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EX-4.(a)
SECURITY AGREEMENT
THIS SECURITY AGREEMENT dated as of July 5, 1996, is made by EDNET,
INC., a Colorado corporation ("Grantor"), in favor of XXXXXX XXXXXX CAPITAL
GROUP L.L.C.
("Lender").
RECITALS
A. Pursuant to and as evidenced by that certain Senior Secured
Promissory Note, dated July __ 1996, in the amount of $500,000, Senior Secured
Promissory Note, dated July 22, 1996, in the amount of $500,000 and Senior
Secured Promissory Note, dated August 15, 1996, in the amount of $250,000 (as
the same from time to time may be amended, modified, supplemented or restated,
the "Notes") by Grantor, Lender has agreed to make certain extensions or credit
to Grantor in the amount and manner set forth in the Notes (the "Loan").
B. Lender is willing to make the Loan to Grantor, but only upon the
condition, among others, that Grantor shall have executed and delivered to
Lender this Security Agreement.
AGREEMENT
NOW, THEREFORE, in order to induce Lender to enter into the Notes and
to make the Loans available thereunder, and for other good and valuable
consideration, and intending to be legally bound, Grantor hereby represents,
warrants, covenants and agrees as follows:
Section 1. Defined Terms. Unless otherwise defined herein, (a) the
capitalized terms defined in the Notes are used herein as therein defined and
(b) the following capitalized terms shall have the following meanings (such
meanings being equally applicable to both the singular and plural forms of the
terms defined):
"Account Debtor" means any "account debtor," as such term is defined in
Section 9105(1)(a) of the UCC.
"Account" means any "account," as such term is defined in Section 9106
of the UCC, now owned or hereafter acquired by Grantor or in which Grantor now
holds or hereafter acquires any interest and, in any event, shall include,
without limitation, all accounts receivable, book debts and other forms of
obligations (other than forms of obligations evidenced by Chattel Paper,
Documents or Instruments) now owned or hereafter received or acquired by or
belonging or owing to Grantor (including, without limitation, under any trade
name, style or division thereof) whether arising out of goods sold or services
rendered by Grantor or from any other transaction, whether or not the same
involves the sale of goods or services by Grantor (including, without
limitation, any such obligation which may be characterized as an account or
contract right under the UCC) and all of Grantor's rights in, to and under all
purchase orders or receipts now owned or hereafter acquired by it for goods or
services, and all of Grantor's rights to any goods represented by any of the
foregoing (including, without limitation, unpaid
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seller's rights of rescission, replevin, reclamation and stoppage in transit and
rights to returned, reclaimed or repossessed goods), and all monies due or to
become due to Grantor under all purchase orders and contracts for the sale of
goods or the performance of services or both by Grantor (whether or not yet
earned by performance on the part of Grantor or in connection with any other
transaction), now in existence or hereafter occurring, including, without
limitation, the right to receive the proceeds of said purchase orders and
contracts, and all collateral security and guarantees of any kind given by any
Person with respect to any of the foregoing.
"Charges" means all federal, state, county, city, municipal, local,
foreign or other governmental taxes, levies, assessments, charges or claims, in
each case then due and payable, upon or relating to (a) the Loan, (b) Grantor's
employees, payroll, income or gross receipts, (c) Grantor's ownership or use of
any of its Properties or assets, or (d) any other aspect of Grantor's business.
"Chattel Paper" means any "chattel paper," as such term is defined in
Section 9105(1)(b) of the UCC, now owned or hereafter acquired by Grantor or in
which Grantor now holds or hereafter acquires any interest.
"Collateral" shall have the meaning assigned to such term in Section 2
hereof.
"Contracts" means all contracts, undertakings, franchise agreements or
other agreements (other than rights evidenced by Chattel Paper, Documents or
Instruments) in or under which Grantor may now or hereafter have any right,
title or interest, and with respect to an Account, any agreement relating to the
terms of payment or the terms of performance thereof.
"Copyrights" means all of the following now owned or hereafter acquired
by Grantor or in which Grantor now holds or hereafter acquires any interest: (i)
all copyrights, whether registered or unregistered, held pursuant to the laws of
the United States, any State thereof or of any other country; (ii)
registrations, applications and recordings in the United States Copyright Office
or in any similar office or agency of the United States, any state thereof or
any other country; (iii) any continuations, renewals or extensions thereof; and
(iv) any registrations to be issued in any pending applications.
"Copyright License" means any written agreement granting any right to
use any Copyright or Copyright registration now owned or hereafter acquired by
Grantor or in which Grantor now holds or hereafter acquires any interest.
