SECURITY AGREEMENT
EXHIBIT
10.1
THIS
SECURITY AGREEMENT (this “Agreement”) is made and entered into as of the
17th
day of
March, 2008, by and among Single Touch Interactive, Inc., a Nevada corporation
(the “Borrower”) and Hosting Site Network, Inc., a Delaware corporation (the
“Lender”).
RECITALS:
The
Borrower has issued and delivered or will issue and deliver to the Lender
Secured Bridge Loan Promissory Note(s) (each, a “Note”) in the aggregate
principal amount of up to Three Million, Three Hundred Thousand Dollars
($3,300,000). Pursuant to the Notes and the related Bridge Loan Agreement,
the
Borrower has agreed to grant a security interest in and to the Collateral (as
defined in this Agreement) on the terms and conditions set forth in this
Agreement.
In
consideration of the Debt (as defined in this Agreement) evidenced by the Notes,
and to secure repayment thereof, the Stockholders have agreed to grant the
Lender a security interest in and to the Borrower Control Shares (as defined
in
this Agreement).
NOW,
THEREFORE, for and in consideration of the Debt, and of the premises and
intending to be legally bound, the parties covenant and agree as follows:
1. Definitions.
In
addition to the words and terms defined elsewhere in this Agreement, the
following words and terms shall have the following meanings, unless the context
otherwise clearly requires:
“Accounts”
shall have the meaning given to that term in the Code and shall include without
limitation all rights of the Borrower, whenever acquired, to payment for goods
sold or leased or for services rendered, whether or not earned by
performance.
“As-extracted
Collateral” shall have the meaning given to that term under the
Code.
“Bridge
Loan Agreement” shall mean the Bridge Loan Agreement by and between the Borrower
and the Lender dated as of even date herewith.
“Chattel
Paper” shall have the meaning given to that term in the Code and shall include
without limitation all writings owned by the Borrower, whenever acquired, which
evidence both a monetary obligation and a security interest in or a lease of
specific goods.
“Code”
shall mean the Uniform Commercial Code as in effect on the date of this
Agreement, and as amended from time to time, of the state or states having
jurisdiction with respect to all or any portion of the Collateral from time
to
time.
“Collateral”
shall mean all tangible and intangible assets of the Borrower, including,
without limitation, collectively the Accounts, As-extracted Collateral, Chattel
Paper, Deposit Accounts, Documents, Equipment, Fixtures, General Intangibles,
Instruments, Intellectual Property, Inventory, Investment Property, and Proceeds
of each of them.
“Debt”
shall mean (i) all indebtedness, both principal and interest, of the Borrower
to
the Lender now or after the date of this Agreement evidenced by the Notes,
(ii)
all other debts, liabilities, duties and obligations of the Borrower to the
Lender arising after the date of this Agreement contracted or incurred, whether
arising under or in connection with the Loan Documents or arising under or
in
connection with any other agreement, instrument, or undertaking made by or
for
the benefit of the Borrower to or for the benefit of the Lender, (iii) all
costs
and expenses incurred by the Lender in the collection of any of the indebtedness
described in this paragraph or in connection with the enforcement of any of
the
duties and obligations of the Borrower to the Lender described in this
paragraph, including reasonable attorneys’ and paralegals’ fees and expenses,
and (iv) all future advances made by the Lender for the maintenance, protection,
preservation or enforcement of, or realization upon, the Collateral or any
portion of the Collateral, including advances for storage, transportation
charges, taxes, insurance, repairs and the like.
“Deposit
Accounts” shall have the meaning given to that term in the Code and shall
include a demand, time, savings, passbook or similar account maintained with
a
bank, savings bank, savings and loan association, credit union, trust company
or
other organization that is engaged in the business of banking.
“Documents”
shall have the meaning given to that term in the Code and shall include without
limitation all warehouse receipts (as defined by the Code) and other documents
of title (as defined by the Code) owned by the Borrower, whenever
acquired.
“Equipment”
shall have the meaning given to that term in the Code and shall include without
limitation all goods owned by the Borrower, whenever acquired and wherever
located, used or brought for use primarily in the business or for the benefit
of
the Borrower and not included in Inventory of the Borrower, together with all
attachments, accessories and parts used or intended to be used with any of
those
goods or Fixtures, whether now or in the future installed therein or thereon
or
affixed thereto, as well as all substitutes and replacements thereof in whole
or
in part.
