EX-10.24
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of December 7, 2005 (this "AGREEMENT"),
among Secured Services, a Delaware corporation (the "COMPANY") and all of the
Subsidiaries of the Company (such subsidiaries, the "GUARANTORS") (the Company
and Guarantors are collectively referred to as the "DEBTORS") and the holder or
holders of the Company's 7.5% Secured Promissory Note due March 7, 2006 in the
original aggregate principal amount of $500,000 (the "NOTE"), signatory hereto,
their endorsees, transferees and assigns (collectively referred to as, the
"SECURED PARTIES").
W I T N E S S E T H:
WHEREAS, pursuant to the Note, the Secured Parties have severally agreed
to extend the loans to the Company evidenced by the Note;
WHEREAS, pursuant to a certain Subsidiary Guarantee dated as of the date
hereof (the "GUARANTY"), the Guarantors have jointly and severally agreed to
guaranty and act as surety for payment of such loans; and
WHEREAS, in order to induce the Secured Parties to extend the loans
evidenced by the Notes, each Debtor has agreed to execute and deliver to the
Secured Parties this Agreement and to grant the Secured Parties, PARI PASSU with
each other Secured Party, a perfected security interest in certain property of
such Debtor to secure the prompt payment, performance and discharge in full of
all of the Company's obligations under the Note and the other Debtor's
obligations under the Guaranty.
NOW, THEREFORE, in consideration of the agreements herein contained and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto hereby agree as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following
terms shall have the meanings set forth in this Section 1. Terms used but not
otherwise defined in this Agreement that are defined in Article 9 of the UCC
(such as "account", "chattel paper", "commercial tort claim", "deposit account",
"document", "equipment", "fixtures", "general intangibles", "goods",
"instruments", "inventory", "investment property", "letter-of-credit rights",
"proceeds" and "supporting obligations") shall have the respective meanings
given such terms in Article 9 of the UCC.
(a) "COLLATERAL" means the collateral in which the Secured
Parties are granted a security interest by this Agreement and which shall
include the following personal property of the Debtors, whether presently
owned or existing or hereafter acquired or coming into existence,
wherever situated, and all additions and accessions thereto and all
substitutions and replacements thereof, and all proceeds, products and
accounts thereof, including, without limitation, all proceeds from the
sale or transfer of the Collateral and of insurance covering the same and
of any tort claims in connection therewith, and all dividends, interest,
cash, notes, securities, equity interest or other property at any time
and from time to time acquired, receivable or otherwise distributed in
respect of, or in exchange for, any or all of the Pledged Securities (as
defined below):
(i) All goods, including, without limitations, (A) all
machinery, equipment, computers, motor vehicles, trucks, tanks, boats,
ships, appliances, furniture, special and general tools, fixtures, test
and quality control devices and other equipment of every kind and nature
and wherever situated, together with all documents of title and documents
representing the same, all additions and accessions thereto, replacements
therefor, all parts therefor, and all substitutes for any of the
foregoing and all other items used and useful in connection with any
Debtor's businesses and all improvements thereto; and (B) all inventory;
(ii) All contract rights and other general intangibles,
including, without limitation, all partnership interests, membership
interests, stock or other securities, rights under any of the
Organizational Documents, agreements related to the Pledged Securities,
licenses, distribution and other agreements, computer software (whether
"off-the-shelf", licensed from any third party or developed by any
Debtor), computer software development rights, leases, franchises,
customer lists, quality control procedures, grants and rights, goodwill,
trademarks, service marks, trade styles, trade names, patents, patent
applications, copyrights, and income tax refunds;
(iii) All accounts, together with all instruments, all documents
of title representing any of the foregoing, all rights in any
merchandising, goods, equipment, motor vehicles and trucks which any of
the same may represent, and all right, title, security and guaranties
with respect to each account, including any right of stoppage in transit;
(iv) All documents, letter-of-credit rights, instruments and
chattel paper;
(v) All commercial tort claims;
(vi) All deposit accounts and all cash (whether or not deposited
in such deposit accounts);
(vii) All investment property;
(viii) All supporting obligations; and
(ix) All files, records, books of account, business papers, and
computer programs; and
(x) the products and proceeds of all of the foregoing
Collateral set forth in clauses (i)-(ix) above.
10
Without limiting the generality of the foregoing, the
"COLLATERAL" shall include all investment property and general
intangibles respecting ownership and/or other equity interests in
each Guarantor, including, without limitation, the shares of
capital stock and the other equity interests listed on SCHEDULE H
hereto (as the same may be modified from time to time pursuant to
the terms hereof), and any other shares of capital stock and/or
other equity interests of any other direct or indirect subsidiary
of any Debtor obtained in the future, and, in each case, all
certificates representing such shares and/or equity interests and,
in each case, all rights, options, warrants, stock, other
securities and/or equity interests that may hereafter be received,
receivable or distributed in respect of, or exchanged for, any of
the foregoing (all of the foregoing being referred to herein as
the "PLEDGED SECURITIES") and all rights arising under or in
connection with the Pledged Securities, including, but not limited
to, all dividends, interest and cash.
Notwithstanding the foregoing, nothing herein shall be
deemed to constitute an assignment of any asset which, in the
event of an assignment, becomes void by operation of applicable
law or the assignment of which is otherwise prohibited by
applicable law (in each case to the extent that such applicable
law is not overridden by Sections 9-406, 9-407 and/or 9-408 of the
UCC or other similar applicable law); provided, however, that to
the extent permitted by applicable law, this Agreement shall
create a valid security interest in such asset and, to the extent
permitted by applicable law, this Agreement shall create a valid
security interest in the proceeds of such asset.
Notwithstanding anything herein to the contrary, until the
Note dated July 7, 2003 issued to VASCO Data Security
International, Inc. ("VASCO") is no longer outstanding, Collateral
shall not include the following: (i) the IDENTIPRISE SECUREDUSER
software plus any and all enhancements, improvements or
modifications made to it, (ii) the customer contract with Integic
Corporation and accounts receivable from the Integic contract,
(iii) the fixed assets acquired by Secured from VASCO and (iv) any
and all proceeds and products which Secured receives or which it
may become entitled to receive on account of any sale, exchange,
collection or other disposition of all of the above, or any part
thereof.
