EXHIBIT 10.34
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Agreement"), is entered into
and made effective as of December 13, 2004, by and between DCI
USA, INC., a Delaware corporation (the "Company"), and the
BUYER(S) listed on Schedule I attached to the Securities Purchase
Agreement dated the date hereof (the "Secured Party").
WHEREAS, the Company shall issue and sell to the Secured
Party, as provided in the Securities Purchase Agreement dated the
date hereof, and the Secured Party shall purchase a minimum of
Five Hundred Thousand Dollars ($500,000) of eight percent (8%)
secured convertible debentures (the "Convertible Debentures"),
which shall be convertible into shares of the Company's common
stock, par value $.001 (the "Common Stock") (as converted, the
"Conversion Shares"), in the respective amounts set forth
opposite each Buyer(s) name on Schedule I attached to the
Securities Purchase Agreement;
WHEREAS, to induce the Secured Party to enter into the
transaction contemplated by the Securities Purchase Agreement,
the Secured Convertible Debenture, the Investor Registration
Rights Agreement, the Irrevocable Transfer Agent Instructions,
and the Escrow Agreement (collectively referred to as the
"Transaction Documents"), the Company hereby grants to the
Secured Party a security interest in and to the pledged property
identified on Exhibit "A" hereto (collectively referred to as the
"Pledged Property") until the satisfaction of the Obligations, as
defined herein below; and
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, and for other good and
valuable consideration, the adequacy and receipt of which are
hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATIONS
Section 1.1 Recitals.
The above recitals are true and correct and are incorporated
herein, in their entirety, by this reference.
Section 1.2 Interpretations.
Nothing herein expressed or implied is intended or shall be
construed to confer upon any person other than the Secured Party
any right, remedy or claim under or by reason hereof.
Section 1.3 Obligations Secured.
The obligations secured hereby are any and all obligations
of the Company now existing or hereinafter incurred to the
Secured Party, whether oral or written and whether arising
before, on or after the date hereof including, without
limitation, those obligations of the Company to the Secured Party
under the Securities Purchase Agreement, the Secured Convertible
Debenture, the Investor Registration Rights Agreement and
Irrevocable Transfer Agent Instructions, and any other amounts
now or hereafter owed to the Secured Party by the Company
thereunder or hereunder (collectively, the "Obligations").
ARTICLE 2.
PLEDGED COLLATERAL; ADMINISTRATION AND TERMINATION OF SECURITY
INTEREST
Section 2.1 Pledged Property.
(a) Company hereby pledges to the Secured Party, and
creates in the Secured Party for its benefit, a security interest
for such time until the Obligations are paid in full, in and to
all of the property of the Company as set forth in Exhibit "A"
attached hereto (collectively, the "Pledged Property"); provided,
however, that Secured Party agrees that it will subordinate its
security interest to the Pledged Property in the event that the
Company requests such subordination to establish a line of credit
with a bank or other financial institution.
The Pledged Property, as set forth in Exhibit "A" attached
hereto, and the products thereof and the proceeds of all such
items are hereinafter collectively referred to as the "Pledged
Collateral."
(b) Simultaneously with the execution and delivery of
this Agreement, the Company shall make, execute, acknowledge,
file, record and deliver to the Secured Party any documents
reasonably requested by the Secured Party to perfect its security
interest in the Pledged Property. Simultaneously with the
execution and delivery of this Agreement, the Company shall make,
execute, acknowledge and deliver to the Secured Party such
documents and instruments, including, without limitation,
financing statements, certificates, affidavits and forms as may,
in the Secured Party's reasonable judgment, be necessary to
effectuate, complete or perfect, or to continue and preserve, the
security interest of the Secured Party in the Pledged Property,
and the Secured Party shall hold such documents and instruments
as secured party, subject to the terms and conditions contained
herein.
Section 2.2 Rights; Interests; Etc.
