SECURITY AGREEMENT
SECURITY
AGREEMENT, dated as of April 30, 2008 (this “Agreement”),
between Infosmart Group, Inc., a California corporation (the “Company),
and
the lenders identified on the signature page hereto (the “Lenders”).
WHEREAS,
the Company and the Lenders are party to that certain Securities Purchase
Agreement dated of date hereof (the "SPA”);
WHEREAS,
it is intended hereby that all obligations of the Company to the Lenders
under
the Transaction Documents1
and
other agreements to which the Company and Lenders are from time to time party
be
secured by the personal property assets of the Company herein described;
NOW,
THEREFORE, in consideration of the promises contained herein and for other
good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Definitions.
(a) Capitalized
terms used herein without definition (by cross-reference or otherwise) shall
have the meanings provided for such terms (by cross-reference or otherwise)
in
the SPA.
(b) The
following capitalized terms, when used herein, shall have the meanings provided
for such terms in Article 9 of the NYUCC (as hereafter defined): Accession,
Account, Cash Proceeds, Certificate of Title, Chattel Paper, Commercial Tort
Claim, Commodity Account, Commodity Contract, Commodity Intermediary, Deposit
Account, Document, Electronic Chattel Paper, Equipment, Farm Products, General
Intangible, Goods, Health-Care-Insurance Receivable, Instrument, Inventory,
Investment Property, Letter-of-Credit Right, Non-Cash Proceeds, Payment
Intangible, Proceeds, Promissory Note, Software, Supporting Obligation, and
Tangible Chattel Paper. Such terms (and those in the following clauses of this
Section 1) shall include in the singular number the plural and in the plural
number the singular. Nothing contained in this subsection (b)
or
otherwise in this Agreement shall be construed to mean that uncapitalized terms
used herein which are defined in the UCC or the NYUCC shall not have the
meanings ascribed to such terms in such statutes.
(c) The
following capitalized terms, when used herein and not defined in Article 9
of
the NYUCC, shall have the meanings provided therefor elsewhere in the NYUCC:
Certificated Security, Letter of Credit, Securities Intermediary and
Uncertificated Security.
(d) As
used
herein, the following capitalized terms shall have the following
meanings:
“Event
of Default”
means
any of the following: (i) any failure by the Company to pay, when due, any
amount payable by it under any Transaction Document, (ii) any other
material breach by the Company of any provision of any Transaction Document
which is not cured within 10 days, (iii) any representation or warranty made
by
the Company in any Transaction Document, or otherwise in writing in connection
with any such document, or in any certificate or statement furnished pursuant
to
or in connection with any such document, shall be breached or shall prove to
be
untrue in any material respect on the date as of which made; (iv) the occurrence
of an Insolvency Event with respect to the Company; or (v) any other Event
of
Default (as defined in the terms and conditions of any relevant Transaction
Document).
1
All
Capitalized Terms not otherwise defined herein shall have the meaning ascribed
to them in the SPA.
“Government
Authority”
shall
mean any nation or government, any state or political subdivision thereof and
any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
“Insolvency
Event”
means
the occurrence of any of the following with respect to the Company or another
Person: such Person shall make an assignment for the benefit of, or composition
with, creditors or shall become insolvent or be unable, or generally fail,
to
pay its debts when due; or any bankruptcy, insolvency or other proceeding for
the relief of financially distressed debtors shall be commenced with respect
to
such Person, or a receiver, liquidator, custodian or trustee shall be appointed
for such Person or a substantial part of its assets, and, if any of the same
shall occur involuntarily as to such Person, it shall not be dismissed, stayed
or discharged within 60 days; or if any order for relief shall be entered
against such Person under Title 11 of the United States Code entitled
“Bankruptcy”; or such Person shall take any action to effect, or which indicates
its acquiescence in, any of the foregoing; in each of the foregoing situations,
whether under the laws of the United States or the analogous laws of any foreign
jurisdiction.
“Loan
Agreement”
means
each agreement (if, as and when executed by the Company and the Lenders)
pursuant to or in connection with which any financial accommodation is extended
by the Lenders to or on behalf of the Company, including, without limitation,
the Debentures.
“NYUCC”
means
the Uniform Commercial Code of the State of New York (as currently in effect
and
as the same may from time to time hereafter be amended).
“Patents”
means
(i) all United States or other patents which the Company may from time to time
possess or be otherwise entitled to use, and all licenses of United States
or
other patents which the Company may from time to time possess or be otherwise
entitled to use (including without limitation the patents described in Section
8(f)
hereof),
(ii) all re-issues, divisions, continuations, renewals, extensions and
continuations-in-part thereof, (iii) the right to xxx for past, present and
future infringements of the foregoing, and (iv) all rights corresponding to
all
of the foregoing throughout the world.
“Payment
Default”
means
the failure by the Company to make any payment required to be made by it
pursuant to any Transaction Document to which it is a party at the time when
same is due (after giving effect to any applicable grace period).
“Person”
shall
mean and include an individual, a partnership, a corporation (including a
business trust), a joint stock company, a limited liability company, a
not-for-profit corporation or other not-for-profit entity, a trust, an
unincorporated association, a joint venture or other entity or a Government
Authority.
“Secured
Obligations”
means
all of the indebtedness, obligations and liabilities of the Company to the
Lenders, individually or collectively, whether direct or indirect, joint or
several, absolute or contingent, due or to become due, now existing or hereafter
arising, pursuant to one or more of the Transaction Documents.
“Trademarks”
means
(i) all United States or other trademarks which the Company may from time to
time possess or be otherwise entitled to use, together with the goodwill of
the
business connected with the use of, and symbolized by, such trademarks (together
with the trademarks described in Section 8(f)
hereof),
(ii) all re-issues, divisions, continuations, renewals, extensions and
continuations-in-part thereof, (iii) the right to xxx for past, present and
future infringements of the foregoing, and (iv) all rights corresponding to
all
of the foregoing throughout the world (excluding intent-to-use United States
applications prior to their conversion into use-based
applications).
(e) Unless
otherwise specified, each reference in this Agreement or in any other
Transaction Document to a Transaction Document shall mean such Transaction
Document as the same may from time to time be amended, restated, replaced,
supplemented or otherwise modified from time to time with the consent of the
Lenders.
