Exhibit 4.19
SECURITY AGREEMENT
This Security Agreement (as amended,
supplemented, amended and restated or otherwise modified from time
to time, this “Agreement”), dated as of May 30,
2008 is made by OPTICAL CABLE CORPORATION , a Virginia
Corporation (“OCC”) SUPERIOR MODULAR PRODUCTS
INCORPORATED , a Delaware corporation (“SMP” and
together with OCC, each individually with respect to itself,
jointly and severally, and collectively, the “Debtor”)
in favor of VALLEY BANK , a Virginia banking corporation,
its affiliates and their successors and assigns (the “Secured
Party”).
For good and valuable consideration,
the receipt and sufficiency of which is acknowledged, and intending
to be legally bound, Debtor agrees with Secured Party as
follows:
1. Security Interest . Debtor
hereby grants to Secured Party a security interest (“Security
Interest”) in all of Debtor’s right, title and interest
in and to all of its real and personal property whether now owned
or hereafter acquired, and in all proceeds and products thereof,
including, without limitation, of the following property in any
form including, but not limited to, insurance proceeds, increases
and profits received therefrom, all substitutions therefor, goods
represented by, and books and records pertaining thereto whether
any of the foregoing is now or hereafter acquired
(“Collateral”): all money, goods, machinery, equipment,
fixtures, inventory, accounts, chattel paper, letter of credit
rights, deposit accounts, commercial tort claims, documents,
instruments, investment property and general intangibles now owned
or hereafter acquired by Debtor and wherever located.
2. Indebtedness Secured . The
Security Interest granted by Debtor secures payment of any and all
indebtedness and liabilities of Debtor to Secured Party, whether
now existing or hereafter incurred, or every kind and character,
direct or indirect, joint or several, absolute or contingent, due
or to become due, and whether any such indebtedness or liability is
from time to time reduced and thereafter increased or entirely
extinguished and thereafter reincurred, including, without
limitation, any sums advanced by Secured Party for taxes,
assessments, insurance and other charges and expenses as
hereinafter provided all obligations and liabilities of Debtor
under interest rate swap agreements, interest rate cap agreements
and interest rate collar agreements or arrangements with Secured
Party designed to protect Debtor against fluctuations in interest
rates or currency exchange rates (hereinafter, collectively
“Indebtedness”).
3. Representations and Warranties
of Debtor . Debtor represents and warrants and, so long as any
Indebtedness remains unpaid, shall be deemed continuously to
represent and warrant that: (a) Debtor (OCC with respect to
that portion of the Collateral owned by it and SMP with respect to
that portion of the Collateral owned by it, and which together
constitute all of the Collateral) is the owner of the Collateral
free of all security interests, adverse claims or other
encumbrances other than Permitted Encumbrances; (b) Debtor is
authorized to enter into this Agreement, and this Agreement is not
in contravention of any law or any indenture, agreement
or
undertaking to which Debtor is a party or by
which it is bound; (c) OCC is duly organized, existing and in
good standing under the laws of the Virginia and SMP is duly
organized, existing and in good standing under the laws of
Delaware; (d) OCC’s business is carried on 5290
Concourse Drive, Roanoke, VA 24019 and SMP’s business is
carried on at 33 Superior Way/112 Buckeye Cove Road, Sannanoa,
North Carolina 28778, (e) Debtor’s chief executive
office is located at 5290 Concourse Drive, Roanoke, VA 24019, and
Debtor’s records concerning the Collateral are kept, at the
addresses specified on Schedule I hereto; (f) each
Account, Chattel Paper, Document, Instrument, General Intangible
which is an outstanding obligation is genuine and enforceable in
accordance with its terms against the party obligated to pay it
(“Account Debtor”); and (f) any amounts
represented by Debtor to Secured Party as owing by each or any
Account Debtor is the correct amount owing not subject to any
material defense, offset, claim or counterclaim against
Debtor.
