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EXHIBIT 10.4
SECURITY AGREEMENT
FOR VALUE RECEIVED, Maxxis Group, Inc. (hereinafter "Debtor")
and World Access, Inc. (hereinafter "Secured Party") hereby agree as follows:
1. SECURITY INTEREST
A security interest pursuant to the Uniform Commercial Code is
hereby created and provided for Secured Party in and attaches to the personal
property (hereinafter "Collateral") described below to secure payment and
performance of Debtor's Obligations including the Indebtedness as defined in
Paragraph 3 below.
2. COLLATERAL
The Collateral of Debtor is set forth on Exhibit "A" hereto,
which is made a part hereof by this reference, and includes all additions and
accessions thereto and replacements thereof with respect to all such Collateral;
and all products and proceeds of the property described on Exhibit A, including
without limitation, money, deposit accounts, goods, insurance proceeds and other
tangible or intangible property received upon the sale or other disposition of
the foregoing.
3. DEFINITIONS
Any and all terms used in this Agreement shall be construed
and defined in accordance with the definition of such terms under the Uniform
Commercial Code as in effect in the State of Georgia and the specific
definitions provided herein:
(A) "Indebtedness" shall mean all debts, obligations and
liabilities now existing or hereafter arising, whether absolute or contingent,
direct or indirect, of Debtor to Secured Party arising under that certain Asset
Purchase Agreement dated as of September 29, 1998, to which Debtor and Secured
Party are Parties ("Asset Purchase Agreement").
(B) "Debtor's Obligations" shall mean the Indebtedness
defined in Paragraph 3(A) hereof, all sums and expenses, including without
limitation attorneys' fees, collection, legal and receiver's expense, advanced
or incurred by Secured Party for or in connection with the Collateral or any
obligation of Debtor, and all extensions and renewals thereof, and the
warranties agreements and liabilities undertaken by Debtor herein and in any
other present or future agreement, instrument or guaranty delivered to or made
by Debtor in favor of Secured Party.
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4. DEBTOR'S REPRESENTATIONS, WARRANTIES AND AGREEMENTS
Now, and for so long as any Debtor's Obligations shall remain
outstanding, Debtor warrants, represents, covenants and agrees that:
(A) All of the Collateral is owned by Debtor alone free and
clear of all liens, claims, security interests or encumbrances, except those
granted to Secured Party.
(B) Debtor shall indemnify and save Secured Party harmless
from all loss, cost, damage, liability or expense, including without limitation,
reasonable attorneys' fees, that Secured Party may sustain or incur by reason of
any matter arising out of or relating to this Agreement, including without
limitation, enforcing or collecting Debtor's Obligations or defending or
protecting the Collateral, Secured Party's security interest therein or the
priority thereof.
(C) Secured Party may, at its option, but is not obligated to,
discharge any taxes, liens, security interests or other encumbrances at any time
levied or placed on the Collateral and may pay for the maintenance and
preservation of the Collateral. Debtor shall reimburse Secured Party on demand
for each amount so paid by Secured Party, with interest thereon at the interest
rate specified the applicable evidence of Indebtedness. Any payment made by
Secured Party shall not constitute an agreement to make similar payments in the
future or a waiver of any default under this Agreement. Secured Party need not
inquire as to, or contest the validity of, any expense, tax, security interest,
encumbrance or lien, and the receipt of the usual official notice requiring the
payment thereof shall be conclusive evidence that the same was validly due and
owing.
(D) Debtor shall comply with the terms and conditions of any
leases covering the premises wherein the Collateral is located, and any orders,
ordinances, laws or statutes of any governmental body having jurisdiction with
respect to such premises or the conduct of business therein.
(E) Debtor shall at its expense, when requested by Secured
Party execute and deliver to Secured Party any written document which Secured
Party deems necessary or desirable to protect the interests or rights of Secured
Party and do any other acts necessary or advisable to effectuate more fully the
purposes and provisions of this Agreement, including without limitation,
executing and filing financing or continuation statements in form and substance
satisfactory to Secured Party.
(F) Debtor's books, and records fully and completely reflect
all of its assets, liabilities (both absolute and contingent), profits and
losses and are kept in the ordinary
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course of business in accordance with generally accepted accounting principles
consistently applied. All information contained in Debtor's books and records is
and shall continue to be true and correct.
