EXHIBIT 10.16
SECURITY AGREEMENT
This SECURITY AGREEMENT is made this 30th day of June 2005 by WINDSWEPT
ENVIRONMENTAL GROUP, INC., a Delaware corporation (the "Debtor"), located at 000
Xxxxxxxxxxx Xxxxxx, Xxx Xxxxx, Xxx Xxxx 00000, in favor of SPOTLESS PLASTICS
(USA) INC., a Delaware corporation (the "Secured Party"), located at 000 Xxxxx
Xxxxxxx, Xxxxx 000, Xxxxxxxxx, Xxx Xxxx 00000.
Recitals
A. Pursuant to a Promissory Note dated the date hereof (as it may be
amended from time to time, the "Note"), the Debtor, as a joint and several
obligor under the Note, is obligated to pay to the Secured Party the sum of
$500,000.00;
B. The Debtor has purchased a certain account receivable (the Purchased
Account") from the Secured Party pursuant to the Account Receivable Sale
Agreement, dated as of the date hereof, by and between the Secured Party and the
Debtor, and the Debtor has also agreed to pay to the Secured Party and Xxxxxx
Xxxxxx payments for services (the "Service Payments) rendered pursuant to the
Transition Services Agreement by and among the Secured Party, the Debtor and Xx.
Xxxxxx Xxxxxx;
C. In connection with the execution and delivery of the Note, the Debtor
has agreed to enter into this Security Agreement; and
D. The Secured Party has agreed to subordinate all security interests that
have been, or may be, granted by the Debtor and/or any of its subsidiaries to
the Secured Party in respect of the Obligations secured hereunder pursuant to
the Subordination Agreement, dated as of the date hereof (the "Subordination
Agreement"), by and between the Secured Party and Laurus Master Fund, Ltd
("Laurus").
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency in which are hereby acknowledged, the Debtor and Secured Party
hereby agree as follows:
1. DEFINED TERMS. As used in this Security Agreement the following terms
shall have the respective meanings assigned to them as follows:
"Accounts" shall mean, in addition to the definition of accounts in the
UCC, all presently existing and hereafter arising accounts receivable and any
and all Contract Rights, Instruments, Documents, Chattel Paper and General
Intangibles, including, without limitation, (i) all accounts created by or
arising from sales of Goods or rendition of services to customers of the Debtor,
whether or not earned by performance, (ii) all credit insurance, guaranties and
security therefor and (iii) all rights to payment that has been earned under a
Contract Right.
"Assigned Agreements" shall mean and include all leases, contracts and
agreements included in the Collateral or in connection with which Accounts now
exist or may hereafter be created.
"Business Day" means any day other than a Saturday or Sunday or a public or
bank holiday or the equivalent for banks generally under the laws of the State
of New York and the United States.
"Chattel Paper" shall have the meaning accorded to that term under the UCC.
"Contract Right" shall mean any right to payment under a contract, whether
or not evidenced by an Instrument or Chattel Paper presently existing or
hereafter arising.
"Collateral" shall have the meaning accorded to that term in Section 3.
"Deposit Accounts" shall mean and include all bank accounts and other
deposit accounts included in the Collateral whether now existing or hereafter
created.
"Document" shall have the meaning accorded to that term under the UCC.
"Equipment" shall mean all present and hereafter acquired machinery,
equipment, furnishings and fixtures, and all additions, substitutions and
replacements thereof, wherever located, together with all attachments, component
parts, equipment and accessories installed thereon or affixed thereto,
including, without limitation, equipment as defined in the UCC.
"General Intangibles" shall mean all presently existing or hereafter
acquired general intangibles as defined in the UCC, including, without
limitation, corporate or other business records, inventions, designs, patents,
patent applications, trademarks, trade names, trade secrets, good will,
copyrights, registrations, licenses, permits, franchises, tax refund claims,
insurance policies and all rights thereunder (including any refunds and returned
premiums) and any security now or hereafter held by or granted to the Debtor to
secure payment of any of the Accounts.
"Goods" shall mean all goods presently existing or hereafter acquired as
defined in the UCC.
"Governmental Authority" means any court or any federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign.
"Instruments" shall have the meaning accorded to that term under the UCC.
"Inventory" shall mean goods, merchandise and other personal property now
or hereafter held by the Debtor for sale or lease or furnished or to be
furnished under contracts of service or otherwise, raw materials, parts,
finished goods, work-in-process and supplies and materials used or consumed, or
to be used or consumed, in the Debtor's present or any future business, and all
such property the sale, lease or other disposition of which has given rise to
Accounts and which has been returned to, or repossessed or stopped in transit
by, the Debtor.
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"Lien" includes any mortgage, deed of trust, security deed, pledge, lien,
security interest, hypothecation, claim, assignment, deposit arrangement,
easement, restriction, charge or encumbrance, and any other security device of
any nature whatsoever (including, without limitation, any lease, title retention
agreement or financing lease having substantially the same economic effect as
any of the foregoing, and the filing of any financing statement under the
Uniform Commercial Code or comparable law of any jurisdiction).
"Note" shall have the meaning set forth in the recitals herein.
"Obligations" shall have the meaning accorded to that term in Section 2.
"Obligor" shall include any buyer or lessee of Inventory from the Debtor,
any customer for whom services have been rendered or materials furnished by the
Debtor and any other Person that is now or may become obligated to the Debtor on
an Account.
"Person" includes natural persons, sole proprietorships, corporations,
business trusts, unincorporated organizations, associations, companies,
institutions, entities, joint ventures, partnerships, governments (whether
federal, state, county, municipal or otherwise) and Governmental Authorities.
"Tangible Collateral" shall have the meaning accorded to that term in
Section 3.
"UCC" shall mean the Uniform Commercial Code as in effect from time to time
in the State of New York; provided that if by reason of mandatory provisions of
law, the perfection or the effect of perfection or non-perfection of the
security interest in any Collateral is governed by the Uniform Commercial Code
as in effect in a jurisdiction other than New York, "UCC" shall mean the Uniform
Commercial Code as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such perfection or effect of perfection or
non-perfection.
2. OBLIGATIONS SECURED. This Security Agreement is given to secure and
shall secure the prompt payment and performance of the following (hereinafter
sometimes collectively referred to as the "Obligations"):
(a) the indebtedness evidenced by the Note, and any and every
extension or renewal thereof;
(b) all sums becoming due and payable by the Debtor under the terms of
this Security Agreement, including, but not limited to, sums advanced by
the Secured Party pursuant to the terms and conditions of this Security
Agreement; and
(c) the compliance with and performance of each and every, obligation,
covenant, duty, condition and agreement in this Security Agreement and the
Note imposed on or agreed to by the Debtor.
2.1 SUBORDINATION. For the avoidance of doubt, the payment of the
Obligations by
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the Debtor to the Secured Party shall be made, and the security interest
granted to the Secured Party hereunder shall be subordinated (except with
respect to the Purchased Account and the Service Payments, which shall not be
subordinate), in accordance with the terms of, the Subordination Agreement.
3. COLLATERAL. As security for the Obligations, the Debtor does hereby
transfer, assign and convey to the Secured Party, and grant to the Secured Party
a security interest in, all of its right, title and interest in, to and under
the following property, whether real, personal or mixed, whether now owned or
hereafter acquired by the Debtor, and wherever located (hereinafter collectively
called the "Collateral"):
(a) All Equipment, Inventory, materials, vehicles, supplies, fixtures,
goods and other tangible personal property of the Debtor (hereinafter
collectively called the "Tangible Collateral" except to the extent any
lease or agreement with respect thereto would be violated if they were
covered by the terms of this Security Agreement or treated as Collateral
under this Security Agreement);
(b) all existing and future leases and use agreements of personal
property entered into by the Debtor as lessor with other Persons as
lessees, including, without limitation, the right to receive and collect
all rentals and other monies, including security deposits, at any time
payable under such leases and agreements;
(c) any existing and future leases and use agreements of personal
property entered into by the Debtor as lessee with other Persons as lessor,
including, without limitation, the leasehold interest of the Debtor in such
property, and all options to purchase such property or to extend any such
lease or agreement, except any such leases or agreements which would be
violated if they were covered by the terms of this Security Agreement or
treated as Collateral for the purposes of this Security Agreement;
(d) any and all accessions and additions now or hereafter made or
added to any of the property described in subparagraphs (a) through (c)
above, any substitutions and replacements therefor, and all attachments and
improvements now or hereafter placed upon or used in connection therewith,
or any part thereof;
(e) all Accounts of the Debtor;
(f) all General Intangibles of the Debtor and any agreements
constituting part of General Intangibles except such agreements which would
be violated if they were covered by the terms of this Security Agreement or
treated as Collateral for the purposes of this Security Agreement;
(g) all Deposit Accounts and all monies of the Debtor and all bank
accounts in which such monies may at any time be held and all investments
or securities in which such monies may at any time be invested and all
certificates, instruments and documents from time to time representing or
evidencing any such monies;
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(h) all interest, dividends, proceeds, products, rents, royalties,
issues and profits of any of the Collateral described in subparagraphs (a)
through (g) above and all notes, certificates of deposit, checks and other
instruments from time to time delivered to or otherwise possessed by the
Secured Party for or on behalf of the Debtor in substitution for or in
addition to any or all of said property;
(i) all books, documents and records (whether on computer or
otherwise) related to any of the items described in subparagraphs (a)
through (h) above; and
(j) all products and proceeds of any of the items described in
subparagraphs (a) through (i) above.
