SECURITY AGREEMENT
SECURITY
AGREEMENT (this “Agreement”), dated
as
of November 6, 2007, by and among Midnight Holdings Group, Inc., a Delaware
corporation (“Company”), and the
secured parties signatory hereto and their respective endorsees, transferees
and
assigns (collectively, the “Secured
Party”).
W
I T N E
S S E T H:
WHEREAS,
pursuant to a Securities Purchase Agreement, dated the date hereof, between
Company and the Secured Party (the “Purchase Agreement”),
Company has agreed to issue to the Secured Party and the Secured Party has
agreed to purchase from Company certain of Company’s 10% Secured Convertible
Notes, due three years from the date of issue (the “Notes”), which
are
convertible into shares of Company’s Common Stock, par value $.00005 per share
(the “Common
Stock”). In connection therewith, Company shall issue the
Secured Party certain Common Stock purchase warrants dated as of the date hereof
to purchase the number of shares of Common Stock indicated below each Secured
Party’s name on the Purchase Agreement (the “Warrants”);
and
WHEREAS,
in order to induce the Secured Party to purchase the Notes, Company has agreed
to execute and deliver to the Secured Party this Agreement for the benefit
of
the Secured Party and to grant to it a first priority security interest in
certain property of Company to secure the prompt payment, performance and
discharge in full of all of Company’s obligations under the Notes and exercise
and discharge in full of Company’s obligations under the Warrants.
NOW,
THEREFORE, in consideration of the agreements herein contained and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1. Certain
Definitions. As used in this Agreement, the following terms
shall have the meanings set forth in this Section 1. Terms used but
not otherwise defined in this Agreement that are defined in Article 9 of the
UCC
(such as “general
intangibles” and “proceeds”)
shall have
the respective meanings given such terms in Article 9 of the UCC.
(a) “Collateral”
means
the
collateral in which the Secured Party is granted a security interest by this
Agreement and which shall include the following, whether presently owned or
existing or hereafter acquired or coming into existence, and all additions
and
accessions thereto and all substitutions and replacements thereof, and all
proceeds, products and accounts thereof, including, without limitation, all
proceeds from the sale or transfer of the Collateral and of insurance covering
the same and of any tort claims in connection therewith:
(i) All
Goods
of the Company, including, without limitations, all machinery, equipment,
computers, motor vehicles, trucks, tanks, boats, ships, appliances, furniture,
special and general tools, fixtures, test and quality control devices and other
equipment of every kind and nature and wherever situated, together with all
documents of title and documents representing the same, all additions and
accessions thereto, replacements therefor, all parts therefor, and all
substitutes for any of the foregoing and all other items used and useful in
connection with the Company’s businesses and all improvements thereto
(collectively, the “Equipment”);
and
(ii) All
Inventory of the Company; and
(iii) All
of
the Company’s contract rights and general intangibles, including, without
limitation, all partnership interests, stock or other securities, licenses,
distribution and other agreements, computer software development rights, leases,
franchises, customer lists, quality control procedures, grants and rights,
goodwill, trademarks, service marks, trade styles, trade names, patents, patent
applications, copyrights, deposit accounts, and income tax refunds
(collectively, the “General
Intangibles”); and
(iv) All
Receivables of the Company including all insurance proceeds, and rights to
refunds or indemnification whatsoever owing, together with all instruments,
all
documents of title representing any of the foregoing, all rights in any
merchandising, goods, equipment, motor vehicles and trucks which any of the
same
may represent, and all right, title, security and guaranties with respect to
each Receivable, including any right of stoppage in transit; and
(v) All
of
the Company’s documents, instruments and chattel paper, files, records, books of
account, business papers, computer programs and the products and proceeds of
all
of the foregoing Collateral set forth in clauses (i)-(iv) above.
(b) “Company”
shall
mean,
collectively, Company and all of the subsidiaries of Company, a list of which
is
contained in Schedule
A, attached hereto.
