SONABANK
SABL
SECURITY AND COMPLIANCE AGREEMENT
1.
Halifax Corporation of Virginia hereinafter called
“Debtor”), for value received, hereby grants to
Sonabank 550 Broadview Avenue, #LL, Warrenton, VA 20186,
(hereinafter called “Secured Party”), a security
interest in the property described below (hereinafter collectively
called “Collateral”) to secure the payment of the
principal and interest on and all obligations under a note
(hereinafter called the “Note”), dated June 11,
2009, and Amendment to Note dated August 20, 2009 of the
Debtor payable to the order of the Secured Party, in the principal
amount of Three Million Dollars and 00/100 , all
renewals and extensions of the Note, and all costs, expenses,
advances and liabilities which may be made or incurred by Secured
Party in the disbursement, administration and collection of the
loan evidenced by the Note and in the protection, maintenance and
liquidation of the security interest hereby granted with interest
at the maximum legal rate on such costs, expenses, advances and
liabilities. The Note and all other obligations secured hereby are
herein collectively called the
“Liabilities.”
2. The
Collateral in which this security interest is granted is all of the
Debtor’s property described below in reference to which an
“X” or checkmark has been placed in the blank
applicable thereto, together with all the proceeds and products
therefrom. If two such boxes are so marked, the security interest
so designated secures the purchase money from the loan used by the
Debtor to acquire title to the Collateral.
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a.
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All equipment
and machinery, including power-driven machinery and equipment,
furniture and fixtures now owned or hereafter acquired, together
with all replacements thereof, all attachments, accessories, parts
and tools belonging thereto or for use in connection
therewith.
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b.
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All passenger
and commercial motor vehicles registered for use upon public
highways or streets, now owned or hereinafter acquired, together
with all replacements thereof, all attachments, accessories, parts,
equipment and tools belonging thereto or for use in connection
therewith.
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c.
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All inventory,
raw materials, work in process and supplies now owned or hereafter
acquired.
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d.
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All accounts
receivable and cash now outstanding or hereafter
arising.
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e.
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All contract
rights and general intangibles now in force or hereafter
acquired.
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f.
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Government
Contracts assigned to Sonabank, pursuant to the Assignment of
Claims Act of 1940.
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3. Debtor shall
not transfer, sell or assign Debtor’s interest in the
Collateral nor permit any other security interest to be created
thereon without Secured Party’s prior written approval,
except that Debtor may sell the inventory listed in
Paragraph 2c hereof in the ordinary course of business on
customary terms and at usual prices and may collect as Secured
Party’s agent sums due on accounts receivable and contract
rights listed in Paragraphs 2d. and 2e. until advised otherwise by
Secured Party.
4. Lock Box.
Collateral Account. Debtor will process payments due under the
relevant account directly to a special lock box to be under the
control of Secured Party. All account debtors will direct ACH
payments and wire transfer to the special collateral account to be
established and maintained with Secured Party. All deposits in said
collateral account shall constitute proceeds of Collateral and
shall not constitute payment of any Obligation. Nightly, Secured
Party will apply finally collected funds on deposit in said
collateral account to the payment of the Obligations; however, no
advances will be allowed prior to 10 a.m. each business day. Until
so deposited, all payments on accounts and chattel paper received
by debtor shall be held in trust by Debtor for and as the
property
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