EXHIBIT 10.4
AMENDED AND RESTATED SECURITY AGREEMENT
This Amended and Restated Security Agreement ("Security Agreement"), dated
as of May 19, 2006 among PracticeXpert, Inc., a Nevada corporation (the
"Company"), and all of the subsidiaries of the Company organized under the laws
of the United States or any state thereof listed on the signature page hereto
(such subsidiaries, the "Guarantors") (the Company and Guarantors are
collectively referred to as the "Debtors") and the holders of the Company's 12%
Senior Secured Convertible Debentures due May 19, 2007 in the original aggregate
principal amount of $600,000 (the "Debentures") signatory hereto, their
endorsees, transferees and assigns (collectively referred to as, the "Secured
Parties") and the Agent (as defined below).
WITNESSETH:
WHEREAS, pursuant to the Amended and Restated Securities Purchase
Agreement (as defined in the Debentures), the Secured Parties have severally
agreed to extend certain loans to the Company evidenced by the Debentures;
WHEREAS, pursuant to a certain Amended and Restated Subsidiary Guarantee
dated as of the date hereof (the "Guaranty"), the Guarantors have jointly and
severally agreed to guaranty and act as surety for payment of such loans; and
WHEREAS, in order to induce the Secured Parties to extend the loans
evidenced by the Debentures, each Debtor has agreed to execute and deliver to
the Secured Parties this Security Agreement and to grant to the Secured Parties,
pari passu with each other Secured Party, a security interest in certain
property of such Debtor to secure the prompt payment, performance and discharge
in full of all of the Company's obligations under the Debentures;
NOW, THEREFORE, in consideration of the agreements herein contained and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto hereby agree as follows:
1. Certain Definitions. As used in this Security Agreement, the following
terms shall have the meanings set forth in this Section 1. Terms used but not
otherwise defined in this Security Agreement that are defined in Article 9 of
the UCC (such as "account", "chattel paper", "commercial tort claim", "deposit
account", "document", "equipment", "fixtures", "general intangibles", "goods",
"instruments", "inventory", "investment property", "letter-of-credit rights",
"proceeds" and "supporting obligations") shall have the respective meanings
given such terms in Article 9 of the UCC.
(a) "Collateral" means Collateral in which the Secured Parties are
granted a security interest by this Agreement and which shall include the
following personal property of the Debtors, whether presently owned or existing
or hereafter acquired or coming into existence, wherever situated, and all
additions and accessions thereto and all substitutions and replacements thereof,
and all proceeds, products and accounts thereof, including, without limitation,
all proceeds from the sale or transfer of the Collateral and of insurance
covering the same and of any tort claims in connection therewith, and all
dividends, interest, cash, notes, securities, equity interest or other property
at any time and from time to time acquired, receivable or otherwise distributed
in respect of, or in exchange for, any or all of the Pledged Securities (as
defined below):
(i) All goods, including, without limitations, (A) all
machinery, equipment, computers, motor vehicles, trucks, tanks, boats, ships,
appliances, furniture, special and general tools, fixtures, test and quality
control devices and other equipment of every kind and nature and wherever
situated, together with all documents of title and documents representing the
same, all additions and accessions thereto, replacements therefor, all parts
therefor, and all substitutes for any of the foregoing and all other items used
and useful in connection with any Debtor's businesses and all improvements
thereto; and (B) all inventory;
(ii) All contract rights and other general intangibles,
including, without limitation, all partnership interests, membership interests,
stock or other securities, rights under any of the Organizational Documents,
agreements related to the Pledged Securities, licenses, distribution and other
agreements, computer software (whether "off-the-shelf", licensed from any third
party or developed by any Debtor), computer software development rights, leases,
franchises, customer lists, quality control procedures, grants and rights,
goodwill, trademarks, service marks, trade styles, trade names, patents, patent
applications, copyrights, and income tax refunds;
(iii) All accounts, together with all instruments, all
documents of title representing any of the foregoing, all rights in any
merchandising, goods, equipment, motor vehicles and trucks which any of the same
may represent, and all right, title, security and guaranties with respect to
each account, including any right of stoppage in transit;
(iv) All documents, letter-of-credit rights, instruments and
chattel paper;
(v) All commercial tort claims;
(vi) All deposit accounts and all cash (whether or not
deposited in such deposit accounts);
(vii) All investment property;
(viii) All supporting obligations; and
(ix) All files, records, books of account, business papers,
and computer programs; and
(x) the products and proceeds of all of the foregoing
Collateral set forth in clauses (i)-(ix) above.
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Without limiting the generality of the foregoing, the "Collateral" shall
include all investment property and general intangibles respecting ownership
and/or other equity interests in each Guarantor, including, without limitation,
the shares of capital stock and the other equity interests listed on Schedule H
hereto (as the same may be modified from time to time pursuant to the terms
hereof), and any other shares of capital stock and/or other equity interests of
any other direct or indirect subsidiary of any Debtor obtained in the future,
and, in each case, all certificates representing such shares and/or equity
interests and, in each case, all rights, options, warrants, stock, other
securities and/or equity interests that may hereafter be received, receivable or
distributed in respect of, or exchanged for, any of the foregoing (all of the
foregoing being referred to herein as the "Pledged Securities") and all rights
arising under or in connection with the Pledged Securities including, but not
limited to, all dividends, interest and cash.
Notwithstanding the foregoing, nothing herein shall be deemed to
constitute an assignment of any asset which, in the event of an assignment,
becomes void by operation of applicable law or the assignment of which is
otherwise prohibited by applicable law (in each case to the extent that such
applicable law is not overridden by Sections 9-406, 9-407 and/or 9-408 of the
UCC or other similar applicable law); provided, however, that to the extent
permitted by applicable law, this Security Agreement shall create a valid
security interest in such asset and, to the extent permitted by applicable law,
this Security Agreement shall create a valid security interest in the proceeds
of such asset.
(b) "Intellectual Property" means the collective reference to all
rights, priorities and privileges relating to intellectual property, whether
arising under United States, multinational or foreign laws or otherwise,
including, without limitation, (i) all copyrights arising under the laws of the
United States, any other country or any political subdivision thereof, whether
registered or unregistered and whether published or unpublished, all
registrations and recordings thereof, and all applications in connection
therewith, including, without limitation, all registrations, recordings and
applications in the United States Copyright Office, (ii) all letters patent of
the United States, any other country or any political subdivision thereof, all
reissues and extensions thereof, and all applications for letters patent of the
United States or any other country and all divisions, continuations and
continuations-in-part thereof, (iii) all trademarks, trade names, corporate
names, company names, business names, fictitious business names, trade dress,
service marks, logos, domain names and other source or business identifiers, and
all goodwill associated therewith, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications in
connection therewith, whether in the United States Patent and Trademark Office
or in any similar office or agency of the United States, any State thereof or
any other country or any political subdivision thereof, or otherwise, and all
common law rights related thereto, (iv) all trade secrets arising under the laws
of the United States, any other country or any political subdivision thereof,
(v) all rights to obtain any reissues, renewals or extensions of the foregoing,
(vi) all licenses for any of the foregoing, and (vii) all causes of action for
infringement of the foregoing.
(c) "Majority in Interest" shall mean, at any time of determination,
the majority in interest (based on then-outstanding principal amounts of
Debentures at the time of such determination) of the Secured Parties.
(d) "Necessary Endorsement" shall mean undated stock powers endorsed
in blank or other proper instruments of assignment duly executed and such other
instruments or documents as the Agent (as that term is defined below) may
reasonably request.
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(e) "Obligations" means all of the liabilities and obligations
(primary, secondary, direct, contingent, sole, joint or several) due or to
become due, or that are now or may be hereafter contracted or acquired, or owing
to, of any Debtor to the Secured Parties, including, without limitation, all
obligations under this Security Agreement, the Debentures, the Guaranty and any
other instruments, agreements or other documents executed and/or delivered in
connection herewith or therewith, in each case, whether now or hereafter
existing, voluntary or involuntary, direct or indirect, absolute or contingent,
liquidated or unliquidated, whether or not jointly owed with others, and whether
or not from time to time decreased or extinguished and later increased, created
or incurred, and all or any portion of such obligations or liabilities that are
paid, to the extent all or any part of such payment is avoided or recovered
directly or indirectly from any of the Secured Parties as a preference,
fraudulent transfer or otherwise as such obligations may be amended,
supplemented, converted, extended or modified from time to time. Without
limiting the generality of the foregoing, the term "Obligations" shall include,
without limitation: (i) principal of, and interest on the Debentures and the
loans extended pursuant thereto; (ii) any and all other fees, indemnities,
costs, obligations and liabilities of the Debtors from time to time under or in
connection with this Security Agreement, the Debentures, the Guaranty and any
other instruments, agreements or other documents executed and/or delivered in
connection herewith or therewith; and (iii) all amounts (including but not
limited to post-petition interest) in respect of the foregoing that would be
payable but for the fact that the obligations to pay such amounts are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving any Debtor.
