SECURITY AGREEMENT
EXHIBIT 99.7
THIS
SECURITY AGREEMENT (“Agreement”) is made and entered into on the 30th day of
June, 2008, by and between Lightning Poker, Inc., a Pennsylvania corporation
(the “Borrower”), the person listed on the signature pages hereto as the
Lenders’ Agent, for the benefit of the Lenders listed on Schedule I hereto
(collectively, the “Lenders” and individually, a “Lender”).
RECITALS:
The
Borrower has issued and delivered to each Lender a Promissory Note dated as of
the date of this Agreement (as defined in the Loan Agreement) (collectively, the
“Notes” and individually, a “Note”). Pursuant to the Notes, the
Borrower has agreed to grant a security interest in and to the Collateral (as
defined in this Agreement) on the terms and conditions set forth in this
Agreement.
NOW,
THEREFORE, for and in consideration of the Debt (as defined in this Agreement),
and intending to be legally bound, the parties covenant and agree as
follows:
1. Definitions. In
addition to the words and terms defined elsewhere in this Agreement, the
following words and terms shall have the following meanings, unless the context
otherwise clearly requires:
“Accounts”
shall have the meaning given to that term in the Code and shall include without
limitation all rights of the Borrower, whenever acquired, to payment for goods
sold or leased or for services rendered, whether or not earned by
performance.
“Chattel
Paper” shall have the meaning given to that term in the Code and shall include
without limitation all writings owned by the Borrower, whenever acquired, which
evidence both a monetary obligation and a security interest in or a lease of
specific goods.
“Code”
shall mean the Uniform Commercial Code as in effect on the date of this
Agreement and as amended from time to time, of the state or states having
jurisdiction with respect to all or any portion of the Collateral from time to
time.
“Collateral”
shall mean collectively the Accounts, Chattel Paper, Documents, Equipment,
Fixtures, General Intangibles, Instruments, Inventory and all other personal
property and Proceeds of each of the foregoing.
“Debt”
shall mean (i) all indebtedness, both principal and interest, of the Borrower to
the Lenders now or after the date of this Agreement evidenced by the
Notes,
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(ii) all
other debts, liabilities, duties and obligations of the Borrower to the Lenders
now existing and after the date of this Agreement contracted or
incurred arising in connection with the Loan Documents, and (iii) all
costs and expenses incurred by the Lenders in the collection of any of the
indebtedness described in this paragraph or in connection with the enforcement
of any of the duties and obligations of the Borrower to the Lenders described in
this paragraph, including reasonable attorneys’ and paralegals’ fees and
expenses, and (iv) all future advances made by the Lenders for the reasonable
maintenance, protection, preservation or enforcement of, or realization upon,
the Collateral or any portion of the Collateral, including advances for storage,
transportation charges, taxes, insurance, repairs and the like.
“Documents”
shall have the meaning given to that term in the Code and shall include without
limitation all warehouse receipts (as defined by the Code) and other documents
of title (as defined by the Code) owned by the Borrower, whenever
acquired.
“Equipment”
shall have the meaning given to that term in the Code and shall include without
limitation all goods owned by the Borrower, whenever acquired and wherever
located, used or brought for use primarily in the business or for the benefit of
the Borrower and not included in Inventory of the Borrower, together with all
attachments, accessories and parts used or intended to be used with any of those
goods or Fixtures, whether now or in the future installed therein or thereon or
affixed thereto, as well as all substitutes and replacements thereof in whole or
in part.
“Event of
Default” shall mean any default by the Borrower as defined in the
Notes.
“Fixtures”
shall have the meaning given to that term in the Code, and shall include without
limitation leasehold improvements.
“General
Intangibles” shall have the meaning given to that term in the Code and shall
include, without limitation, all leases under which the Borrower now or in the
future leases and or obtains a right to occupy or use real or personal property,
or both, all of the other contract rights of the Borrower, whenever acquired,
and customer lists, choses in action, claims (including claims for
indemnification), books, records, patents and patent applications, copyrights
and copyright applications, trademarks, trade names, trade styles, trademark
applications, blueprints, drawings, designs and plans, trade secrets, methods,
processes, contracts, licenses, license agreements, formulae, tax and any other
types of refunds, returned and unearned insurance premiums, rights and claims
under insurance policies, and computer information, software, domain names,
URL’s, web pages, records and data, now owned or acquired after the date of this
Agreement by the Borrower.
