Exhibit 99.3
SECURITY AGREEMENT
THIS SECURITY AGREEMENT is made and entered into as of the 16th day of
December, 2004, by XXXXXXXX AEROSPACE TECHNOLOGIES, INC., a Delaware corporation
(hereinafter called "Debtor"), whose principal place of business is 0000 X. Xxxx
Xxxxxx, Xxxxxx, XX 00000 and whose mailing address is X.X. Xxx 00000, Xxxxxx,
Xxxxxxx 00000-0000, in favor of M&I XXXXXXXX & ILSLEY BANK, a banking
corporation organized and existing under the laws of the State of Wisconsin, and
its successors and assigns (hereinafter called "Lender"), whose address is Xxx
Xxxx Xxxxxxxxx Xxxx, Xxxxxxx, Xxxxxxx 00000-0000.
RECITALS
A. Lender has been requested or may be requested to make or to continue
loans or other financial accommodations to Debtor, subject to the terms and
conditions of that Loan Agreement of on or about even date herewith between
Lender and Borrower (the "Loan Agreement").
B. It is a condition precedent to Lender's making any loan or financial
accommodation to Debtor that Debtor execute and deliver to Lender this Security
Agreement, and Debtor desires to grant the security interests in favor of Lender
provided herein.
NOW, THEREFORE, in consideration of the promises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
AGREEMENT
1. SECURITY INTEREST
Debtor hereby grants to Lender a security interest (hereinafter called the
"Security Interest") in all of the property described on Exhibit A hereto in, to
or under which Debtor now has or hereafter acquires any right, title or
interest, whether present, future or contingent (hereinafter called the
"Collateral").
2. OBLIGATION SECURED
The Security Interest shall secure, in such order of priority as Lender may
elect, payment and performance of any and all indebtedness, obligations and
liabilities of Debtor to Lender of every kind and character, direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter
incurred, whether such indebtedness is from time to time reduced and thereafter
increased or entirely extinguished and thereafter reincurred, including, without
limitation, all indebtedness and obligations under the Indebtedness (as defined
in the Loan Agreement). All of the indebtedness and obligations secured by this
Agreement are hereinafter collectively called the "Obligation." The Loan
Agreement, together with all other documents evidencing, securing or executed
and delivered in connection with the Obligation are herein called the "Loan
Documents". The account debtors or other persons obligated on any of the
Collateral are herein called the "Obligors."
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3. ACTIONS FOR ATTACHMENT; PERFECTION AND FIRST PRIORITY
3.1 Authorization to File Financing Statements. Debtor hereby irrevocably
authorizes Lender at any time and from time to time to file in any Uniform
Commercial Code jurisdiction any initial financing statements and amendments
thereto that Lender determines are necessary or appropriate in connection with
the Security Interest. Debtor agrees to furnish any additional information
requested by Lender in connection with such filings. Debtor also ratifies its
authorization for Lender to have filed in any Uniform Commercial Code
jurisdiction any like initial financing statements or amendments thereto if
filed prior to the date hereof.
3.2 Other Actions. Debtor further agrees to take any other action
reasonably requested by Lender to insure the attachment, perfection and first
priority of, and the ability of Lender to enforce, Lender's security interest in
any and all of the Collateral including, without limitation, (a) executing,
delivering and, where appropriate, filing financing statements and amendments
relating thereto under the Uniform Commercial Code, to the extent, if any, that
Debtor's signature thereon is required therefor, (b) causing Lender's name to be
noted as secured party on any certificate of title for a titled good if such
notation is a condition to attachment, perfection or priority of, or ability of
Lender to enforce, Lender's security interest in such Collateral, (c) complying
with any provision of any statute, regulation or treaty of the United States as
to any Collateral if compliance with such provision is a condition to
attachment, perfection or priority of, or ability of Lender to enforce, Lender's
security interest in such Collateral, (d) using its best efforts to obtain
control agreements and all necessary consents and approvals, including without
limitation any consent of any licensor, lessor or other person obligated on
Collateral, (e) obtaining waivers from mortgagees and landlords in form and
substance satisfactory to Lender, and (f) taking all actions required by any
applicable Uniform Commercial Code or by other applicable law.
