SECURITY AGREEMENT
SECURITY AGREEMENT (this "Agreement"), dated as of February 6, 2003, by and
among iDial Networks, Inc., a Nevada corporation ("Company"), and the secured
parties signatory hereto and their respective endorsees, transferees and assigns
(collectively, the "Secured Party").
W I T N E S S E T H:
WHEREAS, pursuant to a Securities Purchase Agreement, dated the date hereof
between Company and the Secured Party (the "Purchase Agreement"), Company has
agreed to issue to the Secured Party and the Secured Party has agreed to
purchase from Company certain of Company's 12% Secured Convertible Debentures,
due one year from the date of issue (the "Debentures"), which are convertible
into shares of Company's Common Stock, par value $.005 per share (the "Common
Stock"). In connection therewith, Company shall issue the Secured Party certain
Common Stock purchase warrants dated as of the date hereof to purchase the
number of shares of Common Stock indicated below each Secured Party's name on
the Purchase Agreement (the "Warrants"); and
WHEREAS, in order to induce the Secured Party to purchase the Debentures,
Company has agreed to execute and deliver to the Secured Party this Agreement
for the benefit of the Secured Party and to grant to it a first priority
security interest in certain property of Company to secure the prompt payment,
performance and discharge in full of all of Company's obligations under the
Debentures and exercise and discharge in full of Company's obligations under the
Warrants.
NOW, THEREFORE, in consideration of the agreements herein contained and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto hereby agree as follows:
1. Certain Definitions. As used in this Agreement, the following terms shall
have the meanings set forth in this Section 1. Terms used but not otherwise
defined in this Agreement that are defined in Article 9 of the UCC (such as
"general intangibles" and "proceeds") shall have the respective meanings
given such terms in Article 9 of the UCC.
(a) "Collateral" means the collateral in which the Secured Party is
granted a security interest by this Agreement and which shall include
the following, whether presently owned or existing or hereafter
acquired or coming into existence, and all additions and accessions
thereto and all substitutions and replacements thereof, and all
proceeds, products and accounts thereof, including, without
limitation, all proceeds from the sale or transfer of the Collateral
and of insurance covering the same and of any tort claims in
connection therewith:
(i) All Goods of the Company, including, without limitations, all
machinery, equipment, computers, motor vehicles, trucks, tanks,
boats, ships, appliances, furniture, special and general tools,
fixtures, test and quality control devices and other equipment of
every kind and nature and wherever situated, together with all
documents of title and documents representing the same, all
additions and accessions thereto, replacements therefor, all
parts therefor, and all substitutes for any of the foregoing and
all other items used and useful in connection with the Company's
businesses and all improvements thereto (collectively, the
"Equipment"); and
(ii) All Inventory of the Company; and
(iii)All of the Company's contract rights and general intangibles,
including, without limitation, all partnership interests, stock
or other securities, licenses, distribution and other agreements,
computer software development rights, leases, franchises,
customer lists, quality control procedures, grants and rights,
goodwill, trademarks, service marks, trade styles, trade names,
patents, patent applications, copyrights, deposit accounts, and
income tax refunds (collectively, the "General Intangibles"); and
(iv) All Receivables of the Company including all insurance proceeds,
and rights to refunds or indemnification whatsoever owing,
together with all instruments, all documents of title
representing any of the foregoing, all rights in any
merchandising, goods, equipment, motor vehicles and trucks which
any of the same may represent, and all right, title, security and
guaranties with respect to each Receivable, including any right
of stoppage in transit; and
(v) All of the Company's documents, instruments and chattel paper,
files, records, books of account, business papers, computer
programs and the products and proceeds of all of the foregoing
Collateral set forth in clauses (i)-(iv) above.
(b) "Company" shall mean, collectively, Company and all of the
subsidiaries of Company, a list of which is contained in Schedule A,
attached hereto.
(c) "Obligations" means all of the Company's obligations under this
Agreement and the Debentures, in each case, whether now or hereafter
existing, voluntary or involuntary, direct or indirect, absolute or
contingent, liquidated or unliquidated, whether or not jointly owed
with others, and whether or not from time to time decreased or
extinguished and later decreased, created or incurred, and all or any
portion of such obligations or liabilities that are paid, to the
extent all or any part of such payment is avoided or recovered
directly or indirectly from the Secured Party as a preference,
fraudulent transfer or otherwise as such obligations may be amended,
supplemented, converted, extended or modified from time to time.
(d) "UCC" means the Uniform Commercial Code, as currently in effect in the
State of New York.
2. Grant of Security Interest. As an inducement for the Secured Party to
purchase the Debentures and to secure the complete and timely payment,
performance and discharge in full, as the case may be, of all of the
Obligations, the Company hereby, unconditionally and irrevocably, pledges,
grants and hypothecates to the Secured Party, a continuing security
interest in, a continuing first lien upon, an unqualified right to
possession and disposition of and a right of set-off against, in each case
to the fullest extent permitted by law, all of the Company's right, title
and interest of whatsoever kind and nature in and to the Collateral (the
"Security Interest").
3. Representations, Warranties, Covenants and Agreements of the Company. The
Company represents and warrants to, and covenants and agrees with, the
Secured Party as follows:
(a) The Company has the requisite corporate power and authority to enter
into this Agreement and otherwise to carry out its obligations
thereunder. The execution, delivery and performance by the Company of
this Agreement and the filings contemplated therein have been duly
authorized by all necessary action on the part of the Company and no
further action is required by the Company. This Agreement constitutes
a legal, valid and binding obligation of the Company enforceable in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditor's rights generally.
(b) The Company represents and warrants that it has no place of business
or offices where its respective books of account and records are kept
(other than temporarily at the offices of its attorneys or
accountants) or places where Collateral is stored or located, except
as set forth on Schedule A attached hereto;
(c) The Company is the sole owner of the Collateral (except for
non-exclusive licenses granted by the Company in the ordinary course
of business), free and clear of any liens, security interests,
encumbrances, rights or claims, and is fully authorized to grant the
Security Interest in and to pledge the Collateral. There is not on
file in any governmental or regulatory authority, agency or recording
office an effective financing statement, security agreement, license
or transfer or any notice of any of the foregoing (other than those
that have been filed in favor of the Secured Party pursuant to this
Agreement) covering or affecting any of the Collateral. So long as
this Agreement shall be in effect, the Company shall not execute and
shall not knowingly permit to be on file in any such office or agency
any such financing statement or other document or instrument (except
to the extent filed or recorded in favor of the Secured Party pursuant
to the terms of this Agreement).
(d) No part of the Collateral has been judged invalid or unenforceable. No
written claim has been received that any Collateral or the Company's
use of any Collateral violates the rights of any third party. There
has been no adverse decision to the Company's claim of ownership
rights in or exclusive rights to use the Collateral in any
jurisdiction or to the Company's right to keep and maintain such
Collateral in full force and effect, and there is no proceeding
involving said rights pending or, to the best knowledge of the
Company, threatened before any court, judicial body, administrative or
regulatory agency, arbitrator or other governmental authority.
(e) The Company shall at all times maintain its books of account and
records relating to the Collateral at its principal place of business
and its Collateral at the locations set forth on Schedule A attached
hereto and may not relocate such books of account and records or
tangible Collateral unless it delivers to the Secured Party at least
30 days prior to such relocation (i) written notice of such relocation
and the new location thereof (which must be within the United States)
and (ii) evidence that appropriate financing statements and other
necessary documents have been filed and recorded and other steps have
been taken to perfect the Security Interest to create in favor of the
Secured Party valid, perfected and continuing first priority liens in
the Collateral.
(f) This Agreement creates in favor of the Secured Party a valid security
interest in the Collateral securing the payment and performance of the
Obligations and, upon making the filings described in the immediately
following sentence, a perfected first priority security interest in
such Collateral. Except for the filing of financing statements on
Form-1 under the UCC with the jurisdictions indicated on Schedule B,
attached hereto, no authorization or approval of or filing with or
notice to any governmental authority or regulatory body is required
either (i) for the grant by the Company of, or the effectiveness of,
the Security Interest granted hereby or for the execution, delivery
and performance of this Agreement by the Company or (ii) for the
perfection of or exercise by the Secured Party of its rights and
remedies hereunder.
(g) On the date of execution of this Agreement, the Company will deliver
to the Secured Party one or more executed UCC financing statements on
Form-1 with respect to the Security Interest for filing with the
jurisdictions indicated on Schedule B, attached hereto and in such
other jurisdictions as may be requested by the Secured Party.
