EXHIBIT 4.9
SECURITY AGREEMENT
SECURITY AGREEMENT (this "Agreement"), dated as of November 18, 2005, by
and among Summus, Inc., a Delaware corporation (the "Company"), and the secured
parties signatory hereto and their respective endorsees, transferees and assigns
(collectively, the "Secured Party"). If the Secured Party consists of two
entities, then these entities shall act jointly when exercising any rights under
this Agreement, and if the Secured Party consists of more than two entities, any
rights of the Secured Party under this Agreement shall be exercised upon the
action of Secured Parties holding a majority of the principal amount of the
Debentures (as defined below) held by such entities.
W I T N E S S E T H:
WHEREAS, pursuant to a Securities Purchase Agreement, dated the date
hereof, between Company and the Secured Party (the "Purchase Agreement"), the
Company has agreed to issue to the Secured Party and the Secured Party has
agreed to purchase from the Company the 6% Senior Secured Debentures in the
aggregate original principal amount of $8,000,000 (the "Debentures"). In
connection therewith, Company shall issue to the Secured Party and the Secured
Party shall acquire certain warrants to purchase Common Stock (the "Warrants")
as set forth in the Purchase Agreement; and
WHEREAS, in order to induce the Secured Party to purchase the Debentures
and the Warrants, Company has agreed to execute and deliver to the Secured Party
this Agreement for the benefit of the Secured Party and to grant to it a first
priority security interest in certain property of Company to secure the prompt
payment, performance and discharge in full of all of Company's obligations under
the Debentures and exercise and discharge in full of Company's obligations under
the Warrants.
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:
1. Certain Definitions. As used in this Agreement, the following terms
shall have the meanings set forth in this Section 1. Terms used but not
otherwise defined in this Agreement that are defined in Article 9 of the UCC
shall have the respective meanings given such terms in Article 9 of the UCC.
(a) "Collateral" means the collateral in which the Secured Party is
granted a security interest by this Agreement and which shall include the
following, whether presently owned or existing or hereafter acquired or coming
into existence, and all additions and accessions thereto and all substitutions
and replacements thereof, and all proceeds, products and
accounts thereof, including, without limitation, all proceeds from the sale or
transfer of the Collateral and of insurance covering the same and of any tort
claims in connection therewith:
(i) All Goods of the Company, including, without
limitations, all machinery, equipment, computers, motor vehicles,
trucks, tanks, boats, ships, appliances, furniture, special and
general tools, fixtures, test and quality control devices and other
equipment of every kind and nature and wherever situated, together
with all documents of title and documents representing the same, all
additions and accessions thereto, replacements therefor, all parts
therefor, and all substitutes for any of the foregoing and all other
items used and useful in connection with the Company's businesses
and all improvements thereto; and
(ii) All Inventory of the Company; and
(iii) All of the Company's contract rights and general
intangibles, including, without limitation, all water contracts,
partnership interests, stock or other securities, licenses,
distribution and other agreements, computer software development
rights, leases, franchises, customer lists, quality control
procedures, grants and rights, goodwill, trademarks, service marks,
trade styles, trade names, patents, patent applications, copyrights,
deposit accounts, and income tax refunds; and
(iv) All Accounts of the Company including all insurance
proceeds, and rights to refunds or indemnification whatsoever owing,
together with all instruments, all documents of title representing
any of the foregoing, all rights in any merchandising, goods,
equipment, motor vehicles and trucks which any of the same may
represent, and all right, title, security and guaranties with
respect to each Account, including any right of stoppage in transit;
(v) All of the Company's documents, instruments, chattel
paper, investment property, deposit accounts, letter-of-credit
rights, supporting obligations, files, records, books of account,
business papers and computer programs and the products; and
(vi) To the extent not listed above, the proceeds of all
of the foregoing Collateral set forth in clauses (i)-(v) above.
(b) "Company" means, collectively, Company and all of the
subsidiaries of Company, a list of which is contained in Exhibit A, attached
hereto.
(c) "Material Adverse Effect" shall have the meaning set forth in
the Purchase Agreement.
