Exhibit 4.4
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of March 15, 2005 (this "Agreement"),
among Knobias, Inc., a Delaware corporation (the "Company" or the "Debtor") and
the holder or holders of the Company's 12% Senior Subordinated Secured Notes due
September 1, 2006 in the aggregate principal amount of up to $550,000 (the
"Notes"), signatory hereto, their endorsees, transferees and assigns
(collectively referred to as, the "Secured Parties").
W I T N E S S E T H:
WHEREAS, pursuant to the Notes, the Secured Parties have severally
agreed to extend the loans to the Company evidenced by the Notes;
WHEREAS, the Notes are being exchanged for the Company's 12% Senior
Subordinated Notes due June 15, 2005; and
WHEREAS, in order to induce the Secured Parties to extend the loans
evidenced by the Notes, the Debtor has agreed to execute and deliver to the
Secured Parties this Agreement and to grant the Secured Parties, pari passu with
each other Secured Party, but subject to the liens granted to the holders of the
8% Secured Convertible Notes of the Company due November 1, 2006 (the "8%
Convertible Notes") a second priority perfected security interest in certain
property of such Debtor to secure the prompt payment, performance and discharge
in full of all of the Company's obligations under the Notes.
NOW, THEREFORE, in consideration of the agreements herein contained and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto hereby agree as follows:
1. Certain Definitions. As used in this Agreement, the following terms
shall have the meanings set forth in this Section 1. Terms used but not
otherwise defined in this Agreement that are defined in Article 9 of the UCC
(such as "account", "chattel paper", "commercial tort claim", "deposit account",
"document", "equipment", "fixtures", "general intangibles", "goods",
"instruments", "inventory", "investment property", "letter-of-credit rights",
"proceeds" and "supporting obligations") shall have the respective meanings
given such terms in Article 9 of the UCC.
(a) "Collateral" means the collateral in which the Secured
Parties are granted a security interest by this Agreement and which
shall include the following personal property of the Debtors, whether
presently owned or existing or hereafter acquired or coming into
existence, wherever situated, and all additions and accessions thereto
and all substitutions and replacements thereof, and all proceeds,
products and accounts thereof, including, without limitation, all
proceeds from the sale or transfer of the Collateral and of insurance
covering the same and of any tort claims in connection therewith, and
all dividends, interest, cash, notes, securities, equity interest or
other property at any time and from time to time acquired, receivable
or otherwise distributed in respect of, or in exchange for, any or all
of the Pledged Securities (as defined below):
(i) All goods, including, without limitations, (A)
all machinery, equipment, computers, motor vehicles, trucks,
tanks, boats, ships, appliances, furniture, special and
general tools, fixtures, test and quality control devices and
other equipment of every kind and nature and wherever
situated, together with all documents of title and documents
representing the same, all additions and accessions thereto,
replacements therefor, all parts therefor, and all substitutes
for any of the foregoing and all other items used and useful
in connection with any Debtor's businesses and all
improvements thereto; and (B) all inventory;
(ii) All contract rights and other general
intangibles, including, without limitation, all partnership
interests, membership interests, stock or other securities,
rights under any of the Organizational Documents, agreements
related to the Pledged Securities, licenses, distribution and
other agreements, computer software (whether "off-the-shelf",
licensed from any third party or developed by any Debtor),
computer software development rights, leases, franchises,
customer lists, quality control procedures, grants and rights,
goodwill, trademarks, service marks, trade styles, trade
names, patents, patent applications, copyrights, Intellectual
Property, and income tax refunds;
(iii) All accounts, together with all instruments,
all documents of title representing any of the foregoing, all
rights in any merchandising, goods, equipment, motor vehicles
and trucks which any of the same may represent, and all right,
title, security and guaranties with respect to each account,
including any right of stoppage in transit;
(iv) All documents, letter-of-credit rights,
instruments and chattel paper;
(v) All commercial tort claims;
(vi) All deposit accounts and all cash (whether or
not deposited in such deposit accounts);
(vii) All investment property;
(viii) All supporting obligations; and
(ix) All files, records, books of account, business
papers, and computer programs; and
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(x) the products and proceeds of all of the foregoing
Collateral set forth in clauses (i)-(ix) above.
Without limiting the generality of the foregoing, the
"Collateral" shall include all investment property and general
intangibles respecting ownership and/or other equity interests
in each Subsidiary, including, without limitation, the shares
of capital stock and the other equity interests listed on
Schedule H hereto (as the same may be modified from time to
time pursuant to the terms hereof), and any other shares of
capital stock and/or other equity interests of any other
direct or indirect subsidiary of any Debtor obtained in the
future, and, in each case, all certificates representing such
shares and/or equity interests and, in each case, all rights,
options, warrants, stock, other securities and/or equity
interests that may hereafter be received, receivable or
distributed in respect of, or exchanged for, any of the
foregoing (all of the foregoing being referred to herein as
the "Pledged Securities") and all rights arising under or in
connection with the Pledged Securities, including, but not
limited to, all dividends, interest and cash.
Notwithstanding the foregoing, nothing herein shall
be deemed to constitute an assignment of any asset which, in
the event of an assignment, becomes void by operation of
applicable law or the assignment of which is otherwise
prohibited by applicable law (in each case to the extent that
such applicable law is not overridden by Sections 9-406, 9-407
and/or 9-408 of the UCC or other similar applicable law);
provided, however, that to the extent permitted by applicable
law, this Agreement shall create a valid security interest in
such asset and, to the extent permitted by applicable law,
this Agreement shall create a valid security interest in the
proceeds of such asset.
(b) "Intellectual Property" means the collective reference to
all rights, priorities and privileges relating to intellectual
property, whether arising under United States, multinational or foreign
laws or otherwise, including, without limitation, (i) all copyrights
arising under the laws of the United States, any other country or any
political subdivision thereof, whether registered or unregistered and
whether published or unpublished, all registrations and recordings
thereof, and all applications in connection therewith, including,
without limitation, all registrations, recordings and applications in
the United States Copyright Office, (ii) all letters patent of the
United States, any other country or any political subdivision thereof,
all reissues and extensions thereof, and all applications for letters
patent of the United States or any other country and all divisions,
continuations and continuations-in-part thereof, (iii) all trademarks,
trade names, corporate names, company names, business names, fictitious
business names, trade dress, service marks, logos, domain names and
other source or business identifiers, and all goodwill associated
therewith, now existing or hereafter adopted or acquired, all
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registrations and recordings thereof, and all applications in
connection therewith, whether in the United States Patent and Trademark
Office or in any similar office or agency of the United States, any
State thereof or any other country or any political subdivision
thereof, or otherwise, and all common law rights related thereto, (iv)
all trade secrets arising under the laws of the United States, any
other country or any political subdivision thereof, (v) all rights to
obtain any reissues, renewals or extensions of the foregoing, (vi) all
licenses for any of the foregoing, and (vii) all causes of action for
infringement of the foregoing.
(c) "Majority in Interest" shall mean, at any time of
determination, the majority in interest (based on then-outstanding
principal amounts of Notes at the time of such determination) of the
Secured Parties.
