-1-
3309101/RLC
12/03/97
X.X. MANTA, INC.
SECURITY AGREEMENT
The undersigned, X.X. Manta, Inc., an Illinois corporation (the
"Debtor"), with its mailing address as set forth in Section 11(b) hereof, for
value received, hereby grants to XXXXXX TRUST AND SAVINGS BANK, an Illinois
banking corporation (the "Secured Party"), with its mailing address as set forth
in Section 11(b) hereof, a lien on and security interest in, and acknowledges
and agrees that the Secured Party has and shall continue to have a continuing
lien on and security interest in, any and all right, title and interest of the
Debtor, whether now owned or existing or hereafter created, acquired or arising,
in and to the following:
(a) Receivables. All Receivables, whether now owned or
existing or hereafter created, acquired or arising, and however
evidenced or acquired, or in which the Debtor now has or hereafter
acquires any rights (the term "Receivables" means and includes all
accounts, accounts receivable, contract rights, instruments, notes,
drafts, acceptances, documents, chattel paper, and all other forms of
obligations owing to the Debtor, any right of the Debtor to payment for
goods sold or leased or for services rendered, whether or not earned by
performance, and all of the Debtor's rights to any merchandise and
other goods (including, without limitation, any returned or repossessed
goods and the right of stoppage in transit) which is represented by,
arises from or is related to any of the foregoing);
(b) General Intangibles. All General Intangibles, whether now
owned or existing or hereafter created, acquired or arising, or in
which the Debtor now has or hereafter acquires any rights (the term
"General Intangibles" means and includes all general intangibles,
patents, patent applications, patent licenses, trademarks, trademark
registrations, trademark licenses, trade styles, trade names,
copyrights, copyright registrations, copyright licenses and other
licenses and similar intangibles, all customer, client and supplier
lists (in whatever form maintained), all rights in leases and other
agreements relating to real or personal property, all causes of action
and tax refunds of every kind and nature, all privileges, franchises,
immunities, licenses, permits and similar intangibles, all rights to
receive payments in connection with the termination of any pension plan
or employee stock ownership plan or trust established for the benefit
of employees of the Debtor, and all other personal property (including
things in action) not otherwise covered by this Security Agreement);
(c) Inventory. All Inventory, whether now owned or existing or hereafter
created, acquired or arising, or in which the Debtor now has or hereafter
acquires any rights, and all documents
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of title at any time evidencing or representing any part thereof (the
term "Inventory" means and includes all inventory and any other goods
which are held for sale or lease or are to be furnished under contracts
of service or consumed in the Debtor's business, all goods which are
raw materials, work-in-process or finished goods, all goods which are
returned or repossessed goods, and all materials and supplies of every
kind and nature used or usable in connection with the acquisition,
manufacture, processing, supply, servicing, storing, packing, shipping,
advertising, selling, leasing or furnishing of the foregoing, and any
constituents or ingredients thereof);
(d) Equipment. All Equipment, whether now owned or existing
or hereafter created, acquired or arising, or in which the Debtor now
has or hereafter acquires any rights (the term "Equipment" means and
includes all equipment and any other machinery, tools, fixtures, trade
fixtures, furniture, furnishings, office equipment, vehicles (including
vehicles subject to a certificate of title law), and all other goods
now or hereafter used or usable in connection with the Debtor's
business, together with all parts, accessories and attachments relating
to any of the foregoing), except for any Equipment described on
Schedule E attached hereto;
(e) Investment Property. All Investment Property, whether now
owned or existing or hereafter created, acquired or arising, or in
which the Debtor now has or hereafter acquires any rights (the term
"Investment Property" means and includes all investment property and
any other securities (whether certificated or uncertificated), security
entitlements, securities accounts, commodity contracts and commodity
accounts, including all substitutions and additions thereto, all
dividends, distributions and sums distributable or payable from, upon,
or in respect of such property, and all rights and privileges incident
to such property);
(f) Deposits and Property in Possession. All deposit accounts
(whether general, special or otherwise) of the Debtor maintained with
the Secured Party and all sums now or hereafter on deposit therein or
payable thereon, and all other personal property and interests in
personal property of the Debtor of any kind or description now held by
the Secured Party or at any time hereafter transferred or delivered to,
or coming into the possession, custody or control of, the Secured
Party, or any agent or affiliate of the Secured Party, whether
expressly as collateral security or for any other purpose (whether for
safekeeping, custody, collection or otherwise), and all dividends and
distributions on or other rights in connection with any such property,
in each case whether now owned or existing or hereafter created,
acquired or arising;
(g) Records. All supporting evidence and documents relating
to any of the above-described property, whether now owned or existing
or hereafter created, acquired or arising, including, without
limitation, computer programs, disks, tapes and related electronic data
processing media, and all rights of the Debtor to retrieve the same
from third parties, written applications, credit information, account
cards, payment records, correspondence, delivery and installation
certificates, invoice copies, delivery receipts, notes and other
evidences of indebtedness, insurance certificates and the like,
together with all books of account, ledgers and cabinets in which the
same are reflected or maintained;
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(h) Accessions and Additions. All accessions and additions to, and
substitutions and replacements of, any and all of the foregoing, whether now
owned or existing or hereafter created, acquired or arising; and
(i) Proceeds and Products. All proceeds and products of the
foregoing and all insurance of the foregoing and proceeds thereof,
whether now owned or existing or hereafter created, acquired or
arising;
all of the foregoing being herein sometimes referred to as the "Collateral". All
terms which are used in this Security Agreement which are defined in the Uniform
Commercial Code of the State of Illinois ("UCC") shall have the same meanings
herein as such terms are defined in the UCC, unless this Security Agreement
shall otherwise specifically provide.
1. Obligations Hereby Secured. The lien and security interest herein
granted and provided for is made and given to secure, and shall secure, the
payment and performance of (a) any and all indebtedness, obligations and
liabilities of whatsoever kind and nature of the Debtor to the Secured Party
(whether arising before or after the filing of a petition in bankruptcy),
whether direct or indirect, absolute or contingent, due or to become due, and
whether now existing or hereafter arising and howsoever held, evidenced or
acquired, and whether several, joint or joint and several and (b) any and all
reasonable expenses and charges, legal or otherwise, suffered or incurred by the
Secured Party in collecting or enforcing any of such indebtedness, obligations
or liabilities or in realizing on or protecting or preserving any security
therefor, including, without limitation, the lien and security interest granted
hereby (all of the foregoing being hereinafter referred to as the
"Obligations").
