Exhibit 10.17
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of March 2, 1999 (this "AGREEMENT"), by
WorldGate Communications, Inc., a Delaware corporation (the "COMPANY"), in favor
of Strong River Investment, Inc., a British Virgin Islands corporation, and its
successors, endorsees, transferees and assigns ("STRONG RIVER"), and Ampal
American-Israel Corporation, a New York corporation, and its endorsees,
transferees, heirs and assigns ("AMPAL"). Strong River and Ampal are sometimes
collectively referred to in this Agreement as the "SECURED PARTIES."
W I T N E S S E T H:
WHEREAS, Strong River agreed to extend a loan to the Company in the
aggregate amount of $3,000,000 (the "STRONG RIVER LOAN"), which is evidenced by
(i) a Senior Secured Promissory Note of the Company in the principal aggregate
amount of $2,500,000 due December 2, 1999 or such other date pursuant to its
terms thereof (as amended, modified, or supplemented from time to time, the
"FIRST STRONG RIVER NOTE") and (ii) (i) a Senior Secured Promissory Note of the
Company in the principal aggregate amount of $500,000 due September 2, 1999 or
such other date pursuant to its terms thereof (as amended, modified, or
supplemented from time to time, the "SECOND STRONG RIVER NOTE" and together with
the First Strong River Note, the "STRONG RIVER NOTES") and, in connection
therewith, the Company issued to Strong River a certain Common Stock purchase
warrant of even date herewith to purchase shares of the Company's common stock
(the "STRONG RIVER WARRANT");
WHEREAS, Ampal agreed to extend a loan to the Company in the aggregate
amount of $3,000,000 (the "AMPAL LOAN"), which is evidenced by (i) a Senior
Secured Promissory Note of the Company in the principal aggregate amount of
$2,500,000 due December 2, 1999 or such other date pursuant to its terms thereof
(as amended, modified, or supplemented from time to time, the "FIRST AMPAL
NOTE") and (ii) (i) a Senior Secured Promissory Note of the Company in the
principal aggregate amount of $500,000 due September 2, 1999 or such other date
pursuant to its terms thereof (as amended, modified, or supplemented from time
to time, the "SECOND AMPAL NOTE" and together with the First Ampal Note, the
"AMPAL NOTES") and, in connection therewith, the Company issued to Ampal a
certain Common Stock purchase warrant of even date herewith to purchase shares
of the Company's common stock (the "AMPAL WARRANT"); and
WHEREAS, in order to induce the Secured Parties to extend the Strong River
Loan and the Ampal Loan, respectively, the Company has agreed to execute and
deliver to the Secured Parties this Agreement for the benefit of the Secured
Parties and to grant a first priority security interest in certain property of
the Company to secure the prompt payment, performance and discharge in full of
all of the Company's payment obligations under the Strong River Notes and the
Ampal Notes.
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 Parties are
granted a security interest by this Agreement and which shall include, except as
set forth below, 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 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 therefor, all parts therefor, 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
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(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.
Collateral shall not herein include the property described on SCHEDULE B
attached hereto (the "Excluded Collateral").
(b) "LOANS" means, collectively, the Strong River Loan and the Ampal
Loan.
(c) "MAJORITY-IN-INTEREST" means the Secured Party or Secured Parties
(as the case may be) holding in excess of 50% of the aggregate principal amount
outstanding under the Notes, determined on a cumulative basis.
(d) "NOTE(S)" means, collectively, the Strong River Notes and the Ampal
Notes.
(e) "OBLIGATIONS" means all of the Company's obligations under this
Agreement, 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 Parties as a preference, fraudulent transfer or
otherwise as such obligations may be amended, supplemented, converted, extended
or modified from time to time.
(e) "PERMITTED LIENS" means the liens contemplated in SCHEDULE D
attached hereto.
(f) "UCC" means the Uniform Commercial Code, as currently in effect in
the State of Pennsylvania.
(g) "WARRANTS" means, collectively, the Strong River Warrant and the
Ampal Warrant.
2. GRANT OF SECURITY INTEREST. As an inducement for the Secured Parties to
extend the Loans to the Company and to secure the complete and timely payment,
performance and discharge in full of all of the Obligations, the Company hereby,
unconditionally and irrevocably, pledges, grants and hypothecates to the Secured
Parties, a continuing security interest in, a first lien upon and a right of
set-off against all of the Company's right, title and interest of whatsoever
kind and nature in and to the Collateral (the "SECURITY INTEREST").
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3. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF THE COMPANY.
The Company represents and warrants to, and covenants and agrees with, the
Secured Parties 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.
(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. 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 Parties pursuant to this
Agreement) covering or affecting any of the Collateral. So long as this
Agreement shall be in effect, except for the Permitted Liens, 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 Parties pursuant to the
terms of this Agreement).
(d) No part of the Collateral has been judged invalid or unenforceable.
Except as set on SCHEDULE C attached hereto, no written claim has been received
that any Collateral or the Company's use of any Collateral violates the rights
of any third party. Except as set forth on SCHEDULE C attached hereto, 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 (other than, in the case of tangible Collateral, in the ordinary
course of business) unless it delivers to the Secured Parties 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
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and other steps have been taken to perfect the Security Interest to
create in favor of the Secured Parties valid, perfected and continuing first
priority liens in the Collateral.
(f) This Agreement creates in favor of the Secured Parties 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 E attached hereto, no authorization or
approval of or filing with or notice to any governmental authority or regulatory
body is required either (i) 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 (ii) for the
perfection of or exercise by the Secured Parties of their rights and remedies
hereunder.
(g) 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 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.
(h) 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 Parties until the
Obligations are satisfied in full. 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 Parties. At the request of the Secured
Parties, the Company will sign and deliver to the Secured Parties 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 Parties
and will pay the cost of filing the same in all public offices wherever filing
is, or is deemed by the Secured Parties 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 Parties 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.
(i) Except for the Permitted Liens, the Company will not transfer,
pledge, hypothecate, encumber, license (except for non-exclusive licenses
granted by the Company in the ordinary course of business), sell or otherwise
dispose (except, in the case of a sale, lease or loan of inventory, in the
ordinary course of business) of any of the Collateral without the prior written
consent of the Secured Parties.
(j) 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.
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(k) The Company shall, within ten (10) days of obtaining knowledge
thereof, advise the Secured Parties 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 Parties' respective security interests therein.
(l) The Company shall promptly execute and deliver to the Secured
Parties such further deeds, mortgages, assignments, security agreements,
financing statements or other instruments, documents, certificates and
assurances and take such further action as the Secured Parties may from time to
time reasonably request and may in its good faith 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 Parties have been granted a security
interest hereunder, substantially in a form acceptable to the Secured Parties,
which Intellectual Property Security Agreement, other than as stated therein,
shall be subject to all of the terms and conditions hereof.
(m) The Company shall permit the Secured Parties and their
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 Parties from time to time.
(n) On the date of execution of this Agreement, the Company will deliver
to the Secured Parties one or more executed UCC financing statements on Form-1
with respect to the Security Interest for filing in the state and county
jurisdictions of the Company's principal place of business and in such other
jurisdictions (including, but not limited to, the offices and jurisdictions
referenced in Section 3(f) hereof) as may be requested by the Secured Parties.
(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 Parties 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 Parties
hereunder.
(q) All information heretofore, herein or hereafter supplied to the
Secured Parties 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 Company's
subsidiaries. Such subsidiaries do not own any material assets and do not
conduct any business.
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(s) The Company's Registration Statement on Form S-1 filed on February
9, 1999 (file number 333-71997), as amended or supplemented is true and correct
in all material respects and does not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
disclosure and information made therein, in light of the circumstances under
which they were made, not misleading, other than any information to be supplied
by amendment or supplement which, when supplied, shall be true and correct in
all material respects and not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make such information, in
light of the circumstances under which made, not misleading.
4. DEFAULTS. The following events shall be "EVENTS OF DEFAULT":
(a) The failure by the Company to pay any amounts of principal, interest
on premium, if any, when, as, and in the amount due, pursuant to any of 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 a
Majority-in-Interest; and
(d) Any breach or default under the Warrants.
5. DUTY TO HOLD IN TRUST. Upon the occurrence of any Event of Default and
at any time thereafter, for so long as such Event of Default is continuing, 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 Parties
and shall upon written request forthwith endorse and transfer any such sums or
instruments, or both, to the Secured Parties (on a pro rata basis in accordance
with the principal amount then outstanding under such Secured Party's respective
Notes, determined on a cumulative basis)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, for so long as such Event of Default is
continuing, the Secured Parties shall have the right to exercise all of the
remedies conferred hereunder, and Strong River shall have the right to exercise
all remedies conferred under the Strong River Notes and Ampal shall have the
right to exercise all remedies conferred under the Ampal Notes, and each 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 Parties shall have the following rights and powers:
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(a) The Secured Parties 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 Parties at places which the Secured Parties
shall reasonably select, whether at the Company's premises or elsewhere, and
make available to the Secured Parties, without rent, all of the Company's
respective premises and facilities for the purpose of the Secured Parties taking
possession of, removing or putting the Collateral in saleable or disposable
form.
(b) The Secured Parties 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 Parties 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 Parties
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, reasonable fees and other
reasonable costs incurred in connection therewith) of the Collateral, to the
reasonable attorneys' fees and expenses incurred by the Secured Parties in
enforcing their 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 Parties shall promptly 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 Parties are legally
entitled, each Secured Party will be entitled to their pro rata portion of such
proceeds (determined by reference to the aggregate amount of principal and
accrued and unpaid interest then due under each of their respective Notes,
determined on a cumulative basis), and the Company will be liable for the
deficiency, together with interest thereon, at the rate of 11% per annum (the
"DEFAULT RATE"), and the reasonable fees of any attorneys employed by the
Secured Parties to collect such deficiency, PROVIDED, that the Default Rate
shall not apply with respect to any amounts due under the Notes. To the extent
permitted by applicable law, the Company waives all claims, damages and demands
against the Secured Parties arising out of the repossession, removal, retention
or sale of the Collateral, unless due to the gross negligence or willful
misconduct of the Secured Parties.
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8. COSTS AND EXPENSES. The Company agrees to pay all reasonable
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
Parties. The Company shall also pay all other claims and charges which in the
reasonable opinion of the Secured Parties might prejudice, imperil or otherwise
affect the Collateral or the Security Interest therein. The Company will also,
upon demand, pay to the Secured Parties 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 Parties may incur in connection with (i)
the enforcement of this Agreement, (ii) the custody or preservation of, or the
sale of, collection from, or other realization upon, any of the Collateral, or
(iii) the exercise or enforcement of any of the rights of the Secured Parties
under the Notes. Until so paid, any fees payable hereunder shall be added to the
principal amount of the Obligations 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 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 Parties and all
Obligations of the Company hereunder, shall be absolute and unconditional,
irrespective of: (a) any lack of validity or enforceability of this Agreement,
any Note or any agreement entered into in connection with the foregoing, or any
portion hereof or thereof; (b) 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 or any other agreement entered into in connection with the
foregoing; (c) any exchange, release or nonperfection 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; (d) any action by the Secured Parties to obtain, adjust, settle and
cancel in its sole discretion any insurance claims or matters made or arising in
connection with the Collateral; or (e) 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 Parties 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 Parties 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 Parties, 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
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all right to require any Secured Party to proceed against any other person or to
apply any Collateral which the Secured Parties 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 shall terminate when all payments
under the Notes have been made in full and all other Obligations have been paid
or discharged. Upon such termination, the Secured Parties, 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 Parties, and does hereby make, constitute and appoint them, and their
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, (i) 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 Parties; (ii) 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; (iii) to pay or discharge taxes, liens, security
interests or other encumbrances at any time levied or placed on or threatened
against the Collateral; (iv) to demand, collect, receipt for, compromise, settle
and ▇▇▇ for monies due in respect of the Collateral; and (v) generally, to do,
at the option of the Secured Parties, and at the Company's expense, at any time,
or from time to time, all acts and things which the Secured Parties reasonably
deem 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 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
and deliver, and file and record, in the proper filing and recording places in
any jurisdiction, including, without limitation, with the jurisdictions
indicated on SCHEDULE E 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 Parties, 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 Parties the grant or perfection of
a security interest in all the Collateral.
(c) The Company hereby irrevocably appoints the Secured Parties as the
Company's attorneys-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
Parties' discretion, to take any action
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and to execute any instrument which the Secured Parties may reasonably deem
necessary or advisable to accomplish the purposes of this Agreement, including
the filing, in their 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 (i) if delivered by hand, upon
receipt, (ii) if sent by facsimile, upon receipt of proof of sending thereof,
(iii) if sent by nationally recognized overnight delivery service (receipt
requested), the next business day or (iv) 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
(or such other addresses as a party may duly notify the other in accordance with
the provisions of this paragraph):
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If to the Company: WorldGate Communications, Inc.
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Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇
With copies to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
WorldGate Communications, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Strong River: Strong River Investment, Inc.
c/▇ ▇▇▇▇▇▇▇ Capital Corp.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: Avi Vigder
If to Ampal: Ampal American Israel Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: 212-782-2114
Attn: ▇▇▇ ▇▇▇▇▇▇▇▇
With copies to (for ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
communications 1290 Avenue of the Americas
to any Secured Party) ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
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 Parties shall have the right, in their 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 Parties' rights and
remedies hereunder.
15. ACTIONS BY SECURED PARTIES. Any action required or permitted hereunder
to be taken by or on behalf of the Secured Parties shall, for such action to be
valid, require the approval of the Majority-in-Interest prior to the taking of
such action. If the consent, approval or disapproval of the Secured Parties is
required or permitted pursuant to this Agreement, such consent, approval or
disapproval shall only be valid if given by the ▇▇▇▇▇▇▇▇-▇▇-▇▇▇▇▇▇▇▇.
▇▇
▇▇. MISCELLANEOUS.
(a) No course of dealing between the Company and the Secured Parties,
nor any failure to exercise, nor any delay in exercising, on the part of the
Secured Parties, 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 Parties 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
13
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 convenient.
(i) EACH PARTY HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A
JURY TRAIL 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.
* * * * * * * * * * *
14
IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement
to be duly executed on the day and year first above written.
WORLDGATE COMMUNICATIONS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title: Vice President,
Corporate Affairs
STRONG RIVER INVESTMENT, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Attorney-in-fact
AMPAL AMERICAN-ISRAEL CORPORATION
By: /s/ unintelligible
-------------------------------
Name: unintelligible
Title: CEO
