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EXHIBIT 10.10
NationsBank, N.A. AMENDED AND RESTATED
1501 Pennsylvania Ave. N.W. SECURITY AGREEMENT
Washington DC 20005 4293718
THIS SECURITY AGREEMENT (this Agreement') is made this 31st day of
August, 1994 by and between NationsBank, N.A.. formerly known as NationsBank of
Maryland, N.A. and successor by merger to Maryland National Bank. successor by
merger to American Security Bank, N.A. (the "Bank"), and FileTek, Inc. and
FileTek UK Limited (the "Grantor", whether one or more than one).
WHEREAS, at various times and from time to time, the Bank has extended
loans to the Grantor as evidenced by Loan Documents delivered by the Grantor
and/or by any other Obligor (as hereinafter defined) to the Bank, which Loan
Documents may have been modified and extended from time to time (the Loan
Documents and all amendments, modifications and extensions thereto are
collectively referred to herein as the "Loan Documents"); and
WHEREAS, to secure the Grantor's obligations to the Bank under the
Loan Documents, the Grantor executed a Security Agreement dated January 27,
1992 granting a lien to the Bank in certain Collateral, as defined in the
Security Agreement (the Security Agreement and all amendments and modifications
thereto are collectively referred to herein as the "Security Agreement"); and
WHEREAS, the Grantor has requested the Bank to modify and amend
certain provisions of the Security Agreement and the Bank has agreed to do so
pursuant to the terms of this Amended and Restated Security Agreement.
NOW, THEREFORE, in consideration of the premises and for other good,
valuable and legal consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto do hereby agree to amend and restate the
Security Agreement as follows:
WHEREAS, the Grantor wishes to receive a loan from the Bank and the
Bank is willing to make such a loan provided, among other things, that the
Grantor's obligations to the Bank are secured pursuant to this Agreement; and
WHEREAS, the Grantor is willing to enter into this Agreement to secure
its obligations to the Bank.
NOW, THEREFORE, in consideration of the premises and the agreements
and covenants contained herein and for other good and valuable consideration
the receipt and sufficiency of which are hereby acknowledged, the Grantor,
intending to be legally bound, agrees as follows:
1. Construction of Security Agreement and Definitions. Unless
varied by this Agreement, all of the terms used herein without
definition which are defined
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by the applicable Uniform Commercial Code pursuant to paragraph 24 hereof shall
have the meanings assigned to them by that law. Whenever used herein, the
words "Grantor," "Obligor" and "Bank," shall be deemed to include their
respective heirs, legal representatives, successors and assigns. All words used
herein shall be deemed to refer to the singular, plural, masculine, feminine or
neuter as the identity of the person or entity or the context may require. The
following terms shall have the following meanings when used herein:
1.1 "Collateral" shall mean the following property of the
Grantor, including specifically, but without limitation: (a) all amounts now
and in the future owed by the Bank or any affiliate of the Bank to the Grantor
and/or on deposit in any account maintained by the Grantor with the Bank or any
affiliate of the Bank; (b) all present and future substitutions, replacements,
appurtenances, accessories and accessions relating to any of the following; (c)
all of the Grantor's books, records, computer programs, other software,
computer files and diskettes or disk storage media and rights under any and all
licenses to use computer programs, software, files and hardware relating to any
of the following; (d) all proceeds (cash and noncash, including insurance
proceeds) and products of all of the following in any form whatsoever; and (e)
all accounts, chattel paper, instruments, inventory, or other goods or property
purchased or acquired with the cash and/or non-cash proceeds of any of the
following:
All of the Grantor's present and future accounts,
contract rights, promissory notes, notes receivable, drafts, acceptances and
other instruments and documents, chattel paper, leases and writings evidencing
a monetary obligation or a security interest in or lease of goods, tax refunds,
all rights to receive the payment of money or other consideration under present
or future contracts (including without limitation, all rights to receive
payments under presently existing), choices in action, judgments and cash, and
all rights to the payment of money due or to become due to the Grantor for any
reason whatsoever, and all goods returned, repossessed or stopped in transit,
the sale, lease or other disposition of which contributed to the creation of
any account, instrument or chattel paper, and all rights which the Grantor may
at any time have against any account debtor or other borrower of the Grantor,
including liens and security interests for the benefit of the Grantor.
All of the inventory of the Grantor of every type
and description, now owned and hereafter acquired and wherever located,
including raw materials, work in process, finished goods, materials and
supplies, goods returned or repossessed, and goods held for demonstration,
marketing or similar purposes, and all property in or on which any of the
foregoing is stored or maintained, and all documents of title and trust
receipts relating to any inventory, and all present and future rights, claims
and causes of action of the Grantor in connection with contracts for the
purchase of, or warranties relating to, or damages to, goods held or to be held
by the Grantor as inventory, and all warranties, manuals and other written
materials (and packaging thereof or relating thereto) relating to inventory.
1.2 "Loan Documents" shall mean this Agreement, any note,
letter agreement, line of credit agreement, commercial financing agreement,
other security agreement, guaranty of payment, mortgage, deed of trust, pledge
agreement, loan agreement, hypothecation agreement, indemnity agreement, letter
of credit application and agreement, assignment or any other
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document or agreement previously, simultaneously or hereafter executed and
delivered by the Grantor and/or by any other Obligor, as hereinafter defined,
singly or jointly with another person or persons to the Bank, in connection
with Obligations, whether or not this Agreement is specifically referred to
therein as the same may from time to time be amended, restated, supplemented or
otherwise modified.
