EXHIBIT 10.2
SECURITY INTEREST AGREEMENT
SECURITY INTEREST AGREEMENT ("Security Interest Agreement"), dated as
of April 26, 2006, by and among the persons set forth on Schedule 1 (each a
"Secured Party" and collectively, the "Secured Parties"), AMEDIA NETWORKS, INC.,
a Delaware corporation having its principal executive offices at 0 Xxxxxxx Xxx,
Xxxxxxxxx, Xxx Xxxxxx 00000 (the "Company" or the "Debtor"), and XXXXXXX &
PRAGER, LLP, as agent for the Secured. Parties (the "Agent").
RECITALS
A. Reference is made to (i) that certain Securities Purchase Agreement
of even date herewith (the "Securities Purchase Agreement") to which the Debtor
and the Secured Parties are parties, and (ii) the Transaction Agreements,
including, without limitation, the Debentures and the Registration Rights
Agreement. Capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the relevant Transaction Agreements.
B. Pursuant to the Transaction Agreements, the Debtor has certain
obligations to the Secured Parties (all such obligations, the "Obligations"),
including, but not limited to, obligations pursuant to the Securities Purchase
Agreement, the Debentures and the Registration Rights Agreement.
C. In order to induce the Secured Parties to execute and deliver the
Transaction Agreements and to make the advances to the Debtor contemplated
thereby, and as contemplated by the Securities Purchase Agreement and the
Debenture, the Debtor has agreed to grant to the Secured Parties a security
interest in the Collateral (as defined below) to secure the due and punctual
fulfillment of the Obligations. The Secured Parties are willing to enter into
the Securities Purchase Agreement and the other Transaction Agreements only upon
receiving the Debtor's execution of this Security Interest Agreement.
NOW, THEREFORE, in consideration of the premises, the mutual covenants
and conditions contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
Section 1. Grant of Security Interest.
(a) In order to secure the due and punctual fulfillment of the
Obligations, the Debtor hereby grants, conveys, transfers and assigns to the
Secured Parties (and to each of them based on their respective Allocable Shares,
as defined below) a continuing security interest in the following described
properties, assets and rights of Debtor, wherever located, whether now owned or
hereafter acquired or arising, and all cash and non-cash proceeds and products
thereof (all of the same hereinafter collectively called the "Collateral"):
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"COLLATERAL" is all right, title and interest of Debtor in and to all
of the following, whether now owned or hereafter arising or acquired
and wherever located: All assets of the Debtor, including, but not
limited to: all personal and fixture property of every kind and nature,
including without limitation all goods (including inventory, equipment
and any accessions thereto), instruments (including promissory notes),
documents, accounts (including accounts receivable), chattel paper
(whether tangible or electronic), deposit accounts, letter-of-credit
rights (whether or not the letter of credit is evidenced by a writing),
commercial tort claims, securities and all other investment property,
supporting obligations, any other contract rights or rights to the
payment of money, insurance claims and proceeds, and all general
intangibles (including all payment intangibles); all Equipment; all
Intellectual Property; and any and all claims, rights and interests in
any of the above, and all guaranties and security for any of the above,
and all substitutions and replacements for, additions, accessions,
attachments, accessories, and improvements to, and proceeds (including
proceeds of any insurance policies, proceeds of proceeds and claims
against third parties) of, any and all of the above, and all Debtor's
books relating to any and all of the above and includes, without
limiting the generality of the above, the Equipment (and related IP)
listed in Exhibit B.
"CODE" is the Uniform Commercial Code, in effect in the State of New
York as in effect from time to time.
"COPYRIGHTS" are all copyrights, copyright rights, applications or
registrations and like protections in each work or authorship or
derivative work, whether published or not (whether or not it is a trade
secret) now or later existing, created, acquired or held.
"EQUIPMENT" has the meaning set forth in the Code and includes all
present and future machinery, equipment, tenant improvements,
furniture, fixtures, vehicles, tools, parts and attachments in which
Debtor has any interest.
"INTELLECTUAL PROPERTY" is all present and future (a) Copyrights, (b)
trade secret rights, including all rights to unpatented inventions and
know-how, and confidential information; (c) mask work or similar rights
available for the protection of semiconductor chips; (d) Patents; (e)
Trademarks; (f) computer software and computer software products; (g)
designs and design rights; (h) technology; (i) all claims for damages
by way of past, present and future infringement of any of the rights
included above; (j) all licenses or other rights to use any property or
rights of a type described above.
