GENERAL SECURITY AGREEMENT
(Floating Lien)
SECURITY AGREEMENT, dated as of 1998, between PICK Communications
Corp., a Nevada corporation with offices at Wayne Xxxxxxxxxxx Xxxxx XX, Xxxxx
Xxxxx, Xxxxx, Xxx Xxxxxx 00000 (the "Debtor"), and Commonwealth Associates, a
New York limited partnership with offices at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, as agent (the "Agent") for the investors (the "Investors") from time
to time set forth on Annex I hereto (the Agent, acting in such capacity, the
"Secured Party");
WITNESSETH:
WHEREAS, the Debtor and the Investors are parties to a series of 10%
senior subordinated secured notes issued by the Debtor in a private placement
pursuant to the terms of a Confidential Term Sheet dated July __, 1998 (herein,
as at any time amended, extended, restated, renewed or modified, the "Notes")
through the Agent, as placement agent; and
WHEREAS, it is a condition to the willingness of the Investors to enter
into the Notes and make the loan evidenced thereby that the Debtor enter into
this Agreement and grant to the Secured Party, for the ratable benefit of the
Investors, the security interest provided for herein;
NOW, THEREFORE, FOR VALUE RECEIVED, IT IS AGREED:
Section 1. Terms. Unless otherwise defined herein, capitalized terms
used in this Agreement shall have the meaning specified therefor in the Notes.
As used herein the following terms shall have the meanings specified and shall
include in the singular number the plural and in the plural number the singular:
"Assigned Agreements" shall mean all contracts and agreements of the
Debtor.
"Collateral" means all of the Debtor's right, title and interest in and
under or arising out of each and all of the following:
All personal property and fixtures of the Debtor of any type
or description, wherever located and now existing or hereafter arising
or acquired, including but not limited to the following:
(i) all of the Debtor's goods including, without
limitation:
(a) all inventory, including without limitation,
equipment held for lease, whether raw materials, in
process or finished, all material or equipment usable
in processing the same and all documents of title
covering any inventory (all of the foregoing,
"Inventory"), including without limitation that
located at the locations listed on Schedule I annexed
hereto;
(b) all equipment (the "Equipment") employed in
connection with the Debtor's business, together with
all present and future additions, attachments and
accessions thereto and all substitutions therefor and
replacements thereof, including without limitation
that located at the locations listed on Schedule 1
annexed hereto;
(ii) all of the Debtor's present and future accounts,
accounts receivable, general intangibles, contracts
and contract rights (herein sometimes referred to as
"Receivables"), including but not limited to the
Debtor's rights (including rights to payment) under
all Assigned Agreements, together with
(a) all claims, rights, powers or privileges and
remedies of the Debtor relating thereto or arising in
connection therewith including, without limitation,
all rights of the Debtor to make determinations, to
exercise any election (including, but not limited to,
election of remedies) or option or to give or receive
any notice, consent, waiver or approval, together
with full power and authority to demand, receive,
enforce, collect or receipt for any of the foregoing
or any property which is the subject of the Assigned
Agreements, to enforce or execute any checks, or
other instruments or orders, to file any claims and
to take any action which (in the opinion of the
Secured Party) may be necessary or advisable in
connection with any of the foregoing,
(b) all liens, security, guaranties, endorsements,
warranties and indemnities and all insurance and
claims for insurance relating thereto or arising in
connection therewith,
(c) all rights to property forming the subject matter
of the Receivables including, without limitation,
rights to stoppage in transit and rights to returned
or repossessed property,
(d) all writings relating thereto or arising in
connection therewith including without limitation,
all notes, contracts, security agreements,
guaranties, chattel paper and other evidence of
indebtedness or security, all powers-of- attorney,
all books, records, ledger cards and invoices, all
credit information, reports or memoranda and all
evidence of filings or registrations relating
thereto,
(e) all catalogs, computer and automatic machinery
software and programs, and the like pertaining to
operations by the Debtor in, on or about any of its
plants or warehouses, all sales data and other
information relating to sales or service of products
now or hereafter manufactured on or about any of its
plants, and all accounting information pertaining to
operations in, on or about any of its plants, and all
media in which or on which any of the information
-2-
or knowledge or data is stored or contained, and all
computer programs used for the compilation or
printout of such information, knowledge, records or
data, and
(f) all accounts, contract rights, general
intangibles and other property rights of any nature
whatsoever arising out of or in connection with the
foregoing, including without limitation, payments due
and to become due, whether as repayments,
reimbursements, contractual obligations, indemnities,
damages or otherwise;
(iii) all other personal property of the Debtor of any
nature whatsoever, including, without limitation, all
accounts, bank accounts, deposits, credit balances,
contract rights, inventory, general intangibles,
goods, equipment, instruments, chattel paper,
machinery, furniture, furnishings, fixtures, tools,
supplies, appliances, plans and drawings, together
with all customer and supplier lists and records of
the business, and all property from time to time
described in any financing statement (UCC- 1) signed
by the Debtor naming the Agent as secured party; and
(iv) all additions, accessions, replacements,
substitutions or improvements and all products and
proceeds including, without limitation, proceeds of
insurance, of any and all of the Collateral described
in clauses (i) through (iii) above.
