Document:

EXHIBIT 10.6

 

COMMERCIAL SECURITY AGREEMENT

 

	
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  $15,000,000.00

  	
   

  	
  06-26-2009

  	
   

  	
  08-01-2010

  	
   

  	
   

  	
   

  	
  4A0 / 9215

  	
   

  	
   

  	
   

  	
  PMF01

  	
   

  	
   

  	
   

  

 

References in the boxes
above are for Lender’s use only and do not limit the applicability of this
document to any particular loan or item.

 

Any item above containing “***” has been omitted due to text length
limitations.

 

	
  Borrower:

  	
   

  	
  STARTEK,
  INC.

  STARTEK
  USA, INC.

  STARTEK
  CANADA SERVICES, LTD.

  44 COOK
  ST., SUITE 400

  DENVER, CO
  80206

  	
   

  	
  Lender:

  	
   

  	
  UMB BANK
  COLORADO, n.a.

  DOWNTOWN
  DENVER BANKING CENTER

  1670
  BROADWAY

  DENVER, CO
  80202-4838

  (303)
  839-1300

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Grantor:

  	
   

  	
  STARTEK
  USA, INC.

  44 COOK
  ST., SUITE 400

  DENVER, CO
  80206

  	
   

  	
   

  	
   

  	
   

  

 

THIS
COMMERCIAL SECURITY AGREEMENT dated June 26, 2009, is made and executed
among STARTEK USA, INC. (“Grantor”); STARTEK, INC.; STARTEK USA, INC. and
STARTEK CANADA SERVICES, LTD. (“Borrower”); and UMB BANK COLORADO, n.a. (“Lender”).

 

GRANT OF
SECURITY INTEREST.  For valuable
consideration, Grantor grants to Lender a security interest in the Collateral
to secure the Indebtedness and agrees that Lender shall have the rights stated
in this Agreement with respect to the Collateral, in addition to all other
rights which Lender may have by law.

 

COLLATERAL
DESCRIPTION.  The word “Collateral”
as used in this Agreement means the following described property, whether now
owned or hereafter acquired, whether now existing or hereafter arising, and
wherever located, in which Grantor is giving to Lender a security interest for
the payment of the Indebtedness and performance of all other obligations under
the Note and this Agreement:

 

All Accounts and General Intangibles

 

In addition, the word “Collateral”
also includes all the following, whether now owned or hereafter acquired,
whether now existing or hereafter arising, and wherever located:

 

(A) 
All accessions, attachments, accessories, replacements of and additions to any
of the collateral described herein, whether added now or later.

 

(B) 
All products and produce of any of the property described in this Collateral
section.

 

(C) 
All accounts, general intangibles, instruments, rents, monies, payments, and
all other rights, arising out of a sale, lease, consignment or other
disposition of any of the property described in this Collateral section.

 

(D) 
All proceeds (including insurance proceeds) from the sale, destruction, loss,
or other disposition of any of the property described in this Collateral
section, and sums due from a third party who has damaged or destroyed the
Collateral or from that party’s insurer, whether due to judgment, settlement or
other process.

 

(E) 
All records and data relating to any of the property described in this
Collateral section, whether in the form of a writing, photograph, microfilm,
microfiche, or electronic media, together with all of Grantor’s right, title,
and interest in and to all computer software required to utilize, create,
maintain, and process any such records or data on electronic media.

 

CROSS-COLLATERALIZATION.  In addition to the Note, this Agreement
secures all obligations, debts and liabilities, plus interest thereon, of
either Grantor or Borrower to Lender, or any one or more of them, as well as
all claims by Lender against Borrower and Grantor or any one or more of them,
whether now existing or hereafter arising, whether related or unrelated to the
purpose of the Note, whether voluntary or otherwise, whether due or not due,
direct or indirect, determined or undetermined, absolute or contingent,
liquidated or unliquidated, whether Borrower or Grantor may be liable
individually or jointly with others, whether obligated as guarantor, surety,
accommodation party or otherwise, and whether recovery upon such amounts may be
or hereafter may become barred by any statute of limitations, and whether the
obligation to repay such amounts may be or hereafter may become otherwise
unenforceable.

 

BORROWER’S
WAIVERS AND RESPONSIBILITIES.  Except as otherwise required under this
Agreement or by applicable law,  (A) 
Borrower agrees that Lender need not tell Borrower about any action or inaction
Lender takes in connection with this Agreement; 
(B)  Borrower assumes the responsibility for being and keeping
informed about the Collateral; and  (C) 
Borrower waives any defenses that may arise because of any action or inaction
of Lender, including without limitation any failure of Lender to realize upon
the Collateral or any delay by Lender in realizing upon the Collateral; and
Borrower agrees to remain liable under the Note no matter what action Lender
takes or fails to take under this Agreement.

 

GRANTOR’S
REPRESENTATIONS AND WARRANTIES.  Grantor warrants that:  (A)  this Agreement is executed at
Borrower’s request and not at the request of Lender;  (B)  Grantor has the full right, power
and authority to enter into this Agreement and to pledge the Collateral to
Lender;  (C)  Grantor has
established adequate means of obtaining from Borrower on a continuing basis
information about Borrower’s financial condition; and  (D)  Lender has made no representation
to Grantor about Borrower or Borrower’s creditworthiness.

 

GRANTOR’S
WAIVERS.  Grantor
waives all requirements of presentment, protest, demand, and notice of dishonor
or non-payment to Borrower or Grantor, or any other party to the Indebtedness
or the Collateral.  Lender may do any of
the following with respect to any obligation of any Borrower, without first
obtaining the consent of Grantor:  (A) 
grant any extension of time for any payment, 
(B)  grant any renewal,  (C) 
permit any modification of payment terms or other terms, or  (D)  exchange or release any Collateral
or other security.  No such act or
failure to act shall affect Lender’s rights against Grantor or the Collateral.

 

RIGHT OF
SETOFF.  To the extent permitted by
applicable law, Lender reserves a right of setoff in all Grantor’s accounts
with Lender (whether checking, savings, or some other account).  This includes all accounts Grantor holds
jointly with someone else and all accounts Grantor may open in the future.  However, this does not include any IRA or
Keogh accounts, or any trust accounts for which setoff would be prohibited by
law.  Grantor authorizes Lender, to the
extent permitted by applicable law, to charge or setoff all sums owing on the
Indebtedness against any and all such accounts, and, at Lender’s option, to
administratively freeze all such accounts to allow Lender to protect Lender’s
charge and setoff rights provided in this paragraph.

 

GRANTOR’S
REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL.  With respect to the Collateral, Grantor
represents and promises to Lender that:

 

Perfection of Security Interest.  Grantor agrees to take whatever actions are
requested by Lender to perfect and continue Lender’s security interest in the
Collateral.  Upon request of Lender,
Grantor will deliver to Lender any and all of the documents evidencing or
constituting the Collateral, and Grantor will note Lender’s interest upon any
and all chattel paper and instruments if not delivered to Lender for possession
by Lender.  This is a continuing Security Agreement and will continue in effect even
though all or any part of the Indebtedness is paid in full and even though for
a period of time Borrower may not be indebted to Lender.

 

Notices to Lender.  Grantor will promptly notify Lender in
writing at Lender’s address shown above (or such other addresses as Lender may
designate from time to time) prior to any 
(1)  change in Grantor’s name; 
(2)  change in Grantor’s assumed business name(s);  (3)  change in the management of the
Corporation Grantor;  (4)  change in
the authorized signer(s);  (5) 
change in Grantor’s principal office address; 
(6)  change in Grantor’s state of organization;  (7)  conversion of Grantor to a new or
different type of business entity; or  (8) 
change in any other aspect of Grantor that directly or indirectly relates to
any agreements between Grantor and Lender. 
No change in Grantor’s name or state of organization will take effect
until after Lender has received notice.

 

No Violation.  The execution and delivery of this Agreement
will not violate any law or agreement governing Grantor or to which Grantor is
a party, and its certificate or articles of incorporation and bylaws do not
prohibit any term or condition of this Agreement.

 

 

Enforceability of Collateral.  To the extent the Collateral consists of
accounts, chattel paper, or general intangibles, as defined by the Uniform
Commercial Code, the Collateral is enforceable in accordance with its terms, is
genuine, and fully complies with all applicable laws and regulations concerning
form, content and manner of preparation and execution, and all persons
appearing to be obligated on the Collateral have authority and capacity to
contract and are in fact obligated as they appear to be on the Collateral.  At the time any account becomes subject to a
security interest in favor of Lender, the account shall be a good and valid
account representing an undisputed, bona fide indebtedness incurred by the account
debtor, for merchandise held subject to delivery instructions or previously
shipped or delivered pursuant to a contract of sale, or for services previously
performed by Grantor with or for the account debtor.  After the occurrence of an Event of Default
under this Agreement, Grantor shall not, without Lender’s prior written
consent, compromise, settle, adjust, or extend payment under or with regard to
any such Accounts.  There shall be no
setoffs or counterclaims against any of the Collateral, and no agreement shall
have been made under which any deductions or discounts may be claimed
concerning the Collateral except those disclosed to Lender in writing.

 

Location of the Collateral.  Except in the ordinary course of Grantor’s
business, Grantor agrees to keep the Collateral (or to the extent the
Collateral consists of intangible property such as accounts or general
intangibles, the records concerning the Collateral) at Grantor’s address shown
above or at such other locations as are acceptable to Lender.  Upon Lender’s request, Grantor will deliver
to Lender in form satisfactory to Lender a schedule of real properties and
Collateral locations relating to Grantor’s operations, including without
limitation the following:  (1)  all
real property Grantor owns or is purchasing; 
(2)   all real property
Grantor is renting or leasing;  (3) 
all storage facilities Grantor owns, rents, leases, or uses; and  (4)  all other properties where
Collateral is or may be located.

 

Removal of the Collateral.  Except in the ordinary course of Grantor’s
business,  Grantor shall not remove the
Collateral from its existing location without Lender’s prior written
consent.  Grantor shall, whenever
requested, advise Lender of the exact location of the Collateral.

 

Transactions Involving Collateral.  Except for inventory sold or accounts
collected in the ordinary course of Grantor’s business, or as otherwise
provided for in this Agreement, Grantor shall not sell, offer to sell, or
otherwise transfer or dispose of the Collateral.  Grantor shall not pledge, mortgage, encumber
or otherwise permit the Collateral to be subject to any lien, security
interest, encumbrance, or charge, other than the security interest provided for
in this Agreement, without the prior written consent of Lender.  This includes security interests even if
junior in right to the security interests granted under this Agreement.  Unless waived by Lender, all proceeds from
any disposition of the Collateral (for whatever reason) shall be held in trust
for Lender and shall not be commingled with any other funds; provided however,
this requirement shall not constitute consent by Lender to any sale or other
disposition.  Upon receipt, Grantor shall
immediately deliver any such proceeds to Lender.

