EXHIBIT 10.8
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "AGREEMENT"), dated as of the 1st day of
September, 1998, by and between Xxxx Telecom, Inc., a Florida corporation
(hereinafter the "Debtor"), and CellStar Ltd., a Texas limited partnership
(hereinafter the "Lender").
WHEREAS, Lender has made a loan to Debtor (the "Loan") to restructure and
refinance Debtor's obligations to Lender under certain accounts receivables of
Lender which, in the aggregate, amount to US$26,990,000.00; and
WHEREAS, the Loan is evidenced by that certain Promissory Note dated as of
the date hereof, executed by Debtor in favor of Lender in the original principal
amount of US$26,990,000.00 (the "Note"); and
WHEREAS, in order to induce Lender to make the Loan, Debtor has agreed to
grant a continuing Lien on the Collateral (as hereinafter defined) to secure the
obligations of Debtor to Lender under the Note;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Defined Terms. All capitalized terms used but not otherwise defined
herein have the meanings given to them in the Note. All other undefined terms
contained in this Security Agreement, unless the context indicates otherwise,
have the meanings provided for by Article 9 of the Uniform Commercial Code of
Florida (Chapters 671-680, inclusive, Florida Statutes) to the extent the same
are used or defined therein.
2. Grant of Security Interest.
(a) To secure the prompt and complete payment, performance and observance
of all of Debtor's obligations to Lender under the Note (the "Obligations"),
Debtor hereby grants, assigns, conveys, mortgages, pledges, hypothecates and
transfers to Lender a security interest in and lien on all of its right, title
and interest in, to and under the following property, whether now owned by or
owing to, or hereafter acquired by or arising in favor of Debtor (including
under any trade names, styles or derivations thereof), and whether owned or
consigned by or to, or leased from or to, Debtor, and regardless of where
located (all of which being hereinafter collectively referred to as the
"Collateral"):
(i) all of Debtor's accounts and trade receivables (the
"Accounts");
(ii) all of Debtor's inventory and equipment purchased from Lender
("Inventory");
(iii) all of Debtor's contract rights under Section 3.1.5 of that certain
License Agreement by and between Debtor and Motorola, Inc., dated as
of July 7, 1998; and
(iv) to the extent not otherwise included, all Proceeds and products of
the foregoing and all accessions to, substitutions and replacements
for, and rents and profits of, each of the foregoing.
(b) In addition, to secure the prompt and complete payment,
performance and observance of the Obligations and in order to induce Lender as
aforesaid, Debtor hereby grants to Lender, upon the occurrence of an Event of
Default under the Note, a right of set-off against the property of Debtor held
by Lender, consisting of property described above in Section 2(a) now or
hereafter in the possession or custody of or in transit to Lender, for any
purpose, including safekeeping, collection or pledge, for the account of Debtor,
or as to which Debtor may have any right or power.
3. Lender's Rights Regarding Accounts. Lender may, prior to the
occurrence of an Event of Default under the Note, in Lender's reasonable
discretion and upon reasonable notice to Debtor, or, at any time after the
occurrence of an Event of Default under the Note, in its sole discretion and
without notice to Debtor, in Lender's own name or in the name of Debtor
communicate with the debtors under the Accounts (the "Account Debtors") to
verify with such Persons, to Lender's satisfaction, the existence, amount and
terms of any such Accounts. If a Default or Event of Default shall have
occurred and be continuing, Debtor, at its own expense, shall cause the
independent certified public accountants then engaged by Debtor to prepare and
deliver to Lender at any time and from time to time promptly upon Lender's
request, the following reports with respect to Debtor: (i) a reconciliation of
all Accounts; (ii) an aging of all Accounts; (iii) trial balances; and (iv) a
test verification of such Accounts as Lender may request. Debtor, at its own
expense, shall deliver to Lender the results of each physical verification, if
any, which Debtor may in its discretion have made, or caused any other Person to
have made on its behalf, of all or any portion of its Inventory. Lender shall
have the right, from time to time, upon reasonable notice and during reasonable
business hours, to verify the existence and state of the Collateral and inspect
Debtor's books and records relating to the Collateral in any manner it may
reasonably consider reasonably appropriate, and Debtor agrees to furnish all
assistance and information and to perform all such acts as Lender may reasonably
request in connection therewith and for such purpose to grant to Lender or its
agents access to all places where the Collateral may be located and to all books
and records relating to the Collateral.