(a) So long as no Event of Default (as hereinafter
defined) shall have occurred and be continuing:
(i) the Company shall be entitled to exercise any
and all rights pertaining to the Pledged Property or any part
thereof for any purpose not inconsistent with the terms hereof;
and
(ii) the Company shall be entitled to receive and
retain any and all payments paid or made in respect of the
Pledged Property.
(b) Upon the occurrence and during the continuance of
an Event of Default:
(i) All rights of the Company to exercise the
rights which it would otherwise be entitled to exercise pursuant
to Section 2.2(a)(i) hereof and to receive payments which it
would otherwise be authorized to receive and retain pursuant to
Section 2.2(a)(ii) hereof shall be suspended, and all such rights
shall thereupon become vested in the Secured Party who shall
thereupon have the sole right to exercise such rights and to
receive and hold as Pledged Collateral such payments; provided,
however, that if the Secured Party shall become entitled and
shall elect to exercise its right to realize on the Pledged
Collateral pursuant to Article 5 hereof, then all cash sums
received by the Secured Party, or held by Company for the benefit
of the Secured Party and paid over pursuant to
Section 2.2(b)(ii) hereof, shall be applied against any
outstanding Obligations; and
(ii) All interest, dividends, income and other
payments and distributions which are received by the Company
contrary to the provisions of Section 2.2(b)(i) hereof shall be
received in trust for the benefit of the Secured Party, shall be
segregated from other property of the Company and shall be
forthwith paid over to the Secured Party; or
(iii) The Secured Party in its sole discretion
shall be authorized to sell any or all of the Pledged Property at
public or private sale in order to recoup all of the outstanding
principal plus accrued interest owed pursuant to the Convertible
Debenture as described herein
(c) Each of the following events shall constitute a
default under this Agreement (each an "Event of Default"):
(i) any default, whether in whole or in part,
shall occur in the payment to the Secured Party of principal,
interest or other item comprising the Obligations as and when due
or with respect to any other debt or obligation of the Company to
a party other than the Secured Party;
(ii) any default, whether in whole or in part,
shall occur in the due observance or performance of any
obligations or other covenants, terms or provisions to be
performed under this Agreement or the Transaction Documents;
(iii) the Company shall: (1) make a general
assignment for the benefit of its creditors; (2) apply for or
consent to the appointment of a receiver, trustee, assignee,
custodian, sequestrator, liquidator or similar official for
itself or any of its assets and properties; (3) commence a
voluntary case for relief as a debtor under the United States
Bankruptcy Code; (4) file with or otherwise submit to any
governmental authority any petition, answer or other document
seeking: (A) reorganization, (B) an arrangement with creditors
or (C) to take advantage of any other present or future
applicable law respecting bankruptcy, reorganization, insolvency,
readjustment of debts, relief of debtors, dissolution or
liquidation; (5) file or otherwise submit any answer or other
document admitting or failing to contest the material allegations
of a petition or other document filed or otherwise submitted
against it in any proceeding under any such applicable law, or
(6) be adjudicated a bankrupt or insolvent by a court of
competent jurisdiction; or
(iv) any case, proceeding or other action shall be
commenced against the Company and has not been resolved in a
period of thirty (30) days after such commencement; for the
purpose of effecting, or an order, judgment or decree shall be
entered by any court of competent jurisdiction approving (in
whole or in part) anything specified in
Section 2.2(c)(iii) hereof, or any receiver, trustee, assignee,
custodian, sequestrator, liquidator or other official shall be
appointed with respect to the Company, or shall be appointed to
take or shall otherwise acquire possession or control of all or a
substantial part of the assets and properties of the Company, and
any of the foregoing shall continue unstayed and in effect for
any period of thirty (30) days.
ARTICLE 3.
ATTORNEY IN FACT; PERFORMANCE
Section 3.1 Secured Party Appointed Attorney-In-Fact.
