EIGHTH AMENDED AND RESTATED SECURITY AGREEMENT
THIS EIGHTH AMENDED AND RESTATED SECURITY AGREEMENT (the "Security
Agreement") is made and entered into, as of July 14th, 1999, by and between JNC
Strategic Fund Ltd., a Cayman Islands corporation ("JNC") and InnovaCom, Inc., a
Nevada corporation (the "Company").
RECITALS
WHEREAS, on June 29, 1998, JNC and the Company entered into a
Convertible Debenture Purchase Agreement (the "June 29th Purchase Agreement"),
and related documents, pursuant to which JNC purchased an aggregate principal
amount of $2,000,000 of the Company's 7% Convertible Debentures Due June 29,
2003 (the "June 29th Debentures");
WHEREAS, in connection with the June 29th Purchase Agreement, the
Company also executed and delivered to JNC a Security Agreement (the "Security
Agreement") to secure the payment and discharge of all of the Company's
obligations under the June 29th Debentures and to provide JNC with a continuing
security interest, a first lien upon, and a right of set-off against, all of the
Company's right, title, and interest in the Collateral (as defined in the
Security Agreement), to which any and all rights and claims of any other parties
shall be subordinate;
WHEREAS, JNC and the Company subsequently agreed to amend and restate in
its entirety the Security Agreement in connection with their entering into a
Convertible Debenture Purchase Agreement dated as of August 28th, 1998 (the
"August 28th Purchase Agreement") in order to provide that the obligations of
the Company pursuant to the Company's 7% Convertible Secured Debentures Due
August 28, 2003 in an aggregate principal amount of $1,500,000 (the "August 28th
Debentures") and other Transaction Documents (as defined in Section 2.1(a) of
the August 28th Purchase Agreement) would also be deemed to be part of the
Obligations (as defined in Section 2 of the Security Agreement) of the Company
under the Security Agreement;
WHEREAS, JNC and the Company again agreed to amend and restate in its
entirety the Security Agreement (as amended and restated pursuant to the
transactions contemplated by the August 28th Purchase Agreement) in connection
with their entering into a Convertible Debenture Purchase Agreement dated as of
December 15th, 1998 (the "December 15th Purchase Agreement") in order to provide
that the obligations of the Company pursuant to the Company's 7% Secured
Convertible Debentures Due December 15, 2003 in an aggregate principal amount of
$500,000 (the "December 15th Debentures") and other Transaction Documents (as
defined in Section 2.1(a) of the December 15th Purchase Agreement) would also be
deemed to be part of the Obligations of the Company under the Security
Agreement;
WHEREAS, JNC and the Company again agreed to amend and restate in its
entirety the Security Agreement (as amended and restated pursuant to the
transactions contemplated by the August 28th Purchase Agreement and the
transactions contemplated by the December 15th Purchase Agreement) in connection
with their entering into a Convertible Debenture Purchase Agreement dated as of
January 14th, 1999 (the "January 14th Purchase Agreement," and collectively with
the June 29th Purchase Agreement, the August 28th Purchase Agreement, and the
December 15th Purchase Agreement, the "Purchase Agreements") in order to provide
that the obligations of the Company pursuant to the Company's 7% Secured
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Convertible Debentures Due January 14, 2004 in an aggregate principal amount of
$750,000 (the "January 14th Debentures," and collectively with the June 29th
Debentures, the August 28th Debentures, and the December 15th Debentures, the
"Debentures") and other Transaction Documents (as defined in Section 2.1(a) of
the January 14th Purchase Agreement) shall also be deemed to be part of the
Obligations of the Company under the Security Agreement;
WHEREAS, JNC and the Company again agreed to amend and restate in its
entirety the Security Agreement (as amended and restated pursuant to the
transactions contemplated by the August 28th Purchase Agreement, the December
15th Purchase Agreement, and the January 14th Purchase Agreement) in connection
with the Company's executing a "Secured Promissory Note" dated as of March 3,
1999 in the aggregate principal amount of $600,000 in favor of JNC (the "March
3rd Note"), in order to provide that the obligations of the Company pursuant to
the March 3rd Note shall also be deemed to be part of the Obligations of the
Company under the Security Agreement;
WHEREAS, JNC and the Company again agreed to amend and restate in its
entirety the Security Agreement (as amended and restated pursuant to the
transactions contemplated by the August 28th Purchase Agreement, the December
15th Purchase Agreement, the January 14th Purchase Agreement, and the March 3rd
Note) in connection with the Company's executing a "Secured Promissory Note"
dated as of April 9, 1999 in the aggregate principal amount of $600,000 in favor
of JNC (the "April 9th Note"), in order to provide that the obligations of the
Company pursuant to the April 9th Note shall also be deemed to be part of the
Obligations of the Company under the Security Agreement;
WHEREAS, JNC and the Company again agreed to amend and restate in its
entirety the Security Agreement (as amended and restated pursuant to the
transactions contemplated by the August 28th Purchase Agreement, the December
15th Purchase Agreement, the January 14th Purchase Agreement, the March 3rd
Note, and the April 9th Note) in connection with the Company's executing a
