Document:

EXHIBIT 10.49

 

SECURITY AGREEMENT

 

THIS SECURITY AGREEMENT (this “Security

Agreement”) is made on the 29th day of May, 2002, by and between Electric City

Corp., a Delaware corporation (“Debtor”), and American Chartered Bank, an

Illinois banking association (“Secured Party”).

 

R E C I T A L S

 

WHEREAS, pursuant to that certain Loan

Agreement dated of even date herewith, by and among Debtor, Switchboard

Apparatus, Inc., a Delaware corporation (“Switchboard”), Great Lakes Controlled

Energy Corporation, a Delaware corporation (collectively with Debtor and

Switchboard, the “Borrowers”), and Secured Party, as amended from time to time

(the “Loan Agreement”), Secured Party has agreed to make available to

Borrowers, among other things, a revolving line of credit (the “Revolving

Credit”) in the maximum principal amount of $2,000,000.00, a term loan (the

“Term Loan”) in the original principal amount of $400,000.00, and a mortgage loan (the “Mortgage Loan”) in the

original principal amount of $735,000.00, each on those terms and conditions

set forth in the Loan Agreement and for the purposes set forth therein (the

Revolving Credit, the Term Loan and the Mortgage Loan are hereinafter

collectively referred to as the “Loans”). 

Capitalized terms not defined herein shall have the meanings ascribed to

such terms in the Loan Agreement.

 

WHEREAS, as evidence of the indebtedness

under the Revolving Credit, Borrowers have executed and delivered to Secured

Party that certain Revolving Note dated of even date herewith, as amended from

time to time (the “Revolving Note”), as evidence of the indebtedness under the

Term Loan, Borrowers have executed and delivered to Secured Party the Term Note

dated of even date herewith, as amended from time to time (the “Term Note”), as

evidence of the indebtedness under the 

Mortgage Loan, Borrowers have executed and delivered to Secured Party

the Mortgage Note dated of even date herewith, as amended from time to time

(the “Mortgage Note”) (the Revolving Note, the Term Note and the Mortgage Note

are hereinafter collectively referred to as the “Notes”).

 

WHEREAS,

subject to the terms of the Loan Agreement and the other Loan Documents, the

Loan Agreement requires that Debtor grant to Secured Party a lien on and

security interest in all of Debtor’s property and all replacements thereof,

additions thereto, and substitutions therefor, as security for the payment of

the Notes and performance of the Borrowers’ obligations under the Loan

Agreement, and all other documents evidencing, securing or otherwise in connection

with the Loans (collectively, “Loan Documents”).

 

NOW,

THEREFORE, Debtor, to secure (i) further the payment of the Liabilities; and

(ii) the performance of the covenants and agreements by Debtor contained herein

or in the Loan Documents, and for other good and valuable consideration, the

receipt and sufficiency of which are hereby acknowledged, hereby grants to

Secured Party a lien on and security interest in, and collaterally assigns,

transfers, conveys, confirms, pledges and sets over unto Secured Party and

 

 

its successors and assigns, all

of Debtor’s tangible and intangible assets and properties, wherever located,

whether now or hereafter existing and whether now or hereafter acquired or

owned, licensed, leased, bailed or consigned by Debtor including, without

limitation, all of Debtor’s (a) accounts, chattel paper, contract rights,

electronic chattel paper, leases, leasehold interests, instruments, documents,

letter of credit rights, all proceeds of letters of credit, health care

insurance receivables, supporting obligations, lottery winnings, notes secured

by real estate, patents, copyrights, trademarks, trade names, deposit accounts,

beneficial interests and general intangibles, including payment intangibles,

(b) certificated securities or uncertificated securities, (c) goods, including,

without limitation, all of Debtor’s consumer goods, equipment, fixtures,

inventory and embedded software contained therein, (d) documents and

instruments, (e) monies, reserves, deposits, and interest or dividends thereon,

cash and cash equivalents, (f) all books, records and computer records in any

way relating to the foregoing, software, computer programs, (g) property now or

at any time or times hereafter in the possession or under the control of

Secured Party or its bailee, (h) liens, guaranties and other rights and

privileges pertaining to any of the foregoing, (i) all accessions to the

foregoing and all substitutions, renewals, improvements and replacements of and

additions to the foregoing, (j) all of the capital stock of Debtor’s

subsidiaries, (k) all commercial tort claims, and (l) all proceeds and products

of any of the foregoing, including, without limitation, proceeds of insurance

policies of the foregoing (all of the property described in this paragraph

being hereinafter referred to as the “Personal Property Collateral”) (Any terms

not defined herein which are defined in the Illinois Uniform Commercial Code,

810 ILCS 5/1-101 et seq., as amended from time to time (the “UCC”), shall have

the meaning assigned to such term in the UCC).

 

It is hereby

understood and agreed by Debtor as follows:

 

1.             Recitals.  The recitals are hereby incorporated and

made a part of this Security Agreement.

 

2.             Representations,

Warranties and Covenants.  The

Debtor hereby represents and warrants to, and covenants with, Secured Party, as

follows:

 

(a)           Except liens in favor

of Secured Party or as otherwise permitted by the Loan Agreement, Debtor is or

will be the owner of all the Personal Property Collateral free from any lien, security

interest or encumbrance and Debtor will defend the Personal Property Collateral

against any and all claims and demands of all persons, other than Secured

Party, at any time claiming the same or any interest therein;

 

(b)           The Debtor has the

authority to enter into this Security Agreement and the person signing on

Debtor’s behalf has been duly authorized to execute this Security Agreement;

 

(c)           Debtor’s state issued

organizational identification number is set forth on Schedule 2(c).  The exact legal name of Debtor is as set

forth on Schedule 2(c).  Except

as provided for Schedule 2(c), Debtor currently does not conduct, nor

has it in the last five years conducted, business under any other name or trade

name;

 

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(d)           No less than 30 days

prior to the effective date thereof, Debtor will notify Secured Party in

writing of any change in Debtor’s name, type of organization, organizational

identification number, or jurisdiction of organization or the use of any

assumed name by Debtor.  Debtor shall,

as a condition to making effective any of the foregoing, execute and deliver to

Secured Party any and all financing statements and other documents requested by

Secured Party in connection with any of the foregoing and as a condition to

making effective any of the foregoing.

 

(e)           Except for any existing

lien in favor of Secured Party, no other financing statement covering any of

the Personal Property Collateral is on file in any public office;

 

(f)            Except as set forth in

Schedule 2(f), no Personal Property Collateral is now, nor shall any

Personal Property Collateral at any time or times hereafter be stored with a

bailee, warehouseman or similar party without Secured Party’s prior written

consent, and in such event, Debtor will concurrently therewith, upon the demand

of Secured Party cause the warehouseman, bailee or similar party within 15

business days of the date thereof, to acknowledge in writing Secured Party’s

security interest and to cause its records to reflect such security interest in

form and substance reasonably satisfactory to Secured Party, and to cause such

bailee, warehouseman or similar party to issue and deliver non-negotiable

warehouse receipts or non-negotiable bills of lading in Debtor’s name in form

and substance reasonably satisfactory to Secured Party.

