Exhibit 10.2
SECURITY AGREEMENT
▇▇▇▇▇ FARGO EQUIPMENT
1. GRANT OF SECURITY INTEREST. For valuable consideration, the undersigned
ENGlobal Corporation, 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 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 rights, 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 any of the foregoing (hereinafter called
"Proceeds").
2. OBLIGATIONS SECURED. The obligations secured hereby are the payment and
performance of: (a) all present and future Indebtedness of Debtor to Bank; (b)
all obligations of Debtor and rights of Bank under this Agreement; and (c) all
present and future obligations of Debtor to Bank of other kinds. The word
"Indebtedness" is used herein in its most comprehensive sense and includes any
and all advances, debts, obligations and liabilities of Debtor, or any of them,
heretofore, now or hereafter made, incurred or created, whether voluntary or
involuntary and however arising, whether due or not due, absolute or contingent,
liquidated or unliquidated, determined or undetermined, including under any
swap, derivative, foreign exchange, hedge, deposit, treasury management or other
similar transaction or arrangement, and whether Debtor may be liable
individually or jointly, or whether recovery upon such Indebtedness may be or
hereafter becomes unenforceable.
3. TERMINATION. This Agreement will terminate upon the performance of all
obligations of Debtor to Bank, including without limitation, the payment of all
Indebtedness of Debtor to Bank, and the termination of all commitments of Bank
to extend credit to Debtor, existing at the time Bank receives written notice
from Debtor of the termination of this Agreement.
4. 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's legal name is exactly as set forth on the first page of this
Agreement, and all of Debtor's organizational documents or agreements delivered
to Bank are complete and accurate in every respect; (b) Debtor is the owner and
has possession or control of the Collateral and Proceeds; (c) Debtor has the
exclusive right to grant a security interest in the Collateral and Proceeds; (d)
all Collateral and Proceeds are genuine, free from liens, adverse claims,
setoffs, default, prepayment, defenses and conditions precedent of any kind or
character, except the lien created hereby or as otherwise agreed to by Bank, or
heretofore disclosed by Debtor to Bank, in writing; (e) all statements contained
herein 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) 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 or other disposition 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.
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6.1 Debtor Agrees in general: (a) to pay Indebtedness secured hereby when due;
(b) to indemnify Bank against all losses, claims, demands, liabilities and
expenses of every kind caused by property subject hereto; (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 its name, and as applicable, its chief executive
office, its principal residence or the jurisdiction in which it is organized
and/or registered without giving Bank prior written notice thereof; (f) not to
change the places where Debtor keeps any Collateral or Debtor's records
concerning the Collateral and Proceeds without giving Bank prior written notice
of the address to which Debtor is moving same; and (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 Debtor 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 Debtor to perfect Bank's security interest in Collateral and
Proceeds; (b) to insure the Collateral with Bank named as loss payee, in form,
substance and amounts, under agreements, against risks and liabilities, and with
insurance companies satisfactory to Bank; (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 repairs to or
storage of the Collateral, 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 Debtor's premises except in
the ordinary course of Debtor's business; (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; (h) not to rent, lease or
charter the Collateral; (i) to permit Bank to inspect the Collateral at any
time; (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
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; (l) not to commingle 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 Collateral or Proceeds in any
material respect; (n) 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 (o) 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 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's interest in the Collateral and Proceeds; (g) to receive, open and
read mail addressed to Debtor; (h) to take cash, instruments for the payment of
money and other property to which Bank is entitled; (i) to verify facts
concerning the Collateral and Proceeds by inquiry of obligors thereon, or
otherwise, in its own name or a fictitious name; (j) to endorse, collect,
deliver and receive payment under instruments for the payment of money
constituting or relating to Proceeds; (k) to prepare, adjust, execute, deliver
and receive payment under insurance claims, and to collect and receive payment
of and endorse any instrument in payment of loss or returned premiums or any
other
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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 connection 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 and shall be secured by the Collateral and
Proceeds, subject to all terms and conditions of this Agreement.
