COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT
EXHIBIT 10.2.3
This COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT (this “Agreement”), dated as of
November 29th, 2004, is made by and between DiscLive, Inc., a Delaware corporation
(“Company”) and Xxxxx Xxxx (“Secured Party”).
W I T N E S S E T H:
WHEREAS, contemporaneously with this Agreement, Immediatek, Inc., a Nevada corporation
(“Borrower”) entered into that certain Secured Convertible Promissory Note by and between
Borrower and Secured Party (the “Note”); and
WHEREAS, Company has guaranteed the obligations of Borrower under the Note pursuant to that
certain Unlimited Guaranty (the “Guaranty”) executed contemporaneously herewith; and
WHEREAS, to induce Secured Party to execute the Note, Company has agreed to execute and
deliver to the Secured Party this Agreement for the benefit of the Secured Party and to grant to
him a first priority security interest in certain property of Company to secure the prompt payment,
performance and discharge in full of all of Company’s obligations under the Guaranty and the
discharge in full of all of Company’s obligations under the Note.
NOW, THEREFORE, in consideration of the agreements herein contained and for other good and
valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties
hereto hereby agree as follows:
Certain Definitions. As used in this Agreement, the following terms shall have the
meanings set forth in this Section 1. Terms used but not otherwise defined in this Agreement that
are defined in Article 9 of the UCC (such as “proceeds”) shall have the respective meanings
given such terms in Article 9 of the UCC.
“Collateral” means the collateral in which the Secured Party is granted a security
interest by this Agreement and which shall include the following, whether presently owned or
existing or hereafter acquired or coming into existence, and all additions and accessions thereto
and all substitutions and replacements thereof, and all proceeds, products and accounts thereof,
including, without limitation, all proceeds from the sale or transfer of the Collateral and all
proceeds of insurance covering the same:
The equipment of the Company listed on Schedule A attached hereto
(collectively, the “Equipment”); and
All inventory of compact discs of the Company; and
The products and proceeds of the foregoing Collateral set forth in clauses
(i) and (ii) above.
“Indebtedness” means all of the Company’s obligations under this Agreement, the
Guaranty and the Note, in each case, whether now or hereafter existing, voluntary or involuntary,
direct or indirect, absolute or contingent, liquidated or unliquidated, whether or not jointly owed
with others, and whether or not from time to time decreased or extinguished and later decreased,
created or incurred, and all or any portion of such obligations or liabilities that are paid, to
the extent all or any part of such payment is avoided or recovered directly or indirectly from the
Secured Party as a preference, fraudulent transfer or otherwise as such obligations may be amended,
supplemented, converted, extended or modified from time to time.
“UCC” means the Uniform Commercial Code, as currently in effect in the State of
Delaware.
Grant of Security Interest. As an inducement for the Secured Party to execute a Note
and to secure the complete and timely payment, performance and discharge in full, as the case may
be, of the Indebtedness, the Company hereby, unconditionally and irrevocably, pledges, grants and
hypothecates to the Secured Party, a continuing security interest in, a continuing first lien upon,
an unqualified right to possession and disposition of and a right of set-off against, in each case
to the fullest extent permitted by law, all of the Company’s right, title and interest of
whatsoever kind and nature in and to the Collateral (the “Security Interest”).
Representations, Warranties, Covenants and Agreements of the Company. The Company
represents and warrants to, and covenants and agrees with, the Secured Party as follows:
The Company has the requisite corporate power and authority to enter into this Agreement and
otherwise to carry out its obligations thereunder. The execution, delivery and performance by the
Company of this Agreement and the filings contemplated therein have been duly authorized by all
necessary action on the part of the Company and no further action is required by the Company. This
Agreement constitutes a legal, valid and binding obligation of the Company enforceable in
accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of creditor’s rights
generally.
The Company represents and warrants that it has no place of business or offices where its
respective books of account and records are kept (other than temporarily at the offices of its
attorneys or accountants), except as set forth on Schedule B attached hereto.
The Company is the sole owner of the Collateral, free and clear of any liens, security
interests, encumbrances, rights or claims, and is fully authorized to grant the Security Interest
in and to pledge the Collateral. There is not on file in any governmental or regulatory authority,
agency or recording office an effective financing
statement, security agreement, license or transfer or any notice of any of the foregoing
(other than those that have been filed in favor of the Secured Party pursuant to this Agreement)
covering or affecting any of the Collateral. So long as this Agreement shall be in effect, the
Company shall not execute and shall not knowingly permit to be on file in any such office or agency
any such financing statement or other document or instrument (except to the extent filed or
recorded in favor of the Secured Party pursuant to the terms of this Agreement, and except to the
extent filed or recorded in favor of Xxxx Xxxx and Xxxxxxx Xxxxx pursuant to the terms of a
security agreement relating to the Collateral and executed contemporaneously herewith).
