Exhibit 4.8.2
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Agreement") is entered into as of this
9th day of December, 2003, (the "Effective Date") by and between Epixtar Corp.,
a Delaware corporation ("Epixtar") with its principal address at 00000 Xxxxxxxx
Xxxx. Xxxxx 000 Xxxxx, XX 00000, its subsidiaries, (collectively, Epixtar and
its subsidiaries shall be referred to as the "Epixtar Companies" or "Borrowers")
and the parties whose signatures appear at the end of this document (the
"Secured Parties"). Borrowers and Secured Parties may be independently referred
to hereinafter as "Parties" or collectively as the "Parties."
RECITALS
WHEREAS, in connection with a Note Purchase Agreement dated of even
date herewith, the Secured Parties have loaned or will loan the sum of up to
$500,000 (the "Loan") to the Epixtar Companies;
WHEREAS, simultaneously herewith, the Epixtar and the other Borrowers
have executed a Note Purchase Agreement as of this date (the "Note Purchase
Agreement") pursuant to which Epixtar issued its 7% Secured Convertible Notes
dated as of December 9, 2003 (collectively "The Notes"), which are guaranteed by
the other Borrowers and evidences the obligation of the Epixtar Companies to
repay the aforesaid Loan;
WHEREAS, the Epixtar Companies have agreed to secure the Loan and the
Obligations (as defined hereinafter), with the assets and to the extent set
forth in Section 5 herein; and
WHEREAS, in connection with the Loan, the Secured Parties shall receive
Warrants to purchase the Common Stock of the Borrower, and such shares of Common
Stock issuable upon exercise of the Warrants or Conversion of the Notes shall be
referred to hereinafter as the Shares.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, the receipt and
sufficiency of which is hereby mutually acknowledged, the Parties agree as
follows:
1. Interest.
The rate of Interest (the "Interest") shall be simple interest seven
percent (7%) per annum accruing from the date the Loan is made based upon a 365
day year.
2. Obligations.
As used herein "Obligations" shall refer collectively to (a) the
amounts due under the Notes including all renewals, extensions, and modification
thereof; (b) the payment, performance and observance of all warranties,
obligations, covenants and agreements to be paid, performed or observed by the
Borrowers under this Agreement; and (c) the payment of all other sums, with
interest thereon advanced or otherwise due or payable under the terms of this
Agreement.
3. Default Provisions.
The occurrence of any of the following events shall constitute an event
of default:
3.1 The nonpayment of any amount by Epixtar on the Notes when
the same becomes due and payable pursuant to its terms upon the Maturity Date or
upon an earlier date as set forth in the Notes.
3.2 Any Borrower's failure to comply with any material term,
obligation, covenant, or condition contained in this Agreement within thirty
(30) days after receiving written notice from the Secured Parties demanding such
compliance. Such thirty-day period will be reduced to fifteen (15) days if
Borrower does not meet the Debt Coverage requirement set forth in Section 5.1.1.
Notwithstanding the foregoing, Borrower may cure such default in the maintenance
of the Debt Coverage by repaying such portion of the principal of the Note so
that it complies with the Debt Coverage requirement (even if there is no
registration statement in effect at such time).
3.3 Any warranty, covenant, or representation made to Secured
Parties by Borrowers under this Agreement proves to have been false in any
material respect when made or furnished and which is not cured within thirty
(30) days after receiving written notice of same.
3.4 Any levy, seizure, attachment, lien on the Collateral,
other than those existing as of the date hereof) or as permitted hereunder) that
is not discharged by Borrowers within thirty (30) days after receiving notice of
same.
3.5 Any sale, transfer, or disposition of any interest in the
Collateral other than in the ordinary course of business, without the prior
written consent of Secured Parties.
For purposes of this Agreement, the term Event of Default with
respect to remedies shall only apply if the Notes are accelerated.
4. Acceleration and Attorneys Fees.
At the option of Secured Parties, upon notice all amounts due shall
immediately become due and payable upon an event of default as set forth in
Section 3 above. Any reasonable attorneys fees and other expenses incurred by
Secured Parties in connection with enforcing any of its rights hereunder or from
a bankruptcy filing relating to Borrowers, whether a lawsuit is filed or not
shall be additional indebtedness of Borrowers secured by this Agreement and
shall not be deemed a penalty.
