SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "AGREEMENT") dated as of December 14, 2000
between Edge Technology Group, Inc., a Delaware corporation (the "Debtor"), and
Catalyst Master Fund, L.P. (the "SECURED PARTY").
R E C I T A L S:
- - - - - - - -
WHEREAS, the Secured Party has as of the date hereof made a $620,000
loan (the "LOAN") to the Debtor and the Debtor has executed and delivered to
Secured Party its Convertible Note dated the date hereof in the original
principal amount of $620,000 (as the same may be amended, renewed, extended,
restated, replaced, substituted, supplemented, or otherwise modified from time
to time, the "NOTE") to evidence the Loan; and
WHEREAS, execution and delivery of this Agreement is a condition to the
Secured Party making the Loan;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the adequacy, receipt, and sufficiency of which are
hereby acknowledged, and in order to induce the Secured Party to make the Loan,
the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. DEFINITIONS. As used in this Agreement, the following
terms have the following meanings:
"ACCOUNT" means any "account," as such term is defined in Article or
Chapter 9 of the UCC, now owned or hereafter acquired by the Debtor and, in any
event, shall include, without limitation, each of the following, whether now
owned or hereafter acquired by the Debtor: (a) all rights of the Debtor to
payment for goods sold or leased or services rendered, whether or not earned by
performance, (b) all accounts receivable of the Debtor, (c) all rights of the
Debtor to receive any payment of money or other form of consideration, (d) all
security pledged, assigned, or granted to or held by the Debtor to secure any of
the foregoing, (e) all guaranties of, or indemnifications with respect to, any
of the foregoing, and (f) all rights of the Debtor as an unpaid seller of goods
or services, including, but not limited to, all rights of stoppage in transit,
replevin, reclamation and resale.
"BORROWER" means the Debtor.
"BROKER" means any "broker," as such term is defined in Article or
Chapter 8 of the UCC, and in any event shall include, but not be limited to, any
Person defined as a broker or dealer under the federal securities laws, but
without excluding a bank acting in that capacity.
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"CHATTEL PAPER" means any "chattel paper," as such term is defined in
Article or Chapter 9 of the UCC, now owned or hereafter acquired by the Debtor.
"CLEARING CORPORATION" means any "clearing corporation," as such term
is defined in Article or Chapter 8 of the UCC, and in any event shall include,
but not be limited to, any (a) Person that is registered as a "clearing agency"
under the federal securities laws, (b) federal reserve bank, or (c) other Person
that provides clearance or settlement services with respect to Financial Assets
that would require it to register as a clearing agency under the federal
securities laws but for an exclusion or exemption from the registration
requirement, if its activities as a clearing corporation, including promulgation
of rules, are subject to regulation by a federal or state governmental
authority.
"COLLATERAL" has the meaning specified in SECTION 2.01 of this
Agreement.
"COMMODITY ACCOUNT" means any commodity account, now owned or hereafter
acquired by the Debtor, including, without limitation, all accounts maintained
by a Commodity Intermediary in which a Commodity Contract is carried for the
Debtor.
"COMMODITY CONTRACT" means any commodity contract, and includes,
without limitation, a commodity futures contract, a commodity option, or other
contract that, in each case, is (a) traded on or subject to the rules of a board
of trade that has been designated as a contract market for such a contract
pursuant to the federal commodities laws, or (b) traded on a foreign commodity
board of trade, exchange, or market, and is carried on the books of a Commodity
Intermediary for a Commodity Customer.
"COMMODITY CUSTOMER" means any Person for whom a Commodity Intermediary
carries a Commodity Contract on its books.
"COMMODITY INTERMEDIARY" means (a) a Person who is registered as a
futures commission merchant under the federal commodities laws, or (b) a Person
who in the ordinary course of its business provides clearance or settlement
services for a board of trade that has been designated as a contract market
pursuant to the federal commodities laws.
"COPYRIGHT LICENSE" means any written agreement now or hereafter in
existence granting to the Debtor any right to use any Copyright including,
without limitation, the agreements identified on SCHEDULE 3 hereto.
"COPYRIGHTS" means all of the following: (a) all copyrights, works
protectable by copyright, copyright registrations and copyright applications of
the Debtor, including, without limitation, those set forth on SCHEDULE 3 hereto;
(b) all renewals, extensions and modifications thereof; (c) all income,
royalties, damages, profits and payments relating to or payable under any of the
foregoing; (d) the right to xxx for past, present or future infringements of any
of the foregoing; (e) all other rights and benefits relating to any of the
foregoing throughout the world; and (f) all goodwill associated with and
symbolized by any of the foregoing; in each case, whether now owned or hereafter
acquired by the Debtor.
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"COPYRIGHT SECURITY AGREEMENT" means the copyright security agreement
to be executed and delivered by the Debtor to the Secured Party, substantially
in the form of EXHIBIT A hereto, as such agreement may hereafter be amended,
supplemented or otherwise modified from time to time.
"DEFAULT" means any Event of Default, whether or not any requirement in
connection with such event for the giving of notice, lapse of time or happening
of any further condition has been satisfied.
"DEPOSIT ACCOUNTS" means any and all deposit accounts, bank accounts or
investment accounts now owned or hereafter acquired or opened by the Debtor, and
any account which is a replacement or substitute for any of such accounts,
together with all monies, Instruments and other property deposited therein and
all balances therein and all investments made with funds deposited therein or
otherwise held in connection therewith including, without limitation,
indebtedness (howsoever evidenced) and/or securities issued or guaranteed by the
government of the United States of America, certificates of deposit and all
contract rights, General Intangibles, contracts, Instruments, Investment
Property, Security Entitlements, Financial Assets, Commodity Contracts and other
Documents now or hereafter existing with respect thereto, including, but not
limited to, any and all renewals, extensions, reissuances and replacements and
substitutions therefor with all earnings, profits or other Proceeds therefrom in
the form of interest or otherwise.
"DOCUMENT" means any "document," as such term is defined in Article or
Chapter 9 of the UCC, now owned or hereafter acquired by the Debtor, including,
without limitation, all documents of title and all receipts covering, evidencing
or representing goods now owned or hereafter acquired by the Debtor.
"ENTITLEMENT HOLDER" means any Person identified in the records of a
Securities Intermediary as the Person having a Security Entitlement against the
Securities Intermediary.
"EQUIPMENT" means any "equipment," as such term is defined in Article
or Chapter 9 of the UCC, now owned or hereafter acquired by the Debtor and, in
any event, shall include, without limitation, all machinery, equipment,
furniture, fixtures, trade fixtures, trailers, rolling stock, vessels, aircraft
and vehicles now owned or hereafter acquired by the Debtor and any and all
additions, substitutions and replacements of any of the foregoing, wherever
located, together with all attachments, components, parts, equipment and
accessories installed thereon or affixed thereto.
"EVENT OF DEFAULT" shall have the meaning set forth in the Note.
"FINANCIAL ASSET" means any financial asset, and in any event shall
include, but not be limited to, any (a) Security, (b) obligation of a Person or
a share, participation or other interest in a Person or in property or an
enterprise of a Person, which is, or is of a type, dealt in or traded on
financial markets, or which is recognized in any area in which it is issued or
dealt in as a medium for investment, and (c) any property that is held by a
Securities Intermediary for another Person in a Securities Account if the
Securities Intermediary has expressly agreed with the other Person that the
property is to be treated as a Financial Asset under Article or Chapter 8 of the
UCC.
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"GENERAL INTANGIBLES" means any "general intangibles," as such term is
defined in Article or Chapter 9 of the UCC, now owned or hereafter acquired by
the Debtor and, in any event, shall include, without limitation, each of the
following, whether now owned or hereafter acquired by the Debtor: (a) all of the
Debtor's service marks, trade names, trade secrets, registrations, goodwill,
franchises, licenses, permits, proprietary information, customer lists, designs
and inventions; (b) all of the Debtor's books, records, data, plans, manuals,
computer software, computer tapes, computer disks, computer programs, source
codes, object codes and all rights of the Debtor to retrieve data and other
information from third parties; (c) all of the Debtor's contract rights,
partnership interests, joint venture interests, securities, deposit accounts,
investment accounts and certificates of deposit; (d) all rights of the Debtor to
payment under letters of credit and similar agreements; (e) all tax refunds and
tax refund claims of the Debtor; (f) all choses in action and causes of action
of the Debtor (whether arising in contract, tort or otherwise and whether or not
currently in litigation) and all judgments in favor of the Debtor; (g) all
rights and claims of the Debtor under warranties and indemnities; and (h) all
rights of the Debtor under any insurance, surety or similar contract or
arrangement.
"INSTRUMENT" means any "instrument," as such term is defined in Article
or Chapter 9 of the UCC, now owned or hereafter acquired by the Debtor, and, in
any event, shall include all promissory notes, drafts, bills of exchange and
trade acceptances of the Debtor, whether now owned or hereafter acquired.
"INTELLECTUAL PROPERTY" means the Copyrights, Copyright Licenses,
Patents, Patent Licenses, Trademarks and Trademark Licenses.