No written claim has been received that any Collateral or the Company’s use of any Collateral
violates the rights of any third party. There has been no adverse decision to the Company’s claim
of ownership rights in or exclusive rights to use the Collateral in any jurisdiction or to the
Company’s right to keep and maintain such Collateral, and there is no proceeding involving said
rights pending or, to the best knowledge of the Company, threatened before any court, judicial
body, administrative or regulatory agency, arbitrator or other governmental authority.
The Company shall at all times maintain its books of account and records relating to the
Collateral at its principal place of business at the location set forth on Schedule B
attached hereto and may not relocate such books of account and records unless it delivers to the
Secured Party at least 30 days prior to such relocation (i) written notice of such relocation and
the new location thereof (which must be within the United States) and (ii) evidence that
appropriate financing statements and other necessary documents have been filed and recorded and
other steps have been taken to perfect the Security Interest to create in favor of the Secured
Party valid, perfected and continuing first priority liens in the Collateral.
This Agreement creates in favor of the Secured Party a valid security interest in the
Collateral securing the payment and performance of the Indebtedness and, upon making the filings
described in the immediately following sentence, a perfected first priority security interest in
such Collateral. Except for the filing of financing statements under the UCC with the
jurisdictions indicated on Schedule C attached hereto, no authorization or approval of or
filing with or notice to any governmental authority or regulatory body is required either (i) for
the grant by the Company of, or the effectiveness of, the Security Interest granted hereby or for
the execution, delivery and performance of this Agreement by the Company or (ii) for the perfection
of or exercise by the Secured Party of his rights and remedies hereunder.
The execution, delivery and performance of this Agreement does not conflict with or cause a
breach or default, or an event that with or without the passage of time or notice, shall constitute
a breach or default, under any agreement to which the Company is a party or by which the Company is
bound. No consent (including, without limitation, from creditors of the Company) is required for
the Company to enter into and perform its obligations hereunder.
The Company shall at all times maintain the liens and Security Interest provided for hereunder
as valid and perfected liens and security interests in the Collateral in favor of the Secured Party
until this Agreement and the Security Interest hereunder shall terminate pursuant to Section 11.
The Company hereby agrees to defend the same against any and all persons. The Company shall
safeguard and protect all Collateral for the account of the Secured Party. At the request of the
Secured Party, the Company will pay the cost of filing one or more financing statements pursuant to
the UCC (or any other applicable statute) in all public offices wherever filing is, or is deemed by
the Secured Party to be, necessary or desirable to effect the rights and obligations provided for
herein. Without limiting the generality of the foregoing, the Company shall pay all fees, taxes and
other amounts necessary to maintain the Collateral and the Security Interest hereunder, and the
Company shall obtain and furnish to the Secured Party from time to time, upon demand, such releases
and/or subordinations of claims and liens which may be required to maintain the priority of the
Security Interest hereunder.
The Company will not transfer, pledge, hypothecate, encumber, license, sell or otherwise
dispose of any of the Collateral without the prior written consent of the Secured Party.
The Company shall keep and preserve the Collateral in good condition, repair and order and
shall not operate or locate any such Collateral (or cause any such Collateral to be operated or
located) in any area excluded from insurance coverage.
The Company will at all times cause to be carried and maintained on and in respect of the
Collateral, insurance in such amounts, against such risks and with such insurance companies as the
Secured Party shall from time to time require or approve, as evidenced by insurance certificates
provided to Secured Party. The Company will cause each such insurance company to agree to advise
the Secured Party promptly of any default in the payment of any premium and of any other act or
omission on the part of the Company which might invalidate or render unenforceable, in whole or in
part, any insurance on the Collateral.
The Company shall, within ten (10) days of obtaining knowledge thereof, advise the Secured
Party promptly, in sufficient detail, of any substantial change in the Collateral, and of the
occurrence of any event which would have a material adverse effect on the value of the Collateral
or on the Secured Party’s security interest therein.
The Company shall promptly execute and deliver to the Secured Party such further documents and
take such further action as the Secured Party may from time to time request and may in his sole
discretion deem necessary to perfect, protect or enforce his Security Interest in the Collateral.
The Company shall permit the Secured Party and his representatives and agents to inspect the
Collateral at any time, and to make copies of records pertaining to the Collateral as may be
requested by the Secured Party from time to time.
The Company will take all steps reasonably necessary to diligently pursue and seek to
preserve, enforce and collect any rights, claims, causes of action and accounts receivable in
respect of the Collateral.
The Company shall promptly notify the Secured Party in sufficient detail upon becoming aware
of any attachment, garnishment, execution or other legal process levied against any Collateral and
of any other information received by the Company that may materially affect the value of the
Collateral, the Security Interest or the rights and remedies of the Secured Party hereunder.
All information heretofore, herein or hereafter supplied to the Secured Party by or on behalf
of the Company with respect to the Collateral is accurate and complete in all material respects as
of the date furnished.
Defaults. The following events shall be “Events of Default”:
The occurrence of an event of default under the Note;
Any representation or warranty of the Company in this Agreement shall prove to have been
incorrect in any material respect when made; and
The failure by the Company to observe or perform any of its obligations hereunder for ten (10)
days after receipt by the Company of notice of such failure from the Secured Party.
Duty To Hold In Trust. Upon the occurrence of any Event of Default and at any time
thereafter, the Company shall, upon receipt by it of any sums subject to the Security Interest,
whether payable pursuant to the Note or otherwise, or of any check, draft, note or other instrument
evidencing an obligation to pay any such sum, hold the same in trust for the Secured Party and
shall forthwith endorse and transfer any such sums or instruments, or both, to the Secured Party
for application to the satisfaction of the Indebtedness.
Rights and Remedies Upon Default. Upon occurrence of any Event of Default and at any
time thereafter, the Secured Party shall have the right to exercise all of the remedies conferred
hereunder and under the Note, and the Secured Party shall have all the rights and remedies of a
secured party under the UCC and/or any other applicable law (including the Uniform Commercial Code
of any jurisdiction in which any Collateral is then located). Without limitation, the Secured
Party shall have the following rights and powers:
The Secured Party shall have the right to take possession of the Collateral and, for that
purpose, enter, with the aid and assistance of any person, any premises where the Collateral, or
any part thereof, is or may be placed and remove the same, and the Company shall assemble the
Collateral and make it available to the Secured Party at places which the Secured Party shall
reasonably select, whether at the Company’s premises or elsewhere, and make available to the
Secured Party, without rent, all of the
Company’s respective premises and facilities for the purpose of the Secured Party taking
possession of, removing or putting the Collateral in saleable or disposable form.
The Secured Party shall have the right to operate the business of the Company using the
Collateral and shall have the right to assign, sell, lease or otherwise dispose of and deliver all
or any part of the Collateral, at public or private sale or otherwise, either with or without
special conditions or stipulations, for cash or on credit or for future delivery, in such parcel or
parcels and at such time or times and at such place or places, and upon such terms and conditions
as the Secured Party may deem commercially reasonable, all without (except as shall be required by
applicable statute and cannot be waived) advertisement or demand upon or notice to the Company or
right of redemption of the Company, which are hereby expressly waived. Upon each such sale, lease,
assignment or other transfer of Collateral, the Secured Party may, unless prohibited by applicable
law which cannot be waived, purchase all or any part of the Collateral being sold, free from and
discharged of all trusts, claims, right of redemption and equities of the Company, which are hereby
waived and released.
Applications of Proceeds. The proceeds of any such sale, lease or other disposition
of the Collateral hereunder shall be applied first, to the expenses of retaking, holding, storing,
processing and preparing for sale, selling, and the like (including, without limitation, any taxes,
fees and other costs incurred in connection therewith) of the Collateral, to the reasonable
attorneys’ fees and expenses incurred by the Secured Party in enforcing his rights hereunder and in
connection with collecting, storing and disposing of the Collateral, and then to the satisfaction
of the Indebtedness, and then to the satisfaction of any other indebtedness of the Company secured
by a lien on the Collateral, and to the payment of any other amounts required by applicable law,
after which the Secured Party shall pay to the Company any surplus proceeds. If, upon the sale,
license or other disposition of the Collateral, the proceeds thereof are insufficient to pay all
amounts to which the Secured Party is legally entitled, the Company will be liable for the
deficiency, together with interest thereon, at the rate of 18% per annum (the “Default
Rate”), and the reasonable fees of any attorneys employed by the Secured Party to collect such
deficiency. To the extent permitted by applicable law, the Company waives all claims, damages and
demands against the Secured Party arising out of the repossession, removal, retention or sale of
the Collateral, unless due to the gross negligence or willful misconduct of the Secured Party.