Upon the occurrence of an Event of Default, the Company
hereby appoints the Secured Party as its attorney-in-fact, with
full authority in the place and stead of the Company and in the
name of the Company or otherwise, from time to time in the
Secured Party's discretion to take any action and to execute any
instrument which the Secured Party may reasonably deem necessary
to accomplish the purposes of this Agreement, including, without
limitation, to receive and collect all instruments made payable
to the Company representing any payments in respect of the
Pledged Collateral or any part thereof and to give full discharge
for the same. The Secured Party may demand, collect, receipt
for, settle, compromise, adjust, xxx for, foreclose, or realize
on the Pledged Property as and when the Secured Party may
determine. To facilitate collection, the Secured Party may
notify account debtors and obligors on any Pledged Property or
Pledged Collateral to make payments directly to the Secured
Party.
Section 3.2 Secured Party May Perform.
If the Company fails to perform any agreement contained
herein, the Secured Party, at its option, may itself perform, or
cause performance of, such agreement, and the expenses of the
Secured Party incurred in connection therewith shall be included
in the Obligations secured hereby and payable by the Company
under Section 8.3.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES
Section 4.1 Authorization; Enforceability.
Each of the parties hereto represents and warrants that it
has taken all action necessary to authorize the execution,
delivery and performance of this Agreement and the transactions
contemplated hereby; and upon execution and delivery, this
Agreement shall constitute a valid and binding obligation of the
respective party, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors'
rights or by the principles governing the availability of
equitable remedies.
Section 4.2 Ownership of Pledged Property.
The Company warrants and represents that it is the legal and
beneficial owner of the Pledged Property free and clear of any
lien, security interest, option or other charge or encumbrance
except for the security interest created by this Agreement.
ARTICLE 5.
DEFAULT; REMEDIES; SUBSTITUTE COLLATERAL
Section 5.1 Default and Remedies.
(a) If an Event of Default described in
Section 2.2(c)(i) and (ii) occurs, then in each such case the
Secured Party may declare the Obligations to be due and payable
immediately, by a notice in writing to the Company, and upon any
such declaration, the Obligations shall become immediately due
and payable. If an Event of Default described in
Sections 2.2(c)(iii) or (iv) occurs and is continuing for the
period set forth therein, then the Obligations shall
automatically become immediately due and payable without
declaration or other act on the part of the Secured Party.
(b) Upon the occurrence of an Event of Default, the
Secured Party shall: (i) be entitled to receive all
distributions with respect to the Pledged Collateral, (ii) to
cause the Pledged Property to be transferred into the name of the
Secured Party or its nominee, (iii) to dispose of the Pledged
Property, and (iv) to realize upon any and all rights in the
Pledged Property then held by the Secured Party.
Section 5.2 Method of Realizing Upon the Pledged
Property: Other Remedies.
Upon the occurrence of an Event of Default, in addition to
any rights and remedies available at law or in equity, the
following provisions shall govern the Secured Party's right to
realize upon the Pledged Property:
(a) Any item of the Pledged Property may be sold for
cash or other value in any number of lots at brokers board,
public auction or private sale and may be sold without demand,
advertisement or notice (except that the Secured Party shall give
the Company ten (10) days' prior written notice of the time and
place or of the time after which a private sale may be made (the
"Sale Notice")), which notice period shall in any event is hereby
agreed to be commercially reasonable. At any sale or sales of
the Pledged Property, the Company may bid for and purchase the
whole or any part of the Pledged Property and, upon compliance
with the terms of such sale, may hold, exploit and dispose of the
same without further accountability to the Secured Party. The
Company will execute and deliver, or cause to be executed and
delivered, such instruments, documents, assignments, waivers,
certificates, and affidavits and supply or cause to be supplied
such further information and take such further action as the
Secured Party reasonably shall require in connection with any
such sale.
