Exhibit 10.21
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Security Agreement") is entered into as of
August 21, 2000, by and between EBIZ ENTERPRISES, INC., a Nevada corporation
(the "Company"), and THE CANOPY GROUP, INC., a Utah corporation ("Secured
Party").
RECITALS
A. Company has borrowed funds from Secured Party pursuant to a $500,000
Secured Convertible Promissory Note of even date herewith (the "Note").
B. As security for its repayment obligations under the Note, Company has
agreed to grant Secured Party a security interest in all of its assets on the
terms set forth in this Security Agreement.
NOW, THEREFORE, to that end and in consideration of the premises,
covenants and agreements set forth below, and the mutual benefits to be derived
from this Security Agreement, and other good and valuable consideration, the
parties hereto agree as follows:
1. SECURITY INTEREST. To secure the "Obligation" (as defined below),
Company hereby transfers, conveys, assigns, and grants to Secured Party a
security interest in all of Company's assets, which may include one or more of
the following items (hereinafter, collectively, the "Collateral"):
(a) GENERAL INTANGIBLES. All of Company's General Intangibles,
now existing or hereafter arising or acquired, together with the proceeds
therefrom. As used herein, the term "General Intangibles" means all personal
property (including things in action) other than goods, accounts, chattel paper,
documents, instruments, and money, and includes, but is not limited to, business
records, deposit accounts, inventions, intellectual property, designs, patents,
patent applications, trademarks, trademark applications, trademark
registrations, service marks, service xxxx applications, service xxxx
registrations, trade names, goodwill, technology, know-how, confidential
information, trade secrets, customer lists, supplier lists, copyrights,
copyright applications, copyright registrations, licenses, permits, franchises,
tax refund claims, and any letters of credit, guarantee claims, security
interests, or other security held by the Company to secure any "Accounts" (as
hereinafter defined).
(b) ACCOUNTS (INCLUDING ACCOUNTS RECEIVABLE). All of Company's
Accounts, whether now existing or hereafter arising or acquired, together with
the proceeds therefrom. As used herein, the term "Accounts" means any right of
Company to receive payment from another person or entity, including payment for
goods sold or leased, or for services rendered, no matter how evidenced or
arising, and regardless of whether yet earned by performance. It includes, but
is not limited to, accounts, accounts receivable, contract rights, contracts
receivable, purchase orders, notes, drafts, acceptances, all rights to payment
earned or unearned under a charter or other contract involving the use or hire
of a vessel and all rights incident to the charter or contract, and other forms
of obligations and receivables.
(c) INVENTORY. All of Company's Inventory, whether now owned or
hereafter acquired, together with the products and proceeds therefrom and all
packaging, manuals, and instructions related thereto. As used herein, the term
"Inventory" means all goods, merchandise, and personal property held for sale or
leased or furnished or to be furnished under contracts of service, and all raw
materials, work in process, or materials used or consumed in Company's business,
wherever located and whether in the possession of Company, a warehouseman, a
bailee, or any other person.
(d) EQUIPMENT. All of Company's Equipment, now owned or hereafter
acquired, together with the products and proceeds therefrom, and all substitutes
and replacements therefor. As used herein, the term "Equipment" includes all
equipment, machinery, tools, office equipment, supplies, furnishings, furniture,
or other items used or useful, directly or indirectly, in Company's business,
all accessions, attachments, and other additions thereto, all parts used in
connection therewith, all packaging, manuals, and instructions related thereto,
and all leasehold or equitable interests therein.
(e) FIXTURES. All of Company's interest in and to all fixtures
and furnishings, now owned or hereafter acquired, together with the products and
proceeds therefrom, all substitutes and replacements therefor, all accessories,
attachments, and other additions thereto, all tools, parts, and supplies used in
connection therewith, and all packaging, manuals, and instructions related
thereto, located on or attached to Company's business premises located at 00000
Xxxxx 00xx Xxx, Xxxxxxxxxx, Xxxxxxx 00000.
(f) CHATTEL PAPER, DOCUMENTS AND INSTRUMENTS. All of Company's
right, title, and interest in any chattel paper, documents, or instruments, now
owned or hereafter acquired or arising, or now or hereafter coming into the
possession, control, or custody of either Company or Secured Party, together
with all proceeds therefrom. The terms "chattel paper," "documents," and
"instruments" shall have those meanings ascribed to them in the Utah Uniform
Commercial Code.
2. OBLIGATION. This security interest is given as security for all
indebtedness and obligations owed by Company to Secured Party, whether now
existing or hereafter incurred, under this Security Agreement or the Note,
together with all extensions, modifications, or renewals thereof (hereinafter
referred to, collectively, as the "Obligation").
3. PROCEEDS. As used in this Security Agreement, the term "proceeds"
means all products of the Collateral and all additions and accessions to,
replacements of, insurance or condemnation proceeds of, and documents covering
any of the Collateral, all property received wholly or partly in trade or
exchange for any of the Collateral, all leases of any of the Collateral, and all
rents, revenues, issues, profits, and proceeds arising from the sale, lease,
license, encumbrance, collection, or any other temporary or permanent
disposition, of any of the Collateral or any interest therein.
4. TITLE; FILING. Company warrants that, it is the owner of the
Collateral free and clear of all liens, claims, and encumbrances except as set
forth on Exhibit A. Company covenants that so long as any portion of the
Obligation remains unpaid, Company will not execute or file a financing
statement or security agreement covering the Collateral to anyone other than
Secured Party, except in the ordinary course of business or as otherwise
allowed. Company agrees to sign and deliver one or more financing statements or
supplements thereto or other instruments as Secured Party may from time to time
require to comply with the Uniform Commercial Code or other applicable law to
preserve, protect and enforce the security interest of Secured Party and to pay
all costs of filing such statements or instruments. In addition, Company shall
promptly file a financing statement to perfect Secured Party's interest in the
Collateral.
5. CARE OF COLLATERAL. Company will keep in effect all licenses,
permits and franchises required by law or contract relating to Company's
business (if applicable), property, or the Collateral; maintain insurance on the
Collateral; keep the Collateral in good repair and be responsible for any loss
or damage to it; at all times warrant and defend Company's ownership and
possession of the Collateral; keep the Collateral free from all liens, claims,
encumbrances and security interests; pay when due all taxes, license fees, and
other charges upon the Collateral or upon Company's business, property or the
income therefrom; and not misuse, conceal or in any way use or dispose of the
Collateral unlawfully or contrary to the provisions of this Security Agreement
or of any insurance coverage. Loss of, damage to, or uncollectability of the
Collateral or any part thereof will not release Company from any of its
obligations hereunder.
6. DEFAULT. A default hereunder will occur if any of the following
events occur: (1) Company fails to pay any portion of the Obligation when due;
(2) Company fails to perform any undertaking or materially breaches any warranty
or covenant in this Security Agreement or the Note; (3) any statement,
representation or warranty of Company under this Security Agreement or the Note
is untrue in any material respect when made; (4) Company becomes insolvent or
unable to pay debts as they mature or makes an assignment for the benefit of
creditors or any proceeding is instituted by or against it alleging that it is
insolvent or unable to pay its debts as they mature; (5) dissolution of Company;
(6) an attachment, garnishment, execution or other process is issued or a lien
filed against any property of Company, which is not removed within a reasonable
period of time; and (7) Company transfers an interest in any of the Collateral
contrary to the provisions of this Security Agreement without the prior written
consent of Secured Party other than in the ordinary course of business. Waiver
of any default will not constitute a waiver of any other or subsequent default.
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7. REMEDIES. Upon the occurrence of any default hereunder at any time
thereafter, all of the Obligation will, at the election of Secured Party and
without notice of such election, or demand for payment, become immediately due
and payable and Secured Party will have the remedies of a secured party under
the Utah Uniform Commercial Code or other applicable law.
8. GENERAL. The waiver by Secured Party of any breach of any provision
of this Security Agreement or warranty or representation herein set forth will
not be construed as a waiver of any subsequent breach. The failure to exercise
any right hereunder by Secured Party will not operate as a waiver of such right.
All rights and remedies herein provided are cumulative. Company may not assign
its rights or delegate its duties hereunder without Secured Party's written
consent. This Security Agreement may not be altered or amended except by a
writing signed by all the parties hereto. This Security Agreement will be
governed by and construed and interpreted in accordance with the laws of the
State of Utah. Any provision hereof found to be invalid will not invalidate the
remainder. All words used herein will be construed to be of such gender and
number as the circumstances require. This Security Agreement binds Company, its
successors and assigns, and inures to the benefit of Secured Party, its
successors and assigns.
IN WITNESS WHEREOF, the parties have executed this Security Agreement as of
the date first written above.
EBIZ ENTERPRISES, INC.,
a Nevada corporation
By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx, Chief Executive
Officer
THE CANOPY GROUP, INC.,
a Utah corporation
By: /s/ Xxxxx Xxxxx
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Xxxxx Xxxxx, President
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