Exhibit 4.3
General Security Agreement
between Comdial Corporation and ComVest Venture Partners, L.P.,
as agent, dated June 21, 2002
THE RIGHTS OF THE SECURED PARTY AND THE INVESTORS UNDER THIS SECURITY AGREEMENT
SHALL BE SUBORDINATED TO THE EXTENT AND IN THE MANNER PROVIDED IN THAT CERTAIN
SUBORDINATION AGREEMENT BETWEEN THE SECURED PARTY, THE INVESTORS AND BANK OF
AMERICA, N.A. (THE "SUBORDINATION AGREEMENT"). THE SECURED PARTY, THE INVESTORS
AND SUBSEQUENT HOLDERS OF THE NOTES (AS DEFINED BELOW), BY ACCEPTANCE THEREOF,
ACKNOWLEDGE AND AGREE TO BE BOUND BY THE SUBORDINATION AGREEMENT.
GENERAL SECURITY AGREEMENT
(Floating Lien)
SECURITY AGREEMENT, dated as of June 21, 2002, between Comdial
Corporation, a Delaware corporation with its principal executive office located
at 000 Xxxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxx 00000 (the "Debtor"), and ComVest
Venture Partners, L. P., a Delaware limited partnership with offices at 000
Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, as agent (the "Agent") for the investors
(the "Investors") from time to time set forth on Annex I hereto (the Agent,
acting in such capacity, the "Secured Party");
W I T N E S S E T H :
WHEREAS, Debtor and the Investors, including the Agent, are parties to
a series of 7% senior subordinated secured promissory notes in the aggregate
principal amount of up to $4,000,000 issued by Debtor from time to time in a
private placement (herein collectively, as at any time amended, extended,
restated, renewed or modified, the "Notes");
WHEREAS, it is a condition to the willingness of the Investors to make
the loan evidenced by the Notes that Debtor enter into this Agreement and grant
to the Secured Party, for the ratable benefit of the Investors, the security
interest provided for herein;
WHEREAS, the term "Notes" shall be deemed to include any promissory
notes issued as payment of interest on the Notes; and
WHEREAS, the Investors have appointed the Agent pursuant to the Agency
Appointment Agreement attached as Exhibit 3 hereto.
NOW, THEREFORE, FOR VALUE RECEIVED, IT IS AGREED:
Section 1. Terms. Unless otherwise defined herein, capitalized terms used in
this Agreement shall have the meaning specified therefor in the Notes. As used
herein the following terms shall have the meanings specified and shall include
in the singular number the plural and in the plural number the singular:
"Assigned Agreements" shall mean all contracts and agreements of Debtor
(other than contracts or agreements which by their terms expressly prohibit the
granting of any Lien (as hereinafter defined) thereon).
"Collateral" means all of Debtor's right, title and interest in and
under or arising out of each and all of the following:
All personal property and fixtures of Debtor of any type or
description, wherever located and now existing or hereafter arising or
acquired, including but not limited to the following:
(i) all of Debtor's goods including, without limitation:
(a) all inventory, including without limitation, equipment held
for lease, whether raw materials, in process or finished, all
material or equipment usable in processing the same and all
documents of title covering any inventory (as such term is
defined in the Uniform Commercial Code, as in effect from time to
time in the State of New York (the "NYUCC")) (all of the
foregoing, "Inventory"), including without limitation that
located at the locations listed on Schedule 1-A annexed hereto;
(b) Except for the equipment subject to liens set forth in
Schedule 1-B hereto (for so long as such lessors and/or lenders
set forth in Schedule 1-B hereto maintain a security interest in
such equipment), all equipment (the "Equipment") employed in
connection with Debtor's business, together with all present and
future additions, attachments and accessions thereto and all
substitutions therefor and replacements thereof, including
without limitation that located at the locations listed on
Schedule 1-A annexed hereto;
(ii) all of Debtor's present and future accounts, accounts receivable,
general intangibles, as such terms are defined in the NYUCC, and all
contracts and contract rights (herein sometimes referred to as
"Receivables"), including but not limited to Debtor's rights
(including rights to payment) under all Assigned Agreements, together
with
(a) all claims, rights, powers or privileges and remedies of
Debtor relating thereto or arising in connection therewith
including, without limitation, all rights of Debtor to make
determinations, to exercise any election (including, but not
limited to, election of remedies) or option or to give or receive
any notice, consent, waiver or approval, together with full power
and authority to demand, receive, enforce, collect or receipt for
any of the foregoing or any property which is the subject of the
Assigned Agreements, to enforce or execute any checks, or other
instruments or orders, to file any claims and to take any action
which (in the opinion of the Secured Party) may be necessary or
advisable in connection with any of the foregoing,
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(b) all liens, security, guaranties, endorsements, warranties
and indemnities and all insurance and claims for insurance
relating thereto or arising in connection therewith,
(c) all rights to property forming the subject matter of the
Receivables including, without limitation, rights to stoppage in
transit and rights to returned or repossessed property,
(d) all writings relating thereto or arising in connection
therewith including without limitation, all notes, contracts,
security agreements, guaranties, chattel paper and other
evidence of indebtedness or security, all powers-of-attorney,
all books, records, ledger cards and invoices, all credit
information, reports or memoranda and all evidence of filings or
registrations relating thereto,
(e) all catalogs, computer and automatic machinery software and
programs, and the like pertaining to operations by Debtor in, on
or about any of its plants or warehouses, all sales data and
other information relating to sales or service of products now
or hereafter manufactured on or about any of its plants, and all
accounting information pertaining to operations in, on or about
any of its plants, and all media in which or on which any of the
information or knowledge or data is stored or contained, and all
computer programs used for the compilation or printout of such
information, knowledge, records or data, and
(f) all accounts, contract rights, general intangibles and other
property rights of any nature whatsoever arising out of or in
connection with the foregoing, including without limitation,
payments due and to become due, whether as repayments,
reimbursements, contractual obligations, indemnities, damages or
otherwise;
(iii) all other personal property of Debtor of any nature whatsoever,
including, without limitation, all accounts, bank accounts, deposits,
credit balances, contract rights, inventory, general intangibles,
goods, equipment, instruments, chattel paper, machinery, furniture,
furnishings, fixtures, tools, supplies, appliances, plans and
drawings, together with all customer and supplier lists and records of
the business, and all property from time to time described in any
financing statement signed by Debtor naming the Agent as secured
party;
(iv) all of Debtor's right, title, and interest in and to any shares
of capital stock of the respective corporations identified on Schedule
1-C hereto (the "Issuers"), represented by the certificates identified
on Schedule 1-C, together with the certificates representing any such
shares, and all other shares of capital stock of whatever class of the
Issuers, now or hereafter owned by Debtor, in each case together with
the certificates evidencing the same (collectively, the "Stock
Collateral");
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(v) All shares, securities, money or property representing a
dividend on any of the Stock Collateral, or representing a
distribution of return of capital upon or in respect of the Stock
Collateral, or resulting from a split-up, revision,
reclassification and other like change of the Stock Collateral or
otherwise received in exchange therefor, and any subscription
warrants, rights or options issued to the holders of, or
otherwise in respect of, the Stock Collateral;
(vi) Without affecting the obligations of Debtor under any
provision prohibiting such action hereunder or under the Notes,
in the event of any consolidation or merger in which an Issuer is
not the surviving corporation, all shares of each class of the
capital stock of the successor corporation formed by or resulting
from such consolidation or merger;
(vii) any and all of Debtor's right, title and interest in its
intellectual property, including, without limitation, (a) each of
the Trademarks (as hereinafter defined) and the goodwill of the
business symbolized by each of the Trademarks, all customer lists
and other records of Debtor relating to the distribution of
products bearing the Trademarks (as hereinafter defined) and each
of the registrations described in Schedule 1-D hereto; (b) each
of the Patents (as hereinafter defined) and each of the
registrations listed on Schedule 1-D hereto; (c) each of the
tradenames listed on Schedule 1-D hereto (the "Tradenames"); (d)
each of the Copyrights (as hereinafter defined) and each of the
applications, registrations and recordings thereof listed on
Schedule 1-D hereto, and all derivative works, extensions or
renewals thereof ; (d) any and all proceeds of the foregoing,
including, without limitation, any claims by Debtor against third
parties for infringement of the Trademarks, the Patents and/or
the Copyrights (collectively, the "Intellectual Property");
(viii) all additions, accessions, replacements, substitutions or
improvements and all products and proceeds including, without
limitation, proceeds of insurance, of any and all of the
Collateral described in clauses (i) through (vii) above; and
(ix) any consideration received from the sale, exchange, lease
or other disposition of any asset or property which constitutes
Collateral, any other value received as a consequence of the
possession of any Collateral and any payment received from any
insurer or other person or entity as a result of the destruction,
loss, theft or other involuntary conversion of whatever nature of
any asset or property that constitutes Collateral.
