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Exhibit 4.4
SECURITY INTEREST AND PLEDGE PROVISIONS
For purposes of this ANNEX VII, the terms "Debtor" and "Secured Party"
have the meanings ascribed to them in the Securities Purchase Agreement (as
defined below), to which this Annex VII is attached.
Unless otherwise specified, all capitalized terms not otherwise defined
herein shall have the meanings ascribed to them in the Securities Purchase
Agreement of even date herewith (the "Securities Purchase Agreement") to which
the undersigned Debtor and the Lenders named therein are parties.
These Security Interest and Pledge Provisions are sometimes referred to
as the "Security Interest Agreement."
Section 1. The Security Interests.
(a) In order to secure the due and punctual fulfillment of the
Obligations (as defined below), the Debtor hereby grants, conveys, transfers and
assigns to the Secured Party a continuing security interest in the following
described fixtures and personal property, whether now owned or hereafter
acquired, together with all additions, substitutions, replacements and proceeds
and all income, interest, dividends and other distributions thereon (hereinafter
collectively called the "Collateral"):
all assets and properties of whatever kind and description, excluding
intellectual property, now or hereafter owned by the Debtor, and all
accessions, additions or improvements to, all replacements,
substitutions and parts for, and all proceeds and products of the
foregoing; all bank and securities accounts of any kind or nature; all
books, records and documents relating to the foregoing located at the
principal place of business or any other place of business of the
Debtor, or at such other location as the business may hereafter be
located , or held by any agent, representative or bailee of the Debtor
wherever located.
(b) The security interests granted pursuant to this Section 1 (the
"Security Interests") are granted as security only and shall not subject the
Secured Party to, or transfer or in any way affect or modify, any obligation or
liability of the Debtor under any of the Collateral or any transaction which
gave rise thereto.
(c) If the Collateral includes certificated securities, documents or
instruments, such certificates are herewith delivered to the Secured Party or to
the Agent (as defined below) or the
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Agent's designee, accompanied by duly executed blank stock or bond powers or
assignments, as applicable. The Debtor hereby authorizes the transfer of
possession of all certificates, instruments, documents and other evidence of the
Collateral to the Secured Party or the Agent or the Agent's designee.
Notwithstanding anything to the contrary contained herein, this Security
Interest Agreement evidences a present and absolute pledge of the Collateral to
the Secured Party, which shall be effective upon the execution of this Security
Interest Agreement.
(d) The term " Obligations" means the due and punctual fulfillment and
performance of all of the Debtor's obligations to the Secured Party whether now
existing or hereafter arising (i) under each of the Securities Purchase
Agreement, the Registration Rights Agreement, the Debentures, or any other
Transaction Agreements and all other documentation and instruments reflecting
the obligations of the Debtor to the Secured Party (collectively, the "Debtor
Agreements") and (ii) any and all other obligations as may be incurred or
assumed by the Debtor to the Secured Party from time to time; all of the
foregoing whether arising under any agreement, instrument or document, whether
or not for the payment of money, whether arising by reason of an extension of
credit, opening a letter of credit, loan or guarantee or in any other manner,
whether direct or indirect (including those acquired by assignment or
participation), absolute or contingent, joint or several, due or to become due,
whether now existing or hereafter arising, and any amendments, extensions,
renewals or increases, and all costs and expenses of the Secured Party incurred
in the documentation, negotiation, modification, enforcement, collection or
otherwise in connection with any of the foregoing, including reasonable
attorneys' fees and expenses.
Section 2. Filing; Further Assurances.
(a) The Debtor will, at its expense, execute, deliver, file and record
(in such manner and form as the Secured Party may require), or permit the
Secured Party to file and record, any financing statements, any carbon,
photographic or other reproduction of a financing statement or this Security
Interest Agreement (which shall be sufficient as a financing statement
hereunder), any specific assignments or other paper that may be reasonably
necessary or desirable, or that the Secured Party may request, in order to
create, preserve, perfect or validate any Security Interest or to enable the
Secured Party to exercise and enforce its rights hereunder with respect to any
of the Collateral. Effective upon the existence of an Debtor Event of Default
(as defined below), the Debtor hereby appoints Secured Party as Xxxxxx's
attorney-in-fact to execute in the name and behalf of Debtor such additional
financing statements as Secured Party may request.