“Event
of
Default” shall mean (i) any of the Events of Default described in the Note or
the Loan Documents, or (ii) any default by the Borrower in the performance
of
its obligations under this Agreement.
“Fixtures”
shall have the meaning given to that term in the Code, and shall include without
limitation leasehold improvements.
“General
Intangibles” shall have the meaning given to that term in the Code and shall
include, without limitation, all leases under which the Borrower now or in
the
future leases and or obtains a right to occupy or use real or personal property,
or both, all of the other contract rights of the Borrower, whenever acquired,
and customer lists, choses in action, claims (including claims for
indemnification), books, records, patents, copyrights, trademarks, blueprints,
drawings, designs and plans, trade secrets, methods, processes, contracts,
licenses, license agreements, formulae, tax and any other types of refunds,
returned and unearned insurance premiums, rights and claims under insurance
policies, and computer information, software, records and data now owned or
acquired after the date of this Agreement by the Borrower.
2
“Instruments”
shall have the meaning given to that term in the Code and shall include, without
limitation, all negotiable instruments (as defined in the Code), all
certificated securities (as defined in the Code) and all other writings which
evidence a right to the payment of money now or after the date of this Agreement
owned by the Borrower.
“Inventory”
shall have the meaning given to that term in the Code and shall include without
limitation all goods owned by the Borrower, whenever acquired and wherever
located, held for sale or lease or furnished or to be furnished under contracts
of service, and all raw materials, work in process and materials owned by the
Borrower and used or consumed in the Borrower’s business, whenever acquired and
wherever located.
“Investment
Property” shall have the meaning set forth in the Code.
“Loan
Documents” shall mean, collectively, this Agreement, the Note, the Bridge Loan
Agreement, and all other agreements, Documents and Instruments executed and
delivered in connection therewith, as each may be amended, supplemented or
modified from time to time.
“Permitted
Liens” shall mean (i) all existing liens on the assets of the Borrower which
have been disclosed to the Lender by the Borrower in the Bridge Loan Agreement,
and (ii) all purchase money security interests hereinafter incurred by the
Borrower in the ordinary course of business to the extent permitted by the
Bridge Loan Agreement.
“Proceeds”
shall have the meaning given to that term in the Code and shall include without
limitation whatever is received when Collateral or Proceeds are sold, exchanged,
collected or otherwise disposed of, whether cash or non-cash, and includes
without limitation proceeds of insurance payable by reason of loss of or damage
to Collateral.
2. Security
Interest.
As
security for the full and timely payment of the Debt in accordance with the
terms of the Debt and the performance of the obligations of the Borrower under
the Notes and this Agreement, the Borrower agrees that the Lender shall have,
and the Borrower grants and conveys to and creates in favor of the Lender,
a
security interest under the Code in and to such of the Collateral as is now
owned or acquired after the date of this Agreement by the Borrower. The security
interest granted to the Lender in this Agreement shall be a first priority
security interest, prior and superior to the rights of all third parties
existing on or arising after the date of this Agreement, subject to the
Permitted Liens.
3
3. Provisions
Applicable to the Collateral.
The
parties agree that the following provisions shall be applicable to the
Collateral:
(a) The
Borrower covenants and agrees that at all times during the term of this
Agreement it shall keep accurate and complete books and records concerning
the
Collateral that is now owned or acquired after the date of this Agreement by
the
Borrower.
(b) The
Borrower shall not move the location of its principal executive offices without
prior written notification to the Lender.
(c) Without
the prior written consent of the Lender, the Borrower shall not sell, lease
or
otherwise dispose of any Equipment or Fixtures, except in the ordinary course
of
business.
(d) Promptly
upon request of the Lender from time to time, the Borrower shall furnish the
Lender with such information and Documents regarding the Collateral and the
Borrower’s financial condition, business, assets or liabilities, at such times
and in such form and detail as the Lender may request.
(e) The
Borrower shall not change its name, entity status, federal taxpayer
identification number, or provincial organizational or registration number,
or
the state under which it is organized without the prior written consent of
the
Lender.
