Security
Agreement
_____________________________________________________________________________
DATE: January 3, 1997
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DEBTOR| SERVICE BUSINESS SYSTEMS, INC. | SECURED| NORWEST BANK
COLORADO, N.A.|
| | PARTY | |
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BUS. | 11415 WEST I-70 FRONTAGE ROAD |ADDRESS | 12601 WEST 32ND AVE. |
OR | NORTH | | |
RES. | | | |
ADD. | | | |
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CITY, | WHEAT RIDGE, CO 80033 | CITY, | WHEAT RIDGE, CO 80033-5252 |
STATE | | STATE, | |
& | | & | |
ZIP | | ZIP | |
CODE | | CODE | |
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1. Security Interest and Collateral. To secure the payment and
performance of each and every debt, liability and obligation of every type
and description which Debtor may now or at any time hereafter owe to Secured
Party (whether such debt, liability or obligation now exists or is hereafter
created or incurred, whether it is currently contemplated by the Debtor and
Secured Party, whether any documents evidencing it refer to this Security
Agreement, whether it arises with or without any documents (e.g. obligations
to Secured party created by checking overdrafts), and whether it is or may be
direct or indirect, due to become due, absolute or contingent, primary or
secondary, liquidated or unliquidated, or joint, several or joint and
several; all such debts, liabilities and obligations being herein
collectively referred to as the "Obligations"). Debtor hereby grants Secured
Party a security interest (herein called the "Security Interest"0 int he
following property (herein called the "Collateral) (check applicable boxes
and complete information):
(a) INVENTORY:
All Inventory of Debtor, whether now owned or hereafter acquired and
wherever located:
(b) EQUIPMENT, FARM PRODUCTS AND CONSUMER GOODS:
All equipment of Debtor, whether now owned or hereafter acquired,
including but not limited to all present and future machinery,
vehicles, furniture, fixtures, manufacturing equipment, farm machinery
and equipment, shop equipment, office and recordkeeping equipment,
parts and tools, and the goods described in any equipment schedule or
list herewith or hereafter furnished to Secured Party by Debtor (but
no such schedule or list need be furnished in order for the security
interest granted herein to be valid as to all of Debtor's equipment).
All farm products of Debtor, whether now owned or hereafter acquired,
including but not limited to all poultry and livestock and their young,
products thereof and produce thereof, all crops, whether annual or
perennial and the products thereof, and all feed, seed, fertilizer,
medicines and other supplies used or produced by Debtor in farming
operations, and any crop insurance payments and any government farm
support payments, including any diversion or deficiency payments. The
real estate concerned with the above described crops growing or to be
grown is:____________________________________________________________
_____________________________________________________________________
and the name of the record owner is:_________________________________
The following goods or types of goods:_______________________________
_____________________________________________________________________
(c) ACCOUNTS AND OTHER RIGHTS TO PAYMENT:
Each and every right of Debtor to the payment of money, whether such
right to payment now exists or hereafter arises, whether such right to
payment arises out of a sale, lease or other disposition of goods or
other property by Debtor, out of a rendering of services by Debtor,
out of a loan by Debtor, out of the overpayment of taxes or other
liabilities of Debtor, or otherwise arises under any contract or
agreement, whether such right to payment is or is not already earned
by performance, and howsoever such right to payment may be evidenced,
together with all other rights and interests (including all liens and
security interests) which Debtor may at any time have by law or
agreement against any account debtor or other obligor obligated to
make any such payment or against any of the property such account
debtor or other obligor;o all including but not limited to all present
and future debt instruments, chattel papers, accounts, loans and
obligations receivable and tax refunds.
______________________________________________________________________
______________________________________________________________________
(d) GENERAL INTANGIBLES:
All general intangibles of Debtor, whether now owned or hereafter
acquired, including, but not limited to, applications for patents,
patients, copyrights, trademarks, trade secrets, good will, tradenames,
customers' lists, permits and franchises, and the right to use Debtor's
name.
together with all substitutions and replacements for and products of any of
the foregoing property not constituting consumer goods and together with
proceeds of any and all of the foregoing property and, in the case of all
tangible Collateral, together with all accessions and, except in the case of
consumer goods, together with (i) all accessories, attachments, parts,
equipment and repairs now or hereafter attached or affixed to or used in
connection with any such goods, and (ii) all warehouse receipts, bills of
lading and other documents of title now or hereafter covering such goods.
