Exhibit 10.8
SECURITY AGREEMENT
SECURITY AGREEMENT dated as of January 13,2005, by and between National
Parking Systems, Inc., a Nevada corporation ("NPS"), ABS Holding Company, Inc.,
a Nevada corporation ("ABS") and BH Holding Company, Inc., a Nevada corporation
(BH, and, together with ABS and NPS, jointly and severally, the "Borrower", and
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sometimes collectively referred to herein as the "Grantor"), and Hyde
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Investments, Ltd. ("Lender"), in connection with that certain Senior Secured
Convertible Debenture, dated as of the date hereof (the "Debenture"), and as to
any and all future loans or advances made by Lender to Borrower, as such loans
and loan agreements may be amended, modified or supplemented from time to time,
between the Grantor and the Lender, or any other obligations of Borrower to
Lender (collectively, the "Loans"). Capitalized terms not otherwise defined
herein shall have the meaning set forth in that certain Senior Secured
Convertible Debenture dated as of October 15, 2004.
The parties acknowledge the following facts and circumstances:
The Lender has agreed to extend the Loans to the Borrower pursuant to, and
subject to the terms and conditions of, certain agreements, including this
Security Agreement, the Debenture, and such other agreements and documents as
may relate to any present or future loans, as all such agreements may be
amended, modified or supplemented from time to time (the "Loan Documents"). The
obligation of the Lender to extend such Loans is and was conditioned on the
execution and delivery by the Grantor of a security agreement in a form
consistent herewith to secure the Obligations.
Accordingly, the Grantor and the Lender hereby agree as follows:
1. Definitions of Terms Used Herein. As used herein, the following terms shall
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have the following meanings:
(a) "Accounts Receivable" means (i) all of the Grantor's present and
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future accounts, general intangibles, chattel paper and instruments, as such
terms are defined in the Uniform Commercial Code, (ii) all moneys, securities
and other property and the proceeds thereof, now or hereafter held or received
by, or in transit to, the Lender from or for the Grantor, whether for
safekeeping, pledge, custody, transmission, collection or otherwise, and all of
the deposits (general or special) of the Grantor, balances, sums and credits
with, and all of the Grantor's claims against the Lender at any time existing,
(iii) all of the Grantor's right, title and interest, and all of the Grantor's
rights, remedies, security and Liens, in, to and in respect of any accounts
receivable, including, without limitation, rights of stoppage in transit,
replevin, repossession and reclamation and other rights and remedies of an
unpaid vendor, lienor or secured party, guaranties or other contracts of
suretyship with respect to accounts receivable, deposits or other security for
the obligation of any account debtor, and credit and other insurance, (iv) all
of the Grantor's right, title and interest in, to and in respect of all goods
relating to, or which by sale have resulted in, accounts receivable, including,
without limitation, all goods described in invoices or other documents or
instruments with respect to, or otherwise representing or evidencing, any
account receivable, and all returned, reclaimed or repossessed goods, (v) any
other right to payment for goods sold, leased or licensed or for services
rendered, whether or not it has been earned by performance, whether billed or
unbilled, and whether or not it is evidenced by any Contract, (vi) any note
receivable, and (vii) any other receivable or right to payment of any nature.
(b) "Borrower Companies" means the Borrower, and all subsidiaries of the
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Borrower or any of its subsidiaries.
(c) "Cash" means any cash on hand, cash in bank or other accounts, readily
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marketable securities, and other cash-equivalent liquid assets of any nature.
(d) "Collateral" means all (i) Cash, (ii) Accounts Receivable, (iii)
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Documents, (iv) Equipment, (v) General Intangibles, (vi) Inventory, (vii) all
right, title and interest in any and all assets, (viii) all Intellectual
Property Rights, (viii) all capital stock of any of the Borrower Companies
beneficially owned by such Borrower Company, and (ix) Proceeds.
(e) "Contract" means any written or oral contract, agreement, instrument,
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order, arrangement, commitment or understanding of any nature, including sales
orders, purchase orders, leases, subleases, data processing agreements,
maintenance agreements, license agreements, sublicense agreements, loan
agreements, promissory notes, security agreements, pledge agreements, deeds,
mortgages, guaranties, indemnities, warranties, employment agreements,
consulting agreements, sales representative agreements, joint venture
agreements, buy-sell agreements, options or warrants.
(f) "Documents" means all instruments, files, records, ledger sheets and
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documents covering or relating to any of the Collateral.
(g) "Equipment" means all of the Grantor's machinery, equipment, vehicles,
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furniture and fixtures and all attachments, accessories and equipment now or
hereafter owned or acquired in the Grantor's business or used in connection
therewith, and all substitutions and replacements thereof, wherever located,
whether now owned or hereafter acquired by the Grantor.
