Exhibit 10.2
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of September 30, 2002 (together
with all amendments, if any, from time to time hereto, this "Security
Agreement"), among Phone1, Inc., a Florida corporation ("Phone1"),
Phone1Globalwide, Inc., a Delaware corporation ("Global") and Globaltron
Communication Corporation, a Delaware corporation ("GCC" and collectively with
Phone1 and Global, the "Grantors" and individually, a "Grantor"), and GNB Bank
Panama S.A., a bank organized under the laws of the Republic of Panama
("Lender").
W I T N E S S T H:
- - - - - - - - --
WHEREAS, pursuant to that certain Loan Agreement (which is
incorporated herein by reference) dated as of the date hereof (the "Loan
Agreement") by and among Lender and the Grantors, Lender has agreed to make the
Loans;
WHEREAS, in order to induce Lender to enter into the Loan
Agreement, Grantors have agreed to grant a continuing Lien on the Collateral (as
hereinafter defined) to secure all of the payment obligations of Phone1
(guaranteed by Global and GCC) under the Loan Agreement (the "Secured
Obligations");
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. DEFINED TERMS. All capitalized terms used but not otherwise
defined herein (included in the recitals hereof) have the meanings given to them
in the Loan Agreement. All other terms contained in this Security Agreement,
unless the context indicates otherwise, have the meanings provided for by the
Code to the extent the same are used or defined therein.
(a) "Accounts" means all "accounts," as such term is defined
in the Code, now owned or hereafter acquired by any Grantor, including (a) all
accounts receivable, other receivables, book debts and other forms of
obligations (other than forms of obligations evidenced by Chattel Paper, or
Instruments), (including any such obligations that may be characterized as an
account or contract right under the Code), (b) all of each Grantor's rights in,
to and under all purchase orders or receipts for goods or services, (c) all of
each Grantor's rights to any goods represented by any of the foregoing
(including unpaid sellers' rights of rescission, replevin, reclamation and
stoppage in transit and rights to returned, reclaimed or repossessed goods), (d)
all rights to payment due to any Grantor for property sold, leased, licensed,
assigned or otherwise disposed of, for a policy of insurance issued or to be
issued, for a secondary obligation incurred or to be incurred, for energy
provided or to be provided, for the use or hire of a vessel under a charter or
other contract, arising out of the use of a credit card or charge card, or for
services rendered or to be rendered by such Grantor or in connection with any
other transaction (whether or not yet earned by performance on the part of such
Grantor), (e) all health care insurance receivables and (f) all collateral
security of any kind, given by any Account Debtor or any other Person with
respect to any of the foregoing.
(b) "Account Debtor" means any Person who may become obligated
to any Grantor under, with respect to, or on account of, an Account, Chattel
Paper or General Intangibles (including a payment intangible).
(c) "Chattel Paper" means any "chattel paper," as such term is
defined in the Code, including electronic chattel paper, now owned or hereafter
acquired by any Grantor.
(d) "Code" means the Uniform Commercial Code as the same may,
from time to time, be enacted and in effect in the State of New York; PROVIDED,
that to the extent that the Code is used to define any term herein or in the
Loan Agreement and such term is defined differently in different Articles or
Divisions of the Code, the definition of such term contained in Article or
Division 9 shall govern; PROVIDED FURTHER, that in the event that, by reason of
mandatory provisions of law, any or all of the attachment, perfection or
priority of, or remedies with respect to Lender's Lien on any Collateral is
governed by the Uniform Commercial Code as enacted and in effect from time to
time in a jurisdiction other than the State of New York, the term "Code" shall
mean the Uniform Commercial Code as enacted and in effect in such other
jurisdiction solely for purposes of the provisions thereof relating to such
attachment, perfection, priority or remedies and for purposes of definitions
related to such provisions.
(e) "Contracts" means all contracts and agreements to which
any Grantor is a party, as the same may be amended, supplemented or otherwise
modified from time to time, including without limitation, (i) all rights of any
Grantor to receive moneys due and to become due to it thereunder or in
connection therewith, (ii) all rights of any Grantor to damages arising
thereunder and (iii) all rights of any Grantor to perform and to exercise all
remedies thereunder.
(f) "Copyright Licenses" means any and all rights now owned or
hereafter acquired by any Grantor under any written agreement granting any right
to use any Copyright (as defined below) or Copyright registration.
(g) "Copyrights" means all of the following now owned or
hereafter adopted or acquired by any Grantor: (i) all Copyrights and General
Intangibles of like nature (whether registered or unregistered), all
registrations and recordings thereof, and all applications in connection
therewith, including all registrations, recordings and applications in the
United States Copyright Office or in any similar office or agency of the United
States, any state or territory thereof, or any other country or any political
subdivision thereof, and (ii) all reissues, extensions or renewals thereof.
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(h) "Deposit Accounts" means all "deposit accounts" as such
term is defined in the Code, now or hereafter held in the name of any Grantor.
(i) "Documents" means all "documents", as such term is defined
in the Code, now owned or hereafter acquired by any Grantor, wherever located.
(j) "Equipment" means all "equipment," as such term is defined
in the Code, now owned or hereafter acquired by any Grantor, wherever located
and, in any event, including all such Grantor's machinery and equipment,
including processing equipment, conveyors, machine tools, data processing and
computer equipment, including embedded software and peripheral equipment and all
engineering, processing and manufacturing equipment, office machinery,
furniture, materials handling equipment, tools, attachments, accessories,
automotive equipment, trailers, trucks, forklifts, molds, dies, stamps, motor
vehicles, rolling stock and other equipment of every kind and nature, trade
fixtures and fixtures not forming a part of real property, together with all
additions and accessions thereto, replacements therefor, all parts therefor, all
substitutes for any of the foregoing, fuel therefor, and all manuals, drawings,
instructions, warranties and rights with respect thereto, and all products and
proceeds thereof and condemnation awards and insurance proceeds with respect
thereto.
(k) "Fixtures" means all "fixtures" as such term is defined in
the Code, now owned or hereafter acquired by any Grantor.
(l) "General Intangibles" means all "general intangibles," as
such term is defined in the Code, now owned or hereafter acquired by any
Grantor, including all right, title and interest that such Grantor may now or
hereafter have in or under any contract, all payment intangibles, customer
lists, licenses, Copyrights, Trademarks, Patents, and all applications therefor
and reissues, extensions or renewals thereof, rights in Intellectual Property,
interests in partnerships, joint ventures and other business associations,
licenses, permits, Copyrights, trade secrets, proprietary or confidential
information, inventions (whether or not patented or patentable), technical
information, procedures, designs, knowledge, know-how, software, data bases,
data, skill, expertise, experience, processes, models, drawings, materials and
records, goodwill (including the goodwill associated with any Trademark or
Trademark license), all rights and claims in or under insurance policies
(including insurance for fire, damage, loss and casualty, whether covering
personal property, real property, tangible rights or intangible rights, all
liability, life, key man and business interruption insurance, and all unearned
premiums), uncertificated securities, choses in action, deposit, checking and
other bank accounts, rights to receive tax refunds and other payments, rights to
receive dividends, distributions, cash, instruments and other property in
respect of or in exchange for pledged stock and investment property, rights of
indemnification, all books and records, correspondence, credit files, invoices
and other papers, including without limitation all tapes, cards, computer runs
and other papers and documents in the possession or under the control of such
Grantor or any computer bureau or service company from time to time acting for
such Grantor.
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(m) "Global Subsidiaries Stock" means all of Global's right,
title and interest in and to any and all of its subsidiaries; the Global
Subsidiaries Stock shall include any additional shares of any class or series of
capital stock of any subsidiary of Global hereafter acquired by Global from time
to time and at any time and all dividends, cash, instruments and other property
or proceeds, from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all the Global Subsidiaries Stock.
