1
EXHIBIT 10.19
- --------------------------------------------------------------------------------
Norwest Equipment Finance, Inc. PROMISSORY NOTE
NORWEST EQUIPMENT Investors Building, Suite 300
FINANCE 733 Marquette Avenue
Minneapolis, MN 55479-2048
- --------------------------------------------------------------------------------
Dated as of October 26, 1998
Contract Number 17657-709
For value received, the undersigned, hereby promises to pay to the order of
Norwest Equipment Finance, Inc. (the "Lender") at its office in Minneapolis,
Minnesota, or at such other place as may be designated from time to time by the
holder hereof, the sum of $4,171,667.04 in installments according to the
schedule set forth below; provided, however, that the undersigned and the Lender
may agree to any other payment schedule, in which case only variations shall be
set forth in the space provided for additional provisions. The first payment
period shall begin on the 15th day of the month in which Lender disburses the
loan proceeds if disbursement is made on or before the 15th day of such month,
and the first payment period shall begin on the last day of such month if
disbursement is made during the balance of such month. The first installment
shall be payable on the first payment due date set forth below (which may be the
same as the date the first payment period begins). Subsequent installments shall
be payable on the first day of each payment period beginning after the first
payment period. The undersigned agrees that the date the first payment period
begins may be left blank when this Note is executed and hereby authorizes Lender
to insert such date based upon the date the loan proceeds are disbursed.
PAYMENT SCHEDULE:
- -------------------------------------------------------------------------------------------------------------------------
Date first payment period begins: November 30, 1998 First payment due: December 31, 1998
- -------------------------------------------------------------------------------------------------------------------------
Number of installments: 48 Amount of each installment: $86,909.73
- -------------------------------------------------------------------------------------------------------------------------
Payment period: MONTHLY Annual interest rate used in computing payment
schedule: 7.00%
- -------------------------------------------------------------------------------------------------------------------------
Principal amount of loan proceeds disbursed: $3,629,367.67
- -------------------------------------------------------------------------------------------------------------------------
In addition to installment payments as set forth above, the undersigned agrees
to pay Lender interim interest on the loan proceeds disbursed hereunder from the
date of disbursement to the date the first payment period begins at the annual
interest rate set forth above used in computing the payment schedule. Interim
interest shall be due and payable on the date the first payment period begins.
If any installment is not paid when due, then in addition to any other remedy
Lender may have hereunder, Lender may impose and, if imposed, the undersigned
shall pay a late charge of 5% of the amount of the delinquent installment but in
any event not more than permitted by applicable law.
Payments thereafter received shall be applied first to delinquent installments
and then to current installments.
This Note may be prepaid in whole or in part at anytime and from time to time
but only if accompanied by a prepayment premium of 2% of the principal amount
prepaid if prepaid during months 1 - 12, 1% during months 13 - 24 and 0%
thereafter. Any partial prepayment shall be applied to the last maturing
installment or installments. Upon any prepayment in full, the unearned portion
of the interest will be refunded using the simple interest method. The following
shall constitute an Event of Default hereunder: (a) failure to pay any
installment hereunder when due; (b) the occurrence of an event of default as
defined in any security agreement or mortgage securing this Note; (c) the
commencement of any bankruptcy or insolvency proceedings by or against the
undersigned or any guarantor of this Note; and (d) any indebtedness the
undersigned may now or hereafter owe to Norwest Bank Minnesota, National
Association or any affiliate thereof shall be accelerated following a default
thereunder or, if any such indebtedness is payable on demand, payment thereof
shall be demanded. Upon the occurrence of an Event of Default, Lender may do any
one or more of the following as it may elect: (i) upon written notice to the
undersigned, declare the entire unpaid balance of the Note to be immediately due
and payable, and the same (less unearned interest computed using the simple
interest method as if this Note had been paid in full on the date it became due
and payable) shall thereupon be and become immediately due and payable; (ii)
exercise any one or more of the rights and remedies available to it under any
security agreement or mortgage securing this Note or under any other agreement
or by law.
The undersigned hereby waives presentment, notice of dishonor, and protest. The
undersigned agrees to pay all costs of collection of this Note, including
reasonable attorneys' fees. The holder hereof may change the terms of payment of
the Note by extension, renewal or otherwise, and release any security for, or
party to, this Note and such action shall not release any accommodation maker,
endorser, or guarantor from liability on this Note. Notwithstanding anything to
the contrary contained herein, if the rate of interest, late payment fee,
prepayment premium or any other charges or fees due hereunder are determined by
a court of competent jurisdiction to be usurious, then said interest rate, fees
and/or charges shall be reduced to the maximum amount permissible under
applicable law and any such excess amounts shall be applied towards the
reduction of the principal balance of this Note.
This Note shall be construed and enforced in accordance with, and the rights of
the parties shall be governed by, the laws of the State of Minnesota without
regard to conflicts of law rules.
If this Note is signed by more than one person as Debtor, then the term "Debtor"
shall refer to each of them separately and to all of them jointly, and each such
person shall be liable hereunder individually in full and jointly with the
others.
IN WITNESS WHEREOF the Debtor has signed this Agreement as of the date first
above written.
