AGREEMENT FOR PURCHASE AND SALE OF ASSETS
Exhibit
2.1
AGREEMENT FOR PURCHASE AND
SALE OF ASSETS
THIS AGREEMENT IS MADE this
24TH day of August, 2005, by and between SUNCOAST NUTRICEUTICALS, INC.,
a Delaware corporation with its principal office at 00000
Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxx Xxxxx Xxxxx, XX 00000 (hereinafter referred to
as "Purchaser"), and
INTELLIGENT SECURITY NETWORKS, INC., a Delaware corporation with its
principal office at 0000 XX 00xx Xxxxxx,
Xxxx Xxxxx, XX 00000 (hereinafter referred to as "Seller"); and
WITNESSETH:
WHEREAS, the parties desire
that Purchaser shall acquire certain Assets of the Seller more particularly
described and set forth in Exhibit "A" annexed hereto (hereinafter referred to
collectively as the "Assets"; and
WHEREAS, it is intended that
this transaction shall comprise the acquisition by Purchaser of substantially
all of the property, assets, goodwill and business as a going concern of Seller
as hereinafter provided, in exchange for a part of Purchaser's voting stock and
assumption by Purchaser of certain debt of the Seller;
NOW, THEREFORE, in order to
consumate the transaction herein set forth and in consideration of the mutual
benefits to be derived therefrom and of the mutual agreements hereinafter
contained, the parties hereto do represent, warrant, covenant and agree as
follows:
1. PURCHASE OF
ASSETS. The Seller agrees to sell and the Purchaser agrees to
purchase from Seller all right, title and interest in and to certain assets of
the Seller related to Seller's business activities and operations, including
100% of the issued and outstanding capital stock of Caribbean Pacific Natural
Products, Inc. (“CPNP”), trademarks, proprietary product
formulations, all of which Assets are more particularly described and set forth
in Exhibit "A" annexed hereto.
2. PURCHASE PRICE AND
TERMS. The Purchase Price for the Assets shall be $260,000
payable to the Seller as follows:
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(i)
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$3,500
through the issuance to Seller of 3,500,000 Shares of fully-paid and
non-assessable Common Stock of the
Purchaser;
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(ii)
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$6,500
in assumed liabilities at the time of Closing;
and
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(iii)
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$250,000.00
at the closing by the execution and delivery of a Promissory Note by
Purchaser to Seller in said amount, less an amount equal to any accounts
payable of the Seller which are specifically assumed by the Purchaser or
which are assumed by Purchaser by reason of its acquisition of 100% of the
Common Stock of CPNP, substantially in the form of Exhibit “B” hereto (the
"Promissory Note"), secured by a Security Agreement substantially in the
form of Exhibit “C” hereto and UCC Financing Statements creating a
security interest in the assets of the Corporation (the "Security
Agreement").
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3. DELIVERY OF THE ASSETS AT
CLOSING. At the time of the closing of this transaction, the
Seller shall deliver physical possession or a xxxx of sale of the Assets to
Purchaser at Seller's principal office as set forth hereinabove.
4. REPRESENTATIONS OF
SELLER. The Seller represents and warrants to the Purchaser as
follows:
4.1. That
it is the owner of the Assets and holds the Assets free and clear of all liens
and encumbrances, and that title to the Assets has not been assigned, pledged,
or otherwise hypothecated;
4.2. The
Seller is not a party to any pending or threatened litigation which might
adversely affect the marketability or title of the Assets;
4.3. No
representation by the Seller made in this Agreement and no statement made in any
certificate furnished in connection with this transaction contains or will
contain any knowingly untrue statement of a material fact or omits or will omit
to state any material fact necessary to make such statement, representation or
warranty not misleading to a prospective purchaser of the Assets purchased
herein;
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5.
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UNDERTAKINGS
BY SELLER.
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5.1. Seller
shall not cause, suffer or permit the Assets, subsequent to the date hereof and
prior to the delivery of the Assets as contemplated hereunder, to become subject
to any further mortgage, pledge, lien or encumbrance;
5.2. Seller
shall indemnify and hold harmless the Purchaser, at all times after the date of
this Agreement, against and in respect of any and all claims which may be made
against the Assets arising out of transactions entered into, or any state of
facts existing, on or prior to the Closing;
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5.3. Seller
agrees that it will, upon the effectiveness of a Registration Statement filed by
Purchaser pursuant to the Securities Act of 1933, as amended, distribute to
Seller’s shareholders of record as of a record date to be mutually agreed upon
by the parties hereto, on a pro-rata basis, the 2,500,000 Shares of Common Stock
of Purchaser received by Seller pursuant to Paragraph 2 above.
6. REPRESENTATIONS OF
PURCHASER. Purchaser represents and warrants to the
Seller as follows:
6.1. That
Purchaser has been duly organized pursuant to the laws of the State of Delaware
and that its Certificate of Incorporation has not been revoked or canceled nor
has the Corporation been dissolved;
6.2. That
there are no lawsuits pending against Purchaser or its Officers or Directors,
nor are there any such lawsuits threatened or anticipated, nor are there any
judgments, warrants, or levies outstanding against Purchaser, or its
property, nor are there any tax examinations or proceedings pending relating to
taxes or other assessments against Purchaser, nor has Purchaser at any time
taken any insolvency or bankruptcy actions;
6.3. Purchaser
is duly qualified and entitled to own or lease its respective properties
and to carry on its business all as and in the places where such properties are
now owned or such businesses are conducted;
6.4. Purchaser
is not party to any pending or threatened litigation which might adversely
affect the financial condition, business operations, or properties of
Purchaser, nor to the knowledge of Purchaser is there any threatened or pending
governmental or regulatory investigation, inquiry, or proceeding involving
Purchaser;
6.5. No
representation by Purchaser or by its Officers made in this Agreement and no
statement made in any certificate furnished in connection with this transaction
contains or will contain any knowingly untrue statement of a material fact
or omits or will omit to state any material fact necessary to make such
statement, representation or warranty not misleading to a prospective purchaser
of the stock of Purchaser who is seeking full information as to Purchaser and
its business affairs.
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6.6. Purchaser
at the time of the Closing will have an authorized capitalization consisting of
25,000,000 shares of Common Stock ($.001 par value), and 1,000,000 shares of
unclassified Preferred Stock ($.01 par value) of which not more than 5,000,000
shares of Common and no shares of Preferred will be duly issued and outstanding
at the time of Closing; it does not have authorized, issued, or outstanding any
other shares of stock of any class or any subscription or other rights to the
issuance or receipt of shares of its capital stock; and all voting rights are
vested exclusively in such capital stock.
6.7. Purchaser
agrees that it will, at its sole cost and expense, register for public sale the
Common Stock issued to Purchaser by Seller in an appropriate Registration
Statement filed pursuant the Securities Act of 1933, as amended, in order to
facilitate the distribution of said Shares to the Shareholders of Seller as set
forth in Paragraph 5.3 above.
7. CONDITIONS PRECEDENT TO
CLOSING. All obligations of Seller and Purchaser under this
Agreement are subject to the fulfillment, on or prior to the Closing, of each of
the following conditions:
7.1. That
the representations of the Seller and the Purchaser shall be true at and as of
the Closing date as though such representations were made at and as of such
time;
7.2. That
no claim or liability shall have been asserted against any of the Assets, nor
have they suffered any loss on account of fire, flood, accident or
other calamity of such a character as to materially adversely affect their
condition, regardless of whether or not such loss shall have been insured, and
that the Assets shall be freely transferrable to the Purchaser on the Closing
date.
8. APPROVALS AND
RATIFICATIONS. All transactions contemplated by this
Agreement shall be subject to the approval and ratification of the Boards of
Directors and Shareholders of the Seller and of the Purchaser, and which
approvals and ratifications shall be obtained not less than forty-eight hours
prior to the Closing.
