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EXHIBIT 8.5
SECURITY AGREEMENT AND FINANCING STATEMENT
(Debtor: Texas TBS, Inc.)
THIS AGREEMENT, made and entered into effective the 11th day of
November, 1998, by and between TEXAS TBS, INC. ("Debtor" herein), a Delaware
corporation, whose address for purposes of this instrument is 0000 Xxxxx Xxxxxxx
Xxxxxxx Xxxx Xxxxxxx, Xxxxx 00000-0000, in Xxxxxx County, Texas, on the one
hand; and XXXXXXX X. XxXXXXX ("CDMP" herein), individually and as Agent and
Attorney-in-Fact for Xxxx X. XxXxxxx, Xxxx Xxxxx XxXxxxx, Xxxx Xxxx XxXxxxx, and
JoyVer Investments, L.L.C., a Texas limited liability company (together "Other
Shareholders" herein), whose address for purposes of this instrument is 00000
Xxxx Xxxxx, Xxxxxxx, Xxxxx 00000, in Xxxxxx County, Texas, on the other hand;
WITNESSETH, THAT:
WHEREAS, Debtor owes obligations to Secured Party under the Obligation
Documents herein defined; and
WHEREAS, Debtor has agreed to the terms and conditions herein set forth
in order to induce Secured Party to proceed with the Closing described in that
certain Acquisition / Merger Agreement dated November 11, 1998, by and between
Debtor, Total Building Systems, Inc., and CDMP; and
WHEREAS, Secured Party, or any of them, at his sole discretion, may
extend to Debtor further credit or future advances, or any combination of the
same; and
WHEREAS, this Security Agreement and Financing Statement is intended to
and does secure the payment of all indebtedness, whether current or future, of
Debtor to Secured Party, and specifically including future advances and
extensions of credit, if any, to Debtor by Secured Party, or any of them, and is
further intended to secure the performance of any and all obligations of Debtor
under any of the Obligation Documents, including without limitation the TBS
Texas Employment Agreement, TBS Texas Guaranty Agreement, TBS Texas
Indemnification Agreement, and TBS Assumption Agreement, as described in the
said Acquisition / Merger Agreement;
NOW THEREFORE, for value received, the receipt and adequacy of which
are hereby acknowledged, Debtor does hereby GRANT and ASSIGN unto Secured Party
a security interest, as hereinafter set forth, in the Collateral, as herein
defined, and does hereby agree with Secured Party as follows:
A. OBLIGATIONS SECURED. The security interest granted hereby is to
secure payment of all indebtedness, whether current or future, of Debtor to
Secured Party under the Obligation Documents, and specifically including future
advances and extensions of credit, if any, to Debtor by Secured Party, or any of
them, and is further intended to secure the full and punctual performance when
due (whether by acceleration or otherwise) of all obligations of Debtor (when
and as any of such obligations shall be or become due and/or owing by Debtor)
evidenced by and/or existing or to become existing under and by reason of any of
the following instruments, agreements and documents and any extensions,
modifications, renewals, and rearrangements thereof, amendments and
modifications thereto, and substitutions therefor (together "Obligation
Documents" herein):
(i) The said Acquisition / Merger Agreement, including without
limitation any and all obligations under the said Acquisition / Merger
Agreement, all instruments referenced in Exhibit A thereto, and all
other instruments related to the transaction therein described, and
(ii) That certain Employment Agreement ("TBS Texas Employment
Agreement" herein) dated January 1, 1996, 1998, by and between Debtor,
as Employer therein, and CDMP, as Employee therein; and
(iii) That certain Continuing and Unconditional Guaranty Agreement
("TBS Texas Guaranty Agreement" herein) of even date herewith, by and
between Debtor, as Guarantor therein, and CDMP and the Other
Shareholders, as Obligees therein; and
(iv) Each and every instrument, agreement, or document executed by
Debtor in connection with, or to grant security for, obligations
evidenced by the above described Acquisition / Merger Agreement and
Security Agreement, including without limitation all instruments listed
in Exhibit A to the said Acquisition / Merger Agreement; and
(v) Any other instrument, agreement, or document executed by Debtor,
whether or not described herein as an Obligation Document, in
connection with any other obligation to Secured Party, specifically
including without limitation future loans and advances, and funding
agreements, and further including without limitation any instruments,
agreements, or documents effecting any extensions, renewals, and
rearrangements of any Obligation Document, amendments and modifications
thereto, and substitutions therefor;
And is further intended to secure payment or performance, when and as due, of
any other debt or other obligation of Debtor to Secured Party, specifically
including future advances and extensions of credit; all of the foregoing
effective until the same have been paid and satisfied in full.