(d) "Necessary Endorsement" shall mean undated stock powers endorsed in
blank or other proper instruments of assignment duly executed and such
other instruments or documents as the Secured Parties may reasonably
request.
(e) "Obligations" means all of the Debtors' obligations under
this Agreement, the Notes and any other instruments, agreements or
other documents executed and/or delivered in connection herewith or
therewith, in each case, whether now or hereafter existing, voluntary
or involuntary, direct or indirect, absolute or contingent, liquidated
or unliquidated, whether or not jointly owed with others, and whether
or not from time to time decreased or extinguished and later increased,
created or incurred, and all or any portion of such obligations or
liabilities that are paid, to the extent all or any part of such
payment is avoided or recovered directly or indirectly from any of the
Secured Parties as a preference, fraudulent transfer or otherwise as
such obligations may be amended, supplemented, converted, extended or
modified from time to time. Without limiting the generality of the
foregoing, the term "Obligations" shall include, without limitation:
(i) principal of, and interest on the Notes and the loans extended
pursuant thereto; (ii) any and all other fees, indemnities, costs,
obligations and liabilities of the Debtors from time to time under or
in connection with this Agreement, the Notes and any other instruments,
agreements or other documents executed and/or delivered in connection
herewith or therewith; and (iii) all amounts (including but not limited
to post-petition interest) in respect of the foregoing that would be
payable but for the fact that the obligations to pay such amounts are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving any Debtor.
(f) "Organizational Documents" means with respect to any
Debtor, the documents by which such Debtor was organized (such as a
certificate of incorporation, certificate of limited partnership or
articles of organization, and including, without limitation, any
certificates of designation for preferred stock or other forms of
preferred equity) and which relate to the internal governance of such
Debtor (such as bylaws, a partnership agreement or an operating,
limited liability or members agreement).
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(g) "UCC" means the Uniform Commercial Code of the State of
New York and or any other applicable law of any state or states which
has jurisdiction with respect to all, or any portion of, the Collateral
or this Agreement, from time to time. It is the intent of the parties
that defined terms in the UCC should be construed in their broadest
sense so that the term "Collateral" will be construed in its broadest
sense. Accordingly if there are, from time to time, changes to defined
terms in the UCC that broaden the definitions, they are incorporated
herein and if existing definitions in the UCC are broader than the
amended definitions, the existing ones shall be controlling.
2. Grant of Perfected Security Interest. As an inducement for the
Secured Parties to extend the loans as evidenced by the Notes and to secure the
complete and timely payment, performance and discharge in full, as the case may
be, of all of the Obligations, the Debtor hereby unconditionally and irrevocably
pledges, grants and hypothecates to the Secured Parties a continuing and
perfected security interest in and to, a lien upon and a right of set-off
against all of their respective right, title and interest of whatsoever kind and
nature in and to, the Collateral, all subject to the first priority lien granted
as security for the 8% Convertible Notes (the "Security Interest").
3. Delivery of Certain Collateral. Subject to the liens granted to the
secured parties in connection with the 8% Convertible Notes (and action taken by
the Debtor to perfect such liens), contemporaneously or prior to the execution
of this Agreement, the Debtor shall deliver or cause to be delivered to the
Secured Parties (a) any and all certificates and other instruments representing
or evidencing the Pledged Securities, and (b) any and all certificates and other
instruments or documents representing any of the other Collateral, in each case,
together with all Necessary Endorsements. The Debtors are, contemporaneously
with the execution hereof, delivering to the Secured Parties, or have previously
delivered to the Secured Parties, a true and correct copy of each Organizational
Document governing any of the Pledged Securities.
4. Representations, Warranties, Covenants and Agreements of the
Debtors. The Debtor represents and warrants to, and covenants and agrees with,
the Secured Parties as follows:
(a) The Debtor has the requisite corporate, partnership,
limited liability company or other power and authority to enter into
this Agreement and otherwise to carry out its obligations hereunder.
The execution, delivery and performance by the Debtor of this Agreement
and the filings contemplated therein have been duly authorized by all
necessary action on the part of such Debtor and no further action is
required by such Debtor. This Agreement has been duly executed by the
Debtor. This Agreement constitutes the legal, valid and binding
obligation of the Debtor, enforceable against the Debtor in accordance
with its terms except as such enforceability may be limited by
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applicable bankruptcy, insolvency, reorganization and similar laws of
general application relating to or affecting the rights and remedies of
creditors and by general principles of equity.
(b) The Debtors have no place of business or offices where
their respective books of account and records are kept (other than
temporarily at the offices of its attorneys or accountants) or places
where Collateral is stored or located, except as set forth on Schedule
A attached hereto. Except as specifically set forth on Schedule A, the
Debtor is the record owner of the real property where such Collateral
is located, and there exist no mortgages or other liens on any such
real property. Except as disclosed on Schedule A, none of such
Collateral is in the possession of any consignee, bailee, warehouseman,
agent or processor.
(c) Except as set forth on Schedule B attached hereto, the
Debtors are the sole owner of the Collateral (except for non-exclusive
licenses granted by any Debtor in the ordinary course of business),
free and clear of any liens, security interests, encumbrances, rights
or claims, and are fully authorized to grant the Security Interest.
Other than those filings made in connection with the 8% Convertible
Notes, there is not on file in any governmental or regulatory
authority, agency or recording office an effective financing statement,
security agreement, license or transfer or any notice of any of the
foregoing (other than those that will be filed in favor of the Secured
Parties pursuant to this Agreement) covering or affecting any of the
Collateral. So long as this Agreement shall be in effect, the Debtors
shall not execute and shall not knowingly permit to be on file (other
than those on file to evidence the liens granted in connection the 8%
Convertible Notes) in any such office or agency any such financing
statement or other document or instrument (except to the extent filed
or recorded in favor of the Secured Parties pursuant to the terms of
this Agreement).
(d) No written claim has been received that any Collateral or
Debtor's use of any Collateral violates the rights of any third party.
There has been no adverse decision to any Debtor's claim of ownership
rights in or exclusive rights to use the Collateral in any jurisdiction
or to any Debtor's right to keep and maintain such Collateral in full
force and effect, and there is no proceeding involving said rights
pending or, to the best knowledge of any Debtor, threatened before any
court, judicial body, administrative or regulatory agency, arbitrator
or other governmental authority.
(e) The Debtor shall at all times maintain its books of
account and records relating to the Collateral at its principal place
of business and its Collateral at the locations set forth on Schedule A
attached hereto and may not relocate such books of account and records
or tangible Collateral unless it delivers to the Secured Parties at
least 30 days prior to such relocation (i) written notice of such
relocation and the new location thereof (which must be within the
United States) and (ii) evidence that appropriate financing statements
under the UCC and other necessary documents have been filed and
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recorded and other steps have been taken to perfect the Security
Interest to create in favor of the Secured Parties a valid, perfected
and continuing perfected second priority lien in the Collateral.
(f) This Agreement creates in favor of the Secured Parties a
valid, security interest in the Collateral, securing the payment and
performance of the Obligations. Upon making the filings described in
the immediately following paragraph, all security interests created
hereunder in any Collateral which may be perfected by filing Uniform
Commercial Code financing statements shall have been duly perfected.
Except for the filing of the Uniform Commercial Code financing
statements referred to in the immediately following paragraph, the
recordation of the Intellectual Property Security Agreement (as defined
below) with respect to copyrights and copyright applications in the
United States Copyright Office referred to in paragraph (p), the
execution and delivery of deposit account control agreements satisfying
the requirements of Section 9-104(a)(2) of the UCC with respect to each
deposit account of the Debtors, and the delivery of the certificates
and other instruments provided in Section 3, no action is necessary to
create, perfect or protect the security interests created hereunder.
Without limiting the generality of the foregoing, except for the filing
of said financing statements, the recordation of said Intellectual
Property Security Agreement, and the execution and delivery of said
deposit account control agreements, no consent of any third parties and
no authorization, approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required
for (i) the execution, delivery and performance of this Agreement, (ii)
the creation or perfection of the Security Interests created hereunder
in the Collateral or (iii) the enforcement of the rights of the Secured
Parties hereunder.
(g) The Debtor hereby authorizes the Secured Parties, or any
of them, to file one or more financing statements under the UCC, with
respect to the Security Interest with the proper filing and recording
agencies in any jurisdiction deemed proper by them.
(h) The execution, delivery and performance of this Agreement
by the Debtors does not (i) violate any of the provisions of any
Organizational Documents of any Debtor or any judgment, decree, order
or award of any court, governmental body or arbitrator or any
applicable law, rule or regulation applicable to any Debtor or (ii)
conflict with, or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation
(with or without notice, lapse of time or both) of, any agreement,
credit facility, debt or other instrument (evidencing any Debtor's debt
or otherwise) or other understanding to which any Debtor is a party or
by which any property or asset of any Debtor is bound or affected. No
consent (including, without limitation, from stockholders or creditors
of any Debtor) is required for any Debtor to enter into and perform its
obligations hereunder, other than consents that have already been
received.
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(i) The capital stock and other equity interests listed on
Schedule H hereto represent all capital stock and other equity
interests owned, directly or indirectly, by the Company. All of the
Pledged Securities are validly issued, fully paid and nonassessable,
and the Company is the legal and beneficial owner of the Pledged
Securities, free and clear of any lien, security interest or other
encumbrance except for the security interests created by this Agreement
and the prior security interest related to the 8% Convertible Notes
which is senior to the security interest created hereunder.
(j) The ownership and other equity interests in partnerships
and limited liability companies (if any) included in the Collateral
(the "Pledged Interests") by their express terms do not provide that
they are securities governed by Article 8 of the UCC and are not held
in a securities account or by any financial intermediary.
(k) The Debtor shall at all times maintain the liens and
Security Interest provided for hereunder as valid and perfected second
priority liens and security interests in the Collateral in favor of the
Secured Parties until this Agreement and the Security Interest
hereunder shall be terminated pursuant to Section 11 hereof. The Debtor
hereby agrees to defend the same against the claims of any and all
persons and entities. The Debtor shall safeguard and protect all
Collateral for the account of the Secured Parties. At the request of
the Secured Parties, the Debtor will sign and deliver to the Secured
Parties at any time or from time to time one or more financing
statements pursuant to the UCC in form reasonably satisfactory to the
Secured Parties and will pay the cost of filing the same in all public
offices wherever filing is, or is deemed by the Secured Parties to be,
necessary or desirable to effect the rights and obligations provided
for herein. Without limiting the generality of the foregoing, the
Debtor shall pay all fees, taxes and other amounts necessary to
maintain the Collateral and the Security Interest hereunder, and the
Debtor shall obtain and furnish to the Secured Parties from time to
time, upon demand, such releases and/or subordinations of claims and
liens which may be required to maintain the priority of the Security
Interest hereunder.
(l) No Debtor will transfer, pledge, hypothecate, encumber,
license, sell or otherwise dispose of any of the Collateral (except for
non-exclusive licenses granted by a Debtor in its ordinary course of
business and sales of inventory by a Debtor in its ordinary course of
business) without the prior written consent of a Majority in Interest.
(m) The Debtor shall keep and preserve its equipment,
inventory and other tangible Collateral in good condition, repair and
order and shall not operate or locate any such Collateral (or cause to
be operated or located) in any area excluded from insurance coverage.
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(n) The Debtor shall maintain with financially sound and
reputable insurers, insurance with respect to the Collateral against
loss or damage of the kinds and in the amounts customarily insured
against by entities of established reputation having similar properties
similarly situated and in such amounts as are customarily carried under
similar circumstances by other such entities and otherwise as is
prudent for entities engaged in similar businesses but in any event
sufficient to cover the full replacement cost thereof. The Debtor shall
cause each insurance policy issued in connection herewith to provide,
and the insurer issuing such policy to certify to the Secured Parties
that (a) the Secured Parties will be named as lender loss payees and
additional insured under each such insurance policy; (b) if such
insurance be proposed to be cancelled or materially changed for any
reason whatsoever, such insurer will promptly notify the Secured
Parties and such cancellation or change shall not be effective as to
the Secured Parties for at least thirty (30) days after receipt by the
Secured Parties of such notice, unless the effect of such change is to
extend or increase coverage under the policy; and (c) the Secured
Parties will have the right (but no obligation) at its election to
remedy any default in the payment of premiums within thirty (30) days
of notice from the insurer of such default. If no Event of Default (as
defined in the Debenture) exists and if the proceeds arising out of any
claim or series of related claims do not exceed $50,000, loss payments
in each instance will be applied by the applicable Debtor to the repair
and/or replacement of property with respect to which the loss was
incurred to the extent reasonably feasible, and any loss payments or
the balance thereof remaining, to the extent not so applied, shall be
payable to the applicable Debtor, provided, however, that payments
received by any Debtor after an Event of Default occurs and is
continuing or in excess of $50,000 for any occurrence or series of
related occurrences shall be paid to the Secured Parties and, if
received by such Debtor, shall be held in trust for and immediately
paid over to the Secured Parties unless otherwise directed in writing
by the Secured Parties. Copies of such policies or the related
certificates, in each case, naming the Secured Parties as lender loss
payee and additional insured shall be delivered to the Secured Parties
at least annually and at the time any new policy of insurance is
issued.
(o) The Debtor shall, within ten (10) days of obtaining
knowledge thereof, advise the Secured Parties promptly, in sufficient
detail, of any substantial change in the Collateral, and of the
occurrence of any event which would have a material adverse effect on
the value of the Collateral or on the Secured Parties' security
interest therein.
(p) The Debtor shall promptly execute and deliver to the
Secured Parties such further deeds, mortgages, assignments, security
agreements, financing statements or other instruments, documents,
certificates and assurances and take such further action as the Secured
Parties may from time to time request and may in its sole discretion
deem necessary to perfect, protect or enforce its security interest in
the Collateral including, without limitation, if applicable, the
execution and delivery of a separate security agreement with respect to
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the Debtor's Intellectual Property ("Intellectual Property Security
Agreement") in which the Secured Parties have been granted a security
interest hereunder, substantially in a form acceptable to the Secured
Parties, which Intellectual Property Security Agreement, other than as
stated therein, shall be subject to all of the terms and conditions
hereof.
