EXHIBIT 4.10
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of January 18, 2002 (this "Agreement"),
among x.Xxxxxxx Corporation, a Delaware corporation ("Parent"), x.Xxxxxxx
Corporation, a California corporation ("Subsidiary" and, each of
Subsidiary and Parent are a "Debtor" and Subsidiary and Parent are,
collectively, the "Debtors"), and Xxxxxxxx Xxxx International Limited, its
endorsees, transferees and assigns (the "Secured Party").
W I T N E S S E T H:
WHEREAS, pursuant to the 5% Secured Promissory Note of the Parent,
dated the date of this Agreement, issued in the original principal amount
of $1,200,000 to the Secured Party (the "Note"), the Secured Party has
agreed to extend the loan to Parent evidenced by the Note; and
WHEREAS, in order to induce the Secured Party to extend the loan
evidenced by the Note, the Debtors have agreed to execute and deliver to
the Secured Party this Agreement and to grant Secured Party a first
priority security interest in certain property of the Debtors to secure
the prompt payment, performance and discharge in full of all of Parent's
obligations under the Note.
NOW, THEREFORE, in consideration of the agreements herein contained
and for other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto hereby agree as
follows:
1. Certain Definitions. As used in this Agreement, the following
terms shall have the meanings set forth in this Section 1. Terms used but
not otherwise defined in this Agreement that are defined in Article 9 of
the UCC (such as "general intangibles" and "proceeds") shall have the
respective meanings given such terms in Article 9 of the UCC.
(a) "Collateral" means the collateral in which the Secured
Party is granted a security interest by this Agreement and which shall
include the following, whether presently owned or existing or hereafter
acquired or coming into existence, and all additions and accessions
thereto and all substitutions and replacements thereof, and all proceeds,
products and accounts thereof, including, without limitation, all proceeds
from the sale or transfer of the Collateral and of insurance covering the
same and of any tort claims in connection therewith:
(i) All Goods of the Debtors, including, without limitations, all machinery,
equipment, computers, motor vehicles, trucks, tanks, boats, ships,
appliances, furniture, special and general tools, fixtures, test and
quality control devices and other equipment of every kind and nature and
wherever situated, together with all documents of title and documents
representing the same, all additions and accessions thereto, replacements
therefor, all parts therefor, and all substitutes for any of the foregoing
and all other items used and useful in connection with the Debtors'
respective businesses and all improvements thereto (collectively, the
"Equipment"); and
(ii) All Inventory of the Debtors; and
(iii) All of the Debtors' respective contract rights and general intangibles,
including, without limitation, all partnership interests, stock or other
securities, licenses, distribution and other agreements, computer software
development rights, leases, franchises, customer lists, quality control
procedures, grants and rights, goodwill, trademarks, service marks, trade
styles, trade names, patents, patent applications, copyrights, deposit
accounts, and income tax refunds (collectively, the "General
Intangibles"); and
(iv) All Receivables of the Debtors including all insurance proceeds, and
rights to refunds or indemnification whatsoever owing, together with all
instruments, all documents of title representing any of the foregoing, all
rights in any merchandising, goods, equipment, motor vehicles and trucks
which any of the same may represent, and all right, title,
security and guaranties with respect to each Receivable, including any
right of stoppage in transit; and
(v) All of the Debtors' respective documents, instruments and chattel paper,
files, records, books of account, business papers, computer programs and
the products and proceeds of all of the foregoing Collateral set forth in
clauses (i)-(iv) above.
(c) "Obligations" means all of the Debtors' respective
obligations under this Agreement and the Note, in each case, whether now
or hereafter existing, voluntary or involuntary, direct or indirect,
absolute or contingent, liquidated or unliquidated, whether or not jointly
owed with others, and whether or not from time to time decreased or
extinguished and later increased, created or incurred, and all or any
portion of such obligations or liabilities that are paid, to the extent
all or any part of such payment is avoided or recovered directly or
indirectly from the Secured Party as a preference, fraudulent transfer or
otherwise as such obligations may be amended, supplemented, converted,
extended or modified from time to time.