 

(g)           Debtor will at all

times keep accurate and complete records of the Personal Property Collateral;

and

 

(h)           Debtor will promptly

inform Secured Party of any default in payment or performance by Debtor or

other persons or of claims made by any other person in regard to the Personal

Property Collateral

 

3.             Use and Possession

of Personal Property Collateral. 

Debtor may retain possession of the Personal Property Collateral and, at

its expense, keep and use the same in a manner consistent with applicable law

until Secured Party exercises its rights hereunder.

 

4.             Transfers;

Location of Personal Property Collateral. 

Except as otherwise permitted by the Loan Agreement, Debtor agrees that

it will not sell or attempt to sell or assign, lease, mortgage, encumber or

otherwise transfer the Personal Property Collateral or any interest therein

other than (a) the lien and security interest granted to Secured Party

hereunder, (b) sales in the ordinary course of business, and (c) dispositions

of items which are no longer used or usable in the operation of Debtor’s

business.

 

5.             Maintaining

Personal Property Collateral. 

Debtor will maintain, preserve and keep the Personal Property Collateral

which is used by or useful to Debtor’s business, and every part thereof, in

good repair and condition, reasonable wear and tear excepted, and from time to

time will promptly make needful and proper repairs, replacements, renewals,

additions, and

 

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betterments which may be

required by reason of use, wear, obsolescence, damage or destruction, however

caused, to the ends that the value of the Personal Property Collateral shall be

preserved and that the efficiency of the operation of the Personal Property

Collateral shall not be impaired.

 

6.             Proceeds of Sale,

Loss, Destruction or Condemnation of Personal Property Collateral.  Except for dispositions of Personal Property

Collateral not prohibited under this Security Agreement or the other Loan

Documents, to the extent the Personal Property Collateral is sold, lost,

destroyed or taken by condemnation, Debtor shall immediately pay to Secured

Party, as and when received by Debtor, a sum equal to the net cash proceeds

(including insurance payments) received by Debtor from such sale, loss,

destruction or condemnation for application to any Liabilities, and thereafter

any excess will be transferred to Debtor’s operating account at Secured Party.

Notwithstanding the foregoing, with Secured Party’s prior consent, which

consent shall not be unreasonably withheld, such proceeds shall not be applied

in repayment of any Liabilities so long as (i) such proceeds are used to repair

or replace such sold, lost, destroyed or condemned Personal Property Collateral

with Personal Property Collateral of comparable value and usefulness in the

operation of Debtor’s business within six months following such disposition;

(ii) no Event of Default has occurred and is then continuing; (iii) Debtor has

delivered notice to Secured Party of the occurrence of the sale, loss,

destruction or condemnation, the projected effect on Debtor’s business and

Debtor’s proposed use of the proceeds within 30 days of such disposition; (iv)

such loss, sale, destruction or condemnation has not resulted in a material

adverse effect, as determined in Secured Party’s sole discretion; and (v) the

use of the proceeds would not result in an Event of Default under this Security

Agreement or the other Loan Documents.

 

7.             Inspection of

Personal Property Collateral. 

Debtor will, upon prior notice from Secured Party, permit Secured Party,

its agents and representatives, to inspect the Personal Property Collateral at

any reasonable time from time to time during the term of this Security

Agreement.

 

8.             Defense of

Personal Property Collateral. 

Debtor, at its sole cost and expense, will protect and defend the

Personal Property Collateral or any part thereof against all claims therein or

thereto, or any interest therein, and will keep the Personal Property

Collateral free from any other lien, security interest or encumbrance except as

permitted hereby or by the Loan Agreement, or unless Debtor is contesting such

lien and has delivered a bond or other security to Secured Party which is

satisfactory to Secured Party.  Debtor

will pay all other claims and charges which, in the reasonable opinion of

Secured Party, could prejudice, imperil or otherwise adversely affect the

Personal Property Collateral or its security interest therein.

 

9.             Payment of Taxes.  So long as any part of the indebtedness

hereby secured shall remain unpaid, Debtor will pay all personal property taxes

and other governmental charges levied or assessed against the Personal Property

Collateral or any part thereof, or for its use or operation, or upon this

Security Agreement, before the same become delinquent, and on demand will

promptly furnish Secured Party with receipts showing such payment.  Debtor will not permit the Personal Property

Collateral, or any part thereof, to be levied upon or sold for any tax or

assessment whatsoever, nor will it permit to be done to, in, upon or about the

Personal Property Collateral, anything that may in any way impair the value

thereof, or the security intended to be afforded by this Security Agreement.

 

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10.           After Acquired

Property.  All after acquired

property covered hereby and all additions or replacements to the Personal

Property Collateral acquired by Debtor shall immediately be and become, without

any other act, conveyance or mortgage on the part of Debtor, subject to the

security interest and lien of this Security Agreement, which shall be prior to

any other security interest or lien on such addition or replacement.

 

11.           Special Collateral.  Within five days upon Debtor’s receipt of

that portion of the Personal Property Collateral consisting of Special Personal

Property Collateral (as defined below), the Debtor shall mark the same to show

that such Special Personal Property Collateral is subject to a security

interest in favor of Secured Party and shall deliver the original thereof to

Secured Party, together with appropriate endorsement and/or other specific

evidence of assignment thereof to Secured Party, in form and substance

reasonably acceptable to Secured Party. 

Debtor shall not create any chattel paper or other Special Personal

Property Collateral without placing a legend thereon in form and substance

reasonably satisfactory to Secured Party indicating that Secured Party has a

lien on and security interest in such Special Personal Property

Collateral.  The term “Special Personal

Property Collateral” means any of Debtor’s assets which are evidenced by or

consists of any chattel paper, letters of credit, Instrument, certificate or

document, including, without limitation, promissory notes, documents of title,

securities and warehouse receipts.

 

12.           Deposit Accounts,

Investment Property, Letter of Credit Rights or Electronic Chattel Paper.  In the event Debtor is or becomes the owner

of or acquires any rights in any deposit account, investment property, letter

of credit right or electronic chattel paper, Debtor shall give Secured Party

immediate notice thereof and Debtor shall take or cause to be taken all actions

necessary or desirable to perfect the security interest granted hereunder by

control, in accordance with the provisions of Section 9-104, 9-105, 9-106 or

9-107 of the UCC.  For greater

certainty, and not in limitation of the foregoing, Debtor shall cause any

financial intermediary which is the intermediary, person or entity which

maintains such deposit account, investment property or electronic chattel paper

to execute and deliver to Secured Party a control agreement, in form and

substance acceptable to Secured Party in its sole discretion, granting Secured

Party exclusive control over such deposit account, investment property or

electronic chattel paper and all proceeds thereof. For greater certainty, and

not in limitation of the foregoing, Debtor shall deliver the original of any

letter of credit in which Debtor has any letter of credit rights to Secured

Party and shall cause the issuer of any letter of credit rights to enter into a

control agreement with respect to such letter of credit rights and the proceeds

thereof, granting Secured Party exclusive control over such letter of credit

rights and the proceeds thereof, including the exclusive right to receive

payments under such letter of credit.

