Attached files
| file | filename |
|---|---|
| 8-K - CarePayment Technologies, Inc. | v171992_8k.htm |
| EX-10.1 - CarePayment Technologies, Inc. | v171992_ex10-1.htm |
| EX-10.3 - CarePayment Technologies, Inc. | v171992_ex10-3.htm |
Exhibit
10.2
COMMERCIAL
SECURITY AGREEMENT
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BORROWER:
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microHelix,
Inc.
5300
Meadows Road, Suite 400
Lake
Oswego, OR 97035
WS
Technologies LLC
5300
Meadows Road, Suite 400
Lake
Oswego, OR 97035
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LENDER:
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Aequitas
Commercial Finance, LLC
5300
Meadows Road, Suite 400
Lake
Oswego, OR 97035
Telephone:
(503) 419-3500
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THIS COMMERCIAL SECURITY AGREEMENT
dated January 15, 2010, is made and executed between microHelix, Inc. and WS Technologies LLC
(collectively referred to herein as “Borrower”), and Aequitas Commercial Finance,
LLC (“Lender”).
1. GRANT OF SECURITY
INTEREST. For valuable consideration, Borrower grants to
Lender a security interest in the Collateral to secure the Indebtedness and
agrees that Lender shall have the rights stated in this Agreement with respect
to Collateral, in addition to all other rights which Lender may have by
law.
2. COLLATERAL
DESCRIPTION. The word “Collateral” as used in this Agreement
means the following described property, whether now owned or hereafter acquired,
whether now existing or hereafter arising, and wherever located, in which
Borrower is giving to Lender a security interest for the payment of the
Indebtedness and performance of all other obligations under the Note, this
Agreement and the Related Documents.
All
cash, accounts receivable, notes receivable, contract rights, deposits,
securities, investments, chattel paper, documents, instruments, general
intangibles, inventory, raw materials, work in progress, finished goods,
furnishings, fixtures, trade fixtures, equipment, machinery, motor vehicles and
all other personal property, assets or rights of whatever nature now owned or
hereafter acquired by Borrower and products and proceeds thereof.
In
addition, the word “Collateral” also includes all the following, whether now
owned or hereafter acquired, whether now existing or hereafter arising, and
wherever located.
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(a)
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All
accessions, attachments, accessories, tools, parts, supplies, replacements
of and additions to any of the collateral described herein, whether added
now or later.
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(b)
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All
products and proceeds of any of the property described in this Collateral
section.
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(c)
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All
accounts, general intangibles, instruments, rents, monies, payments and
all other rights, arising out of a sale, lease or other disposition of any
of the Collateral.
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(d)
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All
proceeds (including insurance proceeds) from the sale, destruction, loss
or other disposition of any of the property described in this Collateral
section, and sums due from a third party who has damaged or destroyed the
Collateral or from the party’s insurer, whether due to judgment,
settlement or other process.
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(e)
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All
records and data relating to any of the property described in this
Collateral section, whether in the form of a writing, photograph,
microfilm, microfiche or electronic media, together with all of Borrower’s
right, title and interest in and to all computer software required to
utilize, create, maintain and process any such records or data on
electronic media.
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3. CROSS-COLLATERALIZATION; FUTURE
ADVANCES. In addition to the Note, this Agreement secures all
obligations, debts and liabilities, plus interest thereon, of Borrower to Lender
(or an affiliate of Lender), or any one or more of them, as well as all claims
by Lender (or an affiliate of Lender) against Borrower or any one or more of
them, whether now existing or hereafter arising, whether related or unrelated to
the purpose of the Note, whether voluntary or otherwise, whether due or not due,
direct or indirect, determined or undetermined, absolute or contingent,
liquidated or unliquidated whether Borrower may be liable individually or
jointly with others, whether obligated as guarantor, surety, accommodation party
or otherwise, and whether recovery upon such amounts may be or hereafter barred
by any statute of limitations, and whether the obligation to repay such amounts
may be or hereafter may become otherwise unenforceable. In addition
to the Note, this Agreement secures all future advances made by Lender to
Borrower regardless of whether the advances are made (i) pursuant to a
commitment, or (ii) for the same purposes.
Page 1 of
9 – COMMERCIAL SECURITY AGREEMENT
4. BORROWER’S REPRESENTATIONS AND
WARRANTIES WITH RESPECT TO THE COLLATERAL. With respect to the
Collateral, Borrower represents and promises to Lender that:
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(a)
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Perfection of Security
Interest. Borrower authorizes Lender to file one or more
financing statements and such other documents as Lender may require and to
take whatever other actions are requested by Lender to perfect and
continue Lender's security interest in the Collateral. Upon
request of Lender, Borrower will deliver to Lender any and all of the
documents evidencing or constituting the Collateral, and Borrower will
note Lender's interest upon any and all chattel paper if not delivered to
Lender for possession by Lender. Borrower hereby appoints
Lender as its irrevocable attorney-in-fact for the purpose of executing
any documents necessary to perfect or to continue the security interest
granted in this Agreement. Lender may at any time, and without
further authorization from Borrower, file a carbon, photographic or other
reproduction of any financing statement or of this Agreement for use as a
financing statement. Borrower will reimburse Lender for all
expenses for the perfection and the continuation of the perfection of
Lender's security interest in the Collateral. Borrower promptly
will notify Lender of any change in Borrower's name including any change
to the assumed business names of Borrower. This is a continuing
Security Agreement and will continue in effect even though all or any part
of the Indebtedness is paid in full and even though for a period of time
Borrower may not be indebted to
Lender.
