Exhibit 10.31
THE OBLIGATIONS UNDER THIS SECURITY AGREEMENT ARE SUBORDINATED TO THE CLAIMS OF
UNION BANK OF CALIFORNIA, N.A. ("UBOC") PURSUANT TO AND IN ACCORDANCE WITH THE
TERMS OF THAT CERTAIN AMENDED AND RESTATED INTERCREDITOR AND SUBORDINATION
AGREEMENT DATED OF EVEN DATE HEREWITH BETWEEN SECURED PARTY (AS DEFINED BELOW)
AND UBOC, AS AMENDED.
AMENDED AND RESTATED SECURITY AGREEMENT
THIS AMENDED AND RESTATED SECURITY AGREEMENT dated as of _____________,
2002 (this "Agreement"), is made by OVERHILL FARMS, INC., a Nevada corporation
(the "Company"), and OVERHILL L.C. VENTURES, INC., a California corporation
("Overhill Ventures" and, together with the Company, and any future direct or
indirect Subsidiaries of Company and Overhill Ventures from time to time party
hereto, the "Debtors" and, individually, a "Debtor") in favor of XXXXXX
XXXXXXXXX CAPITAL PARTNERS II, L.P., a California limited partnership ("Secured
Party").
RECITALS
A. The Company, OVERHILL CORPORATION (formerly known as Polyphase
Corporation and to be known from and after the effective date of the Spin-Off as
Treecon Resources, Inc.), a Nevada corporation ("TreeCon"), Overhill Ventures
and the Purchaser entered into that certain Securities Purchase Agreement dated
as of November 24, 1999, as amended by that certain Consent and First Amendment
to Securities Purchase Agreement dated as of August 23, 2000, and as further
amended by that certain Second Amendment to Securities Purchase Agreement dated
as of January 11, 2002, that certain Consent and Third Amendment dated as of
January 31, 2002, that certain Fourth Amendment dated as of June 28, 2002, and
that certain Fifth Amendment to Securities Purchase Agreement dated as of
September 11, 2002 (as so amended, the "Original Securities Purchase
Agreement").
B. In connection with the execution and delivery of the Original
Securities Purchase Agreement, the Company executed and delivered to Secured
Party that certain Security Agreement dated as of November 24, 1999, as amended
by that certain Amendment to Security Agreement dated as of June 28, 2002 (as so
amended, the "Company Security Agreement"), and Overhill Ventures executed and
delivered to Secured Party that certain Security Agreement dated as of November
24, 1999, as amended by that certain Amendment to Security Agreement dated as of
June 28, 2002 (as so amended, the "Ventures Security Agreement").
C. The Company, the entities from time to time parties thereto as
Guarantors (including Overhill Ventures) and Secured Party are concurrently
entering into that certain Amended and Restated Securities Purchase Agreement
dated of even date herewith (as amended from time to time, the "Securities
Purchase Agreement") pursuant to which, among other things, (a) the parties
thereto are amending and restating the Original Securities Purchase Agreement,
the Original Note and the Original Warrant and (b) at the request of
the Company, LLCP is consenting to the Spin-Off Related Matters, all on the
terms and subject to the conditions set forth therein.
D. The Company, Overhill Ventures and their Subsidiaries are members of a
consolidated group of entities whose success is mutually interdependent, and
each of the Company, Overhill Ventures and their Subsidiaries has derived, and
expects to continue to derive, substantial direct and indirect benefits from the
proceeds of the borrowings made available to the Company under the Note.
E. It is a condition precedent to Secured Party's agreement to consent to
the Spin-Off Related Transactions that the Debtors agree to affirm, amend,
restate and combine into a single agreement the Company Security Agreement and
the Ventures Security Agreement, all on the terms and subject to the conditions
set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
consents and agreements contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby amend and restate the Company Security Agreement and the Ventures
Security Agreement as follows:
1. Definitions. Unless otherwise defined, all capitalized terms used in
this Agreement without definition shall have the respective meanings ascribed to
them in the Securities Purchase Agreement, the Company Security Agreement or the
Ventures Security Agreement, as the case may be. The rules of interpretation and
construction set forth in Sections 1.2 through 1.6 of the Securities Purchase
Agreement shall likewise govern the interpretation and construction of this
Agreement. In addition, the following capitalized terms shall have the following
respective meanings:
"Account Debtor" means any Person who may become obligated to any
Person under, with respect to, or on account of, an Account, Chattel Paper or
General Intangible (including a Payment Intangible).
"Accounts" means all "accounts," as such term is defined in the UCC,
now owned or hereafter acquired by any Person, including (a) all accounts
receivable, other receivables, book debts and other forms of obligations (other
than forms of obligations evidenced by Chattel Paper or Instruments) (including
any such obligations that may be characterized as an account or contract right
under the UCC), (b) all of such Person's rights in, to and under all purchase
orders or receipts for goods or services, (c) all of such Person's rights to any
goods represented by any of the foregoing (including unpaid sellers' rights of
rescission, replevin, reclamation and stoppage in transit and rights to
returned, reclaimed or repossessed goods), (d) all rights to payment due or to
become due to such Person for Goods or other property sold, leased, licensed,
assigned or otherwise disposed of, for a policy of insurance issued or to be
issued, for a secondary obligation incurred or to be incurred, for energy
provided or to be provided, for the use or hire of a vessel under a charter or
other contract, arising out of the use of a credit card or charge card, or for
services rendered or to be rendered by such Person or in connection with any
other transaction (whether or not yet earned by performance on the part of such
Person), (e) all health care insurance receivables,
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and (f) all collateral security of any kind, given by any Account Debtor or any
other Person with respect to any of the foregoing.
"Books and Records" means, with respect to any Person, all books,
records, board minutes, contracts, licenses, insurance policies, environmental
audits, business plans, files, accounting books and records, financial
statements (actual and pro forma), and filings with Governmental Authorities.
"Chattel Paper" means all "chattel paper," as such term is defined in
the UCC and including both tangible and electronic chattel paper, now owned or
hereafter acquired by any Person, wherever located.
"Claim" means any and all: (a) suits, actions, or proceedings in any
court or forum, at law, in equity or otherwise; (b) costs, fines, deficiencies,
or penalties; (c) asserted claims or demands by any Person; (d) arbitration
demands, proceedings, or awards; (e) damages, losses, liabilities, and expenses
(including reasonable attorneys' fees and disbursements and other costs of
collection, defense, or appeal); (f) enforcement of rights and remedies; or (g)
criminal, civil, or regulatory investigations.
"Collateral" means any personal property or other assets, now existing
or hereafter acquired, real or personal, tangible or intangible, and whether
owned by, consigned to, or held by, or under the care, custody or control of any
Debtor, including all money, cash, cash equivalents, Accounts, Deposit Accounts,
other bank and deposit accounts (including any bank accounts maintained by any
Debtor or any of its Subsidiaries) and deposits, Investment Property, Inventory,
Equipment, Fixtures, Goods, Chattel Paper, Documents, Instruments, letters of
credit, Letter of Credit Rights, Supporting Obligations, Commercial Tort Claims,
Books and Records, real property interests, leasehold estates in real property
of Debtor, as lessee, General Intangibles (including all Intellectual Property,
Claims, Payment Intangibles, contract rights, choses in action, and Software),
and all of Debtors' other interests in property of every kind and description,
and the products, profits, rents of, dividends or distributions on, accessions
to, and all Proceeds (including tort claims, insurance claims and insurance
proceeds) of any of the foregoing, regardless of whether the Collateral, or any
portion of it, is property as to which the UCC provides the perfection of a
security interest, and all rights and remedies applicable to such property, but
excluding in all events, Hazardous Materials.
"Collection Accounts" means any of the bank accounts in the name of any
Debtor maintained at Senior Lender and designated as collection accounts in the
Senior Credit Documents.
"Commercial Tort Claim" means all "commercial tort claims," as such
term is defined in the UCC, now owned or hereafter acquired by any Person.
"Control Account" means the "Control Account," as defined in the Senior
Credit Documents.
"Control Letter" means a letter agreement between Secured Party and (i)
the issuer of uncertificated securities with respect to uncertificated
securities in the name of Debtor or any of its Subsidiaries, (ii) a securities
intermediary with respect to securities,
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whether certificated or uncertificated, securities entitlements and other
financial assets held in a securities account in the name of Debtor or any of
its Subsidiaries, (iii) a futures commission merchant or clearing house, as
applicable, with respect to commodity accounts and commodity contracts held by
Debtor or any of its Subsidiaries, whereby in each case, among other things, the
issuer, securities intermediary or futures commission merchant disclaims any
security interest in the applicable financial assets, acknowledges the Lien of
Secured Party on such financial assets, and agrees to follow the instructions or
entitlement orders of Secured Party without further consent by Debtor or any of
its Subsidiaries.
"Deposit Accounts" means all "deposit accounts," as such term is
defined in the UCC, now or hereafter held in the name of any Person.
"Disbursement Account" means the "Disbursement Account," as defined in
the Senior Credit Documents.
"Documents" means all "documents," as such term is defined in the UCC,
wherever located, and all of the following, whether or not "documents" as
defined in the UCC: all bills of lading, dock warrants, dock receipts, warehouse
receipts, and other documents of title, whether negotiable or non-negotiable.
"Equipment" means all "equipment," as such term is defined in the UCC,
wherever located, and all of the following, whether or not "equipment" as
defined in the UCC: all machinery and equipment, including processing equipment,
conveyors, machine tools, data processing and computer equipment with software
and peripheral equipment, and all engineering, processing, and manufacturing
equipment, office machinery, furniture, materials handling equipment, tools,
attachments, accessories, automotive equipment, trailers, trucks, forklifts,
molds, dies, stamps, motor vehicles, rolling stock, and other equipment of every
kind and nature, trade fixtures, and fixtures, together with all additions and
accessions thereto, replacements therefor, all parts therefor, all substitutes
for any of the foregoing, fuel therefor, and all manuals, drawings,
instructions, warranties, and rights with respect thereto.
