SECURITY AGREEMENT
EXHIBIT
4.7
SECURITY
AGREEMENT, dated as of March 7, 2006 (this “Agreement”),
among MCF Corporation, a Delaware corporation
(the
“Company”)
and MCF Asset Management LLC and its 99.9% owned subsidiary, MCF/NV Asset
Management, LLC, and MCF Wealth Management LLC and its whollly-owned subsdiary,
Catalyst
Financial Planning and Investment Management Corporation,
each a direct or indirect subsidiary of the Company
(such subsidiaries,
the “Guarantors”)
(the Company and Guarantors are collectively
referred to as the “Debtors”)
and the holder or holders of the Company’s Variable Rate Secured Debentures due
December 31, 2010 in the original aggregate principal amount of $7,500,000
(the
“Debentures”),
signatory hereto, their endorsees, transferees and assigns (collectively
referred to as, the “Secured
Parties”).
W
I T N E S S E T H:
WHEREAS,
pursuant to the Purchase Agreement (as defined in the Debentures), the Secured
Parties have severally agreed to extend the loans to the Company evidenced
by
the Debentures;
WHEREAS,
pursuant to a certain Subsidiary Guarantee dated as of the date hereof (the
“Guaranty”),
the
Guarantors
have jointly and severally agreed to guaranty and act as surety for payment
of
such loans; and
WHEREAS,
in order to induce the Secured Parties to extend the loans evidenced by the
Debentures, each Debtor has agreed to execute and deliver to the Secured Parties
this Agreement and to grant the Secured Parties, pari
passu
with each other Secured Party, a perfected security interest in certain property
of such Debtor to secure the prompt payment, performance and discharge in full
of all of the Company’s obligations under the Debentures and the other Debtor’s
obligations under the Guaranty.
NOW,
THEREFORE, in consideration of the agreements herein contained and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1.
Certain
Definitions.
As used in this Agreement, the following terms shall have the meanings set
forth
in this Section 1. Terms used but not otherwise defined in this Agreement that
are defined in Article 9 of the UCC (such as “account”, “chattel paper”,
“commercial tort claim”, “deposit account”, “document”, “equipment”, “fixtures”,
“general intangibles”, “goods”, “instruments”, “inventory”, “investment
property”, “letter-of-credit rights”, “proceeds” and “supporting obligations”)
shall have the respective meanings given such terms in Article 9 of the
UCC.
(a)
“Collateral”
means the collateral in which the Secured Parties are granted a security
interest by this Agreement and which shall include the following personal
property of the Debtors, whether presently owned or existing or hereafter
acquired or coming into existence, wherever situated, and all additions and
accessions thereto and all substitutions and replacements thereof, and all
proceeds, products and accounts thereof, including, without limitation, all
proceeds from the sale or transfer of the Collateral and of insurance covering
the same and of any tort claims in connection therewith,
and all dividends, interest, cash, notes, securities, equity interest or other
property at any time and from time to time acquired, receivable or otherwise
distributed in respect of, or in exchange for, any or all of the Pledged
Securities (as defined below):
(i)
All goods, including, without limitations, (A) all machinery, equipment,
computers, motor vehicles, trucks, tanks, boats, ships, appliances, furniture,
special and general tools, fixtures, test and quality control devices and other
equipment of every kind and nature and wherever situated, together with all
documents of title and documents representing the same, all additions and
accessions thereto, replacements therefor, all parts therefor, and all
substitutes for any of the foregoing and all other items used and useful in
connection with any Debtor’s businesses and all improvements thereto; and (B)
all inventory;
(ii)
All
contract rights and other general intangibles, including, without limitation,
all partnership interests, membership interests, stock or other securities,
rights
under any of the Organizational Documents, agreements related to the Pledged
Securities, licenses,
distribution and other agreements, computer software (whether “off-the-shelf”,
licensed from any third party or developed by any Debtor), computer software
development rights, leases, franchises, customer lists, quality control
procedures, grants and rights, goodwill, trademarks, service marks, trade
styles, trade names, patents, patent applications, copyrights, and income tax
refunds;
(iii)
All
accounts, together with all instruments, all documents of title representing
any
of the foregoing, all rights in any merchandising, goods, equipment, motor
vehicles and trucks which any of the same may represent, and all right, title,
security and guaranties with respect to each account, including any right of
stoppage in transit;
(iv)
All
documents, letter-of-credit rights, instruments and chattel paper;
(v) All
commercial tort claims;
(vi) All
deposit accounts and all cash (whether or not deposited in such deposit
accounts);
(vii) All
investment property;
(viii) All
supporting obligations; and
(ix) All
files, records, books of account, business papers, and computer programs;
and
(x) the
products and proceeds of all of the foregoing Collateral set forth in clauses
(i)-(ix) above.
Without
limiting the generality of the foregoing, the “Collateral”
shall include all investment property and general intangibles respecting
ownership and/or other equity interests in each Guarantor, including, without
limitation, the shares of capital stock and the other equity interests listed
on
Schedule
A
hereto (as the same may be modified from time to time pursuant to the terms
hereof), and any other shares of capital stock and/or other equity interests
of
any other direct or indirect subsidiary of any Debtor obtained in the future,
and, in each case, all certificates representing such shares and/or equity
interests and, in each case, all rights, options, warrants, stock, other
securities and/or equity interests that may hereafter be received, receivable
or
distributed in respect of, or exchanged for, any of the foregoing (all of the
foregoing being referred to herein as the “Pledged
Securities”)
and all rights arising under or in connection with the Pledged Securities,
including, but not limited to, all dividends, interest and cash;
provided, however, that notwithstanding the foregoing, or any other provision
in
this Agreement to the contrary, the terms “Collateral” and “Pledged Securities”
shall not include any capital stock, investment property and general intangibles
respecting ownership and/or other equity interests in Xxxxxxxx Curhan Ford
&
Co. nor any customer assets of Xxxxxxxx Curhan Ford & Co. or other assets of
Xxxxxxxx Curhan Ford & Co.
Notwithstanding
the foregoing, nothing herein shall be deemed to constitute an assignment of
any
asset which, in the event of an assignment, becomes void by operation of
applicable law or the assignment of which is otherwise prohibited by applicable
law (in each case to the extent that such applicable law is not overridden
by
Sections 9-406, 9-407 and/or 9-408 of the UCC or other similar applicable law);
provided, however, that to the extent permitted by applicable law, this
Agreement shall create a valid security interest in such asset and, to the
extent permitted by applicable law, this Agreement shall create a valid security
interest in the proceeds of such asset.
(b)
“Intellectual
Property”
means the collective reference to all rights, priorities and privileges relating
to intellectual property, whether arising under United States, multinational
or
foreign laws or otherwise, including, without limitation, (i) all copyrights
arising under the laws of the United States, any other country or any political
subdivision thereof, whether registered or unregistered and whether published
or
unpublished, all registrations and recordings thereof, and all applications
in
connection therewith, including, without limitation, all registrations,
recordings and applications in the United States Copyright Office, (ii) all
letters patent of the United States, any other country or any political
subdivision thereof, all reissues and extensions thereof, and all applications
for letters patent of the United States or any other country and all divisions,
continuations and continuations-in-part thereof, (iii) all trademarks, trade
names, corporate names, company names, business names, fictitious business
names, trade dress, service marks, logos, domain names and other source or
business identifiers, and all goodwill associated therewith, now existing or
hereafter adopted or acquired, all registrations and recordings thereof, and
all
applications in connection therewith, whether in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
State thereof or any other country or any political subdivision thereof, or
otherwise, and all common law rights related thereto, (iv) all trade secrets
arising under the laws of the United States, any other country or any political
subdivision thereof, (v) all rights to obtain any reissues, renewals or
extensions of the foregoing, (vi) all licenses for any of the foregoing, and
(vii) all causes of action for infringement of the foregoing.
(c) “Majority
in Interest”
shall mean, at any time of determination, the majority in interest (based on
then-outstanding principal amounts of Debentures at the time of such
determination) of the Secured Parties.
(d) “Necessary
Endorsement”
shall mean undated stock powers endorsed in blank or other proper instruments
of
assignment duly executed and such other instruments or documents as the Agent
(as that term is defined below) may reasonably request.