“Instrument”
shall have the meaning given to that term in the Code and shall include, without
limitation, all negotiable instruments (as defined in the Code), all
certificated securities (as defined in the Code) and all other writings which
evidence a
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right to
the payment of money now or after the date of this Agreement owned by the
Borrower.
“Inventory”
shall have the meaning given to that term in the Code and shall include without
limitation all goods owned by the Borrower, whenever acquired and wherever
located, held for sale or lease or furnished or to be furnished under contracts
of service, and all raw materials, work in process and materials owned by the
Borrower and used or consumed in the Borrower’s business, whenever acquired and
wherever located.
“Lenders’
Agent” shall mean The Co-Investment Fund II, L.P.
“Loan
Agreement” shall mean that certain Loan Agreement of even date herewith among
the Borrower and the Lenders.
“Loan
Documents” shall mean collectively, this Agreement, the Notes, the Loan
Agreement, the Intellectual Property Security Agreement for Patents and
Trademarks and the Intellectual Property Security Agreement for Copyrights and
Mask Works, each of even date herewith among the Borrower, the Lenders and/or
the Lenders’ Agent and all other agreements, documents and instruments executed
and delivered in connection herewith, as each may be amended, supplemented or
modified from time to time.
“Note(s)”
shall mean the Promissory Notes executed and delivered by the Borrower in
connection with the Loan Agreement.
“Proceeds”
shall have the meaning given to that term in the Code and shall include without
limitation whatever is received when Collateral or Proceeds is sold, exchanged,
collected or otherwise disposed of, whether cash or non-cash, and includes
without limitation proceeds of insurance payable by reason of loss of or damage
to Collateral.
2. Security
Interest. As security for the full and timely performance and
payment of the Debt in accordance with the terms of the Debt including the
performance of the obligations of the Borrower under the Notes and this
Agreement, the Borrower agrees that the Lenders shall have, and the Borrower
grants to and creates in favor of the Lenders, a security interest under the
Code in and to such of the Collateral as is now owned or acquired after the date
of this Agreement by the Borrower.
3. Rights and Remedies of a
Secured Party. In addition to all rights and remedies given to
the Lenders by this Agreement, the other Loan Documents and the Note, the
Lenders shall have all the rights and remedies of secured parties under the
Code.
4. Provisions Applicable to the
Collateral. The parties agree that the following provisions
shall be applicable to the Collateral:
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(a) The
Borrower covenants and agrees that at all times during the term of this
Agreement it shall keep accurate and complete books and records concerning the
Collateral that is now owned or acquired after the date of this Agreement by the
Borrower at its principal place of business at 000 Xxxxxxx Xxxxxxx, Xxxxxxxx,
XX 00000, and at no other location without the prior
written consent of the Lenders’ Agent.
(b) The
Lenders’ Agent or its representatives and the Lenders and their representatives
shall have the right at all times during regular business hours of the Borrower,
with prior notice, to examine and inspect the Collateral and to review the books
and records of the Borrower concerning the Collateral that is now owned or
acquired after the date of this Agreement by the Borrower and to copy the same
and make excerpts therefrom; provided, however, that from and after the
occurrence of an Event of Default, the rights of inspection and entry shall be
subject to the requirements of the Code.
(c) Except
as otherwise agreed by the Lenders’ Agent, the Borrower shall at all times
during the term of this Agreement keep the Equipment, Inventory and Fixtures
that are now owned or acquired after the date of this Agreement by the Borrower
at its principal place of business at 000 Xxxxxxx Xxxxxxx, Xxxxxxxx,
XX 00000, except to the extent any such Collateral is intended to be
portable and not fixed to any particular location (such as portable computers,
cellular phones, and other similar property), Inventory and Equipment is located
at the facilities of third-party contractors and assemblers or, upon written
notice to the Lenders’ Agent, at such other locations for which the Lenders’
Agent has filed financing statements, and at no other location without prior
written notice to the Lenders’ Agent, except that the Borrower shall have the
right until one or more Events of Default shall occur to sell or otherwise
dispose of Inventory in the ordinary course of business.