"Documents" means any "documents," as such term is defined in Section
9105(1)(f) of the UCC, now owned or hereafter acquired by Grantor or in which
Grantor now holds or hereafter acquires any interest.
"Equipment" means any "equipment," as such term is defined in Section
9109(2) of the UCC, now or hereafter owned or acquired by Grantor or in which
Grantor now holds or hereafter acquires any interest and, in any event, shall
include, without limitation, all machinery, equipment, furnishings, vehicles
(whether or not registerable), mainframe, personal and other
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computers, terminals and printers and related components and accessories, all
copiers, telephonic, video, electronic data-processing and data storage
equipment and all printing, sorting, inserting, packaging, mailing and other
office, production or warehouse equipment of any nature whatsoever, and any and
all additions, substitutions and replacements of any of the foregoing, wherever
located, together with all attachments, components, parts, equipment and
accessories installed thereon or affixed thereto.
"Fixtures" means "fixtures," as such term is defined in Section
9313(1)(a) of the UCC, now or hereafter owned or acquired by Grantor or in which
Grantor now holds or hereafter acquires any interest and, in any event, shall
include, without limitation, regardless of where located, all of the fixtures,
systems, machinery, apparatus, equipment and fittings of every kind and nature
whatsoever and all appurtenances and additions thereto and substitutions or
replacements thereof, now or hereafter attached or affixed to or constituting a
part of, or located in or upon, real property wherever located, including,
without limitation, all heating, electrical, mechanical, lighting, lifting,
plumbing, ventilating, air-conditioning and air cooling, refrigerating, food
preparation, incinerating and power, loading and unloading, signs, escalators,
elevators, boilers, communication, switchboards, sprinkler and other fire
prevention and extinguishing fixtures, systems, machinery, apparatus and
equipment, and all engines, motors, dynamos, machinery, pipes, pumps, tanks,
conduits and ducts constituting a part of any of the foregoing, together with
all right, title and interest of Grantor in and to all extensions, improvements,
betterments, renewals, substitutes, and replacements of, and all additions and
appurtenances to any of the foregoing property, and all conversions of the
security constituted thereby, immediately upon any acquisition or release
thereof or any such conversion, as the case may be.
"General Intangibles" means any "general intangibles," as such term is
defined in Section 9106 of the UCC, now owned or hereafter acquired by Grantor
or in which Grantor now holds or hereafter acquires any interest and, in any
event, shall include, without limitation, all right, title and interest which
Grantor may now or hereafter have in or under any Contract, all customer lists,
Copyrights, Trademarks, Patents and other Intellectual Property of any kind or
nature, including any rights to Intellectual Property, including under or
pursuant to any License, all proprietary or confidential information, inventions
(whether or not patented or patentable), permits, books and records, goodwill
(including, without limitation, the goodwill associated with any Trademark,
Trademark registration or Trademark licensed under any Trademark License),
claims in or under insurance policies, including unearned premiums,
uncertificated securities, cash and other forms of money or currency, deposit
accounts (including as defined in Section 9105(e) of the UCC), rights to xxx for
past, present and future infringement of Copyrights, Trademarks and Patents,
rights to receive tax refunds, other payments and rights of indemnification, and
interests in partnerships, joint ventures and other business associations,
including, without limitation, Grantor's interests in partnerships, joint
ventures and other business associations.
"Instruments" means any "instrument," as such term is defined in
Section 9105(1)(i) of the UCC now owned or hereafter acquired by Grantor or in
which Grantor now holds or hereafter acquires any interest, including, without
limitation, all notes, certificated securities,
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and other evidences of indebtedness, other than instruments that constitute, or
are a part of a group of writings that constitute, Chattel Paper.
"Intellectual Property" means all intellectual property of any kind or
nature, including, without limitation, all Copyrights, Trademarks, Patents,
trade secrets, mask works, source codes, customer lists, proprietary or
confidential information, inventions (whether or not patented or patentable),
technical information, procedures, designs, knowledge, know-how, software, data
bases, data, skill, expertise, recipes, experience, processes, models, drawings,
materials and records.
"Inventory" means any "inventory," as such term is defined in Section
9109(4) of the UCC, wherever located, now or hereafter owned or acquired by
Grantor or in which Grantor now holds or hereafter acquires any interest, and,
in any event, shall include, without limitation, all inventory, goods and other
personal property which are held by or on behalf of Grantor for sale or lease or
are furnished or are to be furnished under a contract of service or which
constitute raw materials, work in process or materials used or consumed or to be
used or consumed in Grantor's business, or the processing, packaging, promotion,
delivery or shipping of the same, and all furnished goods whether or not such
inventory is listed on any schedules, assignments or reports furnished to Lender
from time to time and whether or not the same is in transit or in the
constructive, actual or exclusive occupancy or possession of Grantor or is held
by Grantor or by others for Grantor's account, including, without limitation,
all goods covered by purchase orders and contracts with suppliers and all goods
billed and held by suppliers and all inventory which may be located on premises
of Grantor or of any carriers, forwarding agents, truckers, warehousemen,
vendors, selling agents or other persons.
