GENERAL SECURITY AGREEMENT
1. DEBTOR: GLOBAL ALASKA INDUSTRIES, INC.
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Address of Debtor's chief executive office (if different):
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2. CREDITOR: ▇▇▇▇ ▇▇▇▇▇▇▇
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Individually and as Agent for the below - described Creditor:
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(collectively, the "Creditor")
3. COLLATERAL:
A. TYPE (Indicate which types of collateral are being pledged.)
X EQUIPMENT:
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All Equipment of Debtor now owned or hereafter acquired including
but in no way limited to furniture or machinery of all sorts,
fixtures and the property described on the attached list,
accessories, accessions, replacements and substitutions
therefore, together with all attachments thereto.
(FIXTURES TO BE FILED IN REAL ESTATE RECORDS)
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X INVENTORY:
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All Inventory of Debtor, now owned or hereafter acquired wherever
located. All goods of like kind or type hereafter acquired by
Debtor in substitution or replacement thereof now owned or
hereafter acquired;
X ACCOUNTS:
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All Accounts of Debtor, now existing or hereafter created.
Accounts means all accounts receivable, created from the sale of
goods and instruments relating to any such accounts, all
guaranties and other collateral held by Debtor as security for or
with respect to any of the foregoing and proceeds thereto, all
indebtedness and all obligations, whether now existing or
hereafter arising, due or to become due Debtor, and all rights to
payment, whether now existing or hereafter arising, and proceeds
thereof, whether or not earned, for or on account of Debtor sold
or to be sold or for or on account of services rendered or to be
rendered by Debtor and all invoices, contracts, claims,
instruments, agreements, accounts, whether now existing or
hereafter arising and proceeds thereof, whether or not earned,
for or on account of Debtor sold or to be sold evidencing or
representing any such indebtedness, obligations or rights and all
amendments, modifications and supplements to any such invoice,
contract, claim, instrument, agreement or account; and all
guaranties and other collateral held by Debtor as security for
or with respect to any of the foregoing; and other property,
rights or interests of Debtors, which shall at any time come into
the possession, custody or control of the Creditor for any
purposes and in any manner; and the proceeds, products, additions
and accessions of and to any of the foregoing;
X GENERAL INTANGIBLES:
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All intangible personal property of the Debtor now owned or
hereafter acquired including but in no way limited to contracts,
claims, credits, choses in action, insurance claims, licenses,
license royalties, leases, permits, trademarks, patents, patent
rights, copyrights, customer lists, computer software, interests
in partnership and joint ventures, tax refunds, bank accounts,
lawsuits, amounts due or to become due, all rights to payment of
any type whether in kind or in cash and any other benefits under
any current or future governmental program; and
AGRICULTURAL PRODUCTS:
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All crops, livestock and other agricultural goods and farm
products described below whether now owed or hereafter acquired:
B. OTHER PROPERTY:
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Any other property, rights or interest of Debtor which shall at any
time come into the possession, custody, or control of Creditor for
any purpose or in any manner and all property similar to that
described above now owned or hereafter acquired by the Debtor
including, but not limited to additions, substitutions,
replacements, progeny of livestock and the product, proceeds,
additions and accessions of and to any of the foregoing.
C. LOCATION:
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Wherever located and including but not limited to collateral located
as follows (need legal description if fixtures is checked).
Description of Property Location
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4. OBLIGATIONS:
(a) All indebtedness evidenced and created by the following described
promissory Note (the "Note") payable to the order of Creditor, and
all refinancings, renewals, restatements, and extensions thereof,
and all amendments and modifications thereto and all promissory
notes issued in substitution therefor:
Date Amount Maturity Date Maker
(if other than
Debtor)
A. August _______, $4,000,000 August _______,
1997 2004
and
(b) All indebtedness or obligations of Debtor to the Creditor, direct or
indirect, absolute or contingent, now existing or hereafter arising,
including, but not limited to, the performance and observance of any
term or condition of this Agreement, and
(c) All expenditures made or incurred by the Creditor to protect and
maintain the Collateral and to enforce its rights under the Note and
this Agreement, as more fully set forth herein.
5. SECURITY INTEREST: Debtor hereby grants to the Creditor a security
interest in the Collateral. The security interest is given to secure the
payment and performance of the Obligations. Unless the context otherwise
indicates, the terms "General Intangibles," "Equipment,"
"Inventory,""Fixtures," "Furniture," or "Account" or "Accounts" in this
Agreement refers to that part of the Collateral consisting of such
property. Inventory shall include goods of Debtor in the hands of
manufacturers or suppliers or in the process of delivery to Debtor or any
agent or representative of Debtor.
