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Exhibit 10.12 (iv)
SECURITY AGREEMENT
THIS SECURITY AGREEMENT ("Agreement") dated as of January 14, 1997 is
entered into by Credentials Services International, Inc., a Delaware
corporation ("Debtor"), and LaSalle National Bank ("Secured Party").
Recitals:
A. Debtor and Secured Party have entered into a certain Credit
Agreement of even date herewith (as amended, restated or otherwise modified and
in effect from time to time, the "Credit Agreement"), pursuant to which Secured
Party has agreed, subject to the terms and conditions thereof, to make loans
and other financial accommodations to Debtor from time to time.
B. Secured Party has required, as a condition to its entering into
the Credit Agreement, that Debtor execute and deliver this Agreement.
NOW, THEREFORE, in consideration of the premises and to induce Secured
Party to enter into the Credit Agreement and to make loans and financial
accommodations to Debtor thereunder, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties agree as follows:
1. Definitions. Capitalized terms used herein without definition
are used herein as defined in the Credit Agreement. In addition, the following
terms shall have the following meanings:
"Accounts" shall mean any "account," as such term is defined in the
Uniform Commercial Code and, in any event, shall include, without limitation,
all Accounts as defined in the Credit Agreement.
"Chattel Paper" shall mean any "chattel paper," as such term is
defined in the Uniform Commercial Code.
"Collateral" is defined in Section 2 hereof.
"Contracts" shall mean all contracts, undertakings or other agreements
(other than rights evidenced by Chattel Paper, Documents or Instruments) in or
under which Debtor may now or hereafter have any right, title or interest,
including, without limitation, with respect to an Account, any agreement
relating to the terms of payment or the terms of performance thereof.
"Copyrights" shall mean any of Debtor's copyrights, rights and
interests in copyrights, works protectable by copyrights, copyright
registrations and copyright applications, including, without limitation, the
copyright registrations and applications listed on Schedule 3 attached hereto,
and all renewals of any of the foregoing, all income, royalties, damages and
payments now or hereafter due or payable under or with respect to any of the
foregoing, including, without limitation, damages and payments for past,
present and future infringements of any of the foregoing and the right to sue
for past, present and future infringements of any of the foregoing.
"Documents" shall mean any "documents," as such term is defined in the
Uniform Commercial Code.
"Equipment" shall mean any "equipment," as such term is defined in the
Uniform Commercial Code and shall include motor vehicles, tractors, trailers
and other like property, whether or not the title thereto is governed by a
certificate of title or ownership.
"General Intangibles" shall mean any "general intangibles," as such
term is defined in the Uniform Commercial Code and shall include, without
limitation, all right, title and interest in or under any Contract, drawings,
materials and records, claims, literary rights, goodwill, rights of
performance, Copyrights, Trademarks, patents, warranties, rights under
insurance policies and rights of indemnification.
"Goods" shall mean any "goods," as such term is defined in the Uniform
Commercial Code.
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"Instruments" shall mean any "instrument," as such term is defined in
the Uniform Commercial Code and shall include, without limitation, promissory
notes, drafts, bills of exchange, trade acceptances, letters of credit and
Chattel Paper.
"Inventory" shall mean any "inventory," as such term is defined in the
Uniform Commercial Code.
"Investment Property" shall mean any "certificated security," or
"uncertificated security" as such terms are defined in the Uniform Commercial
Code.
"Patents" shall mean any of Debtor's patents and patent applications,
including, without limitation, the inventions and improvements described and
claimed therein, all patentable inventions and those patents and patent
applications listed on Schedule 4 attached hereto, and the reissues, divisions,
continuation, renewals, extensions and continuations-in-part of any of the
foregoing, and all income, royalties, damages and payments now or hereafter due
or payable under or with respect to any of the foregoing, including, without
limitation, damages and payments for past, present and future infringements of
any of the foregoing and the right to sue for past, present and future
infringements of any of the foregoing.
