EXHIBIT 10.03
SECURITY AGREEMENT
SECURITY AGREEMENT (this "Security Agreement") made this 31 day of
December, 2007, by and among Cargo Connection Logistics Holding, Inc., a Florida
corporation with its principal place of business located at 000 Xxxxxxx Xxxxxx,
Xxxxxx, Xxx Xxxx 00000 ("Holding"), Cargo Connection Logistics Corp., a Delaware
corporation with its principal place of business located at 000 Xxxxxxx Xxxxxx,
Xxxxxx, Xxx Xxxx 00000 ("CCLC"), and Cargo Connection Logistics-International,
Inc., an Illinois corporation with its principal place of business located at
000 Xxxxxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxx 00000 ("International"; and
collectively with Holding and CCLC, "Debtor"), and Emplify HR Services, Inc., a
Florida corporation, with principal offices located at 000 XX 00xx Xxxxxx,
Xxxxxxxxxx, Xxxxxxx 00000 ("Secured Party").
RECITALS
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Pursuant to a Promissory Note dated the date hereof (as it may be amended
from time to time, the "Note"), the Holding is obligated to pay to the Secured
Party the principal amount of $800,000.00, plus interest accruing thereon;
CCLC and International will derive substantial benefit as a result of the
accommodations to be granted by Secured Party to Holding, and in furtherance and
support of the business dealings of Holding, CCLC and International have entered
into a guaranty of payment of the Note (the "Guaranty");
Secured Party requires, as a condition to the execution by it of granting
said accommodations to Holding, that Debtor execute and deliver this Security
Agreement;
In connection with the execution and delivery of the Note and/or the
Guaranty, Debtor has agreed to enter into this Security Agreement; and
In consideration of the promises set forth in this Agreement, the Note and
the Guaranty, the Debtor and Secured Party hereby agree as follows:
1. Security Interest. Debtor hereby assigns to Secured Party, and mortgages
and grants to it a security interest in, the Collateral described in Paragraph 2
hereof to secure the payment of the indebtedness evidenced by the Note, and the
obligations of Debtor under the Guaranty and under this Security Agreement (the
"Obligations").
2. Description of Collateral. The Collateral subject to this Security
Agreement is all of Debtor's right, title and interest in and to all assets of
the Debtor, wherever located, and now owned or hereafter acquired, including,
but not limited to Accounts, Chattel Paper, Deposit Accounts, Documents,
Equipment, General Intangibles, Goods, Instruments, Inventory, Investment
Property, Letter-of-Credit Rights, Payment Intangibles, Support Obligations,
policies and certificates of insurance and proceeds of insurance; and all
renewals, substitutions, replacements, additions, accessions and cash and
non-cash proceeds of any and all of the foregoing. All capitalized terms in this
Paragraph 2 shall have the meanings ascribed to them
under the Uniform Commercial Code in effect in the State of New York at the date
of the execution of this Security Agreement (the "Code").
3. Obligations of Debtor. Debtor hereby covenants, represents, warrants
and agrees that:
(a) The Collateral will be solely used for and in connection with the
operation and maintenance of Debtor's business;
(b) The Collateral will not be abused, wasted, abandoned or allowed to
deteriorate, but shall be kept in good working order and condition and repair,
reasonable wear and tear from its sole use above permitted excepted in
accordance with reasonable business practice; provided, that the Collateral may
be replaced with substituted assets;
(c) Debtor shall, at no cost or expense to Secured Party, defend its
right, title and interest in and to the Collateral, and, except as to any claim
of Cornell Capital Partners, LP, Xxxxxxxxxx Equity Partners, Ltd. and Xxxxx
Fargo Bank, National Association, defend the Collateral against all other claims
or demands of any other party and all other liabilities of any nature
whatsoever;
(d) The Collateral shall be insured at all times in the amount of its full
insurable value and against all expected risks to which it may be exposed,
including fire and extended coverage and those which Secured Party may
reasonably designate with policies reasonably satisfactory to Secured Party and
payable to both Secured Party and Debtor as their interests appear, providing
thirty (30) days minimum advance cancellation notice to Secured Party and with
duplicate policies deposited with Secured Party; and the proceeds of such
insurance shall be applied to repair and replace such Collateral;
(e) Except as to any claim of Cornell Capital Partners, LP, Xxxxxxxxxx
Equity Partners, Ltd. and Xxxxx Fargo Bank, National Association, Debtor shall
duly and promptly pay and discharge when due and payable, or cause to be paid
and discharged: (i) all taxes, assessments and governmental charges or levies
upon or against it or its profits, income, properties or assets; (ii) all lawful
claims, whether for labor, materials, supplies, services or anything else which
might or could, if unpaid, become a lien or charge upon the properties or assets
of Debtor, unless and to the extent only that the same are being diligently
contested in good faith by appropriate proceedings and appropriate reserves
therefor have been established in accordance with generally accepted accounting
principles consistently applied;
(f) Except as to the interests of Parkside Properties, LLC, Cornell Capital
Partners, LP, Xxxxxxxxxx Equity Partners, Ltd. and Xxxxx Fargo Bank, National
Association, the Collateral, and each part thereof, is free and clear from, and
is not subject to, any assignment, security interest, mortgage, pledge, lien,
levy for taxes (other than for taxes not yet due and payable) or other
assessments, interest, charge, adverse claim or other encumbrance, including any
financing statement or other document filed in any public office
("Encumbrance"), and Debtor shall keep and maintain the Collateral, and each
part thereof, free and clear of any
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Encumbrance which is not subordinate to the security interest granted hereunder,
and shall not create nor permit to remain any such Encumbrance;
(g) The Collateral, or any part thereof, will not be sold, leased,
licensed, assigned, conveyed, transferred, disposed of or become subjected to
any subsequent interest of any party, created or suffered by Debtor, voluntarily
or involuntarily, except in the ordinary course of Debtor's business or as
expressly authorized in writing by Secured Party;
(h) Debtor, at its sole cost and expense, shall execute and deliver, or
cause to be duly executed and delivered, such instruments and documents, and do
and cause to be done such acts and things, as Secured Party may at any time
reasonably request to enforce, perfect and protect its security interest in the
Collateral as herein provided and its rights and remedies with respect to the
Collateral;
(i) The obligations, liabilities and indebtedness of Debtor to Secured
Party hereunder shall not be released, discharged or impaired in any manner or
to any extent if Secured Party renews, extends, modifies, changes or waives the
time of payment and/or the manner, place or terms of payment of all or any part
of the indebtedness secured hereby or any renewal thereof, or Secured Party
makes any exchange, release, substitution, addition, surrender, settlement or
compromise with respect to the Collateral, the indebtedness secured hereby or
any party liable thereon; or Secured Party subordinates such indebtedness or
Collateral, or both, to any other indebtedness of Debtor, or security therefor,
or both which may exist at any time hereafter;
(j) Debtor shall keep and maintain at all times true and complete books,
records and accounts in which complete, true and correct entries shall be made
with respect to the Collateral and Debtor's transactions, in accordance with
normal business practices; Debtor shall permit Secured Party or its
representatives to visit and inspect any of the properties of Debtor and to
examine its books of account and other records and files, all at such reasonable
times and upon reasonable notice, and not more than once in any twelve month
period; and Debtor shall make or permit Secured Party to make, upon request, a
designation on Debtor's books of account and records of the security interest
granted hereunder;
(k) Debtor shall promptly furnish Secured Party with all information
concerning the Collateral, the performance and payment of Debtor's obligations,
liabilities and indebtedness hereunder and the business, operations and
financial condition of Debtor, as Secured Party may reasonably request, such
request not to be made more than twice in any twelve month period;
(l) Debtor shall immediately notify Secured Party of any act, condition,
or event which, with the giving of notice or lapse of time, or both, would
constitute an event of default hereunder, or the existence of any material
litigation, arbitration or other legal proceedings involving or affecting
Debtor;
(m) Debtor shall pay and reimburse Secured Party for all costs and
expenses (including attorneys' fees, legal expenses, and advances and
expenditures for recording and filing fees in connection with perfection and
protection of Secured Party's security interest hereunder other than the
recording and filing of UCC-1 financing statements, (except as to any
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encumbrance of Cornell Capital Partners, LP, Xxxxxxxxxx Equity Partners, Ltd.
and Xxxxx Fargo Bank, National Association) for removal of any encumbrance from
the Collateral, for curing, correcting or remedying any Event of Default
hereunder, and for protection, preservation, maintenance and repair of the
Collateral) incurred by Secured party in connection with the exercise by Secured
Party of any of its rights and remedies under this Security Agreement, in
enforcing, perfecting or protecting its interests under this Security Agreement.
4. Event of Default. The occurrence of any of the following events with
respect to Debtor shall constitute a default on the part of Debtor hereunder
("Event of Default"):
(a) If there shall occur any breach, failure or violation by Debtor in the
payment or performance of any of its obligations, covenants or warranties under
this Security Agreement or the Guaranty;
(b) If there shall occur any sale, transfer or other disposition by the
Debtor of all or substantially all of the assets of the Debtor, other than the
sale of inventory in the ordinary course of business; and
(c) If there shall occur any Event of Default under and as defined in the
Note and/or the Guaranty.
5. Secured Party's Rights and Remedies. Subject to the rights and
interests of Cornell Capital Partners, LP, Xxxxxxxxxx Equity Partners, Ltd. and
Xxxxx Fargo Bank, National Association:
(a) Upon notice to Debtor, Secured Party may at any reasonable time and
from time to time so as not to unreasonably interfere with Debtor's business,
enter upon the premises where the Collateral shall be kept pursuant to this
Security Agreement, and inspect such Collateral, and Debtor shall assist Secured
Party in any reasonable way requested by Secured Party to make any such
inspection;
(b) Upon the occurrence of an Event of Default, in addition to all other
rights and remedies provided hereunder, Secured Party shall have and may
exercise all of the rights and remedies provided by the Code, and any other
applicable law, and, in conjunction with, in addition to, or in substitution
therefor, Secured Party shall have and may exercise the following rights and
remedies:
(i) Secured party may notify or require Debtor to notify the
account debtors of the assignment and security interest in its receivables, and
to have payments thereon made directly to Secured Party in accordance with the
terms of this Security Agreement;
(ii) Secured Party may (but shall not be required), alone or in
conjunction with Debtor, take any or all action necessary to collect or receive
any money or property at any time payable or receivable on account of or in
exchange for the Collateral, including the right to compromise, settle, extend
or otherwise modify the terms of payment owed with respect to any of the
Collateral, and to apply the proceeds thereof in the order, amounts and manner
which
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Secured Party may determine in its sole discretion. In exercising such right,
Secured Party may open and dispose of mail addressed to Debtor and execute, sign
and endorse negotiable and other instruments for the payment of money or other
evidences of payment, on behalf of and in the name of Debtor, for which this
shall be deemed a sufficient power of attorney;
(iii) Secured Party may require Debtor to pay and deliver to Secured
Party, immediately upon collection and receipt thereof by Debtor, all proceeds
arising from the Collateral or may require Debtor to deposit all such proceeds
in a bank selected by Secured Party in a collateral account acceptable to
Secured Party. Until the proceeds from the Collateral have been paid and
delivered to Secured Party or deposited in the bank as hereinabove provided,
Debtor shall hold such proceeds for and on behalf of Secured Party separate and
apart from Debtor's other funds or property, and shall not mingle such proceeds
with any other such funds or property. Secured Party shall promptly apply all of
such proceeds against the obligations, liabilities and indebtedness of Debtor to
Secured Party in the order, amounts and manner which Secured Party may determine
in its sole discretion;
(iv) Secured Party may require Debtor not to modify any agreements
respecting the Collateral nor to bring suit to enforce payment thereon without
giving Secured Party five (5) days advance written notice thereof or without
first having received written consent to do so from Secured Party;
(v) The entire unpaid indebtedness of Debtor to Secured Party
secured hereby, together with all interest accrued thereon, shall become
immediately due and payable as provided in the Note;
(vi) Secured Party may enter upon Debtor's premises to take
possession of, assemble and collect the Collateral or to render it unusable;
(vii) Secured party may require Debtor to assemble the
Collateral and to make it available to Secured Party at any reasonable place
Secured Party designates and to allow Secured Party to take possession of or
dispose of such Collateral;
(viii) Secured Party may in its sole discretion, sell, assign and
deliver all or any part of the Collateral at any public or private sale without
notice or advertisement, at such prices as Secured Party may deem best, and for
cash or on credit or for future delivery (without assumption of any credit risk)
and bid and become a purchaser at any such sale, any purchaser including Secured
Party so purchasing all or part of the Collateral to hold the same free from any
claim whatsoever, including any equity of redemption and Secured Party may make
payment on account thereof by using any claim for moneys when due and payable by
Debtor to Secured Party, and if notice to the Debtor is required, written notice
mailed to Debtor at its business address as hereinabove set forth, at least ten
(10) business days prior to the date of public sale of the Collateral will be
made, shall constitute reasonable notice; and Secured Party may apply the
proceeds of any disposition of the Collateral available for satisfaction of the
indebtedness secured hereby in the order, amounts and manner which Secured Party
may determine in its sole discretion.
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6. Other Provisions.
(a) Secured Party may waive any default, or remedy any default in any
reasonable manner, without waiving such default remedied and without waiving any
other prior or subsequent default; and Secured Party may waive or delay the
exercise of any right or remedy under this Security Agreement without waiving
that right or remedy or any other right or remedy hereunder;
(b) This Security Agreement shall be binding upon, and shall inure to the
benefit of, the respective heirs, executors, administrators, successors and
assigns of the parties hereto;
(c) Each of the foregoing instruments, covenants and warranties on the
part of the Debtor shall be deemed and construed to be on a continuing basis and
shall survive the execution and delivery of this Security Agreement;
(d) All notices, requests, demands or other communications provided for
herein shall be in writing and shall be deemed to have been given (i) delivered
by hand against written receipt therefor, (ii) forwarded by a third party
company or governmental entity providing delivery services in the ordinary
course of business which guarantees delivery the following business day, (iii)
mailed by registered or certified mail, return receipt requested, postage
prepaid, or (iv) transmitted by facsimile transmission electronically confirmed
for receipt, in full, by the other party no later than 5:00 pm, local time, on
the date of transmission, addressed as follows:
If to Debtor to: Cargo Connection Logistics Holding, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxx
Facsimile: (000) 000-0000
and
Cargo Connection Logistics Corp.
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxx
Facsimile: (000) 000-0000
and
Cargo Connection Logistics-International, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxx
Facsimile: (000) 000-0000
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With a copy to: Davidoff Xxxxxx & Hutcher LLP
000 Xxxxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxx
Facsimile: (000) 000-0000
If to Secured Party to: Emplify HR Services, Inc
000 XX 00xx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxx
Facsimile: (000) 000-0000
or at such other address as such party shall have furnished to each of the
other parties hereto in accordance with this paragraph 6(d), each such notice,
demand, request or other communication being deemed given (i) on the date of
such delivery by hand, (ii) on the first business day following the date of such
delivery to the overnight delivery service or facsimile transmission, or (iii)
three (3) business days following such mailing;
(e) The provisions of this Security Agreement shall be deemed severable,
so that if any provision hereof is declared invalid under the laws of any state
where it is in effect or of the United States, all other provisions of this
Security Agreement shall continue in full force and effect;
(f) This Security Agreement shall not be modified or amended or any
provision hereof waived except in writing executed by both parties hereto;
(g) The security interest granted herein shall terminate when all the
Obligations have been fully paid and performed. Upon such termination, the
Secured Party, upon request of Debtor, shall within ten days deliver a written
UCC-3 termination statement to Debtor. Secured Party shall also return the Note
to the Debtor; and
(h) This Security Agreement shall be construed in accordance with and
governed by the laws of the State of New York, without regard to its conflicts
of law principles.
(i) Debtor (A) is a corporation duly organized, validly existing and in
good standing under the laws of the state of its organization, (B) has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as now being conducted, (C) has full corporate
power and authority to execute and deliver this Agreement, the Note and/or the
Guaranty, and (D) is able to perform its obligations hereunder and thereunder
and to consummate the transactions contemplated hereby and thereby,
(j) The execution and delivery of this Security Agreement, the Note and/or
the Guaranty, and the performance by Debtor of its obligations hereunder and
thereunder, and the consummation of the transactions provided for herein and
therein have been duly and validly authorized by all necessary corporate action
on the part of Debtor. This Security Agreement, the
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Note and the Guaranty have been duly executed and delivered, and constitute the
valid and binding agreements of Debtor, enforceable against Debtor in accordance
with their respective terms.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have executed and delivered this Security Agreement as of the day and
year first above written.
Debtor:
CARGO CONNECTION LOGISTICS HOLDING, INC.
By: /s/ Xxxxx Xxxxxxxxx
------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: President
CARGO CONNECTION LOGISTICS CORP.
By: /s/ Xxxxx Xxxxxxxxx
------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: President
CARGO CONNECTION LOGISTICS-INTERNATIONAL, INC.
By: /s/ Xxxxx Xxxxxxxxx
------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: CEO
Secured Party:
EMPLIFY HR SERVICES, INC.
By: /s/ Xxxx Xxxxxx
------------------------------------
Name: Xxxx Xxxxxx
Title: President
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