Exhibit 10.26
SECURITY AGREEMENT
This SECURITY AGREEMENT, dated as of September 8, 1995, is entered
into between Debtor and CoastFed, with reference to the following facts:
RECITALS
A. Debtor is contemporaneously herewith executing the Guaranty in
favor of CoastFed in order to guaranty the indebtedness owing by Borrower to
CoastFed; and
B. Debtor has agreed to enter into this Security Agreement in order to
grant to CoastFed a first priority security interest in the Collateral to secure
the Guaranty.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises, covenants,
conditions, representations, and warranties hereinafter set forth, and for other
good and valuable consideration, the parties hereto agree as follows:
1. Definitions. All initially capitalized terms used but not defined
herein shall have the meanings ascribed thereto in the Guaranty. In addition, as
used herein, the following terms shall have the following meanings:
"Account Debtor" means any Person who is or who may become
obligated with respect to, or on account of, an Account.
"Accounts" means any and all of Debtor's presently existing and
hereafter arising accounts and rights to payment, except those evidenced by
Negotiable Collateral, arising out of the sale or lease of goods or the
rendition of services by Debtor, irrespective of whether earned by performance.
"Borrower" means Cyberlink, Inc., a California corporation.
"Chattel Paper" means all writings of whatever sort which
evidence a monetary obligation and a security interest in or lease of specific
goods, whether now existing or hereafter arising.
"CoastFed Expenses" means any and all costs or expenses required
to be paid by Debtor under this Security Agreement which are paid or advanced by
CoastFed; all costs and expenses of CoastFed, including its attorneys' fees and
expenses (including attorneys' fees incurred pursuant to 11 U.S.C.), incurred or
expended to correct any default or enforce any provision of this Security
Agreement, or in gaining possession of, maintaining, handling, preserving,
storing, shipping, selling, preparing for sale, or
1
advertising to sell the Collateral, irrespective of whether a sale is
consummated; and all costs and expenses of suit incurred or expended by
CoastFed, including its attorneys' fees and expenses (including attorneys' fees
incurred pursuant to 11 U.S.C.) in enforcing or defending this Security
Agreement, irrespective of whether suit is brought.
"CoastFed" means CoastFed Business Credit Corporation, a
California banking corporation.
"Code" means the California Uniform Commercial Code except, to
the extent applicable, the Uniform Commercial Code as adopted by the
jurisdiction in which any of the Collateral is located. Any and all terms used
in this Security Agreement which are defined in the Code shall be construed and
defined in accordance with the meaning and definition ascribed to such terms
under the Code, unless otherwise defined herein.
"Collateral" means the following, collectively: any and all of
the Accounts, Deposit Accounts, Equipment, Inventory, General Intangibles,
Negotiable Collateral, and Debtor's Books, in each case whether now existing or
hereafter acquired or created, and any Proceeds or products of any of the
foregoing, or any portion thereof, and any and all Accounts, Deposit Accounts,
Equipment, Inventory, General Intangibles, Negotiable Collateral, money, or
other tangible or intangible property, resulting from the sale or other
disposition of the Accounts, Deposit Accounts, Equipment, Inventory, General
Intangibles, or Negotiable Collateral, or any portion thereof or interest
therein, and the substitutions, replacements, additions, accessions, products
and Proceeds thereof.
"Communications Act" means the Communications Act of 1934, as
amended (47 U.S.C. xx.xx. 151 et seq.) or any successor statute governing the
subject matter thereof, and all rules, regulations and policies promulgated
thereunder by the FCC.
"Debtor" means Cyberlink-Nevada, Inc., a Nevada corporation.
"Debtor's Books" means any and all presently existing and
hereafter acquired or created books and records of Debtor, including all records
(including maintenance and warranty records), ledgers, computer programs, disc
or tape files, printouts, runs, and other computer prepared information
indicating, summarizing, or evidencing the Accounts, Deposit Accounts,
Equipment, Inventory, General Intangibles and Negotiable Collateral and also
including all FCC logs, public files, engineering records and other records that
relate to the operation of Debtor's business.
"Deposit Account" means any demand, time, savings, passbook or
like account now or hereafter maintained by or for the benefit of Debtor with a
bank, savings and loan association, credit union or like organization, and all
funds and amounts therein, whether or not restricted or designated for a
particular purpose.
2
"Documents" means any and all documents of title, bills of
lading, dock warrants, dock receipts, warehouse receipts and other documents of
Debtor, whether or not negotiable, and includes all other documents which
purport to be issued by a bailee or agent and purport to cover goods in any
bailee's or agent's possession which are either identified or are fungible
portions of an identified mass, including such documents of title made available
to Debtor for the purpose of ultimate sale or exchange of goods or for the
purpose of loading, unloading, storing, shipping, transshipping, manufacturing,
processing or otherwise dealing with goods in a manner preliminary to their sale
or exchange, in each case whether now existing or hereafter acquired.
"Equipment" means any and all of Debtor's presently existing and
hereafter acquired machinery, equipment, furniture, furnishings, fixtures,
computer and other electronic data processing equipment and other office
equipment and supplies, computer programs and related data processing software,
spare parts, tools, motors, automobiles, trucks, tractors and other motor
vehicles, rolling stock, jigs, and other goods (other than Inventory, farm
products, and consumer goods), of every kind and description, wherever located,
together with any and all parts, improvements, additions, attachments,
replacements, accessories, and substitutions thereto or therefor, and all other
rights of Debtor relating thereto, whether in the possession and control of
Debtor, or in the possession and control of a third party for the account of
Debtor.
