SECURITY AGREEMENT
Security
Agreement dated as of March 10, 2010 (“Security Agreement”), made by ORBIT
INTERNATIONAL CORP., XXXXXXX ELECTRONICS, INC., TULIP DEVELOPMENT LABORATORY,
INC. and INTEGRATED CONSULTING SERVICES, INC. D/B/A INTEGRATED COMBAT SYSTEMS
(individually, a “Grantor” and collectively, the “Grantors”) to CAPITAL ONE,
N.A. (“Bank”).
In
consideration of Bank providing credit to the Grantors, Grantors hereby agree as
follows:
Section
1. Definitions.
As used in this Security Agreement, the following terms have the following
meanings (terms defined in the singular to have the same meaning when used in
the plural and vice versa):
“Collateral”
has the meaning specified in “Grant of Security Interest” (Section
3).
“Contracts”
means each contract, agreement, instrument and indenture to which any of the
Grantors are a party or under which any Grantor has any right, title and
interest or to which any Grantor or its property is subject.
“Credit
Agreement” means that certain Credit Agreement dated as of the date hereof
between the Borrowers and the Bank, as same may hereafter be amended, modified,
restated or superseded.
“Secured
Obligations” means any and all present and future liabilities and obligations of
each Grantors to Bank, including those under or in connection with the Credit
Agreement and each other Financing Document, whether incurred by each Grantor as
principal or guarantor or otherwise, and whether due or to become due, secured
or unsecured, absolute or contingent, joint or several, direct or indirect,
acquired outright, conditionally or as collateral security by Bank from another,
liquidated or unliquidated, arising by operation of law or otherwise, together
with all fees and expenses incurred in collecting any or all of the items
specified in this definition or enforcing any rights under any of the documents
executed in connection with any such liabilities and obligations, including all
fees and expenses of Bank’s counsel and of any experts and agents which may be
paid or incurred by Bank in collecting any such items or enforcing any such
rights.
“Security
Agreement” means this Security Agreement.
“UCC”
means the Uniform Commercial Code as promulgated by the American Law Institute
and the National Conference of Commissioners on Uniform State Laws in the form
adopted by the jurisdiction where the financing statement with respect to any
Collateral is filed.
Unless
otherwise defined in this Security Agreement, (1) all terms defined in the
Credit Agreement will have the same meaning specified for such term in the
Credit Agreement when used in this Security Agreement, and (2) all terms defined
in the UCC that are used in this Security
Agreement shall have the meaning specified in the UCC when used in this Security
Agreement.
Section
2. Rules of
Interpretation. When used in this Security Agreement: (1) “or” is not
exclusive, (2) any pronouns used shall include the corresponding masculine,
feminine or neuter forms, (3) the singular form of nouns shall include the
plural and vice versa, (4) a reference to a law includes any amendment or
modification to such law, and (5) a reference to an agreement, instrument or
document includes any amendment or modification of such agreement, instrument or
document, if and to the extent such amendment or modification is permitted under
the applicable Financing Documents.
Section
3. Grant of Security
Interest. The Grantors hereby grant to Bank a continuing security
interest in and lien on all right, title and interest of the Grantors in and to
each of the following items, whether now owned or hereafter acquired, created or
existing: (1) all Accounts, (2) all Chattel Paper (whether tangible or
electronic), (3) all Deposit Accounts, (4) all Documents, (5) all General
Intangibles (including Payment Intangibles and Software), (6) all Goods
(including Inventory), Equipment, Fixtures and Accessions, (7) all Instruments
(including promissory notes), (8) all Investment Property, (9) all
Letter-of-Credit Rights, (10) all Letters of Credit, (11) all Money, (12) all
Supporting Obligations, and (13) all Proceeds and products of the foregoing (the
“Collateral”).
Section
4. Security for
Secured Obligations. Grantors’ Collateral secures the prompt and complete
payment when due of all Secured Obligations of each of the
Grantors.
Section
5. Filing of Financing
Statement. The Grantors hereby authorize Bank, its counsel or its
representative, at any time and from time to time, to file financing statements
and amendments covering its respective Collateral in such jurisdictions as Bank
may deem necessary or desirable to perfect the security interests granted by the
Grantors under this Security Agreement. Such financing statements may describe
the collateral covered by such financing statements as “all assets of Grantors”,
“all personal property of Grantors” or words of similar effect.