4. REPRESENTATIONS AND WARRANTIES OF DEBTOR
Debtor hereby represents and warrants that:
4.1 Legal Status. Debtor has previously delivered, or is concurrently
delivering, to Lender a certificate signed by Debtor and entitled "Perfection
Certificate" (the "Perfection Certificate"). Debtor represents and warrants to
Lender as follows: (a) Debtor's exact legal name is that indicated on the
Perfection Certificate and on the signature page hereof, (b) Debtor is an
organization of the type and organized in the jurisdiction set forth in the
Perfection Certificate, (c) the Perfection Certificate accurately sets forth
Debtor's organizational identification number or accurately states that Debtor
has none, (d) the Perfection Certificate accurately sets forth Debtor's place of
business or, if more than one, its chief executive office as well as Debtor's
mailing address, if different, and (e) all other information set forth on the
Perfection Certificate is accurate and complete.
4.2 Collateral. Debtor further represents and warrants to Lender as
follows: (a) Debtor is the owner of the Collateral, free from any adverse lien,
security interest or other encumbrance, except for the security interest created
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by this Agreement and Permitted Liens, (b) the Collateral is, and is intended to
be, used, produced or acquired by Debtor primarily for business purposes, (c)
none of the Collateral constitutes, or is the proceeds of, "farm products," as
defined in the applicable Uniform Commercial Code, (d) Debtor currently holds no
commercial tort claim, (e) Debtor has at all times operated its business in
compliance with all applicable provisions of the federal Fair Labor Standards
Act, as amended, and with all applicable provisions of federal, state and local
statutes and ordinances dealing with the control, shipment, storage or disposal
of hazardous materials or substances, and (f) all other information set forth on
the Perfection Certificate pertaining to the Collateral is accurate and
complete.
5. COVENANTS OF DEBTOR
5.1 Legal Status. Debtor covenants with Lender as follows: (a) without
providing at least 30 days' prior written notice to Lender, Debtor will not
change its name, its place of business or, if more than one, chief executive
office, or its mailing address or organizational identification number if it has
one, (b) if Debtor does not have an organizational identification number and
later obtains one, Debtor shall forthwith notify Lender of such organizational
identification number, and (c) Debtor will not change its type of organization,
jurisdiction of organization or other legal structure.
5.2 Collateral. Debtor further covenants with Lender as follows: (a) the
Collateral, to the extent not delivered to Lender pursuant to Section 4, will be
kept at those locations listed on the Perfection Certificate and Debtor will not
remove the Collateral from such locations, without providing at least 30 days'
prior written notice to Lender, (b) except for the security interest herein
granted and Permitted Liens, Debtor shall be the owner of the Collateral free
from any lien, security interest or other encumbrance, and Debtor shall defend
the same against all claims and demands of all persons at any time claiming the
same or any interests therein adverse to Lender, (c) Debtor shall not pledge,
mortgage or create, or suffer to exist a security interest in the Collateral in
favor of any person other than Lender except for Permitted Liens, (d) Debtor
will keep the Collateral in good order and repair and will not use the same in
violation of law or any policy of insurance thereon, (e) Debtor will pay
promptly when due all taxes, assessments, governmental charges and levies upon
the Collateral or incurred in connection with the use or operation of such
Collateral or incurred in connection with this Agreement, (f) Debtor will
continue to operate its business in compliance with all applicable provisions of
the federal Fair Labor Standards Act, as amended, and with all applicable
provisions of federal, state and local statutes and ordinances dealing with the
control, shipment, storage or disposal of hazardous materials or substances, and
(g) Debtor will not sell or otherwise dispose, or offer to sell or otherwise
dispose, of the Collateral or any interest therein except for (i) sales of
inventory in the ordinary course of business, and (ii) so long as no Event of
Default has occurred and is continuing, sales or other dispositions of
obsolescent items of equipment in the ordinary course of business consistent
with past practices.
5.3 Insurance. Debtor shall provide and maintain insurance insuring the
Collateral against risks, with coverage and in form and amount satisfactory to
Lender. At Lender's request, Debtor shall deliver to Lender the original
policies of insurance containing endorsements naming Lender as a loss payee.
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5.4 Fixtures. Debtor shall prevent any portion of the Collateral that is
not a fixture from being or becoming a fixture and shall prevent any portion of
the Collateral from being or becoming an accession to other goods that are not
part of the Collateral.
5.5 Inspection. Lender or its agents may inspect the Collateral at
reasonable times and may enter into any premises where the Collateral is or may
be located. Debtor shall keep records concerning the Collateral in accordance
with generally accepted accounting principles and, unless waived in writing by
Lender, shall xxxx its records and the Collateral to indicate the Security
Interest. Lender shall have free and complete access to Debtor's records and
shall have the right to make extracts therefrom or copies thereof. Upon request
of Lender from time to time, Debtor shall submit up-to-date schedules of the
items comprising the Collateral in such detail as Lender may require and shall
deliver to Lender confirming specific assignments of all accounts, instruments,
documents and chattel paper included in the Collateral.
5.6 Protection. Debtor, at its cost and expense, shall protect and defend
this Agreement, all of the rights of Lender hereunder, and the Collateral
against all claims and demands of other parties, including without limitation
defenses, setoffs, claims and counterclaims asserted by any Obligor against
Debtor and/or Lender. Debtor shall pay all claims and charges that, in Lender's
judgment, might prejudice, imperil or otherwise affect the Collateral or the
Security Interest. Debtor shall promptly notify Lender of any levy, distraint or
other seizure by legal process or otherwise of any part of the Collateral and of
any threatened or filed claims or proceedings that might in any way affect or
impair the terms of this Agreement.
5.7 Right to Pay. If Debtor shall fail to pay any taxes, assessments,
expenses or charges, to keep all of the Collateral free from other security
interests, encumbrances or claims, to keep the Collateral in good condition and
repair, to procure and maintain insurance thereon, or to perform otherwise as
required herein, Lender may advance the monies necessary to pay the same, to
accomplish such repairs, to procure and maintain such insurance or to so
perform; Lender is hereby authorized to enter upon any property in the
possession or control of Debtor for such purposes.
5.8 Benefit of Lender. All rights, powers and remedies granted Lender
herein, or otherwise available to Lender, are for the sole benefit and
protection of Lender, and Lender may exercise any such right, power or remedy at
its option and in its sole and absolute discretion without any obligation to do
so. In addition, if under the terms hereof, Lender is given two or more
alternative courses of action, Lender may elect any alternative or combination
of alternatives at its option and in its sole and absolute discretion. All
monies advanced by Lender under the terms hereof and all amounts paid, suffered
or incurred by Lender in exercising any authority granted herein, including
reasonable attorneys' fees, shall be added to the Obligation, shall be secured
by the Security Interest, shall bear interest at the highest rate payable on any
of the Obligation until paid, and shall be due and payable by Debtor to Lender
immediately without demand.
6. ACTIONS REGARDING COLLATERAL; POWER OF ATTORNEY
6.1 Securities and Deposits. Lender may at any time, after the occurrence
of an Event of Default, at its option, transfer to itself or any nominee any
securities constituting Collateral, and if Lender receives any income thereon
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either hold such income as additional Collateral or apply it to the Obligations.
After the occurrence of an Event of Default, whether or not any Obligations are
due, Lender may demand, xxx for, collect, or make any settlement or compromise
which it deems desirable with respect to the Collateral. Regardless of the
adequacy of Collateral or any other security for the Obligations, any deposits
or other sums at any time credited by or due from Lender to Debtor may at any
time be applied to or set off against any of the Obligation.
