SECURITY AGREEMENT
------------------
SECURITY AGREEMENT, dated as of September 21, 2001, between
Phoenix International Industries, Inc., a Florida corporation (the
"Company"), and the secured parties signatory hereto and their
respective endorsees, transferees and assigns (individually and
collectively, a "Secured Party").
W I T N E S S E T H:
--------------------
WHEREAS, pursuant to a Secured Convertible Debenture Purchase
Agreement (the "Purchase Agreement"), dated the date hereof between
the Company and the Secured Party, the Company has agreed to issue to
the Secured Party and the Secured Party has agreed to purchase from
the Company: (i) certain of the Company's 12% Secured Convertible
Debentures, due eighteen months from the date of issue (the "Closing
Debentures"), which are convertible into shares of the Company's
Common Stock, $.001 par value (the "Common Stock") and (ii) Common
Stock purchase warrants to purchase the number of shares of Common
Stock indicated below each Secured Party's name on the Purchase
Agreement (the "Warrants");
WHEREAS, each Secured Party owns 12% Secured Convertible
Debentures of the Company issued to such Secured Party on June 23,
2000 and August 31, 2000, respectively, pursuant to a Secured
Convertible Debenture Purchase Agreement, dated June 23, 2000, between
the Company and the Secured Parties ("Existing Debentures"). The
outstanding principal balance (including any accrued but unpaid
interest) of the Existing Debentures held by each such Secured Party
is set forth below such Secured Party's name on its signature page to
the Purchase Agreement; and
WHEREAS, the Company and the Secured Parties have agreed to
cancel the Existing Debentures and in place of the Existing Debentures,
the Company has agreed to issue new secured convertible debentures to
each Secured Party, substantially in the form of Exhibit A and in the
outstanding principal balance (including any accrued but unpaid interest)
set forth below each Secured Party's name on its signature page to the
Purchase Agreement (the "Re-issued Debentures" and together with the
Closing Debentures and any Additional Debentures (as defined in the
Purchase Agreement), the "Debentures").
WHEREAS, in order to induce the Secured Party to acquire the
Debentures, the Company has agreed to execute and deliver to the
Secured Party this Agreement for the benefit of the Secured Parties
and to grant to them a first priority security interest (which is pari
passu to the security interest granted by the Company to the Secured
Parties pursuant to a Security Agreement between the Company and the
Secured Parties, dated June 23, 2000 ("Initial Security Agreement"))
in certain property of the Company to secure the prompt payment,
performance and discharge in full of all of the Company's obligations
under the Debentures and the exercise and discharge in full of all of
the Company's obligations under the Warrant.
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NOW, THEREFORE, in consideration of the agreements herein contained
and for other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto hereby agree as follows:
1. Certain Definitions.
-------------------- As used in this Agreement, the following
terms shall have the meanings set forth in this Section 1. Terms used but
not otherwise defined in this Agreement that are defined in Article 9 of
the UCC (such as "general intangibles" and "proceeds") shall have the
respective meanings given such terms in Article 9 of the UCC.
(a) "Collateral"
------------ means the collateral in which the Secured
Party is granted a security interest by this Agreement and which shall
include the following, whether presently owned or existing or hereafter
acquired or coming into existence, and all additions and accessions
thereto and all substitutions and replacements thereof, and all proceeds,
products and accounts thereof, including, without limitation, all proceeds
from the sale or transfer of the Collateral and of insurance covering the
same and of any tort claims in connection therewith:
(i) All Goods of the Company, including, without
limitations, all machinery, equipment, computers,
motor vehicles, trucks, tanks, boats, ships,
appliances, furniture, special and general tools,
fixtures, test and quality control devices and other
equipment of every kind and nature and wherever
situated, together with all documents of title and
documents representing the same, all additions and
accessions thereto, replacements therefor, all parts
therefor, and all substitutes for any of the foregoing
and all other items used and useful in connection with
the Company's businesses and all improvements thereto
(collectively, the "Equipment"); and
(ii) All Inventory of the Company; and
(iii) All of the Company's contract rights and general
intangibles, including, without limitation, all
partnership interests, stock or other securities,
licenses, distribution and other agreements, computer
software development rights, leases, franchises,
customer lists, quality control procedures, grants and
rights, goodwill, trademarks, service marks, trade
styles, trade names, patents, patent applications,
copyrights, deposit accounts, and income tax refunds
(collectively, the "General Intangibles"); and
(iv) All Receivables of the Company including
all insurance proceeds, and rights to refunds or
indemnification whatsoever owing, together with
all instruments, all documents of title representing
any of the foregoing, all rights in any merchandising,
goods, equipment, motor vehicles and trucks which any
of the same may represent, and all right, title, security
and guaranties with respect to each Receivable, including
any right of stoppage in transit; and
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(v) All of the Company's documents, instruments
and chattel paper, files, records, books of
account, business papers, computer programs and
the products and proceeds of all of the foregoing
Collateral set forth in clauses (i)-(iv) above.