"Copyrights" mean all copyrights, copyrighted works or any item
which embodies such copyrighted work of the United States or any other country,
all applications therefor, all right, title and interest therein and thereto,
and all registrations and recordings thereof, including, without limitation,
applications, registrations and recordings in the United States Copyright Office
or in any similar office or agency of the United States, and State thereof or
any other country or any political subdivision thereof, and all derivative
works, extensions or renewals thereof.
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"Indebtedness for Borrowed Money" means all secured payment
obligations of Debtor (whether outstanding on the date hereof or hereinafter) to
Bank of America, N.A. ("BOA") or any other bank, insurance company, finance
company or other institutional lender or other entity regularly engaged in the
business of extending credit in the form of borrowed money, provided such entity
is not an affiliate of Debtor.
"Instrument" shall have the meaning specified in Article 3 of the
NYUCC and shall also include any other writing which evidences a right to the
payment of money and is not itself a security agreement or lease and is of a
type which is in the ordinary course of business transferred by delivery with
any necessary endorsement or assignment.
"Lien" means any mortgage, pledge, hypothecation, assignment, security
interest, deposit arrangement, encumbrance (including any easement, right of
way, zoning restriction and the like), lien (statutory or other) or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including any conditional sale or other title retention
agreement, any financing lease involving substantially the same economic effect
as any of the foregoing and the filing of any financing statement under the
NYUCC or comparable law of any jurisdiction).
"Material Adverse Effect" means a material adverse effect on the
financial condition of the Company and its subsidiaries, taken as a whole.
"Patents" mean (i) all letters patent of the United States or any
other country, all right, title and interest therein and thereto, and all
applications, registrations and recordings thereof, including, without
limitation, applications, registrations and recordings in the United States
Patent and Trademark Office or in any similar office or agency of the United
States, any state or province thereof or any other country or any political
subdivision thereof, all whether now owned or hereafter acquired by Debtor,
including, but not limited to, those described in Schedule 1-D hereto, and (ii)
all reissues, continuations, continuations-in-part, extensions or divisionals
thereof and all licenses thereof.
"Permitted Liens" means:
(a) Liens for taxes, assessments or other governmental charges
or levies not at the time delinquent or thereafter payable without
penalty or being contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with
generally accepted accounting principles shall have been set aside
on its books;
(b) Liens of carriers, warehousemen, mechanics, materialmen and
landlords incurred in the ordinary course of business for sums not
overdue or being contested in good faith by appropriate
proceedings and for which adequate reserves shall have been set
aside on its books;
(c) Liens (other than Liens arising under the Employee
Retirement Income Security Act of 1974, as amended, or Section
412(n) of the Internal Revenue Code of 1986, as amended) incurred
in the ordinary course of business in connection with workers'
compensation,
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unemployment insurance or other forms of governmental
insurance or benefits, or to secure performance of tenders,
statutory obligations, leases and contracts (other than for
borrowed money) entered into in the ordinary course of
business or to secure obligations on surety or appeal bonds;
(d) Judgment Liens in existence less than 60 days after the
entry thereof or with respect to which execution has been
stayed;
(e) Ground leases in respect of real property on which
facilities owned or leased by Debtor or any of its
subsidiaries are located;
(f) Easements, rights-of-way, restrictions, minor defects
or irregularities in title and other similar charges or
encumbrances not interfering in any material respect with
the business of Debtor and its subsidiaries taken as a
whole;
(g) Any interest or title of a lessor secured by a lessor's
interest under any lease of real property on which
facilities owned or leased by Debtor or any of its
subsidiaries are located;
(h) Leases or subleases granted to others not interfering
in any material respect with the business of Debtor and its
subsidiaries taken as a whole;
(i) A Lien on any asset securing indebtedness (including
capitalized lease obligations) incurred or assumed for the
purpose of financing the purchase price (including
capitalized lease payments in the nature thereof) of such
asset, provided that such Lien attaches only to the asset
acquired with the proceeds of such indebtedness and attaches
concurrently with or within ten (10) days following the
acquisition thereof;
(j) Liens existing on the date hereof as disclosed on
Schedule 1-E hereto; and
(k) Liens with respect to the Senior Indebtedness.
"Person" means any natural person, corporation, firm,
association, partnership, joint venture, limited liability company, joint-stock
company, trust, unincorporated organization, government, governmental agency or
subdivision, or any other entity, whether acting in an individual, fiduciary or
other capacity.
"Receivables" has the meaning specified therefor in clause
(ii) of the definition of Collateral.
"Secured Obligations" means all obligations of Debtor, whether
for fees, expenses or otherwise, now existing or hereafter arising under this
Agreement and the Notes, including, without limitation, full and prompt payment
and performance of (i) all principal and interest on
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the Notes when and as due, whether at maturity, by acceleration, or otherwise
and (ii) all obligations of Debtor at any time and from time to time under this
Agreement.
"Senior Indebtedness" means, collectively, (a) all
Indebtedness for Borrowed Money (and all renewals, deferrals, extensions,
refundings, amendments, modifications and replacements of any such Indebtedness
for Borrowed Money) and (b) all payment obligations of Debtor pursuant to any
capitalized lease with an entity that is not an affiliate of Debtor, unless by
the terms of the instrument creating or evidencing any such indebtedness it is
expressly provided that such indebtedness is not superior in right of payment to
the Notes.
"Termination Date" means the date on which all the Notes have
been paid in full or converted into securities of Debtor.
