Exhibit 10.2
SECURITY AGREEMENT
This SECURITY AGREEMENT (this "AGREEMENT"), dated as of April 7, 2009,
between Ivivi Technologies, Inc., a New Jersey corporation (the "BORROWER"), and
Emigrant Capital Corp., a Delaware corporation (the "SECURED Party").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Loan Agreement of even date herewith
(as amended, restated, supplemented, or otherwise modified from time to time,
including all schedules and exhibits thereto, the "LOAN AGREEMENT") between the
Borrower and the Secured Party, the Secured Party may, subject to the
satisfaction of certain conditions set forth in the Loan Agreement, make certain
Loans to the Borrower, as evidenced by that certain Convertible Promissory Note
(the "NOTE") issued by the Borrower to the Secured Party pursuant to the terms
of the Loan Agreement, and
WHEREAS, in order to induce the Secured Party to enter into the Loan
Agreement, and as a condition precedent to the making of the Loans evidenced by
the Note, the Borrower has agreed to grant a continuing security interest in and
to the Collateral in order to secure the prompt and complete payment, observance
and performance of, the Secured Obligations.
NOW, THEREFORE, for and in consideration of the recitals made above and
other good and valuable consideration, the receipt, sufficiency and adequacy of
which are hereby acknowledged, the parties hereto agree as follows:
1. DEFINED TERMS. All capitalized terms used herein (including in the
preamble and recitals hereof) without definition shall have the meanings
ascribed thereto in the Loan Agreement. Any terms used in this Agreement that
are defined in the Code shall be construed and defined as set forth in the Code
unless otherwise defined herein or in the Loan Agreement; PROVIDED, HOWEVER,
that to the extent that the Code is used to define any term herein and if such
term is defined differently in different Articles of the Code, the definition of
such term contained in Article 9 of the Code shall govern. In addition to those
terms defined elsewhere in this Agreement, as used in this Agreement, the
following terms shall have the following meanings:
(a) "ACCOUNT" means an account (as that term is defined in
Article 9 of the Code).
(b) "ACCOUNT DEBTOR" means an account debtor (as that term is
defined in the Code).
(c) "ACTIVATION INSTRUCTION" has the meaning specified
therefor in SECTION 6(L).
(d) "BANKRUPTCY CODE" means Title 11 of the United States
Code, as in effect from time to time.
(e) "BOOKS" means books and records (including the Borrower's
Records indicating, summarizing, or evidencing the Borrower's assets (including
the Collateral) or liabilities, the Borrower's Records relating to the
Borrower's business operations or financial condition, and the Borrower's goods
or General Intangibles related to such information).
(f) "BORROWER" has the meaning specified therefor in the
preamble to this Agreement.
(g) "CHATTEL PAPER" means chattel paper (as that term is
defined in the Code) and includes tangible chattel paper and electronic chattel
paper.
(h) "CODE" means the New York Uniform Commercial Code, as in
effect from time to time; PROVIDED, HOWEVER, that in the event that, by reason
of mandatory provisions of law, any or all of the attachment, perfection,
priority, or remedies with respect to the Liens of the Secured Party granted
under the Loan Documents on any Collateral is governed by the Uniform Commercial
Code as enacted and in effect in a jurisdiction other than the State of New
York, the term "Code" shall mean the Uniform Commercial Code as enacted and in
effect in such other jurisdiction solely for purposes of the provisions thereof
relating to such attachment, perfection, priority, or remedies.
(i) "COLLATERAL" has the meaning specified therefor in SECTION
2.
(j) "COLLECTIONS" means all cash, checks, notes, instruments,
and other items of payment (including insurance proceeds, cash proceeds of asset
sales, rental proceeds, and tax refunds).
(k) "COMMERCIAL TORT CLAIMS" means commercial tort claims (as
that term is defined in the Code), and includes those commercial tort claims
listed on SCHEDULE 1 attached hereto.
(l) "CONTROL AGREEMENT" means (i) with respect to a Securities
Account, an agreement relating to such Securities Account and of the type
described in (A) Section 8-106(c)(2) of the Code, duly executed and delivered by
the Borrower, the Secured Party and the issuer of uncertificated securities
pledged pursuant to this Agreement or (B) (A) Section 8-106(d)(2) of the Code,
duly executed and delivered by the Borrower, the Secured Party and the
securities intermediary maintaining such Securities Account, (ii) with respect
to a Deposit Account, an agreement relating to such Deposit Account and of the
type described in Section 9-104(a)(2) of the Code duly executed and delivered by
the Borrower, the Secured Party and the depositary bank maintaining such Deposit
Account and (iii) with respect to a Commodity Account, an agreement relating to
such Commodity Account and of the type described in (A) Section 9-106(b)(2) of
the Code, duly executed and delivered by the Borrower, the Secured Party and the
commodity intermediary maintaining such Commodity Account.
(m) "CONTROLLED ACCOUNT" has the meaning specified therefor in
SECTION 6(L).
(n) "CONTROLLED ACCOUNT AGREEMENTS" means those certain cash
management agreements, in form and substance reasonably satisfactory to the
Secured Party, each of which is among the Borrower, the Secured Party, and one
of the Controlled Account Banks.
(o) "CONTROLLED ACCOUNT BANK" has the meaning specified
therefor in SECTION 6(L).
(p) "COPYRIGHTS" means any and all copyrights and copyright
registrations, including, (i) the copyright registrations and recordings thereof
and all applications in connection therewith listed on SCHEDULE 2 attached
hereto and made a part hereof, (ii) all reissues, continuations, extensions or
renewals thereof, (iii) all income, royalties, damages and payments now and
hereafter due or payable under and with respect thereto, including payments
under all licenses entered into in connection therewith and damages and payments
for past or future infringements thereof, (iv) the right to xxx for past,
present and future infringements thereof, and (v) all of the Borrower's rights
corresponding thereto throughout the world.
(q) "COPYRIGHT SECURITY AGREEMENT" means each Copyright
Security Agreement among the Borrower and the Secured Party, in substantially
the form of EXHIBIT A attached hereto, pursuant to which the Borrower has
granted to the Secured Party a security interest in all of its Copyrights.
(r) "DEFAULT" has the meaning specified therefor in the Loan
Agreement.
(s) "DEPOSIT ACCOUNT" means a deposit account (as that term is
defined in the Code).
(t) "EQUIPMENT" means equipment (as that term is defined in
the Code).
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(u) "EVENT OF DEFAULT" has the meaning specified therefor in
the Loan Agreement.
(v) "GENERAL INTANGIBLES" means general intangibles (as that
term is defined in the Code) and includes payment intangibles, contract rights,
rights to payment, rights arising under common law, statutes, or regulations,
choses or things in action, goodwill (including the goodwill associated with any
Trademark), Patents, Trademarks, Copyrights, URLs and domain names, industrial
designs, other industrial or Intellectual Property or rights therein or
applications therefor, whether under license or otherwise, programs, programming
materials, blueprints, drawings, purchase orders, customer lists, monies due or
recoverable from pension funds, route lists, rights to payment and other rights
under any royalty or licensing agreements, including Intellectual Property
Licenses, infringement claims, computer programs, information contained on
computer disks or tapes, software, literature, reports, catalogs, pension plan
refunds, pension plan refund claims, insurance premium rebates, tax refunds, and
tax refund claims, interests in a partnership or limited liability company which
do not constitute a security under Article 8 of the Code, and any other personal
property other than Commercial Tort Claims, money, Accounts, Chattel Paper,
Deposit Accounts, goods, Investment Related Property, Negotiable Collateral, and
oil, gas, or other minerals before extraction.
(w) "INSOLVENCY PROCEEDING" means any proceeding commenced by
or against any Person under any provision of the Bankruptcy Code or under any
other state or federal bankruptcy or insolvency law, assignments for the benefit
of creditors, formal or informal moratoria, compositions, extensions generally
with creditors, or proceedings seeking reorganization, arrangement, or other
similar relief.
(x) "INSTRUMENT" means instrument (as that term is defined in
the Code).
(y) "INTELLECTUAL PROPERTY" means any and all Intellectual
Property Licenses, Patents, Copyrights, Trademarks, the goodwill associated with
such Trademarks, trade secrets, know-how, customer lists and any other
proprietary rights of any kind.
