Exhibit 10.19
SECURITY AGREEMENT
THIS SECURITY AGREEMENT is made as of the 15th day of November, 2001, by
and between AIRNET COMMUNICATIONS CORPORATION, a Delaware corporation
("Debtor"), and Force Computers, Inc., a Delaware corporation ("Force"), Sanmina
Corporation, a Delaware corporation ("Sanmina"), and Brooktrout, Inc., a
Massachusetts corporation ("Brooktrout" and together with Force and Sanmina,
collectively and individually the "Secured Party" and sometimes referred to
herein as the "Secured Parties").
SECTION 1. THE SECURITY INTERESTS. In order (i) to secure the due and
punctual payment of that certain Settlement Agreement dated October 29, 2001
between Debtor, as debtor, and Force, as creditor (the "Force Settlement
Agreement"), (ii) to secure the due and punctual payment of that certain
Settlement Agreement dated November 7, 2001 between Debtor, as debtor, and
Sanmina, as creditor (the "Sanmina Settlement Agreement"), (iii) to secure the
due and punctual payment of that certain Settlement Agreement dated November 14,
2001 between Debtor, as debtor, and Brooktrout, as creditor (the "Brooktrout
Settlement Agreement" and together with the Force Settlement Agreement and the
Sanmina Settlement Agreement, the "Settlement Agreements"), and (iv) to secure
the performance of all the obligations of Debtor contained herein (all of the
foregoing are hereinafter called the "Obligations"), which Obligations shall not
exceed in the aggregate the sum of $4,500,000, Debtor hereby grants to Secured
Party a continuing security interest in and to all fixtures and tangible
personal property of the Debtor, of every kind and nature, whether now owned or
hereafter acquired or arising and wherever located and all proceeds and products
thereof, including but not limited to the following (hereinafter collectively
called the "Collateral"):
(a) all machinery, equipment, fixtures, tools, furniture and other
goods whether now owned or hereafter acquired by Debtor, or in which Debtor may
now have or hereafter acquire an interest, and all replacements, substitutions
and all parts thereof;
(b) all inventory, including but not limited to all merchandise, raw
materials, work in process, finished goods and supplies whether now owned or
hereafter acquired by Debtor, or in which Debtor may now have or hereafter
acquire an interest, and including any goods that are returned to the Debtor;
(c) all accessions, additions and improvements to, all of the
foregoing, including proceeds of insurance policies or any indemnity, warranty
or guaranty payable by reason of loss or damage to or otherwise with respect to
any of the foregoing Collateral, whether now owned or hereafter acquired by
Debtor, or in which Debtor may now have or hereafter acquire an interest; and
(d) all books, records, documents, computer tapes and discs relating to
all of the foregoing, whether now owned or hereafter acquired by Debtor, or in
which Debtor may now have or hereafter acquire an interest.
The security interests granted pursuant to this Section 1 (the "Security
Interests") are granted as security only and shall not subject Secured Party to,
or transfer to Secured Party, or in any way affect or modify, any obligation or
liability of Debtor under any of the Collateral or any transaction which gave
rise thereto.
For avoidance of doubt it is expressly understood and agreed that the
Collateral does not include, inter alia, patents, applications for patents,
trademarks, trade names, service marks, registrations of trademarks and service
marks, copyrights, blueprints, designs, engineering drawings and contracts,
proprietary information, product lines, research and development, or any other
form of intellectual property.
SECTION 2. FILING; FURTHER ASSURANCES. Debtor hereby agrees to do all acts
that the Secured Party deems necessary or desirable to protect the Security
Interests or to otherwise carry out the provisions of this Security Agreement,
including, but not limited to, the execution of financing, continuation and
amendment statements and similar instruments that describe or indicate the
Collateral and which contain any other information required by Part 5 of Article
9 of the UCC for the sufficiency or filing office acceptance of any financing
statement, continuation statement or amendment. The Debtor appoints Secured
Party as the Debtor's attorney irrevocable to do all acts that the Debtor may be
required to do under this Security Agreement. Debtor shall be liable for the
payment of all charges, fees and expenses, including any documentary stamp taxes
that may be due, in connection with this Security Agreement, the filing of the
aforementioned financing, continuation and amendment statements, and the payment
of the Obligations. In the event documentary stamp taxes are not initially paid
hereunder and such taxes are later required to be paid in order to enforce the
Security Interests granted hereunder, any Secured Party may pay such taxes and
accrued interest and penalties and Debtor shall indemnify such Secured Party
from and against such taxes, interest and penalties. Further, in any future
action in which any Secured Party seeks enforcement of the Security Interests,
Debtor expressly waives any rights it may have to assert such nonpayment of the
documentary stamp taxes as an affirmative defense against such enforcement.
