SECURITY AGREEMENT
SECURITY
AGREEMENT, dated as of August 2, 2007 (this
"Agreement") made by Firepond, Inc. (formerly, FP Technology,
Inc., a Delaware Corporation (the "Company"), in favor of,
Radcliffe SPC, Ltd. for and on behalf of the Class A Segregated Portfolio,
a
Cayman Islands segregated portfolio company, in its capacity as collateral
agent
for the Buyers (as defined below) (in such capacity and together with its
successors in such capacity, the "Collateral
Agent").
WITNESSETH:
WHEREAS,
the Company and each party listed as a "Buyer" on the Schedule of Buyers
attached to the Securities Purchase Agreement (collectively, the
"Buyers") are parties to the Securities Purchase Agreement
dated the date hereof (as amended, restated, replaced or otherwise modified
from
time to time, the "Securities Purchase Agreement"), pursuant to
which the Company has agreed to sell, and the Buyers agreed to purchase, the
"Notes" (as defined in the Securities Purchase Agreement) to be issued pursuant
thereto (as such Notes may be amended, restated, replaced or otherwise modified
from time to time in accordance with the terms thereof, collectively, the
"Notes");
WHEREAS,
it is a condition precedent to the Buyers purchasing the Notes pursuant to
the
Securities Purchase Agreement that the Company executes and delivers to the
Collateral Agent this Agreement providing for the grant to the Collateral Agent
for the benefit of the Buyers of a perfected security interest in the personal
property of the Company, subject only to Permitted Liens (as defined in the
Notes) to secure all of the Company's obligations under the Securities Purchase
Agreement, the Notes and the "Transaction Documents" (as defined in the
Securities Purchase Agreement) (the "Transaction Documents");
and
WHEREAS,
the Company has determined that the execution, delivery and performance of
this
Agreement directly benefits, and is in the best interest of, the
Company.
NOW,
THEREFORE, in consideration of the premises and the agreements herein and in
order to induce the Buyers to perform under the Securities Purchase Agreement,
the Company agrees with the Collateral Agent, for the benefit of the Buyers,
as
follows:
SECTION
1. Definitions.
(a) Reference
is hereby made to the Securities Purchase Agreement and the Notes for a
statement of the terms thereof. All terms used in this Agreement and
the recitals hereto which are defined in the Securities Purchase Agreement,
the
Notes or in Articles 8 or 9 of the Uniform Commercial Code (the
"Code") as in effect from time to time in the State of New
York, and which are not otherwise defined herein shall have the same meanings
herein as set forth therein; provided that terms used herein which are
defined in the Code as in effect in the State of New York on the date hereof
shall continue to have the same meaning notwithstanding any replacement or
amendment of such statute except as the Collateral Agent may otherwise
determine.
(b) The
following terms shall have the respective meanings provided for in the
Code: "Accounts", "Cash Proceeds", "Chattel Paper", "Commercial Tort
Claim", "Commodity Account", "Commodity Contracts", "Deposit Account",
"Documents", "Equipment", "Fixtures", "General Intangibles", "Goods",
"Instruments", "Inventory", "Investment Property", "Letter-of-Credit Rights",
"Noncash Proceeds", "Payment Intangibles", "Proceeds", "Promissory Notes",
"Security", "Record", "Security Account", "Software", and "Supporting
Obligations".
(c) As
used
in this Agreement, the following terms shall have the respective meanings
indicated below, such meanings to be applicable equally to both the singular
and
plural forms of such terms:
"Copyright
Licenses" means all licenses, contracts or other agreements, whether
written or oral, naming the Company as licensee or licensor and providing for
the grant of any right to use or sell any works covered by any copyright
(including, without limitation, all Copyright Licenses set forth in Schedule
II hereto).
"Copyrights"
means all domestic and foreign copyrights, whether registered or not, including,
without limitation, all copyright rights throughout the universe (whether now
or
hereafter arising) in any and all media (whether now or hereafter developed),
in
and to all original works of authorship fixed in any tangible medium of
expression, acquired or used by the Company, all applications, registrations
and
recordings thereof (including, without limitation, applications, registrations
and recordings in the United States Copyright Office or in any similar office
or
agency of the United States or any other country or any political subdivision
thereof), and all reissues, divisions, continuations, continuations in part
and
extensions or renewals thereof.
"Event
ofDefault" shall have the meaning set forth in the
Notes.
"Insolvency
Proceeding" means any proceeding commenced by or against any Person
under any provision of the Bankruptcy Code (Chapter 11 of Title 11 of the
United States Code) or under any other bankruptcy or insolvency law, assignments
for the benefit of creditors, formal or informal moratoria, compositions, or
extensions generally with creditors, or proceedings seeking reorganization,
arrangement, or other similar relief.
"Intellectual
Property" means the Copyrights, Trademarks and Patents.
"Licenses"
means the Copyright Licenses, the Trademark Licenses and the Patent
Licenses.
"Lien"
means any mortgage, deed of trust, pledge, lien (statutory or otherwise),
security interest, charge or other encumbrance or security or preferential
arrangement of any nature, including, without limitation, any conditional sale
or title retention arrangement, any capitalized lease and any assignment,
deposit arrangement or financing lease intended as, or having the effect of,
security.
"Patent
Licenses" means all licenses, contracts or other agreements, whether
written or oral, naming the Company as licensee or licensor and providing for
the grant of any right to manufacture, use or sell any invention covered by
any
Patent (including, without limitation, all Patent Licenses set forth in
Schedule II hereto).
"Patents"
means all domestic and foreign letters patent, design patents, utility patents,
industrial designs, inventions, trade secrets, ideas, concepts, methods,
techniques, processes, proprietary information, technology, know-how, formulae,
rights of publicity and other general intangibles of like nature, now existing
or hereafter acquired (including, without limitation, all domestic and foreign
letters patent, design patents, utility patents, industrial designs, inventions,
trade secrets, ideas, concepts, methods, techniques, processes, proprietary
information, technology, know-how and formulae described in Schedule II
hereto), all applications, registrations and recordings thereof (including,
without limitation, applications, registrations and recordings in the United
States Patent and Trademark Office, or in any similar office or agency of the
United States or any other country or any political subdivision thereof), and
all reissues, divisions, continuations, continuations in part and extensions
or
renewals thereof.
"Permitted
Liens" shall have the meaning provided to such term in the
Notes.
"Special
Purpose Acquisition Subsidiary" means any Subsidiary that has been
acquired by the Company, or any Subsidiary of the Company that is formed for
the
purpose of making an acquisition.
"Subsidiary"
shall have the meaning provided to such term in the Securities Purchase
Agreement.
"Trademark
Licenses" means all licenses, contracts or other agreements, whether
written or oral, naming the Company as licensor or licensee and providing for
the grant of any right concerning any Trademark, together with any goodwill
connected with and symbolized by any such trademark licenses, contracts or
agreements and the right to prepare for sale or lease and sell or lease any
and
all Inventory now or hereafter owned by the Company and now or hereafter covered
by such licenses (including, without limitation, all Trademark Licenses
described in Schedule II hereto).
"Trademarks"
means all domestic and foreign trademarks, service marks, collective marks,
certification marks, trade names, business names, d/b/a's, Internet domain
names, trade styles, designs, logos and other source or business identifiers
and
all general intangibles of like nature, now or hereafter owned, adopted,
acquired or used by the Company (including, without limitation, all domestic
and
foreign trademarks, service marks, collective marks, certification marks, trade
names, business names, d/b/a's, Internet domain names, trade styles, designs,
logos and other source or business identifiers described in Schedule II
hereto), all applications, registrations and recordings thereof (including,
without limitation, applications, registrations and recordings in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any state thereof or any other country or any political
subdivision thereof), and all reissues, extensions or renewals thereof, together
with all goodwill of the business symbolized by such marks and all customer
lists, formulae and other Records of the Company relating to the distribution
of
products and services in connection with which any of such marks are
used.
"Transaction
Documents" shall have the meaning provided to such term in the Exchange
Agreement.
