SECURITY AGREEMENT
dated as of October 31, 1997
between
THE FIFTH THIRD BANK OF NORTHERN KENTUCKY, INC.
as the Lender
and
TECHNOLOGY INTEGRATION FINANCIAL SERVICES, INC.
as the Borrower
SECURITY AGREEMENT
E-73
This Security Agreement dated as of October 31, 1997
(this "Agreement"), is entered into by and between THE FIFTH
THIRD BANK OF NORTHERN KENTUCKY, INC., a state banking
corporation (the "Lender"), and TECHNOLOGY INTEGRATION
FINANCIAL SERVICES, INC., a Kentucky corporation (the
"Borrower").
Recitals
WHEREAS, the Borrower has requested that the Lender
provide certain credit facilities to the Borrower; and
WHEREAS, subject to certain conditions, the Lender has
agreed to make a certain draw loan (the "Draw Facility") to
be used in conjunction with a certain warehouse line of
credit (the "Revolving Credit"); and
WHEREAS, pursuant to a certain Loan Agreement of even
date herewith (the "Loan Agreement"), the Borrower is
required, inter alia, to provide certain additional
collateral to the Lender to secure the obligations of the
Borrower under the Loan Agreement.
NOW, THEREFORE, the Borrower and the Lender agree as
follows:
1. Definitions. Capitalized terms not otherwise
defined herein shall have the meanings given them in the
Loan Agreement. In addition, the following terms shall have
the following meanings, and the meanings assigned to all
capitalized terms used herein shall be equally applicable to
both the singular and plural forms of the terms defined:
"Assignment of Customer Leases and Related
Documents" shall mean an assignment of Customer Leases and
Related Documents from the Borrower to the Lender, in form
and substance satisfactory to the Lender, and substantially
in the form of the Assignment attached hereto as Exhibit A,
which shall be physically attached to the lease, security
agreement, instrument or chattel paper executed by each
Customer creating a leasehold interest security instrument
in or lien upon or retaining title to the Leased Equipment
and associated equipment leased by the Customer.
"Collateral" shall mean (i) all of Borrower's
"Equipment", "General Intangibles", "Inventory" and
"Receivables" (all as defined below); (ii) all proceeds
(whether cash or non-cash) including, without limitation,
proceeds of any insurance, and all products of all of
Borrower's Equipment, General Intangibles, Inventory and
Receivables; (iii) all of Borrower's books and records
related to any of the foregoing; (iv) all of Borrower's
E-74
rights, title and interest in and to all cash, bank
accounts, deposits and similar sums, whether maintained with
Lender, an Affiliate of Lender or any other entity; and (v)
all of the foregoing, whether now owned or existing or
hereafter acquired or arising, or in which Borrower now has
or hereafter acquires any rights. Lender acknowledges that
its security interests in certain Collateral may be
subordinate to certain Permitted Liens as defined in the
Loan Agreement.
"Customer Lease and Related Documents" shall have
the meaning given that term in the Loan Agreement, including
all extensions of the term of the Customer Lease, together
with all rights, powers, privileges, options and other
benefits of the Borrower as lessor under the Customer Lease
and Related Documents.
"Customer Lease Payments" shall mean, with respect
to each Assigned Lease, any and all payments, penalties,
late charges and other amounts of money due or to become due
under such Assigned Lease, including payments with respect
thereto which might be in arrears.
"Equipment" shall mean the Equipment as defined in
the Loan Agreement and all of Borrower's now owned and
hereafter acquired equipment and fixtures, including,
without limitation, furniture, tools, furnishings, leasehold
improvements, other goods, machinery, vehicles, computers
and associated hardware and equipment and trade fixtures,
together with any and all attachments, accessions, parts and
appurtenances thereto, substitutions therefor and
replacements thereof.
"Event of Default" shall mean any of the events
listed in Paragraph 8 of this Security Agreement.
"General Intangibles" shall mean all choses in
action, causes of action and all other tangible personal
property of Borrower of every kind and nature (other then
Receivables), now owned and hereafter acquired, including,
without limitation, corporate or other business records,
inventions, designs, patents, patent applications, service
marks, trademarks, trademark applications, tradenames, trade
secrets, goodwill, registrations, copyrights, all
intellectual property used by Borrower in the operation of
computers and associated hardware and other equipment,
licenses, franchises, customer lists, tax refunds, tax
refund claims, rights and claims against carriers and
shippers and rights to indemnification.
"Inventory" shall mean and include all of
Borrower's now owned and hereafter acquired goods,
E-75
merchandise and other personal property furnished under any
contract of service or intended for sale, rental or lease,
including, without limitation, all farm products, all
product and sales catalogs and literature, raw materials,
work in process, finished goods and materials and supplies
of any kind, nature or description which are used or
consumed in Borrower's business or are or might be used in
connection with the manufacture, packing, shipping,
advertising, selling or finishing of such goods, merchandise
and other personal property and all documents of title or
documents representing the same.
"Leased Equipment" shall mean the Leased Equipment
as defined in the Loan Agreement.
