SECURITY AGREEMENT
THIS
SECURITY AGREEMENT (“Agreement”) is made and entered into as of the
8th
day of
August, 2007, by and among XXXXXXXX URANIUM HOLDINGS, INC., an Arizona
corporation (“Borrower”), Xxxxxx XxXxxxxx (the “Stockholder”), and XXXXXXXX
URANIUM CORP., a Nevada corporation (“Lender”)
RECITALS:
The
Borrower has issued and delivered to the Lender a secured Reversal Promissory
Note in the principal amount of Five Hundred Fifty Seven Thousand Nine Hundred
Twenty Seven Dollars and Thirty Cents ($557,927.30), dated as of the date
of
this Agreement (the “Note”). Pursuant to the Note, the Borrower has agreed to
grant a security interest in and to the Collateral (as defined in this
Agreement) on the terms and conditions set forth in this Agreement.
In
consideration of the Debt (as defined in this Agreement) evidenced by the
Note,
and to secure repayment thereof, the Stockholder has agreed grant Lender
a
security interest in and to the Borrower Control Shares (as defined in this
Agreement).
NOW,
THEREFORE, for and in consideration of the Debt (as defined in this Agreement),
and of the premises and intending to be legally bound, the parties covenant
and
agree as follows:
1. Definitions.
In
addition to the words and terms defined elsewhere in this Agreement, the
following words and terms shall have the following meanings, unless the context
otherwise clearly requires:
“Accounts”
shall have the meaning given to that term in the Code and shall include without
limitation all rights of the Borrower, whenever acquired, to payment for
goods
sold or leased or for services rendered, whether or not earned by
performance.
“As-extracted
Collateral” shall have the meaning given to that term under the
Code.
“Borrower
Control Shares” shall mean Instruments representing or evidencing equity
interests representing 51% or more of the capital stock of the Borrower or
other
equity interests therein.
“Chattel
Paper” shall have the meaning given to that term in the Code and shall include
without limitation all writings owned by the Borrower or, whenever acquired,
which evidence both a monetary obligation and a security interest in or a
lease
of specific goods.
“Code”
shall mean the Uniform Commercial Code as in effect on the date of this
Agreement and as amended from time to time, of the state or states having
jurisdiction with respect to all or any portion of the Collateral from time
to
time.
“Collateral”
shall mean (i) the Borrower Control Shares, and (ii) all tangible and intangible
assets of Borrower, including, without limitation, collectively the Accounts,
As-extracted Collateral, Chattel Paper, Deposit Accounts, Documents, Equipment,
Fixtures, General Intangibles, Instruments, Intellectual Property, Inventory,
Investment Property, all oil and gas in and extracted from any other Collateral,
and Proceeds of each of them, as well as the meaning ascribed to that term
in
Section 2.
“Debt”
shall mean (i) all indebtedness, both principal and interest, of the Borrower
to
the Lender now or after the date of this Agreement evidenced by the Note,
(ii)
all other debts, liabilities, duties and obligations of the Borrower to the
Lender arising after the date of this Agreement contracted or incurred, whether
arising under or in connection with the Loan Documents or arising under or
in
connection with any other agreement, instrument, or undertaking made by or
for
the benefit of the Borrower to or for the benefit of the Lender, (iii) all
costs
and expenses incurred by the Lender in the collection of any of the indebtedness
described in this paragraph or in connection with the enforcement of any
of the
duties and obligations of the Borrower to the Lender described in this
paragraph, including reasonable attorneys’ and paralegals’ fees and expenses,
and (iv) all future advances made by the Lender for the maintenance, protection,
preservation or enforcement of, or realization upon, the Collateral or any
portion of the Collateral, including advances for storage, transportation
charges, taxes, insurance, repairs and the like.
“Deposit
Accounts” shall have the meaning given to that term in the Code and shall
include a demand, time, savings, passbook or similar account maintained with
a
bank, savings bank, savings and loan association, credit union, trust company
or
other organization that is engaged in the business of banking.
“Documents”
shall have the meaning given to that term in the Code and shall include without
limitation all warehouse receipts (as defined by the Code) and other documents
of title (as defined by the Code) owned by the Borrower, whenever
acquired.