(h) "Financial Obligations" means any debt, liability or obligation of any
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nature, whether secured, unsecured, recourse, no recourse, liquidated,
unliquidated, accrued, absolute, fixed, contingent, ascertained, unascertained,
known, unknown or otherwise.
(i) "General Intangibles" means all of the Grantor's present and future
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general intangibles of every kind and description, including (without
limitation) Intellectual Property Rights, patents, patent applications, trade
names and trademarks and the goodwill of the business symbolized thereby,
Federal, State and local tax refund claims of all kinds; and all contract rights
of the Grantor, including, without limitation, the Contracts.
(j) "Intellectual Property Rights" shall mean all rights and interests
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(throughout the universe, in all media, now existing or created in the future,
and for the entire duration of such rights) arising under statutory or common
law, contract, license or otherwise, and whether or not perfected, including,
without limitation all: (i) copyrights, and all registrations, applications for
registration and licenses therefore, together with ancillary rights thereto;
(ii) trademarks, trade names, service marks, service names, domain names,
published telephone numbers, logos, slogans and any abbreviations or variations
thereto, and all registrations, applications for registration and licenses
therefore, and any attendant goodwill together with all ancillary rights
thereto; (iii) issued or pending patents and all registrations, applications for
registration, reissues, divisions, continuations, continuations-in-part,
renewals and extensions thereof and licenses therefore, together with all
ancillary rights thereto; (iv) trade secrets and know-how, designs,
improvements, formulae, discoveries, inventions, concepts, ideas, scientific or
other technical information and procedures, legal, financial or business
affairs, markets, products, key personnel, suppliers, customers, prospective
customers, policies or operational methods, plans for future development, other
information possessed which is not readily available to the public, and all
copies of the foregoing, regardless of form; (v) the Software; and (vi) all
contracts with government or commercial agencies and all licenses, permits,
filings, authorizations, approvals, or indicia of authority issued by any
government branch, department, commission, board, bureau, agency or other
instrumentality of the United States, any foreign government or any state of
political subdivision thereof.
(k) "Inventory" means all of the Grantor's raw materials, work in process,
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finished goods and all other inventory (as such term is defined in the Uniform
Commercial Code), whether now owned or hereafter acquired, and all wrapping,
packaging, advertising and shipping materials, and any documents relating
thereto.
(l) "Obligations" mean all obligations of Borrower to Lender or any other
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party under the Loan Documents, including, without limitation, (a) the due and
punctual payment of the principal of and interest on the Loans, when and as due,
whether at maturity, by acceleration, upon one or more dates set for prepayment
or otherwise and (b) the due and punctual performance of all obligations of the
Grantor at any time and from time to time under any of the Loan Documents.
(m) "Proceeds" means any consideration received from the sale, exchange,
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lease or other disposition of any asset or property which constitutes
Collateral, any other value received as a consequence of the possession of any
Collateral and any payment received from any insurer or other person or entity
as a result of the destruction, loss, theft or other involuntary conversion of
whatever nature of any asset or property that constitutes Collateral, and shall
include, without limitation, all cash and negotiable instruments received or
held by the Lender pursuant to any lockbox or similar arrangement relating to
the payment of Accounts Receivable.
(n) "Software" means any computer program, operating system, applications
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system, firmware or software of any nature, whether operational, under
development or inactive, including all HTML code, CGI scripts, Java applets,
digital content, programming, documentation, network configurations, a
reasonably detailed description of the process required to build such computer
software, any proprietary tools or files owned that are required to build such
computer software, as well as a description of all tools and files not owned
that are required to build such computer software and any modifications,
enhancements, improvements, updates, upgrades, new releases, revisions,
refinements or revisions thereto, whether in analog, digital, source code,
object code, or other form, in each case to the extent required for or used in
the performance of the business as conducted in the past or as currently
conducted, object code, source code, databases, technical manuals, user manuals
and other documentation therefore, whether in machine-readable form, programming
language or any other language or symbols, and whether stored, encoded, recorded
or written on disk, tape, film, memory device, paper or other media of any
nature, including, without limitation, all software used in or with respect to
Borrowers electronic voting system.
2. Security Interests. As security for the payment or performance, as the
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case may be, of the Obligations, the Grantor, and each of them, hereby creates
and grants to the Lender, its successors and its assigns, a security interest in
the Collateral (the "Security Interest"). Without limiting the foregoing, the
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Lender is hereby authorized to file one or more financing statements,
continuation statements or other documents for the purpose of perfecting,
confirming, continuing, enforcing or protecting its Security Interest in the
Collateral, naming the Grantor as debtor and the Lender as secured party. The
Grantor agrees at all times to keep in all material respects accurate and
complete accounting records with respect to the Collateral, including, but not
limited to, a record of all payments and Proceeds received. Borrower shall
deliver to Lender, for the purpose of perfecting the Security Interest granted
hereby, all capital stock and other securities currently owned by any of the
Borrower Companies, and shall deliver to Lender such documents, and take such
action, as is or may in the future be required to continuously maintain and
perfect the Security Interest granted in this Security Agreement.
