EXHIBIT 10.2
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of April 8, 2008 (this "AGREEMENT"), made by
each of the parties set forth on the signature pages hereto (each a "GRANTOR",
and collectively, the "GRANTORS"), in favor of SMITHFIELD FIDUCIARY LLC, a
company organized under the laws of the Cayman Islands, in its capacity as
collateral agent (in such capacity, the "COLLATERAL AGENT") to the Secured
Parties (as defined below).
W I T N E S S E T H:
WHEREAS, InkSure Technologies Inc., a Delaware corporation, (the
"COMPANY"), pursuant to that certain Securities Purchase Agreement, dated as of
September 30, 2005 (the "EXISTING PURCHASE AGREEMENT") issued and sold certain
Convertible Notes (the "EXISTING NOTES").
The Company and certain investors (the "INVESTORS") are entering into
Amendment, Exchange and Purchase Agreements dated the date hereof (collectively,
the "EXCHANGE AGREEMENTS"), pursuant to which, among other things, (i) the
Existing Notes shall be amended and restated pursuant to the "Amended Notes" (as
defined therein) and (ii) the Company shall agree to sell, and the Investors
shall agree to purchase certain additional "New Notes" (as defined therein) (the
"NEW NOTES", and collectively with the Amended Notes and as each may be amended,
restated, replaced or otherwise modified from time to time in accordance with
the terms thereof, the "NOTES").
WHEREAS, each of the Grantors (other than the Company) (each a "GUARANTOR"
and collectively, the "GUARANTORS") has executed and delivered a Guaranty, dated
the date hereof (as amended, restated, supplemented, replaced, modified or
otherwise changed from time to time, the "GUARANTY"), in favor of the Secured
Parties, to guarantee the Company's obligations under the Existing Purchase
Agreement, the Exchange Agreements, the Notes and the Transaction Documents (as
defined below);
WHEREAS, it is a condition precedent to each of the Investors entering into
the Exchange Agreements that the Grantors execute and deliver this Agreement
providing for the grant of a first priority perfected security interest in all
of the property and assets of each Grantor to secure all of the Company's
obligations under the Existing Purchase Agreement, the Exchange Agreements, the
Notes, and the other Transaction Documents and the each Grantor's obligations
under the Guaranty; and
WHEREAS, the Grantors have determined that the execution, delivery and
performance of this Agreement directly benefits, and is in the best interest of,
the Grantors;
NOW, THEREFORE, in consideration of the premises and the agreements herein
and in order to induce each of the Secured Parties to enter into the
transactions under the Exchange Agreements, each Grantor agrees as follows:
SECTION 1. DEFINITIONS.
(a) Reference is hereby made to the Exchange Agreements and the Notes for a
statement of the terms thereof. All terms used in this Agreement and the
recitals hereto which are defined in the Existing Purchase Agreement, the
Exchange Agreements, the Notes or in Articles 8 or 9 of the Uniform Commercial
Code as in effect from time to time in the State of New York (the "CODE"), and
which are not otherwise defined herein shall have the same meanings herein as
set forth therein; PROVIDED that terms used herein which are defined in the Code
as in effect in the State of New York on the date hereof shall continue to have
the same meaning notwithstanding any replacement or amendment of such statute.
(b) The following terms shall have the respective meanings provided for in
the Code: "Accounts", "Cash Proceeds", "Chattel Paper", "Commercial Tort Claim",
"Commodity Account", "Commodity Contracts", "Deposit Account", "Documents",
"Equipment", "Fixtures", "General Intangibles", "Goods", "Instruments",
"Inventory", "Investment Property", "Letter-of-Credit Rights", "Noncash
Proceeds", "Payment Intangibles", "Proceeds", "Promissory Notes", "Security",
"Record", "Security Account", "Software", and "Supporting Obligations".
(c) As used in this Agreement, the following terms shall have the
respective meanings indicated below, such meanings to be applicable equally to
both the singular and plural forms of such terms:
"COLLATERAL" means collectively, the Joint Collateral and the New Note
Collateral.
"COLLATERAL ACCOUNT" means a deposit account number 00-000000-00 maintained
by the Company at Bank Leumi USA.
"COPYRIGHT LICENSES" means all licenses, contracts or other agreements,
whether written or oral, naming any Grantor as licensee or licensor and
providing for the grant of any right to use or sell any works covered by any
copyright (including, without limitation, all Copyright Licenses set forth in
Part F of SCHEDULE I hereto).
"COPYRIGHTS" means all domestic and foreign copyrights, whether registered
or not, including, without limitation, all copyright rights throughout the
universe (whether now or hereafter arising) in any and all media (whether now or
hereafter developed), in and to all original works of authorship fixed in any
tangible medium of expression, acquired or used by any Grantor (including,
without limitation, all copyrights described in Part F of SCHEDULE I hereto),
all applications, registrations and recordings thereof (including, without
limitation, applications, registrations and recordings in the United States
Copyright Office or in any similar office or agency of the United States or any
other country or any political subdivision thereof), and all reissues,
divisions, continuations, continuations in part and extensions or renewals
thereof.
"EVENT OF DEFAULT" shall have the meaning set forth in the Notes.
"GOVERNMENTAL AUTHORITY" means any nation or government, any Federal,
state, city, town, municipality, county, local or other political subdivision
thereof or thereto and any department, commission, board, bureau,
instrumentality, agency or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.
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"INSOLVENCY PROCEEDING" means any proceeding commenced by or against any
Person under any provision of the Bankruptcy Code (Chapter 11 of Title 11 of the
United States Code) or under any other bankruptcy or insolvency law, assignments
for the benefit of creditors, formal or informal moratoria, compositions, or
extensions generally with creditors, or proceedings seeking reorganization,
arrangement, or other similar relief.
"INTELLECTUAL PROPERTY" means the Copyrights, Trademarks and Patents.
"INTELLECTUAL PROPERTY OFFICES" means, (i) with respect to United States
Copyrights or related Licenses, the United States Copyright Office, (ii) with
respect to United States Trademarks and United States Patents or related
Licenses, the United States Patent and Trademark Office and (iii) with respect
to respect to foreign Intellectual Property and related Licenses, the applicable
offices located in the jurisdictions outside of the United States and covering
rights in such jurisdictions relating to such foreign Intellectual Property and
Licenses.
"JOINT COLLATERAL" shall have the meaning set forth for such term in
Section 2(a) hereof.
"LICENSES" means the Copyright Licenses, the Trademark Licenses and the
Patent Licenses.
"LIEN" means any mortgage, deed of trust, pledge, lien (statutory or
otherwise), security interest, charge or other encumbrance or security or
preferential arrangement of any nature, including, without limitation, any
conditional sale or title retention arrangement, any lease required under GAAP
to be capitalized on the balance sheet of such Person and any assignment,
deposit arrangement or financing lease intended as, or having the effect of,
security.
"NEW NOTE COLLATERAL" means (i) the Collateral Account, all amounts which
may now or hereafter be on deposit in the Collateral Account, including without
limitation, all cash now or hereafter held in the Collateral Account; (ii) all
cash, and other property from time to time received, receivable, or otherwise
distributed in respect thereof or in exchange therefor; and (iii) to the extent
not described above, all Proceeds of any and all of the foregoing New Note
Collateral.
"NEW NOTE HOLDERS" means the holders of the New Notes.
"NEW NOTE OBLIGATIONS" has the meaning set forth for such term in Section
3(b) hereof.
"NOTEHOLDERS" means the Investors and the holders of the Notes.
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"PATENT LICENSES" means all licenses, contracts or other agreements,
whether written or oral, naming any Grantor as licensee or licensor and
providing for the grant of any right to manufacture, use or sell any invention
covered by any Patent (including, without limitation, all Patent Licenses set
forth in Part F of SCHEDULE I hereto).
"PATENTS" means all domestic and foreign letters patent, design patents,
utility patents, industrial designs, inventions, trade secrets, ideas, concepts,
methods, techniques, processes, proprietary information, technology, know-how,
formulae, rights of publicity and other general intangibles of like nature, now
existing or hereafter acquired or used by any Grantor (including, without
limitation, all domestic and foreign letters patent, design patents, utility
patents, industrial designs, inventions, trade secrets, ideas, concepts,
methods, techniques, processes, proprietary information, technology, know-how
and formulae described in Part F of SCHEDULE I hereto), all applications,
registrations and recordings thereof (including, without limitation,
applications, registrations and recordings in the United States Patent and
Trademark Office, or in any similar office or agency of the United States or any
other country or any political subdivision thereof), and all reissues,
divisions, continuations, continuations in part and extensions or renewals
thereof.
"PERSON" means an individual, corporation, limited liability company,
partnership, association, joint-stock company, trust, unincorporated
organization, joint venture or other enterprise or entity or Governmental
Authority.
"SECURED PARTIES" means each of the Collateral Agent and the Investors and
all other Noteholders.
"TRADEMARK LICENSES" means all licenses, contracts or other agreements,
whether written or oral, naming any Grantor as licensor or licensee and
providing for the grant of any right concerning any Trademark, together with any
goodwill connected with and symbolized by any such trademark licenses, contracts
or agreements and the right to prepare for sale or lease and sell or lease any
and all Inventory now or hereafter owned by any Grantor and now or hereafter
covered by such licenses (including, without limitation, all Trademark Licenses
described in Part F of SCHEDULE I hereto).