4. Representations and Warranties. Debtor represents and warrants that:
(a) Debtor is the sole owner of each item of the Collateral, and has good
and marketable title thereto free and clear of any and all mortgages, pledges,
liens, security interests or other charges or encumbrances, or any segregation
of assets or revenues or other preferential arrangement (whether or not
constituting a security interest), whether voluntary or involuntary, and whether
granted by agreement, statute or otherwise
2
(collectively, "Liens") other than any Liens set forth on Schedule I hereto or
Liens arising in the ordinary course of business securing obligations which are
not overdue for a period of sixty (60) days or more or which are in good faith
being contested or litigated ("Permitted Encumbrances").
(b) No effective security agreement, financing statement, equivalent
security or lien instrument or continuation statement covering all or any part
of the Collateral is on file or of record in any public office, except such as
may have been filed (i) by Debtor in favor of Lender pursuant to this Security
Agreement or the other Loan Documents, and (ii) in connection with any other
Permitted Encumbrances.
(c) This Security Agreement is effective to create a valid and continuing
Lien on and, upon the filing of the appropriate financing statements, a
perfected Lien in favor of Lender on the Collateral with respect to which a Lien
may be perfected by filing pursuant to the Code. Such Lien is prior to all other
Liens, except Permitted Encumbrances that would be prior to Liens in favor of
Lender as a matter of law, and is enforceable as such as against any and all
creditors of and purchasers from Debtor (other than purchasers of inventory in
the ordinary course of business). All action by Debtor necessary or desirable to
protect and perfect such Lien on each item of the Collateral has been duly
taken.
(d) Debtor's chief executive office, principal place of business, corporate
offices, all warehouses and premises where Collateral is stored or located, and
the locations of all of its books and records concerning the Collateral are set
forth on Schedule II hereto.
(e) With respect to the Accounts, (i) they represent bona fide sales of
inventory or rendering of services to Account Debtors in the ordinary course of
Debtor's business and are not evidenced by a judgment, Instrument or Chattel
Paper; (ii) there are no setoffs, claims or disputes existing or asserted with
respect thereto and Debtor has not made any agreement with any Account Debtor
for any extension of time for the payment thereof, any compromise or settlement
for less than the full amount thereof, any release of any Account Debtor from
liability therefor, or any deduction therefrom except a discount or allowance
allowed by Debtor in the ordinary course of its business for prompt payment and
disclosed to Lender and setoffs, claims or disputes not exceeding $100,000.00;
(iii) to Debtor's knowledge, there are no facts, events or occurrences which in
any way impair the validity or enforceability thereof or could reasonably be
expected to reduce the amount payable thereunder as shown on Debtor's books and
records and any invoices, statements and collateral reports delivered to Lender
with respect thereto; (iv) Debtor has not received any notice of proceedings or
actions which are threatened or pending against any Account Debtor which might
result in any adverse change in such Account Debtor's financial condition; and
(v) Debtor has no knowledge that any Account Debtor is unable generally to pay
its debts as they become due. Further with respect to the Accounts (x) the
amounts shown on such records and all invoices, statements and other documents
or reports regarding Collateral which may be delivered to Lender with respect
thereto are
3
actually and absolutely owing to Debtor as indicated thereon and are not in any
way contingent, except for non-material contingencies; and (y) to Debtor's
knowledge, all Account Debtors have the capacity to contract.