Section
6. Actions to Perfect
Security Interest. The Grantors agree that from time to time, they will
promptly execute and deliver all instruments and documents, and take all
actions, that may be necessary or desirable, or that Bank may reasonably
request, for the attachment, perfection and maintenance of the priority of, the
security interest of Bank in any and all of the Collateral of the Grantors or to
enable Bank to exercise and enforce any and all of its rights, powers and
remedies under this Security Agreement with respect to any and all of the
Collateral of the Grantors.
Section
7. Continued
Perfection of Security Interest. The Grantors shall not: (1) change their
respective names, identities or structures, (2) merge or consolidate into, or,
except in the ordinary course of business, transfer any of their respective
Collateral to, any other party, (3) change the location of their chief executive
offices or principal places of business, (4) change the jurisdiction of their
organization, or (5) change the location where the books and records related to
their respective Collateral are maintained.
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Section
8. Waivers and
Consents. The Grantors agree to use commercially reasonable efforts to
(1) obtain all governmental and other third party waivers, consents and
approvals, in form and substance satisfactory to Bank, required for the
execution and performance of this Security Agreement by Bank, including, the
consent of each licensor, lessor or other persons obligated on Collateral and
(2) to the extent requested by Bank, to obtain waivers and subordinations, in
form and substance satisfactory to Bank, from mortgagees and landlords where any
of its Collateral is located.
Section
9. Representations and
Warranties. At the time of execution of this Security Agreement and each
time Bank provides credit as noted above, each Grantor represents and warrants
to Bank as follows:
(1) Names of Grantors.
The exact legal name of each Grantor is the name specified in the preamble to
this Security Agreement. Each Grantor has not been known by any other name
during the five (5) years prior to the date of this Security
Agreement.
(2) Location of Grantors.
Orbit International Corp. and Xxxxxxx Electronics, Inc. are each a Delaware
corporation. Tulip Development Laboratory, Inc. and Integrated
Consulting Services, Inc. d/b/a Integrated Combat Systems are, respectively,
Pennsylvania and Kentucky corporations. All of the assets used in the
operation of the business of the Grantors are in the possession of, and under
the control of, the Grantors and none of the assets used by the Grantors in the
conduct of their respective business are held by any third party.
(3) Location for Filing of
Financing Statement. With respect to any item of Collateral in which a
security interest can be perfected by the filing of a UCC financing statement,
the filing of such a statement with the Secretary of State of the jurisdiction
of incorporation of each Grantor, as applicable, will perfect the security
interest of Bank in the Collateral of the Grantors.
(4) Formation, Good Standing,
Power and Due Qualification. The Grantors (a) are each a corporation duly
formed, validly existing, and in good standing under the laws of the
jurisdiction of their formation, (b) have the power and authority to own their
respective assets and to transact the business in which they now engage or
propose to engage in, and (c) are duly qualified as a foreign corporation and in
good standing under the laws of each other jurisdiction in which such
qualification is required except where the failure to qualify will not result in
a Material Adverse Change.
(5) Authority, No
Contravention. The execution, delivery and performance by the Grantors of
this Security Agreement are within their respective corporate powers, have been
duly authorized by all necessary corporate action, and do not and will not (a)
require any consent or approval of their officers or shareholders which have not
been obtained, (b) contravene their respective certificates of incorporation or
by-laws, (c) violate any provision of any law, order, writ, judgment,
injunction, decree, determination, or award presently in effect applicable to
them, (d) 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
they are a party or by which they or their properties may be bound or affected,
or (e) result in, or require, the creation or imposition of any lien (except in
favor of the Bank) upon or with respect to any of the properties now owned or
hereafter acquired by them.
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(6) Governmental
Authority. No authorization, approval or other action by, and no notice
to or filing with, any governmental authority is required for the due execution,
delivery and performance by the Grantors of this Security
Agreement. Notwithstanding the foregoing, by its acceptance of this
Agreement, the Bank acknowledges that the Grantors have not complied with the
Assignment of Claims Act with respect to any Collateral the perfection of which
might require compliance with same.
