SECURITY AGREEMENT
Exhibit
10.3
SECURITY
AGREEMENT (this “Agreement”), dated as of December 6, 2006, by and among
Xxxxxxxxx Holdings, Inc., a Delaware corporation (“Company”), and Dutchess
Private Equities Fund, LP, a Delaware Limited partnership, as the secured
parties signatory hereto and their
respective endorsees, transferees and assigns (collectively, the “Secured
Party”) (sometimes
hereinafter the Company and the Secured Party are collectively referred to
as
the “parties”).
W
I T N E
S S E T H:
WHEREAS,
pursuant to Note Agreement, dated the date hereof between Company and
the
Secured Party (the “Note Agreement”), the Company has agreed to issue to the
Secured Party
and the
Secured Party has agreed to purchase from Company certain of Company’s 0%
Secured Note, due one year from the date of issue (the “Note”)
WHEREAS,
in order to induce the Secured Party to purchase the Note, the Company has
agreed to execute and deliver to the Secured Party this Agreement for the
benefit of the Secured Party and to grant to it a first priority security
interest in certain property of Company to secure the prompt payment,
performance and discharge in full of all of Company’s obligations under the
Note.
WHEREAS,
the Secured Party recognizes that they shall not be first lien on those
properties with an outstanding mortgage as of this date, and with respect to
those properties.
NOW,
THEREFORE, in consideration of the agreements herein contained and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1.
Certain
Definitions. As used in this Agreement, the following terms shall have the
meanings set forth in this Section 1. Terms used but not otherwise defined
in
this Agreement that are defined in Article 9 of the UCC (such as “general
intangibles” and “proceeds”) shall have the respective meanings given such terms
in Article 9 of the UCC.
(a)
“Collateral” means the collateral in which the Secured Party is granted a
security interest by this Agreement and which shall include the following,
whether presently owned or existing or hereafter acquired or coming into
existence, and all
additions and accessions thereto and all substitutions and replacements thereof,
and all
proceeds, products and accounts thereof, including, without limitation, all
proceeds from the sale or transfer of the Collateral and of insurance covering
the same and of any tort claims in connection therewith:
(i)
All
Goods of the Company, including, without limitation, all machinery, equipment,
computers, motor vehicles, trucks, tanks, boats, ships, appliances, furniture,
special and general tools, fixtures, test and quality control devices and other
equipment of every kind and nature and wherever situated, together with all
documents of title and documents
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representing
the same, all additions and accessions thereto, replacements therefor, all
parts
therefor, and all substitutes for any of the foregoing and all other items
used
and useful in connection with the Company’s businesses and all improvements
thereto (collectively, the “Equipment”); and
(ii) All
Inventory, land or buildings of the Company including the property located
at
Xxxxx 000 (Xxxxxxx Xxxxxx Xxxxxxx), Xxxx of A Tract Land, Staunton, Virginia
and
all property and mineral rights associated with the Xxxxxxxxx Springs, LLC
property.
(iii) All
of
the Company’s contract rights and general intangibles, including, without
limitation, all partnership interests, stock or other securities, licenses,
distribution and other agreements, computer software development rights, leases,
franchises, customer lists, quality control procedures, grants and rights,
goodwill, trademarks, service marks, trade styles, trade names, patents, patent
applications, copyrights, deposit accounts, and income tax refunds
(collectively, the “General Intangibles”); and
(iv) All
Receivables of the Company including all insurance proceeds, and rights to
refunds or indemnification whatsoever owing, together with all instruments,
all
documents of title representing any of the foregoing, all rights in any
merchandising, goods, equipment, motor vehicles and trucks which any of the
same
may represent, and all right, title, security and guaranties with respect to
each Receivable, including any right of stoppage in transit;
and
(v) All
of
the Company’s documents, instruments and chattel paper, files, records, books of
account, business papers, computer programs and the products and proceeds of
all
of the foregoing Collateral set forth in clauses (i)-(iv)
above.
(b) “Company”
shall mean, collectively, Company and all of the subsidiaries of Company, a
list
of which is contained in Schedule A,
attached
hereto.