"PATENTS" are patents, patent applications and like protections,
including improvements, divisions, continuations, renewals, reissues,
extensions and continuations-in-part of the same.
"TRADEMARKS" are trademarks, servicemarks, trade styles, and trade
names, whether or not any of the foregoing are registered, and all
applications to register and registrations
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of the same and like protections, and the entire goodwill of the
business of Debtor connected with and symbolized by any such
trademarks.
(b) The security interests granted pursuant to this Section (the
"Security Interests") are granted as security only and shall not subject the
Secured Party to, or transfer or in any way affect or modify, any obligation or
liability of the Debtor under any of the Collateral or any transaction which
gave rise thereto.
(c) The term "Allocable Share" means, with respect to each Secured
Party (if there is more than one Secured Party), as of the relevant date, the
fraction equal to (i) the outstanding principal of the Debenture then held by
such Secured Party, divided by (ii) the aggregate outstanding principal of the
Debentures then held by all Secured Parties.
Section 2. Filing; Further Assurances.
(a) The Debtor will, at its expense, cause to be searched the public
records with respect to the Collateral and will execute, deliver, file and
record (in such manner and form as the Secured Party may require), or permit the
Secured Party to file and record, as its attorney in fact for such purpose, any
financing statement, any carbon, photographic or other reproduction of a
financing statement or this Security Interest Agreement (which shall be
sufficient as a financing statement hereunder), any specific assignments or
other paper that may be reasonably necessary or desirable, or that the Secured
Party may request, in order to create, preserve, perfect or validate any
Security Interest or to enable the Secured Party to exercise and enforce its
rights hereunder with respect to any of the Collateral. The Debtor hereby
appoints Secured Party as Debtor's attorney-in-fact to execute in the name and
behalf of Debtor such additional financing statements as Secured Party may
request.
(b) Each Secured Party has designated an Agent as provided in Section
titled "Agent" below. Among other things, such Agent shall be agent of the
Secured Party for execution of and identification on any financing statement or
similar instrument referring to or describing the Collateral.
(c) The Agent is authorized to execute and file any and all financing
statements desired to be filed by the Secured Parties to reflect the security
interest in the Collateral in any and all jurisdictions. For such purposes, the
Debtor irrevocably appoints the Agent (acting by Xxxxxx X. Xxxxxxx and Xxxxxx
Xxxxxxxx, or either one of them), with full power of substitution to execute and
file such financing statements naming the Debtor as debtor thereon.
Section 3. Representations and Warranties of Debtor. The Debtor hereby
represents and warrants to the Secured Party (a) that, except as set forth in
Exhibit A attached hereto, the Debtor is, or to the extent that certain of the
Collateral is to be acquired after the date hereof, will be, the owner of the
Collateral free from any adverse lien, security interest or encumbrance; (b)
that except for such financing statements as may be described on Exhibit A
attached hereto and made a part hereof, no financing statement covering the
Collateral is on file in any public office,
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other than the financing statements filed pursuant to this Security Agreement;
and (c) that all additional information, representations and warranties
contained in Exhibit B attached hereto and made a part hereof are true, accurate
and complete on the date hereof.
