Exhibit 10.47
SECURITY AGREEMENT
(SEI)
THIS SECURITY AGREEMENT is made and entered into as of the 7th day of
May, 1997, by SOUTHHAMPTON ENTERPRISES INC., a Texas corporation (hereinafter
called "Debtor"), whose chief executive office (or residence if Debtor is an
individual without an office) is located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇ in favor of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., as agent for Sellers (defined below),
and his heirs, personal representatives, successors and assigns (hereinafter
called "Secured Party"), whose address is 12401 ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇.
1. RECITALS
1.1 The parties identified on Schedule 1 hereto (the "Sellers"),
Southhampton Enterprises Corp., a British Columbia corporation ("SEC") and
Debtor have entered into a Stock Purchase Agreement dated April 21, 1997 (the
"Stock Purchase Agreement"), which provides for the purchase by Debtor from
Sellers of all of the issued and outstanding common stock of The Antigua Group,
Inc., a Nevada corporation ("Antigua").
1.2 Secured Party has agreed to provide certain financing to SEC in
connection with the Stock Purchase Agreement, provided that Secured Party
receives, among other things, a security interest in all personal property now
owned or hereafter acquired by Debtor.
1.3 LaSalle Business Credit, Inc. ("LaSalle") has provided or agreed to
provide certain financing to Antigua according to the terms of a Loan and
Security Agreement, dated January 23, 1997, as modified by a Modification
Agreement of even date herewith, and according to the terms of a Loan and
Security Agreement of even date herewith, all between LaSalle and Antigua. In
connection therewith and as a condition of that financing, Debtor has executed
and delivered to LaSalle a Security Agreement, of even date herewith, granting
to LaSalle a security interest in all personal property owned or acquired by
Debtor (the "LaSalle Security Agreement").
1.4 Imperial Bank, a California banking corporation ("Imperial") has
agreed to provide certain financing to Antigua according to the terms of a
Credit Agreement, of even date herewith, by and among Imperial, SEC, Debtor, and
Antigua. In connection therewith and as a condition of that financing, Debtor
has executed and delivered to Imperial a Security Agreement, of even date
herewith, granting to Imperial a pledge and security interest in, among other
things, all personal property owned or acquired by Debtor (the "Imperial
Security Agreement").
1.5 The Cruttenden ▇▇▇▇ Bridge Fund, L.L.C, a California limited
liability company ("Cruttenden") has also agreed to provide certain financing to
Antigua according to the terms of a Securities Purchase Agreement, of even date
herewith, by and among Cruttenden, SEC, Debtor, and Antigua. In connection
therewith and as a condition of that financing, Debtor has executed and
delivered to Cruttenden a Security and Pledge Agreement, of even date herewith,
granting to Cruttenden a security interest in, among other things, all personal
owned or acquired by Debtor (the "Cruttenden Security Agreement").
1.6 LaSalle, Imperial, Cruttenden, Secured Party, SEC, Debtor, and
Antigua have entered into an Intercreditor Agreement, of even date herewith (the
"Intercreditor Agreement"), to among other things, establish the respective
priorities of the security interests of LaSalle, Imperial, Cruttenden and
Secured Party in the personal property of Debtor.
1.7 The security interests in favor of LaSalle, Imperial and Cruttenden
in the personal property of Debtor under the LaSalle Security Agreement, the
Imperial Security Agreement and the Cruttenden Security Agreement, respectively,
as modified or limited by the Intercreditor Agreement, are herein called the
"Permitted Security Interests".