3. Except as disclosed in its filings with the Securities and Exchange
Commission, Borrower represents and warrants to Lender as of the date of this
Agreement, and covenants with Lender, as set forth below in each provision of
this Section 3. Any breach or failure of any of the representations, warranties
and covenants contained in this Agreement, as supplemented by the Borrower's
filings with the Securities and Exchange Commission prior to the date hereof,
shall be a breach of this Security Agreement and the Loan Documents.
3.1 Organization. Each of the Borrower Companies is a corporation duly
organized, validly existing and in good standing under the Laws of the
jurisdiction of its organization. Each of the Borrower Companies possesses the
full power and authority to enter into and perform this Agreement. Each of the
Borrower Companies possesses the full corporate power and authority to own its
Assets and to conduct its business as and where presently conducted. Each of the
Borrower Companies is duly qualified or registered to do business in each
jurisdiction where such qualification or registration is required by applicable
Law.
3.2 Due Authorization. The transactions contemplated hereby, as well
as the transactions contemplated in the Security Agreement and the Loan
Documents (the "Transactions") have been duly authorized by all necessary
corporate actions including actions by the Borrowers board of directors and does
not constitute a violation of or default under its articles of incorporation, or
bylaws (or similar organizational documents). The Borrowers execution, delivery
and performance of this Agreement, and its consummation of the Transactions, (a)
do not constitute a default or breach (immediately or after the giving of
notice, passage of time or both) under any Contract to which any of the Borrower
Companies is a party or by which any of the Borrower Companies is bound, (b) do
not constitute a violation of any Law or Judgment that is applicable to any of
the Borrower Companies, or to the business or Assets of any of the Borrower
Companies, or to the Transactions, (c) do not accelerate or otherwise modify any
Financial Obligation of any of the Borrower Companies, (d) do not result in the
creation of any Encumbrance upon, or give to any third party any interest in,
any of the business or Assets, or any of the capital stock of or interests in,
any of the Borrower Companies, and (e) do not require the Consent of any Person.
This Agreement constitutes the valid and legally binding agreement of the
Borrower enforceable against it in accordance with its terms, except to the
extent that its enforceability may be subject to applicable bankruptcy,
insolvency, reorganization and similar laws affecting the enforcement of
creditors' rights generally and to general equitable principles.
3.3 Compliance with Law. The operations of each of the Borrower
Companies, the conduct of the business of each of the Borrower Companies, as and
where such business has been or presently is conducted, and the ownership,
possession and use of the Assets of each of the Borrower Companies have complied
and currently do comply in all material respects with all applicable Laws.
3.4 Assets. Each of the Borrower Companies has good and valid title to
all of its respective Assets which are owned by it and has the right to transfer
all rights, title and interest in such Assets, free and clear of any
Encumbrance.
4. Further Assurances. The Grantor agrees, at its expense, to execute,
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acknowledge, deliver and cause to be duly filed all such further instruments and
documents and take all such actions as the Lender may from time to time
reasonably request for the assuring and preserving of the Security Interest and
the rights and remedies created hereby, including, without limitation, the
payment of any fees and taxes required in connection with the execution and
delivery of this Agreement, the granting of the Security Interest and the filing
of any financing statements or other documents in connection herewith. If any
amount payable under or in connection with any of the Collateral shall be or
become evidenced by any promissory note or other instrument, such note or
instrument shall be promptly pledged and delivered to the Lender, duly endorsed
in a manner satisfactory to the Lender. The Grantor agrees to notify promptly
the Lender of any change in its corporate name or in the location of its chief
executive office, its chief place of business or the office where it keeps its
records relating to the Accounts Receivable owned by it and the location of any
Equipment. The Grantor agrees promptly to notify the Lender if any material
portion of the Collateral is damaged or destroyed.
5. Inspection and Verification. The Lender and such persons as the Lender may
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designate shall have the right, at any reasonable time or times during the
Grantor's usual business hours, and upon reasonable notice (which may be
telephonic), to inspect the Collateral owned by the Grantor, all records related
thereto (and to make extracts and copies from such records), and the premises
upon which any such Collateral is located, to discuss the Grantor's affairs with
the officers of the Grantor and its independent accountants and to verify under
reasonable procedures the validity, amount, quality, quantity, value, and
condition of or any other matter relating to, such Collateral, including, in the
case of Accounts Receivable or Collateral in the possession of a third person,
contacting account debtors and upon the occurrence of an Event of Default or a
third person possessing such Collateral for the purpose of making such a
verification.