"INVENTORY" means any "inventory," as such term is defined in Article
or Chapter 9 of the UCC, now owned or hereafter acquired by the Debtor, and, in
any event, shall include, without limitation, each of the following, whether now
owned or hereafter acquired by the Debtor: (a) all goods and other personal
property of the Debtor that are held for sale or lease or to be furnished under
any contract of service; (b) all raw materials, work-in-process, finished goods,
inventory, supplies and materials of the Debtor; (c) all wrapping, packaging,
advertising and shipping materials of the Debtor; (d) all goods that have been
returned to, repossessed by or stopped in transit by the Debtor; and (e) all
Documents evidencing any of the foregoing.
"INVESTMENT PROPERTY" means any investment property, now owned or
hereafter acquired by the Debtor, and, in any event, shall include, without
limitation, each of the following, whether now owned or hereafter acquired by
the Debtor: (a) any Security, whether certificated or uncertificated; (b) any
Security Entitlement; (c) any Securities Account; (d) any Commodity Contract;
and (e) any Commodity Account.
"ISSUER" means any "issuer," as such term is defined in Article or
Chapter 8 of the UCC, and in any event shall include, but not be limited to, any
Person that, with respect to an obligation on or a defense to a Security, (a)
places or authorizes the placing of its name on a Security Certificate, other
than as authenticating trustee, registrar, transfer agent, or the like, to
evidence a share, participation, or other interest in its property or in an
enterprise, or to evidence its duty to perform an obligation represented by the
certificate; (b) creates a share, participation,
SECURITY AGREEMENT - Page 4
or other interest in its property or in an enterprise, or undertakes an
obligation, that is an Uncertificated Security; (c) directly or indirectly
creates a fractional interest in its rights or property, if the fractional
interest is represented by a Security Certificate; or (d) becomes responsible
for, or in the place of, another Issuer.
"OBLIGATIONS" means all obligations, indebtedness and liabilities of
the Debtor under the Note.
"PATENT LICENSE" means any written agreement now or hereafter in
existence granting to the Debtor any right to use any invention on which a
Patent is in existence including, without limitation, the agreements described
on SCHEDULE 3 hereto.
"PATENTS" means all of the following: (a) all patents, patent
applications and patentable inventions of the Debtor, including, without
limitation, those set forth on SCHEDULE 3 hereto, and all of the inventions and
improvements described and claimed therein; (b) all continuations, divisions,
renewals, extensions, modifications, substitutions, continuations-in-part or
reissues of any of the foregoing; (c) all income, royalties, profits, damages,
awards and payments relating to or payable under any of the foregoing; (d) the
right to xxx for past, present and future infringements of any of the foregoing;
(e) all other rights and benefits relating to any of the foregoing throughout
the world; and (f) all goodwill associated with any of the foregoing; in each
case, whether now owned or hereafter acquired by the Debtor.
"PATENT SECURITY AGREEMENT" means the patent security agreement to be
executed and delivered by the Debtor to the Secured Party, substantially in the
form of EXHIBIT B hereto, as such agreement may hereafter be amended,
supplemented or otherwise modified from time to time.
"PERMITTED LIENS" means Liens and security interests in favor of the
Secured Party.
"PLEDGED COLLATERAL" has the meaning specified in SECTION 4.16(b)(i) of
this Agreement.
"PLEDGED SHARES" means the shares of capital stock or other equity,
partnership or membership interests described on SCHEDULE 4 attached hereto and
incorporated herein by reference.
"PROCEEDS" means any "proceeds," as such term is defined in Article or
Chapter 9 of the UCC and, in any event, shall include, but not be limited to,
(a) any and all proceeds of any insurance, indemnity, warranty or guaranty
payable to the Debtor from time to time with respect to any of the Collateral,
(b) any and all payments (in any form whatsoever) made or due and payable to the
Debtor from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Collateral by any
governmental authority (or any Person acting, or purporting to act, for or on
behalf of any governmental authority), and (c) any and all other amounts from
time to time paid or payable under or in connection with any of the Collateral.
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"SECURITIES ACCOUNT" means any account to which a Financial Asset is or
may be credited in accordance with an agreement under which the Person
maintaining the account undertakes to treat the Person for whom the account is
maintained as entitled to exercise the rights that comprise the Financial Asset.
"SECURITIES INTERMEDIARY" means any (a) Clearing Corporation, or (b)
Person, including a bank or Broker, that in the ordinary course of its business
maintains Securities Accounts for others and is acting in that capacity.
"SECURITY" means any "security," as such term is defined in Article or
Chapter 8 of the UCC and, in an event, shall include, but not be limited to, any
obligation of an Issuer or a share, participation, or other interest in an
issuer or in property or an enterprise or an Issuer: (a) which is represented by
a Security Certificate in bearer or registered form, or the transfer of which
may be registered upon books maintained for that purpose by or on behalf of the
Issuer; (b) which is one of a class or series or by its terms is divisible into
a class or series of shares, participations, interests, or obligations; and (c)
which (i) is, or is of a type, dealt in or traded on securities exchanges or
securities markets; or (ii) is a medium for investment and by its terms
expressly provides that it is a security governed by Article or Chapter 8 of the
UCC.
"SECURITY CERTIFICATE" means any certificate representing a Security.
"SECURITY ENTITLEMENT" means any the rights and property interest of an
Entitlement Holder with respect to a Financial Asset.
"TRADEMARK LICENSE" means any written agreement now or hereafter in
existence granting to the Debtor any right to use any Trademark, including,
without limitation, the agreements identified on SCHEDULE 3 hereto.
"TRADEMARKS" means all of the following: (a) all trademarks, trade
names, corporate names, company names, business names, fictitious business
names, trade styles, service marks, logos, other business identifiers, prints
and labels on which any of the foregoing have appeared or appear, all
registrations and recordings thereof and all applications in connection
therewith, including, without limitation, registrations, recordings and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any state thereof or any other country or
any political subdivision thereof, including, without limitation, those
described in SCHEDULE 3 hereof; (b) all reissues, extensions and renewals
thereof; (c) all income, royalties, damages and payments now or hereafter
relating to or payable under any of the foregoing, including, without
limitation, damages or payments for past or future infringements of any of the
foregoing; (e) the right to xxx for past, present and future infringements of
any of the foregoing; (f) all rights corresponding to any of the foregoing
throughout the world; and (g) all goodwill associated with and symbolized by any
of the foregoing; in each case, whether now owned or hereafter acquired by the
Debtor.
"TRADEMARK SECURITY AGREEMENT" means the trademark security agreement
to be executed and delivered by the Debtor to the Secured Party, substantially
in the form of EXHIBIT C hereto, as
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such agreement may hereafter be amended, supplemented or otherwise modified
from time to time.
"UCC" means the Uniform Commercial Code as in effect in the State of
Texas; provided, that if, by applicable law, the perfection or effect of
perfection or non-perfection of the security interest created hereunder in any
Collateral is governed by the Uniform Commercial Code as in effect on or after
the date hereof in any other jurisdiction, "UCC" means the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provisions
hereof relating to such perfection or the effect of perfection or
non-perfection.
"UNCERTIFICATED SECURITY" means any "uncertificated security," as such
term is defined in Article or Chapter 8 of the UCC, and in any event shall
include, but not be limited to, any Security that is not represented by a
certificate.
Section 1.02. OTHER DEFINITIONAL PROVISIONS. References to "Sections,"
"subsections," "Exhibits" and "Schedules" shall be to Sections, subsections,
Exhibits and Schedules, respectively, of this Agreement unless otherwise
specifically provided. All definitions contained in this Agreement are equally
applicable to the singular and plural forms of the terms defined. All references
to statutes and regulations shall include any amendments of the same and any
successor statutes and regulations. References to particular sections of the UCC
should be read to refer also to parallel sections of the Uniform Commercial Code
as enacted in each state or other jurisdiction where any portion of the
Collateral is or may be located.
ARTICLE II
SECURITY INTEREST
Section 2.01. SECURITY INTEREST. As collateral security for the prompt
payment and performance in full when due of the Obligations (whether at stated
maturity, by acceleration or otherwise), the Debtor hereby pledges and assigns
(as collateral) to the Secured Party, and grants to the Secured Party a
continuing lien on and security interest in, all of the Debtor's right, title
and interest in and to the following, whether now owned or hereafter arising or
acquired and wherever located (collectively, the "Collateral"):
(a) all Accounts;
(b) all Chattel Paper;
(c) all Instruments;
(d) all General Intangibles;
(e) all Documents;
(f) all Equipment;
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(g) all Inventory;
(h) all Intellectual Property;
(i) all Investment Property;
(j) all Deposit Accounts of the Debtor and all funds,
certificates, Documents, Instruments, checks, drafts, wire
transfer receipts and other earnings, profits or other
Proceeds from time to time representing, evidencing, deposited
into or held in the Deposit Accounts (including, without
limitation, in the form of interest);
(k) the Pledged Shares and the certificates representing the
Pledged Shares, and all dividends, cash, instruments and other
property from time to time received, receivable or otherwise
distributed or distributable in respect of or in exchange for
any or all of the Pledged Shares;
(l) all additional shares of stock of the Subsidiaries of the
Debtor from time to time owned or acquired by the Debtor in
any manner, and the certificates and all dividends, cash,
instruments and other property from time to time received,
receivable or otherwise distributed or distributable in
respect of or in exchange for any or all of such shares;
(m) all indebtedness from time to time owed to the Debtor by the
Subsidiaries of the Debtor and the instruments evidencing such
indebtedness, and all interest, cash, instruments and other
property from time to time received, receivable or otherwise
distributed or distributable in respect of or in exchange for
any or all of such indebtedness;
(n) the proceeds, in cash or otherwise, of any of the property
described in the foregoing CLAUSES (a) through (m) and all
liens, security, rights, remedies and claims of the Debtor
with respect thereto;
(o) all other goods and personal property of the Debtor of any
kind or character, whether tangible or intangible, including,
without limitation, any and all rights in and claims under
insurance policies, judgments and rights thereunder, and tort
claims; and
(p) all Proceeds and products of any or all of the foregoing.