(f) "Organizational Documents" means with respect to any Debtor, the
documents by which such Debtor was organized (such as a certificate of
incorporation, certificate of limited partnership or articles of organization,
and including, without limitation, any certificates of designation for preferred
stock or other forms of preferred equity) and which relate to the internal
governance of such Debtor (such as bylaws, a partnership agreement or an
operating, limited liability or members agreement).
(g) "UCC" means the Uniform Commercial Code of the State of New York
and or any other applicable law of any state or states which has jurisdiction
with respect to all, or any portion of, the Collateral or this Security
Agreement, from time to time. It is the intent of the parties that defined terms
in the UCC should be construed in their broadest sense so that the term
"Collateral" will be construed in its broadest sense. Accordingly if there are,
from time to time, changes to defined terms in the UCC that broaden the
definitions, they are incorporated herein and if existing definitions in the UCC
are broader than the amended definitions, the existing ones shall be
controlling.
2. Grant of Security Interest. As an inducement for the Secured Parties to
extend the loans as evidenced by the Debentures and to secure the complete and
timely payment, performance and discharge in full, as the case may be, of all of
the Obligations, the Company hereby unconditionally and irrevocably pledges,
grants and hypothecates to the Secured Parties a continuing and perfected (other
than as set forth herein) first priority security interest in and to, a lien
upon and a right of set off against all of its right, title and interest of
whatsoever kind and nature in and to, the Collateral, to the extent that
Citibank or PI (Cayman) Limited does not have a first priority security
interest.; and each Guarantor hereby unconditionally and irrevocably pledges,
grants and hypothecates to the Secured Parties a continuing and perfected first
priority security interest in and to, a lien upon and a right of set off against
all of their respective right, title and interest of whatsoever kind and nature
in and to the Collateral (collectively with the security interest granted by the
Company, the "Security Interest").
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3. Delivery of Certain Collateral. Contemporaneously or prior to the
execution of this Security Agreement, each Debtor shall deliver or cause to be
delivered to the Agent (a) any and all certificates and other instruments
representing or evidencing the Pledged Securities, and (b) any and all
certificates and other instruments or documents representing any of the other
Collateral, in each case, together with all Necessary Endorsements. The Debtors
are, contemporaneously with the execution hereof, delivering to Agent, or have
previously delivered to Agent, a true and correct copy of each Organizational
Document governing any of the Pledged Securities.
4. Representations, Warranties, Covenants and Agreements of the Debtors.
Each Debtor represents and warrants to, and covenants and agrees with, the
Secured Parties as follows:
(a) Each Debtor has the requisite corporate, partnership, limited
liability company or other power and authority to enter into this Security
Agreement and otherwise to carry out its obligations hereunder. The execution,
delivery and performance by each Debtor of this Security Agreement and the
filings contemplated therein have been duly authorized by all necessary action
on the part of such Debtor and no further action is required by such Debtor.
This Security Agreement has been duly executed by each Debtor. This Security
Agreement constitutes the legal, valid and binding obligation of each Debtor,
enforceable against each Debtor in accordance with its terms except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization and similar laws of general application relating to or affecting
the rights and remedies of creditors and by general principles of equity.
(b) The Debtors have no place of business or offices where their
respective books of account and records are kept (other than temporarily at the
offices of its attorneys or accountants) or places where Collateral is stored or
located, except as set forth on Schedule A attached hereto. Except as
specifically set forth on Schedule A, each Debtor is the record owner of the
real property where such Collateral is located, and there exist no mortgages or
other liens on any such real property except for Permitted Liens (as defined in
the Debentures). Except as disclosed on Schedule A, none of such Collateral is
in the possession of any consignee, bailee, warehouseman, agent or processor.
(c) Except for Permitted Liens (as defined in the Debenture) and
except as set forth on Schedule B attached hereto, the Debtors are the sole
owner of the Collateral (except for non-exclusive licenses granted by any Debtor
in the ordinary course of business), free and clear of any liens, security
interests, encumbrances, rights or claims, and are fully authorized to grant the
Security Interest. There is not on file in any governmental or regulatory
authority, agency or recording office an effective financing statement, security
agreement, license or transfer or any notice of any of the foregoing (other than
those that will be filed in favor of the Secured Parties pursuant to this
Security Agreement) covering or affecting any of the Collateral. So long as this
Security Agreement shall be in effect, the Debtors shall not execute and shall
not knowingly permit to be on file in any such office or agency any such
financing statement or other document or instrument (except to the extent filed
or recorded in favor of the Secured Parties pursuant to the terms of this
Security Agreement).
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(d) No written claim has been received that any Collateral or
Debtor's use of any Collateral violates the rights of any third party. There has
been no adverse decision to any Debtor's claim of ownership rights in or
exclusive rights to use the Collateral in any jurisdiction or to any Debtor's
right to keep and maintain such Collateral in full force and effect, and there
is no proceeding involving said rights pending or, to the best knowledge of any
Debtor, threatened before any court, judicial body, administrative or regulatory
agency, arbitrator or other governmental authority.
(e) Each Debtor shall at all times maintain its books of account and
records relating to the Collateral at its principal place of business and its
Collateral at the locations set forth on Schedule C attached hereto and may not
relocate such books of account and records or tangible Collateral unless it
delivers to the Agent, for the benefit of the Secured Parties, at least thirty
(30) days prior to such relocation (i) written notice of such relocation and the
new location thereof (which must be within the United States) and (ii) evidence
that appropriate financing statements under the UCC and other necessary
documents have been filed and recorded and other steps have been taken to
perfect the Security Interest to create in favor of the Secured Parties a valid,
perfected and continuing perfected lien in the Collateral, subject only to
Permitted Liens (as defined in the Debenture).
(f) This Security Agreement creates in favor of the Secured Parties
a valid, security interest in the Collateral, subject only to Permitted Liens
securing the payment and performance of the Obligations. Upon making the filings
described in the immediately following paragraph, all security interests created
hereunder in any Collateral which may be perfected by filing Uniform Commercial
Code financing statements shall have been duly perfected. Except for the filing
of the Uniform Commercial Code financing statements referred to in the
immediately following paragraph, the recordation of the Intellectual Property
Security Agreement (as defined below) with respect to copyrights and copyright
applications in the United States Copyright Office referred to in paragraph
(mm), the execution and delivery of deposit account control agreements
satisfying the requirements of Section 9-104(a)(2) of the UCC with respect to
each deposit account of the Debtors, and the delivery of the certificates and
other instruments provided in Section 3, no action is necessary to create,
perfect or protect the security interests created hereunder with respect to
Collateral located in the U.S. Without limiting the generality of the foregoing,
except for the filing of said financing statements, the recordation of said
Intellectual Property Security Agreement, and the execution and delivery of said
deposit account control agreements, no consent of any third parties and no
authorization, approval or other action by, and no notice to or filing with, any
governmental authority or regulatory body is required for (i) the execution,
delivery and performance of this Security Agreement, (ii) the creation or
perfection of the Security Interests created hereunder in the Collateral or
(iii) the enforcement of the rights of the Secured Parties hereunder.
(g) Each Debtor hereby authorizes the Agent on behalf of the Secured
Parties, or any of them, to file one or more financing statements under the UCC,
with respect to the Security Interest with the proper filing and recording
agencies in any jurisdiction deemed proper by them.
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(h) The execution, delivery and performance of this Security
Agreement by the Debtors does not (i) violate any of the provisions of any
Organizational Documents of any Debtor or any judgment, decree, order or award
of any court, governmental body or arbitrator or any applicable law, rule or
regulation applicable to any Debtor or (ii) conflict with, or constitute a
default (or an event that with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of,
any agreement, credit facility, debt or other instrument (evidencing any
Debtor's debt or otherwise) or other understanding to which any Debtor is a
party or by which any property or asset of any Debtor is bound or affected. No
consent (including, without limitation, from stockholders or creditors of any
Debtor) is required for any Debtor to enter into and perform its obligations
hereunder.
(i) The capital stock and other equity interests listed on Schedule
H hereto represent all of the capital stock and other equity interests of the
Guarantors, and represent all capital stock and other equity interests owned,
directly or indirectly, by the Company. All of the Pledged Securities are
validly issued, fully paid and nonassessable, and the Company is the legal and
beneficial owner of the Pledged Securities, free and clear of any lien, security
interest or other encumbrance except for the security interests created by this
Security Agreement and other Permitted Liens (as defined in the Debenture).
(j) The ownership and other equity interests in partnerships and
limited liability companies (if any) included in the Collateral (the "Pledged
Interests") by their express terms do not provide that they are securities
governed by Article 8 of the UCC and are not held in a securities account or by
any financial intermediary.
(k) Each Debtor shall at all times maintain the liens and Security
Interest provided for hereunder as valid and perfected first priority liens and
security interests (except in the case of the Company to the extent that a first
priority lien is held by Citibank or PI (Cayman) Limitied, in which event the
Company shall maintain a perfected second priority lien) in the Collateral in
favor of the Secured Parties until this Security Agreement and the Security
Interest hereunder shall be terminated pursuant to Section 14 hereof. Each
Debtor hereby agrees to defend the same against the claims of any and all
persons and entities. Each Debtor shall safeguard and protect all Collateral for
the account of the Secured Parties.
At the request of the Agent, each Debtor will sign and deliver to the
Agent at any time or from time to time one or more financing statements pursuant
to the UCC in form reasonably satisfactory to the Agent and will pay the cost of
filing the same in all public offices wherever filing is, or is deemed by the
Agent to be, necessary or desirable to effect the rights and obligations
provided for herein. Without limiting the generality of the foregoing, each
Debtor shall pay all fees, taxes and other amounts necessary to maintain the
Collateral and the Security Interest hereunder, and each Debtor shall obtain and
furnish to the Agent from time to time, upon demand, such releases and/or
subordinations of claims and liens which may be required to maintain the
priority of the Security Interest hereunder.
(l) No Debtor will transfer, pledge, hypothecate, encumber, license,
sell or otherwise dispose of any of the Collateral (except for (i) non-exclusive
licenses granted by a Debtor in its ordinary course of business and (ii) sales
of inventory by a Debtor in its ordinary course of business), without the prior
written consent of a Majority in Interest.
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(m) Each Debtor shall keep and preserve its equipment, inventory and
other tangible Collateral in good condition, repair and order (ordinary wear and
tear excepted) and shall not operate or locate any such Collateral (or cause to
be operated or located) in any area excluded from insurance coverage.
(n) Each Debtor shall maintain with financially sound and reputable
insurers, insurance with respect to the Collateral against loss or damage of the
kinds and in the amounts customarily insured against by entities of established
reputation having similar properties similarly situated and in such amounts as
are customarily carried under similar circumstances by other such entities and
otherwise as is prudent for entities engaged in similar businesses but in any
event sufficient to cover the full replacement cost thereof. Each Debtor shall
cause each insurance policy issued in connection herewith to provide, and the
insurer issuing such policy to certify to the Agent that (a) the Agent on behalf
of the Secured Parties will be named as lender loss payee and additional insured
under each such insurance policy; (b) if such insurance be proposed to be
cancelled or materially changed for any reason whatsoever, such insurer will
promptly notify the Agent and such cancellation or change shall not be effective
as to the Agent for at least thirty (30) days after receipt by the Agent of such
notice, unless the effect of such change is to extend or increase coverage under
the policy; and (c) the Agent will have the right (but no obligation) at its
election to remedy any default in the payment of premiums within thirty (30)
days of notice from the insurer of such default. If no Event of Default (as
defined in the Debenture) exists, and if the proceeds arising out of any claim
or series of related claims do not exceed $100,000, loss payments in each
instance will be applied by the applicable Debtor to the repair and/or
replacement of property with respect to which the loss was incurred to the
extent reasonably feasible, and any loss payments or the balance thereof
remaining, to the extent not so applied, shall be payable to the applicable
Debtor, provided, however, that payments received by any Debtor after an Event
of Default occurs and is continuing and if the proceeds arising out of any claim
or series of related claims do not exceed $100,000, shall be paid to the Agent,
for the benefit of the Secured Parties, and, if received by such Debtor, shall
be held in trust for and immediately paid over to the Agent, for the benefit of
the Secured Parties, unless otherwise directed in writing by the Agent. Copies
of such policies or the related certificates, in each case, naming the Agent, on
behalf of the Secured Parties, as lender loss payee and additional insured shall
be delivered to the Agent at least annually and at the time any new policy of
insurance is issued.
(o) Each Debtor shall, within ten (10) days of obtaining knowledge
thereof, advise the Agent promptly, in sufficient detail, of any substantial
change in the Collateral, and of the occurrence of any event which would have a
material adverse effect on the value of the Collateral or on the Secured
Parties' security interest therein.
(p) Each Debtor shall promptly execute and deliver to the Agent such
further deeds, mortgages, assignments, security agreements, financing statements
or other instruments, documents, certificates and assurances and take such
further action as the Agent may from time to time request and may in its sole
discretion deem necessary to perfect, protect or enforce its security interest
in the Collateral including, without limitation, if applicable, the execution
and delivery of a separate security agreement with respect to each Debtor's
Intellectual Property ("Intellectual Property Security Agreement") in which the
Agent have been granted a security interest hereunder, substantially in a form
acceptable to the Agent, which Intellectual Property Security Agreement, other
than as stated therein, shall be subject to all of the terms and conditions
hereof.
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(q) Each Debtor shall permit the Agent and their representatives and
agents to inspect the Collateral any time to time, and to make copies of records
pertaining to the Collateral as may be requested by a Agent from time to time.
(r) Each Debtor shall take all steps reasonably necessary to
diligently pursue and seek to preserve, enforce and collect any rights, claims,
causes of action and accounts receivable in respect of the Collateral.
(s) Each Debtor shall promptly notify the Agent in sufficient detail
upon becoming aware of any attachment, garnishment, execution or other legal
process levied against any Collateral and of any other information received by
such Debtor that may materially affect the value of the Collateral, the Security
Interest or the rights and remedies of the Secured Parties hereunder.
(t) All information heretofore, herein or hereafter supplied to the
Agent by or on behalf of any Debtor with respect to the Collateral is accurate
and complete in all material respects as of the date furnished.
(u) The Debtors shall at all times preserve and keep in full force
and effect their respective valid existence and good standing and any rights and
franchises material to its business.
(v) No Debtor will change its name, type of organization,
jurisdiction of organization, organizational identification number (if it has
one), legal or corporate structure, or identity, or add any new fictitious name
unless it provides at least thirty (30) days prior written notice to the Agent
of such change and, at the time of such written notification, such Debtor
provides any financing statements or fixture filings necessary to perfect and
continue perfected the perfected security Interest granted and evidenced by this
Security Agreement.
(w) No Debtor may consign any of its Inventory without the consent
of a Majority in Interest which shall not be unreasonably withheld, except to
the extent such consignment or sale does not exceed 15% of the total value of
all of the Company's finished goods in Inventory. No Debtor may sell any of its
Inventory on xxxx and hold, sale or return, sale on approval, or other
conditional terms of sale, except as currently conducted in the ordinary course
of business in connection with its distribution arrangements.
(x) No Debtor may relocate its chief executive office to a new
location without providing thirty (30) days prior written notification thereof
to the Agent and so long as, at the time of such written notification, such
Debtor provides any financing statements or fixture filings necessary to perfect
and continue perfected the perfected security Interest granted and evidenced by
this Security Agreement.
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(y) Each Debtor was organized and remains organized solely under the
laws of the state set forth next to such Debtor's name in the first paragraph of
this Security Agreement. Schedule D attached hereto sets forth each Debtor's
organizational identification number or, if any Debtor does not have one, states
that one does not exist.
(z) (i) The actual name of each Debtor is the name set forth in the
preamble above; (ii) no Debtor has any trade names except as set forth on
Schedule E attached hereto; (iii) no Debtor has used any name other than that
stated in the preamble hereto or as set forth on Schedule F for the preceding
five years; and (iv) no entity has merged into any Debtor or been acquired by
any Debtor within the past five years except as set forth on Schedule E.
(aa) At any time and from time to time that any Collateral consists
of instruments, certificated securities or other items that require or permit
possession by the secured party to perfect the security interest created hereby,
the applicable Debtor shall deliver such Collateral to the Agent, for the
benefit of the Secured Parties.
(bb) Each Debtor, in its capacity as issuer, hereby agrees to comply
with any and all orders and instructions of the Agent regarding the Pledged
Interests consistent with the terms of this Security Agreement without the
further consent of any Debtor as contemplated by Section 8-106 (or any successor
section) of the UCC. Further, each Debtor agrees that it shall not enter into a
similar agreement (or one that would confer "control" within the meaning of
Article 8 of the UCC) with any other person or entity.
(cc) Each Debtor shall cause all tangible chattel paper constituting
Collateral, to be delivered to the Agent, or, if such delivery is not possible,
then to cause such tangible chattel paper to contain a legend noting that it is
subject to the security interest created by this Security Agreement. To the
extent that any Collateral consists of electronic chattel paper, the applicable
Debtor shall cause the underlying chattel paper to be "marked" within the
meaning of Section 9-105 of the UCC (or successor section thereto).