 

13.           Liens and

Encumbrances.  Except for liens in

favor of Secured Party or otherwise permitted by the Loan Agreement, Debtor

shall not, without the prior written consent of Secured Party, create, incur or

permit to exist any mortgage, pledge, title retention, lien, encumbrance,

lease, easement, or security interest with respect to the Personal Property Collateral

(“Liens”).

 

14.           Authorization.  Debtor hereby irrevocably authorizes Secured

Party at any time and from time to time to file in any Uniform Commercial Code

jurisdiction any initial financing statements and amendments thereto and to

indicate therein (a) that the Personal Property Collateral (i) consists of all

of the assets of Debtor or words of similar effect, regardless of

 

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whether any particular asset comprised in the

Personal Property Collateral falls within the scope of the Uniform Commercial

Code of any applicable jurisdiction, or (ii) consists of a portion of the

assets of Debtor with such detail as Secured Party may deem appropriate, and

(b) any other information required, in Secured Party’s discretion, by the  Uniform Commercial Code in any relevant

jurisdiction for the sufficiency or filing office acceptance of any financing

statements or amendment, including (i) whether Debtor is an organization, the

type of organization and any organization identification number issued to such

Debtor and, (ii) in the case of a financing statement filed as a fixture filing

or indicating Personal Property Collateral as as-extracted collateral or timber

to be cut, a sufficient description of real property to which the Personal

Property Collateral relates.  Debtor

agrees to furnish any information reasonably requested by Secured Party to

facilitate the objectives of this paragraph. 

To the extent applicable, Debtor also ratifies its authorization for

Secured Party to have filed in any applicable Uniform Commercial Code

jurisdiction any like initial financing statements or amendments thereto if

filed prior to the date hereof.

 

15.           Verification of

Accounts.  Secured Party’s nominee,

together with any of Secured Party’s officers, employees or agents shall have

the right, at any time or times hereafter, in the name of a nominee of Secured

Party, to verify the validity, amount or any other matter relating to any

accounts by mail, telephone, facsimile or otherwise.  All reasonable costs, fees and expenses relating thereto incurred

by Secured Party (or for which Secured Party becomes obligated), including the

reasonable costs of retaining Secured Party’s nominee shall be paid by Debtor

upon the written demand of Secured Party.

 

16.           Notice to Account

Debtors.  Upon an Event of Default,

Secured Party shall have the right, in its sole and absolute discretion,

without notice thereof to Debtor: (a) to notify any or all account debtors

that the accounts and Special Personal Property Collateral have been assigned

to Secured Party and that Secured Party has a security interest therein;

(b) after an Event of Default has occurred and is then continuing, to

direct such account debtors to make all payments due from them to Debtor upon

the accounts and Special Personal Property Collateral directly to Secured

Party; (c) to enforce payment of and collect, by legal proceedings or

otherwise, the accounts and Special Personal Property Collateral in the name of

Secured Party and Debtor; and (d) to take control, in any manner, of any

item of payment or proceeds.

 

17.           Action by Secured

Party.  Secured Party may, but need

not, make any payment or perform any act herein required of Debtor in any form

and manner deemed expedient by it, and may, but need not, purchase, discharge,

compromise or settle any tax lien or other lien, security interest, or other

encumbrance at any time levied or placed on the Personal Property

Collateral.  All monies paid for any of

the purposes herein authorized and expenses paid or incurred in connection

therewith, including reasonable attorneys’ fees, and any other monies advanced

by Secured Party to protect the Personal Property Collateral and the security

interest and lien hereof, shall be additional indebtedness secured hereby and

shall become immediately due and payable without notice and with interest

thereon at the default rate set forth in the Revolving Note.  Inaction of Secured Party shall never be

considered a waiver of any right accruing to it on account of any default on

the part of Debtor.

 

18.           Insurance and

Protection of Personal Property Collateral.  Debtor will insure and keep insured, with insurance companies

reasonably satisfactory to Secured Party, the Personal

 

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Property Collateral which is of a character

usually insured by entities similarly situated and as may otherwise be required

by Secured Party; and will insure such other hazards and risks (including

employers’ and public liability risks) with insurance companies acceptable to

Secured Party to the extent usually insured by entities similarly situated in

conducting similar businesses and as may otherwise be required by Secured

Party.  All such insurance shall be in

such amounts, with such deductibles, under such policies and terms and issued

by such insurers, as are reasonably acceptable to Secured Party.  Debtor will cause Secured Party to be named

as a lender’s loss payee and additional named insured on all such insurance

policies and shall cause all such policies to contain a prohibition against

cancellation, modification or amendment without 30 days prior written notice to

Secured Party and, at the request of Secured Party, collaterally assign such

insurance to Secured Party as additional security for the Liabilities.  Debtor will deliver to Secured Party, upon

the signing of this Security Agreement and, at the request of Secured Party

from time to time hereafter, a certificate evidencing Debtor’s compliance with

its obligations hereunder and, at Secured Party’s request, a certificate

setting forth in summary form the nature and extent of the insurance maintained

pursuant to this Section 18.

 

19.           Illinois Collateral

Protection Act.  Unless Debtor

provides Secured Party with evidence of the insurance coverage required by this

Security Agreement, Secured may purchase insurance at Debtor’s expense to

protect Secured Party’s interest in the Personal Property Collateral.  This insurance may, but need not, protect Debtor’s

interests.  The coverage that Secured

Party purchases may not pay any claim that Debtor makes or any claim that is

made against Debtor in connection with the Personal Property Collateral.  Debtor may later cancel any insurance

purchased by Secured Party, but only after providing Secured Party with

evidence that Debtor has obtained insurance as required by this Security

Agreement.  If Secured Party purchases

insurance for the Personal Property Collateral, Debtor will be responsible for

the costs of that insurance, including interest and any other charges Secured

Party may impose in connection with the placement of the insurance, until the

effective date of the cancellation or expiration of the insurance.  The costs of the insurance may be added to

Debtor’s total outstanding balance or obligation.  The costs of the insurance may be more than the cost of insurance

Debtor may be able to obtain on its own.

 

20.           Event of Default.  The occurrence of any Event of Default

specified in the Loan Agreement which is incorporated by this reference as

fully and with the same effect as if set forth herein shall constitute an

“Event of Default” hereunder.