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(b)
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Landlord Lien
Waiver. If requested by Lender, Borrower will obtain
from each of its landlords a waiver providing that Lender’s security
interest in the Collateral will be senior to any lien in the Collateral
which may be claimed by such
landlords.
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(c)
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Notices to
Lender. Borrower will promptly notify Lender in writing
at Lender’s address shown above (or such other addresses as Lender may
designate from time to time) prior to any (1) change in Borrower’s name;
(2) change in Borrower’s assumed business name(s); (3) change in the
management of Borrower or, if Borrower is a limited liability
company, in the members or managers of Borrower; (4) change in the
authorized signer(s); (5) change in Borrower’s principal office address;
(6) change in Borrower’s state of organization; (7) conversion of Borrower
to a new or different type of business entity; or (8) change in any other
aspect of Borrower that directly or indirectly relates to any agreements
between Borrower and Lender. No change in Borrower’s name or
state of organization will take effect until after Lender has received
notice.
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(d)
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No
Violation. The execution and delivery of this Agreement
will not violate any law or agreement governing Borrower or to which
Borrower is a party, and its articles of incorporation, bylaws, operating
agreement or other organizational documents do not prohibit any term or
condition of this Agreement.
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(e)
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Enforceability of
Collateral. To the extent Collateral consists of
accounts, chattel paper or general intangibles, as defined by the Uniform
Commercial Code, the Collateral is enforceable in accordance with its
terms, is genuine, and fully complies with all applicable laws and
regulations concerning form, content and manner of preparation and
execution, and all persons appearing to be obligated on the Collateral
have authority and capacity to contract and are in fact obligated as they
appear to be on the Collateral. At the time any Account becomes
subject to a security interest in favor of Lender, the Account shall be a
good and valid account representing an undisputed, bona fide indebtedness
incurred by the account debtor, for merchandise held subject to delivery
instructions or previously shipped or delivered pursuant to a contract of
sale, or for services previously performed by Borrower with or for the
account debtor. So long as this Agreement remains in effect,
Borrower shall not, without Lender’s prior written consent, compromise,
settle, adjust or extend payment under or with regard to any such
Accounts. There shall be no setoffs or counterclaims against
any of the Collateral, and no agreement shall have been made under which
any deductions or discounts may be claimed concerning the Collateral
except those disclosed to Lender in
writing.
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(f)
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Location of the
Collateral. Except in the ordinary course of Borrower’s
business, Borrower agrees to keep the Collateral (or to the extent the
Collateral consists of intangible property such as accounts or general
intangibles, the records concerning the Collateral) at Borrower’s address
shown above or at such other locations as are acceptable to
Lender. Upon Lender’s request, Borrower will deliver to Lender
in form satisfactory to Lender a schedule of real properties and
Collateral locations relating to Borrower’s operations, including without
limitation the following: (1) all real property Borrower owns or is
purchasing; (2) all real property Borrower is renting or leasing; (3) all
storage facilities Borrower owns, rents, leases or uses; and (4) all other
properties where Collateral is or may be
located.
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(g)
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Removal of the
Collateral. Except in the ordinary course of Borrower’s
business, including the sales of inventory, Borrower shall not remove the
Collateral from its existing location without Lender’s prior written
consent. To the extent that the Collateral consists of vehicles
or other titled property, Borrower shall not take or permit any action
which would require application for certificates of title for the vehicles
outside the State of Oregon, without Lender’s prior written
consent. Borrower shall, whenever requested, advise Lender of
the exact location of the
Collateral.
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Page 2 of
9 – COMMERCIAL SECURITY AGREEMENT
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(h)
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Transactions involving
Collateral. Except for inventory sold or accounts
collected in the ordinary course of Borrower’s business, or as otherwise
provided for in this Agreement, Borrower shall not sell, offer to sell, or
otherwise transfer or dispose of the Collateral. While Borrower
is not in default under this Agreement, Borrower may sell inventory, but
only in the ordinary course of its business and only to buyers who qualify
as a buyer in the ordinary course of business. A sale of
inventory in the ordinary course of Borrower’s business does not include a
transfer in partial or total satisfaction of a debt or any bulk
sale. Borrower shall not pledge, mortgage, encumber or
otherwise permit the Collateral to be subject to any lien, security
interest, encumbrance or charge, other than the security interest provided
for in this Agreement, without the prior written consent of
Lender. This includes security interests even if junior in
right to the security interests granted under this
Agreement. Unless waived by Lender, all proceeds from any
disposition of the Collateral (for whatever reason) shall be held in trust
for Lender and shall not be commingled with any other funds; provided
however, this requirement shall not constitute consent by Lender to any
sale or other disposition. Upon receipt, Borrower shall
immediately deliver any such proceeds to
Lender.
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(i)
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Title. Borrower
represents and warrants to Lender that Borrower holds good and marketable
title to the Collateral, free and clear of all liens and encumbrances
except for the lien of this Agreement and security interests which appear
in the public records. No financing statement covering
any of the Collateral is on file in any public office other than those
which reflect the security interest created by this Agreement or to which
Lender has specifically consented. Borrower shall defend
Lender’s rights in the Collateral against the claims and demands of all
other persons.
