EXHIBIT 10.5
THIRD PARTY SECURITY AGREEMENT
▇▇▇▇▇ FARGO RIGHTS TO PAYMENT AND INVENTORY
1. GRANT OF SECURITY' INTEREST. In consideration of any credit or other
financial accommodation heretofore, now or hereafter extended or made to STAR
SOLUTIONS OF DELAWARE, INC. ("Borrowers"), or any of them by ▇▇▇▇▇ FARGO BANK,
NATIONAL ASSOCIATION ("Bank'), and security for the payment of all indebtedness
of Borrowers to Bank, the undersigned PWI TECHNOLOGIES, INC. ("Owner") hereby
grants and transfers to Bank a security interest in all 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 Payment"), now existing or at any time
hereafter, and prior to the t hereof, arising (whether they arise from the sale,
lease or other disposition of inventory or from performance or contracts for
service, manufacture, construction, repair or otherwise or from any other source
whatsoever including all security, 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 Owner's customers, to 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 Owner's
business, and all warehouse receipts, bills of lading and other documents
evidencing goods owned or acquired by Owner, and all goods covered thereby, now
or at any time hereafter and prior to the termination hereof, owned or acquired
by Owner wherever located, and all products thereof (collectively called
"Inventory"), whether in the possession of Owner, warehousemen, bailees or any
other person, or in process of delivery, and whether located at Owner'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, 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").
The word "Indebtedness" is used herein in its most comprehensive sense and
includes any and all advances debts, obligations and liabilities of Borrowers,
or any of them, heretofore, now or hereafter made incurred or created, whether
voluntary or involuntary and however arising, whether due or not due, absolute
or contingent, liquidated or unliquidated, determined or undetermined and
whether borrowers may be liable individually or jointly, or whether recovery
upon such Indebtedness may be or hereafter becomes unenforceable.
2. CONTINUING AGREEMENT; REVOCATION: OBLIGATION UNDER OTHER AGREEMENTS. This a
continuing agreement and all rights, powers and remedies hereunder shall apply
to all past, present and future Indebtedness of each of the Borrowers to Bank,
including that arising under successive transactions which shall either continue
the Indebtedness, increase or decrease it, or from time to time create new
Indebtedness after all or any prior Indebtedness has been satisfied, and
notwithstanding the death, incapacity, dissolution, liquidation or bankruptcy of
any of the Borrowers or Owner or any other event or proceeding affecting any of
the Borrow or Owner. This Agreement shall not apply to any new Indebtedness
created after actual receipt by Bank of written notice of its revocation as to
such new Indebtedness; provided however, that loans or advances made by Bank to
any of the Borrowers after revocation under commitments existing prior to
receipt by Bank at such revocation, and
extensions, renewals or modifications, of any kind, of indebtedness incurred by
any of the Borrowers or committed by Bank prior to receipt by Bank of such
revocation, shall not be considered new Indebtedness. Any such notice must be
sent to Bank by registered US mail, postage prepaid, addressed to its office at
Colorado RCBO, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, or at such other
address as Bank shall from time to time designate. The obligations of Owner
hereunder shall be in addition to any obligations of Owner under any other
grants or pledges of security for any liabilities or obligations of any of the
Borrowers or any other persons heretofore or hereafter given to Bank unless said
other grants or pledges of security are expressly modified or revoked in
writing; and this Agreement shall not, unless expressly herein provided, affect
or invalidate any such other grants or pledges of security.
3. OBLIGATIONS JOINT AND SEVERAL; SEPARATE ACTIONS; WAIVER OF STATUTE OF
LIMITATIONS; REINSTATEMENT OF LIABILITY. The obligations hereunder are joint and
several and independent of the obligations of Borrowers and a separate action or
actions may be brought and prosecuted against Owner whether action is brought
against any of the Borrowers or any other person, or whether any of the
Borrowers or any other person is joined in any such action or actions. Owner
acknowledges that this Agreement is absolute and unconditional, there are no
conditions precedent to the effectiveness of this Agreement, and this Agreement
is in full force and effect and is binding on Owner as of the date written
below, regardless o whether Bank obtains collateral or any guaranties from
others or takes any other action contemplated by Owner. Owner waives the benefit
of any statute of limitations affecting Owner liability hereunder or the
enforcement thereof, and Owner agrees that any payment of any indebtedness or
other act which Shall toll any statute of limitations applicable thereto shall
similarly operate to toll such statute of limitations applicable to Owner's
liability hereunder. The liability of Owner hereunder shall be reinstated and
revived and the rights of Bank shall continue if and to the extent that for any
reason any amount at any time paid on account of any indebtedness secured hereby
is rescinded or must otherwise be restored by Bank, whether as a result of any
proceedings in bankruptcy or reorganization or otherwise, all as though such
amount had not been paid. The determination as to whether any amount so paid
must be rescinded or restored shall be made by Bank in its sole discretion;
provided however, that if Bank chooses to contest any such matter at the request
of Owner, Owner agrees to indemnity and hold Bank harmless from and against all
costs and expenses, including reasonable attorneys' fees, expended or incurred
by Bank in connection therewith, including without limitation, in any litigation
with respect thereto.
4. OBLIGATIONS OF BANK. Any money received by Bank in respect of the Collateral
may be deposited, at Bank's option, into a non-interest bearing account over
which Owner shall have no control, and the same shall, for all purposes, be
deemed Collateral hereunder.
5. REPRESENTATIONS AND WARRANTIES.
5.1 Owner represents and warrants to Bank that: (a) Owner's legal name is
exactly as set forth on the first page of this Agreement, and all of Owners
organizational documents or agreements delivered to Bank are complete and
accurate in every respect; (b) Owner is the owner and has possession or control
of the Collateral and Proceeds; (c) Owner has the exclusive right to grant a
security interest in the Collateral and Proceeds; (d) all Collateral and
Proceeds are genuine, free from liens, adverse claims, setoffs, default,
prepayment, defenses and conditions precedent of any kind or character, except
the lien created hereby or as otherwise agreed to by Bank, or heretofore
disclosed by Owner to Bank, in writing; (e) all statements contained herein and,
where applicable, in the Collateral are true and complete in all material
respects; (f) no financing statement covering any of the Collateral or Proceeds,
and naming any secured, party other than Bank, is on file in any public
office;(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 Owner 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.
5.2 Owner further represents and warrants to Bank that: (a) the Collateral
pledged hereunder is so pledged at Borrowers' request; (b) Bank has made no
representation to Owner as to the creditworthiness of any of the Borrowers; and
(c) Owner has established adequate means of obtaining from each of the Borrowers
on a continuing basis financial and other information pertaining to Borrowers'
financial condition. Owner agrees to keep adequately informed from such means of
any facts, events or circumstances which might in any way affect Owner's risks
hereunder, and Owner further agrees that Bank shall have no obligation to
disclose to Owner any information or material about any of the Borrowers which
is acquired by Bank in any manner.
6. COVENANTS OF OWNER.
6.1 Owner agrees in general: (a) to indemnify Bank against a losses, claims,
demands, liabilities and expenses of every kind caused by property subject
hereto; (b) to pay all costs and expenses, including reasonable attorneys' fees,
incurred by Bank in the perfection and preservation at the Collateral or Bank's
interest therein interest therein and/or the realization, enforcement and
exercise of Bank's rights, powers and remedies hereunder; (c) to permit Bank to
exercise its powers; (d) to execute and deliver such documents as Bank deems
necessary to create, perfect and continue the security interests contemplated
hereby; (e) not to change Owner's name, and as applicable, its chief executive
office, its principal residence or the jurisdiction in which it is organized
and/or registered without giving Bank prior written notice thereof; (f) not to
change the places where Owner keeps any Collateral or Owner's records concerning
the Collateral and Proceeds without giving Bank prior written notice of the
address to which Owner is moving same; and (g) to cooperate with Bank in
perfecting all security interests granted herein and in obtaining such
agreements from third parties as Bank deems necessary, proper or convenient in
connection with the preservation, perfection or enforcement of any of its rights
hereunder.
