Exhibit 4.4
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SECURITY AGREEMENT
This Security Agreement (the "Security Agreement"), dated as of July 21,
2003, is by and between GSV, Inc., a Delaware corporation (the "Debtor"), and
Brooks Station Holdings, Inc., a Delaware corporation (the "Secured Party").
Background
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1. Pursuant to a stock redemption agreement between the Debtor and the
Secured Party of even date herewith (the "Redemption Agreement"), the
Debtor has redeemed 363,637 shares of its Series A Convertible
Preferred Stock, par value $0.001 per share (the Series A Stock"),
from the Secured Party in exchange for a payment of $263,800.70 in
cash and a promissory note of the Debtor in the amount of $200,000
(the "Promissory Note").
2. To induce the Secured Party to surrender the Series A Stock in
exchange for the cash payment and the Promissory Note, the Debtor has
agreed to provide the Secured Party with a first priority security
interest in its assets under the terms and conditions set forth below.
N O W, T H E R E F O R E ,
In consideration of the premises and the mutual covenants and agreements
herein set forth, and in order to induce the Secured Party to surrender the
Series A Stock in exchange for the cash payment and the Promissory Note, the
Debtor hereby agrees with the Secured Party as follows:
Section 1. Grant of Security Interest. The Debtor hereby grants to the
Secured Party, on the terms and conditions hereinafter set forth, a first
priority security interest in the collateral hereinafter identified (the
"Collateral").
Section 2. Collateral. The Collateral is all tangible and intangible assets
of the Debtor of whatever kind and nature (including without limitation all
accounts, chattel paper, commercial tort claims, documents, equipment, farm
products, general intangibles, instruments, inventory, investment property,
patents, trademarks tradenames, copyrights and all other intellectual property
and the stock of all of Debtor's subsidiaries), in each case whether now owned
or hereafter acquired and wherever located, and all proceeds thereof, together
with all proceeds, products, replacements and renewals thereof.
Section 3. Representations and Warranties; Covenants. The Debtor hereby
warrants and covenants as follows:
(a) The Debtor has title to the Collateral free from any lien, security
interest, encumbrance or claim.
(b) The Debtor will maintain the Collateral so as to preserve its value.
(c) The Debtor is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware.
(d) The Debtor will pay when due all existing or future charges, liens, or
encumbrances on the Collateral, and will pay when due all taxes and
assessments now or hereafter imposed on or affecting it unless such
taxes or assessments are diligently contested by the Debtor in good
faith and reasonable reserves are established therefor.
(e) All information with respect to the Promissory Note and the Collateral
and account debtors set forth in any schedule, certificate or other
writing at any time heretofore or hereafter furnished by the Debtor to
the Secured Party, and all other written information heretofore or
hereafter furnished by the Debtor to the Secured Party, is or will be
true and correct in all material respects, as of the date furnished.
(f) As soon as practicable following the date of execution of this
Security Agreement, the Debtor will prepare, execute and file in
Delaware a UCC-1 Financing Statement covering all Collateral, naming
the Secured Party as a secured party thereunder.
(g) The Debtor will maintain accurate records concerning the Collateral.
Such records will be of such character as to enable the Secured Party
or its representatives to determine at any time the status thereof.
(h) The Debtor will permit the Secured Party and its representatives at
any reasonable time to inspect any and all of the Collateral, and to
inspect, audit and make copies of and extracts from all records and
all other papers in possession of the Debtor pertaining to the
Promissory Note and the Collateral.
Section 4. Disposition of Collateral in Ordinary Course. Nothing herein
shall prevent the Debtor from selling, trading in, or replacing any of the
Collateral in the ordinary course of its business.
Section 5. Secured Parties May Perform. Upon the occurrence of an "event of
default" under the Promissory Note, at the option of the Secured Party, the
Secured Party may discharge taxes, liens or security interests, or other
encumbrances at any time hereafter levied or placed on the Collateral; and may
pay for the maintenance and preservation of the Collateral. Until default, the
Debtor may have possession of the Collateral and use it in any lawful manner not
inconsistent with this Security Agreement.