(d) Except
as otherwise agreed by the Lenders’ Agent, the Borrower shall not move the
location of its chief executive offices without prior written notification to
the Lenders’ Agent, and shall not change its jurisdiction of formation without
the prior written consent of the Lenders’ Agent.
(e) Without
the prior written consent of the Lenders’ Agent, such consent not to be
unreasonably withheld, the Borrower shall not sell, lease or otherwise dispose
of any Equipment or Fixtures, except Equipment or Fixtures reasonably deemed by
the Borrower to be no longer material to or useful in the conduct of its
business or Equipment leased to third parties in the ordinary course of
Borrower’s business.
(f) Promptly
upon request of the Lenders’ Agent, from time to time, the Borrower shall
furnish the Lenders’ Agent with such information and documents regarding the
Collateral and the Borrower’s financial condition, business, assets or
liabilities, at such times and in such form and detail as the Lenders’ Agent may
reasonably request.
(g) Promptly
upon request of the Lenders’ Agent, from time to time, the Borrower shall
deliver to the Lenders’ Agent all documentation reasonably requested by the
Lenders’ Agent without limitation, (i) all invoices and customer statements
rendered to account debtors, documents, contracts, chattel paper, instruments
and other writings pertaining to the
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Borrower’s
contracts or the performance of the Borrower’s contracts, (ii) evidence of the
Borrower’s accounts and statements showing the aging, identification,
reconciliation and collection thereof and (iii) reports as to the Borrower’s
inventory and sales, shipment, damage or loss thereof, all of the foregoing to
be certified by authorized officers or other employees of the
Borrower.
(h) Notwithstanding
the security interest in the Collateral granted to and created in favor of the
Lenders under this Agreement, the Borrower shall have the right until one or
more Events of Default shall occur, at its own cost and expense, to collect the
Accounts and the Chattel Paper and to enforce its contract rights
generally.
(i) After
the occurrence of an Event of Default, the Lenders’ Agent shall have
the right, in its sole discretion, to give notice of the Lenders’ security
interest to account debtors obligated to the Borrower and to take over and
direct collection of the Accounts and the Chattel Paper, to notify such account
debtors to make payment directly to the Lenders’ Agent and to enforce payment of
the Accounts and the Chattel Paper and to enforce the Borrower’s contract
rights. It is understood and agreed by the Borrower that the Lenders’
Agent shall have no liability whatsoever under this Agreement except for its own
gross negligence or willful misconduct.
(j) After
the occurrence of an Event of Default, the Lenders’ Agent shall cause to be
opened and maintained a noninterest bearing deposit account (the “Cash
Collateral Account”) and after delivery of notice to the Borrower by the
Lenders’ Agent, deposit, and require the Borrower to deposit, therein all cash
proceeds of Collateral. All cash proceeds of the Collateral received
directly by the Borrower shall be held by the Borrower in trust for the benefit
of the Lenders’ Agent, shall be segregated from all other funds of the Borrower
and shall, within one business day after receipt, be paid over to the Lenders’
Agent in the same form as so received (with any necessary endorsement or
assignment) for deposit in the Cash Collateral Account. The Lenders’
Agent shall have sole dominion and control over all items and funds in the Cash
Collateral Account and such items and funds may be withdrawn only by the
Lenders’ Agent, it being the intention of the parties to this Agreement that the
Borrower shall have no control over or withdrawal rights in respect of the Cash
Collateral Account. The Lender’s Agent, in accordance with the Loan
Agreement, may, in its discretion, release to the Borrower from time to time all
or any part of the collected funds deposited in the Cash Collateral Account but
the Lenders’ Agent shall have the right at any time to apply all or any part of
the collected funds on deposit in the Cash Collateral Account to the payment of
the Debt, whether on account of principal or interest or otherwise as the
Lenders’ Agent in its discretion and in good faith may elect, until the Debt is
fully paid.
(k) After
the occurrence of an Event of Default and delivery of a written request, the
Borrower shall promptly deliver to the Lenders’ Agent all existing leases, and
all other leases entered into by the Borrower from time to time, covering any
Equipment or Inventory (“Leased Inventory”) which is leased to third parties and
will take such action as is necessary to perfect the Lenders’ security interest
in Leased Inventory.