"Instrument" shall have the meaning specified in Article 3 of the
Uniform Commercial Code, as in effect from time to time in the State of New York
and shall also include any other writing which evidences a right to the payment
of money and is not itself a security agreement or lease and is of a type which
is in the ordinary course of business transferred by delivery with any necessary
endorsement or assignment .
"Lien" means any mortgage, pledge, hypothecation, assignment, security
interest, deposit arrangement, encumbrance (including any easement, right of
way, zoning restriction and the like), lien (statutory or other) or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including any conditional sale or other title retention
agreement, any financing lease involving substantially the same economic effect
as any of the foregoing and the filing of any financing statement under the
Uniform Commercial Code or comparable law of any jurisdiction).
"Permitted Liens" means:
(a) Liens for taxes, assessments or other governmental charges
or levies not at the time delinquent or thereafter payable without
penalty or being contested in good faith by appropriate proceedings and
for which adequate reserves in accordance with generally accepted
accounting principles shall have been set aside on its books;
-3-
(b) Liens of carriers, warehousemen, mechanics, materialmen
and landlords incurred in the ordinary course of business for sums not
overdue or being contested in good faith by appropriate proceedings and
for which adequate reserves shall have been set aside on its books;
(c) Liens (other than Liens arising under the Employee
Retirement Income Security Act of 1974, as amended, or Section 412(n)
of the Internal Revenue Code of 1986, as amended) incurred in the
ordinary course of business in connection with workers' compensation,
unemployment insurance or other forms of governmental insurance or
benefits, or to secure performance of tenders, statutory obligations,
leases and contracts (other than for borrowed money) entered into in
the ordinary course of business or to secure obligations on surety or
appeal bonds;
(d) judgment Liens in existence less than 30 days after the
entry thereof or with respect to which execution has been stayed;
(e) ground leases in respect of real property on which
facilities owned or leased by the Debtor or any of its subsidiaries are
located;
(f) easements, rights-of-way, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances not
interfering in any material respect with the business of the Debtor and
its subsidiaries taken as a whole;
(g) any interest or title of a lessor secured by a lessor's
interest under any lease of real property on which facilities owned or
leased by the Debtor or any of its subsidiaries are located;
(h) leases or subleases granted to others not interfering in
any material respect with the business of the Debtor and its
subsidiaries taken as a whole; and
(i) a Lien on any asset securing indebtedness (including
capitalized lease obligations) incurred or assumed for the purpose of
financing the purchase price including capitalized lease payments in
the nature thereof) of such asset, provided that such Lien attaches
only to the asset acquired with the proceeds of such indebtedness and
attaches concurrently with or within ten (10) days following the
acquisition thereof
"Person" means any natural person, corporation, firm, association,
partnership, joint venture, limited liability company, joint-stock company,
trust, unincorporated organization, government, governmental agency or
subdivision, or any other entity, whether acting in an individual, fiduciary or
other capacity.
"Receivables" has the meaning specified therefor in clause (ii) of the
definition of Collateral.
-4-
"Secured Obligations" means all obligations of the Debtor, whether for
fees, expenses or otherwise, now existing or hereafter arising under this
Agreement, the Notes, and any other document executed by Debtor in connection
with any of the foregoing.
Section 2. Security Interests. As security for the payment and
performance of all Secured Obligations the Debtor does hereby grant and assign
to the Secured Party, for the ratable benefit of the Investors, a continuing
security interest in all of the Collateral, whether now existing or hereafter
arising or acquired and wherever located.
Section 3. General Representations, Warranties and Covenants. The
Debtor represents, warrants and covenants, which representations, warranties and
covenants shall survive execution and delivery of this Agreement, as follows:
(a) This Agreement is made with full recourse to the Debtor and
pursuant to and upon all the warranties, representations, covenants, and
agreements on the part of the Debtor contained herein, in the Notes and
otherwise made in writing in connection herewith or therewith.
(b) Except for the security interest of the Secured Party therein, the
Debtor is, and as to Collateral acquired from time to time after the date hereof
the Debtor will be, the owner of all the Collateral free from any hen, security
interest, encumbrance or other right, title or interest of any Person (other
than Permitted Liens) and the Debtor shall defend the Collateral against all
claims and demands of all Persons at any time claiming the same or any interest
therein adverse to the Secured Party.
