GENERAL SECURITY AGREEMENT
Exhibit
10.3
In
consideration of SILVERBIRCH
INC., an Ontario corporation having an office at Xxxxx 000, 000 Xxxxxxx
Xxxxx, Xxxxxxx, Xxxxxxx X0X 0X0, Xxxxxx, (the “Secured Party”) heretofore or
hereafter (1) extending or agreeing to extend any credit or other financial
accommodation to or relying on any guaranty, endorsement or other assurance of
payment of RED MILE
ENTERTAINMENT, INC., a corporation organized under the law of Delaware
and having its chief executive office at 000 Xxx Xxxxxxx Xxxxxx, Xxxxx #0, Xxx
Xxxxxxx, Xxxxxxxxxx 00000, U.S.A., (the “Debtor”) or (2) agreeing to any
direct or indirect extension, renewal, refinancing or other modification or
replacement of or waiving or forbearing from exercising any right, remedy or
power relating to any obligation heretofore or hereafter arising or accruing as
a result of any such credit or other financial accommodation, and for other
valuable consideration, the receipt of which is acknowledged, the Debtor agrees
with the Secured Party as follows:
1. DEFINITIONS. In
this Agreement:
a. Collateral. The
“Collateral” means collectively all right, title and interest of the Debtor in
and to, wherever located, whether now owned or hereafter acquired or now
existing or hereafter arising or accruing and whether or not subject to
Article 9 of the Uniform Commercial Code or described in any schedule
heretofore or hereafter delivered to the Secured Party by the Debtor, (i)
Accounts (including, but not limited to, Health-Care-Insurance Receivables),
Chattel Paper, Deposit Accounts, Documents, General Intangibles (including, but
not limited to, Intellectual Property, Payment Intangibles, Software, licenses,
franchises and customer information), Goods (including, but not limited to,
Equipment, Farm Products, Fixtures and Inventory), Instruments (including, but
not limited to, Promissory Notes), Investment Property, Letter-of-Credit Rights
(whether or not the related letter of credit is in writing), letters of credit
(whether or not in writing), money and other personal property regardless of
kind or nature (including, but not limited to, agreements, instruments and other
Records not constituting Chattel Paper or a Document, General Intangible or
Instrument, tort claims not constituting a Commercial Tort Claim, contract
rights not constituting an Account or General Intangible, rights to payment of
any money not constituting or evidenced by an Account, Commercial Tort Claim,
Deposit Account, General Intangible, Investment Property, Letter-of-Credit
Right, letter of credit, Chattel Paper or Instrument and insurance policies,
claims and proceeds not constituting a Health-Care-Insurance Receivable or
Proceeds) and (ii) to the extent not referred to in clause (i) of this
sentence, (A) Supporting Obligations and Incidental Property Rights incident to,
arising or accruing pursuant to or otherwise relating to any of the things
referred to in clause (i) of this sentence, whether arising or accruing
from any action taken by the Debtor or the Secured Party or otherwise,
(B) Proceeds, other proceeds and Products of any of the things referred to
in clauses (i) and (ii)(A) of this sentence and (C) Records
relating to any of the things referred to in clauses (i) and (ii)(A) and (B) of
this sentence.
b. Control. “Control”
means, with respect to any Deposit Account, Electronic Chattel Paper, Investment
Property or Letter-of-Credit Right, control as described in Article 9 of the
Uniform Commercial Code with respect to collateral of its type.
c. Control
Agreement. “Control Agreement” means an agreement, instrument
or other Record heretofore or hereafter entered into among the Debtor, the
Secured Party and a Bank, Securities Intermediary or Commodity Intermediary for
the purpose of giving the Secured Party Control of any Deposit Account or
Investment Property included in the Collateral.
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d. Event of
Default. An “Event of Default” occurs or exists if
(i) the Debtor or any Other Obligor defaults in the payment or other
performance when due, whether by acceleration or otherwise, of any of the
Obligations or the payment or other performance when due of any other obligation
(including, but not limited to, any obligation to pay any money), whether now
existing or hereafter arising or accruing and whether arising or accruing
pursuant to this Agreement or any Control Agreement or otherwise, to the Secured
Party or any other Person, the maturity of any of the Obligations or any such
other obligation is accelerated or there occurs or exists any event or condition
that, whether immediately or after notice, lapse of time or both notice and
lapse of time and whether or not waived by any Person other than the Secured
Party, would constitute a default with respect to or permit the acceleration of
the maturity of any of the Obligations or any such other obligation,
(ii) the Debtor or any Other Obligor is dissolved, ceases to exist,
participates or agrees to participate in any merger, consolidation or other
absorption, assigns or otherwise transfers all or substantially all of his, her
or its assets, makes any bulk sale, sends any notice of any intended bulk sale,
dies, becomes incompetent or insolvent (however evidenced), generally fails to
pay his, her or its debts as they become due, fails to pay, withhold or collect
any tax as required by applicable law, suspends or ceases his, her or its
present business or has entered, served, filed or recorded against him, her or
it or any of his, her or its assets any judgment or order of any court, agency
or other governmental body or any lien other than a Permitted Lien,
(iii) the Debtor or any Other Obligor has any receiver, trustee, custodian
or similar Person for him, her or it or any of his, her or its assets appointed
(whether with or without his, her or its consent), makes any assignment for the
benefit of creditors or commences or has commenced against him, her or it any
case or other proceeding pursuant to any bankruptcy, insolvency or similar
statute or any formal or informal proceeding for the dissolution, liquidation or
winding up of his, her or its affairs or the settlement of claims against him,
her or it, (iv) any representation or warranty made in this Agreement or
any Control Agreement or any other representation or warranty heretofore or
hereafter made, or any financial statement heretofore or hereafter provided, to
the Secured Party by or on behalf of the Debtor or any Other Obligor proves, as
of the date thereof, to have been incorrect or misleading in any material
respect or before the execution and delivery to the Secured Party by the Debtor
of this Agreement there occurred and was not disclosed to the Secured Party any
material adverse change in any information disclosed in any such representation
or warranty heretofore so made or any financial statement heretofore so
provided, (v) there occurs any loss, theft or destruction of or damage to
any substantial portion of the Collateral or any substantial decrease in the
value of the Collateral or (vi) the Secured Party deems itself insecure with
respect to the Obligations or is of the opinion that the Collateral is or may
not be sufficient or has decreased or may decrease in value, whether or not the
Secured Party has sought any Other Collateral from the Debtor or any Other
Obligor.
e. Intellectual
Property. “Intellectual Property” means, regardless of kind or
nature and wherever in the world existing, used, issued or pending, (i) any
patent or invention disclosed or claimed in any patent, (ii) any copyright,
copyright registration or tangible personal property embodying any copyright,
(iii) any trademark, service xxxx, trade style or trade dress (including, but
not limited to, any trade, company, fictitious or other business or other name,
logo or other source or business identifier), whether registered in any public
office or not so registered, (iv) any trade secret (including, but not limited
to, any know-how, technology, procedure, product formulation or other product or
manufacturing specification or standard) or other confidential or proprietary
business or technical data or other information, (v) any unpatented invention,
whether or not patentable, (vi) any industrial or other design or design
application or (vii) any registration or recording of, application for, reissue,
renewal, continuation or extension of, goodwill symbolized by, incident to,
associated with or otherwise relating to or Incidental Property Right, Record or
license relating to any of the things referred to in clauses (i) through (vi) of
this sentence.
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f. Incidental Property
Right. “Incidental Property Right” means, whether arising or
accruing pursuant to applicable law or any agreement, instrument or other Record
or otherwise, (i) any direct or indirect addition to, extension, renewal,
refinancing or other modification or replacement of, increase in or earnings,
profit, interest, dividend or distribution of cash or other property or other
income or payment on account of any property, (ii) any direct or indirect
Proceeds or other proceeds of any replacement, release, surrender, discharge,
exchange, conversion, redemption, assignment or other transfer, collection or
sale, lease or other disposition of any property, whether voluntary or
involuntary or arising or accruing pursuant to any dissolution, liquidation or
merger, consolidation or other absorption or otherwise, or (iii) any direct or
indirect right, privilege, power or claim relating to any property (including,
but not limited to, any right to any of the things referred to in clauses (i)
and (ii) of this sentence, any option or warrant, any right of subscription,
registration, conversion or redemption, any management right or any right to
vote or give any consent, ratification or other approval or authorization
(including, but not limited to, any right to vote or give any consent,
ratification or other approval or authorization for any replacement of any of
the directors, officers and managers of, amendment of any certificate or
articles of incorporation or organization, by-laws, operating or partnership
agreement or other charter, organizational or other governing document of,
dissolution, liquidation or merger, consolidation or other absorption of or
sale, lease or other disposition of all or substantially all of the assets of
any Issuer of any General Intangible or Investment Property)).
g. Obligations. The
“Obligations” means collectively, whether now existing or hereafter arising or
accruing and whether or not arising or accrued subsequent to any commencement of
or made, proved, voted or allowed as a claim in any case or other proceeding
pursuant to any bankruptcy, insolvency or similar statute, all obligations to
the Secured Party in any capacity for (i) the payment of any money,
however evidenced, regardless of kind or nature, whether for the payment of any
principal, interest, fee, charge, cost or expense or otherwise, incurred for any
business, commercial or agricultural purpose or otherwise, created directly or
by any assignment or other transfer, direct or indirect, absolute or contingent
(whether pursuant to any guaranty, endorsement or other assurance of payment or
otherwise), similar or dissimilar or related or unrelated, or (ii) the
performance of any other obligation that have been heretofore or are hereafter
incurred by, in any capacity (including, but not limited to, as a
debtor-in-possession after the commencement of any case or other proceeding
pursuant to any bankruptcy, insolvency or similar statute) and whether alone or
otherwise, the Debtor or any direct or indirect successor of the Debtor or
direct or indirect assignee or other transferee of all or substantially all of
the assets of the Debtor (including, but not limited to, any estate created by
the commencement of any case or other proceeding pursuant to any bankruptcy,
insolvency or similar statute and any receiver, trustee, custodian or similar
Person for the Debtor or any of the assets of the Debtor) (including, but not
limited to, all obligations of the Debtor to the Secured Party pursuant to
Section 8 of this Agreement).
h. Other
Collateral. “Other Collateral” means, other than the
Collateral, (i) any collateral, subordination, guaranty, endorsement or
other security or assurance of payment, whether now existing or hereafter
arising or accruing, that now or hereafter secures the payment or other
performance of or is otherwise applicable to any of the Obligations or
(ii) any obligation of the Secured Party, whether pursuant to any Deposit
Account or Instrument or otherwise, that is now or hereafter available for
setoff against any of the Obligations.