StarTek USA, Inc.
- ---------------------------------
Debtor
/s/ DENNIS M.SWENSON
- ---------------------------------
By
Executive Vice President
- ---------------------------------
Title
Exhibits and Schedules not filed
2
- --------------------------------------------------------------------------------
Norwest Equipment Finance, Inc. SECURITY AGREEMENT
NORWEST EQUIPMENT Investors Building, Suite 300
FINANCE 733 Marquette Avenue
Minneapolis, MN 55479-2048
- --------------------------------------------------------------------------------
Dated as of October 26, 1998
Contract Number 17657-709
Name and Address of Debtor:
StarTek USA, Inc.
111 Havana Street
Denver, CO 80010
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 Norwest Equipment
Finance, Inc. ("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 the Security Agreement, and whether it is or may be
direct or indirect, due or 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 call the "Security Interest") in
the following property (herein called the "Collateral"):
SEE ATTACHED SCHEDULE A
together with all substitutions and replacements for and products of the
Collateral, all proceeds, accessories, attachments, parts, equipment and
repairs now or hereafter attached or affixed to or used in connection with
the Collateral.
2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. Debtor represents, warrants and
agrees that:
(A) AUTHORIZATION. If Debtor is a corporation, a partnership or a limited
liability company, the execution, delivery and performance of this
Agreement has been duly authorized by all necessary action on the part
of the Debtor and will not violate any provision of the Debtor's
articles of incorporation or bylaws, partnership agreement or articles
of organization or management agreement, as the case may be.
(B) OFFICE LOCATION. Debtor's chief executive office (if Debtor is a
corporation, a partnership or a limited liability company) is located
at the address for Debtor shown above. Debtor will not change the
location of its chief executive office or his/her residence, as the
case may be, without first giving Secured Party at least 10 days prior
written notice of the new location.
(C) BUSINESS PURPOSE, LAWFUL USE. The Equipment will be used primarily for
business purposes as opposed to personal, family or household purposes.
Debtor will comply with all laws and regulations applicable to the
Equipment and its use.
3. ADDITIONAL REPRESENTATIONS, WARRANTIES AND AGREEMENTS. Debtor represents,
warrants and agrees that:
(a) Debtor has (or will have at 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 therein
without the prior written consent of Secured Party. If Debtor is a
corporation, this Agreement has been duly and validly authorized by all
necessary corporate action, and, if Debtor is a partnership or a
limited liability company, the partner(s) or manager(s) executing this
Agreement has (have) authority to act for the partnership or the
limited liability company.
(b) Debtor will not permit any Collateral to be located in any state (and,
if county filing is required, in any county) in which the financing
statement covering such Collateral is required to be, but has not in
fact been, filed in order to perfect the Security Interest.
(c) Debtor will (i) keep all 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; (ii) 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; (iii) keep all Collateral free
and clear of all security interests, liens and encumbrances except the
Security Interest; (iv) 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;
(v) keep accurate and complete records pertaining to Debtor's business
and financial condition and submit to Secured Party such periodic
reports concerning Debtor's business and financial condition as Secured
Party may from time to time reasonably request; (vi) promptly notify
Secured Party of any loss of or material damage to any Collateral;
(vii) at all times keep all Collateral insured against risks of fire
(including so-called extended coverage), theft, collision (in case of
Collateral consisting of motor vehicles) and 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, (viii) from
time to time execute such financing statements as Secured Party may
reasonably require in order to perfect 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; (ix) 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; (x) 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; (xi)
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; and (xii) not permit any 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 an 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(c), 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 (vii) and (viii) of
this Section 3(c), 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 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 procurement and maintenance of insurance, the execution of
financing statements, the endorsement of instruments, and the
procurement of
3
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 agreement 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-in-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.
4. 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.
5. EVENTS OF DEFAULT. Each of the following occurrences shall constitute an
event of default under this Agreement (herein called "Event of Default"):
(i) 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; (ii) any representation or
warranty by Debtor set forth in the 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; (iii) 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 Debtor
or any indebtedness owing to Debtor; (iv) 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,i f an individual, die; or (D) go out of business;
(v) if Debtor is a corporation, more than 50% of the shares of voting stock
of Debtor shall become owned by a shareholder or shareholders who were not
owners of voting stock of Debtor on the date of this Agreement or, if
Debtor is a partnership, more than 50% of the partnership interests in the
Debtor shall become owned by a partner or partners who were not partners of
Debtor on the date of this Agreement; or (vi) Debtor shall consolidate with
or merge into, or sell all or substantially all of its assets to, any
individual, corporation, or other entity.
6. REMEDIES UPON EVENT OF DEFAULT. Upon the occurrence of an Event of Default
under Section 5 and at any time thereafter, Secured Party may exercise any
one or more of the following rights and remedies: (i) 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; (ii) exercise and enforce any or 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
designated 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 7) at least 10 calendar days prior to the date of
intended disposition or other action; (iii) 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
5(iv)(B), all Obligations shall be immediately due and payable without
demand or notice thereof.
