SECURITY AGREEMENT
Exhibit
10.5
This
Security Agreement (the “Agreement”), dated as of July __, 2008, is entered into
by and between Boomj, Inc., a Nevada corporation (“Parent”), Xxxxx.xxx, Inc., a
Nevada corporation (“Guarantor” and together with Parent, each a “Debtor” and
collectively the “Debtors”), and Xxxx X. Xxxxxxx, Esq., as collateral agent
acting in the manner and to the extent described in the Collateral Agent
Agreement defined below (the “Collateral Agent”), for the benefit of the parties
identified on Schedule
A
hereto
(collectively, the “Lenders”).
1. Recitals.
1.1 The
Guarantor is the wholly-owned subsidiary of the Parent. The Guarantor conducts
substantially all of the operations of the Parent.
1.2 Prior
to
the date of this Agreement, certain Lenders identified on Schedule A as the
“Initial Lenders” made loans to the Debtors in the amounts set forth on Schedule
A (collectively, the “Prior Loans”), which Prior Loans were secured pursuant to
a Security Agreement (the “Initial Security Agreement”). Substantially all of
the funds provided to Parent by the Initial Lenders from the Prior Loans were
transferred by the Parent to the Guarantor for use by Guarantor in its
operations.
1.3 As
contemplated by the transactions between the Debtors and the Initial Lenders,
the Parent is now obtaining additional loans from new lenders (the “New
Lenders”). The names of each New Lender, and the amount of the loan made by each
New Lender, is set forth on Schedule A attached hereto.
1.4. The
Initial Lenders hereby intend to amend and replace the Prior Security Agreement
with this Agreement and intend to become parties to and be granted the rights
and benefits of this Agreement, the intention being that this Agreement
supersedes the Initial Security Agreement.
1.5 Concurrently
with the execution of this Agreement (and for up to 20 days thereafter), the
New
Lenders are, and/or will be, extending additional loans to the Parent in the
aggregate amount of up to a maximum of $2,500,000 (the “July Loans”).
Substantially all of the net proceeds received by the Parent from the July
Loans
will be transferred by the Parent to the Guarantor for use by Guarantor in
its
operations.
1.6 Concurrently
with the execution of this Agreement, the Guarantor is executing and delivering
that certain Guaranty (the “Guaranty”) in order to guaranty and act as surety
for the payment of the July Loans.
1.7 In
order
to induce the New Lenders to extend the July Loans, the Initial Lenders and
each
Debtor has agreed to execute and deliver a security agreement and to grant
the
New Lenders, pari
passu
with
each other Lender, a perfected security interest in certain property of each
such Debtor to secure the prompt payment, performance and discharge in full
of
all of the Parent’s obligations under the Notes and the other Debtor’s
obligations under the Guaranty.
NOW,
THEREFORE, in consideration of the agreements herein contained and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
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Exhibit
10.5
2. Definitions.
In
addition to the terms defined elsewhere in this Agreement, (i) capitalized
terms
not otherwise defined herein shall have the meanings set forth in the
Subscription Agreement and (ii) the following terms have the meanings indicated
in this Section 2 below:
2.1 The
following defined terms which are defined in the Uniform Commercial Code in
effect in the State of Nevada on the date hereof are used herein as so defined:
Accounts, Chattel Paper, Documents, Equipment, General Intangibles, Instruments,
Inventory and Proceeds.
2.2 “Subscription
Agreement” shall mean (i) the Secured Convertible Promissory Note and Warrant
Purchase Agreement entered into on December 28, 2007, (ii) the Amended and
Restated Secured Convertible Promissory Note and Warrant Purchase Agreement
entered into in January and February 2008, and (iii) the Subscription Agreement
executed by the New Lenders.
2.3 “Note”
and “Notes” shall mean, individually and collectively, the (i) 12% Secured
Convertible Promissory Notes, dated December 28, 2007, (ii) 12% Secured
Convertible Promissory Notes, dated January and February 2008, and (iii) the
Secured Convertible Notes, dated as of the date of this Agreement.
2.4 “Lenders”
shall mean the Initial Lenders and the New Lenders, all of whom are listed
on
Schedule A.
2.5 “Obligations”
shall mean all of the obligations
of the Debtors under the Notes and all other sums due from Debtors to Lenders
arising under the Transaction Documents (as defined in the Subscription
Agreements) and any other agreement between or among them relating
thereto.
2.6 “Collateral
Agent Agreement” shall mean the agreement between the Lenders, the Parent and
the Collateral Agent, dated as of the date of this Agreement.
3. Grant
of General Security Interest in Collateral.
3.1 As
security for the Obligations of Debtors, each Debtor hereby grants the
Collateral Agent, for the benefit of the Lenders, a security interest in the
Collateral.
3.2 “Collateral”
shall mean all of the following property of Debtors:
(A) All
now
owned and hereafter acquired right, title and interest of Debtors in, to and
in
respect of all Accounts, Goods, real or personal property, all present and
future books and records relating to the foregoing and all products and Proceeds
of the foregoing, and as set forth below:
(i) All
now
owned and hereafter acquired right, title and interest of Debtors in, to and
in
respect of all: Accounts, interests in goods represented by Accounts, returned,
reclaimed or repossessed goods with respect thereto and rights as an unpaid
vendor; contract rights; Chattel Paper; investment property; General Intangibles
(including but not limited to, tax and duty claims and refunds, any registered
and unregistered patents, trademarks, service marks, certificates, copyrights
trade names, applications for the foregoing, trade secrets, goodwill, processes,
drawings, blueprints, customer lists, licenses, whether as licensor or licensee,
chooses in action and other claims, and existing and future leasehold interests
in equipment, real estate and fixtures); Documents; Instruments; letters of
credit, bankers’ acceptances or guaranties; cash moneys, deposits; securities,
bank accounts, deposit accounts, credits and other property now or hereafter
owned or held in any capacity by Debtors, as well as agreements or property
securing or relating to any of the items referred to above;
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Exhibit
10.5
(ii) Goods:
All now
owned and hereafter acquired right, title and interest of Debtors in, to and
in
respect of goods, including, but not limited to:
(a) All
Inventory, wherever located, whether now owned or hereafter acquired, of
whatever kind, nature or description, including all raw materials,
work-in-process, finished goods, and materials to be used or consumed in
Debtors’ business; finished goods, timber cut or to be cut, oil, gas,
hydrocarbons, and minerals extracted or to be extracted, and all names or marks
affixed to or to be affixed thereto for purposes of selling same by the seller,
manufacturer, lessor or licensor thereof and all Inventory which may be returned
to any Debtor by its customers or repossessed by any Debtor and all of Debtors’
right, title and interest in and to the foregoing (including all of a Debtor’s
rights as a seller of goods);
(b) All
Equipment and fixtures, wherever located, whether now owned or hereafter
acquired, including, without limitation, all machinery, furniture and fixtures,
and any and all additions, substitutions, replacements (including spare parts),
and accessions thereof and thereto (including, but not limited to Debtors’
rights to acquire any of the foregoing, whether by exercise of a purchase option
or otherwise);
(iii) Property:
All now
owned and hereafter acquired right, title and interests of Debtors in, to and
in
respect of any other personal property in or upon which a Debtor has or may
hereafter have a security interest, lien or right of setoff;
(iv) Books
and Records:
All
present and future books and records relating to any of the above including,
without limitation, all computer programs, printed output and computer readable
data in the possession or control of the Debtors, any computer service bureau
or
other third party; and
(v) Products
and Proceeds:
All
products and Proceeds of the foregoing in whatever form and wherever located,
including, without limitation, all insurance proceeds and all claims against
third parties for loss or destruction of or damage to any of the
foregoing.
(B) All
now
owned and hereafter acquired right, title and interest of Debtors in, to and
in
respect of the following:
(i) the
shares of stock, partnership interests, member interests or other equity
interests at any time and from time to time acquired by Debtor of any and all
entities now or hereafter existing including Subsidiaries (such entities, being
hereinafter referred to collectively as the "Pledged
Issuers")
including but not limited to, 100% of the equity ownership of each Pledged
Issuer, the certificates representing such shares, partnership interests, member
interests or other interests, all options and other rights, contractual or
otherwise, in respect thereof and all dividends, distributions, cash,
instruments, investment property and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or
all
of such shares, partnership interests, member interests or other
interests;
(ii) all
additional shares of stock, partnership interests, member interests or other
equity interests from time to time acquired by Debtor, of any Pledged Issuer,
the certificates representing such additional shares, all options and other
rights, contractual or otherwise, in respect thereof and all dividends,
distributions, cash, instruments, investment property and other property from
time to time received, receivable or otherwise distributed in respect of or
in
exchange for any or all of such additional shares, interests or equity; and
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Exhibit
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(iii) all
security entitlements of Debtor in, and all Proceeds of any and all of the
foregoing in each case, whether now owned or hereafter acquired by Debtor and
howsoever its interest therein may arise or appear (whether by ownership,
security interest, lien, claim or otherwise).
3.3 The
Collateral Agent is hereby specifically authorized, after the Maturity Date
(defined in the Notes) accelerated, or after the occurrence of an Event of
Default (as defined herein) and the expiration of any applicable cure period,
to
transfer any Collateral into the name of the Collateral Agent and to take any
and all action deemed advisable to the Collateral Agent to remove any transfer
restrictions affecting the Collateral.
4. Perfection
of Security Interest.
4.1 Each
Debtor shall prepare, execute and deliver to the Collateral Agent UCC-1
Financing Statements. The Collateral Agent is instructed to prepare and file
at
each Debtor’s cost and expense, financing statements in such jurisdictions
deemed advisable to the Collateral Agent, including but not limited to the
State
of Nevada. The Financing Statements are deemed to have been filed for the
benefit of the Collateral Agent and Lenders identified on Schedule A
hereto.
4.2 Upon
the
execution of this Agreement, Parent shall deliver to Collateral Agent stock
certificates representing all of the shares of outstanding capital stock of
the
Guarantor. All such certificates shall be held by or on behalf of Collateral
Agent pursuant hereto and shall be delivered in suitable form for transfer
by
delivery, or shall be accompanied by duly executed instruments of transfer
or
assignment or undated stock powers executed in blank, all in form and substance
satisfactory to Collateral Agent.
4.3
All
certificates and instruments constituting Collateral from time to time required
to be pledged to Collateral Agent pursuant to the terms hereof (the “Additional
Collateral”) shall be delivered to Collateral Agent promptly upon receipt
thereof by or on behalf of Debtors. All such certificates and instruments shall
be held by or on behalf of Collateral Agent pursuant hereto and shall be
delivered in suitable form for transfer by delivery, or shall be accompanied
by
duly executed instruments of transfer or assignment or undated stock powers
executed in blank, all in form and substance satisfactory to Collateral Agent.