(d) "Obligations" means all of the Company's obligations under this
Agreement, the Purchase Agreement and the Debentures, in each case, whether now
or hereafter existing, voluntary or involuntary, direct or indirect, absolute or
contingent, liquidated or unliquidated, whether or not jointly owed with others,
and whether or not from time to time decreased or extinguished and later
decreased, created or incurred, and all or any portion of such
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obligations or liabilities that are paid, to the extent all or any part of such
payment is avoided or recovered directly or indirectly from the Secured Party as
a preference, fraudulent transfer or otherwise as such obligations may be
amended, supplemented, converted, extended or modified from time to time.
(e) "UCC" means the Uniform Commercial Code, as currently in effect
in the State of Delaware.
2. Grant of Security Interest. As an inducement for the Secured Party to
purchase the Debentures and to secure the complete and timely payment,
performance and discharge in full, as the case may be, of all of the
Obligations, the Company hereby, pledges, grants and hypothecates to the Secured
Party, a continuing first priority security interest in, a continuing lien upon,
an unqualified right to possession and disposition of and a right of set-off
against, in each case to the fullest extent permitted by law, all of the
Company's right, title and interest of whatsoever kind and nature in and to the
Collateral (the "Security Interest"). The Company shall take all such actions
requested by the Secured Party so as to maintain the Security Interest as a
valid and perfected first priority security interest in the Collateral in
accordance with the terms and conditions of this Agreement.
3. Representations, Warranties, Covenants and Agreements of the Company.
The Company represents and warrants to, and covenants and agrees with, the
Secured Party as follows:
(a) The Company represents and warrants that it has no place of
business or offices where its respective books of account and records are kept
(other than temporarily at the offices of its attorneys or accountants) or
places where Collateral is stored or located, except as set forth on Exhibit B
attached hereto.
(b) The Company is the sole owner of the Collateral, free and clear
from encumbrances, and is free from any other liens which would have a Material
Adverse Effect and is fully authorized to grant the Security Interest in and to
pledge the Collateral. Except for the financing statements filed pursuant to
this Agreement, there is not on file with any governmental authority an
effective financing statement, security agreement, license or transfer or any
notice of any of the foregoing covering or affecting any of the Collateral. So
long as this Agreement shall be in effect, the Company shall not execute and
shall not knowingly permit to be on file in any such office or agency any such
financing statement or other document or instrument, except to the extent filed
or recorded in favor of the Secured Party pursuant to the terms of this
Agreement.
(c) No part of the Collateral has been judged invalid or
unenforceable. No written claim has been received that any Collateral or the
Company's use of any Collateral violates the rights of any third party. There
has been no adverse decision to the Company's claim of ownership rights in or
exclusive rights to use the Collateral in any jurisdiction or to the Company's
right to keep and maintain such Collateral in full force and effect, and there
is no proceeding involving said rights pending or, to the Company's knowledge,
threatened before any court, judicial body, administrative or regulatory agency,
arbitrator or other governmental authority.
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(d) The Company shall at all times maintain its books of account and
records relating to the Collateral at its principal place of business and its
Collateral at the locations set forth on Exhibit B attached hereto and may not
relocate such books of account and records or tangible Collateral unless it
delivers to the Secured Party at least ten (10) days prior to such relocation,
written notice of such relocation and the new location thereof (which must be
within the United States).
(e) The Company shall notify the Secured Party at least ten (10)
days in advance of any change in the state of incorporation or formation or any
change in the Company's name(s) and the Company shall provide evidence that
appropriate financing statements and other necessary documents have been filed
and recorded and other steps have been taken to perfect the Security Interest to
create in favor of the Secured Party valid, perfected and continuing liens in
the Collateral, to the extent the Security Interest in the Collateral can be
perfected by making such filings.
(f) This Agreement creates in favor of the Secured Party a valid
security interest in the Collateral securing the payment and performance of the
Obligations and, upon making the filings described in the immediately following
sentence, a perfected security interest in such Collateral, to the extent the
Security Interest in the Collateral can be perfected by making such filings.
Except for the filing of financing statements on Form UCC-1 under the UCC with
the jurisdictions indicated on Exhibit C, attached hereto, no authorization or
approval of or filing with or notice to any governmental authority is required
either (i) for the grant by the Company of, or the effectiveness of, the
Security Interest granted hereby or for the execution, delivery and performance
of this Agreement by the Company or (ii) for the perfection of or exercise by
the Secured Party of its rights and remedies hereunder to the extent such rights
and remedies with respect to the Collateral can be perfected by making such
filings.
