SECURITY AGREEMENT
THIS SECURITY AGREEMENT dated as of July 31, 2009 ("SECURITY
AGREEMENT"), is made by and among XXXXXXXX CURHAN FORD GROUP, INC., a Delaware
corporation (the "GRANTOR"), and First Bank & Trust as Custodian of Xxxxxx X.
Chez XXX (the "SECURED PARTY").
RECITALS
A. The Secured Party has agreed to make certain advances of money and to
extend certain financial accommodation to Grantor (collectively, the "LOAN")
as evidenced by that certain Secured Promissory Note executed by Grantor in
favor of the Secured Party (the "NOTE") dated of even date herewith, by and
between Grantor and the Secured Party.
B. The Secured Party is willing to make the Loan to Grantor, but only
upon the condition, among others, that Grantor shall have executed and
delivered this Security Agreement to the Secured Party.
C. The Grantor's obligations under the Note are not guaranteed by the
Grantor's Subsidiaries and the assets of the Grantor's Subsidiaries are not
subject to this Security Agreement.
D. Grantor is a party to a security agreement (the "PRIOR SECURITY
AGREEMENT") with holders of the notes issued pursuant to the Subscription
Agreement (the "SUBSCRIPTION AGREEMENT"), by and among the Company and the
purchasers set forth on Schedule A thereto, dated June 1, 2009.
AGREEMENT
NOW, THEREFORE, in order to induce the Secured Party to make the Loan
and for other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, and intending to be legally bound, the Grantor
hereby represents, warrants, covenants and agrees as follows:
1. DEFINED TERMS. When used in this Security Agreement the following
terms shall have the following meanings (such meanings being equally
applicable to both the singular and plural forms of the terms defined):
"BANKRUPTCY CODE" means Title XI of the United States Code.
"COLLATERAL" shall have the meaning assigned to such term in SECTION 2
of this Security Agreement.
"CONTRACTS" means all contracts (including any customer, vendor,
supplier, service or maintenance contract), leases, licenses, undertakings,
purchase orders, permits, franchise agreements or other agreements (other than
any right evidenced by Chattel
Paper, Documents or Instruments), whether in written or electronic form, in or
under which a Grantor now holds or hereafter acquires any right, title or
interest, including, without limitation, with respect to an Account, any
agreement relating to the terms of payment or the terms of performance
thereof.
"COPYRIGHT LICENSE" means any agreement, whether in written or
electronic form, in which a Grantor now holds or hereafter acquires any
interest, granting any right in or to any Copyright or Copyright registration
(whether a Grantor is the licensee or the licensor thereunder) including,
without limitation, licenses pursuant to which a Grantor has obtained the
exclusive right to use a copyright owned by a third party.
"COPYRIGHTS" means all of the following now owned or hereafter acquired
or created (as a work for hire for the benefit of a Grantor) by a Grantor or
in which a Grantor now holds or hereafter acquires or receives any right or
interest, in whole or in part: (a) all copyrights, whether registered or
unregistered, held pursuant to the laws of the United States, any State
thereof or any other country; (b) registrations, applications, recordings and
proceedings in the United States Copyright Office or in any similar office or
agency of the United States, any State thereof or any other country; (c) any
continuations, renewals or extensions thereof; (d) any registrations to be
issued in any pending applications, and shall include any right or interest in
and to work protectable by any of the foregoing which are presently or in the
future owned, created or authorized (as a work for hire for the benefit of a
Grantor) or acquired by a Grantor, in whole or in part; (e) prior versions of
works covered by copyright and all works based upon, derived from or
incorporating such works; (f) income, royalties, damages, claims and payments
now and hereafter due and/or payable with respect to copyrights, including,
without limitation, damages, claims and recoveries for past, present or future
infringement; (g) rights to xxx for past, present and future infringements of
any copyright; and (h) any other rights corresponding to any of the foregoing
rights throughout the world.
"EVENT OF DEFAULT" means any "Event of Default" as defined in the Note.
"INTELLECTUAL PROPERTY" means any intellectual property, in any medium,
of any kind or nature whatsoever, now or hereafter owned or acquired or
received by a Grantor or in which a Grantor now holds or hereafter acquires or
receives any right or interest, and shall include, in any event, any
Copyright, Trademark, Patent, trade secret, customer list, internet domain
name (including any right related to the registration thereof), proprietary or
confidential information, mask work, source, object or other programming code,
invention (whether or not patented or patentable), technical information,
procedure, design, knowledge, know-how, software, data base, data, skill,
expertise, recipe, experience, process, model, drawing, material or record.
"LICENSE" means any Copyright License, Patent License, Trademark License
or other license of rights or interests, whether in-bound or out-bound,
whether in written or electronic form, now or hereafter owned or acquired or
received by a Grantor or in which a Grantor now holds or hereafter acquires or
receives any right or interest, and shall include any renewals or extensions
of any of the foregoing thereof.
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"LIEN" means any mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.
"PATENT LICENSE" means any agreement, whether in written or electronic
form, in which a Grantor now holds or hereafter acquires any interest,
granting any right with respect to any invention on which a Patent is in
existence (whether a Grantor is the licensee or the licensor thereunder).
