SECURITY AGREEMENT
SECURITY AGREEMENT (this "Agreement"), dated as of August 21, 2003, by
and among iDial Networks, Inc., a Nevada corporation ("Company"), and the
secured parties signatory hereto and their respective endorsees, transferees and
assigns (collectively, the "Secured Party").
W I T N E S S E T H:
WHEREAS, pursuant to a Securities Purchase Agreement, dated the date
hereof between Company and the Secured Party (the "Purchase Agreement"), Company
has agreed to issue to the Secured Party and the Secured Party has agreed to
purchase from Company certain of Company's 12% Secured Convertible Debentures,
due two years from the date of issue (the "Debentures"), which are convertible
into shares of Company's Common Stock, par value $.005 per share (the "Common
Stock"); and
WHEREAS, in order to induce the Secured Party to purchase the
Debentures, Company has agreed to execute and deliver to the Secured Party this
Agreement for the benefit of the Secured Party and to grant to it a security
interest in certain property of Company to secure the prompt payment,
performance and discharge in full of all of Company's obligations under the
Debentures.
NOW, THEREFORE, in consideration of the agreements herein contained and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto hereby agree as follows:
1. Certain Definitions. As used in this Agreement, the following terms
shall have the meanings set forth in this Section 1. Terms used but not
otherwise defined in this Agreement that are defined in Article 9 of the UCC
(such as "general intangibles" and "proceeds") shall have the respective
meanings given such terms in Article 9 of the UCC.
(a) "Collateral" means the collateral in which the Secured Party
is granted a security interest by this Agreement and which
shall include the following, whether presently owned or
existing or hereafter acquired or coming into existence, and
all additions and accessions thereto and all substitutions
and replacements thereof, and all proceeds, products and
accounts thereof, including, without limitation, all
proceeds from the sale or transfer of the Collateral and of
insurance covering the same and of any tort claims in
connection therewith:
(i) All Goods of the Company, including, without
limitations, all machinery, equipment, computers, motor
vehicles, trucks, tanks, boats, ships, appliances,
furniture, special and general tools, fixtures, test
and quality control devices and other equipment of
every kind and nature and wherever situated, together
with all documents of title and documents representing
the same, all additions and accessions thereto,
replacements therefor, all parts therefor, and all
substitutes for any of the foregoing and all other
items used and useful in connection with the Company's
businesses and all improvements thereto (collectively,
the "Equipment"); and
(ii) All Inventory of the Company; and
(iii)All of the Company's contract rights and general
intangibles, including, without limitation, all
partnership interests, stock or other securities,
licenses, distribution and other agreements, computer
software development rights, leases, franchises,
customer lists, quality control procedures, grants and
rights, goodwill, trademarks, service marks, trade
styles, trade names, patents, patent applications,
copyrights, deposit accounts, and income tax refunds
(collectively, the "General Intangibles"); and
(iv) All Receivables of the Company including all insurance
proceeds, and rights to refunds or indemnification
whatsoever owing, together with all instruments, all
documents of title representing any of the foregoing,
all rights in any merchandising, goods, equipment,
motor vehicles and trucks which any of the same may
represent, and all right, title, security and
guaranties with respect to each Receivable, including
any right of stoppage in transit; and
(v) All of the Company's documents, instruments and chattel
paper, files, records, books of account, business
papers, computer programs and the products and proceeds
of all of the foregoing Collateral set forth in clauses
(i)-(iv) above.
(b) "Company" shall mean, collectively, Company and all of the
subsidiaries of Company, a list of which is contained in Schedule
A, attached hereto.
(c) "Obligations" means all of the Company's obligations under this
Agreement and the Debentures, in each case, whether now or
hereafter existing, voluntary or involuntary, direct or indirect,
absolute or contingent, liquidated or unliquidated, whether or
not jointly owed with others, and whether or not from time to
time decreased or extinguished and later decreased, created or
incurred, and all or any portion of such obligations or
liabilities that are paid, to the extent all or any part of such
payment is avoided or recovered directly or indirectly from the
Secured Party as a preference, fraudulent transfer or otherwise
as such obligations may be amended, supplemented, converted,
extended or modified from time to time.
(d) "UCC" means the Uniform Commercial Code, as currently in effect
in the State of New York.
