GENERAL BUSINESS SECURITY AGREEMENT
Exhibit
10.3
Dated
June
01, 2003
1.
SECURITY INTEREST
The
undersigned (“Debtor”, whether one or more) grants SOUTHWEST
BANK OF ST.
LOUIS
(“Lender”) a security interest in all equipment, fixtures, investment property,
general intangibles, accounts, contract rights, chattel paper, instruments,
inventory deposit accounts (unless a security interest would render a nontaxable
account taxable), letter of credit rights and documents now owned or hereafter
acquired by Debtor (or by Debtor with spouse), and all additions and accessions
to, all spare and repair parts, special tools, equipment and replacements
for,
software used in, all returned or repossessed goods the sale of which give
rise
to, and all proceeds, supporting obligations and products of the foregoing
(“Collateral”), wherever located, to secure all debts, obligations and
liabilities of any Debtor to Lender arising out of credit previously granted,
credit contemporaneously granted and credit granted in the future by Lender
to
any Debtor, to any Debtor and another, or to another guaranteed or indorsed
by
any Debtor (“Obligations”).
2.
DEBTOR’S WARRANTIES
Debtor
warrants that while any of the Obligations are unpaid:
(a) Ownership
and use. Debtor owns (or with spouse owns) the Collateral free of all
encumbrances and security interests (except Lender’s security interest). Chattel
paper constituting Collateral evidence a perfected security interest in the
goods (including software used in the goods) covered by it, free from all
other
encumbrances and security interests, and no financing statement is on file
or
control agreement in existence (other than Lender’s) covering the Collateral or
any of it. Debtor, acting alone, may grant a security interest in the
Collateral. The Collateral is used or bought for use primarily for business
purposes.
(b) Sale
of
goods or services rendered. Each account and chattel paper constituting
Collateral as of this date arose from the performance of services by Debtor
or
from a bona fide sale or lease of goods, which have been delivered or shipped
to
the account debtor and for which Debtor has genuine invoices, shipping documents
or receipts.
(c) Enforceability.
Each account, contract right and chattel paper constituting Collateral as
of
this date is genuine and enforceable against the account debtor according
to its
terms. It and the transaction out of which it arose comply with all applicable
laws and regulations. The amount represented by Debtor to Lender as owing
by
each account debtor is the amount actually owing and is not subject to setoff,
credit, allowance or adjustment, except discount for prompt payment, nor
has any
account debtor returned the goods or disputed liability.
(d) Due
date. There has been no default as of this date according to the terms of
any
chattel paper or account consulting Collateral and no step has been taken
to
foreclose the security interest it evidences or otherwise enforce its
payment.
(e) Financial
condition of account debtor. As of this date Debtor has no notice or knowledge
of anything which might impair the credit standing of any account
debtor.
(f) Valid
Organization. If a corporation, limited liability company or partnership,
Debtor
is duly organized, validly existing and in good standing under the laws of
the
state of organization and is authorized to do business in Missouri.
(g) Other
agreements. Debtor is not in default under any agreement for the payment
of
money.
(h) Authority
to contract. The execution and delivery of this Agreement and any instruments
evidencing Obligations will not violate or constitute a breach of Debtor’s
articles of incorporation or organization, by-laws, partnership agreement,
operating agreement or any other agreement or restriction to which Debtor
is a
party or is subject.
(i) Accuracy
of information. All information, certificates or statements given to Lender
pursuant to this Agreement shall be true and complete when given.
(j) Name
and
address. Debtor’s exact legal name as is set forth below Section 9. If Debtor is
an individual, the address of Debtor’s principal residence is as set forth below
Section 9. If Debtor is an organization that has only one place of business,
the
address of Debtor’s place of business, or if Debtor has more than one place of
business, then the address of Debtor’s chief executive office, is as set forth
below Section 9.
(k) Location.
The address where the Collateral will be kept, if different from that appearing
below Section 9, is _____________ N/A .