(b) Solely for administrative convenience and not for any other
purpose, each Secured Party has designated Xxxxxxx & Xxxxxx XX to act as agent
for and on behalf of the Secured Party (the "Agent") for purposes of taking
possession of the Collateral and for execution of and identification on any
financing statement or similar instrument referring to or describing the
Collateral. Such agency designation shall remain in effect until canceled by
such Secured Party; provided, however, that such cancellation shall not affect
the validity of any action theretofore taken by such agent pursuant to this
provision. The Debtor acknowledges and agrees to honor such designation and
acknowledges that the Agent is acting as the agent of the Secured Party and not
as a principal.
Section 3. Representations and Warranties of Debtor. Except for the
interests of
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(i) the Senior Lender, which has and retains an interest in the
Collateral which is senior to and has priority over the interest of the
Secured Party therein (the "Senior Lender Interests");
(ii) Xx Xxxxxx Distributor, Inc. ("Xxxxxx"), which has and retains an
interest in "all Xx Xxxxxx Distributor, Inc. inventory known and now in
possession and to be acquired" by the Debtor, to secure an aggregate
obligation not exceeding $13,050 (the "Xxxxxx Interests"); and
(iii) any other party (a "Subordinating Party") having a security
interest in or to any of the Collateral, each of which has acknowledged
and consented in writing to the priority of the security interest of
the Secured Party in and to the Collateral granted hereby,
the Debtor hereby represents and warrants to the Secured Party as follows:
(a) There are no restrictions on the pledge or transfer of any of the
Collateral, other than restrictions referenced on the face of any certificates
evidencing the Collateral.
(b) The Debtor is the legal, beneficial and record owner of the
Collateral, which is registered in the name of the Debtor as of the date hereof.
(c) Except for the Senior Lender Interests, the Xxxxxx Interests and
the interests of any Subordinating Party and except for the security interests
of Coast (as defined below), to the extent provided in the immediately following
sentence, the Collateral is free and clear of any security interests, pledges,
liens, encumbrances, charges, agreements, claims or other arrangements or
restrictions of any kind; and the Debtor will not incur, create, assume or
permit to exist any pledge, security interest, lien, charge or other encumbrance
of any nature whatsoever on any of the Collateral, or assign, pledge or
otherwise encumber any right to receive income from the Collateral, except in
connection with any secured financing with a New Senior Lender. Except for such
financing statements representing the Senior Lender Interests or in favor of
Subordinating Parties, a schedule of which is attached hereto as part of Exhibit
A and made a part hereof, no financing statement covering the Collateral is on
file in any public office, other than (i) financing statements naming Coast
Business Credit ("Coast"), as secured party, which financing statements are
being terminated by Coast, as reflected in an August 1, 2000 letter from Coast,
a copy of which has been provided to the Secured Party, (ii) financing
statements representing the Xxxxxx Interests, which security interest will be
released and which financing statements will be terminated upon Xxxxxx'x receipt
of payments aggregating no more than $13,050, as reflected in an August 3, 2000
letter from Xxx Xxxxxxx, Xx., Esq., counsel to Xxxxxx, a copy of which has been
provided to the Secured Party, and (iii) financing statements filed pursuant to
this Security Interest Agreement.
(d) Subject to the Senior Lender Interests and the Xxxxxx Interests,
the Debtor has the right to transfer the Collateral free of any encumbrances and
the Debtor will defend the Debtor's title to the Collateral against the claims
of all persons, and any registration with, or consent or approval to or action
by, any federal, state or other governmental authority or regulatory body which
was or is necessary for the validity of the pledge and grant of the security
interest in the Collateral has been obtained.
(e) Upon the occurrence of a Debtor Event of Default, no third party
other than the Senior Lender or the Subordinating Parties, has any rights to
receive notice of such default or the
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sale of the Collateral or any portion thereof, and no third party other than the
Senior Lender or the Subordinating Parties has rights to purchase all or any
portion of the Collateral.
(f) All additional information, representations and warranties
contained in Exhibit B attached hereto and made a part hereof are true, accurate
and complete on the date hereof.