6.2 Owner agrees with regard to the Collateral and Proceeds, unless Bank agrees
otherwise in writing: (a) that Bank is authorized to file financing statements
in the name of Owner to perfect Bank's security interest in the Collateral and
Proceeds; (b) to insure inventory and, where applicable, Rights to Payment with
bank named as loss payee, in form, substance and amounts, under agreements,
against risks and liabilities, and with insurance companies satisfactory to
Bank; (c) 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 Owner's premises, except for deliveries to buyers in
the ordinary course of Owner's business and except Inventory which consists of
mobile goods as defined in the Colorado Uniform Commercial Code, in which case
Owner agrees not to remove or permit the removal of the Inventory from its state
of domicile for a period in excess of 30 calendar days; (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
Owner'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
anytime; (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 received payments of Rights to Payment or Proceeds hereunder, to pay all
expenses incurred by Bank in connection therewith, including expenses of
accounting, correspondence, collection efforts, reporting to account or contract
debtors, filing, recording, record keeping, and expenses incidental thereto; and
(p) to provide any service and do any other acts which may be necessary to
maintain, preserve and protect all Collateral and, as appropriate and
applicable, to keep all Collateral in good and saleable condition in accordance
with the standards and practices adhered to generally by users and manufacturers
of like property, and to keep all Collateral and Proceeds free and clear of all
defenses, rights of offset and counterclaims.
7. POWERS OF BANK. Owner appoints Bank its true attorney-in-fact to perform any
of the following powers, which are coupled with an interest, are irrevocable
until termination of the Agreement and may be exercised from time to time by
Bank's officers and employees, or any of them, whether or not any of the
Borrowers or Owner is in default: (a) to perform any obligation of Owner
hereunder in Owner's name or otherwise; (b) to give notice to account debtors or
others of Banks rights in the Collateral and Proceeds, to enforce or forebear
from enforcing the same and make extension or modification agreements with
respect thereto; (c) to release persons liable on Proceeds and to give receipts
and acquittances and compromise disputes in connection therewith; (d) to release
or substitute security; (e) to resort to security in any order; (f) to prepare,
execute file, record or deliver notes, assignments, schedules, designation
statements, financing statements, continuation statements, termination
statements, statements of assignment, applications for registration or like
papers to perfect, preserve or release Bank interest in the Collateral and
Proceeds; (g) to receive, open and read mail addressed to Owner; (h) to take
cash, instruments for the payment of money and other property to which Bank is
entitled; (i) to verify facts concerning the Collateral and Proceeds by inquiry
of obligors thereon, or otherwise, in its own name or a fictitious name; (j) to
endorse, collect, deliver and receive payment under instruments for the payment
of money constituting or relating to Proceeds; (k) to prepare, adjust, execute,
deliver and receive payment under insurance claims, and to collect and receive
payment of and endorse any instrument in payment of loss or return premiums or
any other insurance refund or return, and to apply such amounts received by
Bank, at Bank's sole option, toward repayment of the Indebtedness or replacement
of the Collateral; (l) to exercise all rights, powers and remedies which Owner
would have but for this Agreement, with respect to all Collateral and Proceeds
subject hereto; (m) to enter onto Owner's premises in inspecting the Collateral;
(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 Owner or otherwise, deemed by Bank as
necessary, proper and convenient in connection with the preservation, perfection
or enforcement of its rights hereunder.
8. OWNERS WAIVERS.
8.1 Owner waives any right to require Bank to: (a) proceed against any of the
Borrowers or any other person; (b) marshal assets or proceed against or exhaust
any security held from any of the Borrowers or any other person; (c) give notice
of the terms, time and place of any public or private sale or other disposition
of personal property security held from any of the Borrowers or any other
person; (d) take any action or pursue any other remedy in Banks power; or (e)
make any presentment or demand for performance, or give any notice of
nonperformance, protest, notice of protest or notice of dishonor hereunder or in
connection with any obligations or evidences of indebtedness held by Bank's
security for or which constitute in whole or in part the Indebtedness secured
hereunder, or in connection with the creation of new or additional Indebtedness.
