[EXHBIT 20.2]
COMMERCIAL SECURITY AGREEMENT
THIS COMMERCIAL SECURITY AGREEMENT ("Agreement") is dated as
of April __, 2004, among Giant Motorsports, Inc., a Nevada
corporation and Chicago Cycle, Inc., a Nevada corporation
(collectively, "Grantor") and Kings' Motorsports, Inc., an
Illinois corporation ("Secured Party").
SECTION 1: GRANT OF SECURITY INTEREST AND OBLIGATIONS OF GRANTOR
1.1 Grant of Security Interest. For valuable
consideration, Grantor grants to Secured Party a security
interest in the Collateral to secure the Indebtedness and agrees
that Secured Party shall have the rights stated in this Agreement
with respect to the Collateral, in addition to all other rights
which Secured Party may have by law.
1.2 Obligations of Grantor. Grantor warrants and covenants
to Secured Party as follows:
(a) Perfection of Security Interest. Grantor hereby
authenticates such financing statements and to take whatever
other actions are requested by Secured Party to perfect and
continue Secured Party's security interest in the
Collateral. Upon request of Secured Party, Grantor will
deliver to Secured Party any and all of the documents
evidencing or constituting the Collateral, and Grantor will
note Secured Party's interest upon any and all documents
evidencing Accounts if not delivered to Secured Party for
possession by Secured Party. Grantor hereby appoints
Secured Party as its irrevocable attorney-in-fact for the
purpose of executing any documents necessary to perfect or
to continue the security interest granted in this Agreement.
Secured Party may at any time, and without further
authorization from Grantor, file a carbon, photographic or
other reproduction of any financing statement or of this
Agreement for use as a financing statement. Grantor will
reimburse Secured Party for all expenses for the perfection
and the continuation of the perfection of Secured Party's
security interest in the Collateral. Grantor promptly will
notify Secured Party of any change in Grantor's location or
name, including any change to the assumed business names of
Grantor. This is a continuing Commercial Security Agreement
and will continue in effect even though all or any part of
the Indebtedness is paid in full and even though for a
period of time Grantor may not be indebted to Secured Party.
Secured Party shall release its interest in the Collateral
upon the full and final payment and satisfaction of the
Indebtedness. If payment is made by Grantor, whether
voluntarily or otherwise, or by any third party, on the
Indebtedness and thereafter Secured Party is forced to remit
the amount of that payment to Grantor's trustee in
bankruptcy or to any similar person under any federal, state
or foreign bankruptcy law or law for the relief of debtors,
the Indebtedness shall be considered unpaid for the purpose
of enforcement of this Agreement.
(b) No Violation. The execution and delivery of this
Agreement will not violate any law or agreement governing
Grantor or to which Grantor is a party, and its articles of
incorporation and bylaws or other organizational documents
do not prohibit any term or condition of this Agreement.
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The execution and delivery hereof is in the interest of the
Grantor.
(c) Enforceability of Collateral. With respect to the
Accounts, each Account is enforceable in accordance with its
terms, is genuine, and complies with applicable laws
concerning form, content and manner of preparation and
execution, and, to Guarantor's knowledge, all persons
appearing to be obligated on the Accounts have authority and
capacity to contract and are in fact obligated as they
appear to be on the Account. At the time any Account becomes
subject to a security interest in favor of Secured Party,
the Account shall be a good and valid Account representing
an undisputed, bona fide indebtedness incurred by the
Account Debtor; there shall be no setoffs or counterclaims
against any such Account; and no agreement under which any
deductions or discounts may be claimed shall have been made
with the Account Debtor except those disclosed to Secured
Party in writing.
(d) Removal of Collateral; Transactions Involving
Collateral. To the extent the Collateral consists of
intangible property such as Accounts, the records and other
documents pertaining to the Collateral shall be kept at 0000
X. Xxxxxxx Xxx., Xxxxxxx, XX, or at such other locations as
are acceptable to Secured Party. Grantor shall keep the
tangible Collateral at 0000 X. Xxxxxxx Xxx., Xxxxxxx,
Xxxxxxxx. Grantor shall not sell, offer to sell, or
otherwise transfer or dispose of the Collateral. Grantor
shall not pledge, mortgage, encumber or otherwise permit the
Collateral to be subject to any lien, security interest,
encumbrance, or charge, other than the security interest
provided for in this Agreement, without the prior written
consent of Secured Party. This includes security interests
even if junior in right to the security interests granted
under this Agreement.
