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EXHIBIT 2.5
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SECURITY AGREEMENT
This SECURITY AGREEMENT ("Agreement") made and entered into as
of the 1st day of June, 1999, by Access Resource Services, Inc, a Florida
corporation, with its principal place of business at 0000 X. Xxxxxxx Xxxxxxxxx,
Xx. Xxxxxxxxxx, Xxxxxxx 00000 ("Debtor"); in favor of Xxxxxxx Communications,
Inc., a Delaware corporation, with its principal place of business at Xxx Xxxx
Xxxx Xxxxx, Xxxxx Xxxxx, Xxxxx Xxxxx, Xxx Xxxx 00000 ("Secured Party").
WITNESSETH:
WHEREAS, Debtor and Secured Party have entered into an
Agreement Regarding 900 Pay-Per-Call Psychic Services of even date herewith
(collectively, the "900 Agreement");
WHEREAS, pursuant to the 900 Agreement, Debtor has agreed to
make certain royalty payments to Secured Party (the "Royalty Payments");
WHEREAS, Debtor has entered into an agreement with West
Interactive Services, Inc. ("WIS") pursuant to which Debtor has instructed WIS
to pay directly to Secured Party all Royalty Payments;
WHEREAS, Debtor has granted a general security interest in all
of its accounts and general intangibles to WIS (the "WIS Security Interest");
WHEREAS, pursuant to the 900 Agreement, as amended, as
security for satisfaction of the Royalty Payments, and in consideration of the
financial accommodations and agreements therein contained, Debtor agreed to
grant to Secured Party a lien and security interest in its accounts receivable,
and any proceeds thereof,
NOW, THEREFORE, in consideration of the foregoing, Debtor and
Secured Parties hereby agree as follows:
1. Definitions. When used herein, the following capitalized
defined terms shall have the following respective meanings:
"Account Debtor" shall mean the party obligated on or under
any Account Receivable or obligated to make payment for any General Intangible
transferred to such party.
"Account Receivable" shall mean (a) any present or future
right of the Debtor to receive and collect payment for goods or services now or
hereafter rendered to an Account Debtor, whether or not it has been earned by
performance, (b) all present and future chattel paper and instruments acquired
by the Debtor drawn, made, issued or otherwise created in connection with any
transaction giving rise to an Account Receivable and any proceeds thereof, (c)
all present and future rights of the Debtor to proceeds of any insurance,
indemnity, warranty
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or guaranty with respect to any goods sold or leased or services rendered in a
transaction giving rise to an Account Receivable, (d) any present or future
right of the Debtor to receive and collect payment for General Intangibles now
or hereafter transferred to any Debtor, whether or not it has been earned by
performance, and (e) all present and future rights of the Debtor to claim for
damages arising out of a breach of or default under any contract, to terminate
any contract giving rise to any Account Receivable, to perform thereunder and to
compel performance and otherwise exercise all remedies thereunder.
"Collateral" shall mean all right, title and interest of the
Debtor in and to (i) any Account Receivable, and (ii) all proceeds, monies,
income, products and benefits attributable or accruing to the foregoing property
and which Debtor is or may hereafter become entitled to receive on account of
said property.
"Default" shall mean the occurrence of any one or more of the
following events: (a) the Debtor's failure to pay, when due, any amount payable
in respect of all or any portion of the Indebtedness; (b) the loss, theft,
destruction or encumbrance of, or substantial damage to, the Collateral or any
portion thereof or the making of any levy, seizure or attachment thereof or
therein; (c) the Debtor's failure to pay debts as and when due and payable, or
the making of any assignment by Debtor for the benefit of creditors; (d) the
commencement of any proceedings by or against Debtor under any insolvency,
bankruptcy or other debtor relief laws in any jurisdiction, including without
limitation any such proceedings seeking the liquidation, arrangement, or
reorganization of the Debtor under any bankruptcy or insolvency procedure, or
any formal or informal proceeding for the liquidation, dissolution or settlement
of claims by or against the Debtor; or (e) any application for the appointment
of a receiver for the assets of Debtor.
"General Intangibles" shall mean all personal property other
than goods, accounts, chattel paper, documents and instruments, now owned or
hereafter acquired by Debtor, such term having the broadest meaning attributable
to it under the Uniform Commercial Code or other applicable law, and including
without limitation all things in action, all contract rights, subscription
rights and all rights and interests of any nature or kind now owned or hereafter
acquired by Debtor in any partnership, venture or other business association or
entity.
"Indebtedness" shall mean (a) all liabilities and obligations
of Debtor to Secured Party relating to the Club Royalties referred to in Section
1(h) of the 900 Agreement, (b) the royalties referred to in Sections 2(a), 2(b)
and 2(c) of the 900 Agreement, and (c) the balance of the Purchase Price due
under Section 5(c)(i) of the 900 Agreement.
"Instruments" shall mean all instruments now owned or
hereafter acquired by Debtor, such term having the broadest meaning attributable
to it under the Uniform Commercial Code or other applicable law.
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"Permitted Lien" shall mean the first priority security
interest in the Debtor's accounts and general intangibles, and the proceeds
thereof, granted to WIS, as the same may be modified or amended form time to
time.
