SECURITY AGREEMENT
Exhibit
10.3
This
SECURITY AGREEMENT, dated as of September 21, 2006 (this “Agreement”),
is
entered into by and among ZONE MINING LIMITED, a Nevada corporation and ZM
ACQUISITION CORP., a Delaware corporation (hereinafter collectively referred
to
as the “Debtor”)
and
the Holders of those certain 12% Senior Secured Convertible Debentures due
September 21, 2007 (or such earlier contingent date as set forth therein) in
the
original aggregate principal amount of $1,000,000 (the “Debentures”),
issued by Debtor to Trident Growth Fund, L.P., the Holder thereof (whether
one
or more, the “Secured
Parties”)
in
connection with that certain Securities Purchase Agreement of even date herewith
entered into by and between the Debtors and the Secured Parties (the
“Purchase
Agreement”).
W
I T N E S S E T H:
WHEREAS,
pursuant to the Debentures, the Secured Parties have agreed to extend certain
loans described above to the Debtor as evidenced by the Debentures;
and
WHEREAS,
in
order to induce the Secured Parties to extend the loans evidenced by the
Debentures, the Debtor has agreed to execute and deliver to the Secured Parties
this Agreement and to grant the Secured Parties a perfected first priority
security interest in all property of the Debtor to secure the prompt payment,
performance and discharge in full of all of the Debtor’s obligations under the
Debentures.
NOW,
THEREFORE,
in
consideration of the agreements herein contained and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
the
parties hereto hereby agree as follows:
1.
Certain
Definitions.
As used
in this Agreement, the following terms shall have the meanings set forth in
this
Section 1. Terms used but not otherwise defined in this Agreement that are
defined in Article 9 of the Uniform Commercial Code (the “UCC”)
shall
have the respective meanings given such terms in Article 9 of the UCC, and
capitalized terms not otherwise defined herein shall have the meaning given
them
in the Purchase Agreement.
(a)
“Collateral”
means,
as such terms are defined in Section 9.102 of the UCC: all “collateral,”
“accounts,” “chattel paper” (including, but not limited to tangible and
electronic chattel paper), “commercial tort claims,” “commodity contracts,”
“commodity accounts,” “deposit accounts,” “documents,” “equipment,” “farm
products,” “fixtures,” “general intangibles” (including “payment intangibles”
and “software”), “goods,” “health care insurance receivables,” “instruments,”
“inventory,” “investment property,” “letter of credit rights,” “mortgages,” and
“records” of the Debtors, whether presently owned or existing or hereafter
acquired or coming into existence, and all additions and accessions thereto
and
all substitutions and replacements thereof, and all “proceeds” (cash or noncash)
(as defined in Article 9 of the UCC) thereof, including, without limitation,
all
proceeds from the sale or transfer of the Collateral and of insurance covering
the same. Without in any way limiting the generality of the foregoing, if not
already included in the Collateral described above, the term “Collateral” shall
also include, as defined in plain English: All machinery, equipment, computers,
computer programs, motor vehicles, trucks, tanks, boats, ships, appliances,
furniture, special and general tools, fixtures, test and quality control devices
and other equipment of every kind and nature and wherever situated, contract
rights, partnership interests, stock or other securities, licenses, distribution
and other agreements, computer software (whether “off-the-shelf”, licensed from
any third party or developed by Debtor) computer software development rights,
leases, franchises, customer lists, quality control procedures, grants and
rights, goodwill, trademarks, service marks, trade styles, trade names, patents,
patent applications, copyrights, deposit and investment accounts and income
tax
refunds, insurance proceeds, and rights to refunds or indemnification whatsoever
owing, together with all instruments, all documents of title representing any
of
the foregoing, all rights in any merchandising, goods, equipment, motor vehicles
and trucks which any of the same may represent, and all right, title, security
and guaranties with respect to same, including any right of stoppage in transit,
business papers together with all documents of title and documents representing
the same, all additions and accessions thereto, replacements therefor, all
parts
therefor, and all substitutes for any of the foregoing and all other items
used
and useful in connection with the Debtor’s businesses and all improvements
thereto.
