SECURITY AGREEMENT
This Security Agreement is made as of the 22nd day of November, 2002 by and
between Xxxx X. Xxxxxx, an individual ("Xxxxxx") and Xxxxxxx Xxxxxxx Xxxxxxxx
("Sessions" who, along with Xxxxxx shall be referred to as a "Debtor" and
collectively as the "Debtors"), on the one hand, and Xxxxxxx X. Xxxxx, an
individual (the "Secured Party"), on the other hand.
The parties hereto agree as follows:
1. SECURITY INTEREST. In consideration of that certain loan extended
by the Secured Party as set forth in the Note of even date herewith executed in
favor of the Secured Party by the Debtor, of which this Agreement is attached as
an exhibit (the "Note"), the terms of which are incorporated herein by
reference, the Debtor hereby grants to Secured Party a continuing security
interest in and a right of setoff against, the Collateral described in Paragraph
2, to secure the prompt payment, performance and observance of the Note (the
"Obligations").
2. THE COLLATERAL. The Collateral is Two Hundred Fifty Thousand
(250,000) shares of Series A Preferred Stock of TMI Holdings, Inc.
3. REPRESENTATIONS AND WARRANTIES. The Debtor warrants, represents and
covenants that:
(a) the Collateral is now, and at all times will be, owned by Debtor
free and clear of all liens, security interest, claims and encumbrances;
(b) Debtor will not assign, sell, mortgage, lease, transfer, pledge,
grant a security interest in or lien upon, encumber, or otherwise dispose
of or abandon, nor will Debtor suffer or permit any of the same to occur
with respect to, any part or all of the Collateral, without prior written
notice to Secured Party; Debtor has made, and will continue to make payment
or deposit or otherwise provide for the payment, when due, of all taxes,
assessments or contributions required by law which have been or may be
levied or assessed against Debtor with respect to any of the Collateral;
Secured Party shall at all times have free access to and right of
inspection of the Collateral and any records pertaining thereto; at any
time and from time to time, Debtor shall, at its sole cost and expense,
execute and deliver to Secured Party such financing statements pursuant to
the Uniform Commercial Code ("UCC"), applications for certificate of title
and other papers, documents or instruments as may be requested by Secured
Party in connection with this Security Agreement, and Debtor hereby
authorizes Secured Party to execute and file at any time and from time to
time one or more financing statements or copies thereof of this Security
Agreement with respect to the Collateral signed only by Secured Party.
4. EVENTS OF DEFAULT. Each of the following events shall constitute an
event of default ("Default") under this Security Agreement:
(a) Debtor shall default in the punctual payment of any sum payable
with respect to, or in the observance or performance of any of the terms
and conditions of any Obligations;
(b) the making or filing of any lien, levy, or execution on or
seizure, attachment of or garnishment of, any Collateral;
(c) Debtor shall become insolvent or commit an act of bankruptcy or
make an assignment for the benefit of creditors;
(d) there shall be filed by or against Debtor any petition for any
relief under the bankruptcy laws of the United States now or hereafter in
effect;
5. REMEDIES UPON DEFAULT. Upon the occurrence of any Default and at
any time thereafter, Secured Party may, without notice to or demand upon Debtor,
declare any Obligations immediately due and payable and Secured Party shall have
all rights and remedies of a secured party under the UCC.
6. MISCELLANEOUS. Debtor hereby releases Secured Party from any
claims, causes of action and demands at any time arising out of or with respect
to this Security Agreement, the Obligations, the Collateral and its use and/or
actions taken or omitted to be taken by Secured Party with respect thereto, and
Debtor hereby agrees to hold Secured Party harmless from and with respect to any
and all such claims, causes of action and demands. No act, omission or delay by
Secured Party shall constitute a waiver of its rights and remedies hereunder or
otherwise. Debtor hereby waives presentment, notice of dishonor and protest of
all instruments included in or evidencing any Obligations or Collateral, and all
other notices and demands whatsoever (except as expressly provided herein.) No
provision hereof shall be modified, altered or limited except by a written
instrument expressly referring to this Security Agreement and to such provision,
and executed by the party to be charged. This Security Agreement and all
Obligations shall be binding upon the heirs, executors, administrators,
successors, or assigns of Debtor and shall, together with the rights and
remedies of Secured Party hereunder, inure to the benefit of Secured Party, its
successors, endorses and assigns. This Security Agreement and the Obligations
shall be governed in all respects by the laws of the State of Florida applicable
to contracts executed and to be performed in such State. If any term of this
Security Agreement shall be held to be invalid, illegal or unenforceable, the
validity of all other terms hereof shall in no way be affected thereby.
IN WITNESS WHEREOF, the undersigned has executed or caused this Security
Agreement to be executed in the State of Florida on the date first above set
forth.
SECURED PARTY: DEBTORS:
/s/ Xxxxxxx X. Xxxxx /s/ Xxxx X. Xxxxxx
------------------------------ ----------------------------
Xxxxxxx X. Xxxxx Xxxx X. Xxxxxx
/s/ Xxxxxxx Xxxxxxx Xxxxxxxx
----------------------------
Xxxxxxx Xxxxxxx Xxxxxxxx