(d) "UCC" means the Uniform Commercial Code and or any other
applicable law of any jurisdiction (including, without limitation, the
state of California) as to any Collateral located therein.
2. Grant of First Priority Security Interest. As an inducement
for the Secured Party to extend the loan as evidenced by the Note and to
secure the complete and timely payment, performance and discharge in full,
as the case may be, of all of the Obligations, each Debtor hereby,
unconditionally and irrevocably, pledges, grants and hypothecates to the
Secured Party, a continuing first priority security interest in, a first
lien upon and a right of set-off against all of their respective right,
title and interest of whatsoever kind and nature in and to the Collateral
(the "Security Interest").
3. Representations, Warranties, Covenants and Agreements of the
Debtors. The Debtors jointly and severally represent and warrant to, and
covenant and agree with, the Secured Party as follows:
(a) The Debtors have the requisite corporate power and
authority to enter into this Agreement and otherwise to carry out their
obligations thereunder. The execution, delivery and performance by the
Debtors of this Agreement and the filings contemplated therein have been
duly authorized by all necessary action on the part of the Debtors and no
further action is required by the Debtors.
(b) The Debtors represent and warrant that they have no
place of business or offices where their respective books of account and
records are kept (other than temporarily at the offices of its attorneys
or accountants) or places where Collateral is stored or located, except as
set forth on Schedule A attached hereto.
(c) Except for the indebtedness and subordinated liens of
the holders of the Parent's 12% Secured Promissory Notes due December 31,
2002 in the principal amount of $1,000,000, the Debtors are the sole
owners of the Collateral (except for non-exclusive licenses granted by the
Debtors in the ordinary course of business), free and clear of any liens,
security interests, encumbrances, rights or claims, and are fully
authorized to grant the Security Interest in and to pledge the Collateral.
There is not on file in any governmental or regulatory authority, agency
or recording office an effective financing statement, security agreement,
license or transfer or any notice of any of the foregoing (other than
those that have been filed in favor of the Secured Party pursuant to this
Agreement) covering or affecting any of the Collateral. So long as this
Agreement shall be in effect, neither Debtor shall not execute and shall
not knowingly permit to be on file in any such office or agency any such
financing statement or other document or instrument (except to the extent
filed or recorded in favor of the Secured Party pursuant to the terms of
this Agreement).
(d) No part of the Collateral has been judged invalid or
unenforceable. No written claim has been received that any Collateral or
either Debtor's use of any Collateral violates the rights of any third
party. There has been no adverse decision to either Debtor's claim of
ownership rights in or exclusive rights to use the Collateral
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in any jurisdiction or to a Debtor's right to keep and maintain such
Collateral in full force and effect, and there is no proceeding involving
said rights pending or, to the best knowledge of the Debtors, threatened
before any court, judicial body, administrative or regulatory agency,
arbitrator or other governmental authority.
(e) The Debtors shall at all times maintain their respective
books of account and records relating to the Collateral at their
respective principal place of business and their respective Collateral at
the locations set forth on Schedule A attached hereto and may not relocate
such books of account and records or tangible Collateral unless they
deliver to the Secured Party at least 30 days prior to such relocation (i)
written notice of such relocation and the new location thereof (which must
be within the United States) and (ii) evidence that appropriate financing
statements under the UCC and other necessary documents have been filed and
recorded and other steps have been taken to perfect the Security Interest
to create in favor of the Secured Party a valid, perfected and continuing
first priority liens in the Collateral.