6. Taxes; Encumbrances. At its option, the Lender may discharge past due
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taxes, liens, security interests or other encumbrances at any time levied or
placed on the Collateral and not permitted under the Loan Documents, and may pay
for the maintenance and preservation of the Collateral to the extent a Grantor
fails to do so as required by the Loan Documents, and the Grantor agrees to
reimburse the Lender on demand for any payment made or any expense incurred by
it pursuant to the foregoing authorization; provided, however, that nothing in
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this Section 6 shall be interpreted as excusing the Grantor from the performance
of any covenants or other promises with respect to taxes, liens, Security
Interests or other en-cumbrances and maintenance as set forth herein or in the
Loan Documents.
7. Representations and Warranties. The Grantor represents and warrants to the
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Lender that:
(a) Title and Authority. It has (i) rights, interest in and to the
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Collateral in which it is granting a security interest hereunder and (ii) the
requisite power and authority to grant to the Lender the Security Interest in
such Collateral pursuant hereto and to execute, deliver and perform its
obligations in accordance with the terms of this Agreement, without the consent
or approval of any other person other than any consent or approval which has
been obtained.
(b) Filing. Fully executed Uniform Commercial Code financing statements
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and other such documents as may be necessary containing a description of the
Collateral shall have been, or shall be delivered to the Lender in a form such
that they can be, filed of record in every governmental, municipal or other
office in every jurisdiction in which any portion of the Collateral is located
necessary to publish notice of and protect the validity of and to establish a
valid, legal and perfected security interest in favor of the Lender in respect
of the Collateral in which a security interest may be perfected by filing in the
United States and its territories and possessions, and no further or subsequent
filing, refiling, recording, rerecording, registration or reregistration is
necessary in any such jurisdiction, except as provided under applicable law with
respect to the filing of Uniform Commercial Code continuation statements.
(c) Validity of Security Interest. The Security Interest constitutes a
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valid, legal and perfected first priority security interest in all of the
Collateral for payment and performance of the Obligations.
(d) Information Regarding Names. It has disclosed in writing to the Lender
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any trade names used to identify it in its business or in the ownership of its
properties.
(e) Survival of Representations and Warranties. All representations and
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warranties of the Grantor contained in this Agreement shall survive the
execution, delivery and performance of this Agreement until the termination of
this Agreement.
8. Records of Accounts Receivable. The Grantor shall keep or cause to be kept
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records of its Accounts Receivable which are accurate in all material respects.
In addition, the Grantor will provide the Lender with such further schedules
and/or information respecting each Account Receivable as the Lender may
reasonably require.
9. Protection of Security. The Grantor shall, at its own cost and expense,
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take any and all actions reasonably necessary to defend title to the Collateral
owned by it against all persons and to defend the Security Interest of the
Lender in such Collateral, and the priority thereof, against any adverse
mortgage, pledge, security interest, Lien, charge or other encumbrance of any
nature whatsoever.
10. Continuing Obligations of the Grantor. The Grantor shall remain liable to
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observe and perform all the conditions and obligations to be observed and
performed by it under each contract, agreement, interest or obligation relating
to the Collateral, all in accordance with the terms and conditions thereof, and
shall indemnify and hold harmless the Lender from any and all such liabilities.
11. Use and Disposition of Collateral. Without the prior written consent of
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Lender, the Grantor shall not make nor permit to be made any assignment, pledge
or hypothecation of the Collateral, or grant any security interest in the
Collateral except for the Security Interest. The Grantor shall not make nor
permit to be made any transfer of any Collateral, except Inventory in the
ordinary course of business and as otherwise permitted by the Loan Documents,
and the Grantor shall remain at all times in possession of the Collateral owned
by it other than transfers to the Lender pursuant to the provisions hereof and
as otherwise provided in this Agreement or the Loan Documents.
12. Limitation on Modifications of Accounts Receivable. The Grantor will not,
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without the Lender's prior written consent, grant any extension of the time of
payment of any of its Accounts Receivable, compromise, compound or settle the
same for less than the full amount thereof, release, wholly or partly, any
person liable for the payment thereof, or allow any credit or discount
whatsoever thereon other than extensions, credits, discounts, compromises or
settlements granted or made in the ordinary course of business.