"Secured Promissory Note" dated as of May 7th, 1999 in the aggregate principal
amount of $450,000 in favor of JNC (the "May 7th Note"), in order to provide
that the obligations of the Company pursuant to the May 7th Note shall also be
deemed to be part of the Obligations of the Company under the Security
Agreement;
WHEREAS, JNC and the Company again agreed to amend and restate in its
entirety the Security Agreement (as amended and restated pursuant to the
transactions contemplated by the August 28th Purchase Agreement, the December
15th Purchase Agreement, the January 14th Purchase Agreement, the March 3rd
Note, the April 9th Note, and the May 7th Note) in connection with the Company's
executing a "Secured Promissory Note" dated as of June 17th, 1999 in the
aggregate principal amount of $300,000 in favor of JNC (the "June 17th Note"),
in order to provide that the obligations of the Company pursuant to the June
17th Note shall also be deemed to be part of the Obligations of the Company
under the Security Agreement;
WHEREAS, JNC and the Company have now agreed to amend and restate in its
entirety the Security Agreement (as amended and restated pursuant to the
transactions contemplated by the August 28th Purchase Agreement, the December
15th Purchase Agreement, the January 14th Purchase Agreement, the March 3rd
Note, the April 9th Note, the May 7th Note, and the June 17th Note) in
connection with the Company's executing a "Secured Promissory Note" dated as of
July 14th, 1999 in the aggregate principal amount of $500,000 in favor of JNC
(the "July 14th Note"), in order to provide that the obligations of the Company
pursuant to the July 14th Note shall also be deemed to be part of the
Obligations of the Company under the Security Agreement.
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NOW, THEREFORE, in consideration of the agreements herein contained and
for other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto hereby agree as follows:
AGREEMENT
1. Definitions. Unless otherwise defined, or unless the context otherwise
requires, capitalized terms used in this Security Agreement shall have
the same meaning given such terms in the Transaction Documents (as
defined in Section 2.1(a) of the January 14th Purchase Agreement).
(a) The following terms shall have the same meaning given such terms
in Article 9 of the Uniform Commercial Code of the State of
California, as amended to the date of this Security Agreement,
and/or any other applicable law of any jurisdiction (whether or
not such other Uniform Commercial Code applies to the Collateral,
as defined herein)(collectively, the "UCC"): Chattel Paper,
Documents, Goods, Instruments, Accounts, Consumer Goods,
Equipment, Fixtures, Deposit Accounts, Proceeds, General
Intangibles and Inventory.
2. Grant of Security Interest. As security for the full and punctual
satisfaction, payment, and performance of all of the obligations of the
Company pursuant to the July 14th Note, as well as the obligations of
the Company under each and all of the June 17th Note, the May 7th Note,
the April 9th Note, the March 3rd Note, and the Transaction Documents
referenced in each of the Purchase Agreements (collectively, the "JNC
Transaction Documents"), as such obligations may be amended,
supplemented, and modified from time to time (the "Obligations"), the
Company does hereby, unconditionally and irrevocably, pledge, mortgage,
assign, set over, convey, grant, transfer, and deliver (collectively,
"Transfer") to JNC a continuing security interest, a first lien upon,
and a right of set-off against, all of the Company's right, title, and
interest of whatsoever kind and nature in and to the Collateral (as
hereinafter defined)(the "Security Interest"). The Security Interest
granted hereby shall relate back to the date of the June 29th Purchase
Agreement.
3. Collateral. The "Collateral" shall cover and include all right, title,
and interest of the Company in, to, and under all of the following,
whether now existing or hereafter acquired from time to time: (i) all
Accounts; (ii) all receivables; (iii) all General Intangibles; (iv) all
Goods, including, without limitation, all Equipment, and all Inventory,
whether now held or acquired in the future and wherever located,
including, but not limited to Inventory that is repossessed, returned or
acquired as a result of a "trade-in;" and (v) all letters of credit,
notes, drafts, stock and other debt and equity securities whether or not
certificated, and all instruments; (vi) all Chattel Paper and all
Documents including without limitation documents of title (vii) all
Instruments; (viii) all contract rights and all causes of action; (ix)
all Deposit Accounts (general or special) with, and all credits and
other claims against, all-lenders or other financial institutions; (x)
all money; (xi) all property or interests in property now or hereafter
coming into the possession, custody or control of the Company (whether
for safekeeping, deposit, custody, pledge, transmission, collection or
otherwise); (xii) all Proceeds including, without limitation, all
proceeds of any loans, including the Loan and all insurance proceeds of
or relating to any of the foregoing; (xiii) all books and records
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relating to any of the foregoing; (xiv) all Fixtures, accessions and
additions to, substitutions for, and replacements, products and proceeds
of any of the foregoing and (xv) all rights to payment resulting from
disposition or other Transfer of any of the foregoing.