(f) This Agreement creates in favor of the Secured Party a
valid security interest in the Collateral securing the payment and
performance of the Obligations and, upon making the filings described in
the immediately following sentence, a perfected first priority security
interest in such Collateral. Except for the filing of financing statements
pursuant to the UCC with the proper filing and recording agencies in the
jurisdictions indicated on Schedule B, attached hereto, no authorization
or approval of or filing with or notice to any governmental authority or
regulatory body is required either (i) for the grant by the Debtors of, or
the effectiveness of, the Security Interest granted hereby or for the
execution, delivery and performance of this Agreement by the Debtors or
(ii) for the perfection of or exercise by the Secured Party of its rights
and remedies hereunder.
(g) On the date of execution of this Agreement, the Debtors
will file one or more financing statements under the UCC with respect to
the Security Interest with the proper filing and recording agencies in the
jurisdictions indicated on Schedule B, attached hereto and in such other
jurisdictions as may be requested by the Secured Party and will deliver
true and complete copies of such filings to the Secured Party.
(h) The execution, delivery and performance of this
Agreement by the Debtors does not conflict with, or constitute a default
(or an event that with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or
both) of, any agreement, credit facility, debt or other instrument
(evidencing a Debtor's debt or otherwise) or other understanding to which
either Debtor is a party or by which any property or asset of the Debtors
is bound or affected. No consent (including, without limitation, from
stock holders or creditors of a Debtor) is required for the Debtors to
enter into and perform its obligations hereunder.
(i) The Debtors shall at all times maintain the liens and
Security Interest provided for hereunder as valid and perfected first
priority liens and security interests in the Collateral in favor of the
Secured Party until this Agreement and the Security Interest hereunder
shall be terminated pursuant to Section 11 hereof. The Debtors hereby
agree to defend the same against any and all persons. The Debtors shall
safeguard and protect all Collateral for the account of the Secured Party.
At the request of the Secured Party, the Debtors will sign and deliver to
the Secured Party at any time or from time to time one or more financing
statements pursuant to the UCC in form reasonably satisfactory to the
Secured Party and will pay the cost of filing the same in all public
offices wherever filing is, or is deemed by the Secured Party to be,
necessary or desirable to effect the rights and obligations provided for
herein. Without limiting the generality of the foregoing, the Debtors
shall pay all fees, taxes and other amounts necessary to maintain the
Collateral and the Security Interest hereunder, and the Debtors shall
obtain and furnish to the Secured Party from time to time, upon demand,
such releases and/or subordinations of claims and liens which may be
required to maintain the priority of the Security Interest hereunder.
(j) The Debtors will not transfer, pledge, hypothecate,
encumber, license (except for non-exclusive licenses granted by a Debtor
in its ordinary course of business and sales of inventory), sell or
otherwise dispose of any of the Collateral without the prior written
consent of the Secured Party.
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(k) The Debtors shall keep and preserve its Equipment,
Inventory and other tangible Collateral in good condition, repair and
order and shall not operate or locate any such Collateral (or cause to be
operated or located) in any area excluded from insurance coverage.
(l) The Debtors shall, within ten (10) days of obtaining
knowledge thereof, advise the Secured Party promptly, in sufficient
detail, of any substantial change in the Collateral, and of the occurrence
of any event which would have a material adverse effect on the value of
the Collateral or on the Secured Party's security interest therein.
(m) The Debtors shall promptly execute and deliver to the
Secured Party such further deeds, mortgages, assignments, security
agreements, financing statements or other instruments, documents,
certificates and assurances and take such further action as the Secured
Party may from time to time request and may in its sole discretion deem
necessary to perfect, protect or enforce its security interest in the
Collateral including, without limitation, the execution and delivery of a
separate security agreement with respect to each Debtor's intellectual
property ("Intellectual Property Security Agreement") in which the Secured
Party has been granted a security interest hereunder, substantially in a
form acceptable to the Secured Party, which Intellectual Property Security
Agreement, other than as stated therein, shall be subject to all of the
terms and conditions hereof.
(n) The Debtor's shall permit the Secured Party and its
representatives and agents to inspect the Collateral at any time, and to
make copies of records pertaining to the Collateral as may be requested by
the Secured Party from time to time.