"Proceeds" shall mean "proceeds," as such term is defined in the
Uniform Commercial Code and shall include, without limitation, (a) any and all
proceeds of any insurance, indemnity, warranty or guaranty payable with respect
to any of the Collateral, (b) any and all payments, in any form whatsoever,
made or due and payable from time to time in connection with any confiscation,
condemnation, seizure or forfeiture of all or any part of the Collateral by any
governmental authority, and (c) any and all other amounts from time to time
paid or payable under, in respect of or in connection with any of the
Collateral.
"Trademarks" shall mean any of Debtor's trademarks, trade names,
corporate names, company names, business names, fictitious business names,
trade styles, service marks, logos, other business identifiers, prints and
labels on which any of the foregoing have appeared or appear, all registrations
and recordings thereof, and all applications in connection therewith,
including, without limitation, the trademarks and applications listed on
Schedule 5 attached hereto and renewals thereof, and all income, royalties,
damages and payments now or hereafter due or payable under or with respect to
any of the foregoing, including, without limitation, damages and payments for
past, present and future infringements of any of the foregoing and the right to
sue for past, present and future infringements of any of the foregoing.
"Uniform Commercial Code" shall mean the Uniform Commercial Code as in
effect from time to time in the State of Illinois; provided, however, if, by
reason of mandatory provisions of law, the attachment, perfection or priority
of Secured Party's security interest in any Collateral is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than the State of
Illinois, the term "Uniform Commercial Code" shall mean the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provisions
hereof relating to such attachment, perfection or priority and for purposes of
definitions related to such provisions.
2. Grant of Security Interest. As collateral security for the
prompt payment in full when due (whether at stated maturity, by acceleration or
otherwise) of the Obligations, Debtor hereby pledges and grants to Secured
Party a Lien on and security interest in and to all of Debtor's right, title
and interest in the following property and interests in property, whether now
owned or hereafter acquired by Debtor and wherever located (collectively, the
"Collateral"):
(a) all Accounts;
(b) all Inventory;
(c) all General Intangibles;
(d) all Instruments, together with all payments thereon or
thereunder;
(e) all Equipment;
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(f) all Documents;
(g) all Contracts;
(h) all Goods;
(i) all Investment Property;
(j) all bank and depositary accounts maintained by Debtor,
including, without limitation, the Cash Collateral Account, all funds on
deposit therein, all investments arising out of such funds, all claims
thereunder or in connection therewith, and all cash, securities, rights and
other property at any time and from time to time received, receivable or
otherwise distributed in respect of such accounts;
(k) all other tangible and intangible property of Debtor,
including without limitation, all Proceeds, products, accessions, rents,
profits, income, benefits, substitutions, additions and replacement of and to
any of the property described in this Section 3 including, without limitation,
any proceeds of insurance thereon and all rights, claims and benefits against
any Person relating thereto) and all books, correspondence files, records,
invoices and other papers, including, without limitation, all tapes, cards,
computer runs, computer programs, computer files and other papers, documents
and records in the possession or under the control of Debtor or any computer
bureau or service company from time to time acting for Debtor.
3. Representations, Warranties and Covenants of Debtor. Debtor
represents and warrants to, and covenants with, Secured Party as follows:
(a) Debtor is and will be the owner of the Collateral and no Lien
other than Permitted Liens exists or will exist upon such Collateral at any
time.
(b) This Agreement is effective to create in favor of Secured
Party a valid security interest in and Lien upon all of Debtor's right, title
and interest in and to the Collateral and, upon the filing of appropriate
Uniform Commercial Code financing statements in the jurisdictions listed on
Schedule 1 attached hereto, such security interest will be duly perfected in
all of the Collateral (other than Instruments not constituting Chattel Paper,
Investment Property, deposit accounts and cash), and upon delivery of the
Instruments to Secured Party, duly endorsed by Debtor or accompanied by
appropriate instruments of transfer duly executed by Debtor, the security
interest in the Instruments will be duly perfected.
(c) All of the Equipment, Inventory and Goods is located at the
places specified on Schedule 1 attached hereto. Except as disclosed on
Schedule 1, none of the Collateral is in the possession of any bailee,
warehouseman, processor or consignee. The chief place of business, chief
executive office and the office where Debtor keeps its books and records are
located at the place specified on Schedule 1. Debtor does not do business and
has not done business under any trade name or fictitious business name except
as disclosed on Schedule 2 attached hereto.
(d) No Copyrights, Patents or Trademarks have been adjudged
invalid or unenforceable or have been canceled, in whole or in part, or are not
presently subsisting. Each of the Copyrights, Patents and Trademarks is valid
and enforceable. Debtor is the sole and exclusive owner of the entire and
unencumbered right, title and interest in and to each of the Copyrights,
patents and Trademarks, free and clear of any liens, charges and encumbrances,
including, without limitation, licenses, shop rights and covenants by Debtor
not to sue third persons. Debtor has adopted, used or is currently using, or
has a current bona fide intention to use, all of the Trademarks and Copyrights.
Debtor has no notice of any suits or actions commenced or threatened with
respect to the Copyrights, Patents or Trademarks. The Copyrights, Patents and
Trademarks listed on Schedules 3, 4 and 5, respectively, constitute all of the
Copyrights, Patents and Trademarks owned by Debtor as of the date hereof.
(e) All information heretofore, herein or hereafter furnished to
Secured Party by or on behalf of Debtor with respect to the Collateral and the
Account Debtors is and will be accurate and complete in all material respects.
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4. Agreements of Debtor. Debtor hereby agrees with Secured Party as
follows:
(a) Delivery of Instruments. Debtor shall deliver and pledge to
Secured Party any and all Instruments, duly endorsed or accompanied by such
instruments of assignment and transfer executed by Debtor in such form and
substance as Secured Party may request.
(b) Other Documents and Actions. Debtor shall give, execute,
deliver, file or record any financing statement, notice, instrument, agreement
or other document that may be necessary or desirable in the reasonable judgment
of Secured Party to create, preserve, perfect or validate the security interest
granted pursuant hereto or to enable Secured Party to exercise and enforce the
rights of Secured Party hereunder with respect to such security interest.
(c) Books and Records. Debtor shall maintain at its own cost and
expense complete and accurate books and records of the Collateral, including,
without limitation, a record of all payments received and all credits granted
with respect to the Collateral and all other dealings with the Collateral. Upon
the occurrence and during the continuation of any Event of Default, Debtor
shall deliver any such books and records, or true and correct copies thereof,
to Secured Party at any time on demand. Debtor shall permit any representative
of Secured Party to inspect such books and records at any time during
reasonable business hours and shall provide photocopies thereof at Debtor's
expense to Secured Party upon the request of Secured Party.
(d) Notice to Account Debtors; Verification. (i) Upon the
occurrence and during the continuance of any Event of Default, upon request of
Secured Party, Debtor shall promptly notify (and Debtor hereby authorizes
Secured Party so to notify) each Account Debtor in respect of any Accounts or
Instruments that such Collateral has been assigned to Secured Party and that
any payments due or to become due in respect of such Collateral are to be made
directly to Secured Party, and (ii) Secured Party shall have the right at any
time or times to make direct verification with the Account Debtors of any and
all of the Accounts.
(e) Intellectual Property. If Debtor shall (i) obtain rights to
any patentable inventions, Copyrights, Patents or Trademarks not listed on
Schedule 3, 4 or 5, or (ii) become entitled to the benefit of any Copyrights,
Patents or Trademarks or any improvements on any Patent, the provisions of this
Agreement shall automatically apply thereto and Debtor shall give Secured Party
prompt written notice thereof. Debtor hereby authorizes Secured Party to
modify this Agreement by amending Schedules 3, 4 and 5, as applicable, to
include any such Copyrights, Patents and Trademarks. Debtor shall have the
duty, to the extent required by reasonable commercial judgment and, in any
event, if the failure to do so could reasonably be expected to have a Material
Adverse Effect, (i) to prosecute diligently any patent, trademark, copyright or
service mark applications pending as of the date hereof or thereafter, (ii) to
make application on unpatented but patentable inventions and on trademarks,
copyrights and service marks, as appropriate, (iii) to preserve and maintain
all rights in the Copyrights, Patents and Trademarks, and (iv) to ensure that
the Copyrights, Patents and Trademarks are and remain enforceable. Any expenses
incurred in connection with Debtor's obligation under this Section 4(e) shall
be borne by Debtor. Debtor shall not abandon any right to file a patent,
trademark, copyright or service mark application, or abandon any pending patent
application, or any other Copyright, Patent or Trademark without the written
consent of Secured Party, unless such abandonment could not reasonably be
expected to have a Material Adverse Effect.
(f) Further Identification of Collateral. Debtor shall, when and as
often as reasonably requested by Secured Party, furnish to Secured Party,
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as Secured Party may
reasonably request, all in reasonable detail.
(g) Investment Property. Debtor shall take any and all actions
required or requested by Secured Party, from time to time, to (i) cause Secured
Party to obtain exclusive control of any Investment Property owned by Debtor in
a manner acceptable to Secured Party and (ii) obtain from any issuers of
Investment Property and such other Persons, for the benefit of Secured Party,
written confirmation of Secured Party's control over such Investment Property.
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(h) Compliance with Loan Documents. Debtor shall comply with the
provisions of the Loan Documents applicable to the Collateral, including,
without limitation, maintenance of insurance, restrictions on dispositions and
providing Secured Party the right to inspections with respect to the
Collateral.
(i) Other Liens. Debtor shall not create, permit or suffer to
exist, and shall defend the Collateral against and take such other action as is
necessary to remove, any Lien on the Collateral except Permitted Liens, and
shall defend the right, title and interest of Secured Party in and to the
Collateral and in and to all Proceeds thereof against the claims and demands of
all Persons whatsoever.
(j) Preservation of Rights. Whether or not any Event of Default
has occurred or is continuing, Secured Party may, but shall not be required to,
take any actions Secured Party reasonably deems necessary or appropriate to
preserve any Collateral or any rights against third parties to any of the
Collateral, including obtaining insurance on the Collateral at any time when
Debtor has failed to do so, and Debtor shall promptly pay, or reimburse Secured
Party for, all expenses incurred in connection therewith.
(k) Changes in Name; Location. Debtor shall notify Secured Party
promptly in writing prior to any change in Debtor's name, identity or corporate
structure or the proposed use by Debtor of any trade name or fictitious
business name other than any such name set forth on Schedule 2 attached hereto.
Debtor shall keep the Collateral at the locations specified in Schedule 1 and
shall give Secured Party 30 days' prior written notice of any change in
Debtor's chief place of business or of any new location for any of the
Collateral.
(i) Bank Accounts; Collections. (i) Debtor shall not establish any
deposit account with any financial institution unless permitted by the terms of
the Credit Agreement.
(m) Until notice from Secured Party to the contrary, given at any
time after the occurrence and during the continuance of any Default, Debtor
shall, at its own expense, endeavor to collect all amounts due with respect to
any of the Accounts and shall take such action with respect to such collection
as Debtor may deem advisable.
(n) Upon demand therefor by Secured Party at any time following
the occurrence and during the continuance of any Default, Debtor shall,
forthwith upon receipt, transmit and deliver to Secured Party, in the form
received, all cash, checks, drafts and other instruments or writings for the
payment of money which may be received by Debtor at any time in payment or
otherwise as proceeds of any Collateral. Any such items which may be so
received by Debtor shall not be commingled by Debtor with any of its other
funds or property but, until delivery to Secured Party, shall be held separate
and apart from such other funds and property and in trust for Secured Party.
5. Remedies. During the period during which an Event of Default
shall have occurred and be continuing:
(a) Secured Party shall have, in addition to other rights and
remedies provided for herein or otherwise available to it, all of the rights
and remedies of a Secured Party upon default under the Uniform Commercial Code
(whether or not the Uniform Commercial Code applies to the affected Collateral)
and Lender may, without notice, demand or legal process of any kind except as
may be required by law, at any time or times (i) enter Debtor's premises and
take physical possession of the Collateral and maintain such possession on
Debtor's premises, at no cost to Lender, or remove the Collateral or any part
thereof to such other place or places as Secured Party may desire, (ii) require
Debtor to, and Debtor hereby agrees to, assemble the Collateral as directed by
Secured Party and make it available to Secured Party at a place to be
designated by Secured Party which is reasonably convenient to Secured Party and
Debtor and (iii) without notice except as specified below, sell, lease, assign,
grant an option or options to purchase or otherwise dispose of the Collateral
or any part thereof at public or private sale, at any exchange, broker's board
or at any of the offices of Secured Party or elsewhere, for cash, on credit or
for future delivery, and upon such other terms as Secured Party may deem
commercially reasonable. Debtor agrees that, to the extent notice of sale shall
be required by law, at least 10 days' notice to Debtor of the time and place of
any public sale or the time after which any private sale is to be made shall
constitute reasonable notification. Secured Party shall not be obligated to
make any sale of Collateral regardless of notice of sale having been given.
