Exhibit 4
AMENDED AND RESTATED
GENERAL SECURITY AGREEMENT
BETWEEN
XXXXXX CORPORATION
AND
TELTRONICS, INC.
ORIGINALLY DATED AS OF JUNE 30, 2000
AMENDED AND RESTATED AS OF MARCH 27, 2002
TABLE OF CONTENTS
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Page
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Article I Definitions....................................................................................1
1.1 Definitions.....................................................................................1
1.2 Applicability of UCC Definitions................................................................7
ARTICLE II SECURITY INTERESTS............................................................................7
2.1 Grant of Security Interest......................................................................7
2.2 Perfection of Security Interests................................................................8
2.3 Closing Report..................................................................................9
2.4 Additional Security............................................................................10
2.5 Power of Attorney..............................................................................10
ARTICLE III GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS...........................................11
3.1 Inspection; No Liens...........................................................................11
3.2 Financing Statements...........................................................................11
3.3 Chief Executive Office State; Records..........................................................11
3.4 Location of Inventory and Equipment............................................................12
3.5 Recourse.......................................................................................12
3.6 Trade Names; Change of Name....................................................................12
3.7 Payment and Performance........................................................................12
3.8 Possession; Sale and Exchange..................................................................12
3.9 Preservation of Collateral, Defend Collateral..................................................13
3.10 Organization...................................................................................13
3.11 Non-Contravention..............................................................................13
3.12 Security Agreement Binding.....................................................................14
3.13 No Default of Debtor...........................................................................14
3.14 No Litigation; No Default......................................................................14
3.15 Information Schedule...........................................................................14
ARTICLE IV SPECIAL PROVISION CONCERNING ACCOUNTS; CONTRACT RIGHTS.......................................14
4.1 Maintenance of Records.........................................................................14
4.2 Direction to Account Debtors; Contracting Parties, etc.........................................15
4.3 Debtor Remains Liable..........................................................................15
ARTICLE V PROVISIONS CONCERNING ALL COLLATERAL..........................................................15
5.1 Protection of Secured Party's Rights...........................................................15
5.2 Financing Statements...........................................................................15
5.3 Secured Party May Perform......................................................................16
(i)
ARTICLE VI EVENTS OF DEFAULT; REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT..............................16
6.1 Events of Default and Remedies; Obtaining the Collateral Upon Default..........................16
6.2 Remedies; Disposition of the Collateral........................................................18
6.3 Waiver of Claims...............................................................................18
6.4 Application of Proceeds........................................................................19
6.5 Collateral Account.............................................................................20
6.6 Remedies Cumulative, etc.......................................................................20
6.7 No Effect on Liability of Debtor...............................................................21
6.8 No Marshaling..................................................................................21
ARTICLE VII INDEMNITY...................................................................................21
7.1 Indemnity......................................................................................21
7.2 Indemnity Obligations Secured by Collateral; Survival..........................................22
ARTICLE VIII MISCELLANEOUS..............................................................................22
8.1 Notices........................................................................................22
8.2 Waiver; Amendment..............................................................................23
8.3 Obligations Absolute...........................................................................23
8.4 Successors and Assigns.........................................................................23
8.5 Construction; Pronouns.........................................................................23
8.6 Severability...................................................................................23
8.7 Further Assurances.............................................................................24
8.8 Debtor's Duties................................................................................24
8.9 Governing Law..................................................................................24
8.10 Submission to Jurisdiction; Waiver of Jury Trial...............................................24
8.11 Counterparts...................................................................................24
EXHIBITS
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A - INFORMATION SCHEDULE
B - SCHEDULE OF COLLATERAL STATE(S)
SCHEDULES
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A - PERMITTED LIENS
(ii)
AMENDED AND RESTATED GENERAL SECURITY AGREEMENT
THIS AMENDED AND RESTATED GENERAL SECURITY AGREEMENT, dated as of March
27, 2002 (as modified, supplemented, restated or amended from time to time, this
"SECURITY AGREEMENT"), is made by and between TELTRONICS, INC., a Delaware
corporation, (the "DEBTOR") and XXXXXX CORPORATION, a Delaware corporation (the
"SECURED PARTY").
W I T N E S S E T H:
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WHEREAS, the Debtor executed and delivered to the Secured Party that
certain Security Agreement dated June 30, 2000 (the "ORIGINAL SECURITY
Agreement"), securing amounts due under a secured promissory note originally
issued in the principal amount of $6,884,355.29, which note was amended and
restated as of October 4, 2000, pursuant to the Amended and Restated Secured
Promissory Note (the "EXISTING PROMISSORY NOTE") pursuant to which an additional
$212,267.62 of accrued and unpaid interest was added to the unpaid principal,
resulting in a note in the principal amount of $7,096,622.91; and
WHEREAS, simultaneously herewith the Debtor has executed and delivered
to the Secured Party that certain Amended, Restated and Consolidated Secured
Promissory Note dated of even date herewith in the original principal amount of
9,196,801.23, which amends and restates the Existing Promissory Note and adds
and consolidates additional amounts owing to the Secured Party by the Debtor (as
amended, restated and consolidated as of March 27, 2002) (the "NOTE"); and
WHEREAS, the Secured Party and the Debtor have agreed upon the Debtor's
provision of collateral as security for the obligations of the Debtor under the
Note, and to amend and restate the Original Security Agreement in its entirety
to read as herein set forth.
NOW, THEREFORE, to induce the Secured Party to accept the Note from
Debtor and in consideration of the benefits accruing to the Debtor, and for good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Debtor hereby makes the following representations and
warranties to the Secured Party and hereby covenants and agrees with the Secured
Party as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. For purposes of this Security Agreement, the following
terms shall have the following meanings. Such definitions shall be equally
applicable to the singular and plural forms of the terms defined.
"ACCESSION" shall have the meaning provided in Section 679.1021(1)(a)
of the UCC.
"ADDITIONAL INVENTORY NOTE" shall mean the promissory note between
Teltronics, Inc. (as "Maker") and Xxxxxx Corporation (as "Payee) dated as of
March 27, 2002 in the principal amount of $94,185.90.
"ACCOUNTS" shall have the meaning provided in Section 679.1021(1)(b) of
the UCC, now owned or hereafter acquired by the Debtor and shall include in any
event (without limitation) (i) all credit or charge card receivables and (ii)
all payment obligations, whether or not earned by performance, arising out of
the sale, lease, license, assignment or disposition of Goods or other property,
the provision of services not evidenced by any Instrument, a policy of insurance
issued or to be issued, or a secondary obligation incurred or to be incurred.
"APPLICABLE LAW" shall mean any statute, law, regulation, ordinance,
rule, judgment, order, decree, permit, approval, confession, grant, franchise,
license, agreement, directive, guideline, policy, requirement or other
governmental restriction or any similar form of decision of, or determination
by, or any interpretation or administration of any of the foregoing by any
nation or government, any state or other political subdivision thereof and any
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, whether now or hereafter in effect
with respect to the Debtor or any property of the Debtor.
"ASSET SALE AGREEMENT" shall mean that certain Asset Sale Agreement by
and among Xxxxxx Corporation (as "Seller" therein) and the Debtor (as "Buyer"
therein) dated as of June 30, 2000, as amended.
"BANKRUPTCY CODE" shall mean Title 11 of the United States Code, as
amended from time to time.
"CAPITAL LEASES" shall mean all obligations of the Debtor under any
lease of property, the obligations of which are required to by capitalized on a
balance sheet of the lessee in accordance with generally accepted accounting
principles.
"CHATTEL PAPER" shall have the meaning provided in Section
679.1021(1)(k) of the UCC, now owned or hereafter acquired by the Debtor, and
shall include in any event (without limitation) (i) all writings evidencing both
a monetary obligation and a security interest in or a lease of specific Goods,
including any Instruments evidencing such obligations, and (ii) all Electronic
Chattel Paper.
"CHIEF EXECUTIVE OFFICE STATE" shall mean the place from which the
Debtor manages the main part of its business operations or other affairs.
"CLOSING" shall mean the execution and consummation of the transactions
contemplated by this Security Agreement.
"COLLATERAL" shall have the meaning provided in Section 2.1(b) hereof.
"COLLATERAL STATE" shall mean the states identified in EXHIBIT B as
locations of all Collateral consisting of Goods.
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"COMMERCIAL CLAIMS" shall mean the commercial or business claims,
including, but not limited to, "Commercial Tort Claims" (as defined in Section
679.1021(1)(m) of the UCC) of the Debtor described on the Information Schedule,
and to the fullest extent permitted by Applicable Law any other claims, causes
of action, judgments and awards relating to the Debtor's business whether now
existing or hereafter arising.
"CONTRACT RIGHT" shall mean each right, not evidenced by any Instrument
or Chattel Paper, of the Debtor (including without limitation all rights to
payments and indemnities) under each Contract, both now owned or hereafter
acquired, together with all cash and non-cash Proceeds and products thereof.
"CONTRACTS" shall mean all contracts between the Debtor and one or more
additional parties, both now owned or hereafter acquired.
"CONTROL AGREEMENT" shall mean an agreement among the Secured Party and
others that satisfies the requirements of Sections 679.1041 through 679.1071 of
the UCC so that the Secured Party has control of Collateral consisting of
Deposit Accounts, Electronic Chattel Paper, Investment Property or Letter of
Credit Rights.
"DEBTOR" shall have the meaning provided in the Preamble to this
Security Agreement.
"DEBTOR STATE" shall mean the state identified in EXHIBIT A as the
state of incorporation of the Debtor.
"DEPOSIT ACCOUNT" shall mean, in each case now existing and hereafter
arising, each demand, time, savings, passbook, or similar account of the Debtor
maintained with a bank, and shall include in any event (without limitation) the
accounts described in the Information Schedule, all deposit accounts of the
Debtor with the Bank. The term "Deposit Account" shall not, for the purposes of
this definition, include Investment Property or Accounts evidenced by an
Instrument.
"DOCUMENT" shall have the meaning provided in Section 679.1021(1)(dd)
of the UCC, now owned or hereafter acquired.
"ELECTRONIC CHATTEL PAPER" shall have the meaning provided in Section
679.1021(1)(ee) of the UCC, now owned or hereafter acquired.
"EQUIPMENT" shall have the meaning provided in Section 679.1021(1)(gg)
of the UCC, now owned or hereafter acquired, and shall include in any event
(without limitation) all Goods now or hereafter owned by the Debtor whether now
or hereafter deemed to constitute Fixtures.
"EVENT OF DEFAULT" shall mean any event of default under, and as
defined in, Section 6.1 hereof.
"FINANCING STATEMENT" shall have the meaning provided in Section
679.1021(1)(mm) of the UCC as in effect on the date hereof.
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"FIXTURE FILING" shall have the meaning provided in Section
679.1021(1)(nn) of the UCC.
"FIXTURES" shall have the meaning provided in Section 679.1021(1)(oo)
of the UCC, now owned or hereafter acquired.
"GENERAL INTANGIBLES" shall have the meaning provided in Section
679.1021(1)(pp) of the UCC, now owned or hereafter acquired, and in any event
shall include (without limitation) choses in action, Payment Intangibles,
Software, all domain names, patents, patent applications, Xxxxx, Xxxx
applications, and copyrights registration and applications (including, without
limitation, those Marks, domain names, patents and copyrights identified on the
Information Schedule), and the goodwill of the Debtor's business symbolized
thereby, and all customer lists, goodwill and engineering drawings and all
licenses, permits, agreements of any kind or nature pursuant to which the Debtor
possesses, uses or has authority to possess or use property (whether tangible or
intangible) of others or others possess, use or have authority to possess or use
property (whether tangible or intangible) of the Debtor. The term "General
Intangibles" shall not, for purposes of this definition, include Goods,
Accounts, Commercial Claims, Deposit Accounts, Investment Property,
Letter-of-Credit Rights, Chattel Paper, Contract Rights, Documents, Instruments
and immediately-available cash.
"GOODS" shall have the meaning provided in Section 679.1021(1)(rr) of
the UCC, now owned or hereafter acquired.
"HEALTH-CARE-INSURANCE RECEIVABLES" shall mean an interest in or claims
under a policy of insurance which is a right of payment of a monetary obligation
for health-care goods or services provided or to be provided.
"INDEMNITEE" shall mean the Secured Party and its successors, assigns,
employees, agents, servants, outside attorneys and paralegals, expert witnesses,
consultants, accountants, and other professionals.
"INFORMATION SCHEDULE" shall mean the schedule of information attached
as EXHIBIT A to this Security Agreement disclosing information about the Debtor,
the Debtor's business and the Collateral.
"INSTRUMENT" shall have the meaning provided in Section 679.1021(1)(uu)
of the UCC, now owned or hereafter acquired, and shall include in any event
(without limitation), negotiable instruments, certificated securities, and each
writing evidencing a right to the payment of money.
"INVENTORY" shall have the meaning provided in Section 679.1021(1)(vv)
of the UCC, now owned or hereafter acquired.
"INVESTMENT PROPERTY" shall have the meaning provided in Section
679.1021(1)(ww) of the UCC, now owned or hereafter acquired.
"LETTER-OF-CREDIT RIGHT" shall have the meaning provided in Section
679.1021(1)(yy) of the UCC, now owned or hereafter acquired.
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"LIENS" shall mean any security interest, mortgage, pledge, lien,
claim, charge, encumbrance, title retention agreement, lessor's interest in a
financing lease or analogous instrument, in, of, or on the Debtor's property.
"LIFE INSURANCE POLICIES" shall mean all policies of life insurance
kept on key members or employees of Debtor, now existing or hereafter acquired,
including (without limitation) those disclosed on the Information Schedule.
"LOAN AGREEMENT" shall mean that certain Loan Agreement by and among
Xxxxxx Corporation (therein "Xxxxxx") and Debtor (therein "Borrower") dated as
of March 27, 2002.
"MARKS" shall mean any trademarks and service marks now held or
hereafter acquired by the Debtor whether registered or not, including (without
limitation) all applications for the same and all trade dress, logos or designs.
"NOTE" shall have the meaning provided in the second WHEREAS clause of
this Security Agreement.
"OBLIGATIONS" shall mean:
(a) the full and prompt payment when due of amounts, and the
payment or performance of all other obligations of the Debtor, under the Note,
the Loan Agreement, the Additional Inventory Note and this Security Agreement
(whether by demand, upon acceleration or otherwise);
(b) any and all present and future loans, advances,
indebtedness, liabilities and obligations of any kind owing to the Secured Party
by the Debtor, however evidenced, whether as principal, guarantor or otherwise,
whether arising under the Note, the Loan Agreement this Security Agreement, the
Additional Inventory Note or otherwise;
(c) any and all sums advanced or spent by the Secured Party in
order to maintain or preserve the Collateral or maintain or preserve its
security interest in the Collateral, including without limitation all
expenditures made for the perfection or prioritization of the Secured Party's
rights in the Collateral and any other expenditures that the Secured Party may
make under the provisions of this Security Agreement or for the benefit of the
Debtor;
(d) all amounts owed under any modifications, renewals, or
extensions of any of the foregoing obligations;
(e) in the event of any proceeding for the collection or
enforcement of any indebtedness, obligations, or liabilities of the Debtor or
the Debtor referred to in clauses (a), (b), (c) and (d), the reasonable expenses
of re-taking, holding, preparing for sale or lease, selling or otherwise
disposing or realizing on the Collateral, or of any exercise by the Secured
Party of its rights hereunder, together with reasonable attorneys' fees and
court costs and all amounts paid by any Indemnitee which has the right to
reimbursement under Article VII of this Security Agreement; and
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(f) any of the foregoing that arises after the filing of a
petition by or against the Debtor or the Debtor under the Bankruptcy Code , even
if the obligations do not accrue because of the automatic stay under Section 362
of the Bankruptcy Code or otherwise.
"PAYMENT INTANGIBLE" shall have the meaning provided in Section
679.1021(1)(hhh) of the UCC, now owned or hereafter acquired, and in any event
shall include (without limitation) payment rights that arise out of agreements
for borrowed money that do not constitute Instruments.
"PERMITTED LIENS" shall mean (i) Liens granted to the Secured Party,
(ii) purchase money Liens on newly acquired assets, which Liens shall extend
solely to the assets so acquired, (iii) Liens expressly junior and subordinate
in right to those created under this Agreement, (iv) Liens extending to assets
which are leased pursuant to Capital Leases, which assets have not been owned by
Secured Party prior to the entering into of such Capital Leases and which Lien
extends solely to the assets so leased; and (v) liens in existence on the date
hereof and listed on SCHEDULE A hereto, including any refinancing of any
existing Permitted Lien held by CIT Group/Credit Finance, Inc. "CIT") or Finova
Mezzanine Capital, Inc. ("FINOVA") so long as the total indebtedness of the
Debtor does not exceed $5,500,000 with respect to CIT or $1,000,000 with respect
to Finova (except in the case of Collateral which represent assets acquired
under the Asset Sale Agreement which shall be senior in all respects to any
previously filed Liens).