(e)
“Obligations”
means all of the liabilities
and obligations (primary, secondary, direct, contingent, sole, joint or several)
due or to become due, or that are now or may be hereafter contracted or
acquired, or owing to, of any Debtor to the Secured Parties, including, without
limitation, all
obligations under this Agreement, the Debentures, the Guaranty and any other
instruments, agreements or other documents executed and/or delivered in
connection herewith or therewith, in each case, whether now or hereafter
existing, voluntary or involuntary, direct or indirect, absolute or contingent,
liquidated or unliquidated, whether or not jointly owed with others, and whether
or not from time to time decreased or extinguished and later increased, created
or incurred, and all or any portion of such obligations or liabilities that
are
paid, to the extent all or any part of such payment is avoided or recovered
directly or indirectly from any of the Secured Parties as a preference,
fraudulent transfer or otherwise as such obligations may be amended,
supplemented, converted, extended or modified from time to time. Without
limiting the generality of the foregoing, the term “Obligations” shall include,
without limitation: (i) principal of, and interest on the Debentures and the
loans extended pursuant thereto; (ii) any and all other fees, indemnities,
costs, obligations and liabilities of the Debtors from time to time under or
in
connection with this Agreement, the Debentures, the Guaranty and any other
instruments, agreements or other documents executed and/or delivered in
connection herewith or therewith; and (iii) all amounts (including but not
limited to post-petition interest) in respect of the foregoing that would be
payable but for the fact that the obligations to pay such amounts are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving any Debtor.
(f)
“Organizational
Documents”
means with respect to any Debtor, the documents by which such Debtor was
organized (such as a certificate of incorporation, certificate of limited
partnership or articles of organization, and including, without limitation,
any
certificates of designation for preferred stock or other forms of preferred
equity) and which relate to the internal governance of such Debtor (such as
bylaws, a partnership agreement or an operating, limited liability or members
agreement).
(g)
“UCC”
means the Uniform Commercial Code of the State of New York and or any other
applicable law of any state or states which has jurisdiction with respect to
all, or any portion of, the Collateral or this Agreement, from time to time.
It
is the intent of the parties that defined terms in the UCC should be construed
in their broadest sense so that the term “Collateral” will be construed in its
broadest sense. Accordingly if there are, from time to time, changes to defined
terms in the UCC that broaden the definitions, they are incorporated herein
and
if existing definitions in the UCC are broader than the amended definitions,
the
existing ones shall be controlling.
(h) All
references herein to “Subsidiary” or “subsidiaries” shall not include Xxxxxxxx
Curhan Ford & Co.
2.
Grant
of Perfected First Priority Security Interest.
As an inducement for the Secured Parties to extend the loans as evidenced by
the
Debentures and to secure the complete and timely payment, performance and
discharge in full, as the case may be, of all of the Obligations, each Debtor
hereby unconditionally and irrevocably pledges, grants and hypothecates to
the
Secured Parties a continuing and perfected security interest in and to, a lien
upon and a right of set-off against all of their respective right, title and
interest of whatsoever kind and nature in and to, the Collateral (the
“Security
Interest”).
3. [Intentionally
Omitted].
4. Representations,
Warranties, Covenants and Agreements of the Debtors.
Each Debtor represents and warrants to, and covenants and agrees with, the
Secured Parties as follows:
(a)
Each Debtor has the requisite corporate, partnership, limited liability company
or other power and authority to enter into this Agreement and otherwise to
carry
out its obligations hereunder. The execution, delivery and performance by each
Debtor of this Agreement and the filings contemplated therein have been duly
authorized by all necessary action on the part of such Debtor and no further
action is required by such Debtor. This Agreement has been duly executed by
each
Debtor. This Agreement constitutes the legal, valid and binding obligation
of
each Debtor, enforceable against each Debtor in accordance with its terms except
as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization and similar laws of general application relating to or affecting
the rights and remedies of creditors and by general principles of
equity.
(b)
The
Debtors have no place of business or offices where their respective books of
account and records are kept (other than temporarily at the offices of its
attorneys or accountants) or places where Collateral is stored or located,
except as set forth on Schedule
B
attached hereto. Except as specifically set forth on Schedule
B,
each Debtor is the record owner of the real property where such Collateral
is
located, and there exist no mortgages or other liens on any such real property
except for Permitted Liens (as defined in the Debentures). Except as disclosed
on Schedule
B,
none of such Collateral is in the possession of any consignee, bailee,
warehouseman, agent or processor.
(c)
Except
for Permitted Liens (as defined in the Debentures) and except as set forth
on
Schedule
C
attached hereto, the Debtors are the sole owner of the Collateral (except for
non-exclusive licenses granted by any Debtor in the ordinary course of
business), free and clear of any liens, security interests, encumbrances, rights
or claims, and are fully authorized to grant the Security Interest. Except
as
set forth on Schedule
C
hereto, there is not on file in any governmental or regulatory authority, agency
or recording office an effective financing statement, security agreement,
license or transfer or any notice of any of the foregoing (other than those
that
will be filed in favor of the Secured Parties pursuant to this Agreement)
covering or affecting any of the Collateral. So long as this Agreement shall
be
in effect, the Debtors shall not execute and shall not knowingly permit to
be on
file in any such office or agency any such financing statement or other document
or instrument (except to the extent filed or recorded in favor of the Secured
Parties pursuant to the terms of this Agreement).
(d)
No
written claim has been received that any Collateral or Debtor's use of any
Collateral violates the rights of any third party. There has been no adverse
decision to any Debtor's claim of ownership rights in or exclusive rights to
use
the Collateral in any jurisdiction or to any Debtor's right to keep and maintain
such Collateral in full force and effect, and there is no proceeding involving
said rights pending or, to the best knowledge of any Debtor, threatened before
any court, judicial body, administrative or regulatory agency, arbitrator or
other governmental authority.
(e)
Each
Debtor shall at all times maintain its books of account and records relating
to
the Collateral at its principal place of business and its Collateral at the
locations set forth on Schedule
B
attached hereto and may not relocate such books of account and records or
tangible Collateral unless it delivers to the Secured Parties at least 30 days
prior to such relocation (i) written notice of such relocation and the new
location thereof (which must be within the United States) and (ii) evidence
that
appropriate financing statements under the UCC and other necessary documents
have been filed and recorded and other steps have been taken to perfect the
Security Interest to create in favor of the Secured Parties a valid, perfected
and continuing perfected first priority lien in the Collateral.
(f)
This
Agreement creates in favor of the Secured Parties a valid, security interest
in
the Collateral, subject only to Permitted Liens (as defined in the Debentures)
securing the payment and performance of the Obligations. Upon making the filings
described in the immediately following paragraph, all security interests created
hereunder in any Collateral which may be perfected by filing Uniform Commercial
Code financing statements shall have been duly perfected. Except for the filing
of the Uniform Commercial Code financing statements referred to in the
immediately following paragraph,
no action is necessary to create, perfect or protect the security interests
created hereunder to the extent such security interests can be perfected by
filing a UCC financing statement. Without limiting the generality of the
foregoing, except for the filing of said financing statements, no consent of
any
third parties and no authorization, approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body is required
for
(i) the execution, delivery and performance of this Agreement, (ii) the creation
or perfection of the Security Interests created hereunder in the Collateral
to
the extent such security interests can be perfected by filing a UCC financing
statement or (iii) the enforcement of the rights of the Secured Parties
hereunder.
(g)
Each
Debtor hereby authorizes the Secured Parties, or any of them, to file one or
more financing statements under the UCC, with respect to the Security Interest
with the proper filing and recording agencies in any jurisdiction deemed proper
by them.
(h)
[Intentionally
Omitted].
(i)
The
capital stock and other equity interests listed on Schedule
A
hereto represent all of the capital stock and other equity interests of the
Guarantors, and represent all capital stock and other equity interests owned,
directly or indirectly, by the Company other than the equity interests in
Xxxxxxxx Curhan Ford & Co. All of the Pledged Securities are validly issued,
fully paid and nonassessable, and the Company is the legal and beneficial owner
of the Pledged Securities, free and clear of any lien, security interest or
other encumbrance except for the security interests created by this Agreement
and other Permitted Liens (as defined in the Debenture).