"TRADEMARKS" means all domestic and foreign trademarks, service marks,
collective marks, certification marks, trade names, business names, d/b/a's,
Internet domain names, trade styles, designs, logos and other source or business
identifiers and all general intangibles of like nature, now or hereafter owned,
adopted, acquired or used by any Grantor (including, without limitation, all
domestic and foreign trademarks, service marks, collective marks, certification
marks, trade names, business names, d/b/a's, Internet domain names, trade
styles, designs, logos and other source or business identifiers described in
Part F of SCHEDULE I hereto), all applications, registrations and recordings
thereof (including, without limitation, applications, registrations and
recordings in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any state thereof or any other country or
any political subdivision thereof), and all reissues, extensions or renewals
thereof, together with all goodwill of the business symbolized by such marks and
all customer lists, formulae and other Records of any Grantor relating to the
distribution of products and services in connection with which any of such marks
are used.
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"TRANSACTION DOCUMENTS" means the Existing Purchase Agreement, the Exchange
Agreements, the Notes, the Guaranty, this Agreement and the other Transaction
Documents as defined in the Existing Purchase Agreement as defined by the
Exchange Agreements.
SECTION 2. GRANT OF SECURITY INTEREST. (a) As collateral security for all
of the Obligations referred to below, each Grantor hereby pledges and assigns to
the Collateral Agent for the benefit of the Secured Parties, and grants to the
Collateral Agent for the benefit of the Secured Parties a continuing security
interest in, all personal property of each Grantor, wherever located and whether
now or hereafter existing and whether now owned or hereafter acquired, of every
kind and description, tangible or intangible (collectively, the "JOINT
COLLATERAL"), including, without limitation, the following:
(i) all Accounts; (ii) all Chattel Paper (whether tangible or electronic);
(iii) the Commercial Tort Claims specified on Part D of SCHEDULE I hereto; (iv)
all Deposit Accounts, all cash and other property from time to time deposited
therein and the monies and property in the possession or under the control of
the Secured Parties or any affiliate, representative, agent or correspondent of
any Secured Party; (v) all Documents; (vi) all Equipment; (vii) all Fixtures;
(viii) all General Intangibles (including, without limitation, all Payment
Intangibles); (ix) all Goods; (x) all Instruments (including, without
limitation, Promissory Notes and each certificated Security); (xi) all
Inventory; (xii) all Investment Property; (xiii) all Copyrights, Patents and
Trademarks, and all Licenses; (xiv) all Letter-of-Credit Rights; (xv) all
Supporting Obligations; (xvi) all other tangible and intangible personal
property of each Grantor (whether or not subject to the Code), including,
without limitation, all bank and other accounts and all cash and all investments
therein, all proceeds, products, offspring, accessions, rents, profits, income,
benefits, substitutions and replacements of and to any of the property of any
Grantor described in the preceding clauses of this Section 2 (including, without
limitation, any proceeds of insurance thereon and all causes of action, claims
and warranties now or hereafter held by each Grantor in respect of any of the
items listed above), and all books, correspondence, files and other Records,
including, without limitation, all tapes, desks, cards, Software, data and
computer programs in the possession or under the control of any Grantor or any
other Person from time to time acting for any Grantor, in each case, to the
extent of such Grantor's rights therein, that at any time evidence or contain
information relating to any of the property described in the preceding clauses
of this Section 2 or are otherwise necessary or helpful in the collection or
realization thereof; and (xvii) all Proceeds, including all Cash Proceeds and
Noncash Proceeds, and products of any and all of the foregoing Joint Collateral;
in each case howsoever any Grantor's interest therein may arise or appear
(whether by ownership, security interest, claim or otherwise).
Notwithstanding anything herein to the contrary, the term "Joint
Collateral" shall not include (i) any New Note Collateral nor (ii) any General
Intangibles or other rights arising under any contracts, instruments, licenses
or other documents as to which the grant of a security interest would (A)
constitute a violation of a valid and enforceable restriction in favor of a
third party on such grant, unless and until any required consents shall have
been obtained, or (B) give any other party to such contract, instrument, license
or other document an enforceable right to terminate its obligations thereunder,
or (iii) any asset, the granting of a security interest in which would be void
or illegal under any applicable governmental law, rule or regulation, or
pursuant thereto would result in, or permit the termination of, such asset
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(b) As collateral security for all of the New Note Obligations referred to
below, the Company hereby pledges and assigns to the Collateral Agent for the
benefit of the New Note Holders, and grants to the Collateral Agent for the
benefit of the New Note Holders a continuing security interest in, the New Note
Collateral, whether now or hereafter existing and whether now owned or hereafter
acquired.
SECTION 3. SECURITY FOR OBLIGATIONS. (a) The security interest created
hereby in the Joint Collateral constitutes continuing collateral security for
all of the following obligations of the respective Grantor, whether now existing
or hereafter incurred (collectively, the "OBLIGATIONS"):
(i) (A) the payment by the Company, as and when due and payable (by
scheduled maturity, required prepayment, acceleration, demand or
otherwise), of all amounts from time to time owing by it in respect of the
Existing Purchase Agreement, the Exchange Agreements, the Notes and the
other Transaction Documents, including, without limitation, all principal
of and interest on the Notes (including, without limitation, all interest
that accrues after the commencement of any Insolvency Proceeding, whether
or not the payment of such interest is unenforceable or is not allowable
due to the existence of such Insolvency Proceeding), and (B) in the case of
any other Grantor, the payment by such Grantor, as and when due and payable
of all "Guaranteed Obligations" under (and as defined in) the Guaranty,
including, without limitation, in both cases, all fees, commissions,
expense reimbursements, indemnifications and all other amounts due or to
become due under any of the Transaction Documents; and
(ii) the due performance and observance by each Grantor of all of its
other obligations from time to time existing in respect of any of the
Transaction Documents, including without limitation, with respect to any
conversion or redemption rights of the Noteholders.
(b) The security interest created hereby in the New Note Collateral
constitutes continuing collateral security for all of the following obligations
of the Company, whether now existing or hereafter incurred (collectively, the
"NEW NOTE OBLIGATIONS"):
(i) the payment by the Company, as and when due and payable (by
scheduled maturity, required prepayment, acceleration, demand or
otherwise), of all amounts from time to time owing by it in respect of the
New Notes, including, without limitation, all principal of and interest on
the New Notes (including, without limitation, all interest that accrues
after the commencement of any Insolvency Proceeding, whether or not the
payment of such interest is unenforceable or is not allowable due to the
existence of such Insolvency Proceeding); and
(ii) the due performance and observance by the Company of all of its
other obligations from time to time existing in respect of any of the New
Notes, including without limitation, with respect to any conversion or
redemption rights of the New Note Holders under the New Notes.
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SECTION 4. REPRESENTATIONS AND WARRANTIES. Each Grantor represents and
warrants as of the date of this Agreement as follows:
(a) Part A of SCHEDULE I hereto sets forth (i) the exact legal name of each
Grantor, and (ii) the state of incorporation, organization or formation and the
organizational identification number of each Grantor in such state.
(b) There is no pending or threatened action, suit, proceeding or claim
affecting any Guarantor before any Governmental Authority or any arbitrator, or
any order, judgment or award issued by any Governmental Authority or arbitrator,
in each case, that would reasonably be expected to adversely affect the grant by
any Grantor, or the perfection, of the security interest purported to be created
hereby in the Collateral, or the exercise by the Collateral Agent of any of its
rights or remedies hereunder.
(c) All Federal, state and local tax returns and other reports required by
applicable law to be filed by any Grantor have been filed, or extensions have
been obtained, and all taxes, assessments and other governmental charges imposed
upon any Grantor or any property of any Grantor (including, without limitation,
all federal income and social security taxes on employees' wages) and which have
become due and payable on or prior to the date hereof have been paid, except to
the extent contested in good faith by proper proceedings which stay the
imposition of any penalty, fine or Lien resulting from the non-payment thereof
and with respect to which adequate reserves have been set aside for the payment
thereof in accordance with generally accepted accounting principles consistently
applied ("GAAP").
(d) All Equipment, Fixtures, Goods and Inventory of each Grantor now
existing are, and all Equipment, Fixtures, Goods and Inventory of each Grantor
hereafter existing will be, located and/or based at the addresses specified
therefor in Part B of SCHEDULE I hereto, except that each Grantor will give the
Collateral Agent written notice of any change in the location of any such
Collateral within 20 days of such change, other than to locations set forth on
Part B of SCHEDULE I hereto (or a new Part B of SCHEDULE I delivered by the
Grantors to the Collateral Agent from time to time) and with respect to which
the Collateral Agent has filed financing statements and otherwise fully
perfected its Liens thereon or will take such actions pursuant to Section 5(n).
Each Grantor's chief place of business and chief executive office, the place
where each Grantor keeps its Records concerning Accounts and all originals of
all Chattel Paper are located at the addresses specified therefor in Part B of
SCHEDULE I hereto. None of the Accounts is evidenced by Promissory Notes or
other Instruments. Set forth in Part E of SCHEDULE I hereto is a complete and
accurate list, as of the date of this Agreement, of (i) each Promissory Note,
Security and other Instrument owned by each Grantor and (ii) each Deposit
Account, Securities Account and Commodities Account of each Grantor, together
with the name and address of each institution at which each such account is
maintained, the account number for each such account and a description of the
purpose of each such account. Set forth in Part G of SCHEDULE I hereto is a
complete and correct list of each trade name used by each Grantor.