(q) The Debtor shall permit the Secured Parties and their
representatives and agents to inspect the Collateral at any time, and
to make copies of records pertaining to the Collateral as may be
requested by a Secured Party from time to time.
(r) The Debtor shall take all steps reasonably necessary to
diligently pursue and seek to preserve, enforce and collect any rights,
claims, causes of action and accounts receivable in respect of the
Collateral.
(s) The Debtor shall promptly notify the Secured Parties in
sufficient detail upon becoming aware of any attachment, garnishment,
execution or other legal process levied against any Collateral and of
any other information received by such Debtor that may materially
affect the value of the Collateral, the Security Interest or the rights
and remedies of the Secured Parties hereunder.
(t) All information heretofore, herein or hereafter supplied
to the Secured Parties by or on behalf of any Debtor with respect to
the Collateral is accurate and complete in all material respects as of
the date furnished.
(u) The Debtor shall at all times preserve and keep in full
force and effect their respective valid existence and good standing and
any rights and franchises material to its business.
(v) No Debtor will change its name, type of organization,
jurisdiction of organization, organizational identification number (if
it has one), legal or corporate structure, or identity, or add any new
fictitious name unless it provides at least 30 days prior written
notice to the Secured Parties of such change and, at the time of such
written notification, such Debtor provides any financing statements or
fixture filings necessary to perfect and continue perfected the
perfected Security Interest granted and evidenced by this Agreement.
(w) No Debtor may consign any of its Inventory or sell any of
its Inventory on xxxx and hold, sale or return, sale on approval, or
other conditional terms of sale without the consent of a Majority in
Interest which shall not be unreasonably withheld, except to the extent
such consignment or sale does not exceed 15% of the total value of all
of the Company's finished goods in Inventory.
(x) No Debtor may relocate its chief executive office to a new
location without providing 30 days prior written notification thereof
to the Secured Parties and so long as, at the time of such written
notification, such Debtor provides any financing statements or fixture
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filings necessary to perfect and continue perfected the perfected
security Interest granted and evidenced by this Agreement.
(y) The Debtor was organized and remains organized solely
under the laws of the state set forth next to such Debtor's name in the
first paragraph of this Agreement. Schedule D attached hereto sets
forth the Debtor's organizational identification number or, if any
Debtor does not have one, states that one does not exist.
(z) (i) The actual name of the Debtor is the name set forth in
the preamble above; (ii) no Debtor has any trade names except as set
forth on Schedule E attached hereto; (iii) no Debtor has used any name
other than that stated in the preamble hereto or as set forth on
Schedule E for the preceding five years; and (iv) no entity has merged
into any Debtor or been acquired by any Debtor within the past five
years except as set forth on Schedule E.
(aa) Subject to the liens granted to the secured parties in
connection with the 8% Convertible Notes (and action taken by the
Debtor to perfect such liens), at any time and from time to time that
any Collateral consists of instruments, certificated securities or
other items that require or permit possession by the secured party to
perfect the security interest created hereby, the applicable Debtor
shall deliver such Collateral to the Secured Parties.
(bb) Subject to the liens granted to the secured parties in
connection with the 8% Convertible Notes (and action taken by the
Debtor to perfect such liens), the Debtor, in its capacity as issuer,
hereby agrees to comply with any and all orders and instructions of the
Secured Parties regarding the Pledged Interests consistent with the
terms of this Agreement without the further consent of any Debtor as
contemplated by Section 8-106 (or any successor section) of the UCC.
Further, the Debtor agrees that it shall not enter into a similar
agreement (or one that would confer "control" within the meaning of
Article 8 of the UCC) with any other person or entity.
(cc) Subject to the liens granted to the secured parties in
connection with the 8% Convertible Notes (and action taken by the
Debtor to perfect such liens), the Debtor shall cause all tangible
chattel paper constituting Collateral to be delivered to the Secured
Parties, or, if such delivery is not possible, then to cause such
tangible chattel paper to contain a legend noting that it is subject to
the security interest created by this Agreement. To the extent that any
Collateral consists of electronic chattel paper, the applicable Debtor
shall cause the underlying chattel paper to be "marked" within the
meaning of Section 9-105 of the UCC (or successor section thereto).
(dd) If there is any investment property or deposit account
included as Collateral that can be perfected by "control" through an
account control agreement, the applicable Debtor shall cause such an
account control agreement, in form and substance in each case
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satisfactory to the Secured Parties, to be entered into and delivered
to the Secured Parties.
(ee) To the extent that any Collateral consists of
letter-of-credit rights, the applicable Debtor shall cause the issuer
of each underlying letter of credit to consent to an assignment of the
proceeds thereof to the Secured Parties.
(ff) To the extent that any Collateral is in the possession of
any third party, the applicable Debtor shall join with the Secured
Parties in notifying such third party of the Secured Parties' security
interest in such Collateral and shall use its best efforts to obtain an
acknowledgement and agreement from such third party with respect to the
Collateral, in form and substance satisfactory to the Secured Parties.
(gg) If any Debtor shall at any time hold or acquire a
commercial tort claim, such Debtor shall promptly notify the Secured
Parties in a writing signed by such Debtor of the particulars thereof
and grant to the Secured Parties in such writing a security interest
therein and in the proceeds thereof, all upon the terms of this
Agreement, with such writing to be in form and substance satisfactory
to the Secured Parties.
(hh) The Debtor shall immediately provide written notice to
the Secured Parties of any and all accounts which arise out of
contracts with any governmental authority and, to the extent necessary
to perfect or continue the perfected status of the Security Interest in
such accounts and proceeds thereof, shall execute and deliver to the
Secured Parties an assignment of claims for such accounts and cooperate
with the Secured Parties in taking any other steps required, in their
judgment, under the Federal Assignment of Claims Act or any similar
federal, state or local statute or rule to perfect or continue the
perfected status of the Security Interest in such accounts and proceeds
thereof.
(ii) Intentionally Omitted.
(jj) The Debtor shall vote the Pledged Securities to comply
with the covenants and agreements set forth herein and in the Notes.
(kk) The Debtor shall register the pledge of the applicable
Pledged Securities on the books of such Debtor. The Debtor shall notify
each issuer of Pledged Securities to register the pledge of the
applicable Pledged Securities in the name of the Secured Parties on the
books of such issuer. Further, except with respect to certificated
securities delivered to the Secured Parties, if any, the applicable
Debtor shall deliver to Secured Parties an acknowledgement of pledge
(which, where appropriate, shall comply with the requirements of the
relevant UCC with respect to perfection by registration) signed by the
issuer of the applicable Pledged Securities, which acknowledgement
shall confirm that: (a) it has registered the pledge on its books and
12
records; and (b) at any time directed by Secured Parties during the
continuation of an Event of Default, subject to the action taken by the
secured parties in connection with the 8% Convertible Notes, such
issuer will transfer the record ownership of such Pledged Securities
into the name of any designee of Secured Parties, will take such steps
as may be necessary to effect the transfer, and will comply with all
other instructions of Secured Parties regarding such Pledged Securities
without the further consent of the applicable Debtor.
(ll) In the event that, upon an occurrence of an Event of
Default and subject to the action of the secured parties in connection
with the 8% Convertible Notes, the Secured Parties shall sell all or
any of the Pledged Securities to another party or parties (herein
called the "Transferee") or shall purchase or retain all or any of the
Pledged Securities, the Debtor shall, to the extent applicable: (i)
deliver to the Secured Parties or the Transferee, as the case may be,
the articles of incorporation, bylaws, minute books, stock certificate
books, corporate seals, deeds, leases, indentures, agreements,
evidences of indebtedness, books of account, financial records and all
other Organizational Documents and records of the Debtor and their
direct and indirect subsidiaries; (ii) use its best efforts to obtain
resignations of the persons then serving as officers and directors of
the Debtor and their direct and indirect subsidiaries, if so requested;
and (iii) use its best efforts to obtain any approvals that are
required by any governmental or regulatory body in order to permit the
sale of the Pledged Securities to the Transferee or the purchase or
retention of the Pledged Securities by the Secured Parties and allow
the Transferee or the Secured Parties to continue the business of the
Debtor and their direct and indirect subsidiaries.
(mm) Without limiting the generality of the other obligations
of the Debtor hereunder, the Debtor shall promptly (i) cause to be
registered at the United States Copyright Office all of its material
copyrights, (ii) cause the security interest contemplated hereby with
respect to all Intellectual Property registered at the United States
Copyright Office or United States Patent and Trademark Office to be
duly recorded at the applicable office, and (iii) give the Secured
Parties notice whenever it acquires (whether absolutely or by license)
or creates any additional material Intellectual Property.
(nn) The Debtor will from time to time, at the joint and
several expense of the Debtor, promptly execute and deliver all such
further instruments and documents, and take all such further action as
may be necessary or desirable, or as the Secured Parties may reasonably
request, in order to perfect and protect any security interest granted
or purported to be granted hereby or to enable the Secured Parties to
exercise and enforce their rights and remedies hereunder and with
respect to any Collateral or to otherwise carry out the purposes of
this Agreement.
(oo) Schedule F attached hereto lists all of the patents,
patent applications, trademarks, trademark applications, registered
copyrights, and domain names owned by the Debtor as of the date hereof.
Schedule F lists all material licenses in favor of any Debtor for the
13
use of any patents, trademarks, copyrights and domain names as of the
date hereof. All material patents and trademarks of the Debtor have
been duly recorded at the United States Patent and Trademark Office and
all material copyrights of the Debtor have been duly recorded at the
United States Copyright Office.
(pp) Except as set forth on Schedule G attached hereto, none
of the account debtors or other persons or entities obligated on any of
the Collateral is a governmental authority covered by the Federal
Assignment of Claims Act or any similar federal, state or local statute
or rule in respect of such Collateral.
5. Effect of Pledge on Certain Rights. If any of the Collateral subject
to this Agreement consists of nonvoting equity or ownership interests
(regardless of class, designation, preference or rights) that may be converted
into voting equity or ownership interests upon the occurrence of certain events
(including, without limitation, upon the transfer of all or any of the other
stock or assets of the issuer), it is agreed that the pledge of such equity or
ownership interests pursuant to this Agreement or the enforcement of any of the
Secured Parties' rights hereunder shall not be deemed to be the type of event
which would trigger such conversion rights notwithstanding any provisions in the
Organizational Documents or agreements to which any Debtor is subject or to
which any Debtor is party.
6. Defaults. The following events shall be "Events of Default":
(a) The occurrence of an Event of Default (as defined in the
Notes) under the Notes;
(b) Any representation or warranty of any Debtor in this
Agreement shall prove to have been incorrect in any material respect
when made;
(c) The failure by any Debtor to observe or perform any of its
obligations hereunder for five (5) days after delivery to such Debtor
of notice of such failure by or on behalf of a Secured Party unless
such default is capable of cure but cannot be cured within such time
frame and such Debtor is using best efforts to cure same in a timely
fashion; or
(d) If any provision of this Agreement shall at any time for
any reason be declared to be null and void, or the validity or
enforceability thereof shall be contested by any Debtor, or a
proceeding shall be commenced by any Debtor, or by any governmental
authority having jurisdiction over any Debtor, seeking to establish the
invalidity or unenforceability thereof, or any Debtor shall deny that
any Debtor has any liability or obligation purported to be created
under this Agreement.
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7. Duty To Hold In Trust.
(a) Upon the occurrence of any Event of Default and at any
time thereafter, the Debtor shall, upon receipt of any revenue, income,
dividend, interest or other sums subject to the Security Interest,
whether payable pursuant to the Notes or otherwise, or of any check,
draft, note, trade acceptance or other instrument evidencing an
obligation to pay any such sum, hold the same in trust for the Secured
Parties and shall forthwith endorse and transfer any such sums or
instruments, or both, to the Secured Parties, pro-rata in proportion to
their initial purchases of Notes for application to the satisfaction of
the Obligations (and if any Debenture is not outstanding, pro-rata in
proportion to the initial purchases of the remaining Notes).
(b) If any Debtor shall become entitled to receive or shall
receive any securities or other property (including, without
limitation, shares of Pledged Securities or instruments representing
Pledged Securities acquired after the date hereof, or any options,
warrants, rights or other similar property or certificates representing
a dividend, or any distribution in connection with any
recapitalization, reclassification or increase or reduction of capital,
or issued in connection with any reorganization of such Debtor or any
of its direct or indirect subsidiaries) in respect of the Pledged
Securities (whether as an addition to, in substitution of, or in
exchange for, such Pledged Securities or otherwise), such Debtor agrees
to (i) accept the same as the agent of the Secured Parties; (ii) hold
the same in trust on behalf of and for the benefit of the Secured
Parties; and (iii) to deliver any and all certificates or instruments
evidencing the same to the Secured Parties on or before the close of
business on the fifth business day following the receipt thereof by
such Debtor, in the exact form received together with the Necessary
Endorsements, to be held by the Secured Parties subject to the terms of
this Agreement as Collateral.
(c) Anything to the contrary notwithstanding, all rights and
powers of the Secured Parties hereunder are subject to the rights and
powers of the secured parties pursuant to the documents executed in
connection with the 8% Convertible Notes.
8. Rights and Remedies Upon Default.
(a) Upon the occurrence of any Event of Default and at any
time thereafter, the Secured Parties, acting through any agent
appointed by them for such purpose, shall have the right to exercise
all of the remedies conferred hereunder and under the Notes, and the
Secured Parties shall have all the rights and remedies of a secured
party under the UCC. Without limitation, the Secured Parties shall have
the following rights and powers, subject to the rights and powers of
the secured parties pursuant to the documents executed in connection
with the 8% Convertible Notes:
(i) The Secured Parties shall have the right to take
possession of the Collateral and, for that purpose, enter,
with the aid and assistance of any person, any premises where
15
the Collateral, or any part thereof, is or may be placed and
remove the same, and the Debtor shall assemble the Collateral
and make it available to the Secured Parties at places which
the Secured Parties shall reasonably select, whether at such
Debtor's premises or elsewhere, and make available to the
Secured Parties, without rent, all of such Debtor's respective
premises and facilities for the purpose of the Secured Parties
taking possession of, removing or putting the Collateral in
saleable or disposable form.