(f) As
used
in this Agreement, the terms "including," "including without limitation" and
"such as" (and like terms) are illustrative and not limitative. No difference
shall be imputed to the use in some places herein of “including” and in others
of “including without limitation.” Phrases such as "hereof" and "herein" refer
to the entire Agreement and not just the section or other portion in which
said
reference appears.
2. Grant
of Security Interest.
The
Company hereby grants to the Lenders, to secure the payment and performance
in
full of all of the Secured Obligations, a security interest in and so pledges
and assigns to the Lenders all the Company’s assets subordinate only to bank
debt, whether existing as of the date of this Agreement or accumulated in the
future, not to exceed the aggregate amount of $12,000,000, wherever located,
whether now owned or hereafter acquired or arising, and all Proceeds and
products thereof; all personal and fixture property of every kind and nature
including without limitation all Goods (including Inventory, Equipment and
any
Accessions thereto), Instruments (including Promissory Notes), Documents,
Accounts, Chattel Paper (whether Tangible Chattel Paper or Electronic Chattel
Paper), Deposit Accounts, Letter-of-Credit Rights (whether or not the Letter
of
Credit is evidenced by a writing), Commercial Tort Claims, Investment Property,
Supporting Obligations, any other contract rights or rights to the payment
of
money, insurance claims and proceeds, tort claims, and all General Intangibles
(including all Payment Intangibles) (all of the same listed in this Section
2
being hereinafter called, the “Collateral”).
The
Lenders acknowledge that the attachment of its security interest in any
Commercial Tort Claim as original collateral is subject to the Company’s
compliance with Section 4(g).
3. Authorization
to File Financing Statements.
The
Company hereby irrevocably authorizes the Lenders at any time and from time
to
time to file in any Uniform Commercial Code or similar jurisdiction in a country
other than the United States any initial Financing Statements and amendments
thereto (or a statement of similar rights consistent with local laws and
regulations) that (a) indicate the Collateral (i) as all assets of the
Company or words of similar effect, regardless of whether any particular asset
included in the Collateral falls within the scope of Article 9 of the NYUCC,
or
(ii) as being of an equal or lesser scope or with greater detail, and
(b) contain any other information required by part 5 of Article 9 of the
NYUCC for the sufficiency or filing office acceptance of any Financing Statement
or amendment, including (i) whether the Company is an organization, the
type of organization and any organization identification number issued to the
Company and, (ii) in the case of a Financing Statement filed as a fixture
filing or indicating Collateral as as-extracted collateral or timber to be
cut,
a sufficient description of real property to which the Collateral relates.
The
Company agrees to furnish any such information to the Lenders promptly upon
request. To the extent the Lenders have previously filed any Financing Statement
with respect to any Collateral, the Company ratifies, confirms and approves
the
filing of same by the Lenders.
4. Other
Actions.
To
further insure the attachment, perfection and priority of, and the ability
of
the Lenders to enforce the Lenders’ security interest in the Collateral, the
Company agrees, in each case at the Company’s own expense, to take the following
actions with respect to the Collateral:
(a) Promissory
Notes and Tangible Chattel Paper.
If the
Company shall at any time hold or acquire any Promissory Notes or Tangible
Chattel Paper, the Company shall (when an Event of Default exists, unless
required otherwise by another Loan Document) forthwith endorse, assign and
deliver the same to the Lenders, accompanied by such instruments of transfer
or
assignment duly executed in blank as the Lenders may from time to time
specify.
(b) Deposit
Accounts.
For
each Deposit Account that the Company at any time opens or maintains, the
Company shall, at the Lenders’ request made at any time while an Event of
Default exists, pursuant to an agreement in form and substance satisfactory
to
the Lenders, either (1) cause the depositary bank to agree to comply at any
time with instructions from the Lenders to such depositary bank directing the
disposition of funds from time to time credited to such Deposit Account, without
further consent of the Company, or (2) arrange for the Lenders to become
the customer of the depositary bank with respect to the Deposit Account, with
the Company being permitted, only with the consent of the Lenders, to exercise
rights to withdraw funds from such Deposit Account. The Lenders agree with
the
Company that the Lenders shall not give any such instructions or withhold any
withdrawal rights from the Company unless a Payment Default exists (or would
exist after giving effect to any such withdrawal).
The
provisions of this paragraph shall not apply to (i) any Deposit Account for
which the Company, the depositary bank and the Lenders have entered into a
cash
collateral or “control” agreement specially negotiated among the Company, the
depositary bank and the Lenders for the purpose set forth herein,
(ii) Deposit Accounts for which the Lenders is the depositary and
(iii) Deposit Accounts specially and exclusively used for payroll, payroll
taxes and other employee wage and benefit payments to or for the benefit of
the
Company’s salaried employees.
(c) Investment
Property.
If the
Company shall at any time hold or acquire any Certificated Securities, the
Company shall forthwith endorse, assign and deliver the same to the Lenders,
accompanied by such instruments of transfer or assignment duly executed in
blank
as the Lenders may from time to time specify while an Event of Default exists.
If any securities now or hereafter acquired by the Company are uncertificated
and are issued to the Company or its nominee directly by the issuer thereof,
the
Company shall immediately notify the Lenders thereof and, at the Lenders’
request and option, pursuant to an agreement in form and substance satisfactory
to the Lenders, cause the issuer to agree to comply with instructions from
the
Lenders as to such securities, without further consent of the Company or such
nominee. If any securities, whether certificated or uncertificated, or other
Investment Property now or hereafter acquired by the Company are held by the
Company or its nominee through a Securities Intermediary or Commodity
Intermediary, the Company shall immediately notify the Lenders thereof and,
at
the Lenders’ request and option, pursuant to an agreement in form and substance
satisfactory to the Lenders, either (i) cause such Securities Intermediary
or (as the case may be) Commodity Intermediary to agree to comply with
entitlement orders or other instructions from the Lenders to such Securities
Intermediary as to such securities or other Investment Property, or (as the
case
may be) to apply any value distributed on account of any commodity contract
as
directed by the Lenders to such Commodity Intermediary, in each case without
further consent of the Company or such nominee, or (ii) in the case of
financial assets or other Investment Property held through a Securities
Intermediary, arrange for the Lenders to become the entitlement holder with
respect to such Investment Property, with the Company being permitted, only
with
the consent of the Lenders, to exercise rights to withdraw or otherwise deal
with such Investment Property. The Lenders agrees with the Company that the
Lenders shall not give any such entitlement orders or instructions or directions
to any such issuer, Securities Intermediary or Commodity Intermediary, and
shall
not withhold its consent to the exercise of any withdrawal or dealing rights
by
the Company, unless an Event of Default exists (or would exist after giving
effect to any such investment or withdrawal). The provisions of this paragraph
shall not apply to any financial assets credited to a securities account for
which the Lenders is the Securities Intermediary.