Costs and Expenses. The Company agrees to pay all out-of-pocket fees, costs and
expenses incurred in connection with any filing required hereunder, including without limitation,
any financing statements, continuation statements, partial releases and/or termination statements
related thereto or any expenses of any searches reasonably required by the Secured Party. The
Company shall also pay all other claims and charges which in the reasonable opinion of the Secured
Party might prejudice, imperil or otherwise affect the Collateral or the Security Interest therein.
The Company will also, upon demand, pay to the Secured Party the amount of any and all reasonable
expenses, including the reasonable fees and expenses of his counsel and of any experts and agents,
which the Secured Party may incur in connection with (i) the enforcement of this Agreement, (ii)
the custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, or (iii) the exercise or enforcement of any of the
rights of the Secured Party under the Note.
Responsibility for Collateral. The Company assumes all liabilities and responsibility
in connection with all Collateral, and the obligations of the Company hereunder or under the Note
shall in no way be affected or diminished by reason of the loss, destruction, damage or theft of
any of the Collateral or its unavailability for any reason.
Security Interest Absolute. All rights of the Secured Party and all Indebtedness of
the Company hereunder, shall be absolute and unconditional, irrespective of: (a) any lack of
validity or enforceability of this Agreement, the Note or any agreement entered into in connection
with the foregoing, or any portion hereof or thereof; (b) any change in the time, manner or place
of payment or performance of, or in any other term of, all or any of the Indebtedness, or any other
amendment or waiver of or any consent to any departure from the Note or any other agreement entered
into in connection with the foregoing; (c) any exchange, release or nonperfection of any of the
Collateral, or any release or amendment or waiver of or consent to departure from any other
collateral for, or any guaranty, or any other security, for all or any of the Indebtedness; (d) any
action by the Secured Party to obtain, adjust, settle and cancel in his sole discretion any
insurance claims or matters made or arising in connection with the Collateral; or (e) any other
circumstance which might otherwise constitute any legal or equitable defense available to the
Company, or a discharge of all or any part of the Security Interest granted hereby. Until the
Indebtedness shall have been paid and performed in full, the rights of the Secured Party shall
continue even if the Indebtedness is barred for any reason, including, without limitation, the
running of the statute of limitations or bankruptcy. The Company expressly waives presentment,
protest, notice of protest, demand, notice of nonpayment and demand for performance. In the event
that at any time any transfer of any Collateral or any payment received by the Secured Party
hereunder shall be deemed by final order of a court of competent jurisdiction to have been a
voidable preference or fraudulent conveyance under the bankruptcy or insolvency laws of the United
States, or shall be deemed to be otherwise due to any party other than the Secured Party, then, in
any such event, the Company’s obligations hereunder shall survive cancellation of this Agreement,
and shall not be discharged or satisfied by any prior payment thereof and/or cancellation of this
Agreement, but shall remain a valid and binding obligation enforceable in accordance with the terms
and provisions hereof. The Company waives all right to require the Secured Party to proceed
against any other person or to apply any Collateral which the Secured Party may hold at any time,
or to marshal assets, or to pursue any other remedy. The Company waives any defense arising by
reason of the application of the statute of limitations to any obligation secured hereby.
Term of Agreement. As such Security Interest relates to the Secured Party, any
Security Interest created by this Agreement shall terminate upon fulfillment by the Company of all
of its obligations under the Indebtedness.
Power of Attorney. The Company authorizes the Secured Party, and does hereby make,
constitute and appoint him, and his respective agents, successors or assigns with
full power of substitution, as the Company’s true and lawful attorney-in-fact, with power, in
the name of the Company or otherwise, after the occurrence and during the continuance of an Event
of Default: (i) to endorse any notes, checks, drafts, money orders, or other instruments of payment
(including payments payable under or in respect of any policy of insurance) in respect of the
Collateral that may come into possession of the Secured Party; (ii) to pay or discharge taxes,
liens, security interests or other encumbrances at any time levied or placed on or threatened
against the Collateral; (iii) to demand, collect, receipt for, compromise, settle and xxx for
monies due in respect of the Collateral; and (iv) generally, to do, at the option of the Secured
Party, and at the Company’s expense, at any time, or from time to time, all acts and things which
the Secured Party deems necessary to protect, preserve and realize upon the Collateral and the
Security Interest granted therein in order to effect the intent of this Agreement and the Note, all
as fully and effectually as the Company might or could do; and the Company hereby ratifies all that
said attorney shall lawfully do or cause to be done by virtue hereof. This power of attorney is
coupled with an interest and shall be irrevocable for the term of this Agreement and thereafter as
long as any of the Indebtedness shall be outstanding.