“Equipment”
shall have the meaning given to that term in the Code and shall include without
limitation all goods owned by the Borrower, whenever acquired and wherever
located, used or brought for use primarily in the business or for the benefit
of
the Borrower and not included in Inventory of the Borrower, together with
all
attachments, accessories and parts used or intended to be used with any of
those
goods or Fixtures, whether now or in the future installed therein or thereon
or
affixed thereto, as well as all substitutes and replacements thereof in whole
or
in part.
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“Escrow Agent” shall mean Gottbetter & Partners, LLP.
“Escrow
Agreement” shall mean the Pledge and Escrow Agreement among the Borrower, the
Lender, the Stockholder and the Escrow Agent with respect to the Pledged
Shares.
“Event
of
Default” shall mean (i) any of the Events of Default described in the Note or
the Loan Documents, or (ii) any default by the Borrower in the performance
of
its obligations under this Agreement.
“Fixtures”
shall have the meaning given to that term in the Code, and shall include
without
limitation leasehold improvements.
“General
Intangibles” shall have the meaning given to that term in the Code and shall
include, without limitation, all leases under which the Borrower now or in
the
future leases and or obtains a right to occupy or use real or personal property,
or both, all of the other contract rights of the Borrower, whenever acquired,
and customer lists, choses in action, claims (including claims for
indemnification), books, records, patents, copyrights, trademarks, blueprints,
drawings, designs and plans, trade secrets, methods, processes, contracts,
licenses, license agreements, formulae, tax and any other types of refunds,
returned and unearned insurance premiums, rights and claims under insurance
policies, and computer information, software, records and data, and oil,
gas, or
other minerals before extraction now owned or acquired after the date of
this
Agreement by the Borrower.
“Instruments”
shall have the meaning given to that term in the Code and shall include,
without
limitation, all negotiable instruments (as defined in the Code), all
certificated securities (as defined in the Code) and all other writings which
evidence a right to the payment of money now or after the date of this Agreement
owned by the Borrower.
“Inventory”
shall have the meaning given to that term in the Code and shall include without
limitation all goods owned by the Borrower, whenever acquired and wherever
located, held for sale or lease or furnished or to be furnished under contracts
of service, and all raw materials, work in process and materials owned by
the
Borrower and used or consumed in the Borrower’s business, whenever acquired and
wherever located.
“Investment
Property,” “Securities Intermediary” and “Commodities Intermediary” each shall
have the meaning set forth in the Code.
“Know-How”
means all documented and undocumented research, ideas, data, theories,
conclusions, reports, drawings, designs, blueprints, schematics, exhibits,
models, prototypes, source code, object code, flow charts, manuals, processes,
specifications, formulae, product configurations, notes, inventions (whether
or
not patentable and whether or not reduced to practice) and any other information
of any kind developed, in development or maintained by the Borrower or any
of
its employees, agents or representatives relating to any goods or services
sold
or licensed or offered for sale or license by the Borrower or goods or services
which the Borrower has a present intention to sell or license.
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“Loan
Documents” shall mean collectively, this Agreement, the Note, the Reversal Loan
Agreement, the Escrow Agreement and all other agreements, documents and
instruments executed and delivered in connection therewith, as each may be
amended, supplemented or modified from time to time.
“Permitted
Liens” shall mean all (i) all existing liens on the assets of the Borrower which
have been disclosed to the Lender by the Borrower in the Reversal Loan
Agreement, and (ii) all purchase money security interests hereinafter incurred
by the Borrower in the ordinary course of business to the extent permitted
by
the Reversal Loan Agreement.
“Pledged
Shares” shall mean the Borrower Control Shares.
“Pledgors”
shall mean the Borrower and the Stockholder.
“Proceeds”
shall have the meaning given to that term in the Code and shall include without
limitation whatever is received when Collateral or Proceeds are sold, exchanged,
collected or otherwise disposed of, whether cash or non-cash, and includes
without limitation proceeds of insurance payable by reason of loss of or
damage
to Collateral.
“Reversal
Loan Agreement” shall mean the Reversal Loan and Control Share Pledge and
Security Agreement by and between the Borrower and the Lender dated as of
even
date herewith.
“Trade
Secret Rights” means all documentation, Know-How and other materials owned by
the Borrower that is considered to be proprietary to the Borrower, is maintained
on a confidential or secret basis, and is generally not known to other persons
or entities who are not subject to confidentiality restrictions.