If any Collateral consists of uncertificated securities, unless the immediately
following sentence is applicable thereto, Debtors shall cause Collateral Agent
(or its custodian, nominee or other designee) to become the registered holder
thereof, or cause each issuer of such securities to agree that it will comply
with instructions originated by Collateral Agent with respect to such securities
without further consent by Debtors. If any Collateral consists of security
entitlements, Debtors shall transfer such security entitlements to Collateral
Agent (or its custodian, nominee or other designee) or cause the applicable
securities intermediary to agree that it will comply with entitlement orders
by
Collateral Agent without further consent by Debtors.
4.4 Within
five (5) business days after the receipt by a Debtor of any Additional
Collateral, a Pledge Amendment, duly executed by such Debtor, in substantially
the form of Annex I hereto (a “Pledge Amendment”), shall be delivered to
Collateral Agent in respect of the Additional Collateral to be pledged pursuant
to this Agreement. Each Debtor hereby authorizes Collateral Agent to attach
each
Pledge Amendment to this Agreement and agrees that all certificates or
instruments listed on any Pledge Amendment delivered to Collateral Agent shall
for all purposes hereunder constitute Collateral.
Security Agreement
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Exhibit
10.5
4.5 If
Debtor
shall receive, by virtue of Debtor being or having been an owner of any
Collateral, any (i) stock certificate (including, without limitation, any
certificate representing a stock dividend or distribution in connection with
any
increase or reduction of capital, reclassification, merger, consolidation,
sale
of assets, combination of shares, stock split, spin-off or split-off),
promissory note or other instrument, (ii) option or right, whether as an
addition to, substitution for, or in exchange for, any Collateral, or otherwise,
(iii) dividends payable in cash (except such dividends permitted to be retained
by Debtor pursuant to Section 5.2 hereof) or in securities or other property
or
(iv) dividends or other distributions in connection with a partial or total
liquidation or dissolution or in connection with a reduction of capital,
capital
surplus or paid-in surplus, Debtor shall receive such stock certificate,
promissory note, instrument, option, right, payment or distribution in trust
for
the benefit of Collateral Agent, shall segregate it from Debtor’s other property
and shall deliver it forthwith to Collateral Agent, in the exact form received,
with any necessary endorsement and/or appropriate stock powers duly executed
in
blank, to be held by Collateral Agent as Collateral and as further collateral
security for the Obligations.
5. Distribution.
5.1 So
long
as an Event of Default does not exist, Debtors shall be entitled to exercise
all
voting power pertaining to any of the Collateral, provided such exercise is
not
contrary to the interests of the Lenders and does not materially impair the
Collateral.
5.2. At
any
time an Event of Default exists or has occurred and is continuing, all rights
of
Debtors, upon notice given by Collateral Agent, to exercise the voting power
and
receive payments, which it would otherwise be entitled to pursuant to Section
5.1, shall cease and all such rights shall thereupon become vested in Collateral
Agent, which shall thereupon have the sole right to exercise such voting power
and receive such payments.
5.3 All
dividends, distributions, interest and other payments which are received by
Debtors contrary to the provisions of Section 5.2 shall be received in trust
for
the benefit of Collateral Agent as security and Collateral for payment of the
Obligations shall be segregated from other funds of Debtors, and shall be
forthwith paid over to Collateral Agent as Collateral in the exact form received
with any necessary endorsement and/or appropriate stock powers duly executed
in
blank, to be held by Collateral Agent as Collateral and as further collateral
security for the Obligations.
6. Further
Action By Debtors; Covenants and Warranties.
6.1 Collateral
Agent at all times shall have a perfected security interest in the Collateral.
Each Debtor represents that, other than the security interests described on
Schedule
6.1,
it has
and will continue to have full title to the Collateral free from any liens,
leases, encumbrances, judgments or other claims. The Collateral Agent’s security
interest in the Collateral constitutes and will continue to constitute a first,
prior and indefeasible security interest in favor of Collateral Agent, subject
only to the security interests described on Schedule
6.1.
Each
Debtor will do all acts and things, and will execute and file all instruments
(including, but not limited to, security agreements, financing statements,
continuation statements, etc.) reasonably requested by Collateral Agent to
establish, maintain and continue the perfected security interest of Collateral
Agent in the perfected Collateral, and will promptly on demand, pay all costs
and expenses of filing and recording, including the costs of any searches
reasonably deemed necessary by Collateral Agent from time to time to establish
and determine the validity and the continuing priority of the security interest
of Collateral Agent, and also pay all other claims and charges that, in the
opinion of Collateral Agent, exercised in good faith, are reasonably likely
to
materially prejudice, imperil or otherwise affect the Collateral or Collateral
Agent’s or Lenders’ security interests therein.
