EXHIBIT 10.2
This Security Agreement is entered into
June 7, 2002 to be effective as of June
3, 2002 (References to the date of this
Security Agreement contained herein
shall be deemed to mean June 3, 2002.)
SECURITY AGREEMENT
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LENDER/SECURED PARTY: DEBTOR(S)/PLEDGOR(S):
MUSI INVESTMENTS ▇.▇. ▇▇▇▇▇▇ TECHNOLOGIES, INC.
▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇-▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇-▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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Debtor/Pledgor is: [ ] Individual [X] Corporation [ ] Partnership [ ] Other
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Address is Debtor's/Pledgor's: [ ] Residence [X] Place of Business [ ] Chief Executive Office if more than one place
of business Collateral (hereinafter defined) is located at: [X] Debtor's/Pledgor's address shown above [ ] the following address:
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Reference is made to that certain Loan Agreement entered into June ___, 2002 to
be effective as of June 3, 2002 (the "Loan Agreement") between Lender and
Debtor. Capitalized terms used herein and not otherwise defined herein shall
have the meaning ascribed to them in the Loan Agreement.
1. SECURITY INTEREST. For good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, Debtor/Pledgor
(hereinafter referred to as "Debtor") assigns and grants to
Lender (also known as "Secured Party"), a security interest
and lien in the Collateral (hereinafter defined) to secure
the payment and the performance of the Obligation
(hereinafter defined); provided that Lender expressly
acknowledges and agrees that (i) its security interest and
lien in the Collateral (hereinafter defined) is junior and
subordinate to the security interests and liens of DAMAD
Holding AG and Bluwat AG to such Collateral granted in
January 2002 (the "Prior Secured Rights")and (ii) to the
extent any covenant of Borrower hereunder, or any right and
remedy of Lender hereunder, is inconsistent with, or
impracticable in light of, a covenant, right or remedy set
forth in documents executed in connection with the Prior
Secured Rights, such covenant, right or remedy hereunder
shall be deemed stricken herefrom in its entirety.
2. COLLATERAL. A security interest is granted in the following collateral
described in this Item 2 (the "Collateral'):
A. TYPES OF COLLATERAL (check as applicable)
[X] ACCOUNTS: Any and all accounts and other rights of Debtor to the
payment for goods sold or leased or for services rendered whether or not earned
by performance, contract rights, book debts, checks, notes, drafts,
instruments, chattel, paper acceptances, and any and all amounts due to Debtor
from a factor or other forms of obligations and receivables now existing or
hereafter arising out of the business of Debtor.
[X] INVENTORY: Any and all of Debtor's goods held as inventory
whether now owned or hereafter acquired, including without limitation, any and
all such goods held for sale or lease or being processed for sale or lease in
Debtor's business, as now or hereafter conducted including all materials goods
and work in process, finished goods and other tangible property held for sale
or lease or furnished or to be furnished under contracts of service or used or
consumed in Debtor's business, along with all documents (including documents of
title) covering such inventory.
[X] EQUIPMENT: Any and all of Debtor's goods held as equipment
including, without limitation, all machinery, tools, dies, furnishings, or
fixtures wherever located whether now owned or hereafter acquired, together
with all increases, parts, fittings, accessories, equipment, and special tools
now or hereafter affixed to any part thereof or used in connection therewith.
[X] FIXTURES:
[X] Specific Fixtures: Limited to any and all of Debtor's goods held as
fixtures which are specifically described in the space below to the extent that
granting a security interest shall not constitute a violation of law or default
under any agreement or contract applicable to Debtor.
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whether now existing or hereafter acquired. These goods are or will become
fixtures on the following described real estate in Forsyth County, North
Carolina, owned by: Debtor more particularly described as follows: as described
in Exhibit A attached hereto.
[X] GENERAL INTANGIBLES:
Any and all of Debtor's general intangible property, including,
without limitation, all patents, trademarks, service marks and exclusive
licenses (whether issued or pending), and all processes and systems related
thereto.