"PATENTS" means all of the following in which a Grantor now holds or
hereafter acquires any interest: (a) all letters patent of the United States
or any other country, all registrations and recordings thereof and all
applications for letters patent of the United States or any other country,
including, without limitation, registrations, recordings and applications in
the United States Patent and Trademark Office or in any similar office or
agency of the United States, any state thereof or any other country; (b) all
reissues, divisions, continuations, renewals, continuations-in-part or
extensions thereof; (c) all xxxxx patents, divisionals and patents of
addition; (d) all patents to issue in any such applications; (e) income,
royalties, damages, claims and payments now and hereafter due and/or payable
with respect to patents, including, without limitation, damages, claims and
recoveries for past, present or future infringement; and (f) rights to xxx for
past, present and future infringements of any patent.
"PERMITTED LIEN" means: (a) any Liens granted in settlement of
litigation to litigants, former litigants or potential litigants, to (i)
proceeds of insurance litigation and the Fidelity insurance policy; and (ii)
any and all commercial tort claims held by Grantor, including, but not limited
to, insurance litigation and the Fidelity insurance policy; (b) Liens for
taxes, fees, assessments or other governmental charges or levies, either not
delinquent or being contested in good faith by appropriate proceedings,
provided the same have no priority over any of Secured Party's security
interests; (c) Liens (i) upon or in any Equipment acquired or held by a
Grantor to secure the purchase price of such Equipment or indebtedness
incurred solely for the purpose of financing the acquisition of such Equipment
or (ii) existing on such Equipment at the time of its acquisition, provided
that the Lien is confined solely to the Equipment so acquired, improvements
thereon and the Proceeds of such Equipment; (d) leases or subleases and
licenses or sublicenses granted to others in the ordinary course of a
Grantor's business if such are otherwise permitted under this Security
Agreement and do not interfere in any material respect with the business of
such Grantor; (e) any right, title or interest of a licensor under a license
provided that such license or sublicense does not prohibit the grant of the
security interest granted hereunder; (f) Liens arising from judgments, decrees
or attachments; (g) easements, reservations, rights-of-way, restrictions,
minor defects or irregularities in title and other similar Liens affecting
real property not interfering in any material respect with the ordinary
conduct of the business of a Grantor; (h) Liens in favor of customs and
revenue authorities arising as a matter of law to secure payment of customs
duties in connection with the importation of goods; (i) Liens arising solely
by virtue of any statutory or common law provision relating to banker's liens,
rights of setoff or similar rights and remedies as to deposit accounts or
other funds maintained with a creditor depository institution; (j) Liens on
equipment leased by a Grantor pursuant to an operating lease in the ordinary
course of such Grantor's business (including proceeds
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thereof and accessions thereto), all incurred solely for the purpose of
financing the lease of such equipment (including Liens arising from UCC
financing statements regarding such leases); (k) any Lien approved in advance
in writing by the Secured Party; and (l) liens granted pursuant to the Prior
Security Agreement.
"SECURED OBLIGATIONS" means (a) the obligation of a Grantor to repay the
Secured Party all of the unpaid principal amount of, and accrued interest on
(including any interest that accrues after the commencement of bankruptcy),
such Secured Party's Loan; (b) the obligation of a Grantor to pay any fees,
costs or expenses of the Secured Party under the Note, or this Security
Agreement; and (c) all other indebtedness, liabilities and obligations of
Grantor to the Secured Party, whether now existing or hereafter incurred, and
whether created under, arising out of or in connection with any written
agreement or otherwise.
"SECURITY AGREEMENT" means this Security Agreement and all Schedules
hereto, as the same may from time to time be amended, modified, supplemented
or restated.
"TRADEMARK LICENSE" means any agreement, whether in written or
electronic form, in which a Grantor now holds or hereafter acquires any
interest, granting any right in and to any Trademark or Trademark registration
(whether a Grantor is the licensee or the licensor thereunder).
"TRADEMARKS" means any of the following in which a Grantor now holds or
hereafter acquires any interest: (a) any trademarks, tradenames, corporate
names, company names, business names, trade styles, service marks, logos,
other source or business identifiers, prints and labels on which any of the
foregoing have appeared or appear, designs and general intangibles of like
nature, now existing or hereafter adopted or acquired, all registrations and
recordings thereof and any applications in connection therewith, including,
without limitation, registrations, recordings and applications in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any State thereof or any other country (collectively, the
"MARKS"); (b) any reissues, extensions or renewals thereof; (c) the goodwill
of the business symbolized by or associated with the Marks; (d) income,
royalties, damages, claims and payments now and hereafter due and/or payable
with respect to the Marks, including, without limitation, damages, claims and
recoveries for past, present or future infringement; and (e) rights to xxx for
past, present and future infringements of the Marks.
"UCC" means the Uniform Commercial Code as the same may from time to
time be in effect in the State of Delaware (and each reference in this
Security Agreement to an Article thereof (denoted as a Division of the UCC as
adopted and in effect in the State of Delaware) shall refer to that Article
(or Division, as applicable) as from time to time in effect; provided,
however, in the event that, by reason of mandatory provisions of law, any or
all of the attachment, perfection or priority of the Secured Party's security
interest in any Collateral is governed by the Uniform Commercial Code as in
effect in a jurisdiction other than the State of Delaware, the term "UCC"
shall mean the Uniform Commercial Code (including the Articles thereof) as in
effect at such time in such other jurisdiction for purposes of the provisions
hereof relating to such attachment, perfection or priority and for purposes of
definitions related to such provisions.