(f) With respect to any Inventory, (i) such Inventory is located at one of
Debtor's locations set forth on Schedule II hereto (ii) no Inventory is now, or
shall at any time or times hereafter be stored at any other location without
Lender's prior consent, and if Lender gives such consent, Debtor will
concurrently therewith obtain, bailee, landlord and mortgagee agreements
reasonably satisfactory to Lender, (iii) Debtor has good, indefeasible and
merchantable title to such Inventory and such Inventory is not subject to any
Lien or security interest or document whatsoever except for the Lien granted to
Lender and except for Permitted Encumbrances and non-material Liens, (iv) such
Inventory is of good and merchantable quality, free from any defects, (v) such
Inventory is not subject to any licensing, patent, royalty, trademark, trade
name or copyright agreements with any third parties which would require any
consent of any third party upon sale or disposition of that Inventory or the
payment of any monies to any third party as a precondition of such sale or other
disposition, and (vi) to the knowledge of Debtor, after due inquiry and
investigation, the completion of manufacture, sale or other disposition of such
Inventory by Lender following an Event of Default shall not require the consent
of any Person and shall not constitute a material breach or default under any
contract or agreement to which Debtor is a party or to which such property is
subject.
(g) The security interest held by Capital Factors, Inc. in the accounts
receivables of Debtor is valid and perfected solely against accounts receivable
of Debtor not in excess of $200,000.
5. Covenants. Debtor covenants and agrees with Lender that from and
after the date of this Security Agreement and until the Termination Date:
(a) Further Assurances; Pledge of Instruments. At any time and from time to
time, upon the written request of Lender and at the sole expense of Debtor,
Debtor shall promptly and duly execute and deliver any and all such further
instruments and documents and take such further actions as Lender may reasonably
deem desirable to obtain the full benefits of this Security Agreement and of the
rights and powers herein granted, including (i) using its best efforts to secure
all consents and approvals necessary or appropriate for the assignment to or for
the benefit of Lender of any license or contract held by Debtor or in which
Debtor has any rights not heretofore assigned, (ii) filing any financing or
continuation statements under the Code with respect to the Liens granted
hereunder or under any other Loan Document (as defined in the Note), (iii)
transferring Collateral to Lender's possession if a Lien on such Collateral can
be perfected only by possession, and (iv) obtaining, or using its best efforts
to obtain, waivers of Liens, if any exist, from landlords and mortgagees as may
be reasonably requested by Lender. Debtor also hereby authorizes Lender to file
any such financing or continuation statements without the signature of Debtor to
the extent permitted by applicable law. If any amount payable under or in
connection with any of the Collateral is or shall become evidenced by
4
any Instrument, such Instrument, other than checks and notes received in the
ordinary course of business, shall be duly endorsed in a manner satisfactory to
Lender immediately upon Debtor's receipt thereof.
(b) Maintenance of Records. Debtor shall keep and maintain, at one of the
locations listed in Schedule II, hereto at its own cost and expense,
satisfactory and complete records of the Collateral, including a record of any
and all payments received and any and all credits granted with respect to the
Collateral and all other dealings with the Collateral. Debtor shall xxxx its
general ledger books pertaining to the Collateral to evidence this Security
Agreement and the Liens granted hereby.
(c) Indemnification. In any suit, proceeding or action brought by Lender
relating to any Collateral for any sum owing thereunder or to enforce any
provision of any Collateral, Debtor will save, indemnify and keep Lender
harmless from and against all expense (including reasonable attorneys' fees and
expenses), loss or damage suffered by reason of any defense, setoff,
counterclaim, recoupment or reduction of liability whatsoever of the obligor
thereunder, arising out of a breach by Debtor of any obligation thereunder or
arising out of any other agreement, indebtedness or liability at any time owing
to, or in favor of, such obligor or its successors from Debtor, except in the
case of Lender, to the extent such expense, loss, or damage is attributable
solely to the gross negligence or willful misconduct of Lender as finally
determined by a court of competent jurisdiction. All such obligations of Debtor
shall be and remain enforceable against and only against Debtor and shall not be
enforceable against Lender.
(d) Compliance with Terms of Accounts, etc. In all material respects,
Debtor will perform and comply with all obligations in respect of its Accounts,
Chattel Paper, Contracts and Licenses and all other agreements to which it is a
party or by which it is bound relating to the Collateral.