 

Title. 
Grantor represents and warrants to Lender that Grantor holds good and
marketable title to the Collateral, free and clear of all liens and
encumbrances except for the lien of this Agreement.  No financing statement covering any of the
Collateral is on file in any public office other than those which reflect the
security interest created by this Agreement or to which Lender has specifically
consented.  Grantor shall defend Lender’s
rights in the Collateral against the claims and demands of all other persons.

 

Repairs and Maintenance.  Grantor agrees to keep and maintain, and to
cause others to keep and maintain, the Collateral in good order, repair and
condition at all times while this Agreement remains in effect.  Grantor further agrees to pay when due all
claims for work done on, or services rendered or material furnished in
connection with the Collateral so that no lien or encumbrance may ever attach
to or be filed against the Collateral.

 

Inspection of Collateral.  Lender and Lender’s designated
representatives and agents shall have the right at all reasonable times to
examine and inspect the Collateral wherever located.

 

Taxes, Assessments and Liens.  Grantor will pay when due (prior to
delinquency) all taxes, assessments and liens upon the Collateral, its use or
operation, upon this Agreement, upon any promissory note or notes evidencing
the Indebtedness, or upon any of the other Related Documents.  Grantor may withhold any such payment or may
elect to contest any lien if Grantor is in good faith conducting an appropriate
proceeding to contest the obligation to pay and so long as Lender’s interest in
the Collateral is not jeopardized in Lender’s sole opinion.  If the Collateral is subjected to a lien
which is not discharged within fifteen (15) days, Grantor shall deposit with
Lender cash, a sufficient corporate surety bond or other security satisfactory
to Lender in an amount adequate to provide for the discharge of the lien plus
any interest, costs, attorneys’ fees or other charges that could accrue as a
result of foreclosure or sale of the Collateral.  In any contest Grantor shall defend itself
and Lender and shall satisfy any final adverse judgment before enforcement
against the Collateral.  Grantor shall
name Lender as an additional obligee under any surety bond furnished in the
contest proceedings.  Grantor further
agrees to furnish Lender with evidence that such taxes, assessments, and
governmental and other charges have been paid in full and in a timely
manner.  Grantor may withhold any such
payment or may elect to contest any lien if Grantor is in good faith conducting
an appropriate proceeding to contest the obligation to pay and so long as
Lender’s interest in the Collateral is not jeopardized.

 

Compliance with Governmental Requirements.  Grantor shall comply promptly in all material
respects with all laws, ordinances, rules and regulations of all
governmental authorities, now or hereafter in effect, applicable to the
ownership, production, disposition, or use of the Collateral, including all
laws or regulations relating to the undue erosion of highly-erodible land or
relating to the conversion of wetlands for the production of an agricultural
product or commodity.  Grantor may
contest in good faith any such law, ordinance or regulation and withhold
compliance during any proceeding, including appropriate appeals, so long as
Lender’s interest in the Collateral, in Lender’s opinion, is not jeopardized.

 

Hazardous Substances.  Grantor represents and warrants that the
Collateral never has been, and never will be so long as this Agreement remains
a lien on the Collateral, used in violation of any Environmental Laws or for
the generation, manufacture, storage, transportation, treatment, disposal,
release or threatened release of any Hazardous Substance.  The representations and warranties contained
herein are based on Grantor’s due diligence in investigating the Collateral for
Hazardous Substances.  Grantor
hereby  (1)  releases and waives any
future claims against Lender for indemnity or contribution in the event Grantor
becomes liable for cleanup or other costs under any Environmental Laws,
and  (2)  agrees to indemnify,
defend, and hold harmless Lender against any and all claims and losses
resulting from a breach of this provision of this Agreement.  This obligation to indemnify and defend shall
survive the payment of the Indebtedness and the satisfaction of this Agreement.

 

Maintenance of Casualty Insurance.  Grantor shall procure and maintain all risks
insurance, including without limitation fire, theft and liability coverage
together with such other insurance as Lender may reasonably require with
respect to the Collateral, in form, amounts, coverages and basis reasonably
acceptable to Lender and issued by a company or companies reasonably acceptable
to Lender.  Grantor, upon request of
Lender, will deliver to Lender from time to time the policies or certificates
of insurance in form satisfactory to Lender, including stipulations that
coverages will not be cancelled or diminished without at least thirty (30) days’
prior written notice to Lender and not including any disclaimer of the insurer’s
liability for failure to give such a notice. 
Each insurance policy also shall include an endorsement providing that
coverage in favor of Lender will not be impaired in any way by any act,
omission or default of Grantor or any other person.  In connection with all policies covering
assets in which Lender holds or is offered a security interest, Grantor will
provide Lender with such loss payable or other endorsements as Lender may
require.  If Grantor at any time fails to
obtain or maintain any insurance as required under this Agreement, Lender may
(but shall not be obligated to) obtain such insurance as Lender deems
appropriate, including if Lender so chooses “single interest insurance,” which
will cover only Lender’s interest in the Collateral.

 

Application of Insurance Proceeds.  Grantor shall promptly notify Lender of any
loss or damage to the Collateral, whether or not such casualty or loss is
covered by insurance.  Lender may make
proof of loss if Grantor fails to do so within fifteen (15) days of the
casualty.  All proceeds of any insurance
on the Collateral, including accrued proceeds thereon, shall be held by Lender
as part of the Collateral.  If Lender
consents to repair or replacement of the damaged or destroyed Collateral, Lender
shall, upon satisfactory proof of expenditure, 
pay or reimburse Grantor from the proceeds for the reasonable cost of
repair or restoration.  If Lender does
not consent to repair or replacement of the Collateral, Lender shall retain a
sufficient amount of the proceeds to pay all of the Indebtedness, and shall pay
the balance to Grantor.  Any proceeds
which have not been disbursed within six (6) months after their receipt
and which Grantor has not committed to the repair or restoration of the
Collateral shall be used to prepay the Indebtedness.

 

Insurance Reports.  Grantor, upon request of Lender, shall
furnish to Lender reports on each existing policy of insurance showing such
information as Lender may reasonably request including the following:  (1)  the name of the insurer;  (2)  the risks insured;  (3)  the amount of the policy;  (4)  the property insured;  (5)  the then current value on the basis
of which insurance has been obtained and the manner of determining that value;
and  (6)  the expiration date of the
policy.  In addition, Grantor shall upon
request by Lender (however not more often than annually) have an independent
appraiser satisfactory to Lender determine, as applicable, the cash value or
replacement cost of the Collateral.

 

Financing Statements.  Grantor authorizes Lender to file a UCC
financing statement, or alternatively, a copy of this Agreement to perfect
Lender’s security interest.  At Lender’s
request, Grantor additionally agrees to sign all other documents that are
necessary to perfect, protect, and continue Lender’s security interest in the
Property.  This includes making sure
Lender is shown as the first and only security interest holder on the title
covering the Property.  Grantor will pay
all filing fees, title transfer fees, and other fees and costs involved unless
prohibited by law or unless Lender is required by law to pay such fees and
costs.  Grantor irrevocably appoints
Lender to execute documents necessary to transfer title if there is a
default.  Lender may file a copy of this
Agreement as a financing statement.  If
Grantor changes Grantor’s name or address, or the name or address of any person
granting a security interest under this Agreement changes, Grantor will
promptly notify the Lender of such change.

 

GRANTOR’S RIGHT
TO POSSESSION AND TO COLLECT ACCOUNTS.  Until default and except as otherwise
provided below with respect to accounts,

 

 

Grantor may have possession
of the tangible personal property and beneficial use of all the Collateral and
may use it in any lawful manner not inconsistent with this Agreement or the
Related Documents, provided that Grantor’s right to possession and beneficial
use shall not apply to any Collateral where possession of the Collateral by
Lender is required by law to perfect Lender’s security interest in such
Collateral.  Until otherwise notified by
Lender, Grantor may collect any of the Collateral consisting of accounts.  At any time and even though no Event of
Default exists, Lender may exercise its rights to collect the accounts and to
notify account debtors to make payments directly to Lender for application to
the Indebtedness.  If Lender at any time
has possession of any Collateral, whether before or after an Event of Default,
Lender shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral if Lender takes such action for that purpose as
Grantor shall request or as Lender, in Lender’s sole discretion, shall deem
appropriate under the circumstances, but failure to honor any request by
Grantor shall not of itself be deemed to be a failure to exercise reasonable
care.  Lender shall not be required to
take any steps necessary to preserve any rights in the Collateral against prior
parties, nor to protect, preserve or maintain any security interest given to
secure the Indebtedness.

 

LENDER’S
EXPENDITURES.  If any action
or proceeding is commenced that would materially affect Lender’s interest in
the Collateral or if Grantor fails to comply with any provision of this
Agreement or any Related Documents, including but not limited to Grantor’s
failure to discharge or pay when due any amounts Grantor is required to
discharge or pay under this Agreement or any Related Documents, Lender on
Grantor’s behalf may (but shall not be obligated to) take any action that
Lender deems appropriate, including but not limited to discharging or paying
all taxes, liens, security interests, encumbrances and other claims, at any
time levied or placed on the Collateral and paying all costs for insuring,
maintaining and preserving the Collateral. 
All such expenditures incurred or paid by Lender for such purposes will
then bear interest at the rate charged under the Note from the date incurred or
paid by Lender to the date of repayment by Grantor.  All such expenses will become a part of the
Indebtedness and, at Lender’s option, will 
(A)  be payable on demand;  (B) 
be added to the balance of the Note and be apportioned among and be payable
with any installment payments to become due during either  (1)  the term of any applicable
insurance policy; or  (2)  the
remaining term of the Note; or  (C) 
be treated as a balloon payment which will be due and payable at the Note’s
maturity.  The Agreement also will secure
payment of these amounts.  Such right
shall be in addition to all other rights and remedies to which Lender may be
entitled upon Default.

 

DEFAULT.  Each of the following shall constitute an Event
of Default under this Agreement:

 

Payment Default.  Borrower fails to make any payment when due
under the Indebtedness following the expiration of applicable cure periods, if
any.

 

Other Defaults.  Borrower or Grantor fails to comply with or
to perform any other term, obligation, covenant or condition contained in this
Agreement or in any of the Related Documents or to comply with or to perform
any term, obligation, covenant or condition contained in any other agreement
between Lender and Borrower or Grantor following the expiration of thirty (30)
days after written notice of such default is provided by Lender to Borrower.

 

False Statements.  Any warranty, representation or statement
made or furnished to Lender by Borrower or Grantor or on Borrower’s or Grantor’s
behalf under this Agreement or the Related Documents is false or misleading in
any material respect, either now or at the time made or furnished or becomes
false or misleading at any time thereafter.

 

Defective Collateralization.  This Agreement or any of the Related
Documents ceases to be in full force and effect (including failure of any
collateral document to create a valid and perfected security interest or lien)
at any time and for any reason if such defect has not been cured following the
expiration of thirty (30) days after notice by Lender to Borrower.