(c) “Obligations”
means
all of the Company’s obligations under this Agreement and the Notes, in each
case, whether now or hereafter existing, voluntary or involuntary, direct or
indirect, absolute or contingent, liquidated or unliquidated, whether or not
jointly owed with others, and whether or not from time to time decreased or
extinguished and later decreased, created or incurred, and all or any portion
of
such obligations or liabilities that are paid, to the extent all or any part
of
such payment is avoided or recovered directly or indirectly from the Secured
Party as a preference, fraudulent transfer or otherwise as such obligations
may
be amended, supplemented, converted, extended or modified from time to
time.
(d) “UCC”
means
the
Uniform Commercial Code, as currently in effect in the State of New
York.
2. Grant
of Security
Interest. As an inducement for the Secured Party to purchase
the Notes and to secure the complete and timely payment, performance and
discharge in full, as the case may be, of all of the Obligations, the Company
hereby, unconditionally and irrevocably, pledges, grants and hypothecates to
the
Secured Party, a continuing security interest in, a continuing first lien upon,
an unqualified right to possession and disposition of and a right of set-off
against, in each case to the fullest extent permitted by law, all of the
Company’s right, title and interest of whatsoever kind and nature in and to the
Collateral (the “Security
Interest”).
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3. Representations,
Warranties,
Covenants and Agreements of the Company. The Company
represents and warrants to, and covenants and agrees with, the Secured Party
as
follows:
(a) The
Company has the requisite corporate power and authority to enter into this
Agreement and otherwise to carry out its obligations thereunder. The
execution, delivery and performance by the Company of this Agreement and the
filings contemplated therein have been duly authorized by all necessary action
on the part of the Company and no further action is required by the
Company. This Agreement constitutes a legal, valid and binding
obligation of the Company enforceable in accordance with its terms, except
as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditor’s rights
generally.
(b) The
Company represents and warrants that it has no place of business or offices
where its respective books of account and records are kept (other than
temporarily at the offices of its attorneys or accountants) or places where
Collateral is stored or located, except as has been disclosed to the Secured
Party;
(c) Except
as
set forth on Schedule
3(c), the Company is the sole owner or lessor (as the case may be) of the
Collateral (except for non-exclusive licenses granted by the Company in the
ordinary course of business), free and clear of any liens, security interests,
encumbrances, rights or claims, and is fully authorized to grant the Security
Interest in and to pledge the Collateral. There is not on file in any
governmental or regulatory authority, agency or recording office an effective
financing statement, security agreement, license or transfer or any notice
of
any of the foregoing (other than those that have been filed in favor of the
Secured Party pursuant to this Agreement) covering or affecting any of
the Collateral. So long as this Agreement shall be in
effect, the Company shall not execute and shall not knowingly permit to be
on
file in any such office or agency any such financing statement or other document
or instrument (except to the extent filed or recorded in favor of the Secured
Party pursuant to the terms of this Agreement).
(d) No
part
of the Collateral has been judged invalid or unenforceable. No
written claim has been received that any Collateral or the Company’s use of any
Collateral violates the rights of any third party. There has been no adverse
decision to the Company’s claim of ownership rights in or exclusive rights to
use the Collateral in any jurisdiction or to the Company’s right to keep and
maintain such Collateral in full force and effect, and there is no proceeding
involving said rights pending or, to the best knowledge of the Company,
threatened before any court, judicial body, administrative or regulatory agency,
arbitrator or other governmental authority.
(e) The
Company shall at all times maintain its books of account and records relating
to
the Collateral at its principal place of business and may not relocate such
books of account and records or tangible Collateral unless it delivers to the
Secured Party at least 30 days prior to such relocation (i) written notice
of
such relocation and the new location thereof (which must be within the United
States) and (ii) evidence that appropriate financing statements and other
necessary documents have been filed and recorded and other steps have been
taken
to perfect the Security Interest to create in favor of the Secured Party valid,
perfected and continuing first priority liens in the Collateral.
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(f) This
Agreement creates in favor of the Secured Party a valid security interest in
the
Collateral securing the payment and performance of the Obligations and, upon
making the filings described in the immediately following sentence, a perfected
first priority security interest in such Collateral. Except for the
filing of financing statements on Form-1 under the UCC in the proper
jurisdiction, no authorization or approval of or filing with or notice to any
governmental authority or regulatory body is required either (i) for the
grant by the Company of, or the effectiveness of, the Security Interest granted
hereby or for the execution, delivery and performance of this Agreement by
the
Company or (ii) for the perfection of or exercise by the Secured Party of
its rights and remedies hereunder.