(d) Collateral
in the Possession of a Bailee.
If any
goods are at any time in the possession of a bailee, the Company shall promptly
notify the Lenders thereof and, if requested by the Lenders while an Event
of
Default exists, shall promptly obtain an acknowledgment from the bailee, in
form
and substance satisfactory to the Lenders, that the bailee holds such Collateral
for the benefit of the Lenders and shall act upon the instructions of the
Lenders, without the further consent of the Company.
(e) Electronic
Chattel Paper and Transferable Records.
If the
Company at any time holds or acquires an interest in any Electronic Chattel
Paper or any “transferable record,” as that term is defined in Section 201 of
the federal Electronic Signatures in Global and National Commerce Act, or in
§16
of the Uniform Electronic Transactions Act as in effect in any relevant
jurisdiction, the Company shall promptly notify the Lenders thereof and, at
the
request of the Lenders while an Event of Default exists, shall take such action
as the Lenders may reasonably request to vest in the Lenders control, under
§9-105 of the NYUCC, of such Electronic Chattel Paper or control under Section
201 of the federal Electronic Signatures in Global and National Commerce Act
or,
as the case may be, §16 of the Uniform Electronic Transactions Act, as so in
effect in such jurisdiction, of such transferable record.
(f) Letter-of-Credit
Rights.
If the
Company is at any time a beneficiary under a letter of credit now or hereafter
issued in favor of the Company, the Company shall promptly notify the Lenders
thereof and, at the request and option of the Lenders at any time when an Event
of Default exists, the Company shall, pursuant to an agreement in form and
substance satisfactory to the Lenders, either (i) arrange for the issuer
and any confirmer of such letter of credit to consent to an assignment to the
Lenders of the proceeds of any drawing under the letter of credit or
(ii) arrange for the Lender to become the transferee beneficiary of the
letter of credit, with the Lenders agreeing, in each case, that the proceeds
of
any drawing under the letter to credit shall be held as collateral for the
Secured Obligations.
(g) Commercial
Tort Claims.
If the
Company shall at any time hold or acquire a Commercial Tort Claim, the Company
shall immediately notify the Lenders in a writing signed by the Company of
the
brief details thereof and grant to the Lenders in such writing a security
interest therein and in the proceeds thereof while an Event of Default exists,
all upon the terms of this Agreement, with such writing to be in form and
substance satisfactory to the Lenders.
(h) Other
Actions as to any and all Collateral.
The
Company further agrees to take any other action reasonably requested by the
Lenders while an Event of Default exists to insure the attachment, perfection
and first priority of, and the ability of the Lenders to enforce, the Lenders’
security interest in any and all of the Collateral including, without
limitation, (1) executing, delivering and, where appropriate, filing
Financing Statements and amendments relating thereto under the Uniform
Commercial Code, to the extent, if any, that the Company’s signature thereon is
required therefor, (2) causing the Lenders’ name to be noted as secured
party on any certificate of title for a titled good if such notation is a
condition to attachment, perfection or priority of, or ability of the Lenders
to
enforce, the Lenders’ security interest in such Collateral, (3) complying
with any provision of any statute, regulation or treaty of the United States
or
any foreign jurisdiction to any Collateral if compliance with such provision
is
a condition to attachment, perfection or priority of (or comparable concepts
under the laws of the United States or any foreign jurisdiction), or ability
of
the Lenders to enforce, the Lenders’ security interest in such Collateral, (4)
making such filings in the United States Copyright Office and the United States
Patent and Trademark Office as the Lenders shall request to register, file
or
otherwise confirm Lenders’ security interest in intellectual property, or rights
therein, held by the Company, (5) obtaining governmental and other third
party consents and approvals, including without limitation any consent of any
licensor, lessor or other person obligated on Collateral, (6) obtaining
waivers from mortgagees and landlords in form and substance satisfactory to
the
Lenders and (7) 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.
5. Conflicts;
Other Jurisdictions.
In
the
case of any direct conflict between the provisions of this Agreement and any
other Transaction Document, whether governed by the laws of the United States,
any state therein or any other jurisdiction, those provisions shall control
which afford to the Secured Party the greater rights, security and
indemnification. Without limiting the generality of the foregoing, the parties
hereto acknowledge that the inclusion of supplemental rights or remedies in
favor of the Secured Party with respect to any Collateral in any such
Transaction Document shall not be deemed a conflict with this
Agreement.
6. Representations
and Warranties.
The
Company hereby makes the following representations and warranties to the
Lenders, which representations and warranties shall survive the execution,
delivery and performance of this Agreement and the other Transaction
Documents:
(a) Other
than as disclosed in Schedule 6(a), the Company does not have any liens, claims
or encumbrances filed on or against any of its assets or as do not materially
affect the value of such property and do not materially interfere with the
use
made and proposed to be made of such property by the Company, and liens for
the
payment of .
(b) The
Company will not incur any debt, other than bank debt, whether existing as
of
the date of this Agreement or accumulated in the future, totaling in the
aggregate not more than $12,000,000 (USD) that will hold a higher priority
security interest that would be considered senior to the Lenders’ interests.
(c) The
Company is the owner of, or has other rights in, the Collateral, free from
any
adverse lien, security interest or other encumbrance, except for the security
interest created by this Agreement and other liens permitted by the Transaction
Documents.
(d) None
of
the Collateral constitutes, or is the proceeds of, Farm Products.
(e) None
of
the account debtors or other persons obligated on any of the Collateral is
a
governmental authority subject to the Federal Assignment of Claims Act or like
federal, state or local statute or rule in respect of such
Collateral.
(f) The
Company holds no Commercial Tort Claim.
(g) The
Company has at all times operated its business in compliance with all applicable
provisions of the federal Fair Labor Standards Act, as amended, and with all
applicable provisions of federal, state and local statutes and ordinances
dealing with the control, shipment, storage or disposal of hazardous materials
or substances.