(g) The Company shall take all such actions requested by the Secured
Party so as to maintain the liens and Security Interest provided for hereunder
as valid and perfected liens and security interests in the Collateral in favor
of the Secured Party until this Agreement and the Security Interest hereunder
shall terminate pursuant to Section 11. The Company hereby agrees to defend the
same against any and all persons. The Company shall safeguard and protect all
Collateral for the account of the Secured Party. At the request of the Secured
Party, the Company will deliver to the Secured Party at any time or from time to
time one or more Financing Statements pursuant to the UCC (or any other
applicable statute) in form reasonably satisfactory to the Secured Party and
will pay the cost of filing the same in all public offices wherever filing is,
or is deemed by the Secured Party to be, necessary or desirable to effect the
rights and obligations provided for herein. Without limiting the generality of
the foregoing, the Company shall pay all fees, taxes and other amounts necessary
to maintain the Collateral and the Security Interest hereunder, and the Company
shall obtain and furnish to the Secured Party from time to time, upon demand,
such releases and/or subordinations of claims and liens which may be required to
maintain the priority of the Security Interest hereunder.
(h) The Company hereby authorizes the Secured Party to file any UCC
financing or continuation statement without the signature of the Company to the
extent permitted by applicable law, including, but not limited to, a filing of a
Form UCC-1 financing statement with an "all assets" description for the
Collateral description. The Company hereby ratifies
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any filing by the Secured Party of financing statements prior to the date hereof
with respect to the Collateral. A carbon, photographic, facsimile or any
reproduction of this Security Agreement shall be sufficient as a financing
statement for filing in any jurisdiction.
(i) The Company will not sell, lease, transfer, or otherwise dispose
of any of the Collateral or create, incur, assume or suffer to exist any lien
upon any of the Collateral, except as otherwise permitted under the Purchase
Agreement, without the prior written consent of the Secured Party.
(j) The Company shall keep and preserve its Goods, Inventory and
other tangible Collateral in good working order and condition in accordance with
good business practices customary in the Company's industry reasonable wear and
tear excepted and shall not operate or locate any such Collateral (or cause to
be operated or located) in any area excluded from insurance coverage.
(k) The Company shall, within ten (10) days of obtaining knowledge
thereof, advise the Secured Party promptly, in sufficient detail, of any
substantial change in the Collateral, and of the occurrence of any event which
would have a Material Adverse Effect on the value of the Collateral or on the
Secured Party's security interest therein.
(l) The Company shall promptly execute and deliver to the Secured
Party such further deeds, mortgages, assignments, security agreements, financing
statements or other instruments, documents, certificates and assurances and take
such further action as the Secured Party may from time to time reasonably
request and may in its sole discretion deem necessary to perfect, protect or
enforce its security interest in the Collateral including, without limitation,
the execution and delivery of a separate security agreement with respect to the
Company's intellectual property ("Intellectual Property Security Agreement") in
which the Secured Party has been granted a security interest hereunder,
substantially in a form acceptable to the Secured Party, which Intellectual
Property Security Agreement, other than as stated therein, shall be subject to
all of the terms and conditions hereof. Where Collateral is in the possession of
a third party, the Company will join with the Secured Party in notifying the
third party of the Secured Party's security interest and obtaining an
acknowledgement from the third party that it is holding the Collateral for the
benefit of the Secured Party as may be reasonably requested by the Secured
Party. The Company will use reasonable efforts to cooperate with the Secured
Party in obtaining control with respect to Collateral consisting of (i) deposit
accounts; (ii) investment property; (iii) letter-of-credit rights; and (iv)
electronic chattel paper.
(m) The Company shall permit the Secured Party and its employees and
agents to inspect the Collateral during regular business hours and upon at least
twenty-four (24) hours prior written notice, and to make copies of records
pertaining to the Collateral, all in accordance with the Purchase Agreement.
(n) The Company will take all steps reasonably necessary to
diligently pursue and seek to preserve, enforce and collect any rights, claims,
causes of action and accounts receivable in respect of the Collateral.
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(o) The Company shall promptly, and in any case, in no less than
five (5) days, notify the Secured Party in sufficient detail upon becoming aware
of any attachment, garnishment, execution or other legal process levied against
any Collateral and of any other information received by the Company that may
have a Material Adverse Effect on the Collateral, the Security Interest or the
rights and remedies of the Secured Party hereunder.
(p) All information heretofore, herein or hereafter supplied to the
Secured Party by or on behalf of the Company with respect to the Collateral is
accurate and complete in all material respects as of the date furnished.
(q) Exhibit A attached hereto contains a list of all of the
subsidiaries of Company. The Company shall notify the Secured Party as soon as
practicable after acquiring or creating a new subsidiary, and cause such new
subsidiary which is a domestic subsidiary to execute and deliver to the Secured
Party joinders to this Agreement, any Intellectual Property Security Agreement,
and any other documents as may be reasonably requested by the Secured Party in
form and substance satisfactory to the Company to which such subsidiary shall
grant a security interest to the Secured Party in its assets as additional
Collateral for the Obligations.
4. Defaults. The following events shall be "Events of Default":
(a) The occurrence of an Event of Default as defined in and under
the Debentures;
(b) Any representation or warranty of the Company in this Agreement
or in the Intellectual Property Security Agreement shall prove to have been
incorrect and the subject of that breach of representation or warranty has a
Material Adverse Effect (as defined in the Purchase Agreement) on or as the date
made or deemed made;
(c) The failure by the Company to observe or perform any of its
obligations hereunder or in the Intellectual Property Security Agreement for
fifteen (15) days after receipt by the Company of notice of such failure from
the Secured Party; and
(d) Any breach of, or default under, the Warrants or the Purchase
Agreement.
5. Duty To Hold In Trust. Upon the occurrence of any Event of Default
and at any time thereafter, the Company shall, upon receipt by it of any
revenue, income or other sums subject to the Security Interest, whether payable
pursuant to the Debentures or otherwise, or of any check, draft, Debenture,
trade acceptance or other instrument evidencing an obligation to pay any such
sum, hold the same in trust for the Secured Party and shall forthwith endorse
and transfer any such sums or instruments, or both, to the Secured Party for
application to the satisfaction of the Obligations.
6. Rights and Remedies Upon Default. Upon occurrence of any Event of
Default and at any time thereafter, the Secured Party shall have the right to
exercise all of the remedies conferred hereunder and under the Debentures, and
the Secured Party shall have all the rights and remedies of a secured party
under the UCC and/or any other applicable law (including the Uniform Commercial
Code of any jurisdiction in which any Collateral is then located). Without
limitation, the Secured Party shall have the following rights and powers:
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(a) The Secured Party shall have the right to take possession of the
Collateral and, for that purpose, enter, with the aid and assistance of any
person, any premises where the Collateral, or any part thereof, is or may be
placed and remove the same, and the Company shall assemble the Collateral and
make it available to the Secured Party at places which the Secured Party shall
reasonably select, whether at the Company's premises or elsewhere, and make
available to the Secured Party, without rent, all of the Company's respective
premises and facilities for the purpose of the Secured Party taking possession
of, removing or putting the Collateral in saleable or disposable form.
(b) The Secured Party shall have the right to operate the business
of the Company using the Collateral and shall have the right to assign, sell,
lease or otherwise dispose of and deliver all or any part of the Collateral, at
public or private sale or otherwise, either with or without special conditions
or stipulations, for cash or on credit or for future delivery, in such parcel or
parcels and at such time or times and at such place or places, and upon such
terms and conditions as the Secured Party may deem commercially reasonable, all
without (except as shall be required by applicable statute and cannot be waived)
advertisement or demand upon or notice to the Company or right of redemption of
the Company, which are hereby expressly waived. Upon each such sale, lease,
assignment or other transfer of Collateral, the Secured Party may, unless
prohibited by applicable law which cannot be waived, purchase all or any part of
the Collateral being sold, free from and discharged of all trusts, claims, right
of redemption and equities of the Company, which are hereby waived and released.
7. Applications of Proceeds. The proceeds of any such sale, lease or
other disposition of the Collateral hereunder shall be applied first, to the
expenses of retaking, holding, storing, processing and preparing for sale,
selling, and the like (including, without limitation, any taxes, fees and other
costs incurred in connection therewith) of the Collateral, to the reasonable
attorneys' fees and expenses incurred by the Secured Party in enforcing its
rights hereunder and in connection with collecting, storing and disposing of the
Collateral, and then to satisfaction of the Obligations, and to the payment of
any other amounts required by applicable law, after which the Secured Party
shall pay to the Company any surplus proceeds. If, upon the sale, license or
other disposition of the Collateral, the proceeds thereof are insufficient to
pay all amounts to which the Secured Party is legally entitled, the Company will
be liable for the deficiency, together with interest thereon, at the rate of 12%
per annum (the "Default Rate"), and the reasonable fees of any attorneys
employed by the Secured Party to collect such deficiency. To the extent
permitted by applicable law, the Company waives all claims, damages and demands
against the Secured Party arising out of the repossession, removal, retention or
sale of the Collateral, unless due to the gross negligence or willful misconduct
of the Secured Party.
8. Costs and Expenses. The Company agrees to pay all out-of-pocket fees,
costs and expenses incurred in connection with any filing required hereunder,
including without limitation, any financing statements, continuation statements,
partial releases and/or termination statements related thereto or any expenses
of any searches reasonably required by the Secured Party. The Company shall also
pay all other claims and charges which in the reasonable opinion of the Secured
Party might prejudice, imperil or otherwise affect the Collateral or the
Security Interest therein. The Company will also, upon demand, pay to the
Secured Party the amount of any and all reasonable expenses, including the
reasonable fees and expenses of its counsel and of any experts and agents, which
the Secured Party may incur in connection with (i) the
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enforcement of this Agreement, (ii) the custody or preservation of, or the sale
of, collection from, or other realization upon, any of the Collateral, or (iii)
the exercise or enforcement of any of the rights of the Secured Party under the
Debentures. Until so paid, any fees payable hereunder shall be added to the
principal amount of the Debentures and shall bear interest at the Default Rate.
9. Responsibility for Collateral. The Company assumes all liabilities
and responsibility in connection with all Collateral, and the obligations of the
Company hereunder or under the Debentures and the Warrants shall in no way be
affected or diminished by reason of the loss, destruction, damage or theft of
any of the Collateral or its unavailability for any reason.
10. Security Interest Absolute. All rights of the Secured Party and all
Obligations of the Company hereunder, shall be absolute and unconditional,
irrespective of: (a) any lack of validity or enforceability of this Agreement,
the Purchase Agreement, the Debentures, the Warrants or any agreement entered
into in connection with the foregoing, or any portion hereof or thereof; (b)any
change in the time, manner or place of payment or performance of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or any consent to any departure from the Purchase Agreement, the Debentures,
the Warrants or any other agreement entered into in connection with the
foregoing; (c) any exchange, release or nonperfection of any of the Collateral,
or any release or amendment or waiver of or consent to departure from any other
collateral for, or any guaranty, or any other security, for all or any of the
Obligations; (d) any action by the Secured Party to obtain, adjust, settle and
cancel in its sole discretion any insurance claims or matters made or arising in
connection with the Collateral; or (e) any other circumstance which might
otherwise constitute any legal or equitable defense available to the Company, or
a discharge of all or any part of the Security Interest granted hereby. Until
the Obligations shall have been paid and performed in full, the rights of the
Secured Party shall continue even if the Obligations are barred for any reason,
including, without limitation, the running of the statute of limitations or
bankruptcy. The Company expressly waives presentment, protest, notice of
protest, demand, notice of nonpayment and demand for performance. In the event
that at any time any transfer of any Collateral or any payment received by the
Secured Party hereunder shall be deemed by final order of a court of competent
jurisdiction to have been a voidable preference or fraudulent conveyance under
the bankruptcy or insolvency laws of the United States, or shall be deemed to be
otherwise due to any party other than the Secured Party, then, in any such
event, the Company's obligations hereunder shall survive cancellation of this
Agreement, and shall not be discharged or satisfied by any prior payment thereof
and/or cancellation of this Agreement, but shall remain a valid and binding
obligation enforceable in accordance with the terms and provisions hereof. The
Company waives all right to require the Secured Party to proceed against any
other person or to apply any Collateral which the Secured Party may hold at any
time, or to marshal assets, or to pursue any other remedy. The Company waives
any defense arising by reason of the application of the statute of limitations
to any obligation secured hereby.
