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EXHIBIT 10.15
SECURITY AGREEMENT
This Security Agreement (the "AGREEMENT") is made and entered into as
of the 3rd day of June, 1999 by Xxxx Xxxxxx Direct, Inc. ("BORROWER"), in favor
of the person or entity designated below as "Senior Lender" and all persons and
entities heretofore and hereafter receiving this Agreement in his, her, or its
capacity as a "Senior Lender" (collectively, the "SENIOR LENDERS"). The Senior
Lenders have provided to Borrower loans in an aggregate principal amount of up
to $75,000 outstanding at any date (the "SENIOR FINANCING"). The Senior Lenders
are identified on Scheule A attached hereto.
1. SECURITY INTEREST.
(a) To secure the due and punctual payment of all amounts due under the
Senior Financing, Borrower hereby grants to the Senior Lenders a security
interest in all of its assets (the "COLLATERAL"), except for the capital stock
of Rhino Marketing, Inc., a wholly owned subsidiary of Borrower which has ceased
operations. The Collateral shall include, without limitation:
(i) All goods now owned or hereafter acquired by Borrower or
in which Borrower has or may hereafter acquire any interest;
(ii) All equipment now owned or hereafter acquired by
Borrower;
(iii) All inventory now owned or hereafter acquired by
Borrower;
(iv) All accounts, contract rights and general intangibles now
owned or hereafter created or acquired by Borrower, all receivables, goodwill,
trademarks, trade styles, trade names, customers lists and business records;
(v) All documents, instruments and chattel paper now owned or
hereafter acquired by Borrower; and
(vi) All monies, deposit accounts, certificate of deposit and
securities of Borrower now or hereafter in Borrower's or its agents' possession.
(b) Lender's security interest in the Collateral shall be a continuing
lien and shall include the proceeds and products of the Collateral, including,
but not limited to, the proceeds of any insurance thereon.
(c) Borrower, represents and warrants to the Senior Lenders that the
Collateral is free and clear of all mortgages, encumbrances, liens and security
interests except the following ("PERMITTED LIENS"): (i) security interest in
favor of Xxxxxx Xxxxxxx, as agent for several lenders (the "EXISTING LENDERS")
in connection with a loan in the principal amount of $200,000
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made by the Existing Lenders, which loan is evidenced by a promissory note dated
June 28, 1996 (the "EXISTING LOAN"); and (ii) purchase money security interests,
which security interests may be directly in favor of the Seller or in favor of a
third-party which shall have financed the acquisition of such goods, equipment
or inventory.
2. COVENANTS AND FURTHER ASSURANCES.
(a) Borrower agrees to take any and all actions as may be reasonably
requested by the Senior Lenders to perfect, protect and evidence the security
interest of the Senior Lenders in the Collateral, including, without limitation:
(i) the filing of financing statements and other instruments; (ii) the delivery
of possession of that portion of the Collateral with respect to which a security
interest may be perfected by possession; and (iii) delivery of notices to banks,
insurance companies and others where notice may be required to perfect a
security interest.
(b) Borrower shall: (i) keep and maintain the Collateral free and clear
of all liens, encumbrances and security interests of third parties other than
the Permitted Liens and shall defend the Collateral at its cost and expense
against any such lien, encumbrance or security interest; (ii) comply in all
material respects, with all laws, statutes and regulations pertaining to
Collateral and its use and operation; (iii) properly care for, house, store and
maintain the Collateral in good condition, free of misuse, abuse and
deterioration, other than normal wear and tear; and (iv) permit the Senior
Lenders or any representative thereof to examine and make copies of the records
and visit the properties of Borrower and discuss the business and operations of
Borrower with any employee or representative thereof.
3. EVENTS OF DEFAULT AND REMEDIES.
(a) The failure to pay the Senior Financing when due shall constitute
an event of default by Borrower under this Agreement. Upon the occurrence of an
event of default under this Agreement, the Senior Lenders shall have all rights
and remedies of a secured party under the Uniform Commercial Code and other
rights and remedies to which the Senior Lenders may be entitled under applicable
law.
(b) Any action taken by the Senior Lenders with respect to the
Collateral, including any sale or disposition of the Collateral, shall be for
the benefit of all the Senior Lenders and the net proceeds of any such sale
available to the Senior Lenders shall be allocated among the Senior Lenders on a
pro rata basis.
(c) Any action taken by the Senior Lenders with respect to the
Collateral shall be taken only by action approved by a majority in principal
amount of the Senior Financing then outstanding. Any consent or approval of the
Senior Lenders, or any notice required to be given by the Senior Lenders, may be
given only by a Senior Lender(s) holding a majority in principal amount of the
Senior Financing then outstanding.
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4. MISCELLANEOUS.
(a) NOTICES. All notices, requests, demands and other communications
(collectively, "NOTICES") given pursuant to this Agreement shall be in writing,
and shall be delivered by personal service, courier, facsimile transmission or
by United States first class, registered or certified mail, postage prepaid,
addressed to the party at the address set forth on the signature page of this
Agreement. Any Notice, other than a Notice sent by registered or certified mail,
shall be effective when received; a Notice sent by registered or certified mail,
postage prepaid return receipt requested, shall be effective on the earlier of
when received or the fifth day following deposit in the United States mails. Any
party may from time to time change its address for further Notices hereunder by
giving notice to the other party in the manner prescribed in this Section.
(b) ENTIRE AGREEMENT. This Agreement contains the sole and entire
agreement and understanding of the parties with respect to the entire subject
matter of this Agreement, and any and all prior discussions, negotiations,
commitments and understandings, whether oral or otherwise, related to the
subject matter of this Agreement are hereby merged herein.
(c) SUCCESSORS. This Agreement shall be binding upon and inure to the
benefit of the parties to this Agreement and their respective successors, heirs
and personal representatives.
(d) GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of California without giving effect to the principles of
conflicts of law thereof.
(e) SEVERABILITY. Whenever possible each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be or become
prohibited or invalid under applicable law, such provision shall be ineffective
to the extent of such prohibition or invalidity without invalidating the
remainder of such provision of the remaining provisions of this Agreement.
(f) CAPTIONS. The various captions of this Agreement are for reference
only and shall not be considered or referred to in resolving questions of
interpretation of this Agreement.
(g) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
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(h) ATTORNEYS' FEES. If any action or proceeding is brought to enforce
or interpret any provision of this Agreement, the prevailing party shall be
entitled to recover reasonable attorneys' fees to be fixed by the court.
XXXX XXXXXX DIRECT, INC.
By:__________________________________
Xxxxxxx X. Xxxxxxxxx, President
0000 Xxxxxxx Xxxxx,
Xxxxx Xxxxx, XX 00000
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SCHEDULE A
SENIOR LENDERS
Xxx Xxxxx
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