2. Representations, Warranties and Agreements. Debtor represents,
warrants and agrees that:
(a) Debtor is an individual, a partnership, a corporation and, if
Debtor is an individual, the Debtor's residence is at the address of
Debtor shown at the beginning of this Agreement.
(b) The Collateral will be used primarily for personal, family or
household purposes; farming operations; business purposes.
(c) if any part or all of the tangible Collateral will become so related
to particular real estate as to become a fixture, the real estate
concerned is:_______________________________________________________
____________________________________________________________________
and the name of the record owner is:________________________________
(d) Debtor's chief executive office is located at:______________________
or, if left blank, at the address of Debtor shown at the beginning of
this Agreement.
THIS AGREEMENT CONTAINS ADDITIONAL PROVISIONS SET FORTH ON THE
REVERSE SIDE
HEREOF, ALL OF WHICH ARE MADE A PART HEREOF.
NORWEST BANK COLORADO, N.A. SERVICE BUSINESS SYSTEM, INC
Secured Party's Name Debtor's Name
BY(Signature) /s/Frank L. Cummings /s/Donald V. Warriner
(Name and Title) Frank L.Cummings Donald V. Warriner
AVP President and CEO
ADDITIONAL PROVISIONS
3. Additional Representations, Warranties and Agreements.
Debtor represents, warrants and agrees that:
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(a) Debtor has (or will have all the time Debtor acquires rights in
Collateral hereafter arising) absolute title to each item of Collateral free
and clear of all security interests, liens and encumbrances, except the
Security interest, and will defend the Collateral against all claims or
demands of all persons other than Secured Party. Debtor will not sell or
otherwise dispose of the Collateral or any interest thereon without the prior
written consent of Secured Party, except that, until the occurrence of an
Event of Default and the revocation by Secured Party or Debtor's right to do
so. Debtor may sell any inventory constituting Collateral to buyers in the
ordinary course of business and use and consume any farm products
constituting Collateral in Debtor's farming operation. If Debtor is a
corporation, this Agreement has been duly and validly authorized by all
necessary corporate action, and, if Debtor is a partnership, the partner(s)
executing this Agreement has (have) authority to act for the partnership.
(b) Debtor will not permit any tangible Collateral to be located in any
state (and, if county filing is required, in any county) in which a financing
statement covering such Collateral is required to be, but has not in fact
been, titled in order to perfect the Security interest.
(c) Each right to payment and each instrument, document, chattel paper
and other agreement constituting or evidencing Collateral is (or will be when
arising or issued) the valid, genuine and legally enforceable obligation,
subject to no defense, set-off or counterclaim (other than those arising in
the ordinary course of business) of the account debtor or other obligor named
therein or in Debtor's records pertaining thereto as being obligated to pay
such obligation. Debtor will neither agree to any material modification or
amendment nor agree to any cancellation of any such obligation without
Secured Party's prior written consent, and will not subordinate any such
right to payment to claims or other creditors of such account debtor or other
obligor.
