SECURITY AGREEMENT
SECURITY
AGREEMENT, dated as of October 27, 2005 (this "Agreement"), among Global Axcess
Corp., a Nevada corporation (the "Company") and all of the Subsidiaries of the
Company (such subsidiaries, the "Guarantors") (the Company and Guarantors are
collectively referred to as the "Debtors") and the holder or holders of the
Company's 9% Senior Subordinated Secured Convertible Notes due October 27, 2010
in the original aggregate principal amount of $3,500,000 (the "Notes"),
signatory hereto, their endorsees, transferees and assigns (collectively
referred to as, the "Secured Parties").
WITNESSETH:
WHEREAS,
pursuant to the Notes, the Secured Parties have severally agreed to extend the
loans to the Company evidenced by the Notes;
WHEREAS,
pursuant to a certain Subsidiary Guarantee dated as of the date hereof (the
"Guaranty"), the Guarantors have jointly and severally agreed to guaranty and
act as surety for payment of such loans; and
WHEREAS,
in order to induce the Secured Parties to extend the loans evidenced by the
Notes, each Debtor has agreed to execute and deliver to the Secured Parties this
Agreement and to grant the Secured Parties, a perfected security interest in
certain property of such Debtor, subject only to that certain security interest
granted to Wachovia Bank ("Wachovia") pursuant to that Loan Agreement dated
September 24, 2004 as renewed on June 22, 2005 (the "Wachovia Agreement"), to
secure the prompt payment, performance and discharge in full of all of the
Company's obligations under the Notes and the other Debtors' obligations under
the Guaranty.
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 UCC (such as "account",
"chattel paper", "commercial tort claim", "deposit account", "document",
"equipment", "fixtures", "general intangibles", "goods", "instruments",
"inventory", "investment property", "letter-of-credit rights", "proceeds" and
"supporting obligations") shall have the respective meanings given such terms in
Article 9 of the UCC.
(a) "Collateral"
means the collateral in which the Secured Parties are granted a security
interest by this Agreement and which shall include the following personal
property of the Debtors, whether presently owned or existing or hereafter
acquired or coming into existence, wherever situated, and all additions and
accessions thereto and all substitutions and replacements thereof, and all
proceeds, products and accounts thereof, including, without limitation, all
proceeds from the sale or transfer of the Collateral and of insurance covering
the same and of any tort claims in connection therewith, and all dividends,
interest, cash, notes, securities, equity interest or other property at any time
and from time to time acquired, receivable or otherwise distributed in respect
of, or in exchange for, any or all of the Pledged Securities (as defined
below):
(i)
All goods, including, without limitations, (A) all machinery, equipment,
computers, 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, 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 any Debtor's businesses and all improvements thereto; and (B)
all inventory;
(ii) All
contract rights and other general intangibles, including, without limitation,
all partnership interests, membership interests, stock or other securities,
rights under any of the Organizational Documents, agreements related to the
Pledged Securities, licenses, distribution and other agreements, computer
software (whether "off-the-shelf", licensed from any third party or developed by
any 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, Intellectual Property, and income tax refunds;
(iii)
All accounts, 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 each account, including any right of
stoppage in transit;
(iv) All
documents, letter-of-credit rights, instruments and chattel paper;
(v) All
commercial tort claims;
(vi) All
deposit accounts and all cash (whether or not deposited in such deposit
accounts);
(vii) All
investment property;
(viii)
All supporting obligations; and
(ix) All
files, records, books of account, business papers, and computer programs;
and
2
(x) the
products and proceeds of all of the foregoing Collateral set forth in clauses
(i)-(ix) above.
Without
limiting the generality of the foregoing, the "Collateral" shall include all
investment property and general intangibles respecting ownership and/or other
equity interests in each Guarantor, including, without limitation, the shares of
capital stock and the other equity interests listed on Schedule H hereto (as the
same may be modified from time to time pursuant to the terms hereof), and any
other shares of capital stock and/or other equity interests of any other direct
or indirect subsidiary of any Debtor obtained in the future, and, in each case,
all certificates representing such shares and/or equity interests and, in each
case, all rights, options, warrants, stock, other securities and/or equity
interests that may hereafter be received, receivable or distributed in respect
of, or exchanged for, any of the foregoing (all of the foregoing being referred
to herein as the "Pledged Securities") and all rights arising under or in
connection with the Pledged Securities, including, but not limited to, all
dividends, interest and cash.
Notwithstanding
the foregoing, nothing herein shall be deemed to constitute an assignment of any
asset which, in the event of an assignment, becomes void by operation of
applicable law or the assignment of which is otherwise prohibited by applicable
law (in each case to the extent that such applicable law is not overridden by
Sections 9-406, 9-407 and/or 9-408 of the UCC or other similar applicable law);
provided, however, that to the extent permitted by applicable law, this
Agreement shall create a valid security interest in such asset and, to the
extent permitted by applicable law, this Agreement shall create a valid security
interest in the proceeds of such asset.
(b)
"Intellectual Property" means the collective reference to all rights, priorities
and privileges relating to intellectual property, whether arising under United
States, multinational or foreign laws or otherwise, including, without
limitation, (i) all copyrights arising under the laws of the United States, any
other country or any political subdivision thereof, whether registered or
unregistered and whether published or unpublished, all registrations and
recordings thereof, and all applications in connection therewith, including,
without limitation, all registrations, recordings and applications in the United
States Copyright Office, (ii) all letters patent of the United States, any other
country or any political subdivision thereof, all reissues and extensions
thereof, and all applications for letters patent of the United States or any
other country and all divisions, continuations and continuations-in-part
thereof, (iii) all trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade dress, service marks, logos,
domain names and other source or business identifiers, and all goodwill
associated therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or any other
country or any political subdivision thereof, or otherwise, and all common law
rights related thereto, (iv) all trade secrets arising under the laws of the
United States, any other country or any political subdivision thereof, (v) all
rights to obtain any reissues, renewals or extensions of the foregoing, (vi) all
licenses for any of the foregoing, and (vii) all causes of action for
infringement of the foregoing.
