STAR E MEDIA CORPORATION
00000 XXXXXXX
XXXXXXXX XXXXX, XX 00000
TEL (000) 000-0000 FAX (000) 000-0000
TAX I.D. NO. 00-0000000
SECURITY AGREEMENT, dated December 27, 2002, between Star E Media Corporation, a
Nevada corporation (the "Debtor"), and Xxxxx X. Xxxxxxxx, as escrow agent for
the Lenders listed on Schedule A of the Secured Promissory Note dated the date
hereof (the "Secured Party").
WHEREAS, the Debtor has issued a Secured Promissory Note dated December 27, 2002
(as amended and in effect from time to time, the "Credit Agreement"), with the
Secured Party, pursuant to which the Secured Party, subject to the terms and
conditions contained therein, is making a loan in the principal amount of
$230,000.00 to the Debtor; and
WHEREAS, it is a condition precedent to the Secured Party's making any loans to
the Debtor under the Credit Agreement that the Debtor execute and deliver to the
Secured Party a security agreement in the form hereof; and
WHEREAS, the Debtor wishes to grant a security interest in favor of the Secured
Party as herein provided;
NOW, THEREFORE, in consideration of the promises contained herein and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. All capitalized terms used herein without definitions shall
have the respective meanings provided therefore in the Credit Agreement. The
term "State," as used herein, means the State of Nevada. All terms defined in
the Uniform Commercial Code of the State and used herein shall have the same
definitions herein as specified therein. However, if a term is defined in
Article 9 of the Uniform Commercial Code of the State differently than in
another Article of the Uniform Commercial Code of the State, the term has the
meaning specified in Article 9. The term "Obligations," as used herein, means
all of the indebtedness, obligations and liabilities of the Debtor to the
Secured Party, individually or collectively, whether direct or indirect, joint
or several, absolute or contingent, due or to become due, now existing or
hereafter arising under or in respect of the Credit Agreement or this Agreement,
and the term "Event of Default," as used herein, means the failure of the Debtor
to pay or perform any of the Obligations as and when due to be paid or performed
under the terms of the Credit Agreement.
2. Grant of Security Interest. The Debtor hereby grants to the Secured
Party, to secure the payment and performance in full of all of the Obligations,
a security interest in and so pledges and assigns to the Secured Party the
following properties, assets and rights of the Debtor, wherever located, whether
now owned or hereafter acquired or arising, and all proceeds and products
thereof (all of the same being hereinafter called the "Collateral"): all
assets of the Debtor including without limitation (a) all personal and
fixture property of every kind and nature including without limitation all
goods (including inventory, equipment and any accessions thereto), instruments
(including promissory notes), documents, accounts (including health-care-
insurance receivables), chattel paper (whether tangible or electronic), deposit
accounts, letter-of-credit rights (whether or not the letter of credit is
evidenced by a writing), commercial tort claims, securities and all other
investment property, supporting obligations, any other contract rights or rights
to the payment of money, insurance claims and proceeds, and all general
intangibles (including all payment intangibles) and all multi-language, bi-
lingual localization of licensed software titles and content. The Secured Party
acknowledges that the attachment of its security interest in any additional
commercial tort claim as original collateral is subject to the Debtor's
compliance with Section 4.7
3. Authorization to File Financing Statements. The Debtor hereby irrevocably
authorizes the Secured Party at any time and from time to time to file in any
filing office in any Uniform Commercial Code jurisdiction any initial financing
statements and amendments thereto that (a) indicate the Collateral (i) as all
assets of the Debtor or words of similar effect, regardless of whether any
particular asset comprised in the Collateral falls within the scope of Article 9
of the Uniform Commercial Code of the State or such jurisdiction, or (ii) as
being of an equal or lesser scope or with greater detail, and (b) provide any
other information required by part 5 of Article 9 of the Uniform Commercial Code
of the State, or such other jurisdiction, for the sufficiency or filing office
acceptance of any financing statement or amendment, including (i) whether the
Debtor is an organization, the type of organization and any organizational
identification number issued to the Debtor and, (ii) in the case of a financing
statement filed as a fixture filing, a sufficient description of real property
to which the Collateral relates. The Debtor agrees to furnish any such
information to the Secured Party promptly upon the Secured Party's request. The
Debtor also ratifies its authorization for the Secured Party to have filed in
any Uniform Commercial Code jurisdiction any like initial financing statements
or amendments thereto if filed prior to the date hereof.
4. Other Actions. To further the attachment, perfection and first priority
of, and the ability of the Secured Party to enforce, the Secured Party's
security interest in the Collateral, and without limitation on the Debtor's
other obligations in this Agreement, the Debtor agrees, in each case at the
Debtor's expense, to take the following actions with respect to the following
Collateral:
4.1. Promissory Notes and Tangible Chattel Paper. If the Debtor shall
at any time after which there has been an event of Default hold or acquire any
promissory notes or tangible chattel paper, the Debtor shall forthwith endorse,
assign and deliver the same to the Secured Party, accompanied by such
instruments of transfer or assignment duly executed in blank as the Secured
Party may from time to time specify.
4.2. Deposit Accounts. For each deposit account that the Debtor at any
time after which there is has been an event of Default opens or maintains, the
Debtor shall, at the Secured Party's request and option, pursuant to an
agreement in form and substance satisfactory to the Secured Party, either (a)
cause the depositary bank to comply at any time with instructions from the
Secured Party to such depositary bank directing the disposition of funds from
time to time credited to such deposit account, without further consent of the
Debtor, or (b) arrange for the Secured Party to become the customer of the
depositary bank with respect to the deposit account, with the Debtor being
permitted, only with the consent of the Secured Party, to exercise rights to
withdraw funds from such deposit account. The Secured Party agrees with the
Debtor that the Secured Party shall not give any such instructions or withhold
any withdrawal rights from the Debtor, unless an Event of Default has occurred
and is continuing, or would occur, if effect were given to any withdrawal not
otherwise permitted by the Loan Documents. The provisions of this paragraph
shall not apply to (i) any deposit account for which the Debtor, the depositary
bank and the Secured Party have entered into a cash collateral agreement
specially negotiated among the Debtor, the depositary bank and the Secured Party
for the specific purpose set forth therein, (ii) a deposit account for which the
Secured Party is the depositary bank and is in automatic control, and (iii)
deposit accounts specially and exclusively used for payroll, payroll taxes and
other employee wage and benefit payments to or for the benefit of the Debtor's
salaried employees.
4.3. Investment Property. If the Debtor shall at any time after which
there has been an event of Default hold or acquire any certificated securities,
the Debtor shall forthwith endorse, assign and deliver the same to the Secured
Party, accompanied by such instruments of transfer or assignment duly executed
in blank as the Secured Party may from time to time specify. If any securities
now or hereafter acquired by the Debtor are uncertificated and are issued to the
Debtor or its nominee directly by the issuer thereof, after an event of Default
the Debtor shall immediately notify the Secured Party thereof and, at the
Secured Party's request and option, pursuant to an agreement in form and
substance satisfactory to the Secured Party, either (a) cause the issuer to
agree to comply with instructions from the Secured Party as to such securities,
without further consent of the Debtor or such nominee, or (b) arrange for the
Secured Party to become the registered owner of the securities. If any
securities, whether certificated or uncertificated, or other investment property
now or hereafter acquired by the Debtor are held by the Debtor or its nominee
through a securities intermediary or commodity intermediary at any time after
which there has been an event of Default, the Debtor shall immediately notify
the Secured Party thereof and, at the Secured Party's request and option,
pursuant to an agreement in form and substance satisfactory to the Secured
Party, either (i) cause such securities intermediary or (as the case may be)
commodity intermediary to agree to comply with entitlement orders or other
instructions from the Secured Party to such securities intermediary as to such
securities or other investment property, or (as the case may be) to apply any
value distributed on account of any commodity contract as directed by the
Secured Party to such commodity intermediary, in each case without further
consent of the Debtor or such nominee, or (ii) in the case of financial assets
or other investment property held through a securities intermediary, arrange for
the Secured Party to become the entitlement holder with respect to such
investment property, with the Debtor being permitted, only with the consent of
the Secured Party, to exercise rights to withdraw or otherwise deal with such
investment property. The Secured Party agrees with the Debtor that the Secured
Party shall not give any such entitlement orders or instructions or directions
to any such issuer, securities intermediary or commodity intermediary, and shall
not withhold its consent to the exercise of any withdrawal or dealing rights by
the Debtor, unless an Event of Default has occurred and is continuing, or, after
giving effect to any such investment and withdrawal rights not otherwise
permitted by the Loan Documents, would occur. The provisions of this paragraph
shall not apply to any financial assets credited to a securities account for
which the Secured Party is the securities intermediary.
4.4. Collateral in the Possession of a Bailee. If any Collateral is at
any time in the possession of a bailee, the Debtor shall promptly notify the
Secured Party thereof and, at the Secured Party's request and option, shall
promptly obtain an acknowledgement from the bailee, in form and substance
satisfactory to the Secured Party, that the bailee holds such Collateral for the
benefit of the Secured Party, and that such bailee agrees to comply, without
further consent of the Debtor, with instructions from the Secured Party as to
such Collateral. The Secured Party agrees with the Debtor that the Secured Party
shall not give any such instructions unless an Event of Default has occurred and
is continuing or would occur after taking into account any action by the Debtor
with respect to the bailee.
4.5. Electronic Chattel Paper and Transferable Records. If the Debtor
at any time holds or acquires an interest in any electronic chattel paper or any
"transferable record," as that term is defined in Section 201 of the federal
Electronic Signatures in Global and National Commerce Act, or in Section 16
of the Uniform Electronic Transactions Act as in effect in any relevant
jurisdiction, the Debtor shall promptly notify the Secured Party thereof and, at
the request and option of the Secured Party at any time after which there has
been an event of Default, shall take such action as the Secured Party may
reasonably request to vest in the Secured Party control, under Section 9-105 of
the Uniform Commercial Code, of such electronic chattel paper or control under
Section 201 of the federal Electronic Signatures in Global and National Commerce
Act or, as the case may be, Section 16 of the Uniform Electronic Transactions
Act, as so in effect in such jurisdiction, of such transferable record. The
Secured Party agrees with the Debtor that the Secured Party will arrange,
pursuant to procedures satisfactory to the Secured Party and so long as such
procedures will not result in the Secured Party's loss of control, for the
Debtor to make alterations to the electronic chattel paper or transferable
record permitted under UCC Section 9-105 or, as the case may be, Section 201 of
the federal Electronic Signatures in Global and National Commerce Act or Section
16 of the Uniform Electronic Transactions Act for a party in control to make
without loss of control, unless an Event of Default has occurred and is
continuing or would occur after taking into account any action by the Debtor
with respect to such electronic chattel paper or transferable record.