(ii) Upon notice to the Debtor by the Secured
Parties, all rights of the Debtor to exercise the voting and
other consensual rights which it would otherwise be entitled
to exercise and all rights of the Debtor to receive the
dividends and interest which it would otherwise be authorized
to receive and retain, shall cease. Upon such notice, the
Secured Parties shall have the right to receive any interest,
cash dividends or other payments on the Collateral and, at the
option of the Secured Parties, to exercise in the Secured
Parties' discretion all voting rights pertaining thereto.
Without limiting the generality of the foregoing, the Secured
Parties shall have the right (but not the obligation) to
exercise all rights with respect to the Collateral as it were
the sole and absolute owners thereof, including, without
limitation, to vote and/or to exchange, at its sole
discretion, any or all of the Collateral in connection with a
merger, reorganization, consolidation, recapitalization or
other readjustment concerning or involving the Collateral or
any Debtor or any of its direct or indirect subsidiaries.
(iii) The Secured Parties shall have the right to
operate the business of the Debtor using the Collateral and
shall have the right to assign, sell, lease or otherwise
dispose of and deliver all or any part of the Collateral, at
public or private sale or otherwise, either with or without
special conditions or stipulations, for cash or on credit or
for future delivery, in such parcel or parcels and at such
time or times and at such place or places, and upon such terms
and conditions as the Secured Parties may deem commercially
reasonable, all without (except as shall be required by
applicable statute and cannot be waived) advertisement or
demand upon or notice to any Debtor or right of redemption of
a Debtor, which are hereby expressly waived. Upon each such
sale, lease, assignment or other transfer of Collateral, the
Secured Parties may, unless prohibited by applicable law which
cannot be waived, purchase all or any part of the Collateral
being sold, free from and discharged of all trusts, claims,
right of redemption and equities of any Debtor, which are
hereby waived and released.
(iv) The Secured Parties shall have the right (but
not the obligation) to notify any account debtors and any
obligors under instruments or accounts to make payments
16
directly to the Secured Parties and to enforce the Debtor's
rights against such account debtors and obligors.
(v) The Secured Parties may (but are not obligated
to) direct any financial intermediary or any other person or
entity holding any investment property to transfer the same to
the Secured Parties or their designee.
(vi) The Secured Parties may (but are not obligated
to) transfer any or all Intellectual Property registered in
the name of any Debtor at the United States Patent and
Trademark Office and/or Copyright Office into the name of the
Secured Parties or any designee or any purchaser of any
Collateral.
(b) The Secured Parties may comply with any applicable law in
connection with a disposition of Collateral and such compliance will
not be considered adversely to affect the commercial reasonableness of
any sale of the Collateral. The Secured Parties may sell the Collateral
without giving any warranties and may specifically disclaim such
warranties. If the Secured Parties sell any of the Collateral on
credit, the Debtor will only be credited with payments actually made by
the purchaser. In addition, the Debtor waives any and all rights that
it may have to a judicial hearing in advance of the enforcement of any
of the Secured Parties' rights and remedies hereunder, including,
without limitation, its right following an Event of Default to take
immediate possession of the Collateral and to exercise its rights and
remedies with respect thereto.
(c) For the purpose of enabling the Secured Parties to further
exercise rights and remedies under this Section 8 or elsewhere provided
by agreement or applicable law, the Debtor hereby grants to the Secured
Parties an irrevocable, nonexclusive license (exercisable without
payment of royalty or other compensation to such Debtor) to use,
license or sublicense following an Event of Default, any Intellectual
Property now owned or hereafter acquired by such Debtor, and wherever
the same may be located, and including in such license access to all
media in which any of the licensed items may be recorded or stored and
to all computer software and programs used for the compilation or
printout thereof.
9. Applications of Proceeds. Subject to the actions and claims of the
secured parties pursuant to the documents executed in connection with the 8%
Convertible Notes, the proceeds of any such sale, lease or other disposition of
the Collateral hereunder shall be applied first, to the expenses of retaking,
holding, storing, processing and preparing for sale, selling, and the like
(including, without limitation, any taxes, fees and other costs incurred in
connection therewith) of the Collateral, to the reasonable attorneys' fees and
expenses incurred by the Secured Parties in enforcing their rights hereunder and
in connection with collecting, storing and disposing of the Collateral, and then
to satisfaction of the Obligations pro rata among the Secured Parties (based on
then-outstanding principal amounts of Notes at the time of any such
determination), and to the payment of any other amounts required by applicable
17
law, after which the Secured Parties shall pay to the applicable Debtor any
surplus proceeds. If, upon the sale, license or other disposition of the
Collateral, the proceeds thereof are insufficient to pay all amounts to which
the Secured Parties are legally entitled, the Debtor will be liable for the
deficiency, together with interest thereon, at the rate of 20% per annum or the
lesser amount permitted by applicable law (the "Default Rate"), and the
reasonable fees of any attorneys employed by the Secured Parties to collect such
deficiency. To the extent permitted by applicable law, the Debtor waives all
claims, damages and demands against the Secured Parties arising out of the
repossession, removal, retention or sale of the Collateral, unless due solely to
the gross negligence or willful misconduct of the Secured Parties as determined
by a final judgment (not subject to further appeal) of a court of competent
jurisdiction.
10. Securities Law Provision. The Debtor recognizes that Secured
Parties may be limited in their ability to effect a sale to the public of all or
part of the Pledged Securities by reason of certain prohibitions in the
Securities Act of 1933, as amended, or other federal or state securities laws
(collectively, the "Securities Laws"), and may be compelled to resort to one or
more sales to a restricted group of purchasers who may be required to agree to
acquire the Pledged Securities for their own account, for investment and not
with a view to the distribution or resale thereof. The Debtor agrees that sales
so made may be at prices and on terms less favorable than if the Pledged
Securities were sold to the public, and that the Secured Parties have no
obligation to delay the sale of any Pledged Securities for the period of time
necessary to register the Pledged Securities for sale to the public under the
Securities Laws. The Debtor shall cooperate with the Secured Parties in their
attempt to satisfy any requirements under the Securities Laws (including,
without limitation, registration thereunder if requested by the Secured Parties)
applicable to the sale of the Pledged Securities by the Secured Parties.
11. Costs and Expenses. The Debtor agrees to pay all reasonable
out-of-pocket fees, costs and expenses incurred in connection with any filing
required hereunder, including without limitation, any financing statements
pursuant to the UCC, continuation statements, partial releases and/or
termination statements related thereto or any expenses of any searches
reasonably required by the Secured Parties. The Debtor shall also pay all other
claims and charges which in the reasonable opinion of the Secured Parties might
prejudice, imperil or otherwise affect the Collateral or the Security Interest
therein. The Debtor will also, upon demand, pay to the Secured Parties the
amount of any and all reasonable expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, which the Secured Parties
may incur in connection with (i) the enforcement of this Agreement, (ii) the
custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, or (iii) the exercise or enforcement of
any of the rights of the Secured Parties under the Notes. Until so paid, any
fees payable hereunder shall be added to the principal amount of the Notes and
shall bear interest at the Default Rate.
