EXHIBIT 10.16
SECURITY AGREEMENT
SECURITY AGREEMENT dated as of April 17, 1997 (this "Agreement"),
made by QUIETPOWER SYSTEMS, INC., with its principal office at 0000 Xxxxxxxx,
Xxx Xxxx, Xxx Xxxx 00000 (the "Company") to QPS Bridge, LLC, with an office at
1330 Avenue of the Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, as agent (the
"Agent") for the Purchasers (as defined below) of the Company's Senior Secured
Promissory Notes.
R E C I T A L S
WHEREAS, the Company is a party to a Securities Purchase Agreement
dated as of April 17, 1997 (the "Purchase Agreement"), relating to the sale by
the Company of $2 million aggregate principal amount of Senior Secured
Promissory Notes of the Company (the "Notes") to the purchasers (the
"Purchasers") listed therein;
WHEREAS, the Purchasers in the Purchase Agreement have appointed QPS
Bridge, LLC, as their Agent for purposes of this Agreement;
WHEREAS, DayStar Partners, L.P., as Agent for certain other secured
lenders, the Company, and the Agent have executed an Intercreditor Agreement of
even date herewith (the "Intercreditor Agreement") regarding the matters
contained herein;
WHEREAS, the Purchasers hold the Notes which shall be secured by the
Collateral (as defined below) and it is a condition of the consummation of the
Purchase Agreement that the Company make the assignments and grant the liens and
security interests contemplated by this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and in
order to induce the Purchasers to enter into the Purchase Agreement, the Company
hereby agrees with the Agent for its benefit and the benefit of the Purchasers,
as follows:
SECTION 1. Grant of Security. The Company hereby grants, assigns and
pledges to the Agent for the benefit of the Purchasers, a lien on and security
interest in all of the right, title and interest of the Company, whether now or
hereafter acquired, in and to the Collateral. For the purposes of this
Agreement, "Collateral" shall mean:
(a) All tangible and intangible property of the Company (and all of
the Company's right, title and interest therein and thereto), whether now owned
by the Company or acquired by the Company after the date hereof at any time,
including, but not limited to, goods, inventories, machinery, equipment,
fixtures, documents, customer lists, contract rights, instruments, books,
records, files, general intangibles, goodwill, chattel paper, accounts
receivable and accounts, including all cash and non-cash proceeds of all such
property, the products and increase of all such property, and all additions to
and replacements of all such property;
(b) Each of the patents, patent applications, patent licenses,
trademarks, trade names, trade secrets, service marks, brand marks, brand names,
copyrights, copyright applications, inventions, technologies, know-how,
formulae, processes, names and likeness owned or licensed by the Company, which
are presently, or in the future may be, owned, created, acquired, or used
(whether pursuant to a license or otherwise) by the Company, in whole or in
part, and all rights with respect thereto throughout the world, including all
proceeds thereof (including license royalties and proceeds of infringement
suits), and rights to renew and extend such rights, and the good will of the
business to which each of such rights relates, including, without limitation:
(i) All of the trademarks, service marks, trade names, brand
marks, and brand names, (whether or not registered) listed on Schedule A hereto;
(ii) All of the patents, patent applications, patent licenses,
listed on Schedule B hereto;
(iii) All of the copyrights (whether or not registered) and
copyright applications listed on Schedule C hereto; and
(iv) All of the licenses and license agreements in which the
Company grants or receives any interest in any trademarks, service marks, trade
names, brand marks, brand names, patents, patent applications, patent licenses,
copyrights and copyright applications, which are listed on Schedule D hereto.
(c) If an Event of Default shall have occurred and be continuing,
all of the Company's right, title and interest to register any trademark,
copyright or patent claims under any state or federal patent, trademark or
copyright law or regulation of any foreign country and to apply for, renew, and
extend any of the rights listed in clauses (a) and (b) above, the right (without
obligation) to xxx or bring opposition or cancellation proceedings in the name
of the Company or in the name of the Agent for past, present, and future
infringements of the above listed rights and all rights (but not obligations)
corresponding thereto in the United States and any foreign country, and the
associated goodwill;
(d) All general intangibles relating to the foregoing (including
without limitation all standards, formulae, recipes and procedures necessary to
run the Company's business as set forth in its Business Plan, dated February,
1997, and thereafter); and
(e) All proceeds of any and all of the foregoing (including, without
limitation, license royalties and proceeds of infringement suits) and, to the
extent not otherwise included, all payments under insurance, or any indemnity,
warranty, or guaranty payable by reason of loss or damage to or otherwise with
respect to the Collateral. The term "proceeds" includes whatever is receivable
or received by the Company when Collateral is sold, leased, collected, exchanged
or otherwise disposed of, whether such disposition is voluntary or involuntary,
and includes,
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without limitation, all rights to payment, including return premiums, with
respect to any insurance relating thereto.