(h) On
the
date hereof, the Company does not hold or have any interest in (directly or
through a nominee or through a Securities Intermediary or Commodity
Intermediary) any Investment Property (whether Certificated Securities,
Uncertificated Securities or otherwise).
(i) On
the
date hereof:
(i) the
Company does not hold or otherwise have any interest in any Electronic Chattel
Paper or any such transferable record.
(ii) the
Company is not a beneficiary under a letter of credit issued in favor of the
Company.
(iii) the
Company possesses no rights in any material or significant copyrights,
regardless of whether same have been registered with the United States Copyright
Office or not.
7. Grant
of License to Use Patent and Trademark Collateral.
For the
purpose of enabling the Lenders to exercise rights and remedies hereunder at
such time (after the occurrence of an Event of Default) as the Lenders, without
regard to this Section 7,
shall
be lawfully entitled to exercise such rights and remedies, the Company hereby
grants to the Lenders (effective upon the occurrence of an Event of Default)
an
irrevocable, non-exclusive license (exercisable without payment of royalty
or
other compensation to the Company) to use, license or sublicense any Patent
or
Trademark now owned or hereafter acquired by the Company (or as to which Company
is now or hereafter a licensee) and wherever the same may be located, and
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 and automatic
machinery software and programs used for the compilation or printout
thereof.
8. Special
Provisions Concerning Trademarks and Patents.
(a) The
Company (either itself or through licensees) will, for each Patent, not do
any
act, or omit to do any act, whereby any Patent which is material to the conduct
of the Company’s business may become abandoned or dedicated.
(b) The
Company shall notify the Lenders immediately if it knows or has reason to know
that any application or registration relating to any Patent or Trademark which
is material to the conduct of the Company’s business may become abandoned or
dedicated, or of any adverse determination or development (including, without
limitation, the institution of, or any such determination or development in,
any
proceeding in the United States Patent and Trademark Office or any court)
regarding the Company’s ownership of any Patent or Trademark which is material
to the Company’s business, its right to register the same, or to keep and
maintain the same.
(c) In
no
event shall the Company, either itself or through any agent, employee, licensee
or designee, file an application for the registration of any Patent or Trademark
with the United States Patent and Trademark Office or any similar office or
agency in any other country or any political subdivision thereof, unless it
promptly informs the Lenders, and, upon request of the Lenders, executes and
delivers any and all agreements, instruments, documents, and papers as the
Lenders may request to evidence the Lenders’ security interest in such Patent or
Trademark and the goodwill and general intangibles of the Company relating
thereto or represented thereby, and the Company hereby constitutes the Lenders
its attorney-in-fact after an Event of Default has occurred to execute and
file
all such writings for the foregoing purposes, all acts of such attorney being
hereby ratified and confirmed; such power, being coupled with an interest,
is
irrevocable until the Secured Obligations are paid in full.
(d) The
Company will take all necessary steps that are consistent with good business
practices 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, to maintain and pursue each application relating to the
Patents (and to obtain the relevant registration) and to maintain each
registration of each of the Patents which is material to the conduct of the
Company’s business, including, without limitation, filing of applications for
renewal, affidavits of use, affidavits of incontestability and opposition,
interference and cancellation proceedings.
(e) In
the
event that any Collateral consisting of a Patent is infringed, misappropriated
or diluted by a third party, the Company shall notify the Lenders within thirty
(30) days after it learns thereof and shall, if consistent with good business
practice, promptly xxx for infringement, misappropriation or dilution and to
recover any and all damages for such infringement, misappropriation or dilution,
and take such other actions as are appropriate under the circumstances to
protect such Collateral consisting of a Patent.
(f) If,
before the Secured Obligations have been satisfied in full, the Company obtains
rights to any new trademark material to its business or new patent, or becomes
entitled to the benefit of any trademark material to its business or patent
application or patent for any reissue, division, continuation, renewal,
extension, or continuation-in-part of any Patent, or any improvement on any
Patent, or any Trademark, the provisions of Section 2
hereof
shall automatically apply thereto and the Company shall give the Lenders prompt
notice thereof in writing.
(g) The
Company shall have the duty, through counsel reasonably acceptable to the
Lenders, to prosecute diligently any patent or trademark application pending
as
of the date of this Agreement or thereafter until the Secured Obligations have
been paid in full, to make application on unpatented but patentable inventions
and to preserve and maintain all rights in patent and trademark applications;
provided,
however,
that
the Company shall have no obligation to make application on any unpatented
but
patentable inventions if making such application would be unnecessary or
imprudent in the good faith business judgment of the Company. Any expenses
incurred in connection with such an application shall be borne by the Company.
(h) The
Lenders shall have the right but shall in no way be obligated to bring suit
in
its own name to enforce the Patents and Trademarks and any license thereunder,
in which event the Company shall, at the request of the Lenders, do any and
all
lawful acts and execute any and all proper documents required by the Lenders
in
aid of such enforcement action and indemnify the Lenders for all costs and
expenses incurred by the Lenders in the exercise of its rights under this
Section (h).
(i) The
Company represents and warrants that (x) it has no Patents or Trademarks which
are material to the business or operations of the Company or otherwise important
to the Company except such as are listed on Schedule 8(i) attached hereto,
and
(y) it is not the holder, owner or licensee of any copyright (i) material to
its
business or (ii) which has been registered with the United States Copyright
Office.
(j) Until
the
occurrence of an Event of Default, the Lenders hereby grants to the Company
the
exclusive, nontransferable right and license to use the Trademarks and to make,
have made, use and sell the inventions disclosed and claimed in the Patents
for
the Company’s benefit and account and for none other. The Company agrees not to
sell or assign its interest in, or grant any sublicense under, the license
granted to the Company in this clause (j)
without
the prior written consent of the Lenders, which consent will not be unreasonably
withheld or delayed.
9. Covenants
Concerning Company’s Legal Status.
The
Company covenants with the Lenders as follows: (a) without providing at
least 60 days prior written notice to the Lenders, the Company will not change
its name, its place of business or, if more than one, chief executive office,
or
its mailing address or organizational identification number if it has one,
(b) if the Company does not have an organizational identification number
and later obtains one, the Company shall forthwith notify the Lenders of such
organizational identification number, and (c) the Company will not change
its type of organization, jurisdiction of organization or other legal
structure.