(g) On
the
date of execution of this Agreement, the Company will deliver to the Secured
Party one or more executed UCC financing statements on Form-1 with respect
to
the Security Interest for filing in the proper jurisdiction, attached hereto
and
in such other jurisdictions as may be requested by the Secured
Party.
(h) The
execution, delivery and performance of this Agreement does not conflict with
or
cause a breach or default, or an event that with or without the passage of
time
or notice, shall constitute a breach or default, under any agreement to which
the Company is a party or by which the Company is bound. No consent
(including, without limitation, from stock holders or creditors of the Company)
is required for the Company to enter into and perform its obligations
hereunder.
(i) The
Company shall at all times maintain the liens and Security Interest provided
for
hereunder as valid and perfected liens and security interests in the Collateral
in favor of the Secured Party until this Agreement and the Security Interest
hereunder shall terminate pursuant to Section 11. The Company hereby
agrees to defend the same against any and all persons. The Company
shall safeguard and protect all Collateral for the account of the Secured
Party. At the request of the Secured Party, the Company will sign and
deliver to the Secured Party at any time or from time to time one or more
financing statements pursuant to the UCC (or any other applicable statute)
in
form reasonably satisfactory to the Secured Party and will pay the cost of
filing the same in all public offices wherever filing is, or is deemed by the
Secured Party to be, necessary or desirable to effect the rights and obligations
provided for herein. Without limiting the generality of the foregoing, the
Company shall pay all fees, taxes and other amounts necessary to maintain the
Collateral and the Security Interest hereunder, and the Company shall obtain
and
furnish to the Secured Party from time to time, upon demand, such releases
and/or subordinations of claims and liens which may be required to maintain
the
priority of the Security Interest hereunder.
(j) The
Company will not transfer, pledge, hypothecate, encumber, license (except for
non-exclusive licenses granted by the Company in the ordinary course of
business), sell or otherwise dispose of any of the Collateral without the prior
written consent of the Secured Party.
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(k) The
Company shall keep and preserve its Equipment, Inventory and other tangible
Collateral in good condition, repair and order and shall not operate or locate
any such Collateral (or cause to be operated or located) in any area excluded
from insurance coverage.
(l) The
Company shall, within ten (10) days of obtaining knowledge thereof, advise
the
Secured Party promptly, in sufficient detail, of any substantial change in
the
Collateral, and of the occurrence of any event which would have a material
adverse effect on the value of the Collateral or on the Secured Party’s security
interest therein.
(m) The
Company shall promptly execute and deliver to the Secured Party such further
deeds, mortgages, assignments, security agreements, financing statements or
other instruments, documents, certificates and assurances and take such further
action as the Secured Party may from time to time request and may in its sole
discretion deem necessary to perfect, protect or enforce its security interest
in the Collateral including, without limitation, the execution and delivery
of a
separate security agreement with respect to the Company’s intellectual property
(“Intellectual
Property Security Agreement”) in which the Secured Party has been granted
a security interest hereunder, substantially in a form acceptable to the Secured
Party, which Intellectual Property Security Agreement, other than as stated
therein, shall be subject to all of the terms and conditions
hereof.
(n) The
Company shall permit the Secured Party and its representatives and agents to
inspect the Collateral at any time, and to make copies of records pertaining
to
the Collateral as may be requested by the Secured Party from time to
time.
(o) The
Company will take all steps reasonably necessary to diligently pursue and seek
to preserve, enforce and collect any rights, claims, causes of action and
accounts receivable in respect of the Collateral.
(p) The
Company shall promptly notify the Secured Party in sufficient detail upon
becoming aware of any attachment, garnishment, execution or other legal process
levied against any Collateral and of any other information received by the
Company that may materially affect the value of the Collateral, the Security
Interest or the rights and remedies of the Secured Party hereunder.
(q) All
information heretofore, herein or hereafter supplied to the Secured Party by
or
on behalf of the Company with respect to the Collateral is accurate and complete
in all material respects as of the date furnished.
(r) Schedule
3(a) to the
Purchase Agreement contains a list of all of the wholly-owned subsidiaries
of
Company.