B. SUBSTITUTIONS, PROCEEDS AND RELATED ITEMS. Any and all
substitutes and replacements for, accessions, attachments and
other additions to, tools, parts and equipment now or
hereafter added to or used in connection with, and all cash
or non-cash proceeds and products of, the Collateral
(including, without limitation all income benefits and
property receivable, received or distributed which results
from any of the Collateral, such as dividends payable or
distributable in cash property or stock; insurance
distributions of any kind related to the Collateral,
including, without limitation, returned premiums interest
premium and principal payments; redemption proceeds and
subscription rights; and shares or other proceeds of
conversions or splits of any securities in the Collateral)
any and all choses in action and causes of action of Debtor,
whether now existing or hereafter arising, relating directly
or indirectly to the Collateral (whether arising in contract,
tort or otherwise and whether or not currently in
litigation); all certificates of title, manufacturer's
statements of origin, other documents, accounts and chattel
paper, whether now existing or hereafter arising directly or
indirectly from or related to the Collateral; all warranties,
wrapping, packaging, advertising and shipping materials used
or to be used in connection with or related to the
Collateral; all of Debtors books, records, data, plans,
manuals, computer software, computer tapes, computer systems,
computer disks, computer programs, source codes and object
codes containing any information, pertaining directly or
indirectly to the Collateral and all rights of Debtor to
retrieve data and other information pertaining directly or
indirectly to the Collateral from third parties, whether now
existing or hereafter arising; and all returned refused,
stopped in transit, or repossessed Collateral, any of which,
received by Debtor, upon request shall be delivered
immediately to Lender.
3. DESCRIPTION OF OBLIGATION(S). The following obligations ("Obligation"
or "Obligations") are secured by this Agreement: (a) All debts,
obligations liabilities and agreements of Debtor to Lender, now
or hereafter existing, arising under the Loan Agreement, and all
renewals, extensions or rearrangement of any of the above; (b)
All costs incurred by Lender to obtain, preserve, perfect and
enforce this Agreement and maintain, preserve, collect and
realize upon the Collateral; (c) All other reasonable costs and
reasonable attorney's fees incurred by Lender for which Debtor is
obligated to reimburse Lender in accordance with the terms of the
Loan Documents, together with interest at the maximum rate
allowed by law or if none, Prime Rate plus 3.75% per annum. If
Debtor is not the obligor of the Obligation, and in the event any
amount paid to Lender on any Obligation is subsequently recovered
from Lender in or as a result of any bankruptcy, insolvency or
fraudulent conveyance proceeding, Debtor shall be liable to
Lender for the amounts so recovered up to the fair market value
of the Collateral whether or not the Collateral has been
released or the security interest terminated. In the event the
Collateral has been released or the security interest terminated
the fair market value of the Collateral shall be determined, at
Lender's option, as of the date the Collateral was released, the
security interest terminated, or said amounts were recovered.
4. DEBTOR'S WARRANTIES. Debtor hereby represents and warrants to Lender
as follows:
A. FINANCING STATEMENTS. Except as may be noted by schedule
attached hereto and incorporated herein by reference and
except as noted in the Loan Agreement or a schedule thereto,
no financing statement covering the Collateral is or will be
on file in any public office, except the financing statements
relating to this security interest, and no security interest,
other than the one herein created, has attached or been
perfected in the Collateral or any part thereof.
B. OWNERSHIP. Debtor owns, or will use the proceeds of any loans
by Lender to become the owner of, the Collateral free from
any setoff, claim, restriction, lien, security interest or
encumbrance, except Permitted Liens and the security interest
hereunder.
C. FIXTURES AND ACCESSIONS. No material part of the Collateral
is affixed to real estate or is an accession to any goods, or
will become a fixture or accession, except as expressly set
out herein.
D. CLAIMS OF DEBTORS ON THE COLLATERAL. As of the date of this
Agreement, all account debtors and other obligors whose debts
or obligations are part of the Collateral have no right to
setoffs, counterclaims or adjustments, and no defenses in
connection therewith, except defenses, adjustments, setoffs
and counterclaims that arise in the ordinary course of
business.
E. ENVIRONMENTAL COMPLIANCE. To the best of Debtor's knowledge,
the conduct of Debtor's business operations and the condition
of Debtor's property does not and will not violate any
federal laws, rules or ordinances for environmental
protection, regulations of the Environmental Protection
Agency and any applicable local or state law rule, regulation
or rule of common law and any judicial interpretation thereof
relating primarily to the environment or any materials
defined as hazardous materials or substances under any local,
state or federal environmental laws, rules or regulations,
and petroleum, petroleum products, oil and asbestos
("Hazardous Materials"), except violations which are not
likely to have a Material Adverse Effect.
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F. POWER AND AUTHORITY. Debtor has full power and authority to
make this Agreement, and all necessary consents and approvals
of any persons, entities, governmental or regulatory
authorities and securities exchanges have been obtained to
effectuate the validity of this Agreement.