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Section 6. Obligations Secured; Certain Remedies. This Security Agreement
secures the payment and performance of all obligations of the Debtor to the
Secured Party under the Promissory Note, whether now existing or hereafter
arising and whether for principal, interest, costs, fees or otherwise
(collectively, the "Obligations"). Upon the occurrence of an event of default
under the Promissory Note, the Secured Party may declare all obligations secured
hereby immediately due and payable and may exercise the remedies of a secured
party under the Uniform Commercial Code. Without limiting the foregoing, the
Secured Party may require the Debtor to assemble the Collateral and make it
available to the Secured Party at a place to be designated by the Secured Party
that is reasonably convenient to both parties or to execute appropriate
documents of assignment, transfer and conveyance, in each case, in order to
permit the Secured Party to take possession of and title to the Collateral.
Unless the Collateral is perishable or threatens to decline rapidly in value or
is of a type customarily sold on a recognized market, the Secured Party will
give the Debtor reasonable notice of the time and place of any public sale
thereof or of the time after which any private sale or any other intended
disposition thereof is to be made. The requirements of reasonable notice shall
be met if such notice is mailed to the Debtor via registered or certified mail,
postage prepaid, at least fifteen (15) days before the time of sale or
disposition. Expenses of retaking, holding, preparing for sale, selling or the
like, shall include the Secured Party's reasonable attorneys' fees and legal
expenses.
Section 7. Debtor Remains Liable. Anything herein to the contrary
notwithstanding:
(a) Notwithstanding the exercise of any remedy available to the Secured
Party hereunder or at law in connection with an event of default, the
Debtor shall remain liable to repay the balance, if any, remaining
unpaid and outstanding under the Promissory Note after the value or
proceeds received by the Secured Party in connection with such remedy
is subtracted. The Secured Party shall promptly deliver and pay over
to the Debtor any portion of the value or proceeds received in
connection with such remedy that remains after the unpaid and
outstanding portion of the Promissory Note is paid in full.
(b) The Debtor shall remain liable under the contracts and agreements
included in the Collateral to the extent set forth therein, and shall
perform all of its duties and obligations under such contracts and
agreements to the same extent as if this Security Agreement had not
been executed;
(c) The exercise by the Secured Party of any of its rights hereunder shall
not release the Debtor from any of its duties or obligations under any
such contracts or agreements included in the Collateral; and
(d) The Secured Party shall not have any obligation or liability under any
such contracts or agreements included in the Collateral by reason of
this Security Agreement, nor shall the Secured Party be obligated to
perform any of the obligations or duties of the Debtor thereunder or
to take any action to collect or enforce any claim for payment
assigned hereunder.
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Section 8. Security Interest Absolute. All rights of the Secured Party and
the security interests granted to the Secured Party hereunder shall be absolute
and unconditional, to the maximum extent permitted by law, irrespective of:
(a) Any lack of validity or enforceability of the Promissory Note or any
other document or instrument relating thereto;
(b) Any change in the time, manner or place of payment of, or in any other
term of, all or any part of the Obligations or any other amendment to
or waiver of or any consent to any departure from the Promissory Note
or any other document or instrument relating thereto;
(c) Any exchange, release or non-perfection of any collateral (including
the Collateral), or any release of or amendment to or waiver of or
consent to or departure from any guaranty, for all or any of the
Obligations; or
(d) Any other circumstance that might otherwise constitute a defense
available to, or a discharge of, the Debtor, a guarantor or a third
party grantor of a security interest.
Section 9. Additional Assurances. At the request of the Secured Party, the
Debtor will join in executing or will execute, as appropriate, all necessary
financing statements in a form satisfactory to the Secured Party, and the Debtor
will pay the cost of filing such statements, including all statutory fees. The
Debtor will further execute all other instruments deemed necessary by the
Secured Party and pay the cost of filing such instruments.
Section 10. Representations, Warranties and Covenants Concerning Debtor's
Legal Status.
The Debtor covenants with the Secured Party as follows:
(i) without providing 15 days prior written notice to the
Secured Party, Debtor will not change its name, its place of
business, or, if more than one, its chief executive offices
or its mailing address; and
(ii) without providing 15 days prior written notice to the
Secured Party, Debtor will not change its type of
organization, jurisdiction of organization or other legal
structure.
Section 11. Expenses. The Debtor will upon demand pay to the Secured Party
the amount of any and all reasonable expenses, including the reasonable fees and
disbursements of its counsel and of any experts and agents, that the Secured
Party may incur in connection with (i) the custody, preservation, use or
operation of, or the sale of, collection from, or other realization
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upon, any of the Collateral upon the occurrence of an event of default, (ii) the
exercise or enforcement of any of the rights of the Secured Party hereunder, or
(iii) the failure by the Debtor to perform or observe any of the provisions
hereof.
Section 12. Notices of Loss or Depreciation. The Debtor will immediately
notify the Secured Party of any claim, suit or proceeding against any Collateral
or any event causing loss or depreciation in the value of Collateral, including
the amount of such loss or depreciation.
Section 13. No Waivers. No waiver by the Secured Party of any default shall
operate as a waiver of any other default or of the same default on any
subsequent occasion.
Section 14. Continuing Security Interest. This Agreement shall create a
continuing security interest in the Collateral and shall (i) remain in full
force and effect until the payment in full of the Obligations, (ii) be binding
upon Debtor, its successors and assigns, and (iii) inure to the benefit of, and
be enforceable by, the Secured Party and its successors, transferees and
assigns. Upon the payment in full of the Obligations, the security interest
granted hereby shall terminate and all rights to the Collateral shall revert to
the Debtor. Upon any such termination, the Secured Party will execute and
deliver to the Debtor such documents as the Debtor shall reasonably request to
evidence such termination.
Section 15. Governing Law. This Security Agreement shall be governed by the
laws of the State of New York, without giving effect to such jurisdiction's
principles of conflict of laws, except to the extent that the validity or the
perfection of the security interest hereunder, or remedies hereunder, in respect
of any particular Collateral are governed by the laws of a jurisdiction other
than the State of New York.
Section 16. Counterparts. This Security Agreement may be executed in any
number of counterparts, each of which will be deemed an original, but all of
which together shall constitute one and the same instrument.
Section 17. Remedies Cumulative. The rights and remedies herein are
cumulative, and not exclusive of other rights and remedies which may be granted
or provided by law.
Section 18. Notices. Any demand upon or notice to the Debtor hereunder
shall be effective when delivered by hand or when properly deposited in the
mails postage prepaid, or sent by electronic facsimile transmission, receipt
acknowledged, or delivered to an overnight courier, in each case addressed to
the Debtor at the address shown below or such other address as the Debtor
advises the Secured Party in writing. Any notice by the Debtor to the Secured
Party shall be given as aforesaid, addressed to the Secured Party at the address
shown below or such other address as the Secured Party may advises the Debtor in
writing:
If to Secured Party: Brooks Station Holdings, Inc.
c/o Cavallo Capital Corp.
660 Madison Avenue
New York, New York 10021
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If to Debtor: GSV, Inc.
191 Post Road
Westport, Connecticut 06880
With a copy to: Davis & Gilbert LLP
1740 Broadway
New York, New York 10019
Attn: Ralph W. Norton, Esq.
Section 19. Entire Agreement. This Security Agreement and the documents and
instruments referred to herein embody the entire agreement entered into between
the parties relating to the subject matter hereof, and may not be amended,
waived, or discharged except by an instrument in writing executed by the party
against whom enforcement of said amendment, waiver, or discharge is sought.
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IN WITNESS WHEREOF, the parties hereto, by their duly authorized agents,
have executed this Security Agreement as of the date set forth above.
GSV, INC.
By: /s/ Gilad Gat
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Name: Gilad Gat
Title: President
BROOKS STATION HOLDINGS, INC.
By: /s/ Daniel Golan
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Name: Daniel Golan
Title: Vice President and Secrtary
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