Document:

EXECUTION VERSION

        SECURITY AGREEMENT

        THIS SECURITY AGREEMENT (this “Agreement”), dated as of February 5, 2010, is made between KEYON COMMUNICATIONS HOLDINGS, INC., a Delaware corporation (“Debtor”) and THE CALIFORNIA CAPITAL LIMITED PARTNERSHIP, a California limited partnership
        (“Secured Party”).

        Secured Party and Debtor are parties to that certain Note Purchase Agreement, dated as of February 1, 2010 (the “Note Purchase Agreement”), pursuant to which, among other things, Debtor has issued that certain Secured Convertible Promissory Note, of even date herewith (the
        “Note”), to Secured Party.

        To induce Secured Party to enter into the Note Purchase Agreement and purchase the Note from Debtor, and in order to secure the Obligations of Debtor arising under the Convertible Note Documents, Debtor and Secured Party desire to enter into this Agreement for the purpose of effecting the grant by Debtor to Secured Property of the Liens in the personal property of Debtor contemplated
        hereby.

        For valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Debtor and Secured Party hereby agree as follows:

        
            	
                         

                    	
                        SECTION 1

                    	
                        Definitions; Interpretation.

                    

        

        (a) All capitalized terms used in this Agreement and not otherwise defined herein shall have the meanings assigned to them in the Note Purchase Agreement or the Note, as the context may require.

        (b) As used in this Agreement, the following terms shall have the following meanings:

        “Agreement” has the meaning set forth in the introductory paragraph hereof.

        “Collateral” has the meaning set forth in Section 2.

        “Collateral Augmentation Date” means the earlier of (i) September 30, 2010 and (ii) the date on which Debtor determines, as a result of its receipt of verbal or written notice from any applicable Governmental Authority in connection with the ARRA Grant Funding, that the conditions to the Closing set forth in the Securities
        Purchase Agreement will not be satisfied on or prior to September 30, 2010.

        “Debtor” has the meaning set forth in the introductory paragraph hereto.

        “Event of Default” has the meaning set forth in Section 7.

        “Internal Revenue Code” means the Internal Revenue Code of 1986, including (unless the context otherwise requires) any rules or regulations promulgated thereunder.

         

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        “KeyOn Communications, Inc.” means KeyOn Communications, Inc., a Nevada corporation, a wholly-owned Subsidiary of Debtor.

        “Note” has the meaning set forth in the recitals to this Agreement.

        “Note Purchase Agreement” has the meaning set forth in the recitals to this Agreement.

        “Operating Subsidiary” has the meaning set forth in Section 5(l).

        “Partnership and LLC Collateral” has the meaning set forth in Section 5.

        “Pledged Collateral” means Debtor’s (i) investment property and (ii) Partnership and LLC Collateral, including any ownership interests in any subsidiaries of Debtor.

        “Pledged Collateral Agreements” means any shareholders agreement, operating agreement, partnership agreement, voting trust, proxy agreement or other agreement or understanding with respect to any Pledged Collateral.

        “Secured Party” has the meaning set forth in the introductory paragraph hereto.

        “UCC” means the Uniform Commercial Code as the same may, from time to time, be in effect in the State of California.

        (c) Where applicable and except as otherwise defined herein, terms used in this Agreement shall have the meanings assigned to them in the UCC.

        (d) In this Agreement, (i) the meaning of defined terms shall be equally applicable to both the singular and plural forms of the terms defined; and (ii) the captions and headings are for convenience of reference only and shall not affect the construction of this Agreement.

        SECTION 2   Security Interest. As security for the payment and performance of the Obligations, Debtor hereby grants to Secured Party a security interest in all of Debtor’s right, title and interest in, to and under all of its personal property, wherever located and whether now existing or owned or hereafter acquired
        or arising, including all accounts, chattel paper, commercial tort claims, deposit accounts, documents, equipment (including all fixtures), general intangibles, instruments, inventory, investment property, letter-of-credit rights, other goods, money and all products, proceeds and supporting obligations of any and all of the foregoing (collectively, the “Collateral”). This Agreement shall create a continuing security interest
        in the Collateral which shall remain in effect until terminated in accordance with Section 18 hereof. Anything herein to the contrary notwithstanding, in no event shall the Collateral include, and Debtor shall not be deemed to have granted a security interest in, any of Debtor’s right, title or interest in any of the outstanding voting capital stock or other ownership interests of a Controlled Foreign Corporation (as defined
        below) in excess of 65% of the voting power of all classes of capital stock or other ownership interests of such Controlled Foreign Corporation entitled to vote; provided that (i) immediately upon the amendment of the Internal Revenue Code to allow the pledge of a greater percentage of the voting power of capital stock or other ownership 

         

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        interests in a Controlled Foreign Corporation without adverse tax consequences, the Collateral shall include, and Debtor shall be deemed to have granted a security interest in, such greater percentage of capital stock or other ownership interests of each Controlled Foreign Corporation; and (ii) if no adverse tax consequences to Debtor shall arise or exist in connection with the pledge of any Controlled
        Foreign Corporation, the Collateral shall include, and Debtor shall be deemed to have granted a security interest in, such Controlled Foreign Corporation. As used herein, “Controlled Foreign Corporation” shall mean a “controlled foreign corporation” as defined in the Internal Revenue Code.

        
            	
                         

                    	
                        SECTION 3

                    	
                        Financing Statements and other Action. 

                    

        

        (a) Debtor hereby authorizes Secured Party to file at any time and from time to time any financing statements describing the Collateral, and Debtor hereby authorizes Secured Party to file (with or without Debtor’s signature), at any time and from time to time, all amendments to financing statements, assignments, continuation financing statements, termination statements,
        account control agreements, and Debtor agrees to execute and deliver to Secured Party such other documents and instruments, in form reasonably satisfactory to Secured Party, as Secured Party may reasonably request, to perfect and continue perfected, maintain the priority of or provide notice of the security interest of Secured Party in the Collateral and to accomplish the purposes of this Agreement. Without limiting the generality of the foregoing, Debtor ratifies and authorizes the
        filing by Secured Party of any financing statements filed prior to the date hereof. 

        (b) Debtor will join with Secured Party in notifying any third party who has possession of any Collateral of Secured Party’s security interest therein and obtaining an acknowledgment from the third party that it is holding the Collateral for the benefit of Secured Party.

        (c) Upon request of Secured Party, Debtor (i) shall cause certificates to be issued in respect of any uncertificated Pledged Collateral, (ii) shall exchange certificated Pledged Collateral for certificates of larger or smaller denominations, and (iii) shall cause any securities intermediaries to show on their books that Secured Party is the entitlement holder with respect to any
        Pledged Collateral.

        (d) Debtor will not create any chattel paper without placing a legend on the chattel paper acceptable to Secured Party indicating that Secured Party has a security interest in the chattel paper.

        SECTION 4   Representations and Warranties. Debtor represents and warrants to Secured Party that:

        (a) Debtor’s chief executive office and principal place of business (as of the date of this Agreement) is located at the address set forth in Schedule 1; Debtor’s jurisdiction of organization and organizational identification number are set forth in Schedule 1;
        Debtor’s exact legal name is as set forth in the first paragraph of this Agreement; and all other locations where Debtor conducts business or Collateral is kept (as of the date of this Agreement) are set forth in Schedule 2.