(e) Title. Grantor represents and warrants to Secured
Party that it holds good and marketable title to the
Collateral, free and clear of all liens and encumbrances
except for the lien of this Agreement. No financing
statement or other evidence of a lien or transfer covering
any of the Collateral is on file in any public office in any
jurisdiction other than those which reflect the security
interest created by this Agreement or to which Secured Party
has specifically consented. Grantor shall defend Secured
Party's rights in the Collateral against the claims and
demands of all other persons.
(f) Prepayments. Grantor represents and warrants to
Secured Party that none of the Collateral has been prepaid
by any Account Debtor other than as Grantor has disclosed to
Secured Party in writing.
(g) Collateral Schedules and Locations. As often as Secured
Party shall require Grantor shall deliver to Secured Party
schedules of such Collateral, including such information as
Secured Party may require, including without limitation
names and addresses of Account Debtors and agings of
Accounts. Such information shall be submitted for Grantor
and each of its subsidiaries, if any.
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(h) Possession and Collection of Accounts. All Accounts
pledged as Collateral hereunder shall, unless otherwise
directed by Secured Party, remain in Grantor's possession or
that of its agent and held in accordance with the terms of
this Agreement.
(i) Maintenance and Inspection of Collateral. Grantor shall
maintain or cause to be maintained all tangible Collateral
in good condition and repair ordinary wear and tear
excepted. Grantor will not commit or permit damage to or
destruction of the Collateral or any part of the Collateral.
Secured Party and its designated representatives and agents
shall have the right at all reasonable times to examine,
inspect, and audit the Collateral wherever located and the
books, records and physical plant of any property which is
otherwise used in connection with the Collateral. Grantor
shall immediately notify Secured Party of all cases
involving the return, rejection, repossession, loss or
damage of or to any material portion of the Collateral; of
any request for credit or adjustment or of any other dispute
arising with respect to the Collateral; and generally of all
happenings and events materially affecting the Collateral or
the material value or the material amount of the Collateral.
(j) Taxes, Assessments and Liens. Grantor will pay when due
all taxes, assessments and liens upon the Collateral, its
use or operation, upon this Agreement, upon any promissory
note or notes evidencing the Indebtedness.
(k) Compliance With Governmental Requirements. Grantor
shall comply promptly with all laws, ordinances and
regulations of all governmental authorities applicable to
the production, disposition, or use of the Collateral.
Grantor may contest in good faith any such law, ordinance or
regulation and withhold compliance during any proceeding,
including appropriate appeals, so long as Secured Party's
interest in the Collateral, in Secured Party's discretion,
is not jeopardized. Secured Party may require Grantor to
post adequate security or a surety bond, reasonably
satisfactory to Secured Party, to protect Secured Party's
interest.
(l) Insurance. Grantor shall:
(i) Maintain, or cause to be maintained, fire and
other risk insurance, public liability insurance, and
such other insurance as Secured Party may require with
respect to Grantor's properties and operations, in
form, amounts, coverages and with insurance companies
reasonably acceptable to Secured Party. Grantor, upon
request of Secured Party, will deliver to Secured Party
from time to time the policies or certificates of
insurance in form satisfactory to Secured Party,
including stipulations that coverages will not be
cancelled or diminished without at least thirty (30)
days prior written notice to Secured Party. In
connection with all policies covering the Collateral,
Grantor will provide Secured Party with such loss
payable or other endorsements as Secured Party may
require.
(ii) Furnish to Secured Party, upon its request,
reports on each existing insurance policy showing such
information as Secured Party may reasonably request,
including without limitation, the following: (A) the
name of the insurer; (B) the risks insured; (C) the
amount of the policy; (D) the properties insured; (E)
the then current property values on the basis of which
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insurance has been obtained, and the manner of
determining those values; and (F) the expiration date
of the policy.
(iii) Grantor shall promptly notify Secured
Party of any loss or damage to the Collateral. Secured
Party may make proof of loss if Grantor fails to do so
within fifteen (15) days of the casualty. All
insurance proceeds shall be distributed to Secured
Party.