3
(c) "Majority
in Interest" shall mean, at any time of determination, the majority in interest
(based on then-outstanding principal amounts of Notes at the time of such
determination) of the Secured Parties.
(d) "Necessary
Endorsement" shall mean undated stock powers endorsed in blank or other proper
instruments of assignment duly executed and such other instruments or documents
as the Secured Parties may reasonably request.
(e) "Obligations"
means all of the Debtors' obligations under this Agreement, the Notes, the
Guaranty and any other instruments, agreements or other documents executed
and/or delivered in connection herewith or therewith, 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 any of 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. Without
limiting the generality of the foregoing, the term "Obligations" shall include,
without limitation: (i) principal of, and interest on the Notes and the loans
extended pursuant thereto; (ii) any and all other fees, indemnities, costs,
obligations and liabilities of the Debtors from time to time under or in
connection with this Agreement, the Notes, the Guaranty and any other
instruments, agreements or other documents executed and/or delivered in
connection herewith or therewith; and (iii) all amounts (including but not
limited to post-petition interest) in respect of the foregoing that would be
payable but for the fact that the obligations to pay such amounts are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving any Debtor.
(f) "Organizational
Documents" means with respect to any Debtor, the documents by which such Debtor
was organized (such as a certificate of incorporation, certificate of limited
partnership or articles of organization, and including, without limitation, any
certificates of designation for preferred stock or other forms of preferred
equity) and which relate to the internal governance of such Debtor (such as
bylaws, a partnership agreement or an operating, limited liability or members
agreement).
(g) "UCC"
means the Uniform Commercial Code of the State of New York and or any other
applicable law of any state or states which has jurisdiction with respect to
all, or any portion of, the Collateral or this Agreement, from time to time. It
is the intent of the parties that defined terms in the UCC should be construed
in their broadest sense so that the term "Collateral" will be construed in its
broadest sense. Accordingly if there are, from time to time, changes to defined
terms in the UCC that broaden the definitions, they are incorporated herein and
if existing definitions in the UCC are broader than the amended definitions, the
existing ones shall be controlling.
4
2. Grant
of Perfected Security Interest. As an inducement for the Secured Parties to
extend the loans as evidenced by the Notes and to secure the complete and timely
payment, performance and discharge in full, as the case may be, of all of the
Obligations, each Debtor hereby unconditionally and irrevocably pledges, grants
and hypothecates to the Secured Parties a continuing and perfected security
interest in and to, a lien upon and a right of set-off against all of their
respective right, title and interest of whatsoever kind and nature in and to,
the Collateral (the "Security Interest").
3.
Delivery of Certain Collateral. Contemporaneously or prior to the execution of
this Agreement, each Debtor shall deliver or cause to be delivered to the
Secured Parties (a) any and all certificates and other instruments representing
or evidencing the Pledged Securities, and (b) any and all certificates and other
instruments or documents representing any of the other Collateral, in each case,
together with all Necessary Endorsements. The Debtors are, contemporaneously
with the execution hereof, delivering to the Secured Parties, or have previously
delivered to the Secured Parties, a true and correct copy of each Organizational
Document governing any of the Pledged Securities.
4.
Representations, Warranties, Covenants and Agreements of the Debtors. Each
Debtor represents and warrants to, and covenants and agrees with, the Secured
Parties as follows:
(a) Each
Debtor has the requisite corporate, partnership, limited liability company or
other power and authority to enter into this Agreement and otherwise to carry
out its obligations hereunder. The execution, delivery and performance by each
Debtor of this Agreement and the filings contemplated therein have been duly
authorized by all necessary action on the part of such Debtor and no further
action is required by such Debtor. This Agreement has been duly executed by each
Debtor. This Agreement constitutes the legal, valid and binding obligation of
each Debtor, enforceable against each Debtor in accordance with its terms except
as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization and similar laws of general application relating to or affecting
the rights and remedies of creditors and by general principles of
equity.
(b) The
Debtors have no place of business or offices where their respective 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. Except as specifically set
forth on Schedule A, each Debtor is the record owner of the real property where
such Collateral is located, and there exist no mortgages or other liens on any
such real property except for Permitted Liens (as defined in the Notes). Except
as disclosed on Schedule A, none of such Collateral is in the possession of any
consignee, bailee, warehouseman, agent or processor.
5
(c) Except
as set forth on Schedule B attached hereto, the Debtors are the sole owner of
the Collateral (except for non-exclusive licenses granted by any Debtor in the
ordinary course of business), free and clear of any liens, security interests,
encumbrances, rights or claims other than those granted to Wachovia and capital
lease holders, and are fully authorized to grant the Security Interest. 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, the Debtors
shall not execute and shall not knowingly permit to be on file (except those in
favor of Wachovia) 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
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 any Debtor's claim of ownership rights in or exclusive rights to use
the Collateral in any jurisdiction or to any 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 any Debtor, threatened before
any court, judicial body, administrative or regulatory agency, arbitrator or
other governmental authority.