Where permitted under applicable law, Creditor hereby acquires a
purchase money security interest in the Collateral.
7. WARRANTIES AND REPRESENTATIONS: Debtor warrants and represents to the
Creditor:
(a) Except for the security interest created by this Agreement, and
except for the security interest held by ▇▇▇▇ ▇▇▇▇▇▇▇ securing the
repayment of that certain promissory note in the principal amount of
$4,000,000, Debtor is the owner of all the Collateral or will be at
the time such Collateral is created or acquired, free and clear of
all liens, security interests and encumbrances;
(b) Except as otherwise indicated by Debtor to the Creditor in writing,
at the time any property of any type becomes subject to the security
interest granted in this Agreement Debtor will be the owner of such
property with the absolute right to transfer any interest therein,
and if the property is on Account, the Account will be a valid
obligation of the Account debtor, enforceable in accordance with its
terms and to the best of Debtor's knowledge and belief, free and
clear of all liens, security interests, restrictions, setoffs,
adverse claims, assessments, defaults, prepayments, defenses and
conditions precedent other than the security interest created by
this Agreement;
(c) The unpaid amount and all other information shown relating to all
Accounts in Debtor's books and on any schedule, certificate or
report at any time given by Debtor to the Creditor is and will be
true and correct as of the date indicated;
(d) All chattel paper, documents and instruments which are part of the
Collateral are valid and genuine and comply with applicable laws
concerning form, content and manner of preparation and execution,
and all persons appearing to be obligated thereon have authority and
capacity to contract and are bound as they appear to be;
(e) No financing statement covering any of the Collateral is on file in
any public office other than those which reflect the security
interest created by this Agreement;
(f) If Debtor is a corporation or partnership, its articles of
incorporation or certificate and bylaws or its partnership agreement
do not prohibit any term or condition of this Agreement;
(g) The execution and delivery of this Agreement will not violate any
laws or agreement governing Debtor or to which Debtor is a party;
and
(h) All information and statements in this Agreement are and will
continue to be true and correct.
8. COVENANTS OF DEBTOR: Unless and until the Creditor expressly consents to
another course of action:
(a) Debtor shall, at such intervals and in such form and manner as the
Creditor may require, execute, deliver and otherwise provide the
Creditor with schedules confirming or assigning to the Creditor the
Accounts or other Collateral herein described and intended to be
covered by this Agreement and copies of invoices, evidences of
shipment or delivery and such other information, including aging and
reconciliation reports, as the Creditor may deem necessary or
advisable. Additionally, Debtor shall from time to time execute
financing statements and other documents in form satisfactory to the
Creditor (and pay the cost of filing or recording them in whatever
public offices the Creditor deems necessary or advisable) and
perform such other acts as the Creditor may request to perfect and
maintain a valid properly perfected security interest in the
Collateral;
(b) At the Creditor's request Debtor shall ▇▇▇▇ or stamp each of its
individual ledger sheets or cards pertaining to Accounts with the
legend "For value received, this Account has been assigned to the
Creditor," and shall stamp or otherwise ▇▇▇▇ and keep its books and
records relating to the Collateral in such manner as the Creditor
may deem necessary or advisable;
(c) Debtor shall (i) keep such books and records pertaining to the
Collateral, and at such office or offices of Debtor, as may be
satisfactory to the Creditor, (ii) permit representatives of the
Creditor at all reasonable times to inspect the Collateral, and to
inspect and make abstracts from Debtor's books and records
pertaining or relating to the Collateral, and (iii) from time to
time prepare or cause to be prepared and deliver to the Creditor all
financial statements, reports and data requested by the Creditor, at
such times and in such form as may be satisfactory to the Creditor;
(d) Debtor shall give such written notice to Account debtors as the
Creditor may at time request. The Creditor may at any time, whether
or not an Event of Default exists under this Agreement, (i) notify
any Account debtor of the Creditor's interest in the Collateral,
(ii) request information as to the Collateral from any Account
debtor, and (iii) notify an Account debtor to make all payments with
respect to the Collateral directly to the Creditor or in any other
manner directed by the Creditor;
(e) Debtor shall (i) not sell, transfer, lease, abandon, assign or
otherwise dispose of any of the Collateral or any interest therein
(except that Inventory may be sold in the ordinary course of
business) or any other material asset of the Debtor; (ii) not permit