Security Agreement
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Exhibit
10.5
6.2 Except
in
connection with sales of Collateral, in the ordinary course of business, for
fair value and in cash, and except for Collateral which is substituted by assets
of identical or greater value (subject to the consent of the Collateral Agent)
or which is inconsequential in value, each Debtor will not sell, transfer,
assign or pledge those items of Collateral (or allow any such items to be sold,
transferred, assigned or pledged), without the prior written consent of
Collateral Agent other than a transfer of the Collateral to a wholly-owned
United States formed and located subsidiary or to another Debtor on prior notice
to Collateral Agent, and provided the Collateral remains subject to the security
interest herein described. Although Proceeds of Collateral are covered by this
Agreement, this shall not be construed to mean that Collateral Agent consents
to
any sale of the Collateral, except as provided herein. Sales of Collateral
in
the ordinary course of business shall be free of the security interest of
Lenders and Collateral Agent and Lenders and Collateral Agent shall promptly
execute such documents (including without limitation releases and termination
statements) as may be required by Debtors to evidence or effectuate the
same.
6.3 Each
Debtor will, at all reasonable times during regular business hours and upon
reasonable notice, allow Collateral Agent or its representatives free and
complete access to the Collateral and all of such Debtor’s records which in any
way relate to the Collateral, for such inspection and examination as Collateral
Agent reasonably deems necessary.
6.4 Each
Debtor, at its sole cost and expense, will protect and defend this Security
Agreement, all of the rights of Collateral Agent and Lenders hereunder, and
the
Collateral against the claims and demands of all other persons.
6.5 Debtors
will promptly notify Collateral Agent of any levy, distraint or other seizure
by
legal process or otherwise of any part of the Collateral, and of any threatened
or filed claims or proceedings that are reasonably likely to affect or impair
any of the rights of Collateral Agent under this Security Agreement in any
material respect.
6.6 Each
Debtor, at its own expense, will obtain and maintain in force insurance policies
covering losses or damage to those items of Collateral which constitute physical
personal property, which insurance shall be of the types customarily insured
against by companies in the same or similar business, similarly situated, in
such amounts (with such deductible amounts) as is customary for such companies
under the same or similar circumstances, similarly situated. Debtors shall
make
the Collateral Agent a loss payee thereon to the extent of its interest in
the
Collateral. Collateral Agent is hereby irrevocably (until the Obligations are
paid in full) appointed each Debtor’s attorney-in-fact to endorse any check or
draft that may be payable to such Debtor so that Collateral Agent may collect
the proceeds payable for any loss under such insurance. The proceeds of such
insurance, less any costs and expenses incurred or paid by Collateral Agent
in
the collection thereof, shall be applied either toward the cost of the repair
or
replacement of the items damaged or destroyed, or on account of any sums secured
hereby, whether or not then due or payable.
6.7 In
order
to protect the Collateral and Lenders’ interest therein, Collateral Agent may,
at its option, and without any obligation to do so, pay, perform and discharge
any and all amounts, costs, expenses and liabilities herein agreed to be paid
or
performed by Debtor upon
Debtor’s
failure
to do
so. All
amounts expended by Collateral Agent in so doing shall become part of the
Obligations secured hereby, and shall be immediately due and payable by Debtor
to Collateral Agent upon demand
and
shall
bear interest at the lesser of 15% per annum or the highest legal amount allowed
from the dates of such expenditures until paid.
Security Agreement
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Exhibit
10.5
6.8 Upon
the
request of Collateral Agent, Debtors will furnish to Collateral Agent within
five (5) business days thereafter, or to any proposed assignee of this Security
Agreement, a written statement in form reasonably satisfactory to Collateral
Agent, duly acknowledged, certifying the amount of the principal and interest
and any other sum then owing under the Obligations, whether to its knowledge
any
claims, offsets or defenses exist against the Obligations or against this
Security Agreement, or any of the terms and provisions of any other agreement
of
Debtors securing the Obligations. In connection with any assignment by
Collateral Agent of this Security Agreement, each Debtor hereby agrees to cause
the insurance policies required hereby to be carried by such Debtor, if any,
to
be endorsed in form satisfactory to Collateral Agent or to such assignee, with
loss payable clauses in favor of such assignee, and to cause such endorsements
to be delivered to Collateral Agent within ten (10) calendar days after request
therefor by Collateral Agent.
6.9 Each
Debtor will, at its own expense, make, execute, endorse, acknowledge, file
and/or deliver to the Collateral Agent from time to time such vouchers,
invoices, schedules, confirmatory assignments, conveyances, financing
statements, transfer endorsements, powers of attorney, certificates, reports
and
other reasonable assurances or instruments and take further steps relating
to
the Collateral and other property or rights covered by the security interest
hereby granted, as the Collateral Agent may reasonably require to perfect its
security interest hereunder.
6.10 Debtors
represent and warrant that they are the true and lawful exclusive owners of
the
Collateral, free and clear of any liens and encumbrances other than Permitted
Liens.
6.11 Each
Debtor hereby agrees not to divest itself of any right under the Collateral
except as permitted herein absent prior written approval of the Collateral
Agent, except to a subsidiary organized and located in the United States on
prior notice to Collateral Agent provided the Collateral remains subject to
the
security interest herein described.