2. Security
Interest.
As
security for the full and timely payment of the Debt in accordance with the
terms of the Debt and the performance of the obligations of the Borrower
under
the Note and this Agreement, the Borrower and the Stockholder agree that
the
Lender shall have, and the Borrower and the Stockholder grant and convey
to and
create in favor of the Lender, a security interest under the Code in and
to such
of the Collateral as is now owned or acquired after the date of this Agreement
by the Borrower; provided, that with respect to the Stockholder, the security
interest granted hereunder is limited to the Borrower Control Shares. The
security interest granted to the Lender in this Agreement shall be a first
priority security interest, prior and superior to the rights of all third
parties existing on or arising after the date of this Agreement, subject
to the
Permitted Liens.
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3. Provisions
Applicable to the Collateral.
The
parties agree that the following provisions shall be applicable to the
Collateral:
(a)
The
Borrower covenants and agrees that at all times during the term of this
Agreement it shall keep accurate and complete books and records concerning
the
Collateral that is now owned or acquired after the date of this Agreement
by the
Borrower.
(b)
The
Lender or its representatives shall have the right, upon reasonable prior
written notice to the Borrower and during the regular business hours of the
Borrower, to examine and inspect the Collateral and to review the books and
records of the Borrower concerning the Collateral that is now owned or acquired
after the date of this Agreement by the Borrower and to copy the same and
make
excerpts therefrom; provided, however, that from and after the occurrence
of an
Event of Default, the rights of inspection and entry shall be subject to
the
requirements of the Code.
(c)
The
Borrower shall at all times during the term of this Agreement keep the
Equipment, Inventory and Fixtures that are now owned or acquired after the
date
of this Agreement by the Borrower at its various locations or, upon written
notice to the Lender, at such other locations for which the Lender has filed
financing statements, and at no other location without 20 days’ prior written
notice to the Lender, except that the Borrower shall have the right until
one or
more Events of Default shall occur to sell or otherwise dispose of Inventory
and
other Collateral in the ordinary course of business.
(d)
The
Borrower shall not move the location of its principal executive offices without
prior written notification to the Lender.
(e)
Without the prior written consent of the Lender, the Borrower shall not sell,
lease or otherwise dispose of any Equipment or Fixtures, except in the ordinary
course of their business.
(f)
Promptly upon request of the Lender from time to time, the Borrower shall
furnish the Lender with such information and documents regarding the Collateral
and the Borrower’s financial condition, business, assets or liabilities, at such
times and in such form and detail as the Lender may request.
(g)
At
all times during the term of this Agreement, the Borrower shall deliver to
the
Lender, upon its written request, without limitation,
(i)
all
invoices and customer statements rendered to account debtors, documents,
contracts, chattel paper, instruments and other writings pertaining to the
Borrower’s contracts or the performance of the Borrower’s contracts,
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(ii)
evidence of the Borrower’s accounts and statements showing the aging,
identification, reconciliation and collection thereof, and
(iii)
reports as to the Borrower’s inventory and sales, shipment, damage or loss
thereof, all of the foregoing to be certified by authorized officers or other
employees of the Borrower, and Borrower shall take all necessary action during
the term of this Agreement to perfect any and all security interests in favor
of
Borrower and to assign to Lender all such security interests in favor of
Borrower.
(h)
Notwithstanding the security interest in the Collateral granted to and created
in favor of the Lender under this Agreement, the Borrower shall have the
right
until one or more Events of Default shall occur, at its own cost and expense,
to
collect the Accounts and the Chattel Paper and to enforce its contract rights.
(i)
After
the occurrence of an Event of Default, the Lender shall have the right, in
its
sole discretion, to give notice of the Lender’s security interest to account
debtors obligated to the Borrower and to take over and direct collection
of the
Accounts and the Chattel Paper, to notify such account debtors to make payment
directly to the Lender and to enforce payment of the Accounts and the Chattel
Paper and to enforce the Borrower’s contract rights. It is understood and agreed
by the Borrower that the Lender shall have no liability whatsoever under
this
subsection (i) except for its own gross negligence or willful misconduct.
