SECURITY AGREEMENT AND FINANCING STATEMENT
FINANCING
STATEMENT
THIS
SECURITY AGREEMENT AND FINANCING STATEMENT is made this 21st day of
September, 2010, between XXXXX
FARGO BANK, NATIONAL ASSOCIATION, acting through its Xxxxx Fargo Business
Credit, operating division (the "SECURED PARTY"), and SOUTHPEAK INTERACTIVE, L.L.C., a Virginia limited
liability company, GONE
OFF DEEP, LLC, a Delaware limited liability company, SOUTHPEAK INTERACTIVE CORP., a
Delaware corporation, and VID
SUB, LLC, a Delaware limited
liability company (collectively, the "DEBTOR"), as follows:
BACKGROUND:
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A.
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On
this date, the Secured Party and Debtor entered into a Master Purchase
Order Assignment Agreement (the "Assignment
Agreement").
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B.
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It
is a condition to Secured Party's performance of its obligations under the
Assignment Agreement that the Debtor execute and deliver this Agreement to
secure performance and payment of the "Liabilities" (as hereinafter
defined).
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THEREFORE, in consideration of
the agreements described in this Agreement and the Assignment Agreement, the
parties agree as follows:
1. Definitions. In this
Agreement, the following frequently used terms are defined as set forth in this
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(a) Each
term used in this Agreement which is defined in the Assignment Agreement will
have the same meaning herein as that ascribed to it in the Assignment
Agreement.
(b) The
"LIABILITIES" are all
payments and other obligations from time to time due or owing to the Secured
Party by the Debtor under the Assignment Agreement, this Agreement and any
agreement referred to in the Assignment Agreement or this
Agreement.
(c) The
"PRIMARY COLLATERAL"
means those assets of the Debtor set forth on Exhibit "A" attached to and made
part of this Agreement, whether now or hereafter existing or acquired, together
with all the proceeds thereof and Xxxxxx's interests therein.
(d) The
"COMMON COLLATERAL" are
those assets of Debtor set forth on Exhibit "B" attached to and made part of
this Agreement, whether now or hereafter existing or acquired, together with all
the proceeds thereof and Xxxxxx's interests therein which from time to time are
also pledged to a Senior Lender and as to which the Secured Party shall maintain
a subordinated security interest. If no Senior Lender is involved in
the subject transaction, Exhibit "A" shall be excluded from this Agreement and
the Primary Collateral and Common Collateral shall refer to the same
assets.
(e) The
"COLLATERAL" means the
Primary Collateral and the Common Collateral and the Secured Party's security
interest in the Collateral is referred to as the "LIEN".
(f) The
"SENIOR LIEN" is the
security interest in the Common Collateral maintained by a Senior Lender (if
any).
(g) The
"LOCATIONS" are Debtor's
facilities set forth at the end of this Agreement at which all or a portion of
the Collateral will be located.
2. Grant of
Security Interest. As security for
the performance and payment of the Liabilities, the Debtor hereby assigns,
grants, conveys, mortgages, hypothecates, pledges, and sets over to the Secured
Party a continuing first priority security interest for the use and benefit of
the Secured Party in the Primary Collateral; and a security interest for the use
and benefit of the Secured Party in the Common Collateral which is subordinate
only to the Senior Lien, if any.
3. Representations
and Warranties. The Debtor
represents, warrants, and agrees that: (i) except with respect to the Senior
Lien, no financing statement or other lien notice covering any portion of the
Collateral is on file in any public office; (ii) the Debtor is and at all times
will be the lawful owner of all Collateral, free of all liens and claims
whatsoever except the Senior Lien and the Lien; (iii) the Debtor has full power
and authority to execute this Agreement and to perform the Debtor's obligations
hereunder, and to subject the Collateral to the Lien; (iv) all information with
respect to Collateral set forth in any schedule, certificate or other writing at
any time heretofore, and all other written information heretofore or hereafter
furnished by the Debtor to the Secured Party is and will be true and correct in
all respects as of the date furnished; (v) the Locations include the address at
which any portion of the Collateral is located and Debtor will immediately
notify Secured Party of any other location at which any portion of the
Collateral is hereafter located; and (vi) there is no litigation or regulatory
complaint against the Debtor or affecting or relating to the Collateral or any
portion thereof which is pending or threatened as of this date other than as set
forth on Exhibit "E" of the Assignment Agreement.
4. Certificates,
Schedules and Reports. The Debtor will
from time to time, as the Secured Party may request, deliver to the Secured
Party such schedules and such certificates and reports respecting the Collateral
to such extent as the Secured Party may reasonably request. Any such
schedule, certificate or report shall be executed by an authorized officer of
the Debtor and shall be in such form and detail as the Secured Party may
specify. The Debtor shall immediately notify the Secured Party of the
occurrence of any event causing a material loss or depreciation in the value of
any item of Collateral, and the amount of such loss or
depreciation.