No submission by the Debtor to the Secured Party of a schedule or other
particular identification of Collateral shall be necessary to vest in the
Secured Party security title to and a security interest in each and every item
of Collateral of the Debtor now existing or hereafter created and acquired, but
rather such title and security interest shall vest in the Secured Party
immediately upon the creation or acquisition of any item of Collateral hereafter
created or acquired, without the necessity for any other or further action by
the Debtor or by the Secured Party.
4. GENERAL REPRESENTATIONS AND WARRANTIES. The Debtor represents and
warrants as follows:
(a) The Debtor has not granted a security interest in any of the
Collateral, other than pursuant to the Master Security Agreement by and
among Laurus Master Fund, Ltd, the Debtor and certain of Debtor's
subsidiaries, or as disclosed in Exhibit A attached hereto; and
(b) The Debtor's chief place of business, chief executive office and
office where the Debtor keeps its records concerning Accounts is located at
the address set forth below the Debtor's name on the first page of this
Security Agreement.
5. GENERAL COVENANTS AND AGREEMENTS. The Debtor covenants and agrees with
the Secured Party as follows:
(a) The Tangible Collateral (other than Inventory in transit or in the
process of being sold and other than other items of Collateral which are
sold as permitted pursuant to this Security Agreement and Tangible
Collateral maintained or used off premises in the ordinary course of
business) and the Debtor's records concerning Accounts, shall be kept at
Debtor's principal place of business as set forth on the first page of this
Security Agreement which shall not be changed without prior notice to
Secured Party.
(b) Except for purchase money security interests, the Debtor will not,
without the prior consent of the Secured Party, pledge or grant any
security interest in any of the Collateral to any Person other than the
Secured Party, permit any Lien to attach to any of
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the Collateral or any levy to be made thereon or any financing
statement (other than those of the Secured Party) to be on file with
respect thereto, or except in the ordinary course of business, sell, assign
or convey any of the Collateral.
(c) At the request of the Secured Party, the Debtor will join with the
Secured Party in executing one or more financing statements pursuant to the
UCC in form satisfactory to the Secured Party covering the Collateral
wherever filing is deemed necessary or prudent by the Secured Party. In the
event that the Debtor fails or refuses to execute any such financing
statement within ten (10) days of written request by Debtor, the Secured
Party may file an executed copy or photocopy of an executed copy of this
Security Agreement as a financing statement in any such offices to the
extent permitted by applicable law.
(d) The Debtor shall inform the Secured Party in writing of any
material adverse change in any of the representations and warranties of the
Debtor under this Security Agreement, promptly after the Debtor shall learn
of such change.
(e) The Debtor will keep and maintain at its own cost and expense
customary business records of the Collateral, including without limitation,
a record of all payments received and all credits granted with respect to
the Collateral and all other dealings with the Collateral. For the further
security of the Secured Party, the Debtor agrees that the Secured Party
shall have a special property interest in all of the Debtor books and
records pertaining to the Collateral. After the occurrence and during the
continuance of an Event of Default the Debtor shall deliver and turn over
to the Secured Party any such books and records at any time on demand of
the Secured Party.
(f) The Debtor will within 120 days of the close of each fiscal year,
furnish Secured Party with annual financial statements of Debtor consisting
of balance sheets and operating statements for the period(s) involved,
prepared in accordance with generally accepted accounting principles
consistently applied for the period involved.
(g) The Debtor will within 50 days after the close of each of the
first three (3) fiscal quarters of each fiscal year, furnish Secured Party
with unaudited quarterly and year-to-date financial statements of Debtor,
consisting of balance sheets and operating statements for the periods
involved, prepared in accordance with generally accepted accounting
principles applied on a basis consistent with the financial statement(s)
previously furnished to Secured Party, taken from the books and records of
Debtor.