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In addition, the following terms shall be defined terms having the
meaning set forth for such terms in the UCC: "Account" (including
health-care-insurance receivables), "Account Debtor", "Chattel Paper"
(including tangible and electronic chattel paper), "Commercial Tort Claims",
"Commodity Account", "Deposit Account", "Documents", "Equipment" (including
all accessions and additions thereto), "Fixtures", "General Intangible"
(including payment intangibles and software), "Instrument", "Inventory"
(including all goods held for sale or lease or to be furnished under a
contract of service, and including returns and repossessions), "Investment
Property" (including securities and securities entitlements),
"Letter-of-Credit Right" (whether or not the letter of credit is evidenced by
a writing), "Payment Intangibles", "Proceeds", "Promissory Notes", "Securities
Account", and "Supporting Obligations". Each of the foregoing defined terms
shall include all of such items now owned, or hereafter acquired, by a
Grantor.
2. GRANT OF SECURITY INTEREST. Certain provisions of this Security
Agreement might conflict with or violate the terms of the Prior Security
Agreement unless any such conflicts are waived by the secured parties under
the Prior Security Agreement. Grantor hereby covenants to use commercially
reasonable efforts to obtain such waivers promptly. This Security Agreement
shall be not be effective until and unless such waivers are obtained from all
secured parties under the Prior Security Agreement. Upon delivery of such
waivers to Secured party, this Security Agreement shall become effective
without further action on the part of the parties hereto. As collateral
security for the full, prompt, complete and final payment and performance when
due (whether at stated maturity, by acceleration or otherwise) of all the
Secured Obligations and in order to induce the Secured Party to cause the Loan
to be made, the Grantor hereby assigns, conveys, mortgages, pledges,
hypothecates and transfers to the Secured Party, and hereby grants to the
Secured Party, a security interest in all of such Grantor's right, title and
interest in, to and under the following, whether now owned or hereafter
acquired, (all of which being collectively referred to herein as the
"COLLATERAL"):
(A) All Accounts of Grantor;
(B) All Chattel Paper of Grantor;
(C) All Contracts of Grantor;
(D) All Deposit Accounts of Grantor;
(E) All Documents of Grantor;
(F) All Equipment of Grantor;
(G) All Fixtures of Grantor;
(H) All General Intangibles of Grantor, including, without
limitation, Payment Intangibles, all Copyrights, Patents, Trademarks,
Licenses, designs, drawings, technical information, marketing plans, customer
lists, trade secrets, proprietary or confidential
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information, inventions (whether or not patentable), procedures, know-how,
models and data;
(I) All Instruments of Grantor, including, without limitation,
Promissory Notes;
(J) All Investment Property of Grantor;
(K) All Letter-of Credit Rights of Grantor;
(L) All Supporting Obligations of Grantor;
(M) All property of Grantor held by Secured Party, or any other
party for whom Secured Party is acting as agent hereunder, including, without
limitation, all property of every description now or hereafter in the
possession or custody of or in transit to Secured Party or such other party
for any purpose, including, without limitation, safekeeping, collection or
pledge, for the account of Grantor, or as to which Grantor may have any right
or power;
(N) All other goods and personal property of Grantor, wherever
located, whether tangible or intangible, and whether now owned or hereafter
acquired, existing, leased or consigned by or to Grantor; and
(O) To the extent not otherwise included, all Proceeds of each of
the foregoing and all accessions to, substitutions and replacements for and
rents, profits and products of each of the foregoing.
Notwithstanding the foregoing provisions of this SECTION 2,
the grant, assignment and transfer of a security interest as provided herein
shall not extend to, and the term "Collateral" shall not include: (a) any and
all proceeds of insurance litigation and the Fidelity insurance policy; (b)
any and all commercial tort claims held by Issuer, including, but not limited
to, the insurance litigation and the Fidelity insurance policy, (c)
"intent-to-use" trademarks at all times prior to the first use thereof,
whether by the actual use thereof in commerce, the recording of a statement of
use with the United States Patent and Trademark Office or otherwise; (d) any
Contract, Instrument or Chattel Paper in which a Grantor has any right, title
or interest if and to the extent such Contract, Instrument or Chattel Paper
includes a provision containing a restriction on assignment such that the
creation of a security interest in the right, title or interest of such
Grantor therein would be prohibited and would, in and of itself, cause or
result in a default thereunder enabling another person party to such Contract,
Instrument or Chattel Paper to enforce any remedy with respect thereto;
provided that the foregoing exclusion shall not apply if (i) such prohibition
has been waived or such other person has otherwise consented to the creation
hereunder of a security interest in such Contract, Instrument or Chattel Paper
or (ii) such prohibition would be rendered ineffective pursuant to Sections
9-407(a) or 9-408(a) of the UCC, as applicable and as then in effect in any
relevant jurisdiction, or any other applicable law (including the Bankruptcy
Code) or principles of equity); provided further that immediately upon the
ineffectiveness, lapse or termination of any such provision, the Collateral
shall include, and the Grantor shall be deemed to
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have granted a security interest in, all its rights, title and interests in
and to such Contract, Instrument or Chattel Paper as if such provision had
never been in effect; and provided further that the foregoing exclusion shall
in no way be construed so as to limit, impair or otherwise affect Secured
Party's unconditional continuing security interest in and to all rights, title
and interests of the Grantor in or to any payment obligations or other rights
to receive monies due or to become due under any such Contract, Instrument or
Chattel Paper and in any such monies and other proceeds of such Contract,
Instrument or Chattel Paper; or (e) any Equipment subject to Permitted Liens
in cases where the secured party has prohibited additional Liens.