(j)
The
ownership and other equity interests in partnerships and limited liability
companies (if any)
included in the Collateral
(the “Pledged
Interests”)
by their express terms do not provide that they are securities governed by
Article 8 of the UCC and are not held in a securities account or by any
financial intermediary.
(k)
Each
Debtor shall at all times maintain the liens and Security Interest provided
for
hereunder as valid and perfected first priority liens and security interests
in
the Collateral in favor of the Secured Parties until this Agreement and the
Security Interest hereunder shall be terminated pursuant to Section 14 hereof.
Each Debtor hereby agrees to defend the same against the claims of any and
all
persons and entities. Each Debtor shall safeguard and protect all Collateral
for
the account of the Secured Parties. At the request of the Secured Parties,
each
Debtor will sign and deliver to the Secured Parties at any time or from time
to
time one or more financing statements pursuant to the UCC in form reasonably
satisfactory to the Secured Parties and will pay the cost of filing the same
in
all public offices wherever filing is, or is deemed by the Secured Parties
to
be, necessary or desirable to effect the rights and obligations provided for
herein. Without limiting the generality of the foregoing, each Debtor shall
pay
all fees, taxes and other amounts necessary to maintain the Collateral and
the
Security Interest hereunder, and each Debtor shall obtain and furnish to the
Secured Parties from time to time, upon demand, such releases and/or
subordinations of claims and liens which may be required to maintain the
priority of the Security Interest hereunder.
(l)
No
Debtor will transfer, pledge, hypothecate, encumber, license, sell or otherwise
dispose of any of the Collateral except as permitted under the Transaction
Documents without the prior written consent of the
Agent.
(m) Each
Debtor shall keep and preserve its equipment, inventory and other tangible
Collateral in good condition, repair and order and shall not operate or locate
any such Collateral (or cause to be operated or located) in any area excluded
from insurance coverage.
(n) [Intentionally
Omitted].
(o)
Each
Debtor shall, within ten (10) days of obtaining knowledge thereof, advise the
Secured Parties promptly, in sufficient detail, of any substantial change in
the
Collateral, and of the occurrence of any event which would have a material
adverse effect on the value of the Collateral or on the Secured Parties’
security interest therein.
(p)
Each
Debtor shall promptly execute and deliver to the Secured Parties such further
deeds, mortgages, assignments, security agreements, financing statements or
other instruments, documents, certificates and assurances and take such further
action as the Secured Parties may from time to time request and may in its
sole
discretion deem necessary to perfect, protect or enforce its security interest
in the Collateral.
(q)
Upon
reasonable notice, each Debtor shall permit the Secured Parties and their
representatives and agents to inspect the Collateral at any time during business
hours, and to make copies of records pertaining to the Collateral as may be
requested by a Secured Party from time to time.
(r)
Each
Debtor shall take all steps reasonably necessary to diligently pursue and seek
to preserve, enforce and collect any rights, claims, causes of action and
accounts receivable in respect of the Collateral.
(s)
Each
Debtor shall promptly notify the Secured Parties in sufficient detail upon
becoming aware of any attachment, garnishment, execution or other legal process
levied against any Collateral and of any other information received by such
Debtor that may materially affect the value of the Collateral, the Security
Interest or the rights and remedies of the Secured Parties
hereunder.
(t)
All
information heretofore, herein or hereafter supplied to the Secured Parties
by
or on behalf of any Debtor with respect to the Collateral is accurate and
complete in all material respects as of the date furnished.
(u)
The
Debtors shall at all times preserve and keep in full force and effect their
respective valid existence and good standing and any rights and franchises
material to its business.
(v)
No
Debtor will change its name, type of organization, jurisdiction of organization,
organizational identification number (if it has one), legal or corporate
structure, or identity, or add any new fictitious name unless it provides at
least 30 days prior written notice to the Secured Parties of such change and,
at
the time of such written notification, such Debtor provides any financing
statements or fixture filings necessary to perfect and continue perfected the
perfected security Interest granted and evidenced by this
Agreement.
(w) [Intentionally
omitted].
(x)
No
Debtor may relocate its chief executive office to a new location without
providing 30 days prior written notification thereof to the Secured Parties
and
so long as, at the time of such written notification, such Debtor provides
any
financing statements or fixture filings necessary to perfect and continue
perfected the perfected security Interest granted and evidenced by this
Agreement.
(y) Each
Debtor was organized and remains organized solely under the laws of the state
set forth next to such Debtor’s name in the first paragraph of this Agreement.
Schedule
D
attached hereto sets forth each Debtor’s organizational identification number
or, if any Debtor does not have one, states that one does not
exist.
(z)
(i) The actual name of each Debtor is the name set forth in the preamble above;
(ii) no Debtor has any trade names except as set forth on Schedule
E
attached hereto; (iii) no Debtor has used any name other than that stated in
the
preamble hereto or as set forth on Schedule
E
for the preceding five years; and (iv) no entity has merged into any Debtor
or
been acquired by any Debtor within the past five years except as set forth
on
Schedule
E.
(aa) At
any time and from time to time that any Collateral consists of instruments,
certificated securities or other items that require or permit possession by
the
secured party to perfect the security interest created hereby, the applicable
Debtor shall deliver such Collateral to the Agent.
(bb)
Each
Debtor, in its capacity as issuer, hereby agrees to comply with any and all
orders and instructions of Agent regarding the Pledged Interests consistent
with
the terms of this Agreement without the further consent of any Debtor as
contemplated by Section 8-106 (or any successor section) of the UCC. Further,
each Debtor agrees that it shall not enter into a similar agreement (or one
that
would confer “control” within the meaning of Article 8 of the UCC) with any
other person or entity.
(cc) Upon
request of the Agent, each Debtor shall cause all tangible chattel paper
constituting Collateral to be delivered to the Agent, or, if such delivery
is
not possible, then to cause such tangible chattel paper to contain a legend
noting that it is subject to the security interest created by this Agreement.
To
the extent that any Collateral consists of electronic chattel paper, the
applicable Debtor shall cause the underlying chattel paper to be “marked” within
the meaning of Section 9-105 of the UCC (or successor section
thereto).
(dd) If
there is any investment property or deposit account included as Collateral
that
can be perfected by “control” through an account control agreement, upon request
of the Agent, the applicable Debtor shall cause such an account control
agreement, in form and substance in each case satisfactory to the Secured
Parties, to be entered into and delivered to the Secured Parties.
(ee)
To
the extent that any Collateral consists of letter-of-credit rights, upon request
of the Agent, the applicable Debtor shall cause the issuer of each underlying
letter of credit to consent to an assignment of the proceeds thereof to the
Secured Parties.
(ff)
To
the extent that any Collateral is in the possession of any third party, the
applicable Debtor shall join with the Secured Parties in notifying such third
party of the Secured Parties’ security interest in such Collateral and shall use
its best efforts to obtain an acknowledgement and agreement from such third
party with respect to the Collateral, in form and substance satisfactory to
the
Secured Parties.
(gg) If
any Debtor shall at any time hold or acquire a commercial tort claim where
the
claimed amount is in excess of $100,000, such Debtor shall promptly notify
the
Agent in a writing signed by such Debtor of the particulars thereof and, upon
the request of the Agent, grant to the Secured Parties in such writing a
security interest therein and in the proceeds thereof, all upon the terms of
this Agreement, with such writing to be in form and substance satisfactory
to
the Agent.
(hh) [Intentionally
Omitted].
(ii) Each
Debtor shall cause each subsidiary
of such Debtor (other than Xxxxxxxx Curhan Ford & Co., or any future
registered broker-dealer ) to immediately become a party hereto (an
“Additional
Debtor”),
by executing and delivering an Additional Debtor Joinder in substantially the
form of Annex
A
attached hereto and comply with the provisions hereof applicable to the Debtors.