"Receivables" shall mean and include all of
Borrower's presently existing and hereafter arising or
acquired accounts, receivables and all present and future
rights of Borrower to payment for goods sold, rented or
leased or for services rendered, including, without
limitation, those which are not evidenced by instruments or
chattel paper, and whether or not they have been earned by
performance; proceeds of any letters of credit on which
Borrower is named as beneficiary; contract rights; chattel
paper; instruments; documents; insurance proceeds; and all
such obligations whatsoever owing to Borrower, together with
all instruments and all documents of title representing any
of the foregoing, all rights in any merchandise or goods
which any of the same may represent, and all right, title,
security and guaranties with respect to each of the
foregoing, including, without limitation, any right of
stoppage in transit.
"Secured Obligations" shall mean all of the
obligations secured by this Agreement as set forth in
Section 3 of this Agreement.
Any accounting terms used in this Security
Agreement which are not specifically defined shall have the
meanings customarily given them in accordance with generally
accepted accounting principles. All other terms contained
in this Security Agreement shall, unless the context
indicates otherwise, have the meanings provided for by the
applicable state's version of the Uniform Commercial Code
(the "Code") to the extent the same are defined therein.
2. Grant of Security Interests and Assignment.
(a) As security for all Secured Obligations, the
Borrower grants to the Lender a security interest in the
following property whether now existing or arising or
acquired after the date of this Agreement.
E-76
(1) All of Borrower's right, title and
interest in, to and under all of the Customer Leases and
Related Documents in which it now has, or in which it might
later acquire any interest as a "lessor" to Customer
obligors, including all Customer Leases assigned or to be
assigned pursuant to the terms and conditions of this
Agreement, Section 4.06 of the Loan Agreement and one or
more Assignments of Customer Leases and Related Documents;
(2) All of the Borrower's right, title and interest in, to
and under all Customer Lease Payments; (3) All of the
Borrower's right, title and interest in and to the Leased
Equipment; (4) All of the Borrower's right, title and
interest in, to and under any and all warranties,
guaranties, and indemnities, whether express or implied, and
all similar rights which a Customer obligor may have under
an agreement or instrument associated with any Customer
Lease assigned to Lender against the manufacturer, vendor,
supplier, engineer, contractor or maker of the Leased
Equipment; (5) Any property which the Borrower receives or
which the Borrower is or may hereafter become entitled to
receive on account of any sale, exchange, transfer or other
disposition of any or all Leased Equipment; (6) Any property
which the Borrower receives or which the Borrower is or may
hereafter be entitled to receive on account of any
collections of or with respect to any and all Customer
Leases and Related Documents assigned or to be assigned
pursuant to the terms and conditions of this Agreement,
Section 4.06 of the Loan Agreement and one or more
Assignments of Customer Leases and Related Documents,
including without limitation, any instrument, document
and/or chattel paper in payment of or in substitution for
any of the assigned Customer Leases and Related Documents;
(7) All other Collateral; and (8) All sums which become
payable under any insurance covering the Collateral,
including but not limited to all Leased Equipment.
(b) The Borrower grants a further security
interest to the Lender in the proceeds and products of any
sale, exchange, collection or other disposition of the
Collateral or any part thereof.
(c) From time to time, and in any event, at the
time each particular Customer Lease and Related Documents is
assigned to the Lender by one or more Assignments of
Customer Leases and Related Documents, in connection with a
draw on the Revolving Credit and/or Draw Facility and the
execution of the Revolving Credit Note and/or Draw Facility
Note evidencing such draw, the Borrower shall do all of the
following.
(1) Deliver to the Lender all originals of
all agreements or documents evidencing any obligation of any
Customer obligor to make lease payments under or in
connection with such Customer Lease and Related Documents,
E-77
as well as any and all agreements or documents in the nature
of security agreements, conditional sale contracts or other
title retention agreements or devices which retain, grant or
otherwise create a lien or other security interest in any
Leased Equipment to secure such Customer obligation; (2)
Duly assign to Lender via a properly prepared and executed
Assignment, which shall be physically attached to the
Assigned Lease and delivered to Lender, any and all leases
or other instruments which are part of or constitute any
Customer Lease or otherwise obligate a Customer to make
lease payments under or in connection with any Customer
Lease and Related Documents, and all associated documents;
(3) Deliver to Lender all financing statements as the Lender
may require with respect to such Customer Lease and Related
Documents and any and all Leased Equipment associated with
or related thereto, together with evidence satisfactory to
the Lender, in its discretion, of the proper recordation,
filing or other publication of notice with respect thereto
in all places which the Lender may require, in its
discretion, all at the Borrower's expense; and (4) Deliver
to the Lender copies of any and all applications, documents
or other instruments delivered to any public official with
respect to the title to any and all Leased Equipment
associated with or related to such Customer Lease and
Related Documents, together with evidence satisfactory to
the Lender, in its discretion, that the lien of the Borrower
has been duly filed and perfected.
All of the foregoing documentation and evidence must be
satisfactory to the Lender in its discretion, as to both
form and content.