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(b)
“Obligations”
means
all of the Debtor’s obligations under the Transaction Documents, in each case,
whether now or hereafter existing, voluntary or involuntary, direct or indirect,
absolute or contingent, liquidated or unliquidated, whether or not jointly
owed
with others, and whether or not from time to time decreased or extinguished
and
later increased, created or incurred, and all or any portion of such obligations
or liabilities that are paid, to the extent all or any part of such payment
is
avoided or recovered directly or indirectly from the Secured Parties as a
preference, fraudulent transfer or otherwise as such obligations may be amended,
supplemented, converted, extended or modified from time to time.
2.
Grant
of Security Interest.
As an
inducement for the Secured Parties to extend the loan as evidenced by the
Debentures and to secure the complete and timely payment, performance and
discharge in full, as the case may be, of all of the Obligations, the Debtor
hereby unconditionally and irrevocably pledges, grants and hypothecates to
the
Secured Parties a continuing security interest in and to, a lien upon and a
right of set-off against all of its right, title and interest of whatsoever
kind
and nature in and to, the Collateral (the “Security
Interest”).
3.
Representations,
Warranties, Covenants and Agreements of the Debtor.
The
Debtor represents and warrants to, and covenants and agrees with, the Secured
Parties as follows:
(a)
The
Debtor has the requisite corporate power and authority to enter into this
Agreement and otherwise to carry out its obligations hereunder. The execution,
delivery and performance by the Debtor of this Agreement and the filings
contemplated therein have been duly authorized by all necessary action on the
part of the Debtor and no further action is required by the Debtor.
(b)
The
Debtor represents and warrants that it has no place of business or offices
where
its books of account and records are kept (other than temporarily at the offices
of its attorneys or accountants) or places where Collateral is stored or
located, except as set forth on Schedule
A
attached
hereto. The state of organization and the organization number for each Debtor
is
correctly shown on Schedule B
attached
hereto.
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(c)
The
Debtor is the sole owner of the Collateral (except for non-exclusive licenses
granted by the Debtor in the ordinary course of business), free and clear of
any
liens, security interests, encumbrances, rights or claims, and is fully
authorized to grant the Security Interest in and to pledge the Collateral.
There
is not on file in any governmental or regulatory authority, agency or recording
office an effective financing statement, security agreement, license or transfer
or any notice of any of the foregoing (other than those that will be filed
in
favor of the Secured Parties pursuant to this Agreement) covering or affecting
any of the Collateral. So long as this Agreement shall be in effect, Debtor
shall not execute and shall not knowingly permit to be on file in any such
office or agency any such financing statement or other document or instrument
(except to the extent filed or recorded in favor of the Secured Parties pursuant
to the terms of this Agreement).
(d)
No
part of the Collateral has been judged invalid or unenforceable. No written
claim has been received that any Collateral or Debtor’s use of any Collateral
violates the rights of any third party. There has been no adverse decision
to
Debtor’s claim of ownership rights in or exclusive rights to use the Collateral
in any jurisdiction or to Debtor’s right to keep and maintain such Collateral in
full force and effect, and there is no Proceeding involving said rights pending
or, to the best knowledge of the Debtor, threatened before any court, judicial
body, administrative or regulatory agency, arbitrator or other governmental
authority.
(e)
The
Debtor shall at all times maintain its books of account and records relating
to
the Collateral at its principal place of business and its Collateral at the
locations set forth on Schedule
A
attached
hereto and may not relocate such books of account and records or tangible
Collateral unless it delivers to the Secured Parties at least 30 days prior
to
such relocation (i) written notice of such relocation and the new location
thereof (which must be within the United States) and (ii) if requested by the
Secured Parties in writing, evidence that appropriate financing statements
under
the UCC and other necessary documents have been filed and recorded and other
steps have been taken to perfect the Security Interest to create in favor of
the
Secured Parties a valid, perfected and continuing perfected first priority
lien
in the Collateral.