6.12 Each
Debtor shall cause each Subsidiary of such Debtor in existence on the date
hereof and each Subsidiary not in existence on the date hereof to execute and
deliver to Collateral Agent promptly and in any event within ten (10) days
after
the formation, acquisition or change in status thereof (A) a guaranty
guaranteeing the Obligations and (B) if requested by Collateral Agent, a
security and pledge agreement substantially in the form of this Agreement
together with (x) certificates evidencing all of the capital stock of each
Subsidiary of and any entity owned by such Subsidiary, (y) undated stock powers
executed in blank with signatures guaranteed, and (z) such opinion of counsel
and such approving certificate of such Subsidiary as Collateral Agent may
reasonably request in respect of complying with any legend on any such
certificate or any other matter relating to such shares and (C) such other
agreements, instruments, approvals, legal opinions or other documents reasonably
requested by Collateral Agent in order to create, perfect, establish the first
priority of or otherwise protect any lien purported to be covered by any such
pledge and security agreement or otherwise to effect the intent that all
property and assets of such Subsidiary shall become Collateral for the
Obligations. For purposes of this Agreement, “Subsidiary”
means,
with respect to any entity at any date, any corporation, limited or general
partnership, limited liability company, trust, estate, association, joint
venture or other business entity) of which more than 30% of (A) the
outstanding capital stock having (in the absence of contingencies) ordinary
voting power to elect a majority of the board of directors or other managing
body of such entity, (B) in the case of a partnership or limited liability
company, the interest in the capital or profits of such partnership or limited
liability company or (C) in the case of a trust, estate, association, joint
venture or other entity, the beneficial interest in such trust, estate,
association or other entity business is, at the time of determination, owned
or
controlled directly or indirectly through one or more intermediaries, by such
entity. Annex
I annexed hereto contains a list of all Subsidiaries of the Debtors as of the
date of this Agreement.
6.13 Name
Change/Address Change.
Debtor
agrees to notify Collateral Agent not later than fifteen (15) Business Days
after the effectuation of a name change of Debtor or any Subsidiary or the
change of location of any Collateral other than in the ordinary course of
business.
Security
Agreement
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Exhibit
10.5
7. Power
of Attorney.
At
any
time an Event of Default has occurred, and only after the applicable cure
period
as set forth in this Agreement and the other Transaction Documents, and is
continuing, each Debtor hereby irrevocably constitutes and appoints the
Collateral Agent as the true and lawful attorney of such Debtor, with full
power
of substitution, in the place and stead of such Debtor and in the name of
such
Debtor or otherwise, at any time or times, in the discretion of the Collateral
Agent, to take any action and to execute any instrument or document which
the
Collateral Agent may deem necessary or advisable to accomplish the purposes
of
this Agreement. This power of attorney is coupled with an interest and is
irrevocable until the Obligations are satisfied.
8. Performance
By The Collateral Agent.
If
a
Debtor fails to perform any material covenant, agreement, duty or obligation
of
such Debtor under this Agreement, the Collateral Agent may, after any applicable
cure period, at any time or times in its discretion, take action to effect
performance of such obligation. All reasonable expenses of the Collateral Agent
incurred in connection with the foregoing authorization shall be payable by
Debtors as provided in Paragraph 12.1 hereof. No discretionary right, remedy
or
power granted to the Collateral Agent under any part of this Agreement shall
be
deemed to impose any obligation whatsoever on the Collateral Agent with respect
thereto, such rights, remedies and powers being solely for the protection of
the
Collateral Agent.
9. Event
of Default.
An
event
of default (“Event of Default”) shall be deemed to have occurred hereunder upon
the occurrence of any event of default as defined and described in this
Agreement, in the Notes, the Subscription Agreement, and any other agreement
to
which one or more Debtors and a Lender are parties relating to the Notes and
Securities issued in connection therewith. Upon and after any Event of Default,
after the applicable cure period, if any, any or all of the Obligations shall
become immediately due and payable at the option of the Collateral Agent, for
the benefit of the Lenders, and the Collateral Agent may dispose of Collateral
as provided below. A default by Debtor of any of its material obligations
pursuant to this Agreement and any of the Transaction Documents (as defined
in
the Subscription Agreement) shall be an Event of Default hereunder and an “Event
of Default” as defined in the Notes, and Subscription Agreement.
10. Disposition
of Collateral.
Upon
and
after any Event of Default which is then continuing,
10.1 The
Collateral Agent may exercise its rights with respect to each and every
component of the Collateral, without regard to the existence of any other
security or source of payment for, in order to satisfy the Obligations. In
addition to other rights and remedies provided for herein or otherwise available
to it, the Collateral Agent shall have all of the rights and remedies of a
lender on default under the Uniform Commercial Code then in effect in the State
of Nevada.
10.2 If
any
notice to Debtors of the sale or other disposition of Collateral is required
by
then applicable law, five (5) business days prior written notice (which Debtors
agree is reasonable notice within the meaning of Section 9.612(a) of the Uniform
Commercial Code) shall be given to Debtors of the time and place of any sale
of
Collateral which Debtors hereby agree may be by private sale. The rights granted
in this Section are in addition to any and all rights available to Collateral
Agent under the Uniform Commercial Code.
Security Agreement
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Exhibit
10.5
10.3 The
Collateral Agent is authorized, at any such sale, if the Collateral Agent deems
it advisable to do so, in order to comply with any applicable securities laws,
to restrict the prospective bidders or purchasers to persons who will represent
and agree, among other things, that they are purchasing the Collateral for
their
own account for investment, and not with a view to the distribution or resale
thereof, or otherwise to restrict such sale in such other manner as the
Collateral Agent deems advisable to ensure such compliance. Sales made subject
to such restrictions shall be deemed to have been made in a commercially
reasonable manner.
10.4 All
proceeds received by the Collateral Agent for the benefit of the Lenders in
respect of any sale, collection or other enforcement or disposition of
Collateral, shall be applied (after deduction of any amounts payable to the
Collateral Agent pursuant to Paragraph 12.1 hereof) against the Obligations
pro
rata among the Lenders in proportion to their interests in the Obligations.