Section 4. Covenants of Debtor. The Debtor hereby covenants and agrees
with each Secured Party that the Debtor (a) will, at the Debtor's sole cost and
expense, defend the Collateral against all claims and demands of all persons at
any time claiming any interest therein junior to the Secured Party's interest;
(b) will provide the Secured Party with prompt written notice of (i) any change
in the chief executive officer of the Debtor or the office where the Debtor
maintains its books and records pertaining to the Collateral; (ii) the movement
or location of all or a material part of the Collateral to or at any address
other than as set forth in said Exhibit B; and (iii) any facts which constitute
a Debtor Event of Default (as such term is defined below), or which, with the
giving of notice and/or the passage of time, could or would constitute a Debtor
Event of Default, pursuant to the Section titled "Debtor Events of Default"
herein; (c) will promptly pay any and all taxes, assessments and governmental
charges upon the Collateral prior to the date penalties are attached thereto,
except to the extent that such taxes, assessments and charges shall be contested
in good faith by the Debtor; (d) will immediately notify the Secured Party of
any event causing a substantial loss or diminution in the value of all or any
material part of the Collateral and the amount or an estimate of the amount of
such loss or diminution; (e) will have and maintain adequate insurance at all
times with respect to the Collateral, for such other risks as are customary in
the Debtor's industry for the respective items included in the Collateral, such
insurance to be payable to the Secured Party and the Debtor as their respective
interests may appear, and shall provide for a minimum of ten (10) days prior
written notice of cancellation to the Secured Party, and Debtor shall furnish
the Secured Party with certificates or other evidence satisfactory to the
Secured Party of compliance with the foregoing insurance provisions; (f) will
not sell or offer to sell or otherwise assign, transfer or dispose of the
Collateral or any interest therein, without the prior written consent of the
Secured Party, except in the ordinary course of business; (g) will keep the
Collateral free from any adverse lien, security interest or encumbrance (except
for encumbrances specified in Exhibit A attached hereto) and in good order and
repair, reasonable wear and tear excepted, and will not waste or destroy the
Collateral or any part thereof; and (h) will not use the Collateral in material
violation of any statute or ordinance the violation of which could materially
and adversely affect the Debtor's business.
Section 5. Records Relating To Collateral. The Debtor will keep its
records concerning the Collateral at its offices designated in the caption of
this Security Interest Agreement or at such other place or places of business of
which the Secured Party shall have been notified in writing no less than ten
(10) days prior thereto. The Debtor will hold and preserve such records and
chattel paper and will permit representatives of the Secured Party at any time
during normal business hours upon reasonable notice to examine and inspect the
Collateral and to make abstracts from such records and chattel paper
(collectively, "Audit"), and will furnish to the Secured Party such information
and reports regarding the Collateral as the Secured Party may from time to time
reasonably request. As long as no Event of Default has occurred and is
continuing, such Audits will be conducted not more often than once every twelve
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(12) months. Unless an Event of Default is continuing at the time of the Audit,
the Secured Party shall bear its own costs of the Audit. If an Event of Default
has occurred and is continuing, Secured Party may make Audits more frequently
and the Debtor will be responsible for the related costs.
Section 6. General Authority. From and during the term of any Debtor
Event of Default, the Debtor hereby appoints the Secured Party the Debtor's
lawful attorney, with full power of substitution, in the name of the Debtor, for
the sole use and benefit of the Secured Party, but at the Debtor's expense, to
exercise, all or any of the following powers with respect to all or any of the
Collateral:
(a) to demand, xxx for, collect, receive and give acquittance for any
and all monies due or to become due;
(b) to receive, take, endorse, assign and deliver all checks, notes,
drafts, documents and other negotiable and non-negotiable instruments and
chattel paper taken or received by the Secured Party;
(c) to settle, compromise, prosecute or defend any action or proceeding
with respect thereto;
(d) to sell, transfer, assign or otherwise deal in or with the same or
the proceeds thereof or the related goods securing the Collateral, as fully and
effectually as if the Secured Party were the sole and absolute owner thereof;
(e) to extend the time of payment of any or all thereof and to make any
allowance and other adjustments with reference thereto; and
(f) to discharge any taxes, liens, security interests or other
encumbrances at any time placed thereon;
provided, however, that the Secured Party shall give the Debtor not less than
ten (10) business days' prior written notice of the time and place of any sale
or other intended disposition of any of the Collateral.
The exercise by Secured Party or by the Agent of, or failure to so
exercise, any authority granted herein shall in no manner affect Debtor's
liability to Secured Party, and provided, further, that Secured Party and the
Agent shall be under no obligation or duty to exercise any of the powers hereby
conferred upon them and they shall be without liability for any act or failure
to act in connection with the collection of, or the preservation of, any rights
under any of the Collateral.
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Section 7. Debtor Events of Default.
(a) The Debtor shall be in default under this Security Agreement upon
the occurrence of any of the following events (a "Debtor Event of Default"):
(i) if any representation or warranty made by the Debtor
in this Security Interest Agreement, in the
Securities Purchase Agreement or in any of the other
Transaction Agreements shall be false or misleading
in any material respect; or
(ii) the occurrence of an Event of Default (as defined in
the Debenture) by the Debtor.
