INTELLECTUAL PROPERTY SECURITY AGREEMENT
Intellectual Property Security Agreement (this "Agreement"
dated as of April 22, 2003, by and among Palladium Communications, Inc., a
Nevada corporation (the "Company"), and the secured parties signatory hereto and
their respective endorsees, transferees and assigns (collectively, the "Secured
Party").
W I T N E S S E T H :
WHEREAS, pursuant to a Securities Purchase Agreement, dated as of April
22, 2003 between Company and the Secured Party (the "Purchase Agreement"),
Company has agreed to issue to the Secured Party and the Secured Party has
agreed to purchase from Company certain of Company's 12% Secured Convertible
Debentures, due one year from the date of issue (the "Debentures"), which are
convertible into shares of Company's Common Stock, par value $.001 per share
(the "Common Stock"). In connection therewith, Company shall issue the Secured
Party certain Common Stock purchase warrants dated as of the date hereof to
purchase the number of shares of Common Stock indicated below each Secured
Party's name on the Purchase Agreement (the "Warrants"); and
WHEREAS, in order to induce the Secured Party to purchase the
Debentures, Company has agreed to execute and deliver to the Secured Party this
Agreement for the benefit of the Secured Party and to grant to it a first
priority security interest in certain Intellectual Property (defined below) of
Company to secure the prompt payment, performance and discharge in full of all
of Company's obligations under the Debentures and exercise and discharge in full
of Company's obligations under the Warrants; and
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. Defined Terms. Unless otherwise defined herein, terms which
are defined in the Purchase Agreement and used herein are so used as
so defined; and the following terms shall have the following meanings:
"Company" shall mean, collectively, Company and all of the
subsidiaries of Company (including, without limitation, Peak
Entertainment, Ltd.), a list of which is contained in Schedule A,
attached hereto.
"Copyrights" shall mean (a) all copyrights, registrations
and applications for registration, issued or filed,
including any reissues, extensions or renewals thereof, by or
with the United States Copyright Office or any similar office or
agency of the United States, any state thereof, or any other
country or political subdivision thereof, or otherwise,
including, all rights in and to the material constituting the
subject matter thereof, including, without limitation, any
referred to in Schedule B hereto, and (b) any rights in any
material which is copyrightable or which is protected by common
law, United States copyright laws or similar laws or any law of
any State, including, without limitation, any thereof referred to
in Schedule B hereto.
"Copyright License" shall mean any agreement, written
or oral, providing for a grant by the Company of any right in any Copyright,
including, without limitation, any thereof referred to in Schedule B hereto.
"Intellectual Property" shall means, collectively, the
Software Intellectual Property, Copyrights, Copyright Licenses, Patents, Patent
Licenses, Trademarks, Trademark Licenses and Trade Secrets.
"Obligations" means all of the Company's obligations under
this Agreement and the Debentures, in each case, whether now or hereafter
existing, voluntary or involuntary, direct or indirect, absolute or contingent,
liquidated or unliquidated, whether or not jointly owed with others, and
whether or not from time to time decreased or extinguished and later decreased,
created or incurred, and all or any portion of such obligations or liabilities
that are paid, to the extent all or any part of such payment is avoided or
recovered directly or indirectly from the Secured Party as a preference,
fraudulent transfer or otherwise as such obligations may be amended,
supplemented, converted, extendedb or modified from time to time.
"Patents" shall mean (a) all letters patent of the
United States or any other country or any political subdivision thereof, and
all reissues and extensions thereof, including, without limitation, any thereof
referred to in Schedule B hereto, and (b) all applications for letters patent
of the United States and all divisions, continuations and continuations-in-part
thereof or any other country or any political subdivision, including, without
limitation, any thereof referred to in Schedule B hereto.
"Patent License" shall mean all agreements, whether
written or oral, providing for the
grant by the Company of any right to manufacture, use or sell any invention
covered by a Patent, including, without limitation, any thereof referred to in
Schedule B hereto.
"Security Agreement" shall mean the Security
Agreement, dated the date hereof between Company and the Secured Party.