13. Collections.
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(a) The Grantor shall have the right to collect its Accounts Receivable in
the ordinary course of its business. During the continuance of an Event of
Default and at the request of Lender in its sole discretion, the Grantor shall
(i) arrange for remittances on any of its Account Receivable to be made directly
to lockboxes or blocked accounts designated by the Lender or in such other
manner as the Lender may direct, and (ii) promptly deposit all payments received
by the Grantor on account of Accounts Receivable, whether in the form of cash,
checks, notes, drafts, bills of exchange, money orders or otherwise, in one or
more accounts designated by the Lender in precisely the form received (but with
any endorsements of the Grantor necessary for deposit or collection), subject to
withdrawal by the Lender only, as hereinafter provided, and until they are
deposited, shall be deemed to be held in trust by the Grantor for and as the
Lender's property and shall not be commingled with the Grantor's other funds.
(b) Upon the occurrence and during the continuance of an Event of Default,
the Lender shall have the right, as the true and lawful agent of the Grantor,
with power of substitution for the Grantor and in the Grantor's name, the
Lender's name or otherwise, for the use and benefit of the Lender (i) to
receive, endorse, assign and/or deliver any and all notes, acceptances, checks,
drafts, money orders or other evidences of payment relating to the Collateral or
any part thereof; (ii) to demand, collect, receive payment of, give receipt for
and give discharges and releases of all or any of the Collateral; (iii) to sign
the name of the Grantor on any invoice or xxxx of lading relating to any of the
Collateral; (iv) to send verifications of Accounts Receivable to any customer;
(v) to commence and prosecute any and all suits, actions or proceedings at law
or in equity in any court of competent jurisdiction to collect or otherwise
realize on all or any of the Collateral or to enforce any rights in respect of
any Collateral; (vi) to settle, compromise, compound, adjust or defend any
actions, suits or proceedings relating to or pertaining to all or any of the
Collateral; (vii) to notify, or to require the Grantor to notify, the account
debtors obligated on any or all of the Accounts Receivable to make payment
thereof directly to the Lender; and (viii) to use, sell, assign, transfer,
pledge, make any agreement with respect to or otherwise deal with all or any of
the Collateral, and to do all other acts and things necessary to carry out the
purposes of this Agreement, as fully and completely as though the Lender were
the absolute owner of the Collateral for all purposes; provided, however, that
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nothing herein contained shall be construed as requiring or obligating the
Lender to make any commitment or to make any inquiry as to the nature or
sufficiency of any payment received by the Lender or to present or file any
claim or notice, or to take any action with respect to the Collateral or any
part thereof or the moneys due or to become due in respect thereof or any
property covered thereby, and no action taken by the Lender or omitted to be
taken with respect to the Collateral or any part thereof shall give rise to any
defense, counterclaim or offset in favor of the Grantor or to any claim or
action against the Lender in the absence of the gross negligence or willful
misconduct of the Lender. It is understood and agreed that the appointment of
the Lender as the agent of the Grantor for the purposes set forth above in this
Section 14 is coupled with an interest and is irrevocable. The provisions of
this Section 14 shall in no event relieve the Grantor of any of its obligations
hereunder or under the Loan Documents with respect to the Collateral or any part
thereof or impose any obligation on the Lender to proceed in any particular
manner with respect to the Collateral or any part thereof, or in any way limit
the exercise by the Lender of any other or further right which it may have on
the date of this Agreement or hereafter, whether hereunder or by law or
otherwise.
14. Remedies upon Default. Upon the occurrence and during the continuance of
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an Event of Default, the Grantor agrees to deliver each item of Collateral to
the Lender on demand, and it is agreed that the Lender shall have the right to
take any or all of the following actions at the same or different times: with or
without legal process and with or without previous notice or demand for
performance, to take possession of the Collateral and without liability for
trespass (except for actual damage caused by the Lender's gross negligence or
willful misconduct) to enter any premises where the Collateral may be located
for the purpose of taking possession of or removing the Collateral and,
generally, to exercise any and all rights afforded to a secured party under, and
subject to its obligations contained in, the Uniform Commercial Code as in
effect in California or any other applicable state law. Without limiting the
generality of the foregoing, the Grantor agrees that the Lender shall have the
right, subject to the mandatory requirements of applicable law, to sell or
otherwise dispose of all or any part of the Collateral, at public or private
sale or at any broker's board or on any securities exchange, for cash, upon
credit or for future delivery as the Lender shall deem appropriate. Each such
purchaser at any such sale shall hold the property sold absolutely free from any
claim or right on the part of the Grantor, and the Grantor hereby waives (to the
extent permitted by law) all rights of redemption, stay and appraisal which the
Grantor now has or may at any time in the future have under any rule of law or
statute now existing or hereafter enacted. Without limiting the foregoing, upon
the occurrence and during the continuance of an Event of Default, immediately
upon Lenders demand Grantor shall transfer all Cash, including but not limited
to all proceeds of Collateral, to Lender, and shall execute all documents
reasonably requested by Lender to effectuate an assignment of all of Grantor's
deposit accounts and account balances to Lender at any and all financial
institutions at which such deposits exist at the time of such demand.