9. CLOSING DATE. The
closing under this Agreement shall take place at the offices of the Purchaser on
or before September 30, 2005.
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10. NOTICES. All
notices under this Agreement shall be in writing and addressed to the parties at
the addresses hereinabove set forth, and shall be mailed by certified mail,
return receipt requested.
11. SUCCESSORS AND
ASSIGNS. This Agreement shall bind and inure to the benefit of
the parties hereto and their respective legal representatives, successors and
assigns, provided, however, that this Agreement cannot be assigned by any party
except by or with the written consent of all parties hereto. Nothing
herein expressed or implied is intended or shall be construed to confer upon or
give any person, firm or corporation other than the parties hereto and their
respective legal representatives, successors and assigns any rights or
benefits under or by reason of this Agreement.
12. LAW GOVERNING. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware.
13. COUNTERPARTS. This
Agreement may be executed in any number of counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
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SIGNATURES
IN WITNESS WHEREOF, the
parties hereto have respectively executed this Agreement as of the day and
year first written above.
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PURCHASER:
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By: XXXXX X. XXXX-XXXXXX,
PRES.
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SELLER:
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INTELLIGENT
SECURITY NETWORKS, INC.
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By: /s/ XXXXXX XXXXX,
SEC.
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Exhibit
“A”
ASSETS
ACQUIRED:
All
Products, Technology, Trademarks, and Tradenames, defined as
follows:
“Products”
means all currently-developed Caribbean Pacific and Suncoast Naturals products,
any future modifications or improvements thereto, and any future brand or
product extensions.
“Technology”
means all Caribbean Pacific and Suncoast Naturals formulations, manufacturing
information, processes, trade secrets, and all technical or proprietary
information related to the Products.
“Trademarks”
means the marks “Caribbean Pacific”, “Suncoast Naturals”, “Surf ‘n Sol”, “Ski ‘n
Sol”, “Sportsol”, “Golf ‘n Sol”, “Solcreme”, “Virgin Sol”, “Sabate”, and “Coral
Sol”, and any label designs or logos related to such names.
“Tradename”
includes any unregistered name, xxxx, design or logo related to any of the
Products, including but not limited to “Karibbean Kidz”, “Emerald Rose”,
“Diamond Rose”, “Black Pearl”, and “Aloe Rose”.
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Exhibit
“B”
NEITHER
THIS NOTE, NOR ANY SECURITIES ISSUABLE UPON THE ONVERSION HEREOF, HAS BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD,
PLEDGED, ASSIGNED, OR OTHERWISE DISPOSED OF UNLESS (1) A REGISTRATION STATEMENT
WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT AND ANY APPLICABLE
STATE SECURITIES LAWS, OR (2) THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE
HOLDER OF THIS NOTE OR SUCH SECURITIES, WHICH COUNSEL AND OPINION ARE REASONABLY
SATISFACTORY TO THE COMPANY, THAT THIS NOTE OR SUCH SECURITIES, RESPECTIVELY,
MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED, OR DISPOSED OF IN THE MANNER
CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR APPLICABLE STATE SECURITIES LAWS.
SECURED 15% PROMISSORY NOTE
PRINCIPAL
AMOUNT: $250,000.00
Maturity
Date: December 31, 2007
FOR VALUE RECEIVED, SUNCOAST
NUTRICEUTICALS, INC, a
Delaware corporation (the “Company”), hereby promises to pay to INTELLIGENT
SECURITY NETWORKS, INC., or its registered assigns (the “Holder”), the principal
amount of TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000.00) on the Maturity Date (as
hereinafter defined), and to pay simple interest on the unpaid principal balance
hereof at the rate (calculated on the basis of a 360-day year consisting of
twelve 30-day months) of 15% per annum from the date hereof until the Maturity
Date, in each case subject to Section 6 hereof. Accrued and unpaid
interest on the unpaid principal balance hereof shall be payable on the Maturity
Date, subject to Section 6 hereof. In no event shall any interest to be paid
hereunder exceed the maximum rate permitted by law. In any such event, this Note
shall automatically be deemed amended to permit interest charges at an amount
equal to, but no greater than, the maximum rate permitted by
law.
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1.
Payments.
a)
Subject to Section 6 hereof, principal of, and any accrued and unpaid interest
on, this Note shall be due and payable in full on the Maturity Date. The
“Maturity Date” shall be December 31, 2007.
a)
Interest on this Note shall accrue from the date of issuance hereof to, but
excluding, the Maturity Date, and shall be payable on the Maturity
Date.
b) If
the Maturity Date or any other date hereunder would fall on a day that is not a
Business Day (as defined below), the payment due on each such date will be made
on the next succeeding Business Day with the same force and effect as if made on
the Maturity Date or such other date, as the case may be. “Business Day” means
any day which is not a Saturday or Sunday and is not a day on which banking
institutions are generally authorized or obligated to close in the City of New
York, New York.
c) The
Company may, at its option, prepay all or any part of the principal of this
Note, without payment of any premium or penalty, at any time after six (6)
months from the date of issuance hereof. All payments on this Note shall be
applied first to accrued interest hereon and the balance to the payment of
principal hereof. In all events the Company must give thirty (30) days prior
written notice of its intention so to repay this Note and permit the Holder
during such period to convert this Note, prior to any such prepayment, pursuant
to Section 6 hereof, if the Holder elects to do so.
d)
Payments of principal of, and interest on, this Note shall be made by check sent
to the Holder’s address set forth above or to such other address as the Holder
may designate for such purpose from time to time by written notice to the
Company, in such coin or currency of the United States of America as at the time
of payment shall be legal tender for the payment of public and private
debts.
e) The
obligation to make the payments provided for in this Note are absolute and
unconditional and not subject to any defense, set-off, counterclaim, rescission,
recoupment, or adjustment whatsoever. The Company hereby expressly waives demand
and presentment for payment, notice of non-payment, notice of dishonor, protest,
notice of protest, bringing of suit, and diligence in taking any action to
collect any amount called for hereunder, and shall be directly and primarily
liable for the payment of all sums owing and to be owing hereon, regardless of,
and without any notice, diligence, act, or omission with respect to, the
collection of any amount called for hereunder.
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2.
Covenants:
Representations and Warranties.
2.1
The Company covenants and agrees with the Holder that, so long as any amount
remains unpaid on the Note, the Company shall deliver to Holder and otherwise
comply with the following:
(a)
promptly after the Company shall obtain knowledge of such, written notice of all
legal or arbitral proceedings, and of all proceedings by or before any
governmental or regulatory authority or agency, and each material development in
respect of such legal or other proceedings, affecting the Company and its
affiliates, except proceedings which, if adversely determined, would not have a
material adverse effect on the Company or any of its affiliates; (b) promptly
after the Company shall obtain knowledge of the occurrence of any Event of
Default (as hereinafter defined) or any event which with notice or lapse of time
or both would become an Event of Default (an Event of Default or such other
event being a “Default’), a notice specifying that such notice is a ‘Notice of
Default” and describing such Default in reasonable detail, and, in
such Notice of Default or as soon thereafter as practicable, a description of
the action the Company has taken or proposes to take with respect thereto; c) in
no event shall the Company incur any additional indebtedness of any kind, other
than trade debt incurred in the ordinary course of business, unless the Company
shall have notified the Holder in writing (the “Financing Notice”) of its
intention to seek such additional indebtedness and that all amounts due under
this Note will be paid from the proceeds of such financing, within ten (10)
business days after the completion of such financing.
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2.2.
The Company represents and warrants as follows: (i) the Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware; (ii) the execution, delivery and performance by the Company
of this Note are within the Company’s corporate powers, have been duly
authorized by all necessary corporate action, and do not contravene with (A) the
Company’s articles of incorporation or by-laws or (B) (x) any law or (y) any
agreement or document binding on or affecting the Company, (iii) no
authorization or approval or other action by, and no notice to or filing with,
any governmental authority, regulatory body or third person is required for the
due execution, delivery and performance by the Company of this Note; (iv) this
Note constitutes the legal, valid and biding obligation of the Company,
enforceable against the Company in accordance with its terms except as
enforcement hereof may be limited by bankruptcy, insolvency or other similar
laws affecting the enforcement of creditors’ rights generally and subject to the
applicability of general principles of equity; (v) the Company has all requisite
corporate power and authority to own and operate its property and assets and to
conduct its business as now conducted and proposed to be conducted and
to consummate the transactions contemplated hereby; (vi) the Company
is duly qualified to conduct its business and is in good standing in each
jurisdiction in which the character of the properties owned or leased by it, or
in which the transaction of its business makes such qualification necessary
except where such failure to qualify would not have a material adverse effect on
the business, properties, assets, operations, condition, financial or otherwise,
performance or prospects of the Company (a “Material Adverse Effect”); (vi)
there is no pending or, to the Company’s knowledge, threatened action or
proceeding affecting the Company before any governmental agency, court or
arbitrator which challenges or relates to this Note or which may otherwise have
a Material Adverse Effect; (viii) after giving effect to the transactions
contemplated by this Note, the Company is solvent; (ix) the most recent
financial statements of the Company dated September 30, 2005 fairly presents the
financial condition of the Company and the results of operations of the Company
for the period ended on the date thereof and since the date thereof there has
been no event which either individually or in the aggregate with other events
since such date has resulted in a Material Adverse Effect; (x) there are no
securities, instruments or agreements containing anti-dilution or similar
provisions that will be triggered by the issuance of this Note; (xi) the Company
is not in violation or default of any provision of (A) its articles of
incorporation or by-laws, each as currently in effect, or (B) any instrument,
judgment, order, writ, decree or contract, statute, rule or regulation to which
the Company is subject, which violation, singularly or in the aggregate, could
have a Material Adverse Effect; (xii) this Note is validly issued, free of any
taxes, liens, and encumbrances related to the issuance hereof and is not subject
to preemptive right or other similar right of stockholders of the Company and,
assuming the Holder is an accredited investor under applicable law and is
acquiring this Note for its own account, for investment purposes and not with a
view to any distribution hereof, the offer, issue and sale of this Note is not
subject to the registration requirement of any applicable securities laws.; and
(xiii) that the Company will remain in full compliance with the requirements of
Schedule A hereof.
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3. Events of
Default.
The
occurrence of any of the following events shall constitute an event of default
(an “Event of Default”): a) A default in the payment of the principal amount of
the Notes, when and as the same shall become due and payable. b) A default in
the payment of any interest on the Notes, when and as the same shall become due
and payable. c) A default in the performance, or a breach, of any of the
covenants of the Company contained in the Note. d) Any representation, warranty,
or certification made by the Company pursuant to the Notes shall prove to have
been false or misleading as of the date made in any material respect. e) A final
judgment or judgments for the payment of money in excess of $250,000 in the
aggregate shall be rendered by one or more courts, administrative or arbitral
tribunals, or other bodies having jurisdiction over the Company and the same
shall not be discharged (or provision shall not be made for such discharge), or
a stay of execution thereof shall not be procured, within 60 days from the date
of entry thereof and the Company shall not, within such 60-day period, or such
longer period during which execution of the same shall have been stayed, appeal
therefrom and cause the execution thereof to be stayed during such appeal. f)
The entry of a decree or order by a court having jurisdiction adjudging the
Company a bankrupt or insolvent, or approving a petition seeking reorganization,
arrangement, adjustment, or composition of, or in respect of, the Company, under
federal bankruptcy law, as now or hereafter constituted, or any other applicable
federal or state bankruptcy, insolvency, or other similar law, and the
continuance of any such decree or order unstayed and in effect for a period of
60 days; or the commencement by the Company of a voluntary case under federal
bankruptcy law, as now or hereafter constituted, or any other applicable federal
or state bankruptcy, insolvency, or other similar law, or the consent by it to
the institution of bankruptcy or insolvency proceedings against it, or the
filing by it of a petition or answer or consent seeking reorganization or relief
under federal bankruptcy law or any other applicable federal or state law, or
the consent by it to the filing of such petition or to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator, or similar official as to
the Company or of any substantial part of its property, or the making by it of
an assignment for the benefit of creditors, or the admission by it in writing of
its inability to pay its debts generally as they become due, or the taking of
action by the Company in furtherance of any such action.
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4.
Remedies Upon Default .
4.1(a)
Upon the occurrence of an Event of Default referred to in Section 3(f), the
principal amount then outstanding of, and the accrued and unpaid interest on,
this Note shall automatically become immediately due and payable without
presentment, demand, protest, or other formalities of any kind, all of which are
hereby expressly waived by the Company. Upon the occurrence of an Event of
Default referred to in Section 3(a) or (b), the Holder, by notice in writing
given to the Company, may declare the entire principal amount then outstanding
of, and the accrued and unpaid interest on, the Notes to be due and payable
immediately, and upon any such declaration the same shall become and be due and
payable immediately, without presentation, demand, protest, or other formalities
of any kind, all of which are expressly waived by the Company. Upon the
occurrence of an Event of Default other than those referred to in Sections 3(a),
(b), or (f), the Holder may declare the principal amount then outstanding of,
and the accrued and unpaid interest on, the Notes to be due and payable
immediately, and upon such declaration the same shall become due and payable
immediately, without presentation, demand, protest, or other formalities of any
kind, all of which are expressly waived by the Company. (b) The
Holder may institute such actions or proceedings in law or equity as they shall
deem expedient for the protection of their rights and may prosecute and enforce
their claims against all assets of the Company, and, in connection with any such
action or proceeding, the holders of the Notes shall be entitled to receive in
the aggregate from the Company payment of the outstanding principal amount of
the Notes plus accrued and unpaid interest to the date of payment plus
reasonable expenses of collection, including, without limitation, attorneys’
fees and expenses.
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5.
Transfer.
a. Any
Notes issued upon the transfer of this Note shall be numbered and shall be
registered in a note register (the “Note Register”) as they are issued. The
Company shall be entitled to treat the registered holder of any Note on the Note
Register as the owner in fact thereof for all purposes and shall not be bound to
recognize any equitable or other claim to, or interest in, such Note on the part
of any other person, and shall not be liable for any registration or transfer of
Notes which are registered or to be registered in the name of a fiduciary or the
nominee of a fiduciary unless made with the actual knowledge that a fiduciary or
nominee is committing a breach of trust in requesting such registration or
transfer, or with the knowledge of such facts that its participation therein
amounts to bad faith. This Note shall be transferable only on the books of the
Company upon delivery thereof duly endorsed by the Holder or by its duly
authorized attorney or representative, or accompanied by proper evidence of
succession, assignment, or authority to transfer. In all cases of transfer by an
attorney, executor, administrator, guardian, or other legal representative, duly
authenticated evidence of its or its authority shall be produced. Upon any
registration of transfer, the Company shall deliver a new Note or Notes to the
person entitled thereto. This Note may be exchanged, at the option of the Holder
thereof, for another Note, or other Notes of different denominations, of like
tenor and representing in the aggregate a like principal amount, upon surrender
to the Company or its duly authorized agent. Notwithstanding the foregoing, the
Company shall have no obligation to cause any Note to be transferred on its
books to any person if, in the opinion of counsel to the Company, such transfer
does not comply with the provisions of the Securities Act of 1933, as amended
(the “Securities Act”), and the rules and regulations thereunder. b. The Holder
acknowledges that it has been advised by the Company that neither this Note, nor
any securities issuable pursuant to Section 6 hereof, has been registered under
the Securities Act, that this Note is being, and any such securities will be,
issued on the basis of, among other things, the statutory exemption provided by
Section 4(2) of the Securities Act or Regulation D promulgated thereunder, or
both, relating to transactions by an issuer not involving any public offering,
and that the Company’s reliance thereon is based in part upon the
representations made by the original Holder to the Company. The Holder
acknowledges that it has been informed by the Company of, or is otherwise
familiar with, the nature of the limitations imposed by the Securities Act and
the rules and regulations thereunder on the transfer of securities. In
particular, the Holder agrees that no sale, assignment, or transfer of this Note
or such securities shall be valid or effective, and the Company shall not be
required to give any effect to any such sale, assignment, or transfer, unless
(i) such sale, assignment, or transfer is registered under the Securities Act,
it being understood that the Company has no obligation or intention to so
register the Notes or such securities except as otherwise set forth herein or in
other agreements, including the RRL, executed and delivered by the Company
simultaneously herewith, or (ii) this Note or such securities are sold,
assigned, or transferred in accordance with all the requirements and
limitations of Rule 144 under the Securities Act, it being understood that Rule
144 is not available at the time of the original issuance of this Note for the
sale of this Note and that there can be no assurance that Rule 144 sales will be
available at any subsequent time, or (iii) such sale, assignment, or transfer is
otherwise exempt from registration under the Securities Act.
