SECURITY AGREEMENT
THIS
SECURITY AGREEMENT
is
entered on February 6, 2008 by and between Web2
Corp.,
a
Florida corporation (the “Debtor”), and Xxxxxxx
X. Xxxxxx, Xx.,
an
individual (the “Secured Party”).
WITNESSETH:
WHEREAS,
the
Debtor has executed and delivered to the Secured Party a Convertible Promissory
Note of even date herewith (the “Note”);
WHEREAS,
in
order to secure its obligations under the Note, the Debtor is executing and
delivering this Security Agreement (the “Agreement”);
NOW,
THEREFORE,
in
consideration of the premises and the respective covenants and agreements of
the
parties set forth in this Agreement, each of the Debtor and the Secured Party
agrees as follows:
1. The
Security.
The
Debtor hereby assigns and grants to Secured Party a security interest in the
following described property now owned or hereafter acquired by the Debtor
(“Collateral”):
All
of
Debtor’s accounts, inventory, equipment, furniture, general intangibles,
contract rights and intellectual property, wherever held or located, whether
now
owned or hereafter owned or acquired by Debtor, together with all proceeds
and
products thereof, and all books and records and insurance proceeds relating
thereto. The terms ‘accounts,” “inventory,” “equipment,” “general intangibles”
and “contract rights” shall have the same respective meanings as are given to
those terms in Chapter 679 of Florida Statutes, as amended; and
All
of
the shares of the common capital stock of each of the subsidiaries of Debtor,
whether now in existence or hereafter acquired or formed, including but not
limited to ByIndia, Inc., a Florida corporation, Global Portals Online, Inc.,
a
Florida corporation, You Get It, Inc., a Delaware corporation, and Web 1000,
Inc., a Florida corporation (all of which are collectively referred to as the
“Shares”), together with all stock dividends, stock splits, cash dividends and
distribution of shares of subsidiaries or other assets which may at any time
arise from such Shares (collectively, the “Share Benefits”).
2. The
Indebtedness.
The
Collateral secures and will secure all Indebtedness of the Debtor to the Secured
Party. Each party obligated under any Indebtedness is referred to in this
Agreement as a “Debtor.” “Indebtedness” means all debts, obligations or
liabilities now or hereafter existing, absolute or contingent of the Debtor
or
any one or more of them to the Secured Party, whether voluntary or involuntary,
whether due or not due, or whether incurred directly or indirectly or acquired
by the Secured Party by assignment or otherwise, including without limitation
the Note.
3. Debtor’s
Obligations .
The
Debtor represents and warrants to the Secured Party, and covenants and agrees
with the Secured Party, as follows:
(a) The
Debtor will properly preserve the Collateral; defend the Collateral against
any
adverse claims and demands; and keep accurate books and records.
(b) The
Debtor resides in the State of Florida. The Debtor shall give the Secured Party
at least thirty days notice before changing his residence. The Debtor will
notify the Secured Party in writing prior to any change in the location of
any
Collateral, including the books and records.
(c) The
Debtor will notify the Secured Party in writing prior to any change in the
Debtor’s name, identity or business structure.
(d) The
Debtor has not granted and will not grant any security interest in any of the
Collateral except to the Secured Party, and will keep the Collateral free of
all
liens, claims, security interests and encumbrances of any kind or nature except
the security interest of the Secured Party.
(e) The
Debtor will promptly notify the Secured Party in writing of any event which
affects the value of the Collateral, the ability of the Debtor or the Secured
Party to dispose of the Collateral, or the rights and remedies of the Secured
Party in relation thereto, including, but not limited to, the levy of any legal
process against any Collateral and the adoption of any marketing order,
arrangement or procedure affecting the Collateral, whether governmental or
otherwise.
