Exhibit 10.3
SECURITY AGREEMENT
WELLS FARGO BANK EQUIPMENT
1. GRANT OF SECURITY INTEREST. For valuable consideration, the undersigned
Barrett Business Services, Inc., or any of them ("Debtor"), hereby grants and
transfers to WELLS 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, 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.
(a) Debtor Agrees in general: (i) to pay Indebtedness secured hereby when
due; (ii) to indemnify Bank against all losses, claims, demands, liabilities and
expenses of every kind caused by property subject hereto;
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(iii) to pay all costs and expenses, including reasonable attorneys' fees,
incurred by Bank in the perfection and preservation of the Collateral or Bank's
interest therein and/or the realization, enforcement and exercise of Bank's
rights, powers and remedies hereunder; (iv) to permit Bank to exercise its
powers; (v) to execute and deliver such documents as Bank deems necessary to
create, perfect and continue the security interests contemplated hereby; (vi)
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; (vii) 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 (viii) 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.
(b) Debtor agrees with regard to the Collateral and Proceeds, unless Bank agrees
otherwise in writing: (i) that Bank is authorized to file financing statements
in the name of Debtor to perfect Bank's security interest in Collateral and
Proceeds; (ii) to insure the Collateral with Bank as loss payee, in form,
substance and amounts, under agreements, against risks and liabilities, and with
insurance companies satisfactory to Bank; (iii) 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; (iv) 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; (v) to pay when due all
license fees, registration fees and other charges in connection with any
Collateral; (vi) not to remove the Collateral from Debtor's premises unless the
Collateral consists of mobile goods as defined in the Oregon Uniform Commerical
Code, in which case Debtor agrees not to remove or permit the removal of the
Collateral from its state of domicile for a period in excess of 30 calendar
days; (vii) 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; (viii) not to rent, lease or charter the Collateral; (ix) to
permit Bank to inspect the Collateral at any time; (x) 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; (xi) 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; (xii) not to commingle
Proceeds or collections thereunder with other property; (xiii) 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; (xiv) 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 (xv) 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
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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; 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, together with interest at a rate
determined in accordance with the provisions of Section 15 hereof, 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 Oregon Uniform Commerical 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.
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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) 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 notice of nonpayment or
nonperformance, protest, notice of protest or notice of dishonor 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), expended or
incurred by Bank in exercising any right, power, privilege or remedy conferred
by this Agreement or in the enforcement thereof, whether incurred at the trial
or appellate level, in an arbitration proceeding or otherwise, and including any
of the foregoing incurred in connection with any bankruptcy proceeding
(including without limitation, any adversary proceeding, contested matter or
motion brought by Bank or any other person) relating to Debtor or in any way
affecting any of the Collateral or Bank's ability to exercise any of its rights
or remedies with respect thereto. All of the foregoing shall be paid by Debtor
with interest from the date of demand until paid in full at a rate per annum
equal to the greater of ten percent (10%) or Bank's Prime Rate in effect from
time to time.
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.
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18. 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.
19. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Oregon.
Debtor warrants that Debtor is an organization registered under the laws of
the State of Maryland.
Debtor warrants that its chief executive office (or principal residence, if
applicable) is located at the following address: 4724 SW MACADAM AVENUE,
PORTLAND, OR 97239
Debtor warrants that the Collateral (except goods in transit) is located or
domiciled at the following additional addresses: See Exhibit A attached hereto,
all terms of which are incorporated herein by this reference.
IN WITNESS WHEREOF, this Agreement has been duly executed as of May 22,
2003.
Barrett Business Services, Inc.
By: /s/ Michael D. Mulholland
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Michael D. Mulholland, Vice President-Finance,
Secretary, CFO
Exhibit A - Company Addresses (Omitted)
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