"Fiscal Month" means any of the monthly accounting periods of the
Company.
"Fixtures" means "fixtures," as such term is defined in the UCC.
"General Intangibles" means all "general intangibles," as such term is
defined in the UCC, now owned or hereafter acquired by any Person, including all
right, title and interest which such Person may now or hereafter have in or
under any Contract, all Payment Intangibles, Licenses, Intellectual Property,
interests in partnerships, joint ventures and other business associations,
permits, proprietary or confidential information, inventions (whether or not
patented or patentable), technical information, procedures, designs, knowledge,
know-how, software, data bases, data, skill, expertise, experience, processes,
models, drawings, materials, Books and Records, Goodwill (including Goodwill
associated with any Intellectual Property), all rights and claims in or under
insurance policies (including insurance for fire, damage, loss, and casualty,
whether covering personal property, real property, tangible rights or intangible
rights, all liability, life, key-person, and
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business interruption insurance, and all unearned premiums), uncertificated
securities, choses in action, deposit accounts, rights to receive tax refunds
and other payments, rights to receive dividends, distributions, cash,
Instruments, and other property in respect of or in exchange for pledged Stock,
Investment Property or other equity interests, and rights of indemnification.
"Goods" means all "goods," as such term is defined in the UCC, now
owned or hereafter acquired by any Person, wherever located, including embedded
software to the extent included in "goods" as defined in the UCC, manufactured
homes, standing timber that is cut and removed for sale and unborn young of
animals.
"Goodwill" means all goodwill, trade secrets, proprietary or
confidential information, technical information, procedures, formulae, quality
control standards, designs, operating and training manuals, customer lists, and
distribution agreements.
"Instruments" means all "instruments," as such term is defined in the
UCC, wherever located, and all of the following, whether or not "instruments" as
defined in the UCC: all certificated securities, all certificates of deposit,
and all promissory notes and other evidences of indebtedness.
"Intellectual Property" means all of the following: (a) patents,
trademarks, trade dress, trade names, service marks, copyrights, trade secrets,
and all other intellectual property or Licenses thereof; and (b) all Proceeds of
the foregoing.
"Inventory" means all "inventory," as such term is defined in the UCC,
now owned or hereafter acquired by any Person, wherever located, including all
goods, merchandise and other personal property held for sale or lease by any
Person, or which is furnished by such Person under any contract of service or is
held by such Person as raw materials, work or goods in process, finished goods,
returned goods or materials and supplies of every nature used or consumed or to
be used or consumed by such Person in the ordinary course of its business
including all embedded software, whether now owned or hereafter acquired by such
Person.
"Investment Property" means all "investment property," as such term is
defined in the UCC, and all of the following, whether or not "investment
property" as defined in the UCC: (a) all securities, whether certificated or
uncertificated, including stocks, bonds, treasuries, certificates of deposit,
and mutual fund shares; (b) all securities entitlements of such Person,
including the rights of such Person to any securities account and the financial
assets held by a securities intermediary in such securities account and any free
credit balance or other money owing by any securities intermediary with respect
to that account; (c) all interests in limited liability companies and
partnership interests, whether or not such interests constitute securities; (d)
all securities contracts held by any Person; and (e) all commodity contracts
held by any Person.
"Joinder Agreement" means an agreement, in substantially the form
attached hereto as Exhibit A, pursuant to which each direct and indirect future
Subsidiary of the Debtors shall become a party to this Agreement.
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"Letter of Credit" means an irrevocable commercial or standby letter of
credit.
"Letter of Credit Rights" means all "letter of credit rights," as such
term is defined in the UCC, now owned or hereafter acquired by any Person,
including rights to payment or performance under a letter of credit, whether or
not such Person, as beneficiary, has demanded or is entitled to demand payment
or performance.
"License" means any license or sublicense under any written agreement
granting the right to use any Intellectual Property or other license of rights
or interests therein, including the Licenses described in the PTC Security
Agreement.
"Payment Intangibles" means all "payment intangibles" as such term is
defined in the UCC, now owned or hereafter acquired by any Person.
"Proceeds" means "proceeds," as such term is defined in the UCC,
including: (a) any and all proceeds of any insurance, indemnity, warranty or
guaranty payable to any Person 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 any Person 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 under color of
Governmental Authority); (c) any claim of any Person against third parties for
past, present or future infringement or dilution of any Intellectual Property,
or for injury to the goodwill associated with any Intellectual Property; (d) any
recoveries by any Person against third parties with respect to any litigation or
dispute concerning any of the Collateral including claims arising out of the
loss or nonconformity of, interference with the use of, defects in, or
infringement of rights in, or damage to, Collateral; (e) all amounts collected
on, or distributed on account of, other Collateral, including dividends,
interest, distributions and Instruments with respect to Investment Property and
pledged Stock; and (f) any and all other amounts, rights to payment or other
property acquired upon the sale, lease, license, exchange or other disposition
of Collateral and all rights arising out of Collateral.
"Secured Obligations" mean any and all Obligations, and all covenants
and duties regarding such amounts, of any kind or nature, present or future,
contingent or liquidated, whether or not evidenced by any note, agreement or
other instrument, the payment or performance of which is provided for or arises
now or hereafter under or in connection with the Securities Purchase Agreement
or any other Investment Document.
"Senior Indebtedness" shall have the meaning assigned to it in the
Intercreditor Agreement.
"Senior Liens" shall mean the Liens granted to the Senior Lender
pursuant to the Senior Collateral Documents.
"Software" means all "software," as such term is defined in the UCC,
now owned or hereafter acquired by any Person, other than software embedded in
any category of Goods, including all computer programs and all supporting
information provided in connection with a transaction related to any program.
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"Supporting Obligations" means all "supporting obligations," as such
term is defined in the UCC, including letters of credit and guaranties issued in
support of Accounts, Chattel Paper, Documents, General Intangibles, Instruments,
or Investment Property.
"UCC" means the Uniform Commercial Code as the same may, from time to
time, be enacted and in effect in the State of California; provided, that in the
event by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of, or remedies with respect to, Secured Party's Lien on
any Collateral is governed by the Uniform Commercial Code as enacted and in
effect in a jurisdiction other than the State of California, the term "UCC"
shall mean the Uniform Commercial Code as enacted and in effect in such other
jurisdiction solely for purposes of the provisions hereof relating to such
attachment, perfection, priority or remedies and for purposes of definitions
related to such provisions; provided further, that to the extent that the UCC is
used to define any term herein or in any of the Investment Documents and such
term is defined differently in different Articles or Divisions of the UCC, the
definition of such term contained in Article or Division 9 shall govern.
2. Affirmation of Existing Security Interests; Continuing Assignment and
Grant of Security Interest.
(a) To secure the payment and performance in full of any and all
Secured Obligations, each Debtor hereby grants to Secured Party a
continuing security interest in, and so pledges and assigns to Secured
Party, and affirms, ratifies and acknowledges the continuing validity,
enforceability, and perfection of, the assignments, pledges, and grants to
Secured Party of security interests heretofore granted to Secured Party
pursuant to the Company Security Agreement and the Ventures Security
Agreement (subject, as to priority, only to the Senior Liens and Permitted
Liens to the extent entitled to priority by Applicable Law) in and to all
right, title and interest of each such Debtor in and to the Collateral.
(b) Concurrently herewith, the Debtors are executing and delivering to
Secured Party that certain Amended and Restated Patent, Trademark, and
Copyright Security Agreement (the "PTC Security Agreement") pursuant to
which the Debtors and Secured Party are amending and restating the Original
PTC Security Agreement under which, among other things, the Debtors
assigned to Secured Party as collateral security certain Collateral
consisting of patents, patent rights, trademarks, service marks, trademark
and service xxxx rights, associated goodwill, copyrights, and related
rights. The provisions of the PTC Security Agreement are supplemental to
the provisions of this Agreement, and nothing contained in the PTC Security
Agreement shall derogate from any of the rights or remedies of Secured
Party hereunder, nor shall anything contained in the PTC Security Agreement
be deemed to prevent or extend the time of attachment or perfection of any
security interest in such Collateral created hereby.
(c) Concurrently herewith, the Company is executing and delivering to
Secured Party that certain Amended and Restated Stock Pledge and Control
Agreement (the "Company Pledge Agreement") pursuant to which the Company
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and Secured Party are amending and restating the Original Company Pledge
Agreement (as defined in the Company Pledge Agreement) under which, among
other things, Company pledged to Secured Party all of its Capital Stock in
its Subsidiaries and agreed to pledge any after-acquired Capital Stock and
other Investment Property. The provisions of the Company Pledge Agreement
are supplemental to the provisions of this Agreement, and nothing contained
in the Company Pledge Agreement shall derogate from any of the rights or
remedies of Secured Party hereunder.
(d) Prior to the date hereof, the Company and Secured Party entered
into the UBOC Control Agreement pursuant to which the Company granted
control to Secured Party over the Company's deposit accounts with the
Senior Lender set forth on Schedule 3, on the terms provided for therein.
The provisions of the UBOC Control Agreement, and any other Deposit Account
Control Agreement entered into pursuant to this Agreement, are supplemental
to the provisions of this Agreement, and nothing contained in any Control
Agreement shall derogate from any of the rights or remedies of Secured
Party hereunder.
(e) For each item of electronic chattel paper, if any, Debtors have
(i) irrevocably created a single, authoritative copy, which is unique and
unalterable except by Secured Party (or the Senior Lender), (ii) has duly
and irrevocably identified the security interest of Secured Party (or the
Senior Lender) in such original, and (iii) has communicated such
authoritative copy to Secured Party (or the Senior Lender). Debtors have so
encrypted such authoritative copy that it can be distinguished from any
other copy, and so that any amendments which may be made to such
authoritative copy by any Person other than Secured Party (or Senior
Lender) would be identifiable from authoritative amendments made by Secured
Party (or the Senior Lender).
3. Security for Secured Obligations. This Agreement continues an
enforceable security interest (subject, as to priority, only to the Senior Liens
and those Permitted Liens that would be prior to Secured Party's Lien as a
matter of law) in and to the Collateral, securing the payment and performance in
full of any and all Secured Obligations, now existing or hereafter incurred or
arising, of each Debtor or any other Person. Without limiting the generality of
the foregoing, this Agreement secures the payment of all amounts which
constitute part of the Secured Obligations and would be owed by any Debtor to
Secured Party, but for the fact that they are unenforceable or not allowable due
to the existence of a bankruptcy, reorganization or similar proceeding under any
Bankruptcy Law involving any Debtor, any Guarantor or any other Person
(including all such amounts which would become due or would be secured but for
the filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding by or against any Debtor, any Guarantor or any
other Person under any Bankruptcy Law).
4. Debtors Remain Liable. Anything herein to the contrary
notwithstanding, (a) until the Secured Obligations have been fully and finally
paid and performed as required by Section 20, the applicable Debtors shall
remain liable under the contracts and agreements 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
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exercise by Secured Party of any of the rights hereunder shall not release any
Debtor from any of its duties or obligations under the contracts and agreements
included in the Collateral unless expressly and specifically agreed to by
Secured Party in writing, and (c) Secured Party shall not have any obligation or
liability under the contracts and agreements included in the Collateral by
reason of this Agreement, nor shall Secured Party be obligated to perform any of
the obligations or duties of any Debtor thereunder or to make any payment, or to
make any inquiry as to the nature or the sufficiency of any payment received by
it or the sufficiency of any performance by any party under any contract or
License, or to present or file any claim, or to take any action to collect or
enforce any performance or the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times. All rights
and security interests of Secured Party in the Collateral shall be absolute and
unconditional, irrespective of: (i) any lack of validity or enforceability of
any of the Secured Obligations or any other agreement or instrument relating
thereto; (ii) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Secured Obligations, or any other amendment or
waiver of or any consent to any departure from terms of the Note or any other
Investment Document; (iii) any exchange, release or non-perfection of any
Collateral for all or any of the Secured Obligations; or (iv) any other
circumstance which might otherwise constitute a defense available to any Debtor,
or a discharge of any Debtor's obligations, with respect to the validity or
enforceability of a security interest to the Collateral, excluding the defense
of performance.
5. Agreement With Respect to Collateral. Each Debtor and Secured Party
agree that to the extent that any of the Collateral may be deemed to be a
Fixture as opposed to Equipment, Inventory or any other form of Collateral that
maybe perfected by the filing of a UCC financing statement, it is the intention
of each of these parties that such Collateral be deemed to be Equipment,
Inventory or any other form of Collateral that may be perfected by the filing of
a UCC financing statement and such Collateral not be deemed to be a Fixture. No
Debtor shall agree with any other Person to treat any such Collateral as a
Fixture.
6. Representations and Warranties. Each Debtor hereby represents and
warrants, with respect to itself and the Collateral, as follows:
(a) except as specifically disclosed in the most recent schedule of
Accounts delivered to Secured Party: (i) each Account arises out of a bona
fide sale, lease, license, or assignment and delivery of property or
rendition of services by any Debtor in the ordinary course of its business,
or is otherwise a bona fide monetary obligation properly classifiable as an
"account" under the UCC, (ii) no Account has been reduced to a judgment;
(iii) there are no known setoffs, claims, or disputes existing or asserted
with respect thereto and no Debtor has agreed or will agree with any
applicable Account Debtor to (a) any deduction therefrom, (b) any extension
of time for the payment thereof, (c) any compromise or settlement for less
than the full amount thereof, or (d) any release, in whole or in part, of
any Person liable therefor, except as to all of the foregoing deductions,
extensions, compromises, settlements, or releases allowed by any Debtor in
the ordinary course of its business and disclosed to Secured Party;
provided, that the aggregate amount of such deductions, extensions,
compromises, settlements, or releases shall not exceed $10,000 in any
Fiscal Month; (iv) there are no facts, events, or occurrences that any
Debtor knows or should know that in any way impair the validity,
collectibility, or enforceability thereof or tend to
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reduce the amount payable thereunder as reflected on the invoices,
statements, and schedules of Accounts delivered to Secured Party with
respect thereto, or that might result in any material adverse change in the
financial condition of any Account Debtor or the collectibility thereof;
and (v) no Debtor has any knowledge that any Account Debtor is unable
generally to pay its debts as they become due;
(b) the amounts reflected on all records, invoices, statements, and
schedules of Accounts with respect thereto (i) to the knowledge of the
Debtors, are actually and absolutely owing to the Debtors as indicated
thereon and (ii) are not in any way contingent;
(c) no payments have been made on any Account, except ordinary-course
payments which have reduced the balance thereof as reported by the Debtors
to Secured Party;
(d) to the best of the Debtors' knowledge, each Account Debtor has
the capacity to contract;
(e) (i) all Inventory of the Debtors (a) is, and will continue to be,
located at one of the locations set forth on Schedule 1 or (b) is being
shipped directly to a customer of the Debtors and such Inventory is
scheduled to arrive at its destination within 15 days after shipment or
between two of the locations set forth on Schedule 1, (ii) such Inventory
has not been consigned to any Person, (iii) such Inventory has been and
will be produced in compliance with all Applicable Laws, including the
minimum wage and overtime pay provisions of the Fair Labor Standards Act,
(iv) the Debtors have good, indefeasible, and merchantable title to such
Inventory and such Inventory is not subject to any Lien or document
whatsoever except for Liens in favor of Senior Lender, Liens to Secured
Party and other Permitted Liens, (v) except for Inventory that is
manufactured by the Debtors pursuant to confidential specifications for
particular customers of the Debtors and that is subject to certain
restrictions on the sale or disposition thereof that have been disclosed to
Secured Party and have been consented to by Secured Party (which consent
may be subject to terms and conditions satisfactory to Secured Party), such
Inventory is not subject to any licensing, patent, royalty, trademark,
trade name, or copyright agreements with any third parties that would
require any consent of any third party upon sale or disposition thereof or
the payment of any monies to any third party as a condition precedent to
any such sale or other disposition, and (vi) the completion of manufacture,
sale, or other disposition of such Inventory by Secured Party following a
Default or Event of Default shall not require the consent of any Person and
shall not constitute a breach or default under any contract or agreement to
which any Debtor is a party or to which any of its property is subject;
(f) Debtor's and each of its Subsidiaries' name as it appears in the
official filings in the state of its incorporation or other organization,
the type of entity of Debtor and each of its Subsidiaries (including
corporation, partnership, limited partnership or limited liability
company), the organizational identification number issued by Debtor's and
each of its Subsidiaries' state of incorporation or organization or a
statement that no such number has been issued, the locations of Debtor's
and
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each of its Subsidiaries' state of organization or incorporation, chief
executive office, principal place of business, corporate offices,
warehouses, other locations of Collateral and locations where all of
Debtor's and each of its Subsidiaries' records with respect to Collateral
are kept are as set forth in Schedule 1 and, except as set forth in such
Schedule, such locations have not changed during the preceding twelve (12)
months. As of the Closing Date, during the prior five (5) years, except as
set forth in Schedule 1, neither Debtor nor any of its Subsidiaries has
been known as or conducted business in any other name. Neither Debtor nor
any of its Subsidiaries shall change (a) its name, (b) the type of legal
entity that it is, (c) the organizational identification number issued by
the state of its organization, (d) chief executive office, (e) its
principal place of business, (f) its corporate offices, (g) its warehouses
or other Collateral locations, (h) the location of its records concerning
the Collateral, or (i) the jurisdiction of its organization, without such
Person, in each instance, giving thirty (30) days' prior written notice
thereof to Secured Party and taking all actions deemed necessary or
appropriate by Secured Party to protect and perfect Secured Party's Liens
continuously upon the Collateral. Debtor and each of its Subsidiaries'
shall have only one state of organization;
(g) all Chattel Paper, promissory notes or other Instruments have
been pledged to Secured Party and, when the Senior Indebtedness has been
fully and finally paid and satisfied in cash, the Chattel Paper and
Instruments shall be duly endorsed and accompanied by such duly executed
instruments of transferor assignment as are necessary for such pledge, to
be held as pledged collateral;
(h) the Debtors are the legal and beneficial owners of, or have valid
leasehold title to, the Collateral pledged by them free and clear of any
Lien, security interest, option or other charge or encumbrance except for
the security interest created by this Agreement (other than Senior Liens
and Permitted Liens). No effective financing statement or other similar
document used to perfect and preserve a security interest under the
Applicable Laws of any jurisdiction covering all or any part of the
Collateral is on file in any recording office, except such as may have been
filed (i) in respect of Senior Liens and Permitted Liens and (ii) in favor
of Secured Party relating to this Agreement. The Company (or its
predecessors) has not existed or operated under any name other than those
set forth on Schedule 2, and Overhill Ventures (or its predecessors) has
not existed or operated under any name other than those set forth on
Schedule 2;
(i) the Debtors have possession and/or control of the Equipment and
Inventory pledged by it hereunder;
(j) this Agreement creates a valid and continuing security interest
(subject, as to priority, only to the Senior Liens and those Permitted
Liens that would be prior to Secured Party's Lien as a matter of law) in
the Collateral, securing the payment of the Secured Obligations, which upon
filings and other necessary actions to perfect such security interest
(subject, as to priority, only to the Senior Liens and those Permitted
Liens that would be prior to Secured Party's Lien as a matter of law) will
create a perfected security interest in such Collateral. This Agreement is
a valid, binding and enforceable obligation of the Debtors. Secured Party's
Lien (i) is prior
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to all other Liens except Liens granted to the Senior Lender securing the
Senior Indebtedness and those Permitted Encumbrances that would be prior to
Secured Party's Lien as a matter of law, and (ii) is enforceable as such as
against creditors of, and purchasers from, the Debtors and as against any
purchaser of real property where any of the Fixtures or Equipment are
located and any future creditor obtaining a Lien on such real property. All
such action as is necessary in law has been taken (A) to establish and
perfect Secured Party's Lien in each item of the Collateral with respect to
which Liens may be perfected by such filings (other than items of
Collateral for which Secured Party's Lien may be perfected only by
possession thereof and which are in the possession of the Senior Lender or
of which Senior Lender requires the Debtors to retain possession), and (B)
to entitle Secured Party to exercise the rights and remedies provided in
each of this Agreement, the other Investment Documents and the UCC. No
Debtor shall at any time take any action which shall cause this section to
become not true and correct, and each Debtor shall at all times take all
such action as may be necessary to cause this section to remain true and
correct. If, at any time, there are Liens on any Collateral, other than
Liens securing the Senior Indebtedness or Permitted Liens or Liens granted
to Secured Party, the Debtors shall use their best efforts to remove such
conflicting Liens within 30 days thereafter and, in any event, shall remove
such conflicting Liens within 60 days thereafter;
(k) no consent of any other Person and no authorization, approval or
other action by, and no notice to or filing with, any Governmental
Authority that has not been obtained, made or given is required (i) for the
pledge by any Debtor of the Collateral pledged by it hereunder, for the
grant by any Debtor of the security interest granted hereby or for the
execution, delivery or performance of this Agreement by any Debtor, (ii) as
to Collateral with respect to which Liens may be perfected by such filings,
for maintenance of the pledge, assignment and security interest created
hereby or for the perfection of the pledge, assignment and security
interest created hereby by filing a UCC-1 financing statements in the
appropriate filing offices designated by the UCC, or (iii) except as
otherwise provided by law, for the exercise by Secured Party of the rights
provided for in this Agreement or the remedies in respect of the Collateral
pursuant to this Agreement;
(l) each Debtor possesses all material licenses and permits,
including but not limited to all applicable certificates of occupancy,
licenses and permits and all health and sanitation permits, required for
the operations of its business; and
(m) Schedule 3 is a complete and correct list of all (i) deposit
accounts (demand, time, special or other) maintained by or in which any
Debtor has an interest and correctly describes the financial institution in
which such account is maintained (including the specific branch), the
address and ABA number of such institution, the officer of such institution
having primary responsibility for such Debtor's accounts, the account
number and type (as supplemented from time to time by the Debtors by
written notice to Secured Party) and (ii) Chattel Paper, promissory notes
and other Instruments in which any Debtor has an interest.