(o) The Debtor's shall take all steps reasonably necessary
to diligently pursue and seek to preserve, enforce and collect any rights,
claims, causes of action and accounts receivable in respect of the
Collateral.
(p) The Debtors shall promptly notify the Secured Party in
sufficient detail upon becoming aware of any attachment, garnishment,
execution or other legal process levied against any Collateral and of any
other information received by a Debtor that may materially affect the
value of the Collateral, the Security Interest or the rights and remedies
of the Secured Party hereunder.
(q) All information heretofore, herein or hereafter supplied
to the Secured Party by or on behalf of the Debtors with respect to the
Collateral is accurate and complete in all material respects as of the
date furnished.
(r) The Debtors shall at all times preserve and keep in full
force and effect their respective valid existence and good standing and
any rights and franchises material to its business.
(s) A Debtor will not change its name, FEIN, corporate
structure, or identity, or add any new fictitious name unless it provides
at least 30 days prior written notice to the Secured Party of such change
and, at the time of such written notification, such Debtor provides any
financing statements or fixture filings necessary to perfect and continue
perfected the first priority Security Interest granted and evidenced by
this Agreement and the Note as to the Collateral.
(t) A Debtor may not consign any of its Inventory or sell
any of its Inventory on xxxx and hold, sale or return, sale on approval,
or other conditional terms of sale without the consent of the Secured
Party which shall not be unreasonably withheld.
(u) A Debtor may not relocate its chief executive office to
a new location without providing 30 days prior written notification
thereof to the Secured Party and so long as, at the time of such written
notification, such Debtor provides any financing statements or fixture
filings necessary to perfect and continue perfected the first
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priority Security Interest granted and evidenced by this Agreement and the
Note as to the Collateral.
(v) Parent owns 100% of the capital stock of Subsidiary.
4. Defaults. The following events shall be "Events of Default":
(a) The occurrence of an Event of Default (as defined in the
Note) under the Note;
(b) Any representation or warranty of a Debtor in this
Agreement or in the Intellectual Property Security Agreement shall prove
to have been incorrect in any material respect when made;
(c) The failure by a Debtor to observe or perform any of its
obligations hereunder or in the Intellectual Property Security Agreement
for five (5) days after delivery to such Debtor of notice of such failure
by or on behalf of the Secured Party;
(d) A Debtor shall prepay, redeem, defease, purchase, or
otherwise acquire any of its or its subsidiaries' indebtedness, other than
permitted prepayments under the Note;
(e) A Debtor shall make any distribution or declare or pay
any dividends (in cash or other property, other than common stock) on, or
purchase, acquire, redeem, or retire any of its capital stock, of any
class, whether now or hereafter outstanding;
(f) Parent shall modify or change its method of accounting
or enter into, modify, or terminate any agreement currently existing, or
at any time hereafter entered into with any third party accounting firm or
service bureau for the preparation or storage of its accounting records;
(g) If a judgment or other claim becomes a lien or
encumbrance upon any material portion of a Debtor's assets; and
(h) If any provision of this Agreement shall at any time for
any reason be declared to be null and void, or the validity or
enforceability thereof shall be contested by a Debtor, or a proceeding
shall be commenced by a Debtor, or by any governmental authority having
jurisdiction over a Debtor, seeking to establish the invalidity or
unenforceability thereof, or a Debtor shall deny that a Debtor has any
liability or obligation purported to be created under this Agreement.
5. Duty To Hold In Trust. Upon the occurrence of any Event of
Default and at any time thereafter, the Debtors shall, upon receipt of any
revenue, income or other sums subject to the Security Interest, whether
payable pursuant to the Note or otherwise, or of any check, draft, note,
trade acceptance or other instrument evidencing an obligation to pay any
such sum, hold the same in trust for the Secured Party and shall forthwith
endorse and transfer any such sums or instruments, or both, to the Secured
Party for application to the satisfaction of the Obligations.