(f) The
Debtor shall pay all costs necessary to preserve, defend, enforce and collect
the Collateral, including but not limited to taxes, assessments, insurance
premiums, repairs, rent, storage costs and expenses of sales, and any costs
to
perfect the Secured Party’s security interest (collectively, the “Collateral
Costs”). Without waiving the Debtor's default for failure to make any such
payment, the Secured Party at its option may pay any such Collateral Costs,
and
discharge encumbrances on the Collateral, and such Collateral Costs payments
shall be a part of the Indebtedness and bear interest at the rate set out in
the
Indebtedness. The Debtor agrees to reimburse the Secured Party on demand for
any
Collateral Costs so incurred.
(g) Until
the
Secured Party exercises its rights to make collection, the Debtor will
diligently collect all Collateral.
(h) If
any
Collateral is or becomes the subject of any registration certificate,
certificate of deposit or negotiable document of title, including any warehouse
receipt or xxxx of lading, the Debtor shall immediately deliver such document
to
the Secured Party, together with any necessary endorsements.
(i) The
Debtor will not sell, lease, agree to sell or lease, or otherwise dispose of
any
Collateral except with the prior written consent of the Secured
Party.
(j) The
Debtor will maintain and keep in force insurance covering the Collateral against
fire and extended coverages, to the extent that any Collateral is of a type
which can be so insured. Such insurance shall require losses to be paid on
a
replacement cost basis, be issued by insurance companies acceptable to the
Secured Party and include a loss payable endorsement in favor of the Secured
Party in a form acceptable to the Secured Party. Upon the request of the Secured
Party, the Debtor will deliver to the Secured Party a copy of each insurance
policy, or, if permitted by the Secured Party, a certificate of insurance
listing all insurance in force.
(k) The
Debtor will not attach any Collateral to any real property or fixture in a
manner which might cause such Collateral to become a part thereof unless the
Debtor first obtains the written consent of any owner, holder of any lien on
the
real property or fixture, or other person having an interest in such property
to
the removal by the Secured Party of the Collateral from such real property
or
fixture. Such written consent shall be in form and substance acceptable to
the
Secured Party and shall provide that the Secured Party has no liability to
such
owner, holder of any lien, or any other person.
(l) The
Debtor has submitted to Secured Party a complete list of all patents, trademark
and service xxxx registrations, copyright registrations, mask work
registrations, and all applications therefor, in which the Debtor has any right,
title, or interest, throughout the world. To the extent required by the Secured
Party in its discretion, the Debtor will promptly notify the Secured Party
of
any acquisition (by adoption and use, purchase, license or otherwise) of any
patent, trademark or service xxxx registration, copyright registration, mask
work registration, and applications therefor, and unregistered trademarks and
service marks and copyrights, throughout the world, which are granted or filed
or acquired after the date hereof.
(m) The
Debtor will, at its expense, diligently prosecute all patent, trademark or
service xxxx or copyright applications pending on or after the date hereof,
will
maintain in effect all issued patents and will renew all trademark and service
xxxx registrations, including payment of any and all maintenance and renewal
fees relating thereto, except for such patents, service marks and trademarks
that are being sold, donated or abandoned by the Debtor pursuant to the terms
of
its intellectual property management program. The Debtor also will promptly
make
application on any patentable but unpatented inventions, registerable but
unregistered trademarks and service marks, and copyrightable but uncopyrighted
works. The Debtor will at its expense protect and defend all rights in the
Collateral against any material claims and demands of all persons other than
the
Secured Party and will, at its expense, enforce all rights in the Collateral
against any and all infringers of the Collateral where such infringement would
materially impair the value or use of the Collateral to the Debtor or the
Secured Party. The Debtor will not license or transfer any of the Collateral,
except for such licenses as are customary in the ordinary course of the Debtor's
business, or except with the Secured Party's prior written
consent.
(n) In
order
to permit Secured Party, in the event of any demand for payment of the Note
which is not immediately satisfied, to accomplish transfer of the Shares
constituting the Collateral, the Debtor shall execute in blank, such stock
powers as Secured Party shall require, and such execution shall remain
irrevocable during the term of this Agreement. The originals of the certificates
regarding the Shares and the stock powers shall be held in escrow by the law
firm of Winderweedle, Haines, Xxxx & Xxxxxxx, P.A., Winter Park and Orlando,
Florida (“Escrow Agent”), throughout the term of this Agreement.