(dd) If there is any investment property or deposit account included
as Collateral that can be perfected by "control" through an account control
agreement, the applicable Debtor shall cause such an account control agreement,
in form and substance in each case satisfactory to the Agent, to be entered into
and delivered to the Agent, for the benefit of the Secured Parties.
(ee) To the extent that any Collateral consists of letter-of-credit
rights, the applicable Debtor shall cause the issuer of each underlying letter
of credit to consent to an assignment of the proceeds thereof to the Secured
Parties.
(ff) To the extent that any Collateral is in the possession of any
third party, the applicable Debtor shall join with the Agent in notifying such
third party of the Agent's security interest in such Collateral and shall use
its best reasonable efforts to obtain an acknowledgement and agreement from such
third party with respect to the Collateral, in form and substance satisfactory
to the Agent.
(gg) If any Debtor shall at any time hold or acquire a commercial
tort claim, such Debtor shall promptly notify the Secured Parties in a writing
signed by such Debtor of the particulars thereof and grant to the Secured
Parties in such writing a security interest therein and in the proceeds thereof,
all upon the terms of this Security Agreement, with such writing to be in form
and substance satisfactory to the Secured Parties.
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(hh) Each Debtor shall immediately provide written notice to the
Agent of any and all accounts which arise out of contracts with any governmental
authority and, to the extent necessary to perfect or continue the perfected
status of the Security Interest in such accounts and proceeds thereof, shall
execute and deliver to the Agent, for the benefit of the Secured Parties, an
assignment of claims for such accounts and cooperate with the Agent in taking
any other steps required, in their judgment, under the Federal Assignment of
Claims Act or any similar federal, state or local statute or rule to perfect or
continue the perfected status of the Security Interest in such accounts and
proceeds thereof.
(ii) Each Debtor shall cause each subsidiary of such Debtor
organized in the United States or any state thereof to immediately become a
party hereto (an "Additional Debtor"), by executing and delivering an Additional
Debtor Joinder in substantially the form of Annex A attached hereto and comply
with the provisions hereof applicable to the Debtors. Concurrent therewith, the
Additional Debtor shall deliver replacement schedules for, or supplements to all
other Schedules to (or referred to in) this Security Agreement, as applicable,
which replacement schedules shall supersede, or supplements shall modify, the
Schedules then in effect. The Additional Debtor shall also deliver such opinions
of counsel, authorizing resolutions, good standing certificates, incumbency
certificates, organizational documents, financing statements and other
information and documentation as the Secured Parties may reasonably request.
Upon delivery of the foregoing to the Agent, the Additional Debtor shall be and
become a party to this Security Agreement with the same rights and obligations
as the Debtors, for all purposes hereof as fully and to the same extent as if it
were an original signatory hereto and shall be deemed to have made the
representations, warranties and covenants set forth herein as of the date of
execution and delivery of such Additional Debtor Joinder, and all references
herein to the "Debtors" shall be deemed to include each Additional Debtor.
(jj) Each Debtor shall vote the Pledged Securities to comply with
the covenants and agreements set forth herein and in the Debentures.
(kk) Each Debtor shall register the pledge of the applicable Pledged
Securities on the books of such Debtor. Each Debtor shall notify each issuer of
Pledged Securities to register the pledge of the applicable Pledged Securities
in the name of the Secured Parties on the books of such issuer. Further, except
with respect to certificated securities delivered to the Agent, the applicable
Debtor shall deliver to the Agent an acknowledgement of pledge (which, where
appropriate, shall comply with the requirements of the relevant UCC with respect
to perfection by registration) signed by the issuer of the applicable Pledged
Securities, which acknowledgement shall confirm that: (a) it has registered the
pledge on its books and records; and (b) at any time directed by the Agent
during the continuation of an Event of Default, such issuer will transfer the
record ownership of such Pledged Securities into the name of any designee of the
Agent, will take such steps as may be necessary to effect the transfer, and will
comply with all other instructions of the Agent regarding such Pledged
Securities without the further consent of the applicable Debtor.
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(ll) In the event that, upon an occurrence of an Event of Default,
the Agent shall sell all or any of the Pledged Securities to another party or
parties (herein called the "Transferee") or shall purchase or retain all or any
of the Pledged Securities, each Debtor shall, to the extent applicable: (i)
deliver to the Agent or the Transferee, as the case may be, the articles of
incorporation, bylaws, minute books, stock certificate books, corporate seals,
deeds, leases, indentures, agreements, evidences of indebtedness, books of
account, financial records and all other Organizational Documents and records of
the Debtors and their direct and indirect subsidiaries; (ii) use its best
efforts to obtain resignations of the persons then serving as officers and
directors of the Debtors and their direct and indirect subsidiaries, if so
requested; and (iii) use its best efforts to obtain any approvals that are
required by any governmental or regulatory body in order to permit the sale of
the Pledged Securities to the Transferee or the purchase or retention of the
Pledged Securities by the Agent and allow the Transferee or the Agent to
continue the business of the Debtors and their direct and indirect subsidiaries.
(mm) Without limiting the generality of the other obligations of the
Debtors hereunder, each Debtor shall promptly (i) cause to be registered at the
United States Copyright Office all of its material copyrights, (ii) cause the
security interest contemplated hereby with respect to all Intellectual Property
registered at the United States Copyright Office or United States Patent and
Trademark Office to be duly recorded at the applicable office, and (iii) give
the Agent notice whenever it acquires (whether absolutely or by license) or
creates any additional material Intellectual Property.
(nn) Each Debtor will from time to time, at the joint and several
expense of the Debtors, promptly execute and deliver all such further
instruments and documents, and take all such further action as may be necessary
or desirable, or as the Agent may reasonably request, in order to perfect and
protect any security interest granted or purported to be granted hereby or to
enable the Agent, for the benefit of Secured Parties, to exercise and enforce
their rights and remedies hereunder and with respect to any Collateral or to
otherwise carry out the purposes of this Security Agreement.
(oo) Schedule F attached hereto lists all of the patents, patent
applications, trademarks, trademark applications, registered copyrights, and
domain names owned by any of the Debtors as of the date hereof. Schedule F lists
all material licenses in favor of any Debtor for the use of any patents,
trademarks, copyrights and domain names as of the date hereof. All material
patents and trademarks of the Debtors have been duly recorded at the United
States Patent and Trademark Office and all material copyrights of the Debtors
have been duly recorded at the United States Copyright Office.
(pp) Except as set forth on Schedule G attached hereto, none of the
account debtors or other persons or entities obligated on any of the Collateral
is a governmental authority covered by the Federal Assignment of Claims Act or
any similar federal, state or local statute or rule in respect of such
Collateral.
5. Effect of Pledge on Certain Rights. If any of the Collateral subject to
this Security Agreement consists of nonvoting equity or ownership interests
(regardless of class, designation, preference or rights) that may be converted
into voting equity or ownership interests upon the occurrence of certain events
(including, without limitation, upon the transfer of all or any of the other
stock or assets of the issuer), it is agreed that the pledge of such equity or
ownership interests pursuant to this Security Agreement or the enforcement of
any of the Agent's rights hereunder shall not be deemed to be the type of event
which would trigger such conversion rights notwithstanding any provisions in the
Organizational Documents or agreements to which any Debtor is subject or to
which any Debtor is party.
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6. Defaults. The following events shall be "Events of Default":
(a) The occurrence of an Event of Default (as defined in the
Debenture) under the Debenture;
(b) Any representation or warranty of any Debtor in this Security
Agreement shall prove to have been incorrect when made;
(c) The failure by any Debtor to observe or perform any of its
obligations hereunder for five (5) days after delivery to such Debtor of notice
of such failure by or on behalf of a Secured Party unless such default is
capable of cure but cannot be cured within such time frame and such Debtor is
using best efforts to cure same in a timely fashion; or
(d) If any provision of this Security Agreement shall at any time
for any reason be declared to be null and void, or the validity or
enforceability thereof shall be contested by any Debtor, or a proceeding shall
be commenced by any Debtor, or by any governmental authority having jurisdiction
over any Debtor, seeking to establish the invalidity or unenforceability
thereof, or any Debtor shall deny that any Debtor has any liability or
obligation purported to be created under this Security Agreement.
7. Duty To Hold In Trust.
(a) Upon the occurrence of any Event of Default and at any time
thereafter, each Debtor shall, upon receipt of any revenue, income, dividend,
interest or other sums subject to the Security Interest, whether payable
pursuant to the Debentures or otherwise, or of any check, draft, note, trade
acceptance or other instrument evidencing an obligation to pay any such sum,
hold the same in trust for the Secured Parties and shall forthwith endorse and
transfer any such sums or instruments, or both, to the Secured Parties, pro-rata
in proportion to their initial purchases of Debentures for application to the
satisfaction of the Obligations (and if any Debenture is not outstanding,
pro-rata in proportion to the initial purchases of the remaining Debentures).