6. Rights and Remedies Upon Default. Upon the occurrence of any
Event of Default and at any time thereafter, the Secured Party shall have
the right to exercise all of the remedies conferred hereunder and under
the Note, and the Secured Party shall have all the rights and remedies of
a secured party under the UCC. Without limitation, the Secured Party shall
have the following rights and powers:
(a) The Secured Party shall have the right to take
possession of the Collateral and, for that purpose, enter, with the aid
and assistance of any person, any premises where the Collateral, or any
part thereof, is or may be placed and remove the same, and the Debtors
shall assemble the Collateral and make it available to the Secured Party
at places which the Secured Party shall reasonably select, whether at a
Debtor's premises or
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elsewhere, and make available to the Secured Party, without rent, all of
the Debtors' respective premises and facilities for the purpose of the
Secured Party taking possession of, removing or putting the Collateral in
saleable or disposable form.
(b) The Secured Party shall have the right to operate the
business of the Debtors using the Collateral and shall have the right to
assign, sell, lease or otherwise dispose of and deliver all or any part of
the Collateral, at public or private sale or otherwise, either with or
without special conditions or stipulations, for cash or on credit or for
future delivery, in such parcel or parcels and at such time or times and
at such place or places, and upon such terms and conditions as the Secured
Party may deem commercially reasonable, all without (except as shall be
required by applicable statute and cannot be waived) advertisement or
demand upon or notice to the Debtors or right of redemption of a Debtor,
which are hereby expressly waived. Upon each such sale, lease, assignment
or other transfer of Collateral, the Secured Party may, unless prohibited
by applicable law which cannot be waived, purchase all or any part of the
Collateral being sold, free from and discharged of all trusts, claims,
right of redemption and equities of the Debtors, which are hereby waived
and released.
7. Applications of Proceeds. The proceeds of any such sale, lease
or other disposition of the Collateral hereunder shall be applied first,
to the expenses of retaking, holding, storing, processing and preparing
for sale, selling, and the like (including, without limitation, any taxes,
fees and other costs incurred in connection therewith) of the Collateral,
to the reasonable attorneys' fees and expenses incurred by the Secured
Party in enforcing its rights hereunder and in connection with collecting,
storing and disposing of the Collateral, and then to satisfaction of the
Obligations, and to the payment of any other amounts required by
applicable law, after which the Secured Party shall pay to the applicable
Debtor any surplus proceeds. If, upon the sale, license or other
disposition of the Collateral, the proceeds thereof are insufficient to
pay all amounts to which the Secured Party is legally entitled, the
Debtors will be jointly and severally liable for the deficiency, together
with interest thereon, at the rate of 10% per annum or the lesser amount
permitted by applicable law (the "Default Rate"), and the reasonable fees
of any attorneys employed by the Secured Party to collect such deficiency.
To the extent permitted by applicable law, the Debtors waive all claims,
damages and demands against the Secured Party arising out of the
repossession, removal, retention or sale of the Collateral, unless due to
the gross negligence or willful misconduct of the Secured Party.
8. Costs and Expenses. The Debtors agree to pay all reasonable
out-of-pocket fees, costs and expenses incurred in connection with any
filing required hereunder, including without limitation, any financing
statements pursuant to the UCC, continuation statements, partial releases
and/or termination statements related thereto or any expenses of any
searches reasonably required by the Secured Party. The Debtors shall also
pay all other claims and charges which in the reasonable opinion of the
Secured Party might prejudice, imperil or otherwise affect the Collateral
or the Security Interest therein. The Debtors will also, upon demand, pay
to the Secured Party the amount of any and all reasonable expenses,
including the reasonable fees and expenses of its counsel and of any
experts and agents, which the Secured Party may incur in connection with
(i) the enforcement of this Agreement, (ii) the custody or preservation
of, or the sale of, collection from, or other realization upon, any of the
Collateral, or (iii) the exercise or enforcement of any of the rights of
the Secured Party under the Note. Until so paid, any fees payable
hereunder shall be added to the principal amount of the Note and shall
bear interest at the Default Rate. The Debtors shall be jointly and
severally liable to Secured Party for all costs and expenses due or owing
under or in accordance with this Agreement.