8.2 Owner waives any defense to its obligations hereunder based upon or arising
by reason of: (a) any disability or other defense of any of the Borrowers or any
other person; (b) the cessation or limitation from any cause whatsoever, other
than payment in full, of the Indebtedness of any of the Borrowers or any other
person; (c) any lack of authority of any officer, director, partner, agent or
any other person. acting or purporting to act on behalf of any of the Borrowers
which is a corporation, partnership or other type of entity, or any defect in
the formation of any of such Borrower; (d) the application by any of the
Borrowers of the proceeds of any Indebtedness for purposes other than the
purposes represented by Borrowers to, or intended or understood by, Bank or
Owner; (e) any act or omission by Bank which directly or indirectly results in
or aids the discharge of the Borrowers or any portion of the Indebtedness by
operation of law or otherwise, or which in any way impairs or suspends any
rights or remedies of Bank against any of the Borrowers; (f) any impairment of
the value of any interest in any security for the Indebtedness or any portion
thereof, including without limitation, the failure to obtain or maintain
perfection or recordation of any interest in any such security, the release of
any such security without substitution, and the failure to preserve the value
of, or to comply with applicable law in disposing of, any such security; (g) any
modification of the Indebtedness, in any form whatsoever, including any
modification made after revocation hereof to any Indebtedness incurred prior to
such revocation, and including without limitation the renewal, extension,
acceleration or other change in time for payment of, or other change in the
terms of, the indebtedness or any portion thereof, including increase or
decrease of the rate of Interest thereon; or (h) any requirement that Bank give
any notice of acceptance of this Agreement. Until all Indebtedness shall have
been paid in full, Owner shall have no right of subrogation, and Owner waives
any right to enforce any remedy which Bank now has or may hereafter have against
any of the Borrowers or any other person, and waives any benefit of, or any
right to participate in, any security now or her held by Bank. Owner further
waives all rights and defenses Owner may have arising out of (i) any election of
remedies by Bank, even though that election of remedies, such as a non-judicial
foreclosure with respect to any security for any portion of the Indebtedness,
destroys Owners rights of subrogation or Owners rights to proceed against any of
the Borrowers for reimbursement, or (ii) any loss of rights Owner may suffer by
reason of any rights, powers or remedies of any of the Borrowers in connection
with any anti-deficiency laws or any other laws limiting, qualifying or
discharging Borrowers' Indebtedness, whether by operation of law or otherwise
including any rights Guarantor may have to a fair market value hearing to
determine the size of a deficiency following any foreclosure sale or other
disposition of any real property security for any portion of the Indebtedness.
9. AUTHORIZATIONS TO BANK. Owner authorizes Bank either before or after
revocation hereof with notice to or demand on Owner, and without affecting
Owners liability hereunder from time to time to: (a) alter, compromise renew
extend accelerate or otherwise change the time for payment of, or otherwise
change the terms of, the Indebtedness or any portion thereof, including increase
or decrease of the rate of interest thereon; (b) take and hold security, other
than the Collateral and Proceeds, for the payment of the Indebtedness or any
portion thereof, and exchange, enforce, waive, subordinate or release the
Collateral and Proceeds, or any part thereof or any such other security: (c)
apply the Collateral and Proceeds or such other security and direct the order or
manner of sale thereof, including without limitation, a non-judicial sale
permitted by the terms of the controlling security agreement, mortgage or deed
of trust, as Bank in its discretion may determine; (d) release or substitute any
one or more of the endorsers or guarantors of the Indebtedness, or any portion
thererof, or any other party thereto; and (e) apply payments received by Bank
from any of the Borrowers to any indebtedness of any of the Borrowers to Bank,
in such order as Bank shall determine in its sole discretion, whether or not
such Indebtedness is covered by this Agreement, and Owner hereby waives any
provision of law regarding application of payments which specifies otherwise.
Bank may without notice assign this Agreement in whole or in part.
10. PAYMENT OF PREMIUMS, TAXES, CHARGES, LIENS AND ASSESSMENTS. Owner agrees to
pay, prior to delinquency, all insurance premiums, taxes, charges, liens and
assessments against the Collateral and Proceeds, and upon the failure of Owner
to do so, Bank at its option may pay any of them, and shall be the sole judge of
the legality or validity thereof and the amount necessary to discharge the same.
Any such payments made by Bank shall be obligations of Owner to Bank, due and
payable immediately upon demand, together with interest at a rate determined in
accordance with the provisions of this Agreement, and shall be secured by the
Collateral and Proceeds, subject to all terms and conditions of this Agreement.