2. Grant of Security Interest. As an inducement for the Secured Party to
purchase the Debentures and to secure the complete and timely payment,
performance and discharge in full, as the case may be, of all of the
Obligations, the Company hereby, unconditionally and irrevocably, pledges,
grants and hypothecates to the Secured Party, a continuing security interest in,
a continuing lien upon, an unqualified right to possession and disposition of
and a right of set-off against, in each case to the fullest extent permitted by
law, all of the Company's right, title and interest of whatsoever kind and
nature in and to the Collateral (the "Security Interest").
3. Representations, Warranties, Covenants and Agreements of the Company.
The Company represents and warrants to, and covenants and agrees with, the
Secured Party as follows:
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(a) The Company has the requisite corporate power and authority to
enter into this Agreement and otherwise to carry out its
obligations thereunder. The execution, delivery and performance
by the Company of this Agreement and the filings contemplated
therein have been duly authorized by all necessary action on the
part of the Company and no further action is required by the
Company. This Agreement constitutes a legal, valid and binding
obligation of the Company enforceable in accordance with its
terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
the enforcement of creditor's rights generally.
(b) The Company represents and warrants that it has no place of
business or offices where its respective books of account and
records are kept (other than temporarily at the offices of its
attorneys or accountants) or places where Collateral is stored or
located, except as set forth on Schedule A attached hereto;
(c) The Company is the sole owner of the Collateral (except for
non-exclusive licenses granted by the Company in the ordinary
course of business), free and clear of any liens, security
interests, encumbrances, rights or claims, and is fully
authorized to grant the Security Interest in and to pledge the
Collateral. There is not on file in any governmental or
regulatory authority, agency or recording office an effective
financing statement, security agreement, license or transfer or
any notice of any of the foregoing (other than those that have
been filed in favor of the Secured Party pursuant to this
Agreement) covering or affecting any of the Collateral. So long
as this Agreement shall be in effect, the Company shall not
execute and shall not knowingly permit to be on file in any such
office or agency any such financing statement or other document
or instrument (except to the extent filed or recorded in favor of
the Secured Party pursuant to the terms of this Agreement).
(d) No part of the Collateral has been judged invalid or
unenforceable. No written claim has been received that any
Collateral or the Company's use of any Collateral violates the
rights of any third party. There has been no adverse decision to
the Company's claim of ownership rights in or exclusive rights to
use the Collateral in any jurisdiction or to the Company's right
to keep and maintain such Collateral in full force and effect,
and there is no proceeding involving said rights pending or, to
the best knowledge of the Company, threatened before any court,
judicial body, administrative or regulatory agency, arbitrator or
other governmental authority.
(e) The Company shall at all times maintain its books of account and
records relating to the Collateral at its principal place of
business and its Collateral at the locations set forth on
Schedule A attached hereto and may not relocate such books of
account and records or tangible Collateral unless it delivers to
the Secured Party at least 30 days prior to such relocation (i)
written notice of such relocation and the new location thereof
(which must be within the United States) and (ii) evidence that
appropriate financing statements and other necessary documents
have been filed and recorded and other steps have been taken to
perfect the Security Interest to create in favor of the Secured
Party valid, perfected and continuing liens in the Collateral.
(f) This Agreement creates in favor of the Secured Party a valid
security interest in the Collateral securing the payment and
performance of the Obligations and, upon
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making the filings described in the immediately following
sentence, a perfected security interest in such Collateral.
Except for the filing of financing statements on Form-1 under the
UCC with the jurisdictions indicated on Schedule B, attached
hereto, no authorization or approval of or filing with or notice
to any governmental authority or regulatory body is required
either (i) for the grant by the Company of, or the effectiveness
of, the Security Interest granted hereby or for the execution,
delivery and performance of this Agreement by the Company or (ii)
for the perfection of or exercise by the Secured Party of its
rights and remedies hereunder.
(g) On the date of execution of this Agreement, the Company will
deliver to the Secured Party one or more executed UCC financing
statements on Form-1 with respect to the Security Interest for
filing with the jurisdictions indicated on Schedule B, attached
hereto and in such other jurisdictions as may be requested by the
Secured Party.
(h) The execution, delivery and performance of this Agreement does
not conflict with or cause a breach or default, or an event that
with or without the passage of time or notice, shall constitute a
breach or default, under any agreement to which the Company is a
party or by which the Company is bound. No consent (including,
without limitation, from stock holders or creditors of the
Company) is required for the Company to enter into and perform
its obligations hereunder.
(i) The Company shall at all times maintain the liens and Security
Interest provided for hereunder as valid and perfected liens and
security interests in the Collateral in favor of the Secured
Party until this Agreement and the Security Interest hereunder
shall terminate pursuant to Section 11. The Company hereby agrees
to defend the same against any and all persons. The Company shall
safeguard and protect all Collateral for the account of the
Secured Party. At the request of the Secured Party, the Company
will sign and deliver to the Secured Party at any time or from
time to time one or more financing statements pursuant to the UCC
(or any other applicable statute) in form reasonably satisfactory
to the Secured Party and will pay the cost of filing the same in
all public offices wherever filing is, or is deemed by the
Secured Party to be, necessary or desirable to effect the rights
and obligations provided for herein. Without limiting the
generality of the foregoing, the Company shall pay all fees,
taxes and other amounts necessary to maintain the Collateral and
the Security Interest hereunder, and the Company shall obtain and
furnish to the Secured Party from time to time, upon demand, such
releases and/or subordinations of claims and liens which may be
required to maintain the priority of the Security Interest
hereunder.
(j) The Company will not transfer, pledge, hypothecate, encumber,
license (except for non-exclusive licenses granted by the Company
in the ordinary course of business), sell or otherwise dispose of
any of the Collateral without the prior written consent of the
Secured Party.
(k) The Company shall keep and preserve its Equipment, Inventory and
other tangible Collateral in good condition, repair and order and
shall not operate or locate any such Collateral (or cause to be
operated or located) in any area excluded from insurance
coverage.
(l) The Company shall, within ten (10) days of obtaining knowledge
thereof, advise the Secured Party promptly, in sufficient detail,
of any substantial change in the
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Collateral, and of the occurrence of any event which would have a
material adverse effect on the value of the Collateral or on the
Secured Party's security interest therein.
(m) The Company shall promptly execute and deliver to the Secured
Party such further deeds, mortgages, assignments, security
agreements, financing statements or other instruments, documents,
certificates and assurances and take such further action as the
Secured Party may from time to time request and may in its sole
discretion deem necessary to perfect, protect or enforce its
security interest in the Collateral including, without
limitation, the execution and delivery of a separate security
agreement with respect to the Company's intellectual property
("Intellectual Property Security Agreement") in which the Secured
Party has been granted a security interest hereunder,
substantially in a form acceptable to the Secured Party, which
Intellectual Property Security Agreement, other than as stated
therein, shall be subject to all of the terms and conditions
hereof.
(n) The Company shall permit the Secured Party and its
representatives and agents to inspect the Collateral at any time,
and to make copies of records pertaining to the Collateral as may
be requested by the Secured Party from time to time.
(o) The Company will take all steps reasonably necessary to
diligently pursue and seek to preserve, enforce and collect any
rights, claims, causes of action and accounts receivable in
respect of the Collateral.
(p) The Company shall promptly notify the Secured Party in sufficient
detail upon becoming aware of any attachment, garnishment,
execution or other legal process levied against any Collateral
and of any other information received by the Company that may
materially affect the value of the Collateral, the Security
Interest or the rights and remedies of the Secured Party
hereunder.
(q) All information heretofore, herein or hereafter supplied to the
Secured Party by or on behalf of the Company with respect to the
Collateral is accurate and complete in all material respects as
of the date furnished.
(r) Schedule A attached hereto contains a list of all of the
subsidiaries of Company.
4. Defaults. The following events shall be "Events of Default":
(a) The occurrence of an Event of Default (as defined in the
Debentures) under the Debentures;
(b) Any representation or warranty of the Company in this Agreement
or in the Intellectual Property Security Agreement shall prove to
have been incorrect in any material respect when made; and
(c) The failure by the Company to observe or perform any of its
obligations hereunder or in the Intellectual Property Security
Agreement for ten (10) days after receipt by the Company of
notice of such failure from the Secured Party.