9. Responsibility for Collateral. The Debtors jointly and
severally assume all liabilities and responsibility in connection with all
Collateral, and the obligations of a Debtor hereunder or under the Note
shall in no way be affected or diminished by reason of the loss,
destruction, damage or theft of any of the Collateral or its
unavailability for any reason.
10. Security Interest Absolute. All rights of the Secured Party
and all Obligations of the Debtors hereunder, shall be absolute and
unconditional, irrespective of: (a) any lack of validity or enforceability
of this Agreement, the Note or any agreement entered into in connection
with the foregoing, or any portion hereof or thereof; (b) any change in
the time, manner or place of payment or performance of, or in any other
term of, all or any
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of the Obligations, or any other amendment or waiver of or any consent to
any departure from the Note or any other agreement entered into in
connection with the foregoing; (c) any exchange, release or nonperfection
of any of the Collateral, or any release or amendment or waiver of or
consent to departure from any other collateral for, or any guaranty, or
any other security, for all or any of the Obligations; (d) any action by
the Secured Party to obtain, adjust, settle and cancel in its sole
discretion any insurance claims or matters made or arising in connection
with the Collateral; or (e) any other circumstance which might otherwise
constitute any legal or equitable defense available to a Debtor, or a
discharge of all or any part of the Security Interest granted hereby.
Until the Obligations shall have been paid and performed in full, the
rights of the Secured Party shall continue even if the Obligations are
barred for any reason, including, without limitation, the running of the
statute of limitations or bankruptcy. The Debtors expressly waives
presentment, protest, notice of protest, demand, notice of nonpayment and
demand for performance. In the event that at any time any transfer of any
Collateral or any payment received by the Secured Party hereunder shall be
deemed by final order of a court of competent jurisdiction to have been a
voidable preference or fraudulent conveyance under the bankruptcy or
insolvency laws of the United States, or shall be deemed to be otherwise
due to any party other than the Secured Party, then, in any such event,
the Debtors' respective obligations hereunder shall survive cancellation
of this Agreement, and shall not be discharged or satisfied by any prior
payment thereof and/or cancellation of this Agreement, but shall remain a
valid and binding obligation enforceable in accordance with the terms and
provisions hereof. Each Debtor waives all right to require the Secured
Party to proceed against any other person or to apply any Collateral which
the Secured Party may hold at any time, or to marshal assets, or to pursue
any other remedy. Each Debtor waives any defense arising by reason of the
application of the statute of limitations to any obligation secured
hereby.
11. Term of Agreement. This Agreement and the Security Interest
shall terminate on the date on which all payments under the Note have been
made in full and all other Obligations have been paid or discharged. Upon
such termination, the Secured Party, at the request and at the expense of
the Debtors, will join in executing any termination statement with respect
to any financing statement executed and filed pursuant to this Agreement.
12. Power of Attorney; Further Assurances. (a) Each Debtor
authorizes the Secured Party, and does hereby make, constitute and appoint
Secured Party and its respective officers, agents, successors or assigns
with full power of substitution, as the Debtors' true and lawful
attorney-in-fact, with power, in the name of the Secured Party or a
Debtor, to, after the occurrence and during the continuance of an Event of
Default, (i) endorse any notes, checks, drafts, money orders, or other
instruments of payment (including payments payable under or in respect of
any policy of insurance) in respect of the Collateral that may come into
possession of the Secured Party; (ii) to sign and endorse any financing
statement pursuant to the UCC or any invoice, freight or express xxxx,
xxxx of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications and notices in connection with accounts, and
other documents relating to the Collateral; (iii) to pay or discharge
taxes, liens, security interests or other encumbrances at any time levied
or placed on or threatened against the Collateral; (iv) to demand,
collect, receipt for, compromise, settle and xxx for monies due in respect
of the Collateral; and (v) generally, to do, at the option of the Secured
Party, and at the expense of the Debtors, at any time, or from time to
time, all acts and things which the Secured Party deems necessary to
protect, preserve and realize upon the Collateral and the Security
Interest granted therein in order to effect the intent of this Agreement
and the Note all as fully and effectually as a Debtor might or could do;
and each Debtor hereby ratifies all that said attorney shall lawfully do
or cause to be done by virtue hereof. This power of attorney is coupled
with an interest and shall be irrevocable for the term of this Agreement
and thereafter as long as any of the Obligations shall be outstanding.