(n) Continuous Perfection. The Company's jurisdiction of organization
is the State of Nevada, and Ventures' jurisdiction of organization is the
State of
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California. No Debtor will change the same, or its name, identity,
corporate structure or jurisdiction of organization in any manner, without
providing at least thirty (30) days' prior written notice to Secured Party.
The Collateral, to the extent not delivered to Secured Party, will be kept
within the United States at all times.
7. Further Assurances.
(a) Unless this requirement is specifically waived in writing by
Secured Party, each Debtor agrees to promptly obtain the necessary consent
to or waiver of such restriction from any Person so as to enable such
Debtor to effectively grant to Secured Party the security interest
contemplated by this Agreement.
(b) At any time and from time to time, upon the written request of
Secured Party and at the sole expense of Debtors, each Debtor shall
promptly and duly execute and deliver any and all such further instruments
and documents and take such further action as Secured Party may reasonably
request to obtain the full benefits of this Agreement and to protect,
preserve and maintain Secured Party's rights in the Collateral and under
this Agreement, including, without limitation, (A) using its best efforts
to secure all consents and approvals necessary or appropriate for the
assignment to or for the benefit of Secured Party of any License or
Contract held by Debtor and to enforce the Liens granted hereunder, and (B)
filing any financing or continuation statements under the UCC with respect
to the Liens granted hereunder or under any other Investment Document as to
those jurisdictions that are not Uniform Commercial Code jurisdictions. On
each anniversary of the Closing Date (or as often as Secured Party may
require upon the occurrence and continuation of a Default or an Event of
Default), Debtor will supplement each schedule to this Agreement with
respect to any matter hereafter arising that, if existing or occurring as
of the Closing Date, would have been required to be set forth or described
in such Schedule; provided that such supplement shall not be deemed to be
an amendment thereof unless expressly consented to in writing by Secured
Party.
(c) Each Debtor hereby authorizes Secured Party to, from time to time
in any appropriate jurisdiction, file one or more financing or continuation
statements, and amendments thereto, relating to all or any part of the
Collateral without the signature of any Debtor where permitted by
Applicable Law. Such financing statements may indicate that the Collateral
is all assets of the Debtors. A photocopy or other reproduction of this
Agreement or any financing statement covering the Collateral or any part
thereof shall be sufficient as a financing statement where permitted by
Applicable Law.
(d) The Debtors will furnish to Secured Party from time to time
statements and schedules (including Schedules to this Agreement) further
identifying and describing the Collateral and such other reports in
connection with the Collateral as Secured Party may reasonably request in
writing, all in reasonable detail. The Debtors will promptly furnish to
Secured Party a copy of each new or renewal, restatement or modification of
any agreement included in Collateral.
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(e) Borrower shall not establish or maintain any deposit or similar
bank account not listed on Schedule 3 hereto unless Secured Party receives
prior notice thereof and the depositary enters into a control agreement, in
form and substance satisfactory to Secured Party, with respect to such
account.
(f) In the event that any Debtor acquires by any means any rights
under or in respect of commercial tort claims, such Debtor shall promptly
notify Secured Party of the facts of such claims in reasonable detail,
grant Secured Party a continuing security interest therein, and take any
action Secured Party may reasonably request to ensure that such security
interest is a valid, enforceable, perfected security interest therein,
subject as to priority only to the Senior Liens and other Permitted Liens
entitled to priority by Applicable Law. Without limiting the foregoing,
each Debtor hereby authorizes Secured Party to file in any jurisdictions
such amendments to financing statements, new financing statements, or other
documents as may be necessary or desirable to perfect a security interest
in any such commercial tort claims.
(g) In addition to such other information as shall be specifically
provided for herein, each Debtor agrees to permit such site visitations and
inspections and furnish to Secured Party such other information with
respect to such Debtor's business and Collateral as Secured Party may
reasonably request from time to time in connection with the Collateral, or
the protection, preservation, maintenance or enforcement of the security
interest or the Collateral as provided pursuant to the terms of the
Securities Purchase Agreement.
(h) Each Debtor agrees that, if at any time after the date hereof,
such Debtor acquires, creates or otherwise obtains, directly or indirectly,
Capital Stock of a new Subsidiary, such Subsidiary shall immediately
execute and deliver a Joinder Agreement, together with any other documents,
instruments or agreements necessary to join such Subsidiary as a party to
this Agreement and to cause such Subsidiary to assign, pledge and grant
security interests in all of its assets pursuant hereto. The Debtors agree
to cause any such Subsidiary to take any actions that may be necessary or
desirable to perfect and ensure the continuing perfection and priority of
such security interests.
(i) Each Debtor shall, in accordance with the terms hereunder, obtain
or use its best efforts to obtain waivers or subordinations of Liens from
landlords and mortgages, and shall in all instances obtain signed
acknowledgments of Secured Party's Liens from bailees having possession of
any of such Debtor's Goods.
(j) If not waived by Secured Party in writing (which waiver may be
revoked), each Debtor and its Subsidiaries shall obtain authenticated
Control Letters from each issuer of uncertificated securities, securities
intermediary, or commodities intermediary issuing or holding any financial
assets or commodities to or for such Debtor or any of its Subsidiaries.
(k) Borrower and each of its Subsidiaries shall take all steps
necessary to grant Secured Party control of all electronic chattel paper in
accordance with the
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UCC and all "transferable records" as defined in each of the Uniform
Electronic Transactions Act and the Electronic Signatures in Global and
National Commerce Act.
(l) Debtors also hereby (i) authorizes Secured Party to file any
financing statements, continuation statements or amendments thereto that
(A) indicate the Collateral (I) as all assets of any Debtor (or any portion
of any Debtor's assets) or words of similar effect, regardless of whether
any particular asset comprised in the Collateral falls within the scope of
Article 9 of the UCC of such jurisdiction, or (II) as being of an equal or
lesser scope or with greater detail, and (B) contain any other information
required by Part 5 of Article 9 of the UCC for the sufficiency or filing
office acceptance of any financing statement, continuation statement or
amendment, including (I) whether any Debtor is an organization, the type of
organization and any organization identification number issued to any
Debtor, and (II) in the case of a financing statement filed as a fixture
filing or indicating Collateral as as-extracted collateral or timber to be
cut, a sufficient description of real property to which the Collateral
relates, (ii) agrees to furnish any such information to Secured Party
promptly upon request, and (iii) ratifies its authorization for Secured
Party to have filed any initial financial statements, or amendments thereto
if filed prior to the date hereof. Each Debtor acknowledges that it is not
authorized to file any financing statement or amendment or termination
statement with respect to any financing statement without the prior written
consent of Secured Party and agrees that it will not do so without the
prior written consent of Secured Party, subject to Debtors' rights under
Section 9509(d)(2) of the UCC.
8. Equipment, Fixtures and Inventory.
(a) The Debtors shall keep all Equipment, Fixtures and Inventory
(other than Inventory sold in the ordinary course of business or in transit
between two permitted locations) at the places therefor specified herein
or, upon thirty days prior written notice to Secured Party, at such other
places in such jurisdictions where all action required by Section 7 shall
have been taken with respect to the Equipment and Inventory.
(b) The Debtors shall, and shall cause their respective Subsidiaries,
to maintain or cause to be maintained all their material properties
necessary to the conduct of their business (whether owned or held under
lease) in reasonably good repair, working order and condition, taken as a
whole, and from time to time make or cause to be made all reasonably
necessary repairs, renewals, replacements, additions, betterments and
improvements thereto.