1.3 "Obligations" shall mean the full and punctual
observance and performance of all present and future duties, covenants and
responsibilities due to the Bank by the Grantor or by any other Obligor of any
nature whatsoever, including to the fullest extent permitted by applicable law,
all past, present and future indebtedness and liabilities of the Grantor or any
Obligor to the Bank for the payment of money (extending to all principal,
interest, fees, expense payments, liquidation costs, and attorneys' fees and
expenses), whether similar or dissimilar, related or unrelated, matured or
unmatured, direct or indirect, contingent or noncontingent, primary or
secondary, alone or jointly with others, now due or to become due, now existing
or hereafter created, and whether or not now contemplated.
1.4 'Obligor' shall mean individually and collectively
the Grantor and each endorser, guarantor and surety of any of the Obligations,
any person who is primarily or secondarily liable for the repayment of any of
the Obligations, or any portion thereof, and any person who has granted
security for the repayment of any of the Obligations.
1.5 "Permitted Liens' shall mean: (a) liens and security
interests of the Bank; (b) liens for taxes not delinquent; (c) mechanics',
artisans', landlords', carriers' and other like liens arising in the ordinary
course of business with respect to obligations which are not due; and (d) liens
and security interests specifically consented to by the Bank in writing.
2. Payment and Performance by the Parties. The Grantor will pay
the Obligations or cause the Obligations to be paid as and when due and
payable, and will perform, comply with, and otherwise assure the observance of
the terms, covenants and conditions of the Loan Documents by the Grantor and/or
by any Obligor.
3. Security Interest and Collateral. As security for all of the
Obligations, whether or not any agreement relating to any Obligations
specifically refers to this Agreement or the security interest created
hereunder, the Grantor hereby grants to the Bank a security interest in, and
pledges and assigns to the Bank, the Collateral. The Grantor agrees that the
Bank shall have a perfected lien and continuing security interest in the
Collateral. The Grantor agrees to defend its title to the Collateral against
all persons and will, upon request of the Bank, furnish such further assurances
of title as may be required by the Bank. In addition, the Grantor agrees to
execute and deliver to the Bank, whenever requested by the Bank, any security
agreements, financing statements, amendments to or assignments of financing
statements, security interest filing statements and such other documents as the
Bank may request, in form and content satisfactory to the Bank and otherwise do
or cause to be done from time to time all things requested by the Bank, in
order to confirm, preserve, protect or perfect, or to maintain the perfection
of, the Bank's security interest in any of the Collateral and/or its priority.
The Grantor will, on demand, pay the cost of filing any financing,
continuation, termination or security
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interest filing statement as well as any recordation or transfer tax required
by law to be paid in connection with the filing or recording of any such
statement. Upon the request of the Bank, the Grantor will promptly deliver to
the Bank, with such endorsements and/or assignments as may be requested by the
Bank, the originals of all promissory notes and other instruments, chattel
paper, guaranties, documents of title, certificates of origin and certificates
of title, as well as other documents that may be requested by the Bank,
previously or hereafter received by the Grantor and constituting or evidencing
the Collateral. The Grantor hereby irrevocably constitutes and appoints the
Bank its attorney-in-fact and hereby irrevocably authorizes and empowers the
Bank to execute, deliver and, if appropriate, record with the appropriate
filing office or offices, in the name of the Grantor, all financing statements,
amendments to, or assignments of, financing statements, certifications,
acknowledgments, security interest filing statements, and/or other documents as
the Bank may request or require in order to perfect, preserve, maintain,
continue, protect and/or extend the security interest and lien granted to the
Bank under this Agreement or under any of the Loan Documents and its priority,
such power of attorney being coupled with an interest. To the extent that the
proceeds of any of the Collateral are expected to become subject to the control
of, or in the possession of, a party other than the Grantor or the Bank, the
Grantor shall, at its expense, cause all such parties to execute and deliver
security documents, consents, acknowledgments, financing statements or other
documents as requested by the Bank as may be necessary in the Bank's sole
discretion to evidence and/or perfect the security interest in and lien on all
or any portion of such Collateral. In the Bank's sole discretion, a photocopy
of this Agreement fully executed by the Grantor shall be sufficient to serve as
a financing statement under the applicable Uniform Commercial Code.
4. Representations and Warranties. The Grantor represents,
warrants and agrees that, except as previously disclosed to the Bank in
writing: (a) it is and shall remain the owner of the Collateral and has good
and marketable title to the Collateral free and clear of all liens, pledges,
security interests and other encumbrances except for Permitted Liens; (b) the
Collateral is not on consignment: (c) the Collateral was acquired by the
Grantor from a person whose primary and customary business is the sale of such
Collateral in the ordinary course of business; (d) this Security Agreement and
any other Loan Documents executed by the Grantor constitute the legally binding
obligations of the Grantor and are fully enforceable against the Grantor in
accordance with their terms; (a) the Grantor's name is as specified on the
signature line of this Security Agreement and each legal or trade name of the
Grantor for the previous twelve (12) years (if different from the current legal
name) is as specified below the signature lines of this Security Agreement; (f)
the address of the Grantor's chief executive office and the address of each
other place of business of the Grantor are as specified below the signature
lines of this Security Agreement: (g) except for mobile equipment and motor
vehicles, the Collateral and all books and records pertaining to the Collateral
have for the previous 4 months (unless acquired by the Grantor during the
previous 4 months) are and will be located only at the Grantor's chief
executive office specified below or at any other place of business which may be
specified below; (h) the Grantor will immediately advise the Bank in writing of
any change in the location of its chief executive office and the places where
the Collateral, or any part thereof, or the books and records concerning the
Collateral, or any part thereof, are kept; (i) to the Grantor's knowledge,
there are no judgments, injunctions or similar orders outstanding against the
Grantor or any of the Collateral, and no actions, suits or proceedings pending
or threatened against the Grantor; (j)
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the Grantor has filed all tax returns which are required to be filed by the
Grantor and the Grantor has paid all taxes shown to be due thereon or which
have been assessed against the Grantor; and (k) all information contained in
any financial statement, application, schedule, report or any other document
given by the Grantor, any other Obligor or by any other person in connection
with the Obligations is in all material respects true and accurate and the
Grantor, any Obligor or such other person has not omitted to state any material
fact or any fact necessary to make such information not misleading.