9. EVENTS OF DEFAULT. The occurrence of any of the following shall constitute an
"Event of Default" under this Agreement: (a) any default in the payment or
performance of any obligation, or any defined event of default, under (i) any
contract or instrument evidencing any Indebtedness, or (ii) any other agreement
between Debtor and Bank, including without limitation any loan agreement,
relating to or executed in connection with any Indebtedness; (b) any
representation or warranty made by Debtor herein shall prove to be incorrect,
false or misleading in any material respect when made; (c) Debtor shall fail to
observe or perform any obligation or agreement contained herein; (d) any
impairment of the rights of Bank in any Collateral or Proceeds or any attachment
or like levy on any property of Debtor; and (e) Bank, in good faith, believes
any or all of the Collateral and/or Proceeds to be in danger of misuse,
dissipation, commingling, loss, theft, damage or destruction, 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 Texas Business and Commerce
Code or otherwise provided by law, including without limitation, the right (a)
to contact all persons obligated to Debtor on any Collateral or Proceeds and to
instruct such persons to deliver all Collateral and/or Proceeds directly to
Bank, and (b) to sell, lease, license or otherwise dispose of any or all
Collateral. All rights, powers, privileges and remedies of Bank shall be
cumulative. No delay, failure or discontinuance of Bank in exercising any right,
power, privilege or remedy hereunder shall affect or operate as a waiver of such
right, power, privilege or remedy; nor shall any single or partial exercise of
any such right, power, privilege or remedy preclude, waive or otherwise affect
any other or further exercise thereof or the exercise of any other right, power,
privilege or remedy. Any waiver, permit, consent or approval of any kind by Bank
of any default hereunder, or any such waiver of any provisions or conditions
hereof, must be in writing and shall be effective only to the extent set forth
in writing. It is agreed that public or private sales or other dispositions, for
cash or on credit, to a wholesaler or retailer or investor, or user of property
of the types subject to this Agreement, or public auctions, are all commercially
reasonable since differences in the prices generally realized in the different
kinds of dispositions are ordinarily offset by the differences in the costs and
credit risks of such dispositions.
While an Event of Default exists: (a) Debtor will deliver to Bank from time to
time, as requested by Bank, current lists of all Collateral and Proceeds; (b)
Debtor will not dispose of any Collateral or Proceeds except on terms approved
by Bank; (c) at Bank's request, Debtor will assemble and deliver all Collateral
and Proceeds, and books and records pertaining thereto, to Bank at a reasonably
convenient place designated by Bank; and (d) Bank may, without notice to Debtor,
enter onto Debtor's premises and take possession of the Collateral. Debtor
further agrees that Bank shall have no obligation to process or prepare any
Collateral for sale or other disposition.
11. DISPOSITION OF COLLATERAL AND PROCEEDS; TRANSFER OF INDEBTEDNESS. In
disposing of Collateral hereunder, Bank may disclaim all warranties of title,
possession, quiet enjoyment and the like. Any proceeds of any disposition of any
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
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order of application as Bank may from time to time elect. Upon the transfer of
all or any part of the Indebtedness, Bank may transfer all or any part of the
Collateral or Proceeds and shall be fully discharged thereafter from all
liability and responsibility with respect to any of the foregoing so
transferred, and the transferee shall be vested with all rights and powers of
Bank hereunder with respect to any of the foregoing so transferred; but with
respect to any Collateral or Proceeds not so transferred Bank shall retain all
rights, powers, privileges and remedies herein given.
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 or other disposition and all other rights, powers, privileges and
remedies granted to Bank hereunder shall continue to exist and may be exercised
by Bank at any time and from time to time irrespective of the fact that the
Indebtedness or any part thereof may have become barred by any statute of
limitations, or that the personal liability of Debtor may have ceased, unless
such liability shall have ceased due to the payment in full of all Indebtedness
secured hereunder.
13. MISCELLANEOUS. When there is more than one Debtor named herein: (a) the word
"Debtor" shall mean all or any one or more of them as the context requires; (b)
the obligations of each Debtor hereunder are joint and several; and (c) until
all Indebtedness shall have been paid in full, no Debtor shall have any right of
subrogation or contribution, and each Debtor hereby waives any benefit of or
right to participate in any of the Collateral or Proceeds or any other security
now or hereafter held by Bank. Debtor hereby waives any right to require Bank to
(i) proceed against Debtor or any other person, (ii) marshal assets or proceed
against or exhaust any security from Debtor or any other person, (iii) perform
any obligation of Debtor with respect to any Collateral or Proceeds, and (d)
make any presentment or demand, or give any notices of any kind, including
without limitation, any notice of nonpayment or nonperformance, protest, notice
of protest, notice of dishonor, notice of intention to accelerate or notice of
acceleration hereunder or in connection with any Collateral or Proceeds. Debtor
further waives any right to direct the application of payments or security for
any Indebtedness of Debtor or indebtedness of customers of Debtor.
