Name Dated Amount
--------------------------------------- ------------ ----------
Southshore Capital, Ltd.* July 9, 1999 $1,100,000
* This document has been filed.
SECURITY AGREEMENT
This Security Agreement (the "Agreement") is made between Swissray
International Inc., as borrower ("Borrower"), and Southshore Capital. Ltd.
("Secured Party").
For good and valuable consideration, receipt of which is hereby
acknowledged, Borrower and Secured Party hereby agree as follows:
1. Grant of Security Interest. Borrower hereby grants to Secured Party
a security interest in each of those items as described in Exhibit A attached
hereto and made a part hereof (cumulatively being referred to as the
"Collateral") and all proceeds (as that term is defined in the New York Uniform
Commercial Code) of any and all of the property referred to in Exhibit A.
Borrower and Secured Party acknowledge their mutual intent that all
security interests contemplated herein are given as a contemporaneous exchange
for new value to Borrower.
2. Debts Secured.The security interest granted by this Agreement shall
secure the following obligation, which is a full recourse obligation of the
Borrower: Promissory Note of Swissray International, Inc. issued in favor of
Secured Party dated July 9, 1999 in the principal amount of not more than One
Million One Hundred Thousand Dollars ($1,100,000) (the "Note"), any and all
renewals, extensions, replacements, modifications and amendments thereof
(including any which increase the original principal amount).
3. Perfection and Enforcement of Assignment and Security Interest.
Borrower agrees to deliver any and all documents or similar instruments
evidencing the Collateral, to Secured Party or Secured Party's counsel, at the
time of execution of this Agreement. Borrower agrees to give good faith,
diligent cooperation to Secured Party and to perform such other acts as
reasonably requested by Secured Party for perfection and enforcement of said
security interest, including the filing of a UCC-1 Financing Statement with the
New York Secretary of State's Office, if applicable. Borrower will promptly
deliver to Secured Party all written notices, or other documents constituting or
relating to the Collateral and will promptly give Secured Party written notice
of any other notices which are received in the future by Borrower with respect
to the Collateral.
4. Secured Creditors. Borrower represents and warrants that it does not
have any outstanding security interests relating to the collateral other than
those set forth in Exhibit B attached hereto and made a part hereof and it shall
not create or incur any indebtedness or obligation for borrowed money except for
indebtedness with respect to trade obligations and other normal accruals in the
ordinary course of business not yet due and payable, and shall not grant any
other security interests in the Collateral until payment and performance in full
of the obligations hereunder, unless Secured Party otherwise consents in
writing, which consent shall not be unreasonably withheld.
5. Representations and Warranties Concerning Collateral. Borrower
represents and warrants that:
a. Borrower is the sole owner of the Collateral.
b. The Collateral is not subject to any security
interest, lien, prior assignment, or other encumbrance of any nature whatsoever
except for the security interest created by this Note and Agreement and except
as may be indicated in Exhibit B heteto.
c. Borrower's attorney shall prepare and have forwarded
by overnight courier a UCC-1 financing statement (See copy off UCC-1 attached
hereof as Exhibit C) in favor of Secured Party placing Secured Party in a first
lien position concerning the Collateral.
d. The Borrower has been duly organized, is validly
existing and is in good standing under the laws of the State of New York and is
duly qualified and in good standing in each other state in which the nature of
its activities requires it to be so qualified.
e. The Borrower has not changed its name or been the
subject of any merger, consolidation or other corporate reorganization during
the four month period immediately prior to the date of this Agreement.
f. The Borrower has all requisite power and authority to
transact the business that it now transacts and to own or lease the properties
and assets that it purports to own or lease.
g. The execution performance and delivery of this
Agreement and any promissory note or other instrument or agreement contemplated
herein by Borrower has been duly authorized by all requisite corporate action on
behalf of Borrower.
h. The Borrower will notify Secured Party in writing
not fewer than 30 days in advance of any change in the Borrower's principal
place of business or other business locations.
i. The execution, delivery and performance of this
Agreement and any promissory note or other instrument or agreement contemplated
herein by Borrower will not result in a breach of any terms or conditions of
any other contract or agreement or in the acceleration of any other obligation
of Borrower.
j. No consent or approval of any other person or entity
that has not been obtained by Borrower is required before Borrower may execute,
deliver and perform its obligations under this Agreement.
6. Covenants Concerning Collateral. Borrower covenants that:
a. Borrower covenants, represents and warrants that
there are presently no other secured creditors that are able to obtain priority
over Secured Party concerning the Collateral or any proceeds of the Collateral
except as may be indicated in Exhibit B hereto.
b. Borrower agrees to promptly execute and deliver any
UCC Financing Statements reasonably requested by Secured Party for perfection
or enforcement of this Agreement and the security interests created hereby, and
to give good faith, diligent cooperation to Secured Party and to perform such
other acts reasonably requested by Secured Party for perfection and enforcement
of said security interests.
c. Borrower will defend the Collateral against all claims and
demands of all persons. Borrower will keep the Collateral free from any lien,
security interest, assignment or other encumbrances except for the security
interest granted herein. Borrower will take all steps necessary or advisable to
preserve rights against account debtors and other parties. Borrower will
promptly and fully inform Secured Party of any matter or information that may
come to its attention which might impair the validity or collectability of the
Collateral or proceeds thereof. Borrower will not sell, transfer or further
encumber or lien the Collateral in any way whatsoever except as may be
contemplated by this Agreement.
d. Borrower will execute and deliver to Secured Party, at such
times and in such form and containing such terms as Secured Party may require,
instruments, documents and agreements evidencing all or any part of the
indebtedness and such certificates of title, financing and continuation
statements and other instruments as Secured Party may deem necessary or
desirable to protect, perfect and preserve the security interest created herein.
Borrower will pay all reasonable costs of filing and recording incurred by
Secured Party in connection with the protection, perfection and preservation of
the security interest. Furthermore, Borrower irrevocably appoints Secured Party
its attorney-in-fact in Borrower's name and on its behalf to make, execute,
deliver and file any instruments or documents and to take any action as Secured
Party deems necessary or appropriate to protect and preserve the Collateral on
behalf of and for the benefit of Secured Party.
e. Borrower will be responsible for all risk of loss and any
damage to the Collateral. Borrower will (if applicable to the type of collateral
indicated in Exhibit A) have and maintain insurance at all times with respect to
the collateral against risks of fire (including so-called extended coverage),
theft and such other risks as Secured Party may require and in the case of motor
vehicles, collision insurance. All insurance with respect to the Collateral
shall be written by such companies, on such terms, in such form and for such
periods and amounts as may be satisfactory to Secured Party, and shall be
payable to Secured Party and Borrower as their interests may appear on such
policies, with annual premiums prepaid by Borrower. Borrower shall deliver the
insurance policies to Secured Party upon request. Borrower hereby irrevocably
appoints Secured Party as its agent to collect, compromise and settle any loss
or claim payable under such policies and to endorse any loss payment or return
premium check in Borrower's name and to apply the proceeds thereof to the
satisfaction of the indebtedness in such manner as Secured Party shall
determine.
Borrower shall give immediate written notice to Secured Party and to insurers of
loss or damage to the Collateral and will promptly file proofs of loss with
insurers.
f. Borrower will permit Secured Party or its agent to
inspect and audit the Collateral, during normal business hours (or at other
times, if Secured Party shall have notified Borrower in advance). Borrower will
furnish to Secured Party copies of all records, documents and instruments which
Secured Party may reasonably request solely as same relates to the Collateral.
g. Borrower shall pay its debts promptly as they become
due.
h. Borrower shall not change its name without giving
Secured Party notice not fewer than 30 days in advance. The notice shall set
forth Borrower's new name and the date on which the new name shall first be
used.
i. Borrower shall immediately deliver to Secured Party
all certificates of title, or other such similar documents, to any Collateral
for which such certificates are used.
7. Right to Perform for Borrower. Secured Party may, in its sole
discretion and without any duty to do so, elect to discharge taxes, tax liens,
security interests, or any other encumbrance upon the Collateral, perform any
duty or obligation of Borrower, pay filing, recording, insurance and other
charges payable by Borrower, or provide insurance as provided herein if Borrower
fails to do so. Any such payments advanced by Secured Party shall be repaid by
Borrower upon demand, together with interest thereon from the date of advance
until repaid at the rate of ten percent (10%) per annum.
8. Default. Time is of the essence of thi s Agreement. The
occurrence of any of the following events shall constitute a default under this
Agreement:
a. Any representation, warranty or covenant made by or
on behalf of Borrower in this Agreement is materially false or materially
misleading when made;
b. Borrower fails in the payment or performance of any
obligation, covenant, agreement or liability created by or contemplated by this
Agreement or secured by this Agreement;
c. Any default in the payment or performance of any
amounts, obligation, covenant, agreement or liability under the Note; or
d. Any default, as that term is defined in the Note.
No course of dealing or any delay or failure to assert any default
shall constitute a waiver of that default or of any prior or subsequent default.
9. Remedies. Upon the occurrence of any default under this
Agreement, Secured Party shall have the following rights and remedies, in
addition to all other rights and remedies existing at law, in equity, or by
statute or provided in the Note:
a. Secured Party shall have all the rights and remedies
available under the Uniform Commercial Code:
b. If Borrower fails to cure any default within fifteen
(15) days after Borrower's receipt of written notice of default from Secured
Party, Secured Party may sell, assign, deliver or otherwise dispose of any or
all of the Collateral for cash and/or credit and upon such terms and at such
place or places, and at such time or times, and to such person, firms, companies
or corporation as Secured Party reasonably believes expedient, without any
advertisement whatsoever, and, after deducting the reasonable costs and
out-of-pocket expenses incurred by Secured Party, including, without limitation,
(1) reasonable attorneys fees and legal expenses, (2) advertising of sale of the
Collateral, (3) sale commissions, (4) sales tax, and (5) costs for preservation
and protection of the Collateral, apply the remainder to pay, or to hold as a
reserve against, the obligations secured by this Agreement.
c. The rights and remedies herein conferred are cumulative and
not exclusive of any other rights and remedies and shall be in addition to every
other right, power and remedy herein specifically granted or hereafter existing
at law, in equity, or by statute which Secured Party might otherwise have, and
any and all such rights and remedies may be exercised from time to time and as
often and in such order as Secured Party may deem expedient. Such remedies may
be exercised singularly or concurrently. No delay or omission in the exercise of
any such right, power or remedy or in the pursuance of any remedy shall impair
any such right, power or remedy or be construed to be a waiver thereof or of any
default or to be an acquiescence therein.
d. In the event of breach or default under the terms of this
Agreement by Borrower, Borrower agrees to pay all reasonable attorneys fees and
legal expenses incurred by or on behalf of Secured Party in enforcement of this
Agreement, in exercising any remedy arising from such breach or default, or
otherwise related to such breach or default. Borrower additionally agrees to pay
all reasonable costs and out-of-pocket expenses, including, without limitation,
(1) reasonable attorneys fees and legal expenses, (2) advertising of sale of the
Collateral, (3) sale commissions, (4) sales tax, and (5) costs for preservation
and protection of the Collateral, incurred by Secured Party in obtaining
possession of Collateral, preparation for sale, sale or other disposition, and
otherwise incurred in foreclosing upon the Collateral. Any and all such costs
and out-of-pocket expenses shall be payable by Borrower upon demand, together
with interest thereon at ten percent (10.0%) per annum.
e. Regardless of any breach or default, Borrower agrees to pay
all expenses, including reasonable attorneys fees and legal expenses, incurred
by Secured Party in any bankruptcy proceeding of any type involving Borrower,
the Collateral, or this Agreement, including, without limitation, expenses
incurred in modifying or lifting the automatic stay, determining adequate
protection, use of cash collateral, or relating to any plan of reorganization.
f. If Borrower shall be in default under this Agreement,
Secured Party, immediately and at any time thereafter, may declare all of the
indebtedness secured pursuant to this Agreement immediately due and payable,
shall have all rights available in law or at equity, including, without
limitation, specific performance of this Agreement or for an injunction against
violations of any of the terms hereof, and the rights and all the remedies of a
secured party under the New York UCC and any other applicable law.
10. Notices. All notices or demands by any party hereto shall be in
writing and may be sent by regular mail. Notices shall be deemed received when
deposited in a United States post office box, postage prepaid, properly
addressed to Borrower or Secured Party at the mailing addresses stated below or
to such other addresses as Borrower or Secured Party may from time to time
specify in writing. Any notice otherwise delivered shall be deemed to be given
when actually received by the addressee. Additionally, copies of all notices or
demands made by one party shall be faxed by such party to the other parties
attorney on the same date as mailed.
If to Borrower to:
x/x Xxxx X. Xxxxx, Xxx.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
(f) 000-000-0000
If to Secured Party to:
c/o Xxxxxx X. XxXxxxx, Esq.
00 Xxxxxx Xxxxxx - Xxxxx 000
Xxx Xxxxxx, XX 00000
(f) 000-000-0000
11. Indemnification. Borrower agrees to indemnify Secured Party for any
and all claims and liabilities, and for damages which may be awarded against
Secured Party and for all reasonable attorneys fees, legal expenses, and other
out-of-pocket expenses incurred in defending such claims, arising from or
related in any manner to the negotiation, execution, or performance of this
Agreement, excluding any claims and liabilities based upon breach or default by
Secured Party under this Agreement or upon the negligence or misconduct of
Secured Party. Secured Party shall have sole and complete control of the defense
of any such claims, and is hereby given the authority to settle or otherwise
compromise any such claims as Secured Party in good faith determines shall be in
its best interests.
12. Litigation. Borrower represents that there are no actions, suits,
investigations or proceedings pending or threatened against or affecting the
validity or enforceability of the Note or this Agreement, any guaranty or any
instrument, document or agreement concerning the Collateral or of which, if
adversely determined, would have a material adverse effect on the financial
condition, operations, business or properties of the Borrower, and there are no
outstanding orders or judgments of any court or governmental authority or awards
of any arbitrator or arbitration board against the Borrower except as may be
indicated in Borrower's current Registration Statement on Form S-1 as filed with
the SEC under File Number 333-59829 or in Exhibit D attached hereto.
13. Miscellaneous.
a. This Agreement is made for the sole and exclusive
benefit of Borrower and Secured Party and is not intended to benefit any third
party. No such third party may claim any right or benefit or seek to enforce any
term or provision of this Agreement.
b. In recognition of Secured Party's right to have all
its attorneys fees and expenses incurred in connection with this Agreement
secured by the Collateral, notwithstanding payment in full of the obligations
secured by the Collateral, Secured Party shall not be required to release,
reconvey, or terminate any security interest in the Collateral unless and until
Borrower and all Guarantors, if any, have executed and delivered to Secured
Party general release in form and substance satisfactory to Secured Party.
c. Secured Party and its officers, directors, employees,
representatives, agents and attorneys, shall not be liable to Borrower or any
Guarantor, if any, for consequential damages arising from or relating to any
breach of contract, tort, or other wrong in connection with or relating to this
Agreement or the Collateral.
d. Borrower waives presentment, demand for payment, notice of
dishonor, protest and any other notices or demands in connections with the
delivery, acceptance, performance, default and enforcement of any promissory
note or instrument representing all or any part of the indebtedness.
e. The provisions of this Agreement are binding on the heirs,
executors, administrators, successors and assigns of Borrower and shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, executors, administrators, successors and assigns.
f. [Deliberately deleted.]
g. Borrower will pay to Secured Party on demand any costs,
expenses, reasonable attorneys' fees and their reasonable disbursements incurred
or paid by Secured Party in protecting or enforcing its rights in the Collateral
and in collecting any part of the indebtedness and such amounts extended
pursuant to this section shall be added to the indebtedness.
h. Any delay, failure or waiver by Secured Party to exercise
any right it may have under this Agreement is not a waiver of Secured Party's
right to exercise the same or any other right at any other time.
i. If any provision of this Agreement or the application of
any provision to any person or circumstance shall be invalid or unenforceable,
neither the balance of this Agreement nor the application of the provision to
other persons or circumstances shall be affected. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction only, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
j. In the interest of a speedy resolution of any lawsuit
which may arise hereunder, Borrower and Secured Party waive a trial by jury in
any action with respect to this Agreement and as to any issues arising relating
to this Agreement.
k. If the incurring of any debt by Borrower or the payment of
any money or transfer of property to Secured Party by or on behalf of Borrower
or any Guarantor, if any, should for any reason subsequently be determined to be
"voidable" or avoidable" in whole or in part within the meaning of any state or
federal law of the United States, (collectively "voidable transfers"),
including, without limitation, fraudulent conveyances or preferential transfers
under the United States Bankruptcy Code or any other federal or state law, and
Secured Party is required to repay or restore any voidable transfers or the
amount or any portion thereof, or upon the advise of Secured Party's counsel is
advised to do so, then, as to any such amount or property repaid or restored,
including all reasonable costs, expenses, and attorneys fees of Secured Party
related thereto, the liability of Borrower and Guarantor, if any, and each of
them, and this Agreement, shall automatically be revived, reinstated and
restored and shall exist as though the voidable transfers had never been made.