10. Covenants
Concerning Collateral, Etc.
The
Company further covenants with the Lenders as follows:
(a) The
Collateral, to the extent not delivered to the Lenders pursuant to Section
4,
will be
kept at those locations listed on Schedule 10 hereto, and the Company will
not
remove the Collateral from such locations (except for the sale of Inventory
in
the ordinary course of the Company’s business) without providing at least 60
days (or such lesser number of days agreed to at the relevant time by the
Lenders) prior written notice to the Lenders.
(b) Except
for the security interest herein granted and liens permitted by the Transaction
Documents: (1) the Company is and shall be the owner of or have other rights
in
the Collateral free from any lien, security interest or other encumbrance,
and
(2) the Company shall defend the same against all claims and demands of all
persons at any time claiming the same or any interests therein adverse to the
Lenders.
(c) The
Company shall not pledge, mortgage or create, or suffer to exist a security
interest in the Collateral in favor of any person other than the Lenders or
the
Company’s bank debt, whether existing as of the date of this Agreement or
accumulated in the future totaling in the aggregate up to $12,000,000, except
for liens permitted by the Transaction Documents and provided that the Lenders’
interests remain subordinate to the Company’s bank debt, whether existing as of
the date of this Agreement or accumulated in the future, totaling in the
aggregate up to $12,000,000.
(d) The
Company will keep the Collateral in good order and repair (reasonable wear
and
tear excepted) and will not use the same in violation of law or any policy
of
insurance thereon.
(e) The
Company will permit the Lenders, or its designee, to inspect the Collateral
(wherever located) at any reasonable time.
(f) The
Company will pay promptly when due all taxes, assessments, governmental charges
and levies upon the Collateral or incurred in connection with the use or
operation of such Collateral or incurred in connection with this Agreement
(except for taxes, assessments and government charges which are being contested
in good faith and by appropriate proceedings diligently conducted and the
Company has set aside on its books adequate reserves therefor in accordance
with
generally accepted accounting principles).
(g) The
Company will continue to operate its business in compliance with all applicable
provisions of the federal Fair Labor Standards Act, as amended, and with all
applicable provisions of federal, state and local statutes and ordinances
dealing with the control, shipment, storage or disposal of hazardous materials
or substances.
(h) The
Company will not sell or otherwise dispose, or offer to sell or otherwise
dispose, of the Collateral or any interest therein except for (1) sales and
leases of Inventory, and licenses of general intangibles, in the ordinary course
of the Company’s business, and (2) sales or other dispositions of items of
equipment in the ordinary course of business consistent with the Company’s past
practices except to the extent same is prohibited by the Note
(i) The
Company will, whenever the Company acquires or otherwise possesses any
significant or material copyrights or any rights or interests therein, provide
to the Lenders a list thereof, identified (to the extent applicable) by title,
author and Copyright Office registration number and date.
11. Insurance.
The
Company will maintain with financially sound and reputable insurers insurance
with respect to its properties and business against loss and damage by fire
and
other risks, casualties and contingencies in such manner and to the extent
that
like properties are customarily so insured by other corporations engaged in
the
same or similar business similarly situated. In the event of failure by the
Company to provide and maintain insurance as herein provided, the Lenders may,
at its option, provide such insurance and charge the amount thereof to the
Company. Lenders, to the extent applicable to the type of policy and provided
that the Lenders’ interests remain subordinate to the
Company’s bank debt, whether existing as of the date of this Agreement or
accumulated in the future, totaling in the aggregate up to
$12,000,000,
shall
hold a senior lien against any and all insurance proceeds subordinate only
to
the Company’s bank debt, whether existing as of the date of this Agreement or
accumulated in the future, totaling in the aggregate up to $12,000,000. If
reasonably practical, the Lenders shall be named as a loss payee (“as its
interests may appear” or like language); to the extent applicable and Lenders
are not so named, such will be done no later than ten days following the
Company’s execution hereof. Certificates of insurance naming Lenders as loss
payee shall be promptly delivered to Lenders; such certificate shall also state,
as to the policies referenced therein, that none of such policies shall be
cancelled by the insurer without at least 30 days prior written notice to
Lenders.
12. Collateral
Protection Expenses; Preservation of Collateral.
(a) Expenses
Incurred by Lenders.
In its
discretion, the Lenders may discharge taxes and other encumbrances at any time
levied or placed on any of the Collateral, make repairs thereto and pay any
necessary filing fees or, if the Company fails to do so, insurance premiums.
The
Company agrees to reimburse the Lenders on demand for any and all expenditures
so made. The Lenders shall have no obligation to the Company to make any such
expenditures, nor shall the making thereof relieve the Company of any
default.
(b) Lenders’
Obligations and Duties.
Anything herein to the contrary notwithstanding, the Company shall remain liable
for its obligations under each contract or agreement included in the Collateral.
The Lenders shall not have any obligation or liability under any such contract
or agreement by reason of or arising out of this Agreement or the receipt by
the
Lenders of any payment relating to any of the Collateral, nor shall the Lenders
be obligated in any manner to perform any of the obligations of the Company
under or pursuant to any such contract or agreement, to make inquiry as to
the
nature or sufficiency of any payment received by the Lenders in respect of
the
Collateral or as to the sufficiency of any performance by any party under any
such contract or agreement, to present or file any claim, to take any action
to
enforce any performance or to collect the payment of any amounts which may
have
been assigned to the Lenders or to which the Lenders may be entitled at any
time
or times. The Lenders’ sole duty with respect to the custody, safe keeping and
physical preservation of the Collateral in its possession, under §9-207 of the
NYUCC or otherwise, shall be to deal with such Collateral in the same manner
as
the Lenders deals with similar property for its own account.
13. Notification
to Account Debtors and Other Persons Obligated on Collateral.
Whenever an Event of Default exists, the Company shall, at the request of the
Lenders, notify account debtors and other persons obligated on any of the
Collateral of the security interest of the Lenders in any Account, Chattel
Paper, General Intangible, Instrument or other Collateral and that payment
thereof is to be made directly to the Lenders or to any financial institution
designated by the Lenders as the Lenders’ agent therefor, and the Lenders may
itself, whenever an Event of Default exists, without
notice to or demand upon the Company, so notify account debtors and other
persons obligated on Collateral. After the making of such a request or the
giving of any such notification, the Company shall hold as trustee for the
Lenders any Proceeds of collection of Accounts, Chattel Paper, General
Intangibles, Instruments and other Collateral received by the Company without
commingling the same with other funds of the Company and shall turn the same
over to the Lenders in the identical form received, together with any necessary
endorsements or assignments. The Lenders, at its option, shall apply the
Proceeds of collection of Accounts, Chattel Paper, General Intangibles,
Instruments and other Collateral received by the Lenders to the Secured
Obligations, such Proceeds to be immediately entered after final payment in
cash
or other immediately available funds of the items giving rise to them, or hold
such Proceeds as collateral for the Secured Obligations.
14. Power
of Attorney.
(a) Appointment
and Powers of Lenders.
The
Company hereby irrevocably constitutes and appoints the Lenders and any officer
or agent thereof, with full power of substitution, as its true and lawful
attorneys-in-fact with full irrevocable power and authority in the place and
stead of the Company or in the Lenders’ own name, for the purpose of carrying
out the terms of this Agreement, to take any and all appropriate action and
to
execute any and all documents and instruments that may be necessary or desirable
to accomplish the purposes of this Agreement and, without limiting the
generality of the foregoing, hereby gives said attorneys the power and right,
on
behalf of the Company, without notice to or assent by the Company, to do the
following:
(i) whenever
an Event of Default exists, generally to sell, transfer, pledge, make any
agreement with respect to or otherwise deal with any of the Collateral in such
manner as is consistent with the NYUCC and as fully and completely as though
the
Lenders were the absolute owner thereof for all purposes, and to do at the
Company’s expense, at any time, or from time to time, all acts and things which
the Lenders deems necessary to protect, preserve or realize upon the Collateral
and the Lenders’ security interest therein, in order to effect the intent of
this Agreement, all as fully and effectively as the Company might do, including,
without limitation, (i) the filing and prosecuting of registration and
transfer applications with the appropriate federal or local agencies or
authorities with respect to trademarks, copyrights and patentable inventions
and
processes, and (ii) the execution, delivery and recording, in connection
with any sale or other disposition of any Collateral, of the endorsements,
assignments or other instruments of conveyance or transfer with respect to
such
Collateral; and
(ii) to
the
extent that the Company’s authorization given in Section 3
is not
sufficient, to file such Financing Statements with respect hereto, with or
without the Company’s signature, or a photocopy of this Agreement in
substitution for a Financing Statement, as the Lenders may deem appropriate
and
to execute in the Company’s name such Financing Statements and amendments
thereto and continuation statements which may require the Company’s
signature.
(b) Ratification
by Company.
To the
extent permitted by law, the Company hereby ratifies all that said attorneys
shall lawfully do or cause to be done by virtue of this Agreement. This power
of
attorney is a power coupled with an interest and shall be
irrevocable.
(c) No
Duty on Lenders.
The
powers conferred on the Lenders hereunder are solely to protect its interests
in
the Collateral and shall not impose any duty upon it to exercise any such
powers. The Lenders shall be accountable only for the amounts that it actually
receives as a result of the exercise of such powers and neither it nor any
of
its officers, directors, employees or agents shall be responsible to the Company
for any act or failure to act, except for the Lenders’ own gross negligence or
willful misconduct.
15. Remedies.
Whenever an Event of Default exists, the Lenders may, without notice to or
demand upon the Company, declare this Agreement to be in default, and the
Lenders shall thereafter have in any jurisdiction in which enforcement hereof
is
sought, in addition to all other rights and remedies, the rights and remedies
of
a secured party under the NYUCC or of any other jurisdiction in which Collateral
is located, including, without limitation, the right to take possession of
the
Collateral, and for that purpose the Lenders may, so far as the Company can
give
authority therefor, enter upon any premises on which the Collateral may be
situated and remove the same therefrom. The Lenders may in its discretion
require the Company to assemble all or any part of the Collateral at such
location or locations within the jurisdiction(s) of the Company’s principal
office(s) or at such other locations as the Lenders may reasonably designate.
Unless the Collateral is perishable or threatens to decline speedily in value
or
is of a type customarily sold on a recognized market, the Lenders shall give
to
the Company at least five Business Days prior written notice of the time and
place of any public sale of Collateral or of the time after which any private
sale or any other intended disposition is to be made. The Company hereby
acknowledges that five Business Days prior written notice of such sale or sales
shall be reasonable notice. In addition, the Company waives any and all rights
that it may have to a judicial hearing in advance of the enforcement of any
of
the Lenders’ rights hereunder, including, without limitation, the Lenders' right
following an Event of Default to take immediate possession of the Collateral
and
to exercise its rights with respect thereto.
16. Standards
for Exercising Remedies.
To the
extent that applicable law imposes duties on the Lenders to exercise remedies
in
a commercially reasonable manner, the Company acknowledges and agrees that
it is
not commercially unreasonable for the Lenders (a) to incur or fail to incur
expenses reasonably deemed necessary by the Lenders to prepare Collateral for
disposition or otherwise to complete raw material or work in process into
finished goods or other finished products for disposition, (b) to fail to
obtain third party consents for access to Collateral to be disposed of, or
to
obtain or (if not required by other law) to fail to obtain governmental or
third
party consents for the collection or disposition of Collateral to be collected
or disposed of, (c) to fail to exercise collection remedies against account
debtors or other persons obligated on Collateral or to fail to remove liens
or
encumbrances on or any adverse claims against Collateral, (d) to exercise
collection remedies against account debtors and other persons obligated on
Collateral directly or through the use of collection agencies and other
collection specialists, (e) to advertise dispositions of Collateral through
publications or media of general circulation, whether or not the Collateral
is
of a specialized nature, (f) to contact other persons, whether or not in
the same business as the Company, for expressions of interest in acquiring
all
or any portion of the Collateral, (g) to hire or fail to hire one or more
professional auctioneers to assist in the disposition of Collateral, whether
or
not the collateral is of a specialized nature, (h) to dispose of Collateral
by utilizing Internet sites that provide for the auction of assets of the types
included in the Collateral or that have the reasonable capability of doing
so,
or that match buyers and sellers of assets, (i) to dispose of assets in
wholesale rather than retail markets, (j) to disclaim disposition
warranties, (k) to purchase insurance or credit enhancements to insure the
Lenders against risks of loss, collection or disposition of Collateral or to
provide to the Lenders a guaranteed return from the collection or disposition
of
Collateral, or (l) to the extent deemed appropriate by the Lenders, to
obtain the services of other brokers, investment bankers, consultants and other
professionals to assist the Lenders in the collection or disposition of any
of
the Collateral. The
Company acknowledges that the purpose of this Section 16
is to
provide non-exhaustive indications of what actions or omissions by the Lenders
would not be commercially unreasonable in the Lenders’ exercise of remedies
against the Collateral and that other actions or omissions by the Lenders shall
not be deemed commercially unreasonable solely on account of not being indicated
in this Section 16.