(b) "Company"
--------- shall mean, collectively, the Company and all
of the subsidiaries of the Company, a list of which is contained in
Schedule A, attached hereto.
(c) "Obligations"
------------- means all of the Company's obligations
under this Agreement, the Debentures, the Registration Rights
Agreement (as defined in the Purchase Agreement) and the Warrants, in
each case, whether now or hereafter existing, voluntary or involuntary,
direct or indirect, absolute or contingent, liquidated or unliquidated,
whether or not jointly owed with others, and whether or not from time
to time decreased or extinguished and later increased, created or
incurred, and all or any portion of such obligations or liabilities
that are paid, to the extent all or any part of such payment is avoided
or recovered directly or indirectly from the Secured Party as a preference,
fraudulent transfer or otherwise as such obligations may be amended,
supplemented, converted, extended or modified from time to time.
(d) "UCC"
----- means the Uniform Commercial Code, as currently in
effect in the State of Florida.
2. Grant of Security Interest.
--------------------------- As an inducement for the Secured
Party to acquire the Debentures and to secure the complete and
timely payment, performance and discharge in full, as the case may be,
of all of the Obligations, the Company hereby, unconditionally and
irrevocably, pledges, grants and hypothecates to the Secured Party, a
continuing security interest in, a lien upon and a right of set-off
against all of the Company's right, title and interest of whatsoever
kind and nature in and to the Collateral (the "Security Interest")
senior to all liens and encumbrances of the Company and pari passu
with the security interest granted by the Company to the Secured Party
pursuant to the Initial Security Agreement (the "Initial Priority
Interest").
3. Representations, Warranties, Covenants and Agreements of the
------------------------------------------------------------
Company.
-------- The Company represents and warrants to, and covenants
and agrees with, each Secured Party as follows:
(a) The Company has the requisite corporate power and authority
to enter into this Agreement and otherwise to carry out its obligations
thereunder. The execution, delivery and performance by the Company of
this Agreement and the filings contemplated therein have been duly
authorized by all necessary action on the part of the Company and no
further action is required by the Company.
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(b) The Company is organized and in good standing under
the laws of the State of Florida and the information contained on
Schedule A attached hereto is true and accurate as of the date hereof;
(c) The Company is the sole owner of the Collateral
(except for non-exclusive licenses granted by the Company in the
ordinary course of business), free and clear of any liens, security
interests, encumbrances, rights or claims other than the Initial
Priority Interest (which is pari passu with the Security Interest
created hereunder), and is fully authorized to grant the Security
Interest in and to pledge the Collateral. There is not on file in any
governmental or regulatory authority, agency or recording office an
effective financing statement, security agreement, license or transfer
or any notice of any of the foregoing (other than those that have been
filed in favor of the Secured Party pursuant to this Agreement or with
respect to the Initial Priority Interest) covering or affecting any of
the Collateral. So long as this Agreement shall be in effect, the
Company shall not execute and shall not knowingly permit to be on file
in any such office or agency any such financing statement or other
document or instrument (except to the extent filed or recorded in
favor of the Secured Party pursuant to the terms of this Agreement or
with respect to the Initial Priority Interest).