Upon
payment in full of all Obligations, Debtors shall be entitled to the return
of
all Collateral, including cash, which has not been used or applied toward the
payment of Obligations or used or applied to any and all costs or expenses
of
the Collateral Agent incurred in connection with the liquidation of the
Collateral (unless another person is legally entitled thereto). Any assignment
of Collateral by the Collateral Agent to Debtors shall be without representation
or warranty of any nature whatsoever and wholly without recourse. To the extent
allowed by law, each Lender may purchase the Collateral and pay for such
purchase by offsetting up to such Lender’s pro rata portion of the purchase
price with sums owed to such Lender by Debtors arising under the Obligations
or
any other source.
11. Waiver
of Automatic Stay.
Debtor
acknowledges and agrees that should a proceeding under any bankruptcy or
insolvency law be commenced by or against Debtor, or if any of the Collateral
should become the subject of any bankruptcy or insolvency proceeding, then
the
Collateral Agent should be entitled to, among other relief to which the
Collateral Agent or Lenders may be entitled under the Note, Subscription
Agreement, and any other agreement to which the Debtor, Lenders or Collateral
Agent are parties, (collectively “Loan Documents”) and/or applicable law, an
order from the court granting immediate relief from the automatic stay pursuant
to 11 U.S.C. Section 362 to permit the Collateral Agent to exercise all of
its
rights and remedies pursuant to the Loan Documents and/or applicable law. DEBTOR
EXPRESSLY WAIVES THE BENEFIT OF THE AUTOMATIC STAY IMPOSED BY 11 U.S.C. SECTION
362. FURTHERMORE, DEBTOR EXPRESSLY ACKNOWLEDGES AND AGREES THAT NEITHER 11
U.S.C. SECTION 362 NOR ANY OTHER SECTION OF THE BANKRUPTCY CODE OR OTHER STATUTE
OR RULE (INCLUDING, WITHOUT LIMITATION, 11 U.S.C. SECTION 105) SHALL STAY,
INTERDICT, CONDITION, REDUCE OR INHIBIT IN ANY WAY THE ABILITY OF THE COLLATERAL
AGENT TO ENFORCE ANY OF ITS RIGHTS AND REMEDIES UNDER THE LOAN DOCUMENTS AND/OR
APPLICABLE LAW. Debtor
hereby consents to any motion for relief from stay which may be filed by the
Collateral Agent in any bankruptcy or insolvency proceeding initiated by or
against Debtor, and further agrees not to file any opposition to any motion
for
relief from stay filed by the Collateral Agent. Debtor represents, acknowledges
and agrees that this provision is a specific and material aspect of this
Agreement, and that the Collateral Agent would not agree to the terms of this
Agreement if this waiver were not a part of this Agreement. Debtor further
represents, acknowledges and agrees that this waiver is knowingly, intelligently
and voluntarily made, that neither the Collateral Agent nor any person acting
on
behalf of the Collateral Agent has made any representations to induce this
waiver, that Debtor has been represented (or has had the opportunity to be
represented) in the signing of this Agreement and in the making of this waiver
by independent legal counsel selected by Debtor and that Debtor has had the
opportunity to discuss this waiver with counsel. Debtor further agrees that
any
bankruptcy or insolvency proceeding initiated by Debtor will only be brought
in
the Federal Court within the state of Nevada.
Security
Agreement
9
Exhibit
10.5
12. Miscellaneous.
12.1 Expenses.
Debtors
shall pay to the Collateral Agent, on demand, the amount of any and all
reasonable expenses, including, without limitation, attorneys’ fees, legal
expenses and brokers’ fees, which the Collateral Agent may incur in connection
with (a) sale, collection or other enforcement or disposition of Collateral;
(b)
exercise or enforcement of any the rights, remedies or powers of the Collateral
Agent hereunder or with respect to any or all of the Obligations upon breach
or
threatened breach; or (c) failure by Debtors to perform and observe any
agreements of Debtors contained herein which are performed by the Collateral
Agent.
12.2 Waivers,
Amendment and Remedies.
No
course of dealing by the Collateral Agent and no failure by the Collateral
Agent
to exercise, or delay by the Collateral Agent in exercising, any right, remedy
or power hereunder shall operate as a waiver thereof, and no single or partial
exercise thereof shall preclude any other or further exercise thereof or the
exercise of any other right, remedy or power of the Collateral Agent. No
amendment, modification or waiver of any provision of this Agreement and no
consent to any departure by Debtors therefrom, shall, in any event, be effective
unless contained in a writing signed by the Collateral Agent, and then such
waiver or consent shall be effective only in the specific instance and for
the
specific purpose for which given. The Collateral Agent shall not agree to any
amendment of this Agreement without obtaining the written consent of the Debtors
holding more than 50% of the then outstanding principal balance under the Notes.
The rights, remedies and powers of the Collateral Agent, not only hereunder,
but
also under any instruments and agreements evidencing or securing the Obligations
and under applicable law are cumulative, and may be exercised by the Collateral
Agent from time to time in such order as the Collateral Agent may
elect.