"Software Intellectual Property" shall mean:
(a) all software programs (including all source code, object
code and all related applications and data files), whether now
owned, upgraded, enhanced, licensed or leased or hereafter
acquired by the Company, above;
(b) all computers and electronic data processing hardware
and firmware associated therewith;
(c) all documentation (including flow charts, logic
diagrams, manuals, guides and specifications) with respect to
such software, hardware and firmware described in the preceding
clauses (a) and (b); and
(d) all rights with respect to all of the foregoing,
including, without limitation, any and all upgrades,
modifications, copyrights, licenses, options, warranties, service
contracts, program services, test rights, maintenance rights,
support rights, improvement rights, renewal rights and
indemnifications and substitutions, replacements, additions, or
model conversions of any of the foregoing.
2
"Trademarks" shall mean (a) all trademarks, trade
names, corporate names, company names, business names, fictitious business
names, trade styles, service marks, logos and other source or business
identifiers, and the goodwill associated
therewith, now existiI
"Trademark License" shall mean any agreement, written
or oral, providing for the grant by the Company of any right to use any
Trademark, including, without limitation, any thereof referred to in Schedule
B hereto.
"Trade Secrets" shall mean common law and statutory trade
secrets and all other confidential or proprietary or useful
information and all know-how obtained by or used in or
contemplated at any time for use in the business of the Company
(all of the foregoing being collectively called a "Trade
Secret"), whether or not such Trade Secret has been reduced to a
writing or other tangible form, including all documents and
things embodying, incorporating or referring in any way to such
Trade Secret, all Trade Secret licenses, including each Trade
Secret license referred to in Schedule B hereto, and including
the right to xxx for and to enjoin and to collect damages for the
actual or threatened misappropriation of any Trade Secret and for
the breach or enforcement of any such Trade Secret license.
2. Grant of Security Interest. In accordance with Section
3(m) of the Security Agreement, to secure the complete and timely
payment, performance and discharge in full, as the case may be,
of all of the Obligations, the Company hereby, unconditionally
and irrevocably, pledges, grants and hypothecates to the Secured
Party, a continuing security interest in, a continuing first lien
upon, an unqualified right to possession and disposition of and a
right of set-off against, in each case to the fullest extent
permitted by law, all of the Company's right, title and interest
of whatsoever kind and nature (including, without limitation, all
of Peak Entertainment Ltd.'s rights) in and to the Intellectual
Property (the "Security Interest").
3. Representations and Warranties. The Company hereby
represents and warrants, and covenants and agrees with, the
Secured Party as follows:
(a) The Company has the requisite corporate power and
authority to enter into this Agreement and otherwise to carry out
its obligations thereunder. The execution, delivery and
performance by the Company of this Agreement and the filings
contemplated therein have been duly authorized by all necessary
action on the part of the Company and no further action is
required by the Company. This Agreement constitutes a legal,
valid and binding obligation of the Company enforceable in
accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditor's rights
generally.
3
(b) The Company represents and warrants that it has no place
of business or offices where its respective books of account and
records are kept (other than temporarily at the offices of its
attorneys or accountants) or places where the Intellectual
Property is stored or located, except as set forth on Schedule A
attached hereto;
(c) The Company is the sole owner of the Intellectual
Property (except for non-exclusive licenses granted by the
Company in the ordinary course of business), free and clear of
any liens, security interests, encumbrances, rights or claims,
and is fully authorized to grant the Security Interest in and to
pledge the Intellectual Property. There is not on file in any
governmental or regulatory authority, agency or recording office
an effective financing statement, security agreement, license or
transfer or any notice of any of the foregoing (other than those
that have been filed in favor of the Secured Party pursuant to
this Agreement) covering or affecting any of the Intellectual
Property. So long as this Agreement shall be in effect, the
Company shall not execute and shall not knowingly permit to be on
file in any such office or agency any such financing statement or
other document or instrument (except to the extent filed or
recorded in favor of the Secured Party pursuant to the terms of
this Agreement), except for a financing statement covering assets
acquired by the Company after the date hereof, provided that the
value of the Intellectual Property covered by this Agreement
along with the Collateral (as defined in the Security Agreement)
is equal to at least 150% of the Obligations.
