SECURITY AGREEMENT
Exhibit
10.2
SECURITY
AGREEMENT,
dated
as of December 26, 2006 (this "Agreement")
made
by
Pure Vanilla eXchange, Inc.,
a
Nevada corporation (the "Company"),
and
the undersigned subsidiaries of the Company (each a "Grantor"
and
collectively and together with the Company the "Grantors"),
in
favor of
Gottbetter Capital Master, Ltd.,
a
Nevada limited liability company (the "Buyer").
WITNESSETH:
WHEREAS,
the Company and the Buyer are parties to the Securities Purchase Agreement
dated
as of December 26, 2006 (the “Securities
Purchase Agreement”),
pursuant to which, among other things, the Company shall sell, and the Buyer
shall purchase, the Notes (as defined below); and
WHEREAS,
it is a condition precedent to the Buyer’s consummation of the transactions
contemplated by the Securities Purchase Agreement that the Grantors shall have
executed and delivered to the Buyer this Agreement providing for the grant
to
the Buyer of a security interest in all personal property of each Grantor to
secure all of the Company's obligations under the Securities Purchase Agreement,
the Notes or the other Transaction Documents (each as defined in the Securities
Purchase Agreement).
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,
each Grantor agrees with the Buyer, 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 as in effect from
time to time in the State of New York (the "Code"),
and which are not otherwise defined herein shall have the same meanings
herein as set forth therein;
provided
that
terms used herein which are defined in the Code as in effect in the State of
New
York on the date hereof shall continue to have the same meaning notwithstanding
any replacement or amendment of such statute except as the Buyer 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:
"Collateral"
shall
have the meaning set forth in Section 2 hereof.
"Copyright
Licenses"
means
all licenses, contracts or other agreements, whether written or oral, naming
any
Grantor as licensee or licensor and providing for the grant of any right to
use
or sell any works covered by any copyright (including, without limitation,
all
Copyright Licenses set forth in 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 any Grantor (including, without limitation,
all
copyrights described in Schedule
II
hereto),
all applications, registrations and recordings thereof (including, without
limitation, applications, registrations and recordings in the United States
Copyright Office or in any similar office or agency of the United States or
any
other country or any political subdivision thereof), and all reissues,
divisions, continuations, continuations in part and extensions or renewals
thereof.
"Event
of Default"
shall
have the meaning set forth in the Notes.
"GAAP"
shall
have the meaning set forth in Section 4(a) hereof.
"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.
“Notes”
means
the Notes issued pursuant to the Securities Purchase Agreement, as the same
may
be amended, restated, replaced or otherwise modified from time to time in
accordance with the terms thereof.
“Obligations”
shall
have the meaning set forth in Section 3 hereof.
"Patent
Licenses"
means
all licenses, contracts or other agreements, whether written or oral, naming
any
Grantor as licensee or licensor and providing for the grant of any right
to
manufacture, use or sell any invention covered by any Patent (including, without
limitation, all Patent Licenses set forth in 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.
"Trademark
Licenses"
means
all licenses, contracts or other agreements, whether written or oral, naming
any
Grantor as licensor or licensee and providing for the grant of any right
concerning any Trademark, together with any goodwill connected with and
symbolized by any such trademark licenses, contracts or agreements and the
right
to prepare for sale or lease and sell or lease any and all Inventory now or
hereafter owned by any Grantor and now or hereafter covered by such licenses
(including, without limitation, all Trademark Licenses described in 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 any Grantor (including, without limitation, all domestic
and
foreign trademarks, service marks, collective marks, certification marks, trade
names, business names, d/b/a's, Internet domain names, trade styles, designs,
logos and other source or business identifiers described in 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 any Grantor relating to the distribution of
products and services in connection with which any of such marks are
used.
(a) all
Accounts;
(b) all
Chattel Paper (whether tangible or electronic);
(c) the
Commercial Tort Claims;
(d) all
Deposit Accounts, 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 Buyer or any affiliate, representative, agent or correspondent of the
Buyer;
(e) all
Documents;
(f) all
Equipment;
(g) all
Fixtures;
(h) all
General Intangibles (including, without limitation, all Payment
Intangibles);
(i) all
Goods;
(j) all
Instruments (including, without limitation, Promissory Notes and each
certificated Security);
(k) all
Inventory;
(l) all
Investment Property;
(m) all
Copyrights, Patents and Trademarks, and all Licenses;
(n) all
Letter-of-Credit Rights;
(o) all
Supporting Obligations;
(p) all
other
tangible and intangible personal property of each Grantor (whether or not
subject to the Code), including, without limitation, all bank and other accounts
and all cash and all investments therein, all proceeds, products, offspring,
accessions, rents, profits, income, benefits, substitutions and replacements
of
and to any of the property of any Grantor described in the preceding clauses
of
this Section
2
(including, without limitation, any proceeds of insurance thereon and all causes
of action, claims and warranties now or hereafter held by each Grantor in
respect
of any of the items listed above), and all books, correspondence, files and
other Records, including, without limitation, all tapes, desks, cards, Software,
data and computer programs in the possession or under the control of any Grantor
or any other Person from time to time acting for any Grantor 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
(q) all
Proceeds, including all Cash Proceeds and Noncash Proceeds, and products of
any
and all of the foregoing Collateral;
in
each
case howsoever any Grantor'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, including, without limitation, (A)
all principal of and interest on the Notes (including, without limitation,
all
interest that accrues after the commencement of any Insolvency Proceeding of
any
Grantor, whether or not the payment of such interest is unenforceable or is
not
allowable due to the existence of such Insolvency Proceeding), and (B) all
fees,
commissions, expense reimbursements, indemnifications and all other amounts
due
or to become due under any of the Transaction Documents; and
(b) the
due
performance and observance by each Grantor of all of its other obligations
from
time to time existing in respect of any of the Transaction Documents, including
without limitation, with respect to any conversion or redemption rights of
the
Buyer under the Notes, for so long as the Notes are outstanding.
SECTION
4. REPRESENTATIONS
AND WARRANTIES.
Each Grantor represents and warrants as follows:
(a) Schedule
I hereto sets forth (i) the exact legal name of each Grantor, and (ii) the
organizational identification number of each Grantor or states that no such
organizational identification number exists.
(b) There
is
no pending or written notice threatening any action, suit, proceeding or claim
affecting any Grantor before any governmental authority or any arbitrator,
or,
to the knowledge of the Company, any order, judgment or award by any
governmental authority or arbitrator, that may adversely affect the grant by
any
Grantor, or the perfection, of the security interest purported to be created
hereby in the Collateral, or the exercise by the Buyer of any of its rights
or
remedies hereunder.
(c) All
Federal, state and local tax returns and other reports required by applicable
law to be filed by any Grantor have been filed, or extensions have been
obtained, and all taxes,
assessments and other governmental charges imposed upon any Grantor or any
property of any Grantor (including, without limitation, all Federal income
and
social security taxes on employees' wages) and which have become due and payable
on or prior to the date hereof have been paid, except to the extent contested
in
good faith by proper proceedings which stay the imposition of any penalty,
fine
or Lien resulting from the non-payment thereof and with respect to which
adequate reserves have been set aside for the payment thereof in accordance
with
accounting principles generally accepted in the United States ("GAAP")
consistently applied.
(d) All
Equipment, Fixtures, Goods and Inventory of each Grantor now existing are,
and
all Equipment, Fixtures, Goods and Inventory of each Grantor hereafter existing
will be, located and/or based at the addresses specified therefor in
Schedule
III
hereto,
except that each Grantor will give the Buyer 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 Buyer has filed financing statements and otherwise fully
perfected its Liens thereon. Each Grantor's chief place of business and
chief executive office, the place where each Grantor keeps its Records
concerning Accounts and all originals of all Chattel Paper are located at the
addresses specified therefor in 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, Security and other Instrument owned by each Grantor and (ii)
each Deposit Account, Securities Account and Commodities Account of each
Grantor, together with the name and address of each institution at which each
such Account is maintained, the account number for each such Account and a
description of the purpose of each such Account. Set forth in Schedule
II
hereto
is a complete and correct list of each trade name used by each Grantor and
the
name of, and each trade name used by, each person from which each Grantor has
acquired any substantial part of the Collateral.
(e) The
Grantors have made available to the Buyer 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 each Grantor or any of its affiliates in respect thereof. Each
material License now existing is, and any material License entered into in
the
future will be, the legal, valid and binding obligation of the parties thereto,
enforceable against such parties in accordance with its terms. No default
under any material License by any such party has occurred, nor does any defense,
offset, deduction or counterclaim exist thereunder in favor of any such
party.
(f) Each
Grantor owns and controls, or otherwise possesses adequate rights to use, all
its 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 each Grantor as
of
the date hereof. To the knowledge of the Grantors, all such Intellectual
Property of each Grantor is 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. No Grantor has any knowledge of any
conflict with the rights of others to any Intellectual Property and, to the
knowledge of the Grantors, each Grantor is not now infringing or in conflict
with any such rights of others in any material respect, and to the knowledge
of
the Grantors, no other Person is now infringing or in conflict in any material
respect with any such properties, assets and rights owned or used by each
Grantor. No Grantor has received any notice that it is violating or has
violated the trademarks, patents, copyrights, inventions, trade secrets,
proprietary information and technology, know-how, formulae, rights of publicity
or other intellectual property rights of any third party.
(g) Each
Grantor is and will be at all times the sole and exclusive owner of, or
otherwise has and will have adequate rights in, the Collateral pledged hereunder
by such Grantor 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 Buyer
relating to this Agreement.
(h) The
exercise by the Buyer of any of its rights and remedies hereunder will not
contravene any law or any contractual restriction binding on or otherwise
affecting each Grantor or any of its properties and will not result in or
require the creation of any Lien, upon or with respect to any of its
properties.
(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 each Grantor, or the perfection, of the
security interest purported to be created hereby in the Collateral, or
(ii) the exercise by the Buyer 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, (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 Buyer a legal, valid and enforceable security
interest in the Collateral, as security for the Obligations. Buyer's
having possession of all Instruments and cash constituting Collateral from
time
to time (or with respect to deposit accounts, entering into appropriate control
agreements), 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, the execution of appropriate assignments of Letter
of
Credit Rights, 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, will result in the perfection of such security
interests. Such security interests will be, perfected, first priority
security interests, subject only to Permitted Liens and the recording of such
instruments of assignment.
(k) As
of the
date hereof, no Grantor holds any Commercial Tort Claims nor is aware of any
such pending claims.