(b) Any cash being held by the Secured Party as
Pledged Collateral and all cash proceeds received by the Secured
Party in respect of, sale of, collection from, or other
realization upon all or any part of the Pledged Collateral shall
be applied as follows:
(i) to the payment of all amounts due the Secured
Party for the expenses reimbursable to it hereunder or owed to it
pursuant to Section 8.3 hereof;
(ii) to the payment of the Obligations then due
and unpaid.
(iii) the balance, if any, to the person or
persons entitled thereto, including, without limitation, the
Company.
(c) In addition to all of the rights and remedies
which the Secured Party may have pursuant to this Agreement, the
Secured Party shall have all of the rights and remedies provided
by law, including, without limitation, those under the Uniform
Commercial Code.
(i) If the Company fails to pay such amounts due
upon the occurrence of an Event of Default which is continuing,
then the Secured Party may institute a judicial proceeding for
the collection of the sums so due and unpaid, may prosecute such
proceeding to judgment or final decree and may enforce the same
against the Company and collect the monies adjudged or decreed to
be payable in the manner provided by law out of the property of
Company, wherever situated.
(ii) The Company agrees that it shall be liable
for any reasonable fees, expenses and costs incurred by the
Secured Party in connection with enforcement, collection and
preservation of the Transaction Documents, including, without
limitation, reasonable legal fees and expenses, and such amounts
shall be deemed included as Obligations secured hereby and
payable as set forth in Section 8.3 hereof.
Section 5.3 Proofs of Claim.
In case of the pendency of any receivership,
insolvency, liquidation, bankruptcy, reorganization, arrangement,
adjustment, composition or other judicial proceeding relating to
the Company or the property of the Company or of such other
obligor or its creditors, the Secured Party (irrespective of
whether the Obligations shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of
whether the Secured Party shall have made any demand on the
Company for the payment of the Obligations), subject to the
rights of Previous Security Holders, shall be entitled and
empowered, by intervention in such proceeding or otherwise:
(i) to file and prove a claim for the whole
amount of the Obligations and to file such other papers or
documents as may be necessary or advisable in order to have the
claims of the Secured Party (including any claim for the
reasonable legal fees and expenses and other expenses paid or
incurred by the Secured Party permitted hereunder and of the
Secured Party allowed in such judicial proceeding), and
(ii) to collect and receive any monies or other
property payable or deliverable on any such claims and to
distribute the same; and any custodian, receiver, assignee,
trustee, liquidator, sequestrator or other similar official in
any such judicial proceeding is hereby authorized by the Secured
Party to make such payments to the Secured Party and, in the
event that the Secured Party shall consent to the making of such
payments directed to the Secured Party, to pay to the Secured
Party any amounts for expenses due it hereunder.
Section 5.4 Duties Regarding Pledged Collateral.
The Secured Party shall have no duty as to the collection or
protection of the Pledged Property or any income thereon or as to
the preservation of any rights pertaining thereto, beyond the
safe custody and reasonable care of any of the Pledged Property
actually in the Secured Party's possession.
ARTICLE 6.
AFFIRMATIVE COVENANTS
The Company covenants and agrees that, from the date hereof
and until the Obligations have been fully paid and satisfied,
unless the Secured Party shall consent otherwise in writing (as
provided in Section 8.4 hereof):
Section 6.1 Existence, Properties, Etc.
(a) The Company shall do, or cause to be done, all
things, or proceed with due diligence with any actions or courses
of action, that may be reasonably necessary (i) to maintain
Company's due organization, valid existence and good standing
under the laws of its state of incorporation, and (ii) to
preserve and keep in full force and effect all qualifications,
licenses and registrations in those jurisdictions in which the
failure to do so could have a Material Adverse Effect (as defined
below); and (b) the Company shall not do, or cause to be done,
any act impairing the Company's corporate power or authority
(i) to carry on the Company's business as now conducted, and
(ii) to execute or deliver this Agreement or any other document
delivered in connection herewith, including, without limitation,
any UCC-1 Financing Statements required by the Secured Party
(which other loan instruments collectively shall be referred to
as the "Loan Instruments") to which it is or will be a party, or
perform any of its obligations hereunder or thereunder. For
purpose of this Agreement, the term "Material Adverse Effect"
shall mean any material and adverse affect as determined by
Secured Party in its reasonable discretion, whether individually
or in the aggregate, upon (a) the Company's assets, business,
operations, properties or condition, financial or otherwise;
(b) the Company's to make payment as and when due of all or any
part of the Obligations; or (c) the Pledged Property.