B. PRIORITIES. The security interests granted by Debtor to Secured
Party and the rights of Secured Party in the Collateral are subject to the terms
and conditions of the said Acquisition / Merger Agreement; provided, however,
that in the event of conflict between this agreement and the said Acquisition /
Merger Agreement, the terms and conditions hereof shall prevail. This agreement
is not intended to be a third-party beneficiary contract. This agreement is
intended for the express benefit of CDMP and the Other Shareholders, and in
addition to executing this agreement individually, CDMP executed this agreement
for and on behalf of the Other Shareholders, as the Agent and Attorney-in-Fact
for each of the Other Shareholders, as an accommodation to Debtor in order to
facilitate the execution of the Obligation Documents.
C. DESCRIPTION OF COLLATERAL. The security interest hereby granted to
Secured Party shall be a security interest in all of the following (the
"Property" and the "Collateral" herein):
All personal property of Debtor, tangible and intangible, whether now
owned or hereafter acquired, and wheresoever located, including all
general intangibles of Debtor, and further including without limitation
all of the following assets: accounts (including without limitation
accounts receivable); contract rights; chattel paper; documents; notes;
drafts; instruments; reserves; reserve accounts; general intangibles;
money; deposit accounts; security agreements and debts secured thereby;
inventory and other personal property in all stages of manufacture,
processing, or production; equipment; machinery; furniture;
furnishings; fixtures; tools; supplies; motor vehicles of every kind
and description; patents, copyrights, trademarks; trade names; trade
styles; display materials; negotiable and
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non-negotiable documents of title now owned or hereafter acquired;
books and records (including, but not limited to computer tapes, disks,
programs, and other things upon which or in which such books or records
are stored or maintained) together with all equipment, machinery, and
inventory containing, or used in connection with the use, preparation,
or maintenance of such books and records; all substitutions,
replacements, additions, accessions, proceeds, and products of any of
the foregoing, whether or not due to voluntary or involuntary
disposition or dissolution, including without limitation money, deposit
accounts, goods, tax refunds, other tangible and intangible property,
and insurance and the proceeds thereof covering or relating to any of
the foregoing.
As used in this agreement, and subject to Paragraph B above, the terms
"Collateral" and "Property" shall mean and include, and the security interest
hereunder shall cover and extend to, all of the aforementioned Property, as well
as any accessions, additions, and attachments thereto and the proceeds and
products thereof, including without limitation all cash, general intangibles,
accounts, inventory, equipment, fixtures, notes, drafts, acceptances,
securities, instruments, chattel paper, insurance proceeds payable because of
loss or damage, or other property, benefits, or rights arising therefrom or
traceable thereto, and in and to all returned or repossessed goods arising from
or relating in any way to any of the property described herein, or other
proceeds of any sale or other disposition of such property.
D. REPRESENTATIONS, WARRANTIES, AND COVENANTS OF DEBTOR. Debtor hereby
represents, warrants, and covenants as follows:
(1) Debtor is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware.
(2) Debtor has the power and authority to conduct all of its business
activities, to own and lease all of the properties owned and leased by
it, and to carry on its business as and in the places where such
properties are now owned or leased, or such businesses are now
conducted.