(e) Each
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) 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 second 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. Upon
making the filings described in the immediately following paragraph, all
security interests created hereunder in any Collateral which may be perfected by
filing Uniform Commercial Code financing statements shall have been duly
perfected. Except for the filing of the Uniform Commercial Code financing
statements referred to in the immediately following paragraph, the recordation
of the Intellectual Property Security Agreement (as defined below) with respect
to copyrights and copyright applications in the United States Copyright Office
referred to in paragraph (p), the execution and delivery of deposit account
control agreements satisfying the requirements of Section 9-104(a)(2) of the UCC
with respect to each deposit account of the Debtors, and the delivery of the
certificates and other instruments provided in Section 3, no action is necessary
to create, perfect or protect the security interests created hereunder. Without
limiting the generality of the foregoing, except for the filing of said
financing statements, the recordation of said Intellectual Property Security
Agreement, and the execution and delivery of said deposit account control
agreements, no consent of any third parties and no authorization, approval or
other action by, and no notice to or filing with, any governmental authority or
regulatory body is required for (i) the execution, delivery and performance of
this Agreement, (ii) the creation or perfection of the Security Interests
created hereunder in the Collateral or (iii) the enforcement of the rights of
the Secured Parties hereunder.
6
(g) Each
Debtor hereby authorizes the Secured Parties, or any of them, 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 Debtors does not
(i) violate any of the provisions of any Organizational Documents of any Debtor
or any judgment, decree, order or award of any court, governmental body or
arbitrator or any applicable law, rule or regulation applicable to any Debtor or
(ii) 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 any Debtor's debt or otherwise) or other understanding to
which any Debtor is a party or by which any property or asset of any Debtor is
bound or affected. No consent (including, without limitation, from stockholders
or creditors of any Debtor, other than Wachovia) is required for any Debtor to
enter into and perform its obligations hereunder.
(i) The
capital stock and other equity interests listed on Schedule H hereto represent
all of the capital stock and other equity interests of the Guarantors, and
represent all capital stock and other equity interests owned, directly or
indirectly, by the Company. All of the Pledged Securities are validly issued,
fully paid and nonassessable, and the Company is the legal and beneficial owner
of the Pledged Securities, free and clear of any lien, security interest or
other encumbrance except for the security interests created by this Agreement
and those in favor of Wachovia.
(j) The
ownership and other equity interests in partnerships and limited liability
companies (if any) included in the Collateral (the "Pledged Interests") by their
express terms do not provide that they are securities governed by Article 8 of
the UCC and are not held in a securities account or by any financial
intermediary.
(k) Each
Debtor shall at all times maintain the liens and Security Interest provided for
hereunder as valid and perfected second 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.
Each Debtor hereby agrees to defend the same against the claims of any and all
persons and entities. Each Debtor shall safeguard and protect all Collateral for
the account of the Secured Parties. At the request of the Secured Parties, each
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, each Debtor shall pay
all fees, taxes and other amounts necessary to maintain the Collateral and the
Security Interest hereunder, and each 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.
7
(l) Other
than the security interest in favor of Wachovia and all capital leases, no
Debtor will transfer, pledge, hypothecate, encumber, license, sell or otherwise
dispose of any of the Collateral (except for non-exclusive licenses granted by a
Debtor in its ordinary course of business and sales of inventory by a Debtor in
its ordinary course of business) without the prior written consent of a Majority
in Interest.
(m) Each
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.
(n) Each
Debtor shall maintain with financially sound and reputable insurers, insurance
with respect to the Collateral against loss or damage of the kinds and in the
amounts customarily insured against by entities of established reputation having
similar properties similarly situated and in such amounts as are customarily
carried under similar circumstances by other such entities and otherwise as is
prudent for entities engaged in similar businesses but in any event sufficient
to cover the full replacement cost thereof. Each Debtor shall cause each
insurance policy issued in connection herewith to provide, and the insurer
issuing such policy to certify to the Secured Parties that (a) the Secured
Parties will be named as lender loss payee and additional insured under each
such insurance policy; (b) if such insurance be proposed to be cancelled or
materially changed for any reason whatsoever, such insurer will promptly notify
the Secured Parties and such cancellation or change shall not be effective as to
the Secured Parties for at least thirty (30) days after receipt by the Secured
Parties of such notice, unless the effect of such change is to extend or
increase coverage under the policy; and (c) the Secured Parties will have the
right (but no obligation) at its election to remedy any default in the payment
of premiums within thirty (30) days of notice from the insurer of such default.
If no Event of Default (as defined in the Debenture) exists and if the proceeds
arising out of any claim or series of related claims do not exceed $50,000, loss
payments in each instance will be applied by the applicable Debtor to the repair
and/or replacement of property with respect to which the loss was incurred to
the extent reasonably feasible, and any loss payments or the balance thereof
remaining, to the extent not so applied, shall be payable to the applicable
Debtor, provided, however, that payments received by any Debtor after an Event
of Default occurs and is continuing or in excess of $50,000 for any occurrence
or series of related occurrences shall be paid to the Secured Parties and, if
received by such Debtor, shall be held in trust for and immediately paid over to
the Secured Parties unless otherwise directed in writing by the Secured Parties.
Copies of such policies or the related certificates, in each case, naming the
Secured Parties as lender loss payee and additional insured shall be delivered
to the Secured Parties at least annually and at the time any new policy of
insurance is issued.
8
(o) Each
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.
(p) Each
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 each 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.
(q) Each
Debtor shall permit the Secured Parties and their 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 a Secured Party from time to
time.
(r) Each
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.
(s) Each
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 such
Debtor that may materially affect the value of the Collateral, the Security
Interest or the rights and remedies of the Secured Parties
hereunder.
(t) All
information heretofore, herein or hereafter supplied to the Secured Parties by
or on behalf of any Debtor with respect to the Collateral is accurate and
complete in all material respects as of the date furnished.
(u) The
Debtors shall at all times preserve and keep in full force and effect their
respective valid existence and good standing and any rights and franchises
material to its business.