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i. Other
Obligor. “Other Obligor” means, other than the Debtor, any
Person who or that is now or hereafter liable, whether directly or indirectly or
absolutely or contingently, for the payment or other performance of any of the
Obligations.
j. Permitted
Lien. “Permitted Lien” means (i) whether now existing or
hereafter arising or accruing, any security interest in or other lien on any of
the Collateral in favor of the Secured Party or (ii) any security interest
in or other lien on any of the Collateral fully and accurately described under
the heading “Permitted Liens” on Exhibit A attached to and made a part of this
Agreement.
k. Person. “Person”
means (i) any individual, corporation, partnership, limited liability company,
joint venture, trust, unincorporated association, government, political
subdivision or other taxing authority, (ii) any court, agency or other
governmental body or (iii) any other entity, body, organization or
group.
l. Security
Interest. “Security Interest” means any security interest or
other lien granted or otherwise created pursuant to the first sentence of
Section 2 of this Agreement.
m. Uniform Commercial
Code. “Uniform Commercial Code” means at any time the Uniform
Commercial Code of the State of California as in effect at such
time.
n. Other Terms. Each
of the following terms has at any time the meaning given it at such time for
purposes of Article 9 of the Uniform Commercial
Code: (i) Accession, (ii) Account, (iii) Account Debtor,
(iv) Bank, (v) Certificated Security, (vi) Chattel Paper, (vii) Commercial
Tort Claim, (viii) Commodity Account, (ix) Commodity Intermediary, (x)
Deposit Account, (xi) Document, (xii) Electronic Chattel Paper, (xiii)
Equipment, (xiv) Farm Product, (xv) Financing Statement,
(xvi) Fixture, (xvii) General Intangible, (xviii) Goods,
(xix) Health-Care-Insurance Receivable, (xx) Instrument, (xxi) Inventory,
(xxii) Investment Property, (xxiii) Issuer, (xxiv) Letter-of-Credit Right, (xxv)
Payment Intangible, (xxvi) Proceeds, (xxvii) Products, (xxviii) Promissory
Note, (xxix) Record, (xxx) Registered Organization, (xxxi) Securities Account,
(xxxii) Securities Intermediary, (xxxiii) Security, (xxxiv) Software, (xxxv)
Supporting Obligation, (xxxvi) Tangible Chattel Paper and (xxxvii)
Uncertificated Security.
2. GRANT OF SECURITY
INTEREST. To secure the payment and other performance of the
Obligations, the Debtor grants to the Secured Party a security interest in and
assigns, pledges and hypothecates to the Secured Party the Collateral except
that, with respect to any portion of the Collateral that would be rendered void
or voidable under applicable law by such grant, assignment, pledge and
hypothecation without the consent of a Person other than the Debtor that has not
been or is not obtained, such grant, assignment, pledge and hypothecation shall
not be effective until such consent is obtained. In addition, the
security interests granted in this Agreement do not apply or extend to: (a) any
real property or interests therein of the Debtor, (b) the last day of any term
created by any lease or agreement therefor now held or hereafter acquired by the
Debtor by the Debtor will stand possessed of the reversion thereby remaining in
the Debtor of any leasehold premises upon trust for the Secured Party to assign
and dispose thereof as the Secured Party or any purchaser of such leasehold
premises directs; and (c) any consumer goods of the Debtor. Each
Security Interest is a continuing, absolute and unconditional security interest
or other lien.
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3. REINSTATEMENT OF
OBLIGATIONS. Each portion of
the Obligations heretofore or hereafter paid or satisfied by any of the
Collateral, or any money or Other Collateral, heretofore or hereafter received,
applied or retained by the Secured Party and later recovered from the Secured
Party as a result of any claim (including, but not limited to, any claim
involving any allegation that any money constituted trust funds or that the
receipt, application or retention of any of the Collateral or any money or Other
Collateral or the grant, perfection or other creation or protection of any
security interest in or other lien on any of the Collateral or any Other
Collateral constituted a preference or fraudulent conveyance or transfer),
however asserted and whether now existing or hereafter arising or accruing,
shall be reinstated as part of the Obligations for purposes of this Agreement as
of the date it originally arose or accrued.
4. COVENANTS.
a. Affirmative
Covenants. The Debtor shall (i) maintain complete and
accurate Records relating to the Collateral, (ii) before the end of any
applicable grace period, pay each tax, assessment, fee and charge imposed by any
government, political subdivision or other taxing authority upon any
of the Collateral, any manufacture, purchase or other acquisition, ownership,
possession, control, use, operation, advertising or other promotion or sale,
lease or other disposition of any of the Collateral, this Agreement or any
agreement, instrument or other Record evidencing any of the Collateral or any of
the Obligations, (iii) obtain and maintain in full force and effect each
authorization, certification, certificate, approval, permit, consent, franchise
and license necessary for any manufacture, purchase or other acquisition,
ownership, possession, control, use, operation, advertising or other promotion
or sale, lease or other disposition of any of the Collateral, (iv) defend
the Collateral against each demand, claim, counterclaim, setoff and defense
asserted by any Person (including, but not limited to, any Account Debtor,
Issuer, Bank, Securities Intermediary or Commodity Intermediary)
other than the Secured Party, (v) keep all Goods included in the Collateral
insured against each risk to which any of such Goods may be subject (including,
but not limited to, risks covered by all risks coverage) and maintain insurance
against liability on account of any damage to any Person or property arising out
of any manufacture, purchase or other acquisition, ownership, possession,
control, use, operation, advertising or other promotion or sale, lease or other
disposition of any of such Goods, with all insurance maintained pursuant to this
clause (v) to be issued in such amounts, for such periods, on such terms, with
such special endorsements (including, but not limited to, an endorsement naming
the Secured Party as a mortgagee, lender loss payee or additional insured) and
by such companies as are satisfactory to the Secured Party, and deliver to the
Secured Party a copy of each policy providing any such insurance,
(vi) cause all Goods included in the Collateral to be properly titled and
registered to the extent required by applicable law, cause the interest of the
Secured Party to be properly indicated on any certificate of title relating to
any of such Goods and deliver to the Secured Party each such certificate,
(vii) maintain all Goods included in the Collateral in good condition
except for ordinary wear and tear, (viii) cultivate, store, preserve and
care for all Farm Products and Inventory included in the Collateral in
accordance with commonly accepted methods, (ix) diligently prosecute each
application constituting Intellectual Property included in the Collateral and
not abandon such application before exhausting all reasonable administrative and
judicial remedies,
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(x) take
each action (including, but not limited to, the filing of any required
application for reissue, renewal, continuation or extension or any required
affidavit, the payment of any required fee and the commencement and prosecution
of any necessary action or other legal proceeding) required to maintain in full
force and effect each registration of or preserve in full force and effect each
right (including, but not limited to, any right as a licensor or licensee) of
the Debtor in any Intellectual Property included in the Collateral, (xi) use
each item of Intellectual Property included in the Collateral with appropriate
notice of registration or application for registration, (xii) maintain the
quality of products and services offered under any Intellectual Property
included in the Collateral, (xiii) upon receiving any certificate or other
evidence of any Intellectual Property included in the Collateral from any public
office, promptly deliver a copy thereof to the Secured Party,
(xiv) promptly xxx to stop and recover damages for any infringement,
misappropriation or dilution of any Intellectual Property included in the
Collateral, (xv) provide to the Secured Party a complete and accurate copy of
each statement, confirmation, notice, proxy statement, proxy and other
communication relating to any Deposit Account, General Intangible or Investment
Property included in the Collateral and received by the Debtor from any Person
(including, but not limited to, any Account Debtor, Issuer, Bank, Securities
Intermediary or Commodity Intermediary) obligated with respect to such Deposit
Account, General Intangible or Investment Property, (xvi) take each action
(including, but not limited to, increasing the value of the Collateral and
reducing the amount of the Obligations) necessary to maintain any value of any
of the Collateral or ratio of the value of any of the Collateral to the amount
of any of the Obligations required by applicable law or any contract between the
Secured Party and the Debtor or any Other Obligor, (xvii) promptly notify
the Secured Party if any of the Collateral arises out of any contract with any
government, political subdivision or other taxing authority, (xviii) promptly
notify the Secured Party if any of the Collateral arises out of any contract
that gives rise to any requirement under applicable law that the Debtor receive,
hold or apply any money advanced by the Secured Party with respect to any of the
Collateral as a trust fund and receive, hold and apply such money in accordance
with such requirement, (xix) promptly notify the Secured Party of (A) any Goods
included in the Collateral being affixed to or installed in or on any real
property or any Goods not included in the Collateral, (B) any loss,
destruction or theft of or damage to any of the Collateral, (C) any threat
or commencement of any action or other legal proceeding, any entry of any
judgment or order of any court, agency or other governmental body, or any
assertion by any Person (including, but not limited to, any Account Debtor,
Issuer, Bank, Securities Intermediary or Commodity Intermediary) other than the
Secured Party of any demand, claim, counterclaim, setoff or defense, relating to
any of the Collateral, (D) any infringement, misappropriation, dilution or
other violation of any right (including, but not limited to, as a licensor or
licensee) of the Debtor in any Intellectual Property included in the Collateral,
(E) any claim by any Person that the use by the Debtor (including, but not
limited to, as a licensee) of any Intellectual Property that the Debtor uses
infringes, misappropriates, dilutes or otherwise violates any right of such
Person in such Intellectual Property, (F) any abandonment of or adverse claim,
determination or development with respect to the ownership, license or
maintenance in full force and effect of any registration of or the preservation
in full force and effect of any right (including, but not limited to, as a
licensor or licensee) of the Debtor in any Intellectual Property included in the
Collateral, (G) any occurrence or existence of any Event of Default, any event
or condition that, after notice, lapse of time or both notice and lapse of time,
would constitute any Event of Default or any event or condition that has or will
or might have any material adverse effect on (I) any of the Collateral,
(II) the Debtor, (III) any Other Obligor or (IV) the business,
operations, assets, affairs or condition (financial or other) of the Debtor or
any Other Obligor, (H) any change in (I) the location of the residence
or chief executive office of the Debtor, (II) any company, trade,
fictitious or other business or other name under which the Debtor conducts his,
her or its business, operations or affairs, (III) the location of any of
the Collateral not in the possession or control of or en route to or from the
Secured Party other than mobile Equipment or the addition of any new such
location or
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Continued
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(IV) the
primary location at which any mobile Equipment included in the Collateral is
kept or the addition of any new such location, (I) the obtaining of any
organizational identification number by the Debtor if he, she or it does not
have one, (J) any removal of any mobile Equipment included in the Collateral for
more than thirty days at a time from the primary location at which such mobile
Equipment is kept and (K) the existence of any Commercial Tort Claim of the
Debtor and (xx) to the extent that any portion of the Collateral would be
rendered void or voidable under applicable law by the grant to the Secured Party
of a security interest therein or the assignment, pledge or hypothecation
thereof to the Secured Party without the consent of a Person other than the
Debtor that has not been or is not obtained, hold such portion of the Collateral
in trust for the Secured Party until such consent is obtained and take each
action (including, but not limited to, obtaining such consent and assigning or
selling or otherwise disposing of such portion of the Collateral) requested by
the Secured Party to assure that such portion of the Collateral inures and is
realized upon for the benefit of the Secured Party.
b. Negative
Covenants. Without the prior written consent of the Secured
Party, the Debtor shall not (i) without giving the Secured Party at least
30 days’ prior written notice (other than Section (C)(iv), which will only
require 48 hours notice to Secured Party) (A) change his, her or its location
for purposes of Article 9 of the Uniform Commercial Code (including, but not
limited to, its jurisdiction of organization if it is a Registered
Organization), (B) change his, her or its organizational identification number
if he, she or it has one, (C) make any change in his, her or its name, identity
or structure or (D) participate in any merger, consolidation or other
absorption, (ii) grant or otherwise create, permit to exist or agree or
otherwise incur any obligation to grant or otherwise create or permit to exist
any security interest in or other lien on any of the Collateral other than
Permitted Liens, (iii) authorize the filing of or permit to be filed or remain
on file in any public office any Financing Statement, execute or otherwise
authenticate any application for any certificate of title or notice of lien, or
permit to exist any certificate of title, relating to any of the Collateral and
naming any Person other than the Secured Party as a secured party, except for
any Financing Statement, certificate of title or notice of lien heretofore
consented to by the Secured Party in writing or relating solely to any Permitted
Lien, (iv) sell, lease or otherwise dispose of any of the Collateral or any
interest or right in any of the Collateral, except for, until any occurrence or
existence of any Event of Default or any giving by the Secured Party to the
Debtor of any notice to the contrary and provided that no Event of Default
occurs thereby or exists immediately thereafter, in the ordinary course of the
business of the Debtor, (A) any sale, lease or other disposition of any
Inventory, Farm Product or worn-out or obsolete Equipment included in the
Collateral, (B) any sale, lease or other disposition of any Equipment
included in the Collateral in connection with the acquisition by the Debtor of
Equipment of equal or greater value that is not subject to any security interest
or other lien other than Permitted Liens, (C) other than the co-publishing
licenses for “Heroes of Europe” and “Sin City” (for which 48 hours prior written
notice will be required), any written nonexclusive license of any Intellectual
Property included in the Collateral provided that such license is expressly
subject and subordinate to each Security Interest, by its terms will terminate
upon enforcement of any Security Interest and does not materially interfere with
the conduct of the business of the Debtor or (D) any use of any money
included in the Collateral, funds in any Deposit Account included in the
Collateral or funds represented by any certificate of deposit included in the
Collateral in partial or complete satisfaction of any obligation of the Debtor
incurred in the ordinary course of the business of the Debtor,
(v) manufacture, use, operate, advertise or otherwise promote, permit the
manufacture, use, operation or advertising or other promotion of or sell, lease
or otherwise dispose of any of the Collateral in any manner that would or might
violate or result in any violation of applicable law (including, but not limited
to, the Fair Labor Standards Act and any environmental or criminal statute) or
any policy providing any insurance on any of the Collateral,
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(vi) change
or permit any change in the location of any of the Collateral not in the
possession or control of or en route to or from the Secured Party other than
mobile Equipment, (vii) remove or permit any removal of any mobile
Equipment included in the Collateral for more than thirty days at a time from
the primary location at which such mobile Equipment is kept, (viii) cause
or permit any Goods included in the Collateral to become an Accession to any
Goods not included in the Collateral, (ix) cause or permit any Goods
included in the Collateral to be subject to any negotiable Document,
(x) use any Intellectual Property included in the Collateral for any use
for which registration or application for registration of such Intellectual
Property has not been made, (xi) abandon, permit the abandonment by any licensee
of or take, fail to take or permit any licensee to take or fail to take any
action (including, but not limited to, sufficient use) that would or might
result in the invalidation or abandonment of any Intellectual Property included
in the Collateral, (xii) modify, terminate or attempt or agree or otherwise
incur any obligation to modify or terminate any Control Agreement or any
contract with a Securities Intermediary or Commodity Intermediary under which
any Securities Account or Commodity Account included in the Collateral is
established or maintained, (xiii) give Control of any Deposit Account,
Electronic Chattel Paper, Investment Property or Letter-of-Credit Right included
in the Collateral to any Person other than the Secured Party, whether by
entering into any agreement, instrument or other Record with a Bank, Securities
Intermediary or Commodity Intermediary for the purpose of giving a Person other
than the Secured Party Control of any Deposit Account or Investment Property
included in the Collateral or otherwise, (xiv) withdraw any money or other
property from any Securities Account or Commodity Account included in the
Collateral, (xv) exercise any Incidental Property Right included in the
Collateral, or take any other action, that would or might impair or otherwise
adversely affect the validity, perfection or priority of any Security Interest
or the value of any of the Collateral, cause any Event of Default or any event
or condition that, after notice, lapse of time or both notice and lapse of time,
would constitute any Event of Default, impair or otherwise adversely affect any
right, remedy or power of the Secured Party pursuant to this Agreement or
arising or accruing as a result of this Agreement or authorize or permit the
dissolution, liquidation or sale of any Person (including, but not limited to,
any Account Debtor, Issuer, Bank, Securities Intermediary or Commodity
Intermediary) obligated with respect to any of the Collateral, (xvi) provide to
the Secured Party or permit to be provided to the Secured Party on his, her or
its behalf any certificate, financial statement or other Record that contains
any statement of fact that is incorrect or misleading in any material respect or
omits to state any fact necessary to make any statement of fact contained
therein not incorrect or misleading in any material respect or (xvii) upon
or at any time after any occurrence or existence of any Event of Default or any
giving by the Secured Party to the Debtor of any notice to the contrary,
(A) enforce, extend, renew, refinance or otherwise modify or replace,
request, demand, accept, collect or otherwise realize upon, compromise, cancel,
release, discharge, subordinate, accelerate, give any receipt, release or
discharge relating to, commence, prosecute or settle any action or other legal
proceeding relating to, waive or forbear from exercising any right, remedy or
power relating to or adversely affect any obligation of any Person (including,
but not limited to, any Account Debtor, Issuer, Bank, Securities Intermediary or
Commodity Intermediary) obligated with respect to any of the Collateral relating
to any of the Collateral, (B) agree or otherwise incur any obligation to do
anything described in clause (xvii)(A) of this sentence, (C) make any trade in
any Securities Account or Commodity Account included in the Collateral or (D)
exercise any Incidental Property Right included in the Collateral.
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c. Additional Covenants Triggered by
Request of Secured Party. Promptly upon the request of the
Secured Party, the Debtor shall (i) execute or otherwise authenticate and
deliver to the Secured Party each application for any certificate of title,
notice of lien, instrument of assignment, proxy and other Record, and take each
other action (including, but not limited to, making any endorsement), requested
by the Secured Party to perfect, maintain the validity, perfection or priority
of or enforce any Security Interest (including, but not limited to, (A) giving
Control of any Deposit Account, Electronic Chattel Paper, Investment Property or
Letter-of-Credit Right included in the Collateral to the Secured Party, whether
by providing to the Secured Party for execution or other authentication by the
Secured Party a Control Agreement, in form and substance satisfactory to the
Secured Party, that is executed or otherwise authenticated by the Debtor and any
Bank, Securities Intermediary or Commodity Intermediary establishing or
maintaining a Deposit Account included in the Collateral or a Securities Account
or Commodity Account to which any Investment Property included in the Collateral
is credited or otherwise, (B) providing to the Secured Party an agreement,
instrument or other Record, in form and substance satisfactory to the Secured
Party, executed or otherwise authenticated by any bailee of any portion of the
Collateral, acknowledging that such bailee holds such portion of the Collateral
for the benefit of the Secured Party and agreeing to act with respect to such
portion of the Collateral in accordance with the instructions of the Secured
Party without any need for any authorization of the Debtor and (C) registering
with the appropriate public office or offices any Intellectual Property included
in the Collateral), otherwise protect the interest of the Secured Party in or
collect, sell, lease or otherwise dispose of or otherwise realize upon any of
the Collateral, whether under applicable law (including, but not limited to, the
Federal Assignment of Claims Act) or otherwise, verify any of the Collateral or
any insurance on any of the Collateral or otherwise accomplish any purpose of
this Agreement, (ii) execute or otherwise authenticate and deliver to the
Secured Party a security agreement, in form and substance satisfactory to the
Secured Party granting to the Secured Party a security interest in any
Commercial Tort Claim or Intellectual Property of the Debtor to secure the
payment and other performance of the Obligations, (iii) execute or otherwise
authenticate and deliver to the Secured Party a certificate or other Record
updating or confirming the continued completeness and accuracy of all
information contained in any certificate or other Record submitted by or on
behalf of the Debtor to the Secured Party in connection with this Agreement,
(iv) deliver to the Secured Party each Tangible Chattel Paper, Document,
Instrument, Certificated Security and tangible Record included in the
Collateral, together with each endorsement, instrument of assignment and other
Record that the Secured Party requests to accomplish the assignment or other
transfer of such Tangible Chattel Paper, Document, Instrument, Certificated
Security or tangible Record to the Secured Party (with all signatures guaranteed
by such Person and in such manner as are satisfactory to the Secured Party),
and, until such delivery, hold such Tangible Chattel Paper, Document,
Instrument, Certificated Security or tangible Record in trust for the Secured
Party, (v) deliver to any Securities Intermediary designated by the Secured
Party any Certificated Security included in the Collateral, together with each
endorsement, instrument of assignment and other Record that such Securities
Intermediary requests to accomplish the assignment or other transfer of such
Certificated Security to such Securities Intermediary (with all signatures
guaranteed by such Person and in such manner as are satisfactory to such
Securities Intermediary), instruct such Securities Intermediary to hold such
Certificated Security for the account of the Secured Party and, until such
delivery, hold such Certificated Security in trust for the Secured Party,
(vi) cause any Security Interest in any General Intangible or Investment
Property included in the Collateral that is not represented by a Certificated
Security to be registered to or otherwise reflected in the name of the Secured
Party or any Person designated by the Secured Party, (vii) cause a
Certificated Security to be issued to represent any Uncertificated Security
included in the Collateral,
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Continued -
(viii)
cause any Person (including, but not limited to, any Account Debtor, Issuer,
Bank, Securities Intermediary or Commodity Intermediary) obligated with respect
to any Deposit Account, General Intangible or Investment Property included in
the Collateral to provide to the Secured Party a complete and accurate copy of
each statement, confirmation, notice, proxy statement, proxy and other
communication relating to such Deposit Account, General Intangible or Investment
Property, (ix) cause each Instrument representing Proceeds or other proceeds of
any of the Collateral to be made payable, at the option of the Secured Party, to
the Secured Party alone or the Secured Party and the Debtor jointly,
(x) provide to the Secured Party all information requested by the Secured
Party and relating to (A) any of the Collateral (including, but not limited
to, information requested by the Secured Party to monitor the market value of
any of the Collateral), (B) any Person (including, but not limited to, any
Account Debtor, Issuer, Bank, Securities Intermediary or Commodity Intermediary)
obligated with respect to any of the Collateral, (C) the Debtor,
(D) any Other Obligor or (E) the business, operations, assets, affairs
or condition (financial or other) of the Debtor or any Other Obligor (including,
but not limited to, financial statements prepared in a form satisfactory to the
Secured Party and, if requested by the Secured Party, audited, reviewed or
compiled by an independent certified public accountant satisfactory to the
Secured Party), (xi) enter into each warehousing, lockbox or other
custodial arrangement with respect to any of the Collateral requested by the
Secured Party, (xii) permit each director, officer, employee, accountant,
attorney and other agent of the Secured Party to inspect the Collateral and
audit, copy and extract each Record included in the Collateral,
(xiii) provide to the Secured Party an agreement, instrument or other
Record, in form and substance satisfactory to the Secured Party,
(A) executed by each Person having any interest, whether as an owner,
mortgagee, secured party or lessee or otherwise, in any premises, or any Goods
not included in the Collateral, to which is affixed or in or on which is
installed or located any of the Collateral, (B) disclaiming any interest of
such Person in any of the Collateral and (C) authorizing the Secured Party,
upon or at any time after any occurrence or existence of any Event of Default,
to (I) enter upon any premises of such Person to which is affixed or in or
on which is installed or located any of the Collateral, (II) take
possession of and remove from any such premises and any Goods of such Person not
included in the Collateral any of the Collateral affixed to or installed or
located in or on any such premises or Goods and (III) remain on and use any
such premises in completing any work in process included in the Collateral or
storing, preparing for any sale, lease or other disposition or collecting,
selling, leasing or otherwise disposing of or otherwise realizing upon any of
the Collateral, without by doing any of the things described in clauses
(xiii)(C)(I) through (III) of this sentence incurring any liability to such
Person, except for unreasonable damage to any such premises or Goods directly
resulting from doing so, and (xiv) upon or at any time after any occurrence
or existence of any Event of Default, assemble and make available to the Secured
Party at any place designated by the Secured Party and reasonably convenient to
the Secured Party and the Debtor (A) all Goods included in the Collateral other
than Fixtures, growing crops and standing timber and (B) all Tangible Chattel
Paper and tangible Records included in the Collateral.
d. Additional Covenants if Collateral
Includes Unregistered Security. If the Collateral includes any
Security required to be registered pursuant to applicable law (including, but
not limited to, the Securities Act of 1933) before being permitted to be sold or
otherwise disposed of, or offered for sale or other disposition, by the Secured
Party, (i) the Debtor shall not (A) take any action to permit the
issuer of such Security to issue any other Security or any Incidental Property
Right relating to any other Security or (B) sell or otherwise dispose of or
take any other action with respect to any other Security or any Incidental
Property Right relating to any other Security if such sale or other disposition
or other action would be required to be considered in determining whether any
sale or other disposition of such Security would be permissible without
registration pursuant to such law, and
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Continued -
(ii)
promptly upon the request of the Secured Party, the Debtor shall
(A) execute and deliver to the Secured Party or any other Person
(including, but not limited to, the Securities and Exchange Commission) each
form, schedule and other Record (including, but not limited to, any form giving
a notice of a proposed sale of securities pursuant to Rule 144 of the
Securities and Exchange Commission) necessary to permit any sale or other
disposition of such Security without registration pursuant to such law,
(B) use his, her or its best efforts to cause the issuer of such Security
to take each action necessary to (I) permit any sale or other disposition
of such Security without registration pursuant to such law, (II) register
such Security pursuant to such law and (III) permit any public sale or
other disposition of such Security in each jurisdiction determined by the
Secured Party and (C) execute and deliver to the Secured Party each
agreement, instrument and other Record requested by the Secured Party to
indemnify each Person who or that is an underwriter of such Security against
each liability, cost and expense (including, but not limited to, if such Person
retains counsel for advice, litigation or any other purpose, reasonable
attorneys’ fees and disbursements) incurred by such Person as a result of such
sale or other disposition.
5. POWER OF ATTORNEY; IRREVOCABLE
PROXY. Subject to any
confidentiality restrictions as to third parties, the Debtor irrevocably and
unconditionally appoints the Secured Party as the attorney-in-fact of the
Debtor, with full power of substitution and revocation, to take, in the name and
on behalf of the Debtor or otherwise, each action relating to any of the
Collateral that the Debtor could take (including, but not limited to,
(a) receiving and collecting any mail addressed to the Debtor, directing
the place of delivery of any such mail, opening any such mail and removing from
any such mail and retaining any enclosure evidencing or relating to any of the
Collateral, (b) obtaining, settling and canceling any insurance on any of
the Collateral and using any payment in connection with any such insurance to
pay any of the Obligations, whether due or not due, and (c) taking any
action described in Section 4 of this Agreement), except that, until any notice
of intention to do so is given by the Secured Party to the Debtor upon or at any
time after any occurrence or existence of any Event of Default, the Secured
Party may not, as such attorney-in-fact, except as expressly permitted by this
Agreement, exercise or direct the exercise of any Incidental Property Right
relating to any General Intangible or Investment Property included in the
Collateral or sell, lease or otherwise dispose of any of the
Collateral. The power of attorney given pursuant to the preceding
sentence is coupled with an interest in favor of the Secured Party and shall not
be terminated or otherwise affected by the death, disability or incompetence of
the Debtor. In furtherance of, as the attorney-in-fact of the Debtor, the
Secured Party’s exercise or direction of the exercise of any Incidental Property
Right relating to any General Intangible or Investment Property included in the
Collateral, the Debtor grants to the Secured Party a proxy, which shall be
irrevocable and unlimited in duration, to exercise such Incidental Property
Right.
6. CERTAIN
RIGHTS, REMEDIES, POWERS AND DUTIES.
a. Rights, Remedies and Powers Pursuant
to Applicable Law. With respect to the Collateral, the Secured
Party shall have each applicable right, remedy and power pursuant to applicable
law (including, but not limited to, Article 9 of the Uniform Commercial Code) or
this Agreement.
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b. Additional Rights Without Event of
Default. The Secured Party shall have the right to
(i) file in any public office, without any authorization by the Debtor
other than this Agreement, each Financing Statement relating to any of the
Collateral that the Secured Party desires to file, (ii) direct each Person
issuing any insurance on any of the Collateral to make directly and solely to
the Secured Party each payment in connection with any such insurance,
(iii) verify any of the Collateral in any manner or through any medium,
whether directly with any Person (including, but not limited to, any Account
Debtor, Issuer, Bank, Securities Intermediary or Commodity Intermediary)
obligated with respect thereto or otherwise or in the name of the Debtor or
otherwise, (iv) notify each Person (including, but not limited to, any
Account Debtor, Issuer, Bank, Securities Intermediary or Commodity Intermediary)
obligated with respect to any of the Collateral of the interest of the Secured
Party therein, direct such Person to make each payment with respect thereto
directly and solely to the Secured Party, take control of all Proceeds and other
proceeds thereof and, at the option of the Secured Party, hold such Proceeds and
other proceeds as part of the Collateral or apply such Proceeds and other
proceeds as provided in Section 6f of this Agreement, (v) deliver any notice of
exclusive control pursuant to any Control Agreement, (vi) exchange any
certificate representing any of the Collateral for a certificate of a larger or
smaller denomination and (vii) cause to be transferred to or registered in
the name of the Secured Party or any nominee, Securities Intermediary, Commodity
Intermediary or other agent of the Secured Party any of the Collateral so that
the Secured Party appears as the sole owner of record thereof, whether such
transfer or registration is made with or without reference to this Agreement or
any Security Interest. Any Financing Statement referred to in clause
(i) of the preceding sentence may, but shall not be required to, (i) use the
term all personal property of the Debtor or all assets of the Debtor or similar
terminology to refer to the collateral covered thereby and (ii) describe such
collateral in any degree of detail.
c. Additional Rights Upon or After Event
of Default. Upon or at any time after any occurrence or
existence of any Event of Default, the Secured Party shall have the right to,
for the purpose of preserving or enhancing the value of any of the Collateral or
exercising any right, remedy or power of the Secured Party pursuant to this
Agreement or arising or accruing as a result of this Agreement, (i) perform
each obligation of the Debtor pursuant to this Agreement, (ii) without any
judicial process but without any breach of the peace, (A) enter upon each
premises of the Debtor, (B) store and provide for the guarding and
maintenance in good condition of any of the Collateral located on such premises,
(C) take possession of and remove from each such premises any of the Collateral
and (D) remain on and use each such premises, and use all Equipment and
Fixtures of the Debtor, whether or not included in the Collateral, in completing
any work in process included in the Collateral or storing, preparing for any
sale, lease or other disposition or collecting, selling, leasing or otherwise
disposing of or otherwise realizing upon any of the Collateral, (iii) exercise
any Incidental Property Right included in the Collateral, (iv) declare all
right, title and interest of the Debtor in and to any Intellectual Property
included in the Collateral to be vested in the Secured Party, (v) grant any
license, whether exclusive or nonexclusive, in any Intellectual Property
included in the Collateral to such Person, for such period, on such terms and in
such manner as is determined by the Secured Party and (vi) without the
payment of any compensation of any kind, use each General Intangible (including,
but not limited to, each item of Intellectual Property, license and franchise)
of the Debtor, whether or not included in the Collateral, to the extent of the
rights of the Debtor therein, for the purpose of exercising any right, remedy or
power of the Secured Party pursuant to this Agreement or arising or accruing as
a result of this Agreement, and, to such extent for such purpose, the Debtor
irrevocably grants the Secured Party a nonexclusive license in each such General
Intangible.