(d) Debtor will keep all tangible Collateral in good repair, working
order and condition, normal depreciation excepted, and will, from time to
time, replace any worn, broken or defective parts thereof; promptly pay all
taxes and other governmental charges levied or assessed upon or against any
Collateral or upon or against the creation, perfection or continuance of the
Security interest; keep all Collateral free and clear of all security
interests, liens and encumbrances except the Security interest; at all
reasonable times, permit Secured Party or its representatives to examine or
inspect any Collateral, wherever located, and to examine, inspect and copy
Debtor's books and records pertaining to the Collateral and its business and
financial condition and to discuss with account debtors and other obligors
requests for verifications of amounts owed to Debtor; keep accurate and
complete records pertaining to the Collateral and pertaining to Debtor's
business and financial condition and submit to Secured Party such periodic
reports concerning the Collateral and Debtor's business and financial
condition as Secured Party may from time to time reasonably request;
promptly notify Secured Party of any loss of or material damage to any
Collateral or of any adverse change, known to Debtor, in the prospect of
payment of any sums due or on under any instrument, chattel paper, or
account constituting Collateral; if Secured Party at any time so requests
(whether the request is made before or after the occurrence of an Event of
Default), promptly deliver to Secured Party any instrument, document or
chattel paper constituting Collateral, duly endorsed or assigned by Debtor;
at all times keep all tangible Collateral insured against risks of fire
(including so-called extended coverage), theft, collision (in case of
Collateral consisting of motor vehicles) any such other risks and in such
amounts as Secured Party may reasonably request, with any loss payable to
Secured Party to the extent of its interest; from time to time execute such
financing statements as Secured Party may reasonably require in order to
protect the Security interest and, if any Collateral consists of a motor
vehicle, execute such documents as may be required to have the Security
Interest properly noted on a certificate of title; pay when due or reimburse
Secured Party on demand for all costs of collection of any of the Obligations
and all other out-of-pocket expenses (including in each case all reasonable
attorneys' fees) incurred by Secured Party in connection with the creation,
perfection, satisfaction, protection, defense or enforcement of the Security
Interest or the creation, continuance, protection, defense or enforcement of
this Agreement or any or all of the Obligations, including expenses incurred
in any litigation or bankruptcy or insolvency proceedings; execute, deliver
or endorse any and all instruments, documents, assignments, security
agreements and other agreements and writings which Secured Party may at any
time reasonably request in order to secure, protect, perfect or enforce
the Security Interest and Secured Party's rights under this Agreement; not
use or keep any Collateral, or permit it to be used or kept, for any
unlawful purpose or in violation of any federal, state or local law,
statute or ordinance; permit Secured Party at any time and from time to time
to send requests (both before and after the occurrence of an Event of
Default) to account debtors or other obligors for verification of amounts
owed to Debtor; and not permit any tangible Collateral to become part of or
to be affixed to any real property without first assuring to the reasonable
satisfaction of Secured Party that the Security interest will be prior and
senior to any interest or lien then held or thereafter acquired by any
mortgagee of such real property or the owner or purchaser of any interest
therein. If Debtor at any time fails to perform or observe any agreement
contained in this Section 3(d), and if such failure shall continue for a
period of ten calendar days after Secured Party gives Debtor written notice
thereof (or, in the case of the agreements contained in clauses (viii) and
(ix) of this Section 3(d), immediately upon the occurrence of such failure,
without notice or lapse of time), Secured Party may (but need not) perform or
observe such agreement on behalf and in the name, place and stead of Debtor
(or, at Secured Party's option, in Secured Party's own name) and may (but
need not) take any and all other actions which Secured Party may reasonably
deem necessary to cure or correct such failure (including, without
limitation, the payment of taxes, the satisfaction of security interests,
liens, or encumbrances, the performance of obligations under contracts or
agreements with account debtors or other obligors, the procurement and
maintenance of insurance, the execution of financing statements, the
endorsement of instruments, and the procurement of repairs, transportation or
insurance); and, except to the extent that the effect of such payment would
be to render any loan or forbearance of money usurious or otherwise illegal
under any applicable law, Debtor shall thereupon pay Secured Party on demand
the amount of all moneys expended and all costs and expenses (including
reasonable attorneys' fees) incurred by Secured Party in connection with or
as a result of Secured Party's performing or observing such agreements or
taking such actions, together with interest thereon from the date expended or
incurred by Secured Party at the highest rate then applicable to any of the
Obligations. To facilitate the performance or observance by Secured Party of
such agreements of Debtor, Debtor hereby irrevocably appoints ()which
appointment is coupled with an interest) Secured Party, or its delegate, as
the attorney-i-fact of Debtor with the right (but not the duty) from time to
time to create, prepare, complete, execute, deliver, endorse or file, in
the name and on behalf of Debtor, any and all instruments, documents,
financing statements, applications for insurance and other agreements and
writings required to be obtained, executed, delivered or endorsed by Debtor
under this Section 3 and Section 4.
4. Lock Box, Collateral Account. If Secured Party so requests at any time
(whether before or after the occurrence of an Event of Default), Debtor will
direct each of its account debtors to make payments due under the relevant
account or chattel paper directly to a special lock box to be under the
control of Secured Party. Debtor hereby authorizes and directs Secured Party
to deposit into a special collateral account to be established and maintained
with Secured Party all checks, drafts and cash payments, received in said
lock box. All deposits in said collateral account to the payment of the
Obligations in such order of application as Secured Party may determine or
permit Debtor to withdraw all or any party of the balance on deposit in said
collateral account. If a collateral account is so established, Debtor agrees
that it will promptly deliver to Secured Party, for deposit into said
collateral account, all payments on accounts and chattel paper received by
it. All such payments shall be delivered to Secured Party in the form
received (except for Debtor's endorsement where necessary). Until so
deposited, all payments on accounts and chattel paper received by Debtor
shall be held in trust by Debtor for and as the property of Secured Party
and shall not be commingled with any funds or property of Debtor.