"License" means any Copyright License, Patent License, Trademark
License or other license of rights or interests now held or hereafter acquired
by Grantor or in which Grantor now holds or hereafter acquires any interest and
any renewals or extensions thereof.
"Lien" means any mortgage, pledge, hypothecation, assignment for
security, security interest, encumbrance, xxxx, xxxx or charge of any kind,
whether voluntarily incurred or arising by operation of law or otherwise,
affecting any Property, including any agreement to grant any of the foregoing,
any conditional sale or other title retention agreement, any lease in the nature
of a security interest, and the filing of or agreement to file or deliver any
financing statement (other than a precautionary financing statement with respect
to a lease that is not in the nature of a security interest) under the UCC or
comparable law of any jurisdiction.
"Loan Document" when used in the singular and "Loan Documents" when
used in the plural means any and all of this Security Agreement and the Notes
and any and all other agreements, documents and instruments executed and
delivered by or on behalf or support of Grantor to Lender evidencing or
otherwise relating to the Loan, as the same may from time to time be amended,
modified, supplemented or renewed.
"Material Adverse Effect" means any set of circumstances or events
which (a) has or could reasonably be expected to have any material adverse
effect whatsoever upon the validity
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or enforceability of any Loan Document, (b) is or could reasonably be expected
to be material and adverse to the condition (financial or otherwise) or business
operations of Grantor, (c) materially impairs or could reasonably be expected to
materially impair the ability of Grantor to perform its Obligations, or (d)
materially impairs or could reasonably be expected to materially impair the
ability of Lender to enforce any of its legal remedies pursuant to the Loan
Documents.
"Patent License" means any written agreement granting any right with
respect to any invention on which a Patent is in existence now owned or
hereafter acquired by Grantor or in which Grantor now holds or hereafter
acquires any interest.
"Patents" means all of the following now owned or hereafter acquired by
Grantor or in which Grantor now holds or hereafter acquires any interest: (a)
letters patent of, or rights corresponding thereto in, the United States or any
other county, all registrations and recordings thereof, and all applications for
letters patent of, or rights corresponding thereto in, the United States or any
other country, including, without limitation, registrations, recordings and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any State thereof or any other country;
(b) all reissues, continuations, continuations-in-part or extensions thereof;
(c) all xxxxx patents, divisionals, and patents of addition; and (d) all patents
to issue in any such applications.
"Permitted Liens" means (a) Liens granted in favor of Lender under this
Security Agreement; (b) Liens for Charges if payment shall not at the time be
required to be made in accordance with Section 5.4; and (c) Liens in respect of
pledges, obligations or deposits (i) under workers' compensation laws,
unemployment insurance and other types of social security or similar
legislation, (ii) in connection with surety, appeal and similar bonds incidental
to the conduct of litigation, (iii) in connection with bid, performance or
similar bonds and mechanics', laborers' and materialmen's and similar statutory
Liens not then delinquent, or (iv) incidental to the conduct of the business of
Grantor and which were not incurred in connection with the borrowing of money or
the obtaining of advances or credit.
"Proceeds" means "proceeds," as such term is defined in Section 9306(1)
of the UCC and, in any event, shall include, without limitation, (a) any and all
Accounts, Chattel Paper, Instruments, cash or other forms of money or currency
or other proceeds payable to Grantor from time to time in respect of the
Collateral, (b) any and all proceeds of any insurance, indemnity, warranty or
guaranty payable to Grantor from time to time with respect to any of the
Collateral, (c) any and all payments (in any form whatsoever) made or due and
payable to Grantor from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral by any Governmental Authority (or any Person acting under color of
Governmental Authority), (d) any claim of Grantor against third parties (i) for
past, present or future infringement of any Copyright, Patent or Patent License
or (ii) for past, present or future infringement or dilution of any Trademark or
Trademark License or for injury to the goodwill associated with any Trademark,
Trademark registration or Trademark licensed under any Trademark License and (e)
any and all other amounts from time to time paid or payable under or in
connection with any of the Collateral.
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"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, whether tangible or intangible.