(v) No
Debtor will change its name, type of organization, jurisdiction of organization,
organizational identification number (if it has one), legal or 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, such Debtor provides any financing
statements or fixture filings necessary to perfect and continue perfected the
perfected security Interest granted and evidenced by this
Agreement.
9
(w)
Reserved.
(x) No
Debtor may 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, such Debtor provides any
financing statements or fixture filings necessary to perfect and continue
perfected the perfected security Interest granted and evidenced by this
Agreement.
(y) Each
Debtor was organized and remains organized solely under the laws of the state
set forth next to such Debtor's name in the first paragraph of this Agreement.
Schedule D attached hereto sets forth each Debtor's organizational
identification number or, if any Debtor does not have one, states that one does
not exist.
(z) (i)
The actual name of each Debtor is the name set forth in the preamble above; (ii)
no Debtor has any trade names except as set forth on Schedule E attached hereto;
(iii) no Debtor has used any name other than that stated in the preamble hereto
or as set forth on Schedule E for the preceding five years; and (iv) no entity
has merged into any Debtor or been acquired by any Debtor within the past five
years except as set forth on Schedule E.
(aa) At
any time and from time to time that any Collateral consists of instruments,
certificated securities or other items that require or permit possession by the
secured party to perfect the security interest created hereby, the applicable
Debtor shall deliver such Collateral to the Secured Parties.
(bb) Each
Debtor, in its capacity as issuer, hereby agrees to comply with any and all
orders and instructions of the Secured Parties regarding the Pledged Interests
consistent with the terms of this Agreement without the further consent of any
Debtor as contemplated by Section 8-106 (or any successor section) of the UCC.
Further, each Debtor agrees that it shall not enter into a similar agreement (or
one that would confer "control" within the meaning of Article 8 of the UCC) with
any other person or entity.
(cc) Each
Debtor shall cause all tangible chattel paper constituting Collateral to be
delivered to the Secured Parties, or, if such delivery is not possible, then to
cause such tangible chattel paper to contain a legend noting that it is subject
to the security interest created by this Agreement. To the extent that any
Collateral consists of electronic chattel paper, the applicable Debtor shall
cause the underlying chattel paper to be "marked" within the meaning of Section
9-105 of the UCC (or successor section thereto).
(dd) If
there is any investment property or deposit account included as Collateral that
can be perfected by "control" through an account control agreement, the
applicable Debtor shall cause such an account control agreement, in form and
substance in each case satisfactory to the Secured Parties, to be entered into
and delivered to the Secured Parties.
10
(ee) To
the extent that any Collateral consists of letter-of-credit rights, the
applicable Debtor shall cause the issuer of each underlying letter of credit to
consent to an assignment of the proceeds thereof to the Secured
Parties.
(ff) To
the extent that any Collateral is in the possession of any third party, the
applicable Debtor shall join with the Secured Parties in notifying such third
party of the Secured Parties' security interest in such Collateral and shall use
its best efforts to obtain an acknowledgement and agreement from such third
party with respect to the Collateral, in form and substance satisfactory to the
Secured Parties.
(gg) If
any Debtor shall at any time hold or acquire a commercial tort claim, such
Debtor shall promptly notify the Secured Parties in a writing signed by such
Debtor of the particulars thereof and grant to the Secured Parties in such
writing a security interest therein and in the proceeds thereof, all upon the
terms of this Agreement, with such writing to be in form and substance
satisfactory to the Secured Parties.
(hh) Each
Debtor shall immediately provide written notice to the Secured Parties of any
and all accounts which arise out of contracts with any governmental authority
and, to the extent necessary to perfect or continue the perfected status of the
Security Interest in such accounts and proceeds thereof, shall execute and
deliver to the Secured Parties an assignment of claims for such accounts and
cooperate with the Secured Parties in taking any other steps required, in their
judgment, under the Federal Assignment of Claims Act or any similar federal,
state or local statute or rule to perfect or continue the perfected status of
the Security Interest in such accounts and proceeds thereof.
(ii) Each
Debtor shall cause each subsidiary of such Debtor to immediately become a party
hereto (an "Additional Debtor"), by executing and delivering an Additional
Debtor Joinder in substantially the form of Annex A attached hereto and comply
with the provisions hereof applicable to the Debtors. Concurrent therewith, the
Additional Debtor shall deliver replacement schedules for, or supplements to all
other Schedules to (or referred to in) this Agreement, as applicable, which
replacement schedules shall supersede, or supplements shall modify, the
Schedules then in effect. The Additional Debtor shall also deliver such opinions
of counsel, authorizing resolutions, good standing certificates, incumbency
certificates, organizational documents, financing statements and other
information and documentation as the Secured Parties may reasonably request.
Upon delivery of the foregoing to the Secured Parties, the Additional Debtor
shall be and become a party to this Agreement with the same rights and
obligations as the Debtors, for all purposes hereof as fully and to the same
extent as if it were an original signatory hereto and shall be deemed to have
made the representations, warranties and covenants set forth herein as of the
date of execution and delivery of such Additional Debtor Joinder, and all
references herein to the "Debtors" shall be deemed to include each Additional
Debtor.
11
(jj) Each
Debtor shall vote the Pledged Securities to comply with the covenants and
agreements set forth herein and in the Notes.
