SECURITY AGREEMENT
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AGREEMENT, dated as of August 20, 2005, between GLOBAL REALTY DEVELOPMENT
CORP, its successors and assigns, a Delaware corporation, having its principal
offices at 00000 Xxxxx Xxx Xxxxxxxxx, Xxxxx 000, Xxxxx Xxxxxxx, Xxxxxxx 00000,
XXX (hereinafter referred to as the "Debtor"), and Sapphire Developments Limited
and/or its successors and assignees, having its principal offices at 00 Xxxxxx
Xxxxxx, X.X. Xxx 000, Xxxxxx Xxxx, Xxxxxx (hereinafter referred to as the
"Secured Party"). The term Debtor shall refer collectively to all subsidiaries
of Debtor whether wholly or majority owned by Debtor.
W I T N E S S E T H:
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WHEREAS, as of the date of this Agreement, the Secured Party agreed to loan
to Debtor Three Million Two Hundred Thousand Australian dollars (AUD$3,200,000)
in the aggregate, which is evidenced by a Secured Promissory Note (the "Note")
in such amount as attached hereto as Exhibit A; and
WHEREAS, in order to induce the Secured Party to accept the Note, Debtor
has agreed to secure payment of the Note by the provision of shares of
restricted common stock of the Debtor (the "Collateral") within ninety (90) days
of the date hereof in accordance with the provisions of the certain Pledge and
Escrow Agreement entered into simultaneously herewith, a copy of which is
annexed hereto as Exhibit B. All capitalized terms used herein and not otherwise
defined shall have the meanings as defined in the Uniform Commercial Code as in
effect in the State of New York (the "UCC");
NOW THEREFORE, in consideration of Ten Dollars ($10.00), and other valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. OBLIGATIONS. The term "Obligation" as used in this Agreement shall
mean all principal and interest due or to become due under the aforesaid Note
due or to become due, now existing or hereafter arising.
2. CREATION OF THE SECURITY INTEREST. Debtor or its designee (the
("Pledging Party") hereby grants to the Secured Party a first priority security
interest in all of the right, title and interest of the Pledging Party in and to
the Collateral, to the extent available, to secure the full and prompt payment
and performance of all of the Obligations. In the event that certain of the
Collateral is encumbered prior to the date hereof by a validly filed security
interest held by an unaffiliated third party, the Pledging Party hereby grants
to the Secured Party a general security interest on such Collateral.
3. DEBTOR'S OBLIGATIONS TO PAY. Debtor shall pay and perform all of
the Obligations of Debtor to the Secured Party as the same may become due
according to their terms. Debtor shall be liable for, and shall reimburse to the
Secured Party, all expenses, including reasonable attorneys' fees and state
filing fees incurred or paid in connection with establishing, perfecting,
maintaining, protecting or enforcing any of Secured Party's rights and remedies
hereunder.
4. INTENTIONALLY LEFT BLANK.
5. FILING AND RECORDING. Debtor, at its own cost and expense, shall
execute and deliver to Secured Party any financing statements, and shall procure
for Secured Party any other documents, necessary or appropriate to protect the
security interest granted to Secured Party hereunder against the rights and
interests of third parties, and shall cause the same to be duly recorded and
filed in all places necessary to perfect the security interest of Secured Party
in the Collateral. In the event that any recording or re-filing thereof (or
filing of any statements of continuation or assignment of any financing
statement) is required to protect and preserve such security interest, Debtor,
at its own cost and expense, shall cause the same to be re-recorded and/or
re-filed at the time and in the manner requested by Secured Party. The Pledging
Party hereby authorizes Secured Party to file or re-file any financing
statements or continuation statements with respect to the security interest
granted pursuant to this Agreement which at any time may be required or
appropriate, although the same may have been executed only by Secured Party, and
to execute such financing statement on behalf of the Pledging Party. The
Pledging Party hereby irrevocably designates Secured Party, its agents,
representatives and designees, as agent and at-xxxxxx-in-fact for the Pledging
Party for the aforesaid purposes.
6. DEFAULT. The occurrence of any one or more of the following events
(hereinafter referred to as "Events of Default") shall constitute a default
hereunder, whether such occurrence is voluntary or involuntary or comes about or
is effected by operation of law or pursuant to or in compliance with any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental authority:
(a) If the Debtor shall default in the payment of any
principal or interest due under the Note;
(b) If Debtor shall admit in writing its inability to pay
its debts generally as they become due; file a peti-tion for
relief under the bankruptcy laws or a petition to take advantage of
any insolvency act; make an assign-ment for the benefit of creditors;
commence a proceeding for the appointment of a receiver, trustee,
liquidator or conservator of itself or the whole or any substantial
part of its property; file a petition or answer seeking reorganization
or arrangement or similar relief under the Federal Bankruptcy Laws or
any other applicable law or statute of the United States or any State;
or if Debtor shall be adjudged a bankrupt or insolvent, or a court of
competent jurisdiction shall enter any order, judgment or decree
appointing a receiver, trustee, liquidator or con-servator of Debtor
or of the whole or any substantial part of the property of Debtor or
approves a petition filed against Debtor seeking reorganization or
similar relief under the Federal Bankruptcy Laws or any other
ap-plicable law or statute of the United States or any State or
similar laws promulgated in the Commonwealth of Australia; or if,
under the provisions of any other law for the relief or aid of
debtors, a court of competent juris-diction shall assume custody or
control of Debtor or the whole or any substantial part of its
property; or if there is commenced against Debtor any proceeding for
any of the foregoing relief; or if Debtor by any act indi-xxxxx its
consent to, approval of, or acquiescence in any such proceeding; or
(c) If, without the prior written consent of the Secured Party,
all or any part of the Collateral shall be sold, transferred or
assigned, or shall be further encumbered, hypothecated, mortgaged, or
made subject to any other lien or security interest which: (1) did not
exist at the time of this Security Agreement; and (2) was not
disclosed in writing to the Secured Party prior to the date of this
Security Agreement; provided, however, that with respect to any
encumbrance, hypothecation, mortgage, or other lien or security
interest, that either (i) such encumbrance, hypothecation, mortgage,
or other lien or security interest is not removed within ten (10)
business days of the occurrence of such event, or (ii) that the
Collateral has not been replaced with an equivalent number of shares
of the Pledgor that are free and clear of all encumbrances, mortgages,
liens or other security interests within ten (10) business days of the
occurrence of such event.