"Secured Obligations" means all loans, advances, debts, liabilities and
other obligations for monetary amounts owed by Grantor to Lender, whether due or
to become due, matured or unmatured, liquidated or unliquidated, contingent or
non-contingent, and all covenants and duties regarding such amounts, of any kind
or nature, present or future, arising under the Note or any of the other Loan
Documents, whether or not evidenced by any note, agreement or other instrument.
This term includes, without limitation, all principal, interest (including
interest that accrues after the commencement of a case against Grantor or any
Affiliate of Grantor under the Bankruptcy Code), fees, including, without
limitation, any and all closing fees, prepayment fees, commitment fees, loan
fees, attorneys' fees and costs and any and all other fees, expenses, costs or
other sums chargeable to Grantor under any of the Loan Documents.
"Security Agreement" means this Security Agreement and all Schedules
hereto, as the same may from time to time be amended, modified, supplemented or
restated.
"Trademark License" means any written agreement granting any right to
use any Trademark or Trademark registration now owned or hereafter acquired by
Grantor or in which Grantor now holds or hereafter acquires any interest.
"Trademarks" means any of the following now owned or hereafter acquired
by Grantor or in which Grantor now holds or hereafter acquires any interest: (a)
any and all trademarks, tradenames, corporate names, business names, trade
styles, service marks, logos, other source or business identifiers, prints and
labels on which any of the foregoing have appeared or appear, designs and
general intangibles of like nature, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and any applications in
connection therewith, including, without limitation, registrations, recordings
and applications in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or any other
country or any political subdivision thereof and (b) any reissues, extensions or
renewals thereof.
"UCC" means the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of California; provided, however, in the event
that, by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of Lender's security interest in any collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of California, the term "UCC" shall mean the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provisions
hereof relating to such attachment, perfection of priority and for purposes of
definitions related to such provisions.
Section 2. Grant of Security Interest. As security for the prompt,
complete and indefeasible payment when due (whether at stated maturity, by
acceleration or otherwise) of all the Secured Obligations, and in order to
induce Lender to make the Loan available to and for the benefit of Grantor upon
the terms and subject to the conditions thereof, Grantor hereby
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assigns, conveys, mortgages, pledges, hypothecates and transfers to Lender for
security purposes only, and hereby grants to Lender a security interest in and
to all of Grantor's right, title and interest in, to and under each of the
following (all of which being hereinafter collectively called the "Collateral"):
(a) All Accounts;
(b) All Chattel Paper;
(c) All Contracts;
(d) All Documents;
(e) All Equipment;
(f) All Fixtures;
(g) All General Intangibles;
(h) All Instruments;
(i) All Inventory;
(j) All Licenses;
(k) All other goods and personal property of Grantor whether
tangible or intangible and whether now or hereafter owned or existing, leased,
consigned by or to, or acquired by, Grantor and wherever located; and
(l) To the extent not otherwise included, all Proceeds of each
of the foregoing and all accessions to, substitutions and replacements for, and
rents, profits and products of each of the foregoing.
Section 3. Rights of Lender; Collection of Accounts.
(a) Notwithstanding anything contained in this Security
Agreement to the contrary, Grantor expressly agrees that it shall remain liable
under each of its Contracts and each of its Licenses to observe and perform all
the conditions and obligations to be observed and performed by it thereunder and
that it shall perform all of its duties and obligations thereunder, all in
accordance with and pursuant to the terms and provisions of each such Contract
or License. Lender shall not have any obligation or liability under any Contract
or License by reason of or arising out of this Security Agreement or the
granting to Lender of a security interest therein or the receipt by Lender of
any payment relating to any Contract or License pursuant hereto, nor shall
Lender be required or obligated in any manner to perform or fulfill any of the
obligations of Grantor under or pursuant to any Contract or License, or to make
any
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payment, or to make any inquiry as to the nature or the sufficiency of any
payment received by it or the sufficiency of any performance by any party under
any Contract or License, or to present or file any claim, or to take any action
to collect or enforce any performance or the payment of any amounts which may
have been assigned to it or to which it may be entitled at any time or times.
(b) Lender authorizes Grantor to collect its Accounts,
provided that Lender may, upon the occurrence and during the continuation of any
Event of Default and without notice, limit or terminate said authority at any
time. If required by Lender at any time during the continuation of any Event of
Default, any Proceeds, when first collected by Grantor, received in payment of
any such Account or in payment for any of its Inventory or on account of any of
its Contracts or Licenses shall be promptly deposited by Grantor in precisely
the form received (with all necessary endorsements) in a special bank account
maintained by Lender subject to withdrawal by Lender only, as hereinafter
provided, and until so turned over shall be deemed to be held in trust by
Grantor for and as Lender's property, on behalf and for the benefit of Lender,
and shall not be commingled with Grantor's other funds or properties. Such
Proceeds, when deposited, shall continue to be collateral security for all of
the Secured Obligations and shall not constitute payment thereof until applied
as hereinafter provided. Upon the occurrence and during the continuation of any
Event of Default, Lender may, in its sole discretion, apply all or a part of the
funds on deposit in said special account to the principal of or interest on, or
both, in respect of any of the Secured Obligations in accordance with the
provisions of Subsection 7(d), below, and any part of such funds which Lender
elects not so to apply and deem not required as collateral security for the
Secured Obligations shall be paid over from time to time by Lender to Grantor.
