EXHIBIT 10.18
SECURITY AGREEMENT
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THIS SECURITY AGREEMENT (the "Agreement") dated as of this day of
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, 200 , is entered into by and between POWER2SHIP, INC., a Nevada
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corporation (the "Debtor"), and the holders of 14.25% Secured Convertible
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Debentures (the "Holders").
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RECITALS
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WHEREAS, the Debtor has conducted a private offering (the "Offering") of
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14.25% Secured Convertible Debentures (the "Debentures") pursuant to a
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Confidential Summary Private Offering Memorandum; and
WHEREAS, as a condition of the offering, the Debtor has agreed to grant to
the Holders a security interest in the Collateral (as hereinafter defined) to be
used as security for the Secured Obligations (as defined herein) on terms set
forth herein.
NOW, THEREFORE, in consideration of the premises set forth herein, and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the Debtor hereby agrees with the Holders as follows:
1. Recitals. The above recitals are true and correct and same are
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incorporated into this Agreement by this reference.
2. Definition. As used herein, the term "Collateral" shall mean the
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following kinds and types of tangible and intangible property, in all cases
whether now or hereafter existing, whether now owned or hereafter acquired and
wherever located, including, without limitation:
(a) All accounts, accounts receivable, other rights to payment,
documents, chattel paper, general intangibles, deposit accounts, investment
property, financial assets and letter-of-credit rights, and all rights now
or hereafter existing in and to all security agreements, letters of credit
and other supporting obligations or contracts securing or otherwise
relating to any of the foregoing (any and all such accounts, accounts
receivable, other rights to payment, documents, chattel paper, general
intangibles, deposit accounts, investment property, financial assets and
letter-of-credit rights being the "Receivables," and any and all such
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security agreements, letters of credit and other supporting obligations or
contracts being the "Related Contracts");
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(b) All drafts, acceptances, promissory notes and other instruments
(the "Instruments");
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(c) All equipment, machinery, trucks and other motor vehicles,
furnishings and fixtures, all parts thereof, all accessions thereto and all
replacements thereof, wherever located (any and all such equipment,
machinery, vehicles, furnishings, fixtures, parts, accessories and
replacements being the "Equipment");
(d) All inventory in all of its forms, wherever located, (including,
but not limited to) (i) all raw materials and work in process therefore,
all finished goods thereof, and all materials used or consumed in the
production thereof, (ii) all goods in which the Debtor has a joint or other
interest or right of any kind (including, without limitation, goods in
which the Debtor has an interest or right as consignee), (iii) all goods
which are returned to or repossessed by the Debtor and (iv) all accessions
thereto, products thereof and documents therefore (any and all such
inventory, accessions, products and documents being the "Inventory"), and
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all farm products;
(e) All books, records, programs and software relating to any of the
foregoing Collateral;
(f) All proceeds of any and all of the foregoing Collateral and, to
the extent not otherwise included, all payments under insurance (whether or
not the Holders are loss payees thereof), or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect
to any of the foregoing Collateral; and
(g) Subject to the subordination agreement of the Holders set forth in
Section 6 herein, so long as any Secured Obligations (as defined below) are
due and owing to the Holders or an Event of Default has occurred and is
continuing, the Debtor shall not, and the Purchaser shall not take any
action to cause the Debtor, to sell, exchange, lease, negotiate, pledge,
assign or grant any security interest in or otherwise dispose of the
Collateral to anyone other than the Holders, nor permit any other lien of
any kind to attach thereto, nor permit the same to be attached to or
commingled with other goods or property, without the Holder's written
consent.
3. Exclusion. Notwithstanding the foregoing, the Collateral shall not
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include a certain account to be established at Newbridge Securities Corporation,
the proceeds of which account have been pledged to secure the Company's
obligation to pay interest on the Debentures, as described in a Security
Agreement of even date herewith between the Company and the Holders.
4. Security for Obligations. This Agreement secures, and the Collateral
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is collateral security for, the prompt payment of the principal amount of the
Debentures, whether at stated maturity, by required prepayment, declaration,
acceleration, conversion, demand or otherwise (including the payment of amounts
that would become due but for the operation of the automatic stay under Section
363(a) of the Bankruptcy Code, 11 U.S.C. Sec.362(a)) (such obligations of Debtor
being the "Secured Obligations").
