Exhibit 4.11
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "AGREEMENT"), is entered into and made
effective as of June , 2003 by and between PICK-UPS PLUS INC., (the "COMPANY")
XXXXXX XXXXXXXXXX and the BUYER(S) listed on Schedule I attached to the
Securities Purchase Agreement dated the date hereof. (the "SECURED PARTY").
WHEREAS, the Company shall issue and sell to the Secured Party, as
provided in the Securities Purchase Agreement dated the date hereof, and the
Secured Party shall purchase up to One Hundred Eighty Thousand Dollars
($180,000) of five percent (5%) secured convertible debentures (the "CONVERTIBLE
DEBENTURES"), which shall be convertible into shares of the Companys Company's
common stock, par value $.001 (the "COMMON STOCK") (as converted, the
"CONVERSION SHARES"), for a total purchase price of up to One Hundred Eighty
Thousand Dollars ($180,000), in the respective amounts set forth opposite each
Buyer(s) name on Schedule I attached to the Securities Purchase Agreement;
WHEREAS, to induce the Secured Party to enter into the transaction
contemplated by the Securities Purchase Agreement, the Secured Convertible
Debenture, the Registration Rights Agreement, the Irrevocable Transfer Agent
Instructions, and the Escrow Agreement (collectively referred to as the
"TRANSACTION DOCUMENTS"), the Company hereby grants to the Secured Party a
security interest in and to the pledged property identified on EXHIBIT "A"
hereto (collectively referred to as the "Pledged Property") pursuant to the
terms and conditions of this Agreement .
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, and for other good and valuable consideration, the
adequacy and receipt of which are hereby acknowledged, the parties hereto hereby
agree as follows:
ARTICLE 1.
DEFINITIONS AND INTERPRETATIONS
Section 1.1. RECITALS.
The above recitals are true and correct and are incorporated herein, in
their entirety, by this reference.
Section 1.1. INTERPRETATIONS.
Nothing herein expressed or implied is intended or shall be construed
to confer upon any person other than the Secured Party any right, remedy or
claim under or by reason hereof.
Section 1.2. OBLIGATIONS SECURED.
The obligations secured hereby are any and all obligations of the
Company to the Secured Party, whether oral or written and whether arising
before, on or after the date hereof including, without limitation, those
obligations of the Company to the Secured Party under the Securities Purchase
Agreement, Secured Convertible Debenture, Registration Rights Agreement and
Irrevocable Transfer Agent Instructions, in the principal amounts thereof
outstanding from time to time, and any other amounts payable by or chargeable to
the Company there under or hereunder (collectively, the "OBLIGATIONS").
ARTICLE 2.
PLEDGED COLLATERAL AND ADMINISTRATION OF COLLATERAL
Section 2.1. PLEDGED PROPERTY.
(a) Xxxxxx Xxxxxxxxxx hereby pledges to the Secured Party, and
creates in the Secured Party for its benefit, a security interest, for such time
as the Obligations shall remain outstanding, in and to two million (2,000,000)
restricted shares of the Company, which have subsequently been transferred into
the name of the Secured Party as set forth in EXHIBIT "A" attached hereto
(collectively, the "PLEDGED PROPERTY"):
The Pledged Property, as set forth in EXHIBIT "A" attached hereto, and
the products thereof and the proceeds of all such items are hereinafter
collectively referred to as the "PLEDGED COLLATERAL."
(b) Simultaneously with the execution and delivery of this
Agreement, the Xxxxxx Xxxxxxxxxx shall make, execute, acknowledge, file, record
and deliver to the Secured Party any documents reasonably requested by the
Secured Party to perfect its security interest in the Pledged Property.
Simultaneously with the execution and delivery of this Agreement, Xxxxxx
Xxxxxxxxxx shall make, execute, acknowledge and deliver to the Secured Party
such documents and instruments, including, without limitation, financing
statements, certificates, affidavits and forms as may, in the Secured Party's
reasonable judgment, be necessary to effectuate, complete or perfect, or to
continue and preserve, the security interest of the Secured Party in the Pledged
Property, and the Secured Party shall hold such documents and instruments as
secured party, subject to the terms and conditions contained herein.