(m) Grantor's Right to Possession and to Collect Accounts.
Until an Event of Default has occurred and except as
otherwise provided herein, Grantor may have possession of
the tangible personal property and beneficial use of all the
Collateral and may use it in any lawful manner not
inconsistent with this Agreement or the Related Documents.
Prior to an Event of Default or direction by Secured Party
to the contrary, Grantor shall collect the Accounts. At any
time after an Event of Default, Secured Party may exercise
its rights to directly collect the Accounts and to notify
Account Debtors to make payments directly to Secured Party
for application to the Indebtedness and Grantor authorizes
and directs the Account Debtors, if Secured Party exercises
such option, to make payments on the Account to Secured
Party. If Secured Party at any time has possession or
control of any Collateral, whether before or after an Event
of Default, Secured Party shall be deemed to have exercised
reasonable care in the custody and preservation of the
Collateral if Secured Party takes such action for that
purpose as Grantor shall request or as Secured Party, in
Secured Party's discretion, shall deem appropriate under the
circumstances, but failure to honor any request by Grantor
shall not of itself be deemed to be a failure to exercise
reasonable care. Secured Party shall not be required to take
any steps necessary to preserve any rights in the Collateral
against prior parties, nor to protect, preserve or maintain
any security interest given to secure the Collateral.
Secured Party shall have the right to direct who shall
collect and service the Accounts.
(n) Transactions with Others. Secured Party may (i) extend
time for payment or other performance, (ii) grant a renewal
or change in terms or conditions, or (iii) compromise,
compound or release any obligation, with any one or more of
the Grantors, endorsers or Guarantors of the Indebtedness as
Secured Party deems advisable, without obtaining the prior
written consent of Grantor, and no such act or failure to
act shall affect Secured Party's rights against Grantor or
the Collateral.
(o) Expenditures by Secured Party. If Grantor fails to
comply with any provision of this Agreement, or if any
action or proceeding is commenced that would materially
affect Secured Party's interests in the Collateral, Secured
Party on Grantor's behalf may, but shall not be required to,
take any action that Secured Party deems appropriate. Any
amount that Secured Party expends in so doing will bear
interest at the Default Rate charged under the Note from the
date incurred or paid by Secured Party to the date of
repayment by Grantor. All such expenses, at Secured Party's
option, will: (i) be payable on demand; (ii) be added to the
balance of the Note and be apportioned among and be payable
with any installment payments to become due during the
remaining term of the Note; or (iii) be treated as a balloon
payment which will be due and payable at the Note's
maturity. This Agreement also will secure payment of these
amounts. The rights provided for in this section shall be
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in addition to any other rights or any remedies to which
Secured Party may be entitled on account of an Event of
Default. Any such action by Secured Party shall not be
construed as curing an Event of default so as to bar Secured
Party from any remedy that it otherwise would have had.
SECTION 2: EVENTS OF DEFAULT; REMEDIES
2.1 Events of Default. A default in the performance of any
obligation hereunder or any Event of Default under the Note shall
constitute an Event of Default hereunder.
2.2 Rights and Remedies. Upon the occurrence of any Event
of Default and at any time thereafter, Secured Party, at its
option, may exercise any one or more of the following rights and
remedies, in addition to any other rights or remedies provided by
law:
(a) Accelerate Indebtedness. Secured Party shall have the
right at its option without notice to Grantor to declare the
entire Indebtedness immediately due and payable, including
any prepayment fee that Grantor would be required to pay.
(b) UCC Remedies. With respect to all or any part of the
Collateral, Secured Party shall have all the rights and
remedies of a secured party under the Uniform Commercial
Code.
(c) Assemble Collateral. Secured Party may require Grantor
to deliver to Secured Party all or any portion of the
Collateral and other documents relating to the Collateral.
Secured Party may require Grantor to assemble the Collateral
and make it available to Secured Party at a place to be
designated by Secured Party. Secured Party also shall have
full power to enter upon the property of Grantor to take
possession of and remove the Collateral.
(d) Sell the Collateral. Secured Party shall have full
power to sell, lease, transfer, or otherwise deal with the
Collateral or proceeds thereof in its own name or that of
Grantor. Secured Party may sell the Collateral at public
auction or private sale. Unless the Collateral threatens to
decline speedily in value or is of a type customarily sold
on a recognized market, Secured Party will give Grantor
reasonable notice of the time after which any private sale
or any other intended disposition of the Collateral is to be
made. The requirements of reasonable notice shall be met if
such notice is given at least ten (10) days before the time
of the sale or disposition. All expenses relating to the
disposition of the Collateral, including without limitation
the expenses of retaking, holding, insuring, preparing for
sale and selling the Collateral, shall become a part of the
Indebtedness secured by this Agreement and shall be payable
on demand, with interest at the Default Rate set forth in
the Note from date of expenditure until repaid.
(e) Foreclosure. Maintain a judicial suit for foreclosure
and sale of the Collateral.
(f) Appoint Receiver. To the extent permitted by
applicable law, Secured Party shall have the following
rights and remedies regarding the appointment of a receiver:
(i) Secured Party may have a receiver appointed as a matter
of right; (ii) the receiver may be an employee of Secured
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Party and may serve without bond; and (iii) all fees of the
receiver and his attorney shall become part of the
Indebtedness secured by this Agreement and shall be payable
on demand, with interest at the Default Rate set forth in
the Note from date of expenditure until repaid.
(g) Transfer Title. Effect transfer of title upon sale of
all or part of the Collateral. For this purpose, Grantor
irrevocably appoints Secured Party as its attorney in fact
to execute endorsements, assignments and instruments in the
name of Grantor and each of them (if more than one) as shall
be necessary or reasonable.
(h) Collect Revenues, Apply Accounts. Secured Party, either
itself or through a receiver, may collect the payments,
rents, income, and revenues from the Collateral. Secured
Party may at any time in its discretion transfer any
Collateral into its own name or that of its nominee and
receive the payments, rents, income, and revenues therefrom
and hold the same as security for the Indebtedness or apply
it to payment of the Indebtedness in such order of
preference as Secured Party may determine. Secured Party
may demand, collect, receipt for, settle, compromise,
adjust, xxx for, foreclose, or realize on the Collateral as
Secured Party may determine, whether or not the Indebtedness
or Collateral is then due. For these purposes, Secured Party
may, on behalf of and in the name of Grantor, receive, open
and dispose of mail addressed to Grantor; change any address
to which mail and payments are to be sent; and endorse
notes, checks, drafts, money orders, documents of title,
instruments and items pertaining to payment, shipment, or
storage of any Collateral and collect the proceeds
therefrom. To facilitate collection, Secured Party may
notify Account Debtors and obligors on any Collateral to
make payments directly to Secured Party. Secured Party has
been granted a power of attorney in Section 3.2(p) hereof.
(i) Obtain Deficiency. If Secured Party chooses to sell
any or all of the Collateral, Secured Party may obtain a
judgment against Grantor for any deficiency remaining on the
Indebtedness due to Secured Party after application of all
amounts received from the exercise of the rights provided in
this Agreement. Grantor shall be liable for a deficiency
even if the transaction described in this subsection is a
sale of accounts or chattel paper.
(j) Other Rights and Remedies. Secured Party shall have
and may exercise any or all other rights and remedies it may
have available at law, in equity, or otherwise.
2.3 Cumulative Remedies. All of Secured Party's rights and
remedies, whether evidenced by this Agreement or the Related
Documents or by any other writing, shall be cumulative and may be
exercised singularly or concurrently. Election by Secured Party
to pursue any remedy shall not exclude pursuit of any other
remedy, and an election to make expenditures or to take action to
perform an obligation of Grantor under this Agreement, after
Grantor's failure to perform, shall not affect Secured Party's
right to declare an Event of Default and to exercise its
remedies.
2.4 Attorneys' Fees; Expenses. If Secured Party institutes
any suit or action to enforce any of the terms of this Agreement,
Secured Party shall be entitled to recover attorneys' fees at
trial and on any appeal. Whether or not any court action is
involved, all expenses incurred by Secured Party that in Secured
Party's opinion are necessary at any time for the protection of
its interest or the enforcement of its rights shall become a part
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of the Indebtedness payable on demand and shall bear interest
from the date of expenditure until repaid at the Default Rate
under the Note. Expenses covered by this Section include,
without limitation, however subject to any limits under
applicable law, Secured Party's reasonable attorneys' fees and
Secured Party's reasonable legal expenses whether or not there is
a lawsuit, including attorneys' fees for bankruptcy proceedings
(including efforts to modify or vacate any automatic stay or
injunction), appeals and any anticipated post-judgment collection
services, the cost of searching records, obtaining title reports
(including foreclosure reports), surveyors' reports, and
appraisal fees, and title insurance, to the extent permitted by
applicable law. Grantor also will pay any court costs, in
addition to all other sums provided by law.