4. Defaults. The
following events shall be “Events of
Default”:
(a) The
occurrence of an Event of Default (as defined in the Notes) under the
Notes;
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(b) Any
representation or warranty of the Company in this Agreement or in the
Intellectual Property Security Agreement shall prove to have been incorrect
in
any material respect when made;
(c) The
failure by the Company to observe or perform any of its obligations hereunder
or
in the Intellectual Property Security Agreement for ten (10) days after receipt
by the Company of notice of such failure from the Secured Party;
and
(d) Any
breach of, or default under, the Warrants.
5. Duty
To Hold In
Trust. Upon the occurrence of any Event of Default and at any
time thereafter, the Company shall, upon receipt by it of any revenue, income
or
other sums subject to the Security Interest, whether payable pursuant to the
Notes or otherwise, or of any check, draft, note, trade acceptance or other
instrument evidencing an obligation to pay any such sum, hold the same in trust
for the Secured Party and shall forthwith endorse and transfer any such sums
or
instruments, or both, to the Secured Party for application to the satisfaction
of the Obligations.
6. Rights
and Remedies Upon
Default. Upon occurrence of any Event of Default and at any
time thereafter, the Secured Party shall have the right to exercise all of
the
remedies conferred hereunder and under the Notes, and the Secured Party shall
have all the rights and remedies of a secured party under the UCC and/or any
other applicable law (including the Uniform Commercial Code of any jurisdiction
in which any Collateral is then located). Without limitation, the
Secured Party shall have the following rights and powers:
(a) The
Secured Party shall have the right to take possession of the Collateral and,
for
that purpose, enter, with the aid and assistance of any person, any premises
where the Collateral, or any part thereof, is or may be placed and remove the
same, and the Company shall assemble the Collateral and make it available to
the
Secured Party at places which the Secured Party shall reasonably select, whether
at the Company’s premises or elsewhere, and make available to the Secured Party,
without rent, all of the Company’s respective premises and facilities for the
purpose of the Secured Party taking possession of, removing or putting the
Collateral in saleable or disposable form.
(b) The
Secured Party shall have the right to operate the business of the Company using
the Collateral and shall have the right to assign, sell, lease or otherwise
dispose of and deliver all or any part of the Collateral, at public or private
sale or otherwise, either with or without special conditions or stipulations,
for cash or on credit or for future delivery, in such parcel or parcels and
at
such time or times and at such place or places, and upon such terms and
conditions as the Secured Party may deem commercially reasonable, all without
(except as shall be required by applicable statute and cannot be waived)
advertisement or demand upon or notice to the Company or right of redemption
of
the Company, which are hereby expressly waived. Upon each such sale,
lease, assignment or other transfer of Collateral, the Secured Party may, unless
prohibited by applicable law which cannot be waived, purchase all or any part
of
the Collateral being sold, free from and discharged of all trusts, claims,
right
of redemption and equities of the Company, which are hereby waived and
released.
6
7. Applications
of
Proceeds. The proceeds of any such sale, lease or other
disposition of the Collateral hereunder shall be applied first, to the expenses
of retaking, holding, storing, processing and preparing for sale, selling,
and
the like (including, without limitation, any taxes, fees and other costs
incurred in connection therewith) of the Collateral, to the reasonable
attorneys’ fees and expenses incurred by the Secured Party in enforcing its
rights hereunder and in connection with collecting, storing and disposing of
the
Collateral, and then to satisfaction of the Obligations, and to the payment
of
any other amounts required by applicable law, after which the Secured Party
shall pay to the Company any surplus proceeds. If, upon the sale,
license or other disposition of the Collateral, the proceeds thereof are
insufficient to pay all amounts to which the Secured Party is legally entitled,
the Company will be liable for the deficiency, together with interest thereon,
at the rate of 15% per annum (the “Default Rate”), and
the reasonable fees of any attorneys employed by the Secured Party to collect
such deficiency. To the extent permitted by applicable law, the
Company waives all claims, damages and demands against the Secured Party arising
out of the repossession, removal, retention or sale of the Collateral, unless
due to the gross negligence or willful misconduct of the Secured
Party.