(G) Debtor has the legal power and authority to enter into
this Agreement and to perform and discharge all obligations hereunder. The
execution of this Agreement and its performance will not violate any loan or
security agreement or other contractual arrangement to which Debtor is a party
or by which Debtor is bound. This Agreement has been duly authorized by all
necessary corporate action, and when executed and delivered, will be a valid and
binding obligation of Debtor enforceable in accordance with its terms.
(H) At all times, Debtor shall maintain the Collateral for the
benefit of Secured Party.
(I) Debtor shall properly care for, house, store and maintain
Collateral in good condition, free of misuse, abuse, waste and deterioration.
Debtor shall not permit anything to be done that may impair, or fail to do
anything necessary or advisable to preserve, the value of Collateral.
(J) All agreements, covenants and undertakings by Debtor to
Secured Party set forth in this Agreement or in any other writing shall be
promptly performed by Debtor according to their terms.
5. EVENTS OF DEFAULT
Debtor shall be in default under this Agreement upon the
happening of any one of the following (each an "Event of Default"):
(A) Failure by Debtor to perform its obligations to Secured
Party pursuant to Section 3 or Section 8 of the Asset Purchase Agreement.
(B) Dissolution, termination of the existence or insolvency of
Debtor; the appointment of a trustee, receiver or conservator for the property
of Debtor; any assignment for the benefit of creditors of Debtor, or the
commencement of a proceeding under any provision of any bankruptcy or insolvency
law by or against the Debtor, including without limitation, requests,
applications, petitions or proceedings seeking an extension, reorganization,
compromise or any other relief whatsoever under any of said laws.
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6. SECURED PARTY'S RIGHTS, POWERS AND REMEDIES
(A) Upon the occurrence of an Event of Default, or any event
which upon notice or passage of time or both would constitute an Event of
Default, and notwithstanding any other agreement to the contrary, Secured Party
may do any one or more of the following, without presentment, notice, or demand
of any kind:
(1) Make such payments and do such acts as Secured Party
considers necessary or convenient to protect its security interest in the
Collateral.
(2) Prior to the disposition of any Collateral, store,
process, repair or recondition it or otherwise prepare it for disposition in any
manner and to the extent Secured Party deems appropriate, and in connection
therewith and with the disposition of any part or all of the Collateral, use any
trademark, trade name, trade style, copyright, patent or technical process used
by Debtor.
(3) Require Debtor to assemble any part or all of the
Collateral and make it available to Secured Party at a place to be designated by
Secured Party. Debtor agrees that Secured Party, by itself or its agent, may
without notice to any person and without judicial process of any kind, enter
into any premises or upon any land (including access roads and rights of way)
owned, leased or otherwise under the real or apparent control of Debtor or any
agent of Debtor where Collateral may be or where Secured Party believes
Collateral may be and disassemble, render unusable, disconnect and separate all
Collateral from any other property and/or repossess and remove all or any item
of Collateral. Debtor will not hinder or delay Secured Party or its agent in any
way and will, if requested, assist Debtor or its agent in disassembling and/or
removing Collateral. Debtor expressly waives all further rights to possession of
the Collateral after default and all claims for damages related to such removal,
disassembling, entering and/or repossession.
(4) Foreclose or otherwise enforce Secured Party's
security interest in any manner permitted or provided for in this Agreement or
by applicable law.
(5) Sell, lease or otherwise dispose of any part or all of
the Collateral at one or more public or private sales or auctions, for cash or
on credit, in such manner and at such place or places (including Debtor's
premises) as Secured Party in its sole discretion deems commercially reasonable,
and Secured Party may bid and become purchaser at any sale. It is not necessary
that the Debtor be present at any such sale. Any deficiency which exists after
disposition of the Collateral as provided above shall be paid immediately by
Debtor.
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(B) Secured Party's rights, powers and remedies under this
Agreement, all other agreements between Debtor and Secured Party, at law, in
equity or otherwise shall be cumulative and not alternative. Secured Party shall
have all other rights, powers and remedies provided under the Uniform Commercial
Code and any other applicable law to the extent not inconsistent with the terms
of this Agreement.
7. WAIVER OF DEBTOR
Debtor waives any right to require Secured Party to proceed
against any person or entity, or to exhaust any Collateral or to pursue any
remedy in Secured Party's power whatsoever. Secured Party shall not be required
to make presentment, demand or protest or, except as may otherwise be provided
in this Agreement, give any notice or take any action to preserve rights against
prior parties with respect to any of the Collateral or in connection with any
part of Debtor's Obligations.