(f)
This
Agreement creates in favor of the Secured Parties a valid security interest
in
the Collateral securing the payment and performance of the Obligations and,
upon
the filing by the Secured Parties with the Secretary of State of Nevada, in
the
case of Zone Mining Limited, and with the Secretary of State of Delaware, in
the
case of ZM Acquisition Corp, a properly completed UCC-1 financing statement
describing the Collateral in accordance with the requirements of the UCC, a
perfected first priority security interest in such Collateral.
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(g)
The
Debtor hereby authorizes the Secured Parties to file one or more financing
statements under the UCC, with respect to the Security Interest with the proper
filing and recording agencies in any jurisdiction deemed proper by
them.
(h)
The
execution, delivery and performance of this Agreement by the Debtor does not
conflict with, or constitute a default (or an event that with notice or lapse
of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation (with or without notice,
lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing Debtor’s debt or otherwise) or other understanding to
which the Debtor is a party or by which any property or asset of the Debtor
is
bound or affected. No consent (including, without limitation, from stockholders
or creditors of the Debtor) is required for the Debtor to enter into and perform
its obligations hereunder.
(i)
The
Debtor shall at all times maintain the liens and Security Interest provided
for
hereunder as valid and perfected first priority liens and security interests
in
the Collateral in favor of the Secured Parties until this Agreement and the
Security Interest hereunder shall be terminated pursuant to Section 11 hereof.
The Debtor hereby agrees to defend the same against any and all persons. The
Debtor shall safeguard and protect all Collateral for the account of the Secured
Parties. At the request of the Secured Parties, the Debtor will sign and deliver
to the Secured Parties at any time or from time to time one or more financing
statements pursuant to the UCC in form reasonably satisfactory to the Secured
Parties and will pay the cost of filing the same in all public offices wherever
filing is, or is deemed by the Secured Parties to be, necessary or desirable
to
effect the rights and obligations provided for herein. Without limiting the
generality of the foregoing, the Debtor shall pay all fees, taxes and other
amounts necessary to maintain the Collateral and the Security Interest
hereunder, and the Debtor shall obtain and furnish to the Secured Parties from
time to time, upon demand, such releases and/or subordinations of claims and
liens which may be required to maintain the priority of the Security Interest
hereunder.
(j)
The
Debtor will not transfer, pledge, hypothecate, encumber, license (except for
non-exclusive licenses granted by the Debtor in its ordinary course of business
and sales of “inventory”), sell or otherwise dispose of any of the Collateral
not in the ordinary course of its business without the prior written consent
of
the Secured Parties.
(k) The
Debtor shall keep and preserve its “equipment,” “inventory” and other tangible
Collateral in good condition, repair and order and shall not operate or locate
any such Collateral (or cause to be operated or located) in any area excluded
from insurance coverage.
(l)
The
Debtor shall, within ten (10) days of obtaining knowledge thereof, advise the
Secured Parties promptly, in sufficient detail, of any substantial change in
the
Collateral, and of the occurrence of any event which would have a material
adverse effect on the value of the Collateral or on the Secured Parties’
security interest therein.
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(m)
The
Debtor shall promptly execute and deliver to the Secured Parties such further
deeds, mortgages, assignments, security agreements, financing statements or
other instruments, documents, certificates and assurances and take such further
action as the Secured Parties may from time to time request and may in its
sole
discretion deem necessary to perfect, protect or enforce its security interest
in the Collateral including, without limitation, if applicable, the execution
and delivery of a separate security agreement with respect to the Debtor’s
intellectual property (“Intellectual
Property Security Agreement”)
in
which the Secured Parties have been granted a security interest hereunder,
substantially in a form acceptable to the Secured Parties, which Intellectual
Property Security Agreement, other than as stated therein, shall be subject
to
all of the terms and conditions hereof.