4.6. Letter-of-Credit Rights. If the Debtor is at any time a bene-
ficiary under a letter of credit, the Debtor shall promptly notify the Secured
Party thereof and, at the request and option of the Secured Party at any time
after which there has been an event of Default, the Debtor shall, pursuant to an
agreement in form and substance satisfactory to the Secured Party, either (i)
arrange for the issuer and any confirmer or other nominated person of such
letter of credit to consent to an assignment to the Secured Party of the
proceeds of the letter of credit, or (ii) arrange for the Secured Party to
become the transferee beneficiary of the letter of credit. The Secured Party
agrees with the Debtor that the Secured Party shall not request any such
agreement or arrangement with respect to letter-of-credit rights unless an Event
of Default has occurred and is continuing.
4.7 Commercial Tort Claims. If the Debtor shall at any time hold or
acquire a commercial tort claim, the Debtor shall immediately notify the Secured
Party in a writing signed by the Debtor of the particulars thereof and at any
time after which there has been an event of Default grant to the Secured Party
in such writing a security interest therein and in the proceeds thereof, all
upon the terms of this Agreement, with such writing to be in form and substance
satisfactory to the Secured Party.
4.8. Other Actions as to Any and All Collateral. The Debtor further
agrees, at the request and option of the Secured Party, to take any and all
other actions the Secured Party may determine to be necessary or useful for the
attachment, perfection and first priority of, and the ability of the Secured
Party to enforce, the Secured Party's security interest in any and all of the
Collateral, including, without limitation, (a) executing, delivering and, where
appropriate, filing financing statements and amendments relating thereto under
the Uniform Commercial Code, to the extent, if any, that the Debtor's signature
thereon is required therefore, (b) causing the Secured Party's name to be noted
as secured party on any certificate of title for a titled good if such notation
is a condition to attachment, perfection or priority of, or ability of the
Secured Party to enforce, the Secured Party's security interest in such
Collateral, (c) complying with any provision of any statute, regulation or
treaty of the United States as to any Collateral if compliance with such
provision is a condition to attachment, perfection or priority of, or ability of
the Secured Party to enforce, the Secured Party's security interest in such
Collateral, (d) obtaining governmental and other third party waivers, consents
and approvals in form and substance satisfactory to Secured Party, including,
without limitation, any consent of any licensor, lessor or other person
obligated on Collateral, (e) obtaining waivers from mortgagees and landlords in
form and substance satisfactory to the Secured Party and (f) taking all actions
under any earlier versions of the Uniform Commercial Code or under any other
law, as reasonably determined by the Secured Party to be applicable in any
relevant Uniform Commercial Code or other jurisdiction, including any foreign
jurisdiction.
5. Trademark Security Agreement. Concurrently herewith the Debtor is also
executing and delivering to the Secured Party the Trademark Security Agreement
pursuant to which the Debtor is granting to the Secured Party security interests
in certain Collateral consisting of trademarks, service marks and trademark
and service xxxx rights, together with the goodwill appurtenant thereto.
The provisions of the Trademark Security Agreement are supplemental to the
provisions of this Agreement, and nothing contained in the Trademark Security
Agreement shall derogate from any of the rights or remedies of the Secured Party
hereunder. Neither the delivery of, nor anything contained in, the Trademark
Security Agreement shall be deemed to prevent or postpone the time of attachment
or perfection of any security interest in such Collateral created hereby.
6. Representations and Warranties Concerning Debtor's Legal Status. The
Debtor has previously delivered to the Secured Party a certificate signed by the
Debtor and entitled "Perfection Certificate" (the "Perfection Certificate"). The
Debtor represents and warrants to the Secured Party as follows: (a) the Debtor's
exact legal name is that indicated on the Perfection Certificate and on the
signature page hereof, (b) the Debtor is an organization of the type, and is
organized in the jurisdiction set forth in the Perfection Certificate, (c)
the Perfection Certificate accurately sets forth the Debtor's organizational
identification number, (d) the Perfection Certificate accurately sets forth the
Debtor's place of business or, if more than one, its chief executive office, as
well as the Debtor's mailing address, if different, (e) all other information
set forth on the Perfection Certificate pertaining to the Debtor is accurate and
complete, and (f) that there has been no change in any information provided in
the Perfection Certificate since the date on which it was executed by the
Debtor.
7. Covenants Concerning Debtor's Legal Status. The Debtor covenants with the
Secured Party as follows: (a) without providing at least 30 days prior written
notice to the Secured Party, the Debtor will not change its name, its place of
business or, if more than one, chief executive office, or its mailing address or
organizational identification number if it has one, and (b) the Debtor will not
change its type of organization, jurisdiction of organization or other legal
structure.
8. Representations and Warranties Concerning Collateral, etc. The Debtor
further represents and warrants to the Secured Party as follows: (a) the Debtor
is the owner of the Collateral, free from any right or claim or any person or
any adverse lien, security interest or other encumbrance, except for the
security interest created by this Agreement, (b) none of the Collateral
constitutes, or is the proceeds of, "farm products" as defined in Section
9-102(a)(34) of the Uniform Commercial Code of the State, (c) none of the
account debtors or other persons obligated on any of the Collateral is a
governmental authority covered by the Federal Assignment of Claims Act or like
federal, state or local statute or rule in respect of such Collateral, (d) the
Debtor holds no commercial tort claim except as indicated on the Perfection
Certificate, and (e) the Debtor has at all times operated its business in
compliance with all applicable provisions of the federal Fair Labor Standards
Act, as amended, and with all applicable provisions of federal, state and local
statutes and ordinances dealing with the control, shipment, storage or disposal
of hazardous materials or substances, (f) all other information set forth on the
Perfection Certificate pertaining to the Collateral is accurate and complete,
and (g) that there has been no change in any information provided in the
Perfection Certificate since the date on which it was executed by the Debtor.
