DESCRIPTION - Security Agreement Equipment between ▇▇▇▇▇ Fargo Bank and
Auto-Graphics, Inc. dated May 12, 1997.
SECURITY AGREEMENT
▇▇▇▇▇ FARGO BANK
EQUIPMENT
1. GRANT OF SECURITY INTEREST. For valuable consideration, the
undersigned AUTO-GRAPHICS, INC., or any of them ("Debtor"), hereby
grants and transfers to ▇▇▇▇▇ FARGO BANK. NATIONAL ASSOCIATION("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 Debtor , wherever located whether
in the possession of Debtor or any other person and whether located on
Debtor's property or elsewhere, and all improvements, replacements,
accessions and additions thereto (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
rights, chattel paper, instruments, documents, general intangibles and
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 cause of action affecting or
relating to any of the foregoing (hereinafter called "Proceeds").
2. OBLIGATIONS SECURED. The obligations secured hereby are the
payment and performance of. (a) all present and future indebtedness of
Debtor to Bank; (b) all obligations of Debtor and rights of Bank under
this Agreement; and (c) all present and future obligations of Debtor to
Bank of other kinds. The word "Indebtedness" is used herein in its
most comprehensive sense and includes any and all advances, debts,
obligations and liabilities of Debtor. or any of them, heretofore, now
or hereafter made, incurred or created, whether voluntary or involuntary
and however arising, whether due or not due. absolute or contingent,
liquidated or unliquidated, determined or undetermined, and whether
Debtor may be liable individually or jointly, or whether recovery upon
such indebtedness may be or hereafter becomes unenforceable.
3. TERMINATION. This Agreement will terminate upon the
performance of all obligations of Debtor to Bank, including without
limitation, the payment of all indebtedness of Debtor to Bank, and the
termination commitments of Bank to extend credit to Debtor, existing at
the time Bank receives written notice from Debtor of the termination of
this Agreement.
4. OBLIGATIONS OF BANK. Bank has no obligation to make any
loans hereunder. 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 Debtor shall have no control, and the same
shall, for all purposes, be deemed Collateral hereunder.
5. REPRESENTATIONS AND WARRANTIES. Debtor represents and
warrants to Bank that: (a) Debtor is the owner and has possession or
control of the Collateral and Proceeds; (b) Debtor has the right to
grant a security interest in the Collateral and Proceeds; (c) 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 by Debtor to Bank, in writing; (d) all
statements contained herein are true and complete in all material
respects; (e) 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 (f) Debtor is not in the business of selling
goods of the kind Included within the Collateral subject to this
Agreement, and Debtor acknowledges that no sale of any Collateral,
including without limitation, any Collateral which Debtor 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.
6. COVENANTS OF DEBTOR.
(a) Debtor Agrees in general: (i) to pay indebtedness secured
hereby when due; (ii) to indemnify Bank against all losses, claims,
demands, liabilities and expenses of every kind caused by property
subject hereto; (iii) to pay all costs and expenses, including
reasonable attorneys' fees, incurred by Bank in the perfection and
preservation of the Collateral or Bank's interest therein and/or the
realization, enforcement and exercise of Banks rights, powers and
remedies hereunder. (iv) to permit Bank to exercise Its powers; (v) to
execute and deliver such documents as Bank deems necessary to create,
perfect and continue the security interest contemplated hereby; and (vi)
not to change its chief place of business or the places where Debtor
keeps any of the Collateral or Debtors records concerning the Collateral
and Proceeds without first giving Bank written notice of the address to
which Debtor is moving same.