2. Covenants, Agreements, Representations and Warranties. The Debtor
hereby covenants and agrees with, and represents and warrants to, the Secured
Party that:
(a) The Debtor is a corporation duly organized and validly existing
in good standing under the laws of the State of Illinois, is the sole and lawful
owner of the Collateral, and has full right, power and authority to enter into
this Security Agreement and to perform each and all of the matters and things
herein provided for. The execution and delivery of this Security Agreement, and
the observance and performance of each of the matters
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and things herein set forth, will not (i) contravene or constitute a default
under any provision of law or any judgment, injunction, order or decree binding
upon the Debtor or any provision of the Debtor's charter, articles of
incorporation or by-laws or any covenant, indenture or agreement of or affecting
the Debtor or any of its property or (ii) result in the creation or imposition
of any lien or encumbrance on any property of the Debtor except for the lien and
security interest granted to the Secured Party hereunder. The Debtor's Federal
tax identification number is 00-0000000.
(b) The Debtor's chief executive office and principal place of
business is at, and the Debtor keeps and shall keep all of its books and records
relating to Receivables only at, 5233 Xxxxxx, Xxxxxxx, Xxxxxxx 00000; and the
Debtor has no other executive offices or places of business other than those
listed under Item 1 on Schedule A. The Collateral is and shall remain in the
Debtor's possession or control at the locations listed under Item 2 on Schedule
A attached hereto (collectively, the "Permitted Collateral Locations"), except
for (i) Collateral which in the ordinary course of the Debtor's business is in
transit between Permitted Collateral Locations, (ii) in use at job sites, and
(iii) Collateral aggregating less than $50,000 in fair market value outstanding
at any one time. If for any reason any Collateral is at any time kept or located
at a location other than a Permitted Collateral Location, the Secured Party
shall nevertheless have and retain a lien on and security interest therein. The
Debtor owns and shall at all times own all Permitted Collateral Locations,
except the extent otherwise disclosed under Item 2 on Schedule A. The Debtor
shall not move its chief executive office or maintain a place of business at a
location other than those specified under Item 1 on Schedule A or permit the
Collateral to be located at a location other than those specified under Item 2
on Schedule A, in each case without first providing the Secured Party 30 days'
prior written notice of the Debtor's intent to do so; provided that the Debtor
shall at all times maintain its chief executive office and, unless otherwise
specifically agreed to in writing by the Secured Party, Permitted Collateral
Locations in the United States of America and, with respect to any new chief
executive office or place of business or location of Collateral, the Debtor
shall have taken all action reasonably requested by the Secured Party to
maintain the lien and security interest of the Secured Party in the Collateral
at all times fully perfected and in full force and effect.
(c) The Debtor has not invoiced Receivables or otherwise transacted
business at any time during the immediately preceding five-year period, and does
not currently invoice Receivables or otherwise transact business, under any
trade names other than (i) the Debtor's name set forth in the introductory
paragraph of this Security Agreement and (ii) the trade names set forth on
Schedule B attached hereto. The Debtor shall not change its name or transact
business under any other trade name without first giving 30 days' prior written
notice of its intent to do so to the Secured Party.
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(d) The Collateral and every part thereof is and shall be free and
clear of all security interests, liens (including, without limitation,
mechanics', laborers' and statutory liens), attachments, levies and encumbrances
of every kind, nature and description, whether voluntary or involuntary, except
for the lien and security interest of the Secured Party therein and as otherwise
provided on Schedule C attached hereto. The Debtor shall warrant and defend the
Collateral against any claims and demands of all persons at any time claiming
the same or any interest in the Collateral adverse to the Secured Party.
(e) The Debtor shall promptly pay when due all taxes, assessments and
governmental charges and levies upon or against the Debtor or any of the
Collateral, in each case before the same become delinquent and before penalties
accrue thereon, unless and to the extent that the same are being contested in
good faith by appropriate proceedings which prevent foreclosure or other
realization upon any of the Collateral and preclude interference with the
operation of the Debtor's business in the ordinary course, and the Debtor shall
have established adequate reserves therefor.
(f) The Debtor shall not use, manufacture, sell or distribute any
Collateral in violation of any statute, ordinance or other governmental
requirement. The Debtor shall not waste or destroy the Collateral or any part
thereof or be negligent in the care or use of any Collateral. The Debtor shall
perform in all material respects its obligations under any contract or other
agreement constituting part of the Collateral, it being understood and agreed
that the Secured Party has no responsibility to perform such obligations.
(g) Subject to Sections 3(b), 5(b), 5(c), and 6(c) hereof, the Debtor
shall not, without the Secured Party's prior written consent, sell, assign,
mortgage, lease or otherwise dispose of the Collateral or any interest therein.
(h) The Debtor shall at all times insure the Collateral consisting of
tangible personal property against such risks and hazards as other persons
similarly situated insure against, and including in any event loss or damage by
fire, theft, burglary, pilferage, loss in transit and such other hazards as the
Secured Party may reasonably specify. All insurance required hereby shall be
maintained in amounts and under policies and with insurers reasonably acceptable
to the Secured Party, and all such policies shall contain loss payable clauses
naming the Secured Party as loss payee as its interest may appear (and, if the
Secured Party requests, naming the Secured Party as an additional insured
therein) in a form reasonably acceptable to the Secured Party. All premiums on
such insurance shall be paid by the Debtor. Certificates of insurance evidencing
compliance with the foregoing and, at the Secured Party's request, the policies
of such insurance shall be delivered by the Debtor to the Secured Party. All
insurance required hereby shall provide that any loss shall be payable to the
Secured Party notwithstanding any act or negligence of the Debtor, shall provide
that no cancellation thereof shall be effective until at least 30 days after
receipt by the Debtor and the Secured Party of written notice thereof, and shall
be reasonably satisfactory to the Secured Party in all other respects. In case
of any loss, damage to or destruction of the Collateral or any part thereof
having a value in excess of $50,000, the Debtor shall promptly give written
notice thereof to the Secured Party generally describing the nature and extent
of such damage or destruction. In case of any loss, damage to or destruction of
the Collateral or any part thereof, the Debtor, whether or not the insurance
proceeds, if any, received on account of such damage or destruction shall be
sufficient for that purpose, at the Debtor's cost and expense, shall promptly
repair or replace the Collateral so lost, damaged or destroyed, except to the
extent such Collateral, prior to its loss, damage or destruction, had become
uneconomical, obsolete or worn out and is not necessary for or of importance to
the proper conduct of the Debtor's business in the ordinary course. In the event
the Debtor shall receive any proceeds of such insurance, the Debtor shall
immediately pay over such proceeds to the Secured Party to be held as Collateral
hereunder. The
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Debtor hereby authorizes the Secured Party, at the Secured Party's option, to
adjust, compromise and settle in good faith any losses under any insurance
afforded at any time during the existence of any Event of Default or any other
event or condition which with the lapse of time or the giving of notice, or
both, would constitute an Event of Default, and the Debtor does hereby
irrevocably constitute the Secured Party, and each of its nominees, officers,
agents, attorneys, and any other person whom the Secured Party may designate, as
the Debtor's attorneys-in-fact, with full power and authority to effect such
adjustment, compromise and/or settlement and to endorse any drafts drawn by an
insurer of the Collateral or any part thereof and to do everything necessary to
carry out such purposes and to receive and receipt for any unearned premiums due
under policies of such insurance. Unless the Secured Party elects to adjust,
compromise or settle losses as aforesaid, any adjustment, compromise and/or
settlement of any losses under any insurance shall be made by the Debtor subject
to final approval of the Secured Party (regardless of whether or not an Event of
Default shall have occurred) in the case of losses exceeding $50,000. Net
insurance proceeds received by the Secured Party under the provisions hereof or
under any policy of insurance covering the Collateral or any part thereof shall
be applied to the reduction of the Obligations (whether or not then due);
provided, however, that the Secured Party may in its sole discretion release any
or all such insurance proceeds to the Debtor. All insurance proceeds shall be
subject to the lien and security interest of the Secured Party hereunder.