5. Collection Rights of Secured Party. Notwithstanding Secured Party's
rights under Section 4 With respect to any and all debt instruments,
chattel papers, accounts, and other rights to payment constituting Collateral
(including proceeds), Secured Party may, at any time (both before and after
the occurrence of an Event of Default) notify any account debtor, or any
other person obligated to pay any amount due, that such chattel paper,
account, or other right to payment has been assigned or transferred to
Secured Party for security and shall be a paid directly to Secured Party.
If Secured Party so requests at any time, Debtor will so notify such account
debtors and other obligors in writing and will indicate on all invoices to
such account debtors or other obligors that the amount due is payable
directly to Secured Party. At any time after Secured Party or Debtor gives
such notice to an account debtor or other obligor, secured Party may (but
need not) in its own name or in Debtor's name, demand, sue for, collect or
receive any money or property at any time payable or receivable on account
of, or securing, any such chattel paper, account, or other right to payment,
or grant any extension to, make any compromise or settlement with or
otherwise agree to waive, modify, amend or change the obligations (including
collateral obligations) of any such account debtor or other obligor.
6. Assignment of Insurance. Debtor hereby assigns to secured Party, as
additional security for the payment of the Obligations, any and all moneys
(including but not limited to proceeds of insurance and refunds of unearned
premiums) due or to become due under, and all other rights of Debtor under
or with respect to, any and all policies of insurance covering the
Collateral, and Debtor hereby directs the issuer of any such policy to pay
any such moneys directly to Secured Party. Both before and after the
occurrence of an Event of Default, Secured Party may (but need not) in its
own name or in Debtor's name, execute and deliver proofs of claim, receive
all such moneys, endorse checks and other instruments representing payment of
such moneys, and adjust, litigate, compromise or release any claim against
the issuer of any such policy.
7. Events of Default. Each of the following occurrences shall constitute
an event of default under this Agreement (herein called "Event of Default"):
Debtor shall fail to pay any or all of the Obligations when due or (if
payable on demand) on demand, or shall fail to observe or perform any
covenant or agreement herein binding on it;
(i) any representation or warranty by Debtor set forth in this Agreement or
made to Secured Party in any financial statements or reports submitted to
Secured Party by or on behalf of Debtor shall prove materially false or
misleading; a garnishment, summons or a writ of attachment shall be issued
against or served upon the Secured Party for the attachment of any property
of the Debtor or any indebtedness owing to Debtor; Debtor or any guarantor of
any Obligation shall (A) be or become insolvent (however defined); or (B)
voluntarily file or have filed against it involuntarily, a petition under
the United States Bankruptcy Code; or (C) if a corporation, partnership, or
organization be dissolved or liquidated or if a partnership suffer the death
of a partner or, if an individual, die; or (D) go out of business; or Secured
Party shall in good faith believe that the prospect of due and punctual
payment of any or all of the Obligations is impaired.
8. Remedies upon Event of Default. Upon the occurrence of an Event of
Default under Section 7 and at any time thereafter, Secured Party may
exercise any one or more of the following rights and remedies: declare all
unmatured Obligations to be immediately due and payable, and the same shall
thereupon be immediately due and payable, without presentment or other notice
or demand; exercise and enforce any or a all rights and remedies available
upon default to a secured party under the Uniform Commercial Code, including
but not limited to the right to take possession of any Collateral, proceeding
without judicial process or by judicial process (without a prior hearing or
notice thereof, which Debtor hereby expressly waives), and the right to sell,
lease or otherwise dispose of any or all of the Collateral, and in connection
therewith, Secured Party may require Debtor to make the Collateral available
to Secured Party at a place to be designed by Secured Party which is
reasonably convenient to both parties, and if notice to Debtor of any
intended disposition of Collateral or any other intended action is required
by law in a particular instance, such notice shall be deemed commercially
reasonable if given (in the manner specified in Section 10) at least 10
calendar days prior to the date of intended disposition or other action;
exercise or enforce any or all other rights or remedies available to Secured
Party by law or agreement against the Collateral, against Debtor or against
any other person or property. Upon the occurrence of the Event of Default
described in Section 7(iv)(B), all Obligations shall be immediately due
and payable without demand or notice thereof. Secured Party is hereby
granted a nonexclusive, worldwide and royalty-free license to use or
otherwise exploit all trademarks, trade secrets, franchises, copyrights
and patents of Debtor that Secured Party deems necessary or appropriate to
the disposition of any Collateral.