(kk) Each
Debtor shall register the pledge of the applicable Pledged Securities on the
books of such Debtor. Each Debtor shall notify each issuer of Pledged Securities
to register the pledge of the applicable Pledged Securities in the name of the
Secured Parties on the books of such issuer. Further, except with respect to
certificated securities delivered to the Secured Parties, the applicable Debtor
shall deliver to the Secured Parties an acknowledgement of pledge (which, where
appropriate, shall comply with the requirements of the relevant UCC with respect
to perfection by registration) signed by the issuer of the applicable Pledged
Securities, which acknowledgement shall confirm that: (a) it has registered the
pledge on its books and records; and (b) at any time directed by the Secured
Parties during the continuation of an Event of Default, such issuer will
transfer the record ownership of such Pledged Securities into the name of any
designee of the Secured Parties, will take such steps as may be necessary to
effect the transfer, and will comply with all other instructions of the Secured
Parties regarding such Pledged Securities without the further consent of the
applicable Debtor.
(ll) In
the event that, upon an occurrence of an Event of Default, the Secured Parties
shall sell all or any of the Pledged Securities to another party or parties
(herein called the "Transferee") or shall purchase or retain all or any of the
Pledged Securities, each Debtor shall, to the extent applicable: (i) deliver to
the Secured Parties or the Transferee, as the case may be, the articles of
incorporation, bylaws, minute books, stock certificate books, corporate seals,
deeds, leases, indentures, agreements, evidences of indebtedness, books of
account, financial records and all other Organizational Documents and records of
the Debtors and their direct and indirect subsidiaries; (ii) use its best
efforts to obtain resignations of the persons then serving as officers and
directors of the Debtors and their direct and indirect subsidiaries, if so
requested; and (iii) use its best efforts to obtain any approvals that are
required by any governmental or regulatory body in order to permit the sale of
the Pledged Securities to the Transferee or the purchase or retention of the
Pledged Securities by the Secured Parties and allow the Transferee or the
Secured Parties to continue the business of the Debtors and their direct and
indirect subsidiaries.
(mm)
Without limiting the generality of the other obligations of the Debtors
hereunder, each Debtor shall promptly (i) cause to be registered at the United
States Copyright Office all of its material copyrights, (ii) cause the security
interest contemplated hereby with respect to all Intellectual Property
registered at the United States Copyright Office or United States Patent and
Trademark Office to be duly recorded at the applicable office, and (iii) give
the Secured Parties notice whenever it acquires (whether absolutely or by
license) or creates any additional material Intellectual Property.
12
(nn) Each
Debtor will from time to time, at the joint and several expense of the Debtors,
promptly execute and deliver all such further instruments and documents, and
take all such further action as may be necessary or desirable, or as the Secured
Parties may reasonably request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable the Secured
Parties to exercise and enforce their rights and remedies hereunder and with
respect to any Collateral or to otherwise carry out the purposes of this
Agreement.
(oo)
Schedule F attached hereto lists all of the patents, patent applications,
trademarks, trademark applications, registered copyrights, and domain names
owned by any of the Debtors as of the date hereof. Schedule F lists all material
licenses in favor of any Debtor for the use of any patents, trademarks,
copyrights and domain names as of the date hereof. All material patents and
trademarks of the Debtors have been duly recorded at the United States Patent
and Trademark Office and all material copyrights of the Debtors have been duly
recorded at the United States Copyright Office.
(pp)
Except as set forth on Schedule G attached hereto, none of the account debtors
or other persons or entities obligated on any of the Collateral is a
governmental authority covered by the Federal Assignment of Claims Act or any
similar federal, state or local statute or rule in respect of such
Collateral.
5.
Effect of Pledge on Certain Rights. If any of the Collateral subject to this
Agreement consists of nonvoting equity or ownership interests (regardless of
class, designation, preference or rights) that may be converted into voting
equity or ownership interests upon the occurrence of certain events (including,
without limitation, upon the transfer of all or any of the other stock or assets
of the issuer), it is agreed that the pledge of such equity or ownership
interests pursuant to this Agreement or the enforcement of any of the Secured
Parties' rights hereunder shall not be deemed to be the type of event which
would trigger such conversion rights notwithstanding any provisions in the
Organizational Documents or agreements to which any Debtor is subject or to
which any Debtor is party.
6.
Defaults. The following events shall be "Events of Default":
(a) The
occurrence of an Event of Default (as defined in the Notes) under the
Notes;
(b) Any
representation or warranty of any Debtor in this Agreement shall prove to have
been incorrect in any material respect when made;
(c) The
failure by any Debtor to observe or perform any of its obligations hereunder for
five (5) days after delivery to such Debtor of notice of such failure by or on
behalf of a Secured Party unless such default is capable of cure but cannot be
cured within such time frame and such Debtor is using best efforts to cure same
in a timely fashion; or
13
(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 any Debtor, or a proceeding shall be commenced by any Debtor, or by any
governmental authority having jurisdiction over any Debtor, seeking to establish
the invalidity or unenforceability thereof, or any Debtor shall deny that any
Debtor has any liability or obligation purported to be created under this
Agreement.
7.
Duty To Hold In Trust.
(a) Upon
the occurrence of any Event of Default and at any time thereafter, each Debtor
shall, upon receipt of any revenue, income, dividend, interest or other sums
subject to the Security Interest, whether payable pursuant to the Notes 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, pro-rata in proportion to their
initial purchases of Notes for application to the satisfaction of the
Obligations (and if any Debenture is not outstanding, pro-rata in proportion to
the initial purchases of the remaining Notes).
(b) If
any Debtor shall become entitled to receive or shall receive any securities or
other property (including, without limitation, shares of Pledged Securities or
instruments representing Pledged Securities acquired after the date hereof, or
any options, warrants, rights or other similar property or certificates
representing a dividend, or any distribution in connection with any
recapitalization, reclassification or increase or reduction of capital, or
issued in connection with any reorganization of such Debtor or any of its direct
or indirect subsidiaries) in respect of the Pledged Securities (whether as an
addition to, in substitution of, or in exchange for, such Pledged Securities or
otherwise), such Debtor agrees to (i) accept the same as the agent of the
Secured Parties; (ii) hold the same in trust on behalf of and for the benefit of
the Secured Parties; and (iii) to deliver any and all certificates or
instruments evidencing the same to the Secured Parties on or before the close of
business on the fifth business day following the receipt thereof by such Debtor,
in the exact form received together with the Necessary Endorsements, to be held
by the Secured Parties subject to the terms of this Agreement as
Collateral.
