EX-10 11 ex10-35.txt EXHIBIT 10.35 EXHIBIT 10.35 COLLATERAL ASSIGNMENT OF CONTRACT RIGHTS THIS COLLATERAL ASSIGNMENT OF CONTRACT RIGHTS is made and entered into the 13th day of December, 2004 by DCI USA, INC, a Delaware corporation (the "Assignor"), in favor of CORNELL CAPITAL PARTNERS, LP, a Delaware limited partnership ("Assignee"). BACKGROUND The Company has entered into a Securities Purchase Agreement dated as of the date hereof (as amended, modified, restated or supplemented from time to time (the "SPA Agreement") pursuant to which Assignee provides or will provide certain financial accommodations to Assignor. In order to induce Assignee to provide or continue to provide the financial accommodations described in the SPA Agreement, Assignor has agreed to assign certain obligations described herein to Assignee on the terms and conditions set forth herein. WITNESSETH: WHEREAS, pursuant to that certain SPA Agreement with made by Assignor in favor of Assignee, Assignor has assigned certain obligations of 231 Norman Avenue, LLC (the "Norman LLC") which are specified on Schedule I hereto, and WHEREAS, in order to secure the obligations of the Assignor under the SPA Agreement, the parties hereto desire that Assignee be granted an assignment and security interest in all rights of the Assignor as purchaser under those certain agreements of sale listed on Schedule I hereto (each an "Assigned Contract" and collectively, the "Assigned Contracts"). NOW, THEREFORE, in consideration of the promises and covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are acknowledged by the Assignor, and intending to be legally bound, Assignor assigns to Assignee all of its right, title and interest in and to the Assigned Contracts to the fullest extent permitted by law. 1. Except as otherwise expressly provided herein, capitalized terms used in this Assignment shall have the respective meanings given to them in the SPA Agreement. 2. Assignor has granted, bargained, sold, assigned, transferred and set over and by these presents does hereby grant, bargain, sell, assign, transfer, grant a security interest in and set over unto Assignee, its respective successors and assigns, all the rights, interests and privileges which Assignor has or may have in or under any Assigned Contract, including without limiting the generality of the foregoing, the present and continuing right with full power and authority, in its own name, or in the name of Assignor, or otherwise, but subject to the provisions and limitations of Section 3 hereof, (i) to make claim for, enforce, perform, collect and receive any and all rights under any Assigned Contract, (ii) to do any and all things which Assignor is or may become entitled to do under any Assigned Contract, and (iii) to make all waivers and agreements, give all notices, consents and releases and other instruments and to do any and all other things whatsoever which Assignor is or may become entitled to do under any Assigned Contract. 3. The acceptance of this Assignment and the payment or performance under the Assigned Contracts shall not constitute a waiver of any rights of Assignee under the terms of the SPA Agreement, it being understood that, until the occurrence of an a default under the SPA Agreement or the Convertible Debenture issued thereunder, and the exercise of Assignee's rights under Section 4 hereof, Assignor shall have all rights to the Assigned Contracts and to retain, use and enjoy the same. 4. Assignor, upon the occurrence of a payment default under the SPA Agreement or the Convertible Debenture issued thereunder, hereby authorizes Assignee, at Assignee's option, to enforce and exercise all rights and privileges with respect to the Assigned Contract(s) that, pursuant to Schedule I, is associated with the payment which is in default. Assignor does hereby irrevocably constitute and appoint Assignee, while this Assignment remains in force and effect and, in each instance, to the full extent permitted by applicable Law, its true and lawful attorney in fact, coupled with an interest and with full power of substitution and revocation, for Assignor and in its name, place and stead, to demand and enforce compliance with all the terms and conditions of each Assigned Contract and all benefits accrued thereunder, whether at law, in equity or otherwise; provided, however, that Assignee shall not exercise any such power unless and until a default in the payment associated with that Contract shall have occurred. Assignor acknowledges and agrees that (i) the power of attorney herein granted shall in no way be construed as to benefit Assignor; and (ii) the Assignee herein granted this power of attorney shall have NO duty to exercise any powers granted hereunder for the benefit of Assignor. The Assignee hereby accepts this power of attorney and all powers granted hereunder for the benefit of the Assignee. 5. Assignee shall not be obligated to perform or discharge any obligation or duty to be performed or discharged by Assignor under any Assigned Contract, and Assignor hereby agrees to indemnify Assignee for, and to save Assignee harmless from, any and all liability arising under the Assigned Contracts, other than arising or resulting from Assignee's (or its agents, employees or contractors) gross negligence or willful misconduct. 6. Assignor agrees that this Assignment and the designation and directions herein set forth are irrevocable. 7. Neither this Assignment nor any action or inaction on the part of Assignee shall constitute an assumption on the part of Assignee of any obligations or duties under any Assigned Contract. 8. Assignor covenants and warrants that: (a) it has the power and authority to assign each of the Assigned Contracts and there have been no prior assignments of any Assigned Contract; (b) each Assigned Contract is and shall be a valid contract, and that there are and shall be, to Assignor's knowledge, no defaults on the part of any of the parties thereto; (c) it will not assign, pledge or otherwise encumber any Assigned Contract without the prior written consent of Assignee; (d) it will not cancel, terminate or accept any surrender of any Assigned Contract, or amend or modify the same directly or indirectly in any respect whatsoever, without having obtained the prior written consent of the Assignee thereto; (e) it will perform and observe, or cause to be performed and observed, all of the terms, covenants and conditions on its part to be performed and observed with respect to each Assigned Contract; and (f) it will execute from time to time any and all additional assignments or instruments of further assurance to Assignee, as Assignee may at any time reasonably request. 9. Assignor shall have the right, from time to time, to substitute new assigned contracts for any Assigned Contract on Schedule I so long as the substitute contracts provide for a purchase price equal to or greater than the Assigned Contract to be released. Upon any such substitution, the parties hereto shall confirm the substitution in writing and shall replace Schedule I with a new Schedule reflecting updated Assigned Contracts. 10. At such time as the SPA Agreement and Convertible Debentures issued thereunder are satisfied or discharged, this Assignment and all of Assignee's right, title and interest hereunder with respect to the Assigned Contracts shall terminate. 11. This Assignment shall inure to the benefit of Assignee, and its successors and assigns, and shall be binding upon Assignor, and its successors, and assigns. 12. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New Jersey without regard to its conflicts of law principles. 13. EACH PARTY HERETO HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OTHER AGREEMENT EXECUTED OR DELIVERED BY THEM IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HERETO HEREBY AGREES AND CONSENTS THAT ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF EACH PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY. 14. This Agreement may be executed in any number of counterparts, and by different parties hereto in separate counterparts, each of which when so executed shall be deemed an original and all of which taken together shall constitute but one and the same agreement. Assignor acknowledges and agrees that a telecopy transmission to Assignee of signature pages hereof purporting to be signed on behalf of Assignor shall constitute effective and binding execution and delivery hereof by Assignor. [SIGNATURE PAGE FOLLOWS] [SIGNATURE PAGE 1 OF 1 TO COLLATERAL ASSIGNMENT OF CONTRACT RIGHTS] IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed under seal by their respective officers or agents thereunto duly authorized, as of the date first above written. COMPANY: DCI USA, INC. By: /s/ David Yerushalmi Name: David Yerushalmi Title: Chairman INVESTOR: CORNELL CAPITAL PARTNERS, LP By: Yorkville Advisors, LLC Its: General Partner By: Mark Angelo Name: Mark Angelo Title: Portfolio Manager ACKNOWLEDGED BY: 231 NORMAN AVENUE, LLC By: /s/ David Yerushalmi Name: David Yerushalmi Title: Managing Member