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5. Lenders’ Agent’s Actions
with Respect to Accounts. The Borrower irrevocably makes,
constitutes and appoints The Co-Investment Fund II, L.P., as Lenders’ Agent and
each Lender hereby agrees with and consents to such appointment, its true and
lawful attorney-in-fact with power to sign its name and to take any of the
following actions after the occurrence of an Event of Default, such actions only
to be taken during the continuance of an Event of Default, in its name or the
name of all Lenders, as such Lenders’ Agent may determine, at any time without
notice to the Borrower and at the Borrower’s expense:
(a) Verify
the validity and amount of, or any other matter relating to, the Collateral by
mail, telephone, telegraph or otherwise;
(b) Notify
all account debtors that the Accounts have been assigned to the Lenders’ Agent
and that the Lenders have a security interest in the Accounts;
(c) Direct
all account debtors to make payment of all Accounts directly to the Lenders’
Agent;
(d) Take
control in any manner of any cash or non-cash items of payment or proceeds of
Accounts;
(e) Notify
the United States Postal Service to change the address for delivery of, mail
addressed to the Borrower to such address as the Lenders’ Agent may
designate;
(f) Receive,
open and dispose of all mail addressed to the Borrower (any sums received
pursuant to the exercise of the rights provided in this Agreement shall be
deposited in the Cash Collateral Account);
(g) Take
control in any manner of any rejected, returned, stopped in transit or
repossessed goods relating to Accounts;
(h) Enforce
payment of and collect any Accounts, by legal proceedings or otherwise, and for
such purpose the Lenders’ Agent may:
(1) Demand
payment of any Accounts or direct any account debtors to make payment of
Accounts directly to the Lenders’ Agent;
(2) Receive
and collect all monies due or to become due to the Borrower;
(3) Exercise
all of the Borrower’s rights and remedies with respect to the collection of
Accounts;
(4) Settle,
adjust, compromise, extend, renew, discharge or release Accounts;
(5) Sell
or assign Accounts on such terms, for such amount and at such times as the
Lenders’ Agent deems advisable;
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(6) Prepare,
file and sign the Borrower’s name or names on any Proof of Claim or similar
documents in any proceeding filed under federal or state bankruptcy, insolvency,
reorganization or other similar law as to any account debtor;
(7) Prepare,
file and sign the Borrower’s name or names on any notice of lien, claim of
mechanic’s lien, assignment or satisfaction of lien or mechanic’s lien or
similar document in connection with the Collateral;
(8) Endorse
the name of the Borrower upon any chattel papers, documents, instruments,
invoices, freight bills, bills of lading or similar documents or agreements
relating to Accounts or goods pertaining to Accounts or upon any checks or other
media of payment or evidence of a security interest that may come into the
Lenders’ Agent’s possession;
(9) Sign
the name of the Borrower to verifications of Accounts and notices of Accounts
sent by account debtors to the Borrower; or
(10) Take
all other actions necessary or desirable to protect the Borrower’s interest in
the Accounts.
(i) Negotiate
and endorse any Document in favor of the Lenders or their designees, covering
Inventory including the Leased Inventory, which constitutes Collateral, and
related documents for the purpose of carrying out the provisions of this
Agreement and taking any action and executing in the name of Borrower any
instrument which the Lenders’ Agent may deem necessary or advisable to
accomplish the purpose hereof. Without limiting the generality of the
foregoing, the Lenders’ Agent shall have the right and power to receive, endorse
and collect checks and other orders for the payment of money made payable to the
Borrower representing any payment or reimbursement made under, pursuant to or
with respect to, the Collateral or any part thereof and to give full discharge
to the same.
The
Borrower ratifies and approves all acts of said attorney and agrees that said
attorney shall not be liable for any acts of commission or omission, nor for any
error of judgment or mistake of fact or law, except for said attorney’s own
gross negligence or willful misconduct. This power, being coupled
with an interest, is irrevocable until the Debt is paid in full and the Borrower
shall have performed all of its obligations under this Agreement. The
Borrower further agrees to use its commercially reasonable efforts to assist the
Lenders’ Agent in the collection and enforcement of the Accounts and will not
hinder, delay or impede the Lenders’ Agent in any manner in its collection and
enforcement of the Accounts.