14. NOTICES. All notices, requests and demands required under this Agreement
must be in writing, addressed to Bank at the address specified in any other loan
documents entered into between Debtor and Bank and to Debtor at the address of
its chief executive office (or principal residence, if applicable) specified
below or to such other address as any party may designate by written notice to
each other party, and shall be deemed to have been given or made as follows: (a)
if personally delivered, upon delivery; (b) if sent by mail, upon the earlier of
the date of receipt or 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 ATTORNEYS' FEES. Debtor shall pay to Bank immediately
upon demand the full amount of all payments, advances, charges, costs and
expenses, including reasonable attorneys' fees (to include outside counsel fees
and all allocated costs of Bank's in-house counsel to the extent permissible),
expended or incurred by Bank in connection with (a) the perfection and
preservation of the Collateral or Bank's interest therein, and (b) the
realization, enforcement and exercise of any right, power, privilege or remedy
conferred by this Agreement, whether incurred at the trial or appellate level,
in an arbitration proceeding or otherwise, and including any of the foregoing
incurred in connection with any bankruptcy proceeding (including without
limitation, any adversary proceeding, contested matter or motion brought by Bank
or any other person) relating to Debtor or in any way affecting any of the
Collateral or Bank's ability to exercise any of its rights or remedies with
respect thereto.
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. 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.
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18. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.
Debtor warrants that Debtor is an organization registered under the laws of
Nevada. Debtor warrants that its chief executive office (or principal 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: "See Exhibit A attached hereto
and incorporated herein by this reference".
IN WITNESS WHEREOF, this Agreement has been duly executed as of December 31,
2009.
ENGlobal Corporation
By:
/s/ ▇.▇. ▇▇▇▇▇▇▇, Chief Financial Officer
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CONTINUING SECURITY AGREEMENT
▇▇▇▇▇ FARGO RIGHTS TO PAYMENT AND INVENTORY
1. GRANT OF SECURITY INTEREST. For valuable consideration, the undersigned
ENGlobal Corporation, or any of them ("Debtor"), hereby grants and transfers to
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION ("Bank") a security interest in all
accounts, deposit accounts, chattel paper (whether electronic or tangible),
instruments, promissory notes, documents, general intangibles, payment
intangibles, software, letter of credit rights, health-care insurance
receivables and other rights to payment (collectively called "Rights to
Payments"), now existing or at any time hereafter, and prior to the termination
hereof, arising (whether they arise from the sale, lease or other disposition of
inventory or from performance of contracts for service, manufacture,
construction, repair or otherwise or from any other source whatsoever),
including all securities, guaranties, warranties, indemnity agreements,
insurance policies, supporting obligations and other agreements pertaining to
the same or the property described therein, and in all goods returned by or
repossessed from Debtor's customers, together with a security interest in all
inventory, goods held for sale or lease or to be furnished under contracts for
service, goods so leased or furnished, raw materials, component parts and
embedded software, work in process or materials used or consumed in Debtor's
business and all warehouse receipts, bills of lading and other documents
evidencing goods owned or acquired by Debtor, and all goods covered thereby, now
or at any time hereafter, and prior to the termination hereof, owned or acquired
by Debtor, wherever located, and all products thereof (collectively called
"Inventory"), whether in the possession of Debtor, warehousemen, bailees or any
other person, or in process of delivery and whether located at Debtor's places
of business or elsewhere (with all Rights to Payment and Inventory referred to
herein collectively as the "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, all rights to payment,
including returned premiums, with respect to any insurance relating to any of
the foregoing, and all rights to payment with respect to any claim or cause of
action affecting or relating to any of the foregoing (hereinafter called
"Proceeds").