12. Responsibility for Collateral. The Debtor assumes all liabilities
and responsibility in connection with all Collateral, and the Obligations shall
in no way be affected or diminished by reason of the loss, destruction, damage
or theft of any of the Collateral or its unavailability for any reason. Without
18
limiting the generality of the foregoing, (a) no Secured Party (i) has any duty
(either before or after an Event of Default) to collect any amounts in respect
of the Collateral or to preserve any rights relating to the Collateral, or (ii)
has any obligation to clean-up or otherwise prepare the Collateral for sale, and
(b) the Debtor shall remain obligated and liable under each contract or
agreement included in the Collateral to be observed or performed by such Debtor
thereunder. No Secured Party shall have any obligation or liability under any
such contract or agreement by reason of or arising out of this Agreement or the
receipt by any Secured Party of any payment relating to any of the Collateral,
nor any Secured Party be obligated in any manner to perform any of the
obligations of any Debtor under or pursuant to any such contract or agreement,
to make inquiry as to the nature or sufficiency of any payment received by any
Secured Party in respect of the Collateral or as to the sufficiency of any
performance by any party under any such contract or agreement, to present or
file any claim, to take any action to enforce any performance or to collect the
payment of any amounts which may have been assigned to any Secured Party or to
which any Secured Party may be entitled at any time or times.
13. Security Interest Absolute. All rights of the Secured Parties and
all obligations of the Debtor hereunder, shall be absolute and unconditional,
irrespective of: (a) any lack of validity or enforceability of this Agreement,
the Notes or any agreement entered into in connection with the foregoing, or any
portion hereof or thereof; (b) any change in the time, manner or place of
payment or performance of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of or any consent to any departure
from the Notes or any other agreement entered into in connection with the
foregoing; (c) any exchange, release or nonperfection of any of the Collateral,
or any release or amendment or waiver of or consent to departure from any other
collateral for, or any guaranty, or any other security, for all or any of the
Obligations; (d) any action by the Secured Parties to obtain, adjust, settle and
cancel in its sole discretion any insurance claims or matters made or arising in
connection with the Collateral; or (e) any other circumstance which might
otherwise constitute any legal or equitable defense available to a Debtor, or a
discharge of all or any part of the Security Interest granted hereby. Until the
Obligations shall have been paid and performed in full, the rights of the
Secured Parties shall continue even if the Obligations are barred for any
reason, including, without limitation, the running of the statute of limitations
or bankruptcy. The Debtor expressly waives presentment, protest, notice of
protest, demand, notice of nonpayment and demand for performance. In the event
that at any time any transfer of any Collateral or any payment received by the
Secured Parties hereunder shall be deemed by final order of a court of competent
jurisdiction to have been a voidable preference or fraudulent conveyance under
the bankruptcy or insolvency laws of the United States, or shall be deemed to be
otherwise due to any party other than the Secured Parties, then, in any such
event, the Debtor's obligations hereunder shall survive cancellation of this
Agreement, and shall not be discharged or satisfied by any prior payment thereof
and/or cancellation of this Agreement, but shall remain a valid and binding
obligation enforceable in accordance with the terms and provisions hereof. The
Debtor waives all right to require the Secured Parties to proceed against any
other person or entity or to apply any Collateral which the Secured Parties may
19
hold at any time, or to marshal assets, or to pursue any other remedy. The
Debtor waives any defense arising by reason of the application of the statute of
limitations to any obligation secured hereby.
14. Term of Agreement. This Agreement and the Security Interest shall
terminate on the date on which all payments under the Notes have been
indefeasibly paid in full and all other Obligations have been paid or
discharged; provided, however, that all indemnities of the Debtor contained in
this Agreement shall survive and remain operative and in full force and effect
regardless of the termination of this Agreement.
15. Power of Attorney; Further Assurances.
(a) The Debtor authorizes the Secured Parties, and does
hereby make, constitute and appoint the Secured Parties and their
respective officers, agents, successors or assigns with full power of
substitution, as such Debtor's true and lawful attorney-in-fact, with
power, in the name of the various Secured Parties or such Debtor, to,
after the occurrence and during the continuance of an Event of Default,
(i) endorse any note, checks, drafts, money orders or other instruments
of payment (including payments payable under or in respect of any
policy of insurance) in respect of the Collateral that may come into
possession of the Secured Parties; (ii) to sign and endorse any
financing statement pursuant to the UCC or any invoice, freight or
express xxxx, xxxx of lading, storage or warehouse receipts, drafts
against debtors, assignments, verifications and notices in connection
with accounts, and other documents relating to the Collateral; (iii) to
pay or discharge taxes, liens, security interests or other encumbrances
at any time levied or placed on or threatened against the Collateral;
(iv) to demand, collect, receipt for, compromise, settle and xxx for
monies due in respect of the Collateral; (v) to transfer any
Intellectual Property or provide licenses respecting any Intellectual
Property; and (vi) generally, at the option of the Secured Parties, and
at the expense of the Debtor, at any time, or from time to time, to
execute and deliver any and all documents and instruments and to do all
acts and things which the Secured Parties deem necessary to protect,
preserve and realize upon the Collateral and the Security Interest
granted therein in order to effect the intent of this Agreement and the
Notes all as fully and effectually as the Debtor might or could do; and
the Debtor hereby ratifies all that said attorney shall lawfully do or
cause to be done by virtue hereof. This power of attorney is coupled
with an interest and shall be irrevocable for the term of this
Agreement and thereafter as long as any of the Obligations shall be
outstanding. The designation set forth herein shall be deemed to amend
and supersede any inconsistent provision in the Organizational
Documents or other documents or agreements to which any Debtor is
subject or to which any Debtor is a party. Without limiting the
generality of the foregoing, after the occurrence and during the
continuance of an Event of Default, each Secured Party is specifically
authorized to execute and file any applications for or instruments of
transfer and assignment of any patents, trademarks, copyrights or other
Intellectual Property with the United States Patent and Trademark
Office and the United States Copyright Office.
20
(b) On a continuing basis, the Debtor will make, execute,
acknowledge, deliver, file and record, as the case may be, with the
proper filing and recording agencies in any jurisdiction, including,
without limitation, the jurisdictions indicated on Schedule C attached
hereto, all such instruments, and take all such action as may
reasonably be deemed necessary or advisable, or as reasonably requested
by the Secured Parties, to perfect the Security Interest granted
hereunder and otherwise to carry out the intent and purposes of this
Agreement, or for assuring and confirming to the Secured Parties the
grant or perfection of a perfected security interest in all the
Collateral under the UCC.