(n) "Goods" means all "goods" as defined in the Code, now
owned or hereafter acquired by any Grantor, wherever located, including embedded
software to the extent included in "goods" as defined in the Code, manufactured
homes, standing timber that is cut and removed for sale and unborn young of
animals.
(o) "Instruments" means all "instruments," as such term is
defined in the Code, now owned or hereafter acquired by any Grantor, wherever
located, and, in any event, including all certificated securities, all
certificates of deposit, and all promissory notes and other evidences of
indebtedness, other than instruments that constitute, or are a part of a group
of writings that constitute, Chattel Paper.
(p) "Intellectual Property" means any and all Licenses,
Patents, Copyrights, Trademarks, service marks, trade dress, trade names, domain
names, brand names and certification marks presently owned by any Grantor or
(pursuant to license, sublicense, agreement or permission) used by any Grantor
in connection with such Grantor's business.
(q) "Inventory" means all "inventory" as such term is defined
in the Code, now owned or hereafter acquired by any Grantor, wherever located,
and in any event including inventory, merchandise, goods and other personal
property that are held by or on behalf of any Grantor for sale or lease or are
furnished or are to be furnished under a contract of service, or that constitute
raw materials, work in process, finished goods, returned goods, or materials or
supplies of any kind, nature or description used or consumed or to be used or
consumed in the respective Grantor's business or in the processing, production,
packaging, promotion, delivery or shipping of the same, including other supplies
and embedded software.
(r) "Investment Property" means all "investment property" as
such term is defined in the Code now owned or hereafter acquired by any Grantor,
wherever located including (i) all securities, whether certificated or
uncertificated, including stocks, bonds, interests in limited liability
companies, partnership interests, treasuries, certificates of deposit, and
mutual fund shares; (ii) all securities entitlements of any Grantor, including
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the rights of any Grantor to any securities account and the financial assets
held by a securities intermediary in such securities account and any free credit
balance or other money owing by any securities intermediary with respect to that
account, (iii) all securities accounts of any Grantor; (iv) all commodity
contracts of any Grantor and (v) all commodity accounts held by any Grantor.
(s) "Letter of Credit Rights" means letter of credit rights as
such term is defined in the Code, now owned or hereafter acquired by any
Grantor, including rights to payment or performance under a letter of credit,
whether or not such Grantor, as beneficiary, has demanded or is entitled to
demand payment or performance.
(t) "License" means any Copyright License, Patent License,
Trademark License or other license of rights or interests now held or hereafter
acquired by any Grantor.
(u) "Lien" means any mortgage, pledge, security interest,
lien, claim, encumbrance or other similar restrictions, of any kind or nature
whatsoever.
(v) "Patent Licenses" means rights under any written agreement
now owned or hereafter acquired by any Grantor granting any right with respect
to any invention on which a Patent (as defined below) is in existence.
(w) "Patents" means all of the following in which any Grantor
now holds or hereafter acquires any interest: (i) all letters patent of the
United States or of any other country, all registrations and recordings thereof,
and all applications for letters patent of the United States or of any other
country, including registrations, recordings and applications in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any State or any other country, and (ii) all reissues,
continuations, continuations-in-part or extensions thereof.
(x) "Permitted Encumbrances" means (i) Liens on Equipment
leased pursuant to the existing leases and Liens reported on the SEC reports of
Global as of the date hereof; (ii) Liens for taxes not yet payable; (iii) Liens
of materialmen, mechanics, warehousemen, carriers, or other similar liens
arising in the ordinary course of business and securing obligations which are
not delinquent; and (iv) Liens incurred in connection with the extension,
renewal or refinancing of the indebtedness secured by liens of the type
described above in clauses (i) or (ii) above, provided that any extension,
renewal or replacement Lien is limited to the property encumbered by the
existing Lien and the principal amount of the indebtedness being extended,
renewed or refinanced does not increase.
(y) "Proceeds" means "proceeds," as such term is defined in
the Code, including (a) any and all proceeds of any insurance, indemnity,
warranty or guaranty payable to any Grantor from time to time with respect to
any of the Collateral, (b) any and all payments (in any form whatsoever) made or
due and payable to any Grantor from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
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part of the Collateral by any governmental authority (or any Person acting under
color of governmental authority), (c) any claim of any Grantor against third
parties (i) for past, present or future infringement of any Patent or Patent
License, or (ii) for past, present or future infringement or dilution of any
Copyright, Copyright License, Trademark or Trademark License, or for injury to
the goodwill associated with any Trademark or Trademark License, (d) any
recoveries by any Grantor against third parties with respect to any litigation
or dispute concerning any of the Collateral including claims arising out of the
loss or nonconformity of, interference with the use of, defects in, or
infringement of rights in, or damage to, Collateral, (e) all amounts collected
on, or distributed on account of, other Collateral, including dividends,
interest, distributions and Instruments with respect to investment property and
pledged stock, and (f) any and all other amounts, rights to payment or other
property acquired upon the sale, lease, license, exchange or other disposition
of Collateral and all rights arising out of Collateral.
(z) "Software" means all "software" as such term is defined in
the Code, now owned or hereafter acquired by any Grantor, other than software
embedded in any category of goods, including all computer programs and all
supporting information provided in connection with a transaction related to any
program.
(aa) "Supporting Obligations" means all supporting obligations
as such term is defined in the Code, including letters of credit and guaranties
issued in support of Accounts, Chattel Paper, Documents, General Intangibles,
Instruments, or Investment Property.
(bb) "Trademark License" means rights under any written
agreement now owned or hereafter acquired by any Grantor granting any right to
use any Trademark.
(cc) "Trademarks" means all of the following now owned or
hereafter existing or adopted or acquired by any Grantor: (i) all Trademarks,
trade names, corporate names, business names, trade styles, service marks,
logos, other source or business identifiers, prints and labels on which any of
the foregoing have appeared or appear, designs and general intangibles of like
nature (whether registered or unregistered), all registrations and recordings
thereof, and all applications in connection therewith, including registrations,
recordings and applications in the United States Patent and Trademark Office or
in any similar office or agency of the United States, any state or territory
thereof, or any other country or any political subdivision thereof; (ii) all
reissues, extensions or renewals thereof; and (iii) all goodwill associated with
or symbolized by any of the foregoing.
(dd) "Uniform Commercial Code Jurisdiction" means any
jurisdiction that had adopted all or substantially all of Article 9 as contained
in the 2000 Official Text of the Uniform Commercial Code, as recommended by the
National Conference of Commissioners on Uniform State Laws and the American Law
Institute, together with any subsequent amendments or modifications to the
Official Text.
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2. GRANT OF LIEN. To secure the prompt and complete payment,
performance and observance of all of the Secured Obligations, each Grantor
hereby grants, assigns, conveys, mortgages, pledges, hypothecates and transfers
to Lender, a first priority security interest in, and Lien upon all of its
right, title and interest in, to and under all personal property and other
assets whether now owned by or owing to, or hereafter acquired by or arising in
favor of such Grantor (including under any trade names, styles or derivations
thereof), and whether owned or consigned by or to, or leased from or to, such
Grantor, and regardless of where located (all of which being hereinafter
collectively referred to as the "Collateral"), including:
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Contracts;
(iv) all Documents;
(v) all General Intangibles (including payment
intangibles and Software);
(vi) all Goods (including Inventory, Equipment and
Fixtures);
(vii) all Instruments;
(viii) all Investment Property;
(ix) all Deposit Accounts, of any Grantor, inclusive
all deposit and other bank accounts and all deposits therein;
(x) all money, cash or cash equivalents of any
Grantor;
(xi) all Inventory;
(xii) all Global Subsidiaries Stock;
(xiii) all Supporting Obligations and Letter of Credit
Rights of any Grantor;
(xiv) to the extent not otherwise included, all
Proceeds, tort claims, insurance claims and other rights to
payments not otherwise included in the foregoing and products of
the foregoing and all accessions to, substitutions and replacements
for, and rents and profits of, each of the foregoing.