Section 4. Covenants of Debtor. The Debtor hereby covenants and agrees
with the Secured Party that the Debtor, except with the prior written consent of
the Secured Party in each instance, (a) will, at the Debtor's sole cost and
expense, defend the Collateral against all claims and demands of all persons
(including Subordinating Parties) at any time claiming any interest therein
senior to the Secured Party's interest; (b) will provide the Secured Party with
prompt written notice of (i) any change in the chief executive officer of the
Debtor or the office where the Debtor maintains its books and records pertaining
to the Collateral; (ii) the movement or location of all or a material part of
the Collateral to or at any address other than as set forth in said Exhibit B;
and (iii) any facts which constitute an Debtor Event of Default, or which, with
the giving of notice and/or the passage of time, could or would constitute an
Debtor Event of Default, pursuant to Section 7 below; (c) will promptly pay any
and all taxes, assessments and governmental charges upon the Collateral prior to
the date penalties are attached thereto, except to the extent that such taxes,
assessments and charges shall be contested in good faith by the Debtor; (d) will
immediately notify the Secured Party of any event causing a substantial loss or
diminution in the value of all or any material part of the Collateral and the
amount or an estimate of the amount of such loss or diminution; (e) will have
and maintain adequate insurance at all times with respect to the Collateral
against risks of fire (including so-called extended coverage) and theft, and
such other risks as are customary in the Debtor's industry for the respective
items included in the Collateral, such insurance to be payable to the Secured
Party and the Debtor as their respective interests may appear, subject in all
events to the Senior Lender Interests, and shall provide for a minimum of ten
(10) days prior written notice of cancellation to the Secured Party, and Debtor
shall furnish the Secured Party with certificates or other evidence satisfactory
to the Secured Party of compliance with the foregoing insurance provisions; (f)
will not sell or offer to sell or otherwise assign, transfer or dispose of the
Collateral or any interest therein, without the prior written consent of the
Secured Party, except in the ordinary course of business; (g) other than the
Senior Lender Interests, will keep the Collateral free from any adverse lien,
security interest or encumbrance (except for encumbrances specified in Exhibit A
attached hereto) and in good order and repair, reasonable wear and tear
excepted, and will not waste or destroy the Collateral or any part thereof; and
(h) will not use the Collateral in material violation of any statute or
ordinance the violation of which could materially and adversely affect the
Debtor's business.
Section 5. Records Relating To Collateral. The Debtor will keep its
records concerning the Collateral at its offices designated in Exhibit B or at
such other place or places of business of which the Secured Party shall have
been notified in writing no less than ten (10) days prior thereto. The Debtor
will hold and preserve such records and chattel paper and will permit
representatives of the Secured Party at any time during normal business hours
upon reasonable notice to examine and inspect the Collateral and to make
abstracts from such records and chattel paper, and will furnish to the Secured
Party such information and reports regarding the Collateral as the Secured Party
may from time to time reasonably request.
Section 6. General Authority. The Debtor hereby appoints the Secured
Party the Debtor's lawful attorney, with full power of substitution, in the name
of the Debtor, for the sole use and benefit of the Secured Party, but at the
Debtor's expense, to exercise, all or any of the
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following powers with respect to all or any of the Collateral during the
existence of any Debtor Event of Default:
(a) to demand, sue for, collect, receive and give acquittance for any
and all monies due or to become due;
(b) to receive, take, endorse, assign and deliver all checks, notes,
drafts, documents and other negotiable and non- negotiable instruments and
chattel paper taken or received by the Secured Party;
(c) to settle, compromise, prosecute or defend any action or proceeding
with respect thereto;
(d) to sell, transfer, assign or otherwise deal in or with the same or
the proceeds thereof or the related goods securing the Collateral, as fully and
effectually as if the Secured Party were the sole and absolute owner thereof;
(e) to extend the time of payment of any or all thereof and to make any
allowance and other adjustments with reference thereto; and
(f) to discharge any taxes, liens, security interests or other
encumbrances at any time placed thereon;
provided that the Secured Party shall give the Debtor not less than ten (10)
days prior written notice of the time and place of any sale or other intended
disposition of any of the Collateral.
Section 7. Debtor Events of Default. The Debtor shall be in default
under this Security Interest Agreement upon the occurrence of any of the
following events (a "Debtor Event of Default"):
(a) if any representation or warranty made by the Debtor in this ANNEX
VII or in any of the Transaction Agreements shall be false or misleading in any
material respect; or
(b) the occurrence of an Event of Default (as defined in the
Debenture).
Section 8. Remedies Upon Debtor Event of Default.
(a) If any Debtor Event of Default shall have occurred, the Secured
Party may exercise all the rights and remedies of a Secured Party under the
Uniform Commercial Code. The Secured Party may require the Debtor to assemble
all or any part of the Collateral and make it available to the Secured Party at
a place to be designated by the Secured Party which is reasonably convenient.