Concurrent therewith, the Additional Debtor shall deliver replacement schedules
for, or supplements to all other Schedules to (or referred to in) this
Agreement, as applicable, which replacement schedules shall supersede, or
supplements shall modify, the Schedules then in effect. The Additional Debtor
shall also deliver such opinions of counsel, authorizing resolutions, good
standing certificates, incumbency certificates, organizational documents,
financing statements and other information and documentation as the Secured
Parties may reasonably request. Upon delivery of the foregoing to the Secured
Parties, the Additional Debtor shall be and become a party to this Agreement
with the same rights and obligations as the Debtors, for all purposes hereof
as
fully and to the same extent as if it were an original signatory hereto and
shall be deemed to have made the representations, warranties and covenants
set
forth herein as of the date of execution and delivery of such Additional Debtor
Joinder, and all references herein to the “Debtors” shall be deemed to include
each Additional Debtor.
(jj)
Each
Debtor shall vote the Pledged Securities to comply with the covenants and
agreements set forth herein and in the Debentures.
(kk) Each
Debtor shall register the pledge of the applicable Pledged Securities on the
books of such Debtor. Each Debtor shall notify each issuer of Pledged Securities
to register the pledge of the applicable Pledged Securities in the name of
the
Secured Parties on the books of such issuer. Further, except with respect to
certificated securities delivered to the Agent, the applicable Debtor shall
deliver to Agent an acknowledgement of pledge (which, where appropriate, shall
comply with the requirements of the relevant UCC with respect to perfection
by
registration) signed by the issuer of the applicable Pledged Securities, which
acknowledgement shall confirm that: (a) it has registered the pledge on its
books and records; and (b) at any time directed by Agent during the continuation
of an Event of Default, such issuer will transfer the record ownership of such
Pledged Securities into the name of any designee of Agent, will take such steps
as may be necessary to effect the transfer, and will comply with all other
instructions of Agent regarding such Pledged Securities without the further
consent of the applicable Debtor.
(ll)
In
the event that, upon an occurrence of an Event of Default, Agent shall sell
all
or any of the Pledged Securities to another party or parties (herein called
the
“Transferee”)
or shall purchase or retain all or any of the Pledged Securities, each Debtor
shall, to the extent applicable: (i) deliver to Agent or the Transferee, as
the
case may be, the articles of incorporation, bylaws, minute books, stock
certificate books, corporate seals, deeds, leases, indentures, agreements,
evidences of indebtedness, books of account, financial records and all other
Organizational Documents and records of the Debtors and their direct and
indirect subsidiaries; (ii) use its best efforts to obtain resignations of
the
persons then serving as officers and directors of the Debtors and their direct
and indirect subsidiaries, if so requested; and (iii) use its best efforts
to
obtain any approvals that are required by any governmental or regulatory body
in
order to permit the sale of the Pledged Securities to the Transferee or the
purchase or retention of the Pledged Securities by Agent and allow the
Transferee or Agent to continue the business of the Debtors and their direct
and
indirect subsidiaries.
(mm) Without
limiting the generality of the other obligations of the Debtors hereunder,
each
Debtor shall promptly (i) cause to be registered at the United States Copyright
Office all of its material copyrights, if any, (ii) cause the security interest
contemplated hereby with respect to all Intellectual Property registered at
the
United States Copyright Office or United States Patent and Trademark Office
to
be duly recorded at the applicable office, upon request of the Agent and (iii)
give the Agent notice whenever it acquires (whether absolutely or by license)
or
creates any additional material Intellectual Property.
(nn) Each
Debtor will from time to time, at the joint and several expense of the Debtors,
promptly execute and deliver all such further instruments and documents, and
take all such further action as may be reasonably necessary or desirable, or
as
the Secured Parties may reasonably request, in order to perfect and protect
any
security interest granted or purported to be granted hereby or to enable the
Secured Parties to exercise and enforce their rights and remedies hereunder
and
with respect to any Collateral or to otherwise carry out the purposes of this
Agreement.
5. Effect
of Pledge on Certain Rights. If
any of the Collateral subject to this Agreement consists of nonvoting equity
or
ownership interests (regardless of class, designation, preference or rights)
that may be converted into voting equity or ownership interests upon the
occurrence of certain events (including, without limitation, upon the transfer
of all or any of the other stock or assets of the issuer), it is agreed that
the
pledge of such equity or ownership interests pursuant to this Agreement or
the
enforcement of any of Agent’s rights hereunder shall not be deemed to be the
type of event which would trigger such conversion rights notwithstanding any
provisions in the Organizational Documents or agreements to which any Debtor
is
subject or to which any Debtor is party.
6.
Defaults.
The occurrence of an Event of Default (as defined in the Debenture) under the
Debenture shall be deemed an “Event of Default” hereunder.
7. Duty
To Hold In Trust.
(a) Upon
the occurrence of any Event of Default and at any time thereafter, each Debtor
shall, upon receipt of any revenue, income,
dividend, interest
or other sums subject to the Security Interest, whether payable pursuant to
the
Debentures or otherwise, or of any check, draft, note, trade acceptance or
other
instrument evidencing an obligation to pay any such sum, hold the same in trust
for the Secured Parties and shall forthwith endorse and transfer any such sums
or instruments, or both, to the Secured Parties, pro-rata in proportion to
their
initial purchases of Debentures for application to the satisfaction of the
Obligations (and if any Debenture is not outstanding, pro-rata in proportion
to
the initial purchases of the remaining Debentures).
(b) If
any Debtor shall become entitled to receive or shall receive any securities
or
other property (including, without limitation, shares of Pledged Securities
or
instruments representing Pledged Securities acquired after the date hereof,
or
any options, warrants, rights or other similar property or certificates
representing a dividend, or any distribution in connection with any
recapitalization, reclassification or increase or reduction of capital, or
issued in connection with any reorganization of such Debtor or any of its direct
or indirect subsidiaries) in respect of the Pledged Securities (whether as
an
addition to, in substitution of, or in exchange for, such Pledged Securities
or
otherwise), such Debtor agrees to (i) accept the same as the agent of the
Secured Parties; (ii) hold the same in trust on behalf of and for the benefit
of
the Secured Parties; and (iii) to deliver any and all certificates or
instruments evidencing the same to Agent on or before the close of business
on
the fifth business day following the receipt thereof by such Debtor, in the
exact form received together with the Necessary Endorsements, to be held by
Agent subject to the terms of this Agreement as Collateral.
8. Rights
and Remedies Upon Default.
(a) Upon
the occurrence of any Event of Default and at any time thereafter, the Secured
Parties, acting through any agent appointed by them for such purpose, shall
have
the right to exercise all of the remedies conferred hereunder and under the
Debentures, and the Secured Parties shall have all the rights and remedies
of a
secured party under the UCC. Without limitation, the Secured Parties shall
have
the following rights and powers:
(i)
The Secured Parties shall have the right to take possession of the Collateral
and, for that purpose, enter, with the aid and assistance of any person, any
premises where the Collateral, or any part thereof, is or may be placed and
remove the same, and each Debtor shall assemble the Collateral and make it
available to the Secured Parties at places which the Secured Parties shall
reasonably select, whether at such Debtor's premises or elsewhere, and make
available to the Secured Parties, without rent, all of such Debtor’s respective
premises and facilities for the purpose of the Secured Parties taking possession
of, removing or putting the Collateral in saleable or disposable
form.
(ii) Upon
notice to the Debtors by Agent, all rights of each Debtor to exercise the voting
and other consensual rights which it would otherwise be entitled to exercise
and
all rights of each Debtor to receive the dividends and interest which it would
otherwise be authorized to receive and retain, shall cease. Upon such notice,
Agent shall have the right to receive any interest, cash dividends or other
payments on the Collateral and, at the option of Agent, to exercise in such
Agent’s discretion all voting rights pertaining thereto. Without limiting the
generality of the foregoing, Agent shall have the right (but not the obligation)
to exercise all rights with respect to the Collateral as it were the sole and
absolute owners thereof, including, without limitation, to vote and/or to
exchange, at its sole discretion, any or all of the Collateral in connection
with a merger, reorganization, consolidation, recapitalization or other
readjustment concerning or involving the Collateral or any Debtor or any of
its
direct or indirect subsidiaries.