(d) Furthermore and in addition thereto, the
Borrower hereby grants, and acknowledges that the Lender
shall have a purchase money security interest in any and all
Leased Equipment that is purchased using the proceeds of the
Revolving Credit and/or the Draw Facility, and such shall
also be considered part of the Collateral. All moneys,
securities and other properties of Borrower and the proceeds
thereof now or hereafter held or received by Lender from or
for the account of Borrower, including any and all deposits
(general or special), account balances and credits of
Borrower with Lender at any time existing, shall be deemed
Collateral hereunder and held as security for the Secured
Obligations and may be set-off and applied against any
Secured Obligations, and Borrower further authorizes
Lender's Affiliates to pay or deliver to Lender any deposits
or other sums credited by or due from Lender's Affiliates to
Borrower for application against any Secured Obligation, at
any time upon the occurrence of any Event of Default and
without further notice to Borrower (such notice being
expressly waived) and without any necessity on Lender's part
E-78
to resort to other security or sources of reimbursement for
the Secured Obligations. The rights given to Lender
hereunder are cumulative with Lender's other rights and
remedies, including other rights of setoff. Lender will
promptly notify Borrower of Lender's receipt of such funds
for application against the Secured Obligations, but failure
to do so will not affect the validity or enforceability
thereof. Lender may give notice of the above grant of
security interest and assignment of the aforesaid deposits
and other sums, and authorization to, and make any suitable
arrangements with, any such Affiliate of Lender for
effectuation thereof, and Borrower hereby irrevocably
appoints Lender as its attorney to collect any and all such
deposits or other sums to the extent any such payment is not
made to Lender by such Affiliate.
3. Obligations Secured. The security interests
granted by the Borrower hereby secure the payment and
performance of all of the following obligations
(collectively, the "Secured Obligations"): (a) any and all
indebtedness of the Borrower to the Lender evidenced by the
Revolving Credit Note and/or the Draw Facility Notes, and
any and all obligations contained in the Revolving Credit
Note and/or the Draw Facility Notes; (b) any and all of the
representations, warranties, obligations, agreements,
covenants and promises of the Borrower contained in the Loan
Agreement, the Revolving Credit Note, the Draw Facility
Notes, this Agreement and/or the other Borrower Documents,
whether or not now or hereafter evidenced by any note,
instrument or other writing; and (c) any and all
indebtedness, obligations and liabilities of the Borrower to
the Lender, however evidenced, whether now existing or
hereafter arising, direct or indirect, absolute or
contingent, or acquired by the Lender, including without
limitation, any and all other indebtedness, liabilities and
obligations of Borrower to the Lender that exist on the date
of this Agreement, or arise or are created or acquired after
the date of this Agreement, regardless of whether of the
same or of a different class or type as the indebtedness
evidenced by or contained in the Draw Facility Notes and/or
the Revolving Credit Note and/or the Guaranty Agreement
and/or the other Borrower Documents, and whether or not the
creation thereof was reasonably foreseeable or would be
naturally contemplated by the Borrower or the Lender as the
date of this Agreement; provided however, anything to the
contrary notwithstanding, any non-recourse financing
provided to Borrower by Lender or its affiliates shall not
be construed as "Secured Obligations". The Revolving Credit
and the Draw Facility are recourse financing and are
specifically intended to be Secured Obligations.
E-79
4. Representations and Warranties. To induce the
Lender to enter into this Agreement, any and all of the
representations and warranties made by the Borrower in the
Loan Agreement and the other Borrower Documents are
incorporated herein by reference, and the Borrower further
represents, warrants and agrees as follows:
(a) The Borrower has full right, power, authority
and capacity to enter into and perform each Assignment of
Customer Leases and Related Documents; and each Assignment
of Customer Leases and Related Documents has been or will be
duly entered into and delivered and constitutes or will
constitute a legal, valid and binding obligation of the
Borrower enforceable in accordance with its terms, all at
such time as the Assignment of Customer Lease and Related
Documents is executed and delivered; (b) The Borrower has
good and marketable title to the Borrower's Collateral, and
the Collateral is not subject to any lien, charge, pledge,
encumbrance, claim or security interest other than the
security interests created by this Agreement (except for
Permitted Liens, the interest of the Customer obligors and
the security interest created in the Customer Lease and
Related Documents); (c) The books and records with respect
to the Borrower's Collateral are kept at the Borrower's
chief place of business in Kentucky; (d) The Borrower's
chief place of business is located at 0000 Xxxxxxxxxx Xxxx,
Xxxxxx, Xxxxxxxx 00000; (e) The Collateral is used and will
be used for business use only; (f) The registered office of
the Borrower's registered agent in Kentucky is located in
Xxxxx County, Kentucky; (g) No consent, waiver, order,
license, permit or approval of any Person or franchise
governmental authority is required in connection with the
Borrower's execution and delivery of this Security
Agreement; (h) The Borrower does not own any Collateral of a
type or nature which cannot be encumbered by a security
interest perfectible under Article 9 of the Uniform
Commercial Code as presently enacted in the Commonwealth of
Kentucky; (i) Borrower has full power and authority to enter
into this Security Agreement and to grant Lender the
security interest in the Collateral in accordance herewith,
the grant of the security interest in the Collateral by
Borrower in the manner and for the purposes contemplated
herein has been duly authorized by all requisite corporate
action, and this Security Agreement has been duly executed
and delivered; (j) The execution, delivery and/or
performance by Borrower of this Security Agreement will not
(i) constitute a violation of any applicable law or a breach
of any provision contained in Borrower's
Articles/Certificate of Incorporation or ByLaws/Regulations
or contained in any order of any court or other governmental
agency or in any agreement, instrument or document to which
Borrower is a party or by which Borrower of any of its
assets or properties is bound or (ii) result in the creation
or imposition of any lien, charge or encumbrance of any
E-80
nature whatsoever upon any of Borrower's assets or
properties (other than in favor of Lender hereunder); (k)
the office where Borrower keeps its records concerning the
Receivables and General Intangibles is at the location set
forth on Exhibit B attached hereto; (l) all of Borrower's
Inventory, Equipment and other tangible Collateral are at
the locations set forth on Exhibit C attached hereto; (m)
all other locations of Borrower's registered offices and
agents and other offices and places of business during the
five years prior to the date hereof are set forth on Exhibit
D attached hereto; (n) all trade names, assumed names,
fictitious names and other names used by Borrower during the
five years prior to the date hereof set forth on Exhibit E
attached hereto; (o) except as may otherwise be permitted in
the Loan Agreement, Borrower has executed UCC financing
statements, containing sufficient legal descriptions of the
Collateral and otherwise in form and substance sufficient
for filing in every governmental, municipal or other office
in every jurisdiction necessary to perfect Lender's security
interest in the Collateral, and Borrower hereby irrevocably
authorizes Lender to file the same; and (p) Borrower has
good, indefeasible and merchantable title to and ownership
of the Collateral, free and clear of all liens, claims,
security interests and encumbrances whatsoever, except
Permitted Liens and those held by Lender.