"PERSON" shall mean any individual, partnership, corporation,
association, trust, limited liability company, or other legal entity, whether
foreign or domestic, and his, her, or its heirs, executors, administrators,
legal representative, successors, and assigns where the context requires.
"PROCEEDS" shall have the meaning provided in Section 679.1021(1)(lll)
of the UCC, except that it shall also include the entire amount of whatever is
received in respect of:
(a) claims arising out of the loss, nonconformity, or
interference with the use of, defects, or infringement of rights in, or damage
to, the Collateral;
(b) any insurance payable by reason of the loss or
nonconformity of, defects or infringement of rights in, or damage to, the
Collateral; and
(c) any and all payments (in any form whatsoever) made or due
and payable to the Debtor from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral by any nation or government, any state or other political subdivision
thereof and any entity exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to government (or any entity acting
under color of authority with respect thereto).
"REGISTERED COLLATERAL" shall mean vehicles, trucks, mobile homes,
manufactured homes, vessels, boats, aircraft, railroad rolling stock, patent
applications, patents, mask works, copyright applications, copyrights, Marks,
uncertificated securities, government contract rights, and state and federal
licenses and permits.
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"SECURED PARTY" shall have the meaning provided in the Preamble to this
Security Agreement.
"SECURITY AGREEMENT" shall mean this Amended and Restated General
Security Agreement made between the Debtor and the Secured Party, as amended,
modified or supplemented from time to time.
"SOFTWARE" shall have the meaning provided in Section 679.1021(1)(vvv)
of the UCC, now or hereafter acquired.
"SOS REPORT" shall have the meaning provided in Section 2.3.
"SUPPORTING OBLIGATION" shall mean any present or future right,
obligation, security, surety, guaranty, security interest, indemnity, deposit,
collateral or other recourse rights the Debtor may have in respect to any
obligation owed to the Debtor, including (without limitation) those that support
payment or performance of any Account, Chattel Paper, Document, General
Intangible, Instrument or Investment Property of the Debtor.
"UCC" shall mean the Uniform Commercial Code, as amended from time to
time and construed under the laws of the State of Florida; PROVIDED, that if by
reason of mandatory provisions of law, the perfection or the effect of
perfection or non-perfection of the security interests granted pursuant to
Article II hereof (as well as all other security interests created or assigned
as additional security for the Obligations pursuant to the provisions of this
Security Agreement) in any Collateral is governed by the Uniform Commercial Code
as in effect in a jurisdiction other than the State of Florida, "UCC" shall mean
the Uniform Commercial Code as in effect in such jurisdiction for purposes of
the provisions hereof relating to such perfection or effect of perfection or
non-perfection.
1.2 APPLICABILITY OF UCC DEFINITIONS. Any term used in the UCC and
not defined in this Security Agreement has the meaning given to such term in the
UCC.
ARTICLE II
SECURITY INTERESTS
2.1 GRANT OF SECURITY INTEREST
(a) In order to secure the Note in accordance with the
terms thereof, and to secure the prompt and complete payment and performance
when due (whether by acceleration, on demand or otherwise) of all of the
Obligations, the Debtor does hereby grant, pledge, hypothecate, assign and
transfer unto the Secured Party a continuing security interest in and a right of
setoff against, all of the rights, title and interests of the Debtor in, to and
under all personal property of the Debtor including but not limited to all of
the following, whether now owned by the Debtor or hereafter from time to time
acquired and whether now existing or hereafter coming into existence, and
wherever located:
(i) Accounts, including (without limitation)
Health-Care-Insurance Receivables;
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(ii) Chattel Paper;
(iii) Commercial Claims
(iv) Contract Rights;
(v) Deposit Accounts;
(vi) Documents;
(vii) Equipment;
(viii) Fixtures;
(ix) General Intangibles, including (without
limitation) Payment Intangibles;
(x) Goods, including (without limitation) Goods
created by Accession;
(xi) Instruments, including (without limitation)
promissory notes;
(xii) Inventory;
(xiii) Investment Property;
(xiv) Letter-of-Credit Rights;
(xv) Life Insurance Policies;
(xvi) Marks;
(xvii) Proceeds;
(xviii) Software;
(xix) Supporting Obligations; and
(xx) To the extent not listed above as original
collateral, cash and non-cash Proceeds and
products of the foregoing.
(b) All of the assets, rights and interests in and to
property described in Section 2.1(a) and all other assets, rights and interests
in and to property, whether now or hereafter acquired, and wherever located,
which shall from time to time secure the Obligations, whether pursuant to this
Security Agreement or otherwise, are hereafter collectively referred to as the
"COLLATERAL". The security interest granted hereunder in the portion of
Collateral which represents assets acquired from Xxxxxx Corporation pursuant to
the Asset Sale Agreement and Proceeds thereon shall be a first priority purchase
money security interest to secure the principal amount of $7,096,622.91 and the
Additional Inventory Note amount of $94,185.90 plus interest on such amounts.
The security interest granted in the other assets of the Debtor shall have the
priority established by filing of financing statement and shall as a result be
subordinate to any security interests granted to the senior lenders of the
Debtor (including CIT and Finova) as of June 30, 2000.
(c) The security interest of the Secured Party under this
Security Agreement extends to all Collateral of the kind which is the subject of
this Security Agreement which the grantor may acquire at any time during the
continuation of this Security Agreement.
2.2 PERFECTION OF SECURITY INTERESTS.
(a) The Secured Party may file Financing Statements and
all amendments thereto describing the Collateral as all assets or personal
property of the Debtor, or any or all of the Collateral by any description that
the Secured Party deems appropriate in any jurisdiction or office that the
Secured Party deems appropriate to perfect its security interests in the
Collateral.
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(b) The Debtor shall have possession of the Collateral
(including without limitation Investment Property, Instruments and any and all
documentation evidencing the sale of promissory notes or similar Instruments),
except where expressly otherwise provided in this Security Agreement or where
the Secured Party chooses to perfect its security interest by possession in
addition to the filing of a Financing Statement. If Collateral is in the
possession of a third party or bailee , the Debtor will join the Secured Party
in notifying such third party or bailee of the Secured Party's security interest
and obtaining a signed acknowledgement from such third party or bailee that it
is holding such Collateral for the benefit of the Secured Party.
(c) The Debtor will, on the written request of the
Secured Party, obtain agreements (including, without limitation, Control
Agreements) acceptable to the Secured Party, vesting in the Secured Party
control and the right to direct the disposition of all Collateral consisting of:
i. Investment Property;
ii. Deposit Accounts;
iii. Letter-of-Credit Rights; and
iv. Electronic Chattel Paper.
Upon request of the Secured Party, the Debtor shall cause its Deposit Accounts
or Investment Property to be transferred into the name of or maintained with the
Secured Party or otherwise covered by a blocked account or Control Agreement in
form and substance acceptable to the Secured Party.
(d) The Debtor will, on the written request of the
Secured Party, xxxx the originals of all Chattel Paper upon receipt with a
legend prescribed by the Secured Party denoting the Secured Party's security
interest in such Chattel Paper.
(e) Upon request of the Secured Party, the Debtor shall
take all actions and execute and deliver, and cause to be executed and
delivered, all documents, instruments, registrations, assignments and Control
Agreements that Secured Party may request to perfect or further perfect its
security interest in any Instruments, Chattel Paper, Investment Property,
Documents, Letter-of-Credit Rights, Registered Collateral, Deposit Accounts or
Life Insurance Policies. The Debtor shall notify the Secured Party upon request
and not less than monthly of the Debtor's receipt, acquisition or establishment
of any new Instruments, Chattel Paper, Investment Property, Documents,
Letter-of-Credit Rights, Registered Collateral, Deposit Accounts or Life
Insurance Policies. Upon request of the Secured Party, the Debtor shall take all
actions and execute and deliver, and cause to be executed and delivered, all
documents, instruments, registrations, assignments and Control Agreements that
the Secured Party may request to perfect its security interest in any such
Collateral.
2.3 CLOSING REPORT. Prior to the Closing, the Secured Party shall
eceive an official report from the Secretary of State of each Collateral State,
Chief Executive Office State and the Debtor State (the "SOS Reports") indicating
that the Secured Party's security interest in the Collateral is prior to all
other security interests or other interests reflected in such report with the
exception of the Permitted Liens. Each such SOS Report shall be obtained at the
cost and
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expense of Debtor, and in the event the Secured Party obtains any such report,
the Debtor shall reimburse the Secured Party on demand for the cost and expense
thereof.