15. The Lender shall give the Grantor ten (10) days' written notice (which the
Grantor agrees is reasonable notice) of the Lender's intention to make any sale
of Collateral. Such notice, in the case of a public sale, shall state the time
and place for such sale and, in the case of a sale at a broker's board or on a
securities exchange, shall state the board or exchange at which such sale is to
be made and the day on which the Collateral, or portion thereof, will first be
offered for sale at such board or exchange. Any such public sale shall be held
at such time or times within ordinary business hours and at such place or places
as the Lender may fix and state in the notice (if any) of such sale. At any
such sale, the Collateral, or portion thereof, to be sold may be sold in one lot
as an entirety or in separate parcels, as the Lender may (in its sole and
absolute discretion) determine. The Lender shall not be obligated to make any
sale of any Collateral if it shall determine not to do so, regardless of the
fact that notice of sale of such Collateral shall have been given. The Lender
may, without notice or publication, adjourn any public or private sale or cause
the same to be adjourned from time to time by announcement at the time and place
fixed for sale, and such sale may, without further notice, be made at the time
and place to which the same was so adjourned. In case any sale of all or any
part of the Collateral is made on credit or for future delivery, the Collateral
so sold may be retained by the Lender until the sale price is paid by the
purchaser or purchasers thereof, but the Lender shall not incur any liability in
case any such purchaser or purchasers shall fail to take up and pay for the
Collateral so sold and, in case of any such failure, such Collateral may be sold
again upon like notice. At any public sale made pursuant to this Section 15, the
Lender may bid for or purchase, free (to the extent permitted by law) from any
right of redemption, stay or appraisal on the part of the Grantor (all said
rights being also hereby waived and released to the extent permitted by law),
with respect to the Collateral or any part thereof offered for sale and the
Lender may make payment on account thereof by using any claim then due and
payable to the Lender from the Grantor as a credit against the purchase price,
and the Lender may, upon compliance with the terms of sale, hold, retain and
dispose of such property without further accountability to the Grantor
therefore. For purposes hereof, a written agreement to purchase the Collateral
or any portion thereof shall be treated as a sale thereof; the Lender shall be
free to carry out such sale and purchase pursuant to such agreement, and the
Grantor shall not be entitled to the return of the Collateral or any portion
thereof subject thereto, notwithstanding the fact that after the Lender shall
have entered into such an agreement all Events of Default shall have been
remedied and the Obligations paid in full. As an alternative to exercising the
power of sale herein conferred upon it, the Lender may proceed by a suit or
suits at law or in equity to foreclose this Agreement and to sell the Collateral
or any portion thereof pursuant to a judgment or decree of a court or courts
having competent jurisdiction or pursuant to a proceeding by a court-appointed
receiver.
16. Application of Proceeds. The proceeds of any collection or sale of
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Collateral, as well as any Collateral consisting of cash, shall be applied by
the Lender as follows:
(a) FIRST, to the payment of all reasonable costs and expenses incurred by
the Lender in connection with such collection or sale or otherwise in connection
with this Agreement or any of the Obligations, including, but not limited to,
all court costs and the reasonable fees and expenses of its agents and legal
counsel, the repayment of all advances made by the Lender hereunder on behalf of
the Grantor and any other reasonable costs or expenses incurred in connection
with the exercise of any right or remedy hereunder;
(b) SECOND, to the payment in full of principal and interest in respect of
the Loan then outstanding;
(c) THIRD, to the payment in full of all Obligations (other than those
referred to above) owed to the Lender; and
(d) FOURTH, to the Grantor, its successors and assigns, or as a court of
competent jurisdiction may otherwise direct.
17. Upon any sale of the Collateral by the Lender (including, without
limitation, pursuant to a power of sale granted by statute or under a judicial
proceeding), the receipt of the Lender or of the officer making the sale shall
be a sufficient discharge to the purchaser or purchasers of the Collateral so
sold and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the Lender or such
officer or be answerable in any way for the misapplication thereof.
18. Locations of Collateral; Place of Business.
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(a) The Grantor hereby represents and warrants that all the Collateral is
located in Georgia. The Grantor agrees not to establish, or permit to be
established, any other location for Collateral unless all filings under the
Uniform Commercial Code as in effect in any state or otherwise which are
required by this Agreement or the Loan Documents to be made with respect to the
Collateral have been made in any state in which any portion of the Collateral is
located, and the Lender has a valid, legal and perfected first priority security
interest in the Collateral wherever located.
(b) The Grantor agrees not to change, or permit to be changed, the
location of its chief executive office unless all filings under the Uniform
Commercial Code or otherwise which are required by this Agreement or the Loan
Documents to be made have been made and the Lender has a valid, legal and
perfected first priority security interest.