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d. Additional Rights if Collateral
Includes Unregistered Security. If the Collateral includes any
Security required to be registered pursuant to applicable law (including, but
not limited to, the Securities Act of 1933) before being permitted to be sold or
otherwise disposed of, or offered for sale or other disposition, by the Secured
Party and upon or at any time after any occurrence or existence of any Event of
Default the Secured Party opts for any sale or other disposition of such
Security without such registration, (i) the Secured Party shall not be
obligated to delay such sale or other disposition to permit such registration,
and (ii) in order to comply with such law, the Secured Party shall have the
right to restrict the prospective purchasers in such sale or other disposition
(including, but not limited to, restricting such prospective purchasers to
Persons meeting specified requirements as to financial sophistication or intent
to purchase for investment and not with a view to sale or other disposition),
restrict the terms of such sale or other disposition (including, but not limited
to, restricting future sales and other dispositions) and impose other
restrictions on any aspect of such sale or other disposition (including, but not
limited to, the advertising or conduct thereof).
e. Standards for Sale or Other
Disposition in Commercially Reasonable Manner. If upon or at
any time after any occurrence or existence of any Event of Default the Secured
Party opts for any sale or other disposition of any portion of the Collateral,
whether or not such portion of the Collateral is of a specialized nature,
(i) no restriction on the prospective purchasers in such sale or other
disposition (including, but not limited to, a restriction of such prospective
purchasers to Persons meeting specified requirements as to financial
sophistication or intent to purchase for investment and not with a view to sale
or other disposition), restriction on the terms of such sale or other
disposition (including, but not limited to, restricting future sales and other
dispositions) or other restriction on any aspect of such sale or other
disposition (including, but not limited to, the advertising or conduct thereof)
imposed by the Secured Party in order to comply with applicable law (including,
but not limited to, the Securities Act of 1933 and any banking statute) shall be
a factor in determining such sale or other disposition to have been made in
other than a commercially reasonable manner, and (ii) without limiting any
other act, omission or other thing that shall not be considered in determining
such sale or other disposition to have been made in other than a commercially
reasonable manner, such sale or other disposition shall not be determined to
have been made in other than a commercially reasonable manner by reason of
(A) the Secured Party having obtained any insurance, credit enhancement or
other protection to insure it against or reduce loss, or to provide it a
guaranteed return, in connection with such sale or other disposition, (B) such
sale or other disposition having been advertised in a medium of general or
limited circulation, (C) such sale or other disposition not being made at the
time and place therefor specified in any notice thereof provided that the
adjournment thereof is announced at such specified time and place or a time and
place announced at any adjournment thereof, (D) such sale or other disposition
being a public or private sale or other disposition (including, but not limited
to, a sale or other disposition using an internet site that provides for the
auction of assets of the type subject to such sale or other disposition or has
the reasonable capability of doing so or that matches buyers and sellers of such
assets), (E) such sale or other disposition being made in one parcel or in more
than one parcel, at one time or at different times, in a wholesale or retail
market, with or without any warranty, with or without any assistance of any
auctioneer, consultant, broker, investment banker or other professional or with
or without contacting any Person in the same business as the Debtor to determine
his, her or its interest in acquiring such portion of the Collateral, (F) the
exercise by the Secured Party, whether by the use of a collection agency or
otherwise, or the failure by the Secured Party to exercise, whether by the use
of a collection agency or otherwise, any collection remedy against any Person
(including, but not limited to, any Account Debtor, Issuer, Bank, Securities
Intermediary or Commodity Intermediary) obligated with respect to such portion
of the Collateral,
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Continued -
(G) such
sale or other disposition involving the sale or other disposition of such
portion of the Collateral either for future delivery or for future payment
without retention by the Secured Party until such future payment and the failure
of such future delivery or such future payment to occur, (H) the failure of
the Secured Party to comply with any contract between the Secured Party and the
Debtor with respect to any aspect of such sale or other disposition (including,
but not limited to, the advertising or conduct thereof), (I) the failure of the
Secured Party to remove any lien or encumbrance on or adverse claim to such
portion of the Collateral, (J) the failure of the Secured Party to incur any
expense deemed significant by the Secured Party to prepare such portion of the
Collateral for such sale or other disposition or, if such portion of the
Collateral is raw material or work in process, to complete such portion of the
Collateral into finished products prior to such sale or other disposition or (K)
the failure of the Secured Party, except to the extent required by applicable
law, to obtain any consent of any Person required for access to such portion of
the Collateral or for such sale or other disposition.
f. Application of
Proceeds. Except to the extent held as part of the Collateral,
the Secured Party shall apply all Proceeds and other proceeds received by the
Secured Party from any collection or sale, lease or other disposition of or
other recovery upon or otherwise on account of any of the Collateral (including,
but not limited to, as money payable pursuant to any insurance on any of the
Collateral) first to liabilities, costs and expenses described in Section 8 of
this Agreement and then to the remainder of the Obligations, whether due or not
due, in any order determined by the Secured Party.
7. STANDARDS
OF CARE.
a. Collateral Transferred to or
Registered in Name of Secured Party or Agent of Secured
Party. The Secured Party shall be deemed to have exercised
reasonable care in the custody or preservation of any of the Collateral that is
transferred to or registered in the name of the Secured Party or any nominee,
Securities Intermediary, Commodity Intermediary or other agent of the Secured
Party if (i) the treatment thereof by the Secured Party or such nominee,
Securities Intermediary, Commodity Intermediary or other agent is substantially
equal to the treatment by the Secured Party of assets of the Secured Party of a
similar nature or (ii) the Secured Party takes any action in the custody or
preservation thereof reasonably specified by the Debtor in a written notice
received by the Secured Party in a reasonable time to evaluate and take such
action; provided, however, that (A) any failure to take such action shall
not of itself be deemed to be a failure to exercise such reasonable care,
(B) in no event shall the Secured Party be obligated to take such action if
the Secured Party determines that doing so would or might have any adverse
effect on the value of any of the Collateral or otherwise be incompatible with
any provision or purpose of this Agreement and (C) in no event shall the Secured
Party be obligated to (I) preserve any right, remedy or power against any
prior party obligated pursuant to any of the Collateral, whether or not in the
possession or under the control of the Secured Party, (II) ascertain or
notify the Debtor of any maturity, call, exchange, conversion, redemption,
offer, tender or similar matter relating to any of the Collateral, whether or
not the Secured Party has knowledge thereof, or (III) provide to the Debtor
any statement, confirmation, notice, proxy statement, proxy or other
communication received by the Secured Party or any nominee, Securities
Intermediary, Commodity Intermediary or other agent of the Secured Party and
relating to any of the Collateral.
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b. Actions and Omissions by Secured
Party or Agent of Secured Party. Neither the Secured Party nor
any director, officer, employee, accountant, attorney or other agent of the
Secured Party shall be liable for any action taken or not taken, whether in
exercising or refraining from exercising any right, remedy or power pursuant to
this Agreement or arising or accruing as a result of this Agreement or
otherwise, with respect to any of the Collateral (including, but not limited to,
any liability for loss of, damage to or decrease in the value of any of the
Collateral) except to the extent caused by his, her or its gross negligence, bad
faith or willful misconduct.
8. EXPENSES;
INDEMNIFICATION.
a. Expenses. The
Debtor shall pay to the Secured Party on demand the reasonable costs and
expenses (including, but not limited to, if the Secured Party retains counsel
for advice, litigation or any other purpose, reasonable attorneys’ fees and
disbursements) heretofore or hereafter incurred by the Secured Party in
(i) searching for, filing or recording or obtaining any information
relating to any Financing Statement, application for any certificate of title,
notice of lien, instrument of assignment or other Record relating to any of the
Collateral or otherwise obtaining any information relating to the Debtor or any
of the Collateral, (ii) negotiating the entry into any Control Agreement
relating to any Deposit Account, Electronic Chattel Paper, Investment Property
or Letter-of-Credit Right included in the Collateral, (iii) taking any action
pursuant to this Agreement or in connection with the custody or preservation of
any of the Collateral or (iv) endeavoring to (A) enforce any obligation of
the Debtor pursuant to this Agreement or preserve or exercise any right, remedy
or power of the Secured Party pursuant to this Agreement or arising or accruing
as a result of this Agreement or (B) preserve or exercise any right, remedy
or power relating to, take possession of, remove from any premises, store,
prepare for any sale, lease or other disposition or collect, sell, lease or
otherwise dispose of or otherwise realize upon any of the
Collateral. After such demand for the payment of any cost or expense
incurred by the Secured Party in performing any obligation of the Debtor
pursuant to this Agreement, the Debtor shall pay interest at an annual rate
equal to the lesser of 25% or the highest rate permitted by applicable law on
the portion of such cost or expense remaining unpaid.
b. Indemnification. The
Debtor shall indemnify the Secured Party and each director, officer, employee,
accountant, attorney and other agent of the Secured Party on demand, without any
limitation as to amount, against each liability, cost and expense (including,
but not limited to, if the Secured Party or such director, officer, employee,
accountant, attorney or other agent retains counsel for advice, litigation or
any other purpose, reasonable attorneys’ fees and disbursements) heretofore or
hereafter imposed on, incurred by or asserted against the Secured Party or such
director, officer, employee, accountant, attorney or other agent as a result of
any claim (including, but not limited to, any claim involving any allegation of
any violation of applicable law (including, but not limited to, any
environmental or criminal statute)), however asserted and whether now existing
or hereafter arising or accruing, arising out of any manufacture, purchase or
other acquisition, ownership, possession, control, use, operation, advertising
or other promotion or sale, lease or other disposition of any of the Collateral
except to the extent caused by the gross negligence, bad faith or willful
misconduct of the Secured Party or such director, officer, employee, accountant,
attorney or other agent.
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9. TERMINATION. This Agreement
shall remain in full force and effect until and shall terminate only upon (a)
the actual receipt by an officer of the Secured Party at the chief executive
office of the Secured Party of a written notice of (i) the termination of this
Agreement by the Debtor, (ii) if the Debtor is an individual, the death of the
Debtor or the judicial declaration of the Debtor’s incompetence or (iii) if the
Debtor is not an individual, the dissolution or cessation of existence of the
Debtor, (b) the expiration of a reasonable period of time for the Secured Party
to act upon such written notice and (c) the final and indefeasible payment or
other performance in full of (i) each portion of the Obligations (A) arising or
accrued before such receipt of such written notice and the expiration of such
period of time, (B) thereafter arising or accruing as a result of any credit or
other financial accommodation theretofore committed or otherwise agreed to by
the Secured Party or (C) thereafter arising or accruing as a result of any of
the Obligations described in clause (c)(i)(A) or (B) of this sentence
(including, but not limited to, (I) all interest, fees, charges, costs and
expenses thereafter arising or accruing with respect to any of the Obligations
described in such clause (c)(i)(A) or (B) and (II) all of the Obligations
thereafter arising or accruing as a result of any direct or indirect extension,
renewal, refinancing or other modification or replacement of any of the
Obligations described in such clause (c)(i)(A) or (B)) and (ii) each
liability, cost and expense that the Debtor is obligated to pay pursuant to
Section 8 of this Agreement, whether theretofore or thereafter arising or
accruing.