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6.
Miscellaneous.
a) Any
notice or other communication required or permitted to be given hereunder shall
be in writing and shall be mailed by certified mail, return receipt requested,
or by Federal Express, Express Mail or similar overnight delivery or courier
service (in each case, postage prepaid) or delivered (in person or by telecopy,
telex, or similar telecommunications equipment) against receipt to the party to
whom it is to be given, (i) if to the Company, at its address of record, (ii) if
to the Holder, at its address set forth on the first page hereof, (iv) in either
case, to such other address as the party shall have furnished in writing in
accordance with the provisions of this Section 7(a). Notice to the estate of any
party shall be sufficient if addressed to the party as provided in this Section
7(a). Any notice or other communication given by certified mail shall be deemed
given at the time of certification thereof, except for a notice changing a
party’s address which shall be deemed given at the time of receipt thereof. Any
notice given by other means permitted by this Section 7(a) shall be deemed given
at the time of receipt thereof.
b)
Upon receipt of evidence satisfactory to the Company of the loss, theft,
destruction, or mutilation of this Note (and upon surrender of this Note if
mutilated), the Company shall execute and deliver to the Holder a new Note of
like date, tenor, and denomination.
c) No
course of dealing and no delay or omission on the part of the Holder in
exercising any right or remedy shall operate as a waiver thereof or otherwise
prejudice the Holder’s rights, powers, or remedies. No right, power, or remedy
conferred by this Note upon the Holder, or by the Notes on the
holders of the Notes, shall be exclusive of any other right, power, or remedy
referred to herein or now or hereafter available at law, in equity, by statute
or otherwise, and all such remedies may be exercised singly or
concurrently.
d)
This Note may be amended only by a written instrument executed by the Company
and the Holder hereof. Any amendment shall be endorsed upon this Note, and all
future Holders shall be bound thereby.
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e)
This Note has been negotiated and consummated in the State of New York and shall
be governed by, and construed in accordance with, the laws of the State of New
York without giving effect to principles governing conflicts of law. The Company
irrevocably (A) consents that any legal action or proceeding against it relating
to this Note may be commenced exclusively in the Supreme Court of the State of
New York, County of New York, or the United States Xxxxxxxx Xxxxx xxx xxx
Xxxxxxxx Xxxxxxxx xx Xxx Xxxx, (X) submits to the jurisdiction of any such Court
in any such action or proceeding and (C) waives any claim or defense in any such
action or proceeding based on any alleged lack of jurisdiction, improper venue
or forum non conveniens. Service of process may be effected by notice sent
pursuant to Section 7(a) hereof. The Company waives trial by jury in any
proceeding relating to this Note.
f) The
payment of principal of, and accrued and unpaid interest on, the
Notes is secured by a security interest covering all of the assets of the
Company pursuant to a Security Agreement, dated as of September 30, 2005(the
“Security Agreement”), between the Company and Holders of this
Note.
IN WITNESS WHEREOF, the
Company has caused this Note to be executed and dated the day and year first
above written.
__________________________________
By: XXXXXXX
X. XXXXXX, SEC.
Page
16
Exhibit
“C”
SECURITY
AGREEMENT
SECURITY
AGREEMENT made as of the 30th day of
September, 2005 between Suncoast Nutriceuticals, Inc., a Delaware corporation,
whose principal place of business is located at ___________ (“Debtor”), and
Intelligent Security Networks, Inc., a Delaware Corporation having an address at
__________ (“Secured Party”).
In
consideration of the mutual covenants and agreements contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
herby acknowledged, Debtor and Secured Party, intending to be bound legally,
agree as follows:
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1.
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Security
Interest .
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(a)
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To
secure prompt and complete payment and performance of the Obligations (as
defined below), Debtor hereby pledges, assigns, transfers and grants to
the Secured Party a continuing security interest in all properties, assets
and rights of the Debtor now owned or at any time hereafter
acquired by the Debtor or in which the Debtor now has or at any time
hereafter acquired by the Debtor or in which the Debtor now has or at any
time in the future may acquire any right, title or interest, wherever
located or situated (hereinafter, collectively called the
“Collateral”). Without limitation of the foregoing, the
Collateral includes the
following:
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i)
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all
Accounts receivable;
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ii)
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all
As-Extracted Collateral:
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iii)
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all
Chattel Paper;
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iv)
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all
Commercial Tort Claims;
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v)
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all
Consignments;
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vi)
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all
Contracts;
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vii)
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all
Copyrights;
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viii)
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all
Copyright Licenses;
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ix)
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all
Deposit Accounts;
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x)
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all
Documents;
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xi)
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all
Encumbrance(s);
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xii)
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all
Equipment;
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xiii)
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all
Fixtures;
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xiv)
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all
Goods;
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xv)
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all
General Intangibles;
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xvi)
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all
Health Care Insurance
Receivables;
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xvii)
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all
Instruments;
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xviii)
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all
Inventory;
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xix)
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all
Investment Property;
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xx)
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all
Letter-of-Credit Rights;
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xxi)
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all
Letters of Credit
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xxii)
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all
Patents;
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Page
17
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xxiii)
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all
Patent Licenses;
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xxiv)
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all
Payment Intangibles;
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xxv)
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all
Promissory Note(s);
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xxvi)
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all
Software;
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xxvii)
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all
Supporting Obligations;
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xxviii)
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all Tangible Chattel
Paper;
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xxix)
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all
Trademarks;
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xxx)
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all
Trademark Licenses;
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xxxi)
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all
Vehicles; and
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xxxii)
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to
the extent not otherwise included, all Proceeds (including condemnation
proceeds), all Accessions and additions thereto and all substitutions and
replacements therefore and products of any and all of the
foregoing.
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(b)
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Debtor
expressly acknowledges that the security interest granted hereunder shall
remain as security for payment and performance of the Obligations, whether
now existing or which may hereafter be incurred by future advances or
otherwise. The notice of the continuing grant of this security
interest therefore shall not be required to be stated on the face of any
document representing any such Obligations, nor otherwise identify it as
being secured hereby.
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2.
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Cross-Collateralization . All
Collateral which Secured Party may at any time acquire from Debtor or from
any other source in connection with any of the Obligations shall
constitute collateral for each and every Obligation, without apportionment
or designation as to particular Obligations, and all Obligations, however
and whenever incurred, shall be secured by all Collateral, however and
whenever acquired, and Secured party shall have the right, in its sole
discretion, to determine the order in which Secured Party’s rights in, or
remedies against, any Collateral are to be exercised, and which type or
which portions of Collateral are to be proceeded against and the order of
application of Proceeds of Collateral as against particular
Obligations.
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3.