SECTION
5. COVENANTS
AS TO THE COLLATERAL.
So long as any of the Obligations shall remain outstanding, unless the
Buyer shall otherwise consent in writing:
(a) Further
Assurances.
Each Grantor will at its expense, at any time and from time to time,
promptly execute and deliver all further instruments and documents and take
all
further action that the Buyer may reasonably request in order to:
(i) perfect and protect the security interest purported to be created
hereby; (ii) enable the Buyer to exercise and enforce its rights and
remedies hereunder in respect of the Collateral; or (iii) otherwise effect
the purposes of this Agreement, including, without limitation:
(A) marking conspicuously all Chattel Paper and each License and, at
the request of the Buyer, each of its Records pertaining to the Collateral
with
a legend, in form and substance satisfactory to the Buyer, indicating that
such
Chattel Paper, License or Collateral is subject to the security interest created
hereby, (B) delivering and pledging to the Buyer hereunder each Promissory
Note, Security, Chattel Paper or other Instrument, now or hereafter owned by
any
Grantor, duly endorsed and accompanied by executed instruments of transfer
or
assignment, all in form and substance satisfactory to the Buyer,
(C) executing and filing (to the extent, if any, that any Grantor's
signature is required thereon) or authenticating the filing of, such financing
or continuation statements, or amendments thereto, as may be necessary or
desirable or that the Buyer may request in order to perfect and preserve the
security interest purported to be created hereby, (D) furnishing to the
Buyer 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 Buyer 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 Buyer'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 Buyer, which such written
acknowledgement shall be in form and substance satisfactory to the Buyer,
(F) if at any time after the date hereof, any Grantor acquires or holds any
Commercial Tort Claim, promptly notifying the Buyer in a writing signed by
such
Grantor setting forth a brief description of such Commercial Tort Claim and
granting to the Buyer a security interest therein and in the proceeds thereof,
which writing shall incorporate the provisions hereof and shall be in form
and
substance satisfactory to the Buyer, (G) upon the acquisition after the
date hereof by any Grantor of any motor vehicle or other Equipment subject
to a
certificate of title or ownership (other than a Motor Vehicle or Equipment
that
is subject to a purchase money security interest), causing the
Buyer to
be listed as the lienholder on such certificate of title or ownership and
delivering evidence of the same to the Buyer in accordance with the Securities
Purchase Agreement; and (H) taking all actions required by any earlier
versions of the Uniform Commercial Code or by other law, as applicable, in
any
relevant Uniform Commercial Code jurisdiction, or by other law as applicable
in
any foreign jurisdiction.
(b) Location
of Equipment and Inventory.
Each Grantor will keep the Equipment and Inventory at the locations
specified therefor on Schedule II hereto, or, at such other locations in the
United States, provided that within 10 days following the relocation of
Equipment or Inventory to such other location, Grantor shall deliver to the
Buyer a new Schedule II indicating such new location.
(c) Condition
of Equipment.
Each Grantor will maintain or cause the Equipment (necessary or useful to
its business) to be maintained and preserved in good condition, repair and
working order, ordinary wear and tear excepted, and will forthwith, or in the
case of any loss or damage to any Equipment of any Grantor within a commercially
reasonable time after the occurrence thereof, make or cause to be made all
repairs, replacements and other improvements in connection therewith which
are
necessary or desirable, consistent with past practice, or which the Buyer may
request to such end. Any Grantor will promptly furnish to the Buyer a
statement describing in reasonable detail any such loss or damage in excess
of
$250,000 per occurrence to any Equipment.
(d) Taxes,
Etc. Each
Grantor agrees to pay promptly when due all property and other taxes,
assessments and governmental charges or levies imposed upon, and all claims
(including claims for labor, materials and supplies) against, the Equipment
and
Inventory, except to the extent the validity thereof is being contested in
good
faith by proper proceedings which stay the imposition of any penalty, fine
or
Lien resulting from the non-payment thereof and with respect to which adequate
reserves in accordance with GAAP have been set aside for the payment
thereof.
(e) Insurance.
(i) Each
Grantor will, at its own expense, maintain insurance (including, without
limitation, commercial general liability and property insurance) 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 and in any event, in amount,
adequacy and scope reasonably satisfactory to the Buyer. Any
Grantor will, if so requested by the Buyer, deliver to the Buyer original or
duplicate policies of such insurance and, as the Buyer may reasonably request,
a
report of a reputable insurance broker with respect to such insurance. Any
Grantor will also, at the reasonable request of the Buyer, execute and deliver
instruments of assignment of such insurance policies and cause the respective
insurers to acknowledge notice of such assignment.
(ii) Reimbursement
under any liability insurance maintained by any Grantor pursuant to this
Section
5(e)
may be
paid directly to the Person who shall have incurred liability covered by such
insurance. In the case of any loss involving damage to Equipment or
Inventory, any proceeds of insurance maintained by any Grantor pursuant to
this
Section
5(e)
shall be
paid to the Buyer (except as to which paragraph (iii) of this
Section 5(e)
is not
applicable), any Grantor 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 any Grantor pursuant to this Section
5(e)
shall be
paid by the Buyer to such Grantor 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 Buyer and applied as specified in Section
7(b)
hereof.
(f) Provisions
Concerning the Accounts and the Licenses.