Section 2.2 RIGHTS; INTERESTS; ETC.
(a) So long as no Event of Default (as hereinafter defined)
shall have occurred and be continuing:
(i) Xxxxxx Xxxxxxxxxx shall not be entitled to
exercise any and all rights pertaining to the Pledged
Property or any part thereof for any purpose; and
(ii) Xxxxxx Xxxxxxxxxx shall not be entitled to
receive and retain any and all payments paid or made in
respect of the Pledged Property.
(b) Upon the occurrence and during the continuance of an Event
of Default:
(i) All rights of Xxxxxx Quartermanto exercise the
rights which it would otherwise be entitled to
exercise pursuant to Section 2.2(a)(i) hereof and to receive payments which it
would otherwise be authorized to receive and retain pursuant to Section
2.2(a)(ii) hereof shall be suspended, and all such rights shall thereupon become
vested in the Secured Party who shall thereupon have the sole right to exercise
such rights and to receive
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and hold as Pledged Collateral such payments; PROVIDED, HOWEVER, that if the
Secured Party shall become entitled and shall elect to exercise its right to
realize on the Pledged Collateral pursuant to Article V hereof, then all cash
sums received by the Secured Party, or held by Company for the benefit of the
Secured Party and paid over pursuant to Section 2.2(b)(ii) hereof, shall be
applied against any outstanding Obligations; and
(ii) All interest, dividends, income and other
payments and distributions which are received by Xxxxxx
Xxxxxxxxxx contrary to the provisions of Section 2.2(b)(i) hereof shall be
received in trust for the benefit of the Secured Party, and shall be forthwith
paid over to the Secured Party; or
(iii) The Secured Party in its sole discretion shall
be authorized to sell any or all of the Pledged
Property at public or private sale in order to recoup all of the outstanding
principal plus accrued interest owed pursuant to the Convertible Debenture as
described herein
(c) Each of the following events shall constitute a default
under this Agreement (each an "EVENT OF DEFAULT"):
(i) any default, whether in whole or in part, shall
occur in the payment to the Secured Party of
principal, interest or other item comprising the Obligations as and when due or
with respect to any other debt or obligation of the Company to a party other
than the Secured Party;
(ii) any default, whether in whole or in part, shall
occur in the due observance or performance of any obligations or other
covenants, terms or provisions to be performed under this Agreement or the
Transaction Documents;
(iii) the Company shall: (1) make a general
assignment for the benefit of its creditors; (2) apply for or consent to the
appointment of a receiver, trustee, assignee, custodian, sequestrator,
liquidator or similar official for itself or any of its assets and properties;
(3) commence a voluntary case for relief as a debtor under the United States
Bankruptcy Code; (4) file with or otherwise submit to any governmental authority
any petition, answer or other document seeking: (A) reorganization, (B) an
arrangement with creditors or (C) to take advantage of any other present or
future applicable law respecting bankruptcy, reorganization, insolvency,
readjustment of debts, relief of debtors, dissolution or liquidation; (5) file
or otherwise submit any answer or other document admitting or failing to contest
the material allegations of a petition or other document filed or otherwise
submitted against it in any proceeding under any such applicable law, or (6) be
adjudicated a bankrupt or insolvent by a court of competent jurisdiction; or
(iv) any case, proceeding or other action shall be
commenced against the Company for the purpose of effecting, or an order,
judgment or decree shall be entered by any court of competent jurisdiction
approving (in whole or in part) anything specified in Section 2.2(c)(iii)
hereof, or any receiver, trustee, assignee, custodian, sequestrator, liquidator
or other official shall be appointed with respect to the Company, or shall be
appointed to take or shall otherwise acquire possession or control of all or a
substantial part of the assets and properties of the Company, and any of the
foregoing shall continue unstayed and in effect for any period of thirty (30)
days.
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ARTICLE 3.
ATTORNEY-IN-FACT; PERFORMANCE
Section 3.1. SECURED PARTY APPOINTED ATTORNEY-IN-FACT.
Upon the occurrence of an Event of Default, Xxxxxx Xxxxxxxxxx hereby
appoints the Secured Party as its attorney-in-fact, with full authority in the
place and stead of the Company and in the name of Xxxxxx Xxxxxxxxxx or
otherwise, from time to time in the Secured Party's discretion to take any
action and to execute any instrument which the Secured Party may reasonably deem
necessary to accomplish the purposes of this Agreement, including, without
limitation, to receive and collect all instruments made payable to Xxxxxx
Xxxxxxxxxx representing any payments in respect of the Pledged Collateral or any
part thereof and to give full discharge for the same. The Secured Party may
demand, collect, receipt for, settle, compromise, adjust, xxx for, foreclose, or
realize on the Pledged Property as and when the Secured Party may determine. To
facilitate collection, the Secured Party may notify account debtors and obligors
on any Pledged Property or Pledged Collateral to make payments directly to the
Secured Party.
Section 3.2. SECURED PARTY MAY PERFORM.
If the Company fails to perform any agreement contained herein, the
Secured Party, at its option, may itself perform, or cause performance of, such
agreement, and the expenses of the Secured Party incurred in connection
therewith shall be included in the Obligations secured hereby and payable by the
Company under Section 8.3.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES
Section 4.1. AUTHORIZATION; ENFORCEABILITY.
Each of the parties hereto represents and warrants that it has taken
all action necessary to authorize the execution, delivery and performance of
this Agreement and the transactions contemplated hereby; and upon execution and
delivery, this Agreement shall constitute a valid and binding obligation of the
respective party, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights or by the principles
governing the availability of equitable remedies.
Section 4.2. OWNERSHIP OF PLEDGED PROPERTY.
Xxxxxx Xxxxxxxxxx warrants and represents that it is the legal and
beneficial owner of the Pledged Property free and clear of any lien, security
interest, option or other charge or encumbrance except for the security
interests identified on EXHIBIT A hereto and the security interest created by
this Agreement.
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ARTICLE 5.
DEFAULT; REMEDIES; SUBSTITUTE COLLATERAL
Section 5.1. DEFAULT AND REMEDIES.
(a) If an Event of Default described in Section 2.2(c)(i) and
(ii) occurs, then in each such case the Secured Party may declare the
Obligations to be due and payable immediately, by a notice in writing to the
Company, and upon any such declaration, the Obligations shall become immediately
due and payable. If an Event of Default described in Sections 2.2(c)(iii) or
(iv) occurs and is continuing for the period set forth therein, then the
Obligations shall automatically become immediately due and payable without
declaration or other act on the part of the Secured Party.
(b) Upon the occurrence of an Event of Default, the Secured
Party shall,: (i) be entitled to receive all distributions with respect to the
Pledged Collateral, (ii) to cause the Pledged Property to be transferred into
the name of the Secured Party or its nominee, (iii) to dispose of the Pledged
Property, and (iv) to realize upon any and all rights in the Pledged Property
then held by the Secured Party.
Section 5.2. METHOD OF REALIZING UPON THE PLEDGED PROPERTY : OTHER
REMEDIES.
Upon the occurrence of an Event of Default, in addition to any rights
and remedies available at law or in equity, the following provisions shall
govern the Secured Party's right to realize upon the Pledged Property:
(a) Any item of the Pledged Property may be sold for cash or
other value in any number of lots at brokers board, public auction or private
sale and may be sold without demand, advertisement or notice (except that the
Secured Party shall give Xxxxxx Xxxxxxxxxx ten (10) business days' prior written
notice of the time and place or of the time after which a private sale may be
made (the "SALE NOTICE")), which notice period shall in any event is hereby
agreed to be commercially reasonable. At any sale or sales of the Pledged
Property, the Company may bid for and purchase the whole or any part of the
Pledged Property and, upon compliance with the terms of such sale, may hold,
exploit and dispose of the same without further accountability to the Secured
Party. Xxxxxx Xxxxxxxxxx will execute and deliver, or cause to be executed and
delivered, such instruments, documents, assignments, waivers, certificates, and
affidavits and supply or cause to be supplied such further information and take
such further action as the Secured Party reasonably shall require in connection
with any such sale.