6.2 Notify Obligors. Lender, without notice to Debtor, may notify any or
all of the Obligors of the existence of the Security Interest and may direct the
Obligors to make all payments on the Collateral to Lender, after the occurrence
of an Event of Default. Until Lender has notified the Obligors to remit payments
directly to it, Debtor, at Debtor's own cost and expense, shall collect or cause
to be collected the accounts and monies due under the accounts, documents,
instruments and general intangibles or pursuant to the terms of the chattel
paper. Lender shall not be liable or responsible for any embezzlement,
conversion, negligence or default by Debtor or Debtor's agents with respect to
such collections; all agents used in such collections shall be agents of Debtor
and not agents of Lender. Unless Lender notifies Debtor in writing that it
waives one or more of the requirements set forth in this sentence, any payments
or other proceeds of Collateral received by Debtor, before or after notification
to Obligors, shall be held by Debtor in trust for Lender in the same form in
which received, shall not be commingled with any assets of Debtor and shall be
turned over to Lender not later than the next business day following the day of
receipt. All payments and other proceeds of Collateral received by Lender
directly or from Debtor shall be applied to the Obligation in such order and
manner and at such time as Lender, in its sole discretion, shall determine. In
addition, Debtor shall promptly notify Lender of the return to or possession by
Debtor of goods underlying any Collateral; Debtor shall hold the same in trust
for Lender and shall dispose of the same as Lender directs.
6.3 Enforce Collateral. Lender, after the occurrence of an Event of Default
and the expiration of any applicable cure periods and subject to any prior
notice required to be given by Lender, without notice to Debtor, may (i) demand,
collect and xxx on the Collateral (either in Debtor's or Lender's name),
enforce, compromise, settle or discharge the Collateral and endorse Debtor's
name on any instruments, documents, or chattel paper included in or pertaining
to the Collateral, and (ii) as Debtor's agent and attorney-in-fact, notify the
United Sates Postal Service to change the address for delivery of Debtor's mail
to any address designated by Lender, otherwise intercept Debtor's mail, and
receive, open and dispose of Debtor's mail, applying all Collateral as permitted
herein or in the Loan Documents, and holding all other mail for Debtor's account
or forwarding such mail to Debtor's last known address.
6.4 License. Without limiting any other provision hereof or of any other
document, Debtor hereby grants to Lender a non-exclusive, worldwide and
royalty-free license to use or otherwise exploit all actual or prospective
rights of Debtor arising in connection with any intellectual property or other
proprietary rights, including all rights arising in connection with copyrights,
patents, service marks, trade dress, trade secrets, trademarks, trade names or
mask works, for the following purposes after the occurrence and during the
continuance of any Event of Default: (a) completing the manufacture of any
in-process materials so that such materials become saleable inventory, and (b)
selling, leasing or otherwise disposing of any or all Collateral.
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6.5 Duty of Care. Lender shall use such reasonable care in handling,
preserving and protecting the Collateral in its possession as it uses in
handling similar property for its own account. Lender, however, shall have no
liability for the loss, destruction or disappearance of any Collateral unless
there is affirmative proof of a lack of due care; the lack of due care shall not
be implied solely by virtue of any loss, destruction or disappearance.
6.6 Responsibility of Debtor. Debtor shall be solely responsible for taking
any and all actions to preserve rights against all Obligors; Lender shall not be
obligated to take any such actions whether or not the Collateral is in Lender's
possession. Debtor waives presentment and protest with respect to any instrument
included in the Collateral on which Debtor is in any way liable and waives
notice of any action taken by Lender with respect to any instrument, document or
chattel paper included in any Collateral that is in the possession of Lender.
Provided, however, the foregoing is subject to any rights of Debtor to receive
notices of default and any cure periods afforded to Debtor under the applicable
loan documents.