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3. LENDERS' RIGHTS. LIMITATIONS. LENDERS' OBLIGATIONS.
(a) It is expressly agreed by Grantors that, anything herein
to the contrary notwithstanding, each Grantor shall remain liable under each of
its Contracts and each of its Licenses to observe and perform all the conditions
and obligations to be observed and performed by it thereunder. Lender shall have
no obligation or liability under any Contract or License by reason of or arising
out of this Security Agreement or the granting herein of a Lien thereon or the
receipt by Lender of any payment relating to any Contract or License pursuant
hereto. Lender shall not be required or obligated in any manner to perform or
fulfill any of the obligations of any Grantor under or pursuant to any Contract
or License, or to make any payment, or to make any inquiry as to the nature or
the sufficiency of any payment received by it or the sufficiency of any
performance by any party under any Contract or License, or to present or file
any claims, or to take any action to collect or enforce any performance or the
payment of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.
(b) Lender may at any time after an Event of Default has
occurred and be continuing, without prior notice to any Grantor, notify Account
Debtors and other Persons obligated on the Collateral that Lender has a security
interest therein, and that payments shall be made directly to Lender. Upon the
request of Lender after the occurrence and during the continuance of an Event of
Default, each Grantor shall so notify Account Debtors and other Persons
obligated on Collateral. Once any such notice has been given to any Account
Debtor or other Person obligated on the Collateral, the affected Grantor shall
not give any contrary instructions to such Account Debtor or other Person
without Lender's prior written consent.
(c) Lender may at any time in its own name, in the name of a
nominee of Lender or in the name of any Grantor communicate (by mail, telephone,
facsimile or otherwise) with Account Debtors, parties to Contracts, obligors in
respect of Instruments and obligors in respect of Chattel Paper and/or payment
intangibles to verify with such Persons, to Lender's satisfaction, the
existence, amount terms of, and any other matter relating to, any such Accounts,
Contracts, Instruments or Chattel Paper and/or payment intangibles. If a Default
or Event of Default shall have occurred and be continuing, each Grantor, at its
own expense, shall cause the independent certified public accountants then
engaged by such Grantor to prepare and deliver to Lender at any time and from
time to time promptly upon Lender's request the following reports with respect
to each Grantor: (i) a reconciliation of all Accounts; (ii) an aging of all
Accounts; (iii) trial balances; and (iv) a test verification of such Accounts as
Lender may request. Each Grantor, at its own expense, shall deliver to Lender
the results of each physical verification, if any, which such Grantor may in its
discretion have made, or caused any other Person to have made on its behalf, of
all or any portion of its Inventory.
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4. REPRESENTATIONS AND WARRANTIES. Each Grantor represents and
warrants that:
(a) Each Grantor has rights in and the power to transfer each
item of the Collateral upon which it purports to xxxxx x Xxxx hereunder free and
clear of any and all Liens other than Permitted Encumbrances.
(b) No effective security agreement, financing statement,
equivalent security or Lien instrument or continuation statement covering all or
any part of the Collateral is on file or of record in any public office, except
such as may have been filed (i) by any Grantor in favor of Lender pursuant to
this Security Agreement, and (ii) in connection with any other Permitted
Encumbrances.
(c) This Security Agreement is effective to create a valid and
continuing Lien on and, upon the filing of the appropriate financing statements
listed on SCHEDULE I hereto, a perfected Lien in favor of Lender on the
Collateral with respect to which a Lien may be perfected by filing pursuant to
the Code. Such Lien is prior to all other Liens, except Permitted Encumbrances
that would be prior to Liens in favor of Lender as a matter of law, and is
enforceable as such as against any and all creditors of and purchasers from any
Grantor (other than purchasers and lessees of Inventory in the ordinary course
of business). All action by any Grantor necessary or desirable to protect and
perfect such Lien on each item of the Collateral has been duly taken.
(d) SCHEDULE II hereto lists all Instruments, Letter of Credit
Rights and Chattel Paper of each Grantor. All actions by any Grantor necessary
or desirable to protect and perfect the Lien of Lender on each item set forth on
SCHEDULE II (including the delivery of all originals thereof to Lender and the
legending of all Chattel Paper as required by SECTION 5(b) hereof) has been duly
taken. The Lien of Lender on the Collateral listed on SCHEDULE II hereto is
prior to all other Liens, except Permitted Encumbrances that would be prior to
the Liens in favor of Lender as a matter of law, and is enforceable as such
against any and all creditors of and purchasers from any Grantor.
(e) Each Grantor's name as it appears in official filings in
the state of its incorporation or other organization, the type of entity of each
Grantor (including corporation, partnership, limited partnership or limited
liability company), organizational identification number issued by each
Grantor's state of incorporation or organization or a statement that no such
number has been issued, each Grantor's state of organization or incorporation,
the location of each Grantor's chief executive office, principal place of
business, offices, all warehouses and premises where Collateral is stored or
located, and the locations of its books and records concerning the Collateral
are set forth on SCHEDULE III hereto. Each Grantor has only one state of
incorporation or organization.
(f) With respect to the Accounts (i) they represent bona fide
sales of Inventory or rendering of services to Account Debtors in the ordinary
course of each Grantor's business and are not evidenced by a judgment,
Instrument or Chattel Paper; (ii) there are no setoffs, claims or disputes
existing or asserted with respect thereto and no Grantor has made any agreement
with any Account Debtor for any extension of time for the payment thereof, any
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compromise or settlement for less than the full amount thereof, any release of
any Account Debtor from liability therefor, or any deduction therefrom except a
discount or allowance allowed by such Grantor in the ordinary course of its
business for prompt payment and disclosed to Lender; (iii) to each Grantor's
knowledge, there are no facts, events or occurrences which in any way impair the
validity or enforceability thereof or could reasonably be expected to reduce the
amount payable thereunder as shown on any Grantor's books and records and any
invoices, statements and Collateral Reports delivered to Lender with respect
thereto; (iv) no Grantor has received any notice of proceedings or actions which
are threatened or pending against any Account Debtor which might result in any
adverse change in such Account Debtor's financial condition; and (v) no Grantor
has knowledge that any Account Debtor is unable generally to pay its debts as
they become due. Further with respect to the Accounts (x) the amounts shown on
all invoices, statements and Collateral Reports which may be delivered to the
Lender with respect thereto are actually and absolutely owing to such Grantor as
indicated thereon and are not in any way contingent; (y) to each Grantor's
knowledge, all Account Debtors have the capacity to contract.
(g) With respect to any Inventory scheduled or listed on the
most recent Collateral Report delivered to Lender pursuant to the terms of this
Security Agreement, (i) such Inventory is located at one of the applicable
Grantor's locations set forth on SCHEDULE III hereto, (ii) no Inventory is now,
or shall at any time or times hereafter be stored at any other location without
Lender's prior consent, and if Lender gives such consent, each applicable
Grantor will concurrently therewith obtain, to the extent required by Lender,
bailee, landlord and mortgagee agreements, (iii) the applicable Grantor has
good, indefeasible and merchantable title to such Inventory and such Inventory
is not subject to any Lien or security interest or document whatsoever except
for the Lien granted to Lender and except for Permitted Encumbrances, (iv)
except as specifically disclosed in the most recent Collateral Report delivered
to Lender, such Inventory is good and merchantable quality, free from any
defects, (v) such Inventory is not subject to any licensing, Patent, royalty,
Trademark, trade name or Copyright agreements with any third parties which would
require any consent of any third party upon sale or disposition of that
Inventory or the payment of any monies to any third party as a precondition of
such sale or other disposition, and (vi) the completion of manufacture, sale or
other disposition of such Inventory by Lender following an Event of Default
shall not require the consent of any Person and shall not constitute a breach or
default under any contract or agreement to which any Grantor is a party or to
which such property is subject.