5. Security Agreement.
5.1 Grant of Security Interest.
Each Borrower, in consideration for the giving of the Loans by
the Secured Parties, assigns to Secured Parties, as security for the
Obligations, a security interest and, except as herein provided, a second
priority lien in and to the following:
(a) All of the accounts receivable of the Epixtar
Companies (the "Accounts Receivable") whether existing on the date herewith or
arising at any time hereafter.
(b) All proceeds in any type or form arising from the
sale or other disposition of any of the Collateral.
(c) All records in whatever form, relating to the
Collateral.
5.1.1. Second Priority-Debt Coverage.
While the Notes are outstanding, the amount of
accounts receivable securing the amount of the Obligation shall always be two
hundred percent (200%) of the amount of the Obligations (the "Debt Coverage").
The security interest granted herein shall be subordinate and secondary to (a)
all existing securities interest with respect to such Collateral and (b) future
security interests covering such Collateral or any specified portion of such
collateral provided that the amount of accounts receivable remaining after
deducting there from the amount of indebtedness covered by the security
interests having priority is at least equal to the Debt Coverage at the time of
the grant of such new security interest. Until such time as the Loans are repaid
in full, the Chief Executive Officer and Chief Financial Officer of the Company
shall, on a monthly basis, provide certification of the Debt Coverage to the
Secured Parties within fifteen (15) business days after the end of each month.
5.2. Representations and Covenants of Borrowers.
Each of the Borrowers, jointly and severally agrees,
covenants, and acknowledges that Secured Parties is reasonably relying upon
these agreements and covenants as follows:
5.2.1 Payment.
Borrowers shall promptly pay when due the amount
evidenced by the Notes, and all other sums secured by this Agreement and the
Notes.
5.2.2 Existence.
Each Borrower is a duly organized and existing under
the laws of the state of organization.
5.2.3 Authority.
The execution, delivery, and performance of this
Agreement, and the execution and payment of the Notes is within the power of
each of the Borrowers and such acts have been duly authorized, are not in
contravention of law or the terms of any of the Borrowers' articles of
organization or operating agreement or of any indenture, agreement, or
undertaking to which any Borrower is a Party or by which it is bound.
5.2.4 Ownership of Collateral.
Borrowers shall be the sole owners of the Collateral
and will defend the Collateral against the claims and demands of all other
persons at any time claiming the same or any interest therein that arise after
the date hereof.
5.2.5 Taxes and Assessments.
Borrowers will pay or cause to be paid promptly when
due all taxes and assessments on the Collateral. Borrowers may, however,
withhold payment of any tax assessment or claim if a good faith dispute exists
as to the obligation to pay so long as funds sufficient to pay the taxes and
assessments are set aside for such purpose either in cash or by surety bond
issued in favor of the appropriate taxing authority.
5.3 Protection of Security.
If Borrowers fail to perform the covenants and agreements
contained or incorporated in this Agreement, or if any action or proceeding is
commenced which affects the Collateral or title thereto or the interest of
Secured Parties therein including but not limited to, eminent domain,
insolvency, code enforcement, or arrangements or proceedings involving a
bankrupt or decedent, then Secured Parties may make such appearance, disburse
such sums, and take such action as Secured Parties deems necessary, in its sole
discretion, to protect Secured Parties' interest, including, but not limited to
the following: (i) disbursement of attorneys' fees and (ii) procurement of
satisfactory insurance. Any amounts disbursed by Secured Parties pursuant to
this Section 5.3, with interest thereon, shall become additional indebtedness of
Borrowers under the Notes, secured by this Agreement. Unless Borrowers and
Secured Parties agree to other term of payment, such amounts shall be
immediately due and payable and shall bear interest from the date of
disbursement at the default rate stated in the Notes unless collection of
interest at such rate would be contrary to applicable law. Nothing contained in
this Section 5.3 shall require Secured Parties to incur any expense or take any
action.
5.4 Inspection of Books and Records.
Secured Parties may make or cause to be made reasonable
requests to inspect the books and records of the Borrowers as they related to
the Accounts Receivable and Borrowers shall cooperate with Secured Parties to
accommodate such reasonable requests upon three (3) days prior written notice to
the Borrowers.