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5. Duty To Hold In Trust. Upon the occurrence of any Event of Default
and at any time thereafter, the Company shall, upon receipt by it of any
revenue, income or other sums subject to the Security Interest, whether payable
pursuant to the Debentures or otherwise, or of any check, draft, note, trade
acceptance or other instrument evidencing an obligation to pay any such sum,
hold the same in trust for the Secured Party and shall forthwith endorse and
transfer any such sums or instruments, or both, to the Secured Party for
application to the satisfaction of the Obligations.
6. Rights and Remedies Upon Default. Upon occurrence of any Event of
Default and at any time thereafter, the Secured Party shall have the right to
exercise all of the remedies conferred hereunder and under the Debentures, and
the Secured Party shall have all the rights and remedies of a secured party
under the UCC and/or any other applicable law (including the Uniform Commercial
Code of any jurisdiction in which any Collateral is then located). Without
limitation, the Secured Party shall have the following rights and powers:
(a) The Secured Party shall have the right to take possession of the
Collateral and, for that purpose, enter, with the aid and
assistance of any person, any premises where the Collateral, or
any part thereof, is or may be placed and remove the same, and
the Company shall assemble the Collateral and make it available
to the Secured Party at places which the Secured Party shall
reasonably select, whether at the Company's premises or
elsewhere, and make available to the Secured Party, without rent,
all of the Company's respective premises and facilities for the
purpose of the Secured Party taking possession of, removing or
putting the Collateral in saleable or disposable form.
(b) The Secured Party shall have the right to operate the business of
the Company using the Collateral and shall have the right to
assign, sell, lease or otherwise dispose of and deliver all or
any part of the Collateral, at public or private sale or
otherwise, either with or without special conditions or
stipulations, for cash or on credit or for future delivery, in
such parcel or parcels and at such time or times and at such
place or places, and upon such terms and conditions as the
Secured Party may deem commercially reasonable, all without
(except as shall be required by applicable statute and cannot be
waived) advertisement or demand upon or notice to the Company or
right of redemption of the Company, which are hereby expressly
waived. Upon each such sale, lease, assignment or other transfer
of Collateral, the Secured Party may, unless prohibited by
applicable law which cannot be waived, purchase all or any part
of the Collateral being sold, free from and discharged of all
trusts, claims, right of redemption and equities of the Company,
which are hereby waived and released.
7. Applications of Proceeds. The proceeds of any such sale, lease or
other disposition of the Collateral hereunder shall be applied first, to the
expenses of retaking, holding, storing, processing and preparing for sale,
selling, and the like (including, without limitation, any taxes, fees and other
costs incurred in connection therewith) of the Collateral, to the reasonable
attorneys' fees and expenses incurred by the Secured Party in enforcing its
rights hereunder and in connection with collecting, storing and disposing of the
Collateral, and then to satisfaction of the Obligations, and to the payment of
any other amounts required by applicable law, after which the Secured Party
shall pay to the Company any surplus proceeds. If, upon the sale, license or
other disposition of the Collateral, the proceeds thereof are insufficient to
pay all amounts to
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which the Secured Party is legally entitled, the Company will be liable for the
deficiency, together with interest thereon, at the rate of 15% per annum (the
"Default Rate"), and the reasonable fees of any attorneys employed by the
Secured Party to collect such deficiency. To the extent permitted by applicable
law, the Company waives all claims, damages and demands against the Secured
Party arising out of the repossession, removal, retention or sale of the
Collateral, unless due to the gross negligence or willful misconduct of the
Secured Party.
8. Costs and Expenses. The Company agrees to pay all out-of-pocket fees,
costs and expenses incurred in connection with any filing required hereunder,
including without limitation, any financing statements, continuation statements,
partial releases and/or termination statements related thereto or any expenses
of any searches reasonably required by the Secured Party. The Company shall also
pay all other claims and charges which in the reasonable opinion of the Secured
Party might prejudice, imperil or otherwise affect the Collateral or the
Security Interest therein. The Company will also, upon demand, pay to the
Secured Party the amount of any and all reasonable expenses, including the
reasonable fees and expenses of its counsel and of any experts and agents, which
the Secured Party may incur in connection with (i) the enforcement of this
Agreement, (ii) the custody or preservation of, or the sale of, collection from,
or other realization upon, any of the Collateral, or (iii) the exercise or
enforcement of any of the rights of the Secured Party under the Debentures.
Until so paid, any fees payable hereunder shall be added to the principal amount
of the Debentures and shall bear interest at the Default Rate.
