SECURITY AGREEMENT
EXHIBIT
99.4
THIS
SECURITY AGREEMENT
(this
“Agreement”)
is
made and entered into as of March 23, 2007, by x.Xxxxxxx Corporation, a Delaware
corporation and x.Xxxxxxx Corporation, a California corporation (collectively,
“Debtor”)
in
favor of ASI Capital Corporation, a Nevada corporation (“Secured
Party”).
1. Security
Interest.
For a
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, and to secure the payment and performance of the obligations
hereinafter described, Debtor hereby conveys, transfers and assigns to Secured
Party, and grants to Secured Party a security interest in, those assets of
Debtor described in Exhibit
A
attached
hereto (the “Collateral”).
Debtor further agrees to execute such financing statements and to take whatever
other actions are requested by Secured Party to perfect and continue Secured
Party’s security interest in the Collateral. Upon request of Secured party,
Debtor will deliver to Secured Party any and all of the documents evidencing
or
constituting the Collateral and Debtor will note Secured Party’s interest upon
any and all chattel paper if not delivered to Secured Party for possession
by
Secured Party.
2. Obligations
Secured.
This
Agreement and the security interest created hereby are given for the purpose
of
securing: (a) payment of the indebtedness evidenced by that certain 18% Secured
Promissory Notes, of even date herewith, in the aggregate principal amount
of
Seven Hundred Fifty Thousand Dollars ($750,000) payable by Debtor in favor
of
Secured Party (the “Note”)
and
(b) the performance of each agreement of Debtor contained in the Note and any
and all amendments, modifications, renewals and/or extensions
thereof.
3. Representations
and Warranties.
Debtor
represents, warrants and agrees that, except for liens currently held by Summit
Financial Resources, L.P. which the Debtor believes have been paid and are
of no
effect: (a) Debtor now has and will continue to have title to the Collateral,
free and clear of any liens, security interests, encumbrances, defenses or
other
claims except as set forth herein; (b) no financing statement covering the
Collateral, or any part thereof, is on file in any public office, except in
favor of Secured Party; (c) Debtor will execute all documents and take all
such
other actions(s) as Secured Party directs to create and perfect a security
interest in the Collateral including, without limitation, delivery to Secured
Party of ownership documents for the Collateral which evidence Secured Party’s
lien against the Collateral; (d) Debtor will, at its sole cost and expense,
defend any claims that may be made against the Collateral; (e) Debtor will
not,
without Secured Party’s prior written consent, transfer, sell, lease, encumber,
conceal or otherwise dispose of the Collateral or any interest therein, other
than sales of inventory for adequate consideration in the ordinary course of
business; (f) the Collateral will not be used in violation of any applicable
laws, rules or regulations; and (g) Debtor will pay and discharge all taxes
and
liens on the Collateral prior to delinquency.
4. Secured
Party’s Right to Cure.
If
Debtor shall fail to perform any obligation hereunder, Secured Party may, but
shall not be obligated to, perform the same, and the cost thereof shall be
payable by Debtor to Secured Party immediately upon demand, shall bear interest
at the rate set forth in the Note, and shall be secured by this
Agreement.
5. Remedies.
Upon
the occurrence of an event of default under the Note or hereunder, all
obligations secured hereby shall, at Secured Party’s option, immediately become
due and payable without notice or demand, and Secured Party shall have in any
jurisdiction where enforcement hereof is sought, in addition to all other rights
and remedies which Secured Party may have under law, all rights and remedies
of
a secured party under the California Uniform Commercial Code and, in addition,
the following rights and remedies all of which may be exercised with or without
further notice to Debtor:
(a)
to
settle, compromise or release on terms acceptable to Secured Party, in whole
or
in part, any amounts owing on the Collateral;
(b)
to
enforce payment and prosecute any action or proceeding with respect to any
and
all of the Collateral;
(c)
to
extend the time of payment, make allowances and adjustments and issue credits
in
Secured Party’s name or in the name of Debtor;
(d)
to
enforce the liens and security interests created under this Agreement or under
any other agreement relating to the Collateral by any available judicial
procedure or without judicial process; or
(e)
to
sell, assign, lease, or otherwise dispose of the Collateral and any part
thereof, either at a public or private sale, in lots or in bulk, for cash,
on
credit or otherwise, with or without representations or warranties, and upon
such terms as shall be acceptable to Secured Party, all in Secured Party’s sole
discretion. The net cash proceeds resulting from the collection, liquidation,
sale, lease or other disposition of the Collateral shall be applied first,
to
the expenses (including all attorneys’ fees) of retaking, holding, storing,
processing and preparing for sale, selling, collections, liquidation and the
like, and then to the satisfaction of all obligations and indebtedness secured
hereby. Application to particular obligations and indebtedness or against
principal or interest shall be made in Secured Party’s absolute discretion.
Debtor agrees to pay all costs and expenses incurred by Secured Party in the
enforcement of this Agreement, including, without limitation, reasonable
attorneys’ fees, whether or not suit is filed hereon.
6. Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
7. Cumulative
Remedies.
All of
the Secured Party’s rights and remedies hereunder are cumulative and not
exclusive, and are in addition to all rights and remedies provided by law or
under any other agreement between Debtor or Secured Party, or
otherwise.
8. Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Nevada applicable to contracts between residents of such state entered
into and to be performed entirely within such state.
9. Termination.
This
Agreement shall terminate upon the payment of all monies due under the Note
and
the satisfaction of the other obligations secured hereby. Upon termination,
Secured Party shall deliver the Note to Debtor together with a duly executed
UCC-2 Termination Statement to be filed with the California Secretary of State
and any transfer of ownership documents necessary to confirm Debtor’s title in
the Collateral.
10. Arbitration.
Any
controversy or claim relating to this Agreement shall be resolved before a
panel
of three arbitrators selected pursuant to and run in accordance with the rules
then prevailing of the American Arbitration Association. Any such arbitration
shall be held in Las Vegas, Nevada. The prevailing party in the arbitration
shall be entitled to an award of all expenses and reasonable attorneys’ fees
incurred in bringing or defending the arbitration.
[Remainder
of Page Intentionally Left Blank - Signature Page Follows]
2
IN
WITNESS WHEREOF,
the
parties hereto have duly executed this Security Agreement as of the date first
above written.
|
“DEBTOR”
|
“SUBSIDIARY”
|
|
X.XXXXXXX
CORPORATION,
|
X.XXXXXXX
CORPORATION,
|
|
a
Delaware corporation
|
a
California corporation
|
|
By:/s/
XXXXXXX XXXXXXXX
|
By:/s/
XXXXXXX XXXXXXXX
|
|
Xxxxxxx
Xxxxxxxx
|
Xxxxxxx
Xxxxxxxx
|
|
President
and CTO
|
President
and CTO
|
|
By:/s/
XXXXXX XXXXXX
|
By:/s/
XXXXXX XXXXXX
|
|
Xxxxxx
Xxxxxx
|
Xxxxxx
Xxxxxx
|
|
Senior
Vice President
|
Senior
Vice President
|
|
“SECURED
PARTY”
|
|
|
ASI
CAPITAL CORPORATION,
|
|
|
a
Nevada corporation
|
|
|
By:/s/
XXXX X. XXXXXXXX
|
|
|
Its:
President
|
3
Signature
Page to Security Agreement
4
EXHIBIT
A
Description
of Collateral
All
of
Debtor’s right, title and interest in and to customer purchase order no. 224820
and 224817 (as to the final 50% payment due thereunder) and any accounts
receivable or amounts owing Debtor resulting therefrom.
All
accounts as defined in the Uniform Commercial Code, accounts receivable, amounts
owing to Debtor under any rental agreement or lease, payments contracts,
promissory notes or on any other indebtedness, any rights to payment customarily
or for accounting purposes classified as accounts receivable, and all rights
to
payment, proceeds or distributions under any contract, of Debtor, presently
existing or hereafter created, and all proceeds thereof.
All
equipment and goods as defined in the Uniform Commercial Code, all motor
vehicles, including all tires, accessories, spare and repair parts, and tools,
wherever located, and all related right, title and interest, of Debtor, now
owned or herinafter acquired or created, all proceeds and products of the
foregoing and all additions and accessions to, replacements of, insurance or
condemnation procees of, and documents covering any of the foregoing, all leases
of any of the foregoing, and all rents, revenues, issues, profits and proceeds
arising from the sale, lease, license, encumbrance, collection, or any other
temporary or permanent dispostion of any of the foregoing or any interest
therein.
All
general intangibles of Debtor, presently existing or hereafter arising,
including general intangibles as defined in the Uniform Commercial Code, choses
in action, proceeds, contract, distributions, dividends, refunds, security
deposits, judgments, insurance claims, any right to payment of any nature,
intellectual property rights, patents or licenses, any other rights or assets
of
Debtor customarily or for accounting purposes classified as general intangibles,
and all documentation and supporting information related to any of the
foregoing, all rents, profits, fees and issues thereof and all proceeds
thereof.
All
inventory as defined in the Uniform Commercial Code, wherever located, all
goods, merchandise or other personal property held for sale or lease, names
or
marks affixed thereto for purposes of selling or identifying the same or the
seller or manufacturer thereof and all related rights, title and interest,
all
raw materials, work or goods in process or materials or supplies of every nature
used, consumed or to be used in Debtor’s business, all packaging and shipping
materials, and all other goods customarily or for accounting purposes classified
as inventory, of Debtor, now owned or hereafter acquired or created, all
proceeds and products of the foregoing and all additions and accessions to,
replacements of, insurance or condemnation proceeds of, and documents convering
any of the foregoing, all leases of any of the foregoing, and all rents,
revenues, issues, profits and proceeds arising from the sale, lease, license,
encumbrance, collection, or any other temporarty or permanent disposition of
any
of the foregoing or any interest therein.