6.7 Power of Attorney. Debtor hereby irrevocably constitutes and appoints
Lender and any officer or agent thereof, with full power of substitution, as its
true and lawful attorneys-in-fact with full irrevocable power and authority in
the place and stead of Debtor or in Lender's own name, for the purpose of
carrying out the terms of this Agreement, to take any and all appropriate action
and to execute any and all documents and instruments that may be necessary or
desirable to accomplish the purposes of this Agreement and, without limiting the
generality of the foregoing, hereby gives said attorneys the power and right, on
behalf of Debtor, without notice to or assent by Debtor, to do the following:
(a) upon the occurrence and during the continuance of an Event of
Default, and the expiration of any applicable cure periods and subject to any
prior notice required to be given by Lender, generally to sell, transfer,
pledge, make any agreement with respect to or otherwise deal with any of the
Collateral in such manner as is consistent with the applicable Uniform
Commercial Code and as fully and completely as though Lender were the absolute
owner thereof for all purposes, and to do at Debtor's expense, at any time, or
from time to time, all acts and things which Lender deems necessary to protect,
preserve or realize upon the Collateral and Lender's security interest therein,
in order to effect the intent of this Agreement, all as fully and effectively as
Debtor might do, including, without limitation, (i) the filing and prosecuting
of registration and transfer applications with the appropriate federal or local
agencies or authorities with respect to trademarks, copyrights and patentable
inventions and processes, (ii) upon written notice to Debtor, the exercise of
voting rights with respect to voting securities, which rights may be exercised,
if Lender so elects, with a view to causing the liquidation in a commercially
reasonable manner of assets of the issuer of any such securities and (iii) the
execution, delivery and recording, in connection with any sale or other
disposition of any Collateral, of the endorsements, assignments or other
instruments of conveyance or transfer with respect to such Collateral;
(b) to the extent that Debtor's authorization given in Section 3 is
not sufficient, to file such financing statements with respect hereto, with or
without Debtor's signature, or a photocopy of this Agreement in substitution for
a financing statement, as Lender may deem appropriate and to execute in Debtor's
name such financing statements and amendments thereto and continuation
statements which may require Debtor's signature; and
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(c) to file any financing statement terminations or partial releases
that any third party has authorized Debtor to file; and
(d) upon an Event of Default and the expiration of any applicable cure
periods and subject to any prior notice required to be given by Lender, to
direct a change of address with the United States Post Office or otherwise
re-direct mail addressed to Borrower, including directing it to Lender.
Debtor hereby ratifies all that said attorneys shall lawfully do or cause to be
done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable. The powers conferred on Lender hereunder are
solely to protect its interests in the Collateral and shall not impose any duty
upon it to exercise any such powers. Lender shall be accountable only for the
amounts that it actually receives as a result of the exercise of such powers and
neither it nor any of its officers, directors, employees or agents shall be
responsible to Debtor for any act or failure to act, except for Lender's own
gross negligence, fraud or willful misconduct.
7. EVENTS OF DEFAULT; REMEDIES
7.1 Event of Default. The occurrence of any "Event of Default" under the
Loan Agreement shall constitute an "Event of Default" hereunder.
7.2 Remedies. Upon the occurrence of any Event of Default and at any time
while such Event of Default is continuing, Lender shall have the following
rights and remedies and may do one or more of the following:
(a) Declare all or any part of the Obligation to be immediately due
and payable, and the same, with all costs and charges, shall be collectible
thereupon by action at law.
(b) Without further notice or demand and without legal process, take
possession of the Collateral wherever found and, for this purpose, enter upon
any property occupied by or in the control of Debtor. Debtor, upon demand by
Lender, shall assemble the Collateral and deliver it to Lender or to a place
designated by Lender that is reasonably convenient to both parties.
(c) Operate the business of Debtor as a going concern, including,
without limitation, extending sales or services to new customers and advancing
funds for such operation. Lender shall not be liable for any depreciation, loss,
damage or injury to the Collateral or other property of Debtor as a result of
such action. Debtor hereby waives any claim of trespass or replevin arising as a
result of such action.
(d) Pursue any legal or equitable remedy available to collect the
Obligation, to enforce its title in and right to possession of the Collateral
and to enforce any and all other rights or remedies available to it.