These representations and warranties shall be deemed to be
remade and restated in full each time the Borrower assigns a
Customer Lease and Related Documents to the Lender pursuant
to an Assignment of Customer Leases and Related Documents.
5. Duration of Security Interests. The Lender, its
successors and assigns, shall hold the security interests
created hereby upon the terms of this Agreement, and this
Agreement shall continue until the Revolving Credit Note and
the Draw Facility Notes have been paid in full, the other
Secured Obligations have been performed, executed, or
satisfied in their entirety, and no commitment to lend or
extend credit which is intended to be secured hereby remains
outstanding. After payment of any part of the Secured
Obligations, the Lender may, at its option, retain all or
any portion of the Collateral as security for any remaining
Secured Obligations and retain this Agreement as evidence of
such security. The security interests granted hereunder
shall not be impaired or affected by any renewals or
extensions of time for payment of any of the Secured
Obligations, or by release of any party liable on the
Secured Obligations; by any acquisition, release or
surrender of other security, collateral or guaranty; by
delay in enforcement of payment of any of the Secured
Obligations; or by delay in enforcement of any security.
6. Certain Notices. The Borrower shall notify the
Lender of any and all changes of location of the Borrower's
E-81
chief place of business and of the registered office of the
Borrower's registered agent in Kentucky at least thirty (30)
days prior to effecting any such change.
7. Covenants. To induce the Lender to enter into
this Agreement, the Borrower agrees as follows:
(a) Covenant Not to Dispose of or Impair
Collateral. The Borrower shall not, except to the extent
permitted in the Loan Agreement, without the prior written
consent of the Lender, sell, transfer or otherwise dispose
of the Collateral, or any part thereof or interest therein;
provided however, that Inventory may be sold, transferred or
otherwise disposed of by Borrower in the ordinary course of
business and for fair market value, without the Lender's
prior written consent. The Borrower shall not permit any of
the Collateral to be levied upon under any legal process,
nor permit anything to be done that may impair the value of
the Collateral or the security intended to be provided by
this Agreement.
(b) Collateral to be Free from Encumbrances. The
Collateral shall be and shall remain free and clear of
security interest, claims, liens, encumbrances and rights of
others, created by or through Borrower, except the rights of
the Lender under this Agreement and for Permitted Liens.
(c) Payment of Taxes. The Borrower shall pay or
cause to be paid all taxes and charges, including, without
limitation, all taxes imposed on or measured by its net
income, if the failure to pay such taxes could result in any
reduction of the amounts payable to the Lender or the
imposition of any lien against any Leased Equipment, the
assigned Customer Leases and Related Documents, the Customer
Lease Payments or any other Collateral. The Borrower shall
not be required to pay, or cause so long as it shall in good
faith and by appropriate legal proceedings contest the
validity of such tax or charge in any reasonable manner that
will not endanger the interest of a Customer obligor in the
Leased Equipment under an assigned Customer Lease or the
interest of the Lender in any of the Collateral under this
Agreement.
(d) Insurance. The Borrower, at its own cost and
expense, shall maintain insurance as required in the Loan
Agreement. The Borrower shall also cause the Customer to
maintain insurance for liability and property damage and
against loss or damage to the Leased Equipment in amounts
and coverages, and with insurers, satisfactory to the
Lender, in its reasonable discretion.
(e) No Customer Lease Prepayments; No Releases.