SECTION
2. Grant
of Security Interest. As collateral security for all of the
"Obligations" (as defined in Section 3 hereof), the Company hereby
pledges and assigns to the Collateral Agent for the benefit of the Buyers,
and
grants to the Collateral Agent for the benefit of the Buyers a continuing
security interest in, all personal property of the Company, wherever located
and
whether now or hereafter existing and whether now owned or hereafter acquired,
of every kind and description, tangible or intangible (collectively, the
"Collateral"), including, without limitation, the
following:
(a) all
Accounts, except as otherwise provided for in this Agreement;
(b) all
equity interests in Subsidiaries of the Company after the date
hereof;
(c) all
Chattel Paper (whether tangible or electronic);
(d) the
Commercial Tort Claims specified on Schedule VI hereto;
(e) all
Deposit Accounts (including, without limitation, the Reserve Account), all
cash,
and all other property from time to time deposited therein and the monies and
property in the possession or under the control of the Collateral Agent or
any
Holder or any affiliate, representative, agent or correspondent of the
Collateral Agent or Holder;
(f) all
Documents;
(g) all
Equipment;
(h) all
Fixtures;
(i) all
General Intangibles (including, without limitation, all Payment
Intangibles);
(j) all
Goods;
(k) all
Instruments (including, without limitation, Promissory Notes and each
certificated Security);
(l) all
Inventory;
(m) all
Investment Property;
(n) all
Copyrights, Patents and Trademarks, and all Licenses;
(o) all
Letter-of-Credit Rights;
(p) all
Supporting Obligations;
(q) all
other
tangible and intangible personal property of the Company (whether or not subject
to the Code), including, without limitation, all bank and other accounts and
all
cash and all investments therein, all proceeds, products, offspring, accessions,
rents, profits, income, benefits, substitutions and replacements of and to
any
of the property of the Company described in the preceding clauses of this
Section 2 (including, without limitation, any proceeds of insurance
thereon and all causes of action, claims and warranties now or hereafter held
by
the Company in respect of any of the items listed above), and all books,
correspondence, files and other Records, including, without limitation, all
tapes, desks, cards, Software, data and computer programs in the possession
or
under the control of the Company or any other Person from time to time acting
for the Company that at any time evidence or contain information relating to
any
of the property described in the preceding clauses of this Section 2 or
are otherwise necessary or helpful in the collection or realization thereof;
and
(r) all
Proceeds, including all Cash Proceeds and Noncash Proceeds, and products of
any
and all of the foregoing Collateral; in
each
case howsoever the Company's interest therein may arise or appear (whether
by
ownership, security interest, claim or otherwise).
SECTION
3. Security
for Obligations. The security interest created hereby in the
Collateral constitutes continuing collateral security for all of the following
obligations, whether now existing or hereafter incurred (collectively, the
"Obligations"):
(a) the
payment by the Company, as and when due and payable (by scheduled maturity,
required prepayment, acceleration, demand or otherwise), of all amounts from
time to time owing by it in respect of the Securities Purchase Agreement, the
Notes and the other Transaction Documents, and; and
(b) the
due
performance and observance by the Company of all of its other obligations from
time to time existing in respect of any of the Transaction Documents, including
without limitation, with respect to any conversion or redemption rights of
the
Buyers under the Notes, for so long as the Notes are outstanding.
SECTION
4. Representations
and Warranties. The Company represents and warrants as
follows:
(a) Schedule
I hereto sets forth (i) the exact legal name of the Company, and (ii) the
organizational identification number of the Company or states that no such
organizational identification number exists.
(b) There
is
no pending or notice threatening any action, suit, proceeding or claim affecting
the Company before any governmental authority or any arbitrator, or any order,
judgment or award by any governmental authority or arbitrator, that may
adversely affect the grant by the Company, or the perfection, of the security
interest purported to be created hereby in the Collateral, or the exercise
by
the Collateral Agent of any of its rights or remedies hereunder.
(c) All
Federal, state and local tax returns and other reports required by applicable
law to be filed by the Company have been filed, or extensions have been
obtained, and all taxes, assessments and other governmental charges imposed
upon
the Company or any property of the Company (including, without limitation,
all
federal income and social security taxes on employees' wages) and which have
become due and payable on or prior to the date hereof have been paid, except
to
the extent contested in good faith by proper proceedings which stay the
imposition of any penalty, fine or Lien resulting from the non-payment thereof
and with respect to which adequate reserves have been set aside for the payment
thereof in accordance with generally accepted accounting principles consistently
applied ("GAAP").
(d) All
Equipment, Fixtures, Goods and Inventory of the Company now existing are, and
all Equipment, Fixtures, Goods and Inventory of the Company hereafter existing
will be, located and/or based at the addresses specified therefor in Schedule
III hereto, except that the Company will give the Collateral Agent not less
than 30 days' prior written notice of any change of the location of any such
Collateral, other than to locations set forth on Schedule III and with
respect to which the Collateral Agent has filed financing statements and
otherwise fully perfected its Liens thereon. The Company 's chief
place of business and chief executive office, the place where the Company keeps
its Records concerning Accounts and all originals of all Chattel Paper are
located at the addresses specified therefor in Schedule III
hereto. None of the Accounts is evidenced by Promissory Notes or
other Instruments. Set forth in Schedule IV hereto is a
complete and accurate list, as of the date of this Agreement, of (i) each
Promissory Note, Company Security and other Instrument owned by the Company
and
(ii) each Deposit Account, Securities Account and Commodities Account of the
Company, together with the name and address of each institution at which each
such Account is maintained, the account number for each such Account and a
description of the purpose of each such Account. Set forth in
Schedule II hereto is a complete and correct list of each trade name used
by the Company and the name of, and each trade name used by, each person from
which the Company has acquired any substantial part of the
Collateral.
(e) The
Company has delivered to the Collateral Agent complete and correct copies of
each License described in Schedule II hereto, including all schedules and
exhibits thereto, which represents all of the Licenses existing on the date
of
this Agreement. Each such License sets forth the entire agreement and
understanding of the parties thereto relating to the subject matter thereof,
and
there are no other agreements, arrangements or understandings, written or oral,
relating to the matters covered thereby or the rights of the Company or any
of
its affiliates in respect thereof. Each material License now existing
is, and any material License entered into in the future will be, the legal,
valid and binding obligation of the parties thereto, enforceable against such
parties in accordance with its terms. No default under any material
License by any such party has occurred, nor does any defense, offset, deduction
or counterclaim exist thereunder in favor of any such party.
(f) The
Company owns and controls, or otherwise possesses adequate rights to use, all
Trademarks, Patents and Copyrights, which are the only trademarks, patents,
copyrights, inventions, trade secrets, proprietary information and technology,
know-how, formulae, rights of publicity necessary to conduct its business in
substantially the same manner as conducted as of the date
hereof. Schedule II hereto sets forth a true and complete list
of all registered copyrights, issued Patents, Trademarks, and Licenses annually
owned or used by the Company as of the date hereof. To the best
knowledge of the Company except as otherwise disclosed on Schedule II
hereto, all such Intellectual Property of the Company is subsisting
and in
full force and effect, has not been adjudged invalid or unenforceable, is valid
and enforceable and has not been abandoned in whole or in
part. Except as set forth in Schedule II, no such Intellectual
Property is the subject of any licensing or franchising
agreement. The Company has no knowledge of any conflict with the
rights of others to any Intellectual Property and, to the best knowledge of
the
Company, the Company is not now infringing or in conflict with any such rights
of others in any material respect, and to the best knowledge of the Company,
no
other Person is now infringing or in conflict in any material respect with
any
such properties, assets and rights owned or used by the Company. The
Company has not received any notice that it is violating or has violated the
trademarks, patents, copyrights, inventions, trade secrets, proprietary
information and technology, know-how, formulae, rights of publicity or other
intellectual property rights of any third party.
(g) The
Company is and will be at all times the sole and exclusive owner of, or
otherwise has and will have adequate rights in, the Collateral free and clear
of
any Liens, except for Permitted Liens on any Collateral. No effective
financing statement or other instrument similar in effect covering all or any
part of the Collateral is on file in any recording or filing office except
such
as may have been filed in favor of the Collateral Agent relating to this
Agreement or with respect to Permitted Liens.
(h) The
exercise by the Collateral Agent of any of its rights and remedies hereunder
will not contravene any law or any contractual restriction binding on or
otherwise affecting the Company or any of its properties and will not result
in
or require the creation of any Lien, upon or with respect to any of its
properties.
(i) No
authorization or approval or other action by, and no notice to or filing with,
any governmental authority or other regulatory body, or any other Person, is
required for (i) the grant by the Company, or the perfection, of the
security interest purported to be created hereby in the Collateral, or
(ii) the exercise by the Collateral Agent of any of its rights and remedies
hereunder, except (A) for the filing under the Uniform Commercial Code as
in effect in the applicable jurisdiction of the financing statements, all of
which financing statements, have been duly filed and are in full force and
effect, (B) with respect to the perfection of the security interest created
hereby in the Intellectual Property, for the recording of the appropriate
Assignment for Security, substantially in the form of Exhibit A hereto,
as applicable, in the United States Patent and Trademark Office or the United
States Copyright Office, as applicable, and (C) with respect to the
perfection of the security interest created hereby in foreign Intellectual
Property and Licenses, for registrations and filings in jurisdictions located
outside of the United States and covering rights in such jurisdictions relating
to the Intellectual Property and Licenses.