(d) The Company shall at all times maintain its books of
account and records relating to the Intellectual Property at its
principal place of business and its Intellectual Property at the
locations set forth on Schedule A attached hereto and may not
relocate such books of account and records unless it delivers to
the Secured Party at least 30 days prior to such relocation (i)
written notice of such relocation and the new location thereof
(which must be within the United States) and (ii) evidence that
the necessary documents have been filed and recorded and other
steps have been taken to perfect the Security Interest to create
in favor of the Secured Party valid, perfected and continuing
first priority liens in the Intellectual Property to the extent
they can be perfected through such filings.
(e) This Agreement creates in favor of the Secured Party a
valid security interest in the Intellectual Property securing the
payment and performance of the Obligations and, upon making the
filings required hereunder, a perfected first priority security
interest in such Intellectual Property to the extent that it can
be perfected through such filings.
(f) Upon request of the Secured Party, the Company shall
execute and deliver any and all agreements, instruments,
documents, and papers as the Secured Party may request to
evidence the Secured Party's security interest in the
Intellectual Property and the goodwill and general intangibles of
the Company relating thereto or represented thereby, and the
Company hereby appoints the Secured Party its attorney-in-fact to
execute and file all such writings for the foregoing purposes,
all acts of such attorney being hereby ratified and confirmed;
such power being coupled with an interest is irrevocable until
the Obligations have been fully satisfied and are paid in full.
(g) The execution, delivery and performance of this
Agreement does not conflict with or cause a breach or default, or
an event that with or without the passage of time or notice,
shall constitute a breach or default, under any agreement to
which the Company is a party or by which the Company is bound. No
consent (including, without limitation, from stock holders or
creditors of the Company) is required for the Company to enter
into and perform its obligations hereunder.
4
(h) The Company 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 Intellectual
Property to the extent they can be perfected by filing in favor
of the Secured Party until this Agreement and the Security
Interest hereunder shall terminate pursuant to Section 11. The
Company hereby agrees to defend the same against any and all
persons. The Company shall safeguard and protect all Intellectual
Property for the account of the Secured Party. Without limiting
the generality of the foregoing, the Company shall pay all fees,
taxes and other amounts necessary to maintain the Intellectual
Property and the Security Interest hereunder, and the Company
shall obtain and furnish to the Secured Party from time to time,
upon demand, such releases and/or subordinations of claims and
liens which may be required to maintain the priority of the
Security Interest hereunder.
(i) The Company will not transfer, pledge, hypothecate,
encumber, license (except for non-exclusive licenses granted by
the Company in the ordinary course of business), sell or
otherwise dispose of any of the Intellectual Property without the
prior written consent of the Secured Party.
(j) The Company shall, within ten (10) days of obtaining
knowledge thereof, advise the Secured Party promptly, in
sufficient detail, of any substantial change in the Intellectual
Property, and of the occurrence of any event which would have a
material adverse effect on the value of the Intellectual Property
or on the Secured Party's security interest therein.
(k) The Company shall permit the Secured Party and its
representatives and agents to inspect the Intellectual Property
at any time, and to make copies of records pertaining to the
Intellectual Property as may be requested by the Secured Party
from time to time.
(l) The Company will take all steps reasonably necessary to
diligently pursue and seek to preserve, enforce and collect any
rights, claims, causes of action and accounts receivable in
respect of the Intellectual Property.
(m) The Company shall promptly notify the Secured Party in
sufficient detail upon becoming aware of any attachment,
garnishment, execution or other legal process levied against any
Intellectual Property and of any other information received by
the Company that may materially affect the value of the
Intellectual Property, the Security Interest or the rights and
remedies of the Secured Party hereunder.
(n) All information heretofore, herein or hereafter supplied
to the Secured Party by or on behalf of the Company with respect
to the Intellectual Property is accurate and complete in all
material respects as of the date furnished.