(c) The Debtors shall, and shall cause their respective Subsidiaries
to, pay and discharge all Taxes, assessments and governmental charges or
levies imposed upon it or its income or properties prior to the date on
which penalties attach thereto, and all lawful material claims for labor,
materials and supplies which, if unpaid, might become a Lien upon any of
their properties, except those Taxes, assessments, charges or levies
contested by any such Person diligently in good faith, and for which
adequate reserves have been established in accordance with GAAP. The
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Debtors shall, and shall cause their respective Subsidiaries to, timely
file all information returns required by federal, state or local Tax
authorities.
9. Insurance. The Debtors shall, and shall cause their respective
Subsidiaries to, maintain insurance from responsible companies in such amounts
and against such risks as shall be customary and usual in the industry for
companies of similar size and capability, but in no event less than the amount
and types insured as of the Effective Date. The Debtors shall promptly furnish
to Secured Party evidence of such insurance in form and content satisfactory to
Secured Party. If the Debtors fails to perform or observe any applicable
covenants as to insurance on any of such Collateral, Secured Party may at its
own option obtain insurance on only Secured Party's interest in such Collateral,
any premium thereby paid by Secured Party to become part of the Secured
Obligations, bear interest as provided in the Securities Purchase Agreement. In
the event Secured Party maintains such substitute insurance, the additional
premium for such Insurance shall be due upon written demand and jointly and
severally payable by the Debtors to Secured Party in accordance with any notice
delivered to any Debtor by Secured Party. The Debtors hereby grant Secured Party
a security interest in any refunds of unearned premiums in connection with any
cancellation, adjustment or termination of any policy of insurance or paid to
Senior Lender with respect to Senior Indebtedness, required by Secured Party and
in all proceeds of such insurance and hereby appoint Secured Party their
attorney-in-fact to endorse any check or draft that may be payable to any of
them in order to collect such refunds or proceeds. Any such sums collected by
Secured Party shall be credited, except to the extent applied to the purchase by
Secured Party of similar insurance or paid to Senior Lender with respect to
Senior Indebtedness, to any amounts then owing on the Secured Obligations in
accordance with the Securities Purchase Agreement.
10. Place of Perfection: Records; Collection of Accounts; Chattel Paper
and Instruments.
(a) The Debtors shall keep their chief place of business and chief
executive office and the office where they keeps their records concerning
accounting books and records, and the originals of all Chattel Paper (until
delivered to Senior Lender or Secured Party), at the location therefor
specified in Section 6(f), unless the Debtors shall have given written
notice thereof to Secured Party no later than thirty days prior to the
moving thereof to another location within the United States. The Debtors
will hold and preserve such records and Chattel Paper (subject to pledge
thereof to the Senior Lender) and will permit representatives of Secured
Party to inspect and make abstracts from and copies of such records and
Chattel Paper as provided in the Securities Purchase Agreement. Upon the
full and final satisfaction of the Senior Indebtedness in cash, the Debtors
shall deliver, or cause the Senior Lender, if it then has possession
thereof, to deliver, to Secured Party all Instruments to be held by Secured
Party as collateral. Upon the full and final satisfaction of the Secured
Obligations in cash, Secured Party shall return to the Debtors all
Instruments and Chattel Paper held by Secured Party as collateral unless
the Senior Indebtedness is still outstanding, in which case such Collateral
shall be delivered to Senior Lender to be held as collateral.
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(b) (i) Except as otherwise provided in this section, the Debtors
shall continue to collect, at their own expense, all amounts due or to
become due the Debtors under all Accounts, Chattel Paper and Instruments.
In connection with such collections, the Debtors may take (and, at Secured
Party's direction, shall take) such action as the Debtors or Secured Party
may deem reasonably necessary or advisable to enforce collection of the
Accounts, Chattel Paper and Instruments; provided, however, that Secured
Party shall have the right (upon a Default or Event of Default which is
continuing) (without notice to the Debtors) to notify the account debtors
or obligors under any Accounts, Chattel Paper and Instruments of the
assignment of such Accounts, Chattel Paper and Instruments to Secured Party
and to direct such account debtors or obligors to make payment of all
amounts due or to become due to the Debtors thereunder directly to Secured
Party and, at the expense of the Debtors, to enforce collection of any such
Accounts, Chattel Paper and Instruments, and to adjust, settle or
compromise the amount or payment thereof, in the same manner and to the
same extent as the Debtors might have done.
(ii) Subject to the following sentence, upon prior notice to the
Debtors (unless a Default or an Event of Default has occurred and is
continuing in which case no notice is necessary), Secured Party shall have
the right, at the Debtors' expense, no more than twice in any 12-month
period (unless such a Default or an Event of Default has occurred and is
continuing in which case no such limitation shall be in effect) to make
test verifications of the Accounts and physical verifications and
appraisals of any other Collateral in any manner and through any medium
that Secured Party considers advisable, and the Debtors agree to furnish
all such assistance and information as Secured Party may require in
connection therewith. Secured Party may at any time, in Secured Party's own
name, in any Debtor's name or otherwise, communicate with Account Debtors,
parties to contracts, obligors in respect of Instruments and obligors in
respect of Chattel Paper to verify with such Persons, to Secured Party's
satisfaction, the existence, amount and terms of any such Accounts,
contracts, Instruments or Chattel Paper. The Debtors, at their own expense,
shall cause their independent certified public accountants to deliver to
Secured Party the results of any confirmation of all or any portion of the
Accounts and any physical verifications and reconciliations of all or any
portion of the other Collateral made or observed by such accountants when
and if any such confirmation, verification or reconciliation is conducted
in connection with annual audit procedures. Upon the occurrence and during
the continuation of a Default or an Event of Default, the Debtors, promptly
upon Secured Party's request, at the Debtors' own expense, shall prepare
and deliver to Secured Party the following reports: (a) a reconciliation of
all Accounts; (b) an aging of all Accounts; (c) an aged receivable trial
balance; (d) test verifications of such Accounts as Secured Party may
request; (e) a schedule of all Inventory; (f) a schedule of all Equipment;
(g) a schedule of all Leases; (h) a schedule of all Indebtedness,
including, but not limited to, purchase money indebtedness and (i) a
schedule of all Licenses.
(iii) Upon the full and final satisfaction of the Senior
Indebtedness in cash, and after the occurrence of a Default or Event of
Default that is continuing, all amounts and proceeds (including
Instruments) received by any Debtor in respect of the Accounts, Chattel
Paper and Instruments shall be received in trust for the benefit
-17-
of Secured Party hereunder, shall be segregated from other funds of the
Debtors and shall be forthwith paid over to Secured Party in the same form
as so received (with any necessary indorsement) to be held as cash
collateral and either (a) released to the Debtors so long as no Default or
Event of Default shall have occurred and be continuing or (b) if any
Default or Event of Default shall have occurred and be continuing, applied
as provided herein and in the Intercreditor Agreement. The Debtors shall
not, without the written consent of Senior Lender (or, after the
termination of the Intercreditor Agreement, of Secured Party), adjust,
settle or compromise the amount or payment of any Account, Chattel Paper or
Instrument, release wholly or partly any Account Debtors or obligor thereof
or allow any credit or discount thereon except as provided in Section 6(a).
11. Transfers and Other Liens; Name Changes. No Debtor shall (a) sell,
assign (by operation of Applicable Law or otherwise) or otherwise dispose of, or
grant any option with respect to, any of the Collateral, except in the ordinary
course of business or as permitted under the Securities Purchase Agreement, or
(b) create or permit to exist any Lien, security interest, option or other
charge or encumbrance upon or with respect to any of the Collateral, except for
the security interest under this Agreement, Senior Liens and Permitted Liens. No
Debtor shall, nor shall any Debtor permit, any Subsidiary to, change its name,
corporate structure, or jurisdiction of organization.
12. Secured Party Appointed Attorney-in-Fact. Each Debtor hereby
irrevocably constitutes and appoints 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 place and stead of such Debtor
and in the name of such Debtor or in its own name, from time to time in Secured
Party's discretion, for the purpose of carrying out the terms of this Agreement,
to take any and all appropriate action and to execute and deliver any and all
documents and instruments which may be necessary to accomplish the purposes of
this Agreement and, without limiting the generality of the foregoing, hereby
grants to Secured Party the power and right, on behalf of such Debtor, without
notice to or assent by Secured Party, upon the occurrence and during the
continuation of a Default or an Event of Default (except as otherwise provided
below), to do the following, all at the Debtors' expense:
(a) regardless of whether a Default or an Event of Default has
occurred or is continuing, continue any insurance policies existing
pursuant to the terms of this Agreement or maintained pursuant to the tens
of any Investment Document should the Debtors fail to do so, and pay all or
any part of the premiums therefor and the costs thereof;
(b) in the name of any Debtor, in its own name or otherwise, take
possession of, endorse and receive payment of any checks, drafts, notes,
acceptances, or other Instruments for the payment of monies due under any
Collateral;
(c) receive payment of any and all monies, claims and other amounts
due or to become due at any time arising out of or in respect of any
Collateral;
(d) ask, demand, collect, receive and give acquittances and receipts
for any and all money due or to become due under any Collateral;
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(e) pay or discharge any charges or Liens levied or placed on or
threatened against the Collateral;
(f) effect any repairs or obtain any insurance called for by the
terms of the any Investment Document and pay all or any part of the
premiums therefor and costs thereof;
(g) direct any party liable for any payment under or in respect of
any of the Collateral to make payment of any and all monies due or to
become due thereunder, directly to Secured Party or as Secured Party shall
direct;
(h) sign and endorse any invoices, freight or express bills, bills of
lading, storage or warehouse receipts, drafts against Account Debtors,
assignments, verifications and notices in connection with accounts and
other documents constituting or related to the Collateral;
(i) settle, compromise or adjust any suit, action or proceeding
described in this section and, in connection therewith, give such
discharges or releases as Secured Party may deem appropriate;
(j) file any claim or task or commence any other action or proceeding
in any court of law or equity or otherwise deemed appropriate by Secured
Party for the purpose of collecting any and all such monies due under any
Collateral whenever payable;
(k) commence and prosecute any suits, actions or proceedings at law
or in equity in any court to collect the Collateral or any part thereof and
to enforce any other right in respect of any Collateral;
(l) defend any claim, suit, action or proceeding brought against any
Debtor with respect to any Collateral if such Debtor does not defend such
claim, suit, action or proceeding or if Secured Party believes that such
Debtor is not pursuing such defense in a manner that will minimize the loss
with respect to such Collateral and Secured Party's security interest
therein;
(m) license or, to the extent permitted by an applicable License,
sublicense, whether general, specific or otherwise and whether on an
exclusive or non-exclusive basis, any Intellectual Property Collateral
throughout the world on such terms and conditions and in such manner as
Secured Party shall, in its sole discretion, determine; and
(n) sell, transfer, pledge, make any agreement with respect to, or
otherwise deal with any of the Collateral as fully and completely as though
Secured Party were the absolute owner thereof for all purposes, and to do,
at Secured Party's option, at any time or from time to time, all acts and
other things that Secured Party deems necessary to perfect, preserve or
realize upon the Collateral and Secured Party's Lien therein in order to
effect the intent of this Agreement, all as fully and effectively as any
Debtor might do.