(c) There is no financing statement (or similar statement or instrument
of registration under the law of any jurisdiction) now on file or registered in
any public office covering any interest of any kind in the Collateral, or
intended to cover any such interest, which has not been terminated or released
by the secured party named therein and so long as the Notes remain outstanding
or any of the Secured Obligations of the Debtor remain unpaid, the Debtor will
not execute and there will not be on file in any public office any financing
statement (or similar statement or instrument of registration under the law of
any jurisdiction) or statements relating to the Collateral, except (i) financing
statements filed or to be filed in respect of and covering the security interest
of the Secured Party hereby granted and provided for and (ii) with respect to
Permitted Liens,
(d) The chief executive office and chief place of business of the
Debtor is located at the address of the Debtor listed on the signature page
hereof, and the Debtor will not move its chief executive office and chief place
of business except to such new location as the Debtor may establish in
accordance with the last sentence of this Section 3(d). The originals of all
Assigned Agreements and all documents (as well as all duplicates thereof)
evidencing all Receivables and all other contract rights or accounts and other
property of the Debtor and the only original books of account and records of the
Debtor relating thereto are, and will continue to be, kept at such chief
executive office or at such new location as the Debtor may establish in
accordance with the last sentence of this Section 3(d). The Debtor shall
establish no such new location until (i) it shall have given to the
-5-
Secured Party not less than 30 days prior written notice of its intention to do
so, clearly describing such new location and providing such other information in
connection therewith as the Secured Party may reasonably request, and (ii) with
respect to such new location, it shall have taken such action, satisfactory to
the Secured Party (including, without limitation, all action required by Section
7 hereof), to maintain the security interest of the Secured Party in the
Receivables intended to be granted at all times fully perfected and in full
force and effect.
(e) Debtor has no Collateral located outside of the States of New
Jersey and Florida.
(f) The name of the Debtor is as set forth on the signature page hereto
and the Debtor shall not change such name, conduct its business in any other
name or take title to the Collateral in any other name while this Agreement
remains in effect. The Debtor has never had any name, or conducted business
under any name in any jurisdiction, other than its name set forth on the
signature page hereto, during the past six years other than as set forth in
Schedule 2 annexed hereto.
(g) At the Debtor's own expense, the Debtor will: (i) without limiting
the provisions of the Notes, keep the Collateral fully insured at all times with
financially sound and responsible insurance carriers against loss or damage by
fire and other risks, casualties and contingencies and in such manner and to the
same extent that like properties are customarily so insured by other entities
engaged in the same or similar businesses similarly situated and keep adequate
insurance at all times against liability on account of damage to persons and
properties and under all applicable workers' compensation laws, by insurers and
in amounts approved by the Secured Party, for the benefit of the Debtor and the
Secured Party, (ii) upon request by the Secured Party, promptly deliver the
insurance policies or certificates thereof to the Secured Party, and (iii) keep
the Collateral in good condition at all times (normal wear and tear excepted)
and maintain same in accordance with all manufacturer's specifications and
requirements. Upon any failure of the Debtor to comply with its obligations
pursuant to this Section 3(g), the Secured Party may at its option, and without
affecting any of its other rights or remedies provided herein or as a secured
party under the Uniform Commercial Code, procure the insurance protection it
deems necessary and/or cause repairs or modifications to be made to the
Collateral and the cost of either or both of which shall be a lien against the
Collateral added to the amount of the indebtedness secured hereby and payable on
demand with interest at a rate per annum equal to 18%.
(h) The Debtor hereby assigns to the Secured Party all of Debtor's
right, title and interest in and to any and all moneys which may become due and
payable with respect to the Collateral under any policy insuring the Collateral,
including return of unearned premium, and shall cause any such insurance company
to make payment directly to the Secured Party for application tc amounts
outstanding under the Notes in accordance with the terms of the Notes and, to
the extent not provided therein, in such order as the Secured Party shall
determine.
(i) The Debtor will not use the Collateral in violation of any statute
or ordinance or applicable insurance policy and will promptly pay all taxes and
assessments levied against the Collateral.
-6-
(j) The Debtor will not sell, transfer, change the registration, if
any, dispose of, attempt to dispose of, substantially modify or abandon the
Collateral or any part thereof other than sales of Inventory in the ordinary
course of business and the disposition of obsolete or worn-out Equipment in the
ordinary course of business.
(k) The Debtor will not assert against the Secured Party any claim or
defense which the Debtor may have against any seller of the Collateral or any
part thereof or against any other Person with respect to the Collateral or any
part thereof
(1) The Debtor will indemnify and hold the Secured Party harmless from
and against any loss, liability, damage, costs and expenses whatsoever arising
from the Debtor's use, operation, ownership or possession of the Collateral or
any part thereof.
(m) The Debtor will maintain the confidentiality of all customer lists
and not sell or otherwise dispose of such lists except that the Debtor shall
deliver copies thereof to the Secured Party upon its request, which may be made
at any time and from time to time after an Event of Default.
(n) The Debtor will not enter into any agreement that is inconsistent
with the Debtor's obligations under this Agreement, without the prior written
consent of the Secured Party.
Section 4. Special Provisions Concerning Assigned Agreements. The
Debtor represents, warrants and agrees as follows:
(a) The Assigned Agreements constitute the legal, valid and binding
obligations of the Debtor and, to the best of its knowledge, the other parties
thereto, enforceable in accordance with their respective terms.
(b) The Debtor will faithfully abide by, perform and discharge each and
every material obligation, covenant and agreement to be performed by the Debtor
under the Assigned Agreements.