(7) Legally Enforceable Security
Agreement. This Security Agreement is the legal, valid and binding
obligation of the Grantors, enforceable against the Grantors in accordance with
its terms, except to the extent that such enforcement may be limited by (1)
applicable bankruptcy, insolvency, and other similar laws affecting creditors'
rights generally, or (2) general equitable principles, regardless of whether the
issue of enforceability is considered in a proceeding in equity or at
law.
(8) No Restrictions on
Collateral. Except for Permitted Liens, none of the Collateral is subject
to a restriction, which has not been waived with a copy of such waiver delivered
to Bank, that prohibits, restricts or limits the grant of a security interest in
such Collateral pursuant to this Security Agreement, the perfection of the
security interest granted by this Security Agreement (including the priority of
such security interest) or the exercise by Bank of its rights, remedies and
powers under this Security Agreement or otherwise.
(9) Security Interest and
Claims. This Security Agreement creates a valid security interest in the
Collateral and such security interest secures the payment of all Secured
Obligations. Upon the filing of the financing statements in the locations
specified above the security interest of Bank in all of the Collateral will be
perfected (and except for any actions with respect to Accounts which require
compliance with the Assignment of Claims Act). Except with respect to Permitted
Liens, the security interest of Bank in the Collateral is a first priority
security interest and such Collateral is not subject to any other security
interest. The Grantors own their respective Collateral free and clear of any
security interest, except for the security interest created by this Security
Agreement and Permitted Liens.
(10) Acquisition in Ordinary
Course of Business. All of the Collateral, including all Equipment and
all Inventory, was acquired in the ordinary course of business.
(11) Compliance With Law.
All of the Collateral was acquired, used, produced and sold or disposed of in
accordance with all applicable laws, including in the case of inventory, the
Fair Labor Standards Act.
(12) Inventory. None of
the Inventory is held on consignment or subject to a sale or return or sale on
approval or similar arrangement.
(13) Equipment. All
Equipment which is useful or necessary to the business of each Grantor is in
good repair, ordinary wear and tear excepted.
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(14) Accounts. All
Accounts have been originated by each respective Grantors. None of the Accounts
have either been sold to another party or otherwise transferred or delivered to
any party for the purpose of collecting such Account. The Grantors are duly
qualified in all states where required to enable each Grantor to enforce
collection of their respective Accounts due from customers residing in that
state.
(15) Contracts. All of the
Contracts material to the operation of the business of the Grantors are in full
force and effect and the Grantors have performed in all material respects their
respective obligations under each such Contract, and to the knowledge of the
Grantors the other parties to each such Contract have performed in all material
respects their respective obligations under each such Contract.
Section
10. Covenants.
The Grantors agree that:
(1) Reporting
Requirements. The Grantors shall promptly notify Bank if (a) any claim,
including any attachment, levy, execution or other legal process, is made
against any or all of its Collateral, (b) any representation and warranty
included in this Security Agreement would no longer be true if made on such
date, (c) there is any material loss or damage to, or material decline in the
value of, or material change in the nature of, any of its Collateral or (d)
there is a redemption or exchange of any or all of its Collateral. The Grantors
will furnish to Bank from time to time statements and schedules further
identifying and describing its Collateral and such other reports in connection
with such Collateral as Bank may request, all in reasonable detail.
(2) Records. The Grantors
will keep and maintain at their expense complete and accurate records related to
their Collateral, including records of all payments made, all credits granted
and all other documentation related to their Collateral.
(3) Inspection. Upon
reasonable notice to the Grantors and during normal business hours the Grantors
will allow Bank or its designees to visit their offices and each location where
any Collateral is located to inspect their books and records, make copies
thereof, and inspect their Collateral.
(4) Restrictions on
Collateral. The Grantors will not enter into any agreement or undertaking
that restricts or limits the right or ability of Grantors or Bank to sell,
assign or transfer any of their Collateral.
(5) Defense of
Collateral. The Grantors will defend their respective Collateral against
all claims and demands of all parties, other than Bank, claiming an interest in
any of their respective Collateral.