Debtor shall, during normal business hours and from time to time, allow the
Secured Party, by or through any of its officers or employees to examine or
inspect the Collateral and make extracts from Debtor's books and records.
SECTION 3. REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) Chief Executive Office/Location of Records/Change of Name/Change of
State of Incorporation. Debtor's chief executive office is located at the
address set forth in Section 8 below and records relating to Debtor's accounts
are kept at such address. Debtor has no other place of business except as set
forth on Schedule I. Debtor agrees to provide Secured Party with sixty (60) days
prior written notice of any change in the name of Debtor or the location of
Debtor's chief executive office. Debtor further agrees to provide Secured Party
with sixty (60) days prior written notice of any change in the state of Debtor's
incorporation.
(b) Location of Collateral. All Collateral is located at the Debtor's
principal place of business set forth in Section 8 and in such other locations,
if any, set forth on Schedule I. None of the Collateral shall be removed from
such locations except in connection with sales in the ordinary course of
business.
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(c) Absence of Liens, Disposition of Collateral. To the best of
Debtor's knowledge, Debtor is the owner of the Collateral free from all
encumbrances. Except as otherwise provided herein, Debtor will not pledge,
mortgage or create or suffer to exist a lien, security interest or other
encumbrance in the Collateral in favor of any person. Further, Debtor will not
sell or transfer the Collateral or any interest therein without the prior
written consent of the Secured Party, except in the ordinary course of business.
(d) Maintenance of Collateral. The Debtor covenants and agrees to
preserve the Collateral for the benefit of Secured Party and the Debtor agrees
that it will not sell, lease or otherwise dispose of any item of the Collateral
except for the sale of inventory in the ordinary course of business or the
replacement of collateral in the ordinary course of business.
(e) Insurance. Debtor shall maintain insurance covering the Collateral
against such risks, with such insurers, in such form, and in such amounts as
shall from time to time be reasonably required by Secured Party and, in any
event, against such risks and with such limits as is consistent with industry
practice. All insurance policies shall be written so as to be payable in the
event of loss to Secured Party and shall provide for thirty (30) days' written
notice to Secured Party of cancellation or modification. At the request of
Secured Party and after an Event of Default (as defined below), all insurance
policies shall be furnished to and held by Secured Party. Prior to default,
Debtor shall furnish to Secured Party certificates of insurance reasonably
satisfactory to Secured Party. Debtor hereby conditionally assigns to Secured
Party return premiums, dividends and other amounts which may be or become due
upon cancellation of any such policies for any reason whatsoever and directs the
insurers to pay Secured Party any sums so due following an Event of Default.
Following an Event of Default, the Secured Party is hereby irrevocably appointed
as attorney in fact to collect return premiums, dividends and other amounts due
on any insurance policy and the proceeds of such insurance, to settle any claims
with the insurers in the event of loss or damage, to endorse settlement drafts
and to cancel, assign or surrender any insurance policies.
(f) Obligations. Debtor hereby warrants and represents that as of the
date of this Security Agreement, the Obligations owed collectively to the
Secured Parties do not exceed $4,500,000.
SECTION 4. EVENTS OF DEFAULT. Debtor shall be in default under this
Security Agreement upon the occurrence of any one of the following events (each
such event is herein referred to as an "Event of Default"):
(a) default by Debtor in the due observance or performance of the
covenants contained in Section 3 of or elsewhere in this Security Agreement; or
(b) any representation or warranty or statement of fact made to
Secured Party at any time by Debtor is false or misleading in any material
respect; or
(c) the occurrence of a default or event of default under any of the
Settlement Agreements.
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SECTION 5. REMEDIES UPON EVENT OF DEFAULT.
(a) If any Event of Default shall have occurred, any Secured Party may
declare its portion of the Obligations to be immediately due and payable and
exercise all the rights and remedies of a secured party under the UCC (whether
or not the UCC is in effect in the jurisdiction where such rights and remedies
are exercised) and, in addition, any Secured Party may, without being required
to give any notice, except as herein provided or as may be required by mandatory
provisions of law, sell the Collateral, or any part thereof, at public or
private sale for cash, upon credit or for future delivery, and at such price or
prices as such Secured Party may deem satisfactory.
(b) Any Secured Party may require Debtor to assemble all or any part of
the Collateral and make it available to such Secured Party at a place to be
designated by such Secured Party which is reasonably convenient. Any holder of
an Obligation may be the purchaser of any or all of the Collateral so sold at
any public sale (and, if the Collateral is of a type customarily sold in a
recognized market or is of a type which is the subject of widely distributed
standard price quotations, at any private sale) and thereafter hold the same
absolutely, free from any right or claim of whatsoever kind. Upon any such sale
such Secured Party shall have the right to deliver, assign and transfer to the
purchaser thereof the Collateral so sold. Each purchaser at any such sale shall
hold the Collateral so sold absolutely, free from any claim or right of
whatsoever kind, including any equity or right of redemption of Debtor.