 

Upon the

occurrence of an Event of Default, any sums secured hereby may, pursuant to the

terms of the Loan Agreement, become immediately due and payable, without

further notice to Debtor, together with interest thereon from the date of the

first of any such Event of Default, at the default rate set forth in the

Revolving Note.  After the indebtedness

secured by this Security Agreement shall have become due and payable, whether

by lapse of time or by acceleration, or otherwise, then and in any such event,

Secured Party shall have the remedies for such default of a “secured party”

under the UCC or otherwise available to it under applicable law including,

without limitation, the right to take immediate and exclusive possession and

control of the Personal Property Collateral or any part thereof.  Secured Party shall be entitled to hold,

maintain and preserve and prepare the Personal Property Collateral for sale, until

disposed of or

 

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may propose to retain the

Personal Property Collateral pursuant to applicable law.  Secured Party may require Debtor to assemble

the Personal Property Collateral and make it available to Secured Party at a

place to be designated by Secured Party which is reasonably convenient to

Debtor and Secured Party.  Unless the

Personal Property Collateral threatens to decline speedily in value or is of a

type customarily sold on a recognized market, Secured Party will give Debtor

reasonable notice of the time and place of any public sale thereof or of the

time after which any private sale or any other intended disposition thereof is

to be made.  The requirements of

reasonable notice shall be met if such notice is given to Debtor at least 10

days before the time of the sale or disposition.

 

21.           Fees and Expenses.  In case of any suit or foreclosure at law or

in equity by any person whomsoever relating to or affecting the Personal

Property Collateral, or any part thereof, or the title thereto, wherein Secured

Party shall be a party, the reasonable and necessary costs, charges and

attorneys’ and paralegals’ fees and expenses of Secured Party therein shall be

allowed to Secured Party, and shall be additional indebtedness secured hereby

and shall be paid out of the proceeds of sale of the Personal Property

Collateral if not otherwise paid by Debtor.

 

22.           Successors and

Assigns.  The terms used to

designate any of the parties herein shall be deemed to include their respective

successors and assigns, and the term “Secured Party” shall also include any

lawful owner, holder or pledgee of the Revolving Note or the indebtedness

secured hereby.  All representations,

warranties, covenants, powers and rights herein contained shall be binding

upon, and shall inure to the benefit of, Debtor and Secured Party and their

respective legal representatives, successors and assigns.

 

23.           Waiver.  No waiver of any default shall operate as a

waiver of any other default or of the same default on a future occasion.  All rights and remedies of Secured Party

hereunder shall be cumulative and shall be in addition to any other right and

remedy given hereunder or now or hereafter existing at law or in equity or by

statute.

 

24.           Further Assurances.  Debtor will join with Secured Party in

executing such documents, instruments, financing statements, continuation

statements, partial releases and termination statements as Secured Party may

deem necessary or appropriate to perfect Secured Party in the Personal Property

Collateral, pursuant to the Uniform Commercial Code as from time to time in

effect in the State of Illinois.  A

photographic, carbon or other reproduction of this Security Agreement shall be

sufficient as a financing statement.  At

the request of Secured Party, Debtor will also pay for filings and searches in

connection with third party subordinations and may, from time to time, execute

additional or supplemental agreements to confirm Secured Party’s security

interest upon items or types of Personal Property Collateral in connection with

said business now existing or hereafter acquired, or the validity or priority

thereof.

 

25.           Severability.  Any provision of this Security Agreement

which is prohibited or unenforceable in any jurisdiction shall as to such

jurisdiction be ineffective to the extent of such prohibition or

unenforceability without invalidating the remaining provisions hereof or

affecting the validity or enforceability of such provision in any other

jurisdiction.

 

26.           Governing Law.  This Security Agreement shall be governed by

and construed in accordance with the laws of the State of Illinois.

 

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27.           Counterparts.  This Security Agreement may be executed in

any number of counterparts and by facsimile, and all such counterparts taken

together shall be deemed to constitute one instrument.

 

28.           Beneficiaries.  It is expressly intended, understood and

agreed that this Security Agreement and the Notes are made and entered into for

the sole protection and benefits of Debtor and Secured Party, and their

respective successors and assigns and no other person or persons shall have any

right at any time to action hereon or rights to the proceeds of the Loans; that

such proceeds do not constitute a trust fund for the benefit of any third

party; that no third party shall under any circumstances be entitled to any

equitable lien on any such undisbursed loan proceeds at any time and that

Secured Party shall have a lien upon and right to direct application of any

such undisbursed loan proceeds as provided herein and in the Notes.

 

29.           Termination.  This Security Agreement is made for

collateral purposes only and the duties and obligations of Debtor under this

Security Agreement shall terminate when the Liabilities are repaid in full and

satisfied.

 

30.           Waiver of Jury Trial.  DEBTOR

WAIVES ANY RIGHT TO TRIAL BY JURY ON ANY ACTION OR PROCEEDING TO ENFORCE OR

DEFEND ANY RIGHTS (I) UNDER THIS SECURITY AGREEMENT OR THE LOAN AGREEMENT OR

ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT WHICH MAY BE DELIVERED IN THE

FUTURE IN CONNECTION WITH THE REVOLVING CREDIT OR (II) ARISING FROM THE

TRANSACTIONS CONTEMPLATED BY THE LOAN AGREEMENT OR THIS SECURITY AGREEMENT, AND

AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT

BEFORE A JURY.

 

31.           Jurisdiction and

Venue.  DEBTOR IRREVOCABLY AGREES THAT ALL ACTIONS OR PROCEEDINGS IN ANY WAY,

MANNER OR RESPECT, ARISING OUT OF OR FROM OR RELATED TO THE LOAN AGREEMENT,

THIS SECURITY AGREEMENT OR THE LOANS SHALL BE LITIGATED ONLY IN COURTS HAVING 

 

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SITUS WITHIN

THE CITY OF CHICAGO, STATE OF ILLINOIS. 

DEBTOR HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY LOCAL,

STATE OR FEDERAL COURT LOCATED WITHIN SAID CITY AND STATE.  DEBTOR HEREBY WAIVES ANY RIGHT IT MAY HAVE

TO TRANSFER OR CHANGE VENUE OF ANY SUCH ACTION OR PROCEEDING.

 

32.           Notices.  Any notice, demand, request or other

communication which any party hereto may be required or may desire to give

hereunder shall be deemed to have been given if made in accordance with the

terms of the Loan Agreement.

 

IN WITNESS

WHEREOF, Debtor has executed this Security Agreement as of the date first set

forth above.

 

 

	

   

  	

  DEBTOR:

  
	

   

  	

   

  
	

   

  	

  ELECTRIC CITY CORP.

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

    /s/ Jeffrey Mistarz

  	

   

  
	

   

  	

  Its:

  	

    Chief Financial Officer & Treasurer

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  SECURED PARTY:

  
	

   

  	

   

  	

   

  
	

   

  	

  AMERICAN CHARTERED BANK

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

    /s/ William Provan

  	

   

  
	

   

  	

  Its:

  	

    Senior Vice President

  	

   

  

 

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SCHEDULE 2(c)

 

	

  Debtor’s

  Organizational ID Number: 

  	

  28-95-438

  
	

   

  	

   

  
	

  Exact Legal

  Name of Debtor:

  	

  Electric

  City Corp.