 

Insolvency.  The dissolution or termination of Borrower’s
or Grantor’s existence as a going business, the insolvency of Borrower or
Grantor, the appointment of a receiver for any part of Borrower’s or Grantor’s
property, any assignment for the benefit of creditors, any type of creditor
workout, or the commencement of any proceeding under any bankruptcy or
insolvency laws by or against Borrower or Grantor.

 

Creditor or Forfeiture Proceedings.  Commencement of foreclosure or forfeiture
proceedings, whether by judicial proceeding, self-help, repossession or any
other method, by any creditor of Borrower or Grantor or by any governmental
agency against any collateral securing the Indebtedness.  This includes a garnishment of any of
Borrower’s or Grantor’s accounts, including deposit accounts, with Lender.  However, this Event of Default shall not
apply if there is a good faith dispute by Borrower or Grantor as to the
validity or reasonableness of the claim which is the basis of the creditor or
forfeiture proceeding and if Borrower or Grantor gives Lender written notice of
the creditor or forfeiture proceeding and deposits with Lender monies or a
surety bond for the creditor or forfeiture proceeding, in an amount determined
by Lender, in its sole discretion, as being an adequate reserve or bond for the
dispute.

 

Adverse Change.  A material adverse change occurs in Borrower’s
or Grantor’s financial condition, or Lender believes the prospect of payment or
performance of the Indebtedness is impaired.

 

RIGHTS AND
REMEDIES ON DEFAULT.  If an Event
of Default occurs under this Agreement, at any time thereafter, Lender shall
have all the rights of a secured party under the Colorado Uniform Commercial
Code.  In addition and without
limitation, Lender may exercise any one or more of the following rights and
remedies:

 

Accelerate Indebtedness.  Lender may declare the entire Indebtedness,
including any prepayment penalty which Borrower would be required to pay, immediately
due and payable, without notice of any kind to Borrower or Grantor.

 

Assemble Collateral.  Lender may require Grantor to deliver to
Lender all or any portion of the Collateral and any and all certificates of
title and other documents relating to the Collateral.  Lender may require Grantor to assemble the
Collateral and make it available to Lender at a place to be designated by
Lender.  Lender also shall have full
power to enter upon the property of Grantor to take possession of and remove
the Collateral.  If the Collateral
contains other goods not covered by this Agreement at the time of repossession,
Grantor agrees Lender may take such other goods, provided that Lender makes
reasonable efforts to return them to Grantor after repossession.

 

Sell the Collateral.  Lender shall have full power to sell, lease,
transfer, or otherwise deal with the Collateral or proceeds thereof in Lender’s
own name or that of Grantor.  Lender may
sell the Collateral at public auction or private sale.  Unless the Collateral threatens to decline
speedily in value or is of a type customarily sold on a recognized market,
Lender will give Grantor, and other persons as required by law, reasonable
notice of the time and place of any public sale, or the time after which any
private sale or any other disposition of the Collateral is to be made.  However, no notice need be provided to any
person who, after Event of Default occurs, enters into and authenticates an
agreement waiving that person’s right to notification of sale.  The requirements of reasonable notice shall
be met if such notice is given at least ten (10) days before the time of
the sale or disposition.  All expenses
relating to the disposition of the Collateral, including without limitation the
expenses of retaking, holding, insuring, preparing for sale and selling the
Collateral, shall become a part of the Indebtedness secured by this Agreement
and shall be payable on demand, with interest at the Note rate from date of
expenditure until repaid.

 

Appoint Receiver.  Lender shall have the right to have a
receiver appointed to take possession of all or any part of the Collateral,
with the power to protect and preserve the Collateral, to operate the
Collateral preceding foreclosure or sale, and to collect the Rents from the Collateral
and apply the proceeds, over and above the cost of the receivership, against
the Indebtedness.  The receiver may serve
without bond if permitted by law.  Lender’s
right to the appointment of a receiver shall exist whether or not the apparent
value of the Collateral exceeds the Indebtedness by a substantial amount.  Employment by Lender shall not disqualify a
person from serving as a receiver. 
Receiver may be appointed by a court of competent jurisdiction upon ex
parte application and without notice, notice being expressly waived.

 

Collect Revenues, Apply Accounts.  Lender, either itself or through a receiver,
may collect the payments, rents, income, and revenues from the Collateral.  Lender may at any time in Lender’s discretion
transfer any Collateral into Lender’s own name or that of Lender’s nominee and
receive the payments, rents, income, and revenues therefrom and hold the same
as security for the Indebtedness or apply it to payment of the Indebtedness in
such order of preference as Lender may determine.  Insofar as the Collateral consists of
accounts, general intangibles, insurance policies, instruments, chattel paper,
choses in action, or similar property, Lender may demand, collect, receipt for,
settle, compromise, adjust, sue for, foreclose, or realize on the Collateral as
Lender may determine, whether or not Indebtedness or Collateral is then
due.  For these purposes, Lender may, on
behalf of and in the name of Grantor, receive, open and dispose of mail addressed
to Grantor; change any address to which mail and payments are to be sent; and
endorse notes, checks, drafts, money orders, documents of title, instruments
and items pertaining to payment, shipment, or storage of any Collateral.  To facilitate collection, Lender may notify
account debtors and obligors on any Collateral to make payments directly to
Lender.

 

Obtain Deficiency.  If Lender chooses to sell any or all of the
Collateral, Lender may obtain a judgment against Borrower for any deficiency
remaining on the Indebtedness due to Lender after application of all amounts
received from the exercise of the rights provided in this Agreement.  Borrower shall be liable for a deficiency
even if the transaction described in this subsection is a sale of accounts or
chattel paper.

 

Other Rights and Remedies.  Lender shall have all the rights and remedies
of a secured creditor under the provisions of the Uniform Commercial Code, as
may be amended from time to time.  In
addition, Lender shall have and may exercise any or all other rights and
remedies it may have available at law, in equity, or otherwise.

 

Election of Remedies.  Except as may be prohibited by applicable
law, all of Lender’s rights and remedies, whether evidenced by this Agreement,
the Related Documents, or by any other writing, shall be cumulative and may be
exercised singularly or concurrently. 
Election by Lender to pursue any

 

 

remedy
shall not exclude pursuit of any other remedy, and an election to make
expenditures or to take action to perform an obligation of Grantor under this Agreement,
after Grantor’s failure to perform, shall not affect Lender’s right to declare
a default and exercise its remedies.

 

ADDITIONAL
TRUST OBLIGATIONS. If the Owner of the named Collateral, listed in the
attached Security Instrument is a Trust, then, to the extent the foregoing
described Trust Agreement does not specifically authorize this Pledge and
Security Agreement, the provisions of the foregoing described Trust Agreement
are hereby amended to the extent necessary to authorize the same and the performance
of all the provisions hereof. In the event the foregoing described Trust
Agreement is revoked prior to the payment in full of all obligations of
Borrower to Lender and secured by the Collateral, this Pledge and Security
Agreement shall nonetheless remain in full force and effect until all such
obligations of the Borrower are paid in full.

 

ADDITIONAL
TERMS. Grantor’s failure to promptly provide additional collateral of a type
and in a manner satisfactory to Lender upon Lender’s request therefore due to
Lender’s reasonable determination that the value of the Collateral is
insufficient to adequately secure the Indebtedness.

 

In the event the Debtor does
not maintain insurance coverage on the Collateral deemed adequate by Secured
Party, Secured Party may, in its discretion, purchase insurance or additional
insurance, but shall not be obligated to do so. The premium for such additional
insurance shall be added to and become part of the Obligations secured by this
Agreement. Any refund of insurance premiums shall be applied to the cost of
other insurance, or upon the last maturing installment (or the principal) of
the debt secured by this Agreement.

 

Debtor waives the right to
direct the application of any and all payments at any time or times received by
Secured Party on account of the Obligations secured hereby or as proceeds of
the Collateral and agrees that Secured Party shall have the exclusive right to
apply and reapply any and all such payments in such manner as Secured Party in
its sole discretion my deem advisable, notwithstanding any entry by Secured
Party upon any of its books and records.

 

In the event Lender, in its
sole discretion, issues letters of credit for the account of the Borrower
pursuant hereto (“Letters of Credit”), each such Letter of Credit shall be
issued subject to such terms and conditions as Lender shall determine at the
time of issuance of each such Letter of Credit, including but not limited to
letter of credit fees and the terms hereof. The face amount of all such Letters
of Credit shall be deemed to be outstanding loans hereunder for purposes of
computing the amount available to Borrower to borrow under any applicable
credit facility with Lender. At no time shall the face amount of all
outstanding Letters of Credit plus the principal amount of all outstanding
loans from Lender to Borrower under any such credit facility exceed the Loan
Value.

 

Bankcard Obligations: All
currently existing and future bankcard obligations owing by the Borrower to the
Lender or to any affiliate of the Lender created pursuant to the use of
bankcards now existing or hereafter issued by the Lender to the Borrower, shall
be secured by and pursuant to the terms of this Security Agreement. All terms
of the Security Agreement not expressly modified hereby shall remain in full
force and effect.

 

MISCELLANEOUS
PROVISIONS.  The following
miscellaneous provisions are a part of this Agreement:

 

Amendments.  This Agreement, together with any Related
Documents, constitutes the entire understanding and agreement of the parties as
to the matters set forth in this Agreement. 
No alteration of or amendment to this Agreement shall be effective
unless given in writing and signed by the party or parties sought to be charged
or bound by the alteration or amendment.

 

Attorneys’ Fees; Expenses.  Grantor agrees to pay upon demand all of
Lender’s reasonable costs and expenses, including Lender’s attorneys’ fees and
Lender’s legal expenses, incurred in connection with the enforcement of this
Agreement.  Lender may hire or pay someone
else to help enforce this Agreement, and Grantor shall pay the reasonable costs
and expenses of such enforcement.  Costs
and expenses include Lender’s attorneys’ fees and legal expenses whether or not
there is a lawsuit, including attorneys’ fees and legal expenses for bankruptcy
proceedings (including efforts to modify or vacate any automatic stay or
injunction), appeals, and any anticipated post-judgment collection
services.  Grantor also shall pay all
court costs and such additional fees as may be directed by the court.

 

Caption Headings.  Caption headings in this Agreement are for
convenience purposes only and are not to be used to interpret or define the
provisions of this Agreement.

 

Governing Law.  This
Agreement will be governed by federal law applicable to Lender and, to the
extent not preempted by federal law, the laws of the State of Colorado without
regard to its conflicts of law provisions. 
This Agreement has been accepted by Lender in the State of Colorado.

 

Choice of Venue.  If there is a lawsuit, Grantor agrees upon
Lender’s request to submit to the jurisdiction of the courts of DENVER County,
State of Colorado.

 

Joint and Several Liability.  All obligations of Borrower and Grantor under
this Agreement shall be joint and several, and all references to Grantor shall
mean each and every Grantor, and all references to Borrower shall mean each and
every Borrower.  This means that each
Borrower and Grantor signing below is responsible for all obligations in this
Agreement.  Where any one or more of the
parties is a corporation, partnership, limited liability company or similar
entity, it is not necessary for Lender to inquire into the powers of any of the
officers, directors, partners, members, or other agents acting or purporting to
act on the entity’s behalf, and any obligations made or created in reliance
upon the professed exercise of such powers shall be guaranteed under this
Agreement.

 

No Waiver by Lender.  Lender shall not be deemed to have waived any
rights under this Agreement unless such waiver is given in writing and signed
by Lender.  No delay or omission on the
part of Lender in exercising any right shall operate as a waiver of such right
or any other right.  A waiver by Lender
of a provision of this Agreement shall not prejudice or constitute a waiver of
Lender’s right otherwise to demand strict compliance with that provision or any
other provision of this Agreement.  No
prior waiver by Lender, nor any course of dealing between Lender and Grantor,
shall constitute a waiver of any of Lender’s rights or of any of Grantor’s
obligations as to any future transactions. 
Whenever the consent of Lender is required under this Agreement, the
granting of such consent by Lender in any instance shall not constitute
continuing consent to subsequent instances where such consent is required and
in all cases such consent may be granted or withheld in the sole discretion of
Lender.

 

Notices.  Any notice required to be given under this
Agreement shall be given in writing, and shall be effective when actually
delivered, when actually received by telefacsimile (unless otherwise required
by law), when deposited with a nationally recognized overnight courier, or, if
mailed, when deposited in the United States mail, as first class, certified or
registered mail postage prepaid, directed to the addresses shown near the
beginning of this Agreement.  Any party
may change its address for notices under this Agreement by giving formal
written notice to the other parties, specifying that the purpose of the notice
is to change the party’s address.  For
notice purposes, Grantor agrees to keep Lender informed at all times of Grantor’s
current address.  Unless otherwise
provided or required by law, if there is more than one Grantor, any notice
given by Lender to any Grantor is deemed to be notice given to all Grantors.

 

Power of Attorney.  Grantor hereby appoints Lender as Grantor’s
irrevocable attorney-in-fact for the purpose of executing any documents
necessary to perfect, amend, or to continue the security interest granted in
this Agreement or to demand termination of filings of other secured
parties.  Lender may at any time, and
without further authorization from Grantor, file a carbon, photographic or
other reproduction of any financing statement or of this Agreement for use as a
financing statement.  Grantor will
reimburse Lender for all expenses for the perfection and the continuation of
the perfection of Lender’s security interest in the Collateral.

 

Severability.  If a court of competent jurisdiction finds
any provision of this Agreement to be illegal, invalid, or unenforceable as to
any circumstance, that finding shall not make the offending provision illegal,
invalid, or unenforceable as to any other circumstance.  If feasible, the offending provision shall be
considered modified so that it becomes legal, valid and enforceable.  If the offending provision cannot be so
modified, it shall be considered deleted from this Agreement.  Unless otherwise required by law, the
illegality, invalidity, or unenforceability of any provision of this Agreement
shall not affect the legality, validity or enforceability of any other
provision of this Agreement.

 

Successors and Assigns.  Subject to any limitations stated in this
Agreement on transfer of Grantor’s interest, this Agreement shall be binding
upon and inure to the benefit of the parties, their successors and
assigns.  If ownership of the Collateral
becomes vested in a person other than Grantor, Lender, without notice to
Grantor, may deal with Grantor’s successors with reference to this Agreement
and the Indebtedness by way of forbearance or extension without releasing
Grantor from the obligations of this Agreement or liability under the
Indebtedness.

 

Survival of Representations and Warranties.  All representations, warranties, and
agreements made by Grantor in this Agreement shall survive the execution and
delivery of this Agreement, shall be continuing in nature, and shall remain in
full force and effect until such time as Borrower’s Indebtedness shall be paid
in full.

 

Time is of the Essence.  Time is of the essence in the performance of
this Agreement.

 

Waive Jury.  All
parties to this Agreement hereby waive the right to any jury trial in any
action, proceeding, or counterclaim brought by any party against any other
party.

 

DEFINITIONS.  The following capitalized words and terms
shall have the following meanings when used in this Agreement.  Unless specifically stated to the contrary,
all references to dollar amounts shall mean amounts in lawful money of the
United States of America.  Words and
terms used in the singular shall

 

 

include the plural, and the
plural shall include the singular, as the context may require.  Words and terms not otherwise defined in this
Agreement shall have the meanings attributed to such terms in the Uniform
Commercial Code:

 

Agreement.  The word “Agreement” means this Commercial
Security Agreement, as this Commercial Security Agreement may be amended or
modified from time to time, together with all exhibits and schedules attached
to this Commercial Security Agreement from time to time.

 

Borrower.  The word “Borrower” means STARTEK, INC.;
STARTEK USA, INC. and STARTEK CANADA SERVICES, LTD. and includes all co-signers
and co-makers signing the Note and all their successors and assigns.

 

Collateral.  The word “Collateral” means all of Grantor’s
right, title and interest in and to all the Collateral as described in the
Collateral Description section of this Agreement.

 

Default.  The word “Default” means the Default set
forth in this Agreement in the section titled “Default”.

 

Environmental Laws.  The words “Environmental Laws” mean any and
all state, federal and local statutes, regulations and ordinances relating to
the protection of human health or the environment, including without limitation
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended, 42 U.S.C. Section 9601, et seq. (“CERCLA”), the
Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499 (“SARA”),
the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et
seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901,
et seq., or other applicable state or federal laws, rules, or regulations
adopted pursuant thereto.

 

Event of Default.  The words “Event of Default” mean any of the
events of default set forth in this Agreement in the Default section of this
Agreement.

 

Grantor.  The word “Grantor” means STARTEK USA, INC.

 

Guaranty.  The word “Guaranty” means the guaranty from
guarantor, endorser, surety, or accommodation party to Lender, including
without limitation a guaranty of all or part of the Note.

 

Hazardous Substances.  The words “Hazardous Substances” mean
materials that, because of their quantity, concentration or physical, chemical
or infectious characteristics, may cause or pose a present or potential hazard
to human health or the environment when improperly used, treated, stored,
disposed of, generated, manufactured, transported or otherwise handled.  The words “Hazardous Substances” are used in
their very broadest sense and include without limitation any and all hazardous
or toxic substances, materials or waste as defined by or listed under the
Environmental Laws.  The term “Hazardous
Substances” also includes, without limitation, petroleum and petroleum by-products
or any fraction thereof and asbestos.

 

Indebtedness.  The word “Indebtedness” means the
indebtedness evidenced by the Note or Related Documents, including all
principal and interest together with all other indebtedness and costs and
expenses for which Grantor is responsible under this Agreement or under any of
the Related Documents and (a) the payment of Grantor’s obligations
(whether joint, several or otherwise) to Lender as evidenced by any other note(s) or
other evidence of indebtedness executed by such Grantor and all amendments,
modifications, renewals, extensions and substitutions thereof and all
subsequent notes of greater or lesser amounts payable or assigned to Lender; (b) the
performance of each Debtor’s obligations under this security agreement (“Agreement”);
and (c) the payment of any and all other indebtedness, direct or indirect,
mature or unmatured or contingent, joint or several now or hereafter owed to
Secured Party by each Debtor, including (without limitation) indebtedness
unrelated or dissimilar to any indebtedness in 
existence or contemplated by any Debtor at the time this Agreement was
executed or at the time such indebtedness is incurred..

 

Lender.  The
word “Lender” means UMB BANK COLORADO, n.a., its successors and assigns.

 

Note.  The
word “Note” means the Note executed by STARTEK, INC.; and STARTEK USA, INC. in
the principal amount of $15,000,000.00 dated June 26, 2009, together with
all renewals of, extensions of, modifications of, refinancings of,
consolidations of, and substitutions for the note or credit agreement.

 

Property.  The word “Property” means all of Grantor’s
right, title and interest in and to all the Property as described in the “Collateral
Description” section of this Agreement.

 

Related Documents.  The words “Related Documents” mean all
promissory notes, credit agreements, loan agreements, environmental agreements,
guaranties, security agreements, mortgages, deeds of trust, security deeds,
collateral mortgages, and all other instruments, agreements and documents,
whether now or hereafter existing, executed in connection with the
Indebtedness.

 

BORROWER AND
GRANTOR HAVE READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS COMMERCIAL SECURITY
AGREEMENT AND AGREE TO ITS TERMS. THIS AGREEMENT IS DATED JUNE 26, 2009.

 

	
  GRANTOR:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  STARTEK
  USA, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By: 

  	
  /s/ A.
  LAURENCE JONES

  	
   

  	
  By:

  	
  /s/ DAVID
  G. DURHAM

  
	
  A.
  Laurence Jones, Chief Exec. Officer/Pres. of

  STARTEK USA, INC.

  	
   

  	
  David G.
  Durham, Exec. VP/CFO/Treasurer of

  STARTEK USA, INC.

  
	
   

  	
   

  	
   

  
	
  BORROWER:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  STARTEK,
  INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ A. LAURENCE JONES

  	
   

  	
  By:

  	
  /s/ DAVID G. DURHAM

  
	
  A. Laurence Jones, Chief Exec.
  Officer/Pres. of

  STARTEK, INC.

  	
   

  	
  David G. Durham, Exec.
  VP/CFO/Treasurer of

  STARTEK, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  STARTEK
  USA, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ A.
  LAURENCE JONES

  	
   

  	
  By:

  	
  /s/ DAVID
  G. DURHAM

  
	
  A.
  Laurence Jones, Chief Exe. Officer/Pres. of

  STARTEK USA, INC.

  	
   

  	
  David G.
  Durham, Exec VP/CFO/Treasurer of

  STARTEK USA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  STARTEK
  CANADA SERVICES, LTD.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ A.
  LAURENCE JONES

  	
   

  	
  By:

  	
  /s/ DAVID
  G. DURHAM

  
	
  A.
  Laurence Jones, Chief Exec. Officer/Pres. of

  STARTEK CANADA SERVICES, LTD.

  	
   

  	
  David G.
  Durham, Exec. VP/CFO/Treasurer of

  STARTEK CANADA SERVICES, LTD.

  

 

LASER PRO Lending, Ver. 5.44.00.002 
Copr. Harland Financial Solutions, Inc. 1997, 2009.  All Rights Reserved.  — CO  S:\APPS\hfs\CFI\LPL\E40.FC  TR-62141 
PR-63 (M)EXHIBIT 10.7

 

COMMERCIAL SECURITY AGREEMENT

 

	
  Principal

  	
   

  	
  Loan
  Date

  	
   

  	
  Maturity

  	
   

  	
  Loan
  No

  	
   

  	
  Call / Coll

  	
   

  	
  Account

  	
   

  	
  Officer

  	
   

  	
  Initials

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  $15,000,000.00

  	
   

  	
  06-26-2009

  	
   

  	
  08-01-2010

  	
   

  	
   

  	
   

  	
  4A0 / 9215

  	
   

  	
   

  	
   

  	
  PMF01

  	
   

  	
   

  

 

References in the boxes above are for Lender’s use only and do not limit
the applicability of this document to any particular loan or item.