(h) No Grantor has any interest in, or title to, any Patent,
Trademark or Copyright except as set forth in SCHEDULE IV hereto. This Security
Agreement is effective to create a valid and continuing Lien on and, upon filing
of the appropriate documents with the United States Copyright Office and filing
of the appropriate documents with the United States Patent and Trademark Office,
perfected Liens in favor of Lender on each Grantor' s Patents, Trademarks and
Copyrights and such perfected Liens are enforceable as such as against any and
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all creditors of and purchasers from any Grantor. Upon filing of the appropriate
documents with the United States Copyright Office and filing of the appropriate
documents with the United States Patent and Trademark Office and the filing of
appropriate financing statements listed on SCHEDULE I hereto, all action
necessary or desirable to protect and perfect Lender's Lien on each Grantor's
Patents, Trademarks or Copyrights shall have been duly taken.
(i) All motor vehicles owned by each Grantor are listed on
Schedule V hereto, by model, model year and vehicle identification number
("VIN"). Each Grantor shall deliver to Lender motor vehicle title certificates
for all motor vehicles from time to time owned by it and shall cause those title
certificates to be filed (with Lender's lien noted thereon) in the appropriate
state motor vehicle filing office.
5. COVENANTS. Each Grantor covenants and agrees with Lender,
that from and after the date of this Security Agreement and until the
Termination Date:
(a) Further Assurances: Pledge of Instruments; Chattel Paper.
(i) At any time and from time to time, upon the
written request of Lender and at the sole expense of Grantors, each
Grantor shall promptly and duly execute and deliver any and all
such further instruments and documents and take such further
actions as Lender may deem desirable to obtain the full benefits of
this Security Agreement and of the rights and powers herein
granted, including (A) using its commercially reasonable efforts to
secure all consents and approvals necessary or appropriate for the
assignment to or for the benefit of Lender of any License or
Contract held by such Grantor and to enforce the security interests
granted hereunder; and (B) filing any financing or continuation
statements under the Code with respect to the Liens granted
hereunder or under the Loan Agreement as to those jurisdictions
that are not Uniform Commercial Code Jurisdictions.
(ii) Unless Lender shall otherwise consent in writing
(which consent may be revoked), each Grantor shall deliver to
Lender all Collateral consisting of negotiable Documents,
certificated securities, Chattel Paper and Instruments (in each
case, accompanied by stock powers, allonges or other instruments of
transfer executed in blank) promptly after such Grantor receives
the same.
(iii) Each Grantor shall, if required by Lender,
obtain or use its commercially reasonable efforts to obtain waivers
or subordinations of Liens from landlords and mortgagees, and each
Grantor shall in all instances obtain signed acknowledgements of
Lender's Liens from bailees having possession of any Grantor's
Goods that they hold for the benefit of Lender.
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(iv) Each Grantor that is or becomes the beneficiary
of a letter of credit shall promptly, and in any event within two
(2) Business Days after becoming a beneficiary, notify Lender
thereof and enter into a tri-party agreement with Lender and the
issuer and/or confirmation bank with respect to Letter of Credit
Rights assigning such Letter of Credit Rights to Lender and
directing all payments thereunder to Lender, all in form and
substance reasonably satisfactory to Lender.
(v) Each Grantor shall take all steps necessary to
grant the Lender control of all electronic chattel paper in
accordance with the Code and all "transferable records" as defined
in each of the Uniform Electronic Transactions Act and the
Electronic Signatures in Global and National Commerce Act.
(vi) Each Grantor hereby irrevocably authorizes the
Lender at any time and from time to time to file in any filing
office in any Uniform Commercial Code Jurisdiction any initial
financing statements and amendments thereto that (a) indicate the
Collateral (i) as all assets of such Grantor or words of similar
effect, regardless of whether any particular asset comprised in the
Collateral falls within the scope of Article 9 of the Code of such
jurisdiction, or (ii) as being of an equal or lesser scope or with
greater detail, and (b) contain any other information required by
part 5 of Article 9 of the Code for the sufficiency or filing
office acceptance of any financing statement or amendment,
including (i) whether such Grantor is an organization, the type of
organization and any organization identification number issued to
such Grantor, and (ii) in the case of a financing statement filed
as a fixture filing or indicating Collateral as as-extracted
collateral or timber to be cut, a sufficient description of real
property to which the Collateral relates. Each Grantor agrees to
furnish any such information to the Lender promptly upon request.
Each Grantor also ratifies its authorization for the Lender to have
filed in any Uniform Commercial Code Jurisdiction any initial
financing statements or amendments thereto if filed prior to the
date hereof.
(vii) Each Grantor shall promptly, and in any event
within two (2) Business Days after the same is acquired by it,
notify Lender of any commercial tort claim (as defined in the Code)
acquired by it and unless otherwise consented by Lender, such
Grantor shall enter into a supplement to this Security Agreement,
granting to Lender a Lien in such commercial tort claim.
(b) Maintenance of Records. Grantors shall keep and maintain,
at their own cost and expense, satisfactory and complete records of the
Collateral, including a record of any and all payments received and any and all
credits granted with respect to the Collateral and all other dealings with the
Collateral. Grantors shall xxxx their books and records pertaining to the
Collateral to evidence this Security Agreement and the Liens granted hereby. If
any Grantor retains possession of any Chattel Paper or Instruments with Lender's
consent, such Chattel Paper and Instruments shall be marked with the following
legend: "This writing and the obligations evidenced or secured hereby are
subject to the security interest of GNB Bank Panama S.A., as Lender".
12
(c) Covenants Regarding Patent, Trademark and Copyright
Collateral.
(i) Grantors shall notify Lender immediately if they
know or have reason to know that any application or registration
relating to any Patent, Trademark or Copyright (now or hereafter
existing) may become abandoned or dedicated, or of any adverse
determination or development (including the institution of, or any
such determination or development in, any proceeding in the United
States Patent and Trademark Office, the United States Copyright
Office or any court) regarding any Grantor's ownership of any
Patent, Trademark or Copyright, its right to register the same, or
to keep and maintain the same.
(ii) In no event shall any Grantor, either itself or
through any agent, employee, licensee or designee, file an
application for the registration of any Patent, Trademark or
Copyright with the United States Patent and Trademark Office, the
United States Copyright Office or any similar office or agency
without giving Lender prior written notice thereof.
(iii) Grantors shall take all actions necessary or
requested by Lender to maintain and pursue each application, to
obtain the relevant registration and to maintain the registration
of each of the Patents, Trademarks and Copyrights (now or hereafter
existing), including the filing of applications for renewal,
affidavits of use, affidavits of noncontestability and opposition
and interference and cancellation proceedings.
(iv) In the event that any of the Patent, Trademark or
Copyright Collateral is infringed upon, or misappropriated or
diluted by a third party, such Grantor shall comply with Section
5(a)(vii) of this Security Agreement. Such Grantor shall, unless
such Grantor shall reasonably determine that such Patent, Trademark
or Copyright Collateral is in no way material to the conduct of its
business or operations, promptly xxx for infringement,
misappropriation or dilution and to recover any and all damages for
such infringement, misappropriation or dilution, and shall take
such other actions as Lender shall deem appropriate under the
circumstances to protect such Patent, Trademark or Copyright
Collateral.