(h) The execution, delivery and performance of this Agreement does not
conflict with or cause a breach or default, or an event that with or
without the passage of time or notice, shall constitute a breach or
default, under any agreement to which the Company is a party or by
which the Company is bound. No consent (including, without limitation,
from stock holders or creditors of the Company) is required for the
Company to enter into and perform its obligations hereunder.
(i) The Company shall at all times maintain the liens and Security
Interest provided for hereunder as valid and perfected first priority
liens and security interests in the Collateral in favor of the Secured
Party until this Agreement and the Security Interest hereunder shall
terminate pursuant to Section 11. The Company hereby agrees to defend
the same against any and all persons. The Company shall safeguard and
protect all Collateral for the account of the Secured Party. At the
request of the Secured Party, the Company will sign and deliver to the
Secured Party at any time or from time to time one or more financing
statements pursuant to the UCC (or any other applicable statute) in
form reasonably satisfactory to the Secured Party and will pay the
cost of filing the same in all public offices wherever filing is, or
is deemed by the Secured Party to be, necessary or desirable to effect
the rights and obligations provided for herein. Without limiting the
generality of the foregoing, the Company shall pay all fees, taxes and
other amounts necessary to maintain the Collateral and the Security
Interest hereunder, and the Company shall obtain and furnish to the
Secured Party from time to time, upon demand, such releases and/or
subordinations of claims and liens which may be required to maintain
the priority of the Security Interest hereunder.
(j) The Company will not transfer, pledge, hypothecate, encumber, license
(except for non-exclusive licenses granted by the Company in the
ordinary course of business), sell or otherwise dispose of any of the
Collateral without the prior written consent of the Secured Party.
(k) The Company shall keep and preserve its Equipment, Inventory and other
tangible Collateral in good condition, repair and order and shall not
operate or locate any such Collateral (or cause to be operated or
located) in any area excluded from insurance coverage.
(l) The Company shall, within ten (10) days of obtaining knowledge
thereof, advise the Secured Party promptly, in sufficient detail, of
any substantial change in the Collateral, and of the occurrence of any
event which would have a material adverse effect on the value of the
Collateral or on the Secured Party's security interest therein.
(m) The Company shall promptly execute and deliver to the Secured Party
such further deeds, mortgages, assignments, security agreements,
financing statements or other instruments, documents, certificates and
assurances and take such further action as the Secured Party may from
time to time request and may in its sole discretion deem necessary to
perfect, protect or enforce its security interest in the Collateral
including, without limitation, the execution and delivery of a
separate security agreement with respect to the Company's intellectual
property ("Intellectual Property Security Agreement") in which the
Secured Party has been granted a security interest hereunder,
substantially in a form acceptable to the Secured Party, which
Intellectual Property Security Agreement, other than as stated
therein, shall be subject to all of the terms and conditions hereof.
(n) The Company shall permit the Secured Party and its representatives and
agents to inspect the Collateral at any time, and to make copies of
records pertaining to the Collateral as may be requested by the
Secured Party from time to time.
(o) The Company will take all steps reasonably necessary to diligently
pursue and seek to preserve, enforce and collect any rights, claims,
causes of action and accounts receivable in respect of the Collateral.
(p) The Company shall promptly notify the Secured Party in sufficient
detail upon becoming aware of any attachment, garnishment, execution
or other legal process levied against any Collateral and of any other
information received by the Company that may materially affect the
value of the Collateral, the Security Interest or the rights and
remedies of the Secured Party hereunder.
(q) All information heretofore, herein or hereafter supplied to the
Secured Party by or on behalf of the Company with respect to the
Collateral is accurate and complete in all material respects as of the
date furnished.
(r) Schedule A attached hereto contains a list of all of the subsidiaries
of Company.
4. Defaults. The following events shall be "Events of Default":
(a) The occurrence of an Event of Default (as defined in the Debentures)
under the Debentures;
(b) Any representation or warranty of the Company in this Agreement or in
the Intellectual Property Security Agreement shall prove to have been
incorrect in any material respect when made;
(c) The failure by the Company to observe or perform any of its
obligations hereunder or in the Intellectual Property Security
Agreement for ten (10) days after receipt by the Company of notice of
such failure from the Secured Party; and
(d) Any breach of, or default under, the Warrants.