5, Environmental Compliance. The Grantor has obtained or will
obtain all permits, licenses and other authorizations ("Environmental
Authorizations") which are required under any and all federal, state, local and
foreign statutes, ordinances, codes, laws, regulations and other such
authorities relating to the environment or the release of any materials into
the environment ("Environmental Laws"). The Grantor is and will remain in
compliance with the terms and conditions of all such permits, licenses and
authorizations, and is and will remain in compliance with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in any applicable Environmental
Law or in any regulation, code, plan, order, decree, judgment, injunction,
notice or demand letter issued, entered, promulgated or approved thereunder. No
notice, notification, demand, request for information, citation, summons or
order has been issued, no complaint has been filed, no penalty has been
assessed and no investigation or review is pending or threatened by any
governmental or other entity (a) with respect to any alleged failure by the
Grantor to have any Environmental Authorization required in connection with the
conduct of the business of the Grantor; (b) with respect to any generation.
treatment, storage, recycling, transportation, disposal, or any release as
defined in 42 U.S.C. Section 9601(22) ("Release') on, at, under, about or from
the Collateral or any property or facility now, or in the past, owned, leased
or operated by Grantor of any substance regulated under any Environmental Laws
('Hazardous Material"); or (c) with respect to any arrangement by Grantor for
disposal, treatment or transport of any Hazardous Material. No oral or written
notification of a Release of a Hazardous Material has been filed by or on
behalf of the Grantor and no property or facility now or previously owned,
leased or operated by the Grantor is listed or proposed for listing on the
National Priorities List under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, or on any similar state
list of sites requiring investigation or clean-up. There are no liens arising
under or pursuant to any Environmental Laws on any of the Collateral or on any
real property or properties owned or leased by the Grantor and no governmental
actions have been taken or are in process which could subject any of the
Collateral or such properties to such liens such that the Grantor would be
required to place any notice or restriction relating to the presence of
Hazardous Materials at any property owned by it or in any deed of such
property. There are no Hazardous Materials present on, in, at, under or about
the Collateral or any real property or properties, owned or leased by the
Grantor in amounts or concentrations or under circumstances that materially
adversely affect the use or value of the Collateral, or such property or
properties.
6. Affirmative Covenants. Until all of the Obligations have been
performed and paid in full, the Grantor covenants and agrees that the Grantor
will. except as otherwise agreed to in writing by the Bank: (a) at all times
maintain, in accordance with generally accepted accounting principles
consistently applied, accurate and complete books and records pertaining to the
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operation, business and financial condition of the Grantor and pertaining to
the Collateral and any contracts and collections relating to the Collateral;
(b) furnish to the Bank promptly upon request and in the form and content and
at the intervals specified by the Bank, such written statements and reports,
schedules and other information with respect to the Collateral, any other
assets of the Grantor or the operation, business, affairs and financial
condition of the Grantor as the Bank may from time to time require; (c) at all
reasonable times and without hindrance or delay, permit the Bank or any person
designated by the Bank to enter any place of business of the Grantor or any
other premises where any books, records and other data concerning the Grantor
and/or the Collateral may be kept and to examine, audit, inspect and make
extracts from, and photocopies of, any such books, records and other data; (d)
furnish to the Bank promptly upon request and in the form and content specified
by the Bank and acceptable to Bank in its sole discretion lists of purchasers
of inventory, aging of accounts, aggregate cost or wholesale market value of
inventory, schedules of equipment and other data concerning the Collateral as
the Bank may from time to time specify; (e) mark its books and records in a
manner satisfactory to the Bank so that the Bank's rights in and to the
Collateral will be shown; (f) pay as and when due all taxes, levies, license
fees, assessments and other impositions levied on the Collateral or any part
thereof or for its use and operation; (g) do, file, record, make, execute and
deliver all such additional and further acts, things, notices, deeds,
assurances, instruments and documents as the Bank may reasonably request to
vest in and assure to the Bank its rights hereunder or in any of the
Collateral, and pay to the Bank all taxes, fees and costs (including reasonable
attorneys' fees) paid or incurred by the Bank in connection with the
preparation, filing or recordation thereof; (h) on demand, pledge and assign to
the Bank a security interest in additional property satisfactory to the Bank as
security for the Obligations, if at any time the existing Collateral becomes
unsatisfactory to the Bank and the term "Collateral", as used herein, shall be
deemed to include any such additional property; and (i) comply with the
requirements of all applicable laws, rules, regulations and orders of
governmental or regulatory authorities or agencies to which the Grantor is
subject (including, but without limitation, all environmental laws, the
Occupational Safety and Health Act and the Americans With Disabilities Act).