         

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        (b) Debtor has rights in or the power to transfer the Collateral, and Debtor is the legal and beneficial owner of the Collateral, free from any Lien other than Permitted Liens, and has good and marketable title thereto.

        (c) All of Debtor’s U.S. and foreign patents and patent applications, copyrights (whether or not registered), applications for copyright, trademarks, service marks and trade names (whether registered or unregistered), and applications for registration of such trademarks, service marks and trade names, are set forth in Schedule
        2.

        (d) No control agreements exist with respect to any Collateral other than control agreements in favor of Secured Party.

        (e) The names and addresses of all financial institutions and other Persons at which Debtor maintains its deposit and securities accounts, and the account numbers and account names of such accounts, are set forth in Schedule 1.

        (f)   Schedule 3 lists Debtor’s ownership interests in each of its Subsidiaries as of the date hereof.

        (g) Except as disclosed in writing to Secured Party, there are no Pledged Collateral Agreements which affect or relate to the voting or giving of written consents with respect to any of the Pledged Collateral. Each Pledged Collateral Agreement contains the entire agreement between the parties thereto with respect to the subject matter thereof, has not been amended or modified,
        and is in full force and effect in accordance with its terms. To the best knowledge of Debtor, there exists no material violation or material default under any Pledged Collateral Agreement by Debtor or the other parties thereto. Debtor has not knowingly waived or released any of its material rights under or otherwise consented to a material departure from the terms and provisions of any Pledged Collateral Agreement.

        SECTION 5   Covenants. So long as any of the Obligations remain unsatisfied, Debtor agrees that:

        (a) Debtor shall appear in and defend any action, suit or proceeding which may affect to a material extent its title to, or right or interest in, or Secured Party’s right or interest in, the Collateral, and shall do and perform all reasonable acts that may be necessary and appropriate to maintain, preserve and protect the Collateral.

        (b) Debtor shall comply in all material respects with all laws, regulations and ordinances, and all policies of insurance, relating in a material way to the possession, operation, maintenance and control of the Collateral.

        (c) Debtor shall give prompt written notice to Secured Party (and in any event not later than 30 days following any change described below in this subsection) of: (i) any change in the location of Debtor’s chief executive office or principal place of business; (ii) any change in the locations set forth in
        Schedule 1; (iii) any change in its name; (iv) any changes in its identity or structure in any manner which might make any financing statement filed hereunder incorrect or misleading; (v) any change in its registration as an organization (or any new such registration); or (vi) any change in its jurisdiction of organization; provided that Debtor shall not
        

         

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        locate any Collateral outside of the United States nor shall Debtor change its jurisdiction of organization to a jurisdiction outside of the United States.

        (d) Debtor shall carry and maintain in full force and effect, at its own expense and with financially sound and reputable insurance companies, insurance with respect to the Collateral in such amounts, with such deductibles and covering such risks as is customarily carried by companies engaged in the same or similar businesses and owning similar properties in the localities where
        Debtor operates. At the request of Secured Party, insurance on the Collateral shall name Secured Party as additional insured and as loss payee. Upon the request of Secured Party, Debtor shall furnish Secured Party from time to time with full information as to the insurance carried by it and, if so requested, copies of all such insurance policies. Debtor shall also furnish to Secured Party from time to time upon the request of Secured Party a certificate of Debtor’s insurance
        broker or other insurance specialist stating that all premiums then due on the policies relating to insurance on the Collateral have been paid and that such policies are in full force and effect. If so requested by Secured Party, all insurance policies required under this subsection (d) shall provide that they shall not be terminated or cancelled and shall provide that no such policy be materially changed without at least 30 days’ prior written notice to Debtor and Secured
        Party. Receipt of notice of termination or cancellation of any such insurance policies or reduction of coverages or amounts thereunder shall entitle Secured Party to renew any such policies, cause the coverages and amounts thereof to be maintained at levels required pursuant to the first sentence of this subsection (d) or otherwise to obtain similar insurance in place of such policies, in each case at the expense of Debtor.

        (e) If so requested by Secured Party at any time from and after the Collateral Augmentation Date, all insurance policies shall provide that any losses payable thereunder be payable directly to Secured Party unless written authority to the contrary is obtained. In the event that Debtor shall receive any proceeds of any insurance (other than in respect of third
        party liability insurance) it shall immediately cause such proceeds to be paid over to Secured Party. If the Collateral shall be materially damaged or destroyed, in whole or in part, by fire or other casualty, Debtor shall give prompt notice thereof to Secured Party. Additionally, Debtor shall in any event promptly give Secured Party notice of all reports made to insurance companies in respect of any claim in excess of $50,000. No settlement on account of any loss covered by insurance
        shall be made for less than insured value without the consent of Secured Party. In its sole discretion Secured Party may apply all or any portion of such insurance proceeds to the payment of Obligations or may release all or any portion thereof to Debtor.

        (f)  If and when Debtor shall obtain rights to any new patents, trademarks, service marks, trade names or copyrights, or otherwise acquire or become entitled to the benefit of, or apply for registration of, any of the foregoing, Debtor (i) shall promptly notify Secured Party thereof and (ii) hereby authorizes Secured Party to modify, amend, or supplement
        Schedule 2 and from time to time to include any of the foregoing and make all necessary or appropriate filings with respect thereto.

        (g) Without limiting the generality of subsection (i), Debtor shall notify Secured Party of any registration by Debtor with the U.S. Copyright Office of any unregistered copyrights (whether in existence on the date hereof or thereafter acquired, arising, or developed) within 5 Business Days after the date of any such registration.

         

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        (h) If so requested by Secured Party at any time from and after the Collateral Augmentation Date, Debtor will use commercially reasonable efforts to obtain from each Person from whom Debtor leases any premises, and from each other Person at whose premises any Collateral is at any time present (including any bailee, warehouseman or similar Person), any such collateral access,
        subordination, landlord waiver, bailment, consent and estoppel agreements as Secured Party may require, in form and substance satisfactory to Secured Party.

        (i)  Debtor shall comply with all of its material obligations under any Pledged Collateral Agreements to which it is a party and shall enforce all of its rights thereunder. (ii) Debtor will take all actions reasonably necessary to cause each Pledged Collateral Agreement relating to Collateral consisting of any and all limited, limited liability and general partnership
        interests and limited liability company interests of any type or nature (“Partnership and LLC Collateral”) to provide specifically at all times that: (A) no Partnership and LLC Collateral shall be a security governed by Article 8 of the applicable Uniform Commercial Code; and (B) no consent of any member, manager, partner or other Person shall be a condition to the admission as a member or partner of any transferee that
        acquires ownership of the Partnership and LLC Collateral as a result of the exercise by Secured Party of any remedy hereunder or under applicable law. Additionally, Debtor agrees that no Partnership and LLC Collateral (A) shall be dealt in or traded on any securities exchange or in any securities market, (B) shall constitute an investment company security, or (C) shall be held by Debtor in a securities account. (iii) Debtor shall not vote to enable or take any other action
        to amend or terminate, or waive compliance with any of the terms of, any Pledged Collateral Agreement, certificate or articles of incorporation, bylaws or other organizational documents, or otherwise cast any vote or grant or give any consent, waiver or ratification in respect of the Pledged Collateral, in any way that materially changes the rights of Debtor with respect to any Pledged Collateral in a manner adverse to the Secured Party or that adversely affects the validity,
        perfection or priority of Secured Party’s security interest therein.