9. Responsibility for Collateral. The Company assumes all liabilities
and responsibility in connection with all Collateral, and the obligations of the
Company hereunder or under the Debentures shall in no way be affected or
diminished by reason of the loss, destruction, damage or theft of any of the
Collateral or its unavailability for any reason.
10. Security Interest Absolute. All rights of the Secured Party and all
Obligations of the Company hereunder, shall be absolute and unconditional,
irrespective of: (a) any lack of validity or enforceability of this Agreement,
the Debentures 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 Party to obtain, adjust, settle and
cancel in its sole discretion any insurance claims or matters made or arising in
connection with the Collateral; or (e) any other circumstance which might
otherwise constitute any legal or equitable defense available to the Company, or
a discharge of all or any part of the Security Interest granted hereby. Until
the Obligations shall have been paid and performed in full, the rights of the
Secured Party shall continue even if the Obligations are barred for any reason,
including, without limitation, the running of the statute of limitations or
bankruptcy. The Company expressly waives presentment, protest, notice of
protest, demand, notice of nonpayment and demand for performance. In the event
that at any time any transfer of any Collateral or any payment received by the
Secured Party hereunder shall be deemed by final order of a court of competent
jurisdiction to have been a voidable preference or fraudulent conveyance under
the bankruptcy or insolvency laws of the United States, or shall be deemed to be
otherwise due to any party other than the Secured Party, then, in any such
event, the
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Company's obligations hereunder shall survive cancellation of this Agreement,
and shall not be discharged or satisfied by any prior payment thereof and/or
cancellation of this Agreement, but shall remain a valid and binding obligation
enforceable in accordance with the terms and provisions hereof. The Company
waives all right to require the Secured Party to proceed against any other
person or to apply any Collateral which the Secured Party may hold at any time,
or to marshal assets, or to pursue any other remedy. The Company waives any
defense arising by reason of the application of the statute of limitations to
any obligation secured hereby.
11. Term of Agreement. This Agreement and the Security Interest shall
terminate on the date on which all payments under the Debentures have been made
in full and all other Obligations have been paid or discharged. Upon such
termination, the Secured Party, at the request and at the expense of the
Company, will join in executing any termination statement with respect to any
financing statement executed and filed pursuant to this Agreement.
12. Power of Attorney; Further Assurances.
(a) The Company authorizes the Secured Party, and does hereby make,
constitute and appoint it, and its respective officers, agents,
successors or assigns with full power of substitution, as the
Company's true and lawful attorney-in-fact, with power, in its
own name or in the name of the Company, to, after the occurrence
and during the continuance of an Event of Default, (i) endorse
any notes, checks, drafts, money orders, or other instruments of
payment (including payments payable under or in respect of any
policy of insurance) in respect of the Collateral that may come
into possession of the Secured Party; (ii) to sign and endorse
any UCC financing statement or any invoice, freight or express
xxxx, xxxx of lading, storage or warehouse receipts, drafts
against debtors, assignments, verifications and notices in
connection with accounts, and other documents relating to the
Collateral; (iii) to pay or discharge taxes, liens, security
interests or other encumbrances at any time levied or placed on
or threatened against the Collateral; (iv) to demand, collect,
receipt for, compromise, settle and xxx for monies due in respect
of the Collateral; and (v) generally, to do, at the option of the
Secured Party, and at the Company's expense, at any time, or from
time to time, all acts and things which the Secured Party deems
necessary to protect, preserve and realize upon the Collateral
and the Security Interest granted therein in order to effect the
intent of this Agreement, the Debentures, all as fully and
effectually as the Company might or could do; and the Company
hereby ratifies all that said attorney shall lawfully do or cause
to be done by virtue hereof. This power of attorney is coupled
with an interest and shall be irrevocable for the term of this
Agreement and thereafter as long as any of the Obligations shall
be outstanding.
(b) On a continuing basis, the Company will make, execute,
acknowledge, deliver, file and record, as the case may be, in the
proper filing and recording places in any jurisdiction,
including, without limitation, the jurisdictions indicated on
Schedule B, attached hereto, all such instruments, and take all
such action as may reasonably be deemed necessary or advisable,
or as reasonably requested by the Secured Party, to perfect the
Security Interest granted hereunder and otherwise to carry out
the intent and purposes of this Agreement, or for assuring and
confirming to the Secured Party the grant or perfection of a
security interest in all the Collateral.
