CONTINUING SECURITY AGREEMENT: RIGHTS TO PAYMENT
Exhibit
10.9
RIGHTS
TO
PAYMENT
1. GRANT
OF
SECURITY INTEREST. For valuable consideration, the undersigned Target Logistic
Services, Inc., or any of them (“Debtor”), hereby grants and transfers to ▇▇▇▇▇
FARGO BANK, NATIONAL ASSOCIATION (“Bank”) a security interest in all accounts,
deposit accounts, chattel paper (whether electronic or tangible), instruments,
promissory notes, documents, general intangibles, payment intangibles, software,
letter of credit rights, health-care insurance receivables and other rights
to
payment (collectively called “Collateral”), now existing or at any time
hereafter, and prior to the termination hereof, arising (whether they arise
from
the sale, lease or other disposition of inventory or from performance of
contracts for service, manufacture, construction, repair or otherwise or from
any other source whatsoever), including all securities, guaranties, warranties,
indemnity agreements, insurance policies, supporting obligations and other
agreements pertaining to the same or the property described therein, and in
all
goods returned by or repossessed from Debtor’s customers, together with whatever
is receivable or received when any of the Collateral or proceeds thereof are
sold, collected, exchanged or otherwise disposed of, whether such disposition
is
voluntary or involuntary, including without limitation, all rights to payment,
including returned premiums, with respect to any insurance relating to any
of
the foregoing, and 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 and, where applicable, in the Collateral 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; (g) all persons appearing to be obligated on Collateral
and Proceeds have authority and capacity to contract and are bound as they
appear to be; (h) all property subject to chattel paper has been properly
registered and filed in compliance with law and to perfect the interest of
Debtor in such property; and (i) all Collateral and Proceeds comply with all
applicable laws concerning form, content and manner of preparation and
execution, including where applicable Federal Reserve Regulation Z and any
State
consumer credit laws.
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) where applicable, 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) not to
permit any lien on the Collateral or Proceeds, except in favor of Bank;
(iv) 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; (v) 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; (vi) 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; (vii) not to commingle Collateral or
Proceeds, or collections thereunder, with other property; (viii) 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; (ix) on
demand, to deliver to Bank returned property resulting from, or payment equal
to, such allowances or credits on any Collateral or Proceeds or to execute
such
documents and to do such other things as Bank may reasonably request for the
purpose of perfecting, preserving and enforcing its security interest in such
returned property; (x) from time to time, when requested by Bank, to
prepare and deliver a schedule of all Collateral and Proceeds subject to this
Agreement and to assign in writing and deliver to Bank all accounts, contracts,
leases and other chattel paper, instruments, documents and other evidences
thereof; (xi) not to allow any financing statement covering any of Debtor’s
inventory or proceeds thereof to be on file in any public office without Bank’s
prior written consent; (xii) in the event Bank elects to receive payments of
Collateral or 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 (xiii) to provide any
service and do any other acts which may be necessary 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 (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 Collateral or 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; (l) to
exercise all rights, powers and remedies which Debtor would have, but for this
Agreement, with respect to all Collateral and Proceeds subject hereto;
(m) to make withdrawals from and to close deposit accounts or other
accounts with any financial institution, wherever located, into which Proceeds
may have been deposited, and to apply funds so withdrawn to payment of the
Indebtedness; (n) to preserve or release the interest evidenced by chattel
paper to which Bank is entitled hereunder and to endorse and deliver any
evidence of title incidental thereto; and (o) 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), (n), and as it relates to the preservation or perfection of Bank’s
rights hereunder, (o).
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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 of 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; and (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. 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 of the 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.
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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.
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), expended or 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: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇
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IN
WITNESS WHEREOF, this Agreement has been duly executed as of March 19,
2007.
Target
Logistic Services, Inc.
By:
/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title:
Vice President
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