Anything
herein to the contrary notwithstanding, (a) the Borrower shall remain liable
under the contracts and agreements included in the Collateral to the extent set
forth therein to perform all of its duties and obligations thereunder to the
same extent as if this Agreement had not been executed, (b) the exercise by the
Lenders’ Agent of any of the rights hereunder shall not release the Borrower
from any of its duties or obligations under the contracts and
agreements
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included
in the Collateral, and (c) the Lenders’ Agent shall not have any obligation or
liability under the contracts and agreements included in the Collateral by
reason of this Agreement, nor shall the Lenders’ Agent be obligated to perform
any of the obligations or duties of the Borrower thereunder or to take any
action to collect or enforce any claim for payment assigned
hereunder.
6. Preservation and Protection
of Security Interest. The Borrower represents and warrants
that it has, and covenants and agrees that at all times during the term of this
Agreement, it will have, good and marketable title to the Collateral from time
to time owned or acquired by it free and clear of all mortgages, pledges, liens,
security interests, charges or other encumbrances, except as set
forth in the Schedule of Exceptions to the Loan Agreement, purchase money
security interest arising by action of law or those interests junior in right of
payment and enforcement to that of the Lenders or in favor of the Lenders, and
shall defend the Collateral against the claims and demands of all persons, firms
and entities whomsoever. The Borrower represents and warrants that as
of the date of this Agreement the Lenders have, and that all times in the future
the Lenders will have, a security interest in the Collateral prior and superior
to the rights of all third parties in the Collateral existing on the date of
this Agreement or arising after the date of this Agreement except as set forth
on the Schedule of Exceptions to the Loan Agreement. The Borrower
covenants and agrees that it shall not, without the prior written consent of the
Lenders’ Agent (i) borrow against the Collateral or any portion of the
Collateral from any other person, firm or entity, except for borrowings which
are subordinate to the rights of the Lenders (ii) grant or create or permit to
attach or exist any mortgage, pledge, lien, charge or other encumbrance, or
security interest on, of or in any of the Collateral or any portion of the
Collateral except as set forth in the Schedule of Exceptions to the Loan
Agreement, those in favor of the Lenders, purchase money security interest
arising by action of law or those junior in right of payment and enforcement to
that of the Lenders, (iii) permit any levy or attachment to be made against the
Collateral or any portion of the Collateral, except those that are subordinate
to the rights of the Lenders, or (iv) permit any financing statements to be on
file with respect to any of the Collateral, except financing statements in favor
of the Lenders or those junior in right of payment and enforcement to that of
the Lenders. The Borrower shall faithfully preserve and protect the
Lenders’ security interest in the Collateral and shall, at its own cost and
expense, cause, or assist the Lenders’ Agent to cause that security interest to
be perfected and continue perfected so long as the Debt or any portion of the
Debt is outstanding, unpaid or executory. For purposes of the
perfection of the Lenders’ security interest in the Collateral in accordance
with the requirements of this Agreement, the Borrower shall from time to time at
the reasonable request of the Lenders’ Agent file or record, or cause to be
filed or recorded, such instruments, documents and notices, including
assignments, financing statements and continuation statements, as the Lenders’
Agent may deem necessary or advisable from time to time in order to perfect and
continue perfected such security interest. The Borrower shall do all
such other acts and things and shall execute and deliver all such other
instruments and documents, including further security agreements, pledges,
endorsements, assignments and notices, as the Lenders’ Agent in its reasonable
discretion, may deem necessary or advisable from time to time in order to
perfect and preserve the priority of such security interest in the Collateral
prior to the rights of all third persons, firms and entities, except as may be
otherwise provided in this Agreement. The Borrower irrevocably
appoints the Lenders’ Agent as the attorney-in-fact of the Borrower to
do
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all acts
and things which the Lenders’ Agent may reasonably deem necessary or advisable
from time to time to preserve, perfect and continue perfected the Lenders
security interest in the Collateral in accordance with the requirements of this
Agreement, including, but not limited to, signing any financing statements or
amendments to financing statements evidencing the Lenders’ security interest in
the Collateral for and on behalf of the Borrower. The Borrower agrees
that a carbon, photographic or other reproduction of this Agreement or a
financing statement is sufficient as a financing statement and may be filed
instead of the original.