Section 6.2 Maintenance of Books and Records; Inspection.
The Company shall maintain its books, accounts and records
in accordance with generally accepted accounting principles
consistently applied, and permit the Secured Party, its officers
and employees and any professionals designated by the Secured
Party in writing, at any time to visit and inspect any of its
properties (including but not limited to the collateral security
described in the Transaction Documents and/or the Loan
Instruments), corporate books and financial records, and to
discuss its accounts, affairs and finances with any employee,
officer or director thereof.
Section 6.3 Maintenance and Insurance.
(a) The Company shall maintain or cause to be
maintained, at its own expense, all of its assets and properties
in good working order and condition, subject to ordinary wear and
tear, making all necessary repairs thereto and renewals and
replacements thereof.
(b) The Company shall maintain or cause to be
maintained, at its own expense, insurance in form, substance and
amounts (including deductibles), which the Company deems
reasonably necessary to the Company's business, (i) adequate to
insure all assets and properties of the Company, which assets and
properties are of a character usually insured by persons engaged
in the same or similar business against loss or damage resulting
from fire or other risks included in an extended coverage policy;
(ii) against public liability and other tort claims that may be
incurred by the Company; (iii) as may be required by the
Transaction Documents and/or the Loan Instruments or applicable
law and (iv) as may be reasonably requested by Secured Party, all
with adequate, financially sound and reputable insurers.
Section 6.4 Contracts and Other Collateral.
The Company shall perform all of its obligations under or
with respect to each instrument, receivable, contract and other
intangible included in the Pledged Property to which the Company
is now or hereafter will be party on a timely basis and in the
manner therein required, including, without limitation, this
Agreement.
Section 6.5 Defense of Collateral, Etc.
The Company shall defend and enforce its right, title and
interest in and to any part of: (a) the Pledged Property; and
(b) if not included within the Pledged Property, those assets and
properties whose loss could have a Material Adverse Effect, the
Company shall defend the Secured Party's right, title and
interest in and to each and every part of the Pledged Property,
each against all manner of claims and demands on a timely basis
to the full extent permitted by applicable law.
Section 6.6 Payment of Debts, Taxes, Etc.
The Company shall pay, or cause to be paid, all of its
indebtedness and other liabilities and perform, or cause to be
performed, all of its obligations in accordance with the
respective terms thereof, and pay and discharge, or cause to be
paid or discharged, all taxes, assessments and other governmental
charges and levies imposed upon it, upon any of its assets and
properties on or before the last day on which the same may be
paid without penalty, as well as pay all other lawful claims
(whether for services, labor, materials, supplies or
otherwise) as and when due
Section 6.7 Taxes and Assessments; Tax Indemnity.
The Company shall (a) file all tax returns and appropriate
schedules thereto that are required to be filed under applicable
law, prior to the date of delinquency, (b) pay and discharge all
taxes, assessments and governmental charges or levies imposed
upon the Company, upon its income and profits or upon any
properties belonging to it, prior to the date on which penalties
attach thereto, and (c) pay all taxes, assessments and
governmental charges or levies that, if unpaid, might become a
lien or charge upon any of its properties; provided, however,
that the Company in good faith may contest any such tax,
assessment, governmental charge or levy described in the
foregoing clauses (b) and (c) so long as appropriate reserves are
maintained with respect thereto.
Section 6.8 Compliance with Law and Other Agreements.