(b) The Debtor hereby irrevocably agrees that, upon the occurrence of a
Debtor Event of Default, the Debtor shall be deemed to have consented to an
immediate conveyance and transfer to the Secured Party of the copyrights and all
other rights the Debtor may have in the software included in the Collateral,
including, but not necessarily limited to, the software identified in Schedule B
attached hereto. In furtherance of the foregoing, and not in limitation thereof,
the Debtor will, upon the occurrence of a Debtor Event of Default, deliver to
the Agent copies of the source code of the relevant software, with accompanying
written assignment of the software to the Secured Parties. Without limiting the
foregoing, such source code and assignment shall be in form sufficient to enable
the Secured Parties to register the software in name of the Secured Parties with
the Copyright Register. The Debtor hereby agrees to take all steps necessary or
appropriate, as requested by each Secured Party or the Agent, to effectuate and
reflect such conveyance and transfer or assignment to Secured Parties. In all
events, such conveyance, transfer or assignment shall be deemed to vest title in
such software in the Secured Parties.
(c) In furtherance of the foregoing and not in limitation thereof, the
Debtor acknowledges and agrees that a Secured Party may, upon the occurrence of
a Debtor Event of Default, seek the immediate entry of a preliminary injunction
prohibiting the Debtor's use of such software in any shape, way or manner,
including, but not necessarily limited to, through the sale of products that use
any of such software, and the Debtor hereby irrevocably agrees that it will not
contest an application seeking entry of a preliminary injunction and that it
will accept the entry of such injunction.
Section 8. Remedies Upon Debtor Event of Default. If any Debtor Event
of Default shall have occurred, then in addition to the provisions of Section 7
hereof, a Secured Party may exercise all the rights and remedies of a secured
party under the Code. The Secured Party may require the Debtor to assemble all
or any part of the Collateral and make it available to the Secured Party at a
place to be designated by the Secured Party which is reasonably convenient. The
Secured Party shall give the Debtor ten (10) business days prior written notice
of the Secured Party's intention to make any public or private sale or sale at a
broker's board or on a securities exchange of the Collateral. At any such sale
the Collateral may be sold in one lot as an entirety or in separate parcels, as
the Secured Party, in its sole discretion, may determine. The Secured Party
shall not be obligated to make any such sale pursuant to any such notice.
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The Secured Party may, without notice or publication, adjourn any public or
private sale or cause the same to be adjourned from time to time by announcement
at the time and place fixed for the sale, and such sale may be made at any time
or place to which the same may be adjourned. The Secured Party, instead of
exercising the power of sale herein conferred upon it, may proceed by a suit or
suits at law or in equity to foreclose the Security Interests and sell the
Collateral, or any portion thereof, under a judgment or decree of a court or
courts of competent jurisdiction.
Section 9. Application of Collateral and Proceeds. The proceeds of any
sale of, or other realization upon, all or any part of the Collateral shall be
applied in the following order of priorities: (a) first, to pay the reasonable
expenses of such sale or other realization, including, without limitation,
reasonable attorneys' fees, and all expenses, liabilities and advances
reasonably incurred or made by the Secured Party in connection therewith, and
any other unreimbursed expenses for which the Secured Party is to be reimbursed
pursuant to the Section titled "Expenses; Secured Party's Lien" hereof; (b)
second, to the payment of the Obligations in such order of priority as the
Secured Party, in its sole discretion, shall determine; and (c) finally, to pay
to the Debtor, or its successors or assigns, or as a court of competent
jurisdiction may direct, any surplus then remaining from such proceeds.
Section 10. Expenses; Secured Party's Lien. If any Debtor Event of
Default shall have occurred, the Debtor will forthwith upon demand pay to the
Secured Party: (a) the amount which the Secured Party may have been required to
pay to free any of the Collateral from any lien thereon; and (b) the amount of
any and all reasonable out-of-pocket expenses, including, without limitation,
the reasonable fees and disbursements of its counsel, and of any agents not
regularly in its employ, which the Secured Party may incur in connection with
(i) the preparation of any amendments or modifications of this Security
Agreement, (ii) the collection, sale or other disposition of any of the
Collateral; (iii) the exercise by the Secured Party of any of the powers
conferred upon it hereunder, or (iv) any default by the Debtor hereunder.
Section 11. Termination of Security Interests; Release of Collateral.