the Collateral to become a part of or to be affixed to any real or
personal property without first making arrangements satisfactory to
the Creditor to protect the Creditor's security interest therein;
(iii) promptly notify the Creditor of any Event of Default or any
event which with the giving of notice of passage of time a failure
to cure could become an Event of Default, as defined in
paragraph 12; (iv) defend the Collateral against the claims and
demands of all persons; and (v) pay promptly all taxes and
assessments with respect to the Collateral;
(f) Debtor shall carry such insurance on the Collateral as may be
satisfactory to and may be requested by the Creditor. If requested
by the Creditor all insurance policies shall be written for the
benefit of Debtor and the Creditor as their interests may appear,
shall provide for 30 days' written notice to the Creditor prior to
cancellation and shall be deposited with the Creditor. The Creditor
may act as attorney for Debtor in making adjusting and settling
claims under or cancelling such insurance and endorsing Debtor's
name on any draft relating thereto. The Creditor in its sole
discretion may apply any proceeds of insurance towards payment of
the Obligations, whether or not due, in any order of priority;
(g) Debtor shall duly pay and discharge all taxes, assessments, and
governmental charges prior to the date on which penalties are
attached thereto unless and to the extent only that the same shall
be contested in good faith and by appropriate proceedings, and
promptly pay all bills, immediately notifying Creditor of inability
to do so;
(h) At its option, the Creditor may discharge taxes, liens, security
interests and other encumbrances against the Collateral and may pay
for the repair of any damage to the Collateral, the maintenance and
preservation thereof and insurance thereon. Debtor shall reimburse
the Creditor on demand for any payments so made, plus interest of
such payment. Any such payments by the Creditor shall be a fixed
indebtedness of Debtor to the Creditor, secured by the Collateral
even if such payments cause the total outstanding indebtedness of
Debtor to exceed Debtor's loan limit;
(i) Debtor shall not incur or permit to be outstanding any indebtedness
for borrowed money except (i) indebtedness to the Creditor,
(ii) current obligations incurred in the ordinary course of business
and (iii) other indebtedness for which the Creditor has given or may
in the future give its express consent;
(j) Debtor shall not pledge, mortgage or otherwise encumber, or create
or permit a security interest to exist in any of the Collateral or
any other asset of the Debtor, to or in favor of anyone other than
the Creditor, and shall keep the Collateral in good condition and
repair;
(k) Except for temporary processing or storage, all Collateral,
including without limitation Inventory, shall be kept at Debtor's
address or addresses listed on the first page of this Agreement or
at such other location as shall be satisfactory to the Creditor;
(l) Debtor shall report to Creditor any change in the location of any
portion of the Collateral;
(m) If Debtor is a partnership or corporation it shall not change its
name, the name under which it is doing business or corporate
structure without providing prior notice thereof to the Creditor;
(n) A carbon, photographic, or other reproduction of this Security
Agreement, or any Financing Statement executed in connection
herewith, is sufficient as a Financing Statement and may be filed or
recorded as such in any office where a Financing Statement on the
Collateral described herein may be filed;
(o) Debtor hereby expressly grants Secured Party a power of attorney,
and appoints and constitutes Secured Party as Debtor's agent, for
the purpose and with the power to sign on behalf of Debtor and in
Debtor's name, one or more Financing Statements covering any of the
Collateral described herein; and
(p) These covenants are hereby supplemented by those set forth in the
Loan Agreement, if executed and delivered in connection herewith.
9. COLLECTION OF ACCOUNTS: Until revocation of this authority, Debtor, as
agent of the Creditor and at the expense of Debtor:
(a) shall endeavor to collect all amounts due and owing on the Accounts,
including the taking of such action to repossess goods, impose liens
or enforce payment as the Creditor or Debtor may deem proper;
(b) shall receive in trust for the account of the Creditor such goods as
may be returned or rejected by or repossessed from Account debtors,
and hold such goods and the proceeds thereof separate as the
Creditor's property, without commingling them with Debtor's
property, and remit promptly any proceeds of sale or lease of such
goods in the manner described in paragraph 10 below; and
(c) may in the ordinary course of business grant to Account debtors any
rebate, refund or allowance to which they are entitled provided that
Debtor shall not compromise any claims after the occurrence of an
Event of Default or an event which with the giving of notice, the
passage of time or failure to cure would become an Event of Default.
10. PAYMENTS OF PROCEEDS TO CREDITOR:
(a) Debtor shall receive all payments with respect to the Collateral in
trust for the Creditor, without commingling them with any other
funds or property of Debtor, and upon the occurrence of an Event of
Default (until such authority is revoked or different instructions
are given by the Creditor) shall immediately deliver them to the
Creditor in the exact form received, bearing Debtor's full-recourse
endorsement or assignment when necessary, for application to the
Obligations in any order of priority determined by the Creditor.
Debtor shall have the liability of a general endorser with respect
to such payments and hereby waives presentment, notice of dishonor,
protest, demand and all other notices with respect thereto, whether
or not Debtor endorses the instruments or other evidences of payment
and regardless of the form of payment or of Debtor's endorsement or
assignment thereon.
(b) At the election of the Creditor, which may be indicated on an
addendum, all payments described in the preceding subparagraph 10.a
shall be deposited in a separate bank account maintained by the
Creditor (the "Pledge Account"), from which Debtor shall have no
right to withdraw funds and from which Debtor agrees to make
available funds to the Creditor if the Creditor specifically
requests same for payment of the Obligations. All instruments
evidencing payments shall be deposited in the Pledge Account subject
to final payments, and all deposits therein shall be held as
security for the Obligations. From time to time in its discretion
the Creditor may apply all or any of the balance in the Pledge
Account to payment of the Obligations in any order of priority
determined by the Creditor. Additionally, the Creditor in its
discretion may release all or any of the balance in the Pledge
Account to Debtor.
11. RIGHTS OF THE CREDITOR:
(a) The Creditor shall be deemed to have exercised reasonable care in
the custody and preservation of the Collateral if it takes such
action for that purpose as Debtor shall request, but failure to
honor any such request shall not of itself be deemed a failure to
exercise reasonable care. The Creditor shall not be required to
take any steps necessary to preserve any rights in the Collateral
against parties claiming an interest in the property prior in right
to the Creditor's interest nor to protect, preserve or maintain any
security interest given to secure nor to protect, preserve or
maintain any security interest given to secure any of the
Collateral.
(b) Debtor hereby irrevocably appoints the Creditor as the attorney of
the Debtor, with full powers of substitution and at the cost and
expense of Debtor, to exercise any of the following powers with
respect to any of the Accounts: (i) demand, ▇▇▇ for, collect and
give receipts for any payments due thereon or by virtue thereof;
(ii) receive, take, endorse, assign and deliver chattel paper,
documents, instruments and all other property taken or received by
the Creditor in connection therewith including the right of Creditor
to open mail of the Debtor to obtain checks, instruments and other
payments made on accounts; (iii) settle, compromise, compound,
prosecute or defend any action or proceeding with respect thereto;
(iv) sell, transfer, assign or otherwise deal therein or therewith
as fully and effectually as if the Creditor were the absolute owner
thereof, and (v) extend the time of payment thereof and make
allowances and other adjustments with reference thereto. In
exercising any power herein granted the Creditor may act in its name
or the name of Debtor.
(c) The Creditor shall be under no duty to exercise or to withhold the
exercise of any of the rights, powers, privileges and options
expressly or implicitly granted to the Creditor in this Agreement,
and shall not be responsible for any failure to do so or delay in so
doing.
12. EVENTS OF DEFAULT: Debtor shall be in default under this Agreement upon
the happening of any of the following events or conditions ("Events of
Default"):
(a) Default in the due payment, performance or observance of any of the
Obligations unless cured within any applicable grace period;
(b) Any warranty, representation or statement of Debtor in this
Agreement, or otherwise made or furnished to the Creditor or on
behalf of Debtor, proves to have been false in any material respect
when made or furnished;
(c) Any event which results in the acceleration or maturity of the
obligations indebtedness of Debtor to the Creditor or indebtedness
to any other person under any security or loan agreement, indenture,
note or other undertaking;
(d) Loss, theft or destruction of or substantial damage to any of the
Collateral or the seizure or taking of any of the Collateral by any
government or similar authority, or the issuance of a writ, order of
attachment or garnishment with respect thereto;
(e) Death, dissolution, insolvency (however expressed or indicated),
termination of existence of, appointment of a receiver of any part
of the property of, assignment for the benefits of creditors by, or
the commencement of any proceeding under any bankruptcy,
reorganization, arrangement, insolvency or other law relating to the
relief of debtors by or against, Debtor or any guarantor or surety
for Debtor under any of the Obligations; or
(f) Good faith belief by the Creditor that the Obligations are
inadequately secured or that the prospect of payment, performance or
observance of any of the Obligations is impaired. If the security
interest created by this Agreement is given to secure the
Obligations of a person other than Debtor, an additional Event of
Default shall be the happening of any of the above events or
conditions to, by or with respect to such other person.