(d) Indemnification. In any suit, proceeding or action brought
by Lender relating to any Collateral for any sum owing with respect thereto or
to enforce any rights or claims with respect thereto, each Grantor will save,
indemnify and keep Lender harmless from and against all expense (including
reasonable attorneys' fees and expenses), loss or damage suffered by reason of
any defense, setoff, counterclaim, recoupment or reduction of liability
whatsoever of the Account Debtor or other Person obligated on the Collateral,
arising out of a breach by any Grantor of any obligation thereunder or arising
out of any other agreement, indebtedness or liability at any time owing to, or
13
in favor of, such obligor or its successors from such Grantor, except to the
extent such expense, loss, or damage is attributable solely to the gross
negligence or willful misconduct of Lender as finally determined by a court of
competent jurisdiction. All such obligations of Grantors shall be and remain
enforceable against and only against Grantors and shall not be enforceable
against Lender.
(e) Compliance with Terms of Accounts, etc. In all material
respects, each Grantor will perform and comply with all obligations in respect
of the Collateral and all other agreements to which it is a party or by which it
is bound relating to the Collateral.
(f) Limitation on Liens on Collateral. No Grantor will create,
permit or suffer to exist, and each Grantor will defend the Collateral against,
and take such other action as is necessary to remove, any Lien on the Collateral
except Permitted Encumbrances, and will defend the right, title and interest of
Lender in and to any of such Grantor's rights under the Collateral against the
claims and demands of all Persons whomsoever.
(g) Limitations on Disposition. No Grantor will sell, license,
lease, transfer or otherwise dispose of any of the Collateral, or attempt or
contract to do so except as permitted herein or in the Loan Agreement.
(h) Further Identification of Collateral. Grantors will, if so
requested by Lender, furnish to Lender, as often as Lender requests, statements
and schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as Lender may reasonably request, all
in such detail as Lender may specify.
(i) Notices. Grantors will advise Lender promptly, in
reasonable detail, (i) of any Lien (other than Permitted Encumbrances) or claim
made or asserted against any of the Collateral, and (ii) of the occurrence of
any other event which would have a material adverse effect on the aggregate
value of the Collateral or on the Liens created hereunder.
(j) Good Standing Certificates. Not less frequently than once
during each calendar semester, unless Lender shall otherwise consent, provide to
Lender a certificate of good standing from its state of incorporation or
organization.
(k) No Reincorporation. Without limiting the negative
covenants provided under the Loan Agreement, no Grantor shall reincorporate or
reorganize itself under the laws of any jurisdiction other than the jurisdiction
in which it is incorporated or organized as of the date hereof without the prior
written consent of Lender.
(l) Terminations; Amendments Not Authorized. Each Grantor
acknowledges that it is not authorized to file any financing statement or
amendment or termination statement with respect to any financing statement
without the prior written consent of Lender and agrees that it will not do so
without the prior written consent of Lender, subject to such Grantor's rights
under Section 9-509(d)(2) of the Code.
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6. LENDER'S APPOINTMENT AS ATTORNEY-IN-FACT.
On the date hereof each Grantor shall execute and deliver to
Lender a power of attorney (the "POWER OF ATTORNEY") substantially in the form
attached hereto as Exhibit A. The power of attorney granted pursuant to the
Power of Attorney is a power coupled with an interest and shall be irrevocable
until the Secured Obligations have been paid in full. The powers conferred on
Lender under the Power of Attorney are solely to protect Lender's interests in
the Collateral and shall not impose any duty upon Lender to exercise any such
powers. Lender agrees that (a) except for the powers granted in clause (h) of
the Power of Attorney, it shall not exercise any power or authority granted
under the Power of Attorney unless an Event of Default has occurred and is
continuing, and (b) Lender shall account for any moneys received by Lender in
respect of any foreclosure on or disposition of Collateral pursuant to the Power
of Attorney provided that Lender shall not have any duty as to any Collateral,
and Lenders shall be accountable only for amounts that it actually receives as a
result of the exercise of such powers. NEITHER LENDER NOR ITS AFFILIATES,
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES SHALL BE RESPONSIBLE
TO ANY GRANTOR FOR ANY ACT OR FAILURE TO ACT UNDER ANY POWER OF ATTORNEY OR
OTHERWISE, EXCEPT IN RESPECT OF DAMAGES ATTRIBUTABLE SOLELY TO THEIR OWN GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT AS FINALLY DETERMINED BY A COURT OF COMPETENT
JURISDICTION, NOR FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL
DAMAGES.
7. REMEDIES: RIGHTS UPON DEFAULT.
(a) In addition to all other rights and remedies granted to it
under this Security Agreement and the Loan Agreement and under any other
instrument or agreement securing, evidencing or relating to any of the Secured
Obligations, if any Event of Default shall have occurred and be continuing,
Lender may exercise all rights and remedies of a secured party under the Code.
Without limiting the generality of the foregoing, each Grantor expressly agrees
that in any such event Lender, without demand of performance or other demand,
advertisement or notice of any kind (except the notice specified below of time
and place of public or private sale) to or upon such Grantor or any other Person
(all and each of which demands, advertisements and notices are hereby expressly
waived to the maximum extent permitted by the Code and other applicable law),
may forthwith enter upon the premises of such Grantor where any Collateral is
located through self-help, without judicial process, without first obtaining a
final judgment or giving such Grantor or any other Person notice and opportunity
for a hearing on Lender's claim or action and may collect, receive, assemble,
process, appropriate and realize upon the Collateral, or any part thereof, and
may forthwith sell, lease, license, assign, give an option or options to
15
purchase, or sell or otherwise dispose of and deliver said Collateral (or
contract to do so), or any part thereof, in one or more parcels at a public or
private sale or sales, at any exchange at such prices as it may deem acceptable,
for cash or on credit or for future delivery without assumption of any credit
risk. Lender shall have the right upon any such public sale or sales and, to the
extent permitted by law, upon any such private sale or sales, to purchase for
the benefit Lenders, the whole or any part of said Collateral so sold, free of
any right or equity of redemption, which equity of redemption each Grantor
hereby releases. Such sales may be adjourned and continued from time to time
with or without notice. Lender shall have the right to conduct such sales on any
Grantor's premises or elsewhere and shall have the right to use any Grantor's
premises without charge for such time or times as Lender deems necessary or
advisable.
If any Event of Default shall have occurred and be continued,
each Grantor further agrees, at Lender's request, to assemble the Collateral and
make it available to Lender at a place or places designated by Lender which are
reasonably convenient to Lender and such Grantor, whether at such Grantor's
premises or elsewhere. Until Lender is able to effect a sale, lease, or other
disposition of Collateral, Lender shall have the right to hold or use
Collateral, or any part thereof, to the extent that it deems appropriate for the
purpose of preserving Collateral or its value or for any other purpose deemed
appropriate by Lender. Lender shall have no obligation to any Grantor to
maintain or preserve the rights of such Grantor as against third parties with
respect to Collateral while Collateral is in the possession of Lender. Lender
may, if it so elects, seek the appointment of a receiver or keeper to take
possession of Collateral and to enforce any of Lender's remedies (for the
benefit of Lender), with respect to such appointment without prior notice or
hearing as to such appointment. Lender shall apply the net proceeds of any such
collection, recovery, receipt, appropriation, realization or sale to the Secured
Obligations, and only after so paying over such net proceeds, and after the
payment by Lender of any other amount required by any provision of law, need
Lender account for the surplus, if any, to any Grantor. To the maximum extent
permitted by applicable law, each Grantor waives all claims, damages, and
demands against Lender arising out of the repossession, retention or sale of the
Collateral except such as arise solely out of the gross negligence or willful
misconduct of Lender as finally determined by a court of competent jurisdiction.
Each Grantor agrees that ten (10) days prior notice by Lender of the time and
place of any public sale or of the time after which a private sale may take
place is reasonable notification of such matters. Grantors shall remain liable
for any deficiency if the proceeds of any sale or disposition of the Collateral
are insufficient to pay all Secured Obligations, including any attorneys' fees
and other expenses incurred by Lender to collect such deficiency.
