EXHIBIT 10.10
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement"), dated as of June 17, 1999,
is made and entered into by and among American United Global, Inc. ("AUGI"), and
Vogo Networks, LLC, a Delaware limited liability company of which Executive
TeleCard, Ltd., doing business as eGlobe ("EXTEL"), is the only member (the
"Buyer").
WHEREAS, AUGI, EXTEL and the Buyer are parties to an Asset Purchase
Agreement dated July 10, 1998, as amended, including by Amendment No. 3 dated
June ___, 1999 (the "Purchase Agreement"); and
WHEREAS, as part of the purchase price for the Assets under the
Purchase Agreement EXTEL is issuing to AUGI a Note, in the form attached as
Exhibit E to the Purchase Agreement (the "EXTEL Note"), in the amount of
$500,000, the principal and interest payments under which EXTEL Note are to be
secured by, and the Buyer is to grant a security interest in, all chattels,
assets and property being acquired by the Buyer at the Closing under the
Purchase Agreement, wherever located, and all products and proceeds thereof.
WHEREAS, capitalized terms used in this Agreement and not otherwise
defined herein shall have the meanings given such terms in the Purchase
Agreement; and
NOW, THEREFORE, in consideration of the foregoing premises and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. GRANT OF SECURITY INTEREST. For the purpose of securing the payment
of the indebtedness evidenced by the EXTEL Note, including all renewals,
extensions and modifications thereof, and any fees and expenses payable
thereunder (collectively, the "Obligations"), the Buyer hereby grants to AUGI
(subject to Section 2 hereof) a security interest in the Assets being acquired
by the Buyer at the Closing under the Purchase Agreement and described in
Section 1.1(a) through (g) of the Purchase Agreement, wherever located, and all
products and proceeds thereof (collectively, the "Collateral").
2. SUBORDINATION OF SECURITY INTEREST. The security interest granted
under this Agreement shall not be a first priority security interest, but shall
be (1) subordinated in all respects to security interests granted (previously or
in the future) with respect to (i) the obligations described in paragraphs 1 and
2 of
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Exhibit B of the EXTEL Note and (ii) the obligations being assumed by the
Buyer at the Closing under the Purchase Agreement, and any interest, penalties
or other amounts which may accrue thereon, and (2) pari passu in all respects
with security interests granted in connection with future indebtedness of the
Buyer.
3. COVENANTS. The Buyer covenants and agrees as follows:
(a) The Buyer will notify AUGI whenever any of the Collateral is
removed from the location in which it is delivered at the Closing, except for
temporary periods in the normal and customary use thereof.
(b) The Buyer will, in all material respects, maintain, preserve
and keep the Collateral which are tangible property (whether owned in fee or a
leasehold interest) in good repair and working order, reasonable wear and tear
excepted, and from time to time will make all necessary repairs, replacements,
renewals and additions so that at all times the economic efficiency thereof will
be maintained and will pay and discharge all taxes, levies and other impositions
levied thereon as well as the cost of repairs to or maintenance of same.
(c) The Buyer will file, and pay all costs of filing, such
financing, continuation and termination statements with respect to the security
interests created hereby as AUGI may reasonably request, and AUGI is authorized
to do all things that it deems necessary to perfect and continue perfection of
the security interests created hereby.
(d) The Buyer shall take or cause to be taken such further actions,
shall execute, deliver, and file or cause to be executed, delivered, and filed
such further documents and instruments, and shall obtain such consents as may be
necessary or as AUGI may reasonably request to effectuate the purposes, terms,
and conditions of this Agreement, whether before, at or after the closing of
transactions contemplated hereby or the occurrence of an Event of Default under
the EXTEL Note.
4. EVENT OF DEFAULT. The occurrence of an Event of Default under the
EXTEL Note shall constitute an Event of Default hereunder.
