Exhibit 10.20
SECURITY AGREEMENT
This Security Agreement is made as of the 1
st day of May, 2008, by IMAGE
SENSING SYSTEMS, INC ., a Minnesota
corporation (hereinafter (“Debtor”) for the benefit
of ASSOCIATED BANK, NATIONAL
ASSOCIATION (the
“Bank”).
For good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, Debtor agrees as
follows:
ARTICLE I
DEFINITIONS
As used herein, the following terms shall have the
meaning set forth:
“ Bank” shall have the meaning
set forth in the preamble hereto.
“ Debtor” shall have the meaning
set forth in the preamble hereto.
“ Collateral” shall mean all
property in which a security interest is granted pursuant to
Article II hereof.
“ Event of
Default” shall have the meaning
specified in Article V hereof.
“ Loan
Agreement ” means the Loan
Agreement of even date herewith between the Debtor and the
Bank.
“ Obligations” shall mean the
prompt payment or performance in full when due, whether at stated
maturity, by acceleration or otherwise (including the payment of
amounts that would become due but for the operation of the
automatic stay under Section 362(a) of the Bankruptcy Code, 11
U.S.C. sec. 362(a)) of (a) all debts, obligations and liabilities
of Debtor to Bank arising out of credit previously granted, credit
contemporaneously granted, and credit granted in the future by Bank
to any Debtor, to any Debtor and another, or to another guaranteed
or indorsed by any Debtor, and all or any portion of such
obligations that are paid to the extent all or any part of such
payment is avoided or recovered directly or indirectly from Bank as
a preference, fraudulent transfer or otherwise and (b) all
obligations of any nature of Debtor now or hereafter existing under
this Agreement.
Other terms defined herein shall have the meanings
ascribed to them herein. Terms used herein but not defined shall
have the meanings assigned to them in the Wisconsin Uniform
Commercial Code, as amended from time to time.
ARTICLE II
SECURITY INTERESTS
As security for the payment and performance of all
of the Obligations, Debtor hereby grants to the Bank a continuing
security interest in all of Debtor’s following assets now
owned or hereafter acquired or arising: all of Debtor’s
goods, general intangibles, accounts, deposit accounts, investment
property, letter of credit rights, letters of credit, chattel paper
and instruments, whether now owned or hereafter acquired, and all
additions and accessions to, all spare and repair parts, special
tools, equipment and replacements for, software used in, all
returned or repossessed goods the sale of which gave rise to, and
all proceeds and products of the foregoing.
ARTICLE III
REPRESENTATIONS AND COVENANTS OF
DEBTOR
|
|
Debtor represents, warrants and covenants
that:
|
3.1
Authorization . The
execution and performance of this Agreement has been duly
authorized by all necessary action and does not and will not: (a)
require any consent or approval of the stockholders, members or
partners of any entity, or the consent of any governmental entity;
or (b) violate any provision of any indenture, contract, agreement
or instrument to which Debtor is a party or by which it is
bound.
3.2
Title to Collateral .
Debtor has good and marketable title to all of the Collateral and
none of the Collateral is subject to any security interest except
only the Permitted Liens as set forth in the Loan
Agreement.
3.3
Disposition or Encumbrance of
Collateral . Debtor will not encumber,
sell or otherwise transfer or dispose of the Collateral without the
prior written consent of Bank except in the ordinary course of
business or as provided in this Agreement and the Loan Agreement
and except for obsolete, damaged or unneeded Equipment or Equipment
which may be replaced or disposed of in the ordinary course of
business.
3.4
Maintenance of Loan Equipment
. Debtor will maintain the Equipment in good
condition and repair, ordinary wear and tear excepted, and except
for Equipment no longer used or useful in the conduct of
Debtor’s business. The Bank’s security interest
attaches to all of the Collateral wherever located and
Debtor’s failure to inform the Bank of the location of any
item or items of Collateral shall not impair the Bank’s
security interest therein.
3.5
Instruments as Proceeds . Notwithstanding any other provision in this Security
Agreement, Debtor covenants that, upon the occurrence of and during
the continuance of an Event of Default and upon demand by the Bank,
instruments constituting cash Proceeds (for example, money and
checks) shall be immediately deposited in deposit accounts with
Bank.
3.6
Protection of Collateral . All expenses of protecting, storing, warehousing, insuring,
handling and shipping of the Collateral free of any liens,
encumbrances and security interests prohibited by this Agreement
(except the Permitted Liens as set forth in the Loan Agreement) and
of removing the same if they should arise, and any and all excise,
property, sales and use taxes imposed by any state, federal or
local authority on any of the Collateral or in respect of the sale
or lease thereof, shall be borne and paid by Debtor and if Debtor
fails to promptly pay any thereof when due, Bank may, at its
option, but shall not be required to pay the same whereupon the
same shall constitute Obligations and shall be secured by the
security interest granted hereunder.
3.7
Insurance . Debtor
shall keep the Collateral and Bank’s interest in it insured
under policies with such provisions for such, and by such insurers
as shall be satisfactory to Bank, and shall, from time to time,
furnish evidence of such insurance satisfactory to Bank. Debtor
hereby assigns (and directs any insurer to pay) to Bank the
proceeds of all such insurance and any premium refund in excess of
$25,000.00, and authorizes Bank to endorse in the name of Debtor
any instruments for such proceeds or refunds and, at the option of
Bank, to apply such proceeds and refunds to any unpaid balance of
the Obligations, whether or not due, and/or restoration of the
Collateral, returning any excess to Debtor. Bank is authorized, in
the name of Debtor or otherwise, to make, adjust and/or settle
claims in excess of $25,000.00 under any credit insurance financed
by Bank or any insurance on the Collateral, or cancel the same
after the occurrence and during the continuance of an Event of
Default.
2
3.8
Compliance with Law .
Debtor will not use the Collateral, or knowingly permit the
Collateral to be used, for any unlawful purpose or in violation of
any federal, state or municipal law.
3.9
Additional Documentation . Debtor will execute, from time to time, such financing
statements, assignments, and other documents covering the
Collateral, including Proceeds, as Bank may reasonably request in
order to create, evidence, perfect, maintain or continue the
Bank’s security interest in the Collateral (including
additional Collateral acquired by Debtor after the date hereof),
and Debtor will pay the cost of filing the same in all public
offices in which the Bank may deem filing to be appropriate; and
will notify Bank promptly upon acquiring any additional Collateral
other than in the ordinary course of business. Debtor agrees that
it will not change its name or state of organization without first
giving the Bank not less than 15 days prior written notice of such
change and without executing any financing statements or other
documents requested by it in relation thereto.
3.10
Chief Executive Office . The location of the chief executive office of Debtor is set
forth at the end of this Agreement and will not be changed without
30 days’ prior written notice to the Bank. Debtor warrants
that its books and records concerning the Collateral are located at
its chief executive office.
3.11 Name of
Debtor . Debtor’s true name and
state of organ
|