(j) This
Agreement creates in favor of the Collateral Agent a legal, valid and
enforceable security interest in the Collateral, as security for the
Obligations. The Collateral Agent's having possession of all
Instruments and cash (or entering into appropriate control documents)
constituting Collateral from time to time, the recording of the appropriate
Assignment for Security executed pursuant hereto in the United States Patent
and
Trademark Office and the United States Copyright Office, as applicable, and
the
filing of the financing statements and the other filings and recordings, as
applicable, described in Schedule V hereto and, with respect to the
Intellectual Property hereafter existing and not covered by an appropriate
Assignment for Security, the recording in the United States Patent and Trademark
Office or the United States Copyright Office, as applicable, of appropriate
instruments of assignment, result in the perfection of such security
interests. Such security interests are, or in the case of Collateral
in which the Company obtains rights after the date hereof, will be, a perfected
security interest, subject only to Permitted Liens and the recording of such
instruments of assignment. Such recordings and filings and all other
action necessary or desirable to perfect and protect such security interest
have
been duly taken, except for the Collateral Agent's having possession of
Instruments and cash constituting Collateral after the date hereof and the
other
filings and recordations described in Section 4(l) hereof.
(k) As
of the
date hereof, the Company does not hold any Commercial Tort Claims nor is aware
of any such pending claims, except for such claims described in Schedule
VI.
SECTION
5. Covenants
as to the Collateral. So long as any of the Obligations shall
remain outstanding, unless the Collateral Agent shall otherwise consent in
writing (after receiving the approval of the Majority Buyers):
(a) Further
Assurances. The Company will at its expense, at any time and from
time to time, promptly execute and deliver all further instruments and documents
and take all further action as is necessary or otherwise as the Collateral
Agent
may reasonably request in order to: (i) perfect and protect the
security interest purported to be created hereby; (ii) enable the
Collateral Agent to exercise and enforce its rights and remedies hereunder
in
respect of the Collateral; or (iii) otherwise effect the purposes of this
Agreement, including, without limitation: (A) marking
conspicuously all Chattel Paper and each License and each of its Records
pertaining to the Collateral with a legend, indicating that such Chattel Paper,
License or Collateral is subject to the security interest created hereby,
(B) delivering and pledging to the Collateral Agent hereunder each
Promissory Note, Security, Chattel Paper or other Instrument, now or hereafter
owned by the Company, duly endorsed and accompanied by executed instruments
of
transfer or assignment, (C) executing and filing (to the extent, if any,
that the Company 's signature is required thereon) or authenticating the filing
of, such financing or continuation statements, or amendments thereto, as may
be
necessary or desirable or that the Collateral Agent may request in order to
perfect and preserve the security interest purported to be created hereby,
(D) furnishing to the Collateral Agent from time to time statements and
schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral in each case as the Collateral Agent
may reasonably request, all in reasonable detail, (E) if any Collateral
shall be in the possession of a third party, notifying such Person of the
Collateral Agent's security interest created hereby and obtaining a written
acknowledgment from such Person that such Person holds possession of the
Collateral for the benefit of the Collateral Agent, (F) if at any time
after the date hereof, the Company acquires or holds any Commercial Tort Claim,
promptly notifying the Collateral Agent in a writing signed by the Company
setting forth a brief description of such Commercial Tort Claim and granting
to
the Collateral Agent a security interest therein and in the proceeds thereof,
which writing shall incorporate the provisions hereof, (G) upon the
acquisition after the date hereof by the Company of any motor vehicle or other
Equipment subject to a certificate of title or ownership (other than a motor
vehicle or Equipment that is subject to a purchase money security interest),
causing the Collateral Agent to be listed as the lienholder on such certificate
of title or ownership and delivering evidence of the same to the Collateral
Agent; and (H) taking all actions required by any earlier versions of the
Code or by other law, as applicable, in any relevant Code jurisdiction, or
by
other law as applicable in any foreign jurisdiction.
(b) Location
of Equipment and Inventory. The Company will keep the Equipment
and Inventory at the locations specified therefor in Section 4(g)
hereof or, at such other locations in the United States; provided that the
Company shall provide the Collateral Agent with a new Schedule V hereto
indicating each new location of the Equipment and Inventory within five (5)
business days of any such change in location.
(c) Condition
of Equipment. The Company will maintain or cause the Equipment
(necessary or useful to its business) to be maintained and preserved in good
condition, repair and working order, ordinary wear and tear excepted, and will
forthwith, or in the case of any loss or damage to any Equipment of the Company
within a commercially reasonable time after the occurrence thereof, make or
cause to be made all repairs, replacements and other improvements in connection
therewith which are necessary or desirable, consistent with past practice,
or
which the Collateral Agent may request to such end. The Company will
promptly furnish to the Collateral Agent a statement describing in reasonable
detail any such loss or damage in excess of $150,000 to
any Equipment.
(d) Taxes,
Etc. The Company agrees to pay promptly when due all property and
other taxes, assessments and governmental charges or levies imposed upon, and
all claims (including claims for labor, materials and supplies) against, the
Equipment and Inventory, except to the extent the validity thereof is being
contested in good faith by proper proceedings which stay the imposition of
any
penalty, fine or Lien resulting from the non-payment thereof and with respect
to
which adequate reserves in accordance with GAAP have been set aside for the
payment thereof.
(e) Insurance.
(i) The
Company will, at its own expense, maintain insurance (including, without
limitation, commercial general liability and property insurance) with respect
to
the Equipment and Inventory in such amounts, against such risks, in such form
and with responsible and reputable insurance companies or associations as is
required by any governmental authority having jurisdiction with respect thereto
or as is carried generally in accordance with sound business practice by
companies in similar businesses similarly situated. Each such policy
for liability insurance shall provide for all losses to be paid on behalf of
the
Collateral Agent and the Company as their respective interests may appear,
and
each policy for property damage insurance shall provide for all losses to be
adjusted with, and paid directly to, the Collateral Agent. Each such
policy shall in addition (A) name the Collateral Agent as an additional insured
party thereunder (without any representation or warranty by or obligation upon
the Collateral Agent) as their interests may appear, (B) contain an agreement
by
the insurer that any loss thereunder shall be payable to the Collateral Agent
on
its own account notwithstanding any action, inaction or breach of representation
or warranty by the Company, (C) provide that there shall be no recourse against
the Collateral Agent for payment of premiums or other amounts with respect
thereto, and (D) provide that at least 30 days' prior written notice of
cancellation, lapse, expiration or other adverse change shall be given to the
Collateral Agent by the insurer. The Company will, if so requested by
the Collateral Agent, deliver to the Collateral Agent original or duplicate
policies of such insurance and, as often as the Collateral Agent may reasonably
request, a report of a reputable insurance broker with respect to such
insurance. The Company will also, at the request of the Collateral
Agent, following a request to the Collateral Agent by the Majority Buyers,
execute and deliver instruments of assignment of such insurance policies and
cause the respective insurers to acknowledge notice of such
assignment.
(ii) Reimbursement
under any liability insurance maintained by the Company pursuant to this
Section 5(e) may be paid directly to the Person who shall have incurred
liability covered by such insurance. In the case of any loss
involving damage to Equipment or Inventory, any proceeds of insurance maintained
by the Company pursuant to this Section 5(e) shall be paid to the
Collateral Agent (except as to which paragraph (iii) of this Section 5(e)
is not applicable), the Company will make or cause to be made the necessary
repairs to or replacements of such Equipment or Inventory, and any proceeds
of
insurance maintained by the Company pursuant to this Section 5(e) shall
be paid by the Collateral Agent to the Company as reimbursement for the costs
of
such repairs or replacements.
(iii) All
insurance payments in respect of such Equipment or Inventory shall be paid
to
the Collateral Agent and applied as specified in Section 7(b)
hereof.
(f) Provisions
Concerning the Accounts and the Licenses.
(i) The
Company will (A) give the Collateral Agent at least 30 days' prior written
notice of any change in the Company's name, identity or organizational
structure, (B) maintain its jurisdiction of incorporation as set forth in
Section 4(b) hereto, (C) immediately notify the Collateral Agent upon
obtaining an organizational identification number, if on the date hereof the
Company did not have such identification number, and (D) keep adequate records
concerning the Accounts and Chattel Paper and permit representatives of the
Collateral Agent during normal business hours on reasonable notice to the
Company, to inspect and make abstracts from such Records and Chattel
Paper.