(o) Schedule A attached hereto contains a list of all of the
subsidiaries of Company.
5
(p) Schedule B attached hereto includes all Licenses, and
all Patents and Patent Licenses, if any, owned by the Company in
its own name as of the date hereof. Schedule B hereto includes
all Trademarks and Trademark Licenses, if any, owned by the
Company in its own name as of the date hereof. Schedule B hereto
includes all Copyrights and Copyright Licenses, if any, owned by
the Company in its own name as of the date hereof. Schedule B
hereto includes all Trade Secrets and Trade Secret Licenses, if
any, owned by the Company as of the date hereof. To the best of
the Company's knowledge, each License, Patent, Trademark,
Copyright and Trade Secret is valid, subsisting, unexpired,
enforceable and has not been abandoned. Except as set forth in
Schedule B, none of such Licenses, Patents, Trademarks,
Copyrights and Trade Secrets is the subject of any licensing or
franchise agreement. To the best of the Company's knowledge, no
holding, decision or judgment has been rendered by any
Governmental Body which would limit, cancel or question the
validity of any License, Patent, Trademark, Copyright and Trade
Secrets . No action or proceeding is pending (i) seeking to
limit, cancel or question the validity of any License, Patent,
Trademark, Copyright or Trade Secret, or (ii) which, if adversely
determined, would have a material adverse effect on the value of
any License, Patent, Trademark, Copyright or Trade Secret. The
Company has used and will continue to use for the duration of
this Agreement, proper statutory notice in connection with its
use of the Patents, Trademarks and Copyrights and consistent
standards of quality in products leased or sold under the
Patents, Trademarks and Copyrights.
(q) With respect to any Intellectual Property:
(i) such Intellectual Property is subsisting
and has not been adjudged invalid or unenforceable,
in whole or in part;
(ii) such Intellectual Property is valid and
enforceable;
(iii) the Company has made all necessary filings and
recordations to protect its interest in such
Intellectual Property, including, without
limitation, recordations of all of its interests
in the Patents, Patent Licenses, Trademarks
and Trademark Licenses in the United States
Patent and Trademark Office and in corresponding
offices throughout the world and its claims to
the Copyrights and Copyright
Licenses in the United States Copyright Office
and in corresponding offices throughout the
world;
(iv) other than as set forth in Schedule B, the Company
is the exclusive owner of the entire and
unencumbered right, title and interest in and to
such Intellectual Property and no claim
has been made that the use of such Intellectual
Property infringes on the asserted rights of any
third party; and
(v) the Company has performed and will continue to
perform all acts and has paid all required fees
and taxes to maintain each and every item of
Intellectual Property in full force and effect
throughout the world, as applicable.
6
(r) Except with respect to any Trademark or Copyright that
the Company shall reasonably determine is of negligible economic
value to the Company, the Company shall
(i) maintain each Trademark and Copyright in full force
free from any claim of abandonment for non-use,
maintain as in the past the quality of products and
services offered under such Trademark or Copyright;
employ such Trademark or Copyright with
the appropriate notice of registration; not adopt
or use any xxxx which is confusingly similar or a
colorable imitation of such Trademark or Copyright
unless the Secured Party shall obtain a perfected
security interest in such xxxx pursuant to this
Agreement; and not (and not permit any licensee or
sublicensee thereof to) do any act or knowingly
omit to do any act whereby
any Trademark or Copyright may become invalidated;
(ii) not, except with respect to any Patent that it
shall reasonably determine is of negligible
economic value to it, do any act, or omit to do any
act, whereby any Patent may become abandoned or
dedicated; and (iii) notify the Secured Party
immediately if it knows, or has reason to know,
that any application or registration relating to
any Patent, Trademark or Copyright may become
abandoned or dedicated, or of any adverse
determination or development (including, without
limitation, the institution of, or any such
determination or development in, any proceeding in
the United States Patent and Trademark Office,
United States Copyright Office or any court or
tribunal in any country) regarding its ownership of
any Patent, Trademark or Copyright or
its right to register the same or to keep and
maintain the same.