(j)
At
all times during the term of this Agreement, Borrower shall promptly deliver
to
the Lender, upon its written request, all existing leases, and all other
leases
entered into by Borrower from time to time, covering any Equipment or Inventory
(“Leased Inventory”) which is leased to third parties.
(l)
Borrower shall not change its name, entity status, federal taxpayer
identification number, or provincial organizational or registration number,
or
the state under which it is organized without the prior written consent of
the
Lender.
(m)
Borrower shall not close any of its Deposit Accounts or open any new or
additional Deposit Accounts without first giving the Lender at least fifteen
(15) days prior written notice thereof.
(n)
The
Borrower shall cooperate with the Lender, at Borrower’s expense, in perfecting
Lender’s security interest in any of the Collateral, including the execution of
any control agreement(s) required in order to perfect Lender’s security interest
in the Deposit Accounts.
(o)
Lender may file any necessary financing statements and other documents Lender
deems necessary in order to perfect Lender’s security interest without
Borrower’s signature. Borrower grants to Lender a power of attorney for the sole
purpose of executing any documents on behalf of Borrower which Lender deems
necessary to perfect Lender’s security interest. Such power, coupled with an
interest, is irrevocable.
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(p)
The
parties agree that the Lender shall have the right to designate and appoint
a
collateral agent to act for and on behalf of the Lenders with respect to
the
Collateral under this Agreement, provided that Borrower is notified in writing
at least ten (10) days in advance of such appointment.
4. Additional
Provisions Applicable to the Pledged Shares.
(a)
Simultaneously herewith the Pledgors have delivered to the Escrow Agent one
or
more certificates representing the Pledged Shares, together with stock powers
duly executed in blank by the Pledgors. The Escrow Agent shall hold such
Pledged
Shares pursuant to the terms of the Escrow Agreement.
(b)
The
Pledged Shares shall be held by the Escrow Agent as security for the timely
payment of all of the Borrower’s obligations under the Note and for the
Pledgors’ performance of all of their obligations under this Agreement, as
provided herein.
(c)
The
Escrow Agreement shall provide that while the Escrow Agent holds the Pledged
Shares as security, the Pledgors shall have the right to vote the Pledged
Shares
at all meetings of the Borrower’s stockholders to the same extent as if such
Pledged Shares were held by Pledgors; provided that no Event of Default has
occurred and is continuing and that the Pledgors are not in default in the
performance of any term of this Agreement. In the event of any such a default
or
Event of Default, the Lender shall have the right to the extent permitted
by law
to vote and to give consents, ratifications and waivers and take any other
action with respect to the Pledged Shares with the same force and effect
as if
the Lender were the absolute and sole owner of the Pledged Shares.
4. Actions
with Respect to Accounts.
The
Borrower irrevocably makes, constitutes and appoints the Lender its true
and
lawful attorney-in-fact with power to sign its name and to take any of the
following actions after the occurrence and prior to the cure of an Event
of
Default, at any time without notice to the Borrower and at the Borrower’s
expense:
(a)
Verify the validity and amount of, or any other matter relating to, the
Collateral by mail, telephone, telegraph or otherwise;
(b)
Notify all account debtors that the Accounts have been assigned to the Lender
and that the Lender has a security interest in the Accounts;
(c)
Direct all account debtors to make payment of all Accounts directly to the
Lender;
(d)
Take
control in any reasonable manner of any cash or non-cash items of payment
or
proceeds of Accounts;
(e)
Receive, open and dispose of all mail addressed to the Borrower;
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(f)
Take
control in any manner of any rejected, returned, stopped in transit or
repossessed goods relating to Accounts;
(g)
Enforce payment of and collect any Accounts, by legal proceedings or otherwise,
and for such purpose the Lender may:
(1)
Demand payment of any Accounts or direct any account debtors to make payment
of
Accounts directly to the Lender;
(2)
Receive and collect all monies due or to become due to the Borrower pursuant
to
the Accounts;
(3)
Exercise all of the Borrower’s rights and remedies with respect to the
collection of Accounts;
(4)
Settle, adjust, compromise, extend, renew, discharge or release Accounts
in a
commercially reasonable manner;
(5)
Sell
or assign Accounts on such reasonable terms, for such reasonable amounts
and at
such reasonable times as the Lender reasonably deems advisable;
(6)
Prepare, file and sign the Borrower’s name or names on any Proof of Claim or
similar documents in any proceeding filed under federal or state bankruptcy,
insolvency, reorganization or other similar law as to any account debtor;
(7)
Prepare, file and sign the Borrower’s name or names on any notice of lien, claim
of mechanic’s lien, assignment or satisfaction of lien or mechanic’s lien or
similar document in connection with the Collateral;
(8)
Endorse the name of the Borrower upon any chattel papers, documents,
instruments, invoices, freight bills, bills of lading or similar documents
or
agreements relating to Accounts or goods pertaining to Accounts or upon any
checks or other media of payment or evidence of a security interest that
may
come into the Lender, possession;
(9)
Sign
the name of the Borrower to verifications of Accounts and notices of Accounts
sent by account debtors to the Borrower; or
(10)
Take
all other actions that the Lender reasonably deems to be necessary or desirable
to protect the Borrower’s interest in the Accounts.