8. Costs
and
Expenses. The Company agrees to pay all
out-of-pocket fees, costs and expenses incurred in connection with any filing
required hereunder, including without limitation, any financing statements,
continuation statements, partial releases and/or termination statements related
thereto or any expenses of any searches reasonably required by the Secured
Party. The Company shall also pay all other claims and charges which
in the reasonable opinion of the Secured Party might prejudice, imperil or
otherwise affect the Collateral or the Security Interest therein. The
Company will also, upon demand, pay to the Secured Party the amount of any
and
all reasonable expenses, including the reasonable fees and expenses of its
counsel and of any experts and agents, which the Secured Party may incur in
connection with (i) the enforcement of this Agreement, (ii) the
custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, or (iii) the exercise or
enforcement of any of the rights of the Secured Party under the
Notes. Until so paid, any fees payable hereunder shall be added to
the principal amount of the Notes and shall bear interest at the Default
Rate.
9. Responsibility
for
Collateral. The Company assumes all liabilities and
responsibility in connection with all Collateral, and the obligations of the
Company hereunder or under the Notes and the Warrants shall in no way be
affected or diminished by reason of the loss, destruction, damage or theft
of
any of the Collateral or its unavailability for any reason.
10. Security
Interest
Absolute. All rights of the Secured Party and all Obligations
of the Company hereunder, shall be absolute and unconditional, irrespective
of:
(a) any lack of validity or enforceability of this Agreement, the Notes,
the Warrants or any agreement entered into in connection with the foregoing,
or
any portion hereof or thereof; (b) any change in the time, manner or place
of payment or performance of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of or any consent to any departure
from the Notes, the Warrants or any other agreement entered into in connection
with the foregoing; (c) any exchange, release or nonperfection of any of
the Collateral, or any release or amendment or waiver of or consent to departure
from any other collateral for, or any guaranty, or any other security, for
all
or any of the Obligations; (d) any action by the Secured Party to obtain,
adjust, settle and cancel in its sole discretion any insurance claims or matters
made or arising in connection with the Collateral; or
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(e) any
other circumstance which might otherwise constitute any legal or equitable
defense available to the Company, or a discharge of all or any part of the
Security Interest granted hereby. Until the Obligations shall have
been paid and performed in full, the rights of the Secured Party shall continue
even if the Obligations are barred for any reason, including, without
limitation, the running of the statute of limitations or
bankruptcy. The Company expressly waives presentment, protest, notice
of protest, demand, notice of nonpayment and demand for
performance. In the event that at any time any transfer of any
Collateral or any payment received by the Secured Party hereunder shall be
deemed by final order of a court of competent jurisdiction to have been a
voidable preference or fraudulent conveyance under the bankruptcy or insolvency
laws of the United States, or shall be deemed to be otherwise due to any
party
other than the Secured Party, then, in any such event, the Company’s obligations
hereunder shall survive cancellation of this Agreement, and shall not be
discharged or satisfied by any prior payment thereof and/or cancellation
of this
Agreement, but shall remain a valid and binding obligation enforceable in
accordance with the terms and provisions hereof. The Company waives
all right to require the Secured Party to proceed against any other person
or to
apply any Collateral which the Secured Party may hold at any time, or to
marshal
assets, or to pursue any other remedy. The Company waives any defense
arising by reason of the application of the statute of limitations to any
obligation secured hereby.
11. Term
of
Agreement. This Agreement and the Security Interest shall
terminate on the date on which all amounts outstanding under the Notes are
no
longer outstanding and all other Obligations have been paid or
discharged. Upon such termination, the Secured Party, at the request
and at the expense of the Company, will join in executing any termination
statement with respect to any financing statement executed and filed pursuant
to
this Agreement.
12. Power
of Attorney; Further
Assurances.