4. Preservation and Perfection of Security Interests. In connection with
the Security Agreement, the Company previously delivered to JNC one or
more Uniform Commercial Code Form 1 Financing Statements (collectively,
"UCC Form 1") with respect to the Security Interest. In addition, the
Company shall, as required from time to time by JNC, execute and deliver
or endorse any and all instruments, documents, conveyances, assignments,
security agreements, additional financing statements, continuation
statements, and other agreements and writings which JNC may request in
order to create, perfect, or continue the Security Interest or which JNC
may otherwise reasonably request in order to secure, protect or enforce
the Security Interest or the rights of JNC under this Security Agreement
(but any failure to request or assure that the Company execute, deliver
or endorse any such item shall not affect nor impair the validity,
sufficiency or enforceability of this Security Agreement or any security
interests granted herein, regardless of whether any such item was or was
not executed, delivered or endorsed in a similar context or on a prior
occasion). A carbon, photographic or other reproduction of this Security
Agreement or of a financing statement is sufficient as a financing
statement.
5. Representations and Warranties of the Company. The Company hereby
incorporates by reference those representations and warranties set forth
in the JNC Transaction Documents, and further represents and warrants to
JNC:
a. Except for the rights granted hereunder and the related UCC Form
1 which was filed on June 26, 1998 with the California Secretary
of State and on June 29, 1998 with the Santa Xxxxx County
Recorder, the Company is the sole owner of the Collateral, free
and clear from any liens, security interests, encumbrances,
rights or claims, and is fully authorized to grant the Security
Interest in and pledge the Collateral, and the Collateral is not
subject to any UCC financing statement.
b. This Security Agreement is fully sufficient to create and
transfer to JNC, and shall create and transfer to JNC, a Security
Interest in and to all of the Company's right, title, and
interest in the Collateral, free and clear of any and all adverse
liens, claims, and encumbrances of any kind or nature, and the
Company has not transferred, and shall not transfer any Security
Interest in the Collateral to any other person, without the prior
written consent of JNC.
c. This Security Agreement creates a valid and perfected security
interest in the Collateral, securing the performance of the
Obligations. All filings and other actions necessary to perfect
and protect such security interest have been made or taken by the
Company.
d. Except for the consent of JNC, which is implicit pursuant to this
Security Agreement, no consent of any person (including, without
limitation, stock holders or creditors of the Company) is
required for the subjection by the Company of the Collateral to
the terms of this Security Agreement.
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6. Covenants of the Company. The Company hereby reaffirms and incorporates
those covenants set forth in the JNC Transaction Documents and further
covenants and agrees:
a. To appear and defend any and all actions and proceedings
affecting the Collateral, or otherwise affecting the Security
Interest, against any persons whatsoever, and the Company shall
obtain and furnish to JNC from time to time, upon demand, such
releases and/or subordinations of claims and liens which may be
required to maintain the priority of the Security Interest
hereunder.
b. To permit JNC, its representatives and its agents to inspect the
Collateral at any time, and to make copies of records pertaining
to the Collateral as may be requested by JNC from time-to-time.
c. At all times, to maintain the liens and security interests
provided for hereunder as valid and perfected first priority
liens and security interests in the Collateral hereby granted to
JNC.
d. That all Collateral shall, for the entire term of this Security
Agreement, be free and clear of any liens, mortgages, pledges, or
any other encumbrances of any kind or nature whatsoever, except
only for the security interests created by this Security
Agreement, or as otherwise consented to in writing by JNC.
e. Not to sell, lease, transfer or remove the Collateral, or any
part thereof, from its present location without first obtaining
the express written consent of JNC, except in the ordinary course
of business.
f. With respect to that part of the Collateral which is tangible,
the Company will maintain such Collateral in good order and
repair and will not use any part of such Collateral in any manner
injurious or likely to be injurious or which will result in its
unreasonable deterioration or consumption or which will be in
violation of any laws or regulations or any policy of insurance.