 

Any item above containing “***” has been omitted due to text length
limitations.

 

	
  Borrower:

  	
   

  	
  STARTEK,
  INC.

  STARTEK USA, INC.

  STARTEK CANADA SERVICES, LTD.

  44 COOK ST., SUITE 400

  DENVER, CO 80206

  	
   

  	
  Lender:

  	
   

  	
  UMB BANK
  COLORADO, n.a.

  DOWNTOWN DENVER BANKING CENTER

  1670 BROADWAY

  DENVER, CO 80202-4838

  (303) 839-1300

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Grantor:

  	
   

  	
  STARTEK
  CANADA SERVICES, LTD.

  44 COOK ST., SUITE 400

  DENVER, CO  80206

  	
   

  	
   

  	
   

  	
   

  

 

THIS COMMERCIAL SECURITY AGREEMENT dated June 26, 2009,
is made and executed among STARTEK CANADA SERVICES, LTD. (“Grantor”); STARTEK,
INC.; STARTEK USA, INC. and STARTEK CANADA SERVICES, LTD. (“Borrower”); and UMB
BANK COLORADO, n.a. (“Lender”).

 

GRANT OF SECURITY INTEREST. 
For valuable consideration, Grantor grants to Lender a security interest
in the Collateral to secure the Indebtedness and agrees that Lender shall have
the rights stated in this Agreement with respect to the Collateral, in addition
to all other rights which Lender may have by law.

 

COLLATERAL DESCRIPTION.  The word “Collateral” as used in this
Agreement means the following described property, whether now owned or
hereafter acquired, whether now existing or hereafter arising, and wherever
located, in which Grantor is giving to Lender a security interest for the
payment of the Indebtedness and performance of all other obligations under the
Note and this Agreement:

 

All Accounts and General Intangibles

 

In
addition, the word “Collateral” also includes all the following, whether now
owned or hereafter acquired, whether now existing or hereafter arising, and
wherever located:

 

(A) 
All accessions, attachments, accessories, replacements of and additions to any
of the collateral described herein, whether added now or later.

 

(B) 
All products and produce of any of the property described in this Collateral
section.

 

(C) 
All accounts, general intangibles, instruments, rents, monies, payments, and
all other rights, arising out of a sale, lease, consignment or other
disposition of any of the property described in this Collateral section.

 

(D) 
All proceeds (including insurance proceeds) from the sale, destruction, loss,
or other disposition of any of the property described in this Collateral
section, and sums due from a third party who has damaged or destroyed the
Collateral or from that party’s insurer, whether due to judgment, settlement or
other process.

 

(E) 
All records and data relating to any of the property described in this
Collateral section, whether in the form of a writing, photograph, microfilm,
microfiche, or electronic media, together with all of Grantor’s right, title,
and interest in and to all computer software required to utilize, create,
maintain, and process any such records or data on electronic media.

 

CROSS-COLLATERALIZATION.  In addition to the Note, this Agreement
secures all obligations, debts and liabilities, plus interest thereon, of
either Grantor or Borrower to Lender, or any one or more of them, as well as
all claims by Lender against Borrower and Grantor or any one or more of them,
whether now existing or hereafter arising, whether related or unrelated to the
purpose of the Note, whether voluntary or otherwise, whether due or not due,
direct or indirect, determined or undetermined, absolute or contingent,
liquidated or unliquidated, whether Borrower or Grantor may be liable
individually or jointly with others, whether obligated as guarantor, surety,
accommodation party or otherwise, and whether recovery upon such amounts may be
or hereafter may become barred by any statute of limitations, and whether the
obligation to repay such amounts may be or hereafter may become otherwise
unenforceable.

 

BORROWER’S WAIVERS AND RESPONSIBILITIES.  Except as otherwise required under this
Agreement or by applicable law,  (A) 
Borrower agrees that Lender need not tell Borrower about any action or inaction
Lender takes in connection with this Agreement; 
(B)  Borrower assumes the responsibility for being and keeping
informed about the Collateral; and  (C) 
Borrower waives any defenses that may arise because of any action or inaction
of Lender, including without limitation any failure of Lender to realize upon
the Collateral or any delay by Lender in realizing upon the Collateral; and
Borrower agrees to remain liable under the Note no matter what action Lender
takes or fails to take under this Agreement.

 

GRANTOR’S REPRESENTATIONS AND WARRANTIES.  Grantor warrants that:  (A)  this Agreement is executed at
Borrower’s request and not at the request of Lender;  (B)  Grantor has the full right, power
and authority to enter into this Agreement and to pledge the Collateral to
Lender;  (C)  Grantor has
established adequate means of obtaining from Borrower on a continuing basis
information about Borrower’s financial condition; and  (D)  Lender has made no representation
to Grantor about Borrower or Borrower’s creditworthiness.

 

GRANTOR’S WAIVERS.  Grantor waives all requirements of
presentment, protest, demand, and notice of dishonor or non-payment to Borrower
or Grantor, or any other party to the Indebtedness or the Collateral.  Lender may do any of the following with
respect to any obligation of any Borrower, without first obtaining the consent
of Grantor:  (A)  grant any
extension of time for any payment,  (B) 
grant any renewal,  (C)  permit any
modification of payment terms or other terms, or  (D)  exchange or release any Collateral
or other security.  No such act or
failure to act shall affect Lender’s rights against Grantor or the Collateral.

 

RIGHT OF SETOFF.  To the extent permitted by applicable law,
Lender reserves a right of setoff in all Grantor’s accounts with Lender
(whether checking, savings, or some other account).  This includes all accounts Grantor holds
jointly with someone else and all accounts Grantor may open in the future.  However, this does not include any IRA or
Keogh accounts, or any trust accounts for which setoff would be prohibited by
law.  Grantor authorizes Lender, to the
extent permitted by applicable law, to charge or setoff all sums owing on the
Indebtedness against any and all such accounts, and, at Lender’s option, to
administratively freeze all such accounts to allow Lender to protect Lender’s
charge and setoff rights provided in this paragraph.

 

GRANTOR’S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE
COLLATERAL.  With respect
to the Collateral, Grantor represents and promises to Lender that:

 

Perfection of Security Interest.  Grantor agrees to take whatever actions are
requested by Lender to perfect and continue Lender’s security interest in the
Collateral.  Upon request of Lender,
Grantor will deliver to Lender any and all of the documents evidencing or
constituting the Collateral, and Grantor will note Lender’s interest upon any
and all chattel paper and instruments if not delivered to Lender for possession
by Lender.  This is a continuing Security Agreement and will continue in effect even
though all or any part of the Indebtedness is paid in full and even though for
a period of time Borrower may not be indebted to Lender.

 

Notices to Lender.  Grantor will promptly notify Lender in
writing at Lender’s address shown above (or such other addresses as Lender may
designate from time to time) prior to any 
(1)  change in Grantor’s name; 
(2)  change in Grantor’s assumed business name(s);  (3)  change in the management of the
Corporation Grantor;  (4)  change in
the authorized signer(s);  (5) 
change in Grantor’s principal office address; 
(6)  change in Grantor’s state of organization;  (7)  conversion of Grantor to a new or
different type of business entity; or  (8) 
change in any other aspect of Grantor that directly or indirectly relates to
any agreements between Grantor and Lender. 
No change in Grantor’s name or state of organization will take effect
until after Lender has received notice.

 

No Violation.  The execution and delivery of this Agreement
will not violate any law or agreement governing Grantor or to which Grantor is
a party, and its certificate or articles of incorporation and bylaws do not
prohibit any term or condition of this Agreement.

 

 

Enforceability of Collateral.  To the extent the Collateral consists of
accounts, chattel paper, or general intangibles, as defined by the Uniform
Commercial Code, the Collateral is enforceable in accordance with its terms, is
genuine, and fully complies with all applicable laws and regulations concerning
form, content and manner of preparation and execution, and all persons
appearing to be obligated on the Collateral have authority and capacity to
contract and are in fact obligated as they appear to be on the Collateral.  At the time any account becomes subject to a
security interest in favor of Lender, the account shall be a good and valid
account representing an undisputed, bona fide indebtedness incurred by the
account debtor, for merchandise held subject to delivery instructions or
previously shipped or delivered pursuant to a contract of sale, or for services
previously performed by Grantor with or for the account debtor.  After the occurrence of an Event of Default
under this Agreement, Grantor shall not, without Lender’s prior written
consent, compromise, settle, adjust, or extend payment under or with regard to
any such Accounts.  There shall be no
setoffs or counterclaims against any of the Collateral, and no agreement shall have
been made under which any deductions or discounts may be claimed concerning the
Collateral except those disclosed to Lender in writing.

 

Location of the Collateral.  Except in the ordinary course of Grantor’s
business, Grantor agrees to keep the Collateral (or to the extent the
Collateral consists of intangible property such as accounts or general
intangibles, the records concerning the Collateral) at Grantor’s address shown
above or at such other locations as are acceptable to Lender.  Upon Lender’s request, Grantor will deliver
to Lender in form satisfactory to Lender a schedule of real properties and
Collateral locations relating to Grantor’s operations, including without
limitation the following:  (1)  all
real property Grantor owns or is purchasing; 
(2)   all real property
Grantor is renting or leasing;  (3) 
all storage facilities Grantor owns, rents, leases, or uses; and  (4)  all other properties where
Collateral is or may be located.

 

Removal of the Collateral.  Except in the ordinary course of Grantor’s
business,  Grantor shall not remove the
Collateral from its existing location without Lender’s prior written
consent.  Grantor shall, whenever
requested, advise Lender of the exact location of the Collateral.

 

Transactions Involving Collateral.  Except for inventory sold or accounts
collected in the ordinary course of Grantor’s business, or as otherwise
provided for in this Agreement, Grantor shall not sell, offer to sell, or
otherwise transfer or dispose of the Collateral.  Grantor shall not pledge, mortgage, encumber
or otherwise permit the Collateral to be subject to any lien, security
interest, encumbrance, or charge, other than the security interest provided for
in this Agreement, without the prior written consent of Lender.  This includes security interests even if
junior in right to the security interests granted under this Agreement.  Unless waived by Lender, all proceeds from
any disposition of the Collateral (for whatever reason) shall be held in trust
for Lender and shall not be commingled with any other funds; provided however,
this requirement shall not constitute consent by Lender to any sale or other
disposition.  Upon receipt, Grantor shall
immediately deliver any such proceeds to Lender.