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Definitions . The
following terms shall have the following
meanings:
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(a)
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“Accessions”
means all Accessions as that term is defined in Article 9 of the
UCC;
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(b)
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“Accounts”
means all Accounts as that term is defined in Article 9 of the
UCC;
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(c)
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“As-Extracted
Collateral” means all As-Extracted Collateral as that term is defined
Article 9 of the UCC;
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(d)
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“Chattel
Paper” means all Chattel Paper as that term is defined in Article 9 of the
UCC;
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(e)
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“Collateral”
shall have the meaning assigned to it in Section 1 of this
Agreement;
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Page
18
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(f)
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“Commercial
Tort Claims” means all Commercial Tort Claims as that term is defined in
Article 9 of the UCC, including without limitation, those more
specifically described on Schedule 3(g) attached hereto and made a part
hereof;
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(g)
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“Consignments”
means all Consignments as that term is defined in Article 9 of the
UCC;
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(h)
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“Contracts”
means all contracts, undertakings, franchise agreements or other
agreements (other than rights evidenced by Chattel Paper, Documents or
Instruments, as those terms are defined above and below) in or under which
the Debtor may now or hereafter have any right, title or interest,
including, without limitation, with respect to an account, and any
agreement relating to the terms of payment or the terms of performance
thereof;
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(i)
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“Copyrights”
means (a) all copyrights of the United States or any other country,
including, without limitation, any thereof referred tin Schedule 4
attached hereto and made a part hereof; (b) all copyright registrations
filed in the United States or in any other country, including, without
limitation, any thereof referred to in any schedule attached hereto; and
(c) all proceeds thereof;
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(j)
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“Copyright
License” means all agreements, whether written or oral, providing for the
grant by the Debtor of any right to use any
Copyright;
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(k)
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“Deposit
Accounts” means all Deposit Accounts as that term is defined in Article 9
of he UCC;
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(l)
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“Documents”
means all Documents as that term is defined in Article 9 of the
UCC;
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(m)
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“Encumbrance(s)”
means all Encumbrance(s) as that term is defined in Article 9 of the
UCC;
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(n)
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“Equipment”
means all Equipment as that term is defined in Article 9 of the
UCC;
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(o)
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“Financing
Agreement” means this Agreement, and any and all agreements, notes,
guaranties, instruments, security agreements and documents evidencing,
governing, securing or relating in any way to that certain promissory note
(the “Note”) dated April 2005, in the
original principal amount of $35,000.00 of Debtor in favor of Secured
Party;
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(p)
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“Fixtures”
means all Fixtures as that term is defined in Article 9 of the
UCC;
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(q)
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“General
Intangibles” means all General Intangibles as that term is defined in
Article 9 of the UCC;
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(r)
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“Goods”
means all Goods as that term is defined in Article 9 of the
UCC;
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(s)
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“Health
Care Insurance Receivables” means all Health Care Insurance Receivables as
that term is defined in Article 9 of the
UCC;
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(t)
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“Instruments”
means all Instruments as that term is defined in Article 9 of the
UCC;
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(u)
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“Inventory”
means all Inventory as that term is defined in Article 9 of the
UCC;
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Page
19
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(v)
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“Investment
Property” means all Investment Property as that term is defined in Article
9 of the UCC;
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(w)
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“Letters
of Credit” means all Letters of Credit as that term is defined in the
UCC;
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(x)
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Letters
of Credit Rights” means all Letter of Credit Rights as that term is
defined in Article 9 of the
UCC;
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(y)
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“Obligations”
means any and all obligations, indebtedness, liabilities, guaranties,
covenants and duties owing by Debtor to Secured Party, including without
limitation, any obligations under any of the Financing Agreements assigned
to Secured Party, whether due or to become due, absolute or contingent,
now existing or hereafter incurred or arising, whether or not otherwise
guaranteed or secured and whether evidenced by any note or draft or
documented on the books and records of Secured Party or otherwise on open
account, including without limitation, all costs, expenses, fees, charges
and attorney’s and other professional fees incurred by Secured Party in
connection with, involving or related to the administration, protection,
modification, collection, enforcement, preservation or defense of any of
the Secured Party’s rights with respect to any of the Obligations, the
Collateral or any agreement, instrument or document evidencing, governing,
securing or relating to any of the foregoing, including without
limitation, all costs and expenses incurred inspecting or surveying
mortgaged real estate, if any, or conducting environmental studies or
tests, and in connection with any “workout” or default resolution
negotiations involving legal counsel or other professionals and any
renegotiation or restructuring of any of the
Obligations;
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(z)
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“Patents”
means (a) all letters patent of the United States and all reissues and
extensions thereof, (b) all applications for letters patent of the United
States and all divisions, continuations and continuations-in-part thereof
or any other country, including, without limitation, any thereof referred
to in any scheulde attached hereto and (c) all proceeds thereof, including
the goodwill of the business connected with the use of and symbolized by
the Patents;
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(aa)
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“Patent
License” means all agreements, whether written or oral, providing for the
grant by the debtor of any right to manufacture, use or sell any invention
covered by a Patent, including, without limitations, any thereof referred
to in any schedule attached
hereto;
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(bb)
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“Payment
Intangibles” means all Payment Intangibles as that term is defined in
Article 9 of the UCC;
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(cc)
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“Proceeds”
means all proceeds as that term is defined in Article 9 of the
UCC;
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(dd)
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“Promissory
Note(s)” means all Promissory Note(s) as that term is defined in Article 9
of the UCC;
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(ee)
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“Software”
means all Software as that term is defined in Article 9 of the
UCC;
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Page
20
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(ff)
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“Supporting
Obligations” means all Supporting Obligations as that term is defined in
Article 9 of the UCC;
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(gg)
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“Tangible
Chattel Paper” means all Tangible Chattel Paper as that term is defined in
Article 9 of the UCC;
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(hh)
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“Trademarks”
means (a) all trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade styles, service marks,
logos and other source or business identifiers and the goodwill associated
therewith, now existing or hereafter adopted or acquitted, all
registrations and recordings thereof, and all applications in connection
therewith, whether registered in the United States Patent and Trademark
Office or in any similar office or agency of the United States, any State
thereof or any other country or any political subdivision thereof or
otherwise, including, without limitation, any thereof referred to in any
schedule attached hereto; (b) all renewals thereof; and (c) all proceeds
thereof, including the goodwill of the business connected with the use of
an symbolized by the
Trademarks;
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|
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(ii)
|
“Trademark
License” means any agreement, written or oral, providing for the grant by
the Debtor of any right to use any Trademark, including, without
limitation, any thereof referred to in any schedule attached
hereto;
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(jj)
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“UCC”
means the Uniform Commercial Code as in effect from time-to-time in the
State of New York;
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(kk)
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“Vehicles”
means all cars, trucks, trailers, construction and earth moving equipment
and other vehicles owned by the Debtor and covered by a certificate of
title law of any state and, in any event, shall include, without
limitation, the vehicles listed in any schedule attached hereto and all
tires and other appurtenances to any of the
foregoing.
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|
4.
|
Debtor’s
Representations and Warranties . Debtor represents and
warrants in Secured Party as
follows:
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|
|
(a)
|
Good Standing and
Qualification/Legal Capacity. The Debtor is a
corporation duly organized, validity existing and in good standing under
the laws of the State of Delaware (“Debtor’s State”) and has
all requisite corporate power and authority to own and operate its
properties and to carry on its business as now being
conducted. Debtor is not organized under the laws of any
jurisdiction other than the Debtor’s
State.
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|
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(b)
|
Authority. The
Debtor has full power and authority to enter into and perform the
obligations under this Agreement, to execute and deliver the Financing
Agreements and to incur the obligations provided for herein and therein,
all of which have been duly authorized by all necessary and proper
corporate or partnership action, if and as the case may be. No
other consent or approval or the taking of any other action is required as
a condition to the validity or enforceability of this Agreement or any of
the other Financing
Agreements.