Without prior written notice by Borrower to Lender, the
Borrower shall not cause or permit a Customer obligor to
E-82
prepay any Customer Lease Payments or waive, excuse,
condone, forgive or in any manner release or discharge a
Customer obligor from such obligor's obligations, covenants,
conditions and agreements under an assigned Customer Lease
and Related Documents that are intended to satisfy the
Borrower's obligations under this Agreement or to preserve
and protect the interest of the Lender in such an assigned
Customer Lease and Related Documents and any Leased
Equipment, including, without limitation, the obligations of
Customer obligor to pay Customer Lease Payments in the
manner and at the time and place specified in such Assigned
Note. Without prior written notice by Borrower to Lender,
the Borrower shall not enter into any agreement or take any
action the result of which would be to amend, modify or
terminate any assigned Customer Lease and Related Documents
or any Customer obligor's obligations thereunder. Any
prepayment of any Customer Lease Payments shall be promptly
paid to Lender as a prepayment under Section 3.08 or 4.12 as
applicable, of the Loan Agreement.
(f) The Borrower's Rights Subordinate. The
Borrower's rights to any Customer Lease Payments and
payments under any Customer Lease and Related Documents
shall be subordinate to the Lender's rights assigned under
this Agreement. Upon any Event of Default, at any time the
Lender is entitled to exercise its remedies under this
Agreement, the Lender shall have the sole and exclusive
right to exercise and enjoy the benefits, rights and
privilege of the "lessor" under the assigned Customer Lease
and Related Documents. To that end, at all such times and
unless and until the obligations of the Borrower under this
Agreement have been discharged in full, the Borrower shall
not seek recovery of any amounts which are a part of the
Collateral, shall not modify or terminate any assigned
Customer Lease and Related Documents, shall not exercise the
remedies available under the assigned Customer Lease and
Related Documents against any Leased Equipment, shall not
seek to enforce any security provided under the Customer
Lease and Related Documents, except in cooperation with and
for the benefit of the Lender.
(g) Notice of Events of Default by Customers.
The Borrower promptly shall notify the Lender of any event
of default (as defined in an assigned Customer Lease and
Related Documents), or any event that, with the giving of
notice or the lapse of time or both would become an event of
default, of which the Borrower has or obtains knowledge.
8. Default. The occurrence of an Event of Default
under the Loan Agreement shall constitute a default under
this Agreement (an "Event of Default").
9. Loan Remedies. Upon any Event of Default, the
Lender may at its option declare the Revolving Credit Note
E-83
and/or any and all of the Draw Facility Notes and the other
Secured Obligations to be immediately due and payable; and,
in addition to that right, and in addition to exercising all
other rights or remedies, the Lender may proceed to exercise
with respect to the Collateral all rights, options and
remedies of a secured party upon default as provided for
under the Uniform Commercial Code. The rights of the Lender
upon an Event of Default shall include, without limitation,
any and all rights and remedies in any and all other
documents, instruments, agreements and other writings
between the Lender and the Borrower, all rights and remedies
as provided by law, in equity or otherwise, and in addition
thereto, the following:
(a) The right to enter any premises where any
Collateral may be located, subject to the rights of the
Customer obligors, for the purpose of taking possession or
removing the same.
(b) The right to require the Borrower to assemble
the Collateral and the books and records with respect to
assigned Customer Leases and Related Documents and make them
available to the Lender at a place or places to be
designated by the Lender which is reasonably convenient to
the Borrower and the Lender.
(c) The right to require the Borrower to store
any Leased Equipment and other Collateral, at the Borrower's
own cost and risk, on behalf of the Lender after the Lender
has taken possession of such Leased Equipment and other
Collateral. Storage shall be in such manner as to prevent
any deterioration of such Leased Equipment and other
Collateral, and shall be for a reasonable time pending the
sale or other disposition of such Leased Equipment and other
Collateral.
(d) The right to sell the Collateral at public or
private sale in one or more lots in accordance with Uniform
Commercial Code. The Lender may bid upon and purchase any
or all of the Collateral at any public sale thereof, and
shall be entitled to apply the unpaid portion to the Secured
Obligations as a credit against the purchase price. The
Lender's purchase of all or any of the Collateral shall
extinguish the Borrower's rights under section 9-506 of the
Uniform Commercial Code upon application of the unpaid
portion of the Secured Obligations. The Lender shall be
entitled to apply the proceeds of any such sale to the
satisfaction of the Secured Obligations and to expenses
incurred in realizing upon the Collateral in accordance with
the Uniform Commercial Code.
(e) The right to notify any or all of the
Customer obligors under or with respect to any assigned
Customer Lease and Related Documents of the Lender's
E-84
interest therein and to require such Customer obligor to
begin making payments directly to the Lender regardless of
whether the Borrower was previously making collections on
all or any part of the assigned Customer Leases and Related
Documents. The Lender shall have the right to proceed
against any such Customer obligor in its own name, or in the
name of the Borrower (as appropriate) with or without the
consent of the Borrower. The Lender may retain any such
payments or collections and apply them to the satisfaction
of the Secured Obligations and to expenses incurred in
collection, all in accordance with the Uniform Commercial
Code.
(f) The right to recover the reasonable expenses
of taking possession of any of the Collateral that may be
reduced to possession, preparing the Collateral for sale,
selling the Collateral, collecting all or any part of the
Customer Lease Payments, payments of or collections on any
security provided in connection with an assigned Customer
Lease and Related Documents and other like expenses.
(g) The right to recover all of the Lender's
expenses of collection, including, without limitation, court
costs and reasonable attorneys' fees and disbursements
incurred in realizing upon the Collateral or enforcing or
attempting to enforce any provision of this Agreement and
any and all Assignments of Customer Leases and Related
Documents.