Section 2.02. DEBTOR REMAINS LIABLE. Notwithstanding anything to the
contrary contained herein, (a) the Debtor shall remain liable under the
contracts, agreements, documents and instruments included in the Collateral to
the extent set forth therein to perform all of its duties and obligations
thereunder to the same extent as if this Agreement had not been executed, (b)
the exercise by the Secured Party of any of its rights or remedies hereunder
shall not release the Debtor from any of its duties or obligations under the
contracts, agreements, documents and instruments included in the Collateral, and
(c) the Secured Party shall not have any indebtedness,
SECURITY AGREEMENT - Page 8
liability or obligation under any of the contracts, agreements, documents and
instruments included in the Collateral by reason of this Agreement, and the
Secured Party shall not be obligated to perform any of the obligations or
duties of the Debtor thereunder or to take any action to collect or enforce
any claim for payment assigned hereunder.
Section 2.03. DELIVERY OF COLLATERAL. All certificates or instruments
representing or evidencing the Pledged Shares, any Instruments or Chattel Paper
or any other Collateral including, without limitation, any Investment Property,
promptly upon the Debtor gaining any rights therein, shall be delivered to and
held by or on behalf of the Secured Party pursuant hereto in suitable form for
transfer by delivery, or accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance reasonably satisfactory to the
Secured Party. After the occurrence and during the continuation of a Default or
an Event of Default, the Secured Party shall have the right at any time to
exchange certificates or instruments representing or evidencing any Pledged
Collateral in its possession for certificates or instruments of smaller or
larger denominations.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
To induce the Secured Party to enter into this Agreement and make the
Loan, the Debtor represents and warrants to the Secured Party that:
Section 3.01. TITLE. The Debtor is, and with respect to Collateral
acquired after the date hereof the Debtor will be, the legal and beneficial
owner of the Collateral free and clear of any Lien or other encumbrance, except
for Permitted Liens.
Section 3.02. ACCOUNTS. Unless the Debtor has given the Secured Party
written notice to the contrary, whenever the security interest granted hereunder
attaches to an Account, the Debtor shall be deemed to have represented and
warranted to the Secured Party as to each of its Accounts that (a) each Account
is genuine and in all respects what it purports to be, (b) each Account
represents the legal, valid and binding obligation of the account debtor
evidencing indebtedness unpaid and owed by such account debtor, (c) except for
defenses and business disputes arising in the ordinary course of business which
in the aggregate are not material, the amount of each Account represented as
owing is the correct amount actually and unconditionally owing except for normal
trade discounts granted in the ordinary course of business, and (d) except for
defenses and business disputes arising in the ordinary course of business which
in the aggregate are not material, no Account is subject to any offset,
counterclaim, or other defense.
Section 3.03. FINANCING STATEMENTS. No financing statement, security
agreement or other Lien instrument covering all or any part of the Collateral is
on file in any public office, except as may have been filed in favor of the
Secured Party pursuant to this Agreement and except for financing statements
evidencing Permitted Liens in favor of the Secured Party. Except as otherwise
disclosed on SCHEDULE 5 hereto, the Debtor does not do business and has not done
business within the past five (5) years under a trade name or any name other
than its legal name set forth at the beginning of this Agreement.
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Section 3.04. PRINCIPAL PLACE OF BUSINESS. The principal place of
business and chief executive office of the Debtor, and the office where the
Debtor keeps its books and records, is located at the address of the Debtor
shown on the signature pages of this Agreement.
Section 3.05. LOCATION OF COLLATERAL. All Inventory (except Inventory
in transit) and Equipment (other than vehicles) of the Debtor are located at the
places specified on SCHEDULE 1 hereto. If any such location is leased by the
Debtor, the name and address of the landlord leasing such location is identified
on SCHEDULE 1 hereto. The Debtor has exclusive possession and control of its
Inventory and Equipment. None of the Inventory or Equipment of the Debtor is
evidenced by a Document (including, without limitation, a negotiable document of
title). All Instruments, Chattel Paper and Security Certificates of the Debtor
have been delivered to the Secured Party.
Section 3.06. PERFECTION. Upon the filing of Uniform Commercial Code
financing statements in the jurisdictions listed on SCHEDULE 2 attached hereto,
the filing of the Patent Security Agreement and the Trademark Security Agreement
with the United States Patent and Trademark Office, the filing of the Copyright
Security Agreement with the United States Copyright Office, and upon the Secured
Party's obtaining possession of the Pledged Shares and all other Instruments,
Chattel Paper and Security Certificates of the Debtor, the security interest in
favor of the Secured Party created herein will constitute a valid and perfected
Lien upon and security interest in the Collateral, subject to no equal or prior
Liens except for those (if any) which constitute Permitted Liens in favor of the
Secured Party.
Section 3.07. INVENTORY. All Inventory has been produced in compliance
with all requirements of the Fair Labor Standards Act.
Section 3.08. INTELLECTUAL PROPERTY.
(a) The information contained on SCHEDULE 3 hereto is true,
correct and complete. All Intellectual Property of the Debtor is identified on
SCHEDULE 3 hereto.
(b) The Debtor is the sole and exclusive owner of the entire and
unencumbered right, title and interest in and to the Intellectual Property
free and clear of any Liens, charges or encumbrances, including, without
limitation, any pledges, assignments, licenses, user agreements and covenants
by the Debtor not to xxx third Persons, other than Permitted Liens.
(c) No claim has been made that the use of any of the
Intellectual Property violates or may violate the rights of any third Person.
(d) Each of the Patents and Trademarks identified on SCHEDULE 3
hereto has been properly registered with the United States Patent and
Trademark Office and each of the Copyrights identified on SCHEDULE 3 hereto
has been properly registered with the United States Copyright Office.
Section 3.09. PLEDGED SHARES.
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(a) The Pledged Shares that are shares of a corporation have been
duly authorized and validly issued and are fully paid and nonassessable, and
the Pledged Shares that are membership or partnership interests (if any) have
been validly granted, under the laws of the jurisdiction of organization of
the issuers thereof.
(b) The Debtor is the legal and beneficial owner of the Pledged
Shares, free and clear of any Lien (other than the Lien created by this
Agreement), and the Debtor has not sold, granted any option with respect to,
assigned, transferred or otherwise disposed of any of its rights or interest
in or to the Pledged Shares.
(c) On the date hereof, the Pledged Shares constitute the
percentage of the issued and outstanding shares of stock, partnership
interests or membership interests of the issuers thereof indicated on SCHEDULE
4, as such SCHEDULE 4 may from time to time be supplemented, amended or
modified.
Section 3.10. LOAN PURPOSE. The proceeds of the Loan shall be used by
Debtor solely to purchase securities of XxxxxxxxXxxxxxx.xxx, Inc.
ARTICLE IV
COVENANTS
The Debtor covenants and agrees with the Secured Party that until the
Obligations are paid and performed in full:
Section 4.01. ENCUMBRANCES. The Debtor shall not create, permit or
suffer to exist, and shall defend the Collateral against, any Lien or other
encumbrance on the Collateral except for Permitted Liens, and shall defend the
Debtor's rights in the Collateral and the Secured Party's pledge and collateral
assignment of and security interest in the Collateral against the claims and
demands of all Persons. The Debtor shall do nothing to impair the rights of the
Secured Party in the Collateral.
Section 4.02. MODIFICATION OF ACCOUNTS. The Debtor shall, in accordance
with prudent business practices, endeavor to collect or cause to be collected
from each account debtor under its Accounts, as and when due, any and all
amounts owing under such Accounts. Without the prior written consent of the
Secured Party the Debtor shall not (a) grant any extension of time for any
payment with respect to any of the Accounts, (b) compromise, compound or settle
any of the Accounts for less than the full amount thereof, (c) release, in whole
or in part, any Person liable for payment of any of the Accounts, (d) allow any
credit or discount for payment with respect to any Account other than trade
discounts granted in the ordinary course of business, or (e) release any Lien or
guaranty securing any Account.
Section 4.03. DISPOSITION OF COLLATERAL. Except for sales of Inventory
in the ordinary course of the Debtor's business, the Debtor shall not sell,
lease, assign (by operation of law or
SECURITY AGREEMENT - Page 11
otherwise) or otherwise dispose of, or grant any option with respect to, the
Collateral or any part thereof without the prior written consent of the
Secured Party.