7. Negative Covenants. Until all of the Obligations have been
performed and paid in full, the Grantor covenants and agrees that the Grantor
will not, except as otherwise agreed to in writing by the Bank: (a) In the case
of the Company and its subsidiaries, endorse, guarantee or become surety for
the obligation of any person or entity, except that the Borrower may endorse
checks and negotiable instruments for collection or deposit in the ordinary
course of business and the Company may endorse or guarantee the obligations of
its subsidiaries provided that such subsidiaries are also a Borrower, as
defined in the Loan Documents; (b) In the case of the Company and its
subsidiaries, enter into any merger or consolidation agreement to acquire all
or substantially all of the assets of any person or entity, or to dissolve,
merge or consolidate into any person or entity; (c) In the case of the Company
and its subsidiaries, change its name or engage in any business in which it was
not engaged on the date of this Agreement; (d) Sell, lease, assign, pledge or
otherwise dispose of any of the Borrowers properties or assets, whether now
owned or hereafter acquired, except in the ordinary course of business and for
fair value; (e) In the case of the Company and its subsidiaries, create, incur,
assume, or suffer to exist or to be incurred, any lease obligation, other than
lease obligations incurred in the ordinary course of the Borrower's business,
and for fair value; (f) In the case of the Company and its subsidiaries, create
any
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subsidiaries or make any equity investments or acquire any other interest in
any corporation, association, partnership, limited liability company, joint
venture or other party or make any advances to any such party. Notwithstanding
the foregoing, for the purposes of this covenant, the Company shall be allowed
to make advances, loans or equity investments to or in FileTek UK Limited; (g)
In the case of the Company and its subsidiaries, make any loans to any of its
officers, partners, directors or stockholders in excess of $100,000.00 in
aggregate; however, for purposes of this covenant, the Company may extend loans
to such parties solely for the purpose of allowing the parties to purchase the
Company's capital stock and such loans will not count towards the
aforementioned dollar limit provided that said capital stock secures repayment
of such loans; (h) Sell, issue or transfer stock of any class of the Company or
any subsidiary with a non-discretionary cash dividend or a "put option"
redemption feature exercisable by the shareholders; (i) In the case of the
Company and its subsidiaries, 1. Take or permit any action with respect to an
employee benefit plan which would result in the imposition of any lien under
ERISA or the Internal Revenue Code on the assets of the Borrower; 2. engage in
or permit any violation of ERISA (including, but not limited to, any breach of
fiduciary duty, within the meaning of Title I, subtitle B. part 4 of ERISA, or
prohibited transaction, within the meaning of Sections 406 through 408 of ERISA
or Section 4975 of the Internal Revenue Code); 3. withdraw (complete or
partial) from any multi-employer plan if such withdrawal would result in the
imposition of a material liability on the Borrower; and 4. take any other
action with respect to an employee benefit plan which would have a material
adverse affect on the financial condition of the Borrower; (j) Change the
current ownership in a manner that the Bank determines adversely affects its
interests with respect to the Obligations or control of the Company and its
subsidiaries. The Company shall retain management reasonably satisfactory to
the Bank; (k) In the case of the Company and its subsidiaries, purchase, redeem
or otherwise retire any shares of its capital stock, voluntarily prepay,
acquire or anticipate any sinking fund requirement of any indebtedness, declare
or pay any cash dividends or make other distributions in respect of capital.
Notwithstanding the foregoing, for purposes of this covenant, the Company shall
be entitled to repurchase, for fair value, shares of its capital stock from
employees who have terminated their employment with the Company; (l) In the
case of the Company and its subsidiaries, incur any indebtedness for money
borrowed; (m) In the case of the Company, its subsidiaries and the Trusts,
mortgage, pledge, or otherwise encumber or permit any lien, security interest,
or other encumbrance to arise upon any of its assets or properties excepting
security interests and liens granted to the Bank, liens for Taxes not yet due
or which are being contested in good faith by appropriate proceedings or
purchase money liens on the assets or properties of the Company or its
subsidiaries in the normal course of business and for fair value.
Notwithstanding the foregoing, no purchase money security interest shall be
permitted to be perfected on the Collateral whether by public filing or notice
to the Bank or any other means used for the purpose of perfection; (n) sell,
lease, transfer, exchange or otherwise dispose of the Collateral, or any part
thereof, without the prior written consent of the Bank. and will not permit any
lien, security interest or other encumbrance to attach to the Collateral, or
any part thereof, other than those in favor of the Bank or those permitted by
the Bank in writing. except that the Grantor may, in the ordinary course of its
business, and in the absence of a default hereunder, collect its accounts and
chattel paper and sell its inventory; or (o) take by consignment any goods or
property of the same type as the Collateral with an aggregate cost greater than
$100,000.