(s) Whenever the Company, either by itself or through any
agent, employee, licensee or designee, shall file an application
for the registration of any Patent, Trademark or Copyright with
the United States Patent and Trademark Office, United States
Copyright Office or any similar office or agency in any other
country or any political subdivision thereof or acquire rights to
any new Patent, Trademark or Copyright whether or not registered,
report such filing to the Secured Party within five business days
after the last day of the fiscal quarter in which such filing
occurs.
(t) The Company shall take all reasonable and necessary
steps, including, without limitation, in any proceeding before
the United States Patent and Trademark Office, United States
Copyright Office or any similar office or agency in any other
country or any political subdivision thereof, to maintain and
pursue each application (and to obtain the relevant registration)
and to maintain each registration of the Patents, Trademarks and
Copyrights, including, without limitation, filing of applications
for renewal, affidavits of use and affidavits of
incontestability.
7
(u) In the event that any Patent, Trademark or Copyright
included in the Intellectual Property is infringed,
misappropriated or diluted by a third party, promptly notify the
Secured Party after it learns thereof and shall, unless it shall
reasonably determine that such Patent, Trademark or Copyright is
of negligible economic value to it, which determination it shall
promptly report to the Secured Party, promptly xxx for
infringement, misappropriation or dilution, to seek injunctive
relief where appropriate and to recover any and all damages for
such infringement, misappropriation or dilution, or take such
other actions as it shall reasonably deem appropriate under the
circumstances to protect such Patent, Trademark or Copyright. If
the Company lacks the financial resources to comply with this
Section 3(t), the Company shall so notify the Secured Party and
shall cooperate fully with any enforcement action undertaken by
the Secured Party on behalf of the Company.
4. Defaults. The following events shall be "Events of
Default":
(a) The occurrence of an Event of Default (as defined in the
Debentures) under the Debentures;
(b) Any representation or warranty of the Company in this
Agreement or in the Security Agreement shall prove to have been
incorrect in any material respect when made;
(c) The failure by the Company to observe or perform any of
its obligations hereunder or in the Security Agreement for ten
(10) days after receipt by the Company of notice of such failure
from the Secured Party; and
(d) Any breach of, or default under, the Warrants.
5. Duty To Hold In Trust. Upon the occurrence of any Event
of Default and at any time thereafter, the Company shall, upon
receipt by it of any revenue, income or other sums subject to the
Security Interest, whether payable pursuant to the Debentures 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 Party and shall forthwith
endorse and transfer any such sums or instruments, or both, to
the Secured Party for application to the satisfaction of the
Obligations.
6. Rights and Remedies Upon Default. Upon occurrence of any
Event of Default and at any time thereafter, the Secured Party
shall have the right to exercise all of the remedies conferred
hereunder and under the Debentures, and the Secured Party shall
have all the rights and remedies of a secured party under the UCC
and/or any other applicable law (including the Uniform Commercial
Code of any jurisdiction in which any Intellectual Property is
then located). Without limitation, the Secured Party shall have
the following rights and powers:
(a) The Secured Party shall have the right to take
possession of the Intellectual Property and, for that purpose,
enter, with the aid and assistance of any person, any premises
where the Intellectual Property, or any part thereof, is or may
be placed and remove the same, and the Company shall assemble the
Intellectual Property and make it available to the Secured Party
at places which the Secured Party shall reasonably select,
whether at the Company's premises or elsewhere, and make
available to the Secured Party, without rent, all of the
Company's respective premises and facilities for the purpose of
the Secured Party taking possession of, removing or putting the
Intellectual Property in saleable or disposable form.