8. WAIVER OF DEFAULTS
Secured Party may, in the exercise of its sole discretion,
waive a default, or cure a default at Debtor's expense. Any such waiver shall
not constitute a waiver of other defaults or of the same kind of default
occurring at another time, or a modification of this Agreement.
9. SECURED PARTY AS ATTORNEY IN FACT
Upon the happening of an Event of Default or an event which,
with the passage of time or giving of notice, or both, would constitute an Event
of Default, Secured Party may, as Debtor's attorney in fact, and Debtor hereby
irrevocably appoints, authorizes and empowers Secured Party, subject to such
powers as have been granted to secured lenders existing at the time of the
execution of this Agreement, to, endorse and affix Debtor's name to or upon any
check, draft, note, instrument, or other writing relating to the collection of
any Collateral or upon any check or other instrument given in payment thereof,
or upon any omitted assignment, notification of assignment or demand relating to
Collateral and upon all other instruments and writings required to assert and
protect Secured Party's rights in the Collateral, including any change of
address to the United State Post Office; these powers, being coupled with an
interest, shall be irrevocable for so long as Debtor's Obligations remain
unsatisfied.
10. NOTICES
All notices given by Debtor or Secured Party to the other
under or relating to this Agreement shall be in writing and either delivered or
sent by first class mail, with postage
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prepaid, addressed to Debtor or Secured Party, as appropriate, at its address
set forth herein, or to such other address as the parties here to may from time
to time specify in writing.
11. GENERAL PROVISIONS
(A) This Agreement together with any other instrument,
document or other agreement executed by the parties hereto constitute the entire
agreement between Debtor and Secured Party. No modification, amendment or change
in this Agreement shall be binding upon Secured Party unless in writing and
signed by, an authorized officer of Secured Party.
(B) This Agreement shall be binding upon and inure to the
benefit of the respective successors and assigns of Debtor and Secured Party;
provided, however, that Debtor may not assign this Agreement without Secured
Party's prior written consent, and any purported assignment by Debtor without
such consent shall be absolutely void.
(C) This is a continuing grant of security interest and
applies to all past, present and future Indebtedness, Debtor's Obligations, and
transactions of any kind between Debtor and Secured Party, whether or not such
transactions continue, increase, decrease or create new indebtedness after or
before payment of prior indebtedness; and whether or not such transactions are
contemplated by the parties at the time of the granting of this security
interest; and notwithstanding the incapacity or bankruptcy of, or other event or
proceedings affecting, Debtor.
(D) Debtor (i) will give Secured Party prior written notice of
any change of place of business and address thereof; and (ii) hereby assigns to
Secured Party any return or unearned premium becoming due on any insurance
covering Collateral, directs the insurer to pay same to Secured Party, and
irrevocably appoints Secured Party as Debtor's attorney-in-fact to cancel such
insurance and to endorse and sign any instrument payable to Debtor or required
to obtain such insurance premium or proceeds.
(E) The singular includes the plural. If there is more than
one Debtor, their obligations and agreements hereunder are joint and several,
and delivery or other accounting of Collateral (in whatever form) to any one of
them shall discharge Secured Party of all liability therefor. If Debtor is a
married person recourse may be had against his/her separate property for his/her
indebtedness and obligations to Secured Party.
(F) Each provision of this Agreement shall be severable from
each other provision of this Agreement for the purpose of determining the legal
enforceability of any specific provision.
(G) Time is of the essence of this Agreement.
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(H) Paragraph headings and paragraph numbers have been set
forth herein for convenience only.
(I) The validity of this Agreement, its construction,
interpretation and enforcement and the rights of the parties hereunder and
concerning the Collateral shall be determined under and according to the laws of
the State of Georgia.
This Security Agreement is entered into as of the 29th day of
September, 1998.
Maxxis Group, Inc.
By: /s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx, President
By /s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx, Secretary
World Access, Inc.
By: /s/ Xxxxxxx X. Xxxx
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Xxxxxxx X. Xxxx, Treasurer
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EXHIBIT A
Collateral:
1. The "1 -plus" customer base of Maxxis Group, Inc. and its
subsidiaries, and all related contracts, reports, documentation,
manuals, orders, etc.
2. All CIC codes and all tariffs, licenses, permits, authorizations,
etc. of Maxxis Group, Inc. and its subsidiaries, as identified on
the attached schedule.