"FCC" means the Federal Communications Commission or any
governmental authority succeeding to any of its functions.
"General Intangibles" means any and all of Debtor's presently
existing and hereafter acquired or arising general intangibles and other
intangible personal property of every kind and description, including rights
under licensing and distribution agreements, uncertificated securities,
interests in any joint ventures or partnerships, contract rights, noncompetition
covenants, goodwill, choses in action and causes of action (whether legal or
equitable, whether in contract or tort or otherwise, and however arising),
licenses, approvals, permits or any other authorizations issued by any
Government Authority (including, the Telecommunications Licenses and all other
licenses, approvals, permits and other authorizations issued by the FCC or any
state public utility commission to Debtor, including the proceeds of any sale or
other disposition thereof, in each case to the extent that a security interest
therein is not prohibited by law, provided that to the extent that a security
interest therein is now so prohibited and to the extent that such security
interest at any time hereafter shall no longer be so prohibited, then such
security interest shall automatically and without any further action attach and
become fully effective at that time (giving effect to any retroactive effect to
any change in applicable law or regulation)), all Intellectual Property
Collateral, rights of stoppage in transit, replevin and reclamation, rebates or
credits of every kind and nature to which Debtor may be entitled, purchase
orders, customer lists, subscriber lists, monies due or recoverable from pension
funds, computer software, magnetic media, electronic data processing files,
systems and programs, deposit accounts, uncertificated certificates of deposit,
refunds and claims for tax or other
3
refunds against any Governmental Authority, indemnity agreements, guaranties,
insurance policies, contracts, franchise agreements, lease agreements, and other
contractual, equitable and legal rights of whatever kind and nature.
"Governmental Authority" means any federal, state, local or other
governmental department, commission (including the FCC and any state public
utility commission), board, bureau, agency, central bank, court, tribunal or
other instrumentality or authority or subdivision thereof, domestic or foreign,
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guaranty" means that certain Continuing Guaranty, executed by
Debtor in favor of CoastFed, dated as of even date herewith, as amended from
time to time in accordance with its terms.
"Instruments" means any and all negotiable instruments,
certificated securities and every other writing which evidences a right to the
payment of money, in each case whether now existing or hereafter acquired.
"Intellectual Property Collateral" means the following Assets
owned or held by Debtor or in which Debtor otherwise has any interest, now
existing or hereafter acquired or arising:
(a) all patents and patent applications, domestic or
foreign, all licenses relating to any of the foregoing and all income and
royalties with respect to any licenses, all rights to xxx for past, present or
future infringement thereof, all rights arising therefrom and pertaining thereto
and all reissues, divisions, continuations, renewals, extensions and
continuations in-part thereof;
(b) all copyrights and applications for copyright, domestic
or foreign, together with the underlying works of authorship (including titles),
whether or not the underlying works of authorship have been published and
whether said copyrights are statutory or arise under the common law, and all
other rights and works of authorship, all rights, claims and demands in any way
relating to any such copyrights or works, including royalties and rights to xxx
for past, present or future infringement, and all rights of renewal and
extension of copyright;
(c) all state (including common law), federal and foreign
trademarks, service marks and trade names (including all call letters, logos,
jingles, slogans, logotypes, programs and elements of whatever form or nature
used in connection with the operation of Debtor's business, whether completed or
in production), and applications for registration of such trademarks, service
marks and trade names, all licenses relating to any of the foregoing and all
income and royalties with respect to any licenses, whether registered or
unregistered and wherever registered, all rights to xxx for past,
4
present or future infringement or unconsented use thereof, all rights arising
therefrom and pertaining thereto and all reissues, extensions and renewals
thereof;
(d) all trade secrets, confidential information, customer
lists, license rights, advertising materials, operating manuals, methods,
processes, know-how, sales literature, sales and operating plans, drawings,
specifications, blue prints, descriptions, inventions, name plates and catalogs;
and
(e) the entire goodwill of or associated with the businesses
now or hereafter conducted by Debtor connected with and symbolized by any of the
aforementioned properties and assets.
"Inventory" means any and all of Debtor's presently existing and
hereafter acquired goods of every kind and description (including goods in
transit) which are held for sale or lease, or to be furnished under a contract
of service or which have been so leased or furnished, or other disposition,
wherever located, including those held for display or demonstration or out on
lease or consignment or are raw materials, work in process, finished materials,
or materials used or consumed, or to be used or consumed, in Debtor's business,
and the resulting product or mass, and all repossessed, returned, rejected,
reclaimed and replevied goods, together with all materials, parts, supplies,
packing and shipping materials used or usable in connection with the
manufacture, packing, shipping, advertising, selling or furnishing of such
goods; and all other items hereafter acquired by Debtor by way of substitution,
replacement, return, repossession or otherwise, and all additions and accessions
thereto, and any Document representing or relating to any of the foregoing at
any time.
"Lien" means any mortgage, deed of trust, pledge, security
interest, hypothecation, assignment, deposit arrangement or other preferential
arrangement, charge or encumbrance (including, any conditional sale or other
title retention agreement, or finance lease) of any kind.
"Negotiable Collateral" means any and all of Debtor's presently
existing and hereafter acquired or arising letters of credit, advises of credit,
certificates of deposit, notes, drafts, Instruments, Documents and Chattel
paper.
