EXHIBIT 10.49
SECURITY AGREEMENT
THIS SECURITY AGREEMENT is made and entered into on May 21, 2002,
between Telenetics Corporation, a California corporation ("Debtor"), and Corlund
Electronics, Inc., a Delaware corporation ("Secured Party").
ARTICLE 1
Grant of Security Interest
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1. As an inducement to Secured Party to extend or continue to extend
credit to Debtor and for other good and valuable consideration, receipt of which
is hereby acknowledged, Debtor hereby grants to Secured Party a security
interest in all of the property described in Exhibit "A" attached hereto and
incorporated by this reference, in which Debtor now has or hereafter acquires an
interest and wherever located (all of which is herein called the "Collateral").
ARTICLE 2
Secured Obligations
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2. The security interest granted in Article 1 is granted to secure the
following obligations ("Secured Obligations"):
2.1. Payment of all obligations of Debtor to Secured Party for
products manufactured and delivered to Debtor, such indebtedness being evidenced
by one or more accounts payable of Debtor to Secured Party (the "Payables")
2.2. Performance of and compliance with all of the terms,
covenants and conditions of this Security Agreement, and all other agreements,
instruments and documents securing the obligations of Debtor under the Payables
or executed by Debtor in connection with the transaction giving rise to the
execution of such Payables.
ARTICLE 3
Representations, Warranties and Covenants of Debtor
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3. Debtor hereby represents and warrants to and agrees with Secured
Party as follows:
3.1. Debtor will observe all conditions, comply with all
terms, and perform all acts and discharge all obligations secured hereby.
3.2. Debtor will (a) execute any and all financing
statements, amendments to financing statements, continuation statements, fixture
filings and such other agreements, assignments and documents that Secured Party
may reasonably request from time to time in order to perfect or continue the
security interest of Secured Party in the Collateral or otherwise carry out the
purposes and intent of this Security Agreement and (c) take such other steps as
Secured Party may direct, including the noting of Secured Party's lien on the
Collateral, to perfect or continue the security interest of Secured Party in the
Collateral.
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3.3. To the extent lawful, Debtor hereby authorizes Secured
Party to perform any act which Secured Party may deem necessary in order to
protect and preserve the Collateral or any part thereof or to perfect and
continue the security interest of Secured Party therein.
3.4. The Collateral is used and will at all times hereafter
be used primarily for business purposes and not for personal, family or
household purposes.
3.5. Debtor will promptly notify Secured Party in the event
of (a) any claim or proceeding that might in any way affect or impair the
security interest created hereby, (b) any default arising under this Security
Agreement, or (c) any change in the name, place of business, mailing address or
legal form of organization of Debtor.
ARTICLE 4
Acts Constituting Default
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4. The happening of any of the following events shall constitute a
default by Debtor under this Security Agreement:
4.1. A court having jurisdiction shall enter a decree or
order for relief in respect of Debtor in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or appointing a receiver, trustee, liquidator, custodian or other
similar official of Debtor or for any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and such decree or order
shall remain unstayed and in effect for a period of sixty (60) consecutive days;
provided, however, that if Secured Party is a party to bringing such case,
directly or indirectly causes such case to be brought, or has any other
involvement in the events described in this Section 4.1 (i.e., Secured Party is
involved in obtaining the involuntary bankruptcy of Debtor), the events of this
Section 4.1 shall not result in a default by Debtor under this Security
Agreement; or
4.2. Debtor shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or shall consent to the entry of an order for relief in any involuntary
case under any such law, or shall consent to the appointment of or taking
possession by a receiver, trustee, liquidator, custodian or other similar
official of Debtor or for any substantial part of its property, or shall make a
general assignment for the benefit of creditors; provided, however, that if
Secured Party is a party to bringing the involuntary case consented to by
Debtor, or directly or indirectly causes such involuntary case to be brought
against Debtor, the consent to such order or appointment shall not result in a
default by Debtor under this Security Agreement.
ARTICLE 5
Secured Party's Remedies Upon Default
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5. Upon, or at any time after, a default by Debtor, as set forth above,
Secured Party shall have the right to enforce the security interest created
hereby in any manner provided or permitted by applicable law and to exercise any
and all rights under this Security Agreement, the Payables or any other
agreement, instrument or document described in Section 2.2. Without limiting the
generality of the foregoing, Secured Party shall have the right to:
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5.1. Declare the entire indebtedness secured hereby
immediately due and payable;
5.2. Exercise all rights and remedies of a secured party under
the California Uniform Commercial Code;
5.3. Require Debtor to assemble the Collateral and make it
available to Secured Party at a place designated by Secured Party which is
reasonably convenient to both parties;
5.4. Enter upon the premises where the Collateral is kept and
possess and remove the same without judicial process if Secured Party can do so
without a breach of the peace, or proceed by legal action to take possession of
the Collateral;
5.5. Notify an account debtor or the obligor on an instrument
to make payment to Secured Party, and take control of any proceeds to which
Secured Party is entitled;
5.6. Retain the Collateral in satisfaction of the Secured
Obligations;
5.7. Execute, acknowledge, deliver, file and record, for and
on behalf of Debtor and in Debtor's name as attorney-in-fact for Debtor, such
assignments, conveyances, certificates and other documents that Secured Party
deems appropriate to realize upon or retain the Collateral; and
All rights and remedies herein provided are cumulative and not exclusive of any
rights or remedies otherwise provided by law. Any single or partial exercise of
any right or remedy shall not preclude the further exercise thereof or the
exercise of any other right or remedy.
ARTICLE 6
Notices
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6. The following shall control the giving of any notice hereunder:
6.1. Unless the Collateral is perishable or threatens to
decline speedily in value or is of a type customarily sold on a recognized
market, Secured Party will give Debtor (if Debtor has not waived or varied its
right to notice after default) reasonable notice of the time and place of any
public sale thereof or of the time on or after which any private sale or other
intended disposition thereof is to be made.
6.2. The requirements of reasonable notice shall be met if
such notice is mailed, postage prepaid, to Debtor's address at least five (5)
business days before the date of any sale or disposition.
6.3. Any notice provided for in this Security Agreement shall
be in writing and shall be delivered personally or may be sent by first class
mail, registered or certified, return receipt requested, postage prepaid to:
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Secured Party Debtor
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00000 Xxxxxx Xxxx 00000 Xxxxxx Xxxxx
Xxxxxx, XX 00000 Xxxx Xxxxxx, XX 00000
Attn: Chief Financial Officer Attn: Chief Financial Officer
6.4. Any notice mailed to Debtor will be deemed effective
three (3) business days after deposit in the United States mails.
6.5. Debtor shall provide to Secured Party a complete and
up-to-date listing of the names and addresses of all parties to whom notices
should be mailed. Unless Debtor has, in writing by return receipt certified or
registered mail, informed Secured Party of any changes in address, notice mailed
to the address in this Security Agreement shall be deemed to be effective.
ARTICLE 7
General Provisions
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7. This Security Agreement is subject to and shall be construed in
accordance with the following provisions:
7.1. This Agreement applies to and shall inure to the benefit
of the successors and assigns of Secured Party and shall bind the successors and
assigns of Debtor.
7.2. This Agreement sets forth the entire agreement between
Debtor and Secured Party with respect to all matters herein, and the provisions
hereof may not be changed or modified except by an instrument in writing signed
by the parties hereto.
7.3. All covenants, agreements, representations and warranties
made herein or in documents delivered pursuant hereto or in connection herewith
shall be deemed to have been material and relied upon by Secured Party and shall
survive the execution and delivery to Secured Party.
7.4. Time is of the essence of this Agreement.
7.5. No course of dealing between Debtor and Secured Party, or
failure, neglect or delay by Secured Party in exercising any and all of Secured
Party's rights hereunder shall operate as a waiver, forfeiture or abandonment of
any such right except only to the extent explicitly waived in writing.
7.6. This Agreement is being delivered and is intended to be
performed in the State of California and shall be construed in accordance with
the laws of the State of California. Venue in any action based upon this
Agreement shall be proper in Orange County.
7.7. In the event any provision or provisions hereof are
adjudged invalid or unenforceable, the remaining provisions shall continue in
full force and effect.
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7.8. In any arbitration or suit brought to enforce any of the
provisions of this or any other agreement between Secured Party and Debtor, upon
request of Secured Party as plaintiff or cross-complainant, the arbitrator or
court having jurisdiction over such proceeding may appoint a receiver to take
possession of and control the Collateral, and such receiver may exercise such
powers over the Collateral as the arbitrator or court shall confer. Secured
Party may obtain the appointment of a receiver ex parte and Debtor waives the
right to any prior notice.
7.9 The security interest created hereby shall terminate upon
the earlier to occur of the following: (a) full payment and discharge of all
Secured Obligations or (b) full payment of all accounts receivable of Debtor
that have been assigned to Secured Party. Upon such termination, Secured Party
shall execute and deliver to Debtor such termination statements and other
documents as may be reasonably requested by Debtor to terminate any financing
statement then on file or of record with respect to the security interest
created hereby.
7.10 Secured Party agrees with Debtor that in the event Debtor
is able to secure financing from a senior lender after the date of this
Agreement and prior to the termination of this Agreement, Secured Party shall
execute and deliver to Debtor such documents as may be reasonably requested by
Debtor and such senior lender to subordinate Secured Party's security interest
to the security interest granted to the senior lender.
IN WITNESS WHEREOF, the parties have caused this Security Agreement to
be executed and delivered on the date first written above.
DEBTOR:
Telenetics Corporation, a California corporation
By: /s/ Xxxxx Xxxxx
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Its: President
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By: /s/ Xxxxxx Xxxxxxx
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Its: Assistant Secretary
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SECURED PARTY:
Corlund Electronics, Inc,.a Delaware corporation
By: /s/ Xxxxxxx Xxxxxx
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Its: Secretary
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EXHIBIT "A"
COLLATERAL
(1) All accounts, contract rights, chattel paper, and instruments, and all other
obligations now or hereafter owing to Debtor and (2) all substitutions,
additions and accessions to any or all of the foregoing items of Collateral.
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