"Trademarks" means (i) all trademarks, trade names, trade
styles, service marks, prints and labels on which said trademarks, trade names,
trade styles and service marks have appeared or appear, designs and general
intangibles of like nature, now existing or hereafter adopted or acquired, all
right, title and interest therein and thereto, and all applications,
registrations and recordings thereof, including, without limitation,
applications, registrations and recordings in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
state or province thereof, or any other country or any political subdivision
thereof, all whether now owned or hereafter acquired by Debtor, including, but
not limited to, those described in Schedule 1-D annexed hereto and made a part
hereof, and (ii) all reissues, extensions or renewals thereof and all licenses
thereof.
Section 2. Security Interests; Subordination.
(a) As security for the payment and performance of all Secured
Obligations, and subject to the last sentence of this Xxxxxxx 0, Xxxxxx does
hereby create, grant and assign to the Secured Party, for its own benefit and
for the ratable benefit of the Investors, a continuing security interest in all
of the Collateral, whether now existing or hereafter arising or acquired and
wherever located, subject to the priority, if any, of Permitted Liens (the
"Security Interest"). Without limiting the foregoing, the Secured Party is
hereby authorized to file one or more financing statements, continuation
statements or such other documents, including, without limitation, the
Assignment of Security (Trademarks) attached hereto as Exhibit 1, for the
purpose of perfecting, confirming, continuing, enforcing or protecting the
Security Interest.
(b) The Secured Party hereby acknowledges and agrees that the Security
Interest granted hereunder shall be subordinate and junior to any security
interest granted in connection with any Indebtedness for Borrowed Money, and any
refinancings or replacements thereof. Notwithstanding anything to the contrary
in this Security Agreement and in the Notes, the indebtedness evidenced by the
Notes, and all rights of the Secured Party hereunder, shall be subordinate to
the rights of the Senior Indebtedness. In addition, the Security Interest and
any payment of the principal amount of, accrued interest on, fees and expenses
relating to, and any other indebtedness evidenced by the Notes shall be
subordinated to the extent and in the manner provided in that certain
Subordination Agreement between Investors and BOA (the "Subordination
Agreement").
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Section 3. General Representations, Warranties and Covenants. Debtor
represents, warrants and covenants, which representations, warranties and
covenants shall survive execution and delivery of this Agreement, as follows:
(a) This Agreement is made with full recourse to Debtor and pursuant to
and upon all the warranties, representations, covenants, and agreements on the
part of Debtor contained herein, in the Notes and otherwise made in writing in
connection herewith or therewith.
(b) Except for the Security Interest of the Secured Party therein and
Permitted Liens, Debtor is, and as to Collateral acquired from time to time
after the date hereof Debtor will be, the owner of all the Collateral free from
any lien, security interest, encumbrance or other right, title or interest of
any Person (other than Permitted Liens) and Debtor shall defend the Collateral
against all claims and demands of all Persons at any time claiming the same or
any interest therein adverse to the Secured Party (other than Permitted Liens).
(c) To the Company's knowledge, there is no financing statement,
assignment of trademark, or assignment of patent (or similar statement or
instrument of registration under the law of any jurisdiction) now on file or
registered in any public office covering any interest of any kind in the
Collateral, or intended to cover any such interest, which has not been
terminated or released by the secured party named therein and so long as the
Notes remain outstanding or any of the Secured Obligations of Debtor remain
unpaid, Debtor will not execute and there will not be on file in any public
office any financing statement, assignment of trademark, or assignment of patent
(or similar statement or instrument of registration under the law of any
jurisdiction) or statements relating to the Collateral, except (i) financing
statements, assignment of trademark, or assignment of patent filed or to be
filed in respect of and covering the Security Interest of the Secured Party
hereby granted and provided for and (ii) with respect to Permitted Liens.
(d) The chief executive office and chief place of business of Debtor is
located at the address of Debtor listed on the signature page hereof, and Debtor
will not move its chief executive office and chief place of business except to
such new location as Debtor may establish in accordance with the last sentence
of this Section 3(d). The originals of all Assigned Agreements and all documents
(as well as all duplicates thereof) evidencing all Receivables and all other
contract rights or accounts and other property of Debtor and the only original
books of account and records of Debtor relating thereto are, and will continue
to be, kept at such chief executive office or at such new location as Debtor may
establish in accordance with the last sentence of this Section 3(d). Debtor
shall establish no such new location until (i) it shall have given to the
Secured Party not less than 30 days' prior written notice of its intention to do
so, clearly describing such new location and providing such other information in
connection therewith as the Secured Party may reasonably request, and (ii) with
respect to such new location, it shall have taken such action, satisfactory to
the Secured Party (including, without limitation, all action required by Section
7 hereof), to maintain the Security Interest of the Secured Party in the
Receivables intended to be granted at all times fully perfected and in full
force and effect.
(e) Debtor has no Collateral located outside of the states identified
on Schedule 1-A or other states in which inventory may be held on consignment.
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(f) The name of Debtor is as set forth on the signature page hereto and
Debtor shall not change such name, conduct its business in any other name or
take title to the Collateral in any other name while this Agreement remains in
effect. Debtor has never had any name, or conducted business under any name in
any jurisdiction, other than its name set forth on the signature page hereto,
during the past six years other than as set forth in Schedule 3(f) annexed
hereto.
(g) At Debtor's own expense, Debtor will: (i) without limiting the
provisions of the Notes, keep the Collateral fully insured at all times with
financially sound and responsible insurance carriers against loss or damage by
fire and other risks, casualties and contingencies and in such manner and to the
same extent that like properties are customarily so insured by other entities
engaged in the same or similar businesses similarly situated and keep adequate
insurance at all times against liability on account of damage to persons and
properties and under all applicable workers' compensation laws, by financially
sound and reputable insurers and in amounts usually carried by similar
businesses, for the benefit of Debtor and the Secured Party, (ii) upon request
by the Secured Party, promptly deliver the insurance policies or certificates
thereof to the Secured Party, and (iii) keep the Collateral necessary for its
business in good condition at all times (normal wear and tear excepted) and
maintain the same in accordance with all material manufacturer's specifications
and requirements. Upon any failure of Debtor to comply with its obligations
pursuant to this Section 3(g), the Secured Party may at its option and after 20
days' prior notice to Debtor, and without affecting any of its other rights or
remedies provided herein or as a secured party under the NYUCC, procure the
insurance protection it deems necessary and/or cause repairs or modifications to
be made to the Collateral and the cost of either or both of which shall be a
lien against the Collateral added to the amount of the indebtedness secured
hereby and payable on demand with interest at a rate per annum equal to 7%.
(h) Subject to the Senior Indebtedness, Debtor hereby assigns to the
Secured Party all of Debtor's right, title and interest in and to any and all
moneys which may become due and payable with respect to the Collateral under any
policy insuring the Collateral (except proceeds relating to tangible personal
property which are applied to restoration or replacement), including return of
unearned premium, and, upon the occurrence and continuance of an Event of
Default (as defined in the Notes) and subject to the terms of the Senior
Indebtedness, shall cause any such insurance company to make payment directly to
the Secured Party for application to amounts outstanding under the Notes in
accordance with the terms of the Notes and, to the extent not provided therein,
in such order as the Secured Party shall determine.
(i) Debtor will not use the Collateral in material violation of any
statute or ordinance of which it has knowledge or applicable insurance policy
and will promptly pay all material taxes and assessments levied against the
Collateral; provided that Debtor shall not be required to pay any such tax or
assessment that is being contested in good faith and by proper proceedings and
as to which appropriate reserves are being maintained.
(j) Debtor will not sell, transfer, change the registration, if any,
dispose of, attempt to dispose of all or substantially all of the Collateral
unless the proceeds from the sale are allocated to repay the Notes.
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(k) Debtor will not assert against the Secured Party any claim or
defense which Debtor may have against any seller of the Collateral or any part
thereof or against any other Person with respect to the Collateral or any part
thereof.
(l) Debtor will indemnify and hold the Secured Party harmless from and
against any loss, liability, damage, costs and expenses whatsoever arising from
Debtor's use, operation, ownership or possession of the Collateral or any part
thereof.
(m) Debtor will maintain the confidentiality of all customer lists and
not sell or otherwise dispose of such lists except that Debtor shall deliver
copies thereof to the Secured Party upon its request, which may be made at any
time and from time to time after an Event of Default (as such term is defined in
the Notes).
(n) In addition to, and not in limitation of, the foregoing, with
respect to the Intellectual Property, Debtor hereby represents and warrants:
(i) Subject to Permitted Liens and except as set forth in
Schedule 1-D hereto, Debtor has the sole, full and clear title to
the Trademarks shown on Schedule 1-D hereto for the goods and
services covered by the registrations thereof and, to Debtor's
knowledge, such registrations are valid and subsisting.
(ii) Debtor will perform all acts and execute all documents, to
the extent reasonable, including, without limitation, assignments
for security in form suitable for filing with the United States
Patent and Trademark Office, substantially in the form of Exhibit
1 hereof, requested by the Secured Party at any time to evidence,
perfect, maintain, record and enforce the Secured Party's
interest in the Patents and Trademarks or otherwise in
furtherance of the provisions of this Agreement, and Debtor
hereby authorizes the Secured Party to execute and file one or
more financing statements (and similar documents) or copies
thereof or of this Agreement with respect to the Intellectual
Property signed only by the Secured Party.
(iii) Except as set forth on Schedule 1-D, to Debtor's
knowledge, none of the Trademarks used in the business of Debtor
have been abandoned or invalidated, and, except to the extent
that the Secured Party, upon 10 days' prior written notice by
Debtors, shall consent, and except to the extent such Debtor has
a valid business purpose for doing otherwise (so long as any
action on the part of any such Debtor would not have a Material
Adverse Effect on Debtor's business), Debtor (either itself or
through licensees) will continue to use the Trademarks on each
and every trademark class of goods in order to maintain the
Trademarks in full force free from any claim of abandonment for
nonuse and Debtor will not (nor will it permit any licensee
thereof to) do any act or knowingly omit to do any act whereby
any Trademark may become abandoned or invalidated, and Debtor
shall notify the Secured Party immediately if it knows of any
reason or has reason to know that any pending application or
issued Trademark may become abandoned or invalidated.
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(iv) Subject to Permitted Liens and except as set forth on Schedule
1-D, Debtor has the sole, full and clear title to each of the Patents
shown on Schedule 1-D hereto and the issued Patents are subsisting.
Except as set forth in Schedule 1-D, to Debtor's knowledge, none of
the Patents used in the business of Debtor has been abandoned or
dedicated, and, except to the extent that the Secured Party, upon 10
days' prior written notice by Debtor, shall consent, and except to the
extent Debtor has a valid business purpose for doing otherwise (so
long as any action on the part of Debtor would not have a Material
Adverse Effect on Debtor's business), Debtor will not do any act, or
omit to do any act, whereby the Patents may become abandoned or
dedicated and shall notify the Secured Party immediately if it knows
of any reason or has reason to know that any pending application or
issued Patent may become abandoned or dedicated.
(v) Subject to Permitted Liens and except as set forth on Schedule
1-D, Debtor has the sole, full and clear title to each of the
Copyrights shown on Schedule 1-D hereto and the issued Copyrights are
subsisting. Except as set forth in Schedule 1-D, to Debtor's
knowledge, none of the Copyrights used in the business of Debtor has
been abandoned or dedicated, and, except to the extent that the
Secured Party, upon 10 days' prior written notice by Debtor, shall
consent, and except to the extent Debtor has a valid business purpose
for doing otherwise (so long as any action on the part of Debtor would
not have a Material Adverse Effect on Debtor's business), Debtor will
not do any act, or omit to do any act, whereby the Copyrights may
become abandoned or dedicated and shall notify the Secured Party
immediately if it knows of any reason or has reason to know that any
pending application or issued Copyright may become abandoned or
dedicated.
(vi) In no event shall Debtor, either itself or through any agent,
employee, licensee or designee, (A) file an application for the
registration of any Patent or Trademark with the United States Patent
and Trademark Office, and/or an application for the registration of
any Copyright with the United States Copyright Office, or any similar
office or agency of the United States, any state or province thereof,
any other country or any political subdivision thereof, (B) file any
assignment of any patent, trademark, or copyright which Debtor may
acquire from a third party, with the United States Patent and
Trademark Office and/or the United States Copyright Office, any
similar office or agency of the United States, any state or province
thereof, any other country or any political subdivision thereof,
unless Debtor shall promptly notify the Secured Party thereof, and,
upon request of the Secured Party, execute and deliver any and all
assignments, agreements, instruments, documents and papers as the
Secured Party may reasonably request to evidence the Secured Party's
interest in such Patent, Trademark and/or Copyright and the goodwill
and general intangibles of Debtor relating thereto or represented
thereby, and Debtor hereby constitutes the Secured Party its
attorney-in-fact to execute and file all such writings for the
foregoing purposes, all acts of such attorney being hereby ratified
and confirmed, such power being coupled with an interest is
irrevocable until the Secured Obligations are paid in full.
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(vii) Except to the extent that the Secured Party, upon prior written
notice from Debtor, shall consent (which consent shall not be
unreasonably withheld), Debtor will not assign, sell, mortgage, lease,
transfer, pledge, hypothecate, grant a security interest in or lien
upon, encumber, grant an exclusive or non-exclusive license (except in
the ordinary course of business), or otherwise dispose of any of the
Intellectual Property, and nothing in this Agreement shall be deemed a
consent by the Secured Party to any such action except as expressly
permitted herein.
(viii) As of the date hereof neither Debtor nor any affiliate or
subsidiary thereof owns any Patents, Trademarks or Copyrights
registered in, or the subject of pending applications in, the United
States Patent and Trademark Office and/or the United States Copyright
Office or any similar office or agency of the United States, any state
or province thereof, any other country or any political subdivision
thereof, other than those described in Schedule 1-D hereto.
(ix) Except to the extent Debtor has a valid business purpose for
doing otherwise (so long as any action on the part of Debtor would not
have a Material Adverse Effect on Debtor's business), Debtor will take
all reasonable and necessary steps in any proceeding before the United
States Patent and Trademark Office and/or the United States Copyright
Office, or any similar office or agency of the United States, any
state or province thereof, any other country or any political
subdivision thereof, to maintain each application and registration of
the Trademarks, Patents and Copyrights, including, without limitation,
filing of renewals, affidavits of use, affidavits of incontestability
and opposition, interference and cancellation proceedings (except to
the extent that dedication, abandonment or invalidation is permitted
under paragraphs (ii) and (iii) hereof); provided, however, that
Debtor shall not be required to take any such actions with respect to
the Patents, Trademarks or Copyrights identified on Schedule 3(n)(ix).
(x) Debtor agrees that the Secured Party does not assume, and shall
have no responsibility for, the payment of any sums due or to become
due under any agreement or contract included in the Intellectual
Property or the performance of any obligations to be performed under
or with respect to any such agreement or contract by Debtor, and
Debtor hereby agrees to indemnify and hold the Secured Party harmless
with respect to any and all claims by any person relating thereto
other than such that are caused by Secured Party's gross negligence or
willful misconduct.
(xi) Debtor agrees that if it, or any affiliate or subsidiary
thereof, learns of any use by any person of any term or design likely
to cause confusion with any material Trademark, it shall promptly
notify the Secured Party of such use and, if requested by the Secured
Party, shall join with the Secured Party, at its expense, in such
action as the Secured Party, in its reasonable discretion may deem
advisable for the protection of the Secured Party's interest in and to
such Trademarks.
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(xii) All licenses of Trademarks and Patents which Debtor has granted
to third parties are set forth in Schedule 3(n)(xii) hereto.
(xiii) Subject to Permitted Liens, if Debtor shall acquire title to
any new registered Trademarks, Patents and/or Copyrights, the
provisions of this Agreement shall automatically apply thereto. Debtor
shall promptly notify the Secured Party in writing of any rights to
any new registered Trademarks, Patents and/or Copyrights acquired by
Debtor after the date hereof and of any registrations issued or
applications for registration made after the date hereof. Concurrently
with the filing of an application for registration for any Trademarks,
Patents and/or Copyrights, Debtor shall execute, deliver and record in
all places where this Agreement is recorded an appropriate agreement,
substantially in the form hereof, with appropriate insertions, or an
amendment to this Agreement, in form and substance reasonably
satisfactory to the Secured Party, pursuant to which Debtor shall
grant a security interest to the extent of its interest in such
registration as provided herein to the Secured Party.
Section 4. Special Provisions Concerning Assigned Agreements. Debtor
represents, warrants and agrees as follows:
(a) The Assigned Agreements constitute the legal, valid and binding
obligations of Debtor and, to the best of its knowledge, the other parties
thereto, enforceable in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer, fraudulent conveyance and other similar laws affecting the enforcement
of creditors' rights and remedies generally.
(b) Debtor will perform and discharge each and every material obligation,
covenant and agreement to be performed or discharged by Debtor under the
Assigned Agreements, except for any such nonperformance resulting from a default
by any other party thereto.
(c) At the request of the Secured Party, and at the sole cost and expense
of Debtor, Debtor will use its reasonable best efforts to enforce or secure the
performance of each and every material obligation, covenant, condition and
agreement contained in the material Assigned Agreements to be performed by the
other parties thereto.
(d) Debtor will not modify, amend or agree to vary any of the material
Assigned Agreements in any respect likely to have a Material Adverse Effect
other than in the ordinary course of business, or otherwise act or fail to act
in a manner likely (directly or indirectly) to entitle any party thereto to
claim that Debtor is in default under the terms thereof, except for any such
action or failure to act resulting from a default by any other party thereto.
(e) Debtor will not terminate or permit the termination of any material
Assigned Agreement, except in accordance with its terms, other than in the
ordinary course of business.
(f) Without the prior written consent of the Secured Party, Debtor will
not, other than in the ordinary course of business, waive or in any manner
release or discharge any party to any material Assigned Agreement from any of
the material obligations, covenants, conditions and
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agreements to be performed by it under such Assigned Agreement including,
without limitation, the obligation to make all payments in the manner and at the
time and places specified.
(g) After the occurrence and during the continuance of an Event of Default
prior to the Maturity Date (as such term is defined in the Notes) and
acceleration of the Notes pursuant to the terms of the Notes ("Acceleration"),
subject to the terms of the Senior Indebtedness, Debtor will hold any payments
received by it which are assigned and set over to the Secured Party by this
Agreement for and on behalf of the Secured Party and turn them promptly over to
the Secured Party forthwith in the same form in which they are received
(together with any necessary endorsement) for application to amounts outstanding
under the Notes in accordance with the terms of the Notes and, to the extent not
provided therein, in such order as the Secured Party shall determine.
(h) Debtor will appear in and defend every action or proceeding arising
under, growing out of or in any manner connected with the Assigned Agreements or
the obligations, duties or liabilities of Debtor and any assignee thereunder.
(i) Should Debtor fail to make any payment or to do any act as herein
provided after 30 days' notice by the Secured Party, the Secured Party may (but
without obligation on the Secured Party's part to do so and without notice to or
demand on Debtor and without releasing Debtor from any obligation hereunder)
make or do the same in such manner and to such extent as the Secured Party may
deem necessary to protect the Security Interests provided hereby, including
specifically, without limiting the general powers, the right to appear in and
defend any action or proceeding purporting to affect the Security Interests
provided hereby and Debtor, and the Secured Party may also perform and discharge
each and every obligation, covenant and agreement of Debtor contained in any
Assigned Agreement and, in exercising any such powers, pay necessary costs and
expenses, employ counsel and incur and pay reasonable attorneys' fees.
(j) Upon the request of the Secured Party, Debtor will send to the Secured
Party copies of all material notices, documents and other papers furnished or
received by it with respect to any of the material Assigned Agreements.
Section 5. Special Provisions Concerning Receivables.
(a) As of the time when each Receivable arises, Debtor shall be deemed to
have warranted as to each such Receivable that such Receivable and all papers
and documents relating thereto are genuine and in all respects what they purport
to be, and that all papers and documents relating thereto:
(ii) will be signed by the account debtor named therein (or such
account debtor's duly authorized agent) or otherwise be binding on the
account debtor;
(iii) will represent the genuine, legal, valid and binding obligation
of the account debtor evidencing indebtedness unpaid and owed by such
account debtor arising out of the performance of labor or services or
the sale and delivery of merchandise or both;
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(iv) to the extent evidenced by writings, will be the only original
writings evidencing and embodying such obligation of the account
debtor named therein; and
(b) Debtor will keep and maintain at Debtor's own cost and expense
satisfactory and complete records of the Receivables, including, but not limited
to, records of all payments received, all credits granted thereon, all
merchandise returned and all other dealings therewith, and Debtor will make the
same available to the Secured Party, at Debtor's own cost and expense, at any
and all reasonable times during the existence of an Event of Default upon demand
of the Secured Party. Subject to the terms of the Senior Indebtedness, Debtor
shall, at Debtor's own cost and expense, deliver the Receivables (including,
without limitation, all documents evidencing the Receivables) and such books and
records to the Secured Party or to its representatives upon its demand at any
time during the existence of an Event of Default and, if prior to the Maturity
Date, Acceleration. If the Secured Party shall so request during the existence
of an Event of Default, Debtor shall legend, in form and manner satisfactory to
the Secured Party, the Receivables and other books, records and documents of
Debtor evidencing or pertaining to the Receivables with an appropriate reference
to the fact that the Receivables have been assigned to the Secured Party and
that the Secured Party has a security interest therein, subject to the Senior
Indebtedness.
(c) Except in the ordinary course of business prior to an Event of Default
and, if prior to the Maturity Date, Acceleration, Debtor will not rescind or
cancel any indebtedness evidenced by any Receivable or modify any term thereof
or make any adjustment with respect thereto, or extend or renew the same, or
compromise or settle any dispute, claim, suit or legal proceeding relating
thereto, or sell any Receivable or interest therein, without the prior written
consent of the Secured Party, except that, subject to the prior approval of a
majority of the independent directors of Debtor's Board of Directors, Debtor may
grant discounts in connection with the prepayment of any Receivable in an amount
which is customary in the line of business in which Debtor is engaged and
consistent with Debtor's past practices.
(d) Debtor will duly fulfill all material obligations on its part to be
fulfilled under or in connection with the Receivables and, subject to the terms
of the Senior Indebtedness, will do nothing to impair the rights of the Secured
Party in the Receivables.
(e) Debtor shall endeavor to collect or cause to be collected from the
account debtor named in each Receivable, as and when due (including, without
limitation, Receivables which are delinquent, such Receivables to be collected
in accordance with generally accepted lawful collection procedures) any and all
amounts owing under or on account of such Receivable, and credit forthwith upon
receipt thereof all such amounts as are so collected to the outstanding balance
of such Receivable. The costs and expenses (including attorney's fees) of such
collection shall be borne by Debtor.
(f) If any of the Receivables becomes evidenced by an Instrument (other
than a check received in payment of a Receivable and deposited in the ordinary
course of business), Debtor will notify the Secured Party thereof, and, upon
request by the Secured Party, promptly deliver such Instrument to the Secured
Party appropriately endorsed to the order of the Secured Party as further
security for the satisfaction in full of the Secured Obligations.
15
(g) Subject to the terms of the Senior Indebtedness, upon request of
the Secured Party, at any time when an Event of Default and, if prior to the
Maturity Date, Acceleration shall exist, Debtor shall promptly notify (in
manner, form and substance reasonably satisfactory to the Secured Party) all
Persons who are at any time obligated under any Receivable that the Secured
Party possesses a Security Interest in such Receivable and that all payments in
respect thereof are to be made to such account as the Secured Party directs.
Section 6. Special Provisions Concerning Equipment. Subject to the
terms of the Senior Indebtedness, Debtor will do nothing to impair the rights of
the Secured Party in the Equipment. Debtor shall cause the Equipment to at all
times constitute and remain personal property. Debtor retains all liability and
responsibility in connection with the Equipment and the liability of Debtor to
pay the Secured Obligations shall in no way be affected or diminished by reason
of the fact that such Equipment may be lost, destroyed, stolen, damaged or for
any reason whatsoever unavailable to Debtor.
Section 7. Financing Statements; Documentary Stamp Taxes.
(a) Debtor will, at its own expense, make, execute, endorse,
acknowledge, file and/or deliver to the Secured Party from time to time such
lists, descriptions and designations of Inventory, warehouse receipts, bills of
lading, documents of title, vouchers, invoices, schedules, confirmatory
assignments, conveyances, financing statements, transfer endorsements, powers of
attorney, certificates, reports and other assurances or instruments and take
such further steps relating to the Collateral and other property or rights
covered by the Security Interest hereby granted, which the Secured Party
reasonably deems appropriate or advisable to perfect, preserve or protect its
Security Interest in the Collateral. Debtor hereby constitutes the Secured Party
its attorney-in-fact to execute and file in the name and on behalf of Debtor
such additional financing statements as the Secured Party may reasonably
request, such acts of such attorney being hereby ratified and confirmed; such
power, being coupled with an interest, is irrevocable until the Secured
Obligations are paid in full. Further, to the extent permitted by applicable
law, Debtor authorizes the Secured Party to file any such financing statements
without the signature of Debtor. Debtor will pay all applicable filing fees and
related expenses in connection with any such financing statements.
(b) Debtor agrees to procure, pay for, affix to any and all documents
and cancel any documentary tax stamps required by and in accordance with,
applicable law and Debtor will indemnify and hold the Secured Party harmless
against any liability (including interest and penalties) in respect of such
documentary stamp taxes.
Section 8. Termination of this Agreement. This Agreement shall
terminate upon the Termination Date and the Agent, at the request and expense of
Debtor, will promptly execute and deliver to Debtor a proper instrument or
instruments (including Uniform Commercial Code termination statements on Form
UCC-3) acknowledging the satisfaction and termination of this Agreement, and
will duly assign, transfer and deliver to Debtor (without recourse and without
representation and warranty) such of the collateral as may be in the possession
of the Agent and as has not thereto been sold or otherwise applied or released
pursuant to this Agreement.
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Section 9. Special Provisions Concerning Remedies and Sale. Subject
to the terms of the Senior Indebtedness, in addition to any rights and remedies
now or hereafter granted under applicable law and not by way of limitation of
any such rights and remedies, during the existence of an Event of Default and,
if prior to the Maturity Date, Acceleration, the Secured Party shall have all of
the rights and remedies of a secured party under the NYUCC as enacted in any
applicable jurisdiction in addition to the rights and remedies provided herein,
in the Notes and in any other agreement executed in connection with the Notes
whereby Debtor has granted any Lien to the Secured Party. Subject to the terms
of the Senior Indebtedness, without in any way limiting the foregoing, during
the existence of an Event of Default and, if prior to the Maturity Date,
Acceleration, upon the giving of notice to Debtor of Secured Party's intent to
pursue any one or all of the following or any other remedies the Secured Party
shall have the right, in the name of Debtor or in the name of the Secured Party
or otherwise:
(i) to ask for, demand, collect, receive, compound and give
acquittance for the Receivables or any part thereof;
(ii) to extend the time of payment of, compromise or settle
for cash, credit or otherwise, and upon any terms and
conditions, any of the Receivables;
(iii) to endorse the name of Debtor on any checks, drafts or
other orders or instruments for the payment of moneys payable
to Debtor which shall be issued in respect of any Receivable;
(iv) to file any claims, commence, maintain or discontinue
any actions, suits or other proceedings deemed by the Secured
Party necessary or advisable for the purpose of collecting or
enforcing payment of any Receivable;
(v) to make test verifications of the Receivables or any
portion thereof;
(vi) to notify any or all account debtors under any or all of
the Receivables to make payment thereof directly to the Secured
Party for the account of the Secured Party and to require
Debtor to forthwith give similar notice to the account debtors;
(vii) to require Debtor forthwith to account for and transmit
to the Secured Party in the same form as received all proceeds
(other than physical property) of collection of Receivables
received by Debtor and, until so transmitted, to hold the same
in trust for the Secured Party and not commingle such proceeds
with any other funds of Debtor;
(viii) to take possession of any or all of the Collateral and,
for that purpose, to enter, with the aid and assistance of any
Person or Persons and with or without legal process, any
premises where the Collateral, or any part thereof, are, or may
be, placed or assembled, and to remove any of such Collateral;
(ix) to execute any instrument and do all other things
necessary and proper to protect and preserve and realize upon
the Collateral and the other rights contemplated hereby;
17
(x) upon notice to such effect, to require Debtor to
deliver, at Debtor's expense, any or all Collateral to the
Secured Party at a place designated by the Secured Party;
(xi) without obligation to resort to other security, at any
time and from time to time, to sell, re-sell, assign and
deliver all or any of the Collateral, in one or more parcels at
the same or different times, and all right, title and interest,
claim and demand therein and right of redemption thereof, at
public or private sale, for cash, upon credit or for future
delivery, and at such price or prices and on such terms as the
Secured Party may determine, with the amounts realized from any
such sale to be applied to the Secured Obligations in the
manner determined by the Secured Party;
(xii) to cause Debtor not to make any further use of the
Trademarks or Patents or any xxxx similar thereto and/or
Copyrights for any purpose;
(xiii) upon 10 days' prior notice to Debtor, to license,
whether general, special or otherwise, and whether on an
exclusive or nonexclusive basis, any of the Patents or
Trademarks, throughout the world for such term or terms, on
such conditions, and in such manner, as the Secured Party shall
in its sole discretion determine;
(xiv) to enforce, at any time (without assuming any liability
or obligation thereunder), against any licensee or sublicensee,
all rights and remedies of Debtor in, to and under any one or
more license agreements with respect to the Intellectual
Property, and take or refrain from taking any action under any
thereof, and Debtor hereby releases the Secured Party from, and
agrees to hold the Secured Party free and harmless from and
against any claims arising out of, any action taken or omitted
to be taken with respect to any such license agreement;
(xv) upon 10 days' prior notice to Debtor, to assign, sell,
or otherwise dispose of, the Intellectual Property or any part
thereof, either with or without special or other conditions or
stipulations, with power to buy the Intellectual Property or
any part of it, and with power also to execute assurances, and
do all other acts and things for completing the assignment,
sale or disposition which the Secured party shall, in its sole
discretion, deem appropriate or proper; and
(xvi) in addition to the foregoing, in order to implement the
assignment, sale or other disposal of any of the Intellectual
Property pursuant to this Agreement, the Secured Party may, at
any time, pursuant to the authority granted in the Power of
Attorney described herein (such authority becoming effective on
the occurrence or continuation as hereinabove provided of an
Event of Default), execute and deliver on behalf of the
applicable Debtor, one or more instruments of assignment of the
Patents or Trademarks (or any application or registration
thereof), in form suitable for filing, recording or
registration in any country. Debtor agrees to pay when due all
reasonable costs incurred in any such transfer of the Patents
or
18
Trademarks, including any taxes, fees and reasonable attorneys'
fees, and all such costs shall be added to the Secured
Obligations.
In the event of any license, assignment, sale or other
disposition of the Intellectual Property, or any of it, after the occurrence or
continuation as hereinabove provided of an Event of Default, Debtor shall supply
its know-how and expertise relating to the manufacture and sale of the products
bearing or in connection with the Trademarks or Patents, and its customer lists
and other records relating to the Trademarks or Patents and to the distribution
of said products, to the Secured Party or its designee.
The Secured Party shall not be obligated to do any of the acts
hereinabove authorized, but in the event that the Secured Party elects to do any
such act, the Secured Party shall not be responsible to Debtor except for its
gross negligence or willful misconduct.
(a) The Secured Party may take legal proceedings for the appointment of
a receiver or receivers (to which the Secured Party shall be entitled as a
matter of right) to take possession of the Collateral pending the sale thereof
pursuant either to the powers of sale granted by this Agreement or to a
judgment, order or decree made in any judicial proceeding for the foreclosure or
involving the enforcement of this Agreement. If, after the exercise of any or
all of such rights and remedies, any of the Secured Obligations shall remain
unpaid, Debtor shall remain liable for any deficiency. After the indefeasible
payment in full of the Secured Obligations, any proceeds of the Collateral
received or held by the Secured Party shall be turned over to Debtor and the
Collateral shall be reassigned to Debtor by the Secured Party without recourse
to the Secured Party and without any representations, warranties or agreements
of any kind.
(b) Upon any sale of any of the Collateral, whether made under the
power of sale hereby given or under judgment, order or decree in any judicial
proceeding for the foreclosure or involving the enforcement of this Agreement:
(i) the Secured Party may, to the extent permitted by law,
bid for and purchase the property being sold, and upon
compliance with the terms of sale may hold, retain and possess
and dispose of such property in its own absolute right without
further accountability, and may, in paying the purchase money
therefor, deliver any Notes or claims for interest thereon and
any other instruments evidencing the Secured Obligations or
agree to the satisfaction of all or a portion of the Secured
Obligations in lieu of cash in payment of the amount which
shall be payable thereon, and the Notes and such instruments,
in case the amounts so payable thereon shall be less than the
amount due thereon, shall be returned to the Secured Party
after being appropriately stamped to show partial payment;
(ii) the Secured Party may make and deliver to the purchaser
or purchasers a good and sufficient deed, xxxx of sale and
instrument of assignment and transfer of the property sold;
(iii) the Secured Party is hereby irrevocably appointed the
true and lawful attorney-in-fact of Debtor in its name and
stead, to make all necessary deeds, bills of sale and
instruments of assignment and transfer of the property thus
sold and
19
for such other purposes as are necessary or desirable to
effectuate the provisions (including, without limitation, this
Section 9) of this Agreement, and for that purpose it may
execute and deliver all necessary deeds, bills of sale and
instruments of assignment and transfer, and may substitute one
or more Persons with like power, Debtor hereby ratifying and
confirming all that its said attorney, or such substitute or
substitutes, shall lawfully do by virtue hereof; but if so
requested by the Secured Party or by any purchaser, Debtor
shall ratify and confirm any such sale or transfer by executing
and delivering to the Secured Party or to such purchaser all
property, deeds, bills of sale, instruments or assignment and
transfer and releases as may be designated in any such request;
(iv) all right, title, interest, claim and demand whatsoever,
either at law or in equity or otherwise, of Debtor of, in and
to the property so sold shall be divested; such sale shall be a
perpetual bar both at law and in equity against Debtor, its
successors and assigns, and against any and all Persons
claiming or who may claim the property sold or any part thereof
from, through or under Debtor, its successors or assigns;
(v) the receipt of the Secured Party or of the officer
thereof making such sale shall be a sufficient discharge to the
purchaser or purchasers at such sale for his or their purchase
money, and such purchaser or purchasers, and his or their
assigns or personal representatives, shall not, after paying
such purchase money and receiving such receipt of the Secured
Party or of such officer therefor, be obliged to see to the
application of such purchase money or be in any way answerable
for any loss, misapplication or non-application thereof; and
(vi) to the extent that it may lawfully do so, and subject to
any legal requirement that the Secured Party act in a
commercially reasonable manner, Debtor agrees that it will not
at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any appraisement,
valuation, stay, extension or redemption laws, or any law
permitting it to direct the order in which the Collateral or
any part thereof shall be sold, now or at any time hereafter in
force, which may delay, prevent or otherwise affect the
performance or enforcement of this Agreement, the Notes or any
other agreement executed in connection with the Notes whereby
Debtor has granted any Lien to the Secured Party, and Debtor
hereby expressly waives all benefit or advantage of any such
laws and covenants that it will not hinder, delay or impede the
execution of any power granted or delegated to the Secured
Party in this Agreement, but will suffer and permit the
execution of every such power as though no such laws were in
force. In the event of any sale of Collateral pursuant to this
Section, the Secured Party shall, at least 10 days before such
sale, give Debtor written, telecopied or telex notice of its
intention to sell.
Section 10. Application of Moneys.
(a) Except as otherwise provided herein or in the Notes, all moneys which
the Secured Party shall receive, in accordance with the provisions hereof, shall
be applied (to the extent
20
thereof) in the following manner: First, to the payment of all costs and
expenses reasonably incurred in connection with the administration and
enforcement of, or the preservation of any rights under, this Agreement or any
of the reasonable expenses and disbursements of the Secured Party (including,
without limitation, the reasonable fees and disbursements of its counsel and
agents); Second, to the payment of all Secured Obligations arising out of the
Notes in accordance with the terms of the Notes and, if not therein provided, in
such order as the Secured Party may determine; and Third, to the payment of all
other Secured Obligations in such order as the Secured Party may determine.
(b) If after applying any amounts which the Secured Party has received in
respect of the Collateral any of the Secured Obligations remain unpaid, Debtor
shall continue to be liable for any deficiency, together with interest.
(c) If after applying any amounts which the Secured Party has received in
respect of the Collateral, there is a surplus, any such surplus shall be paid to
Debtor, its successors or assigns.
Section 11. Fees and Expenses, etc. Any and all fees, costs and expenses of
whatever kind or nature, including but not limited to the reasonable attorneys'
fees and legal expenses incurred by the Secured Party in connection with
enforcement of its rights under this Agreement, the filing or recording of any
documents (including all taxes in connection therewith) in public offices, the
payment or discharge of any taxes, counsel fees, maintenance fees, fees and
other costs relating to the encumbrances or otherwise protecting, maintaining,
preserving the Collateral, or in defending or prosecuting any actions or
proceedings arising out of or related to the Collateral, shall be borne and paid
by Debtor on written demand by the Secured Party setting forth in reasonable
detail the nature of such expenses and until so paid shall be added to the
principal amount of the Secured Obligations and shall bear interest at the rate
accruing thereon. In addition, Debtor will pay, and indemnify and hold the
Secured Party harmless from and against, any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to the Collateral,
including (without limitation) claims of patent or trademark infringement and
any claim of unfair competition or anti-trust violation, other than liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements arising as a result of Secured Party's gross
negligence or willful misconduct.
Section 12. Power of Attorney.
Concurrently with the execution and delivery hereof, Debtor is
executing and delivering to the Secured Party, in the form of Exhibit 2 hereto,
three originals of a Power of Attorney for the implementation of the assignment,
sale or other disposal of the Collateral, including the Trademarks and Patents
pursuant to this Agreement and Debtor hereby releases the Secured Party from any
claims, causes of action and demands at any time arising out of or with respect
to any actions taken or omitted to be taken by the Secured Party under the
powers of attorney granted herein, other than actions taken or omitted to be
taken through the gross negligence or willful misconduct of the Secured Party.
21
Section 13. Miscellaneous.
(a) All notices, communications and distributions hereunder shall be in
writing (including telecopied communication) and mailed by certified mail,
telecopied, personally delivered or delivered by Federal Express or other
reputable overnight courier service, if to Debtor addressed to it at its address
set forth opposite its signature below, if to the Secured Party, addressed to it
at its address set forth opposite its signature below, or as to either party at
such other address as shall be designated by such party in a written notice to
such other party complying as to delivery with the terms of this Section. All
such notices and other communications shall be effective (i) if mailed by
certified mail, three days after the date of deposit thereof with the U.S.
Postal Service, properly addressed with postage prepaid, (ii) if telecopied,
upon receipt by the addressee, (iii) if personally delivered, upon such delivery
and (iv) if delivered by overnight courier service, on the business day
following delivery thereof to such courier service in time for next-business-day
delivery.
(b) No delay on the part of the Secured Party in exercising any of its
rights, remedies, powers and privileges hereunder or partial or single exercise
thereof, shall constitute a waiver thereof. None of the terms and conditions of
this Agreement may be changed, waived, modified or varied in any manner
whatsoever unless in writing duly signed by Debtor and the Secured Party. No
notice to or demand on Debtor in any case shall entitle Debtor to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of any of the rights of the Secured Party to any other or further action
in any circumstances without notice or demand.
(c) The obligations of Debtor hereunder shall remain in full force and
effect without regard to, and shall not be impaired by, (i) any exercise or
non-exercise, or any waiver of, any right, remedy, power or privilege under or
in respect of the Notes, this Agreement or any other agreement executed in
connection with the Notes whereby Debtor has granted any Lien to the Secured
Party or any other agreement executed in connection with any of the foregoing,
the Secured Obligations or any security for any of the Secured Obligations; or
(ii) any amendment to or modification of any of the foregoing; whether or not
Debtor shall have notice or knowledge of any of the foregoing. The rights and
remedies of the Secured Party herein provided are cumulative and not exclusive
of any rights or remedies which the Secured Party would otherwise have under all
applicable law.
(d) This Agreement shall be binding upon Debtor and its successors and
assigns and shall inure to the benefit of the Secured Party and its successors
and assigns, except that Debtor may not transfer or assign any of its
obligations, rights or interest hereunder without the prior written consent of
the Secured Party and any such purported assignment by Debtor shall be void. All
agreements, representations and warranties made herein shall survive the
execution and delivery of this Agreement.
(e) The descriptive headings of the several sections of this Agreement are
inserted for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.
(f) Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or non-
22
enforceability without invalidating the remaining provisions hereof, and any
such prohibition or non-enforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
(g) All rights, remedies and powers provided by this Agreement may be
exercised only to the extent that the exercise thereof does not violate any
applicable provision of law, and the provisions hereof are intended to be
subject to all applicable mandatory provisions of law that may be controlling
and to be limited to the extent necessary so that they will not render this
Agreement invalid, unenforceable in whole or in part or not entitled to be
recorded, registered or filed under the provisions of any applicable law.
(h) This Agreement and the rights and obligations of the parties hereunder
shall be construed in accordance with and be governed by the laws of the State
of New York except to the extent that matters of title, or creation, perfection
and priority of the Security Interests created hereby, or procedural issues of
foreclosure are required to be governed by the laws of the state in which the
Collateral, or part thereof, is located.
(i) It is expressly agreed, anything herein, in the Notes or in any other
agreement or instrument executed in connection with the Notes to the contrary
notwithstanding, that Debtor shall remain liable to perform all of the
obligations, if any, assumed by it with respect to the Collateral and the
Secured Party shall not have any obligations or liabilities with respect to any
Collateral by reason of or arising out of this Agreement, nor shall the Secured
Party be required or obligated in any manner to perform or fulfill any of the
obligations of Debtor under or pursuant to any or in respect of any Collateral.
(j) This Agreement may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which counterparts taken
together shall be deemed to constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their duly authorized officers as of the date first
above written.
COMDIAL COPORATION, as Debtor
By: /s/ Xxxx X. Xxxxx
-------------------------------------------
Name: Xxxx X. Xxxxx
Title: Chief Financial Officer
COMVEST VENTURE PARTNERS, L. P., as
Agent, as Secured Party
By: ComVest Management LLC, its general partner
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By: /s/ Xxxxxx Xxx Xxxxxx
---------------------------------------------
Name: Xxxxxx Xxx Xxxxxx
Title: Manager President / Managing Director
24