  

 

 

SCHEDULE 2(f)

 

Personal Property Collateral Stored With

Bailee, Warehouseman or Similar Party

 

 

NONEEXHIBIT 10.50

 

SECURITY AGREEMENT

 

THIS SECURITY

AGREEMENT (this “Security Agreement”) is made on the 29th day of May, 2002, by

and between Switchboard Apparatus, Inc., a Delaware corporation (“Debtor”), and

American Chartered Bank, an Illinois banking association (“Secured Party”).

 

R E C I T A L S

 

WHEREAS,

pursuant to that certain Loan Agreement dated of even date herewith, by and

among Debtor, Electric City Corp., a Delaware corporation (“Switchboard”),

Great Lakes Controlled Energy Corporation, a Delaware corporation (collectively

with Debtor and Switchboard, the “Borrowers”), and Secured Party, as amended

from time to time (the “Loan Agreement”), Secured Party has agreed to make

available to Borrowers, among other things, a revolving line of credit (the

“Revolving Credit”) in the maximum principal amount of $2,000,000.00, a term

loan (the “Term Loan”) in the original principal amount of $400,000.00, and a mortgage loan (the

“Mortgage Loan”) in the original principal amount of $735,000.00, each on those

terms and conditions set forth in the Loan Agreement and for the purposes set

forth therein (the Revolving Credit, the Term Loan and the Mortgage Loan are

hereinafter collectively referred to as the “Loans”).  Capitalized terms not defined herein shall have the meanings

ascribed to such terms in the Loan Agreement.

 

WHEREAS, as

evidence of the indebtedness under the Revolving Credit, Borrowers have

executed and delivered to Secured Party that certain Revolving Note dated of

even date herewith, as amended from time to time (the “Revolving Note”), as

evidence of the indebtedness under the Term Loan, Borrowers have executed and

delivered to Secured Party the Term Note dated of even date herewith, as

amended from time to time (the “Term Note”), as evidence of the indebtedness

under the Mortgage Loan, Borrowers have executed and delivered to Secured Party

the Mortgage Note dated of even date herewith, as amended from time to time

(the “Mortgage Note”) (the Revolving Note, the Term Note and the Mortgage Note

are hereinafter collectively referred to as the “Notes”).

 

WHEREAS,

subject to the terms of the Loan Agreement and the other Loan Documents, the

Loan Agreement requires that Debtor grant to Secured Party a lien on and

security interest in all of Debtor’s property and all replacements thereof,

additions thereto, and substitutions therefor, as security for the payment of

the Notes and performance of the Borrowers’ obligations under the Loan

Agreement, and all other documents evidencing, securing or otherwise in connection

with the Loans (collectively, “Loan Documents”).

 

NOW,

THEREFORE, Debtor, to secure (i) further the payment of the Liabilities; and

(ii) the performance of the covenants and agreements by Debtor contained herein

or in the Loan Documents, and for other good and valuable consideration, the

receipt and sufficiency of which are hereby acknowledged, hereby grants to

Secured Party a lien on and security interest in, and collaterally assigns,

transfers, conveys, confirms, pledges and sets over unto Secured Party and

 

 

its successors and assigns, all

of Debtor’s tangible and intangible assets and properties, wherever located,

whether now or hereafter existing and whether now or hereafter acquired or

owned, licensed, leased, bailed or consigned by Debtor including, without

limitation, all of Debtor’s (a) accounts, chattel paper, contract rights,

electronic chattel paper, leases, leasehold interests, instruments, documents,

letter of credit rights, all proceeds of letters of credit, health care

insurance receivables, supporting obligations, lottery winnings, notes secured

by real estate, patents, copyrights, trademarks, trade names, deposit accounts,

beneficial interests and general intangibles, including payment intangibles,

(b) certificated securities or uncertificated securities, (c) goods, including,

without limitation, all of Debtor’s consumer goods, equipment, fixtures,

inventory and embedded software contained therein, (d) documents and

instruments, (e) monies, reserves, deposits, and interest or dividends thereon,

cash and cash equivalents, (f) all books, records and computer records in any

way relating to the foregoing, software, computer programs, (g) property now or

at any time or times hereafter in the possession or under the control of

Secured Party or its bailee, (h) liens, guaranties and other rights and

privileges pertaining to any of the foregoing, (i) all accessions to the

foregoing and all substitutions, renewals, improvements and replacements of and

additions to the foregoing, (j) all of the capital stock of Debtor, (k) all

commercial tort claims, and (l) all proceeds and products of any of the

foregoing, including, without limitation, proceeds of insurance policies of the

foregoing (all of the property described in this paragraph being hereinafter

referred to as the “Personal Property Collateral”) (Any terms not defined

herein which are defined in the Illinois Uniform Commercial Code, 810 ILCS

5/1-101 et seq., as amended from time to time (the “UCC”), shall have the

meaning assigned to such term in the UCC).

 

It is hereby

understood and agreed by Debtor as follows:

 

1.             Recitals.  The recitals are hereby incorporated and

made a part of this Security Agreement.

 

2.             Representations,

Warranties and Covenants.  The

Debtor hereby represents and warrants to, and covenants with, Secured Party, as

follows:

 

(a)           Except for liens in

favor of Secured Party or as otherwise permitted by the Loan Agreement, Debtor

is or will be the owner of all the Personal Property Collateral free from any

lien, security interest or encumbrance and Debtor will defend the Personal

Property Collateral against any and all claims and demands of all persons,

other than Secured Party, at any time claiming the same or any interest

therein;

 

(b)           The Debtor has the

authority to enter into this Security Agreement and the person signing on

Debtor’s behalf has been duly authorized to execute this Security Agreement;

 

(c)           Debtor’s state issued

organizational identification number is set forth on Schedule 2(c).  The exact legal name of Debtor is as set

forth on Schedule 2(c).  Except

as provided for Schedule 2(c), Debtor currently does not conduct, nor

has it in the last five years conducted, business under any other name or trade

name;

 

2

 

(d)           No less than 30 days

prior to the effective date thereof, Debtor will notify Secured Party in

writing of any change in Debtor’s name, type of organization, organizational

identification number, or jurisdiction of organization or the use of any

assumed name by Debtor.  Debtor shall,

as a condition to making effective any of the foregoing, execute and deliver to

Secured Party any and all financing statements and other documents requested by

Secured Party in connection with any of the foregoing and as a condition to

making effective any of the foregoing.

 

(e)           Except for any existing

lien in favor of Secured Party, no other financing statement covering any of

the Personal Property Collateral is on file in any public office;

 

(f)            Except as set forth in

Schedule 2(f), no Personal Property Collateral is now, nor shall any

Personal Property Collateral at any time or times hereafter be stored with a

bailee, warehouseman or similar party without Secured Party’s prior written

consent, and in such event, Debtor will concurrently therewith, upon the demand

of Secured Party cause the warehouseman, bailee or similar party within 15

business days of the date thereof, to acknowledge in writing Secured Party’s

security interest and to cause its records to reflect such security interest in

form and substance reasonably satisfactory to Secured Party, and to cause such

bailee, warehouseman or similar party to issue and deliver non-negotiable

warehouse receipts or non-negotiable bills of lading in Debtor’s name in form

and substance reasonably satisfactory to Secured Party.

