EXHIBIT 10.30
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Agreement") dated this 1st day of November,
1995, by and between POLYPHASE CORPORATION (hereinafter called the "Secured
Party") with its principal offices at 00000 Xxxxxx Xxxxxxx, 0xx Xxxxx, Xxxxxx,
Xxxxx 00000, and the Pyrenees Group, 0 Xxxxxxxxxx Xxxxx, Xxxxxx, Xxxxx 00000,
(the "Debtor:"), in its capacity as the holder of the Note (as defined below).
1. Security Interest. For value received, Debtor hereby grants to
Secured Party, upon the terms and conditions of this Agreement, a security
interest in an to any and all present or future rights of Debtor in and to all
of the following rights, interest and property (all of the following being
herein sometimes called the "Collateral"): Two hundred thousand (200,000) shares
of Polyphase Corporation Series D Preferred Stock or all or any portion of the
500,000 shares of Common Stock into which such shares may have been converted.
2. Obligation. The security interest herein granted ("Security
Interests") shall secure full payment and performance of: (a) that certain
Promissory Note of even date herewith in the principal amount of $2,000,000,
made to Debtor and payable to the order of Secured party (such note and any
notes given in modification, renewal, extension or substitution thereof being
herein sometimes collectively referred to as the "Notes" and individually as the
"Note"); and (b) the due and punctual observance and performance of each and
every agreement, covenant and condition on Debtor's part to be observed or
performed under this Agreement and the Note (all of which debts, duties,
liabilities and obligations hereinbefore described and covered by this Agreement
and the Note are hereinafter referred to as the "Obligation").
3. Priority. Debtor represents and warrants that the Security Interests
are first and prior security interests in and to all of the Collateral, subject
to the following liens thereon or security interest therein in existence prior
to the Debtors acquisition of the Collateral: NONE
4. Title to Collateral. Debtor represents and warrants to Secured Party
that: (a) Debtor is the owner of the Collateral; (b) no dispute, right of
offset, counterclaim, or defense to the Security Interests exists with respect
to all or any part of the Collateral; and (c) Debtor will defend the Collateral
against the claims and demands of all persons other than any subordinate claims
or liens acknowledged by Secured Party.
5. Debtor's Obligation. So long as the Note is outstanding, Debtor
covenants and agrees with Secured Party: (a) not to permit any material part of
the Collateral to be levied upon under any legal process; (b) not to dispose of
any of the Collateral without the prior written consent of Secured
Party; (c) to comply with all applicable federal, state and local statutes laws,
rules and regulations; the noncompliance with which could have a material and
adverse effect on the value of the Collateral; and (d) to pay all taxes accruing
after the Closing Date which constitute, or may constitute, a lien against the
Collateral, prior to the date when penalties or interest would attach to such
taxes; provided, that Debtor may contest any such tax claim if done diligently
and in good faith.
6. Event of Default. As used herein, the term "Event of Default" shall
include any or all of the following if same exist on the 10th day after written
notice by Secured Party to Debtor which certifies such default:
(a) The assignment, voluntary or involuntary conveyance of legal or
beneficial interest, mortgage, pledge or grant of a security interest in any of
the Collateral; or
(b) The filing or issuance of a notice of any lien, warrant for distraint
or notice of levy for taxes or assessment against the Collateral (except for
those which are being contested in good faith and for which adequate reserves
have been created); or
(c) Nonpayment of any installment of principal or interest upon the date
same shall be due and payable under the terms of the Note; or
(d) The adjudication of Debtor as bankrupt, or the taking of any
voluntary action by Debtor or any involuntary action against Debtor seeking an
adjudication of Debtor as bankrupt, or seeking relief by or against Debtor
under any provision of the Bankruptcy Code.
7. Remedies. Upon the occurrence and during the continuation of an
Event of Default as defined herein, in addition to any and all other rights and
remedies which Secured Party may then have hereunder or under the Note, under
the Uniform Commercial Code of the State of Texas or of any other pertinent
jurisdiction (the "Code"), or otherwise, Secured Party may, at its option: (a)
reduce his claim to judgement of foreclosure or otherwise enforce the Security
Interests, on whole or in part, by any available judicial procedure; (b) sell,
or otherwise dispose of, at the office of Secured Party, or elsewhere, all or
any part of the Collateral, and any such sale or other disposition may be as a
unit or on parcels, by public or private proceedings, and by way of one or more
contracts (it being agreed that the sale of any part of the Collateral shall not
exhaust the Secured Party's power of sale, but sales may be made from time to
time, and at any time, until all of the Collateral has been sold or until the
Obligation has been paid and performed in full); (c) at its discretion, retain
the Collateral in satisfaction of the Obligation whenever the circumstances are
such that Secured Party is entitled to do so under the Code or otherwise; and
(d) exercise any and all other rights, remedies and privileges it may have under
the Note and the other documents defining the Obligation.
8. Application of Proceeds by Secured Party. Any and all proceeds ever
received by Secured Party from any sale or other disposition of the Collateral,
or any part thereof, or the exercise of any other remedy pursuant hereto shall
be applies by Secured Party to the Obligation in such order
and manner as Secured Party, in its sole discretion, may deem appropriate,
notwithstanding any directions or instructions to the contrary by Debtor;
provided that: (a) the proceeds and/or accounts shall be applied toward
satisfaction of the Obligation; and (b) if such proceeds and/or accounts are not
sufficient to pay the Obligation in full, Debtor shall remain liable to Secured
Party for the deficiency. Any proceeds received by Secured Party under this
Agreement in excess of those necessary to fully and completely satisfy the
obligation shall be distributed to Debtor.
9. Notice of Sale. Reasonable notification of the time and place of any
public sale of the Collateral, or reasonable notification of the time after
which any private sale or other intended disposition of the Collateral is to be
made, shall be sent to Debtor and to any other persons entitled under the Code
to notice; provided, that if any of the Collateral threatens to decline speedily
in value or is of a type customarily sold on a recognized market, Secured Party
may sell, pledge, assign or otherwise dispose of the Collateral without
notification, advertisement or other notice of any kind. It is agreed that
notice sent or given not less than ten (10) calendar days prior to the taking of
the action to which the notice relates is reasonable notification and notice for
the purposes of this paragraph.
10. Delivery of Notices. Any notice or demand required to be given
hereunder shall be in writing and shall be deemed to have been duly given and
received by the person to whom addressed or, if given by mail, two (2) business
days after a certified or registered letter containing such notice, with postage
prepaid, is deposited in the United States mails, addressed to:
If to Secured Party:
Polyphase Corporation
00000 Xxxxxx Xxxxxxx, 0xx Xxxxx
Xxxxxx, XX 00000
If Debtor:
Pyrenees Group
0 Xxxxxxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Any such address may be changed from time to time by serving notice to the other
party as above provided. A business day shall mean a day of the week which is
not Saturday or Sunday or a holiday recognized by national banking associations.
11. Binding Effect. This Agreement shall be binding upon Debtor, its
successors and assigns, and shall inure to the benefit of Secured Party, its
heirs, successors, assigns, executors, administrators, and personal or legal
representatives.
12. Governing Law. This Agreement shall be construed in accordance with
and governed by the laws of the State of Texas.
13. Severability. In the event that any one or more of the provisions
contained in this Agreement are held to be invalid, illegal or unenforced in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision of this Agreement.
EXECUTED as of the day and year first herein set forth.
SECURED PARTY
POLYPHASE CORPORATION
[Signature appears here]
----------------------------------
President
DEBTOR:
PYRENEES GROUP
[Signature appears here]
By:_______________________________
President