The Secured Party shall give the Debtor ten (10) days prior written notice of
the Secured Party's intention to make any public or private sale or sale at a
broker's board or on a securities exchange of the Collateral. At any such sale
the Collateral may be sold in one lot as an entirety or in separate parcels, as
the Secured Party, in its sole discretion, may determine. The Secured Party
shall not be obligated to make any such sale pursuant to any such notice. 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 the sale, and such sale may be made at any time or
place to which the same may be adjourned. The Secured Party, instead of
exercising the power of sale herein conferred upon it,
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may proceed by a suit or suits at law or in equity to foreclose the Security
Interests and sell the Collateral, or any portion thereof, under a judgment or
decree of a court or courts of competent jurisdiction.
(b) At any bona fide public sale the Secured Party shall be free to
purchase all or any part of the Collateral. Any such sale may be on cash or
credit. The Secured Party will not be obligated to make any sale and may sell at
the time and place to which the sale is adjourned. If the Collateral is
customarily sold on a recognized market or threatens to decline speedily in
value, the Secured Party may sell such Collateral at any time without giving
prior notice to the Debtor. Whenever notice is otherwise required by law to be
sent by the Secured Party to the Debtor of any sale or other disposition of the
Collateral, three (3) days' written notice sent to the Debtor at the notice
address specified below will be reasonable.
Section 9. Application of Collateral and Proceeds.
(a) The proceeds of any sale of, or other realization upon, all or any
part of the Collateral shall be applied in the following order of priorities:
(i) first, to the payment of all of the reasonable expenses of such sale or
other realization, including, without limitation, reasonable attorneys' fees,
and all expenses, liabilities and advances reasonably incurred or made by the
Secured Party in connection therewith, and of any other unreimbursed expenses
for which the Secured Party is to be reimbursed pursuant to the terms of any of
the Transaction Agreements; (ii) second, to any obligations owed to the Senior
Lender secured by the Senior Lender Interests; (iii) third, to the payment of
the Obligations in such order of priority as the Secured Party, in its sole
discretion, shall determine; and (iv) finally, to the payment to the Debtor, or
its successors or assigns, or as a court of competent jurisdiction may direct,
of any surplus then remaining from such proceeds after payments of the character
referred to in subsections (i) through (iii) of this Section 9(a) shall have
been made.
(b) If any demand is made at any time upon the Secured Party for the
repayment or recovery of any amount received by it in payment or on account of
any of the Obligations from the disposition of the Collateral and if the Secured
Party repays all or any part of such amount, the Debtor will be and remain
liable for the amounts so repaid or recovered to the same extent as if never
originally received by the Secured Party.
(c) In furtherance of the foregoing, and not in limitation thereof:
(i) The Secured Party, as attorney-in-fact pursuant to the terms of
this Security Interest Agreement, may, in the name and stead of the
Debtor, make and execute all conveyances, assignments and transfers of
the Collateral sold pursuant to the terms of this Security Interest
Agreement. The Debtor shall, if so requested by the Secured Party or
representatives or agents of the Secured Party, ratify and confirm any
sale or sales by executing and delivering to the Secured Party or its
designees, or to such purchaser or purchasers, all such instruments as
may, in the judgment of the Secured Party, be advisable for such
purpose.
(ii) The receipt of the Secured Party for the purchase money paid at
any such sale made by it shall be a sufficient discharge therefor to
any purchaser of the Collateral, or any portion thereof, sold as
aforesaid; and no such purchaser (or his or its representatives or
assigns), after paying such purchase money and receiving such receipt,
shall be bound to see to the application of such purchase
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money or any part thereof or in any manner whatsoever be answerable for
any loss, misapplication, necessity, expediency or regularity of any
such sale.
Section 10. Further Assurances. At any time and from time to time, upon
demand of the Secured Party, the Debtor will give, execute, file and record any
notice, financing statement, continuation statement, instrument, document or
agreement that the Secured Party may consider necessary or desirable to create,
preserve, continue, perfect or validate any security interest granted hereunder
or to enable the Secured Party to confirm its rights hereunder with respect to
such security interest. Without limiting the generality of the foregoing, the
Debtor hereby irrevocably appoints the Secured Party as the Debtor's
attorney-in-fact to do all acts and things in the Debtor's name that the Secured
Party may deem necessary or desirable to carry out the purposes of this Security
Interest Agreement, which appointment is deemed to be coupled with an interest.
The Secured Party is authorized to file financing statements, continuation
statements and other documents under the Uniform Commercial Code relating to the
Collateral without the Debtor's signature, naming the Debtor as debtor and the
Secured Party (or the Agent as agent of the Secured Party) as secured party.