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EXHIBIT A-1
LICENSES
All licenses described on the attachment hereto.
All numerical access codes which customers use to obtain access to
Seller's services including, but not limited to, all Carrier Identification
Codes described on the attachment hereto.
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SECOND DRAFT SEPTEMBER 28, 1998 INTRASTATE AUTHORITY PRIVILEGED AND CONFIDENTIAL
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GOVERNMENTAL AGENCY REFERENCE EFF. DATE AUTHORITY GRANTED
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Certificate of Public Convenience and
1. Alabama Public Service Necessity authorizing operations as a
Commission Docket No. 22594 10/5/92 provider of Telephone Toll Resale Service
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Authority to provider interexchange
telecommunications services via
Registration filed 6/24/92. Subsequent
Reseller Certification Application filed
2. Arizona Corporation 11/30/95 in Docket #T-02677A-92-0181
Commission Registration 6/24/92 (still pending).
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Certificate of Public Convenience and
Necessity to operate as a reseller of
3. Arkansas Public Service competitive intrastate long distance toll
Commission Docket No. 92-173-U 8/5/92 services.
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Certificate of Public Convenience and
Necessity granting authority to operate
as a reseller of the InterLATA
4. California Public telecommunication service offered by
Utilities Commission Application No. 00-00-000 3/10/93 communication common carriers.
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See copy of California PUC 1.95-10-007
Settlement Agreement attached herein
effective September 4, 1996 when it was
signed by the Commission; a copy of the
September 4, 1996 order is attached
" " " " herein.
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5. Colorado Public Authority to provide interexchange
Utilities Commission Registration 12/9/92 telecommunications services.
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Certificate of Public Convenience and
6. Delaware Public Necessity to provide intrastate
Utilities Commission Docket No. 94-187 12/20/94 telecommunications services to the public.
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7. District of Columbia Unregulated
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Non-dominant interexchange carrier
Certificate No. 3134. See Florida
8. Florida Public Service September 21, 1995 PSC Order accepting
Commission Docket No. 920732-TI 11/12/92 settlement attached herein.
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SECOND DRAFT SEPTEMBER 28, 1998 INTRASTATE AUTHORITY PRIVILEGED AND CONFIDENTIAL
Interim Certificate of Public Convenience
and Necessity to Resell Interexchange
Telecommunications Services. Interim
Certificate has recently expired.
Waiting for status response from Georgia
9. Georgia Public Service PSC staff which shall be shortly
Commission Docket No. 5426-U 5/2/95 forthcoming.
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Per Xxxxxx Xxxxxx September 28, 1998, 2 pm
CST, Cherry was granted another 12 month
Interim Certificate so that the Georgia PSC
could wait and see the outcome of Cherry's
Chapter 11 reorganization. In addition,
Xxxxxx Xxxxxx asked for some additional
information from Cherry. Waiting for
" " " " " confirmation and information requests fax
from Xxxxxx Xxxxxx.
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" " " " "
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10. Idaho Public Utilities Authority to provide interexchange
Commission Registration 8/16/92 telecommunications services
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Certificate of Interexchange Service
Authority granted to provide resold
11. Illinois Commerce interexchange IntraMSA and InterMSA
Commission File No. 92-0234 8/26/92 telecommunications services.
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TF 92-58 (Tariff) Reseller of interexchange
12. Iowa Utilities Board WRU-92-19 (Waivers) 3/31/92 telecommunications services.
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13. Kansas Corporation Docket No. 183.413-U Certificate of Convenience and Authority
Commission 93-CHRC-090-C 10/19/92 to resell telecommunication services.
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14. Commonwealth of
Kentucky Public Service Authority to resell intrastate
Commission Case No. 94-423 3/15/95 long-distance telecommunications services.
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Certificate of Authority to provide
15. Louisiana Public resold interexchange telecommunication
Service Commission Registration 7/23/92 services.
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16. Maryland Public Service Authorization to operate as a reseller of
Commission ML##s 44064 & 44478; TE-785 7/20/94 MTS and WATS telephone services.
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Cherry Communications, Inc.'s Mass.
Tariff No. 1 Allowed to go into effect as
17. Massachusetts filed to provide intrastate interexchange
Department of Public telecommunications services on a reseller
Utilities Registration 7/13/95 basis.