(3) Debtor has the authority to enter into this agreement, has properly
executed this agreement and all other Obligation Documents which Debtor
is obligated or agreed to execute under the Acquisition / Merger
Agreement, is not currently in default under any of the Obligation
Documents, and is able to perform all of its duties and obligations
thereunder.
(4) Debtor has executed all other documents which Debtor is obligated or
agreed to execute under any other agreements to date with CDMP, is not
currently in default under any of such other documents, and is able to
perform all of its duties and obligations thereunder.
(5) All documents related to the Property which have been furnished by
Debtor to Secured Party were originals or true and correct copies of
originals.
(6) Debtor shall notify Secured Party as and when any debts, accounts,
rents, royalties, and obligations constituting a part of the Property
accrue; and Debtor shall notify Secured Party, immediately upon notice
thereof, of any dispute of the debts, accounts, rents, royalties, and
obligations constituting a part of the Property and of any complaints
regarding the goods, services, or other matters which are the basis of
such debts, accounts, rents, royalties, and obligations.
(7) Debtor shall execute and deliver to Secured Party such other and
further documents as Secured Party, in its sole discretion, shall deem
necessary or convenient to effect the purposes of this instrument or of
any of the Obligation documents.
(8) (a) Neither Debtor, nor any surety or guarantor for Debtor, shall do
anything to hinder or delay the collection or enforcement of any debts,
accounts, rents, royalties, and obligations constituting a part of the
Property. Debtor shall take any steps requested by Secured Party to
collect or aid in the collection or enforcement of the debts, accounts,
rents, royalties, and obligations constituting the Property; and Debtor
shall make every diligent effort to collect or enforce the debts,
accounts, rents, royalties, and obligations constituting a part of the
Property, all for the benefit of Secured Party.
(b) Debtor shall not sell, convey, mortgage, pledge, or otherwise
dispose of or encumber the Property nor any portion thereof, nor any
of the Debtor's right, title, or interest therein, without first
securing the written consent of the Secured Party.
(9) Debtor shall notify Secured Party promptly upon notice of any material
change in the status of any one or more of Debtor, any subsidiary or
affiliate of Debtor (including without limitation MegaWorld, Inc., ITS
Telephony, Castello Torre Xxxxx, Xxxxxxxx Xxxxx Enterprises Srl,
Fairway Beech Corporation, and ITM Group, Inc.), any secured creditor
of Debtor (other than Secured Party), any surety or guarantor for
Debtor, or any of the debts, accounts, rents, royalties, and
obligations constituting a part of the Property.
(10) Neither this instrument nor any of the other Obligation Documents
conflict in any manner with any agreement of Debtor with, or obligation
of Debtor to, any third party, including without limitation with or to
any subsidiary, affiliate, or any creditor of Debtor.
(11) While this agreement remains in force, Debtor shall make its books,
debts, accounts, and records available to tax advisors, legal counsel,
and auditors of Secured Party, in the offices of Debtor or in the
offices of Secured Party in Xxxxxx County, Texas, at the election of
Secured Party, during normal business hours, at any time and from time
to time, upon notice of at least three (3) business days by Secured
Party. In order to assure itself of compliance hereunder by Debtor,
upon such notice, Secured Party shall have the right to audit the
books, debts, accounts, and records of Debtor, at the expense of
Debtor, which expense shall be considered an advance hereunder by
Secured Party subject to immediate reimbursement by Debtor upon invoice
to Debtor. Debtor shall make any responses to any such audit within 15
business days after receipt of the audit report from Secured Party.
(12) While this agreement remains in force, Debtor shall notify Secured
Party of all agreements between Debtor and any creditor or creditors of
Debtor; and upon the request of Secured Party, Debtor shall furnish to
Secured Party's legal counsel and/or auditors, as directed by Secured
Party, true and correct copies of all agreements between Debtor and any
creditor or creditors of Debtor.
(13) While this agreement remains in force, Debtor shall deliver to Secured
Party true and correct copies of all reports, statements, and other
financial documents furnished to any other creditor or creditors of
Debtor, as and when the same are furnished to the other creditor or
creditors.
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(14) While this agreement remains in force, Debtor shall deliver to Secured
Party notice of such default, within three (3) days of the occurrence
of any default hereunder by Debtor, and of any default under any of the
other Obligation Documents by Debtor, or by any other obligor owing any
duty or obligation to any of CDMP or the Other Shareholders.
E. EVENTS OF DEFAULT. Debtor shall be in default under this agreement
upon the occurrence of any one or more of the following events or conditions:
(1) The occurrence of any default under the terms and conditions of any of
the Obligation Documents, including without limitation this agreement,
or any extensions, renewals, modifications, and rearrangements thereof;
(2) Failure by Debtor to perform any duty or obligation hereunder or under
any of the other Obligation Documents;
(3) Failure by surety or guarantor of Debtor to perform any duty or
obligation hereunder or under any of the Obligation Documents;
(4) (a) Levy upon or seizure of, or attempted levy upon or seizure of, any
of the Collateral to satisfy a claim of any third party;
(b) The transfer by Debtor of any asset of substantial value for less
than fair market value;
(5) The attachment hereafter to the Collateral, or any part or parts
thereof, of any lien or security interest other than the following
encumbrances ("Permitted Encumbrances" herein): (a) the lien or liens
securing the Secured Obligations, (b) the statutory lien for ad valorem
taxes for the current year and not yet delinquent, (c) any lien or
security interest already attached to the Collateral and properly
perfected as of the date of this agreement, and (d) any lien for state
sales tax obligation which is satisfied within one hundred twenty (120)
days of the inception of such lien.
(6) If any material representation or warranty made by Debtor regarding
Debtor, in, under, or pursuant to the Obligation Documents, or any of
them, or any other document or documents executed in connection
therewith shall be false, erroneous, or misleading in any material
respect, or if there shall be by any of the same an omission of or
failure to disclose a material fact in relation to the Secured
Obligations, or any of them, including without limitation audits and
reports thereunder and responses thereto, regarding the Secured
Obligations, or any of the same, or any of the Property;
(7) If Debtor or any surety or guarantor for Debtor shall (a) be
adjudicated a bankrupt or insolvent, (b) seek, consent to, or not
contest the appointment of a receiver or trustee for itself or for all
or any part of its property, (c) file a petition seeking relief under
the bankruptcy, arrangement, reorganization, or other debtor relief
laws of the United States or any state or any other competent
jurisdiction, (d) make a general assignment for the benefit of its
creditors, or (e) admit in writing its inability to pay its debts as
they mature;
(8) If either (a) any creditor or obligee files a petition putting Debtor
or any surety or guarantor for Debtor in involuntary bankruptcy, or (b)
a court of competent jurisdiction enters an order, judgment, or decree
appointing, without the consent of Secured Party, a receiver or trustee
for Debtor or any guarantor, or for all or any part of its Collateral,
and (c) such petition, order, judgment, or decree shall not be and
remain dismissed or stayed within a period of fifteen (15) days after
its entry;
(9) Death, incapacity, dissolution, business failure, merger, or similar
event affecting the Debtor, any subsidiary, or affiliate of Debtor, or
any surety or guarantor for Debtor, any subsidiary, or affiliate of
Debtor, or any of the Required Shareholders, as defined in the
Acquisition / Merger Agreement, or any other surety, endorser, or
guarantor of the Secured Obligations, or any of them;
(10) If either (a) title of the Debtor to any or all of the Collateral or
(b) the status of this Security Agreement as a first and prior lien and
security interest on the Collateral, except as to the Permitted
Encumbrances, shall be challenged or endangered by any party
whomsoever, in any manner whatsoever, and Debtor shall fail to cure the
same immediately upon the earlier of (i) notice to Debtor of such
challenge or endangerment, or (ii) demand for cure by Secured Party;
(11) The occurrence of any default or event of default, as defined or
described in any of the other Obligation Documents, or under any other
document or documents under which Debtor is obligated in any manner
whatsoever to Secured Party, regardless of whether such obligation
relates in any manner to the Obligation Documents or obligations
thereunder;
(12) The occurrence of any default or event of default under any other
agreement with CDMP, including without limitation agreements under
which any funds have been, or will in the future be, advanced to Debtor
by TBS, CDMP, or any of the Other Shareholders; or
(13) The occurrence hereafter of any event, act, or omission whatsoever
which leads or causes Secured Party to have any doubt about, or to be
insecure in its expectation of, the ability of Debtor, or of any surety
or guarantor for Debtor, or of Texas TBS, Inc., to perform any duty or
obligation under any of the Obligation Documents, which doubt and
insecurity shall each be at Secured Party's sole discretion, whether or
not such discretion is exercised in a reasonable manner.