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(e) Each Grantor has delivered to the Collateral Agent complete and correct
copies of each License described in Part F of SCHEDULE I hereto, including all
schedules and exhibits thereto, which represents all of the Licenses existing on
the date of this Agreement. Each such License sets forth the entire agreement
and understanding of the parties thereto relating to the subject matter thereof,
and there are no other agreements, arrangements or understandings, written or
oral, relating to the matters covered thereby or the rights of such Grantor or
any of its affiliates in respect thereof. Each material License now existing is,
and any material License entered into in the future will be, the legal, valid
and binding obligation of the parties thereto, enforceable against such parties
in accordance with its terms. No default under any material License by any
Grantor or to any Grantor's knowledge, any other party thereto has occurred, nor
does any defense, offset, deduction or counterclaim exist thereunder in favor of
any such party.
(f) Each Grantor owns and controls, or otherwise possesses adequate rights
to use, all Intellectual Property, which are the only trademarks, patents,
copyrights, inventions, trade secrets, proprietary information and technology,
know-how, formulae, rights of publicity necessary to conduct its business in
substantially the same manner as conducted as of the date hereof. Part F of
SCHEDULE I hereto sets forth a true and complete list of all registered
copyrights, issued Patents, Trademarks, and Licenses owned or used by each
Grantor as of the date hereof. To the best knowledge of each Grantor, all such
Intellectual Property of each Grantor is subsisting and in full force and
effect, has not been adjudged invalid or unenforceable and has not been
abandoned in whole or in part. Except as set forth in Part F of SCHEDULE I, no
such Intellectual Property is the subject of any licensing or franchising
agreement. Each Grantor has no knowledge of any conflict with the rights of
others to any such Intellectual Property and, to the knowledge of each Grantor,
the Intellectual Property is not now infringing or in conflict with any such
rights of others in any material respect, and to the knowledge of each Grantor,
no other Person is now infringing or in conflict in any material respect with
any of the Intellectual Property. No Grantor has received any notice that it is
violating or has violated the trademarks, patents, copyrights, inventions, trade
secrets, proprietary information and technology, know-how, formulae, rights of
publicity or other intellectual property rights of any third party.
(g) Each Grantor is and will be at all times the sole and exclusive owner
of, or otherwise has and will have adequate rights in, the Collateral free and
clear of any Liens, except for Permitted Liens, provided, that the Company shall
not create or grant any Lien upon the New Note Collateral. No effective
financing statement or other instrument similar in effect covering all or any
part of the Collateral is on file in any recording or filing office, except such
as may have been filed in favor of the Collateral Agent for the benefit of the
Secured Parties relating to this Agreement or the other Security Documents.
(h) The exercise by the Collateral Agent of any of its rights and remedies
hereunder will not contravene any law or any contractual restriction binding on
or otherwise affecting each Grantor or any of its properties and will not result
in or require the creation of any Lien upon or with respect to any of its
properties.
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(i) No authorization or approval or other action by, and no notice to or
filing with, any Governmental Authority or other regulatory body, is required
for (i) the grant by each Grantor, or the perfection, of the security interest
purported to be created hereby in the Collateral, or (ii) the exercise by the
Collateral Agent of any of its rights and remedies hereunder, except (A) for the
filing under the Uniform Commercial Code as in effect in the applicable
jurisdiction of the financing statements described in Part C of SCHEDULE I
hereto (or a new Part C of SCHEDULE I delivered by the Grantors to the
Collateral Agent from time to time), all of which financing statements have been
duly filed and are in full force and effect or will be duly filed and in full
force and effect, (B) with respect to Deposit Accounts, and all cash and other
property from time to time deposited therein, or Commodity Contracts for the
execution of a control agreement with the depository institution or commodity
intermediary with which such account is maintained, each as provided in Section
5(i), (C) with respect to the perfection of the security interest created hereby
in the Intellectual Property and Licenses, for the recording of the appropriate
Assignment for Security, substantially in the form of EXHIBIT A hereto in the
applicable Intellectual Property Office, (D) with respect to the perfection of
the security interest created hereby in Titled Collateral, for the submission of
an appropriate application requesting that the Lien of the Collateral Agent be
noted on the Certificate of Title or certificate of ownership, completed and
authenticated by the applicable Grantor, together with the Certificate of Title
or certificate of ownership, with respect to such Titled Collateral, to the
appropriate Governmental Authority, (E) with respect to the perfection of the
security interest created hereby in any Letter-of-Credit Rights, for the consent
of the issuer of the applicable letter of credit to the assignment of proceeds
as provided in the Uniform Commercial Code as in effect in the applicable
jurisdiction, (F) with respect to any action that may be necessary to obtain
control of Collateral constituting Electronic Chattel Paper or Investment
Property, the taking of such actions, and (G) the Collateral Agent having
possession of all Documents, Chattel Paper, Instruments and cash constituting
Collateral (subclauses (A), (B), (C), (D), (E), (F) and (G), each a "PERFECTION
REQUIREMENT" and collectively, the "PERFECTION REQUIREMENTS").
(j) This Agreement creates in favor of the Collateral Agent a legal, valid
and enforceable security interest in (i) the Joint Collateral, as security for
the Obligations and (ii) the New Note Collateral, as security for the New Note
Obligations. The Perfection Requirements result in the perfection of such
security interests. Such security interests are, or in the case of Collateral in
which each Grantor obtains rights after the date hereof, will be, perfected,
first priority security interests, subject only to Permitted Liens and to the
Perfection Requirements, provided, that the Company shall not create or grant
any Lien upon the New Note Collateral. Such recordings and filings and all other
action necessary to perfect and protect such security interest have been duly
taken, and, in the case of Collateral in which each Grantor obtains rights after
the date hereof, will be duly taken, except for the Collateral Agent's having
possession of all Documents, Chattel Paper, Instruments and cash constituting
Collateral after the date hereof and the other actions, filings and recordations
described above, including the Perfection Requirements.
(k) As of the date hereof, no Grantor holds any Commercial Tort Claims or
has knowledge of any pending Commercial Tort Claims, except for such Commercial
Tort Claims described in Part D of SCHEDULE I hereto.
SECTION 5. COVENANTS AS TO THE COLLATERAL. So long as any of the
Obligations shall remain outstanding, unless the Collateral Agent shall
otherwise consent in writing:
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(a) FURTHER ASSURANCES. Each Grantor will at its expense, at any time and
from time to time, promptly execute and deliver all further instruments and
documents and take all further action that the Collateral Agent may reasonably
request in order to: (i) perfect and protect the security interest purported to
be created hereby; (ii) enable the Collateral Agent to exercise and enforce its
rights and remedies hereunder in respect of the Collateral; or (iii) otherwise
effect the purposes of this Agreement, including, without limitation: (A)
marking conspicuously all Chattel Paper and each License and, at the request of
the Collateral Agent, each of its Records pertaining to the Collateral with a
legend, in form and substance satisfactory to the Collateral Agent, indicating
that such Chattel Paper, License or Collateral is subject to the security
interest created hereby, (B) delivering and pledging to the Collateral Agent
each Promissory Note, Security, Chattel Paper or other Instrument, now or
hereafter owned by any Grantor, duly endorsed and accompanied by executed
instruments of transfer or assignment, all in form and substance satisfactory to
the Collateral Agent, (C) executing and filing (to the extent, if any, that any
Grantor's signature is required thereon) or authenticating the filing of, such
financing or continuation statements, or amendments thereto, as may be necessary
or that the Collateral Agent may reasonably request in order to perfect and
preserve the security interest purported to be created hereby, (D) furnishing to
the Collateral Agent from time to time statements and schedules further
identifying and describing the Collateral and such other reports in connection
with the Collateral in each case as the Collateral Agent may reasonably request,
all in reasonable detail, (E) if any Collateral shall be in the possession of a
third party, notifying such Person of the Collateral Agent's security interest
created hereby and obtaining a written acknowledgment from such Person that such
Person holds possession of the Collateral for the benefit of the Collateral
Agent, which such written acknowledgement shall be in form and substance
reasonably satisfactory to the Collateral Agent, (F) if at any time after the
date hereof, any Grantor acquires or holds any Commercial Tort Claim, promptly
notifying the Collateral Agent in a writing signed by such Grantor setting forth
a brief description of such Commercial Tort Claim and granting to the Collateral
Agent a security interest therein and in the proceeds thereof, which writing
shall incorporate the provisions hereof and shall be in form and substance
satisfactory to the Collateral Agent, (G) upon the acquisition after the date
hereof by any Grantor of any motor vehicle or other Equipment subject to a
certificate of title or ownership (other than a Motor Vehicle or Equipment that
is subject to a purchase money security interest), causing the Collateral Agent
to be listed as the lienholder on such certificate of title or ownership and
delivering evidence of the same to the Collateral Agent in accordance with
Section 5(j) hereof; and (H) taking all actions required by other law in any
relevant Uniform Commercial Code jurisdiction, or by other law as applicable in
any foreign jurisdiction.
(b) LOCATION OF EQUIPMENT AND INVENTORY. Each Grantor will keep the
Equipment and Inventory (i) at the locations specified therefor on Part B of
SCHEDULE I hereto, or (ii) at such other locations set forth on Part B of
SCHEDULE I hereto (or a new Part B of SCHEDULE I delivered by the Grantors to
Collateral Agent from time to time) and with respect to which the Collateral
Agent has filed financing statements and otherwise fully perfected its Liens
thereon, or (iii) at such other locations in the United States, provided that
within 20 days following the relocation of Equipment or Inventory to such other
location or the acquisition of Equipment or Inventory, such Grantor shall
deliver to the Collateral Agent a new Part B of SCHEDULE I indicating such new
locations.