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8. Insurance. The Grantor will at all times maintain insurance
with responsible insurance companies on such of its assets and properties, in
such amounts and against such risks as is reasonable and customary for like
companies with similar assets and which is satisfactory to the Bank, and will
furnish to the Bank promptly upon the Bank's request certificates evidencing
such insurance. Without limitation of the foregoing, the Grantor will insure
such of the Collateral as specified by the Bank against such casualties and
risks and in such form and amounts as may from time to time be required by the
Bank. Within thirty (30) days after notice in writing from the Bank, the
Borrower will obtain, or will cause each Obligor to obtain, such additional
insurance as the Bank may reasonably require. The Bank is authorized, but under
no duty, to obtain any insurance upon failure of the Grantor to do so, and,
upon demand, the Borrower or any other Obligor shall promptly reimburse the
Bank for the cost of obtaining such insurance. All insurance proceeds shall be
payable to the Bank and all policies or certificates of insurance shall be
furnished to the Bank evidencing among other things (a) a standard lender's
loss payee clause for Collateral consisting of personal property, and a
standard mortgagee's clause for Collateral consisting of improved real
property, in either case in favor of the Bank, and (b) such policy(ies) shall
provide expressly for at least thirty (30) days' prior written notice of
cancellation be provided to the Bank. The Grantor will pay all premiums due or
to become due for such insurance and hereby assigns to the Bank any returned or
unearned premiums which may be due upon cancellation of insurance coverage. The
Bank is hereby irrevocably (a) appointed the Grantor's attorney-in-fact to
endorse any draft or check which may be payable to the Grantor in order to
collect such returned or unearned premiums or the proceeds of insurance, and
(b) authorized to apply such insurance proceeds in the same manner and order as
the proceeds of sale or other disposition of the Collateral are to be applied
as provided herein.
Rights of Bank and Duties of Grantor. If all or any part of the
Collateral at any time consists of contract rights, inventory, accounts or
chattel paper: (a) the Bank may at any time and from time to time, and the
Grantor hereby irrevocably appoints the Bank as its attorney-in-fact, with
power of substitution, in the name of the Bank or in the name of the Grantor or
otherwise, for the use and benefit of the Bank, but at the cost and expense of
the Grantor and without notice to the Grantor to (i) notify the account debtors
obligated on any of the Collateral to make payments thereon directly to the
Bank, and to take control of the cash and non-cash proceeds of any such
Collateral, which right the Bank may exercise at any time whether or not the
Grantor is then in default hereunder or was theretofore making collections
thereon; (ii) charge to any banking account of the Grantor with the Bank any
item of payment credited to the Collateral Account (as hereinafter defined)
which is dishonored by the drawee or maker thereof; (iii) compromise, extend,
or renew any of the Collateral or deal with the same as it may deem advisable;
(iv) release, make exchanges, substitutions, or surrender, all or any part of
the Collateral; (v) remove from the Grantor's place of business all books,
records, ledger sheets, correspondence, invoices and documents relating to or
evidencing any of the Collateral or, without cost or expense to the Bank, make
such use of the Grantor's place(s) of business as may be reasonably necessary
to administer, control and collect the Collateral; (vi) repair, alter or supply
goods, if any, necessary to fulfill in whole or in part the purchase order of
any account debtor; (vii) demand, collect, give receipt for and renewals,
extensions, discharges and releases of any of the Collateral; (viii) institute
and prosecute legal and equitable proceedings to enforce collection of, or
realize upon, any of the Collateral; (ix) settle, renew, extend, compromise,
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compound, exchange or adjust claims with respect to any of the Collateral or
any legal proceedings brought with respect thereto; (x) endorse the name of the
Grantor upon any items of payment relating to the Collateral or upon any Proof
of Claim in Bankruptcy against an account debtor; and (xi) receive and open all
mail addressed to the Grantor and, if a default exists hereunder, notify the
Post Office authorities to change the address for the delivery of mail to the
Grantor to such address as the Bank may designate; and (b) the Grantor will (i)
make no material change to the terms of any sale or lease of inventory or of
any contract right, account or chattel paper without the prior written
permission of the Bank; (ii) on demand, make available in form acceptable to
the Bank shipping documents and delivery receipts evidencing the shipment of
goods which gave rise to the sale or lease of inventory or of an account,
contract right or chattel paper, completion certificates or other proof of the
satisfactory performance of services which gave rise to the sale or lease of
inventory or of an account, contract right or chattel paper, copies of the
invoices arising out of the sale or lease of inventory or of a contract right
or for an account, and the Grantor's copy of any written contract or order from
which a sale or lease of inventory, an account, contract right or chattel paper
arose; (iii) when requested, regularly advise the Bank whenever an account
debtor returns or refuses to retain any goods, the sale or lease of which gave
rise to an account or chattel paper, and of any delay in delivery or
performance, or claims made, in regard to any sale or lease of inventory,
account, contract right or chattel paper, and will comply with any instructions
which the Bank may give regarding the sale or other disposition of such
returns; and (iv) upon the request of the Bank at any time and from time to
time, deposit or cause to be deposited to a bank account designated by the Bank
and from which the Bank alone has power of access and withdrawal (the
"Collateral Account") all checks, drafts, cash and other remittances in payment
or on account of payment of such contract rights, inventory, accounts or
chattel paper and the cash proceeds of any returned goods, the sale or lease of
which gave rise to an account, contract right or chattel paper (all of the
foregoing herein collectively referred to as "items of payment"). The Grantor
shall deposit such items of payment for credit to the Collateral Account within
two (2) banking days of the receipt thereof, and in precisely the form
received, except for the endorsement of the Grantor where necessary to permit
the collection of such payment, which endorsement the Grantor hereby agrees to
make. Pending such deposit, the Grantor will not commingle any such items of
payment with any of its other funds or property but will hold them separate and
apart. The Bank will at least once a week apply the whole or any part of the
collected funds credited to the Collateral Account against the Obligations or
credit such collected funds to a banking account of the Grantor with the Bank,
the order and method of such applications to be in the sole discretion of the
Bank.