(h)
Negotiate and endorse any Document in favor of the Lender or its designees,
covering Inventory which constitutes Collateral, and related documents for
the
purpose of carrying out the provisions of this Agreement and taking any action
and executing in the name of Borrower any instrument which the Lender may
reasonably deem necessary or advisable to accomplish the purpose hereof.
Without
limiting the generality of the foregoing, the Lender shall have the right
and
power to receive, endorse and collect checks and other orders for the payment
of
money made payable to the Borrower representing any payment or reimbursement
made under, pursuant to or with respect to, the Collateral or any part thereof
and to give full discharge to the same. The Borrower does hereby ratify and
approve all acts of said attorney and agrees that said attorney shall not
be
liable for any acts of commission or omission, nor for any error of judgment
or
mistake of fact or law, except for said attorney’s own gross negligence or
willful misconduct. This power, being coupled with an interest, is irrevocable
until the Debt is paid in full (at which time this power shall terminate
in
full) and the Borrower shall have performed all of their obligations under
this
Agreement. The Borrower further agrees to use its reasonable efforts to assist
the Lender in the collection and enforcement of the Accounts and will not
hinder, delay or impede the Lender in any manner in its collection and
enforcement of the Accounts.
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5. Preservation
and Protection of Security Interest.
Each of
the Borrower and the Stockholder represents and warrants that it has, and
covenants and agrees that at all times during the term of this Agreement,
it
will have, good and marketable title to the Collateral from time to time
owned
or acquired by it free and clear of all mortgages, pledges, liens, security
interests, charges or other encumbrances, except for the Permitted Liens
and
those junior in right of payment and enforcement to that of the Lender or
in
favor of the Lender, and shall defend the Collateral against the claims and
demands of all persons, firms and entities whomsoever. Assuming Lender has
taken
all required action to perfect a security interest in the Collateral as provided
by the Code, each of the Borrower and the Stockholder represents and warrants
that as of the date of this Agreement the Lender has, and that all times
in the
future the Lender will have, a first priority perfected security interest
in the
Collateral, prior and superior to the rights of all third parties in the
Collateral existing on the date of this Agreement or arising after the date
of
this Agreement, subject to the Permitted Liens. Except as permitted by this
Agreement, each of the Borrower and the Stockholder covenants and agrees
that it
shall not, without the prior written consent of the Lender (i) borrow against
the Collateral or any portion of the Collateral from any other person, firm
or
entity, except for borrowings which are subordinate to the rights of the
Lender,
(ii) grant or create or permit to attach or exist any mortgage, pledge, lien,
charge or other encumbrance, or security interest on, of or in any of the
Collateral or any portion of the Collateral except those in favor of the
Lender
or the Permitted Liens, (iii) permit any levy or attachment to be made against
the Collateral or any portion of the Collateral, except those subject to
the
Permitted Liens, or (iv) permit any financing statements to be on file with
respect to any of the Collateral, except financing statements in favor of
the
Lender or those with respect to the Permitted Liens. The Borrower and the
Stockholder shall faithfully preserve and protect the Lender’s security interest
in the Collateral and shall, at their own cost and expense, cause, or assist
the
Lender to cause that security interest to be perfected and continue perfected
so
long as the Debt or any portion of the Debt is outstanding, unpaid or executory.