9. Covenants Concerning Collateral, etc. The Debtor further covenants with
the Secured Party as follows: (a) the Collateral will be kept at those locations
listed on the Perfection Certificate and the Debtor will not remove the
Collateral from such locations, without providing at least thirty days prior
written notice to the Secured Party, (b) except for the security interest herein
granted, the Debtor shall be the owner of the Collateral free from any right or
claim of any other person, lien, security interest or other encumbrance, and the
Debtor shall defend the same against all claims and demands of all persons at
any time claiming the same or any interests therein adverse to the Secured
Party, (c) the Debtor shall not pledge, mortgage or create, or suffer to exist
any right of any person in or claim by any person to the Collateral, or any
security interest, lien or encumbrance in the Collateral in favor of any person,
other than the Secured Party, (d) the Debtor will keep the Collateral in good
order and repair and will not use the same in violation of law or any policy of
insurance thereon, (e) the Debtor will permit the Secured Party, or its
designee, to inspect the Collateral at any reasonable time, wherever located,
(f) the Debtor will pay promptly when due all taxes, assessments, governmental
charges and levies upon the Collateral or incurred in connection with the use or
operation of such Collateral or incurred in connection with this Agreement, (g)
the Debtor will continue to operate its business in compliance with all
applicable provisions of the federal Fair Labor Standards Act, as amended, and
with all applicable provisions of federal, state and local statutes and
ordinances dealing with the control, shipment, storage or disposal of hazardous
materials or substances, and (h) the Debtor will not sell or otherwise dispose
of, or offer to sell or otherwise dispose of, the Collateral or any interest
therein except for sales of inventory and licenses of general intangibles in the
ordinary course of business.
10. Insurance.
10.1. Maintenance of Insurance. The Debtor will maintain insurance
with respect to its properties and business as set forth on Exhibit A attached
hereto . Such insurance shall be in such amounts as set forth on Exhibit A. In
addition, all such insurance shall be payable to the Secured Party as loss payee
under a "standard" or "New York" loss payee clause. Debtor shall maintain all
such workers' compensation or similar insurance as may be required by law.
10.2. Insurance Proceeds. The proceeds of any casualty insurance in
respect of any casualty loss of any of the Collateral shall, subject to the
rights, if any, of other parties with an interest having priority in the
property covered thereby, (i) so long as no Default or Event of Default has
occurred and is continuing and to the extent that the amount of such proceeds is
less than $100,000.00, be disbursed to the Debtor for direct application by the
Debtor solely to the repair or replacement of the Debtor's property so damaged
or destroyed, and (ii) in all other circumstances, be held by the Secured Party
as cash collateral for the Obligations. The Secured Party may, at its sole
option, disburse from time to time all or any part of such proceeds so held as
cash collateral, upon such terms and conditions as the Secured Party may
reasonably prescribe, for direct application by the Debtor solely to the repair
or replacement of the Debtor's property so damaged or destroyed, or the Secured
Party may apply all or any part of such proceeds to the Obligations.
10.3. Continuation of Insurance. All policies of insurance shall
provide for at least thirty (30) days prior written cancellation notice to the
Secured Party. In the event of failure by the Debtor to provide and maintain
insurance as herein provided, the Secured Party may, at its option, provide such
insurance and charge the amount thereof to the Debtor. The Debtor shall furnish
the Secured Party with certificates of insurance and policies evidencing
compliance with the foregoing insurance provision.
11. Collateral Protection Expenses; Preservation of Collateral.
11.1. Expenses Incurred by Secured Party. In the Secured Party's
discretion, if the Debtor fails to do so, the Secured Party may discharge taxes
and other encumbrances at any time levied or placed on any of the Collateral,
maintain any of the Collateral, make repairs thereto and pay any necessary
filing fees or insurance premiums. The Debtor agrees to reimburse the Secured
Party on demand for all expenditures so made. The Secured Party shall have no
obligation to the Debtor to make any such expenditures, nor shall the making
thereof be construed as the waiver or cure of any Default or Event of Default.
11.2. Secured Party's Obligations and Duties. Anything herein to the
contrary notwithstanding, the Debtor shall remain obligated and liable under
each contract or agreement comprised in the Collateral to be observed or
performed by the Debtor thereunder. The Secured Party shall not have any
obligation or liability under any such contract or agreement by reason of or
arising out of this Agreement or the receipt by the Secured Party of any payment
relating to any of the Collateral, nor shall the Secured Party be obligated in
any manner to perform any of the obligations of the Debtor under or pursuant to
any such contract or agreement, to make inquiry as to the nature or sufficiency
of any payment received by the Secured Party in respect of the Collateral or as
to the sufficiency of any performance by any party under any such contract or
agreement, to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to the Secured Party or to which the Secured Party may be entitled at
any time or times. The Secured Party's sole duty with respect to the custody,
safe keeping and physical preservation of the Collateral in its possession,
under Section 9-207 of the Uniform Commercial Code of the State or otherwise,
shall be to deal with such Collateral in the same manner as the Secured Party
deals with similar property for its own account.
12. Securities and Deposits. The Secured Party may at any time following and
during the continuance of a Default and Event of Default, at its option,
transfer to itself or any nominee any securities constituting Collateral,
receive any income thereon and hold such income as additional Collateral or
apply it to the Obligations. Whether or not any Obligations are due, the Secured
Party may following and during the continuance of a Default and Event of Default
demand, xxx for, collect, or make any settlement or compromise which it deems
desirable with respect to the Collateral. Regardless of the adequacy of
Collateral or any other security for the Obligations, any deposits or other sums
at any time credited by or due from the Secured Party to the Debtor may at any
time be applied to or set off against any of the Obligations.