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SECOND DRAFT SEPTEMBER 28, 1998 INTRASTATE AUTHORITY PRIVILEGED AND CONFIDENTIAL
18. Michigan Public Service
Commission Registration 12/17/92 Resale Interexchange carrier
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Certificate of Public Convenience and
Necessity to provide InterLATA and
19. Mississippi Public IntraLATA toll telecommunications
Service Commission Case No. 95-UA-0095 4/6/95 services on a resale basis.
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20. Montana Public Service Authority to provide telecommunication
Commission Registration 12/10/92 services on a resale basis.
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Extension of Conditional Authority to
provide InterLATA and IntraLATA
Interexchange telecommunications
services. See copy of Conditional
Authority Order from the Nebraska PSC
21. Nebraska Public Service dated July 31, 1995; copy of the January
Commission Application No. C-1183 7/31/95 9, 1996 Nebraska PSC Order.
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Copy of the June 16, 1998 Nebraska PSC
Rule to Show Cause Order to Revoke
Cherry's Conditional Authority; and a
copy of Attorney Xxxx Xxxxxx'x (Cherry's
local Nebraska Attorney) July 29,1998
22. " " " " letter to the Nebraska PSC.
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Certificate of Public Convenience and
Necessity to operate as a reseller of
23. Nevada Public Service intrastate interexchange
Commission Docket No. 95-7018 9/21/95 telecommunications services.
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24. New Jersey Board of Authorization as a non-dominant
Public Utilities Registration 11/16/92 interexchange carrier.
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25. New Mexico State Certificate of Public Convenience and
Corporation Necessity for authority to provide public
Commission Docket No. 92-249-TC 12/27/94 intrastate telecommunications services.
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Certificate of Public Convenience and
Necessity to operate as a reseller of
telephone services via landline telephone
26. New York Public Service company or other common carrier
Commission Case No. 92-C-0585 8/27/92 facilities.
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Certificate of Registration No. 231 as
27. North Dakota Public Intrastate long distance
Service Commission Case No. PU-1346-95-121 4/12/95 telecommunications reseller.
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Certificate of Public Convenience and
28. Public Utilities Necessity to provide competitive
Commission of Ohio Case No. 94-1982-CT-ACE 5/22/95 telecommunication services.
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Registration authorizing interexchange
carrier service on December 11, 1992.
Subsequent application for Certificate of
Public Convenience and Necessity filed
29. Oklahoma Corporation 10/30/95, Case No. PUD-95-0000318 (still
Commission Registration 12/11/92 pending).
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SECOND DRAFT SEPTEMBER 28, 1998 INTRASTATE AUTHORITY PRIVILEGED AND CONFIDENTIAL
Application for authority to provide
30. Oregon Public Utility telecommunications services as a
Commission UM 489, Order No. 92-992 7/7/92 competitive provider.
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Certificate of Public Convenience to
31. Pennsylvania Public furnish service as a reseller of
Utility Commission Application A.310123 8/5/93 interexchange telecommunication service.
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Certificate of Public Convenience and
necessity to provide intrastate InterLATA
service on a one year probationary basis
issued 7/13/95. Order removing probation
32. South Carolina Public status and granting permanent status
Service Commission Docket No. 94-621-C 7/13/95 dated August 19, 1996.
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33. South Dakota Public Certificate of Authority to provide
Utilities Commission Docket No. TC95-059 4/23/96 intrastate telecommunications services
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Certificate of Convenience and Necessity
34. Tennessee Regulatory as an interexchange telecommunications
Authority Case Number 95-03214 10/13/95 reseller.
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35. Texas Public Utility Authority as a non-dominant interexchange
Commission Registration 9/22/92 carrier
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36. Utah Public Service Authority as a non-dominant interexchange
Commission Registration 12/16/92 carrier
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37. Virginia State Registration as a non-dominant
Corporation Commission Registration 12/8/92 interexchange carrier
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38. Washington Utilities Authorizing registration as a
and Transportation telecommunications company to provide
Commission Docket No. UT-930978 9/30/92 service.
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39. Public Service Certificate of Convenience and Necessity
Commission of West to provide resold telecommunications
Virginia Docket No. 95-0151-T-CN 7/11/95 services.
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40. Wisconsin Public Authorized to provide services as an
Service Commission Docket No. 7814-TI-101 3/30/95 Alternative Telecommunications Utility
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Cherry Communications
Incorporated's CIC
(Carrier Identification
Code) is 270.
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