2.4 ADDITIONAL SECURITY. The Debtor agrees that at the written
request of the Secured Party it will execute and deliver to Secured Party
instruments sufficient to grant the Secured Party a security interest in the
patents, trademarks, copyrights, and other intellectual property rights of the
Debtor. Such instrument and agreement shall be in recordable form and shall be
reasonably satisfactory to the Secured Party. The Debtor agrees to record such
instruments in the Patent and Trademark Office within five (5) days of a request
by the Secured Party. Debtor acknowledges that a default of its obligations
under this Section shall be a material breach entitling Secured Party to
accelerate the maturity of the Note.
2.5 POWER OF ATTORNEY. The Debtor hereby constitutes and appoints
the Secured Party its true and lawful attorney-in-fact, without requiring
Secured Party to act as such, irrevocably, with full power after the occurrence
of and during the continuance of an Event of Default (in the name of the Debtor
or otherwise) to accomplish the purposes of this Security Agreement including,
without limitation:
(a) To act, require, demand, xxx for, compound, collect,
receive and give acquittance for any and all monies and claims due (whether from
an account debtor, an obligor or any other Person) or to become due to the
Debtor or arising out of the Collateral;
(b) To receive, take, endorse, assign and deliver any and
all checks, notes, orders, drafts and other negotiable and non-negotiable
instruments taken or received by the Secured Party in connection therewith and
the Debtor hereby waives notice of presentment, protest and non-payment of any
instrument so endorsed or assigned;
(c) To settle, compromise, compound, prosecute or defend
any action or proceeding with respect thereto;
(d) To sell, transfer, assign or otherwise deal in or
with the Collateral or the proceeds or avails thereof, as fully and effectually
as if the Secured Party were the absolute owner thereof;
(e) To make any reasonable allowances and other
reasonable adjustments with reference thereto;
(f) To file Financing Statements or, to the extent
required under Applicable Law, to sign the Debtor's name on any documents,
invoices relating to any Collateral, schedules of assignments of Collateral,
notices of assignment and other public records;
(g) To notify the post office authorities to change the
address for delivery of the Debtor's mail relating to the Collateral to an
address designated by the Secured Party;
(h) To receive, open and dispose of all mail relating to
the Collateral addressed to Debtor;
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(i) To pay or discharge taxes, liens, security interests
or other Liens levied or placed on or threatened against the Collateral; and
(j) To direct any party liable for any payment under any
Collateral to make payment of any and all monies due and to become due
thereunder directly to the Secured Party and to receive payment of and receipt
for any and all money, claims and other amounts due and to become due at any
time in respect of or arising out of any Collateral.
The Debtor hereby ratifies and approves all acts of the
attorney-in-fact appointed hereunder, who will not be liable for any acts of
commission or omission nor for any error of judgment or mistake of fact or law,
unless done maliciously or with willful misconduct. This power, being coupled
with an interest, is irrevocable so long as this Security Agreement remains in
effect.
ARTICLE III
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
The Debtor represents, warrants and covenants, which representations,
warranties and covenants shall survive execution and delivery of this Security
Agreement, as follows:
3.1 INSPECTION; NO LIENS. The Secured Party may inspect any
Collateral at any time upon reasonable notice. The Debtor has rights in or the
power to transfer the Collateral and the Debtor has title to the Collateral.
Such title is, and as to Collateral acquired by the Debtor from time to time
after the date hereof, such title will be, free from any Liens or other right,
title or interest of any Person (other than Permitted Liens and Liens created
hereby) and the Debtor shall defend its Collateral against all claims and
demands of all Persons at any time claiming the same or any interest therein
adverse to the Secured Party. The Debtor shall advise the Secured Party
promptly, in reasonable detail, of (i) any Lien on, or asserted against, any of
the Collateral; and (ii) the occurrence of any other event which would have a
materially adverse impact on the liens and security interests created hereunder.
3.2 FINANCING STATEMENTS. Upon the filing of such Financing
Statements as may be proper, this Security Agreement creates a valid and
perfected security interest on the Collateral securing the payment of the
Obligations, and all other filings and other actions necessary or desirable to
perfect and protect such security interest have been duly taken pursuant to
Article V hereof. So long as any of the Obligations remain unpaid, the Debtor
will not authorize the filing in any public office any other financing statement
(or similar statement or instrument of registration under the law of any
jurisdiction) or statements relating to the Collateral, except Financing
Statements filed or to be filed in respect of and covering the security
interests granted hereby by the Debtor or in connection with Permitted Liens.
3.3 CHIEF EXECUTIVE OFFICE STATE; RECORDS. The chief executive
office of the Debtor is located at 0000 Xxxxxxxxx Xxxxxxxxxx Xxx, Xxxxxxxx,
Xxxxxxx 00000, which is located in the Chief Executive Office State. Documents
evidencing all Accounts and Contract Rights of the Debtor and the books of
account and records of the Debtor relating thereto are, and will continue to be,
kept at the chief executive office or at such new locations as the Debtor may
establish in accordance with the next sentence. The Debtor shall not establish a
new location for its chief
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executive office until (i) it shall have given to the Secured Party not less
than 30 days' prior written notice of its intention so to do, clearly describing
such new location and providing such other information in connection therewith
as the Secured Party may reasonably request, (ii) with respect to such new
location, it shall have taken all action, reasonably satisfactory to the Secured
Party, to maintain the security interest of the Secured Party in the Collateral
intended to be granted hereby at all times fully perfected and in full force and
effect, and (iii) the location of such new chief executive office shall be the
Chief Executive Office State.
3.4 LOCATION OF INVENTORY AND EQUIPMENT. All Inventory and
Equipment held on the date hereof by the Debtor is located in the Collateral
States on premises owned or leased by Debtor or the location of the Secured
Party. The Debtor agrees that all Inventory and Equipment now held or
subsequently acquired by it shall be kept at such location under the name of the
Debtor, or such new location as the Debtor may establish in accordance with the
next sentence. The Debtor may establish a new location for Inventory and
Equipment only if (i) it shall have given to the Secured Party not less than 30
days' prior written notice of its intention so to do, clearly describing such
new location and providing such other information in connection therewith as the
Secured Party may reasonably request, (ii) with respect to such new location, it
shall have taken all action reasonably satisfactory to the Secured Party to
maintain the security interest of the Secured Party in the Collateral intended
to be granted hereby at all times fully perfected and in full force and effect,
and (iii) the location of such Inventory and Equipment shall be a Collateral
State.
3.5 RECOURSE. This Security Agreement is made with full recourse
to the Debtor and pursuant to and upon all the warranties, representations,
covenants, and agreements on the part of the Debtor contained herein, or in any
of the Obligations.
3.6 TRADE NAMES; CHANGE OF NAME. The exact legal name of the
Debtor is as set forth in the Preamble of this Security Agreement. The Debtor
shall not change its legal name or assume or operate in any jurisdiction under
any trade, fictitious or other name except new names established in accordance
with the following sentence. The Debtor shall not assume or operate in any
jurisdiction under any new trade, fictitious or other name until (i) it shall
have given to the Secured Party not less than 30 days' prior written notice of
its intention so to do, clearly describing such new name and the jurisdictions
in which such new name shall be used and providing such other information in
connection therewith as the Secured Party may reasonably request, (ii) with
respect to such new name, it shall have taken all action, reasonably
satisfactory to the Secured Party, to maintain the security interest of the
Secured Party in the Collateral intended to be granted hereby at all times fully
perfected and in full force and effect, and (iii) the use of such new name is
limited solely to the Debtor State, the Chief Executive Office State and each
Collateral State.
3.7 PAYMENT AND PERFORMANCE. The Debtor shall pay, when due
(whether at stated maturity, acceleration or upon demand), the Obligations and
shall timely perform all of its covenants, agreements and undertakings in
accordance with the Obligations.
3.8 POSSESSION; SALE AND EXCHANGE
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(a) Subject to clause (b) of this Section, the Debtor
will remain in possession of the Collateral provided that the Secured Party
shall be entitled to possession of the Collateral as set forth herein.
(b) Until the occurrence of an Event of Default, Debtor
may use, sell or exchange the Collateral in the ordinary course of its business
without the written consent of the Secured Party, if such sales or exchanges are
in accordance with Debtor's usual and customary practices with respect to terms
of sale, credits, allowances and credit policies. The inclusion of "Proceeds"
under the securities interest granted herein, shall not be deemed a consent by
Secured Party to any sale or other distribution expressly permitted herein. The
Secured Party does not authorize, and the Debtor agrees not to grant any other
security interest(s) (except Permitted Liens) in any of the Collateral.