If an Event of Default has occurred and is continuing, at the request of Lender,
Grantor shall deliver to Lender all original and other documents evidencing, and
relating to, the sale and delivery of such Inventory and Grantor shall deliver
all original and other documents evidencing and relating to, the performance of
labor or service which created such Accounts, including, without limitation, all
original orders, invoices and shipping receipts.
(c) Lender may at any time, upon the occurrence and during the
continuation of any Event of Default, after first notifying Grantor of its
intention to do so, notify Account Debtors of Grantor, parties to the Contracts
of Grantor, obligors in respect of Instruments of Grantor and obligors in
respect of Chattel Paper of Grantor that the Accounts and the right, title and
interest of Grantor in and under such Contracts, Instruments and Chattel Paper
have been assigned to Lender, and that payments shall be made directly to
Lender. Upon the request of Lender, Grantor shall so notify such Account
Debtors, parties to such Contracts, obligors in respect of such Instruments and
obligors in respect of such Chattel Paper. Upon the occurrence and during the
continuation of an Event of Default, Lender may, in its name, or in the name of
others communicate with such Account Debtors, parties to such Contracts,
obligors in respect of such Instruments and obligors in respect of such Chattel
Paper to verify with such parties, to Lender's satisfaction, the existence,
amount and terms of any such Accounts, Contracts, Instruments or Chattel Paper.
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Section 4. Representations and Warranties. Grantor hereby represents
and warrants to Lender that:
4.1 Grantor is the sole legal and equitable owner or, as to
Intellectual Property licensed from other Persons, licensee of each item of the
Collateral in which it purports to grant a security interest hereunder, having
good and marketable title or rights thereto free and clear of any and all Liens,
except for Permitted Liens.
4.2 No effective security agreement, financing statement,
equivalent security or lien instrument or continuation statement covering all or
any part of the Collateral exists, except such as may have been filed by Grantor
in favor of Lender pursuant to this Security Agreement or such as relate to
other Permitted Liens.
Section 5. Covenants. Grantor covenants and agrees with Lender that
from and after the date of this Security Agreement and until the Secured
Obligations have been completely and indefeasibly paid and performed in full:
5.1 Further Assurances; Pledge of Instruments. At any time and
from time to time, upon the written request of Lender, and at the sole expense
of Grantor, Grantor shall promptly and duly execute and deliver any and all such
further instruments and documents and take such further action as Lender may
reasonably deem desirable to obtain the full benefits of this Security Agreement
and of the rights and powers herein granted, including, without limitation, (a)
using its best efforts to secure all consents and approvals necessary or
appropriate for the grant of a security interest to Lender in any Contract or
License held by Grantor or in which Grantor has any rights not heretofore
assigned, (b) filing any financing or continuation statements under the UCC with
respect to the security interests granted hereby, (c) filing or cooperating with
Lender in filing any forms or other documents required to be filed with the
United States Patent and Trademark Office, United States Copyright Office, or
any filings in any foreign jurisdiction or under any international treaty,
required to secure or protect Lender's interest in the Collateral, (d)
transferring Collateral to Lender's possession (if a security interest in such
Collateral can be perfected by possession), (e) placing the interest of Lender
as lienholder on the certificate of title (or other evidence of ownership) of
any vehicle owned by Grantor or in or with respect to which Grantor holds a
beneficial interest, and (f) using its best efforts to obtain waivers of liens
from landlords and mortgagees. Grantor also hereby authorizes Lender to file any
such financing or continuation statement without the signature of Grantor. If
any amount payable under or in connection with any of the Collateral is or shall
become evidenced by any Instrument, such Instrument, other than checks and notes
received in the ordinary course of business, shall be duly endorsed in a manner
satisfactory to Lender and delivered to Lender promptly upon Grantor's receipt
thereof.
5.2 Maintenance of Records. Grantor shall keep and maintain at
its own cost and expense satisfactory and complete records of the Collateral,
including, without limitation, a record of all payments received and all credits
granted with respect to the Collateral and all other dealings with the
Collateral.