"Person" means and includes natural persons, corporations,
limited partnerships, general partnerships, limited liability companies, joint
stock companies, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts, or other organizations, irrespective of
whether they are legal entities, and governments and agencies and political
subdivisions thereof.
"Proceeds" means whatever is receivable or received from or upon
the sale, lease, license, collection, use, exchange or other disposition,
whether voluntary or involuntary, of any Collateral or other assets of Debtor,
including "proceeds"
5
as defined in Section 9306 of the Code, any and all proceeds of any insurance,
indemnity, warranty or guaranty payable to or for the account of Debtor from
time to time with respect to any of the Collateral, any and all payments (in any
form whatsoever) made or due and payable to Debtor from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any Governmental Authority
(or any Person acting under color of Governmental Authority), any and all other
amounts from time to time paid or payable under or in connection with any of the
Collateral or for or on account of any damage or injury to or conversion of any
Collateral by any Person, any and all other tangible or intangible property
received upon the sale or disposition of Collateral, and all proceeds of
proceeds.
"Rights to Payment" means all Accounts and any and all rights and
claims to the payment or receipt of money or other forms of consideration of any
kind in, to and under all General Intangibles, Negotiable Collateral and
Proceeds thereof.
"Secured Obligations" shall have the meaning of "Obligations"
under the Guaranty and shall also mean any and all debts, liabilities,
obligations, or undertakings owing by Debtor to CoastFed arising under, advanced
pursuant to, or evidenced by this Security Agreement, whether direct or
indirect, absolute or contingent, matured or unmatured, due or to become due,
voluntary or involuntary, whether now existing or hereafter arising, and
including all interest not paid when due and all CoastFed Expenses which Debtor
is required to pay or reimburse pursuant to this Security Agreement, the
Guaranty or by law.
"Security Agreement" shall mean this Security Agreement, any
concurrent or subsequent riders, exhibits or schedules to this Security
Agreement, and any extensions, supplements, amendments, or modifications to or
in connection with this Security Agreement, or to any such riders, exhibits or
schedules.
"Telecommunications Licenses" means those licenses issued to
Debtor by the FCC or any state public utility commission.
2. Construction. Unless the context of this Security Agreement clearly
requires otherwise, references to the plural include the singular, references to
the singular include the plural, the part includes the whole, "including" is not
limiting, and "or" has the inclusive meaning represented by the phrase "and/or."
References in this Security Agreement to "determination" by CoastFed include
reasonable estimates (absent manifest error) by CoastFed, as applicable (in the
case of quantitative determinations) and reasonable beliefs (absent manifest
error) by CoastFed, as applicable (in the case of qualitative determinations).
The words "hereof," "herein," "hereby," "hereunder," and similar terms in this
Security Agreement refer to this Security Agreement as a whole and not to any
particular provision of this Security Agreement. Article, section, subsection,
exhibit, and schedule references are to this Security Agreement unless otherwise
specified.
6
3. Creation of Security Interest. Debtor hereby grants to CoastFed a
continuing security interest in all presently existing and hereafter acquired or
arising Collateral in order to secure the prompt payment and performance of all
of the Secured Obligations. Debtor acknowledges and affirms that such security
interest in the Collateral has attached to all Collateral without further act on
the part of CoastFed or Debtor.
4. Further Assurances.
4.1 Debtor shall execute and deliver to CoastFed concurrently
with Debtor's execution of this Security Agreement, and from time to time at the
request of CoastFed, all financing statements, continuation financing
statements, fixture filings, security agreements, chattel mortgages,
assignments, and all other documents that CoastFed may request, in form
satisfactory to CoastFed, to perfect and maintain perfected CoastFed's security
interests in the Collateral and in order to consummate fully all of the
transactions contemplated by this Security Agreement and the Guaranty. Debtor
hereby irrevocably makes, constitutes, and appoints CoastFed (and CoastFed's
officers, employees, or agents) as Debtor's true and lawful attorney with power
to sign the name of Debtor on any of the above-described documents or on any
other similar documents which need to be executed, recorded, or filed, and to do
any and all things necessary in the name and on behalf of Debtor in order to
perfect, or continue the perfection of, CoastFed's security interests in the
Collateral. Debtor agrees that neither CoastFed, nor any of its designees or
attorneys-in-fact, will be liable for any act of commission or omission, or for
any error of judgment or mistake of fact or law with respect to the exercise of
the power of attorney granted under this Section 4.1, other than as a result of
its or their gross negligence or wilful misconduct. THE POWER OF ATTORNEY
GRANTED UNDER THIS SECTION 4.1 IS COUPLED WITH AN INTEREST AND SHALL BE
IRREVOCABLE UNTIL ALL OF THE SECURED OBLIGATlONS HAVE BEEN INDEFEASIBLY PAID IN
FULL, THE GUARANTY TERMINATED, AND ALL DEBTOR'S DUTIES HEREUNDER AND THEREUNDER
HAVE BEEN DISCHARGED IN FULL.
4.2 Without limiting the generality of the foregoing Section 4.1
or any of the provisions of the Guaranty, Debtor will: (i) at the request of
CoastFed, xxxx conspicuously all of its records pertaining to the Collateral
with a legend, in form and substance satisfactory to CoastFed, indicating that
the Collateral is subject to the security interest granted hereby; (ii) at the
request of CoastFed, appear in and defend any action or proceeding which may
affect Debtor's title to, or the security interest of CoastFed in, any of the
Collateral; and (iii) upon demand of CoastFed, allow inspection of Collateral by
CoastFed or Persons designated by CoastFed at any time during normal business
hours.