2. OBLIGATIONS SECURED. The obligations secured hereby are the payment and
performance of: (a) all present and future Indebtedness of Debtor to Bank; (b)
all obligations of Debtor and rights of Bank under this Agreement; and (c) all
present and future obligations of Debtor to Bank of other kinds. The word
"Indebtedness" is used herein in its most comprehensive sense and includes any
and all advances, debts, obligations and liabilities of Debtor, or any of them,
heretofore, now or hereafter made, incurred or created, whether voluntary or
involuntary and however arising, whether due or not due, absolute or contingent,
liquidated or unliquidated, determined or undetermined, including under any
swap, derivative, foreign exchange, hedge, deposit, treasury management or other
similar transaction or arrangement, and whether Debtor may be liable
individually or jointly, or whether recovery upon such Indebtedness may be or
hereafter becomes unenforceable.
3. TERMINATION. This Agreement will terminate upon the performance of all
obligations of Debtor to Bank, including without limitation, the payment of all
Indebtedness of Debtor to Bank, and the termination of all commitments of Bank
to extend credit to Debtor, existing at the time Bank receives written notice
from Debtor of the termination of this Agreement.
4. 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's legal name is exactly as set forth on the first page of this
Agreement, and all of Debtor's organizational documents or agreements delivered
to Bank are complete and accurate in every respect; (b) Debtor is the owner and
has possession or control of the Collateral and Proceeds; (c) Debtor has the
exclusive right to grant a security interest in the Collateral and Proceeds; (d)
all Collateral and Proceeds are genuine, free from liens, adverse claims,
setoffs, default, prepayment, defenses and conditions precedent of any kind or
character, except
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the lien created hereby or as otherwise agreed to by Bank, or heretofore
disclosed by Debtor to Bank, in writing;
(e) all statements contained herein and, where applicable, in the Collateral are
true and complete in all material respects; (f) no financing statement covering
any of the Collateral or Proceeds, and naming any secured party other than Bank,
is on file in any public office; (g) all persons appearing to be obligated on
Rights to Payment and Proceeds have authority and capacity to contract and are
bound as they appear to be; (h) all property subject to chattel paper has been
properly registered and filed in compliance with law and to perfect the interest
of Debtor in such property; and (i) all Rights to Payment and Proceeds comply
with all applicable laws concerning form, content and manner of preparation and
execution, including where applicable Federal Reserve Regulation Z and any State
consumer credit laws.
6. COVENANTS OF DEBTOR.
6.1 Debtor Agrees in general: (a) to pay Indebtedness secured hereby when due;
(b) to indemnify Bank against all losses, claims, demands, liabilities and
expenses of every kind caused by property subject hereto; (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 its name, and as applicable, its chief executive
office, its principal residence or the jurisdiction in which it is organized
and/or registered without giving Bank prior written notice thereof; (f) not to
change the places where Debtor keeps any Collateral or Debtor's records
concerning the Collateral and Proceeds without giving Bank prior written notice
of the address to which Debtor is moving same; and (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 Debtor 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 Debtor to perfect Bank's security interest in
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) not to use any Inventory for any unlawful purpose or
in any way that would void any insurance required to be carried in connection
therewith; (d) not to remove Inventory from Debtor's premises except in the
ordinary course of Debtor's business; (e) 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; (f) 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 Debtor's business; (g) to furnish
reports to Bank of all acquisitions, returns, sales and other dispositions of
the Inventory in such form and detail and at such times as Bank may require; (h)
to permit Bank to inspect the Collateral at any time; (i) 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; (j) 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; (k) not to commingle Rights to Payment, Proceeds or
collections thereunder with other property; (l) 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; (m) on demand, to deliver
to Bank returned property resulting from, or payment equal to, such allowances
or credits on any Rights to Payment or Proceeds or to execute such documents and
do such other things as Bank may reasonably request for the purpose of
perfecting, preserving and enforcing its security interest in such returned
property; (n) from time to time, when requested by Bank, to prepare and deliver
a schedule of all Collateral and Proceeds subject to this Agreement and to
assign in writing and deliver to Bank all accounts, contracts, leases and other
chattel paper, instruments, documents and other evidences thereof; (o) in the
event Bank elects to receive 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.