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5.3 Notices. Grantor shall advise Lender promptly, in
reasonable detail, of (a) any material Lien, other than Permitted Liens,
attaching to or asserted against any of the Collateral, (b) any material change
in the composition or location of the Collateral, and (c) the occurrence of any
other event which might have or result in a Material Adverse Effect with respect
to the Collateral or on the security interest created hereunder.
5.4 Taxes, Assessments, Etc. Grantor shall pay promptly when
due all property and other taxes, assessments and government charges or levies
imposed upon, and all claims (including claims for labor, materials and
supplies) against, the Equipment, Fixtures or Inventory, except to the extent
the validity thereof is being contested in good faith and adequate reserves are
being maintained in connection therewith.
5.5 Maintenance of Insurance. Grantor shall maintain, with
financially sound and reputable companies, casualty and public liability
insurance of the types and in amounts then customarily carried in lines of
business similar to that of Grantor.
5.6 Compliance with Laws. Grantor shall conduct its operations
and keep and maintain its Property in material compliance with all state and
federal laws and regulations.
5.7 Financial Statements. Grantor shall deliver to Lender as
soon as practicable and in any event within twenty (20) days after the end of
each month, financial statements of Grantor as at the end of such period, which
shall include an analysis of any event which has resulted in a Material Adverse
Effect with respect to the Collateral or on the security interest created
hereunder.
Section 6. Lender's Appointment as Attorney-in-Fact.
(a) Subject to Section 6(b) below, Grantor hereby irrevocably
constitutes and appoints Lender, and any officer or agent thereof, with full
power of substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of Grantor and in the
name of Grantor or in its own name, from time to time at Lender's discretion,
for the purpose of carrying out the terms of this Security Agreement, to take
any and all appropriate action and to execute and deliver any and all documents
and instruments which may be necessary or desirable to accomplish the purposes
of this Security Agreement and, without limiting the generality of the
foregoing, hereby gives Lender the power and right, on behalf of Grantor,
without notice to or assent by Grantor to do the following:
(i) to ask, demand, collect, receive and give
acquittances and receipts for any and all monies due or to become due under any
Collateral and, in the name of Grantor in its own name or otherwise to take
possession of, endorse and collect any checks, drafts, note, acceptances or
other Instruments for the payment of monies due under any Collateral and to file
any claim or to take or commence any other action or proceeding in any court of
law or equity or otherwise deemed appropriate by Lender for the purpose of
collecting any and all such monies due under any Collateral whenever payable;
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(ii) to pay or discharge any Liens, including,
without limitation, any tax lien, levied or placed on or threatened against the
Collateral, to effect any repairs or any insurance called for by the terms of
this Security Agreement and to pay all or any part of the premiums therefor and
the costs thereof, which actions shall be for the benefit of Lender and not
Grantor; and
(iii) to (1) direct any person liable for any
payment under or in respect of any of the Collateral to make payment of any and
all monies due or to become due thereunder directly to Lender or as Lender shall
direct, (2) receive payment of any and all monies, claims and other amounts due
or to become due at any time arising out of or in respect of any Collateral, (3)
sign and endorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with Accounts and other Instruments and
Documents constituting of or relating to the Collateral, (4) commence and
prosecute any suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect the Collateral or any part thereof and to
enforce any other right in respect of any Collateral, (5) defend any suit,
action or proceeding brought against Grantor with respect to any Collateral, (6)
settle, compromise or adjust any suit, action or proceeding described above and,
in connection therewith, give such discharges or releases as Lender may deem
appropriate, (7) license or, to the extent permitted by an applicable license,
sublicense, whether general, special or otherwise, and whether on an exclusive
or non-exclusive basis, any Patent or Trademark throughout the world for such
term or terms, on such conditions and in such manner as Lender shall in its
discretion determine, and (8) sell, transfer, pledge, make any agreement with
respect to or otherwise deal with any of the Collateral as fully and completely
as though Lender were the absolute owner thereof for all purposes, and to do, at
Lender's option and Grantor's expense, at any time, or from time to time, all
acts and things which Lender may reasonably deem necessary to protect, preserve
or realize upon the Collateral and Lender's security interest therein in order
to effect the intent of this Security Agreement, all as fully and effectively as
Grantor might do.
(b) Lender agrees that, except upon the occurrence and during
the continuation of an Event of Default, it shall not exercise the power of
attorney or any rights granted to Lender pursuant to this Section 6. Grantor
hereby ratifies, to the extent permitted by law, all that said attorney shall
lawfully do or cause to be done by virtue hereof. The power of attorney granted
pursuant to this Section 6 is a power coupled with an interest and shall be
irrevocable until the Secured Obligations are completely and indefeasibly paid
and performed in full.