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(j)
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Repairs and
Maintenance. Borrower agrees to keep and maintain, and
to cause others to keep and maintain, the Collateral in good order, repair
and condition at all times while this Agreement remains in
effect. Borrower further agrees to pay when due all claims for
work done on, or services rendered or material furnished in connection
with the Collateral so that no lien or encumbrance may ever attach to or
be filed against the Collateral.
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(k)
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Inspection of
Collateral. Lender and Lender’s designated
representatives and agents shall have the right at all reasonable times to
examine and inspect the Collateral wherever
located.
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(l)
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Taxes, Assessments and
Liens. Borrower will pay when due all taxes, assessments
and liens upon the Collateral, its use or operation, upon this Agreement,
upon any promissory note or notes evidencing the Indebtedness, or upon any
other of the Related Documents. Borrower may withhold any such
payment or may elect to contest any lien if Borrower is in good faith
conducting an appropriate proceeding to contest the obligation to pay and
so long as Lender’s interest in the Collateral is not jeopardized in
Lender’s sole opinion. If the Collateral is subjected to a lien
which is not discharged within fifteen (15) days, Borrower shall deposit
with Lender cash, a sufficient corporate surety bond or other security
satisfactory to Lender in an amount adequate to provide for the discharge
of any lien plus any interest, costs, attorneys’ fees or other charges
that could accrue as a result of foreclosure or sale of the
Collateral. In any contest Borrower shall defend itself and
Lender and shall satisfy any final adverse judgment before enforcement
against the Collateral. Borrower shall name Lender as an
additional obligee under any surety bond furnished in the contest
proceedings. Borrower further agrees to furnish Lender with
evidence that such taxes, assessments, and governmental and other charges
have been paid in full and in a timely manner. Borrower may
withhold any such payment or may elect to contest any lien if Borrower is
in good faith conducting any appropriate proceeding to contest the
obligation to pay and so long as Lender’s interest in the Collateral is
not jeopardized.
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(m)
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Compliance with Governmental
Regulations. Borrower shall comply promptly with all
laws, ordinances, rules and regulations of all governmental authorities,
now or hereafter in effect, applicable to the ownership, production,
disposition, or use of the Collateral. Borrower may contest in
good faith any such law, ordinance or regulation and withhold compliance
during any proceeding, including appropriate appeals, so long as Lender’s
interest in the Collateral, in Lender’s sole opinion, is not
jeopardized.
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(n)
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Hazardous
Substances. Borrower represents and warrants that the
Collateral never has been, and never will be so long as this Agreement
remains a lien on the Collateral, used in violation of any Environmental
Laws or for the generation, manufacture, storage, transportation,
treatment, disposal, release or threatened release of a Hazardous
Substance. The representations and warranties contained herein
are based on Borrower’s due diligence in investigating the Collateral for
Hazardous Substances. Borrower hereby (1) releases and
waives any future claims against Lender for indemnity or contribution in
the event Borrower becomes liable for cleanup or other costs under any
Environmental Laws, and (2) agrees to indemnify and hold harmless Lender
against any and all claims and losses resulting from a breach of this
provision of this Agreement. This obligation to indemnify shall
survive the payment of the Indebtedness and the satisfaction of this
Agreement.
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Page 3 of
9 – COMMERCIAL SECURITY AGREEMENT
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(o)
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Maintenance of
Insurance. Borrower shall procure and maintain all risk
insurance, including without limitation fire, theft and liability coverage
together with such other insurance as Lender may require with respect to
the Collateral, in form, amounts, coverages and basis reasonably
acceptable to Lender and issued by a company or companies reasonably
acceptable to Lender. Borrower, upon request of Lender, will
deliver to Lender from time to time the policies or certificates of
insurance in form satisfactory to Lender, including stipulations that
coverages will not be cancelled or diminished without at least thirty (30)
days’ prior written notice to Lender and not including any disclaimer of
the insurer’s liability for failure to give such a notice. Each
insurance policy also shall include an endorsement providing that coverage
in favor of Lender will not be impaired in any way by any act, omission or
default of Borrower or any other person. In connection with all
policies covering assets in which Lender holds or is offered a security
interest, Borrower will provide Lender with such loss payable or other
endorsements as Lender may require. If Borrower at any time
fails to obtain or maintain any insurance as required under this
Agreement, Lender may (but shall not be obligated to) obtain such
insurance as Lender deems appropriate, including if Lender so chooses
“single interest insurance,” which will cover only Lender’s interest in
the Collateral.
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(p)
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Application of Insurance
Proceeds. Borrower shall promptly notify Lender of any
loss or damage to the Collateral. Lender may make proof of loss
if Borrower fails to do so within fifteen (15) days of the
casualty. All proceeds of any insurance on the Collateral,
including accrued proceeds thereon, shall be held by Lender as part of the
Collateral. If Lender consents to repair or replacement of the
damaged or destroyed Collateral, Lender shall, upon satisfactory proof of
expenditure, pay or reimburse Borrower from the proceeds for the
reasonable cost of repair or restoration. If Lender does not
consent to repair or replacement of the Collateral, Lender shall retain a
sufficient amount of the proceeds to pay all of the Indebtedness, and
shall pay the balance to Borrower. Any proceeds which have not
been disbursed within six (6) months after their receipt and which
Borrower has not committed to the repair or restoration of the Collateral
shall be used to prepay the
Indebtedness.
