SECURITY AGREEMENT
Exhibit 10.16
THIS SECURITY AGREEMENT (this
“Security Agreement”),
dated as of ___________________, 2009, by and between SwissINSO SA, a Swiss
corporation (“SwissINSO”), with an address
at Biopole, Xxxxx xx xx Xxxxxxxx, 0000 Xxxxxxxxx, Xxxxxxxxxxx, and each of those
persons and entities whose names are set forth on the signature page hereto
(collectively, the “Secured
Parties”).
W I T N E
S S E T H:
WHEREAS,
SwissINSO Holding Inc. (the “Issuer”) has issued or will be
issuing to the Secured Parties secured promissory notes (the “Notes”), in the aggregate
maximum principal amount of $15,000,000;
WHEREAS,
SwissINSO is a wholly-owned subsidiary of the Issuer and will benefit directly
from the issuance of the Notes;
WHEREAS,
as security for the prompt and complete payment and performance in full by the
Issuer of the Notes and the other Secured Obligations (as herein defined),
SwissINSO has agreed to enter into this Security Agreement assigning, pledging,
conveying, hypothecating, transferring, granting and delivering to the Secured
Parties a security interest in and to the Collateral (as defined
herein).
NOW,
THEREFORE, in consideration of the mutual promises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, it is hereby agreed as follows:
1. SECURITY
INTEREST.
1.1 Grant of
Security. As security for the prompt and complete
payment and performance in full by the Issuer of the indebtedness, together with
all interest, fees and other charges, arising under the Notes and including any
of its remedies under the Notes (the “Secured Obligations”),
SwissINSO hereby grants, assigns, conveys, mortgages, pledges, hypothecates and
transfers to the Secured Parties a first priority lien on and security interest
in, all of SwissINSO’s right, title and interest in, to and under, all of the
property and assets currently owned by or owing to, or hereafter acquired by or
arising in favor of, SwissINSO, wherever located, including, but not limited to,
all accounts, deposit accounts, chattel paper, instruments, documents,
securities, contract rights, receivables, equipment, goods, inventory,
investment property, goodwill, general intangibles, intellectual property,
patents, patent applications, trademarks, trademark applications, trade names,
copyrights, copyright applications, Internet domain names, service marks, trade
secrets, know-how, technology, software, hardware, commercial tort claims,
warranties and guarantees, as any of the foregoing terms may be defined in the
UCC, and including any products, proceeds (including insurance proceeds) or
income derived therefrom, whether by disposition or otherwise (all of the above,
collectively, the “Collateral”). Notwithstanding
the foregoing, in the event that SwissINSO obtains commercial or equipment
financing for the purchase of water purification units, machinery and other
similar equipment in connection with its business and the lender requires a
first priority lien on and security interest in such property, the Secured
Parties agree that their lien on such property will be subordinate to that of
the lender.
1.2 Continuing
Agreement. This Security Agreement shall create a continuing
security interest in the Collateral and shall remain in full force and effect
until performance in full of the Secured Obligations.
1.3 Termination. Upon
satisfaction of the Secured Obligations, whether by payment or conversion into
shares of the Common Stock of the Issuer pursuant to the terms and provisions of
the Notes, this Agreement shall automatically be null and void and have no
further force and effect without any action on the part of any
party.
2. PERFECTION
OF SECURITY INTEREST.
2.1 Authorization to File
Financing Statements. SwissINSO agrees to execute all such
financing statements pursuant to the Uniform Commercial Code or similar filings
as in effect from time to time in Switzerland or other foreign jurisdictions
(the “UCC”) or other
notices appropriate under applicable law.
2.2 Collateral
Covenants. To further insure the attachment, perfection
and priority of, and the ability of the Secured Parties to enforce
the Secured Parties’ security interest in the Collateral, SwissINSO agrees to
take any and all other actions as the Secured Parties may determine to be
necessary or useful for the attachment, perfection, and priority of, and the
ability of the Secured Parties to enforce, the Secured Parties' security
interest in the Collateral, including, without limitation, (a) executing,
delivering and, where appropriate, filing financing statements and amendments
relating thereto under the UCC, to the extent, if any, that SwissINSO's
signature is required therefor, (b) complying with any provision of any statute,
regulation or treaty of the United States or any foreign country as to the
Collateral if compliance with such provision is a condition to attachment,
perfection or priority of, or ability of the Secured Parties to enforce, the
Secured Parties' security interest in such Collateral, (c) obtaining
governmental and other third party waivers, consents, and approvals in form and
substance satisfactory to the Secured Parties, and (d) taking all actions under
any other law, as reasonably determined by the Secured Parties to be
applicable.
3. EVENTS OF
DEFAULT.
3.1 Event of
Default. An Event of Default, as defined in the Notes, shall
constitute an automatic default hereunder.
3.2 Rights upon Event of
Default. Upon an Event of Default, the Secured Parties shall
have all the rights and remedies of a secured party under the UCC or with
respect to the Collateral, provided that Secured Parties holding at least eighty
percent (80%) of the aggregate amount of Notes elect to exercise such rights and
remedies.
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4. REPRESENTATIONS
AND WARRANTIES.