(e) Upon obtaining possession of the Collateral or any part thereof,
after notice to Debtor as provided in Paragraph 7.4 herein, sell such Collateral
at public or private sale either with or without having such Collateral at the
place of sale. The proceeds of such sale, after deducting therefrom all expenses
of Lender in taking, storing, repairing and selling the Collateral (including
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reasonable attorneys' fees) shall be applied to the payment of the Obligation,
and any surplus thereafter remaining shall be paid to Debtor or any other person
that may be legally entitled thereto. In the event of a deficiency between such
net proceeds from the sale of the Collateral and the total amount of the
Obligation, Debtor, upon demand, shall promptly pay the amount of such
deficiency to Lender.
7.3 Right to Purchase. Lender, so far as may be lawful, may purchase all or
any part of the Collateral offered at any public or private sale made in the
enforcement of Lender's rights and remedies hereunder.
7.4 Sufficient Notice. Any demand or notice of sale, disposition or other
intended action hereunder or in connection herewith, whether required by the
Uniform Commercial Code or otherwise, shall be deemed to be commercially
reasonable and effective if such demand or notice is given to Debtor at least
five (5) business days prior to such sale, disposition or other intended action,
in the manner provided herein for the giving of notices.
7.5 Standards for Exercising Remedies. To the extent that applicable law
imposes duties on Lender to exercise remedies in a commercially reasonable
manner, Debtor acknowledges and agrees that it is not commercially unreasonable
for Lender (a) to fail to incur expenses reasonably deemed significant by Lender
to prepare Collateral for disposition or otherwise to complete raw material or
work in process into finished goods or other finished products for disposition,
(b) to fail to obtain third-party consents for access to Collateral to be
disposed of, or to obtain or, if not required by other law, to fail to obtain
governmental or third-party consents for the collection or disposition of
Collateral to be collected or disposed of, (c) to fail to exercise collection
remedies against account debtors or other persons obligated on Collateral or to
remove liens or encumbrances on or any adverse claims against Collateral, (d) to
exercise collection remedies against account debtors and other persons obligated
on Collateral directly or through the use of collection agencies and other
collection specialists, (e) to advertise dispositions of Collateral through
publications or media of general circulation, whether or not the Collateral is
of a specialized nature, (f) to contact other persons, whether or not in the
same business as Debtor, for expressions of interest in acquiring all or any
portion of the Collateral, (g) to hire one or more professional auctioneers to
assist in the disposition of Collateral, whether or not the collateral is of a
specialized nature, (h) to dispose of Collateral by utilizing Internet sites
that provide for the auction of assets of the types included in the Collateral
or that have the reasonable capability of doing so, or that match buyers and
sellers of assets, (i) to dispose of assets in wholesale rather than retail
markets, (j) to disclaim disposition warranties, (k) to purchase insurance or
credit enhancements to insure Lender against risks of loss, collection or
disposition of Collateral or to provide to Lender a guaranteed return from the
collection or disposition of Collateral, or (l) to the extent deemed appropriate
by Lender, to obtain the services of other brokers, investment bankers,
consultants and other professionals to assist Lender in the collection or
disposition of any of the Collateral. Debtor acknowledges that the purpose of
this section is to provide non-exhaustive indications of what actions or
omissions by Lender would not be commercially unreasonable in Lender's exercise
of remedies against the Collateral and that other actions or omissions by Lender
shall not be deemed commercially unreasonable solely on account of not being
indicated in this section. Without limitation upon the foregoing, nothing
contained in this section shall be construed to grant any rights to Debtor or to
impose any duties on Lender that would not have been granted or imposed by this
Agreement or by applicable law in the absence of this section.
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7.6 Costs and Expenses. Debtor shall pay all costs and expenses, including
without limitation costs of Uniform Commercial Code searches, court costs and
reasonable attorneys' fees, incurred by Lender in enforcing payment and
performance of the Obligation or in exercising the rights and remedies of Lender
hereunder. All such costs and expenses shall be secured by this Agreement and by
all deeds of trust and other lien and security documents securing the
Obligation. In the event of any court proceedings, court costs and attorneys'
fees shall be set by the court and not by jury and shall be included in any
judgment obtained by Lender.