7. RIGHTS AND REMEDIES. Upon the occurrence of an Event of Default or
any applicable grace period, the Obligations shall immediately become due and
payable in full without notice or demand. Secured Party shall have all rights
and remedies provided by the Uniform Commercial Code in effect in the State of
New York on the date hereof. In addition to, or in conjunction with, or
substitution for such rights and remedies, Secured Party may at any time and
from and after the oc-xxxxxxxx of an Event of Default hereunder:
(a) foreclose the se-curity interest created herein by any
available judicial procedure, or take possession of the Collateral, or
any portion thereof, with or without judicial process, and the
Pledging Party agrees not to resist or interfere therewith;
(b) sell or otherwise dispose of all or any part of the
Collateral in the Pledging Party's name or in its own name, or in the
name of such party as Secured Party may designate, either at public or
private sale (at which Secured Party shall have the right to
purchase), for cash or for credit, with or without re-presentations or
warranties, and upon such other terms as Secured Party, in its sole
reasonable discretion, may deem advisable; and ten (10) days' written
notice of such public sale date or dates after which private sale may
occur, or such lesser period of time in the case of an emergency,
shall constitute reasonable notice hereunder;
(c) execute and deliver documents of title, certificates of
origin, or other evidence of payment, shipment or storage of any
Collateral or proceeds on behalf of and in the name of the Pledging
Party;
(d) remedy any default by Debtor hereunder, without waiving
such default, and any moneys expended in so doing shall be
chargeable with interest to Debtor and added to the Obligations
secured hereby; and
(e) apply for an injunction to restrain a breach or threatened
breach of this Agreement by Debtor;
(f) If after the Event of the Default, Secured Party shall
foreclose upon the security interest in the Collateral, Debtor shall
pay to Secured Party, as compensation reasonable attorneys' fees.
8. CUMULATIVE RIGHTS All rights, remedies and powers granted to
Secured Party herein, or in any instrument or document related hereto, or
provided or implied by law or in equity shall be cumulative and may be exercised
singly or concurrently on any one or more occasions.
9. DEBTOR'S REPRESENTATIONS AND WARRANTIES Debtor hereby represents
and warrants to Secured Party that:
(a) Neither the execution nor the delivery of this Agreement,
nor the consummation of the transactions here-in contemplated,
nor compliance with the provisions hereof, will violate any law or
regulation, or any order or decree of any court of governmental
authority, or will conflict with, or result in the breach of, or
constitute a default under, any indenture, mortgage, deed or trust,
agreement or other instrument to which Debtor is a party or by which
Debtor may be bound, or result in the creation or imposition of any
lien, claim or encumbrance upon any property of Debtor;
(b) Debtor and/or the Pledging Party, as the case may be, has
or shall have the power to execute, deliver and perform the
provisions of this Agreement and all instruments and documents
delivered or to be delivered pursuant hereto, and has taken or caused
to be taken all necessary or appropriate actions to authorize the
execution, delivery and performance of this Agreement and all such
instruments and documents;
(c) Debtor and/or the Pledging Party, as the case may be, is
or shall be the legal and equitable owner of the Collateral, free
and clear of all security interests, liens, claims and encumbrances of
every kind and nature, except as would be disclosed by a search of
public records;
(d) No default exists, and no event which with notice or
the passage of time, or both, would constitute a default under
the Collateral by any party thereto, and there are no offsets, claims
or defenses against the obligations evidenced by the Collateral.
10. NOTICES. Any notice or demand required or permitted to be made or
given hereunder shall be deemed sufficiently given or made if given by personal
service or by certified or registered mail, return receipt requested, addressed,
if to Secured Party, at Secured Party's address first above written, or if to
Debtor, at Debtor's address first above written. Either party may change its
address by like notice to the other party.
11. MODIFICATION AND WAIVER. No modification or waiver of any
provision of this Agreement, and no consent by Secured Party to any breach
thereof by Debtor, shall be effective unless such modification or waiver shall
be in writing and signed by Secured Party, and the same shall then be effective
only for the period and on the conditions and for the specific instances and
purposes specified in such writing. No course of dealing between Debtor and
Secured Party in exercising any rights or remedies hereunder shall operate as a
waiver or preclude the exercise of any other rights or remedies hereunder.
12. BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
13. MISCELLANEOUS. This Agreement shall be construed in accordance
with and shall be governed by the laws of the State of New York without giving
effect to conflict of law principles thereof.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first above written.
SECURED PARTY:
SAPPHIRE DEVELOPMENTS LIMITED
BY: /S/ XXXXX XXXXXX
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NAME: XXXXX XXXXXX
TITLE: VICE-PRESIDENT
DEBTOR:
GLOBAL REALTY DEVELOPMENT CORP
BY: /S/ XXXXX XXXXXXX XXXXX
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NAME: XXXXX XXXXXXX XXXXX
POSITION:
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Signature of Witness
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(Print) Full Name of Witness
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Address of Witness