SECTION 2. Security Obligations. This Agreement secures the payment
of all obligations of every kind or character now or hereafter existing between
the Company and the Purchasers, whether matured or unmatured, contingent or
liquidated, under the Notes and the Purchase Agreement, including any
extensions, replacements, modifications, substitutions, amendments and renewals
thereof, whether for principal, interest, fees, expenses or otherwise and all
such obligations of the Company now or hereafter existing under this Agreement
(all such obligations being the "Obligations").
SECTION 3. Representation, Warranties and Covenants. The Company
represents and warrants as follows:
(a) Except as set forth on Schedule 3(a) hereto, the Company is the
sole, legal and beneficial owner of the entire right, title and interest in and
to the Collateral free and clear of any lien, security interest, option, charge,
pledge, license, assignment (whether conditional or not) or covenant, or any
other encumbrance except for the liens, licenses and security interests created
or permitted by this Agreement or listed on the Schedules hereto.
(b) Set forth on Schedule A is a complete and accurate list of all
trademarks, service marks, trade names, brand marks, and brand names, (whether
or not registered) owned by the Company.
(c) Set forth on Schedule B is a complete and accurate list of all
patents, patent applications, and patent licenses owned by the Company.
(d) Set forth on Schedule C is a complete and accurate list of all
copyrights (whether or not registered) and copyright applications owned by the
Company.
(e) Set forth on Schedule D is a complete and accurate list of all
licenses and license agreements in which the Company grants or receives any
interest in any trademarks, service marks, trade names, brand marks, brand
names, patents, patent applications, patent licenses, copyrights and copyright
applications, owned by the Company.
(f) The Collateral listed on the Schedules hereto are subsisting and
no portion of the Collateral has been judged by a court to be invalid,
unpatentable, or unenforceable, in whole or in part, and all of the Collateral
is, to the best of the Company's knowledge, valid and enforceable, except as set
forth on the Schedules hereto.
(g) The Company has not granted any license, release, covenant not
to xxx, or non-assertion assurance to any third person with respect to any part
of the Collateral other than such licenses, releases, covenants and assurances
listed on the Schedules hereto. The Company
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covenants that it will (i) not surrender, sell, encumber, or otherwise dispose
of any Collateral in excess of $25,000 per year, or any right or interest
therein except in the ordinary course of business, and (ii) keep the Collateral
free of all levies and security interests or other liens or charges, except
those arising in the ordinary course of business, or approved in writing by the
Agent, which approval shall not be unreasonably withheld.
(h) The Company's principal place of business and all of the records
concerning the Collateral are located, is at 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00000. All of the Collateral is located at 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00000 (which is in New York County) and 0000 Xxxx Xxxxxxx Xxxx, Xxxxxxxx,
Xxxxxxxx 00000 (which is in Xxxx Arundel County). The Company will not change
its principal place of business or remove its records or change the location of
the Collateral unless it gives the Agent at least 30 days prior written notice
thereof (or 5 days prior written notice if the new location of the Collateral is
within New York County) and has taken such action as is necessary to cause the
security interest of the Agent in the Collateral to continue to be perfected.
(i) No authorization, consent, approval or other action by, and no
notice to or filing or recording with, any governmental, administrative or
judicial authority or regulatory body is currently or is reasonably expected to
be required either for the making by the Company of the assignments and the
granting by the Company of the liens and security interests made and granted
hereby or for the execution, delivery or performance of this Agreement by the
Company.
(j) The Company has no knowledge of the existence of any right or
claim under any patent that would preclude the Company from making, having made
for it, importing or exporting, or having imported or exported for it, selling,
or using any product currently made by it, being made for it or sold or used by
it or materially interfere with the ability of the Company to carry on its
business as currently carried on.