(h) The right to proceed by appropriate legal
process at law or in equity to enforce any provision of this
Agreement or in aid of the execution of any power of sale,
or for foreclosure of the security interests of the Lender,
or for the sale of the Collateral under the judgment or
decree of any court.
10. Cumulative Remedies. The rights and remedies of
the Lender shall be deemed to be cumulative, and any
exercise of any right or remedy shall not be deemed to be an
election of that right or remedy to the exclusion of any
other right or remedy. Notwithstanding the foregoing, the
Lender shall be entitled to recover by the cumulative
exercise of all remedies no more than the sum of (a) the
Secured Obligations at the time of exercise of remedies,
plus (b) the reasonable costs, fees and expenses the Lender
is otherwise entitled to recover.
11. Waivers. The Borrower acknowledges that this
Agreement involves the grant of multiple security interests,
and the Borrower hereby waives, to the extent permitted by
applicable law, (a) any requirement of marshalling assets or
proceeding against Persons or assets in any particular
order, and (b) any and all notices of every kind and
description which may be required to be given by any statute
E-85
or rule of law and any defense of any kind which the
Borrower may now or hereafter have with respect to the
Collateral under this Agreement.
12. Collections from Assigned Notes. Collections with
respect to Customer Lease Payments regarding each Assigned
Lease shall be made to the Lockbox pursuant to Section 7.17
of the Loan Agreement.
13. The Lender as Agent. The Borrower hereby
irrevocably constitutes the Lender as the Borrower's agent
and attorney-in-fact at any time during any period when the
Lender may exercise the remedies set forth in Section 9 of
this Agreement, to (a) proceed against Customer obligors
with respect to any assigned Customer Lease and Related
Documents in the Borrower's name or in the Lender's name,
and (b) sign and endorse all checks, drafts and other
instruments in payment of Customer Lease Payments, (c)
perform all such other acts with respect to Customer Lease
Payments as the Lender may in its discretion deem necessary
to effectuate the security intended to be granted in this
Agreement, and (d) to send requests for verification of
Receivables to customers or account debtors; to sign and
endorse Borrower's name on any checks, notes, acceptances,
money orders, drafts or other forms of payment or security
in payment of Receivables or from the sale of Inventory or
that may otherwise come into Lender's possession; to sign
Borrower's name on any invoice or xxxx of lading relating to
any Receivable, on drafts against customers, on schedules
and assignments of Receivables, on notices of assignment,
financing statements and other public records, on
verifications of accounts and on notices to customers; to
collect, enforce, compromise, settle and adjust all
Receivables and take other actions with respect thereto as
Lender determines in its reasonable discretion; to give
receipts in Borrower's name and to perform such other acts
in connection with the Receivables as Lender in its
reasonable discretion may determine to be appropriate; to
notify the post office authorities to change the address
designated by Lender, which may be a post office box opened
by Lender for such purpose or any other address, at Lender's
discretion; to receive, open and dispose of all mail
addressed to Borrower; and to do all things necessary to
perfect Lender's security interest in the Collateral, to
preserve and protect the Collateral and to otherwise carry
out this Security Agreement; all at the cost of Borrower,
and Borrower hereby ratifies and approves all acts of such
attorney except as provided below. Provided Lender acts in
a commercially reasonable manner, neither Lender nor the
attorney will be liable for any acts or omissions nor for
any error of judgment or mistake of fact or law. This
power, being coupled with an interest, is irrevocable until
the Secured Obligations have been fully satisfied and this
Security Agreement terminated, whichever shall later occur.
E-86
Borrower agrees to execute and deliver promptly to Lender
all instruments necessary or appropriate, as determined in
Lender's discretion, to further Lender's exercise of the
rights and powers granted it in this Paragraph 13.
14. Books and Records. The Borrower shall maintain
books and records with respect to the assigned Customer
Leases and Related Documents, the Leased Equipment and other
Collateral in form and manner reasonably satisfactory to the
Lender, and the Lender shall have the right during business
hours with reasonable notice to inspect any and all of the
business properties, premises or books and records of the
Borrower relating to the assigned Customer Leases and
Related Documents, the Leased Equipment and other Collateral
or the proceeds thereof. The Borrower further agrees from
time to time to furnish such reports, data and financial
statements with respect to the Collateral as the Lender may
reasonably request from time to time.
15. Insurance. The Borrower hereby assigns to the
Lender all sums which become payable under any insurance
covering the Collateral, directs any insurer to pay all such
proceeds to the Lender, and authorizes the Lender to act as
the Borrower's attorney in obtaining, adjusting, settling
and compromising such insurance and endorsing any drafts
drawn to the Borrower pursuant to such insurance. If an
Unmatured Default or an Event of Default exists at the time
the Lender receives the insurance proceeds, the Lender may
apply those proceeds as a prepayment under the Loan
Agreement at the Lender's discretion; or if the Lender
chooses, it may remit the insurance proceeds to the
Borrower. If no Unmatured Default or Event of Default
exists at the time the Lender receives the insurance
proceeds, the Lender shall remit the insurance proceeds to
the Borrower.