(c) “Obligations”
means all of the Company’s obligations under this Agreement and the Note, in
each case, whether now or hereafter existing, voluntary or involuntary, direct
or indirect, absolute or contingent, liquidated or unliquidated, whether or
not
jointly owed with others, and whether or not from time to time decreased or
extinguished and later decreased, created or incurred, and all or any portion
of
such obligations or liabilities that are paid, to the extent all or any part
of
such payment is
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avoided
or recovered directly or indirectly from the Secured Party as a preference,
fraudulent transfer or otherwise as such obligations may be amended,
supplemented, converted, extended or modified from time to time.
(d) “UCC”
means the Uniform Commercial Code, as currently in effect in the Commonwealth
of
Massachusetts.
2. Grant of Security Interest.
As an
inducement for the Secured Party to purchase the Note and to secure the complete
and timely payment, performance and discharge in full, as the case may be,
of
all of the Obligations, the Company hereby, unconditionally and irrevocably,
pledges, grants and hypothecates to the Secured Party, a continuing security
interest in, a continuing first lien upon, an unqualified right to possession
and disposition of and a right of set-off against, in each case to the fullest
extent permitted by law, all of the Company’s right, title and interest of
whatsoever kind and nature in and to the Collateral (the “Security
Interest”).
3. Representations, Warranties, Covenants and Agreements of the
Company. The Company represents and warrants to, and covenants and agrees
with, the Secured Party as follows:
(a) The
Company has the requisite corporate power and authority to enter into this
Agreement and otherwise to carry out its obligations thereunder. The execution,
delivery and performance by the Company of this Agreement and the filings
contemplated therein have been duly authorized by all necessary action on the
part of the Company and no further action is required by the Company. This
Agreement constitutes a legal, valid and binding obligation of the Company
enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization,
moratorium or similar laws affecting the enforcement of creditor’s rights
generally.
(b) The
Company represents and warrants that it has no place of business or offices
where its respective books of account and records are kept (other than
temporarily at the offices of its attorneys or accountants) or places where
Collateral is stored or located, except as set forth on Schedule A
attached
hereto;
(c) The
Company is the sole owner of the Collateral, free and clear of any liens,
security interests, encumbrances, rights or claims, and is fully authorized
to
grant the Security Interest in and to pledge the Collateral. There is not on
file in any governmental or regulatory authority, agency or recording office
an
effective financing statement, security agreement, license or transfer or any
notice of any of the foregoing (other than those that have been filed in favor
of the Secured Party pursuant to this Agreement) covering or affecting any
of
the Collateral. So long as this Agreement shall
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be
in
effect, the Company shall not execute and shall not knowingly permit to be
on
file in any such office or agency any such financing statement or other document
or instrument (except to the extent filed or recorded in favor of the Secured
Party pursuant to the terms of this Agreement).
(d) No
part
of the Collateral has been judged invalid or unenforceable. No written claim
has
been received that any Collateral or the Company’s use of any Collateral
violates the rights of any third party. There has been no adverse decision
to
the Company’s claim of ownership rights in or exclusive rights to use the
Collateral in any jurisdiction or to the Company’s right to keep and maintain
such Collateral in full force and effect, and there is no proceeding involving
said rights pending or, to the best knowledge of the Company, threatened before
any court, judicial body, administrative or regulatory agency, arbitrator or
other governmental authority.
(e) The
Company shall at all times maintain its books of account and records relating
to
the Collateral at its principal place of business and its Collateral at the
locations set forth on Schedule A
attached
hereto and may not relocate such books of account and records or tangible
Collateral unless it delivers to the Secured Party at least 30 days prior to
such relocation (i) written notice of such relocation and the new location
thereof (which must be within the United States) and (ii) evidence that
appropriate financing statements and other necessary documents have been filed
and recorded and other steps have been taken to perfect the Security Interest
to
create in favor of the Secured Party valid, perfected and continuing first
priority liens in the Collateral.
(f) This
Agreement creates in favor of the Secured Party a valid security interest in
the
Collateral securing the payment and performance of the Obligations and, upon
making the filings described in the immediately following sentence, a perfected
first priority security interest in such Collateral. Except for the filing
of
financing statements on Form-1 under the UCC with the jurisdictions indicated
on
Schedule B,
attached
hereto, no authorization or approval of or filing with or notice to any
governmental authority or regulatory body is required either (i) for the grant
by the Company of, or the effectiveness of, the Security Interest granted hereby
or for the execution, delivery and performance of this Agreement by the Company
or (ii) for the perfection of or exercise by the Secured Party of its rights
and
remedies hereunder.
(g) On
the
date of execution of this Agreement, the Secured Party shall file in the proper
jurisdictions, one or more executed UCC financing statements on Form-1 with
respect to the Security Interest for filing with the jurisdictions indicated
on
Schedule B,
attached
hereto and in such other jurisdictions as may be requested by the Secured
Party.
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(h) The
execution, delivery and performance of this Agreement does not
conflict with or cause a breach or default, or an event that with or without
the
passage
of time
or notice, shall constitute a breach or default, under any agreement to which
the Company is a party or by which the Company is bound. No consent (including,
without limitation, from stock holders or creditors of the Company) is required
for the Company to enter into and perform its obligations
hereunder.
(i) The
Company shall at all times maintain the liens and Security Interest provided
for
hereunder as valid and perfected first priority liens and security interests
in
the Collateral in favor of the Secured Party until this Agreement and the
Security Interest hereunder shall terminate pursuant to Section 11. The Company
hereby agrees to defend the same against any and all persons. The Company shall
safeguard and protect all Collateral for the account of the Secured Party.
At
the request of the Secured Party,
the Company will sign and deliver to the Secured Party at any time or from
time
to
time one
or more financing statements pursuant to the UCC (or any other applicable
statute)
in form reasonably satisfactory to the Secured Party and will pay the cost
of
filing
the same
in all public offices wherever filing is, or is deemed by the Secured Party
to
be, necessary or desirable to effect the rights and obligations provided for
herein. Without limiting the generality of the foregoing, the Company shall
pay
all fees, taxes and other amounts necessary to maintain the Collateral and
the
Security Interest hereunder, and the Company shall obtain and furnish to the
Secured Party from time to time, upon demand, such releases and/or
subordinations of claims and liens which may be required to maintain the
priority of the Security Interest hereunder.
(j) The
Company will not transfer, pledge, hypothecate, encumber, license, sell or
otherwise dispose of any of the Collateral without the prior written consent
of
the Secured Party, unless within the normal course of business.
(k) The
Company shall keep and preserve its Equipment, Inventory and other tangible
Collateral in good condition, repair and order and shall not operate or locate
any such Collateral (or cause to be operated or located) in any area excluded
from insurance coverage.
(l) The
Company shall, within ten (10) days of obtaining knowledge thereof, advise
the
Secured Party promptly, in sufficient detail, of any substantial change
in
the
Collateral, and of the occurrence of any event which would have a material
adverse
effect
on the value of the Collateral or on the Secured Party’s security interest
therein.
(m) The
Company shall promptly execute and deliver to the Secured Party such further
deeds, mortgages, assignments, security agreements, financing statements or
other instruments, documents, certificates and assurances and take such further
action as the Secured Party may from time to time request and may in its
sole
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discretion
deem necessary to perfect, protect or enforce its security interest in the
Collateral including, without limitation, the execution and delivery of a
separate security agreement with respect to the Company’s intellectual property
(“Intellectual Property Security Agreement”) in which the Secured Party
has been granted a security interest hereunder, substantially in a form
acceptable to the Secured Party, which Intellectual Property Security Agreement,
other than as stated therein, shall be subject to all of the terms and
conditions hereof.
(n) The
Company shall permit the Secured Party and its representatives and agents to
inspect the Collateral at any time, and to make copies of records pertaining
to
the Collateral as may be requested by the Secured Party from time to
time.
(o) The
Company will take all steps reasonably necessary to diligently pursue and seek
to preserve, enforce and collect any rights, claims, causes of action and
accounts receivable in respect of the Collateral.
(p) The
Company shall promptly notify the Secured Party in sufficient detail upon
becoming aware of any attachment, garnishment, execution or other legal process
levied against any Collateral and of any other information received by the
Company that may materially affect the value of the Collateral, the Security
Interest or the rights and remedies of the Secured Party
hereunder.
(q) All
information heretofore, herein or hereafter supplied to the Secured Party by
or
on behalf of the Company with respect to the Collateral is accurate and complete
in all material respects as of the date furnished.
(r) Schedule A
attached
hereto contains a list of all of the subsidiaries of Company.
4. Defaults.
The
following events shall be “Events of
Default”:
(a) The
occurrence of an Event of Default (as defined in the Note Agreement) under
the
Note Agreement, or breach of the terms of the Note Agreement.
(b) Any
representation or warranty of the Company in this Agreement shall prove to
have
been incorrect in any material respect when made;
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(c) The
failure by the Company to observe or perform any of its obligations hereunder
or
in the Intellectual Property Security Agreement for ten (10) days after
receipt
by the Company of notice of such failure from the Secured Party.
5. Duty To Hold In Trust.
Upon the
occurrence of any Event of Default and during the continuance of any Event
of
Default for a period of five
(5)
days,
the Company shall, upon receipt by it of any revenue, income or other sums
subject to the Security Interest, whether payable pursuant to the Note or
otherwise, or of any check, draft,
note,
trade acceptance or other instrument evidencing an obligation to pay any such
sum, hold the same in trust for the Secured Party and shall forthwith endorse
and transfer any such sums or instruments, or both, to the Secured Party for
application to the satisfaction of the Obligations.
6. Rights and Remedies Upon Default.
Upon the
occurrence of any Event of Default and during the continuance of any Event
of
Default for a period of five
(5)
days,
the Secured Party shall have the right to exercise all of the remedies conferred
hereunder and under the Note, and the Secured Party shall have all the rights
and remedies of a secured party under the UCC and/or any other applicable law
(including the Uniform Commercial Code of any jurisdiction in which any
Collateral is then located). Without limitation, the Secured Party shall have
the following rights and powers:
(a) The
Secured Party shall have the right to take possession of the Collateral and,
for
that purpose, enter, with the aid and assistance of any person, any premises
where the Collateral, or any part thereof, is or may be placed and remove the
same, and the Company shall assemble the Collateral and make it available to
the
Secured Party at places which the Secured Party shall reasonably select, whether
at the Company’s
premises
or elsewhere, and make available to the Secured Party, without rent, all of
the
Company’s
respective
premises and facilities for the purpose of the Secured Party taking possession
of, removing or putting the Collateral in saleable or disposable
form.
(b) The
Secured Party shall have the right to operate the business of the Company using
the Collateral and shall have the right to assign, sell, lease or otherwise
dispose of and deliver all or any part of the Collateral, at public or private
sale or otherwise, either with or without special conditions or stipulations,
for cash or on credit or for future delivery, in such parcel or parcels and
at
such time or times and at such place or places, and upon such terms and
conditions as the Secured Party may deem commercially reasonable, all without
(except as shall be required by applicable statute and cannot be waived)
advertisement or demand upon or notice to the Company or right of redemption of
the Company, which are hereby expressly waived. Upon each such sale, lease,
assignment or other transfer of Collateral, the Secured Party may, unless
prohibited by applicable law which cannot be waived, purchase all or any part
of
the
7
Collateral
being sold, free from and discharged of all trusts, claims, right of redemption
and equities of the Company, which are hereby waived and released.
(c)
The
Secured Party shall have the right to require the Company to use
any
and all commercially reasonable means to draw on any equity in the
Collateral,
from a
banking institution or other, in order to repay the Note. The Company shall
be
required to use the assets, as detailed on the balance sheet, in order to obtain
additional funding to repay the Secured Party of all Obligations.
7. Applications of Proceeds.
The
proceeds of any such sale, lease or other disposition of the Collateral
hereunder shall be applied first, to the expenses of retaking, holding, storing,
processing and preparing for sale, selling, and the like (including,
without
limitation, any taxes, fees and other costs incurred in connection therewith)
of
the
Collateral, to the reasonable attorneys’ fees and expenses incurred by the
Secured Party in enforcing its rights hereunder and in connection with
collecting, storing and disposing of the Collateral, and then to satisfaction
of
the Obligations, and to the payment of any other amounts required by applicable
law, after which the Secured Party shall pay to the Company any surplus
proceeds. If, upon the sale, license or other disposition of the Collateral,
the
proceeds thereof are insufficient to pay all amounts to which the Secured Party
is legally entitled, the Company will be liable for the deficiency, together
with interest thereon, at the rate of 18% per annum (the “Default Rate”), and
the reasonable fees of any attorneys employed by the Secured Party to collect
such deficiency. To the extent permitted by applicable law, the Company waives
all claims, damages and demands against the Secured Party arising out of the
repossession, removal, retention or sale of the Collateral, unless due to the
gross negligence or willful misconduct of the Secured Party.
8. Costs and Expenses.
The
Company agrees to pay all out-of-pocket fees, costs and expenses incurred in
connection with any filing required hereunder, including without limitation,
any
financing statements, continuation statements, partial releases and/or
termination statements related thereto or any expenses of any searches
reasonably required by the Secured Party. The Company shall also pay all other
claims and charges which in the reasonable opinion of the Secured Party might
prejudice, imperil or otherwise affect the Collateral or the Security Interest
therein. The Company will also, upon demand, pay to the Secured Party the amount
of any and all reasonable expenses, including the reasonable fees and expenses
of its counsel and of any experts and agents, which the Secured Party may incur
in connection with (i) the enforcement of this Agreement, (ii) the custody
or
preservation of, or the sale of, collection from, or other realization upon,
any
of the Collateral, or (iii) the exercise or enforcement of any of the rights
of
the Secured Party under the Note. Until so paid, any fees payable hereunder
shall be added to the principal amount of the Note and shall bear interest
at
the Default Rate.
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9. Responsibility for Collateral.
The
Company assumes all liabilities and responsibility in connection with all
Collateral, and the obligations of the Company hereunder or under the
Transaction Documents shall in no way be affected or diminished by reason of
the
loss, destruction, damage or theft of any of the Collateral or its
unavailability for any reason.
10. Security Interest Absolute.
All
rights of the Secured Party and all Obligations of the Company hereunder, shall
be absolute and unconditional, irrespective of: (a) any lack of validity or
enforceability of this Agreement, the Note, the Equity Line or any agreement
entered into in connection with the foregoing, or any portion hereof or thereof;
(b) any change in the time, manner or place of payment or performance of, or
in
any other term of, all or any of the Obligations, or any other amendment or
waiver of or any consent to any departure from the Note, the Equity Line or
any
other agreement entered into in connection with the foregoing; (c) any exchange,
release or nonperfection of any of the Collateral, or any release or amendment
or waiver of or consent to departure from any other collateral for, or any
guaranty, or any other security, for all or any of the Obligations; (d) any
action by the Secured Party to obtain, adjust, settle and cancel in its sole
discretion any insurance claims or matters made or arising in connection with
the Collateral; or (e) any other circumstance which might otherwise constitute
any legal or equitable defense available to the Company, or a discharge of
all
or any part of the Security Interest granted hereby. Until the Obligations
shall
have been paid and performed in full, the rights of the Secured Party shall
continue even if the Obligations are barred for any reason, including, without
limitation, the running of the statute of limitations or bankruptcy. The Company
expressly waives presentment, protest, notice of protest, demand, notice of
nonpayment and demand for performance. In the event that at any time any
transfer of any Collateral or any payment received by the Secured Party
hereunder shall be deemed by final order of a court of competent jurisdiction
to
have been a voidable preference or fraudulent conveyance under the bankruptcy
or
insolvency laws of the United States, or shall be deemed to be otherwise due
to
any party other than the Secured Party, then, in any such event, the Company’s
obligations hereunder shall survive cancellation of this Agreement, and shall
not be discharged or satisfied by any prior payment thereof and/or cancellation
of this Agreement, but shall remain a valid and binding obligation enforceable
in accordance with the terms and provisions hereof. The Company waives all
right
to require the Secured Party to proceed against any other person or to apply
any
Collateral which the Secured Party may hold at any time, or to marshal assets,
or to pursue any other remedy. The Company waives any defense arising by reason
of the application of the statute of limitations to any obligation secured
hereby.
11. Term of Agreement.
This
Agreement and the Security Interest shall terminate on the date on which all
payments under the Note have been made in full and all other Obligations of
the
Company have been paid or discharged. Upon such termination, the Secured Party,
at the request and at the expense of the Company, will join in executing any
termination statement with respect to any financing statement executed and
filed
pursuant to this Agreement.