6. TAXES AND ASSESSMENTS. The Debtor shall pay all taxes, rents,
assessments and charges levied against any of the Collateral, or any part
thereof, and all other claims that are or may become Liens against the
Collateral, or any part thereof, and should default be made in the payment of
same, the Secured Party, at its option, may pay them; provided, however, that
Debtor shall not be required to pay or cause to be paid any such taxes, rents,
assessments or charges to the extent that the amount, applicability or validity
thereof shall currently be contested in good
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faith by appropriate proceedings and Debtor shall have established and
shall maintain adequate reserves on its books for the payment of the same.
7. INSURANCE. The Debtor shall keep all Tangible Collateral insured against
loss by fire, theft and, in the case of any vehicle, collision, in such a
manner, in such amounts and with such companies as is customary in the industry
and consistent with past practice. As further security for the Obligations, the
Debtor hereby assigns and pledges to the Secured Party, for its benefit, each
and every policy of insurance covering the Collateral, or any part thereof,
including all proceeds and returned premiums. The Debtor agrees that all
insurance policies required by this Security Agreement shall provide for at
least 30 days' written notice to Secured Party prior to cancellation. If the
Debtor fails to keep the Tangible Collateral, or any portion thereof, insured as
above specified, then (without waiving the resulting Event of Default) the
Secured Party may, at its option, immediately insure the Tangible Collateral, or
any portion thereof for its own benefit. The loss, injury or destruction of the
Collateral, or any part thereof, shall not xxxxx, satisfy or release any of the
Obligations; and the proceeds of such insurance, if collected, less the cost of
collecting the same, shall be used in repairing or replacing the Tangible
Collateral and, to the extent not so used, shall be paid to Secured Party to be
credited on the Obligations.
8. ADVANCES BY SECURED PARTY FOR INSURANCE, TAXES, ETC. If Debtor fails to
pay taxes or provide insurance as set forth in Section 6 or 7, the Secured Party
may pay the same upon ten (10) days' prior written notice to Debtor. All amounts
expended by the Secured Party for insurance, taxes or to satisfy in whole or in
part any prior Lien on the Collateral, or any part thereof, shall become a debt
due and payable at once, without demand upon or notice to any Person, of the
Debtor to the Secured Party, additional to the Obligations hereby specially
secured, and shall be secured hereby, and such amounts shall bear interest until
paid at two (2) percentage points in excess of the rate of interest provided for
in the Note, or the highest rate permitted by law, whichever shall be less.
9. CARE OF TANGIBLE COLLATERAL: NOTICE OF LOSS, ETC. The Debtor shall: (a)
keep all Tangible Collateral in as good condition as it is now in, reasonable
wear and tear alone excepted; and (b) notify the Secured Party immediately in
writing of any event causing material loss or depreciation in value of any of
the Collateral, and, to the extent determinable, the amount of such loss or
depreciation (other than depreciation in the Tangible Collateral resulting from
ordinary wear and tear).
10. RECORDS. The Debtor will at all times keep customary business records
of the Collateral, and the Secured Party or its agents shall have the right to
call (with reasonable prior notice unless an Event of Default has occurred and
is then continuing) at the Debtor's place of business (or any other place where
any of the Collateral is located) during regular business hours upon reasonable
notice not more frequently than once each calendar quarter to inspect and
examine the Collateral and to inspect, audit, check and make abstracts from the
books, records, journals, orders, receipts, correspondence and other data
relating to the Collateral or to any other transactions between the Debtor and
the Secured Party. All information obtained by Secured Party with respect to
Debtor will be kept strictly confidential by Secured Party until an Event of
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Default under Section 15 hereof shall occur and be continuing and will be used
by Secured Party thereafter solely as required to protect its rights pursuant to
this Security Agreement.
11. USE OF TANGIBLE COLLATERAL. The Debtor agrees (a) not to conceal or
abandon the Tangible Collateral, except in abandonment in the ordinary course of
business or in the event such Collateral is obsolete; and (b) not to lease or
hire any of the Tangible Collateral to any Person or permit the same to be
leased or used for hire otherwise than in the ordinary course of business.
12. ASSIGNED AGREEMENTS. The Debtor shall diligently perform all of its
material obligations under each and every Assigned Agreement, if the failure to
perform the same would have a material adverse effect on Debtor's business.
Except in the ordinary course of business or otherwise consistent with prudent
business judgment, the Debtor shall not cancel, terminate or modify any material
Assigned Agreement if such cancellation, termination or modification would have
a material adverse effect on Debtor's business.
13. UNDERLYING DOCUMENTATION. Upon the occurrence and at any time during
the continuance of an Event of Default, the Debtor will, upon the request
therefor by the Secured Party, promptly deliver possession to the Secured Party
of any or all of the Instruments, Documents and Chattel Paper that constitute a
part of the Collateral.
14. DEFEASANCE. If the Debtor shall have paid in full all of the
Obligations (as defined herein), then this Security Agreement and conveyance
shall become null and void; otherwise, this Security Agreement shall remain in
full force and effect. Thereupon, the Secured Party shall execute and deliver
UCC-3 Termination Statements in recordable form and such other documents and
instruments as reasonably may be required by Debtor to terminate and release the
Liens in the Collateral granted hereby.
15. EVENTS OF DEFAULT. Upon the occurrence of any Event of Default under
this Security Agreement and at any time during the continuance of an Event of
Default all of the Obligations, with interest thereon, shall at once become due
and payable at the option of the Secured Party. As used in this Security
Agreement, the term "Event of Default" shall mean the occurrence or happening of
any one or more of the following events, circumstances or conditions:
(a) violation of, or default in the observance or performance of, any
term, agreement or covenant contained in this Security Agreement occurs; or
(b) an Event of Default under and as defined in the Note occurs; or
(c) any warranty or representation contained in this Security
Agreement or made on behalf of the Debtor shall prove to be false or
misleading in any material respect; or
(d) the issuance of any execution or the making of any levy, seizure
or
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attachment on a material portion of the Collateral with respect to a
claim against Debtor exceeding $100,000 occurs, which is not discharged or
stayed within 60 days after notice to Debtor thereof; or
(e) the sale (except as permitted hereunder) of any material portion
of the Collateral occurs.
16. REPOSSESSION OF THE COLLATERAL; CARE AND CUSTODY OF THE COLLATERAL;
ETC.
(a) Upon the occurrence and at any time during the continuance of an
Event of Default, the Debtor hereby expressly and irrevocably consents to,
and to the extent that the Debtor may lawfully do so, invites the Secured Party
and its agents to come upon any premises on which the Collateral, or any part
thereof, is now or hereafter located after the occurrence of and during the
continuance of an Event of Default for any and all purposes related to the
Collateral including without limitation repossession of the Collateral, of any
part thereof. To the extent that the Debtor may lawfully do so, the Debtor
further covenants and warrants that, upon the occurrence and continuance of an
Event of Default, (a) any entry by the Secured Party and its agents upon
premises for the purpose of repossessing the Collateral, or any part thereof,
shall not be a trespass upon such premises and (b) any such repossession shall
not constitute conversion of the Collateral, or any part thereof. The Secured
Party shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if it takes such reasonable
actions for that purpose as the Debtor shall request in writing. Any omission to
do any act not requested by the Debtor shall not be deemed a failure to exercise
reasonable care. The Debtor shall at all times be responsible for the
preservation of the Collateral and prior to Secured Party taking possession
thereof shall be liable for any failure to realize upon, or to exercise any
right or power with respect to, the Collateral, or for any delay in so doing.
(b) Notwithstanding anything in Sections 15 and 17 hereof or in this
Section 16, the Secured Party shall not (i) attempt to enforce or collect any of
the Obligations or any rights in respect of any Obligation or (ii) commence, or
join with any other creditor in commencing, any bankruptcy, reorganization or
insolvency proceedings with respect to the Debtor and/or any of its
subsidiaries, without the prior written consent of Laurus, except in accordance
with the Subordination Agreement.
17. REMEDIES REGARDING ACCOUNTS. Upon the occurrence of an Event of Default
or at any time thereafter during the continuance of an Event of Default:
(a) The Secured Party shall have the right (i) to collect all Accounts
in the Secured Party's or the Debtor's name and take control of any cash or
non-cash proceeds of Collateral; (ii) to enforce payment of any Accounts;
(iii) to prosecute any action or proceeding with respect to Accounts; (iv)
to extend the time of payment of any and all Accounts; (v) to in good faith
make allowances and adjustments with respect thereto and to issue credits
in the name of the Secured Party or the Debtor; (vi) to settle, compromise,
extend, renew or release, in whole or in part, in good faith any Account or
deal with the
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same as the Secured Party may deem advisable; and (vii) to require the
Debtor to open all mail only in the presence of a representative of the
Secured Party, who may take therefrom any remittance on Collateral.
(b) Upon demand by the Secured Party, all checks and other forms of
remittance received by the Debtor as proceeds of Collateral shall be (i)
held in trust for the Secured Party separate and apart from and not
commingled with any other property of the Debtor, (ii) kept capable of
identification as the property of the Secured Party, and (iii) delivered
not less often than daily (or at such other intervals as may be mutually
agreed upon in writing) to the Secured Party in the identical form
received, with appropriate endorsements, and accompanied by a report
prepared by the Debtor in such form as the Secured Party shall require.