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5. Security Interests. As security for the payment and performance of the
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Secured Obligations and subject to the subordination agreement of the Holders
contained in Section 6, below, the Debtor hereby creates and grants to the
Holders, their successors and assigns, a security interest in the Collateral
(the "Security Interest"). Without limiting the foregoing, the Holders are
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hereby authorized to file one or more financing statements, continuation
statements, filings with the U.S. Patent and Trademark Office, or other
documents for the purpose of perfecting, confirming, continuing, enforcing or
protecting the Security Interest, naming the Debtor as debtor and the
Representative (as hereinafter defined), as representative of the Holders as
creditor.
The Debtor agrees at all times to keep in all material respects accurate
and complete accounting records with respect to the Collateral.
6. Agreement to Subordinate. Each Holder hereby agrees that its
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Security Interest shall automatically be subordinate to (a) any credit facility
or factoring arrangement (collectively, a "Facility") obtained by Debtor, which
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Facility is secured by Receivables with a value not in excess of 125% of the
Facility, and (b) any equipment or purchase money financing obtained by Debtor
which financing is secured by the Equipment or Inventory so purchased with a
value not in excess of 125% of the financing provided.
7. Further Assurances. Debtor agrees, at its expense, to execute,
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acknowledge, deliver and cause to be duly filed all such further instruments and
documents and take all such actions as the Holders may from time to time
reasonably request for the assuring and preserving of the Security Interest and
the rights and remedies created hereby, including, without limitation, the
payment of any fees and taxes required in connection with the execution and
delivery of this Agreement, the granting of the Security Interest and the filing
of any financing statements or other documents in connection herewith.
8. Taxes; Encumbrances. At their option, the Holders may discharge past
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due taxes, liens, security interests or other encumbrances at any time levied or
placed on the Collateral and not permitted under the Debentures, and may pay for
the maintenance and preservation of the Collateral to the extent Debtor fails to
do so, and Debtor agrees to reimburse the Holders within five business days
following receipt of written notice from the Holders, accompanied by proof of
payment, for any payment made or any expense incurred by it pursuant to the
foregoing authorization; provided, however, that nothing in this Section shall
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be interpreted as excusing Debtor from the performance of any covenants or other
promises with respect to taxes, liens, security interests or other en-cumbrances
and maintenances as set forth herein or in the Debentures.
9. Representations, Warranties and Covenants. Debtor hereby represents,
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warrants, covenants and agrees as follows:
(a) Title and Authority. Subject to security agreements, leases or
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similar arrangements entered into by Debtor prior to the execution of this
Agreement and Section 6 hereof, it has (i) rights in, and good and
marketable title to, the Collateral and (ii) the requisite corporate power
and authority to grant to the Holders the Security Interest in such
Collateral pursuant hereto and to execute, deliver and perform its
obligations in accordance with the terms of this Agreement, without the
consent or approval of any other person or entity other than any consent or
approval which has been obtained.
(b) Filing. Fully executed Uniform Commercial Code financing
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statements containing a description of the Collateral shall have been or
shall be delivered to the Holders in such form as requested by the Holders.
(c) Absence of Other Liens. The Collateral is owned by the Debtor free
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and clear of any lien or encumbrance of any nature whatsoever, except
otherwise disclosed to the Holders in writing on the date hereof, no
financing statement has been filed, under the Uniform Commercial Code as in
effect in any state or otherwise, covering any Collateral.
(d) No Conflict. None of the execution and delivery by Debtor of this
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Agreement and the other loan documents or the grant and perfection of the
Security Interest will (i) conflict with, violate, breach, cause a default
under (with or without the giving of notice or the passage of time), or
permit an acceleration or termination of, any document, instrument,
mortgage, indenture or other agreement applicable to Debtor or to which its
assets are subject, (ii) conflict with, violate or breach any applicable
law, rule, regulation or order, or (iii) conflict with, violate or breach
any of the organizational documents of Debtor, the result of which (in the
case of clauses (i) and (ii) only) could be a material adverse affect upon
the business, assets, condition (financial or other) or prospects of
Debtor.
