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EXHIBIT 10.7
SECURITY AGREEMENT
SECURITY AGREEMENT (the "Security Agreement"), dated as of
December 31, 1999, between Ambasssa Holdings, Inc., a Florida corporation, with
offices at 0000 X. Xxx Xxxx, Xxxxx Xxxxx, Xxxxxxx (the "Borrower"), and Chicken
Kitchen Corporation, a Florida corporation, with offices at 0000 Xxxxxxx Xxxxxx,
Xxxxx 000, Xxxxx Xxxxx, Xxxxxxx (the "Secured Party").
Section 1. DEFINITIONS. Definitions in the Code (as defined below)
shall apply to words and phrases in this Security Agreement and, if Code
definitions conflict, definitions in Article 9 (Chapter 679, Florida Statutes)
of the Code shall apply. In addition to terms defined in the Code or elsewhere
in this Security Agreement, the following terms have the meanings indicated
below, which meanings shall be equally applicable to both the singular and the
plural forms of such terms:
"Code" means the Uniform Commercial Code as in effect from time to time
in the State of Florida (Chapters 671 through 680, inclusive, Florida Statutes).
"Collateral" means and includes any and all of the following which are
owned by the Borrower or in which the Borrower has an interest, whether now
owned or existing or hereafter created or acquired:
(a) The internet domain names set forth on the attached
Exhibit "A;"
(b) all cash or non-cash proceeds of any of the
foregoing, including insurance proceeds and all
products thereof;
(c) all ledger sheets, files, records, documents and
instruments (including, but not limited to, computer
programs, tapes and related electronic data
processing software) evidencing an interest in or
relating to the above; and
"Obligations" shall mean and include:
(a) the indebtedness, obligations and liabilities of the
Borrower to the Secured Party now or hereafter
existing, incurred or created under the Promissory
Note or any related documents;
"Promissory Note" means that certain Promissory Note in the original
principal amount of $138,913.00 of even date, given by the Borrower to the
Secured Party.
Section 2. GRANT OF SECURITY INTEREST; RELEASE OF COLLATERAL.
2.1. In consideration of advances and other extensions of
credit made or to be made by the Secured Party to the Borrower, and for other
value received by the Borrower, and in further consideration of other financial
accommodations extended by the Secured Party to the Borrower or to other persons
and guaranteed by the Borrower, the Borrower hereby grants a continuing security
interest in, and assigns to the Secured Party, the Collateral, to secure payment
and performance of all of the Obligations of the Borrower to the Secured Party.
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2.2. At any time during which amounts are outstanding under
the Promissory Note, the Borrower is entitled to obtain a release of the Secured
Party's security interest in any and all Inventory and Accounts which are or may
hereafter became encumbered by this Security Agreement by paying the outstanding
principal amount plus accrual interest under the Promissory Note in the manner
set forth in the Promissory Note.
Section 3. OWNERSHIP OF COLLATERAL. The Borrower hereby represents,
that it has good title to the Collateral free and clear of all liens and
security interests except the security interest granted by this Security
Agreement.
Section 4. NO OTHER SECURITY INTERESTS. So long as any Obligation to
the Secured Party is outstanding, the Borrower shall not, without the prior
written consent of the Secured Party, grant to any third party a security
interest in any of the Collateral or permit any lien or encumbrance to attach to
any part of the Collateral (except for taxes not yet due and payable) or suffer
or permit any levy to be made on any part of the Collateral, or permit any
financing statement (except that of the Secured Party) to be on file with
respect thereto, except (a) purchase money liens arising in connection with
newly acquired property, and (b) liens that are junior in priority to the
security interests created by this Security Agreement. Except as is customary
and usual in the course of its business, the Borrower shall not sell, transfer,
lease or otherwise dispose of any of the Collateral or any interest therein, or
offer to do so or permit anything to be done to impair the value of the
Collateral or the security interest hereby created; PROVIDED that the Borrower
may merge or consolidate with another company so long as (x) the Borrower is the
surviving entity; (y) the shareholders of the Borrower control the surviving
entity, and (z) the other company is solvent and has a positive net worth.
Section 5. REPRESENTATIONS, WARRANTIES AND COVENANTS REGARDING THE
COLLATERAL. The Borrower represents, warrants and covenants to the Secured Party
as follows:
5.1. The Borrower shall at all times keep the Collateral
insured against loss, damage, theft, and such other risks as the Secured Party
may reasonably require, in such amounts (in any event, not less than the full
insurable value thereof), with such insurance companies, under such policies, in
such form and for such periods as shall be reasonably acceptable to the Secured
Party, and each such policy shall provide that loss thereunder and proceeds
payable thereunder shall be payable to the Secured Party as an additional loss
payee (and the Secured Party may apply any proceeds of such insurance which may
be received by the Secured Party toward payment of the Obligations, whether due
or not due, in such order of application as the Secured Party may determine).
