EXHIBIT 10.10
SECURITY AGREEMENT
THIS SECURITY AGREEMENT is made effective the 27th day of
July, 2000, between XXXXXXXX TRADING COMPANY, L.C., having a mailing address of
0000 Xxxxx XxXxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 00000 (the "Secured Party"), and
PLASTIC PALLET PRODUCTION, INC., having a mailing address of 0000 Xxxx Xxxxxxxx,
Xxxxxx, Xxxxx 00000 (the "Debtor").
W I T N E S S E T H:
1. SECURITY INTEREST. For value received, the receipt of which
is hereby acknowledged, the Debtor hereby grants to the Secured Party a security
interest in and to the personal property of the Debtor more particularly
described on Exhibit "A" hereto, and all future additions to, replacements of,
substitutions for and all proceeds and products thereof (the "Collateral"). This
Agreement is intended for security only, and is to secure obligations of the
Debtor owing to the Secured Party as herein described. It is specifically
understood that the Secured Party does not hereby assume any of the obligations
of the Debtor in connection with the Collateral.
2. INDEBTEDNESS. This Agreement is given to secure:
(a) Payment of a promissory note (the "Note") executed by
Debtor and PalWeb Corporation, to the Secured Party
in the principal sum of Four Hundred Thousand Dollars
($400,000.00), payable as to principal and interest
as provided therein;
(b) All renewals, consolidations, extensions and
substitutions for the Note;
(c) All liabilities of Debtor to Secured Party of every
kind or description, including (i) future advances,
(ii) both direct and indirect liabilities, (iii)
liabilities due or to become due and whether absolute
or contingent, and (iv) all liabilities now existing
or hereafter arising and however evidenced; and
(d) Payment of all expenditures by the Secured Party for
taxes, insurance and maintenance of the Collateral
and all costs and expenses incurred by the Secured
Party in the collection and enforcement of the
obligations due the Secured Party by the Debtor,
including all of the Secured Party's attorney's fees.
3. DEBTOR'S AGREEMENTS. The Debtor expressly warrants and
covenants as follows:
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3.1 OTHER ENCUMBRANCES. The Debtor is the owner of
the Collateral, free and clear of all encumbrances, and the
Debtor will defend the Collateral against all claims and
demands of all persons at any time claiming the same or any
interest therein. Except for the security interest granted
hereby, the Debtor will not further encumber the Collateral
without the prior written consent of the Secured Party.
3.2 FINANCING STATEMENTS. The Debtor will join with
the Secured Party in executing one or more financing
statements, if applicable, in form satisfactory to the Secured
Party, and the Debtor will perform all further acts necessary
to perfect a security interest in the Collateral in favor of
the Secured Party.
3.3 INSURANCE. The Debtor will purchase or cause to
be purchased, and continuously maintain or cause to be
maintained with companies acceptable to the Secured Party,
policies of insurance covering the Collateral, covering loss
or damage to the Collateral. All such insurance policies will
be written for the benefit of the Debtor and the Secured Party
as their interests may appear, and such policies or
certificates evidencing the same will be furnished to the
Secured Party. All policies of insurance will provide at least
ten (10) days prior written notice of cancellation to the
Secured Party.
3.4 TAXES. Debtor shall promptly pay any and all
taxes, assessments and license fees with respect to the
Collateral or the use of the collateral.
3.5 REIMBURSEMENT FOR EXPENSES. At the option of the
Secured Party, the Secured Party may discharge taxes, liens,
security interest of other encumbrances affecting the
Collateral, and may pay for the maintenance and preservation
thereof, and for insurance covering the Collateral, and may
pay all costs incurred in performing the obligations owing by
the Debtor to the Secured Party. The Debtor agrees to
reimburse the Secured Party on demand for any payments so
made, and until such reimbursement, the amount of any such
payment, with interest at the rate after maturity specified in
the Note, accrued from the date of payment until
reimbursement, will be added to the indebtedness owed by the
Debtor and will be secured by this Agreement.
3.6 CHANGE OF LOCATION OF COLLATERAL. Except as
otherwise provided herein, the Collateral shall at all times
be kept at 0000 Xxxx Xxxxxxxx, Xxxxxx Xxxxx. The Debtor will
immediately notify the Secured Party in writing of any change
in the Debtor's principal place of business, or in the
location of the Collateral from that stated in this paragraph.
