SECURITY AGREEMENT
This SECURITY AGREEMENT ("Agreement"), dated as of January 23,
1998, is made by HAWKER PACIFIC AEROSPACE, a California corporation
("Grantor"), in favor of BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as the Bank under the Loan Agreement referred to below ("Secured
Party"). Terms defined in the Loan Agreement (as hereinafter defined) and
not otherwise defined in this Agreement are used herein with the same
meanings.
RECITALS
A. Pursuant to the Amended and Restated Business Loan Agreement
of even date herewith by and among Grantor, as Borrower, and Secured Party,
as Bank (as such agreement may from time to time be amended, extended,
renewed, supplemented or otherwise modified, the "Loan Agreement"), Secured
Party has agreed to extend certain credit facilities to Grantor.
B. The Loan Agreement provides, as a condition of the
availability of such credit facilities on the Closing Date, that Grantor
shall enter into this Agreement and shall grant security interests to Secured
Party as herein provided.
AGREEMENT
NOW, THEREFORE, in order to induce Bank to extend the
aforementioned credit facilities, and for other good and valuable
consideration, the receipt and adequacy of which hereby is acknowledged,
Grantor hereby represents, warrants, covenants, agrees, assigns and grants as
follows:
1. DEFINITIONS. This Agreement is the Borrower Security
Agreement referred to in the Loan Agreement. This Agreement is one of the
Loan Documents referred to in the Loan Agreement. Terms defined in the
California Uniform Commercial Code and not otherwise defined in this
Agreement or in the Loan Agreement shall have the meanings defined for those
terms in the California Uniform Commercial Code. As used in this Agreement,
the following terms shall have the meanings respectively set forth after each:
"ADVANCE" means any advance made or to be made by Bank to Grantor
as provided in ARTICLE 2, and INCLUDES advances made under Facility No. 1,
Facility No.
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2, any Capital Expenditure Loan made pursuant to Facility No. 3 and all
Letters of Credit issued by Bank for the account of Grantor.
"AFFILIATE" means, as to any Person, any other Person which
indirectly controls, or is under common control with, or is controlled by,
such Person. As used in this definition, "control" (and the correlative
terms, "controlled by" and "under common control with") shall mean
possession, directly or indirectly, of power to direct or cause the direction
of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise); PROVIDED
that, in any event, any Person that owns, directly or indirectly, 10% or more
of the securities having ordinary voting power for the election of directors
or other governing body of a corporation that has more than 100 record
holders of such securities, or 10% or more of the partnership or other
ownership interests of any other Person that has more than 100 record holders
of such interests, will be deemed to control such corporation or other Person.
"COLLATERAL" means and includes all present and future right, title
and interest of Grantor, in or to any Property or assets whatsoever, and all
rights and powers of Grantor to transfer any interest in or to any Property
or assets whatsoever, INCLUDING, without limitation, any and all of the
following property:
(a) All present and future accounts, accounts receivable,
agreements, contracts, leases, contract rights, rights to payment,
instruments, documents, chattel paper, security agreements, guaranties,
letters of credit, undertakings, surety bonds, insurance policies (whether
or not required by the terms of the Loan Documents), notes and drafts, and
all forms of obligations owing to Grantor or in which Grantor may have any
interest, however created or arising and whether or not earned by
performance;
(b) All present and future general intangibles, all tax refunds
of every kind and nature to which Grantor now or hereafter may become
entitled, however arising, all other refunds, and all deposits, reserves,
loans, royalties, cost savings, deferred payments, goodwill, choses in
action, liquidated damages, rights to indemnification, trade secrets,
computer programs, software, customer lists, trademarks, trade names,
patents, licenses, copyrights, technology, processes, proprietary
information and insurance proceeds of which Grantor is a beneficiary;
(c) All present and future deposit accounts of Grantor,
INCLUDING, without limitation, any demand, time, savings, passbook or like