(c) At the request of the Secured Party, and at the sole cost and
expense of the Debtor, the Debtor will enforce or secure the performance of each
and every material obligation, covenant, condition and agreement contained in
the Assigned Agreements to be performed by the other parties thereto.
(d) The Debtor will not modify, amend or agree to vary any of the
Assigned Agreements in any material respect or otherwise act or fail to act in a
manner likely (directly or indirectly) to entitle any party thereto to claim
that the Debtor is in default under the terms thereof
(e) The Debtor will not terminate or permit the termination of any
Assigned Agreement, except in accordance with its terms.
-7-
(f) Without the prior written consent of the Secured Party, the Debtor
will not waive or in any manner release or discharge any party to any Assigned
Agreement from any of the material obligations, covenants, conditions and
agreements to be performed by it under such Assigned Agreement including,
without limitation, the obligation to make all payments in the manner and at the
time and places specified.
(g) If the Secured Party so requests after the occurrence of an Event
of Default, the Debtor will hold any payments received by it which are assigned
and set over to the Secured Party by this Agreement for and on behalf of the
Secured Party and turn them promptly over to the Secured Party forthwith in the
same form in which they are received (together with any necessary endorsement)
for application to amounts outstanding under the Notes in accordance with the
terms of the Notes and, to the extent not provided therein, in such order as the
Secured Party shall determine.
(h) The Debtor will appear in and defend every action or proceeding
arising under, growing out of or in any manner connected with the Assigned
Agreements or the obligations, duties or liabilities of the Debtor and any
assignee thereunder.
(i) Should the Debtor fail to make any payment or to do any act as
herein provided, the Secured Party may (but without obligation on the Secured
Party's part to do so and without notice to or demand on the Debtor and without
releasing the Debtor from any obligation hereunder) make or do the same in such
manner and to such extent as the Secured Party may deem necessary to protect the
security interests provided hereby, including specifically, without limiting the
general powers, the right to appear in and defend any action or proceeding
purporting to affect the security interests provided hereby and the Debtor, and
the Secured Party may also perform and discharge each and every obligation,
covenant and agreement of the Debtor contained in any Assigned Agreement and, in
exercising any such powers, pay necessary costs and expenses, employ counsel and
incur and pay reasonable attorneys' fees.
(j) Upon the request of the Secured Party, the Debtor will send to the
Secured Party copies of all notices, documents and other papers furnished or
received by it with respect to any of the Assigned Agreements.
Section 5. Special Provisions Concerning Receivables. (a) As of the
time when each Receivable arises, the Debtor shall be deemed to have warranted
as to each such Receivable that such Receivable and all papers and documents
relating thereto are genuine and in all respects what they purport to be, and
that all papers and documents relating thereto:
(i) will be signed by the account debtor named therein (or such
account debtor's duly authorized agent) or otherwise be binding on the account
debtor;
(ii) will represent the genuine, legal, valid and binding obligation
of the account debtor evidencing indebtedness unpaid and owed by such account
debtor arising out of the performance of labor or services or the sale and
delivery of merchandise or both;
-8-
(iii) to the extent evidenced by writings, will be the only original
writings evidencing and embodying such obligation of the account debtor named
therein; and
(iv) will be in compliance and will conform with all applicable
federal, state and local laws (including applicable usury laws) and applicable
laws of any relevant foreign jurisdiction.
(b) The Debtor will keep and maintain at the Debtor's own cost and
expense satisfactory and complete records of the Receivables, including, but not
limited to, records of all payments received, all credits granted thereon, all
merchandise returned and all other dealings therewith, and the Debtor will make
the same available to the Secured Party, at the Debtor's own cost and expense,
at any and all reasonable times upon demand of the Secured Party. The Debtor
shall, at the Debtor's own cost and expense, deliver the Receivables (including,
without limitation, all documents evidencing the Receivables) and such books and
records to the Secured Party or to its representatives upon its demand at any
time after the occurrence of an Event of Default. If the Secured Party shall so
request, the Debtor shall legend, in form and manner satisfactory to the Secured
Party, the Receivables and other books, records and documents of the Debtor
evidencing or pertaining to the Receivables with an appropriate reference to the
fact that the Receivables have been assigned to the Secured Party and that the
Secured Party has a security interest therein.
(c) Except in the ordinary course of business prior to an Event of
Default, the Debtor will not rescind or cancel any indebtedness evidenced by any
Receivable or modify any term thereof or make any adjustment with respect
thereto, or extend or renew the same, or compromise or settle any dispute,
claim, suit or legal proceeding relating thereto, or sell any Receivable or
interest therein, without the prior written consent of the Secured Party, except
that the Debtor may grant discounts in connection with the prepayment of any
Receivable in an amount which is customary in the line of business in which the
Debtor is engaged and consistent with the Debtor's past practices.
(d) The Debtor will duly fulfill all obligations on its part to be
fulfilled under or in connection with the Receivables and will do nothing to
impair the rights of the Secured Party in the Receivables.