3.9 PRESERVATION OF COLLATERAL, DEFEND COLLATERAL. The Collateral
shall remain personal property at all times. The Debtor shall not affix any
Collateral to any real property in any manner which would change its nature from
that of personal property to real property or to a fixture. Debtor shall use
reasonable care in the custody and preservation of the Collateral, shall comply
with all legal and insurance requirements permitted with respect to its use, and
shall keep the same free from all Liens except Liens hereunder and Permitted
Liens. Debtor will keep the Collateral in first-class order, repair, running and
marketable condition. The Debtor shall (i) defend the Collateral against all
claims and demands of all other persons or entities at any time claiming the
same or an interest therein; (ii) promptly pay and discharge all liens for labor
done and materials and services furnished in connection with the business of the
Debtor; and (iii) promptly pay when due all taxes and assessments upon the
Collateral or upon its use; provided, however that the Debtor will have the
right to contest in good faith any such lien, taxes or assessments provided that
it does so diligently and without prejudice to the Secured Party. Upon the
Secured Party's request, the Debtor will promptly provide a bond, cash deposit
or other security reasonably satisfactory to the Secured Party to protect the
Secured Party's security interest should the contest be unsuccessful.
3.10 ORGANIZATION. The Debtor (i) is a corporation duly organized,
validly existing and in good standing under the laws of the Debtor State, (ii)
is duly qualified and in good standing as a foreign corporation under the laws
of each Collateral State; (iii) has the power and authority to own its property
and to transact the business in each Collateral State; and (iv) is in compliance
with all Applicable Laws. The employer identification number of the Debtor is
00-00-00000 and the organizational identification number assigned by the
Secretary of State of the Debtor State is Delaware. The Debtor
shall preserve its corporate existence and shall not change its jurisdiction of
organization or its organization identification number or, in one transaction or
a series of related transactions, merge into or consolidate with any other
entity, or sell all or substantially all of its assets.
3.11 NON-CONTRAVENTION. The execution, delivery, and performance of
this Security Agreement by the Debtor has been duly authorized by all necessary
action and do not and will not: (i) require the consent or approval of any
Person; (ii) contravene its corporate charter or bylaws; (iii) violate any
Applicable Law; (iv) result in a breach of, or constitute a default under, any
indenture or loan or credit agreement or any other agreement, lease or
instrument to which
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the Debtor is a party or by which the Debtor or any of its respective properties
may be bound or affected; or (v) cause the Debtor to be in default under any
Applicable Law or any such indenture, agreement, lease, or instrument.
3.12 SECURITY AGREEMENT BINDING. This Security Agreement is in full
force and effect and is a legal, valid, and binding obligation of the Debtor,
enforceable against it in accordance with its terms, except to the extent that
such enforcement may be limited by applicable bankruptcy, insolvency and similar
laws affecting creditor's rights generally or general principles of equity.
3.13 NO DEFAULT OF DEBTOR. The Debtor is not in default in any
respect in the performance, observance, or fulfillment of any of the
obligations, covenants, or conditions contained in (i) any agreement or
instrument material to its business to which the Debtor is a party; or (ii) the
Note, the Loan Agreement or this Security Agreement.
3.14 NO LITIGATION; NO DEFAULT. There are no pending or threatened
actions or proceedings against or affecting the Debtor before any court,
governmental agency or arbitrator, which may, in any one case or in the
aggregate, materially adversely affect its financial condition, operations,
properties, business or ability to perform its obligations, or the obligations
of the Debtor, under the Note, the Loan Agreement or this Security Agreement.
The Debtor is not in default with respect to any judgment, writ, injunction,
decree, rule, or regulation of any court, arbitrator, or federal, state,
municipal or other governmental authority, commission, board, bureau, agency or
instrumentality, domestic or foreign. There is no fact or circumstance known to
the Debtor, that Debtor has not disclosed to the Secured Party, which materially
adversely affects its properties, business, prospects or financial or other
condition or its ability to perform its obligations, or the obligations of the
Debtor, under the Note, the Loan Agreement or this Security Agreement.
3.15 INFORMATION SCHEDULE. All information set forth on the
Information Schedule is accurate and complete. The Debtor holds no Commercial
Claim except as indicated in the Information Schedule. There are no arrangements
or agreements among any lender or creditor of the Debtor and others that satisfy
the requirements of Sections 679.1041 through 679.1071 of the UCC so that such
lender or creditor has control of Collateral consisting of Deposit Accounts,
Electronic Chattel Paper, Investment Property or Letter of Credit Rights.
ARTICLE IV
SPECIAL PROVISION CONCERNING
ACCOUNTS; CONTRACT RIGHTS
4.1 MAINTENANCE OF RECORDS. At any time when an Event of Default
has occurred and is continuing, upon the request of the Secured Party, the
Debtor shall, at its own cost and expense, deliver all tangible evidence of its
Accounts and Contract Rights (including, without limitation, copies of all
documents evidencing the Accounts and all Contracts and such books and records)
to the Secured Party or to its representatives (copies of which evidence and
books and records may be retained by the Debtor).
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4.2 DIRECTION TO ACCOUNT DEBTORS; CONTRACTING PARTIES, ETC. Upon
the occurrence and during the continuance of an Event of Default and if the
Secured Party so directs the Debtor, the Debtor agrees (x) to cause all payments
on account of the Accounts, Contracts, and other Collateral to be made directly
to the Secured Party and (y) that the Secured Party may, at its option, directly
notify all account debtors (as such term is defined in the UCC) and other
Persons obligated with respect to any Accounts, Chattel Paper, General
Intangibles, Instruments or other Collateral, and/or under any Contracts, to
make payments with respect thereto as provided in the preceding clause (x).
4.3 DEBTOR REMAINS LIABLE. Notwithstanding anything herein to the
contrary, (i) the Debtor shall remain liable under the contracts and agreements
included in the Collateral, to the extent set forth therein, to perform all of
its duties and obligations thereunder to the same extent as if this Security
Agreement had not been executed; (ii) the exercise by the Secured Party of its
rights hereunder shall not release the Debtor from any of its duties or
obligations under the contracts and agreements included in the Collateral; and
(iii) the Secured Party shall not have any obligation or liability under the
contracts and agreements included in the Collateral by reason of this Security
Agreement, nor shall the Secured Party be obligated to perform any of the
obligations or duties of the Debtor thereunder or to take any action to collect
or enforce any claim for payment assigned hereunder.
ARTICLE V
PROVISIONS CONCERNING ALL COLLATERAL
5.1 PROTECTION OF SECURED PARTY'S RIGHTS. Except as expressly
permitted herein, the Debtor will do nothing to impair the rights of the Secured
Party in the Collateral. The Debtor has the risk of loss of the Collateral. The
Debtor will at all times keep its Inventory and Equipment insured and at Secured
Party's option, at the Debtor's own expense, all policies or certificates with
respect to such insurance shall be endorsed to the Secured Party's satisfaction
for the benefit of the Secured Party (including, without limitation, by naming
the Secured Party as loss payee) and, at the Secured Party's request, deposited
with the Secured Party. If an Event of Default shall be in existence and the
Debtor shall fail to insure its Inventory and Equipment in accordance with the
preceding sentence, or if the Debtor shall fail to so endorse and deposit all
policies or certificates with respect thereto, the Secured Party shall have the
right (but shall be under no obligation) to procure such insurance and the
Debtor agrees to reimburse the Secured Party for all costs and expenses of
procuring such insurance. The Secured Party may apply any proceeds of such
insurance in accordance with Section 6.4 hereof. The Debtor assumes all
liability and responsibility in connection with the Collateral acquired by it
and the liability of the Debtor to pay its Obligations shall in no way be
affected or diminished by reason of the fact that such Collateral may be lost,
destroyed, stolen, damaged or for any reason whatsoever unavailable to the
Debtor.
5.2 FINANCING STATEMENTS. The Debtor authorizes the Secured Party
to file such Financing Statements (or similar statements or instruments of
registration under the law of any jurisdiction) and amendments thereto, in form
acceptable to the Secured Party (including without limitation Financing
Statements and amendments describing the Collateral as all assets or personal
property of the Debtor, or any or all of the Collateral by any description that
the
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Secured Party deems appropriate in any jurisdiction or office that the Secured
Party deems appropriate to perfect its security interests in the Collateral), as
the Secured Party may from time to time deem necessary or desirable in the
opinion of the Secured Party to establish and maintain a valid, enforceable,
security interest (subject to Permitted Liens) in the Collateral as provided
herein and the other rights and security contemplated hereby all in accordance
with the UCC or any Applicable Law. The Debtor authorizes the Secured Party to
file any such Financing Statements without the signature of Debtor to the extent
permitted by law. The Debtor will pay, and promptly reimburse the Secured Party
in full for, any applicable filing fees and related expenses.