(k) No claim has been made, and the Company has no knowledge of any
claim that is likely to be made, that the use by the Company of any Collateral
does or may violate the rights of any person.
(l) The Company will (i) do all acts that may be necessary to
maintain, preserve and protect the Collateral, (ii) not use or permit any
Collateral to be used unlawfully or in violation of any provision of this
Security Agreement or the other Transaction Documents, or any applicable law,
statute, regulation or ordinance or any policy of insurance covering the
Collateral, (iii) appear in and defend any action or proceeding which affects
its title to or the Agent's interest in the Collateral, (iv) keep the Collateral
in good condition and repair and not cause or permit any waste or unusual or
unreasonable depreciation of the Collateral, (v) at the reasonable request of
the Agent at any time and from time to time, xxxx the Company's records and all
evidence of the collateral to indicate clearly the Agent's security interest
therein, and (vi) at any time and from time to time upon reasonable request by
the Agent, promptly give to the Agent any information relating to the Collateral
which the Agent may reasonably request.
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SECTION 4. Further Assurances.
(a) The Company agrees that from time to time, at the expense of the
Company, the Company will promptly execute and deliver all further instruments
and documents, and take all reasonable further action, that may be necessary or
desirable, or that the Agent may reasonably request, in order to (i) continue,
perfect and protect any security interest granted or purported to be granted
hereby or (ii) enable the Agent to exercise and enforce its rights and remedies
hereunder with respect to any part of the Collateral. The Company will, upon the
request of the Agent, execute a Collateral Assignment of Intellectual Property
in the form attached hereto (and with any revisions necessary so as to make it
acceptable with the appropriate authorities and binding) with respect to any
patents, patent applications, copyrights and copyright applications which form
part of the Collateral for filing with the United States Patent and Trademark
Office. Without limiting the generality of the foregoing, the Company will
execute and file such financing or continuation statements, endorsements,
assignments, vehicle registration documents and other documents, agreements, and
writings (including, without limitation, subordination agreements and
intercreditor agreements) and such other instruments or notices, or any
amendments thereto, as may be necessary or desirable, or as the Agent may
reasonably request, in order to perfect and preserve the security interests
granted or purported to be granted hereby.
(b) The Company hereby authorizes the Agent at the expense of the
Company to file one or more financing or continuation statements, and amendments
thereto, relative to all or any part of the Collateral without the signature of
the Company where permitted by law. A carbon, photographic 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.
(c) The Company will furnish to the Agent from time to time
statements and schedules further identifying and describing the Collateral,
including, without limitation, any sublicensing of Collateral by the Company,
and such other reports in connection with the Collateral as the Agent may
reasonably request, all in reasonable detail.
(d) The Company agrees that, should it obtain an ownership interest
in any patent, patent application, trademark, or trademark application which is
not now identified in the Schedules hereto or in any other asset which is not
included in the Schedules hereto, (i) the Company shall give prompt written
notice thereof to the Agent, (ii) the provisions of Section 1 shall
automatically apply to such Collateral, (iii) the Company shall execute a
collateral Assignment of Intellectual Property with respect to such Collateral,
and (iv) such additional ownership interest shall automatically become part of
the Collateral. The Company authorizes the Agent to modify this Agreement by
amending the Schedules hereto to include any additional ownership interest that
become part of the Collateral under this Section.
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(e) With respect to any patent or patent application necessary to
the conduct of the business of the Company, the Company agrees to take all
necessary steps in any proceeding before the United States Patent and Trademark
Office or any similar office or agency in any other country or any political
subdivision thereof or in any court to maintain and pursue where appropriate,
rights in the Collateral (including each patent application now or hereafter
included in the Collateral), including the filing of divisional, continuation,
continuation-in-part and substitute applications, the filing of applications for
reissue, renewal or extensions, the payment of maintenance fees, and the
participation in interference, reexamination, opposition and infringement
proceedings. Any expenses incurred in connection with such activities shall be
borne by the Company. The Company shall not abandon any such right to file a
patent application, or abandon any such pending patent application or patent,
unless the invention which is the subject of such patent application or patent
is not necessary or desirable in the conduct of the business of the Company in
such country or political subdivision.
(f) The Company agrees to notify the Agent immediately and in
writing if the Company learns of any adverse determination or any development
(including, without limitation, the institution of any proceeding in the United
States Patent and Trademark Office or any court) regarding any material item of
the Collateral, unless, in each such case, the material that is the subject of
such Collateral is not necessary or desirable in the conduct of the business of
the Company.
(g) In the event that the Company becomes aware that any item of the
Collateral is materially infringed or misappropriated by a third party, the
Company shall promptly notify the Agent and if necessary or desirable in the
conduct of the business of the Company, shall promptly xxx for infringement or
misappropriation and for recovery of all damages caused by such infringement or
misappropriation, and shall take such other actions as the Company shall deem
appropriate under the circumstances to protect such Collateral. Any expense
incurred in connection with such activities shall be borne by the Company. The
Company shall have sole control over the prosecution and settlement of such
actions and Agent and Purchasers shall cooperate fully with the Company and
shall be named parties, if necessary, in any such actions.
(h) The Company shall continue to xxxx its products with the number
of appropriate patents in accordance with the existing practices of the Company.
SECTION 5. Transfers and Other Liens. The Company shall not, without
the prior written consent of the Agent:
(a) sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral, except as permitted by Section 3(g) of this
Agreement;
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(b) create or suffer to exist any lien, security interest or other
charge or encumbrance upon or with respect to any of the Collateral except for
the liens and security interests described in the Schedules hereto, or
(c) take any other action in connection with any of the Collateral
that would impair the value of the interests or rights thereunder of the Company
such that the interests or rights of the Agent in the Collateral taken as a
whole would be materially impaired.
SECTION 6. Agent Appointed Attorney-in-Fact. The Company hereby
irrevocably appoints the Agent as the Company's attorney-in-fact, 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 Agent's reasonable discretion and in good
faith, to take any action and to execute any instrument that the Agent may deem
necessary or advisable to accomplish the purposes of this Agreement, only in the
event the Company refuses to take such action after being requested to do so by
the Agent and such action is necessary and desirable in the conduct of the
business of the Company, including, without limitation:
(a) to ask, demand, collect, xxx for, recover, compromise, receive
and give acquittance and receipts for monies due and to become due under or in
respect of any of the Collateral;
(b) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (a) above;
and
(c) to file any claims or take any action or institute any
proceedings that the Agent may deem necessary or desirable for the collection of
any of the Collateral or otherwise to enforce the rights of the Agent with
respect to any of the Collateral.
SECTION 7. Agent May Perform.
(a) If the Company fails to perform any agreement contained herein,
the Agent may perform, or cause performance of, such agreement, and the expenses
of the Agent incurred in connection therewith shall be paid by the Company under
Section 10(b).
(b) The Agent or its designated representatives, shall have the
right, during normal business hours at any reasonable time and from time to
time, with 48 hours notice, to inspect the premises of the Company and to
examine the books, records and operations of the Company relating to the
Collateral.
(c) The Agent shall have the right but in no way shall be obligated
to bring suit in its own name or in the name of the Company to enforce any part
of the Collateral only in the event the Company refuses to take such action
after being reasonably requested in good faith to do so by the Agent and such
action is necessary and desirable (as reasonably determined by
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the Agent) in the conduct of the business of the Company. The Company shall at
the reasonable request of the Agent do any and all lawful acts and execute any
and all proper documents required by the Agent in aid of such enforcement. Upon
demand, the Company shall promptly reimburse and indemnify the Agent for all
reasonable costs and expenses incurred by the Agent in the exercise of its
rights under this Section.
SECTION 8. The Agent's Duties. The powers conferred on the Agent
hereunder are solely to protect the Purchasers' interest in the Collateral and
shall not impose any personal liability or any duty upon the Agent 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 Agent shall
have no duty or any personal liability as to any Collateral or as to the taking
of any necessary steps to preserve rights against the other parties or any other
rights pertaining to any Collateral. The Agent shall be deemed to have exercised
reasonable care in the custody and preservation of the Collateral in its
possession if the Collateral are accorded treatment substantially equal to that
which the Agent accords its own property and it has not committed wilful
misconduct in the care and preservation of the Collateral.