With respect to Collateral which is not tangible, the Company
will take all steps reasonably necessary to preserve and protect
the value of such Collateral, and the Company will diligently
pursue and seek to preserve, enforce and collect any rights,
claims, causes of action and accounts receivable.
g. To safeguard and protect all Collateral for the account of JNC
and make no disposition thereof other than in the ordinary course
of business. At the request of JNC, the Company will sign and
deliver to JNC, at any time or from time to time, one or more
financing statements pursuant to the UCC in form satisfactory to
JNC and will pay the cost of filing the same in all public
offices wherever filing is, or is deemed by JNC to be, necessary
or desirable and with respect to the Collateral.
h. To promptly notify JNC in sufficient detail upon becoming aware
of any attachment, garnishment, execution or other legal process
levied against any or all of the Collateral and of any other
information received by the Company that may materially affect
the value of the Collateral, the Security Interest or the rights
and remedies of JNC hereunder.
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i. To maintain insurance on the Collateral against loss or damage by
fire, perils commonly covered under the extended coverage
endorsement, malicious mischief and sprinkler leakage.
7. Defaults. The following events shall be "Events of Default" under this
Security Agreement:
a. An Event of Default under any of the JNC Transaction Documents
(which shall include any default under any of the July 14th Note,
the June 17th Note, the May 7th Note, the April 9th Note, or the
March 3rd Note); or
b. The Company shall fail to observe or perform any of its
obligations hereunder for 20 days after receipt by the Company of
notice of such default from JNC; or
c. Any representation, warranty, certification or statement made by
the Company hereunder shall prove to have been incorrect in any
material respect when made.
8. Duty To Hold In Trust. Upon the occurrence of any Event of Default, the
Company shall, upon receipt by it of any revenue, income, or other sums
(collectively, the "Sums") subject to the Security Interest, whether
payable pursuant to the Debentures or otherwise, or of any check, draft,
note, trade acceptance or other instrument evidencing an obligation to
pay any such sum, hold the same in trust for JNC and shall forthwith
endorse and transfer any such sums or instruments, or both, to JNC for
application to the satisfaction of the Obligations.
9. Rights and Remedies Upon Default. Upon occurrence of any of the above
Events of Default and at any time thereafter, as long as any such Event
of Default shall continue, JNC may exercise any and all of the rights
and remedies conferred hereunder and under any of the JNC Transaction
Documents, including, without limitation, the right, to accelerate
payment under any or all Debentures, and JNC shall have all the rights
and remedies of a secured party under the UCC and shall further have, in
addition to all other rights and remedies provided herein or by law, the
following rights and powers:
a. JNC may enter upon the premises where any of the Collateral may
be located, and take possession of the Collateral, and demand and
receive reconveyance of the Collateral from any person who has
possession thereof, and JNC may take such measures as may be
necessary or proper for the care or protection of the value
thereof, including the right to remove, keep and/or store all or
any portion of the Collateral or put a custodian in charge
thereof; and/or
b. At JNC's request, the Company shall assemble the Collateral and
make it available to JNC at places which JNC shall reasonably
select, whether at the Company's premises or elsewhere, and make
available to JNC, without rent, all of the Company's premises and
facilities for the purpose of JNC taking possession of, removing
or putting the Collateral in saleable or disposable form; and/or
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c. With or without taking possession, JNC may sell or cause to be
sold, at any time, and from time to time, as JNC may determine,
any of the Collateral in its entirety or in parcels, either at
public or private sale, at such price and on such terms as JNC
may deem best, at which sale JNC may bid and purchase to the
extent permitted by law, as now or hereinafter in effect, all
without (except as shall be required by applicable statute and
cannot be waived) advertisement or demand upon or notice to the
Company or right of redemption of the Company, which are hereby
expressly waived. The Company shall have no right of redemption
subsequent to any such sale, and hereby expressly waives any such
right. JNC shall apply the proceeds of any such sale or sales
first to the expenses incident thereto, including reasonable
attorneys' fees, and next to the full and complete satisfaction
of all of the Obligations. The Company shall remain fully liable
to JNC for any deficiency which may exist after any such sale or
sales and the application of the proceeds thereof in accordance
herewith. Any purchaser at any such sale or sales (including
without limitation JNC) shall thereafter hold any of the
Collateral so purchased absolutely free from any claim or right
of any nature whatsoever by any other person or entity (including
without limitation the Company); and/or
i. Upon each such sale, JNC may, unless prohibited by
applicable statute which cannot be waived, purchase all or
any part of the Collateral being sold, free from and
discharged of all trusts, claims, right of redemption and
equities of the Company, which are hereby waived and
released.
