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EXHIBIT 10.10
SECURITY AGREEMENT
THIS SECURITY AGREEMENT dated as of March 15, 2001, is by and between
Global Election Systems, Inc., a Delaware corporation (the "Debtor"), whose
address is 0000 Xxxxxxx Xxxx, XxXxxxxx, Xxxxx 00000, and Xxxxx, Xxxxx & Company
Limited, an Ontario corporation (the "Secured Party"), whose address is Xxxxx
000, 000 Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxx X0X 0X0.
RECITALS:
A. Global Election Systems Inc., a British Columbia corporation (the
"Borrower"), desires to obtain extensions of credit from the Secured Party.
B. The Secured Party has conditioned its obligations to make such
extensions of credit upon the execution and delivery of this Agreement by the
Debtor.
NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
Definitions
Section 1.1. Definitions. All capitalized terms used herein and not
otherwise defined shall have the meanings given to such terms in the Note (as
defined herein). As used in this Agreement, the following terms have the
following meanings:
"Collateral" has the meaning specified in Section 2.1 of this
Agreement.
"Document" means any "document", as such term is defined in
Section 9.105(a)(6) of the UCC (or, after July 1, 2001, Section
9.102(a)(30) of the UCC), now owned or hereafter acquired by the
Debtor, including, without limitation, all documents of title and
warehouse receipts of the Debtor.
"GAAP" means generally accepted accounting principles.
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"Inventory" means (a) all work-in-process and finished goods,
whether now owned or hereafter acquired by Debtor, and (b) all
Documents evidencing any of the foregoing.
"Obligations" means all obligations, indebtedness, and
liabilities of the Borrower to the Secured Party evidenced by that
certain promissory note dated as of March 15, 2001, executed by the
Borrower and payable to the order of the Secured Party in the principal
amount of Four Million and No/100 Canadian Dollars (CAD $4,000,000.00)
(the "Note"); and (b) all extensions, renewals, and modifications of
any of the foregoing.
"Proceeds" means any "proceeds", as such term is defined in
Section 9.306 of the UCC (or, after July 1, 2001, Section 9.102(a)(65)
of the UCC) and, in any event, shall include, but not be limited to,
(a) any and all proceeds of any insurance, indemnity, warranty, or
guaranty payable to the Debtor from time to time with respect to any of
the Collateral, (b) any and all payments (in any form whatsoever) made
or due and payable to the Debtor from time to time in connection with
any requisition, confiscation, condemnation, seizure, or forfeiture of
all or any part of the Collateral by any governmental authority or
agency (or any person acting under color of governmental authority or
agency), and (c) any and all other amounts from time to time paid or
payable under or in connection with any of the Collateral.
"UCC" means the Uniform Commercial Code as in effect in the
State of Texas or, if so required with respect to any particular
Collateral by mandatory provisions of applicable law, as in effect in
the jurisdiction in which such Collateral is located.
ARTICLE II
Security Interest
Section 2.1. Security Interest. As collateral security for the prompt
payment and performance in full when due of the Obligations (whether at stated
maturity, by acceleration, or otherwise), the Debtor hereby grants to the
Secured Party a lien on and security interest in all of the Debtor's right,
title, and interest in and to the following, whether now owned or hereafter
arising or acquired and wherever located (collectively, the "Collateral"):
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(a) all Inventory; and
(b) all Proceeds and products of any or all of the foregoing.
Without limiting the foregoing, this Agreement secures the payment of all
amounts that constitute part of the Obligations and would be owed by the
Borrower to the Secured Party but for the fact that they are unenforceable or
not allowable due to the existence of bankruptcy, reorganization, or similar
proceedings involving the Borrower.
Section 2.2. Debtor Remains Liable. Notwithstanding anything to the
contrary contained herein, (a) the Debtor shall remain liable under the
contracts and agreements included in the Collateral to the extent set forth
therein to perform all of its duties and obligations thereunder to the same
extent as if this Agreement had not been executed, (b) the exercise by the
Secured Party of any of its rights hereunder shall not release the Debtor from
any of its duties or obligations under the contracts and agreements included in
the Collateral, and (c) the Secured Party shall not have any obligation or
liability under any of the contracts and agreements included in the Collateral
by reason of this Agreement, nor shall the Secured Party be obligated to perform
any of the obligations or duties of the Debtor thereunder or to take any action
to collect or enforce any claim for payment assigned hereunder.
