EXHIBIT 10.6
SECURITY AGREEMENT
▇▇▇▇▇ FARGO EQUIPMENT
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1. GRANT OF SECUR INTEREST. In consideration of any credit or other financial
accommodation heretofore, now or hereafter extended or made to STAR SOLUTIONS OF
OELAWARE INC. ("Borrowers'), or any of them, by ▇▇▇▇▇ FARGO BANK NATIONAL
ASSOCIATION ("Bank"), and for other valuable consideration, as security for the
payment of all Indebtedness of Borrowers to Bank, the undersigned PWI
Technologies, Inc.("Owner) hereby grants and transfers to Bank a security
interest in all goods, tools, machinery, furnishings, furniture and other
equipment now or at any time hereafter, and prior to the termination hereof,
owned or acquired by Owner, wherever located, whether in the possession of Owner
or any other person and whether located on Owner's property or elsewhere, and
all improvements, replacements, accessions and additions thereto and embedded
software included therein (collectively called "Collateral'), together with
whatever is receivable or received when any of the Collateral or proceeds
thereof are sold, leased, collected, exchanged or otherwise disposed of, whether
such disposition is voluntary or involuntary, including without limitation, (a)
all accounts contract ri4hts, chattel paper (whether electronic or tangible),
Instruments, promissory notes, documents, general intangibles, payment
intangibles and other rights to payment of every kind now or at any time
hereafter arising from any such sale, lease, collection, exchange or other
disposition of any of the foregoing, (b) all rights to payment, including
returned premiums, with respect to any insurance relating to any of the
foregoing, and (c) all rights to payment with respect to any claim or cause of
action affecting or relating to an of the foregoing (hereinafter called
"Proceeds"). The word "Indebtedness" is used herein in its most comprehensive
sense and includes any and all advances, debts, obligations and liabilities of
Borrowers, 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, and whether Borrowers may be liable individually or jointly, or
whether recovery upon such indebtedness may be or hereafter becomes
unenforceable.
2. CONTINUING AGREEMENT; REVOCATION: OBLIGATION UNDER OTHER AGREEMENTS. This a
continuing agreement and all rights, powers and remedies hereunder shall apply
to all past, present and future Indebtedness of each of the Borrowers to Bank,
including that arising under successive transactions which shall either continue
the Indebtedness, increase or decrease it, or from time to time create new
Indebtedness after all or any prior Indebtedness has been satisfied, and
notwithstanding the death, incapacity, dissolution, liquidation or bankruptcy of
any of the Borrowers or Owner or any other event or proceeding affecting any of
the Borrow or Owner. This Agreement shall not apply to any new Indebtedness
created after actual receipt by Bank of written notice of its revocation as to
such new Indebtedness; provided however, that loans or advances made by Bank to
any of the Borrowers after revocation under commitments existing prior to
receipt by Bank at such revocation, and extensions, renewals or modifications,
of any kind, of indebtedness incurred by any of the Borrowers or committed by
Bank prior to receipt by Bank of such revocation, shall not be considered new
Indebtedness. Any such notice must be sent to Bank by registered US mail,
postage prepaid, addressed to its office at Colorado RCBO, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, or at such other address as Bank shall from time to
time designate. The obligations of Owner hereunder shall be in addition to any
obligations of Owner under any other grants or pledges of security for any
liabilities or obligations of any of the Borrowers or any other persons
heretofore or hereafter given to Bank unless said other grants or pledges of
security are expressly
modified or revoked in writing; and this Agreement shall not, unless expressly
herein provided, affect or invalidate any such other grants or pledges of
security.
3. OBLIGATIONS JOINT AND SEVERAL; SEPARATE ACTIONS; WAIVER OF STATUTE OF
LIMITATIONS; REINSTATEMENT OF LIABILITY. The obligations hereunder are joint and
several and independent of the obligations of Borrowers and a separate action or
actions may be brought and prosecuted against Owner whether action is brought
against any of the Borrowers or any other person, or whether any of the
Borrowers or any other person is joined in any such action or actions. Owner
acknowledges that this Agreement is absolute and unconditional, there are no
conditions precedent to the effectiveness of this Agreement, and this Agreement
is in full force and effect and is binding on Owner as of the date written
below, regardless o whether Bank obtains collateral or any guaranties from
others or takes any other action contemplated by Owner. Owner waives the benefit
of any statute of limitations affecting Owner liability hereunder or the
enforcement thereof, and Owner agrees that any payment of any indebtedness or
other act which Shall toll any statute of limitations applicable thereto shall
similarly operate to toll such statute of limitations applicable to Owner's
liability hereunder. The liability of Owner hereunder shall be reinstated and
revived and the rights of Bank shall continue if and to the extent that for any
reason any amount at any time paid on account of any indebtedness secured hereby
is rescinded or must otherwise be restored by Bank, whether as a result of any
proceedings in bankruptcy or reorganization or otherwise, all as though such
amount had not been paid. The determination as to whether any amount so paid
must be rescinded or restored shall be made by Bank in its sole discretion;
provided however, that if Bank chooses to contest any such matter at the request
of Owner, Owner agrees to indemnity and hold Bank harmless from and against all
costs and expenses, including reasonable attorneys' fees, expended or incurred
by Bank in connection therewith, including without limitation, in any litigation
with respect thereto.
4. OBLIGATIONS OF BANK. Any money received by Bank in respect of the Collateral
may be deposited, at Bank's option, into a non-interest bearing account over
which Owner shall have no control, and the same shall, for all purposes, be
deemed Collateral hereunder.
5. REPRESENTATIONS AND WARRANTIES.
5.1 Owner represents and warrants to Bank that: (a) Owner's legal name is
exactly as set forth on the first page of this Agreement, and all of Owners
organizational documents or agreements delivered to Bank are complete and
accurate in every respect; (b) Owner is the owner and has possession or control
of the Collateral and Proceeds; (c) Owner 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 heretofore
disclosed by Owner 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;
and (g) Owner is not in the business of selling goods of the kind included
within the Collateral subject to this Agreement, and Owner acknowledges that no
sale or other disposition of any Collateral, including without limitation, any
Collateral which Owner may deem to be surplus, has been or shall be consented to
or acquiesced in by Bank, except as specifically set forth in writing by Bank.
5.2 Owner further represents and warrants to Bank that: (a) the Collateral
pledged hereunder is so pledged at Borrowers' request; (b) Bank has made no
representation to Owner as to the creditworthiness of any of the Borrowers; and
(c) Owner has established adequate means of obtaining from each of the Borrowers
on a continuing basis financial and other information pertaining to Borrowers'
financial condition. Owner agrees to keep adequately informed from such means of
any facts, events or circumstances which might in any way affect Owner's risks
hereunder, and Owner further agrees that Bank shall have no obligation to
disclose to Owner any information or material about any of the Borrowers which
is acquired by Bank in any manner.
6. COVENANTS OF OWNER.
6.1 Owner agrees in general: (a) to indemnify Bank against a losses, claims,
demands, liabilities and expenses of every kind caused by property subject
hereto; (b) to pay all costs and expenses, including reasonable attorneys' fees,
incurred by Bank in the perfection and preservation at the Collateral or Bank's
interest therein interest therein and/or the realization, enforcement and
exercise of Bank's rights, powers and remedies hereunder; (c) to permit Bank to
exercise its powers; (d) to execute and deliver such documents as Bank deems
necessary to create, perfect and continue the security interests contemplated
hereby; (e) not to change Owner's 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; (f) not to
change the places where Owner keeps any Collateral or Owner's records concerning
the Collateral and Proceeds without giving Bank prior written notice of the
address to which Owner is moving same; and (g) 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.
6.2 Owner agrees with regard to the Collateral and Proceeds, unless Bank agrees
otherwise in writing: (a) that Bank is authorized to file financing statements
in the name of Owner to perfect Bank's security interest in the Collateral and
Proceeds; (b) to insure inventory and, where applicable, Rights to Payment with
bank named as loss payee, in form, substance and amounts, under agreements,
against risks and liabilities, and with insurance companies satisfactory to
Bank; (c) to operate the Collateral in accordance with all applicable statutes,
rules and regulations relating to the use and control thereof, and not to use
the Collateral for any unlawful purpose or in any way that would void any
insurance required to be carried in connection therewith; (d) not to permit any
security interest in or lien on the Collateral or Proceeds, including without
limitation, liens arising from the storage of Inventory, except in favor of
Bank; (e) to pay when due all license fees, registration fees and other charges
in connection with any collateral; (f) not to remove the Collateral from Owner's
premises unless the Collateral consists of mobile goods as defined in the
Colorado Uniform Commercial Code, in which case Owner agrees not to remove or
permit the removal of the Collateral from its state of domicile for a period in
excess of 30 calendar days; (g) 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, except sales of Inventory to buyers in the
ordinary course of Owner's business; (h) not to rent, lease or charter the
Collateral; (i) to permit Bank to inspect the Collateral at anytime; (j) 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; (k) if
requested by Bank, to receive and use reasonable diligence to collect Rights to
Payment and Proceeds, in trust and as the property of Bank, and to immediately
endorse as appropriate and deliver such Rights to Payment and Proceeds to Bank
daily in the exact form in which they are received together with a collection
report in form satisfactory to Bank; (l) not to
commingle Rights to Payment, Proceeds or collections thereunder with other
property; (m) to give only normal allowances and credits and to advise Bank
thereof immediately in writing if they affect any Rights to Payment or Proceeds
in any material respect; (n) in the event Bank elects to received payments of
Rights to Payment 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 (p) to provide any service
and do any other acts which may be necessary to maintain, preserve and protect
all Collateral and, as appropriate and applicable, to keep all Collateral in
good and saleable condition in accordance with the standards and practices
adhered to generally by users and manufacturers of like property, and to keep
all Collateral and Proceeds free and clear of all defenses, rights of offset and
counterclaims.
7. POWERS OF BANK. Owner 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 the Agreement and may be exercised from time to time by
Bank's officers and employees, or any of them, whether or not any of the
Borrowers or Owner is in default: (a) to perform any obligation of Owner
hereunder in Owner's name or otherwise; (b) to give notice to account debtors or
others of Banks rights in the Collateral and Proceeds, to enforce or forebear
from enforcing the same and make extension or modification agreements with
respect thereto; (c) to release persons liable on Proceeds and to give receipts
and acquittances and compromise disputes in connection therewith; (d) to release
or substitute security; (e) to resort to security in any order; (f) to prepare,
execute file, record or deliver notes, assignments, schedules, designation
statements, financing statements, continuation statements, termination
statements, statements of assignment, applications for registration or like
papers to perfect, preserve or release Bank interest in the Collateral and
Proceeds; (g) to receive, open and read mail addressed to Owner; (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 return premiums or
any other insurance refund or return, and to apply such amounts received by
Bank, at Bank's sole option, toward repayment of the Indebtedness or replacement
of the Collateral; (l) to exercise all rights, powers and remedies which Owner
would have but for this Agreement, with respect to all Collateral and Proceeds
subject hereto; (m) to enter onto Owner's premises in inspecting the Collateral;
and (n) to do all acts and things and execute all documents in the name of Owner
or otherwise, deemed by Bank as necessary, proper and convenient in connection
with the preservation, perfection or enforcement of its rights hereunder.
8. OWNERS WAIVERS.
8.1 Owner waives any right to require Bank to: (a) proceed against any of the
Borrowers or any other person; (b) marshal assets or proceed against or exhaust
any security held from any of the Borrowers or any other person; (c) give notice
of the terms, time and place of any public or private sale or other disposition
of personal property security held from any of the Borrowers or any other
person; (d) take any action or pursue any other remedy in Banks power; or (e)
make any presentment or demand for performance, or give any notice of
nonperformance, protest, notice of protest or notice of dishonor hereunder or in
connection with any obligations or evidences of indebtedness held by Bank's
security for or which constitute in whole or in part the Indebtedness secured
hereunder, or in connection with the creation of new or additional Indebtedness.
8.2 Owner waives any defense to its obligations hereunder based upon or arising
by reason of: (a) any disability or other defense of any of the Borrowers or any
other person; (b) the
cessation or limitation from any cause whatsoever, other than payment in full,
of the Indebtedness of any of the Borrowers or any other person; (c) any lack of
authority of any officer, director, partner, agent or any other person. acting
or purporting to act on behalf of any of the Borrowers which is a corporation,
partnership or other type of entity, or any defect in the formation of any of
such Borrower; (d) the application by any of the Borrowers of the proceeds of
any Indebtedness for purposes other than the purposes represented by Borrowers
to, or intended or understood by, Bank or Owner; (e) any act or omission by Bank
which directly or indirectly results in or aids the discharge of the Borrowers
or any portion of the Indebtedness by operation of law or otherwise, or which in
any way impairs or suspends any rights or remedies of Bank against any of the
Borrowers; (f) any impairment of the value of any interest in any security for
the Indebtedness or any portion thereof, including without limitation, the
failure to obtain or maintain perfection or recordation of any interest in any
such security, the release of any such security without substitution, and the
failure to preserve the value of, or to comply with applicable law in disposing
of, any such security; (g) any modification of the Indebtedness, in any form
whatsoever, including any modification made after revocation hereof to any
Indebtedness incurred prior to such revocation, and including without limitation
the renewal, extension, acceleration or other change in time for payment of, or
other change in the terms of, the indebtedness or any portion thereof, including
increase or decrease of the rate of Interest thereon; or (h) any requirement
that Bank give any notice of acceptance of this Agreement. Until all
Indebtedness shall have been paid in full, Owner shall have no right of
subrogation, and Owner waives any right to enforce any remedy which Bank now has
or may hereafter have against any of the Borrowers or any other person, and
waives any benefit of, or any right to participate in, any security now or her
held by Bank. Owner further waives all rights and defenses Owner may have
arising out of (i) any election of remedies by Bank, even though that election
of remedies, such as a non-judicial foreclosure with respect to any security for
any portion of the Indebtedness, destroys Owners rights of subrogation or Owners
rights to proceed against any of the Borrowers for reimbursement, or (ii) any
loss of rights Owner may suffer by reason of any rights, powers or remedies of
any of the Borrowers in connection with any anti-deficiency laws or any other
laws limiting, qualifying or discharging Borrowers' Indebtedness, whether by
operation of law or otherwise including any rights Guarantor may have to a fair
market value hearing to determine the size of a deficiency following any
foreclosure sale or other disposition of any real property security for any
portion of the Indebtedness.
9. AUTHORIZATIONS TO BANK. Owner authorizes Bank either before or after
revocation hereof with notice to or demand on Owner, and without affecting
Owners liability hereunder from time to time to: (a) alter, compromise renew
extend accelerate or otherwise change the time for payment of, or otherwise
change the terms of, the Indebtedness or any portion thereof, including increase
or decrease of the rate of interest thereon; (b) take and hold security, other
than the Collateral and Proceeds, for the payment of the Indebtedness or any
portion thereof, and exchange, enforce, waive, subordinate or release the
Collateral and Proceeds, or any part thereof or any such other security: (c)
apply the Collateral and Proceeds or such other security and direct the order or
manner of sale thereof, including without limitation, a non-judicial sale
permitted by the terms of the controlling security agreement, mortgage or deed
of trust, as Bank in its discretion may determine; (d) release or substitute any
one or more of the endorsers or guarantors of the Indebtedness, or any portion
thereof, or any other party thereto; and (e) apply payments received by Bank
from any of the Borrowers to any indebtedness of any of the Borrowers to Bank,
in such order as Bank shall determine in its sole discretion, whether or not
such Indebtedness is covered by this Agreement, and Owner hereby waives any
provision of law regarding application of payments which specifies otherwise.
Bank may without notice assign this Agreement in whole or in part.
10. PAYMENT OF PREMIUMS, TAXES, CHARGES, LIENS AND ASSESSMENTS. Owner agrees to
pay, prior to delinquency, all insurance premiums, taxes, charges, liens and
assessments against the Collateral and Proceeds, and upon the failure of Owner
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 Owner 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.
11. 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 any of the Borrowers and Bank, including without limitation any loan
agreement, relating to or executed in connection with any Indebtedness; (b) any
representation or warranty made by Owner herein shall prove o be incorrect,
false or misleading in any material respect when made; (c) Owner shall fall to
observe or perform any Obligation or agreement contained herein; (d) any
impairment of the rights of Bank in any Collateral or Proceeds or any attachment
or like levy on any property of Owner; 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, or otherwise in jeopardy or
unsatisfactory in character or value.
12. REMEDIES. Upon the occurrence of any Event of Default, Bank shall have and
may exercise without demand any and all rights, powers, privileges and remedies
granted to a secured party upon default under the Colorado Uniform Commercial
Code or otherwise provided by law, including without limitation, the right (a)
to contact all persons obligated to Owner 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 price 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) Owner will deliver to Bank from time to
time as requested by Bank, current lists of all Collateral and Proceeds; (b)
Owner will not dispose of any Collateral or Proceeds except on terms approved by
Bank; (c) at Bank's request, Owner will assemble and deliver all Collateral and
Proceeds and books and records pertaining thereto, to Bank at a reasonably
convenient place designated by Bank; and (d) Bank may, without notice to Owner
enter onto Owner's premises and take possession of the Collateral with respect
to any sale by Bank of any Collateral subject to this Agreement, Owner hereby
expressly grants to Bank the right to sell such Collateral using any or all of
Owner trademarks, trade names, trade name rights and/or proprietary labels or
marks. Owner further agrees that Bank shall have no obligation to process or
prepare any Collateral for sale or other disposition.
13. DISPOSITION OF COLLATERAL ANP PROCEEDS; TRANSFER OF INIDEBTEDNESS. In
disposing of Collateral hereunder, Bank may disclaim all warranties of title,
possession, quiet enjoyment and the like. Any proceeds of any disposition of any
Collateral or Proceeds, or any part thereof, may be applied by Bank to the
payment of expenses incurred by Bank in connection with the foregoing, including
reasonable attorneys' fees, and the balance of such proceeds may be applied by
Bank toward the payment of the Indebtedness in such order of application on as
Bank may from time to time elect. Upon the transfer of an 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.
14. NOTICES. All notices, requests and demands required under this Agreement
must be in writing addressed to Bank at the address specified in Section 2
hereof and to Owner 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 3 days after deposit in
the U.S. mail, first class and postage prepaid; and (c) if sent by telecopy,
upon receipt.
15. COSTS, EXPENSES AND ATTOPRNEYS' FEES, Owner 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 exercising any right, power, privilege or remedy conferred by this
Agreement or in the enforcement thereof, 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 Owner 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 Owner 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.
16. SUCCESSORS: ASSIGNMENT. This Agreement shall be binding upon and inure to
the benefit of the heirs, executors, administrators, legal representatives,
successors and assigns of the parties; provided however that Owner may not
assign or transfer any of its interests or rights hereunder without Bank's prior
written consent. Owner acknowledges that Bank has the right to sell, assign,
transfer, negotiate or grant participations in all or any part of, or any
interest in, any Indebtedness of Borrowers to Bank and any obligations with
respect thereto, including this Agreement. In connection therewith, Bank may
disclose all documents and information which Bank now has or hereafter acquires
relating to Owner and/or this Agreement, whether furnished by Borrowers; Owner
or otherwise. Owner further agrees that Bank may disclose such documents and
information to Borrowers.
17. AMENDMENT. This Agreement may be amended or modified only in writing signed
by Bank and Owner.
18. APPLICATION OF SINGULAR AND PLURAL. In all cases where there is but a single
Borrower, then all words used herein in the plural shall be deemed to have been
used in the singular where the context and construction so require; and when
there is more than one Borrower named herein, or when this Agreement is executed
by more than one Owner, the word
"Borrowers" and the word "Owner" respectively shall mean all or any one or more
of them as the context requires
19. 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.
20. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado.
21. ARBITRATION.
21.1 ARBITRATION. The parties hereto agree, upon demand by any party, to submit
to binding arbitration all claims, disputes and controversies between or among
them (and their respective employees, officers, directors, attorneys, and other
agents), whether in tort, contract or otherwise arising out of or relating to in
any way (a) the loan and related loan and security documents which are the
subject of this Agreement and its negotiation, execution, collateratization,
administration, repayment, modification, extension, substitution, formation,
inducement, enforcement, default or termination; or (b) requests for ?additional
credit.
21.2 GOVERNING RULES. Any arbitration proceeding will (a) proceed in a location
in Colorado selected by the American Arbitration Association ("AAA'"; (b) be
governed by the Federal Arbitration Act (Title 9 of the US States Code),
notwithstanding any conflicting choice of law provision in any of the documents
between the parties; and (c) be conducted by the AAA, or such other
administrator as the parties shall mutually agree upon, in accordance with the
AAA's commercial dispute resolution procedures, unless the claim or counterclaim
is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and
costs in which case the arbitration shall be conducted in accordance with the
AAA's optional procedures for large, complex commercial disputes (the commercial
dispute resolution procedures or the optional procedures for large, complex
commercial disputes to be referred to, as applicable, as the "Rules"). If there
is any inconsistency between the terms hereof and the Rules, the terms and
procedures set forth herein shall control. Any party who fails or refuses to
submit to arbitration following a demand by any other party shall bear all costs
and expenses incurred by such other party in compelling arbitration of any
dispute. Nothing contained herein shall be deemed to be a waiver by any party
that is a bank of the protections afforded to it under 12 U.S.C. Section 91 or
any similar applicable state law.
21.3 NO WAIVER OF PROVISIONAL REMEDIES, SELF-HELP AND FORECLOSURE. The
arbitration requirement does not limit the right of any party to (a) foreclose
against real or personal property collateral; (b) exercise self-help remedies
relating to collateral or proceeds of collateral such as setoff or repossession;
or (c) obtain provisional or ancillary remedies such as replevin, injunctive
relief, attachment or the appointment of a receiver, before during or after the
pendency of any arbitration proceeding. This exclusion does not constitute a
waiver of the right or obligation of any party to submit any dispute to
arbitration or reference hereunder, including those arising from the exercise of
the actions detailed in sections (a), (b) and (c) of this paragraph.
21.4 ARBITRATOR, QUALIFICATIONS AND POWERS. Any arbitration proceeding in which
the amount in controversy is $5,000,000.00 or less will be decided by a single
arbitrator selected according to the Rules, and who shall not render an award of
greater than $5,000,000.00. Any dispute in which the amount in controversy
exceeds $5,000,000.00 shall be decided by majority vote of a panel of three
arbitrators; provided however, that all three arbitrators must actively
participate in all hearings and deliberations. The arbitrator will be a neutral
attorney licensed in the State of Colorado or a neutral retired judge of the
state or federal judiciary of Colorado. In either case
with a minimum of ten years experience in the substantive law applicable to the
subject matter of the dispute to be arbitrated. The arbitrator will determine
whether or not an issue is arbitratable and will give effect to the statutes of
limitation in determining any claim. In any arbitration proceeding the
arbitrator will decide (by documents only or with a hearing at the arbitrator's
discretion) any pre-hearing motions which are similar to motions to dismiss for
failure to state a claim or motions for summary adjudication. The arbitrator
shall resolve all disputes in accordance with the substantive law of Colorado
and may grant any remedy or relief that a court of such state could order or
grant within the scope hereof and such ancillary relief as is necessary to make
effective any award. The arbitrator shall also have the power to award recovery
of all costs and fees, to impose sanctions and to take such other action as the
arbitrator deems necessary to the same extent a judge could pursuant to the
Federal Rules of Civil Procedure, the Colorado Rules of Civil Procedure or other
applicable law. Judgment upon the award rendered by the arbitrator may be
entered in any court having jurisdiction. The institution and maintenance of an
action for judicial relief or pursuit of a provisional or ancillary remedy shall
not constitute a waiver of the right of any party, including the plaintiff, to
submit the controversy or claim to arbitration if any other party contests such
action for judicial relief.
21.5 DISCOVERY. In any arbitration proceeding discovery will be permitted in
accordance with the Rules. All discovery shall be expressly limited to matters
directly relevant to the dispute being arbitrated and must be completed no later
than 20 days before the hearing date and within 180 days of the filing of the
dispute with the AAA. Any requests for an extension of the discovery periods, or
any discovery disputes, will be subject to final determination by the arbitrator
upon a showing that the request for discovery is essential for the party's
presentation and that no alternative means for obtaining information is
available.
21.6 CLASS PROCEEDINGS AND CONSOLIDATIONS. The resolution of any dispute arising
pursuant to the terms of this Agreement shall be determined by a separate
arbitration proceeding and such dispute shall not be consolidated with other
disputes or included in any class proceeding.
21.7 PAYMENT OF ARBITRATION COSTS AND FEES. The arbitrator shall award all costs
and expenses of the arbitration proceeding.
21.8 MISCELLANEOUS. To the maximum extent practicable, the AAA, the arbitrators
and the parties shall take all action required to conclude any arbitration
proceeding within 180 days of the filing of the dispute with the AAA. No
arbitrator or other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of information by
a party required in the ordinary course of its business, by applicable law or
regulation, or to the extent necessary to exercise any judicial review rights
set forth herein. If more than one agreement for arbitration by or between the
parties potentially applies to a dispute, the arbitration provision most
directly related to the documents between the parties or the subject matter of
the dispute shall control. This arbitration provision shall survive termination,
amendment or expiration of any of the documents or any relationship between the
parties.
Owner warrants that Owner is an organization registered under the laws of the
State of Washington.
Owner warrants that its chief executive office (or principal residence, if
applicable) is located at the following address: ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇. ▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Owner warrants that the Collateral (except goods in transit) is located or
domiciled at the following additional addresses: NONE
IN WITNESS WHEREOF, this Agreement has been duly executed as of March 29, 2005.
PWI Technologies, Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III, Chief Executive
Officer/Chairman