(a) The
Company authorizes the Secured Party, and does hereby make, constitute and
appoint it, and its respective officers, agents, successors or assigns with
full
power of substitution, as the Company’s true and lawful attorney-in-fact, with
power, in its own name or in the name of the Company, to, after the occurrence
and during the continuance of an Event of Default, (i) endorse any notes,
checks, drafts, money orders, or other instruments of payment (including
payments payable under or in respect of any policy of insurance) in respect
of
the Collateral that may come into possession of the Secured Party; (ii) to
sign and endorse any UCC financing statement or any invoice, freight or express
xxxx, xxxx of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications and notices in connection with accounts, and other
documents relating to the Collateral; (iii) to pay or discharge taxes,
liens, security interests or other encumbrances at any time levied or placed
on
or threatened against the Collateral; (iv) to demand, collect, receipt for,
compromise, settle and xxx for monies due in respect of the Collateral; and
(v) generally, to do, at the option of the Secured Party, and at the
Company’s expense, at any time, or from time to time, all acts and things which
the Secured Party deems necessary to protect, preserve and realize upon the
Collateral and the Security Interest granted therein in order to effect the
intent of this Agreement, the Notes and the Warrants, all as fully and
effectually as the Company might or could do; and the Company hereby ratifies
all that said attorney shall lawfully do or cause to be done by virtue
hereof. This power of attorney is coupled with an interest and shall
be irrevocable for the term of this Agreement and thereafter as long as any
of
the Obligations shall be outstanding.
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(b) On
a
continuing basis, the Company will make, execute, acknowledge, deliver, file
and
record, as the case may be, in the proper filing and recording places in any
jurisdiction, all such instruments, and take all such action as may reasonably
be deemed necessary or advisable, or as reasonably requested by the Secured
Party, to perfect the Security Interest granted hereunder and otherwise to
carry
out the intent and purposes of this Agreement, or for assuring and confirming
to
the Secured Party the grant or perfection of a security interest in all the
Collateral.
(c) The
Company hereby irrevocably appoints the Secured Party as the Company’s
attorney-in-fact, with full authority in the place and stead of the Company
and
in the name of the Company, from time to time in the Secured Party’s discretion,
to take any action and to execute any instrument which the Secured Party may
deem necessary or advisable to accomplish the purposes of this Agreement,
including the filing, in its sole discretion, of one or more financing or
continuation statements and amendments thereto, relative to any of the
Collateral without the signature of the Company where permitted by
law.
13. Notices. All
notices, requests, demands and other communications hereunder shall be in
writing, with copies to all the other parties hereto, and shall be deemed to
have been duly given when (i) if delivered by hand, upon receipt,
(ii) if sent by facsimile, upon receipt of proof of sending thereof,
(iii) if sent by nationally recognized overnight delivery service (receipt
requested), the next business day or (iv) if mailed by first-class
registered or certified mail, return receipt requested, postage prepaid, four
days after posting in the U.S. mails, in each case if delivered to the following
addresses:
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If
to
the Company:
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Midnight
Holdings Group, Inc.
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00000
Xxxx Xxxx, Xxxxx 000
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Xxxxxxx
Xxxxxxxx, XX 00000
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Attention:
Chief Executive Officer
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Telephone:
000-000-0000
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Facsimile: 000-000-0000
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| With a copy to: |
Xxxxxx
& Xxxxxx, LLP
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000
Xxxxx 0 Xxxxx, Xxxxx 000
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Xxxxxxxxx,
XX 00000
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Attention: Xxxxx
X. Xxxxxx, Esq.
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Telephone: 000-000-0000
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Facsimile: 000-000-0000
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| If to the Secured Party: | AJW Partners, LLC |
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AJW
Offshore, Ltd.
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AJW
Qualified Partners, LLC
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New
Millennium Capital Partners II, LLC
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0000
Xxxxxxxx Xxxxxxxxx
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Xxxxx
000
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Xxxxxx,
Xxx Xxxx 00000
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Attention: Xxxxx
Xxxxxxxx
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Facsimile: 000-000-0000
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| With a copy to: |
Xxxxxxx
Xxxxx Xxxxxxx & Xxxxxxxxx, LLP
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0000
Xxxxxx Xxxxxx, 00xx
Xxxxx
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Xxxxxxxxxxxx,
Xxxxxxxxxxxx 00000
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Attention: Xxxxxx
X. Xxxxxxxx, Esq.
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Facsimile: 000-000-0000
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14. Other
Security. To the extent that the Obligations are now or
hereafter secured by property other than the Collateral or by the guarantee,
endorsement or property of any other person, firm, corporation or other entity,
then the Secured Party shall have the right, in its sole discretion, to pursue,
relinquish, subordinate, modify or take any other action with respect thereto,
without in any way modifying or affecting any of the Secured Party’s rights and
remedies hereunder.