11. Term of Agreement. This Agreement and the Security Interest shall
terminate on the date on which all payments under the Debentures have been made
in full and all other Obligations have been paid or discharged, or earlier in
the event that the Company (i) enters into a financing transaction which is
conditioned upon the termination of this Agreement and the Security Interest and
(ii) in connection with such financing transaction, the Company or a third party
delivers to the Secured Party an irrevocable non-transferable standby letter of
credit, in
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form reasonably satisfactory to the Secured Party, issued by a bona fide
financial institution reasonably satisfactory to the Secured Party in favor of
the Secured Party in the amount of the then outstanding obligations under the
Debentures, including principal, interest and all other amounts that may be due
and owing pursuant to the Debentures. Upon such termination, the Secured Party,
at the request and at the expense of the Company, will join in executing any
termination statement with respect to any financing statement executed and filed
pursuant to this Agreement and taking any and all other actions reasonably
requested by the Company to terminate the Secured Party's Security Interest and
release any and all Collateral.
12. Power of Attorney; Further Assurances.
(a) The Company authorizes the Secured Party, and does hereby make,
constitute and appoint it, and its respective officers, agents, successors or
assigns with full power of substitution, as the Company's true and lawful
attorney-in-fact, with power, in its own name or in the name of the Company, to,
after the occurrence and during the continuance of an Event of Default, (i)
endorse any Debentures, checks, drafts, money orders, or other instruments of
payment (including payments payable under or in respect of any policy of
insurance) in respect of the Collateral that may come into possession of the
Secured Party; (ii) to sign and endorse any UCC financing statement or any
invoice, freight or express xxxx, xxxx of lading, storage or warehouse receipts,
drafts against debtors, assignments, verifications and notices in connection
with accounts, and other documents relating to the Collateral; (iii) to pay or
discharge taxes, liens, security interests or other encumbrances at any time
levied or placed on or threatened against the Collateral; (iv) to demand,
collect, receipt for, compromise, settle and xxx for monies due in respect of
the Collateral; and (v) generally, to do, at the option of the Secured Party,
and at the Company's expense, at any time, or from time to time, all acts and
things which the Secured Party deems reasonably necessary to protect, preserve
and realize upon the Collateral and the Security Interest granted therein in
order to effect the intent of this Agreement, the Purchase Agreement, the
Debentures and the Warrants, all as fully and effectually as the Company might
or could do; and the Company hereby ratifies all that said attorney shall
lawfully do or cause to be done by virtue hereof. This power of attorney is
coupled with an interest and shall be irrevocable for the term of this Agreement
and thereafter as long as any of the Obligations shall be outstanding.
(b) On a continuing basis, the Company will make, execute,
acknowledge, deliver, file and record, as the case may be, in the proper filing
and recording places in any jurisdiction, including, without limitation, the
jurisdictions indicated on Exhibit C, attached hereto, all such instruments, and
take all such action as may reasonably be deemed necessary or advisable, or as
reasonably requested by the Secured Party, to perfect the Security Interest
granted hereunder and otherwise to carry out the intent and purposes of this
Agreement, or for assuring and confirming to the Secured Party the grant or
perfection of a security interest in all the Collateral.
(c) The Company hereby irrevocably appoints the Secured Party as the
Company's attorney-in-fact so long as any of the Obligations shall be
outstanding, with full authority in the place and stead of the Company and in
the name of the Company, from time to time in the Secured Party's discretion, to
take any action and to execute any instrument which the Secured Party may deem
necessary or advisable to accomplish the purposes of this
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Agreement, including the filing, in its sole discretion, of one or more
financing or continuation statements and amendments thereto, relative to any of
the Collateral without the signature of the Company where permitted by law.
13. Notices. All notices, requests, demands to or upon the
respective parties hereto to be effective shall be in writing, and, unless
otherwise expressly provided herein, shall be deemed to have been duly given or
made when delivered by hand, or, in the case of telecopy notice, when received,
or, in the case of a nationally recognized courier service, one business day
after delivery to such courier service, addressed as follows in the case of the
Company and the Secured Party or to such other address as may be hereafter
notified by the respective parties hereto and any future Secured Parties:
IF TO THE COMPANY:
Summus, Inc.
000 Xxxxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Chief Executive Officer
Telephone: 000-000-0000
Facsimile: 000-000-0000
With a copy to (which copy shall not constitute notice to the
Company):
Summus, Inc.
000 Xxxxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: General Counsel
Telephone: 000-000-0000
Facsimile: 000-000-0000
IF TO THE SECURED PARTY:
At the address set forth on Exhibit A to the Purchase
Agreement.
With a copy to (which copy shall not constitute notice to the
Secured Party):
At the address set forth on Exhibit A to the Purchase
Agreement.