(ii) The
Company will, except as otherwise provided in this subsection (f), continue
to collect, at its own expense, all amounts due or to become due under the
Accounts. In connection with such collections, the Company may (and,
at the Collateral Agent's direction, will) take such action as the Company
or
the Collateral Agent may reasonably deem necessary or advisable to enforce
collection or performance of the Accounts; provided, however, that
the Collateral Agent shall have the right at any time, upon the occurrence
and
during the continuance of an Event of Default, to notify the account debtors
or
obligors under any Accounts of the assignment of such Accounts to the Collateral
Agent and to direct such account debtors or obligors to make payment of all
amounts due or to become due to the Company thereunder directly to the
Collateral Agent or its designated agent and, upon such notification and at
the
expense of the Company and to the extent permitted by law, to enforce collection
of any such Accounts and to adjust, settle or compromise the amount or payment
thereof, in the same manner and to the same extent as the Company might have
done. After receipt by the Company of a notice from the Collateral
Agent that an Event of Default has occurred and that the Collateral Agent has
notified, intends to notify, or has enforced or intends to enforce the Company
's rights against the account debtors or obligors under any Accounts as referred
to in the proviso to the immediately preceding sentence, (A) all amounts
and proceeds (including Instruments) received by the Company in respect of
the
Accounts shall be received in trust for the benefit of the Collateral Agent
hereunder, shall be segregated from other funds of the Company and shall be
forthwith paid over to the Collateral Agent in the same form as so received
(with any necessary endorsement) to be held as cash collateral and applied
as
specified in Section 7(b) hereof, and (B) the Company will not adjust,
settle or compromise the amount or payment of any Account or release wholly
or
partly any account debtor or obligor thereof or allow any credit or discount
thereon. In addition, upon the occurrence and during the continuance
of an Event of Default, the Collateral Agent may (in its sole and absolute
discretion) direct any or all of the banks and financial institutions with
which
the Company either maintains a Deposit Account or a lockbox or deposits the
proceeds of any Accounts to send immediately to the Collateral Agent by wire
transfer (to such account as the Collateral Agent shall specify, or in such
other manner as the Collateral Agent shall direct) all or a portion of such
securities, cash, investments and other items held by such
institution. Any such securities, cash, investments and other items
so received by the Collateral Agent shall (in the sole and absolute discretion
of the Collateral Agent) be held as additional Collateral for the Obligations
or
distributed in accordance with Section 7 hereof.
(iii) Upon
the
occurrence and during the continuance of any breach or default under any
material License referred to in Schedule II hereto by any party thereto
other than the Company, the Company will, promptly after obtaining knowledge
thereof, give the Collateral Agent written notice of the nature and duration
thereof, specifying what action, if any, it has taken and proposes to take
with
respect thereto and thereafter will take reasonable steps to protect and
preserve its rights and remedies in respect of such breach or default, or will
obtain or acquire an appropriate substitute License.
(iv) The
Company will, at its expense, promptly deliver to the Collateral Agent a copy
of
each notice or other communication received by it by which any other party
to
any material License referred to in Schedule II hereto purports to
exercise any of its rights or affect any of its obligations thereunder, together
with a copy of any reply by the Company thereto.
(v) The
Company will exercise promptly and diligently each and every right which it
may
have under each material License (other than any right of termination) and
will
duly perform and observe in all respects all of its obligations under each
material License and will take all action reasonably necessary to maintain
such
Licenses in full force and effect. The Company will not, without the
prior written consent of the Collateral Agent after the approval of the Majority
Buyers as contemplated in the Securities Purchase Agreement, cancel, terminate,
amend or otherwise modify in any respect, or waive any provision of, any
material License referred to in Schedule II hereto.
(g) Transfers
and Other Liens.
(i) The
Company will not sell, assign (by operation of law or otherwise), lease,
license, exchange or otherwise transfer or dispose of any of the Collateral,
except (A) Inventory in the ordinary course of business, and (B) worn-out or
obsolete assets not necessary to the business.
(ii) The
Company will not create, suffer to exist or grant any Lien upon or with respect
to any Collateral other than a Permitted Lien.
(h) Intellectual
Property.
(i) If
applicable, the Company shall, upon the Collateral Agent's written request,
following a request to the Collateral Agent by the Majority Buyers, duly execute
and deliver the applicable Assignment for Security in the form attached hereto
as Exhibit A. The Company (either itself or through licensees)
will, and will cause each licensee thereof to, take all action necessary to
maintain all of the Intellectual Property in full force and effect, including,
without limitation, using the proper statutory notices and markings and using
the Trademarks on each applicable trademark class of goods in order to so
maintain the Trademarks in full force and free from any claim of abandonment
for
non-use, and the Company will not (nor permit any licensee thereof to) do any
act or knowingly omit to do any act whereby any Intellectual Property may become
invalidated; provided, however, that so long as no Event of
Default has occurred and is continuing, the Company shall not have an obligation
to use or to maintain any Intellectual Property (A) that relates solely to
any product or work, that has been, or is in the process of being, discontinued,
abandoned or terminated, (B) that is being replaced with Intellectual Property
substantially similar to the Intellectual Property that may be abandoned or
otherwise become invalid, so long as the failure to use or maintain such
Intellectual Property does not materially adversely affect the validity of
such
replacement Intellectual Property and so long as such replacement Intellectual
Property is subject to the Lien created by this Agreement or (C) that is
substantially the same as another Intellectual Property that is in full force,
so long the failure to use or maintain such Intellectual Property does not
materially adversely affect the validity of such replacement Intellectual
Property and so long as such other Intellectual Property is subject to the
Lien
and security interest created by this Agreement. The Company will
cause to be taken all necessary steps in any proceeding before the United States
Patent and Trademark Office and the United States Copyright Office or any
similar office or agency in any other country or political subdivision thereof
to maintain each registration of the Intellectual Property (other than the
Intellectual Property described in the proviso to the immediately preceding
sentence), including, without limitation, filing of renewals, affidavits of
use,
affidavits of incontestability and opposition, interference and cancellation
proceedings and payment of maintenance fees, filing fees, taxes or other
governmental fees. If any Intellectual Property (other than
Intellectual Property described in the proviso to the first sentence of
subsection (i) of this clause (h)) is infringed, misappropriated, diluted or
otherwise violated in any material respect by a third party, the Company shall
(x) upon learning of such infringement, misappropriation, dilution or other
violation, promptly notify the Collateral Agent and (y) to the extent the
Company shall deem appropriate under the circumstances, promptly xxx for
infringement, misappropriation, dilution or other violation, seek injunctive
relief where appropriate and recover any and all damages for such infringement,
misappropriation, dilution or other violation, or take such other actions as
the
Company shall deem appropriate under the circumstances to protect such
Intellectual Property. The Company shall furnish to the Collateral
Agent from time to time upon its request statements and schedules further
identifying and describing the Intellectual Property and Licenses and such
other
reports in connection with the Intellectual Property and Licenses as the
Collateral Agent may reasonably request, all in reasonable detail and promptly
upon request of the Collateral Agent, following receipt by the Collateral Agent
of any such statements, schedules or reports, the Company shall modify this
Agreement by amending Schedule II hereto, as the case may be, to include
any Intellectual Property and License, as the case may be, which becomes part
of
the Collateral under this Agreement and shall execute and authenticate such
documents and do such acts as shall be necessary to subject such Intellectual
Property and Licenses to the Lien and security interest created by this
Agreement. Notwithstanding anything herein to the contrary, upon the
occurrence and during the continuance of an Event of Default, the Company may
not abandon or otherwise permit any Intellectual Property to become invalid
without the prior written consent of the Collateral Agent, and if any
Intellectual Property is infringed, misappropriated, diluted or otherwise
violated in any material respect by a third party, the Company will take such
action as appropriate under the circumstances to protect such Intellectual
Property.
(ii) In
no
event shall the Company, either itself or through any agent, employee, licensee
or designee, file an application for the registration of any Trademark or
Copyright or the issuance of any Patent with the United States Patent and
Trademark Office or the United States Copyright Office, as applicable, or in
any
similar office or agency of the United States or any country or any political
subdivision thereof unless it gives the Collateral Agent prior written notice
thereof. Upon request of the Collateral Agent, the Company shall
execute, authenticate and deliver any and all assignments, agreements,
instruments, documents and papers as the Collateral Agent may reasonably
request, following a request to the Collateral Agent by the Majority Buyers,
to
evidence the Collateral Agent's security interest hereunder in such Intellectual
Property and the General Intangibles of the Company relating thereto or
represented thereby, and the Company hereby appoints the Collateral Agent its
attorney-in-fact to execute and/or authenticate and file all such writings
for
the foregoing purposes, all acts of such attorney being hereby ratified and
confirmed, and such power (being coupled with an interest) shall be irrevocable
until the indefeasible payment in full in cash of all of the Obligations in
full
and the termination of each of the Transaction Documents.