SECTION 3: DEFINITIONS AND MISCELLANEOUS PROVISIONS
3.1 Definitions. The following words shall have the
following meanings when used in this Agreement. Terms not
otherwise defined in this Agreement shall have the meanings
attributed to such terms in the Illinois Uniform Commercial Code
(810 ILCS 1/1 et seq. as amended from time to time ("Uniform
Commercial Code" or "UCC")). All references to dollar amounts
shall mean amounts in lawful money of the United States of
America.
Account Debtor. The words "Account Debtor" means the Person
who is obligated on or under an Account or, if appropriate,
chattel paper or general intangible, as applicable.
Accounts. The word "Accounts" means "accounts" as such term
is defined in the UCC, including without limitation, all
rights to payment for goods sold or leased or services
rendered, whether or not earned by performance and all
rights in respect of the Account Debtor, including, without
limitation, all such rights in which Grantor has any right,
title or interest by reason of the purchase thereof by
Grantor, and including, without limitation, all such rights
constituting or evidenced by any Account, chattel paper,
general intangible, instrument, contract, invoice, purchase
order, draft, acceptance, intercompany account, note,
security agreement, or other evidence of indebtedness or
security, together with (i) any collateral assigned,
hypothecated or held to secure any of the foregoing and the
rights under any security agreement granting a security
interest in such collateral, (ii) all goods, the sale of
which gave rise to any of the foregoing, and (iii) all
powers of attorney for the execution of any evidence of
indebtedness or security or other writing in connection
therewith.
Agreement. The word "Agreement" means this Commercial
Security Agreement, as this Commercial Security Agreement
may be amended or modified from time to time, together with
all exhibits and schedules attached to this Commercial
Security Agreement from time to time.
Collateral. The word "Collateral" means all of the
following properties, assets and rights of the
Grantor,wherever located, whether now owned or hereafter
acquired or arising, and all proceeds and products thereof:
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All personal and fixture property of every kind and
nature owned by Grantor in connection with its business
located at 0000 X. Xxxxxxx Xxx., Xxxxxxx, Xxxxxxxx,
including, without limitation, all furniture, fixtures,
equipment, raw materials, inventory (but not any new or
used motorcycles, ATV's, motor scooters or other
vehicles or equipment subject to "floor plan"
financing), other goods, telephone number, Accounts,
contract rights, rights to the payment of money,
insurance refund claims and all other insurance claims
and proceeds, tort claims, chattel paper, electronic
chattel paper, documents, instruments, securities and
other investment property, deposit accounts, rights to
proceeds of letters of credit, letter-of-credit rights,
supporting obligations of every nature, and general
intangibles including, without limitation, all tax
refund claims, license fees, patents, patent
applications, trademarks, trademark applications, trade
names including the name "Chicago Cycle Center",
copyrights, copyright applications, rights to xxx and
recover for past infringement of patents, trademarks
and copyrights, computer programs, computer software,
engineering drawings, service marks, customer lists,
goodwill, and all licenses, permits, agreements of any
kind or nature pursuant to which (i) the Grantor
operates or has authority to operate, (ii) the Grantor
possesses, uses or has authority to possess or use
property (whether tangible or intangible) of others, or
(iii) others possess, use or have authority to possess
or use property (whether tangible or intangible) of the
Grantor, and all recorded data of any kind or nature,
regardless of the medium of recording, including,
without limitation, all software, writings, plans,
specifications and schematics; provided that all of the
foregoing only shall apply to such rights and property
as it is used in connection with, or removed by Grantor
from, its business located at 0000 X. Xxxxxxx Xxx.,
Xxxxxxx, Xxxxxxxx.