2. SECURITY INTEREST
Debtor hereby grants to Secured Party a security interest (hereinafter
called the "Security Interest") in all of the property described below in, to or
under which Debtor now has or hereafter acquires any right, title or interest,
whether present, future or contingent:
(a) All accounts, general intangibles, instruments, documents
and chattel paper, including all accounts receivable, notes, drafts,
lease agreements and security agreements, and all goods, if any,
represented thereby, and including but not limited to such items
described in the Collateral Schedule (if any) attached hereto, whether
now existing or hereafter acquired or created from time to time;
(b) All inventory now owned or hereafter acquired, wherever
located, including all goods held for sale or lease in Debtor's
business, as now or hereafter conducted, or furnished or to be
furnished under contracts of service, and all raw materials, work in
process, finished goods, and materials to be used or consumed in
Debtor's business (whether or not the inventory is represented by
warehouse receipts or bills of lading or has been or may be placed in
transit or delivered to a public warehouse);
(c) All equipment now owned or hereafter acquired, including
all furniture, fixtures, furnishings, vehicles (whether titled or
non-titled), machinery, materials and supplies, wherever located,
including but not limited to such items described on the collateral
schedule (if any) attached hereto, together with all parts,
accessories, attachments, additions thereto or replacements therefor;
(d) All investment property, including certificated
securities, uncertificated securities, securities accounts, securities
entitlements, commodity accounts and commodity contracts, and including
but not limited to those items described on the collateral schedule (if
any) attached hereto, together with all dividends, distributions and
payments with respect thereto, all other rights and interests arising
therefrom, and all substitutions and replacements therefor;
(e) All of the property described on the collateral schedule
(if any) attached hereto.
(f) All property of Debtor that is now or may hereafter be in
the possession or control of Secured Party in any capacity, including
without limitation all monies owed or that become owed by Secured Party
to Debtor;
(g) All policies or certificates of insurance covering any of
the property described herein, and all awards, loss payments, proceeds
and premium refunds that may become payable with respect to such
policies;
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(h) All books, records, correspondence, files, electronic and
other media relating to the property described herein, all records,
data and information stored thereon, and all computer software,
databases and other informations systems used to create, maintain,
process and utilize such records, data and information;
together with all proceeds of any of the foregoing property, whether due or to
become due from any sale, exchange or other disposition thereof, whether cash or
non-cash in nature, and whether represented by checks, drafts, notes or other
instruments for the payment of money, including, without limitation, all
property, whether cash or non-cash in nature, derived from tort, contractual or
other claims arising in connection with any of the foregoing property. All
property described above is hereinafter called the "Collateral."
3. OBLIGATION SECURED
The Security Interest shall secure, in such order of priority as
Secured Party may elect:
(a) Payment of the sum of $5,198,000.00 with interest thereon,
extension and other fees, late charges, prepayment premiums and
attorneys' fees, according to the terms of that Promissory Note of even
date herewith, made by SEC payable to the order of Secured Party, and
all extensions, modifications, renewals or replacements thereof
(hereinafter called the "Three Year Note");
(b) Payment of the sum of $325,000.00 with interest thereon,
extension and other fees, late charges, prepayment premiums and
attorneys' fees, according to the terms of that Promissory Note of even
date herewith, made by SEC, payable to the order of Secured Party, and
all extensions, modifications, renewals or replacements thereof
(hereinafter called the "Two Year Note");
(c) Payment of the sum of $855,000.00 with interest thereon,
extension and other fees, late charges, prepayment premiums and
attorneys' fees, according to the terms of that Promissory Note of even
date herewith, made by SEC, payable to the order of Secured Party, and
all extensions, modifications, renewals or replacements thereof
(hereinafter called the "Profit Note");
(d) Payment, performance and observance by SEC, Debtor, and/or
Antigua of each covenant, condition and provision contained in any
other security agreement or pledge agreement of even date herewith
securing payment of the Note (defined below) or in any other document
or instrument evidencing, securing or executed and delivered in
connection with the indebtedness evidenced by the Note, and which
specifically refers to the Note, and of all monies expended or advanced
by Secured Party pursuant to the terms thereof or to preserve any right
of Secured Party thereunder; and
(e) Payment, performance and observance by Debtor of each
covenant, condition, provision and agreement contained herein and of
all monies expended or advanced by Secured Party pursuant to the terms
hereof, or to preserve any right of Secured Party hereunder, or to
protect or preserve the Collateral or any part thereof;
3.1 The Three Year Note, the Two Year Note and the Profit Note are
herein severally and collectively called the "Note". All the indebtedness and
obligations secured by this Agreement are hereafter collectively called the
"Obligation."