(b) On a continuing basis, the Debtors will make, execute,
acknowledge, deliver, file and record, as the case may be, with the proper
filing and recording agencies in any jurisdiction, including, without
limitation, the jurisdictions indicated on Schedule B, attached hereto,
all such instruments, and take all such action as may reasonably be deemed
necessary or advisable, or as reasonably requested by the Secured Party,
to perfect the Security Interest granted hereunder and otherwise to carry
out the intent and purposes of this Agreement, or for assuring and
confirming to the Secured Party the grant or perfection of a first
priority security interest in all the Collateral under the UCC.
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(c) Each Debtor hereby irrevocably appoints the Secured
Party as the Debtors' attorney-in-fact, with full authority in the place
and stead of such Debtor and in the name of such Debtor, from time to time
in the Secured Party's discretion, to take any action and to execute any
instrument which the Secured Party may deem necessary or advisable to
accomplish the purposes of this Agreement, including the filing, in its
sole discretion, of one or more financing or continuation statements and
amendments thereto, relative to any of the Collateral without the
signature of the Debtors where permitted by law.
13. Notices. All notices, requests, demands and other
communications hereunder shall be in writing, with copies to all the other
parties hereto, and shall be deemed to have been duly given when (i) if
delivered by hand, upon receipt, (ii) if sent by facsimile, upon receipt
of proof of sending thereof, (iii) if sent by the nationally recognized
overnight delivery service (receipt requested), the next business day or
(iv) if mailed by first-class registered or certified mail, return receipt
requested, postage prepaid, four days after posting in the U.S. mails, in
each case if delivered to the following addresses:
If to either Debtor: x.Xxxxxxx Corporation
00000 Xxxxxxx Xxxxx Xxxxx Xxxxx,
Xxx Xxxxx, Xxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Ran Xxxxxx, Chief Financial Officer
With copies to: Higham, XxXxxxxxx & Xxxxxxx LLP
00000 Xxxxx Xxxx, Xxxxx 000
Xxxxxx Xxxxxx, XX 00000-0000
Facsimile: (000) 000-0000
Attn: Xxxx X. Xxxxxxx, Esq.
If to Secured Party: Xxxxxxxx Xxxx International Limited
c/o Beacon Capital Management
Harbor House, 2nd Floor
Waterfront Drive
Roadtown, Tortola
British Virgin Islands
Attn: Xxxxx Xxxx
With copies to: Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx &
Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000 and
(000) 000-0000
Attn: Xxxx X. Xxxxx, Esq.
14. Other Security. To the extent that the Obligations are now or
hereafter secured by property other than the Collateral or by the
guarantee, endorsement or property of any other person, firm, corporation
or other entity, then the Secured Party shall have the right, in its sole
discretion, to pursue, relinquish, subordinate, modify or take any other
action with respect thereto, without in any way modifying or affecting any
of the Secured Party's rights and remedies hereunder.
15. Miscellaneous.
(a) No course of dealing between the Debtors and the Secured
Party, nor any failure to exercise, nor any delay in exercising, on the
part of the Secured Party, any right, power or privilege hereunder or
under the Note shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, power or
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privilege hereunder or thereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
(b) All of the rights and remedies of the Secured Party with
respect to the Collateral, whether established hereby or by the Note or by
any other agreements, instruments or documents or by law shall be
cumulative and may be exercised singly or concurrently.