10. Intentionally deleted.
11. Intentionally deleted
12. Intentionally deleted.
1 3. Care and Value of Collateral. The Grantor will maintain the
Collateral in good condition and will not do or permit anything to be done to
the Collateral that may impair its value or that may violate the terms of any
insurance covering the Collateral or any part thereof. The Bank shall be
entitled at reasonable times and from time to time to appraise or cause to be
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appraised (or otherwise independently valuated), the Collateral at Grantor's
sole cost and expense. Should any appraisal or valuation of the Collateral
indicate that the Collateral has depreciated in value and the Bank determines
that the Obligations are undersecured, the Grantor upon notice from the Bank,
shall, on demand, grant a security interest in or pledge to the Bank such
additional collateral as the Bank may request to fully secure the Obligations,
which shall become part of the Collateral hereunder. The Bank shall have no
duty to, and the Grantor hereby releases the Bank from all claims of loss or
damage caused by the failure or delay to collect or enforce any account,
contract right or chattel paper, or to preserve rights against prior parties to
the Collateral.
1.4. Performance by Bank. If the Grantor fails to perform,
observe, or comply with any of the conditions, terms or covenants contained in
this Agreement or in any of the Loan Documents, the Bank, without notice to or
demand upon the Grantor and without waiving or releasing any of the Obligations
or any default, may (but shall be under no obligation to) at any time
thereafter perform such conditions, terms or covenants for the account and at
the expense of the Grantor, and may enter upon any place of business or other
premises of the Grantor for that purpose and take all such action thereon as
the Bank may consider as necessary or appropriate for such purpose. All sums
paid or advanced by the Bank in connection with the foregoing and all costs and
expenses ax calculated and determined by the Bank (including, without
limitation, attorneys' fees and expenses) incurred in connection therewith
(collectively, the "Expense Payments") together with interest thereon at a per
annum rate of interest which is equal to the then highest rate of interest
charged on the principal of any of the Obligations giving effect to any default
rates thereon, from the date incurred by the Bank until repaid in full, shall
be paid by the Grantor to the Bank on demand and shall constitute and become a
part of the Obligations secured hereby.
1 5. Default. The occurrence of any one or more of the following
events shall constitute a default under this Agreement. (a) failure of the
Grantor or any other Obligor to pay any of the Obligations as and when due and
payable (whether by acceleration, declaration, extension or otherwise); (b)
failure of Grantor or any other Obligor to perform, observe or comply with any
agreement, covenant or promise made under this Agreement or any of the Loan
Documents; (c) if any information contained in any financial statement,
application, schedule, report or any other document given by Grantor, any other
Obligor or by any other person in connection with the Obligations, with the
Collateral, or with any of any Loan Documents is not in all respects true and
accurate or if Grantor, any other Obligor or such other person omitted to state
any material fact or any fact necessary to make such information not
misleading; (d) the occurrence of a default under any of the Loan Documents;
(e) the occurrence of any default under any other borrowing if the result of
such default would permit the acceleration of the maturity of any note, loan or
other agreement between the Grantor or any other Obligor and any person other
than the Bank; (f) the filing of any petition of relief under the United States
Bankruptcy Code or any similar federal or state statute by or against the
Grantor or any other Obligor or the failure of the Grantor or any other Obligor
to generally pay its debts as such debts become due: (g) the making of any
application for the appointment of a receiver for, or of a general assignment
for the benefit of creditors by, or the insolvency of, the Grantor or any other
Obligor; (h) the determination in good faith by the Bank that a material
adverse change has
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occurred in the financial condition of the Grantor or any other Obligor from
the condition set forth in the most recent financial statement heretofore
furnished to the Bank, or from the financial condition as heretofore most
recently disclosed to the Bank in any other manner; (i) the determination in
good faith by the Bank that the security for the Obligations is or has become
inadequate; (j) the dissolution, merger, consolidation, or reorganization of
the Grantor or any other Obligor; (k) the determination in good faith by the
Bank that the prospect of payment of any of the Obligations is impaired for any
reason; or (l) the death of the Grantor or any other Obligor who is a natural
person. The occurrence or non-occurrence of a default under this Agreement
shall in no way affect or condition the right of the Bank to demand payment at
any time of any Obligations which are payable on demand.
16. Rights and Remedies Upon Default. In the event of a default
hereunder, the Bank may, at its option and without notice to the Grantor or any
other Obligor: (a) declare all or part of the unpaid balance of the
Obligations, together with all accrued and unpaid interest thereon, to be
immediately due and payable without presentment, demand or notice which are
hereby expressly waived; (b) exercise its right of setoff against any money,
funds, credits or other property of any nature whatsoever of the Grantor or any
other Obligor now or at any time hereafter in the possession of, in transit to
or from, under the control or custody of, or on deposit with, the Bank or any
affiliate of the Bank in any capacity whatsoever, including without limitation,
any balance of any deposit account and any credits with the Bank or any
affiliate of the Bank; (c) terminate any outstanding commitments of the Bank to
the Grantor or any other Obligor; (d) exercise any or all rights, powers, and
remedies provided for in any Loan Documents, now or hereafter existing at law,
in equity, by statute or otherwise including, but not limited to, exercising
all rights and remedies of a secured party under the applicable Uniform
Commercial Code; (e) require the Grantor to assemble the Collateral and make it
available to the Bank at a place designated by the Bank; and (f) exercise
self-help efforts, such as to enter upon the Grantor's premises to take
possession of the Collateral, to remove it, to render it unusable or to sell or
otherwise dispose of it
17. Notice. Any notice, demand, request or other
communication which the Bank or any Obligor or Grantor may be required to give
hereunder shall be in writing, and shall be given: (a) by hand-delivery; (b) by
facsimile transmission: (c) by commercial overnight courier: or (d) by United
States regular mail, postage prepaid. Such notice, demand, request or other
communication shall be addressed as follows, or to such other addresses as the
parties may designate by like notice:
If to the Grantor:
FileTek. Inc & FileTek UK Limited
Attention: William C. Thompson, CEO
cc: William P. Loomis. CFO
9400 Key West Ave.
Rockville. MD 20850
Fax: (301) 251-1991
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If to the Bank:
NationsBank, N.A.
1501 Pennsylvania Avenue, N.W.
Washington, DC 20006
Attention: Brent H . Donnell, Vice President
Location Code: MD2-600-03-08
with copy to:
NationsBank, N.A.
100 south Charles Street
6th Floor
Baltimore, MD 21201
Attention: Loan Administration
Location Code: MD4-325-06-03
Any communication hereunder will be deemed given and effective: (e)
when actually received, in the case of hand delivery; (f) when deposited in the
United States mail or with such courier, in the case of first class mail or
overnight courier; or (g) when completely sent and received, as evidenced
by a transmission report from sender's facsimile machine, in the case of
facsimile transmission.
18. Collection. The Grantor shall pay all costs and
expenses, including, without limitation, attorneys' fees and expenses, incurred
by or on behalf of the Bank, (a) in enforcing the Obligations, and (b) in
connection with the taking, holding, preparing for sale or other disposition,
selling, managing, collecting or otherwise disposing of, the Collateral. All
such costs and expenses as calculated and determined by the Bank (collectively,
the "Liquidation Costs") together with interest thereon at a per annum rate of
interest which is equal to the then highest rate of interest charged on the
principal of any of the Obligations giving effect to any default rate thereon,
from the date incurred until repaid in full, shall be paid by the Grantor to
the Bank on demand and shall constitute and become a part of the Obligations
secured hereby. Any proceeds of sale or other disposition of the Collateral
will be applied by the Bank to the payment of the Obligations in such order and
manner of application as the Bank may from time to time in its sole discretion
determine.
19. Deficiency, If the sale or other disposition of the
Collateral fails to fully satisfy the Obligations, the Grantor shall remain
liable to the Bank for any deficiency.
20. Remedies Cumulative; Forbearance is not a Waiver.
Each right and remedy of the Bank under the Loan Documents, at law or in equity
shall be cumulative and concurrent, and the exercise of any of them shall not
preclude the exercise by the Bank of any or all other rights or remedies. No
failure or delay by the Bank to insist upon the strict performance of the Loan
Documents or to exercise any right or remedy upon a default shall constitute a
waiver thereof, or preclude the Bank from exercising any such right or remedy.
By accepting
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payment after the due date of any Obligations, the Bank shall not have waived
the right either to require payment when due of any other Obligations or to
declare a default for failure to effect such payment of any such Obligations.
21. Waiver. The Grantor waives presentment, notice of
dishonor and notice of non-payment with respect to accounts, contract rights
and chattel paper.
22. Invalidity of Any Part. In the event that any one or
more of the provisions of this Agreement shall for any reason be held to be
invalid, illegal or unenforceable, in whole or in part or in any respect, or in
the event that any one or more of the provisions of this Agreement operate or
would prospectively operate to invalidate this Agreement, then and in any of
those events, the following shall occur: (a) the provision(s) shall be enforced
to the fullest extent of its validity, legality and enforceability; or (b) if
such provision(s) would operate so as to invalidate this entire Agreement, only
such provision(s) shall be void as though not herein contained, and the
remainder of the clauses and provisions of this Agreement will remain in full
force and effect. In any event, if any such provision pertains to the repayment
of the indebtedness evidenced by this Agreement, then and in such event, at the
Bank's option, all of the Obligations of the Grantor to the Bank shall become
immediately due and payable. In no event shall this Agreement or the Loan
Documents operate to cause the payment to the Bank by the Grantor or any
Obligor of any amounts whether for the use, forbearance or retention of money
or for any other matter governed by the Loan Documents, exceeding the permitted
maximum amounts therefor under applicable law. If, for any circumstance
whatsoever, fulfillment of such provisions shall be proscribed by law, then the
obligation to be fulfilled shall be reduced the limit of such validity.
23. Transfers of Rights by the Bank. In addition to all other
rights available to the Bank under this Agreement and the other Loan Documents
and applicable laws or under principles of equity, the Bank shall have the
right at any time, without notice to or consent of the Grantor, to sell,
assign, pledge or transfer this Agreement and any renewals, extensions or
modifications hereof or thereof, to any person. The Bank shall also have the
right at anytime, without notice to or consent of the Grantor, to sell, assign,
transfer or grant participation in the Bank's rights in any of the Collateral,
and any such assignee, transferee or participant shall have the rights of the
Bank hereunder with respect to the Collateral so assigned, transferred or
participated, and the Bank shall be thereafter relieved from all duties with
respect to any such Collateral. In connection with any such sale, assignment,
transfer or participation, the Grantor consents to the Bank's divulgence to any
actual or potential assignee, transferee or participant, of all information,
reports, financial statements and documents obtained in connection with this
Agreement and any other Loan Documents or otherwise.
