MASTER SECURITY AGREEMENT
Exhibit 10.3
| To: | LV Administrative Services, Inc., as Agent c/o Valens Capital Management, LLC 000 Xxxxxxx Xxxxxx, 00xx Xxxxx Xxx Xxxx, XX 00000 |
Date: February 29, 2008
To Whom It May Concern:
1. To secure the payment of all Obligations (as hereafter defined), VERICHIP CORPORATION, a
Delaware corporation (“CHIP”), XMARK CORPORATION, a Canada corporation (“XXXX” and
together with CHIP, each a “Company” and collectively the “Companies”), and each
other entity (other than the Agent (as defined below)) that is required to enter into this Master
Security Agreement (each an “Assignor” and, collectively, the “Assignors”) hereby
assigns and grants to the Agent, for the ratable benefit of the Creditor Parties (as defined in the
Securities Purchase Agreement referred to below), a continuing security interest in all of the
following property now owned or at any time hereafter acquired by such Assignor, or in which such
Assignor now has or at any time in the future may acquire any right, title or interest (the
“Collateral”): all cash, cash equivalents, accounts, accounts receivable, deposit accounts
(including, without limitation, the Lockbox Deposit Accounts (as hereafter defined), inventory,
equipment, goods, fixtures, documents, instruments (including, without limitation, promissory
notes), contract rights, commercial tort claims set forth on Schedule B attached hereto,
general intangibles (including, without limitation, payment intangibles and an absolute right to
license on terms no less favorable than those current in effect among such Assignor’s affiliates),
chattel paper, supporting obligations, investment property (including, without limitation, all
partnership interests, limited liability company membership interests and all other equity
interests owned by such Assignor), letter-of-credit rights, trademarks, trademark applications,
tradestyles, patents, patent applications, copyrights, copyright applications and other
intellectual property in which such Assignor now has or hereafter may acquire any right, title or
interest, all proceeds and products thereof (including, without limitation, proceeds of insurance)
and all additions, accessions and substitutions thereto or therefor. Except as otherwise defined
herein, all capitalized terms used herein shall have the meanings provided such terms in that
certain Securities Purchase Agreement dated as of the date hereof (as amended, restated, modified
and/or supplemented from time to time, the “Purchase Agreement”) by and among the
Companies, the Purchasers party thereto and LV Administrative Services, Inc., as administrative and
collateral agent for the Purchasers (the “Agent”).
All items of Collateral which are
defined in the UCC shall have the meanings set forth in the UCC. For purposes hereof, the term
“UCC” means the Uniform Commercial Code as the same may, from time to time, be in effect in
the State of New York; provided, that in the event that, by reason of mandatory provisions of law,
any or all of the attachment, perfection or priority of, or remedies with respect to, the Agent’s
security interest in any Collateral is governed by the Uniform Commercial Code (or comparable
statute (including, for certainty, the Personal Property Security Act (Ontario)) as in effect in a
jurisdiction other than the State of New York, the term “UCC” shall mean the Uniform
Commercial Code (or comparable statute (including, for certainty, the
Personal Property Security Act (Ontario))as in effect in such other jurisdiction for purposes
of the provisions of this Agreement relating to such attachment, perfection, priority or remedies
and for purposes of definitions related to such provisions; provided further, that to the extent
that the UCC is used to define any term herein and such term is defined differently in different
Articles or Divisions of the UCC, the definition of such term contained in Article or Division 9
shall govern. Notwithstanding the foregoing, the term “Collateral” shall not include the following
(“Excluded Collateral”): any rights or interests in any lease, license, contract, or
agreement, as such, if under the terms of such lease, license, contract or agreement, or applicable
law with respect thereto, the valid grant of a security interest or lien therein to the Agent is
prohibited or would result in a default thereunder and such prohibition or default has not been or
is not waived or the consent of the other party to such lease, license, contract or agreement has
not been or is not otherwise obtained or under applicable law such prohibition or default cannot be
waived; provided, that the foregoing exclusion shall in no way be (i) construed to apply if any
such prohibition or default would be rendered ineffective under the UCC or other applicable law
(including the United States Bankruptcy Code) or principles of equity, (ii) construed so as to
limit, impair or otherwise affect the Agent’s unconditional continuing security interests in and
liens upon any rights or interests of Assignors in or to the proceeds thereof, including monies due
or to become due under any such lease, license, contract or agreement (including any accounts), or
(iii) construed to apply at such time as the condition causing such prohibition or default shall be
remedied and, to the extent severable.