(c) CONDITION OF EQUIPMENT. Each Grantor will maintain or cause the
Equipment (necessary or useful to its business) to be maintained and preserved
in good condition, repair and working order, ordinary wear and tear excepted,
and will forthwith, or in the case of any loss or damage to any Equipment of any
Grantor within a commercially reasonable time after the occurrence thereof, make
or cause to be made all repairs, replacements and other improvements in
connection therewith which are necessary or desirable, consistent with past
practice, or which the Collateral Agent may request to such end. Any Grantor
will promptly furnish to the Collateral Agent a statement describing in
reasonable detail any such loss or damage in excess of $250,000 per occurrence
to any Equipment.
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(d) TAXES, ETC. Each Grantor agrees to pay promptly when due all property
and other taxes, assessments and governmental charges or levies imposed upon,
and all claims (including claims for labor, materials and supplies) against, the
Equipment and Inventory, except to the extent the validity thereof is being
contested in good faith by proper proceedings which stay the imposition or
enforcement of any penalty, fine or Lien resulting from the non-payment thereof
and with respect to which adequate reserves in accordance with GAAP have been
set aside for the payment thereof.
(e) INSURANCE.
(i) Each Grantor will, at its own expense, maintain insurance
(including, without limitation, commercial general liability and property
insurance) in such amounts, against such risks, in such form and with
responsible and reputable insurance companies or associations as is
required by any Governmental Authority having jurisdiction with respect
thereto or as is carried generally in accordance with sound business
practice by companies in similar businesses similarly situated. To the
extent requested by the Collateral Agent at any time and from time to time,
each such policy for liability insurance shall provide for all losses to be
paid on behalf of the Collateral Agent and any Grantor as their respective
interests may appear. To the extent requested by the Collateral Agent at
any time and from time to time, each such policy shall (A) name the
Collateral Agent as an additional insured party thereunder (without any
representation or warranty by or obligation upon the Collateral Agent) as
its interests may appear, (B) provide that there shall be no recourse
against the Collateral Agent for payment of premiums or other amounts with
respect thereto, and (C) provide that at least 30 days' prior written
notice of cancellation, lapse, expiration or other adverse change shall be
given to the Collateral Agent by the insurer. Any Grantor will, if so
requested by the Collateral Agent, deliver to the Collateral Agent original
or duplicate policies of such insurance. Any Grantor will also, at the
request of the Collateral Agent, execute and deliver instruments of
assignment of such insurance policies and cause the respective insurers to
acknowledge notice of such assignment.
(ii) Reimbursement under any liability insurance maintained by any
Grantor pursuant to this Section 5(e) may be paid directly to the Person
who shall have incurred liability covered by such insurance. During the
continuance of an Event of Default, any proceeds of property insurance
maintained by any Grantor pursuant to this Section 5(e) shall be paid to
the Collateral Agent, and, at the Collateral Agent's option exercised in
its sole discretion, the Collateral Agent, may make or may cause the
Grantor to make, necessary repairs to or replacements, and if made by
Grantor, any proceeds of insurance maintained by any Grantor pursuant to
this Section 5(e) shall be paid by the Collateral Agent to any Grantor as
reimbursement for the costs of such repairs or replacements.
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(f) PROVISIONS CONCERNING THE ACCOUNTS AND THE LICENSES.
(i) Each Grantor will (A) give the Collateral Agent at least 30 days'
prior written notice of any change in such Grantor's name, identity or
organizational structure, (B) maintain its jurisdiction of incorporation,
organization or formation as set forth in Part A of SCHEDULE I hereto, (C)
immediately notify the Collateral Agent upon obtaining an organizational
identification number, if on the date hereof such Grantor did not have such
identification number, and (D) keep adequate records concerning the
Accounts, in accordance with the Existing Purchase Agreement and Chattel
Paper.
(ii) Each Grantor will, except as otherwise provided in this
subsection (f), continue to collect, at its own expense, all amounts due or
to become due under the Accounts. In connection with such collections, any
Grantor may (and, upon the occurrence and during the continuance of an
Event of Default, at the Collateral Agent's direction, will) take such
action as any Grantor or the Collateral Agent may deem necessary or
advisable to enforce collection or performance of the Accounts; provided,
however, that the Collateral Agent shall have the right at any time, upon
the occurrence and during the continuance of an Event of Default, to notify
the account debtors or obligors under any Accounts of the assignment of
such Accounts to the Collateral Agent and to direct such account debtors or
obligors to make payment of all amounts due or to become due to any Grantor
thereunder directly to the Collateral Agent or its designated agent and,
upon such notification and at the expense of any Grantor and to the extent
permitted by law, to enforce collection of any such Accounts and to adjust,
settle or compromise the amount or payment thereof, in the same manner and
to the same extent as any Grantor might have done. After receipt by any
Grantor of a notice from the Collateral Agent that the Collateral Agent has
notified, intends to notify, or has enforced or intends to enforce any
Grantor's rights against the account debtors or obligors under any Accounts
as referred to in the proviso to the immediately preceding sentence, (A)
all amounts and proceeds (including Instruments) received by any Grantor in
respect of the Accounts shall be received in trust for the benefit of the
Collateral Agent hereunder, shall be segregated from other funds of any
Grantor and shall be forthwith paid over to the Collateral Agent in the
same form as so received (with any necessary endorsement) to be applied as
specified in Section 7(b) hereof, and (B) no Grantor will adjust, settle or
compromise the amount or payment of any Account or release wholly or partly
any account debtor or obligor thereof or allow any credit or discount
thereon. In addition, upon the occurrence and during the continuance of an
Event of Default, the Collateral Agent may (in its sole and absolute
discretion) direct any or all of the banks and financial institutions with
which any Grantor either maintains a Deposit Account or a lockbox or
deposits the proceeds of any Accounts to send immediately to the Collateral
Agent by wire transfer (to such account as the Collateral Agent shall
specify, or in such other manner as the Collateral Agent shall direct) all
or a portion of such securities, cash, investments and other items held by
such institution. Any such securities, cash, investments and other items so
received by the Collateral Agent shall be applied as specified in
accordance with Section 7(b) hereof; provided that any New Note Collateral
shall be applied in accordance with the terms of the Exchange Agreements.
(iii) Upon the occurrence and during the continuance of any material
breach or default under any material License referred to in Part F of
SCHEDULE I hereto by any party thereto other than any Grantor, each Grantor
party thereto will, promptly after obtaining knowledge thereof, give the
Collateral Agent written notice of the nature and duration thereof,
specifying what action, if any, it has taken and proposes to take with
respect thereto and thereafter will take reasonable steps to protect and
preserve its rights and remedies in respect of such breach or default, or
will obtain or acquire an appropriate substitute License.
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(iv) Each Grantor will, at its expense, promptly deliver to the
Collateral Agent a copy of each notice or other communication received by
it by which any other party to any material License referred to in Part F
of SCHEDULE I hereto purports to exercise any of its rights or affect any
of its obligations thereunder in a manner which, in either case, would
adversely affect the interest of the Collateral Agent or the Investors
hereunder or under any Transaction Document, together with a copy of any
reply by such Grantor thereto.
(v) Each Grantor will exercise promptly and diligently each and every
right which it may have under each material License (other than any right
of termination) and will duly perform and observe in all respects all of
its obligations under each material License and will take all action
reasonably necessary to maintain such Licenses in full force and effect.
Upon the occurrence and during the continuance of an Event of Default, no
Grantor will, without the prior written consent of the Collateral Agent,
cancel, terminate, amend or otherwise modify in any respect, or waive any
provision of, any material License referred to in Part F of SCHEDULE I
hereto.
(g) TRANSFERS AND OTHER LIENS.
(i) No Grantor will sell, assign (by operation of law or otherwise),
lease, license, exchange or otherwise transfer or dispose of any of the
Collateral, except (A) Inventory in the ordinary course of business, (B)
worn out or obsolete assets, not necessary to the business, (C)
non-exclusive Licenses of Intellectual Property in the ordinary course of
business and (D) New Note Collateral as expressly provided in the Exchange
Agreement.
(ii) No Grantor will create, suffer to exist or grant any Lien upon or
with respect to any Collateral, other than with respect to Joint Collateral
only, a Permitted Lien.
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(h) INTELLECTUAL PROPERTY.