(6) No Security Interest or
Claims. The Grantors will not create, permit or suffer to exist, any
security interest on any of their respective Collateral other than the security
interest under this Security Agreement or as permitted pursuant to the Credit
Agreement. The Grantors will discharge or cause to be discharged all
security interests and claims on any or all of their Collateral, except for the
security interest under this Security Agreement or as permitted
pursuant
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(7) to the
Credit Agreement. The Grantors will pay promptly when due all property and other
taxes that are not the subject of a Good Faith Contest, assessments and
governmental charges or levies imposed upon, and all claims (including claims
for labor, materials and supplies) against their respective
Collateral.
(8) Transfer and Other Security
Interests. The Grantors shall not sell, assign (by operation of law or
otherwise), transfer or otherwise dispose of any of their Collateral except for
sales, assignments and transfers of Collateral in the ordinary course of
business.
(9) Compliance with Law.
The Grantors will comply in all material respects with all laws applicable to
any or all of their Collateral, except to the extent the failure to comply will
not have a material adverse effect on the rights of Bank under this Security
Agreement, the priority of the security interest of Bank in their Collateral or
the value of their Collateral.
(10) Insurance. The
Grantors shall, at their own expense, maintain insurance with respect to all the
Equipment and all the Inventory in such amounts, against such risks, in such
form and with such insurers as are usually carried by companies engaged in the
same or similar business as the Grantors and such other insurance as reasonably
required by Bank. Each policy for commercial general liability
insurance (a) shall designate Bank as an additional insured and (b) shall
provide for all losses to be paid on behalf of Bank and the Grantors as their
respective interests may appear. Reimbursement under any liability insurance
maintained by the Grantors may be paid directly to the party who shall have
incurred liability covered by such insurance. Each policy for property damage
insurance shall (a) designate Bank and Grantors as the loss payees and (b)
provide for all losses to be paid directly to Bank.
In
addition, each such policy shall (a) in the case of a liability policy, name
Bank as an insured party under such policy (without any representation or
warranty by or obligation upon Bank), (b) contain the agreement by the insurer
that any loss under such policy shall be payable to Bank notwithstanding any
action, inaction or breach of representation or warranty by any Grantor, (c)
provide that there shall be no recourse against Bank for payment of premiums or
other amounts with respect to such policy and (d) provide that at least 30 days
prior written notice of amendment to, cancellation of or lapse shall be given to
Bank by the insurer.
If
requested by Bank, the Grantors shall deliver to Bank (a) original or duplicate
policies of such insurance policies, (b) a report of Rampart Insurance or such
other reputable insurance broker with respect to such insurance and (c) duly
executed instruments of assignment of such insurance policies to perfect Bank’s
security interest in such policy, including without limitation, acknowledgments
of such assignments from the respective insurers.
In case
of any loss involving damage to Equipment or Inventory Bank will determine
whether such insurance proceeds shall be used (a) to make or cause to be made
the necessary repairs to or replacements of such Equipment or Inventory or (b)
to pay the Secured Obligations, and if there are any contingent Secured
Obligations, to provide cash collateral to cover such Secured
Obligations. Provided a Default or Event of Default has not occurred
and is not continuing, the Bank shall not unreasonably withhold its consent with
respect to any requests of the Grantors to apply the insurance proceeds towards
necessary repairs to or replacements of Equipment or Inventory. If
the Bank elects to apply insurance
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proceeds
towards the payment of the Secured Obligations, the Bank shall apply the
insurance proceeds first towards payment of outstanding Line of Credit Loans
before any other Secured Obligations. Notwithstanding anything to the
contrary contained herein, if there are no outstanding Defaults of Events of
Default and the amount of insurance proceeds to be received in connection with a
loss is equal to or less than $1,000,000, then Bank will make such insurance
proceeds available to Grantors and Grantors will use such proceeds to make or
cause to be made the necessary repairs to or replacements of such Equipment or
Inventory.
(10) Equipment. The
Grantors shall cause the Equipment necessary for the conduct of their respective
business to be maintained and preserved in good working order, repair and
condition, ordinary wear and tear excepted, and shall forthwith, or in the case
of any loss or damage to any of their Equipment as quickly as practicable after
the occurrence thereof, make or cause to be made all repairs, replacements, and
other improvements in connection therewith which are necessary or desirable to
so maintain and preserve such Equipment.