4.3 With respect to the Negotiable Collateral (other than drafts
received in the ordinary course of business so long as no Event of Default is
continuing), Debtor shall, immediately upon request by CoastFed, endorse (where
appropriate) and assign the Negotiable Collateral over to CoastFed, and deliver
to CoastFed actual physical possession of the Negotiable Collateral to CoastFed
together with any instruments of transfer
7
or assignment, all in form and substance satisfactory to CoastFed, in order to
fully perfect the security interest therein of CoastFed.
4.4 Whenever the FCC will permit the granting of a security
interest in, or the collateral assignment of, any Telecommunications License or
any other license granted by the FCC to Debtor, or in any event during the
continuance of an Event of Default, pursuant to Section 9.4, Debtor shall take
all actions and do all things requested by CoastFed in connection with
CoastFed's application to the FCC for the grant, assignment, or transfer to
CoastFed, or any purchaser at a foreclosure sale, of the Telecommunications
Licenses or any other license from the FCC, including any assignment of a lawful
security interest in any Telecommunications License previously granted to
Debtor. Without limiting the generality of the foregoing, Debtor agrees to
execute and deliver to CoastFed, or any Person designated by CoastFed, any
documents, instruments, or agreements requested by CoastFed in connection with
any such grant, license, assignment, or transfer sought by CoastFed from the
FCC.
5. Representations and Warranties. In order to induce CoastFed to make
loans to Borrower, in addition to the representations and warranties of Debtor
set forth in the Guaranty which are incorporated herein by this reference,
Debtor represents and warrants to CoastFed that subject to the Schedule of
Exceptions, on the date hereof and on each and every day that CoastFed makes a
loan to Borrower:
5.1 Location of Chief Executive office and Collateral. Debtor's
chief executive office is located at the address set forth in Schedule 1, and
all other locations where Debtor conducts business or Collateral is kept are set
forth in Schedule 1.
5.2 Locations of Debtor's Books. All locations where Debtor's
Books are kept, including all equipment necessary for accessing Debtor's Books
and the names and addresses of all service bureaus, computer or data processing
companies and other Persons keeping Debtor's Books or collecting Rights to
Payment for Debtor, are set forth in Schedule 1.
5.3 Trade Names and Trade Styles. All trade names and trade
styles under which Debtor presently conducts its business operations are set
forth in Schedule 1, and, except as set forth in Schedule 1, Debtor has not, at
any time during the preceding five years: (i) been known as or used any other
corporate, trade or fictitious name; (ii) changed its name; (iii) been the
surviving or resulting corporation in a merger or consolidation; or (iv)
acquired through asset purchase or otherwise any business of any Person.
5.4 Ownership of Collateral. Debtor is and shall continue to be
the sole and complete owner of the Collateral, free from any Lien other than in
favor of CoastFed.
8
5.5 Enforceability Priority of Security Interest. This Agreement
(i) creates a security interest which is enforceable against the Collateral in
which Debtor now has rights and will create a security interest which is
enforceable against the Collateral in which Debtor hereafter acquires rights at
the time Debtor acquires any such rights, and (ii) CoastFed has a perfected
security interest (to the fullest extent perfection can be obtained by filing,
notification to third parties or possession) and a first priority security
interest in the Collateral in which Debtor now has rights, and will have a
perfected and first priority security interest in the Collateral in which Debtor
hereafter acquires rights at the time Debtor acquires any such rights, in each
case securing the payment and performance of the Secured Obligations.
5.6 Other Financial Statements. Other than financing statements
in favor of CoastFed, no effective financing statement naming Debtor as debtor,
assignor, grantor, mortgagor, pledgor or the like and covering all or any part
of the Collateral is on file in any filing or recording office in any
jurisdiction.
5.7 Rights to Payment.
(a) the Rights to Payment represent valid, binding and
enforceable obligations of the Account Debtors or other Persons obligated
thereon, representing undisputed, bona fide transactions completed in accordance
with the terms and provisions contained in any documents related thereto, and
are and will be genuine, free from Liens, adverse claims, counterclaims,
setoffs, defaults, disputes, defenses, retainages, holdbacks and conditions
precedent of any kind of character, except to the extent reflected by Debtor's
reserves for uncollectible Rights to Payment;
(b) to the best of Debtor's knowledge and belief, all
Account Debtors and other obligors on the Rights to Payment are solvent and
generally paying their debts as they come due;
(c) all Rights to Payment comply with all applicable laws
concerning form, content and manner of preparation and execution, including
where applicable any federal and state consumer credit laws;
(d) Debtor has not assigned any of its rights under the
Rights to Payment;
(e) all statements made, all unpaid balances and all other
information in Debtor's Books and other documentation relating to the Rights to
Payment are true and correct and in all respects what they purport to be; and
(f) Debtor has no knowledge of any fact or circumstance
which would impair the validity or collectibility of any of the Rights to
Payment.
9
5.8 Inventory. No Inventory is stored with any bailee,
warehouseman or similar Person or on any premises leased to Debtor, nor has any
Inventory been consigned to Debtor or consigned by Debtor to any Person or is
held by Debtor for any Person under any "xxxx and hold" or other arrangement.