24. Choice of Law. This Agreement shall be governed by,
construed and interpreted in accordance with the laws of the District of
Columbia (excluding the choice of law rules thereof).
25. Not a Novation. This Security Agreement shall
substitute and replace that certain Security Agreement from the Grantor to the
Bank, dated January 27,1992, as modified, and shall not cause novation or be
deemed as a Security Agreement for a new loan. The security
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interest granted hereunder shall confirm the security interest previously
granted to the Bank under the aforementioned Security Agreement unless the
security interest previously granted to the Bank is specifically modified
herein and, in such event, the security interest previously granted to the Bank
shall be modified only to the extend expressly modified herein.
26. Acknowledgments and Waivers. To induce the Bank to
enter into this Amended and Restated Security Agreement, the Grantor and any
Guarantors listed below: (a) hereby acknowledge and agree that the Bank has
fully and properly discharged all covenants and other provisions of the
Security Agreement and the Loan Documents prior to the date hereof; (b) hereby
waive any breach of the Security Agreement and Loan Documents by the Bank prior
to the date hereof; and (c) hereby release, remise, acquit and forever
discharge the Bank and each of its employees, agents, successors and assigns
from any and all matters, claims, actions, causes of action, suits, debts,
agreements and demands whatsoever, whether presently known or unknown, which
the Grantor and any Guarantors ever had, now has, or shall have against the
Bank by reason of any act, cause, matter or thing whatsoever to the date
hereof.
27. Commercial Purposes. The Grantor acknowledges and
warrants that: (a) "Obligations", as used herein are incurred for the purpose
of acquiring an interest in or carrying on a business or commercial enterprise
and that such Obligations represent "commercial loans" within the meaning of
Title 12 of the Commercial Law Article of the Annotated Code of Maryland (1990
Rep. Vol.), as amended; and (b) all proceeds arising from the Obligations will
be used solely in connection with such business or commercial enterprise.
28. Service of Process.
(a) The Grantor hereby irrevocably designates and
appoints Elliott H. Cole of Patton Boggs & Blow at 2550 M Street NW.,
Washington DC 20037, as the Grantor's authorized agent to accept and
acknowledge on the Grantor's behalf service of any and all process that may be
served in any suit, action or proceeding instituted in connection with this
Agreement in any state or federal court sitting in the State of Maryland. If
such agent shall cease so to act, the Grantor shall irrevocably designate and
appoint without delay another such agent in the State of Maryland satisfactory
to the Bank and shall promptly deliver to the Bank evidence in writing of such
agent's acceptance and appointment and its agreement that such appointment will
be irrevocable.
(b) The Grantor hereby consents to process being served in
any suit, action or proceeding instituted in connection with this Agreement by
(i) the mailing of a copy thereof by certified mail, postage prepaid, return
receipt requested, to the Grantor and (ii) serving a copy thereon upon the
agent, if any, hereinabove designated and appointed by the Grantor as the
Grantor's agent for service of process. The Grantor hereby irrevocably agrees
that such service shall be deemed to be service of process upon the Grantor in
any such suit, action or proceeding. Nothing in this Agreement shall affect the
right of the Bank to serve process in any other manner otherwise permitted by
law and nothing in this Agreement will limit the right of the Bank otherwise to
bring proceedings against the Grantor in the courts of any other jurisdiction
or jurisdictions.
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29. WAIVER OF JURY TRIAL THE GRANTOR HEREBY WAIVES TRIAL
BY JURY IN ANY LITIGATION BETWEEN THE BANK AND THE GRANTOR ARISING OUT OF THIS
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY.
30. Miscellaneous. The paragraph headings of this
Agreement are for convenience only, and shall not limit or otherwise affect any
of the terms hereof. This Agreement and related Loan Documents, if any,
constitutes the entire agreement between the parties with respect to its
subject matter and supersedes all prior letters, representations, or
agreements, oral or written, with respect thereto, If this Agreement is a
renewal, extension or modification of the terms of any existing obligation of
the Grantor to the Bank, this Agreement is not intended as a novation, but
rather is intended only to renew, extend or modify the obligation to the extent
applicable. No modification, change, waiver or amendment of this Agreement
shall be deemed to be made by the Bank unless in writing signed by the Bank.
and each such waiver, if any, shall apply only with respect to the specific
instance involved.
31. Intentionally deleted.
IN WITNESS WHEREOF, and intending to create an instrument executed
under seal, the Grantor has duly executed this Agreement under seal as of the
day and year first written above.
WITNESS OR ATTEST: GRANTOR:
FileTek, Inc.:
By: /s/ William C. Thompson [SEAL]
----------------------------------------------
Name: William C. Thompson
----------------------------------------------
Title: CEO
----------------------------------------------
FileTek UK Limited:
By: /s/ William C. Thompson [SEAL]
----------------------------------------------
Name: William C. Thompson
----------------------------------------------
Title:
----------------------------------------------
Previous legal and/or trade name)s, (if any) Address(es) where Collateral is or is to be located:
of the Grantor:
(1) 9400 Key West Avenue
- --------------------------------------------- ----------------------------------------------
Rockville, MD 20850
(2) 12136 Nebel Street
- --------------------------------------------- ----------------------------------------------
Rockville, MD
(3)
- --------------------------------------------- ----------------------------------------------
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