7.7 Additional Remedies. In addition to any remedies provided herein for an
Event of Default, Lender shall have all the rights and remedies afforded a
Lender under the Uniform Commercial Code and all other legal and equitable
remedies allowed under the Loan Documents and applicable law. No failure on the
part of Lender to exercise any of its rights hereunder arising upon any Event of
Default shall be construed to prejudice its rights upon the occurrence of any
other or subsequent Event of Default. No delay on the part of Lender in
exercising any such rights shall be construed to preclude it from the exercise
thereof at any time while that Event of Default is continuing. Lender may
enforce any one or more rights or remedies hereunder successively or
concurrently. By accepting payment or performance of any of the Obligation after
its due date, Lender shall not thereby waive the agreement contained herein that
time is of the essence, nor shall Lender waive either its right to require
prompt payment or performance when due of the remainder of the Obligation or its
right to consider the failure to so pay or perform an Event of Default.
8. MISCELLANEOUS PROVISIONS
8.1 No Waiver. The acceptance of this Agreement by Lender shall not be
considered a waiver of or in any way to affect or impair any other security that
Lender may have, acquire simultaneously herewith, or hereafter acquire for the
payment or performance of the Obligation, nor shall the taking by Lender at any
time of any such additional security be construed as a waiver of or in any way
to affect or impair the Security Interest; Lender may resort, for the payment or
performance of the Obligation, to its several securities therefor in such order
and manner as it may determine.
8.2 Actions by Lender. Without notice or demand, without affecting the
obligations of Debtor hereunder or the personal liability of any person for
payment or performance of the Obligation, and without affecting the Security
Interest or the priority thereof, Lender, from time to time, may: (i) extend the
time for payment of all or any part of the Obligation, accept a renewal note
therefor, reduce the payments thereon, release any person liable for all or any
part thereof, or otherwise change the terms of all or any part of the
Obligation; (ii) take and hold other security for the payment or performance of
the Obligation and enforce, exchange, substitute, subordinate, waive or release
any such security; (iii) join in any extension or subordination agreement; or
(iv) release any part of the Collateral from the Security Interest.
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8.3 Waivers. Debtor waives and agrees not to assert: (i) any right to
require Lender to proceed against any guarantor, to proceed against or exhaust
any other security for the Obligation, to pursue any other remedy available to
Lender, or to pursue any remedy in any particular order or manner; (ii) the
benefits of any statute of limitations affecting the enforcement hereof; (iii)
the benefits of any legal or equitable doctrine or principle of marshalling;
(iv) demand, diligence, presentment for payment, protest and demand, and notice
of extension, dishonor, protest, demand and nonpayment, relating to the
Obligation; and (v) any benefit of, and any right to participate in, any other
security now or hereafter held by Lender.
8.4 Governing Law. The terms herein shall have the meanings in and be
construed under the Uniform Commercial Code. This Agreement shall be governed by
and construed according to the laws of the State of Arizona. Each provision of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be void
or invalid, the same shall not affect the remainder hereof which shall be
effective as though the void or invalid provision had not been contained herein.
8.5 Modifications. No modification, rescission, waiver, release or
amendment of any provision of this Agreement shall be made except by a written
agreement executed by Debtor and a duly authorized officer of Lender.
8.6 Continuing Agreement. This is a continuing Agreement that shall remain
in full force and effect until actual receipt by Lender of written notice of its
revocation as to future transactions and shall remain in full force and effect
thereafter until all of the Obligation incurred before the receipt of such
notice, and all of the Obligation incurred thereafter under commitments extended
by Lender before the receipt of such notice, shall have been paid and performed
in full.
8.7 No Effect on Obligation. No setoff or claim that Debtor now has or may
in the future have against Lender shall relieve Debtor from paying or performing
the Obligation.