2. The term “Obligations” as used herein shall mean and include all debts, liabilities
and obligations owing by each Assignor to any Creditor Party arising under, out of, or in
connection with: (i) the Purchase Agreement and (ii) the Related Agreements (the Purchase Agreement
and the Related Agreements, as each may be amended, modified, restated or supplemented from time to
time, collectively, the “Documents”), and in connection with any documents, instruments or
agreements relating to or executed in connection with the Documents or any documents, instruments
or agreements referred to therein or otherwise, and in connection with any other indebtedness,
obligations or liabilities of each such Assignor to any Creditor Party, whether now existing or
hereafter arising, direct or indirect, liquidated or unliquidated, absolute or contingent, due or
not due and whether under, pursuant to or evidenced by a note, agreement, guaranty, instrument or
otherwise, including, without limitation, obligations and liabilities of each Assignor for
post-petition interest, fees, costs and charges that accrue after the commencement of any case by
or against such Assignor under any bankruptcy, insolvency, reorganization or like proceeding
(collectively, the “Debtor Relief Laws”) in each case, irrespective of the genuineness,
validity, regularity or enforceability of such Obligations, or of any instrument evidencing any of
the Obligations or of any collateral therefor or of the existence or extent of such collateral, and
irrespective of the allowability, allowance or disallowance of any or all of the Obligations in any
case commenced by or against any Assignor under any Debtor Relief Law. Notwithstanding anything to
the contrary contained herein, upon payment of the Obligations under the Note in full in
immediately available funds, this Agreement shall automatically terminate and be without further
force or effect (except for Assignors’ obligations under paragraph 12 of this Master Security
Agreement which shall survive the termination of this Master Security Agreement); provided,
however, that such indemnity obligations shall not be greater than the indemnity obligations of
Assignors under the Purchase Agreement).
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3. Except as set forth in any disclosure schedules to the Purchase Agreement or in the
Exchange Act Filings with respect to those representations and warranties set forth below that have
parallel representations and warranties set forth in the Purchase Agreement which permit exceptions
as set forth in any disclosure schedules to the Purchase Agreement and/or the Exchange Act Filings,
each Assignor hereby jointly and severally represents, warrants and covenants, as applicable, to
Agent, for the benefit of the Creditor Parties, that:
| (a) | it is a corporation, partnership or limited liability company,
as the case may be, validly existing, in good standing and formed under the
respective laws of its jurisdiction of formation set forth on Schedule
A, and each Assignor will provide the Agent thirty (30) days’ prior written
notice of any change in any of its respective jurisdiction of formation; |
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| (b) | its legal name is as set forth in its Certificate/Articles of
Incorporation or other organizational document (as applicable) as amended
through the date hereof and as set forth on Schedule A attached hereto,
and it will provide the Agent thirty (30) days’ prior written notice of any
change in its legal name; |
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| (c) | its organizational identification number (if applicable) is as
set forth on Schedule A hereto, and it will provide the Agent thirty
(30) days’ prior written notice of any change in its organizational
identification number; |
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| (d) | it is the lawful owner of its Collateral and it has the sole
right to grant a security interest therein and will defend the Collateral
against all claims and demands of all persons and entities; |
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| (e) | it will keep its Collateral free and clear of all attachments,
levies, taxes, liens, security interests and encumbrances of every kind and
nature except Permitted Encumbrances; |
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| (f) | it will, at its and the other Assignors’ joint and several cost
and expense, keep the Collateral in good state of repair (ordinary wear and
tear excepted) and will not waste or destroy the same or any part thereof other
than ordinary course discarding of items no longer used or useful in its or
such other Assignors’ business; |
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| (g) | it will not, without the Agent’s prior written consent, sell,
exchange, lease or otherwise dispose of any Collateral, whether by sale, lease
or otherwise, (unless the proceeds of such sale, exchange, lease or disposal
shall be used to repay then outstanding Obligations), except for |
| (i) | the payment of trade payables and other working
capital expenses in the ordinary course of business; |
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| (ii) | the sale of inventory in the ordinary course of
business; |
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| (iii) | the disposition or transfer in the ordinary
course of business during any fiscal year of obsolete and worn-out
equipment or equipment no longer necessary for its ongoing needs,
having an aggregate fair market value of not more than U.S. $100,000
(or the Canadian dollar equivalent) and only to the extent that the
proceeds of each such disposition are used to acquire replacement
Collateral which is subject to the Agent’s first priority perfected
security interest, to repay then outstanding Obligations or to pay
general corporate expenses; or following the occurrence of an Event of
Default which continues to exist the proceeds of which are remitted to
the Agent to be held as cash collateral for the Obligations; |
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| (iv) | the licensing, on a non-exclusive basis, of any
intellectual property; |
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| (v) | arms-length transfers of assets between the
Companies; or |
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| (vi) | any other disposition of assets permitted by
the Purchase Agreement. |
| (h) | (i) it will insure or cause the Collateral to be insured in the
Agent’s name against loss or damage by fire, flood, sprinkler leakage, theft,
burglary, pilferage, loss in transit and other risks customarily insured
against by companies in similar business similarly situated as such Assignor
and such other hazards in amounts and under insurance policies and bonds by
insurers consistent with current practice and reasonably acceptable to the
Agent. All premiums thereon shall be paid by such Assignor, the policies shall
be delivered to the Agent if requested by the Agent and each such policy shall
be endorsed in the Agent’s name as an additional insured and lender loss
payee, with an appropriate loss payable endorsement by each Assignor in form
and substance satisfactory to the Agent. If any Assignor fails to obtain the
insurance and in such amounts of coverage as otherwise required pursuant to
this clause (h), the Agent may procure such insurance and the cost thereof
shall be promptly reimbursed by the Assignor, jointly and severally, and shall
constitute Obligations.; |
| (ii) | it will expressly agree that if additional loss
payees and/or lender loss payees, other than the Agent, are named to
the Collateral, the Agent will always be assigned to first lien
position until all Obligations have been satisfied; |
| (i) | it will permit any representatives designated by the Agent (or
any successor of the Agent), upon reasonable notice and during normal business
hours, at such person’s expense and accompanied by a representative of such
Assignor (provided that no such prior notice shall be required to be given and
no such representative of such Assignor shall
be required to accompany the Agent in the event the Agent reasonably
believes such access is necessary to preserve or protect the Collateral or
following the occurrence and during the continuance of an Event of Default
(as defined in each Note)), to visit and inspect any of the properties of
such Assignor; |
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| (j) | such Assignor (jointly and severally with each other Assignor)
hereby indemnifies and saves the Agent and each other Creditor Party harmless
from all loss, costs, damage, liability and/or expense, including reasonable
attorneys’ fees, that the Agent and each other Creditor Party may sustain or
incur to enforce payment, performance or fulfillment of any of the Obligations
and/or in the enforcement of this Master Security Agreement or in the
prosecution or defense of any action or proceeding either against the Agent,
any other Creditor Party or any Assignor concerning any matter growing out of
or in connection with this Master Security Agreement, and/or any of the
Obligations and/or any of the Collateral except to the extent caused by the
Agent’s or any Creditor Party’s own gross negligence or willful misconduct (as
determined by a court of competent jurisdiction in a final and non-appealable
decision); |
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| (k) | all commercial tort claims (as defined in the Uniform
Commercial Code as in effect in the State of New York) held by any Assignor
are set forth on Schedule B to this Master Security Agreement; each Assignor
hereby agrees that it shall promptly, and in any event within five (5) Business
Days after the same is acquired by it, notify the Agent of any commercial tort
claim acquired by it and unless otherwise consented to in writing by the Agent,
it shall enter into a supplement to this Master Security Agreement granting to
the Agent a security interest for the ratable benefit of the Creditor Parties
in such commercial tort claim, securing the Obligations; and |
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| (l) | all invoices, account statements and other written or oral
communications directing, instructing, demanding or requesting payment of any
Account of any Assignor or any other amount constituting Collateral shall
conspicuously direct that all payments be made to the lockboxes maintained by
such Assignor (the “Lockboxes”) with Citibank, N.A., Royal Bank of
Canada or such other financial institution accepted by the Agent in writing as
may be selected by such Assignor (the “Lockbox Bank”) or such other
address as the Agent may direct in writing. The Lockbox Bank shall agree to
deposit the proceeds of such payments immediately upon receipt thereof in that
certain deposit account maintained at the Lockbox Bank by the applicable
Assignor or such other deposit account accepted by the Agent in writing (the
“Lockbox Deposit Account”). |
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On or prior to the Closing Date, each
Assignor shall and shall cause the Lockbox Bank to enter into all such
documentation acceptable to the Agent pursuant to which, among other things,
the Lockbox Bank agrees to, following notification by the Agent (which
notification the
Agent shall only give following the occurrence and during the continuance of
an Event of Default), comply only with the instructions or other directions
of the Agent concerning the Lockbox and the Lockbox Deposit Account. If any
Assignor receives any payments, such Assignor shall immediately remit such
payments to the Lockbox Deposit Account in their original form with all
necessary endorsements. Until so remitted, the Assignors shall hold all
such payments in trust for and as the property of the Agent, for the ratable
benefit of the Creditor Parties, and shall not commingle such payments with
any of its other funds or property. |
4. The occurrence of either of the following events shall constitute an event of default under
this Master Security Agreement (each, an “Event of Default”): (a) (i) the occurrence of an
Event of Default (as defined in each Note); or (b) any material portion of the Collateral shall be
damaged, destroyed or otherwise lost and such damage, destruction or loss is not covered by
insurance.
5. In case an Event of Default shall have occurred and is continuing, the Agent may (to the
extent permitted by and subject to any requirements of applicable law): (i) transfer any or all of
the Collateral into its name, or into the name of its nominee or nominees; (ii) exercise all
corporate rights with respect to the Collateral including, without limitation, all rights of
conversion, exchange, subscription or any other rights, privileges or options pertaining to any
shares of the Collateral as if it were the absolute owner thereof, including, but without
limitation, the right to exchange, at its discretion, any or all of the Collateral upon the merger,
consolidation, reorganization, recapitalization or other readjustment of any Assignor thereof, or
upon the exercise by any Assignor of any right, privilege or option pertaining to any of the
Collateral, and, in connection therewith, to deposit and deliver any and all of the Collateral with
any committee, depository, transfer agent, registrar or other designated agent upon such terms and
conditions as it may determine, all without liability except to account for property actually
received by it; and (iii) sell, assign and deliver the whole or, from time to time, any part of the
Collateral at the time held by the Agent, at any private sale or at public auction, with or without
demand, advertisement or notice of the time or place of sale or adjournment thereof or otherwise
(all of which are hereby waived, except such notice as is required by applicable law and cannot be
waived), for cash or credit or for other property for immediate or future delivery, and for such
price or prices and on such terms as the Agent in its sole discretion may determine, or as may be
required by applicable law. Each Assignor hereby waives and releases any and all right or equity of
redemption, whether after sale hereunder. At any such sale, unless prohibited by applicable law,
the Agent may bid for and purchase the whole or any part of the Collateral so sold free from any
such right or equity of redemption. All moneys received by Agent hereunder, whether upon sale of
the Collateral or any part thereof or otherwise, shall be held by Agent and applied by it in
repayment of the Obligations as set forth herein. No failure or delay on the part of the Agent in
exercising any rights hereunder shall operate as a waiver of any such rights nor shall any single
or partial exercise of any such rights preclude any other or future exercise thereof or the
exercise of any other rights hereunder. The Agent shall have no duty as to the collection or
protection of the Collateral or any income thereon nor any duty as to preservation of any rights
pertaining thereto, except to apply the funds in accordance with the requirements of Section
10 hereof. Except as required by, and unwaiveable under, the UCC, the Agent may exercise its
rights with respect to property held hereunder without resort to other security for or sources of
reimbursement for the Obligations. In addition to the foregoing, the Agent shall have all of
the rights, remedies and privileges of a secured party under the Uniform Commercial Code of New
York (the “UCC”) regardless of the jurisdiction in which enforcement hereof is sought.
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Notwithstanding anything else herein to the contrary, in the event that any Assignor enters
into a Control Agreement with Agent and a third party holding an account of such Assignor, then
Agent agrees as follows:
| (i) | the Agent shall not deliver a notice (a
“Notice”) to such third party asserting the right to direct the
disposition of funds contained in such account unless an Event of
Default has occurred and is continuing or as otherwise permitted by the
Documents; and |
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| (ii) | in the event Agent delivers a Notice to the
third party in contravention hereof, Agent will promptly notify the
third party that the Notice is terminated and Agent shall not have the
right to send an additional Notice except as provided in Section (i)
above. |
For purposes of the foregoing, Control Agreement shall mean an agreement entered into among a
debtor, secured party and third party pursuant in which the intent is, in part, to evidence the
control of the secured party for purposes of perfecting its security interest in the account
subject to such Control Agreement under Article 9 of the UCC.
6. Upon the occurrence of and during the continuance of any Event of Default and to the extent
permitted by and subject to any requirements of applicable law, the Agent may appoint or reappoint
by instrument in writing, any person or persons, whether an officer or officers or an employee or
employees of any Creditor Party or not, to be an interim receiver, receiver or receivers
(hereinafter called a “Receiver”, which term when used herein shall include a receiver and
manager) of any Collateral of any Assignor (including any interest, income or profits therefrom)
and may remove any Receiver so appointed and appoint another in his/her/its stead. Any such
Receiver shall, so far as concerns responsibility for his/her/its acts, be deemed the agent of the
relevant Assignor and not the Agent, and the Agent shall not be in any way responsible for any
misconduct, negligence or non-feasance on the part of any such Receiver or his/her/its servants,
agents or employees. Subject to the provisions of the instrument appointing him/her/it and to the
extent permitted by and subject to any requirements of applicable law, any such Receiver shall have
power to take possession of Collateral, to preserve Collateral or its value, to carry on or concur
in carrying on all or any part of the business of the relevant Assignor and to sell, lease, license
or otherwise dispose of or concur in selling, leasing, licensing or otherwise disposing of
Collateral. To facilitate the foregoing powers, any such Receiver may, to the exclusion of all
others, including the Assignors, enter upon, use and occupy all premises owned or occupied by the
relevant Assignor wherein Collateral may be situate, maintain Collateral upon such premises, borrow
money on a secured or unsecured basis and use Collateral directly in carrying on the relevant
Assignor’s business or as security for loans or advances to enable the Receiver to carry on the
relevant Assignor’s business or otherwise, as such Receiver shall, in its discretion, determine.
Except as may be otherwise directed by the Agent, and subject to applicable law, all money received
from time to time by such Receiver in carrying out his/her/its appointment shall be received in
trust for and be paid over to the Agent. Every such
Receiver may, in the discretion of the Agent, be vested with all or any of the rights and
powers of the Agent.
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7. Upon and during the continuance of any Event of Default, the Agent may, either directly or
through its agents or nominees, exercise any or all of the powers and rights given to a Receiver by
virtue of Section 6.
8. If any Assignor defaults in the performance or fulfillment of any of the terms, conditions,
promises, covenants, provisions or warranties on such Assignor’s part to be performed or fulfilled
under or pursuant to this Master Security Agreement, the Agent may, at its option without waiving
its right to enforce this Master Security Agreement according to its terms, immediately or at any
time thereafter and without notice to any Assignor, perform or fulfill the same or cause the
performance or fulfillment of the same for each Assignor’s joint and several account and at each
Assignor’s joint and several cost and expense, and the cost and expense thereof (including
reasonable attorneys’ fees) shall be added to the Obligations and shall be payable on demand with
interest thereon at the highest rate set forth in the Notes, or, at the Agent’s option, debited by
the Agent from any other deposit accounts in the name of any Assignor and controlled by the Agent.
9. Each Assignor hereby appoints the Agent, or any other Person whom the Agent may designate
as such Assignor’s attorney, with power to: (a)(i) execute any security related documentation on
such Assignor’s behalf and to supply any omitted information and correct patent errors in any
documents executed by such Assignor or on such Assignor’s behalf; (ii) to sign such Assignor’s name
on and file any financing statements or other public record against such Assignor covering the
Collateral (and, in connection with the filing of any such financing statements, describe the
Collateral as “all assets and all personal property, whether now owned and/or hereafter acquired”
(or any substantially similar variation thereof)); and (iii) to do all other things the Agent deems
necessary to reasonably carry out the terms of Section 1 of this Master Security Agreement,
any other Related Agreement and all other related documents and (b) upon the occurrence and during
the continuance of an Event of Default; (i) endorse such Assignor’s name on any checks, notes,
acceptances, money orders, drafts or other forms of payment or security that may come into the
Agent’s possession; (ii) sign such Assignor’s name on any invoice or xxxx of lading relating to any
accounts receivable, drafts against account debtors, schedules and assignments of accounts
receivable, notices of assignment, verifications of accounts receivable and notices to or from
account debtors; (iii) verify the validity, amount or any other matter relating to any accounts
receivable by mail, telephone, telegraph or otherwise with account debtors; and (iv) notify the
post office authorities to change the address for delivery of such Assignor’s mail to an address
designated by the Agent, and to receive, open and dispose of all mail addressed to such Assignor.
Each Assignor hereby ratifies and approves all acts of the attorney and neither the Agent nor the
attorney will be liable for any acts of commission or omission, nor for any error of judgment or
mistake of fact or law other than gross negligence or willful misconduct (as determined by a court
of competent jurisdiction in a final and non-appealable decision). This power being coupled with
an interest, is irrevocable so long as any Obligations remains unpaid.
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10. The proceeds of any collection, recovery, receipt, appropriation, realization, sale or
other disposition of the Collateral shall be applied by Agent as follows:
| (a) | First, to the payment of all costs, reasonable expenses and
charges of the Agent or any Receiver and to the reimbursement of the Agent or
any Receiver for the prior payment of such costs, reasonable expenses and
charges incurred in connection with the care and safekeeping of the Collateral
(including, without limitation, the reasonable expenses of any sale or any
other disposition of any of the Collateral), reasonable attorneys’ fees and
reasonable expenses, court costs, any other fees or expenses incurred or
expenditures or advances made by the Agent or any Receiver in the protection,
enforcement or exercise of its rights, powers or remedies hereunder; |
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| (b) | Second, to the payment of the Obligations, in whole or in part,
in such order as the Agent may elect, whether or not such Obligations is then
due; |
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| (c) | Third, to such persons, firms, corporations or other entities
as required by applicable law including, without limitation, Section
9-615(a)(3) of the UCC; and |
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| (d) | Fourth, to the extent of any surplus, to the Assignors or as a
court of competent jurisdiction may direct. |
In the event that the proceeds of any collection, recovery, receipt, appropriation,
realization or sale are insufficient to satisfy the Obligations, the Assignors shall be liable for
the deficiency plus the costs and reasonable fees of any attorneys employed by Agent to collect
such deficiency
11. No delay or failure on the Agent’s part in exercising any right, privilege or option
hereunder shall operate as a waiver of such or of any other right, privilege, remedy or option, and
no waiver whatever shall be valid unless in writing, signed by the Agent and then only to the
extent therein set forth, and no waiver by the Agent of any default shall operate as a waiver of
any other default or of the same default on a future occasion. The Creditor Parties’ books and
records containing entries with respect to the Obligations shall be admissible in evidence in any
action or proceeding. The Agent shall have the right to enforce any one or more of the remedies
available to the Agent, successively, alternately or concurrently. Each Assignor agrees to join
with the Agent in executing such documents or other instruments to the extent required by the UCC
in form satisfactory to the Agent and in executing such other documents or instruments as may be
required or deemed necessary by the Agent for purposes of affecting or continuing the Agent’s
security interest in the Collateral.
12. The Assignors shall jointly and severally pay all of the Agent’s and each other Creditor
Party’s reasonable charges, fees, out-of-pocket costs and expenses, including reasonable fees and
disbursements of in-house or outside counsel and appraisers (“Expenses”), in connection
with the preparation, execution and delivery of the Documents as set forth in the Purchase
Agreement, and Expenses in connection with the prosecution or defense of any action, contest,
dispute, suit or proceeding concerning any matter in any way arising out of, related to or
connected with any Document.
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The Assignors shall also jointly and severally pay all of the
Agent’s, any Receiver’s and each other Creditor Party’s Expenses, in connection with (a) the
preparation, execution and delivery of any waiver, any amendment thereto or consent proposed
or executed in connection with the transactions contemplated by the Documents, (b) the Agent’s
obtaining performance of the Obligations under the Documents, including, but not limited to the
enforcement or defense of the Agent’s security interests, assignments of rights and liens hereunder
as valid perfected security interests, (c) any attempt to inspect, verify, protect, collect, sell,
liquidate or otherwise dispose of any Collateral, (d) any appraisals or re appraisals of any
property (real or personal) pledged to the Agent by any Assignor as Collateral for, or any other
Person as security for, the Obligations hereunder and (e) any consultations in connection with any
of the foregoing. The Assignors shall also jointly and severally pay the Agent’s and each other
Creditor Party’s customary bank charges for all bank services (including wire transfers) performed
or caused to be performed by the Agent or any other Creditor Party for any Assignor at any
Assignor’s request or in connection with any Assignor’s loan account (if any) with the Agent or any
other Creditor Party. All such costs and expenses together with all filing, recording and search
fees, taxes and interest payable by the Assignors to the Agent shall be payable on demand and shall
be secured by the Collateral. If any tax by any nation or government, any state or other political
subdivision thereof, and any agency, department or other entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government (each, a
“Governmental Authority”) is or may be imposed on or as a result of any transaction between
any Assignor, on the one hand, and the Agent and/or any other Creditor Party on the other hand,
which the Agent and/or any other Creditor Party is or may be required to withhold or pay, the
Assignors hereby jointly and severally indemnify and hold the Agent and each other Creditor Party
harmless in respect of such taxes, and the Assignors will repay to the Agent or such other Creditor
Party the amount of any such taxes which shall be charged to the Assignors’ account; and until the
Assignors shall furnish the Agent and such other Creditor Party with indemnity therefor (or supply
the Agent and such other Creditor Party with evidence satisfactory to it that due provision for the
payment thereof has been made), the Creditor Parties may hold without interest any balance standing
to each Assignor’s credit (if any) and the Agent shall retain its liens in any and all Collateral.
13. THIS MASTER SECURITY AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN
SUCH STATE, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. All of the rights, remedies,
options, privileges and elections given to the Agent hereunder shall inure to the benefit of the
Agent’s successors and assigns. The term “Agent” as herein used shall include the Agent,
any parent of the Agent’s, any of the Agent’s subsidiaries and any co-subsidiaries of the Agent’s
parent, whether now existing or hereafter created or acquired, and all of the terms, conditions,
promises, covenants, provisions and warranties of this Agreement shall inure to the benefit of each
of the foregoing, and shall bind the representatives, successors and assigns of each Assignor.
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14. Each Assignor hereby consents and agrees that the state and federal courts located in the
County of New York, State of New York shall have exclusive jurisdiction to hear and determine any
claims or disputes between any Assignor, on the one hand, and the Agent and/or any other Creditor
Party, on the other hand, pertaining to this Master Security Agreement or to any matter arising out
of or related to this Master Security Agreement, provided, that the Agent, each other Creditor
Party and each Assignor acknowledges that any appeals from those courts
may have to be heard by a court located outside of the County of New York, State of New York,
and further provided, that nothing in this Master Security Agreement shall be deemed or operate to
preclude the Agent from bringing suit or taking other legal action in any other jurisdiction to
collect, the Obligations, to realize on the Collateral or any other security for the Obligations,
or to enforce a judgment or other court order in favor of the Agent. Each Assignor expressly
submits and consents in advance to such jurisdiction in any action or suit commenced in any such
court, and each Assignor hereby waives any objection which it may have based upon lack of personal
jurisdiction, improper venue or forum non conveniens. Each Assignor hereby
waives personal service of the summons, complaint and other process issues in any such action or
suit and agrees that service of such summons, complaint and other process may be made by registered
or certified mail addressed to such assignor at the address set forth on the signature lines hereto
and that service so made shall be deemed completed upon Assignor’s actual receipt thereof.
The parties desire that their disputes be resolved by a judge applying such applicable laws.
Therefore, to achieve the best combination of the benefits of the judicial system and of
arbitration, the parties hereto waive all rights to trial by jury in any action, suite, or
proceeding brought to resolve any dispute, whether arising in contract, tort, or otherwise between
the Agent and/or any other Creditor Party, and/or any Assignor arising out of, connected with,
related or incidental to the relationship established between them in connection with this Master
Security Agreement or the transactions related hereto.
15. This Master Security Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which shall constitute one instrument. Any signature
delivered by a party by facsimile or electronic transmission shall be deemed to be an original
signature hereto.
16. It is understood and agreed that any person or entity that desires to become an Assignor
hereunder, or is required to execute a counterpart of this Master Security Agreement after the date
hereof pursuant to the requirements of any Document, shall become an Assignor hereunder by (x)
executing a Joinder Agreement in form and substance satisfactory to the Agent, (y) delivering
supplements to such exhibits and annexes to such Documents as the Agent shall reasonably request
and (z) taking all actions as specified in this Master Security Agreement as would have been taken
by such Assignor had it been an original party to this Master Security Agreement, in each case with
all documents required above to be delivered to the Agent and with all documents and actions
required above to be taken to the reasonable satisfaction of the Agent.
11
17. All notices from the Agent to any Assignor shall be sufficiently given if mailed or
delivered to such Assignor’s address set forth below.
| Very truly yours, VERICHIP CORPORATION |
||||
| By: | /s/ Xxxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxxx | |||
| Title: | President and Chief Financial Officer | |||
| Address: 0000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 000 Xxxxxx Xxxxx, XX 00000 Attention: Xxxxxxx X. Xxxxxxx Facsimile No.:561-805-8001 |
||||
| XMARK CORPORATION |
||||
| By: | /s/ Xxxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxxx | |||
| Title: | Chief Financial Officer and Secretary | |||
| Address: 0000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 000 Xxxxxx Xxxxx, XX 00000 Attention: Xxxxxxx X. Xxxxxxx Facsimile No.:561-805-8001 |
||||
AGREED AND ACKNOWLEDGED:
| LV ADMINISTRATIVE SERVICES, INC., as Agent |
||||
By:
|
/s/ Xxxxx Xxxxxxxxx
|
|||
| Title: Authorized Signatory | ||||
signature page to
master security agreement
master security agreement
SCHEDULE A
| Organizational | ||||
| Entity | Jurisdiction of Formation | Identification Number | ||
VERICHIP CORPORATION |
Delaware | 3414073 | ||
XMARK CORPORATION |
Ontario | 446052-9 |
SCHEDULE B
COMMERCIAL TORT CLAIMS
NONE