F. REMEDIES. Upon the occurrence of an event of default, Secured Party,
at its option, shall have and be entitled to exercise any one or more of the
following remedies:
(1) Secured Party shall have all of the rights and remedies provided for in
this agreement and in any other agreements between Secured Party and
Debtor including without limitation the Obligation Documents, the
rights and remedies under the Texas Business and Commerce Code, and all
rights and remedies available at law and in equity, all of which shall
be cumulative, including without limitation the right to take
possession of the Collateral, or any of the same, with or without
process of law, and, in this connection, to enter any premises, without
breach of the peace, where the Collateral is located to remove the
same, to render it unusable, or to dispose of the same on said premises
and, in this connection, to notify any one or more account debtors on
the accounts constituting a part of the Property and to require any of
such account debtors to make payment directly to Secured Party on such
terms and conditions as Secured Party, in its sole discretion, deems
appropriate, or to require, at Secured Party's discretion, any such
account debtors
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to direct payments into a bank lockbox for handling by Secured Party.
Any public sale of the Collateral after repossession shall be held only
after public notice of no less than five (5) days, and shall be held in
a commercially reasonable manner. Debtor hereby waives any requirement
for public notice of more than five (5) days for any such sale and
hereby agrees that five (5) days is a reasonable period for notice.
(2) Debtor shall be liable for and agrees to indemnify Secured Party from
and against, and to pay promptly, all loss, cost, risk, and expense,
even if caused by Secured Party's own sole or concurrent negligence,
incurred by Secured Party in enforcing its rights and remedies
hereunder, including without limitation all expenses incurred in
retaking, holding, testing, repairing, improving, selling, leasing, or
disposing of the Collateral, and all expenses of notifying the said
account debtors and collecting therefrom, and including without
limitation reasonable attorney's fees and legal expenses incurred by
Secured Party, all of which expenses, together with interest thereon at
the rate of eighteen per cent (18%) per annum until paid, shall
constitute additional obligations of Debtor under Paragraph A above and
shall be secured by this agreement and the security interest created
hereby.
(3) Proceeds received by Secured Party from disposition of the Collateral
shall be applied toward Secured Party's expenses, including without
limitation reasonable attorney's fees, and other Secured Obligations of
Debtor in such order or manner as Secured Party may elect. Debtor shall
be entitled to any surplus, if one results after lawful application of
the proceeds; and Debtor shall remain liable for any deficiency.
(4) The rights and remedies of Secured Party hereunder shall be cumulative,
and the exercise of any one or more of the same shall not be deemed an
election of rights or remedies or a waiver of any other right or
remedy. Delay by Secured Party in invoking any remedy shall not be a
waiver of such remedy, but shall merely be a temporary forbearance.
Failure by Secured Party to invoke any available remedy in the event of
a particular breach shall not constitute a waiver of that or any other
remedy for that or any other breach, whether similar or dissimilar. It
is understood by Debtor that Secured Party shall have the right, but
not the obligation, from time to time temporarily to forbear from
invoking any remedy or remedies provided for herein, and Debtor wishes
to encourage such forbearance; therefore, Debtor covenants that no such
forbearance shall be interpreted as a waiver of any remedy, and Debtor
expressly agrees that after any such forbearance, for no matter how
long, Secured Party may invoke any remedy or remedies provided for
herein.