5. Duty To Hold In Trust. Upon the occurrence of any Event of Default and at
any time thereafter, the Company shall, upon receipt by it of any revenue,
income or other sums subject to the Security Interest, whether payable
pursuant to the Debentures or otherwise, or of any check, draft, note,
trade acceptance or other instrument evidencing an obligation to pay any
such sum, hold the same in trust for the Secured Party and shall forthwith
endorse and transfer any such sums or instruments, or both, to the Secured
Party for application to the satisfaction of the Obligations.
6. Rights and Remedies Upon Default. Upon occurrence of any Event of Default
and at any time thereafter, the Secured Party shall have the right to
exercise all of the remedies conferred hereunder and under the Debentures,
and the Secured Party shall have all the rights and remedies of a secured
party under the UCC and/or any other applicable law (including the Uniform
Commercial Code of any jurisdiction in which any Collateral is then
located). Without limitation, the Secured Party shall have the following
rights and powers:
(a) The Secured Party shall have the right to take possession of the
Collateral and, for that purpose, enter, with the aid and assistance
of any person, any premises where the Collateral, or any part thereof,
is or may be placed and remove the same, and the Company shall
assemble the Collateral and make it available to the Secured Party at
places which the Secured Party shall reasonably select, whether at the
Company's premises or elsewhere, and make available to the Secured
Party, without rent, all of the Company's respective premises and
facilities for the purpose of the Secured Party taking possession of,
removing or putting the Collateral in saleable or disposable form.
(b) The Secured Party shall have the right to operate the business of the
Company using the Collateral and shall have the right to assign, sell,
lease or otherwise dispose of and deliver all or any part of the
Collateral, at public or private sale or otherwise, either with or
without special conditions or stipulations, for cash or on credit or
for future delivery, in such parcel or parcels and at such time or
times and at such place or places, and upon such terms and conditions
as the Secured Party may deem commercially reasonable, all without
(except as shall be required by applicable statute and cannot be
waived) advertisement or demand upon or notice to the Company or right
of redemption of the Company, which are hereby expressly waived. Upon
each such sale, lease, assignment or other transfer of Collateral, the
Secured Party may, unless prohibited by applicable law which cannot be
waived, purchase all or any part of the Collateral being sold, free
from and discharged of all trusts, claims, right of redemption and
equities of the Company, which are hereby waived and released.
7. Applications of Proceeds. The proceeds of any such sale, lease or other
disposition of the Collateral hereunder shall be applied first, to the
expenses of retaking, holding, storing, processing and preparing for sale,
selling, and the like (including, without limitation, any taxes, fees and
other costs incurred in connection therewith) of the Collateral, to the
reasonable attorneys' fees and expenses incurred by the Secured Party in
enforcing its rights hereunder and in connection with collecting, storing
and disposing of the Collateral, and then to satisfaction of the
Obligations, and to the payment of any other amounts required by applicable
law, after which the Secured Party shall pay to the Company any surplus
proceeds. If, upon the sale, license or other disposition of the
Collateral, the proceeds thereof are insufficient to pay all amounts to
which the Secured Party is legally entitled, the Company will be liable for
the deficiency, together with interest thereon, at the rate of 15% per
annum (the "Default Rate"), and the reasonable fees of any attorneys
employed by the Secured Party to collect such deficiency. To the extent
permitted by applicable law, the Company waives all claims, damages and
demands against the Secured Party arising out of the repossession, removal,
retention or sale of the Collateral, unless due to the gross negligence or
willful misconduct of the Secured Party.
8. Costs and Expenses. The Company agrees to pay all out-of-pocket fees, costs
and expenses incurred in connection with any filing required hereunder,
including without limitation, any financing statements, continuation
statements, partial releases and/or termination statements related thereto
or any expenses of any searches reasonably required by the Secured Party.
The Company shall also pay all other claims and charges which in the
reasonable opinion of the Secured Party might prejudice, imperil or
otherwise affect the Collateral or the Security Interest therein. The
Company will also, upon demand, pay to the Secured Party the amount of any
and all reasonable expenses, including the reasonable fees and expenses of
its counsel and of any experts and agents, which the Secured Party may
incur in connection with (i) the enforcement of this Agreement, (ii) the
custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, or (iii) the exercise or
enforcement of any of the rights of the Secured Party under the Debentures.
Until so paid, any fees payable hereunder shall be added to the principal
amount of the Debentures and shall bear interest at the Default Rate.
9. Responsibility for Collateral. The Company assumes all liabilities and
responsibility in connection with all Collateral, and the obligations of
the Company hereunder or under the Debentures and the Warrants shall in no
way be affected or diminished by reason of the loss, destruction, damage or
theft of any of the Collateral or its unavailability for any reason.
10. Security Interest Absolute. All rights of the Secured Party and all
Obligations of the Company hereunder, shall be absolute and unconditional,
irrespective of: (a) any lack of validity or enforceability of this
Agreement, the Debentures, the Warrants or any agreement entered into in
connection with the foregoing, or any portion hereof or thereof; (b) any
change in the time, manner or place of payment or performance of, or in any
other term of, all or any of the Obligations, or any other amendment or
waiver of or any consent to any departure from the Debentures, the Warrants
or any other agreement entered into in connection with the foregoing; (c)
any exchange, release or nonperfection of any of the Collateral, or any
release or amendment or waiver of or consent to departure from any other
collateral for, or any guaranty, or any other security, for all or any of
the Obligations; (d) any action by the Secured Party to obtain, adjust,
settle and cancel in its sole discretion any insurance claims or matters
made or arising in connection with the Collateral; or (e) any other
circumstance which might otherwise constitute any legal or equitable
defense available to the Company, or a discharge of all or any part of the
Security Interest granted hereby. Until the Obligations shall have been
paid and performed in full, the rights of the Secured Party shall continue
even if the Obligations are barred for any reason, including, without
limitation, the running of the statute of limitations or bankruptcy. The
Company expressly waives presentment, protest, notice of protest, demand,
notice of nonpayment and demand for performance. In the event that at any
time any transfer of any Collateral or any payment received by the Secured
Party hereunder shall be deemed by final order of a court of competent
jurisdiction to have been a voidable preference or fraudulent conveyance
under the bankruptcy or insolvency laws of the United States, or shall be
deemed to be otherwise due to any party other than the Secured Party, then,
in any such event, the Company's obligations hereunder shall survive
cancellation of this Agreement, and shall not be discharged or satisfied by
any prior payment thereof and/or cancellation of this Agreement, but shall
remain a valid and binding obligation enforceable in accordance with the
terms and provisions hereof. The Company waives all right to require the
Secured Party to proceed against any other person or to apply any
Collateral which the Secured Party may hold at any time, or to marshal
assets, or to pursue any other remedy. The Company waives any defense
arising by reason of the application of the statute of limitations to any
obligation secured hereby.
11. Term of Agreement. This Agreement and the Security Interest shall terminate
on the date on which all payments under the Debentures have been made in
full and all other Obligations have been paid or discharged. Upon such
termination, the Secured Party, at the request and at the expense of the
Company, will join in executing any termination statement with respect to
any financing statement executed and filed pursuant to this Agreement.
12. Power of Attorney; Further Assurances.
(a) The Company authorizes the Secured Party, and does hereby make,
constitute and appoint it, and its respective officers, agents,
successors or assigns with full power of substitution, as the
Company's true and lawful attorney-in-fact, with power, in its own
name or in the name of the Company, to, after the occurrence and
during the continuance of an Event of Default, (i) endorse any notes,
checks, drafts, money orders, or other instruments of payment
(including payments payable under or in respect of any policy of
insurance) in respect of the Collateral that may come into possession
of the Secured Party; (ii) to sign and endorse any UCC financing
statement or any invoice, freight or express xxxx, xxxx of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with accounts, and other
documents relating to the Collateral; (iii) to pay or discharge taxes,
liens, security interests or other encumbrances at any time levied or
placed on or threatened against the Collateral; (iv) to demand,
collect, receipt for, compromise, settle and xxx for monies due in
respect of the Collateral; and (v) generally, to do, at the option of
the Secured Party, and at the Company's expense, at any time, or from
time to time, all acts and things which the Secured Party deems
necessary to protect, preserve and realize upon the Collateral and the
Security Interest granted therein in order to effect the intent of
this Agreement, the Debentures and the Warrants, all as fully and
effectually as the Company might or could do; and the Company hereby
ratifies all that said attorney shall lawfully do or cause to be done
by virtue hereof. This power of attorney is coupled with an interest
and shall be irrevocable for the term of this Agreement and thereafter
as long as any of the Obligations shall be outstanding.