11. EVENTS OF DEFAULT. The occurrence of any of the following shall constitute
an "Event of Default" under this Agreement: (a) any default in the payment or
performance of any obligation, or any defined event of default under (i) any
contract or instrument evidencing any Indebtedness or (ii) any other agreement
between any of the Borrowers and Bank, including without limitation any loan
agreement, relating to or executed in connection with any Indebtedness; (b) any
representation or warranty made by Owner herein shall prove o be incorrect,
false or misleading in any material respect when made; (c) Owner shall fall to
observe or perform any Obligation or agreement contained herein; (d) any
impairment of the rights of Bank in any Collateral or Proceeds or any attachment
or like levy on any property of Owner; and (e) Bank, in good faith, believes any
or all of the Collateral and/or Proceeds to be in danger of misuse, dissipation,
commingling, loss, theft, damage or destruction, or otherwise in jeopardy or
unsatisfactory in character or value.
12. REMEDIES. Upon the occurrence of any Event of Default, Bank shall have and
may exercise without demand any and all rights, powers, privileges and remedies
granted to a secured party upon default under the Colorado Uniform Commercial
Code or otherwise provided by law, including without limitation, the right (a)
to contact all persons obligated to Owner on any Collateral or Proceeds and to
instruct such persons to deliver all Collateral and/or Proceeds directly to
Bank, and (b) to sell,, lease, license or otherwise dispose of any or all
Collateral. All rights, powers, privileges and remedies of Bank shall be
cumulative. No delay, failure or discontinuance of Bank in exercising any right,
power, privilege or remedy hereunder shall affect or operate as a waiver of such
right, power, privilege or remedy; nor Shall any single or partial exercise of
any such right, power, privilege or remedy preclude, waive or otherwise affect
any other or further exercise thereof or the exercise of any other right, power,
privilege or remedy. Any waiver, permit, consent or approval of any kind by Bank
of any default hereunder, or any
such waiver of any provisions or conditions hereof, must be in writing and shall
be effective only to the extent set forth in writing. It is agreed that public
or private sales or other dispositions, for cash or on credit, to a wholesaler
or retailer or Investor, or user of property of the types subject to this
Agreement, or public auctions are all commercially reasonable since differences
in the price generally realized in the different kinds of dispositions are
ordinarily offset by the differences in the costs and credit risks of such
dispositions.
While an Event of Default exists: (a) Owner will deliver to Bank from time to
time as requested by Bank, current lists of all Collateral and Proceeds; (b)
Owner will not dispose of any Collateral or Proceeds except on terms approved by
Bank; (c) at Bank's request, Owner will assemble and deliver all Collateral and
Proceeds and books and records pertaining thereto, to Bank at a reasonably
convenient place designated by Bank; and (d) Bank may, without notice to Owner
enter onto Owner's premises and take possession of the Collateral with respect
to any sale by Bank of any Collateral subject to this Agreement, Owner hereby
expressly grants to Bank the right to sell such Collateral using any or all of
Owner trademarks, trade names, trade name rights and/or proprietary labels or
marks. Owner further agrees that Bank shall have no obligation to process or
prepare any Collateral for sale or other disposition.
13. DISPOSITION OF COLLATERAL ANP PROCEEDS; TRANSFER OF INIDEBTEDNESS. In
disposing of Collateral hereunder, Bank may disclaim all warranties of title,
possession, quiet enjoyment and the like. Any proceeds of any disposition of any
Collateral or Proceeds, or any part thereof, may be applied by Bank to the
payment of expenses incurred by Bank in connection with the foregoing, including
reasonable attorneys' fees, and the balance of such proceeds may be applied by
Bank toward the payment of the Indebtedness in such order of application on as
Bank may from time to time elect. Upon the transfer of an or any part of the
Indebtedness, Bank may transfer all or any part of the Collateral or Proceeds
and shall be fully discharged thereafter from all liability and responsibility
with respect to any of the foregoing so transferred, and the transferee shall be
vested with all rights and powers of Bank hereunder with respect to any of the
foregoing so transferred; but with respect to any Collateral or Proceeds not so
transferred, Bank shall retain all rights, powers, privileges and remedies
herein given.
14. NOTICES. All notices, requests and demands required under this Agreement
must be in writing addressed to Bank at the address specified in Section 2
hereof and to Owner at the address of its chief executive office (or principal
residence, if applicable) specified below or to such other address as any party
may designate by written notice to each other party, and shall be deemed to have
been given or made as follows (a) if personally delivered, upon delivery; (b) if
sent by mail, upon the earlier of the date of receipt or 3 days after deposit in
the U.S. mail, first class and postage prepaid; and (c) if sent by telecopy,
upon receipt.