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(q)
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Insurance
Reserves. Lender may require Borrower to maintain with
Lender reserves for payment of insurance premiums, which reserves shall be
created by monthly payments from Borrower of a sum estimated by Lender to
be sufficient to produce, at least fifteen (15) days before the premium
due date, amounts at least equal to the insurance premiums to be
paid. If fifteen (15) days before payment is due, the reserve
funds are insufficient, Borrower shall upon demand pay any deficiency to
Lender. The reserve funds shall be held by Lender as a general
deposit and shall constitute a non-interest bearing account which Lender
may satisfy by payment of the insurance premiums required to be paid by
Borrower as they become due. Lender does not hold the reserves
funds in trust for Borrower, and Lender is not the agent of Borrower for
payment of the insurance premiums required to be paid by
Borrower. The responsibility for the payment of premiums shall
remain Borrower’s sole
responsibility.
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(r)
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Insurance
Reports. Borrower, upon request of Lender, shall furnish
to Lender reports on each existing policy of insurance showing such
information as Lender may reasonably request including the following: (1)
the name of the insurer; (2) the risk insured; (3) the amount of the
policy; (4) the property insured; (5) the then current value of the basis
of which insurance has been obtained and the manner of determining that
value; and (6) the expiration date of the policy. In addition,
Borrower shall upon request by Lender (however not more often than
annually) have an independent appraiser satisfactory to Lender determine,
as applicable, the cash value or replacement cost of the
Collateral.
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WARNING
Unless
Borrower provides Lender with evidence of the insurance coverage as required
herein, Lender may purchase insurance at Borrower's expense to protect Lender's
interest. This insurance may, but need not, also protect Borrower's
interest. If the Collateral becomes damaged, the coverage Lender
purchases may not pay any claim Borrower makes or any claim made against
Borrower. Borrower may later cancel this coverage by providing
evidence that Borrower has obtained property coverage elsewhere.
Borrower
is responsible for the cost of any insurance purchased by Lender. The
cost of this insurance may be added to the Note balances. If the cost
is added to the Note balances, the interest rate on the Notes will apply to this
added amount. The effective date of coverage may be the date
Borrower's prior coverage lapsed or the date Borrower failed to provide proof of
coverage.
The
coverage Lender purchases may be considerably more expensive than insurance
Borrower can obtain on Borrower's own and may not satisfy any need for property
damage coverage or any mandatory liability insurance requirements imposed by
applicable law.
5. BORROWER’S RIGHT TO POSSESSION AND TO
COLLECT ACCOUNTS. Until default and except as otherwise
provided below with respect to accounts and above in the paragraph titled
“Transactions Involving Collateral”, Borrower may have possession of the
tangible personal property and beneficial use of all the Collateral and may use
it in any lawful manner not inconsistent with this Agreement or the Related
Documents, provided that Borrower’s right to possession and beneficial use shall
not apply to any collateral where possession of the Collateral by Lender is
required by law to perfect Lender’s security interest in such
Collateral. Unless otherwise notified by Lender, Borrower may collect
any of the Collateral consisting of accounts. At any time and even
though no Event of Default exists, Lender may exercise its rights to collect the
accounts and to notify account debtors to make payments directly to Lender for
the application to the Indebtedness. If Lender at any time has
possession of any Collateral, whether before or after an Event of Default,
Lender shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral if Lender take such action for that purpose as
Borrower shall request or as Lender, in Lender’s sole discretion, shall deem
appropriate under the circumstances, but failure to honor any request by
Borrower shall not itself be deemed to be a failure to exercise reasonable
care. Lender shall not be required to take any steps necessary to
preserve any rights in the Collateral against prior parties, nor to protect,
preserve or maintain any security interest given to secure the
Indebtedness.
Page 4 of
9 – COMMERCIAL SECURITY AGREEMENT
6. LENDER’S
EXPENDITURES. If any action or proceeding is commenced that
would materially affect Lender’s interest in the Collateral or if Borrower fails
to comply with any provision of this Agreement or any Related Documents,
including but not limited to Borrower’s failure to discharge or pay when due any
amounts Borrower is required to discharge or pay under this Agreement or any
Related Documents, Lender on Borrower’s behalf may (but shall not be obligated
to) take any action that Lender deems appropriate, including but not limited to
discharging and paying all taxes, liens, security interests, encumbrances and
other claims, at any time levied or placed on the Collateral and paying all
costs for insuring, maintaining and preserving the Collateral. All
such expenditures incurred or paid by Lender for such purposes will then bear
interest at the rate charged under the Note from the date incurred or paid by
Lender to the date of repayment by Borrower. All such expenses will
become a part of the Indebtedness and, at Lender’s option, will (A) be payable
on demand; (B) be added to the balance of the Note and be apportioned among and
be payable with any installment payments to become due during either (1) the
term of any applicable insurance policy; or (2) the remaining term of the Note;
or (3) be treated as a balloon payment which will be due and payable at the
Note’s maturity. The Agreement also will secure payment of these
amounts. Such right shall be in addition to all other rights and
remedies to which Lender may be entitled upon Default.