(z) "INTELLECTUAL PROPERTY LICENSES" means rights under or
interests in any Patent, Trademark, Copyright or other Intellectual Property,
including software license agreements under which Borrower is a licensee or
licensor (but excluding any off-the-shelf software license agreement), including
the license agreements listed on SCHEDULE 3 attached hereto and made a part
hereof, and the right to use the foregoing in connection with the enforcement of
the Secured Party's rights under the Loan Documents, including the right to
prepare for sale and sell any and all Inventory and Equipment now or hereafter
owned by the Borrower and now or hereafter covered by such licenses.
(aa) "INVENTORY" means inventory (as that term is defined in
the Code).
(bb) "INVESTMENT RELATED PROPERTY" means (i) any and all
investment property (as that term is defined in the Code), and (ii) any and all
of the following (regardless of whether classified as investment property under
the Code): all Pledged Interests, Pledged Operating Agreements, and Pledged
Partnership Agreements.
(cc) "LENDER" has the meaning specified therefor in the Loan
Agreement.
(dd) "LENDER EXPENSES" means all (a) costs or expenses
(including taxes and insurance premiums) required to be paid by the Borrower
under any of the Loan Documents that are paid, advanced, or incurred by the
Secured Party, (b) out-of-pocket fees or charges paid or incurred by the Secured
Party in connection with the Secured Party's transactions with the Borrower
under any of the Loan Documents, including, fees or charges for photocopying,
notarization, couriers and messengers, telecommunication, public record searches
(including tax lien, litigation, and UCC searches and including searches with
the patent and trademark office, the copyright office, or the department of
motor vehicles), filing, recording, publication, appraisal (including periodic
collateral appraisals or business valuations to the extent of the fees and
charges (and up to the amount of any limitation) contained in any Loan
Document), real estate surveys, real estate title policies and endorsements, and
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environmental audits, (c) out-of-pocket charges paid or incurred by the Secured
Party resulting from the dishonor of checks payable by or to the Borrower, (d)
reasonable out-of-pocket costs and expenses paid or incurred by the Secured
Party to correct any default or enforce any provision of the Loan Documents, or
during the continuance of an Event of Default, in gaining possession of,
maintaining, handling, preserving, storing, shipping, selling, preparing for
sale, or advertising to sell the Collateral, or any portion thereof,
irrespective of whether a sale is consummated, (e) reasonable out-of-pocket
audit fees and expenses (including travel, meals, and lodging) of the Secured
Party related to any inspections or audits to the extent of the fees and charges
(and up to the amount of any limitation) contained in the Loan Documents, (f)
reasonable out-of-pocket costs and expenses of third-party claims or any other
amount paid or incurred by the Secured Party in enforcing or defending the Loan
Documents or in connection with the transactions contemplated by the Loan
Documents, (g) the Secured Party's reasonable costs and expenses (including
reasonable attorneys' fees) incurred in administering or amending the Loan
Documents, and (h) the Secured Party's reasonable costs and expenses (including
reasonable attorneys', accountants', consultants', and other advisors' fees and
expenses) incurred in terminating, enforcing (including attorneys',
accountants', consultants', and other advisors' fees and expenses incurred in
connection with a "workout," a "restructuring," or an Insolvency Proceeding
concerning the Borrower or in exercising rights or remedies under the Loan
Documents), or defending the Loan Documents, irrespective of whether suit is
brought, or in taking any remedial action concerning the Collateral.
(ee) "LOAN AGREEMENT" has the meaning specified therefor in
the recitals to this Agreement.
(ff) "LOAN DOCUMENT" has the meaning specified therefor in the
Loan Agreement.
(gg) "LOANS" has the meaning specified therefor in the Loan
Agreement.
(hh) "MORTGAGES" means, individually and collectively, one or
more mortgages, deeds of trust, or deeds to secure debt, executed and delivered
by the Borrower in favor of the Secured Party, in form and substance reasonably
satisfactory to the Secured Party, that encumber the Real Property Collateral.
(ii) "NEGOTIABLE COLLATERAL" means letters of credit,
letter-of-credit rights, instruments, notes, drafts and documents (as such terms
are defined in the Code).
(jj) "NOTE" has the meaning specified therefor in the recitals
to this Agreement.
(kk) "PATENTS" means patents and patent applications,
including, (i) the patents and patent applications listed on SCHEDULE 4 attached
hereto and made a part hereof, (ii) all renewals thereof, (iii) all income,
royalties, damages and payments now and hereafter due or payable under and with
respect thereto, including payments under all licenses entered into in
connection therewith and damages and payments for past or future infringements
thereof, (iv) the right to xxx for past, present and future infringements
thereof, and (v) all of the Borrower's rights corresponding thereto throughout
the world.
(ll) "PATENT SECURITY AGREEMENT" means each Patent Security
Agreement between the Borrower and the Secured Party, in substantially the form
of EXHIBIT B attached hereto, pursuant to which the Borrower has granted to the
Secured Party a security interest in all of its Patents.
(mm) "PERMITTED LIENS" has the meaning specified therefor in
the Loan Agreement.
(nn) "PERSON" has the meaning specified therefor in the Loan
Agreement.
(oo) "PLEDGED COMPANIES" means, each Person listed on SCHEDULE
5 hereto as a "Pledged Company", together with each other Person, all or a
portion of whose Stock, is acquired or otherwise owned by the Borrower after the
Closing Date.
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(pp) "PLEDGED INTERESTS" means all of the Borrower's right,
title and interest in and to all of the Stock now or hereafter owned by the
Borrower, regardless of class or designation, including, in each of the Pledged
Companies, and all substitutions therefor and replacements thereof, all proceeds
thereof and all rights relating thereto, also including any certificates
representing the Stock, the right to receive any certificates representing any
of the Stock, all warrants, options, share appreciation rights and other rights,
contractual or otherwise, in respect thereof and the right to receive all
dividends, distributions of income, profits, surplus, or other compensation by
way of income or liquidating distributions, in cash or in kind, and all cash,
instruments, and other property from time to time received, receivable, or
otherwise distributed in respect of or in addition to, in substitution of, on
account of, or in exchange for any or all of the foregoing.
(qq) "PLEDGED INTERESTS ADDENDUM" means a Pledged Interests
Addendum substantially in the form of EXHIBIT C to this Agreement.
(rr) "PLEDGED OPERATING AGREEMENTS" means all of the
Borrower's rights, powers, and remedies under the limited liability company
operating agreements of each of the Pledged Companies that are limited liability
companies.
(ss) "PLEDGED PARTNERSHIP AGREEMENTS" means all of the
Borrower's rights, powers, and remedies under the partnership agreements of each
of the Pledged Companies that are partnerships.
(tt) "PROCEEDS" has the meaning specified therefor in SECTION
2.
(uu) "REAL PROPERTY" means any estates or interests in real
property now owned or hereafter acquired by the Borrower and the improvements
thereto.
(vv) "REAL PROPERTY COLLATERAL" means the Real Property
identified on SCHEDULE 7 and any Real Property hereafter acquired by the
Borrower.
(ww) "RECORDS" means information that is inscribed on a
tangible medium or which is stored in an electronic or other medium and is
retrievable in perceivable form.
(xx) "RESCISSION" has the meaning specified therefor in
SECTION 6(L).
(yy) "SECURED OBLIGATIONS" means all obligations of the
Borrower under the Loan Agreement, this Agreement and the Note, including the
obligation to pay principal, interest (including any interest that accrues after
the commencement of an Insolvency Proceeding, regardless of whether allowed or
allowable in whole or in part as a claim in any such Insolvency Proceeding),
premiums, liabilities, obligations (including indemnification obligations),
fees, expenses (including any fees or expenses that accrue after the
commencement of an Insolvency Proceeding, regardless of whether allowed or
allowable in whole or in part as a claim in any such Insolvency Proceeding),
guaranties, covenants, and duties of any kind and description owing by Borrower
to the Secured Party and irrespective of whether for the payment of money,
whether direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising, and including all interest not paid when due and
all other expenses or other amounts that Borrower is required to pay or
reimburse by this Agreement, the Loan Agreement or the Note or by law or
otherwise in connection with this Agreement, the Loan Agreement or the Note. Any
reference in this Agreement, the Loan Agreement or any other the Loan Document
to the Secured Obligations shall include all or any portion thereof and any
extensions, modifications, renewals, or alterations thereof, both prior and
subsequent to any Insolvency Proceeding.