4. Covenants of Debtor . So
long as any Indebtedness remains unpaid, Debtor (a) will
defend the Collateral against the claims and demands of all other
parties, including any Account Debtor, will keep the Collateral
free from all security interests or other encumbrances other than
Permitted Encumbrances, and will not sell, transfer, lease, or
otherwise dispose of any Collateral or any interest without the
prior written consent of Secured Party, except that, until the
occurrence of an Event of Default as specified in paragraph 10
hereof, Debtor may sell, transfer, lease, assign, deliver or
otherwise dispose of any Collateral in the ordinary course of
business; (b) will notify Secured Party promptly in writing of
any change in Debtor’s addresses, specified on Schedule
I hereto or in Debtor’s name, identity or structure;
(c) will notify Secured Party promptly in writing of any
change in the location of any material Collateral or of the records
with respect thereto or any additional locations at which the
Collateral or records are kept, and will permit Secured Party or
its agents to inspect such records; (d) in connection
herewith, will execute and deliver to Secured Party such financing
statements, and other documents as may be requested by Secured
Party, will pay all costs of title searches, and filing financing
statements and other documents in all public offices requested by
Secured Party, and will do such other things as Secured Party may
reasonably request; (e) will keep, in accordance with GAAP,
consistently applied, accurate and complete books and records
concerning the Collateral, will mark any and all such records
concerning the Collateral, at Secured Party’s request to
indicate the Security Interest, and, upon reasonable notice and in
accordance with the Credit Agreement, will permit Secured Party or
its agents to audit and make extracts from and copy such records or
any of Debtor’s books, ledgers, reports, correspondence or
other records; (f) will not, without Secured Party’s
written consent, make or agree to make any alteration, modification
or cancellation of, or substitution for, or credits, adjustments or
allowances on, any Collateral other than in the ordinary course of
business; (g) will promptly notify Secured Party of any
material default in payment or performance of its obligations with
respect to any of the Collateral; (h) will keep the Collateral
in good condition and repair; and will not use the Collateral in
violation of any provisions of this Agreement, of any applicable
statute, regulation or ordinance or of any policy insuring the
Collateral; (i) will pay all taxes, assessments and other
charges of every nature which may be imposed, levied or assessed
against Debtor or any of Debtor’s assets, including the
Collateral, prior to the date of attachment of any penalties or
liens with respect thereto (other than liens attaching prior to
payment becoming due, if payment is made when due); provided
, however ,
2
Debtor shall not be required to pay any such
tax, assessment or other charge so long as (i) its validity is
being contested in good faith by appropriate proceedings diligently
conducted and (ii) Debtor maintains adequate reserves for any
such tax, assessment or other charge in accordance with GAAP; and
(j) will insure the Collateral against risks, in coverage,
form and amount, and by insurer, satisfactory to Secured Party,
and, at Secured Party’s request, will cause each policy to be
payable to Secured Party as a named insured or loss payee, as its
interest may appear, and deliver each policy or certificate of
insurance to Secured Party, in each case, in accordance with the
Credit Agreement.
5. Verification of Collateral
. Secured Party shall have the right to verify all or any
Collateral in any manner and through any medium Secured Party may
reasonably consider appropriate, and Debtor agrees to furnish all
assistance and information and perform any acts which Secured Party
may reasonably require in connection therewith.
6. Notification and Payments
. After the occurrence of an Event of Default, Secured Party may
notify all or any Account Debtors of the Security Interest and may
also direct such Account Debtors to make all payments on Collateral
to Secured Party. After the occurrence of an Event of Default, all
payments on and from Collateral received by Secured Party directly
or from Debtor shall be applied to the Indebtedness in such order
and manner and at such time as Secured Party shall, in its sole
discretion, determine. After the occurrence of an Event of Default,
Secured Party may notify any or all Account Debtors, and other
parties obligated to pay the Collateral, of the Security Interest
granted hereby and may also direct any and all such parties to make
all payments of the Collateral to Secured Party, and Debtor shall
join in such direction, if requested by Secured Party, and Secured
Party may demand of Debtor in writing, before or after notification
to Account Debtors and without waiving in any manner the Security
Interest, that any payments on and from the Collateral received by
Debtor: (i) shall be held by Debtor in trust for Secured Party
in the same medium in which received; (ii) shall not be
commingled with any assets of Debtor; and (iii) shall be
delivered to Secured Party in the form received, properly indorsed
to permit collection, not later than the third Business Day
following the day of their receipt; and Debtor shall comply with
such demand. Debtor shall also promptly notify Secured Party of the
return to or repossession by Debtor of Goods under