        (j)  In the event that Debtor acquires rights in any subsidiary after the date hereof, it shall deliver to Secured Party a completed supplement to Schedule 3, reflecting such new subsidiary. Notwithstanding the foregoing, it is understood and agreed that the security interest of Secured Party shall attach to any such
        subsidiary immediately upon Debtor’s acquisition of rights therein and shall not be affected by the failure of Debtor to deliver any such supplement to Schedule 3.

        (k) Debtor shall at all times be the sole legal and beneficial owner of all of the issued and outstanding equity interests of KeyOn Communications, Inc.

        (l)  Debtor shall cause KeyOn Communications, Inc. at all times to be the sole legal and beneficial owner of all membership interests issued by KeyOn Communications, LLC, a Nevada limited liability company, KeyOn Pahrump, LLC, a Nevada limited liability company, KeyOn SIRIS, LLC, a Nevada limited liability company, KeyOn Grand Junction, LLC, a Nevada limited liability company,
        KeyOn Idaho Falls, LLC, a Nevada limited liability company, KeyOn Pocatello, LLC, a Nevada limited liability company, KeyOn SpeedNet, LLC, a Nevada limited liability company, and KeyOn Spectrum Holdings, LLC, a Nevada limited liability company (each an “Operating Subsidiary” and, collectively, the “Operating Subsidiaries”).

         

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        (m)      In the event that any portion of the Note has not been converted by the Collateral Augmentation Date in accordance with Section 5 of the Note, Debtor shall take all action necessary in the opinion of Secured Party to effect, by no later than the date occurring 20 days after such Collateral Augmentation Date, the grant to Secured Party by KeyOn
        Communications, Inc. and each Operating Subsidiary of a first priority Lien in all of such Persons’ personal property, and shall take, and shall cause KeyOn Communications, Inc. and each such Operating Subsidiary to take, all actions reasonably necessary in the opinion of Secured Party to facilitate the perfection and protection of such Liens.

        
            	
                         

                    	
                        SECTION 6

                    	
                        Rights of Secured Party; Authorization; Appointment.

                    

        

        (a) At the request of Secured Party, upon the occurrence and during the continuance of any Event of Default, all remittances received by Debtor in respect of its accounts and other rights to payment shall be held in trust for Secured Party and, in accordance with Secured Party’s instructions, remitted to Secured Party or deposited to an account of Secured Party in the form
        received (with any necessary endorsements or instruments of assignment or transfer). 

        (b) At the request of Secured Party, upon the occurrence and during the continuance of any Event of Default, Secured Party shall be entitled to receive all distributions and payments of any nature with respect to any Pledged Collateral or instrument Collateral, and all such distributions or payments received by the Debtor shall be held in trust for Secured Party and, in accordance
        with Secured Party’s instructions, remitted to Secured Party or deposited to an account designated by Secured Party in the form received (with any necessary endorsements or instruments of assignment or transfer). Further, upon the occurrence and during the continuance of any Event of Default any such distributions and payments with respect to any Pledged Collateral held in any securities account shall be held and retained in such securities account, in each case as part of the
        Collateral hereunder, and Secured Party shall have the right, following prior written notice to the Debtor, to vote and to give consents, ratifications and waivers with respect to any Pledged Collateral and instruments, and to exercise all rights of conversion, exchange, subscription or any other rights, privileges or options pertaining thereto, as if Secured Party were the absolute owner thereof; provided that Secured Party shall have
        no duty to exercise any of the foregoing rights afforded to it and shall not be responsible to the Debtor or any other Person for any failure to do so or delay in doing so.

        (c) Secured Party shall have the right to, in the name of Debtor, or in the name of Secured Party or otherwise, upon notice to but without the requirement of assent by Debtor, and Debtor hereby constitutes and appoints Secured Party (and any of Secured Party’s officers, employees or agents designated by Secured Party) as Debtor’s true and lawful attorney-in-fact, with
        full power and authority to: (i) sign and file any of the financing statements and other documents and instruments which must be executed or filed to perfect or continue perfected, maintain the priority of or provide notice of Secured Party’s security interest in the Collateral; (ii) assert, adjust, sue for, compromise or release any claims under any policies of insurance; (iii) give notices of control, default or exclusivity (or similar notices) under any account
        control agreement or similar agreement with respect to exercising control over deposit accounts or securities accounts; and (iv) execute any and all such other documents and instruments, and do any and all acts and things for and on behalf of Debtor, which Secured Party may deem 

         

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        reasonably necessary or advisable to maintain, protect, realize upon and preserve the Collateral and Secured Party’s security interest therein and to accomplish the purposes of this Agreement. Secured Party agrees that, except upon and during the continuance of an Event of Default, it shall not exercise the power of attorney, or any rights granted to Secured Party, pursuant to clauses (ii), (iii)
        and (iv). The foregoing power of attorney is coupled with an interest and irrevocable so long as the Obligations have not been paid and performed in full. Debtor hereby ratifies, to the extent permitted by law, all that Secured Party shall lawfully and in good faith do or cause to be done by virtue of and in compliance with this Section 6.

        SECTION 7   Events of Default. Any of the following events which shall occur and be continuing shall constitute an “Event of Default”:

        (a) Any material impairment in the value of the Collateral or the priority of Secured Party’s Lien hereunder.

        (b) Any levy upon, seizure or attachment of a material portion of the Collateral which shall not have been rescinded or withdrawn within 20 days after the date of such levy, seizure or attachment.

        
            	
                         

                    	
                        (c)

                    	
                        Any “Event of Default” (as defined in the Note) shall occur.

                    

        

        (d) Any loss, theft or substantial damage to, or destruction of, any material portion of the Collateral (unless within 5 Business Days after the occurrence of any such event, Debtor furnishes to Secured Party evidence satisfactory to Secured Party that the amount of any such loss, theft, damage to or destruction of the Collateral is fully insured under policies naming Secured Party
        as an additional named insured or loss payee).

        
            	
                         

                    	
                        SECTION 8

                    	
                        Remedies.