(c) The powers conferred on Lender hereunder are solely to
protect Lender's interests in the Collateral and shall not impose any duty upon
Lender to exercise any such powers. Lender shall be accountable only for amounts
that it actually receives as a result of the exercise of such powers and neither
it nor any of its officers, directors, employees, agents or representatives
shall be responsible to Grantor for any act or failure to act, except for its
own gross negligence or willful misconduct.
(d) Grantor also authorizes Lender, at any time and from time
to time upon the occurrence and during the continuation of any Event of Default,
to (i) communicate in its
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own name with any party to any Contract with regard to the assignment of the
right, title and interest of Grantor in and under the Contracts hereunder and
other matters relating thereto and (ii) execute, in connection with the sale of
Collateral provided for in Section 7 below, any endorsements, assignments or
other instruments of conveyance or transfer with respect to the Collateral.
(e) If Grantor fails to perform or comply with any of its
agreements contained herein and Lender, as provided for by the terms of this
Security Agreement, shall perform or comply, or otherwise cause performance or
compliance, with such agreement, the reasonable expenses, including attorneys'
fees and costs, of Lender incurred in connection with such performance or
compliance, together with interest thereon at the rate of interest set forth in
the Note, shall be payable by Grantor to Lender within (3) three days of demand
and shall constitute Secured Obligations secured hereby.
Section 7. Rights and Remedies Upon Default.
(a) If any Event of Default shall occur and be continuing,
Lender may exercise in addition to all other rights and remedies granted to it
under this Security Agreement, the Note, the other Loan Documents and under any
other instrument or agreement securing, evidencing or relating to the Secured
Obligations, all rights and remedies of a secured party under the UCC. Without
limiting the generality of the foregoing, Grantor expressly agrees that in any
such event Lender, without demand of performance or other demand, advertisement
or notice of any kind (except the notice specified below of time and place of
public or private sale) to or upon Grantor or any other person (all and each of
which demands, advertisements and notices are hereby expressly waived to the
maximum extent permitted by the UCC and other applicable law), may forthwith
collect, receive, appropriate and realize upon the Collateral, or any part
thereof, and may forthwith sell, lease, assign, give an option or options to
purchase or sell or otherwise dispose of and deliver said Collateral (or
contract to do so), or any part thereof, in one or more parcels at public or
private sale or sales, at any exchange or broker's board or at any of Lender's
offices or elsewhere at such prices as it may deem best, for cash or on credit
or for future delivery without assumption of any credit risk. Lender shall have
the right upon any such public sale or sales, and, to the extent permitted by
law, upon any such private sale or sales, to purchase the whole or any part of
said Collateral so sold, free of any right or equity of redemption, which equity
of redemption Grantor hereby releases. Grantor further agrees, at Lender's
request, to assemble the Collateral and make it available to Lender at places
which Lender shall reasonably select, whether at Grantor's premises or
elsewhere. Lender shall apply the net proceeds of any such collection, recovery,
receipt, appropriation, realization or sale as provided in Subsection 7(d),
below, Grantor remaining liable for any deficiency remaining unpaid after such
application, and only after so paying over such net proceeds and after the
payment by Lender of any other amount required by any provision of law,
including Section 9504(1)(c) of the UCC, need Lender account for the surplus, if
any, to Grantor. To the maximum extent permitted by applicable law, Grantor
waives all claims, damages, and demands against Lender arising out of the
repossession, retention or sale of the Collateral except such as arise out of
the gross negligence or willful misconduct of Lender. Grantor agrees that Lender
need not give more than ten (10) days' notice (which notification
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shall be deemed given in accordance with the Notes of the time and place of any
public sale or of the time after which a private sale may take place and that
such notice is reasonable notification of such matters. Grantor shall remain
liable for any deficiency if the proceeds of any sale or disposition of the
Collateral are insufficient to pay all amounts to which Lender is entitled,
Grantor also being liable for the attorneys' fees and costs of any attorneys
employed by Lender to collect such deficiency.
(b) Upon Lender's request, Grantor agrees to promptly execute
assignments of Grantor's entire right, title and interest in and to each of the
Patents, Trademarks, Copyrights and Licenses. Such assignments shall be in form
and content which is recordable in the U.S. Patent and Trademark Office or
Copyright Office, as applicable, and otherwise reasonable acceptable to Lender.
(c) Grantor hereby waives presentment, demand, protest or any
notice (to the maximum extent permitted by applicable law) of any kind in
connection with this Security Agreement or any Collateral.
(d) The Proceeds of any sale, disposition or other realization
upon all or any part of the Collateral shall be distributed by Lender in the
following order of priorities:
First, to Lender in an amount sufficient to pay in
full the reasonable costs of Lender in connection with such
sale, disposition or other realization, including all fees,
costs, expenses, liabilities and advances incurred or made by
Lender in connection therewith, including, without limitation,
attorneys' fees and costs;
Second, to Lender in an amount equal to the then
unpaid principal of and accrued interest and prepayment
premiums, if any, on the Secured Obligations;
Third, to Lender in an amount equal to any other
Secured Obligations which are then unpaid; and
Finally, upon payment in full of all of the Secured
Obligations, to Grantor or its representatives or as a court
of competent jurisdiction may direct.
Section 8. Limitation on Lender's Duty in Respect of Collateral. Lender
shall be deemed to have acted reasonably in the custody, preservation and
disposition of any of the Collateral if it complies with the obligations of a
secured party under Section 9207 of the UCC.
Section 9. Reinstatement. This Security Agreement shall remain in full
force and effect and continue to be effective should any petition be filed by or
against Grantor for liquidation or reorganization, should Grantor become
insolvent or make an assignment for the benefit of creditors or should a
receiver or trustee be appointed for all or any significant part
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of Grantor's property and assets, and shall continue to be effective or be
reinstated, as the case may be, if at any time payment and performance of the
Secured Obligations, or any part thereof, is, pursuant to applicable law,
rescinded or reduced in amount, or must otherwise be restored or returned by any
obligee of the Secured Obligations, whether as a "voidable preference,"
"fraudulent conveyance," or otherwise, all as though such payment or performance
had not been made. In the event that any payment, or any part thereof, is
rescinded, reduced, restored or returned, the Secured Obligations shall be
reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.
Section 10. Miscellaneous.
10.1 Notices. Any notice or other communication hereunder to
any party shall be addressed and delivered (and shall be deemed given) in
accordance with the Note.
10.2 Severability. Any provision of this Security Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
10.3 Headings. The various headings in this Security Agreement
are inserted for convenience only and shall not affect the meaning or
interpretation of this agreement or any provisions hereof.
10.4 No Waiver; Cumulative Remedies.
(a) Lender shall not by any act, delay, omission or
otherwise be deemed to have waived any of its respective rights or remedies
hereunder, nor shall any single or partial exercise of any right or remedy
hereunder on any one occasion preclude the further exercise thereof or the
exercise of any other right or remedy.
(b) The rights and remedies hereunder provided are
cumulative and may be exercised singly or concurrently, and are not exclusive of
any rights and remedies provided by law.
(c) None of the terms or provisions of this Security
Agreement may be waived, altered, modified or amended except by an instrument in
writing, duly executed by Grantor and Lender.
10.5 Time Is of the Essence. Time is of the essence for the
performance of each of the terms and provisions of this Security Agreement.
10.6 Termination of this Security Agreement. Subject to
Section 9 above, this Security Agreement shall terminate upon and the complete
and indefeasible payment and performance in full of the Secured Obligations.
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10.7 Successor and Assigns. This Security Agreement and all
obligations of Grantor hereunder shall be binding upon the successors and
assigns of Grantor, and shall, together with the rights and remedies of Lender
hereunder, inure to the benefit of Lender, any future holder of any Note and
their respective successors and assigns. No sales of participations, other
sales, assignments, transfers or other dispositions of any agreement governing
or instrument evidencing the Secured Obligations or any portion thereof or
interest therein shall in any manner affect the security interest created herein
and granted to Lender hereunder.
10.8 Governing Law. This Security Agreement shall be governed
by and construed in accordance with the laws of the State of California, as
applied to contracts entered into by California residents and to be performed
entirely within California, except to the extent that the validity or 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 California, including federal law.
10.9 Counterparts. This Security Agreement may be executed in
any number of counterparts, each of which when so delivered shall be deemed an
original, but all such counterparts shall constitute but one and the same
instrument. Each such agreement shall become effective upon the execution of a
counterpart hereof or thereof by each of the parties hereto.
IN WITNESS WHEREOF, each of the parties hereto has caused this Security
Agreement to be executed and delivered by its duly authorized officer on the
date first set forth above.
"Grantor"
EDNET, INC.
a Colorado corporation
By /s/ Xxx Xxxxxxxxx
--------------------------------
Xxx Xxxxxxxxx
Chief Executive Officer
Accepted and acknowledged by:
Xxxxxx Xxxxxx Capital Group L.L.C.,
as Lender
By /s/ Xxxxxx X. Xxxxxxxxxx
-----------------------------------
Xxxxxx X. Xxxxxxxxxx
Managing Director
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