4.1 Validity. The
security interest in the Collateral granted to the Secured Parties hereunder
constitutes and shall continue to constitute a legal, valid and, upon the filing
of a UCC financing statement, or similar statement in any foreign jurisdiction
applicable to the Collateral, fully perfected, security interest in the
Collateral.
4.2 No Other
Liens. Except for the liens granted hereunder, SwissINSO owns
and, as to all Collateral whether now existing or hereafter acquired, will
continue to own, the Collateral free and clear of any and all liens, rights or
claims, encumbrances, limitations or restrictions of all other persons or
entities; provided however that the foregoing restriction shall not prohibit
SwissINSO from obtaining a bank loan, revolving line of credit or similar
arrangements pursuant to which a security interest is customarily granted in the
ordinary course of business if, in connection therewith, the Secured Parties and
the new lender agree to an intercreditor agreement acceptable to the Secured
Parties and such new lender and provided further that the foregoing restriction
shall not prohibit SwissINSO from obtaining commercial or equipment financing as
contemplated in the last sentence of Section 1.1 hereof.
4.3 Corporate
Representations. SwissINSO (i) is a duly organized and validly
existing corporation in good standing under the laws of Switzerland, (ii) has
the corporate power and authority to own its property and assets and to transact
the business in which it is engaged or presently proposes to engage and (iii)
has duly qualified and is authorized to do business and is in good standing in
every jurisdiction in which it owns or leases real property or in which the
nature of its business requires it to be so qualified. SwissINSO has
the corporate power and authority to execute, deliver and carry out the terms
and provisions of this Security Agreement and has taken all necessary corporate
action to authorize the execution, delivery and performance and filing of this
Security Agreement and any UCC financing or continuation statements, or
amendments thereto, and related agreements, instruments, endorsements, powers of
attorney or notices. SwissINSO has duly executed and delivered this
Security Agreement, and this Security Agreement constitutes the legal, valid and
binding obligation of SwissINSO, enforceable in accordance with its
terms.
5. MISCELLANEOUS.
5.1 Waiver. No
course of dealing or usage of trade, and no oral or written representations or
agreement, between SwissINSO and the Secured Parties, whether or not relied on
or acted upon, and no act, delay or omission by Secured in exercising any right
or remedy hereunder or with respect to any Obligations shall operate as a waiver
thereof or of any other right or remedy, and no single or partial exercise
thereof shall preclude any other or further exercise thereof or the exercise of
any other right or remedy. The giving of notice or a demand by the
Secured Parties at any time shall not operate as a waiver in the future of the
Secured Parties’ right to exercise any right or remedy without notice or
demand. The Secured Parties may remedy any default by SwissINSO in
any reasonable manner, without waiving the default remedied, and without waiving
any other prior or subsequent default by SwissINSO.
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5.2 Amendment. This
Agreement may be amended or modified only by a writing signed by all of the
parties hereto and any provision hereof may be waived only by a writing signed
by the Secured Parties.
5.3 Severability. The
provisions of this Security Agreement are severable, and if any clause or
provision shall be held invalid or unenforceable in whole or in part in any
jurisdiction, then such invalidity or unenforceability shall affect only such
clause or provision, or part thereof, in such jurisdiction and shall not in any
manner affect such clause or provision in any other jurisdiction, or any other
clause or provision of this Security Agreement in any jurisdiction.
5.4 Assignment. The
benefits of this Security Agreement shall inure to the benefit of the successors
and assigns of the Secured Parties. The rights and obligations of
SwissINSO under this Security Agreement shall not be assigned or delegated, by
operation of law or otherwise, without the prior consent of the Secured Parties,
and any such assignment or attempted assignment shall be void, of no force or
effect, and shall constitute a material default by SwissINSO.
5.5 Headings. The
headings contained herein shall be for convenience of reference only and shall
not have any bearing in the meaning of the provisions contained
herein.
5.6 CHOICE OF
LAW. THIS SECURITY AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF SWITZERLAND.
5.7 SWISSINSO WAIVES ANY AND ALL
RIGHTS TO A TRIAL BY JURY. ALL PARTIES TO THIS AGREEMENT UNCONDITIONALLY,
IRREVOCABLY, AND EXPRESSLY WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING, SUIT, COUNTERCLAIM, OR CROSS-CLAIMS ARISING DIRECTLY OR INDIRECTLY
IN ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT, OR OTHERWISE) IN ANY WAY
ARISING OUT OF OR OTHERWISE RELATING TO THIS AGREEMENT OR TRANSACTIONS OR THE
RELATIONSHIPS ESTABLISHED THEREUNDER. ALL PARTIES CONFIRM THAT THE FOREGOING
WAIVER OF A TRIAL BY JURY IS INFORMED AND FREELY MADE.
[Remainder
of Page Intentionally Omitted; Signature Pages to Follow]
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IN WITNESS WHEREOF, the undersigned
have executed this Security Agreement on the date first set forth
above.
SWISSINSO
SA
By: __________________________
Name: Xxxx
Xxxxxxxx
Title: Chief
Executive Officer
SECURED
PARTIES
By: __________________________
Name: __________________________
Title: __________________________
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