SECURITY AGREEMENT
SECURITY AGREEMENT (this "Agreement"), dated as of April 22, 2003, by
and among Palladium Communications, Inc., a Nevada corporation ("Company"), and
the secured parties signatory hereto and their respective endorsees, transferees
and assigns (collectively, the "Secured Party").
W I T N E S S E T H:
WHEREAS, pursuant to a Securities Purchase Agreement, dated the date
hereof between Company and the Secured Party (the "Purchase Agreement"), Company
has agreed to issue to the Secured Party and the Secured Party has agreed to
purchase from Company certain of Company's 12% Secured Convertible Debentures,
due one year from the date of issue (the "Debentures"), which are convertible
into shares of Company's Common Stock, par value $.001 per share (the "Common
Stock"). In connection therewith, Company shall issue the Secured Party certain
Common Stock purchase warrants dated as of the date hereof to purchase the
number of shares of Common Stock indicated below each Secured Party's name on
the Purchase Agreement (the "Warrants"); and
WHEREAS, in order to induce the Secured Party to purchase the
Debentures, Company has agreed to execute and deliver to the Secured Party this
Agreement for the benefit of the Secured Party and to grant to it a first
priority security interest in certain property of Company to secure the prompt
payment, performance and discharge in full of all of Company's obligations under
the Debentures and exercise and discharge in full of Company's obligations under
the Warrants.
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
(ii) 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
(iii) All Inventory of the Company; and
(iv) 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
(v) 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
(vi) 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; and
(vii) All of the Company's shares of stock of the
subsidiaries of the Company, including, without limitation, all
of the Company's shares of stock of Peak Entertainment, Ltd.
(b) "Company" shall mean, collectively, Company and all of the
subsidiaries of Company (including, without limitation, Peak
Entertainment, Ltd.), a list of which is contained in Schedule A,
attached hereto.
(c) "Obligations" means all of the Company's obligations under
this Agreement and the Debentures, 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 decreased, 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 New York.
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2. Grant of Security Interest. As an inducement for the Secured Party
to purchase 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 continuing first lien upon, an unqualified right to
possession and disposition of and a right of set-off against, in each case
to the fullest extent permitted by law, all of the Company's right, title
and interest of whatsoever kind and nature (including, without limitation,
all of Peak Entertainment Ltd.'s rights) in and to the Collateral (the
"Security Interest").
3. Representations, Warranties, Covenants and Agreements of the
Company. The Company represents and warrants to, and covenants and agrees with,
the 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. This
Agreement constitutes a legal, valid and binding obligation of the
Company enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement
of creditor's rights generally.
(b) The Company represents and warrants that it has no place of
business or offices where its respective books of account and records
are kept (other than temporarily at the offices of its attorneys or
accountants) or places where Collateral is stored or located, except
as set forth on Schedule A attached hereto;
(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, 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) 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).
(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.
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(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.
(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. 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.
(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 which 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 until this Agreement and the Security Interest
hereunder shall terminate 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.
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(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.
(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 Company.
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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 or in the Intellectual Property Security 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 or in the Intellectual Property Security
Agreement for ten (10) days after receipt by the Company of notice of
such failure from the Secured Party; and
(d) Any breach of, or default under, the Warrants.
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 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.
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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
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 Warrants 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 Warrants 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 Warrants 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 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.
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11. Term of Agreement. This Agreement and the Security Interest shall
terminate on the date on which all payments under the Debentures have been
made in full and all other Obligations have been paid or discharged. 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 Warrants, 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.
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(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,
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: Palladium Communications, Inc.
000 X. Xxxxxxxx Xxx Xxxxxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With copies to: Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Email: xxxxxxxxxx@xxxxxx.xxx
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If to the Secured Party: AJW Partners, LLC
AJW Offshore, Ltd.
AJW Qualified Partners, LLC
New Millennium Capital Partners II, LLC
0000 Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxx
Facsimile: 000-000-0000
With copies to:
Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx, LLP
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Facsimile: 000-000-0000
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 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.
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(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) This Agreement shall be construed in accordance with the laws
of the State of New York, except to the extent the validity,
perfection or enforcement of a security interest hereunder in respect
of any particular Collateral which are governed by a jurisdiction
other than the State of New York in which case such law shall govern.
Each of the parties hereto irrevocably submit to the exclusive
jurisdiction of any New York State or United States Federal court
sitting in Manhattan county over any action or proceeding arising out
of or relating to this Agreement, and the parties hereto hereby
irrevocably agree that all claims in respect of such action or
proceeding may be heard and determined in such New York State or
Federal court. The parties hereto agree that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner
provided by law. The parties hereto further waive any objection to
venue in the State of New York and any objection to an action or
proceeding in the State of New York on the basis of forum non
conveniens.
(i) EACH PARTY HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE
RIGHTS TO A JURY TRAIL 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 AND
THAT RELATE TO THE SUBJECT MATER 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.
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(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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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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.
PALLADIUM COMMUNICATIONS, INC.
By: /s/ WILF SHORROCKS
Wilf Shorrocks
President and Chief Executive Officer
AJW PARTNERS, LLC
By: SMS Group, LLC
By: /s/XXXXX X. XXXXXXXX
Xxxxx X. Xxxxxxxx
Manager
AJW OFFSHORE, LTD.
By: First Street Manager II, LLC
By: /s/XXXXX X. XXXXXXXX
Xxxxx X. Xxxxxxxx
Manager
AJW QUALIFIED PARTNERS, LLC
By: AJW Manager, LLC
By: /s/ XXXXX X. XXXXXXXX
Xxxxx X. Xxxxxxxx
Manager
[SIGNATURES CONTINUED ON NEXT PAGE]
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NEW MILLENNIUM CAPITAL PARTNERS II, LLC
By: First Street Manager II, LLC
By: /s/ XXXXX X. XXXXXXXX
Xxxxx X. Xxxxxxxx
Manager
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