Upon the earlier of
(i) the date on which the aggregate principal amount of all outstanding
Debentures is twenty-five percent (25%) or less of the Closed Aggregate
Purchase Price, or
(ii) the payment and performance in full of all the Obligations,
the Security Interests shall terminate and all rights to the Collateral shall
revert to the Debtor. Upon any such termination of the Security Interests or
release of Collateral, the Secured Party will, at the Debtor's expense, to the
extent permitted by law, execute and deliver to the Debtor such documents as the
Debtor shall reasonably request to evidence the termination of the Security
Interests or the release of such Collateral, as the case may be.
Section 12. Permitted Liens. The Debtor further covenants and agrees
that it will not grant any other lien in the Collateral (howsoever denominated)
as long as any of the Obligations
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remains outstanding other than Permitted Liens (as defined below). The term
"Permitted Liens" means any one or more of the following:
(a) liens shown on Exhibit A attached hereto, each of which represents
a security interest granted and perfected prior to March 24, 2006;
(b) liens for taxes, fees, assessments or other governmental charges or
levies, either not delinquent or being actively contested in good faith by the
Debtor;
(c) purchase money liens (i) on equipment acquired or held by the
Debtor, where such lien was created in connection with the financing of the
acquisition of such equipment, or (ii) existing on equipment when such equipment
is or was acquired by the Debtor; provided, in each case that the lien is
limited to the specific item or items of equipment and improvements and proceeds
thereof;
(d) liens associated with licenses or sublicenses granted by the Debtor
in the ordinary course of its business, and not otherwise prohibited by the
terms of this Agreement, if such liens have no priority over the Security
Interests;
(e) liens associated with licenses or sublicenses granted to the Debtor
in the ordinary course of its business, in connection with the Debtor's leased
premises or leased property, if such liens have no priority over the Security
Interests;
(f) leases or subleases granted in the ordinary course of the Debtor's
business, including in connection with the Debtor's leased premises or leased
property; or
(g) liens incurred in the extension, renewal, or refinancing of the
indebtedness secured by liens described in subparagraphs (a) through and
including (c) above, but any such extension, renewal or replacement lien must be
limited to the property encumbered by the existing lien and the principal amount
of the indebtedness may not increase.
Section 13. Notices. All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder shall be in
writing and, unless otherwise specified herein, shall be (a) personally served,
(b) deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (c) delivered by reputable air courier service with charges
prepaid, or (d) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice given in accordance herewith. Any notice or
other communication required or permitted to be given hereunder shall be deemed
effective (i) upon hand delivery or delivery by facsimile, with accurate
confirmation generated by the transmitting facsimile machine, at the address or
number designated below (if delivered on a business day during normal business
hours where such notice is to be received), or the first business day following
such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (ii) on the second business day
following the date of mailing by express courier service or on the
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fifth business day after deposited in the mail, in each case, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever
shall first occur. The addresses for such communications shall be for (i) the
Debtor as provided in the Securities Purchase Agreement for notices to the
Company, (ii) for each Secured Party as provided in the Securities Purchase
Agreement for notices to the relevant Buyer and (iii) for the Agent as provided
in the Securities Purchase Agreement for notices to the Escrow Agent. Any party
hereto may from time to time change its address or facsimile number for notices
under this Section in the manner contemplated by the Securities Purchase
Agreement.
Section 14. Agent.
(a) Anything in the other provisions of this Security Interest
Agreement to the contrary notwithstanding, the Secured Party may designate
another entity to act as agent (the "Agent") for the Secured Party with respect
to any one or more of the rights of Secured Party hereunder, including, but not
necessarily limited to, the right to hold the security interest and/or be named
as secured party (as agent for the Secured Party) in any filed financing
statement and to take action in the name and stead of the Secured Party
hereunder. Such designation may be made with or without power of substitution,
Such designation shall remain in effect until canceled by the Secured Party, as
provided herein; provided, however, that such cancellation shall not affect the
validity of any action theretofore taken by such agent pursuant to this Security
Interest Agreement. The Debtor acknowledges and agrees to honor such designation
and acknowledges that the Agent is acting as the agent of the Secured Party and
not as a principal.
(b) Each Secured Party hereby confirms that the Secured Party has
designated Xxxxxxx & Xxxxxx, LLP (acting by Xxxxxx X. Xxxxxxx and Xxxxxx
Xxxxxxxx, or either one of them), as its initial Agent, with full right of
substitution.