(b) Any cash being held by the Secured Party as Pledged
Collateral and all cash proceeds received by the Secured Party in respect of,
sale of, collection from, or other realization upon all or any part of the
Pledged Collateral shall be applied as follows:
(i) to the payment of all amounts due the Secured
Party for the expenses reimbursable to it hereunder
or owed to him pursuant to Section 8.3 hereof;
(ii) to the payment of the Obligations then due and
unpaid.
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(iii) the balance, if any, to the person or persons
entitled thereto, including, without limitation, the
Company.
(c) In addition to all of the rights and remedies which the
Secured Party may have pursuant to this Agreement, the Secured Party shall have
all of the rights and remedies provided by law, including, without limitation,
those under the Uniform Commercial Code.
(d)
(i) If the Company fails to pay such amounts due upon
the occurrence of an Event of Default which is
continuing, then the Secured Party may institute a judicial proceeding for the
collection of the sums so due and unpaid, may prosecute such proceeding to
judgment or final decree and may enforce the same against the Company and
collect the monies adjudged or decreed to be payable in the manner provided by
law out of the property of Company, wherever situated.
(ii) The Company agrees that it shall be liable for
any reasonable fees, expenses and costs incurred by
the Secured Party in connection with enforcement, collection and preservation of
the Transaction Documents, including without limitation, reasonable legal fees
and expenses.
(iii) Xxxxxx Xxxxxxxxxx agrees that he shall be
liable for any reasonable fees , expenses and costs
incurred by the Secured Party in connection with enforcement, collection and
preservation of without limitation, reasonable legal fees and expenses, and such
amounts shall be deemed included as Obligations secured hereby and payable as
set forth in Section 8.3 hereof.
Section 5.3. PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relating to the Company or the property of the Company
or of such other obligor or its creditors, the Secured Party (irrespective of
whether the Obligations shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Secured Party shall
have made any demand on the Company for the payment of the Obligations), subject
to the rights of Previous Security Holders, shall be entitled and empowered, by
intervention in such proceeding or otherwise:
(i) to file and prove a claim for the whole amount of
the Obligations and to file such other papers or
documents as may be necessary or advisable in order to have the claims of the
Secured Party (including any claim for the reasonable legal fees and expenses
and other expenses paid or incurred by the Secured Party permitted hereunder and
of the Secured Party allowed in such judicial proceeding), and
(ii) to collect and receive any monies or other
property payable or deliverable on any such claims and
to distribute the same; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by the Secured Party to make such payments to
the Secured Party and, in the event that the Secured Party shall consent to the
making of such payments directed to the Secured Party, to pay to the Secured
Party any amounts for expenses due it hereunder.
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Section 5.4. DUTIES REGARDING PLEDGED COLLATERAL.
The Secured Party shall have no duty as to the collection or protection
of the Pledged Property or any income thereon or as to the preservation of any
rights pertaining thereto, beyond the safe custody and reasonable care of any of
the Pledged Property actually in the Secured Party's possession.
ARTICLE 6.
AFFIRMATIVE COVENANTS
Xxxxxx Xxxxxxxxxx covenants and agrees that, from the date hereof and
until the Obligations have been fully paid and satisfied, unless the Secured
Party shall consent otherwise in writing (as provided in Section 8.4 hereof):
Section 6.1. EXISTENCE, PROPERTIES, ETC.
Xxxxxx Xxxxxxxxxx shall do, or cause to be done, all things,
or proceed with due diligence with any actions or courses of action, that may be
reasonably necessary to execute or deliver this Agreement or any other document
delivered in connection herewith, including, without limitation, any UCC-1
Financing Statements required by the Secured Party (which other loan instruments
collectively shall be referred to as the "LOAN INSTRUMENTS") to which it is or
will be a party, or perform any of its obligations hereunder or thereunder.
Section 6.5. DEFENSE OF COLLATERAL, ETC.