14. Other Security. To the extent that the Obligations are now or
hereafter secured by property other than the Collateral or by the guarantee,
endorsement or property of any other person, firm, corporation or other entity,
then the Secured Party shall have the right, in its sole discretion, to pursue,
relinquish, subordinate, modify or take any other action with respect thereto,
without in any way modifying or affecting any of the Secured Party's rights and
remedies hereunder.
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15. Miscellaneous.
(a) No course of dealing between the Company and the Secured Party,
nor any failure to exercise, nor any delay in exercising, on the part of the
Secured Party, any right, power or privilege hereunder or under the Debentures
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, power or privilege hereunder or thereunder preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
(b) All of the rights and remedies of the Secured Party with respect
to the Collateral, whether established hereby or by the Debentures or by any
other agreements, instruments or documents or by law shall be cumulative and may
be exercised singly or concurrently.
(c) This Agreement constitutes the entire agreement of the parties
with respect to the subject matter hereof and is intended to supersede all prior
negotiations, understandings and agreements with respect thereto. Except as
specifically set forth in this Agreement, no provision of this Agreement may be
modified or amended except by a written agreement specifically referring to this
Agreement and signed by the parties hereto.
(d) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
(e) No waiver of any breach or default or any right under this
Agreement shall be considered valid unless in writing and signed by the party
giving such waiver, and no such waiver shall be deemed a waiver of any
subsequent breach or default or right, whether of the same or similar nature or
otherwise.
(f) This Agreement shall be binding upon and inure to the benefit of
each party hereto and its successors and assigns; provided that, (i) the Company
may without the Secured Party's consent assign this Agreement in connection with
a reincorporation of the Company in another jurisdiction and (ii) the Secured
Party may assign any rights or obligations hereunder, in whole or in part, upon
its assignment of any of its rights under the Debentures.
(g) Each party shall take such further action and execute and
deliver such further documents as may be necessary or appropriate in order to
carry out the provisions and purposes of this Agreement.
(h) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO ITS
CONFLICTS OF LAWS PRINCIPLES EXCEPT TO THE EXTENT THAT MANDATORY CHOICE OF LAW
RULES UNDER THE UCC RESULTS IN THE APPLICATION OF THE LAW OF ANOTHER
JURISDICTION. EACH OF THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE
JURISDICTION OF ANY DELAWARE STATE OR UNITED STATES
11
FEDERAL COURT SITTING IN DELAWARE OVER ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT, AND THE PARTIES HERETO HEREBY IRREVOCABLY AGREE
THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN SUCH DELAWARE STATE OR FEDERAL COURT. THE PARTIES HERETO AGREE
THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND
MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER
MANNER PROVIDED BY LAW. THE PARTIES HERETO FURTHER WAIVE ANY OBJECTION TO VENUE
IN THE STATE OF DELAWARE AND ANY OBJECTION TO AN ACTION OR PROCEEDING IN THE
STATE OF DELAWARE ON THE BASIS OF FORUM NON CONVENIENS.
(i) EACH PARTY HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
THIS AGREEMENT. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF
ANY DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATER
OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY
HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR EACH PARTY TO
ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH PARTY HAS ALREADY RELIED ON THIS
WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH PARTY WILL CONTINUE TO RELY
ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH PARTY FURTHER WARRANTS AND
REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT
SUCH PARTY HAS KNOWINGLY AND VOLUNTARILY WAIVES ITS RIGHTS TO A JURY TRIAL
FOLLOWING SUCH CONSULTATION. THIS WAIVER IS IRREVOCABLE, MEANING THAT,
NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS AND SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. IN THE EVENT OF A
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
(j) This Agreement may be executed by one or more of the parties to
this Agreement on any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed on the day and year first above written.
SUMMUS, INC.
By: /s/ Xxxx X. Ban
------------------------------------------
Xxxx X. Ban
Chief Executive Officer
RHP MASTER FUND, LTD.
By: Rock Hill Investment Management, L.P.
By: RHP General Partner, LLC
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------------
Xxxxx X. Xxxxxxx
Director
LAP SUMMUS HOLDINGS, LLC
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------------
Xxxxx X. Xxxxxxx
Managing Partner
EXHIBIT A
SUBSIDIARIES OF THE COMPANY
None
EXHIBIT B
COLLATERAL LOCATIONS
000 Xxxxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
EXHIBIT C
JURISDICTIONS FOR FILING OF FINANCING STATEMENTS
Delaware