G. MISCELLANEOUS. In addition to the foregoing terms and conditions,
the parties hereto agree as follows:
(1) Debtor and each maker, surety, guarantor, endorser, and other party
liable in any capacity respecting the Secured Obligations, severally
waive demand for payment or performance, presentation for payment,
presentment, grace, dishonor, protest, notice of any kind (including,
but not limited to, notice of dishonor, notice of nonpayment, notice of
protest, notice of intention to accelerate and notice of acceleration),
and diligence in collecting and diligence in bringing suit against any
party hereto, or against any one or more sureties, guarantors, or
endorsers, and agree (i) to all extensions, partial payments, renewals,
modifications, and rearrangements of the Secured Obligations, the
Obligation Documents, or any obligation thereunder, with or without
notice, before or after maturity, (ii) to any substitution, exchange,
or release of any security now or hereafter given for any of the
Secured Obligations, (iii) that no judgment taken against any party
shall terminate any lien, security interest, or other interest of
Secured Party in any collateral securing any of the Secured
Obligations, (iv) to the release of any party primarily or secondarily
liable on any of the Secured Obligations, and (v) that it will not be
necessary for Secured Party, in order to enforce any of the Secured
Obligations, to first institute or exhaust Secured Party's remedies
against Debtor or against any other party liable therefor or against
any security for any of the Secured Obligations.
(2) Debtor and each maker, surety, guarantor, endorser, and other party
liable in any capacity respecting the Secured Obligations, severally
release Secured Party, its officers, directors, employees, and third
parties acting as agents for Debtor, and agree to hold them, and each
of them, harmless from and against, any loss, cost, risk, expense, and
liability arising from any acts under this agreement or in furtherance
of any rights and privileges granted or created hereunder or under any
of the Obligation Documents, whether as agent or attorney-in-fact or
otherwise, whether of omission or commission, and whether based upon
any error of judgment or mistake of law or fact, except for willful
misconduct.
(3) This agreement shall constitute a financing statement, and any carbon,
photographic, or other reproduction hereof or of any other financing
statement signed by Debtor or by Debtor's agent hereunder is sufficient
as a financing statement for all purposes, including without limitation
the filing for record in any state where permitted by the laws of such
state.
(4) POWER OF ATTORNEY. DEBTOR HEREBY APPOINTS SECURED PARTY AS THE AGENT
AND ATTORNEY-IN-FACT OF DEBTOR for the purpose of executing in the
name, place, and stead of Debtor, and on behalf of Debtor, any
financing statement (other than financing statements perfecting
purchase money security interests, which shall be executed by Debtor),
necessary or useful, in the opinion of Secured Party, in giving
evidence or notice of, or in perfecting, any security interest provided
for herein or in any of the other Obligation Documents. At any time and
from time to time, Secured Party may delegate in writing the authority
under the power of attorney under this subparagraph to any one or more
third parties to act as agent and attorney-in-fact for Debtor
hereunder. When acting as agent hereunder, neither Secured Party nor
any third party so acting shall be a fiduciary to Debtor or have any
fiduciary duty to Debtor by reason thereof, and the same shall have no
liability to Debtor for any act or omission by any of the same in the
capacity of agent except for the agent's liability for the agent's own
willful misconduct.
(5) The security interest hereby granted and all of the terms and
conditions of this agreement shall constitute a continuing agreement;
and they shall continue in full force and effect and remain effective
between the parties hereto until the earliest of either (a) the
expiration of four (4) years after payment in full and complete
satisfaction of all obligations of Debtor described herein, or (b) the
payment in full and complete satisfaction of all such obligations and
the giving by Debtor of ten (10) days written notice of the revocation
of this agreement, or (c) the release in writing by Secured Party of
this agreement and the obligations hereunder.
(6) This security agreement and the liens and security interests provided
for herein shall extend to and secure the payment of any and all future
advances and future extensions of credit made by Secured Party to or
for Debtor.