5. REMEDIES UPON EVENT OF DEFAULT. Upon the occurrence and during the
continuation of an Event of Default, AUGI may exercise any and all rights and
remedies provided by the Uniform Commercial Code (New York) or other applicable
law, as well as all other rights and remedies possessed by AUGI pursuant to the
Purchase Agreement, all of which shall (to the extent permitted by law) be
cumulative. Any notice of sale, lease or other intended disposition of the
Collateral by AUGI sent to the Buyer at the address hereinafter set forth, at
least
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ten (10) days prior to such action, shall constitute reasonable notice to
the Buyer. AUGI may waive any Event of Default before or after the same has been
declared without impairing its right to declare a subsequent Event of Default
hereunder.
6. RELEASE OF SECURITY INTEREST. Upon payment in full of all
Obligations, AUGI shall release the security interest created hereby and shall
execute and deliver to the Buyer such termination statements and other
agreements and documents as the Buyer may reasonably request to evidence such
payment and release.
7. NOTICES. All notices and other communications given or made pursuant
hereto shall be in writing and shall be deemed to have been duly given or made
as of the date delivered, mailed or transmitted, and shall be effective upon
receipt, if delivered personally, mailed by registered or certified mail
(postage prepaid, return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
changes of address) or sent by electronic transmission to the telecopier number
specified below:
(a) If to the Buyer:
Vogo Networks, L.L.C.
0000 Xxxxxxxxxxxx Xxxxxx, XX
Xxxxx 0000
Xxxxxxxxxx, XX 00000
Telecopier No.: 000-000-0000
Attention: Chairman
(b) If to AUGI:
American United Global, Inc.
c/o Gersten, Xxxxxx & Xxxxxxxxx LLP
000 X. 00xx Xxxxxx
Xxx Xxxx, XX 00000
8. HEADINGS. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
9. SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon any determination that a term or other provision is
invalid, illegal or incapable of being enforced, the parties shall negotiate in
good faith to modify this
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Agreement to effect the original intent of the parties as closely as possible so
that transactions contemplated hereby are fulfilled to the extent possible.
10. ENTIRE AGREEMENT. This Agreement (together with the EXTEL Note and
the Purchase Agreement, as referred to or incorporated herein) constitutes the
entire agreement of the parties and supersedes all prior agreements and
undertakings, both written and oral, between the parties, or any of them, with
respect to the subject matter hereof, except as otherwise expressly provided
herein, are not intended to confer upon any other person any rights or remedies
hereunder.
11. SPECIFIC PERFORMANCE. The transactions contemplated by this
Agreement are unique. Accordingly, each of the parties acknowledges and agrees
that, in addition to all other remedies to which it may be entitled, each of the
parties hereto is entitled to a decree of specific performance, provided such
party is not in material default hereunder.
12. ASSIGNMENT. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties hereto (whether
by operation of law or otherwise) without the prior written consent of the other
party. Subject to the preceding sentence, this Agreement shall be binding upon,
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns.
13. THIRD PARTY BENEFICIARIES. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
14. FEES AND EXPENSES. Except as otherwise provided for in this
Agreement, each party hereto shall pay its own fees, costs and expenses incurred
in connection with this Agreement and in the preparation for and consummation of
the transactions provided for herein.
15. AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
16. GOVERNING LAW. All corporate law matters arising under this
Agreement shall be governed by and construed in accordance with the laws of the
State of New York, and all other matters arising under this Agreement shall be
governed by and construed in accordance with the laws of the State of New York.
Notwithstanding the foregoing, it is the intention of the parties that, to the
extent local law would govern with respect to Collateral located in a particular
jurisdiction, this Agreement shall create a security interest or similar grant
of rights under such local law with respect to Collateral located in such
jurisdiction.
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17. COUNTERPARTS. This Agreement may be executed and delivered in one
or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed and delivered shall be deemed to be an
original but all of which taken together shall constitute one and the same
agreement.
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IN WITNESS WHEREOF, the Buyer and AUGI have caused this Agreement to be
executed as of the date first above written.
VOGO NETWORKS, LLC
By:_______________________________
Title:____________________________
AMERICAN UNITED GLOBAL, INC.
By:_______________________________
Title:____________________________
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