10. WAIVER IF COLLATERAL INCLUDES
UNREGISTERED SECURITY. If the Collateral
includes any Security that is required to be registered pursuant to applicable
law (including, but not limited to, the Securities Act of 1933) before being
permitted to be sold or otherwise disposed of, or offered for sale or other
disposition, by the Secured Party or that otherwise might be subject to any
restriction that might affect any attempt by the Secured Party to sell or
otherwise dispose of such Security, (i) the Secured Party shall not have
any duty to attempt to obtain a fair price for such Security in any sale or
other disposition of such Security even though the Obligations may be paid in
full through realization of a lesser price for such Security, and (ii) the
Debtor knowingly, voluntarily, intentionally and irrevocably waives, without any
notice, each right to hold the Secured Party responsible for selling or
otherwise disposing of such Security at an inadequate price even if the Secured
Party accepts the first offer received for or does not approach more than one
possible purchaser of such Security.
11. OBLIGATIONS IMMEDIATELY
DUE. Upon or at any
time after any occurrence or existence of any Event of Default other than, with
respect to the Debtor, any Event of Default described in clause (iii) of Section
1d of this Agreement, all of the Obligations remaining unpaid shall, in the sole
discretion of the Secured Party and without any notice, demand, presentment or
protest of any kind (each of which is knowingly, voluntarily, intentionally and
irrevocably waived by the Debtor) become immediately due from the Debtor,
notwithstanding any agreement to the contrary. Upon any occurrence or
existence of, with respect to the Debtor, any Event of Default described in such
clause (iii), all of the Obligations remaining unpaid shall automatically,
without any notice, demand, presentment or protest of any kind (each of which is
knowingly, voluntarily, intentionally and irrevocably waived by the Debtor),
become immediately due from the Debtor, notwithstanding any agreement to the
contrary. Nothing in this Section 11 shall render any of the
Obligations payable on demand payable otherwise than on demand.
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12. TERMINATION OF OBLIGATION TO
LEND. Upon
any occurrence or existence of any Event of Default, any obligation of the
Secured Party to extend any credit or other financial accommodation to the
Debtor shall terminate, notwithstanding any commitment or other agreement to the
contrary.
13. REPRESENTATIONS AND
WARRANTIES. The Debtor represents
and warrants to the Secured Party as follows:
a. Debtor
Information. The exact legal name of the Debtor, the residence
of the Debtor if the Debtor is an individual and the jurisdiction of
organization and chief executive office of the Debtor if the Debtor is not an
individual are as indicated at the beginning of this Agreement.
b. Authority. The
execution, delivery to the Secured Party and performance of this Agreement, the
execution or other authentication, delivery to the Secured Party and performance
of each Control Agreement, and the grant or other creation of each Security
Interest, by the Debtor (i) do not and will not violate applicable law, any
judgment or order of any court, agency or other governmental body by which the
Debtor is bound or, if the Debtor is not an individual, any certificate or
articles of incorporation, formation or organization, by-laws, limited liability
company, operating or partnership agreement or other charter, organizational or
other governing document of the Debtor or any resolution or other action of
record of any shareholders, members, directors or managers of the Debtor,
(ii) do not and will not violate or constitute any default under any
agreement, instrument or other Record by which the Debtor is bound,
(iii) if the Debtor is not an individual, are and will be in furtherance of
the purposes and within the power and authority of the Debtor and (iv) do
not and will not require any authorization of, notice to or other act by or
relating to any Person (including, but not limited to, if the Debtor is not an
individual, any shareholder, member, director or manager of the Debtor) that has
not been duly obtained, given or done and is not in full force and
effect.
c. Enforceability. This
Agreement is, and each Control Agreement is or, if not now existing, will be
enforceable in accordance with its terms against the Debtor.
d. Certificate or Other
Record. All information contained in any certificate or other
Record submitted by or on behalf of the Debtor to the Secured Party in
connection with this Agreement is complete and accurate.
e. Rights with Respect to
Collateral. Except as heretofore disclosed by the Debtor to
the Secured Party in writing, there exists (i) other than those security
interests and liens subject to the Subordination Agreement between Secured Party
and TigerPaw Capital Corp. entered into on or about the date of this
Agreement, no security interest in or other lien on any of the Collateral other
than Permitted Liens, (ii) no presently effective Financing Statement or
certificate of title, and no pending application for any certificate of title or
notice of lien, relating to any of the Collateral and naming any Person other
than the Secured Party as a secured party other than those relating solely to
Permitted Liens, (iii) other than the MTV Merchandising Licensing
Agreement, no contractual or other restriction on the grant or other
creation of any security interest in or assignment, pledge or hypothecation of
any of the Collateral, (iv) no demand, claim, counterclaim, setoff or
defense, no action or other legal proceeding, and no outstanding judgment or
order of any court, agency or other governmental body, relating to any of the
Collateral and (v) no Control Agreement (A) that relates to any Deposit Account,
Electronic Chattel Paper, Investment Property or Letter-of-Credit Right included
in the Collateral and (B) to which the Secured Party is not a
party.
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f. Actions with Respect to
Collateral. Except as heretofore disclosed by the Debtor to
the Secured Party in writing, the Debtor has not (i) sold, leased or
otherwise disposed of any of the Collateral or any interest or right in any of
the Collateral, (ii) extended, renewed, refinanced or otherwise modified or
replaced, compromised, canceled, discharged, subordinated, accelerated, waived,
forborne from exercising any right, remedy or power relating to or adversely
affected any obligation of any Person (including, but not limited to, any
Account Debtor, Issuer, Bank, Securities Intermediary or Commodity Intermediary)
relating to any of the Collateral or (iii) manufactured, used, operated,
advertised or otherwise promoted, permitted the manufacture, use, operation or
advertising or other promotion of or sold, leased or otherwise disposed of any
of the Collateral in any manner that violated or resulted in any violation of
applicable law (including, but not limited to, the Fair Labor Standards Act or
any environmental or criminal statute) or any policy providing any insurance on
any of the Collateral.
g. Accounts, Chattel Paper, Deposit
Accounts, Documents, General Intangibles, Instruments, Investment Property,
Letter- of-Credit Rights and Letters of Credit. Each Account,
Chattel Paper, Deposit Account, Document, General Intangible, Instrument, item
of Investment Property, Letter-of Credit Right and letter of credit included in
the Collateral is or, if not now existing, will be genuine, in all respects what
it purports to be and enforceable in accordance with its terms against each
Person (including, but not limited to, any Account Debtor, Issuer,
Bank, Securities Intermediary or Commodity Intermediary) obligated
with respect thereto, subject to no demand, claim, counterclaim, setoff or
defense.
h. Intellectual
Property. The Debtor (i) duly owns or is duly licensed to use
and is not prohibited from using any Intellectual Property that the Debtor uses
and (ii) other than a potential dispute with MTV Games regarding the “Xxxx Ass”
Merchandising Agreement, is not aware of any claim by any Person that (A) the
use by the Debtor (including, but not limited to, as a licensee) of any
Intellectual Property that the Debtor uses infringes, misappropriates, dilutes
or otherwise violates any right of such Person in such Intellectual Property or
(B) any registration of any copyright (including, but not limited to, any right
as a licensor or licensee) of any such Intellectual Property is other than in
full force and effect. Each registration of and each right
(including, but not limited to, any right as a licensor or licensee) of the
Debtor in any Intellectual Property included in the Collateral is in full force
and effect.
i. Rights with Respect to Locations of
Collateral. The Debtor has and will have the right to
(i) keep all of the Collateral now or hereafter located at any location at
such location and (ii) plant and grow crops and timber on and harvest and
remove crops and timber from any real property on which any growing crop or
standing timber now or hereafter included in the Collateral is
located.
j. Locations of Standing
Timber. All real property on which any standing timber
included in the Collateral is located is fully and accurately described under
the heading “Location of Standing Timber” in Exhibit A attached to and made a
part of this Agreement.
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k. Incorrect or Misleading
Information. The Debtor has not provided to the Secured Party
or permitted to be provided to the Secured Party on his, her or its behalf any
certificate, financial statement or other Record that contains any statement of
fact that is incorrect or misleading in any material respect or omits to state
any fact necessary to make any statement of fact contained therein not incorrect
or misleading in any material respect.
14. CERTAIN
CONSENTS AND WAIVERS.
a. Consents. Except to
the extent expressly provided in this Agreement, this Agreement shall not be
modified or terminated, no Security Interest, no obligation of the Debtor
pursuant to this Agreement and no right, remedy or power of the Secured Party
pursuant to this Agreement or arising or accruing as a result of this Agreement
shall be impaired or otherwise adversely affected, and no such right, remedy or
power shall be waived, by, and the Debtor shall not assert any defense based
upon, any act, omission or other thing, whether heretofore occurred or hereafter
occurring. The Debtor knowingly, voluntarily, intentionally and
irrevocably consents, without any notice, to each act, omission and other thing,
whether heretofore occurred or hereafter occurring, that would or might, but for
such consent, modify or terminate this Agreement, impair or otherwise adversely
affect any Security Interest or any such obligation, right, remedy or power or
operate as a waiver of any such right, remedy or power. Without
limiting the generality of the preceding two sentences, this Agreement shall not
be modified or terminated by, no Security Interest and no such obligation,
right, remedy or power shall be impaired or otherwise adversely affected by, no
such right, remedy or power shall be waived by, the Debtor shall not assert any
defense based upon, and such consent shall apply to, whether heretofore occurred
or hereafter occurring, (i) any direct or indirect extension, renewal,
refinancing or other modification or replacement of, or any assignment or other
transfer, compromise, cancellation, release, discharge, invalidity, impairment,
unenforceability, repudiation, revocation or change in any term or condition of,
defense or effect of any statute of limitations with respect to or grant of any
participation in, any of the Obligations or any other obligation of the Debtor
or any Other Obligor or other Person, (ii) any acceptance of any Other Obligor,
(iii) any taking, increase or decrease in value, impairment, unenforceability,
repudiation, revocation or release of, collection or sale, lease or other
disposition of or other realization upon or failure or delaying to call for,
take any property as, hold, preserve, protect, insure or collect, sell, lease or
otherwise dispose of or otherwise realize upon any of the Collateral or any
Other Collateral, (iv) any failure or delaying to perfect, keep perfected or
maintain the priority of any security interest in or other lien on any of the
Collateral or any Other Collateral, (v) any exercise or waiver of, failure or
delaying to exercise, forbearance from exercising or failure to give any notice
prior to exercising any right, remedy or power of the Secured Party or any other
Person, whether relating to any of the Obligations, any of the Collateral or any
Other Collateral, against the Debtor or any Other Obligor or other Person or
otherwise, (vi) any incapacity, death or disability of or case or other
proceeding pursuant to any bankruptcy, insolvency or similar statute with
respect to the Debtor or any Other Obligor or other Person or any election, loan
or other extension of credit or taking of any collateral, subordination,
guaranty, endorsement or other security or assurance of payment in any such case
or other legal proceeding (including, but not limited to, pursuant to 11 U.S.C.
§1111(b) or 364), (vii) any failure of the Secured Party or any other Person to
make, prove or vote any claim relating to any of the Obligations, any of the
Collateral or any Other Collateral, or any failure of any such claim to be
allowed, in any case or other proceeding pursuant to any bankruptcy, insolvency
or similar statute, (viii) the Obligations being at any time or from time to
time paid in full or reduced and then increased or exceeding any amount,
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Continued -
(ix) any
refusal or other failure of the Secured Party or any other Person to grant any
or any additional credit or other financial accommodation to the Debtor or any
Other Obligor or other Person or provide to the Debtor any or complete and
accurate information relating to any Other Obligor or other Person or the
business, operations, assets, affairs or condition (financial or other) of any
Other Obligor or other Person, regardless of whether such information relates to
any fact that increases the scope of the risk undertaken by the Debtor pursuant
to this Agreement or is unknown to the Debtor, (x) any notice to the Secured
Party or any other Person from any Other Obligor or other Person not to grant
any or any additional credit or other financial accommodation to the Debtor or
to take or not to take any other action, (xi) the acceptance by the Secured
Party or any other Person of any agreement, instrument or other Record intended
by the Debtor or any Other Obligor or other Person but not by the Secured Party
to create an accord and satisfaction with respect to any of the Obligations or
any other obligation of the Debtor or any Other Obligor or other Person, (xii)
any action taken or not taken by the Secured Party or any other Person that
increases the scope of the risk undertaken by the Debtor pursuant to this
Agreement (including, but not limited to, any negligent servicing of any credit
or other financial accommodation to the Debtor), (xiii) the manner or order of
any collection or sale, lease or other disposition of or other realization upon
any of the Collateral or any Other Collateral, (xiv) the manner or order of
application of any money applied in payment of any of the Obligations, (xv) any
change in the ownership, membership, location, business, name, identity or
structure of the Debtor or any Other Obligor or other Person or (xvi) the
execution and delivery to the Secured Party by any Other Obligor or other Person
of any agreement, instrument or other Record providing any Other
Collateral.
b. Waivers. The Debtor
knowingly, voluntarily, intentionally and irrevocably waives, without any
notice, each act and other thing upon which, but for such waiver, any Security
Interest, any obligation of the Debtor pursuant to this Agreement or any right,
remedy or power of the Secured Party pursuant to this Agreement or arising or
accruing as a result of this Agreement would or might be conditioned, and the
Debtor shall not assert any defense based upon any such act or other
thing. Without limiting the generality of the preceding sentence, no
Security Interest and no such obligation, right, remedy or power shall be
conditioned upon, such waiver shall apply to, and the Debtor shall not assert
any defense based upon, (i) the acceptance of this Agreement by the Secured
Party or any lack or other insufficiency of consideration for this Agreement,
(ii) any demand upon or presentment or protest to the Debtor or any Other
Obligor or other Person (including, but not limited to, any such demand for the
payment or other performance of any of the Obligations), (iii) any exercise of
any right, remedy or power of the Secured Party or any other Person, whether
relating to any of the Obligations, any of the Collateral or any Other
Collateral, against the Debtor or any Other Obligor or other Person or
otherwise, (iv) any notice to the Debtor or any Other Obligor or other Person of
the acceptance of this Agreement by the Secured Party, any incurring or
nonpayment or other nonperformance of any of the Obligations, any occurrence or
existence of any Event of Default or any other event or condition of default
relating to any of the Obligations, any of the Collateral or any Other
Collateral, any demand for the payment or other performance of or acceleration
of the maturity of any of the Obligations, any decrease in the value of any of
the Collateral or any Other Collateral, any exercise of any right, remedy or
power of the Secured Party or any other Person, whether relating to any of the
obligations, any of the Collateral or any Other Collateral, against the Debtor
or any Other Obligor or other Person or otherwise, any action taken or not taken
by the Secured Party or any other Person or any other matter, (v) any defense or
benefit that would or might, but for such waiver, be available to the Debtor as
a surety (including, but not limited to, any defense based upon the principle
that the obligation of a surety may not exceed or otherwise be more burdensome
than that of any Person for whom or which such surety acts as a surety), as a
result of any right of setoff, as a result of the application of any
anti-deficiency statute, single form of action rule, statute or rule relating to
the marshalling of collateral or similar statute or rule or as a result of any
election of any right, remedy or power by the Secured Party or any other Person
that would or might impair or otherwise adversely affect any right of
subrogation, reimbursement, indemnification or contribution, or any similar
right, against any Other Obligor in connection with this Agreement or any of the
Obligations or (vi) any right to terminate this Agreement except as provided in
Section 9 of this Agreement.
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c. Special Waivers of
Statutory Rights. The Debtor acknowledges that (i) if any
Other Collateral consists of real property and the Secured Party forecloses
judicially or nonjudicially against such Other Collateral, such foreclosure
could cause the loss of or otherwise adversely affect any right that the Debtor
might have to seek reimbursement, indemnification or contribution or otherwise
collect from any Other Obligor or other Person with respect to any amount paid
by the Debtor pursuant to this Agreement and (ii) such loss or other adverse
effect upon such right might give rise to a defense by the Debtor against any
liability pursuant to this Agreement based upon Section 580d of the Code of
Civil Procedure of the State of California as interpreted in Union Bank versus
Gradsky unless such defense is waived by the Debtor. The Debtor
knowingly, voluntarily, intentionally and irrevocably waives (i) such defense,
(ii) each right, defense and other benefit that the Debtor might have under or
as a result of any of Sections 580a, 580b, 580d and 726 of the Code of Civil
Procedure of the State of California (which, in the absence of a waiver, limit a
debtor’s liability after a nonjudicial foreclosure sale of mortgaged real
property to the difference between such debtor’s liability and the fair market
value of such mortgaged real property rather than the actual proceeds of such
sale, limit the right of a mortgagee to obtain a deficiency judgment against a
guarantor and require exhaustion of security for guaranteed indebtedness before
a deficiency judgment may be obtained against a guarantor) or any of Sections
2787 through 2855, 2899 and 3433 of the Civil Code of the State of California
and (iii) each other right, defense and other benefit that the Debtor might have
because such Other Collateral consists of real property. The Debtor
acknowledges that, as a result of such waiver, (i) the Secured Party may enforce
each obligation of the Debtor pursuant to this Agreement without first
foreclosing upon such Other Collateral or realizing upon any other Other
Collateral and (ii) if the Secured Party forecloses upon such Other Collateral,
(A) the amount of the liability of the Debtor pursuant to this Agreement may be
reduced only by the net proceeds of the sale of such Other Collateral in such
foreclosure even if such Other Collateral is worth more than the amount received
in such sale and (B) the Secured Party may collect from the Debtor pursuant to
this Agreement even if, by foreclosing upon such Other Collateral, the Secured
Party causes the loss of or otherwise adversely affects any right that the
Debtor might have to seek reimbursement, indemnification or contribution or
otherwise collect from any Other Obligor or other Person.
15. NOTICES
AND OTHER COMMUNICATIONS.
a. By Secured Party to
Debtor. Each notice and other communication by the Secured
Party to the Debtor relating to this Agreement (i) may be given orally, in
writing or by facsimile or electronic mail, (ii) if given in writing, may be
directed to the Debtor at the last address of the Debtor shown in the Records of
the Secured Party relating to this Agreement, (iii) if sent by mail or overnight
courier service, shall be deemed to have been given when deposited in the mail,
first-class or certified postage prepaid, or accepted by any post office or
overnight courier service for delivery and to have been received by the Debtor
upon the earlier of (A) the actual receipt thereof or (B) three days
after being so deposited or accepted, (iv) if given by facsimile, may be
directed to the Debtor at the last telephone number for receipt of facsimiles by
the Debtor shown in such Records and (v) if given by electronic mail, may be
directed to the Debtor at the last electronic mail address of the Debtor shown
in such Records. Each requirement under applicable law of reasonable
notice of any event by the Secured Party to the Debtor shall be deemed to have
been met if a notice of such event is given by the Secured Party to the Debtor
at least ten days before the date on or after which such event is to
occur.
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b. By Debtor to Secured
Party. Each notice and other communication by the Debtor to
the Secured Party relating to this Agreement (i) shall be in writing and (ii)
shall be deemed to have been given only when actually received by an officer of
the Secured Party at the chief executive office of the Secured
Party.
16. MISCELLANEOUS.
a. Limitation on Security
Interest. If any Security Interest is sought to be voided in
any case or other proceeding pursuant to any bankruptcy, insolvency or similar
statute, such Security Interest shall not secure the payment and other
performance of the Obligations to the extent of any amount in excess of the
maximum amount the payment and other performance of which can be so secured
without rendering such Security Interest unenforceable under applicable law as a
fraudulent conveyance or transfer.
b. Other
Collateral. If the Secured Party in good xxxxx xxxxx itself
insecure with respect to any of the Obligations or is of the opinion that the
Collateral is not or may not be sufficient or has decreased or may decrease in
value and gives the Debtor a notice of such insecurity or opinion, the Debtor
shall provide to the Secured Party Other Collateral satisfactory to the Secured
Party.
c. Reliance by Other
Persons. Each Person (including, but not limited to, any
Account Debtor, Issuer, Bank, Securities Intermediary or Commodity Intermediary)
obligated with respect to, and each transfer agent, registrar and trustee of,
any of the Collateral may accept without any question any exercise by the
Secured Party of any right, remedy or power of the Secured Party pursuant to
this Agreement or arising or accruing as a result of this
Agreement.
d. Obligations Relating to
Collateral. The grant or other creation of any Security
Interest shall not constitute any assignment by the Debtor to the Secured Party
of any obligation of the Debtor relating to any of the
Collateral. The Debtor shall remain obligated to perform such
obligation, and the Secured Party shall not be obligated to perform such
obligation, whether or not the Secured Party exercises any right, remedy or
power pursuant to this Agreement or arising or accruing as a result of this
Agreement. The only obligations of the Secured Party relating to the
Collateral shall be, to the extent required by applicable law, to
(i) exercise reasonable care in the custody or preservation of any of the
Collateral that is transferred to or registered in the name of the Secured Party
or any nominee, Securities Intermediary, Commodity Intermediary or other agent
of the Secured Party and (ii) act in a commercially reasonable manner in
exercising with respect to any of the Collateral any right, remedy or power
pursuant to this Agreement or arising or accruing as a result of this
Agreement.