(7) Debtor covenants that for so long as the debt and other obligations
secured hereby shall remain unpaid or unsatisfied in any part, Debtor
shall incur no debt or other obligations, except in the ordinary course
of business, other than the
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Permitted Encumbrances, without the express written consent of Secured
Party, which consent may be withheld or delayed in any manner,
reasonable or unreasonable.
(8) Debtor shall pay, in full before the same shall become delinquent, all
ad valorem taxes assessed against the Collateral. Secured Party shall
have the right, but not the obligation, to pay any tax or debt for
which Debtor is obligated and to be subrogated to all of the rights
against Debtor of the assessing authority or creditor, including
without limitation any liens and security interests securing the same,
and any such payment by Secured Party shall also be a future advance to
Debtor for purposes of this agreement.
(9) It is the intention of the parties hereto to conform strictly to
applicable usury laws. Accordingly, if the transactions contemplated
hereby or under any of the Obligation Documents would be usurious under
applicable law, then, in that event, notwithstanding anything to the
contrary in any agreement entered into in connection with or as
security for the obligations created or secured hereby, it is agreed as
follows: (a) the aggregate of all consideration which constitutes
interest under applicable law that is taken, reserved, contracted for,
charged, or received under this agreement or under any of the
Obligations Documents or otherwise in connection with this agreement
shall under no circumstances exceed the maximum amount of interest
allowed by applicable law, and any excess shall be credited on the
Secured Obligations by Secured Party (or, if all of the Secured
Obligations shall have been paid and satisfied in full, refunded to the
Debtor); and (b) in the event that maturity of any of the Secured
Obligations is accelerated by reason of an election by Secured Party
resulting from any default hereunder, under the MegaWorld Promissory
note, under any of the other Obligation Documents, or otherwise, or in
the event of any required or permitted prepayment, then such
consideration that constitutes interest may never include more than the
maximum amount allowed by applicable law, and excess interest, if any,
provided for in this agreement or otherwise shall be canceled
automatically as of the date of such acceleration or prepayment and, if
theretofore prepaid, shall be credited on the Secured Obligations (or
if the Secured Obligations shall have been paid and satisfied in full,
refunded to the Debtor). It is further agreed that without limitation
of the foregoing, all calculations of the rate of interest contracted
for, charged, or received under this agreement, under the MegaWorld
Promissory Note, under any of the other Obligation Documents, or under
such other documents which are made for the purposes of determining
whether such rate exceeds the Highest Lawful Rate, as herein defined,
shall be made, to the extent permitted by applicable law, by
amortizing, prorating, allocating, and spreading and averaging during
the period of the full stated term of the debts and obligations
evidenced by this agreement, the MegaWorld Promissory Note, any of the
other Obligation Documents, or otherwise, all interest at any time
contracted for, charged, or received from the Debtor or otherwise by
Secured Party in connection with such debt or obligation. The term
"Highest Lawful Rate" shall be the highest non-usurious contract rate
of interest which Secured Party may charge, collect from, or contract
for with Debtor under applicable law and in regard to which Debtor
could not successfully assert a claim or defense of usury.
(10) Notices. Any notice under or by reason of this agreement shall be in
writing and, except as herein provided, shall be effective upon
delivery to the party to whom it is intended or upon either (a) the
mailing thereof enclosed in a proper mailing wrapper addressed to the
party for whom it is intended, via certified or registered mail,
postage prepaid, to the address for that party stated above or such
subsequent address for that party hereunder, or (b) the depositing
thereof with, or delivery into the possession of, a commercial delivery
service, so wrapped and addressed, with the charges arranged to be paid
by shipper, or (c) the transmission thereof by telecopier or facsimile
machine, so long as a confirmation copy is thereafter mailed to the
party for whom it is intended within three (3) days of completion of
the transmission. The addresses of the parties for purposes of notice
shall be the addresses set out herein for the respective parties,
subject to notice of change of address as herein provided, except that
in the case of notice of change of Debtor's address, the notice may not
be effective until fifteen (15) days after the same shall have been
received by Secured Party, at the option of Secured Party.