16. Certain Secured Obligations Regarding Collateral.
(a) The Borrower shall (or use its best efforts
to cause each Customer obligor to) keep and maintain the
Leased Equipment in good condition and repair, and otherwise
keep (or use its best efforts to cause the Customer obligor
to keep) the Leased Equipment and other Collateral under
adequate condition of storage to prevent its deterioration
or depreciation in value.
(b) The Borrower shall keep the Collateral free
and clear of any and all liens other than the Permitted
Liens and security interests created in favor of the Lender
under this Agreement (and the interests of Borrower which is
to be assigned to the Lender), and shall declare and pay any
and all fees, assessments, charges and taxes allocable to
the Collateral, or which might result in a lien against the
Collateral if left unpaid unless the Borrower at the
E-87
Borrower's own expense is contesting the validity or amount
thereof in good faith by an appropriate proceeding timely
instituted which shall operate to prevent the collection or
satisfaction of the lien or amount so contested. If the
Borrower fails to pay such amount and is not contesting the
validity or amount thereof in accordance with the preceding
sentence, the Lender may, but is not obligated to, pay such
amount, and such payment shall be deemed conclusive evidence
of the legality or validity of such amount. The Borrower
shall promptly reimburse the Lender for any and all payments
made by the Lender in accordance with the preceding
sentence, and until reimbursement, such payments shall be
part of the Secured Obligations.
(c) If the Borrower fails to provide insurance
pursuant to the Loan Agreement, the Lender may, but is not
obligated to, pay for such insurance after first notifying
the Borrower of the Lender's intent to pay it. The Borrower
shall promptly reimburse the Lender for any payments made
pursuant to this subparagraph, and until reimbursement, such
payments shall be a part of the Secured Obligations.
17. Use and Inspection of Collateral. The Borrower
shall not use the Collateral in violation of any statute or
ordinance, and the Lender shall have the right, at
reasonable hours, to inspect the Collateral (provided
however, that Lender's right to inspect Leased Equipment
shall not exceed the Borrower's right to inspect such Leased
Equipment pursuant to the respective Assigned Lease).
18. Notice.
(a) Any requirement of the Uniform Commercial
Code or other applicable law of reasonable notice shall be
met if such notice is given at least ten (10) business days
before the time of sale, disposition or other event or thing
giving rise to the requirement of notice.
(b) All notices and other communications under
this Agreement shall be given in writing and shall give or
be delivered in one of the methods to the addresses as set
forth in Section 12.16 of the Loan Agreement, as amended
from time to time, and all such notices and communications
shall be deemed to have been given or delivered as set forth
in Section 12.16 of the Loan Agreement, as amended from time
to time.
19. Further Assurance. The Borrower shall sign from
time to time such financing statements and other documents
and instruments and take such other actions as the Lender
may request from time to time to more fully create, perfect,
continue, maintain or terminate the security interests in
the Collateral intended to be created in this Agreement.
The Borrower's obligations hereunder shall include, by way
E-88
of illustration and not by way of limitation, the
requirement of signing and sending notices to Customer
obligors of the Lenders rights hereunder. The Borrower
agrees that its obligations under this Section are material
aspects of the protections intended to be provided to the
Lender under this Agreement and may be specifically
enforced.
20. Miscellaneous.
(a) Failure by the Lender to exercise any right
shall not be deemed a waiver of that right, and any single
or partial exercise of any right shall not preclude the
further exercise of that right. Every right of the Lender
shall continue in full force and effect until such right is
specifically waived in a writing signed by the Lender; (b)
If any part, term or provision of this Agreement is held by
any court to be prohibited by any law applicable to this
Agreement, the rights and obligations of the parties shall
be construed and enforced with that part, term or provision
enforced to the greatest extent allowed by law, or if it is
totally unenforceable, as if this Agreement did not contain
that particular part, term or provision; (c) The headings in
this Agreement have been included for ease of reference
only, and shall not be considered in the construction or
interpretation of this Agreement; (d) This Agreement shall
inure to the benefit of the Lender, its successors and
assigns, and all obligations of the Borrower shall bind the
Borrower's successors and assign; (e) To the extent allowed
under the Uniform Commercial Code, this Agreement shall in
all respects be governed by and construed in accordance with
the laws of the Commonwealth of Kentucky; (f) This Agreement
and any and all Assignments of Customer Leases and Related
Documents constitute the entire agreement of the parties
with respect to the subject matter hereof. No change,
modification, addition or termination of this Agreement
shall be enforceable unless in writing and signed by the
party against whom enforcement is sought; (g) This Agreement
may be signed by each party upon a separate copy, and in
such cases one counterpart of this Agreement shall consist
of enough of such copies to reflect the signature of each
part; (h) This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and
it shall not be necessary in making proof of this Agreement
or the terms thereof to produce or account for more than one
such counterpart; (i) Wherever possible, each provision of
this Security Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if
any provision of this Security Agreement shall be prohibited
by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the
remaining provisions of this Security Agreement; (j) This
Security Agreement has been delivered and accepted at and
E-89
shall be deemed to have been made at Florence, Kentucky.