(d) No part of the Collateral has been judged invalid or
unenforceable. No written claim has been received that any Collateral
or the Company's use of any Collateral violates the rights of any
third party. There has been no adverse decision to the Company's claim
of ownership rights in or exclusive rights to use the Collateral in
any jurisdiction or to the Company's right to keep and maintain such
Collateral in full force and effect, and there is no proceeding
involving said rights pending or, to the best knowledge of the
Company, threatened before any court, judicial body, administrative or
regulatory agency, arbitrator or other governmental authority.
(e) The Company shall at all times maintain its books of
account and records relating to the Collateral at its principal place
of business and its Collateral at the locations set forth on Schedule
A attached hereto and may not relocate such books of account and
records or tangible Collateral unless it delivers to the Secured Party
at least 30 days prior to such relocation (i) written notice of such
relocation and the new location thereof (which must be within the
United States) and (ii) evidence that appropriate financing statements
and other necessary documents have been filed and recorded and other
steps have been taken to perfect the Security Interest to create in
favor of the Secured Party valid, perfected and continuing first
priority liens in the Collateral pari passu with the Initial Priority
Interest.
(f) This Agreement creates in favor of the Secured Party a
valid security interest in the Collateral securing the payment and
performance of the Obligations and, upon making the filings described
in the immediately following sentence, a perfected first priority
security interest in such Collateral pari passu with the Initial
Priority Interest. The Security Interest is senior to all liens and
encumbrances and is pari passu with the Initial Priority Interest.
Except for the filing of financing statements on Form-1 under the UCC
with the jurisdictions indicated on Schedule B, attached hereto, no
authorization or approval of or filing with or notice to any
governmental authority or regulatory body is required either (i) for
the grant by the Company of, or the effectiveness of, the Security
Interest granted hereby or for the execution, delivery and performance
of this Agreement by the Company or (ii) for the perfection of or
exercise by the Secured Party of its rights and remedies hereunder.
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(g) On the date of execution of this Agreement, the Company
will deliver to the Secured Party one or more executed UCC financing
statements on Form-1 with respect to the Security Interest for filing
with the jurisdictions indicated on Schedule B, attached hereto and
in such other jurisdictions as may be requested by the Secured Party.
(h) The execution, delivery and performance of this Agreement
does not conflict with or cause a breach or default, or an event that
with or without the passage of time or notice, shall constitute a breach
or default, under any agreement to which the Company is a party or by the
Company is bound. No consent (including, without limitation, from stock
holders or creditors of the Company) is required for the Company to enter
into and perform its obligations hereunder.
(i) The Company shall at all times maintain the liens and
Security Interest provided for hereunder as valid and perfected first
priority liens and security interests in the Collateral in favor of
the Secured Party pari passu with the Initial Priority Interest until
this Agreement and the Security Interest hereunder shall be terminated
pursuant to Section 11. The Company hereby agrees to defend the same
against any and all persons. The Company shall safeguard and protect
all Collateral for the account of the Secured Party. At the request
of the Secured Party, the Company will sign and deliver to the Secured
Party at any time or from time to time one or more financing
statements pursuant to the UCC (or any other applicable statute) in
form reasonably satisfactory to the Secured Party and will pay the
cost of filing the same in all public offices wherever filing is, or
is deemed by the Secured Party to be, necessary or desirable to effect
the rights and obligations provided for herein. Without limiting the
generality of the foregoing, the Company shall pay all fees, taxes and
other amounts necessary to maintain the Collateral and the Security
Interest hereunder, and the Company shall obtain and furnish to the
Secured Party from time to time, upon demand, such releases and/or
subordinations of claims and liens which may be required to maintain
the priority of the Security Interest hereunder.
(j) The Company will not transfer, pledge, hypothecate,
encumber, license (except for non-exclusive licenses granted by the
Company in the ordinary course of business), sell or otherwise dispose
of any of the Collateral without the prior written consent of the
Secured Party.