8.
Rights and Remedies Upon Default.
(a) Upon
the occurrence of any Event of Default and at any time thereafter, the Secured
Parties, acting through any agent appointed by them for such purpose, shall have
the right to exercise all of the remedies conferred hereunder and under the
Notes, 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 (all subject to the rights of Wachovia pursuant
to the Wachovia Agreement):
14
(i) 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 each Debtor shall assemble the Collateral and make it available to the
Secured Parties at places which the Secured Parties shall reasonably select,
whether at such Debtor's premises or elsewhere, and make available to the
Secured Parties, without rent, all of such 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.
(ii) Upon
notice to the Debtors by the Secured Parties, all rights of each Debtor to
exercise the voting and other consensual rights which it would otherwise be
entitled to exercise and all rights of each Debtor to receive the dividends and
interest which it would otherwise be authorized to receive and retain, shall
cease. Upon such notice, the Secured Parties shall have the right to receive any
interest, cash dividends or other payments on the Collateral and, at the option
oft, to exercise in such the Secured Parties' discretion all voting rights
pertaining thereto. Without limiting the generality of the foregoing, the
Secured Parties shall have the right (but not the obligation) to exercise all
rights with respect to the Collateral as it were the sole and absolute owners
thereof, including, without limitation, to vote and/or to exchange, at its sole
discretion, any or all of the Collateral in connection with a merger,
reorganization, consolidation, recapitalization or other readjustment concerning
or involving the Collateral or any Debtor or any of its direct or indirect
subsidiaries.
(iii) The
Secured Parties shall have the right to operate the business of each 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 any 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 any Debtor, which are hereby waived
and released.
(iv) The
Secured Parties shall have the right (but not the obligation) to notify any
account debtors and any obligors under instruments or accounts to make payments
directly to the Secured Parties and to enforce the Debtors' rights against such
account debtors and obligors.
(v) The
Secured Parties may (but are not obligated to) direct any financial intermediary
or any other person or entity holding any investment property to transfer the
same to the Secured Parties or their designee.
15
(vi) The
Secured Parties may (but are not obligated to) transfer any or all Intellectual
Property registered in the name of any Debtor at the United States Patent and
Trademark Office and/or Copyright Office into the name of the Secured Parties or
any designee or any purchaser of any Collateral.
(b) The
Secured Parties may comply with any applicable law in connection with a
disposition of Collateral and such compliance will not be considered adversely
to affect the commercial reasonableness of any sale of the Collateral. The
Secured Parties may sell the Collateral without giving any warranties and may
specifically disclaim such warranties. If the Secured Parties sells any of the
Collateral on credit, the Debtors will only be credited with payments actually
made by the purchaser. In addition, each Debtor waives any and all rights that
it may have to a judicial hearing in advance of the enforcement of any of the
Secured Parties' rights and remedies hereunder, including, without limitation,
its right following an Event of Default to take immediate possession of the
Collateral and to exercise its rights and remedies with respect
thereto.
(c) For
the purpose of enabling the Secured Parties to further exercise rights and
remedies under this Section 8 or elsewhere provided by agreement or applicable
law, each Debtor hereby grants to the Secured Parties an irrevocable,
nonexclusive license (exercisable without payment of royalty or other
compensation to such Debtor) to use, license or sublicense following an Event of
Default, any Intellectual Property now owned or hereafter acquired by such
Debtor, and wherever the same may be located, and including in such license
access to all media in which any of the licensed items may be recorded or stored
and to all computer software and programs used for the compilation or printout
thereof.
9.
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 their
rights hereunder and in connection with collecting, storing and disposing of the
Collateral, and then to satisfaction of the Obligations pro rata among the
Secured Parties (based on then-outstanding principal amounts of Notes at the
time of any such determination), and to the payment of any other amounts
required by applicable law, after which the Secured Parties shall pay to the
applicable 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 Debtors will be
liable for the deficiency, together with interest thereon, at the rate of 20%
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, each 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
solely to the gross negligence or willful misconduct of the Secured Parties as
determined by a final judgment (not subject to further appeal) of a court of
competent jurisdiction.
16
10. Securities
Law Provision. Each Debtor recognizes that the Secured Parties may be limited in
its ability to effect a sale to the public of all or part of the Pledged
Securities by reason of certain prohibitions in the Securities Act of 1933, as
amended, or other federal or state securities laws (collectively, the
"Securities Laws"), and may be compelled to resort to one or more sales to a
restricted group of purchasers who may be required to agree to acquire the
Pledged Securities for their own account, for investment and not with a view to
the distribution or resale thereof. Each Debtor agrees that sales so made may be
at prices and on terms less favorable than if the Pledged Securities were sold
to the public, and that the Secured Parties has no obligation to delay the sale
of any Pledged Securities for the period of time necessary to register the
Pledged Securities for sale to the public under the Securities Laws. Each Debtor
shall cooperate with the Secured Parties in its attempt to satisfy any
requirements under the Securities Laws (including, without limitation,
registration thereunder if requested by the Secured Parties) applicable to the
sale of the Pledged Securities by the Secured Parties.
11.
Costs and Expenses. Each 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, not to exceed $2,500. The Debtors 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
Debtors 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 Notes. Until so paid, any fees payable hereunder
shall be added to the principal amount of the Notes and shall bear interest at
the Default Rate.