(i) Each
Grantor will (A) give the Buyer at least 30 days' prior written notice of any
change in such Grantor's name, identity or organizational structure (except
with
respect to the transaction contemplated by the Agreement and Plan of Merger
dated as of December 15, 2006 by and among the Company, PVNX Acquisition Corp.
and Nimble Group, Inc.), (B) maintain its jurisdiction of incorporation as
set
forth in Section
4(b)
hereto,
(C) immediately notify the Buyer upon obtaining an organizational identification
number, if on the date hereof such Grantor did not have such identification
number, and (D) keep adequate records concerning the Accounts and Chattel Paper
and permit representatives of the Buyer during normal business hours on
reasonable notice to such Grantor, to inspect and make abstracts from such
Records and Chattel Paper.
(ii) Each
Grantor will, except as otherwise provided in this subsection (f), use
commercially reasonable efforts to continue to collect, at its own expense,
all
amounts due or to become due under the Accounts. In connection with such
collections, any Grantor may (and, at the Buyer's direction, will) take such
commercially reasonable action as any Grantor or the Buyer may deem necessary
or
advisable to enforce collection or performance of the Accounts; provided,
however
, that
the Buyer 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 Buyer and to direct
such account debtors or obligors to make payment of all amounts due or to become
due to any Grantor thereunder directly to the Buyer or its designated agent
and,
upon such notification and at the expense of any Grantor and to the extent
permitted by law, to enforce collection of any such Accounts and to adjust,
settle or compromise the amount or payment thereof, in the same manner
and to
the same extent as may Grantor might have done. After receipt by any
Grantor of a notice from the Buyer that the Buyer has notified, intends to
notify, or has enforced or intends to enforce any Grantor's rights against
the
account debtors or obligors under any Accounts as referred to in the proviso
to
the immediately preceding sentence, and for so long as an Event of Default
shall
be continuing, (A) all amounts and proceeds (including Instruments)
received by any Grantor in respect of the Accounts shall be received in trust
for the benefit of the Buyer hereunder, shall be segregated from other funds
of
any Grantor and shall be forthwith paid over to the Buyer in the same form
as so
received (with any necessary endorsement) to be held as cash collateral and
either (i) credited to the outstanding obligations so long as no Event of
Default shall have occurred and be continuing or (ii) if an Event of Default
shall have occurred and be continuing, applied as specified in Section
7(b)
hereof,
and (B) no Grantor will adjust, settle or compromise the amount or payment
of
any Account or release wholly or partly any account debtor or obligor thereof
or
allow any credit or discount thereon. In addition, upon the occurrence and
during the continuance of an Event of Default, the Buyer may (in its sole and
absolute discretion) direct any or all of the banks and financial institutions
with which any Grantor either maintains a Deposit Account or a lockbox or
deposits the proceeds of any Accounts to send immediately to the Buyer by wire
transfer (to such account as the Buyer shall specify, or in such other manner
as
the Buyer shall direct) all or a portion of such securities, cash, investments
and other items held by such institution; provided, that if Buyer shall give
such a notice it shall, upon notification and verification of the discontinuance
of the applicable Event of Default, promptly give a notice to each such bank
and
financial institution that it should no longer send any such securities, cash,
investments or other items to Buyer, and Buyer shall return all such items
theretofore received (except to the extent properly applied against the
Obligations) to the applicable Grantor. Subject to the preceding sentence,
any such securities, cash, investments and other items so received by the Buyer
shall (in the sole and absolute discretion of the Buyer) 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 any Grantor, each Grantor party thereto will,
promptly after obtaining knowledge thereof, give the Buyer 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 if
reasonably necessary in the continued conduct of such Grantor’s business as
theretofore conducted .
(iv) Each
Grantor will, at its expense, promptly deliver to the Buyer 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 such Grantor
thereto.
(v) Each
Grantor will exercise promptly and diligently each and every right which it
may
have under each material License (other than any right of termination) and
will
duly perform and observe in all respects all of its obligations under each
material License and will take all action reasonably necessary to maintain
such
Licenses in full force and effect. No Grantor will, without the prior
written consent of the Buyer, cancel, terminate, amend or otherwise modify
in
any respect, or waive any provision of, any material License referred to in
Schedule
II
hereto,
except to the extent that such material License is no longer necessary for
the
conduct of such Grantor’s business as theretofore conducted.
(g) Transfers
and Other Liens.
(ii) No
Grantor will create, suffer to exist or grant any Lien upon or with respect
to
any Collateral other than Permitted Liens.
(h) Intellectual
Property.
(i) If
applicable, any Grantor shall, upon the Buyer's written request, duly execute
and deliver the applicable Assignment for Security in the form attached hereto
as
Exhibit A.