(b) If any Debtor shall become entitled to receive or shall receive
any securities or other property (including, without limitation, shares of
Pledged Securities or instruments representing Pledged Securities acquired after
the date hereof, or any options, warrants, rights or other similar property or
certificates representing a dividend, or any distribution in connection with any
recapitalization, reclassification or increase or reduction of capital, or
issued in connection with any reorganization of such Debtor or any of its direct
or indirect subsidiaries) in respect of the Pledged Securities (whether as an
addition to, in substitution of, or in exchange for, such Pledged Securities or
otherwise), such Debtor agrees to (i) accept the same as the agent of the
Secured Parties; (ii) hold the same in trust on behalf of and for the benefit of
the Secured Parties; and (iii) to deliver any and all certificates or
instruments evidencing the same to the Agent on or before the close of business
on the fifth business day following the receipt thereof by such Debtor, in the
exact form received together with the Necessary Endorsements, to be held by the
Agent subject to the terms of this Security Agreement as Collateral.
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8. Rights and Remedies Upon Default.
(a) Upon the occurrence of any Event of Default and at any time
thereafter, the Agent, on behalf of the Secured Parties, shall have the right to
exercise all of the remedies conferred hereunder and under the Debenture. The
Agent, on behalf of the Secured Parties, shall have all the rights and remedies
of a secured party under the UCC. Without limitation, the Agent, on behalf of
the Secured Parties, shall have the following rights and powers:
(i) The Agent, for the benefit of the Secured Parties, shall
have the right to take possession of the Collateral and, for that purpose,
enter, with the aid and assistance of any person, any premises where the
Collateral, or any part thereof, is or may be placed and remove the same, and
each Debtor shall assemble the Collateral and make it available to the Agent at
places which the Agent shall reasonably select, whether at such Debtor's
premises or elsewhere, and make available to the Agent, without rent, all of
such Debtor's respective premises and facilities for the purpose of the Agent
taking possession of, removing or putting the Collateral in saleable or
disposable form.
(ii) Upon notice to the Debtors by the Agent, all rights of
each Debtor to exercise the voting and other consensual rights which it would
otherwise be entitled to exercise and all rights of each Debtor to receive the
dividends and interest which it would otherwise be authorized to receive and
retain, shall cease. Upon such notice, the Agent shall have the right to receive
any interest, cash dividends or other payments on the Collateral and, at the
option of the Agent, to exercise in the Agent's discretion all voting rights
pertaining thereto. Without limiting the generality of the foregoing, the Agent
shall have the right (but not the obligation) to exercise all rights with
respect to the Collateral as it were the sole and absolute owners thereof,
including, without limitation, to vote and/or to exchange, at its sole
discretion, any or all of the Collateral in connection with a merger,
reorganization, consolidation, recapitalization or other readjustment concerning
or involving the Collateral or any Debtor or any of its direct or indirect
subsidiaries.
(iii) The Agent, for the benefit of the Secured Parties, shall
have the right to operate the business of each Debtor using the Collateral and
shall have the right to assign, sell, lease or otherwise dispose of and deliver
all or any part of the Collateral, at public or private sale or otherwise,
either with or without special conditions or stipulations, for cash or on credit
or for future delivery, in such parcel or parcels and at such time or times and
at such place or places, and upon such terms and conditions as the Agent may
deem commercially reasonable, all without (except as shall be required by
applicable statute and cannot be waived) advertisement or demand upon or notice
to any Debtor or right of redemption of a Debtor, which are hereby expressly
waived. Upon each such sale, lease, assignment or other transfer of Collateral,
the Secured Parties may, unless prohibited by applicable law which cannot be
waived, purchase all or any part of the Collateral being sold, free from and
discharged of all trusts, claims, right of redemption and equities of any
Debtor, which are hereby waived and released.
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(iv) The Agent shall have the right (but not the obligation)
to notify any account debtors and any obligors under instruments or accounts to
make payments directly to the Agent, or the benefit of the Secured Parties, and
to enforce the Debtors' rights against such account debtors and obligors.
(v) The Agent may (but are not obligated to) direct any
financial intermediary or any other person or entity holding any investment
property to transfer the same to the Agent or their designee.
(vi) The Agent may (but are not obligated to) transfer any or
all Intellectual Property registered in the name of any Debtor at the United
States Patent and Trademark Office and/or Copyright Office into the name of the
Agent, for the benefit of the Secured Parties, or any designee or any purchaser
of any Collateral.
(b) The Agent shall comply with any applicable law in connection
with a disposition of Collateral and such compliance will not be considered
adversely to affect the commercial reasonableness of any sale of the Collateral.
The Agent may sell the Collateral without giving any warranties and may
specifically disclaim such warranties. If the Agent sells any of the Collateral
on credit, the Debtors will only be credited with payments actually made by the
purchaser. In addition, each Debtor waives any and all rights that it may have
to a judicial hearing in advance of the enforcement of any of the Agent's rights
and remedies hereunder, including, without limitation, its right following an
Event of Default to take immediate possession of the Collateral and to exercise
its rights and remedies with respect thereto.
(c) For the purpose of enabling the Agent to further exercise rights
and remedies under this Section 8 or elsewhere provided by agreement or
applicable law, each Debtor hereby grants to the Agent, for the benefit of the
Secured Parties, an irrevocable, nonexclusive license (exercisable without
payment of royalty or other compensation to such Debtor) to use, license or
sublicense following an Event of Default, any Intellectual Property now owned or
hereafter acquired by such Debtor, and wherever the same may be located, and
including in such license access to all media in which any of the licensed items
may be recorded or stored and to all computer software and programs used for the
compilation or printout thereof.
9. Applications of Proceeds. The proceeds of any such sale, lease or other
disposition of the Collateral hereunder shall be applied first, to the expenses
of retaking, holding, storing, processing and preparing for sale, selling, and
the like (including, without limitation, any taxes, fees and other costs
incurred in connection therewith) of the Collateral, to the reasonable
attorneys' fees and expenses incurred by the Agent in enforcing their rights
hereunder and in connection with collecting, storing and disposing of the
Collateral, and then to satisfaction of the Obligations pro rata among the
Secured Parties (based on then-outstanding principal amounts of Debentures at
the time of any such determination), and to the payment of any other amounts
required by applicable law, after which the Secured Parties shall pay to the
applicable Debtor any surplus proceeds. If, upon the sale, license or other
disposition of the Collateral, the proceeds thereof are insufficient to pay all
amounts to which the Secured Parties are legally entitled, the Debtors will be
liable for the deficiency, together with interest thereon, at the rate of 10%
per annum or the lesser amount permitted by applicable law (the "Default Rate"),
and the reasonable fees of any attorneys employed by the Secured Parties to
collect such deficiency. To the extent permitted by applicable law, each Debtor
waives all claims, damages and demands against the Secured Parties arising out
of the repossession, removal, retention or sale of the Collateral, unless due
solely to the gross negligence or willful misconduct of the Secured Parties as
determined by a final judgment (not subject to further appeal) of a court of
competent jurisdiction.
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10. Securities Law Provision. Each Debtor recognizes that the Agent may be
limited in its ability to effect a sale to the public of all or part of the
Pledged Securities by reason of certain prohibitions in the Securities Act of
1933, as amended, or other federal or state securities laws (collectively, the
"Securities Laws"), and may be compelled to resort to one or more sales to a
restricted group of purchasers who may be required to agree to acquire the
Pledged Securities for their own account, for investment and not with a view to
the distribution or resale thereof. Each Debtor agrees that sales so made may be
at prices and on terms less favorable than if the Pledged Securities were sold
to the public, and that the Agent has no obligation to delay the sale of any
Pledged Securities for the period of time necessary to register the Pledged
Securities for sale to the public under the Securities Laws. Each Debtor shall
cooperate with the Agent in its attempt to satisfy any requirements under the
Securities Laws (including, without limitation, registration thereunder if
requested by the Agent) applicable to the sale of the Pledged Securities by the
Agent.