7. MISCELLANEOUS. 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 exercised
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
reserve 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 respective 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 filing, 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 of Minnesota. 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. All
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 other(s); and the Obligations shall
include all debts, liabilities and obligations owned 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. There shall be
(1) counterpart of this Agreement and it will be market "Original." To the
extent that this Agreement constitutes chattel paper (as that terms is
defined by the Uniform Commercial Code), a security interest only may be
created in the Agreement marked "Original."
StarTek USA, Inc.
- ---------------------------------
Debtor
/s/ DENNIS M.SWENSON
- ---------------------------------
By
Executive Vice President
- ---------------------------------
Title
Exhibits and Schedules not filed
4
- --------------------------------------------------------------------------------
Norwest Equipment Finance, Inc. SECURITY AGREEMENT
NORWEST EQUIPMENT Investors Building, Suite 300
FINANCE 733 Marquette Avenue
Minneapolis, MN 55479-2048
- --------------------------------------------------------------------------------
Dated as of October 26, 1998
Name and Address of Debtor:
StarTek USA, Inc.
111 Havana Street
Denver, CO 80010
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 Norwest Equipment
Finance, Inc. ("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 the Security Agreement, and whether it arises with
our without any documents (e.g. obligations to Secured Party created by
checking overdrafts), and whether it is or may be direct or indirect, due
or 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 call the "Security Interest") in the following property (herein
called the "Collateral"):
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 of such account debtor or other obligor; all, including
but not limited to, present and future debt instruments, chattel papers,
accounts, loans and obligations receivable and tax refunds
together with all substitutions and replacements for and products of the
foregoing property not constituting consumer gods 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) AUTHORIZATION. If Debtor is a corporation, a partnership or a limited or
a limited liability company, the execution, delivery and performance of
this Agreement has been duly authorized by all necessary action on the part
of the Debtor and will not violate any provision of the Debtor's articles
of incorporation or bylaws, partnership agreement or articles of
organization or management agreement, as the case may be.
B) OFFICE LOCATION. Debtor's chief executive office (if Debtor is a
corporation, a partnership or a limited liability company) is located at
the address for Debtor shown above. Debtor will not change the location of
its chief executive office or his/her residence, as the case may be,
without first giving Secured Party at least 10 days prior written notice of
the new location.
C) BUSINESS PURPOSE, LAWFUL USE. The Equipment will be used primarily for
business purposes as opposed to personal, family or household purposes.
Debtor will comply with all laws and regulations applicable to the
Equipment and its use.
3. ADDITIONAL REPRESENTATIONS, WARRANTIES AND AGREEMENTS. Debtor represents,
warrants and agrees that:
a) Debt has (or will have at 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 therein without the prior written
consent of Secured Party, except that until the occurrence of an Event of
Default and the revocation by Secured Party of 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 or a limited
liability company, the partner(s) or manager(s) executing this Agreement
has (have) authority to act for the partnership or the limited liability
company.
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 the
financing statement covering such Collateral is required to be, but has not
in fact been, filed 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 of other creditors of such
account debtor or other obligor.
d) Debt will (i) 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; (ii) 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; (iii) keep all Collateral free and clear of all
security interests, liens and encumbrances except the Security Interest;
(iv) at all reasonable times, permit Secured Party or its representatives
to examine or inspect any Collateral, where ever 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; (v) 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; (vi) promptly notify Secured Party of any loss of or
material damage to any Collateral; (vii) 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 chattle paper constituting Collateral, duly endorsed or
assigned by debtor; (viii) 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) and
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, (ix) from time to time execute such financing statements as
Secured Party may reasonably require in order to perfect 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; (x) 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; (xi) 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; (xii) 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; (xiii) 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 (xiv) not
permit any 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 an 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 agreement 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
5
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-in-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. LOCKBOX, 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 shall constitute proceeds of Collateral and shall not constitute
payment of any Obligation. At its option, Secured Party may, at any time,
apply finally collected funds on deposit 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 part 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 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 in 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"):
(i) 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; (ii) any representation or
warranty by Debtor set forth in the 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; (iii) 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 Debtor
or any indebtedness owing to Debtor; (iv) 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;
(v) if Debtor is a corporation, more than 50% of the shares of voting stock
of Debtor shall become owned by a shareholder or shareholders who were not
owners of voting stock of Debtor on the date of this Agreement or, if
Debtor is a partnership, more than 50% of the partnership interests in the
Debtor shall become owned by a partner or partners who were not partners of
Debtor on the date of this Agreement; or (vi) Debtor shall consolidate with
or merge into, or sell all or substantially all of its assets to, any
individual, corporation, or other entity.
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: (i) 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; (ii) exercise and enforce any or 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
designated 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; (iii) 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, papers 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 exercised
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
reserve 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 respective 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 filing, 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 of Minnesota. 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. All
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. There
shall be (1) counterpart of this Agreement and it will be market
"Original." To the extent that this Agreement constitutes chattel paper (as
defined by the Uniform Commercial Code), a security interest only may be
created in the Agreement marked "Original."
StarTek USA, Inc.
- ---------------------------------
Debtor
/s/ DENNIS M.SWENSON
- ---------------------------------
By
Executive Vice President
- ---------------------------------
Title
Exhibits and Schedules not filed