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4. REPRESENTATIONS AND WARRANTIES OF DEBTOR
Debtor hereby represents and warrants that:
4.1 Debtor (i) is duly organized, validly existing and in good standing
under the laws of the jurisdiction in which it is organized; (ii) is qualified
to do business and is in good standing under the laws of the state in which the
Collateral is located and in each state in which it is doing business; (iii) has
full power and authority to own its properties and assets and to carry on its
businesses as now conducted; and (iv) is fully authorized and permitted to
execute and deliver this Agreement and to enter into any transactions evidenced
by any portion of the Collateral. The execution, delivery and performance by
Debtor of this Agreement and all other documents and instruments relating to the
Obligation will not result in any breach of the terms and conditions or
constitute a default under any agreement or instrument under which Debtor is a
party or is obligated. Debtor is not in default in the performance or observance
of any covenants, conditions or provisions of any such agreement or instrument.
4.2 The Collateral is, and is intended to be, used, produced or
acquired by Debtor primarily for business use.
4.3 The address of Debtor set forth at the beginning of this Agreement
is the chief executive office of Debtor.
4.4 All tangible Collateral will be kept at Debtor's address set forth
at the beginning of this Agreement and/or at the locations described on Schedule
"2" attached hereto. Debtor's records concerning the Collateral will be kept at
Debtor's address set forth at the beginning of this Agreement.
4.5 Debtor is the owner of the Collateral free of all security
interests or other encumbrances except the Security Interest and the Permitted
Security Interests; no financing statement covering the Collateral is filed or
recorded in any public office except those to perfect the Security Interest and
the Permitted Security Interests.
4.6 Each account, chattel paper or general intangible included in the
Collateral is genuine and enforceable in accordance with its terms against the
party named therein who is obligated to pay the same (hereinafter called
"Obligor"), and the security interests that are part of each item of chattel
paper included in the Collateral are valid, first and prior perfected security
interests. Each Obligor is solvent, and the amount that Debtor has represented
to Secured Party as owing by each Obligor is the amount actually and
unconditionally owing by that Obligor, without deduction except for normal cash
discounts where applicable; no Obligor has any defense, setoff, claim or
counterclaim against Debtor that can be asserted against Secured Party whether
in any proceeding to enforce the Security Interest or otherwise. Each document,
instrument and chattel paper included in the Collateral is complete and regular
on its face and free from evidence of forgery or alteration. No default has
occurred in connection with any instrument, document or chattel paper included
in the Collateral, no payment in connection therewith is overdue and no
presentment, dishonor or protest has occurred in connection therewith.
4.7 Debtor is fully authorized and permitted to execute and deliver
this Agreement and to enter into any transactions evidenced by any portion of
the Collateral. The execution, delivery and performance by Debtor of this
Agreement and all other documents and instruments relating to the Obligation
will not result in any breach of the terms and conditions or constitute a
default under any agreement or instrument under which Debtor is a party or is
obligated. Debtor is not in default in the performance or observance of any
covenants, conditions or provisions of any such agreement or instrument.
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5. COVENANTS OF DEBTOR
5.1 Debtor shall not sell, transfer, assign or otherwise dispose of any
Collateral or any interest therein (except as permitted herein) without
obtaining the prior written consent of Secured Party and shall keep the
Collateral free of all security interests or other encumbrances except the
Security Interest and the Permitted Security Interests. Although proceeds of
Collateral are covered by this Agreement, this shall not be construed to mean
that Secured Party consents to any sale of the Collateral.
5.2 Debtor shall keep and maintain the Collateral in good condition and
repair and shall not use the Collateral in violation of any provision of this
Agreement or any applicable statute, ordinance or regulation or any policy of
insurance insuring the Collateral.
5.3 Debtor shall provide and maintain insurance insuring the Collateral
against risks, with coverage and in form and amount satisfactory to Secured
Party. At Secured Party's request, Debtor shall deliver to Secured Party the
original policies of insurance containing endorsements naming Secured Party as a
loss payee.
5.4 Debtor shall pay when due all taxes, assessments and other charges
which may be levied or assessed against the Collateral.
5.5 Debtor shall prevent any portion of the Collateral from being or
becoming an accession to other goods that are not part of the Collateral.
5.6 Debtor shall keep all titled vehicles properly registered and
licensed, shall provide Secured Party with the license numbers of all titled
vehicles, shall cause the Security Interest to be shown as a valid first lien on
the Certificate of Title for all titled vehicles and shall deliver the
Certificates of Title, or lien filing receipts, as applicable, to Secured Party
as evidence thereof.