4. DEFAULT. The Debtor will be in default under this Agreement
on the happening of any of the following events or conditions:
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(a) Default in the payment or performance of any
obligation, covenant or liability contained in the
Note or this Agreement.
(b) Any warranty, representation or statement made or
furnished to the Secured Party by or on behalf of the
Debtor proves to have been false in any material
respect when made;
(c) Sale, loss or additional encumbrance of the
Collateral, or the making of any levy, seizure or
attachment thereof or thereon;
(d) The default on the obligation to any first security
interest holder as to any of the Collateral;
(e) Insolvency or business failure of the Debtor,
appointment of a receiver for the Debtor or the
Collateral, assignment for the benefit of creditors
or the commencement of any proceeding under any
bankruptcy or insolvency law by or against the
Debtor; or
(f) The default by PalWeb Corporation on that certain
Security Agreement to the Secured Party executed on
this date.
5. REMEDIES. Upon the occurrence of any event of default and
at any time thereafter, Secured Party shall have and may exercise the following
rights and remedies, without further notice to Debtor:
5.1 ALL LEGAL REMEDIES. Proceed to selectively and
successively enforce and exercise any and all rights and
remedies which Secured Party may have under this Agreement,
any other applicable agreement or applicable law, including,
without limitation: (i) commencing one or more actions against
Debtor and reducing the claims of Secured Party against Debtor
to judgment, (ii) foreclosure or other enforcement of Secured
Party's security interest in the Collateral, or any portion
thereof, or other enforcement of Secured Party's rights and
remedies in respect of and to recover upon the Collateral,
through judicial action or otherwise, including all available
remedies under the applicable provisions of the UCC, and (iii)
payment or discharge of any claim or lien, prior or
subordinate, in respect of or affecting the Collateral.
5.2 DISPOSITION. Sell, lease or otherwise dispose of
the Collateral at private or public sale. Secured Party will
give Debtor reasonable notice of the time and place of any
public sale or other disposition thereof or the time after
which any private sale or other disposition thereof is to be
made. The requirements of reasonable notice shall be met if
such notice is given to Debtor at least ten (10) days
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before the time of any such sale or disposition. Secured Party
shall not be obligated to make any such sale pursuant to any
such notice. 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 so adjourned. Debtor
acknowledges that the Securities Act of 1933, as amended, and
certain other federal and state laws or regulations may
constitute legal restrictions or limitations upon Secured
Party in any attempts to dispose of any portion of the
Collateral which constitutes securities and the enforcement by
Secured Party of its rights and remedies with respect thereto.
Secured Party is authorized, but shall in no event be
obligated, to sell or dispose of any portion of the Collateral
which constitutes securities at a private sale subject to
investment letter or in any other manner which would not
require the Collateral or any portion thereof to be registered
in accordance with the Securities Act of 1933, the rules and
regulations promulgated thereunder, or under any other
securities laws or regulations, and Secured Party is
authorized to take such action, give such notice, obtain such
consents and do such things as it may deem necessary and
appropriate in connection with any such private sale or
disposition. Secured Party may, in its sole discretion, may
sell any portion of the Collateral which constitutes a
security at its book value to a restricted number of potential
purchasers, notwithstanding that a sale under any such
circumstances may yield a lower price for such Collateral than
might otherwise be available if such Collateral were
registered under the applicable securities laws and sold on
the open market. Debtor stipulates and agrees that the sale
for book value is conclusive evidence that such private sale
or sales were conducted in a commercially reasonable manner
pursuant to the requirements of applicable law.
5.3 COSTS AND EXPENSES. Recover from Debtor an amount
equal to all costs, expenses and attorney's fees incurred by
Secured Party in connection with the exercise of the rights
contained or referred to herein, together with interest on
such sums at the rate applicable to the Note from time to
time.
5.4 WAIVER OF DEFAULT. Secured Party may, by an
instrument in writing signed by Secured Party, waive any event
of default which shall have occurred and any of the
consequences thereof and, in such event, Secured Party and
Debtor shall be restored to their respective former positions,
rights and obligations. Any event of default so waived shall,
for all purposes of this Agreement, be deemed to have been
cured and not to be continuing, but no such waiver shall
extend to any subsequent or other default or impair any
consequence thereof.
5.5 REGISTRATION. Any or all shares of stock
constituting a part of the Collateral held by Secured Party
hereunder may, if an event of default has occurred and is
continuing, be registered in the name of Secured Party or its
nominee, and
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Secured Party or its nominee may thereafter exercise all
voting and corporate rights at any meeting of any corporation
issuing any of the shares included in the Collateral and
exercise any and all rights of conversion, exchange,
subscription or any other rights, privileges or options
pertaining to any such shares as if it were the absolute owner
thereof, including without limitation, the right to exchange
at its discretion, any and all of such stock upon the merger,
consolidation, reorganization, recapitalization or other
readjustment of any corporation issuing any of such shares or
upon the exercise by any such issuer of any right, privilege
or option pertaining to any such shares of stock, and in
connection therewith, to deposit and deliver any and all of
such shares of stock with any committee, depositary, transfer
agent, registrar or other designated agency upon such terms
and conditions as it may determine, all without liability
except to account for property actually received by it, but
Secured Party shall have no duty to exercise any of the
aforesaid rights, privileges or options and shall not be
responsible for any failure to do so or for any delay in so
doing. This Agreement constitutes Debtor's proxy to Secured
Party or its nominee to vote all shares of stock constituting
a part of the Collateral or other securities with voting
rights then registered in Debtor's name.
5.6 NO DUTY. The powers conferred on Secured Party
hereunder are solely to protect its interests in the
Collateral and shall not impose any duty upon it to exercise
any such powers. Secured Party shall be accountable only for
amounts that it actually receives as a result of the exercise
of such powers and neither it nor any of its officers,
directors, employees or agents shall be responsible for any
act or failure to act, except for its own gross negligence of
willful misconduct.
6. MISCELLANEOUS. The provisions of this Agreement are
severable, and the invalidity of any part or application hereof will not affect
any other provision or application hereof. No indulgence or waiver hereunder by
the Secured Party will be construed to affect any other default hereunder, or
preclude the Secured Party from asserting any right or remedy with respect to a
later default. The Secured Party's remedies hereunder are cumulative and not
alternative, the exercise of one remedy will not preclude the Secured Party from
exercising another for the same default. The terms of this Agreement will be
binding on the successors and permitted assigns of the parties hereto. The laws
of the State of Oklahoma will govern the construction and validity of this
Agreement and the rights and duties of the parties hereunder.
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EXECUTED AND DELIVERED the date first above written.
"DEBTOR" PLASTIC PALLET PRODUCTION, INC.
By: /s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx, President
"SECURED PARTY" XXXXXXXX TRADING COMPANY, L.C.
By: /s/ Xxxx X. Xxxxxx
---------------------------------------------
Xxxx X. Xxxxxx, Manager
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EXHIBIT "A"
(DESCRIPTION OF COLLATERAL)
All accounts, chattel paper, documents, instruments,
inventory, investment property (as such terms are defined in
Article 9 of the UCC) of the Debtor, now existing or hereafter
acquired; All equipment (as such term is defined in Article 9
of the UCC) of the Debtor, now existing or hereafter acquired
and wherever located, including, without implied limitation,
all prototype injection molding equipment, molds, chillers and
extruders; All general intangibles (as such term is defined in
Article 9 of the UCC) of the Debtor, of every kind and nature,
whether now owned or existing or hereafter arising or
acquired, including, without implied limitation, all books,
records, computer programs, source codes, computer tapes,
computer cards, computer disks, permits, know-how,
technologies, trade secrets, designs, drawings, processes,
claims (including, without limitation, claims for income tax
and other refunds), causes of action, choses in action,
judgments, goodwill, patents, copyrights, brand names,
trademarks, tradenames, service names, service marks, logos,
licensing agreements and other intellectual property,
franchises, royalty payments, settlements, partnership
interests (whether general, limited or special), interests in
joint ventures, contracts, contract rights and monies due
under any contract or agreement; All future additions to,
replacements of, substitutions for and proceeds and products
of any of the foregoing items.
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