(e) Survival of Representations and Warranties. All representations
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and warranties of the Debtor contained in this Agreement shall survive the
execution, delivery and performance of this Agreement until the termination
of this Agreement.
10. Records of Accounts Receivable. Debtor shall keep or cause to be
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kept records of its Accounts Receivable that are accurate in all material
respects.
11. Protection of Security. Debtor shall, at its own cost and expense,
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take any and all actions reasonably necessary to defend title to the Accounts
Receivable owned by it against all persons and, subject to the subordination
agreement of the Holders contained in Section 6 herein, to defend the Security
Interest of the Holders in such Accounts Receivable, and the priority thereof,
against any adverse lien or encumbrance of any nature whatsoever.
12. Continuing Obligations of Debtor. Debtor shall remain liable to
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observe and perform all the material conditions and obligations to be observed
and performed by it under each contract, agreement, interest or obligation
relating to the Collateral, all in accordance with the terms and conditions
thereof.
13. Use and Disposition of Collateral. Subject to the subordination
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agreement of Holders contained in Section 6 herein, Debtor shall not (a) make or
permit to be made any assignment, pledge or hypothecation of the Collateral, or
grant any security interest in the Collateral except for the Security Interest
or (b) make or permit to be made any transfer of any Collateral outside the
ordinary course of business.
14. Notice of Issuance of Intellectual Property Rights. The Debtor
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shall give notice to the Holders, if a patent, trademark, copyright or other
similar intellectual property right is issued by an appropriate governmental
agency as to any General Intangible covered under this Agreement.
15. Collections. Debtor shall have the right to collect its Accounts
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Receivable in the ordinary course of its business; provided, however, that at
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the request of the Holders following an event of default under the Debentures or
this Agreement, Debtor shall (a) arrange for remittances on any of its Account
Receivable to be made directly to lockboxes designated by the Holders or in such
other manner as the Holders may direct (provided same shall not cause a breach
of Debtor's agreements with third parties); and (b) promptly deposit all
payments received by Debtor on account of Accounts Receivable, whether in the
form of cash, checks, notes, drafts, bills of exchange, money orders or
otherwise, in one or more accounts designated by the Holders in precisely the
form received (but with any endorsements of Debtor necessary for deposit or
collection), subject to withdrawal by the Holders only, as hereinafter provided,
and until they are deposited, shall be deemed to be held in trust by Debtor for
and as the Holders' property on their own behalf and shall not be commingled
with Debtor's other funds (provided same shall not cause a breach of Debtor's
agreements with third parties).
16. Remedies upon Default. In the event of a failure to pay the
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secured Obligations as and when due (following the expiration of all applicable
grace periods), and subject to the subordination agreement of the Holders
contained in Section 6 herein, Debtor agrees to deliver each item of Collateral
(other than any portion of such Collateral that may be subject to
confidentiality agreements) to the Holders on demand, and it is agreed that the
Holders shall have the right to exercise any and all rights afforded to a
secured party under, and subject to its obligations contained in, the Uniform
Commercial Code as in effect in the State of Florida. Without limiting the
generality of the foregoing, Debtor agrees that the Holders shall have the
right, subject to the mandatory requirements of applicable law and subject to
the requirement that Holders act reasonably and in good faith, to sell or
otherwise dispose of all or any part of the Collateral (other than any portion
of such Collateral that may be subject to confidentiality agreements), at public
or private sale or at any broker's board or on any se-curities exchange, for
cash, upon credit or for future delivery as the Holders shall deem appropriate.
Each such purchaser at any such sale shall hold the property sold absolutely
free from any claim or right on the part of the Debtor, and Debtor hereby waives
(to the extent permitted by law) all rights of redemption, stay and appraisal
which Debtor now has or may at any time in the future have under any rule of law
or statute now existing or hereafter enacted.
The Holders shall give the Debtor 10 days' prior written notice of the
Holders' intention to make any sale of Collateral. Such notice, in the case of
a public sale, shall state the time and place for such sale and, in the case of
a sale at a broker's board or on a securities exchange, shall state the board or
exchange at which such sale is to be made and the day on which the Collateral,
or portion thereof, will first be offered for sale at such board or exchange.
Any such public sale shall be held at such time or times within ordinary
business hours and at such place or places as the Holders may fix and state in
the notice (if any) of such sale. At any such sale, the Collateral, or portion
thereof, to be sold may be sold in one lot, as an entirety or in separate
parcels, as the Holders may (in their sole and absolute discretion) determine.
The Holders shall not be obligated to make any sale of any Collateral if they
shall determine not to do so, regardless of the fact that notice of sale of such
Collateral shall have been given. The Holders may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and place
to which the same was so adjourned. In case any sale of all or any part of the
Collateral is made on credit or for future delivery, the Collateral so sold may
be retained by the Holders until the sale price is paid by the purchaser or
purchasers thereof, but the Holders shall not incur any liability in case any
such purchaser or purchasers shall fail to take up and pay for the Collateral so
sold and, in case of any such failure, such Collateral may be sold again upon
like notice. At any public sale made pursuant to this Section, any Holders may
bid for or purchase, free (to the extent permitted by law) from any right of
redemption, stay or appraisal on the part of Debtor (all said rights being also
hereby waived and released to the extent permitted by law), with respect to the
Collateral or any part thereof offered for sale and the Holders may make payment
on account thereof by using any claim then due and payable to the Holders from
Debtor as a credit against the purchase price, and the Holders may, upon
compliance with the terms of sale, hold, retain and dispose of such property
without further accountability to Debtor therefore. For purposes hereof, a
written agreement to purchase the Collateral or any portion thereof shall be
treated as a sale thereof; the Holders shall be free to carry out such sale and
purchase pursuant to such agreement, and Debtor shall not be entitled to the
return of the Collateral or any portion thereof subject thereto, notwithstanding
the fact that after the Holders shall have entered into such an agreement all
events of default shall have been remedied and the Secured Obligations paid in
full. Debtor shall remain liable for any deficiency. As an alternative to
exercising the power of sale herein conferred upon it, the Holders may proceed
by a suit or suits at law or in equity to foreclose this Agreement and to sell
the Collateral or any portion thereof pursuant to a judgment or decree of a
court or courts having competent jurisdiction or pursuant to a proceeding by a
court appointed receiver.
17. Application of Proceeds. The proceeds of any collection or sale of
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Collateral, as well as any Collateral consisting of cash, shall be applied by
the Holders as follows:
FIRST, to the payment of all reasonable costs and expenses incurred by the
Holders in connection with such collection or sale or otherwise in connection
with this Agreement, including, but not limited to, all court costs and the
reasonable fees and expenses of their legal counsel, the repayment of all
advances made by the Holders hereunder on behalf of the Debtor and any other
reasonable costs or expenses incurred in connection with the exercise of any
right or remedy hereunder;
SECOND, to the payment in full of the Secured Obligations; and
THIRD, to the Debtor, its successors and assigns, or as a court of
competent jurisdiction may otherwise direct.
Upon any sale of the Collateral by the Holders (including, without
limitation, pursuant to a power of sale granted by statute or under a judicial
proceeding), the receipt of the Holders or of the officer making the sale shall
be a sufficient discharge to the purchaser or purchasers of the Collateral so
sold and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the Holders or such
officer or be answerable in any way for the misapplication thereof.
18. Security Interest Absolute. All rights of the Holders hereunder,
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the Security Interest, and all obligations of the Debtor hereunder, shall be
absolute and unconditional irrespective of (a) any partial invalidity or
unenforceability of the Debentures, any other agreement with respect to any of
the Secured Obligations or any other agreement or instrument relating to any of
the foregoing, (b) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Secured Obligations, or any other amendment
or waiver of or consent to any departure from the Debentures or any other
agreement or instrument, (c) any exchange, release or nonperfection of any other
Collateral, or any release or amendment or waiver of or consent to or departure
from any guarantee, for all or any of the Secured Obligations, or (d) any other
circumstance which might otherwise constitute a defense available to, or
discharge of the Debtor in respect of the Secured Obligations or in respect of
this Agreement.