7. Insurance. Risk
of loss of, damage to or destruction of the Equipment, Inventory and Fixtures is
on the Borrower. The Borrower shall insure the Equipment, Inventory
and Fixtures against such risks and casualties and in such amounts and with such
insurance companies in accordance with its past practices. At the
request of the Lenders’ Agent, each of the Borrower’s policies of insurance
shall contain provision for notification of the Lenders’ Agent thirty (30) days
prior to the termination of each such policy. At the request of the
Lenders’ Agent, copies of all such policies, or certificates evidencing the
same, shall be deposited with the Lenders’ Agent. If the Borrower
fails to effect and keep in full force and effect such insurance or fails to pay
the premiums when due, the Lenders’ Agent may (but shall not be obligated to) do
so for the account of the Borrower and add the cost thereof to the
Debt. After the occurrence of an Event of Default, the Borrower shall
assign and set over to the Lenders’ Agent all monies which may become payable on
account of such insurance and shall direct the insurers to pay the Lenders’
Agent any amount so due. In such event, the Lenders’ Agent is
irrevocably appointed attorney-in-fact of the Borrower to endorse any draft or
check which may be payable to the Borrower in order to collect the proceeds of
such insurance. The Borrower shall apply such proceeds either (i) to
the repair of damaged Equipment, Inventory or Fixtures, or (ii) to the
replacement of destroyed Equipment, Inventory or Fixtures with Equipment,
Inventory or Fixtures of the same or similar type and function and of at least
equivalent value (in the sole judgment of the Lenders’ Agent), provided such
replacement Equipment, Fixtures or Inventory is made subject to the security
interest created by this Agreement and constitutes a security
interest in the Equipment, Inventory and Fixtures subject only to security
interests permitted under this Agreement, and is perfected by the filing of
financing statements in the appropriate public offices and the taking of such
other action as may be necessary or desirable in order to perfect and continue
perfected such security interest. In the event that there is any
balance of insurance proceeds remaining in the possession of the Lenders’ Agent
after payment in full of the Debt, such balance shall be paid over to the
Borrower or its order.
8. Maintenance and
Repair. The Borrower shall maintain the Equipment, Inventory
and Fixtures, and every portion thereof, in good condition, repair and working
order, reasonable wear and tear alone excepted, and shall pay and discharge all
taxes, levies and other impositions assessed or levied thereon as well as the
cost of repairs to or maintenance of the same. If the Borrower fails
to do so, the Lenders’ Agent may (but shall not be obligated to) pay the cost of
such repairs or maintenance and such taxes, levies or impositions for the
account of the Borrower and add the amount of such payments to the
Debt.
9. Preservation of Rights
Against Third Parties; Preservation of Collateral in Lenders’ Agent’s
Possession. Until such time as the Lenders’ Agent exercises
its right to effect
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direct
collection of the Accounts and the Chattel Paper and to effect the enforcement
of the Borrower’s contract rights, the Borrower assumes full responsibility for
taking any and all steps to preserve rights in respect of the Accounts and the
Chattel Paper and its contracts against prior parties. The Lenders’
Agent shall be deemed to have exercised reasonable care in the custody and
preservation of such of the Collateral as may come into its possession from time
to time if the Lenders’ Agent takes such action for that purpose as the Borrower
shall request in writing, provided that such requested action shall not, in the
judgment of the Lenders’ Agent, impair the Lenders security interest in the
Collateral or their right in, or the value of, the Collateral, and provided
further that the Lenders’ Agent receives such written request in sufficient time
to permit the Lenders’ Agent to take the requested action.
10. Events of Default and
Remedies.
(a) If
any one or more of the Events of Default shall occur or shall exist, the
Lenders’ Agent may then, or at any time thereafter, so long as such default
shall continue, foreclose the Lenders’ lien or security interest in the
Collateral in any way permitted by law, or upon ten (10) days prior written
notice to the Borrower, sell any or all Collateral at private sale at any time
or place in one or more sales, at such price or prices and upon such terms,
either for cash or on credit, as the Lenders’ Agent, in its sole discretion, may
elect, or sell any or all Collateral at public auction, either for cash or on
credit, as the Lenders’ Agent, in its sole discretion, may elect, and at any
such sale, the Lenders may bid for and become the purchaser of any or all such
Collateral. Pending any such action the Lenders’ Agent may liquidate
the Collateral.