(b) Except as otherwise specifically provided herein, each
Grantor hereby waives presentment, demand, protest or any notice (to the maximum
extent permitted by applicable law) of any kind in connection with this Security
Agreement or any Collateral.
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(c) To the extent that applicable law imposes duties on the
Lender to exercise remedies in a commercially reasonable manner, each Grantor
acknowledges and agrees that it is not commercially unreasonable for the Lender
(i) to fail to incur expenses reasonably deemed significant by the Lender to
prepare Collateral for disposition or otherwise to complete raw material or work
in process into finished goods or other finished products for disposition, (ii)
to fail to obtain third party consents for access to Collateral to be disposed
of, or to obtain or, if not required by other law, to fail to obtain
governmental or third party consents for the collection or disposition of
Collateral to be collected or disposed of, (iii) to fail to exercise collection
remedies against Account Debtors or other Persons obligated on Collateral or to
remove Liens on or any adverse claims against Collateral, (iv) to exercise
collection remedies against Account Debtors and other Persons obligated on
Collateral directly or through the use of collection agencies and other
collection specialists, (v) to advertise dispositions of Collateral through
publications or media of general circulation, whether or not the Collateral is
of a specialized nature, (vi) to contact other Persons, whether or not in the
same business as the Grantor, for expressions of interest in acquiring all or
any portion of such Collateral, (vii) to hire one or more professional
auctioneers to assist in the disposition of Collateral, whether or not the
Collateral is of a specialized nature, (viii) to dispose of Collateral by
utilizing internet sites that provide for the auction of assets of the types
included in the Collateral or that have the reasonable capacity of doing so, or
that match buyers and sellers of assets, (ix) to dispose of assets in wholesale
rather than retail markets, (x) to disclaim disposition warranties, such as
title, possession or quiet enjoyment, (xi) to purchase insurance or credit
enhancements to insure the Lender against risks of loss, collection or
disposition of Collateral or to provide to the Lender a guaranteed return from
the collection or disposition of Collateral, or (xii) to the extent deemed
appropriate by the Lender, to obtain the services of other brokers, investment
bankers, consultants and other professionals to assist the Lender in the
collection or disposition of any of the Collateral. Each Grantor acknowledges
that the purpose of this Section 7(c) is to provide non-exhaustive indications
of what actions or omissions by the Lender would not be commercially
unreasonable in the Lender's exercise of remedies against the Collateral and
that other actions or omissions by the Lender shall not be deemed commercially
unreasonable solely on account of not being indicated in this Section 7(c).
Without limitation upon the foregoing, nothing contained in this Section 7(c)
shall be construed to grant any rights to any Grantor or to impose any duties on
Lender that would not have been granted or imposed by this Security Agreement or
by applicable law in the absence of this Section 7(c).
(d) Lender shall not be required to make any demand upon, or
pursue or exhaust any of their rights or remedies against, any Grantor, any
other obligor, guarantor, pledgor or any other Person with respect to the
payment of the Secured Obligations or to pursue or exhaust any of their rights
17
or remedies with respect to any Collateral therefor or any direct or indirect
guarantee thereof. Lenders shall not be required to marshal the Collateral or
any guarantee of the Secured Obligations or to resort to the Collateral or any
such guarantee in any particular order, and all of its and their rights
hereunder or under the Loan Agreement shall be cumulative. To the extent it may
lawfully do so, each Grantor absolutely and irrevocably waives and relinquishes
the benefit and advantage of, and covenants not to assert against Lender, any
valuation, stay, appraisement, extension, redemption or similar laws and any and
all rights or defenses it may have as a surety now or hereafter existing which,
but for this provision, might be applicable to the sale of any Collateral made
under the judgment, order or decree of any court, or privately under the power
of sale conferred by this Security Agreement, or otherwise.
8. GRANT OF LICENSE TO USE INTELLECTUAL PROPERTY COLLATERAL.
For the purpose of enabling Lender to exercise rights and remedies under SECTION
7 hereof (including, without limiting the terms of SECTION 7 hereof, in order to
take possession of, hold, preserve, process, assemble, prepare for sale, market
for sale, sell or otherwise dispose of Collateral) at such time as Lender shall
be lawfully entitled to exercise such rights and remedies, each Grantor hereby
grants to Lender an irrevocable, nonexclusive license (exercisable without
payment of royalty or other compensation to such Grantor) to use, license or
sublicense any Intellectual Property now owned or hereafter acquired by such
Grantor, and wherever the same may be located, and including in such license
access to all media in which any of the licensed items may be recorded or stored
and to all computer software and programs used for the compilation or printout
thereof.
9. LIMITATION ON LENDERS' DUTY IN RESPECT OF COLLATERAL.
Lender shall use reasonable care with respect to the Collateral in its
possession or under its control. Lender shall not have any other duty as to any
Collateral in its possession or control or in the possession or control of any
agent or nominee of Lender, or any income thereon or as to the preservation of
rights against prior parties or any other rights pertaining thereto.
10. REINSTATEMENT. This Security Agreement shall remain in
full force and effect and continue to be effective should any petition be filed
by or against any Grantor for liquidation or reorganization, should any Grantor
become insolvent or make an assignment for the benefit of any creditor or
creditors or should a receiver or trustee be appointed for all or any
significant part of any Grantor's assets, and shall continue to be effective or
be reinstated, as the case may be, if at any time payment and performance of the
Secured Obligations, or any part thereof, is, pursuant to applicable law,
rescinded or reduced in amount, or must otherwise be restored or returned by any
obligee of the Secured Obligations, whether as a "voidable preference,"
18
"fraudulent conveyance," or otherwise, all as though such payment or performance
had not been made. In the event that any payment, or any part thereof, is
rescinded, reduced, restored or returned, the Secured Obligations shall be
reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.
11. NOTICES. Except as otherwise provided herein, whenever it
is provided herein that any notice, demand, request, consent, approval,
declaration or other communication shall or may be given to or served upon any
of the parties by any other party, or whenever any of the parties desires to
give and serve upon any other party any communication with respect to this
Security Agreement, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing and shall be given in the
manner, and deemed received, as provided for in the Loan Agreement.
12. SEVERABILITY. Whenever possible, each provision of this
Security Agreement shall be interpreted in a manner as to be effective and valid
under applicable law, but if any provision of this Security Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity without invalidating
the remainder of such provision or the remaining provisions of this Security
Agreement. This Security Agreement is to be read, construed and applied together
with the Loan Agreement which, taken together, set forth the complete
understanding and agreement of Lender and Grantors with respect to the matters
referred to herein and therein.
13. NO WAIVER; CUMULATIVE REMEDIES. Lender shall not by any
act, delay, omission or otherwise be deemed to have waived any of its rights or
remedies hereunder, and no waiver shall be valid unless in writing, signed by
Lender and then only to the extent therein set forth. A waiver by Lender of any
right or remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy which Lender would otherwise have had on any future
occasion. No failure to exercise nor any delay in exercising on the part of
Lender, any right, power or privilege hereunder, shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or future exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
hereunder provided are cumulative and may be exercised singly or concurrently,
and are not exclusive of any rights and remedies provided by law. None of the
terms or provisions of this Security Agreement may be waived, altered, modified
or amended except by an instrument in writing, duly executed by Lender and
Grantors.
14. LIMITATION BY LAW. All rights, remedies and powers
provided in this Security Agreement may be exercised only to the extent that the
exercise thereof does not violate any applicable provision of law, and all the
provisions of this Security Agreement are intended to be subject to all
applicable mandatory provisions of law that may be controlling and to be limited
to the extent necessary so that they shall not render this Security Agreement
invalid, unenforceable, in whole or in part, or not entitled to be recorded,
registered or filed under the provisions of any applicable law.