                    

        

        (a) Upon the occurrence and during the continuance of any Event of Default, Secured Party may declare any of the Obligations to be immediately due and payable and shall have, in addition to all other rights and remedies granted to it in this Agreement or any other Convertible Note Document, all rights and remedies of a secured party under the UCC and other applicable laws. Without
        limiting the generality of the foregoing, (i) Secured Party may, subject to the UCC and other applicable law, peaceably and without notice enter any premises of Debtor, take possession of any the Collateral, remove or dispose of all or part of the Collateral on any premises of such Debtor or elsewhere, or, in the case of equipment, render it nonfunctional, and otherwise collect, receive, appropriate and realize upon all or any part of the Collateral, and demand, give receipt for,
        settle, renew, extend, exchange, compromise, adjust, or sue for all or any part of the Collateral, as Secured Party may determine; (ii) Secured Party may require any Debtor to assemble all or any part of the Collateral and make it available to Secured Party at any place and time designated by Secured Party; (iii) Secured Party may secure the appointment of a receiver of the Collateral or any part thereof (to the extent and in the manner provided by applicable law);
        (iv) Secured Party may sell, resell, lease, use, assign, license, sublicense, transfer or otherwise dispose of any or all of the Collateral in its then condition or following any commercially reasonable preparation or processing (utilizing in connection therewith any of Debtor’s assets, without charge or liability to Secured Party therefor) at public or private sale, by 

         

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        one or more contracts, in one or more parcels, at the same or different times, for cash or credit, or for future delivery without assumption of any credit risk, all as Secured Party deems advisable; provided, however, that Debtor shall be credited with the net proceeds of sale only when such proceeds are
        finally collected by Secured Party. Debtor recognizes that Secured Party may be unable to make a public sale of any or all of the Pledged Collateral, by reason of prohibitions contained in applicable securities laws or otherwise, and expressly agrees that a private sale to a restricted group of purchasers for investment and not with a view to any distribution thereof shall be considered a commercially reasonable sale. Secured Party shall have the right upon any such public sale, and, to
        the extent permitted by law, upon any such private sale, to purchase the whole or any part of the Collateral so sold, free of any right or equity of redemption, which right or equity of redemption Debtor hereby releases, to the extent permitted by law. Secured Party shall give Debtor such notice of any private or public sales as may be required by the UCC or other applicable law.

        (b) For the purpose of enabling Secured Party to exercise its rights and remedies under this Section 8 during the continuance of an Event of Default, Debtor hereby grants to Secured Party an irrevocable, non-exclusive and assignable license (exercisable without payment or royalty or other compensation to Debtor) to use,
        license or sublicense any intellectual property Collateral.

        (c) Secured Party shall not have any obligation to clean up or otherwise prepare the Collateral for sale. Secured Party has no obligation to attempt to satisfy the Obligations by collecting them from any other Person liable for them, and Secured Party may release, modify or waive any Collateral provided by any other Person to secure any of the Obligations, all without affecting
        Secured Party’s rights against Debtor. Debtor waives any right it may have to require Secured Party to pursue any third Person for any of the Obligations. Secured Party may comply with any applicable state or federal law requirements in connection with a disposition of the Collateral and compliance will not be considered adversely to affect the commercial reasonableness of any sale of the Collateral. Secured Party may sell the Collateral without giving any warranties as to the
        Collateral. Secured Party may specifically disclaim any warranties of title or the like. This procedure will not be considered adversely to affect the commercial reasonableness of any sale of the Collateral. If Secured Party sells any of the Collateral upon credit, Debtor will be credited only with payments actually made by the purchaser, received by Secured Party and applied to the indebtedness of the purchaser. In the event the purchaser fails to pay for the Collateral, Secured Party
        may resell the Collateral and Debtor shall be credited with the proceeds of the sale.

        (d) The cash proceeds actually received from the sale or other disposition or collection of Collateral, and any other amounts received in respect of the Collateral the application of which is not otherwise provided for herein, shall be applied first, to the payment of the reasonable costs and expenses of Secured Party in exercising
        or enforcing its rights hereunder and in collecting or attempting to collect any of the Collateral, and to the payment of all other amounts payable to Secured Party pursuant to Section 12 hereof; and second, to the payment of the Obligations. Any surplus thereof which exists after payment and performance in full of the Obligations shall be promptly paid over to Debtor or otherwise
        disposed of in accordance with the UCC or other applicable law. Debtor shall remain liable to Secured Party for any deficiency which exists after any sale or other disposition or collection of Collateral.

         

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        SECTION 9      Certain Waivers. Debtor waives, to the fullest extent permitted by law, (i) any right of redemption with respect to the Collateral, whether before or after sale hereunder, and all rights, if any, of marshalling of the Collateral or other collateral or security for the Obligations;
        (ii) any right to require Secured Party (A) to proceed against any Person, (B) to exhaust any other collateral or security for any of the Obligations, (C) to pursue any remedy in Secured Party’s power, or (D) to make or give any presentments, demands for performance, notices of nonperformance, protests, notices of protests or notices of dishonor in connection with any of the Collateral; and (iii) all claims, damages, and demands against Secured Party
        arising out of the repossession, retention, sale or application of the proceeds of any sale of the Collateral

        SECTION 10     Notices. All notices or other communications hereunder shall be in writing (including by facsimile transmission or by email) and mailed (by certified or registered mail), sent or delivered, if to Debtor, to the address, facsimile number or email address set forth below its name on its signature
        page hereto and if to Secured Party, to the address, facsimile number or email address set forth in Schedule 4 hereto, or, in the case of either party, at or to such other address, facsimile number or email address as shall be designated by such party in a written notice to the other party. All such notices and communications shall be effective (i) if delivered by hand, sent by certified or registered mail or sent by an overnight
        courier service, when received; and (ii) if sent by facsimile transmission or electronic mail, when sent. Electronic mail may be used only for routine communications, such as distribution of informational documents or documents for execution by the parties thereto, and may not be used for any other purpose.

        SECTION 11      No Waiver; Cumulative Remedies. No failure on the part of Secured Party to exercise, and no delay in exercising, any right, remedy, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, remedy, power or privilege preclude any other or further exercise thereof or the
        exercise of any other right, remedy, power or privilege. The rights and remedies under this Agreement are cumulative and not exclusive of any rights, remedies, powers and privileges that may otherwise be available to Secured Party.

        
            	
                         

                    	
                        SECTION 12

                    	
                        Costs and Expenses; Indemnification. 

                    

        

        (a) Debtor agrees to pay on demand: (i) the reasonable out-of-pocket costs and expenses of Secured Party, and the reasonable fees and disbursements of counsel to Secured Party, in connection with the administration of this Agreement, and any amendments, modifications or waivers of the terms thereof, and the custody of the Collateral; (ii) all appraisal, audit, consulting, search,
        recording, filing and similar costs, fees and expenses incurred or sustained by Secured Party in connection with this Agreement or the Collateral; and (iii) all costs and expenses of Secured Party, and the fees and disbursements of counsel, in connection with the enforcement or attempted enforcement of, and preservation of any rights or interests under, this Agreement and the Note, including in any out-of-court workout or other refinancing or restructuring or in any bankruptcy case, and
        the protection, sale or collection of, or other realization upon, any of the Collateral, including all expenses of taking, collecting, holding, sorting, handling, preparing for sale, selling, or the like, and other such expenses of sales and collections of Collateral.

         

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        (b) Any amounts payable to Secured Party under this Section 12 or otherwise under this Agreement if not paid upon demand shall bear interest from the date of such demand until paid in full, at the Post-Default Rate set forth in the Note.

        SECTION 13     Binding Effect. This Agreement shall be binding upon, inure to the benefit of and be enforceable by Debtor, Secured Party and their respective successors and assigns and shall bind any Person who becomes bound as a debtor to this Agreement. 

        SECTION 14     Governing Law. This Agreement shall be governed by, and construed in accordance with, the law of the State of California, except as required by mandatory provisions of law and to the extent the validity or perfection of the security interests hereunder, or the remedies hereunder, in respect of any
        Collateral are governed by the law of a jurisdiction other than California. The provisions of Section 5.3 of the Note Purchase Agreement relating to venue, submission to jurisdiction and the waiver of the right to jury trial are by this reference incorporated herein, mutatis mutandis, as if set forth herein in full.