(n)
The
Debtor shall permit the Secured Parties and their respective representatives
and
agents to inspect the Collateral at any time, and to make copies of records
pertaining to the Collateral as may be requested by the Secured Parties from
time to time.
(o)
The
Debtor shall take all steps reasonably necessary to diligently pursue and seek
to preserve, enforce and collect any rights, claims, causes of action and
accounts receivable in respect of the Collateral.
(p)
The
Debtor shall promptly notify the Secured Parties in sufficient detail upon
becoming aware of any attachment, garnishment, execution or other legal process
levied against any Collateral and of any other information received by the
Debtor that may materially affect the value of the Collateral, the Security
Interest or the rights and remedies of the Secured Parties
hereunder.
(q)
All
information heretofore, herein or hereafter supplied to the Secured Parties
by
or on behalf of the Debtor with respect to the Collateral is accurate and
complete in all material respects as of the date furnished.
(r)
The
Debtor shall at all times preserve and keep in full force and effect its valid
existence and good standing and any rights and franchises material to its
business.
(s)
The
Debtor will not change its name, corporate structure, or identity, or add any
new fictitious name unless it provides at least 30 days prior written notice
to
the Secured Parties of such change and, at the time of such written
notification, Debtor shall provide any financing statements or fixture filings
necessary to perfect and continue perfected the perfected first priority
Security Interest granted and evidenced by this Agreement.
(t) The
Debtor may not consign any of its “inventory” or sell any of its “inventory” on
xxxx and hold, sale or return, sale on approval, or other conditional terms
of
sale without the consent of the Secured Parties which shall not be unreasonably
withheld.
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(u)
The
Debtor may not relocate its chief executive office to a new location without
providing 30 days prior written notification thereof to the Secured Parties
and
so long as, at the time of such written notification, the Debtor provides any
financing statements or fixture filings necessary to perfect and continue the
Security Interest granted and evidenced by this Agreement.
4.
Defaults.
The
following events shall be “Events
of Default”:
(a)
The
occurrence of an Event of Default (as defined in the Debentures) under the
Debentures;
(b)
Any
representation or warranty of the Debtor in this Agreement shall prove to have
been incorrect in any material respect when made;
(c)
The
failure by the Debtor to observe or perform any of its obligations hereunder
for
five (5) days after delivery to Debtor of notice of such failure by or on behalf
of a Secured Party; or
(d)
If
any provision of this Agreement shall at any time for any reason be declared
to
be null and void, or the validity or enforceability thereof shall be contested
by the Debtor, or a Proceeding shall be commenced by the Debtor, or by any
governmental authority having jurisdiction over the Debtor, seeking to establish
the invalidity or unenforceability thereof, or the Debtor shall deny that it
has
any liability or obligation purported to be created under this
Agreement.
5.
Duty
To Hold In Trust.
Upon
the occurrence of any Event of Default and at any time thereafter, the Debtor
shall, upon receipt of any revenue, income or other sums subject to the Security
Interest, whether payable pursuant to the Debentures or otherwise, or of any
check, draft, note, trade acceptance or other instrument evidencing an
obligation to pay any such sum, hold the same in trust for the Secured Parties
and shall forthwith endorse and transfer any such sums or instruments, or both,
to the Secured Parties for application to the satisfaction of the
Obligations.
6.
Rights
and Remedies Upon Default.
Upon
the occurrence of any Event of Default and at any time thereafter, the Secured
Parties shall have the right to exercise all of the remedies conferred hereunder
and under the Debentures, and the Secured Parties shall have all the rights
and
remedies of a secured party under the UCC. Without limitation, the Secured
Parties shall have the following rights and powers:
(a)
The
Secured Parties shall have the right to take possession of the Collateral and,
for that purpose, enter, with the aid and assistance of any person, any premises
where the Collateral, or any part thereof, is or may be placed and remove the
same, and Debtor shall assemble the Collateral and make it available to the
Secured Parties at places which the Secured Parties shall reasonably select,
whether at the Debtor’s premises or elsewhere, and make available to the Secured
Parties, without rent, all of the Debtor’s respective premises and facilities
for the purpose of the Secured Parties taking possession of, removing or putting
the Collateral in saleable or disposable form.