8
(b) The Secured Party shall have the right to operate the
business of the Company using the Intellectual Property and shall
have the right to assign, sell, lease or otherwise dispose of and
deliver all or any part of the Intellectual Property, at public
or private sale or otherwise, either with or without special
conditions or stipulations, for cash or on credit or for future
delivery, in such parcel or parcels and at such time or times and
at such place or places, and upon such terms and conditions as
the Secured Party may deem commercially reasonable, all without
(except as shall be required by applicable statute and cannot be
waived) advertisement or demand upon or notice to the Company or
right of redemption of the Company, which are hereby expressly
waived. Upon each such sale, lease, assignment or other transfer
of Intellectual Property, the Secured Party may, unless
prohibited by applicable law which cannot be waived, purchase all
or any part of the Intellectual Property being sold, free from
and discharged of all trusts, claims, right of redemption and
equities of the Company, which are hereby waived and released.
7. Applications of Proceeds. The proceeds of any such sale,
lease or other disposition of the Intellectual Property 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 Intellectual Property,
to the reasonable attorneys' fees and expenses incurred by the
Secured Party in enforcing its rights hereunder and in connection
with collecting, storing and disposing of the Intellectual
Property, and then to satisfaction of the Obligations, and to the
payment of any other amounts required by applicable law, after
which the Secured Party shall pay to the Company any surplus
proceeds. If, upon the sale, license or other disposition of the
Intellectual Property, the proceeds thereof are insufficient to
pay all amounts to which the Secured Party is legally entitled,
the Company will be liable for the deficiency, together with
interest thereon, at the rate of 15% per annum (the "Default
Rate"), and the reasonable fees of any attorneys employed by the
Secured Party to collect such deficiency. To the extent permitted
by applicable law, the Company waives all claims, damages and
demands against the Secured Party arising out of the
repossession, removal, retention or sale of the Intellectual
Property, unless due to the gross negligence or willful
misconduct of the Secured Party.
8. Costs and Expenses. The Company agrees to pay all
out-of-pocket fees, costs and expenses incurred in connection
with any filing required hereunder, including without limitation,
any financing statements, continuation statements, partial
releases and/or termination statements related thereto or any
expenses of any searches reasonably required by the Secured
Party. The Company shall also pay all other claims and charges
which in the reasonable opinion of the Secured Party might
prejudice, imperil or otherwise affect the Intellectual Property
or the Security Interest therein. The Company will also, upon
demand, pay to the Secured Party the amount of any and all
reasonable expenses, including the reasonable fees and expenses
of its counsel and of any experts and agents, which the Secured
Party may incur in connection with (i) the enforcement of this
Agreement, (ii) the custody or preservation of, or the sale of,
collection from, or other realization upon, any of the
Intellectual Property, or (iii) the exercise or enforcement of
any of the rights of the Secured Party under the Debentures.
Until so paid, any fees payable hereunder shall be added to the
principal amount of the Debentures and shall bear interest at the
Default Rate.
9
9. Responsibility for Intellectual Property. The Company
assumes all liabilities and responsibility in connection with all
Intellectual Property, and the obligations of the Company
hereunder or under the Debentures and the Warrants shall in no
way be affected or diminished by reason of the loss, destruction,
damage or theft of any of the Intellectual Property or its
unavailability for any reason.
10. Security Interest Absolute. All rights of the Secured
Party and all Obligations of the Company hereunder, shall be
absolute and unconditional, irrespective of: (a) any lack of
validity or enforceability of this Agreement, the Debentures, the
Warrants or any agreement entered into in connection with the
foregoing, or any portion hereof or thereof; (b) any change in
the time, manner or place of payment or performance of, or in any
other term of, all or any of the Obligations, or any other
amendment or waiver of or any consent to any departure from the
Debentures, the Warrants or any other agreement entered into in
connection with the foregoing; (c) any exchange, release or
nonperfection of any of the Intellectual Property, or any release
or amendment or waiver of or consent to departure from any other
Intellectual Property for, or any guaranty, or any other
security, for all or any of the Obligations; (d) any action by
the Secured Party to obtain, adjust, settle and cancel in its
sole discretion any insurance claims or matters made or arising
in connection with the Intellectual Property; or (e) any other
circumstance which might otherwise constitute any legal or
equitable defense available to the Company, or a discharge of all
or any part of the Security Interest granted hereby. Until the
Obligations shall have been paid and performed in full, the
rights of the Secured Party shall continue even if the
Obligations are barred for any reason, including, without
limitation, the running of the statute of limitations or
bankruptcy. The Company expressly waives presentment, protest,
notice of protest, demand, notice of nonpayment and demand for
performance. In the event that at any time any transfer of any
Intellectual Property or any payment received by the Secured
Party hereunder shall be deemed by final order of a court of
competent jurisdiction to have been a voidable preference or
fraudulent conveyance under the bankruptcy or insolvency laws of
the United States, or shall be deemed to be otherwise due to any
party other than the Secured Party, then, in any such event, the
Company's obligations hereunder shall survive cancellation of
this Agreement, and shall not be discharged or satisfied by any
prior payment thereof and/or cancellation of this Agreement, but
shall remain a valid and binding obligation enforceable in
accordance with the terms and provisions hereof. The Company
waives all right to require the Secured Party to proceed against
any other person or to apply any Intellectual Property which the
Secured Party may hold at any time, or to marshal assets, or to
pursue any other remedy. The Company waives any defense arising
by reason of the application of the statute of limitations to any
obligation secured hereby.