(iii)
The Secured Parties shall have the right to assign, sell, lease or otherwise
dispose of and deliver all or any part of the Collateral, at public or private
sale or otherwise, either with or without special conditions or stipulations,
for cash or on credit or for future delivery, in such parcel or parcels and
at
such time or times and at such place or places, and upon such terms and
conditions as the Secured Parties may deem commercially reasonable, all without
(except as shall be required by applicable statute and cannot be waived)
advertisement or demand upon or notice to any Debtor or right of redemption
of a
Debtor, which are hereby expressly waived. Upon each such sale, lease,
assignment or other transfer of Collateral, the Secured Parties may, unless
prohibited by applicable law which cannot be waived, purchase all or any part
of
the Collateral being sold, free from and discharged of all trusts, claims,
right
of redemption and equities of any Debtor, which are hereby waived and
released.
(iv) The
Secured Parties shall have the right (but not the obligation) to notify any
account debtors and any obligors under instruments or accounts to make payments
directly to the Secured Parties and to enforce the Debtors’ rights against such
account debtors and obligors.
(v) The
Secured Parties may (but are not obligated to) direct any financial intermediary
or any other person or entity holding any investment property to transfer the
same to the Secured Parties or their designee.
(vi) The
Secured Parties may (but are not obligated to) transfer any or all Intellectual
Property registered in the name of any Debtor at the United States Patent and
Trademark Office and/or Copyright Office into the name of the Secured Parties
or
any designee or any purchaser of any Collateral.
(b) The
Agent may comply with any applicable law in connection with a disposition of
Collateral and such compliance will not be considered adversely to affect the
commercial reasonableness of any sale of the Collateral. The Agent may sell
the
Collateral without giving any warranties and may specifically disclaim such
warranties. If the Agent sells any of the Collateral on credit, the Debtors
will
only be credited with payments actually made by the purchaser. In addition,
each
Debtor waives any and all rights that it may have to a judicial hearing in
advance of the enforcement of any of the Agent’s rights and remedies hereunder,
including, without limitation, its right following an Event of Default to take
immediate possession of the Collateral and to exercise its rights and remedies
with respect thereto.
(c) For
the purpose of enabling the Agent to further exercise rights and remedies under
this Section 8 or elsewhere provided by agreement or applicable law, each Debtor
hereby grants to the Agent, for the benefit of the Agent and the Secured
Parties, an irrevocable, nonexclusive license (exercisable without payment
of
royalty or other compensation to such Debtor) to use, license or sublicense
following an Event of Default, any Intellectual Property now owned or hereafter
acquired by such Debtor, and wherever the same may be located, and including
in
such license access to all media in which any of the licensed items may be
recorded or stored and to all computer software and programs used for the
compilation or printout thereof.
9. Applications
of Proceeds.
The proceeds of any such sale, lease or other disposition of the Collateral
hereunder shall be applied first, to the expenses of retaking, holding, storing,
processing and preparing for sale, selling, and the like (including, without
limitation, any taxes, fees and other costs incurred in connection therewith)
of
the Collateral, to the reasonable attorneys’ fees and expenses incurred by the
Secured Parties in enforcing their rights hereunder and in connection with
collecting, storing and disposing of the Collateral, and then to satisfaction
of
the Obligations pro rata among the Secured Parties (based on then-outstanding
principal amounts of Debentures at the time of any such determination), and
to
the payment of any other amounts required by applicable law, after which the
Secured Parties shall pay to the applicable Debtor any surplus proceeds. If,
upon the sale, license or other disposition of the Collateral, the proceeds
thereof are insufficient to pay all amounts to which the Secured Parties are
legally entitled, the Debtors will be liable for the deficiency, together with
interest thereon, at the rate of 10% per annum or the lesser amount permitted
by
applicable law (the “Default
Rate”),
and the reasonable fees of any attorneys employed by the Secured Parties to
collect such deficiency. To the extent permitted by applicable law, each Debtor
waives all claims, damages and demands against the Secured Parties arising
out
of the repossession, removal, retention or sale of the Collateral, unless due
solely to the gross negligence or willful misconduct of the Secured Parties
as
determined by a final judgment (not subject to further appeal) of a court of
competent jurisdiction.
10. Securities
Law Provision.
Each Debtor recognizes that Agent may be limited in its ability to effect a
sale
to the public of all or part of the Pledged Securities by reason of certain
prohibitions in the Securities Act of 1933, as amended, or other federal or
state securities laws (collectively, the “Securities
Laws”),
and may be compelled to resort to one or more sales to a restricted group of
purchasers who may be required to agree to acquire the Pledged Securities for
their own account, for investment and not with a view to the distribution or
resale thereof. Each Debtor agrees that sales so made may be at prices and
on
terms less favorable than if the Pledged Securities were sold to the public,
and
that Agent has no obligation to delay the sale of any Pledged Securities for
the
period of time necessary to register the Pledged Securities for sale to the
public under the Securities Laws. Each Debtor shall cooperate with Agent in
its
attempt to satisfy any requirements under the Securities Laws (including,
without limitation, registration thereunder if requested by Agent) applicable
to
the sale of the Pledged Securities by Agent.
11. Costs
and Expenses.
Each Debtor agrees to pay all reasonable out-of-pocket fees, costs and expenses
incurred in connection with any filing required hereunder, including without
limitation, any financing statements pursuant to the UCC, continuation
statements, partial releases and/or termination statements related thereto
or
any expenses of any searches reasonably required by the Secured Parties. The
Debtors shall also pay all other claims and charges which in the reasonable
opinion of the Secured Parties might prejudice, imperil or otherwise affect
the
Collateral or the Security Interest therein. The Debtors will also, upon demand,
pay to the Secured Parties the amount of any and all reasonable expenses,
including the reasonable fees and expenses of its counsel and of any experts
and
agents, which the Secured Parties may incur in connection with (i) the
enforcement of this Agreement, (ii) the custody or preservation of, or the
sale
of, collection from, or other realization upon, any of the Collateral, or (iii)
the exercise or enforcement of any of the rights of the Secured Parties under
the Debentures. Until so paid, any fees payable hereunder shall be added to
the
principal amount of the Debentures and shall bear interest at the Default
Rate.
12. Responsibility
for Collateral.
The Debtors assume all liabilities and responsibility in connection with all
Collateral, and the Obligations shall in no way be affected or diminished by
reason of the loss, destruction, damage or theft of any of the Collateral or
its
unavailability for any reason. Without limiting the generality of the foregoing,
(a) neither the Agent nor any Secured Party (i) has any duty (either before
or
after an Event of Default) to collect any amounts in respect of the Collateral
or to preserve any rights relating to the Collateral, or (ii) has any obligation
to clean-up or otherwise prepare the Collateral for sale, and (b) each Debtor
shall remain obligated and liable under each contract or agreement included
in
the Collateral to be observed or performed by such Debtor thereunder. Neither
the Agent nor any Secured Party shall 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 Agent or any Secured Party of any payment relating to any of
the
Collateral, nor shall the Agent or any Secured Party be obligated in any manner
to perform any of the obligations of any Debtor under or pursuant to any such
contract or agreement, to make inquiry as to the nature or sufficiency of any
payment received by the Agent or any Secured Party 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 Agent or to which the Agent or any Secured Party may be entitled
at any time or times.
13. Security
Interest Absolute.
All rights of the Secured Parties and all obligations of the Debtors hereunder,
shall be absolute and unconditional, irrespective of: (a) any lack of validity
or enforceability of this Agreement, the Debentures or any agreement entered
into in connection with the foregoing, or any portion hereof or thereof; (b)
any
change in the time, manner or place of payment or performance of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or any consent to any departure from the Debentures or any other agreement
entered into in connection with the foregoing; (c) any exchange, release or
nonperfection of any of the Collateral, or any release or amendment or waiver
of
or consent to departure from any other collateral for, or any guaranty, or
any
other security, for all or any of the Obligations; (d) any action by the Secured
Parties to obtain, adjust, settle and cancel in its sole discretion any
insurance claims or matters made or arising in connection with the Collateral;
or (e) any other circumstance which might otherwise constitute any legal or
equitable defense available to a Debtor, or a discharge of all or any part
of
the Security Interest granted hereby. Until the Obligations shall have been
paid
and performed in full, the rights of the Secured Parties shall continue even
if
the Obligations are barred for any reason, including, without limitation, the
running of the statute of limitations or bankruptcy. Each Debtor expressly
waives presentment, protest, notice of protest, demand, notice of nonpayment
and
demand for performance. In the event that at any time any transfer of any
Collateral or any payment received by the Secured Parties hereunder shall be
deemed by final order of a court of competent jurisdiction to have been a
voidable preference or fraudulent conveyance under the bankruptcy or insolvency
laws of the United States, or shall be deemed to be otherwise due to any party
other than the Secured Parties, then, in any such event, each Debtor’s
obligations hereunder shall survive cancellation of this Agreement, and shall
not be discharged or satisfied by any prior payment thereof and/or cancellation
of this Agreement, but shall remain a valid and binding obligation enforceable
in accordance with the terms and provisions hereof. Each Debtor waives all
right
to require the Secured Parties to proceed against any other person or
entity
or to
apply any Collateral which the Secured Parties may hold at any time, or to
marshal assets, or to pursue any other remedy. Each Debtor waives any defense
arising by reason of the application of the statute of limitations to any
obligation secured hereby.