Upon demand by the Secured Party, all payments received by the Debtor under
or in connection with any Assigned Agreement or Account or otherwise in
respect of the Collateral shall be received in trust for the benefit of the
Secured Party, shall be segregated from other funds of the Debtor, and
shall forthwith be paid over to the Secured Party in the same form as so
received (with any necessary endorsement). Promptly upon the Secured
Party's request, the Debtor shall do any or all of the following: (A) give
written notice of the Secured Party's security interest in the Accounts to
the Obligors in such form and at such times as the Secured Party may
require; (B) open and maintain at the Debtor's expense a lock box with a
national bank chosen by the Secured Party, in its sole discretion, for the
receipt of all remittances with respect to Collateral and execute an
agreement with the Secured Party in form and substance satisfactory to the
Secured Party governing such lock box; and (C) notify the Obligors to make
payments on the Accounts directly to the Secured Party or to said lock box.
18. ATTORNEY-IN-FACT AFTER DEFAULT. Subject to the terms and conditions of
the Subordination Agreement, upon the occurrence and during the continuance of
an Event of Default, the Debtor hereby constitutes and appoints the Secured
Party, or any other Person whom the Secured Party may designate, as the
attorney-in-fact of the Debtor, at the Debtor's sole cost and expense, to
exercise at any time without notice to the Debtor after the occurrence and at
any time during the continuance of any Event of Default hereunder, all or any of
the following powers, all of which powers, being coupled with an interest, shall
be irrevocable until the Secured Party's security interest shall have been
terminated: (a) to receive, take, endorse, assign and deliver in the Secured
Party's name or in the name of the Debtor any and all checks, notes, drafts and
other instruments relating to Accounts; (b) to receive, open and dispose of all
mail addressed to the Debtor and to notify postal authorities to change the
address for the delivery thereof to such address as the Secured Party may
designate; (c) to transmit to Obligors notice of the Secured Party's interest in
the Accounts and to demand and receive from such Obligors at any time, in the
name of the Secured Party or of the Debtor or of the designee of the Secured
Party, information concerning the Accounts and the amounts owing thereon; (d) to
notify Obligors to make payments on the Accounts directly to the Secured Party
or to a lock box designated by the Secured Party; (e) to take or to bring, in
the name of the Debtor, all steps, action, suits or proceedings deemed by the
Secured Party necessary or desirable to effect
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collection of the Accounts; (f) to exercise all of the Debtor's rights and
remedies with respect to the collection of the Accounts; (g) to settle, adjust,
compromise, extend, renew, discharge, terminate, or release the Accounts and the
Assigned Agreements in whole or in part; (h) to sell or assign the Accounts upon
such terms, for such amounts and at such time or times as the Secured Party
deems advisable; (i) to take control, in any manner, of any item of payment on,
or proceeds of, Collateral; (j) to use the information recorded on or contained
in any data processing equipment and computer hardware and software relating to
any of the Collateral to which the Debtor has access; (k) to obtain and
reasonably adjust insurance proceeds required to be paid to the Secured Party
pursuant to Section 7; and (l) to do all acts and things necessary, in the
Secured Party's sole reasonable judgment, to carry out the purposes of this
Security Agreement. All acts of such attorney-in-fact or designee taken pursuant
to this Section 18 are hereby ratified and approved by the Debtor and said
attorney or designee shall not be liable for any acts or omissions nor for any
error of judgment or mistake of fact or law, except for acts constituting
willful misconduct.
19. OTHER RIGHTS AND REMEDIES UPON DEFAULT. Upon the occurrence of an Event
of Default, and at any time during the continuance of an Event of Default the
whole or any part of the Obligations secured hereby shall become immediately due
and payable at the option of the Secured Party, and the Secured Party shall have
all the rights and remedies of a secured party upon default under the UCC, as
well as all rights and remedies under any other applicable law and under the
terms of this Security Agreement, all of which shall be cumulative. Without
limiting the generality of the foregoing rights and remedies, the Secured Party
may exercise any or all of the following rights, remedies and powers after the
occurrence of and at any time during the continuance of an Event of Default:
(a) The Secured Party may require the Debtor to assemble the
Collateral, or any part thereof, and to make it available to the Secured
Party at any convenient place designated by the Secured Party.