This Security Agreement shall be interpreted and the rights
and liabilities of the parties hereto determined in
accordance with the laws of the State of Kentucky and all
other laws of mandatory application; (k) AS A SPECIFICALLY
BARGAINED INDUCEMENT FOR LENDER TO ENTER INTO THIS SECURITY
AGREEMENT AND TO EXTEND CREDIT TO BORROWER, BORROWER AGREES
THAT ANY ACTION, SUIT OR PROCEEDING IN RESPECT OF OR ARISING
OUT OF THIS SECURITY AGREEMENT, ITS VALIDITY OR PERFORMANCE,
AT THE SOLE OPTION OF LENDER, ITS SUCCESSORS AND ASSIGNS,
AND WITHOUT LIMITATION ON THE ABILITY OF LENDER, ITS
SUCCESSORS AND ASSIGNS, TO EXERCISE ALL RIGHTS AS TO THE
COLLATERAL AND OTHER SECURITY FOR THE Secured Obligations OR
TO INITIATE AND PROSECUTE IN ANY APPLICABLE JURISDICTION
ACTIONS RELATED TO REPAYMENT OF THE Secured Obligations,
SHALL BE INITIATED AND PROSECUTED AS TO ALL PARTIES AND
THEIR SUCCESSORS AND ASSIGNS IN XXXXX COUNTY, KENTUCKY.
LENDER AND BORROWER EACH CONSENTS TO AND SUBMITS TO THE
EXERCISE OF JURISDICTION OVER ITS PERSON BY ANY COURT
SITUATED IN XXXXX COUNTY, KENTUCKY HAVING JURISDICTION OVER
THE SUBJECT MATTER, WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF
PROCESS BE MADE BY CERTIFIED MAIL DIRECTED TO BORROWER AND
LENDER AT THEIR RESPECTIVE ADDRESSES AS SET FORTH IN
SUBPARAGRAPH (H) BELOW OR AS OTHERWISE PROVIDED UNDER THE
LAWS OF THE STATE OF KENTUCKY. BORROWER WAIVES ANY
OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION
TO VENUE OF ANY ACTION INSTITUTED HEREUNDER, AND CONSENTS TO
THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY THE COURT; (l) AS A SPECIFICALLY BARGAINED
INDUCEMENT FOR LENDER TO ENTER INTO THIS SECURITY AGREEMENT
AND TO EXTEND CREDIT TO BORROWER, BORROWER AND LENDER EACH
WAIVES TRIAL BY JURY WITH RESPECT TO ANY ACTION, CLAIM, SUIT
OR PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS SECURITY
AGREEMENT AND/OR THE CONDUCT OF THE RELATIONSHIP BETWEEN
LENDER AND BORROWER; (m) Borrower covenants, warrants and
represents to Lender that all of Borrower's representations
and warranties contained in this Security Agreement are true
at this time, shall survive the executions and delivery
hereof and shall remain true until the Secured Obligations
are fully performed, paid and satisfied, subject to such
changes as may not be prohibited hereby or do not constitute
Events of Default hereunder; (n) All of the Secured
Obligations shall constitute one loan secured by Lender's
security interest in the Collateral and by all other
security interests, mortgages, liens, claims and
encumbrances now and from time to time hereafter granted by
Borrower to Lender. Lender may, in its sole discretion ,
(i) exchange, enforce, waive or release any such security or
portion thereof, (ii) apply such security and direct the
order or manner of sale thereof as Lender may, from time to
time, determine, and (iii) settle, compromise, collect or
otherwise liquidate any such security in any manner
following the occurrence of any Event of Default without
E-90
affecting or impairing its right to take any other further
action with respect to any security or any part thereof.
IN WITNESS WHEREOF, the Borrower and the Lender have
executed and delivered this Agreement as of the date first
set forth above.
BORROWER: LENDER:
TECHNOLOGY INTEGRATION FINANCIAL THE FIFTH THIRD BANK OF
NORTHERN
SERVICES, INC. KENTUCKY, INC.
By: By:
Title: Title:
E-91
SECURITY AGREEMENT
List of Exhibits
Exhibit A - Form of Assignment
Exhibit B - Address where Receivable and General
Intangible records are located
Exhibit C - Address where Inventory is located
Exhibit D - Addresses of Prior Office and Places of
Business for last 5 years
Exhibit E - List of Trade Names, Assumed Names and
Fictitious Names
EXHIBIT A
Form of Assignment
EXHIBIT B
Location of Receivables and
General Intangibles Records
1. 0000 Xxxxxxxxxx Xxxx, Xxxxxx, Xxxxxxxx 00000
E-92
________________________________
Borrower's Signature
EXHIBIT C
Location of Inventory
1. Part of Borrower's Inventory includes Leased Equipment.
The
initial location of the Leased Equipment will be
disclosed to Lender at time of Assignment. Lender
acknowledges that a portion of the Leased Equipment are
mobile goods which will be moved from jurisdiction to
jurisdiction, and Borrower will generally be unable to
inform Lender of such movements.
2. 0000 Xxxxxxxxxx Xxxx, Xxxxxx, Xxxxxxxx 00000
________________________________
Borrower's Signature
E-93
EXHIBIT D
Location of Prior Offices and Places
of Business for Last 5 Years
1. 0000 Xxxxxxx Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
________________________________
Borrower's Signature
E-94
EXHIBIT E
List of Trade Names, Assumed Names,
Fictitious Names and Other Names
Used in Last 5 Years
1. Xxxxxxx Computer Leasing, Inc.
________________________________
Borrower's Signature
E-95
