MASTER SECURITY AGREEMENT
This Master Security Agreement is executed this ___ day of
_____________, 1999, by ONE WORLD XXXXXX.XXX, INC., a Nevada corporation (the
"Corporation" or "Debtor"), in favor of the Holders of the Corporation's 10%
Secured Convertible Promissory Notes ("Holders") and their "Agent," as defined
below, with respect to the following.
RECITALS
A. The Corporation has issued its 10% Secured Convertible Promissory
Notes (hereinafter the "Notes") to the Holders, which Notes total an aggregate
amount of not more than Three Million Dollars (U.S.) ($3,000,000.00 USD).
B. The Corporation and the Holders desire to provide collateral for the
payment of the Notes, and to make provision for collective action by the Holders
in the event of default by the Corporation, upon the following terms and
conditions.
TERMS AND CONDITIONS
1. Grant of Security Interest. Debtor grants and conveys to Holders,
collectively and not individually, a security interest in the following
described property, whether now owned or hereafter acquired:
A. All accounts, goods, equipment, fixtures, and inventory;
B. All money, cash, instruments (including checks and
promissory notes), documents of title, chattel paper, and utility and security
deposits;
C. All deposit accounts and all amounts on deposit with any
banks or other financial institutions, and all amounts owed or becoming owed on
account of credit card sales and collections, including, without limitation, all
amounts due under merchant bankcard or similar agreements; and
D. All securities, shares of stock and ownership interests in
other business entities, including any affiliates or subsidiaries of the
Corporation; and
E. All cash and non-cash proceeds and products of the
foregoing;
hereinafter collectively referred to as the "Collateral;"
For the purpose of securing the payment of the Notes, and the payment
and performance of all obligations and covenants contained in the Notes, in this
Master Security Agreement, or in any other instrument securing the Notes or
relating to the obligations of the Corporation thereunder (hereinafter referred
to as the "Indebtedness").
2. Debtor's Covenants.
A The Corporation will not dispose of, transfer, or conceal
any of the Collateral, excepting only transfers in the ordinary course of
business.
B. The Corporation will endorse in blank and deliver to
Holders' Agent (as defined in Section 5 below), all negotiable instruments and
securities, if any, that are or become Collateral under this Agreement. The
Corporation will further execute and deliver to Holders' Agent all other
documents reasonably required to execute and carry out the intent of the
parties.
C. The Corporation shall pay when due any and all taxes
assessed on the Collateral.
3. Holders Agree to be Bound. By their acceptance and receipt of the
Notes, the Holders accept and agree to be bound by the terms of this Security
Agreement, which is incorporated by reference into each Debenture. Each Holder's
execution of the Subscription Agreement relating to issuance of a Debenture
shall, upon issuance of the Debenture, constitute execution of this Security
Agreement, and agreement to the terms hereof.
4. Parity Provisions. For purposes of this Agreement, "Proportionate
Share" shall mean the fraction the numerator of which is the dollar amount of
the principal and accrued interest owed on a particular Holder's Debenture, and
the denominator of which is the dollar amount of the principal and accrued
interest on all of the Notes. The Agent may rely upon the Corporation's records
in making a determination of the Proportionate Share, unless given written
notice by a Holder of a dispute regarding such records. Each Holder agrees that
its respective right to realize upon the Collateral now or hereafter pledged
under this Security Agreement shall be its Proportionate Share.
5. Holders' Agent. The Holders shall be represented, for purposes of
this Security Agreement, by an Agent (the "Agent"), who may be a natural person
or a business entity. The Agent may be, but is not required to be, a Holder of a
Debenture. The initial Agent shall be Xxxxx X. Xxxxxxx.
A. Holders have the right, by written consent of the Holders
holding a majority in principal amount of the Notes at the time the consent is
given or vote taken (excluding any Notes theretofore converted to common stock),
to select a new person as Agent. In such event, any new person selected as Agent
shall automatically succeed to the prior Agent's status. Holders, or any new
Agent, shall promptly give written notice of selection of a new Agent to the
Corporation, and the Corporation shall be entitled to deal with the prior Agent
as such until such written notice is given.
B. The Agent shall have the following powers and duties:
(1) To provide to third parties such information as
may be requested of a secured party under the Utah Uniform Commercial Code.
(2) As nominee and agent of the Holders, to hold or
take physical possession of, any portion of the Collateral, including any stock
certificates or negotiable instruments that may be part of the Collateral.
(3) To keep and maintain a list of the Holders, their
respective addresses, the amounts of the Notes issued thereto, and payments made
thereon, and the Corporation shall upon request furnish such information to the
Agent.