(b) "INTELLECTUAL PROPERTY" means the collective reference to
all rights, priorities and privileges relating to intellectual property,
whether arising under United States, multinational or foreign laws or
otherwise, including, without limitation, (i) all copyrights arising
under the laws of the United States, any other country or any political
subdivision thereof, whether registered or unregistered and whether
published or unpublished, all registrations and recordings thereof, and
all applications in connection therewith, including, without limitation,
all registrations, recordings and applications in the United States
Copyright Office, (ii) all letters patent of the United States, any other
country or any political subdivision thereof, all reissues and extensions
thereof, and all applications for letters patent of the United States or
any other country and all divisions, continuations and
continuations-in-part thereof, (iii) all trademarks, trade names,
corporate names, company names, business names, fictitious business
names, trade dress,
service marks, logos, domain names and other source or business
identifiers, and all goodwill associated therewith, now existing or
hereafter adopted or acquired, all registrations and recordings thereof,
and all applications in connection therewith, whether in the United
States Patent and Trademark Office or in any similar office or agency of
the United States, any State thereof or any other country or any
political subdivision thereof, or otherwise, and all common law rights
related thereto, (iv) all trade secrets arising under the laws of the
United States, any other country or any political subdivision thereof,
(v) all rights to obtain any reissues, renewals or extensions of the
foregoing, (vi) all licenses for any of the foregoing, and (vii) all
causes of action for infringement of the foregoing.
(c) "MAJORITY IN INTEREST" shall mean, at any time of
determination, the majority in interest (based on then-outstanding
principal amounts of Notes at the time of such determination) of the
Secured Parties.
(d) "NECESSARY ENDORSEMENT" shall mean undated stock powers
endorsed in blank or other proper instruments of assignment duly executed
and such other instruments or documents as the Agent (as that term is
defined below) may reasonably request.
(e) "OBLIGATIONS" means all of the liabilities and obligations
(primary, secondary, direct, contingent, sole, joint or several) due or
to become due, or that are now or may be hereafter contracted or
acquired, or owing to, of any Debtor to the Secured Parties, including,
without limitation, all obligations under this Agreement, the Notes, the
Guaranty and any other instruments, agreements or other documents
executed and/or delivered in connection herewith or therewith, in each
case, whether now or hereafter existing, voluntary or involuntary, direct
or indirect, absolute or contingent, liquidated or unliquidated, whether
or not jointly owed with others, and whether or not from time to time
decreased or extinguished and later increased, created or incurred, and
all or any portion of such obligations or liabilities that are paid, to
the extent all or any part of such payment is avoided or recovered
directly or indirectly from any of the Secured Parties as a preference,
fraudulent transfer or otherwise as such obligations may be amended,
supplemented, converted, extended or modified from time to time. Without
limiting the generality of the foregoing, the term "Obligations" shall
include, without limitation: (i) principal of, and interest on the Notes
and the loans extended pursuant thereto; (ii) any and all other fees,
indemnities, costs, obligations and liabilities of the Debtors from time
to time under or in connection with this Agreement, the Notes, the
Guaranty and any other instruments, agreements or other documents
executed and/or delivered in connection herewith or therewith; and (iii)
all amounts (including but not limited to post-petition interest) in
respect of the foregoing that would be payable but for the fact that the
obligations to pay such amounts are unenforceable or not allowable due to
the existence of a bankruptcy, reorganization or similar proceeding
involving any Debtor.
(f) "ORGANIZATIONAL DOCUMENTS" means with respect to any
Debtor, the documents by which such Debtor was organized (such as a
certificate of incorporation,
certificate of limited partnership or articles of organization, and
including, without limitation, any certificates of designation for
preferred stock or other forms of preferred equity) and which relate to
the internal governance of such Debtor (such as bylaws, a partnership
agreement or an operating, limited liability or members agreement).
(g) "UCC" means the Uniform Commercial Code of the State of New
York and or any other applicable law of any state or states which has
jurisdiction with respect to all, or any portion of, the Collateral or
this Agreement, from time to time. It is the intent of the parties that
defined terms in the UCC should be construed in their broadest sense so
that the term "Collateral" will be construed in its broadest sense.
Accordingly if there are, from time to time, changes to defined terms in
the UCC that broaden the definitions, they are incorporated herein and if
existing definitions in the UCC are broader than the amended definitions,
the existing ones shall be controlling.
2. GRANT OF PERFECTED FIRST PRIORITY SECURITY INTEREST. As an
inducement for the Secured Parties to extend the loans as evidenced by the Notes
and to secure the complete and timely payment, performance and discharge in
full, as the case may be, of all of the Obligations, each Debtor hereby
unconditionally and irrevocably pledges, grants and hypothecates to the Secured
Parties a continuing and perfected security interest in and to, a lien upon and
a right of set-off against all of their respective right, title and interest of
whatsoever kind and nature in and to, the Collateral (the "SECURITY INTEREST").
3. DELIVERY OF CERTAIN COLLATERAL. Contemporaneously or prior to the
execution of this Agreement, each Debtor shall deliver or cause to be delivered
to the Agent (a) any and all certificates and other instruments representing or
evidencing the Pledged Securities, and (b) any and all certificates and other
instruments or documents representing any of the other Collateral, in each case,
together with all Necessary Endorsements. The Debtors are, contemporaneously
with the execution hereof, delivering to Agent, or have previously delivered to
Agent, a true and correct copy of each Organizational Document governing any of
the Pledged Securities.
4. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF THE
DEBTORS. Each Debtor represents and warrants to, and covenants and agrees with,
the Secured Parties as follows:
(a) Each Debtor has the requisite corporate, partnership,
limited liability company or other power and authority to enter into this
Agreement and otherwise to carry out its obligations hereunder. The
execution, delivery and performance by each Debtor of this Agreement and
the filings contemplated therein have been duly authorized by all
necessary action on the part of such Debtor and no further action is
required by such Debtor. This Agreement has been duly executed by each
Debtor. This Agreement constitutes the legal, valid and binding
obligation of each Debtor, enforceable against each Debtor in accordance
with its terms except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization and similar laws of general
application relating to or affecting the rights and remedies of creditors
and by general principles of equity.
(b) The Debtors have no place of business or offices where
their respective books of account and records are kept (other than
temporarily at the offices of its attorneys or accountants) or places
where Collateral is stored or located, except as set forth on SCHEDULE A
attached hereto. Except as specifically set forth on SCHEDULE A, each
Debtor is the record owner of the real property where such Collateral is
located, and there exist no mortgages or other liens on any such real
property except for Permitted Liens (as defined in the Notes). Except as
disclosed on SCHEDULE A, none of such Collateral is in the possession of
any consignee, bailee, warehouseman, agent or processor.
(c) Except as set forth on SCHEDULE B attached hereto, the
Debtors are the sole owner of the Collateral (except for non-exclusive
licenses granted by any Debtor in the ordinary course of business), free
and clear of any liens, security interests, encumbrances, rights or
claims, and are fully authorized to grant the Security Interest. There is
not on file in any governmental or regulatory authority, agency or
recording office an effective financing statement, security agreement,
license or transfer or any notice of any of the foregoing (other than
those that will be filed in favor of the Secured Parties pursuant to this
Agreement) covering or affecting any of the Collateral. So long as this
Agreement shall be in effect, the Debtors shall not execute and shall not
knowingly permit to be on file in any such office or agency any such
financing statement or other document or instrument (except to the extent
filed or recorded in favor of the Secured Parties pursuant to the terms
of this Agreement).
(d) No written claim has been received that any Collateral or
Debtor's use of any Collateral violates the rights of any third party.
There has been no adverse decision to any Debtor's claim of ownership
rights in or exclusive rights to use the Collateral in any jurisdiction
or to any Debtor's right to keep and maintain such Collateral in full
force and effect, and there is no proceeding involving said rights
pending or, to the best knowledge of any Debtor, threatened before any
court, judicial body, administrative or regulatory agency, arbitrator or
other governmental authority.
(e) Each Debtor shall at all times maintain its books of
account and records relating to the Collateral at its principal place of
business and its Collateral at the locations set forth on SCHEDULE A
attached hereto and may not relocate such books of account and records or
tangible Collateral unless it delivers to the Secured Parties at least 30
days prior to such relocation (i) written notice of such relocation and
the new location thereof (which must be within the United States) and
(ii) evidence that appropriate financing statements under the UCC and
other necessary documents have been filed and recorded and other steps
have been taken to perfect the Security Interest to create in favor of
the Secured Parties a valid, perfected and continuing perfected first
priority lien in the Collateral.
(f) This Agreement creates in favor of the Secured Parties a
valid, security interest in the Collateral, securing the payment and
performance of the Obligations. Upon making the filings described in the
immediately following paragraph, all security
interests created hereunder in any Collateral which may be perfected by
filing Uniform Commercial Code financing statements shall have been duly
perfected. Except for the filing of the Uniform Commercial Code financing
statements referred to in the immediately following paragraph, the
recordation of the Intellectual Property Security Agreement (as defined
below) with respect to copyrights and copyright applications in the
United States Copyright Office referred to in paragraph (m), the
execution and delivery of deposit account control agreements satisfying
the requirements of Section 9-104(a)(2) of the UCC with respect to each
deposit account of the Debtors, and the delivery of the certificates and
other instruments provided in Section 3, no action is necessary to
create, perfect or protect the security interests created hereunder.
Without limiting the generality of the foregoing, except for the filing
of said financing statements, the recordation of said Intellectual
Property Security Agreement, and the execution and delivery of said
deposit account control agreements, no consent of any third parties and
no authorization, approval or other action by, and no notice to or filing
with, any governmental authority or regulatory body is required for (i)
the execution, delivery and performance of this Agreement, (ii) the
creation or perfection of the Security Interests created hereunder in the
Collateral or (iii) the enforcement of the rights of the Secured Parties
hereunder.
(g) Each Debtor hereby authorizes the Secured Parties, or any
of them, to file one or more financing statements under the UCC, with
respect to the Security Interest with the proper filing and recording
agencies in any jurisdiction deemed proper by them.
(h) The execution, delivery and performance of this Agreement
by the Debtors does not (i) violate any of the provisions of any
Organizational Documents of any Debtor or any judgment, decree, order or
award of any court, governmental body or arbitrator or any applicable
law, rule or regulation applicable to any Debtor or (ii) conflict with,
or constitute a default (or an event that with notice or lapse of time or
both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any agreement, credit facility, debt
or other instrument (evidencing any Debtor's debt or otherwise) or other
understanding to which any Debtor is a party or by which any property or
asset of any Debtor is bound or affected. No consent (including, without
limitation, from stockholders or creditors of any Debtor) is required for
any Debtor to enter into and perform its obligations hereunder.
(i) The capital stock and other equity interests listed on
SCHEDULE H hereto represent all of the capital stock and other equity
interests of the Guarantors, and represent all capital stock and other
equity interests owned, directly or indirectly, by the Company. All of
the Pledged Securities are validly issued, fully paid and nonassessable,
and the Company is the legal and beneficial owner of the Pledged
Securities, free and clear of any lien, security interest or other
encumbrance except for the security interests created by this Agreement
and other Permitted Liens (as defined in the Note).
(j) Each Debtor shall at all times maintain the liens and
Security Interest provided for hereunder as valid and perfected first
priority liens and security interests in the Collateral in favor of the
Secured Parties until this Agreement and the Security Interest hereunder
shall be terminated pursuant to Section 14 hereof. Each Debtor hereby
agrees to defend the same against the claims of any and all persons and
entities. Each Debtor shall safeguard and protect all Collateral for the
account of the Secured Parties. At the request of the Secured Parties,
each Debtor will sign and deliver to the Secured Parties at any time or
from time to time one or more financing statements pursuant to the UCC in
form reasonably satisfactory to the Secured Parties and will pay the cost
of filing the same in all public offices wherever filing is, or is deemed
by the Secured Parties to be, necessary or desirable to effect the rights
and obligations provided for herein. Without limiting the generality of
the foregoing, each Debtor shall pay all fees, taxes and other amounts
necessary to maintain the Collateral and the Security Interest hereunder,
and each Debtor shall obtain and furnish to the Secured Parties from time
to time, upon demand, such releases and/or subordinations of claims and
liens which may be required to maintain the priority of the Security
Interest hereunder.
(k) No Debtor will transfer, pledge, hypothecate, encumber,
license, sell or otherwise dispose of any of the Collateral (except for
non-exclusive licenses granted by a Debtor in its ordinary course of
business and sales of inventory by a Debtor in its ordinary course of
business) without the prior written consent of a Majority in Interest.
(l) Each Debtor shall keep and preserve its equipment,
inventory and other tangible Collateral in good condition, repair and
order and shall not operate or locate any such Collateral (or cause to be
operated or located) in any area excluded from insurance coverage.
(m) Each Debtor shall maintain with financially sound and
reputable insurers, insurance with respect to the Collateral against loss
or damage of the kinds and in the amounts customarily insured against by
entities of established reputation having similar properties similarly
situated and in such amounts as are customarily carried under similar
circumstances by other such entities and otherwise as is prudent for
entities engaged in similar businesses but in any event sufficient to
cover the full replacement cost thereof. Each Debtor shall cause each
insurance policy issued in connection herewith to provide, and the
insurer issuing such policy to certify to the Agent that (a) the Agent
will be named as lender loss payee and additional insured under each such
insurance policy; (b) if such insurance be proposed to be cancelled or
materially changed for any reason whatsoever, such insurer will promptly
notify the Agent and such cancellation or change shall not be effective
as to the Agent for at least thirty (30) days after receipt by the Agent
of such notice, unless the effect of such change is to extend or increase
coverage under the policy; and (c) the Agent will have the right (but no
obligation) at its election to remedy any default in the payment of
premiums within thirty (30) days of notice from the insurer of such
default. If no Event of Default (as defined in the Note) exists and if
the proceeds arising out of any claim or series of related claims do not
exceed $100,000, loss payments in each instance will be applied by the
applicable Debtor to the repair and/or
replacement of property with respect to which the loss was incurred to
the extent reasonably feasible, and any loss payments or the balance
thereof remaining, to the extent not so applied, shall be payable to the
applicable Debtor, provided, however, that payments received by any
Debtor after an Event of Default occurs and is continuing or in excess of
$100,000 for any occurrence or series of related occurrences shall be
paid to the Agent and, if received by such Debtor, shall be held in trust
for and immediately paid over to the Agent unless otherwise directed in
writing by the Agent. Copies of such policies or the related
certificates, in each case, naming the Agent as lender loss payee and
additional insured shall be delivered to the Agent at least annually and
at the time any new policy of insurance is issued.
(n) Each Debtor shall, within ten (10) days of obtaining
knowledge thereof, advise the Secured Parties promptly, in sufficient
detail, of any substantial change in the Collateral, and of the
occurrence of any event which would have a material adverse effect on the
value of the Collateral or on the Secured Parties' security interest
therein.
(o) Each Debtor shall promptly execute and deliver to the
Secured Parties such further deeds, mortgages, assignments, security
agreements, financing statements or other instruments, documents,
certificates and assurances and take such further action as the Secured
Parties may from time to time request and may in its sole discretion deem
necessary to perfect, protect or enforce its security interest in the
Collateral.
(p) Each Debtor shall take all steps reasonably necessary to
diligently pursue and seek to preserve, enforce and collect any rights,
claims, causes of action and accounts receivable in respect of the
Collateral.
(q) Each Debtor shall promptly notify the Secured Parties in
sufficient detail upon becoming aware of any attachment, garnishment,
execution or other legal process levied against any Collateral and of any
other information received by such Debtor that may materially affect the
value of the Collateral, the Security Interest or the rights and remedies
of the Secured Parties hereunder.
(r) All information heretofore, herein or hereafter supplied to
the Secured Parties by or on behalf of any Debtor with respect to the
Collateral is accurate and complete in all material respects as of the
date furnished.
(s) No Debtor will change its name, type of organization,
jurisdiction of organization, organizational identification number (if it
has one), legal or corporate structure, or identity, or add any new
fictitious name unless it provides at least 30 days prior written notice
to the Secured Parties of such change and, at the time of such written
notification, such Debtor provides any financing statements or fixture
filings necessary to perfect and continue perfected the perfected
security Interest granted and evidenced by this Agreement.
(t) No Debtor may relocate its chief executive office to a new
location without providing 30 days prior written notification thereof to
the Secured Parties and so long as, at the time of such written
notification, such Debtor provides any financing statements or fixture
filings necessary to perfect and continue perfected the perfected
security Interest granted and evidenced by this Agreement.
(u) Each Debtor was organized and remains organized solely
under the laws of the state set forth next to such Debtor's name in the
first paragraph of this Agreement. SCHEDULE D attached hereto sets forth
each Debtor's organizational identification number or, if any Debtor does
not have one, states that one does not exist.
(v) (i) The actual name of each Debtor is the name set forth on
the signature pages hereto; (ii) no Debtor has any trade names except as
set forth on SCHEDULE E attached hereto; (iii) no Debtor has used any
name other than that stated in the signature pages hereto or as set forth
on SCHEDULE E for the preceding five years; and (iv) no entity has merged
into any Debtor or been acquired by any Debtor within the past five years
except as set forth on SCHEDULE E.
(w) At any time and from time to time that any Collateral
consists of instruments, certificated securities or other items that
require or permit possession by the secured party to perfect the security
interest created hereby, the applicable Debtor shall deliver such
Collateral to the Agent.
(x) If there is any investment property or deposit account
included as Collateral that can be perfected by "control" through an
account control agreement, the applicable Debtor shall cause such an
account control agreement, in form and substance in each case
satisfactory to the Secured Parties, to be entered into and delivered to
the Secured Parties at the request of the Agent.
(y) To the extent that any Collateral is in the possession of
any third party, the applicable Debtor shall join with the Secured
Parties in notifying such third party of the Secured Parties' security
interest in such Collateral and shall use its best efforts to obtain an
acknowledgement and agreement from such third party with respect to the
Collateral, in form and substance satisfactory to the Secured Parties.
(z) Each Debtor shall cause each subsidiary of such Debtor to
immediately become a party hereto (an "ADDITIONAL DEBTOR"), by executing
and delivering an Additional Debtor Joinder in substantially the form of
ANNEX A attached hereto and comply with the provisions hereof applicable
to the Debtors. Concurrent therewith, the Additional Debtor shall deliver
replacement schedules for, or supplements to all other Schedules to (or
referred to in) this Agreement, as applicable, which replacement
schedules shall supersede, or supplements shall modify, the Schedules
then in effect. The Additional Debtor shall also deliver such opinions of
counsel, authorizing resolutions, good standing certificates, incumbency
certificates, organizational documents, financing statements and other
information and documentation as the Secured Parties may
reasonably request. Upon delivery of the foregoing to the Secured
Parties, the Additional Debtor shall be and become a party to this
Agreement with the same rights and obligations as the Debtors, for all
purposes hereof as fully and to the same extent as if it were an original
signatory hereto and shall be deemed to have made the representations,
warranties and covenants set forth herein as of the date of execution and
delivery of such Additional Debtor Joinder, and all references herein to
the "Debtors" shall be deemed to include each Additional Debtor.
(aa) Each Debtor shall vote the Pledged Securities to comply
with the covenants and agreements set forth herein and in the Notes.
(bb) Each Debtor shall register the pledge of the applicable
Pledged Securities on the books of such Debtor. Each Debtor shall notify
each issuer of Pledged Securities to register the pledge of the
applicable Pledged Securities in the name of the Secured Parties on the
books of such issuer. Further, except with respect to certificated
securities delivered to the Agent, the applicable Debtor shall deliver to
Agent an acknowledgement of pledge (which, where appropriate, shall
comply with the requirements of the relevant UCC with respect to
perfection by registration) signed by the issuer of the applicable
Pledged Securities, which acknowledgement shall confirm that: (a) it has
registered the pledge on its books and records; and (b) at any time
directed by Agent during the continuation of an Event of Default, such
issuer will transfer the record ownership of such Pledged Securities into
the name of any designee of Agent, will take such steps as may be
necessary to effect the transfer, and will comply with all other
instructions of Agent regarding such Pledged Securities without the
further consent of the applicable Debtor.
(cc) In the event that, upon an occurrence of an Event of
Default, Agent shall sell all or any of the Pledged Securities to another
party or parties (herein called the "TRANSFEREE") or shall purchase or
retain all or any of the Pledged Securities, each Debtor shall, to the
extent applicable: (i) deliver to Agent or the Transferee, as the case
may be, the articles of incorporation, bylaws, minute books, stock
certificate books, corporate seals, deeds, leases, indentures,
agreements, evidences of indebtedness, books of account, financial
records and all other Organizational Documents and records of the Debtors
and their direct and indirect subsidiaries; (ii) use its best efforts to
obtain resignations of the persons then serving as officers and directors
of the Debtors and their direct and indirect subsidiaries, if so
requested; and (iii) use its best efforts to obtain any approvals that
are required by any governmental or regulatory body in order to permit
the sale of the Pledged Securities to the Transferee or the purchase or
retention of the Pledged Securities by Agent and allow the Transferee or
Agent to continue the business of the Debtors and their direct and
indirect subsidiaries.
(dd) Each Debtor will from time to time, at the joint and
several expense of the Debtors, promptly execute and deliver all such
further instruments and documents, and take all such further action as
may be necessary or desirable, or as the Secured Parties may reasonably
request, in order to perfect and protect any security interest granted or
purported to be granted hereby or to enable the Secured Parties to
exercise and enforce
their rights and remedies hereunder and with respect to any Collateral or
to otherwise carry out the purposes of this Agreement.
(ee) SCHEDULE F attached hereto lists all of the patents, patent
applications, trademarks, trademark applications, registered copyrights,
and domain names owned by any of the Debtors as of the date hereof.
SCHEDULE F lists all material licenses in favor of any Debtor for the use
of any patents, trademarks, copyrights and domain names as of the date
hereof. All material patents and trademarks of the Debtors have been duly
recorded at the United States Patent and Trademark Office and all
material copyrights of the Debtors have been duly recorded at the United
States Copyright Office.
(ff) Except as set forth on SCHEDULE G attached hereto, none of
the account debtors or other persons or entities obligated on any of the
Collateral is a governmental authority covered by the Federal Assignment
of Claims Act or any similar federal, state or local statute or rule in
respect of such Collateral.
5. EFFECT OF PLEDGE ON CERTAIN RIGHTS. If any of the Collateral
subject to this Agreement consists of nonvoting equity or ownership interests
(regardless of class, designation, preference or rights) that may be converted
into voting equity or ownership interests upon the occurrence of certain events
(including, without limitation, upon the transfer of all or any of the other
stock or assets of the issuer), it is agreed that the pledge of such equity or
ownership interests pursuant to this Agreement or the enforcement of any of
Agent's rights hereunder shall not be deemed to be the type of event which would
trigger such conversion rights notwithstanding any provisions in the
Organizational Documents or agreements to which any Debtor is subject or to
which any Debtor is party.
6. DEFAULTS. The following events shall be "EVENTS OF DEFAULT":
(a) The occurrence of an Event of Default (as defined in the
Note) under the Note;
(b) Any representation or warranty of any Debtor in this
Agreement shall prove to have been incorrect in any material respect when
made;
(c) The failure by any Debtor to observe or perform any of its
obligations hereunder for five (5) days after delivery to such Debtor of
notice of such failure by or on behalf of a Secured Party unless such
default is capable of cure but cannot be cured within such time frame and
such Debtor is using best efforts to cure same in a timely fashion; or
(d) If any provision of this Agreement shall at any time for
any reason be declared to be null and void, or the validity or
enforceability thereof shall be contested by any Debtor, or a proceeding
shall be commenced by any Debtor, or by any governmental authority having
jurisdiction over any Debtor, seeking to establish the invalidity or
unenforceability thereof, or any Debtor shall deny that any Debtor has
any liability or obligation purported to be created under this Agreement.
7. DUTY TO HOLD IN TRUST.
(a) Upon the occurrence of any Event of Default and at any time
thereafter, each Debtor shall, upon receipt of any revenue, income,
dividend, interest or other sums subject to the Security Interest,
whether payable pursuant to the Note or otherwise, or of any check,
draft, note, trade acceptance or other instrument evidencing an
obligation to pay any such sum, hold the same in trust for the Secured
Parties and shall forthwith endorse and transfer any such sums or
instruments, or both, to the Secured Parties, pro-rata in proportion to
their initial purchases of Notes for application to the satisfaction of
the Obligations (and if any Note is not outstanding, pro-rata in
proportion to the initial purchases of the remaining Notes).
(b) If any Debtor shall become entitled to receive or shall
receive any securities or other property (including, without limitation,
shares of Pledged Securities or instruments representing Pledged
Securities acquired after the date hereof, or any options, warrants,
rights or other similar property or certificates representing a dividend,
or any distribution in connection with any recapitalization,
reclassification or increase or reduction of capital, or issued in
connection with any reorganization of such Debtor or any of its direct or
indirect subsidiaries) in respect of the Pledged Securities (whether as
an addition to, in substitution of, or in exchange for, such Pledged
Securities or otherwise), such Debtor agrees to (i) accept the same as
the agent of the Secured Parties; (ii) hold the same in trust on behalf
of and for the benefit of the Secured Parties; and (iii) to deliver any
and all certificates or instruments evidencing the same to Agent on or
before the close of business on the fifth business day following the
receipt thereof by such Debtor, in the exact form received together with
the Necessary Endorsements, to be held by Agent subject to the terms of
this Agreement as Collateral.
8. RIGHTS AND REMEDIES UPON DEFAULT.
(a) Upon the occurrence of any Event of Default and at any time
thereafter, the Secured Parties, acting through any agent appointed by
them for such purpose, shall have the right to exercise all of the
remedies conferred hereunder and under the Notes, and the Secured Parties
shall have all the rights and remedies of a secured party under the UCC.
Without limitation, the Secured Parties shall have the following rights
and powers:
(i) The Secured Parties shall have the right to take
possession of the Collateral and, for that purpose, enter, with
the aid and assistance of any person, any premises where the
Collateral, or any part thereof, is or may be placed and remove
the same, and each Debtor shall assemble the Collateral and make
it available to the Secured Parties at places which the Secured
Parties shall reasonably select, whether at such Debtor's premises
or elsewhere, and make available to the Secured Parties, without
rent, all of such Debtor's respective
premises and facilities for the purpose of the Secured Parties
taking possession of, removing or putting the Collateral in
saleable or disposable form.
(ii) Upon notice to the Debtors by Agent, all rights of
each Debtor to exercise the voting and other consensual rights
which it would otherwise be entitled to exercise and all rights of
each Debtor to receive the dividends and interest which it would
otherwise be authorized to receive and retain, shall cease. Upon
such notice, Agent shall have the right to receive any interest,
cash dividends or other payments on the Collateral and, at the
option of Agent, to exercise in such Agent's discretion all voting
rights pertaining thereto. Without limiting the generality of the
foregoing, Agent shall have the right (but not the obligation) to
exercise all rights with respect to the Collateral as it were the
sole and absolute owners thereof, including, without limitation,
to vote and/or to exchange, at its sole discretion, any or all of
the Collateral in connection with a merger, reorganization,
consolidation, recapitalization or other readjustment concerning
or involving the Collateral or any Debtor or any of its direct or
indirect subsidiaries.
(iii) The Secured Parties shall have the right to operate
the business of each Debtor 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
Parties may deem commercially reasonable, all without (except as
shall be required by applicable statute and cannot be waived)
advertisement or demand upon or notice to any Debtor or right of
redemption of a Debtor, which are hereby expressly waived. Upon
each such sale, lease, assignment or other transfer of Collateral,
the Secured Parties may, unless prohibited by applicable law which
cannot be waived, purchase all or any part of the Collateral being
sold, free from and discharged of all trusts, claims, right of
redemption and equities of any Debtor, which are hereby waived and
released.
(iv) The Secured Parties shall have the right (but not
the obligation) to notify any account debtors and any obligors
under instruments or accounts to make payments directly to the
Secured Parties and to enforce the Debtors' rights against such
account debtors and obligors.
(v) The Secured Parties may (but are not obligated to)
direct any financial intermediary or any other person or entity
holding any investment property to transfer the same to the
Secured Parties or their designee.
(vi) The Secured Parties may (but are not obligated to)
transfer any or all Intellectual Property registered in the name
of any Debtor at the United States
Patent and Trademark Office and/or Copyright Office into the name
of the Secured Parties or any designee or any purchaser of any
Collateral.
(b) The Agent may comply with any applicable law in connection
with a disposition of Collateral and such compliance will not be
considered adversely to affect the commercial reasonableness of any sale
of the Collateral. The Agent may sell the Collateral without giving any
warranties and may specifically disclaim such warranties. If the Agent
sells any of the Collateral on credit, the Debtors will only be credited
with payments actually made by the purchaser. In addition, each Debtor
waives any and all rights that it may have to a judicial hearing in
advance of the enforcement of any of the Agent's rights and remedies
hereunder, including, without limitation, its right following an Event of
Default to take immediate possession of the Collateral and to exercise
its rights and remedies with respect thereto.
(c) For the purpose of enabling the Agent to further exercise
rights and remedies under this Section 8 or elsewhere provided by
agreement or applicable law, each Debtor hereby grants to the Agent, for
the benefit of the Agent and the Secured Parties, an irrevocable,
nonexclusive license (exercisable without payment of royalty or other
compensation to such Debtor) to use, license or sublicense following an
Event of Default, any Intellectual Property now owned or hereafter
acquired by such Debtor, and wherever the same may be located, and
including in such license access to all media in which any of the
licensed items may be recorded or stored and to all computer software and
programs used for the compilation or printout thereof.
9. APPLICATIONS OF PROCEEDS. The proceeds of any such sale, lease or
other disposition of the Collateral hereunder shall be applied first, to the
expenses of retaking, holding, storing, processing and preparing for sale,
selling, and the like (including, without limitation, any taxes, fees and other
costs incurred in connection therewith) of the Collateral, to the reasonable
attorneys' fees and expenses incurred by the Secured Parties in enforcing their
rights hereunder and in connection with collecting, storing and disposing of the
Collateral, and then to satisfaction of the Obligations pro rata among the
Secured Parties (based on then-outstanding principal amounts of Notes at the
time of any such determination), and to the payment of any other amounts
required by applicable law, after which the Secured Parties shall pay to the
applicable Debtor any surplus proceeds. If, upon the sale, license or other
disposition of the Collateral, the proceeds thereof are insufficient to pay all
amounts to which the Secured Parties are legally entitled, the Debtors will be
liable for the deficiency, together with interest thereon, at the rate of 10%
per annum or the lesser amount permitted by applicable law (the "Default Rate"),
and the reasonable fees of any attorneys employed by the Secured Parties to
collect such deficiency. To the extent permitted by applicable law, each Debtor
waives all claims, damages and demands against the Secured Parties arising out
of the repossession, removal, retention or sale of the Collateral, unless due
solely to the gross negligence or willful misconduct of the Secured Parties as
determined by a final judgment (not subject to further appeal) of a court of
competent jurisdiction.
10. SECURITIES LAW PROVISION. Each Debtor recognizes that Agent may be
limited in its ability to effect a sale to the public of all or part of the
Pledged Securities by reason of certain
prohibitions in the Securities Act of 1933, as amended, or other federal or
state securities laws (collectively, the "SECURITIES LAWS"), and may be
compelled to resort to one or more sales to a restricted group of purchasers who
may be required to agree to acquire the Pledged Securities for their own
account, for investment and not with a view to the distribution or resale
thereof. Each Debtor agrees that sales so made may be at prices and on terms
less favorable than if the Pledged Securities were sold to the public, and that
Agent has no obligation to delay the sale of any Pledged Securities for the
period of time necessary to register the Pledged Securities for sale to the
public under the Securities Laws. Each Debtor shall cooperate with Agent in its
attempt to satisfy any requirements under the Securities Laws (including,
without limitation, registration thereunder if requested by Agent) applicable to
the sale of the Pledged Securities by Agent.
11. COSTS AND EXPENSES. Each Debtor agrees to pay all reasonable
out-of-pocket fees, costs and expenses incurred in connection with any filing
required hereunder, including without limitation, any financing statements
pursuant to the UCC, continuation statements, partial releases and/or
termination statements related thereto or any expenses of any searches
reasonably required by the Secured Parties. The Debtors shall also pay all other
claims and charges which in the reasonable opinion of the Secured Parties might
prejudice, imperil or otherwise affect the Collateral or the Security Interest
therein. The Debtors will also, upon demand, pay to the Secured Parties the
amount of any and all reasonable expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, which the Secured Parties
may incur in connection with (i) the enforcement of this Agreement, (ii) the
custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, or (iii) the exercise or enforcement of
any of the rights of the Secured Parties under the Notes. Until so paid, any
fees payable hereunder shall be added to the principal amount of the Notes and
shall bear interest at the Default Rate.
12. RESPONSIBILITY FOR COLLATERAL. The Debtors assume all liabilities
and responsibility in connection with all Collateral, and the Obligations shall
in no way be affected or diminished by reason of the loss, destruction, damage
or theft of any of the Collateral or its unavailability for any reason. Without
limiting the generality of the foregoing, (a) neither the Agent nor any Secured
Party (i) has any duty (either before or after an Event of Default) to collect
any amounts in respect of the Collateral or to preserve any rights relating to
the Collateral, or (ii) has any obligation to clean-up or otherwise prepare the
Collateral for sale, and (b) each Debtor shall remain obligated and liable under
each contract or agreement included in the Collateral to be observed or
performed by such Debtor thereunder. Neither the Agent nor any Secured Party
shall have any obligation or liability under any such contract or agreement by
reason of or arising out of this Agreement or the receipt by the Agent or any
Secured Party of any payment relating to any of the Collateral, nor shall the
Agent or any Secured Party be obligated in any manner to perform any of the
obligations of any Debtor under or pursuant to any such contract or agreement,
to make inquiry as to the nature or sufficiency of any payment received by the
Agent or any Secured Party in respect of the Collateral or as to the sufficiency
of any performance by any party under any such contract or agreement, to present
or file any claim, to take any action to enforce any performance or to collect
the payment of any amounts which may have been assigned to the Agent or to which
the Agent or any Secured Party may be entitled at any time or times.
13. [INTENTIONALLY DELETED].
14. TERM OF AGREEMENT. This Agreement and the Security Interest shall
terminate on the date on which all payments under the Notes have been
indefeasibly paid in full and all other Obligations have been paid or
discharged; provided, however, that all indemnities of the Debtors contained in
this Agreement (including, without limitation, Annex B hereto) shall survive and
remain operative and in full force and effect regardless of the termination of
this Agreement.
15. POWER OF ATTORNEY; FURTHER ASSURANCES.
(a) Each Debtor authorizes the Secured Parties, and does hereby
make, constitute and appoint the Secured Parties and their respective
officers, agents, successors or assigns with full power of substitution,
as such Debtor's true and lawful attorney-in-fact, with power, in the
name of the various Secured Parties or such Debtor, to, after the
occurrence and during the continuance of an Event of Default, (i) endorse
any note, checks, drafts, money orders or other instruments of payment
(including payments payable under or in respect of any policy of
insurance) in respect of the Collateral that may come into possession of
the Secured Parties; (ii) to sign and endorse any financing statement
pursuant to the UCC or any invoice, freight or express xxxx, xxxx of
lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications and notices in connection with accounts, and
other documents relating to the Collateral; (iii) to pay or discharge
taxes, liens, security interests or other encumbrances at any time levied
or placed on or threatened against the Collateral; (iv) to demand,
collect, receipt for, compromise, settle and xxx for monies due in
respect of the Collateral; (v) to transfer any Intellectual Property or
provide licenses respecting any Intellectual Property; and (vi)
generally, at the option of the Secured Parties, and at the expense of
the Debtors, at any time, or from time to time, to execute and deliver
any and all documents and instruments and to do all acts and things which
the Secured Parties deem necessary to protect, preserve and realize upon
the Collateral and the Security Interest granted therein in order to
effect the intent of this Agreement and the Notes all as fully and
effectually as the Debtors might or could do; and each Debtor hereby
ratifies all that said attorney shall lawfully do or cause to be done by
virtue hereof. This power of attorney is coupled with an interest and
shall be irrevocable for the term of this Agreement and thereafter as
long as any of the Obligations shall be outstanding. The designation set
forth herein shall be deemed to amend and supersede any inconsistent
provision in the Organizational Documents or other documents or
agreements to which any Debtor is subject or to which any Debtor is a
party. Without limiting the generality of the foregoing, after the
occurrence and during the continuance of an Event of Default, each
Secured Party is specifically authorized to execute and file any
applications for or instruments of transfer and assignment of any
patents, trademarks, copyrights or other Intellectual Property with the
United States Patent and Trademark Office and the United States Copyright
Office.
(b) On a continuing basis, each Debtor will make, execute,
acknowledge, deliver, file and record, as the case may be, with the
proper filing and recording agencies in any jurisdiction, including,
without limitation, the jurisdictions indicated on SCHEDULE
C attached hereto, all such instruments, and take all such action as may
reasonably be deemed necessary or advisable, or as reasonably requested
by the Secured Parties, to perfect the Security Interest granted
hereunder and otherwise to carry out the intent and purposes of this
Agreement, or for assuring and confirming to the Secured Parties the
grant or perfection of a perfected security interest in all the
Collateral under the UCC.
(c) Each Debtor hereby irrevocably appoints the Secured Parties
as such Debtor's attorney-in-fact, with full authority in the place and
instead of such Debtor and in the name of such Debtor, from time to time
in the Secured Parties' discretion, to take any action and to execute any
instrument which the Secured Parties may deem necessary or advisable to
accomplish the purposes of this Agreement, including the filing, in its
sole discretion, of one or more financing or continuation statements and
amendments thereto, relative to any of the Collateral without the
signature of such Debtor where permitted by law, which financing
statements may (but need not) describe the Collateral as "all assets" or
"all personal property" or words of like import, and ratifies all such
actions taken by the Secured Parties. This power of attorney is coupled
with an interest and shall be irrevocable for the term of this Agreement
and thereafter as long as any of the Obligations shall be outstanding.
16. NOTICES. All notices, requests, demands and other communications
hereunder shall be subject to the notice provision of the Notes.
17. OTHER SECURITY. To the extent that the Obligations are now or
hereafter secured by property other than the Collateral or by the guarantee,
endorsement or property of any other person, firm, corporation or other entity,
then the Secured Parties shall have the right, in its sole discretion, to
pursue, relinquish, subordinate, modify or take any other action with respect
thereto, without in any way modifying or affecting any of the Secured Parties'
rights and remedies hereunder.
18. APPOINTMENT OF AGENT. The Secured Parties hereby appoint Midsummer
Investment, Ltd. to act as their agent ("AGENT") for purposes of exercising any
and all rights and remedies of the Secured Parties hereunder. Such appointment
shall continue until revoked in writing by a Majority in Interest, at which time
a Majority in Interest shall appoint a new Agent; provided, that Midsummer
Investment, Ltd. may not be removed as Agent unless Midsummer Investment, Ltd.
shall then hold less than $50,000 principal amount of Notes. The Agent shall
have the rights, responsibilities and immunities set forth in ANNEX B hereto.
19. MISCELLANEOUS.
(a) No course of dealing between the Debtors and the Secured
Parties, nor any failure to exercise, nor any delay in exercising, on the
part of the Secured Parties, any right, power or privilege hereunder or
under the Notes shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, power or privilege hereunder or
thereunder preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.