13. Notification to Account Debtors and Other Persons Obligated on
Collateral. If a Default or an Event of Default shall have occurred and be
continuing, the Debtor shall, at the request and option of the Secured Party,
notify account debtors and other persons obligated on any of the Collateral of
the security interest of the Secured Party in any account, chattel paper,
general intangible, instrument or other Collateral and that payment thereof is
to be made directly to the Secured Party or to any financial institution
designated by the Secured Party as the Secured Party's agent therefore, and the
Secured Party may itself, if a Default or an Event of Default shall have
occurred and be continuing, without notice to or demand upon the Debtor, so
notify account debtors and other persons obligated on Collateral. After the
making of such a request or the giving of any such notification, the Debtor
shall hold any proceeds of collection of accounts, chattel paper, general
intangibles, instruments and other Collateral received by the Debtor as trustee
for the Secured Party without commingling the same with other funds of the
Debtor and shall turn the same over to the Secured Party in the identical form
received, together with any necessary endorsements or assignments. The Secured
Party shall apply the proceeds of collection of accounts, chattel paper, general
intangibles, instruments and other Collateral received by the Secured Party to
the Obligations, such proceeds to be immediately credited after final payment in
cash or other immediately available funds of the items giving rise to them.
14. Power of Attorney.
14.1. Appointment and Powers of Secured Party. The Debtor hereby
irrevocably constitutes and appoints the Secured Party and any officer or agent
thereof, with full power of substitution, as its true and lawful attorneys-
in-fact with full irrevocable power and authority in the place and stead of the
Debtor or in the Secured Party's own name, for the purpose of carrying out the
terms of this Agreement, to take any and all appropriate action and to execute
any and all documents and instruments that may be necessary or useful to
accomplish the purposes of this Agreement and, without limiting the generality
of the foregoing, at any time after which there has been an event of Default,
hereby gives said attorneys the power and right, on behalf of the Debtor,
without notice to or assent by the Debtor, to do the following:
(a) upon the occurrence and during the continuance of a Default or
an Event of Default, generally to sell, transfer, pledge, make any agreement
with respect to or otherwise dispose of or deal with any of the Collateral in
such manner as is consistent with the Uniform Commercial Code of the State and
as fully and completely as though the Secured Party were the absolute owner
thereof for all purposes, and to do, at the Debtor's expense, at any time, or
from time to time, all acts and things which the Secured Party deems necessary
or useful to protect, preserve or realize upon the Collateral and the Secured
Party's security interest therein, in order to effect the intent of this
Agreement, all at least as fully and effectively as the Debtor might do,
including, without limitation, (i) the filing and prosecuting of registration
and transfer applications with the appropriate federal, state, local or other
agencies or authorities with respect to trademarks, copyrights and patentable
inventions and processes, (ii) upon written notice to the Debtor, the exercise
of voting rights with respect to voting securities, which rights may be
exercised, if the Secured Party so elects, with a view to causing the
liquidation of assets of the issuer of any such securities, and (iii) the
execution, delivery and recording, in connection with any sale or other
disposition of any Collateral, of the endorsements, assignments or other
instruments of conveyance or transfer with respect to such Collateral; and
(b) to the extent that the Debtor's authorization given in Section
3 is not sufficient, to file such financing statements with respect hereto,
with or without the Debtor's signature, or a photocopy of this Agreement
in substitution for a financing statement, as the Secured Party may deem
appropriate and to execute in the Debtor's name such financing statements and
amendments thereto and continuation statements which may require the Debtor's
signature.
14.2. Ratification by Debtor. To the extent permitted by law, the
Debtor hereby ratifies all that said attorneys shall lawfully do or cause to be
done by virtue hereof. This power of attorney is a power coupled with an
interest and is irrevocable.
14.3. No Duty on Secured Party. The powers conferred on the Secured
Party hereunder are solely to protect its interests in the Collateral and shall
not impose any duty upon it to exercise any such powers. The Secured Party shall
be accountable only for the amounts that it actually receives as a result of the
exercise of such powers, and neither it nor any of its officers, directors,
employees or agents shall be responsible to the Debtor for any act or failure to
act, except for the Secured Party's own gross negligence or willful misconduct.
15. Rights and Remedies. If an Event of Default shall have occurred and be
continuing, the Secured Party, without any other notice to or demand upon the
Debtor have in any jurisdiction in which enforcement hereof is sought, in
addition to all other rights and remedies, the rights and remedies of a secured
party under the Uniform Commercial Code of the State and any additional rights
and remedies which may be provided to a secured party in any jurisdiction in
which Collateral is located, including, without limitation, the right to take
possession of the Collateral, and for that purpose the Secured Party may, so far
as the Debtor can give authority therefore, enter upon any premises on which the
Collateral may be situated and remove the same therefrom. The Secured Party may
in its discretion require the Debtor to assemble all or any part of the
Collateral at such location or locations within the jurisdiction(s) of the
Debtor's principal office(s) or at such other locations as the Secured Party may
reasonably designate. Unless the Collateral is perishable or threatens to
decline speedily in value or is of a type customarily sold on a recognized
market, the Secured Party shall give to the Debtor at least five Business Days
prior written notice of the time and place of any public sale of Collateral or
of the time after which any private sale or any other intended disposition is to
be made. The Debtor hereby acknowledges that five Business Days prior written
notice of such sale or sales shall be reasonable notice. In addition, the Debtor
waives any and all rights that it may have to a judicial hearing in advance of
the enforcement of any of the Secured Party's rights and remedies hereunder,
including, without limitation, its right following an Event of Default to take
immediate possession of the Collateral and to exercise its rights and remedies
with respect thereto.