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THE DEBTORS HEREBY IRREVOCABLY GRANT TO SECURED PARTY THEIR PROXY
(EXERCISABLE AFTER THE SENIOR INDEBTEDNESS HAS BEEN FULLY AND FINALLY
SATISFIED IN CASH FROM AND AFTER THE OCCURRENCE OF A DEFAULT OR EVENT
OF DEFAULT WHICH IS CONTINUING) TO VOTE ANY SECURITIES COLLATERAL AND
APPOINT SECURED PARTY THEIR ATTORNEY-IN-FACT TO PERFORM ALL
OBLIGATIONS OF THE DEBTORS UNDER THIS AGREEMENT AND TO EXERCISE ALL OF
SECURED PARTY'S RIGHTS HEREUNDER. THE PROXY AND POWER OF ATTORNEY
HEREIN GRANTED, AND EACH STOCK POWER AND SIMILAR POWER NOW OR
THEREAFTER GRANTED (INCLUDING ANY EVIDENCED BY A SEPARATE WRITING),
ARE COUPLED WITH AN INTEREST AND ARE IRREVOCABLE PRIOR TO FINAL
PAYMENT IN FULL OF THE SECURED OBLIGATIONS.
13. Secured Party May Perform. Upon and during the continuance of a
Default or Event of Default, if the Debtors fail to perform or comply with any
agreement contained herein or in any Investment Document, Secured Party may
itself perform, or cause performance of, or compliance with, such agreement, and
the expenses of Secured Party incurred in connection therewith, together with
applicable interest thereon at the rate then in effect under the terms of the
Note, shall be payable by the Debtors under Section 16 herein.
14. Secured Party's Duties. The powers conferred on Secured Party
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it or any Secured Party to exercise any such powers. Except
for the safe custody of any Collateral in its possession and the accounting for
moneys actually received by it hereunder, Secured Party shall have no duty as to
any Collateral, as to ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Collateral; whether or not Secured Party has or is deemed to have knowledge of
such matters, or as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to any reasonable care in
the custody and preservation of any Collateral in its possession if such
Collateral is accorded treatment substantially equal to that which Secured Party
accords its own property. Except as provided in this section, Secured Party
shall not have any duty or liability to protect or preserve any Collateral or to
preserve rights pertaining thereto. Nothing contained in this Agreement shall be
construed as requiring or obligating Secured Party, and Secured Party shall not
be required or obligated, to (a) present or file any claim or notice or take any
action, with respect to any Collateral or in connection therewith or (b) notify
the Debtors of any decline in the value of any Collateral.
15. Remedies. If any Default or Event of Default shall occur and be
continuing:
(a) Secured Party may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise
available to it, all the
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rights and remedies of a secured party on default under the UCC in effect
in the state in which the Collateral is located at that time (whether or
not the UCC applies to the affected Collateral), and also may (i) require
any Debtor to, and each Debtor hereby agrees that it will at its expense
and upon request of Secured Party forthwith, assemble all or part of the
Collateral as directed by Secured Party and make it available to Secured
Party at a place to be designated by Secured Party which is reasonably
convenient to both parties or (ii) without demand of performance or other
demand, advertisement or notice of any kind, except as specified below, to
or upon the Debtors or any other Person (all and each of which demands,
advertisements and notices are hereby expressly waived to the maximum
extent permitted by the UCC and other applicable law), forthwith enter upon
the premises of any Debtor where any Collateral is located through
self-help, without judicial process, without first obtaining a final
judgment or giving any Debtor notice and opportunity for a hearing on
Secured Party's claim or action, and collect, receive, assemble, process,
appropriate and realize upon the Collateral, or any part thereof, and may
forthwith sell, lease, assign, give an option or options to purchase, or
sell or otherwise dispose of and deliver said Collateral (or contract to do
so), or any part thereof, sell the Collateral or any portion thereof in one
or more parcels at public or private sale, at any of Secured Party's
offices or elsewhere, at such prices as it may deem best, for cash, on
credit or for future delivery without assumption of any credit risk, and
upon such other terms as Secured Party may deem commercially reasonable.
Secured Party shall have the right, upon any such public sale or sales and,
to the extent permitted by law, upon any such private sale or sales, to
purchase for the benefit of Secured Party by credit bid the whole or any
part of said Collateral so sold, free of any right or equity of redemption,
which equity of redemption each Debtor hereby releases. Secured Party shall
have the right to conduct such sales on any Debtor's premises without rent
or other charge for such sales or other action with respect to the
Collateral for such time or times as Secured Party deems necessary or
advisable. Each Debtor agrees that, to the extent notice of sale shall be
required by Applicable Law, ten days' notice to the Company or such Debtor
of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification.
Secured Party shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. Secured Party may adjourn
any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned. Until Secured
Party is able to effect a sale, lease, or other disposition of any
Collateral, Secured Party shall have the right to use or operate the
Collateral, or any part thereof, to the extent that it deems appropriate
for the purpose of preserving the Collateral or its value or for any other
purpose deemed appropriate by Secured Party. Secured Party shall have no
obligation to any Debtor to take any action to maintain or preserve the
rights of any Debtor as against third parties with respect to any
Collateral while such Collateral is in the possession of Secured Party.
Secured Party may, if it so elects, seek the appointment of a receiver or
keeper to take possession of Collateral and to enforce any of Secured
Party's remedies with respect to such appointment without prior notice or
hearing. Secured Party shall apply the net proceeds of any such collection,
recovery, receipt, appropriation, realization or sale, as provided in
Section 15(b), the Debtors shall remain liable for any deficiency remaining
unpaid after such application, and only
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after so paying over such net proceeds and after the payment by Secured
Party of any other amount required by any provision of law, including, but
not limited to Sections 9608 and 9615 of the UCC, need Secured Party
account for the surplus, if any, to the affected Debtor. The Debtors shall
remain liable for any and all costs and expenses incurred by Secured Party,
including, but not limited to, attorneys' fees, to collect such deficiency.
To the maximum extent permitted by applicable law, each Debtor waives all
claims, damages, and demands against Secured Party arising out of the
repossession, retention or sale of the Collateral except such as are
determined in a final judgment by a court of competent jurisdiction to have
arisen solely out of the gross negligence or willful misconduct of Secured
Party.
(b) Subject to the rights of the Senior Lender under the
Intercreditor Agreement, Secured Party shall apply the proceeds of any
collection or sale of Collateral, as well as any Collateral consisting of
cash, as follows:
FIRST, to the payment of all costs and expenses incurred by
Secured Party in connection with such collection or sale or otherwise
in connection with this Agreement or any of the Secured Obligations,
including, but not limited to, all court costs and the reasonable fees
and expenses of its agents and legal counsel, the repayment of all
advances made hereunder by Secured Party on behalf of the Debtors and
any other reasonable costs or expenses incurred in connection with the
exercise of any right or remedy hereunder.
SECOND, to the payment in full of the Secured Obligations (the
amounts so applied to be distributed among the holders of the Secured
Obligations pro rata in accordance with the amounts of the Secured
Obligations held by them on the date of any such distribution); and
THIRD, unless otherwise required by UCC Sections 9608 and 9615 or
other Applicable Law, to the Debtors, their successors or assigns, or
as a court of competent jurisdiction determines, or as otherwise
provided by applicable law, any surplus remaining (proper allowance
being made for any Obligations not then due) to the Debtors.
Secured Party shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with
this Agreement. All payments received by any Debtor under or in connection
with any Collateral shall be received in trust for the benefit of Secured
Party, shall be segregated from other funds of any Debtor and shall be
forthwith paid over to Secured Party in the same form as so received (with
any necessary indorsement).
16. Indemnity and Expenses.
(a) The Debtors jointly and severally agree to indemnify Secured
Party from and against any and all claims, losses and liabilities
(including attorneys' fees and appraisal fees) growing out of or resulting
from this Agreement (including, without limitation, enforcement of this
Agreement), expressly including such claims, losses or liabilities arising
out of mere negligence of Secured Party, except claims,
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losses or liabilities resulting from Secured Party's gross negligence or
willful misconduct.
(b) The Debtors jointly and severally agree, upon written demand, to
pay to Secured Party the amount of any and all reasonable expenses,
including the fees and expenses of its counsel and of any appraisers,
experts and agents, which Secured Party may incur in connection with,
without limitation, (i) the administration of this Agreement, (ii) the
custody, preservation, use or operation of, or the sale of, collection
from, or other realization upon, any of the Collateral, (iii) the exercise
or enforcement of any of the rights of Secured Party hereunder or (iv) the
failure by any Debtor to perform or observe any of the provisions hereof.
Any payments so made shall be a part of the Secured Obligations, shall be
payable upon written demand, and shall bear applicable interest at the
interest rate set forth in the Note.
17. Further Approvals Required. In connection with the exercise by Secured
Party of its rights hereunder that effects the disposition of or use of any
Collateral, it may be necessary to obtain the prior consent or approval of
Governmental Authorities and other Persons to a transfer or assignment of
Collateral. Each Debtor hereby agrees to execute, deliver and file, and hereby
appoints (to the extent permitted under Applicable Law) Secured Party as its
attorney upon the occurrence and during the continuation of a Default or Event
of Default, to execute, deliver and file on such Debtor's behalf and in such
Debtor's name, all applications, certificates, filings, instruments and other
documents (including without limitation any application for an assignment or
transfer of control or ownership) that may be necessary or appropriate, in
Secured Party's opinion, to obtain such consents or approvals. Each Debtor
further agrees to use its best efforts to obtain such consents or approvals upon
and after the occurrence of a Default or Event of Default that is continuing.
Each Debtor acknowledges that there is no adequate remedy at law for failure by
it to comply with the provisions of this section and that such failure would not
be adequately compensable in damages, and therefore agrees that this section may
be specifically enforced.
18. Cumulative Rights. All rights of Secured Party under the Investment
Documents are cumulative of each other and of every other right which Secured
Party may otherwise have at law or in equity or under any other contract or
other writing for the enforcement of the security interest herein or the
collection of the Secured Obligations. The exercise of one or more rights shall
not prejudice or impair the concurrent or subsequent exercise of other rights.
19. Modifications: Amendments: Etc. No amendment or waiver of any
provision of this Agreement, and no consent to any departure by any Debtor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by Secured Party, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given;
provided, that a Joinder Agreement may amend this Agreement by adding an
additional Debtor hereunder without Secured Party's signature.
20. Continuing Security Interest; Termination. This Agreement shall create
a continuing security interest in and to all of the Collateral, and the security
interest shall survive until, and this Agreement shall remain in full force and
effect and terminate only upon, the indefeasible payment (including payment in
full in cash in immediately available
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funds in the case of Secured Obligations consisting of payment obligations) and
performance in full of any and all Secured Obligations and the expiration or
earlier termination of all obligations of the Secured Party under this Agreement
and the other Investment Documents.
21. GOVERNING LAW. IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE (WITHOUT REGARD TO THE
CHOICE OF LAW OR CONFLICTS OF LAW PROVISIONS THEREOF), EXCEPT TO THE EXTENT THAT
THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES
HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN CALIFORNIA, IN WHICH EVENT SUCH MATTER SHALL BE GOVERNED
BY THE LAWS OF SUCH OTHER JURISDICTION.
22. Secured Party's Right to Use Agents. Secured Party may exercise its
rights under this Agreement through an agent or other designee. Without limiting
the generality of the foregoing, each Debtor hereby acknowledges that Secured
Party may, in its discretion, appoint one or more financial institutions to act
as Secured Party's agent in holding in custodial account instruments in which
Secured Party is granted a security interest hereunder, including, without
limitation, certificates of deposit and other instruments evidencing short term
obligations.
23. No Interference, Compensation or Expense. Secured Party may exercise
its rights under this Agreement (a) without resistance or interference by any
Debtor except to the extent such Debtor has valid defenses, and (b) without
payment of any rent, license fee or compensation of any kind to any Debtor.
24. Waiver. Should any part of the Secured Obligations be payable in
installments, the acceptance by Secured Party at any time and from time to time
of partial payment of the aggregate amount of all installments then matured
shall not be deemed as a waiver of any Default or Event of Default then
existing. No waiver of any Default or Event of Default shall be deemed to be a
waiver of any other subsequent Default or Event of Default, nor shall any such
waiver be deemed to be a continuing waiver. No delay or omission by Secured
Party in exercising any right hereunder, or under any other Investment
Documents, shall impair any such right or be construed as a waiver thereof or
any acquiescence therein, nor shall any single or partial exercise of any such
right preclude other or further exercise thereof, or the exercise of any other
right of Secured Party hereunder or under such other agreements.
25. Waivers by Debtors. Each Debtor waives notice of the creation,
advance, increase, existence, extension, or renewal of, or of any indulgence
with respect to, the Secured Obligations; waives presentment, demand, notice of
dishonor, and protest; and waives notice of the amount of the Secured
Obligations outstanding at any time, notice of any change in financial condition
of any Subsidiary. The foregoing sentence, however, is
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not intended to relieve Security Party of its obligation to give certain notices
as required by the terms of the Investment Documents. Each Debtor waives (a) any
claim that, as to any part of the Collateral, a public sale, should Secured
Party elect so to proceed, is, in and of itself, not a commercially reasonable
method of sale for such Collateral, (b) except as otherwise provided in this
Agreement, TO THE EXTENT PERMITTED BY APPLICABLE LAW, NOTICE OR JUDICIAL HEARING
IN CONNECTION WITH SECURED PARTY'S DISPOSITION OF ANY OF THE COLLATERAL
INCLUDING ANY AND ALL PRIOR NOTICE AND HEARING FOR ANY PREJUDGMENT REMEDY OR
REMEDIES AND ANY SUCH RIGHT THAT COMPANY WOULD OTHERWISE HAVE UNDER THE
CONSTITUTION OR ANY STATUTE OF THE UNITED STATES OR OF ANY STATE, AND ALL OTHER
REQUIREMENTS AS TO THE TIME, PLACE AND TERMS OF SALE OR OTHER REQUIREMENTS WITH
RESPECT TO THE ENFORCEMENT OF SECURED PARTY'S RIGHTS HEREUNDER, and (c) all
rights of redemption, appraisal or valuation. To the maximum extent permitted by
Applicable Law, each Debtor waive all claims, damages, and demands against
Secured Party, its Affiliates, agents, and the officers and employees of any of
them arising out of the repossession, retention, or sale of any Collateral
except such as are determined in a final judgment by a court of competent
jurisdiction to have arisen solely out of the gross negligence or willful
misconduct of any such Person. Each Debtor agrees that ten days' prior notice by
Secured Party to the Debtors of the time and place of any public sale or of the
time after which a private sale may take place is reasonable notification of
such matters.
26. Other Parties and Other Collateral. No renewal, increase, or extension
of or any other indulgence with respect to, the Secured Obligations or any part
thereof, no release, exchange, or taking of any security, no release of any
Person (including any Subsidiary, maker, endorser, guarantor, or surety) liable
on the Secured Obligations, no delay in enforcement of payment, no delay or
omission or lack of diligence or care in exercising any right or power with
respect to the Secured Obligations or any security therefor or guaranty thereof
or under this Agreement, and no other circumstance or event which might
constitute a defense available to or discharge of any Debtor or any other
Person, shall in any manner impair or affect the rights of Secured Party
hereunder, under any other Investment Documents, at law, or in equity. Secured
Party need not file suit or assert a claim for personal judgment against any
Person for any part of the Secured Obligations or seek to realize upon any other
security for the Secured Obligations, before foreclosing upon the Collateral for
the purpose of paying the Secured Obligations. Each Debtor waives any right to
the benefit of or to require or control application of any other security or
proceeds thereof, and agrees that Secured Party shall not have any duty or
obligation to any Debtor to apply any such other security or proceeds thereof to
the Secured Obligations. Each Debtor hereby waives all rights by which it might
be entitled to require suit on an accrued right of action in respect of any of
the Secured Obligations or require suit against any Debtor or others.
27. Notices. All notices, requests, demands and other communications which
are required or may be given under this Agreement shall be in writing and shall
be deemed to have been duly given if transmitted by telecopier with receipt
acknowledged, or upon delivery, if delivered personally or by recognized
commercial courier with receipt acknowledged, or upon the expiration of 72 hours
after mailing, if mailed by registered or
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certified mail, return receipt requested, postage prepaid, addressed as set
forth in Section 12.7 of the Securities Purchase Agreement.
28. Parties Bound; No Assignment. This Agreement shall be binding on the
Debtors and their respective successors, assigns, and other legal
representatives, and shall bind and inure to the benefit of Secured Party, and
its successors and assigns; provided, however, that no Debtor may assign its
rights or delegate its obligations hereunder without the prior written consent
of Secured Party. The rights, powers, and interests held by Secured Party
hereunder may be transferred or assigned, in whole or in part, in accordance
with the Securities Purchase Agreement and the Intercreditor Agreement.
29. Definitions. Unless the context indicates otherwise or the terms are
otherwise defined herein, definitions in the UCC apply to words and phrases in
this Agreement. Each of the terms "Company," "Overhill Ventures," and "Debtors"
includes such Person, such Person's heirs, successors and assigns, such Person
as a debtor-in-possession, and any receiver, trustee, liquidator, conservator,
custodian, or similar party appointed for such Person or all or substantially
all of its assets under any Applicable Law.
30. Severability. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future Applicable Laws
during the term thereof, such provision shall be fully severable, this Agreement
shall be construed and enforced as if such illegal, invalid, or unenforceable
provision had never comprised a part thereof, and the remaining provisions
thereof shall remain in fill force and effect and shall not be affected by the
illegal, invalid, or unenforceable provision or by its severance therefrom.
Furthermore, in lieu of such illegal, invalid, or unenforceable provision there
shall be added automatically as a part of this Agreement a legal, valid, and
enforceable provision as similar in terms to the illegal, invalid, or
unenforceable provision as may be possible.
31. Control. Notwithstanding anything herein to the contrary, this
Agreement and the transactions contemplated hereby do not and shall not
constitute, create, or have the effect of constituting or creating, directly or
indirectly, actual or practical ownership by Secured Party of any Debtor or any
issuer of the Collateral, or control, affirmative or negative, direct or
indirect, by Secured Party over the management or any aspect of the day-to-day
operation of any Debtor or any such issuer, which control remains in each
Debtor, each such issuer, and their respective boards of directors, partners and
officers (as appropriate); provided, however, that if Secured Party becomes the
owner of any partnership interest, or other equity or ownership interest in any
entity whether through foreclosure or otherwise, it shall be entitled to
exercise such legal rights as it may have by being an owner of such partnership
interest or other equity or ownership interest.
32. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument.
33. Entire Agreement. This Agreement represents the final agreement
between the parties with respect to the subject matter hereof and supersedes any
prior oral or written, or any contemporaneous oral, agreements or understandings
of the parties. There are no unwritten oral agreements among the parties.
Nothing in this Agreement or in the other
-26-
Investment Document, expressed or implied, is intended to confer upon any party
other than the parties hereto or thereto any rights, remedies, Secured
Obligations or liabilities under or by reason of this Agreement or the other
Investment Documents.
34. Reinstatement. The provisions of this Agreement shall remain in full
force and effect and continue to be effective even if: (a) any petition is filed
by or against any Debtor or any Subsidiary of any Debtor for liquidation or
reorganization; (b) any Debtor or any Subsidiary of any Debtor becomes insolvent
or makes an assignment for the benefit of creditors; (c) a receiver or trustee
is appointed for all or any significant part of the assets of any Debtor or any
Subsidiary of any Debtor; or (d) at any time payment and performance of the
Secured Obligations, or any part thereof, is, pursuant to Applicable Law,
rescinded or reduced in amount or must otherwise be restored or returned by any
obligee of the Secured Obligations, whether as a "voidable preference,"
"fraudulent transfer," or otherwise, all as though such payment or performance
had not been made. In the event that any payment or any part thereof is
rescinded, reduced, restored, or returned, the Secured Obligations and Secured
Party's Liens in the Collateral shall be reinstated and deemed reduced only by
any amount paid and not so rescinded, reduced, restored, or returned.
35. Governing Law. THIS AGREEMENT AND THE OBLIGATIONS OF THE PLEDGOR
HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF CALIFORNIA (WITHOUT REFERENCE TO CONFLICT OF LAWS).
36. Survival of Agreement. All covenants, agreements, representations and
warranties made by the Debtors herein and in the certificates or other
instruments prepared or delivered in connection with or pursuant to this
Agreement shall be considered to have been relied upon by Secured Party and
shall survive the execution and delivery to Secured Party of the Notes pursuant
to the Securities Purchase Agreement, regardless of any investigation made by
Secured Party, and shall continue in full force and effect as long as any
Secured Obligation is outstanding and unpaid.
37. Amendment and Restatement. Effective on and as of the Effective Date,
this Agreement shall supersede the Company Security Agreement and the Ventures
Security Agreement insofar as they are inconsistent with this Agreement.
However, the execution and delivery of this Agreement shall not excuse, or
constitute a waiver of, any Defaults or Events of Default under the Company
Security Agreement and the Ventures Security Agreement, it being understood that
this Agreement is not a termination of the Company Security Agreement or the
Ventures Security Agreement but is a modification (and, as modified, a
continuation) thereof. The Company and the other Debtors acknowledge and agree
that the Company Security Agreement and the Ventures Security Agreement, in each
case as amended and restated hereby, are affirmed in all respects and that the
first-priority liens and security interests granted thereunder are continued
hereby and under the Company Pledge Agreement and the PTC Security Agreement.
38. Waiver of Jury Trial. EACH PARTY HEREBY KNOWINGLY, INTENTIONALLY AND
VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, WAIVES, RELINQUISHES
AND FOREVER FORGOES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION, SUIT OR OTHER
PROCEEDING
-27-
BASED UPON, ARISING OUT OF OR IN ANY WAY RELATING TO (a) THIS AGREEMENT, THE
SECURITIES PURCHASE AGREEMENT OR ANY OTHER INVESTMENT DOCUMENT, INCLUDING ANY
PRESENT OR FUTURE AMENDMENT THEREOF, OR ANY OF THE TRANSACTIONS CONTEMPLATED BY
OR RELATED TO THIS AGREEMENT OR ANY OTHER INVESTMENT DOCUMENT, OR (b) ANY
CONDUCT, ACT OR OMISSION OF THE PARTIES OR THEIR AFFILIATES (OR ANY OF THEM)
WITH RESPECT TO THIS AGREEMENT, THE SECURITIES PURCHASE AGREEMENT OR ANY OTHER
INVESTMENT DOCUMENT, INCLUDING ANY PRESENT OR FUTURE AMENDMENT THEREOF, WHETHER
SOUNDING IN CONTRACT, TORT OR OTHERWISE, REGARDLESS OF WHICH PARTY INITIATES
SUCH ACTION, SUIT OR OTHER PROCEEDING; AND EACH PARTY HEREBY AGREES AND CONSENTS
THAT ANY SUCH ACTION, SUIT OR OTHER PROCEEDING SHALL BE DECIDED BY A COURT TRIAL
WITHOUT A JURY, AND THAT ANY PARTY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF
THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES TO
THE WAIVER OF ANY RIGHT THEY MIGHT OTHERWISE HAVE TO TRIAL BY JURY.
[REST OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Debtors and Secured Party have caused this
Agreement to be duly executed and delivered as of the date first above written.
DEBTORS
OVERHILL FARMS, INC., a Nevada corporation
By: ____________________________
Xxxxx Xxxxx
President and Chief Executive Officer
By: ____________________________
Xxxxxxx X. Xxxxxxx
Vice President and Chief Financial Officer
OVERHILL L.C. VENTURES, INC., a California corporation
By: ____________________________
Xxxxx Xxxxx
President
By: ____________________________
Xxxxxxx X. Xxxxxxx
Vice President and Chief Financial Officer
SECURED PARTY
XXXXXX XXXXXXXXX CAPITAL PARTNERS II, L.P., a
California limited partnership
By: LLCP California Equity Partners II, L.P., a
California limited partnership, its General
Partner
By: Xxxxxx Xxxxxxxxx Capital Partners, Inc.,
a California corporation, its General Partner
By:________________________
Xxxxxx X. Xxxxxx
President
-29-
Exhibit A to
Amended and Restated Security Agreement
FORM OF
JOINDER AGREEMENT
JOINDER AGREEMENT, dated as of ________________,20__, made by
___________________________________ (the "Additional Debtor"), in favor of,
XXXXXX XXXXXXXXX CAPITAL PARTNERS, II, L.P., a California limited partnership,
its successors and assigns, as Secured Party (in such capacity, "Secured Party")
in connection with the Securities Purchase Agreement referred to below. All
capitalized terms not defined herein shall have the respective meanings ascribed
to them in such Securities Purchase Agreement.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Overhill Farms, Inc., a Nevada corporation ("Company"), the
entities from time to time parties thereto as Guarantors and Secured Party have
entered into that certain Amended and Restated Securities Purchase Agreement
dated as of ___________, 2002 (as amended from time to time, thc "Securities
Purchase Agreement");
WHEREAS, in connection with the Securities Purchase Agreement, Company,
Overhill Ventures and their Subsidiaries (other than the Additional Debtor) have
entered into the Amended and Restated Security Agreement dated as of
___________, 200__ (as amended from time to time, the "Security Agreement") in
favor of Secured Party;
WHEREAS, the Securities Purchase Agreement requires the Additional Debtor
to become a party to the Security Agreement;
WHEREAS, Company, Overhill Ventures, and their Subsidiaries are members of
a consolidated group of entities whose success is mutually interdependent, and
each of the Company, Overhill Ventures, and their Subsidiaries has derived, and
expects to continue to derive, substantial direct and indirect benefits from the
proceeds of the borrowings made available to the Company under the Note; and
WHEREAS, the Additional Debtor has agreed to execute and deliver this
Joinder Agreement in order to become a party to the Security Agreement.
NOW, THEREFORE, IT IS AGREED:
1. Security Agreement. By executing and delivering this Joinder
Agreement, the Additional Debtor, as provided in Section 7(h) of the Security
Agreement, hereby becomes a party to the Security Agreement as a Debtor
thereunder with the same force and effect as if originally named therein as a
Debtor and, without limiting thc generality of the foregoing, hereby expressly
assumes all obligations and liabilities of a Debtor thereunder. Without limiting
the generality of the foregoing, the Additional Debtor hereby assigns, pledges
and grants to Secured Party a continuing security interest (subject, as to
priority, only to the Senior Liens and Permitted Liens to the extent entitled to
priority by Applicable Law) in and to all of the Additional Debtor's right,
title and interest to Collateral. The
-2-
information set forth in Annex 1-A hereto is hereby added to the information set
forth in the Schedules to the Security Agreement. The Additional Debtor hereby
represents and warrants that each of the representations and warranties
contained in Section 6 of the Security Agreement is true and correct on and as
the date hereof (after giving effect to this Joinder Agreement) as if made on
and as of such date.
2. The Additional Debtor hereby represents and warrants that the
representations, warranties and acknowledgments in the Securities Purchase
Agreement or the Security Agreement, as the case may be, made by or with respect
to the Additional Debtor are true and correct in all material respects on and of
the date hereof as though made on and as of the date hereof, and further
represents and warrants that:
(a) The Additional Debtor is a corporation duly organized, validly
existing and in good standing under the laws of the State of ________;
(b) The Additional Debtor has all requisite power and authority to own
and hold or lease the properties it purports to own, hold or lease, to
carry on its business as currently conducted and as proposed to be
conducted and to enter into and deliver this Joinder Agreement and perform
its obligations hereunder and under the PTC Security Agreement; and
(c) This Additional Debtor and the Security Agreement constitute the
legal, valid and binding obligations of the Additional Debtor, enforceable
against the Additional Debtor in accordance with their respective terms.
3. Binding Effect. This Joinder Agreement shall be binding upon, and
inure to the benefit of, the Additional Debtor and its successors and permitted
assigns.
4. Governing Law. THIS JOINDER AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
CALIFORNIA.
IN WITNESS WHEREOF, the undersigned has caused this Joinder Agreement to be
duly executed and delivered as of the date first above written.
[ADDITIONAL DEBTOR]
By: _______________________________
Name:
Title:
-3-
Annex 1-A to
Joinder Agreement
Supplement to Schedule 1
Supplement to Schedule 2
Supplement to Schedule 3