5.7 Debtor shall immediately deliver to Secured Party all instruments,
documents, chattel paper and certificated securities (together with stock powers
satisfactory to Secured Party, executed in blank) that are at any time included
in the Collateral and that are not then held by LaSalle, Imperial or Cruttenden
in connection with the Permitted Security Interests. Debtor, upon demand, shall
promptly deliver to Secured Party all invoices, shipping or delivery records,
purchase orders, contracts or other items related to the Collateral. Debtor
shall notify Secured Party immediately of any default by any Obligor in the
payment or performance of its obligations with respect to any Collateral.
Debtor, without Secured Party's prior written consent, shall not make or agree
to make any alteration, modification or cancellation of, or substitution for, or
credit, adjustment or allowance on, any Collateral.
5.8 Debtor shall give Secured Party immediate written notice of any
change in the location of: (i) Debtor's chief executive office; (ii) the
Collateral or any part thereof; or (iii) Debtor's records concerning the
Collateral.
5.9 Secured Party or its agents may inspect the Collateral at
reasonable times and may enter into any premises where the Collateral is or may
be located. Debtor shall keep records concerning the Collateral in accordance
with generally accepted accounting principles and, unless waived in writing by
Secured Party, shall ▇▇▇▇ its records and the Collateral to indicate the
Security Interest. Secured Party shall have free and complete access to Debtor's
records and shall have the right to make extracts therefrom or copies thereof.
Upon request of Secured Party from time to time, Debtor shall submit up-to-date
schedules of the items comprising the Collateral in such detail as Secured Party
may require and
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shall deliver to Secured Party confirming specific assignments of all accounts,
instruments, documents and chattel paper included in the Collateral.
5.10 Debtor, at its cost and expense, shall protect and defend this
Agreement, all of the rights of Secured Party hereunder, and the Collateral
against all claims and demands of other parties, including without limitation
defenses, setoffs, claims and counterclaims asserted by any Obligor against
Debtor and/or Secured Party. Debtor shall pay all claims and charges that in the
opinion of Secured Party might prejudice, imperil or otherwise affect the
Collateral or the Security Interest. Debtor shall promptly notify Secured Party
of any levy, distraint or other seizure by legal process or otherwise of any
part of the Collateral and of any threatened or filed claims or proceedings that
might in any way affect or impair the terms of this Agreement.
5.11 The Security Interest, at all times, shall be perfected and shall
be prior to any other interests in the Collateral except the Permitted Security
Interests. Debtor shall act and perform as necessary and shall execute and file
all security agreements, financing statements, continuation statements and other
documents requested by Secured Party to establish, maintain and continue the
perfected Security Interest. Debtor, on demand, shall promptly pay all costs and
expenses of filing and recording, including the costs of any searches, deemed
necessary by Secured Party from time to time to establish and determine the
validity and the continuing priority of the Security Interest.
5.12 If Debtor shall fail to pay any taxes, assessments, expenses or
charges, to keep all of the Collateral free from other security interests,
encumbrances or claims except the Permitted Security Interests, to keep the
Collateral in good condition and repair, to procure and maintain insurance
thereon, or to perform otherwise as required herein, Secured Party may advance
the monies necessary to pay the same, to accomplish such repairs, to procure and
maintain such insurance or to so perform; Secured Party is hereby authorized to
enter upon any property in the possession or control of Debtor for such
purposes.
5.13 All rights, powers and remedies granted Secured Party herein, or
otherwise available to Secured Party, are for the sole benefit and protection of
Secured Party, and Secured Party may exercise any such right, power or remedy at
its option and in its sole and absolute discretion without any obligation to do
so. In addition, if under the terms hereof, Secured Party is given two or more
alternative courses of action, Secured Party may elect any alternative or
combination of alternatives at its option and in its sole and absolute
discretion. All monies advanced by Secured Party under the terms hereof and all
amounts paid, suffered or incurred by Secured Party in exercising any authority
granted herein, including reasonable attorneys' fees, shall be added to the
Obligation, shall be secured by the Security Interest, shall bear interest at
the highest rate payable on any of the Obligation until paid, and shall be due
and payable by Debtor to Secured Party immediately without demand.
6. NOTIFICATION AND PAYMENTS; COLLECTION OF COLLATERAL; USE OF
COLLATERAL BY DEBTOR
6.1 Secured Party, after the occurrence and during the continuation of
an Event of Default, without notice to Debtor, may notify any or all Obligors of
the existence of the Security Interest and may direct the Obligors to make all
payments on the Collateral to Secured Party. Until Secured Party has notified
the Obligors to remit payments directly to it, Debtor, at Debtor's own cost and
expense, shall collect or cause to be collected the accounts and monies due
under the accounts, documents, instruments and general intangibles or pursuant
to the terms of the chattel paper. Secured Party shall not be liable or
responsible for any embezzlement, conversion, negligence or default by Debtor or
Debtor's agents with respect to such collections; all agents used in such
collections shall be agents of Debtor and not agents of Secured Party. Unless
Secured Party notifies Debtor in writing that it waives one or more of
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the requirements set forth in this sentence, any payments or other proceeds of
Collateral received by Debtor, before or after notification to Obligors, shall
be held by Debtor in trust for Secured Party in the same form in which received,
shall not be commingled with any assets of Debtor and shall be turned over to
Secured Party not later than the next business day following the day of receipt.
All payments and other proceeds of Collateral received by Secured Party directly
or from Debtor shall be applied to the Obligation in such order and manner and
at such time as Secured Party, in its sole discretion, shall determine. In
addition, Debtor shall promptly notify Secured Party of the return to or
possession by Debtor of goods underlying any Collateral; Debtor shall hold the
same in trust for Secured Party and shall dispose of the same as Secured Party
directs.
6.2 Secured Party, after the occurrence and during the continuation of
any Event of Default, without notice to Debtor, may demand, collect and ▇▇▇ on
the Collateral (either in Debtor's or Secured Party's name), enforce,
compromise, settle or discharge the Collateral and endorse Debtor's name on any
instruments, documents, or chattel paper included in or pertaining to the
Collateral; Debtor hereby irrevocably appoints Secured Party its attorney in
fact for all such purposes.
6.3 Until the occurrence of an Event of Default, Debtor may: (i) use,
consume and sell any inventory included in the Collateral in any lawful manner
in the ordinary course of Debtor's business provided that all sales shall be at
commercially reasonable prices; and (ii) retain possession of any other
Collateral and use it in any lawful manner consistent with this Agreement.
7. COLLATERAL IN THE POSSESSION OF SECURED PARTY
7.1 Secured Party shall use such reasonable care in handling,
preserving and protecting the Collateral in its possession as it uses in
handling similar property for its own account. Secured Party, however, shall
have no liability for the loss, destruction or disappearance of any Collateral
unless there is affirmative proof of a lack of due care; the lack of due care
shall not be implied solely by virtue of any loss, destruction or disappearance.
7.2 Debtor shall be solely responsible for taking any and all actions
to preserve rights against all Obligors; Secured Party shall not be obligated to
take any such actions whether or not the Collateral is in Secured Party's
possession. Debtor waives presentment and protest with respect to any instrument
included in the Collateral on which Debtor is in any way liable and waives
notice of any action taken by Secured Party with respect to any instrument,
document or chattel paper included in any Collateral that is in the possession
of Secured Party.
8. EVENTS OF DEFAULT; REMEDIES
8.1 The occurrence of any event or condition defined in the Note as an
"Event of Default" shall constitute and is hereby defined to be an Event of
Default under this Security Agreement.
8.2 Upon the occurrence of any Event of Default and at any time while
such Event of Default is continuing, Secured Party shall have the following
rights and remedies and may do one or more of the following:
(a) Declare all or any part of the Obligation to be
immediately due and payable, and the same, with all costs and charges,
shall be collectible thereupon by action at law.
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(b) Without further notice or demand and without legal
process, take possession of the Collateral wherever found and, for this
purpose, enter upon any property occupied by or in the control of
Debtor. Debtor, upon demand by Secured Party, shall assemble the
Collateral and deliver it to Secured Party or to a place designated by
Secured Party that is reasonably convenient to both parties.
