SECURITY AGREEMENT: EQUIPMENT
Exhibit
10.10
EQUIPMENT
1. GRANT
OF
SECURITY INTEREST. For valuable consideration, the undersigned Target Logistic
Services, Inc., or any of them (“Debtor”), hereby grants and transfers to XXXXX
FARGO BANK, NATIONAL ASSOCIATION (“Bank”) a security interest in all goods,
tools, machinery, furnishings, furniture and other equipment, now or at any
time
hereafter, and prior to the termination hereof, owned or acquired by Debtor,
wherever located, whether in the possession of Debtor or any other person and
whether located on Debtor’s property or elsewhere, and all improvements,
replacements, accessions and additions thereto and embedded software included
therein (collectively called “Collateral”), together with whatever is receivable
or received when any of the Collateral or proceeds thereof are sold, leased,
collected, exchanged or otherwise disposed of, whether such disposition is
voluntary or involuntary, including without limitation, (a) all accounts,
contract rights, chattel paper (whether electronic or tangible), instruments,
promissory notes, documents, general intangibles, payment intangibles and other
rights to payment of every kind now or at any time hereafter arising out of
any
such sale, lease, collection, exchange or other disposition of any of the
foregoing, (b) all rights to payment, including returned premiums, with respect
to any insurance relating to any of the foregoing, and (c) all rights to payment
with respect to any claim or cause of action affecting or relating to any of
the
foregoing (hereinafter called “Proceeds”).
2. OBLIGATIONS
SECURED. The obligations secured hereby are the payment and performance of:
(a)
all present and future Indebtedness of Debtor to Bank; (b) all obligations
of
Debtor and rights of Bank under this Agreement; and (c) all present and future
obligations of Debtor to Bank of other kinds. The word “Indebtedness” is used
herein in its most comprehensive sense and includes any and all advances, debts,
obligations and liabilities of Debtor, or any of them, heretofore, now or
hereafter made incurred or created, whether voluntary or involuntary and however
arising, whether due or not due, absolute or contingent, liquidated or
unliquidated, determined or undetermined, including under any swap, derivative,
foreign exchange, hedge, deposit, treasury management or other similar
transaction or arrangement, and whether Debtor may be liable individually or
jointly with others, or whether recovery upon such Indebtedness may be or
hereafter becomes unenforceable.
3. TERMINATION.
This Agreement will terminate upon the performance of all obligations of Debtor
to Bank, including without limitation, the payment of all Indebtedness of Debtor
to Bank, and the termination of all commitments of Bank to extend credit to
Debtor, existing at the time Bank receives written notice from Debtor of the
termination of this Agreement.
4. REPRESENTATIONS
AND WARRANTIES. Debtor represents and warrants to Bank that: (a) Debtor’s legal
name is exactly as set forth on the first page of this Agreement, and all of
Debtor’s organizational documents or agreements delivered to Bank are complete
and accurate in every respect; (b) Debtor is the owner and has possession
or control of the Collateral and Proceeds; (c) Debtor has the exclusive right
to
grant a security interest in the Collateral and Proceeds; (d) all Collateral
and
Proceeds are genuine, free from liens, adverse claims, setoffs, default,
prepayment, defenses and conditions precedent of any kind or character, except
the lien created hereby or as otherwise agreed to by Bank, or as heretofore
disclosed by Debtor to Bank, in writing; (e) all statements contained
herein are true and complete in all material respects; (f) no financing
statement covering any of the Collateral or Proceeds, and naming any secured
party other than Bank, is on file in any public office; and (g) Debtor is not
in
the business of selling goods of the kind included within the Collateral subject
to this Agreement, and Debtor acknowledges that no sale or other disposition
of
any Collateral, including without limitation, any Collateral which Debtor may
deem to be surplus, has been or shall be consented to or acquiesced in by Bank,
except as specifically set forth in writing by Bank.
5. COVENANTS
OF DEBTOR.
(a) Debtor
agrees in general: (i) to pay Indebtedness secured hereby when due; (ii) to
indemnify Bank against all losses, claims, demands, liabilities and expenses
of
every kind caused by property subject hereto; (iii) to permit Bank to exercise
its powers; (iv) to execute and deliver such documents as Bank deems necessary
to create, perfect and continue the security interests contemplated hereby;
(v)
not to change its name, and as applicable, its chief executive office, its
principal residence or the jurisdiction in which it is organized and/or
registered without giving Bank prior written notice thereof; (vi) not to change
the places where Debtor keeps any Collateral or Debtor’s records concerning the
Collateral and Proceeds without giving Bank prior written notice of the address
to which Debtor is moving same; and (vii) to cooperate with Bank in
perfecting all security interests granted herein and in obtaining such
agreements from third parties as Bank deems necessary, proper or convenient
in
connection with the preservation, perfection or enforcement of any of its rights
hereunder.
