EXHIBIT 10.16
SECURITY AGREEMENT
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SECURITY AGREEMENT, dated as of May 8, 2002, between Achievement Tec
Holdings, Inc., a Delaware corporation (the "Company"), Achievement Tec, Inc. a
Texas corporation ("Achievement"), Career Direction, Inc., a Texas corporation
("Career") (each of Achievement and Career is a "Subsidiary" and, the
Subsidiaries together with the Company, are the "Debtors") and the secured
parties signatory hereto and their respective endorsees, transferees and assigns
(each a "Secured Party" and collectively, the "Secured Parties").
W I T N E S S E T H:
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WHEREAS, pursuant to a Secured Convertible Debenture Purchase
Agreement, dated the date hereof, between the Company and the Secured Parties
(the "Purchase Agreement"), the Company has agreed to issue to the Secured
Parties and the Secured Parties have agreed to purchase from the Company certain
of the Company's 10% Secured Convertible Debentures, due one year from the date
of issue (the "Debentures"), which are convertible into shares of the Company's
Common Stock, $.001 par value (the "Common Stock"); and
WHEREAS, in order to induce the Secured Parties to purchase the
Debentures, the Debtors have agreed to execute and deliver to the Secured
Parties this Agreement for the benefit of the Secured Parties and to grant to
them a security interest (which is pari passu with the security interest granted
by the Company to AJW Partners, LLC and New Millennium Capital Partners II, LLC
(the "Initial Secured Parties") pursuant to a Security Agreement and an
Intellectual Property Security Agreement, both dated June 29, 2001 ("Initial
Security Agreements" and subordinate only to a federal tax lien created in favor
of the Internal Revenue Service on April 8, 2002 with respect to Career as set
forth on Schedule 1 attached hereto ("Federal Tax Lien")), in certain property
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of the Debtors to secure the prompt payment, performance and discharge in full
of all of the Company's obligations under the Debentures and agreements entered
into in connection therewith.
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
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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) "Business Day" means any day except Saturday, Sunday and
any day which shall be a legal holiday or a day on which banking institutions in
the State of New York or Texas generally are authorized or required by law or
other government actions to close.
(b) "Collateral" means the collateral in which the Secured
Parties are 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 Debtors, 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
therefore, all parts therefor, and all substitutes for any
of the foregoing and all other items used and useful in
connection with the Debtors' businesses and all
improvements thereto (collectively, the "Equipment"); and
(ii) All Inventory of the Debtors; and
(iii) All of the Debtors' 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 Debtors 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 Debtors' 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.
(c) "Obligations" means all of the Debtors' obligations under
this Agreement, the Debentures, the Registration Rights Agreement (as defined in
the Purchase Agreement) and the Purchase Agreement, 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
increased, 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 Parties as a
preference, fraudulent transfer or otherwise as such obligations may be amended,
supplemented, converted, extended or modified from time to time.
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(d) "UCC" means the Uniform Commercial Code and/or any other
applicable law of each jurisdiction in which any Debtor is incorporated or
organized (including, without limitation the State of Delaware, and the State of
Texas) and any jurisdiction as to any Collateral located therein.
2. Grant of Security Interest. As an inducement for the Secured
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Parties 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, each Debtor hereby, unconditionally and irrevocably, pledges,
grants and hypothecates to the Secured Parties, a continuing security interest
in, a lien upon and a right of set-off against all of the Debtors' right, title
and interest of whatsoever kind and nature in and to the Collateral (the
"Security Interest") senior to all liens and encumbrances of the Debtors other
than Federal Tax Lien and pari passu with the security interest granted by the
Company to the Initial Secured Parties pursuant to the Initial Security
Agreements (the "Initial Priority Interest").
3. Representations, Warranties, Covenants and Agreements of the
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Debtors. Each Debtor represents and warrants to, and covenants and agrees with,
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the Secured Parties as follows:
(a) Each Debtor 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 such Debtor
of this Agreement and the filings contemplated therein have been duly authorized
by all necessary action on the part of such Debtor and no further action is
required by such Debtors.