For purposes of the perfection of the Lender’s security interest in the
Collateral in accordance with the requirements of this Agreement, the Borrower
and the Stockholder shall from time to time at the request of the Lender
file or
record, or cause to be filed or recorded, such instruments, documents and
notices, including assignments, financing statements and continuation
statements, as the Lender may reasonably deem necessary or advisable from
time
to time in order to perfect and continue perfected such security interest.
The
Borrower and the Stockholder shall do all such other acts and things and
shall
execute and deliver all such other instruments and documents, including further
security agreements, pledges, endorsements, assignments and notices, as the
Lender in its discretion may reasonably deem necessary or advisable from
time to
time in order to perfect and preserve the priority of such security interest
as
a first lien security interest in the Collateral prior to the rights of all
third persons, firms and entities, subject to the Permitted Liens and except
as
may be otherwise provided in this Agreement. The Borrower and the Stockholder
agree that a carbon, photographic or other reproduction of this Agreement
or a
financing statement is sufficient as a financing statement and may be filed
instead of the original.
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6. Insurance.
Risk of
loss of, damage to or destruction of the Equipment, Inventory and Fixtures
is on
the Borrower. The Borrower shall insure the Equipment, Inventory and Fixtures
against such risks and casualties and in such amounts and with such insurance
companies as is ordinarily carried by corporations or other entities engaged
in
the same or similar businesses and similarly situated or as otherwise reasonably
required by the Lender in its sole discretion. In the event of loss of, damage
to or destruction of the Equipment, Inventory or Fixtures during the term
of
this Agreement, the Borrower shall promptly notify Lender of such loss, damage
or destruction. At the reasonable request of the Lender, each of the Borrower’s
policies of insurance shall contain loss payable clauses in favor of the
Borrower and the Lender as their respective interests may appear and shall
contain provision for notification of the Lender thirty (30) days prior to
the
termination of such policy. At the request of the Lender, copies of all such
policies, or certificates evidencing the same, shall be deposited with the
Lender. If the Borrower fails to effect and keep in full force and effect
such
insurance or fails to pay the premiums when due, the Lender may (but shall
not
be obligated to) do so for the account of the Borrower and add the cost thereof
to the Debt. The Lender is irrevocably appointed attorney-in-fact of the
Borrower to endorse any draft or check which may be payable to the Borrower
in
order to collect the proceeds of such insurance. Unless an Event of Default
has
occurred and is continuing, the Lender will turn over to the Borrower the
proceeds of any such insurance collected by it on the condition that the
Borrower apply such proceeds either (i) to the repair of damaged Equipment,
Inventory or Fixtures, or (ii) to the replacement of destroyed Equipment,
Inventory or Fixtures with Equipment, Inventory or Fixtures of the same or
similar type and function and of at least equivalent value (in the sole judgment
of the Lender), provided such replacement Equipment, Fixtures or Inventory
is
made subject to the security interest created by this Agreement and constitutes
a first lien security interest in the Equipment, Inventory and Fixtures subject
only to Permitted Liens and other security interests permitted under this
Agreement, and is perfected by the filing of financing statements in the
appropriate public offices and the taking of such other action as may be
necessary or desirable in order to perfect and continue perfected such security
interest. Any balance of insurance proceeds remaining in the possession of
the
Lender after payment in full of the Debt shall be paid over to the Borrower
or
its order.
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7. Maintenance
and Repair.
The
Borrower shall maintain the Equipment, Inventory and Fixtures, and every
portion
thereof, in good condition, repair and working order, reasonable wear and
tear
alone excepted, and shall pay and discharge all taxes, levies and other
impositions assessed or levied thereon as well as the cost of repairs to
or
maintenance of the same. If the Borrower fails to do so, the Lender may (but
shall not be obligated to) pay the cost of such repairs or maintenance and
such
taxes, levies or impositions for the account of the Borrower and add the
amount
of such payments to the Debt.
8. Preservation
of Rights Against Third Parties; Preservation of Collateral in Lender’s
Possession.