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(b)
The
Secured Parties shall have the right to operate the business of the Debtor
using
the Collateral and shall have the right to assign, sell, lease or otherwise
dispose of and deliver all or any part of the Collateral, at public or private
sale or otherwise, either with or without special conditions or stipulations,
for cash or on credit or for future delivery, in such parcel or parcels and
at
such time or times and at such place or places, and upon such terms and
conditions as the Secured Parties may deem commercially reasonable, all without
(except as shall be required by applicable statute and cannot be waived)
advertisement or demand upon or notice to the Debtor or right of redemption
of a
Debtor, which are hereby expressly waived. Upon each such sale, lease,
assignment or other transfer of Collateral, the Secured Parties may, unless
prohibited by applicable law which cannot be waived, purchase all or any part
of
the Collateral being sold, free from and discharged of all trusts, claims,
right
of redemption and equities of the Debtor, which are hereby waived and
released.
7.
Applications
of Proceeds.
The
proceeds of any such sale, lease or other disposition of the Collateral
hereunder shall be applied first, to the expenses of retaking, holding, storing,
processing and preparing for sale, selling, and the like (including, without
limitation, any taxes, fees and other costs incurred in connection therewith)
of
the Collateral, to the reasonable attorneys’ fees and expenses incurred by the
Secured Parties in enforcing its rights hereunder and in connection with
collecting, storing and disposing of the Collateral, and then to satisfaction
of
the Obligations to the Secured Parties based on the then outstanding principal
amount of the Debentures, and to the payment of any other amounts required
by
applicable law, after which the Secured Parties shall pay to the Debtor any
surplus proceeds. If, upon the sale, license or other disposition of the
Collateral, the proceeds thereof are insufficient to pay all amounts to which
the Secured Parties are legally entitled, the Debtor will be liable for the
deficiency, together with interest thereon, at the rate of 18% per annum or
the
lesser amount permitted by applicable law (the “Default
Rate”),
and
the reasonable fees of any attorneys employed by the Secured Parties to collect
such deficiency. To the extent permitted by applicable law, the Debtor waives
all claims, damages and demands against the Secured Parties arising out of
the
repossession, removal, retention or sale of the Collateral, unless due to the
gross negligence or willful misconduct of the Secured Parties.
8.
Costs
and Expenses.
The
Debtor agrees to pay all reasonable out-of-pocket fees, costs and expenses
incurred in connection with any filing required hereunder, including without
limitation, any financing statements pursuant to the UCC, continuation
statements, partial releases and/or termination statements related thereto
or
any expenses of any searches reasonably required by the Secured Parties. The
Debtor shall also pay all other claims and charges which in the reasonable
opinion of the Secured Parties might prejudice, imperil or otherwise affect
the
Collateral or the Security Interest therein. The Debtor will also, upon demand,
pay to the Secured Parties the amount of any and all reasonable expenses,
including the reasonable fees and expenses of its counsel and of any experts
and
agents, which the Secured Parties may incur in connection with (i) the
enforcement of this Agreement, (ii) the custody or preservation of, or the
sale
of, collection from, or other realization upon, any of the Collateral, or (iii)
the exercise or enforcement of any of the rights of the Secured Parties under
the Debentures. Until so paid, any fees payable hereunder shall be added to
the
principal amount of the Debentures and shall bear interest at the Default
Rate.
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9.
Responsibility
for Collateral.
The
Debtor assumes all liabilities and responsibility in connection with all
Collateral, and the Obligations shall in no way be affected or diminished by
reason of the loss, destruction, damage or theft of any of the Collateral or
its
unavailability for any reason.
10.
Security
Interest Absolute.