15. COSTS, EXPENSES AND ATTOPRNEYS' FEES, Owner shall pay to Bank immediately
upon demand the full amount of all payments, advances, charges, costs and
expenses, including reasonable attorneys' fees (to include outside counsel fees
and all allocated costs of Bank's in-house counsel), expended or incurred by
Bank in exercising any right, power, privilege or remedy conferred by this
Agreement or in the enforcement thereof, whether incurred at the trial or
appellate level, in an arbitration proceeding or otherwise, and including any of
the foregoing incurred in connection with any bankruptcy proceeding (including
without limitation, any adversary proceeding, contested matter or motion brought
by Bank or any other person) relating to Owner or in any way affecting any of
the Collateral or Bank's ability to exercise any of its rights or remedies with
respect thereto. All of the foregoing shall be paid by Owner with interest from
the date of demand until paid in full at a rate per annum equal to the greater
of ten percent (10%) or Bank's Prime Rate in effect from time to time.
16. SUCCESSORS: ASSIGNMENT. This Agreement shall be binding upon and inure to
the benefit of the heirs, executors, administrators, legal representatives,
successors and assigns of the parties; provided however that Owner may not
assign or transfer any of its interests or rights hereunder without Bank's prior
written consent. Owner acknowledges that Bank has the right to sell, assign,
transfer, negotiate or grant participations in all or any part of, or any
interest in, any Indebtedness of Borrowers to Bank and any obligations with
respect thereto, including this Agreement. In connection therewith, Bank may
disclose all documents and information which Bank now has or hereafter acquires
relating to Owner and/or this Agreement, whether furnished by Borrowers; Owner
or otherwise. Owner further agrees that Bank may disclose such documents and
information to Borrowers.
17. AMENDMENT. This Agreement may be amended or modified only in writing signed
by Bank and Owner.
18. APPLICATION OF SINGULAR AND PLURAL. In all cases where there is but a single
Borrower, then all words used herein in the plural shall be deemed to have been
used in the singular where the context and construction so require; and when
there is more than one Borrower named herein, or when this Agreement is executed
by more than one Owner, the word "Borrowers" and the word "Owner" respectively
shall mean all or any one or more of them as the context requires.
19. SEVERABILITY OF PROVISIONS. If any provision of this Agreement shall be held
to be prohibited by, or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or any remaining provisions of this
Agreement.
20. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado.
21. ARBITRATION.
21.1 ARBITRATION. The parties hereto agree, upon demand by any party, to submit
to binding arbitration all claims, disputes and controversies between or among
them (and their respective employees, officers, directors, attorneys, and other
agents), whether in tort, contract or otherwise arising out of or relating to in
any way (a) the loan and related loan and security documents which are the
subject of this Agreement and its negotiation, execution, collateratization,
administration, repayment, modification, extension, substitution, formation,
inducement, enforcement, default or termination; or (b) requests for ?additional
credit.
21.2 GOVERNING RULES. Any arbitration proceeding will (a) proceed in a location
in Colorado selected by the American Arbitration Association ("AAA'"; (b) be
governed by the Federal Arbitration Act (Title 9 of the US States Code),
notwithstanding any conflicting choice of law provision in any of the documents
between the parties; and (c) be conducted by the AAA, or such other
administrator as the parties shall mutually agree upon, in accordance with the
AAA's commercial dispute resolution procedures, unless the claim or counterclaim
is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and
costs in which case the arbitration shall be conducted in accordance with the
AAA's optional procedures for large, complex commercial disputes (the commercial
dispute resolution procedures or the optional procedures for large, complex
commercial disputes to be referred to, as applicable, as the "Rules"). If there
is any inconsistency between the terms hereof and the Rules, the terms and
procedures set forth herein shall control. Any party who fails or refuses to
submit to arbitration following a demand by any other party shall bear all costs
and expenses incurred by such other party in compelling arbitration of any
dispute. Nothing contained herein shall be deemed to be a
waiver by any party that is a bank of the protections afforded to it under 12
U.S.C. Section 91 or any similar applicable state law.