(zz) "SECURED PARTY" has the meaning specified therefore in
the preamble to this Agreement.
(aaa) "SECURITIES ACCOUNT" means a securities account (as that
term is defined in the Code).
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(bbb) "SECURITY INTEREST" has the meaning specified therefor
in SECTION 2.
(ccc) "STOCK" means all shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in a
Person, whether voting or nonvoting, including common stock, preferred stock, or
any other "equity security" (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the SEC under the Exchange Act).
(ddd) "SUPPORTING OBLIGATIONS" means supporting obligations
(as such term is defined in the Code) and includes letters of credit and
guaranties issued in support of Accounts, Chattel Paper, documents, General
Intangibles, instruments or Investment Related Property.
(eee) "TRADEMARKS" means any and all trademarks, trade names,
registered trademarks, trademark applications, service marks, registered service
marks and service xxxx applications, including (i) the trade names, registered
trademarks, trademark applications, registered service marks and service xxxx
applications listed on SCHEDULE 6 attached hereto and made a part hereof, (ii)
all renewals thereof, (iii) all income, royalties, damages and payments now and
hereafter due or payable under and with respect thereto, including payments
under all licenses entered into in connection therewith and damages and payments
for past or future infringements or dilutions thereof, (iv) the right to xxx for
past, present and future infringements and dilutions thereof, (v) the goodwill
of the Borrower's business symbolized by the foregoing or connected therewith,
and (vi) all of the Borrower's rights corresponding thereto throughout the
world.
(fff) "TRADEMARK SECURITY AGREEMENT" means each Trademark
Security Agreement among the Borrower and the Secured Party, in substantially
the form of EXHIBIT D attached hereto, pursuant to which the Borrower has
granted to the Secured Party a security interest in all of its Trademarks.
(ggg) "URL" means "uniform resource locator," an internet web
address.
2. GRANT OF SECURITY. The Borrower hereby unconditionally grants,
assigns, and pledges to the Secured Party, to secure the Secured Obligations, a
continuing security interest (hereinafter referred to as the "SECURITY
INTEREST") in all personal property of the Borrower whether now owned or
hereafter acquired or arising and wherever located, including the Borrower's
right, title, and interest in and to the following, whether now owned or
hereafter acquired or arising and wherever located (the "COLLATERAL"):
(a) all of the Borrower's Accounts;
(b) all of the Borrower's Books;
(c) all of the Borrower's Chattel Paper;
(d) all of the Borrower's interest with respect to any Deposit
Account;
(e) all of the Borrower's Equipment and fixtures;
(f) all of the Borrower's General Intangibles;
(g) all of the Borrower's Inventory;
(h) all of the Borrower's Investment Related Property;
(i) all of the Borrower's Negotiable Collateral;
(j) all of the Borrower's rights in respect of Supporting
Obligations;
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(k) all of the Borrower's interest with respect to any
Commercial Tort Claims;
(l) all of the Borrower's money, cash and cash equivalents;
(m) all of the proceeds (as that term is defined in the Code)
and products, whether tangible or intangible, of any of the foregoing, including
proceeds of insurance or Commercial Tort Claims covering or relating to any or
all of the foregoing, and any and all Accounts, Books, Chattel Paper, Deposit
Accounts, Equipment, General Intangibles, Inventory, Investment Related
Property, Negotiable Collateral, Supporting Obligations, money, or other
tangible or intangible property resulting from the sale, lease, license,
exchange, collection, or other disposition of any of the foregoing, whatever is
collected on, or distributed on account of any of the foregoing, any and all
rights arising out of the foregoing, the proceeds of any award in condemnation
with respect to any of the foregoing, any rebates or refunds, whether for taxes
or otherwise, and all proceeds of any such proceeds, or any portion thereof or
interest therein, and the proceeds thereof, claims arising out of the loss,
non-conformity, or interference with the use of, defects, or infringement of
rights in, or damage to, any of the foregoing, and all proceeds of any loss of,
damage to, or destruction of the above, whether insured or not insured, and, to
the extent not otherwise included, any indemnity, warranty, insurance, or
guaranty payable by reason of loss or non-conformity of, defects or infringement
of rights in, or damage to, or otherwise with respect to any of the foregoing
(the "PROCEEDS"). Without limiting the generality of the foregoing, the term
"Proceeds" includes whatever is receivable or received when Investment Related
Property or proceeds are sold, exchanged, collected, or otherwise disposed of,
whether such disposition is voluntary or involuntary, and includes proceeds of
any indemnity or guaranty payable to the Borrower or the Secured Party from time
to time with respect to any of the Investment Related Property.
Notwithstanding anything contained in this Agreement to the contrary,
the term "Collateral" shall not include any rights or interest in any contract,
lease, permit, license, charter or license agreement covering real or personal
property of the Borrower if under the terms of such contract, lease, permit,
license, charter or license agreement, or applicable law with respect thereto,
the grant of a security interest or lien therein is prohibited as a matter of
law or by the terms of such contract, lease, permit, license, charter or license
agreement and such prohibition has not been waived or the consent of the other
party to such contract, lease, permit, license, charter or license agreement has
not been obtained (PROVIDED, that, the foregoing exclusions of this paragraph
shall in no way be construed (A) to apply to the extent that any described
prohibition is unenforceable under Section 9-406, 9-407, 9-408 or 9-409 of the
Code or other applicable law, (B) to limit, impair, or otherwise affect the
Secured Party's continuing security interests in and liens upon any rights or
interests of the Borrower in or to (x) monies due or to become due under any
described contract, lease, permit, license, charter or license agreement
(including any Accounts), or (y) any proceeds from the sale, license, lease, or
other dispositions of any such contract, lease, permit, license, charter,
license agreement, or Stock, or (C) to apply to the extent that any such
prohibition is ineffective, lapsed or has been terminated, or any consent or
waiver has been obtained that would permit the security interest of lien
notwithstanding the prohibition).
3. SECURITY FOR SECURED OBLIGATIONS. The Security Interest created
hereby secures the payment and performance of the Secured Obligations, whether
now existing or arising hereafter. Without limiting the generality of the
foregoing, this Agreement secures the payment of all amounts which constitute
part of the Secured Obligations and would be owed by the Borrower to the Secured
Party but for the fact that they are unenforceable or not allowable due to the
existence of an Insolvency Proceeding involving the Borrower.
4. BORROWER REMAINS LIABLE. Anything herein to the contrary
notwithstanding, (a) the Borrower shall remain liable under the contracts and
agreements included in the Collateral, including the Pledged Operating
Agreements and the Pledged Partnership Agreements, to perform all of the duties
and obligations thereunder to the same extent as if this Agreement had not been
executed, (b) the exercise by the Secured Party of any of the rights hereunder
shall not release the Borrower from any of its duties or obligations under such
contracts and agreements included in the Collateral, and (c) the Secured Party
shall not have any obligation or liability under such contracts and agreements
included in the Collateral by reason of this Agreement, nor shall the Secured
Party be obligated to perform any of the obligations or duties of the Borrower
thereunder or to take any action to collect or enforce any claim for payment
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assigned hereunder. Until an Event of Default shall occur and be continuing,
except as otherwise provided in this Agreement, the Loan Agreement or the Note,
the Borrower shall have the right to possession and enjoyment of the Collateral
for the purpose of conducting the ordinary course of its business, subject to
and upon the terms hereof and of the Loan Agreement and the Note. Without
limiting the generality of the foregoing, it is the intention of the parties
hereto that record and beneficial ownership of the Pledged Interests, including
all voting, consensual, and dividend rights, shall remain in the Borrower until
the occurrence of an Event of Default and until the Secured Party shall notify
the Borrower of the Secured Party's exercise of voting, consensual, or dividend
rights with respect to the Pledged Interests pursuant to SECTION 14 hereof.
5. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents and
warrants as follows:
(a) The exact legal name of the Borrower is set forth on the
signature pages of this Agreement.
(b) SCHEDULE 7 attached hereto sets forth all Real Property
owned the Borrower as of the Closing Date.