(e) The Debtor shall endeavor to collect or cause to be collected from
the account debtor named in each Receivable, as and when due (including, without
limitation, Receivables which are delinquent, such Receivables to be collected
in accordance with generally accepted lawful collection procedures) any and all
amounts owing under or on account of such Receivable, and apply forthwith (on a
daily basis) upon receipt thereof all such amounts as are so collected to the
outstanding balance of such Receivable. The costs and expenses (including
attorney's fees) of collection, whether incurred by the Debtor or the Secured
Party, shall be borne by the Debtor.
(f) If any of the Receivables becomes evidenced by an Instrument (other
than a check received in payment of a Receivable and deposited in the ordinary
course of business), the Debtor will notify the Secured Party thereof, and upon
request by the Secured Party promptly deliver such Instrument to the Secured
Party appropriately endorsed to the order of the Secured Party as further
security for the satisfaction in fall of the Secured Obligations.
-9-
(g) Upon request of the Secured Party, at any time when an Event of
Default shall exist, the Debtor shall promptly notify (in manner, form and
substance satisfactory to the Secured Party) all Persons who are at any time
obligated under any Receivable that the Secured Party possesses a security
interest in such Receivable and that all payments in respect thereof are to be
made to such account as the Secured Party directs.
Section 6. Special Provisions Concerning Equipment. The Debtor will do
nothing to impair the rights of the Secured Party in the Equipment. The Debtor
shall cause the Equipment to at all times constitute and remain personal
property. The Debtor will at all times keep all Equipment insured with
financially responsible insurance companies in favor of the Secured Party, at
the expense of the Debtor, against such perils and in such amounts as are
customary for Persons in the same general line of business as the Debtor and
operating in similar geographic locations and markets. If the Debtor shall fail
to insure the Equipment to the Secured Party's satisfaction, or if the Debtor
shall fail so to endorse and deposit all policies or certificates with respect
thereto, the Secured Party shall have the right (but shall be under no
obligation) to procure such insurance and the Debtor agrees to reimburse the
Secured Party for all costs and expenses of procuring such insurance, together
with interest at a rate per annum equal to 18%. The Secured Party may apply any
proceeds of such insurance when received by it toward the payment of any of the
Secured Obligations, whether or not the same shall then be due. The Debtor
retains all liability and responsibility in connection with the Equipment and
the liability of the Debtor to pay the Secured Obligations shall in no way be
affected or diminished by reason of the fact that such Equipment may be lost,
destroyed, stolen, damaged or for any reason whatsoever unavailable to the
Debtor.
Section 7. Financing Statements; Documents; Stamp Taxes. (a) The Debtor
will, at its own expense, make, execute, endorse, acknowledge, file and/or
deliver to the Secured Party from time to time such lists, descriptions and
designations of Inventory, warehouse receipts, bills of lading, documents of
title, vouchers, invoices, schedules, confirmatory assignments, conveyances,
financing statements, transfer endorsements, powers of attorney, certificates,
reports and other assurances or instruments and take such further steps relating
to the Collateral and other property or rights covered by the security interest
hereby granted, which the Secured Party deems appropriate or advisable to
perfect, preserve or protect its security interest in the Collateral. The Debtor
hereby constitutes the Secured Party its attorney-in-fact to execute and file in
the name and on behalf of the Debtor such additional financing statements as the
Secured Party may request, such acts of such attorney being hereby ratified and
confirmed; such power, being coupled with an interest, is irrevocable until the
Secured Obligations are paid in full. Further, to the extent permitted by
applicable law, the Debtor authorizes the Secured Party to file any such
financing statements without the signature of the Debtor. The Debtor will pay
all applicable filing fees and related expenses in connection with any such
financing statements.
(b) The Debtor agrees to procure, pay for, affix to any and all
documents and cancel any documentary tax stamps required by and in accordance
with, applicable law and the Debtor will indemnify and hold the Secured Party
harmless against any liability (including interest and penalties) in respect of
such documentary stamp taxes.