(4) To take such other and further actions as may be
reasonably necessary to perfect or continue the perfection of the Holders'
security interests as the Agent deems appropriate, including the filing of any
continuation statements respecting or amendments to UCC-1 financing statements.
(5) To give, on behalf of the Holders, such notices
of default or other notices as may be necessary or appropriate in the judgment
of the Agent, and to receive and accept notices on behalf of the Holders.
(6) To accept and receive payments or proceeds of
liquidation of Collateral on behalf of the Holders, and to remit to Holders
their Proportionate Shares thereof (after deducting any expenses incurred by
Agent).
(7) To execute, deliver and/or record termination
statements with respect to the Collateral, upon payment in full of the Notes.
(8) To execute, deliver and/or record releases or
partial releases of portions of the Collateral in order to facilitate the
transfer or sale of such Collateral by the Corporation, but only if (i) such
transfer or sale is authorized hereunder or under the Notes; or (ii) the
Collateral proposed to be transferred or sold does not constitute, in the
Agent's judgment, a significant portion of the value of the Collateral and the
terms of the transfer or sale are, in the Agent's judgment, reasonable.
(9) To take such other and further actions as may be
authorized or directed by the Holders, pursuant to Section 6 below or otherwise.
C. The Corporation agrees to reimburse the Agent's reasonable
expenses incurred in performing Agent's duties hereunder to the extent such
expenses or costs are the responsibility of the Corporation under the terms of
the Notes, and all such sums shall be secured hereby. The Agent shall be
entitled to be reimbursed by the Holders for their respective Proportionate
Shares of any reasonable expenses Agent may incur in performing its duties
hereunder, to the extent such are not reimbursed by the Corporation.
D. The Agent shall have no liability to the Holders for any
acts or omissions by it acting in its capacity as Agent under this Security
Agreement, so long as it acts in good faith, except that Agent shall be liable
for its own gross negligence or willful misconduct.
E. The Corporation may rely upon the actions or inactions of
the Agent hereunder, provided such reliance is reasonable and in good faith.
F. It is understood and agreed that neither the relationship
of the Holders to the Agent nor the relationship between the Holders, whether
arising under this Security Agreement or otherwise with respect to the Notes, is
intended to be or to create, and shall not be construed to be a partnership,
joint venture, or other joint enterprise.
6. Collective Action by Holders. The Holders agree that any action to
enforce any provision of the Notes or this Security Agreement, or to otherwise
collect amounts owed, or alleged to be owed, by the Corporation on the Notes, or
any of them (whether before or after filing of a lawsuit), shall be taken
collectively by the Holders as a group as provided in this Section 6 (except to
the extent such action may be taken by the Agent on behalf of the Holders, as
provided herein). Actions by the Holders as a group shall be authorized by
written consent of a majority in principal amount of the Notes at the time the
consent is given or vote taken (excluding any Notes theretofore converted to
common stock). By such written consent, the Holders may delegate the authority
to make specified decisions or to take specified actions on behalf of the group
of Holders to the Agent, to a third person, or to a committee or subgroup of the
Holders. The Holders shall be bound by actions taken in reasonable and good
faith reliance on such delegation of authority.
7. Default. The Corporation shall be in default hereunder upon the
occurrence of any of the following events or conditions:
A If the Corporation shall fail to pay any sum when due under
one or more of the Notes, or any other event of default occurs with respect to
the Indebtedness.
B. Failure of the Corporation to comply with or perform any of
the terms, covenant, and conditions of this Security Agreement.
C. If any levy, attachment, garnishment, lien, execution or
other process is issued against or otherwise attaches to the Collateral, whether
for taxes or any other debt or claim and whether or not any such attachment or
other process is issued before or after entry of judgment.
D. If the Corporation ceases conducting business, dissolves,
terminates its existence, becomes insolvent, files a voluntary petition for
bankruptcy, has filed against it an involuntary petition in bankruptcy that is
not dismissed within sixty (60) days of the filing date, or is the subject of an
assignment for the benefit of creditors.
E. If any representation by the Corporation, them, in
connection with this Security Agreement, the Notes, or any other related
instrument, whether made before or after execution of this Security Agreement,
was false in any material respect when made.
8. Remedies. Upon default, the Holders shall have the following rights,
in addition to any other rights afforded by law:
A. The Corporation agrees that notice of any disposition of or
use of the Collateral shall be deemed commercially reasonable and to have been
given to and received by the Corporation if transmitted by certified mail,
return receipt requested, at least fourteen (14) days prior to the proposed
disposition or use. The Corporation further agrees that any public sale of the
Collateral, or any portion thereof, may be postponed by the Holders (or their
agent) for a period of not to exceed seven days, by announcement at the time and
place of the sale, without need to re-notice or advertise. Notwithstanding the
foregoing, the Holders shall not be required to dispose of the Collateral or any
portion thereof by public auction.