        SECTION 15 Entire Agreement; Amendment. This Agreement contains the entire agreement of the parties with respect to the subject matter hereof and shall not be amended except by the written agreement of the parties.

        SECTION 16     Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under all applicable laws and regulations. If, however, any provision of this Agreement shall be prohibited by or invalid under any such law or regulation in any
        jurisdiction, it shall, as to such jurisdiction, be deemed modified to conform to the minimum requirements of such law or regulation, or, if for any reason it is not deemed so modified, it shall be ineffective and invalid only to the extent of such prohibition or invalidity without affecting the remaining provisions of this Agreement, or the validity or effectiveness of such provision in any other jurisdiction.

        SECTION 17     Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. The delivery of an executed counterpart of a signature page of this Agreement by telecopy or other electronic
        imaging means shall be effective as delivery of a manually executed counterpart of this Agreement.

        SECTION 18     Termination. Upon payment and performance in full of all Obligations, the security interest created under this Agreement shall terminate and Secured Party shall promptly execute and deliver to Debtor such documents and instruments reasonably requested by Debtor as shall be necessary to evidence
        termination of all security interests given by Debtor to Secured Party hereunder.

        (Remainder of page intentionally left blank; signature pages follow)

        11

        sf-2792320

         

         

        

        

        

        IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement, as of the date first above written.

        KEYON COMMUNICATIONS HOLDINGS, INC.

         

        	
                     

                	
                  By:

                	  /s/ Jonathan Snyder	 
	 	 	 	 
	
                     

                	
                    Name:

                	 Jonathan Snyder	 
	 	 	 	 
	
                     

                	
                    Title:

                	 President and Chief Executive Officer	 

 

         

        Address for notices: 

         

        KeyOn Communications Holdings, Inc.

        11742 Stonegate Circle

        Omaha, Nebraska 68164

        Attention: Jason Lazar

        Facsimile: (402) 998-4111

         

        with a copy to:

        Haynes and Boone, LLP

        1221 Avenue of the Americas, 26th Floor

        New York, New York 10020

        Attention: Rick A. Werner, Esq.

        Facsimile: (212) 884-8234

        Signature Page 1 to Security Agreement

         

        

        

        

        THE CALIFORNIA CAPITAL LIMITED PARTNERSHIP

         

        	
                     

                	
                    By:

                	 /s/ C. Kenworthy	 
	 	 	 	 
	
                     

                	
                    Name:

                	 C. Kenworthy	 
	 	 	 	 
	
                     

                	
                    Title:

                	  Authorized Agent	 

 

         

         

         

        Signature Page 2 to Security Agreement

        sf-2792320

         

        

        

        

        SCHEDULE 1

        to the Security Agreement

        
            	
                        1.

                    	
                        Jurisdiction of Organization and Organizational Identification Number

                    

        

        Delaware

        Organizational Identification Number: DE 3852792

         

        
            	
                        2.

                    	
                        Chief Executive Office and Principal Place of Business

                    

        

        KeyOn Communications Holdings, Inc.

        11742 Stonegate Circle

        Omaha, Nebraska 68164

         

        
            	
                        3.

                    	
                        Other locations where Debtor conducts business or Collateral is kept

                    

        

        KeyOn Communications Holdings, Inc.

        4067 Dean Martin Drive

        Las Vegas, NV 89103

        Leased Premises in Idaho Falls, Idaho

        Leased Premises in Grand Junction, Colorado

        Leased Premises in Centerville, Iowa

        Leased Premises in Wolffworth, Texas 

        
            	
                        4.

                    	
                        Deposit Accounts and Security Accounts

                    

        

        None.

         

        Schedule 1

        sf-2792320

         

        

        

        

        SCHEDULE 2

        to the Security Agreement

        
            	
                        1.

                    	
                        Patents and Patent Applications. 

                    	
                        None.

                    

        

        
            	
                        2.

                    	
                        Copyrights (Registered and Unregistered) and Copyright Applications. 

                    	
                        None.

                    

        

        3.   Trademarks, Service Marks and Trade Names and Trademark, Service Mark and Trade Name Applications.

        None.

         

         

         

        Schedule 2

        sf-2792320

         

        

        

        

        SCHEDULE 3

        to the Security Agreement

        SUBSIDIARIES

        1.         Interests in each limited liability company that is a Subsidiary of Debtor as follows:

        KeyOn Communications, LLC

        KeyOn Pahrump, LLC

        KeyOn SIRIS, LLC

        KeyOn Grand Junction, LLC

        KeyOn Idaho Falls, LLC

        KeyOn Pocatello, LLC

        KeyOn SpeedNet, LLC

        KeyOn Spectrum Holdings, LLC

         

        2.         Interests in each general partnership, limited partnership, limited liability partnership or other partnership that is a subsidiary of Debtor as follows:

        None.

         

        3.         Capital stock of each corporate subsidiary of Debtor, and the stock certificates with respect thereto, as follows:

        
            	
                        Subsidiary

                    	
                        No. and Class 

                        of Shares

                    
	
                         

                    	
                         

                    
	
                        KeyOn Communications, Inc.

                    	
                        216,890 shares of common stock

                    

        

         

         

        Schedule 3

        sf-2792320

         

        

        

        

        SCHEDULE 4

        to the Security Agreement

        SECURED PARTY ADDRESS

        The California Capital Limited Partnership

        149 S. Barrington Avenue, Suite 311

        Los Angeles, CA 90049

        Attention: General Partner

         

         

        Schedule 4

        sf-2792320EXECUTION VERSION

GUARANTY

THIS GUARANTY (“Guaranty”), dated as of February 5, 2010, is made by each of the undersigned guarantors (each a “Guarantor” and, collectively, the “Guarantors”), in favor of THE CALIFORNIA CAPITAL LIMITED PARTNERSHIP, a California limited partnership (“Lender”).

KeyOn Communications Holdings, Inc., a Delaware corporation (“Company”), and Lender are parties to that certain Note Purchase Agreement, dated as of February 1, 2010 (as amended, modified, renewed or extended from time to time, the “Note Purchase Agreement”), and Company is indebted to Lender pursuant to that certain Secured Convertible Promissory Note, of even date herewith, issued by Company to Lender pursuant to the Note Purchase Agreement (as amended, modified, renewed or extended from time to time, the “Note”, the terms defined therein and in the Note Purchase Agreement and not otherwise defined herein being used herein as therein defined).  Guarantors have agreed, on a joint and several basis, to guarantee the
indebtedness and other obligations of Company to Lender under or in connection with the Note Purchase Agreement, the Note and the other Convertible Note Documents, as set forth herein.  Each Guarantor, as a shareholder of Company, will derive substantial direct and indirect benefits from the extension of credit by Lender to Company (which benefits are hereby acknowledged by each Guarantor).

Accordingly, to induce Lender to extend credit to Company, and in consideration thereof, each Guarantor hereby agrees as follows:

	
 
  	
1.
 	
Guaranty.  
 