15. Miscellaneous.
(a) No
course
of dealing between the Company and the Secured Party, nor any failure to
exercise, nor any delay in exercising, on the part of the Secured Party, any
right, power or privilege hereunder or under the Notes shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or thereunder preclude any other or further exercise thereof
or the exercise of any other right, power or privilege.
(b) All
of
the rights and remedies of the Secured Party with respect to the Collateral,
whether established hereby or by the Notes or by any other agreements,
instruments or documents or by law shall be cumulative and may be exercised
singly or concurrently.
(c) This
Agreement constitutes the entire agreement of the parties with respect to the
subject matter hereof and is intended to supersede all prior negotiations,
understandings and agreements with respect thereto. Except as
specifically set forth in this Agreement, no provision of this Agreement may
be
modified or amended except by a written agreement specifically referring to
this
Agreement and signed by the parties hereto.
(d) In
the
event that any provision of this Agreement is held to be invalid, prohibited
or
unenforceable in any jurisdiction for any reason, unless such provision is
narrowed by judicial construction, this Agreement shall, as to such
jurisdiction, be construed as if such invalid, prohibited or unenforceable
provision had been more narrowly drawn so as not to be invalid, prohibited
or
unenforceable.
10
If,
notwithstanding the foregoing, any provision of this Agreement is held to
be
invalid, prohibited or unenforceable in any jurisdiction, such provision,
as to
such jurisdiction, shall be ineffective to the extent of such invalidity,
prohibition or unenforceability without invalidating the remaining portion
of
such provision or the other provisions of this Agreement and without affecting
the validity or enforceability of such provision or the other provisions
of this
Agreement in any other jurisdiction.
(e) No
waiver
of any breach or default or any right under this Agreement shall be considered
valid unless in writing and signed by the party giving such waiver, and no
such
waiver shall be deemed a waiver of any subsequent breach or default or right,
whether of the same or similar nature or otherwise.
(f) This
Agreement shall be binding upon and inure to the benefit of each party hereto
and its successors and assigns.
(g) Each
party shall take such further action and execute and deliver such further
documents as may be necessary or appropriate in order to carry out the
provisions and purposes of this Agreement.
(h) This
Agreement shall be construed in accordance with the laws of the State of New
York, except to the extent the validity, perfection or enforcement of a security
interest hereunder in respect of any particular Collateral which are governed
by
a jurisdiction other than the State of New York in which case such law shall
govern. Each of the parties hereto irrevocably submit to the
exclusive jurisdiction of any New York State or United States Federal court
sitting in Manhattan county over any action or proceeding arising out of or
relating to this Agreement, and the parties hereto hereby irrevocably agree
that
all claims in respect of such action or proceeding may be heard and determined
in such New York State or Federal court. The parties hereto agree
that a final judgment in any such action or proceeding shall be conclusive
and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. The parties hereto further waive any
objection to venue in the State of New York and any objection to an action
or
proceeding in the State of New York on the basis of forum non
conveniens.
(i) EACH
PARTY HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRAIL OF
ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL
ENCOMPASSING OF ANY DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE
TO
THE SUBJECT MATER OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND
STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS
A MATERIAL INDUCEMENT FOR EACH PARTY TO ENTER INTO A BUSINESS RELATIONSHIP,
THAT
EACH PARTY HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT
AND
THAT EACH PARTY WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE
DEALINGS. EACH PARTY FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS
WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY HAS KNOWINGLY AND VOLUNTARILY
WAIVES ITS RIGHTS TO A JURY TRIAL FOLLOWING SUCH
CONSULTATION.