4. Additional
Optional Requirements.
The
Debtor agrees that the Secured Party may at its option at any time, whether
or
not the Debtor the Secured Party has made demand on the Note:
(a) require
the Debtor to deliver to the Secured Party (i) copies of or extracts from the
Books and Records, and (ii) information on any contracts or other matters
affecting the Collateral.
(b) examine
the Collateral, including the books and records, and make copies of or extracts
from the books and records, and for such purposes enter at any reasonable time
upon the property where any Collateral or any books and records are
located.
(c) require
the Debtor to deliver to the Secured Party any instruments, chattel paper or
letters of credit which are part of the Collateral, and to assign to the Secured
Party the proceeds of any such letters of credit.
(d) notify
any account debtors, any buyers of the Collateral, or any other persons of
the
Secured Party's interest in the Collateral.
5. Remedies.
In the
event of any demand of payment of the Note which is not immediately satisfied,
the Secured Party may do any one or more of the following:
(a) Declare
any Indebtedness immediately due and payable, without notice or
demand.
(b) Enforce
the security interest given hereunder pursuant to the Uniform Commercial Code
and any other applicable law.
(c) Enforce
the security interest of the Secured Party in any deposit account of the Debtor
maintained with the Secured Party by applying such account to the
Indebtedness.
(d) Require
the Debtor to obtain the Secured Party’s rior written consent to any sale,
lease, agreement to sell or lease, or other disposition of any Collateral
consisting of inventory.
(e) Require
the Debtor to segregate all collections and proceeds of the Collateral so that
they are capable of identification and deliver daily such collections and
proceeds to the Secured Party in kind.
(f) Require
the Debtor to direct all account debtors to forward all payments and proceeds
of
the Collateral to a post office box under the Secured Party’s exclusive
control.
(g) Require
the Debtor to assemble the Collateral, including the Books and Records, and
make
them available to the Secured Party at a place designated by the Secured
Party.
(h) Enter
upon the property where any Collateral, including any Books and Records, are
located and take possession of such Collateral and such Books and Records,
and
use such property (including any buildings and facilities) and any of the
Debtor’s equipment, if the Secured Party deems such use necessary or advisable
in order to take possession of, hold, preserve, process, assemble, prepare
for
sale or lease, market for sale or lease, sell or lease, or otherwise dispose
of,
any Collateral.
(i) Demand
and collect any payments on and proceeds of the Collateral. In connection
therewith the Debtor irrevocably authorizes the Secured Party to endorse or
sign
the Debtor's name on all checks, drafts, collections, receipts and other
documents, and to take possession of and open the mail addressed to the Debtor
and remove therefrom any payments and proceeds of the Collateral.
(j) Grant
extensions and compromise or settle claims with respect to the Collateral for
less than face value, all without prior notice to the Debtor.
(k) Use
or
transfer any of the Debtor’s rights and interests in any Intellectual Property
now owned or hereafter acquired by the Debtor, if the Secured Party deems such
use or transfer necessary or advisable in order to take possession of, hold,
preserve, process, assemble, prepare for sale or lease, market for sale or
lease, sell or lease, or otherwise dispose of, any Collateral. The Debtor agrees
that any such use or transfer shall be without any additional consideration
to
the Debtor. As used in this paragraph, “Intellectual Property” includes, but is
not limited to, all trade secrets, computer software, service marks, trademarks,
trade names, trade styles, copyrights, patents, applications for any of the
foregoing, customer lists, working drawings, instructional manuals, and rights
in processes for technical manufacturing, packaging and labeling, in which
the
Debtor has any right or interest, whether by ownership, license, contract or
otherwise.
(l) Have
a
receiver appointed by any court of competent jurisdiction to take possession
of
the Collateral. The Debtor hereby consents to the appointment of such a receiver
and agrees not to oppose any such appointment.