19. No Waiver. No failure on the part of the Holders to exercise, and
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no delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy by the Holders preclude any other or further exercise thereof or
the exercise of any other right, power or remedy. All remedies hereunder are
cumulative and are not exclusive of any other remedies provided by law. The
Holders shall not be deemed to have waived any rights hereunder or under any
other agreement or instrument unless such waiver shall be in writing and signed
by such parties.
20. Holders Appointed Attorney-in-Fact. Debtor hereby appoints the
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Representative (as hereinafter defined) of the Holders the attorney-in-fact of
Debtor solely for the purpose of carrying out the provisions of this Agreement
and taking any action and executing any instrument which the Representative may
reasonably deem necessary to accomplish the purposes hereof, which appointment
is irrevocable so long as this Agreement and the Security Interest have not been
terminated.
21. Waiver of Equitable Subordination. Subject to the subordination
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agreement of the Holders contained in Section 6 herein, each of the parties
hereto waives any and all rights it may have to assert a claim for or to raise
the defense of equitable subordination in any legal action or proceeding arising
from this Agreement or the Debentures.
22. Binding Agreement; Assignments. This Agreement, and the terms,
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covenants and conditions hereof, shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns, except that
the Debtor shall not be permitted to assign this Agreement or any interest
herein or in the Collateral, or any part thereof, or any cash or property held
by the Holders as Collateral under this Agreement, except as contemplated by
this Agreement.
23. Governing Law. This Agreement shall be construed in accordance with
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and governed by the laws of the State of Florida, except to the extent that the
validity or perfection of the security interest hereunder, or remedies
hereunder, in respect of any particular collateral are governed by the laws of a
jurisdiction other than the State of Florida. The parties hereby consent and
submit to the jurisdiction of the state and federal courts sitting in Broward
County, Florida for the resolution of any dispute arising out of or in
connection with this Agreement. In the event of a dispute between the parties
for any matter arising out of this Agreement, the prevailing party(ies) in such
dispute shall be entitled to recover against the other party, reasonable
attorney's fees and court costs, including the cost of any appeals associated
therewith.
24. Notices. All communications and notices hereunder shall be in
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writing and given as provided in the Debentures.
25. Severability. In case any one or more of the provisions contained
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in this Agreement should be invalid, illegal or unenforceable the remaining
provisions contained herein shall not in any way be affected or impaired.
26. Section Headings. Section headings used herein are for convenience
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only and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
27. Counterparts. This Agreement may be executed in two or more
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counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument. This Agreement shall be
effective when a counterpart that bears the signature of the Debtor shall have
been delivered to the Holders.
28. Termination. This Agreement and the Security Interest shall
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terminate when all the Secured Obligations have been fully and indefeasibly paid
in full, at which time the Holders shall execute and deliver to the Debtor all
Uniform Commercial Code termination statements and similar documents which the
Debtor shall reasonably request to evidence such termination; provided, however,
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that all indemnities of the Debtor contained in this Agreement shall survive,
and remain operative and in full force and effect regardless of, the termination
of this Agreement for a period of six months following the termination of this
Agreement.
29. Representative. Upon execution hereof, and thereafter from time to
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time, as determined by the Holders, the Holders shall provide to the Debtor, in
writing, the name and notice information of a representative (the
"Representative") who shall be exclusively authorized to act on behalf of the
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Holders. The Debtor may, in good faith, rely upon any document, instrument or
instruction presented to the Debtor by the Representative, and treat same as the
act of the Holders. In the event that the Debtor acts in good faith reasonable
reliance upon instruction made in any such document or instrument, the Debtor
shall not be liable for the sufficiency, accuracy or authenticity of such
document or instrument.
30. Entire Agreement. This Agreement constitutes the entire agreement
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between the parties and supersedes any prior or contemporaneous oral or written
agreement or representation between them with regard to the subject matter
hereof. This Agreement may not be modified except by a writing signed by each
of the parties hereto.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOLLOWS
IN WITNESS WHEREOF, the parties hereto have duly executed this Security
Agreement as of the day and year first above written.
DEBTOR:
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POWER2SHIP, INC.
By:
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Name:
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Title:
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HOLDERS:
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SECURITY AGREEMENT
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THIS SECURITY AGREEMENT (the "Agreement") dated as of the day of
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, 200 , is entered into by and between POWER2SHIP, INC., a Nevada
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corporation (the "Debtor"), and the holders of 14.25% Secured Convertible
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Debentures (the "Holders").
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RECITALS
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WHEREAS, the Debtor has conducted a private offering (the "Offering") of
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14.25% Secured Convertible Debentures (the "Debentures") pursuant to a
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Confidential Summary Private Offering Memorandum; and
WHEREAS, as a condition of the offering, the Debtor has agreed to grant to
the Holders a security interest in the Collateral (as hereinafter defined) to be
used as security for the Secured Obligations (as defined herein) on terms set
forth herein.
NOW, THEREFORE, in consideration of the premises set forth herein, and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the Debtor hereby agrees with the Holders as follows:
1. Recitals. The above recitals are true and correct and same are
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incorporated into this Agreement by this reference.
2. Definition. As used herein, the term "Collateral" shall mean the
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proceeds of an account to be established for the benefit of the Holders at
Newbridge Securities Corporation, to be funded with 7.125% of the gross proceeds
of the Offering.
3. Security for Obligations. This Agreement secures, and the Collateral is
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collateral security for, the prompt payment of interest on the Debentures,
whether at stated maturity, by required prepayment, declaration, acceleration,
conversion, demand or otherwise (including the payment of amounts that would
become due but for the operation of the automatic stay under Section 363(a) of
the Bankruptcy Code, 11 U.S.C. Sec.362(a)) (such obligation of Debtor to pay
interest on the Debentures being the "Secured Obligations").
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4. Security Interests. As security for the payment and performance of the
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Secured Obligations, the Debtor hereby creates and grants to the Holders, their
successors and assigns, a security interest in the Collateral (the "Security
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Interest"). Without limiting the foregoing, the Holders are hereby authorized to
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file one or more financing statements for the purpose of perfecting, confirming,
continuing, enforcing or protecting the Security Interest, naming the Debtor as
debtor and the Representative (as hereinafter defined), as representative of the
Holders as creditors
5. Further Assurances. Debtor agrees, at its expense, to execute,
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acknowledge, deliver and cause to be duly filed all such further instruments and
documents and take all such actions as the Holders may from time to time
reasonably request for the assuring and preserving of the Security Interest and
the rights and remedies created hereby, including, without limitation, the
payment of any fees and taxes required in connection with the execution and
delivery of this Agreement, the granting of the Security Interest and the filing
of any financing statements or other documents in connection herewith.
6. Taxes; Encumbrances. At their option, the Holders may discharge past due
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taxes, liens, security interests or other encumbrances at any time levied or
placed on the Collateral and not permitted under the Debentures, and may pay for
the maintenance and preservation of the Collateral to the extent Debtor fails to
do so, and Debtor agrees to reimburse the Holders within five business days
following receipt of written notice from the Holders, accompanied by proof of
payment, for any payment made or any expense incurred by it pursuant to the
foregoing authorization; provided, however, that nothing in this Section shall
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be interpreted as excusing Debtor from the performance of any covenants or other
promises with respect to taxes, liens, security interests or other en-cumbrances
and maintenances as set forth herein or in the Debentures.
7. Representations, Warranties and Covenants. Debtor hereby represents,
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warrants, covenants and agrees as follows:
(a) Title and Authority. Subject to security agreements, leases or
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similar arrangements entered into by Debtor prior to the execution of this
Agreement, it has (i) rights in, and good and marketable title to, the
Collateral and (ii) the requisite corporate power and authority to grant to
the Holders the Security Interest in such Collateral pursuant hereto and to
execute, deliver and perform its obligations in accordance with the terms
of this Agreement, without the consent or approval of any other person or
entity other than any consent or approval which has been obtained.
(b) Filing. Fully executed Uniform Commercial Code financing
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statements containing a description of the Collateral shall have been or
shall be delivered to the Holders in such form as requested by the Holders.
(c) Absence of Other Liens. The Collateral is owned by the Debtor free
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and clear of any lien or encumbrance of any nature whatsoever, except
otherwise disclosed to the Holders in writing on the date hereof, no
financing statement has been filed, under the Uniform Commercial Code as in
effect in any state or otherwise, covering any Collateral.
(d) No Conflict. None of the execution and delivery by Debtor of this
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Agreement and the other loan documents or the grant and perfection of the
Security Interest will (i) conflict with, violate, breach, cause a default
under (with or without the giving of notice or the passage of time), or
permit an acceleration or termination of, any document, instrument,
mortgage, indenture or other agreement applicable to Debtor or to which its
assets are subject, (ii) conflict with, violate or breach any applicable
law, rule, regulation or order, or (iii) conflict with, violate or breach
any of the organizational documents of Debtor, the result of which (in the
case of clauses (i) and (ii) only) could be a material adverse affect upon
the business, assets, condition (financial or other) or prospects of
Debtor.
(e) Survival of Representations and Warranties. All representations
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and warranties of the Debtor contained in this Agreement shall survive the
execution, delivery and performance of this Agreement until the termination
of this Agreement.
(f) Exclusive Security Interest. Debtor shall not grant to any person
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a security interest in the Collateral, except for the security interest
created hereby.
8. Protection of Security. Debtor shall, at its own cost and expense, take
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any and all actions reasonably necessary to defend title to the Collateral, to
defend the Security Interest of the Holders in such Collateral, and the priority
thereof, against any adverse lien or encumbrance of any nature whatsoever.
9. Continuing Obligations of Debtor. Debtor shall remain liable to observe
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and perform all the material conditions and obligations to be observed and
performed by it under each contract, agreement, interest or obligation relating
to the Collateral, all in accordance with the terms and conditions thereof.
10. Use and Disposition of Collateral. Debtor shall not (a) make or permit
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to be made any assignment, pledge or hypothecation of the Collateral, or grant
any security interest in the Collateral except for the Security Interest or (b)
make or permit to be made any transfer of any Collateral.
11. Remedies upon Default. In the event the Company fails to pay any of the
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Secured Obligations as and when due (following the expiration of all applicable
grace periods), the Representative shall have the authority and obligation to
withdraw all or any portion of the proceeds held in the Collateral for the
benefit of the Holders, as their respective interests may appear. The
representative shall provide the Company with written notice of any such
withdrawal within three business days thereof. Neither the Representative nor
Newbridge Securities Corporation shall have any liability to the Debtor or any
other person for complying with this provision and the Debtor agrees that such
compliance shall not be a violation of any duty (fiduciary or otherwise) owed by
either the Representative or Newbridge Securities Corporation to the Debtor;
provided, however, that the Company shall be relieved of its obligation to pay
the Secured Obligations to the extent of the amount of the Collateral withdrawn
by the Representative under this provision. Each of the Representative and
Newbridge Securities Corporation are authorized to disregard any instructions
given by the Debtor that are contrary to the terms hereof. The Debtor hereby
waives all defenses it may have against the enforcement of this provision
(whether known or unknown) and irrevocably agrees that any claims or
counterclaims it may have against the Holders, the Representative or Newbridge
Securities Corporation shall not be deemed to be a defense against the
enforcement of this provision.
12. Replenishment of Collateral. To the extent that the Collateral is
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withdrawn by the Representative in accordance with the provisions of Section 11,
above, the Company shall have a period of 45 days from the date of such
withdrawal to replenish the Collateral so that the Collateral is equal to 7.125%
of the then outstanding principal amount of the Debentures. The Company's
failure to so replenish the Collateral within such 45-day period shall
constitute a default under this Agreement.
13. Security Interest Absolute. All rights of the Holders hereunder, the
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Security Interest, and all obligations of the Debtor hereunder, shall be
absolute and unconditional irrespective of (a) any partial invalidity or
unenforceability of the Debentures, any other agreement with respect to any of
the Secured Obligations or any other agreement or instrument relating to any of
the foregoing, (b) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Secured Obligations, or any other amendment
or waiver of or consent to any departure from the Debentures or any other
agreement or instrument, (c) any exchange, release or non-perfection of any
other Collateral, or any release or amendment or waiver of or consent to or
departure from any guarantee, for all or any of the Secured Obligations, or (d)
any other circumstance which might otherwise constitute a defense available to,
or discharge of the Debtor in respect of the Secured Obligations or in respect
of this Agreement.