Until
such time as the Lender exercise its right to effect direct collection of
the
Accounts and the Chattel Paper and to effect the enforcement of the Borrower’s
contract rights, the Borrower assume full responsibility for taking any and
all
commercially reasonable steps to preserve rights in respect of the Accounts
and
the Chattel Paper and their contracts against prior parties. The Lender shall
be
deemed to have exercised reasonable care in the custody and preservation
of such
of the Collateral as may come into its possession from time to time if the
Lender takes such action for that purpose as the Borrower shall request in
writing, provided that such requested action shall not, in the judgment of
the
Lender, impair the Lender’s security interest in the Collateral or its right in,
or the value of, the Collateral, and provided further that the Lender receives
such written request in sufficient time to permit the Lender to take the
requested action.
9. Events
of Default and Remedies.
(a)
If
any one or more of the Events of Default shall occur or shall exist, the
Lender
may then or at any time thereafter, so long as such default shall continue,
foreclose the lien or security interest in the Collateral in any way permitted
by law, or upon fifteen (15) days prior written notice to the Borrower or
the
Stockholder, sell any or all Collateral at private sale at any time or place
in
one or more sales, at such price or prices and upon such terms, either for
cash
or on credit, as the Lender, in its sole discretion, may elect, or sell any
or
all Collateral at public auction, either for cash or on credit, as the Lender,
in its sole discretion, may elect, and at any such sale, the Lender may bid
for
and become the purchaser of any or all such Collateral. Pending any such
action
the Lender may liquidate the Collateral.
(b)
If
any one or more of the Events of Default shall occur or shall exist, the
Lender
may then, or at any time thereafter, so long as such default shall continue,
grant extensions to, or adjust claims of, or make compromises or settlements
with, debtors, guarantors or any other parties with respect to Collateral
or any
securities, guarantees or insurance applying thereon, without notice to or
the
consent of the Borrower or the Stockholder, without affecting the Borrower’s or
the Stockholder’s liability under this Agreement or the Note. Each of the
Borrower and the Stockholder waives notice of acceptance, of nonpayment,
protest
or notice of protest of any Accounts or Chattel Paper or any of its contract
rights and any other notices to which the Borrower or the Stockholder may
be
entitled.
11
(c)
If
any one or more of the Events of Default shall occur or shall exist and be
continuing, then in any such event, the Lender shall have such additional
rights
and remedies in respect of the Collateral or any portion thereof as are provided
by the Code and such other rights and remedies in respect thereof which it
may
have at law or in equity or under this Agreement, including without limitation
the right to enter any premises where Equipment, Inventory and/or Fixtures
are
located and take possession and control thereof without demand or notice
and
without prior judicial hearing or legal proceedings, which the Borrower and
the
Stockholder expressly waive.
(d)
The
Lender shall apply the Proceeds of any sale or liquidation of the Collateral,
and, subject to Section 6, any Proceeds received by the Lender from insurance,
first to the payment of the reasonable costs and expenses incurred by the
Lender
in connection with such sale or collection, including without limitation
reasonable attorneys’ fees and legal expenses, second to the payment of the
Debt, whether on account of principal or interest or otherwise as the Lender,
in
its sole discretion, may elect, and then to pay the balance, if any, to the
Borrower or as otherwise required by law. If such Proceeds are insufficient
to
pay the amounts required by law, the Borrower shall be liable for any
deficiency.
(e)
Upon
the occurrence of any Event of Default, the Borrower shall promptly upon
written
demand by the Lender assemble the Equipment, Inventory and Fixtures and make
them available to the Lender at a place or places to be designated by the
Lender. The rights of the Lender under this paragraph to have the Equipment,
Inventory and Fixtures assembled and made available to it is of the essence
of
this Agreement and the Lender may, at its election, enforce such right by
an
action in equity for injunctive relief or specific performance, without the
requirement of a bond.
10. Defeasance.
Notwithstanding anything to the contrary contained in this Agreement upon
payment and performance in full of the Debt, this Agreement shall terminate
and
be of no further force and effect and the Lender shall thereupon terminate
its
security interest in the Collateral. Until such time, however, this Agreement
shall be binding upon and inure to the benefit of the parties, their successors
and assigns, provided that, without the prior written consent of the Lender,
the
Borrower may not assign this Agreement or any of its rights under this Agreement
or delegate any of its duties or obligations under this Agreement and any
such
attempted assignment or delegation shall be null and void. This Agreement
is not
intended and shall not be construed to obligate the Lender to take any action
whatsoever with respect to the Collateral or to incur expenses or perform
or
discharge any obligation, duty or disability of the Borrower.