(b) Debtor agrees with regard to the Collateral and Proceeds,
unless Bank agrees otherwise in writing: (i) to insure the Collateral
with Bank as loss payee, in form, substance and amounts, under
agreements, against risks and liabilities, and with insurance companies
satisfactory to Bank: (ii) 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; (iii) not to permit any lien of the Collateral or
Proceeds, including without limitation, liens arising from repairs to or
storage of the Collateral. except in favor of Bank; (iv) to pay when due
all license fees, registration fees and other charges in connection-
with-any Collateral; (v) not to remove the Collateral from Debtor's
premises unless the Collateral consists of mobile goods as defined in
the California Uniform Commercial Code, in which case Debtor 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; (vi) 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; (vii) not to rent, lease or charter the Collateral; (viii) to
permit Bank to Inspect the Collateral at any time; (ix) 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;
(x) If requested by Bank, to receive and use reasonable diligence to
collect Proceeds, in trust and as the property of Bank, and to
immediately endorse as appropriate and deliver such Proceeds to Bank
daily in the exact form in which they are received together with a
collection report in form satisfactory to Bank. (xi) not to commingle
Proceeds or collections thereunder with other property; (xii) to give
only normal allowances and credits and to advise Bank thereof
immediately in writing if they affect any Collateral or Proceeds in any
material respect: (xiii) in the event Bank elects to receive payments of
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 (xiv) 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 the Collateral in good and saleable condition and repair. to
deal with the Collateral in accordance with the standards and practices
adhered to generally by owners 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. Debtor appoints Bank its true attorney-in-
fact to perform any of the following powers. which are coupled with an
interest, are irrevocable until termination of this Agreement and may be
exercised from time to time by Bank's officers and employees, or any of
them, whether or not Debtor is in default: (a) to perform any obligation
of Debtor hereunder in Debtor's name or otherwise; (b) to give notice to
account debtors or others of Bank's rights In the Collateral and
Proceeds. to enforce the same and make extension agreements with respect
thereto; (c) to release persons liable on Proceeds and to give receipts
and acceptances and compromise disputes in connection therewith; (d) to
release security; (e) to resort to security in any order, (f) to
prepare, execute, file, record or deliver notes, assignments. schedules,
designation statements, financing statements. continuation statements,
termination statements, statements of assignment, applications for
registration or like papers to perfect, preserve or release Bank's
interest in the Collateral and Proceeds; (g) to receive, open and read
mail addressed to Debtor ; (h) to take cash, instruments for the payment
of money and other property to which Bank is entitled (i) to verify facts
concerning the Collateral and Proceeds by inquiry of obligors thereon, or
otherwise, in its own name or a fictitious name; (j) to endorse, collect.
deliver and receive payment under instruments for the payment of money
constituting or relating to proceeds;(k) to prepare adjust, execute,
deliver and receive payment under insurance claims, and to collect and
receive payments of and endorse any instrument in payment of loss or
returned premiums or any other insurance refund or return, and to apply
such amounts received by Bank, at Bank's sole option, toward repayment of
the indebtedness or replacement of the Collateral: (l) to exercise all
rights, powers and remedies which Debtor would have, but for this
Agreement, with respect to all Collateral and Proceeds subject hereto; (m)
to enter onto Debtor's premises in inspecting the Collateral; and (n) to
do all acts and things and execute all documents in the name of Debtor or
otherwise, deemed by Bank as necessary, proper and convenient in with the
preservation, perfection or enforcement of its rights hereunder.
8. PAYMENT OF PREMIUMS,TAXES, CHARGES, LIENS AND ASSESSMENTS.
Debtor agrees to pay prior to delinquency. all Insurance premiums,
taxes, charges. liens and assessments against the Collateral and
Proceeds, and upon the failure of Debtor to do so, Bank at its option
may pay any of them and shall be the sole judge of the legality or
validity thereof and the amount necessary to discharge the same. Any
such payments made by Bank shall be obligations of Debtor to Bank, due
and payable immediately upon demand, together with interest at a rate
determined in accordance with the provisions of Section 15 herein, and
shall be secured by the Collateral and Proceeds, subject to all terms
and conditions of this Agreement.
9. EVIENTS OF DEFAULT. The occurrence of any of the following
shall 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 Debtor and Bank.
including without limitation any loan agreement, relating to or executed
in connection with any indebtedness; (b) any representation or warranty
made by any Debtor herein shall prove to be incorrect in any material
respect when made; (c) any Debtor shall fail to observe or perform any
obligation or agreement contained herein: (d) any attachment or like
levy on any property of any Debtor; and (e) Bank, in good faith,
believes any or all of the Collateral and/or Proceeds to be in danger of
misuse, dissipation, commingling, loss. theft, damage or destruction, or
otherwise in jeopardy or unsatisfactory In character or value.
10. REMEDIES. Upon the occurrence of any Event of Default, Bank
shall have the right to declare immediately due and payable all or any
indebtedness secured hereby and to terminate any commitments to make
loans or otherwise extend credit to Debtor. Bank shall have all other
rights, powers, privileges and remedies granted to a secured party upon
default under the California Uniform Commercial Code or otherwise
provided by law, including without limitation, the right to contact all
persons obligated to Debtor on any Collateral or Proceeds and to
instruct such person to deliver all Collateral and/or Proceeds directly
to Bank. 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. 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 auction. are
all commercially reasonable since differences in the sales prices
generally realized in the different kinds of sales are ordinarily offset
by the differences In the costs and credit risks of such sales.