Grantor acknowledges and agrees that, with respect to any
term used in this definition that is defined in either (a)
Article 9 of the Uniform Commercial Code as in force in
Illinois at the time that this Agreement was signed, (b)
Article 9 as in force at any relevant time in the
jurisdictions in which a financing statement is filed, or
(c) in this Agreement the meaning to be ascribed thereto
with respect to any particular item of property shall be
that under the more encompassing of the three definitions.
In addition, the word "Collateral" includes all the
following, whether now owned or hereafter acquired, whether
now existing or hereafter arising, and wherever located:
(a) All accessions, increases, and additions to
and all replacements of and substitutions for any
property described above.
(b) All accounts, contract rights, general
intangibles, instruments, monies, payments, and all
other rights relating and incident thereto, or arising
out of a sale, lease, or other disposition of any of
the property described in this definition.
(c) All proceeds (including insurance proceeds)
from the sale, destruction, loss, or other disposition
of any of the property described in this definition.
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(d) All records and data relating to any of the
property described in this definition, whether in the
form of a writing, photograph, microfilm, microfiche,
or electronic media, together with all of Grantor's
right, title, and interest in and to all computer
software required to utilize, create, maintain, and
process any such records or data on electronic media.
Event of Default. The words "Event of Default" have the
meaning set forth in Section 2.1 above.
Grantor. The word "Grantor" has the meaning set forth in
the initial paragraph of this Agreement.
Indebtedness. The word "Indebtedness" means all principal
and interest payable under the Note and any amounts expended
or advanced by Secured Party to discharge obligations of
Grantor or expenses incurred by Secured Party to enforce
obligations of Grantor under this Agreement or under the
Note together with interest on such amounts as provided in
this Agreement.
Note. The word "Note" means that certain Secured Promissory
Note executed by Grantor to Secured Party dated as of even
date herewith in the principal amount of $1,675,000.00,
together with all renewals of, extensions of, modifications
of, refinancings of, consolidations of, and substitutions
for such promissory note.
Person. The word "Person" means an individual or a
corporation, partnership, trust, incorporated or
unincorporated association, joint venture, joint stock
company, limited liability company, government (or any
agency or political subdivision thereof) or other entity of
any kind.
Secured Party. The word "Secured Party" has the meaning set
forth in the initial paragraph of this Agreement.
Related Documents. The words "Related Documents" mean and
include without limitation all promissory notes, credit
agreements, loan agreements, guaranties, security
agreements, mortgages, deeds of trust, collateral
assignments, financing statements and all other instruments,
agreements and documents, whether now or hereafter existing,
executed in connection with the Indebtedness.
3.2 Miscellaneous Provisions. The following miscellaneous
provisions are a part of this Agreement:
(a) Entire Agreement; Amendments. This Agreement, together
with any Related Documents, constitutes the entire
understanding and agreement of the parties as to the matters
set forth in this Agreement. No alteration of or amendment
to this Agreement shall be effective unless given in writing
and signed by the party or parties sought to be charged or
bound by the alteration or amendment.
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(b) Applicable Law. This Agreement and all acts,
agreements, certificates, assignments, transfers and
transactions hereunder, and all rights of the parties
hereto, shall be governed as to validity, enforcement,
interpretation, construction, effect and in all other
respects by the internal laws and decisions of the State of
Illinois, including, but not limited to, laws regulating
interest, loan charges, commitment fees and brokerage
commissions (without regard to conflicts of law principles).
It is acknowledged and agreed by Grantor and Secured Party
that the loan transaction evidenced hereby, bears a
reasonable relationship to the State of Illinois.
(c) Consent to Jurisdiction. To induce Secured Party to
accept this Agreement, Grantor irrevocably agrees that,
subject to Secured Party's sole and absolute election, ALL
ACTIONS OR PROCEEDINGS IN ANY WAY ARISING OUT OF OR RELATED
TO THIS AGREEMENT WILL BE LITIGATED IN COURTS HAVING SITUS
IN XXXX COUNTY, ILLINOIS. GRANTOR HEREBY CONSENTS AND
SUBMITS TO THE JURISDICTION OF ANY COURT LOCATED WITHIN XXXX
COUNTY, ILLINOIS.
(d) Caption Headings. Caption headings in this Agreement
are for convenience purposes only and are not to be used to
interpret or define the provisions of this Agreement.