(11) Inventory. In
accordance with reasonable business practice, the Grantors will maintain all
Inventory in good saleable or useable condition. The Grantors will
(a) not sell, assign, lease, mortgage, transfer or otherwise dispose of any
interest in any Inventory other than sales of Inventory in the ordinary course
of business, and (b) not use or permit any of the Inventory to be used for any
unlawful purpose or in violation of any law, or for hire.
(12) Accounts. The
Grantors will remain duly qualified in all states where required to enable each
Grantor to enforce collection of their respective Accounts due from account
debtors in that state. Except as otherwise provided in this Security Agreement,
it shall continue to collect, at their own expense, all amounts due or to become
due to the Grantors under the Accounts. In connection with such collections, the
Grantors may take (and, at Bank's discretion, shall take) such action, as the
Grantors or Bank may deem necessary or advisable to enforce collection of the
Accounts.
(13) Contracts. The
Grantors will perform all of their duties and obligations under each contract
material to the operation of their respective business. They will require that
all other parties to each such contract perform all of their respective duties
and obligations.
Section
11. Rights and
Remedies. If Grantors fail to perform any agreement contained in this
Security Agreement, Bank may itself perform, or cause performance of, such
agreement.
Upon the
occurrence of an Event of Default Bank may exercise in respect of any or all of
the Collateral each of the following rights, remedies and powers and the
Grantors agree that each of the following rights, remedies and powers are
commercially reasonable:
(a) General Remedies.
Bank may exercise in respect of any or all of the Collateral all rights,
remedies and powers provided for in this Security Agreement, by law, in equity
or otherwise available to it, including all the rights and remedies of a secured
party under the UCC (whether or not the UCC applies to the affected
Collateral).
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Right to Accelerate
Obligations Owed to Grantors. To the extent that any obligation to make
payment on any Collateral is not then due or a demand for payment has not been
made and the Grantors have the right, in accordance with the term of such
Collateral, to require or make a demand for payment on such Collateral, Bank has
the right to require and to make a demand for payment on such
Collateral.
(b) Accounts, Contracts, and
Other Collateral. Bank has the right to notify the account debtors or
obligors under any Accounts, Contracts and other Collateral of the security
interest of Bank in such Account, Contract or other Collateral and to direct
such account debtors or obligors to make payment of all amounts due or to become
due to the Grantors thereunder directly to Bank or to an account designated by
Bank and, upon such notification, to enforce collection of any such Accounts,
Contracts and other Collateral, and to adjust, settle or compromise the amount
or payment thereof, in the same manner and to the same extent as the Grantors
might have done. After receipt by the Grantors of such notice from Bank, (a) all
amounts and proceeds (including wire transfers, checks and other instruments)
received by any Grantor in respect of any Accounts, Contracts, or other
Collateral shall be received in trust for the benefit of Bank under this
Security Agreement, shall be segregated from other funds of the Grantors and
shall be forthwith deposited to such account or paid over or delivered to Bank
in the same form as so received (with any necessary endorsement or assignment)
to be held as Collateral, or be applied as provided by this Section, as
determined by Bank and (b) the Grantors shall not adjust, settle or compromise
the amount or payment of any such Account, Contract, or other Collateral or
release wholly or partly any account debtor or obligor thereof, or allow any
discount thereon, other than any discount allowed for prompt
payment.
(i) Assembly of
Collateral. Bank may require the Grantors to, and the Grantors hereby
agree that they will at their expense and upon the request of Bank forthwith,
assemble all or any part of the Collateral as directed by Bank and make it
available to Bank at a place to be designated by Bank that is reasonably
convenient to both Bank and the Grantors.
(ii) Entering Premises.
Bank or its designated agents may enter, with or without judicial process, upon
any premises of the Grantors and take possession of all or any part of the
Collateral, and remove such Collateral to a location specified by
Bank.
(iii) Use of Premises. Bank
shall have the right to enter and remain upon each and every location of the
Grantors without cost or charge to Bank, and use the same together with
materials, supplies, books and records of the Grantors for the purpose of
collecting and liquidating the Collateral, or for preparing for sale and
conducting the sale of the Collateral, whether by foreclosure, auction or
otherwise.
(c) Sale or Other Disposition of
Collateral. Bank may, without notice, except as specified below, sell,
lease, license or otherwise dispose of and grant options to purchase, lease,
license or otherwise acquire, any or all of the Collateral in one or more
parcels at public or private sale or other disposition, for cash, on credit, for
future delivery or otherwise and upon such other terms, including price, as Bank
may deem commercially reasonable.
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Notice of Sale or Other
Disposition of Collateral. The Grantors agree that, to the extent notice
of sale shall be required by law, at least ten (10) days notice to the Grantors
of the time and place of any public or private sale is to be made shall
constitute reasonable notification. Bank shall not be obligated to make any sale
of any or all of the Collateral after any notice of sale has been given. Bank
may adjourn any public or private sale from time to time by announcement at the
time and place fixed for such sale, and such sale may, without further notice,
be made at the time and to the place to which it was so adjourned.
(d) Commercially Reasonable
Sale. The Grantors agree that it is not commercially unreasonable for
Bank (a) to restrict the prospective bidders on or purchasers of any of the
investment property to a limited number of sophisticated investors who will
represent and agree that they are purchasing for their own account for
investment and not with a view to the distribution or sale of any of such
investment property, (b) to fail to incur expenses reasonably deemed significant
by Bank to prepare Collateral for disposition or otherwise to fail to complete
raw material or work in process into finished goods or other finished products
for disposition, (c) 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, (d) to fail to
exercise collection remedies against account debtors or other persons obligated
on Collateral or to fail to remove liens or encumbrances on or any adverse
claims against Collateral, (e) 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, (f) to advertise
dispositions of Collateral through publications or media of general circulation,
whether or not the Collateral is of a specialized nature, (g) to contact other
persons, whether or not in the same business as the Grantors, for expressions of
interest in acquiring all or any portion of the Collateral, (h) to hire one or
more professional auctioneers to assist in the disposition of Collateral,
whether or not the Collateral is of a specialized nature, (i) 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, (j) to dispose of assets
in wholesale rather than retail markets, (k) to disclaim disposition warranties,
including disclaimers of warranties of title, possession, quiet enjoyment and
the like, (l) to purchase insurance or credit enhancements to insure Bank
against risk of loss, collection or disposition of Collateral or to provide to
Bank a guaranteed return from the collection or disposition of Collateral, or
(m) to the extent deemed appropriate by Bank, to obtain the services of other
brokers, investment bankers, consultants and other professionals to assist Bank
in the collection or disposition of any of the Collateral. The Grantors agree
that the purpose of this Section is to provide non-exhaustive indications of
what actions or omissions by Bank would fulfill the duties of Bank under the UCC
of the State or any other relevant jurisdiction in the exercise by Bank of
remedies against the Collateral and that other actions or omissions by Bank
shall not be deemed to fail to fulfill such duties 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 the Grantors
or to impose any duties on Bank that would not have been granted or imposed by
this Security Agreement or by applicable law in the absence of this
Section.
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Proceeds. If any of
the Collateral is sold by Bank upon credit or for future delivery, Bank shall
not be liable for the failure of the purchaser to purchase or pay for the same
and, in the event of any such failure, Bank may resell such Collateral. In no
event shall the Grantors be credited with any part of the proceeds of sale of
any Collateral until and to the extent cash payment in respect thereof has
actually been received by Bank. To the extent any of the Secured Obligations are
contingent, cash proceeds received by Bank in respect of any sale of, collection
from, or other realization upon all or any part of the Collateral may, in the
discretion of Bank, be held by Bank as collateral for such contingent Secured
Obligations. Any cash held by Bank as Collateral and all cash proceeds received
by Bank in respect of any sale of, collection from, or other realization upon
all or any part of the Collateral may, in the discretion of Bank, be applied,
first, to pay all reasonable costs and expenses incurred by Bank in connection
with or incident to the custody, preservation, use or operation of, or the sale
of, collection from, or other realization upon, any and all of the Collateral,
second, to pay all reasonable attorney’s fees and legal expenses incurred by
Bank in connection with or incident to the custody, preservation, use or
operation of, or the sale of, collection from, or other realization upon, any
and all of the Collateral, third, to pay all matured and unpaid Secured
Obligations, in whole or in part by Bank against, all or any part of the Secured
Obligations in such order as Bank shall elect, fourth, if and to the extent any
of the Secured Obligations are unmatured or contingent, to provide cash
collateral for all such Secured Obligations, and fifth, in accordance with
applicable law. If the proceeds of the sale of the Collateral are insufficient
to pay all of the Secured Obligations, the Grantors agree to pay upon demand any
deficiency to Bank.