(c) As of the Closing Date, the Borrower has no interest in,
or title to, any Copyrights, Intellectual Property Licenses, Patents, or
Trademarks except as set forth on SCHEDULES 2, 3, 4, and 6, respectively,
attached hereto. This Agreement is effective to create a valid and continuing
Lien on all U.S. Intellectual Property in which the Borrower has any right,
title, or interest and, assuming that New York law will apply to the creation of
such Lien, on all foreign Intellectual Property in which the Borrower has any
right, title, or interest. Upon the filing of the Copyright Security Agreement
with the United States Copyright Office and filing of the Patent Security
Agreement and the Trademark Security Agreement with the United States Patent and
Trademark Office, and the filing of appropriate financing statements in the
jurisdictions listed on SCHEDULE 8 hereto, all action necessary to perfect the
Security Interest in the Borrower's U.S. Intellectual Property will have been
taken and such perfected Security Interest is enforceable as such as against any
and all creditors of and purchasers from the Borrower. The Borrower exclusively
owns, free and clear of any Liens (other than Permitted Liens), all right, title
and interest in, or holds licenses in, all Intellectual Property that are
necessary to the conduct of its business as currently conducted.
(d) This Agreement creates a valid security interest in favor
of the Secured Party in the Collateral, to the extent a security interest
therein can be created under the Code, securing the payment of the Secured
Obligations. Except to the extent a security interest in the Collateral cannot
be perfected by the filing of a financing statement under the Code, upon the
filing of financing statements naming the Borrower, as debtor, and the Secured
Party, as secured party, in the jurisdictions listed next to the Borrower's name
on SCHEDULE 8 attached hereto all filings and other actions necessary to perfect
such security interest will have been taken. Upon the making of such filings,
the Secured Party shall have a first priority perfected security interest in the
Collateral of the Borrower to the extent such security interest can be perfected
by the filing of a financing statement under the Code (subject only to Permitted
Liens).
(e) Except for the Security Interest created hereby, (i) the
Borrower is and will at all times be the sole record and beneficial owner of the
Pledged Interests described on SCHEDULE 5, and, when acquired by the Borrower,
of any Pledged Interests acquired after the Closing Date, in each case free and
clear of all Liens other than Permitted Liens; (ii) all of the Pledged Interests
are (or, in the case of Pledged Interests acquired after the Closing Date, will
be) duly authorized, validly issued, fully paid and nonassessable and the
Pledged Interests constitute or will constitute the percentage of the issued and
outstanding Stock of the Pledged Companies identified on SCHEDULE 5 hereto, as
supplemented or modified by any Pledged Interests Addendum or any Supplement to
this Agreement; (iii) the Borrower has the right and requisite authority to
pledge the Investment Related Property pledged by the Borrower to the Secured
Party as provided herein; (iv) all actions necessary to perfect, and establish
the first priority of, the Liens of the Secured Party granted under the Loan
Documents in the Investment Related Collateral, and the proceeds thereof, will
have been duly taken (A) upon the execution and delivery of this Agreement; (B)
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upon the taking of possession by the Secured Party of any certificates
constituting the Pledged Interests, to the extent such Pledged Interests are
represented by certificates, together with undated transfer powers undated and
endorsed in blank by the Borrower; (C) upon the filing of financing statements
in the applicable jurisdiction set forth on SCHEDULE 8 attached hereto for the
Borrower with respect to the Pledged Interests of the Borrower that are not
represented by certificates; and (D) with respect to each Securities Account,
upon the delivery of a Control Agreement adequately describing such Securities
Account, duly executed by the Borrower, the Secured Party and securities
intermediary maintaining such Securities Account; (v) the Borrower has delivered
to and deposited with the Secured Party (or, with respect to any Pledged
Interests created or obtained after the Closing Date, will deliver and deposit
in accordance with SECTIONS 6(A) and 8 hereof) all certificates representing the
Pledged Interests owned by the Borrower to the extent such Pledged Interests are
represented by certificates, and undated transfer powers endorsed in blank with
respect to such certificates; and (vi) none of the Pledged Interests owned or
held by the Borrower has been issued or transferred in violation of any
securities registration, securities disclosure, or similar laws of any
jurisdiction to which such issuance or transfer may be subject.
(f) Other than the filing of financing statements and the
Copyright Security Agreement, Patent Security Agreement and Trademark Security
Agreement and the execution and delivery of an appropriate Control Agreement
with respect to each Securities Account, no consent, approval, authorization, or
other order or other action by, and no notice to or filing with, any
Governmental Authority or any other Person is required (i) for the grant of a
Security Interest by the Borrower in and to the Collateral pursuant to this
Agreement or for the execution, delivery, or performance of this Agreement by
the Borrower, or (ii) for the exercise by the Secured Party of the voting or
other rights provided for in this Agreement with respect to the Investment
Related Property or the remedies in respect of the Collateral pursuant to this
Agreement, except as may be required in connection with such disposition of
Investment Related Property by laws affecting the offering and sale of
securities generally and except for consents or approvals that have been
obtained and that are still in force and effect. No Intellectual Property
License to which the Borrower is a party requires any consent for the Borrower
to grant the security interest granted hereunder in the Borrower's right, title
or interest in or to any Copyrights, Patents, Trademarks or material
Intellectual Property Licenses.
6. COVENANTS. The Borrower covenants and agrees with the Secured Party
that from and after the date of this Agreement and until the date of termination
of this Agreement in accordance with SECTION 21 hereof:
(a) POSSESSION OF COLLATERAL. In the event that any
Collateral, including Proceeds, is evidenced by or consists of Negotiable
Collateral, certificated Investment Related Property, or Chattel Paper, and if
and to the extent that perfection or priority of the Secured Party's Liens
granted under the Loan Documents is dependent on or enhanced by possession, the
Borrower, promptly upon the request of the Secured Party, shall execute such
other documents and instruments as shall be reasonably requested by the Secured
Party or, if applicable, endorse and deliver physical possession of such
Negotiable Collateral, certificated Investment Related Property, or Chattel
Paper to the Secured Party, together with such undated transfer powers endorsed
in blank as shall be requested by the Secured Party.
(b) CHATTEL PAPER.
(i) The Borrower shall take all steps reasonably
necessary to maintain all (A) electronic chattel paper so that the Secured Party
has control of the electronic chattel paper in the manner specified in Section
9-105 of the Code and (B) all transferable records so that the Secured Party has
control of the transferable records in the manner specified in Section 16 of the
Uniform Electronic Transactions Act, as in effect in the jurisdiction governing
such transferable record, and Section 201 of the federal Electronic Signatures
in Global and National Commerce Act as in effect in any relevant jurisdiction.
(ii) If the Borrower retains possession of any
Chattel Paper or instruments (which retention of possession shall be subject to
the extent permitted hereby and by the Loan Agreement), promptly upon the
9
request of the Secured Party, such Chattel Paper and instruments shall be marked
with the following legend: "This writing and the obligations evidenced or
secured hereby are subject to the Security Interest of Emigrant Capital Corp.".
(c) CONTROL AGREEMENTS.
(i) Except to the extent otherwise consented to by
the Secured Party, the Borrower shall use its best efforts to obtain an
authenticated Control Agreement from each bank maintaining a Deposit Account for
the Borrower. Each Control Agreement shall provide, among other things, that the
bank maintaining such Deposit Account will comply with any instructions
originated by the Secured Party directing disposition of the funds in such
Deposit Account without further consent by the Borrower. The Secured Party
agrees not to issue any such instruction with respect to such Deposit Account
unless a Default has occurred. Upon the occurrence of a Default, the Secured
Party shall be free to issue such instructions and the subsequent elimination,
cure or waiver of such Default shall not vitiate eliminate the effectiveness of
such notice.
(ii) The Borrower shall use its best efforts to
obtain an authenticated Control Agreement from (A) each issuer of uncertificated
securities pledged pursuant to this Agreement and (B) each securities
intermediary and commodities intermediary maintaining any financial assets or
commodities for the account of the Borrower.
(iii) The Borrower shall use its best efforts to
obtain an authenticated Control Agreement with respect to all of the Borrower's
electronic chattel paper and investment property.
(d) LETTER-OF-CREDIT RIGHTS. If the Borrower is or becomes the
beneficiary of a letter of credit, the Borrower shall promptly (and in any event
within 2 Business Days after becoming a beneficiary), notify the Secured Party
thereof and, upon the request by the Secured Party, shall use its best efforts
to provide the Secured Party with control of the letter-of-credit rights
relating thereto in the manner specified in Section 9-107 of the Code.
(e) COMMERCIAL TORT CLAIMS. The Borrower shall promptly (and
in any event within 5 Business Days of receipt thereof) notify the Secured Party
in writing of any Commercial Tort Claim that the Borrower has against any party
and of which the Borrower becomes aware and, upon request of the Secured Party,
promptly amend SCHEDULE 1 to this Agreement to describe such after-acquired
Commercial Tort Claim in a manner that reasonably identifies such Commercial
Tort Claim, and hereby authorizes the filing of additional financing statements
or amendments to existing financing statements describing such Commercial Tort
Claim, and agrees to do such other acts or things deemed necessary or desirable
by the Secured Party to give the Secured Party a first priority (subject to
Permitted Liens), perfected security interest in any such Commercial Tort Claim.
(f) GOVERNMENT CONTRACTS. If any Account or Chattel Paper
arises out of a contract or contracts with the United States of America or any
department, agency, or instrumentality thereof, the Borrower shall promptly (and
in any event within 5 Business Days of the creation thereof) notify the Secured
Party thereof in writing and execute any instruments or take any steps
reasonably required by the Secured Party in order that all moneys due or to
become due under such contract or contracts shall be assigned to the Secured
Party and shall provide written notice thereof under the Assignment of Claims
Act or other applicable law.
(g) INTELLECTUAL PROPERTY.
(i) Upon the request of the Secured Party, in order
to facilitate filings with the United States Patent and Trademark Office and the
United States Copyright Office, the Borrower shall execute and deliver to the
Secured Party one or more Copyright Security Agreements, Trademark Security
10
Agreements, or Patent Security Agreements to further evidence the Liens of the
Secured Party granted under the Loan Documents on the Borrower's Patents,
Trademarks, or Copyrights, and the General Intangibles of the Borrower relating
thereto or represented thereby.
(ii) The Borrower shall have the duty, to take all
necessary steps, to the extent deemed economically desirable by the Borrower in
the operation of its business, (A) to diligently enforce and defend the
Borrower's Patents, Trademarks and Copyrights, including promptly suing for
infringement, misappropriation, or dilution and to recover any and all damages
for such infringement, misappropriation, or dilution, and filing for opposition,
interference, and cancellation against conflicting intellectual property rights
of any third party, (B) to prosecute diligently any trademark application or
service xxxx application that is part of the Trademarks pending as of the date
hereof or hereafter until the termination of this Agreement, (C) to prosecute
diligently any patent application that is part of the Patents pending as of the
date hereof or hereafter until the termination of this Agreement, and (D) to
take all action necessary to preserve and maintain all of the Borrower's
Trademarks, Patents, Copyrights, Intellectual Property Licenses, and its rights
therein, including paying all maintenance fees and filing applications for
renewal, affidavits of use and affidavits of noncontestability, as applicable.
The Borrower shall promptly file an application with the United States Copyright
Office for any Copyright that has not been registered with the United States
Copyright Office if such Copyright is necessary in connection with the operation
of the Borrower's business. Any expenses incurred in connection with the
foregoing shall be borne by the Borrower. The Borrower further agrees not to
abandon any Trademark, Patent, Copyright, or Intellectual Property License that
is necessary or economically desirable in the operation of the Borrower's
business.
(iii) The Borrower acknowledges and agrees that the
Secured Party shall have no duties with respect to the Trademarks, Patents,
Copyrights, or Intellectual Property Licenses. Without limiting the generality
of this SECTION 6(G), the Borrower acknowledges and agrees that the Secured
Party shall not be under any obligation to take any steps necessary to preserve
rights in the Trademarks, Patents, Copyrights, or Intellectual Property Licenses
against any other Person, but the Secured Party may do so at its option from and
after the occurrence and during the continuance of an Event of Default, and all
expenses incurred in connection therewith (including reasonable fees and
expenses of attorneys and other professionals) shall be for the sole account of
Borrower and shall be reimbursed by Borrower.
(iv) In no event shall the Borrower, either itself or
through any agent, employee, licensee, or designee, file an application for the
registration of any Copyright with the United States Copyright Office (or any
similar office or agency in another country) without giving the Secured Party
prior written notice thereof or any Patent or Trademark with the United States
Patent and Trademark Office (or any similar office or agency in another country)
without giving the Secured Party written notice thereof promptly thereafter.
Promptly upon any such filing, the Borrower shall comply with SECTION 6(G)(I)
hereof.
(h) INVESTMENT RELATED PROPERTY.
(i) If the Borrower shall receive or become entitled
to receive any Pledged Interests after the Closing Date, it shall promptly (and
in any event within 2 Business Days of receipt thereof) deliver to the Secured
Party a duly executed Pledged Interests Addendum identifying such Pledged
Interests.
(ii) All sums of money and property paid or
distributed in respect of the Investment Related Property which are received by
the Borrower shall be held by the Borrower in trust for the benefit of the
Secured Party segregated from the Borrower's other property, and the Borrower
shall deliver it forthwith to the Secured Party in the exact form received.
(iii) The Borrower shall promptly deliver to the
Secured Party a copy of each material written notice or other material written
communication received by it in respect of any Pledged Interests.
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(iv) The Borrower shall not make or consent to any
amendment or other modification or waiver with respect to any Pledged Interests,
Pledged Operating Agreement, or Pledged Partnership Agreement, or enter into any
agreement or permit to exist any restriction with respect to any Pledged
Interests other than pursuant to the Loan Documents.
(v) The Borrower agrees that it will cooperate with
the Secured Party in obtaining all necessary approvals and making all necessary
filings under federal, state or local in order to constitute the Security
Interest in the Investment Related Property a fully perfected first priority
security interest, subject only to Permitted Liens.
(vi) As to all limited liability company or
partnership interests, issued under any Pledged Operating Agreement or Pledged
Partnership Agreement, the Borrower hereby represents, warrants and covenants
that the Pledged Interests issued pursuant to such agreement (A) are not and
shall not be dealt in or traded on securities exchanges or in securities
markets, (B) do not and will not constitute investment company securities, and
(C) are not and will not be held by the Borrower in a securities account. In
addition, none of the Pledged Operating Agreements, the Pledged Partnership
Agreements, or any other agreements governing any of the Pledged Interests
issued under any Pledged Operating Agreement or Pledged Partnership Agreement,
provide or shall provide that such Pledged Interests are securities governed by
Article 8 of the Uniform Commercial Code as in effect in any relevant
jurisdiction.
(i) REAL PROPERTY; FIXTURES. The Borrower covenants and agrees
that upon the acquisition of any fee interest in Real Property it will promptly
(and in any event within 5 Business Days of acquisition) notify the Secured
Party of the acquisition of such Real Property and will grant to the Secured
Party a first Mortgage lien (subject to Permitted Liens and any exceptions to
title existing at the time the fee interest in such Real Property is conveyed to
the Borrower and appearing on schedule B to the title insurance policy insuring
the Borrower's fee interest in such Real Property) on each fee interest in Real
Property now or hereafter owned by the Borrower and shall deliver such other
documentation and opinions, in form and substance reasonably satisfactory to the
Secured Party, in connection with the grant of such Mortgage as the Secured
Party shall reasonably request, including title insurance policies, financing
statements, fixture filings and environmental audits and the Borrower shall pay
all recording costs, intangibles taxes and other fees and costs (including
reasonable attorneys' fees and expenses) incurred in connection therewith. The
Borrower acknowledges and agrees that, to the extent permitted by applicable
law, all of the Collateral (other than Real Property Collateral) shall remain
personal property regardless of the manner of its attachment or affixation to
Real Property.
(j) TRANSFERS AND OTHER LIENS. The Borrower shall not (i)
sell, assign (by operation of law or otherwise) or otherwise dispose of, or
grant any option with respect to, any of the Collateral, except as expressly
permitted by the Loan Agreement and except for the sale of inventory in the
ordinary course of business, or (ii) create or permit to exist any Lien upon or
with respect to any of the Collateral of the Borrower, except for Permitted
Liens. The inclusion of Proceeds in the Collateral shall not be deemed to
constitute the Secured Party's consent to any sale or other disposition of any
of the Collateral except as expressly permitted in this Agreement or the other
Loan Documents.
(k) OTHER ACTIONS AS TO ANY AND ALL COLLATERAL. The Borrower
shall promptly (and in any event within 5 Business Days of acquiring or
obtaining such Collateral) notify the Secured Party in writing upon (i)
acquiring or otherwise obtaining any Collateral after the date hereof consisting
of Trademarks, Patents, Copyrights, Intellectual Property Licenses, Investment
Related Property, Chattel Paper (electronic, tangible or otherwise), documents
(as defined in Article 9 of the Code), promissory notes (as defined in the Code,
or instruments (as defined in the Code) or (ii) any amount payable under or in
connection with any of the Collateral being or becoming evidenced after the date
12
hereof by any Chattel Paper, documents, promissory notes, or instruments and, in
each such case upon the request of the Secured Party, promptly execute such
other documents, or if applicable, deliver such Chattel Paper, other documents
or certificates evidencing any Investment Related Property and do such other
acts or things reasonably deemed necessary or desirable by the Secured Party to
protect the Secured Party's Security Interest therein.
(l) CONTROLLED ACCOUNTS.
(i) The Borrower shall (i) establish and maintain
cash management services of a type and on terms reasonably satisfactory to the
Secured Party at one or more of the banks set forth on SCHEDULE 6(L) (each a
"CONTROLLED ACCOUNT BANK"), and shall take reasonable steps to ensure that all
of its Account Debtors forward payment of the amounts owed by them directly to
such Controlled Account Bank, and (ii) deposit or cause to be deposited
promptly, and in any event no later than the first Business Day after the date
of receipt thereof, all of its Collections (including those sent directly by the
Account Debtors to the Borrower) into a bank account of the Borrower (each, a
"CONTROLLED ACCOUNT") at one of the Controlled Account Banks.
(ii) Each Controlled Account Bank shall establish and
maintain Controlled Account Agreements with the Secured Party and the Borrower,
in form and substance reasonably acceptable to the Secured Party. Each such
Controlled Account Agreement shall provide, among other things, that (a) the
Controlled Account Bank will comply with any instructions originated by the
Secured Party directing the disposition of the funds in such Controlled Account
without further consent by the Borrower, (b) the Controlled Account Bank has no
rights of setoff or recoupment or any other claim against the applicable
Controlled Account other than for payment of its service fees and other charges
directly related to the administration of such Controlled Account and for
returned checks or other items of payment, and (c) upon the instruction of the
Secured Party (an "ACTIVATION INSTRUCTION"), the Controlled Account Bank will
forward by daily sweep all amounts in the applicable Controlled Account to an
account as to which the Controlled Account Bank shall have received written
notice from the Secured Party, together with appropriate wire transfer
instructions enabling it to make such transfer. The Secured Party agrees not to
issue an Activation Instruction with respect to the Controlled Accounts unless a
Default has occurred and is continuing at the time such Activation Instruction
is issued. The Secured Party agrees to use commercially reasonable efforts to
rescind an Activation Instruction (the "RESCISSION") if: (x) the Default by
reason of which such Activation Instruction was issued is waived in writing in
accordance with the terms of this Agreement, and (y) no additional Default has
occurred prior to and is continuing on the date of the Rescission.
(m) So long as no Default or Event of Default has occurred and
is continuing, Borrower may amend SCHEDULE 6(L) to add or replace a Controlled
Account Bank or Controlled Account; PROVIDED, HOWEVER, that (i) such prospective
Controlled Account Bank shall be reasonably satisfactory to the Secured Party,
and (ii) prior to the time of the opening of such Controlled Account, the
Borrower and such prospective Controlled Account Bank shall have executed and
delivered to the Secured Party a Controlled Account Agreement. The Borrower
shall close any of its Controlled Accounts (and establish replacement Controlled
Account accounts in accordance with the foregoing sentence) as promptly as
practicable and in any event within 45 days of notice from the Secured Party
that the operating performance, funds transfer, or availability procedures or
performance of the Controlled Account Bank with respect to Controlled Accounts
or the Secured Party's liability under any Controlled Account Agreement with
such Controlled Account Bank is no longer acceptable in the Secured Party's
reasonable judgment.
7. RELATION TO OTHER SECURITY DOCUMENTS. The provisions of this
Agreement shall be read and construed with the other Loan Documents referred to
below in the manner so indicated.
(a) LOAN AGREEMENT. In the event of any conflict between any
provision in this Agreement and a provision in the Loan Agreement, such
provision of the Loan Agreement shall control.
(b) PATENT, TRADEMARK, COPYRIGHT SECURITY AGREEMENTS. The
provisions of the Copyright Security Agreements, Trademark Security Agreements,
and Patent Security Agreements are supplemental to the provisions of this
Agreement, and nothing contained in the Copyright Security Agreements, Trademark
13
Security Agreements, or the Patent Security Agreements shall limit any of the
rights or remedies of the Secured Party hereunder.
8. FURTHER ASSURANCES.
(a) The Borrower agrees that from time to time, at its own
expense, the Borrower will promptly execute and deliver all further instruments
and documents, and take all further action, that may be necessary or that the
Secured Party may reasonably request, in order to perfect and protect the
Security Interest granted or purported to be granted hereby or to enable the
Secured Party to exercise and enforce its rights and remedies hereunder with
respect to any of the Collateral.
(b) The Borrower authorizes the filing by the Secured Party of
financing or continuation statements, or amendments thereto, and the Borrower
will execute and deliver to the Secured Party such other instruments or notices,
as may be necessary or as the Secured Party may reasonably request, in order to
perfect and preserve the Security Interest granted or purported to be granted
hereby.
(c) The Borrower authorizes the Secured Party at any time and
from time to time to file, transmit, or communicate, as applicable, financing
statements and amendments (i) describing the Collateral as "all personal
property of debtor" or "all assets of debtor" or words of similar effect, (ii)
describing the Collateral as being of equal or lesser scope or with greater
detail, or (iii) that contain any information required by chapter 5 of Article 9
of the Code for the sufficiency thereof or filing office acceptance. The
Borrower also hereby ratifies any and all financing statements or amendments
previously filed by the Secured Party in any jurisdiction relating to the
Secured Obligations.
(d) The Borrower acknowledges that it is not authorized to
file any financing statement or amendment or termination statement with respect
to any financing statement filed in connection with this Agreement without the
prior written consent of the Secured Party, subject to the Borrower's rights
under Section 9-509(d)(2) of the Code.
9. SECURED PARTY'S RIGHT TO PERFORM CONTRACTS, EXERCISE RIGHTS, ETC.
Upon the occurrence and during the continuance of an Event of Default, the
Secured Party (or its designee) (a) may, to the extent permitted by law, perform
any and all of the obligations of the Borrower contained in any contract, lease,
or other agreement and exercise any and all rights of the Borrower therein
contained as fully as the Borrower itself could, (b) shall have the right to use
the Borrower's rights under Intellectual Property Licenses in connection with
the enforcement of the Secured Party's rights hereunder, including the right to
prepare for sale and sell any and all Inventory in compliance with applicable
law and Equipment now or hereafter owned by the Borrower and now or hereafter
covered by such licenses, and (c) shall have the right to request that any Stock
that is pledged hereunder be registered in the name of the Secured Party or any
of its nominees.
10. SECURED PARTY APPOINTED ATTORNEY-IN-FACT. The Borrower hereby
irrevocably appoints the Secured Party its attorney-in-fact, with full authority
in the place and stead of the Borrower and in the name of the Borrower or
otherwise, at such time as an Event of Default has occurred and is continuing
under the Loan Agreement, to take any action and to execute any instrument which
the Secured Party may reasonably deem necessary or advisable to accomplish the
purposes of this Agreement, including:
(a) to ask for, demand, collect, xxx for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become due under
or in connection with the Accounts or any other Collateral of the Borrower;
(b) to receive and open all mail addressed to the Borrower and
to notify postal authorities to change the address for the delivery of mail to
the Borrower to that of the Secured Party;
14
(c) to receive, indorse, and collect any drafts or other
instruments, documents, Negotiable Collateral or Chattel Paper;
(d) to file any claims or take any action or institute any
proceedings which the Secured Party may deem necessary or desirable for the
collection of any of the Collateral of the Borrower or otherwise to enforce the
rights of the Secured Party with respect to any of the Collateral;
(e) to repair, alter, or supply goods, if any, necessary to
fulfill in whole or in part the purchase order of any Person obligated to the
Borrower in respect of any Account of the Borrower;
(f) to use any labels, Patents, Trademarks, trade names, URLs,
domain names, industrial designs, Copyrights, advertising matter or other
industrial or intellectual property rights, in advertising for sale and selling
Inventory and other Collateral and to collect any amounts due under Accounts,
contracts or Negotiable Collateral of the Borrower; and
(g) the Secured Party shall have the right, but shall not be
obligated, to bring suit in its own name to enforce the Trademarks, Patents,
Copyrights and Intellectual Property Licenses and, if the Secured Party shall
commence any such suit, the Borrower shall, at the request of the Secured Party,
do any lawful acts and execute any and all proper documents reasonably required
by the Secured Party in aid of such enforcement.
To the extent permitted by law, the Borrower hereby ratifies all that
such attorney-in-fact shall lawfully do or cause to be done by virtue hereof.
This power of attorney is coupled with an interest and shall be irrevocable
until this Agreement is terminated.
11. THE SECURED PARTY MAY PERFORM. If the Borrower shall fail to
perform any agreement contained herein, the Secured Party may itself perform, or
cause performance of, such agreement, and the reasonable expenses of the Secured
Party incurred in connection therewith shall be payable by the Borrower.
12. COLLECTION OF ACCOUNTS, GENERAL INTANGIBLES AND NEGOTIABLE
COLLATERAL. At any time upon the occurrence and during the continuation of an
Event of Default, the Secured Party or the Secured Party's designee may (a)
notify Account Debtors of the Borrower that the Accounts, General Intangibles,
Chattel Paper or Negotiable Collateral have been assigned to the Secured Party,
or that the Secured Party has a security interest therein, and (b) collect the
Accounts, General Intangibles and Negotiable Collateral directly, and any
collection costs and expenses shall constitute part of the Borrower's Secured
Obligations under the Loan Documents.
13. DISPOSITION OF PLEDGED INTERESTS BY THE SECURED PARTY. None of the
Pledged Interests existing as of the date of this Agreement are, and Pledged
Interests hereafter acquired on the date of acquisition thereof may not be,
registered or qualified under the various federal or state securities laws of
the United States and disposition thereof after an Event of Default may be
restricted to one or more private (instead of public) sales in view of the lack
of such registration. The Borrower understands that in connection with such
disposition, the Secured Party may approach only a restricted number of
potential purchasers and further understands that a sale under such
circumstances may yield a lower price for the Pledged Interests than if the
Pledged Interests were registered and qualified pursuant to federal and state
securities laws and sold on the open market. The Borrower, therefore, agrees
that: (a) if the Secured Party shall, pursuant to the terms of this Agreement,
sell or cause the Pledged Interests or any portion thereof to be sold at a
private sale, the Secured Party shall have the right to rely upon the advice and
opinion of any nationally recognized brokerage or investment firm (but shall not
be obligated to seek such advice and the failure to do so shall not be
considered in determining the commercial reasonableness of such action) as to
the best manner in which to offer the Pledged Interest or any portion thereof
for sale and as to the best price reasonably obtainable at the private sale
thereof; and (b) such reliance shall be conclusive evidence that the Secured
Party has handled the disposition in a commercially reasonable manner.
15
14. VOTING RIGHTS.
(a) Upon the occurrence and during the continuation of an
Event of Default, (i) the Secured Party may, at its option, and with 2 Business
Days' prior written notice to the Borrower, and in addition to all rights and
remedies available to the Secured Party under any other agreement, at law, in
equity, or otherwise, exercise all voting rights, and all other ownership or
consensual rights in respect of the Pledged Interests owned by the Borrower, but
under no circumstances is the Secured Party obligated by the terms of this
Agreement to exercise such rights, and (ii) if the Secured Party duly exercises
its right to vote any of such Pledged Interests, the Borrower hereby appoints
the Secured Party, the Borrower's true and lawful attorney-in-fact and
irrevocable proxy to vote such Pledged Interests in any manner the Secured Party
deems advisable for or against all matters submitted or which may be submitted
to a vote of shareholders, partners or members, as the case may be. The power of
attorney granted hereby is coupled with an interest and shall be irrevocable.
(b) For so long as the Borrower shall have the right to vote
the Pledged Interests owned by it, the Borrower covenants and agrees that it
will not, without the prior written consent of the Secured Party, vote or take
any consensual action with respect to such Pledged Interests which would
materially adversely affect the rights of the Secured Party or the value of the
Pledged Interests.
15. REMEDIES. Upon the occurrence and during the continuance of an
Event of Default:
(a) The Secured Party may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein, in the
other Loan Documents, or otherwise available to it, all the rights and remedies
of a secured party on default under the Code or any other applicable law.
Without limiting the generality of the foregoing, the Borrower expressly agrees
that, in any such event, the Secured Party without demand of performance or
other demand, advertisement or notice of any kind (except a notice specified
below of time and place of public or private sale) to or upon the Borrower or
any other Person (all and each of which demands, advertisements and notices are
hereby expressly waived to the maximum extent permitted by the Code or any other
applicable law), may take immediate possession of all or any portion of the
Collateral and (i) require the Borrower to, and the Borrower hereby agrees that
it will at its own expense and upon request of the Secured Party forthwith,
assemble all or part of the Collateral as directed by the Secured Party and make
it available to the Secured Party at one or more locations where the Borrower
regularly maintains Inventory, and (ii) without notice except as specified
below, sell the Collateral or any part thereof in one or more parcels at public
or private sale, at any of the Secured Party's offices or elsewhere, for cash,
on credit, and upon such other terms as the Secured Party may deem commercially
reasonable. The Borrower agrees that, to the extent notice of sale shall be
required by law, at least 10 days notice to the Borrower of the time and place
of any public sale or the time after which any private sale is to be made shall
constitute reasonable notification and specifically such notice shall constitute
a reasonable "authenticated notification of disposition" within the meaning of
Section 9-611 of the Code. The Secured Party shall not be obligated to make any
sale of Collateral regardless of notice of sale having been given. The Secured
Party may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned.
(b) The Secured Party is hereby granted a license or other
right to use, without liability for royalties or any other charge, the
Borrower's labels, Patents, Copyrights, rights of use of any name, trade
secrets, trade names, Trademarks, service marks and advertising matter, URLs,
domain names, industrial designs, other industrial or intellectual property or
any property of a similar nature, whether owned by the Borrower or with respect
to which the Borrower has rights under license, sublicense, or other agreements,
to the extent it pertains to the Collateral, in preparing for sale, advertising
for sale and selling any Collateral.
(c) The Secured Party may, in addition to other rights and
remedies provided for herein, in the other Loan Documents, or otherwise
available to it under applicable law and without the requirement of notice to or
upon any the Borrower or any other Person (which notice is hereby expressly
waived to the maximum extent permitted by the Code or any other applicable law),
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(i) with respect to the Borrower's Deposit Accounts in which the Liens of the
Secured Party granted under the Loan Documents are perfected by control under
Section 9-104 of the Code, instruct the bank maintaining such Deposit Account
for the Borrower to pay the balance of such Deposit Account to or for the
benefit of the Secured Party, and (ii) with respect to any of the Borrower's
Securities Accounts in which the Liens of the Secured Party granted under the
Loan Documents are perfected by control under Section 9-106 of the Code,
instruct the securities intermediary maintaining such Securities Account for the
Borrower to (A) transfer any cash in such Securities Account to or for the
benefit of the Secured Party, or (B) liquidate any financial assets in such
Securities Account that are customarily sold on a recognized market and transfer
the cash proceeds thereof to or for the benefit of the Secured Party.
(d) Any cash held by the Secured Party as Collateral and all
cash proceeds received by the Secured Party in respect of any sale of,
collection from, or other realization upon all or any part of the Collateral
shall be applied against the Secured Obligations in the order set forth in the
Loan Agreement. In the event the proceeds of Collateral are insufficient to
satisfy all of the Secured Obligations in full, the Borrower shall remain liable
for any such deficiency.
(e) The Borrower hereby acknowledges that the Secured
Obligations arose out of a commercial transaction, and agrees that if an Event
of Default shall occur and be continuing the Secured Party shall have the right
to an immediate writ of possession without notice of a hearing. The Secured
Party shall have the right to the appointment of a receiver for the properties
and assets of the Borrower, and the Borrower hereby consents to such rights and
such appointment and hereby waives any objection the Borrower may have thereto
or the right to have a bond or other security posted by the Secured Party.
16. REMEDIES CUMULATIVE. Each right, power, and remedy of the Secured
Party as provided for in this Agreement or in the other Loan Documents or now or
hereafter existing at law or in equity or by statute or otherwise shall be
cumulative and concurrent and shall be in addition to every other right, power,
or remedy provided for in this Agreement or in the other Loan Documents or now
or hereafter existing at law or in equity or by statute or otherwise, and the
exercise or beginning of the exercise by the Secured Party, of any one or more
of such rights, powers, or remedies shall not preclude the simultaneous or later
exercise by the Secured Party of any or all such other rights, powers, or
remedies.
17. MARSHALING. The Secured Party shall not be required to marshal any
present or future collateral security (including but not limited to 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 and remedies hereunder
and in respect of such collateral security and other assurances of payment shall
be cumulative and in addition to all other rights and remedies, however existing
or arising. To the extent that it lawfully may do so, the Borrower hereby agrees
that it will not invoke any law relating to the marshaling of collateral which
might cause delay in or impede the enforcement of the Secured Party's rights and
remedies 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 Borrower hereby irrevocably waives the benefits of all such laws.
18. INDEMNITY AND EXPENSES.
(a) The Borrower agrees to indemnify the Secured Party from
and against all claims, lawsuits and liabilities (including reasonable attorneys
fees) growing out of or resulting from this Agreement (including enforcement of
this Agreement) or any other Loan Document to which the Borrower is a party,
except claims, losses or liabilities resulting from the gross negligence or
willful misconduct of the party seeking indemnification as determined by a final
non-appealable order of a court of competent jurisdiction. This provision shall
survive the termination of this Agreement and the Loan Agreement and the
repayment of the Secured Obligations.
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(b) The Borrower shall, upon demand, pay to the Secured Party
all the Lender Expenses which the Secured Party may incur in connection with (i)
the administration of this Agreement, (ii) the custody, preservation, use or
operation of, or, upon an Event of Default, the sale of, collection from, or
other realization upon, any of the Collateral in accordance with this Agreement
and the other Loan Documents, (iii) the exercise or enforcement of any of the
rights of the Secured Party hereunder or (iv) the failure by the Borrower to
perform or observe any of the provisions hereof.
19. MERGER, AMENDMENTS; ETC. THIS AGREEMENT, TOGETHER WITH THE OTHER
LOAN DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE
PARTIES. No waiver of any provision of this Agreement, and no consent to any
departure by the Borrower herefrom, shall in any event be effective unless the
same shall be in writing and signed by the Secured Party, and then such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given. No amendment of any provision of this Agreement shall
be effective unless the same shall be in writing and signed by the Secured Party
and the Borrower.
20. ADDRESSES FOR NOTICES. All notices and other communications
provided for hereunder shall be given in the form and manner and delivered to
the Secured Party at its address specified in the Loan Agreement, and to the
Borrower at its address specified in the Loan Agreement, as applicable, or, as
to any party, at such other address as shall be designated by such party in a
written notice to the other party.
21. CONTINUING SECURITY INTEREST: ASSIGNMENTS UNDER LOAN AGREEMENT.
This Agreement shall create a continuing security interest in the Collateral and
shall (a) remain in full force and effect until the Secured Obligations have
been paid in full in cash in accordance with the provisions of the Loan
Agreement and the obligation of the Lender to extend any future Loans under the
Loan Agreement have expired or have been terminated, (b) be binding upon the
Borrower, and its successors and assigns, and (c) inure to the benefit of, and
be enforceable by, the Secured Party, and its successors, transferees and
assigns. Without limiting the generality of the foregoing CLAUSE (C), the
Secured Party may, in accordance with the provisions of the Loan Agreement,
assign or otherwise transfer all or any portion of its rights and obligations
under the Loan Agreement to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to the
Secured Party herein or otherwise. Upon payment in full in cash of the Secured
Obligations in accordance with the provisions of the Loan Agreement and the
expiration or termination of the obligation of the Secured Party to extend any
future Loans under the Loan Agreement, the Security Interest granted hereby
shall terminate and all rights to the Collateral shall revert to the Borrower or
any other Person entitled thereto. At such time, the Secured Party will
authorize the filing of appropriate termination statements to terminate such
Security Interests. No transfer or renewal, extension, assignment, or
termination of this Agreement or of the Loan Agreement, any other Loan Document,
or any other instrument or document executed and delivered by the Borrower to
the Secured Party nor any additional Advances or other loans made by the Secured
Party to Borrower, nor the taking of further security, nor the retaking or
re-delivery of the Collateral to the Borrower by the Secured Party shall release
the Borrower from any obligation, except a release or discharge executed in
writing by the Secured Party in accordance with the provisions of the Loan
Agreement. The Secured Party shall not by any act, delay, omission or otherwise,
be deemed to have waived any of its rights or remedies hereunder, unless such
waiver is in writing and signed by the Secured Party and then only to the extent
therein set forth. A waiver by the Secured Party of any right or remedy on any
occasion shall not be construed as a bar to the exercise of any such right or
remedy which the Secured Party would otherwise have had on any other occasion.
22. GOVERNING LAW.
(a) THE VALIDITY OF THIS AGREEMENT, THE CONSTRUCTION,
INTERPRETATION, AND ENFORCEMENT HEREOF, AND THE RIGHTS OF THE PARTIES HERETO
WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR RELATED HERETO SHALL BE
18
DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING
IN CONNECTION WITH THIS AGREEMENT SHALL BE TRIED AND LITIGATED ONLY IN THE STATE
AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE
COUNTY OF NEW YORK, STATE OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE
SECURED PARTY'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE THE SECURED
PARTY ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY
BE FOUND. THE SECURED PARTY AND EACH GRANTOR WAIVE, TO THE EXTENT PERMITTED
UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM
NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN
ACCORDANCE WITH THIS SECTION 22(B).
(c) TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, THE
SECURED PARTY AND EACH GRANTOR HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. THE SECURED PARTY AND EACH GRANTOR REPRESENT THAT EACH HAS
REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A
COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
23. MISCELLANEOUS.
(a) This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, shall be deemed to be an original, and all of
which, when taken together, shall constitute but one and the same Agreement.
Delivery of an executed counterpart of this Agreement by telefacsimile or other
electronic method of transmission shall be equally as effective as delivery of
an original executed counterpart of this Agreement. Any party delivering an
executed counterpart of this Agreement by telefacsimile or other electronic
method of transmission also shall deliver an original executed counterpart of
this Agreement but the failure to deliver an original executed counterpart shall
not affect the validity, enforceability, and binding effect of this Agreement.
The foregoing shall apply to each other Loan Document MUTATIS MUTANDIS.
(b) Any provision of this Agreement which is prohibited or
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof in that
jurisdiction or affecting the validity or enforceability of such provision in
any other jurisdiction.
(c) Headings used in this Agreement are for convenience only
and shall not be used in connection with the interpretation of any provision
hereof.
(d) The pronouns used herein shall include, when appropriate,
either gender and both singular and plural, and the grammatical construction of
sentences shall conform thereto.
(e) Unless the context of this Agreement or any other Loan
Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the terms "includes"
and "including" are not limiting, and the term "or" has, except where otherwise
indicated, the inclusive meaning represented by the phrase "and/or." The words
"hereof," "herein," "hereby," "hereunder," and similar terms in this Agreement
19
or any other Loan Document refer to this Agreement or such other Loan Document,
as the case may be, as a whole and not to any particular provision of this
Agreement or such other Loan Document, as the case may be. Section, subsection,
clause, schedule, and exhibit references herein are to this Agreement unless
otherwise specified. Any reference in this Agreement or in any other Loan
Document to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). Any reference herein or in any
other Loan Document to the satisfaction or repayment in full of the Secured
Obligations shall mean the repayment in full in cash (or cash collateralization
in accordance with the terms of the Loan Agreement) of all Secured Obligations
other than unasserted contingent indemnification Secured Obligations. Any
reference herein to any Person shall be construed to include such Person's
successors and assigns. Any requirement of a writing contained herein or in any
other Loan Document shall be satisfied by the transmission of a Record.
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17554278
IN WITNESS WHEREOF, the undersigned parties hereto have
executed this Agreement by and through their duly authorized officers, as of the
day and year first above written.
BORROWER: IVIVI TECHNOLOGIES, INC., as Borrower
By: /s/Xxxx X. Xxxxxxxxx
Name: Xxxx X. Xxxxxxxxx
Title: CFO
SECURED PARTY: EMIGRANT CAPITAL CORP., as Secured Party
By: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President
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