11. Term of Agreement. This Agreement and the Security
Interest shall terminate on the date on which all payments under
the Debentures have been made in full and all other Obligations
have been paid or discharged. Upon such termination, the Secured
Party, at the request and at the expense of the Company, will
join in executing any termination statement with respect to any
financing statement executed and filed pursuant to this
Agreement.
10
12. Power of Attorney; Further Assurances.
(a) The Company authorizes the Secured Party, and does
hereby make, constitute and appoint it, and its respective
officers, agents, successors or assigns with full power of
substitution, as the Company's true and lawful attorney-in-fact,
with power, in its own name or in the name of the Company, to,
after the occurrence and during the continuance of an Event of
Default, (i) endorse any notes, checks, drafts, money orders, or
other instruments of payment (including payments payable under or
in respect of any policy of insurance) in respect of the
Intellectual Property that may come into possession of the
Secured Party; (ii) to sign and endorse any UCC financing
statement 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 Intellectual
Property; (iii) to pay or discharge taxes, liens, security
interests or other encumbrances at any time levied or placed on
or threatened against the Intellectual Property; (iv) to demand,
collect, receipt for, compromise, settle and xxx for monies due
in respect of the Intellectual Property; and (v) generally, to
do, at the option of the Secured Party, and at the Company's
expense, at any time, or from time to time, all acts and things
which the Secured Party deems necessary to protect, preserve and
realize upon the Intellectual Property and the Security Interest
granted therein in order to effect the intent of this Agreement,
the Debentures and the Warrants, all as fully and effectually as
the Company might or could do; and the Company hereby ratifies
all that said attorney shall lawfully do or cause to be done by
virtue hereof. This power of attorney is coupled with an interest
and shall be irrevocable for the term of this Agreement and
thereafter as long as any of the Obligations shall be
outstanding.
(b) On a continuing basis, the Company will make,
execute, acknowledge, deliver, file and record, as the case may be, in the
proper filing and recording places 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 Party, 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 Party the grant or perfection of a
security interest in all the Intellectual Property.
(c) The Company hereby irrevocably appoints the Secured
Party as the Company's attorney-in-fact, with full authority in
the place and stead of the Company and in the name of the
Company, from time to time in the Secured Party's discretion, to
take any action and to execute any instrument which the Secured
Party 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 Intellectual Property
without the signature of the Company where permitted by law.
13. Notices. All notices, requests, demands and other
communications hereunder shall be in writing, with copies to all
the other parties hereto, and shall be deemed to have been duly
given when (i) if delivered by hand, upon receipt, (ii) if sent
by facsimile, upon receipt of proof of sending thereof, (iii) if
sent by nationally recognized overnight delivery service (receipt
requested), the next business day or (iv) if mailed by
first-class registered or certified mail, return receipt
requested, postage prepaid, four days after posting in the U.S.
mails, in each case if delivered to the following addresses:
11
If to the Company: Palladium Communications, Inc.