Secured Party may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor and such sale may, without
further notice, be made at the time and place to which it was so adjourned;
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(b) Secured Party may make any reasonable compromise or settlement
deemed desirable with respect to any of the Collateral and may extend the time
of payment, arrange for payment in installments or otherwise modify the terms
of, any of the Collateral; and
(c) Secured Party may, in the name of Secured Party or in the name
of Debtor or otherwise, demand, sue for, collect or receive any money or
property at any time payable or receivable on account of or in exchange for any
of the Collateral, but shall be under no obligation to do so.
6. Deficiency; Application of Proceeds. If the proceeds of sale,
collection or other realization of or upon the Collateral are insufficient to
cover the costs and expenses of such realization and the payment in full of the
Obligations, Debtor shall remain liable for any deficiency. The proceeds of any
collection, sale or other realization of all or any part of the Collateral
shall be applied: first, to payment of all expenses payable or reimbursable by
Debtor under the Loan Documents; second, to payment of all accrued unpaid
interest on the Revolving Loans; third, to payment of principal of the
Revolving Loans; fourth, to payment of all accrued unpaid interest on the Term
Loan; fifth, to payment of principal of the Term Loan; sixth, to payment of any
other amounts owing constituting Obligations; and last, any remainder shall be
for the account of and paid to Debtor.
7. Power of Attorney. Debtor hereby irrevocably constitutes and
appoints Secured Party, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of Debtor and in the name of Debtor or in its own name, from time to time
in the discretion of Secured Party, after the occurrence and during the
continuance of an Event of Default, for the purpose of carrying out the terms
of this Agreement, to take any and all appropriate action and to execute and
deliver any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this Agreement and, without limiting
the generality of the foregoing, hereby gives Secured Party the power and
right, on behalf of Debtor, without notice to or assent by Debtor, to do the
following upon the occurrence and during the continuance of an Event of
Default:
(a) to ask, demand, collect, receive and acquittance and receipts
for any and all moneys due and to become due under any Collateral and, in the
name of Debtor or its own name or otherwise, to take possession of and endorse
and collect any checks, drafts, notices acceptances or other Instruments for
the payment of moneys due under any Collateral and to file any claim or to take
any other action or proceeding in any court of law or equity or otherwise
deemed appropriate by Secured Party for the purpose of collecting any and all
such moneys due under any Collateral whenever payable and to file any claim or
to take any other action or proceeding or otherwise deemed appropriate by
Secured Party for the purpose of collecting any and all such moneys due under
any Collateral;
(b) to pay or discharge charges or Liens levied or placed on or
threatened against the Collateral, other than Permitted Liens, to effect any
insurance required by the terms of the Credit Agreement and to pay all or any
part of the premiums therefor;
(c) to direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due and to become due
thereunder directly to Secured Party or as Secured Party may direct, and to
receive payment of and receipt for any and all moneys, claims and other amounts
due and to become due in respect of or arising out of any Collateral;
(d) to sign and indorse any invoices, drafts against debtors,
assignments, verifications and notices in connection with Accounts and other
Documents constituting or relating to the Collateral;
(e) to commence and prosecute any suits, actions or proceedings to
collect the Collateral or any part thereof and to enforce any other right in
respect of any Collateral;
(f) to participate in the defense of any suit, action or
proceeding brought against Debtor with respect to any Collateral, or to defend
same with Debtor's consent;
(g) to settle, compromise or adjust any such suit, action or
proceeding as it relates to the Collateral and, in connection therewith, to
give such discharges or releases as Secured Party may deem appropriate;
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(h) to communicate in its own name with any party to any Contract
with regard to the assignment of the right, title and interest of Debtor in and
under the Contracts hereunder and other matters relating thereto;
(i) to execute, in connection with any sale of Collateral provided
for in Section 5 hereof, any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral; and
(j) generally to sell, transfer, pledge, make any agreement with
respect to or otherwise deal with any of the Collateral as fully and completely
as though Secured Party were the absolute owner thereof for all purposes and to
do, at Secured Party's option and at Debtor's expense, at any time or from time
to time, all acts and things which Secured Party reasonably deems necessary to
protect, preserve or realize upon the Collateral and Secured Party's Lien
therein, in order to effect the intent of this Agreement, all as fully and
effectively as Debtor might do.