The Company shall maintain its business operations and
property owned or used in connection therewith in compliance with
(a) all applicable federal, state and local laws, regulations and
ordinances governing such business operations and the use and
ownership of such property, and (b) all agreements, licenses,
franchises, indentures and mortgages to which the Company is a
party or by which the Company or any of its properties is bound.
Without limiting the foregoing, the Company shall pay all of its
indebtedness promptly in accordance with the terms thereof.
Section 6.9 Notice of Default.
The Company shall give written notice to the Secured Party
of the occurrence of any default or Event of Default under this
Agreement, the Transaction Documents or any other Loan Instrument
or any other agreement of Company for the payment of money,
promptly upon the occurrence thereof.
Section 6.10 Notice of Litigation.
The Company shall give notice, in writing, to the Secured
Party of (a) any actions, suits or proceedings wherein the amount
at issue is in excess of $50,000, instituted by any persons
against the Company, or affecting any of the assets of the
Company, and (b) any dispute, not resolved within fifteen (15)
days of the commencement thereof, between the Company on the one
hand and any governmental or regulatory body on the other hand,
which might reasonably be expected to have a Material Adverse
Effect on the business operations or financial condition of the
Company.
ARTICLE 7.
NEGATIVE COVENANTS
The Company covenants and agrees that, from the date hereof
until the Obligations have been fully paid and satisfied, the
Company shall not, unless the Secured Party shall consent
otherwise in writing:
Section 7.1 Liens and Encumbrances.
The Company shall not directly or indirectly make, create,
incur, assume or permit to exist any assignment, transfer,
pledge, mortgage, security interest or other lien or encumbrance
of any nature in, to or against any part of the Pledged Property
or of the Company's capital stock, or offer or agree to do so, or
own or acquire or agree to acquire any asset or property of any
character subject to any of the foregoing encumbrances (including
any conditional sale contract or other title retention
agreement), or assign, pledge or in any way transfer or encumber
its right to receive any income or other distribution or proceeds
from any part of the Pledged Property or the Company's capital
stock; or enter into any sale-leaseback financing respecting any
part of the Pledged Property as lessee, or cause or assist the
inception or continuation of any of the foregoing.
Section 7.1 Articles, By-Laws, Mergers, Consolidations,
Acquisitions and Sales.
Without the prior express written consent of the Secured
Party, which consent shall not be unreasonably withheld, the
Company shall not: (a) Amend its Articles of Incorporation or By-
Laws; (b) be a party to any merger, consolidation or corporate
reorganization; (c) purchase or otherwise acquire all or
substantially all of the assets or stock of, or any partnership
or joint venture interest in, any other person, firm or entity;
(d) sell, transfer, convey, grant a security interest in or lease
all or any substantial part of its assets; nor (e) create any
subsidiaries nor convey any of its assets to any subsidiary in
excess of $200,000 in the aggregate.
Section 7.2 Management, Ownership.
Xxxx Xxxx and Apros & Chay, Ltd. shall remain material
shareholders and directors of the Company in their current
capacity. This provision is a material factor in the Secured
Party's willingness to institute and maintain a lending
relationship with the Company.
Section 7.3 Dividends, Etc.
Except with respect to the Series A Preferred Stock, the
Company shall not declare or pay any dividend of any kind, in
cash, on any class of its capital stock, nor purchase, redeem,
retire or otherwise acquire for value any shares of such stock,
nor make any distribution of any kind in respect thereof, nor
make any return of capital to shareholders, nor make any payments
in respect of any pension, profit sharing, retirement, stock
option, stock bonus, incentive compensation or similar plan
(except as required or permitted hereunder), without the prior
written consent of the Secured Party, which consent shall not be
unreasonably withheld.
Section 7.4 Conduct of Business.
The Company will continue to engage, in an efficient and
economical manner, in a business of the same general type as
conducted by it on the date of this Agreement.
Section 7.5 Places of Business.
The location of the Company's chief place of business is 000
Xxxxxx Xxxxxx, Xxxxxxxx XX 00000. The Company shall not change
the location of its chief place of business, chief executive
office or any place of business disclosed to the Secured Party or
move any of the Pledged Property from its current location
without thirty (30) days prior written notice to the Secured
Party in each instance.
ARTICLE 8.
MISCELLANEOUS
Section 8.1 Notices.
All notices or other communications required or permitted to
be given pursuant to this Agreement shall be in writing and shall
be considered as duly given on: (a) the date of delivery, if
delivered in person, by nationally recognized overnight delivery
service or (b) five (5) days after mailing if mailed from within
the continental United States by certified mail, return receipt
requested to the party entitled to receive the same:
If to the Secured Cornell Capital Partners, LP
Party:
000 Xxxxxx Xxxxxx-Xxxxx 0000
Xxxxxx Xxxx, Xxx Xxxxxx 00000
Attention: Xxxx Xxxxxx
Portfolio Manager
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to: Cornell Capital Partners, LP
000 Xxxxxx Xxxxxx-Xxxxx 0000
Xxxxxx Xxxx, Xxx Xxxxxx 00000
Attention: Xxxx X. Xxxxx, Esquire
Senior Vice President
Capital Markets
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Company, DCI USA, Inc.
to:
000 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to: Xxxxx Xxxxx & Associates
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Any party may change its address by giving notice to the
other party stating its new address. Commencing on the tenth
(10th) day after the giving of such notice, such newly designated
address shall be such party's address for the purpose of all
notices or other communications required or permitted to be given
pursuant to this Agreement.
Section 8.2 Severability.
If any provision of this Agreement shall be held invalid or
unenforceable, such invalidity or unenforceability shall attach
only to such provision and shall not in any manner affect or
render invalid or unenforceable any other severable provision of
this Agreement, and this Agreement shall be carried out as if any
such invalid or unenforceable provision were not contained
herein.
Section 8.3 Expenses.
In the event of an Event of Default, the Company will pay to
the Secured Party the amount of any and all reasonable expenses,
including the reasonable fees and expenses of its counsel, which
the Secured Party may incur in connection with: (i) the custody
or preservation of, or the sale, collection from, or other
realization upon, any of the Pledged Property; (ii) the exercise
or enforcement of any of the rights of the Secured Party
hereunder or (iii) the failure by the Company to perform or
observe any of the provisions hereof.
Section 8.4 Waivers, Amendments, Etc.
The Secured Party's delay or failure at any time or times
hereafter to require strict performance by Company of any
undertakings, agreements or covenants shall not waiver, affect,
or diminish any right of the Secured Party under this Agreement
to demand strict compliance and performance herewith. Any waiver
by the Secured Party of any Event of Default shall not waive or
affect any other Event of Default, whether such Event of Default
is prior or subsequent thereto and whether of the same or a
different type. None of the undertakings, agreements and
covenants of the Company contained in this Agreement, and no
Event of Default, shall be deemed to have been waived by the
Secured Party, nor may this Agreement be amended, changed or
modified, unless such waiver, amendment, change or modification
is evidenced by an instrument in writing specifying such waiver,
amendment, change or modification and signed by the Secured
Party.
Section 8.5 Continuing Security Interest.
This Agreement shall create a continuing security interest
in the Pledged Property and shall: (i) remain in full force and
effect until payment in full of the Obligations; and (ii) be
binding upon the Company and its successors and heirs and
(iii) inure to the benefit of the Secured Party and its
successors and assigns. Upon the payment or satisfaction in full
of the Obligations, the Company shall be entitled to the return,
at its expense, of such of the Pledged Property as shall not have
been sold in accordance with Section 5.2 hereof or otherwise
applied pursuant to the terms hereof.
Section 8.6 Independent Representation.
Each party hereto acknowledges and agrees that it has
received or has had the opportunity to receive independent legal
counsel of its own choice and that it has been sufficiently
apprised of its rights and responsibilities with regard to the
substance of this Agreement.