 (a)       Guaranty.  The Guarantors hereby jointly and severally, unconditionally and irrevocably, guarantee to Lender and its respective successors, endorsees, transferees and assigns, the full and prompt payment when due (whether at stated maturity, declaration, acceleration, demand or otherwise) and performance of the indebtedness, liabilities and other obligations of Company to Lender under or in connection with the Note (each a “Document” and, collectively, the “Documents”), including all unpaid principal, all interest accrued thereon, all fees due to Lender and all other amounts payable by Company to Lender thereunder or in connection therewith, and including interest that accrues after the
commencement by or against Company of any action, case or proceeding involving insolvency, bankruptcy, reorganization, arrangement, adjustment, composition, assignment for the benefit of creditors, liquidation, winding up or dissolution under any applicable laws with respect thereto (an “Insolvency Proceeding”).  The terms “indebtedness,” “liabilities” and “obligations” are used herein in their most comprehensive sense and include any and all advances, debts, obligations and liabilities, now existing or hereafter arising, regardless of by what instrument, agreement, contract or entry in Lender’s accounts they may be evidenced, or whether evidenced by any instrument, agreement, contract or entry in Lender’s accounts, whether voluntary or involuntary and whether due or not due, absolute or contingent, liquidated or unliquidated, determined or undetermined, and whether recovery upon such
indebtedness, liabilities and obligations may be or hereafter become unenforceable under the Bankruptcy Reform Act of 1978 (the “Bankruptcy Code”) or 

 

sf-2795824  

 

        

        

        

other applicable law.  The foregoing indebtedness, liabilities and other obligations of Company, and all other indebtedness, liabilities and obligations to be paid or performed by Guarantors in connection with this Guaranty (including any and all amounts due under Section 11 hereof), shall hereinafter be collectively referred to as the “Obligations.”

(b)       Limitation of Guaranty.  Notwithstanding any other provision set forth in this Guaranty, any increase in the amount of the Obligations or any other amendment of any Convertible Note Document, (i) the aggregate amount of Obligations for which the Guarantors will be liable under this Guaranty shall not exceed $4,050,000 at any time and (ii) this Guaranty shall terminate upon the satisfaction (whether by repayment, conversion or otherwise and in each case in accordance with the terms and provisions of the Convertible Note Documents) of Obligations having an aggregate amount of at least $4,050,000.

(c)       Consideration.  Each Guarantor has received at least “reasonably equivalent value” (as such phrase is used in Section 548 of Title 11 of the United States Code entitled “Bankruptcy” (the “Bankruptcy Code”), in the California Uniform Fraudulent Transfer Act (the “UFTA”) and in comparable provisions of other applicable law) and more than sufficient consideration to support its obligations hereunder in respect of the Obligations.

(d)       Further Limitations.  (i) To the extent that any court of competent jurisdiction shall impose by final judgment under applicable law (including the UFTA and Sections 544 and 548 of the Bankruptcy Code) any limitations on the amount of any Guarantor’s liability with respect to the Obligations which Lender can enforce under this Guaranty, Lender, by its acceptance hereof, accepts such limitation on the amount of such Guarantor’s liability hereunder to the extent needed to make this Guaranty and the Documents fully enforceable and nonavoidable.

(e)       Maximum Rate.  Notwithstanding anything to the contrary contained herein or in any other Document, the interest paid or agreed to be paid hereunder and under the other Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable law (the “Maximum Rate”).  If Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Obligations or, if it exceeds the amount of such unpaid principal, refunded to the applicable Guarantor,  In determining whether the interest contracted for, charged or received by the Lender exceeds the Maximum Rate, Lender may, to the extent permitted by applicable law, (i) characterize any payment that is not principal
as an expense, fee, or premium rather than as interest, (ii) exclude voluntary prepayments and the effects thereof, and (iii) amortize, prorate, allocate and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.

2.         Liability of Guarantors.  The liability of each Guarantor under this Guaranty shall be irrevocable, absolute, independent and unconditional, and shall not be affected by any circumstance which might constitute a discharge of a surety or guarantor other than the indefeasible payment and performance in full of all Obligations.  In furtherance of the foregoing and without limiting the generality thereof, each Guarantor agrees as follows:  (i) such Guarantor’s liability hereunder shall be the immediate, direct, and primary obligation of such Guarantor and shall not be contingent upon Lender’s exercise or enforcement of any remedy it 

 

2.

sf-2795824 

 

        

        

        

may have against Company or any other person or entity (“Person”), or against any collateral for any Obligations; (ii) this Guaranty is a guaranty of payment when due and not of collectibility; (iii) Lender may enforce this Guaranty upon the occurrence of a default notwithstanding any dispute between Lender and Company with respect to the existence of such default; (iv) such Guarantor’s payment of a portion, but not all, of the Obligations shall in no way limit, affect, modify or abridge such Guarantor’s liability for any portion of the Obligations remaining unsatisfied; and (v) such Guarantor’s liability with respect to the Obligations shall remain in full force and effect without regard to, and shall not be impaired or affected by, nor shall such Guarantor be exonerated or discharged by, (A) any Insolvency
Proceeding with respect to Company, any Guarantor, any other guarantor or any other Person; (B) any limitation, discharge, or cessation of the liability of Company, any other Guarantor, other guarantor or any other Person for any Obligations due to any statute, regulation or rule of law, or any invalidity or unenforceability in whole or in part of any of the Obligations; (C) any merger, acquisition, consolidation or change in structure of Company, any Guarantor or any other guarantor or Person, or any sale, lease, transfer or other disposition of any or all of the assets or shares of Company, any Guarantor, any other guarantor or other Person; (D) any assignment or other transfer, in whole or in part, of Lender’s interests in and rights under this Guaranty, including, without limitation, Lender’s right to receive payment of the Obligations, or any assignment or other transfer, in whole or in part, of Lender’s interests in and to any collateral securing
the Obligations; (E) any claim, defense, counterclaim or setoff, other than that of prior performance, that Company, any Guarantor, any other guarantor or other Person may have or assert, including, without limitation, any defense of incapacity or lack of corporate or other authority to execute or deliver any Document or this Guaranty or any other document related thereto; (F) any direction of application of payment to Company, any Guarantor, any other guarantor or other Person; or (G) Lender’s vote, claim, distribution, election, acceptance, action or inaction in any bankruptcy case related to the Obligations.

	
 
  	
3.
 	
Consents.  
 