ii. The proceeds of any such sale, lease, or other disposition
of the Collateral shall be applied first, to the expenses
of retaking, holding, storing, processing, and preparing
for sale, selling, and the like, and to the reasonable
attorneys' fees and expenses incurred by JNC, and then to
satisfaction of the Obligations, and to the payment of any
other amounts required by applicable law, after which JNC
shall pay to the Company any surplus proceeds. If, upon
the sale, lease or other disposition of the Collateral,
the proceeds thereof are insufficient to pay all amounts
to which JNC is legally entitled, the Company will be
liable for the deficiency, together with interest thereon,
at the rate of 18% per annum (the "Default Rate"), and the
reasonable fees of any attorneys employed by JNC to
collect such deficiency. To the extent permitted by
applicable law, the Company waives all claims, damages and
demands against JNC arising out of the repossession,
removal, retention or sale of the Collateral, unless due
to the gross negligence or willful misconduct of JNC.
d. Upon the occurrence and during the continuance of an Event of
Default, JNC shall have the right to send notice of the
assignment granted herein and the security interest created
hereunder to any account debtors of the Company or any other
persons obligated on, holding or otherwise concerned with, any of
the receivables, may demand that monies due or to become due be
paid to JNC and thereafter, JNC shall have the sole right to
collect the receivables and all books and records relating
thereto; and/or
e. JNC may institute any proceeding at law, in equity, or otherwise
in order to foreclose upon the Collateral or any part thereof. To
the extent permitted by
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law, any sale thereof shall be held in the same manner, with the
same effect and subject to the same terms and conditions as
specified in paragraph (c) of this Section 9. JNC may, in the
exercise of its sole and absolute discretion, from time to time,
at any time and in any order, choose to institute a proceeding
for foreclosure on some portion of the Collateral and/or a sale
under paragraphs (c) or (d) on other portions of the Collateral,
without being deemed to have made an election of remedies or to
have waived any other rights or remedies, and without in any
other way limiting any remedies or rights which it may otherwise
have; and/or
f. In its name or in the name of the Company or otherwise, JNC may
demand, xxx for, collect, or receive any money or property at any
time payable or receivable on account of or in exchange for or
make any compromise or settlement deemed desirable with respect
to, any of the Collateral, but shall be under no obligation to do
so, and JNC may extend the time of payment, arrange for payment
in installments, or otherwise modify the terms of, or release,
any of the Collateral, without thereby incurring responsibility
to, or discharging or otherwise affecting any liability of, the
Company or in any other way limiting any remedies or rights which
JNC may otherwise have; and/or
g. JNC may, in the event JNC takes possession of the Collateral
pursuant to the exercise of any right or remedy provided for
hereunder or by law, any insurance policy owned by the Company,
together with any unearned or prepaid premium thereon, shall, at
the option of JNC, be assigned by the Company to, and become the
sole property of JNC, provided that the amount of any such
unearned or prepaid premium is thereupon applied to the payment
or satisfaction of the Obligations.
10. Responsibility for Collateral. The Company assumes all liabilities and
responsibility in connection with all Collateral, and the obligation of
the Company hereunder or under any of the JNC Transaction Documents, and
shall in no way be affected or diminished by reason of the loss,
destruction, damage, or theft of any of the Collateral or its
unavailability for any reason.
11. Security Interest Absolute. All rights of JNC and the Security Interest
hereunder, and all Obligations of the Company hereunder, shall be
absolute and unconditional, irrespective of: (a) any lack of validity or
enforceability of any of the JNC Transaction Documents or this Security
Agreement, and any agreement entered into in connection with the
foregoing, or any portion hereof or thereof; (b) any change in the time,
manner or place of payment or performance of, or in any other term of,
all or any of the Obligations, or any other amendment or waiver of or
any consent to any departure from the JNC Transaction Documents; (c) any
exchange, release, or nonperfection of any of the Collateral, or any
release or amendment or waiver of or consent to departure from any other
collateral for, or any guaranty, or any other security, for all or any
of the Obligations; (d) any action by JNC to obtain, adjust, settle, and
cancel in its sole discretion any insurance claims or matters made or
arising in connection with the Collateral; or (e) any other circumstance
which might otherwise constitute any legal or equitable defense
available to the Company, or a discharge of all or any part of the
Security Interest granted hereby. Until the Obligations shall have been
paid and performed in full, JNC's rights shall continue even if the
Obligations are barred for any reason, including, without limitation,
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the running of the statute of limitations or bankruptcy. The Company
expressly waives presentment, protest, notice of protest, demand,
notice of nonpayment, and demand for performance. This Security
Agreement shall create a continuing security interest in the
Collateral and shall remain in full force and effect until the
Obligations shall have been paid and performed in full, and shall be
binding upon the Company and its successors and permitted transferees
and assigns. In the event that at any time any transfer of any
Collateral or any payment received by JNC hereunder shall be deemed by
final order of a court of competent jurisdiction to have been a
voidable preference or fraudulent conveyance under the bankruptcy or
insolvency laws of the United States, or shall be deemed to be
otherwise due to any party other than JNC, then, in any such event,
the Company's obligations hereunder shall survive cancellation of this
Security Agreement, and shall not be discharged or satisfied by any
prior payment thereof and/or cancellation of this Security Agreement,
but shall remain a valid and binding obligation enforceable in
accordance with the terms and provisions hereof. The Company waives
all right to require JNC to proceed against any other person or to
apply any Collateral which JNC may hold at any time, or to marshal
assets, or to pursue any other remedy. JNC may, at its election,
exercise any right or remedy it may have against any security held by
JNC, including, without limitation, the right to foreclose any such
security by judicial or nonjudicial sale, without affecting or
impairing in any way the rights of JNC hereunder. The Company waives
any defense arising by reason of the application of the statute of
limitations to any obligation secured hereby.