(b) Each Debtor 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) Each Debtor is the sole owner of the Collateral (except
for non-exclusive licenses granted by the Debtors in the ordinary course of
business), free and clear of any liens, security interests, encumbrances, rights
or claims, other than the Initial Priority Interest (which is pari passu with
the Security Interest created hereunder) and the Federal Tax Lien, and is fully
authorized to grant the Security Interest in and to pledge the Collateral. No
consent is required to enter into this Agreement or issue the Debentures or to
create the Security Interest hereunder that has not been received. There is not
on file in any governmental or regulatory authority, agency or recording office
an effective financing statement or similar instrument, 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 Parties pursuant to this Agreement or
with respect to the Federal Tax Lien or the Initial Priority Interest) covering
or affecting any of the Collateral. So long as this Agreement shall be in
effect, the Debtors 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
Parties pursuant to the terms of this Agreement or with respect to the Initial
Priority Interest).
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(d) No part of the Collateral has been judged invalid or
unenforceable. No written claim has been received that any Collateral or the
Debtors' use of any Collateral violates the rights of any third party. There has
been no adverse decision to the Debtors' claim of ownership rights in or
exclusive rights to use the Collateral in any jurisdiction or to the Debtors'
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
Debtors, threatened before any court, judicial body, administrative or
regulatory agency, arbitrator or other governmental authority.
(e) Each of the Debtors 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
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hereto and may not relocate such books of account and records or tangible
Collateral unless it delivers to each 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 each Secured Party valid, perfected and continuing liens in
the Collateral pari passu with the Initial Priority Interest and subordinate
only to the Federal Tax Lien.
(f) This Agreement creates in favor of each 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 security interest in such Collateral pari passu
with the Initial Priority Interest subordinate only to the Federal Tax Lien. The
Security Interest is senior to all liens and encumbrances (except for the
Federal Tax Lien) and is pari passu with the Initial Priority Interest. 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
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approval of or filing with or notice to any governmental authority or regulatory
body is required either: (i) for the grant by the Debtors of, or the
effectiveness of, the Security Interest granted hereby or for the execution,
delivery and performance of this Agreement by each Debtor or (ii) for the
perfection of or exercise by each Secured Party of its rights and remedies
hereunder.
(g) On the date of execution of this Agreement, the Debtors
will deliver to the Secured Parties 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
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jurisdictions as may be requested by any Secured Party in compliance with
applicable law.
(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 Debtors are a party or by which any of the
Debtors are bound. No consent (including, without limitation, from stock holders
or creditors of the Debtors) is required for the Debtors to enter into and
perform its obligations hereunder.
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(i) Each Debtor shall at all times maintain the liens and
Security Interest provided for hereunder as valid and perfected senior liens and
security interests in the Collateral in favor of the Secured Parties
(subordinate only to the Federal Tax Lien and pari passu with the Initial
Priority Interest) until this Agreement and the Security Interest hereunder
shall be terminated pursuant to Section 11. Each Debtor hereby agrees to defend
the same against any and all persons. Each Debtor shall safeguard and protect
all Collateral for the account of the Secured Parties. At the request of a
Secured Party, each Debtor 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 such
Secured Party and will pay the cost of filing the same in all public offices
wherever filing is, or is deemed by a Secured Party to be, necessary or
desirable to effect the rights and obligations provided for herein. Without
limiting the generality of the foregoing, the Debtors shall pay all fees, taxes
and other amounts necessary to maintain the Collateral and the Security Interest
hereunder, and the Debtors shall obtain and furnish to each 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 Debtors will not transfer, pledge, hypothecate,
encumber, license (except for non-exclusive licenses granted by the Debtors in
the ordinary course of business), sell or otherwise dispose of any of the
Collateral without the prior written consent of each Secured Party.
(k) Each Debtor 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) Each Debtor 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
a Secured Party's security interest therein.
(m) Each Debtor shall promptly execute and deliver to the
Secured Parties such further deeds, mortgages, assignments, security agreements,
financing statements or other instruments, documents, certificates and
assurances and take such further action as a 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
Debtors' intellectual property ("IP Security Agreement") in which the Secured
Parties have been granted a security interest hereunder, substantially in a form
acceptable to the Secured Parties, which IP Security Agreement, other than as
stated therein, shall be subject to all of the terms and conditions hereof.
(n) Each Debtor shall permit any 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 such
Secured Party from time to time.
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(o) Each Debtor 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) Each Debtor shall promptly notify each 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 such Debtor that may materially affect the value of the
Collateral, the Security Interest or the rights and remedies of the Secured
Parties hereunder.
(q) All information heretofore, herein or hereafter supplied
to the Secured Parties by or on behalf of the Debtors with respect to the
Collateral is accurate and complete in all material respects as of the date
furnished.