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12. Power of Attorney; Further Assurances.
(a) The
Company authorizes the Secured Party, and does hereby make, constitute and
appoint it, and its respective officers, agents, successors or assigns with
full
power of substitution, as the Company’s true and lawful attorney-in-fact, with
power, in its own name or in the name of the Company, to, after the occurrence
and during the continuance of an Event of Default (i) endorse any notes, checks,
drafts, money orders, or other instruments of payment (including payments
payable under or in respect of any policy of insurance) in respect of the
Collateral that may come into possession of the Secured Party; (ii) to sign
and
endorse any UCC financing statement or any invoice, freight or express xxxx,
xxxx of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications and notices in connection with accounts, and other
documents relating to the Collateral; (iii) to pay or discharge taxes, liens,
security interests or other encumbrances at any time levied or placed on or
threatened against the Collateral;
(iv) to demand, collect, receipt for, compromise, settle and xxx for monies
due
in
respect of the Collateral; and (v) generally, to do, at the option of the
Secured Party, and at the Company’s expense, at any time, or from time to time,
all acts and things which the Secured Party deems necessary to protect, preserve
and realize upon the Collateral and the Security Interest granted therein in
order to effect the intent of this Agreement, the Note, all as fully and
effectually as the Company might or could do; and the
Company hereby ratifies all that said attorney shall lawfully do or cause to
be
done by
virtue
hereof. This power of attorney is coupled with an interest and shall be
irrevocable for the term of this Agreement and thereafter as long as any of
the
Obligations shall be outstanding.
(b) On
a
continuing basis, the Company will make, execute, acknowledge, deliver, file
and
record, as the case may be, in the proper filing and recording places in any
jurisdiction, including, without limitation, the jurisdictions indicated
on Schedule B,
attached
hereto, all such instruments, and take all such action as
may
reasonably be deemed necessary or advisable, or as reasonably requested by
the
Secured Party, to perfect the Security Interest granted hereunder and otherwise
to carry out the intent and purposes of this Agreement, or for assuring and
confirming to the Secured Party the grant or perfection of a security interest
in all the Collateral.
(c) The
Company hereby irrevocably appoints the Secured Party as the Company’s
attorney-in-fact, with full authority in the place and stead of the Company
and
in the name of the Company, from time to time in the Secured Party’s discretion,
to take any action and to execute any instrument which the Secured Party may
deem necessary
or advisable to accomplish the purposes of this Agreement, including the
filing,
in its
sole discretion, of one or more financing or continuation statements and
amendments thereto, relative to any of the Collateral without the signature
of
the Company where permitted by law.
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13. Notices.
All
notices, requests, demands and other communications hereunder shall be in
writing, with copies to all the other parties hereto, and shall be deemed
to
have been duly given when (i) if delivered by hand, upon receipt, (ii) if sent
by
facsimile, upon receipt of proof of sending thereof, (iii) if sent by nationally
recognized overnight delivery service (receipt requested), the next business
day
or (iv) if mailed by first-class registered or certified mail, return receipt
requested, postage prepaid, four days after posting in the U.S. mails, in each
case if delivered to the following addresses:
If
to the
Company:
Xxxx Xxxx
Xxxxxxxxx
Holdings
000
Xxxxxxx Xx
Xxxxxxxxxx,
XX 00000 Telephone: 000-000-0000 Facsimile: 000-000-0000
If
to the
Secured Party: Dutchess
Capital Management, LLC
Xxxxxxx
Xxxxxxxx
00
Xxxxxxxxxxxx Xxx, Xxxxx 0
Xxxxxx,
XX 00000 (617) 301-4700 (000) 000-0000
14. Other
Security. To the extent that the Obligations are now or hereafter secured by
property other than the Collateral or by the guarantee, endorsement or property
of any other person, firm, corporation or other entity, then the Secured Party
shall have the right, in its sole discretion, to pursue, relinquish,
subordinate, modify or take any other action with respect thereto, without
in
any way modifying or affecting any of the Secured Party’s rights and remedies
hereunder.