Debtor hereby ratifies, to the extent permitted by law, all actions that such
attorneys lawfully take or cause to be taken by virtue hereof. The power of
attorney granted hereunder is a power coupled with an interest and shall be
irrevocable until the Obligations are indefeasibly paid in full and the Credit
Agreement is terminated.
8. Termination. This Agreement and the Liens and security
interests granted hereunder shall not terminate until the termination of the
Credit Agreement and the full and complete performance and satisfaction of all
Obligation (regardless of whether the Credit Agreement shall have earlier
terminated).
9. Further Assurances. At any time and from time to time, upon the
request of Secured Party, and at the sole expense of Debtor, Debtor shall
promptly and duly execute and deliver any and all such further instruments,
documents and agreements and take such further actions as Secured Party may
reasonably require in order for Secured Party to obtain the full benefits of
this Agreement, including, without limitation, using Debtor's best efforts to
secure all consents and approvals necessary or appropriate for the assignment
to Secured Party of any Collateral held by Debtor or in which Debtor has any
rights not heretofore assigned, the filing of any financing or continuation
statements under the Uniform Commercial Code with respect to the Liens and
security interests granted hereby, transferring Collateral to Secured Party's
possession if a security interest in such Collateral can be perfected by
possession, placing the interest of Secured Party as lienholder on the
certificate of title of any motor vehicle and obtaining waivers of liens from
landlords and mortgagees. Debtor further hereby authorizes Secured Party to
file any such financing or continuation statement without the signature of
Debtor to the extent permitted by law.
10. Limitation on Duty of Secured Party. The powers conferred on
Secured Party under this Agreement are solely to protect the Secured Party's
interest in the Collateral and shall not impose any duty upon it to exercise
any such powers. Except for the safe custody of any Collateral in its
possession and the accounting for moneys actually received by it hereunder,
Secured Party shall have no duty as to any of the Collateral. Secured Party
shall be accountable only for amounts that it actually receives as a result of
the exercise of such powers and neither Secured Party nor any of their
respective officers, directors, employees or agents shall be responsible to
Debtor for any act or failure to act, except for gross negligence or willful
misconduct. Without limiting the foregoing, Secured Party shall be deemed to
have exercised reasonable care in the custody and preservation of the
Collateral in its possession if such Collateral is accorded treatment
substantially equivalent to that which Secured Party, in its individual
capacity, accords its own property consisting of the type of Collateral
involved, it being understood and agreed that Secured Party shall have no
responsibility for taking any necessary steps, other than steps taken in
accordance with the standard of care set forth above, to preserve rights
against any Person with respect to any Collateral.
11. Debtor to Remain Liable. Without limiting the generality of
Section 10, Secured Party shall have no obligation or liability under any
Contract or license by reason of or arising out of this Agreement or the
granting to Secured Party of a security interest therein or assignment thereof
or the receipt by Secured Party of any payment relating to any Contract or
license hereto, nor shall Secured Party be required or obligated in any manner
to perform or fulfill any of the obligations of Debtor under or pursuant to any
Contract or license, or to make any payment or to make any inquiry as to the
nature or the sufficiency of any payment received by it or the sufficiency of
any performance by any party under any Contract or license, or to present or
file any claim, or to take any action to collect or enforce any performance or
the payment of any amount which may have been assigned to it or which it may be
entitled at any time or times.
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12. Miscellaneous.