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(c) The Company hereby irrevocably appoints the Secured Party as the
Company's attorney-in-fact, with full authority in the place and
stead of the Company and in the name of the Company, from time to
time in the Secured Party's discretion, to take any action and to
execute any instrument which the Secured Party may deem necessary
or advisable to accomplish the purposes of this Agreement,
including the filing, in its sole discretion, of one or more
financing or continuation statements and amendments thereto,
relative to any of the Collateral without the signature of the
Company where permitted by law.
13. Notices. All notices, requests, demands and other communications
hereunder shall be in writing, with copies to all the other
parties hereto, and shall be deemed to have been duly given when
(i) if delivered by hand, upon receipt, (ii) if sent by
facsimile, upon receipt of proof of sending thereof, (iii) if
sent by nationally recognized overnight delivery service (receipt
requested), the next business day or (iv) if mailed by
first-class registered or certified mail, return receipt
requested, postage prepaid, four days after posting in the U.S.
mails, in each case if delivered to the following addresses:
If to the Company: iDial Networks, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxx 000
Xxx Xxxxxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
With copies to: Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP
1065 Avenue of the Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Email: XXxxxxxxxx@xxxxxx.xxx
If to the Secured Party: AJW Partners, LLC
AJW Offshore, Ltd.
AJW Qualified Partners, LLC
New Millennium Capital Partners II, LLC
AJW Managed Account
0000 Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxx
Facsimile: 000-000-0000
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With copies to:
Xxxxxxx Xxxxx Xxxxxxx & Ingersoll, LLP
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Facsimile: 000-000-0000
14. Other Security. To the extent that the Obligations are now or
hereafter secured by property other than the Collateral or by the guarantee,
endorsement or property of any other person, firm, corporation or other entity,
then the Secured Party shall have the right, in its sole discretion, to pursue,
relinquish, subordinate, modify or take any other action with respect thereto,
without in any way modifying or affecting any of the Secured Party's rights and
remedies hereunder.
15. Miscellaneous.
(a) No course of dealing between the Company and the Secured Party,
nor any failure to exercise, nor any delay in exercising, on the
part of the Secured Party, any right, power or privilege
hereunder or under the Debentures shall operate as a waiver
thereof; nor shall any single or partial exercise of any right,
power or privilege hereunder or thereunder preclude any other or
further exercise thereof or the exercise of any other right,
power or privilege.
(b) All of the rights and remedies of the Secured Party with respect
to the Collateral, whether established hereby or by the
Debentures or by any other agreements, instruments or documents
or by law shall be cumulative and may be exercised singly or
concurrently.
(c) This Agreement constitutes the entire agreement of the parties
with respect to the subject matter hereof and is intended to
supersede all prior negotiations, understandings and agreements
with respect thereto. Except as specifically set forth in this
Agreement, no provision of this Agreement may be modified or
amended except by a written agreement specifically referring to
this Agreement and signed by the parties hereto.
(d) In the event that any provision of this Agreement is held to be
invalid, prohibited or unenforceable in any jurisdiction for any
reason, unless such provision is narrowed by judicial
construction, this Agreement shall, as to such jurisdiction, be
construed as if such invalid, prohibited or unenforceable
provision had been more narrowly drawn so as not to be invalid,
prohibited or unenforceable. If, notwithstanding the foregoing,
any provision of this Agreement is held to be invalid, prohibited
or unenforceable in any jurisdiction, such provision, as to such
jurisdiction, shall be ineffective to the extent of such
invalidity, prohibition or unenforceability without invalidating
the remaining portion of such provision or the other provisions
of this Agreement and without affecting the validity or
enforceability of such provision or the other provisions of this
Agreement in any other jurisdiction.
(e) No waiver of any breach or default or any right under this
Agreement shall be considered valid unless in writing and signed
by the party giving such waiver, and no such waiver shall be
deemed a waiver of any subsequent breach or default or right,
whether of the same or similar nature or otherwise.
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(f) This Agreement shall be binding upon and inure to the benefit of
each party hereto and its successors and assigns.
(g) Each party shall take such further action and execute and deliver
such further documents as may be necessary or appropriate in
order to carry out the provisions and purposes of this Agreement.