Without
limitation upon the foregoing, nothing contained in this
Section 16
shall be
construed to grant any rights to the Company or to impose any duties on the
Lenders that would not have been granted or imposed by this Agreement or by
applicable law in the absence of this Section 16.
17. No
Waiver by Lenders, etc.
The
Lenders shall not be deemed to have waived any of its rights upon or under
the
Secured Obligations or the Collateral unless such waiver shall be in writing
and
signed by the Lenders and any other person or entity required by the Note to
sign such waiver. No delay or omission on the part of the Lenders in exercising
any right shall operate as a waiver of such right or any other right. A waiver
on any one occasion shall not be construed as a bar to or waiver of any right
on
any future occasion. All rights and remedies of the Lenders with respect to
the
Secured Obligations or the Collateral, whether evidenced hereby or by any other
instrument or papers, shall be cumulative and may be exercised singularly,
alternatively, successively or concurrently at such time or at such times as
the
Lenders deems expedient.
18. Suretyship
Waivers by Company.
The
Company waives demand, notice, protest, notice of acceptance of this Agreement,
notice of loans made, credit extended, Collateral received or delivered or
other
action taken in reliance hereon and all other demands and notices of any
description. With respect to both the Secured Obligations and the Collateral,
the Company assents to any extension or postponement of the time of payment
or
any other indulgence, to any substitution, exchange or release of or failure
to
perfect any security interest in any Collateral, to the addition or release
of
any party or person primarily or secondarily liable, to the acceptance of
partial payment thereon and the settlement, compromising or adjusting of any
thereof, all in such manner and at such time or times as the Lenders may deem
advisable. The Lenders shall have no duty as to the collection or protection
of
the Collateral or any income thereon, nor as to the preservation of rights
against prior parties, nor as to the preservation of any rights pertaining
thereto beyond the safe custody thereof as set forth in Section
12(b).
The
Company further waives any and all other suretyship defenses.
19. Marshalling.
The
Lenders shall not be required to marshal any present or future collateral
security (including but not limited to this Agreement and the Collateral) for,
or other assurances of payment of, the Secured Obligations or any of them or
to
resort to such collateral security or other assurances of payment in any
particular order, and all of its rights hereunder and in respect of such
collateral security and other assurances of payment shall be cumulative and
in
addition to all other rights, however existing or arising. To the extent that
it
lawfully may, the Company hereby agrees that it will not invoke any law relating
to the marshalling of collateral which might cause delay in or impede the
enforcement of the Lenders’ rights under this Agreement or under any other
instrument creating or evidencing any of the Secured Obligations or under which
any of the Secured Obligations is outstanding or by which any of the Secured
Obligations is secured or payment thereof is otherwise assured, and, to the
extent that it lawfully may, the Company hereby irrevocably waives the benefits
of all such laws.
20. Proceeds
of Dispositions; Expenses.
The
Company shall pay to the Lenders on demand any and all expenses, including
reasonable attorneys’ fees and disbursements, incurred or paid by the Lenders in
protecting, preserving or enforcing the Lenders’ rights under or in respect of
any of the Secured Obligations or any of the Collateral, or otherwise in
connection with this Agreement. After deducting all of said expenses, the
residue of any proceeds of collection or sale of the Secured Obligations or
Collateral shall, to the extent actually received in cash, be applied to the
payment of the Secured Obligations in such order or preference as the Lenders
may determine or held by it as otherwise provided in the Note,
proper
allowance and provision being made for any Secured Obligations not then due.
Upon the final payment and satisfaction in full of all of the Secured
Obligations and after making any payments required by Sections 9-608(a)(1)(C)
or
9-615(a)(3) of the NYUCC or other applicable law, any excess shall be returned
to the Company, and the Company shall remain liable for any deficiency in the
payment of the Secured Obligations.
21. Overdue
Amounts.
Until
paid, all amounts due and payable by the Company hereunder shall be a debt
secured by the Collateral and shall bear, whether before or after judgment,
interest (to the fullest extent permitted by applicable law) at the rate of
eighteen percent (18%) per annum.
22. Governing
Law.
THIS
AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK WITHOUT REFERENCE TO CHOICE OF LAW DOCTRINE THAT WOULD RESULT IN THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION, except to the extent that
matters of title or procedural issues of foreclosure are required to be governed
by the laws of the state in which the Collateral, or part thereof, is
located.
23. Jurisdiction.
The
Company hereby agrees that ANY LEGAL ACTION OR PROCEEDING AGAINST THE COMPANY
WITH RESPECT TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT MAY BE BROUGHT
IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR
THE SOUTHERN DISTRICT OF NEW YORK AS THE LENDERS MAY ELECT, AND BY EXECUTION
AND
DELIVERY OF THIS AGREEMENT THE COMPANY ACCEPTS AND CONSENTS FOR ITSELF AND
IN
RESPECT TO ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF
THE
AFORESAID COURTS AND AGREES THAT SUCH JURISDICTION SHALL BE EXCLUSIVE, unless
waived by the Lenders in writing, with respect to any action or proceeding
brought by the Company against the Lenders, and further consents (to the extent
permitted by applicable law) to the service of process in any such action or
proceeding being made upon the Company by mail at the address stated alongside
its name on the signature page hereof or at such other address as the Lenders
are notified of in accordance with Section 24(g)
hereof.
The Company hereby waives any objection that it may now or hereafter have to
the
venue of any such suit or any such court or that such suit is brought in an
inconvenient court. Nothing herein shall limit the right of the Lenders to
bring
proceedings against the Company in the courts of any other jurisdiction. The
Company covenants that it is and will remain subject to service of process
in
the State of New York so long as any of the Secured Obligations is outstanding.