5. DEBTOR'S COVENANTS. Until full payment and performance of all of the
Obligations and termination or expiration of any obligation or
commitment of Lender to make advances or loans to Debtor, unless
Lender otherwise consents in writing:
A. OBLIGATION AND THIS AGREEMENT. Debtor shall perform all of
its agreements herein and in any other material agreements
between it and Lender.
B. OWNERSHIP AND MAINTENANCE OF THE COLLATERAL. Debtor shall
keep all tangible Collateral (except Collateral that is
obsolete or no longer used in the ordinary course of
business) in good condition. Debtor shall defend the
Collateral against all claims and demands of all persons at
any time claiming any interest therein adverse to Lender.
Debtor shall keep the Collateral free from all liens and
security interests except Permitted Liens and the security
interest hereby created.
C. INSURANCE. Debtor shall insure the Collateral with companies
reasonably acceptable to Lender. Such insurance shall be in
an amount not less than the fair market value of the
Collateral and shall be against such casualties with such
deductible amounts as Lender shall approve. All insurance
policies shall be written for the benefit of Debtor and
Lender as their interests may appear, payable to Lender as
loss payee, or in other form satisfactory to Lender, and such
policies or certificates evidencing the same shall be
furnished to Lender. All policies of insurance shall provide
for written notice to Lender at least thirty (30) days prior
to cancellation. Risk of loss or damage is Debtor's to the
extent of any deficiency in any effective insurance coverage.
D. LENDER'S COSTS. Debtor shall pay all reasonable costs
necessary to obtain, preserve, perfect, defend and enforce
the security interest created by this Agreement, collect the
Obligation, and preserve, defend, enforce and collect the
Collateral, including but not limited to taxes, assessments,
insurance premiums, repairs, rent, storage costs and expenses
of sales legal expenses, reasonable attorney's fees and other
fees or expenses for which Debtor is obligated to reimburse
Lender in accordance with the terms of the Loan Documents.
Whether the Collateral is or is not in Lender's possession,
and without any obligation to do so and without waiving
Debtor's default for failure to make any such payment, Lender
at its option may pay any such costs and expenses, discharge
encumbrances on the Collateral, and pay for insurance of the
Collateral, and such payments shall be a part of the
Obligation and bear interest at the rate set out in the
Obligation. Debtor agrees to reimburse Lender on demand for
any costs so incurred.
E. INFORMATION AND INSPECTION. Debtor shall (i) promptly furnish
Lender any information with respect to the Collateral
reasonably requested by Lender; (ii) allow Lender or its
representatives to inspect the Collateral, during business
hours and wherever located, and to inspect and copy, or
furnish Lender or its representatives with copies of, all
records relating to the Collateral and the Obligation; (iii)
promptly furnish Lender or its representatives such
information as Lender may request to identify the Collateral,
at the time and in the form requested by Lender; and (iv)
deliver upon request to Lender shipping and delivery receipts
evidencing the shipment of goods and invoices evidencing the
receipt of, and the payment for, the Collateral.
F. ADDITIONAL DOCUMENTS. Debtor shall sign and deliver any
papers deemed reasonably necessary or desirable in the
judgment of Lender to obtain, maintain, and perfect the
security interest hereunder and to enable Lender to comply
with any federal or state law in order to obtain or perfect
Lender's interest in the Collateral or to obtain proceeds of
the Collateral.
G. PARTIES LIABLE ON THE COLLATERAL. Debtor shall preserve the
liability of all obligors on any Collateral, shall preserve
the priority of all security therefor. Lender shall have no
duty to preserve such liability or security, but may do so at
the expense of Debtor, without waiving Debtor's default.
H. RECORDS OF THE COLLATERAL. Debtor at all times shall maintain
accurate books and records covering the Collateral. Debtor
immediately will ▇▇▇▇ all books and records with an entry
showing the absolute assignment of all Collateral to Lender,
and Lender is hereby given the right to audit the books and
records of Debtor relating to the Collateral at any time and
from time to time. The amounts shown as owed to Debtor on
Debtor's books and on any assignment schedule will be the
undisputed amounts owing and unpaid.
I. DISPOSITION OF THE COLLATERAL. If disposition of any
Collateral gives rise to an account, chattel paper or
instrument, Debtor immediately shall notify Lender, and upon
request of Lender shall assign or indorse the same to Lender.
No Collateral may be sold, leased, manufactured, processed or
otherwise disposed of by Debtor in any manner without the
prior written consent of Lender, except: (1) the Collateral
sold, leased, manufactured, processed or consumed in the
ordinary course of business, and (2) dispositions of
Collateral that is obsolete or no longer used in Debtor's
business.