Bank
shall not by any act, delay, omission or otherwise be deemed to have waived any
of its rights or remedies under this Security Agreement. A waiver by Bank of any
right or remedy under this Security Agreement on any one occasion, shall not be
construed as a bar to or waiver of any such right or remedy which Bank would
have had on any future occasion nor shall Bank be liable for exercising or
failing to exercise any such right or remedy.
Section
12. Appointment of
Bank Attorney-in-Fact. The Grantors hereby irrevocably appoint Bank
attorney-in-fact, with full authority in the place and stead of the Grantors and
in the name of the Grantors, Bank or otherwise (1) to take any and all action
and exercise all rights and remedies granted to Bank under this Security
Agreement and (2) execute any instrument which Bank may deem necessary or
advisable to accomplish the purpose of this Security Agreement.
The
Grantors hereby ratify and approve all acts of Bank as their attorney in-fact
pursuant to this Section, and Bank, as their attorney in-fact, will not be
liable for any acts of commission or omission, nor for any error of judgment or
mistake of fact or law, other than those which result from Bank’s gross
negligence or willful misconduct. This power, being coupled with an interest, is
irrevocable so long as this Security Agreement remains in effect.
Bank
agrees not to exercise its rights under this Section unless there is an
outstanding Event of Default.
Section
13. Grantors Remain
Liable. In all events, including the exercise by Bank of any of the
rights under this Security Agreement, the Grantors remain liable to perform all
of their duties and obligations under the contracts and agreements included in
the Collateral to which
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they are
a party to the same extent as if this Security Agreement had not been executed.
Bank shall not have any obligation or liability under any such contracts and
agreements by reason of this Security Agreement, nor shall Bank be obligated to
perform any of the obligations or duties of the Grantors under, or to take any
action to collect or enforce any claim or rights under, any such contract or
agreement.
The
powers conferred on Bank under this Security Agreement are solely to protect its
interest in the Collateral and shall not impose any duty upon it to exercise any
such powers. Except for the safe custody of any Collateral in its possession and
the accounting for moneys actually received by it under this Security Agreement,
Bank shall not have any duty as to any such Collateral or as to the taking of
any necessary steps to preserve rights against prior parties or any other rights
pertaining to any such Collateral.
Section
14. Indemnity and
Expenses. The Grantors agree to indemnify Bank and each of its directors,
officers, employees, agents and affiliates from and against any and all claims,
losses and liabilities growing out of or resulting from this Security Agreement
or the transactions contemplated by this Security Agreement (including, without
limitation, enforcement of this Security Agreement), except claims, losses or
liabilities resulting from the gross negligence or willful misconduct of the
person to be indemnified. The Grantors will upon demand pay to Bank the amount
of any and all expenses, including the reasonable fees and out of pocket
disbursements of its counsel and of any experts and agents, which Bank may incur
in connection with (1) any amendment to this Security Agreement, (2) the
administration of this Security Agreement, (3) filing or recording fees incurred
with respect to or in connection with this Security Agreement, (4) the custody,
preservation, use or operation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (5) the exercise or enforcement of any
of the rights of Bank under this Security Agreement, or (6) the failure by any
Grantor to perform or observe any of the provisions of this Security
Agreement.
Section
15. Amendments.
No amendment or waiver of any provision of this Security Agreement nor consent
to any departure by any Grantor from this Security Agreement shall in any event
be effective unless the same shall be in writing and signed by Bank, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.
Section
16. Addresses for
Notices. All notices and other communications provided for under this
Security Agreement shall be given in accordance with the terms of the Credit
Agreement.