-10-
Section 8. Special Provisions Concerning Remedies and Sale. In addition
to any rights and remedies now or hereafter granted under applicable law and not
by way of limitation of any such rights and remedies, upon the occurrence of an
Event of Default the Secured Party shall have all of the rights and remedies of
a secured party under the Uniform Commercial Code as enacted in any applicable
jurisdiction in addition to the rights and remedies provided herein, in the
Notes and in any other agreement executed in connection with the Notes whereby
the Debtor has granted any Lien to the Secured Party. Without in any way
limiting the foregoing, upon the giving of notice to the Debtor of Secured
Party's intent to pursue any one or all of the following or any other remedies:
(a) The Secured Party shall have all of the rights and remedies of a
secured party under the Uniform Commercial Code as enacted in any applicable
jurisdiction in addition to the rights and remedies provided herein, in the
Notes and any other document whereby the Debtor has granted any Lien to the
Secured Party. The Secured Party shall have the right, without further notice
to, or assent by, the Debtor, in the name of the Debtor or in the name of the
Secured Party or otherwise:
(i) to ask for, demand, collect, receive, compound and give
acquittance for the Receivables or any part thereof;
(ii) to extend the time of payment of, compromise or settle for
cash, credit or otherwise, and upon any terms and conditions, any of
the Receivables;
(iii) to endorse the name of the Debtor on any checks, drafts or
other orders or instruments for the payment of moneys payable to the
Debtor which shall be issued in respect of any Receivable;
(iv) to file any claims, commence, maintain or discontinue any
actions, suits or other proceedings deemed by the Secured Party
necessary or advisable for the purpose of collecting or enforcing
payment of any Receivable;
(v) to make test verifications of the Receivables or any portion
thereof;
(vi) to notify any or all account debtors under any or all of the
Receivables to make payment thereof directly to the Secured Party for
the account of the Secured Party and to require the Debtor to forthwith
give similar notice to the account debtors,
(vii) to require the Debtor forthwith to account for and transmit
to the Secured Party in the same form as received all proceeds (other
than physical property) of collection of Receivables received by the
Debtor and, until so transmitted, to hold the same in trust for the
Secured Party and not commingle such proceeds with any other funds of
the Debtor;
(viii) to take possession of any or all of the Collateral and, for
that purpose, to enter, with the aid and assistance of any Person or
Persons and with or without legal process, any
-11-
premises where the Collateral or any part thereof, are, or may be,
placed or assembled, and to remove any of such Collateral;
(ix) to execute any instrurnent and do all other things necessary
and proper to protect and preserve and realize upon the Collateral and
the other rights contemplated hereby;
(x) upon notice to such effect, to require the Debtor to deliver,
at the Debtor's expense, any or all Collateral to the Secured Party at
a place designated by the Secured Party and after delivery thereof the
Debtor shall have no further claim to or interest in the Collateral;
and
(xi) without obligation to resort to other security, at any time
and from time to time, to sell, re-sell, assign and deliver all or any
of the Collateral, in one or more parcels at the same or different
times, and all right, title and interest, claim and demand therein and
right of redemption thereof, at public or private sale, for cash, upon
credit or for future delivery, and at such price or prices and on such
terms as the Secured Party may determine, with the amounts realized
from any such sale to be applied to the Secured Obligations in the
manner determined by the Secured Party.
The Debtor hereby agrees that all of the foregoing may be effected without
demand, advertisement or notice (except as otherwise provided herein or as may
be required by law), all of which (except as otherwise provided) are hereby
expressly waived, to the extent permitted by law. The Secured Party shall not be
obligated to do any of the acts hereinabove authorized, but in the event that
the Secured Party elects to do any such act, the Secured Party shall not be
responsible to the Debtor except for its gross negligence or willful misconduct.
(b) The Secured Party may take legal proceedings for the appointment of
a receiver or receivers (to which the Secured Party shall be entitled as a
matter of right) to take possession of the Collateral pending the sale thereof
pursuant either to the powers of sale granted by this Agreement or to a
judgment, order or decree made in any judicial proceeding for the foreclosure or
involving the enforcement of this Agreement. If, after the exercise of any or
all of such rights and remedies, any of the Secured Obligations shall remain
unpaid, the Debtor shall remain liable for any deficiency. After termination of
this Agreement and the Notes and the indefeasible payment in full of the Secured
Obligations, any proceeds of the Collateral received or held by the Secured
Party shall be turned over to the Debtor and the Collateral shall be reassigned
to the Debtor by the Secured Party without recourse to the Secured Party and
without any representations, warranties or agreements of any kind.
(c) Upon any sale of any of the Collateral, whether made under the
power of sale hereby given or under judgment, order or decree in any judicial
proceeding for the foreclosure or involving the enforcement of this Agreement:
-12-
(i) the Secured Party may, to the extent permitted by law, bid for
and purchase the property being sold, and upon compliance with the
terms of sale may hold, retain and possess and dispose of such property
in its own absolute right without further accountability, and may, in
paying the purchase money therefor, deliver any Note or claims for
interest thereon and any other instruments evidencing the Secured
Obligations or agree to the satisfaction of all or a portion of the
Secured Obligations in lieu of cash in payment of the amount which
shall be payable thereon, and the Notes and such instruments, in case
the amounts so payable thereon shall be less than the amount due
thereon, shall be returned to the Secured Party after being
appropriately stamped to show partial payment;
(ii) the Secured Party may make and deliver to the purchaser or
purchasers a good and sufficient deed, xxxx of sale and instrument of
assignment and transfer of the property sold;
(iii) the Secured Party is hereby irrevocably appointed the true
and lawful attorney-in- fact of the Debtor in its name and stead, to
make all necessary deeds, bills of sale and instruments of assigmnent