(h) This Agreement shall be construed in accordance with the laws of
the State of New York, except to the extent the validity,
perfection or enforcement of a security interest hereunder in
respect of any particular Collateral which are governed by a
jurisdiction other than the State of New York in which case such
law shall govern. Each of the parties hereto irrevocably submit
to the exclusive jurisdiction of any New York State or United
States Federal court sitting in Manhattan county over any action
or proceeding arising out of or relating to this Agreement, and
the parties hereto hereby irrevocably agree that all claims in
respect of such action or proceeding may be heard and determined
in such New York State or Federal court. The parties hereto agree
that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on
the judgment or in any other manner provided by law. The parties
hereto further waive any objection to venue in the State of New
York and any objection to an action or proceeding in the State of
New York on the basis of forum non conveniens.
(i) EACH PARTY HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO
A JURY TRAIL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT. THE SCOPE OF THIS WAIVER IS
INTENDED TO BE ALL ENCOMPASSING OF ANY DISPUTES THAT MAY BE FILED
IN ANY COURT AND THAT RELATE TO THE SUBJECT MATER OF THIS
AGREEMENT, INCLUDING WITHOUT LIMITATION CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND
STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER
IS A MATERIAL INDUCEMENT FOR EACH PARTY TO ENTER INTO A BUSINESS
RELATIONSHIP, THAT EACH PARTY HAS ALREADY RELIED ON THIS WAIVER
IN ENTERING INTO THIS AGREEMENT AND THAT EACH PARTY WILL CONTINUE
TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH
PARTY FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS
WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY HAS KNOWINGLY
AND VOLUNTARILY WAIVES ITS RIGHTS TO A JURY TRIAL FOLLOWING SUCH
CONSULTATION. THIS WAIVER IS IRREVOCABLE, MEANING THAT,
NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY
TO ANY SUBSEQUENT AMENDMENTS, RENEWALS AND SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT. IN THE EVENT OF A LITIGATION,
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY
THE COURT.
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(j) This Agreement may be executed in any number of counterparts,
each of which when so executed shall be deemed to be an original
and, all of which taken together shall constitute one and the
same Agreement. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid
binding obligation of the party executing (or on whose behalf
such signature is executed) the same with the same force and
effect as if such facsimile signature were the original thereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed on the day and year first above written.
IDIAL NETWORKS, INC.
By: _______________________________
Xxxx X. Xxxx
Chief Executive Officer
AJW PARTNERS, LLC
By: SMS Group, LLC
By: _______________________________
Xxxxx X. Xxxxxxxx
Manager
AJW OFFSHORE, LTD.
By: First Street Manager II, LLC
By: _______________________________
Xxxxx X. Xxxxxxxx
Manager
AJW QUALIFIED PARTNERS, LLC
By: AJW Manager, LLC
By: _______________________________
Xxxxx X. Xxxxxxxx
Manager
[Signatures Continued on Next Page]
13
NEW MILLENNIUM CAPITAL PARTNERS II, LLC
By: First Street Manager II, LLC
By:________________________________
Xxxxx X. Xxxxxxxx
Manager
AJW MANAGED ACCOUNT
By:________________________________
Xxxxx X. Xxxxxxxx
Authorized Signatory
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SCHEDULE A
Principal Place of Business of the Company:
------------------------------------------
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000, Xxx Xxxxxxxxx, Xxxxx 00000
Locations Where Collateral is Located or Stored:
-----------------------------------------------
o Sirius Telecom - Suite 800, 000 Xxxxx Xxxxx Xxxxxx, Xxx Xxxxxxx,
Xxxxxxxxxx 00000
o 0000 Xxxxxxxxxx Xxxxx Xxxxx 000, Xxx Xxxxxxxxx, XX 00000
o 00000 X Xxxxxxx Xxxxx 000, Xxxxxx, XX 00000
List of Subsidiaries of the Company:
o IDNW Carrier Services, Inc. - Delaware Corp.
o IDNW, Inc. - Delaware Corp.
o Global Dollar, Inc. - Delaware Corp.
o Dibz, Inc. - Delaware, Corp.
o 2Sendit, Inc. - Colorado Corp.
o Adelant Telecom, Inc. - Nevada Corp.
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SCHEDULE B
Jurisdictions:
California
Colorado
Texas
16