7. PREFERENCE
PAYMENTS. Any monies Lender pays because of an asserted
preference in Borrower’s bankruptcy will become a part of the Indebtedness and,
at Lender’s option, shall be payable by Borrower as provided in this
Agreement.
8. DEFAULT. Each of
the following shall constitute an Event of Default under this
Agreement.
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(a)
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Payment
Default. Borrower fails to make any payment when due
under the Indebtedness.
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(b)
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Other
Defaults. Borrower fails to comply with or to perform
any other term, obligations, covenant or condition contained in this
Agreement or in any of the Related Documents or to comply with or to
perform any term, obligation, covenant or condition contained in any other
agreement between Lender and Borrower. If any failure, other
than a failure to pay money or to comply with financial covenants and
ratio requirements, is curable and if Borrower has not been given a notice
of a similar breach within the preceding twelve (12) months, it may be
cured (and no Event of Default will have occurred) if Borrower, after
delivery of written notice from Lender demanding cure of such failure: (a)
cures the failure within fifteen (15) days; or (b) if the cure requires
more than fifteen (15) days, immediately initiates steps sufficient to
cure the failure and thereafter continues and completes all reasonable and
necessary steps sufficient to produce compliance within sixty (60) days
after notice is sent.
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(c)
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Default in Favor of Third
Parties. Failure of Borrower to comply with or to
perform any other term, obligation, covenant, or condition contained in
any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or
person that may materially affect any of Borrower’s property or Borrower’s
ability to repay the Indebtedness or perform their respective obligations
under this Agreement or any of the Related
Documents.
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(d)
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False
Statements. Any warranty, representation or statement
made or furnished to Lender by Borrower or on Borrower’s behalf under this
Agreement or the Related Documents is false or misleading in any material
respect, either now or at the time made or furnished or becomes false or
misleading at any time thereafter.
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(e)
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Dissolution, Insolvency,
etc. The dissolution of Borrower (regardless of whether
election to continue is made), or any other termination of Borrower’s
existence as a going business, the insolvency of Borrower, the appointment
of a receiver for any part of Borrower’s property, any assignment for the
benefit of creditors, any type of creditor workout, or the commencement of
any proceeding under any bankruptcy or insolvency laws by or against
Borrower.
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(f)
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Creditor or Forfeiture
Proceedings. Commencement of foreclosure or forfeiture
proceedings, whether by judicial proceeding, self-help, repossession or
any other method, by any creditor of Borrower or by any governmental
agency against any Collateral securing the
Indebtedness.
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Page 5 of
9 – COMMERCIAL SECURITY AGREEMENT
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(g)
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Events Affecting
Guarantor. Any of the preceding events occurs with
respect to any Guarantor of any of the Indebtedness or any Guarantor dies
or becomes incompetent, or revokes or disputes the validity of, or
liability under, any Guaranty of the
Indebtedness.
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(h)
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Adverse
Change. A Material Adverse Change occurs in Borrower’s
financial condition, or Lender reasonably believes the prospect of payment
performance of this Indebtedness has been
impaired.
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(i)
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Insecurity. Lender
in good faith believes itself
insecure.
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9. RIGHTS AND REMEDIES ON
DEFAULT. If an Event of Default occurs under this Agreement,
at any time thereafter, Lender shall have all the rights of a secured party
under the Oregon Uniform Commercial Code. In addition, and without
limitation, Lender may exercise any one or more of the following rights and
remedies:
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(a)
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Accelerate
Indebtedness. Lender may declare the entire
Indebtedness, including any prepayment charge which Borrower would be
required to pay, immediately due and payable, without notice of any kind
to Borrower. In the case of an Event of Default of the type
described in the “Insolvency” subsection above, such acceleration shall be
automatic and not optional
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(b)
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Assemble
Collateral. Lender may require Borrower to deliver to
Lender all or any portion of the Collateral and any and all certificates
of title and other documents relating to the Collateral. Lender
may require Borrower to assemble the Collateral and make it available to
Lender at a place to be designated by Lender. Lender also shall
have full power to enter upon the property of Borrower to take possession
of and remove the Collateral. If the Collateral contains other
goods not covered by this Agreement at the time of repossession, Borrower
agrees Lender may take such other goods, provided that Lender makes
reasonable efforts to return them to Borrower after
repossession.
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(c)
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Sell the
Collateral. Lender shall have full power to sell, lease,
transfer or otherwise deal with the Collateral or proceeds thereof in
Lender’s own name or that of Borrower. Lender may sell the
Collateral at public auction or private sale. Unless the
Collateral threatens to decline speedily in value or is of a type
customarily sold on a recognized market, Lender will give Borrower, and
other persons as required by law, reasonable notice of the time and place
of any public sale, or the time after which any private sale or any other
disposition of the Collateral are to be made. However, no
notice need be provided to any person who, after an Event of Default
occurs, enters into and authenticates an agreement waiving that person’s
right to notification of sale. The requirements of reasonable
notice shall be met if such notice is given at least ten (10) days before
the time of the sale or disposition. All expenses relating to
the disposition of the Collateral, including without limitation the
expenses of retaking, holding, insuring, preparing, for sale and selling
the Collateral, shall become a part of the Indebtedness secured by this
Agreement and shall be payable on demand, with interest at the Note rate
from the date of expenditure until
repaid.