4. Defaults. The following events shall be "Events of Default:"
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(a) The occurrence of an Event of Default (as defined in the
Debentures) under the Debentures;
(b) Any representation or warranty of the Debtors in this
Agreement shall prove to have been incorrect in any material respect when made;
and
(c) The failure by any Debtor to observe or perform any of its
obligations hereunder for ten (10) days after receipt by such Debtor of notice
of such failure from a Secured Party.
5. Duty To Hold In Trust. Upon the occurrence of any Event of
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Default and at any time thereafter, each Debtor 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 Parties and shall forthwith endorse and
transfer any such sums or instruments, or both, to the Secured Parties for
application to the satisfaction of the Obligations.
6. Rights and Remedies Upon Default. Upon occurrence of any Event
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of Default and at any time thereafter, each Secured Party shall have the right
to exercise all of the remedies conferred hereunder and under the Debentures,
and each 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, each Secured Party shall have the following rights and powers:
(a) Each 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 each Debtor shall assemble the Collateral and
make it available to such Secured Party at places which such Secured Party shall
reasonably select, whether at such Debtor's premises or elsewhere, and make
available to such Secured Party, without rent, all of the Debtor's respective
premises and facilities for the purpose of such Secured Party taking possession
of, removing or putting the Collateral in saleable or disposable form.
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(b) Each Secured Party shall have the right to operate the
business of the Debtors 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 such 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
Debtors or right of redemption of the Debtors, which are hereby expressly
waived. Upon each such sale, lease, assignment or other transfer of Collateral,
each 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
Debtors, which are hereby waived and released.
7. Applications of Proceeds. The proceeds of any such sale, lease
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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 any 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 such Secured Party
shall pay to the Debtors 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 any Secured Party is legally entitled, the Debtors 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 such Secured Party to collect such deficiency. To the extent
permitted by applicable law, each Debtor waives all claims, damages and demands
against the Secured Parties arising out of the repossession, removal, retention
or sale of the Collateral, unless due to the gross negligence or willful
misconduct of such Secured Party.
8. Costs and Expenses. Each Debtor agrees to pay all out-of-pocket
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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 a Secured Party. Each Debtor
shall also pay all other claims and charges which in the reasonable opinion of a
Secured Party might prejudice, imperil or otherwise affect the Collateral or the
Security Interest therein. Each Debtor will also, upon demand, pay to a 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 such
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 Parties 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.
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9. Responsibility for Collateral. Each Debtor assumes all
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liabilities and responsibility in connection with all Collateral, and the
obligations of the Debtors hereunder or under the Debentures 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 Parties
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and all Obligations of the Debtors hereunder, shall be absolute and
unconditional, irrespective of: (a) any lack of validity or enforceability of
this Agreement, the Debentures 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 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 Parties 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 Debtors, 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 Parties shall continue even if the
Obligations are barred for any reason, including, without limitation, the
running of the statute of limitations or bankruptcy. Each Debtor 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 Parties 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 Parties, then, in any such event, the Debtors'
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. Each Debtor waives all right
to require the Secured Parties to proceed against any other person or to apply
any Collateral which the Secured Parties may hold at any time, or to marshal
assets, or to pursue any other remedy. Each Debtor 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
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shall terminate on the date on which all Obligations have been paid, fulfilled
and discharged in full. Upon such termination, the Secured Parties, at the
request and at the expense of the Debtors, 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) Each Debtor
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authorizes each Secured Party, and does hereby make, constitute and appoint it,
and its respective officers, agents, successors or assigns with full power of
substitution, as such Debtor's true and lawful attorney-in-fact, with power, in
its own name or in the name of such Debtor, 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 a Secured Party; (ii) to sign and endorse any UCC
financing statement or any invoice, freight or express ▇▇▇▇, ▇▇▇▇ 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
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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 ▇▇▇ for monies due in respect of the Collateral; and (v) generally, to do,
at the option of the Secured Parties, and at the Debtors' expense, at any time,
or from time to time, all acts and things which the Secured Parties deem
necessary to protect, preserve and realize upon the Collateral and the Security
Interest granted therein in order to effect the intent of this Agreement and the
Debentures, all as fully and effectually as the Debtors might or could do; and
the Debtors 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, each Debtor 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,
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and take all such action as may reasonably be deemed necessary or advisable, or
as reasonably requested by a 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 a Secured Party the grant or
perfection of a security interest in all the Collateral.
(c) Each Debtor hereby irrevocably appoints each Secured Party
as such Debtor's attorney-in-fact, with full authority in the place and stead of
such Debtor and in the name of such Debtor, from time to time in the Secured
Party's discretion, to take any action and to execute any instrument which such
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 Debtors where permitted by law.
13. Notices. Any and all notices or other communications or
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deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of (a) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section prior to 6:30 p.m. (New York City
time) on a Business Day, (b) the next Business Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section on a day that is not a Business Day
or later than 6:30 p.m. (New York City time) on any Business Day, (c) the
Business following the date of mailing, if sent by U.S. nationally recognized
overnight courier service, or (d) upon actual receipt by the party to whom such
notice is required to be given. The addresses for such notices and
communications are those set forth on the signature pages hereof, or such other
address as may be designated in writing hereafter, in the same manner, by such
Person.
14. Other Security. To the extent that the Obligations are now or
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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 each 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 such Secured Party's rights and
remedies hereunder.
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15. Actions by a Secured Party. Any action required or permitted
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hereunder to be taken by or on behalf of the Secured Parties signatory hereto
shall, for such action to be valid, require the approval of the Two
Thirds-in-Interest prior to the taking of such action. If the consent, approval
or disapproval of the secured parties signatory hereto is required or permitted
pursuant to this Agreement, such consent, approval or disapproval shall only be
valid if given by the Two Thirds-in-Interest.
16. Miscellaneous.
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(a) No course of dealing between the Debtors and the Secured
Parties, nor any failure to exercise, nor any delay in exercising, on the part
of the Secured Parties, 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 Parties 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.
10
(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) All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof. Each party
agrees that all legal proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement (whether brought
against a party hereto or its respective affiliates, directors, officers,
shareholders, employees or agents) shall be commenced in the state and federal
courts sitting in the City of New York, Borough of Manhattan. Each party hereto
hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the City of New York, Borough of Manhattan for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of the any of this Agreement), and hereby irrevocably waives,
and agrees not to assert in any suit, action or proceeding, any claim that it is
not personally subject to the jurisdiction of any such court, that such suit,
action or proceeding is improper. Each party hereto hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. If either party shall commence
an action or proceeding to enforce any provisions of this Agreement, then the
prevailing party in such action or proceeding shall be reimbursed by the other
party for its attorneys fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or proceeding.
(i) EACH PARTY HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE
RIGHTS TO A JURY TRIAL 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
MATTER 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.
11
(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.
* * * * * * * * * * *
12
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed on the day and year first above written.
ACHIEVEMENT TEC HOLDINGS, INC.
By:_____________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Executive Officer
Address for Notice:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Phone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: Chief Executive Officer
With a copy to:
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Phone No.: (▇▇▇) ▇▇▇-▇▇▇▇
13
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed on the day and year first above written.
ACHIEVEMENT TEC, INC.
By:____________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
Address for Notice:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Phone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: Chief Executive Officer
With a copy to:
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Phone No.: (▇▇▇) ▇▇▇-▇▇▇▇
14
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed on the day and year first above written.
CAREER DIRECTION, INC.
By:___________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
Address for Notice:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Phone No.: (▇▇▇) ▇▇▇-▇▇▇▇
15
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed on the day and year first above written.
NEW MILLENNIUM CAPITAL PARTNERS II, LLC
By: First Street Manager II, LLC
Its Investment Manger
By:_____________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Manager
Address for Notice:
New Millennium Capital Partners II, LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇ or (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
16
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed on the day and year first above written.
AJW PARTNERS, LLC
By: SMS Group, LLC
Its Investment Manger
By:_____________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Manager
Address for Notice:
AJW Partners, LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇ or (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
17
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed on the day and year first above written.
AJW/NEW MILLENNIUM OFFSHORE LTD
By: SMS Group, LLC
Its Investment Manger
By:_____________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Manager
Address for Notice:
AJW/New Millennium Offshore Ltd.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇ or (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
18
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed on the day and year first above written.
PEGASUS CAPITAL PARTNERS, LLC
By: SMS Group, LLC
Its Investment Manger
By:_____________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Manager
Address for Notice:
Pegasus Capital Partners, LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇ or (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
19
SCHEDULE A
----------
Principal Place of Business of the Debtors:
------------------------------------------
Locations Where Collateral is Located or Stored:
-----------------------------------------------
List of subsidiaries of the Debtors:
-----------------------------------
20
SCHEDULE B
----------
Jurisdictions:
-------------
21