(i) If applicable, any Grantor shall, upon the Collateral Agent's
written request, duly execute and deliver the applicable Assignment for
Security in the form attached hereto as Exhibit A. Each Grantor (either
itself or through licensees) will, and will cause each licensee thereof to,
take all commercially reasonable action necessary to maintain all of the
Intellectual Property in full force and effect, including, without
limitation, using the proper statutory notices and markings and using the
Trademarks on each applicable trademark class of goods in order to so
maintain the Trademarks in full force and free from any claim of
abandonment for non-use, and each Grantor will not (nor permit any licensee
thereof to) do any act or knowingly omit to do any act whereby any
Intellectual Property may become invalidated; provided, however, that so
long as no Event of Default has occurred and is continuing, no Grantor
shall have an obligation to use or to maintain any Intellectual Property
(A) that relates solely to any product or work that has been, or is in the
process of being, discontinued, abandoned or terminated, (B) that is being
replaced with Intellectual Property substantially similar to the
Intellectual Property that may be abandoned or otherwise become invalid, so
long as the failure to use or maintain such Intellectual Property does not
materially adversely affect the validity of such replacement Intellectual
Property and so long as such replacement Intellectual Property is subject
to the Lien created by this Agreement or (C) that is substantially the same
as another Intellectual Property that is in full force, so long as such
other Intellectual Property is subject to the Lien and security interest
created by this Agreement. Each Grantor will cause to be taken all
commercially reasonable necessary steps in any proceeding before applicable
Intellectual Property Office or any similar office or agency in any other
country or political subdivision thereof to maintain each registration of
the Intellectual Property (other than the Intellectual Property described
in the proviso to the immediately preceding sentence), including, without
limitation, filing of renewals, affidavits of use, affidavits of
incontestability and opposition, interference and cancellation proceedings
and payment of maintenance fees, filing fees, taxes or other governmental
fees. If any Intellectual Property (other than Intellectual Property
described in the proviso to the second preceding sentence) is infringed,
misappropriated, diluted or otherwise violated in any material respect by a
third party, each Grantor shall (x) upon learning of such infringement,
misappropriation, dilution or other violation, promptly notify the
Collateral Agent and (y) to the extent any Grantor shall deem appropriate
under the circumstances, promptly xxx for infringement, misappropriation,
dilution or other violation, seek injunctive relief where appropriate and
recover any and all damages for such infringement, misappropriation,
dilution or other violation, or take such other actions as such Grantor
shall deem appropriate under the circumstances to protect such Intellectual
Property. Each Grantor shall furnish to the Collateral Agent from time to
time upon its reasonable request statements and schedules further
identifying and describing the Intellectual Property and Licenses and such
other reports in connection with the Intellectual Property and Licenses as
the Collateral Agent may reasonably request, all in reasonable detail. Each
Grantor shall modify this Agreement by amending Part F of SCHEDULE I hereto
to include any Intellectual Property and License, as the case may be, which
becomes part of the Collateral under this Agreement and shall execute and
authenticate such documents and do such acts as shall be necessary or, in
the reasonable judgment of the Collateral Agent, desirable to subject such
Intellectual Property and Licenses to the Lien and security interest
created by this Agreement. Notwithstanding anything herein to the contrary,
upon the occurrence and during the continuance of an Event of Default, no
Grantor may abandon or otherwise permit any Intellectual Property to become
invalid without the prior written consent of the Collateral Agent, and if
any Intellectual Property is infringed, misappropriated, diluted or
otherwise violated in any material respect by a third party, each Grantor
will take such commercially reasonable action as the Collateral Agent shall
deem appropriate under the circumstances to protect such Intellectual
Property.
(ii) In no event shall any Grantor, either itself or through any
agent, employee, licensee or designee, file an application for the
registration of any Trademark or Copyright or the issuance of any Patent
with any Intellectual Property Office, or in any similar office or agency
of the United States or any country or any political subdivision thereof
unless it gives the Collateral Agent prior written notice thereof. Upon
request of the Collateral Agent, any Grantor shall execute, authenticate
and deliver any and all assignments, agreements, instruments, documents and
papers as the Collateral Agent may reasonably request to evidence the
Collateral Agent's security interest hereunder in such Intellectual
Property and the General Intangibles of any Grantor relating thereto or
represented thereby, and each Grantor hereby appoints the Collateral Agent
its attorney-in-fact to execute and/or authenticate and file all such
writings for the foregoing purposes, all acts of such attorney being hereby
ratified and confirmed, and such power (being coupled with an interest)
shall be irrevocable until the indefeasible payment in full in cash of all
of the Obligations in full.
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(i) DEPOSIT, COMMODITIES AND SECURITIES ACCOUNTS. Upon the Collateral
Agent's written request, each Grantor shall cause each bank and other financial
institution with an account referred to in Part E of SCHEDULE I hereto to
execute and deliver to the Collateral Agent a control agreement, in form and
substance reasonably satisfactory to the Collateral Agent, duly executed by each
Grantor and such bank or financial institution, or enter into other arrangements
in form and substance satisfactory to the Collateral Agent, pursuant to which
such institution shall irrevocably agree, INTER ALIA, that (i) it will comply at
any time with the instructions originated by the Collateral Agent to such bank
or financial institution directing the disposition of cash, Commodity Contracts,
securities, Investment Property and other items from time to time credited to
such account, without further consent of each Grantor, which instructions the
Collateral Agent will not give to such bank or other financial institution in
the absence of a continuing Event of Default, (ii) all Commodity Contracts,
securities, Investment Property and other items of each Grantor deposited with
such institution shall be subject to a perfected, first priority security
interest in favor of the Collateral Agent, (iii) any right of set off (other
than recoupment of standard fees and returned items), banker's Lien or other
similar Lien, security interest or encumbrance shall be fully waived as against
the Collateral Agent, and (iv) upon receipt of written notice from the
Collateral Agent during the continuance of an Event of Default, such bank or
financial institution shall immediately send to the Collateral Agent by wire
transfer (to such account as the Collateral Agent shall specify, or in such
other manner as the Collateral Agent shall direct) all such cash, the value of
any Commodity Contracts, securities, Investment Property and other items held by
it. Without the prior written consent of the Collateral Agent, each Grantor
shall not make or maintain any Deposit Account, Commodity Account or Securities
Account except for the Collateral Account and accounts set forth in Part E of
SCHEDULE I hereto. The provisions of this paragraph 5(i) shall not apply to (i)
Deposit Accounts for which the Collateral Agent is the depositary and (ii)
Deposit Accounts specially and exclusively used for payroll, payroll taxes and
other employee wage and benefit payments to or for the benefit of each Grantor's
salaried or hourly employees. Notwithstanding the foregoing, the Company shall
have complied and shall continue to comply with all requirements set forth in
the Exchange Agreement regarding the Collateral Account.
(j) MOTOR VEHICLES.
(i) Upon the Collateral Agent's written request, each Grantor shall
deliver to the Collateral Agent originals of the certificates of title or
ownership for all motor vehicles owned by it with the Collateral Agent
listed as lienholder, for the benefit of the Secured Parties (other than a
motor vehicle that is subject to a purchase money security interest).
(ii) Each Grantor hereby appoints the Collateral Agent as its
attorney-in-fact, effective the date hereof and terminating upon the
termination of this Agreement, for the purpose of, following the occurrence
and during the continuation of an Event of Default, (A) executing on behalf
of such Grantor title or ownership applications for filing with appropriate
state agencies to enable motor vehicles now owned or hereafter acquired by
such Grantor to be retitled and the Collateral Agent listed as lienholder
thereof (other than a motor vehicle that is subject to a purchase money
security interest), (B) filing such applications with such state agencies,
and (C) executing such other documents and instruments on behalf of, and
taking such other action in the name of, such Grantor as the Collateral
Agent may deem necessary or advisable to accomplish the purposes hereof
(including, without limitation, for the purpose of creating in favor of the
Collateral Agent a perfected Lien on such motor vehicles and exercising the
rights and remedies of the Collateral Agent hereunder). This appointment as
attorney-in-fact is coupled with an interest and is irrevocable until all
of the Obligations are indefeasibly paid in full in cash.
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(iii) Any certificates of title or ownership delivered pursuant to the
terms hereof shall be accompanied by odometer statements for each motor
vehicle covered thereby.
(iv) So long as no Event of Default shall have occurred and be
continuing, upon the request of any Grantor, the Collateral Agent shall
execute and deliver to any Grantor such instruments as any Grantor shall
reasonably request to remove the notation of the Collateral Agent as
lienholder on any certificate of title for any motor vehicle; PROVIDED,
HOWEVER, that any such instruments shall be delivered, and the release
effective, only upon receipt by the Collateral Agent of a certificate from
any Grantor stating that such motor vehicle is to be sold or has suffered a
casualty loss (with title thereto in such case passing to the casualty
insurance company therefor in settlement of the claim for such loss) and
the amount that any Grantor will receive as sale proceeds or insurance
proceeds.
(k) CONTROL. Each Grantor hereby agrees to take any or all action that may
be necessary or that the Collateral Agent may reasonably request in order for
the Collateral Agent to obtain control in accordance with Sections 9-105, 9-106
and 9-107 of the Code with respect to the following Collateral: (i) Electronic
Chattel Paper, (ii) Investment Property, and (iii) Letter-of-Credit Rights.
(l) INSPECTION AND REPORTING. Each Grantor shall permit in accordance with
the Existing Purchase Agreement and the Exchange Agreements, the Collateral
Agent, or any agent or representatives thereof or such professionals or other
Persons as the Collateral Agent may designate, during normal business hours,
after reasonable prior notice, in the absence of an Event of Default and not
more than once a year in the absence of an Event of Default, (i) to examine and
make copies of and abstracts from any Grantor's records and books of account,
(ii) to visit and inspect its properties, (iii) to verify materials, leases,
Instruments, Accounts, Inventory and other assets of any Grantor from time to
time, (iii) to conduct audits, physical counts, appraisals and/or valuations,
examinations at the locations of any Grantor.