Each such policy shall provide for minimum ten days written cancellation notice
to the Secured Party. Each such policy shall, if the Secured Party so requests,
be deposited with the Secured Party. Such policies shall provide that no act or
default of the Borrower shall affect the right of the Secured Party to recover
thereunder.
5.2. The Borrower shall at all times keep the Collateral in
good order and repair and shall not waste or destroy the Collateral or any part
thereof.
5.3. The Borrower warrants that no financing statement
covering any Collateral or any proceeds thereof is on file in any public office.
The Borrower shall promptly, if requested by the Secured Party, xxxx its records
evidencing its accounts and chattel paper in a manner satisfactory to the
Secured Party so as to show the same having been assigned to the Secured Party.
The Borrower authorizes the Secured Party to file financing statements with
respect to the Collateral signed only by the Secured Party when permitted by the
Code. The Borrower shall join with the Secured Party in executing financing
statements, notices, affidavits or similar instruments in forms satisfactory to
the Secured Party and such other documents as the Secured Party may from time to
time reasonably request, and shall pay the cost of filing the same in any public
office required by law. The Borrower shall do such other acts and things, all as
the Secured Party
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may reasonably request, to maintain a valid, perfected security interest in
favor of the Secured Party in the Collateral (free and clear of all other liens
and claims whatsoever, in order to secure the payment of the Obligations. The
Borrower agrees to execute all documents which the Secured Party may deem
necessary to perfect and to continue the perfection of the security interest
created hereby and to protect the Collateral.
5.4. The Borrower shall not use the Collateral or permit the
same to be used in violation of, and shall at all times maintain the Collateral
in compliance with, any applicable statute or ordinance. The Secured Party may
examine and inspect the Collateral, wherever located, upon reasonable prior
notice to the Borrower. The Borrower shall pay promptly when due all taxes and
assessments upon the Collateral or for its use or operation or upon this
Security Agreement or any other writing evidencing the Obligations, or any of
them.
5.5. The chief executive office where Borrower keeps its
records concerning its Receivables is at the address specified at the beginning
of this Security Agreement. The Borrower shall give the Secured Party written
notice of each additional location at which Collateral is kept and of any change
in the chief executive office of the Borrower at which records of the Borrower
pertaining to Receivables are kept at least thirty days prior to the change of
the chief executive office.
5.6. The Borrower shall not dispose of or transfer any of the
Collateral, or any interest therein, without the Secured Party's prior written
consent. Notwithstanding the foregoing, the Borrower shall be permitted to
license any of the Collateral to a third party pursuant to an arms-length
transaction so long as the licensee acknowledges in writing the existence of the
Secured Party's security interest in such Collateral. Furthermore, the Borrower
may assign the Collateral in connection with a merger or consolidation in which
the Borrower is not the continuing corporation, provided that the continuing
corporation acknowledges in writing the existence of the Secured Party's
security interest in the Collateral.
Section 6. DEFAULTS AND REMEDIES. If any one of the following "Events
of Default" shall occur and shall not have been remedied;
(a) any default under the Promissory Note, which remains
unremedied for 10 calendar days after written notice thereof has been given to
the Borrower by the Secured Party;
(b) any representation or warranty made by the Borrower herein
or in any certificate or report furnished by the Borrower hereunder shall prove
to have been incorrect in any material respect; or
(c) the Borrower shall default in the performance of any other
agreement, covenant or obligation contained herein, which default shall persist
for 10 calendar days after written notice thereof has been given to the Borrower
by the Secured Party;
then the Secured Party may, in addition to any other rights and remedies which
it may have under applicable law, immediately and without demand exercise any
and all of the rights and remedies granted to a secured party upon default under
the Code; and upon request or demand of the Secured Party, the Borrower shall at
its expense assemble all (or any part, if so directed) of the Collateral and
make it available to the Secured Party at Borrower's place of business. The
Secured Party and its agents are authorized to enter into or onto any premises
where the Collateral may be located for the purpose of taking possession of such
Collateral. Any notice of sale, disposition or other intended action by the
Secured Party, sent to the Borrower at the address specified at the beginning of
this Security Agreement or at such other address of the Borrower as may from
time to time be shown on the Secured Party's records, at least ten days prior to
such action, shall constitute reasonable notice to the Borrower. Any proceeds of
any disposition of any of the Collateral may be applied by the Secured Party
toward payment of such of the Obligations and in such order of application as
the Secured Party may from time to time elect.