14.
Term
of Agreement.
This Agreement and the Security Interest shall terminate on the date on which
all payments under the Debentures have been indefeasibly paid in full and all
other Obligations have been paid or discharged; provided, however, that all
indemnities of the Debtors contained in this Agreement (including, without
limitation, Annex B hereto) shall survive and remain operative and in full
force
and effect regardless of the termination of this Agreement.
15.
Power
of Attorney; Further Assurances.
(a)
Each
Debtor authorizes the Secured Parties, and does hereby make, constitute and
appoint the Secured Parties and their respective officers, agents, successors
or
assigns with full power of substitution, as such Debtor’s true and lawful
attorney-in-fact, with power, in the name of the various Secured Parties or
such
Debtor, to, after the occurrence and during the continuance of an Event of
Default, (i) endorse any note, checks, drafts, money orders or other instruments
of payment (including payments payable under or in respect of any policy of
insurance) in respect of the Collateral that may come into possession of the
Secured Parties; (ii) to sign and endorse any financing statement pursuant
to
the UCC or any invoice, freight or express xxxx, xxxx of lading, storage or
warehouse receipts, drafts against debtors, assignments, verifications and
notices in connection with accounts, and other documents relating to the
Collateral; (iii) to pay or discharge taxes, liens, security interests or other
encumbrances at any time levied or placed on or threatened against the
Collateral; (iv) to demand, collect, receipt for, compromise, settle and xxx
for
monies due in respect of the Collateral; (v) to transfer any Intellectual
Property or provide licenses respecting any Intellectual Property; and (vi)
generally, at the option of the Secured Parties, and at the expense of the
Debtors, at any time, or from time to time, to execute and deliver any and
all
documents and instruments and to do all acts and things which the Secured
Parties deem necessary to protect, preserve and realize upon the Collateral
and
the Security Interest granted therein in order to effect the intent of this
Agreement and the Debentures all as fully and effectually as the Debtors might
or could do; and each Debtor hereby ratifies all that said attorney shall
lawfully do or cause to be done by virtue hereof. This power of attorney is
coupled with an interest and shall be irrevocable for the term of this Agreement
and thereafter as long as any of the Obligations shall be outstanding.
Without
limiting the generality of the foregoing, after the occurrence and during the
continuance of an Event of Default, each Secured Party is specifically
authorized to execute and file any applications for or instruments of transfer
and assignment of any patents, trademarks, copyrights or other Intellectual
Property with the United States Patent and Trademark Office and the United
States Copyright Office.
(b)
On
a continuing basis, each Debtor will make, execute, acknowledge, deliver, file
and record, as the case may be, with the proper filing and recording agencies
in
any jurisdiction, including, without limitation, the jurisdictions indicated
on
Schedule
C
attached hereto, all such instruments, and take all such action as may
reasonably be deemed necessary or advisable, or as reasonably requested by
the
Secured Parties, to perfect the Security Interest granted hereunder and
otherwise to carry out the intent and purposes of this Agreement, or for
assuring and confirming to the Secured Parties the grant or perfection of a
perfected security interest in all the Collateral under the UCC.
(c)
Each
Debtor hereby irrevocably appoints the Secured Parties as such Debtor’s
attorney-in-fact, with full authority in the place and instead of such Debtor
and in the name of such Debtor, from time to time in the Secured Parties’
discretion, to take any action and to execute any instrument which the Secured
Parties may deem necessary or advisable to accomplish the purposes of this
Agreement, including the filing, in its sole discretion, of one or more
financing or continuation statements and amendments thereto, relative to any
of
the Collateral without the signature of such Debtor where permitted by law,
which financing statements may (but need not) describe the Collateral as “all
assets” or “all personal property” or words of like import (but which shall
expressly exclude the ownership of or assets in Xxxxxxxx Curhan Ford & Co.),
and ratifies all such actions taken by the Secured Parties. This power of
attorney is coupled with an interest and shall be irrevocable for the term
of
this Agreement and thereafter as long as any of the Obligations shall be
outstanding.
16. Notices.
All notices, requests, demands and other communications hereunder shall be
subject to the notice provision of the Purchase Agreement (as such term is
defined in the Debentures).
17. Other
Security.
To the extent that the Obligations are now or hereafter secured by property
other than the Collateral or by the guarantee, endorsement or property of any
other person, firm, corporation or other entity, then the Secured Parties shall
have the right, in its sole discretion, to pursue, relinquish, subordinate,
modify or take any other action with respect thereto, without in any way
modifying or affecting any of the Secured Parties’ rights and remedies
hereunder.
18. Appointment
of Agent.
The Secured Parties hereby appoint Midsummer Investment Ltd. to act as their
agent (“Midsummer”
or “Agent”)
for purposes of exercising any and all rights and remedies of the Secured
Parties hereunder. Such appointment shall continue until revoked in writing
by a
Majority
in Interest, at which time a Majority in Interest
shall appoint a new Agent; provided, that Midsummer may not be removed as Agent
unless Midsummer shall then hold less than $100,000 principal amount of
Debentures;
provided further that such removal may occur only if each of the other Secured
Parties shall then hold not less than $100,000 principal amount of Debentures.
The
Agent shall have the rights, responsibilities and immunities set forth in
Annex
B
hereto.
19. Miscellaneous.
(a)
No
course of dealing between the Debtors and the Secured Parties, nor any failure
to exercise, nor any delay in exercising, on the part of the Secured Parties,
any right, power or privilege hereunder or under the Debentures shall operate
as
a waiver thereof; nor shall any single or partial exercise of any right, power
or privilege hereunder or thereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
(b)
All
of the rights and remedies of the Secured Parties with respect to the
Collateral, whether established hereby or by the Debentures or by any other
agreements, instruments or documents or by law shall be cumulative and may
be
exercised singly or concurrently.
(c)
This
Agreement constitutes the entire agreement of the parties with respect to the
subject matter hereof and is intended to supersede all prior negotiations,
understandings and agreements with respect thereto. Except as specifically
set
forth in this Agreement, no provision of this Agreement may be modified or
amended except by a written agreement specifically referring to this Agreement
and signed by the Debtors and the Secured Parties holding
at least
two-thirds (2/3) of the Registrable Securities into which all of the Debentures
and Warrants then outstanding are convertible or exercisable (without regard
to
any limitation on such conversion or exercise).
(d)
In
the event any provision of this Agreement is held to be invalid, prohibited
or
unenforceable in any jurisdiction for any reason, unless such provision is
narrowed by judicial construction, this Agreement shall, as to such
jurisdiction, be construed as if such invalid, prohibited or unenforceable
provision had been more narrowly drawn so as not to be invalid, prohibited
or
unenforceable. If, notwithstanding the foregoing, any provision of this
Agreement is held to be invalid, prohibited or unenforceable in any
jurisdiction, such provision, as to such jurisdiction, shall be ineffective
to
the extent of such invalidity, prohibition or unenforceability without
invalidating the remaining portion of such provision or the other provisions
of
this Agreement and without affecting the validity or enforceability of such
provision or the other provisions of this Agreement in any other
jurisdiction.
(e)
No
waiver of any breach or default or any right under this Agreement shall be
considered valid unless in writing and signed by the party giving such waiver,
and no such waiver shall be deemed a waiver of any subsequent breach or default
or right, whether of the same or similar nature or otherwise.