3. RIGHTS OF SECURED PARTY; COLLECTION OF ACCOUNTS.
(A) Notwithstanding anything contained in this Security Agreement
to the contrary, the Grantor expressly agrees that it shall remain liable
under each of its Contracts and each of its Licenses to observe and perform
all the conditions and obligations to be observed and performed by it
thereunder and that it shall perform all of its duties and obligations
thereunder, all in accordance with and pursuant to the terms and provisions of
each such Contract or License. No Secured Party shall have any obligation or
liability under any Contract or License by reason of or arising out of this
Security Agreement or the granting to the Secured Party of a lien therein or
the receipt by Secured Party of any payment relating to any Contract or
License pursuant hereto, nor shall Secured Party be required or obligated in
any manner to perform or fulfill any of the obligations of any Grantor under
or pursuant to any Contract or License, or to make any payment, or to make any
inquiry as to the nature or the sufficiency of any payment received by it or
the sufficiency of any performance by any party under any Contract or License,
or to present or file any claim, or to take any action to collect or enforce
any performance or the payment of any amounts which may have been assigned to
it or to which it may be entitled at any time.
(B) The Secured Party authorizes the Grantor to collect its
Accounts, provided that such collection is performed in a prudent and
businesslike manner, and the Secured Party may, upon the occurrence and during
the continuation of any Event of Default, limit or terminate said authority at
any time. Upon the occurrence and during the continuance of any Event of
Default, at the request of the Secured Party, Grantor shall deliver all
original and other documents evidencing and relating to the performance of
labor or service which created such Accounts, including, without limitation,
all original orders, invoices and shipping receipts.
(C) The Secured Party may at any time, upon the occurrence and
during the continuance of any Event of Default, without notifying Grantor of
its intention to do so, notify Account Debtors of Grantor, parties to the
Contracts of Grantor, obligors in respect of Instruments of Grantor and
obligors in respect of Chattel Paper of Grantor that the Accounts and the
right, title and interest of Grantor in and under such Contracts, Instruments
and Chattel Paper have been assigned to the Secured Party and that payments
shall be made directly to the Secured Party. Upon the request of the Secured
Party, the Grantor shall so notify such Account Debtors, parties to such
Contracts, obligors in
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respect of such Instruments and obligors in respect of such Chattel Paper.
Upon the occurrence and during the continuance of any Event of Default,
Secured Party may communicate with such Account Debtors, parties to such
Contracts, obligors in respect of such Instruments and obligors in respect of
such Chattel Paper to verify with such parties, to such Secured Party's
satisfaction, the existence, amount and terms of any such Accounts, Contracts,
Instruments or Chattel Paper.
4. REPRESENTATIONS AND WARRANTIES. Grantor hereby represents and
warrants to the Secured Party that:
(A) Except for the security interest granted to the Secured Party
under this Security Agreement, the security interest granted under the Prior
Security Agreement and Permitted Liens, Grantor is the sole legal and
equitable owner of each item of the Collateral in which it purports to grant a
security interest hereunder, having good and marketable title thereto, free
and clear of any and all Liens.
(B) No effective security agreement, financing statement,
equivalent security or lien instrument or continuation statement covering all
or any part of the Collateral exists, except for those granted pursuant to the
Prior Security Agreement and other Permitted Liens.
(C) This Security Agreement creates a legal and valid security
interest on and in all of the Collateral in which Grantor now has rights and
will create a legal and valid security interest in the Collateral in which
Grantor later acquires rights.
(D) Grantor's taxpayer identification number is, and chief
executive office, principal place of business, and the place where Grantor
maintains its records concerning the Collateral are presently located at the
address set forth on the signature page hereof. If Grantor is a corporation,
limited liability company, limited partnership, corporate trust or other
registered organization, the State (or if not a state, the other jurisdiction)
under whose law such registered organization was organized is set forth on the
signature page hereof. The Collateral, other than Deposit Accounts, Securities
Accounts, Commodity Accounts and motor vehicles and other mobile goods of the
type contemplated in Section 9103(3)(a) of the UCC, is presently located at
such address and at such additional addresses set forth on SCHEDULE A attached
hereto.
(E) The name and address of each depository institution at which
Grantor maintains any Deposit Account and the account number and account name
of each such Deposit Account is listed on SCHEDULE B attached hereto. The name
and address of each securities intermediary or commodity intermediary at which
Grantor maintains any Securities Account or Commodity Account and the account
number and account name is listed on SCHEDULE B attached hereto. Grantor
agrees to notify the Secured Party from time to time within five (5) business
days after opening any additional Deposit Account, Securities Account or
Commodity Account, or closing or changing the account name or number on any
existing Deposit Account, Securities Account, or Commodity Account.
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(F) None of the Investment Property of Grantor has been
transferred in violation of the securities registration, securities disclosure
or similar laws of any jurisdiction to which such transfer may be subject.