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5. Agreements
of the Debtor. The Debtor (i)
hereby authorizes the Secured Party (at the Debtor’s expense) to file such
financing statements and other documents necessary to perfect its Lien on the
Collateral, and do such other acts and things as Secured Party may from time to
time deem necessary to establish and maintain valid perfected security interests
in the Collateral; (ii) will keep all items of Collateral at the Locations;
(iii) will keep its records concerning all items of Collateral at the Locations,
which records will be of such character as will enable Secured Party to
determine at any time the status thereof; (iv) will furnish the Secured Party
such information concerning the Debtor and the Collateral as the Secured Party
may from time to time reasonably request; (v) will permit the Secured Party or
its designees, at all times, to inspect the Collateral, and to inspect, audit
and make copies of and extracts from all records and all other papers in the
possession of the Debtor, and will, upon request of the Secured Party, deliver
to the Secured Party all of such records and papers that pertain to the
Collateral; (vi) will, upon request of the Secured Party, stamp on its records
concerning the Collateral (and/or enter in its computer records concerning the
Collateral) a notation, in form reasonably satisfactory to the Secured Party, of
the security interests of the Secured Party hereunder; (vii) except as consented
to in writing by the Secured Party, will not sell, lease, assign or create or
permit to exist any lien on or security interest in any item of Collateral to or
in favor of anyone other than the Secured Party and the Senior Lender(s); (viii)
will at all times keep all items of Collateral insured against loss, damage,
theft and other risks, in such amounts, by such companies, under such policies
and in such form as may be required pursuant to the Assignment Agreement, which
policies shall contain a so-called lender's loss payable (or comparable) clause,
whereby a denial of payment based on policy conditions will not prevent recovery
by Secured Party, and such policies or certificates thereof shall be deposited
with the Secured Party; (ix) furnish to the Secured Party no less than thirty
(30) days prior to the occurrence of any change in the Locations or in Debtor's
name, notice in writing of such change; and (x) will reimburse the Secured Party
for all expenses, including reasonable attorneys' fees and legal expenses
incurred by the Secured Party in seeking to collect or enforce any rights under
this Agreement or the Assignment Agreement.
6. Remedies. Whenever Debtor
shall fail to perform any obligation in the manner and at the time required by
the Assignment Agreement or this Agreement, or whenever the Debtor or any of
them shall breach or default on a covenant made by any Debtor pursuant to the
Assignment Agreement or this Agreement (collectively an "event of default"), the
Secured Party may exercise any rights and remedies available to it under the
Assignment Agreement and applicable law. The Debtor and each of them
agrees, upon the occurrence of an event of default and during the continuance
thereof, if requested by the Secured Party, to assemble, at the Debtor's
expense, all or any part of the Collateral at a place designated by the Secured
Party. Without limiting the foregoing, upon an event of default the
Secured Party may, to the fullest extent permitted by applicable law, without
notice, advertisement, hearing or process of law of any kind, (i) enter upon any
premises where any of the Collateral may be located and take possession of and
remove such Collateral, (ii) sell any or all of the Collateral, free of all
rights and claims of the Debtor therein and thereto, at any public or private
sale, and (iii) bid for and purchase any or all of the Collateral at any such
sale. The Debtor and each of them hereby expressly waives, to the
fullest extent permitted by applicable law, any and all notices, advertisements,
hearings or process of law in connection with the exercise by the Secured Party
of any of its rights and remedies upon an event of default. Any
notification of the intended disposition of any of the Collateral required by
law shall be deemed reasonably and properly given if given at least ten (10)
days before such disposition. Any proceeds of any disposition by the
Secured Party of any of the Collateral will be applied by the Secured
Party.
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First, to the payment
of the Secured Party's reasonable out-of-pocket expenses in connection with the
Collateral or this Agreement and enforcement of the Secured Party's rights with
respect thereto or hereunder, including reasonable attorney's fees and legal
expenses;
Second, toward the
payment or satisfaction of the Liabilities in full; and
Third, any surplus to
be paid to the Debtor, its successors and assigns, or as a court of competent
jurisdiction may direct.
7. Relationship
with Senior Lender. If a Senior Lender is involved in the
instant transaction, the Secured Party and each Senior Lender have entered into
a Subordination Agreement of even date herewith which defines and sets forth the
respective rights and interests of the Secured Party and each Senior Lender in
connection with the Collateral.
8. Miscellaneous. (a) The
Secured Party shall be deemed to have exercised reasonable care in the custody
and preservation of any of the Collateral in its possession if it takes such
action for that purpose as the Debtor requests in writing, but failure of the
Secured Party to comply with any such request shall not of itself be deemed a
failure to exercise reasonable care, and no failure of the Secured Party to
preserve or protect any rights with respect to such Collateral against prior
parties, or to do any act with respect to the preservation of such Collateral
not so requested by the Debtor, shall be deemed a failure to exercise reasonable
care in the custody or preservation of such Collateral.
(b) All
notices required or permitted pursuant to this Agreement shall be in writing and
either personally delivered, sent by facsimile transmission (provided evidence
of transmission is maintained and the original of the transmittal notice is sent
by U.S. mail), or Federal Express or similar overnight delivery service, to the
Secured Party at its address set forth at the end of this Agreement and to the
Debtor at any one of the Locations. Notices given in the manner
prescribed herein shall be deemed given on the date sent or transmitted (as the
case may be). Either party may change its notice address by notice to
the other party in the manner prescribed herein.
(c) No
delay on the part of the Secured Party in the exercise of any right or remedy
shall operate as a waiver thereof, and no single or partial exercise by the
Secured Party of any right or remedy shall preclude other or further exercise
thereof or the exercise of any other right or remedy.
(d) No
amendment to, modification or waiver of, or consent with respect to, any
provision of this Agreement shall in any event be effective unless the same
shall be in writing and signed and delivered by the Secured Party, and then any
such amendment, modification, waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
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(e) All
obligations of the Debtor and all rights, powers and remedies of the Secured
Party expressed herein are in addition to all other rights, powers and remedies
possessed by Secured Party, including, without limitation, those provided by
applicable law or in any other written instrument or agreement relating to any
of the Liabilities or security therefor.
(f) The
Agreement shall in all respects be a continuing agreement and shall remain in
full force and effect until final payment in full of all the
Liabilities.
(g) THIS
AGREEMENT HAS BEEN DELIVERED AT DEERFIELD, ILLINOIS, AND SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS, SUBJECT,
HOWEVER, TO THE UNIFORM COMMERCIAL CODE OF ANY APPLICABLE
JURISDICTION. WHENEVER POSSIBLE, EACH PROVISION OF THIS AGREEMENT
SHALL BE INTERPRETED IN SUCH MANNER AS TO BE EFFECTIVE AND VALID UNDER
APPLICABLE LAW, BUT IF ANY PROVISION OF THIS AGREEMENT SHALL BE HELD INVALID,
ILLEGAL OR UNENFORCEABLE UNDER APPLICABLE LAW, SUCH PROVISION SHALL BE
INEFFECTIVE TO THE EXTENT OF SUCH INVALIDITY, ILLEGALITY OR UNENFORCEABILITY,
WITHOUT INVALIDATING THE REMAINDER OF SUCH PROVISION OR THE REMAINING PROVISIONS
OF THIS AGREEMENT.
(h) THE
DEBTOR IRREVOCABLY SUBMITS AND CONSENTS TO THE JURISDICTION OF THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS, EASTERN DIVISION, OR ANY
COURT OF THE STATE OF ILLINOIS LOCATED IN COOK COUNTY, AND WAIVES ANY AND ALL
OBJECTIONS TO JURISDICTION OR VENUE THAT ANY SUCH PARTY MAY HAVE UNDER THE LAWS
OF THE STATE OF ILLINOIS OR OTHERWISE IN THOSE COURTS IN ANY SUCH SUIT, ACTION,
OR PROCEEDING. FURTHER, TO THE EXTENT PERMITTED BY LAW, SERVICE OF
PROCESS SUFFICIENT FOR PERSONAL JURISDICTION IN ANY ACTION AGAINST THE DEBTOR
MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO ITS
ADDRESS FOR NOTICE AS PROVIDED IN THIS AGREEMENT.
(i) DEBTOR AND SECURED PARTY ACKNOWLEDGE
AND AGREE THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT, ANY OTHER
AGREEMENT RELATED HERETO OR WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREBY
OR THEREBY WOULD BE BASED UPON DIFFICULT AND COMPLEX ISSUES, AND THEREFORE, THE
PARTIES AGREE THAT ANY COURT PROCEEDING ARISING OUT OF ANY SUCH CONTROVERSY WILL
BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A
JURY.
(j) This
Agreement shall be binding upon, and shall inure to the benefit of, the Secured
Party and the Debtor and their respective successors and
assigns.
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(k) At
the option of the Secured Party, this Agreement, or a carbon, photographic or
other reproduction of this Agreement or of any Uniform Commercial Code financing
statement covering the Collateral or any portion thereof, shall be sufficient as
a Uniform Commercial Code financing statement and may be filed as
such.
(l) This
Agreement is the Security Agreement referred to in the Assignment
Agreement.
(m) In
the case of any irreconcilable conflict between the provisions of this Agreement
and the Assignment Agreement, the provisions of the Assignment Agreement shall
control.
(n) If
more than one person or entity is included as a Debtor hereunder, each of
Debtor's obligations, covenants, warranties, and representations hereunder is
joint, several and mutually binding on each such party.
(o) This
Agreement may be executed in one or more counterparts, each of which taken
together shall constitute one and the same instrument, admissible into
evidence. Delivery of an executed counterpart of this Agreement by
facsimile shall be equally as effective as delivery of a manually executed
counterpart of this Agreement. Any party delivering an executed
counterpart of this Agreement by facsimile shall also deliver a manually
executed counterpart of this Agreement, but the failure to deliver a manually
executed counterpart shall not affect the validity, enforceability, and binding
effect of this Agreement.
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IN WITNESS WHEREOF, this
Agreement has been duly signed at Deerfield, Illinois on the day and year first
above written.
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SECURED
PARTY:
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XXXXX
FARGO BANK, NATIONAL ASSOCIATION
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By:
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Title:
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Address:
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000 Xxxx Xxxx Xxxx, Xxxxx
000
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Deerfield, IL 60015
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DEBTOR:
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SOUTHPEAK
INTERACTIVE, L.L.C.
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By:
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/s/ Xxxx XxXxxxxxx
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Title:
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Chief Financial Officer
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GONE
OFF DEEP, LLC
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By:
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/s/ Xxxx XxXxxxxxx
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Title:
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Chief Financial Officer
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By:
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/s/ Xxxx XxXxxxxxx
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Title:
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Chief Financial Officer
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VID
SUB, LLC
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By:
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/s/ Xxxx XxXxxxxxx
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Title:
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Chief Financial Officer
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LOCATIONS:
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0000 Xxxx Xxxxxxx, Xxxxxxxxxx, XX
00000
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EXHIBIT
"A"
PRIMARY
COLLATERAL
The
"Collateral" with respect to which Secured Party's first priority security
interest applies shall be (i) all merchandise, inventory and goods and all
additions, substitutions and replacements thereof, wherever located, together
with all goods, supplies, incidentals, packaging materials, labels, materials
and any other items used or usable in manufacturing, processing, packaging or
shipping "Products" pursuant to "Accepted Purchase Orders", as such terms are
defined in a certain Master Purchase Order Purchase Agreement dated September
21, 2010 between Secured Party and Debtor, and all products and proceeds of
whatever sort now or hereafter owned by Debtor and related thereto; (ii) all
accounts receivable, credit card receivables, payment intangibles, contract
rights and other customer obligations for the payment of money arising out of
the Debtor's sale, lease, or license of any tangible or intangible property or
the rendering of services pursuant to "Accepted Purchase Orders" now or
hereafter existing; and (iii) all proceeds and products of the
foregoing.
Debtor's
facility at which the Collateral is located is:
0000 Xxxx Xxxxxxx,
Xxxxxxxxxx, XX 00000
"A-1"
EXHIBIT
"B"
COMMON
COLLATERAL
The
"Collateral" with respect to which Secured Party's subordinated lien applies
shall be (i) all merchandise, inventory and goods and all additions,
substitutions and replacements thereof, wherever located, together with all
goods, supplies, incidentals, packaging materials, labels, materials and any
other items used or usable in manufacturing, processing, packaging or shipping
same, in all stages of production, and all products and proceeds of whatever
sort, including specifically all "inventory" as such term is defined in the
Code, now or hereafter owned by Debtor; (ii) all machinery and equipment, now or
hereafter owned by Debtor, including, but not limited to, all machinery,
equipment, furnishings, movable trade fixtures and vehicles now or hereafter
owned by Debtor and all additions, substitutions and replacements of any of the
foregoing, wherever located, together with all attachments, components, spare
and replacement parts, related computer software, maintenance and repair
supplies and manuals, instructional manuals, warranties, and equipment and
accessories installed thereon or affixed thereto; (iii) all accounts
receivable, credit card receivables, payment intangibles, contract rights and
other customer obligations for the payment of money arising out of the Debtor's
sale, lease, or license of any tangible or intangible property or the rendering
of services, now existing or hereafter arising; (iv) all trademarks, copyrights,
patents, contract rights, investment property, rights to payment evidenced by
tangible or electronic chattel paper, instruments, and all general intangible
assets of Debtor now or hereafter existing; and (v) all proceeds and products of
the foregoing, except such assets of the Debtor as are described on
Exhibit "A".
Debtor's
facility at which the Collateral is located is:
0000 Xxxx Xxxxxxx,
Xxxxxxxxxx, XX 00000
"B-1"