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15. TERMINATION OF THIS SECURITY AGREEMENT. Subject to SECTION
10 hereof, this Security Agreement shall terminate upon payment in full of the
secured Obligations.
16. SUCCESSORS AND ASSIGNS. This Security Agreement and all
obligations of Grantors hereunder shall be binding upon the successors and
assigns of each Grantor (including any debtor-in-possession on behalf of such
Grantor) and shall, together with the rights and remedies of Lender, hereunder,
inure to the benefit of Lender, all future holders of any instrument evidencing
any of the Secured Obligations and their respective successors and assigns. No
sales of participations, other sales, assignments, transfers or other
dispositions of any agreement governing or instrument evidencing the Secured
Obligations or any portion thereof or interest therein shall in any manner
affect the Lien granted to Lender hereunder. No Grantor may assign, sell,
hypothecate or otherwise transfer any interest in or obligation under this
Security Agreement.
17. COUNTERPARTS. This Security Agreement may be executed in
any number of separate counterparts, each of which shall collectively and
separately constitute one agreement.
18. GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN
ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS SECURITY AGREEMENT AND THE
OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
MADE AND PERFORMED IN THAT STATE, AND ANY APPLICABLE LAWS OF THE UNITED STATES
OF AMERICA. EACH GRANTOR HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL
COURTS LOCATED IN NEW YORK COUNTY, CITY OF NEW YORK, NEW YORK, SHALL HAVE
EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN
GRANTORS AND LENDER PERTAINING TO THIS SECURITY AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS
SECURITY AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, PROVIDED, THAT LENDERS
AND GRANTORS ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD
BY A COURT LOCATED OUTSIDE OF NEW YORK COUNTY, AND, PROVIDED, FURTHER, NOTHING
IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE LENDER FROM BRINGING
SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE
20
COLLATERAL OR ANY OTHER SECURITY FOR THE SECURED OBLIGATIONS, OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER IN FAVOR OF LENDER. EACH GRANTOR EXPRESSLY SUBMITS
AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN
ANY SUCH COURT, AND EACH GRANTOR HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE
BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS
AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS
DEEMED APPROPRIATE BY SUCH COURT. EACH GRANTOR HEREBY WAIVES PERSONAL SERVICE OF
THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH GRANTOR AT THE ADDRESS SET FORTH
ON SECTION 8.1 OF THE LOAN AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED
COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER
DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.
19. WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN
CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY
RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE
STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES
DESIRE THAT DISPUTES ARISING HEREUNDER OR RELATING HERETO BE RESOLVED BY A JUDGE
APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE
BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO RESOLVE ANY
DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, AMONG LENDER AND
GRANTORS ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED IN CONNECTION WITH, THIS SECURITY AGREEMENT OR THE LOAN
AGREEMENT.
20. SECTION TITLES. The Section titles contained in this
Security Agreement are and shall be without substantive meaning or content of
any kind whatsoever and are not a part of the agreement between the parties
hereto.
21. NO STRICT CONSTRUCTION. The parties hereto have
participated jointly in the negotiation and drafting of this Security Agreement.
In the event an ambiguity or question of intent or interpretation arises, this
Security Agreement shall be construed as if drafted jointly by the parties
hereto and no presumption or burden of proof shall arise favoring or disfavoring
any party by virtue of the authorship of any provisions of this Security
Agreement.
21
22. ADVICE OF COUNSEL. Each of the parties represents to each
other party hereto that it has discussed this Security Agreement and,
specifically, the provisions of SECTION 18 and SECTION 19, with its counsel.
23. BENEFIT OF LENDER. All Liens granted or contemplated
hereby shall be for the benefit of Lender, and all proceeds or payments realized
from Collateral in accordance herewith shall be applied to the Secured
Obligations.
22
IN WITNESS WHEREOF, each of the parties hereto has caused this
Security Agreement to be executed and delivered by its duly authorized officer
as of the date first set forth above.
PHONE1, INC.
By: /s/ Xxxxx Xxxxxxxxx
Name: Xxxxx Xxxxxxxxx
Title: Chief Executive Officer
PHONE1GLOBALWIDE, INC.
By: /s/ Xxxxx Xxxxxxxxx
Name: Xxxxx Xxxxxxxxx
Title: Chief Executive Officer
GLOBALTRON COMMUNICATIONS CORPORATION
By: /s/ Xxxxx Xxxxxxxxx
Name: Xxxxx Xxxxxxxxx
Title: Chief Executive Officer
GNB BANK PANAMA S.A.
By: /s/ Xxxxxx Xxxxxxxxxx
Name: Xxxxxx Xxxxxxxxxx
Title: General Manager
23
EXHIBIT A
POWER OF ATTORNEY
This Power of Attorney is executed and delivered by
______________________, a _____________________ corporation ("Grantor") to GNB
Bank Panama S.A., a bank organized under the laws of the Republic of Panama
(hereinafter referred to as "Attorney"), as Lender, under a :Loan Agreement and
a Security Agreement, both dated as of September 30, 2002 (collectively, the
"Loan Documents"). No person to whom this Power of Attorney is presented, as
authority for Attorney to take any action or actions contemplated hereby, shall
be required (including in respect of clauses (d) and (e) in the next succeeding
paragraph) to inquire into or seek confirmation from Grantor as to the authority
of Attorney to take any action described below, or as to the existence of or
fulfillment of any condition to this Power of Attorney, which is intended to
grant to Attorney unconditionally the authority to take and perform the actions
contemplated herein, and Grantor irrevocable waives any right to commence any
suit or action, in law or equity, against any person or entity which acts in
reliance upon or acknowledges the authority granted under this Power of
Attorney. The power of attorney granted hereby is coupled with an interest, and
may not be revoked or canceled by Grantor without Attorney's written consent.