(G) All Copyrights, Copyright Licenses, Patents, Patent Licenses,
Trademarks and Trademark Licenses now owned, held or in which Grantor
otherwise has any interest are listed on SCHEDULE C attached hereto. Grantor
shall amend SCHEDULE C from time to time within twenty (20) business days
after the filing of any application for a Patent, Trademark or Copyright or
the issuance of any Patent or registration of any Trademark or Copyright to
reflect any additions to or deletions from this list. Except as set forth on
SCHEDULE C, none of the Patents, Trademarks or Copyrights has been licensed to
any third party.
5. COVENANTS. The Grantor covenants and agrees with the Secured Party
that from and after the date of this Security Agreement and until the Secured
Obligations have been performed and paid in full:
5.1. DISPOSITION OF COLLATERAL. Subject to the next sentence of
this SECTION 5.1, Grantor shall not sell, lease, transfer or otherwise dispose
of any of the Collateral, or attempt or contract to do so, other than (a) the
sale of Inventory; (b) the granting of non-exclusive Licenses or exclusive
Licenses if the grant of an exclusive License is approved by the Board of the
Directors of the Grantor; and (c) the disposal of worn-out or obsolete
Equipment, all in the ordinary course of Grantor's business.
5.2. CHANGE OF JURISDICTION OF ORGANIZATION, RELOCATION OF
BUSINESS OR COLLATERAL. Grantor shall not change its jurisdiction of
organization, relocate its chief executive office, principal place of business
or its records, or allow the relocation of any Collateral (except as allowed
pursuant to SECTION 5.1 immediately above) from such address(es) provided to
the Secured Party pursuant to SECTION 4(D) above without thirty (30) days
prior written notice to the Secured Party.
5.3. LIMITATION ON LIENS ON COLLATERAL. Grantor shall not,
directly or indirectly, create, permit or suffer to exist, and shall defend
the Collateral and any other assets of Grantor of any kind (including real
property) against and take such other action as is necessary to remove, any
Lien on the Collateral or any other such property, except (a) Permitted Liens
and (b) the Lien granted to the Secured Party under this Security Agreement.
Grantor shall use its commercially reasonable efforts to further defend the
right, title and interest of the Secured Party in and to any of Grantor's
rights under the Chattel Paper, Contracts, Documents, General Intangibles,
Instruments and Investment Property and to the Equipment and Inventory and in
and to the Proceeds thereof against the claims and demands of all persons
whomsoever.
5.4. LIMITATIONS ON MODIFICATIONS OF ACCOUNTS, ETC. Upon the
occurrence and during the continuance of any Event of Default, Grantor shall
not, without the Secured Party's prior written consent which shall not be
unreasonably withheld, grant any extension of the time of payment of any of
the Accounts, Chattel Paper, Instrument
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or amounts due under any Contract or Document, compromise, compound or settle
the same for less than the full amount thereof, release, wholly or partly, any
person liable for the payment thereof, or allow any credit or discount
whatsoever thereon other than trade discounts and rebates granted in the
ordinary course of Grantor's business.
5.5. INSURANCE. Grantor shall maintain reasonable insurance
policies insuring the Collateral against loss or damage from such risks and in
such amounts and forms and with such companies as are customarily maintained
by businesses similar to Grantor.
5.6. TAXES, ASSESSMENTS, ETC. Grantor shall pay promptly when due
all property and other taxes, assessments and government charges or levies
imposed upon, and all claims (including claims for labor, materials and
supplies) against, the Equipment, Fixtures or Inventory, except to the extent
the validity thereof is being contested in good faith and adequate reserves
are being maintained in connection therewith.
5.7. MAINTENANCE OF RECORDS. Grantor shall keep and maintain at
its own cost and expense reasonably satisfactory and complete records of the
Collateral. Grantor shall not create any Chattel Paper without placing a
legend on the Chattel Paper acceptable to the Secured Party indicating that
the Secured Party has a security interest in the Chattel Paper.
5.8. REGISTRATION OF INTELLECTUAL PROPERTY RIGHTS. Grantor shall
promptly register or cause to be registered (to the extent not already
registered) the most recent version of any Copyright and any Copyright License
and any Patent, Patent License, Trademark or Trademark License, which,
individually or in the aggregate, is material to the conduct of Grantor's
business, with the United States Copyright Office or Patent and Trademark
Office or similar offices in overseas jurisdictions, as applicable, including,
without limitation, in all such cases, the filing of applications for renewal,
affidavits of use, affidavits of noncontestability and opposition and
interference and cancellation proceedings. Grantor shall register or cause to
be registered with the United States Copyright Office or Patent and Trademark
Office or similar offices in overseas jurisdictions, as applicable, those
additional rights and interests developed or acquired by Grantor after the
date of this Security Agreement, including, without limitation, any additions
to the rights and interests of Grantor listed on SCHEDULE C hereto, prior to
the sale nr licensing of any product containing such rights and interests.
5.9. NOTIFICATION REGARDING CHANGES IN INTELLECTUAL PROPERTY.
Grantor shall:
(A) promptly advise the Secured Party of any subsequent ownership
right or interest of the Grantor in or to any Copyright, Patent, Trademark or
License not specified on SCHEDULE C hereto and shall permit the Secured Party
to amend such Schedule, as necessary, to reflect any addition or deletion to
such ownership rights; and
(B) promptly give Secured Party written notice of any applications
or registrations of intellectual property rights filed with the United States
Patent and Trademark Office and the United States Copyright Office or similar
offices in overseas
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jurisdictions, including the date of such filing and the registration or
application numbers, if any.