All capitalized terms not otherwise defined herein shall have
the meanings ascribed to them in the 900 Agreement.
2. Grant of Security Interest. As security for the
payment of the Indebtedness, the Debtor hereby grants, pledges and assigns to
the Secured Party a continuing security interest in the Collateral.
3. Perfection of Security Interest. The Debtor hereby
authorizes the Secured Party to file one or more financing or continuation
statements, and amendments thereto, relating to all or any part of the
Collateral, without the signature of the Debtor where permitted by applicable
law, and agrees itself to take all such other actions and to execute and deliver
and file or cause to be filed such financing statements, continuation
statements, and other documents, as the Secured Party may reasonably require in
order to establish and maintain a perfected, valid and continuing security
interest of the Secured Party in the Collateral.
4. Records; Information. The Debtor agrees to keep at
its principal place of business, as shown in the opening paragraph of this
Agreement, its records concerning the Collateral, which records shall be
sufficiently accurate to enable the Secured Party or its designee to determine
at any time the status thereof. The Debtor agrees promptly to furnish to the
Secured Party such information concerning the Debtor, the Collateral and any
Account Debtor as the Secured Party may reasonably request.
5. Representations and Warranties of the Debtor. The
Debtor represents and warrants that: (a) it is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and is qualified to do business in all such jurisdictions in which
it is doing business, (b) the execution, delivery and performance of this
Agreement and the above pledge and assignment and grant of a security interest
in the Collateral to the Secured Party have been duly authorized and are not
contrary to or in violation of law, any order of a court or government agency,
the Debtor's certificate of incorporation or by-laws, or any other agreement,
instrument, or other document to which the Debtor is a party or by which the
Debtor or any of its assets may be bound, (c) this Agreement is the legal, valid
and binding obligation of the Debtor and, subject to the making of any filings
required pursuant to Section 3 hereof, creates a valid, enforceable and
perfected security interest in the Collateral, first and prior to any or all
other liens, claims, encumbrances or security interests except for the Permitted
Lien, and the Debtor is duly authorized to make all filings and take all other
actions necessary or desirable to perfect and to continue perfected such
security interest, (d) all of the Debtor's right, title and interest in and to
the Collateral is free and clear of all liens, claims, charges, pledges,
security interests and encumbrances, except for the security interests granted
to the Secured Party herein and the Permitted Lien, and (e) no consent of any
person or entity is required, except such as have been obtained in writing by
Debtor and delivered to Secured
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Party, in order to render this Agreement and the 900 Agreement fully enforceable
against the Debtor in accordance with their terms or to prevent the execution
and delivery of this Agreement and the 900 Agreement from violating the terms of
or giving rise to a default or event of default under any other agreement,
instrument or document to which the Debtor is a party or by which the Debtor or
any of its assets are bound.
6. Covenants.
(a) Affirmative Covenants. The Debtor shall (i)
perform and observe all the terms and provisions of any agreement for the
rendering of services or any other agreement, giving rise to an Account
Receivable to be performed or observed by it, maintain any such agreement in
full force and effect, enforce any such agreement in accordance with its terms,
and take all such action to such and as may be from time to time requested by
the Secured Party; (ii) at the Debtor's expense, furnish to the Secured Party
promptly upon receipt thereof copies of all notices, requests and other
documents received by the Debtor in connection with any Account Receivable, and
from time to time (x) furnish to the Secured Party such information and reports
regarding any Account Receivable as the Secured Party may reasonably request,
and (y) upon request of the Secured Party, make to any Account Debtor such
demand and request for information and reports or for such action as the Debtor
may be entitled to make in connection with any Account Receivable; (iii) at the
Debtor's expense, take such action as the Debtor or the Secured Party may deem
necessary or advisable to enforce collection of amounts due or to become due in
respect of any Account Receivable; (iv) take out and maintain in effect such
policies of insurance covering the Collateral as the Secured Party may
reasonably require; and (v) maintain and preserve the Collateral in good
condition and take all such action to such end as may be from time to time
requested by the Secured Party.
(b) Negative Covenants. The Debtor shall not
without the prior written consent of the Secured Party (i) sell, assign or
otherwise dispose of the Collateral, or (ii) create or suffer to exist any
security interest, financing statement, lien or other encumbrances upon or with
respect to the Collateral to secure indebtedness of any person or entity, except
for the security interest granted to the Secured Party hereunder and the
Permitted Lien.