16. Standards for Exercising Rights and Remedies. To the extent that
applicable law imposes duties on the Secured Party to exercise remedies in a
commercially reasonable manner, the Debtor acknowledges and agrees that it
is not commercially unreasonable for the Secured Party (a) to fail to
incur expenses reasonably deemed significant by the Secured Party to prepare
Collateral for disposition or otherwise to fail to complete raw material or work
in process into finished goods or other finished products for disposition, (b)
to fail to obtain third party consents for access to Collateral to be disposed
of, or to obtain or, if not required by other law, to fail to obtain
governmental or third party consents for the collection or disposition of
Collateral to be collected or disposed of, (c) to fail to exercise collection
remedies against account debtors or other persons obligated on Collateral or to
fail to remove liens or encumbrances on or any adverse claims against
Collateral, (d) to exercise collection remedies against account debtors and
other persons obligated on Collateral directly or through the use of collection
agencies and other collection specialists, (e) to advertise dispositions of
Collateral through publications or media of general circulation, whether or not
the Collateral is of a specialized nature, (f) to contact other persons, whether
or not in the same business as the Debtor, for expressions of interest in
acquiring all or any portion of the Collateral, (g) to hire one or more
professional auctioneers to assist in the disposition of Collateral, whether or
not the collateral is of a specialized nature, (h) to dispose of Collateral by
utilizing Internet sites that provide for the auction of assets of the types
included in the Collateral or that have the reasonable capability of doing so,
or that match buyers and sellers of assets, (i) to dispose of assets in
wholesale rather than retail markets, (j) to disclaim disposition warranties,
(k) to purchase insurance or credit enhancements to insure the Secured Party
against risks of loss, collection or disposition of Collateral or to provide to
the Secured Party a guaranteed return from the collection or disposition of
Collateral, or (l) to the extent deemed appropriate by the Secured Party, to
obtain the services of other brokers, investment bankers, consultants and other
professionals to assist the Secured Party in the collection or disposition of
any of the Collateral. The Debtor acknowledges that the purpose of this Section
16 is to provide non-exhaustive indications of what actions or omissions by the
Secured Party would fulfill the Secured Party's duties under the Uniform
Commercial Code or other law of the State or any other relevant jurisdiction in
the Secured Party's exercise of remedies against the Collateral and that other
actions or omissions by the Secured Party shall not be deemed to fail to fulfill
such duties solely on account of not being indicated in this Section 16. Without
limitation upon the foregoing, nothing contained in this Section 16 shall be
construed to grant any rights to the Debtor or to impose any duties on the
Secured Party that would not have been granted or imposed by this Agreement or
by applicable law in the absence of this Section 16.
17. No Waiver by Secured Party, etc. The Secured Party shall not be deemed
to have waived any of its rights or remedies in respect of the Obligations or
the Collateral unless such waiver shall be in writing and signed by the Secured
Party. No delay or omission on the part of the Secured Party in exercising any
right or remedy shall operate as a waiver of such right or remedy or any other
right or remedy. A waiver on any one occasion shall not be construed as a bar to
or waiver of any right or remedy on any future occasion. All rights and remedies
of the Secured Party with respect to the Obligations or the Collateral, whether
evidenced hereby or by any other instrument or papers, shall be cumulative and
may be exercised singularly, alternatively, successively or concurrently at such
time or at such times as the Secured Party deems expedient.
18. Suretyship Waivers by Debtor. The Debtor waives demand, notice, protest,
notice of acceptance of this Agreement, notice of loans made, credit extended,
Collateral received or delivered or other action taken in reliance hereon and
all other demands and notices of any description. With respect to both
the Obligations and the Collateral, the Debtor assents to any extension
or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of or failure to perfect any security interest
in any Collateral, to the addition or release of any party or person primarily
or secondarily liable, to the acceptance of partial payment thereon and the
settlement, compromising or adjusting of any thereof, all in such manner and at
such time or times as the Secured Party may deem advisable. The Secured Party
shall have no duty as to the collection or protection of the Collateral or any
income therefrom, the preservation of rights against prior parties, or the
preservation of any rights pertaining thereto beyond the safe custody thereof as
set forth in Section 11.2. The Debtor further waives any and all other
suretyship defenses.
19. Marshalling. The Secured Party shall not be required to marshal any
present or future collateral security (including but not limited to the
Collateral) for, or other assurances of payment of, the Obligations or any of
them or to resort to such collateral security or other assurances of payment in
any particular order, and all of its rights and remedies hereunder and in
respect of such collateral security and other assurances of payment shall be
cumulative and in addition to all other rights and remedies, however existing or
arising. To the extent that it lawfully may, the Debtor hereby agrees that it
will not invoke any law relating to the marshalling of collateral which might
cause delay in or impede the enforcement of the Secured Party's rights and
remedies under this Agreement or under any other instrument creating or
evidencing any of the Obligations or under which any of the Obligations is
outstanding or by which any of the Obligations is secured or payment thereof is
otherwise assured, and, to the extent that it lawfully may, the Debtor hereby
irrevocably waives the benefits of all such laws.