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Page
21
|
|
(c)
|
Binding
Agreement.
|
This
Agreement and the other Financing Agreements constitute the valid and
legally binding obligations of the Debtor, enforceable in accordance with
their respective terms, except as enforcement may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of
creditors’ rights generally.
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|
|
(d)
|
Litigation. There are no
actions, suits, proceedings or investigations pending or threatened
against he Debtor before any court or administrative agency, which either
in any case or in the aggregate, if adversely determined, would materially
and adversely affect the financial condition, assets or operations of the
Debtor, or which question the validity of this Agreement or any of the
other Financing Agreements, or any action to be taken in connection with
the transactions contemplated hereby or
thereby.
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|
|
(e)
|
No Conflicting Law of
Agreements. The execution, delivery and performance by
the Debtor of this Agreement and the other Financing Agreements: (i) do
not violate any provisions of the Certificate of Incorporation and By-Laws
of the Debtor, (ii) do not, to the best of Debtor’s knowledge, violate any
order, decree or judgment, or any provision of any statue, rule or
regulation, (iii) do not, to the best of Debtor’s knowledge, violate or
conflict with, result in a breach of or constitute (with notice or lapse
of time, or both) a default under any share holder agreement, partnership
agreement, stock preference agreement, mortgage, indenture, contract or
other agreement to which the Debtor is a party, or by which any of
Debtor’s properties are bound, or (iv) except for the liens and mortgages
granted to the Secured Party hereunder, do not result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever
upon any property or assets of the
Debtor.
|
|
|
(f)
|
Taxes. With
respect to all taxable periods of the Debtor, the Debtor has filed all tax
returns which are required to be filed and all federal, state, municipal,
franchise and other taxes shown on such filed returns have been paid as
due or have been reserved against, if not yet due, as required by
generally accepted accounting principles, consistently applied, and the
Debtor knows of no unpaid assessments against
Debtor.
|
|
|
(g)
|
Compliance. The
Debtor is not in default with respect to or in violation of any order,
writ, injunction, or decree of any court or of any federal, state,
municipal or other governmental department, commissions, board, bureau,
agency, authority or official, or in violation of any law, statute, rule
or regulation in which Debtor or Debtor’s properties is or are subject,
where such default or violation would materially and adversely affect the
financial condition of the Debtor. The Debtor represents that
Debtor has not received notice of any such de fault or violation from any
party. The Debtor is not in default in the payment or
performance of any of Debtor’s obligations to an ythi4rd parties or in the
performance of any mortgage, indenture, lease, contract or other agreement
to which Debtor is a party or by which any of Debtor’s assets or
properties are bound, where such default would materially and adversely
affect the financial condition of the
Debtor.
|
Page
22
|
|
(h)
|
Office. The
chief executive office and principal place of business of the Debtor, and
the office where Debtor’s books and records concerning Collateral are
kept, is, and has been for at least six (6) months, as set forth in the
first paragraph of this
Agreement.
|
|
|
(i)
|
Places of
Business. Except as set forth in Schedule A hereto, the
Debtor has no other places of business and locales no Collateral,
specifically including books and records, at any location other than at
Debtor’s place of business set forth in the first paragraph of this
Agreement.
|
|
|
(j)
|
Contingent
Liabilities. The Debtor is not a party to any
suretyship, guarantyship, or other similar type agreement; nor has Debtor
offered its endorsement to any individual, concern, corporation or other
entity or acted or failed to act in any manner which would in any way
create a contingent liability (except for endorsement of negotiable
instruments in the ordinary course of
business).
|
|
|
(k)
|
Licenses. The
Debtor has, to the best of its knowledge, all licenses, permits and other
permissions required by any government, agency or subdivision thereof, or
from any licensing entity necessary for the conduct of Debtor’s business,
all of which the Debtor represents to be in good standing and in full
force and effect.
|
|
|
(l)
|
Collateral. The
Debtor is and shall continue to be the sole owner of the Collateral free
and clear of all liens, encumbrances, security interests and claims except
the liens granted to Secured Party hereunder, the Debtor is fully
authorized to sell, transfer, pledge and/or grant a security interest in
each and every item of the Collateral to Secured Party; all documents and
agreements related to the Collateral shall be true and correct and in all
respects what they purport to be, all signatures and endorsements that
appear thereon shall be genuine and all signatories and endorses shall
have full capacity to contract; to the best of Debtor’s knowledge none of
the transactions underlying or giving rise to the Collateral shall violate
any applicable state or federal laws or regulations; all documents
relating to the Collateral shall be legally sufficient under such laws or
regulations and shall be legally enforceable in accordance with their
terms; and the Debtor agrees to defend the Collateral against the claims
of all persons other than Secured
Party.
|
|
|
(m)
|
Environmental, Health, Safety
Laws. Debtor has not received any notice, order,
petition or similar document in connection with or arising out of any
violation of any environmental, health or safety law, regulation, rule or
order, and Debtor knows of no basis for any claim of such violation or of
any threat thereof.
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Page
23
|
|
(n)
|
Accounts. The
amount represented by the Debtor to the Secured Party from time to time as
owing by each account debtor or by all account debtors in respect of the
Accounts will at such time, to the best of the Debtor’s knowledge, be the
correct amount actually owing by such account debtor or debtors thereunder
in all material respects. No amount payable to the Debtor under
or in connection with any Account is evidenced by any Instrument or
Chattel Paper (other than customer contracts constituting Chattel Paper)
which ahs not been delivered to the Secured
Party.
|
|
|
(o)
|
Contracts. No
consent of any party (other than the Debtor) to any Contract is required,
or purports to be required, in connection with the execution, delivery and
performance of this Agreement. Each Contract is in full force
and effect and constitutes a valid and legally enforceable obligation of
the parties therein, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditor’s rights generally. No
consent or authorization of, filing, with or other act by or in respect of
any governmental authority is required in connection with the execution,
delivery, performance, validity or enforceablity of any of the Contracts
by any party thereto other than those which have been duly obtained, made
or performed, are in full force and effect and do not subject the scope of
any such Contract to any material adverse limitation, either specific or
general in nature. Neither the Debtor nor (tot the best of the
Debtor’s knowledge) any other party to any Contract is in default in a
manner which could reasonably be expected to materially adversely affect
the value of all such Contracts as Collateral or is reasonably likely to
become in de fault in the performance or observance of any of the terms
thereof in any material respect. The Debtor has fully performed
all its current obligations under each Contract. The Debtor has
fully performed all its current obligations under each
Contract. The right, title and interest of the Debtor in, to
and under each Contract are not subject to any defense, offset,
counterclaim or claim which n the aggregate could reasonably be expected
to have a material adverse effect to the Collateral, the Debtor’s
operations or the Debtor’s ability to satisfy its obligations
hereunder. No amount payable to the Debtor under or in
connection with any Contract is evidenc/74441ed by any Instrument or
Chattel Paper (other than customer contracts constituting chattel Paper)
which has not been delivered to the Secured
Party.