 

(g)           Debtor will at all

times keep accurate and complete records of the Personal Property Collateral;

and

 

(h)           Debtor will promptly

inform Secured Party of any default in payment or performance by Debtor or other

persons or of claims made by any other person in regard to the Personal

Property Collateral

 

3.             Use and Possession

of Personal Property Collateral. 

Debtor may retain possession of the Personal Property Collateral and, at

its expense, keep and use the same in a manner consistent with applicable law

until Secured Party exercises its rights hereunder.

 

4.             Transfers;

Location of Personal Property Collateral. 

Except as otherwise permitted by the Loan Agreement, Debtor agrees that

it will not sell or attempt to sell or assign, lease, mortgage, encumber or

otherwise transfer the Personal Property Collateral or any interest therein

other than (a) the lien and security interest granted to Secured Party

hereunder, (b) sales in the ordinary course of business, and (c) dispositions

of items which are no longer used or usable in the operation of Debtor’s

business.

 

5.             Maintaining

Personal Property Collateral. 

Debtor will maintain, preserve and keep the Personal Property Collateral

which is used by or useful to Debtor in its business, and every part thereof,

in good repair and condition, reasonable wear and tear excepted, and from time

to time will promptly make needful and proper repairs, replacements, renewals,

additions, 

 

3

 

and betterments which may be

required by reason of use, wear, obsolescence, damage or destruction, however

caused, to the ends that the value of the Personal Property Collateral shall be

preserved and that the efficiency of the operation of the Personal Property

Collateral shall not be impaired.

 

6.             Proceeds of Sale,

Loss, Destruction or Condemnation of Personal Property Collateral.  Except for dispositions of Personal Property

Collateral not prohibited under this Security Agreement or the other Loan

Documents, to the extent the Personal Property Collateral is sold, lost,

destroyed or taken by condemnation, Debtor shall immediately pay to Secured

Party, as and when received by Debtor, a sum equal to the net cash proceeds

(including insurance payments) received by Debtor from such sale, loss,

destruction or condemnation for application to any Liabilities, and thereafter

any excess will be transferred to Debtor’s operating account at Secured Party.

Notwithstanding the foregoing, with Secured Party’s prior consent, which

consent shall not be unreasonably withheld, such proceeds shall not be applied

in repayment of any Liabilities so long as (i) such proceeds are used to repair

or replace such sold, lost, destroyed or condemned Personal Property Collateral

with Personal Property Collateral of comparable value and usefulness in the

operation of Debtor’s business within six months following such disposition;

(ii) no Event of Default has occurred and is then continuing; (iii) Debtor has

delivered notice to Secured Party of the occurrence of the sale, loss,

destruction or condemnation, the projected effect on Debtor’s business and

Debtor’s proposed use of the proceeds within 30 days of such disposition; (iv)

such loss, sale, destruction or condemnation has not resulted in a material

adverse effect, as determined in Secured Party’s sole discretion; and (v) the

use of the proceeds would not result in an Event of Default under this Security

Agreement or the other Loan Documents.

 

7.             Inspection of

Personal Property Collateral. 

Debtor will, upon prior notice from Secured Party, permit Secured Party,

its agents and representatives, to inspect the Personal Property Collateral at

any reasonable time from time to time during the term of this Security

Agreement.

 

8.             Defense of

Personal Property Collateral. 

Debtor, at its sole cost and expense, will protect and defend the

Personal Property Collateral or any part thereof against all claims therein or

thereto, or any interest therein, and will keep the Personal Property Collateral

free from any other lien, security interest or encumbrance except as permitted

hereby or by the Loan Agreement, or unless Debtor is contesting such lien and

has delivered a bond or other security to Secured Party which is satisfactory

to Secured Party.  Debtor will pay all

other claims and charges which, in the reasonable opinion of Secured Party,

could prejudice, imperil or otherwise adversely affect the Personal Property

Collateral or its security interest therein.

 

9.             Payment of Taxes.  So long as any part of the indebtedness

hereby secured shall remain unpaid, Debtor will pay all personal property taxes

and other governmental charges levied or assessed against the Personal Property

Collateral or any part thereof, or for its use or operation, or upon this

Security Agreement, before the same become delinquent, and on demand will

promptly furnish Secured Party with receipts showing such payment.  Debtor will not permit the Personal Property

Collateral, or any part thereof, to be levied upon or sold for any tax or

assessment whatsoever, nor will it permit to be done to, in, upon or about the

Personal Property 

 

4

 

Collateral, anything that may

in any way impair the value thereof, or the security intended to be afforded by

this Security Agreement.

 

10.           After Acquired

Property.  All after acquired

property covered hereby and all additions or replacements to the Personal

Property Collateral acquired by Debtor shall immediately be and become, without

any other act, conveyance or mortgage on the part of Debtor, subject to the

security interest and lien of this Security Agreement, which shall be prior to

any other security interest or lien on such addition or replacement.

 

11.           Special Collateral.  Within five days upon Debtor’s receipt of

that portion of the Personal Property Collateral consisting of Special Personal

Property Collateral (as defined below), the Debtor shall mark the same to show

that such Special Personal Property Collateral is subject to a security

interest in favor of Secured Party and shall deliver the original thereof to

Secured Party, together with appropriate endorsement and/or other specific

evidence of assignment thereof to Secured Party, in form and substance

reasonably acceptable to Secured Party. 

Debtor shall not create any chattel paper or other Special Personal

Property Collateral without placing a legend thereon in form and substance

reasonably satisfactory to Secured Party indicating that Secured Party has a

lien on and security interest in such Special Personal Property

Collateral.  The term “Special Personal

Property Collateral” means any of Debtor’s assets which are evidenced by or

consists of any chattel paper, letters of credit, Instrument, certificate or

document, including, without limitation, promissory notes, documents of title,

securities and warehouse receipts.

 

12.           Deposit Accounts,

Investment Property, Letter of Credit Rights or Electronic Chattel Paper.  In the event Debtor is or becomes the owner

of or acquires any rights in any deposit account, investment property, letter

of credit right or electronic chattel paper, Debtor shall give Secured Party

immediate notice thereof and Debtor shall take or cause to be taken all actions

necessary or desirable to perfect the security interest granted hereunder by

control, in accordance with the provisions of Section 9-104, 9-105, 9-106 or

9-107 of the UCC.  For greater

certainty, and not in limitation of the foregoing, Debtor shall cause any

financial intermediary which is the intermediary, person or entity which

maintains such deposit account, investment property or electronic chattel paper

to execute and deliver to Secured Party a control agreement, in form and

substance acceptable to Secured Party in its sole discretion, granting Secured

Party exclusive control over such deposit account, investment property or

electronic chattel paper and all proceeds thereof. For greater certainty, and

not in limitation of the foregoing, Debtor shall deliver the original of any

letter of credit in which Debtor has any letter of credit rights to Secured

Party and shall cause the issuer of any letter of credit rights to enter into a

control agreement with respect to such letter of credit rights and the proceeds

thereof, granting Secured Party exclusive control over such letter of credit

rights and the proceeds thereof, including the exclusive right to receive

payments under such letter of credit.