(b) On a continuing basis, the Company will make, execute, acknowledge,
deliver, file and record, as the case may be, in the proper filing and
recording places in any jurisdiction, including, without limitation,
the jurisdictions indicated on Schedule B, attached hereto, all such
instruments, and take all such action as may reasonably be deemed
necessary or advisable, or as reasonably requested by the Secured
Party, to perfect the Security Interest granted hereunder and
otherwise to carry out the intent and purposes of this Agreement, or
for assuring and confirming to the Secured Party the grant or
perfection of a security interest in all the Collateral.
(c) The Company hereby irrevocably appoints the Secured Party as the
Company's attorney-in-fact, with full authority in the place and stead
of the Company and in the name of the Company, from time to time in
the Secured Party's discretion, to take any action and to execute any
instrument which the Secured Party may deem necessary or advisable to
accomplish the purposes of this Agreement, including the filing, in
its sole discretion, of one or more financing or continuation
statements and amendments thereto, relative to any of the Collateral
without the signature of the Company where permitted by law.
13. Notices. All notices, requests, demands and other communications hereunder
shall be in writing, with copies to all the other parties hereto, and shall
be deemed to have been duly given when (i) if delivered by hand, upon
receipt, (ii) if sent by facsimile, upon receipt of proof of sending
thereof, (iii) if sent by nationally recognized overnight delivery service
(receipt requested), the next business day or (iv) if mailed by first-class
registered or certified mail, return receipt requested, postage prepaid,
four days after posting in the U.S. mails, in each case if delivered to the
following addresses:
If to the Company: iDial Networks, Inc.
00000 Xxxx Xxxxxxx Xxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
With copies to: Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP
1065 Avenue of the Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Email: XXxxxxxxxx@xxxxxx.xxx
If to the Secured Party:______________________________AJW Partners, LLC
AJW Offshore, Ltd.
AJW Qualified Partners, LLC
0000 Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxx
Facsimile: 000-000-0000
With copies to:
Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx, LLP
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Facsimile: 000-000-0000
14. Other Security. To the extent that the Obligations are now or hereafter
secured by property other than the Collateral or by the guarantee,
endorsement or property of any other person, firm, corporation or other
entity, then the Secured Party shall have the right, in its sole
discretion, to pursue, relinquish, subordinate, modify or take any other
action with respect thereto, without in any way modifying or affecting any
of the Secured Party's rights and remedies hereunder.
15. Miscellaneous.
(a) No course of dealing between the Company and the Secured Party, nor
any failure to exercise, nor any delay in exercising, on the part of
the Secured Party, any right, power or privilege hereunder or under
the Debentures shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, power or privilege hereunder or
thereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.
(b) All of the rights and remedies of the Secured Party with respect to
the Collateral, whether established hereby or by the Debentures or by
any other agreements, instruments or documents or by law shall be
cumulative and may be exercised singly or concurrently.
(c) This Agreement constitutes the entire agreement of the parties with
respect to the subject matter hereof and is intended to supersede all
prior negotiations, understandings and agreements with respect
thereto. Except as specifically set forth in this Agreement, no
provision of this Agreement may be modified or amended except by a
written agreement specifically referring to this Agreement and signed
by the parties hereto.
(d) In the event that any provision of this Agreement is held to be
invalid, prohibited or unenforceable in any jurisdiction for any
reason, unless such provision is narrowed by judicial construction,
this Agreement shall, as to such jurisdiction, be construed as if such
invalid, prohibited or unenforceable provision had been more narrowly
drawn so as not to be invalid, prohibited or unenforceable. If,
notwithstanding the foregoing, any provision of this Agreement is held
to be invalid, prohibited or unenforceable in any jurisdiction, such
provision, as to such jurisdiction, shall be ineffective to the extent
of such invalidity, prohibition or unenforceability without
invalidating the remaining portion of such provision or the other
provisions of this Agreement and without affecting the validity or
enforceability of such provision or the other provisions of this
Agreement in any other jurisdiction.