SECTION 9. Remedies. If an Event of Default shall have occurred and
be continuing:
(a) The Agent may exercise in respect of the Collateral, in addition
to other rights and remedies provided for herein or otherwise available to the
Agent, all the rights and remedies of a secured party on default under the
Uniform Commercial Code in effect in the state of New York at the time (the
"Code") (whether or not the Code applies to the affected Collateral) and also
may (i) exercise any and all rights and remedies of the Company in respect of
the Collateral, (ii) require the Company to, and the Company hereby agrees that
it will at its expense and upon request of the Agent forthwith, assemble all or
any part of the documents embodying the Collateral as directed by the Agent and
make it available to the Agent at a place to be designated by the Agent that is
reasonably convenient to both the Agent and the Company, (iii) file any
Assignments of Intellectual Property with the United States Patent and Trademark
Office, and (iv) without notice except as specified below, sell the Collateral
or any part thereof in one or more parcels at public or private sale, at any of
the Agent's offices or elsewhere, for cash, on credit or for future delivery,
and upon such other terms as the Agent may deem commercially reasonable. Upon
the occurrence of an Event of Default, the Company's rights to the Intellectual
Property subject to this Agreement shall be unconditional. The Company agrees
that at least ten (10) days' notice to the Company of the time and place of any
public or private sale is to be made shall constitute reasonable notification.
The Agent shall not be obligated to make any sale of Collateral regardless of
notice of sale having been given. The 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.
(b) All payments received by the Company under or in connection with
any of the Collateral shall be received in trust for the benefit of the Agent,
shall be segregated from
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other funds of the Company and shall be forthwith paid over to the Agent in the
same form as so received (with any necessary endorsement).
(c) All payments made under or in connection with or otherwise in
respect of the Collateral, and all cash proceeds received by the Agent in
respect of any sale of, collection from, or other realization upon all or any
part of the Collateral may, in the discretion of the Agent, be held by the Agent
as collateral for, and/or then or at any time thereafter applied (after payment
of any amounts payable to the Agent pursuant to Section 10) in whole or in part
by the Agent for the benefit of the Purchasers, ratably among the Purchasers,
against all or any part of the remaining Obligations, in such order as the Agent
shall elect. Any surplus of such cash or cash proceeds held by the Agent and
remaining after payment in full of all Obligations shall be paid over to the
Company or to whomsoever may be lawfully entitled to receive such surplus.
SECTION 10. Indemnity and Expenses.
(a) The Company agrees to indemnify the Agent from and against any
and all claims, losses and liabilities arising out of or resulting from this
Agreement or the transactions contemplated hereby (including, without
limitation, enforcement of this Agreement), except claims, losses or liabilities
resulting from the Agent's gross negligence or wilful misconduct as determined
by a final judgment of a court of competent jurisdiction.
(b) The Company will upon demand pay to the Agent the amount of any
and all reasonable expenses, including, without limitation the reasonable fees
and disbursements of its counsel and of any experts and agents, which the Agent
may incur in connection with (i) the custody, preservation, use or operation of,
or the sale of, collection from, or other realization upon, any of the
Collateral, (ii) the exercise or enforcement of any of the rights of the Agent
or the Purchasers hereunder, or (iii) the failure by the Company to perform or
observe any of the provisions hereof.
SECTION 11. Acceptance of Agency. The Agent hereby accepts its
duties as Agent hereunder for the Purchasers. The Agent shall not be entitled to
compensation for any services rendered by it in the exercise and performance of
any of its duties hereunder.
SECTION 12. Certain Matters Regarding the Agent.
(a) The Agent in its individual or any other capacity may be or
become the owner of Notes with the same rights it would have if it were not the
Agent.
(b) There shall at all times be an Agent hereunder.
(c) The Agent at any time may be removed from the agency and trusts
hereby created, by the Purchasers of a majority in principal amount of the Notes
then outstanding (the
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"Majority Purchasers") upon written notice thereof to the Agent and the Company
and a successor Agent shall be appointed by the Majority Purchasers.
If at any time the Agent shall become incapable of acting (including
without limitation by reason of death or disability), or shall be adjudged
bankrupt or insolvent, or a receiver of the Agent or of its property shall be
appointed, or any public officer shall take charge or control of the Agent or of
its property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Agent shall be deemed to have been removed from the agency
and trusts hereby created and the Company shall promptly notify the Majority
Purchasers in writing who shall have the right to appoint a successor Agent as
if such Agent had been removed pursuant to the preceding paragraph.