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J. ACCOUNTS. Each account held as Collateral will represent the
valid and legally enforceable obligation of third parties and
shall not be evidenced by any instrument or chattel paper.
K. NOTICE/LOCATION OF THE COLLATERAL. Debtor shall give Lender
written notice of each office of Debtor in which records of
Debtor pertaining to accounts held as Collateral are kept and
each location at which the Collateral is or will be kept, and
of any change of any such location. If no such notice is
given, all records of Debtor pertaining to the Collateral and
all Collateral of Debtor are and shall be kept at the address
marked by Debtor above.
L. CHANGE OF NAME/STATUS AND NOTICE OF CHANGES. Without the
written consent of Lender, Debtor shall not change its name,
change its corporate status, use any trade name or engage in
any business not reasonably related to its business as
presently conducted. Debtor shall notify Lender immediately
of (i) any material change in the Collateral, (ii) a change
in Debtor's residence or location, (iii) a change in any
matter warranted or represented by Debtor in this Agreement,
or in any of the Loan Documents or furnished to Lender
pursuant to this Agreement, and (iv) the occurrence of an
Event of Default (hereinafter defined).
M. USE AND REMOVAL OF THE COLLATERAL. Debtor shall not use the
Collateral illegally. Debtor shall not, unless previously
indicated as a fixture, permit the Collateral to be affixed
to real or personal property without the prior written
consent of Lender. Debtor shall not permit any of the
Collateral to be removed from the locations specified herein
without the prior written consent of Lender, except for the
sale of inventory in the ordinary course of business.
N. POSSESSION OF THE COLLATERAL. Debtor shall deliver all
investment securities and other instruments, documents and
chattel paper which are part of the Collateral and in
Debtor's possession to Lender immediately upon request, or if
hereafter acquired, immediately following acquisition and
such request, appropriately endorsed to Lender s order, or
with appropriate, duly executed powers. Debtor waives
presentment, notice of acceleration, demand, notice of
dishonor, protest, and all other notices with respect
thereto.
O. CONSUMER CREDIT. If any Collateral or proceeds includes
obligations of third parties to Debtor, the transactions
giving rise to the Collateral shall conform in all material
respects to the applicable state or federal law including but
not limited to consumer credit law. Debtor shall hold
harmless and indemnify Lender against any cost, loss or
expense arising from Debtor's breach of this covenant.
P. POWER OF ATTORNEY. Debtor appoints Lender and any officer
thereof effective upon the occurrence and during the
continuance of an Event of Default as Debtor's
attorney-in-fact with full power in Debtor's name and behalf
to do every act which Debtor is obligated to do or may be
required to do hereunder; however, nothing in this paragraph
shall be construed to obligate Lender to take any action
hereunder nor shall Lender be liable to Debtor for failure to
take any act on hereunder. This appointment shall be deemed a
power coupled with an interest and shall not be terminable as
long as the Obligation is outstanding and shall not terminate
on the disability or incompetence of Debtor.
Q. WAIVERS BY DEBTOR. Debtor waives notice of the creation,
advance, increase, existence, extension or renewal of and of
any indulgence with respect to, the Obligation; waives
presentment, demand, notice of dishonor, and protest; waives
notice of the amount of the Obligation outstanding at any
time, notice of any change in financial condition of any
person liable for the Obligation or any part thereof, and all
other notices respecting the Obligation except for notices to
be provided under the Loan Agreement. Debtor waives any right
to require that any action be brought against any other
person or to require that resort be had to any other security
or to any balance of any deposit account. Debtor further
waives any right of subrogation or to enforce any right of
action against any other Debtor until the Obligation is paid
in full.
R. OTHER PARTIES AND OTHER COLLATERAL. No renewal or extension
of or any other indulgence with respect to the Obligation or
any part thereof, no release of any security, no release of
any person (including any maker, indorser, guarantor or
surety) liable on the Obligation, no delay in enforcement of
payment, and no delay or omission or lack of diligence or
care in exercising any right or power with respect to the
Obligation or any security therefor or guaranty thereof or
under this Agreement shall in any manner impair or affect the
rights of Lender under the law, hereunder, or under any other
agreement pertaining to the Collateral. Lender need not file
suit or assert a claim for personal judgment against any
person for any part of the Obligation or seek to realize upon
any other security for the Obligation, before foreclosing or
otherwise realizing upon the Collateral. Debtor waives any,
right to the benefit of or to require or control application
of any other security or proceeds thereof, and agrees that
Lender shall have no duty or obligation to Debtor to apply to
the Obligation any such other security or proceeds thereof.
S. COLLECTION AND SEGREGATION OF ACCOUNTS AND RIGHT TO NOTIFY.
Lender hereby authorizes Debtor to collect the Collateral,
subject to the direction and control of Lender, but following
the occurrence and during the continuance of an Event of
Default, Lender may without cause or notice, curtail or
terminate said authority at any time. Upon notice by Lender,
whether oral or in writing to Debtor, Debtor shall forthwith
upon receipt of all checks, drafts, cash, and other
remittances in payment of or on account following the
occurrence and during the continuance of an Event of Default
of the Collateral, deposit the same in one or more special
accounts maintained with Lender over which Lender alone shall
have power of withdrawal. The remittance of the proceeds of
such Collateral shall not, however,
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constitute payment or liquidation of such Collateral until
Lender shall receive good funds for such proceeds. Funds
placed in such special accounts shall be held by Lender as
security for all Obligations secured hereunder. These
proceeds shall be deposited in precisely the form received
except for the endorsement of Debtor where necessary to
permit collection of items, which indorsement Debtor agrees
to make and which indorsement Lender is also hereby
authorized, as attorney-in-fact, to make on behalf of Debtor.
In the event Lender has notified Debtor to make deposits to a
special account, pending such deposit, Debtor agrees that it
will not commingle any such checks, drafts, cash or other
remittances with any funds or other property of Debtor, but
will hold them separate and apart therefrom, and upon an
express trust for Lender until deposit thereof is made in the
special account. Lender will, from time to time, apply the
whole or any part of the Collateral funds on deposit in this
special account against such Obligations as are secured
hereby as Lender may in its sole discretion elect. At the
sole election of Lender, any portion of said funds on deposit
in the special account which Lender shall elect not to apply
to the Obligations, may be paid over by Lender to Debtor. At
any time, following the occurrence and during the continuance
of an Event of Default, Lender may notify persons obligated
on any Collateral to make payments directly to Lender and
Lender may take control of all proceeds of any Collateral.
Until Lender elects to exercise such rights, Debtor as agent
of Lender, shall collect and enforce all payments owed on the
Collateral.
T. COMPLIANCE WITH STATE AND FEDERAL LAWS. Debtor will maintain
its existence, good standing and qualification to do
business, where the failure to do so would result in a
Material Adverse Effect, and comply in all material respects
with all laws, regulations and governmental requirements,
including without limitation, environmental laws applicable
to it or any of its property, business operations and
transactions.
U. ENVIRONMENTAL COVENANTS. Debtor shall immediately advise
Lender in writing of (i) any and all material enforcement,
cleanup, remedial, removal, or other governmental or
regulatory actions instituted, completed or threatened
pursuant to any applicable federal, state, or local laws,
ordinances or regulations relating to any Hazardous Materials
affecting Debtor's business operations; and (ii) all material
claims made or threatened by any third party against Debtor
relating to damages, contribution, cost recovery,
compensation, loss or injury resulting from any Hazardous
Materials. Debtor shall immediately notify Lender of any
material remedial action taken by Debtor with respect to
Debtor's business operations. Debtor will not use or permit
any other party to use any Hazardous Materials at any of
Debtor's places of business or at any other property owned by
Debtor except such materials as are incidental to Debtor's
normal course of business, maintenance and repairs and which
are handled in material compliance with all applicable
environmental laws. Debtor agrees to permit Lender, its
agents, contractors and employees to enter and inspect any of
Debtor's places of business or any other property of Debtor
at any reasonable times upon three (3) days prior notice for
the purposes of conducting, at Lender's expense, an
environmental investigation and audit (including taking
physical samples) to insure that Debtor is complying with
this covenant.