(b) The Secured Party may send any written notice to the Debtor
required by law or this Security Agreement in the manner set forth in
Section 28 of this Security Agreement; and any notice sent by the Secured
Party in such manner at least 10 calendar days (counting the day of
sending) prior to the date of a proposed disposition of the Collateral
shall be deemed to be reasonable notice.
(c) The Secured Party may exercise any and all rights and remedies of
the Debtor under or in connection with any Assigned Agreement or otherwise
in respect of the Collateral, including, without limitation, any and all
rights of the Debtor to demand or otherwise require payment of any amount
under, or performance of any provision of, any Assigned Agreement.
(d) The Secured Party, without demand of performance or other demand,
advertisement or notice of any kind (except the notice specified below in
this subparagraph of a proposed disposition of the Collateral) to or upon
the Debtor or any
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other Person (all and each of which demands, advertisements and
notices are hereby expressly waived, to the extent permitted by applicable
law), may forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and may forthwith sell, lease, assign,
give option or options to purchase, or sell or otherwise dispose of and
deliver the Collateral (or contract to do so), or any part thereof, in one
or more parcels at public or private sale or sales, at any exchange
broker's board or at any of the Secured Party's offices or elsewhere at
such prices as the Secured Party may deem best, for cash or on credit or
for future delivery without assumption of any credit risk. The Secured
Party shall have the right upon any such public sale or sales, and to the
extent permitted by law, upon any such private sale or sales, to purchase
the whole or any part of the Collateral so sold, free of any right or
equity of redemption, which equity of redemption the Debtor hereby
releases. To the extent permitted by applicable law, the Debtor waives all
claims, damages, and demands against the Secured Party arising out of the
repossession, retention or sale of the Collateral. The Debtor agrees that
the Secured Party need not give more than 10 days' notice as set forth in
subparagraph (b) above of the time and place of any public sale or of the
time after which a private sale may take place.
20. SECURED PARTY MAY PERFORM. If the Debtor fails to perform any agreement
contained herein, the Secured Party may itself perform, or cause performance of,
such agreement, and the reasonable expenses of the Secured Party incurred in
connection therewith shall be payable by the Debtor under Section 21.
21. INDEMNITY AND EXPENSES. The Debtor agrees to indemnify the Secured
Party from and against any and all claims, losses and liabilities growing out of
or resulting from enforcement of this Security Agreement from and after the
occurrence and during the continuance of an Event of Default, except claims,
losses or liabilities resulting from the Secured Party's gross negligence or
willful misconduct. The Debtor shall upon demand reimburse the Secured Party for
any expenses incurred by the Secured Party in perfecting, protecting or
enforcing or attempting to perfect, protect or enforce any of its rights and
remedies under this Security Agreement from and after the occurrence and during
the continuance of an Event of Default, including, without limitation, all
expenses of filing and recording this Security Agreement or any financing
statements executed in connection with this Security Agreement, and all expenses
of taking possession, holding, preparing for disposition, and disposing of the
Collateral, including reasonable attorneys' fees.
22. APPLICATION OF PROCEEDS. The net cash proceeds resulting from the
exercise of any of the rights and remedies of the Secured Party under this
Security Agreement, after deducting all reasonable charges, expenses, costs and
attorneys' fees relating thereto, including any and all costs and expenses
incurred in securing the possession of Collateral, moving, storing, repairing or
finishing the manufacture of Collateral, and preparing the same for sale, shall
be applied by the Secured Party to the payment of the Obligations, whether due
or to become due, in such order and in such proportions as the Secured Party may
elect.
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23. SEVERABILITY, ETC., In case any one or more of the provisions contained
in this Security Agreement shall be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not be affected or impaired thereby, and if any one or
more of such provisions shall be invalid, illegal or unenforceable in any
respect in any one jurisdiction, then, to the full extent permitted by
applicable law, the validity, legality and enforceability of such provisions and
of any remaining provisions shall not be affected or impaired thereby in other
jurisdictions.
24. REMEDIES CUMULATIVE. The rights and remedies of the Secured Party under
this Security Agreement are cumulative and not exclusive of any other rights or
remedies now or hereafter existing at law or in equity.
25. NON-WAIVER. No delay in exercising any right, power or privilege given
or granted hereto to the Secured Party shall be construed as a waiver thereof;
nor shall a single or partial exercise thereof preclude any other or further
exercise or the exercise of any other right, power or privilege. Subject to the
rights to cure specified in Section 15, the Secured Party may permit the Debtor
to remedy any default without waiving the default so remedied, and the Secured
Party may waive any default without waiving any other subsequent or prior
default by the Debtor.
26. DEBTOR REMAINS LIABLE. Anything in this Security Agreement to the
contrary notwithstanding, (a) the Debtor shall remain liable under the Assigned
Agreements to perform all of its duties and obligations thereunder to the same
extent as if this Security Agreement had not been executed, (b) the exercise by
the Secured Party of any of the rights hereunder shall not release the Debtor
from any of its duties or obligations under the Assigned Agreements, and (c) the
Secured Party shall not have any obligation or liability under the Assigned
Agreements by reason of this Security Agreement or the receipt by the Secured
Party of any payment hereunder, nor shall the Secured Party be obligated to
perform any of the obligations or duties of the Debtor under the Assigned
Agreements, to take any action to collect, file or enforce any claim for payment
assigned to the Secured Party hereunder, or to make any inquiry as to the nature
or sufficiency of any payment received by it or the sufficiency of any
performance by any party thereunder.
27. COSTS. From and after the occurrence and during the continuance of an
Event of Default, Debtor shall promptly reimburse the Secured Party for any and
all reasonable costs and expenses, including but not limited to, the reasonable
fees and disbursements of counsel to the Secured Party, which the Secured Party
may incur in connection with (a) the enforcement of the rights of the Secured
Party in connection with the Obligations, (b) the protection or perfection of
the Secured Party's rights and interests hereunder, and (c) the exercise by or
for the Secured Party of any of the rights or powers herein conferred upon the
Secured Party.
28. NOTICES. Any notices or other communications required or desired to be
given pursuant to this Security Agreement shall be in writing and shall be
deemed given (i) when personally delivered, or (ii) one business day after being
sent for next-day delivery by Federal
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Express or other overnight courier or mail service providing next-day
delivery and confirmation of delivery. Notice shall be addressed as follows, or
to any other address which a party may designate in a notice given to the other
parties in compliance with this Section:
If to Debtor: Windswept Environmental Group, Inc.
000 Xxxxxxxxxxx Xxxxxx
Xxx Xxxxx, Xxx Xxxx 00000
Attn: President
With a copy to: Davidoff Xxxxxx & Xxxxxxx LLP
000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxx, Esq.
To Secured Party: Spotless Plastics (USA) Inc.
000 Xxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxx
With a copy to: Coudert Brothers
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
29. MISCELLANEOUS. Plural or singular words used herein to designate the
Debtor shall be construed to refer to the maker or makers of this Security
Agreement, whether one or more persons, associations, partnerships or
corporations, and the successors and assigns of such party or parties; and all
covenants and agreements herein made by the Debtor shall survive the execution
and delivery of this Security Agreement and the Agreement, and shall bind the
heirs, personal representatives, executors, administrators, successors and
assigns of the undersigned, and every option, right and privilege herein
reserved or secured to the Secured Party shall inure to the benefit of, or may
be exercised by, its successors and assigns. Each of the undersigned hereby
acknowledges receipt of a duplicate copy of this Security Agreement. The Debtor
hereby waives presentment, demand, protest or any notice (to the extent
permitted by applicable law) of any kind in connection with this Security
Agreement or any Collateral, except as otherwise provided in this Security
Agreement or the Note. No modification, amendment or waiver of any provision of
this Security Agreement or the Note, or consent to any departure by the Debtor
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the party against whom enforcement of same is sought and such
waiver or consent shall be effective only in the specific instance and for the
purpose for which given. No notice to or demand on the Debtor in any case shall
entitle the Debtor to any other or further notice or demand in the same, similar
or other circumstances, except as otherwise provided in this Security Agreement
or the Note. The headings and captions in this Security Agreement are for
convenience of reference only and shall in no way restrict or modify any of the
terms hereof. This Security Agreement
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may be executed in any number of counterparts, each of which shall
constitute an original, but all of which together shall constitute one and the
same instrument. This Security Agreement shall be governed by the laws of the
State of New York.
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IN WITNESS WHEREOF, the undersigned has caused this Security Agreement to
be executed by a duly authorized officer of the day and year first above
written.
DEBTOR:
WINDSWEPT ENVIRONMENTAL GROUP, INC.
By: /s/ Xxxxxxx X'Xxxxxx
----------------------------------
Name: Xxxxxxx X'Xxxxxx
Title: President
SECURED PARTY:
-------------
SPOTLESS PLASTICS (USA) INC.
By: /s/ Xxxxxxx X. Xxxxx, Xx.
-----------------------------------
Name: Xxxxxxx X. Xxxxx, Xx.
Title: Senior Vice President of Operations
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