(c) A Secured Party shall give Debtor at least twenty (20) days' prior
written notice of its intention to make any such public or private sale. Secured
Parties and Debtor agree that such notice constitutes "reasonable notification"
within the meaning of the UCC. Such notice, in case of a public sale, shall
state the time and place fixed for such sale. Such notice, in case of a private
sale or disposition, shall state the time after which any private sale or other
intended disposition is to be made. All notices shall otherwise comply with the
terms of the UCC.
(d) Any such public sale shall be held at such time or times within
ordinary business hours and at public or private place or places as a Secured
Party may fix in the notice of such sale. At any public or private sale, the
Collateral may be sold in one lot as an entirety or in separate parcels, as such
Secured Party may determine. Such Secured Party shall not be obligated to make
such sale pursuant to any such notice. Such Secured Party may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for the
sale, and such sale may be made at any time or place to which the same may be
adjourned. In case of any sale of all or any part of the Collateral on credit or
for future delivery, the Collateral so sold may be retained by such Secured
Party until the selling price is paid by the purchaser thereof, but such Secured
Party shall not incur any liability in case of the failure of such purchaser to
take up and pay for the Collateral so sold and, in case of any such failure,
such Collateral may again be sold upon like notice.
(e) Any Secured Party, instead of exercising the power of sale herein
conferred upon it, may proceed by a suit or suits at law or in equity to
foreclose the Security Interests and sell the Collateral, or any portion
thereof, under a judgment or decree of a court or courts of competent
jurisdiction.
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(f) Secured Party may take any other action that Secured Party deems
necessary or desirable to protect the Collateral or the Security Interests.
(g) All rights and remedies contained herein shall be separate and
cumulative and in addition to all other rights and remedies available to a
secured party under applicable law, and the exercise of one shall not in any way
limit or prejudice the exercise of any other such rights or remedies.
SECTION 6. APPLICATION OF PROCEEDS. The proceeds of any sale of, or other
realization upon, all or any part of the Collateral shall be applied in the
following order of priorities:
(a) first, to pay the expenses of such sale or other realization,
including out-of-pocket expenses of Secured Party and reasonable fees and
expenses of its agents and counsel, and all expenses, liabilities and advances
incurred or made by Secured Party in connection therewith;
(b) second, to the payment of the Obligations owed to each of the
Secured Parties in proportion to the amount of the outstanding Obligations owed
to each of the Secured Parties at the time of such payment; and
(c) finally, unless applicable law otherwise provides, to pay to
Debtor, or its successors or assigns, or as a court of competent jurisdiction
may direct, any surplus then remaining from such proceeds.
SECTION 7. TERMINATION OF SECURITY INTERESTS; RELEASE OF COLLATERAL. Upon
the repayment and performance in full of all the Obligations, the Security
Interests shall terminate and all rights to the Collateral shall revert to
Debtor. Upon any such termination of the Security Interests or release of
Collateral, Secured Party will, at Debtor's expense to the extent permitted by
law, execute and deliver to Debtor such documents as Debtor shall reasonably
request to evidence the termination of the Security Interests or the release of
such Collateral, as the case may be.
SECTION 8. NOTICES. All notices and correspondence, hereunder shall be in
writing and sent by certified or registered mail, return receipt request, or by
overnight delivery service, with all charges prepaid, to the applicable party at
the address set forth below, or by facsimile transmission (including, without
limitation, computer generated facsimile), promptly confirmed in writing sent by
first class mail, to the FAX numbers and the addresses set forth below.
if to Force:
c/o Force Computers, Inc.
0000 Xxxxxxx Xxxxxxx
Xxxxxxx, XX 00000
Attention: General Counsel
FAX No.: (000) 000-0000
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if to Sanmina:
c/o Sanmina Corporation
0000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: V.P. & Corporate Counsel
FAX No.: (000) 000-0000
if to Brooktrout:
c/o Brooktrout, Inc.
000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Corporate Counsel
FAX No.: (000) 000-0000
if to Debtor:
AirNet Communications Corporation
000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, V.P. and General Counsel
FAX No.: (000) 000-0000
or, as to each party, at such other address as shall be designated by such party
in a written notice to the other party complying as to delivery with the terms
of this Section, provided, however, each Secured Party may only designate one
address for notice to such Secured Party hereunder. All such notices and
correspondence shall be deemed given upon the earlier to occur of (i) actual
receipt, (ii) if sent by certified or registered mail, three business days after
being post-marked, (iii) if sent by overnight delivery service, when received at
the above stated addresses or when delivery is refused or (iv) if sent by
facsimile transmission, when receipt of such transmission is acknowledged.