12.3 Notices.
All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be: (i) personally served; (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid; (iii)
delivered by reputable air courier service with charges prepaid; or (iv)
transmitted by hand delivery, telegram, or confirmed facsimile, addressed as
set
forth below or to such other address as such party shall have specified most
recently by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective: (a) upon hand
delivery or delivery by facsimile, with accurate confirmation generated by
the
transmitting facsimile machine, at the address or number designated below (if
delivered on a Business Day during normal business hours where such notice
is to
be received), or the first Business Day following such delivery (if delivered
other than on a Business Day during normal business hours where such notice
is
to be received); or (b) on the second Business Day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses
for
such communications shall be:
|
To
Debtors:
|
Boomj,
Inc.
|
|
0000
Xxxxx Xxxxx Xxxx, Xxxxx 0000
|
|
|
Xxxxxxxxx,
XX 00000
|
|
|
Attn:
Xxxxxx X. XxXxxxx, CEO
|
|
|
Fax:
(000) 000-0000
|
|
|
With
a copy by fax only to:
|
TroyGould
|
|
0000
Xxxxxxx Xxxx Xxxx, Xxxxx 0000
|
|
|
Xxx
Xxxxxxx, XX 00000-0000
|
|
|
Attn:
Xxxxxx Xxxxx, Esq.
|
|
|
Fax:
(000) 000-0000
|
Security Agreement
10
Exhibit
10.5
|
To
the Collateral Agent:
|
|
|
Xxxx
X. Xxxxxxx, Esq.
|
|
|
Law
Offices of Xxxx X. Xxxxxxx, Esq.
|
|
|
0000
Xxxxxxx Xxxx Xxxx
|
|
|
Xxx
Xxxxxxx, XX 00000
|
|
|
Fax:
(000) 000-0000
|
|
|
To
Lenders:
|
To
the addresses and telecopier numbers set forth on Schedule
A
|
Any
party
may change its address by written notice in accordance with this
paragraph.
12.4 Term;
Binding Effect.
This
Agreement shall (a) remain in full force and effect until payment and
satisfaction in full of all of the Obligations; (b) be binding upon each Debtor,
and its successors and permitted assigns; and (c) inure to the benefit of the
Collateral Agent, for the benefit of the Lenders and their respective successors
and assigns.
12.5 Captions.
The
captions of Paragraphs, Articles and Sections in this Agreement have been
included for convenience of reference only, and shall not define or limit the
provisions hereof and have no legal or other significance
whatsoever.
12.6 Governing
Law; Venue; Severability.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Nevada without
regard to conflicts
of laws principles
that
would result in the application of the substantive laws of another
jurisdiction,
except
to the extent that the perfection of the security interest granted hereby in
respect of any item of Collateral may be governed by the law of another
jurisdiction. Any legal action or proceeding against a Debtor with respect
to
this Agreement may be brought in the courts in the State of Nevada or of
the
United
States in Xxxxx County, Nevada, and, by execution and delivery of this
Agreement, each Debtor hereby irrevocably accepts for itself and in respect
of
its property, generally and unconditionally, the jurisdiction of the aforesaid
courts. Each Debtor hereby irrevocably waives any objection which they may
now
or hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement brought in
the
aforesaid courts and hereby further irrevocably waives and agrees not to plead
or claim in any such court that any such action or proceeding brought in any
such court has been brought in an inconvenient forum. If any provision of this
Agreement, or the application thereof to any person or circumstance, is held
invalid, such invalidity shall not affect any other provisions which can be
given effect without the invalid provision or application, and to this end
the
provisions hereof shall be severable and the remaining, valid provisions shall
remain of full force and effect.
12.7 Entire
Agreement.
This
Agreement contains the entire agreement of the parties and supersedes all other
agreements and understandings, oral or written, with respect to the matters
contained herein. The Initial Lenders hereby agree that this Agreement (i)
replaces and supersedes Initial Security Agreement and all representations
and
warranties previously made by the Company to the Initial Lenders regarding
the
Initial Security Agreement and the security granted thereunder, and (ii) that
the Initial Security Agreement is hereby terminated.
12.8 Counterparts/Execution.
This
Agreement may be executed in any number of counterparts and by the different
signatories hereto on separate counterparts, each of which, when so executed,
shall be deemed an original, but all such counterparts shall constitute but
one
and the same instrument. This Agreement may be executed by facsimile signature
and delivered by facsimile transmission.
Security
Agreement
11
Exhibit
10.5
13. Intercreditor
Terms.
As
between the Lenders, any distribution under paragraph 10.4 shall be made
proportionately based upon the remaining principal amount (plus accrued and
unpaid interest) to each as to the total amount then owed to the Lenders
as a
whole. The rights of each Lender hereunder are pari
passu
to the
rights of the other Lenders hereunder. Any recovery hereunder shall be shared
ratably among the Lenders according to the then remaining principal amount
owed
to each (plus accrued and unpaid interest) as to the total amount then owed
to
the Lenders as a whole.
14. Termination;
Release.
When
the Obligations have been indefeasibly paid and performed in full or
all
outstanding Notes have been converted to common stock pursuant to the terms
of
the Notes and the Subscription Agreements,
this
Agreement shall terminated, and the Collateral Agent, at the request and
sole
expense of the Debtors, will execute and deliver to the Debtors the proper
instruments (including UCC termination statements) acknowledging the termination
of the Security Agreement, and duly assign, transfer and deliver to the Debtors,
without recourse, representation or warranty of any kind whatsoever, such
of the
Collateral, including, without limitation, Securities and any Additional
Collateral, as may be in the possession of the Collateral
Agent.
15. Collateral
Agent.