13. REMEDIES:
(a) Upon the occurrence of any Event of Default, the Creditor may,
without notice or demand, declare any of the Obligations immediately
due and payable and this Agreement in default, and thereafter the
Creditor shall, inter alia, have the remedies of a secured party
under the Uniform Commercial Code as then in effect in Alaska,
including, without limitation, the right (i) to take possession of
the Collateral not then in its possession and (ii) to have Debtor
assemble such Collateral and make it available to the Creditor at a
place to be designated by the Creditor which is reasonably
convenient to both parties. To take possession, the Creditor may
enter upon any premises and remove the Collateral therefrom. If
notice is required by law, five days prior to notice of the time and
place of any public sale or of the time after which any private sale
or any other intended disposition thereof is to be made shall be
deemed reasonable notice to Debtor.
(b)
(c) As a supplemental or additional remedy, the Creditor shall also be
entitled, without notice or demand and to the extent permitted by
law, (i) to hold, use, operate, manage and control all or any part
of the Collateral; (ii) to demand, collect and retain all earnings,
proceeds and other sums due or to become due with respect to the
Collateral, accounting only for the net earnings arising from such
use and charging against receipts from such use all other costs,
expenses, charges, damage or loss by reason of such use, and
(iii) to exercise or continue to exercise all of the rights granted
to the Creditor in paragraph 11. Notwithstanding the foregoing, the
Creditor shall also be entitled without notice or demand and to the
extent permitted by law, to have a receiver appointed to take charge
of all or any part of the Collateral, exercising all of the rights
granted to the Creditor in this paragraph.
14. GENERAL:
(a) No default shall be waived by the Creditor except in writing and no
waiver of any payment or other right under this Agreement shall
operate as a waiver of any payment or other right under this
Agreement shall operate as a waiver of any other payments or right.
(b) Without affecting any obligations of Debtor under this Agreement
without notice or demand, the Creditor may renew, extend, or
otherwise change the terms and conditions of any of the Obligations,
take or release any other Collateral as security for any of the
Obligations, and add or release any guarantor, endorser, surety or
other party to any of the Obligations.
(c) The Creditor may assign, transfer or deliver any of the Collateral
to any transferee of any of the Obligations, and thereafter shall be
fully discharged from all responsibility with respect to such
Collateral, but the Creditor shall retain all powers and rights
hereunder with respect to any of the Collateral remaining.
(d) This Agreement may be terminated by either party upon ten days'
prior written notice to the other but such termination shall be
effective only as to new Obligations of Debtor subsequently
incurred; as to transactions entered into, rights or interests
created or Obligations created or arising (and refinancings,
renewals, modifications, amendments and extensions thereof, if any),
prior to such termination, this Agreement shall remain fully
effective as if such termination had not occurred.
(e) Any consent of the Creditor and any notice or other communication
from Debtor required or contemplated by this Agreement shall be in
writing. Any written notice intended for Debtor shall be deemed
given if mailed, postage prepaid to Debtor at the address given on
the first page of this Agreement or at such other address given by
notice as herein provided. If intended for the Creditor, notice
shall be deemed given only if actually received by the Creditor.
(f) If there is more than one Debtor, all of the terms and conditions of
this Agreement shall apply to each and every one of them. Delivery
by the Creditor to any Debtor of any of the Collateral shall
discharge the Creditor from any further liability or responsibility
therefor.
(g) This Agreement shall be construed under and governed by the
substantive laws of Alaska without reference to choice of law rules,
including Alaska's, and Debtor hereby consents to personal
jurisdiction in and agrees that any litigation in any way related to
this Agreement shall be brought and prosecuted in a court of
competent jurisdiction sitting in the Anchorage, Alaska and no where
else.
(h) Except as modified by this Agreement and unless the context
otherwise requires, all terms used herein which are defined in the
Uniform Commercial Code as in effect in Alaska shall have the
meanings therein stated.
(i) All of the rights of the Creditor under this Agreement shall be
cumulative and shall inure to the benefit of its successors and
assigns. All obligations of Debtor hereunder shall be binding upon
the heirs, legal representatives, successors and assigns of Debtor.
Dated: August 1, 1997 /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
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N/A By: President
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Secretary, if a Corporate Debtor Title:
[SEAL] ---------------------------------