Nothing herein shall affect the right of the Lenders to serve process in any
other manner permitted by law.
24. Miscellaneous.
(a) No
Waiver.
No
delay on the part of the Lenders in exercising any of its rights, remedies,
powers and privileges hereunder or partial or single exercise thereof, shall
constitute a waiver thereof. None of the terms and conditions of this Agreement
may be changed, waived, modified or varied in any manner whatsoever unless
in
writing duly signed by the Company and the Lenders. No notice to or demand
on
the Company in any case shall entitle the Company to any other or further notice
or demand in similar or other circumstances or constitute a waiver of any of
the
rights of the Lenders to any other or further action in any circumstances
without notice or demand.
(b) Binding
Effect.
The
obligations of the Company hereunder shall remain in full force and effect
without regard to, and shall not be impaired by, (i) any bankruptcy, insolvency,
reorganization, arrangement, readjustment, composition, liquidation or the
like
of the Company; (ii) any exercise or non-exercise, or any waiver of, any right,
remedy, power or privilege under or in respect of this Agreement or any of
the
other Transaction Documents, any other agreement executed in connection with
any
of the foregoing whereby the Company has granted any Lien to the Lenders or
any
other agreement executed in connection with any of the foregoing, the Secured
Obligations or any security for any of the Secured Obligations; or (iii) any
amendment to or modification of any of the foregoing; whether or not the Company
shall have notice or knowledge of any of the foregoing. The rights and remedies
of the Lenders herein provided are cumulative and not exclusive of any rights
or
remedies which the Lenders would otherwise have.
(c) No
Violation.
All
rights, remedies and powers provided by this Agreement may be exercised only
to
the extent that the exercise thereof does not violate any applicable provision
of law, and the provisions hereof are intended to be subject to all applicable
mandatory provisions of law that may be controlling and to be limited to the
extent necessary so that they will not render this Agreement invalid,
unenforceable in whole or in part or not entitled to be recorded, registered
or
filed under the provisions of any applicable law.
(d) No
Obligation of Lenders.
It is
expressly agreed, anything herein, in the Transaction Documents or in any other
agreement or instrument executed by the Company in connection with any of the
Transaction Documents to the contrary notwithstanding, that the Company shall
remain liable to perform all of the obligations, if any, assumed by it with
respect to the Collateral and the Lenders shall not have any obligations or
liabilities with respect to any Collateral by reason of or arising out of this
Agreement, nor shall the Lenders be required or obligated in any manner to
perform or fulfill any of the obligations of the Company under or pursuant
to
any or in respect of any Collateral.
(e) Successors.
This
Agreement shall be binding upon the Company and its successors and assigns
and
shall inure to the benefit of the Lenders and their respective successors and
assigns, except that the Company may not transfer or assign any of its
obligations, rights or interest hereunder without the prior written consent
of
the Lenders and any such purported assignment by the Company shall be void.
All
agreements, representations and warranties made herein shall survive the
execution, delivery and performance of this Agreement.
(f) Headings;
Amendments.
The
descriptive headings of the several sections of this Agreement are inserted
for
convenience only and shall not in any way affect the meaning or construction
of
any provision of this Agreement. No provision of this Agreement shall be waived,
amended or supplemented except by a written instrument executed by the Company
and the Lenders.
(g) Severability.
Any
provision of this Agreement which 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
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in
any
other jurisdiction.
(h) Notices.
Any
notice or demand upon the Company pursuant to this Agreement or any other
Transaction Document shall be deemed to have been sufficiently given or served
for all purposes thereof when mailed, postage prepaid, by registered or
certified mail, return receipt requested, or when telegraphed, telecopied,
telexed or sent by messenger or by Federal Express (or similar overnight express
or courier service), to the Company at its address set forth below or at such
other address as the Company may designate in a writing delivered to the
Lenders, provided that in the case where the Lenders are required to give only
five days’ notice of a proposed sale of the Collateral such notice shall not be
deemed given until delivered to the chief executive office of the Company (or
the latest such chief executive office of which the Lenders have been notified
in accordance with the provisions hereof). All notices to the Lenders under
this
Agreement shall be deemed to have been given when delivered by mail, telegraph,
telecopy, telex, messenger or Federal Express (or similar overnight express
or
courier service) to the Lenders at their respective addresses set forth below
or
at such other address as the Lenders may designate in a writing delivered to
the
Company.
(i) Counterparts.
This
Agreement may be executed in any number of counterparts and by the different
parties hereto on separate counterparts, each of which when so executed and
delivered shall be an original, but all of which counterparts taken together
shall be deemed to constitute one and the same instrument. Telecopied signatures
hereto shall be of the same force and effect as an original of a manually signed
copy.
25. Waiver
of Jury Trial.
EACH OF
THE COMPANY AND THE LENDERS HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE ANY AND ALL RIGHTS EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED ON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF THE LENDERS,
THE
COMPANY OR ANY OTHER PERSON. Except
as
prohibited by law, the Company waives any other right which it may have to
claim
or recover in any litigation referred to in the preceding sentence any special,
exemplary, punitive or consequential damages or any damages other than, or
in
addition to, actual damages.
IN
WITNESS WHEREOF, the Company has caused this Agreement to be duly executed
as of
the date first above written.
|
By:
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Name:
Xxxxxx Xxxx
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Title:
Chief Executive Officer
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Address:
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5th
Floor, QPL Industrial Building
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000-000
Xxxxxx Xxxx
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Xxxxx
Xxx, Xxxx Xxxx
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PROFESSIONAL
OFFSHORE OPPORTUNITY FUND, LTD.
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By:
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Name:
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Title:
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Address:
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PROFESSIONAL
TRADERS FUND, LTD.
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By:
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Name:
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Title:
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SCHEDULE
6(a)
LIENS,
CLAIMS, AND ENCUMBRANCES
None.
SCHEDULE
8(i)
MATERIAL
PATENTS AND TRADEMARKS
Infoscience
Holdings Limited, a subsidiary of the Company, owns a patent for the production
of recordable digital versatile discs, which is material to the Company’s
business operations.
The
Company has no trademarks that are material to its business
operations.
SCHEDULE
10
LOCATION
OF COLLATERAL
5th
Floor,
QPL Industrial Building
000-000
Xxxxxx Xxxx
Xxxxx
Xxx, Xxxx Xxxx