(c) If there is more than one Secured Party, the Agent shall act as
agent for all Secured Parties. Any revocation of the authority of the Agent or
the designation of an alternate Agent shall be done only by Secured Parties who
represent a Majority in Interest of the Holders at that time; provided that at
all times all Secured Parties shall be represented by one and the same Agent.
(d) Reference is made to the provisions of Sections 2 through 15,
inclusive of the Joint Escrow Instructions. All such provisions are incorporated
herein by reference as if set forth herein in full, except that, for such
purposes, the references therein to (i) the "Escrow Agent" shall be deemed to be
references to the "Agent" under this Security Interest Agreement, (ii) the
"Company" shall be deemed to be references to the Debtor under this Security
Interest Agreement, and (iii) each "Buyer" shall be deemed to be references to
each Secured Party under this Security Interest Agreement.
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Section 15. Miscellaneous.
(a) No failure on the part of the Secured Party to exercise, and no
delay in exercising, and no course of dealing with respect to, any right, power
or remedy under this Security Interest Agreement shall operate as a waiver
thereof; nor shall any single or partial exercise by the Secured Party of any
right, power or remedy under this Security Interest Agreement preclude the
exercise, in whole or in part, of any other right, power or remedy. The remedies
in this Security Interest Agreement are cumulative and are not exclusive of any
other remedies provided by law. Neither this Security Interest Agreement nor any
provision hereof may be changed, waived, discharged or terminated orally but
only by a statement in writing signed by the party against which enforcement of
the change, waiver, discharge or termination is sought.
(b) Unless otherwise defined herein, or unless the context otherwise
requires, all terms used herein which are defined in the New York Uniform
Commercial Code have the meanings therein stated.
(c) The execution and delivery by Debtor of this Security Interest
Agreement and all documents delivered in connection herewith have been duly and
validly authorized by all necessary corporate action of Debtor and this
Agreement and all documents delivered in connection herewith have been duly and
validly executed and delivered by Debtor. The execution and delivery by Debtor
of this Security Interest Agreement and all documents delivered in connection
herewith will not result in a breach or default of or under the Certificate of
Incorporation, By-laws or any agreement, contract or indenture of Debtor. This
Security Interest Agreement and all documents delivered in connection therewith
are legal, valid and binding obligations of Debtor enforceable against Debtor in
accordance with their terms.
(e) In the event that any action is taken by Debtor or Secured Party in
connection with the this Security Interest Agreement, or any related document or
matter, the losing party in such legal action, in addition to such other damages
as he or it may be required to pay, shall pay reasonable attorneys' fees to the
prevailing party.
Section 16. Separability. If any provision hereof shall prove invalid
or unenforceable in any jurisdiction whose laws shall be deemed applicable, the
other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Secured Party.
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Section 17. Governing Law.
(a) This Security Interest Agreement shall be governed by and construed
in accordance with the laws of the State of New York for contracts to be wholly
performed in such state and without giving effect to the principles thereof
regarding the conflict of laws. Each of the parties consents to the exclusive
jurisdiction of the federal courts whose districts encompass any part of the
County of New York or (except with respect to issues relating to the copyright
in and to the software, as contemplated by Section 7 hereof, which shall
exclusively be in the aforesaid federal courts) of the state courts of the State
of New York sitting in the County of New York in connection with any dispute
arising under this Security Interest Agreement and hereby waives, to the maximum
extent permitted by law, any objection, including any objection based on forum
non coveniens, to the bringing of any such proceeding in such jurisdictions or
to any claim that such venue of the suit, action or proceeding is improper. To
the extent determined by such court, the Debtor shall reimburse the Secured
Party for any reasonable legal fees and disbursements incurred by the Secured
Party in enforcement of or protection of any of its rights under this Security
Interest Agreement. Nothing in this Section shall affect or limit any right to
serve process in any other manner permitted by law.
(b) The Debtor and the Secured Party acknowledge and agree
that irreparable damage would occur in the event that any of the provisions of
this Security Interest Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent or cure
breaches of the provisions of this Security Interest Agreement and to enforce
specifically the terms and provisions hereof, this being in addition to any
other remedy to which any of them may be entitled by law or equity.