Any removal of the Agent and appointment of a successor pursuant to
any of the provisions of this Section shall become effective upon acceptance of
appointment by the successor as provided in paragraph (d) below.
(d) Any successor Agent appointed as provided in paragraph (c) shall
execute, acknowledge and deliver to the Company and to its predecessor Agent an
instrument accepting such appointment hereunder, and thereupon the removal of
the predecessor Agent shall become effective and such successor Agent, without
any further action, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor Agent hereunder, with
the like effect as if originally named as Agent herein. The predecessor Agent
shall transfer all Collateral to the successor Agent and execute and deliver
such instruments, and do such other things, as reasonably may be required for
more fully and certainly vesting and confirming in the successor Agent all such
rights, powers, duties and obligations.
Upon acceptance of appointment by a successor Agent as provided in
this Section, the Company shall mail notice of the succession of such Agent
hereunder to all Purchasers at the address for each Purchaser set forth next to
his or her or its name on the signature page of the Purchase Agreement. If the
Company fails to mail such notice within 10 days after acceptance of appointment
by the successor Agent, the successor Agent shall cause such notice to be mailed
at the expense of the Company.
SECTION 13. Limitation on Rights of Purchasers. No Purchaser (except
as expressly provided herein) shall have any right to control in any manner the
operation, management, foreclosure or liquidation of the Collateral, or the
obligations of the parties hereto.
No Purchaser shall have any right by virtue of any provision of this
Agreement to institute any suit, action or proceeding in equity or at law upon
or under or with respect to this Agreement, unless such Purchaser previously
shall have given to the Agent a written notice of default and of the continuance
thereof, and unless also the Majority Purchasers shall have made written request
upon the Agent to institute such action, suit or proceeding in its own name as
Agent hereunder and shall have offered to the Agent such reasonable indemnity as
it may require
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against the costs, expenses and liabilities to be incurred therein or thereby,
and the Agent, for 30 days after its receipt of such notice, request and offer
of indemnity, shall have neglected or refused to institute any such action, suit
or proceeding; it being understood and intended, and being covenanted expressly
by each Purchaser with each other Purchaser and the Agent, that no one or more
Purchasers shall have any right in any manner whatever by virtue of any
provision of this Agreement to affect, disturb or prejudice the rights of any
other Purchaser, or to obtain or seek to obtain priority over or preference to
any other such Purchasers. For the protection and enforcement of the provisions
of this Section, each and every Purchaser and the Agent shall be entitled to
such relief as can be given either at law or in equity.
SECTION 14. Acts of Purchasers. (a) Except as otherwise specifically
provided herein, whenever Purchaser approval, authorization, direction, notice,
consent, waiver or other action is required hereunder, such approval,
authorization, direction, notice, consent, waiver or other action shall be
deemed to have been given or taken on behalf of, and shall be binding upon, all
Purchasers if agreed to by the Majority Purchasers.
(b) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by
Purchasers may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Purchasers in person or by agent duly
appointed in writing; and except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Agent and, where required, to the Company. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Agreement and conclusive in favor of the Agent and the Company
if made in the manner provided in this Section.
(c) The fact and date of the execution by any Purchaser of any such
instrument or writing may be proved in any reasonable manner which the Agent
deems sufficient.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by Purchasers pursuant to Section 14(a) above shall bind
every holder of every Purchaser in respect of anything done, or omitted to be
done, by the Agent in reliance thereon, whether or not notation of such action
is made upon such security.
(e) The Agent may require such additional proof of any matter
referred to in this Section as it shall deem reasonably necessary.
SECTION 15. Amendment. This Agreement may be amended from time to
time by the Company and the Agent, but without the consent of any Purchaser, (a)
to cure any ambiguity or to correct or supplement any provisions herein which
may be inconsistent with any other provisions herein, (b) to add to the duties
or obligations of the Agent hereunder, or (c) to make any other provisions with
respect to matters or questions arising under this Agreement
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which shall not be materially inconsistent with the provisions of this
Agreement; provided, however, that in each case such action shall not, as
evidenced by an opinion of counsel to the Company, adversely affect in any
material respect the interests of any Purchaser.