8.8 Time of Essence, etc. Time is of the essence hereof. If more than one
Debtor is named herein, the word "Debtor" shall mean all and any one or more of
them, severally and collectively. All liability hereunder shall be joint and
several. This Agreement shall be binding upon, and shall inure to the benefit
of, the parties hereto and their heirs, personal representatives, successors and
assigns. The term "Lender" shall include not only the original Lender hereunder
but also any future owner and holder, including pledgees, of note or notes
evidencing the Obligation. The provisions hereof shall apply to the parties
according to the context thereof and without regard to the number or gender of
words or expressions used.
8.9 Notices. All notices required or permitted to be given hereunder shall
be in writing and may be given in person or by United States mail, by commercial
delivery service or by electronic transmission with verified receipt. Any notice
directed to a party to this Agreement shall become effective upon the earliest
of the following: (i) actual receipt by that party; (ii) delivery to the
designated address of that party, addressed to that party; or (iii) if given by
certified or registered United States mail, twenty-four (24) hours after deposit
with the United States Postal Service, postage prepaid, addressed to that party
at its designated address. The designated address of a party shall be the
address of that party shown at the beginning of this Agreement or such other
address as that party, from time to time, may specify by notice to the other
parties.
-10-
8.10 Counterparts. This Agreement may be executed in any number of
counterparts and each counterpart executed by any of the undersigned, together
with all other counterparts so executed, shall constitute a single instrument
and agreement of the undersigned.
DATED as of December 16, 2004.
XXXXXXXX AEROSPACE TECHNOLOGIES,
INC., a Delaware corporation
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
-11-
EXHIBIT A
Description of Collateral
All personal property of Debtor including, without limitation, the following:
(a) All accounts, instruments, documents, chattel paper (whether electronic
or tangible), deposit accounts, letter-of-credit rights (whether or not the
letter of credit is evidenced by a writing), commercial tort claims, supporting
obligations, other contract rights and rights to the payment of money, and
general intangibles, including, without limitation, all accounts receivable,
notes, drafts, lease agreements and security agreements, and all goods, if any,
represented thereby (whether now existing or hereafter acquired or created from
time to time) and all payment intangibles;
(b) All inventory now owned or hereafter acquired, wherever located,
including all goods held for sale or lease in Debtor's business, as now or
hereafter conducted, or furnished or to be furnished under contracts of service,
and all raw materials, work in process, finished goods, and materials to be used
or consumed in Debtor's business (whether or not the inventory is represented by
warehouse receipts or bills of lading or has been or may be placed in transit or
delivered to a public warehouse);
(c) All equipment now owned or hereafter acquired, including all furniture,
fixtures, furnishings, vehicles (whether titled or non-titled), machinery,
materials and supplies, wherever located, including but not limited to such
items described on the collateral schedule (if any) attached hereto, together
with all parts, accessories, attachments, additions thereto or replacements
therefor;
(d) All investment property, including certificated securities,
uncertificated securities, securities accounts, securities entitlements,
commodity accounts and commodity contracts, and including but not limited to
those items described on the collateral schedule (if any) attached hereto,
together with all dividends, distributions and payments with respect thereto,
all other rights and interests arising therefrom, and all substitutions and
replacements therefor;
(e) all patents, patent applications, trademarks, trademark applications,
trade names, copyrights, copyright applications, software, engineering drawings,
service marks, customer lists, and goodwill;
(f) all licenses, permits, agreements of any kind or nature pursuant to
which Debtor possesses, uses or has authority to possess or use property
(tangible or intangible) of others or others possess, use or have authority to
possess or use property (tangible or intangible) of Debtor;
(g) All property of Debtor that is now or may hereafter be in the
possession or control of Lender in any capacity, including without limitation
all monies owed or that become owed by Lender to Debtor;
Exhibit "A"
Page 1
(h) All policies or certificates of insurance covering any of the property
described herein, and all awards, loss payments, proceeds and premium refunds
that may become payable with respect to such policies;
(i) All books, records, correspondence, files, electronic and other media,
all records, data and information stored thereon, and all computer software,
databases and other information systems used to create, maintain, process and
utilize such records, data and information;
together with all products and proceeds of any of the foregoing property. All
property described above is hereinafter called the "Collateral."
Exhibit "A"
Page 2