5.10. DEFENSE OF INTELLECTUAL PROPERTY. Grantor shall (a) use its
commercially reasonable efforts to protect, defend and maintain the validity
and enforceability of the Copyrights, Patents and Trademarks, (b) use its
commercially reasonable efforts to detect infringements of the Copyrights,
Patents and Trademarks and promptly advise the Secured Party in writing of
material infringements detected and (c) not allow any Copyrights, Patents or
Trademarks to be abandoned, forfeited or dedicated to the public without the
written consent of the Secured Party unless reasonable business practice would
determine that any such abandonment is appropriate.
5.11. FURTHER ASSURANCES; PLEDGE OF INSTRUMENTS. At any time and
from time to time, upon the written request of the Secured Party, and at the
sole expense of Grantor, Grantor shall promptly and duly execute and deliver
any and all financing statements, fixture filings, security agreements,
pledges, assignments, endorsements of certificates of title, mortgages, deeds
of trust, opinions of counsel, and all other documents (collectively, the
"Additional Documents") and take such further action as the Secured Party may
--------------------
reasonably deem necessary or desirable to obtain the full benefits of this
Security Agreement, including, without limitation, (a) using its commercially
reasonable efforts to secure all consents and approvals necessary or
appropriate for the grant of a security interest to the Secured Party in any
Contract held by Grantor or in which Grantor has any right or interest not
heretofore assigned; (b) executing, delivering and causing to be filed any
financing or continuation statements (including "in lieu" continuation
statements) under the UCC with respect to the security interests granted
hereby; (c) filing or cooperating with the Secured Party in filing any forms
or other documents required to be recorded with the United States Patent and
Trademark Office, United States Copyright Office or similar offices in
overseas jurisdictions, or any actions, filings, recordings or registrations
in any foreign jurisdiction or under any international treaty, required to
secure or protect the Secured Party's interest in Grantor's Collateral; (d)
transferring Grantor's Collateral to the Secured Party's possession (only if a
security interest in such Collateral can be perfected by possession); (e) at
Secured Party's reasonable request, placing the interest of the Secured Party
as lienholder on the certificate of title (or similar evidence of ownership)
of any vehicle, watercraft or other Equipment constituting Collateral owned by
Grantor which is covered by a certificate of title (or similar evidence of
ownership); (f) at Secured Party's reasonable request, executing and
delivering or causing to be delivered written notice to insurers of the
Secured Party's security interest in, or claim in or under, any policy of
insurance (including unearned premiums); and (g) at the Secured Party'
reasonable request, using its commercially reasonable efforts to obtain
acknowledgments from bailees having possession of any Collateral and waivers
of liens from landlords and mortgagees of any location where any of the
Collateral may from time to time be stored or located. Secured Party may at
any time and from time to time file Additional Documents that describe the
Collateral as all assets of Grantor or words of similar effect. To the maximum
extent permitted by law, any Additional Documents may be signed by Secured
Party on behalf of Grantor and may be filed at any time in any jurisdiction.
Grantor also hereby
11
authorizes Secured Party to file any such Additional Documents (including "in
lieu" continuation statements) without the signature of Grantor. If any amount
payable under or in connection with any of the Collateral is or shall become
evidenced by any Instrument, such Instrument, other than checks and notes
received in the ordinary course of business and any Instrument in the
outstanding or stated amount of less than twenty-five thousand dollars
($25,000), shall be duly endorsed in a manner reasonably satisfactory to the
Secured Party and delivered to the Secured Party promptly and in any event
within five (5) business days of Grantor's receipt thereof.
5.12 SUBORDINATION. Issuer shall use commercially reasonable
efforts to secure the agreement of all parties to the Prior Security Agreement
to subordinate their security interest to Holder within 60 days of the date
hereof.
6. RIGHTS AND REMEDIES UPON DEFAULT. After any Event of Default shall
have occurred and while such Event of Default is continuing:
(A) The Secured Party may exercise in addition to all other rights
and remedies granted to it under this Security Agreement, the Note and under
any other instrument or agreement securing, evidencing or relating to the
Secured Obligations, all rights and remedies of a secured party under the UCC.