Such
location shall not be changed without prior written consent of Lender, but
the
parties intend that the Collateral, wherever located, is covered by this
Agreement.
(l) Organization.
If Debtor is an organization, this type of organization and the state under
whose law it is organized are as set forth below Section 9.
(m) Environmental
laws. (i) No substance has been, is or will be present, used, stored, deposited,
treated, recycled or disposed of on, under, in or about any real estate now
or
at any time owned or occupied by Debtor (“Property”) during the period of
Debtor’s ownership or use of the Property in a form, quantity or manner which if
known to be present on, under, in or about the Property would require clean-up,
removal or some other remedial action (“Hazardous Substance”) under any federal,
state or local laws, regulations, ordinances, codes or rules (“Environmental
Laws”), (ii) Debtor has no knowledge, after due inquiry, of any prior use
or existence of any Hazardous Substance on the Property by any prior owner
of or
person using the Property, (iii) without limiting the generality of the
foregoing, Debtor has no knowledge, after due inquiry, that the Property
contains asbestos, polychlorinated biphenyl components (PCBs) or underground
storage tanks, (iv) there are no conditions existing currently or likely to
exist during the term of this Agreement which would subject Debtor to any
damages, penalties, injunctive relief or clean-up costs in any governmental
or
regulatory action or third-party claim relating to any Hazardous Substance,
(v) Debtor is not subject to any court or administrative proceeding,
judgment, decree, order or citation relating to any such substance, and
(vi) Debtor in the past has been, at the present is, and in the future will
remain in compliance with all Environmental Laws. Debtor shall indemnify
and
hold harmless Lender, its directors, officers, employees and agents from
all
loss, cost (including reasonable attorneys’ fees and legal expenses), liability
and damage whatsoever directly or indirectly resulting from, arising out
of, or
based upon (1) the presence, use, storage, deposit, treatment, recycling or
disposal, at any time, of any Hazardous Substance on, under, in or about
the
Property, or the transportation of any such substance to or from the Property,
(2) the violation or alleged violation of any Environmental Law, permit,
judgment or license relating to the presence use, storage, deposit, treatment,
recycling or disposal of any Hazardous Substance on, under, in or about the
Property, or the transportation of any Hazardous Substance to or from Property,
or (3) the imposition of any governmental lien for the recovery of
environmental clean-up costs expended under any Environmental Law. Debtor
shall
immediately notify Lender in writing of any governmental or
regulatory
action
or third-party claim instituted or threatened in connection with any Hazardous
Substance described above, on, in, under or about the Property.
(n) Fixtures.
If any of the Collateral is affixed to real estate, the legal description
of the
real estate set forth in each UCC Financing Statement signed or authorized
by
Debtor is true and correct.
3.
SHIPPERS
Shippers
authorized to draw drafts on Lender under Section 6(c) are:
NONE.
4.
SALE AND COLLECTIONS
(a) Sale
of
inventory. So long as no default exists under any of the Obligations or this
Agreement, Debtor may (a) sell inventory in the ordinary course of Debtor’s
business for cash or on terms customary in the trade, at prices not less
than
any minimum sale price shown on instruments evidencing Obligations and
describing inventory, or (b) lease or license inventory on terms customary
in the trade.
(b) Verification
and notification. Lender may verify Collateral in any manner, and Debtor
shall
assist Lender in so doing. Upon default Lender may at any time and Debtor
shall,
upon request of Lender, notify the account debtors or other persons obligated
on
the Collateral to make payments directly to Lender and Lender may enforce
collection of, settle, compromise, extend or renew the indebtedness of such
account debtors or other persons obligated on the Collateral. Until account
debtors or other persons obligated on the Collateral are so notified, Debtor,
as
agent of Lender, shall make collections and receive payments on the
Collateral.
(c) Deposit
with Lender. At any time Lender may require that all proceeds of Collateral
received by Debtor shall be held by Debtor upon an express trust for Lender,
shall not be commingled with any other funds or property of Debtor and shall
be
turned over to Lender in precisely the form received (but endorsed by Debtor
if
necessary for collection) not later than the business day following the day
of
their receipt. Except as provided in Section 4(d) below, all proceeds of
Collateral received by Lender directly or from Debtor shall be applied against
the Obligations in such order and at such times as Lender shall
determine.
(d) Accounting.
If the extent to which Lender’s security interest in the Collateral is a
purchase money security interest depends on the application of a payment
to a
particular obligation of Debtor, the payment shall first be applied to
obligations of Debtor for which Debtor did not create a security interest
in the
order in which those obligations were incurred and then to obligations of
Debtor
for which Debtor did create a security interest, including the Obligations
secured by the Collateral, in the order in which those obligations were
incurred; provided, however, that Lender shall retain its security interest
in
all Collateral regardless of the allocation of payments.
5.
DEBTOR’S COVENANTS
(a) Maintenance
of Collateral. Debtor shall: maintain the Collateral in good condition and
repair and not permit its value to be impaired; keep it free from all liens,
encumbrances and security interests (other than Lender’s security interest);
defend it against all claims and legal proceedings by persons other than
Lender;
pay and discharge when due all taxes, license fees, levies and other charges
upon it; not sell, lease, license or otherwise transfer or dispose of it
or
permit it to become a fixture or an accession to other goods, except for
sales,
leases or licenses of inventory as provided in this Agreement; not permit
it to
be used in violation of any applicable law, regulation or policy of insurance;
and, as to Collateral consisting of instruments, chattel paper and letter
of
credit rights, preserve rights in it against prior parties. Loss of or damage
to
the Collateral shall not release Debtor from any of the
Obligations.
(b) Insurance.
Debtor shall keep the Collateral and Lender’s interest in it insured for all
risks of physical damage to or loss of the Collateral (including loss or
damage
occasioned by flood if the Collateral includes a building or mobile home
on a
permanent foundation), under policies with such provisions, for such amounts
and
by such insurers as shall be satisfactory to Lender from time to time, and
shall
furnish evidence of such insurance satisfactory to Lender. Subject to Lender’s
satisfaction, Debtor is free to select the insurance agent or insurer through
which the insurance is obtained. Debtor assigns (and directs any insurer
to pay)
to Lender the proceeds of all such insurance and any premium refund, and
authorizes Lender to endorse in the name of Debtor any instruments for such
proceeds or refunds and, at the option of Lender, to apply such proceeds
and
refunds to any unpaid balance of the Obligations, whether or not due, and/or
to
restoration of the Collateral, returning any excess to Debtor. Lender is
authorized, in the name of Debtor or otherwise, to make, adjust and/or settle
claims under any credit insurance financed by Lender or any insurance on
the
Collateral, or cancel the same after the occurrence of an event of
default.
Notice:
The
following notice is included in compliance with ▇.▇.▇▇. 427.120(3). Unless
you
provide evidence of the insurance coverage required by your agreement with
us,
we may purchase insurance at your expense to protect our interests in your
collateral. This insurance may, but need not, protect your interests. The
coverage that we purchase may not pay any claim that you make or any claim
that
is made against you in connection with the collateral. You may later cancel
any
insurance purchased by us, but only after providing evidence that you have
obtained insurance as required by our agreement. If we purchase insurance
for
the collateral, you will be responsible for the costs of that insurance,
including the insurance premium, interest and any other charges we 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 your total outstanding balance or obligation. The costs of the
insurance may be more than the cost of insurance you may be able to obtain
on
your own.
(c) Maintenance
of security interest. Debtor shall pay all expenses and upon request, take
any
action reasonably deemed advisable by Lender to preserve the Collateral or
to
establish, evidence, determine and maintain priority of, perfect, continue
perfected, terminate and/or enforce Lender’s interest in it or rights under this
Agreement. Debtor authorizes Lender to file Uniform Commercial Code financing
statements describing the Collateral (including describing the Collateral
as
“all assets”, “all personal property” or with words of similar affect if
Section 2(a) is checked) and amendments to such financing statements and
ratifies any such financing statement or amendment filed prior to the date
of
this Agreement. Debtor will cooperate with Lender in obtaining control of
Collateral or other security for the Obligations for which control may be
required to perfect Lender’s security interest under applicable law. If the
Collateral is in possession of a third party, Debtor will join with Lender
at
its request in notifying the third party of Lender’s security interest and
obtaining an acknowledgment from the third party that it is holding the
Collateral for the benefit of Lender.
(d) Taxes
and other charges. Debtor shall pay and discharge all lawful taxes, assessments
and government charges upon Debtor or against its properties prior to the
date
on which penalties attach, unless and to the extent only that such taxes,
assessments and charges are contested in good faith and by appropriate
proceedings by Debtor.
(e) Records
and statements. Debtor shall furnish to Lender financial statements at least
annually and such other financial information respecting Debtor at such times
and in such form as Lender may request. Debtor shall keep accurate and complete
records respecting the Collateral in such form as Lender may approve. At
such
times as Lender may require, Debtor shall furnish to Lender a
-
2 -
statement
certified by Debtor and in such form and containing such information as may
be
prescribed by Lender, showing the current status and value of the
Collateral.
(f) Inspection
of Collateral. All reasonable times Lender may examine the Collateral and
Debtor’s records pertaining to it, wherever located, and make copies of records.
Debtor shall assist Lender in so doing.
(g) Service
charge. In addition to the required payments under the Obligations and this
Agreement, Debtor shall pay Lender’s then current service charges for servicing
and auditing in connection with this Agreement.
(h) Chattel
paper. Lender may require that chattel paper constituting Collateral shall
be on
forms approved by Lender. Unless it consists of electronic chattel paper,
Debtor
shall promptly ▇▇▇▇ all chattel paper constituting Collateral, and all copies,
to indicate conspicuously the Lender’s interest and, upon request, deliver them
to Lender. If it consists of electronic chattel paper, Debtor shall promptly
notify Lender of the existence of the electronic chattel paper and, at the
request of Lender, shall take such actions as Lender may reasonably request
to
vest in Lender control of such electronic chattel paper under applicable
law.
(i) United
States contracts. If any accounts or contract rights constituting Collateral
arose out of contracts with the United States or any of its departments,
agencies or instrumentalities, Debtor will notify Lender and execute writings
required by Lender in order that all money due or to become due under such
contracts shall be assigned to Lender and proper notice of the assignment
given
under the Federal Assignment of Claims Act.
(j) Modifications.
Without the prior written consent of Lender, Debtor shall not alter, modify,
extend, renew or cancel any accounts, letter of credit rights, chattel paper
constituting Collateral or any Collateral constituting part of the Debtor’s
borrowing base.
(k) Returns
and repossessions. Debtor shall promptly notify Lender of the return to or
repossession by Debtor of goods underlying any Collateral and Debtor shall
hold
and dispose of them only as Lender directs.
(l) Promissory
Notes, Chattel Paper and Investment Property. If Debtor shall at any time
hold
or acquire Collateral consisting of promissory notes, chattel paper or
certificated securities, Debtor shall endorse, assign and deliver the same
to
Lender accompanied by such instruments of transfer or assignment duly executed
in blank as Lender may from time to time request.
(m) Change
of name, address or organization. Debtor shall not change Debtor’s legal name or
address without providing at least 30 days prior written notice of the change
to
Lender. Debtor if it is an organization shall not change its type of
organization or state under whose law it is organized and shall preserve
its
organizational existence, and Debtor shall not whether or not Debtor is an
organization, in one transaction or in a series of related transactions,
merge
into or consolidate with any other organization, change Debtor’s legal
structure, or sell or transfer all or substantially all of Debtor’s
assets.
6.
RIGHTS OF LENDER
(a) Authority
to perform for Debtor. Upon the occurrence of an event of default or if Debtor
fails to perform any of Debtor’s duties set forth in this Agreement or in any
evidence of or document relating to the Obligations, Lender is authorized,
in
Debtor’s name or otherwise, to take any such action including without limitation
signing Debtor’s name or paying any amount so required, and the cost shall be
one of the Obligations secured by this Agreement and shall be payable by
Debtor
upon demand with interest from the date of payment by Lender at the highest
rate
stated in any evidence of any Obligation but not in excess of the maximum
rate
permitted by law.
(b) Charging
Debtor’s credit balance. Unless a lien would be prohibited by law or would
render a nontaxable account taxable, Debtor grants Lender, as further security
for the Obligations, a security interest and lien in any deposit account
Debtor
may at any time have with Lender and other money now or hereafter owed Debtor
by
Lender and agrees that Lender may, at any time after the occurrence of an
event
of default, without prior notice or demand, set-off all or any part of the
unpaid balance of the Obligations against any deposit balances or other money
now or hereafter owed Debtor by Lender.
(c) Power
of
attorney. Debtor irrevocably appoints any officer of Lender as Debtor’s
attorney, with power after an event of default to receive, open and dispose
of
all mail addressed to Debtor (and Lender shall not be required as a condition
to
the exercise of this power to prove the occurrence of an event of default
to the
Post Office); to notify the Post Office authorities to change the address
for
delivery of all mail addressed to Debtor to such address as Lender may
designate; to endorse the name of Debtor upon any instruments which may come
into Lender’s possession; and to sign and make draws under any letter of credit
constituting Collateral on Debtor’s behalf. Debtor agrees that Obligations may
be created by drafts drawn on Lender by shippers of inventory named in
Section 3. Debtor authorizes Lender to honor any such draft accompanied by
invoices aggregating the amount of the draft and describing inventory to
be
shipped to Debtor and to pay any such invoices not accompanied by drafts.
Debtor
appoints any employee of Lender as Debtor’s attorney, with full power to sign
Debtor’s name on any instrument evidencing an Obligation, or any renewals or
extensions, for the amount of such drafts honored by Lender and such instruments
may be payable at fixed times or on demand, shall bear interest at the rate
from
time to time fixed by Lender and Debtor agrees, upon request of Lender, to
execute any such instruments. This power of attorney to execute instruments
may
be revoked by Debtor only by written notice to Lender and no such revocation
shall affect any instruments executed prior to the receipt by Lender of such
notice. All acts of such attorney are ratified and approved and such attorney
is
not liable for any act or omission or for any error of judgment or mistake
of
fact or law.
(d) Non-liability
of Lender. Lender has no duty to determine the validity of any invoice, the
authority of any shipper named in section 3 to ship goods to Debtor or
compliance with any order of Debtor. Lender has no duty to protect, insure,
collect or realize upon the Collateral or preserve rights in it against prior
parties. Debtor releases Lender from any liability for any act or omission
relating to the Obligations, the Collateral or this agreement, except Lender’s
willful misconduct.
7.
DEFAULT
Upon
the
occurrence of one or more of the following events of default:
Nonperformance.
Debtor fails to pay any of the Obligations or to perform, or rectify breach
of,
any warranty or covenant or other undertaking by Debtor in this Agreement
or in
any evidence of or document relating to the Obligations or an event of default
occurs under any evidence of or document relating to any other obligation
secured by the Collateral;
Inability
to Perform. Debtor or a surety for any of the Obligations dies, ceases to
exist,
becomes insolvent or the subject of bankruptcy or insolvency proceedings
or any
guaranty of the Obligations is revoked or becomes unenforceable for any
reason;
Misrepresentation.
Any representation made to induce Lender to extend credit to Debtor, under
this
Agreement or otherwise, is false in any material respect when made;
or
Insecurity.
Any other event which causes Lender in good faith to deem itself
insecure;
-
3 -
All
of
the Obligations shall, at the option of Lender and without notice or demand,
become immediately payable; and Lender shall have all rights and remedies
for
default provided by the Arizona Uniform Commercial Code and this Agreement,
as
well as any other applicable law and any evidence of or document relating
to any
Obligation. With respect to such rights and remedies:
(a) Repossession.
Lender may take possession of Collateral without notice or hearing, which
Debtor
waives;
(b) Assembling
collateral. Lender may require Debtor to assemble the Collateral and to make
it
available to Lender at any place reasonably designated by Lender;
(c) Notice
of disposition. Written notice, when required by law, sent to any address
of
Debtor in this Agreement at least 10 calendar days (counting the day of sending)
before the date of a proposed disposition of the Collateral is reasonable
notice;
(d) Expenses
and application of proceeds. Debtor shall reimburse Lender for any expense
incurred by Lender in protecting or enforcing its rights under this Agreement
before and after judgment, including, without limitation, reasonable attorneys’
fees and legal expenses (including those incurred in successful defense or
settlement of any counterclaim brought by Debtor or incident to any action
or
proceeding involving Debtor brought pursuant to the United States Bankruptcy
Code) and all expenses of taking possession, holding, preparing for disposition
and disposing of Collateral (provided, however, Lender has no obligation
to
clean up or otherwise prepare the Collateral for sale). After deduction of
such
expenses, Lender shall apply the proceeds of disposition to the extent actually
received in cash to the Obligations in such order and amounts as it elects
or as
otherwise required by this Agreement; and
(e) Waiver.
Lender may permit Debtor to remedy any default without waiving the default
so
remedied, and Lender may waive any default without waiving any other subsequent
or prior default by Debtor.
8.
INTERPRETATION
The
validity, construction and enforcement of this Agreement are governed by
the
internal laws of Missouri. All terms not otherwise defined have the meanings
assigned to them by the Missouri Uniform Commercial Code, as amended from
time
to time, provided, however, that the term “instrument” shall be such term as
defined in the Missouri Uniform Commercial Code-Secured Transactions. All
references in this Agreement to Sections of the Missouri Revised Statutes
are to
those sections as they may be renumbered from time to time. Invalidity of
any
provision of this Agreement shall not affect the validity of any other
provision. This Agreement is intended by Debtor and Lender as a final expression
of this Agreement and as a complete and exclusive statement of its terms,
there
being no conditions to the enforceability of this Agreement. This Agreement
may
not be supplemented or modified except in writing.
9.
PERSONS BOUND AND OTHER PROVISIONS
The
obligations hereunder of all Debtors are joint and several. This Agreement
benefits Lender, its successors and assigns, and binds Debtor(s) and their
respective heirs, personal representatives, successors and assigns and shall
bind all persons and entities who become bound as a debtor to this Agreement.
If
checked here, this Agreement amends and replaces in their entirety the provision
of all existing General Business Security Agreements between Debtor and Lender;
provided, however, that all security interests granted to Lender under those
existing security agreements shall remain in full force and effect, subject
to
the provisions of this Agreement.
|
SIBONEY
LEARNING GROUP,
INC.
|
(SEAL)
|
|||
|
CORPORATION
|
||||
|
(Type of Organization)
|
||||
|
BY:/s/
▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇ PRESIDENT
|
(SEAL)
|
|||
|
Address: ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇
300
SEE SECTIONS 2(j) and (k)
|
BY:
/s/ ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ SECRETARY
|
(SEAL)
|
||
|
▇▇▇▇▇ ▇▇▇▇▇ ▇▇
▇▇▇▇▇-▇▇▇▇
|
(SEAL)
|
|||
|
TEXAS
STATE OF ORGANIZATION
|
(SEAL)
|
|||
|
(SEAL)
|
||||
|
(Type
of Organization)
|
||||
|
(SEAL)
|
||||
|
Address:
SEE SECTIONS 2(j) and (k)
|
(SEAL)
|
|||
|
(SEAL)
|
||||
|
STATE OF ORGANIZATION
|
(SEAL)
|
|||
-
4
-