Section 18. Jury Trial Waiver. The Debtor and the Secured Party hereby
waive a trial by jury in any action, proceeding or counterclaim brought by
either of the parties hereto against the other in respect of any matter arising
out of or in connection with the Debenture or this Security Interest Agreement.
Section 19. Assignment. Only in connection with the transfer of the
rights under the Transaction Agreements in accordance with their terms, a
Secured Party may assign or transfer the whole or any part of its security
interest granted hereunder, and may transfer as collateral security the whole or
any part of Secured Party's security interest in the Collateral. Any transferee
of the Collateral shall be vested with all of the rights and powers of the
assigning Secured Party hereunder with respect to the Collateral.
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Section 20. Waiver. The Debtor waives any right that it may have to
require Secured Party to proceed against any other person, or proceed against or
exhaust any other security, or pursue any other remedy Secured Party may have.
IN WITNESS WHEREOF, the Parties have executed this Security Interest
Agreement as of the day, month and year first above written.
SECURED PARTIES (named in Schedule 1):
By: Xxxxxxx & Xxxxxx LLP, as their agent
By:_________________________________________
DEBTOR:
AMEDIA NETWORKS, INC.
By:__________________________________________
President
AGENT:
XXXXXXX & PRAGER, LLP
By:_________________________________________
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SCHEDULE 1
The Secured Parties are:
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Name Address
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EXHIBIT A
EXCEPTIONS TO REPRESENTATIONS
1. That certain Security Interest Agreement, dated as of December 15, 2005 (as
permitted by the terms thereof or with the consent of the Secured Parties
named therein, additional parties or additional interests were added as
Secured Parties to this Agreement on January 20, 2006, March 1, 2006 and
March 9, 2006; collectively, "December Security Interest Agreement"), to
which the Debtor and the Holders of the Senior Specified Notes (as defined
in Annex IX to the Securities Purchase Agreement) are parties, with such
December Security Interest Agreement having been executed in connection
with the transactions (the "Senior Bridge Transactions") as described in
the respective Bridge Loan Agreements, dated on or about the respective
dates of the Senior Specified Notes, by and between the Debtor and one or
more certain individuals and entities named on executed counterpart
signature pages to such Bridge Loan Agreement, and in connection with which
a certain financing statement (as heretofore amended) was filed in the
State of Delaware, which remains in effect. The Senior Specified Notes,
which were issued in connection with the Senior Bridge Transactions, are
contemplated to be paid in full as provided in said Annex IX. The security
interests reflected by the December Security Interest Agreement will be
released upon such payment in full of the Senior Specified Notes. If any
such amount is deferred but not subsequently paid to the holders of the
Senior Specified Notes, the security interest of such holders will continue
and will have priority over the security interests granted to the Secured
Parties under this Security Interest Agreement.
2. That certain Junior Security Interest Agreement, dated as of March 13, 2006
(as permitted by the terms thereof or with the consent of the Secured
Parties named therein, additional parties or additional interests were
added as Secured Parties to this Agreement on April 7, 2006; collectively,
"March Security Interest Agreement"), to which the Debtor and the Holders
of the Junior Specified Notes (as defined in Annex IX to the Securities
Purchase Agreement) are parties, with such March Security Interest
Agreement having been executed in connection with the transactions (the
"Junior Bridge Transactions") as described in the respective Bridge Loan
Agreements, dated on or about the respective dates of the Junior Specified
Notes, by and between the Debtor and one or more certain individuals and
entities named on executed counterpart signature pages to such Bridge Loan
Agreement, and in connection with which a certain financing statement (as
heretofore amended) was filed in the State of Delaware, which remains in
effect. The Junior Specified Notes, which were issued in connection with
the Junior Bridge Transactions, are contemplated to be paid in full as
provided in said Annex IX. The security interests reflected by the March
Security Interest Agreement will be released upon such payment in full of
the Junior Specified Notes. If any such amount is deferred but not
subsequently paid to the holders of the Junior Specified Notes, the
security interest of such holders will continue and will have priority over
the security interests granted to the Secured Parties under this Security
Interest Agreement.
4/25/06
All of the above exceptions to representations on this Exhibit A shall be
collectively referred to and defined as the "Permitted Liens" and individually
as a "Permitted Lien".
3. Each Permitted Lien has priority over the security interest granted to the
Secured Parties named in the current Security Agreement to which this
Exhibit A is attached.
4/25/06