5.9 Intellectual Property.
(a) except as set forth in Schedule 1, Debtor (directly or
through any subsidiary) does not own, possess or use under any licensing
arrangement any patents, copyrights, trademarks, service marks or trade names,
nor is there currently pending before any Governmental Authority any application
for registration of any patent, copyright, trademark, service xxxx or trade
name;
(b) all patents, copyrights, trademarks, service marks and
trade names are subsisting and have not been adjudged invalid or unenforceable
in whole or in part;
(c) all maintenance fees required to be paid on account of
any patents have been timely paid for maintaining such patents in force, and, to
the best of Debtor's knowledge, each of the patents is valid and enforceable and
Debtor has notified CoastFed in writing of all prior art (including public uses
and sales) of which it is aware;
(d) to the best of Debtor's knowledge after due inquiry, no
material infringement or unauthorized use presently is being made of any
Intellectual Property Collateral by any Person;
(e) Debtor is the sole and exclusive owner of the
Intellectual Property Collateral and the past, present and contemplated future
use of such Intellectual Property Collateral by Debtor has not, does not and
will not infringe or violate any right, privilege or license agreement of or
with any other Person; and
(f) Debtor owns, has material rights under, is a party to,
or an assignee of a party to all material licenses, patents, patent
applications, copyrights, service marks, trademarks, trademark applications,
trade names and all other intellectual property Collateral necessary to continue
to conduct its business as heretofore conducted.
5.10 Equipment.
(a) none of the Equipment or other Collateral is affixed to
real property, except Collateral with respect to which Debtor has supplied
CoastFed with all information and documentation necessary to make all fixture
filings required to perfect and protect the priority of CoastFed's security
interest in all such Collateral which may be fixtures as against all Persons
having an interest in the premises to which such property may be affixed; and
10
(b) none of the Equipment is leased from or to any Person,
except as set forth in Schedule 1.
5.11 Deposit Accounts. The names and addresses of all financial
institutions at which Debtor maintains its Deposit Accounts, and the account
numbers and account names of such Deposit Accounts, are, set forth in Schedule
1.
6. Covenants. In addition to the covenants of Debtor set forth in the
Guaranty which are incorporated herein by this reference, Debtor agrees that
from the Closing Date and thereafter until the indefeasible payment, performance
and satisfaction in full of the Secured Obligations, and all of CoastFed's
obligations under the Guaranty to Debtor have been terminated:
6.1 Defense of Collateral. Debtor shall appear in and defend any
action, suit or proceeding which may affect to a material extent its title to or
right or interest in, or CoastFed's right or interest in, the Collateral.
6.2 Preservation of Collateral. Debtor shall do and perform all
reasonable acts that may be necessary and appropriate to maintain, preserve and
protect the Collateral.
6.3 Compliance with Laws, Etc. Debtor shall comply with all laws,
regulations and ordinances, and all policies of insurance, relating in a
material way to the possession, operation, maintenance and control of the
Collateral.
6.4 Location of Debtor's Books and Chief Executive Office. Debtor
shall: (i) keep all Debtor's Books at the locations set forth in Schedule 1; and
(ii) the location of Debtor's chief executive office or principal place of
business at the location set forth in Schedule 1.
6.5 Location of Collateral. Debtor shall: (i) keep the Collateral
at the locations set forth in Schedule 1; and (ii) give CoastFed at least 30
days' prior written notice of any change in the locations set forth in Schedule
1 by delivering to CoastFed an amended Schedule 1.
6.6 Change in Name, Trade Name or Trade Style. Debtor
shall give at least 30 days' prior written notice of any changes in the its
name, or of any changes in, additions to or other modifications of its trade
names and trade styles set forth in Schedule 1 by delivering to CoastFed an
amended Schedule 1.
6.7 Maintenance of Records. Debtor shall keep separate, accurate
and complete Debtor's Books, disclosing CoastFed's security interest hereunder.
11
6.8 Invoicing of Sales. Debtor shall invoice all of its sales
upon forms customary in the industry and to maintain proof of delivery and
customer acceptance of goods.
6.9 Disposition of Collateral. Debtor shall not surrender or lose
possession of (other than to CoastFed), sell, lease, rent, or otherwise dispose
of or transfer any of the Collateral or any fight or interest therein, except to
the extent permitted by the Guaranty.
6.10 Liens. Debtor shall keep the Collateral free of all Liens
except in favor of CoastFed.
6.11 Expenses. Debtor shall pay all expenses of protecting,
storing, warehousing, insuring, handling and shipping the Collateral.
6.12 Leased Premises. At CoastFed's request, Debtor shall obtain
from each Person from whom Debtor leases any premises at which any Collateral is
at any time present, such subordination, waiver, consent and estoppel agreements
as CoastFed may require, in form and substance satisfactory to CoastFed.