11. Costs and Expenses. Each Debtor agrees to pay all reasonable
out-of-pocket fees, costs and expenses incurred in connection with any filing
required hereunder, including without limitation, any financing statements
pursuant to the UCC, continuation statements, partial releases and/or
termination statements related thereto or any expenses of any searches
reasonably required by the Secured Parties. The Debtors shall also pay all other
claims and charges which in the reasonable opinion of the Secured Parties might
prejudice, imperil or otherwise affect the Collateral or the Security Interest
therein. The Debtors will also, upon demand, pay to the Secured Parties the
amount of any and all reasonable expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, which the Secured Parties
may incur in connection with (i) the enforcement of this Security Agreement,
(ii) the custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, or (iii) the exercise or enforcement of
any of the rights of the Secured Parties under the Debentures. Until so paid,
any fees payable hereunder shall be added to the principal amount of the
Debentures and shall bear interest at the Default Rate.
12. Responsibility for Collateral. The Debtors assume all liabilities and
responsibility in connection with all Collateral, and the Obligations shall in
no way be affected or diminished by reason of the loss, destruction, damage or
theft of any of the Collateral or its unavailability for any reason. Without
limiting the generality of the foregoing, (a) neither the Agent nor any Secured
Party (i) has any duty (either before or after an Event of Default) to collect
any amounts in respect of the Collateral or to preserve any rights relating to
the Collateral, or (ii) has any obligation to clean-up or otherwise prepare the
Collateral for sale, and (b) each Debtor shall remain obligated and liable under
each contract or agreement included in the Collateral to be observed or
performed by such Debtor thereunder. Neither the Agent nor any Secured Party
shall have any obligation or liability under any such contract or agreement by
reason of or arising out of this Security Agreement or the receipt by the Agent
or any Secured Party of any payment relating to any of the Collateral, nor shall
the Agent or any Secured Party be obligated in any manner to perform any of the
obligations of any Debtor under or pursuant to any such contract or agreement,
to make inquiry as to the nature or sufficiency of any payment received by the
Agent or any Secured Party in respect of the Collateral or as to the sufficiency
of any performance by any party under any such contract or agreement, to present
or file any claim, to take any action to enforce any performance or to collect
the payment of any amounts which may have been assigned to the Agent or to which
the Agent or any Secured Party may be entitled at any time or times.
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13. Security Interest Absolute. All rights of the Secured Parties and all
obligations of the Debtors hereunder, shall be absolute and unconditional,
irrespective of: (a) any lack of validity or enforceability of this Security
Agreement, the Debentures or any agreement entered into in connection with the
foregoing, or any portion hereof or thereof; (b) any change in the time, manner
or place of payment or performance of, or in any other term of, all or any of
the Obligations, or any other amendment or waiver of or any consent to any
departure from the Debentures or any other agreement entered into in connection
with the foregoing; (c) any exchange, release or nonperfection of any of the
Collateral, or any release or amendment or waiver of or consent to departure
from any other collateral for, or any guaranty, or any other security, for all
or any of the Obligations; (d) any action by the Secured Parties to obtain,
adjust, settle and cancel in its sole discretion any insurance claims or matters
made or arising in connection with the Collateral; or (e) any other circumstance
which might otherwise constitute any legal or equitable defense available to a
Debtor, or a discharge of all or any part of the Security Interest granted
hereby. Until the Obligations shall have been paid and performed in full, the
rights of the Secured Parties shall continue even if the Obligations are barred
for any reason, including, without limitation, the running of the statute of
limitations or bankruptcy. Each Debtor expressly waives presentment, protest,
notice of protest, demand, notice of nonpayment and demand for performance. In
the event that at any time any transfer of any Collateral or any payment
received by the Secured Parties hereunder shall be deemed by final order of a
court of competent jurisdiction to have been a voidable preference or fraudulent
conveyance under the bankruptcy or insolvency laws of the United States, or
shall be deemed to be otherwise due to any party other than the Secured Parties,
then, in any such event, each Debtor's obligations hereunder shall survive
cancellation of this Security Agreement, and shall not be discharged or
satisfied by any prior payment thereof and/or cancellation of this Security
Agreement, but shall remain a valid and binding obligation enforceable in
accordance with the terms and provisions hereof. Each Debtor waives all right to
require the Secured Parties to proceed against any other person or entity or to
apply any Collateral which the Secured Parties may hold at any time, or to
marshal assets, or to pursue any other remedy. Each Debtor waives any defense
arising by reason of the application of the statute of limitations to any
obligation secured hereby.
14. Term of Security Agreement. This Security Agreement and the Security
Interest shall terminate on the date on which all payments under the Debentures
have been indefeasibly paid in full and all other Obligations have been paid or
discharged; provided, however, that all indemnities of the Debtors contained in
this Security Agreement (including, without limitation, Annex B hereto) shall
survive and remain operative and in full force and effect regardless of the
termination of this Security Agreement.
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15. Power of Attorney; Further Assurances.
(a) Each Debtor authorizes the Agent, and does hereby make,
constitute and appoint the Agent and their respective officers, agents,
successors or assigns with full power of substitution, as such Debtor's true and
lawful attorney-in-fact, with power, in the name of the various Secured Parties
or such Debtor, to, after the occurrence and during the continuance of an Event
of Default, (i) endorse any note, checks, drafts, money orders or other
instruments of payment (including payments payable under or in respect of any
policy of insurance) in respect of the Collateral that may come into possession
of the Secured Parties; (ii) to sign and endorse any financing statement
pursuant to the UCC or any invoice, freight or express xxxx, xxxx of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with accounts, and other documents
relating to the Collateral; (iii) to pay or discharge taxes, liens, security
interests or other encumbrances at any time levied or placed on or threatened
against the Collateral; (iv) to demand, collect, receipt for, compromise, settle
and xxx for monies due in respect of the Collateral; (v) to transfer any
Intellectual Property or provide licenses respecting any Intellectual Property;
and (vi) generally, at the option of the Secured Parties, and at the expense of
the Debtors, at any time, or from time to time, to execute and deliver any and
all documents and instruments and to do all acts and things which the Secured
Parties deem necessary to protect, preserve and realize upon the Collateral and
the Security Interest granted therein in order to effect the intent of this
Security Agreement and the Debentures all as fully and effectually as the
Debtors might or could do; and each Debtor hereby ratifies all that said
attorney shall lawfully do or cause to be done by virtue hereof. This power of
attorney is coupled with an interest and shall be irrevocable for the term of
this Security Agreement and thereafter as long as any of the Obligations shall
be outstanding. The designation set forth herein shall be deemed to amend and
supersede any inconsistent provision in the Organizational Documents or other
documents or agreements to which any Debtor is subject or to which any Debtor is
a party. Without limiting the generality of the foregoing, after the occurrence
and during the continuance of an Event of Default, each Secured Party is
specifically authorized to execute and file any applications for or instruments
of transfer and assignment of any patents, trademarks, copyrights or other
Intellectual Property with the United States Patent and Trademark Office and the
United States Copyright Office.
(b) On a continuing basis, each Debtor will make, execute,
acknowledge, deliver, file and record, as the case may be, with the proper
filing and recording agencies in any jurisdiction, including, without
limitation, the jurisdictions indicated on Schedule C attached hereto, all such
instruments, and take all such action as may reasonably be deemed necessary or
advisable, or as reasonably requested by the Secured Parties, to perfect the
Security Interest granted hereunder and otherwise to carry out the intent and
purposes of this Security Agreement, or for assuring and confirming to the
Secured Parties the grant or perfection of a perfected security interest in all
the Collateral under the UCC.
(c) Each Debtor hereby irrevocably appoints the Agent as such
Debtor's attorney-in-fact, with full authority in the place and instead of such
Debtor and in the name of such Debtor, from time to time in the Agent's
discretion, to take any action and to execute any instrument which the Secured
Parties may deem necessary or advisable to perfect the security interests
granted pursuant to the terms of this Security Agreement, including the filing,
in its sole discretion, of one or more financing or continuation statements and
amendments thereto, relative to any of the Collateral without the signature of
such Debtor where permitted by law, which financing statements may (but need
not) describe the Collateral as "all assets" or "all personal property" or words
of like import, and ratifies all such actions taken by the Agent. This power of
attorney is coupled with an interest and shall be irrevocable for the term of
this Security Agreement and thereafter as long as any of the Obligations.
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16. Notices. All notices, requests, demands and other communications
hereunder shall be subject to the notice provision of the Purchase Agreement (as
such term is defined in the Debentures).
17. Other Security. To the extent that the Obligations are now or
hereafter secured by property other than the Collateral or by the guarantee,
endorsement or property of any other person, firm, corporation or other entity,
then the Secured Parties shall have the right, in its sole discretion, to
pursue, relinquish, subordinate, modify or take any other action with respect
thereto, without in any way modifying or affecting any of the Secured Parties'
rights and remedies hereunder.
18. Appointment of the Agent. The Secured Parties hereby appoint Platinum
Long Term Growth III to act as their agent (the "Agent") for purposes of
exercising any and all rights and remedies of the Secured Parties hereunder.