SECTION 9. WAIVERS, NON-EXCLUSIVE REMEDIES.
(a) Except as otherwise provided by applicable law, Secured Party shall
not have any duty as to the preservation of any rights pertaining thereto beyond
the safe custody of any Collateral in its possession.
(b) The remedies in this Security Agreement are cumulative and are not
exclusive of any other remedies provided by law.
(c) Debtor, to the extent it may lawfully do so, hereby consents to the
jurisdiction of the courts of the State of Florida and the Federal District
Court for the District of Florida for the purpose of any suit or proceeding
brought in connection with or with respect to this Security Agreement.
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SECTION 10. CHANGES IN WRITING. Neither this Security Agreement nor any
provision hereof may be changed, waived, discharged or terminated orally but
only by a statement in writing signed by the party against which enforcement of
the change, waiver, discharge or termination is sought.
SECTION 11. FLORIDA LAW; MEANING OF TERMS. This Security Agreement shall be
construed in accordance with and governed by the laws of the State of Florida
applicable to contracts made and performed in said state without regard to
conflict of laws principals. Unless otherwise defined herein, or unless the
context otherwise requires, all terms used herein which are defined in the
Florida Uniform Commercial Code have the meanings therein stated.
SECTION 12. SEVERABILITY. If any provision hereof is invalid or
unenforceable in any jurisdiction, the other provisions hereof shall remain in
full force and effect in such jurisdiction.
SECTION 13. HEADINGS. The headings in this Security Agreement are for the
purposes of reference only and shall not limit or otherwise affect the meaning
hereof.
SECTION 14. SUCCESSOR AND ASSIGNS. This Security Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
SECTION 15. WAIVER OF JURY TRIAL. DEBTOR AND SECURED PARTY EACH WAIVES
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF
THEM AGAINST THE OTHER ON ANY MATTER WHATSOEVER RELATED TO THIS SECURITY
AGREEMENT OR THE OBLIGATIONS. No party to this Security Agreement, including but
not limited to any assignee or successor of a party, shall seek a jury trial in
any lawsuit, proceeding, counterclaim, or any other litigation procedure based
upon, or arising out of, this Security Agreement. No party will seek to
consolidate any such action, in which a jury trial has been waived, with any
other action in which a jury trial cannot be or has not been waived. THE
PROVISIONS OF THIS SECTION HAVE BEEN FULLY DISCUSSED BY THE PARTIES HERETO, AND
THESE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS. NO PARTY HAS IN ANY WAY
AGREED WITH OR REPRESENTED TO ANY OTHER PARTY THAT THE PROVISIONS OF THIS
SECTION WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
SECTION 16. COUNTERPARTS. This Security Agreement may be executed in
multiple counterparts and may be executed by facsimile, each of which when taken
together shall constitute one and the same original.
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SECTION 17. SUBORDINATION OF SECURITY INTEREST. Notwithstanding the terms
of this Security Agreement, Secured Parties agrees that in the event Debtor
enters into a loan transaction with a lender or lenders for a loan in the
original principal amount of $6,000,000 or more, Secured Parties shall execute
and deliver to such new lender(s) (the "Senior Lender") a subordination
agreement in form and substance reasonably satisfactory to such Senior Lender
and Secured Parties. The subordination agreement shall provide that the Security
Interests granted by this Security Agreement shall be deemed to be subordinated
to the security interest granted to the Senior Lender and the priorities of the
liens established, altered or specified in the subordination agreement shall be
applicable irrespective of the time or order of attachment or perfection
thereof.
IN WITNESS WHEREOF, this Security Agreement has been executed by the
parties hereto all as of the day and year first above written.
DEBTOR:
WITNESS: AIRNET COMMUNICATIONS CORPORATION
_______________________________ By:_________________________________
Title:______________________________
SECURED PARTY:
WITNESS: FORCE COMPUTERS, INC.
_______________________________ By:_________________________________
Title:______________________________
SECURED PARTY:
WITNESS: SANMINA CORPORATION
_______________________________ By:_________________________________
Title:______________________________
SECURED PARTY:
BROOKTROUT, INC.
_______________________________ By:_________________________________
Title:______________________________
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SCHEDULE I
OTHER PLACES OF BUSINESS AND COLLATERAL LOCATIONS
1. AirNet Communications Corporation
Trio Road Facility
000 & 000 Xxxxx Xxxxx
Xxxxxxxxx, Xxxxxxx 00000.
2. Collateral may be occasionally stored and warehoused at the IDS storage
facility at the Melbourne International Airport.
3. For field trial and demonstration purposes, Collateral may be taken to
customer sites and trade shows on a worldwide basis.
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