account maintained by Grantor with any bank, savings and loan association,
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credit union or like organization, and all cash and cash equivalents of
Grantor, whether or not deposited in any such deposit account;
(d) All present and future books and records, INCLUDING, without
limitation, books of account and ledgers of every kind and nature, all
electronically recorded data relating to Grantor or the business thereof,
all receptacles and containers for such records, and all files and
correspondence;
(e) All present and future goods, INCLUDING, without limitation,
all consumer goods, farm products, inventory, equipment, gaming devices and
associated equipment, machinery, tools, molds, dies, furniture,
furnishings, fixtures, trade fixtures, motor vehicles and all other goods
used in connection with or in the conduct of Grantor's business;
(f) All present and future inventory and merchandise, INCLUDING,
without limitation, all present and future goods held for sale or lease or
to be furnished under a contract of service, all raw materials, work in
process and finished goods, all packing materials, supplies and containers
relating to or used in connection with any of the foregoing, and all bills
of lading, warehouse receipts or documents of title relating to any of the
foregoing;
(g) All present and future stocks, bonds, debentures,
securities, subscription rights, options, warrants, puts, calls,
certificates, partnership interests, limited liability company interests,
joint venture interests, investments and/or brokerage accounts and all
rights, preferences, privileges, dividends, distributions, redemption
payments, or liquidation payments with respect thereto;
(h) All present and future accessions, appurtenances,
components, repairs, repair parts, spare parts, replacements,
substitutions, additions, issue and/or improvements to or of or with
respect to any of the foregoing;
(i) All other tangible and intangible property of Grantor;
(j) All rights, remedies, powers and/or privileges of Grantor
with respect to any of the foregoing; and
(k) Any and all proceeds and products of any of the foregoing,
INCLUDING, without limitation, all money, accounts, general intangibles,
deposit accounts, documents, instruments, chattel paper, goods, insurance
proceeds, and
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any other tangible or intangible property received upon the
sale or disposition of any of the foregoing;
PROVIDED that the term "COLLATERAL", as used in this Agreement, shall NOT
include the following: (i) interests pledged pursuant to the Pledge
Agreement; or (ii) real property or any interest therein.
"GOVERNMENTAL AGENCY" means (a) any international, foreign,
federal, state, county or municipal government, or political subdivision
thereof, (b) any governmental or quasi-governmental agency, authority, board,
bureau, commission, department, instrumentality or public body, or (c) any
court or administrative tribunal.
"LAWS" means, collectively, all international, foreign, federal,
state and local statutes, treaties, rules, regulations, ordinances, codes and
administrative or judicial precedents.
"LOAN" means the aggregate of the Advances made at any one time by
Bank pursuant to ARTICLE 2.
"PERSON" means any entity, whether an individual, trustee,
corporation, general partnership, limited partnership, joint stock company,
trust, estate, unincorporated organization, business association, firm, joint
venture, Governmental Agency, or otherwise.
"PROPERTY" means any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"SECURED OBLIGATIONS" means any and all present and future
obligations of any type or nature of Grantor to Secured Party arising under
or relating to (a) the Loan Agreement and the other Loan Documents including
all obligations with respect to Loans or Letters of Credit made under the
Loan Agreement and obligations under the Loan Documents executed in
connection therewith, (b) interest rate swaps and other hedging arrangements
entered into by Bank and Grantor, (c) the documents governing each other
credit facility hereafter made available to Grantor or guarantied by Grantor,
whether due or to become due, matured or unmatured, liquidated or
unliquidated, or contingent or noncontingent, INCLUDING obligations of
performance as well as obligations of payment, and INCLUDING interest that
accrues after the commencement of any bankruptcy or insolvency proceeding by
or against Grantor.
2. FURTHER ASSURANCES. At any time and from time to time at the
request of Secured Party, Grantor shall execute and deliver to Secured Party
all such financing statements and other instruments and documents in form and
substance
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satisfactory to Secured Party as shall be necessary or desirable to fully
perfect, when filed and/or recorded, Secured Party's security interests
granted pursuant to SECTION 3 of this Agreement. At any time and from time
to time, Secured Party shall be entitled to file and/or record any or all
such financing statements, instruments and documents held by it, and any or
all such further financing statements, documents and instruments, and to take
all such other actions, as Secured Party may deem appropriate to perfect and
to maintain perfected the security interests granted in SECTION 3 of this
Agreement. Before and after the occurrence of any Event of Default, at
Secured Party's request, Grantor shall execute all such further financing
statements, instruments and documents, and shall do all such further acts and
things, as may be deemed necessary or desirable by Secured Party to create
and perfect, and to continue and preserve, an indefeasible security interest
in the Collateral in favor of Secured Party, or the priority thereof. With
respect to any Collateral consisting of certificated securities, instruments,
documents, certificates of title or the like, as to which Secured Party's
security interest need be perfected by, or the priority thereof need be
assured by, possession of such Collateral, Grantor will upon demand of
Secured Party deliver possession of same in pledge to Secured Party. With
respect to any Collateral consisting of securities, instruments, partnership,
joint venture or limited liability company interests or the like, Grantor
hereby consents and agrees that the issuers of, or obligors on, any such
Collateral, or any registrar or transfer agent or trustee for any such
Collateral, shall be entitled to accept the provisions of this Agreement as
conclusive evidence of the right of Secured Party to effect any transfer or
exercise any right hereunder or with respect to any such Collateral,
notwithstanding any other notice or direction to the contrary heretofore or
hereafter given by Grantor or any other Person to such issuers or such
obligors or to any such registrar or transfer agent or trustee.
3. SECURITY AGREEMENT. For valuable consideration, Grantor
hereby assigns and pledges to Secured Party, and grants to Secured Party a
security interest in, all presently existing and hereafter acquired
Collateral, as security for the timely payment and performance of the Secured
Obligations, and each of them. This Agreement is a continuing and
irrevocable agreement and all the rights, powers, privileges and remedies
hereunder shall apply to any and all Secured Obligations, including those
arising under successive transactions which shall either continue the Secured
Obligations, increase or decrease them and notwithstanding the bankruptcy of
any Grantor or any other Person or any other event or proceeding affecting
any Person.
4. GRANTOR'S REPRESENTATIONS, WARRANTIES AND AGREEMENTS. EXCEPT
as otherwise disclosed to Secured Party in writing concurrently herewith,
Grantor represents, warrants and agrees that: (a) Grantor will pay, prior to
delinquency, all taxes, charges, Liens and assessments against the
Collateral, EXCEPT such as are timely contested in good faith, and upon its
failure to pay or so contest such taxes, charges,
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Liens and assessments, Secured Party, after an Event of Default, at its
option may pay any of them, and Secured Party shall be the sole judge of the
legality or validity thereof and the amount necessary to discharge the same;
(b) the Collateral will not be used for any unlawful purpose or in violation
of any Laws in any material respect, nor used in any way that will void or
impair any insurance required to be carried in connection therewith; (c)
Grantor will, to the extent consistent with good business practice, keep the
portion of the Collateral owned by it in reasonably good repair, working
order and condition, and from time to time make all needful and proper
repairs, renewals, replacements, additions and improvements thereto and, as
appropriate and applicable, will otherwise deal with such portion of the
Collateral in all such ways as are considered good practice by owners of like
Property; (d) Grantor will take all reasonable steps to preserve and protect
the Collateral; (e) Grantor will maintain, with responsible insurance
companies, insurance covering the Collateral against such insurable losses as
is required by the Loan Agreement, and will cause Secured Party to be
designated as an additional insured and loss payee with respect to all
insurance (whether or not required by the Loan Agreement), will obtain the
written agreement of the insurers that such insurance shall not be canceled,
terminated or materially modified to the detriment of Secured Party without
at least 30 days prior written notice to Secured Party, and will furnish
copies of such insurance policies or certificates to Secured Party promptly
upon request therefor; (f) Grantor will promptly notify Secured Party in
writing in the event of any substantial or material damage to the Collateral
(considered as a whole) from any source whatsoever, and, EXCEPT for the
disposition of collections and other proceeds of the Collateral permitted by
SECTION 7 hereof, Grantor will not remove or permit to be removed any part of
the Collateral from its places of business without the prior written consent
of Secured Party, EXCEPT for such items of the Collateral as are removed in
the ordinary course of business or in connection with any transaction or
disposition otherwise permitted by the Loan Documents; and (g) in the event
Grantor changes its name or its address as either are set forth herein or in
the Loan Agreement, Grantor will notify Secured Party of such name and/or
address change promptly, but in any event, within five (5) days.
5. SECURED PARTY'S RIGHTS RE COLLATERAL. At any time (whether or
not an Event of Default has occurred), without notice or demand and at the
expense of Grantor with regard to the portion of the Collateral owned by it,
Secured Party may, to the extent it may be necessary or desirable to protect
the security hereunder, but Secured Party shall not be obligated to: (a) at
all reasonable times on reasonable notice, provided that if no Default or
Event of Default exists, Bank will provide one (1) business day prior written
or verbal notice of its intention to exercise its rights, and, if requested
by Borrower, will provide written confirmation of any such verbal notice,
enter upon any premises on which Collateral is situated and examine the same
or (b) perform any obligation of Grantor under this Agreement or any
obligation of any other Person under the Loan Documents. At any time and
from time to time, at the
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expense of Grantor, Secured Party may, to the extent it may be necessary or
desirable to protect the security hereunder, but Secured Party shall not be
obligated to: (i) after an Event of Default, notify obligor on the Collateral
that the Collateral has been assigned to Secured Party; and (ii) at any time
and from time to time request from obligors on the Collateral, in the name of
Grantor or in the name of Secured Party, information concerning the
Collateral and the amounts owing thereon, PROVIDED, HOWEVER, that any such
action which involves communicating with customers of Grantor shall be
carried out by Secured Party through such Grantor's independent auditors
unless Secured Party shall then have the right directly to notify obligors on
the Collateral as provided in SECTION 9. Grantor shall maintain books and
records pertaining to the Collateral in such detail, form and scope as
Secured Party shall reasonably require consistent with Secured Party's
interests hereunder. Grantor shall at any time at Secured Party's request
mark the Collateral and/or Grantor's ledger cards, books of account and other
records relating to the Collateral with appropriate notations reasonably
satisfactory to Secured Party disclosing that they are subject to Secured
Party's security interests. Secured Party shall be under no duty or
obligation whatsoever to take any action to preserve any rights of or against
any prior or other parties in connection with the Collateral, to exercise any
voting rights or managerial rights with respect to any Collateral, whether or
not an Event of Default shall have occurred, or to make or give any
presentments, demands for performance, notices of non-performance, protests,
notices of protests, notices of dishonor or notices of any other nature
whatsoever in connection with the Collateral or the Secured Obligations.
Secured Party shall be under no duty or obligation whatsoever to take any
action to protect or preserve the Collateral or any rights of Grantor
therein, or to make collections or enforce payment thereon, or to participate
in any foreclosure or other proceeding in connection therewith.
6. COLLECTIONS ON THE COLLATERAL. EXCEPT as otherwise provided
in any Loan Document, Grantor shall have the right to use and to continue to
make collections on and receive dividends and other proceeds of all of the
Collateral in the ordinary course of business so long as no Event of Default
shall have occurred and be continuing. Upon the occurrence and during the
continuance of an Event of Default, at the option of Secured Party, Grantor's
right to make collections on and receive dividends and other proceeds of the
Collateral and to use or dispose of such collections and proceeds shall
terminate, and any and all dividends, proceeds and collections, including all
partial or total prepayments, then held or thereafter received on or on
account of the Collateral will be held or received by Grantor in trust for
Secured Party and immediately delivered in kind to Secured Party. Any
remittance received by Grantor from any Person shall be presumed to relate to
the Collateral and to be subject to Secured Party's security interests. Upon
the occurrence and during the continuance of an Event of Default, Secured
Party shall have the right at all times to receive, receipt for, endorse,
assign, deposit and deliver, in the name of Secured Party or in the name
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of Grantor, any and all checks, notes, drafts and other instruments for the
payment of money constituting proceeds of or otherwise relating to the
Collateral; and Grantor hereby authorizes Secured Party to affix, by
facsimile signature or otherwise, the general or special endorsement of it,
in such manner as Secured Party shall deem advisable, to any such instrument
in the event the same has been delivered to or obtained by Secured Party
without appropriate endorsement, and Secured Party and any collecting bank
are hereby authorized to consider such endorsement to be a sufficient, valid
and effective endorsement by Grantor, to the same extent as though it were
manually executed by the duly authorized officer of Grantor, regardless of by
whom or under what circumstances or by what authority such facsimile
signature or other endorsement actually is affixed, without duty of inquiry
or responsibility as to such matters, and Grantor hereby expressly waives
demand, presentment, protest and notice of protest or dishonor and all other
notices of every kind and nature with respect to any such instrument.
7. POSSESSION OF COLLATERAL BY SECURED PARTY. All the Collateral
now, heretofore or hereafter delivered to Secured Party shall be held by
Secured Party in its possession, custody and control. Any or all of the
Collateral delivered to Secured Party shall be held in an interest-bearing
account, which is in the form of cash or cash equivalent, and Secured Party
shall apply any such interest to payment of the Secured Obligations. Nothing
herein shall obligate Secured Party to obtain any particular return on the
Collateral. Upon the occurrence and during the continuance of an Event of
Default, whenever any of the Collateral is in Secured Party's possession,
custody or control, Secured Party may use, operate and consume the
Collateral, whether for the purpose of preserving and/or protecting the
Collateral, or for the purpose of performing any of Grantor's obligations
with respect thereto, or otherwise. Secured Party may at any time deliver or
redeliver the Collateral or any part thereof to Grantor, and the receipt of
any of the same by Grantor shall be complete and full acquittance for the
Collateral so delivered, and Secured Party thereafter shall be discharged
from any liability or responsibility therefor. So long as Secured Party
exercises reasonable care with respect to any Collateral in its possession,
custody or control, Secured Party shall have no liability for any loss of or
damage to such Collateral, and in no event shall Secured Party have liability
for any diminution in value of Collateral occasioned by economic or market
conditions or events. Secured Party shall be deemed to have exercised
reasonable care within the meaning of the preceding sentence if the
Collateral in the possession, custody or control of Secured Party is accorded
treatment substantially equal to that which Secured Party accords its own
property, it being understood that Secured Party shall not have any
responsibility for (a) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relating to any
Collateral, whether or not Secured Party has or is deemed to have knowledge
of such matters, or (b) taking any necessary steps to preserve rights against
any Person with respect to any Collateral.
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8. EVENTS OF DEFAULT. There shall be an Event of Default
hereunder upon the occurrence and during the continuance of an Event of
Default under the Loan Agreement.
9. RIGHTS UPON EVENT OF DEFAULT. Upon the occurrence and during
the continuance of an Event of Default, Secured Party shall have, in any
jurisdiction where enforcement hereof is sought, in addition to all other
rights and remedies that Secured Party may have under applicable Law or in
equity or under this Agreement (INCLUDING, without limitation, all rights set
forth in SECTION 5 hereof) or under any other Loan Document, all rights and
remedies of a secured party under the Uniform Commercial Code as enacted in
California and, in addition, the following rights and remedies, all of which
may be exercised with or without notice to Grantor and without affecting the
Secured Obligations of Grantor hereunder or under any other Loan Document, or
the enforceability of the Liens created hereby: (a) to foreclose the Liens
created hereunder or under any other agreement relating to any Collateral by
any available judicial procedure or without judicial process; (b) to enter
any premises where any Collateral may be located for the purpose of securing,
protecting, inventorying, appraising, inspecting, repairing, preserving,
storing, preparing, processing, taking possession of or removing the same;
(c) to sell, assign, lease or otherwise dispose of any Collateral or any part
thereof, either at public or private sale or at any broker's board, in lot or
in bulk, for cash, on credit or otherwise, with or without representations or
warranties and upon such terms as shall be acceptable to Secured Party; (d)
to notify obligors on the Collateral that the Collateral has been assigned to
Secured Party and that all payments thereon are to be made directly and
exclusively to Secured Party; (e) to collect by legal proceedings or
otherwise all dividends, distributions, interest, principal or other sums now
or hereafter payable upon or on account of the Collateral; (f) to cause the
Collateral to be registered in the name of Secured Party, as legal owner; (g)
to enter into any extension, reorganization, deposit, merger or consolidation
agreement, or any other agreement relating to or affecting the Collateral,
and in connection therewith Secured Party may deposit or surrender control of
the Collateral and/or accept other Property in exchange for the Collateral;
(h) to settle, compromise or release, on terms acceptable to Secured Party,
in whole or in part, any amounts owing on the Collateral and/or any disputes
with respect thereto; (i) to extend the time of payment, make allowances and
adjustments and issue credits in connection with the Collateral in the name
of Secured Party or in the name of Grantor; (j) to enforce payment and
prosecute any action or proceeding with respect to any or all of the
Collateral and take or bring, in the name of Secured Party or in the name of
Grantor, any and all steps, actions, suits or proceedings deemed by Secured
Party necessary or desirable to effect collection of or to realize upon the
Collateral, INCLUDING any judicial or nonjudicial foreclosure thereof or
thereon, and Grantor specifically consents to any nonjudicial foreclosure of
any or all of the Collateral or any other action taken by Secured Party which
may release any obligor
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from personal liability on any of the Collateral, and Grantor waives any
right not expressly provided for in this Agreement to receive notice of any
public or private judicial or nonjudicial sale or foreclosure of any security
or any of the Collateral; and any money or other Property received by Secured
Party in exchange for or on account of the Collateral, whether representing
collections or proceeds of Collateral, and whether resulting from voluntary
payments or foreclosure proceedings or other legal action taken by Secured
Party or Grantor may be applied by Secured Party without notice to Grantor to
the Secured Obligations in such order and manner as Secured Party in its sole
discretion shall determine; (k) to insure, process and preserve the
Collateral; (l) to exercise all rights, remedies, powers or privileges
provided under any of the Loan Documents; (m) to remove, from any premises
where the same may be located, the Collateral and any and all documents,
instruments, files and records, and any receptacles and cabinets containing
the same, relating to the Collateral, and Secured Party may, at the cost and
expense of Grantor, use such of its supplies, equipment, facilities and space
at its places of business as may be necessary or appropriate to properly
administer, process, store, control, prepare for sale or disposition and/or
sell or dispose of the Collateral or to properly administer and control the
handling of collections and realizations thereon, and Secured Party shall be
deemed to have a rent-free tenancy of any premises of Grantor for such
purposes and for such periods of time as reasonably required by Secured
Party; (n) to receive, open and dispose of all mail addressed to Grantor and
notify postal authorities to change the address for delivery thereof to such
address as Secured Party may designate; PROVIDED that Secured Party agrees
that it will promptly deliver over to Grantor such opened mail as does not
relate to the Collateral; and (o) to exercise all other rights, powers,
privileges and remedies of an owner of the Collateral; all at Secured Party's
sole option and as Secured Party in its sole discretion may deem advisable.
Grantor will, at Secured Party's request, assemble the Collateral and make it
available to Secured Party at places which Secured Party may reasonably
designate, whether at the premises of Grantor or elsewhere, and will make
available to Secured Party, free of cost, all premises, equipment and
facilities of Grantor for the purpose of Secured Party's taking possession of
the Collateral or storing same or removing or putting the Collateral in
salable form or selling or disposing of same.
Upon the occurrence and during the continuance of an Event of
Default, Secured Party also shall have the right, without notice or demand,
either in person, by agent or by a receiver to be appointed by a court (and
Grantor hereby expressly consents upon the occurrence and during the
continuance of an Event of Default to the appointment of such a receiver),
and without regard to the adequacy of any security for the Secured
Obligations, to take possession of the Collateral or any part thereof and to
collect and receive the rents, issues, profits, income and proceeds thereof.
Taking possession of the Collateral shall not cure or waive any Event of
Default or notice
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thereof or invalidate any act done pursuant to such notice. The rights,
remedies and powers of any receiver appointed by a court shall be as ordered
by said court.
Any public or private sale or other disposition of the Collateral
may be held at any office of Secured Party, or at Grantor's place of
business, or at any other place permitted by applicable Law, and without the
necessity of the Collateral's being within the view of prospective
purchasers. Secured Party may direct the order and manner of sale of the
Collateral, or portions thereof, as it in its sole and absolute discretion
may determine, and Grantor expressly waives any right to direct the order and
manner of sale of any Collateral. Secured Party or any Person on Secured
Party's behalf may bid and purchase at any such sale or other disposition.
The net cash proceeds resulting from the collection, liquidation, sale, lease
or other disposition of the Collateral shall be applied, first, to the
expenses (including reasonable attorneys' fees and disbursements) of
retaking, holding, storing, processing and preparing for sale or lease,
selling, leasing, collecting, liquidating and the like, and then to the
satisfaction of the Secured Obligations in such order as shall be determined
by Secured Party in its sole and absolute discretion. Grantor and any other
Person then obligated therefor shall pay to Secured Party on demand any
deficiency with regard thereto which may remain after such sale, disposition,
collection or liquidation of the Collateral.
Unless the Collateral is perishable or threatens to decline
speedily in value or is of a type customarily sold on a recognized market,
Secured Party will send or otherwise make available to Grantor reasonable
notice of the time and place of any public sale thereof or of the time on or
after which any private sale thereof is to be made. The requirement of
sending reasonable notice conclusively shall be met if such notice is mailed,
first class mail, postage prepaid, to Grantor at its address set forth in the
Loan Agreement, or delivered or otherwise sent to Grantor, at least five (5)
days before the date of the sale.
With respect to any Collateral consisting of securities,
partnership interests, joint venture interests, limited liability company
interests, Investments or the like, and whether or not any of such Collateral
has been effectively registered under the Securities Act of 1933, as amended,
or other applicable Laws, Secured Party may, in its sole and absolute
discretion, sell all or any part of such Collateral at private sale in such
manner and under such circumstances as Secured Party may deem necessary or
advisable in order that the sale may be lawfully conducted. Without limiting
the foregoing, Secured Party may (i) approach and negotiate with a limited
number of potential purchasers, and (ii) restrict the prospective bidders or
purchasers to persons who will represent and agree that they are purchasing
such Collateral for their own account for investment and not with a view to
the distribution or resale thereof. In the event that any such Collateral is
sold at private sale, Grantor agrees that if such Collateral is sold for a
price which Secured Party in good faith believes to be
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reasonable under the circumstances then existing, then (a) the sale shall be
not be deemed to be commercially unreasonable by reason of price, (b) Grantor
shall not be entitled to a credit against the Secured Obligations in an
amount in excess of the purchase price, and (c) Secured Party shall not incur
any liability or responsibility to Grantor in connection therewith,
notwithstanding the possibility that a substantially higher price might have
been realized at a public sale. Grantor recognizes that a ready market may
not exist for such Collateral if it is not regularly traded on a recognized
securities exchange, and that a sale by Secured Party of any such Collateral
for an amount substantially less than a pro rata share of the fair market
value of the issuer's assets minus liabilities may be commercially reasonable
in view of the difficulties that may be encountered in attempting to sell a
large amount of such Collateral or Collateral that is privately traded.
Upon consummation of any sale of Collateral hereunder, Secured
Party shall have the right to assign, transfer and deliver to the purchaser
or purchasers thereof the Collateral so sold. Each such purchaser at any
such sale shall hold the Collateral so sold absolutely free from any claim or
right upon the part of Grantor or any other Person, and Grantor hereby waives
(to the extent permitted by applicable Laws) all rights of redemption, stay
and appraisal which it now has or may at any time in the future have under
any rule of Law or statute now existing or hereafter enacted.
10. ATTORNEY-IN-FACT. Grantor hereby irrevocably nominates and
appoints Secured Party as their attorney-in-fact for the following purposes:
(a) to do all acts and things which Secured Party may deem necessary or
advisable to perfect and continue perfected the security interests created by
this Agreement and, upon the occurrence and during the continuance of an
Event of Default, to preserve, process, develop, maintain and protect the
Collateral; (b) upon the occurrence and during the continuance of an Event of
Default, to do any and every act which Grantor is obligated to do under this
Agreement, at the expense of the Grantor and without any obligation to do so;
(c) to prepare, sign, file and/or record, for Grantor, in the name of
Grantor, any financing statement, application for registration, or like
paper, and to take any other action deemed by Secured Party necessary or
desirable in order to perfect or maintain perfected the security interests
granted hereby; and (d) upon the occurrence and during the continuance of an
Event of Default, to execute any and all papers and instruments and do all
other things necessary or desirable to preserve and protect the Collateral
and to protect Secured Party's security interests therein; PROVIDED, HOWEVER,
that Secured Party shall be under no obligation whatsoever to take any of the
foregoing actions, and, absent bad faith or actual malice, Secured Party
shall have no liability or responsibility for any act taken or omission with
respect thereto (other than Secured Party's own gross negligence or wilful
misconduct).
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11. COSTS AND EXPENSES. Grantor agrees to pay to Secured Party
all costs and expenses (INCLUDING, without limitation, reasonable attorneys'
fees and disbursements, including allocated costs of in-house counsel),
incurred by Secured Party in the enforcement or attempted enforcement of this
Agreement, whether or not an action is filed in connection therewith, and in
connection with any waiver or amendment of any term or provision hereof. All
advances, charges, costs and expenses, INCLUDING reasonable attorneys' fees
and disbursements, incurred or paid by Secured Party in exercising any right,
privilege, power or remedy conferred by this Agreement (INCLUDING, without
limitation, the right to perform any Secured Obligation of Grantor under the
Loan Documents), or in the enforcement or attempted enforcement thereof,
shall be secured hereby and shall become a part of the Secured Obligations
and shall be paid to Secured Party by Grantor, immediately upon demand,
together with interest thereon at the Default Rate.
12. STATUTE OF LIMITATIONS AND OTHER LAWS. Until the Secured
Obligations shall have been paid and performed in full, the power of sale and
all other rights, privileges, powers and remedies granted to Secured Party
hereunder shall continue to exist and may be exercised by Secured Party at
any time and from time to time irrespective of the fact that any of the
Secured Obligations may have become barred by any statute of limitations.
Grantor expressly waives the benefit of any and all statutes of limitation,
and any and all Laws providing for exemption of property from execution or
for valuation and appraisal upon foreclosure, to the maximum extent permitted
by applicable Law.
13. OTHER AGREEMENTS. Nothing herein shall in any way modify or
limit the effect of terms or conditions set forth in any other security or
other agreement executed by Grantor or in connection with the Secured
Obligations, but each and every term and condition hereof shall be in
addition thereto. All provisions contained in the Loan Agreement or any
other Loan Document that apply to Loan Documents generally are fully
applicable to this Agreement and are incorporated herein by this reference.
14. CONTINUING EFFECT. This Agreement shall remain in full force and
effect and continue to be effective should any petition be filed by or against
Grantor for liquidation or reorganization, should Grantor become insolvent or
make an assignment for the benefit of creditors or should a receiver or trustee
be appointed for all or any significant part of Grantor's assets.
15. RELEASE OF GRANTOR. This Agreement and all Secured Obligations
of Grantor hereunder shall be released when all Secured Obligations have been
paid in full in cash or otherwise performed in full and when no portion of the
Commitments remain outstanding. Upon such release of Grantor's Secured
Obligations hereunder, Secured Party shall return any pledged Collateral to
Grantor, or to the Person or
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Persons legally entitled thereto, and shall endorse, execute, deliver, record
and file all instruments and documents, and do all other acts and things,
reasonably required for the return of the Collateral to Grantor, or to the
Person or Persons legally entitled thereto, and to evidence or document the
release of Secured Party's interests arising under this Agreement, all as
reasonably requested by, and at the sole expense of, Grantor.
16. GOVERNING LAW. This Agreement shall be construed and enforced
in accordance with and governed by the local laws of the State of California.
17. ATTORNEY'S FEES. In any action to enforce this Agreement, the
prevailing party shall be entitled to receive, in addition to any other
relief awarded by the tribunal, its attorney's fees and costs (including the
allocated fees and costs of internal counsel).
IN WITNESS WHEREOF, Grantor has executed this Agreement by its duly
authorized officer as of the date first written above.
"Grantor"
HAWKER PACIFIC AEROSPACE, a California
corporation
By: /s/ Brian Aune
------------------------------
CFO
------------------------------
[Name and Title]
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ACCEPTED AND AGREED
AS OF THE DATE FIRST
ABOVE WRITTEN:
"Secured Party"
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION,
as Secured Party
By: /s/ [ILLEGIBLE]
---------------------------
Title: Vice President
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