(b) Debtor
agrees with regard to the Collateral and Proceeds, unless Bank agrees otherwise
in writing: (i) that Bank is authorized to file financing statements in the
name
of Debtor to perfect Bank’s security interest in Collateral and Proceeds;
(ii) to insure the Collateral with Bank named as loss payee, in form,
substance and amounts, under agreements, against risks and liabilities, and
with
insurance companies satisfactory to Bank; (iii) to operate the Collateral in
accordance with all applicable statutes, rules and regulations relating to
the
use and control thereof, and not to use the Collateral for any unlawful purpose
or in any way that would void any insurance required to be carried in connection
therewith; (iv) not to permit any lien on the Collateral or Proceeds, including
without limitation, liens arising from repairs to or storage of the Collateral,
except in favor of Bank; (v) to pay when due all license fees, registration
fees
and other charges in connection with any Collateral; (vi) not to remove the
Collateral from Debtor’s premises except in the ordinary course of Debtor’s
business; (vii) not to sell, hypothecate or otherwise dispose of, nor
permit the transfer by operation of law of, any of the Collateral or Proceeds
or
any interest therein; (viii) not to rent, lease or charter the Collateral;
(ix) to permit Bank to inspect the Collateral at any time; (x) to keep, in
accordance with generally accepted accounting principles, complete and accurate
records regarding all Collateral and Proceeds, and to permit Bank to inspect
the
same and make copies thereof at any reasonable time; (xi) if requested by Bank,
to receive and use reasonable diligence to collect Proceeds, in trust and as
the
property of Bank, and to immediately endorse as appropriate and deliver such
Proceeds to Bank daily in the exact form in which they are received together
with a collection report in form satisfactory to Bank; (xii) not to commingle
Proceeds or collections thereunder with other property; (xiii) to give only
normal allowances and credits and to advise Bank thereof immediately in writing
if they affect any Collateral or Proceeds in any material respect; (xiv) in
the
event Bank elects to receive payments of Proceeds hereunder, to pay all expenses
incurred by Bank in connection therewith, including expenses of accounting,
correspondence, collection efforts, reporting to account or contract debtors,
filing, recording, record keeping and expenses incidental thereto; and (xv)
to
provide any service and do any other acts which may be necessary to maintain,
preserve and protect all Collateral and, as appropriate and applicable, to
keep
the Collateral in good and saleable condition and repair, to deal with the
Collateral in accordance with the standards and practices adhered to generally
by owners of like property, and to keep all Collateral and Proceeds free and
clear of all defenses, rights of offset and counterclaims.
6. POWERS
OF
BANK. Debtor appoints Bank its true attorney in fact to perform any of the
following powers, which are coupled with an interest, are irrevocable until
termination of this Agreement and may be exercised from time to time by Bank’s
officers and employees, or any of them, if an Event of Default (as defined
below) exists: (a) to perform any obligation of Debtor hereunder in Debtor’s
name or otherwise; (b) to give notice to account debtors or others of Bank’s
rights in the Collateral and Proceeds, to enforce or forebear from enforcing
the
same and make extension or modification agreements with respect thereto; (c)
to
release persons liable on Proceeds and to give receipts and acquittances and
compromise disputes in connection therewith; (d) to release or substitute
security; (e) to resort to security in any order; (f) to prepare, execute,
file,
record or deliver notes, assignments, schedules, designation statements,
financing statements, continuation statements, termination statements,
statements of assignment, applications for registration or like papers to
perfect, preserve or release Bank’s interest in the Collateral and Proceeds; (g)
to receive, open and read mail addressed to Debtor; (h) to take cash,
instruments for the payment of money and other property to which Bank is
entitled; (i) to verify facts concerning the Collateral and Proceeds by inquiry
of obligors thereon, or otherwise, in its own name or a fictitious name; (j)
to
endorse, collect, deliver and receive payment under instruments for the payment
of money constituting or relating to Proceeds; (k) to prepare, adjust, execute,
deliver and receive payment under insurance claims, and to collect and receive
payment of and endorse any instrument in payment of loss or returned premiums
or
any other insurance refund or return, and to apply such amounts received by
Bank, at Bank’s sole option, toward repayment of the Indebtedness or replacement
of the Collateral; (l) to exercise all rights, powers and remedies which Debtor
would have, but for this Agreement, with respect to all the Collateral and
Proceeds subject hereto; (m) to enter onto Debtor’s premises in inspecting the
Collateral; and (n) to do all acts and things and execute all documents in
the
name of Debtor or otherwise, deemed by Bank as necessary, proper and convenient
in connection with the preservation, perfection or enforcement of its rights
hereunder. Notwithstanding the foregoing, the powers of Bank under the following
described subdivisions of the preceding sentence may be exercised whether or
not
an Event of Default exists: (b), (d), (f), (i), (m), and as it relates to the
preservation or perfection of Bank’s rights hereunder, (n).