5.3 SECURED PARTY MAY PERFORM. If the Debtor fails to perform any
agreement contained herein, the Secured Party may itself perform, or cause the
performance of, such agreement and the expenses of the Secured Party incurred in
connection therewith shall be promptly payable and reimbursed to the Secured
Party by the Debtor, under Article VII hereof. Notwithstanding the foregoing
sentence, the Secured Party has no duty to collect any income or either amounts
accruing on the Collateral or to preserve any rights relating to any Collateral.
ARTICLE VI
EVENTS OF DEFAULT; REMEDIES UPON
OCCURRENCE OF EVENT OF DEFAULT
6.1 EVENTS OF DEFAULT AND REMEDIES; OBTAINING THE COLLATERAL UPON
DEFAULT. The occurrence of any of the following, shall, at the option of the
Secured Party (except with respect to clause (e) below, which shall be
automatic), be an event of default ("Event of Default"):
(a) any failure to pay any amounts due under the Note,
the Loan Agreement or this Security Agreement when and as due and payable;
(b) any failure by the Debtor to comply with (including
any period of grace provided to the Debtor with respect thereto) with any of the
provisions of, or the incorrectness of any representation or warranty contained
in or any other default or breach under, the Note, the Loan Agreement or this
Security Agreement;
(c) any Event of Default under the Loan Agreement or the
Note;
(d) any transfer or disposition of any Collateral, except
as expressly permitted by this Security Agreement;
(e) attachment, execution or levy on any Collateral;
(f) the Debtor voluntarily or involuntarily becomes
subject to any proceeding under (A) the Bankruptcy Code or (B) any similar
remedy under Applicable Law;
(g) the Debtor shall fail to comply with, or becomes
subject to, any administrative or judicial proceeding under federal,
state or local (A) hazardous waste or environmental law, (B) asset
forfeiture or similar law which can result in the forfeiture of
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property, or (C) other law, in which noncompliance may have any
significant adverse effect on the Collateral; or
(h) the Secured Party shall have received at any time
following the Closing an SOS Report indicating that the Secured Party's interest
in the Collateral is not prior to all other security interests or other
interests reflected in such SOS Report except for the Permitted Liens.
The Debtor agrees that, if any Event of Default shall have occurred and
be continuing, then and in every such case, subject to any mandatory
requirements of Applicable Law then in effect, and further subject to the rights
of CIT and Finova under any security agreement between Debtor and either of CIT
or Finova existing as of the date of this Agreement, the Secured Party, in
addition to any rights now or hereafter existing under applicable law, shall
have all rights as a secured party (as such term is defined in the UCC) under
the UCC in all relevant jurisdictions and may:
(a) declare all Obligations to be immediately due and
payable, without notice, protest, presentment or demand all of which are
expressly waived by the Debtor;
(b) personally, or by agents or attorneys, immediately
take possession or control of the Collateral or any part thereof, from the
Debtor or any other Person who then has possession or control of any part
thereof with or without notice or process of law, and for that purpose may enter
upon the Debtor's premises where any of the Collateral is located and remove the
same and use in connection with such removal any and all services, supplies,
aids and other facilities of the Debtor;
(c) instruct the account debtor (as such term is defined
in the UCC), obligor or obligors on any agreement, instrument or other
obligation constituting the Collateral to make any payment required by the terms
of such instrument or agreement directly to the Secured Party;
(d) notify any and all creditors (if any) of the Debtor
of such Event of Default and of the Secured Party's enforcement of any rights
under this Security Agreement;
(e) sell, assign or otherwise liquidate, or direct the
Debtor to sell, assign or otherwise liquidate, any or all of the Collateral or
any part thereof, and take possession of the proceeds of any such sale or
liquidation; and
(f) take possession of the Collateral or any part
thereof, by directing the Debtor in writing to deliver the same to the Secured
Party at any place or places designated by the Secured Party, in which event the
Debtor shall at its own expense (i) forthwith cause the same to be moved to the
place or places so designated by the Secured Party and there delivered to the
Secured Party, (ii) store and keep any Collateral so delivered to the Secured
Party at such place or places pending further action by the Secured Party as
provided in Section 6.2 hereof, and (iii) while the Collateral shall be so
stored and kept, provide such guards and maintenance services as shall be
necessary to protect the same and to preserve and maintain them in good
condition; it being understood that the Debtor's obligation so to deliver the
Collateral is of the essence of this Security Agreement and that, accordingly,
upon application to a court of equity having jurisdiction, the Secured Party
shall be entitled to a decree requiring specific performance by the Debtor of
said obligation.
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6.2 REMEDIES; DISPOSITION OF THE COLLATERAL. Any Collateral
repossessed by the Secured Party under or pursuant to Section 6.1 hereof and any
other Collateral whether or not so repossessed by the Secured Party, may be
sold, assigned, leased or otherwise disposed of under one or more contracts or
as an entirety, and without the necessity of gathering at the place of sale the
property to be sold, and in general in such manner, at such time or times, at
such place or places and on such terms as the Secured Party may, taking into
consideration the mandatory requirements of the UCC that the purchase price paid
for such Collateral not fall "significantly below" the range of prices a third
party would pay in a commercially reasonable foreclosure sale, determine to be
commercially reasonable. Any of the Collateral may be sold, leased or otherwise
disposed of, in the condition in which the same existed when taken by the
Secured Party or after any overhaul or repair which the Secured Party shall
determine to be commercially reasonable; however, the Secured Party shall have
no obligation to clean up or otherwise prepare the Collateral for such sale,
lease or disposition. The Secured Party may specifically disclaim any warranties
of title and the like. Any such disposition which shall be a private sale or
other private proceedings permitted by such requirements shall be made upon not
less than 10 days' written notice to the Debtor and all debtors (if any) of the
Debtor specifying the time at which such disposition is to be made and the
intended sale price or other consideration therefor, and shall be subject, for
the 10 days after the giving of such notice, to the right of the Debtor or any
nominee of the Debtor to acquire the Collateral involved at a price or for such
other consideration at least equal to the intended sale price or other
consideration so specified. Any such disposition which shall be a public sale
permitted by such requirements shall be made upon not less than 10 days' written
notice to the Debtor specifying the time and place of such sale and, in the
absence of Applicable Law, shall be by public auction (which may, at the Secured
Party's option, be subject to reserve) after publication of notice of such
auction not less than 10 day's prior thereto in a newspaper in general
circulation. To the extent permitted by any such requirement of Applicable Law,
the Secured Party may bid for and become the purchaser of the Collateral or any
item thereof, offered for sale in accordance with this Section without
accountability to the Debtor (except to the extent of surplus money received).
If the Secured Party sells or disposes of any of the Collateral upon credit, the
Debtor will be credited only with payments actually made by the purchaser and
received by the Secured Party on such Collateral and applied to the indebtedness
of such purchaser. In the event that such purchaser fails to pay for the
Collateral, the Secured Party may resell or re-dispose of such Collateral and
the Debtor shall be credited with the proceeds of such resale or re-disposition.
If, under mandatory requirements of Applicable Law, the Secured Party shall be
required to make disposition of the Collateral within a period of time which
does not permit the giving of notice to the Debtor as hereinabove specified, the
Secured Party need give the Debtor only such notice of disposition as shall be
reasonably practicable in view of such mandatory requirements of applicable law.
6.3 WAIVER OF CLAIMS. Except as otherwise provided in this
Security Agreement, THE DEBTOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE SECURED
PARTY'S TAKING POSSESSION OR THE SECURED PARTY'S DISPOSITION OF ANY OF THE
COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING
FOR ANY PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT WHICH DEBTOR WOULD
OTHERWISE HAVE UNDER THE
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CONSTITUTION OR ANY STATUTE OF THE UNITED STATES OR OF ANY STATE, and the Debtor
hereby further waives, to the extent permitted by Applicable Law:
(a) all damages occasioned by such taking of possession
except any damages which are the direct result of the Secured Party's gross
negligence or willful misconduct;
(b) all other requirements as to the time, place and
terms of sale or other requirements with respect to the enforcement of the
Secured Party's rights hereunder;
(c) all rights of redemption, appraisement, valuation,
stay, extension or moratorium now or hereafter in force under any applicable law
in order to prevent or delay the enforcement of this Security Agreement or the
absolute sale of the Collateral or any portion thereof, and the Debtor, for
itself and all who may claim under it, insofar as it or they now or hereafter
lawfully may, hereby waives the benefit of all such laws;
(d) demand, notice of non-payment, dishonor and notice of
acceptance of this Security Agreement, notice of loans made, credit extended,
collateral received or delivered or other action taken in reliance hereon; and
(e) any and all rights of the Debtor to pursue any Person
for any Obligation.