 

Title. 
Grantor represents and warrants to Lender that Grantor holds good and
marketable title to the Collateral, free and clear of all liens and
encumbrances except for the lien of this Agreement.  No financing statement covering any of the
Collateral is on file in any public office other than those which reflect the
security interest created by this Agreement or to which Lender has specifically
consented.  Grantor shall defend Lender’s
rights in the Collateral against the claims and demands of all other persons.

 

Repairs and Maintenance.  Grantor agrees to keep and maintain, and to
cause others to keep and maintain, the Collateral in good order, repair and
condition at all times while this Agreement remains in effect.  Grantor further agrees to pay when due all
claims for work done on, or services rendered or material furnished in
connection with the Collateral so that no lien or encumbrance may ever attach
to or be filed against the Collateral.

 

Inspection of Collateral.  Lender and Lender’s designated
representatives and agents shall have the right at all reasonable times to
examine and inspect the Collateral wherever located.

 

Taxes, Assessments and Liens.  Grantor will pay when due (prior to
delinquency) all taxes, assessments and liens upon the Collateral, its use or
operation, upon this Agreement, upon any promissory note or notes evidencing
the Indebtedness, or upon any of the other Related Documents.  Grantor may withhold any such payment or may
elect to contest any lien if Grantor is in good faith conducting an appropriate
proceeding to contest the obligation to pay and so long as Lender’s interest in
the Collateral is not jeopardized in Lender’s sole opinion.  If the Collateral is subjected to a lien
which is not discharged within fifteen (15) days, Grantor shall deposit with
Lender cash, a sufficient corporate surety bond or other security satisfactory
to Lender in an amount adequate to provide for the discharge of the lien plus
any interest, costs, attorneys’ fees or other charges that could accrue as a
result of foreclosure or sale of the Collateral.  In any contest Grantor shall defend itself
and Lender and shall satisfy any final adverse judgment before enforcement
against the Collateral.  Grantor shall
name Lender as an additional obligee under any surety bond furnished in the
contest proceedings.  Grantor further
agrees to furnish Lender with evidence that such taxes, assessments, and
governmental and other charges have been paid in full and in a timely
manner.  Grantor may withhold any such
payment or may elect to contest any lien if Grantor is in good faith conducting
an appropriate proceeding to contest the obligation to pay and so long as
Lender’s interest in the Collateral is not jeopardized.

 

Compliance with Governmental Requirements.  Grantor shall comply promptly in all material
respects with all laws, ordinances, rules and regulations of all
governmental authorities, now or hereafter in effect, applicable to the
ownership, production, disposition, or use of the Collateral, including all
laws or regulations relating to the undue erosion of highly-erodible land or
relating to the conversion of wetlands for the production of an agricultural
product or commodity.  Grantor may
contest in good faith any such law, ordinance or regulation and withhold compliance
during any proceeding, including appropriate appeals, so long as Lender’s
interest in the Collateral, in Lender’s opinion, is not jeopardized.

 

Hazardous Substances.  Grantor represents and warrants that the
Collateral never has been, and never will be so long as this Agreement remains
a lien on the Collateral, used in violation of any Environmental Laws or for
the generation, manufacture, storage, transportation, treatment, disposal,
release or threatened release of any Hazardous Substance.  The representations and warranties contained
herein are based on Grantor’s due diligence in investigating the Collateral for
Hazardous Substances.  Grantor
hereby  (1)  releases and waives any
future claims against Lender for indemnity or contribution in the event Grantor
becomes liable for cleanup or other costs under any Environmental Laws,
and  (2)  agrees to indemnify,
defend, and hold harmless Lender against any and all claims and losses
resulting from a breach of this provision of this Agreement.  This obligation to indemnify and defend shall
survive the payment of the Indebtedness and the satisfaction of this Agreement.

 

Maintenance of Casualty Insurance.  Grantor shall procure and maintain all risks
insurance, including without limitation fire, theft and liability coverage
together with such other insurance as Lender may reasonably require with
respect to the Collateral, in form, amounts, coverages and basis reasonably
acceptable to Lender and issued by a company or companies reasonably acceptable
to Lender.  Grantor, upon request of
Lender, will deliver to Lender from time to time the policies or certificates
of insurance in form satisfactory to Lender, including stipulations that
coverages will not be cancelled or diminished without at least thirty (30) days’
prior written notice to Lender and not including any disclaimer of the insurer’s
liability for failure to give such a notice. 
Each insurance policy also shall include an endorsement providing that
coverage in favor of Lender will not be impaired in any way by any act,
omission or default of Grantor or any other person.  In connection with all policies covering
assets in which Lender holds or is offered a security interest, Grantor will
provide Lender with such loss payable or other endorsements as Lender may
require.  If Grantor at any time fails to
obtain or maintain any insurance as required under this Agreement, Lender may
(but shall not be obligated to) obtain such insurance as Lender deems
appropriate, including if Lender so chooses “single interest insurance,” which
will cover only Lender’s interest in the Collateral.

 

Application of Insurance Proceeds.  Grantor shall promptly notify Lender of any
loss or damage to the Collateral, whether or not such casualty or loss is
covered by insurance.  Lender may make
proof of loss if Grantor fails to do so within fifteen (15) days of the
casualty.  All proceeds of any insurance
on the Collateral, including accrued proceeds thereon, shall be held by Lender
as part of the Collateral.  If Lender
consents to repair or replacement of the damaged or destroyed Collateral,
Lender shall, upon satisfactory proof of expenditure,  pay or reimburse Grantor from the proceeds
for the reasonable cost of repair or restoration.  If Lender does not consent to repair or
replacement of the Collateral, Lender shall retain a sufficient amount of the
proceeds to pay all of the Indebtedness, and shall pay the balance to
Grantor.  Any proceeds which have not
been disbursed within six (6) months after their receipt and which Grantor
has not committed to the repair or restoration of the Collateral shall be used
to prepay the Indebtedness.

 

Insurance Reports.  Grantor, upon request of Lender, shall
furnish to Lender reports on each existing policy of insurance showing such
information as Lender may reasonably request including the following:  (1)  the name of the insurer;  (2)  the risks insured;  (3)  the amount of the policy;  (4)  the property insured;  (5)  the then current value on the basis
of which insurance has been obtained and the manner of determining that value;
and  (6)  the expiration date of the
policy.  In addition, Grantor shall upon
request by Lender (however not more often than annually) have an independent
appraiser satisfactory to Lender determine, as applicable, the cash value or
replacement cost of the Collateral.

 

Financing Statements.  Grantor authorizes Lender to file a UCC
financing statement, or alternatively, a copy of this Agreement to perfect
Lender’s security interest.  At Lender’s
request, Grantor additionally agrees to sign all other documents that are
necessary to perfect, protect, and continue Lender’s security interest in the
Property.  This includes making sure
Lender is shown as the first and only security interest holder on the title
covering the Property.  Grantor will pay
all filing fees, title transfer fees, and other fees and costs involved unless
prohibited by law or unless Lender is required by law to pay such fees and
costs.  Grantor irrevocably appoints
Lender to execute documents necessary to transfer title if there is a
default.  Lender may file a copy of this
Agreement as a financing statement.  If
Grantor changes Grantor’s name or address, or the name or address of any person
granting a security interest under this Agreement changes, Grantor will
promptly notify the Lender of such change.

 

GRANTOR’S RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS.  Until default and except as otherwise
provided below with respect to accounts,

 

 

Grantor
may have possession of the tangible personal property and beneficial use of all
the Collateral and may use it in any lawful manner not inconsistent with this
Agreement or the Related Documents, provided that Grantor’s right to possession
and beneficial use shall not apply to any Collateral where possession of the
Collateral by Lender is required by law to perfect Lender’s security interest
in such Collateral.  Until otherwise
notified by Lender, Grantor may collect any of the Collateral consisting of
accounts.  At any time and even though no
Event of Default exists, Lender may exercise its rights to collect the accounts
and to notify account debtors to make payments directly to Lender for
application to the Indebtedness.  If
Lender at any time has possession of any Collateral, whether before or after an
Event of Default, Lender shall be deemed to have exercised reasonable care in
the custody and preservation of the Collateral if Lender takes such action for
that purpose as Grantor shall request or as Lender, in Lender’s sole
discretion, shall deem appropriate under the circumstances, but failure to
honor any request by Grantor shall not of itself be deemed to be a failure to
exercise reasonable care.  Lender shall
not be required to take any steps necessary to preserve any rights in the
Collateral against prior parties, nor to protect, preserve or maintain any
security interest given to secure the Indebtedness.

 

LENDER’S EXPENDITURES.  If any action or proceeding is commenced that
would materially affect Lender’s interest in the Collateral or if Grantor fails
to comply with any provision of this Agreement or any Related Documents,
including but not limited to Grantor’s failure to discharge or pay when due any
amounts Grantor is required to discharge or pay under this Agreement or any
Related Documents, Lender on Grantor’s behalf may (but shall not be obligated
to) take any action that Lender deems appropriate, including but not limited to
discharging or paying all taxes, liens, security interests, encumbrances and
other claims, at any time levied or placed on the Collateral and paying all
costs for insuring, maintaining and preserving the Collateral.  All such expenditures incurred or paid by
Lender for such purposes will then bear interest at the rate charged under the
Note from the date incurred or paid by Lender to the date of repayment by
Grantor.  All such expenses will become a
part of the Indebtedness and, at Lender’s option, will  (A)  be payable on demand;  (B)  be added to the balance of the Note
and be apportioned among and be payable with any installment payments to become
due during either  (1)  the term of
any applicable insurance policy; or  (2) 
the remaining term of the Note; or  (C) 
be treated as a balloon payment which will be due and payable at the Note’s
maturity.  The Agreement also will secure
payment of these amounts.  Such right
shall be in addition to all other rights and remedies to which Lender may be
entitled upon Default.

 

DEFAULT.  Each of the following shall constitute an
Event of Default under this Agreement:

 

Payment Default.  Borrower fails to make any payment when due
under the Indebtedness following the expiration of applicable cure periods, if
any.

 

Other Defaults.  Borrower or Grantor fails to comply with or
to perform any other term, obligation, covenant or condition contained in this
Agreement or in any of the Related Documents or to comply with or to perform
any term, obligation, covenant or condition contained in any other agreement
between Lender and Borrower or Grantor following the expiration of thirty (30)
days after written notice of such default is provided by Lender to Borrower.

 

False Statements.  Any warranty, representation or statement
made or furnished to Lender by Borrower or Grantor or on Borrower’s or Grantor’s
behalf under this Agreement or the Related Documents is false or misleading in
any material respect, either now or at the time made or furnished or becomes
false or misleading at any time thereafter.

 

Defective Collateralization.  This Agreement or any of the Related
Documents ceases to be in full force and effect (including failure of any
collateral document to create a valid and perfected security interest or lien)
at any time and for any reason if such defect has not been cured following the
expiration of thirty (30) days after notice by Lender to Borrower.