(e) Merger. There shall be no merger of the interest or
estate created by this Agreement with any other interest or
estate in the Collateral at any time held by or for the
benefit of Secured Party in any capacity, without the
written consent of Secured Party.
(f) Corporate Authority. To the extent that Grantor is a
corporation, partnership or limited liability company, it
hereby represents and warrants to Secured Party that the
execution of this Agreement has been authorized by all
necessary corporate, partnership or limited liability
company action, as the case may be.
(g) Severability. If a court of competent jurisdiction
finds any provision of this Agreement to be invalid or
unenforceable as to any person or circumstance, such finding
shall not render that provision invalid or unenforceable as
to any other persons or circumstances. If feasible, any
such offending provision shall be deemed to be modified to
be within the limits of enforceability or validity; however,
if the offending provision cannot be so modified, it shall
be stricken and all other provisions of this Agreement in
all other respects shall remain valid and enforceable.
(h) Successors and Assigns. Subject to the limitations
stated in this Agreement on transfer of Grantor's interest
in the Collateral, or a change in ownership of Grantor, this
Agreement shall be binding upon and inure to the benefit of
the parties, their successors and assigns. If ownership of
the Collateral becomes vested in a person other than
Grantor, Secured Party, without notice to Grantor, may deal
with Grantor's successors with reference to this Agreement
and the Indebtedness by way of forbearance, extension or any
other modification without releasing Grantor from the
obligations of this Agreement or liability under the
Indebtedness.
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(i) Survival. All warranties, representations, and
covenants made by Grantor in this Agreement or in any
certificate or other instrument delivered by Grantor to
Secured Party under this Agreement shall be considered to
have been relied upon by Secured Party and will survive the
making of the loan secured hereby and delivery to Secured
Party of the Related Documents, regardless of any
investigation made by Secured Party or on Secured Party's
behalf.
(j) Time Is of the Essence. Time is of the essence in the
performance of this Agreement.
(k) Agency. Nothing in this Agreement shall be construed
to constitute the creation of a partnership or joint venture
between Secured Party and Grantor or any contractor.
Secured Party is not an agent or representative of Grantor.
This Agreement does not create a contractual relationship
with and shall not be construed to benefit or bind Secured
Party in any way with or create any contractual duties by
Secured Party to any contractor, subcontractor, materialman,
laborer, or any other person.
(l) Notices. Except as otherwise provided herein, whenever
it is provided herein that any notice, demand, request,
consent, approval, declaration or other communication shall
or may be given to or served upon any of the parties by
another, or whenever any of the parties desires to give or
serve upon another any communication with respect to this
Agreement, each such notice, demand, request, consent,
approval, declaration or other communication shall be in
writing and shall be delivered in person (by personal
delivery, delivery service or reputable overnight courier
service), or telecopied and confirmed immediately in writing
by a copy mailed by United States mail, postage prepaid,
addressed as hereafter set forth, or mailed by registered or
certified mail, return receipt requested, postage prepaid,
addressed as follows:
(i) If to Secured Party, at:
Kings' Motorsports, Inc.
Attn: Xxxxx Xxxxxxx
000 X. Xxxxx
Xxxxxxxxx Xxxxxxx, XX 00000
Tel:
Fax:
With a copy to:
Xxxxxx Xxxxxxxxx, Esq.
000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
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(ii) If to Grantor, at:
Tel:
Fax:
With a copy to:
Xxxxxxx X. Xxxxxxxxx, Esq.
Benesch, Friedlander, Xxxxxx & Xxxxxxx, LLP
0000 XX Xxxxx
Xxxxxxxxx, Xxxx 00000
Tel:
Fax:
or at such other address as may be substituted by notice
given as herein provided. The giving of any notice required
hereunder may be waived in writing by the party entitled to
receive such notice. Every notice, demand, request,
consent, approval, declaration or other communication
hereunder shall be deemed to have been duly given or served
on the date on which (i) personally delivered (whether in
person, by delivery service, or by reputable overnight
courier service), (ii) the date of the telecopy transmission
(provided the confirmation mailing was sent as provided
herein), or (iii) on the date of receipt if sent by the
United States mail. Failure or delay in delivering copies
of any notice, demand, request, consent, approval,
declaration or other communication to the persons designed
above to receive copies, if any, shall in no way adversely
affect the effectiveness of such notice, demand, request,
consent, approval, declaration or other communication.