All
rights of the Secured Parties and all Obligations of the Debtor hereunder,
shall
be absolute and unconditional, irrespective of: (a) any lack of validity or
enforceability of this Agreement, the Debentures or any agreement entered into
in connection with the foregoing, or any portion hereof or thereof; (b) any
change in the time, manner or place of payment or performance of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or any consent to any departure from the Debentures or any other agreement
entered into in connection with the foregoing; (c) any exchange, release or
nonperfection of any of the Collateral, or any release or amendment or waiver
of
or consent to departure from any other collateral for, or any guaranty, or
any
other security, for all or any of the Obligations; (d) any action by the Secured
Parties to obtain, adjust, settle and cancel in its sole discretion any
insurance claims or matters made or arising in connection with the Collateral;
or (e) any other circumstance which might otherwise constitute any legal or
equitable defense available to a Debtor, or a discharge of all or any part
of
the Security Interest granted hereby. Until the Obligations shall have been
paid
and performed in full, the rights of the Secured Parties shall continue even
if
the Obligations are barred for any reason, including, without limitation, the
running of the statute of limitations or bankruptcy. The Debtor expressly waives
presentment, protest, notice of protest, demand, notice of nonpayment and demand
for performance. In the event that at any time any transfer of any Collateral
or
any payment received by the Secured Parties hereunder shall be deemed by final
order of a court of competent jurisdiction to have been a voidable preference
or
fraudulent conveyance under the bankruptcy or insolvency laws of the United
States, or shall be deemed to be otherwise due to any party other than the
Secured Parties, then, in any such event, the Debtor’s obligations hereunder
shall survive cancellation of this Agreement, and shall not be discharged or
satisfied by any prior payment thereof and/or cancellation of this Agreement,
but shall remain a valid and binding obligation enforceable in accordance with
the terms and provisions hereof. The Debtor waives all right to require the
Secured Parties to proceed against any other person or to apply any Collateral
which the Secured Parties may hold at any time, or to marshal assets, or to
pursue any other remedy. The Debtor waives any defense arising by reason of
the
application of the statute of limitations to any obligation secured
hereby.
11.
Term
of Agreement.
This
Agreement and the Security Interest shall terminate on the date on which all
payments under the Debentures have been made in full or have been satisfied
and
all other costs, expenses, fees or other obligations of Debtor under the
Debenture and this Agreement have been paid or discharged. Upon such
termination, the Secured Parties, at the request and at the expense of the
Debtor, will join in executing any termination statement with respect to any
financing statement executed and filed pursuant to this Agreement.
12.
Power
of Attorney; Further Assurances.
(a)
The
Debtor authorizes the Secured Parties, and do hereby make, constitute and
appoint the Secured Parties and its respective officers, agents, successors
or
assigns with full power of substitution, as the Debtor’s true and lawful
attorney-in-fact, with power, in the name of the Secured Parties or the Debtor,
to, after the occurrence and during the continuance of an Event of Default,
(i)
endorse any note, checks, drafts, money orders or other instruments of payment
(including payments payable under or in respect of any policy of insurance)
in
respect of the Collateral that may come into possession of the Secured Parties;
(ii) to sign and endorse any financing statement pursuant to the UCC or any
invoice, freight or express xxxx, xxxx of lading, storage or warehouse receipts,
drafts against debtors, assignments, verifications and notices in connection
with accounts, and other documents relating to the Collateral; (iii) to pay
or
discharge taxes, liens, security interests or other encumbrances at any time
levied or placed on or threatened against the Collateral; (iv) to demand,
collect, receipt for, compromise, settle and xxx for monies due in respect
of
the Collateral; and (v) generally, to do, at the option of the Secured Parties,
and at the expense of the Debtor, at any time, or from time to time, all acts
and things which the Secured Parties deem necessary to protect, preserve and
realize upon the Collateral and the Security Interest granted therein in order
to effect the intent of this Agreement and the Debentures all as fully and
effectually as the Debtor might or could do; and the Debtor hereby ratifies
all
that said attorney shall lawfully do or cause to be done by virtue hereof.