9. Other Personal Property. Unless at the time Secured Party takes
possession of any tangible Collateral, or within seven days thereafter,
Debtor gives written notice to Secured Party of the existence of any goods,
paper or other property of Debtor, not affixed to or constituting a part of
such Collateral, but which are located or found upon or within such
Collateral, describing such property. Secured Party shall not be responsible
or liable to Debtor for any action taken or omitted by or on behalf of
Secured Party with respect to such property without actual knowledge of the
existence of any such property or without actual knowledge that it was
located or to be found upon or within such Collateral.
10. Miscellaneous. This Agreement does not contemplate a sale of accounts
or chattel paper. Debtor agrees that each provision whose box is checked is
part of this Agreement. This Agreement can be waived, modified, amended,
terminated or discharged, and the Security Interest can be released, only
explicitly in a writing signed by Secured Party. A waiver signed by Secured
Party shall be effective only in the specific instance and for the specific
purpose given. Mere delay or failure to act shall not preclude the exercise
or enforcement of any of Secured Party's rights or remedies. All rights and
remedies of Secured Party shall be cumulative and may be exercised singularly
or concurrently at Secured Party's option, and the exercise or enforcement of
any one such right or remedy shall neither be a condition to nor bar the
exercise or enforcement of any other. All notices to be given to Debtor
shall be deemed sufficiently given if delivered or mailed by registered or
certified mail, postage prepaid, to Debtor at its address set forth
above or at the most recent address shown on Secured Party's records.
Secured Party's duty of care with respect to Collateral in its possession
(as imposed by law) shall be deemed fulfilled if Secured Party exercises
reasonable care in physically safekeeping such Collateral or, in the case of
Collateral in the custody or possession of a bailee or other third person,
exercises reasonable care in the selection of the bailee or other third
person, and Secured Party need not otherwise preserve, protect, insure or
care for any Collateral. Secured Party shall not be obligated to preserve
any rights Debtor may have against prior parties, to realize on the
Collateral at all or in any particular manner or order, or to apply any cash
proceeds of Collateral in any particular order of application. This
Agreement shall be binding upon and inure to the benefit of Debtor and
Secured Party and their prospective heirs, representatives, successors and
assigns and shall take effect when signed by Debtor and delivered to Secured
Party, and Debtor waives notice of Secured Party's acceptance hereof.
Secured Party may execute this Agreement if appropriate for the purpose of
timing, but the failure of Secured Party to execute this Agreement shall not
affect or impair the validity or effectiveness of this Agreement. A carbon,
photographic or other reproduction of this Agreement or of any financing
statement signed by the Debtor shall have the same force and effects as the
original for all purposes of a financing statement. Except to the extent
otherwise required by law, this Agreement shall be governed by the internal
laws of the state named as part of Secured Party's address above. If any
provision or application of this Agreement is held unlawful or unenforceable
in any respect, such illegality or unenforceability shall not affect other
provisions or applications which can be given effect and this Agreement
shall be construed as if the unlawful or unenforceable provision or
application had never been contained herein or prescribed hereby. Any
representations and warranties contained in this Agreement shall survive the
execution, delivery and performance of this Agreement and the creation and
payment of the Obligations. If this Agreement is signed by more than one
person as Debtor, the term "Debtor" shall refer to each of them separately
and to both or all of them jointly: all such persons shall be bound both
severally and jointly with the other(s), and the Obligations shall include
all debts, liabilities and obligations owed to Secured Party by any Debtor
solely or by both or several or all Debtors jointly or jointly and severally,
and all property described in Section 1 shall be included as part of the
Collateral, whether it is owned jointly by both or all Debtors or is owned in
whole or in part by one (or more) of them.