 

13.           Liens and

Encumbrances.  Except for liens in

favor of Secured Party or otherwise permitted by the Loan Agreement, Debtor

shall not, without the prior written consent of Secured Party, create, incur or

permit to exist any mortgage, pledge, title retention, lien, encumbrance,

lease, easement, or security interest with respect to the Personal Property Collateral

(“Liens”).

 

5

 

14.           Authorization.  Debtor hereby irrevocably authorizes Secured

Party at any time and from time to time to file in any Uniform Commercial Code

jurisdiction any initial financing statements and amendments thereto and to

indicate therein (a) that the Personal Property Collateral (i) consists of all

of the assets of Debtor or words of similar effect, regardless of whether any

particular asset comprised in the Personal Property Collateral falls within the

scope of the Uniform Commercial Code of any applicable jurisdiction, or (ii)

consists of a portion of the assets of Debtor with such detail as Secured Party

may deem appropriate, and (b) any other information required, in Secured

Party’s discretion, by the  Uniform

Commercial Code in any relevant jurisdiction for the sufficiency or filing

office acceptance of any financing statements or amendment, including (i)

whether Debtor is an organization, the type of organization and any

organization identification number issued to such Debtor and, (ii) in the case

of a financing statement filed as a fixture filing or indicating Personal

Property Collateral as as-extracted collateral or timber to be cut, a

sufficient description of real property to which the Personal Property

Collateral relates.  Debtor agrees to

furnish any information reasonably requested by Secured Party to facilitate the

objectives of this paragraph.  To the

extent applicable, Debtor also ratifies its authorization for Secured Party to

have filed in any applicable Uniform Commercial Code jurisdiction any like

initial financing statements or amendments thereto if filed prior to the date

hereof.

 

15.           Verification of

Accounts.  Secured Party’s nominee,

together with any of Secured Party’s officers, employees or agents shall have

the right, at any time or times hereafter, in the name of a nominee of Secured

Party, to verify the validity, amount or any other matter relating to any

accounts by mail, telephone, facsimile or otherwise.  All reasonable costs, fees and expenses relating thereto incurred

by Secured Party (or for which Secured Party becomes obligated), including the

reasonable costs of retaining Secured Party’s nominee shall be paid by Debtor

upon the written demand of Secured Party.

 

16.           Notice to Account

Debtors.  Upon an Event of Default,

Secured Party shall have the right, in its sole and absolute discretion,

without notice thereof to Debtor: (a) to notify any or all account debtors

that the accounts and Special Personal Property Collateral have been assigned

to Secured Party and that Secured Party has a security interest therein;

(b) after an Event of Default has occurred and is then continuing, to

direct such account debtors to make all payments due from them to Debtor upon

the accounts and Special Personal Property Collateral directly to Secured

Party; (c) to enforce payment of and collect, by legal proceedings or

otherwise, the accounts and Special Personal Property Collateral in the name of

Secured Party and Debtor; and (d) to take control, in any manner, of any

item of payment or proceeds.

 

17.           Action by Secured

Party.  Secured Party may, but need

not, make any payment or perform any act herein required of Debtor in any form

and manner deemed expedient by it, and may, but need not, purchase, discharge,

compromise or settle any tax lien or other lien, security interest, or other

encumbrance at any time levied or placed on the Personal Property

Collateral.  All monies paid for any of

the purposes herein authorized and expenses paid or incurred in connection

therewith, including reasonable attorneys’ fees, and any other monies advanced

by Secured Party to protect the Personal Property Collateral and the security

interest and lien hereof, shall be additional indebtedness secured hereby and

shall become immediately due and payable without notice and with interest

thereon at the default rate set forth in the Revolving Note.

 

6

 

Inaction of Secured Party shall

never be considered a waiver of any right accruing to it on account of any

default on the part of Debtor.

 

18.           Insurance and

Protection of Personal Property Collateral.  Debtor will insure and keep insured, with insurance companies

reasonably satisfactory to Secured Party, the Personal Property Collateral

which is of a character usually insured by entities similarly situated and as

may otherwise be required by Secured Party; and will insure such other hazards

and risks (including employers’ and public liability risks) with insurance companies

acceptable to Secured Party to the extent usually insured by entities similarly

situated in conducting similar businesses and as may otherwise be required by

Secured Party.  All such insurance shall

be in such amounts, with such deductibles, under such policies and terms and

issued by such insurers, as are reasonably acceptable to Secured Party.  Debtor will cause Secured Party to be named

as a lender’s loss payee and additional named insured on all such insurance

policies and shall cause all such policies to contain a prohibition against

cancellation, modification or amendment without 30 days prior written notice to

Secured Party and, at the request of Secured Party, collaterally assign such

insurance to Secured Party as additional security for the Liabilities.  Debtor will deliver to Secured Party, upon

the signing of this Security Agreement and, at the request of Secured Party

from time to time hereafter, a certificate evidencing Debtor’s compliance with

its obligations hereunder and, at Secured Party’s request, a certificate

setting forth in summary form the nature and extent of the insurance maintained

pursuant to this Section 18.

 

19.           Illinois Collateral

Protection Act.  Unless Debtor

provides Secured Party with evidence of the insurance coverage required by this

Security Agreement, Secured may purchase insurance at Debtor’s expense to

protect Secured Party’s interest in the Personal Property Collateral.  This insurance may, but need not, protect

Debtor’s interests.  The coverage that

Secured Party purchases may not pay any claim that Debtor makes or any claim

that is made against Debtor in connection with the Personal Property

Collateral.  Debtor may later cancel any

insurance purchased by Secured Party, but only after providing Secured Party with

evidence that Debtor has obtained insurance as required by this Security

Agreement.  If Secured Party purchases

insurance for the Personal Property Collateral, Debtor will be responsible for

the costs of that insurance, including interest and any other charges Secured

Party may impose in connection with the placement of the insurance, until the

effective date of the cancellation or expiration of the insurance.  The costs of the insurance may be added to

Debtor’s total outstanding balance or obligation.  The costs of the insurance may be more than the cost of insurance

Debtor may be able to obtain on its own.

 

20.           Event of Default.  The occurrence of any Event of Default

specified in the Loan Agreement which is incorporated by this reference as

fully and with the same effect as if set forth herein shall constitute an

“Event of Default” hereunder.