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7. PAYMENT
OF PREMIUMS, TAXES, CHARGES, LIENS AND ASSESSMENTS. Debtor agrees to pay, prior
to delinquency, all insurance premiums, taxes, charges, liens and assessments
against the Collateral and Proceeds, and upon the failure of Debtor to do so,
Bank at its option may pay any of them and shall be the sole judge of the
legality or validity thereof and the amount necessary to discharge the same.
Any
such payments made by Bank shall be obligations of Debtor to Bank, due and
payable immediately upon demand, together with interest at a rate determined
in
accordance with the provisions of this Agreement, and shall be secured by the
Collateral and Proceeds, subject to all terms and conditions of this
Agreement.
8. EVENTS
OF
DEFAULT. The occurrence of any of the following shall constitute an “Event of
Default” under this Agreement: (a) any default in the payment or performance of
any obligation, or any defined event of default, under (i) any contract or
instrument evidencing any Indebtedness, or (ii) any other agreement between
Debtor and Bank, including without limitation any loan agreement, relating
to or
executed in connection with any Indebtedness; (b) any representation or warranty
made by Debtor herein shall prove to be incorrect, false or misleading in any
material respect when made; (c) Debtor shall fail to observe or perform any
obligation or agreement contained herein and such default is not cured within
any cure period applicable thereto; (d) any impairment in the rights of Bank
in
any Collateral or Proceeds, or any attachment or like levy on any property
of
Debtor, and (e) Bank, in good faith, believes any or all of the Collateral
and/or Proceeds to be in danger of misuse, dissipation, commingling, loss,
theft, damage or destruction.
9. REMEDIES.
Upon the occurrence of any Event of Default, Bank shall have the right to
declare immediately due and payable all or any Indebtedness secured hereby
and
to terminate any commitments to make loans or otherwise extend credit to Debtor.
Bank shall have all other rights, powers, privileges and remedies granted to
a
secured party upon default under the California Uniform Commercial Code or
otherwise provided by law, including without limitation, the right (a) to
contact all persons obligated to Debtor on any Collateral or Proceeds and to
instruct such persons to deliver all Collateral and/or Proceeds directly to
Bank, and (b) to sell, lease, license or otherwise dispose of any or all
Collateral. All rights, powers, privileges and remedies of Bank shall be
cumulative. No delay, failure or discontinuance of Bank in exercising any right,
power, privilege or remedy hereunder shall affect or operate as a waiver of
such
right, power, privilege or remedy; nor shall any single or partial exercise
of
any such right, power, privilege or remedy preclude, waive or otherwise affect
any other or further exercise thereof or the exercise of any other right, power,
privilege or remedy. Any waiver, permit, consent or approval of any kind by
Bank
of any default hereunder, or any such waiver of any provisions or conditions
hereof, must be in writing and shall be effective only to the extent set forth
in writing. It is agreed that public or private sales or other dispositions,
for
cash or on credit, to a wholesaler or retailer or investor, or user of property
of the types subject to this Agreement, or public auctions, are all commercially
reasonable since differences in the prices generally realized in the different
kinds of dispositions are ordinarily offset by the differences in the costs
and
credit risks of such dispositions. While an Event of Default exists: (a) Debtor
will deliver to Bank from time to time, as requested by Bank, current lists
of
all Collateral and Proceeds; (b) Debtor will not dispose of any Collateral
or
Proceeds except on terms approved by Bank; (c) at Bank’s request, Debtor will
assemble and deliver all Collateral and Proceeds, and books and records
pertaining thereto, to Bank at a reasonably convenient place designated by
Bank;
and (d) Bank may, without notice to Debtor, enter onto Debtor’s premises and
take possession of the Collateral. Debtor further agrees that Bank shall have
no
obligation to process or prepare any Collateral for sale or other
disposition.
10. DISPOSITION
OF COLLATERAL AND PROCEEDS; TRANSFER OF INDEBTEDNESS. In disposing of Collateral
hereunder, Bank may disclaim all warranties of title, possession, quiet
enjoyment and the like. Any proceeds of any disposition of any Collateral or
Proceeds, or any part thereof, may be applied by Bank to the payment of expenses
incurred by Bank in connection with the foregoing, including reasonable
attorneys’ fees, and the balance of such proceeds may be applied by Bank toward
the payment of the Indebtedness in such order of application as Bank may from
time to time elect. Upon the transfer of all or any part of the Indebtedness,
Bank may transfer all or any part of the Collateral or Proceeds and shall be
fully discharged thereafter from all liability and responsibility with respect
to any of the foregoing so transferred, and the transferee shall be vested
with
all rights and powers of Bank hereunder with respect to any of the foregoing
so
transferred; but with respect to any Collateral or Proceeds not so transferred,
Bank shall retain all rights, powers, privileges and remedies herein
given.
11. STATUTE
OF LIMITATIONS. Until all Indebtedness shall have been paid in full and all
commitments by Bank to extend credit to Debtor have been terminated, the power
of sale or other disposition and all other rights, powers, privileges and
remedies granted to Bank hereunder shall continue to exist and may be exercised
by Bank at any time and from time to time irrespective of the fact that the
Indebtedness or any part thereof may have become barred by any statute of
limitations, or that the personal liability of Debtor may have ceased, unless
such liability shall have ceased due to the payment in full of all Indebtedness
secured hereunder.
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12. MISCELLANEOUS.
When there is more than one Debtor named herein: (a) the word “Debtor” shall
mean all or any one or more of them as the context requires; (b) the obligations
of each Debtor hereunder are joint and several; and (c) until all Indebtedness
shall have been paid in full, no Debtor shall have any right of subrogation
or
contribution, and each Debtor hereby waives any benefit of or right to
participate in any of the Collateral or Proceeds or any other security now
or
hereafter held by Bank. Debtor hereby waives any right to require Bank to (i)
proceed against Debtor or any other person, (ii) marshal assets or proceed
against or exhaust any security from Debtor or any other person, (iii) perform
any obligation of Debtor with respect to any Collateral or Proceeds, and (d)
make any presentment or demand, or give any notice of nonpayment or
nonperformance, protest, notice of protest or notice of dishonor hereunder
or in
connection with any Collateral or Proceeds. Debtor further waives any right
to
direct the application of payments or security for any Indebtedness of Debtor
or
indebtedness of customers of Debtor.
13. NOTICES.
All notices, requests and demands required under this Agreement must be in
writing, addressed to Bank at the address specified in any other loan documents
entered into between Debtor and Bank and to Debtor at the address of its chief
executive office (or principal residence, if applicable) specified below or
to
such other address as any party may designate by written notice to each other
party, and shall be deemed to have been given or made as follows: (a) if
personally delivered, upon delivery; (b) if sent by mail, upon the earlier
of
the date of receipt or three (3) days after deposit in the U.S. mail, first
class and postage prepaid; and (c) if sent by telecopy, upon
receipt.
14. COSTS,
EXPENSES AND ATTORNEYS’ FEES. Debtor shall pay to Bank immediately upon demand
the full amount of all payments, advances, charges, costs and expenses,
including reasonable attorneys’ fees (to include outside counsel fees and all
allocated costs of Bank’s in-house counsel), incurred by Bank in connection with
(a) the perfection and preservation of the Collateral or Bank’s interest
therein, and (b) the realization, enforcement and exercise of any right, power,
privilege or remedy conferred by this Agreement, whether incurred at the trial
or appellate level, in an arbitration proceeding or otherwise, and including
any
of the foregoing incurred in connection with any bankruptcy proceeding
(including without limitation, any adversary proceeding, contested matter or
motion brought by Bank or any other person) relating to Debtor or in any way
affecting any of the Collateral or Bank’s ability to exercise any of its rights
or remedies with respect thereto. All of the foregoing shall be paid by Debtor
with interest from the date of demand until paid in full at a rate per annum
equal to the greater of ten percent (10%) or Bank’s Prime Rate in effect from
time to time.
15. SUCCESSORS;
ASSIGNS; AMENDMENT. This Agreement shall be binding upon and inure to the
benefit of the heirs, executors, administrators, legal representatives,
successors and assigns of the parties, and may be amended or modified only
in
writing signed by Bank and Debtor.
16. SEVERABILITY
OF PROVISIONS. If any provision of this Agreement shall be held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only
to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or any remaining provisions of this Agreement.
17. GOVERNING
LAW. This Agreement shall be governed by and construed in accordance with the
laws of the State of California.
Debtor
warrants that Debtor is an organization registered under the laws of
Delaware.
Debtor
warrants that its chief executive office (or principal residence, if applicable)
is located at the following address: 0000 Xxxxx Xxxxxxx Xxxxxx, Xxxxxx, XX
00000
Debtor
warrants that the Collateral (except goods in transit) is located or domiciled
at the following additional addresses: NONE.
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IN
WITNESS WHEREOF, this Agreement has been duly executed as of March 19,
2007.
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Target
Logistic Services, Inc.
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By:
/s/ Xxxxxx X. Xxxxxx
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Title:
Vice President
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