(b) All of the rights and remedies of the Secured Parties with
respect to the Collateral, whether established hereby or by the Notes or
by any other agreements, instruments or documents or by law shall be
cumulative and may be exercised singly or concurrently.
(c) This Agreement constitutes the entire agreement of the
parties with respect to the subject matter hereof and is intended to
supersede all prior negotiations, understandings and agreements with
respect thereto. Except as specifically set forth in this Agreement, no
provision of this Agreement may be modified or amended except by a
written agreement specifically referring to this Agreement and signed by
the parties hereto.
(d) In the event any provision of this Agreement is held to be
invalid, prohibited or unenforceable in any jurisdiction for any reason,
unless such provision is narrowed by judicial construction, this
Agreement shall, as to such jurisdiction, be construed as if such
invalid, prohibited or unenforceable provision had been more narrowly
drawn so as not to be invalid, prohibited or unenforceable. If,
notwithstanding the foregoing, any provision of this Agreement is held to
be invalid, prohibited or unenforceable in any jurisdiction, such
provision, as to such jurisdiction, shall be ineffective to the extent of
such invalidity, prohibition or unenforceability without invalidating the
remaining portion of such provision or the other provisions of this
Agreement and without affecting the validity or enforceability of such
provision or the other provisions of this Agreement in any other
jurisdiction.
(e) No waiver of any breach or default or any right under this
Agreement shall be considered valid unless in writing and signed by the
party giving such waiver, and no such waiver shall be deemed a waiver of
any subsequent breach or default or right, whether of the same or similar
nature or otherwise.
(f) This Agreement shall be binding upon and inure to the
benefit of each party hereto and its successors and assigns.
(g) Each party shall take such further action and execute and
deliver such further documents as may be necessary or appropriate in
order to carry out the provisions and purposes of this Agreement.
(h) All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State
of New York, without regard to the principles of conflicts of law
thereof. Each Debtor agrees that all proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated
by this Agreement and the Note (whether brought against a party hereto or
its respective affiliates, directors, officers, shareholders, partners,
members, employees or agents) shall be commenced exclusively in the state
and federal courts sitting in the City of New York,
Borough of Manhattan. Each Debtor hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in the
City of New York, Borough of Manhattan for the adjudication of any
dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives,
and agrees not to assert in any proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such
proceeding is improper. Each party hereto hereby irrevocably waives
personal service of process and consents to process being served in any
such proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such party at
the address in effect for notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of process
and notice thereof. Nothing contained herein shall be deemed to limit in
any way any right to serve process in any manner permitted by law. Each
party hereto hereby irrevocably waives, to the fullest extent permitted
by applicable law, any and all right to trial by jury in any legal
proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby. If any party shall commence a
proceeding to enforce any provisions of this Agreement, then the
prevailing party in such proceeding shall be reimbursed by the other
party for its reasonable attorney's fees and other costs and expenses
incurred with the investigation, preparation and prosecution of such
proceeding.
(i) This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an
original and, all of which taken together shall constitute one and the
same Agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of
the party executing (or on whose behalf such signature is executed) the
same with the same force and effect as if such facsimile signature were
the original thereof.
(j) All Debtors shall jointly and severally be liable for the
obligations of each Debtor to the Secured Parties hereunder.
(k) Each Debtor shall indemnify, reimburse and hold harmless
the Secured Parties and their respective partners, members, shareholders,
officers, directors, employees and agents (collectively, "INDEMNITEES")
from and against any and all losses, claims, liabilities, damages,
penalties, suits, costs and expenses, of any kind or nature, (including
fees relating to the cost of investigating and defending any of the
foregoing) imposed on, incurred by or asserted against such Indemnitee in
any way related to or arising from or alleged to arise from this
Agreement or the Collateral, except any such losses, claims, liabilities,
damages, penalties, suits, costs and expenses which result from the gross
negligence or willful misconduct of the Indemnitee as determined by a
final, nonappealable decision of a court of competent jurisdiction. This
indemnification provision is in addition to, and not in limitation of,
any other indemnification provision in the Notes or any other agreement,
instrument or other document executed or delivered in connection herewith
or therewith.
(l) Nothing in this Agreement shall be construed to subject
Agent or any Secured Party to liability as a partner in any Debtor or any
if its direct or indirect subsidiaries that is a partnership or as a
member in any Debtor or any of its direct or indirect subsidiaries that
is a limited liability company, nor shall Agent or any Secured Party be
deemed to have assumed any obligations under any partnership agreement or
limited liability company agreement, as applicable, of any such Debtor or
any if its direct or indirect subsidiaries or otherwise, unless and until
any such Secured Party exercises its right to be substituted for such
Debtor as a partner or member, as applicable, pursuant hereto.
(m) To the extent that the grant of the security interest in
the Collateral and the enforcement of the terms hereof require the
consent, approval or action of any partner or member, as applicable, of
any Debtor or any direct or indirect subsidiary of any Debtor or
compliance with any provisions of any of the Organizational Documents,
the Debtors hereby grant such consent and approval and waive any such
noncompliance with the terms of said documents.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed on the day and year first above written.
SECURED SERVICES, INC.
By: /s/Xxxxxx Xxxxxxx
-----------------
Name: Xxxxxx Xxxxxxx
Title: President and CEO
SSI OPERATING CORP.
By: /s/Xxxxxx Xxxxxxx
-----------------
Name: Xxxxxx Xxxxxxx
Title: President and CEO
SECURED MOBILE, INC.
By: /s/Xxxxxx Xxxxxxx
-----------------
Name: Xxxxxx Xxxxxxx
Title: President and CEO
SSI MINNESOTA CORP.
By: /s/Xxxxxx Xxxxxxx
-----------------
Name: Xxxxxx Xxxxxxx
Title: President and CEO
SECURED SERVICES CANADA INC.
By: /s/Xxxxxx Xxxxxxx
-----------------
Name: Xxxxxx Xxxxxxx
Title: President and CEO
[SIGNATURE PAGE OF HOLDERS FOLLOWS]
[SIGNATURE PAGE OF HOLDERS TO SSVC SA]
Name of Investing Entity: Midsummer Investment, Ltd.
--------------------------
SIGNATURE OF AUTHORIZED SIGNATORY OF INVESTING ENTITY: /s/ Xxxxx X. Xxxxxxx
--------------------
Name of Authorized Signatory: Xxxxx X. Xxxxxxx
----------------
Title of Authorized Signatory: Managing Director of Midsummer Capital, LLC
Acting as investing manager of Midsummer
Investment, Ltd.
[SIGNATURE PAGE OF HOLDERS FOLLOWS]