(a) No Waiver. No failure on the part of Secured Party to
exercise, and no course of dealing with respect to, and no delay in exercising,
any right, power or remedy hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise by Secured Party of any right, power or
remedy hereunder preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The rights and remedies hereunder provided
are cumulative and may be exercised singly or concurrently, and are not
exclusive of any rights and remedies provided by law.
(b) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Illinois, without giving
effect to the choice of law principles thereof.
(c) Notices. All notices, demands and requests that any party is
required or elects to give to any other party shall be given in accordance with
the provisions of the Credit Agreement.
(d) Amendments. The terms of this Agreement may be waived, altered
or amended only by an instrument in writing duly executed by Debtor and Secured
Party.
(e) Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the respective successors and assigns of each of
the parties hereto, provided, that Debtor shall not assign or transfer its
rights hereunder without the prior written consent of Secured Party.
(f) Counterparts; Headings. This Agreement may be executed in any
number of counterparts, all of which together shall constitute one and the same
instrument. The headings in this Agreement are for convenience of reference
only and shall not alter or otherwise affect the meaning hereof.
(g) Severability. If any provision hereof is invalid or
unenforceable in any jurisdiction, then, to the fullest extent permitted by
law, the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of Secured Party in
order to carry out the intentions of the parties hereto as nearly as may be
possible, and the invalidity or unenforceability of any provision in any
jurisdiction shall not affect the validity or enforceability of such provision
in any other jurisdiction.
(h) Other Loan Documents. This Agreement supplements the other
Loan Documents and nothing in this Agreement shall be deemed to limit or
supersede the rights granted to Secured Party in any other Loan Document. If
any item of Collateral hereunder also constitutes collateral granted to Secured
Party under any other mortgage, agreement or instrument, in the event of any
conflict between the provisions of this Agreement and the provision of such
other mortgage, agreement or instrument, the provision or provisions selected
by Secured Party shall control
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with respect to such Collateral. In the event of any conflict between any
provision of this Agreement and any provision of the Credit Agreement, the
provisions of the Credit Agreement shall control to the extent of such
inconsistency.
IN WITNESS WHEREOF, the parties have caused this Security Agreement to be duly
executed and delivered as of the date first written above.
CREDENTIALS SERVICES INTERNATIONAL, INC.
By: /s/ Vineet Pruthi
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Name: Vineet Pruthi
Title: Chief Financial Officer
LASALLE NATIONAL BANK
By: /s/Andrew Kanfer
--------------------------------------
Name: Andrew Kanfer
Title: Loan Officer
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SCHEDULE 1
TO
SECURITY AGREEMENT
Offices; Locations of Collateral
1. Chief Executive Office:
333 City Boulevard West, 10th Floor
Orange, California 92668
2. Locations of Tangible Collateral:
(a) 333 City Boulevard West, 10th Floor
Orange, California 92668
[Three leased, on-site lockers in basement, containing certain
records, inventory and equipment.]
(b) 1700 Alma Drive, Suite 500
Plano,Texas 75075
(c) Public Storage
601 N. Main Street
Orange, California 92868
[Locker Containing old mainframe
terminals and miscellaneous files.]
(A) Arcus Data Security
PO Box 488
Gardena, California 90248
[Security storage of back-up data tapes.]
11
SCHEDULE 2
TO
SECURITY AGREEMENT
Trade Names; Fictitious Names
1. CSI uses the following unregistered trade names:
American Privacy Watch
Business Credentials
Credentials and Monitor Service
Loss Notification Service
Operation Identification Service
Privacy Watch Service
Small Business Credit Monitor
Three Bureau Credit Report
U.S. Marshall's Operation Identification
2. Credentials is a registered service mark:
Federal Service Mark: "CREDENTIALS"
Registration Number: 1,466,544
Expiration Date: November 24, 2007
12
SCHEDULE 3
TO
SECURITY AGREEMENT
Copyrights
None.
13
SCHEDULE 4
TO
SECURITY AGREEMENT
Patents
None.
- -
14
SCHEDULE 5
TO
SECURITY AGREEMENT
Trademarks
Privacy Watch is a registered trademark:
Trademark: "Privacy Watch"
Registration Number: 2,000,996
Expiration Date: September 27, 2006