(k) The Company shall keep and preserve its Equipment,
Inventory and other tangible Collateral in good condition, repair and
order and shall not operate or locate any such Collateral (or cause to
be operated or located) in any area excluded from insurance coverage.
(l) The Company shall, within ten (10) days of obtaining
knowledge thereof, advise the Secured Party promptly, in sufficient
detail, of any substantial change in the Collateral, and of the
occurrence of any event which would have a material adverse effect on
the value of the Collateral or on the Secured Party's security interest
therein.
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(m) The Company shall promptly execute and deliver to the
Secured Party such further deeds, mortgages, assignments, security
agreements, financing statements or other instruments, documents,
certificates and assurances and take such further action as the
Secured Party may from time to time request and may in its sole
discretion deem necessary to perfect, protect or enforce its security
interest in the Collateral including, without limitation, the
execution and delivery of a separate security agreement with respect
to the Company's intellectual property ("Intellectual Property
Security Agreement") in which the Secured Party has been granted a
security interest hereunder, substantially in a form acceptable to the
Secured Party, which Intellectual Property Security Agreement, other
than as stated therein, shall be subject to all of the terms and
conditions hereof.
(n) The Company shall permit the Secured Party and its
representatives and agents to inspect the Collateral at any time, and
to make copies of records pertaining to the Collateral as may be
requested by the Secured Party from time to time.
(o) The Company will take all steps reasonably necessary
to diligently pursue and seek to preserve, enforce and collect any
rights, claims, causes of action and accounts receivable in respect of
the Collateral.
(p) The Company shall promptly notify the Secured Party in
sufficient detail upon becoming aware of any attachment, garnishment,
execution or other legal process levied against any Collateral and of
any other information received by the Company that may materially
affect the value of the Collateral, the Security Interest or the rights
and remedies of the Secured Party hereunder.
(q) All information heretofore, herein or hereafter supplied to
the Secured Party by or on behalf of the Company with respect to the
Collateral is accurate and complete in all material respects as of the
date furnished.
(r) Schedule A,
----------- attached hereto contains a list of all of the
subsidiaries of the Company.
4. Defaults.
--------- The following events shall be "Events of Default":
-------------------
(a) The occurrence of an Event of Default (as defined in the
Debentures) under the Debentures;
(b) Any representation or warranty of the Company in this
Agreement shall prove to have been incorrect in any material respect
when made;
(c) The failure by the Company to observe or perform any
of its obligations hereunder for ten (10) days after receipt by the
Company of notice of such failure from the Secured Party; and
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(d) Any breach or default under the Warrant.
5. Duty To Hold In Trust.
---------------------- Upon the occurrence of any Event of
Default and at any time thereafter, the Company shall, upon receipt by
it of any revenue, income or other sums subject to the Security
Interest, whether payable pursuant to the Debentures or otherwise, or
of any check, draft, note, trade acceptance or other instrument
evidencing an obligation to pay any such sum, hold the same in trust
for the Secured Party and shall forthwith endorse and transfer any
such sums or instruments, or both, to the Secured Party for application
to the satisfaction of the Obligations.
6. Rights and Remedies Upon Default.
--------------------------------- Upon occurrence of any Event
of Default and at any time thereafter, the Secured Party shall have the
right to exercise all of the remedies conferred hereunder and under the
Debentures and the Warrant, and the Secured Party shall have all the
rights and remedies of a secured party under the UCC and/or any other
applicable law (including the Uniform Commercial Code of any jurisdiction
in which any Collateral is then located). Without limitation, the Secured
Party shall have the following rights and powers:
(a) The Secured Party shall have the right to take possession of
the Collateral and, for that purpose, enter, with the aid and assistance
of any person, any premises where the Collateral, or any part thereof,
is or may be placed and remove the same, and the Company shall assemble
the Collateral and make it available to the Secured Party at places which
the Secured Party shall reasonably select, whether at the Company's
premises or elsewhere, and make available to the Secured Party, without
rent, all of the Company's respective premises and facilities for the
purpose of the Secured Party taking possession of, removing or putting
the Collateral in saleable or disposable form.
(b) The Secured Party shall have the right to operate the
business of the Company using the Collateral and shall have the right
to assign, sell, lease or otherwise dispose of and deliver all or any
part of the Collateral, at public or private sale or otherwise, either
with or without special conditions or stipulations, for cash or on
credit or for future delivery, in such parcel or parcels and at such
time or times and at such place or places, and upon such terms and
conditions as the Secured Party may deem commercially reasonable, all
without (except as shall be required by applicable statute and cannot
be waived) advertisement or demand upon or notice to the Company or
right of redemption of the Company, which are hereby expressly waived.
Upon each such sale, lease, assignment or other transfer of Collateral,
the Secured Party may, unless prohibited by applicable law which cannot
be waived, purchase all or any part of the Collateral being sold, free
from and discharged of all trusts, claims, right of redemption and
equities of the Company, which are hereby waived and released.
7. Applications of Proceeds.
------------------------- The proceeds of any such sale,
lease or other disposition of the Collateral hereunder shall be
applied first, to the expenses of retaking, holding, storing,
processing and preparing for sale, selling, and the like (including,
without limitation, any taxes, fees and other costs incurred in
connection therewith) of the Collateral, to the reasonable attorneys'
fees and expenses incurred by the Secured Party in enforcing its
rights hereunder and in connection with collecting, storing and
disposing of the Collateral, and then to satisfaction of the
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Obligations, and to the payment of any other amounts required by
applicable law, after which the Secured Party shall pay to the Company
any surplus proceeds. If, upon the sale, license or other disposition
of the Collateral, the proceeds thereof are insufficient to pay all
amounts to which the Secured Party is legally entitled, the Company
will be liable for the deficiency, together with interest thereon, at
the rate of 15% per annum (the "Default Rate"), and the reasonable
fees of any attorneys employed by the Secured Party to collect such
deficiency. To the extent permitted by applicable law, the Company
waives all claims, damages and demands against the Secured Party
arising out of the repossession, removal, retention or sale of the
Collateral, unless due to the gross negligence or willful misconduct
of the Secured Party.
8. Costs and Expenses.
------------------- The Company agrees to pay all out-of-
pocket fees, costs and expenses incurred in connection with any filing
required hereunder, including without limitation, any financing
statements, continuation statements, partial releases and/or termination
statements related thereto or any expenses of any searches reasonably
required by the Secured Party. The Company shall also pay all other
claims and charges which in the reasonable opinion of the Secured Party
might prejudice, imperil or otherwise affect the Collateral or the
Security Interest therein. The Company will also, upon demand, pay to
the Secured Party the amount of any and all reasonable expenses,
including the reasonable fees and expenses of its counsel and of any
experts and agents, which the Secured Party may incur in connection
with (i) the enforcement of this Agreement, (ii) the custody or
preservation of, or the sale of, collection from, or other realization
upon, any of the Collateral, or (iii) the exercise or enforcement of
any of the rights of the Secured Party under the Debentures. Until so
paid, any fees payable hereunder shall be added to the principal amount
of the Debentures and shall bear interest at the Default Rate.
9. Responsibility for Collateral.
------------------------------ The Company assumes all
liabilities and responsibility in connection with all Collateral, and
the obligations of the Company hereunder or under the Debentures and
the Warrant shall in no way be affected or diminished by reason of the
loss, destruction, damage or theft of any of the Collateral or its
unavailability for any reason.
10. Security Interest Absolute.
--------------------------- All rights of the Secured Party
and all Obligations of the Company hereunder, shall be absolute
and unconditional, irrespective of: (a) any lack of validity or
enforceability of this Agreement, the Debentures, the Warrant or any
agreement entered into in connection with the foregoing, or any
portion hereof or thereof; (b) any change in the time, manner or place
of payment or performance of, or in any other term of, all or any of
the Obligations, or any other amendment or waiver of or any consent to
any departure from the Debentures, the Warrant or any other agreement
entered into in connection with the foregoing; (c) any exchange,
release or nonperfection of any of the Collateral, or any release or
amendment or waiver of or consent to departure from any other collateral
for, or any guaranty, or any other security, for all or any of the
Obligations; (d) any action by the Secured Party to obtain, adjust,
settle and cancel in its sole discretion any insurance claims or matters
made or arising in connection with the Collateral; or (e) any other
circumstance which might otherwise constitute any legal or equitable
defense available to the Company, or a discharge of all or any part of
the Security Interest granted hereby. Until the Obligations shall have
been paid and performed in full, the rights of the Secured Party shall
continue even if the Obligations are barred for any reason, including,
without limitation, the running of the statute of limitations or
bankruptcy. The Company expressly waives presentment, protest, notice
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of protest, demand, notice of nonpayment and demand for performance. In
the event that at any time any transfer of any Collateral or any payment
received by the Secured Party hereunder shall be deemed by final order of
a court of competent jurisdiction to have been a voidable preference or
fraudulent conveyance under the bankruptcy or insolvency laws of the United
States, or shall be deemed to be otherwise due to any party other than
the Secured Party, then, in any such event, the Company's obligations
hereunder shall survive cancellation of this Agreement, and shall not
be discharged or satisfied by any prior payment thereof and/or cancellation
of this Agreement, but shall remain a valid and binding obligation
enforceable in accordance with the terms and provisions hereof. The
Company waives all right to require the Secured Party to proceed against
any other person or to apply any Collateral which the Secured Party may
hold at any time, or to marshal assets, or to pursue any other remedy.
The Company waives any defense arising by reason of the application of
the statute of limitations to any obligation secured hereby.
11. Term of Agreement.
------------------ This Agreement and the Security Interest
shall terminate on the date on which all Obligations have been paid,
fulfilled and discharged in full. Upon such termination, the Secured
Party, at the request and at the expense of the Company, will join in
executing any termination statement with respect to any financing
statement executed and filed pursuant to this Agreement.
12. Power of Attorney; Further Assurances.
-------------------------------------- (a) The Company
authorizes the Secured Party, and does hereby make, constitute and
appoint it, and its respective officers, agents, successors or assigns
with full power of substitution, as the Company's true and lawful
attorney-in-fact, with power, in its own name or in the name of the
Company, to, after the occurrence and during the continuance of an
Event of Default, (i) endorse any notes, checks, drafts, money orders,
or other instruments of payment (including payments payable under or
in respect of any policy of insurance) in respect of the Collateral
that may come into possession of the Secured Party; (ii) to sign and
endorse any UCC financing statement or any invoice, freight or express
xxxx, xxxx of lading, storage or warehouse receipts, drafts against
debtors, assignments, verifications and notices in connection with
accounts, and other documents relating to the Collateral; (iii) to pay
or discharge taxes, liens, security interests or other encumbrances at
any time levied or placed on or threatened against the Collateral;
(iv) to demand, collect, receipt for, compromise, settle and xxx for
monies due in respect of the Collateral; and (v) generally, to do, at
the option of the Secured Party, and at the Company's expense, at any
time, or from time to time, all acts and things which the Secured
Party deems necessary to protect, preserve and realize upon the
Collateral and the Security Interest granted therein in order to
effect the intent of this Agreement, the Debentures and the Warrant
all as fully and effectually as the Company might or could do; and the
Company hereby ratifies all that said attorney shall lawfully do or
cause to be done by virtue hereof. This power of attorney is coupled
with an interest and shall be irrevocable for the term of this
Agreement and thereafter as long as any of the Obligations shall be
outstanding.
(b) On a continuing basis, the Company will make, execute,
acknowledge, deliver, file and record, as the case may be, in the
proper filing and recording places in any jurisdiction, including,
without limitation, the jurisdictions indicated on Schedule B,
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attached hereto, all such instruments, and take all such action as may
reasonably be deemed necessary or advisable, or as reasonably
requested by the Secured Party, to perfect the Security Interest
granted hereunder and otherwise to carry out the intent and purposes
of this Agreement, or for assuring and confirming to the Secured Party
the grant or perfection of a security interest in all the Collateral.