6.13 Rights to Payment. Debtor shall:
(a) perform and observe all terms and provisions of the
Rights to Payment and all obligations to be performed or observed by it in
connection therewith and maintain the Rights to Payment in full force and
effect;
(b) enforce all Rights to Payment strictly in accordance
with their terms, and take all such action to such end as may be from time to
time reasonably requested by CoastFed;
(c) if, to the knowledge of Debtor, any dispute, setoff,
claim, counterclaim or defense shall exist or shall be asserted or threatened
with respect to a Right to Payment (whether with or against Debtor or
otherwise), disclose such fact fully to CoastFed in Debtor's Books relating to
such Account or other Right to Payment and in connection with any report
furnished by Debtor to CoastFed relating to such Right to Payment;
(d) furnish to CoastFed such information and reports
regarding the Rights to Payment as CoastFed may request, and upon request of
CoastFed make such demands and requests for information and reports as Debtor is
entitled to make in respect of the Rights to Payment; and
12
(e) during the continuance of any Event of Default,
establish such lockbox or similar arrangements for the payment of the Rights to
Payment as CoastFed shall require.
6.14 Inventory. Debtor shall:
(a) at such times as CoastFed shall request, prepare and
deliver to CoastFed periodic reports pertaining to the Inventory, in form and
substance satisfactory to CoastFed;
(b) upon the request of CoastFed, take a physical listing of
the Inventory and promptly deliver a copy of such physical listing to CoastFed;
and
(c) not store any Inventory with a bailee, warehouseman or
similar Person or on premises leased to Debtor, nor dispose of any Inventory on
a xxxx-and-hold, guaranteed sale, sale and return, sale on approval, consignment
or similar basis, nor acquire any Inventory from any Person on any such basis,
without in each case CoastFed prior written notice thereof.
6.15 Equipment. Debtor shall, upon CoastFed's request, deliver to
CoastFed a report of each item of Equipment, in form and substance satisfactory
to CoastFed.
6.16 Intellectual Property Collateral. Debtor shall:
(a) not enter into any agreement (including any license or
royalty agreement) pertaining to any Intellectual Property Collateral without in
each case giving CoastFed prior notice thereof;
(b) not allow or suffer any Intellectual Property Collateral
to become abandoned, nor any registration thereof to be terminated, forfeited,
expired or dedicated to the public;
(c) promptly give CoastFed notice of any rights Debtor may
obtain to any new patentable inventions, copyrightable works or other new
Intellectual Property Collateral, prior to the filing of any application for
registration thereof; and
(d) diligently prosecute all applications for patents,
copyrights and trademarks, and file and prosecute any and all continuations,
continuations-in-part, applications for reissue, applications for certificate of
correction and like matters as shall be reasonable and appropriate in accordance
with prudent business practice, and promptly and timely pay any and all
maintenance, license, registration and other fees, taxes and expenses incurred
in connection with any Intellectual Property Collateral.
13
7. Collection of Rights to Payment. Debtor or its agents shall
endeavor in the first instance to collect all amounts due or to become due on or
with respect to the Rights to Payment. At the request of CoastFed during the
continuance of an Event of Default, all remittances received by Debtor shall be
held in trust for CoastFed, and, in accordance with CoastFed's instructions,
remitted to CoastFed or deposited to an account with CoastFed in the form
received (with any necessary endorsements or instruments of assignment or
transfer).
8. Events of Default. The occurrence of any of the following shall
constitute an event of default ("Event of Default") under this Security
Agreement:
8.1 The occurrence of an Event of Default under the Guaranty;
8.2 Debtor shall breach, or be in default of, any of its
agreements, covenants and obligations hereunder; or
8.3 Any representation or warranty made by Debtor hereunder shall
have been untrue in any material respect when made.
9. Rights and Remedies.
9.1 During the continuance of an Event of Default, CoastFed,
without notice or demand, may do any one or more of the following, all of which
are authorized by Debtor:
(a) Make such payments and do such acts as it considers
necessary or reasonable to protect CoastFed's security interest in the
Collateral. Debtor agrees to assemble and make available any or all of the
Collateral if CoastFed so requires. Debtor authorizes CoastFed to enter the
premises where the Collateral is located, take and maintain possession of the
Collateral, or any part of it, and to pay, purchase, contest, or compromise any
encumbrance, charge, or lien which, in the opinion of the CoastFed, appears to
be prior or superior to CoastFed's security interest, and to pay all costs and
expenses incurred in connection therewith;
(b) CoastFed is hereby granted a license or other right to
use, without charge, Debtor's trade names, trademarks, service marks, customer
lists, and advertising matter, or any other property of a similar nature, in
advertising for sale or selling any Collateral and Debtor's rights under all
licenses shall inure to the benefit of CoastFed, subject to the then applicable
rules and regulations of the FCC;
(c) Ship, reclaim, recover, store, finish, maintain, repair,
advertise and prepare for sale the Collateral;
14
(d) Sell the Collateral, at either a public or private sale,
or both, by way of one or more contracts or transactions, for cash or on terms,
in such manner and at such places (including Debtor's premises) as is
commercially reasonable, and apply any proceeds of any sale or other disposition
of the Collateral in the order provided in Section 9504 of the Code, including
the payment of CoastFed Expenses. It is not necessary that the Collateral be
present at any such sale;
(e) Without constituting a retention of collateral in
satisfaction of indebtedness as provided for in Section 9505 of the Code, notify
account debtors and other obligors of Debtor of CoastFed's security interests in
the Collateral, and proceed to collect the same and apply the net cash proceeds
therefrom to the Secured Obligations;
(f) CoastFed shall give notice of any disposition of the
Collateral as follows:
(i) CoastFed shall give Debtor and each holder of a
security interest in the Collateral who has filed with CoastFed a written
request for notice, a written notice stating the time and place of a public
sale, or, if the disposition is to be either a private sale or some other
disposition that is not a public sale, the time on or after which the private
sale or other disposition is to be made;
(ii) The notice described in the immediately preceding
paragraph shall be delivered to Debtor as provided in Section 9.1 of the
Guaranty at least five (5) calendar days before the date fixed for a sale.
Notice to Persons other than Debtor claiming an interest in the Collateral shall
be sent to such addresses as such Persons have furnished to CoastFed prior to
the date of such notice;
(iii) If the disposition is to be a public sale,
CoastFed shall also give notice of the time and place of said sale by publishing
a notice at least five (5) calendar days before the date of the sale in a
newspaper of general circulation, if one exists, in the county in which the sale
is to be held;
(iv) Notwithstanding anything to the contrary in
clauses (ii) and (iii) of this Section 9.1(f), CoastFed shall provide ten (10)
days written notice to Debtor and the FCC before any Equipment will be
repossessed or foreclosed upon;
(g) CoastFed may, in its own name, or in the name of a
designee or nominee, credit bid and purchase at any public sale;
(h) Debtor shall pay all CoastFed Expenses; and
(i) Any portion of the Secured Obligations which remains
unpaid after disposition of the Collateral as provided above shall be paid
immediately by
15
Debtor. Any excess which exists after disposition of the Collateral and payment
in full of the Secured Obligations shall be returned promptly, without interest
and subject to the rights of third parties, to Debtor by CoastFed.
9.2 Upon the exercise by CoastFed of any power, right, privilege,
or remedy pursuant to this Security Agreement which requires any consent,
approval, registration, qualification, or authorization of any Governmental
Authority, Debtor agrees to execute and deliver, or will cause the execution and
delivery of, all applications, certificates, instruments, assignments, and other
documents and papers that CoastFed or any purchaser of the Collateral may be
required to obtain for such governmental consent, approval, registration,
qualification, or authorization.
9.3 The rights and remedies of CoastFed under this Security
Agreement, the Guaranty, and all other agreements contemplated hereby and
thereby shall be cumulative. CoastFed shall have all other rights and remedies
not inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by CoastFed of any one right or remedy shall be deemed an election of
remedies, and no waiver by CoastFed of any default on Debtor's part shall be
deemed a continuing waiver of any further defaults. No delay by CoastFed shall
constitute a waiver, election or acquiescence with respect to any right or
remedy.
9.4 Notwithstanding anything to the contrary contained in this
Security Agreement or in any other agreement, instrument or document executed by
Debtor and delivered to CoastFed, CoastFed will not take any action pursuant to
this Security Agreement or any other document referred to above which would
constitute or result in any assignment of any Telecommunications License or any
change of control of Debtor or any Subsidiary of Debtor if such assignment of
any Telecommunications License or change of control would require, under then
existing law, the prior approval of the FCC without first obtaining such prior
approval of the FCC. Debtor waives, to the extent permitted by law, any right it
may have to oppose, and agrees to take any action which CoastFed may request in
order to obtain from the FCC, such approval as may be necessary to enable
CoastFed to exercise and enjoy the full rights and benefits granted CoastFed by
this Security Agreement and the other documents referred to above, including
specifically, at the cost and expense of Debtor, the use of commercially
reasonable efforts to assist in obtaining approval of the FCC for any action or
transaction contemplated by this Security Agreement for which such approval is
or shall be required by law, and specifically, without limitation, upon request,
to prepare, sign and file with the FCC the assignor's or transferor's portion of
any application or applications for consent to the assignment of license or
transfer of control necessary or appropriate under the FCC's rules and
regulations for approval of (a) any sale or other disposition of the Collateral
by or on behalf of the CoastFed, or (b) any assumption by the CoastFed of voting
rights in the Collateral effected in accordance with the terms of this Security
Agreement. It is understood and agreed that all foreclosures and related actions
will be made in accordance with Section 310 of the Communications Act.
16
10. CoastFed Not Liable. So long as CoastFed complies with the
obligations, if any, imposed by Section 9207 of the Code, CoastFed shall not
otherwise be liable or responsible in any way or manner for: (a) the safekeeping
of the Collateral; (b) any loss or damage thereto occurring or arising in any
manner or fashion or from any cause; (c) any diminution in the value thereof; or
(d) any act or default of any carrier, warehouseman, bailee, forwarding agency,
or other person whomsoever.
11. Indefeasible Payment. The Secured Obligations shall not be
considered indefeasibly paid for purposes of this Security Agreement unless and
until all payments to CoastFed are no longer subject to any right on the part of
any Person, including Debtor, Debtor as a debtor in possession, or any trustee
(whether appointed under the Bankruptcy Code or otherwise) of Debtor or Debtor's
Assets to invalidate or set aside such payments or to seek to recoup the amount
of such payments or any portion thereof, or to declare same to be fraudulent or
preferential. In the event that, for any reason, any portion of such payments to
CoastFed is set aside or restored, whether voluntarily or involuntarily, after
the making thereof, then the obligation intended to be satisfied thereby shall
be revived and continued in full force and effect as if said payment or payments
had not been made.
12. GENERAL PROVISIONS
12.1 Cumulative Remedies: No Prior Recourse to Collateral. The
enumeration herein of CoastFed's rights and remedies is not intended to be
exclusive, and such rights and remedies are in addition to and not by way of
limitation of any other rights or remedies that the CoastFed may have under the
Guaranty, the Code, or other applicable law. CoastFed shall have the right, in
its sole discretion, to determine which rights and remedies are to be exercised
and in which order. The exercise of one right or remedy shall not preclude the
exercise of any others, all of which shall be cumulative.
12.2 No Implied Waivers. No act, failure, or delay by CoastFed
shall constitute a waiver of any of its rights and remedies. No single or
partial waiver by CoastFed of any provision of this Security Agreement, or of a
breach or default hereunder, or of any right or remedy which the CoastFed may
have, shall operate as a waiver of any other provision, breach, default, right,
or remedy or of the same provision, breach, default, right, or remedy on a
future occasion. No waiver by CoastFed shall affect its rights to require strict
performance of this Security Agreement.
12.3 Notices. All notices or demands by any party hereto to the
other party and relating to this Security Agreement shall be sent in accordance
with the terms of Section 22 of the Guaranty.
12.4 Severability. Should any provision, clause or condition of
this Security Agreement be held by any court of competent jurisdiction to be
void or unenforceable, such defect shall not affect the remainder of this
Security Agreement.
17
12.5 Integration. This Security Agreement and such other
agreements, documents and instruments as may be executed in connection herewith
shall be construed as the entire and complete agreement between Debtor and
CoastFed and shall supersede all prior negotiations, all of which are merged and
integrated herein.
12.6 Amendment. The terms and provisions of this Security
Agreement may not be waived or amended except in a writing executed by Debtor
and a duly authorized officer of CoastFed.
12.7 Time of Essence. Time is of the essence in the performance
by Debtor of each and every obligation under this Security Agreement.
12.8 Mutual Waiver of Jury Trial. Debtor and CoastFed each hereby
waive the right to trial by jury in any action or proceeding based upon, arising
out of, or in any way relating to, this Security Agreement, or any conduct, acts
or omissions of Debtor or CoastFed any of their directors, officers, employees,
agents, attorneys or any other persons affiliated with Debtor or CoastFed.
12.9 Benefit of Agreement. The provisions of this Security
Agreement shall be binding upon and inure to the benefit of the respective
successors, assigns, heirs, beneficiaries and representatives of the parties
hereto; provided, however, that Debtor may not assign or transfer any of its
rights under this Security Agreement without the prior written consent of
CoastFed, and any prohibited assignment shall be void. No consent by CoastFed to
any assignment shall relieve Debtor or any guarantor from its liability
hereunder.
12.10 Paragraph Headings: Construction. Paragraph headings are
used herein for convenience only. Debtor acknowledges that the same may not
describe completely the subject matter of the applicable paragraph, and the same
shall not be used in any manner to construe, limit, define or interpret any term
or provision hereof. This Security Agreement has been fully reviewed and
negotiated between the parties and no uncertainty or ambiguity in any term or
provision of this Agreement shall be construed strictly against Debtor or
CoastFed under any rule of construction or otherwise.
12.11 Governing Law: Jurisdiction: Venue. This Security Agreement
and all acts and transactions hereunder and all rights and obligations of Debtor
and CoastFed shall be governed by and in accordance with the laws of the State
of California. Any undefined term used in this Security Agreement that is
defined in the California Uniform Commercial Code shall have the meaning therein
assigned to that term. As a material part of the consideration to CoastFed to
enter into the Loan Agreement, Debtor (i) agrees that all actions and
proceedings relating directly or indirectly hereto shall, at CoastFed's option,
be litigated in courts located within California, and that the exclusive venue
therefor shall be Los Angeles County; (ii) consents to the jurisdiction and
venue of any such court and consents to service of process in any such action or
proceeding by
18
personal delivery or any other method permitted by law; and (iii) waives any and
all rights Debtor may have to object to the jurisdiction of any such court, or
to transfer or change the venue of any such action or proceeding.
IN WITNESS WHEREOF, the parties have executed this Security Agreement
as of the date first set forth above.
Cyberlink-Nevada, Inc.
a Nevada corporation
By /s/ Xxxxxxx Xxxxxx Lydiate
-----------------------------------------
Xxxxxxx Xxxxxx Lydiate, President
By_________________________________________
Xxx XxXxxxx, Chief Financial Officer
COASTFED BUSINESS CREDIT CORPORATION
a California corporation
By_________________________________________
Title:_____________________________________
personal delivery or any other method permitted by law; and (iii) waives any and
all rights Debtor may have to object to the jurisdiction of any such court, or
to transfer or change the venue of any such action or proceeding.
IN WITNESS WHEREOF, the parties have executed this Security Agreement
as of the date first set forth above.
Cyberlink-Nevada, Inc.
a Nevada corporation
By /s/ Xxxxxxx Xxxxxx Lydiate
-----------------------------------------
Xxxxxxx Xxxxxx Lydiate, President
By /s/ Xxx XxXxxxx
-----------------------------------------
Xxx XxXxxxx, Chief Financial Officer
COASTFED BUSINESS CREDIT CORPORATION
a California corporation
By /s/ Coastfed Business Credit Corporation
-----------------------------------------
Title: Vice President
--------------------------------------
19
Schedule I
Section 5.1 Location of Chief Executive Office and Collateral
Section 5.2 Locations of Debtor's Books
Section 5.3 Trade Names or Trade Styles
Section 5.9 Intellectual Property
Section 5.10 Equipment Leases
Section 5.11 Deposit Accounts
See Schedule of exceptions