21.3 NO WAIVER OF PROVISIONAL REMEDIES, SELF-HELP AND FORECLOSURE. The
arbitration requirement does not limit the right of any party to (a) foreclose
against real or personal property collateral; (b) exercise self-help remedies
relating to collateral or proceeds of collateral such as setoff or repossession;
or (c) obtain provisional or ancillary remedies such as replevin, injunctive
relief, attachment or the appointment of a receiver, before during or after the
pendency of any arbitration proceeding. This exclusion does not constitute a
waiver of the right or obligation of any party to submit any dispute to
arbitration or reference hereunder, including those arising from the exercise of
the actions detailed in sections (a), (b) and (c) of this paragraph.
21.4 ARBITRATOR, QUALIFICATIONS AND POWERS. Any arbitration proceeding in which
the amount in controversy is $5,000,000.00 or less will be decided by a single
arbitrator selected according to the Rules, and who shall not render an award of
greater than $5,000,000.00. Any dispute in which the amount in controversy
exceeds $5,000,000.00 shall be decided by majority vote of a panel of three
arbitrators; provided however, that all three arbitrators must actively
participate in all hearings and deliberations. The arbitrator will be a neutral
attorney licensed in the State of Colorado or a neutral retired judge of the
state or federal judiciary of Colorado. In either case with a minimum of ten
years experience in the substantive law applicable to the subject matter of the
dispute to be arbitrated. The arbitrator will determine whether or not an issue
is arbitratable and will give effect to the statutes of limitation in
determining any claim. In any arbitration proceeding the arbitrator will decide
(by documents only or with a hearing at the arbitrator's discretion) any
pre-hearing motions which are similar to motions to dismiss for failure to state
a claim or motions for summary adjudication. The arbitrator shall resolve all
disputes in accordance with the substantive law of Colorado and may grant any
remedy or relief that a court of such state could order or grant within the
scope hereof and such ancillary relief as is necessary to make effective any
award. The arbitrator shall also have the power to award recovery of all costs
and fees, to impose sanctions and to take such other action as the arbitrator
deems necessary to the same extent a judge could pursuant to the Federal Rules
of Civil Procedure, the Colorado Rules of Civil Procedure or other applicable
law. Judgment upon the award rendered by the arbitrator may be entered in any
court having jurisdiction. The institution and maintenance of an action for
judicial relief or pursuit of a provisional or ancillary remedy shall not
constitute a waiver of the right of any party, including the plaintiff, to
submit the controversy or claim to arbitration if any other party contests such
action for judicial relief.
21.5 DISCOVERY. In any arbitration proceeding discovery will be permitted in
accordance with the Rules. All discovery shall be expressly limited to matters
directly relevant to the dispute being arbitrated and must be completed no later
than 20 days before the hearing date and within 180 days of the filing of the
dispute with the AAA. Any requests for an extension of the discovery periods, or
any discovery disputes, will be subject to final determination by the arbitrator
upon a showing that the request for discovery is essential for the party's
presentation and that no alternative means for obtaining information is
available.
21.6 CLASS PROCEEDINGS AND CONSOLIDATIONS. The resolution of any dispute arising
pursuant to the terms of this Agreement shall be determined by a separate
arbitration proceeding and such dispute shall not be consolidated with other
disputes or included in any class proceeding.
21.7 PAYMENT OF ARBITRATION COSTS AND FEES. The arbitrator shall award all costs
and expenses of the arbitration proceeding.
21.8 MISCELLANEOUS. To the maximum extent practicable, the AAA, the arbitrators
and the parties shall take all action required to conclude any arbitration
proceeding within 180 days of the filing of the dispute with the AAA. No
arbitrator or other party to an arbitration proceeding may
disclose the existence, content or results thereof, except for disclosures of
information by a party required in the ordinary course of its business, by
applicable law or regulation, or to the extent necessary to exercise any
judicial review rights set forth herein. If more than one agreement for
arbitration by or between the parties potentially applies to a dispute, the
arbitration provision most directly related to the documents between the parties
or the subject matter of the dispute shall control. This arbitration provision
shall survive termination, amendment or expiration of any of the documents or
any relationship between the parties.
Owner warrants that Owner is an organization registered under the laws of the
State of Washington.
Owner warrants that its chief executive office (or principal residence, if
applicable) is located at the following address: ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇. ▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Owner warrants that the Collateral (except goods in transit) is located or
domiciled at the following additional addresses: NONE
IN WITNESS WHEREOF, this Agreement has been duly executed as of March 29, 2005.
PWI Technologies, Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III
----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III, Chief Executive
Officer/Chairman