12. JNC Appointed Attorney-in-Fact. The Company hereby irrevocably makes,
nominates, constitutes and appoints JNC and each of its officers,
agents, successors, or assigns (with full power of substitution and
resubstitution), as the Company's true and lawful attorney-in-fact
with full power to take all actions and sign, execute, acknowledge,
record, and file, in the Company's name and for JNC's use and benefit,
all documents that shall be necessary to accomplish the following on
the occurrence of any Event of Default and at any time thereafter, so
long as such Event of Default shall continue:
a. To receive, open, and dispose of all mail addressed to the
Company which relates to the Collateral, or to endorse and
collect any notes, checks, drafts, money orders, or other
evidences of payment that may come into the possession of JNC;
b. To enforce all rights of the Company under and pursuant to any
agreements or other contractual arrangements relating to the
Collateral, and to enter into such other agreements as may be
necessary to exploit the Collateral;
c. To pay or discharge taxes, liens, security interests, or other
encumbrances at any time levied or placed on or threatened
against the Collateral; to demand, collect, receipt for,
compromise, settle, and xxx for monies due in respect of the
Collateral;
d. to execute and perform such other and further agreements,
documents, and instruments of any nature whatsoever, including,
but not limited to, the execution and filing of a UCC Form 1 and
to do any and all other things as JNC may deem necessary or
appropriate for the purpose of preserving, protecting or
maintaining the Collateral and the Security Interest granted to
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JNC; and Generally, to do, at the option of JNC and at the
Company's expense, at any time, or from time to time, all acts
and things which JNC deems necessary to protect, preserve, and
realize upon the Collateral and JNC's security interests therein
in order to effect the intent of this Security Agreement and of
the Purchase Agreements all as fully and effectually as the
Company might or could do.
The Company hereby ratifies all that said attorney shall lawfully do or
cause to be done by virtue hereof. This power of attorney is coupled
with an interest and shall be irrevocable for the term of this Security
Agreement and thereafter as long as any of the Obligations shall be
outstanding.
13. Duties of JNC.
a. The powers conferred on JNC hereunder are solely to protect its
interests in the Collateral and shall not impose any duty upon it
to exercise any such powers. Except for the safe custody of any
Collateral in its actual possession and the accounting for monies
actually received by it hereunder with respect to which JNC shall
act with reasonable care, JNC shall have no duty as to any
Collateral or as to the taking of any steps necessary to preserve
its rights against prior parties or any other rights pertaining
to any Collateral. JNC shall be deemed to have exercised
reasonable care in the custody and preservation of the Collateral
in its possession if the Collateral is accorded treatment that is
substantially equal to that treatment which JNC accords its own
property in the ordinary course of its business.
b. If the Company fails to pay, before delinquency, any taxes or
other governmental charges which may be levied against the
Collateral or its operation or use, or any assessments made
against the Collateral, or fails to make any payment or to take
any action required herein or in the JNC Transaction Documents,
or to take any other action necessary to preserve the priority
and value of JNC's rights under this Security Agreement, then JNC
may (but shall not be obligated to) make such payments and take
all such actions as JNC deems necessary to protect its security
interest in or to protect and preserve the value of the
Collateral, and JNC is hereby authorized (without limiting the
general nature of the authority hereinabove conferred) to pay,
purchase, contest, or compromise any encumbrances, charges, or
liens which in the judgment of JNC appear to be prior to or
superior to, or of equal priority with, the Security Interest.