12.
Responsibility for Collateral. The Debtors assume 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. Without
limiting the generality of the foregoing, (a) no Secured Party (i) has any duty
(either before or after an Event of Default) to collect any amounts in respect
of the Collateral or to preserve any rights relating to the Collateral, or (ii)
has any obligation to clean-up or otherwise prepare the Collateral for sale, and
(b) each Debtor shall remain obligated and liable under each contract or
agreement included in the Collateral to be observed or performed by such Debtor
thereunder. No Secured Party shall have any obligation or liability under any
such contract or agreement by reason of or arising out of this Agreement or the
receipt by any Secured Party of any payment relating to any of the Collateral,
nor shall the any Secured Party be obligated in any manner to perform any of the
obligations of any Debtor under or pursuant to any such contract or agreement,
to make inquiry as to the nature or sufficiency of any payment received by any
Secured Party in respect of the Collateral or as to the sufficiency of any
performance by any party under any such contract or agreement, to present or
file any claim, to take any action to enforce any performance or to collect the
payment of any amounts which may have been assigned to any Secured Party may be
entitled at any time or times.
17
13. Security
Interest Absolute. All rights of the Secured Parties and all obligations of the
Debtors hereunder, shall be absolute and unconditional, irrespective of: (a) any
lack of validity or enforceability of this Agreement, the Notes 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 Notes 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. Each 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, each 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. Each Debtor waives all right
to require the Secured Parties to proceed against any other person or entity or
to apply any Collateral which the Secured Parties may hold at any time, or to
marshal assets, or to pursue any other remedy. Each Debtor waives any defense
arising by reason of the application of the statute of limitations to any
obligation secured hereby.
14. Term
of Agreement. This Agreement and the Security Interest shall terminate on the
date on which all payments under the Notes have been indefeasibly paid in full
and all other Obligations have been paid or discharged; provided, however, that
all indemnities of the Debtors contained in this Agreement shall survive and
remain operative and in full force and effect regardless of the termination of
this Agreement.
18
15.
Power of Attorney; Further Assurances.
(a) Subject
to the rights of Wachovia under the Wachovia Agreement, each Debtor authorizes
the Secured Parties, and does hereby make, constitute and appoint the Secured
Parties and their respective officers, agents, successors or assigns with full
power of substitution, as such Debtor's true and lawful attorney-in-fact, with
power, in the name of the various Secured Parties or such 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; (v) to transfer any Intellectual
Property or provide licenses respecting any Intellectual Property; and (vi)
generally, at the option of the Secured Parties, and at the expense of the
Debtors, at any time, or from time to time, to execute and deliver any and all
documents and instruments and to do 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 Notes all as fully and effectually as the Debtors might or
could do; and each 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. The
designation set forth herein shall be deemed to amend and supersede any
inconsistent provision in the Organizational Documents or other documents or
agreements to which any Debtor is subject or to which any Debtor is a party.
Without limiting the generality of the foregoing, after the occurrence and
during the continuance of an Event of Default, each Secured Party is
specifically authorized to execute and file any applications for or instruments
of transfer and assignment of any patents, trademarks, copyrights or other
Intellectual Property with the United States Patent and Trademark Office and the
United States Copyright Office.
(b) On
a continuing basis, each 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 C 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) Each
Debtor hereby irrevocably appoints the Secured Parties as such Debtor's
attorney-in-fact, with full authority in the place and instead of such Debtor
and in the name of such 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 such Debtor where permitted by law,
which financing statements may (but need not) describe the Collateral as "all
assets" or "all personal property" or words of like import, and ratifies all
such actions taken by the Secured Parties. 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.
19
16. Notices.
All notices, requests, demands and other communications hereunder shall be
subject to the notice provision of the Purchase Agreement (as such term is
defined in the Notes).
17. 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, firm, corporation or other entity, then the Secured Parties
shall have the right, in its 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.
18. Intentionally
Omitted.
19. Miscellaneous.
(a) No
course of dealing between the Debtors 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 Notes 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 Notes 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.
20
(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 New York, without regard to the
principles of conflicts of law thereof. Each Debtor agrees that all proceedings
concerning the interpretations, enforcement and defense of the transactions
contemplated by this Agreement and the Notes (whether brought against a party
hereto or its respective affiliates, directors, officers, shareholders,
partners, members, employees or agents) shall be commenced exclusively in the
state and federal courts sitting in the City of New York, Borough of Manhattan.
Each Debtor hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in the City of New York, Borough of Manhattan
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, 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 any 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 attorney's 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.
21
(j) All
Debtors shall jointly and severally be liable for the obligations of each Debtor
to the Secured Parties hereunder.
(k) Each
Debtor shall indemnify, reimburse and hold harmless the Secured Parties and
their respective partners, members, shareholders, officers, directors, employees
and agents (collectively, "Indemnitees") from and against any and all losses,
claims, liabilities, damages, penalties, suits, costs and expenses, of any kind
or nature, (including fees relating to the cost of investigating and defending
any of the foregoing) imposed on, incurred by or asserted against such
Indemnitee in any way related to or arising from or alleged to arise from this
Agreement or the Collateral, except any such losses, claims, liabilities,
damages, penalties, suits, costs and expenses which result from the gross
negligence or willful misconduct of the Indemnitee as determined by a final,
nonappealable decision of a court of competent jurisdiction. This
indemnification provision is in addition to, and not in limitation of, any other
indemnification provision in the Notes, the Purchase Agreement (as such term is
defined in the Notes) or any other agreement, instrument or other document
executed or delivered in connection herewith or therewith.