5.5 Security Interest Not Released.
From time to time, Secured Parties may, at Secured Parties'
option, without giving notice to or obtaining the consent of Borrowers or its
successors or assigns or of any other lienholders, without liability on Secured
Parties' part, and notwithstanding a breach by Borrowers of any covenant or
agreement set forth in this Agreement, extend the time for payment of said
indebtedness or any part thereof, reduce the payments thereon, release anyone
liable on any of said indebtedness, accept a renewal Notes or Notes therefore,
modify the terms and the time of payment of said indebtedness, release from the
security interest of this Agreement any part of the Col1ateral, take or release
other or additional security, and reconvey any part of the Collateral. Any
actions taken by Secured Parties pursuant to the terms of this Section shall be
in writing, shall not affect the obligation of Borrowers or any of their
successors or assigns to pay the sums secured by this Agreement and to observe
the covenants of Borrowers contained herein shall not affect the guaranty of any
person corporation, partnership, or other entity for payment of the indebtedness
secured hereby, and shall not affect the lien or priority of security interest
hereof on the Collateral.
5.6 Forbearance by Secured Parties Not a Waiver.
Any forbearance by Secured Parties in exercising any right or
remedy hereunder, or otherwise afforded by applicable law, shall not be a waiver
of, or preclude the exercise of, any right or remedy.
5.7 Uniform Commercial Code Security Agreement.
This Agreement is intended to be a security agreement pursuant
to the Uniform Commercial Code for each of the items specified in Section 5.1 as
Collateral. Borrowers hereby grant Secured Parties a security interest in said
items. Borrowers agree to execute and allow Secured Parties to file financing
statements, as well as extensions, renewals and amendments thereof, and
reproductions of this Agreement, and do whatever may be necessary under the
applicable Uniform Commercial Code in the state where the Collateral is located
to perfect and continue Secured Parties' interest in the Collateral. The Parties
agree that such financing statements will be filed in the name of the Secured
Parties. Borrowers shall pay all costs of filing such financing statements and
any extensions, renewals, amendments, and releases thereto; and shall pay all
reasonable costs and expenses of any record searches for financing statements
requested by Secured Parties. Except as provided herein, without the prior
written consent of Secured Parties, Borrowers shall not create or allow to be
created pursuant to the Uniform Commercial Code, any other statute, a security
interest in the Collateral senior in priority to that of Secured Parties
including replacements and additions thereto. Upon the occurrence of an event of
default, Secured Parties shall have the remedies of a secured party under the
Uniform Commercial Code and, at Secured Parties' option, may also invoke any
other remedy provided for in this Agreement. In exercising any of said remedies,
Secured Parties may proceed against any part of the Collateral separately or
together and in any order whatsoever without in any way affecting the
availability of Secured Parties' remedies under the Uniform Commercial Code, or
of Secured Parties' other remedies provided in this Agreement.
5.8 Rights of Secured Parties.
5.8.1. Upon default, Secured Parties shall be
entitled, in its own name or in the name of the Borrower, or otherwise, but at
the expense and cost of the Borrower, to collect, demand, receive, xxx for
and/or compromise any and all of the Accounts Receivables including, without
limitation, any and all Accounts Receivable due or to become due from present or
future subscribers or customers of any service provided by the Borrower and to
give good and sufficient releases therefore, to endorse any checks, drafts or
other orders for the payment of monies payable in payment thereof and, in its
discretion, to file any claims or take any action or proceeding, either in its
own name or in the name of the Borrower, or otherwise, which the Secured Parties
may deem necessary or advisable. It is expressly understood and agreed, however,
that the Secured Parties shall not be required or obligated in any manner to
make any inquiries as to the nature or sufficiency of any payment received by
any of them or to present or file any claims or take any other action to collect
or enforce a payment of any amounts which may have been assigned to any bank or
to which any bank may be entitled hereunder at any time or times. Secured
Parties may sell all or any part of the Collateral, as reasonably necessary to
satisfy the obligations of Borrower hereunder to Secured Parties, either by
public auction, private sale, or any other reasonable method of disposition.
Nothing in this Section 5.8.1 shall be construed to limit any of Secured
Parties' rights in connection with any of the Collateral as provided herein.
5.8.2. The Secured Parties is hereby irrevocably
appointed the true and lawful attorney-in-fact of the Borrower in the Borrower's
name and stead, to make all necessary deeds, bills of sale and instruments of
assignment and transfer of the Collateral thus sold and for such other purposes
as are necessary or desirable to effectuate the provisions 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 or entities with like power, the Borrower 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 Parties or by
any purchaser, the Borrower shall ratify and confirm any such sale or transfer
by executing and delivering to the Secured Parties or such purchaser all
property, deeds, bills of sale, instruments of assignment and transfer and
releases as may be designated in any such request;
5.8.3. All right, title, interest, claim and demand
whatsoever, either in law or in equity or otherwise, of the Borrower of, in and
to the Collateral so sold shall be divested and such sale shall be a perpetual
bar both at law and in equity against the Borrower, its successors and assigns,
and against any and all persons or entities claiming or who may claim the
Collateral sold or any part thereof, from, through or under the Borrower or such
entities, its successors or assigns.
5.8.4. The receipt of the Secured Parties or of the
officers thereof making such sale or such assignment 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, its or their assigns or
personal representatives shall not, after paying such purchase money and
receiving such receipt of the Secured Parties or of such officers thereof, be
obligated to see to the application of such purchase money or be in anywise
answerable for any loss, misapplication or non-application, thereof. The
Borrower shall remain liable for any deficiency resulting from a sale of the
Collateral and shall pay any such deficiency forthwith on demand.
6. Attorneys' Fees.
In the event arbitration, suit or action is brought by any Parties
under this Agreement to enforce any of its terms, and in any appeal therefrom,
it is agreed that the prevailing Parties shall be entitled to reasonable
attorneys' fees to be fixed by the arbitrator, trial court, or appellate court.
7. Remedies Cumulative.
Each remedy provided in this Agreement is distinct and cumulative to
all other rights or remedies under this Agreement or afforded by law or equity,
and may be exercised concurrently, independently, or successively, in any order.
8. Further Assurances.
The Parties hereto shall execute and deliver all documents, provide all
information and take or forbear from all such action as may be necessary or
appropriate to achieve the purposes of the Agreement, including, but not limited
to, executing such financing statements, as the Secured Parties may deem
necessary and appropriate to protect its interests.
9. Notices and Delivery.
Any notices permitted or required under this Agreement shall be deemed
given as provided in the Note Purchase Agreement, addressed as follows:
if to Secured Parties at the address set forth in the Note Purchase
Agreement;
if to any of the Borrowers to:
Epixtar Corp.
00000 Xxxxxxxx Xxxxxxxxx
Xxxxx, Xxxxxxx 00000
Attn: President
With a copy to:
Xxxxxxx X. XxXxxxxxxx, Esq.
000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, Xxx Xxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
10. Entire Agreement.
This Agreement and the Notes contain the entire understanding between
the Parties and supersedes any prior understandings and agreements among them
respecting the subject matter of this Agreement.
11. Agreement Binding.
This Agreement shall be binding upon the heirs, executors,
administrators, successors and assigns of the Parties hereto.
12. Amendment and Modification.
Subject to applicable law, this Agreement may be amended, modified, or
supplemented only by a written agreement signed by the Parties.
13. Law Governing.
This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Florida without giving effect to the conflicts
of laws provisions thereof.
14. Severability.
If any provision of this Agreement, or the application of such
provision to any person or circumstance, shall be held invalid, the remainder of
this Agreement, or the application of such provision to persons or circumstances
other than those as to which it is held invalid, shall not be affected thereby.
15. Titles and Captions.
All section titles or captions contained in this Agreement are for
convenience only and shall not be deemed part of the context nor effect the
interpretation of this Agreement.
16. Counterparts.
The Agreement may be signed in one or more counterparts, each of which
shall be deemed an original. Furthermore, facsimile copies shall be deemed the
same as originals. The Agreement shall be deemed fully executed and effective
when all Parties have executed at least one of the counterparts, even though no
single counterpart bears all such signatures.
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SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, the Parties have executed this Security Agreement
as of the date first written above.
SECURED PARTIES:
Generation Capital Associates
By:
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Name: Xxxx X. Xxxxxx
Title: CFO
The Xxxx Organization Corp.
By:
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Name: Xxxxx X. Xxxxxxxx
Title: Executive Vice President & General Counsel
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Xxxxxx Commander
BORROWERS:
EPIXTAR CORP.
By:
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Name:
Title:
EPIXTAR GROUP, INC.
By:
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Name:
Title:
EPIXTAR BPO SERVICES, INC.
By:
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Name:
Title:
NATIONAL ONLINE SERVICES, INC.
By:
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Name:
Title:
LIBERTY ONLINE SERVICES, INC.
By:
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Name:
Title:
AMERIPAGES, INC.
By:
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Name:
Title:
B2BADVANTAGE, INC.
By:
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Name:
Title:
ONE WORLD COMMUNICATIONS, INC.
By:
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Name:
Title:
EPIXTAR COMMUNICATIONS, INC.
By:
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Name:
Title:
EPIXTAR PREPAID COMMUNICATIONS CORP.
By:
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Name:
Title:
