EXHIBIT 4.9
THE RIGHTS OF THE SECURED PARTY AND THE INVESTORS UNDER THIS SECURITY AGREEMENT
SHALL BE SUBORDINATED TO THE EXTENT AND IN THE MANNER PROVIDED IN THAT CERTAIN
SUBORDINATION AGREEMENT BETWEEN THE SECURED PARTY AND _____________ AND/OR ANY
OTHER SUBORDINATION AGREEMENT IN EFFECT WITH RESPECT TO ANY INDEBTEDNESS FOR
BORROWED MONEY (IN EACH CASE, A "SUBORDINATION AGREEMENT"). THE SECURED PARTY,
THE INVESTORS AND SUBSEQUENT HOLDERS OF THE SENIOR NOTES (AS DEFINED BELOW), BY
ACCEPTANCE THEREOF, ACKNOWLEDGE AND AGREE TO BE BOUND BY A SUBORDINATION
AGREEMENT.
GENERAL SECURITY AGREEMENT
(Floating Lien)
SECURITY AGREEMENT, dated as of September 27, 2002, between Comdial
Corporation, a Delaware corporation with its principal executive office located
at 000 Xxxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxx 00000 (the "Debtor"), and Winfield
Capital Corp., a New York corporation with offices at 000 Xxxxxxxxxx Xxxxxx,
Xxxxx Xxxxxx, Xxx Xxxx 00000 (the "Secured Party");
W I T N E S S E T H :
WHEREAS, Debtor has issued to the Secured Party 12% senior
subordinated secured promissory notes in the aggregate principal amount of
$2,000,000 (herein collectively, as at any time amended, extended, restated,
renewed or modified, the "Senior Notes");
WHEREAS, it is a condition to the willingness of the Secured Party
to make the loan evidenced by the Senior Notes that Debtor enter into this
Agreement and grant to the Secured Party the security interest provided for
herein;
NOW, THEREFORE, FOR VALUE RECEIVED, IT IS AGREED:
Section 1. Terms. Unless otherwise defined herein, capitalized terms
used in this Agreement shall have the meaning specified therefor in the Senior
Notes. As used herein the following terms shall have the meanings specified and
shall include in the singular number the plural and in the plural number the
singular:
"Assigned Agreements" shall mean all contracts and agreements of
Debtor (other than contracts or agreements which by their terms expressly
prohibit the granting of any Lien (as hereinafter defined) thereon).
"Collateral" means all of Debtor's right, title and interest in and
under or arising out of each and all of the following:
All personal property and fixtures of Debtor of any type or
description, wherever located and now existing or hereafter arising
or acquired, including but not limited to the following:
(i) all of Debtor's goods including, without limitation:
(a) all inventory, including without limitation, equipment
held for lease, whether raw materials, in process or finished,
all material or equipment usable in processing the same and
all documents of title covering any inventory (as such term is
defined in the Uniform Commercial Code, as in effect from time
to time in the State of New York (the "NYUCC")) (all of the
foregoing, "Inventory"), including without limitation that
located at the locations listed on Schedule 1-A annexed
hereto;
(b) Except for the equipment subject to liens set forth in
Schedule 1-B hereto (for so long as such lessors and/or
lenders set forth in Schedule 1-B hereto maintain a security
interest in such equipment), all equipment (the "Equipment")
employed in connection with Debtor's business, together with
all present and future additions, attachments and accessions
thereto and all substitutions therefor and replacements
thereof, including without limitation that located at the
locations listed on Schedule 1-A annexed hereto;
(ii) all of Debtor's present and future accounts, accounts
receivable, general intangibles, as such terms are defined in the
NYUCC, and all contracts and contract rights (herein sometimes
referred to as "Receivables"), including but not limited to Debtor's
rights (including rights to payment) under all Assigned Agreements,
together with
(a) all claims, rights, powers or privileges and remedies of
Debtor relating thereto or arising in connection therewith
including, without limitation, all rights of Debtor to make
determinations, to exercise any election (including, but not
limited to, election of remedies) or option or to give or
receive any notice, consent, waiver or approval, together with
full power and authority to demand, receive, enforce, collect
or receipt for any of the foregoing or any property which is
the subject of the Assigned Agreements, to enforce or execute
any checks, or other instruments or orders, to file any claims
and to take any action which (in the opinion of the Secured
Party) may be necessary or advisable in connection with any of
the foregoing,
(b) all liens, security, guaranties, endorsements, warranties
and indemnities and all insurance and claims for insurance
relating thereto or arising in connection therewith,
(c) all rights to property forming the subject matter of the
Receivables including, without limitation, rights to stoppage
in transit and rights to returned or repossessed property,
(d) all writings relating thereto or arising in connection
therewith including without limitation, all notes, contracts,
security agreements, guaranties, chattel paper and other
evidence of indebtedness or security,
2
all powers-of-attorney, all books, records, ledger cards and
invoices, all credit information, reports or memoranda and all
evidence of filings or registrations relating thereto,
(e) all catalogs, computer and automatic machinery software
and programs, and the like pertaining to operations by Debtor
in, on or about any of its plants or warehouses, all sales
data and other information relating to sales or service of
products now or hereafter manufactured on or about any of its
plants, and all accounting information pertaining to
operations in, on or about any of its plants, and all media in
which or on which any of the information or knowledge or data
is stored or contained, and all computer programs used for the
compilation or printout of such information, knowledge,
records or data, and
(f) all accounts, contract rights, general intangibles and
other property rights of any nature whatsoever arising out of
or in connection with the foregoing, including without
limitation, payments due and to become due, whether as
repayments, reimbursements, contractual obligations,
indemnities, damages or otherwise;
(iii) all other personal property of Debtor of any nature
whatsoever, including, without limitation, all accounts, bank
accounts, deposits, credit balances, contract rights, inventory,
general intangibles, goods, equipment, instruments, chattel paper,
machinery, furniture, furnishings, fixtures, tools, supplies,
appliances, plans and drawings, together with all customer and
supplier lists and records of the business, and all property from
time to time described in any financing statement signed by Debtor
naming the Secured Party as secured party;
(iv) all of Debtor's right, title, and interest in and to any shares
of capital stock of the respective corporations identified on
Schedule 1-C hereto (the "Issuers"), represented by the certificates
identified on Schedule 1-C, together with the certificates
representing any such shares, and all other shares of capital stock
of whatever class of the Issuers, now or hereafter owned by Debtor,
in each case together with the certificates evidencing the same
(collectively, the "Stock Collateral");
(v) All shares, securities, money or property representing a
dividend on any of the Stock Collateral, or representing a
distribution of return of capital upon or in respect of the Stock
Collateral, or resulting from a split-up, revision, reclassification
and other like change of the Stock Collateral or otherwise received
in exchange therefor, and any subscription warrants, rights or
options issued to the holders of, or otherwise in respect of, the
Stock Collateral;
(vi) Without affecting the obligations of Debtor under any provision
prohibiting such action hereunder or under the Senior Notes, in the
event of any consolidation or merger in which an Issuer is not the
surviving corporation, all
3
shares of each class of the capital stock of the successor
corporation formed by or resulting from such consolidation or
merger;
(vii) any and all of Debtor's right, title and interest in its
intellectual property, including, without limitation, (a) each of
the Trademarks (as hereinafter defined) and the goodwill of the
business symbolized by each of the Trademarks, all customer lists
and other records of Debtor relating to the distribution of products
bearing the Trademarks (as hereinafter defined) and each of the
registrations described in Schedule 1-D hereto; (b) each of the
Patents (as hereinafter defined) and each of the registrations
listed on Schedule 1-D hereto; (c) each of the tradenames listed on
Schedule 1-D hereto (the "Tradenames"); (d) each of the Copyrights
(as hereinafter defined) and each of the applications, registrations
and recordings thereof listed on Schedule 1-D hereto, and all
derivative works, extensions or renewals thereof ; (d) any and all
proceeds of the foregoing, including, without limitation, any claims
by Debtor against third parties for infringement of the Trademarks,
the Patents and/or the Copyrights (collectively, the "Intellectual
Property");
(viii) all additions, accessions, replacements, substitutions or
improvements and all products and proceeds including, without
limitation, proceeds of insurance, of any and all of the Collateral
described in clauses (i) through (vii) above; and
(ix) any consideration received from the sale, exchange, lease or
other disposition of any asset or property which constitutes
Collateral, any other value received as a consequence of the
possession of any Collateral and any payment received from any
insurer or other person or entity as a result of the destruction,
loss, theft or other involuntary conversion of whatever nature of
any asset or property that constitutes Collateral.
"Copyrights" mean all copyrights, copyrighted works or any item
which embodies such copyrighted work of the United States or any other country,
all applications therefor, all right, title and interest therein and thereto,
and all registrations and recordings thereof, including, without limitation,
applications, registrations and recordings in the United States Copyright Office
or in any similar office or agency of the United States, and State thereof or
any other country or any political subdivision thereof, and all derivative
works, extensions or renewals thereof.
"Indebtedness for Borrowed Money" means all secured payment
obligations of Debtor (whether outstanding on the date hereof or hereinafter) to
any bank, insurance company, finance company or other institutional lender or
other entity regularly engaged in the business of extending credit in the form
of borrowed money and any pledgor or guarantor of letters of credit posted on
behalf of Debtor.
"Instrument" shall have the meaning specified in Article 3 of the
NYUCC and shall also include any other writing which evidences a right to the
payment of money and is not itself a security agreement or lease and is of a
type which is in the ordinary course of business transferred by delivery with
any necessary endorsement or assignment.
4
"Lien" means any mortgage, pledge, hypothecation, assignment,
security interest, deposit arrangement, encumbrance (including any easement,
right of way, zoning restriction and the like), lien (statutory or other) or
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever (including any conditional sale or other title
retention agreement, any financing lease involving substantially the same
economic effect as any of the foregoing and the filing of any financing
statement under the NYUCC or comparable law of any jurisdiction).
"Material Adverse Effect" means a material adverse effect on the
financial condition of the Company and its subsidiaries, taken as a whole.
"Patents" mean (i) all letters patent of the United States or any
other country, all right, title and interest therein and thereto, and all
applications, registrations and recordings thereof, including, without
limitation, applications, registrations and recordings in the United States
Patent and Trademark Office or in any similar office or agency of the United
States, any state or province thereof or any other country or any political
subdivision thereof, all whether now owned or hereafter acquired by Debtor,
including, but not limited to, those described in Schedule 1-D hereto, and (ii)
all reissues, continuations, continuations-in-part, extensions or divisionals
thereof and all licenses thereof.
"Permitted Liens" means:
(a) Liens for taxes, assessments or other governmental charges
or levies not at the time delinquent or thereafter payable
without penalty or being contested in good faith by
appropriate proceedings and for which adequate reserves in
accordance with generally accepted accounting principles shall
have been set aside on its books;
(b) Liens of carriers, warehousemen, mechanics, materialmen
and landlords incurred in the ordinary course of business for
sums not overdue or being contested in good faith by
appropriate proceedings and for which adequate reserves shall
have been set aside on its books;
(c) Liens (other than Liens arising under the Employee
Retirement Income Security Act of 1974, as amended, or Section
412(n) of the Internal Revenue Code of 1986, as amended)
incurred in the ordinary course of business in connection with
workers' compensation, unemployment insurance or other forms
of governmental insurance or benefits, or to secure
performance of tenders, statutory obligations, leases and
contracts (other than for borrowed money) entered into in the
ordinary course of business or to secure obligations on surety
or appeal bonds;
(d) Judgment Liens in existence less than 60 days after the
entry thereof or with respect to which execution has been
stayed;
(e) Ground leases in respect of real property on which
facilities owned or leased by Debtor or any of its
subsidiaries are located;
5
(f) Easements, rights-of-way, restrictions, minor defects or
irregularities in title and other similar charges or
encumbrances not interfering in any material respect with the
business of Debtor and its subsidiaries taken as a whole;
(g) Any interest or title of a lessor secured by a lessor's
interest under any lease of real property on which facilities
owned or leased by Debtor or any of its subsidiaries are
located;
(h) Leases or subleases granted to others not interfering in
any material respect with the business of Debtor and its
subsidiaries taken as a whole;
(i) A Lien on any asset securing indebtedness (including
capitalized lease obligations) incurred or assumed for the
purpose of financing the purchase price (including capitalized
lease payments in the nature thereof) of such asset, provided
that such Lien attaches only to the asset acquired with the
proceeds of such indebtedness and attaches concurrently with
or within ten (10) days following the acquisition thereof;
(j) Liens existing on the date hereof as disclosed on Schedule
1-E hereto; and
(k) Liens with respect to the Senior Indebtedness.
"Person" means any natural person, corporation, firm, association,
partnership, joint venture, limited liability company, joint?stock company,
trust, unincorporated organization, government, governmental agency or
subdivision, or any other entity, whether acting in an individual, fiduciary or
other capacity.
"Receivables" has the meaning specified therefor in clause (ii) of
the definition of Collateral.
"Secured Obligations" means all obligations of Debtor, whether for
fees, expenses or otherwise, now existing or hereafter arising under this
Agreement and the Senior Notes, including, without limitation, full and prompt
payment and performance of (i) all principal and interest on the Senior Notes
when and as due, whether at maturity, by acceleration, or otherwise and (ii) all
obligations of Debtor at any time and from time to time under this Agreement.
"Senior Indebtedness" means, collectively, (a) all Indebtedness for
Borrowed Money (and all renewals, deferrals, extensions, refundings, amendments,
modifications and replacements of any such Indebtedness for Borrowed Money) up
to a maximum principal amount of $15,000,000 and (b) all payment obligations of
Debtor pursuant to any capitalized lease with an entity that is not an affiliate
of Debtor, unless by the terms of the instrument creating or evidencing any such
indebtedness it is expressly provided that such indebtedness is not superior in
right of payment to the Senior Notes.
6
"Termination Date" means the date on which all the Senior Notes have
been paid in full or converted into securities of Debtor.
"Trademarks" means (i) all trademarks, trade names, trade styles,
service marks, prints and labels on which said trademarks, trade names, trade
styles and service marks have appeared or appear, designs and general
intangibles of like nature, now existing or hereafter adopted or acquired, all
right, title and interest therein and thereto, and all applications,
registrations and recordings thereof, including, without limitation,
applications, registrations and recordings in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
state or province thereof, or any other country or any political subdivision
thereof, all whether now owned or hereafter acquired by Debtor, including, but
not limited to, those described in Schedule 1-D annexed hereto and made a part
hereof, and (ii) all reissues, extensions or renewals thereof and all licenses
thereof.
Section 2. Security Interests; Subordination.
(a) As security for the payment and performance of all Secured
Obligations, and subject to the last sentence of this Xxxxxxx 0, Xxxxxx does
hereby create, grant and assign to the Secured Party a continuing security
interest in all of the Collateral, whether now existing or hereafter arising or
acquired and wherever located, subject to the priority, if any, of Permitted
Liens (the "Security Interest"). Without limiting the foregoing, the Secured
Party is hereby authorized to file one or more financing statements,
continuation statements or such other documents, including, without limitation,
the Assignment of Security (Trademarks) attached hereto as Exhibit 1, for the
purpose of perfecting, confirming, continuing, enforcing or protecting the
Security Interest.
The Secured Party hereby acknowledges and agrees that the Security
Interest granted hereunder shall be subordinate and junior to any security
interest granted in connection with any Indebtedness for Borrowed Money, and any
refinancings or replacements thereof. Notwithstanding anything to the contrary
in this Security Agreement and in the Senior Notes, the indebtedness evidenced
by the Senior Notes, and all rights of the Secured Party hereunder, shall be
subordinate to the rights of the Senior Indebtedness. In addition, the Security
Interest and any payment of the principal amount of, accrued interest on, fees
and expenses relating to, and any other indebtedness evidenced by the Senior
Notes shall be subordinated to the extent and in the manner provided in a
Subordination Agreement.
Section 3. General Representations, Warranties and Covenants. Debtor
represents, warrants and covenants, which representations, warranties and
covenants shall survive execution and delivery of this Agreement, as follows:
(a) This Agreement is made with full recourse to Debtor and pursuant to
and upon all the warranties, representations, covenants, and agreements on the
part of Debtor contained herein, in the Senior Notes and otherwise made in
writing in connection herewith or therewith.
(b) Except for the Security Interest of the Secured Party therein and
Permitted Liens, Debtor is, and as to Collateral acquired from time to time
after the date hereof Debtor will be, the owner of all the Collateral free from
any lien, security interest, encumbrance or other right, title
7
or interest of any Person (other than Permitted Liens) and Debtor shall defend
the Collateral against all claims and demands of all Persons at any time
claiming the same or any interest therein adverse to the Secured Party (other
than Permitted Liens).
(c) To the Company's knowledge, there is no financing statement,
assignment of trademark, or assignment of patent (or similar statement or
instrument of registration under the law of any jurisdiction) now on file or
registered in any public office covering any interest of any kind in the
Collateral, or intended to cover any such interest, which has not been
terminated or released by the secured party named therein and so long as the
Senior Notes remain outstanding or any of the Secured Obligations of Debtor
remain unpaid, Debtor will not execute and there will not be on file in any
public office any financing statement, assignment of trademark, or assignment of
patent (or similar statement or instrument of registration under the law of any
jurisdiction) or statements relating to the Collateral, except (i) financing
statements, assignment of trademark, or assignment of patent filed or to be
filed in respect of and covering the Security Interest of the Secured Party
hereby granted and provided for and (ii) with respect to Permitted Liens.
(d) The chief executive office and chief place of business of Debtor is
located at the address of Debtor listed on the signature page hereof, and Debtor
will not move its chief executive office and chief place of business except to
such new location as Debtor may establish in accordance with the last sentence
of this Section 3(d). The originals of all Assigned Agreements and all documents
(as well as all duplicates thereof) evidencing all Receivables and all other
contract rights or accounts and other property of Debtor and the only original
books of account and records of Debtor relating thereto are, and will continue
to be, kept at such chief executive office or at such new location as Debtor may
establish in accordance with the last sentence of this Section 3(d). Debtor
shall establish no such new location until (i) it shall have given to the
Secured Party not less than 30 days' prior written notice of its intention to do
so, clearly describing such new location and providing such other information in
connection therewith as the Secured Party may reasonably request, and (ii) with
respect to such new location, it shall have taken such action, satisfactory to
the Secured Party (including, without limitation, all action required by Section
7 hereof), to maintain the Security Interest of the Secured Party in the
Receivables intended to be granted at all times fully perfected and in full
force and effect.
(e) Debtor has no Collateral located outside of the states identified on
Schedule 1-A or other states in which inventory may be held on consignment.
(f) The name of Debtor is as set forth on the signature page hereto and
Debtor shall not change such name, conduct its business in any other name or
take title to the Collateral in any other name while this Agreement remains in
effect. Debtor has never had any name, or conducted business under any name in
any jurisdiction, other than its name set forth on the signature page hereto,
during the past six years other than as set forth in Schedule 3(f) annexed
hereto.
(g) At Debtor's own expense, Debtor will: (i) without limiting the
provisions of the Senior Notes, keep the Collateral fully insured at all times
with financially sound and responsible insurance carriers against loss or damage
by fire and other risks, casualties and contingencies and
8
in such manner and to the same extent that like properties are customarily so
insured by other entities engaged in the same or similar businesses similarly
situated and keep adequate insurance at all times against liability on account
of damage to persons and properties and under all applicable workers'
compensation laws, by financially sound and reputable insurers and in amounts
usually carried by similar businesses, for the benefit of Debtor and the Secured
Party, (ii) upon request by the Secured Party, promptly deliver the insurance
policies or certificates thereof to the Secured Party, and (iii) keep the
Collateral necessary for its business in good condition at all times (normal
wear and tear excepted) and maintain the same in accordance with all material
manufacturer's specifications and requirements. Upon any failure of Debtor to
comply with its obligations pursuant to this Section 3(g), the Secured Party may
at its option and after 20 days' prior notice to Debtor, and without affecting
any of its other rights or remedies provided herein or as a secured party under
the NYUCC, procure the insurance protection it deems necessary and/or cause
repairs or modifications to be made to the Collateral and the cost of either or
both of which shall be a lien against the Collateral added to the amount of the
indebtedness secured hereby and payable on demand with interest at a rate per
annum equal to 7%.
(h) Subject to the Senior Indebtedness, Debtor hereby assigns to the
Secured Party all of Debtor's right, title and interest in and to any and all
moneys which may become due and payable with respect to the Collateral under any
policy insuring the Collateral (except proceeds relating to tangible personal
property which are applied to restoration or replacement), including return of
unearned premium, and, upon the occurrence and continuance of an Event of
Default (as defined in the Senior Notes) and subject to the terms of the Senior
Indebtedness, shall cause any such insurance company to make payment directly to
the Secured Party for application to amounts outstanding under the Senior Notes
in accordance with the terms of the Senior Notes and, to the extent not provided
therein, in such order as the Secured Party shall determine.
(i) Debtor will not use the Collateral in material violation of any
statute or ordinance of which it has knowledge or applicable insurance policy
and will promptly pay all material taxes and assessments levied against the
Collateral; provided that Debtor shall not be required to pay any such tax or
assessment that is being contested in good faith and by proper proceedings and
as to which appropriate reserves are being maintained.
(j) Debtor will not sell, transfer, change the registration, if any,
dispose of, attempt to dispose of all or substantially all of the Collateral
unless the proceeds from the sale are allocated to repay the Senior Notes.
(k) Debtor will not assert against the Secured Party any claim or defense
which Debtor may have against any seller of the Collateral or any part thereof
or against any other Person with respect to the Collateral or any part thereof.
(l) Debtor will indemnify and hold the Secured Party harmless from and
against any loss, liability, damage, costs and expenses whatsoever arising from
Debtor's use, operation, ownership or possession of the Collateral or any part
thereof.
(m) Debtor will maintain the confidentiality of all customer lists and not
sell or otherwise dispose of such lists except that Debtor shall deliver copies
thereof to the Secured Party upon its
9
request, which may be made at any time and from time to time after an Event of
Default (as such term is defined in the Senior Notes).
(n) In addition to, and not in limitation of, the foregoing, with respect
to the Intellectual Property, Debtor hereby represents and warrants:
(i) Subject to Permitted Liens and except as set forth in Schedule
1-D hereto, Debtor has the sole, full and clear title to the
Trademarks shown on Schedule 1-D hereto for the goods and services
covered by the registrations thereof and, to Debtor's knowledge,
such registrations are valid and subsisting.
(ii) Debtor will perform all acts and execute all documents, to the
extent reasonable, including, without limitation, assignments for
security in form suitable for filing with the United States Patent
and Trademark Office, substantially in the form of Exhibit 1 hereof,
requested by the Secured Party at any time to evidence, perfect,
maintain, record and enforce the Secured Party's interest in the
Patents and Trademarks or otherwise in furtherance of the provisions
of this Agreement, and Debtor hereby authorizes the Secured Party to
execute and file one or more financing statements (and similar
documents) or copies thereof or of this Agreement with respect to
the Intellectual Property signed only by the Secured Party.
(iii) Except as set forth on Schedule 1-D, to Debtor's knowledge,
none of the Trademarks used in the business of Debtor have been
abandoned or invalidated, and, except to the extent that the Secured
Party, upon 10 days' prior written notice by Debtors, shall consent,
and except to the extent such Debtor has a valid business purpose
for doing otherwise (so long as any action on the part of any such
Debtor would not have a Material Adverse Effect on Debtor's
business), Debtor (either itself or through licensees) will continue
to use the Trademarks on each and every trademark class of goods in
order to maintain the Trademarks in full force free from any claim
of abandonment for nonuse and Debtor will not (nor will it permit
any licensee thereof to) do any act or knowingly omit to do any act
whereby any Trademark may become abandoned or invalidated, and
Debtor shall notify the Secured Party immediately if it knows of any
reason or has reason to know that any pending application or issued
Trademark may become abandoned or invalidated.
(iv) Subject to Permitted Liens and except as set forth on Schedule
1-D, Debtor has the sole, full and clear title to each of the
Patents shown on Schedule 1-D hereto and the issued Patents are
subsisting. Except as set forth in Schedule 1-D, to Debtor's
knowledge, none of the Patents used in the business of Debtor has
been abandoned or dedicated, and, except to the extent that the
Secured Party, upon 10 days' prior written notice by Debtor, shall
consent, and except to the extent Debtor has a valid business
purpose for doing otherwise (so long as any action on the part of
Debtor would not have a Material Adverse Effect on Debtor's
business), Debtor will not do any act, or omit to do any act,
whereby the Patents may become abandoned or dedicated and shall
notify the Secured Party
10
immediately if it knows of any reason or has reason to know that any
pending application or issued Patent may become abandoned or
dedicated.
(v) Subject to Permitted Liens and except as set forth on Schedule
1-D, Debtor has the sole, full and clear title to each of the
Copyrights shown on Schedule 1-D hereto and the issued Copyrights
are subsisting. Except as set forth in Schedule 1-D, to Debtor's
knowledge, none of the Copyrights used in the business of Debtor has
been abandoned or dedicated, and, except to the extent that the
Secured Party, upon 10 days' prior written notice by Debtor, shall
consent, and except to the extent Debtor has a valid business
purpose for doing otherwise (so long as any action on the part of
Debtor would not have a Material Adverse Effect on Debtor's
business), Debtor will not do any act, or omit to do any act,
whereby the Copyrights may become abandoned or dedicated and shall
notify the Secured Party immediately if it knows of any reason or
has reason to know that any pending application or issued Copyright
may become abandoned or dedicated.
(vi) In no event shall Debtor, either itself or through any agent,
employee, licensee or designee, (A) file an application for the
registration of any Patent or Trademark with the United States
Patent and Trademark Office, and/or an application for the
registration of any Copyright with the United States Copyright
Office, or any similar office or agency of the United States, any
state or province thereof, any other country or any political
subdivision thereof, (B) file any assignment of any patent,
trademark, or copyright which Debtor may acquire from a third party,
with the United States Patent and Trademark Office and/or the United
States Copyright Office, any similar office or agency of the United
States, any state or province thereof, any other country or any
political subdivision thereof, unless Debtor shall promptly notify
the Secured Party thereof, and, upon request of the Secured Party,
execute and deliver any and all assignments, agreements,
instruments, documents and papers as the Secured Party may
reasonably request to evidence the Secured Party's interest in such
Patent, Trademark and/or Copyright and the goodwill and general
intangibles of Debtor relating thereto or represented thereby, and
Debtor hereby constitutes the Secured Party its attorney-in-fact to
execute and file all such writings for the foregoing purposes, all
acts of such attorney being hereby ratified and confirmed, such
power being coupled with an interest is irrevocable until the
Secured Obligations are paid in full.
(vii) Except to the extent that the Secured Party, upon prior
written notice from Debtor, shall consent (which consent shall not
be unreasonably withheld), Debtor will not assign, sell, mortgage,
lease, transfer, pledge, hypothecate, grant a security interest in
or lien upon, encumber, grant an exclusive or non-exclusive license
(except in the ordinary course of business), or otherwise dispose of
any of the Intellectual Property, and nothing in this Agreement
shall be deemed a consent by the Secured Party to any such action
except as expressly permitted herein.
11
(viii) As of the date hereof neither Debtor nor any affiliate or
subsidiary thereof owns any Patents, Trademarks or Copyrights
registered in, or the subject of pending applications in, the United
States Patent and Trademark Office and/or the United States
Copyright Office or any similar office or agency of the United
States, any state or province thereof, any other country or any
political subdivision thereof, other than those described in
Schedule 1-D hereto.
(ix) Except to the extent Debtor has a valid business purpose for
doing otherwise (so long as any action on the part of Debtor would
not have a Material Adverse Effect on Debtor's business), Debtor
will take all reasonable and necessary steps in any proceeding
before the United States Patent and Trademark Office and/or the
United States Copyright Office, or any similar office or agency of
the United States, any state or province thereof, any other country
or any political subdivision thereof, to maintain each application
and registration of the Trademarks, Patents and Copyrights,
including, without limitation, filing of renewals, affidavits of
use, affidavits of incontestability and opposition, interference and
cancellation proceedings (except to the extent that dedication,
abandonment or invalidation is permitted under paragraphs (ii) and
(iii) hereof); provided, however, that Debtor shall not be required
to take any such actions with respect to the Patents, Trademarks or
Copyrights identified on Schedule 3(n)(ix).
(x) Debtor agrees that the Secured Party does not assume, and shall
have no responsibility for, the payment of any sums due or to become
due under any agreement or contract included in the Intellectual
Property or the performance of any obligations to be performed under
or with respect to any such agreement or contract by Debtor, and
Debtor hereby agrees to indemnify and hold the Secured Party
harmless with respect to any and all claims by any person relating
thereto other than such that are caused by Secured Party's gross
negligence or willful misconduct.
(xi) Debtor agrees that if it, or any affiliate or subsidiary
thereof, learns of any use by any person of any term or design
likely to cause confusion with any material Trademark, it shall
promptly notify the Secured Party of such use and, if requested by
the Secured Party, shall join with the Secured Party, at its
expense, in such action as the Secured Party, in its reasonable
discretion may deem advisable for the protection of the Secured
Party's interest in and to such Trademarks.
(xii) All licenses of Trademarks and Patents which Debtor has
granted to third parties are set forth in Schedule 3(n)(xii) hereto.
(xiii) Subject to Permitted Liens, if Debtor shall acquire title to
any new registered Trademarks, Patents and/or Copyrights, the
provisions of this Agreement shall automatically apply thereto.
Debtor shall promptly notify the Secured Party in writing of any
rights to any new registered Trademarks, Patents and/or Copyrights
acquired by Debtor after the date hereof and of any registrations
issued or applications for registration made after the date hereof.
12
Concurrently with the filing of an application for registration for
any Trademarks, Patents and/or Copyrights, Debtor shall execute,
deliver and record in all places where this Agreement is recorded an
appropriate agreement, substantially in the form hereof, with
appropriate insertions, or an amendment to this Agreement, in form
and substance reasonably satisfactory to the Secured Party, pursuant
to which Debtor shall grant a security interest to the extent of its
interest in such registration as provided herein to the Secured
Party.
Section 4. Special Provisions Concerning Assigned Agreements. Debtor
represents, warrants and agrees as follows:
(a) The Assigned Agreements constitute the legal, valid and binding
obligations of Debtor and, to the best of its knowledge, the other parties
thereto, enforceable in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer, fraudulent conveyance and other similar laws affecting the enforcement
of creditors' rights and remedies generally.
(b) Debtor will perform and discharge each and every material obligation,
covenant and agreement to be performed or discharged by Debtor under the
Assigned Agreements, except for any such nonperformance resulting from a default
by any other party thereto.
(c) At the request of the Secured Party, and at the sole cost and expense
of Debtor, Debtor will use its reasonable best efforts to enforce or secure the
performance of each and every material obligation, covenant, condition and
agreement contained in the material Assigned Agreements to be performed by the
other parties thereto.
(d) Debtor will not modify, amend or agree to vary any of the material
Assigned Agreements in any respect likely to have a Material Adverse Effect
other than in the ordinary course of business, or otherwise act or fail to act
in a manner likely (directly or indirectly) to entitle any party thereto to
claim that Debtor is in default under the terms thereof, except for any such
action or failure to act resulting from a default by any other party thereto.
(e) Debtor will not terminate or permit the termination of any material
Assigned Agreement, except in accordance with its terms, other than in the
ordinary course of business.
(f) Without the prior written consent of the Secured Party, Debtor will
not, other than in the ordinary course of business, waive or in any manner
release or discharge any party to any material Assigned Agreement from any of
the material obligations, covenants, conditions and agreements to be performed
by it under such Assigned Agreement including, without limitation, the
obligation to make all payments in the manner and at the time and places
specified.
(g) After the occurrence and during the continuance of an Event of Default
prior to the Maturity Date (as such term is defined in the Senior Notes) and
acceleration of the Senior Notes pursuant to the terms of the Senior Notes
("Acceleration"), subject to the terms of the Senior Indebtedness, Debtor will
hold any payments received by it which are assigned and set over to the Secured
Party by this Agreement for and on behalf of the Secured Party and turn them
promptly over to the Secured Party forthwith in the same form in which they are
received (together with any necessary endorsement) for application to amounts
outstanding under the
13
Senior Notes in accordance with the terms of the Senior Notes and, to the extent
not provided therein, in such order as the Secured Party shall determine.
(h) Debtor will appear in and defend every action or proceeding arising
under, growing out of or in any manner connected with the Assigned Agreements or
the obligations, duties or liabilities of Debtor and any assignee thereunder.
(i) Should Debtor fail to make any payment or to do any act as herein
provided after 30 days' notice by the Secured Party, the Secured Party may (but
without obligation on the Secured Party's part to do so and without notice to or
demand on Debtor and without releasing Debtor from any obligation hereunder)
make or do the same in such manner and to such extent as the Secured Party may
deem necessary to protect the Security Interests provided hereby, including
specifically, without limiting the general powers, the right to appear in and
defend any action or proceeding purporting to affect the Security Interests
provided hereby and Debtor, and the Secured Party may also perform and discharge
each and every obligation, covenant and agreement of Debtor contained in any
Assigned Agreement and, in exercising any such powers, pay necessary costs and
expenses, employ counsel and incur and pay reasonable attorneys' fees.
(j) Upon the request of the Secured Party, Debtor will send to the Secured
Party copies of all material notices, documents and other papers furnished or
received by it with respect to any of the material Assigned Agreements.
Section 5. Special Provisions Concerning Receivables.
(a) As of the time when each Receivable arises, Debtor shall be deemed to
have warranted as to each such Receivable that such Receivable and all papers
and documents relating thereto are genuine and in all respects what they purport
to be, and that all papers and documents relating thereto:
(ii) will be signed by the account debtor named therein (or such
account debtor's duly authorized agent) or otherwise be binding on
the account debtor;
(iii) will represent the genuine, legal, valid and binding
obligation of the account debtor evidencing indebtedness unpaid and
owed by such account debtor arising out of the performance of labor
or services or the sale and delivery of merchandise or both;
(iv) to the extent evidenced by writings, will be the only original
writings evidencing and embodying such obligation of the account
debtor named therein; and
(b) Debtor will keep and maintain at Debtor's own cost and expense
satisfactory and complete records of the Receivables, including, but not limited
to, records of all payments received, all credits granted thereon, all
merchandise returned and all other dealings therewith, and Debtor will make the
same available to the Secured Party, at Debtor's own cost and expense, at any
and all reasonable times during the existence of an Event of Default upon demand
of the Secured Party. Subject to the terms of the Senior Indebtedness, Debtor
shall, at Debtor's own cost and expense, deliver the Receivables (including,
without limitation, all documents
14
evidencing the Receivables) and such books and records to the Secured Party or
to its representatives upon its demand at any time during the existence of an
Event of Default and, if prior to the Maturity Date, Acceleration. If the
Secured Party shall so request during the existence of an Event of Default,
Debtor shall legend, in form and manner satisfactory to the Secured Party, the
Receivables and other books, records and documents of Debtor evidencing or
pertaining to the Receivables with an appropriate reference to the fact that the
Receivables have been assigned to the Secured Party and that the Secured Party
has a security interest therein, subject to the Senior Indebtedness.
(c) Except in the ordinary course of business prior to an Event of Default
and, if prior to the Maturity Date, Acceleration, Debtor will not rescind or
cancel any indebtedness evidenced by any Receivable or modify any term thereof
or make any adjustment with respect thereto, or extend or renew the same, or
compromise or settle any dispute, claim, suit or legal proceeding relating
thereto, or sell any Receivable or interest therein, without the prior written
consent of the Secured Party, except that, subject to the prior approval of a
majority of the independent directors of Debtor's Board of Directors, Debtor may
grant discounts in connection with the prepayment of any Receivable in an amount
which is customary in the line of business in which Debtor is engaged and
consistent with Debtor's past practices.
(d) Debtor will duly fulfill all material obligations on its part to be
fulfilled under or in connection with the Receivables and, subject to the terms
of the Senior Indebtedness, will do nothing to impair the rights of the Secured
Party in the Receivables.
(e) Debtor shall endeavor to collect or cause to be collected from the
account debtor named in each Receivable, as and when due (including, without
limitation, Receivables which are delinquent, such Receivables to be collected
in accordance with generally accepted lawful collection procedures) any and all
amounts owing under or on account of such Receivable, and credit forthwith upon
receipt thereof all such amounts as are so collected to the outstanding balance
of such Receivable. The costs and expenses (including attorney's fees) of such
collection shall be borne by Debtor.
(f) If any of the Receivables becomes evidenced by an Instrument (other
than a check received in payment of a Receivable and deposited in the ordinary
course of business), Debtor will notify the Secured Party thereof, and, upon
request by the Secured Party, promptly deliver such Instrument to the Secured
Party appropriately endorsed to the order of the Secured Party as further
security for the satisfaction in full of the Secured Obligations.
(g) Subject to the terms of the Senior Indebtedness, upon request of the
Secured Party, at any time when an Event of Default and, if prior to the
Maturity Date, Acceleration shall exist, Debtor shall promptly notify (in
manner, form and substance reasonably satisfactory to the Secured Party) all
Persons who are at any time obligated under any Receivable that the Secured
Party possesses a Security Interest in such Receivable and that all payments in
respect thereof are to be made to such account as the Secured Party directs.
Section 6. Special Provisions Concerning Equipment. Subject to the terms
of the Senior Indebtedness, Debtor will do nothing to impair the rights of the
Secured Party in the Equipment. Debtor shall cause the Equipment to at all times
constitute and remain personal
15
property. Debtor retains all liability and responsibility in connection with the
Equipment and the liability of Debtor to pay the Secured Obligations shall in no
way be affected or diminished by reason of the fact that such Equipment may be
lost, destroyed, stolen, damaged or for any reason whatsoever unavailable to
Debtor.
Section 7. Financing Statements; Documentary Stamp Taxes.
(a) Debtor will, at its own expense, make, execute, endorse, acknowledge,
file and/or deliver to the Secured Party from time to time such lists,
descriptions and designations of Inventory, warehouse receipts, bills of lading,
documents of title, vouchers, invoices, schedules, confirmatory assignments,
conveyances, financing statements, transfer endorsements, powers of attorney,
certificates, reports and other assurances or instruments and take such further
steps relating to the Collateral and other property or rights covered by the
Security Interest hereby granted, which the Secured Party reasonably deems
appropriate or advisable to perfect, preserve or protect its Security Interest
in the Collateral. Debtor hereby constitutes the Secured Party its
attorney?in?fact to execute and file in the name and on behalf of Debtor such
additional financing statements as the Secured Party may reasonably request,
such acts of such attorney being hereby ratified and confirmed; such power,
being coupled with an interest, is irrevocable until the Secured Obligations are
paid in full. Further, to the extent permitted by applicable law, Debtor
authorizes the Secured Party to file any such financing statements without the
signature of Debtor. Debtor will pay all applicable filing fees and related
expenses in connection with any such financing statements.
(b) Debtor agrees to procure, pay for, affix to any and all documents and
cancel any documentary tax stamps required by and in accordance with, applicable
law and Debtor will indemnify and hold the Secured Party harmless against any
liability (including interest and penalties) in respect of such documentary
stamp taxes.
Section 8. Termination of this Agreement. This Agreement shall terminate
upon the Termination Date and the Secured Party, at the request and expense of
Debtor, will promptly execute and deliver to Debtor a proper instrument or
instruments (including Uniform Commercial Code termination statements on Form
UCC-3) acknowledging the satisfaction and termination of this Agreement, and
will duly assign, transfer and deliver to Debtor (without recourse and without
representation and warranty) such of the collateral as may be in the possession
of the Secured Party and as has not thereto been sold or otherwise applied or
released pursuant to this Agreement.
Section 9. Special Provisions Concerning Remedies and Sale. Subject to the
terms of the Senior Indebtedness, in addition to any rights and remedies now or
hereafter granted under applicable law and not by way of limitation of any such
rights and remedies, during the existence of an Event of Default and, if prior
to the Maturity Date, Acceleration, the Secured Party shall have all of the
rights and remedies of a secured party under the NYUCC as enacted in any
applicable jurisdiction in addition to the rights and remedies provided herein,
in the Senior Notes and in any other agreement executed in connection with the
Senior Notes whereby Debtor has granted any Lien to the Secured Party. Subject
to the terms of the Senior Indebtedness, without in any way limiting the
foregoing, during the existence of an Event of Default and, if prior to the
Maturity Date, Acceleration, upon the giving of notice to Debtor of Secured
Party's intent to
16
pursue any one or all of the following or any other remedies the Secured Party
shall have the right, in the name of Debtor or in the name of the Secured Party
or otherwise:
(i) to ask for, demand, collect, receive, compound and give
acquittance for the Receivables or any part thereof;
(ii) to extend the time of payment of, compromise or settle for
cash, credit or otherwise, and upon any terms and conditions, any of
the Receivables;
(iii) to endorse the name of Debtor on any checks, drafts or other
orders or instruments for the payment of moneys payable to Debtor
which shall be issued in respect of any Receivable;
(iv) to file any claims, commence, maintain or discontinue any
actions, suits or other proceedings deemed by the Secured Party
necessary or advisable for the purpose of collecting or enforcing
payment of any Receivable;
(v) to make test verifications of the Receivables or any portion
thereof;
(vi) to notify any or all account debtors under any or all of the
Receivables to make payment thereof directly to the Secured Party
for the account of the Secured Party and to require Debtor to
forthwith give similar notice to the account debtors;
(vii) to require Debtor forthwith to account for and transmit to the
Secured Party in the same form as received all proceeds (other than
physical property) of collection of Receivables received by Debtor
and, until so transmitted, to hold the same in trust for the Secured
Party and not commingle such proceeds with any other funds of
Debtor;
(viii) to take possession of any or all of the Collateral and, for
that purpose, to enter, with the aid and assistance of any Person or
Persons and with or without legal process, any premises where the
Collateral, or any part thereof, are, or may be, placed or
assembled, and to remove any of such Collateral;
(ix) to execute any instrument and do all other things necessary and
proper to protect and preserve and realize upon the Collateral and
the other rights contemplated hereby;
(x) upon notice to such effect, to require Debtor to deliver, at
Debtor's expense, any or all Collateral to the Secured Party at a
place designated by the Secured Party;
(xi) without obligation to resort to other security, at any time and
from time to time, to sell, re?sell, assign and deliver all or any
of the Collateral, in one or more parcels at the same or different
times, and all right, title and interest, claim and demand therein
and right of redemption thereof, at public or private sale, for
cash, upon credit or for future delivery, and at such price or
prices and on such terms as the Secured Party may determine, with
the amounts realized from any such sale to
17
be applied to the Secured Obligations in the manner determined by
the Secured Party;
(xii) to cause Debtor not to make any further use of the Trademarks
or Patents or any xxxx similar thereto and/or Copyrights for any
purpose;
(xiii) upon 10 days' prior notice to Debtor, to license, whether
general, special or otherwise, and whether on an exclusive or
nonexclusive basis, any of the Patents or Trademarks, throughout the
world for such term or terms, on such conditions, and in such
manner, as the Secured Party shall in its sole discretion determine;
(xiv) to enforce, at any time (without assuming any liability or
obligation thereunder), against any licensee or sublicensee, all
rights and remedies of Debtor in, to and under any one or more
license agreements with respect to the Intellectual Property, and
take or refrain from taking any action under any thereof, and Debtor
hereby releases the Secured Party from, and agrees to hold the
Secured Party free and harmless from and against any claims arising
out of, any action taken or omitted to be taken with respect to any
such license agreement;
(xv) upon 10 days' prior notice to Debtor, to assign, sell, or
otherwise dispose of, the Intellectual Property or any part thereof,
either with or without special or other conditions or stipulations,
with power to buy the Intellectual Property or any part of it, and
with power also to execute assurances, and do all other acts and
things for completing the assignment, sale or disposition which the
Secured party shall, in its sole discretion, deem appropriate or
proper; and
(xvi) in addition to the foregoing, in order to implement the
assignment, sale or other disposal of any of the Intellectual
Property pursuant to this Agreement, the Secured Party may, at any
time, pursuant to the authority granted in the Power of Attorney
described herein (such authority becoming effective on the
occurrence or continuation as hereinabove provided of an Event of
Default), execute and deliver on behalf of the applicable Debtor,
one or more instruments of assignment of the Patents or Trademarks
(or any application or registration thereof), in form suitable for
filing, recording or registration in any country. Debtor agrees to
pay when due all reasonable costs incurred in any such transfer of
the Patents or Trademarks, including any taxes, fees and reasonable
attorneys' fees, and all such costs shall be added to the Secured
Obligations.
In the event of any license, assignment, sale or other disposition
of the Intellectual Property, or any of it, after the occurrence or continuation
as hereinabove provided of an Event of Default, Debtor shall supply its know-how
and expertise relating to the manufacture and sale of the products bearing or in
connection with the Trademarks or Patents, and its customer lists and other
records relating to the Trademarks or Patents and to the distribution of said
products, to the Secured Party or its designee.
18
The Secured Party shall not be obligated to do any of the acts
hereinabove authorized, but in the event that the Secured Party elects to do any
such act, the Secured Party shall not be responsible to Debtor except for its
gross negligence or willful misconduct.
(a) The Secured Party may take legal proceedings for the appointment of a
receiver or receivers (to which the Secured Party shall be entitled as a matter
of right) to take possession of the Collateral pending the sale thereof pursuant
either to the powers of sale granted by this Agreement or to a judgment, order
or decree made in any judicial proceeding for the foreclosure or involving the
enforcement of this Agreement. If, after the exercise of any or all of such
rights and remedies, any of the Secured Obligations shall remain unpaid, Debtor
shall remain liable for any deficiency. After the indefeasible payment in full
of the Secured Obligations, any proceeds of the Collateral received or held by
the Secured Party shall be turned over to Debtor and the Collateral shall be
reassigned to Debtor by the Secured Party without recourse to the Secured Party
and without any representations, warranties or agreements of any kind.
(b) Upon any sale of any of the Collateral, whether made under the power
of sale hereby given or under judgment, order or decree in any judicial
proceeding for the foreclosure or involving the enforcement of this Agreement:
(i) the Secured Party may, to the extent permitted by law, bid for
and purchase the property being sold, and upon compliance with the
terms of sale may hold, retain and possess and dispose of such
property in its own absolute right without further accountability,
and may, in paying the purchase money therefor, deliver any Senior
Notes or claims for interest thereon and any other instruments
evidencing the Secured Obligations or agree to the satisfaction of
all or a portion of the Secured Obligations in lieu of cash in
payment of the amount which shall be payable thereon, and the Senior
Notes and such instruments, in case the amounts so payable thereon
shall be less than the amount due thereon, shall be returned to the
Secured Party after being appropriately stamped to show partial
payment;
(ii) the Secured Party may make and deliver to the purchaser or
purchasers a good and sufficient deed, xxxx of sale and instrument
of assignment and transfer of the property sold;
(iii) the Secured Party is hereby irrevocably appointed the true and
lawful attorney?in?fact of Debtor in its name and stead, to make all
necessary deeds, bills of sale and instruments of assignment and
transfer of the property thus sold and for such other purposes as
are necessary or desirable to effectuate the provisions (including,
without limitation, this Section 9) of this Agreement, and for that
purpose it may execute and deliver all necessary deeds, bills of
sale and instruments of assignment and transfer, and may substitute
one or more Persons with like power, Debtor hereby ratifying and
confirming all that its said attorney, or such substitute or
substitutes, shall lawfully do by virtue hereof; but if so requested
by the Secured Party or by any purchaser, Debtor shall ratify and
confirm any such sale or transfer by executing and delivering to the
Secured Party
19
or to such purchaser all property, deeds, bills of sale, instruments
or assignment and transfer and releases as may be designated in any
such request;
(iv) all right, title, interest, claim and demand whatsoever, either
at law or in equity or otherwise, of Debtor of, in and to the
property so sold shall be divested; such sale shall be a perpetual
bar both at law and in equity against Debtor, its successors and
assigns, and against any and all Persons claiming or who may claim
the property sold or any part thereof from, through or under Debtor,
its successors or assigns;
(v) the receipt of the Secured Party or of the officer thereof
making such sale shall be a sufficient discharge to the purchaser or
purchasers at such sale for his or their purchase money, and such
purchaser or purchasers, and his or their assigns or personal
representatives, shall not, after paying such purchase money and
receiving such receipt of the Secured Party or of such officer
therefor, be obliged to see to the application of such purchase
money or be in any way answerable for any loss, misapplication or
non-application thereof; and
(vi) to the extent that it may lawfully do so, and subject to any
legal requirement that the Secured Party act in a commercially
reasonable manner, Debtor agrees that it will not at any time insist
upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any appraisement, valuation, stay,
extension or redemption laws, or any law permitting it to direct the
order in which the Collateral or any part thereof shall be sold, now
or at any time hereafter in force, which may delay, prevent or
otherwise affect the performance or enforcement of this Agreement,
the Senior Notes or any other agreement executed in connection with
the Senior Notes whereby Debtor has granted any Lien to the Secured
Party, and Debtor hereby expressly waives all benefit or advantage
of any such laws and covenants that it will not hinder, delay or
impede the execution of any power granted or delegated to the
Secured Party in this Agreement, but will suffer and permit the
execution of every such power as though no such laws were in force.
In the event of any sale of Collateral pursuant to this Section, the
Secured Party shall, at least 10 days before such sale, give Debtor
written, telecopied or telex notice of its intention to sell.
Section 10. Application of Moneys.
(a) Except as otherwise provided herein or in the Senior Notes, all moneys
which the Secured Party shall receive, in accordance with the provisions hereof,
shall be applied (to the extent thereof) in the following manner: First, to the
payment of all costs and expenses reasonably incurred in connection with the
administration and enforcement of, or the preservation of any rights under, this
Agreement or any of the reasonable expenses and disbursements of the Secured
Party (including, without limitation, the reasonable fees and disbursements of
its counsel and agents); Second, to the payment of all Secured Obligations
arising out of the Senior Notes in accordance with the terms of the Senior Notes
and, if not therein provided, in such order as the Secured Party may determine;
and Third, to the payment of all other Secured Obligations in such order as the
Secured Party may determine.
20
(b) If after applying any amounts which the Secured Party has received in
respect of the Collateral any of the Secured Obligations remain unpaid, Debtor
shall continue to be liable for any deficiency, together with interest.
(c) If after applying any amounts which the Secured Party has received in
respect of the Collateral, there is a surplus, any such surplus shall be paid to
Debtor, its successors or assigns.
Section 11. Fees and Expenses, etc. Any and all fees, costs and expenses
of whatever kind or nature, including but not limited to the reasonable
attorneys' fees and legal expenses incurred by the Secured Party in connection
with enforcement of its rights under this Agreement, the filing or recording of
any documents (including all taxes in connection therewith) in public offices,
the payment or discharge of any taxes, counsel fees, maintenance fees, fees and
other costs relating to the encumbrances or otherwise protecting, maintaining,
preserving the Collateral, or in defending or prosecuting any actions or
proceedings arising out of or related to the Collateral, shall be borne and paid
by Debtor on written demand by the Secured Party setting forth in reasonable
detail the nature of such expenses and until so paid shall be added to the
principal amount of the Secured Obligations and shall bear interest at the rate
accruing thereon. In addition, Debtor will pay, and indemnify and hold the
Secured Party harmless from and against, any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to the Collateral,
including (without limitation) claims of patent or trademark infringement and
any claim of unfair competition or anti?trust violation, other than liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements arising as a result of Secured Party's gross
negligence or willful misconduct.
Section 12. Power of Attorney.
Concurrently with the execution and delivery hereof, Debtor is executing
and delivering to the Secured Party, in the form of Exhibit 2 hereto, three
originals of a Power of Attorney for the implementation of the assignment, sale
or other disposal of the Collateral, including the Trademarks and Patents
pursuant to this Agreement and Debtor hereby releases the Secured Party from any
claims, causes of action and demands at any time arising out of or with respect
to any actions taken or omitted to be taken by the Secured Party under the
powers of attorney granted herein, other than actions taken or omitted to be
taken through the gross negligence or willful misconduct of the Secured Party.
Section 13. Miscellaneous.
(a) All notices, communications and distributions hereunder shall be in
writing (including telecopied communication) and mailed by certified mail,
telecopied, personally delivered or delivered by Federal Express or other
reputable overnight courier service, if to Debtor addressed to it at its address
set forth opposite its signature below, if to the Secured Party, addressed to it
at its address set forth opposite its signature below, or as to either party at
such other address as shall be designated by such party in a written notice to
such other party complying as to delivery with the terms of this Section. All
such notices and other communications shall be effective (i) if mailed by
certified mail, three days after the date of deposit thereof with the U.S.
Postal Service, properly addressed with postage prepaid, (ii) if
21
telecopied, upon receipt by the addressee, (iii) if personally delivered, upon
such delivery and (iv) if delivered by overnight courier service, on the
business day following delivery thereof to such courier service in time for
next-business-day delivery.
(b) No delay on the part of the Secured Party in exercising any of its
rights, remedies, powers and privileges hereunder or partial or single exercise
thereof, shall constitute a waiver thereof. None of the terms and conditions of
this Agreement may be changed, waived, modified or varied in any manner
whatsoever unless in writing duly signed by Debtor and the Secured Party. No
notice to or demand on Debtor in any case shall entitle Debtor to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of any of the rights of the Secured Party to any other or further action
in any circumstances without notice or demand.
(c) The obligations of Debtor hereunder shall remain in full force and
effect without regard to, and shall not be impaired by, (i) any exercise or
non?exercise, or any waiver of, any right, remedy, power or privilege under or
in respect of the Senior Notes, this Agreement or any other agreement executed
in connection with the Senior Notes whereby Debtor has granted any Lien to the
Secured Party or any other agreement executed in connection with any of the
foregoing, the Secured Obligations or any security for any of the Secured
Obligations; or (ii) any amendment to or modification of any of the foregoing;
whether or not Debtor shall have notice or knowledge of any of the foregoing.
The rights and remedies of the Secured Party herein provided are cumulative and
not exclusive of any rights or remedies which the Secured Party would otherwise
have under all applicable law.
(d) This Agreement shall be binding upon Debtor and its successors and
assigns and shall inure to the benefit of the Secured Party and its successors
and assigns, except that Debtor may not transfer or assign any of its
obligations, rights or interest hereunder without the prior written consent of
the Secured Party and any such purported assignment by Debtor shall be void. All
agreements, representations and warranties made herein shall survive the
execution and delivery of this Agreement.
(e) The descriptive headings of the several sections of this Agreement are
inserted for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.
(f) Any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or non-enforceability without invalidating the remaining
provisions hereof, and any such prohibition or non-enforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
(g) All rights, remedies and powers provided by this Agreement may be
exercised only to the extent that the exercise thereof does not violate any
applicable provision of law, and the provisions hereof are intended to be
subject to all applicable mandatory provisions of law that may be controlling
and to be limited to the extent necessary so that they will not render this
Agreement invalid, unenforceable in whole or in part or not entitled to be
recorded, registered or filed under the provisions of any applicable law.
22
(h) This Agreement and the rights and obligations of the parties hereunder
shall be construed in accordance with and be governed by the laws of the State
of New York except to the extent that matters of title, or creation, perfection
and priority of the Security Interests created hereby, or procedural issues of
foreclosure are required to be governed by the laws of the state in which the
Collateral, or part thereof, is located.
(i) It is expressly agreed, anything herein, in the Senior Notes or in any
other agreement or instrument executed in connection with the Senior Notes to
the contrary notwithstanding, that Debtor shall remain liable to perform all of
the obligations, if any, assumed by it with respect to the Collateral and the
Secured Party shall not have any obligations or liabilities with respect to any
Collateral by reason of or arising out of this Agreement, nor shall the Secured
Party be required or obligated in any manner to perform or fulfill any of the
obligations of Debtor under or pursuant to any or in respect of any Collateral.
(j) This Agreement may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which counterparts taken
together shall be deemed to constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their duly authorized officers as of the date first
above written.
COMDIAL COPORATION, as Debtor
By: ____________________________________
Name: Xxxxxxxx X. Xxxxxxx
Title: Chief Executive Officer
WINFIELD CAPITAL CORP., as Secured Party
By: _____________________________________
Name:
Title:
23