Any sale of, or the grant of options to purchase, or any other
realization upon, any Collateral shall operate to divest all right, title,
interest, claim and demand, either at law or in equity, of the Debtor therein
and thereto, and shall be a perpetual bar both at law and in equity against the
Debtor and against any and all Persons claiming or attempting to claim the
Collateral so sold, optioned or realized upon, or any part thereof, from,
through and under such Debtor.
6.4 APPLICATION OF PROCEEDS. The proceeds of any Collateral
obtained pursuant to Section 4.2 or Section 6.1 or disposed of pursuant to
Section 6.2 shall be applied as follows:
(a) to the payment of any and all expenses and fees
(including reasonable attorneys' fees) incurred by Secured Party in obtaining,
taking possession of, removing, insuring, repairing, storing and disposing of
Collateral and any and all amounts incurred by Secured Party in connection
therewith;
(b) next, any amount then remaining to the payment of the
Obligations in the following order of priority:
(i) the fees, costs and expenses then owing to
the Secured Party;
(ii) all interest accrued and unpaid;
(iii) the principal amounts owing on the Note; and
(iv) all other Obligations then owing;
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(c) if no Obligation is outstanding, any surplus then
remaining shall be paid to the Debtor, subject, however, to the rights of the
holder of any then existing Lien of which Secured Party has actual notice
(without investigation); it being understood that the Debtor shall remain liable
to the extent of any deficiency between the amount of the proceeds of the
Collateral and the aggregate amount of the sums referred to in clauses (a) and
(b) of this Section with respect to the Debtor.
6.5 COLLATERAL ACCOUNT. At the Secured Party's option, exercisable
after and during the continuance of any Event of Default under this Security
Agreement (although once exercised, not to be conditioned on the continuance of
any Event of Default), the Debtor will deposit or cause to be deposited to one
or more bank accounts designated by the Secured Party and from which the Secured
Party alone (to the extent the Secured Party is not prohibited from acting alone
under Applicable Law) has control or power of access and withdrawal (the
"Collateral Account") all checks, drafts, cash and other remittances in payment
or on account of payment of the Collateral (all of the foregoing herein
collectively referred to as "items of payment"). The Debtor shall deposit items
of payment for credit to the Collateral Account not later than the next banking
day after the receipt thereof, and in precisely the form received, except for
the appropriate endorsements of the Debtor where necessary to permit the
collection of any such items of payment, which endorsement the Debtor hereby
agrees to make. Pending such deposit to the Collateral Account, endorsement
and/or other delivery thereof to the Secured Party, the Debtor will not
commingle any such items of payment with any of its other funds or property, but
will hold them separate and apart therefrom in trust and for the account of the
Secured Party. The Debtor recognizes that the amounts evidenced by the items of
payment may not be collectible by the Secured Party on the date deposited to the
Collateral Account. The Secured Party is not required to credit the Collateral
Account for the amount of any item of payment which is reasonably unsatisfactory
to the Secured Party. The Secured Party may, at its option, at any time or from
time to time after an Event of Default hereunder, revoke the collection right of
the Debtor with respect to the Collateral by either giving notice of its
assignment of, and lien on, the Collateral to the account Debtor, or giving
notice of such revocation to the Debtor.
6.6 REMEDIES CUMULATIVE, ETC. Each and every right, power and
remedy hereby specifically given to the Secured Party shall be in addition to
every other right, power and remedy specifically given under this Security
Agreement or any of the Obligations, or any document related thereto or now or
hereafter existing at law or in equity, or by statute and each and every right,
power and remedy whether specifically herein given or otherwise existing may be
exercised from time to time or simultaneously and as often and in such order as
may be deemed expedient by the Secured Party. All such rights, powers and
remedies shall be cumulative and the exercise or the beginning of exercise of
one shall not be deemed a waiver of the right to exercise of any other or
others. No delay or omission of the Secured Party in the exercise of any such
right, power or remedy and no renewal or extension of any of the Obligations
shall impair any such right, power or remedy or shall be construed to be a
waiver of any Event of Default or an acquiescence therein. No notice to or
demand on the Debtor in any case shall entitle the Debtor to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the Secured Party to any other further action in any
circumstances without notice or demand. In the event that the Secured Party
shall bring any suit to enforce any of its rights hereunder and shall be
entitled to judgment, then in such suit
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the Secured Party may recover reasonable expenses, including attorneys' fees,
and the amounts thereof shall be included in such judgment. With respect to both
the Obligations and the Collateral, the Debtor assents to any extension or
postponements of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral, to the addition or release of
any party or person primarily or secondarily liable, to the acceptance of
partial payment thereon and the settlement, compromising or adjusting of any
thereof, all in such manner and at such time or times as the Secured Party may
deem advisable. The Secured Party shall have no duty as to the collection of
protection of the Collateral or any income thereon, nor as to the preservation
thereto beyond the safe custody thereof.
6.7 NO EFFECT ON LIABILITY OF DEBTOR. The exercise by the Secured
Party of, or failure to so exercise, any authority granted under this Security
Agreement shall in no manner affect the Debtor' liability to the Secured Party
and the Secured Party shall be under no obligation or duty to exercise any of
the powers hereby conferred upon it and it shall be without liability for any
act or failure to act in connection with the collection of, or the preservation
of any rights under, any of the Collateral.
6.8 NO MARSHALING. The Secured Party has no obligation to marshal
any assets or property in favor of the Debtor or any other lienholders of
Debtor, or against or in payment of:
(a) the Note;
(b) this Security Agreement;
(c) any of the Obligations; or
(d) any other obligation owed to the Secured Party by the
Debtor or any other Person.
ARTICLE VII
INDEMNITY
7.1 INDEMNITY. (a) The Debtor agrees to indemnify, reimburse and
hold all Indemnitees harmless from any and all liabilities, obligations,
damages, injuries, penalties, claims, demands, actions, suits, judgments and any
and all costs and expenses (including reasonable attorneys' fees and expenses)
(for the purposes of this Section 7.1 the foregoing are collectively called
"EXPENSES") of whatsoever kind and nature imposed on, asserted against or
incurred by any of the Indemnitees in any way relating to or arising out of this
Security Agreement or the documents executed in connection herewith or in any
other way connected with the administration of the transactions contemplated
hereby or the enforcement of any of the terms of, or the preservation of any
rights under any thereof, or in any way relating to or arising out of the
manufacture, ownership, ordering, purchase, delivery, control, acceptance,
lease, financing, possession, operation, condition, sale, return or other
disposition, or use of the Collateral (including, without limitation, latent or
other defects, whether or not discoverable), the violation of the laws of any
country, state or other governmental body or unit, any tort (including, without
limitation, claims arising or imposed under the doctrine of strict liability, or
for or on account of injury to or the death of any Person (including any
Indemnitee), or property damage), or contract
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claim; provided that no Indemnitee shall be indemnified pursuant to this Section
7.1(a) for losses, damages or liabilities to the extent caused by the gross
negligence or willful misconduct of such Indemnitee. The Debtor agrees that upon
written notice by any Indemnitee of the assertion of such a liability,
obligation, damage, injury, penalty, claim, demand, action, judgment or suit,
the Debtor shall assume full responsibility for the defense thereof. Each
Indemnitee agrees to use its best efforts to promptly notify the Debtor of any
such assertion of which such Indemnitee has knowledge, however, the failure to
so notify the Debtor shall not effect its obligations hereunder.
(b) Without limiting the application of Section 7.1(a),
the Debtor agrees to pay, or reimburse the Secured Party for (if the Secured
Party shall have incurred fees, costs or expenses because the Debtor shall have
failed to comply with its obligations under this Security Agreement), any and
all fees, costs and expenses of whatever kind or nature (including without
limitation any and all fees, costs and expenses of the Secured Party's outside
attorneys) incurred in connection with the creation, preservation or protection
of the Secured Party's Liens on, and security interest in, the Collateral,
including, without limitation, all fees and taxes in connection with the
recording or filing of instruments and documents in public offices, payment or
discharge of any taxes or Liens upon or in respect of the Collateral, premiums
for insurance with respect to the Collateral and all other fees, costs and
expenses in connection with protecting, maintaining or preserving the Collateral
and the Secured Party's interest therein, whether through judicial proceedings
or otherwise, or in defending or prosecuting any actions, suits or proceedings
arising out of or relating to the Collateral.
(c) If and to the extent that the obligations of the
Debtor under this Section 7.1 are unenforceable for any reason, the Debtor
hereby agrees to make the maximum contribution to the payment and satisfaction
of such obligations which is permissible under Applicable Law.
7.2 INDEMNITY OBLIGATIONS SECURED BY COLLATERAL; SURVIVAL. Any
amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Collateral. The
indemnity obligations of the Debtor contained in this Article VII shall continue
in full force and effect notwithstanding the full payment of all other
Obligations and notwithstanding the discharge thereof.
