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EXHIBIT 10.9
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement") is made as of August 27, 1999
by and between EDUTREK INTERNATIONAL, INC., a Georgia corporation (the
"Company"), and R. XXXXXX XXXXXX, an individual resident of the State of
Georgia ("Xxxxxx").
W I T N E S S E T H:
WHEREAS, Xxxxxx has extended certain financial accommodations to the
Company as evidenced by that certain Promissory Note, dated as of the date
hereof, executed by the Company in favor of Xxxxxx in the original principal
amount of $1,000,000 (the "Note"); and
WHEREAS, pursuant to the terms and conditions of the Note, it must be
repaid only from the payment of the tax refund claims of the Company arising in
connection with the Company's federal or state income taxes for its tax year
ending September 30, 1999 (the "Tax Refunds"); and
WHEREAS, the Company and Xxxxxx desire to execute this Agreement to
provide security for the prompt and complete payment when due of all
Obligations (as defined below) owing from the Company to Xxxxxx under the Note;
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants contained herein and for other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1 Definitions. Whenever used in this Agreement, the following
terms shall have the meanings stated below:
"Event of Default" - each of the events described in Article III hereof.
"Obligations" - any and all amounts, loans, advances, debts, liabilities,
obligations, payments, covenants and duties owing by the Company to Xxxxxx of
any kind and description under the Note, whether direct or indirect, absolute
or contingent, due or to become due, now existing or hereafter arising, and
including, without limitation, all interest not paid when due, which
Obligations must be repaid only from the Tax Refunds.
"UCC" - the Uniform Commercial Code as enacted in the State of Georgia as
of the date of this Agreement. Any and all terms used in this Agreement which
are defined in the UCC shall be construed and defined in accordance with the
meaning and definition ascribed to such terms under the UCC.
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ARTICLE II.
SECURITY INTEREST
To secure timely payment (from the Tax Refunds) and performance in full
of the Obligations, subject to the security interest of First Union National
Bank in the Tax Refunds, the Company hereby sells, assigns, conveys, mortgages,
pledges, hypothecates and transfers and hereby grants to Xxxxxx a right of
setoff against and a continuing lien upon and security interest in and to the
Tax Refunds and all proceeds thereof.
ARTICLE III.
EVENTS OF DEFAULT
Section 3.1 Events of Default. The occurrence of any of the following
shall constitute an "Event of Default":
(a) The Company shall fail to pay when due any principal of, or interest
on, the Note or any other Obligation and fails to cure such failure to pay
within ten (10) days of notice from Xxxxxx of such failure to pay;
(b) The Company (i) makes an assignment for the benefit of creditors,
(ii) admits in writing that it is unable to pay its debts generally as they
become due, (iii) files a petition in bankruptcy, or for reorganization or for
an adoption of an arrangement under the Bankruptcy Act (as now or in the future
amended), or an answer to a petition seeking relief therein provided, (iv) has
a petition in bankruptcy filed against it which petition is not dismissed
within ninety (90) days of the filing thereof, (v) consents to the appointment
of a receiver or trustee for all or a substantial part of its property, or (vi)
has a petition filed against its for the appointment of a receiver for all or a
substantial part of its property and such petition is not dismissed within
ninety (90) days of the filing thereof.
Section 3.2 Remedies Upon Default. At any time after the occurrence and
during the continuance of an Event of Default, Xxxxxx may, at its election and
without demand, do any one or more of the following, all of which are
authorized by the Company:
(a) Declare all Obligations to be immediately due and payable; or
(b) Without notice to or demand upon the Company or any guarantor of the
Obligations of the Company, make such payments and do such acts as Xxxxxx
considers necessary or reasonable to protect his security interest in the Tax
Refunds.
Section 3.3 Remedies Cumulative. Except as otherwise provided herein,
Xxxxxx may exercise any of the remedies set forth above without notice of his
election to the Company. Xxxxxx'x rights and remedies under this Agreement and
all other agreements shall be cumulative. Xxxxxx shall have all other rights
and remedies not inconsistent herewith as provided under the UCC, by law or in
equity. No exercise by Xxxxxx of one right or remedy shall be deemed an
election, and no waiver by Xxxxxx of any default on the Company's part shall be
deemed a continuing waiver. No delay by Xxxxxx shall constitute a waiver,
election or acquiescence by it.
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ARTICLE IV.
MISCELLANEOUS
Section 4.1 Amendments; Waiver; Consent. No amendment or waiver of any
provision of this Agreement, nor consent to any departure by the Company
therefrom, shall in any event be effective unless the same shall be in writing
and signed by Xxxxxx (and in the case of amendments, the Company), and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.
Section 4.2 Notices. All notices and other communications relating to this
Agreement shall be in writing and addressed as follows:
If to Xxxxxx: Mr. R. Xxxxxx Xxxxxx
75 14th Street
Apt. 4640
Xxxxxxx, Xxxxxxx 00000
If to the Company: EduTrek International, Inc.
0000 Xxxxxxxxx-Xxxxxxxx Xxxx
000 Xxxxxxx Xxx
Xxxxxxx, Xxxxxxx 00000
or to such other address as the respective party or its successors or assigns
may subsequently designate by proper notice. All such notices and
communications shall be effective when personally delivered or three (3) days
after being sent by certified mail, postage prepaid, addressed as aforesaid.
Section 4.3 No Waiver. No failure on the part of Xxxxxx to exercise, and
no delay in exercising, any right hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any right hereunder preclude any
other or further exercise thereof or the exercise of any other right.
Section 4.4 Binding Effect; Governing Law. This Agreement shall be
binding upon and inure to the benefit of the Company and Xxxxxx and their
respective successors and assigns, except that the Company shall not have the
right to assign its rights hereunder or any interest herein without the prior
written consent of Xxxxxx. This Agreement, and any other documents delivered
hereunder shall be governed by, and construed in accordance with, the laws of
the State of Georgia, excluding its conflict of laws provisions.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals as
of the date and year first above written.
EduTrek International, Inc.
By: /s/ Xxxxxx X. Xxxxx
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Title: Chief Financial Officer
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/s/ R. Xxxxxx Xxxxxx
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R. Xxxxxx Xxxxxx
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