(f) The
Borrower shall cooperate with the Lender, at the Borrower’s expense, in
perfecting the Lender’s security interest in any of the Collateral, including
(i) the execution of any financing statements and (ii) any control agreement(s)
required in order to perfect the Lender’s security interest in the Deposit
Accounts.
4. Actions
with Respect to Accounts.
The
Borrower hereby authorizes the Lender to take all actions that the Lender
reasonably deems to be necessary or desirable to protect the Borrower’s interest
in the Accounts after the occurrence and prior to the cure of an Event of
Default at any time without notice to the Borrower and at the Borrower’s
expense.
5. Preservation
and Protection of Security Interest.
The
Borrower represents and warrants that it has, and covenants and agrees that
at
all times during the term of this Agreement, it will have, good and marketable
title to the Collateral from time to time owned or acquired by it free and
clear
of all mortgages, pledges, liens, security interests, charges or other
encumbrances, except for the Permitted Liens and those junior in right of
payment and enforcement to that of the Lender or in favor of the Lender, and
shall defend the Collateral against the claims and demands of all persons,
firms
and entities whomsoever. Assuming the Lender has taken all required action
to
perfect a security interest in the Collateral as provided by the Code, the
Borrower represents and warrants that as of the date of this Agreement the
Lender has, and that all times in the future the Lender will have, a first
priority perfected security interest in the Collateral, prior and superior
to
the rights of all third parties in the Collateral existing on the date of this
Agreement or arising after the date of this Agreement, subject to the Permitted
Liens. Except as permitted by this Agreement, the Borrower covenants and agrees
that it shall not, without the prior written consent of the Lender, (i) borrow
against the Collateral or any portion of the Collateral from any other person,
firm or entity, except for borrowings which are subordinate to the rights of
the
Lender, (ii) grant or create or permit to attach or exist any mortgage, pledge,
lien, charge or other encumbrance, or security interest on, of or in any of
the
Collateral or any portion of the Collateral except those in favor of the Lender
or the Permitted Liens, (iii) permit any levy or attachment to be made against
the Collateral or any portion of the Collateral, except those subject to the
Permitted Liens, or (iv) permit any financing statements to be on file with
respect to any of the Collateral, except financing statements in favor of the
Lender or those with respect to the Permitted Liens. The Borrower shall
faithfully preserve and protect the Lender’s security interest in the Collateral
and shall, at its own cost and expense, cause, or assist the Lender to cause,
that security interest to be perfected and continue perfected so long as the
Debt or any portion of the Debt is outstanding, unpaid or executory. For
purposes of the perfection of the Lender’s security interest in the Collateral
in accordance with the requirements of this Agreement, the Borrower shall from
time to time at the request of the Lender file or record, or cause to be filed
or recorded, such Instruments, Documents and notices, including assignments,
financing statements and continuation statements, as the Lender may reasonably
deem necessary or advisable from time to time in order to perfect and continue
perfected such security interest. The Borrower shall do all such other acts
and
things and shall execute and deliver all such other Instruments and Documents,
including further security agreements, pledges, endorsements, assignments and
notices, as the Lender in its discretion may reasonably deem necessary or
advisable from time to time in order to perfect and preserve the priority of
such security interest as a first lien security interest in the Collateral
prior
to the rights of all third persons, firms and entities, subject to the Permitted
Liens and except as may be otherwise provided in this Agreement. The Borrower
agrees that a carbon, photographic or other reproduction of this Agreement
or a
financing statement is sufficient as a financing statement and may be filed
instead of the original.
4
6. Maintenance
and Repair.
The
Borrower shall maintain the Equipment, Inventory and Fixtures, and every portion
thereof, in good condition, repair and working order, reasonable wear and tear
alone excepted, and shall pay and discharge all taxes, levies and other
impositions assessed or levied thereon as well as the cost of repairs to or
maintenance of the same. If the Borrower fails to do so, the Lender may (but
shall not be obligated to) pay the cost of such repairs or maintenance and
such
taxes, levies or impositions for the account of the Borrower and add the amount
of such payments to the Debt.
7. Preservation
of Rights against Third Parties; Preservation of Collateral in Lender’s
Possession.
