Exhibit 10.5
SECURITY AGREEMENT
THIS SECURITY AGREEMENT is made and entered into by and between
DIVERSIFIED CORPORATE RESOURCES, INC., a Texas corporation, whose address is
00000 X. Xxxxxxx Xxxxx., Xxxxx 000, Xxxxxx, Xxxxx 00000 (herein referred to
as "Secured Party"), and M. XXX XXXXXXX whose address is 0000 Xx. Xxxxxxx,
Xxxxxxxxxx, XX 00000 (herein referred to as the "Debtor").
For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Debtor hereby grants to Secured Party a
security interest in and to the Collateral, as herein defined, and in
connection therewith the parties hereby agree as follows:
COLLATERAL. To secure payment of the "Indebtedness", as herein
defined, Debtor hereby assigns, transfers and sets over to Secured Party, and
grants to Secured Party, a security interest in and to the following assets
(herein referred to as the "Collateral"): (a) 20,000 shares of common stock
of the Secured Party, (b) such additional shares of common stock of the
Secured Party as shall be required by the Secured Party based upon the terms
of this Security Agreement, and (c) all proceeds (including insurance
proceeds) from the sale, dispositions, or other hypothecation of all or any
part of the aforesaid assets.
INDEBTEDNESS. The term "Indebtedness" as used herein, shall mean
all obligations payable to Secured Party by Debtor pursuant to the terms and
conditions of that certain Promissory Note (the "Note") dated as of July 17,
1998, in the stated amount of $148,580.53, payable by Maker to Secured Party.
REPRESENTATIONS OF DEBTOR. Debtor represents, warrants and agrees
as follows:
(a) The Collateral will not be sold, transferred, pledged or made
subject to a security agreement without the prior written consent of Secured
Party.
(b) Debtor will sign and execute alone or with Secured Party any
financing statement or other document or procure any document, and pay all
costs in connection therewith necessary to protect the security interest
under this Security Agreement against the rights or interests of third
persons.
(c) Debtor will, at Debtor's own expense, do, make, procure, execute
and deliver all acts, things, writings and assurances as Secured Party may at
any time reasonably request to protect, assure or enforce the interests,
rights and remedies of Secured Party created by, provided in or emanating
from this Security Agreement.
(d) Debtor will pay to Secured Party all expenses (including
expenses for legal services of every kind) of, or incidental to, the
enforcement of any of the provisions of this Security Agreement, or
incidental to the enforcement, repayment or collection of any of the
Indebtedness, or any actual or attempted sale, or any exchange, enforcement,
collection, compromise or settlement of any of the Collateral or receipt of
the proceeds thereof, and for the care of the Collateral and defending or
asserting the rights and claims of the Secured Party in respect thereof, by
litigation or otherwise; and all such expenses shall be Indebtedness within
the terms of this Security Agreement.
REGULATION G. Both parties agree that this transaction may be
subject to Regulation G issued by the Board of Governors of the Federal
Reserve System, which may impose compliance obligations on Debtor.
UNIFORM COMMERCIAL CODE. This Security Agreement shall constitute a
valid and binding security agreement under the Uniform Commercial Code -
Secured Transactions (herein called the "Code") creating in favor of Secured
Party, until the Indebtedness is fully paid, a first and prior security
interest in and to the Collateral. Accordingly, Debtor hereby acknowledges
unto Secured Party that Secured Party shall have, in addition to any and all
other rights, remedies and recourses afforded to
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Secured Party under this Security Agreement or the instruments, all rights,
remedies and recourses afforded to secured parties by the Code.
DEFAULT BY DEBTOR. There will be a default under this Security
Agreement upon the happening of any of the following events or conditions
(herein called an "Event of Default"):
(a) If any Indebtedness secured by this Security Agreement, either
principal or interest, is not paid within ten (10) business days after
Debtor's receipt of written notice of the default.
(b) If the Debtor shall fail to comply with any of the Debtor's
covenants or undertakings in any agreement, instrument or other document
between the Debtor and the Secured Party, and said failure to comply shall
continue for thirty (30) days after written notice of said failure from
Secured Party.
(c) If Debtor shall fail to comply with any of Debtor's covenants
or agreements herein or in any promissory note, agreement, instrument or
other document evidencing, relating to, or executed in connection with or as
security for any of the Indebtedness (such documents are herein referred to
as the "Security Instruments"), and said failure to comply shall continue for
thirty (30) days after receipt of written notice of said failure from Secured
Party; provided, however, if there are any conflicts with respect to any
provisions of this Security Agreement and the security instruments, the terms
of the security instruments will govern and shall be controlling.
(d) If Debtor (i) applies for or consents to the appointment of a
receiver, trustee, custodian or liquidator of all or a substantial part of
Debtors assets, or (ii) files a voluntary petition in bankruptcy or fails
generally to pay Debtor's debts as such debts become due, or (iii) makes a
general assignment for the benefit of creditors, or (iv) files a petition or
answers same wherein Debtor seeks reorganization or rearrangement with
creditors or to take advantage of any insolvency law, or (v) files an answer
admitting the material allegations of a petition filed against Debtor in any
bankruptcy, reorganization, insolvency or similar proceeding.
(e) If an order, judgment or decree is entered by any court of
competent jurisdiction, upon the application of a creditor or otherwise,
adjudicating Debtor as bankrupt or insolvent or approving a petition seeking
reorganization or appointing a receiver, trustee or liquidator of all or any
substantial part of Debtor's assets.
(f) If any warranty, representation or statement contained in this
Security Agreement, or any agreement, instrument or other document made or
furnished to Secured Party by or on behalf of Debtor in connection with this
Security Agreement proves to have been false in any respect when made or
furnished.
REMEDIES.
(a) When an Event of Default occurs, and at any time thereafter,
Secured Party may declare all or a part of the Indebtedness immediately due
and payable and may proceed to enforce payment of same and to exercise any
and all of the rights and remedies provided by the Code, as well as all other
rights and remedies possessed by Secured Party under this Security Agreement
or otherwise at law or in equity. Secured Party may require Debtor to
assemble the Collateral and make it available to Secured Party at any place
to be designated by Secured Party which is reasonably convenient to both
parties. For purposes of the notice requirements of the Code, Secured Party
and Debtor agree that notice given at least ten (10) days prior to the
related action hereunder is reasonable. Secured Party shall be entitled to
immediate possession of the Collateral and all books and records evidencing
same and shall have authority to enter upon any premises, upon which said
items may be situated, and
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remove same therefrom. Expenses of retaking, holding, preparing for sale,
selling, or the like ("Collection Costs"), shall include, without limitation,
Secured Party's reasonable attorneys' fees and all such expenses shall be
recovered by Secured Party before applying the proceeds from the disposition
of the Collateral toward the Indebtedness. To the extent allowed by the Code,
Secured Party may use Secured Party's discretion in applying the proceeds of
any disposition of the Collateral to the Collection Costs or to the
Indebtedness and Debtor will remain liable for any deficiency remaining after
such disposition. All rights and remedies of Secured Party hereunder are
cumulative and may be exercised singly or concurrently. The exercise of any
right or remedy will not be a waiver of any other.
(b) Secured Party, in addition to the rights and remedies provided
for in the preceding subparagraph, shall have all the rights and remedies of
a secured party under the Uniform Commercial Code as adopted by the state
where the Collateral is located at the date of any such Event of Default, and
Secured Party shall be entitled to all such other rights and remedies as may
now or hereafter exist at law or in equity for the collection of the
Indebtedness and the enforcement of the covenants herein and the foreclosure
of the security interest created hereby and to resort to any remedy provided
hereunder or provided by the Uniform Commercial Code as adopted in the state
where the Collateral is located at the date of an Event of Default, or by any
other law of such state, shall not prevent the concurrent or subsequent
employment of any other appropriate remedy or remedies.
(c) Secured Party may remedy any default, without waiving same, or
may waive any default without waiving any prior or subsequent default.
SECURED PARTY'S RIGHTS.
(a) This Security Agreement, Secured Party's rights hereunder or
said Indebtedness hereby secured, may be assigned from time to time, and in
any such case the assignee will be entitled to all of the rights, privileges
and remedies granted in this Security Agreement to Secured Party.
(b) Upon the occurrence of an Event of Default, Secured Party may
execute, sign, endorse, transfer or deliver, in the name of Debtor, notes,
checks, drafts or other instrument for the payment of money and receipts or
any other documents necessary to evidence, perfect or realize upon the
security interest and obligations created by this Security Agreement.
(c) At Secured Party's option, Secured Party may discharge taxes,
liens or security interests or other encumbrances at any time levied or
placed on the Collateral, and may perform or cause to be performed Debtor's
obligations under the Collateral to maintain the same in full force and
effect. Debtor agrees to reimburse Secured Party on demand for any payment
made, or expense incurred, by Secured Party pursuant to the foregoing
authorization, plus interest thereon at the maximum rate of interest allowed
by applicable law.
(d) No remedy herein conferred upon or reserved to Secured Party is
intended to be or shall be exclusive of any other remedy, but every remedy
herein provided is cumulative and is in addition to every other remedy given
hereunder or in any instrument executed in connection herewith, or now or
hereafter existing at law or in equity, or by statute; and every such right
and remedy may be exercised from time to time and as often as may be deemed
expedient. No delay or omission by Secured Party to exercise any right or
remedy arising from any default will impair any such right or remedy or will
be construed to be a waiver thereof or of any such default or an acquiescence
therein.
ADDITIONAL RIGHTS OF SECURED PARTY. The right is expressly granted
to Secured Party, that upon the occurrence of an Event of Default and at
Secured Party's discretion, to receive the income distributions or
distributions following dissolution, and dividends on the Collateral, and to
hold the same as part of the Collateral or apply the same, or both, to the
payment of the Indebtedness, all without notice
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and without liability except to account for property actually received by
Secured Party.
RELEASE OF SECURITY INTEREST. Upon full and complete payment of all
sums owing and to be owing by Debtor to Secured Party and the termination of
any obligations of Debtor under the Security Agreement, together with all
costs incurred in connection therewith, at the request and expense of Debtor,
Secured Party will make, execute and deliver a reassignment of the properties
assigned hereby and of the monies, revenues, proceeds, benefits and payments,
if any, that may be owing upon the aforesaid Collateral to Debtor but without
covenant or warranty, however, of any kind or character, express or implied,
and with the provisions that Secured Party will not be required or called
upon to refund or account for any payments properly made to Secured Party
which have been or may be properly applied to any Indebtedness secured or to
be secured hereby.
VALIDITY OF SECURITY INTEREST. No security taken hereafter as
security for payment of any part or all of the Indebtedness shall impair in
any manner or effect this Security Agreement; all such present and future
additional security to be considered as cumulative security. Any of the
Collateral may be released from this Security Agreement without altering,
varying or diminishing in any way the force, effect, lien, security interest
or charge of this Security Agreement as to the Collateral not expressly
released, and this Agreement shall continue as a first lien, security
interest and charge on all of the Collateral not expressly released until all
sums and indebtedness secured hereby have been paid in full.
NOTICES. Any notice, request or other document shall be in writing
and sent by registered or certified mail, return receipt requested, postage
prepaid and addressed to the party to be notified at the following addresses,
or such other address as such party may hereafter designate by written notice
to all parties, which notice shall be effective as of the date of posting:
(a) If to Secured Party:
Diversified Corporate Resources, Inc.
00000 X. Xxxxxxx Xxxxx., Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: CFO
(b) If to Debtor:
M. Xxx Xxxxxxx
0000 Xx. Xxxxxxx
Xxxxxxxxxx, XX 00000
TEXAS LAW. This Security Agreement and the obligations of the
parties hereunder is to be interpreted, construed and enforced in accordance
with the laws of the State of Texas.
SEVERABILITY. If any provision of this Security Agreement or the
application thereof to any person or circumstance is held to be invalid or
unenforceable to any extent, the remainder of this Security Agreement and the
application of such provisions to other persons or circumstances is not to be
affected thereby and is to be enforced to the full extent permitted by law.
SUCCESSORS AND ASSIGNS. This Security Agreement inures to the
benefit of, and is binding upon, Debtor and Secured Party and their
respective heirs, legal representatives, successors and assigns.
GENDER. The use of any gender herein shall include the other
genders.
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SCOPE. Nothing herein contained will in any way limit or be
construed as limiting the right of Secured Party to collect any note, item,
sum or amount secured or to be secured hereby only out of the properties
assigned hereby or out of the revenues, monies, proceeds, benefits and
payments accruing and to accrue unto Debtor, under and by virtue of said
Collateral, but it is expressly understood and provided that all such
Indebtedness and amounts secured and to be secured hereby are, and shall
constitute, absolute and unconditional obligations of Debtor to pay to
Secured Party the amount provided for instruments executed in connection
herewith and all agreements with reference thereto at the time and in the
manner therein specified or provided. Debtor agrees that Debtor will, from
time to time, and upon request of Secured Party, furnish satisfactory proof
that the properties assigned hereby and the revenues, monies, proceeds,
benefits and payments accruing and to accrue under said Collateral are free
and clear of all lawful demands, claims and liens of any and all persons
whomsoever.
IN WITNESS WHEREOF, this Security Agreement is effective as of July
17, 1998, but is actually executed this 16th day of November 1998.
DIVERSIFIED CORPORATE RESOURCES, INC.
By:
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Name:
----------------------------
Title:
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M. Xxx Xxxxxxx
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THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
This instrument was acknowledged before me, a Notary Public, on the
___ day of November, 1998, by ______________, as ______________ of Diversified
Corporate Resources, Inc., a Texas corporation, for and on behalf of such
corporation and for the purposes therein set forth.
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Notary Public in and for the State of Texas
My Commission Expires:
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
This instrument was acknowledged before me, a Notary Public, on the ___
day of November, 1998, by M. Xxx Xxxxxxx.
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Notary Public in and for the State of Texas
My Commission Expires
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