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Section 7. MISCELLANEOUS.
7.1. No waiver by the Secured Party of any default shall
operate as a waiver of any other default or of the same default on a future
occasion. No delay or omission on the part of the Secured Party in exercising
any right or remedy shall operate as a waiver thereof, and no single or partial
exercise by the Secured Party of any right or remedy shall preclude any other or
further exercise thereof or the exercise of any other right or remedy. Time is
of the essence in this Security Agreement. The provisions of this Security
Agreement are cumulative and in addition to the provisions of any liability of
the Borrower under any note, any guaranty or any other writing, the Secured
Party shall have all the benefits, rights and remedies of a secured party under
this Security Agreement and any other document. No modification or amendment to
this Security Agreement shall be effective unless evidenced by a written
instrument signed by authorized officers of the Borrower and the Secured Party.
7.2. Upon the occurrence of any Event of Default hereunder,
the Secured Party may at its discretion transfer any property constituting
Collateral into its own name or that of its nominee and receive the income
thereon and hold the same as security for the Obligations or apply it towards
principal or interest due on Obligations. The powers conferred upon the Secured
Party by this Section are solely to protect the interests of the Secured Party
and shall not impose any duties on the Secured Party to exercise any powers.
7.3. All rights of the Secured Party hereunder shall inure to
the benefit of its successors and assigns, and all Obligations of the Borrower
shall bind the successors and assigns of the Borrower.
7.4. This Security Agreement shall be governed by and
construed in accordance with the laws of Florida, without regard to the conflict
of laws principles thereof.
7.5. At its option, the Secured Party may, if the Borrower
fails to pay the same when due, discharge taxes, liens or security interests or
other encumbrances at any time levied or placed on the Collateral (unless such
item is being contested in good faith by the Borrower), may pay for insurance on
the Collateral, and may pay for the maintenance and preservation of the
Collateral. The Borrower agrees to reimburse the Secured Party on demand for any
reasonable payment made, or any reasonable expense incurred, by the Secured
Party pursuant to the foregoing authorization. Except as otherwise expressly
provided in this Security Agreement, until an Event of Default takes place, the
Borrower may have possession of the Collateral and use it in any lawful manner
not inconsistent with this Security Agreement and not inconsistent with any
policy of insurance thereon.
7.6. If any of the provisions of this Security Agreement shall
contravene or be held invalid under the laws of any jurisdiction, the Security
Agreement shall be construed as if such provision did not exist and the
remainder of this Security Agreement shall be construed and enforced
accordingly.
7.7. The Secured Party's rights under the Promissory Note and
this Security Agreement are cumulative. Without limiting the generality of the
foregoing, the Secured Party may enforce its rights hereunder in all or part of
the Collateral or in any other security in the order selected by Secured Party.
7.8. THE BORROWER, AND THE SECURED PARTY BY ITS ACCEPTANCE OF
THIS SECURITY AGREEMENT, HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE
THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS SECURITY AGREEMENT
AND ANY AGREEMENT TO BE EXECUTED IN CONJUNCTION HEREWITH OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF
EITHER PARTY; PROVIDED, HOWEVER, THAT THIS
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WAIVER SHALL NOT BE APPLICABLE WITH RESPECT TO ANY COUNTERCLAIM BY THE BORROWER
OR ANY ACTION BY THE BORROWER IN WHICH THE SECURED PARTY IS AN ADVERSE PARTY AND
THE BORROWER SEEKS DAMAGES FROM THE SECURED PARTY IN CONNECTION WITH THIS
SECURITY AGREEMENT. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE SECURED
PARTY ENTERING INTO THIS SECURITY AGREEMENT.
7.9. All notices, demands and requests hereunder or required
hereby shall be in writing and shall be deemed to have been properly given if
and only if personally delivered or sent by a nationally recognized overnight
courier requiring the signature of the recipient party, when addressed to the
parties at their respective addresses set forth on the first page hereof or at
such other locations as a party may subsequently designate in writing.
IN WITNESS WHEREOF, this Security Agreement has been executed by the
Secured Party and the Borrower as of the date set forth above.
THE SECURED PARTY:
CHICKEN KITCHEN CORPORATION,
a Florida corporation
By:_________________________
Name: Xxxxxxxxx xx Xxxxxxxxx,
Its President
THE BORROWER:
AMBASSA HOLDINGS, INC.,
a Delaware corporation
By:_______________________
Name: Xxxxxxxxx Xx Xxxxxxxxx,
Its President
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