(i) Deposit,
Commodities and Securities Accounts. Upon the Collateral Agent's
written request, following a request to the Collateral Agent by the Majority
Buyers, the Company shall cause each bank and other financial institution with
an account referred to in Schedule IV hereto to execute and deliver to
the Collateral Agent a control agreement, in form and substance reasonably
satisfactory to the Collateral Agent, duly executed by the Company and such
bank
or financial institution, or enter into other arrangements in form and substance
satisfactory to the Collateral Agent, pursuant to which such institution shall
irrevocably agree, interalia, that (i) it will comply at any
time with the instructions originated by the Collateral Agent to such bank
or
financial institution directing the disposition of cash, Commodity Contracts,
Securities, Investment Property and other items from time to time credited
to
such account, without further consent of the Company, which instructions the
Collateral Agent will not give to such bank or other financial institution
in
the absence of a continuing Event of Default, (ii) all cash, Commodity
Contracts, securities, Investment Property and other items of the Company
deposited with such institution shall be subject to a perfected priority
security interest in favor of the Collateral Agent, subject only to Permitted
Liens (iii) any right of set off, banker's Lien or other similar Lien,
security interest or encumbrance shall be fully waived as against the Collateral
Agent, and (iv) upon receipt of written notice from the Collateral Agent
during the continuance of an Event of Default, such bank or financial
institution shall immediately send to the Collateral Agent by wire transfer
(to
such account as the Collateral Agent shall specify, or in such other manner
as
the Collateral Agent shall direct) all such cash, the value of any Commodity
Contracts, Securities, Investment Property and other items held by
it. The Company shall not make or maintain any Deposit Account,
Commodity Account or Securities Account except for the accounts set forth in
Schedule IV hereto. The provisions of this paragraph 5(i)
shall not apply to (i) Deposit Accounts for which the Collateral Agent is the
depositary and (ii) Deposit Accounts specially and exclusively used for payroll,
payroll taxes and other employee wage and benefit payments to or for the benefit
of the Company 's salaried employees.
(j) Motor
Vehicles.
(i) Upon
the
Collateral Agent's written request, the Company shall deliver to the Collateral
Agent originals of the certificates of title or ownership for all motor vehicles
owned by it with a blue book value equal or in excess of $50,000, with the
Collateral Agent listed as lienholder, for the benefit of the
Buyers.
(ii) The
Company hereby appoints the Collateral Agent as its attorney-in-fact, effective
the date hereof and terminating upon the termination of this Agreement, for
the
purpose of (A) executing on behalf of the Company title or ownership
applications for filing with appropriate state agencies to enable motor vehicles
now owned or hereafter acquired by such the Company to be retitled and the
Collateral Agent listed as lienholder thereof, (B) filing such applications
with
such state agencies, and (C) executing such other documents and instruments
on
behalf of, and taking such other action in the name of, the Company as the
Collateral Agent may deem necessary or advisable to accomplish the purposes
hereof (including, without limitation, for the purpose of creating in favor
of
the Collateral Agent a perfected Lien on the motor vehicles and exercising
the
rights and remedies of the Collateral Agent hereunder). This
appointment as attorney-in-fact is coupled with an interest and is irrevocable
until all of the Obligations are indefeasibly paid in full in cash and after
all
Transaction Documents have been terminated.
(iii) Any
certificates of title or ownership delivered pursuant to the terms hereof shall
be accompanied by odometer statements for each motor vehicle covered
thereby.
(iv) So
long
as no Event of Default shall have occurred and be continuing, upon the request
of the Company, the Collateral Agent shall execute and deliver to the Company
such instruments as the Company shall reasonably request to remove the notation
of the Collateral Agent as lienholder on any certificate of title for any motor
vehicle; provided, however, that any such instruments shall be
delivered, and the release effective, only upon receipt by the Collateral Agent
of a certificate from the Company stating that such motor vehicle is to be
sold
or has suffered a casualty loss (with title thereto passing to the casualty
insurance company therefor in settlement of the claim for such loss) and the
amount that the Company will receive as sale proceeds or insurance
proceeds. Any proceeds of such sale or casualty loss shall be paid to
the Collateral Agent hereunder immediately upon receipt, to be applied to the
Obligations then outstanding.
(k) Control. The
Company hereby agrees to take any or all action that may be necessary or
desirable or that the Collateral Agent may reasonably request in order for
the
Collateral Agent to obtain control in accordance with Sections 9-105 – 9-107 of
the Code with respect to the following
Collateral: (i) Electronic Chattel Paper, (ii) Investment
Property, and (iii) Letter-of-Credit Rights.
(l) Inspection
and Reporting. The Company shall permit the Collateral Agent, or
any agent or representatives thereof or such professionals or other Persons
as
the Collateral Agent may designate, not more than twice a year in the absence
of
an Event of Default, upon prior notice and during regular business hours
(i) to examine and make copies of and abstracts from the Company 's records
and books of account, (ii) to visit and inspect its properties, (iii) to
verify materials, leases, Instruments, Accounts, Inventory and other assets
of
the Company from time to time, (iii) to conduct audits, physical counts,
appraisals and/or valuations, examinations at the locations of the
Company. The Company shall also permit the Collateral Agent, or any
agent or representatives thereof or such professionals or other Persons as
the
Collateral Agent may designate to discuss the Company 's affairs, finances
and
accounts with any of its directors, officers, managerial employees, independent
accountants or any of its other representatives.
(m) Future
Subsidiaries. If the Company shall hereafter create or acquire
any Subsidiary, simultaneously with the creation or acquisition of such
Subsidiary, the Company shall cause such Subsidiary to become a party to this
Agreement as a grantor hereunder, and to duly execute and deliver a guaranty
of
the Obligations in favor of the Collateral Agent in form and substance
reasonably acceptable to the Collateral Agent and to duly execute and/or deliver
such opinions of counsel and other documents, in form and substance reasonably
acceptable to the Collateral Agent, as the Collateral Agent shall reasonably
request with respect thereto; provided, however, that this
subsection (m) shall not apply to any Subsidiary for which the Company has
provided notice to the Collateral Agent at the time of the formation thereof
that such Subsidiary is a Special Purpose Acquisition Subsidiary and which
complies with the requirements set forth in the Indenture for Special Purpose
Acquisition Subsidiaries. The Company hereby agrees that it shall not
make capital contributions in excess of $10,000 in cash or property of
equivalent value (or some combination thereof) to any such Special Purpose
Acquisition Subsidiary.
SECTION
6. Additional
Provisions Concerning the Collateral.
(a) The
Company hereby (i) authorizes the Collateral Agent to cause the filing of
one or more Code financing or continuation statements, and amendments thereto,
relating to the Collateral and (ii) ratifies such authorization to the
extent that the Collateral Agent has filed any such financing or continuation
statements, or amendments thereto, prior to the date hereof. A
photocopy or other reproduction of this Agreement or any financing statement
covering the Collateral or any part thereof shall be sufficient as a financing
statement where permitted by law. Notwithstanding the foregoing, the
Company shall at all times maintain perfected the Security Interest granted
hereunder without further act on the part of the Collateral Agent.
(b) The
Company hereby irrevocably appoints the Collateral Agent as its attorney-in-fact
and proxy, with full authority in the place and stead of the Company and in
the
name of the Company or otherwise, from time to time in the Collateral Agent's
discretion, so long as an Event of Default shall have occurred and is
continuing, to take any action and to execute any instrument which is necessary
and which the Collateral Agent may deem necessary or advisable to accomplish
the
purposes of this Agreement (subject to the rights of the Company under
Section 5 hereof), including, without limitation, (i) to obtain and
adjust insurance required to be paid to the Collateral Agent pursuant to
Section 5(e) hereof, (ii) to ask, demand, collect, xxx for, recover,
compound, receive and give acquittance and receipts for moneys due and to become
due under or in respect of any Collateral, (iii) to receive, endorse, and
collect any drafts or other instruments, documents and chattel paper in
connection with clause (i) or (ii) above, (iv) to file any claims or take any
action or institute any proceedings which the Collateral Agent may deem
necessary or desirable for the collection of any Collateral or otherwise to
enforce the rights of the Collateral Agent and the Buyers with respect to any
Collateral, and (v) to execute assignments, licenses and other documents to
enforce the rights of the Collateral Agent and the Buyers with respect to any
Collateral. This power is coupled with an interest and is irrevocable
until all of the Obligations are indefeasibly paid in full in cash.
(c) For
the
purpose of enabling the Collateral Agent to exercise rights and remedies
hereunder, at such time as the Collateral Agent shall be lawfully entitled
to
exercise such rights and remedies, and for no other purpose, the Company hereby
grants to the Collateral Agent, to the extent assignable, an irrevocable,
non-exclusive license (exercisable without payment of royalty or other
compensation to the Company) to use, assign, license or sublicense any
Intellectual Property now owned or hereafter acquired by the Company, wherever
the same may be located, including in such license reasonable access to all
media in which any of the licensed items may be recorded or stored and to all
computer programs used for the compilation or printout
thereof. Notwithstanding anything contained herein to the contrary,
but subject to any provisions of the Notes that limit the right of the Company
to dispose of its property and Section 5(h) hereof, so long as no Event
of Default shall have occurred and be continuing, the Company may exploit,
use,
enjoy, protect, license, sublicense, assign, sell, dispose of or take other
actions with respect to the Intellectual Property in the ordinary course of
its
business. In furtherance of the foregoing, unless an Event of Default
shall have occurred and be continuing, the Collateral Agent shall from time
to
time, upon the request of the Company, execute and deliver any instruments,
certificates or other documents, in the form so requested, which the Company
shall have certified are appropriate (in the Company 's judgment) to allow
it to
take any action permitted above (including relinquishment of the license
provided pursuant to this clause (c) as to any Intellectual
Property). Further, upon the indefeasible payment in full in cash of
all of the Obligations, the Collateral Agent (subject to Section 10(e)
hereof) shall release and reassign to the Company all of the Collateral Agent's
right, title and interest in and to the Intellectual Property, and the Licenses,
all without recourse, representation or warranty whatsoever. The
exercise of rights and remedies hereunder by the Collateral Agent shall not
terminate the rights of the holders of any licenses or sublicenses theretofore
granted by the Company in accordance with the second sentence of this clause
(c). The Company hereby releases the Collateral Agent from any
claims, causes of action and demands at any time arising out of or with respect
to any actions taken or omitted to be taken by the Collateral Agent under the
powers of attorney granted herein other than actions taken or omitted to be
taken through the Collateral Agent's own gross negligence or willful misconduct,
as determined by a final determination of a court of competent
jurisdiction.
(d) If
the
Company fails to perform any agreement contained herein, the Collateral Agent
may (but is under no obligation to) itself perform, or cause performance of,
such agreement or obligation, in the name of the Company or the Collateral
Agent, and the expenses of the Collateral Agent incurred in connection therewith
shall be payable by the Company pursuant to Section 8 hereof and shall be
secured by the Collateral.
(e) The
powers conferred on the Collateral Agent hereunder are solely to protect its
interest in the Collateral and shall not impose any duty upon it to exercise
any
such powers. Except for the safe custody of any Collateral in its
possession and the accounting for moneys actually received by it hereunder,
the
Collateral Agent shall have no duty as to any Collateral or as to the taking
of
any necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral.
(f) Anything
herein to the contrary notwithstanding (i) the Company shall remain liable
under the Licenses and otherwise with respect to any of the Collateral to the
extent set forth therein to perform all of its obligations thereunder to the
same extent as if this Agreement had not been executed, (ii) the exercise
by the Collateral Agent of any of its rights hereunder shall not release the
Company from any of its obligations under the Licenses or otherwise in respect
of the Collateral, and (iii) the Collateral Agent shall not have any
obligation or liability by reason of this Agreement under the Licenses or with
respect to any of the other Collateral, nor shall the Collateral Agent be
obligated to perform any of the obligations or duties of the Company thereunder
or to take any action to collect or enforce any claim for payment assigned
hereunder.
(g) Beyond
the exercise of reasonable care in the custody thereof, the Collateral Agent
shall have no duty as to any Collateral in its possession or control or in
the
possession or control of any agent or bailee or any income thereon or as to
preservation of rights against prior parties or any other rights pertaining
thereto and the Collateral Agent shall not be responsible for filing any
financing or continuation statements or recording any documents or instruments
in any public office at any time or times or otherwise perfecting or maintaining
the perfection of any security interest in the Collateral. The
Collateral Agent shall be deemed to have exercised reasonable care in the
custody of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which it accords its own property and
shall not be liable or responsible for any loss or diminution in the value
of
any of the Collateral, by reason of the act or omission of any carrier,
forwarding agency or other agent or bailee selected by the Collateral Agent
in
good faith.
(h) The
Collateral Agent shall not be responsible for the exercise, genuineness or
value
of any of the Collateral or for the validity, perfection, priority or
enforceability of the Liens in any of the Collateral, whether impaired by
operation of law or by reason of any action or omission to act on its part
hereunder, except to the extent such action or omission constitutes gross
negligence, bad fait or willful misconduct on the part of the Collateral Agent,
for the validity or sufficiency of the Collateral or any agreement or assignment
contained therein, for the validity of the title of the Company to the
Collateral, for insuring the Collateral or for the payment of taxes, charges,
assessments or Liens upon the Collateral or otherwise as to the maintenance
of
the Collateral.
(i) Notwithstanding
anything in t his Agreement to the contrary and for the avoidance of doubt,
the
Collateral Agent shall have no duty to act outside of the United States in
respect of any Collateral located in the jurisdiction other than the United
States.
SECTION
7. Remedies
Upon Event of Default. If any Event of Default shall have
occurred and be continuing:
(a) The
Collateral Agent may exercise in respect of the Collateral, in addition to
any
other rights and remedies provided for herein or otherwise available to it,
all
of the rights and remedies of a secured party upon default under the Code
(whether or not the Code applies to the affected Collateral), and also may
(i) take absolute control of the Collateral, including, without limitation,
transfer into the Collateral Agent's name or into the name of its nominee or
nominees (to the extent the Collateral Agent has not theretofore done so) and
thereafter receive, for the benefit of the Collateral Agent, all payments made
thereon, give all consents, waivers and ratifications in respect thereof and
otherwise act with respect thereto as though it were the outright owner thereof,
(ii) require the Company to, and the Company hereby agrees that it will at
its expense and upon request of the Collateral Agent forthwith, assemble all
or
part of its respective Collateral as directed by the Collateral Agent and make
it available to the Collateral Agent at a place or places to be designated
by
the Collateral Agent that is reasonably convenient to both parties, and the
Collateral Agent may enter into and occupy any premises owned or leased by
the
Company where the Collateral or any part thereof is located or assembled for
a
reasonable period in order to effectuate the Collateral Agent's rights and
remedies hereunder or under law, without obligation to the Company in respect
of
such occupation, and (iii) without notice except as specified below and
without any obligation to prepare or process the Collateral for sale,
(A) sell the Collateral or any part thereof in one or more parcels at
public or private sale, at any of the Collateral Agent's offices or elsewhere,
for cash, on credit or for future delivery, and at such price or prices and
upon
such other terms as the Collateral Agent may deem commercially reasonable and/or
(B) lease, license or dispose of the Collateral or any part thereof upon
such terms as the Collateral Agent may deem commercially
reasonable. The Company agrees that, to the extent notice of sale or
any other disposition of its respective Collateral shall be required by law,
at
least ten (10) days' notice to the Company of the time and place of any public
sale or the time after which any private sale or other disposition of its
respective Collateral is to be made shall constitute reasonable
notification. The Collateral Agent shall not be obligated to make any
sale or other disposition of any Collateral regardless of notice of sale having
been given. The Collateral Agent may adjourn any public or private
sale from time to time by announcement at the time and place fixed therefor,
and
such sale may, without further notice, be made at the time and place to which
it
was so adjourned. The Company hereby waives any claims against the
Collateral Agent and the Buyers arising by reason of the fact that the price
at
which its respective Collateral may have been sold at a private sale was less
than the price which might have been obtained at a public sale or was less
than
the aggregate amount of the Obligations, even if the Collateral Agent accepts
the first offer received and does not offer such Collateral to more than one
offeree, and waives all rights that such the Company may have to require that
all or any part of such Collateral be marshalled upon any sale (public or
private) thereof. The Company hereby acknowledges that (i) any
such sale of its respective Collateral by the Collateral Agent shall be made
without warranty, (ii) the Collateral Agent may specifically disclaim any
warranties of title, possession, quiet enjoyment or the like, and
(iii) such actions set forth in clauses (i) and (ii) above shall not
adversely effect the commercial reasonableness of any such sale of
Collateral. In addition to the foregoing, (1) upon written
notice to the Company from the Collateral Agent, the Company shall cease any
use
of the Intellectual Property or any trademark, patent or copyright similar
thereto for any purpose described in such notice; (2) the Collateral Agent
may,
at any time and from time to time, upon 10 days' prior notice to the Company,
license, whether general, special or otherwise, and whether on an exclusive
or
non-exclusive basis, any of the Intellectual Property, throughout the universe
for such term or terms, on such conditions, and in such manner, as the
Collateral Agent shall in its sole discretion determine; and (3) the Collateral
Agent may, at any time, pursuant to the authority granted in Section 6
hereof (such authority being effective upon the occurrence and during the
continuance of an Event of Default), execute and deliver on behalf of the
Company, one or more instruments of assignment of the Intellectual Property
(or
any application or registration thereof), in form suitable for filing, recording
or registration in any country.