(m) FUTURE SUBSIDIARIES. If any Grantor shall hereafter create or acquire
any Subsidiary, simultaneously with the creation or acquisition of such
Subsidiary, such Grantor shall (i) cause such Subsidiary to become a party to
this Agreement as an additional "Grantor" hereunder, (ii) such Grantor shall
deliver to Collateral Agent revised Schedules to this Agreement, as appropriate,
(iii) shall become a party to the Guaranty or duly execute and deliver a
guaranty of the Obligations in favor of the Collateral Agent in form and
substance reasonably acceptable to the Collateral Agent, and (iv) shall duly
execute and/or deliver such opinions of counsel and other documents, in form and
substance reasonably acceptable to the Collateral Agent, as the Collateral Agent
shall reasonably request with respect thereto, provided that any Grantor that
acquires a subsidiary on or within two days after the Closing Date shall have 10
Business Days in which to satisfy the requirements of this Section 5(m).
- 16 -
SECTION 6. ADDITIONAL PROVISIONS CONCERNING THE COLLATERAL.
(a) To the maximum extent permitted by applicable law, and for the purpose
of taking any action that the Collateral Agent may deem necessary or advisable
to accomplish the purposes of this Agreement, each Grantor hereby (i) authorizes
the Collateral Agent to execute any such agreements, instruments or other
documents in such Grantor's name and to file such agreements, instruments or
other documents in such Grantor's name and in any appropriate filing office,
(ii) authorizes the Collateral Agent at any time and from time to time to file,
one or more financing or continuation statements, and amendments thereto,
relating to the Collateral (including, without limitation, any such financing
statements that (A) describe the Collateral as "all assets" or "all personal
property" (or words of similar effect) or that describe or identify the
Collateral by type or in any other manner as the Collateral Agent may determine
regardless of whether any particular asset of such Grantor falls within the
scope of Article 9 of the Uniform Commercial Code or whether any particular
asset of such Grantor constitutes part of the Collateral, and (B) contain any
other information required by Part 5 of Article 9 of the Uniform Commercial Code
for the sufficiency or filing office acceptance of any financing statement,
continuation statement or amendment, including, without limitation, whether such
Grantor is an organization, the type of organization and any organizational
identification number issued to such Grantor) and (iii) ratifies such
authorization to the extent that the Collateral Agent has filed any such
financing or continuation statements, or amendments thereto, prior to the date
hereof. 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 law.
(b) Each Grantor hereby irrevocably appoints the Collateral Agent as its
attorney-in-fact and proxy, with full authority in the place and stead of such
Grantor and in the name of such Grantor or otherwise, from time to time in the
Collateral Agent's discretion, so long as an Event of Default shall have
occurred and is continuing, to take any action and to execute any instrument
which the Collateral Agent may reasonably deem necessary or advisable to
accomplish the purposes of this Agreement (subject to the rights of each Grantor
under Section 5 hereof), including, without limitation, (i) to obtain and adjust
insurance required to be paid to the Collateral Agent pursuant to Section 5(e)
hereof, (ii) to ask, demand, collect, xxx for, recover, compound, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any Collateral, (iii) to receive, endorse, and collect any drafts or
other instruments, documents and chattel paper in connection with clause (i) or
(ii) above, (iv) to file any claims or take any action or institute any
proceedings which the Collateral Agent may deem necessary or desirable for the
collection of any Collateral or otherwise to enforce the rights of the Secured
Parties with respect to any Collateral, and (v) to execute assignments, licenses
and other documents to enforce the rights of the Secured Parties with respect to
any Collateral. This power is coupled with an interest and is irrevocable until
all of the Obligations are indefeasibly paid in full in cash.
- 17 -
(c) For the purpose of enabling the Collateral Agent to exercise rights and
remedies hereunder, at such time as the Collateral Agent shall be lawfully
entitled to exercise such rights and remedies, and for no other purpose, each
Grantor hereby grants to the Collateral Agent, to the extent assignable, an
irrevocable, non-exclusive license (exercisable without payment of royalty or
other compensation to any Grantor) to use, assign, license or sublicense any
Intellectual Property now owned or hereafter acquired by such Grantor, wherever
the same may be located, including in such license reasonable access to all
media in which any of the licensed items may be recorded or stored and to all
computer programs used for the compilation or printout thereof; provided,
however, that Collateral Agent, prior to commencing foreclosure proceedings
against the Intellectual Property, shall have no right to license the
Intellectual Property in any manner that shall have the effect of causing: (i)
any Grantor to be in violation of any then-existing License or other agreement
with any third party, or (ii) the forfeiture or invalidation of any of the
Intellectual Property, including, by way of example and not of limitation, the
unprotected disclosure of proprietary information that derives its value from
being kept secret or the naked licensing of trademark rights. Notwithstanding
anything contained herein to the contrary, but subject to the provisions of the
Existing Purchase Agreement that limit the right of any Grantor to dispose of
its property, and Section 5(g) and Section 5(h) hereof, so long as no Event of
Default shall have occurred and be continuing, any Grantor may exploit, use,
enjoy, protect, license, sublicense, assign, sell, dispose of or take other
actions with respect to the Intellectual Property in the ordinary course of its
business. In furtherance of the foregoing, unless an Event of Default shall have
occurred and be continuing, the Collateral Agent shall from time to time, upon
the request of any Grantor, execute and deliver any instruments, certificates or
other documents, in the form so requested, which such Grantor shall have
certified are appropriate (in such Grantor's judgment) to allow it to take any
action permitted above (including relinquishment of the license provided
pursuant to this clause (c) as to any Intellectual Property). Further, upon the
indefeasible payment in full in cash of all of the Obligations, the Collateral
Agent (subject to Section 10(e) hereof) shall release and reassign to any
Grantor all of the Collateral Agent's right, title and interest in and to the
Intellectual Property, and the Licenses, all without recourse, representation or
warranty whatsoever. The exercise of rights and remedies hereunder by the
Collateral Agent shall not terminate the rights of the holders of any licenses
or sublicenses theretofore granted by each Grantor in accordance with the second
sentence of this clause (c). Each Grantor hereby releases the Collateral Agent
from any claims, causes of action and demands at any time arising out of or with
respect to any actions taken or omitted to be taken by the Collateral Agent
under the powers of attorney granted herein other than actions taken or omitted
to be taken through the Collateral Agent's gross negligence or willful
misconduct, as determined by a final determination of a court of competent
jurisdiction.
(d) If any Grantor fails to perform any agreement or obligation contained
herein, the Collateral Agent may itself perform, or cause performance of, such
agreement or obligation, in the name of such Grantor or the Collateral Agent,
and the expenses of the Collateral Agent incurred in connection therewith shall
be payable by such Grantor pursuant to Section 8 hereof and shall be secured by
the Collateral.
(e) The powers conferred on the Collateral Agent hereunder are solely to
protect its interest in the Collateral and shall not impose any duty upon it 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, the
Collateral Agent shall have no duty as to any Collateral or as to the taking of
any necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral.
- 18 -
(f) Anything herein to the contrary notwithstanding (i) each Grantor shall
remain liable under the Licenses and otherwise with respect to any of the
Collateral to the extent set forth therein to perform all of its obligations
thereunder to the same extent as if this Agreement had not been executed, (ii)
the exercise by the Collateral Agent of any of its rights hereunder shall not
release any Grantor from any of its obligations under the Licenses or otherwise
in respect of the Collateral, and (iii) the Collateral Agent shall not have any
obligation or liability by reason of this Agreement under the Licenses or with
respect to any of the other Collateral, nor shall the Collateral Agent be
obligated to perform any of the obligations or duties of any Grantor thereunder
or to take any action to collect or enforce any claim for payment assigned
hereunder.
SECTION 7. REMEDIES UPON EVENT OF DEFAULT. If any Event of Default shall
have occurred and be continuing:
(a) The Collateral Agent may exercise in respect of the Collateral, in
addition to any other rights and remedies provided for herein or otherwise
available to it, all of the rights and remedies of a secured party upon default
under the Uniform Commercial Code (whether or not the Uniform Commercial Code
applies to the affected Collateral), and also may (i) take absolute control of
the Collateral, including, without limitation, transfer into the Collateral
Agent's name or into the name of its nominee or nominees (to the extent the
Collateral Agent has not theretofore done so) and thereafter receive, for the
benefit of the Collateral Agent, all payments made thereon, give all consents,
waivers and ratifications in respect thereof and otherwise act with respect
thereto as though it were the outright owner thereof, (ii) require each Grantor
to, and each Grantor hereby agrees that it will at its expense and upon request
of the Collateral Agent forthwith, assemble all or part of its respective
Collateral as directed by the Collateral Agent and make it available to the
Collateral Agent at a place or places to be designated by the Collateral Agent
that is reasonably convenient to both parties, and the Collateral Agent may
enter into and occupy any premises owned or leased by any Grantor where the
Collateral or any part thereof is located or assembled for a reasonable period
in order to effectuate the Collateral Agent's rights and remedies hereunder or
under law, without obligation to any Grantor in respect of such occupation, and
(iii) without notice except as specified below and without any obligation to
prepare or process the Collateral for sale, (A) sell the Collateral or any part
thereof in one or more parcels at public or private sale, at any of the
Collateral Agent's offices or elsewhere, for cash, on credit or for future
delivery, and at such price or prices and upon such other terms as the
Collateral Agent may deem commercially reasonable and/or (B) lease, license or
dispose of the Collateral or any part thereof upon such terms as the Collateral
Agent may deem commercially reasonable. Each Grantor agrees that, to the extent
notice of sale or any other disposition of its respective Collateral shall be
required by law, at least ten (10) days' notice to any Grantor of the time and
place of any public sale or the time after which any private sale or other
disposition of its respective Collateral is to be made shall constitute
reasonable notification. The Collateral Agent shall not be obligated to make any
sale or other disposition of any Collateral regardless of notice of sale having
been given. The Collateral Agent 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. Each Grantor hereby waives any claims against the Secured Parties
arising by reason of the fact that the price at which its respective Collateral
may have been sold at a private sale was less than the price which might have
been obtained at a public sale or was less than the aggregate amount of the
Obligations, even if the Collateral Agent accepts the first offer received and
does not offer such Collateral to more than one offeree, and waives all rights
that any Grantor may have to require that all or any part of such Collateral be
marshaled upon any sale (public or private) thereof. Each Grantor hereby
acknowledges that (i) any such sale of its respective Collateral by the
Collateral Agent shall be made without warranty, (ii) the Collateral Agent may
specifically disclaim any warranties of title, possession, quiet enjoyment or
the like, and (iii) such actions set forth in clauses (i) and (ii) above shall
not adversely affect the commercial reasonableness of any such sale of
Collateral. In addition to the foregoing, (1) upon written notice to any Grantor
from the Collateral Agent after and during the continuance of an Event of
Default, such Grantor shall cease any use of the Intellectual Property or any
trademark, patent or copyright similar thereto for any purpose described in such
notice; (2) the Collateral Agent may, at any time and from time to time after
and during the continuance of an Event of Default, upon 10 days' prior notice to
such Grantor, license, whether general, special or otherwise, and whether on an
exclusive or non-exclusive basis, any of the Intellectual Property, throughout
the universe for such term or terms, on such conditions, and in such manner, as
the Collateral Agent shall in its sole discretion determine; ; provided,
however, that Collateral Agent, prior to commencing foreclosure proceedings
against the Intellectual Property, shall have no right to license the
Intellectual Property in any manner that shall have the effect of causing: (i)
any Grantor to be in violation of any then-existing License or other agreement
with any third party, or (ii) the forfeiture or invalidation of any of the
Intellectual Property, including, by way of example and not of limitation, the
unprotected disclosure of proprietary information that derives its value from
being kept secret or the naked licensing of trademark rights, and (3) the
Collateral Agent may, at any time, pursuant to the authority granted in Section
6 hereof (such authority being effective upon the occurrence and during the
continuance of an Event of Default), execute and deliver on behalf of such
Grantor, one or more instruments of assignment of the Intellectual Property (or
any application or registration thereof), in form suitable for filing, recording
or registration in any country.
- 19 -
(b) Any cash held by the Collateral Agent as Collateral and all Cash
Proceeds received by the Collateral Agent in respect of any sale of or
collection from, or other realization upon, all or any part of the Joint
Collateral shall be applied (after payment of any amounts payable to the
Collateral Agent pursuant to SECTION 8 hereof) by the Collateral Agent against,
all or any part of the Obligations in such order as the Collateral Agent shall
elect, consistent with the provisions of the Existing Purchase Agreement. Any
surplus of such cash or Cash Proceeds held by the Collateral Agent and remaining
after the indefeasible payment in full in cash of all of the Obligations shall
be paid over to whomsoever shall be lawfully entitled to receive the same or as
a court of competent jurisdiction shall direct.
(c) In the event that the proceeds of any such sale, collection or
realization are insufficient to pay all amounts to which the Secured Parties are
legally entitled, each Grantor shall be liable for the deficiency, together with
interest thereon at the highest rate specified in the Notes for interest on
overdue principal thereof or such other rate as shall be fixed by applicable
law, together with the costs of collection and the reasonable fees, costs,
expenses and other client charges of any attorneys employed by the Collateral
Agent to collect such deficiency.
(d) Each Grantor hereby acknowledges that if the Collateral Agent complies
with any applicable state, provincial, or federal law requirements in connection
with a disposition of the Collateral, such compliance will not adversely affect
the commercial reasonableness of any sale or other disposition of the Collateral
in such jurisdiction.
- 20 -
(e) The Collateral Agent shall not be required to marshal any present or
future collateral security (including, but not limited to, the Collateral) for,
or other assurances of payment of, the Obligations or any of them or to resort
to such collateral security or other assurances of payment in any particular
order, and all of the Collateral Agent's rights hereunder and in respect of such
collateral security and other assurances of payment shall be cumulative and in
addition to all other rights, however existing or arising. To the extent that
any Grantor lawfully may, each Grantor hereby agrees that it will not invoke any
law relating to the marshaling of collateral which might cause delay in or
impede the enforcement of the Collateral Agent's rights under this Agreement or
under any other instrument creating or evidencing any of the Obligations or
under which any of the Obligations is outstanding or by which any of the
Obligations is secured or payment thereof is otherwise assured, and, to the
extent that it lawfully may, each Grantor hereby irrevocably waives the benefits
of all such laws.
SECTION 8. INDEMNITY AND EXPENSES.
(a) Each Grantor agrees, jointly and severally, to defend, protect,
indemnify and hold the Secured Parties harmless from and against any and all
claims, damages, losses, liabilities, obligations, penalties, fees, costs and
expenses (including, without limitation, reasonable legal fees, costs, expenses,
and disbursements of such Person's counsel) to the extent that they arise out of
or otherwise result from this Agreement (including, without limitation,
enforcement of this Agreement), except to the extent resulting from such
Person's gross negligence or willful misconduct, as determined by a final
judgment of a court of competent jurisdiction.
(b) Each Grantor agrees, jointly and severally, to pay to the Collateral
Agent upon demand the amount of any and all costs and expenses, including the
reasonable fees, costs, expenses and disbursements of counsel for the Collateral
Agent and of any experts and agents (including, without limitation, any
collateral trustee which may act as agent of the Collateral Agent), which the
Collateral Agent may incur in connection with (i) the preparation, negotiation,
execution, delivery, recordation, administration, amendment, waiver or other
modification or termination of this Agreement, (ii) the custody, preservation,
use or operation of, or the sale of, collection from, or other realization upon,
any Collateral, (iii) the exercise or enforcement of any of the rights of the
Collateral Agent hereunder, or (iv) the failure by any Grantor to perform or
observe any of the provisions hereof.
SECTION 9. NOTICES, ETC. All notices and other communications provided for
hereunder shall be in writing and shall be mailed (by certified mail, postage
prepaid and return receipt requested), telecopied, e-mailed or delivered, at its
address set forth on the signature pages below, and if to the Collateral Agent
to it, at its address specified on the signature pages below; or as to any such
Person, at such other address as shall be designated by such Person in a written
notice to all other parties hereto complying as to delivery with the terms of
this Section 9. All such notices and other communications shall be effective (a)
if sent by certified mail, return receipt requested, when received or three days
after deposited in the mails, whichever occurs first, (b) if telecopied or
e-mailed, when transmitted (during normal business hours) and confirmation is
received, and otherwise, the day after the notice or communication was
transmitted and confirmation is received, or (c) if delivered in person, upon
delivery. For the avoidance of doubt, any Grantor organized under the laws of a
jurisdiction other than the United States, any of the states thereof or the
District of Columbia, hereby irrevocably appoint the Company as its agent for
receipt of service of process and all notices and other communications in the
United States at the address specified below.
- 21 -
SECTION 10. MISCELLANEOUS.
(a) No amendment of any provision of this Agreement shall be effective
unless it is in writing and signed by each Grantor and the Collateral Agent, and
no waiver of any provision of this Agreement, and no consent to any departure by
each Grantor therefrom, shall be effective unless it is in writing and signed by
each Grantor and the Collateral Agent, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
(b) No failure on the part of the Collateral Agent to exercise, and no
delay in exercising, any right hereunder or under any of the other Transaction
Documents shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or the
exercise of any other right. The rights and remedies of the Secured Parties
provided herein and in the other Transaction Documents are cumulative and are in
addition to, and not exclusive of, any rights or remedies provided by law. The
rights of the Secured Parties under any of the other Transaction Documents
against any party thereto are not conditional or contingent on any attempt by
such Person to exercise any of its rights under any of the other Transaction
Documents against such party or against any other Person, including but not
limited to, any Grantor.
(c) Any provision of this Agreement that is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining portions
hereof or thereof or affecting the validity or enforceability of such provision
in any other jurisdiction.
(d) This Agreement shall create a continuing security interest in the
Collateral and shall (i) remain in full force and effect until the indefeasible
payment in full in cash of the Obligations (other than inchoate indemnity
obligations) and/or complete conversion of all of the Company's obligations
under the Notes in accordance with the terms thereof, and (ii) be binding on
each Grantor and all other Persons who become bound as debtor to this Agreement
in accordance with Section 9-203(d) of the Uniform Commercial Code and shall
inure, together with all rights and remedies of the Secured Parties hereunder,
to the benefit of the Secured Parties and their respective permitted successors,
transferees and assigns. Without limiting the generality of clause (ii) of the
immediately preceding sentence, without notice to any Grantor, the Secured
Parties may assign or otherwise transfer their rights and obligations under this
Agreement and any of the other Transaction Documents in accordance with the
respective Transaction Documents to any other Person and such other Person shall
thereupon become vested with all of the benefits in respect thereof granted to
the Secured Parties herein or otherwise. Upon any such assignment or transfer,
all references in this Agreement to the Secured Parties shall mean the assignee
of the Secured Parties. None of the rights or obligations of any Grantor
hereunder may be assigned or otherwise transferred without the prior written
consent of the Collateral Agent, and any such assignment or transfer without the
consent of the Collateral Agent shall be null and void.