Xxxxxx Xxxxxxxxxx shall defend and enforce its right, title and
interest in and to any part of: (a) the Pledged Property ; and (b) Xxxxxx
Xxxxxxxxxx shall defend the Secured Party's right, title and interest in and to
each and every part of the Pledged Property, each against all manner of claims
and demands on a timely basis to the full extent permitted by applicable law.
1.1. NOTICE OF DEFAULT.
Xxxxxx Xxxxxxxxxx and the Company shall give written notice to the
Secured Party of the occurrence of any default or Event of Default under this
Agreement, the Transaction Documents or any other Loan Instrument or any other
agreement of Company for the payment of money, promptly upon the occurrence
thereof.
1.1. NOTICE OF LITIGATION.
Xxxxxx Xxxxxxxxxx shall give notice, in writing, to the Secured Party
of (a) any actions, suits or proceedings wherein instituted by any persons
against the Pledged Prperty
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ARTICLE 7.
NEGATIVE COVENANTS
Xxxxxx Xxxxxxxxxx covenants and agrees that, from the date hereof until
the Obligations have been fully paid and satisfied, he shall not:
Section 7.1. LIENS AND ENCUMBRANCES.
Shall not directly or indirectly make, create, incur, assume or permit
to exist any assignment, transfer, pledge, mortgage, security interest or other
lien or encumbrance of any nature in, to or against any part of the Pledged
Property or offer or agree to do so, or own or acquire or agree to acquire any
asset or property of any character subject to any of the foregoing encumbrances
(including any conditional sale contract or other title retention agreement), or
assign, pledge or in any way transfer or encumber its right to receive any
income or other distribution or proceeds from any part of the Pledged Property
or the Company's capital stock; or enter into any sale-leaseback financing
respecting any part of the Pledged Property as lessee, or cause or assist the
inception or continuation of any of the foregoing.
ARTICLE 8.
MISCELLANEOUS
Section 8.1. NOTICES.
All notices or other communications required or permitted to be given
pursuant to this Agreement shall be in writing and shall be considered as duly
given on: (a) the date of delivery, if delivered in person, by nationally
recognized overnight delivery service or (b) five (5) days after mailing if
mailed from within the continental United States by certified mail, return
receipt requested to the party entitled to receive the same:
If to the Secured Party: Xxxxxx Xxxxxxxxxx
With a copy to:
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If to the Company : Pick Ups Plus Inc.
0000 Xxxxxxxx Xxxxx - Xxxxx 000
Xxxxxxxxxx, Xxxx 00000
Attention: Xxxxxx Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a Copy to: Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP
1065 Avenue of the Americas - 21st Floor
New York, New York 10018
Attention: Xxxxxxx Xxxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Secured Party: Cornell Capital Partners, LP
000 Xxxxxx Xxxxxx -Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Attention: Xxxx Xxxxxx
Portfolio Manager
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a Copy to: Xxxxxx Xxxxxxxx LLP
0000 Xxxxxxxxxx Xxxxxx - Xxxxx 0
Xxxxx, XX 00000
Attention: Xxxxx Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Any party may change its address by giving notice to the other party
stating its new address. Commencing on the tenth (10th) day after the giving of
such notice, such newly designated address shall be such party's address for the
purpose of all notices or other communications required or permitted to be given
pursuant to this Agreement.
Section 8.2. SEVERABILITY.
If any provision of this Agreement shall be held invalid or
unenforceable, such invalidity or unenforceability shall attach only to such
provision and shall not in any manner affect or render invalid or unenforceable
any other severable provision of this Agreement, and this Agreement shall be
carried out as if any such invalid or unenforceable provision were not contained
herein.
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Section 8.3. EXPENSES.
In the event of an Event of Default, Xxxxxx Xxxxxxxxxx will pay to the
Secured Party the amount of any and all reasonable expenses, including the
reasonable fees and expenses of its counsel, which the Secured Party may incur
in connection with: (i) the custody or preservation of, or the sale, collection
from, or other realization upon, any of the Pledged Property; (ii) the exercise
or enforcement of any of the rights of the Secured Party hereunder or (iii) the
failure by the Company to perform or observe any of the provisions hereof.