Each Grantor (either itself or through licensees) will, and will cause
each licensee thereof to, take all commercially reasonable action necessary
to
maintain all of the Intellectual Property in full force and effect, including,
without limitation, using the proper statutory notices and markings and using
the Trademarks on each applicable trademark class of goods in order to so
maintain the Trademarks in full force and free from any claim of abandonment
for
non-use, and each Grantor will not (nor permit any licensee thereof to) do
any
act or knowingly omit to do any act whereby any Intellectual Property may become
invalidated; provided,
however,
that so
long as no Event of Default has occurred and is continuing, no Grantor shall
have an obligation to use or to maintain any Intellectual Property (A) that
relates solely to any product or work, that has been, or is in the process
of
being, discontinued, abandoned or terminated, (B) that is being replaced with
Intellectual Property substantially similar to the Intellectual Property that
may be abandoned or otherwise become invalid, so long as the failure to use
or
maintain such Intellectual Property does not materially adversely affect the
validity of such replacement Intellectual Property and so long as such
replacement Intellectual Property is subject to the Lien created by this
Agreement or (C) that is substantially the same as another Intellectual Property
that is in full force, so long 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. Each Grantor
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, each Grantor shall (x) upon learning
of
such infringement, misappropriation, dilution or other violation, promptly
notify the Buyer and (y) to the extent any Grantor shall deem appropriate under
the circumstances, promptly xxx for infringement, misappropriation, dilution
or
other violation, seek injunctive relief where appropriate and recover any and
all damages for such infringement, misappropriation, dilution or other
violation, or take such other actions as such Grantor shall deem appropriate
under the circumstances to protect such Intellectual Property. Each
Grantor shall furnish to the Buyer, 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 Buyer may
reasonably request, all in reasonable detail and promptly upon request of the
Buyer, following receipt by the Buyer of any such statements, schedules or
reports, each Grantor 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 commercially reasonable
acts
as shall be necessary or, in the judgment of the Buyer, desirable to subject
such Intellectual Property and Licenses to the Lien and security interest
created by this Agreement. Notwithstanding anything herein to the
contrary, upon the occurrence and during the continuance of an Event of Default,
no Grantor may abandon or otherwise permit any Intellectual Property to become
invalid without the prior written consent of the Buyer, and if any Intellectual
Property is infringed, misappropriated, diluted or otherwise violated in any
material respect by a third party, each Grantor will take such action as the
Buyer shall deem appropriate under the circumstances to protect such
Intellectual Property.
(ii) In
no
event shall any Grantor, either itself or through any agent, employee, licensee
or designee, file an application for the registration of any Trademark or
Copyright or the issuance of any Patent with 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 Buyer prompt written notice thereof.
Upon request of the Buyer, any Grantor shall execute, authenticate and
deliver any and all assignments, agreements, instruments, documents and papers
as the Buyer may reasonably request to evidence the Buyer's security interest
hereunder in such Intellectual Property and the General Intangibles of any
Grantor relating thereto or represented thereby, and each Grantor hereby
appoints the Buyer 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 Buyer's written request, each Grantor shall cause each bank and
other financial institution with an account referred to in Schedule
IV
hereto
to execute and deliver to the Buyer a control agreement, in form and substance
reasonably satisfactory to the Buyer, duly executed by each Grantor and such
bank or financial institution, or enter into other arrangements in form and
substance satisfactory to the Buyer, pursuant to which such institution shall
irrevocably agree, inter
alia,
that
(i) upon the occurrence and during the continuation of an Event of Default,
it will comply at any time with the instructions originated by the Buyer to
such
bank or financial institution directing the disposition of cash, Commodity
Contracts, securities, Investment Property and other items from time to time
credited to such account, without further consent of each Grantor, which
instructions the Buyer 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 each Grantor
deposited with such institution shall be subject to a perfected, first priority
security interest in favor of the Buyer, (iii) any right of set off (other
than recoupment of standard fees), banker's Lien or other similar Lien, security
interest or encumbrance shall be fully waived as against the Buyer, and
(iv) upon receipt of written notice from the Buyer during the continuance
of an Event of Default, such bank or financial institution shall
immediately send to the Buyer by wire transfer (to such account as the Buyer
shall specify, or in such other manner as the Buyer shall direct) all such
cash,
the value of any Commodity Contracts, securities, Investment Property and other
items held by it. Without the prior written consent of the Buyer, no
Grantor shall 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 Buyer is the depositary and (ii) Deposit Accounts
specially and exclusively used for payroll, payroll taxes and other employee
wage and benefit payments to or for the benefit of each Grantor's salaried
employees.
(j) Motor
Vehicles.
(i) Upon
the
Buyer's written request, each Grantor shall deliver to the Buyer originals
of
the certificates of title or ownership for all motor vehicles with a value
in
excess of $50,000, owned by such Grantor with the Buyer listed as lienholder,
for the benefit of the Buyers.
(ii) Each
Grantor hereby appoints the Buyer 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 each Grantor title or ownership applications
for
filing with appropriate state agencies to enable motor vehicles now owned or
hereafter acquired by each Grantor to be retitled and the Buyer 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, each Grantor as the Buyer may deem necessary or
advisable to accomplish the purposes hereof (including, without limitation,
for
the purpose of creating in favor of the Buyer a perfected Lien on the motor
vehicles and exercising the rights and remedies of the Buyer 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 any Grantor, the Buyer shall execute and deliver to any Grantor such
instruments as any Grantor shall reasonably request to remove the notation
of
the Buyer 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 Buyer of a certificate from any Grantor 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 any Grantor will receive as sale proceeds
or
insurance proceeds.
(l) Inspection
and Reporting.