This Agreement also may be amended from time to time by the Company
and the Agent, with the consent of the Majority Purchasers, for the purpose of
adding any provisions to or changing in any manner or eliminating or waiving any
of the provisions or requirements of this Agreement; provided, however, that no
such amendment or waiver shall (i) effectively reduce in any manner the amount
of, or delay the timing of, the amounts to be distributed on the Notes, or (ii)
alter the percentage of Purchasers required to consent to any such amendment,
unless such amendment or waiver is consented to by all Purchasers.
Promptly after the execution of any such amendment the Agent shall
furnish written notification of the substance of such amendment to each
Purchaser.
SECTION 16. Notices. All notices, consents and other communications
under this Note shall be in writing and shall be deemed to have been duly given
when (a) delivered by hand, (b) sent by telex or telecopier (with receipt
confirmed), provided that a copy is mailed by registered mail, return receipt
requested, or (c) when received by the addressee, if sent by Express Mail,
Federal Express or other express delivery service (receipt requested), in each
case to the appropriate addresses, telex numbers and telecopier numbers set
forth below (or to such other addresses, telex numbers and telecopier numbers as
a party may designate as to itself by notice to the other parties complying as
to delivery with this Section):
(a) if to the Company:
QuietPower Systems, Inc.
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxxxx
Telecopier No.: (000) 000-0000
with a copy to:
Xxxxxxx & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
Telecopier No.: (000) 000-0000
(a) if to the Purchasers, at the address for each Purchaser set
forth next to his or her or its name on the signature page of
the Purchase Agreement.
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(b) if to the Agent:
QPS Bridge, LLC
0000 Xxxxxx xx xxx Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx
Telecopier No.: (000) 000-0000
with a copy to:
Shereff, Friedman, Xxxxxxx & Xxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx Esq.
Telecopier No.: (000) 000-0000
SECTION 17. Continuing Ownership Rights; Continuing Security
Interest; Release of Collateral and Termination of this Agreement.
(a) This Agreement shall create continuing ownership rights in the
Collateral and shall (i) remain in full force and effect until the payment in
full of the Obligations, (ii) be binding upon the Company, its successors and
assigns, and (iii) inure, together with the rights and remedies of the Agent
hereunder, to the benefit of the Agent, the Purchasers and their respective
successors, transferees and assigns. The term "Purchasers" as used herein shall
include all successors, transferees and assigns of the original Purchasers.
(b) This Agreement shall terminate, the assignments made, and the
liens and security interests and other rights granted hereby shall terminate and
all rights to the Collateral shall revert to the Company upon the payment in
full of the Obligations. Upon any such termination, the Agent and the Purchasers
will, at the Company's expense, execute and deliver to the Company such
documents as the Company shall reasonably request to evidence such termination
and reversion.
SECTION 18. Definitions; Entire Agreement. Any capitalized term used
but not defined herein shall have the meaning ascribed to such term in the
Purchase Agreement. This Agreement, the Purchase Agreement, the Intercreditor
Agreement, the Notes, the Warrants and the Registration Rights Agreements
contain the entire agreement between the parties with respect to the
transactions contemplated hereby.
SECTION 19. Severability. If any term or provision of this Agreement
is or shall become illegal, invalid or unenforceable in any jurisdiction, all
other terms and provisions of
13
this Agreement shall remain legal, valid and enforceable in such jurisdiction
and such illegal, invalid or unenforceable provision shall be legal, valid and
enforceable in any other jurisdiction.
SECTION 20. Governing Law; Terms. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York, except
to the extent that the validity or perfection of the security interest
hereunder, or remedies hereunder, in respect of any particular Collateral are
governed by the laws of the United States or any other jurisdiction other than
the State of New York.
SECTION 21. Consent to Jurisdiction. The Company and the Purchasers
hereby consent to the jurisdiction of the state and federal courts of New York
for all disputes arising under this Agreement.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
QUIETPOWER SYSTEMS, INC.
By:/s/ Xxxxxxxx X. Xxxxxx
---------------------------
Name:Xxxxxxxx X. Xxxxxx
Title:President
Agreed and consented to as of the date first above written:
QPS BRIDGE, LLC, AS AGENT
By: Xxxxxxxx, Xxxxxxxx & Co., L.P., Manager
By: /s/ Xxxxxxx Xxxxxxxx
---------------------------
Name:Xxxxxxx Xxxxxxxx
Title:General Partner