Section 4.04. FURTHER ASSURANCES. At any time and from time to time,
upon the request of the Secured Party, and at the sole expense of the Debtor,
the Debtor shall promptly execute and deliver all such further agreements,
documents and instruments and take such further action as the Secured Party may
reasonably deem necessary or appropriate to preserve and perfect its security
interest in and pledge and collateral assignment of the Collateral and carry out
the provisions and purposes of this Agreement or to enable the Secured Party to
exercise and enforce its rights and remedies hereunder with respect to any of
the Collateral, and, to the extent any of the Collateral is at any time in the
custody of a Clearing Corporation or of a "custodian bank" or a nominee of
either, as defined in the UCC, or any other Securities Intermediary, then the
Debtor shall cause the Secured Party to obtain "control," as defined in Article
or Chapter 8 of the UCC, of such Collateral in one of the manners prescribed in
Article or Chapter 8.106 of the UCC. Except for Permitted Liens, the Debtor
agrees to defend the title to the Collateral and the Lien thereon of the Secured
Party against the claim of any other Person and to maintain and preserve such
Lien. Without limiting the generality of the foregoing, the Debtor shall (a)
execute and deliver to the Secured Party such financing statements as the
Secured Party may from time to time require; (b) deliver and pledge to the
Secured Party all Documents (including, without limitation, documents of title)
evidencing Inventory or Equipment and cause the Secured Party to be named as
lienholder on all Documents of title; (c) deliver and pledge to the Secured
Party all Instruments and Chattel Paper of the Debtor with any necessary
endorsements; and (d) execute and deliver to the Secured Party such other
agreements, documents and instruments as the Secured Party may require to
perfect and maintain the validity, effectiveness and priority of the Liens
intended to be created hereunder. The Debtor authorizes the Secured Party to
file one or more financing or continuation statements, and amendments thereto,
relating to all or any part of the Collateral without the signature of the
Debtor where permitted by law. A carbon, photographic or other reproduction of
this Agreement or of any financing statement covering the Collateral or any part
thereof shall be sufficient as a financing statement and may be filed as a
financing statement.
Section 4.05. INSURANCE. The Debtor will, at its own expense, maintain
insurance with respect to all Collateral which constitutes goods in such
amounts, against such risks, in such form and with such insurers, as shall be
satisfactory to the Secured Party from time to time. If requested by the Secured
Party, each policy for property damage insurance shall provide for all losses to
be paid directly to the Secured Party. If requested by the Secured Party, each
policy of insurance maintained by the Debtor shall (i) name the Debtor and the
Secured Party as insured parties thereunder (without any representation or
warranty by or obligation upon the Secured Party) as their interests may appear,
(ii) contain the agreement by the insurer that any loss thereunder shall be
payable to the Secured Party notwithstanding any action, inaction or breach of
representation or warranty by the Debtor, (iii) provide that there shall be no
recourse against the Secured Party for payment of premiums or other amounts with
respect thereto, and (iv) provide that at least thirty (30) days prior written
notice of cancellation or of lapse shall be given to the Secured Party by the
insurer. The Debtor will, if requested by the Secured Party, deliver to the
Secured Party original or duplicate policies of such insurance and, as often as
the Secured Party may reasonably request, a report of a reputable insurance
broker with respect to such
SECURITY AGREEMENT - Page 12
insurance. The Debtor will also, at the request of the Secured Party, duly
execute and deliver instruments of assignment of such insurance policies and
cause the respective insurers to acknowledge notice of such assignment. All
insurance payments in respect of loss of or damage to any Collateral shall be
paid to the Secured Party and applied as the Secured Party in its sole
discretion deems appropriate.
Section 4.06. BAILEES. If any of the Collateral is at any time in the
possession or control of any warehouseman, bailee or any of the Debtor's agents
or processors, the Debtor shall, at the request of the Secured Party, notify
such warehouseman, bailee, agent or processor of the security interest created
hereunder and shall instruct such Person to hold such Collateral for the Secured
Party's account subject to the Secured Party's instructions.
Section 4.07. INSPECTION RIGHTS. The Debtor shall permit the Secured
Party and its representatives to examine, inspect and audit the Collateral and
to examine, inspect and audit the Debtor's books and records at any reasonable
time and after notice, and as the Secured Party may desire. The Secured Party
may at any time and from time to time contact account debtors to verify the
existence, amounts and terms of the Accounts.
Section 4.08. MORTGAGEE AND LANDLORD WAIVERS. The Debtor shall cause
each mortgagee of real property owned by the Debtor and each landlord of real
property leased by the Debtor to execute and deliver instruments satisfactory in
form and substance to the Secured Party by which such mortgagee or landlord
waives its rights, if any, in the Collateral.
Section 4.09. LEGAL CHANGES. The Debtor shall not change its name,
identity or legal structure in any manner that might make any financing
statement filed in connection with this Agreement seriously misleading unless
the Debtor shall have given the Secured Party thirty (30) days prior written
notice thereof and shall have taken all action deemed necessary or desirable by
the Secured Party to protect its Liens and the perfection and priority thereof.
The Debtor shall not change its principal place of business, chief executive
office or the place where it keeps its books and records unless it shall have
given the Secured Party thirty (30) days prior written notice thereof and shall
have taken all action deemed necessary or desirable by the Secured Party to
cause its security interest in the Collateral to be perfected with the priority
required by this Agreement.
Section 4.10. BOOKS AND RECORDS; INFORMATION. The Debtor shall keep
accurate and complete books and records of the Collateral and the Debtor's
business and financial condition in accordance with generally accepted
accounting principles consistently applied. The Debtor shall from time to time
at the request of the Secured Party deliver to the Secured Party such
information regarding the Collateral and the Debtor as the Secured Party may
request, including, without limitation, lists and descriptions of the Collateral
and evidence of the identity and existence of the Collateral. To the extent
required by SECTION 4.04 of this Agreement, the Debtor shall xxxx its books and
records to reflect the security interest of the Secured Party under this
Agreement.
Section 4.11. EQUIPMENT AND INVENTORY.
SECURITY AGREEMENT - Page 13
(a) The Debtor shall keep the Equipment (other than vehicles) and
Inventory (other than Inventory in transit) at the locations specified on
SCHEDULE 1 hereto or, upon thirty (30) days prior written notice to the
Secured Party, at such other places within the United States of America where
all action required to perfect the Secured Party's security interest in the
Equipment and Inventory with the priority required by this Agreement shall
have been taken.
(b) The Debtor shall maintain the Equipment and Inventory in good
condition and repair (ordinary wear and tear excepted) and in accordance with
any manufacturer's manual. The Debtor shall not permit any waste or
destruction of the Equipment or Inventory or any part thereof. The Debtor
shall not permit the Equipment or Inventory to be used in violation of any
law, rule or regulation or the terms of any policy of insurance. The Debtor
shall not use or permit any of the Equipment or Inventory to be used in any
manner or for any purpose that would impair its value or expose it to unusual
risk.
(c) In producing Inventory, the Debtor shall comply with all
requirements of the Fair Labor Standards Act.
Section 4.12. WAREHOUSE RECEIPTS NON-NEGOTIABLE. The Debtor agrees that
if any warehouse receipt or receipt in the nature of a warehouse receipt is
issued in respect of any of the Collateral, such warehouse receipt or receipt in
the nature thereof shall not be "negotiable" (as such term is used in Section
7.104 of the UCC) unless such warehouse receipt or receipt in the nature thereof
is delivered to the Secured Party.
Section 4.13. NOTIFICATION. The Debtor shall promptly notify the
Secured Party of (a) any Lien, encumbrance or claim that has attached to or been
made or asserted against any of the Collateral, (b) any material change in any
of the Collateral, including, without limitation any material damage to or loss
of Collateral, and (c) the occurrence of any other event or condition
(including, without limitation, matters as to Lien priority) that could have a
material adverse effect on the Collateral or the security interest created
hereunder.
Section 4.14. COLLECTION OF ACCOUNTS. So long as no Default has
occurred and is continuing and except as otherwise provided in this SECTION 4.14
and in SECTION 5.01, the Debtor shall have the right to collect and receive
payments on the Accounts. In connection with such collections, the Debtor may
take (and, at the Secured Party's direction, shall take) such actions as the
Debtor or the Secured Party may deem necessary or advisable to enforce
collection of the Accounts. Upon the request of the Secured Party, the Debtor
shall cause all account debtors and other Persons obligated in respect of the
Accounts to make all payments on the Accounts directly to any collection or
collateral account established by the Secured Party and the Debtor shall cause
all other Proceeds of Collateral to be deposited directly to such account. Until
such Proceeds are delivered to such account, such Proceeds shall be held in
trust by the Debtor for the benefit of the Secured Party and shall not be
commingled with any other funds or property of the Debtor. All Proceeds of
Collateral received by the Secured Party pursuant to this SECTION 4.14 will be
applied by the Secured Party to the Obligations as provided in the Note.
Section 4.15. INTELLECTUAL PROPERTY.
SECURITY AGREEMENT - Page 14
(a) The Debtor shall prosecute diligently all applications in
respect of Intellectual Property, now or hereafter pending.
(b) The Debtor shall make federal applications on all of its
unpatented but patentable inventions and all of its registrable but
unregistered Copyrights and Trademarks.
(c) The Debtor shall preserve and maintain all of its rights in
the Intellectual Property and shall protect the Intellectual Property from
infringement, unfair competition, cancellation or dilution by all appropriate
action, including the commencement and prosecution of legal proceedings to
recover damages for infringement and to defend and preserve its rights in the
Intellectual Property.
(d) The Debtor shall not abandon any of the Intellectual Property.
(e) The Debtor shall not sell or assign any of its interest in,
or grant any license under (except as permitted by SECTION 5.05 hereof), any
of the Intellectual Property without the prior written consent of the Secured
Party and shall maintain the quality of any and all products and services with
respect to which the Intellectual Property is used. The Debtor shall not enter
into any agreement regarding Intellectual Property, including, but not limited
to any licensing agreement not permitted by SECTION 5.05 hereof, that is or
may be inconsistent with the Debtor's obligations under this Agreement.
(f) If the Debtor shall obtain rights to or become entitled to
the benefit of any Intellectual Property not identified on SCHEDULE 3 hereto,
the Debtor shall give the Secured Party prompt written notice thereof and the
provisions of this Agreement shall automatically apply thereto and the Debtor
hereby authorizes the Secured Party to modify or update SCHEDULE 3 hereto to
include any such new Intellectual Property.
(g) Upon the occurrence of any event that would require any
addition to or modification of SCHEDULE 3 hereto or upon the request of the
Secured Party, the Debtor shall furnish to the Secured Party statements and
schedules further identifying the Intellectual Property and such other items
in connection with the Intellectual Property as the Secured Party may request.
Promptly upon the request of the Secured Party, the Debtor shall modify this
Agreement by amending SCHEDULE 3 hereto to include any Intellectual Property
that becomes part of the Collateral.
(h) If a Default shall have occurred and be continuing, the
Debtor shall use its best efforts to obtain any consents, waivers or
agreements necessary to enable the Secured Party to exercise its rights and
remedies with respect to the Intellectual Property.
(i) The Debtor shall, at the request of the Secured Party,
execute and deliver to the Secured Party the Copyright Security Agreement, the
Patent Security Agreement, and the Trademark Security Agreement and all other
documents, instruments, and other items as may be necessary for the Secured
Party to file such agreements with the United States Copyright Office, the
United States Patent and Trademark Office, and any similar domestic or foreign
office, department, or agency. The Debtor will, at any time and from time to
time upon the request of
SECURITY AGREEMENT - Page 15
the Secured Party, execute and deliver to the Secured Party all such other
agreements, documents, instruments and other items as may be necessary or
appropriate for the Secured Party to create and perfect its security interest
in the Intellectual Property and to make all appropriate filings with respect
thereto.
Section 4.16. VOTING RIGHTS; DISTRIBUTIONS, ETC.
(a) So long as no Default shall have occurred and be continuing:
(i) The Debtor shall be entitled to exercise any and all
voting and other consensual rights (including, without limitation, the right
to give consents, waivers and notifications in respect of any of the Pledged
Collateral) pertaining to any of the Pledged Collateral or any part thereof;
provided; however, that without the prior written consent of the Secured
Party, no vote shall be cast or consent, waiver or ratification given or
action taken which would (x) be inconsistent with or violate any provision of
this Agreement or (y) amend, modify or waive any term, provision or condition
of the certificate of incorporation, by-laws, certificate of formation or
other charter document or other agreement relating to, evidencing, providing
for the issuance of or securing any Collateral; and provided further that the
Debtor shall give the Secured Party at least five (5) Business Days' prior
written notice in the form of an officer's certificate of the manner in which
it intends to exercise, or the reasons for refraining from exercising, any
voting or other consensual rights pertaining to the Collateral or any part
thereof which might have a material adverse effect on the value of the
Collateral or any part thereof; and
(ii) Unless a Default shall have occurred and be
continuing, the Debtor shall be entitled to receive and retain any and all
dividends and interest paid in respect to any of the Collateral; PROVIDED,
HOWEVER, that any and all
(A) dividends, interest or other distributions paid
or payable other than in cash in respect of, and instruments and other
property received, receivable or otherwise distributed in respect of, or in
exchange for, any Collateral,
(B) dividends, interest or other distributions
hereafter paid or payable in cash in respect of any Collateral in connection
with a partial or total liquidation or dissolution or in connection with a
reduction of capital, capital surplus or paid-in-surplus, and
(C) cash paid, payable or otherwise distributed in
redemption of, or in exchange for, any Collateral,
shall be, and shall be forthwith delivered to the Secured Party to hold as,
Collateral and shall, if received by the Debtor, be received in trust for the
benefit of the Secured Party, be segregated from the other property or funds of
the Debtor and be forthwith delivered to the Secured Party as Collateral in the
same form as so received (with any necessary endorsement). All amounts (other
than amounts described in CLAUSES (ii)(A)-(C) above) received by the Secured
Party in respect of any Pledged Collateral shall be either (1) promptly released
to the Debtor, so long as no Default shall have occurred and be continuing or
(2) if any Default shall have occurred and be continuing, held by the Secured
Party and applied to the Obligations. During the continuance of
SECURITY AGREEMENT - Page 16
any Default, any dividends, interest or other distributions (whether in cash,
securities, property or otherwise) received by the Debtor with respect to any
Pledged Collateral shall be held by the Debtor in trust for the benefit of the
Secured Party and, upon the request of the Secured Party, shall be delivered
promptly to the Secured Party to hold as Collateral. If such Default is waived
or cured to the satisfaction of the Secured Party, any such distributions
(except those of the types described in CLAUSES (ii)(A)-(C) above) shall be
returned promptly to the Debtor (provided that no other Default exists).
(b) Upon the occurrence and during the continuance of a Default:
(i) The Secured Party may, without notice to the Debtor,
transfer or register in the name of the Secured Party or any of its nominees
any or all of the Collateral described in SECTION 2.01(k) through (m) of this
Agreement, the proceeds thereof (in cash or otherwise) and all liens,
security, rights, remedies and claims of the Debtor with respect thereto
(collectively, the "PLEDGED COLLATERAL") held by the Secured Party hereunder,
and the Secured Party or its nominee may thereafter, after delivery of notice
to the Debtor, exercise all voting and corporate rights at any meeting of any
corporation, partnership or other business entity issuing any of the Pledged
Collateral and any and all rights of conversion, exchange, subscription or any
other rights, privileges or options pertaining to any of the Pledged
Collateral as if it were the absolute owner thereof, including, without
limitation, the right to exchange at its discretion any and all of the Pledged
Collateral upon the merger, consolidation, reorganization, recapitalization or
other readjustment of any corporation, partnership or other business entity
issuing any of such Pledged Collateral or upon the exercise by any such issuer
or the Secured Party of any right, privilege or option pertaining to any of
the Pledged Collateral, and in connection therewith, to deposit and deliver
any and all of the Pledged Collateral with any committee, depositary, transfer
agent, registrar or other designated agency upon such terms and conditions as
it may determine, all without liability except to account for property
actually received by it but the Secured Party shall have no duty to exercise
any of the aforesaid rights, privileges or options, and the Secured Party
shall not be responsible for any failure to do so or delay in so doing.
(ii) All rights of the Debtor to exercise the voting and
other consensual rights which it would otherwise be entitled to exercise
pursuant to SUBSECTION 4.16(a)(i) and to receive the dividends, interest and
other distributions which it would otherwise be authorized to receive and
retain pursuant to SUBSECTION 4.16(a)(ii) shall be suspended until such
Default shall no longer exist, and all such rights shall, until such Default
shall no longer exist, thereupon become vested in the Secured Party which
shall thereupon have the sole right to exercise such voting and other
consensual rights and to receive and hold as Pledged Collateral such
dividends, interest and other distributions.
(iii) All dividends, interest and other distributions which
are received by the Debtor contrary to the provisions of this SUBSECTION 4.16(b)
shall be received in trust for the benefit of the Secured Party, shall be
segregated from other funds of the Debtor and shall be forthwith paid over to
the Secured Party as Collateral in the same form as so received (with any
necessary endorsement).
SECURITY AGREEMENT - Page 17
(iv) The Debtor shall execute and deliver (or cause to be
executed and delivered) to the Secured Party all such proxies and other
instruments as the Secured Party may reasonably request for the purpose of
enabling the Secured Party to exercise the voting and other rights which it is
entitled to exercise pursuant to this SUBSECTION 4.16(b) and to receive the
dividends, interest and other distributions which it is entitled to receive
and retain pursuant to this SUBSECTION 4.16(b). The foregoing shall not in any
way limit the Secured Party's power and authority granted pursuant to SECTION
5.01.
Section 4.17. TRANSFERS AND OTHER LIENS.
(a) The Debtor shall not grant any option with respect to,
exchange, sell or otherwise dispose of any of the Collateral, except for the
sales of inventory in the ordinary course of its business, or create or permit
to exist any Lien upon or with respect to any of the Collateral except for the
Liens created hereby.
(b) The Debtor agrees that it will (i) cause each issuer of any
of the Collateral not to issue any shares of stock, notes or other securities
or instruments in addition to or in substitution for any of the Collateral,
except, with the written consent of the Secured Party, to the Debtor, (ii)
pledge hereunder, immediately upon its acquisition (directly or indirectly)
thereof, any and all such shares of stock, membership interests, partnership
interests, notes or instruments, and (iii) promptly (and in any event within
three Business Days) deliver to the Secured Party an Amendment, duly executed
by the Debtor, in substantially the form of EXHIBIT D hereto (an "Amendment"),
in respect of such shares of stock, membership interests, partnership
interests, notes or instruments, together with all certificates, notes or
other instruments representing or evidencing the same. The Debtor hereby (i)
authorizes the Secured Party to attach each Amendment to this Agreement, (ii)
agrees that all such shares of stock, membership interests, partnership
interests, notes or instruments listed on any Amendment delivered to the
Secured Party shall for all purposes hereunder constitute Collateral, and
(iii) is deemed to have made, upon such delivery, the representations and
warranties contained in ARTICLE III with respect to such Collateral.
Section 4.18. POSSESSION; REASONABLE CARE. Regardless of whether a
Default has occurred or is continuing, the Secured Party shall have the right to
hold in its possession all Pledged Collateral pledged, assigned or transferred
hereunder and from time to time constituting a portion of the Collateral. The
Secured Party may, from time to time, in its sole discretion, appoint one or
more agents (which in no case shall be the Debtor or an affiliate of the Debtor)
to hold physical custody, for the account of the Secured Party, of any or all of
the Collateral. The Secured Party shall be deemed to have exercised reasonable
care in the custody and preservation of the Collateral in its possession if the
Collateral is accorded treatment substantially equal to that which the Secured
Party accords its own property, it being understood that the Secured Party shall
not have any responsibility for (a) ascertaining or taking action with respect
to calls, conversions, exchanges, maturities, tenders or other matters relative
to any Collateral, whether or not the Secured Party has or is deemed to have
knowledge of such matters, or (b) taking any necessary steps to preserve rights
against any parties with respect to any Collateral. Following the occurrence of
a Default, the Secured Party shall be entitled to take possession of the
Collateral.
SECURITY AGREEMENT - Page 18
Section 4.19. ACKNOWLEDGMENT OF PLEDGE. The Debtor shall deliver to the
Secured Party, concurrently with the execution hereof, acknowledgment by each
financial institution in which any Deposit Account is held or maintained that
the pledge of such Deposit Account has been recorded in the books and records of
the financial institution, and that the Secured Party shall have dominion and
control over such Deposit Account, such acknowledgment to be in form and
substance satisfactory to the Secured Party.
ARTICLE V
RIGHTS OF THE SECURED PARTY
Section 5.01. POWER OF ATTORNEY. The Debtor hereby irrevocably
constitutes and appoints the Secured Party and any officer or agent thereof,
with full power of substitution, as its true and lawful attorney-in-fact with
full irrevocable power and authority in the name of the Debtor or in its own
name, to take after the occurrence and during the continuance of a Default and
from time to time thereafter, any and all action and to execute any and all
documents and instruments which the Secured Party at any time and from time to
time deems necessary or desirable to accomplish the purposes of this Agreement
and, without limiting the generality of the foregoing, the Debtor hereby gives
the Secured Party the power and right on behalf of the Debtor and in its own
name to do any of the following after the occurrence and during the continuance
of a Default and from time to time thereafter, without notice to or the consent
of the Debtor:
(a) to demand, xxx for, collect or receive, in the name of
the Debtor or in its own name, any money or property at any time
payable or receivable on account of or in exchange for any of the
Collateral and, in connection therewith, endorse checks, notes,
drafts, acceptances, money orders, documents of title or any other
instruments for the payment of money under the Collateral or any
policy of insurance;
(b) to pay or discharge taxes, Liens or other encumbrances
levied or placed on or threatened against the Collateral;
(c) to notify post office authorities to change the address
for delivery of mail of the Debtor to an address designated by the
Secured Party and to receive, open and dispose of mail addressed to the
Debtor;
(d) (i) to direct account debtors and any other parties
liable for any payment under any of the Collateral to make payment of
any and all monies due and to become due thereunder directly to the
Secured Party or as the Secured Party shall direct; (ii) to receive
payment of and receipt for any and all monies, claims and other
amounts due and to become due at any time in respect of or arising
out of any Collateral; (iii) to sign and endorse any invoices,
freight or express bills, bills of lading, storage or warehouse
receipts, drafts against debtors, assignments, proxies, stock powers,
verifications and notices in connection with accounts and other
documents relating to the Collateral; (iv) to commence and prosecute
any suit, action or proceeding at law or in equity in any court of
SECURITY AGREEMENT - Page 19
competent jurisdiction to collect the Collateral or any part thereof
and to enforce any other right in respect of any Collateral; (v) to
defend any suit, action or proceeding brought against the Debtor with
respect to any Collateral; (vi) to settle, compromise or adjust any
suit, action or proceeding described above and, in connection
therewith, to give such discharges or releases as the Secured Party
may deem appropriate; (vii) to exchange any of the Collateral for
other property upon any merger, consolidation, reorganization,
recapitalization or other readjustment of the issuer thereof and, in
connection therewith, deposit any of the Collateral with any
committee, depositary, transfer agent, registrar or other designated
agency upon such terms as the Secured Party may determine; (viii) to
add or release any guarantor, indorser, surety or other party to any
of the Collateral; (ix) to renew, extend or otherwise change the
terms and conditions of any of the Collateral; (x) to grant or issue
any exclusive or nonexclusive license under or with respect to any of
the Intellectual Property; (xi) to endorse the Debtor's name on all
applications, documents, papers and instruments necessary or
desirable in order for the Secured Party to use any of the
Intellectual Property; (xii) to make, settle, compromise or adjust
any claims under or pertaining to any of the Collateral (including
claims under any policy of insurance); and (xiii) to sell, transfer,
pledge, convey, make any agreement with respect to or otherwise deal
with any of the Collateral as fully and completely as though the
Secured Party were the absolute owner thereof for all purposes, and
to do, at the Secured Party's option and the Debtor's expense, at any
time, or from time to time, all acts and things which the Secured
Party deems necessary to protect, preserve, maintain, or realize upon
the Collateral and the Secured Party's security interest therein.
This power of attorney is a power coupled with an interest and shall be
irrevocable. The Secured Party shall be under no duty to exercise or withhold
the exercise of any of the rights, powers, privileges and options expressly or
implicitly granted to the Secured Party in this Agreement, and shall not be
liable for any failure to do so or any delay in doing so. Neither the Secured
Party nor any Person designated by the Secured Party shall be liable for any act
or omission or for any error of judgment or any mistake of fact or law. This
power of attorney is conferred on the Secured Party solely to protect, preserve,
maintain and realize upon its security interest in the Collateral. The Secured
Party shall not be responsible for any decline in the value of the Collateral
and shall not be required to take any steps to preserve rights against prior
parties or to protect, preserve or maintain any Lien given to secure the
Collateral.
Section 5.02. SETOFF. The Secured Party shall have the right to set
off and apply against the Obligations, at any time and without notice to the
Debtor, any and all deposits (general, time or demand, provisional or final) or
other sums at any time credited by or owing from the Secured Party to the Debtor
whether or not the Obligations are then due. The rights and remedies of the
Secured Party hereunder are in addition to other rights and remedies (including,
without limitation, other rights of setoff) that the Secured Party may have.
Section 5.03. ASSIGNMENT BY THE SECURED PARTY. The Secured Party may
at any time assign or otherwise transfer all or any portion of its rights and
obligations under this Agreement and the Note, in connection with an assignment
of the Obligations, to any other Person, and such Person shall thereupon become
vested with all the benefits thereof granted to the Secured Party herein or
otherwise.
SECURITY AGREEMENT - Page 20
Section 5.04. PERFORMANCE BY THE SECURED PARTY. If the Debtor shall
fail to perform any covenant or agreement contained in this Agreement, the
Secured Party may perform or attempt to perform such covenant or agreement on
behalf of the Debtor. In such event, the Debtor shall, at the request of the
Secured Party, promptly pay any amount expended by the Secured Party in
connection with such performance or attempted performance to the Secured Party,
together with interest thereon at the applicable rate of interest set forth in
the Note from and including the date of such expenditure to but excluding the
date such expenditure is paid in full. Notwithstanding the foregoing, it is
expressly agreed that the Secured Party shall not have any liability or
responsibility for the performance of any obligation of the Debtor under this
Agreement.
Section 5.05. LICENSE. If no Default shall have occurred and be
continuing, the Debtor shall have the exclusive, non-transferable right and
license to use the Intellectual Property in the ordinary course of business and
the exclusive right to grant to other Persons licenses and sublicenses with
respect to the Intellectual Property for full and fair consideration. The Debtor
agrees not to sell or assign its interest in, or grant any sublicense under, the
license granted under this SECTION 5.05 without the prior written consent of the
Secured Party.
Section 5.06. CHANGE OF DEPOSITORY. In the event of the termination by
any financial institution in which any Deposit Account is maintained of any
agreement with or for the benefit of the Secured Party, or if any such financial
institution shall fail to comply with any provisions of any such agreement or
any instructions of the Secured Party in accordance with any such agreement or
this Agreement, or if the Secured Party determines in its sole discretion that
the financial condition of any such financial institution has materially
deteriorated, the Debtor agrees to transfer the affected Deposit Account(s) to
another financial institution acceptable to the Secured Party and cause such
substitute financial institution to execute such agreements as the Secured Party
may require, in form and substance reasonably acceptable to the Secured Party,
to ensure that the Secured Party has a perfected, first priority security
interest in the Deposit Account(s) held with such substitute financial
institution. If any affected Deposit Account is a lockbox account, the Debtor
agrees to notify its account debtors promptly to remit all payments which were
being sent to the terminated Deposit Account directly to the substitute Deposit
Account.
Section 5.07. COLLECTION OF DEPOSIT ACCOUNTS. Upon written demand from
the Secured Party to any financial institution in which any of the Deposit
Accounts are maintained, each such financial institution is hereby authorized
and directed by the Debtor to make payment directly to the Secured Party of the
funds in or credited to the Deposit Accounts, or such part thereof as the
Secured Party may request, and each such financial institution shall be fully
protected in relying upon the written statement of the Secured Party that the
Deposit Accounts are at the time of such demand assigned hereunder and that the
Secured Party is entitled to payment of the Obligations therefrom. The Secured
Party's receipt for sums paid it pursuant to such demand shall be a full and
complete release, discharge and acquittance to the Depository or other financial
institution making such payment to the extent of the amount so paid. The Debtor
hereby authorizes the Secured Party upon the occurrence and during the
continuation of a Default and so long as any part of the Obligations remain
unpaid, (i) to withdraw, collect and receipt for any and all funds, securities
or other investments on deposit in or payable on the Deposit Accounts; (ii) on
behalf of
SECURITY AGREEMENT - Page 21
the Debtor to endorse the name of the Debtor upon any checks, drafts or other
instruments payable to the Debtor evidencing payment on the Deposit Accounts;
and (iii) to surrender or present for notation of withdrawal the passbook,
certificate or other documents issued to the Debtor in connection with the
Deposit Accounts. No power granted herein to the Secured Party by the Debtor
shall terminate upon any disability of the Debtor.
ARTICLE VI
DEFAULT
Section 6.01. RIGHTS AND REMEDIES. If a Default shall have occurred and
be continuing, the Secured Party shall have the following rights and remedies:
(i) In addition to all other rights and remedies granted
to the Secured Party in this Agreement or in the Note or by applicable law,
the Secured Party shall have all of the rights and remedies of a secured party
under the UCC (whether or not the UCC applies to the affected Collateral) and
the Secured Party may also, without notice except as specified below, sell the
Collateral or any part thereof in one or more parcels at public or private
sale, at any exchange, broker's board or at any of the Secured Party's offices
or elsewhere, for cash, on credit or for future delivery, and upon such other
terms as the Secured Party may deem commercially reasonable or otherwise as
may be permitted by law. Without limiting the generality of the foregoing, the
Secured Party may (A) without demand or notice to the Debtor, collect, receive
or take possession of the Collateral or any part thereof and for that purpose
the Secured Party may enter upon any premises on which the Collateral is
located and remove the Collateral therefrom or render it inoperable, and/or
(B) sell, lease or otherwise dispose of the Collateral, or any part thereof,
in one or more parcels at public or private sale or sales, at the Secured
Party's offices or elsewhere, for cash, on credit or for future delivery, and
upon such other terms as the Secured Party may deem commercially reasonable or
otherwise as may be permitted by law. The Secured Party shall have the right
at any public sale or sales, and, to the extent permitted by applicable law,
at any private sale or sales, to bid (which bid may be, in whole or in part,
in the form of cancellation of indebtedness) and become a purchaser of the
Collateral or any part thereof free of any right or equity of redemption on
the part of the Debtor, which right or equity of redemption is hereby
expressly waived and released by the Debtor. Upon the request of the Secured
Party, the Debtor shall assemble the Collateral and make it available to the
Secured Party at any place designated by the Secured Party that is reasonably
convenient to the Debtor and the Secured Party. The Debtor agrees that the
Secured Party shall not be obligated to give more than five (5) days prior
written notice of the time and place of any public sale or of the time after
which any private sale may take place and that such notice shall constitute
reasonable notice of such matters. The Secured Party shall not be obligated to
make any sale of Collateral if it shall determine not to do so, regardless of
the fact that notice of sale of Collateral may have been given. The Secured
Party may, without notice or publication, adjourn any public or private sale
or cause the same to be adjourned from time to time by announcement at the
time and place fixed for sale, and such sale may, without further notice, be
made at the time and place to which the same was so adjourned. The Debtor
shall be liable for all expenses of retaking, holding, preparing for sale or
the like, and all attorneys' fees, legal expenses and other costs and expenses
incurred by the Secured Party in connection with the collection of the
Obligations and the
SECURITY AGREEMENT - Page 22
enforcement of the Secured Party's rights under this Agreement. The Debtor
shall remain liable for any deficiency if the Proceeds of any sale or other
disposition of the Collateral applied to the Obligations are insufficient to
pay the Obligations in full. The Secured Party may apply the Collateral
against the Obligations in such order and manner as the Secured Party may
elect in its sole discretion. The Debtor waives all rights of marshaling,
valuation and appraisal in respect of the Collateral. Any cash held by the
Secured Party as Collateral and all cash proceeds received by the Secured
Party in respect of any sale of, collection from or other realization upon all
or any part of the Collateral may, in the discretion of the Secured Party, be
held by the Secured Party as collateral for, and then or at any time
thereafter applied in whole or in part by the Secured Party against, the
Obligations in such order as the Secured Party shall select. Any surplus of
such cash or cash proceeds and interest accrued thereon, if any, held by the
Secured Party and remaining after payment in full of all the Obligations shall
be paid over to the Debtor or to whomsoever may be lawfully entitled to
receive such surplus; provided that the Secured Party shall have no obligation
to invest or otherwise pay interest on any amounts held by it in connection
with or pursuant to this Agreement.
(ii) The Secured Party may cause any or all of the
Collateral held by it to be transferred into the name of the Secured Party or
the name or names of the Secured Party's nominee or nominees.
(iii) The Secured Party may exercise any and all rights and
remedies of the Debtor under or in respect of the Collateral, including, without
limitation, any and all rights of the Debtor to demand or otherwise require
payment of any amount under, or performance of any provision of, any of the
Collateral and any and all voting rights and corporate powers in respect of the
Collateral.
(iv) The Secured Party may collect or receive all money or
property at any time payable or receivable on account of or in exchange for
any of the Collateral, but shall be under no obligation to do so.
(v) On any sale of the Collateral, the Secured Party is
hereby authorized to comply with any limitation or restriction with which
compliance is necessary, in the view of the Secured Party's counsel, in order
to avoid any violation of applicable law or in order to obtain any required
approval of the purchaser or purchasers by any applicable governmental
authority.
(vi) For purposes of enabling the Secured Party to exercise
its rights and remedies under this SECTION 6.01 and enabling the Secured Party
and its successors and assigns to enjoy the full benefits of the Collateral,
the Debtor hereby grants to the Secured Party an irrevocable, nonexclusive
license (exercisable without payment of royalty or other compensation to the
Debtor) to use, assign, license or sublicense any of the Intellectual
Property, including in such license reasonable access to all media in which
any of the licensed items may be recorded or stored and all computer programs
used for the completion or printout thereof. This license shall also inure to
the benefit of all successors, assigns and transferees of the Secured Party.
(vii) The Secured Party may require that the Debtor assign all
of its right, title and interest in and to the Intellectual Property or any part
thereof to the Secured Party or such
SECURITY AGREEMENT - Page 23
other Person as the Secured Party may designate pursuant to documents
satisfactory to the Secured Party.
6.02. REGISTRATION RIGHTS, PRIVATE SALES, ETC.
(a) If the Secured Party shall determine to exercise its right
to sell all or any of the Collateral pursuant to SECTION 6.01, the Debtor
agrees that, upon the reasonable request of the Secured Party (which request
may be made by the Secured Party in its sole discretion), the Debtor will, at
its own expense:
(i) execute and deliver, and cause each issuer of any of
the Collateral contemplated to be sold and the directors and officers thereof
to execute and deliver, all such agreements, documents and instruments, and do
or cause to be done all such other acts and things, as may be necessary or, in
the opinion of the Secured Party, advisable to register such Collateral under
the provisions of the Securities Act (as hereinafter defined) and to cause the
registration statement relating thereto to become effective and to remain
effective for such period as prospectuses are required by law to be furnished
and to make all amendments and supplements thereto and to the related
prospectus which, in the opinion of the Secured Party, are necessary or
advisable, all in conformity with the requirements of the Securities Act and
the rules and regulations of the Securities and Exchange Commission applicable
thereto;
(ii) use its best efforts to qualify such Collateral under
all applicable state securities or "Blue Sky" laws and to obtain all necessary
governmental approvals for the sale of such Collateral, as requested by the
Secured Party;
(iii) cause each such issuer to make available to its security
holders, as soon as practicable, an earnings statement which will satisfy the
provisions of Section 11(a) of the Securities Act;
(iv) do or cause to be done all such other acts and things
as may be reasonably necessary to make such sale of the Collateral or any part
thereof valid and binding and in compliance with applicable law; and
(v) bear all reasonable costs and expenses, including
reasonable attorneys' fees, of carrying out its obligations under this SECTION
6.02.
(b) The Debtor recognizes that the Secured Party may be unable
to effect a public sale of any or all of the Collateral by reason of certain
prohibitions contained in the laws of any jurisdiction outside the United
States or in the Securities Act of 1933, as amended from time to time (the
"SECURITIES ACT"), and applicable state securities laws but may be compelled
to resort to one or more private sales thereof to a restricted group of
purchasers who will be obliged to agree, among other things, to acquire such
Collateral for their own account for investment and not with a view to the
distribution or resale thereof. The Debtor acknowledges and agrees that any
such private sale may result in prices and other terms less favorable to the
seller than if such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall, to the extent
permitted by law, be deemed to have been made in a commercially reasonable
manner.
SECURITY AGREEMENT - Page 24
The Secured Party shall not be under any obligation to delay a sale of any of
the Collateral for the period of time necessary to permit the issuer of such
securities to register such securities under the laws of any jurisdiction
outside the United States, under the Securities Act or under any applicable
state securities laws, even if such issuer would agree to do so.
(c) The Debtor further agrees to do or cause to be done, to the
extent that the Debtor may do so under applicable law, all such other acts and
things as may be necessary to make such sales or resales of any portion or all
of the Collateral valid and binding and in compliance with any and all
applicable laws, regulations, orders, writs, injunctions, decrees or awards of
any and all courts, arbitrators or governmental instrumentalities, domestic or
foreign, having jurisdiction over any such sale or sales, all at the Debtor's
expense. The Debtor further agrees that a breach of any of the covenants
contained in this SECTION 6.02 will cause irreparable injury to the Secured
Party and that the Secured Party has no adequate remedy at law in respect of
such breach and, as a consequence, agrees that each and every covenant
contained in this SECTION 6.02 shall be specifically enforceable against the
Debtor, and the Debtor hereby waives and agrees, to the fullest extent
permitted by law, not to assert as a defense against an action for specific
performance of such covenants that (i) the Debtor's failure to perform such
covenants will not cause irreparable injury to the Secured Party or (ii) the
Secured Party has an adequate remedy at law in respect of such breach. The
Debtor further acknowledges the impossibility of ascertaining the amount of
damages which would be suffered by the Secured Party by reason of a breach of
any of the covenants contained in this SECTION 6.02 and, consequently, agrees
that, if the Debtor shall breach any of such covenants and the Secured Party
shall xxx for damages for such breach, the Debtor shall pay to the Secured
Party, as liquidated damages and not as a penalty, an aggregate amount equal
to the value of the Collateral on the date the Secured Party shall demand
compliance with this SECTION 6.02.
(d) THE DEBTOR HEREBY AGREES TO INDEMNIFY, PROTECT AND SAVE
HARMLESS THE SECURED PARTY AND ANY CONTROLLING PERSONS THEREOF WITHIN THE
MEANING OF THE SECURITIES ACT FROM AND AGAINST ANY AND ALL LIABILITIES, SUITS,
CLAIMS, COSTS AND EXPENSES (INCLUDING COUNSEL FEES AND DISBURSEMENTS) ARISING
UNDER THE SECURITIES ACT, THE SECURITIES AND EXCHANGE ACT OF 1934, AS AMENDED,
ANY APPLICABLE STATE SECURITIES STATUTE, OR AT COMMON LAW, OR PURSUANT TO ANY
OTHER APPLICABLE LAW IN CONNECTION WITH THE AFORESAID REGISTRATION, INSOFAR AS
SUCH LIABILITIES, SUITS, CLAIMS, COSTS AND EXPENSES ARISE OUT OF, OR ARE BASED
UPON, ANY UNTRUE STATEMENT OR ALLEGED UNTRUE STATEMENT OF A MATERIAL FACT
CONTAINED IN ANY REGISTRATION STATEMENT RELATING TO ANY PART OF THE
COLLATERAL, OR SUCH REGISTRATION STATEMENT AS AMENDED OR SUPPLEMENTED, OR
ARISES OUT OF, OR IS BASED UPON, THE OMISSION OR ALLEGED OMISSION TO STATE
THEREIN A MATERIAL FACT REQUIRED TO BE STATED THEREIN OR NECESSARY TO MAKE THE
STATEMENTS THEREIN NOT MISLEADING; PROVIDED, HOWEVER, THAT THE DEBTOR SHALL
NOT BE LIABLE IN ANY SUCH CASE TO THE EXTENT THAT ANY SUCH LIABILITIES, SUITS,
CLAIMS, COSTS AND EXPENSES ARISE OUT OF, OR ARE BASED UPON, ANY UNTRUE
STATEMENT OR ALLEGED UNTRUE STATEMENT OR OMISSION OR ALLEGED OMISSION MADE IN
THE AFORESAID
SECURITY AGREEMENT - Page 25
REGISTRATION STATEMENT OR THE AFORESAID REGISTRATION STATEMENT AS AMENDED OR
SUPPLEMENTED, IN RELIANCE UPON AND IN CONFORMITY WITH WRITTEN INFORMATION
FURNISHED TO THE DEBTOR BY THE SECURED PARTY SPECIFICALLY FOR INCLUSION
THEREIN. THE FOREGOING INDEMNITY AGREEMENT IS IN ADDITION TO ANY INDEBTEDNESS,
LIABILITY OR OBLIGATION THAT THE DEBTOR MAY OTHERWISE HAVE TO THE SECURED
PARTY OR ANY SUCH CONTROLLING PERSON.
ARTICLE VII
MISCELLANEOUS
Section 7.01. NO WAIVER; CUMULATIVE REMEDIES. No failure on the part of
the Secured Party to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege under this Agreement preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies provided for in this Agreement are cumulative and not
exclusive of any rights and remedies provided by law.
Section 7.02. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the Debtor and the Secured Party and their
respective heirs, successors and assigns, except that the Debtor may not assign
any of its rights or obligations under this Agreement without the prior written
consent of the Secured Party.
Section 7.03. AMENDMENT; ENTIRE AGREEMENT. This Agreement embodies the
final, entire agreement among the parties hereto and supersedes any and all
prior commitments, agreements, representations and understandings, whether
written or oral, relating to the subject matter hereof and may not be
contradicted or varied by evidence of prior, contemporaneous or subsequent oral
agreements or discussions of the parties hereto. There are no unwritten oral
agreements among the parties hereto. The provisions of this Agreement may be
amended or waived only by an instrument in writing signed by the parties hereto,
except as provided in SECTION 4.15(g).
Section 7.04. NOTICES. All notices and other communications provided
for in this Agreement shall be given or made by telecopy or in writing and
telecopied, mailed by certified mail return receipt requested, or delivered to
the intended recipient at the "Address for Notices" specified below its name on
the signature pages hereof, or, as to any party, at such other address as shall
be designated by such party in a notice to the other party given in accordance
with this SECTION 7.04. Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given when transmitted by
telecopy or when personally delivered or, in the case of a mailed notice, upon
receipt, in each case given or addressed as aforesaid; PROVIDED, HOWEVER, that
notices to the Secured Party shall be deemed given when received by the Secured
Party.
Section 7.05. GOVERNING LAW; SUBMISSION TO JURISDICTION; SERVICE OF
PROCESS. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
SECURITY AGREEMENT - Page 00
XXX XXXX XX XXX XXXXX XX XXXXX (WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES)
AND APPLICABLE LAWS OF THE UNITED STATES.
Section 7.06. HEADINGS. The headings, captions, and arrangements used
in this Agreement are for convenience only and shall not affect the
interpretation of this Agreement.
Section 7.07. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made in this Agreement or in any certificate
delivered pursuant hereto shall survive the execution and delivery of this
Agreement, and no investigation by the Secured Party shall affect the
representations and warranties or the right of the Secured Party to rely upon
them.
Section 7.08. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
Section 7.09. WAIVER OF BOND. In the event the Secured Party seeks to
take possession of any or all of the Collateral by judicial process, the Debtor
hereby irrevocably waives any bonds and any surety or security relating thereto
that may be required by applicable law as an incident to such possession, and
waives any demand for possession prior to the commencement of any such suit or
action
Section 7.10. SEVERABILITY. Any provision of this Agreement which is
determined by a court of competent jurisdiction to be prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions of this Agreement, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 7.11. CONSTRUCTION. The Debtor and the Secured Party
acknowledge that each of them has had the benefit of legal counsel of its own
choice and has been afforded an opportunity to review this Agreement with its
legal counsel and that this Agreement shall be construed as if jointly drafted
by the Debtor and the Secured Party.
Section 7.12. TERMINATION. If all of the Obligations shall have been
paid and performed in full, the Secured Party shall, upon the written request of
the Debtor, execute and deliver to the Debtor a proper instrument or instruments
acknowledging the release and termination of the security interests created by
this Agreement, and shall duly assign and deliver to the Debtor (without
recourse and without any representation or warranty) such of the Collateral as
may be in the possession of the Secured Party and has not previously been sold
or otherwise applied pursuant to this Agreement.
Section 7.13. WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, THE DEBTOR HEREBY IRREVOCABLY AND EXPRESSLY WAIVES ALL RIGHT TO
A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
SECURITY AGREEMENT - Page 27
TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF THE SECURED PARTY IN THE
NEGOTIATION, ADMINISTRATION OR ENFORCEMENT THEREOF.
(SIGNATURE PAGE FOLLOWS)
SECURITY AGREEMENT - Page 28
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first written above.
DEBTOR:
EDGE TECHNOLOGY GROUP, INC.
By: /s/ Xxxxxx Xxxxxxxx
-------------------
Name: Xxxxxx Xxxxxxxx
Title: President
Address for Notices:
000 Xxxxxx Xxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxxxx Xxxxxxxx
President
SECURED PARTY:
CATALYST MASTER FUND, L.P.
By: Catalyst GP, Ltd., its General Partner
By: /s/ J. Xxxxx Xxxxxxxx
---------------------
J. Xxxxx Xxxxxxxx
Vice President
Address for Notices:
Catalyst GP, Ltd.
0000 Xxx Xxxxxx
0000 Xxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: J. Xxxxx Xxxxxxxx
SECURITY AGREEMENT - Page 29
Schedules and Exhibits Omitted
SECURITY AGREEMENT - Page 30