(b) Any
cash
held by the Collateral Agent as Collateral and all Cash Proceeds received by
the
Collateral Agent in respect of any sale of or collection from, or other
realization upon, all or any part of the Collateral may, in the discretion
of
the Collateral Agent, be held by the Collateral Agent as collateral for, and/or
then or at any time thereafter applied (after payment of any amounts payable
to
the Collateral Agent pursuant to Section 8 hereof) in whole or in part by
the Collateral Agent against, all or any part of the Obligations in such order
as the Collateral Agent shall elect, consistent with the provisions of the
Securities Purchase Agreement. Any surplus of such cash or Cash
Proceeds held by the Collateral Agent and remaining after the indefeasible
payment in full in cash of all of the Obligations shall be paid over to
whomsoever shall be lawfully entitled to receive the same or as a court of
competent jurisdiction shall direct.
(c) In
the
event that the proceeds of any such sale, collection or realization are
insufficient to pay all amounts to which the Collateral Agent and the Buyers
are
legally entitled, the Company shall be liable for the deficiency, together
with
interest thereon at the highest rate specified in any of the applicable
Transaction Documents for interest on overdue principal thereof or such other
rate as shall be fixed by applicable law, together with the costs of collection
and the reasonable fees, costs, expenses and other client charges of any
attorneys employed by the Collateral Agent to collect such
deficiency.
(d) The
Company hereby acknowledges that if the Collateral Agent complies with any
applicable state, provincial, or federal law requirements in connection with
a
disposition of the Collateral, such compliance will not adversely affect the
commercial reasonableness of any sale or other disposition of the
Collateral.
(e) The
Collateral Agent shall not be required to marshal any present or future
collateral security (including, but not limited to, this Agreement and the
Collateral) for, or other assurances of payment of, the Obligations or any
of
them or to resort to such collateral security or other assurances of payment
in
any particular order, and all of the Collateral Agent's rights hereunder and
in
respect of such collateral security and other assurances of payment shall be
cumulative and in addition to all other rights, however existing or
arising. To the extent that the Company lawfully may, the Company
hereby agrees that it will not invoke any law relating to the marshalling of
collateral which might cause delay in or impede the enforcement of the
Collateral Agent's rights under this Agreement or under any other instrument
creating or evidencing any of the Obligations or under which any of the
Obligations is outstanding or by which any of the Obligations is secured or
payment thereof is otherwise assured, and, to the extent that it lawfully may,
the Company hereby irrevocably waives the benefits of all such
laws.
SECTION
8. Indemnity
and Expenses.
(a) The
Company agrees, jointly and severally, to defend, protect, indemnify and hold
the Collateral Agent, the Trustee and each of the Buyers, jointly and severally,
harmless from and against any and all claims, damages, losses, liabilities,
obligations, penalties, fees, costs and expenses (including, without limitation,
reasonable legal fees, costs, expenses, and disbursements of such Person's
counsel) to the extent that they arise out of or otherwise result from this
Agreement (including, without limitation, enforcement of this Agreement), except
claims, losses or liabilities resulting solely and directly from such Person's
own gross negligence or willful misconduct, as determined by a final judgment
of
a court of competent jurisdiction.
(b) The
Company agrees, jointly and severally, to upon demand pay to the Collateral
Agent the amount of any and all costs and expenses, including the reasonable
fees, costs, expenses and disbursements of counsel for the Collateral Agent
and
of any experts and agents (including, without limitation, any collateral trustee
which may act as agent of the Collateral Agent), which the Collateral Agent
may
incur in connection with (i) the preparation, negotiation, execution,
delivery, recordation, administration, amendment, waiver or other modification
or termination of this Agreement, (ii) the custody, preservation, use or
operation of, or the sale of, collection from, or other realization upon, any
Collateral, (iii) the exercise or enforcement of any of the rights of the
Collateral Agent hereunder, or (iv) the failure by the Company to perform
or observe any of the provisions hereof.
SECTION
9. Notices,
Etc. All notices and other communications provided for hereunder
shall be in writing and shall be mailed (by certified mail, postage prepaid
and
return receipt requested), telecopied or delivered, if to the Company at its
address specified below and if to the Collateral Agent to it, at its address
specified below; or as to any such Person, at such other address as shall be
designated by such Person in a written notice to such other Person complying
as
to delivery with the terms of this Section 9. All such notices
and other communications shall be effective if sent by certified mail, return
receipt requested, when received.
SECTION
10. Miscellaneous.
(a) No
amendment of any provision of this Agreement shall be effective unless it is
in
writing and signed by the Company and the Collateral Agent, and no waiver of
any
provision of this Agreement, and no consent to any departure by the Company
therefrom, shall be effective unless it is in writing and signed by the
Collateral Agent, and then such waiver or consent shall be effective only in
the
specific instance and for the specific purpose for which given.
(b) No
failure on the part of the Collateral Agent to exercise, and no delay in
exercising, any right hereunder or under any of the other Transaction Documents
shall operate as a waiver thereof; nor shall any single or partial exercise
of
any such right preclude any other or further exercise thereof or the exercise
of
any other right. The rights and remedies of the Collateral Agent or
any Holder provided herein and in the other Transaction Documents are cumulative
and are in addition to, and not exclusive of, any rights or remedies provided
by
law. The rights of the Collateral Agent or any Holder under any of
the other Transaction Documents against any party thereto are not conditional
or
contingent on any attempt by such Person to exercise any of its rights under
any
of the other Transaction Documents against such party or against any other
Person, including but not limited to, the Company.
(c) All
rights of the Collateral Agent hereunder, the security interest created hereby
and all obligations of the Company hereunder shall be absolute and unconditional
irrespective of (a) any lack of validity or enforceability of any Transaction
Document, any agreement with respect to any of the Obligations or any other
agreement or instrument relating to any of the foregoing, (b) any change in
the
time, manner or place of payment of, or in any other term of, all or any of
the
Obligations, or any other amendment or waiver of or any consent to any departure
from any Transaction Document or any other agreement or instrument, (c) any
exchange, release or non-perfection of any Lien on other collateral, or any
release or amendment or waiver of or consent under or departure from any
guarantee, securing or guaranteeing all or any of the Obligations, or (d) any
other circumstance that might otherwise constitute a defense available to,
or a
discharge of, the Company in respect of the Obligations or this
Agreement.
(d) Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining portions
hereof or thereof or affecting the validity or enforceability of such provision
in any other jurisdiction.
(e) This
Agreement shall create a continuing security interest in the Collateral and
shall (i) remain in full force and effect until the indefeasible payment in
full
in cash of the Obligations, and (ii) be binding on the Company and all other
Persons who become bound as debtor to this Agreement in accordance with Section
9-203(d) of the Code and shall inure, together with all rights and remedies
of
the Collateral Agent and the Buyers hereunder, to the benefit of the Collateral
Agent and the Buyers and their respective permitted successors, transferees
and
assigns. Without limiting the generality of clause (ii) of the
immediately preceding sentence, without notice to the Company, the Collateral
Agent and the Buyers may assign or otherwise transfer their rights and
obligations under this Agreement and any of the other Transaction Documents
to
any other Person (subject to the terms of the Notes and the other Transaction
Documents) and such other Person shall thereupon become vested with all of
the
benefits in respect thereof granted to the Collateral Agent and the Buyers
herein or otherwise. Upon any such assignment or transfer, all
references in this Agreement to the Collateral Agent or any such Holder shall
mean the assignee of the Collateral Agent or such Holder. None of the
rights or obligations of the Company hereunder may be assigned or otherwise
transferred and any such assignment or transfer without the consent of the
Collateral Agent shall be null and void.
(f) Upon
the
indefeasible payment in full in cash of the Obligations, (i) this Agreement
and
the security interests created hereby shall terminate and all rights to the
Collateral shall revert to the Company that granted such security interests
hereunder, and (ii) the Collateral Agent will, upon the Company's request and
at
the Company's expense, (A) return to the Company such of the Collateral as
shall
not have been sold or otherwise disposed of or applied pursuant to the terms
hereof, and (B) execute and deliver to the Company such documents as the Company
shall reasonably request to evidence such termination, all without any
representation, warranty or recourse whatsoever.
(g) THIS
AGREEMENT SHALL BE GOVERNED BY, CONSTRUED AND INTERPRETED IN ACCORDANCE WITH
THE
LAWS OF THE STATE OF NEW YORK, EXCEPT AS REQUIRED BY MANDATORY PROVISIONS OF
LAW
AND EXCEPT TO THE EXTENT THAT THE VALIDITY AND PERFECTION OR THE PERFECTION
AND
THE EFFECT OF PERFECTION OR NON-PERFECTION OF THE SECURITY INTEREST CREATED
HEREBY, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE
GOVERNED BY THE LAW OF A JURISDICTION OTHER THAN THE STATE OF NEW
YORK.
(h) ANY
LEGAL
ACTION, SUIT OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY DOCUMENT
RELATED THERETO MAY BE BROUGHT IN XXX XXXXXX XX XXX XXXXX XX XXX XXXX IN THE
COUNTY OF NEW YORK OR THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT
OF
NEW YORK, AND APPELLATE COURTS THEREOF, AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, THE COMPANY HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS. THE COMPANY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION, INCLUDING, WITHOUT LIMITATION,
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUMNONCONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO
THE BRINGING OF ANY SUCH ACTION, SUIT OR PROCEEDING IN SUCH RESPECTIVE
JURISDICTIONS AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF
AS
IS DEEMED APPROPRIATE BY THE COURT.
(i) THE
COMPANY AND (BY ITS ACCEPTANCE OF THE BENEFITS OF THIS AGREEMENT) THE COLLATERAL
AGENT WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED ON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY
OF
THE OTHER TRANSACTION DOCUMENTS, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
VERBAL OR WRITTEN STATEMENT OR OTHER ACTION OF THE PARTIES HERETO.
(j) The
Company irrevocably consents to the service of process of any of the aforesaid
courts in any such action, suit or proceeding by the mailing of copies thereof
by registered or certified mail (or any substantially similar form of mail),
postage prepaid, to the Company at its address provided herein, such service
to
become effective ten (10) days after such mailing.
(k) Nothing
contained herein shall affect the right of the Collateral Agent to serve process
in any other manner permitted by law or commence legal proceedings or otherwise
proceed against the Company or any property of the Company in any other
jurisdiction.
(l) The
Company irrevocably and unconditionally waives any right it may have to claim
or
recover in any legal action, suit or proceeding referred to in this Section
any
special, exemplary, punitive or consequential damages.
(m) Section
headings herein are included for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
(n) This
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which shall be deemed to be an
original, but all of which taken together constitute one in the same
Agreement.
(o) In
connection with its appointment and acting hereunder, the Collateral Agent
is
entitled to all rights, privileges, protections, benefits, immunities and
indemnities provided to it as Collateral Agent under the Securities Purchase
Agreement. The Buyers hereby authorize and direct the Collateral
Agent to enter into this Agreement.
(p) In
no
event shall the Collateral Agent be responsible or liable for any failure or
delay in the performance of its obligations hereunder arising out of or caused
by, directly or indirectly, forces beyond its control, including without
limitation strikes, work stoppages, accidents, acts of war or terrorism, civil
or military disturbances, nuclear or natural catastrophes or acts of god, and
interruptions, loss or malfunctions of utilities, communications or computer
(software and hardware) services; it being understood that the Collateral Agent
shall use reasonable efforts which are consistent with accepted practices in
the
banking industry to resume performance as soon as practicable under the
circumstances.
(q) Notwithstanding
anything herein to the contrary, the security interest granted to the Collateral
Agent pursuant to this Agreement and the exercise of any right or remedy by
the
Collateral Agent hereunder are subject to the provisions of any subordination
agreement entered into by the Collateral Agent in favor of any holder of Senior
Indebtedness or the Trustee under the Indenture (as such terms are defined
in
the Notes). In the event of any conflict between the terms of such
subordination agreement and this Agreement, the terms of such subordination
agreement shall control. Prior to the discharge of the Senior
Indebtedness, the requirements of this Agreement to deliver Collateral to the
Collateral Agent shall be deemed satisfied by delivery of such Collateral to
the
Trustee, in its capacity as collateral agent for the holders of the Senior
Indebtedness, under the Indenture or any security documents entered into by
the
Company in connection therewith.
[REMAINDER
OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN
WITNESS WHEREOF, the Company has caused this Agreement to be executed and
delivered by its officer thereunto duly authorized, as of the date first above
written.
|
|
THE
COMPANY:
|
|
|
By:
|
/s/ Xxxxxxx Xxxxx |
|
|
Name: Xxxxxxx
Xxxxx
|
|
|
Title: Chief
Financial Officer
|
ACCEPTED
BY:
Radcliffe
SPC, as Collateral Agent
By:
/s/ Xxxxxx X.
Xxxxxxxxxx
Name:
Xxxxxx X. Xxxxxxxxxx
Title:
Managing Director
|
|
Address:
|
SCHEDULE
I
LEGAL
NAME; ORGANIZATIONAL IDENTIFICATION NUMBER; STATE OR JURISDICTION OF
ORGANIZATION
SCHEDULE
II
THE
COMPANY
INTELLECTUAL
PROPERTY AND LICENSES
SCHEDULE
III
LOCATIONS
OF THE COMPANY
|
LOCATION
|
Description
of Location (State if Location
|
|
|
(i) contains
Rolling Stock, other Equipment,
Fixtures,
|
|
|
Goods
or Inventory,
|
|
|
(ii)
is chief place of business and
|
|
|
chief
executive office, or
|
|
|
(iii)
contains Records concerning
Accounts
|
|
|
and
originals of Chattel Paper)
|
SCHEDULE
IV
PROMISSORY
NOTES, SECURITIES, DEPOSIT ACCOUNTS, SECURITIES ACCOUNTS AND COMMODITIES
ACCOUNTS
THE
COMPANY
|
Promissory
Notes:
|
Securities
and Other Instruments:
Name
and
Address
of
Institution
Maintaining
Account Account
Number Type
of Account
SCHEDULE
V
THE
COMPANY
UCC-1
FINANCING STATEMENTS
SCHEDULE
VI
THE
COMPANY
COMMERCIAL
TORT CLAIMS
EXHIBIT
A
ASSIGNMENT
FOR SECURITY
[TRADEMARKS]
[PATENTS] [COPYRIGHTS]
WHEREAS,
______________________________ (the "Assignor") [has
adopted, used and is using, and holds all right, title and interest in and
to,
the trademarks and service marks listed on the annexed Schedule 1A,
which trademarks and service marks are registered or applied for in the United
States Patent and Trademark Office (the "Trademarks")] [holds all right,
title and interest in the letter patents, design patents and utility patents
listed on the annexed Schedule 1A, which patents are issued or
applied for in the United States Patent and Trademark Office (the
"Patents")] [holds all right, title and interest in the copyrights listed
on the annexed Schedule 1A, which copyrights are registered in the United
States Copyright Office (the "Copyrights")];
WHEREAS,
the Assignor has entered into a Security Agreement, dated as of
________________, 2006 (as amended, restated or otherwise modified from time
to
time the "Security Agreement"), in favor of _______________, as
collateral agent for certain purchasers (the "Assignee");
WHEREAS,
pursuant to the Security Agreement, the Assignor has assigned to the Assignee
and granted to the Assignee for the benefit of the Buyers (as defined in the
Security Agreement) a continuing security interest in all right, title and
interest of the Assignor in, to and under the [Trademarks, together with, among
other things, the good-will of the business symbolized by the Trademarks]
[Patents] [Copyrights] and the applications and registrations thereof, and
all
proceeds thereof, including, without limitation, any and all causes of action
which may exist by reason of infringement thereof and any and all damages
arising from past, present and future violations thereof (the
"Collateral"), to secure the payment, performance and observance of the
"Obligations" (as defined in the Security Agreement);
NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency
of
which are hereby acknowledged, the Assignor does hereby pledge, convey, sell,
assign, transfer and set over unto the Assignee and grants to the Assignee
for
the benefit of the Buyers a continuing security interest in the Collateral
to
secure the prompt payment and performance of the Obligations.
The
Assignor does hereby further acknowledge and affirm that the rights and remedies
of the Assignee with respect to the Collateral are more fully set forth in
the
Security Agreement, the terms and provisions of which are hereby incorporated
herein by reference as if fully set forth herein.
IN
WITNESS WHEREOF, the Assignor has caused this Assignment to be duly executed
by
its officer thereunto duly authorized as of _____________, 20__
|
|
[THE
COMPANY]
|
|
|
By:____________________________
|
|
|
Name:
|
|
|
Title:
|
STATE
OF
____________
ss.:
COUNTY
OF
__________
On
this
____ day of _______________, 20__, before me personally came ________________,
to me known to be the person who executed the foregoing instrument, and who,
being duly sworn by me, did depose and say that s/he is the ________________
of
_______________________________________, a ____________________, and that s/he
executed the foregoing instrument in the firm name of
_______________________________________, and that s/he had authority to sign
the
same, and s/he acknowledged to me that he executed the same as the act and
deed
of said firm for the uses and purposes therein mentioned.
SCHEDULE
1A TO ASSIGNMENT FOR SECURITY
[Trademarks
and Trademark Applications]
[Patent
and Patent Applications]
[Copyright
and Copyright Applications]
Owned
by
______________________________