(b) If
any one or more of the Events of Default shall occur or shall exist, the Lenders
may then, or at any time thereafter, so long as such default shall continue,
grant extensions to, or adjust claims of, or make compromises or settlements
with, debtors, guarantors or any other parties with respect to Collateral or any
securities, guarantees or insurance applying thereon, without notice to or the
consent of the Borrower, without affecting the Borrower’s liability under this
Agreement or the Notes. The Borrower waives notice of acceptance, of
nonpayment, protest or notice of protest of any Accounts or Chattel Paper or any
of its contract rights and any other notices to which the Borrower may be
entitled.
(c) If
any one or more of the Events of Default shall occur or shall exist and be
continuing, then in any such event, the Lenders’ Agent shall have such
additional rights and remedies in respect of the Collateral or any portion
thereof as are provided by the Code and such other rights and remedies in
respect thereof which it may have at law or in equity or under this Agreement,
including without limitation the right to enter any premises where Equipment,
Inventory and/or Fixtures are located and take possession and control thereof
without demand or notice and without prior judicial hearing or legal
proceedings, which the Borrower expressly waives.
(d) The
Lenders’ Agent shall apply the Proceeds of any sale or liquidation of the
Collateral, and, subject to Section 7, any Proceeds received by the Lenders’
Agent from insurance, first to the payment of the reasonable costs and expenses
incurred by the Lenders in
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connection
with such sale or collection, including without limitation reasonable attorneys’
fees and legal expenses, second to the payment of the Debt, whether on account
of principal or interest or otherwise as the Lenders’ Agent in its sole
discretion may elect, and then to pay the balance, if any, to the Borrower or as
otherwise required by law. If such Proceeds are insufficient to pay
the amounts required by law, the Borrower shall be liable for any
deficiency.
(e) Upon
the occurrence of any Event of Default and delivery of a written request, the
Borrower shall promptly upon demand by the Lenders’ Agent assemble the
Equipment, Inventory and Fixtures and make them available to the Lenders’ Agent
at a place or places to be designated by the Lenders’ Agent. The
rights of the Lenders’ Agent under this paragraph to have the Equipment,
Inventory and Fixtures assembled and made available to it is of the essence of
this Agreement and the Lenders may, at their election, enforce such right by an
action in equity for injunctive relief or specific performance.
(f) If
any one or more of the Events of Default shall occur or shall exist and be
continuing, then in any event, the Lenders have the right to use and operate
under all trade names under which the Borrower does business.
11. Defeasance. Notwithstanding
anything to the contrary contained in this Agreement upon payment and
performance in full of the Debt owed to each Lender, this Agreement shall
terminate and be of no further force and effect as to such Lender, and such
Lender shall thereupon terminate its security interest in the
Collateral. Upon such termination, Lender’s Agent hereby authorizes
the Company to file any UCC termination statements necessary to reflect such
termination and Lenders’ Agent will execute and deliver to the Company any
additional documents or instruments as Company shall reasonably request to
evidence such termination. Until such time, however, this Agreement
shall be binding upon and inure to the benefit of the parties, their successors
and assigns, provided that, without the prior written consent of the Lenders’
Agent, the Borrower may not assign this Agreement or any of its rights under
this Agreement or delegate any of its duties or obligations under this Agreement
and any such attempted assignment or delegation shall be null and
void. This Agreement is not intended and shall not be construed to
obligate the Lenders’ Agent to take any action whatsoever with respect to the
Collateral or to incur expenses or perform or discharge any obligation, duty or
disability of the Borrower.
12. Miscellaneous.
(a) The
provisions of this Agreement are intended to be severable. If any
provision of this Agreement shall for any reason be held invalid or
unenforceable in whole or in part in any jurisdiction, such provision shall, as
to such jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without in any manner affecting the validity or enforceability
of such provision in any other jurisdiction or any other provision of this
Agreement in any jurisdiction.
(b) No
failure or delay on the part of the Lenders’ Agent in exercising any right,
remedy, power or privilege under this Agreement and the Notes shall operate as a
waiver thereof or of any other right, remedy, power or privilege of the Lenders’
Agent under this
11
Agreement,
the Notes or any of the other Loan Documents; nor shall any single or partial
exercise of any such right, remedy, power or privilege preclude any other right,
remedy, power or privilege or further exercise thereof or the exercise of any
other right, remedy, power or privilege. The rights, remedies, powers
and privileges of the Lenders and the Lenders’ Agent under this Agreement, the
Notes and the other Loan Documents are cumulative and not exclusive of any
rights or remedies which they may otherwise have.