 

Upon the

occurrence of an Event of Default, any sums secured hereby may, pursuant to the

terms of the Loan Agreement, become immediately due and payable, without further

notice to Debtor, together with interest thereon from the date of the first of

any such Event of Default, at the default rate set forth in the Revolving

Note.  After the indebtedness secured by

this Security Agreement shall have become due and payable, whether by lapse of

time or by 

 

7

 

acceleration, or otherwise,

then and in any such event, Secured Party shall have the remedies for such

default of a “secured party” under the UCC or otherwise available to it under

applicable law including, without limitation, the right to take immediate and

exclusive possession and control of the Personal Property Collateral or any

part thereof.  Secured Party shall be

entitled to hold, maintain and preserve and prepare the Personal Property

Collateral for sale, until disposed of or may propose to retain the Personal

Property Collateral pursuant to applicable law.  Secured Party may require Debtor to assemble the Personal Property

Collateral and make it available to Secured Party at a place to be designated

by Secured Party which is reasonably convenient to Debtor and Secured

Party.  Unless the Personal Property

Collateral threatens to decline speedily in value or is of a type customarily

sold on a recognized market, Secured Party will give Debtor reasonable notice

of the time and place of any public sale thereof or of the time after which any

private sale or any other intended disposition thereof is to be made.  The requirements of reasonable notice shall

be met if such notice is given to Debtor at least 10 days before the time of

the sale or disposition.

 

21.           Fees and Expenses.  In case of any suit or foreclosure at law or

in equity by any person whomsoever relating to or affecting the Personal

Property Collateral, or any part thereof, or the title thereto, wherein Secured

Party shall be a party, the reasonable and necessary costs, charges and

attorneys’ and paralegals’ fees and expenses of Secured Party therein shall be

allowed to Secured Party, and shall be additional indebtedness secured hereby

and shall be paid out of the proceeds of sale of the Personal Property

Collateral if not otherwise paid by Debtor.

 

22.           Successors and

Assigns.  The terms used to

designate any of the parties herein shall be deemed to include their respective

successors and assigns, and the term “Secured Party” shall also include any

lawful owner, holder or pledgee of the Revolving Note or the indebtedness

secured hereby.  All representations,

warranties, covenants, powers and rights herein contained shall be binding

upon, and shall inure to the benefit of, Debtor and Secured Party and their

respective legal representatives, successors and assigns.

 

23.           Waiver.  No waiver of any default shall operate as a

waiver of any other default or of the same default on a future occasion.  All rights and remedies of Secured Party

hereunder shall be cumulative and shall be in addition to any other right and

remedy given hereunder or now or hereafter existing at law or in equity or by

statute.

 

24.           Further Assurances.  Debtor will join with Secured Party in

executing such documents, instruments, financing statements, continuation

statements, partial releases and termination statements as Secured Party may

deem necessary or appropriate to perfect Secured Party in the Personal Property

Collateral, pursuant to the Uniform Commercial Code as from time to time in

effect in the State of Illinois.  A

photographic, carbon or other reproduction of this Security Agreement shall be

sufficient as a financing statement.  At

the request of Secured Party, Debtor will also pay for filings and searches in

connection with third party subordinations and may, from time to time, execute

additional or supplemental agreements to confirm Secured Party’s security

interest upon items or types of Personal Property Collateral in connection with

said business now existing or hereafter acquired, or the validity or priority

thereof.

 

25.           Severability.  Any provision of this Security Agreement

which is prohibited or unenforceable in any jurisdiction shall as to such

jurisdiction be ineffective to the extent of such

 

8

 

prohibition or unenforceability

without invalidating the remaining provisions hereof or affecting the validity

or enforceability of such provision in any other jurisdiction.

 

26.           Governing Law.  This Security Agreement shall be governed by

and construed in accordance with the laws of the State of Illinois.

 

27.           Counterparts.  This Security Agreement may be executed in

any number of counterparts and by facsimile, and all such counterparts taken

together shall be deemed to constitute one instrument.

 

28.           Beneficiaries.  It is expressly intended, understood and

agreed that this Security Agreement and the Notes are made and entered into for

the sole protection and benefits of Debtor and Secured Party, and their

respective successors and assigns and no other person or persons shall have any

right at any time to action hereon or rights to the proceeds of the Loans; that

such proceeds do not constitute a trust fund for the benefit of any third

party; that no third party shall under any circumstances be entitled to any

equitable lien on any such undisbursed loan proceeds at any time and that

Secured Party shall have a lien upon and right to direct application of any

such undisbursed loan proceeds as provided herein and in the Notes.

 

29.           Termination.  This Security Agreement is made for

collateral purposes only and the duties and obligations of Debtor under this

Security Agreement shall terminate when the Liabilities are repaid in full and

satisfied.

 

30.           Waiver of Jury Trial.  DEBTOR

WAIVES ANY RIGHT TO TRIAL BY JURY ON ANY ACTION OR PROCEEDING TO ENFORCE OR

DEFEND ANY RIGHTS (I) UNDER THIS SECURITY AGREEMENT OR THE LOAN AGREEMENT OR

ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT WHICH MAY BE DELIVERED IN THE

FUTURE IN CONNECTION WITH THE REVOLVING CREDIT OR (II) ARISING FROM THE

TRANSACTIONS CONTEMPLATED BY THE LOAN AGREEMENT OR THIS SECURITY AGREEMENT, AND

AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT

BEFORE A JURY.

 

31.           Jurisdiction and

Venue.  DEBTOR IRREVOCABLY AGREES THAT ALL ACTIONS OR PROCEEDINGS IN ANY WAY,

MANNER OR RESPECT, ARISING OUT OF OR FROM OR RELATED TO THE LOAN AGREEMENT,

THIS SECURITY AGREEMENT OR THE LOANS SHALL BE LITIGATED ONLY IN COURTS HAVING 

 

9

 

SITUS WITHIN

THE CITY OF CHICAGO, STATE OF ILLINOIS. 

DEBTOR HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY LOCAL,

STATE OR FEDERAL COURT LOCATED WITHIN SAID CITY AND STATE.  DEBTOR HEREBY WAIVES ANY RIGHT IT MAY HAVE

TO TRANSFER OR CHANGE VENUE OF ANY SUCH ACTION OR PROCEEDING.

 

32.           Notices.  Any notice, demand, request or other

communication which any party hereto may be required or may desire to give

hereunder shall be deemed to have been given if made in accordance with the

terms of the Loan Agreement.

 

IN WITNESS

WHEREOF, Debtor has executed this Security Agreement as of the date first set

forth above.

 

	

   

  	

  DEBTOR:

  
	

   

  	

   

  
	

   

  	

  SWITCHBOARD APPARATUS, INC.

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

    /s/ Jeffrey Mistarz

  	

   

  
	

   

  	

  Its:

  	

    Vice President

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  SECURED PARTY:

  
	

   

  	

   

  	

   

  
	

   

  	

  AMERICAN CHARTERED BANK

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

    /s/ William Provan

  	

   

  
	

   

  	

  Its:

  	

    Senior Vice President

  	

   

  

 

10

 

SCHEDULE 2(c)

 

	

  Debtor’s

  Organizational ID Number:

  	

  32-41-352

  
	

   

  	

   

  
	

  Exact Legal

  Name of Debtor:

  	

  Switchboard

  Apparatus, Inc.

  

 

 

SCHEDULE 2(f)

 

Personal Property Collateral Stored With

Bailee, Warehouseman or Similar Party

 

NONE

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