SECURITY AGREEMENT
Exhibit
10.2
THIS
SECURITY AGREEMENT is
made
as of the 15th day of June 2006 at 0000
Xxxxxx Xx., Xxxxx #00, Xxxxxxxxxx, Xxxxxxxx 00000,
by
and between Xxxxx X. Xxxx, and individual (“Maker”)
and
Universal Capital Management, Inc. (“Payee”).
Concurrently with the execution of this security agreement (“Agreement”),
Maker
is executing and delivering to Payee a promissory note (the “Note”)
of
even date hereof, in the principal amount of $800,000.
In
order
to induce Payee to accept the Note as evidence of such loan, and as further
security for the payment by Maker of the Note, Maker has agreed to pledge
with
Payee the collateral, as described below, on the terms and conditions set
forth
below.
In
consideration of the premises, the parties agree as follows:
1. |
As
security for the payment of the Note by Maker to Payee, Maker pledges,
assigns and delivers to Payee all of the right, title and interest
to four
hundred thousand shares of the capital stock of Payee, represented
by
Certificate No. _________ registered in the name of Maker. All
such shares
together with any substitutions for them or additional shares of
any
class, pledged or intended to be pledged with Payee under this
Agreement
are here sometimes collectively called the “collateral”.
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2. |
Maker
represents, warrants and covenants to and with Payee that Maker
is, on
this date, the owner, free and clear of all liens, encumbrances
and other
charges or interests of others, of the abovementioned certificate
for
shares registered in Maker's name; that Maker will not sell,
assign,
transfer or otherwise dispose of, or mortgage, pledge or otherwise
hypothecate, any of such shares other than described herein;
and that
Maker has full power and authority to transfer and pledge the
shares
stated with Payee as provided herein.
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3. |
Notwithstanding
the provisions of paragraph 2 above, Maker shall have the right
to sell,
assign, transfer or otherwise dispose of, or mortgage, pledge or
otherwise
hypothecate, any of such shares to Payee in connection with Maker’s
repayment of the principal and interest of the Note, in whole or
in part,
pursuant to the terms of the Note.
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4. |
If
no default shall have occurred and be continuing, Maker shall have
the
right to vote the shares stated and to exercise the other rights
and
privileges of the owner, but subject to the provisions of paragraph
2
above.
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5. |
Maker
expressly agrees that (i) if, by virtue of a default by Maker under
the
Note, Payee shall accelerate the indebtedness in accordance with
the terms
of the Note; or (ii) if Maker shall violate or suffer any of the
provisions of Section 2 above (called an “event of default”); Payee may,
at its election, transfer the shares pledged hereto to its name
and
exercise all rights of owner in respect of such shares, including,
without
limitation, the right to vote such shares; and Maker irrevocably
constitutes and appoints Payee, its attorney-in-fact to effectuate
such
transfer upon the books of Payee. In addition, Payee shall have
all of the
rights in respect of the collateral that are accorded it as a secured
party under the Uniform Commercial Code. For the purpose of determining
what constitutes reasonable notice of any sale of the collateral
under the
provisions of the Uniform Commercial Code, the parties agree that
Thirty
(30) days shall be sufficient.
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6. |
Maker
waives demand, notice, protest and notice of acceptance of this
Agreement
and of all other demands and notices of any description not expressly
provided for here that it may lawfully waive. No delay or omission
by
Payee in exercising any right under this Agreement, and no partial
exercise of any right under this Agreement, shall operate as a
waiver of
such right or of any other right under this Agreement or provided
for by
law. No purported waiver of any right shall be effective unless
in writing
signed by Payee and no waiver on one occasion shall be construed
as a bar
to or waiver of any such right on any other occasion. All rights
of Payee
under this Agreement or by law are cumulative and the exercise
of one
shall not be construed as a bar to or waiver of any
other.
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7. |
Upon
payment in full of the Note, Payee shall transfer and deliver the
collateral to Maker or to such other person or persons as Maker
may
direct, together with any stock power or powers delivered in connection
with that by Maker.
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8. |
Notwithstanding
any other provision of this Agreement, all notices and other
communications given under or pursuant to this Agreement (hereafter
collectively “notices”) shall be in writing and shall be addressed to the
party to receive them at its address or at such other address as
it may
later designate as provided below, and shall be sent by registered
or
certified mail, return receipt requested or any other means (including
personal delivery, expedited courier, messenger service, telecopy,
telex,
ordinary mail, or electronic mail). Any party may, by like notice,
change
its address for receipt of further notices. Notices given in the
manner
stated shall be deemed given and served when mailed or sent or
received.
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9. |
Maker
agrees that he will at any time and from time to time, upon request,
execute and deliver such further documents and do such further
acts and
things as Payee may reasonably request in order to more fully effectuate
the purposes of this Agreement.
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10. |
This
Agreement shall be binding upon and shall inure to the benefit
of Maker
and Payee, and subject to the restrictions set forth in Section
2 above in
the case of Maker, Maker's respective legal representatives, successors
and assigns. This Agreement shall be governed by and construed
in
accordance with the laws of the state of Delaware applicable to
agreements
made and to be performed wholly within that state. Maker and Payee
agree
that proper venue shall lie in New Castle County,
Delaware.
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IN
WITNESS WHEREOF,
the
undersigned has executed this Agreement as of date first written
above.
/s/ Xxxxxxxx Xxxx | /s/ Xxxxxxx Xxxxx | ||
Name: Xxxxxxxx Xxxx |
Xxxxxxx Xxxxx, president |
/s/ Xxxxxx Xxxxxxxx | /s/ Xxxxx X. Xxxx | ||
Xxxxxx Xxxxxxxx |
Xxxxx X. Xxxx |
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