(c) All
notices, statements, requests and demands given to or made upon either party in
accordance with the provisions of this Agreement shall be deemed to have been
given or made when personally delivered or when deposited in the United States
mail, postage prepaid or with private overnight courier service, charges
prepaid, addressed, if to the Borrower, to its principal place of business at
000 Xxxxxxx Xxxxxxx, Xxxxxxxx, XX 00000, and if to the Lenders, to
the Lenders’ Agent at Five Radnor Corporate Center, Suite 555, 000 Xxxxxxxxxx
Xxxx, Xxxxx XX 00000, or in accordance with the latest unrevoked
written direction from either party to the other party.
(d) The
section headings contained in this Agreement are for reference purposes only and
shall not control or affect its construction or interpretation in any
respect.
(e) Unless
the context otherwise requires, all terms used in this Agreement which are
defined by the Code shall have the meanings stated in the Code.
(f) The
Code shall govern the settlement, perfection and the effect of attachment and
perfection of the Lenders’ security interest in the Collateral, and the rights,
duties and obligations of the Lenders, the Lenders’ Agent and the Borrower with
respect to the Collateral. This Agreement shall be deemed to be a
contract under the laws of the Commonwealth of Pennsylvania and the execution
and delivery of this Agreement and, to the extent not inconsistent with the
preceding sentence, the terms and provisions of this Agreement shall be governed
by and construed in accordance with the laws of that State.
(g) No
amendment or waiver of any provision of this Agreement, and no consent to any
departure by the Borrower herefrom, shall in any event be effective unless the
same shall be in writing and signed by the Lenders’ Agent, and then such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given, or in the event that such amendment would have a
material and adverse impact on a Lender’s economic interest, such amendment
shall be approved by each Lender.
(h) In
the event that the Lenders’ Agent is at any time no longer serving as the
Lenders’ Agent and a new Lenders’ Agent has not been appointed in accordance
with the Loan Agreement, the Lenders shall have all of the rights, powers and
privileges granted to Lenders’ Agent hereunder.
(i) This
Agreement shall bind and inure to the benefit of the respective successors and
assigns of each of the parties; provided, however, that the Borrower may not
assign the Agreement or any rights or duties hereunder without the Lenders’
Agent’s prior written consent and any prohibited assignment shall be absolutely
void. The Lenders’ Agent
12
may
assign this Agreement and its rights and duties hereunder to another Lender or
to a transferee of the Notes held by the Lenders’ Agent, subject only to Section
6 of the Loan Agreement, and no consent or approval by the Borrower is required
in connection with any such assignment.
(k) The
Borrower shall pay to the Lenders’ Agent reasonable costs and expenses
(including reasonable attorneys’ and paralegals’ fees and disbursements) paid or
incurred to enforce the security interest created hereunder, sell or otherwise
realize upon the Collateral, and otherwise enforce the provisions of this
Agreement, or to defend any claims made or threatened against the Lenders
arising out of the transactions contemplated hereby (including preparations for
the consultations concerning any such matters). The foregoing shall
not be construed to limit any other provisions of this Agreement or the Loan
Documents regarding costs and expenses to be paid by the Borrower.
IN
WITNESS WHEREOF, and intending to be legally bound, the parties have executed
and delivered this Security Agreement as of the day and year set forth at the
beginning of this Security Agreement.
BORROWER:
LIGHTNING
POKER, INC.
By:/s/
Xxxxx Xxxxxxx
Title:
CEO
13
LENDERS’
AGENT
THE
CO-INVESTMENT FUND II, L.P.
By: Co-Invest
Management II, L.P.
its general partner
By: Co-Invest
Capital Partners, Inc.
its general partner
By: /s/
Xxxxx Xxxxxxx
Title: CFO and
Treasurer
14
SCHEDULE
I
Lenders
THE
CO-INVESTMENT FUND II, L.P.
SIG
STRATEGIC INVESTMENTS, LLLP
15