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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 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's interest in the Collateral and Proceeds; (g) to receive, open and
read mail addressed to Debtor; (h) to take cash, instruments for the payment of
money and other property to which Bank is entitled; (i) to verify facts
concerning the Collateral and Proceeds by inquiry of obligors thereon, or
otherwise, in its own name or a fictitious name; (j) to endorse, collect,
deliver and receive payment under instruments for the payment of money
constituting or relating to Proceeds; (k) to prepare, adjust, execute, deliver
and receive payment under insurance claims, and to collect and receive payment
of and endorse any instrument in payment of loss or returned premiums or any
other insurance refund or return, and to apply such amounts received by Bank, at
Bank's sole option, toward repayment of the Indebtedness 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; (n) to make withdrawals from and to close deposit accounts or other
accounts with any financial institution, wherever located, into which Proceeds
may have been deposited, and to apply funds so withdrawn to payment of the
Indebtedness; (o) to preserve or release the interest evidenced by chattel paper
to which Bank is entitled hereunder and to endorse and deliver any evidence of
title incidental thereto; and (p) to do all acts and things and execute all
documents in the name of Debtor or otherwise, deemed by Bank as necessary,
proper and convenient in connection with the preservation, perfection or
enforcement of its rights hereunder.
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 and shall be secured by the Collateral and
Proceeds, subject to all terms and conditions of this Agreement.
9. EVENTS OF DEFAULT. The occurrence of any of the following shall constitute an
"Event of Default" under this Agreement: (a) any default in the payment or
performance of any obligation, or any defined event of default, under (i) any
contract or instrument evidencing any Indebtedness, or (ii) any other agreement
between Debtor and Bank, including without limitation any loan agreement,
relating to or executed in connection with any Indebtedness; (b) any
representation or warranty made by Debtor herein shall prove to be incorrect,
false or misleading in any material respect when made; (c) Debtor shall fail to
observe or perform any obligation or agreement contained herein; (d) any
impairment of the rights of Bank in any Collateral or Proceeds or any attachment
or like levy on any property of Debtor; and (e) Bank, in good faith, believes
any or all of the Collateral and/or Proceeds to be in danger of misuse,
dissipation, commingling, loss, theft, damage or destruction, 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 Texas Business and Commerce
Code or otherwise provided by law, including without limitation, the right (a)
to contact all persons obligated to Debtor on any Collateral or Proceeds and to
instruct such persons to deliver all Collateral and/or Proceeds directly to
Bank, and (b) to sell, lease, license or otherwise dispose of any or all
Collateral. All rights, powers, privileges and remedies of Bank shall be
cumulative. No delay, failure or discontinuance of Bank in exercising any right,
power, privilege or remedy hereunder shall affect or operate as a waiver of such
right, power, privilege or remedy; nor shall any single or partial exercise of
any such right, power, privilege or remedy preclude, waive or otherwise affect
any
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other or further exercise thereof or the exercise of any other right, power,
privilege or remedy. Any waiver, permit, consent or approval of any kind by Bank
of any default hereunder, or any such waiver of any provisions or conditions
hereof, must be in writing and shall be effective only to the extent set forth
in writing. It is agreed that public or private sales or other dispositions, for
cash or on credit, to a wholesaler or retailer or investor, or user of property
of the types subject to this Agreement, or public auctions, are all commercially
reasonable since differences in the prices generally realized in the different
kinds of dispositions are ordinarily offset by the differences in the costs and
credit risks of such dispositions.
While an Event of Default exists: (a) Debtor will deliver to Bank from time to
time, as requested by Bank, current lists of all Collateral and Proceeds; (b)
Debtor will not dispose of any Collateral or Proceeds except on terms approved
by Bank; (c) at Bank's request, Debtor will assemble and deliver all Collateral
and Proceeds, and books and records pertaining thereto, to Bank at a reasonably
convenient place designated by Bank; and (d) Bank may, without notice to Debtor,
enter onto Debtor's premises and take possession of the Collateral. With respect
to any sale by Bank of any Collateral subject to this Agreement, Debtor hereby
expressly grants to Bank the right to sell such Collateral using any or all of
Debtor's trademarks, trade names, trade name rights and/or proprietary labels or
marks. Debtor further agrees that Bank shall have no obligation to process or
prepare any Collateral for sale or other disposition.