 (a)       Each Guarantor hereby consents and agrees that, except as provided in subsection (b) of this Section 3, without notice to or further assent from such Guarantor:  (i) the time, manner, place or terms of any payment under any Document may be extended or changed, including by an increase or decrease in the interest rate on any Obligation or any fee or other amount payable under such Document, by a modification or renewal of any Document or otherwise; (ii) the time for Company’s performance of or compliance with any term, covenant or agreement on its part to be performed or observed under any Document may be extended, or such performance or compliance waived, or failure in or departure from such performance or compliance consented to, all in such manner and upon such terms as Lender
may deem proper; (iii) Lender may discharge or release, in whole or in part, any other guarantor or any other Person liable for the payment and performance of all or any part of the Obligations, and may permit or consent to any such action or any result of such action, and Lender shall not be liable to such Guarantor for any failure to collect or enforce payment of the Obligations; (iv) Lender may take and hold security of any kind, at any time, as collateral for the Obligations, and may, from time to time, in whole or in part, exchange, sell, surrender, release, subordinate, modify, waive, rescind, compromise or extend such security and may permit or consent to any such action or the result of any such action, and may apply such security and direct the order or manner of sale thereof; (v) Lender may request and accept other guaranties of the Obligations and may, from 

 

3.

sf-2795824 

 

        

        

        

time to time, in whole or in part, surrender, release, subordinate, modify, waive, rescind, compromise or extend any such guaranty and may permit or consent to any such action or the result of any such action; and (vi) Lender may exercise, or waive or otherwise refrain from exercising, any other right, remedy, power or privilege granted by any Document, or otherwise available to Lender, with respect to the Obligations and any collateral therefor, even if the exercise of such right, remedy, power or privilege affects or eliminates any right of subrogation or any other right of such Guarantor against Company; all as Lender may deem advisable, and all without impairing, abridging, releasing or affecting this Guaranty.

(b)       Notwithstanding anything to the contrary set forth in subsection (a) of this Section 3, none of the actions contemplated by clauses (i) or (ii) of Section 3(a) shall be undertaken without providing each Guarantor at least 10 Business Days’ notice thereof at any time Lender owns in excess of 50% of the common stock of Company, or such other equity interests in Company which are convertible into common stock of Company and, when taken together with any other common stock of Company then owned by Lender, constitute in excess of 50% of the common stock of Company.

4.         Waivers.  (a) Each Guarantor waives and agrees not to assert:  (i) any right to require Lender to proceed against Company, any other Guarantor or other guarantor or any other Person, to proceed against or exhaust any collateral or other security held for the Obligations (except to the extent required by applicable law), to give notice of or institute any public or private sale, foreclosure, or other disposition of any collateral or security for the Obligations, including, without limitation, to comply with applicable provisions of the California Uniform Commercial Code (the “UCC”) or any equivalent provision of any other applicable law in connection with the sale, foreclosure, or other disposition of any collateral or to
pursue any other right, remedy, power or privilege of Lender whatsoever; (ii) the defense of the statute of limitations in any action hereunder or for the collection or performance of the Obligations; (iii) any defense arising by reason of any lack of corporate or other authority or any other defense of Company, any Guarantor or any other Person; (iv) any defense based upon Lender’s errors or omissions in the administration of the Obligations; (v) any rights to set-offs and counterclaims; and (vi) without limiting the generality of the foregoing, to the fullest extent permitted by law, any other defenses or benefits that may be derived from or afforded by applicable law limiting the liability of or exonerating guarantors or sureties, or which may conflict with the terms of this Guaranty, including any rights and defenses which are or may become available to such Guarantor by reason of California Civil Code §§2787 through 2855, 2899 and 3433.
(b) Each Guarantor waives any and all notice of the acceptance of this Guaranty, and any and all notice of the creation, renewal, modification, extension or accrual of the Obligations, or the reliance by Lender upon this Guaranty, or the exercise of any right, power or privilege hereunder.  The Obligations shall conclusively be deemed to have been created, contracted, incurred and permitted to exist in reliance upon this Guaranty.  Each Guarantor waives promptness, diligence, presentment, protest, demand for payment, notice of default, dishonor or nonpayment and all other notices to or upon Company, any Guarantor or any other Person with respect to the Obligations.  (c) The obligations of each Guarantor hereunder are independent of and separate from the obligations of Company and any other guarantor and upon the occurrence and during the continuance of any default, a separate action or actions may be brought against any Guarantor, whether or not Company or any such other
guarantor is joined therein or a separate action or actions are brought against Company or any such other guarantor.  

 

4.

sf-2795824 

 

        

        

        

(d) No Guarantor shall have any right to require Lender to obtain or disclose any information with respect to (i) the financial condition or character of Company or the ability of Company to pay and perform the Obligations; (ii) the Obligations; (iii) any collateral or other security for any or all of the Obligations; (iv) the existence or nonexistence of any other guarantees of all or any part of the Obligations; (v) any action or inaction on the part of Lender or any other Person; or (vi) any other matter, fact or occurrence whatsoever.

5.         Subrogation.  Until the Obligations shall be satisfied in full, no Guarantor shall have or directly or indirectly exercise, (i) any rights that it may acquire by way of subrogation under this Guaranty, by any payment hereunder or otherwise, (ii) any rights of contribution, indemnification, reimbursement or similar suretyship claims arising out of this Guaranty, or (iii) any other right which it might otherwise have or acquire (in any way whatsoever) which could entitle it at any time to share or participate in any right, remedy or security of Lender as against Company or other guarantors, whether in connection with this Guaranty or otherwise.  If any amount shall be paid to any Guarantor on account of the foregoing rights at any time when
any Obligations are outstanding, such amount shall be held in trust for the benefit of Lender and shall forthwith be paid to Lender to be credited and applied to the Obligations.

6.         Continuing Guaranty.  Each Guarantor agrees that this Guaranty is a continuing guaranty relating to any Obligations, including Obligations which may exist continuously or which may arise from time to time under successive transactions.  This Guaranty shall continue to be effective or shall be reinstated and revived, as the case may be, if, for any reason, any payment of the Obligations by or on behalf of Company shall be rescinded or must otherwise be restored by Lender, whether as a result of any Insolvency Proceeding or otherwise.  To the extent any payment is rescinded or restored, the Obligations shall be revived in full force and effect without reduction or discharge for such payment.

7.         Payments. Each Guarantor hereby agrees, in furtherance of the foregoing provisions of this Guaranty and not in limitation of any other right which Lender or any other Person may have against such Guarantor by virtue hereof, upon the failure of Company to pay any of the Obligations when and as the same shall become due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including amounts that would become due but for the operation of the automatic stay under §362(a) of the Bankruptcy Code), such Guarantor shall forthwith pay, or cause to be paid, in cash, to Lender an amount equal to the amount of the Obligations then due as aforesaid (including interest which, but for the filing of a petition in any Insolvency Proceeding with respect
to Company, would have accrued on such Obligations, whether or not a claim is allowed against Company for such interest in any such Insolvency Proceeding), subject to the limitation set forth in Section 1(b).  All payments made by any Guarantor hereunder may be applied in such order as Lender shall elect.  Each Guarantor shall make each payment hereunder, without deduction (whether for taxes or otherwise), set-off or counterclaim, on the day when due in same day or immediately available funds, and in U.S. dollars.

8.         Representations; Covenants.  (a) Each Guarantor represents and warrants to Lender that this Guaranty does not contravene any contractual or judicial restriction binding on or affecting such Guarantor and that this Guaranty is the legal, valid and binding obligation of such Guarantor enforceable in accordance with its terms.  (b) So long as this Guaranty shall be in 

 

5.

sf-2795824 

 

 

        

        

        

effect, each Guarantor will furnish to Lender from time to time such information respecting such Guarantor’s financial condition as Lender may from time to time reasonably request and will execute, acknowledge, deliver, file, notarize and register at its own expense all such further agreements, instruments, certificates, documents and assurances and perform such acts as Lender shall deem necessary or appropriate to effectuate the purposes of this Guaranty and shall reasonably request.