(e) No waiver of any breach or default or any right under this Agreement
shall be considered valid unless in writing and signed by the party
giving such waiver, and no such waiver shall be deemed a waiver of any
subsequent breach or default or right, whether of the same or similar
nature or otherwise.
(f) This Agreement shall be binding upon and inure to the benefit of each
party hereto and its successors and assigns.
(g) Each party shall take such further action and execute and deliver such
further documents as may be necessary or appropriate in order to carry
out the provisions and purposes of this Agreement.
(h) This Agreement shall be construed in accordance with the laws of the
State of New York, except to the extent the validity, perfection or
enforcement of a security interest hereunder in respect of any
particular Collateral which are governed by a jurisdiction other than
the State of New York in which case such law shall govern. Each of the
parties hereto irrevocably submit to the exclusive jurisdiction of any
New York State or United States Federal court sitting in Manhattan
county over any action or proceeding arising out of or relating to
this Agreement, and the parties hereto hereby irrevocably agree that
all claims in respect of such action or proceeding may be heard and
determined in such New York State or Federal court. The parties hereto
agree that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. The parties hereto
further waive any objection to venue in the State of New York and any
objection to an action or proceeding in the State of New York on the
basis of forum non conveniens.
(i) EACH PARTY HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A
JURY TRAIL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS AGREEMENT. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL
ENCOMPASSING OF ANY DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT
RELATE TO THE SUBJECT MATER OF THIS AGREEMENT, INCLUDING WITHOUT
LIMITATION CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL
OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES
THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR EACH PARTY TO ENTER INTO
A BUSINESS RELATIONSHIP, THAT EACH PARTY HAS ALREADY RELIED ON THIS
WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH PARTY WILL
CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH
PARTY FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER
WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY HAS KNOWINGLY AND
VOLUNTARILY WAIVES ITS RIGHTS TO A JURY TRIAL FOLLOWING SUCH
CONSULTATION. THIS WAIVER IS IRREVOCABLE, MEANING THAT,
NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS AND SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT. IN THE EVENT OF A LITIGATION, THIS AGREEMENT MAY BE
FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
(j) This Agreement may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original and, all of
which taken together shall constitute one and the same Agreement. In
the event that any signature is delivered by facsimile transmission,
such signature shall create a valid binding obligation of the party
executing (or on whose behalf such signature is executed) the same
with the same force and effect as if such facsimile signature were the
original thereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement
to be duly executed on the day and year first above written.
IDIAL NETWORKS, INC.
By: _____________________________________
Xxxx X. Xxxx
Chief Executive Officer
AJW PARTNERS, LLC
By: SMS Group, LLC
By: _____________________________________
Xxxxx X. Xxxxxxxx
Manager
AJW OFFSHORE, LTD.
By: First Street Manager II, LLC
By: _____________________________________
Xxxxx X. Xxxxxxxx
Manager
AJW QUALIFIED PARTNERS, LLC
By: AJW Manager, LLC
By: _____________________________________
Xxxxx X. Xxxxxxxx
Manager
SCHEDULE A
Principal Place of Business of the Company:
------------------------------------------
00000 X. Xxxxxxx Xx. Xxxxx 000, Xxxxxx, XX 00000
Locations Where Collateral is Located or Stored:
-----------------------------------------------
x 00 Xxxxxx Xxxxx 0000-000, XX, XX 00000
o Sirius Telecom - Suite 800, 000 Xxxxx Xxxxx Xxxxxx, Xxx Xxxxxxx,
Xxxxxxxxxx 00000
o 0000 Xxxxxxxxxx Xxxxx Xxxxx 000, Xxx Xxxxxxxxx, XX 00000
o 00000 X Xxxxxxx Xxxxx 000, Xxxxxx, XX 00000
List of Subsidiaries of the Company:
-----------------------------------
o IDNW Carrier Services, Inc. - Delaware Corp.
o IDNW, Inc. - Delaware Corp.
o Global Dollar, Inc. - Delaware Corp.
o Dibz, Inc. - Delaware, Corp.
o 2Sendit, Inc. - Colorado Corp.
o Adelant Telecom, Inc. - Nevada Corp.
SCHEDULE B
Jurisdictions:
-------------
California
Colorado
New York
Texas