(e) Limitation on Liens on Collateral. Debtor will not create, permit or
suffer to exist, and will defend the Collateral against, and take such other
action as is necessary to remove, any Lien on the Collateral except Permitted
Encumbrances, and will defend the right, title and interest of Lender in and to
any of Debtor's rights under the Collateral against the claims and demands of
all Persons whomsoever.
(f) Limitations on Disposition. Debtor will not sell, lease, transfer or
otherwise dispose of any of the Collateral, or attempt or contract to do so,
other than in the ordinary course of business.
(g) Further Identification of Collateral. Debtor will, if so requested by
Lender, furnish to Lender, as often as Lender reasonably requests, statements
and schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as Lender may reasonably request, all
in such detail as Lender may specify.
5
(h) Notices. Debtor will advise Lender promptly, in reasonable detail, (i)
of any Lien (other than Permitted Encumbrances) or claim made or asserted
against any of the Collateral, and (ii) of the occurrence of any other event
which would have a material adverse effect on the aggregate value of the
Collateral or on the Liens created hereunder or under any other Loan Document.
6. Lender's Appointment as Attorney-In-Fact. On the Closing Date Debtor
shall execute and deliver to Lender a power of attorney (the "Power of
Attorney") substantially in the form attached hereto as Exhibit A. The power of
attorney granted pursuant to the Power of Attorney is a power coupled with an
interest and shall be irrevocable until the Termination Date. The powers
conferred on Lender under the Power of Attorney are solely to protect Lender's
interests in the Collateral and shall not impose any duty upon Lender to
exercise any such powers. Lender agrees that (a) it shall not exercise any power
or authority granted under the Power of Attorney unless an Event of Default has
occurred and is continuing, and (b) Lender shall account for any moneys received
by Lender in respect of any foreclosure on or disposition of Collateral pursuant
to the Power of Attorney provided that Lender shall have no duty as to any
Collateral, and Lender shall be accountable only for amounts that it actually
receives as a result of the exercise of such powers. NONE OF LENDER OR ITS
AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES SHALL BE
RESPONSIBLE TO ANY DEBTOR FOR ANY ACT OR FAILURE TO ACT UNDER ANY POWER OF
ATTORNEY OR OTHERWISE, EXCEPT IN RESPECT OF DAMAGES ATTRIBUTABLE SOLELY TO THEIR
OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS FINALLY DETERMINED BY A COURT OF
COMPETENT JURISDICTION, NOR FOR ANY PUNITIVE EXEMPLARY, INDIRECT OR
CONSEQUENTIAL DAMAGES.
7. Remedies; Rights Upon Default.
(a) In addition to all other rights and remedies granted to it under this
Security Agreement, the other Loan Documents and under any other instrument or
agreement securing, evidencing or relating to any of the Obligations, if any
Event of Default shall have occurred and be continuing, Lender may exercise all
rights and remedies of a secured party under the Code. Without limiting the
generality of the foregoing, Debtor expressly agrees that in any such event
Lender, without demand of performance or other demand, advertisement or notice
of any kind (except the notice specified below of time and place of public or
private sale) to or upon Debtor or any other Person (all and each of which
demands, advertisements and notices are hereby expressly waived to the maximum
extent permitted by the Code and other applicable law), may forthwith enter upon
the premises of Debtor where any Collateral is located through self-help,
without judicial process, without first obtaining a final judgment or giving
Debtor or any other Person notice and opportunity for a hearing on Lender's
claim or action, and may collect, receive, assemble, process, appropriate and
realize upon the Collateral, or any part thereof, and may forthwith sell, lease,
assign, give an option or options to purchase, or sell or otherwise dispose of
and deliver said Collateral (or contract to do so),
6
or any part thereof, in one or more parcels at a public or private sale or
sales, at any exchange at such prices as it may deem acceptable, for cash or on
credit or for future delivery without assumption of any credit risk. Lender
shall have the right upon any such public sale or sales and, to the extent
permitted by law, upon any such private sale or sales, to purchase the whole or
any part of said Collateral so sold, free of any right or equity of redemption,
which equity of redemption Debtor hereby releases. Such sales may be adjourned
and continued from time to time with or without notice. Lender shall have the
right to conduct such sales on Debtor's premises or elsewhere and shall have the
right to use Debtor's premises without charge for such time or times as Lender
deems necessary or advisable. Debtor further agrees, at Lender's request, to
assemble the Collateral and make it available to Lender at places which Lender
shall select, whether at Debtor's premises or elsewhere. Until Lender is able to
effect a sale, lease, or other disposition of Collateral, Lender shall have the
right to hold or use Collateral, or any part thereof, to the extent that it
deems appropriate for the purpose of preserving Collateral or its value or for
any other purpose deemed appropriate by Lender. Lender shall have no obligation
to Debtor to maintain or preserve the rights of Debtor as against third parties
with respect to Collateral while Collateral is in the possession of Lender.