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Page
24
|
|
(p)
|
Copyrights, Patents and
Trademarks. All Copyrights, Copyrights Licenses, Patents
and Patent Licenses owned by the Debtor in its own name as of the date
hereof are listed on Schedule 4( ) attached hereto and made a part hereof,
which listing includes all Trademarks and Trademark Licenses owned by the
Debtor in its own name as of the ate hereof. To the best of the
Debtor’s knowledge, each Copyright, Patent and Trademark is valid,
subsisting, unexpired, enforceable and has not been
abandoned. Except as set forth in Schedule 4 ( ),
none of such Copyrights, Patents and Trademarks is the subject of any
licensing or franchise agreement. No holding, decision or
judgment has been rendered by any governmental authority which would
limit, cancel or question the validity of any Copyright, Patent or
Trademark. No action or proceeding is pending seeking to limit,
cancel or question the validity of any Copyright, patent or
Trademark.
|
|
|
(q)
|
Governmental
Obligors. None of the obligors on any Accounts, and none
of the parties to any Contracts, is a governmental authority with respect
to which the Federal Assignment of Claims Act is
applicable.
|
|
5.
|
Affirmative Covenants of the
Debtor. The Debtor covenanats and agrees that from the
date hereof until full and final payment and performance of all
Obligations, the Debtor shall:
|
|
|
(a)
|
Financial
Information: Deliver to Secured Party: promptly upon
Secured party’s request, such documentation and information about the
Debtor’s financial condition, business and/or operations as Secured Party
may, at any time and from time to time, reasonably request, including
without limitation, copies of federal and state income tax returns and all
schedules thereto, a listing of Debtor’s accounts and accounts payable and
a listing of Debtor’s Inventory and Equipment, all of which shall be in
form, scope and content reasonably satisfactory to Secured Party, in its
sole discretion.
|
|
|
(b)
|
Tax and Other
Liens. Comply with all statues and government
regulations and pay all taxes (including withholdings), assessments,
governmental charges or levies, or claims for labor, supplies, rent and
other obligations made against it or its property which, if unpaid, might
become a lien or charge against the Debtor or its properties, unless and
to the extent being contested in good faith with the prior written consent
of Secured party and against which, if requested by Secured
Party as a condition to its consent, the Debtor shall set up a cash
reserve or post a surety bond in an amount equal to the total amount of
the tax or lien being
contested.
|
Page
25
|
|
(c)
|
Place of
Business. Maintain its place of business and chief
executive offices at the address set forth in the first paragraph of this
Agreement.
|
|
|
(d)
|
Litigation. Promptly
advise Secured Party of the commencement or threat of litigation,
including arbitration proceedings and any proceedings before any
governmental agency (collectively, “Litigation”), which is instituted
against the Debtor and which, if adversely determined, would have a
maximum adverse affect on Debtor or its
assets.
|
|
|
(e)
|
Maintenance of
Existence. Maintain its corporate and comply with all
valid and applicable statutes, rules and regulations, and maintain its
properties in good repair, working order and operating
condition. The Debtor shall immediately notify Secured Party of
any event causing material loss in the value of its
assets.
|
|
|
(f)
|
Collateral
Duties. Do whatever Secured Party may request from time
to time by way of obtaining, executing, delivering and filing financing
statements, assignments, landlord’s or mortgagee’s waivers, and other
notices and amendments and renewals thereof, and the Debtor will take any
and all steps and observe such formalities as Secured party may request in
order to create and maintain a valid and enforceable first lien upon,
pledge of, and first priority security interest in, any and all of the
Collateral. Secured party is authorized to file financing
statements on behalf of the Debtor as specified by the UCC to perfect or
maintain Secured Party’s security interest in all of the
Collateral. All charges, expenses and fees Secured Party may
incur in filing any of the foregoing, together with reasonable costs and
expenses of any lien search required by Secured party, and any taxes
relating thereto, shall be changed to the Debtor and added to the
Obligations.
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(g)
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Notice of
Default. Provide to Secured Party, within one business
day after becoming aware of the occurrence or existence of an Event of
Default or a condition which would constitute an Event of de fault but for
the giving of notice or passage of time or both, notice in writing of such
Event of Default or condition.
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6.
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Negative Covenants of the
Debtor. The Debtor covenants and agrees that from the
date hereof until full and final payment and performance of all
Obligations, the Debtor shall not without the prior written consent of
Secured Party:
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26
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(a)
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Encumbrances. Incur
or permit to exist any lien, mortgage, charge or other encumbrance against
any of the Collateral which is prior to that of Secured party, whether now
owned or hereafter acquired, except: (1) liens required or expressly
permitted by this Agreement; (ii) pledges or deposits in connection with
or to se cure worker’s compensation, unemployment, or liability insurance;
and (iii) tax liens which are being contested in good faith with the prior
written consent of Secured party and against which, if requested by
Secured party as a condition to its consent the Debtor shall set up a cash
reserve or post a surety bond in an amount equal to the total amount of
the lien being contested.
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(b)
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Sale, Lease and/or License of
Assets. Sell, lease, license or otherwise dispose of any
of its assets, except in the ordinary course of
business.
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(c)
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Maintenance of
Collateral. Permit to incur or suffer any loss, theft,
substantial damage or destruction of any of the Collateral which is not
immediately replaced with collateral of equal or greater value, or which
is not fully covered by insurance, the proceeds of which shall have been
endorsed over to Secured Party in accordance with Section 5(b)
hereof.
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(d)
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Maintenance of
Existence. Fail to preserve and maintain its corporate
existence in the jurisdiction of its incorporation, organization or
formation.
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(e)
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UCC-3 Termination
Statements. File any UCC-3 termination statement
affecting any UCC-1 Financing Statement in favor of the Secured
Party.
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(f)
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Chattel
Paper. Create any Chattel Paper without placing a legend
thereon acceptable to Secured Party indicating that Secured Party has a
security interest therein.
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27
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7.
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Rights of Secured
Party. Upon the occurrence of any Event of Default,
Secured Party shall have the right to declare all of the Obligations to be
immediately due and payable and shall then have the rights and remedies of
a secured party under the UCC or under any other applicable law,
including, without limitations, the right to take possession of the
Collateral, and in addition thereto, the right to enter upon any premises
on which the Collateral or any part thereof may be situated and remove the
same therefrom and the right to occupy the Debtor’s premises for the
purposes of liquidating Collateral, including without limitation,
conducting an auction thereon, Secured Party may require the Debtor to
take the Collateral (to the extent the same is moveable) available to
Secured Party at a place to be designated by Secured
Party. Secured Party may, at its option, sell the Collateral on
credit, and furthermore may sell the Collateral without giving any
warranties as to the Collateral and my specifically disclaim any
warranties of title or the like, which shall not be considered to
adversely affect the commercial reasonableness of any sale of the
Collateral. Unless the Collateral is perishable or threatens to decline
speedily in value or is of a type customarily sold on a recognized market,
Secured Party will give the Debtor at least ten (10) days prior written
notice at the address of the Debtor set forth above (or at such other
address or addresses as the Debtor shall specify in writing to Secured
Party) of the time and place of any public sale thereof or of the time
after which any private sale or any other intended disposition thereof is
to be made. Any such notice shall be deemed to meet any
requirement hereunder or under any applicable law (including the UCC) that
reasonable notification be given of the time and place of such sale or
other disposition. After deducting all costs and expenses of
collection, storage, custody, sale or other disposition and delivery
(including reasonable attorney’s fees) and all other reasonable charges
against the Collateral, the residue of the Proceeds of any such sale or
disposition shall be applied to the payment of the Obligations in such
order of priority as Secured Party shall determine and any surplus shall
be returned to the Debtor or to any person or party lawfully entitled
thereto. In the event the Proceeds of any such sale or
disposition shall be applied to the payment of the Obligations in such
order of priority as Secured Party shall determine and any surplus shall
be returned to the Debtor or to any person or party lawfully entitled
thereto. In the event the Proceeds of any sale, lease or other disposition
of the Collateral hereunder, including without limitation, the Proceeds
from the collection of Accounts, are insufficient to pay all of the
Obligations in full, the Debtor will be liable for the deficiency,
together with interest thereon, at the maximum rate allowable by law, and
the costs and expenses of collection of such deficiency, including (to the
extent permitted by law) without limitation, attorneys fees, expenses and
disbursements.
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8.