UNLESS THE DEBTOR PROVIDES THE SECURED PARTY WITH EVIDENCE OF THE
INSURANCE COVERAGE REQUIRED BY THIS SECURITY AGREEMENT, THE SECURED PARTY MAY
PURCHASE INSURANCE AT THE DEBTOR'S EXPENSE TO PROTECT THE SECURED PARTY'S
INTERESTS IN THE COLLATERAL. THIS INSURANCE MAY, BUT NEED NOT, PROTECT THE
DEBTOR'S INTERESTS IN THE COLLATERAL. THE COVERAGE PURCHASED BY THE SECURED
PARTY MAY NOT PAY ANY CLAIMS THAT THE DEBTOR MAKES OR ANY CLAIM THAT IS MADE
AGAINST THE DEBTOR IN CONNECTION WITH THE COLLATERAL. THE DEBTOR MAY LATER
CANCEL ANY SUCH INSURANCE PURCHASED BY THE SECURED PARTY, BUT ONLY AFTER
PROVIDING THE SECURED PARTY WITH EVIDENCE THAT THE DEBTOR HAS OBTAINED INSURANCE
AS REQUIRED BY THIS SECURITY AGREEMENT. IF THE SECURED PARTY PURCHASES INSURANCE
FOR THE COLLATERAL, THE DEBTOR WILL BE RESPONSIBLE FOR THE COSTS OF THAT
INSURANCE, INCLUDING INTEREST AND ANY
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OTHER REASONABLE CHARGES THAT THE SECURED PARTY MAY IMPOSE IN CONNECTION WITH
THE PLACEMENT OF THE INSURANCE, UNTIL THE EFFECTIVE DATE OF THE CANCELLATION OR
EXPIRATION OF THE INSURANCE. THE COSTS OF THE INSURANCE MAY BE ADDED TO THE
OBLIGATIONS SECURED HEREBY. THE COSTS OF THE INSURANCE MAY BE MORE THAN THE COST
OF INSURANCE THE DEBTOR MAY BE ABLE TO OBTAIN ON ITS OWN.
(i) The Debtor shall at all times allow the Secured Party and its
representatives free access to and right of inspection of the Collateral,
provided that, unless an Event of Default has occurred and is continuing, any
such access or inspection shall only be required during normal business hours.
(j) If any Collateral is in the possession or control of any of the
Debtor's agents or processors and the Secured Party so requests, the Debtor
agrees to notify such agents or processors in writing of the Secured Party's
security interest therein and instruct them to hold all such Collateral for the
Secured Party's account and subject to the Secured Party's instructions. The
Debtor shall, upon the request of the Secured Party, authorize and instruct all
bailees and other parties, if any, at any time processing, labeling, packaging,
holding, storing, shipping or transferring all or any part of the Collateral to
permit the Secured Party and its representatives to examine and inspect any of
the Collateral then in such party's possession and to verify from such party's
own books and records any information concerning the Collateral or any part
thereof which the Secured Party or its representatives may seek to verify. As to
any premises not owned by the Debtor wherein any of the Collateral is located,
the Debtor shall, at Secured Party's request, cause each party having any right,
title or interest in, or lien on, any of such premises to enter into an
agreement (any such agreement to contain a legal description of such premises)
whereby such party disclaims any right, title and interest in, and lien on, the
Collateral and allows the removal of such Collateral by the Secured Party at any
time during the existence of an Event of Default and is otherwise in form and
substance acceptable to the Secured Party; provided, however, that no such
landlord agreement need be obtained with respect to any one location wherein the
value of the Collateral as to which such agreement has not been obtained
aggregates less than $50,000 at any one time.
(k) The Debtor agrees from time to time to deliver to the Secured
Party such evidence of the existence, identity and location of the Collateral
and of its availability as collateral security pursuant hereto (including,
without limitation, schedules describing all Receivables created or acquired by
the Debtor, copies of customer invoices or the equivalent and original shipping
or delivery receipts for all merchandise and other goods sold or leased or
services rendered, together with the Debtor's warranty of the genuineness
thereof, and
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reports stating the book value of Inventory and Equipment by major category and
location), in each case as the Secured Party may reasonably request and, absent
the existence of a continuing Event of Default, not more frequently than four
times during any 12-month period (if an Event of Default exists, such reports
shall be delivered to the Secured Party at such times and with such frequency as
Secured Party may reasonably request). The Secured Party shall have the right to
verify all or any part of the Collateral in any manner, and through any medium,
which the Secured Party considers appropriate (including, without limitation,
the verification of Collateral by use of a fictitious name), and the Debtor
agrees to furnish all assistance and information, and perform any acts, which
the Secured Party may require in connection therewith. The Debtor shall promptly
notify the Secured Party of any Collateral which the Debtor has determined to
have been rendered obsolete, stating the prior book value of such Collateral,
its type and location.
(l) The Debtor shall comply in all material respects with the terms
and conditions of all leases, easements, right-of-way agreements and other
similar agreements binding upon the Debtor or affecting the Collateral or any
part thereof, and all orders, ordinances, laws and statutes of any city, state
or other governmental entity, department or agency having jurisdiction with
respect to the premises wherein such Collateral is located or the conduct of
business thereon.
(m) The Debtor agrees to execute and deliver to the Secured Party
such further agreements, assignments, instruments and documents and to do all
such other things as the Secured Party may deem necessary or appropriate to
assure the Secured Party its lien and security interest hereunder, including
such financing statements, and amendments thereof or supplements thereto, and
such other instruments and documents as the Secured Party may from time to time
require in order to comply with the UCC. The Debtor hereby agrees that a carbon,
photographic or other reproduction of this Security Agreement or any such
financing statement is sufficient for filing as a financing statement by the
Secured Party without notice thereof to the Debtor wherever the Secured Party in
its sole discretion desires to file the same. In the event for any reason the
law of any jurisdiction other than Illinois becomes or is applicable to the
Collateral or any part thereof, or to any of the Obligations, the Debtor agrees
to execute and deliver all such instruments and documents and to do all such
other things as the Secured Party in its sole discretion deems necessary or
appropriate to preserve, protect and enforce the lien and security interest of
the Secured Party under the law of such other jurisdiction. The Debtor agrees to
xxxx its books and records to reflect the lien and security interest of the
Secured Party in the Collateral.