Lender may, if it so elects, seek the appointment of a receiver or keeper to
take possession of Collateral and to enforce any of Lender's remedies with
respect to such appointment without prior notice or hearing as to such
appointment. Lender shall apply the net proceeds of any such collection,
recovery, receipt, appropriation, realization or sale to the Obligations as
provided in the Note, and only after so paying over such net proceeds, and after
the payment by Lender of any other amount required by any provision of law, need
Lender account for the surplus, if any, to Debtor. To the maximum extent
permitted by applicable law, Debtor waives all claims, damages, and demands
against Lender arising out of the repossession, retention or sale of the
Collateral except such as arise solely out of the gross negligence or willful
misconduct of Lender as finally determined by a court of competent jurisdiction.
Debtor agrees that ten (10) days' prior notice by Lender of the time and place
of any public sale or of the time after which a private sale may take place is
reasonable notification of such matters. Debtor shall remain liable for any
deficiency if the proceeds of any sale or disposition of the Collateral are
insufficient to pay all Obligations, including any attorneys' fees and other
expenses incurred by Lender to collect such deficiency.
(b) Except as otherwise specifically provided herein, Debtor hereby waives
presentment, demand, protest or any notice (to the maximum extent permitted by
applicable law) of any kind in connection with this Security Agreement or any
Collateral.
8. Limitation on Lender's Duty in Respect of Collateral. Notwithstanding
anything herein to the contrary, Lender shall use reasonable care with respect
to the Collateral in its possession or under its control. Lender shall not have
any other duty as to any Collateral in its possession or control or in the
possession or control of any agent or nominee of Lender, or any income thereon
or as to the preservation of rights against prior parties or any other rights
pertaining thereto.
7
9. Reinstatement. This Security Agreement shall remain in full force and
effect and continue to be effective should any petition be filed by or against
Debtor for liquidation or reorganization, should Debtor become insolvent or make
an assignment for the benefit of any creditor or creditors or should a receiver
or trustee be appointed for all or any significant part of Debtor's assets, and
shall continue to be effective or be reinstated, as the case may be, if at any
time payment and performance of the Obligations, or any part thereof, is,
pursuant to applicable law, rescinded or reduced in amount, or must otherwise be
restored or returned by any obligee of the Obligations, whether as an avoidable
preference, fraudulent conveyance, or otherwise, all as though such payment or
performance had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Obligations shall be
reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.
10. Notices. Whenever it is provided herein that any notice, demand,
request, consent, approval, declaration or other communication shall or may be
given to or served upon any of the parties by any other party, or whenever any
of the parties desires to give or serve upon another any such communication with
respect to this Security Agreement, each such notice, demand, request, consent,
approval, declaration or other communication shall be in writing and shall be
addressed to the party to be notified as follows:
(a) If to Lender, at:
CellStar, Ltd.
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxx 00000
Attention: General Counsel
With a copy to:
Steel Xxxxxx & Xxxxx LLP
000 X. Xxxxxxxx Xxxx.
Xxxxx, Xxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxx
(b) If to Debtor, at:
Xxxx Telecom, Inc.
0000 X.X. 00xx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attention: X. X. Xxxxxx
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration or
8
other communication hereunder shall be deemed to have been validly served, given
or delivered (i) upon the earlier of actual receipt and three (3) Business Days
after the same shall have been deposited with the United States mail, registered
or certified mail, return receipt requested, with proper postage prepaid, (ii)
upon transmission, when sent by telecopy or other similar facsimile transmission
(with such telecopy or facsimile promptly confirmed by delivery of a copy by
personal delivery or United States mail as otherwise provided above), (iii) one
(1) Business Day after deposit with a reputable overnight carrier with all
charges prepaid, or (iv) when delivered, if hand-delivered by messenger.
11. Severability. Whenever possible, each provision of this Security
Agreement shall be interpreted in a manner as to be effective and valid under
applicable law, but if any provision of this Security Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity without invalidating
the remainder of such provision or the remaining provisions of this Security
Agreement. This Security Agreement, together with the Note, sets forth the
complete understanding and agreement of Lender and Debtor with respect to the
matters referred to herein and therein.
12. No Waiver; Cumulative Remedies. Lender shall not by any act, delay,
omission or otherwise be deemed to have waived any of its rights or remedies
hereunder, and no waiver shall be valid unless in writing, signed by Lender and
then only to the extent therein set forth. A waiver by Lender of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which Lender would otherwise have had on any future occasion.
No failure to exercise nor any delay in exercising on the part of Lender, any
right, power or privilege hereunder, shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude any other or future exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies hereunder provided are
cumulative and may be exercised singly or concurrently, and are not exclusive of
any rights and remedies provided by law. None of the terms or provisions of
this Security Agreement may be waived, altered, modified or amended except by an
instrument in writing, duly executed by Lender and Debtor.
13. Limitation by Law. All rights, remedies and powers provided in this
Security Agreement may be exercised only to the extent that the exercise thereof
does not violate any applicable provision of law, and all the provisions of this
Security Agreement are intended to be subject to all applicable mandatory
provisions of law that may be controlling and to be limited to the extent
necessary so that they shall not render this Security Agreement invalid,
unenforceable, in whole or in part, or not entitled to be recorded, registered
or filed under the provisions of any applicable law.
14. Termination of This Security Agreement. This Security Agreement shall
terminate upon the payment and performance in full of all of Debtor's
obligations under the Note (the "Termination Date").
9
15. Successors and Assigns. This Security Agreement and all obligations
of Debtor hereunder shall be binding upon the successors and assigns of Debtor
(including any debtor-in-possession on behalf of Debtor) and shall, together
with the rights and remedies of Lender hereunder, inure to the benefit of
Lender, all future holders of any instrument evidencing any of the Obligations
and their respective successors and assigns. No sales of participations, other
sales, assignments, transfers or other dispositions of any agreement governing
or instrument evidencing the Obligations or any portion thereof or interest
therein shall in any manner affect the Lien granted to Lender hereunder. The
rights and obligations of the Lender hereunder may be assigned to Chase Bank of
Texas, N.A., or to any other lender which is a party to the Credit Agreement
dated October 15, 1997 by and among CellStar, Ltd., Chase Bank of Texas, N.A.
and the other "Lenders" thereunder (the "Credit Agreement"), or to any successor
lenders under the Credit Agreement, without any approval or consent of, or
notice to, the Debtor. Debtor may not assign, sell, hypothecate or otherwise
transfer any interest in or obligation under this Security Agreement.
16. Counterparts. This Security Agreement may be executed in any number
of separate counterparts, each of which shall collectively and separately
constitute one and the same agreement.
17. Governing Law. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE
LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY
AND PERFORMANCE, THIS SECURITY AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER
SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF FLORIDA. DEBTOR HEREBY CONSENTS AND AGREES THAT THE STATE OR
FEDERAL COURTS LOCATED IN MIAMI-DADE COUNTY, FLORIDA SHALL HAVE EXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN DEBTOR AND
LENDER PERTAINING TO THIS SECURITY AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS
OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT,
PROVIDED, NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE
LENDER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION
TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF LENDER. DEBTOR HEREBY WAIVES
PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH
ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER
PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO DEBTOR AND THAT
SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT
THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE
PREPAID.
10
18. WAIVER OF JURY TRIAL. THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY
JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN LENDER AND DEBTOR ARISING OUT
OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED IN
CONNECTION WITH, THIS SECURITY AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR
THE TRANSACTIONS RELATED HERETO OR THERETO.
18. Headings; Section Titles. The headings and section titles contained
in this Security Agreement are and shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement between the
parties hereto.
19. No Strict Construction. The parties hereto have participated jointly
in the negotiation and drafting of this Security Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Security
Agreement shall be construed as if drafted jointly by the parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Security Agreement.
20. Conflicts with Letter Agreement. This Security Agreement is to be
construed so as to be consistent and not in conflict with that certain Letter
Agreement dated as of September 1, 1998 by and among Lender, Debtor and each of
the Guarantors and Pledgors named therein (the "Letter Agreement"), but should a
conflict nonetheless arise between this Security Agreement and the Letter
Agreement, the conflict will be resolved by giving the conflicting provisions of
this Security Agreement full force and effect.
[Remainder of page intentionally left blank.
Signatures continued on following page]
11
IN WITNESS WHEREOF, each of the parties hereto has caused this Security
Agreement to be executed and delivered by its duly authorized officer as of the
date first set forth above.
XXXX TELECOM, INC.
as Debtor
By: /s/ X.X. XXXXXX
---------------------------
Name: X.X. Xxxxxx
Title: President and CEO
CELLSTAR, LTD.
By National Auto Center, Inc.
Its General Partner
as Lender
By: /s/ XXXXXXX X. XXXXXXX
---------------------------
Name: Xxxxxxx X. Xxxxxxx
Its: U.S. Region President
12
SCHEDULE I
to
SECURITY AGREEMENT
PERMITTED LIENS
Security interest held by Capital Factors, Inc., evidenced by that UCC-1
Financing Statement, filed by Capital Factors, Inc., on January 31, 1997, File
Number U97000000665, amended on March 6, 1998, File Number 980000049853.
Security interest held by Eastern National Bank, evidenced by that UCC-1
Financing Statement filed by Eastern National Bank, on August 6, 1997, File
Number 970000175847.
Security interest held by Cellco Partnership d/b/a/ Xxxx Atlantic Nynex Mobile,
evidenced by that UCC-1 Financing Statement, filed by Cellco Partnership d/b/a
Xxxx Atlantic Nynex Mobile, on December 11, 1997, File Number 970000277161.
Security interest held by National Auto Center, Inc. d/b/a/ CellStar, evidenced
by that UCC-1 Financing Statement, filed by National Auto Center, Inc. d/b/a
Cellstar, on November 3, 1997, File Number 970000248201.
Security interest held by Cellstar, Ltd., evidenced by that UCC-1 Financing
Statement, filed by Cellstar, Ltd., on October 21, 1997, File Number
970000236679.
Liens with respect to permitted factoring activities.
13
SCHEDULE II
to
SECURITY AGREEMENT
SCHEDULE OF OFFICES, LOCATIONS OF COLLATERAL
AND RECORDS CONCERNING COLLATERAL
I. Chief Executive Office and principal place of business of Debtor:
II. Corporate Offices of Debtor:
III. Warehouses:
IV. Other Premises at which Collateral is Stored or Located:
V. Locations of Records Concerning Collateral:
[TO BE COMPLETED BY DEBTOR]
14
EXHIBIT A
POWER OF ATTORNEY
This Power of Attorney is executed and delivered by Xxxx Telecom, Inc., a
Florida corporation ("Debtor") to CellStar, Ltd. a Texas limited partnership
(hereinafter referred to as "Attorney"), as Lender, under a Promissory Note and
a Security Agreement, both dated as of September 1, 1998, and other related
documents (the "Loan Documents"). No person to whom this Power of Attorney is
presented, as authority for Attorney to take any action or actions contemplated
hereby, shall be required to inquire into or seek confirmation from Debtor as to
the authority of Attorney to take any action described below, or as to the
existence of or fulfillment of any condition to this Power of Attorney, which is
intended to grant to Attorney unconditionally the authority to take and perform
the actions contemplated herein, and Debtor irrevocably waives any right to
commence any suit or action, in law or equity, against any person or entity
which acts in reliance upon or acknowledges the authority granted under this
Power of Attorney. The power of attorney granted hereby is coupled with an
interest, and may not be revoked or canceled by Debtor without Attorney's
written consent.
Debtor hereby irrevocably constitutes and appoints Attorney (and the officers
and agents designated in writing by Attorney), with full power of substitution,
as Debtor's true and lawful attorney-in-fact with full irrevocable power and
authority in the place and stead of Debtor and in the name of Debtor or in its
own name, from time to time in Attorney's discretion, to take any and all
appropriate action and to execute and deliver any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
the Loan Documents and, without limiting the generality of the foregoing, Debtor
hereby grants to Attorney the power and right, on behalf of Debtor, without
notice to or assent by Debtor, and at any time, to do the following: (a) change
the mailing address of Debtor, open a post office box on behalf of Debtor, open
mail for Debtor, and ask, demand, collect, give acquittances and receipts for,
take possession of, endorse any invoices, freight or express bills, bills of
lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications, and notices in connection with any property of Debtor; (b) effect
any repairs to any asset of Debtor, or continue or obtain any insurance and pay
all or any part of the premiums therefor and costs thereof, and make, settle and
adjust all claims under such policies of insurance, and make all determinations
and decisions with respect to such policies; (c) pay or discharge any taxes,
liens, security interests, or other encumbrances levied or placed on or
threatened against Debtor or its property; (d) defend any suit, action or
proceeding brought against Debtor if Debtor does not defend such suit, action or
proceeding or if Attorney believes that Debtor is not pursuing such defense in a
manner that will maximize the recovery to Attorney, and settle, compromise or
adjust any suit, action, or proceeding described above and, in connection
therewith, give such discharges or releases as Attorney may deem appropriate;
(e) file or prosecute any claim, litigation, suit or proceeding in any court of
competent jurisdiction or before any arbitrator, or take any other action
otherwise deemed appropriate by Attorney for the purpose of collecting any and
all such moneys due to
15
Debtor whenever payable and to enforce any other right in respect of Debtor's
property; (f) cause the certified public accountants then engaged by Debtor to
prepare and deliver to Attorney at any time and from time to time, promptly upon
Attorney's request, the following reports: (1) a reconciliation of all accounts,
(2) an aging of all accounts, (3) trial balances, (4) test verifications of such
accounts as Attorney may request, and (5) the results of each physical
verification of inventory; (g) communicate in its own name with any party to any
Contract with regard to the assignment of the right, title and interest of such
Debtor in and under the Contracts and to perfect, preserve, or realize upon
Debtor's property or assets and Attorney's Liens thereon, all as fully and
effectively as Debtor might do. Debtor hereby ratifies, to the extent permitted
by law, all that said Attorney shall lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, this Power of Attorney is executed by Debtor, and Debtor
has caused its seal to be affixed pursuant to the authority of its board of
directors effective as of the 1st day of September, 1998.
XXXX TELECOM, INC.
By: _________________________
Name:
Title:
ATTEST:
By: ________________________________ (SEAL)
Title: _______________________________
STATE of FLORIDA )
)
COUNTY of MIAMI-DADE )
The foregoing instrument was acknowledged before me this ______ of
______________________________,1998 by _________________________________,
____________________________ of Xxxx Telecom, Inc., a Florida corporation, on
behalf of the corporation. He/she is personally known to me or has produced a
Driver's License as identification.
______________________________
Notary Public, State of Florida
Print Name: ___________________
Commission No.: _______________
My Commission Expires: ________
16