Section 8.7 Applicable Law: Jurisdiction.
This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New Jersey without
regard to the principles of conflict of laws. The parties
further agree that any action between them shall be heard in
Xxxxxx County, New Jersey, and expressly consent to the
jurisdiction and venue of the Superior Court of New Jersey,
sitting in Xxxxxx County and the United States District Court for
the District of New Jersey sitting in Newark, New Jersey for the
adjudication of any civil action asserted pursuant to this
Paragraph.
Section 8.8 Waiver of Jury Trial.
AS A FURTHER INDUCEMENT FOR THE SECURED PARTY TO ENTER INTO
THIS AGREEMENT AND TO MAKE THE FINANCIAL ACCOMMODATIONS TO THE
COMPANY, THE COMPANY HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING RELATED IN ANY WAY TO THIS AGREEMENT AND/OR
ANY AND ALL OTHER DOCUMENTS RELATED TO THIS TRANSACTION.
Section 8.9 Entire Agreement.
This Agreement constitutes the entire agreement among the
parties and supersedes any prior agreement or understanding among
them with respect to the subject matter hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
COMPANY:
DCI USA, INC.
By: /s/ Xxxxx Xxxxxxxxxx
Name: Xxxxx Xxxxxxxxxx
Title: Chairman
SECURED PARTY:
CORNELL CAPITAL PARTNERS, LP
By: Yorkville Advisors, LLC
Its: General Partner
By: Xxxx Xxxxxx
Name: Xxxx Xxxxxx
Title: Portfolio Manager
EXHIBIT A
DEFINITION OF PLEDGED PROPERTY
For the purpose of securing prompt and complete payment and
performance by the Company of all of the Obligations, the Company
unconditionally and irrevocably hereby grants to the Secured
Party a continuing security interest in and to, and lien upon,
the following Pledged Property of the Company:
(a) all goods of the Company, including, without
limitation, machinery, equipment, furniture, furnishings,
fixtures, signs, lights, tools, parts, supplies and motor
vehicles of every kind and description, now or hereafter owned by
the Company or in which the Company may have or may hereafter
acquire any interest, and all replacements, additions,
accessions, substitutions and proceeds thereof, arising from the
sale or disposition thereof, and where applicable, the proceeds
of insurance and of any tort claims involving any of the
foregoing;
(b) all inventory of the Company, including, but not
limited to, all goods, wares, merchandise, parts, supplies,
finished products, other tangible personal property, including
such inventory as is temporarily out of Company's custody or
possession and including any returns upon any accounts or other
proceeds, including insurance proceeds, resulting from the sale
or disposition of any of the foregoing;
(c) all contract rights and general intangibles of the
Company, including, without limitation, goodwill, trademarks,
trade styles, trade names, leasehold interests, partnership or
joint venture interests, patents and patent applications,
copyrights, deposit accounts whether now owned or hereafter
created;
(d) all documents, warehouse receipts, instruments and
chattel paper of the Company whether now owned or hereafter
created;
(e) all accounts and other receivables, instruments or
other forms of obligations and rights to payment of the Company
(herein collectively referred to as "Accounts"), together with
the proceeds thereof, all goods represented by such Accounts and
all such goods that may be returned by the Company's customers,
and all proceeds of any insurance thereon, and all guarantees,
securities and liens which the Company may hold for the payment
of any such Accounts including, without limitation, all rights of
stoppage in transit, replevin and reclamation and as an unpaid
vendor and/or lienor, all of which the Company represents and
warrants will be bona fide and existing obligations of its
respective customers, arising out of the sale of goods by the
Company in the ordinary course of business;
(f) to the extent assignable, all of the Company's
rights under all present and future authorizations, permits,
licenses and franchises issued or granted in connection with the
operations of any of its facilities; and
(g) all products and proceeds (including, without
limitation, insurance proceeds) from the above-described Pledged
Property.