(n) On failure of the Debtor to perform any of the covenants and
agreements herein contained, after giving effect to any applicable notice or
cure periods, the Secured Party may, at its option, perform the same and in so
doing may expend such sums as the Secured Party may deem advisable in the
performance thereof, including, without limitation, the payment of any insurance
premiums, the payment of any taxes, liens and
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encumbrances, expenditures made in defending against any adverse claims, and all
other expenditures which the Secured Party may be compelled to make by operation
of law or which the Secured Party may make by agreement or otherwise for the
protection of the security hereof. All such sums and amounts so expended shall
be repayable by the Debtor immediately without notice or demand, shall
constitute additional Obligations secured hereunder and shall bear interest from
the date said amounts are expended at the rate per annum (computed on the basis
of a 360-day year for the actual number of days elapsed) determined by adding 3%
to the rate per annum from time to time announced by Xxxxxx Trust and Savings
Bank as its prime commercial rate with any change in such rate per annum as so
determined by reason of a change in such prime commercial rate to be effective
on the date of such change in said prime commercial rate (such rate per annum as
so determined being hereinafter referred to as the "Default Rate"). No such
performance of any covenant or agreement by the Secured Party on behalf of the
Debtor, and no such advancement or expenditure therefor, shall relieve the
Debtor of any default under the terms of this Security Agreement or in any way
obligate the Secured Party to take any further or future action with respect
thereto. The Secured Party, in making any payment hereby authorized, may do so
according to any xxxx, statement or estimate procured from the appropriate
public office or holder of the claim to be discharged without inquiry into the
accuracy of such xxxx, statement or estimate or into the validity of any tax
assessment, sale, forfeiture, tax lien or title or claim. The Secured Party, in
performing any act hereunder, shall be the sole judge of whether the Debtor is
required to perform same under the terms of this Security Agreement. The Secured
Party is hereby authorized to charge any depository or other account of the
Debtor maintained with the Secured Party for the amount of such sums and amounts
so expended.
3. Special Provisions Re: Receivables.
(a) As of the time any Receivable becomes subject to the security
interest provided for hereby, and at all times thereafter, the Debtor shall be
deemed to have warranted as to each and all of such Receivables that all
warranties of the Debtor set forth in this Security Agreement are true and
correct with respect to each such Receivable; that each Receivable and all
papers and documents relating thereto are genuine and in all respects what they
purport to be; that each Receivable is valid and subsisting and, if such
Receivable is an account, arises out of a bona fide sale of goods sold and
delivered by the Debtor to, or in the process of being delivered to, or out of
and for services theretofore actually rendered by the Debtor to, the account
debtor named therein; that no such Receivable is evidenced by any instrument or
chattel paper unless such instrument or chattel paper has theretofore been
endorsed by the Debtor and delivered to the Secured Party (except that, prior to
the occurrence of an Event of Default and thereafter until otherwise notified by
the Secured Party, the Debtor will not be required to endorse and deliver to the
Secured Party any such instrument or chattel paper if and only so
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long as the aggregate outstanding balance of all such instruments and chattel
paper not so endorsed and delivered to the Secured Party hereunder is less than
$50,000 at any one time outstanding); that the amount of the Receivable
represented as owing is the correct amount actually and unconditionally owing,
except for normal cash discounts on normal trade terms in the ordinary course of
business if such Receivable is an account; and that the amount of such
Receivable represented as owing is not disputed and is not subject to any
set-offs, credits, deductions or countercharges other than those arising in the
ordinary course of the Debtor's business which are disclosed to the Secured
Party in writing promptly upon the Debtor becoming aware thereof. Without
limiting the foregoing, if any Receivable arises out of a contract with the
United States of America, or any state or political subdivision thereof, or any
department, agency or instrumentality of any of the foregoing, the Debtor agrees
to notify the Secured Party and, at the Secured Party's request, execute
whatever instruments and documents are required by the Secured Party in order
that such Receivable shall be assigned to the Secured Party and that proper
notice of such assignment shall be given under the federal Assignment of Claims
Act (or any successor statute) or any similar state or local statute, as the
case may be.
(b) Unless and until an Event of Default occurs, any merchandise or
other goods which are returned by a customer or account debtor or otherwise
recovered may be resold by the Debtor in the ordinary course of its business as
presently conducted in accordance with Section 5(b) hereof; and, during the
existence of any Event of Default, such merchandise and other goods shall be set
aside at the request of the Secured Party and held by the Debtor as trustee for
the Secured Party and shall remain part of the Secured Party's Collateral.
Unless and until an Event of Default occurs, the Debtor may settle and adjust
disputes and claims with its customers and account debtors, handle returns and
recoveries and grant discounts, credits and allowances in the ordinary course of
its business as presently conducted for amounts and on terms which the Debtor in
good faith considers advisable; and, during the existence of any Event of
Default, unless the Secured Party requests otherwise, the Debtor shall notify
the Secured Party promptly of all returns and recoveries and, on the Secured
Party's request, deliver any such merchandise or other goods to the Secured
Party. During the existence of any Event of Default, unless the Secured Party
requests otherwise, the Debtor shall also notify the Secured Party promptly of
all disputes and claims and settle or adjust them at no expense to the Secured
Party, but no discount, credit or allowance other than on normal trade terms in
the ordinary course of business as presently conducted shall be granted to any
customer or account debtor and no returns of merchandise or other goods shall be
accepted by the Debtor without the Secured Party's consent. The Secured Party
may, at all times during the existence of any Event of Default, settle or adjust
disputes and claims directly with customers or account debtors for amounts and
upon terms which the Secured Party considers advisable.
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4. Collection of Receivables.
(a) Except as otherwise provided in this Security Agreement, the
Debtor shall make collection of all Receivables and may use the same to carry on
its business in accordance with sound business practice and otherwise subject to
the terms hereof.
(b) Whether or not any Event of Default has occurred and whether or
not the Secured Party has exercised any or all of its rights under other
provisions of this Section 4, in the event the Secured Party requests the Debtor
to do so:
(i) all instruments and chattel paper at any time
constituting part of the Receivables or any other Collateral (including
any postdated checks) shall, upon receipt by the Debtor, be immediately
endorsed to and deposited with the Secured Party; and/or
(ii) the Debtor shall instruct all customers and account
debtors to remit all payments in respect of Receivables or any other
Collateral to a lockbox or lockboxes under the sole custody and control
of the Secured Party and which are maintained at post office(s) in
Chicago, Illinois selected by the Secured Party.
(c) Upon the occurrence of any Event of Default or of any event or
condition which with the lapse of time or the giving of notice, or both, would
constitute an Event of Default, whether or not the Secured Party has exercised
any or all of its rights under other provisions of this Section 4, the Secured
Party or its designee may notify the Debtor's customers and account debtors at
any time that Receivables or any other Collateral have been assigned to the
Secured Party or of the Secured Party's security interest therein, and either in
its own name, or the Debtor's name, or both, demand, collect (including, without
limitation, through a lockbox analogous to that described in Section 4(b)(ii)
hereof), receive, receipt for, xxx for, compound and give acquittance for any or
all amounts due or to become due on Receivables or any other Collateral, and in
the Secured Party's discretion file any claim or take any other action or
proceeding which the Secured Party may deem reasonably necessary or appropriate
to protect or realize upon the security interest of the Secured Party in the
Receivables or any other Collateral.
(d) Any proceeds of Receivables or other Collateral transmitted to or
otherwise received by the Secured Party pursuant to any of the provisions of
Sections 4(b) or 4(c) hereof may be handled and administered by the Secured
Party in and through a remittance account at the Secured Party, and the Debtor
acknowledges that the maintenance of such remittance account by the Secured
Party is solely for the Secured Party's convenience and that the Debtor does not
have any right, title or interest in such remittance account or any amounts at
any time standing to the credit thereof. The Secured Party may, after the
occurrence and during the continuation of any Event of Default or of any event
or condition which with the lapse of time or the giving of notice, or both,
would constitute an Event of Default, apply all or any part of any proceeds of
Receivables or other Collateral
Page 255
received by it from any source to the payment of the Obligations (whether or not
then due and payable), such applications to be made in such amounts, in such
manner and order and at such intervals as the Secured Party may from time to
time in its discretion determine, but not less often than once each week. The
Secured Party need not apply or give credit for any item included in proceeds of
Receivables or other Collateral until the Secured Party has received final
payment therefor at its office in cash or final solvent credits current in
Chicago, Illinois, acceptable to the Secured Party as such. However, if the
Secured Party does give credit for any item prior to receiving final payment
therefor and the Secured Party fails to receive such final payment or an item is
charged back to the Secured Party for any reason, the Secured Party may at its
election in either instance charge the amount of such item back against the
remittance account or any depository account of the Debtor maintained with the
Secured Party, together with interest thereon at the Default Rate. Concurrently
with each transmission of any proceeds of Receivables or other Collateral to the
remittance account, the Debtor shall furnish the Secured Party with a report in
such form as the Secured Party shall reasonably require identifying the
particular Receivable or other Collateral from which the same arises or relates.
Unless and until an Event of Default or an event or condition which with the
lapse of time or the giving of notice, or both, would constitute an Event of
Default shall have occurred and be continuing, the Secured Party will release
proceeds of Collateral which the Secured Party has not applied to the
Obligations as provided above from the remittance account from time to time, but
not less often than once per week. The Debtor hereby indemnifies the Secured
Party from and against all liabilities, damages, losses, actions, claims,
judgments, costs, expenses, charges and reasonable attorneys' fees suffered or
incurred by the Secured Party because of the maintenance of the foregoing
arrangements; provided, however, that the Debtor shall not be required to
indemnify the Secured Party for any of the foregoing to the extent they arise
solely from the gross negligence or willful misconduct of the Secured Party. The
Secured Party shall have no liability or responsibility to the Debtor for
accepting any check, draft or other order for payment of money bearing the
legend "payment in full" or words of similar import or any other restrictive
legend or endorsement whatsoever or be responsible for determining the
correctness of any remittance.
5. Special Provisions Re: Inventory and Equipment.
(a) The Debtor shall at its own cost and expense maintain, keep and
preserve the Inventory in good and merchantable condition and keep and preserve
the Equipment in good repair, working order and condition, ordinary wear and
tear excepted, and, without limiting the foregoing, make all necessary and
proper repairs, replacements and additions to the Equipment so that the
efficiency thereof shall be fully preserved and maintained.
Page 256
(b) The Debtor may, until an Event of Default has occurred and is
continuing and thereafter until otherwise notified by the Secured Party, use,
consume and sell the Inventory in the ordinary course of its business, but a
sale in the ordinary course of business shall not under any circumstance include
any transfer or sale in satisfaction, partial or complete, of a debt owing by
the Debtor.
(c) The Debtor may, until an Event of Default has occurred and is
continuing and thereafter until otherwise notified by the Secured Party, sell
(i) obsolete, worn out or unusable Equipment which is concurrently replaced with
similar Equipment at least equal in quality and condition to that sold and owned
by the Debtor free of any lien, charge or encumbrance other than the security
interest granted hereby and (ii) Equipment which is not necessary for or of
importance to the proper conduct of the Debtor's business in the ordinary course
which, when taken together with all other Equipment not repaired or replaced
pursuant to the terms of this Security Agreement during the immediately
preceding 12 months, has an aggregate fair market value of less than $50,000.
(d) As of the time any Inventory or Equipment becomes subject to the
security interest provided for hereby and at all times thereafter, the Debtor
shall be deemed to have warranted as to any and all of such Inventory and
Equipment that all warranties of the Debtor set forth in this Security Agreement
are true and correct with respect to such Inventory and Equipment; that all of
such Inventory and Equipment is located at a location set forth pursuant to
Section 2(b) hereof; and that, in the case of Inventory, such Inventory is new
and unused and in good and merchantable condition. The Debtor warrants and
agrees that no Inventory is or will be consigned to any other person without the
Secured Party's prior written consent.
(e) Unless the Secured Party requests otherwise, the Debtor shall at
its own cost and expense cause the lien of the Secured Party in and to any
portion of the Collateral subject to a certificate of title law to be duly noted
on such certificate of title or to be otherwise filed in such manner as is
prescribed by law in order to perfect such lien and shall cause all such
certificates of title and evidences of lien to be deposited with the Secured
Party.
(f) Except for Equipment from time to time located on the real estate
described on Schedule D attached hereto and as otherwise disclosed to the
Secured Party in writing, none of the Equipment is or will be attached to real
estate in such a manner that the same may become a fixture.
(g) If any of the Inventory is at any time evidenced by a document of
title, such document shall be promptly delivered by the Debtor to the Secured
Party except to the extent the Secured Party specifically requests the Debtor
not to do so with respect to any such document.
Page 257
Section 6. Special Provisions Re: Investment Property.
(a) Unless and until an Event of Default has occurred and is
continuing and thereafter until notified to the contrary by the Secured Party
pursuant to Section 8(d) hereof:
(i) The Debtor shall be entitled to exercise all voting
and/or consensual powers pertaining to the Investment Property or any
part thereof, for all purposes not inconsistent with the terms of this
Security Agreement or any other document evidencing or otherwise
relating to any Obligations; and
(ii) The Debtor shall be entitled to receive and retain all
cash dividends paid upon or in respect of the Investment Property.