Without limiting the generality of the foregoing, the Grantor expressly agrees
that in any such event the Secured Party, without demand of performance or
other demand, advertisement or notice of any kind (except the notice specified
below of time and place of public or private sale) to or upon such Grantor or
any other person (all and each of which demands, advertisements and notices
are hereby expressly waived to the maximum extent permitted by the UCC and
other applicable law), may (i) reclaim, take possession, recover, store,
maintain, finish, repair, prepare for sale or lease, shop, advertise for sale
or lease and sell or lease (in the manner provided herein) the Collateral, and
in connection with the liquidation of the Collateral and collection of the
accounts receivable pledged as Collateral, use any Trademark, Copyright, or
process used or owned by a Grantor and (ii) forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and may
forthwith sell, lease, assign, give an option or options to purchase or sell
or otherwise dispose of and deliver said Collateral (or contract to do so), or
any part thereof, in one or more parcels at public or private sale or sales,
at any exchange or broker's board or at Secured Party's offices or elsewhere
at such prices as they may deem best, for cash or on credit or for future
delivery without assumption of any credit risk. To the extent the Grantor has
the right to do so, the Grantor authorizes Secured Party, on the terms set
forth in this SECTION 6 to enter the premises where the Collateral is located
during normal business hours, to take possession of the Collateral, or any
part of it, and to pay, purchase, contact, or compromise any encumbrance,
charge, or lien which, in the opinion of Secured Party, appears to be prior or
superior to its security interest. Secured Party shall have the right upon any
such public sale or sales, and, to the extent permitted by law, upon any such
private sale or sales, to purchase the whole or any part of said Collateral so
sold, free of any right or equity of redemption, which equity of redemption
the Grantor hereby releases. The Grantor further agrees, at the Secured Party'
request, to
12
assemble its Collateral and make it available to the Secured Party at places
which the Secured Party shall reasonably select, whether at Grantor's premises
or elsewhere. The Secured Party shall apply the net proceeds of any such
collection, recovery, receipt, appropriation, realization or sale as provided
in SECTION 6(F) below and only after so paying over such net proceeds and
after the payment by the Secured Party of any other amount required by any
provision of law, remit the surplus from the Secured Party's account, if any,
to Grantor. To the maximum extent permitted by applicable law, the Grantor
waives all claims, damages, and demands against the Secured Party arising out
of the repossession, retention or sale of the Collateral. The Grantor agrees
that the Secured Party need not give more than ten (10) days' notice of the
time and place of any public sale or of the time after which a private sale
may take place and that such notice is reasonable notification of such
matters. The Grantor shall remain liable for any deficiency if the proceeds of
any sale or disposition of its Collateral are insufficient to pay all amounts
to which the Secured Party is entitled from Grantor, such Grantor also being
liable for the attorney costs of any attorneys employed by the Secured Party
to collect such deficiency.
(B) As to any Collateral constituting certificated securities or
uncertificated securities, if, at any time when the Secured Party shall
determine to exercise their right to sell the whole or any part of such
Collateral hereunder, such Collateral or the part thereof to be sold shall
not, for any reason whatsoever, be effectively registered under Securities Act
of 1933, as amended (as so amended the "ACT"), the Secured Party may, in its
discretion (subject only to applicable requirements of law), sell such
Collateral or part thereof by private sale in such manner and under such
circumstances as the Secured Party may deem necessary or advisable, but
subject to the other requirements of this SECTION 6(B), and shall not be
required to effect such registration or cause the same to be effected. Without
limiting the generality of the foregoing, in any such event the Secured Party
may, in its discretion, (i) in accordance with applicable securities laws,
proceed to make such private sale notwithstanding that a registration
statement for the purpose of registering such Collateral or part thereof could
be or shall have been filed under the Act; (ii) approach and negotiate with a
single possible purchaser to effect such sale; and (iii) restrict such sale to
a purchaser who will represent and agree that such purchaser is purchasing for
its own account, for investment, and not with a view to the distribution or
sale of such Collateral or part thereof. In addition to a private sale as
provided above in this SECTION 6(B), if any of such Collateral shall not be
freely distributable to the public without registration under the Act at the
time of any proposed sale hereunder, then the Secured Party shall not be
required to effect such registration or cause the same to be effected but may,
in their discretion (subject only to applicable requirements of law), require
that any sale hereunder (including a sale at auction) be conducted subject to
such restrictions as the Secured Party may, in its discretion, deem necessary
or appropriate in order that such sale (notwithstanding any failure so to
register) may be effected in compliance with the Bankruptcy Code and other
laws affecting the enforcement of creditors' rights and the Act and all
applicable state securities laws.
(C) The Grantor agrees that in any sale of any of such Collateral,
whether at a foreclosure sale or otherwise, the Secured Party is hereby
authorized to comply with any limitation or restriction in connection with
such sale as it may be advised by counsel is
13
necessary in order to avoid any violation of applicable law (including
compliance with such procedures as may restrict the number of prospective
bidders and purchasers, require that such prospective bidders and purchasers
have certain qualifications and restrict such prospective bidders and
purchasers to persons who will represent and agree that they are purchasing
for their own account for investment and not with a view to the distribution
or resale of such Collateral), or in order to obtain any required approval of
the sale or of the purchaser by any governmental authority, and the Grantor
further agrees that such compliance shall not result in such sale being
considered or deemed not to have been made in a commercially reasonable
manner, nor shall the Secured Party be liable nor accountable to a Grantor for
any discount allowed by the reason of the fact that such Collateral is sold in
compliance with any such limitation or restriction.
(D) The Grantor also agrees to pay all fees, costs and expenses of
the Secured Party, including, without limitation, reasonable attorneys' fees,
incurred in connection with the enforcement of any of their rights and
remedies hereunder.
(E) The Grantor hereby waives presentment, demand, protest or any
notice (to the maximum extent permitted by applicable law) of any kind in
connection with this Security Agreement or any Collateral.
(F) The Proceeds of any sale, disposition or other realization
upon all or any part of the Collateral shall be distributed by the Secured
Party in the following order of priorities:
FIRST, to the Secured Party in an amount sufficient to pay in full
the reasonable costs of the Secured Party in connection with such sale,
disposition or other realization, including all fees, costs, expenses,
liabilities and advances incurred or made by the Secured Party in connection
therewith, including, without limitation, reasonable attorneys' fees;
SECOND, to the Secured Party in an amount up to the then unpaid
Secured Obligations; and
FINALLY, upon payment in full of the Secured Obligations, to the
Grantor or its representatives, in accordance with the UCC or as a court of
competent jurisdiction may direct.