Until
such time as the Lender exercise its right to effect direct collection of the
Accounts and the Chattel Paper and to effect the enforcement of the Borrower’s
contract rights, the Borrower assumes full responsibility for taking any and
all
commercially reasonable steps to preserve rights in respect of the Accounts
and
the Chattel Paper and their contracts against prior parties. The Lender shall
be
deemed to have exercised reasonable care in the custody and preservation of
such
of the Collateral as may come into its possession from time to time if the
Lender takes such action for that purpose as the Borrower shall request in
writing, provided that such requested action shall not, in the judgment of
the
Lender, impair the Lender’s security interest in the Collateral or its right in,
or the value of, the Collateral, and provided further that the Lender receives
such written request in sufficient time to permit the Lender to take the
requested action.
8. Events
of Default and Remedies.
(a) If
any
one or more of the Events of Default shall occur or shall exist, the Lender
may
then or at any time thereafter, so long as such default shall continue,
foreclose the lien or security interest in the Collateral in any way permitted
by law, or upon 15 days prior written notice to the Borrower, sell any or all
Collateral at private sale at any time or place in one or more sales, at such
price or prices and upon such terms, either for cash or on credit, as the
Lender, in its sole discretion, may elect, or sell any or all Collateral at
public auction, either for cash or on credit, as the Lender, in its sole
discretion, may elect, and at any such sale, the Lender may bid for and become
the purchaser of any or all such Collateral. Pending any such action the Lender
may liquidate the Collateral.
(b) If
any
one or more of the Events of Default shall occur or shall exist, the Lender
may
then, or at any time thereafter, so long as such default shall continue, grant
extensions to, or adjust claims of, or make compromises or settlements with,
debtors, guarantors or any other parties with respect to Collateral or any
securities, guarantees or insurance applying thereon, without notice to or
the
consent of the Borrower, without affecting the Borrower’s liability under this
Agreement or the Notes. The Borrower waives notice of acceptance, of nonpayment,
protest or notice of protest of any Accounts or Chattel Paper or any of its
contract rights and any other notices to which the Borrower may be
entitled.
(c) If
any
one or more of the Events of Default shall occur or shall exist and be
continuing, then in any such event, the Lender shall have such additional rights
and remedies in respect of the Collateral or any portion thereof as are provided
by the Code and such other rights and remedies in respect thereof which it
may
have at law or in equity or under this Agreement, including without limitation
the right to enter any premises where Equipment, Inventory and/or Fixtures
are
located and take possession and control thereof without demand or notice and
without prior judicial hearing or legal proceedings, which the Borrower
expressly waives
(d) The
Lender shall apply the Proceeds of any sale or liquidation of the Collateral,
and, subject to Section 6, any Proceeds received by the Lender from insurance,
first to the payment of the reasonable costs and expenses incurred by the Lender
in connection with such sale or collection, including without limitation
reasonable attorneys’ fees and legal expenses, second to the payment of the
Debt, whether on account of principal or interest or otherwise as the Lender,
in
its sole discretion, may elect, and then to pay the balance, if any, to the
Borrower or as otherwise required by law. If such Proceeds are insufficient
to
pay the amounts required by law, the Borrower shall be liable for any
deficiency.
(e) Upon
the
occurrence of any Event of Default, the Borrower shall promptly upon written
demand by the Lender assemble the Equipment, Inventory and Fixtures and make
them available to the Lender at a place or places to be designated by the
Lender. The rights of the Lender under this paragraph to have the Equipment,
Inventory and Fixtures assembled and made available to it is of the essence
of
this Agreement and the Lender may, at its election, enforce such right by an
action in equity for injunctive relief or specific performance, without the
requirement of a bond.
5
9. Defeasance.
Notwithstanding anything to the contrary contained in this Agreement upon
payment and performance in full of the Debt, this Agreement shall terminate
and
be of no further force and effect and the Lender shall thereupon terminate
its
security interest in the Collateral. Until such time, however, this Agreement
shall be binding upon and inure to the benefit of the parties, their successors
and assigns, provided that, without the prior written consent of the Lender,
the
Borrower may not assign this Agreement or any of its rights under this Agreement
or delegate any of its duties or obligations under this Agreement and any such
attempted assignment or delegation shall be null and void. This Agreement is
not
intended and shall not be construed to obligate the Lender to take any action
whatsoever with respect to the Collateral or to incur expenses or perform or
discharge any obligation, duty or disability of the Borrower.