19. Security Interest Absolute. All rights of the Lender hereunder, the
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Security Interest, and all obligations of the Grantor hereunder, shall be
absolute and unconditional irrespective of (i) any lack of validity or
enforceability of the Loan Documents, any other agreement with respect to any of
the Obligations or any other agreement or instrument relating to any of the
foregoing, (ii) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or consent to any departure from the Loan Documents, or any other agreement
or instrument, (iii) any exchange, release or nonperfection of any other
Collateral, or any release or amendment or waiver of or consent to or departure
from any guarantee, for all or any of the Obligations, or (iv) any other
circumstance which might otherwise constitute a defense available to, or
discharge of, the Grantor or any other obligor in respect of the Obligations or
in respect of this Agreement.
20. No Waiver. No failure on the part of the Lender to exercise, and no delay
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in exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy by the Lender preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. All remedies hereunder are
cumulative and are not exclusive of any other remedies provided by law. The
Lender shall not be deemed to have waived any rights hereunder or under any
other agreement or instrument unless such waiver shall be in writing and signed
by such parties.
21. Lender Appointed Attorney-in-Fact. The Grantor hereby appoints the Lender
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its attorney-in-fact solely for the purpose of carrying out the provisions of
this Agreement and taking any action and executing any instrument which the
Lender may deem necessary or advisable to accomplish the purposes hereof, which
appointment is irrevocable and coupled with an interest.
22. Lender's Fees and Expenses. The Grantor shall be obligated to, upon
-----------------------------
demand, pay to the Lender the amount of any and all reasonable expenses,
including the reasonable fees and expenses of its counsel and of any experts or
agents which the Lender may incur in connection with (i) the administration of
this Agreement, (ii) the custody or preservation of, or the sale of, collection
from, or other realization upon, any of the Collateral, (iii) the exercise or
enforcement of any of the rights of the Lender hereunder, or (iv) the failure by
the Grantor to perform or observe any of the provisions hereof. In addition,
the Grantor indemnifies and holds the Lender harmless from and against any and
all liability incurred by the Lender hereunder or in connection herewith, unless
such liability shall be due to the gross negligence or willful misconduct of the
Lender. Any such amounts payable as provided hereunder or thereunder shall be
additional Obligations secured hereby and by the other Security Documents.
23. Binding Agreement; Assignments. This Agreement, and the terms, covenants
--------------------------------
and conditions hereof, shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, except that the
Grantor shall not be permitted to assign this Agreement or any interest herein
or in the Collateral, or any part thereof, or any cash or property held by the
Lender as Collateral under this Agreement, except as contemplated by this
Agreement or the Loan Documents.
24. Governing Law. (a) This Agreement shall be construed in accordance with
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and governed by the laws of the state of California, except to the extent that
the validity or perfection of the security interest hereunder, or remedies
hereunder, which shall be governed by the appropriate jurisdiction relating to
the specific Collateral itself. Venue for any action under this Agreement or
any of the Loan Documents shall be in the Superior Court located in Santa
Monica, California. The prevailing party in any dispute arising hereunder shall
be entitled to recover all of its reasonable attorneys fees and costs of
defense, prosecution or litigation. The Grantor hereby expressly and
irrevocably submits to the jurisdiction of the state and federal courts of the
State of California, city of Los Angeles (and Santa Xxxxxx specifically for
state court), for the purpose of any such litigation as set forth above and
irrevocably agrees to be bound by any final judgment rendered thereby in
connection with such litigation. The Grantor further irrevocably consents to
the service of process by registered mail, postage prepaid, or by personal
service within or without the State of California. The Grantor hereby expressly
and irrevocably waives, to the fullest extent permitted by law, any objection
which it may have or hereafter may have to the laying of venue of any such
litigation brought in any such court referred to above and any claim that any
such litigation has been brought in any inconvenient forum. To the extent that
the Grantor has or hereafter may acquire any immunity from jurisdiction of any
court or from any legal process (whether through service or notice, attachment
prior to judgment, attachment in aid of execution or otherwise) with respect to
itself or its property, the Grantor hereby irrevocably waives such immunity in
respect of its obligations under this agreement and the other Loan Documents.
(b) Waiver of Jury Trial. The parties hereby knowingly, voluntarily
and intentionally waive any rights they may have to a trial by jury in respect
of any litigation based hereon, or arising out of, under, or in connection with,
this agreement, or any course of conduct, course of dealing, statements (whether
oral or written) or actions of any of the parties hereto. If for any reason
this jury trial waiver is not enforceable, then upon any such finding, the
parties agree that any dispute arising from or related in any way to this
Agreement shall be resolved by binding arbitration, and shall be immediately
referred to arbitration by the court in any then pending proceeding upon request
by either party.