(m) Take
such
measures as the Secured Party may deem necessary or advisable to take possession
of, hold, preserve, process, assemble, insure, prepare for sale or lease, market
for sale or lease, sell or lease, or otherwise dispose of, any Collateral,
and
the Debtor hereby irrevocably constitutes and appoints the Secured Party as
the
Debtor’s attorney-in-fact to perform all acts and execute all documents in
connection therewith.
(n) Without
notice or demand to the Debtor, set off and apply against any and all of the
Indebtedness any and all deposits (general or special, time or demand,
provisional or final) and any other indebtedness, at any time held or owing
by
the Secured Party or any of the Secured Party’s agents or affiliates to or for
the credit of the account of the Debtor or any guarantor or endorser of the
Debtor's Indebtedness.
(o) Exercise
any other remedies available to the Secured Party at law or in
equity.
(p) Cause
the
Escrow Agent to release its Shares, the Share Benefits and the stock powers
to
Secured Party. Secured Party may also exercise any and all of the rights and
remedies provided by the Uniform Commercial Code as well as other rights and
remedies, either at law or in equity, possessed by Secured Party.
7. Further
Assurances.
Each of
the parties shall cooperate with one another, shall do and perform such actions
and things, and shall execute and deliver such documents and instruments, as
may
be reasonable and necessary to effectuate the purposes and intents of this
Agreement.
8. Governing
Law.
This
Agreement shall be governed by, and shall be construed and interpreted in
accordance, with the laws of the State of Florida, without giving effect to
the
principles of conflicts of law thereof.
9. Entire
Agreement.
This
Agreement, together with the exhibits attached hereto, constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements, understandings, negotiations and arrangements,
both oral and written, between the parties with respect to such subject matter.
Without limiting the generality of the immediately preceding sentence, the
Letter of Intent is superceded by this Agreement and shall be of no further
force or effect. This Agreement may not be amended or modified in any manner,
except by a written instrument executed by each of the parties.
10. Benefits;
Binding Effect.
This
Agreement shall be for the benefit of, and shall be binding upon, the parties
and their respective successors and assigns.
11. Severability.
The
invalidity of any one or more of the words, phrases, sentences, clauses or
sections contained in this Agreement shall not affect the enforceability of
the
remaining portions of this Agreement or any part hereof, all of which are
inserted conditionally on their being valid in law. If any one or more of the
words, phrases, sentences, clauses or sections contained in this Agreement
shall
be declared invalid by any court of competent jurisdiction, then, in any such
event, this Agreement shall be construed as if such invalid word or words,
phrase or phrases, sentence or sentences, clause or clauses, or section or
sections had not been inserted.
12. Jurisdiction
and Venue.
Any
claim or dispute arising out of, connected with, or in any way related to this
Agreement shall be instituted by the complaining party and adjudicated in a
court of competent jurisdiction located in Orange County, Florida, and the
parties to this Agreement consent to the personal jurisdiction of and venue
in
such courts. In no event shall any party to this Agreement contest the personal
jurisdiction of such courts over or the venue of such courts.
13. No
Waivers.
The
waiver by either party of a breach or violation of any provision of this
Agreement by the other party shall not operate nor be construed as a waiver
of
any subsequent breach or violation,. The waiver by either party to exercise
any
right or remedy it may possess shall not operate nor be construed as a bar
to
the exercise of such right or remedy by such party upon the occurrence of any
subsequent breach or violation.
14. Headings.
The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of any or all of the
provisions hereof.
15. Counterparts.
This
Agreement may be executed in any number of counterparts and by the separate
parties in separate counterparts, each of which shall be deemed to constitute
an
original and all of which shall be deemed to constitute the one and the same
instrument.
IN
WITNESS WHEREOF,
each of
the parties has executed and delivered this Agreement on the date first written
above.
By |
/s/
Xxxxxxx X. Xxxxxx, Xx.
|
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Xxxxxxx
X. Xxxxxx, Xx.
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President
and Chief Operating Officer
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