(b) At the Secured Party's request, certificates for all securities
now or at any time constituting Investment Property individually having a value
of $50,000 or more or which in the aggregate have a value of $200,000 or more
shall be promptly delivered by the Debtor to the Secured Party duly endorsed in
blank for transfer or accompanied by an appropriate assignment or assignments or
an appropriate undated stock power or powers, in every case sufficient to
transfer title thereto including, without limitation, all stock received in
respect of a stock dividend or resulting from a split-up, revision or
reclassification of the Investment Property or any part thereof or received in
addition to, in substitution of or in exchange for the Investment Property or
any part thereof as a result of a merger, consolidation or otherwise. With
respect to any Investment Property held by a securities intermediary, commodity
intermediary, or other financial intermediary of any kind, at the Secured
Party's request, the Debtor shall execute and deliver, and shall cause any such
intermediary to execute and deliver, an agreement among the Debtor, the Secured
Party, and such intermediary in form and substance reasonably satisfactory to
the Secured Party which provides, among other things, for the intermediary's
agreement that it shall comply with such entitlement orders, and apply any value
distributed on account of any Investment Property maintained in an account with
such intermediary, as directed by the Secured Party without further consent by
the Debtor at any time after the occurrence and during the continuation of any
Event of Default. The Secured Party may at any time, after the occurrence of an
Event of Default or an event or condition which with the lapse of time or the
giving of notice, or both, would constitute an Event of Default, cause to be
transferred into its name or the name of its nominee or nominees all or any part
of the Investment Property hereunder.
(c) Unless and until an Event of Default, or an event or condition
which with the lapse of time or the giving of notice, or both, would constitute
an Event of Default, has occurred and is continuing, the Debtor may sell or
otherwise dispose of any Investment Property, provided that the Debtor shall not
sell or otherwise dispose of any capital stock of any direct or indirect
subsidiary without the prior written consent of the Secured Party. After the
occurrence and during the continuation of any Event of Default or of any event
or
Page 258
condition which with the lapse of time or the giving of notice, or both, would
constitute an Event of Default, the Debtor shall not sell all or any part of the
Investment Property without the prior written consent of the Secured Party.
(d) The Debtor represents that on the date of this Security
Agreement, none of the Investment Property consists of margin stock (as such
term is defined in Regulation U of the Board of Governors of the Federal Reserve
System) except to the extent the Debtor has delivered to the Secured Party a
duly executed and completed Form U-1 with respect to such stock. If at any time
the Investment Property or any part thereof consists of margin stock, the Debtor
shall promptly so notify the Secured Party and deliver to the Secured Party a
duly executed and completed Form U-1 and such other instruments and documents
reasonably requested by the Secured Party in form and substance reasonably
satisfactory to the Secured Party.
(e) Notwithstanding anything to the contrary contained herein, in the
event any Investment Property is subject to the terms of a separate security
agreement in favor of the Secured Party, the terms of such separate security
agreement shall govern and control unless otherwise agreed to in writing by the
Secured Party.
Section 7. Power of Attorney. In addition to any other powers of
attorney contained herein, the Debtor hereby appoints the Secured Party as the
Debtor's attorney-in-fact, with full power to sign the Debtor's name on
verifications of accounts and other Collateral; to send requests for
verification of Collateral to the Debtor's customers, account debtors and other
obligors; to endorse the Debtor's name on any checks, notes, acceptances, money
orders, drafts and any other forms of payment or security that may come into the
Secured Party's possession or on any assignments, stock powers, or other
instruments of transfer relating to the Collateral or any part thereof; to sign
the Debtor's name on any invoice or xxxx of lading relating to any Collateral,
on claims to enforce collection of any Collateral, on notices to and drafts
against customers and account debtors and other obligors, on schedules and
assignments of Collateral, on notices of assignment and on public records; to
notify the post office authorities to change the address for delivery of the
Debtor's mail to an address designated by the Secured Party; to receive, open
and dispose of all mail addressed to the Debtor; and to do all things necessary
to carry out this Agreement. The Debtor hereby ratifies and approves all acts of
any such attorney and agrees that neither the Secured Party nor any such
attorney will be liable for any acts or omissions nor for any error of judgment
or mistake of fact or law other than such person's gross negligence or willful
misconduct. The Secured Party may file one or more financing statements
disclosing its security interest in any or all of the Collateral without the
Debtor's signature appearing thereon. The Debtor also hereby grants the Secured
Party a power of attorney to execute any such financing statements, or
amendments and supplements to financing statements, on behalf of the Debtor
without notice thereof to the Debtor. The foregoing powers of attorney, being
coupled with an interest, are irrevocable until the Obligations have been fully
paid and satisfied and all agreements of the Secured Party to extend credit to
or for the account of the Debtor have expired or otherwise have been terminated.
Page 259
8. Defaults and Remedies.
(a) The occurrence of any one or more of the following events shall
constitute an "Event of Default" hereunder:
(i) default in the payment when due (whether by demand, lapse of
time, acceleration or otherwise) of the Obligations or any part
thereof; or
(ii) default in the observance or performance of any covenant
set forth in Sections 4(b), 4(c) or 6(b) hereof or of any provision
hereof requiring the maintenance of insurance on the Collateral or
dealing with the use or remittance of proceeds of Collateral; or
(iii) default in the observance or performance of any other
provision hereof which is not remedied within 30 days after written
notice thereof is given to the Debtor by the Secured Party; or
(iv) any representation or warranty made by the Debtor herein,
or in any statement or certificate furnished by it pursuant hereto, or
in connection with any loan or extension of credit made to or on behalf
of or at the request of the Debtor by the Secured Party, shall be false
in any material respect as of the date of the issuance or making
thereof; or
(v) default in the observance or performance of any terms or
provisions of any mortgage, security agreement or any other instrument
or document securing any Obligations or setting forth terms and
conditions applicable thereto or otherwise relating thereto, in each
case after giving effect to any applicable notice or cure periods
provided for therein, or this Security Agreement or any such other
mortgage, security agreement, instrument or document shall for any
reason not be or shall cease to be in full force and effect or any of
the foregoing is declared to be null and void; or
(vi) default shall occur under any evidence of indebtedness in
a principal amount in excess of $50,000 issued, assumed or guaranteed
by the Debtor or under any indenture, agreement or other instrument
under which the same may be issued, and such default shall continue for
a period of time sufficient to permit the acceleration of the maturity
of any such indebtedness (whether or not such maturity is in fact
accelerated), or any such indebtedness shall not be paid when due
(whether by lapse of time, acceleration or otherwise); or
Page 260
(vii) the Debtor makes any payment on account of the principal
of or interest on any indebtedness which is prohibited under the terms
of any instrument subordinating such indebtedness to any indebtedness
owed to the Secured Party; or
(viii) any judgment or judgments, writ or writs, or warrant or
warrants of attachment, or any similar process or processes in an
aggregate amount in excess of $250,000 shall be entered or filed
against the Debtor or against any of its property or assets and which
remains unvacated, unbonded, unstayed or unsatisfied for a period of 45
days; or
(ix) the Debtor shall (a) have entered involuntarily against
it an order for relief under the United States Bankruptcy Code, as
amended, (b) not pay, or admit in writing its inability to pay, its
debts generally as they become due, (c) make an assignment for the
benefit of creditors, (d) apply for, seek, consent to, or acquiesce in,
the appointment of a receiver, custodian, trustee, examiner, liquidator
or similar official for it or any substantial part of its property, (e)
institute any proceeding seeking to have entered against it an order
for relief under the United States Bankruptcy Code, as amended, to
adjudicate it insolvent, or seeking dissolution, winding up,
liquidation, reorganization, arrangement, adjustment or composition of
it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors or fail to file an answer or other
pleading denying the material allegations of any such proceeding filed
against it, (f) take any action in furtherance of any matter described
in parts (a) through (e) above, or (g) fail to contest in good faith
any appointment or proceeding described in Section 8(a)(x) hereof; or
(x) a custodian, receiver, trustee, examiner, liquidator or
similar official shall be appointed for the Debtor or any substantial
part of any of its property, or a proceeding described in Section
8(a)(ix)(e) shall be instituted against the Debtor, and such
appointment continues undischarged or such proceeding continues
undismissed or unstayed for a period of 60 days; or
(xi) any guarantor of any Obligations shall die or shall
terminate, breach, repudiate or disavow its guarantee or any part
thereof, or any event specified in Sections 8(a)(vi), 8(a)(viii),
8(a)(ix) or 8(a)(x) hereof shall occur with regard to said guarantor.