ARTICLE III
Representations and Warranties
To induce the Secured Party to enter into this Agreement, the Debtor
represents and warrants to the Secured Party that:
Section 3.1. Corporate Existence. The Debtor (a) is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation; (b) has all requisite corporate power and
authority to own its assets and carry on its business as now being or as
proposed to be conducted; and (c) is qualified to do business in all
jurisdictions in which the nature of its business makes such qualification
necessary and where failure to so qualify would have a material adverse effect
on its business, condition (financial or otherwise), operations, prospects, or
properties. The Debtor has the corporate power and authority to execute,
deliver, and perform its obligations under this Agreement.
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Section 3.2. Corporate Action; No Breach. The execution, delivery, and
performance by the Debtor of this Agreement and compliance with the terms and
provisions hereof have been duly authorized by all requisite corporate action on
the part of the Debtor and do not and will not (a) violate or conflict with, or
result in a breach of, or require any consent under (i) the certificate of
incorporation or bylaws of the Debtor, (ii) any applicable law, rule, or
regulation or any order, writ, injunction, or decree of any governmental
authority or agency or arbitrator, or (iii) any agreement or instrument to which
the Debtor is a party or by which it or any of its property is bound or subject,
or (b) constitute a default under any such agreement or instrument, or result in
the creation or imposition of any lien (except as provided in Section 2.1
hereof) upon any of the revenues or assets of the Debtor.
Section 3.3. Approvals. No authorization, approval, or consent of, and
no filing or registration with, any governmental authority or agency or third
party is or will be necessary for the execution, delivery, or performance by the
Debtor of this Agreement or the validity or enforceability thereof.
Section 3.4. Enforceability. This Agreement constitutes the legal,
valid, and binding obligation of the Debtor, enforceable against the Debtor in
accordance with its terms, except as limited by bankruptcy, insolvency, or other
laws of general application relating to the enforcement of creditors' rights.
Section 3.5. Title. The Debtor is, and with respect to Collateral
acquired after the date hereof the Debtor will be, the legal and beneficial
owner of the Collateral free and clear of any lien, security interest, or other
encumbrance.
Section 3.6. Financing Statements. No financing statement, security
agreement, or other lien instrument covering all or any part of the Collateral
is on file in any public office, except as may have been filed in favor of the
Secured Party pursuant to this Agreement.
Section 3.7. Principal Place of Business. The principal place of
business and chief executive office of the Debtor, and the office where the
Debtor keeps its books and records, is located at the address of the Debtor
shown at the beginning of this Agreement.
Section 3.8. Independent Investigation. The Debtor has, independently
and without reliance upon the Secured Party and based upon such documents and
information as it has deemed appropriate, made its own credit analysis and
decision
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to enter into this Agreement. There are no conditions precedent to the full
effectiveness of this Agreement that have not been fully and permanently
satisfied.
Section 3.9. Benefit to Debtor. The value of the consideration received
and to be received by the Debtor as a result of the Borrower and the Secured
Party entering into the Loan Agreement and the Debtor executing and delivering
this Agreement is reasonably worth at least as much as the liability and
obligation of the Debtor hereunder, and such liability and obligation and the
Borrower's entering into the Loan Agreement have benefited and may reasonably
expected to benefit the Debtor directly and indirectly.
ARTICLE IV
Covenants
The Debtor covenants and agrees with the Secured Party that until the
Obligations are paid and performed in full and all commitments of the Secured
Party to the Borrower and the Debtor have terminated:
Section 4.1. Encumbrances. The Debtor shall not create, permit, or
suffer to exist, and shall defend the Collateral against, any lien, security
interest, or other encumbrance on the Collateral, and shall defend the Debtor's
rights in the Collateral and the Secured Party's security interest in the
Collateral against the claims and demands of all persons or entities. The Debtor
shall do nothing to impair the rights of the Secured Party in the Collateral.