(l) Nothing
in this Agreement shall be construed to subject any Secured Party to liability
as a partner in any Debtor or any if its direct or indirect subsidiaries that is
a partnership or as a member in any Debtor or any of its direct or indirect
subsidiaries that is a limited liability company, nor any Secured Party be
deemed to have assumed any obligations under any partnership agreement or
limited liability company agreement, as applicable, of any such Debtor or any if
its direct or indirect subsidiaries or otherwise, unless and until any such
Secured Party exercises its right to be substituted for such Debtor as a partner
or member, as applicable, pursuant hereto.
(m) To
the extent that the grant of the security interest in the Collateral and the
enforcement of the terms hereof require the consent, approval or action of any
partner or member, as applicable, of any Debtor or any direct or indirect
subsidiary of any Debtor or compliance with any provisions of any of the
Organizational Documents, the Debtors hereby grant such consent and approval and
waive any such noncompliance with the terms of said documents.
[SIGNATURE
PAGES FOLLOW]
22
IN
WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be
duly executed on the day and year first above written.
|
/s/
Xxxxxxx Xxxxx
|
|
Name:
Xxxxxxx Xxxxx
|
|
Title:
Chief
Executive
Officer
|
23
[SIGNATURE
PAGE OF HOLDERS TO GLOBAL AXCESS SA]
Name of
Investing Entity: __________________________
Signature
of Authorized Signatory of Investing entity:
_________________________
Name of
Authorized Signatory: _________________________
Title of
Authorized Signatory: __________________________
[SIGNATURE
PAGE OF HOLDERS FOLLOWS]
24
SCHEDULE
A
LOCATION
OF COLLATERAL
Principal
Place of Business of Debtors:
000 Xxxxx
Xxxxx Xxxx Xxxxx, Xxxxx Xxxxx Xxxxx, XX 00000
Locations
Where Collateral is Located or Stored:
000 Xxxxx
Xxxxx Xxxx Xxxxx, Xxxxx Vedra Beach, FL 32082
West
Columbia, SC
Jacksonville,
TX
SCHEDULE
B
EXISTING
LIENS ON COLLATERAL
Liens in
favor of Wachovia.
Capital
Leases as noted below, not exclusive;
25
SCHEDULE
C
JURISDICTIONS
IN WHICH COLLATERAL LOCATED
Florida
Texas
South
Carolina
26
SCHEDULE
D
ORGANIZATIONAL
IDENTIFICATION NUMBERS
Global
Axcess Corp - FEIN 00-0000000
Nationwide
Money Services Inc. - FEIN 00-0000000
EFT
Integration Inc. - FEIN 00-0000000
Electronic
Payment & Transfer Corp - FEIN 00-0000000
Axcess
Technology Corp - FEIN 00-0000000
Cash
Axcess Corp SA
Axcess
Technology Corp SA
27
SCHEDULE
E
NAMES;
MERGERS AND ACQUISITIONS
NAMES
Global
Axcess Corp, previously Net Holdings
Nationwide
Money Services Inc.
EFT
Integration Inc.
Electronic
Payment & Transfer Corp
Axcess
Technology Corp
Cash
Axcess Corp SA
Axcess
Technology Corp SA
MERGERS
and ACQUISITIONS
Only
assets purchased from the following entities:
Progressive
Ventures Inc.
Family
Heritage Estate Portfolio
ATM
Networks Inc, D/B/A The Xxxxxx Group
Proposed
acquisition, Ameri E Com Digital Corp
28
SCHEDULE
F
INTELLECTUAL
PROPERTY
29
SCHEDULE
G
ACCOUNT
DEBTORS
Nationwide
Money Services Inc.
EFT
Integration Inc.
Electronic
Payment & Transfer Corp
Axcess
Technology Corp
Cash
Axcess Corp SA
Axcess
Technology Corp SA
30
SCHEDULE
H
PLEDGED
SECURITIES
31
ANNEX
A
to
SECURITY
AGREEMENT
FORM OF
ADDITIONAL DEBTOR JOINDER
Security
Agreement dated as of October 27, 2005 made by
and its
subsidiaries party thereto from time to time, as Debtors
to and in
favor of
the
Secured Parties identified therein (the "Security Agreement")
Reference
is made to the Security Agreement as defined above; capitalized terms used
herein and not otherwise defined herein shall have the meanings given to such
terms in, or by reference in, the Security Agreement.
The
undersigned hereby agrees that upon delivery of this Additional Debtor Joinder
to the Secured Parties referred to above, the undersigned shall (a) be an
Additional Debtor under the Security Agreement, (b) have all the rights and
obligations of the Debtors under the Security Agreement as fully and to the same
extent as if the undersigned was an original signatory thereto and (c) be deemed
to have made the representations and warranties set forth in Section ___ therein
as of the date of execution and delivery of this Additional Debtor Joinder.
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE UNDERSIGNED SPECIFICALLY
GRANTS TO THE SECURED PARTIES A SECURITY INTEREST IN THE COLLATERAL AS MORE
FULLY SET FORTH IN THE SECURITY AGREEMENT AND ACKNOWLEDGES AND AGREES TO THE
WAIVER OF JURY TRIAL PROVISIONS SET FORTH THEREIN.
Attached
hereto are supplemental and/or replacement Schedules to the Security Agreement,
as applicable.
An
executed copy of this Joinder shall be delivered to the Secured Parties, and the
Secured Parties may rely on the matters set forth herein on or after the date
hereof. This Joinder shall not be modified, amended or terminated without the
prior written consent of the Secured Parties.
IN
WITNESS WHEREOF, the undersigned has caused this Joinder to be executed in the
name and on behalf of the undersigned.
|
[Name
of Additional Debtor]
|
|
By:
|
|
Name:
|
|
Title:
|
|
Address:
|
Dated:
