EXHIBIT F
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of April 6, 2005 (this "Agreement"),
among TNX Television Holdings, Inc., a Delaware corporation (the "Company" or
the "Debtor") and the holder or holders of the Company's Secured Convertible
Debenture due April 6, 2007 in the original aggregate Principal Amount of up to
$5,000,000 (the "Debenture") and Warrants, 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 Purchase Agreement and the Debentures, the
Secured Parties have severally agreed to extend the loans to the Company
evidenced by the Debenture; and
WHEREAS, in order to induce the Secured Parties to extend the loans
evidenced by the Debentures, 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, a perfected first priority security interest in
certain property of the Debtor to secure the prompt payment, performance and
discharge in full of all of the Company's obligations under the Debenture.
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 Debtor, 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 the 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 the 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, 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
(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
subsidiaries of the Company (the "Subsidiaries"), 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 the 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 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
Debentures 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 Agent (as that term is defined
below) may reasonably request.
(e) "Obligations" means all of the Debtor's obligations under this
Agreement, the Purchase Agreement, the Debentures 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 Debentures and the loans extended
pursuant thereto; (ii) any and all other fees, indemnities, costs,
obligations and liabilities of the Debtor from time to time under or in
connection with this Agreement, the Debentures 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 the Debtor.
(f) "Organizational Documents" means with respect to the Debtor, the
documents by which the 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 the Debtor (such as bylaws,
a partnership agreement or an operating, limited liability or members
agreement).
(g) "UCC" means the Uniform Commercial Code of the State of Delaware 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 First Priority Perfected Security Interest. As an inducement
for the Secured Parties to extend the loans as evidenced by the Debentures 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 first priority 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 (the "Security
Interest").
3. Delivery of Certain Collateral. Contemporaneously or prior to the
execution of this Agreement, the Debtor shall deliver or cause to be delivered
to the Agent (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.
4. Representations, Warranties, Covenants and Agreements of the Debtor.
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 the Debtor and no further action is
required by the 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 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 Debtor has no place of business or offices where its
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.
No Debtor owns any 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 for Permitted Liens (as defined in the Debenture) and
except as set forth on Schedule B attached hereto, the Debtor is the sole
owner of the Collateral (except for non-exclusive licenses granted by the
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. 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 Debtor shall not execute and shall not knowingly permit to be
on file 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 the Debtor's claim of ownership
rights in or exclusive rights to use the Collateral in any jurisdiction or
to the 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 the 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 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 first priority lien in
the Collateral.
(f) This Agreement creates in favor of the Secured Parties a valid,
first priority security interest in the Collateral, subject only to
Permitted Liens, 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 (m), 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 Debtor, 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 Debtor does not (i) violate any of the provisions of any
Organizational Documents of the Debtor or any judgment, decree, order or
award of any court, governmental body or arbitrator or any applicable law,
rule or regulation applicable to the 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 the Debtor's debt or otherwise) or other
understanding to which the Debtor is a party or by which any property or
asset of the Debtor is bound or affected. No consent (including, without
limitation, from stockholders or creditors of the Debtor) is required for
the Debtor to enter into and perform its obligations hereunder.
(i) The capital stock and other equity interests listed on Schedule
H hereto represent all of the capital stock and other equity interests of
the Subsidiaries, and 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 other Permitted
Liens.
(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) Unless the Agent (as defined in Section 18) in its sole
discretion, consents in writing to a senior lien, the Debtor shall at all
times maintain the liens and Security Interest provided for hereunder as
valid and perfected first 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; provided, however, the Agent (as defined in Section 18), in its
sole discretion, consents in writing to a senior lien. 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) The Debtor will not transfer, pledge, hypothecate, encumber,
license, sell or otherwise dispose of any of the Collateral (except for
non-exclusive licenses granted by the Debtor in its ordinary course of
business and sales of obsolescent inventory and of inventory by the Debtor
in its ordinary course of business) without the prior written consent of a
Majority in Interest.
(m) The Debtor shall use its reasonable best efforts to keep and
preserve its equipment, inventory and other tangible Collateral in good
condition, repair and order (with the exception of reasonable wear and
tear) and shall not operate or locate any such Collateral (or cause to be
operated or located) in any area excluded from insurance coverage.
(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 Agent that (a) the Agent will be named as lender
loss payee 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 Agent and such
cancellation or change shall not be effective as to the Agent for at least
thirty (30) days after receipt by the Agent of such notice, unless the
effect of such change is to extend or increase coverage under the policy;
and (c) the Agent 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 $100,000, loss payments in
each instance will be applied by the 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 Debtor,
provided, however, that payments received by the Debtor after an Event of
Default occurs and is continuing or in excess of $100,000 for any
occurrence or series of related occurrences shall be paid to the Agent
and, if received by the Debtor, shall be held in trust for and immediately
paid over to the Agent unless otherwise directed in writing by the Agent.
Copies of such policies or the related certificates, in each case, naming
the Agent as lender loss payee and additional insured shall be delivered
to the Agent at least annually and at the time any new policy of insurance
is issued.
(o) The Debtor shall, within ten (10) business days of obtaining
knowledge thereof, advise the Agent 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 Agent such
further deeds, mortgages, assignments, security agreements, financing
statements or other instruments, documents, certificates and assurances
and take such further action as the Agent 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 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 Agent, 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 Agent and its representatives and
agents to inspect the Collateral upon reasonable notice during regular
business hours, and to make copies of records pertaining to the Collateral
as may be reasonably requested by the Agent 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 Agent 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 the 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 the 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 its valid existence and good standing and any rights and
franchises material to its business.
(v) The Debtor will not 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 Agent of such change and, at the time of such written notification,
the 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) The Debtor may not 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) The Debtor may not 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, the Debtor provides any financing statements or fixture
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 the Debtor's name in the first
paragraph of this Agreement. Schedule D attached hereto sets forth the
Debtor's organizational identification number or, if the 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) the Debtor has no trade names except as set forth on
Schedule E attached hereto; (iii) the Debtor has not 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 the Debtor or
been acquired by the Debtor within the past five years except as set forth
on Schedule E.
(aa) 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 Debtor shall deliver such Collateral to the Agent.
(bb) The Debtor, in its capacity as issuer, hereby agrees to comply
with any and all orders and instructions of Agent regarding the Pledged
Interests consistent with the terms of this Agreement without the further
consent of the 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) The Debtor shall cause all tangible chattel paper constituting
Collateral to be delivered to the Agent, 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 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) To the extent that any Collateral consists of letter-of-credit
rights, the Debtor shall cause the issuer of each underlying letter of
credit to consent to an assignment of the proceeds thereof to the Secured
Parties.
(ee) To the extent that any Collateral is in the possession of any
third party, the 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 commercially reasonable efforts to obtain an
acknowledgement and agreement from such third party with respect to the
Collateral, in form and substance satisfactory to the Agent.
(ff) If the Debtor shall at any time hold or acquire a commercial
tort claim, the Debtor shall promptly notify the Agent in a writing signed
by the 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 Agent.
(gg) The Debtor shall immediately provide written notice to the
Agent 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 Agent an assignment of
claims for such accounts and cooperate with the Agent 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.
(hh) In the event that the Company creates any subsidiaries after
the date of this Agreement, the Debtor shall cause each such subsidiary of
the Debtor to immediately become a party hereto (an "Additional Debtor"),
by executing and delivering an Additional Debtor Joinder in substantially
the form of Annex A attached hereto and comply with the provisions hereof
applicable to the Debtor. Concurrent therewith, the Additional Debtor
shall deliver replacement schedules for, or supplements to all other
Schedules to (or referred to in) this Agreement, as applicable, which
replacement schedules shall supersede, or supplements shall modify, the
Schedules then in effect. The Additional Debtor shall also deliver such
opinions of counsel, authorizing resolutions, good standing certificates,
incumbency certificates, organizational documents, financing statements
and other information and documentation as the Agent may reasonably
request. Upon delivery of the foregoing to the Agent, the Additional
Debtor shall be and become a party to this Agreement with the same rights
and obligations as the Debtor, for all purposes hereof as fully and to the
same extent as if it were an original signatory hereto and shall be deemed
to have made the representations, warranties and covenants set forth
herein as of the date of execution and delivery of such Additional Debtor
Joinder, and all references herein to the "Debtor" shall be deemed to
include each Additional Debtor.
(ii) The Debtor shall vote the Pledged Securities to comply with the
covenants and agreements set forth herein and in the Debentures.
(jj) The Debtor shall register the pledge of the applicable Pledged
Securities on the books of the 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
Agent, the Debtor shall deliver to Agent 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 records;
and (b) at any time directed by Agent during the continuation of an Event
of Default, such issuer will transfer the record ownership of such Pledged
Securities into the name of any designee of Agent, will take such steps as
may be necessary to effect the transfer, and will comply with all other
instructions of Agent regarding such Pledged Securities without the
further consent of the Debtor.
(kk) In the event that, upon an occurrence of an Event of Default,
the Agent 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 Agent 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 its direct and
indirect subsidiaries; (ii) use commercially reasonable efforts to obtain
resignations of the persons then serving as officers and directors of the
Debtor and its direct and indirect subsidiaries, if so requested; and
(iii) use commercially reasonable 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 Agent and allow the Transferee or
Agent to continue the business of the Debtor and its direct and indirect
subsidiaries.
(ll) 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 Agent notice whenever it acquires
(whether absolutely or by license) or creates any additional material
Intellectual Property.
(mm) The Debtor will from time to time, at the 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 Agent 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.
(nn) 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 the Debtor for the 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.
(oo) 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 Agent's 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 the Debtor is subject or to which the 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
Debenture) under the Debenture;
(b) Any representation or warranty of the Debtor in this Agreement
shall prove to have been incorrect in any material respect when made, and
the failure of the same to be correct has a material adverse effect on
such Debtor taken as a whole, or the ability of such Debtor to perform its
obligations hereunder;
(c) The failure by the Debtor to observe or perform any of its
obligations hereunder for ten (10) business days after delivery to the
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 the Debtor is using commercially reasonable 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 the Debtor, or a proceeding shall be
commenced by the Debtor, or by any governmental authority having
jurisdiction over the Debtor, seeking to establish the invalidity or
unenforceability thereof, or the Debtor shall deny that the Debtor has any
liability or obligation purported to be created under this Agreement.
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 Debenture 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
Debentures 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 Debentures).
(b) If the 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
the 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), the 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 Agent on or before the close of business on the fifth business day
following the receipt thereof by the Debtor, in the exact form received
together with the Necessary Endorsements, to be held by Agent subject to
the terms of this Agreement as Collateral.
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 Debentures, 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:
(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 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 the Debtor's premises or elsewhere,
and make available to the Secured Parties, without rent, all of the
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 Agent, 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,
Agent shall have the right to receive any interest, cash dividends
or other payments on the Collateral and, at the option of Agent, to
exercise in such Agent's discretion all voting rights pertaining
thereto. Without limiting the generality of the foregoing, Agent
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 the 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 the Debtor or right of redemption of the 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 the 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 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
the 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 Agent 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 Agent may sell the Collateral without giving any
warranties and may specifically disclaim such warranties. If the Agent
sells 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 Agent's 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 Agent to further exercise rights
and remedies under this Section 8 or elsewhere provided by agreement or
applicable law, the Debtor hereby grants to the Agent, for the benefit of
the Agent and the Secured Parties, an irrevocable, nonexclusive license
(exercisable without payment of royalty or other compensation to the
Debtor) to use, license or sublicense following an Event of Default, any
Intellectual Property now owned or hereafter acquired by the 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. 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 Debentures at
the time of any such determination), and to the payment of any other amounts
required by applicable law, after which the Secured Parties shall pay to the
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 10% 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 Agent may be
limited in its 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 Agent has 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 Agent in its attempt to satisfy any requirements under the Securities Laws
(including, without limitation, registration thereunder if requested by Agent)
applicable to the sale of the Pledged Securities by Agent.
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 Debentures. Until so paid,
any fees payable hereunder shall be added to the principal amount of the
Debentures 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
limiting the generality of the foregoing, (a) neither the Agent nor any 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 the Debtor thereunder. Neither the Agent nor any 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 the Agent or any
Secured Party of any payment relating to any of the Collateral, nor shall the
Agent or any Secured Party be obligated in any manner to perform any of the
obligations of the Debtor under or pursuant to any such contract or agreement,
to make inquiry as to the nature or sufficiency of any payment received by the
Agent or 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 the Agent or to which
the Agent or 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 Debentures 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 Debentures 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 the 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
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 Debentures 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 (including, without limitation, Annex B hereto) 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 Agent, and does hereby make,
constitute and appoint the Agent and its officers, agents, successors or
assigns with full power of substitution, as the Debtor's true and lawful
attorney-in-fact, with power, in the name of the various Secured Parties
or the 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 Agent, 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 Agent deems 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 Debentures 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 the Debtor is subject or to which
the Debtor is a party. Without limiting the generality of the foregoing,
after the occurrence and during the continuance of an Event of Default,
the Agent 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.
(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 Agent, 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 first
priority security interest in all the Collateral under the UCC.
(c) The Debtor hereby irrevocably appoints the Agent as the Debtor's
attorney-in-fact, with full authority in the place and instead of the
Debtor and in the name of the Debtor, from time to time in the Agent's
discretion, to take any action and to execute any instrument which the
Agent 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 the 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 Agent. 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 Debentures).
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. Appointment of Agent. The Secured Parties hereby appoint Smithfield
Fiduciary, LLC ("Smithfield" or the "Agent") to act as their agent for purposes
of exercising any and all rights and remedies of the Secured Parties hereunder.
Such appointment shall continue until revoked in writing by a Majority in
Interest, at which time a Majority in Interest shall appoint a new Agent;
provided, that Smithfield may not be removed as Agent unless Smithfield shall
then hold less than $100,000 of Principal Amount of Debentures. The Agent shall
have the rights, responsibilities and immunities set forth in Annex B hereto.
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
Debentures 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.
(b) All of the rights and remedies of the Secured Parties with
respect to the Collateral, whether established hereby or by the Debentures
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 Debenture (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 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 attorneys 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) The Debtor shall jointly and severally be liable for the
obligations of the Debtor to the Secured Parties hereunder.
(k) The Debtor shall indemnify, reimburse and hold harmless the
Secured Parties and its 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 provision in the Debentures, the Purchase Agreement
(as such term is defined in the Debentures) 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 Agent or
any Secured Party to liability as a partner in the Debtor or any if its
direct or indirect subsidiaries that is a partnership or as a member in
the Debtor or any of its direct or indirect subsidiaries that is a limited
liability company, nor shall Agent or any Secured Party be deemed to have
assumed any obligations under any partnership agreement or limited
liability company agreement, as applicable, of any the 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 the 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 the Debtor
or any direct or indirect subsidiary of the Debtor or compliance with any
provisions of any of the Organizational Documents, the Debtor hereby grant
such consent and approval and waive any such noncompliance with the terms
of said documents.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed on the day and year first above written.
TNX TELEVISION HOLDINGS, INC.
By:
--------------------------------------
Name:
Title:
SMITHFIELD FIDUCIARY, LLC, as Agent
By:
--------------------------------------
Name:
Title:
[SIGNATURE PAGE OF HOLDERS FOLLOWS]
[SIGNATURE PAGE OF HOLDERS TO TNXT SECURITY AGREEMENT]
Name of Investing Entity:_________________________________________________
Signature of Authorized Signatory of Investing entity:____________________
Name of Authorized Signatory:_____________________________________________
Title of Authorized Signatory:____________________________________________
[SIGNATURE PAGE OF HOLDERS FOLLOWS]
ANNEX A
to
SECURITY
AGREEMENT
FORM OF ADDITIONAL DEBTOR JOINDER
Security Agreement dated as of April 6, 2005 made by
TNX Television Holdings, Inc., as Debtor
to and in favor of
the Secured Parties identified therein (the "Security Agreement")
Reference is made to the Security Agreement as defined above; capitalized
terms used herein and not otherwise defined herein shall have the meanings given
to such terms in, or by reference in, the Security Agreement.
The undersigned hereby agrees that upon delivery of this Additional Debtor
Joinder to the Secured Parties referred to above, the undersigned shall (a) be
an Additional Debtor under the Security Agreement, (b) have all the rights and
obligations of the Debtor under the Security Agreement as fully and to the same
extent as if the undersigned was an original signatory thereto and (c) be deemed
to have made the representations and warranties set forth in Section ___ therein
as of the date of execution and delivery of this Additional Debtor Joinder.
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE UNDERSIGNED SPECIFICALLY
GRANTS TO THE SECURED PARTIES A SECURITY INTEREST IN THE COLLATERAL AS MORE
FULLY SET FORTH IN THE SECURITY AGREEMENT AND ACKNOWLEDGES AND AGREES TO THE
WAIVER OF JURY TRIAL PROVISIONS SET FORTH THEREIN.
Attached hereto are supplemental and/or replacement Schedules to the
Security Agreement, as applicable.
An executed copy of this Joinder shall be delivered to the Secured
Parties, and the Secured Parties may rely on the matters set forth herein on or
after the date hereof. This Joinder shall not be modified, amended or terminated
without the prior written consent of the Secured Parties.
IN WITNESS WHEREOF, the undersigned has caused this Joinder to be executed
in the name and on behalf of the undersigned.
[Name of Additional Debtor]
By:
Name:
Title:
Address:
Dated:
ANNEX B
to
SECURITY
AGREEMENT
THE AGENT
1. Appointment. The Secured Parties (all capitalized terms used
herein and not otherwise defined shall have the respective meanings provided in
the Security Agreement to which this Annex B is attached (the "Agreement")), by
their acceptance of the benefits of the Agreement, hereby designate __________
(the "Agent") as the Agent to act as specified herein and in the Agreement. Each
Secured Party shall be deemed irrevocably to authorize the Agent to take such
action on its behalf under the provisions of the Agreement and any other
Transaction Document (as such term is defined in the Debentures) and to exercise
such powers and to perform such duties hereunder and thereunder as are
specifically delegated to or required of the Agent by the terms hereof and
thereof and such other powers as are reasonably incidental thereto. The Agent
may perform any of its duties hereunder by or through its agents or employees.
2. Nature of Duties. The Agent shall have no duties or
responsibilities except those expressly set forth in the Agreement. Neither the
Agent nor any of its partners, members, shareholders, officers, directors,
employees or agents shall be liable for any action taken or omitted by it as
such under the Agreement or hereunder or in connection herewith or therewith, be
responsible for the consequence of any oversight or error of judgment or
answerable for any loss, unless caused solely by its or their gross negligence
or willful conduct as determined by a final judgment (not subject to further
appeal) of a court of competent jurisdiction. The duties of the Agent shall be
mechanical and administrative in nature; the Agent shall not have by reason of
the Agreement or any other Transaction Document a fiduciary relationship in
respect of the Debtor or any Secured Party; and nothing in the Agreement or any
other Transaction Document, expressed or implied, is intended to or shall be so
construed as to impose upon the Agent any obligations in respect of the
Agreement or any other Transaction Document except as expressly set forth herein
and therein.
3. Lack of Reliance on the Agent. Independently and without reliance
upon the Agent, each Secured Party, to the extent it deems appropriate, has made
and shall continue to make (i) its own independent investigation of the
financial condition and affairs of the Company and its subsidiaries in
connection with such Secured Party's investment in the Debtor, the creation and
continuance of the Obligations, the transactions contemplated by the Transaction
Documents, and the taking or not taking of any action in connection therewith,
and (ii) its own appraisal of the creditworthiness of the Company and its
subsidiaries, and of the value of the Collateral from time to time, and the
Agent shall have no duty or responsibility, either initially or on a continuing
basis, to provide any Secured Party with any credit, market or other information
with respect thereto, whether coming into its possession before any Obligations
are incurred or at any time or times thereafter. The Agent shall not be
responsible to the Debtor or any Secured Party for any recitals, statements,
information, representations or warranties herein or in any document,
certificate or other writing delivered in connection herewith, or for the
execution, effectiveness, genuineness, validity, enforceability, perfection,
collectibility, priority or sufficiency of the Agreement or any other
Transaction Document, or for the financial condition of the Debtor or the value
of any of the Collateral, or be required to make any inquiry concerning either
the performance or observance of any of the terms, provisions or conditions of
the Agreement or any other Transaction Document, or the financial condition of
the Debtor, or the value of any of the Collateral, or the existence or possible
existence of any default or Event of Default under the Agreement, the Debentures
or any of the other Transaction Documents.
4. Certain Rights of the Agent. The Agent shall have the right to
take any action with respect to the Collateral, on behalf of all of the Secured
Parties. To the extent practical, the Agent shall request instructions from the
Secured Parties with respect to any material act or action (including failure to
act) in connection with the Agreement or any other Transaction Document, and
shall be entitled to act or refrain from acting in accordance with the
instructions of Secured Parties holding a majority in principal amount of
Debentures (based on then-outstanding principal amounts of Debentures at the
time of any such determination); if such instructions are not provided despite
the Agent's request therefor, the Agent shall be entitled to refrain from such
act or taking such action, and if such action is taken, shall be entitled to
appropriate indemnification from the Secured Parties in respect of actions to be
taken by the Agent; and the Agent shall not incur liability to any person or
entity by reason of so refraining. Without limiting the foregoing, (a) no
Secured Party shall have any right of action whatsoever against the Agent as a
result of the Agent acting or refraining from acting hereunder in accordance
with the terms of the Agreement or any other Transaction Document, and the
Debtor shall have no right to question or challenge the authority of, or the
instructions given to, the Agent pursuant to the foregoing and (b) the Agent
shall not be required to take any action which the Agent believes (i) could
reasonably be expected to expose it to personal liability or (ii) is contrary to
this Agreement, the Transaction Documents or applicable law.
5. Reliance. The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, statement,
certificate, telex, teletype or telecopier message, cablegram, radiogram, order
or other document or telephone message signed, sent or made by the proper person
or entity, and, with respect to all legal matters pertaining to the Agreement
and the other Transaction Documents and its duties thereunder, upon advice of
counsel selected by it and upon all other matters pertaining to this Agreement
and the other Transaction Documents and its duties thereunder, upon advice of
other experts selected by it.
6. Indemnification. To the extent that the Agent is not reimbursed
and indemnified by the Debtor, the Secured Parties will jointly and severally
reimburse and indemnify the Agent, in proportion to their initially purchased
respective principal amounts of Debentures, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by or asserted against the Agent in performing its duties
hereunder or under the Agreement or any other Transaction Document, or in any
way relating to or arising out of the Agreement or any other Transaction
Document except for those determined by a final judgment (not subject to further
appeal) of a court of competent jurisdiction to have resulted solely from the
Agent's own gross negligence or willful misconduct. Prior to taking any action
hereunder as Agent, the Agent may require each Secured Party to deposit with it
sufficient sums as it determines in good faith is necessary to protect the Agent
for costs and expenses associated with taking such action.
7. Resignation by the Agent.
(a) The Agent may resign from the performance of all its functions
and duties under the Agreement and the other Transaction Documents at any
time by giving 30 days' prior written notice (as provided in the
Agreement) to the Debtor and the Secured Parties. Such resignation shall
take effect upon the appointment of a successor Agent pursuant to clauses
(b) and (c) below.
(b) Upon any such notice of resignation, the Secured Parties, acting
by a Majority in Interest, shall appoint a successor Agent hereunder.
(c) If a successor Agent shall not have been so appointed within
said 30-day period, the Agent shall then appoint a successor Agent who
shall serve as Agent until such time, if any, as the Secured Parties
appoint a successor Agent as provided above. If a successor Agent has not
been appointed within such 30-day period, the Agent may petition any court
of competent jurisdiction or may interplead the Debtor and the Secured
Parties in a proceeding for the appointment of a successor Agent, and all
fees, including, but not limited to, extraordinary fees associated with
the filing of interpleader and expenses associated therewith, shall be
payable by the Debtor on demand.
8. Rights with respect to Collateral. Each Secured Party agrees with
all other Secured Parties and the Agent (i) that it shall not, and shall not
attempt to, exercise any rights with respect to its security interest in the
Collateral, whether pursuant to any other agreement or otherwise (other than
pursuant to this Agreement), or take or institute any action against the Agent
or any of the other Secured Parties in respect of the Collateral or its rights
hereunder (other than any such action arising from the breach of this Agreement)
and (ii) that such Secured Party has no other rights with respect to the
Collateral other than as set forth in this Agreement and the other Transaction
Documents.