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e. Liability;
Interpretation. If more than one Person executes this
Agreement, (i) each of them shall be jointly and severally liable pursuant to
this Agreement, (ii) each of them shall be liable pursuant to this Agreement as
though each of them had executed and delivered to the Secured Party a separate
agreement identical to this Agreement, and (iii) this Agreement shall be
construed, interpreted and enforced, whether in any action or other legal
proceeding or otherwise, as to each of them as though each of them had executed
and delivered to the Secured Party a separate agreement identical to this
Agreement.
f. Effect on Other Agreements,
Instruments and Records. The execution, delivery to the
Secured Party and performance of this Agreement by the Debtor shall not modify
or terminate any other agreement, instrument or other Record (including, but not
limited to, any agreement, instrument or other Record granting or otherwise
creating any security interest in or other lien on any of the Collateral or
providing any Other Collateral) by which the Debtor or any Other Obligor or
other Person is bound or impair or otherwise adversely affect any obligation of
the Debtor or any Other Obligor or other Person pursuant to any such other
agreement, instrument or other Record.
g. Right of
Setoff. Upon and at any time and from time to time after any
occurrence or existence of any Event of Default, the Secured Party shall have
the right to place an administrative hold on, and set off against each
obligation of the Debtor pursuant to this Agreement, each obligation of the
Secured Party in any capacity to, in any capacity and whether alone or
otherwise, the Debtor, whether now existing or hereafter arising or accruing,
whether or not then due and whether pursuant to any Deposit Account or
certificate of deposit or otherwise. Such setoff shall become
effective at the time the Secured Party opts therefor even though evidence
thereof is not entered in the Records of the Secured Party until
later.
h. Assignment or Grant of
Participation. In conjunction with any assignment or other
transfer of or grant of any participation in any of the Obligations by the
Secured Party, the Secured Party shall have the right to assign or otherwise
transfer or grant any participation in this Agreement, any Security Interest,
any obligation of the Debtor pursuant to this Agreement or any right, remedy or
power of the Secured Party pursuant to this Agreement or arising or accruing as
a result of this Agreement.
i. Binding
Effect. This Agreement shall be binding upon the Debtor, each
other Person who or that becomes bound as a debtor by this Agreement pursuant to
Article 9 of the Uniform Commercial Code and each direct or indirect legal
representative, successor and assignee of the Debtor or any such other Person
and shall inure to the benefit of and be enforceable by the Secured Party and
each direct or indirect successor and assignee of the Secured
Party.
j. Entire Agreement, Modifications and
Waivers. This Agreement contains the entire agreement between
the Secured Party and the Debtor with respect to the subject matter of this
Agreement and supersedes each action heretofore taken or not taken, each course
of conduct heretofore pursued, accepted or acquiesced in, and each oral, written
or other agreement and representation heretofore made, by or on behalf of the
Secured Party with respect thereto. No action heretofore or hereafter taken or
not taken, no course of conduct heretofore or hereafter pursued, accepted or
acquiesced in, no oral, written or other agreement or representation heretofore
made, and no agreement or representation hereafter made other than in writing,
by or on behalf of the Secured Party shall modify or terminate this Agreement,
impair or otherwise adversely affect any Security Interest, any obligation of
the Debtor pursuant to this Agreement or any right, remedy or power of the
Secured Party pursuant to this Agreement or arising or accruing as a result of
this Agreement or operate as a waiver of any such right, remedy or
power. No modification of this Agreement or waiver of any such right,
remedy or power shall be effective unless made in a writing duly executed by the
Secured Party and specifically referring to such modification or
waiver.
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k. Rights, Remedies and Powers
Cumulative. All rights, remedies and powers of the Secured
Party pursuant to this Agreement or arising or accruing as a result of this
Agreement shall be cumulative, and no such right, remedy or power shall be
exclusive of any other such right, remedy or power.
l. Extent of Consents and
Waivers. Each consent and waiver of the Debtor contained in
this Agreement shall be deemed to have been given to the extent permitted by
applicable law.
m. Exercise of Rights, Remedies and
Powers; Requests. Except as expressly provided in this
Agreement, each right, remedy and power of the Secured Party pursuant to this
Agreement or arising or accruing as a result of this Agreement may be exercised
(i) at any time and from time to time, (ii) in the sole discretion of the
Secured Party, (iii) without any notice or demand of any kind or nature and (iv)
whether or not any Event of Default or any other event or condition of default
relating to any of the Obligations, any of the Collateral or any Other
Collateral has occurred or existed, but the Secured Party shall not be obligated
to exercise any such right, remedy or power. Each such right, remedy
and power may be exercised only to the extent that the exercise thereof does not
violate applicable law. Each request by the Secured Party pursuant to
this Agreement may be made (i) at any time and from time to time, (ii) in the
sole discretion of the Secured Party and (iii) whether or not any Event of
Default or any other event or condition of default relating to any of the
Obligations, any of the Collateral or any Other Collateral has occurred or
existed.
n. Severability. Whenever
possible, each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law. If, however, any
such provision shall be prohibited by or invalid under such law, it shall be
deemed modified to conform to the minimum requirements of such law, or, if for
any reason it is not deemed so modified, it shall be prohibited or invalid only
to the extent of such prohibition or invalidity without the remainder thereof or
any other such provision being prohibited or invalid.
o. Governing
Law. Except to the extent that Article 9 of the Uniform
Commercial Code provides for the application of the law of any other
jurisdiction, this Agreement shall be governed by and construed, interpreted and
enforced in accordance with the law of the State of California and, to the
extent applicable, the federal law of the United States without regard to the
law of any other jurisdiction.
p. Headings. In this
Agreement, headings of sections are for convenience of reference only and have
no substantive effect.
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17. CONSENTS
AND WAIVERS RELATING TO LEGAL PROCEEDINGS.
a. JURISDICTIONAL
CONSENTS AND WAIVERS. THE DEBTOR KNOWINGLY, VOLUNTARILY,
INTENTIONALLY AND IRREVOCABLY (i) CONSENTS IN EACH ACTION AND OTHER LEGAL
PROCEEDING COMMENCED BY THE SECURED PARTY AND ARISING OUT OF OR OTHERWISE
RELATING TO THIS AGREEMENT, ANY OF THE OBLIGATIONS, ANY OF THE COLLATERAL OR ANY
OTHER COLLATERAL TO THE NONEXCLUSIVE PERSONAL JURISDICTION OF ANY COURT THAT IS
EITHER (A) A COURT OF RECORD OF THE STATE OF CALIFORNIA OR A COURT OF THE UNITED
STATES LOCATED IN THE STATE OF CALIFORNIA OR (B) A COURT OF RECORD OF THE
PROVINCE XX XXXXXXX XX X XXXXX XX XXXXXX LOCATED IN THE PROVINCE OF ONTARIO,
(ii) WAIVES EACH OBJECTION TO THE LAYING OF VENUE OF ANY SUCH ACTION OR
OTHER LEGAL PROCEEDING, (iii) WAIVES PERSONAL SERVICE OF PROCESS IN EACH
SUCH ACTION AND OTHER LEGAL PROCEEDING, (iv) CONSENTS TO THE MAKING OF
SERVICE OF PROCESS IN EACH SUCH ACTION AND OTHER LEGAL PROCEEDING BY REGISTERED
MAIL DIRECTED TO THE DEBTOR AT THE LAST ADDRESS OF THE DEBTOR SHOWN IN THE
RECORDS RELATING TO THIS AGREEMENT MAINTAINED BY THE SECURED PARTY, WITH SUCH
SERVICE OF PROCESS TO BE DEEMED COMPLETED FIVE DAYS AFTER THE MAILING THEREOF,
(v) WAIVES IN EACH SUCH ACTION AND OTHER LEGAL PROCEEDING EACH RIGHT TO
ASSERT ANY NONMANDATORY COUNTERCLAIM, ANY SETOFF OR ANY DEFENSE BASED UPON ANY
STATUTE OF LIMITATIONS OR CLAIM OF LACHES, (vi) WAIVES EACH RIGHT TO ATTACK
ANY FINAL JUDGMENT THAT IS OBTAINED AS A RESULT OF ANY SUCH ACTION OR OTHER
LEGAL PROCEEDING AND (vii) CONSENTS TO EACH SUCH FINAL JUDGMENT BEING SUED
UPON IN ANY COURT HAVING JURISDICTION WITH RESPECT THERETO AND ENFORCED IN THE
JURISDICTION IN WHICH SUCH COURT IS LOCATED AS IF ISSUED BY SUCH
COURT.
b. WAIVER
OF TRIAL BY JURY AND CLAIMS TO CERTAIN DAMAGES. THE DEBTOR (i)
KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY WAIVES EACH RIGHT THE
DEBTOR MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO, AND EACH RIGHT TO ASSERT ANY
CLAIM FOR DAMAGES (INCLUDING, BUT NOT LIMITED TO, PUNITIVE DAMAGES) IN ADDITION
TO ACTUAL DAMAGES IN, ANY ACTION OR OTHER LEGAL PROCEEDING, WHETHER BASED ON ANY
CONTRACT OR NEGLIGENT, INTENTIONAL OR OTHER TORT OR OTHERWISE, ARISING OUT OF OR
OTHERWISE RELATING TO (A) THIS AGREEMENT, ANY OF THE OBLIGATIONS, ANY OF THE
COLLATERAL OR ANY OTHER COLLATERAL, (B) ANY TRANSACTION ARISING OUT OF OR
OTHERWISE RELATING TO THIS AGREEMENT, ANY OF THE OBLIGATIONS, ANY OF THE
COLLATERAL OR ANY OTHER COLLATERAL OR (C) ANY NEGOTIATION, ADMINISTRATION,
PERFORMANCE OR ENFORCEMENT OF THIS AGREEMENT, ANY OF THE OBLIGATIONS, ANY OF THE
COLLATERAL OR ANY OTHER COLLATERAL AND (ii) CERTIFIES THAT NEITHER THE SECURED
PARTY NOR ANY REPRESENTATIVE OF THE SECURED PARTY HAS REPRESENTED TO THE DEBTOR
THAT THE SECURED PARTY WILL NOT SEEK TO ENFORCE THE WAIVER MADE BY THE DEBTOR IN
THIS SECTION 17b.
- 26 -
Dated May
______,
0000 XXX XXXX XXXXXXXXXXXXX,
INC.
By _____________________________________________________________________
Xxxxxxx Xxxxxxxx, Chief Executive Officer and Chairman
EXHIBIT
A
Permitted
Liens
Location
of Standing Timber