(f)
This
Agreement shall be binding upon and inure to the benefit of each party hereto
and its successors and assigns.
(g)
Each
party shall take such further action and execute and deliver such further
documents as may be necessary or appropriate in order to carry out the
provisions and purposes of this Agreement.
(h)
All questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by and construed and enforced
in accordance with the internal laws of the State of New York, without regard
to
the principles of conflicts of law thereof. Each Debtor agrees that all
proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by this Agreement and the Debentures(whether brought
against a party hereto or its respective affiliates, directors, officers,
shareholders, partners, members, employees or agents) shall be commenced
exclusively in the state and federal courts sitting in the City of New York,
Borough of Manhattan. Each Debtor hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of New York,
Borough of Manhattan for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any
proceeding, any claim that it is not personally subject to the jurisdiction
of
any such court, that such proceeding is improper. Each party hereto hereby
irrevocably waives personal service of process and consents to process being
served in any such proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees
that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. Each party hereto hereby
irrevocably waives, to the fullest extent permitted by applicable law, any
and
all right to trial by jury in any legal proceeding arising out of or relating
to
this Agreement or the transactions contemplated hereby. If any party shall
commence a proceeding to enforce any provisions of this Agreement, then the
prevailing party in such proceeding shall be reimbursed by the other party
for
its reasonable attorney’s fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such proceeding.
(i)
This
Agreement may be executed in any number of counterparts, each of which when
so
executed shall be deemed to be an original and, all of which taken together
shall constitute one and the same Agreement. In the event that any signature
is
delivered by facsimile transmission, such signature shall create a valid binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
were the original thereof.
(j) All
Debtors shall jointly and severally be liable for the obligations of each Debtor
to the Secured Parties hereunder.
(k) Each
Debtor shall indemnify, reimburse and hold harmless the Secured Parties and
their respective partners, members, shareholders, officers, directors, employees
and agents (collectively, “Indemnitees”)
from and against any and all losses, claims, liabilities, damages, penalties,
suits, costs and expenses, of any kind or nature, (including fees relating
to
the cost of investigating and defending any of the foregoing) imposed on,
incurred by or asserted against such Indemnitee in any way related to or arising
from or alleged to arise from this Agreement or the Collateral, except any
such
losses, claims, liabilities, damages, penalties, suits, costs and expenses
which
result from the gross negligence or willful misconduct of the Indemnitee as
determined by a final, nonappealable decision of a court of competent
jurisdiction. This indemnification provision is in addition to, and not in
limitation of, any other indemnification provision in the Debentures, the
Purchase Agreement (as such term is defined in the Debentures) or any other
agreement, instrument or other document executed or delivered in connection
herewith or therewith.
(l) Nothing
in this Agreement shall be construed to subject Agent or any Secured Party
to
liability as a partner in any Debtor or any if its direct or indirect
subsidiaries that is a partnership or as a member in any Debtor or any of its
direct or indirect subsidiaries that is a limited liability company, nor shall
Agent or any Secured Party be deemed to have assumed any obligations under
any
partnership agreement or limited liability company agreement, as applicable,
of
any such Debtor or any if its direct or indirect subsidiaries or otherwise,
unless and until any such Secured Party exercises its right to be substituted
for such Debtor as a partner or member, as applicable, pursuant
hereto.
(m)
To
the extent that the grant of the security interest in the Collateral and the
enforcement of the terms hereof require the consent, approval or action of
any
partner or member, as applicable, of any Debtor or any direct or indirect
subsidiary of any Debtor or compliance with any provisions of any of the
Organizational Documents, the Debtors hereby grant such consent and approval
and
waive any such noncompliance with the terms of said documents.
[SIGNATURE
PAGES FOLLOW]
IN
WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed on the day and year first above
written.
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MCF
CORPORATION
|
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By:__________________________________________
Name:
Title:
|
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MCF
ASSET MANAGEMENT, LLC
|
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By:__________________________________________
Name:
Title:
|
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MCF
WEALTH MANAGEMENT, LLC
|
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By:__________________________________________
Name:
Title:
|
|
MCF/NV
ASSET MANAGEMENT, LLC
|
|
By:__________________________________________
Name:
Title:
|
|
CATALYST
FINANCIAL PLANNING AND INVESTMENT MANAGEMENT
CORPORATION
|
|
By:__________________________________________
Name:
Title:
|
[SIGNATURE
PAGE OF HOLDERS FOLLOWS]
[SIGNATURE
PAGE OF HOLDERS TO MEM SA]
Name
of Investing Entity: Midsummer Investment, Ltd.
Signature
of Authorized Signatory of Investing entity:
_________________________
Name
of Authorized Signatory: _________________________
Title
of Authorized Signatory: __________________________
[SIGNATURE
PAGE OF HOLDERS FOLLOWS]
SCHEDULE
A
Pledged
Securities
100%
Membership Interests in MCF Asset Management, LLC
100%
Membership Interests in MCF Wealth Management, LLC
99.9%
Membership Interests in MCF/NV Asset Management, LLC
100%
common stock of Catalyst Financial Planning and Investment Management
Corporation
SCHEDULE
B
Principal
Place of Business of Debtors: 000
Xxxxxxxxxx Xxxxxx, 0xx
Xxxxx,
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Locations
Where Collateral is Located or Stored: 000
Xxxxxxxxxx Xxxxxx, 0xx
Xxxxx,
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
SCHEDULE
C
Liens
None
SCHEDULE
D
Organizational
Identification Numbers
MCF
Corporation: 2125509
MCF
Asset Management, LLC: 3752781
MCF
Wealth Management, LLC: 3907834
MCF/NV
Asset Management, LLC: 4089251
Catalyst
Financial Planning & Investment Management Corporation: 3907619
SCHEDULE
E
Names;
Mergers and Acquisitions
MCF
Corporation:
o MCF
Corporation was RateXchange Corporation until 7/21/03;
o RateXchange
Corporation was Xxxxxxxxxx.xxx Corporation until 4/21/00;
o Xxxxxxxxxx.xxx
Corporation was Telenisus Corporation until 5/18/99;
o Telenisus
Corporation was Xxxxxxxxxx.xxx Corporation until 5/6/99;
o Xxxxxxxxxx.xxx
Corporation was NetAmerica International Corporation until 4/13/99;
o NetAmerica
International Corporation was Venture World Ltd. until 10/6/98; and
o Venture
World Ltd. was first formed as World Ventures, Ltd.
o In
2005,
MCF Corporation acquired Catalyst
Financial Planning & Investment Management Corporation
MCF
Asset Management, LLC: no other names; no mergers/ acquisitions
MCF
Wealth Management, LLC: no other names; no mergers/ acquisitions
MCF/NV
Asset Management, LLC: no other names; no mergers/ acquisitions
Catalyst
Financial Planning & Investment Management Corporation: no other names; no
mergers/ acquisitions
ANNEX
A
to
SECURITY
AGREEMENT
FORM
OF ADDITIONAL DEBTOR JOINDER
Security
Agreement dated as of March ___, 2006 made by
MCF
Corporation
and
its subsidiaries party thereto from time to time, as Debtors
to
and in favor of
the
Secured Parties identified therein (the “Security
Agreement”)
Reference
is made to the Security Agreement as defined above; capitalized terms used
herein and not otherwise defined herein shall have the meanings given to such
terms in, or by reference in, the Security Agreement.
The
undersigned hereby agrees that upon delivery of this Additional Debtor Joinder
to the Secured Parties referred to above, the undersigned shall (a) be an
Additional Debtor under the Security Agreement, (b) have all the rights and
obligations of the Debtors under the Security Agreement as fully and to the
same
extent as if the undersigned was an original signatory thereto and (c) be deemed
to have made the representations and warranties set forth in the Security
Agreement as of the date of execution and delivery of this Additional Debtor
Joinder. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE UNDERSIGNED
SPECIFICALLY GRANTS TO THE SECURED PARTIES A SECURITY INTEREST IN THE COLLATERAL
AS MORE FULLY SET FORTH IN THE SECURITY AGREEMENT AND ACKNOWLEDGES AND AGREES
TO
THE WAIVER OF JURY TRIAL PROVISIONS SET FORTH THEREIN.