10. Miscellaneous.
(a) The
provisions of this Agreement are intended to be severable. If any provision
of
this Agreement shall for any reason be held invalid or unenforceable in whole
or
in part in any jurisdiction, such provision shall, as to such jurisdiction,
be
ineffective to the extent of such invalidity or unenforceability without in
any
manner affecting the validity or enforceability of such provision in any other
jurisdiction or any other provision of this Agreement in any jurisdiction.
(b) No
failure or delay on the part of the Lender in exercising any right, remedy,
power or privilege under this Agreement and the Notes shall operate as a waiver
thereof or of any other right, remedy, power or privilege of the Lender under
this Agreement, the Notes or any of the other Loan Documents; nor shall any
single or partial exercise of any such right, remedy, power or privilege
preclude any other right, remedy, power or privilege or further exercise thereof
or the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges of the Lender under this Agreement, the Notes
and the other Loan Documents are cumulative and not exclusive of any rights
or
remedies which they may otherwise have.
(c) Unless
otherwise provided herein, all demands, notices, consents, service of process,
requests and other communications hereunder shall be in writing and shall be
delivered in person or by overnight courier service, or mailed by certified
mail, return receipt requested, addressed:
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If
to the Borrower:
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|
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Single
Touch Interactive, Inc.
|
|
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0000
Xxxxxxxxx Xxxx. Xxxxx 000
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Xxxxxxxxx,
XX 00000
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Attn:
Xxxxxxx X. Xxxxxx, General Counsel
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Facsimile:
760.438.1793
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If
to the Lender:
|
|
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Hosting
Site Network, Inc.
|
|
|
00
Xxxxxx Xxxxx
|
|
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Xxxxxxx,
XX 00000
|
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Attn:
Xxxxx Xxxxxx, President
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with
a copy to:
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Gottbetter
& Partners, LLP
|
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000
Xxxxxxx Xxxxxx, 00xx Xxxxx
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Xxx
Xxxx, XX 00000
|
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Attn:
Xxxxx Xxxxxxxx, Esq.
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Facsimile:
212.400.6901
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Any
such
notice shall be effective (a) when delivered, if delivered by hand delivery
or overnight courier service, or (b) five days after deposit in the United
States mail, as applicable.
6
(d) The
section headings contained in this Agreement are for reference purposes only
and
shall not control or affect its construction or interpretation in any respect.
(e) Unless
the context otherwise requires, all terms used in this Agreement which are
defined by the Code shall have the meanings stated in the Code.
(f) The
Code
shall govern the settlement, perfection and the effect of attachment and
perfection of the Lender’s security interest in the Collateral, and the rights,
duties and obligations of the Lender and the Borrower with respect to the
Collateral. This Agreement shall be deemed to be a contract under the laws
of
the State of New York and the execution and delivery of this Agreement and,
to
the extent not inconsistent with the preceding sentence, the terms and
provisions of this Agreement shall be governed by and construed in accordance
with the laws of that State, without regard to conflicts of laws principles
thereof.
(g) This
Agreement may be executed in several counterparts, each of which shall be deemed
an original but all of which shall constitute one and the same instrument.
All
of such counterparts shall be read as though one, and they shall have the same
force and effect as though all the signers had signed a single page. This
Agreement may be executed by facsimile signature.
[SIGNATURE
PAGE FOLLOWS]
7
IN
WITNESS WHEREOF, and intending to be legally bound, the parties have executed
and delivered this Security Agreement as of the day and year set forth at the
beginning of this Security Agreement.
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LENDER:
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BORROWER:
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|||
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HOSTING
SITE NETWORK, INC.
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SINGLE
TOUCH INTERACTIVE, INC.
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|||
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By:
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/s/
Xxxxx Xxxxxx
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By:
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/s/
Xxxxxxx Xxxxxxxx
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Name:
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Xxxxx
Xxxxxx
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Name:
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Xxxxxxx
Xxxxxxxx
|
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Title:
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President
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Title:
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Chief
Executive Officer
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8