Grantor hereby irrevocably constitutes and appoints Attorney
(and all officers, employees or agents designated by Attorney), with full power
of substitution, as Grantor's true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of Grantor and in the
name of Grantor or in its own name, from time to time in Attorney's discretion,
to take any and all appropriate action and to execute and deliver any and all
documents and instruments which may be necessary or desirable to accomplish the
purposes of the Loan Documents and, without limiting the generality of the
foregoing, Grantor hereby grants to Attorney the power and right, on behalf of
Grantor, without notice to or assent by Grantor, (other than in connection with
a change of address as specified in clause (a), as to which Attorney shall use
commercially reasonable efforts to give Grantor concurrent notice thereof
provided that failure to do so will not affect Attorney's rights hereunder, and
at any time, to do the following: (a) change the mailing address of Grantor,
open a post office box on behalf of Grantor, open mail for Grantor, and ask,
demand, collect, give acquittances and receipts for, take possession of, endorse
any invoices, freight or express bills, bills of lading, storage or warehouse
receipts, drafts against debtors, assignments, verifications, and notices in
connection with any property of Grantor; (b) effect any repairs to any asset of
Grantor, or continue or obtain any insurance and pay all or any part of the
premiums therefor and costs thereof, and make, settle and adjust all claims
under such policies of insurance, and make all determinations and decisions with
respect to such policies; (c) pay or discharge any taxes, liens, security
interests, or other encumbrances levied or placed on or threatened against
Grantor or its property; (d) defend any suit, action or proceeding brought
against Grantor if Grantor does not defend such suit, action or proceeding or if
Attorney believes that Grantor is not pursuing such defense in a manner that
will maximize the recovery to Attorney, and settle, compromise or adjust any
suit, action, or proceeding described above and, in connection therewith, give
such discharges or releases as Attorney may deem appropriate, provided that in
connection with the foregoing Attorney shall act in a manner consistent with the
terms of the Loan Documents to the extent explicitly covered thereby; (e) file
or prosecute any claim, litigation, suit or proceeding in any court of competent
jurisdiction or before any arbitrator, or take any other action otherwise deemed
appropriate by Attorney for the purpose of collecting any and all such moneys
due to Grantor whenever payable and to enforce any other right in respect of
Grantor's property provided, in the case of any such claim, litigation, suit or
proceeding relating to product liability insurance Attorney shall act in a
manner consistent with the terms of the Loan Documents to the extent
explicitly covered thereby; (f) cause the certified public accountants then
engaged by Grantor to prepare and deliver to Attorney at any time and from time
to time, promptly upon Attorney's request, the following reports: (1) a
reconciliation of all accounts, (2) an aging of all accounts, (3) trial
balances, (4) test verifications of such accounts as Attorney may request, and
(5) the results of each physical verification of inventory; (g) communicate in
its own name with any party to any Contract with regard to the assignment of the
right, title and interest of such Grantor in and under the Contracts and other
matters relating thereto; (h) to file such financing statements with respect to
the Security Agreement, with or without Grantor's signature, or to file a
photocopy of the Security Agreement in substitution for a financing statement,
as the Lender may deem appropriate and to execute in Grantor's name such
financing statements and amendments thereto and continuation statements which
may require the Grantor's signature; and (i) execute, in connection with any
sale provided for in any Loan Document, any endorsements, assignments or other
instruments of conveyance or transfer with respect to the Collateral and to
otherwise direct such sale or resale, all as though Attorney were the absolute
owner of the property of Grantor for all purposes, and to do, at Attorney's
option and Grantor's expense, at any time or from time to time, all acts and
other things that Attorney reasonably deems necessary to perfect, preserve, or
realize upon Grantor's property or assets and Attorney's Liens thereon, all as
fully and effectively as Grantor might do. Grantor hereby ratifies, to the
extent permitted by law, all that said Attorney shall lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, this Power of Attorney is executed by
Grantor, and Grantor has caused its seal to be affixed pursuant to the authority
of its board of directors this _____________ day of
----------------------.
[ GRANTOR ]
-----------------------------------
By:
----------------------------------------
Name:
-----------------------------------
Title:
-------------------------------------
NOTARY PUBLIC CERTIFICATE
-------------------------
On this _____ day of ______________, 2002, [officer's name]
who is personally known to me appeared before me in his/her capacity as the
[title] of [Grantor] ("Grantor") and executed on behalf of Grantor the Power of
Attorney in favor of GNB Bank Panama S.A. to which this Certificate is
attached.
-------------------
Notary Public
SCHEDULE I
TO
SECURITY AGREEMENT
------------------
FILING JURISDICTIONS
Offices and/or switches are located in:
New York
Florida
Costa Rica
Brazil
Headsets, advertising materials and eproms, and in certain cases, circuit
boards, are located in or proximate to phones placed by carriers with whom we do
business. These headsets, advertising materials and/or eproms are currently
placed in:
Arizona
California
Florida
Kentucky
Maryland
Massachusetts
Michigan
New York
Ohio
Utah
West Virginia
SCHEDULE II
TO
SECURITY AGREEMENT
------------------
INSTRUMENTS, CHATTEL PAPER AND LETTER OF CREDIT RIGHTS
Instruments
$13,500 Certificate of Deposit owned by Phone1 and maintained on
deposit with Eagle National Bank.
Chattel Paper
None.
Letters of Credit Rights
None.
SCHEDULE III
TO
SECURITY AGREEMENT
SCHEDULE OF OFFICES, LOCATIONS OF COLLATERAL AND RECORDS CONCERNING COLLATERAL
------------------------- ---------- ------------------ ------------- ------------------------- ------------------------- ----------
OFFICIAL NAME OF GRANTOR TYPE OF ORGANIZATIONAL STATE OF CHIEF OFFICE AND CORPORATE OFFICE WAREHOUSES
ENTITY ID NUMBER INCORPORATION PRINCIPAL PLACE OF
BUSINESS
------------------------- ---------- ------------------ ------------- ------------------------- ------------------------- ----------
------------------------- ---------- ------------------ ------------- ------------------------- ------------------------- ----------
Phone1, Inc. Corp. Unknown Florida 000 X. Xxxxxxxx Xxxx., 100 N. Biscayne Blvd., None
Suite 2500, Xxxxx, XX Xxxxx 0000, Xxxxx, XX
------------------------- ---------- ------------------ ------------- ------------------------- ------------------------- ----------
------------------------- ---------- ------------------ ------------- ------------------------- ------------------------- ----------
Phone1Globalwide, Inc. Corp. Unknown Delaware 000 X. Xxxxxxxx Xxxx., 100 N. Biscayne Blvd., None
Suite 2500, Xxxxx, XX Xxxxx 0000, Xxxxx, XX
------------------------- ---------- ------------------ ------------- ------------------------- ------------------------- ----------
------------------------- ---------- ------------------ ------------- ------------------------- ------------------------- ----------
Globaltron Corp. Unknown Delaware 000 X. Xxxxxxxx Xxxx., 100 N. Biscayne Blvd., None
Communications Xxxxx 0000, Xxxxx, XX Xxxxx 0000, Xxxxx, XX
Corporation
------------------------- ---------- ------------------ ------------- ------------------------- ------------------------- ----------
[restubbed table]
------------------------- ---------- ------------------- -------------------------
OFFICIAL NAME OF GRANTOR TYPE OF OTHER PREMISES AT LOCATION OF RECORDS
ENTITY WHICH COLLATERAL CONCERNING COLLATERAL
STORED
------------------------- ---------- ------------------- -------------------------
------------------------- ---------- ------------------- -------------------------
Phone1, Inc. Corp. * 000 X. Xxxxxxxx Xxxx.,
Xxxxx 0000, Xxxxx, XX
------------------------- ---------- ------------------- -------------------------
------------------------- ---------- ------------------- -------------------------
Phone1Globalwide, Inc. Corp. None 000 X. Xxxxxxxx Xxxx.,
Xxxxx 0000, Xxxxx, XX
------------------------- ---------- ------------------- -------------------------
------------------------- ---------- ------------------- -------------------------
Globaltron Corp. 00 Xxxxxx Xxxxxx, 100 N. Biscayne Blvd.,
Communications Xxx Xxxx, XX Xxxxx 0000, Xxxxx, XX
Corporation
Brazil
Costa Rica
------------------------- ---------- ------------------- -------------------------
* Switches, headsets, advertising materials and/or eproms, and in certain
cases, circuit boards, are located in or proximate to phones placed by
carriers with whom we do business. These headsets, advertising
materials and eproms are currently placed in:
Arizona California Florida Costa Rica
Kentucky Maryland Massachusetts Brazil
Michigan New York Ohio
Utah West Virginia
SCHEDULE IV
TO
SECURITY AGREEMENT
------------------
PATENTS, TRADEMARKS AND COPYRIGHTS
Patents
-------
"Provisional" U.S. Patent Application Serial Number 60/367,539 filed on behalf
of Phone1, Inc. on March 25, 2002.
Trademarks
----------
1. Phone1Globalwide, Inc.
None
2. Phone1, Inc.
U.S. Registration No. 2,602,991 for PHONE1
U.S. Application No. 76/251,479 for Phone1 & Design
U.S. Application No. 78/097,107 for PHONE1SMART
3. Globaltron Communications Corporation
U.S. Registration No. 2,539,103 for GLOBALTRON
U.S. Registration No. 2,539,102 for GLOBALTRON COMMUNICATIONS
CORPORATION & Design
Copyrights
----------
SCHEDULE V
TO
SECURITY AGREEMENT
------------------
VEHICLES
None.