Section
17. Continuing
Security Interest, Transfer of Secured Obligations. Notwithstanding the
fact that there may be no Secured Obligations outstanding from time to time,
this Security Agreement shall create a continuing security interest in all of
the Collateral. This Security Agreement shall be binding upon the Grantors,
their successors and assigns, and inure to Bank and its successors, transferees
and assigns. No Grantor may transfer or assign its obligations under this
Security Agreement. Bank may assign or otherwise transfer all or a portion of
its rights or obligations with respect to the Secured Obligations to any other
party, and such other party shall then become vested with all the benefits in
respect of such transferred Secured
11
Obligations
and the security interest granted to Bank pursuant to this Security Agreement or
otherwise. The Grantors agree that Bank can provide information regarding the
Grantors to any prospective or actual successor, transferee or
assign.
Section
18. Submission to
Jurisdiction. The Grantors hereby irrevocably submit to the jurisdiction
of any federal or state court sitting in the County of New York in the State of
New York over any action or proceeding arising out of or related to this
Security Agreement and agree with Bank that personal jurisdiction over the
Grantors rests with such courts for purposes of any action on or related to this
Security Agreement. The Grantors hereby waive personal service by manual
delivery and agree that service of process may be made by prepaid certified mail
directed to the Grantors at the address of the Grantors for notices under this
Security Agreement or at such other address as may be designated in writing by
the Grantors to Bank, and that upon mailing of such process such service will be
effective as if the Grantors were personally served. The Grantors agree that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any manner
provided by law. The Grantors further waive any objection to venue in any such
action or proceeding on the basis of inconvenient forum. The Grantors agree that
any action on or proceeding brought against Bank shall only be brought in such
courts.
Section
19. Set-off.
The Grantors agree that, in addition to, and without limiting, any right of
setoff, banker’s lien or counterclaim Bank may otherwise have, Bank shall be
entitled, at its option and without notice to the Grantors after the occurrence
and continuance of an Event of Default, to offset balances (general or special,
time or demand, provisional or final) held by it for the account of the
Grantors, at any of the offices of Bank, in Dollars or any other currency,
against any amount payable by the Grantors to Bank under this Security Agreement
which is not paid when demanded (regardless of whether such balances are then
due to the Grantors).
Section
20. Governing
Law. This Security Agreement shall be governed by and construed in
accordance with the laws of New York, except to the extent that the validity or
perfection of the security interest under this Security Agreement, or remedies
under this Security Agreement, in respect of any particular Collateral are
governed by the laws of a jurisdiction other than New York.
Section
21. Miscellaneous. This
Security Agreement is in addition to and not in limitation of any other rights
and remedies Bank may have by virtue of any other instrument or agreement
heretofore, contemporaneously herewith or hereafter executed by the Grantors or
by law or otherwise. If any provision of this Security Agreement is contrary to
applicable law, such provision shall be deemed ineffective without invalidating
the remaining provisions of this Security Agreement. The headings in this
Security Agreement are for convenience of reference only, and shall not affect
the interpretation or construction of this Security Agreement.
Section
22. WAIVER OF JURY
TRIAL. THE GRANTORS AND BANK EXPRESSLY WAIVE ANY AND EVERY RIGHT TO A
TRIAL BY JURY IN ANY ACTION ON OR RELATED TO THIS SECURITY
AGREEMENT.
12
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13
IN
WITNESS WHEREOF, the Grantors have caused this Security Agreement to be duly
executed and delivered as of the date of this Security Agreement.
By:
________________________________
Name:
Xxxxxxxx Xxxxxx
Title: Chief
Financial Officer
XXXXXXX
ELECTRONICS, INC.
By:
________________________________
Name:
Xxxxxxxx Xxxxxx
Title: Chief
Financial Officer
TULIP
DEVELOPMENT LABORATORY, INC.
By:
________________________________
Name:
Xxxxxxxx Xxxxxx
Title: Chief
Financial Officer
INTEGRATED
CONSULTING SERVICES, INC.
By:
________________________________
Name:
Xxxxxxxx Xxxxxx
Title:
Chief Financial Officer