25. Notices. All communications and notices hereunder shall be in writing and
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given as provided in the Loan Documents.
26. Severability. In case any one or more of the provisions contained in this
------------
Agreement should be invalid, illegal or unenforceable the remaining provisions
contained herein shall not in any way be affected or impaired.
27. Section Headings. Section headings used herein are for convenience only
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and are not to affect the construction of, or to be taken into consideration in
interpreting, this Agreement.
28. Counterparts. This Agreement may be executed in two or more counterparts,
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each of which shall constitute an original, but all of which, when taken
together, shall constitute but one instrument. This Agreement shall be effective
when a counterpart which bears the signature of the Grantor shall have been
delivered to the Lender.
29. Termination. This Agreement and the Security Interest shall terminate when
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all the Obligations have been fully and indefeasibly paid in cash, at which time
the Lender shall execute and deliver to the Grantor all Uniform Commercial Code
termination statements and similar documents which the Grantor shall reasonably
request to evidence such termination; provided, however, that all indemnities of
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the Grantor contained in this Agreement shall survive, and remain operative and
in full force and effect regardless of, the termination of this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Security
Agreement as of the day and year first above written.
Hyde Investments, Ltd.
By: /s/ X. Xxxxx
----------------------------
NATIONAL PARKING SYSTEMS, INC.,
a Nevada corporation
By: /s/ Xxxx Xxxxxxxx
-------------------------
Name: Xxxx Xxxxxxxx
Title: President and CEO
ABS Holding Company, Inc.
a Nevada corporation
By: /s/ Xxxx Xxxxxxxx
-------------------------
Name: Xxxx Xxxxxxxx
Title: President and CEO
BH Holding Company, Inc.
a Nevada corporation
By: /s/ Xxxx Xxxxxxxx
-------------------------
Name: Xxxx Xxxxxxxx
Title: President and CEO
CONSENT; AGREEMENT AND ACKNOWLEDGMENT:
As shareholder and individually, I consent to and approve all terms set forth in
this agreement.
Xxxx Xxxxxxxx
/s/ Xxxx Xxxxxxxx
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Xxxx Xxxxxxxx
EXHIBIT A
Collateral
All rights, title, claims and interests of every kind and character of
National Parking Systems, Inc., a Nevada corporation ("NPS"), ABS Holding
Company, Inc., a Nevada corporation ("ABS") and BH Holding Company, Inc., a
Nevada corporation (BH, and, together with ABS and NPS, jointly and severally,
the "Debtor"), and any of their respective subsidiaries (the "Debtor"), or any
------
of them (whether tangible, intangible, xxxxxx, inchoate, legal, direct,
indirect, possessory, nonpossessory, vested, nonvested, beneficial or equitable)
in any assets, property or property rights now or at any time hereafter owned,
held, used or acquired by Debtor whether in the name of any of them or in any
fictitious business name or in any other name, and whether or not particularly
described herein, including without limitation: all cash, inventory, accounts
receivable, new and used finished goods, products, merchandise, work in process,
raw materials, parts, supplies, accessories, attachments whether or not held for
sale, lease, use or consumption and any property classified as inventory by the
Uniform Commercial Code ("UCC"), machinery, equipment, tools, dies molds,
furniture, general intangibles, as that term is defined by said UCC, good will,
trademarks, trade names, service names and marks, licenses, patents rights,
copyrights, inventions, negotiable and non-negotiable instruments and documents,
things in action and all other rights, privileges and franchises, all rights
under any leases (including without limitation any lease of any of Debtors
business premises) whether of real or personal property and whether as landlord,
tenant, or otherwise, chattel paper, accounts, deposit accounts, and
instruments, as those terms are defined by the UCC, condemnation or insurance
recoveries, rents, royalties, profits, certificated and uncertificated
securities, treasury stock, commercial paper, business records and reports,
documents, claims, commission, contracts, causes of action, suits, rights of
offset or recoupment, fixtures, as that term is defined by said UCC, and all
products and proceeds (as defined in said UCC), accessions, additions,
increases, repairs to, improvements and replacements of each of the foregoing
items of Collateral. Further, "Collateral" shall also mean all rights, title,
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claims and interests of every kind and character of Debtor under any name
(whether tangible, intangible, xxxxxx, inchoate, legal, direct, indirect,
possessory, nonpossessory, vested, nonvested, beneficial or equitable) in the
common stock and/or other debt or equity interests and/or other interests in any
corporation or in any other partnership or other legal entity involved in which
the Debtor has an interest now or at any time hereafter owed, held, used or
acquired. "Collateral" shall also include all products and proceeds (as defined
----------
in said UCC), accessions, additions, increases, repairs to, improvements and
replacements of each of the foregoing items of Collateral.