(c) This Agreement constitutes the entire agreement of the
parties with respect to the subject matter hereof and is intended to
supersede all prior negotiations, understandings and agreements with
respect thereto. Except as specifically set forth in this Agreement, no
provision of this Agreement may be modified or amended except by a written
agreement specifically referring to this Agreement and signed by the
parties hereto.
(d) In the event that any provision of this Agreement is
held to be invalid, prohibited or unenforceable in any jurisdiction for
any reason, unless such provision is narrowed by judicial construction,
this Agreement shall, as to such jurisdiction, be construed as if such
invalid, prohibited or unenforceable provision had been more narrowly
drawn so as not to be invalid, prohibited or unenforceable. If,
notwithstanding the foregoing, any provision of this Agreement is held to
be invalid, prohibited or unenforceable in any jurisdiction, such
provision, as to such jurisdiction, shall be ineffective to the extent of
such invalidity, prohibition or unenforceability without invalidating the
remaining portion of such provision or the other provisions of this
Agreement and without affecting the validity or enforceability of such
provision or the other provisions of this Agreement in any other
jurisdiction.
(e) No waiver of any breach or default or any right under
this Agreement shall be considered valid unless in writing and signed by
the party giving such waiver, and no such waiver shall be deemed a waiver
of any subsequent breach or default or right, whether of the same or
similar nature or otherwise.
(f) This Agreement shall be binding upon and inure to the
benefit of each party hereto and its successors and assigns.
(g) Each party shall take such further action and execute
and deliver such further documents as may be necessary or appropriate in
order to carry out the provisions and purposes of this Agreement.
(h) All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State
of New York, without regard to the principles of conflicts of law thereof.
Each party agrees that all proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement
and the Note (whether brought against a party hereto or its respective
affiliates, directors, officers, shareholders, employees or agents) shall
be commenced exclusively in the state and federal courts sitting in the
City of New York, Borough of Manhattan. Each party hereto hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of New York, Borough of Manhattan for the
adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any proceeding, any claim
that it is not personally subject to the jurisdiction of any such court,
that such proceeding is improper. Each party hereto hereby irrevocably
waives personal service of process and consents to process being served in
any such proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such party at
the address in effect for notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of process
and notice thereof. Nothing contained herein shall be deemed to limit in
any way any right to serve process in any manner permitted by law. Each
party hereto hereby irrevocably waives, to the fullest extent permitted by
applicable law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Agreement or the transactions
contemplated hereby. If either party shall commence a proceeding to
enforce any provisions of this Agreement, then the prevailing party in
such proceeding shall be reimbursed by the other party for its reasonable
attorneys fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such proceeding.
9
(i) This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an
original and, all of which taken together shall constitute one and the
same Agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of
the party executing (or on whose behalf such signature is executed) the
same with the same force and effect as if such facsimile signature were
the original thereof.
* * * * * * * * * *
10
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed on the day and year first above written.
x.XXXXXXX CORPORATION
By:_______________________
Name:
Title:
x.XXXXXXX CORPORATION
By:_______________________
Name:
Title:
XXXXXXXX XXXX INTERNATIONAL LIMITED
By:_______________________
Name:
Title:
11
Schedule A
Principal Place of Business of Parent:
00000 Xxxxxxx Xxxxx Xxxxx Xxxxx
Xxx Xxxxx, XX 00000
Principal Place of Business of Subsidiary:
00000 Xxxxxxx Xxxxx Xxxxx Xxxxx
Xxx Xxxxx, XX 00000
Locations Where Collateral is Located or Stored:
1. 00000 Xxxxxxx Xxxxx Xxxxx Xxxxx
Xxx Xxxxx, XX 00000
2. APL Direct Logistics
0000 Xxxxxxxxx Xxxxxxxxx
Xxxxxx, Xxxxxxxx 00000
12
Schedule B
Jurisdictions:
13