While an Event of Default exists: (a) Debtor will deliver to Bank from
time to time. as requested by Bank, current lists of all Collateral and
Proceeds; (b) Debtor will not dispose of any of the Collateral or
Proceeds on terms approved by Bank; (c) at Banks request Debtor will
assemble and deliver all Collateral and Proceeds, and books and records
pertaining thereto, to Bank at a reasonably convenient place designated
by Bank: and (d) Bank may, without notice to Debtor, enter onto Debtor's
premises and take possession of the Collateral.
11. DISPOSITION OF COLLATERAL AND PROCEEDS. Upon the transfer
of all or any part of the indebtedness. Bank may transfer all or any
part of the Collateral or Proceeds and shall be fully discharged
thereafter from all liability and responsibility with respect to any of
the foregoing so transferred and the transferee shall be vested with all
rights and powers of Bank hereunder with respect to any of the foregoing
so transferred; but with respect to any Collateral or Proceeds not so
transferred Bank shall retain all rights, powers, privileges and
remedies herein given. Any proceeds of any disposition of any of the
Collateral or Proceeds, or any part thereof. may be applied by Bank to
the payment of expenses incurred by Bank in connection with the
foregoing, including reasonable attorneys' fees, and the balance of such
proceeds may be applied by Bank toward the payment of the indebtedness
in such order of application as Bank may from time to-time elect.
12. STATUTE OF LIMITATIONS. Until all indebtedness shall have
been paid in full and all commitments by Bank to extend credit to Debtor
have been terminated, the power of sale and all other rights, powers.
privileges and remedies granted to Bank hereunder shall continue to
exist and may be exercised by Bank at any time and from time to time
irrespective of the fact that the indebtedness or any part thereof may
have become barred by any statute of limitations, or that the personal
liability of Debtor may have ceased, unless such liability shall have
Ceased due to the payment in full of all indebtedness secured hereunder.
13. MISCELLANEOUS. (a) The obligations of Debtor are joint and
several; (b) Debtor hereby waives any right (i) to require Bank to make
any presentment or demand or give any notice of nonpayment or
nonperformance, protest, or notice of dishonor hereunder, (ii) to direct
the application of payments or security for indebtedness of Debtor or
indebtedness of customers of Debtor, or (iii) to require proceedings
against others or to require exhaustion of security and (c) Debtor hereby
consents to extensions forbearance's or alterations of the terms of
indebtedness, the release or substitution of security, and the release
of any guarantors; provided however. that in each instance, Bank
believes in good faith that the action in question is commercially
reasonable in that it does not unreasonably increase the risk of
nonpayment of the indebtedness to which the action applies. Until all
indebtedness shall have been paid in full no Debtor shall have any
right of subrogation or contribution, and each Debtor hereby waives any
benefit of or right to participate in any of the Collateral or Proceeds
or any other security now or hereafter held by Bank.
14. NOTICES. All notice, requests and demands required under
this Agreement must be in writing, addressed to Bank at the address
specified in any other loan documents entered Into between Debtor and
Bank and to Debtor at the address of its chief executive office (or
personal 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 ATTORENYS' FEES. Debtor shall pay to
Bank Immediately upon demand the full amount of all payment, advances,
charges, costs and expenses, including reasonable attorneys' fees (to
include outside counsel fees and all allocated costs of Bank 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 Debtor or in any way affecting
any of the Collateral or Bank's ability to exercise any of its rights or
remedies with respect thereto. All of the foregoing shall be paid by
Debtor with interest from the date of demand until paid in full at a
rate per annum equal to the greater of ten percent (10%) or the Prime
Rate in effect from time to time. The "Prime Rate" is a base rate that
Bank from time to time establishes and which serves as the basis upon
which effective rates of interest are calculated for those loans making
reference thereto.
16. SUCCESSORS; ASSIGNS; AMENDMENT. This Agreement shall be
binding upon and inure to the benefit of the heirs, executors,
administrators. legal representatives. successors and assigns of the
parties, and may be amended or modified only in writing signed by Bank
and Debtor.
17. OBLIGATIONS OF MARRIED PERSONS. Any married person who
signs this Agreement as Debtor hereby expressly agrees that recourse may
be had against his or her separate property for all his or her
indebtedness to Bank secured by the Collateral and Proceeds under this
Agreement.
18 SEVERABILFTY 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.
19. GOVERNING LAW. This Agreement shall be governed by and
construed In accordance with the laws of the state of California.
Debtor warrants that its chief executive office (or personal
residence, if applicable) is located at the following address: ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Debtor warrants that the Collateral (except goods in transit) is
located or domiciled at the following additional addresses: NONE
IN WITNESS WHEREOF, this Agreement been duly executed as of May
12, 1997
AUTO GRAPHICS, INC.
By: Ss/▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President