(11) Governing Law; Jurisdiction and Venue. The laws of the State of Texas
shall govern the validity, construction, enforcement, and
interpretation hereof and the obligations, liabilities, rights,
remedies, powers, and privileges of the parties hereto under this
agreement. Each party submits itself to the personal jurisdiction of
the state and federal courts sitting in Houston, Xxxxxx County, Texas.
This agreement is executed by the parties in Xxxxxx County, Texas;
performance by Debtor is due in Houston, Xxxxxx County, Texas; and
venue may lie for all disputes arising hereunder in the federal and
state courts sitting in Houston, Xxxxxx County, Texas.
(12) Entire Agreement; Joint Preparation. This agreement represents the
entire agreement between the parties hereto concerning the subject
matter hereof and supersedes all prior agreements as they relate to the
subject matter hereof. This agreement is the result of extended
negotiations between the parties, and has been jointly prepared. Each
party acknowledges being separately represented by counsel, or having
the opportunity for such representation and waiving the same, in all
matters regarding this agreement.
(13) Amendment. This agreement may be modified or amended only by written
instrument executed by the parties hereto.
(14) Binding Effect; Assignment. This agreement shall inure to the benefit
of and be binding upon the parties hereto, their respective heirs,
successors, and assigns. DEBTOR SHALL NOT SELL, TRANSFER, OR OTHERWISE
DISPOSE OF THE COLLATERAL EXCEPT IN THE ORDINARY COURSE OF BUSINESS
WITHOUT THE EXPRESS WRITTEN CONSENT OF SECURED PARTY, which consent may
be withheld without cause and at the sole discretion of Secured Party,
whether reasonably or unreasonably. The rights of Secured Party shall
be freely assignable, in whole or in part, and at any time and from
time to time, including without limitation in order to extend to and
protect any obligees under any of the Secured Obligations.
(15) Nothing herein shall be deemed as requiring Debtor to purchase
products, goods, or services from Secured Party or as controlling the
charges that Debtor may make to its customers.
IN WITNESS WHEREOF, this instrument is executed effective the date
first above written.
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Security Agreement and Financing Statement
By Texas TBS, Inc., as Debtor Secured Party's Initials:/s/CDM
6
DEBTOR:
ATTEST: MEGAWORLD, INC.
By: /s/ Xxxxxx Xxxxxxxxx By: /s/ Xxxxx X. Roll
----------------------- ---------------------------------------------
Name: Name: Xxxxx X. Roll
Office: Office: President
SECURED PARTY:
/s/ Xxxxxxx X. XxXxxxx
------------------------------------------------
XXXXXXX X. XxXXXXX, Individually and as
Agent and Attorney-in-Fact for Xxxx X. XxXxxxx,
Xxxx Xxxxx XxXxxxx, Xxxx Xxxx XxXxxxx, and
JoyVer Investments, L.L.C.
ACKNOWLEDGMENTS
STATE OF New York )
COUNTY OF New York )
This instrument was acknowledged before me on November 11, 1998, by
Xxxxx X. Roll, as President (title of officer) of MEGAWORLD, INC., a Delaware
corporation, on behalf of said corporation.
My commission expires: /s/ Xxx Xxxxxx
May 8, 1999. ------------------------------------------------
Notary Public in and for the State of New York.
STATE OF New York )
COUNTY OF New York )
This instrument was acknowledged before me on November 11, 1998, by
XXXXXXX X. XxXXXXX, individually and as attorney-in-fact on behalf of Xxxx X.
XxXxxxx, Xxxx Xxxxx XxXxxxx, Xxxx Xxxx XxXxxxx, and JoyVer Investments, L.L.C.
My commission expires: /s/ Xxx Xxxxxx
May 8, 1999. ------------------------------------------------
Notary Public in and for the State of New York.
[w7 tbs]tbstxsecag
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Security Agreement and Financing Statement
By Texas TBS, Inc., as Debtor Secured Party's Initials:/s/CDM