9.         Notices.  All notices and other communications provided for hereunder shall, unless otherwise stated herein, be in writing (including by facsimile or email) and shall be mailed (by certified or registered mail), sent or delivered (i) if to Lender, to the address specified in Schedule 1 hereto; and (ii) if to any Guarantor, at or to its address or facsimile number, or email address, set forth below its name on the signature page hereof, or at or to such other address or facsimile number, or email address, as such party shall have designated in a written notice to the other parties.  All such notices and communications shall be effective (i) if delivered by hand, sent by certified or registered mail or sent by an overnight courier
service, when received; and (ii) if sent by facsimile transmission or electronic mail, when sent.  Electronic mail may be used only for routine communications, to distribute materials such as financial statements and other informational documents, and to distribute documents for execution by the parties thereto, and may not be used for any other purpose.

10.       No Waiver.  No failure on the part of Lender to exercise, and no delay in exercising, any right, remedy, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, remedy, power or privilege preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.  The rights and remedies under this Guaranty are cumulative and not exclusive of any rights, remedies, powers and privileges that may otherwise be available to Lender.

11.       Costs and Expenses.  Guarantor agrees to pay on demand all reasonable costs and expenses of Lender and reasonable fees and disbursements of counsel in connection with the enforcement, or preservation of any rights under, this Guaranty.

12.       Binding Effect; Entire Agreement; Amendments.  This Guaranty shall be binding upon each Guarantor and their respective successors, assigns, personal representatives, heirs and legatees, and inure to the benefit of and be enforceable by Lender and its successors, endorsees, transferees and assigns; provided that no Guarantor shall have the right to assign or transfer its rights and obligations hereunder without the prior written consent of Lender.  This Guaranty constitutes the entire agreement of each Guarantor with respect to the matters set forth herein and supersedes any prior agreements, commitments, discussions and understandings, oral or written, with respect thereto.  There are no conditions to the full effectiveness of this Guaranty.  This
Guaranty may not be amended except by a writing signed by each Guarantor and Lender.  No waiver of any rights of Lender under any provision of this Guaranty or consent to any departure by any Guarantor therefrom shall be effective unless in writing and signed by Lender.  Any such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

13.       Knowing and Explicit Waivers.  Each Guarantor acknowledges that it has either obtained the advice of legal counsel or has had the opportunity to obtain such advice in 

 

6.

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connection with the terms and provisions of this Guaranty.  Each Guarantor acknowledges and agrees that each of the waivers and consents set forth herein, including, without limitation, those contained in Sections 2 through 4, are made with full knowledge of their significance and consequences.  Additionally, each Guarantor acknowledges and agrees that by executing this Guaranty, it is waiving certain rights, benefits, protections and defenses to which it may otherwise be entitled under applicable law, including, without limitation, under the provisions of the California Civil Code and California Code of Civil Procedure referred to in Section 4, and that all such waivers herein are explicit, knowing waivers.  Each Guarantor further acknowledges and agrees that Lender
is relying on such waivers in creating the Obligations, and that such waivers are a material part of the consideration which Lender is receiving for creating the Obligations.

14.       Severability.  Whenever possible, each provision of this Guaranty shall be interpreted in such manner as to be effective and valid under all applicable laws and regulations.  If, however, any provision of this Guaranty shall be prohibited by or invalid under any such law or regulation, it shall be deemed modified to conform to the minimum requirements of such law or regulation, or, if for any reason it is not deemed so modified, it shall be ineffective and invalid only to the extent of such prohibition or invalidity without affecting the remaining provisions of this Guaranty.

15.       Law; Submission to Jurisdiction; Jury Trial Waiver; Judicial Reference.  (a) THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH CALIFORNIA LAW.  EACH GUARANTOR HEREBY AGREES THAT ANY LEGAL ACTION OR PROCEEDING AGAINST IT WITH RESPECT TO THIS GUARANTY MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA OR OF THE UNITED STATES OF AMERICA LOCATED IN LOS ANGELES COUNTY, CALIFORNIA, AS LENDER MAY ELECT, AND, BY EXECUTION AND DELIVERY HEREOF, EACH GUARANTOR ACCEPTS AND CONSENTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, TO THE JURISDICTION OF THE AFORESAID COURTS AND AGREES THAT SUCH JURISDICTION SHALL BE EXCLUSIVE, UNLESS WAIVED BY LENDER IN WRITING WITH RESPECT TO ANY ACTION OR PROCEEDING BROUGHT BY SUCH GUARANTOR AGAINST LENDER.  EACH GUARANTOR
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.  NOTHING HEREIN SHALL AFFECT THE RIGHT OF LENDER TO BRING PROCEEDINGS AGAINST ANY GUARANTOR IN THE COURTS OF ANY OTHER JURISDICTION. 

(b)       EACH GUARANTOR HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, CLAIM, SUIT, PROCEEDING OR OTHER LITIGATION (EACH A “CLAIM”) BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS GUARANTY.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER ENTERING INTO THIS AGREEMENT.

 

7.

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(c)
       If the waiver of jury trial set forth in Section 15(b) is deemed ineffective or unenforceable, the parties agree that all Claims shall be resolved by reference to a private judge sitting without a jury, pursuant to California Code of Civil Procedure Section 638, before a mutually acceptable referee or, if the parties cannot agree, a referee selected by the Presiding Judge of Los Angeles County, California.  Such proceeding shall be conducted in Los Angeles County, California, with California rules of evidence and discovery applicable to such proceeding.  In the event Claims are to be resolved by judicial reference, any party may seek from a court identified in this paragraph any prejudgment order, writ or other relief and have such
prejudgment order, writ or other relief enforced to the fullest extent permitted by law notwithstanding that all Claims are otherwise subject to resolution by judicial reference.

16.       Married Persons.  Any married person who signs this Guaranty as a Guarantor hereby expressly agrees that recourse may be had against his or her separate and community property for all his or her obligations under this Guaranty.

17.       Joint and Several Liability.  The obligations of all persons signing this Guaranty shall be joint and several.

 

(Remainder of page intentionally left blank; signature page follows)

8.

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IN WITNESS WHEREOF, each Guarantor has executed and delivered this Guaranty, as of the date first above written.

JEROME F. SNYDER

 /s/ Jerome F. Snyder                                       

Address:

8628 Scarsdale Drive

Las Vegas, NV 89117

Fax: (702) 939-0460

Email: jerome@keyon.com

 

JONATHAN SNYDER
 

 /s/ Jonathan  Snyder                                       

Address:

3051 Traverse Creek Lane

Las Vegas, NV 89135

Fax: (702) 949-3579

Email: jon.snyder@keyon.com

 

BARRY W. BECKER
 

 /s/ Barry W. Becker                                       

Address:

50 South Jones #101

Las Vegas, NV 89107-2673

Fax: (702) 870-4976

Email: barrybecker@beckerrealty.net

Signature Page to Guaranty

sf-2795824  

 

        

        

        

SCHEDULE 1

TO GUARANTY

Address of Lender

 

The California Capital Limited Partnership

149 S. Barrington Avenue, Suite 311

Los Angeles, CA 90049

Attention:  General Partner

 

 

Schedule 1

sf-2795824

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