B. Holders shall be entitled to notify any account debtor, any
obligor on an instrument, and any other person in custody or control of any of
the Collateral (including all banks and financial institutions holding funds of
the Corporation), to make payments on and/or to deliver the Collateral to
Holders or their Agent.
9. Miscellaneous.
A. The Corporation shall pay to the Holders or Agent, on
demand, any and all expenses, including attorney's fees, incurred or paid by
Holders or Agent in protecting or enforcing its rights upon or under the Notes,
the Indebtedness, or the Collateral, and such expenses are secured hereunder. If
the Corporation shall default in the performance of any of the provisions of
this Agreement, Holders or Agent may cure the default for the Corporation's
account, and any monies expended in doing so shall be paid on demand, together
with interest from the date expended at twelve percent (12%) per annum.
B. The Corporation agrees to execute and deliver such
financing statements, certificates of title or other evidence of title or
ownership, and other instruments as Holders or Agent may reasonably request in
order to perfect or protect the security interest granted hereunder. A copy of
this Security Agreement may be filed as a financing statement.
C. This Security Agreement constitutes the entire agreement
between the parties pertaining to the subject matter contained in this Security
Agreement. All prior and contemporaneous agreements, representations and
understandings of the parties, oral or written, are superseded by and merged in
this Security Agreement. No supplement, modification or amendment of this
Security Agreement shall be binding unless in writing and executed by the
Corporation and the Agent.
D. The provisions of this Security Agreement shall be binding
upon the Corporation, its legal representatives, successors or assigns, and
shall be for the benefit of the Holders, the Agent, and their respective
successors and assigns.
E. The headings of this Security Agreement are for purposes of
reference only and shall not limit or define the meaning of any provision of
this Security Agreement. This Security Agreement may be executed in any number
of counterparts, each of which shall be an original but all of which shall
constitute one and the same instrument.
F. If any action is brought by either party in respect to its
rights under this Security Agreement, or to obtain an interpretation thereof,
the prevailing party shall be entitled to reasonable attorneys' fees and court
costs as determined by the court.
G. No waiver of any of the provisions of this Security
Agreement shall constitute a waiver of any other provision, whether or not
similar, nor shall any waiver be a continuing waiver. Except as expressly
provided in this Security Agreement, no waiver shall be binding unless executed
in writing by the party making the waiver. Either party may waive any provision
of this Security Agreement intended for its benefit; provided, however, such
waiver shall in no way excuse the other party from the performance of any of its
other obligations under this Security Agreement.
H. This Security Agreement shall be governed by the laws of
the State of Utah. Any legal action to enforce or obtain an interpretation of
this Security Agreement may be filed in the Fourth Judicial District Court of
Utah County, or the Third Judicial District Court of Salt Lake County, and the
parties consent to the exercise of personal over them by said courts.
10. Notices; Addresses. Any notices required or permitted hereunder
shall be in writing and shall be given by personal delivery; by deposit in the
United States mail, certified mail, return receipt requested, postage prepaid;
or by established express delivery service, freight prepaid. Notices shall be
delivered, addressed, or transmitted to the Corporation and to Agent at the
following addresses, which may be changed by a notice given to the other party
in accordance with this Section. Any notices to the Holders pertaining to the
security interest granted hereunder shall be deemed given if directed to the
Agent in accordance with this Section. The date notice is deemed to have been
given, received and become effective shall be the date on which the notice is
delivered, if notice is given by personal delivery, two (2) days following the
date of deposit in the mail, if the notice is sent through the United States
mail, or the date of actual receipt, if the notice is sent by express delivery
service.
The Corporation's address is:
One World Xxxxxx.xxx, Inc.
Attn. Chief Executive Officer
0000 Xxxxx 000 Xxxx, Xxxxx 000
Xxxxx, Xxxx 00000
Telephone: 000-000-0000
Fax: 000-000-0000
The Agent's address, and the address from which information
respecting this security interest may be requested, is:
____________________________
____________________________
____________________________
____________________________
"DEBTOR"
ONE WORLD XXXXXX.XXX, INC.,
a Nevada corporation
Federal Empl. ID No. 00-0000000
By____________________________
____________________________
Its President
"AGENT" on behalf of the "HOLDERS"
__________________________________