14. No Waiver. No failure on the part of the Holders to exercise, and no
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delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy by the Holders preclude any other or further exercise thereof or
the exercise of any other right, power or remedy. All remedies hereunder are
cumulative and are not exclusive of any other remedies provided by law. The
Holders shall not be deemed to have waived any rights hereunder or under any
other agreement or instrument unless such waiver shall be in writing and signed
by such parties.
15. Holders Appointed Attorney-in-Fact. Debtor hereby appoints the
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Representative (as hereinafter defined) of the Holders the attorney-in-fact of
Debtor solely for the purpose of carrying out the provisions of this Agreement
and taking any action and executing any instrument which the Representative may
reasonably deem necessary to accomplish the purposes hereof, which appointment
is irrevocable so long as this Agreement and the Security Interest have not been
terminated.
16. Waiver of Equitable Subordination. Each of the parties hereto waives
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any and all rights it may have to assert a claim for or to raise the defense of
equitable subordination in any legal action or proceeding arising from this
Agreement or the Debentures.
17. Binding Agreement; Assignments. This Agreement, and the terms,
--------------------------------
covenants and conditions hereof, shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns, except that
the Debtor shall not be permitted to assign this Agreement or any interest
herein or in the Collateral, or any part thereof, or any cash or property held
by the Holders as Collateral under this Agreement, except as contemplated by
this Agreement.
18. Governing Law. This Agreement shall be construed in accordance with and
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governed by the laws of the State of Florida, except to the extent that the
validity or perfection of the security interest hereunder, or remedies
hereunder, in respect of any particular collateral are governed by the laws of a
jurisdiction other than the State of Florida. The parties hereby consent and
submit to the jurisdiction of the state and federal courts sitting in Broward
County, Florida for the resolution of any dispute arising out of or in
connection with this Agreement. In the event of a dispute between the parties
for any matter arising out of this Agreement, the prevailing party(ies) in such
dispute shall be entitled to recover against the other party, reasonable
attorney's fees and court costs, including the cost of any appeals associated
therewith.
19. Notices. All communications and notices hereunder shall be in writing
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and given as provided in the Debentures.
20. Severability. In case any one or more of the provisions contained in
------------
this Agreement should be invalid, illegal or unenforceable the remaining
provisions contained herein shall not in any way be affected or impaired.
21. Section Headings. Section headings used herein are for convenience only
----------------
and are not to affect the construction of, or to be taken into consideration in
interpreting, this Agreement.
22. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument. This Agreement shall be
effective when a counterpart that bears the signature of the Debtor shall have
been delivered to the Holders.
23. Termination. This Agreement and the Security Interest shall terminate
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when all the Secured Obligations have been fully and indefeasibly paid in full,
at which time the Holders shall execute and deliver to the Debtor all Uniform
Commercial Code termination statements and similar documents which the Debtor
shall reasonably request to evidence such termination; provided, however, that
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all indemnities of the Debtor contained in this Agreement shall survive, and
remain operative and in full force and effect regardless of, the termination of
this Agreement for a period of six months following the termination of this
Agreement.
24. Representative. Upon execution hereof, and thereafter from time to
--------------
time, as determined by the Holders, the Holders shall provide to the Debtor, in
writing, the name and notice information of a representative (the
"Representative") who shall be exclusively authorized to act on behalf of the
---------------
Holders. The Debtor may, in good faith, rely upon any document, instrument or
instruction presented to the Debtor by the Representative, and treat same as the
act of the Holders. In the event that the Debtor acts in good faith reasonable
reliance upon instruction made in any such document or instrument, the Debtor
shall not be liable for the sufficiency, accuracy or authenticity of such
document or instrument.
25. Entire Agreement. This Agreement constitutes the entire agreement
-----------------
between the parties and supersedes any prior or contemporaneous oral or written
agreement or representation between them with regard to the subject matter
hereof. This Agreement may not be modified except by a writing signed by each of
the parties hereto.
IN WITNESS WHEREOF, the parties hereto have duly executed this Security
Agreement as of the day and year first above written.
DEBTOR:
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POWER2SHIP, INC.
By:
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Name:
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Title:
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HOLDERS:
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