(c) The Debtor hereby irrevocably appoints the Secured Parties
as such Debtor's attorney-in-fact, with full authority in the place and
instead of such Debtor and in the name of such Debtor, from time to
time in the Secured Parties' discretion, to take any action and to
execute any instrument which the Secured Parties may deem necessary or
advisable to accomplish the purposes of this Agreement, including the
filing, in its sole discretion, of one or more financing or
continuation statements and amendments thereto, relative to any of the
Collateral without the signature of such Debtor where permitted by law,
which financing statements may (but need not) describe the Collateral
as "all assets" or "all personal property" or words of like import, and
ratifies all such actions taken by the Secured Parties. This power of
attorney is coupled with an interest and shall be irrevocable for the
term of this Agreement and thereafter as long as any of the Obligations
shall be outstanding.
16. Notices. All notices, requests, demands and other communications
hereunder shall be subject to the notice provision of the Purchase Agreement (as
such term is defined in the Notes).
17. Other Security. To the extent that the Obligations are now or
hereafter secured by property other than the Collateral or by the guarantee,
endorsement or property of any other person, firm, corporation or other entity,
then the Secured Parties shall have the right, in its sole discretion, to
pursue, relinquish, subordinate, modify or take any other action with respect
thereto, without in any way modifying or affecting any of the Secured Parties'
rights and remedies hereunder.
18. Intentionally Omitted
19. Miscellaneous.
(a) No course of dealing between the Debtor and the Secured
Parties, nor any failure to exercise, nor any delay in exercising, on
the part of the Secured Parties, any right, power or privilege
hereunder or under the Notes shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege
hereunder or thereunder preclude any other or further exercise thereof
or the exercise of any other right, power or privilege.
21
(b) All of the rights and remedies of the Secured Parties with
respect to the Collateral, whether established hereby or by the Notes
or by any other agreements, instruments or documents or by law shall be
cumulative and may be exercised singly or concurrently.
(c) This Agreement constitutes the entire agreement of the
parties with respect to the subject matter hereof and is intended to
supersede all prior negotiations, understandings and agreements with
respect thereto. Except as specifically set forth in this Agreement, no
provision of this Agreement may be modified or amended except by a
written agreement specifically referring to this Agreement and signed
by the parties hereto.
(d) In the event any provision of this Agreement is held to be
invalid, prohibited or unenforceable in any jurisdiction for any
reason, unless such provision is narrowed by judicial construction,
this Agreement shall, as to such jurisdiction, be construed as if such
invalid, prohibited or unenforceable provision had been more narrowly
drawn so as not to be invalid, prohibited or unenforceable. If,
notwithstanding the foregoing, any provision of this Agreement is held
to be invalid, prohibited or unenforceable in any jurisdiction, such
provision, as to such jurisdiction, shall be ineffective to the extent
of such invalidity, prohibition or unenforceability without
invalidating the remaining portion of such provision or the other
provisions of this Agreement and without affecting the validity or
enforceability of such provision or the other provisions of this
Agreement in any other jurisdiction.
(e) No waiver of any breach or default or any right under this
Agreement shall be considered valid unless in writing and signed by the
party giving such waiver, and no such waiver shall be deemed a waiver
of any subsequent breach or default or right, whether of the same or
similar nature or otherwise.
(f) This Agreement shall be binding upon and inure to the
benefit of each party hereto and its successors and assigns.
(g) Each party shall take such further action and execute and
deliver such further documents as may be necessary or appropriate in
order to carry out the provisions and purposes of this Agreement.
(h) All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by
and construed and enforced in accordance with the internal laws of the
State of New York, without regard to the principles of conflicts of law
thereof. The Debtor agrees that all proceedings concerning the
interpretations, enforcement and defense of the transactions
contemplated by this Agreement and the Notes (whether brought against a
party hereto or its respective affiliates, directors, officers,
shareholders, partners, members, employees or agents) shall be
commenced exclusively in the state and federal courts sitting in the
City of New York, Borough of Manhattan. The Debtor hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts
22
sitting in the City of New York, Borough of Manhattan for the
adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any proceeding, any
claim that it is not personally subject to the jurisdiction of any such
court, that such proceeding is improper. Each party hereto hereby
irrevocably waives personal service of process and consents to process
being served in any such proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it
under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. Each party hereto hereby irrevocably
waives, to the fullest extent permitted by applicable law, any and all
right to trial by jury in any legal proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby. If
any party shall commence a proceeding to enforce any provisions of this
Agreement, then the prevailing party in such proceeding shall be
reimbursed by the other party for its reasonable attorney's fees and
other costs and expenses incurred with the investigation, preparation
and prosecution of such proceeding.
(i) This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an
original and, all of which taken together shall constitute one and the
same Agreement. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile
signature were the original thereof.
(j) Intentionally Omitted.
(k) The Debtor shall indemnify, reimburse and hold harmless
the Secured Parties and their respective partners, members,
shareholders, officers, directors, employees and agents (collectively,
"Indemnitees") from and against any and all losses, claims,
liabilities, damages, penalties, suits, costs and expenses, of any kind
or nature, (including fees relating to the cost of investigating and
defending any of the foregoing) imposed on, incurred by or asserted
against such Indemnitee in any way related to or arising from or
alleged to arise from this Agreement or the Collateral, except any such
losses, claims, liabilities, damages, penalties, suits, costs and
expenses which result from the gross negligence or willful misconduct
of the Indemnitee as determined by a final, nonappealable decision of a
court of competent jurisdiction. This indemnification provision is in
addition to, and not in limitation of, any other indemnification
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provision in the Notes, the Purchase Agreement (as such term is defined
in the Notes) or any other agreement, instrument or other document
executed or delivered in connection herewith or therewith.
(l) Nothing in this Agreement shall be construed to subject
any Secured Party to liability as a partner in any Debtor or any if its
direct or indirect subsidiaries that is a partnership or as a member in
any Debtor or any of its direct or indirect subsidiaries that is a
limited liability company, nor shall any Secured Party be deemed to
have assumed any obligations under any partnership agreement or limited
liability company agreement, as applicable, of any such Debtor or any
if its direct or indirect subsidiaries or otherwise, unless and until
any such Secured Party exercises its right to be substituted for such
Debtor as a partner or member, as applicable, pursuant hereto.
(m) To the extent that the grant of the security interest in
the Collateral and the enforcement of the terms hereof require the
consent, approval or action of any partner or member, as applicable, of
any Debtor or any direct or indirect subsidiary of any Debtor or
compliance with any provisions of any of the Organizational Documents,
the Debtor hereby grants such consent and approval and waives any such
noncompliance with the terms of said documents.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed on the day and year first above written.
KNOBIAS, INC.
/s/ E. KEY XXXXXX
-------------------------
E. Key Xxxxxx, President
[SIGNATURE PAGE OF HOLDERS FOLLOWS]
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[SIGNATURE PAGE OF HOLDERS TO KNOBIAS SA]
Name of Investing Entity: DCOFI Master LDC
------------------------------------------------------
Signature of Authorized Signatory of Investing entity: /s/ XXXXXXX X. XXXX
-------------------------
Name of Authorized Signatory: Xxxxxxx X. Xxxx
--------------------------------------------------
Title of Authorized Signatory: Senior Vice-President
-------------------------------------------------
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