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(d)
|
Appoint
Receiver. Lender shall have the right to have a receiver
appointed to take possession of all or any part of the Collateral, with
the power to protect and preserve the Collateral, to operate the
Collateral preceding foreclosure or sale, and to collect the Rents from
the Collateral and apply the proceeds, over and above the cost of the
receivership, against the Indebtedness. The receiver may serve
without bond if permitted by law. Lender’s right to the
appointment of a receiver shall exist whether or not the apparent value of
the Collateral exceeds the Indebtedness by a substantial
amount. Employment by Lender shall not disqualify a person from
serving as a receiver.
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(e)
|
Collect Revenues, Apply
Accounts. Lender, either itself or through a receiver,
may collect the payments, rents, income and revenues from the
Collateral. Lender may at any time in Lender’s discretion
transfer any Collateral into Lender’s own name or that of Lender’s nominee
and receive the payments, rents, income and revenues therefrom and hold
the same as security for the Indebtedness or apply it to payment of the
Indebtedness in such order of preference as Lender may
determine. Insofar as the Collateral consists of accounts,
general intangibles, insurance policies, instruments, chattel paper,
choses in action or similar property, Lender may demand, collect, receipt
for, settle, compromise, adjust, sue for, foreclose or realize on the
Collateral as Lender may determine, whether or not Indebtedness or
Collateral is then due. For these purposes, Lender may,
on behalf of and in the name of Borrower, receive, open and dispose of
mail addressed to Borrower; change any address to which mail and payments
are to be sent; and endorse notes, checks, drafts, money orders, documents
of title, instruments and items pertaining to payment, shipment, or
storage of any Collateral. To facilitate collection, Lender may
notify account debtors and obligors on any Collateral to make payments
directly to Lender.
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(f)
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Obtain
Deficiency. If Lender chooses to sell any or all of the
Collateral, Lender may obtain a judgment against Borrower for any
deficiency remaining on the Indebtedness due to Lender after application
of all amounts received from the exercise of the rights provided in this
Agreement. Borrower shall be liable for a deficiency even if
the transaction described in this subsection is a sale of accounts or
chattel paper.
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Page 6 of
9 – COMMERCIAL SECURITY AGREEMENT
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(g)
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Other Rights and
Remedies. Lender shall have all the rights and remedies
of a secured creditor under the provisions of the Uniform Commercial Code,
as may be amended from time to time. In addition, Lender shall
have and may exercise any or all other rights and remedies it may have
available at law, in equity, or
otherwise.
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(h)
|
Election of
Remedies. Except as may be prohibited by applicable law,
all of Lender’s rights and remedies, whether evidenced by this Agreement,
the Related Documents, or by any other writing, shall be cumulative and
may be exercised singularly or concurrently. Election by Lender
to pursue any remedy shall not exclude pursuit of any other remedy, and an
election to make expenditures or to take action to perform an obligation
of Borrower under this Agreement, after Borrower’s failure to perform,
shall not affect Lender’s right to declare a default and exercise its
remedies.
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10. DEFINITIONS. The
following capitalized words and terms shall have the following meanings when
used in this Agreement. Unless specifically stated to the
contrary, all references to dollar amounts shall mean amounts in lawful money of
the United States of America. Words and terms used in the singular
shall include the plural, and the plural shall include the singular, as the
context may require. Words and terms not otherwise defined in this
Agreement shall have the meanings attributed to such terms in the Uniform
Commercial Code. Accounting words and terms not otherwise defined in
this Agreement shall have the meanings assigned to them in accordance with
generally accepted accounting principles as in effect on the date of this
Agreement:
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(a)
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Account. The
word “Account” means a trade account, account receivable, other
receivable, or other right to payment for goods sold or services rendered
owing to Borrower (or a third party Borrower acceptable to
Lender).
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(b)
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Agreement. The
word “Agreement” means this Commercial Security Agreement, as this
Commercial Security Agreement may be amended or modified from time to
time, together with all exhibits and schedules attached to the Commercial
Security Agreement from time to
time.
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(c)
|
Borrower. The
word “Borrower” means the person designated as such on the first page of
this Agreement and all other persons and entities signing the Note in
whatever capacity.
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(d)
|
Collateral. The
word “Collateral” means all of Borrower’s right, title and interest in and
to all the Collateral as described in Section 2 of this
Agreement.
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(e)
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Environmental
Laws. The words “Environmental Laws” mean any and all
state, federal and local statutes, regulations and ordinances relating to
the protection of human health or the environment, including without
limitation the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq.
(“CERCLA”), the Superfund Amendments and Reauthorization Act of 1986, Pub.
L. No. 99-499 (“SARA”), the Hazardous Materials Transportation Act, 49
U.S.C. Section 1808, et seq., the Resource Conservation and Recovery Act,
42 U.S.C. Section 6901, et seq., or other applicable state or federal
laws, rules, or regulations adopted pursuant thereto or intended to
protect human health or the
environment.
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(f)
|
Event of
Default. The words “Event of Default” mean any of the
events of default set forth in Section 7 of this
Agreement.
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(g)
|
Guarantor. The
word “Guarantor” means any guarantor, surety, or accommodation party of
any or all of the Indebtedness.
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(h)
|
Guaranty. The
word “Guaranty” means the guaranty from Guarantor to Lender, including
without limitation a guaranty of all of part of the
Note.