Such appointment shall continue until revoked in writing by a Majority in
Interest, at which time a Majority in Interest shall appoint a new Agent;
provided, that the Agent may not be removed as agent unless the Agent and its
Affiliates shall then hold less than $25,000 principal amount of Debentures;
provided further that such removal may occur only if each of the other Secured
Parties shall then hold not less than $50,000 principal amount of Debentures.
The Agent shall have the rights, responsibilities and immunities set forth in
Annex B hereto.
Miscellaneous.
(a) No course of dealing between the Debtors and the Secured
Parties, nor any failure to exercise, nor any delay in exercising, on the part
of the Secured Parties, any right, power or privilege hereunder or under the
Debentures shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or thereunder preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege.
(b) All of the rights and remedies of the Secured Parties with
respect to the Collateral, whether established hereby or by the Debentures or by
any other agreements, instruments or documents or by law shall be cumulative and
may be exercised singly or concurrently.
(c) This Security Agreement constitutes the entire agreement of the
parties with respect to the subject matter hereof and is intended to supersede
all prior negotiations, understandings and agreements with respect thereto.
Except as specifically set forth in this Security Agreement, no provision of
this Security Agreement may be modified or amended except by a written agreement
specifically referring to this Security Agreement and signed by the parties
hereto.
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(d) In the event any provision of this Security Agreement is held to
be invalid, prohibited or unenforceable in any jurisdiction for any reason,
unless such provision is narrowed by judicial construction, this Security
Agreement shall, as to such jurisdiction, be construed as if such invalid,
prohibited or unenforceable provision had been more narrowly drawn so as not to
be invalid, prohibited or unenforceable. If, notwithstanding the foregoing, any
provision of this Security Agreement is held to be invalid, prohibited or
unenforceable in any jurisdiction, such provision, as to such jurisdiction,
shall be ineffective to the extent of such invalidity, prohibition or
unenforceability without invalidating the remaining portion of such provision or
the other provisions of this Security Agreement and without affecting the
validity or enforceability of such provision or the other provisions of this
Security Agreement in any other jurisdiction.
(e) No waiver of any breach or default or any right under this
Security Agreement shall be considered valid unless in writing and signed by the
party giving such waiver, and no such waiver shall be deemed a waiver of any
subsequent breach or default or right, whether of the same or similar nature or
otherwise.
(f) This Security Agreement shall be binding upon and inure to the
benefit of each party hereto and its successors and assigns.
(g) Each party shall take such further action and execute and
deliver such further documents as may be necessary or appropriate in order to
carry out the provisions and purposes of this Security Agreement.
(h) All questions concerning the construction, validity, enforcement
and interpretation of this Security Agreement shall be governed by and construed
and enforced in accordance with the internal laws of the State of New York,
without regard to the principles of conflicts of law thereof. Each Debtor agrees
that all proceedings concerning the interpretations, enforcement and defense of
the transactions contemplated by this Security Agreement and the Debentures
(whether brought against a party hereto or its respective affiliates, directors,
officers, shareholders, partners, members, employees or agents) shall be
commenced exclusively in the state and federal courts sitting in the City of New
York, Borough of Manhattan. Each Debtor hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in the City of
New York, Borough of Manhattan for the adjudication of any dispute hereunder or
in connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any
proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such proceeding is improper. Each party hereto hereby
irrevocably waives personal service of process and consents to process being
served in any such proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Security Agreement and
agrees that such service shall constitute good and sufficient service of process
and notice thereof. Nothing contained herein shall be deemed to limit in any way
any right to serve process in any manner permitted by law. Each party hereto
hereby irrevocably waives, to the fullest extent permitted by applicable law,
any and all right to trial by jury in any legal proceeding arising out of or
relating to this Security Agreement or the transactions contemplated hereby. If
any party shall commence a proceeding to enforce any provisions of this Security
Agreement, then the prevailing party in such proceeding shall be reimbursed by
the other party for its reasonable attorney's fees and other costs and expenses
incurred with the investigation, preparation and prosecution of such proceeding.
20
(i) This Security Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and, all of which taken together shall constitute one and the same agreement. In
the event that any signature is delivered by facsimile transmission, such
signature shall create a valid binding obligation of the party executing (or on
whose behalf such signature is executed) the same with the same force and effect
as if such facsimile signature were the original thereof.
(j) All Debtors shall jointly and severally be liable for the
obligations of each Debtor to the Secured Parties hereunder.
(k) Each Debtor shall indemnify, reimburse and hold harmless the
Secured Parties and their respective partners, members, shareholders, officers,
directors, employees and agents (collectively, "Indemnitees") from and against
any and all losses, claims, liabilities, damages, penalties, suits, costs and
expenses, of any kind or nature, (including fees relating to the cost of
investigating and defending any of the foregoing) imposed on, incurred by or
asserted against such Indemnitee in any way related to or arising from or
alleged to arise from this Security Agreement or the Collateral, except any such
losses, claims, liabilities, damages, penalties, suits, costs and expenses which
result from the gross negligence or willful misconduct of the Indemnitee as
determined by a final, nonappealable decision of a court of competent
jurisdiction. This indemnification provision is in addition to, and not in
limitation of, any other indemnification provision in the Debentures, the
Purchase Agreement (as such term is defined in the Debentures) or any other
agreement, instrument or other document executed or delivered in connection
herewith or therewith.
(l) Nothing in this Security Agreement shall be construed to subject
the Agent or any Secured Party to liability as a partner in any Debtor or any if
its direct or indirect subsidiaries that is a partnership or as a member in any
Debtor or any of its direct or indirect subsidiaries that is a limited liability
company, nor shall the Agent or any Secured Party be deemed to have assumed any
obligations under any partnership agreement or limited liability company
agreement, as applicable, of any such Debtor or any if its direct or indirect
subsidiaries or otherwise, unless and until any such Secured Party exercises its
right to be substituted for such Debtor as a partner or member, as applicable,
pursuant hereto.
(m) To the extent that the grant of the security interest in the
Collateral and the enforcement of the terms hereof require the consent, approval
or action of any partner or member, as applicable, of any Debtor or any direct
or indirect subsidiary of any Debtor or compliance with any provisions of any of
the Organizational Documents, the Debtors hereby grant such consent and approval
and waive any such noncompliance with the terms of said documents.
SIGNATURE PAGES FOLLOW
21
IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement
to be duly executed on the day and year first above written.
PracticeXpert, Inc, Debtor
By:
---------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Chief Executive Officer
PracticeXpert of Oklahoma, Inc.
By:_________________________________
Name: Xxxxxxxx Doctor
Title: President
PracticeXpert of California, Inc.
By:_________________________________
Name: Xxxxxxxx Doctor
Title: President
PracticeXpert of Idaho, Inc.
By:_________________________________
Name: Xxxxxxxx Doctor
Title: President
PracticeXpert of Texas, Inc.
By:_________________________________
Name: Xxxxxxxx Doctor
Title: President
PracticeXpert of West Virginia, Inc.
By:_________________________________
Name: Xxxxxxxx Doctor
Title: President
PracticeXpert Systems, Inc.
By:_________________________________
Name: Xxxxxxxx Doctor
Title: President
PracticeXpert Services Corp .
By:_________________________________
Name: Xxxxxxxx Doctor
Title: President
22
SIGNATURE PAGE OF HOLDERS
Name of Investing Entity:
Signature of Authorized Signatory of Investing entity:
Name of Authorized Signatory:
Title of Authorized Signatory:
23
SIGNATURE PAGE OF AGENT
Name of Investing Entity: ________________, as the Agent
Signature of Authorized Signatory of Investing entity:
Name of Authorized Signatory:
Title of Authorized Signatory:
24
SCHEDULE A
Principal Place of Business of Debtors:
Locations Where Collateral is Located or Stored:
25
SCHEDULE B
Liens
26
SCHEDULE C
Location of Books and Accounts
27
SCHEDULE D
Organizational Identification Numbers
28
SCHEDULE E
Names; Mergers and Acquisitions
29
SCHEDULE F
Intellectual Property
30
SCHEDULE G
Account Debtors
31
SCHEDULE H
Pledged Securities
32
ANNEX A
to
AMENDED AND RESTATED SECURITY AGREEMENT
FORM OF ADDITIONAL DEBTOR JOINDER
Amended and Restated Security Agreement dated as of May 19, 2006 made by
PracticeXpert, Inc. and its subsidiaries party thereto from time to time, as
Debtors to and in favor of the Secured Parties identified therein (the "Security
Agreement")
Reference is made to the Security Agreement as defined above; capitalized
terms used herein and not otherwise defined herein shall have the meanings given
to such terms in, or by reference in, the Security Agreement.