Attached
hereto are supplemental and/or replacement Schedules to the Security Agreement,
as applicable.
An
executed copy of this Joinder shall be delivered to the Secured Parties, and
the
Secured Parties may rely on the matters set forth herein on or after the date
hereof. This Joinder shall not be modified, amended or terminated without the
prior written consent of the Secured Parties.
IN
WITNESS WHEREOF, the undersigned has caused this Joinder to be executed in
the
name and on behalf of the undersigned.
[Name
of Additional Debtor]
By:________________________________
Name:
Title:
Address:
Dated:
ANNEX
B
to
SECURITY
AGREEMENT
THE
AGENT
1.
Appointment. The
Secured Parties (all capitalized terms used herein and not otherwise defined
shall have the respective meanings provided in the Security Agreement to which
this Annex B is attached (the "Agreement")),
by their acceptance of the benefits of the Agreement, hereby designate Midsummer
Investment Ltd. (“Midsummer” or “Agent”)
as the Agent to act as specified herein and in the Agreement. Each Secured
Party
shall be deemed irrevocably to authorize the Agent to take such action on its
behalf under the provisions of the Agreement and any other Transaction Document
(as such term is defined in the Debentures) and to exercise such powers and
to
perform such duties hereunder and thereunder as are specifically delegated
to or
required of the Agent by the terms hereof and thereof and such other powers
as
are reasonably incidental thereto. The Agent may perform any of its duties
hereunder by or through its agents or employees.
2.
Nature
of Duties.
The Agent shall have no duties or responsibilities except those expressly set
forth in the Agreement. Neither the Agent nor any of its partners, members,
shareholders, officers, directors, employees or agents shall be liable for
any
action taken or omitted by it as such under the Agreement or hereunder or in
connection herewith or therewith, be responsible for the consequence of any
oversight or error of judgment or answerable for any loss, unless caused solely
by its or their gross negligence or willful misconduct as determined by a final
judgment (not subject to further appeal) of a court of competent jurisdiction.
The duties of the Agent shall be mechanical and administrative in nature; the
Agent shall not have by reason of the Agreement or any other Transaction
Document a fiduciary relationship in respect of any Debtor or any Secured Party;
and nothing in the Agreement or any other Transaction Document, expressed or
implied, is intended to or shall be so construed as to impose upon the Agent
any
obligations in respect of the Agreement or any other Transaction Document except
as expressly set forth herein and therein.
3.
Lack
of Reliance on the Agent.
Independently and without reliance upon the Agent, each Secured Party, to the
extent it deems appropriate, has made and shall continue to make (i) its own
independent investigation of the financial condition and affairs of the Company
and its subsidiaries in connection with such Secured Party’s investment in the
Debtors, the creation and continuance of the Obligations, the transactions
contemplated by the Transaction Documents, and the taking or not taking of
any
action in connection therewith, and (ii) its own appraisal of the
creditworthiness of the Company and its subsidiaries, and of the value of the
Collateral from time to time, and the Agent shall have no duty or
responsibility, either initially or on a continuing basis, to provide any
Secured Party with any credit, market or other information with respect thereto,
whether coming into its possession before any Obligations are incurred or at
any
time or times thereafter. The Agent shall not be responsible to the Debtors
or
any Secured Party for any recitals, statements, information, representations
or
warranties herein or in any document, certificate or other writing delivered
in
connection herewith, or for the execution, effectiveness, genuineness, validity,
enforceability, perfection, collectibility, priority or sufficiency of the
Agreement or any other Transaction Document, or for the financial condition
of
the Debtors or the value of any of the Collateral, or be required to make any
inquiry concerning either the performance or observance of any of the terms,
provisions or conditions of the Agreement or any other Transaction Document,
or
the financial condition of the Debtors, or the value of any of the Collateral,
or the existence or possible existence of any default or Event of Default under
the Agreement, the Debentures or any of the other Transaction
Documents.
4.
Certain
Rights of the Agent.
The Agent shall have the right to take any action with respect to the
Collateral, on behalf of all of the Secured Parties. To the extent practical,
the Agent shall request instructions from the Secured Parties with respect
to
any material act or action (including failure to act) in connection with the
Agreement or any other Transaction Document, and shall be entitled to act or
refrain from acting in accordance with the instructions of Secured Parties
holding a majority in principal amount of Debentures (based on then-outstanding
principal amounts of Debentures at the time of any such determination); if
such
instructions are not provided despite the Agent’s request therefor, the Agent
shall be entitled to refrain from such act or taking such action, and if such
action is taken, shall be entitled to appropriate indemnification from the
Secured Parties in respect of actions to be taken by the Agent; and the Agent
shall not incur liability to any person or entity by reason of so refraining.
Without limiting the foregoing, (a) no Secured Party shall have any right of
action whatsoever against the Agent as a result of the Agent acting or
refraining from acting hereunder in accordance with the terms of the Agreement
or any other Transaction Document, and the Debtors shall have no right to
question or challenge the authority of, or the instructions given to, the Agent
pursuant to the foregoing and (b) the Agent shall not be required to take any
action which the Agent believes (i) could reasonably be expected to expose
it to
personal liability or (ii) is contrary to this Agreement, the Transaction
Documents or applicable law.
5.
Reliance.
The Agent shall be entitled to rely, and shall be fully protected in relying,
upon any writing, resolution, notice, statement, certificate, telex, teletype
or
telecopier message, cablegram, radiogram, order or other document or telephone
message signed, sent or made by the proper person or entity, and, with respect
to all legal matters pertaining to the Agreement and the other Transaction
Documents and its duties thereunder, upon advice of counsel selected by it
and
upon all other matters pertaining to this Agreement and the other Transaction
Documents and its duties thereunder, upon advice of other experts selected
by
it.
6.
Indemnification.
To the extent that the Agent is not reimbursed and indemnified by the Debtors,
the Secured Parties will jointly and severally reimburse and indemnify the
Agent, in proportion to their initially purchased respective principal amounts
of Debentures, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by or
asserted against the Agent in performing its duties hereunder or under the
Agreement or any other Transaction Document, or in any way relating to or
arising out of the Agreement or any other Transaction Document except for those
determined by a final judgment (not subject to further appeal) of a court of
competent jurisdiction to have resulted solely from the Agent's own gross
negligence or willful misconduct. Prior to taking any action hereunder as Agent,
the Agent may require each Secured Party to deposit with it sufficient sums
as
it determines in good faith is necessary to protect the Agent for costs and
expenses associated with taking such action.
7.
Resignation
by the Agent.
(a)
The Agent may resign from the performance of all its functions and duties under
the Agreement and the other Transaction Documents at any time by giving 30
days'
prior written notice (as provided in the Agreement) to the Debtors and the
Secured Parties. Such resignation shall take effect upon the appointment of
a
successor Agent pursuant to clauses (b) and (c) below.
(b)
Upon any such notice of resignation, the Secured Parties, acting by
a Majority
in Interest,
shall appoint a successor Agent hereunder.
(c)
If a successor Agent shall not have been so appointed within said 30-day period,
the Agent shall then appoint a successor Agent who shall serve as Agent until
such time, if any, as the Secured Parties appoint a successor Agent as provided
above. If a successor Agent has not been appointed within such 30-day period,
the Agent may petition any court of competent jurisdiction or may interplead
the
Debtors and the Secured Parties in a proceeding for the appointment of a
successor Agent, and all fees, including, but not limited to, extraordinary
fees
associated with the filing of interpleader and expenses associated therewith,
shall be payable by the Debtors on demand.
8.
Rights
with respect to Collateral.
Each Secured Party agrees with all other Secured Parties and the Agent (i)
that
it shall not, and shall not attempt to, exercise any rights with respect to
its
security interest in the Collateral, whether pursuant to any other agreement
or
otherwise (other than pursuant to this Agreement), or take or institute any
action against the Agent or any of the other Secured Parties in respect of
the
Collateral or its rights hereunder (other than any such action arising from
the
breach of this Agreement) and (ii) that such Secured Party has no other rights
with respect to the Collateral other than as set forth in this Agreement and
the
other Transaction Documents.