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(i)
|
Hazardous
Substances. The words “Hazardous Substances” mean
materials that, because of their quality, concentration or physical,
chemical or infectious characteristics, may cause or pose a present or
potential hazard to human health or the environment when improperly used,
treated, stored, disposed of, generated, manufactured, transported or
otherwise handled. The words “Hazardous Substances” are used in
their very broadest sense and include without limitation any and all
hazardous or toxic substances, materials or waste as defined by or listed
under the Environmental Laws. The term “Hazardous Substances”
also includes, without limitation, petroleum and petroleum by-products or
any fraction thereof and asbestos.
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(j)
|
Indebtedness. The
word “Indebtedness” means the indebtedness evidenced by the Note or
Related Documents, including all principal and interest together with all
other indebtedness and costs and expenses for which Borrower is
responsible under this Agreement or under any of the Related
Documents. The word "Indebtedness" also includes all other
obligations, debts and liabilities of Borrower to Lender, as well as all
claims by Lender against Borrower, that are now or hereafter existing,
voluntary or involuntary, due or not due, absolute or contingent,
liquidated or unliquidated; whether Borrower may be liable individually or
jointly with others; whether Borrower may be obligated as a guarantor,
surety or otherwise; whether recovery upon such Indebtedness may be or
hereafter may become barred by any statute of limitations; and whether
such Indebtedness may be or hereafter may become otherwise
unenforceable.
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Page 7 of
9 – COMMERCIAL SECURITY AGREEMENT
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(k)
|
Material Adverse
Change. The words “Material Adverse Change” mean any
condition or event that Lender determines has or is reasonably likely to
have a material adverse effect on (a) the business, operations, property,
condition (financial or otherwise) or prospects of Borrower and its
subsidiaries and affiliates, if any, taken as a whole, or (b) the validity
or enforceability of this Agreement or any of the other Related Documents
or the rights and remedies of Lender hereunder or
thereunder.
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(l)
|
Note. The
word “Note” means the Note executed by microHelix, Inc. in the principal
amount of $500,000 of even date herewith, together with all renewals of,
extensions of, modifications of, refinancings of, consolidations of, and
substitutions for the note or credit
agreement.
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(m)
|
Property. The
word “Property” means all of Borrower’s right, title and interest in and
to all the Property as described in the “Collateral Description” section
of this Agreement.
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(n)
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Related
Documents. The words “Related Documents” mean all
promissory notes, credit agreements, loan agreements, environmental
agreements, guaranties, security agreements, mortgages, deeds or trust,
security deeds, collateral mortgages and all other instruments, agreements
and documents, whether now or hereafter existing, executed in connection
with the Note.
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11. MISCELLANEOUS
PROVISIONS. The following miscellaneous provisions are a part
of this Agreement:
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(a)
|
Amendments. This
Agreement, together with any Related Documents, constitutes the entire
understanding and agreement of the parties as to the matters set forth in
this Agreement. No alteration of or amendment to this Agreement
shall be effective unless given in writing and signed by the party or
parties sought to be charged or bound by the alteration or
amendment.
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(b)
|
Attorneys’ Fees;
Expenses. Borrower agrees to pay upon demand all of
Lender’s costs and expenses, including Lender’s attorneys’ fees and
Lender’s legal expenses, incurred in connection with the enforcement of
this Agreement. Lender may hire or pay someone else to help
collect this Agreement, and Borrower shall pay the costs and expenses of
such enforcement. This includes, subject to any limits under applicable
law, Lender attorneys’ fees and Lender’s legal expenses, whether or not
there is a lawsuit, including attorneys’ fees, expenses for arbitration or
bankruptcy proceedings (including efforts to modify or vacate any
automatic stay or injunction), and appeals. If not prohibited
by applicable law, Borrower also will pay any court costs, in addition to
all other sums provided by law.
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(c)
|
Caption
Headings. Caption headings in this Agreement are for
convenience purposes only and are not to be used to interpret or define
the provisions of this Agreement.
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(d)
|
Assignments. Borrower
acknowledges that Lender may sell and assign its interest in the
Indebtedness, the payments due thereunder and the Collateral, in whole or
in part, or sell participations therein, to an assignee (the “Assignee”)
which may be represented by a bank or trust company acting as a trustee of
such Assignee. BORROWER ACKNOWLEDGES THAT ANY ASSIGNMENT OR
TRANSFER BY LENDER OR ANY ASSIGNEE SHALL NOT MATERIALLY CHANGE BORROWER’S
OBLIGATIONS UNDER THIS AGREEMENT. Any Assignee shall be
entitled to enforce all the rights so assigned but be under no obligation
to Borrower to perform any of Lender’s obligations under this Agreement,
the sole remedy of Borrower being against Lender with Borrower’s right
against Lender being unaffected except as provided
herein. Borrower agrees that upon notice of assignment of the
Indebtedness, it shall pay directly to the Assignee, unconditionally, all
amounts which become due hereunder. Borrower specifically
covenants and agrees that it will not assert against any Assignee any
claims by way of abatement, defense, set-off, counterclaim, recoupment or
otherwise which Borrower may have against Lender or any third party, and
BORROWER SHALL NOT ASSERT AGAINST SUCH ASSIGNEE IN ANY ACTION FOR PAYMENTS
OR OTHER MONEYS PAYABLE HEREUNDER ANY DEFENSE EXCEPT THE DEFENSE OF
PAYMENT TO SUCH ASSIGNEE. Upon Lender’s request, Borrower will
acknowledge to any assignee receipt of Lender’s notice of
assignment.