(G) The costs of enforcing or pursuing any right or remedy
hereunder, including without limitation any repossession, sale, possession and
management (including, without limitation, reasonable attorneys' fees), and
distribution shall be borne by the Secured Party.
9. INDEMNITY. The Grantor agrees to defend, indemnify and hold harmless
the Secured Party and their officers, employees, and agents against (a) all
obligations, demands, claims, and liabilities claimed or asserted by any other
party in connection with the transactions contemplated by this Security
Agreement and (b) all losses or expenses in any way suffered, incurred, or
paid by Secured Party as a primary
14
and direct result of transactions between Secured Party and any Grantor,
whether under this Security Agreement or otherwise (including without
limitation, reasonable attorneys fees and expenses), except for losses arising
from or out of such Secured Party's negligence, bad faith or willful
misconduct.
10. REINSTATEMENT. This Security Agreement shall remain in full force
and effect and continue to be effective should any petition be filed by or
against any Grantor for liquidation or reorganization, should any Grantor
become insolvent or make an assignment for the benefit of creditors or should
a receiver or trustee be appointed for all or any significant part of any
Grantor's property and assets, and shall continue to be effective or be
reinstated, as the case may be, if at any time payment and performance of the
Secured Obligations, or any part thereof, is, pursuant to applicable law,
rescinded or reduced in amount, or must otherwise be restored or returned by
any obligee of the Secured Obligations, whether as a "voidable preference,"
"fraudulent conveyance," or otherwise, all as though such payment or
performance had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Secured Obligations
shall be reinstated and deemed reduced only by such amount paid and not so
rescinded, reduced, restored or returned.
11. MISCELLANEOUS.
11.1. WAIVERS; MODIFICATIONS. None of the terms or provisions of
this Security Agreement may be waived, altered, modified or amended except by
an instrument in writing, duly executed by the Grantor, the Secured Party and
the "Guarantors" as such term is defined in the Note.
11.2. TERMINATION OF THIS SECURITY AGREEMENT. Subject to SECTION
10 hereof, this Security Agreement shall terminate upon the payment and
performance in full of the Secured Obligations.
11.3. SUCCESSOR AND ASSIGNS. This Security Agreement and all
obligations of Grantor hereunder shall be binding upon the successors and
assigns of Grantor, and shall, together with the rights and remedies of the
Secured Party hereunder, inure to the benefit of the Secured Party, any future
holder of any of the indebtedness and their respective successors and assigns.
No sales of participations, other sales, assignments, transfers or other
dispositions of any agreement governing or instrument evidencing the Secured
Obligations or any portion thereof or interest therein shall in any manner
affect the lien granted to the Secured Party hereunder.
11.4. GOVERNING LAW. In all respects, including all matters of
construction, validity and performance, this Security Agreement and the
Secured Obligations arising hereunder shall be governed by, and construed and
enforced in accordance with, the laws of the State of Delaware applicable to
contracts made and performed in such state, without regard to the principles
thereof regarding conflict of laws, except to the extent that the UCC provides
for the application of the law of a different jurisdiction.
15
11.5. COUNTERPARTS. This Security Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instruments.
[SIGNATURE PAGE FOLLOWS]
16
IN WITNESS WHEREOF, each of the parties hereto has caused this Security
Agreement to be executed and delivered by its dilly authorized officer on the
date first set forth above.
GRANTOR
XXXXXXXX CURHAN FORD GROUP, INC. Address for Notice:
000 Xxxxxxxxxx Xxxxxx, 0xx Xxxxx,
By: /s/ D. Xxxxxxxx Xxxxxxxx Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
------------------------- FACSIMILE: (000) 000-000-0000
Name: D. Xxxxxxxx Xxxxxxxx ATTENTION: CHIEF FINANCIAL OFFICER
Title: Chief Executive Officer
[Signature Page to the Security Agreement]
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Schedule A
----------
Location of Collateral
18
Schedule B
----------
Deposit, Securities and Commodities Accounts
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NAME ADDRESS ACCOUNT NUMBER ACCOUNT NAME
---- ------- -------------- ------------
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[Bank]
-----------------------------------------------------------------------------------------------------------
[Bank]
-----------------------------------------------------------------------------------------------------------
[Bank]
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Schedule C
----------
Intellectual Property
Patents
-------
-----------------------------------------------------------------------------------------------------------
DOCKET APPLICATION U.S. INVENTOR(S) TITLE ISSUE DATE
------ ----------- ---- ----------- ----- ----------
NO. DATE OR PATENT NO.
--- ------- ----------
FIRST
-----
CLAIMED
-------
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-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
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Trademarks
----------
-----------------------------------------------------------------------------------------------------------
TRADEMARK FILING DATE CASE NO. REGISTRATION NO. RENEWAL DATE
--------- ----------- -------- ---------------- ------------
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
Copyrights
----------
Licenses
--------
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DOMAIN NAMES
------------
-----------------------------------------------------------------------------------------------------------
DOMAIN RENEWAL
------ -------
WEBSITE CURRENT NAME DUE CREATION
------- ------- ---- --- --------
OWNER REGISTRY STATUS DATE DATE
----- -------- ------ ---- ----
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