Each Grantor shall permit the Buyer, or any agent or representatives
thereof or such professionals or other Persons as the Buyer may designate,
not
more frequently than once a year in the absence of an Event of Default, during
normal business hours, upon reasonable advance notice to the Grantor, and
without unreasonably disrupting the business of such grantor, (i) to
examine and make copies of and abstracts from any Grantor's records and books
of
account, (ii) to visit and inspect its properties, (iii) to verify
materials, leases, Instruments, Accounts, Inventory and other assets of any
Grantor from time to time, (iii) to conduct audits, physical counts,
appraisals and/or valuations, examinations at the locations of any Grantor.
Each Grantor shall also, upon reasonable advance notice from the Buyer,
permit the Buyer, or any agent or representatives thereof or such professionals
or other Persons as the Buyer may designate, to discuss such Grantor's affairs,
finances and accounts with any of its directors, officers, managerial employees,
independent accountants or any of its other representatives during normal
business hours at a time and place to be mutually agreed upon by the Buyer
or
its designee and such Grantor.
(m) Future
Subsidiaries.
If any Grantor shall hereafter create or acquire any Subsidiary,
simultaneously with the creation of acquisition of such Subsidiary, such Grantor
shall cause such Subsidiary to become a party to this Agreement as an additional
"Grantor" hereunder, and to duly execute and deliver a guaranty of the
Obligations in favor of the Buyer in form and substance reasonably acceptable
to
the Buyer, and to duly execute and/or deliver such opinions of counsel and
other
documents, in form and substance reasonably acceptable to the Buyer, as the
Buyer shall reasonably request with respect thereto.
SECTION
6. ADDITIONAL
PROVISIONS CONCERNING THE COLLATERAL.
(a) Each
Grantor hereby (i) authorizes the Buyer to file one or more Uniform
Commercial Code financing or continuation statements, and amendments thereto,
relating to the Collateral and (ii) ratifies such authorization to the
extent that the Buyer has filed any such financing or continuation statements,
or amendments thereto, prior to the date hereof. A photocopy or other
reproduction of this Agreement or any financing statement covering the
Collateral or any part thereof shall be sufficient as a financing statement
where permitted by law.
(b) Each
Grantor hereby irrevocably appoints the Buyer as its attorney-in-fact and proxy,
with full authority in the place and stead of each Grantor and in the name
of
each Grantor or otherwise, from time to time in the Buyer's discretion, so
long
as an Event of Default shall have occurred and is continuing, to take any action
and to execute any instrument which the Buyer may deem necessary or advisable
to
accomplish the purposes of this Agreement (subject to the rights of each Grantor
under Section
5
hereof),
including, without limitation, after the occurrence and during the continuance
of an Event of Default, (i) to obtain and adjust insurance required to be paid
to the Buyer 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 Buyer may
deem
necessary or desirable for the collection of any Collateral or otherwise to
enforce the rights of the Buyer and the Buyers with respect to any Collateral,
and (v) to execute assignments, licenses and other documents to enforce the
rights of the Buyer 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 Buyer to exercise rights and remedies hereunder, at
such
time as the Buyer shall be lawfully entitled to exercise such rights and
remedies, and for no other purpose, each Grantor hereby grants to the Buyer,
to
the extent assignable, an irrevocable, non-exclusive license (exercisable
without payment of royalty or other compensation to any Grantor) to use, assign,
license or sublicense any Intellectual Property now owned or hereafter acquired
by any Grantor, wherever the same may be located, including in such license
reasonable access to all media in which any of the licensed items may be
recorded or stored and to all computer programs used for the compilation or
printout thereof. Notwithstanding anything contained herein to the
contrary, but subject to the provisions of the Securities Purchase Agreement
that limit the right of any Grantor to dispose of its property and Section
5(h)
hereof,
so long as no Event of Default shall have occurred and be continuing, any
Grantor may exploit, use, enjoy, protect, license, sublicense, assign, sell,
dispose of or take other actions with respect to the Intellectual Property
in
the ordinary course of its business. In furtherance of the foregoing,
unless an Event of Default shall have occurred and be continuing, the Buyer
shall from time to time, upon the request of any Grantor, execute and deliver
any instruments, certificates or other documents, in the form so requested,
which such Grantor shall have certified are appropriate (in any Grantor's
judgment) to allow it to take any action permitted above (including
relinquishment of the license provided pursuant to this clause (c) as to any
Intellectual Property). Further, upon the indefeasible payment in full in
cash of all of the Obligations, the Buyer (subject to Section
10(e)
hereof)
shall release and reassign to any Grantor all of the Buyer'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 Buyer shall not terminate the rights of the
holders of any licenses or sublicenses theretofore granted by any Grantor in
accordance with the second sentence of this clause (c). Each Grantor hereby
releases the Buyer 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 Buyer under the powers of attorney granted herein other than actions taken
or omitted to be taken through the Buyer's gross negligence or willful
misconduct, as determined by a final determination of a court of competent
jurisdiction.
(d) If
any
Grantor fails to perform any agreement contained herein, the Buyer may itself
perform, or cause performance of, such agreement or obligation, in the name
of
any Grantor or the Buyer, and the expenses of the Buyer incurred in connection
therewith shall be payable by any Grantor pursuant to Section
8
hereof
and shall be secured by the Collateral.
(e) The
powers conferred on the Buyer hereunder are solely to protect its interest
in
the Collateral and shall not impose any duty upon it to exercise any such
powers.