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Rights of Secured Party to Use
and Operate Collateral, Etc. Upon the occurrence of any
Event of Default, Secured Party shall have the right and power to take
possession of all or any xxx of the Collateral, and to exclude the Debtor
and all persons claiming under the Debtor wholly or partly therefrom, and
thereafter to hold, store, and/or use, operate, manage and control the
same. Upon any such taking of possession, Secured Party without
obligation to do so, may, from time to time, at the expense of the Debtor,
make all such repairs, replacements, alterations, additions and
improvements to the Collateral as Secured Party may deem
proper. The Debtor hereby expressly waives any obligation of
the Secured Party to process ad/or prepare any Collateral prior to any
sale or other disposition thereof. Upon any taking of
possession of all or any part of the Collateral, Secured Party shall have
the right to manage and control the Collateral and to carry on the
business and to exercise all rights and powers of the Debtor in respect
thereto as Secured Party shall reasonably deem best, including the right
to enter into any and all such agreements with respect to the operation of
the Collateral or any part thereof as Secured Party may see fit; and
Secured party shall e entitled to collect and receive all issues, profits,
fees, revenues and other income of the same and every part
thereof. Such issues, profits, fees, revenues, and other income
shall be applied to pay the expenses of holding and operating the
Collateral and of conducting the business thereof, and of all maintenance,
repairs, replacements, alterations, additions and improvements, and to
make all payments which Secured Party may be required or may elect to
make, if any, for taxes, assessments, insurance and other charges upon the
Collateral or any part thereof, and all other payments which Secured Party
may be required or authorized to make under any provision of this
Agreement (including legal costs and attorneys fees). The
remainder of such issues, profits, fees, revenues and other income shall
be applied in the payment of the Obligations is such order of priority as
Secured Party shall determine. Without limiting the generality
of the foregoing, Secured Party shall have the right to apply for and have
a receiver appointed by a Court of competent jurisdiction in any action
taken by Secured party to enforce its rights and remedies hereunder in
order to manage, protect and preserve the Collateral and continue the
operation of the business of the Debtor and to collect all revenues and
profits thereof and apply the same to the payment of all expense and other
charges of such receivership including the compensation of the receiver
and to the payment of the Obligations as aforesaid until a sale or other
disposition of such Collateral shall be finally made and
consummated.
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9.
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Events of
Default. The Debtor shall be in default under this
Agreement upon the happening of any of the following events or conditions
(herein individually called an “Event of Default” and collectively called
“Events of Default”):
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(a)
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Failure
by Debtor to do anything required by the Note and other Financing
Agreements and, if curable, Debtor’s failure to fully secure such failure
within thirty (30) days of written notice thereof from Secured
Party;
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29
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(b)
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Failure
by Debtor to preserve, or account to Secured Party’s reasonable
satisfaction for, any of the Collateral or its proceeds and, if curable,
Debtor’s not curing such failure within thirty (30) days of written notice
thereof from Secured Party;
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(c)
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Default
by Debtor on a major loan agreement with another creditor, if Secured
Party reasonably believes the default may materially affect Debtor’s
ability to pay the Note;
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(d)
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Other
than as otherwise provided in this §9, breach of or failure in the due
observance or performance of any covenants, condition or agreement on the
part of Debtor to be observed or performed pursuant to this Agreement,
and, if curable, the failure to cure any such reach or failure within
thirty (30) days after written notice thereof from Secured Party to
Debtor;
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(e)
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Debtor’s
becoming the subject of a proceeding under any bankruptcy or insolvency
law;
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(f)
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Debtor’s
having a receiver or liquidator appointed for any part of its business or
property;
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(g)
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Debtor’s
making an assignment for the benefit of
creditors;
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(h)
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The
Secured party receiving at any time after the date hereof, a UCC lien
search report indicating that the Secured Party’s security interest in the
Collateral is not prior to all other security interests or other interests
reflected in the report, and Debtor’s failure to have any such prior
security or other interests fully released, terminated or subordinated
within 45 days of written notice of such report from Secured Party to
Debtor.
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10.
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Perfection by
Filing. The Secured Party may at any time and from time
to time, at Debtor’s expense, file financing statements, continuation
statements and amendments thereto that described the Collateral as all
assets of the Debtor or words of similar effect and which contain any
other information required by the UCC for the sufficiency or filing office
acceptance of any financing statement, continuation statement or
amendment, including whether the Debtor is an organization, the type of
organization and any tax and/or organization identification number issued
to the Debtor. The Debtor agrees to furnish any such
information to the Secured Party promptly upon request. Any
such financing statements, continuation statements or amendments may be
signed, if so required, by the Secured Party on behalf of the Debtor, and
may be filed at any time in any jurisdiction as necessary. The
Debtor hereby irrevocably appoints the Secured Party, through any of its
chosen agents or designees, as Debtor’s Attorney in Fact, coupled with an
interest, for the purposes
hereof.
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30
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11.
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Other Perfection,
etc. The Debtor shall at any time and from time to time,
at Debtor’s expense, take such steps as the Secured Party may reasonably
request for the Secured Party (a) to obtain an acknowledgement, in form
and substance satisfactory to the Secured Party, of any bailee having
possession of any of the Collateral that the bailee holds such Collateral
for the Secured Party, (b) to obtain “control” of any Investment Property,
Deposit Account, Letter Of Credit Rights or electronic Chattel paper (as
such terms are defined in the UCC), with any agreements establishing
control to be in form and substance satisfactory to the S e cured Party,
(c) to obtain possession of all or any portion of the Collateral in order
to perfect its security interest therein in addition to the filing of a
financing statement, and (d) otherwise to insure the continued perfection
and priority of the Secured Party’s security interest in any of the
Collateral and of the preservation of its rights
therein.
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12.
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Application of
Payments. To the extent that Debtor uses the proc3eeds
of the loan secured hereby to purchase any Collateral, Debtor’s repayment
shall be applied on a “first-in-first-out” basis so that the portion of
said loan used to purchase a particular item of Collateral shall be paid
in the chronological order Debtor purchased such
Collateral.
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13.
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Termination; Assignment
etc. This Agreement and the security interest in the
Collateral created hereby shall terminate when all of the Obligations have
been fully and finally paid, performed and discharged, whereupon Secured
Party will promptly provide Debtor with appropriate releases/terminations
of the security interests granted hereby. No waiver by Secured
Party or by any other holder of the Obligations of any default shall be
effective unless in writing signed by Secured Party or such other holder
nor shall any waiver granted on any one occasion operate as a waiver of
any other default or of the same default on a future occasion operate as a
waiver of any other default or of the same de fault on a future occasion.
In the event of a sale or assignment by Secured party of all or any of the
Obligations held by Secured Party, Secured party may assign or transfer
its respective rights and interests under this Agreement in whole or in
part to the purchaser or purchasers of such Obligations, whereupon such
purchaser or purchasers shall become vested with all of the powers and
rights hereunder, and Secured Party shall thereafter be forever released
and fully discharged from any liability or responsibility hereunder with
respect to the rights and interests so assigned except that Secured Party
shall be liable for damages suffered by the Debtor as a result of
sanctions taken by Secured Party in bad faith or with willful
misconduct.
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14.
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Notices. Except
as otherwise provided herein, notice to the Debtor or to Secured Party
shall be deemed to have been sufficiently given or served for all purposes
hereof if mailed by certified or registered mail, return receipt
requested, as follows:
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a)
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if
to Debtor:
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b)
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if
to Secured Party:
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15.
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Miscellaneous. This
Agreement shall inure the benefit of and be binding upon Secured Party and
the Debtor and their respective successors and assigns and all persons who
become bound as a Debtor to this Agreement. In case any
provision in this Agreement shall be invalid, illegal or unenforceable,
the validity, legality, and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby. This
Agreement may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, each of which shall be
an original, but all of which together shall constitute one
instrument. The paragraph headings used in this Agreement are
for convenience of reference only and are not to affect the construction
hereof or to be taken into consideration in the interpretation
hereof. This Agreement may not be amended except in
writing.
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16.
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Governing
Law. This Agreement shall be governed by the laws of the
State of New York, conflicts of laws rules excepted, and not to the extent
part 3 of the UCC requires the application of the laws of another
jurisdiction with regard to the perfection and priority of security
interests or agricultural
liens.
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.
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IN
WITNESS WHEREOF, the parties have executed this Agreement as a sealed instrument
as of the date first above written.
By:
_________________________________
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