Page 261
(b) Upon the occurrence and during the continuation of any Event of
Default, the Secured Party shall have, in addition to all other rights provided
herein or by law, the rights and remedies of a secured party under the UCC
(regardless of whether the UCC is the law of the jurisdiction where the rights
or remedies are asserted and regardless of whether the UCC applies to the
affected Collateral), and further the Secured Party may, without demand and
without advertisement, notice, hearing or process of law, all of which the
Debtor hereby waives, at any time or times, sell and deliver all or any part of
the Collateral (and any other property of the Debtor attached thereto or found
therein) held by or for it at public or private sale, for cash, upon credit or
otherwise, at such prices and upon such terms as the Secured Party deems
advisable, in its sole discretion. In addition to all other sums due the Secured
Party hereunder, the Debtor shall pay the Secured Party all reasonable costs and
expenses incurred by the Secured Party, including attorneys' fees and court
costs, in obtaining, liquidating or enforcing payment of Collateral or the
Obligations or in the prosecution or defense of any action or proceeding by or
against the Secured Party or the Debtor concerning any matter arising out of or
connected with this Security Agreement or the Collateral or the Obligations,
including, without limitation, any of the foregoing arising in, arising under or
related to a case under the United States Bankruptcy Code (or any successor
statute). Any requirement of reasonable notice shall be met if such notice is
personally served on or mailed, postage prepaid, to the Debtor in accordance
with Section 11(b) hereof at least 10 days before the time of sale or other
event giving rise to the requirement of such notice; provided however, no
notification need be given to the Debtor if the Debtor has signed, after an
Event of Default has occurred, a statement renouncing any right to notification
of sale or other intended disposition. The Secured Party shall not be obligated
to make any sale or other disposition of the Collateral regardless of notice
having been given. The Secured Party may be the purchaser at any such sale. The
Debtor hereby waives all of its rights of redemption from any such sale. The
Secured Party may postpone or cause the postponement of the sale of all or any
portion of the Collateral by announcement at the time and place of such sale,
and such sale may, without further notice, be made at the time and place to
which the sale was postponed or the Secured Party may further postpone such sale
by announcement made at such time and place.
(c) Without in any way limiting the foregoing, upon the occurrence
and during the continuation of any Event of Default, the Secured Party shall
have the right, in addition to all other rights provided herein or by law, to
take physical possession of any and all of the Collateral and anything found
therein, the right for that purpose to enter without legal process any premises
where the Collateral may be found (provided such entry be done lawfully), and
the right to maintain such possession on the Debtor's premises (the Debtor
hereby agreeing to lease such premises without cost or expense to the Secured
Party or its designee if the Secured Party so requests) or to remove the
Collateral or any part thereof to such other places as the Secured Party may
desire. Upon the occurrence and during the continuation of any Event of Default,
the Secured Party shall have the right
Page 262
to exercise any and all rights with respect to deposit accounts of the Debtor
maintained with the Secured Party, including, without limitation, the right to
collect, withdraw and receive all amounts due or to become due or payable under
each such deposit account. Upon the occurrence and during the continuation of
any Event of Default, the Debtor shall, upon the Secured Party's demand,
assemble the Collateral and make it available to the Secured Party at a place
designated by the Secured Party. If the Secured Party exercises its right to
take possession of the Collateral, the Debtor shall also at its expense perform
any and all other steps requested by the Secured Party to preserve and protect
the security interest hereby granted in the Collateral, such as placing and
maintaining signs indicating the security interest of the Secured Party,
appointing overseers for the Collateral and maintaining Collateral records.
(d) Without in any way limiting the foregoing, upon the occurrence
and during the continuation of any Event of Default, all rights of the Debtor to
exercise the voting and/or consensual powers which it is entitled to exercise
pursuant to Section 6(a)(i) hereof and/or to receive and retain the
distributions which it is entitled to receive and retain pursuant to Section
6(a)(ii) hereof, shall, at the option of the Secured Party, cease and thereupon
become vested in the Secured Party, which, in addition to all other rights
provided herein or by law, shall then be entitled solely and exclusively to
exercise all voting and other consensual powers pertaining to the Investment
Property and/or to receive and retain the distributions which the Debtor would
otherwise have been authorized to retain pursuant to Section 6(a)(ii) hereof and
shall then be entitled solely and exclusively to exercise any and all rights of
conversion, exchange or subscription or any other rights, privileges or options
pertaining to any Investment Property as if the Secured Party were the absolute
owner thereof. Without limiting the foregoing, the Secured Party shall have the
right to exchange, at its discretion, any and all of the Investment Property
upon the merger, consolidation, reorganization, recapitalization or other
readjustment of the respective issuer thereof or upon the exercise by or on
behalf of any such issuer or the Secured Party of any right, privilege or option
pertaining to any Investment Property and, in connection therewith, to deposit
and deliver any and all of the Investment Property with any committee,
depositary, transfer agent, registrar or other designated agency upon such terms
and conditions as the Secured Party may determine. In the event the Secured
Party in good faith believes any of the Collateral constitutes restricted
securities within the meaning of any applicable securities laws, any disposition
thereof in compliance with such laws shall not render the disposition
commercially unreasonable.
(e) Without in any way limiting the foregoing, the Debtor hereby
grants to the Secured Party a royalty-free irrevocable license and right to use
all of the Debtor's patents, patent applications, patent licenses, trademarks,
trademark registrations, trademark licenses, trade names, trade styles,
copyrights, copyright applications, copyright licenses, and similar intangibles
in connection with any foreclosure or other realization by the Secured Party on
all or any part of the Collateral. The license and right granted the Secured
Party hereby shall be without any royalty or fee or charge whatsoever.
Page 263
(f) The powers conferred upon the Secured Party hereunder are solely
to protect its interest in the Collateral and shall not impose on it any duty to
exercise such powers. The Secured Party shall be deemed to have exercised
reasonable care in the custody and preservation of Investment Property in its
possession if such Collateral is accorded treatment substantially equivalent to
that which the Secured Party accords its own property, consisting of similar
type assets, it being understood, however, that the Secured Party shall have no
responsibility for ascertaining or taking any action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relating to any
such Collateral, whether or not the Secured Party has or is deemed to have
knowledge of such matters. This Security Agreement constitutes an assignment of
rights only and not an assignment of any duties or obligations of the Debtor in
any way related to the Collateral, and the Secured Party shall have no duty or
obligation to discharge any such duty or obligation. The Secured Party shall
have no responsibility for taking any necessary steps to preserve rights against
any parties with respect to any Collateral or initiating any action to protect
the Collateral against the possibility of a decline in market value. Neither the
Secured Party nor any party acting as attorney for the Secured Party shall be
liable for any acts or omissions or for any error of judgment or mistake of fact
or law other than their gross negligence or willful misconduct.
(g) Failure by the Secured Party to exercise any right, remedy or
option under this Security Agreement or any other agreement between the Debtor
and the Secured Party or provided by law, or delay by the Secured Party in
exercising the same, shall not operate as a waiver; and no waiver by the Secured
Party shall be effective unless it is in writing and then only to the extent
specifically stated. The rights and remedies of the Secured Party under this
Security Agreement shall be cumulative and not exclusive of any other right or
remedy which the Secured Party may have. For purposes of this Security
Agreement, an Event of Default shall be construed as continuing after its
occurrence until the same is waived in writing by the Secured Party.
9. Application of Proceeds. The proceeds and avails of the
Collateral at any time received by the Secured Party after the occurrence and
during the continuation of any Event of Default shall, when received by the
Secured Party in cash or its equivalent, be applied by the Secured Party as
follows:
(i) First, to the payment and satisfaction of all sums paid
and costs and expenses incurred by the Secured Party hereunder or
otherwise in connection herewith, including such monies paid or
incurred in connection with protecting, preserving or realizing upon
the Collateral or enforcing any of the terms hereof, including
reasonable attorneys' fees and court costs, together with any interest
thereon (but without preference or priority of principal over interest
or of interest over principal), to the extent the Secured Party is not
reimbursed therefor by the Debtor; and
Page 264
(ii) Second, to the payment and satisfaction of the remaining
Obligations, whether or not then due (in whatever order the Secured
Party elects), both for interest and principal.
The Debtor shall remain liable to the Secured Party for any deficiency. Any
surplus remaining after the full payment and satisfaction of the foregoing shall
be returned to the Debtor or to whomsoever the Secured Party reasonably
determines is lawfully entitled thereto.
10. Continuing Agreement. This Security Agreement shall be a
continuing agreement in every respect and shall remain in full force and effect
until all of the Obligations, both for principal and interest, have been fully
paid and satisfied and all agreements of the Secured Party to extend credit to
or for the account of the Debtor have expired or otherwise have been terminated.
Upon such termination of this Security Agreement, the Secured Party shall, upon
the request and at the expense of the Debtor, forthwith release its security
interest hereunder.
11. Miscellaneous.
(a) This Security Agreement cannot be changed or terminated orally.
All of the rights, privileges, remedies and options given to the Secured Party
hereunder shall inure to the benefit of its successors and assigns, and all the
terms, conditions, covenants, agreements, representations and warranties of and
in this Security Agreement shall bind the Debtor and its legal representatives,
successors and assigns, provided that the Debtor may not assign its rights or
delegate its duties hereunder without the Secured Party's prior written consent.
(b) Except as otherwise specified herein, all notices hereunder shall
be in writing (including, without limitation, notice by telecopy) and shall be
given to the relevant party at its address or telecopier number set forth below
(or, if no such address is set forth below, at the address of the Debtor as
shown on the records of the Secured Party), or such other address or telecopier
number as such party may hereafter specify by notice to the other given by
United States certified or registered mail, by telecopy or by other
telecommunication device capable of creating a written record of such notice and
its receipt. Notices hereunder shall be addressed:
Page 265
to the Debtor at: to the Secured Party at:
X.X. Manta, Inc. Xxxxxx Trust and Savings Bank
0000 Xxxxxx Xxxxxx 000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000 X.X. Xxx 000
Attention: Xxxxxxx Xxxxxx Xxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000 Attention: Xxxxx X. Xxxxxx
Telecopy: (000) 000-0000 Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Each such notice, request or other communication shall be effective (i) if given
by telecopier, when such telecopy is transmitted to the telecopier number
specified in this Section and a confirmation of such telecopy has been received
by the sender, (ii) if given by mail, five (5) days after such communication is
deposited in the mail, certified or registered with return receipt requested,
addressed as aforesaid or (iii) if given by any other means, when delivered at
the addresses specified in this Section.
(c) In the event and to the extent that any provision hereof shall be
deemed to be invalid or unenforceable by reason of the operation of any law or
by reason of the interpretation placed thereon by any court, this Security
Agreement shall to such extent be construed as not containing such provision,
but only as to such locations where such law or interpretation is operative, and
the invalidity or unenforceability of such provision shall not affect the
validity of any remaining provisions hereof, and any and all other provisions
hereof which are otherwise lawful and valid shall remain in full force and
effect.
(d) This Security Agreement shall be deemed to have been made in the
State of Illinois and shall be governed by, and construed in accordance with,
the laws of the State of Illinois. The headings in this Security Agreement are
for convenience of reference only and shall not limit or otherwise affect the
meaning of any provision hereof.
(e) This Security Agreement may be executed in any number of
counterparts and by different parties hereto on separate counterpart signature
pages, each constituting an original, but all together one and the same
instrument. The Debtor acknowledges that this Security Agreement is and shall be
effective upon its execution and delivery by the Debtor to the Secured Party,
and it shall not be necessary for the Secured Party to execute this Security
Agreement or any other acceptance hereof or otherwise to signify or express its
acceptance hereof.
(f) The Debtor hereby submits to the non-exclusive jurisdiction of
the United States District Court for the Northern District of Illinois and of
any Illinois state court sitting in the City of Chicago for purposes of all
legal proceedings arising out of or relating to this Agreement or the
transactions contemplated hereby. The Debtor irrevocably waives, to the fullest
extent permitted by law, any objection which it may now or hereafter have to the
laying of the venue of any such proceeding brought in such a court and any claim
that any such proceeding brought in such a court has been brought in an
inconvenient form. THE DEBTOR AND THE SECURED PARTY EACH HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Page 266
IN WITNESS WHEREOF, the Debtor has caused this Security Agreement to be
duly executed and delivered in Chicago, Illinois, as of this _______ day of
November, 1997.
X.X. MANTA, INC.
By
ATTEST: _____________________,_______________________________________
(Print or Type Name) (Title)
__________________,__________________________________Secretary
(Print or Type Name) (Title)
Page 267