12
11. Miscellaneous.
(a)
The
provisions of this Agreement are intended to be severable. If any provision
of
this Agreement shall for any reason be held invalid or unenforceable in whole
or
in part in any jurisdiction, such provision shall, as to such jurisdiction,
be
ineffective to the extent of such invalidity or unenforceability without
in any
manner affecting the validity or enforceability of such provision in any
other
jurisdiction or any other provision of this Agreement in any jurisdiction.
(b)
No
failure or delay on the part of the Lender in exercising any right, remedy,
power or privilege under this Agreement and the Note shall operate as a waiver
thereof or of any other right, remedy, power or privilege of the Lender under
this Agreement, the Note or any of the other Loan Documents; nor shall any
single or partial exercise of any such right, remedy, power or privilege
preclude any other right, remedy, power or privilege or further exercise
thereof
or the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges of the Lender under this Agreement, the Note
and
the other Loan Documents are cumulative and not exclusive of any rights or
remedies which they may otherwise have.
(c)
Unless otherwise provided herein, all demands, notices, consents, service
of
process, requests and other communications hereunder shall be in writing
and
shall be delivered in person or by overnight courier service, or mailed by
certified mail, return receipt requested, addressed:
If
to
Borrower or to the Stockholder:
Xxxxxxxx
Uranium Holdings, Inc.
0000
Xxxx
Xxx Xx Xxxxxxx
Xxxxx
X0000
Xxxxxxxxxx,
XX 00000
Attn:
Xxxxxx XxXxxxxx, Chief Executive Officer
Facsimile:
[insert]
with
a
copy to:
[insert
counsel]
If
to
Lender:
Xxxxxxxx
Uranium Corp.
0000
Xxxxxxx Xxx
Xxxxxx
Xxxxx, XX 00000
Attn:
Xxxxx Xxxxxx, President and Chief Executive Officer
Facsimile:
(000) 000-0000
13
with
a
copy to:
Gottbetter
& Partners, LLP
000
Xxxxxxx Xxxxxx, 00xx
Xxxxx
Xxx
Xxxx,
XX 00000
Attn:
Xxxx X. Xxxxxxxxxx, Esq.
Facsimile:
(000) 000-0000
Any
such
notice shall be effective (a) when delivered, if delivered by hand delivery
or overnight courier service, or (b) five (5) days after deposit in the
United States mail, as applicable.
(d)
The
section headings contained in this Agreement are for reference purposes only
and
shall not control or affect its construction or interpretation in any respect.
(e)
Unless the context otherwise requires, all terms used in this Agreement which
are defined by the Code shall have the meanings stated in the Code.
(f)
The
Code shall govern the settlement, perfection and the effect of attachment
and
perfection of the Lender’s security interest in the Collateral, and the rights,
duties and obligations of the Lender, the Borrower and the Stockholder with
respect to the Collateral. This Agreement shall be deemed to be a contract
under
the laws of the State of New York and the execution and delivery of this
Agreement and, to the extent not inconsistent with the preceding sentence,
the
terms and provisions of this Agreement shall be governed by and construed
in
accordance with the laws of that State.
(g)
This
Agreement may be executed in several counterparts, each of which shall be
deemed
an original but all of which shall constitute one and the same instrument.
All
of such counterparts shall be read as though one, and they shall have the
same
force and effect as though all the signers had signed a single
page.
[SIGNATURE
PAGE FOLLOWS]
14
IN
WITNESS WHEREOF, and intending to be legally bound, the parties have executed
and delivered this Security Agreement as of the day and year set forth at
the
beginning of this Security Agreement.
|
LENDER:
|
BORROWER:
|
||||
|
XXXXXXXX
URANIUM CORP.
|
XXXXXXXX
URANIUM HOLDINGS, INC.
|
||||
|
By:
|
By:
|
||||
|
Name: Xxxxx
Xxxxxx
|
Name: Xxxxxx
XxXxxxxx
|
||||
|
Title: Chief
Executive Officer
|
Title: Chief
Executive Officer
|
||||
|
STOCKHOLDER:
|
|
||||
| XXXXXX XXXXXXXX | |||||
|
|
|
||||
15