11
THIS
WAIVER IS IRREVOCABLE, MEANING THAT, NOTWITHSTANDING ANYTHING HEREIN TO THE
CONTRARY, IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS AND SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT. IN THE EVENT OF A LITIGATION, THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
(j) This
Agreement may be executed in any number of counterparts, each of which when
so
executed shall be deemed to be an original and, all of which taken together
shall constitute one and the same Agreement. In the event that any
signature is delivered by facsimile transmission, such signature shall create a
valid binding obligation of the party executing (or on whose behalf such
signature is executed) the same with the same force and effect as if such
facsimile signature were the original thereof.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
12
IN
WITNESS WHEREOF, the parties hereto have caused this Security Agreement to
be
duly executed on the day and year first above written.
|
MIDNIGHT
HOLDINGS GROUP,
INC.
|
|
|
By:
|
/s/ Xxxxxxxx Xxxxx |
|
Xxxxxxxx
Xxxxx
|
|
|
Chief
Executive Officer
|
|
|
AJW
PARTNERS,
LLC
By: SMS
Group, LLC
|
|
|
By:
|
/s/
Xxxxx X. Xxxxxxxx
|
|
Xxxxx
X. Xxxxxxxx
|
|
|
Manager
|
|
|
AJW
OFFSHORE,
LTD.
By: First
Street Manager II, LLC
|
|
|
By:
|
/s/
Xxxxx X. Xxxxxxxx
|
|
Xxxxx
X. Xxxxxxxx
|
|
|
Manager
|
|
|
AJW
QUALIFIED PARTNERS,
LLC
By: AJW
Manager, LLC
|
|
|
By:
|
/s/
Xxxxx X. Xxxxxxxx
|
|
Xxxxx
X. Xxxxxxxx
|
|
|
Manager
|
|
|
NEW
MILLENNIUM CAPITAL PARTNERS
II, LLC
By: First
Street Manager II, LLC
|
|
|
By:
|
/s/
Xxxxx X. Xxxxxxxx
|
|
Xxxxx
X. Xxxxxxxx
|
|
|
Manager
|
|
13
|
Wholly-Owned
Subsidiaries
of
|
|
|
Midnight
Holdings Group,
Inc.:
|
|
|
By:
|
/s/ Xxxxxxxx Xxxxx |
|
Xxxxxxxx
Xxxxx
Chief
Executive Officer and/or President on behalf of the following
entities:
|
|
|
MIDNIGHT
AUTO HOLDINGS,
INC.,
a
Michigan corporation
|
|
|
MIDNIGHT
AUTO FRANCHISE
CORP.,
a
Michigan corporation
|
|
|
ALL
NIGHT AUTO® STORES,
INC.,
a
Michigan corporation
|
|
|
ALL
NIGHT AUTO
INC.,
a
Michigan corporation – business done as All Night Auto of
Troy
|
|
|
ALL
NIGHT AUTO-GROSSE POINTE,
INC.,
a
Michigan corporation – business done as All Night Auto of Grosse
Pointe
|
|
|
ALL
NIGHT AUTO OF NORMAL
NORTH,
a
Michigan corporation
|
|
|
ALL
NIGHT AUTO OF
AURORA,
a
Michigan corporation
|
|
|
ALL
NIGHT AUTO OF
JOLIET,
a
Michigan corporation
|
|
|
ALL
NIGHT AUTO OF FORT
XXXXX,
a
Michigan corporation
|
|
14
SCHEDULE
A
Principal
Place of Business
of the Company:
00000
Xxxx Xxxx, Xxxxx 000 Xxxxxxx
Xxxxxxxx, XX 00000
Locations
Where Collateral
is Located or Stored:
0000
Xxxxxxxxx Xxxx, Xxxx, XX
00000
000
X. Xxxx Xxxx, Xxxxxx,
XX 00000
0000
Xxxx 000xx
Xxxxxx, Xxxxxx
Xxxx, XX 00000
0000
Xxxx 000xx
Xxxxxx, Xxxxxx
Xxxx, XX 00000
0000
Xxxx Xxxxxxxxx, Xxxxx 000, Xxxxx,
XX 00000
List
of Subsidiaries of the
Company:
Midnight
Auto Holdings,
Inc.
Midnight
Auto Franchise
Corp.
All
Night Auto, Inc.
All
Night Auto Grosse Pointe,
Inc.
All
Night Auto Stores,
Inc.
All
Night Auto of Normal North,
Inc.
All
Night Auto of Aurora,
Inc.
All
Night Auto of Joliet,
Inc.
All
Night Auto of Fort Xxxxx,
Inc.
15