l. The parties hereto expressly agree that this Agreement
shall be governed by, interpreted under, and construed and enforced in
accordance of the laws of the State of New York. Any action to enforce, arising
out of, or relating in any way to, any provisions of this Agreement shall be
brought exclusively, in the federal courts for the State of New York.
m. All references in this Agreement to the singular shall be
deemed to include the plural if the context so requires and vice versa.Reference
in the collective or conjunctive shall also include the disjunctive unless the
context otherwise clearly requires a different interpretation.
n. All agreements, representations, warranties and covenants
made by Borrower shall survive the execution and delivery of this Agreement, the
filing and consummation of any bankruptcy proceedings, and shall continue in
effect so long as any obligation to Secured Party contemplated by this Agreement
is outstanding and unpaid, notwithstanding any termination of this Agreement.
All agreements, representations, warranties and covenants in this Agreement
shall bind the party making the same and its heirs and successors, and shall be
to the benefit of and be enforceable by each party for whom made their
respective heirs, successors and assigns.
o. This Agreement constitutes the entire agreement between
Borrower and Secured Party as to the subject matter hereof and may not be
altered or amended except by written agreement signed by Borrower and Secured
Party. All other prior and contemporaneous understandings between the parties
hereto as to the subject matter hereof are rescinded.
Dated: July 9, 1999
Secured Party: Borrower:
SWISSRAY INTERNATIONAL, INC.
________________________ By: ________________________
Xxxxx X. Xxxxxxx its Chairman
and President duly authorized
SCHEDULE "A"
TO FINANCING STATEMENT AND SECURITY AGREEMENT
This FINANCING STATEMENT and SECURITY AGREEMENT covers, and the undersigned
("Debtor") hereby grants Southshore Capital, Ltd. ("Secured Party") a security
interest in, the following types or items of property, as collateral for the
payment and performance of all present and future indebtedness, liabilities,
guarantees and obligations of Debtor to Secured Party: All "Receivables" and
"Inventory", (as those terms are defined below), including packaging, raw
materials and finished goods, and all money, and all property now or at any time
in the future in Secured Party's possession (including claims and credit
balances), and all proceeds of any of the foregoing, as that term is defined in
the New York Uniform Commercial Code, (including proceeds of any insurance
policies, proceeds of proceeds, and claims against third parties), all products
of any of the foregoing, and all books and records related to any of the
foregoing. Debtor agrees that said security interest may be enforced by Secured
Party in accordance with the terms and provisions of all security and other
agreements between Secured Party and Debtor, the New York Uniform Commercial
Code, or both, but this document shall be fully effective as a security
agreement, even if there is no other security or other agreement between Secured
Party and Debtor.
For purposes of this Schedule A, the following terms have the following
meanings:
"Inventory" means, with respect only to the Purchase Orders for Debtor's
Products, listed on Schedule AA, all of Debtor's now owned and hereafter
acquired goods, merchandise or other personal property, wherever located, to be
furnished under any contract of service or held for sale or lease (including
without limitation all raw materials, work in process, finished goods and goods
in transit, and including without limitation all materials and supplies of every
kind, nature and description which are or might be used or consumed in Debtor's
business or used in connection with the manufacture, packing, shipping,
advertising, selling or finishing of such goods, merchandise or other personal
property, and all warehouse receipts, documents of title and other documents
representing any of the foregoing.
"Receivables" means, with respect only to the Purchase Orders for Debtor's
Products, listed on Schedule AA, all of Debtor's now owned and hereafter
acquired accounts (whether or not earned by performance), letters of credit,
contract rights, chattel paper, instruments, securities, documents and all other
forms of obligations at any time owing to Debtor, all guaranties and other
security therefor, all merchandise returned to or repossessed by Debtor, an all
rights of stoppage in transit and other rights or remedies of an unpaid vendor,
lienor or secured party.
SWISSRAYINTERNATIONAL, INC.
By:_______________________________
Xxxxx X. Xxxxxxx its Chairman and
President duly authorized