(m) Waiver of Homestead Exemption. Grantor hereby releases
and waives all rights and benefits of the homestead
exemption laws of the State of Illinois as to all
Indebtedness secured by this Agreement.
(n) Waiver of Right of Redemption. NOTWITHSTANDING ANY OF
THE PROVISIONS TO THE CONTRARY CONTAINED IN THIS AGREEMENT,
GRANTOR HEREBY WAIVES, TO THE EXTENT PERMITTED UNDER 735
ILCS 5/15-1601(b) OR ANY SIMILAR LAW EXISTING AFTER THE DATE
OF THIS AGREEMENT, ANY AND ALL RIGHTS OF REDEMPTION ON
BEHALF OF GRANTOR AND ON BEHALF OF ANY OTHER PERSONS
PERMITTED TO REDEEM THE COLLATERAL.
(o) Waivers and Consents. Secured Party shall not be
deemed to have waived any rights under this Agreement (or
under the Related Documents) unless such waiver is in
writing and signed by Secured Party. No delay or omission
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on the part of Secured Party in exercising any right shall
operate as a waiver of such right or any other right. A
waiver by any party of a provision of this Agreement shall
not constitute a waiver of or prejudice the party's right
otherwise to demand strict compliance with that provision or
any other provision of this Agreement. No prior waiver by
Secured Party, nor any course of dealing between Secured
Party and Grantor, shall constitute a waiver of any of
Secured Party's rights or any of Grantor's obligations as to
any future transactions.
(p) Power of Attorney. Grantor hereby appoints Secured
Party as its true and lawful attorney-in-fact, irrevocably,
with full power of substitution to do the following upon an
Event of Default: (i) to demand, collect, receive, receipt
for, xxx and recover all sums of money or other property
which may now or hereafter become due, owing or payable from
the Collateral; (ii) to execute, sign and endorse any and
all claims, instruments, receipts, checks, drafts or
warrants issued in payment for the Collateral; (iii) to
settle or compromise any and all claims arising under the
Collateral, and, in the place and stead of Grantor, to
execute and deliver its release and settlement for the
claim; and (iv) to file any claim or claims or to take any
action or institute or take part in any proceedings, either
in its own name or in the name of Grantor, or otherwise,
which in the discretion of Secured Party may seem to be
necessary or advisable. This power is given as security for
the Indebtedness, and the authority hereby conferred is and
shall be irrevocable and shall remain in full force and
effect until renounced by Secured Party.
(q) Secured Party's Discretion. Whenever this instrument
requires either Secured Party's consent, election, approval
or similar action or otherwise vests in Secured Party the
authority to make decisions and/or determinations, such
actions shall be made or withheld in Secured Party's sole
and absolute discretion, unless specifically provided
otherwise and the granting of any consent, election,
approval or similar action by Secured Party in any instance
shall not constitute continuing consent, election, approval
or similar action in subsequent instances where such is
required.
(r) Waiver of Jury Trial. GRANTOR AND SECURED PARTY EACH
WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS (i) UNDER THIS
AGREEMENT OR ANY RELATED DOCUMENT OR UNDER ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION HEREWITH OR ANY RELATED DOCUMENT OR
(ii) ARISING FROM ANY RELATIONSHIP EXISTING IN CONNECTION
HEREWITH, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING WILL
BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. GRANTOR
AGREES THAT IT WILL NOT ASSERT ANY CLAIM AGAINST SECURED
PARTY OR ANY OTHER PERSON INDEMNIFIED UNDER THIS AGREEMENT
ON ANY THEORY OF LIABILITY FOR SPECIAL, INDIRECT,
CONSEQUENTIAL, INCIDENTAL OR PUNITIVE DAMAGES.
(signatures to follow)
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GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS
COMMERCIAL SECURITY AGREEMENT, AND GRANTOR AGREES TO ITS TERMS.
GRANTOR:
Giant Motorsports, Inc.,
a Nevada corporation
By:_______________________
Its:______________________
Chicago Cycle, Inc.,
a Nevada corporation
By:_______________________
Its:______________________
SECURED PARTY:
Kings' Motorsports, Inc.,
an Illinois corporation
By:_______________________
Its:______________________
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