This
power of attorney is coupled with an interest and shall be irrevocable for
the
term of this Agreement and thereafter as long as any of the Obligations shall
be
outstanding.
(b)
On a
continuing basis, the Debtor will make, execute, acknowledge, deliver, file
and
record, as the case may be, with the proper filing and recording agencies in
any
jurisdiction, including, without limitation, the jurisdictions indicated on
Schedule
B
attached
hereto, all such instruments, and take all such action as may reasonably be
deemed necessary or advisable, or as reasonably requested by the Secured
Parties, to perfect the Security Interest granted hereunder and otherwise to
carry out the intent and purposes of this Agreement, or for assuring and
confirming to the Secured Parties the grant or perfection of a perfected
security interest in all the Collateral under the UCC.
(c)
The
Debtor hereby irrevocably appoints the Secured Parties as the Debtor’s
attorney-in-fact, with full authority in the place and instead of the Debtor
and
in the name of the Debtor, from time to time in the Secured Parties’ discretion,
to take any action and to execute any instrument which the Secured Parties
may
deem necessary or advisable to accomplish the purposes of this Agreement,
including the filing, in its sole discretion, of one or more financing or
continuation statements and amendments thereto, relative to any of the
Collateral without the signature of the Debtor where permitted by
law.
13.
Notices.
All
notices, requests, demands and other communications hereunder shall be subject
to the notice provision of the Purchase Agreement.
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14.
Other
Security.
To the
extent that the Obligations are now or hereafter secured by property other
than
the Collateral or by the guarantee, endorsement or property of any other Person,
then the Secured Parties shall have the right, in their sole discretion, to
pursue, relinquish, subordinate, modify or take any other action with respect
thereto, without in any way modifying or affecting any of the Secured Parties’
rights and remedies hereunder.
15.
Best
Efforts for Licensed Collateral. Notwithstanding
any other provision contained herein or any of the Transaction Documents, upon
the occurrence of an Event of Default, the Debtor hereby agrees that with
respect to any part of the Collateral which may require the consent of any
third
party or third parties in order for Debtor to transfer and/or convey its
interest in and to such Collateral to the Secured Parties, as may be required
in
accordance herewith, Debtor agrees to and shall use its best efforts to obtain
such consents or approvals in as expedient a manner as possible.
16. Miscellaneous.
(a)
No
course of dealing between the Debtor and the Secured Parties, nor any failure
to
exercise, nor any delay in exercising, on the part of the Secured Parties,
any
right, power or privilege hereunder or under the Debentures shall operate as
a
waiver thereof; nor shall any single or partial exercise of any right, power
or
privilege hereunder or thereunder preclude any other or further exercise thereof
or the exercise of any other right, power or privilege.
(b)
All
of the rights and remedies of the Secured Parties with respect to the
Collateral, whether established hereby or by the Debentures or by any other
agreements, instruments or documents or by law shall be cumulative and may
be
exercised singly or concurrently.
(c)
This
Agreement constitutes the entire agreement of the parties with respect to the
subject matter hereof and is intended to supersede all prior negotiations,
understandings and agreements with respect thereto. Except as specifically
set
forth in this Agreement, no provision of this Agreement may be modified or
amended except by a written agreement specifically referring to this Agreement
and signed by the parties hereto.
(d)
In
the event any provision of this Agreement is held to be invalid, prohibited
or
unenforceable in any jurisdiction for any reason, unless such provision is
narrowed by judicial construction, this Agreement shall, as to such
jurisdiction, be construed as if such invalid, prohibited or unenforceable
provision had been more narrowly drawn so as not to be invalid, prohibited
or
unenforceable. If, notwithstanding the foregoing, any provision of this
Agreement is held to be invalid, prohibited or unenforceable in any
jurisdiction, such provision, as to such jurisdiction, shall be ineffective
to
the extent of such invalidity, prohibition or unenforceability without
invalidating the remaining portion of such provision or the other provisions
of
this Agreement and without affecting the validity or enforceability of such
provision or the other provisions of this Agreement in any other
jurisdiction.
9
(e)
No
waiver of any breach or default or any right under this Agreement shall be
considered valid unless in writing and signed by the party giving such waiver,
and no such waiver shall be deemed a waiver of any subsequent breach or default
or right, whether of the same or similar nature or otherwise.
(f)
This
Agreement shall be binding upon and inure to the benefit of each party hereto
and its successors and assigns.
(g)
Each
party shall take such further action and execute and deliver such further
documents as may be necessary or appropriate in order to carry out the
provisions and purposes of this Agreement.
(h)
All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of Texas, without regard to the principles
of conflicts of law thereof. Each party agrees that all Proceedings concerning
the interpretations, enforcement and defense of the transactions contemplated
by
this Agreement and the Debentures (whether brought against a party hereto or
its
respective affiliates, directors, officers, shareholders, employees or agents)
shall be commenced exclusively in the state and federal courts sitting in
Dallas, Texas. Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in Dallas, Texas for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any Proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, or that such
Proceeding is improper. Each party hereto hereby irrevocably waives personal
service of process and consents to process being served in any such Proceeding
by mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law. Each party hereto hereby irrevocably waives, to the fullest
extent permitted by applicable law, any and all right to trial by jury in any
legal Proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby. If either party shall commence a Proceeding
to
enforce any provisions of this Agreement, then the prevailing party in such
Proceeding shall be reimbursed by the other party for its reasonable attorneys
fees and other costs and expenses incurred with the investigation, preparation
and prosecution of such Proceeding.
(i)
This
Agreement may be executed in any number of counterparts, each of which when
so
executed shall be deemed to be an original and, all of which taken together
shall constitute one and the same Agreement. In the event that any signature
is
delivered by facsimile transmission, such signature shall create a valid binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
were the original thereof.
10
Exhibit
10.3
IN
WITNESS WHEREOF,
the
parties hereto have caused this Security Agreement to be duly executed on
the
day and year first above written.
|
DEBTOR
ZONE
MINING LIMITED
By:
/s/ Xxxxxxx X. Xxxxxxxxxx
Name:
Xxxxxxx X. Xxxxxxxxxx
Title:
President
ZM
ACQUISTION CORP.
By:
/s/ Xxxxxxx X. Xxxxxxxxxx
Name:
Xxxxxxx X. Xxxxxxxxxx
Title:
President
|
Address
for Notice and Delivery:
000
Xxxxxxxxxxxx Xxxx.
Xxxxx
000
Xxxx
Xxxxxx, XX
Telephone:
(000) 000-0000
Facsimile:
(___) ___-____
Attn:
Xxxxxxx X. Xxxxxxxxxx
|
11
SECURED
PARTIES’ SIGNATURE PAGE
SECURED
PARTIES:
TRIDENT
GROWTH FUND, L.P.
By:
TRIDENT MANAGEMENT, LLC, its
GENERAL
PARTNER
By:
/s/ Xxxxxx Xxxx
Name: Xxxxxx
Xxxx
Title:
Authorized Member
Address
for Notice and Delivery
000
Xxxxxx
Xxxxxxx,
XX 00000
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
Attn:
Xxxxx St. Xxxxxx
12
Exhibit
10.3
SCHEDULE
A
Principal
Place of Business of Zone Mining Limited and ZM Acquisition
Corp.:
000
Xxxxxxxxxxxx Xxxx.
Xxxxx
000
Xxxx
Xxxxxx, XX
Locations
Where Collateral is Located or Stored:
000
Xxxxxxxxxxxx Xxxx.
Xxxxx
000
Xxxx
Xxxxxx, XX
13
Exhibit
10.3
SCHEDULE
B
Zone
Mining Limited:
State
of
Organization: Nevada
Organization
Number: E001362005-2
ZM
Acquisition Corp.:
State
of
Organization: Delaware
Organization
Number: 4216137
14