6. RIGHTS AND POWERS OF LENDER.
A. GENERAL. Lender, following the occurrence and during the
continuance of an Event of Default may obtain from any person
information regarding Debtor or Debtor's business, which
information any such person also may furnish without
liability to Debtor; require Debtor to give possession or
control of any Collateral to Lender; indorse as Debtor's
agent any instruments, documents or chattel paper in the
Collateral or representing proceeds of the Collateral;
contact account debtors directly to verify information
furnished by Debtor; take control of proceeds, Including
stock received as dividends or by reason of stock splits;
release the Collateral in its possession to any Debtor,
temporarily or otherwise; require additional Collateral;
reject as unsatisfactory any property hereafter offered by
Debtor as Collateral; set standards from time to time to
govern what may be used as after acquired Collateral;
designate, from time to time, a certain percent of the
Collateral as the loan value and require Debtor to maintain
the Obligation at or below such figure; take control of funds
generated by the Collateral, such as cash dividends, interest
and proceeds or refunds from insurance, and use same to
reduce any part of the Obligation and exercise all other
rights which an owner of such Collateral may exercise, except
the right to vote or dispose of the Collateral before an
Event of Default; at any time transfer any of the Collateral
or evidence thereof into its own name or that of its nominee;
and demand, collect, convert, redeem receipt for, settle,
compromise, adjust, ▇▇▇ for, foreclose or realize upon the
Collateral, in its own name or in the name of Debtor, as
Lender may determine. Lender shall not be liable for failure
to collect any account or instruments, or for any act or
omission on the part of Lender, its officers, agents or
employees, except for its or their own willful misconduct or
gross negligence. The foregoing rights and powers of Lender
will be in addition to, and not a limitation upon, any rights
and powers of Lender given by law, elsewhere in this
Agreement, or otherwise. If Debtor fails to maintain any
required insurance to the extent permitted by applicable law
Lender may (but is not obligated to) following 10 days prior
written notice to Debtor purchase single interest insurance
coverage for the Collateral which insurance may at Lender's
option (i) protect only Lender and not provide any
remuneration or protection for Debtor directly and (ii)
provide coverage only after the Obligation has been declared
due as herein provided. The premiums for any such insurance
purchased by Lender shall be a part of the Obligation and
shall bear interest as provided in 3(c) hereof.
7. DEFAULT.
A. EVENT OF DEFAULT. An event of default ("Event of Default")
shall occur if: (i) there is a loss, theft, damage or
destruction of any material portion of the Collateral for
which there is no insurance coverage or for which, in the
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opinion of Lender, there is insufficient insurance coverage;
or (ii) the occurrence of a "Default" under the Loan
Agreement.
B. RIGHTS AND REMEDIES. If any Event of Default shall occur then
in each and every such case, Lender may without presentment,
demand, or protest; notice of default, dishonor, demand,
non-payment, or protest; notice of intent to accelerate all
or any part of the Obligation; notice of acceleration of all
or any part of the Obligation; or notice of any other kind,
all of which Debtor hereby expressly waives, (except for any
notice required under this Agreement, any other Loan Document
or applicable law); at any time thereafter exercise and/or
enforce any of the following rights and remedies of Lender's
option:
i. ACCELERATION. The Obligation shall at Lender's
option, become immediately due and payable, and the
obligation, If any, of Lender to permit further
borrowings under the Obligation shall at Lender's
option immediately cease and terminate.
ii. POSSESSION AND COLLECTION OF THE COLLATERAL. At its
option: (a) take possession or control of, store,
lease, operate, manage, sell, or instruct any Agent
or Broker to sell or otherwise dispose of, all or
any part of the Collateral; (b) notify all parties
under any account or contract right forming all or
any part of the Collateral to make any payments
otherwise due to Debtor directly to Lender; (c) in
Lender's own name, or in the name of Debtor, demand,
collect, receive, ▇▇▇ for, and give receipts and
releases for, any and all amounts due under such
accounts and contract rights; (d) indorse as the
agent of Debtor any check, note, chattel paper,
documents or instruments forming all or any part of
the Collateral; (e) make formal application for
transfer to Lender (or to any assignee of Lender or
to any purchaser of any of the Collateral) of all of
Debtor's permits, licenses, approvals, agreements
and the like relating to the Collateral or to
Debtor's business; (f) take any other action which
Lender deems necessary or desirable to protect and
realize upon its security interest in the
Collateral; and (g) in addition to the foregoing,
and not in substitution therefor, exercise any one
or more of the rights and remedies exercisable by
Lender under any other provision of this Agreement,
under any of the other Loan Documents, or as
provided by applicable law (including, without
limitation, the Uniform Commercial Code as in effect
in NORTH CAROLINA (hereinafter referred to as the
"UCC")). In taking possession of the Collateral
Lender may enter Debtor's premises and otherwise
proceed without legal process, if this can be done
without breach of the peace. Debtor shall, upon
Lender's demand, promptly make the Collateral or
other security available to Lender at a place
designated by Lender, which place shall be
reasonably convenient to both parties.
Lender shall not be liable for nor be prejudiced by, any loss, depreciation or
other damages to the Collateral, unless caused by Lender's willful and
malicious act. Lender shall have no duty to take any action to preserve or
collect the Collateral.
iii. RECEIVER. Obtain the appointment of a receiver for
all or any of the Collateral, Debtor hereby
consenting to the appointment of such a receiver and
agreeing not to oppose any such appointment.
iv. RIGHT OF SET OFF. Without notice or demand to
Debtor, set off and apply against any and all of the
Obligation any and all deposits (general or special,
time or demand provisional or final) and any other
indebtedness, at any time held or owing by Lender or
any of Lender's agents or affiliates to or for the
credit of the account of Debtor or any guarantor or
indorser of Debtor's Obligation.
Lender shall be entitled to immediate possession of all books and records
evidencing any Collateral or pertaining to chattel paper covered by this
Agreement and it or its representatives shall have the authority to enter upon
any premises upon which any of the same, or any Collateral, may be situated and
remove the same therefrom without liability. Lender may surrender any insurance
policies in the Collateral and receive the unearned premium thereon. Debtor
shall be entitled to any surplus and shall be liable to Lender for any
deficiency. The proceeds of any disposition after default available to satisfy
the Obligation shall be applied to the Obligation in such order and in such
manner as Lender in its discretion shall decide.
Debtor specifically understands and agrees that any sale by Lender of all or
part of the Collateral pursuant to the terms of this Agreement may be effected
by the Lender at times and in manners which could result in the proceeds of
such sale as being significantly and materially less than might have been
received if such sale had occurred at different times or in different manners,
and Debtor hereby releases Lender and its officers and representatives from and
against any and all obligations and liabilities arising out of or related to
the timing or manner of any such date; provided that any such sale is in
accordance with applicable law and conducted in a commercially reasonable
manner.
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8. GENERAL.
A. PARTIES BOUND. Lender's rights hereunder shall inure to the
benefit of its successors and assigns. In the event of any
assignment or transfer by Lender of any of the Obligation or
the Collateral, Lender thereafter shall be fully discharged
from any responsibility with respect to the Collateral so
assigned or transferred, but Lender shall retain all rights
and powers hereby given with respect to any of the Obligation
or the Collateral not so assigned or transferred. All
representations, warranties and agreements of Debtor if more
than one are joint and several and all shall be binding upon
the personal representatives, heirs, successors and assigns
of Debtor.
B. WAIVER. No delay of Lender in exercising any power or right
shall operate as a waiver thereof; nor shall any single or
partial exercise of any power or right preclude other or
further exercise thereof or the exercise of any other power
or right. No waiver by Lender of any right hereunder or of
any default by Debtor shall be binding upon Lender unless in
writing, and no failure by Lender to exercise any power or
right hereunder or waiver of any default by Debtor shall
operate as a waiver of any other or further exercise of such
right or power or of any further default. Each right, power
and remedy of Lender as provided for herein or in any of the
Loan Documents, or which shall now or thereafter exist at law
or in equity or by statue or otherwise, shall be cumulative
and concurrent and shall be in addition to every other such
right, power or remedy. The exercise or beginning of the
exercise by Lender of any one or more of such rights, powers
or remedies shall not preclude the simultaneous or later
exercise by Lender or any or all other such rights, powers or
remedies.
C. AGREEMENT CONTINUING. This Agreement shall constitute a
continuing agreement, applying to all future as well as
existing transactions, whether or not of the character
contemplated at the date of this Agreement, and if all
transactions between Lender and Debtor shall be closed at any
time, shall be equally applicable to any new transactions
thereafter. Provisions of this Agreement, unless by their
terms exclusive, shall be in addition to other agreements
between the parties. Time is of the essence of this
Agreement.
D. DEFINITIONS. Unless the context indicates otherwise,
definitions in the UCC apply to words and phrases in this
Agreement; if UCC definitions conflict, Article 9 definitions
apply.
E. NOTICES. Notice shall be deemed reasonable if mailed postage
prepaid at least five (5) days before the related action (or
if the UCC elsewhere specifies a longer period, such longer
period) to the address of Debtor given above, or to such
other address as any party may designate by written notice to
the other party. Each notice request and demand shall be
deemed given or made, if sent by mail, upon the earlier of
the date of receipt of five (5) days after deposit in the
U.S. Mail, first class postage prepaid, or if sent by any
other means, upon delivery.
F. MODIFICATIONS. No provision hereof shall be modified or
limited except by written agreement expressly referring
hereto and to the provisions so modified or limited and
signed by Debtor and Lender. The provisions of this Agreement
shall not be modified or limited by course of conduct or
usage of trade.
G. APPLICABLE LAW AND PARTIAL INVALIDITY. This Agreement has
been delivered in the State of NORTH CAROLINA and shall be
construed in accordance with the laws of that State. Wherever
possible 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 shall
be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder
of such provisions or the remaining provisions of this
Agreement. The invalidity or unenforceability of any
provision of any Loan Document to any person or circumstances
shall not affect the enforceability or validity of such
provision as it may apply to other persons or circumstances.
H. FINANCING STATEMENT. To the extent permitted by applicable
law, a carbon, photographic or other reproduction of this
Agreement or any financing statement covering the Collateral
shall be sufficient as a financing statement.
I. ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE
PARTIES HERETO INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT
OF OR RELATING TO THIS INSTRUMENT, AGREEMENT OR DOCUMENT OR
ANY RELATED INSTRUMENTS, AGREEMENTS OR DOCUMENTS, INCLUDING
ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL BE
DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE
FEDERAL ARBITRATION ACT (OR IF NOT APPLICABLE, THE APPLICABLE
STATE LAW), THE RULES OF PRACTICE AND PROCEDURE FOR THE
ARBITRATION OF COMMERCIAL DISPUTES OF AMERICAN ARBITRATION
ASSOCIATION OR ANY SUCCESSOR THEREOF ("A.A.A."), AND THE
"SPECIAL RULES" SET FORTH BELOW. IN THE EVENT OF ANY
INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON
ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING
JURISDICTION. ANY PARTY TO THIS INSTRUMENT, AGREEMENT OR
DOCUMENT MAY BRING AN ACTION, INCLUDING A SUMMARY OR
EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY
INCONSISTENCY OR CLAIM TO WHICH THIS AGREEMENT APPLIES IN ANY
COURT HAVING JURISDICTION OVER SUCH ACTION.
i. SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN FORSYTH
COUNTY, NORTH CAROLINA AND ADMINISTERED BY A.A.A. WHO WILL APPOINT AN
ARBITRATOR. ALL ARBITRATION HEARINGS WILL BE
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COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR ARBITRATION; FURTHER, THE ARBITRATOR
SHALL ONLY, UPON A SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE COMMENCEMENT OF
SUCH HEARING FOR UP TO AN ADDITIONAL 60 DAYS.
ii. RESERVATION OF RIGHTS. NOTHING IN THIS ARBITRATION PROVISION
SHALL BE DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE
STATUTES OF LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS INSTRUMENT,
AGREEMENT OR DOCUMENT; OR (II) LIMIT THE RIGHT OF LENDER HERETO (A) TO EXERCISE
SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED TO) SETOFF, OR (B) TO FORECLOSE
AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL, OR (C) TO OBTAIN FROM A COURT
PROVISIONAL OR ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE
RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT OF A RECEIVER. LENDER MAY
EXERCISE SUCH SELF HELP RIGHTS, FORECLOSE UPON SUCH PROPERTY, OR OBTAIN SUCH
PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE PENDENCY OF ANY
ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS INSTRUMENT, AGREEMENT OR
DOCUMENT. NEITHER THIS EXERCISE OF SELF HELP REMEDIES NOR THE INSTITUTION OR
MAINTENANCE OF AN ACTION FOR FORECLOSURE OR PROVISIONAL OR ANCILLARY REMEDIES
SHALL CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN
ANY SUCH ACTION, TO ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM
OCCASIONING RESORT TO SUCH REMEDIES.
J. CONTROLLING DOCUMENT. To the extent that this Security
Agreement conflicts with or is in any way incompatible with
any other Loan Document concerning the Obligation, any
promissory note shall control over any other document, and if
such note does not address an issue, then each other document
shall control to the extent that it deals most specifically
with an issue.
K. EXECUTION UNDER SEAL. This Agreement is being executed under
seal by Debtor(s).
L. NOTICE OF FINAL AGREEMENT. THIS WRITTEN SECURITY AGREEMENT
AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF
THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement to
be duly executed under seal by their duly authorized representatives as of the
date first above written.
MUSI INVESTMENTS ▇.▇. ▇▇▇▇▇▇ TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇ Antivari By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------- ----------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇ Antivari Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Title: Chairman and CEO
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Attest (If Applicable)
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
[Corporate Seal]