and transfer of the property thus sold and for such other purposes as
are necessary or desirable to effectuate the provisions (including,
without limitation, this Section 8) of this Agreement, and for that
purpose it may execute and deliver all necessary deeds, bills of sale
and instruments of assignment and transfer, and may substitute one or
more Persons with like power, the Debtor hereby ratifying and
confirming all that its said attorney, or such substitute or
substitutes, shall lawfully do by virtue hereof, but if so requested by
the Secured Party or by any purchaser, the Debtor shall ratify and
confirm any such sale or transfer by executing and delivering to the
Secured Party or to such purchaser all property, deeds, bills of sale,
instruments or assignment and transfer and releases as may be
designated in any such request;
(iv) all right, title, interest, claim and demand whatsoever,
either at law or in equity or otherwise, of the Debtor of, in and to
the property so sold shall be divested; such sale shall be a perpetual
bar both at law and in equity against the Debtor, its successors and
assigns, and against any and all Persons claiming or who may claim the
property sold or any part thereof from, through or under the Debtor,
its successors or assigns;
(v) the receipt of the Secured Party or of the officer thereof
making such sale shall be a sufficient discharge to the purchaser or
purchasers at such sale for his or their purchase money, and such
purchaser or purchasers, and his or their assigns or personal
representatives, shall not, after paying such purchase money and
receiving such receipt of the Secured Party or of such officer
therefor, be obliged to see to the application of such purchase money
or be in any way answerable for any loss, misapplication or
nonapplication thereof, and
(vi) to the extent that it may lawfully do so, and subject to any
legal requirement that the Secured Party act in a commercially
reasonable manner, the Debtor agrees that it will not at any time
insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any appraisement, valuation, stay, extension
or redemption laws, or any law
-13-
perrnitting it to direct the order in which the Collateral or any part
thereof shall be sold, now or at any time hereafter in force, which may
delay, prevent or otherwise affect the performance or enforcement of
this Agreement, the Notes or any other agreement executed in connection
with the Notes whereby the Debtor has granted any Lien to the Secured
Party, and the Debtor hereby expressly waives all benefit or advantage
of any such laws and covenants that it will not hinder, delay or impede
the execution of any power granted or delegated to the Secured Party in
this Agreement, but will suffer and permit the execution of every such
power as though no such laws were in force. In the event of any sale of
Collateral pursuant to this Section, the Secured Party shall, at least
10 days before such sale, give the Debtor written, telecopied or telex
notice of its intention to sell, except that, if the Secured Party
shall determine in its sole discretion that any of the Collateral
threatens to decline speedily in value, any such sale may be made upon
3 days' written, telecopied or telex notice to the Debtor.
Section 9. Application of Moneys. (a) Except as otherwise provided
herein or in the Notes, all moneys which the Secured Party shall receive, in
accordance with the provisions hereof, shall be applied (to the extent thereof)
in the following manner: First, to the payment of all costs and expenses
incurred in connection with the administration and enforcement of, or the
preservation of any rights under, this Agreement or any of the reasonable
expenses and disbursements of the Secured Party (including, without limitation,
the fees and disbursements of its counsel and agents); Second, to the payment of
all Secured Obligations arising out of the Notes in accordance with the terms of
the Notes and, if not therein provided, in such order as the Secured Party may
determine; and Third, to the payment of all other Secured Obligations in such
order as the Secured Party may determine.
(b) If after applying any amounts which the Secured Party has received
in respect of the Collateral any of the Secured Obligations remain unpaid, the
Debtor shall continue to be liable for any deficiency, together with interest.
Section 10. Fees and Expenses, etc. Any and all fees, costs and
expenses of whatever kind or nature, including but not limited to the reasonable
attorneys' fees and legal expenses incurred by the Secured Party in connection
with this Agreement, the filing or recording of any documents (including all
taxes in connection therewith) in public offices, the payment or discharge of
any taxes, counsel fees, maintenance fees, fees and other costs relating to the
encumbrances or otherwise protecting, maintaining, preserving the Collateral, or
in defending or prosecuting any actions or proceedings arising out of or related
to the Collateral, shall be borne and paid by the Debtor on demand by the
Secured Party and until so paid shall be added to the principal amount of the
Secured Obligations and shall bear interest at a rate per annum equal to 18%. In
addition, the Debtor will pay, and indemnify and hold the Secured Party harmless
from and against, any and all liabilities, obligations, losses, damages
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever with respect to the Collateral, including (without
limitation) claims of patent or trademark infringement and any claim of unfair
competition or anti-trust violation.
-14-
Section 11. Miscellaneous. All notices, communications and
distributions hereunder shall be in writing (including telecopied communication)
and mailed, telecopied, personally delivered or delivered by Federal Express or
other reputable overnight courier service, if to the Debtor addressed to it at
its address set forth opposite its signature below, if to the Secured Party,
addressed to it at its address set forth opposite its signature below, or as to
either party at such other address as shall be designated by such party in a
written notice to such other party complying as to delivery with the terms of
this Section. All such notices and other communications shall be effective (i)
if mailed, three days after the date of deposit thereof with the U.S. Postal
Service, properly addressed with postage prepaid, (ii) if telecopied, upon
receipt by the addressee, (iii) if personally delivered, upon such delivery and
(iv) if delivered by overnight courier service, on the business day following
delivery thereof to such courier service in time for next-business-day delivery,
provided that in the case where the Secured Party is required to give only three
days' notice of a proposed sale of the Collateral such notice shall not be
deemed given until delivered to the chief executive office of the Debtor
provided for herein.
(b) No delay on the part of the Secured Party in exercising any of its
rights, remedies, powers and privileges hereunder or partial or single exercise
thereof shall constitute a waiver thereof. None of the terms and conditions of
this Agreement may be changed, waived, modified or varied in any manner
whatsoever unless in writing duly signed by the Debtor and the Secured Party. No
notice to or demand on the Debtor in any case shall entitle the Debtor to any
other or further notice or demand in similar or other circumstances or
constitute a waiver of any of the rights of the Secured Party to any other or
further action in any circumstances without notice or demand.
(c) The obligations of the Debtor hereunder shall remain in full force
and effect without regard to, and shall not be impaired by, (i) any bankruptcy,
insolvency, reorganization, arrangement, readjustment, composition, liquidation
or the like of the Debtor; (ii) any exercise or non-exercise, or any waiver of,
any right, remedy, power or privilege under or in respect of the Notes, this
Agreement or any other agreement executed in connection with the Notes whereby
the Debtor has granted any Lien to the Secured Party or any other agreement
executed in connection with any of the foregoing, the Secured Obligations or any
security for any of the Secured Obligations; or (iii) any amendment to or
modification of any of the foregoing; whether or not the Debtor shall have
notice or knowledge of any of the foregoing. The rights and remedies of the
Secured Party herein provided are cumulative and not exclusive of any rights or
remedies which the Secured Party would otherwise have.
(d) This Agreement shall be binding upon the Debtor and its successors
and assigns and shall inure to the benefit of the Secured Party and its
successors and assigns, except that the Debtor may not transfer or assign any of
its obligations, rights or interest hereunder without the prior written consent
of the Secured Party and any such purported assignment by the Debtor shall be
void. All agreements, representations and warranties made herein shall survive
the execution and delivery of this Agreement.
-15-
(e) The descriptive headings of the several sections of this Agreement
are inserted for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.
(f) 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.
(g) All rights, remedies and powers provided by this Agreement may be
exercised only to the extent that the exercise thereof does not violate any
applicable provision of law, and the provisions hereof 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 will not render this
Agreement invalid, unenforceable in whole or in part or not entitled to be
recorded, registered or filed under the provisions of any applicable law.
(h) This Agreement and the rights and obligations of the parties
hereunder shall be construed in accordance with and be governed by the laws of
the State of New York except to the extent that matters of title, or creation,
perfection and priority of the security interests created hereby, or procedural
issues of foreclosure are required to be governed by the laws of the state in
which the Collateral, or part thereof, is located. EACH PARTY HERETO KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO A TRIAL
BY JURY IN ANY ACTION, PROCEEDING, COUNTERCLAIM OR OTHER LITIGATION BASED ON, OR
ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT, THE NOTES OR ANY
FINANCING DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY SUCH PARTY. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE SECURED PARTY'S ENTERING INTO THIS AGREEMENT.
(i) It is expressly agreed, anything herein, in the Notes or in any
other agreement or instrument executed in connection with the Notes to the
contrary notwithstanding, that the Debtor shall remain liable to perform all of
the obligations, if any, assumed by it with respect to the Collateral and the
Secured Party shall not have any obligations or liabilities with respect to any
Collateral by reason of or arising out of this Agreement, nor shall the Secured
Party be required or obligated in any manner to perform or fulfill any of the
obligations of the Debtor under or pursuant to any or in respect of any
Collateral.
(j) This Agreement may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which counterparts taken
together shall be deemed to constitute one and the same instrument.
-16-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
Addresses PICK COMMUNICATIONS CORP.,
--------- as Debtor
Wayne Xxxxxxxxxxx Xxxxx XX
Xxxxx Xxxxx
Xxxxx, Xxx Xxxxxx 00000 By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President and
Chief Financial Officer
COMMONWEALTH ASSOCIATES, as Agent,
as Secured Party
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 By: COMMONWEALTH MANAGEMENT CO., INC.,
its general partner
By: /s/ Xxxxxx Xxxxx
-----------------------------------
Name: Xxxxxx Xxxxx
Title: Chief Financial Officer
as Debtor
-17-
Annex I
INVESTORS
Name Address
---- -------
-1-
Schedule 1
LOCATION OF CERTAIN INVENTORY AND EQUIPMENT COLLATERAL
Current place(s) of business of the Debtor:
Wayne Interchange Plaza II, Third Floor Wayne, Passaic, NJ
--------------------------------------- -----------------------------
No. and Street City County State
Jersey City, Bergen NJ
--------------------------------------- -----------------------------
No. and Street City County State
Miami, [Dade], FL
--------------------------------------- -----------------------------
No. and Xxxxxx Xxxx Xxxxxx Xxxxx
-0-
Xxxxxxxx 2
EXISTING FINANCING STATEMENTS
Date of Number of Description Amount of
Secured Financing Financing Location of Indebtedness
Party Statement Statement Filed Collateral Secured
----- --------- --------- ----- ---------- -------
[to be completed by Debtor]
OTHER NAMES UNDER WHICH DEBTOR HAS CONDUCTED BUSINESS
-3-