ARTICLE VIII
MISCELLANEOUS
8.1 NOTICES. Except as otherwise specified herein, all notices,
requests, demands or other communications to or upon the respective parties
hereto shall be deemed to have been duly given or made when a record thereof has
been delivered to the party to which such notice, request, demand or other
communication is required or permitted to be given or made under this Security
Agreement, addressed to such party at its address set forth in the Information
Schedule (in the case of the Debtor) or below its signature hereon (in the case
of the Secured Party), or at such other address as any of the parties hereto may
hereafter notify the others in writing. The Debtor is obligated to furnish the
Secured Party with a current address and similar notice information at all times
for as long as the Obligations remain outstanding.
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8.2 WAIVER; AMENDMENT. None of the terms and conditions of this
Security Agreement may be changed, waived, modified or varied in any manner
whatsoever except in a writing signed by the parties hereto.
8.3 OBLIGATIONS ABSOLUTE. The obligations of the Debtor hereunder
shall remain in full force and effect without regard to, and shall not be
impaired by, (a) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of the Debtor; (b) any
exercise or non-exercise, or any waiver of, any right, remedy, power or
privilege under or in respect of this Security Agreement, or any other
documentation; or (c) any amendment to or modification of the Note, the Loan
Agreement, this Security Agreement or any other documentation or any security
for any of the Obligations, whether or not the Debtor shall have notice or
knowledge of any of the foregoing. The rights and remedies of the Secured Party
herein provided are cumulative and not exclusive of any rights or remedies which
the Secured Party would otherwise have. The parties acknowledge that this
Security Agreement is intended to include all liabilities of the Debtor to the
Secured Party which have arisen in the past or which arise in the future,
regardless of form or purpose and whether evidenced by instruments or not and
whether now contemplated or not. The parties acknowledge that the contents of
EXHIBIT A constitute a part of this Security Agreement as if all such contents
were fully set forth herein.
8.4 SUCCESSORS AND ASSIGNS. This Security Agreement shall be
binding upon the Debtor and its successors and assigns (including without
limitation all Persons who become bound as a debtor, as such term is defined in
the UCC, to this Security Agreement) and shall inure to the benefit of the
Secured Party and its successors and assigns, provided that the Debtor may not
transfer or assign any or all of its rights or obligations hereunder without the
written consent of the Secured Party. All agreements, statements,
representations and warranties made by the Debtor herein or in any certificate
or other instrument delivered by the Debtor or on its behalf under this Security
Agreement shall be considered to have been relied upon by the Secured Party and
shall survive the execution and delivery of this Security Agreement regardless
of any investigation made by the Secured Party.
8.5 CONSTRUCTION; PRONOUNS. The language used in this Security
Agreement shall be deemed to be the language chosen by the parties hereto to
express their mutual intent, and no rule of strict construction shall be applied
against either party. Unless the context otherwise requires, the term "include"
and all derivatives thereof shall be construed in an illustrative sense and not
a limiting sense. The headings of the several sections of this Security
Agreement are inserted for convenience only and shall not in any way affect the
meaning or construction of any provision of this Security Agreement. All
pronouns and any variations thereof shall be deemed to refer to masculine,
feminine, or gender neutral, singular or plural, as the identity of the Person
or Persons may require. Any reference herein to any law or statute shall be
deemed to include any succeeding law or statute.
8.6 SEVERABILITY. Any provision of this Security Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
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8.7 FURTHER ASSURANCES. From time to time, or at any time, upon
demand of the Secured Party and at the Debtor's expense, the Debtor shall (i)
make, execute, endorse, file, acknowledge and deliver to the Secured Party such
assignments and other papers, documents, lists, descriptions, conveyances,
transfer endorsements, powers of attorney, certificates, reports, instruments
and other assurances; and (ii) do or cause to be done all such other acts and
things, as the Secured Party deems necessary or appropriate to establish,
perfect and maintain a valid security interest in the Collateral or to carry out
the intention, or facilitate the performance, of the terms of this Security
Agreement. The Debtor hereby further agrees that it shall, at the Secured
Party's request, deliver to the Secured Party any and all evidence of ownership
of, certificates of title to, or other Documents evidencing any interest in, any
and all of the Collateral.
8.8 DEBTOR'S DUTIES. It is expressly agreed, anything herein
contained to the contrary notwithstanding, that the Debtor shall remain liable
to perform all of the obligations, if any, assumed by it with respect to the
Collateral and the Secured Party shall not have any obligations or liabilities
with respect to any Collateral by reason of or arising out of this Security
Agreement, nor shall the Secured Party be required or obligated in any manner to
perform or fulfill any of the obligations of the Secured Party under or with
respect to any Collateral.
8.9 GOVERNING LAW. THIS SECURITY AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND
BE GOVERNED BY THE LAW OF THE STATE OF FLORIDA (EXCEPT TO THE EXTENT THAT THE
UCC PROVIDES FOR THE APPLICATION OF THE LAW OF THE DEBTOR STATE), AND IN ANY
CASE WITHOUT REGARD TO THE CONFLICTS OF LAWS PROVISIONS THEREOF.
8.10 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL. THE DEBTOR
HEREBY CONSENTS TO THE JURISDICTION OF ANY FEDERAL COURT LOCATED WITHIN THE
MIDDLE DISTRICT OF FLORIDA AND ANY STATE COURT WITHIN BREVARD COUNTY, STATE OF
FLORIDA, AND IRREVOCABLY AGREES THAT ALL ACTIONS OR PROCEEDINGS RELATING TO THIS
SECURITY AGREEMENT MAY BE LITIGATED IN SUCH COURTS, AND THE DEBTOR WAIVES ANY
OBJECTION WHICH IT MIGHT HAVE BASED ON IMPROPER VENUE OR FORUM NON CONVENIENS.
THE PARTIES ACKNOWLEDGE THAT THE TIME AND EXPENSE REQUIRED FOR TRIAL BY
JURY EXCEED THE TIME AND EXPENSE FOR A BENCH TRIAL AND HEREBY WAIVE, TO THE
EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS SECURITY AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
8.11 COUNTERPARTS. This Security Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument. The
Debtor acknowledges that this Security Agreement is and shall be effective upon
execution of the Debtor and delivery to and acceptance hereof by the Secured
Party, and it shall not be necessary for the Secured Party to execute any
acceptance hereof or otherwise to signify or express its acceptance hereof to
the Debtor. This Security Agreement may be
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executed by facsimile signature, but the Debtor agrees to furnish an original to
the Secured Party within two business days after signing. The Debtor's failure
or delay in delivering an original signed counterpart of this Agreement shall
not affect its validity or enforceability.
[Intentionally left blank to end of page]
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IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated General Security Agreement to be executed and delivered by their duly
authorized officers as of the date first above written.
Debtor: Secured Party:
TELTRONICS, INC. XXXXXX CORPORATION
By: /s/ Xxxx Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------- -----------------------------
Name: Xxxx Xxxxxxx Name: Xxxxxxx X. Xxxxxxx
--------------------------- ---------------------------
Title President CEO Title Assistant Treasurer
--------------------------- ---------------------------
Address: 0000 Xxxx XXXX Xxxx.
Xxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx, Esquire
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AFFIDAVIT OF OUT-OF-FLORIDA EXECUTION
-------------------------------------
I, Xxxx Xxxxxxx, being duly sworn upon my oath, depose and say:
1. That I am President and CEO of Teltronics, Inc.
(the "Borrower").
2. That on the 28th day of March, 2002, I executed on
behalf of the Borrower the Amended and Restated General Security Agreement dated
March ___, 2002 between the Borrower and Xxxxxx Corporation ("Xxxxxx").
3. The execution of the Amended and Restated General
Security Agreement took place in the City of Atlanta in the State of Georgia.
IN WITNESS WHEREOF, I have executed this Affidavit of Out-of-Florida
Execution as of the day and year set forth below.
/s/ Xxxx Xxxxxxx
----------------------------------
Name: Xxxx Xxxxxxx
Title: President CEO
STATE OF Georgia
-----------------------
COUNTY OF Xxxxxx
-----------------------
The foregoing Affidavit of Out-of-Florida Execution was acknowledged
before me this 28th day of March, 2002, by the affiant named above, who signed
and acknowledged the same on behalf of the Borrower, Teltronics, Inc. The
affiant is personally known to me or has produced Driver's License as
identification and [X] did [ ]did not take an oath.
(NOTARY SEAL)
/s/ Xxxxx X. Xxxxxx
------------------------------
Name: Xxxxx X. Xxxxxx
Notary Public-State of Georgia
--------
Commission Number: 01-NT-02474
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(2)