15.1 Collateral
Agent Powers.
The
powers conferred on the Collateral Agent hereunder are solely to protect its
interest (on behalf of the Lenders) in the Collateral and shall not impose
any
duty on it to exercise any such powers.
15.2 Reasonable
Care.
The
Collateral Agent is required to exercise reasonable care in the custody and
preservation of any Collateral in its possession; provided, however, that the
Collateral Agent shall be deemed to have exercised reasonable care in the
custody and preservation of any of the Collateral if it takes such action for
that purposes as any owner thereof reasonably requests in writing at times
other
than upon the occurrence and during the continuance of any Event of Default,
but
failure of the Collateral Agent, to comply with any such request at any time
shall not in itself be deemed a failure to exercise reasonable
care.
[THIS
SPACE INTENTIONALLY LEFT BLANK]
Security Agreement
12
Exhibit
10.5
IN
WITNESS WHEREOF, the
undersigned have executed and delivered this Security Agreement, as of the
date
first written above.
|
“PARENT”
|
“THE
COLLATERAL AGENT”
|
||
|
BOOMJ,
INC.
|
|||
|
a
Nevada corporation
|
|||
|
By:
|
____________________________________
|
_________________________________
|
|
|
Xxxx
X. Xxxxxxx, Esq.
|
|||
|
Its:
|
____________________________________
|
||
|
“GUARANTOR”
|
|||
|
XXXXX.XXX,
INC.
|
|||
|
A
Nevada corporation
|
|||
|
By:
|
____________________________________
|
||
|
Its:
|
_____________________________________
|
||
Security Agreement
13
Exhibit
10.5
IN
WITNESS WHEREOF, the
undersigned have executed and delivered this Security Agreement, as of the
date
first written above.
APPROVED
BY “LENDERS”:
|
_______________________________________
|
_______________________________________
|
|
|
_______________________________________
|
_______________________________________
|
|
|
By:____________________________________
|
By:____________________________________
|
|
|
Print
Name of Signator:_____________________
|
Print
Name of Signator:____________________
|
|
|
_______________________________________
|
_______________________________________
|
|
|
_______________________________________
|
_______________________________________
|
|
|
By:____________________________________
|
By:____________________________________
|
|
|
Print
Name of Signator:_____________________
|
Print
Name of Signator:____________________
|
|
|
_______________________________________
|
_______________________________________
|
|
|
_______________________________________
|
_______________________________________
|
|
|
By:____________________________________
|
By:____________________________________
|
|
|
Print
Name of Signator:_____________________
|
Print
Name of
Signator:____________________
|
Security Agreement
14
Exhibit
10.5
IN
WITNESS WHEREOF, the
undersigned have executed and delivered this Security Agreement, as of the
date
first written above.
APPROVED
BY “INITIAL LENDERS”:
|
________________________________________
|
______________________________________
|
|
|
By:____________________________________
|
By:____________________________________
|
|
|
Print
Name of Signator:_____________________
|
Print
Name of Signator:____________________
|
|
|
_______________________________________
|
_______________________________________
|
|
|
By:____________________________________
|
By:____________________________________
|
|
|
Print
Name of Signator:_____________________
|
Print
Name of Signator:____________________
|
|
|
________________________________________
|
______________________________________
|
|
|
By:____________________________________
|
By:____________________________________
|
|
|
Print
Name of Signator:_____________________
|
Print
Name of Signator:____________________
|
|
|
_______________________________________
|
_______________________________________
|
|
|
By:____________________________________
|
By:____________________________________
|
|
|
Print
Name of Signator:_____________________
|
Print
Name of
Signator:____________________
|
Security
Agreement
15
Exhibit
10.5
SCHEDULE
A TO SECURITY AGREEMENT
“INITIAL
LENDERS”
|
Name
|
Issue Date
|
Principal
of
Note
|
|||||
|
$
|
2,280,000
|
||||||
Security
Agreement
16
Exhibit
10.5
“NEW
LENDERS”
|
LENDER
|
NOTE
PRINCIPAL AMOUNT
|
|
|
Total:
|
Security
Agreement
17
Exhibit
10.5
SCHEDULE
6.1 TO SECURITY AGREEMENT
EXISTING
SECURITY INTERESTS
The
Guarantor has granted Centurion Credit Resources LLC a lien on all of its assets
in consideration for a $500,000 loan, and a lien granted in favor of Dell
Financial Services L.P. Both of these liens have been perfected by a UCC-1
filing and have priority over the liens granted under this
Agreement.
Security
Agreement
18
Exhibit
10.5
ANNEX
I
TO
SECURITY
AGREEMENT
PLEDGE
AMENDMENT
This
Pledge Amendment, dated _________ __ 200_, is delivered pursuant to Section
4.3
of the Security Agreement referred to below. The undersigned hereby agrees
that
this Pledge Amendment may be attached to the Security Agreement, dated July
__,
2008, as it may heretofore have been or hereafter may be amended, restated,
supplemented or otherwise modified from time to time and that the shares listed
on this Pledge Amendment shall be hereby pledged and assigned to Collateral
Agent and become part of the Collateral referred to in such Security Agreement
and shall secure all of the Obligations referred to in such Security
Agreement.
|
Subsidiary
|
Shares
Issued
|
%
Owned
|
|||||
|
Xxxxx.xxx,
Inc.
|
500
|
100
|
%
|
||||
Security Agreement
19