Section 8.4. WAIVERS, AMENDMENTS, ETC.
The Secured Party's delay or failure at any time or times hereafter to
require strict performance by Company or Xxxxxx Xxxxxxxxxx of any undertakings,
agreements or covenants shall not waiver, affect, or diminish any right of the
Secured Party under this Agreement to demand strict compliance and performance
herewith. Any waiver by the Secured Party of any Event of Default shall not
waive or affect any other Event of Default, whether such Event of Default is
prior or subsequent thereto and whether of the same or a different type. None of
the undertakings, agreements and covenants of the Company or Xxxxxx Xxxxxxxxxx
contained in this Agreement, and no Event of Default, shall be deemed to have
been waived by the Secured Party, nor may this Agreement be amended, changed or
modified, unless such waiver, amendment, change or modification is evidenced by
an instrument in writing specifying such waiver, amendment, change or
modification and signed by the Secured Party.
Section 8.5. CONTINUING SECURITY INTEREST.
This Agreement shall create a continuing security interest in the
Pledged Property and shall: (i) remain in full force and effect until the
registration statement filed pursuant to the Registration Rights Agreement dated
the date hereof is declared effective by the United States Securities and
Exchange Commission; and (ii) be binding upon Xxxxxx Xxxxxxxxxx and his
successors and heirs and (iii) inure to the benefit of the Secured Party and its
successors and assigns. Upon the registration statement bing declared effective
by the United States Securities and Exchange Commission or satisfaction in full
of the Obligations, Xxxxxx Xxxxxxxxxx shall be entitled to the return, at its
expense, of such of the Pledged Property as shall not have been sold in
accordance with Section 5.2 hereof or otherwise applied pursuant to the terms
hereof.
Section 8.6. INDEPENDENT REPRESENTATION.
Each party hereto acknowledges and agrees that it has received or has
had the opportunity to receive independent legal counsel of its own choice and
that it has been sufficiently apprised of its rights and responsibilities with
regard to the substance of this Agreement.
Section 8.7. APPLICABLE LAW: JURISDICTION.
This Agreement shall be governed by and interpreted
in accordance with the laws of the State of New Jersey without regard to the
principles of conflict of laws. The parties further agree that any action
between them shall be heard in Xxxxxx County, New Jersey, and expressly consent
to the jurisdiction and venue of the Superior Court of New Jersey, sitting in
Xxxxxx County and the United States District Court for the District of New
Jersey sitting in Newark, New Jersey for the adjudication of any civil action
asserted pursuant to this Paragraph.
Section 8.8. WAIVER OF JURY TRIAL.
AS A FURTHER INDUCEMENT FOR THE SECURED PARTY TO ENTER INTO THIS
AGREEMENT AND TO MAKE THE FINANCIAL ACCOMMODATIONS TO THE COMPANY, THE COMPANY
HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATED IN ANY
WAY TO THIS AGREEMENT AND/OR ANY AND ALL OTHER DOCUMENTS RELATED TO THIS
TRANSACTION.
Section 8.9. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement among the parties and
supersedes any prior agreement or understanding among them with respect to the
subject matter hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
COMPANY:
PICK-UPS PLUS INC.
By:
Name: Xxxxxx Xxxxx
Title: Chief Financial Officer
XXXXXX XXXXXXXXXX
By:_________________________________
SECURED PARTY:
CORNELL CAPITAL PARTNERS, LP
By: Yorkville Advisors, LLC
Its: General Partner
By:_________________________________
Name: Xxxx Xxxxxx
Title: Portfolio Manager
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A-1
EXHIBIT B
DEFINITION OF PLEDGED PROPERTY
For the purpose of securing prompt and complete payment and performance
by the Company of all of the Obligations, the Company unconditionally and
irrevocably hereby grants to the Secured Party a continuing security interest in
and to, and lien upon, the following Pledged Property of the Company:
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Number of Shares Stock Certificate Number
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2,000,000 01640
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A-2