 

Insolvency.  The dissolution or termination of Borrower’s
or Grantor’s existence as a going business, the insolvency of Borrower or
Grantor, the appointment of a receiver for any part of Borrower’s or Grantor’s
property, any assignment for the benefit of creditors, any type of creditor
workout, or the commencement of any proceeding under any bankruptcy or
insolvency laws by or against Borrower or Grantor.

 

Creditor or Forfeiture Proceedings.  Commencement of foreclosure or forfeiture
proceedings, whether by judicial proceeding, self-help, repossession or any
other method, by any creditor of Borrower or Grantor or by any governmental
agency against any collateral securing the Indebtedness.  This includes a garnishment of any of
Borrower’s or Grantor’s accounts, including deposit accounts, with Lender.  However, this Event of Default shall not
apply if there is a good faith dispute by Borrower or Grantor as to the
validity or reasonableness of the claim which is the basis of the creditor or
forfeiture proceeding and if Borrower or Grantor gives Lender written notice of
the creditor or forfeiture proceeding and deposits with Lender monies or a
surety bond for the creditor or forfeiture proceeding, in an amount determined
by Lender, in its sole discretion, as being an adequate reserve or bond for the
dispute.

 

Adverse Change.  A material adverse change occurs in Borrower’s
or Grantor’s financial condition, or Lender believes the prospect of payment or
performance of the Indebtedness is impaired.

 

RIGHTS AND REMEDIES ON DEFAULT.  If an Event of Default occurs under this
Agreement, at any time thereafter, Lender shall have all the rights of a
secured party under the Colorado Uniform Commercial Code.  In addition and without limitation, Lender
may exercise any one or more of the following rights and remedies:

 

Accelerate Indebtedness.  Lender may declare the entire Indebtedness,
including any prepayment penalty which Borrower would be required to pay,
immediately due and payable, without notice of any kind to Borrower or Grantor.

 

Assemble Collateral.  Lender may require Grantor to deliver to
Lender all or any portion of the Collateral and any and all certificates of
title and other documents relating to the Collateral.  Lender may require Grantor to assemble the
Collateral and make it available to Lender at a place to be designated by
Lender.  Lender also shall have full
power to enter upon the property of Grantor to take possession of and remove
the Collateral.  If the Collateral contains
other goods not covered by this Agreement at the time of repossession, Grantor
agrees Lender may take such other goods, provided that Lender makes reasonable
efforts to return them to Grantor after repossession.

 

Sell the Collateral.  Lender shall have full power to sell, lease,
transfer, or otherwise deal with the Collateral or proceeds thereof in Lender’s
own name or that of Grantor.  Lender may
sell the Collateral at public auction or private sale.  Unless the Collateral threatens to decline
speedily in value or is of a type customarily sold on a recognized market,
Lender will give Grantor, and other persons as required by law, reasonable
notice of the time and place of any public sale, or the time after which any
private sale or any other disposition of the Collateral is to be made.  However, no notice need be provided to any person
who, after Event of Default occurs, enters into and authenticates an agreement
waiving that person’s right to notification of sale.  The requirements of reasonable notice shall
be met if such notice is given at least ten (10) days before the time of
the sale or disposition.  All expenses
relating to the disposition of the Collateral, including without limitation the
expenses of retaking, holding, insuring, preparing for sale and selling the
Collateral, shall become a part of the Indebtedness secured by this Agreement
and shall be payable on demand, with interest at the Note rate from date of
expenditure until repaid.

 

Appoint Receiver.  Lender shall have the right to have a
receiver appointed to take possession of all or any part of the Collateral, with
the power to protect and preserve the Collateral, to operate the Collateral
preceding foreclosure or sale, and to collect the Rents from the Collateral and
apply the proceeds, over and above the cost of the receivership, against the
Indebtedness.  The receiver may serve
without bond if permitted by law.  Lender’s
right to the appointment of a receiver shall exist whether or not the apparent
value of the Collateral exceeds the Indebtedness by a substantial amount.  Employment by Lender shall not disqualify a
person from serving as a receiver. 
Receiver may be appointed by a court of competent jurisdiction upon ex
parte application and without notice, notice being expressly waived.

 

Collect Revenues, Apply Accounts.  Lender, either itself or through a receiver,
may collect the payments, rents, income, and revenues from the Collateral.  Lender may at any time in Lender’s discretion
transfer any Collateral into Lender’s own name or that of Lender’s nominee and
receive the payments, rents, income, and revenues therefrom and hold the same
as security for the Indebtedness or apply it to payment of the Indebtedness in
such order of preference as Lender may determine.  Insofar as the Collateral consists of
accounts, general intangibles, insurance policies, instruments, chattel paper,
choses in action, or similar property, Lender may demand, collect, receipt for,
settle, compromise, adjust, sue for, foreclose, or realize on the Collateral as
Lender may determine, whether or not Indebtedness or Collateral is then due.  For these purposes, Lender may, on behalf of
and in the name of Grantor, receive, open and dispose of mail addressed to
Grantor; change any address to which mail and payments are to be sent; and
endorse notes, checks, drafts, money orders, documents of title, instruments
and items pertaining to payment, shipment, or storage of any Collateral.  To facilitate collection, Lender may notify
account debtors and obligors on any Collateral to make payments directly to
Lender.

 

Obtain Deficiency.  If Lender chooses to sell any or all of the
Collateral, Lender may obtain a judgment against Borrower for any deficiency
remaining on the Indebtedness due to Lender after application of all amounts
received from the exercise of the rights provided in this Agreement.  Borrower shall be liable for a deficiency
even if the transaction described in this subsection is a sale of accounts or
chattel paper.

 

Other Rights and Remedies.  Lender shall have all the rights and remedies
of a secured creditor under the provisions of the Uniform Commercial Code, as
may be amended from time to time.  In
addition, Lender shall have and may exercise any or all other rights and
remedies it may have available at law, in equity, or otherwise.

 

Election of Remedies.  Except as may be prohibited by applicable
law, all of Lender’s rights and remedies, whether evidenced by this Agreement,
the Related Documents, or by any other writing, shall be cumulative and may be
exercised singularly or concurrently. 
Election by Lender to pursue any

 

 

remedy
shall not exclude pursuit of any other remedy, and an election to make
expenditures or to take action to perform an obligation of Grantor under this
Agreement, after Grantor’s failure to perform, shall not affect Lender’s right
to declare a default and exercise its remedies.

 

ADDITIONAL
TRUST OBLIGATIONS. If the Owner of the named Collateral, listed in the
attached Security Instrument is a Trust, then, to the extent the foregoing
described Trust Agreement does not specifically authorize this Pledge and
Security Agreement, the provisions of the foregoing described Trust Agreement
are hereby amended to the extent necessary to authorize the same and the
performance of all the provisions hereof. In the event the foregoing described
Trust Agreement is revoked prior to the payment in full of all obligations of
Borrower to Lender and secured by the Collateral, this Pledge and Security
Agreement shall nonetheless remain in full force and effect until all such
obligations of the Borrower are paid in full.

 

ADDITIONAL
TERMS. Grantor’s failure to promptly provide additional collateral of a type
and in a manner satisfactory to Lender upon Lender’s request therefore due to
Lender’s reasonable determination that the value of the Collateral is
insufficient to adequately secure the Indebtedness.

 

In the event the Debtor does
not maintain insurance coverage on the Collateral deemed adequate by Secured
Party, Secured Party may, in its discretion, purchase insurance or additional
insurance, but shall not be obligated to do so. The premium for such additional
insurance shall be added to and become part of the Obligations secured by this
Agreement. Any refund of insurance premiums shall be applied to the cost of
other insurance, or upon the last maturing installment (or the principal) of
the debt secured by this Agreement.

 

Debtor waives the right to
direct the application of any and all payments at any time or times received by
Secured Party on account of the Obligations secured hereby or as proceeds of
the Collateral and agrees that Secured Party shall have the exclusive right to
apply and reapply any and all such payments in such manner as Secured Party in
its sole discretion my deem advisable, notwithstanding any entry by Secured
Party upon any of its books and records.

 

In the event Lender, in its
sole discretion, issues letters of credit for the account of the Borrower
pursuant hereto (“Letters of Credit”), each such Letter of Credit shall be
issued subject to such terms and conditions as Lender shall determine at the
time of issuance of each such Letter of Credit, including but not limited to
letter of credit fees and the terms hereof. The face amount of all such Letters
of Credit shall be deemed to be outstanding loans hereunder for purposes of
computing the amount available to Borrower to borrow under any applicable
credit facility with Lender. At no time shall the face amount of all
outstanding Letters of Credit plus the principal amount of all outstanding
loans from Lender to Borrower under any such credit facility exceed the Loan
Value.

 

Bankcard Obligations: All
currently existing and future bankcard obligations owing by the Borrower to the
Lender or to any affiliate of the Lender created pursuant to the use of
bankcards now existing or hereafter issued by the Lender to the Borrower, shall
be secured by and pursuant to the terms of this Security Agreement. All terms
of the Security Agreement not expressly modified hereby shall remain in full
force and effect.

 

MISCELLANEOUS
PROVISIONS.  The following
miscellaneous provisions are a part of this Agreement:

 

Amendments.  This Agreement, together with any Related
Documents, constitutes the entire understanding and agreement of the parties as
to the matters set forth in this Agreement. 
No alteration of or amendment to this Agreement shall be effective
unless given in writing and signed by the party or parties sought to be charged
or bound by the alteration or amendment.

 

Attorneys’ Fees; Expenses.  Grantor agrees to pay upon demand all of
Lender’s reasonable costs and expenses, including Lender’s attorneys’ fees and
Lender’s legal expenses, incurred in connection with the enforcement of this
Agreement.  Lender may hire or pay
someone else to help enforce this Agreement, and Grantor shall pay the
reasonable costs and expenses of such enforcement.  Costs and expenses include Lender’s attorneys’
fees and legal expenses whether or not there is a lawsuit, including attorneys’
fees and legal expenses for bankruptcy proceedings (including efforts to modify
or vacate any automatic stay or injunction), appeals, and any anticipated
post-judgment collection services. 
Grantor also shall pay all court costs and such additional fees as may
be directed by the court.

 

Caption Headings.  Caption headings in this Agreement are for
convenience purposes only and are not to be used to interpret or define the
provisions of this Agreement.

 

Governing Law.  This
Agreement will be governed by federal law applicable to Lender and, to the
extent not preempted by federal law, the laws of the State of Colorado without
regard to its conflicts of law provisions. 
This Agreement has been accepted by Lender in the State of Colorado.

 

Choice of Venue.  If there is a lawsuit, Grantor agrees upon
Lender’s request to submit to the jurisdiction of the courts of DENVER County,
State of Colorado.

 

Joint and Several Liability.  All obligations of Borrower and Grantor under
this Agreement shall be joint and several, and all references to Grantor shall
mean each and every Grantor, and all references to Borrower shall mean each and
every Borrower.  This means that each
Borrower and Grantor signing below is responsible for all obligations in this
Agreement.  Where any one or more of the
parties is a corporation, partnership, limited liability company or similar
entity, it is not necessary for Lender to inquire into the powers of any of the
officers, directors, partners, members, or other agents acting or purporting to
act on the entity’s behalf, and any obligations made or created in reliance
upon the professed exercise of such powers shall be guaranteed under this
Agreement.

 

No Waiver by Lender.  Lender shall not be deemed to have waived any
rights under this Agreement unless such waiver is given in writing and signed
by Lender.  No delay or omission on the
part of Lender in exercising any right shall operate as a waiver of such right
or any other right.  A waiver by Lender
of a provision of this Agreement shall not prejudice or constitute a waiver of
Lender’s right otherwise to demand strict compliance with that provision or any
other provision of this Agreement.  No
prior waiver by Lender, nor any course of dealing between Lender and Grantor,
shall constitute a waiver of any of Lender’s rights or of any of Grantor’s
obligations as to any future transactions. 
Whenever the consent of Lender is required under this Agreement, the
granting of such consent by Lender in any instance shall not constitute
continuing consent to subsequent instances where such consent is required and
in all cases such consent may be granted or withheld in the sole discretion of
Lender.

 

Notices.  Any notice required to be given under this
Agreement shall be given in writing, and shall be effective when actually
delivered, when actually received by telefacsimile (unless otherwise required
by law), when deposited with a nationally recognized overnight courier, or, if
mailed, when deposited in the United States mail, as first class, certified or
registered mail postage prepaid, directed to the addresses shown near the
beginning of this Agreement.  Any party
may change its address for notices under this Agreement by giving formal
written notice to the other parties, specifying that the purpose of the notice
is to change the party’s address.  For
notice purposes, Grantor agrees to keep Lender informed at all times of Grantor’s
current address.  Unless otherwise
provided or required by law, if there is more than one Grantor, any notice
given by Lender to any Grantor is deemed to be notice given to all Grantors.

 

Power of Attorney.  Grantor hereby appoints Lender as Grantor’s
irrevocable attorney-in-fact for the purpose of executing any documents
necessary to perfect, amend, or to continue the security interest granted in
this Agreement or to demand termination of filings of other secured parties.  Lender may at any time, and without further
authorization from Grantor, file a carbon, photographic or other reproduction
of any financing statement or of this Agreement for use as a financing
statement.  Grantor will reimburse Lender
for all expenses for the perfection and the continuation of the perfection of
Lender’s security interest in the Collateral.

 

Severability.  If a court of competent jurisdiction finds
any provision of this Agreement to be illegal, invalid, or unenforceable as to
any circumstance, that finding shall not make the offending provision illegal,
invalid, or unenforceable as to any other circumstance.  If feasible, the offending provision shall be
considered modified so that it becomes legal, valid and enforceable.  If the offending provision cannot be so
modified, it shall be considered deleted from this Agreement.  Unless otherwise required by law, the
illegality, invalidity, or unenforceability of any provision of this Agreement
shall not affect the legality, validity or enforceability of any other
provision of this Agreement.

 

Successors and Assigns.  Subject to any limitations stated in this
Agreement on transfer of Grantor’s interest, this Agreement shall be binding
upon and inure to the benefit of the parties, their successors and
assigns.  If ownership of the Collateral
becomes vested in a person other than Grantor, Lender, without notice to
Grantor, may deal with Grantor’s successors with reference to this Agreement
and the Indebtedness by way of forbearance or extension without releasing Grantor
from the obligations of this Agreement or liability under the Indebtedness.

 

Survival of Representations and Warranties.  All representations, warranties, and
agreements made by Grantor in this Agreement shall survive the execution and
delivery of this Agreement, shall be continuing in nature, and shall remain in
full force and effect until such time as Borrower’s Indebtedness shall be paid
in full.

 

Time is of the Essence.  Time is of the essence in the performance of
this Agreement.

 

Waive Jury.  All parties
to this Agreement hereby waive the right to any jury trial in any action,
proceeding, or counterclaim brought by any party against any other party.

 

DEFINITIONS.  The following capitalized words and terms
shall have the following meanings when used in this Agreement.  Unless specifically stated to the contrary,
all references to dollar amounts shall mean amounts in lawful money of the
United States of America.  Words and terms
used in the singular shall

 

 

include the plural, and the
plural shall include the singular, as the context may require.  Words and terms not otherwise defined in this
Agreement shall have the meanings attributed to such terms in the Uniform
Commercial Code:

 

Agreement.  The word “Agreement” means this Commercial
Security Agreement, as this Commercial Security Agreement may be amended or
modified from time to time, together with all exhibits and schedules attached
to this Commercial Security Agreement from time to time.

 

Borrower.  The word “Borrower” means STARTEK, INC.;
STARTEK USA, INC. and STARTEK CANADA SERVICES, LTD. and includes all co-signers
and co-makers signing the Note and all their successors and assigns.

 

Collateral.  The word “Collateral” means all of Grantor’s
right, title and interest in and to all the Collateral as described in the
Collateral Description section of this Agreement.

 

Default.  The word “Default” means the Default set
forth in this Agreement in the section titled “Default”.

 

Environmental Laws.  The words “Environmental Laws” mean any and
all state, federal and local statutes, regulations and ordinances relating to
the protection of human health or the environment, including without limitation
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended, 42 U.S.C. Section 9601, et seq. (“CERCLA”), the
Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499 (“SARA”),
the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et
seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901,
et seq., or other applicable state or federal laws, rules, or regulations
adopted pursuant thereto.

 

Event of Default.  The words “Event of Default” mean any of the
events of default set forth in this Agreement in the Default section of this
Agreement.

 

Grantor.  The word “Grantor” means STARTEK CANADA
SERVICES, LTD.

 

Guaranty.  The word “Guaranty” means the guaranty from
guarantor, endorser, surety, or accommodation party to Lender, including
without limitation a guaranty of all or part of the Note.

 

Hazardous Substances.  The words “Hazardous Substances” mean
materials that, because of their quantity, concentration or physical, chemical
or infectious characteristics, may cause or pose a present or potential hazard
to human health or the environment when improperly used, treated, stored,
disposed of, generated, manufactured, transported or otherwise handled.  The words “Hazardous Substances” are used in
their very broadest sense and include without limitation any and all hazardous
or toxic substances, materials or waste as defined by or listed under the
Environmental Laws.  The term “Hazardous
Substances” also includes, without limitation, petroleum and petroleum
by-products or any fraction thereof and asbestos.

 

Indebtedness.  The word “Indebtedness” means the
indebtedness evidenced by the Note or Related Documents, including all
principal and interest together with all other indebtedness and costs and
expenses for which Grantor is responsible under this Agreement or under any of
the Related Documents and (a) the payment of Grantor’s obligations
(whether joint, several or otherwise) to Lender as evidenced by any other note(s) or
other evidence of indebtedness executed by such Grantor and all amendments,
modifications, renewals, extensions and substitutions thereof and all
subsequent notes of greater or lesser amounts payable or assigned to Lender; (b) the
performance of each Debtor’s obligations under this security agreement (“Agreement”);
and (c) the payment of any and all other indebtedness, direct or indirect,
mature or unmatured or contingent, joint or several now or hereafter owed to
Secured Party by each Debtor, including (without limitation) indebtedness
unrelated or dissimilar to any indebtedness in 
existence or contemplated by any Debtor at the time this Agreement was
executed or at the time such indebtedness is incurred..

 

Lender.  The
word “Lender” means UMB BANK COLORADO, n.a., its successors and assigns.

 

Note.  The
word “Note” means the Note executed by STARTEK, INC.; and STARTEK USA, INC. in
the principal amount of $15,000,000.00 dated June 26, 2009, together with
all renewals of, extensions of, modifications of, refinancings of,
consolidations of, and substitutions for the note or credit agreement.

 

Property.  The word “Property” means all of Grantor’s
right, title and interest in and to all the Property as described in the “Collateral
Description” section of this Agreement.

 

Related Documents.  The words “Related Documents” mean all
promissory notes, credit agreements, loan agreements, environmental agreements,
guaranties, security agreements, mortgages, deeds of trust, security deeds,
collateral mortgages, and all other instruments, agreements and documents,
whether now or hereafter existing, executed in connection with the
Indebtedness.

 

BORROWER AND
GRANTOR HAVE READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS COMMERCIAL SECURITY
AGREEMENT AND AGREE TO ITS TERMS. THIS AGREEMENT IS DATED JUNE 26, 2009.

 

GRANTOR:

 

 

STARTEK
CANADA SERVICES, LTD.

 

	
  By: 

  	
  /s/ A.
  LAURENCE JONES

  	
   

  	
  By:

  	
  /s/ DAVID
  G. DURHAM

  
	
  A.
  Laurence Jones, Chief Exec. Officer/Pres. of

  	
   

  	
  David G.
  Durham, Exec. VP/CFO/Treasurer of

  
	
  STARTEK,
  INC.

  	
   

  	
  STARTEK,
  INC.

  

 

BORROWER:

 

 

STARTEK,
INC.

 

	
  By:

  	
  /s/ A.
  LAURENCE JONES

  	
   

  	
  By:

  	
  /s/ DAVID
  G. DURHAM

  
	
  A.
  Laurence Jones, Chief Exec. Officer/Pres. of

  	
   

  	
  David G.
  Durham, Exec. VP/CFO/Treasurer of

  
	
  STARTEK,
  INC.

  	
   

  	
  STARTEK,
  INC.

  

 

 

STARTEK USA,
INC.

 

	
  By:

  	
  /s/ A.
  LAURENCE JONES

  	
   

  	
  By:

  	
  /s/ DAVID
  G. DURHAM

  
	
  A.
  Laurence Jones, Chief Exe. Officer/Pres. of

  	
   

  	
  David G.
  Durham, Exec VP/CFO/Treasurer of 

  
	
  STARTEK
  USA, INC.

  	
   

  	
  STARTEK
  USA, INC.

  

 

 

STARTEK
CANADA SERVICES, LTD.

 

	
  By:

  	
  /s/ A.
  LAURENCE JONES

  	
   

  	
  By:

  	
  /s/ DAVID
  G. DURHAM

  
	
  A.
  Laurence Jones, Chief Exec. Officer/Pres. of

  	
   

  	
  David G.
  Durham, Exec. VP/CFO/Treasurer of

  
	
  STARTEK
  CANADA SERVICES, LTD.

  	
   

  	
  STARTEK
  CANADA SERVICES, LTD.

  

 

LASER PRO Lending, Ver. 5.44.00.002 
Copr. Harland Financial Solutions, Inc. 1997, 2009.   All Rights Reserved.   — CO 
S:\APPS\hfs\CFI\LPL\E40.FC 
TR-62141  PR-63 (M)

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