Any amount so paid shall be included in the Obligations secured
hereby and shall bear interest thereon at the Default Rate from
date of payment until repaid, and shall be secured pursuant to
the terms of this Security Agreement by the Collateral and shall
be repayable by the Company on demand.
14. Expenses. In addition to expenses payable under the Transaction
Documents, the Company agrees to pay all out of pocket fees, costs, and
expenses incurred in the filing of the UCC Form 1 or any other financing
statements, continuation statements, partial releases, and/or
termination statements related thereto or any expenses of any searches
reasonably required by JNC. The Company shall also pay all other claims
and charges which in the reasonable opinion of JNC might prejudice,
imperil, or otherwise affect the Collateral or the Security Interest
11
therein. All expenses so incurred shall be immediately paid by the
Company upon demand by JNC. The Company will also, upon demand, pay to
JNC the amount of any and all reasonable expenses, including the
reasonable fees and expenses of its counsel and of any experts and
agents, which JNC may incur in connection with (i) the administration
of this Security Agreement, (ii) the custody or preservation of, or
the sale of, collection from, or other realization upon, any of the
Collateral, (iii) the exercise or enforcement of any of the rights of
JNC hereunder or under the JNC Transaction Documents, or (iv) the
failure by the Company to perform or observe any of the provisions
contained herein or in the JNC Transaction Documents. Until so paid,
any fees payable hereunder shall be added to the principal amount of
the Obligations and shall bear interest at the Default Rate.
15. Term of Agreement. This Security Agreement shall terminate when all
payments under the JNC Transaction Documents have been made in full
and all other Obligations have been paid or discharged. Upon such
termination, JNC, at the request and at the expense of the Company,
will join in executing any termination statement with respect to any
financing statement executed and filed pursuant to this Security
Agreement.
16. Other Security. To the extent that the Obligations are now or
hereafter secured by property other than the Collateral or by the
guarantee, endorsement, or property of any other person, firm,
corporation, or other entity, then JNC shall have the right, in its
sole discretion, to pursue, relinquish, subordinate, modify, or take
any other action with respect thereto, without in any way modifying or
affecting any of JNC's rights and remedies hereunder.
17. Miscellaneous.
a. Indemnity. The Company agrees to defend, protect, indemnify, and
hold harmless JNC and each and all of its respective officers,
directors, employees, attorneys, and Agents (collectively called
the "Indemnitees") from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, claims, costs, expenses, and disbursements of any kind or
nature whatsoever (including, without limitation, the reasonable
fees and disbursements of counsel for such Indemnitees in
connection with any investigative, administrative, or judicial
proceeding, whether or not such Indemnitees shall be designated a
party thereto), which may be imposed on, incurred by, or asserted
against such Indemnitees (whether direct, indirect, or
consequential and whether based on any federal or state laws or
other statutory regulations, including, without limitation,
securities and commercial laws and regulations, common law or at
equitable cause, or contract or otherwise) in any manner relating
to or arising out of this Security Agreement or the Obligations,
or any act, event, or transaction related or attendant thereto,
including, without limitation, any and all costs and expenses
incurred in the enforcement of this Security Agreement
(collectively, the "Indemnified Matters"). To the extent that the
undertaking to indemnify, pay, and hold harmless set forth in the
preceding sentence may be unenforceable because it is violative
of any law or public policy, the Company shall contribute the
maximum portion which it is permitted to pay and satisfy under
applicable law, to the payment and satisfaction of all
Indemnified Matters incurred by the Indemnitees.
b. Course of Dealing. No course of dealing between the Company and
JNC, nor any failure to exercise, nor any delay in exercising, on
12
the part of JNC, any right, power, or privilege hereunder or
under the JNC Transaction Documents shall operate as a waiver
thereof; nor shall any single or partial exercise of any right,
power, or privilege hereunder or thereunder preclude any other or
further exercise thereof or the exercise of any other right,
power or privilege.
c. Remedies Cumulative. Except as otherwise expressly provided
herein, no remedy conferred by any of the specific provisions of
this Security Agreement is intended to be exclusive of any other
remedy which is otherwise available at law, in equity, by
statute, or otherwise, and except as otherwise expressly provided
for herein, each and every other remedy shall be cumulative and
shall be in addition to every other remedy given hereunder or
otherwise. The election of any one or more of such remedies by
any of the parties hereto shall not constitute a waiver by such
party of the right to pursue any other available remedies.
d. Notices. All notices, requests, demands, deliveries, and other
communications hereunder shall be in writing and, except as
otherwise specifically provided in this Security Agreement, shall
be deemed to have been duly given, upon receipt, if delivered
personally or via fax, or ten (10) business days after deposit in
the mail, if mailed, first class with postage prepaid to the
parties at the following addresses:
If to JNC, to:
JNC Strategic Fund Ltd.
c/o Olympia Capital (Cayman) Ltd.