20. Proceeds of Dispositions; Expenses. The Debtor shall pay to the Secured
Party on demand any and all expenses, including reasonable attorneys' fees and
disbursements, incurred or paid by the Secured Party in protecting, preserving
or enforcing the Secured Party's rights and remedies under or in respect of any
of the Obligations or any of the Collateral. After deducting all of said
expenses, the residue of any proceeds of collection or sale or other disposition
of the Collateral shall, to the extent actually received in cash, be applied to
the payment of the Obligations in such order or preference as the Secured Party
may determine or in such order or preference as is provided in the Credit
Agreement, proper allowance and provision being made for any Obligations not
then due. Upon the final payment and satisfaction in full of all of the
Obligations and after making any payments required by Sections 9-608(a)(1)(C) or
9-615(a)(3) of the Uniform Commercial Code of the State, any excess shall be
returned to the Debtor. In the absence of final payment and satisfaction in full
of all of the Obligations, the Debtor shall remain liable for any deficiency.
21. Overdue Amounts. Until paid, all amounts due and payable by the Debtor
hereunder shall be a debt secured by the Collateral and shall bear, whether
before or after judgment, interest at the rate of interest for overdue principal
set forth in the Credit Agreement.
22. Governing Law; Consent to Jurisdiction. THIS AGREEMENT IS INTENDED TO
TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEVADA. The Debtor agrees that any
action or claim arising out of, or any dispute in connection with, this
Agreement, any rights, remedies, obligations, or duties hereunder, or the
performance or enforcement hereof or thereof, may be brought in the courts of
the State or any federal court sitting in Xxxxxx County, GA and consents to the
non-exclusive jurisdiction of such court and to service of process in any such
suit being made upon the Debtor by mail and/or overnight courier at the address
set forth on the first page hereof. The Debtor hereby waives any objection that
it may now or hereafter have to the venue of any such suit or any such court or
that such suit is brought in an inconvenient court.
23. Waiver of Jury Trial. THE DEBTOR WAIVES ITS RIGHT TO A JURY TRIAL WITH
RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH
THIS AGREEMENT, ANY RIGHTS, REMEDIES, OBLIGATIONS, OR DUTIES HEREUNDER, OR THE
PERFORMANCE OR ENFORCEMENT HEREOF OR THEREOF. Except as prohibited by law, the
Debtor waives any right which it may have to claim or recover in any litigation
referred to in the preceding sentence any special, exemplary, punitive or
consequential damages or any damages other than, or in addition to, actual
damages. The Debtor (i) certifies that neither the Secured Party nor any
representative, agent or attorney of the Secured Party has represented,
expressly or otherwise, that the Secured Party would not, in the event of
litigation, seek to enforce the foregoing waivers or other waivers contained in
this Agreement, and (ii) acknowledges that, in entering into the Credit
Agreement, the Secured Party is relying upon, among other things, the waivers
and certifications contained in this Section 23.
24. Miscellaneous. The headings of each section of this Agreement are for
convenience only and shall not define or limit the provisions thereof. This
Agreement and all rights and obligations hereunder shall be binding upon the
Debtor and its respective successors and assigns, and shall inure to the benefit
of the Secured Party and its successors and assigns. If any term of this
Agreement shall be held to be invalid, illegal or unenforceable, the validity
of all other terms hereof shall in no way be affected thereby, and this
Agreement shall be construed and be enforceable as if such invalid, illegal or
unenforceable term had not been included herein. The Debtor acknowledges receipt
of a copy of this Agreement.
IN WITNESS WHEREOF, intending to be legally bound, the Debtor has caused this
Agreement to be duly executed as of the date first above written.
Star E Media Corporation
/s/ E.G. Xxxxxxxxx
By:----------------------------------------------
E.G.(Gene) Xxxxxxxxx, President & COO
Accepted:
Secured Party
/s/ Xxxxx X. Xxxxxxxx
By:----------------------------------------------
Xxxxx X. Xxxxxxxx, Escrow Agent
CERTIFICATE OF ACKNOWLEDGMENT )
STATE OF CALIFORNIA )
) ss.
ORANGE COUNTY )
Before me, the undersigned, a Notary Public in and for the county aforesaid, on
this ___ day of December, 2002, personally appeared ________________________ to
me known personally, and who, being by me duly sworn, deposes and says that he
is the _______________________ of Star E Media Corp., and that said instrument
was signed and sealed on behalf of said Star E Media Corp. by authority of its
Board of Directors, and said _________________ acknowledged said instrument to
be the free act and deed of said Star E Media Corp.
Notary Public
My commission expires:
Exhibit A
Schedule of Insurance
1. Gulf Insurance Company, Directors and Officers Liability Policy,
Policy number GA0618704.
2. Hartford Insurance Company, General Liability Policy, Policy number
57 SBA FN6248.
PERFECTION CERTIFICATE
The undersigned, the President of Star E Media Corp. a Nevada corporation
(the "Debtor"), hereby certifies, with reference to a certain Security Agreement
dated December 27, 2002 (terms defined in such Security Agreement having the
same meanings herein as specified therein), between the Debtor and Xxxxx X.
Xxxxxxxx, as escrow agent, (the "Secured Party"), to the Secured Party as
follows:
1. Name. The exact legal name of the Debtor as that name appears on its
Certificate of Incorporation is as follows:
STAR E MEDIA CORP.
2. Other Identifying Factors.
(a) The following is a mailing address for the Debtor:
00000 XXXXXXX
XXXX XXXXXX, XX 00000
(b) If different from its indicated mailing address, the Debtor's place
of business or, if more than one, its chief executive office is located at the
following address:
NOT APPLICABLE
(c) The following is the type of organization of the Debtor:
CORPORATION
(d) The following is the jurisdiction of the Debtor's organization:
NEVADA
(e) The following is the Debtor's state issued organizational
identification number [state "None" if the state does not issue such a number]:
C4250-1999
3. Other Names, etc.
(a) The following is a list of all other names (including trade names
or similar appellations) used by the Debtor, or any other business or
organization to which the Debtor became the successor by merger, consolidation,
acquisition, change in form, nature or jurisdiction of organization or
otherwise, now or at any time during the past five years:
STAR E MEDIA, CORPORATION
(b) Attached hereto as Schedule 3 is the information required in
Section 2 for any other business or organization to which the Debtor became the
successor by merger, consolidation, acquisition of assets, change in form,
nature or jurisdiction of organization or otherwise, now or at any time during
the past five years:
NOT APPLICABLE
4. Other Current Locations.
(a) The following are all other locations in the United States of
America in which the Debtor maintains any books or records relating to any of
the Collateral consisting of accounts, instruments, chattel paper, general
intangibles or mobile goods:
NOT APPLICABLE
(b) The following are all other places of business of the Debtor in the
United States of America:
NOT APPLICABLE
(c) The following are all other locations in the United States of
America where any of the Collateral consisting of inventory or equipment is
located:
NOT APPLICABLE
(d) The following are the names and addresses of all persons or
entities other than the Debtor, such as lessees, consignees, warehousemen or
purchasers of chattel paper, which have possession or are intended to have
possession of any of the Collateral consisting of instruments, chattel paper,
inventory or equipment:
NOT APPLICABLE
5. Prior Locations.
(a) Set forth below is the information required by Section 4 (a) or (b)
with respect to each location or place of business previously maintained by the
Debtor at any time during the past five years in a state in which the Debtor has
previously maintained a location or place of business at any time during the
past four months:
NOT APPLICABLE
(b) Set forth below is the information required by Section 4(c) or (d)
with respect to each other location at which, or other person or entity with
which, any of the Collateral consisting of inventory or equipment has been
previously held at any time during the past twelve months:
NOT APPLICABLE
6. Fixtures. Attached hereto as Schedule 6 is the information required by
UCC Section 9-502(b) or F. Section 9-402(5) of each state in which any of the
Collateral consisting of fixtures are or are to be located and the name and
address of each real estate recording office where a mortgage on the real estate
on which such fixtures are or are to be located would be recorded.
NOT APPLICABLE
7. Unusual Transactions. Except for those purchases, acquisitions and other
transactions described on Schedule 3 or on Schedule 7 attached hereto, all of
the Collateral has been originated by the Debtor in the ordinary course of the
Debtor's business or consists of goods which have been acquired by the Debtor in
the ordinary course from a person in the business of selling goods of that kind.
8. File Search Reports. Attached hereto as Schedule 8(A) is a true copy of a
file search report from the Uniform Commercial Code filing officer (or, if such
officer does not issue such reports, from an experienced Uniform Commercial Code
search organization acceptable to the Secured Party) (i) in each jurisdiction
identified in Section 2(d) or in Section 4 or 5 with respect to each name set
forth in Section 1 or 3, (ii) from each filing officer in each real estate
recording office identified on Schedule 6 with respect to real estate on which
Collateral consisting of fixtures are or are to be located and (iii) in each
jurisdiction in which any of the transactions described in Schedule 3 or 7 took
place with respect to the legal name of the person from which the Debtor
purchased or otherwise acquired any of the Collateral. Attached hereto as
Schedule 8(B) is a true copy of each financing statement or other filing
identified in such file search reports.
9. UCC Filings. A duly authorized financing statement, in a form acceptable
to the Secured Party and containing the indication of the Collateral set forth
on Schedule 9(A) has been duly filed in the central Uniform Commercial Code
filing office in the jurisdiction identified in Section 2(d) and in each real
estate recording office referred to on Schedule 6 hereto. Attached hereto as
Schedule 9(B) is a true copy of each such filing duly acknowledged or otherwise
identified by the filing office.
10. Termination Statements. A duly signed or otherwise authorized termin-
ation statement in form acceptable to the Secured Party has been duly filed in
each applicable jurisdiction identified in Section 2(d), 3, 4 and 5 or on
Schedule 3 or 7 hereto or, in the case of Schedule 3 or 7, a release acceptable
to the Secured Party from the secured party of the person from which the Debtor
purchased or otherwise acquired the Collateral identified on Schedule 3 or 7,
has been delivered to the Secured Party. Attached hereto as Schedule 10 is a
true copy of each such filing duly acknowledged or otherwise identified by the
filing office.
NOT APPLICABLE
11. Schedule of Filing. Attached hereto as Schedule 11 is a schedule setting
forth filing information with respect to the filings described in Sections 9 and
10.
UCC-1 FINANCING STATEMENT EXECUTED IN FAVOR OF XXXXX X. XXXXXXXX
12. Filing Fees. All filing fees and taxes payable in connection with the
filings described in Sections 8 and 9 have been paid.
IN WITNESS WHEREOF, we have hereunto signed this Certificate on December
27, 2002.
/s/ E.G. Xxxxxxxxx
By: ----------------------------
Name: E.G. "Gene" Xxxxxxxxx
Title: President
SCHEDULE 8(A)
FILE SEARCH REPORT
SCHEDULE 8(B)
FINANCING STATEMENTS
SCHEDULE 9(A)
UCC-1
SCHEDULE 9(B)
FILE STAMPED UCC-1
