AND
WILL DULY ASSIGN, TRANSFER AND DELIVER TO SOUTHWEST ANY COLLATERAL THAT MAY BE
IN THE POSSESSION OF THE CO-SIGNERS AND HAS NOT BEEN DISPOSED OF, APPLIED OR
RELEASED.
1.7
ACTIONS NOT AFFECTING THE PLEDGE.
THE CO-SIGNERS MAY (AND EACH OF
THE CO-SIGNERS IS AUTHORIZED TO MAKE FROM TIME TO TIME, WITHOUT NOTICE TO
ANYONE) WITHOUT IMPAIRING OR AFFECTING THE PLEDGE GRANTED IN THIS AGREEMENT:
A.
SELL, PLEDGE, SURRENDER, COMPROMISE,
SETTLE, RELEASE, RENEW, EXTEND, GRANT AN INDULGENCE, ALTER, SUBSTITUTE, CHANGE,
MODIFY, OR OTHERWISE DISPOSE OF ANY OF THE SECURED OBLIGATIONS OR ANY CONTRACT
EVIDENCING THE SAME OR ANY PART OF THE SECURED OBLIGATIONS OR ANY SECURITY
INTEREST FOR THE SECURED OBLIGATIONS;
B.
ACCEPT ADDITIONAL SECURITY FOR OR
ADDITIONAL PARTIES OR OTHER CO-SIGNERS UPON ANY OF THE SECURED OBLIGATIONS OR
RELEASE ANY PORTION OF THE COLLATERAL OR ANY MAKER, ENDORSER, SECURITY OR
CO-SIGNER OR OTHER PARTY LIABLE ON ANY PORTION OF THE SECURED OBLIGATIONS;
C.
APPLY ANY AND ALL PAYMENTS A CO-SIGNER
RECEIVES ON ACCOUNT OF THE SECURED OBLIGATIONS AND THE PROCEEDS OF THE
COLLATERAL OR ANY OTHER SECURITY FOR THE COLLATERAL AGAINST ANY ITEM OR ITEMS OF
THE SECURED OBLIGATIONS AS THE CO-SIGNERS, EACH IN ITS SOLE DISCRETION, MAY
DETERMINE, WHETHER THE SAME IS THEN DUE OR NOT; AND
D.
SETTLE OR COMPROMISE ANY LIABILITY
SECURED BY THIS AGREEMENT, ANY SECURITY FOR THAT LIABILITY OR ANY LIABILITY
(INCLUDING ANY OF THOSE UNDER THIS AGREEMENT) INCURRED DIRECTLY OR INDIRECTLY IN
RESPECT OF THE LIABILITY SECURED BY THIS AGREEMENT, AND MAY SUBORDINATE THE
PAYMENT OF ALL OR PART OF THAT LIABILITY TO THE PAYMENT OF ANY LIABILITY OF
SOUTHWEST TO CREDITORS OF SOUTHWEST, OTHER THAN THE CO-SIGNERS.
2.
WARRANTIES AND REPRESENTATIONS OF
SOUTHWEST
2.1
POWER AND AUTHORITY.
SOUTHWEST HAS FULL POWER AND AUTHORITY TO
EXECUTE AND DELIVER THIS AGREEMENT AND TO PERFORM ITS OBLIGATIONS UNDER THIS
AGREEMENT.
2.2
ENFORCEABILITY.
THIS AGREEMENT IS THE LEGAL, VALID AND BINDING
OBLIGATION OF SOUTHWEST, ENFORCEABLE AGAINST SOUTHWEST ACCORDING TO ITS TERMS,
SUBJECT ONLY TO BANKRUPTCY, INSOLVENCY, MORATORIUM, REORGANIZATION OR SIMILAR
LAWS, RULINGS OR DECISIONS AT THE TIME IN EFFECT AFFECTING THE ENFORCEABILITY OF
RIGHTS OF CREDITORS GENERALLY AND TO APPLICABLE EQUITABLE PRINCIPLES.
2.3
TITLE TO THE COLLATERAL.
SOUTHWEST WARRANTS AND REPRESENTS TO THE
CO-SIGNERS THAT IT HOLDS TITLE TO THE COLLATERAL FREE AND CLEAR OF ANY LIENS,
PLEDGES OR ENCUMBRANCES, EXCEPT LIENS OR ENCUMBRANCES IN FAVOR OF THE
CO-SIGNERS, AND NO FINANCING STATEMENT OR REGISTRATION OF PLEDGE COVERING ALL OR
ANY PART OF THE COLLATERAL IS ON FILE IN ANY PUBLIC OFFICE OR PRIVATE OFFICE,
EXCEPT THOSE IN FAVOR OF THE CO-SIGNERS.
3.
EVENTS OF DEFAULT AND REMEDIES
3.1
EVENTS OF DEFAULT.
AN "EVENT OF DEFAULT" WILL OCCUR IF THE BANK
REQUIRES AND ANY CO-SIGNER MAKES ANY PAYMENT ON A NOTE OR THE BANK CALLS ALL OR
ANY PORTION OF ANY GUARANTY GIVEN BY ANY OF THE CO-SIGNERS AND SOUTHWEST IS
UNABLE TO REIMBURSE THE AMOUNT PAID BY THE CO-SIGNER OR CO-SIGNERS WITHIN 30
DAYS.
AFTER OCCURRENCE OF AN EVENT OF DEFAULT AND UPON WRITTEN