Notices. All notices and other communications made or required to be given pursuant
to this Agreement shall be in writing and shall be delivered in hand, mailed by United States
registered or certified first class mail, postage prepaid, sent by overnight courier, or sent by
telecopy and confirmed by delivery via courier or postal service, addressed as follows:
if to Company, at 00 Xxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: (Fax Number: ), with a copy to 0000
X. Xxxxxxx Xxxxxxxxxx, Xxxxx 0000, Xxxxxxxxxx, Xxxxx 00000, Attention: Xxxx
Xxxx, Chief Executive Officer (Fax Number: (000) 000-0000), or at such other
address for notice as Company shall last have furnished in writing to Secured
Party; and
if to Secured Party, at 0000 Xxx Xxxx, Xxxxxx, Xxxxx 00000 (Fax number:
(000) 000-0000), or such other address for notice as Secured Party shall last
have furnished in writing to Company.
Any such notice or demand shall be deemed to have been duly given or made and to have become
effective (i) if delivered by hand, overnight courier or facsimile to the party to which it is
directed, at the time of the receipt thereof by such party or the sending of such facsimile and
(ii) if sent by registered or certified first-class mail, postage prepaid, on the third business
day following the mailing thereof.
Miscellaneous.
No course of dealing between the Company and the Secured Party, nor any failure to exercise,
nor any delay in exercising, on the part of the Secured Party, any right, power or privilege
hereunder or under the Note shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or
thereunder preclude any other or further exercise thereof or the exercise of any other right,
power or privilege.
All of the rights and remedies of the Secured Party with respect to the Collateral, whether
established hereby or by the Note or by any other agreements, instruments or documents or by law
shall be cumulative and may be exercised singly or concurrently.
This Agreement constitutes the entire agreement of the parties with respect to the subject
matter hereof and is intended to supersede all prior negotiations, understandings and agreements
with respect thereto. Except as specifically set forth in this Agreement, no provision of this
Agreement may be modified or amended except by a written agreement specifically referring to this
Agreement and signed by the parties hereto.
In the event that any provision of this Agreement is held to be invalid, prohibited or
unenforceable in any jurisdiction for any reason, unless such provision is narrowed by judicial
construction, this Agreement shall, as to such jurisdiction, be construed as if such invalid,
prohibited or unenforceable provision had been more narrowly drawn so as not to be invalid,
prohibited or unenforceable. If, notwithstanding the foregoing, any provision of this Agreement is
held to be invalid, prohibited or unenforceable in any jurisdiction, such provision, as to such
jurisdiction, shall be ineffective to the extent of such invalidity, prohibition or
unenforceability without invalidating the remaining portion of such provision or the other
provisions of this Agreement and without affecting the validity or enforceability of such provision
or the other provisions of this Agreement in any other jurisdiction.
No waiver of any breach or default or any right under this Agreement shall be considered valid
unless in writing and signed by the party giving such waiver, and no such waiver shall be deemed a
waiver of any subsequent breach or default or right, whether of the same or similar nature or
otherwise.
This Agreement shall be binding upon and inure to the benefit of each party hereto and its
successors and assigns.
Each party shall take such further action and execute and deliver such further documents as
may be necessary or appropriate in order to carry out the provisions and purposes of this
Agreement.
This Agreement shall be governed by, and construed in accordance with, the laws of the State
of Texas. Company agrees that any suit for the enforcement of this Agreement may be brought in any
court of competent jurisdiction in Dallas County, Texas and consents to the non-exclusive
jurisdiction of such courts and to service of process in any such suit being made upon Company by
mail at the address specified in Section 13 hereof. Company hereby waives any objection that it
may now or hereafter have to the venue of any such suit or any such court or that such suit was
brought in an inconvenient court.
This Agreement may be executed in any number of counterparts, each of which when so executed
shall be deemed to be an original, and all of which taken together shall constitute one and the
same Agreement. In the event that any signature is delivered by facsimile transmission, such
signature shall create a valid binding obligation of the party executing (or on whose behalf such
signature is executed) the same with the same force and effect as if such facsimile signature were
the original thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be duly executed
on the day and year first above written.
| DISCLIVE, INC. | ||||||
| By: | /s/ Xxxx Xxxx | |||||
| Name: | Xxxx Xxxx | |||||
| Title: | Chief Executive Officer | |||||
| XXXXX XXXX | ||||||
| /s/ Xxxxx Xxxx | ||||||
| Xxxxx Xxxx, individually | ||||||
SCHEDULE A
Listing of Equipment
[see attached listing]
SCHEDULE B
Principal Place of Business of the Company:
00 Xxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000
Locations Where Collateral is Located or Stored:
Currently, Texas
SCHEDULE C
Jurisdictions: Delaware, New York