(f) Anything
herein to the contrary notwithstanding (i) each Grantor shall remain liable
under the Licenses and otherwise with respect to any of the Collateral to the
extent set forth therein to perform all of its obligations thereunder to the
same extent as if this Agreement had not been executed, (ii) the exercise
by the Buyer of any of its rights hereunder shall not release any Grantor from
any of its obligations under the Licenses or otherwise in respect of the
Collateral, and (iii) the Buyer 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 Buyer be obligated to perform any of the
obligations or duties of any Grantor thereunder or to take any action to collect
or enforce any claim for payment assigned hereunder.
SECTION
7. REMEDIES
UPON EVENT OF DEFAULT.
If any Event of Default shall have occurred and be
continuing:
(a) The
Buyer
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 Buyer's
name
or into the name of its nominee or nominees (to the extent the Buyer has not
theretofore done so) and thereafter receive, for the benefit of the Buyer,
all
payments made thereon, give all consents, waivers and ratifications in respect
thereof and otherwise act with respect thereto as though it were the outright
owner thereof, (ii) require each Grantor to, and each Grantor hereby agrees
that it will at its expense and upon request of the Buyer forthwith, assemble
all or part of its respective Collateral as directed by the Buyer and make
it
available to the Buyer at a place or places to be designated by the Buyer that
is reasonably convenient to both parties, and the Buyer may enter into and
occupy any premises owned or leased by any Grantor where the Collateral or
any
part thereof is located or assembled for a reasonable period in order to
effectuate the Buyer's rights and remedies hereunder or under law, without
obligation to any Grantor in respect of such occupation, and (iii) without
notice except as specified below and without any obligation to prepare or
process the Collateral for sale, (A) sell the Collateral or any part
thereof in one or more parcels at public or private sale, at any of the Buyer'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 Buyer may deem commercially
reasonable and/or (B) lease, license or dispose of the Collateral or any
part thereof upon such terms as the Buyer may deem commercially reasonable.
Each Grantor agrees that, to the extent notice of sale or any other
disposition of its respective Collateral shall be required by law, at least
ten
(10) days' notice to any Grantor of the time and place of any public sale or
the
time after which any private sale or other disposition of its respective
Collateral is to be made shall constitute reasonable notification. The
Buyer shall not be obligated to make any sale or other disposition of any
Collateral regardless of notice of sale having been given. The Buyer may
adjourn any public or private sale from time to time by announcement at the
time
and place fixed therefor, and such sale may, without further notice, be
made at
the time and place to which it was so adjourned. Each Grantor hereby
waives any claims against the Buyer 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
Buyer
accepts the first offer received and does not offer such Collateral to more
than
one offeree, and waives all rights that any Grantor may have to require that
all
or any part of such Collateral be marshalled upon any sale (public or private)
thereof. Each Grantor hereby acknowledges that (i) any such sale of
its respective Collateral by the Buyer shall be made without warranty,
(ii) the Buyer 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 any Grantor from the Buyer, such
Grantor shall cease any use of the Intellectual Property or any trademark,
patent or copyright similar thereto for any purpose described in such notice;
(2) the Buyer may, at any time and from time to time, upon 10 days' prior notice
to such Grantor, license, whether general, special or otherwise, and whether
on
an exclusive or non-exclusive basis, any of the Intellectual Property,
throughout the universe for such term or terms, on such conditions, and in
such
manner, as the Buyer shall in its sole discretion determine; and (3) the Buyer
may, at any time, pursuant to the authority granted in Section
6
hereof
(such authority being effective upon the occurrence and during the continuance
of an Event of Default), execute and deliver on behalf of such Grantor, one
or
more instruments of assignment of the Intellectual Property (or any application
or registration thereof), in form suitable for filing, recording or registration
in any country.
(b) Any
cash
held by the Buyer as Collateral and all Cash Proceeds received by the Buyer
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 Buyer, be held by the
Buyer
as collateral for, and/or then or at any time thereafter applied (after payment
of any amounts payable to the Buyer pursuant to Section
8
hereof)
in whole or in part by the Buyer against, all or any part of the Obligations
in
such order as the Buyer shall elect, consistent with the provisions of the
Securities Purchase Agreement. Any surplus of such cash or Cash Proceeds
held by the Buyer 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 Buyer is legally entitled, such
each 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 Buyer
to collect such deficiency.
(d) Each
Grantor hereby acknowledges that if the Buyer 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.
SECTION
8. INDEMNITY
AND EXPENSES.
(a) Each
Grantor agrees, jointly and severally, to defend, protect, indemnify and hold
the Buyer, 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 gross negligence or willful misconduct, as
determined by a final judgment of a court of competent
jurisdiction.
(b) Each
Grantor agrees, jointly and severally, to upon demand pay to the Buyer the
amount of any and all costs and expenses, including the reasonable fees, costs,
expenses and disbursements of counsel for the Buyer and of any experts and
agents (including, without limitation, any collateral trustee which may act
as
agent of the Buyer), which the Buyer may incur after the occurrence and during
the continuance of an Event of Default in connection with (i) the custody,
preservation, use or operation of, or the sale of, collection from, or other
realization upon, any Collateral, (ii) the exercise or enforcement of any
of the rights of the Buyer hereunder, or (iv) the failure by any Grantor to
perform or observe any of the provisions hereof.