(c) The Company hereby irrevocably appoints the Secured
Party as the Company's attorney-in-fact, with full authority in the
place and stead of the Company and in the name of the Company, from
time to time in the Secured Party's discretion, to take any action and
to execute any instrument which the Secured Party may deem necessary
or advisable to accomplish the purposes of this Agreement, including
the filing, in its sole discretion, of one or more financing or
continuation statements and amendments thereto, relative to any of the
Collateral without the signature of the Company where permitted by
law.
13. Notices.
-------- All notices, requests, demands and other communications
hereunder shall be in writing, with copies to all the other parties
hereto, and shall be deemed to have been duly given when (i) if delivered
by hand, upon receipt, (ii) if sent by facsimile, upon receipt of proof
of sending thereof, (iii) if sent by nationally recognized overnight
delivery service (receipt requested), the next business day or (iv) if
mailed by first-class registered or certified mail, return receipt
requested, postage prepaid, four days after posting in the U.S. mails,
in each case if delivered to the following addresses:
If to the Company: Phoenix International Industries, Inc.
0000 Xxxxxxx Xxxxx
Xxxx Xxxx Xxxxx, Xxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Chief Financial Officer
With copies to: X. Xxx Xxxxxxxx, Esq.
0000 Xxxxxx Xxxx Xxxx
Xxxxx 000
Xxxxxx Xxxxx, Xxxxxxx 00000
Facsimile No.: (000) 000-0000
If to the Secured Party: AJW Partners, LLC
000 Xxxxx Xxxxxx, Xxxxx X
Xxxxxxx, XX, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxx X. Xxxxxxxx
and
New Millennium Capital Partners II, LLC
000 Xxxxx Xxxxxx, Xxxxx X
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Xxxxxxx, XX, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxx X. Xxxxxxxxx
With copies to: Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx &
Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000 and 1432
Attn: Xxxx X. Xxxxx. Esq.
14. Other Security.
--------------- To the extent that the Obligations are now
or hereafter secured by property other than the Collateral or by the
guarantee, endorsement or property of any other person, firm,
corporation or other entity, then the Secured Party shall have the
right, in its sole discretion, to pursue, relinquish, subordinate,
modify or take any other action with respect thereto, without in any
way modifying or affecting any of the Secured Party's rights and
remedies hereunder.
15. Miscellaneous.
--------------
(a) No course of dealing between the Company and the Secured
Party, nor any failure to exercise, nor any delay in exercising, on the
part of the Secured Party, any right, power or privilege hereunder or
under the Debentures shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, power or privilege hereunder
or thereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.
(b) All of the rights and remedies of the Secured Party
with respect to the Collateral, whether established hereby or by the
Debentures or by any other agreements, instruments or documents or by
law shall be cumulative and may be exercised singly or concurrently.
(c) This Agreement constitutes the entire agreement of the
parties with respect to the subject matter hereof and is intended to
supersede all prior negotiations, understandings and agreements with
respect thereto. Except as specifically set forth in this Agreement,
no provision of this Agreement may be modified or amended except by a
written agreement specifically referring to this Agreement and signed
by the parties hereto.
(d) In the event that any provision of this Agreement is
held to be invalid, prohibited or unenforceable in any jurisdiction
for any reason, unless such provision is narrowed by judicial
construction, this Agreement shall, as to such jurisdiction, be
construed as if such invalid, prohibited or unenforceable provision
had been more narrowly drawn so as not to be invalid, prohibited or
unenforceable. If, notwithstanding the foregoing, any provision of
this Agreement is held to be invalid, prohibited or unenforceable in
any jurisdiction, such provision, as to such jurisdiction, shall be
ineffective to the extent of such invalidity, prohibition or
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unenforceability without invalidating the remaining portion of such
provision or the other provisions of this Agreement and without
affecting the validity or enforceability of such provision or the
other provisions of this Agreement in any other jurisdiction.
(e) No waiver of any breach or default or any right under
this Agreement shall be considered valid unless in writing and signed
by the party giving such waiver, and no such waiver shall be deemed a
waiver of any subsequent breach or default or right, whether of the
same or similar nature or otherwise.
(f) This Agreement shall be binding upon and inure to the
benefit of each party hereto and its successors and assigns.
(g) Each party shall take such further action and execute
and deliver such further documents as may be necessary or appropriate
in order to carry out the provisions and purposes of this Agreement.
(h) All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by
and construed and enforced in accordance with the internal laws of the
State of New York, without regard to the principles of conflicts of
law thereof. Each party agrees that all legal proceedings concerning
the interpretations, enforcement and defense of the transactions
contemplated by this Agreement (whether brought against a party hereto
or its respective affiliates, directors, officers, shareholders,
employees or agents) shall be commenced in the state and federal
courts sitting in the City of New York, Borough of Manhattan. Each
party hereto hereby irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in the City of New York,
Borough of Manhattan for the adjudication of any dispute hereunder or
in connection herewith or with any transaction contemplated hereby or
discussed herein (including with respect to the enforcement of the any
of this Agreement), and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such
suit, action or proceeding is improper. Each party hereto hereby
irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy
thereof via registered or certified mail or overnight delivery (with
evidence of delivery) to such party at the address in effect for
notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. If either party shall
commence an action or proceeding to enforce any provisions of this
Agreement, then the prevailing party in such action or proceeding
shall be reimbursed by the other party for its attorneys fees and
other costs and expenses incurred with the investigation, preparation
and prosecution of such action or proceeding.
(i) EACH PARTY HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT. THE SCOPE OF THIS WAIVER IS INTENDED
TO BE ALL ENCOMPASSING OF ANY DISPUTES THAT MAY BE FILED IN ANY COURT
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AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING
WITHOUT LIMITATION CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS
AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO
ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR EACH PARTY
TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH PARTY HAS ALREADY
RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT
EACH PARTY WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED
FUTURE DEALINGS. EACH PARTY FURTHER WARRANTS AND REPRESENTS THAT IT
HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY
HAS KNOWINGLY AND VOLUNTARILY WAIVES ITS RIGHTS TO A JURY TRIAL
FOLLOWING SUCH CONSULTATION. THIS WAIVER IS IRREVOCABLE, MEANING
THAT, NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS AND SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT. IN THE EVENT OF A LITIGATION, THIS AGREEMENT MAY
BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
(j) This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an
original and, all of which taken together shall constitute one and the
same Agreement. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid binding
obligation of the party executing (or on whose behalf such signature
is executed) the same with the same force and effect as if such
facsimile signature were the original thereof.
* * * * * * * * * *
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IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed on the day and year first above written.
PHOENIX INTERNATIONAL INDUSTRIES, INC.
By:_____________________________________
Name: /S/Xxxxxx Xxxxxxx
Title: Chief Executive Officer
AJW PARTNERS, LLC
By: SMS Group, LLC
By:_____________________________________
Name: /S/Xxxxx X. Xxxxxxxx
Title:
NEW MILLENNIUM CAPITAL PARTNERS II, LLC
By: First Street Manager II, LLC
By:_____________________________________
Name: /S/Xxxxx X. Xxxxxxxxx
Title:
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SCHEDULE A
----------
Principal Place of Business of the Company:
-------------------------------------------
0000 Xxxxxxx Xxxxx
Xxxx Xxxx Xxxxx, Xxxxxxx 00000
Locations Where Collateral is Located or Stored:
------------------------------------------------
Not applicable
List of subsidiaries of the Company:
------------------------------------
Xxxx & Associates, Inc.
00 Xxxxxxx Xxxx
Xx. Xxxxxx, Xxxxxxx 00000
Epicus, Inc.
0000 Xxxx Xxxx Xxxx Xxxxxxxxx, Xxxxx X
Xxxx Xxxx, Xxxxxxx 00000
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SCHEDULE B
----------
Jurisdictions:
--------------
State of Florida, USA
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