Section 11. Expenses; Secured Party's Lien. The Debtor will forthwith
upon demand pay to the Secured Party: (a) the amount of any taxes which the
Secured Party may have been required to pay by reason of the Security Interests
(including, without limitation, any applicable transfer taxes) or, except with
respect with the Senior Lender Interests, to free any of the Collateral from any
lien thereon; and (b) the amount of any and all reasonable out-of-pocket
expenses, including, without limitation, the reasonable fees and disbursements
of its counsel, and of any agents not regularly in its employ, which the Secured
Party may incur in connection with (i) the preparation of any amendments or
modifications of this Security Interest Agreement, (ii) the collection, sale or
other disposition of any of the Collateral; (iii) the exercise by the Secured
Party of any of the powers conferred upon it hereunder, or (iv) any default by
the Debtor hereunder.
Section 12. Termination of Security Interests; Release of Collateral.
Upon the repayment and performance in full of all the Obligations, the Security
Interests shall terminate and all rights to the Collateral shall revert to the
Debtor. Upon any such termination of the Security Interests or release of
Collateral, the Secured Party will, at the Debtor's expense, to the extent
permitted by law, execute and deliver to the Debtor such documents as the Debtor
shall reasonably request to evidence the termination of the Security Interests
or the release of such Collateral, as the case may be.
Section 13. Notices. Any notice required or permitted hereunder shall
be given in the manner contemplated by the Securities Purchase Agreement.
Section 14. Miscellaneous.
(a) 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 remedy under this Security Interest Agreement shall operate as a waiver
thereof; nor shall any single or partial exercise by the Secured Party of any
right, power or remedy under this Security Interest Agreement preclude the
exercise, in whole or in part, of any other right, power or remedy. The remedies
in this Security Interest Agreement are cumulative and are not exclusive of any
other remedies provided by law. Neither this Security Interest Agreement nor any
provision hereof may be changed, waived,
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discharged or terminated orally but only by a statement in writing signed by the
party against which enforcement of the change, waiver, discharge or termination
is sought.
(b) Unless otherwise defined herein, or unless the context otherwise
requires, all terms used herein which are defined in the Delaware Uniform
Commercial Code have the meanings therein stated.
Section 15. Separability. If any provision hereof shall prove invalid
or unenforceable in any jurisdiction whose laws shall be deemed applicable, the
other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Secured Party.
Acknowledged:
TITAN MOTORCYCLE CO. OF AMERICA, Debtor
By:______________________________________
Its
STATE OF ________________
COUNTY OF ______________
On the ______ day of ________, 2000, before me personally came
_________________________, to me known, who being by me duly sworn, did depose
and say that he resides at _____________________________________,
__________________; that he is the _______________ of TITAN MOTORCYCLE CO. OF
AMERICA, the corporation described in and which executed the foregoing
instrument as Debtor; that he was authorized to execute the foregoing instrument
on behalf of said corporation by the Board of Directors of said corporation; and
that he executed the foregoing instrument voluntarily and of his own free will
on behalf of said corporation.
________________________________
Notary Public
My commission expires:
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EXHIBIT A
FINANCING STATEMENTS ON FILE ON DATE HEREOF
1. Financing Statement on Form UCC-1, naming Debtor, as debtor,
and , as secured party, as filed in the
office of the Secretary of State of the State of
on , and in the office of
on , . Covered
collateral:
[IN LIEU OF FOREGOING, SEE ATTACHED COPIES OF UCC
FINANCING STATEMENTS ON FILE]
Debtor represents that, except for the security interest referred to in
paragraph 1 above, there are no security interests in the Collateral in favor of
any other party.
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EXHIBIT B
ADDITIONAL REPRESENTATIONS AND WARRANTIES
1. The exact title of the Debtor is TITAN MOTORCYCLE CO. OF AMERICA
2. The Debtor does business under the names:
3. The Debtor was incorporated on under the laws of the State
of Nevada and is in good standing under those laws.
4. The President of the Debtor is Xxxxx Xxxxx.
5. The Debtor is qualified to transact business in:
Arizona
6. The Debtor's only place(s) of business is/are at:
0000 Xxxx Xxxxxx Xxxxxx, Xxxxxxx, XX 00000.
7. The Debtor owns or has an interest in personal property or fixtures at
the following locations:
Address Record Owner of Real Estate