SECTION
10. MISCELLANEOUS.
(a) No
amendment of any provision of this Agreement shall be effective unless it is
in
writing and signed by each Grantor and the Buyer, and no waiver of any provision
of this Agreement, and no consent to any departure by each Grantor therefrom,
shall be effective unless it is in writing and signed by the Buyer, 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 Buyer 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 Buyer or any Buyer 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 Buyer under any of the other Transaction Documents against any party
thereto are not conditional or contingent on any attempt by such Person to
exercise any of its rights under any of the other Transaction Documents against
such party or against any other Person, including but not limited to, any
Grantor.
(c) Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining portions
hereof or thereof or affecting the validity or enforceability of such provision
in any other jurisdiction.
(d) This
Agreement shall create a continuing security interest in the Collateral and
shall (i) remain in full force and effect until the indefeasible payment in
full
in cash of the Obligations, and (ii) be binding on each Grantor and all other
Persons who become bound as debtor to this Agreement in accordance with Section
9-203(d) of the Code and shall inure, together with all rights and remedies
of
the Buyer hereunder, to the benefit of the Buyer and their respective permitted
successors, transferees and assigns. Without limiting the generality of
clause (ii) of the immediately preceding sentence, without notice to any
Grantor, the Buyer may assign or otherwise transfer their rights and obligations
under this Agreement and any of the other Transaction Documents, to any other
Person and such other Person shall thereupon become
vested
with all of the benefits in respect thereof granted to the Buyer herein or
otherwise. Upon any such assignment or transfer, all references in this
Agreement to the Buyer shall mean the assignee of the Buyer. None of the
rights or obligations of any Grantor hereunder may be assigned or otherwise
transferred without the prior written consent of the Buyer, and any such
assignment or transfer without the consent of the Collateral
Agent
shall be null and void.
(e) 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 respective Grantor that granted such security
interests hereunder, and (ii) the Buyer will, upon any Grantor's request and
at
such Grantor's expense, (A) return to such Grantor such of the Collateral as
shall not have been sold or otherwise disposed of or applied pursuant to the
terms hereof, and (B) execute and deliver to such Grantor such documents as
such
Grantor shall reasonably request to evidence such termination, all without
any
representation, warranty or recourse whatsoever.
(f) THIS
AGREEMENT SHALL BE GOVERNED BY, CONSTRUED AND INTERPRETED IN ACCORDANCE WITH
THE
LAWS OF THE STATE OF NEW YORK, EXCEPT AS REQUIRED BY MANDATORY PROVISIONS OF
LAW
AND EXCEPT TO THE EXTENT THAT THE VALIDITY AND PERFECTION OR THE PERFECTION
AND
THE EFFECT OF PERFECTION OR NON-PERFECTION OF THE SECURITY INTEREST CREATED
HEREBY, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE
GOVERNED BY THE LAW OF A JURISDICTION OTHER THAN THE STATE OF NEW
YORK.
(g) ANY
LEGAL
ACTION, SUIT OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY DOCUMENT
RELATED 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, EACH GRANTOR HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS. EACH PARTY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM
NON CONVENIENS,
WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION, SUIT OR
PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS AND CONSENTS TO THE GRANTING OF
SUCH
LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT.
(h) EACH
GRANTOR AND (BY ITS ACCEPTANCE OF THE BENEFITS OF THIS AGREEMENT) THE BUYER
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.
(i) Each
party irrevocably consents to the service of process of any of the aforesaid
courts in any such action, suit or proceeding by the mailing of copies thereof
by registered or certified mail (or any substantially similar form of mail),
postage prepaid, to such party at the address of such party specified for
notices hereunder, such service to become effective 10 days after such
mailing.
(j) Nothing
contained herein shall affect the right of the Buyer to serve process in any
other manner permitted by law or commence legal proceedings or otherwise proceed
against any Grantor or any property of any Grantor in any other
jurisdiction.
(k) Each
Grantor irrevocably and unconditionally waives any right it may have to claim
or
recover in any legal action, suit or proceeding referred to in this Section
any
special, exemplary, punitive or consequential damages.
(l) Section
headings herein are included for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
(m) This
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which shall be deemed to be an
original, but all of which taken together constitute one in the same
Agreement.
[REMAINDER
OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN
WITNESS WHEREOF, each party has caused this Agreement to be executed and
delivered by its officer thereunto duly authorized, as of the date first above
written.
|
PURE
VANILLA EXCHANGE, INC.
|
||
| |
|
|
| By: | /s/ Xxxxxx Xxxxxx | |
| Name: |
Xxxxxx Xxxxxx |
|
| Title: | Chairman | |
| Address: | 000 Xxxxx Xxxxxx | |
| Xxx Xxxx, XX 00000 | ||
| PVNX ACQUISITION CORP. | ||
| |
|
|
| By: | /s/ Xxxxxx Xxxxxx | |
| Name: |
Xxxxxx Xxxxxx |
|
| Title: | President | |
| Address: | 000 Xxxxx Xxxxxx | |
| Xxx Xxxx, XX 00000 | ||
ACCEPTED
BY:
GOTTBETTER
CAPITAL MASTER, LTD.
|
By:
/s/
Xxxx X. Xxxxxxxxxx
|
|||
|
Name: Xxxx
X. Xxxxxxxxxx
|
|||
|
Title: Director
|
|||
|
Address: 000
Xxxxxxx Xxxxxx, 00xx
Xxxxx
|
|||
|
Xxx
Xxxx, XX 00000
|