- 22 -
(e) Upon the indefeasible payment in full in cash of the Obligations (other
than inchoate indemnity obligations) and/or complete conversion of all of the
Company's obligations under the Notes, in accordance with the terms thereof, (i)
this Agreement and the security interests created hereby shall terminate and all
rights to the Collateral shall revert to the respective Grantor that granted
such security interests hereunder, and (ii) the Collateral Agent will, upon any
Grantor's request and at such Grantor's expense, (A) return to such Grantor such
of the Collateral as shall not have been sold or otherwise disposed of or
applied pursuant to the terms hereof, and (B) execute and deliver to such
Grantor such documents as such Grantor shall reasonably request to evidence such
termination, all without any representation, warranty or recourse whatsoever.
(f) THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT AS REQUIRED BY
MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT THE VALIDITY AND
PERFECTION OR THE PERFECTION AND THE EFFECT OF PERFECTION OR NON-PERFECTION OF
THE SECURITY INTEREST CREATED HEREBY, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL ARE GOVERNED BY THE LAW OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK.
(g) ANY LEGAL ACTION, SUIT OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY DOCUMENT RELATED HERETO MAY BE BROUGHT IN XXX XXXXXX XX XXX XXXXX XX XXX
XXXX IN THE COUNTY OF NEW YORK OR THE UNITED STATES OF AMERICA FOR THE SOUTHERN
DISTRICT OF NEW YORK, AND APPELLATE COURTS THEREOF, AND, BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH GRANTOR AND THE COLLATERAL AGENT HEREBY ACCEPTS
FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS. EACH GRANTOR AND THE COLLATERAL AGENT
HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF
VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION, SUIT OR PROCEEDING IN SUCH
RESPECTIVE JURISDICTIONS AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE
RELIEF AS IS DEEMED APPROPRIATE BY THE COURT.
- 23 -
(h) EACH GRANTOR AND (BY ITS ACCEPTANCE OF THE BENEFITS OF THIS AGREEMENT)
THE COLLATERAL AGENT WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED ON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OF THE OTHER TRANSACTION DOCUMENTS, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, ORAL OR WRITTEN STATEMENT OR OTHER ACTION OF THE PARTIES
HERETO.
(i) The Collateral Agent and each Grantor irrevocably consents to the
service of process of any of the aforesaid courts in any such action, suit or
proceeding by the mailing of copies thereof by registered or certified mail (or
any substantially similar form of mail), postage prepaid, to such party at its
address provided herein, such service to become effective 10 days after such
mailing.
(j) Nothing contained herein shall affect the right of the Collateral Agent
to serve process in any other manner permitted by law or commence legal
proceedings or otherwise proceed against any Grantor or any property of any
Grantor in any other jurisdiction.
(k) Each Grantor irrevocably and unconditionally waives any right it may
have to claim or recover in any legal action, suit or proceeding referred to in
this Section any special, exemplary, punitive or consequential damages.
(l) Section headings herein are included for convenience of reference only
and shall not constitute a part of this Agreement for any other purpose.
(m) This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which shall be deemed
to be an original, but all of which taken together constitute one in the same
Agreement.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
- 24 -
IN WITNESS WHEREOF, each Grantor has caused this Agreement to be executed
and delivered by its officer thereunto duly authorized, as of the date first
above written.
INKSURE TECHNOLOGIES INC.
By:_________________________
Name:
Title:
Address:
____________________________
____________________________
____________________________
INKSURE INC.
By:_________________________
Name:
Title:
Address:
____________________________
____________________________
____________________________
IST OPERATING INC.
By:_________________________
Name:
Title:
Address:
____________________________
____________________________
____________________________
Schedule I, Page 1
INKSURE RF, INC.
By:_________________________
Name:
Title:
Address:
____________________________
____________________________
____________________________
SMITHFIELD FIDUCIARY LLC
By:_________________________
Name:
Title:
Schedule I, Page 2
SCHEDULE I
PART A: Legal Names; Organizational Identification Numbers; State or
Jurisdiction of Organizations
GRANTOR'S NAME STATE OF ORGANIZATION EMPLOYER I.D. ORGANIZATIONAL I.D.
PART B: Locations
GRANTOR'S NAME CHIEF EXECUTIVE OFFICE CHIEF PLACE OF BUSINESS BOOKS AND RECORDS INVENTORY, EQUIPMENT, ETC.
-------------- ---------------------- ----------------------- ----------------- -------------------------
-------------- ---------------------- ----------------------- ----------------- -------------------------
-------------- ---------------------- ----------------------- ----------------- -------------------------
PART C: Financing Statements
GRANTOR JURISDICTIONS FOR FILING FINANCING STATEMENTS
PART D: Commercial Tort Claims
[Describe Commercial Tort Claim]
PART E: Promissory Notes, Securities, Instruments and Deposit, Securities and
Commodities Accounts
SECURITIES
GRANTOR NAME OF ISSUER NUMBER OF SHARES CLASS CERTIFICATE NO.(S)
------- -------------- ---------------- ----- ------------------
------- -------------- ---------------- ----- ------------------
PROMISSORY NOTES AND OTHER INSTRUMENTS
GRANTOR NAME OF ISSUER PRINCIPAL AMOUNT MATURITY DATE
------- -------------- ---------------- -------------
------- -------------- ---------------- -------------
DEPOSIT, SECURITIES OR COMMODITIES ACCOUNTS
GRANTOR NAME AND ADDRESS OF INSTITUTION PURPOSE OF THE ACCOUNT ACCOUNT NO. TYPE OF ACCOUNT
------- ------------------------------- ---------------------- ---------- ---------------
------- ------------------------------- ---------------------- ---------- ---------------
PART F: Intellectual Property
TRADEMARKS
GRANTOR COUNTRY TRADEMARK APPLICATION/ REGISTRATION NO. FILING DATE REGISTRATION DATE ASSIGNEES
------- ------- --------- ----------------------------- ----------- ----------------- ---------
PATENTS
COPYRIGHTS
LICENSES
PART G: Tradenames
Schedule I, Page 3
EXHIBIT A
GRANT OF SECURITY INTEREST - [TRADEMARKS] [PATENTS] [COPYRIGHTS]
WHEREAS, ______________________________ (the "ASSIGNOR") [has adopted, used
and is using, and holds all right, title and interest in and to, the trademarks
and service marks listed on ANNEX A, which trademarks and service marks are
registered or applied for in the United States Patent and Trademark Office (the
"TRADEMARKS")] [holds all right, title and interest in the letter patents,
design patents and utility patents listed on ANNEX A, which patents are issued
or applied for in the United States Patent and Trademark Office (the "PATENTS")]
[holds all right, title and interest in the copyrights listed on ANNEX A, which
copyrights are registered in the United States Copyright Office (the
"COPYRIGHTS")];
WHEREAS, the Assignor has entered into a Security Agreement, dated as of
_________ __, 20__ (as amended, restated, replaced, supplemented, modified or as
otherwise changed from time to time, the "SECURITY AGREEMENT"), in favor of
__________, as collateral agent for certain purchasers (the "ASSIGNEE");
WHEREAS, pursuant to the Security Agreement, the Assignor has assigned to
the Assignee and granted to the Assignee for the benefit of the Investors (as
defined in the Security Agreement) a continuing security interest in all right,
title and interest of the Assignor in, to and under the [Trademarks, together
with, among other things, the good-will of the business symbolized by the
Trademarks] [Patents] [Copyrights] and the applications and registrations
thereof, and all proceeds thereof, including, without limitation, any and all
causes of action which may exist by reason of infringement thereof and any and
all damages arising from past, present and future violations thereof (the
"COLLATERAL"), to secure the payment, performance and observance of the
"Obligations" (as defined in the Security Agreement);
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Assignor does hereby pledge,
convey, sell, assign, transfer and set over unto the Assignee and grants to the
Assignee for the benefit of the Secured Parties a continuing security interest
in the Collateral to secure the prompt payment, performance and observance of
the Obligations.
The Assignor does hereby further acknowledge and affirm that the rights and
remedies of the Assignee with respect to the Collateral are more fully set forth
in the Security Agreement, the terms and provisions of which are hereby
incorporated herein by reference as if fully set forth herein.
IN WITNESS WHEREOF, the Assignor has caused this Grant of Security Interest
to be duly executed by its officer thereunto duly authorized as of
_____________, 20__
[GRANTORS]
By: ________________
Name:
Title:
STATE OF ____________
ss.:
COUNTY OF __________
On this ____ day of _______________, 20__, before me personally came
________________, to me known to be the person who executed the foregoing
instrument, and who, being duly sworn by me, did depose and say that s/he is the
______________________ of _________________________, a __________________, and
that s/he executed the foregoing instrument in the firm name of
______________________________, and that s/he had authority to sign the same,
and s/he acknowledged to me that he executed the same as the act and deed of
said firm for the uses and purposes therein mentioned.
----------------------------------
ANNEX A TO ASSIGNMENT FOR SECURITY
[Trademarks and Trademark Applications]
[Patent and Patent Applications]
[Copyright and Copyright Applications]
Owned by ______________________________