15. Miscellaneous.
(a) No
course
of dealing between the Company and the Secured Party, nor any failure to
exercise, nor any delay in exercising, on the part of the Secured Party, any
right, power or privilege hereunder or under the Note shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or thereunder preclude any other or further exercise thereof
or the exercise of any other right, power or privilege.
(b) All
of
the rights and remedies of the Secured Party with respect to the Collateral,
whether established hereby or by the Note or by any other
agreements,
11
instruments
or documents or by law shall be cumulative and may be exercised singly or
concurrently.
(c) This
Agreement constitutes the entire agreement of the parties with respect to the
subject matter hereof and is intended to supersede all prior negotiations,
understandings and agreements with respect to the subject matter hereof. Except
as specifically set forth in this Agreement, no provision of this Agreement
may
be modified or amended except by a written agreement specifically referring
to
this Agreement and signed by the parties hereto.
(d) In
the
event that any provision of this Agreement is held to be invalid, prohibited
or
unenforceable in any jurisdiction for any reason, unless such provision is
narrowed by judicial construction, this Agreement shall, as to such
jurisdiction, be construed as if such invalid, prohibited or unenforceable
provision had been more narrowly drawn so as not to be invalid, prohibited
or
unenforceable. If, notwithstanding the foregoing, any provision of this
Agreement is held to be invalid, prohibited or unenforceable in any
jurisdiction, such provision, as to such jurisdiction, shall be ineffective
to
the extent of such invalidity, prohibition or unenforceability without
invalidating the remaining portion of such provision or the other provisions
of
this Agreement and without affecting the validity or enforceability of such
provision or the other provisions of this Agreement in any other
jurisdiction.
(e) No
waiver
of any breach or default or any right under this Agreement shall be considered
valid unless in writing and signed by the party giving such waiver, and no
such
waiver shall be deemed a waiver of any subsequent breach or default or right,
whether of the same or similar nature or otherwise.
(f) This
Agreement shall be binding upon and inure to the benefit of each party hereto
and its successors and assigns.
(g) Each
party shall take such further action and execute and deliver such further
documents as may be necessary or appropriate in order to carry out the
provisions and purposes of this Agreement.
(h) The
validity, terms, performance and enforcement of this Agreement shall be governed
and construed by the provisions hereof and in accordance with the laws of the
Commonwealth of Massachusetts applicable to agreements that are negotiated,
executed, delivered and performed solely in the Commonwealth of
Massachusetts.
12
(i) All
disputes arising under this agreement shall be governed by and interpreted
in
accordance with the laws of the Commonwealth of Massachusetts, without regard
to
principles of conflict
of
laws.
The parties to this agreement will submit all disputes arising under this
agreement to arbitration in Boston, Massachusetts before a single arbitrator
of
the American Arbitration Association (“AAA”). The arbitrator shall be
selected by application of the rules of the AAA, or by mutual agreement of
the
parties,
except
that such arbitrator shall be an attorney admitted to practice law in the
Commonwealth of Massachusetts. No party to this agreement will challenge the
jurisdiction or venue provisions as provided in this section.
(j) This
Agreement may be executed in any number of counterparts, each
of
which when so executed shall be deemed to be an original and, all of which
taken
together
shall constitute one and the same Agreement. In the event that any signature
is
delivered
by facsimile transmission, such signature shall create a valid binding
obligation
of the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature were the original
thereof.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
13
IN
WITNESS
WHEREOF, the parties hereto have caused this Security Agreement to be duly
executed on the day and year first
above
written.
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XXXXXXXXX
HOLDINGS, INC.
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By
____________________________
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Name:
Xxxx X. Xxxx
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Title:
Chief Executive Officer
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DUTCHESS
PRIVATE EQUITIES FUND, II, L.P. BY ITS GENERAL PARTNER DUTCHESS
CAPITAL
MANAGEMENT, LLC
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By:
______________________________
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Name:
Xxxxxxx X. Xxxxxxxx
Title:
A Managing Member
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14
SCHEDULE
A
Principal
Place of Business of the Company:
Locations
Where Collateral is Located or Stored:
List
of Subsidiaries of the Company:
15
SCHEDULE
B
Jurisdictions:
16