(c) Operate the business of Debtor as a going concern,
including, without limitation, extend sales or services to new
customers and advance funds for such operation. Secured Party shall not
be liable for any depreciation, loss, damage or injury to the
Collateral or other property of Debtor as a result of such action.
Debtor hereby waives any claim of trespass or replevin arising as a
result of such action.
(d) Pursue any legal or equitable remedy available to collect
the Obligation, to enforce its title in and right to possession of the
Collateral and to enforce any and all other rights or remedies
available to it.
(e) Upon obtaining possession of the Collateral or any part
thereof, after notice to Debtor as provided in Paragraph 8.4 herein,
sell such Collateral at public or private sale either with or without
having such Collateral at the place of sale. The proceeds of such sale,
after deducting therefrom all expenses of Secured Party in taking,
storing, repairing and selling the Collateral (including reasonable
attorneys' fees) shall be applied to the payment of the Obligation, and
any surplus thereafter remaining shall be paid to Debtor or any other
person that may be legally entitled thereto. In the event of a
deficiency between such net proceeds from the sale of the Collateral
and the total amount of the Obligation, Debtor, upon demand, shall
promptly pay the amount of such deficiency to Secured Party.
8.3 Secured Party, so far as may be lawful, may purchase all or any
part of the Collateral offered at any public or private sale made in the
enforcement of Secured Party's rights and remedies hereunder.
8.4 Any demand or notice of sale, disposition or other intended action
hereunder or in connection herewith, whether required by the Uniform Commercial
Code or otherwise, shall be deemed to be commercially reasonable and effective
if such demand or notice is given to Debtor at least ten (10) days prior to such
sale, disposition or other intended action, in the manner provided herein for
the giving of notices.
8.5 Debtor shall pay all costs and expenses, including without
limitation costs of Uniform Commercial Code searches, court costs and reasonable
attorneys' fees, incurred by Secured Party in enforcing payment and performance
of the Obligation or in exercising the rights and remedies of Secured Party
hereunder. All such costs and expenses shall be secured by this Agreement and by
all deeds of trust and other lien and security documents securing the
Obligation. In the event of any court proceedings, court costs and attorneys'
fees shall be set by the court and not by jury and shall be included in any
judgment obtained by Secured Party.
8.6 In addition to any remedies provided herein for an Event of
Default, Secured Party shall have all the rights and remedies afforded a secured
party under the Uniform Commercial Code and all other legal and equitable
remedies allowed under applicable law. No failure on the part of Secured Party
to exercise any of its rights hereunder arising upon any Event of Default shall
be construed to prejudice its rights upon the occurrence of any other or
subsequent Event of Default. No delay on the part of
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Secured Party in exercising any such rights shall be construed to preclude it
from the exercise thereof at any time while that Event of Default is continuing.
Secured Party may enforce any one or more rights or remedies hereunder
successively or concurrently. By accepting payment or performance of any of the
Obligation after its due date, Secured Party shall not thereby waive the
agreement contained herein that time is of the essence, nor shall Secured Party
waive either its right to require prompt payment or performance when due of the
remainder of the Obligation or its right to consider the failure to so pay or
perform an Event of Default.
9. MISCELLANEOUS PROVISIONS
9.1 The acceptance of this Agreement by Secured Party shall not be
considered a waiver of or in any way to affect or impair any other security that
Secured Party may have, acquire simultaneously herewith, or hereafter acquire
for the payment or performance of the Obligation, nor shall the taking by
Secured Party at any time of any such additional security be construed as a
waiver of or in any way to affect or impair the Security Interest; Secured Party
may resort, for the payment or performance of the Obligation, to its several
securities therefor in such order and manner as it may determine.
9.2 Without notice or demand, without affecting the obligations of
Debtor hereunder or the personal liability of any person for payment or
performance of the Obligation, and without affecting the Security Interest or
the priority thereof, Secured Party, from time to time, may: (i) extend the time
for payment of all or any part of the Obligation, accept a renewal note
therefor, reduce the payments thereon, release any person liable for all or any
part thereof, or otherwise change the terms of all or any part of the
Obligation; (ii) take and hold other security for the payment or performance of
the Obligation and enforce, exchange, substitute, subordinate, waive or release
any such security; (iii) join in any extension or subordination agreement; or
(iv) release any part of the Collateral from the Security Interest.
9.3 Debtor waives and agrees not to assert: (i) any right to require
Secured Party to proceed against any guarantor, to proceed against or exhaust
any other security for the Obligation, to pursue any other remedy available to
Secured Party, or to pursue any remedy in any particular order or manner; (ii)
the benefits of any legal or equitable doctrine or principle of marshalling;
(iii) the benefits of any statute of limitations affecting the enforcement
hereof; (iv) demand, diligence, presentment for payment, protest and demand, and
notice of extension, dishonor, protest, demand and nonpayment, relating to the
Obligation; and (v) any benefit of, and any right to participate in, any other
security now or hereafter held by Secured Party.
9.4 The terms herein shall have the meanings in and be construed under
the Uniform Commercial Code. This Agreement shall be governed by and construed
according to the laws of the State of Arizona. Each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be void or
invalid, the same shall not affect the remainder hereof which shall be effective
as though the void or invalid provision had not been contained herein.
9.5 Debtor shall execute and deliver such additional documents and
instruments and shall do such other acts as Secured Party may reasonably require
to fully implement the intent of this Agreement.
9.6 No modification, rescission, waiver, release or amendment of any
provision of this Agreement shall be made except by a written agreement executed
by Debtor and a duly authorized officer of Secured Party.
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9.7 This Agreement which shall remain in full force and effect until
all of the Obligation shall have been paid and performed in full.
9.8 No setoff or claim that Debtor now has or may in the future have
against Secured Party shall relieve Debtor from paying or performing the
Obligation.
9.9 Time is of the essence hereof. If more than one Debtor is named
herein, the word "Debtor" shall mean all and any one or more of them, severally
and collectively. All liability hereunder shall be joint and several. This
Agreement shall be binding upon, and shall inure to the benefit of, the parties
hereto and their heirs, personal representatives, successors and assigns. The
term "Secured Party" shall include not only the original Secured Party hereunder
but also any future owner and holder, including pledgees, of note or notes
evidencing the Obligation. The provisions hereof shall apply to the parties
according to the context thereof and without regard to the number or gender of
words or expressions used.
9.10 All exhibits and schedules attached hereto are incorporated herein
at each reference thereto.
9.11 All notices required or permitted to be given hereunder shall be
in writing and shall be given at the place and in the manner provided in the
Stock Purchase Agreement.
9.12 A carbon, photographic or other reproduced copy of this Agreement
and/or any financing statement relating hereto shall be sufficient for filing
and/or recording as a financing statement.
9.13 Secured Party may bring any action or proceeding to enforce or
arising out of this Note in any court of competent jurisdiction. Any action or
proceeding brought by Debtor arising out of this Note shall be brought solely in
a court of competent jurisdiction located in the County of Maricopa, State of
Arizona, or in the United States District Court for the District of Arizona.
Debtor waives any objection which it may now or hereafter have to venue of any
such action or proceeding and waives any right to seek removal of any action or
proceeding commenced in accordance herewith. If either party commences any
action or proceeding arising out of this Note, in a court located in the County
of Maricopa, State of Arizona, or the United States District Court for the
District of Arizona, the other party hereby agrees that it will submit and does
hereby irrevocably submit to the personal jurisdiction of such courts and will
not attempt to have such action dismissed, abated, or transferred on the ground
of forum non convenience or similar grounds; provided, however, that nothing
contained herein shall prohibit any party from seeking, by appropriate motion,
to remove any action brought in a Arizona state court to the United States
District Court for the District of Arizona. If such action is so removed,
however, neither party shall seek to transfer such action to any other district,
nor shall either party seek to transfer to any other district any action which
the other party originally commences in such federal court.
9.14 Debtor agrees that a summons and complaint or equivalent documents
commencing an action or proceeding in any court shall be validly and properly
served and shall confer personal jurisdiction over Debtor if served upon Bonn,
Luscher, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq., whom Debtor hereby designates and appoints as
Debtor's authorized agent to accept and acknowledge on its behalf service of any
and all process which may be served in such action or proceeding in any such
court. Debtor shall be sent, by certified mail to Debtor's notice address as
provided herein, a copy of such summons and complaint at the time of service
upon such agent; provided, however, that any such copy shall be sent solely as a
courtesy for Debtor and its failure to receive such copy shall in no way affect
the validity and propriety of the service made on Debtor through such agent.
Debtor agrees that if it desires to make any change in its agent for
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service, such change shall be subject to Secured Party's written approval, which
approval shall not be unreasonably withheld.
DEBTOR AND SECURED PARTY (BY ITS ACCEPTANCE OF THIS NOTE) HEREBY WAIVE
ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING UNDER OR IN
CONNECTION WITH THIS NOTE OR THE OTHER TRANSACTION DOCUMENTS, THE INDEBTEDNESS
EVIDENCED BY THIS NOTE, ANY COLLATERAL OR SECURITY FOR THIS NOTE, OR ANY
DEALINGS BETWEEN DEBTOR AND SECURED PARTY IN CONNECTION WITH THE TRANSACTIONS
THAT ARE THE SUBJECT OF THIS NOTE AND THE OTHER TRANSACTION DOCUMENTS, AND AGREE
THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE
A JURY. THIS PROVISION SHALL APPLY TO ANY SUCH ACTION OR PROCEEDING, WHETHER
INVOLVING A CLAIM, DEMAND, ACTION OR CAUSE OF ACTION BASED IN CONTRACT, TORT OR
OTHERWISE. EITHER PARTY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES TO THE
WAIVER OF ANY RIGHT THEY MIGHT OTHERWISE HAVE TO TRIAL BY JURY.
10. NON-DEBTOR BORROWER PROVISIONS
10.1 All advances of principal under the Note shall be made to SEC
subject to and in accordance with the terms thereof. It is not necessary for
Secured Party to inquire into the powers of SEC or the officers, directors,
partners, members or agents acting or purporting to act on its behalf. Debtor is
and shall continue to be fully informed as to all aspects of the business
affairs of SEC that it deems relevant to the risks it is assuming and hereby
waives and fully discharges Secured Party from any and all obligations to
communicate to Debtor any facts of any nature whatsoever regarding SEC and SEC's
business affairs.
10.2 Debtor authorizes Secured Party, without notice or demand, without
affecting the obligations of Debtor hereunder or the personal liability of any
person for payment or performance of the Obligation and without affecting the
lien or the priority of the Security Interest, from time to time, at the request
of any person primarily obligated therefor, to renew, compromise, extend,
accelerate or otherwise change the time for payment or performance of, or
otherwise change the terms of, all or any part of the Obligation, including
increase or decrease any rate of interest thereon. Debtor waives and agrees not
to assert: (i) any right to require Secured Party to proceed against SEC; (ii)
the benefits of any statutory provision limiting the liability of a surety,
including without limitation the benefit of A.R.S. ss.12-1641, et seq. and Rule
17(f) of the Arizona Rules of Civil Procedure; and (iii) any defense arising by
reason of any disability or other defense of SEC or by reason of the cessation
from any cause
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whatsoever of the liability of SEC. Debtor shall have no right of subrogation
and hereby waives any right to enforce any remedy which Secured Party now has,
or may hereafter have, against Borrower.
IN WITNESS WHEREOF, these presents are executed as of the date
indicated above.
SOUTHHAMPTON ENTERPRISES INC., a Texas
corporation
By /s/ L. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Its Secretary
DEBTOR
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SCHEDULE 1
Sellers
-------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. and ▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustees under the ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇ Revocable Trust of 1988, dated 10/4/88
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as Custodian Under the Uniform Gifts to Minors Act fbo
▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as Custodian Under the Uniform Gifts to Minors Act fbo
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. and ▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustees under the ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇ Revocable Trust of 1988, dated 10/4/88
E. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. Trustee, E. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. Revocable Intervivos
Trust dated December 31, 1982
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustee under the 1989 Trust Agreement established
separate irrevocable Gift Trusts f/b/o the children of ▇▇▇▇▇▇ and ▇▇▇▇
▇▇▇▇▇▇ dated March 7, 1989
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SCHEDULE 2
Collateral Locations
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▇▇▇▇-▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
Page 1 of 1
