SECURITY AGREEMENT
SECURITY AGREEMENT (this Agreement), dated as of March 8, 2006, by
and among Palomar Enterprises, 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 6% Callable Secured
Convertible Notes, due three years from the date of issue (the Notes), which
are convertible into shares of Company's Common Stock, par value $.00001 per
share (the Common Stock). In connection therewith, Company shall issue the
Secured Party certain Common Stock purchase warrants (the Warrants); and
WHEREAS, in order to induce the Secured Party to purchase the Notes,
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 first
priority 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 Notes and exercise and discharge in full of Company's
obligations under the Warrants.
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
therefore, all parts therefore, 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 Notes, 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 Notes 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 first 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, subject to any current
UCC-1 on file for the assets on the Company's subsidiary (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:
(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
creditors 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, except as set forth on Schedule C. 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, except as set forth on Schedule
C. 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), except as set forth on Schedule C.
(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 first priority 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 making the filings described in the
immediately following sentence, a perfected first priority 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 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 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) Except as set forth on Schedule C, 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 first
priority 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 and sales made
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 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
Notes) under the Notes;
(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;
(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; and
(d) Any breach of, or default under, the Warrants.
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 Notes 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 Notes, 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
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 the enforcement of this Agreement, the
custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, or the exercise or enforcement of
any of the rights of the Secured Party under the Notes. Until so paid, any
fees payable hereunder shall be added to the principal amount of the Notes
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 Notes and the Warrants
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: any lack of validity or enforceability of
this Agreement, the Notes, the Warrants or any agreement entered into in
connection with the foregoing, or any portion hereof or thereof; 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 Notes, the Warrants or any other
agreement entered into in connection with the foregoing; any exchange,
release or non-perfection 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; 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 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
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 Notes 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, 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; to sign and endorse any UCC financing
statement or any invoice, freight or express ▇▇▇▇, ▇▇▇▇ of lading, storage
or warehouse receipts, drafts against debtors, assignments, verifications
and notices in connection with accounts, and other documents relating to the
Collateral; to pay or discharge taxes, liens, security interests or other
encumbrances at any time levied or placed on or threatened against the
Collateral; to demand, collect, receipt for, compromise, settle and ▇▇▇ for
monies due in respect of the Collateral; and 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 Notes and the Warrants, 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.
(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 if delivered by hand, upon
receipt, if sent by facsimile, upon receipt of proof of sending thereof,
if sent by nationally recognized overnight delivery service (receipt
requested), the next business day or 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:
Palomar Enterprises, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇-▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (775)
With a copy to:
Attention:
Telephone:
Facsimile:
If to the Secured Party:
AJW Partners, LLC
AJW Offshore, Ltd.
AJW Qualified Partners, LLC
New Millennium Capital Partners II, LLC
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & Ingersoll, LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
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
Notes 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 Notes 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.
(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 TRIAL 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.
(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]
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed on the day and year first above written.
PALOMAR ENTERPRISES, INC.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Chief Executive Officer
AJW PARTNERS, LLC
By: SMS Group, LLC
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Manager
AJW OFFSHORE, LTD.
By: First Street Manager II, LLC
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Manager
AJW QUALIFIED PARTNERS, LLC
By: AJW Manager, LLC
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Manager
NEW MILLENNIUM CAPITAL PARTNERS II, LLC
By: First Street Manager II, LLC
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Manager
SCHEDULE A
Principal Place of Business of the Company:
Locations Where Collateral is Located or Stored:
List of Subsidiaries of the Company:
SCHEDULE B
Jurisdictions:
