SECURITY AGREEMENT
This SECURITY AGREEMENT, dated as of June 10, 2008 (this "Agreement"), is
among Perf-Go Green Holdings, Inc., a Delaware corporation (the "Company" or
"Debtor"), and the holder or holders of the Company's 10% Senior Secured
Convertible Debenture in the original aggregate principal amount of up to
$5,000,000 (plus an additional 20% of such principal amount, at the option of
the Company's placement agent) (each, a "Debenture," and collectively, the
"Debentures"), signatory hereto, their endorsees, transferees and assigns
(collectively referred to as, the "Secured Parties").
W I T N E S S E T H:
WHEREAS, pursuant to subscription agreements entered into between the
Company and the Secured Parties (the "Subscription Agreement"), Company has
agreed to issue to the Secured Parties and the Secured Parties have severally
agreed to purchase from Company the Debentures which are convertible into shares
of Company's Common Stock, par value $.0001 per share (the "Common Stock"). In
connection therewith, Company shall issue the Secured Parties certain Common
Stock purchase warrants (the "Warrants"); and
WHEREAS, pursuant to the Debentures, the Secured Parties have severally
agreed to extend the loans to the Company evidenced by the Debentures; and
WHEREAS, in order to induce the Secured Parties to extend the loans
evidenced by the Debentures, the Debtor has agreed to execute and deliver to the
Secured Parties this Agreement and to grant the Secured Parties, pari passu with
each other Secured Party, a perfected first priority lien and security interest
in certain property of the Debtor to secure the prompt payment, performance and
discharge in full of all of the Company's obligations under the Debentures.
NOW, THEREFORE, in consideration of the agreements herein contained and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto hereby agree as follows:
1. Certain Definitions. As used in this Agreement, the following terms
shall have the meanings set forth in this Section 1. Terms used but not
otherwise defined in this Agreement that are defined in Article 9 of the UCC
(such as "account", "chattel paper", "commercial tort claim", "deposit account",
"document", "equipment", "fixtures", "general intangibles", "goods",
"instruments", "inventory", "investment property", "letter-of-credit rights",
"proceeds" and "supporting obligations") shall have the respective meanings
given such terms in Article 9 of the UCC.
(a) "Collateral" means the collateral in which the Secured Parties are
granted a security interest by this Agreement and which shall include the
following personal property of the Debtor, whether presently owned or existing
or hereafter acquired or coming into existence, wherever situated, and all
additions and accessions thereto and all substitutions and replacements thereof,
and all proceeds, products and accounts thereof, including, without limitation,
all proceeds from the sale or transfer of the Collateral and of insurance
covering the same and of any tort claims in connection therewith:
(i) All goods, including, without limitations, (A) all machinery,
equipment, computers, motor vehicles, trucks, appliances, furniture, special and
general tools, fixtures, test and quality control devices and other equipment of
every kind and nature and wherever situated, together with all documents of
title and documents representing the same, all additions and accessions thereto,
replacements therefor, all parts therefor, and all substitutes for any of the
foregoing and all other items used and useful in connection with the Debtor's
businesses and all improvements thereto; and (B) all inventory;
(ii) All contract rights and other general intangibles, including, without
limitation, all partnership interests, membership interests, stock or other
securities, rights under any of the Organizational Documents, agreements related
to any pledged securities, licenses, distribution and other agreements, computer
software (whether "off-the-shelf", licensed from any third party or developed by
the Debtor), computer software development rights, leases, franchises, customer
lists, quality control procedures, grants and rights, goodwill, trademarks,
service marks, trade styles, trade names, patents, patent applications,
copyrights, and income tax refunds;
(iii) All accounts, together with all instruments, all documents of title
representing any of the foregoing, all rights in any merchandising, goods,
equipment, motor vehicles and trucks which any of the same may represent, and
all right, title, security and guaranties with respect to each account,
including any right of stoppage in transit;
(iv) All documents, letter-of-credit rights, instruments and chattel paper;
(v) All commercial tort claims;
(vi) All deposit accounts and all cash (whether or not deposited in such
deposit accounts);
(vii) All investment property;
(viii) All supporting obligations;
(ix) All files, records, books of account, business papers, and computer
programs; and
(x) the products and proceeds of all of the foregoing Collateral set forth
in clauses (i)-(ix) above.
Notwithstanding the foregoing, nothing herein shall be deemed to constitute
an assignment of any asset which, in the event of an assignment, becomes void by
operation of applicable law or the assignment of which is otherwise prohibited
by applicable law (in each case to the extent that such applicable law is not
overridden by Sections 9-406, 9-407 and/or 9-408 of the UCC or other similar
applicable law); provided, however, that to the extent permitted by applicable
law, this Agreement shall create a valid security interest in such asset and, to
the extent permitted by applicable law, this Agreement shall create a valid
security interest in the proceeds of such asset.
(b) "Intellectual Property" means the collective reference to all rights,
priorities and privileges relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including,
without limitation, (i) all copyrights arising under the laws of the United
States, any other country or any political subdivision thereof, whether
registered or unregistered and whether published or unpublished, all
registrations and recordings thereof, and all applications in connection
therewith, including, without limitation, all registrations, recordings and
applications in the United States Copyright Office, (ii) all letters patent of
the United States, any other country or any political subdivision thereof, all
reissues and extensions thereof, and all applications for letters patent of the
United States or any other country and all divisions, continuations and
continuations-in-part thereof, (iii) all trademarks, trade names, corporate
names, company names, business names, fictitious business names, trade dress,
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service marks, logos, domain names and other source or business identifiers, and
all goodwill associated therewith, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications in
connection therewith, whether in the United States Patent and Trademark Office
or in any similar office or agency of the United States, any State thereof or
any other country or any political subdivision thereof, or otherwise, and all
common law rights related thereto, (iv) all trade secrets arising under the laws
of the United States, any other country or any political subdivision thereof,
(v) all rights to obtain any reissues, renewals or extensions of the foregoing,
(vi) all licenses for any of the foregoing, and (vii) all causes of action for
infringement of the foregoing.
(c) "Majority in Interest " shall mean, at any time of determination, the
majority in interest (based on then-outstanding principal amounts of Debentures
at the time of such determination) of the Secured Parties.
(d) "Necessary Endorsement " shall mean undated stock powers endorsed in
blank or other proper instruments of assignment duly executed and such other
instruments or documents as the Agent (as that term is defined below) may
reasonably request.
(e) "Obligations" means all obligations under this Agreement, the
Debentures, and any other instruments, agreements or other documents executed
and/or delivered in connection herewith or therewith, in each case, whether now
or hereafter existing, voluntary or involuntary, direct or indirect, absolute or
contingent, liquidated or unliquidated, whether or not jointly owed with others,
and whether or not from time to time decreased or extinguished and later
increased, created or incurred, and all or any portion of such obligations or
liabilities that are paid, to the extent all or any part of such payment is
avoided or recovered directly or indirectly from any of the Secured Parties as a
preference, fraudulent transfer or otherwise as such obligations may be amended,
supplemented, converted, extended or modified from time to time. Without
limiting the generality of the foregoing, the term "Obligations" shall include,
without limitation: (i) principal of, and interest on the Debentures and the
loans extended pursuant thereto; (ii) any and all other fees, indemnities,
costs, obligations and liabilities of the Debtor from time to time under or in
connection with this Agreement, the Debentures, and any other instruments,
agreements or other documents executed and/or delivered in connection herewith
or therewith; and (iii) all amounts (including but not limited to post-petition
interest) in respect of the foregoing that would be payable but for the fact
that the obligations to pay such amounts are unenforceable or not allowable due
to the existence of a bankruptcy, reorganization or similar proceeding involving
the Debtor.
(f) "Organizational Documents" means with respect to the Debtor, the
documents by which the Debtor was organized (such as a certificate of
incorporation, certificate of limited partnership or articles of organization,
and including, without limitation, any certificates of designation for preferred
stock or other forms of preferred equity) and which relate to the internal
governance of the Debtor (such as bylaws, a partnership agreement or an
operating, limited liability or members agreement).
(g) "UCC" means the Uniform Commercial Code of the State of New York and or
any other applicable law of any state or states which has jurisdiction with
respect to all, or any portion of, the Collateral or this Agreement, from time
to time. It is the intent of the parties that defined terms in the UCC should be
construed in their broadest sense so that the term "Collateral" will be
construed in its broadest sense. Accordingly if there are, from time to time,
changes to defined terms in the UCC that broaden the definitions, they are
incorporated herein and if existing definitions in the UCC are broader than the
amended definitions, the existing ones shall be controlling.
2. Grant of Perfected First Priority Security Interest. As an inducement
for the Secured Parties to extend the loans as evidenced by the Debentures and
to secure the complete and timely payment, performance and discharge in full, as
the case may be, of all of the Obligations, the Debtor hereby unconditionally
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and irrevocably pledges, grants and hypothecates to the Secured Parties a
continuing and perfected security interest in and to, a lien upon and a right of
set-off against all of their respective right, title and interest of whatsoever
kind and nature in and to, the Collateral other than Permitted Liens (as defined
in the Debentures) (the "Security Interest").
3. Delivery of Certain Collateral. Contemporaneously or prior to the
execution of this Agreement, the Debtor shall deliver or cause to be delivered
to the Agent (a) any and all certificates and other instruments representing or
evidencing pledged securities, and (b) any and all certificates and other
instruments or documents representing any of the other Collateral, in each case,
together with all Necessary Endorsements. The Debtor is, contemporaneously with
the execution hereof, delivering to Agent, or have previously delivered to
Agent, a true and correct copy of each Organizational Document governing any
pledged securities.
4. Representations, Warranties, Covenants and Agreements of the Debtor. The
Debtor represents and warrants to, and covenants and agrees with, the Secured
Parties as follows:
(a) The Debtor has the requisite corporate, power and authority to enter
into this Agreement and otherwise to carry out its obligations hereunder. The
execution, delivery and performance by the Debtor of this Agreement and the
filings contemplated therein have been duly authorized by all necessary action
on the part of the Debtor and no further action is required by the Debtor. This
Agreement has been duly executed by the Debtor. This Agreement constitutes the
legal, valid and binding obligation of the Debtor, enforceable against the
Debtor in accordance with its terms except as such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization and similar laws of general
application relating to or affecting the rights and remedies of creditors and by
general principles of equity.
(b) The Debtor has no place of business or offices where their respective
books of account and records are kept (other than temporarily at the offices of
its attorneys or accountants) or places where Collateral is stored or located,
except as set forth on Schedule A attached hereto. Except as disclosed on
Schedule A, none of such Collateral is in the possession of any consignee,
bailee, warehouseman, agent or processor.
(c) Except for Permitted Liens (as defined in the Debentures), the Debtor
is the sole owner of the Collateral (except for non-exclusive licenses granted
by the Debtor in the ordinary course of business), free and clear of any liens,
security interests, encumbrances, rights or claims, and are fully authorized to
grant the Security Interest. There is not on file in any governmental or
regulatory authority, agency or recording office an effective financing
statement, security agreement, license or transfer or any notice of any of the
foregoing (other than those that will be filed in favor of the Secured Parties
pursuant to this Agreement) covering or affecting any of the Collateral. So long
as this Agreement shall be in effect, the Debtor shall not execute and shall not
knowingly permit to be on file in any such office or agency any such financing
statement or other document or instrument (except to the extent filed or
recorded in favor of the Secured Parties pursuant to the terms of this
Agreement).
(d) No written claim has been received that any Collateral or the Debtor's
use of any Collateral violates the rights of any third party. There has been no
adverse decision to the Debtor's claim of ownership rights in or exclusive
rights to use the Collateral in any jurisdiction or to the Debtor's right to
keep and maintain such Collateral in full force and effect, and there is no
proceeding involving said rights pending or, to the best knowledge of the
Debtor, threatened before any court, judicial body, administrative or regulatory
agency, arbitrator or other governmental authority.
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(e) The Debtor shall at all times maintain its books of account and records
relating to the Collateral at its principal place of business and its Collateral
at the locations set forth on Schedule A attached hereto and may not relocate
such books of account and records or tangible Collateral unless it delivers to
the Secured Parties at least 30 days prior to such relocation (i) written notice
of such relocation and the new location thereof (which must be within the United
States) and (ii) evidence that appropriate financing statements under the UCC
and other necessary documents have been filed and recorded and other steps have
been taken to perfect the Security Interest to create in favor of the Secured
Parties a valid, perfected and continuing perfected first priority lien in the
Collateral.
(f) This Agreement creates in favor of the Secured Parties a valid,
security interest in the Collateral, subject only to Permitted Liens (as defined
in the Debentures), securing the payment and performance of the Obligations.
Upon making the filings described in the immediately following paragraph, all
security interests created hereunder in any Collateral which may be perfected by
filing Uniform Commercial Code financing statements shall have been duly
perfected. Except for the filing of the Uniform Commercial Code financing
statements referred to in the immediately following paragraph, the recordation
of the Intellectual Property Security Agreement (as defined below) with respect
to copyrights and copyright applications in the United States Copyright Office
referred to in paragraph (m), the execution and delivery of deposit account
control agreements satisfying the requirements of Section 9-104(a)(2) of the UCC
with respect to each deposit account of the Debtor, and the delivery of the
certificates and other instruments provided in Section 3, no action is necessary
to create, perfect or protect the security interests created hereunder. Without
limiting the generality of the foregoing, except for the filing of said
financing statements, the recordation of said Intellectual Property Security
Agreement, and the execution and delivery of said deposit account control
agreements, no consent of any third parties and no authorization, approval or
other action by, and no notice to or filing with, any governmental authority or
regulatory body is required for (i) the execution, delivery and performance of
this Agreement, (ii) the creation or perfection of the Security Interests
created hereunder in the Collateral or (iii) the enforcement of the rights of
the Secured Parties hereunder.
(g) The Debtor hereby authorizes the Secured Parties, or any of them, to
file one or more financing statements under the UCC, with respect to the
Security Interest with the proper filing and recording agencies in any
jurisdiction deemed proper by them.
(h) The execution, delivery and performance of this Agreement by the Debtor
does not (i) violate any of the provisions of any Organizational Documents of
the Debtor or any judgment, decree, order or award of any court, governmental
body or arbitrator or any applicable law, rule or regulation applicable to the
Debtor or (ii) conflict with, or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation (with or
without notice, lapse of time or both) of, any agreement, credit facility, debt
or other instrument (evidencing the Debtor's debt or otherwise) or other
understanding to which the Debtor is a party or by which any property or asset
of the Debtor is bound or affected. No consent (including, without limitation,
from stockholders or creditors of the Debtor) is required for the Debtor to
enter into and perform its obligations hereunder.
(i) The Debtor shall at all times maintain the liens and Security Interest
provided for hereunder as valid and perfected first priority liens and security
interests in the Collateral in favor of the Secured Parties until this Agreement
and the Security Interest hereunder shall be terminated pursuant to Section 11
hereof. The Debtor hereby agrees to defend the same against the claims of any
and all persons and entities. The Debtor shall safeguard and protect all
Collateral for the account of the Secured Parties. At the request of the Secured
Parties, the Debtor will sign and deliver to the Secured Parties at any time or
from time to time one or more financing statements pursuant to the UCC in form
reasonably satisfactory to the Secured Parties and will pay the cost of filing
the same in all public offices wherever filing is, or is deemed by the Secured
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Parties to be, necessary or desirable to effect the rights and obligations
provided for herein. Without limiting the generality of the foregoing, the
Debtor shall pay all fees, taxes and other amounts necessary to maintain the
Collateral and the Security Interest hereunder, and the Debtor shall obtain and
furnish to the Secured Parties from time to time, upon demand, such releases
and/or subordinations of claims and liens which may be required to maintain the
priority of the Security Interest hereunder.
(j) The Debtor will not transfer, pledge, hypothecate, encumber, license,
sell or otherwise dispose of any of the Collateral (except in the ordinary
course of business) without the prior written consent of a Majority in Interest.
(k) The Debtor shall keep and preserve its equipment, inventory and other
tangible Collateral in good condition, repair and order and shall not operate or
locate any such Collateral (or cause to be operated or located) in any area
excluded from insurance coverage.
(l) The Debtor shall maintain with financially sound and reputable
insurers, insurance with respect to the Collateral against loss or damage of the
kinds and in the amounts customarily insured against by entities of established
reputation having similar properties similarly situated and in such amounts as
are customarily carried under similar circumstances by other such entities and
otherwise as is prudent for entities engaged in similar businesses but in any
event sufficient to cover the full replacement cost thereof. Copies of such
policies or the related certificates, in each case, naming the Agent as lender
loss payee and additional insured shall be delivered to the Agent at least
annually and at the time any new policy of insurance is issued.
(m) The Debtor shall, within five (5) days of obtaining knowledge thereof,
advise the Secured Parties promptly, in sufficient detail, of any substantial
change in the Collateral, and of the occurrence of any event which would have a
material adverse effect on the value of the Collateral or on the Secured
Parties' security interest therein.
(n) The Debtor shall promptly execute and deliver to the Secured Parties
such further deeds, mortgages, assignments, security agreements, financing
statements or other instruments, documents, certificates and assurances and take
such further action as the Secured Parties may from time to time request and may
in its sole discretion deem necessary to perfect, protect or enforce its
security interest in the Collateral including, without limitation, if
applicable, the execution and delivery of a separate security agreement with
respect to the Debtor's Intellectual Property ("Intellectual Property Security
Agreement") in which the Secured Parties have been granted a security interest
hereunder, substantially in a form acceptable to the Secured Parties, which
Intellectual Property Security Agreement, other than as stated therein, shall be
subject to all of the terms and conditions hereof.
(o) The Debtor shall permit the Secured Parties and their representatives
and agents to inspect the Collateral at any time, and to make copies of records
pertaining to the Collateral as may be requested by a Secured Party from time to
time.
(p) The Debtor shall take all steps reasonably necessary to diligently
pursue and seek to preserve, enforce and collect any rights, claims, causes of
action and accounts receivable in respect of the Collateral.
(q) The Debtor shall promptly, and in any event within five (5) days of
such event, notify the Secured Parties in sufficient detail upon becoming aware
of any attachment, garnishment, execution or other legal process levied against
any Collateral and of any other information received by the Debtor that may
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materially affect the value of the Collateral, the Security Interest or the
rights and remedies of the Secured Parties hereunder.
(r) All information heretofore, herein or hereafter supplied to the Secured
Parties by or on behalf of the Debtor with respect to the Collateral is accurate
and complete in all material respects as of the date furnished.
(s) The Debtor shall at all times preserve and keep in full force and
effect their respective valid existence and good standing and any rights and
franchises material to its business.
(t) The Debtor will not change its name, type of organization, jurisdiction
of organization, organizational identification number (if it has one), legal or
corporate structure, or identity, or add any new fictitious name unless it
provides at least 30 days prior written notice to the Secured Parties of such
change and, at the time of such written notification, the Debtor provides any
financing statements or fixture filings necessary to perfect and continue
perfected the perfected Security Interest granted and evidenced by this
Agreement.
(u) The Debtor may not relocate its chief executive office to a new
location without providing 30 days prior written notification thereof to the
Secured Parties and so long as, at the time of such written notification, the
Debtor provides any financing statements or fixture filings necessary to perfect
and continue perfected the perfected security Interest granted and evidenced by
this Agreement.
(v) (i) The actual name of the Debtor is the name set forth in the preamble
above; (ii) the Debtor has not used any trade names except as set forth on
Schedule B attached hereto; (iii) the Debtor has not used any name other than
that stated in the preamble hereto or as set forth on Schedule B for the
preceding five years; and (iv) no entity has merged into the Debtor or been
acquired by the Debtor within the past five years except as set forth on
Schedule B.
(w) At any time and from time to time that any Collateral consists of
instruments, certificated securities or other items that require or permit
possession by the secured party to perfect the security interest created hereby,
the Debtor shall deliver such Collateral to the Agent.
(x) The Debtor shall cause all tangible chattel paper constituting
Collateral to be delivered to the Agent, or, if such delivery is not possible,
then to cause such tangible chattel paper to contain a legend noting that it is
subject to the security interest created by this Agreement. To the extent that
any Collateral consists of electronic chattel paper, the Debtor shall cause the
underlying chattel paper to be "marked" within the meaning of Section 9-105 of
the UCC (or successor section thereto).
(y) If there is any investment property or deposit account included as
Collateral that can be perfected by "control" through an account control
agreement, the Debtor shall cause such an account control agreement, in form and
substance in each case satisfactory to the Secured Parties, to be entered into
and delivered to the Secured Parties.
(z) To the extent that any Collateral consists of letter-of-credit rights,
the Debtor shall cause the issuer of each underlying letter of credit to consent
to an assignment of the proceeds thereof to the Secured Parties.
(aa) To the extent that any Collateral is in the possession of any third
party, the Debtor shall join with the Secured Parties in notifying such third
party of the Secured Parties' security interest in such Collateral and shall use
its best efforts to obtain an acknowledgement and agreement from such third
party with respect to the Collateral, in form and substance satisfactory to the
Secured Parties.
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(bb) If the Debtor shall at any time hold or acquire a commercial tort
claim, the Debtor shall promptly notify the Secured Parties in a writing signed
by the Debtor of the particulars thereof and grant to the Secured Parties in
such writing a security interest therein and in the proceeds thereof, all upon
the terms of this Agreement, with such writing to be in form and substance
satisfactory to the Secured Parties.
(cc) Within five (5) days of the formation of any new direct or indirect
subsidiary, the Debtor shall cause each subsidiary to immediately become a party
hereto (an "Additional Debtor"), by executing and delivering an Additional
Debtor Joinder in substantially the form of Annex A attached hereto and comply
with the provisions hereof applicable to the Debtor. Concurrent therewith, the
Additional Debtor shall deliver replacement schedules for, or supplements to all
other Schedules to (or referred to in) this Agreement, as applicable, which
replacement schedules shall supersede, or supplements shall modify, the
Schedules then in effect. The Additional Debtor shall also deliver such opinions
of counsel, authorizing resolutions, good standing certificates, incumbency
certificates, organizational documents, financing statements and other
information and documentation as the Secured Parties may reasonably request.
Upon delivery of the foregoing to the Secured Parties, the Additional Debtor
shall be and become a party to this Agreement with the same rights and
obligations as the Debtor, for all purposes hereof as fully and to the same
extent as if it were an original signatory hereto and shall be deemed to have
made the representations, warranties and covenants set forth herein as of the
date of execution and delivery of such Additional Debtor Joinder, and all
references herein to the "Debtor" shall be deemed to include each Additional
Debtor.
(dd) In the event that, upon an occurrence of an Event of Default, Agent
shall sell all or any pledged securities to another party or parties (herein
called the "Transferee") or shall purchase or retain all or any pledged
securities, the Debtor shall, to the extent applicable: (i) deliver to Agent or
the Transferee, as the case may be, the articles of incorporation, bylaws,
minute books, stock certificate books, corporate seals, deeds, leases,
indentures, agreements, evidences of indebtedness, books of account, financial
records and all other Organizational Documents and records of the Debtor and
their direct and indirect subsidiaries; and (ii) use its best efforts to obtain
resignations of the persons then serving as officers and directors of the Debtor
and their direct and indirect subsidiaries, if so requested.
(ee) Without limiting the generality of the other obligations of the Debtor
hereunder, the Debtor shall promptly (i) cause to be registered at the United
States Copyright Office all of its material copyrights, (ii) cause the security
interest contemplated hereby with respect to all Intellectual Property
registered at the United States Copyright Office or United States Patent and
Trademark Office to be duly recorded at the applicable office, and (iii) give
the Agent notice whenever it acquires (whether absolutely or by license) or
creates any additional material Intellectual Property.
(ff) The Debtor will from time to time, at the joint and several expense of
the Debtor, promptly execute and deliver all such further instruments and
documents, and take all such further action as may be necessary or desirable, or
as the Secured Parties may reasonably request, in order to perfect and protect
any security interest granted or purported to be granted hereby or to enable the
Secured Parties to exercise and enforce their rights and remedies hereunder and
with respect to any Collateral or to otherwise carry out the purposes of this
Agreement.
(gg) Schedule C attached hereto lists all of the patents, patent
applications, trademarks, trademark applications, registered copyrights, and
domain names owned by any of the Debtor as of the date hereof. Schedule C lists
all material licenses in favor of the Debtor for the use of any patents,
trademarks, copyrights and domain names as of the date hereof. All material
patents and trademarks of the Debtor have been duly recorded at the United
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States Patent and Trademark Office and all material copyrights of the Debtor
have been duly recorded at the United States Copyright Office.
(hh) None of the account Debtor or other persons or entities obligated on
any of the Collateral is a governmental authority covered by the Federal
Assignment of Claims Act or any similar federal, state or local statute or rule
in respect of such Collateral.
5. Effect of Pledge on Certain Rights. If any of the Collateral subject to
this Agreement consists of nonvoting equity or ownership interests (regardless
of class, designation, preference or rights) that may be converted into voting
equity or ownership interests upon the occurrence of certain events (including,
without limitation, upon the transfer of all or any of the other stock or assets
of the issuer), it is agreed that the pledge of such equity or ownership
interests pursuant to this Agreement or the enforcement of any of Agent's rights
hereunder shall not be deemed to be the type of event which would trigger such
conversion rights notwithstanding any provisions in the Organizational Documents
or agreements to which the Debtor is subject or to which the Debtor is party.
6. Defaults. The following events shall be "Events of Default":
(a) The occurrence of an Event of Default (as defined in the Debenture)
under the Debenture;
(b) Any representation or warranty of the Debtor in this Agreement shall
prove to have been incorrect in any material respect when made;
(c) The failure by the Debtor to observe or perform any of its obligations
hereunder for five (5) days after delivery to the Debtor of notice of such
failure by or on behalf of a Secured Party; or
(d) If any provision of this Agreement shall at any time for any reason be
declared to be null and void, or the validity or enforceability thereof shall be
contested by the Debtor, or a proceeding shall be commenced by the Debtor, or by
any governmental authority having jurisdiction over the Debtor, seeking to
establish the invalidity or unenforceability thereof, or the Debtor shall deny
that the Debtor has any liability or obligation purported to be created under
this Agreement.
7. Duty To Hold In Trust.
(a) Upon the occurrence of any Event of Default and at any time thereafter,
the Debtor shall, upon receipt of any revenue, income, dividend, interest or
other sums subject to the Security Interest, whether payable pursuant to the
Debenture or otherwise, or of any check, draft, note, trade acceptance or other
instrument evidencing an obligation to pay any such sum, hold the same in trust
for the Secured Parties and shall forthwith endorse and transfer any such sums
or instruments, or both, to the Secured Parties, pro-rata in proportion to their
initial purchases of Debentures for application to the satisfaction of the
Obligations (and if any Debenture is not outstanding, pro-rata in proportion to
the initial purchases of the remaining Debentures).
(b) If the Debtor shall become entitled to receive or shall receive any
securities or other property (including, without limitation, shares of pledged
securities or instruments representing pledged securities acquired after the
date hereof, or any options, warrants, rights or other similar property or
certificates representing a dividend, or any distribution in connection with any
recapitalization, reclassification or increase or reduction of capital, or
issued in connection with any reorganization of the Debtor or any of its direct
or indirect subsidiaries) in respect of pledged securities (whether as an
addition to, in substitution of, or in exchange for, such pledged securities or
9
otherwise), the Debtor agrees to (i) accept the same as the agent of the Secured
Parties; (ii) hold the same in trust on behalf of and for the benefit of the
Secured Parties; and (iii) to deliver any and all certificates or instruments
evidencing the same to Agent on or before the close of business on the fifth
business day following the receipt thereof by the Debtor, in the exact form
received together with the Necessary Endorsements, to be held by Agent subject
to the terms of this Agreement as Collateral.
8. Rights and Remedies Upon Default.
(a) Upon the occurrence of any Event of Default and at any time thereafter,
the Secured Parties, acting through any agent appointed by them for such
purpose, shall have the right to exercise all of the remedies conferred
hereunder and under the Debentures, and the Secured Parties shall have all the
rights and remedies of a secured party under the UCC. Without limitation, the
Secured Parties shall have the following rights and powers:
(i) The Secured Parties shall have the right to take possession of the
Collateral and, for that purpose, enter, with the aid and assistance of any
person, any premises where the Collateral, or any part thereof, is or may be
placed and remove the same, and the Debtor shall assemble the Collateral and
make it available to the Secured Parties at places which the Secured Parties
shall reasonably select, whether at the Debtor's premises or elsewhere, and make
available to the Secured Parties, without rent, all of the Debtor's respective
premises and facilities for the purpose of the Secured Parties taking possession
of, removing or putting the Collateral in saleable or disposable form.
(ii) Upon notice to the Debtor by Agent, all rights of the Debtor to
exercise the voting and other consensual rights which it would otherwise be
entitled to exercise and all rights of the Debtor to receive the dividends and
interest which it would otherwise be authorized to receive and retain, shall
cease. Upon such notice, Agent shall have the right to receive any interest,
cash dividends or other payments on the Collateral and, at the option of Agent,
to exercise in such Agent's discretion all voting rights pertaining thereto.
Without limiting the generality of the foregoing, Agent shall have the right
(but not the obligation) to exercise all rights with respect to the Collateral
as it were the sole and absolute owners thereof, including, without limitation,
to vote and/or to exchange, at its sole discretion, any or all of the Collateral
in connection with a merger, reorganization, consolidation, recapitalization or
other readjustment concerning or involving the Collateral or the Debtor or any
of its direct or indirect subsidiaries.
(iii) The Secured Parties shall have the right to operate the business of
the Debtor using the Collateral and shall have the right to assign, sell, lease
or otherwise dispose of and deliver all or any part of the Collateral, at public
or private sale or otherwise, either with or without special conditions or
stipulations, for cash or on credit or for future delivery, in such parcel or
parcels and at such time or times and at such place or places, and upon such
terms and conditions as the Secured Parties may deem commercially reasonable,
all without (except as shall be required by applicable statute and cannot be
waived) advertisement or demand upon or notice to the Debtor or right of
redemption of the Debtor, which are hereby expressly waived. Upon each such
sale, lease, assignment or other transfer of Collateral, the Secured Parties
may, unless prohibited by applicable law which cannot be waived, purchase all or
any part of the Collateral being sold, free from and discharged of all trusts,
claims, right of redemption and equities of the Debtor, which are hereby waived
and released.
(iv) The Secured Parties shall have the right (but not the obligation) to
notify any account Debtor and any obligors under instruments or accounts to make
payments directly to the Secured Parties and to enforce the Debtor's rights
against such account Debtor and obligors.
10
(v) The Secured Parties may (but are not obligated to) direct any financial
intermediary or any other person or entity holding any investment property to
transfer the same to the Secured Parties or their designee.
(vi) The Secured Parties may (but are not obligated to) transfer any or all
Intellectual Property registered in the name of the Debtor at the United States
Patent and Trademark Office and/or Copyright Office into the name of the Secured
Parties or any designee or any purchaser of any Collateral.
(b) The Agent may comply with any applicable law in connection with a
disposition of Collateral and such compliance will not be considered adversely
to affect the commercial reasonableness of any sale of the Collateral. The Agent
may sell the Collateral without giving any warranties and may specifically
disclaim such warranties. If the Agent sells any of the Collateral on credit,
the Debtor will only be credited with payments actually made by the purchaser.
In addition, the Debtor waives any and all rights that it may have to a judicial
hearing in advance of the enforcement of any of the Agent's rights and remedies
hereunder, including, without limitation, its right following an Event of
Default to take immediate possession of the Collateral and to exercise its
rights and remedies with respect thereto.
(c) For the purpose of enabling the Agent to further exercise rights and
remedies under this Section 8 or elsewhere provided by agreement or applicable
law, the Debtor hereby grants to the Agent, for the benefit of the Agent and the
Secured Parties, an irrevocable, nonexclusive license (exercisable without
payment of royalty or other compensation to the Debtor) to use, license or
sublicense following an Event of Default, any Intellectual Property now owned or
hereafter acquired by the Debtor, and wherever the same may be located, and
including in such license access to all media in which any of the licensed items
may be recorded or stored and to all computer software and programs used for the
compilation or printout thereof.
9. Applications of Proceeds. The proceeds of any such sale, lease or other
disposition of the Collateral hereunder shall be applied first, to the expenses
of retaking, holding, storing, processing and preparing for sale, selling, and
the like (including, without limitation, any taxes, fees and other costs
incurred in connection therewith) of the Collateral, to the reasonable
attorneys' fees and expenses incurred by the Secured Parties in enforcing their
rights hereunder and in connection with collecting, storing and disposing of the
Collateral, and then to satisfaction of the Obligations pro rata among the
Secured Parties (based on then-outstanding principal amounts of Debentures at
the time of any such determination), and to the payment of any other amounts
required by applicable law, after which the Secured Parties shall pay to the
Debtor any surplus proceeds. If, upon the sale, license or other disposition of
the Collateral, the proceeds thereof are insufficient to pay all amounts to
which the Secured Parties are legally entitled, the Debtor will be liable for
the deficiency, together with interest thereon, at the rate of interest
applicable to such indebtedness pursuant to the Debentures plus 10% per annum or
the lesser amount permitted by applicable law (the "Default Rate"), and the
reasonable fees of any attorneys employed by the Secured Parties to collect such
deficiency. To the extent permitted by applicable law, the Debtor waives all
claims, damages and demands against the Secured Parties arising out of the
repossession, removal, retention or sale of the Collateral, unless due solely to
the gross negligence or willful misconduct of the Secured Parties as determined
by a final judgment (not subject to further appeal) of a court of competent
jurisdiction.
10. Securities Law Provision. The Debtor recognizes that Agent may be
limited in its ability to effect a sale to the public of all or part of any
pledged securities by reason of certain prohibitions in the Securities Act of
1933, as amended, or other federal or state securities laws (collectively, the "
Securities Laws "), and may be compelled to resort to one or more sales to a
restricted group of purchasers who may be required to agree to acquire pledged
11
securities for their own account, for investment and not with a view to the
distribution or resale thereof. The Debtor agrees that sales so made may be at
prices and on terms less favorable than if pledged securities were sold to the
public, and that Agent has no obligation to delay the sale of any pledged
securities for the period of time necessary to register pledged securities for
sale to the public under the Securities Laws. The Debtor shall cooperate with
Agent in its attempt to satisfy any requirements under the Securities Laws
(including, without limitation, registration thereunder if requested by Agent)
applicable to the sale of pledged securities by Agent.
11. Costs and Expenses. The Debtor agrees to pay all reasonable
out-of-pocket fees, costs and expenses incurred in connection with any filing
required hereunder, including without limitation, any financing statements
pursuant to the UCC, continuation statements, partial releases and/or
termination statements related thereto or any expenses of any searches
reasonably required by the Secured Parties. The Debtor shall also pay all other
claims and charges which in the reasonable opinion of the Secured Parties might
prejudice, imperil or otherwise affect the Collateral or the Security Interest
therein. The Debtor will also, upon demand, pay to the Secured Parties the
amount of any and all reasonable expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, which the Secured Parties
may incur in connection with (i) the enforcement of this Agreement, (ii) the
custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, or (iii) the exercise or enforcement of
any of the rights of the Secured Parties under the Debentures. Until so paid,
any fees payable hereunder shall be added to the principal amount of the
Debentures and shall bear interest at the Default Rate.
12. Responsibility for Collateral. The Debtor assumes all liabilities and
responsibility in connection with all Collateral, and the Obligations shall in
no way be affected or diminished by reason of the loss, destruction, damage or
theft of any of the Collateral or its unavailability for any reason. Without
limiting the generality of the foregoing, (a) neither the Agent nor any Secured
Party (i) has any duty (either before or after an Event of Default) to collect
any amounts in respect of the Collateral or to preserve any rights relating to
the Collateral, or (ii) has any obligation to clean-up or otherwise prepare the
Collateral for sale, and (b) the Debtor shall remain obligated and liable under
each contract or agreement included in the Collateral to be observed or
performed by the Debtor thereunder. Neither the Agent nor any Secured Party
shall have any obligation or liability under any such contract or agreement by
reason of or arising out of this Agreement or the receipt by the Agent or any
Secured Party of any payment relating to any of the Collateral, nor shall the
Agent or any Secured Party be obligated in any manner to perform any of the
obligations of the Debtor under or pursuant to any such contract or agreement,
to make inquiry as to the nature or sufficiency of any payment received by the
Agent or any Secured Party in respect of the Collateral or as to the sufficiency
of any performance by any party under any such contract or agreement, to present
or file any claim, to take any action to enforce any performance or to collect
the payment of any amounts which may have been assigned to the Agent or to which
the Agent or any Secured Party may be entitled at any time or times.
13. Security Interest Absolute. All rights of the Secured Parties and all
obligations of the Debtor hereunder, shall be absolute and unconditional,
irrespective of: (a) any lack of validity or enforceability of this Agreement,
the Debentures or any agreement entered into in connection with the foregoing,
or any portion hereof or thereof; (b) any change in the time, manner or place of
payment or performance of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of or any consent to any departure
from the Debentures or any other agreement entered into in connection with the
foregoing; (c) any exchange, release or nonperfection of any of the Collateral,
or any release or amendment or waiver of or consent to departure from any other
collateral for, or any guaranty, or any other security, for all or any of the
Obligations; (d) any action by the Secured Parties to obtain, adjust, settle and
cancel in its sole discretion any insurance claims or matters made or arising in
12
connection with the Collateral; or (e) any other circumstance which might
otherwise constitute any legal or equitable defense available to the Debtor, or
a discharge of all or any part of the Security Interest granted hereby. Until
the Obligations shall have been paid and performed in full, the rights of the
Secured Parties shall continue even if the Obligations are barred for any
reason, including, without limitation, the running of the statute of limitations
or bankruptcy. The Debtor expressly waives presentment, protest, notice of
protest, demand, notice of nonpayment and demand for performance. In the event
that at any time any transfer of any Collateral or any payment received by the
Secured Parties hereunder shall be deemed by final order of a court of competent
jurisdiction to have been a voidable preference or fraudulent conveyance under
the bankruptcy or insolvency laws of the United States, or shall be deemed to be
otherwise due to any party other than the Secured Parties, then, in any such
event, the Debtor's obligations hereunder shall survive cancellation of this
Agreement, and shall not be discharged or satisfied by any prior payment thereof
and/or cancellation of this Agreement, but shall remain a valid and binding
obligation enforceable in accordance with the terms and provisions hereof. The
Debtor waives all right to require the Secured Parties to proceed against any
other person or entity or to apply any Collateral which the Secured Parties may
hold at any time, or to marshal assets, or to pursue any other remedy. The
Debtor waives any defense arising by reason of the application of the statute of
limitations to any obligation secured hereby.
14. Term of Agreement. This Agreement and the Security Interest shall
terminate on the date on which all payments under the Debentures have been
indefeasibly paid in full and all other Obligations have been paid or
discharged; provided, however, that all indemnities of the Debtor contained in
this Agreement (including, without limitation, Annex B hereto) shall survive and
remain operative and in full force and effect regardless of the termination of
this Agreement.
15. Power of Attorney; Further Assurances.
(a) The Debtor authorizes the Secured Parties, and does hereby make,
constitute and appoint the Secured Parties and their respective officers,
agents, successors or assigns with full power of substitution, as the Debtor's
true and lawful attorney-in-fact, with power, in the name of the various Secured
Parties or the Debtor, to, after the occurrence and during the continuance of an
Event of Default, (i) endorse any note, checks, drafts, money orders or other
instruments of payment (including payments payable under or in respect of any
policy of insurance) in respect of the Collateral that may come into possession
of the Secured Parties; (ii) to sign and endorse any financing statement
pursuant to the UCC or any invoice, freight or express xxxx, xxxx of lading,
storage or warehouse receipts, drafts against Debtor, assignments, verifications
and notices in connection with accounts, and other documents relating to the
Collateral; (iii) to pay or discharge taxes, liens, security interests or other
encumbrances at any time levied or placed on or threatened against the
Collateral; (iv) to demand, collect, receipt for, compromise, settle and xxx for
monies due in respect of the Collateral; (v) to transfer any Intellectual
Property or provide licenses respecting any Intellectual Property; and (vi)
generally, at the option of the Secured Parties, and at the expense of the
Debtor, at any time, or from time to time, to execute and deliver any and all
documents and instruments and to do all acts and things which the Secured
Parties deem necessary to protect, preserve and realize upon the Collateral and
the Security Interest granted therein in order to effect the intent of this
Agreement and the Debentures all as fully and effectually as the Debtor might or
could do; and the Debtor hereby ratifies all that said attorney shall lawfully
do or cause to be done by virtue hereof. This power of attorney is coupled with
an interest and shall be irrevocable for the term of this Agreement and
thereafter as long as any of the Obligations shall be outstanding. The
designation set forth herein shall be deemed to amend and supersede any
inconsistent provision in the Organizational Documents or other documents or
agreements to which the Debtor is subject or to which the Debtor is a party.
Without limiting the generality of the foregoing, after the occurrence and
during the continuance of an Event of Default, each Secured Party is
specifically authorized to execute and file any applications for or instruments
13
of transfer and assignment of any patents, trademarks, copyrights or other
Intellectual Property with the United States Patent and Trademark Office and the
United States Copyright Office.
(b) On a continuing basis, the Debtor will make, execute, acknowledge,
deliver, file and record, as the case may be, with the proper filing and
recording agencies in any jurisdiction, all such instruments, and take all such
action as may reasonably be deemed necessary or advisable, or as reasonably
requested by the Secured Parties, to perfect the Security Interest granted
hereunder and otherwise to carry out the intent and purposes of this Agreement,
or for assuring and confirming to the Secured Parties the grant or perfection of
a perfected security interest in all the Collateral under the UCC.
(c) The Debtor hereby irrevocably appoints the Secured Parties as the
Debtor's attorney-in-fact, with full authority in the place and instead of the
Debtor and in the name of the Debtor, from time to time in the Secured Parties'
discretion, to take any action and to execute any instrument which the Secured
Parties may deem necessary or advisable to accomplish the purposes of this
Agreement, including the filing, in its sole discretion, of one or more
financing or continuation statements and amendments thereto, relative to any of
the Collateral without the signature of the Debtor where permitted by law, which
financing statements may (but need not) describe the Collateral as "all assets"
or "all personal property" or words of like import, and ratifies all such
actions taken by the Secured Parties. This power of attorney is coupled with an
interest and shall be irrevocable for the term of this Agreement and thereafter
as long as any of the Obligations shall be outstanding.
16. Notices. All notices, requests, demands and other communications
hereunder shall be subject to the notice provision of the Subscription Agreement
(as such term is defined in the Debentures).
17. Other Security. To the extent that the Obligations are now or hereafter
secured by property other than the Collateral or by the guarantee, endorsement
or property of any other person, firm, corporation or other entity, then the
Secured Parties shall have the right, in its sole discretion, to pursue,
relinquish, subordinate, modify or take any other action with respect thereto,
without in any way modifying or affecting any of the Secured Parties' rights and
remedies hereunder.
18. Appointment of Agent. The Secured Parties hereby appoint Xxxxxxxx Xxxx,
to act as their agent ("Xx. Xxxx" or "Agent") for purposes of exercising any and
all rights and remedies of the Secured Parties hereunder. Such appointment shall
continue until revoked in writing by at least 33% (based on then-outstanding
principal amounts of Debentures at the time of such determination) of the
Secured Parties, at which time a Majority in Interest shall appoint a new Agent.
The Agent shall have the rights, responsibilities and immunities set forth in
Annex B hereto.
19. Miscellaneous.
(a) No course of dealing between the Debtor and the Secured Parties, nor
any failure to exercise, nor any delay in exercising, on the part of the Secured
Parties, any right, power or privilege hereunder or under the Debentures shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, power or privilege hereunder or thereunder preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.
(b) All of the rights and remedies of the Secured Parties with respect to
the Collateral, whether established hereby or by the Debentures or by any other
agreements, instruments or documents or by law shall be cumulative and may be
exercised singly or concurrently.
(c) This Agreement constitutes the entire agreement of the parties with
respect to the subject matter hereof and is intended to supersede all prior
negotiations, understandings and agreements with respect thereto. Except as
14
specifically set forth in this Agreement, no provision of this Agreement may be
modified or amended except by a written agreement specifically referring to this
Agreement and signed by the parties hereto.
(d) In the event any provision of this Agreement is held to be invalid,
prohibited or unenforceable in any jurisdiction for any reason, unless such
provision is narrowed by judicial construction, this Agreement shall, as to such
jurisdiction, be construed as if such invalid, prohibited or unenforceable
provision had been more narrowly drawn so as not to be invalid, prohibited or
unenforceable. If, notwithstanding the foregoing, any provision of this
Agreement is held to be invalid, prohibited or unenforceable in any
jurisdiction, such provision, as to such jurisdiction, shall be ineffective to
the extent of such invalidity, prohibition or unenforceability without
invalidating the remaining portion of such provision or the other provisions of
this Agreement and without affecting the validity or enforceability of such
provision or the other provisions of this Agreement in any other jurisdiction.
(e) No waiver of any breach or default or any right under this Agreement
shall be considered valid unless in writing and signed by the party giving such
waiver, and no such waiver shall be deemed a waiver of any subsequent breach or
default or right, whether of the same or similar nature or otherwise.
(f) This Agreement shall be binding upon and inure to the benefit of each
party hereto and its successors and assigns.
(g) Each party shall take such further action and execute and deliver such
further documents as may be necessary or appropriate in order to carry out the
provisions and purposes of this Agreement.
(h) All questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by and construed and enforced
in accordance with the internal laws of the State of New York, without regard to
the principles of conflicts of law thereof. The Debtor agrees that all
proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by this Agreement and the Debenture (whether brought
against a party hereto or its respective affiliates, directors, officers,
shareholders, partners, members, employees or agents) shall be commenced
exclusively in the state and federal courts sitting in the City of New York,
Borough of Manhattan. The Debtor hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of New York,
Borough of Manhattan for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any
proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such proceeding is improper. Each party hereto hereby
irrevocably waives personal service of process and consents to process being
served in any such proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. Each party hereto hereby
irrevocably waives, to the fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of or relating to
this Agreement or the transactions contemplated hereby. If any party shall
commence a proceeding to enforce any provisions of this Agreement, then the
prevailing party in such proceeding shall be reimbursed by the other party for
its reasonable attorney's fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such proceeding.
15
(i) This Agreement may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original and, all of which taken
together shall constitute one and the same Agreement. In the event that any
signature is delivered by facsimile transmission, such signature shall create a
valid binding obligation of the party executing (or on whose behalf such
signature is executed) the same with the same force and effect as if such
facsimile signature were the original thereof.
(j) The Debtor shall indemnify, reimburse and hold harmless the Secured
Parties and their respective partners, members, shareholders, officers,
directors, employees and agents (collectively, "Indemnitees") from and against
any and all losses, claims, liabilities, damages, penalties, suits, costs and
expenses, of any kind or nature, (including fees relating to the cost of
investigating and defending any of the foregoing) imposed on, incurred by or
asserted against such Indemnitee in any way related to or arising from or
alleged to arise from this Agreement or the Collateral, except any such losses,
claims, liabilities, damages, penalties, suits, costs and expenses which result
from the gross negligence or willful misconduct of the Indemnitee as determined
by a final, nonappealable decision of a court of competent jurisdiction. This
indemnification provision is in addition to, and not in limitation of, any other
indemnification provision in the Debentures, the Subscription Agreement (as such
term is defined in the Debentures) or any other agreement, instrument or other
document executed or delivered in connection herewith or therewith.
(k) To the extent that the grant of the security interest in the Collateral
and the enforcement of the terms hereof require the consent, approval or action
of any partner or member, as applicable, of the Debtor or any direct or indirect
subsidiary of the Debtor or compliance with any provisions of any of the
Organizational Documents, the Debtor hereby grant such consent and approval and
waive any such noncompliance with the terms of said documents.
[SIGNATURE PAGES FOLLOW]
16
IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement
to be duly executed on the day and year first above written.
PERF-GO GREEN HOLDINGS, INC.
By: ___________________________
Name: ____________________
Title: ___________________
[SIGNATURE PAGE OF HOLDERS FOLLOWS]
17
[SIGNATURE PAGE OF HOLDERS]
Name of Holder: ______________________________
Signature of Authorized Signatory of Holder: ____________________
Name of Authorized Signatory: ___________________________________
Title of Authorized Signatory: __________________________________
18
ANNEX A
to
SECURITY AGREEMENT
FORM OF ADDITIONAL DEBTOR JOINDER
Security Agreement dated as of June 10, 2008 made by
Perf-Go Green Holdings, Inc.
and its subsidiaries party thereto from time to time, as Debtor
to and in favor of
the Secured Parties identified therein (the "Security Agreement")
Reference is made to the Security Agreement as defined above; capitalized
terms used herein and not otherwise defined herein shall have the meanings given
to such terms in, or by reference in, the Security Agreement.
The undersigned hereby agrees that upon delivery of this Additional Debtor
Joinder to the Secured Parties referred to above, the undersigned shall (a) be
an Additional Debtor under the Security Agreement, (b) have all the rights and
obligations of the Debtor under the Security Agreement as fully and to the same
extent as if the undersigned was an original signatory thereto and (c) be deemed
to have made the representations and warranties set forth in Section ___ therein
as of the date of execution and delivery of this Additional Debtor Joinder.
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE UNDERSIGNED SPECIFICALLY
GRANTS TO THE SECURED PARTIES A SECURITY INTEREST IN THE COLLATERAL AS MORE
FULLY SET FORTH IN THE SECURITY AGREEMENT AND ACKNOWLEDGES AND AGREES TO THE
WAIVER OF JURY TRIAL PROVISIONS SET FORTH THEREIN.
Attached hereto are supplemental and/or replacement Schedules to the
Security Agreement, as applicable.
An executed copy of this Joinder shall be delivered to the Secured Parties,
and the Secured Parties may rely on the matters set forth herein on or after the
date hereof. This Joinder shall not be modified, amended or terminated without
the prior written consent of the Secured Parties.
IN WITNESS WHEREOF, the undersigned has caused this Joinder to be executed
in the name and on behalf of the undersigned.
[Name of Additional Debtor]
By:
Name:
Title:
Address:
Dated:
[ANNEX B
to
SECURITY AGREEMENT]
THE AGENT
1. Appointment. The Secured Parties (all capitalized terms used herein and
not otherwise defined shall have the respective meanings provided in the
Security Agreement to which this Annex B is attached (the "Agreement")), by
their acceptance of the benefits of the Agreement, hereby designate Xxxxxxxx
Xxxx ("Xx. Xxxx" or "Agent") as the Agent to act as specified herein and in the
Agreement. Each Secured Party shall be deemed irrevocably to authorize the Agent
to take such action on its behalf under the provisions of the Agreement and any
other Transaction Document (as such term is defined in the Debentures) and to
exercise such powers and to perform such duties hereunder and thereunder as are
specifically delegated to or required of the Agent by the terms hereof and
thereof and such other powers as are reasonably incidental thereto. The Agent
may perform any of its duties hereunder by or through its agents or employees.
2. Nature of Duties. The Agent shall have no duties or responsibilities
except those expressly set forth in the Agreement. Neither the Agent nor any of
its partners, members, shareholders, officers, directors, employees or agents
shall be liable for any action taken or omitted by it as such under the
Agreement or hereunder or in connection herewith or therewith, be responsible
for the consequence of any oversight or error of judgment or answerable for any
loss, unless caused solely by its or their gross negligence or willful conduct
as determined by a final judgment (not subject to further appeal) of a court of
competent jurisdiction. The duties of the Agent shall be mechanical and
administrative in nature; the Agent shall not have by reason of the Agreement or
any other Transaction Document a fiduciary relationship in respect of the Debtor
or any Secured Party; and nothing in the Agreement or any other Transaction
Document, expressed or implied, is intended to or shall be so construed as to
impose upon the Agent any obligations in respect of the Agreement or any other
Transaction Document except as expressly set forth herein and therein.
3. Lack of Reliance on the Agent. Independently and without reliance upon
the Agent, each Secured Party, to the extent it deems appropriate, has made and
shall continue to make (i) its own independent investigation of the financial
condition and affairs of the Company and its subsidiaries in connection with
such Secured Party's investment in the Debtor, the creation and continuance of
the Obligations, the transactions contemplated by the Transaction Documents, and
the taking or not taking of any action in connection therewith, and (ii) its own
appraisal of the creditworthiness of the Company and its subsidiaries, and of
the value of the Collateral from time to time, and the Agent shall have no duty
or responsibility, either initially or on a continuing basis, to provide any
Secured Party with any credit, market or other information with respect thereto,
whether coming into its possession before any Obligations are incurred or at any
time or times thereafter. The Agent shall not be responsible to the Debtor or
any Secured Party for any recitals, statements, information, representations or
warranties herein or in any document, certificate or other writing delivered in
connection herewith, or for the execution, effectiveness, genuineness, validity,
enforceability, perfection, collectibility, priority or sufficiency of the
Agreement or any other Transaction Document, or for the financial condition of
the Debtor or the value of any of the Collateral, or be required to make any
inquiry concerning either the performance or observance of any of the terms,
provisions or conditions of the Agreement or any other Transaction Document, or
the financial condition of the Debtor, or the value of any of the Collateral, or
the existence or possible existence of any default or Event of Default under the
Agreement, the Debentures or any of the other Transaction Documents.
4. Certain Rights of the Agent. The Agent shall have the right to take any
action with respect to the Collateral, on behalf of all of the Secured Parties.
To the extent practical, the Agent shall request instructions from the Secured
Parties with respect to any material act or action (including failure to act) in
20
connection with the Agreement or any other Transaction Document, and shall be
entitled to act or refrain from acting in accordance with the instructions of
Secured Parties holding a majority in principal amount of Debentures (based on
then-outstanding principal amounts of Debentures at the time of any such
determination); if such instructions are not provided despite the Agent's
request therefor, the Agent shall be entitled to refrain from such act or taking
such action, and if such action is taken, shall be entitled to appropriate
indemnification from the Secured Parties in respect of actions to be taken by
the Agent; and the Agent shall not incur liability to any person or entity by
reason of so refraining. Without limiting the foregoing, (a) no Secured Party
shall have any right of action whatsoever against the Agent as a result of the
Agent acting or refraining from acting hereunder in accordance with the terms of
the Agreement or any other Transaction Document, and the Debtor shall have no
right to question or challenge the authority of, or the instructions given to,
the Agent pursuant to the foregoing and (b) the Agent shall not be required to
take any action which the Agent believes (i) could reasonably be expected to
expose it to personal liability or (ii) is contrary to this Agreement, the
Transaction Documents or applicable law.
5. Reliance. The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, statement,
certificate, telex, teletype or telecopier message, cablegram, radiogram, order
or other document or telephone message signed, sent or made by the proper person
or entity, and, with respect to all legal matters pertaining to the Agreement
and the other Transaction Documents and its duties thereunder, upon advice of
counsel selected by it and upon all other matters pertaining to this Agreement
and the other Transaction Documents and its duties thereunder, upon advice of
other experts selected by it.
6. Indemnification. To the extent that the Agent is not reimbursed and
indemnified by the Debtor, the Secured Parties will jointly and severally
reimburse and indemnify the Agent, in proportion to their initially purchased
respective principal amounts of Debentures, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by or asserted against the Agent in performing its duties
hereunder or under the Agreement or any other Transaction Document, or in any
way relating to or arising out of the Agreement or any other Transaction
Document except for those determined by a final judgment (not subject to further
appeal) of a court of competent jurisdiction to have resulted solely from the
Agent's own gross negligence or willful misconduct. Prior to taking any action
hereunder as Agent, the Agent may require each Secured Party to deposit with it
sufficient sums as it determines in good faith is necessary to protect the Agent
for costs and expenses associated with taking such action.
7. Resignation by the Agent.
(a) The Agent may resign from the performance of all its functions and
duties under the Agreement and the other Transaction Documents at any time by
giving 30 days' prior written notice (as provided in the Agreement) to the
Debtor and the Secured Parties. Such resignation shall take effect upon the
appointment of a successor Agent pursuant to clauses (b) and (c) below.
(b) Upon any such notice of resignation, the Secured Parties, acting by a
Majority in Interest, shall appoint a successor Agent hereunder.
(c) If a successor Agent shall not have been so appointed within said
30-day period, the Agent shall then appoint a successor Agent who shall serve as
Agent until such time, if any, as the Secured Parties appoint a successor Agent
as provided above. If a successor Agent has not been appointed within such
30-day period, the Agent may petition any court of competent jurisdiction or may
interplead the Debtor and the Secured Parties in a proceeding for the
appointment of a successor Agent, and all fees, including, but not limited to,
extraordinary fees associated with the filing of interpleader and expenses
associated therewith, shall be payable by the Debtor on demand.
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8. Rights with respect to Collateral. Each Secured Party agrees with all
other Secured Parties and the Agent (i) that it shall not, and shall not attempt
to, exercise any rights with respect to its security interest in the Collateral,
whether pursuant to any other agreement or otherwise (other than pursuant to
this Agreement), or take or institute any action against the Agent or any of the
other Secured Parties in respect of the Collateral or its rights hereunder
(other than any such action arising from the breach of this Agreement) and (ii)
that such Secured Party has no other rights with respect to the Collateral other
than as set forth in this Agreement and the other Transaction Documents.
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[SCHEDULES OMITTED]
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