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(e)
|
Governing
Law. This Agreement will be governed by, construed and
enforced in accordance with the laws of the State of
Oregon. This Agreement has been accepted by Lender in the State
of Oregon. If there is a lawsuit, Borrower agrees to submit to
the jurisdiction of the courts located in Portland, Oregon and waives any
objections that such venue is an inconvenient
forum.
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(f)
|
No Waiver by
Lender. Lender shall not be deemed to have waived any
rights under this Agreement unless such waiver is given in writing and
signed by Lender. No delay or omission on the part of Lender in
exercising any right shall operate as a waiver of such right or any other
right. A waiver by Lender of a provision of this Agreement
shall not prejudice or constitute a waiver of Lender’s right otherwise to
demand strict compliance with that provision or any other provision of
this Agreement. No prior waiver by Lender, nor any course of
dealing between Lender any Borrower shall constitute a waiver of any of
Lender’s rights or of any of Borrower’s obligations as to any future
transactions. Whenever the consent of Lender is required under
this Agreement, the granting of such consent by Lender in any instance
shall not constitute continuing consent to subsequent instances where such
consent is required and in all cases such consent may be granted or
withheld in the sole discretion of
Lender.
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Page 8 of
9 – COMMERCIAL SECURITY AGREEMENT
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(g)
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Notices. Any
notice required to be given under the Agreement shall be given in writing,
and shall be effective when actually delivered, when deposited with a
reputable overnight courier for next business day delivery, or, if mailed,
when deposited in the United States mail, as first class, certified or
registered mail with postage prepaid, directed to the addresses shown near
the beginning of this Agreement. Any party may change its
address for notices under this Agreement by giving formal written notice
to the other parties, specifying that the purpose of the notice is to
change the party’s address. Unless otherwise provided or
required by law, if there is more than one Borrower, any notice given by
Lender to any Borrower is deemed to be notice given to all
Borrowers.
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(h)
|
Severability. If
a court of competent jurisdiction finds any provision of this Agreement to
be illegal, invalid, or unenforceable as to any circumstance, that finding
shall not make the offending provision illegal, invalid, or unenforceable
as to any other circumstance. If feasible, the offending
provision shall be considered modified so that it becomes legal, valid,
and enforceable. If the offending provision cannot be so
modified, it shall be considered deleted from this
Agreement. Unless otherwise required by law, the illegality,
invalidity, or unenforceability of any provision of this Agreement shall
not affect the legality, validity or enforceability of any other provision
of this Agreement.
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|
(i)
|
Waiver of Co-Obligor’s
Rights. If more than one person is obligated for the
Indebtedness, Borrower irrevocably waives, disclaims and relinquished all
claims against such other person which Borrower has or would otherwise
have by virtue of payment of the Indebtedness or any part thereof,
specifically including but not limited to all rights of indemnity,
contribution or exoneration.
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|
(j)
|
Interpretation. In all
cases where there is more than one Borrower, then all words used in this
Agreement in the singular shall be deemed to have been used in the plural
where the context and construction so require; and where there is more
than one Borrower named in this Agreement or when this Agreement is
executed by more than one, the words "Borrower" shall mean all and any one
or more of them. Reference to the phrase "Borrower" includes
the heirs, successors, assigns and transferees of each of
them.
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(k)
|
Successors and
Assigns. Subject to any limitations stated in this
Agreement on transfer of Borrower’s interest, this Agreement shall be
binding upon and inure to the benefit of the parties, their successors and
assigns. If ownership of the Collateral becomes vested in a
person other than Borrower, Lender, without notice to Borrower, may deal
with Borrower’s successors with reference to this Agreement and the
Indebtedness by way of forbearance or extension without releasing Borrower
from the obligations of this Agreement or liability under the
Indebtedness.
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|
(l)
|
Survival of Representations and
Warranties. All representations, warranties and
agreements made by Borrower in this Agreement and the Related Documents
shall survive the execution and delivery of this Agreement, shall be
continuing in nature, and shall remain in full force and effect until such
time as Borrower’s Indebtedness shall be paid in
full.
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|
(m)
|
Time is of the
Essence. Time is of the essence in the performance of
this Agreement.
|
|
(n)
|
Jury
Waiver. ALL PARTIES TO THIS AGREEMENT
HEREBY WAIVE THE RIGHT TO ANY JURY TRIAL IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM BROUGHT BY ANY PARTY AGAINST ANY OTHER
PARTY.
|
BORROWER
ACKNOWLEDGES HAVING READ ALL OF THE PROVISIONS OF THIS COMMERCIAL SECURITY
AGREEMENT AND BORROWER AGREES TO ITS TERMS.
BORROWER:
|
microHelix,
Inc.
|
WS
Technologies LLC
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||
|
By:
|
microHelix,
Inc., its Manager
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||
|
By:
|
/s/
Thomas A. Sidley
|
By:
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/s/
Thomas A. Sidley
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||
|
Thomas
A. Sidley, President
|
Thomas
A. Sidley, President
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Page 9 of
9 – COMMERCIAL SECURITY AGREEMENT