Xxxxxxxx Xxxxx
00 Xxxx Xxxxxx
Xxxxxxxx XX00
Xxxxxxx
Attn: Director
Fax: (000) 000-0000
with a copy to:
Encore Capital Management, LLC
00000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Managing Director
Fax: (000) 000-0000
and
Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx & Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxx, Esq.
Fax: 000-000-0000
13
If to the Company, to:
InnovaCom, Inc.
0000 Xxxxxxx Xxxxx
Xxxxx Xxxxx, XX 00000
Attn: Xxxxx Xxxxxx, President
Fax: 000-000-0000
with a copy to:
Xxxxxx Eng Xxxx & Xxxxxxxx
000 Xxxxxxx Xxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx, Esq.
Fax: 000-000-0000
d. Headings. The section headings contained in this Security
Agreement are for convenience only and shall not control or
affect the meaning or construction of any of the provisions of
this Security Agreement.
e. Governing Law. This Security Agreement shall be construed in
accordance with the laws of the State of New York, except to the
extent the validity, perfection or enforcement of a security
interest hereunder in respect of any particular Collateral are
governed by a jurisdiction other than the State of New York in
which case such law shall govern.
The Company and JNC hereby irrevocably submit to the jurisdiction
of any New York State or United States Federal court sitting in
Manhattan county over any action or proceeding arising out of or
relating to this Security Agreement, and the Company and JNC
hereby irrevocably agree that all claims in respect of such
action or proceeding may be heard and determined in such New York
State or Federal court. The Company and JNC agree that a final
judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. The Company and JNC further
waive any objection to venue in such State and any objection to
an action or proceeding in such State on the basis of forum non
conveniens.
f. Amendments, etc. Any of the terms and provisions of this Security
Agreement may be waived at any time by the party which is
entitled to the benefit thereof, but only by a written instrument
executed by such party. This Security Agreement may be amended
only by an agreement in writing executed by JNC and the Company.
g. Severability. In the event that any provision of this Security
Agreement is held to be invalid, prohibited or unenforceable in
any jurisdiction for any reason, unless such provision is
narrowed by judicial construction, this Security Agreement shall,
as to such jurisdiction, be construed as if such invalid,
prohibited or unenforceable provision had been more narrowly
drawn so as not to be invalid, prohibited or unenforceable. If,
notwithstanding the foregoing, any provision of this Security
Agreement is held to be invalid, prohibited or
14
unenforceable in any jurisdiction, such provision, as to such
jurisdiction, shall be ineffective to the extent of such
invalidity, prohibition or unenforceability without invalidating
the remaining portion of such provision or the other provisions
of this Security Agreement and without affecting the validity or
enforceability of such provision or the other provisions of this
Security Agreement in any other jurisdiction.
x. Xxxxx, Etc. No delay or omission to exercise any right, power, or
remedy accruing to any party hereto shall impair any such right,
power, or remedy of such party nor be construed to be a waiver of
any such right, power, or remedy nor constitute any course of
dealing or performance hereunder.
i. Costs and Attorneys' Fees. If any action, suit, arbitration
proceeding, or other proceeding is instituted arising out of this
Security Agreement, the prevailing party shall recover all of
such party's costs, including, without limitation, the court
costs and reasonable attorneys' fees incurred therein, including
any and all appeals or petitions therefrom.
j. Counterparts. This Security Agreement may be executed in one or
more counterparts, each of which may be deemed an original, but
all of which together, shall constitute one and the same
instrument. This Security Agreement may be executed by a party
and sent to the other parties via facsimile transmission and the
facsimile transmitted copy shall have the same integrity, force,
and effect as an original document.
k. Entire Agreement. This Security Agreement and the other
agreements referred to herein supersede all prior negotiations
and agreements (whether written or oral) and constitute the
entire understanding among the parties hereto, it being
understood that this Security Agreement relates back to the date
of the June 29th Purchase Agreement.
[remainder of page intentionally left blank -- signature page follows]
15
IN WITNESS WHEREOF, the Company has caused this Eighth Amended And
Restated Security Agreement to be duly executed and delivered by its officers
thereunto duly authorized effective as of July 14th, 1999.
INNOVACOM, INC.
By:____________________________________
Xxxxx Xxxxxx
President
Accepted and agreed, effective
as of this 14th day of July, 1999:
JNC STRATEGIC FUND LTD.
By:_______________________________
Its:______________________________