7. Rights of the Secured Party upon Default. On and
after the occurrence of a Default by the Debtor, all the Indebtedness shall, at
the option of the Secured Party, become immediately due and payable, without
notice or demand. Subject to the rights of WIS under the WIS Security Interest,
the Secured Party may (a) enforce collection of any of the Collateral by suit or
any other lawful means available to the Secured Party, (b) surrender, release or
exchange all or any part of the Collateral, or compromise or extend or renew for
any period any indebtedness thereunder or evidenced thereby, (c) assert all
other rights of a secured party under the Uniform Commercial Code or other
applicable law, including, without limitation, the right to take possession of,
hold, collect, sell, lease or otherwise retain, liquidate or dispose of all or
any portion of the Collateral. The proceeds of any collection, liquidation or
other disposition of the Collateral shall be applied by the Secured Party first
to the payment of all expenses (including without limitation, all fees, taxes,
reasonable attorney's fees and legal expenses)
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incurred by the Secured Party in connection with retaking, holding, collecting,
or liquidating the Collateral. The balance of such proceeds, if any, shall, to
the extent permitted by law, be applied to the payment of the Indebtedness in
such order of application as the Secured Party may, in its sole discretion,
elect. In case of any deficiency, the Debtor shall, whether or not then due,
remain liable therefor. In addition to the foregoing, the Secured Party shall be
entitled to exercise any and all other rights and remedies provided to the
Secured Party under this Agreement, the 900 Agreement, and applicable law and
equity.
8. The Secured Party' Duties and Right to Perform. The
powers conferred on the Secured Party hereunder are solely to protect the
Secured Party' interest in the Collateral and shall not impose any duty upon it
to exercise any such powers. The Secured Party shall have no duty as to the
Collateral or as to the taking of any necessary steps to preserve rights against
prior Party or any other rights pertaining to the Collateral. If the Debtor
fails to perform any of its obligations hereunder, or under any agreement giving
use to or in connection with any Account Receivable, the Secured Party may
themselves perform, or cause the performance of, such agreement, and the
expenses of the Secured Party incurred in connection therewith shall be payable
by the Debtor.
9. Indemnity and Expenses. The Debtor agrees to
indemnify the Secured Party from and against any and all claims, losses and
liabilities arising out of or connected with this Agreement (including, without
limitation, enforcement of this Agreement), except claims, losses or liabilities
resulting solely from the Secured Party' gross negligence or wilful misconduct.
10. Security Interest Absolute. All rights of the Secured
Party hereunder, and all obligations of the Debtor hereunder, shall be absolute
and unconditional, irrespective of:
(a) any lack of validity or enforceability of
the Indebtedness or any agreement or instrument contemplated thereby;
(b) any change in the time, manner or place of
payment of, or in any other term of, all or any of the Indebtedness, or any
other amendment or waiver of or any consent to any departure from the terms of
the Indebtedness or any other agreements contemplated thereby;
(c) any exchange, release or non-perfection of
any other security interest, or any release or amendment or waiver of or consent
to departure from any guaranty, for all or any of the Indebtedness; or
(d) any other circumstance (other than payment
in full) which might otherwise constitute a defense available to, or a discharge
of, the Debtor in respect of the Indebtedness or in respect of this Agreement.
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11. Cumulative Security. Neither the execution and
delivery of this Agreement nor the taking hereafter of any security for payment
of the Indebtedness shall in any manner impair or affect any other security for
payment of the Indebtedness. All such present and future additional security is
to be considered as cumulative security.
12. Continuing Agreement. This is a continuing agreement
and the grant of a security interest hereunder shall remain in full force and
effect and all the rights, powers and remedies of Secured Party hereunder shall
continue to exist until the Indebtedness is paid in full as the same becomes due
and payable and until Secured Party, upon request of Debtor, has executed a
written termination statement, reassigned to Debtor without recourse the
Collateral and all rights conveyed hereby, and returned possession of the
Collateral to Debtor.
13 Notices. All notices, requests and other
communications to either party hereunder shall be in writing and shall be given
to such party at its address or telefax number set forth at the beginning of
this Agreement or such other address or telefax number of which such party may
hereafter give notice to the other. Each such notice, request or other
communication shall be effective (i) if given by telefax, upon transmission with
a machine-generated transmittal confirmation, (ii) if given by mail, 72 hours
after such communication is deposited in the United States mails with first
class postage prepaid, addressed as aforesaid, or (iii) if given by any other
means, when delivered at the address specified in this Section.
14. Remedy and Waiver. Secured Party may remedy any
Default without waiving the Default rendered, and may waive any Default without
waiving any prior or subsequent Default. No failure or delay by the Secured
Party in the exercise of any right or remedy under this Agreement or under the
Uniform Commercial Code or any applicable law shall operate as a waiver
hereunder or thereunder, and no partial exercise by the Secured Party of any
right or remedy of the Secured Party hereunder or thereunder shall preclude the
further exercise by the Secured Party of any other right or remedy hereunder or
thereunder.
15. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Florida.
16. Successors and Assigns. The rights and obligations of
the Party hereto shall be binding on and shall inure to the benefit of their
successors and assigns, except that in accordance with Section 6 of this
Agreement, the rights and obligations hereunder may not be assigned by Debtor.
17. Modification. This agreement or any provision hereof
may be modified or amended only by a written agreement signed by both Party
hereto.
18. Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, this Agreement has been duly executed as
of the day and year first above written.
DEBTOR
ACCESS RESOURCE SERVICES, INC.
By: /s/ Xxxxxx Xxxxx
__________________________________
Name: Xxxxxx Xxxxx
SECURED PARTY
XXXXXXX COMMUNICATIONS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
__________________________________
Xxxxxxx X. Xxxxxxxx
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