11. DISPOSITION OF COLLATERAL AND PROCEEDS; TRANSFER OF INDEBTEDNESS. In
disposing of Collateral hereunder, Bank may disclaim all warranties of title,
possession, quiet enjoyment and the like. Any proceeds of any disposition of any
Collateral or Proceeds, or any part thereof, may be applied by Bank to the
payment of expenses incurred by Bank in connection with the foregoing, including
reasonable attorneys' fees, and the balance of such proceeds may be applied by
Bank toward the payment of the Indebtedness in such order of application as Bank
may from time to time elect. Upon the transfer of all or any part of the
Indebtedness, Bank may transfer all or any part of the Collateral or Proceeds
and shall be fully discharged thereafter from all liability and responsibility
with respect to any of the foregoing so transferred, and the transferee shall be
vested with all rights and powers of Bank hereunder with respect to any of the
foregoing so transferred; but with respect to any Collateral or Proceeds not so
transferred Bank shall retain all rights, powers, privileges and remedies herein
given.
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 or other disposition and all other rights, powers, privileges and
remedies granted to Bank hereunder shall continue to exist and may be exercised
by Bank at any time and from time to time irrespective of the fact that the
Indebtedness or any part thereof may have become barred by any statute of
limitations, or that the personal liability of Debtor may have ceased, unless
such liability shall have ceased due to the payment in full of all Indebtedness
secured hereunder.
13. MISCELLANEOUS. When there is more than one Debtor named herein: (a) the word
"Debtor" shall mean all or any one or more of them as the context requires; (b)
the obligations of each Debtor hereunder are joint and several; and (c) until
all Indebtedness shall have been paid in full, no Debtor shall have any right of
subrogation or contribution, and each Debtor hereby waives any benefit of or
right to participate in any of the Collateral or Proceeds or any other security
now or hereafter held by Bank. Debtor hereby waives any right to require Bank to
(i) proceed against Debtor or any other person, (ii) marshal assets or proceed
against or exhaust any security from Debtor or any other person, (iii) perform
any obligation of Debtor with respect to any Collateral or Proceeds, and (d)
make any presentment or demand, or give any notices of any kind, including
without limitation, any notice of nonpayment or nonperformance, protest, notice
of protest, notice of dishonor, notice of intention to accelerate or notice of
acceleration hereunder or in connection with any Collateral or Proceeds. Debtor
further waives any right to direct the application of payments or security for
any Indebtedness of Debtor or indebtedness of customers of Debtor.
14. NOTICES. All notices, requests and demands required under this Agreement
must be in writing, addressed to Bank at the address specified in any other loan
documents entered into between Debtor and Bank and to Debtor at the address of
its chief executive office (or principal residence, if applicable) specified
below or to such other address as any party may designate by written notice to
each other party, and shall be deemed to have been given or made as follows: (a)
if personally delivered, upon delivery; (b) if sent by mail, upon the earlier
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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 ATTORNEYS' FEES. Debtor shall pay to Bank immediately
upon demand the full amount of all payments, advances, charges, costs and
expenses, including reasonable attorneys' fees (to include outside counsel fees
and all allocated costs of Bank's in-house counsel to the extent permissible),
expended or incurred by Bank in connection with (a) the perfection and
preservation of the Collateral or Bank's interest therein, and (b) the
realization, enforcement and exercise of any right, power, privilege or remedy
conferred by this Agreement, whether incurred at the trial or appellate level,
in an arbitration proceeding or otherwise, and including any of the foregoing
incurred in connection with any bankruptcy proceeding (including without
limitation, any adversary proceeding, contested matter or motion brought by Bank
or any other person) relating to Debtor or in any way affecting any of the
Collateral or Bank's ability to exercise any of its rights or remedies with
respect thereto.
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. 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.
18. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas. Debtor warrants that Debtor is
an organization registered under the laws of Nevada.
Debtor warrants that its chief executive office (or principal 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: "See Exhibit A attached hereto
and incorporated herein by this reference".
IN WITNESS WHEREOF, this Agreement has been duly executed as of December 31,
2009.
ENGlobal Corporation
By:
/s/ ▇.▇. ▇▇▇▇▇▇▇, Chief Financial Officer
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