The undersigned hereby agrees that upon delivery of this Additional Debtor
Joinder to the Secured Parties referred to above, the undersigned shall (a) be
an Additional Debtor under the Security Agreement, (b) have all the rights and
obligations of the Debtors under the Security Agreement as fully and to the same
extent as if the undersigned was an original signatory thereto and (c) be deemed
to have made the representations and warranties set forth in Section 4 therein
as of the date of execution and delivery of this Additional Debtor Joinder.
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE UNDERSIGNED SPECIFICALLY
GRANTS TO THE SECURED PARTIES A SECURITY INTEREST IN THE COLLATERAL AS MORE
FULLY SET FORTH IN THE SECURITY AGREEMENT AND ACKNOWLEDGES AND AGREES TO THE
WAIVER OF JURY TRIAL PROVISIONS SET FORTH THEREIN.
Attached hereto are supplemental and/or replacement Schedules to the
Security Agreement, as applicable.
An executed copy of this Joinder shall be delivered to the Secured
Parties, and the Secured Parties may rely on the matters set forth herein on or
after the date hereof. This Joinder shall not be modified, amended or terminated
without the prior written consent of the Secured Parties.
33
IN WITNESS WHEREOF, the undersigned has caused this Joinder to be executed
in the name and on behalf of the undersigned.
Name of Additional Debtor
By:
----------------------
Name:
Title:
Address:
Dated:
34
ANNEX B
to
AMENDED AND RESTATED SECURITY AGREEMENT
THE AGENT
1. Appointment. The Secured Parties (all capitalized terms used herein and
not otherwise defined shall have the respective meanings provided in the Amended
and Restated Security Agreement to which this Annex B is attached (the "Security
Agreement")), by their acceptance of the benefits of the Security Agreement,
hereby designate Platinum Long Term Growth III (the "Agent") as the Agent to act
as specified herein and in the Security Agreement. Each Secured Party shall be
deemed irrevocably to authorize the Agent to take such action on its behalf
under the provisions of the Security Agreement and any other Transaction
Document (as such term is defined in the Debentures) and to exercise such powers
and to perform such duties hereunder and thereunder as are specifically
delegated to or required of the Agent by the terms hereof and thereof and such
other powers as are reasonably incidental thereto. The Agent may perform any of
its duties hereunder by or through its agents or employees.
2. Nature of Duties. The Agent shall have no duties or responsibilities
except those expressly set forth in the Security Agreement. Neither the Agent
nor any of its partners, members, shareholders, officers, directors, employees
or agents shall be liable for any action taken or omitted by it as such under
the Security Agreement or hereunder or in connection herewith or therewith, be
responsible for the consequence of any oversight or error of judgment or
answerable for any loss, unless caused solely by its or their gross negligence
or willful conduct as determined by a final judgment (not subject to further
appeal) of a court of competent jurisdiction. The duties of the Agent shall be
mechanical and administrative in nature; the Agent shall not have by reason of
the Security Agreement or any other Transaction Document a fiduciary
relationship in respect of any Debtor or any Secured Party; and nothing in the
Security Agreement or any other Transaction Document, expressed or implied, is
intended to or shall be so construed as to impose upon the Agent any obligations
in respect of the Security Agreement or any other Transaction Document except as
expressly set forth herein and therein.
3. Lack of Reliance on the Agent. Independently and without reliance upon
the Agent, each Secured Party, to the extent it deems appropriate, has made and
shall continue to make (i) its own independent investigation of the financial
condition and affairs of the Company and its subsidiaries in connection with
such Secured Party's investment in the Debtors, the creation and continuance of
the Obligations, the transactions contemplated by the Transaction Documents, and
the taking or not taking of any action in connection therewith, and (ii) its own
appraisal of the creditworthiness of the Company and its subsidiaries, and of
the value of the Collateral from time to time, and the Agent shall have no duty
or responsibility, either initially or on a continuing basis, to provide any
Secured Party with any credit, market or other information with respect thereto,
whether coming into its possession before any Obligations are incurred or at any
time or times thereafter. The Agent shall not be responsible to the Debtors or
35
any Secured Party for any recitals, statements, information, representations or
warranties herein or in any document, certificate or other writing delivered in
connection herewith, or for the execution, effectiveness, genuineness, validity,
enforceability, perfection, collectibility, priority or sufficiency of the
Security Agreement or any other Transaction Document, or for the financial
condition of the Debtors or the value of any of the Collateral, or be required
to make any inquiry concerning either the performance or observance of any of
the terms, provisions or conditions of the Security Agreement or any other
Transaction Document, or the financial condition of the Debtors, or the value of
any of the Collateral, or the existence or possible existence of any default or
Event of Default under the Security Agreement, the Debentures or any of the
other Transaction Documents.
4. Certain Rights of the Agent. The Agent shall have the right to take any
action with respect to the Collateral, on behalf of all of the Secured Parties.
To the extent practical, the Agent shall request instructions from the Secured
Parties with respect to any material act or action (including failure to act) in
connection with the Security Agreement or any other Transaction Document, and
shall be entitled to act or refrain from acting in accordance with the
instructions of Secured Parties holding a majority in principal amount of
Debentures (based on then-outstanding principal amounts of Debentures at the
time of any such determination); if such instructions are not provided despite
the Agent's request therefor, the Agent shall be entitled to refrain from such
act or taking such action, and if such action is taken, shall be entitled to
appropriate indemnification from the Secured Parties in respect of actions to be
taken by the Agent; and the Agent shall not incur liability to any person or
entity by reason of so refraining. Without limiting the foregoing, (a) no
Secured Party shall have any right of action whatsoever against the Agent as a
result of the Agent acting or refraining from acting hereunder in accordance
with the terms of the Security Agreement or any other Transaction Document, and
the Debtors shall have no right to question or challenge the authority of, or
the instructions given to, the Agent pursuant to the foregoing and (b) the Agent
shall not be required to take any action which the Agent believes (i) could
reasonably be expected to expose it to personal liability or (ii) is contrary to
this Security Agreement, the Transaction Documents or applicable law.
5. Reliance. The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, statement,
certificate, telex, teletype or telecopier message, cablegram, radiogram, order
or other document or telephone message signed, sent or made by the proper person
or entity, and, with respect to all legal matters pertaining to the Security
Agreement and the other Transaction Documents and its duties thereunder, upon
advice of counsel selected by it and upon all other matters pertaining to this
Security Agreement and the other Transaction Documents and its duties
thereunder, upon advice of other experts selected by it.
6. Indemnification. To the extent that the Agent is not reimbursed and
indemnified by the Debtors, the Secured Parties will, jointly and severally,
reimburse and indemnify the Agent, in proportion to their initially purchased
respective principal amounts of Debentures, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by or asserted against the Agent in performing its duties
hereunder or under the Security Agreement or any other Transaction Document, or
in any way relating to or arising out of the Security Agreement or any other
Transaction Document except for those determined by a final judgment (not
subject to further appeal) of a court of competent jurisdiction to have resulted
solely from the Agent's own gross negligence or willful misconduct. Prior to
taking any action hereunder as agent, the Agent may require each Secured Party
to deposit with it sufficient sums as it determines in good faith is necessary
to protect the Agent for costs and expenses associated with taking such action.
36
7. Resignation by the Agent.
(a) The Agent may resign from the performance of all its functions
and duties under the Security Agreement and the other Transaction Documents at
any time by giving thirty (30) days' prior written notice (as provided in the
Security Agreement) to the Debtors and the Secured Parties. Such resignation
shall take effect upon the appointment of a successor Agent pursuant to clauses
(b) and (c) below.
(b) Upon any such notice of resignation, the Secured Parties, acting
by a Majority in Interest, shall appoint a successor agent hereunder.
(c) If a successor agent shall not have been so appointed within
said 30-day period, the Agent shall then appoint a successor agent who shall
serve as the Agent until such time, if any, as the Secured Parties appoint a
successor agent as provided above. If a successor agent has not been appointed
within such 30-day period, the Agent may petition any court of competent
jurisdiction or may interplead the Debtors and the Secured Parties in a
proceeding for the appointment of a successor agent, and all fees, including,
but not limited to, extraordinary fees associated with the filing of
interpleader and expenses associated therewith, shall be payable by the Debtors
on demand.
8. Rights with respect to Collateral. Each Secured Party agrees with all
other Secured Parties and the Agent (i) that it shall not, and shall not attempt
to, exercise any rights with respect to its security interest in the Collateral,
whether pursuant to any other agreement or otherwise (other than pursuant to
this Security Agreement), or take or institute any action against the Agent or
any of the other Secured Parties in respect of the Collateral or its rights
hereunder (other than any such action arising from the breach of this Security
Agreement) and (ii) that such Secured Party has no other rights with respect to
the Collateral other than as set forth in this Security Agreement and the other
Transaction Documents.
37