Section 4.2. Margin Agreement. The Debtor shall maintain at all times
the amount of Collateral (based upon the book value of such Collateral
calculated in accordance with GAAP) described herein in an amount not less than
150% of the outstanding principal amount of the Note.
Section 4.3. Further Assurances. At any time and from time to time,
upon the request of the Secured Party, and at the sole expense of the Debtor,
the Debtor shall promptly execute and deliver all such further instruments,
agreements, and documents and take such further action as the Secured Party may
deem necessary or desirable to preserve and perfect its security interest in the
Collateral and carry out the provisions and purposes of this Agreement. Without
limiting the generality of the foregoing, the Debtor shall (a) execute and
deliver to the Secured Party such financing statements as the Secured Party may
from time to time require; (b) deliver and pledge to the Secured Party all
Documents (including, without
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limitation, negotiable documents of title) evidencing Inventory; and (c) execute
and deliver to the Secured Party such other documents, instruments, and
agreements as the Secured Party may require to perfect and maintain the
validity, effectiveness, and priority of the Documents and the liens intended to
be created thereby. The Debtor 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 law. A carbon, photographic, or other reproduction of this Agreement or of
any financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement and may be filed as a financing statement.
Section 4.4. Risk of Loss; Insurance. The Debtor shall be responsible
for any loss or damage to the Collateral. The Debtor shall, at its own expense,
maintain insurance with respect to the Collateral in such amounts against such
risks, in such form, and with such insurers as is usually carried by
corporations engaged in similar businesses and owning similar properties in the
same general areas in which the Debtor operates.
Section 4.5. Inspection Rights. The Debtor shall permit the Secured
Party and its representatives to examine and inspect the Collateral and to
examine, inspect, and copy the Debtor's books and records at any reasonable time
and during normal business hours upon one (1) business day's prior notice.
Section 4.6. Corporate Changes. The Debtor shall not change its name,
identity, or corporate structure in any manner that might make any financing
statement filed in connection with this Agreement seriously misleading unless
the Debtor shall have given the Secured Party thirty (30) days prior written
notice thereof and shall have taken all action deemed necessary or desirable by
the Secured Party to make each financing statement not seriously misleading. The
Debtor shall not change its principal place of business, chief executive office,
or the place where it keeps its books and records unless it shall have given the
Secured Party thirty (30) days prior written notice thereof and shall have taken
all action deemed necessary or desirable by the Secured Party to cause its
security interest in the Collateral to be perfected with the priority required
by this Agreement.
Section 4.7. Reporting Requirements. The Debtor shall furnish to the
Secured Party the following: (a) within five (5) business days after the end of
each calendar month, an inventory report containing a description of the
Inventory and the book value of the Inventory as of the end of such calendar
month, calculated in
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accordance with GAAP; and (b) on or before such dates such reports or
certificates are delivered to Hibernia National Bank ("Hibernia"), copies of any
reports or certificates prepared by the Debtor regarding compliance with the
financial covenants contained in that certain Loan Agreement dated as of July
19, 2000, by and between Debtor and Hibernia.
Section 4.8. Inventory. The Debtor shall maintain the Inventory in good
condition and repair (ordinary wear and tear excepted) and in accordance with
any manufacturer's manual. The Debtor shall not permit any waste or destruction
of the Inventory or any part thereof. The Debtor shall not permit the Inventory
to be used in violation of any law, rule, or regulation or inconsistently with
the terms of any policy of insurance. The Debtor shall not use or permit any of
the Inventory to be used in any manner or for any purpose that would impair its
value or expose it to unusual risk.
Section 4.9. Taxes and Claims. The Debtor shall pay and discharge,
before the same become delinquent, (a) all taxes, assessments, and governmental
charges imposed upon it or upon any of its property, and (b) all lawful claims
that, if unpaid, might become a lien upon any of its property; provided,
however, that the Debtor shall not be required to pay or discharge any such tax,
assessment, or governmental charge if (i) the amount or validity thereof is
being contested in good faith by proper proceedings being diligently pursued,
(ii) adequate reserves therefor have been established in accordance with GAAP,
and (iii) such proceedings do not subject the Secured Party to any criminal or
civil penalty or liability or involve any substantial risk of the sale,
forfeiture, or loss of any item of Collateral.
Section 4.10. Compliance with Laws. The Debtor shall comply in all
material respects with all applicable laws, rules, regulations, orders, and
decrees of any governmental authority or agency or arbitrator.
Section 4.11. Compliance with Agreements. The Debtor shall comply in
all material respects with all agreements, contracts, and instruments binding on
it or affecting its properties or businesses.
Section 4.12. Notification. The Debtor shall promptly notify the
Secured Party of (a) any lien, security interest, encumbrance, or claim that has
attached to or been made or asserted against any of the Collateral, (b) any
material change in any of the Collateral, including, without limitation, any
material damage to or loss of any of the Collateral, (c) the occurrence of any
other event that could have a material adverse effect on the Collateral or the
security interest created
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hereunder, and (d) the occurrence or existence of any Event of Default or of any
event or condition that, with the giving of notice or lapse of time or both,
would constitute an Event of Default.
ARTICLE V
Rights of the Secured Party
Section 5.1. Power of Attorney. The Debtor hereby irrevocably
constitutes and appoints the Secured Party and any officer or agent thereof,
with full power of substitution, as its true and lawful attorney-in-fact with
full irrevocable power and authority in the name of the Debtor or in its own
name, to take any and all action and to execute any and all documents and
instruments which the Secured Party at any time and from time to time deems
necessary or desirable to accomplish the purposes of this Agreement and, without
limiting the generality of the foregoing, the Debtor hereby gives the Secured
Party the power and right on behalf of the Debtor and in its own name to do any
of the following upon the occurrence and continuance of an Event of Default,
without notice to or the consent of the Debtor:
(i) to demand, xxx for, collect, or receive in the name of the
Debtor or in its own name, any money or property at any time payable or
receivable on account of or in exchange for any of the Collateral and,
in connection therewith, endorse checks, notes, drafts, acceptances,
money orders, documents of title, or any other instruments for the
payment of money under the Collateral or any policy of insurance;
(ii) to pay or discharge taxes, liens, or other encumbrances
levied or placed on or threatened against the Collateral;
(iii) to notify post office authorities to change the address
for delivery of mail of the Debtor to an address designated by the
Secured Party and to receive, open, and dispose of mail addressed to
the Debtor;
(iv) (A) to direct account debtors and any other parties
liable for any payment under any of the Collateral to make payment of
any and all monies due and to become due thereunder directly to the
Secured Party or as the Secured Party shall direct; (B) to receive
payment of and receipt for any and all monies, claims, and other
amounts due and to become due at any time in respect of or arising out
of any Collateral; (C) to sign and endorse
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any invoices, freight or express bills, bills of lading, storage or
warehouse receipts, drafts against debtors, assignments, proxies, stock
powers, verifications, and notices in connection with accounts and
other documents relating to the Collateral; (D) to commence and
prosecute any suit, action, or proceeding at law or in equity in any
court of competent jurisdiction to collect the Collateral or any part
thereof and to enforce any other right in respect of any Collateral;
(E) to defend any suit, action, or proceeding brought against the
Debtor with respect to any Collateral; (F) to settle, compromise, or
adjust any suit, action, or proceeding described above and, in
connection therewith, to give such discharges or releases as the
Secured Party may deem appropriate; (G) to exchange any of the
Collateral for other property upon any merger, consolidation,
reorganization, recapitalization, or other readjustment of the issuer
thereof and, in connection therewith, deposit any of the Collateral
with any committee, depositary, transfer agent, registrar, or other
designated agency upon such terms as the Secured Party may determine;
(H) to add or release any guarantor, indorser, surety, or other party
to any of the Collateral; (I) to renew, extend, or otherwise change the
terms and conditions of any of the Collateral; (J) to make, settle,
compromise, or adjust claims under any insurance policy covering any of
the Collateral; and (K) to sell, transfer, pledge, make any agreement
with respect to or otherwise deal with any of the Collateral as fully
and completely as though the Secured Party were the absolute owner
thereof for all purposes, and to do, at the Secured Party's option and
the Debtor's expense, at any time, or from time to time, all acts and
things which the Secured Party deems necessary to protect, preserve, or
realize upon the Collateral and the Secured Party's security interest
therein.
This power of attorney is a power coupled with an interest and shall be
irrevocable. The Secured Party shall be under no duty to exercise or withhold
the exercise of any of the rights, powers, privileges, and options expressly or
implicitly granted to the Secured Party in this Agreement, and shall not be
liable for any failure to do so or any delay in doing so. The Secured Party
shall not be liable for any act or omission or for any error of judgment or any
mistake of fact or law in its individual capacity or in its capacity as
attorney-in-fact except acts or omissions resulting from its willful misconduct.
This power of attorney is conferred on the Secured Party solely to protect,
preserve, and realize upon its security interest in the Collateral. The Secured
Party shall not be responsible for any decline in the value of the Collateral
and shall not be required to take any steps to preserve rights
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against prior parties or to protect, preserve, or maintain any security interest
or lien given to secure the Collateral.
Section 5.2. Performance by the Secured Party. If the Debtor shall fail
to perform any covenant or agreement contained in this Agreement, the Secured
Party may perform or attempt to perform such covenant or agreement on behalf of
the Debtor. In such event, the Debtor shall, at the request of the Secured
Party, pay any amount expended by the Secured Party in connection with such
performance or attempted performance to the Secured Party, together with
interest thereon at the maximum rate permitted by applicable law from and
including the date of such expenditure to but excluding the date such
expenditure is paid in full. Notwithstanding the foregoing, it is expressly
agreed that the Secured Party shall not have any liability or responsibility for
the performance of any obligation of the Debtor under this Agreement.
ARTICLE VI
Rights and Remedies
Section 6.1. Rights and Remedies. If an Event of Default shall have
occurred and be continuing, the Secured Party shall have the following rights
and remedies:
(i) The Secured Party may declare the Obligations or any part
thereof immediately due and payable, without notice, demand,
presentment, notice of dishonor, notice of acceleration, notice of
intent to accelerate, notice of intent to demand, protest, or other
formalities of any kind, all of which are hereby expressly waived by
the Debtor.
(ii) In addition to all other rights and remedies granted to
the Secured Party in this Agreement or in the Note or by applicable
law, the Secured Party shall have all of the rights and remedies of a
secured party under the UCC (whether or not the UCC applies to the
affected Collateral). Without limiting the generality of the foregoing,
the Secured Party may (A) without demand or notice to the Debtor,
collect, receive, or take possession of the Collateral or any part
thereof and for that purpose the Secured Party may enter upon any
premises on which the Collateral is located and remove the Collateral
therefrom or render it inoperable, and/or (B) sell, lease, or otherwise
dispose of the Collateral, or any part thereof, in one or more parcels
at public or private sale or sales, at the Secured Party's offices or
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elsewhere, for cash, on credit or for future delivery, and upon such
other terms as the Secured Party may deem commercially reasonable. The
Secured Party shall have the right at any public sale or sales, and, to
the extent permitted by applicable law, at any private sale or sales,
to bid and become a purchaser of the Collateral or any part thereof
free of any right or equity of redemption on the part of the Debtor,
which right or equity of redemption is hereby expressly waived and
released by the Debtor. Upon the request of the Secured Party, the
Debtor shall assemble the Collateral and make it available to the
Secured Party at any place designated by the Secured Party that is
reasonably convenient to the Debtor and the Secured Party. The Debtor
agrees that the Secured Party shall not be obligated to give more than
ten (10) days written notice of the time and place of any public sale
or of the time after which any private sale may take place and that
such notice shall constitute reasonable notice of such matters. The
Secured Party shall not be obligated to make any sale of Collateral if
it shall determine not to do so, regardless of the fact that notice of
sale of Collateral may have been given. The Secured Party may, without
notice or publication, adjourn any public or private sale or cause the
same to be adjourned from time to time by announcement at the time and
place fixed for sale, and such sale may, without further notice, be
made at the time and place to which the same was so adjourned. The
Debtor shall be liable for all expenses of retaking, holding, preparing
for sale, or the like, and all reasonable attorneys' fees, legal
expenses, and all other costs and expenses incurred by the Secured
Party in connection with the collection of the Obligations and the
enforcement of the Secured Party's rights under this Agreement. The
Debtor shall remain liable for any deficiency if the Proceeds of any
sale or other disposition of the Collateral are insufficient to pay the
Obligations in full. The Secured Party may apply the Collateral against
the Obligations in such order and manner as the Secured Party may elect
in its sole discretion. The Debtor waives all rights of marshalling,
valuation, and appraisal in respect of the Collateral.
(iii) The Secured Party may cause any or all of the Collateral
held by it to be transferred into the name of the Secured Party or the
name or names of the Secured Party's nominee or nominees.
(iv) The Secured Party may exercise or cause to be exercised
all voting rights and corporate powers in respect of the Collateral.
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(v) The Secured Party may collect or receive all money or
property at any time payable or receivable on account of or in exchange
for any of the Collateral, but shall be under no obligation to do so.
(vi) On any sale of the Collateral, the Secured Party is
hereby authorized to comply with any limitation or restriction with
which compliance is necessary, in the view of the Secured Party's
counsel, in order to avoid any violation of applicable law or in order
to obtain any required approval of the purchaser or purchasers by any
applicable governmental authority or agency.
ARTICLE VII
Miscellaneous
Section 7.1. Expenses. The Debtor agrees to pay on demand all costs and
expenses incurred by the Secured Party in connection with the preparation,
negotiation, execution, administration, and enforcement of this Agreement and
any and all amendments, modifications, and supplements hereto. The Debtor agrees
to pay and to hold the Secured Party harmless from and against all filing fees
and all excise, sales, stamp, and other taxes payable in connection with this
Agreement or the transactions contemplated hereby.
Section 7.2. Indemnification. The Debtor hereby agrees to indemnify the
Secured Party and each affiliate thereof and their respective officers,
directors, employees, attorneys, and agents from, and hold each of them harmless
against, any and all losses, liabilities, claims, damages, penalties, judgments,
disbursements, costs, and expenses (including reasonable attorneys' fees) to
which any of them may become subject which directly or indirectly arise from or
relate to (a) the negotiation, execution, delivery, performance, administration,
or enforcement of this Agreement, (b) any of the transactions contemplated by
this Agreement, (c) any breach by the Debtor of any representation, warranty,
covenant, or other agreement contained in this Agreement, or (d) any
investigation, litigation, or other proceeding, including, without limitation,
any threatened investigation, litigation, or other proceeding relating to any of
the foregoing. Without limiting any provision of this Agreement, it is the
express intention of the parties hereto that each person or entity to be
indemnified under this Section shall be indemnified from and held harmless
against any and all losses, liabilities, claims, damages, penalties, judgments,
disbursements, costs, and expenses (including
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reasonable attorneys' fees) arising out of or resulting from the sole or
contributory negligence of such person or entity.
Section 7.3. No Waiver; Cumulative Remedies. No failure on the part of
the Secured Party to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power, or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power, or privilege under this Agreement preclude any other or
further exercise thereof or the exercise of any other right, power, or
privilege. The rights and remedies provided for in this Agreement are cumulative
and not exclusive of any rights and remedies provided by law.
Section 7.4. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the Debtor and the Secured Party and their
respective heirs, successors, and assigns, except that the Debtor may not assign
any of its rights or obligations under this Agreement without the prior written
consent of the Secured Party.
Section 7.5. AMENDMENT; ENTIRE AGREEMENT. THIS AGREEMENT EMBODIES THE
FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDES ANY AND ALL
PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER
WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE
CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS
AMONG THE PARTIES HERETO. The provisions of this Agreement may be amended or
waived only by an instrument in writing signed by the parties hereto.
Section 7.6. Notices. All notices and other communications provided for
in this Agreement shall be given or made by telex, telegraph, telecopy, cable,
or in writing and telexed, telecopied, telegraphed, cabled, mailed by certified
mail return receipt requested, or delivered to the intended recipient at the
"Address for Notices" specified below its name on the signature pages hereof;
or, as to any party at such other address as shall be designated by such party
in a notice to the other party given in accordance with this Section. Except as
otherwise provided in this Agreement, all such communications shall be deemed to
have been duly given when transmitted by telex or telecopy, subject to telephone
confirmation of receipt, or delivered to the telegraph or cable office, subject
to telephone confirmation of receipt,
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or when personally delivered or, in the case of a mailed notice, when duly
deposited in the mails, in each case given or addressed as aforesaid.
Section 7.7. Governing Law; Venue; Service of Process. This Agreement
shall be governed by and construed in accordance with the laws of British
Columbia or Texas at the election of the Secured Party. The Debtor hereby
irrevocably (a) submits to the nonexclusive jurisdiction of such courts, and (b)
waives any objection it may now or hereafter have as to the venue of any such
action or proceeding brought in such court or that such court is an inconvenient
forum. The Debtor agrees that service of process upon it may be made by
certified or registered mail, return receipt requested, at its address specified
or determined in accordance with the provisions of Section 7.6 of this
Agreement. Nothing in this Agreement shall affect the right of the Secured Party
to serve process in any other manner permitted by law or shall limit the right
of the Secured Party to bring any action or proceeding against the Debtor or
with respect to any of its property in courts in other jurisdictions.
Section 7.8. Headings. The headings, captions, and arrangements used in
this Agreement are for convenience only and shall not affect the interpretation
of this Agreement.
Section 7.9. Survival of Representations and Warranties. All
representations and warranties made in this Agreement or in any certificate
delivered pursuant hereto shall survive the execution and delivery of this
Agreement, and no investigation by the Secured Party shall affect the
representations and warranties or the right of the Secured Party to rely upon
them.
Section 7.10. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
Section 7.11. Waiver of Bond. In the event the Secured Party seeks to
take possession of any or all of the Collateral by judicial process, the Debtor
hereby irrevocably waives any bonds and any surety or security relating thereto
that may be required by applicable law as an incident to such possession, and
waives any demand for possession prior to the commencement of any such suit or
action.
Section 7.12. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be
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ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 7.13. Construction. The Debtor and the Secured Party
acknowledge that each of them has had the benefit of legal counsel of its own
choice and has been afforded an opportunity to review this Agreement with its
legal counsel and that this Agreement shall be construed as if jointly drafted
by the Debtor and the Secured Party.
Section 7.14. Obligations Absolute. All rights and remedies 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 Obligations
or this Agreement or any other agreement or instrument relating to;
(b) any change in the time, manner, or place of payment 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
Obligations or this Agreement;
(c) any exchange, release, or nonperfection of any Collateral,
or any release or amendment or waiver of or consent to any departure
from any guarantee, for all or any of the Obligations; or
(d) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, the Debtor.
Section 7.15. Termination. If all of the Obligations shall have been
paid and performed in full and all commitments of the Secured Party to the
Debtor and the Borrower shall have expired or terminated, the Secured Party
shall, upon the written request of the Debtor, promptly execute and deliver to
the Debtor a proper instrument or instruments acknowledging the release and
termination of the security interests created by this Agreement, and shall duly
assign and deliver to the Debtor (without recourse and without any
representation or warranty) such of the Collateral as may be in the possession
of the Secured Party and has not previously been sold or otherwise applied
pursuant to this Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first written above.
DEBTOR:
GLOBAL ELECTION SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
Xxxxxx X. Xxxxxxxxx, President
Address for Notices:
-------------------
0000 Xxxxxxx Xxxx
XxXxxxxx, Xxxxx 00000
Fax No.: 000-000-0000
Telephone No.: 000-000-0000
Attention: Xxxx Xxxxxxxxx
Chief Financial Officer
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SECURED PARTY:
XXXXX, XXXXX & COMPANY LIMITED
By: /s/ X.X. Xxxx
Name: X.X. Xxxx
Title: President
Address for Notices:
-------------------
Xxxxx 000, 000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Fax No.: 000-000-0000
Telephone No.: 000-000-0000
Attention: X. X. Xxxx
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