000 X. Xxxxxxxx Xxx Xxxxxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With copies to: Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Email: xxxxxxxxxx@xxxxxx.xxx
If to the Secured Party: AJW Partners, LLC
AJW Offshore, Ltd.
AJW Qualified Partners, LLC
New Millennium Capital Partners II, LLC
0000 Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxx
Facsimile: 000-000-0000
With copies to: Xxxxxxx Xxxxx Xxxxxxx & Ingersoll, LLP
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esquire
Facsimile: 000-000-0000
14. Other Security. To the extent that the Obligations are
now or hereafter secured by property other than the Intellectual
Property or by the guarantee, endorsement or property of any
other person, firm, corporation or other entity, then the Secured
Party 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 Party's rights and remedies hereunder.
15. Miscellaneous.
(a) No course of dealing between the Company and the Secured
Party, nor any failure to exercise, nor any delay in exercising,
on the part of the Secured Party, any right, power or privilege
hereunder or under the Debentures 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.
12
b) All of the rights and remedies of the Secured Party with
respect to the Intellectual Property, whether established hereby
or by the Debentures or by any other agreements, instruments or
documents or by law shall be cumulative and may be exercised
singly or concurrently.
(c) This Agreement and the Security Agreement constitute 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 that any provision of this Agreement is
held to be invalid, prohibited or unenforceable in any
jurisdiction for any reason, unless such provision is narrowed by
judicial construction, this Agreement shall, as to such
jurisdiction, be construed as if such invalid, prohibited or
unenforceable provision had been more narrowly drawn so as not to
be invalid, prohibited or unenforceable. If, notwithstanding the
foregoing, any provision of this Agreement is held to be invalid,
prohibited or unenforceable in any jurisdiction, such provision,
as to such jurisdiction, shall be ineffective to the extent of
such invalidity, prohibition or unenforceability without
invalidating the remaining portion of such provision or the other
provisions of this Agreement and without affecting the validity
or enforceability of such provision or the other provisions of
this Agreement in any other jurisdiction.
(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) This Agreement shall be construed in accordance with the
laws of the State of New York, except to the extent the validity,
perfection or enforcement of a security interest hereunder in
respect of any particular Intellectual Property which are
governed by a jurisdiction other than the State of New York in
which case such law shall govern. Each of the parties hereto
irrevocably submit to the exclusive jurisdiction of any New York
State or United States Federal court sitting in Manhattan county
over any action or proceeding arising out of or relating to this
Agreement, and the parties hereto hereby irrevocably agree that
all claims in respect of such action or proceeding may be heard
and determined in such New York State or Federal court. The
parties hereto agree that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner
provided by law. The parties hereto further waive any objection
to venue in the State of New York and any objection to an action
or proceeding in the State of New York on the basis of forum non
conveniens.
13
(i) EACH PARTY HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE
RIGHTS TO A JURY TRAIL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF THIS AGREEMENT. THE SCOPE OF THIS WAIVER IS
INTENDED TO BE ALL ENCOMPASSING OF ANY DISPUTES THAT MAY BE FILED
IN ANY COURT AND THAT RELATE TO THE SUBJECT MATER OF THIS
AGREEMENT, INCLUDING WITHOUT LIMITATION CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND
STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER
IS A MATERIAL INDUCEMENT FOR EACH PARTY TO ENTER INTO A BUSINESS
RELATIONSHIP, THAT EACH PARTY HAS ALREADY RELIED ON THIS WAIVER
IN ENTERING INTO THIS AGREEMENT AND THAT EACH PARTY WILL CONTINUE
TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH
PARTY FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS
WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY HAS KNOWINGLY
AND VOLUNTARILY WAIVES ITS RIGHTS TO A JURY TRIAL FOLLOWING SUCH
CONSULTATION. THIS WAIVER IS IRREVOCABLE, MEANING THAT,
NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY
TO ANY SUBSEQUENT AMENDMENTS, RENEWALS AND SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT. IN THE EVENT OF A LITIGATION,
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY
THE COURT.
(j) 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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
14
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day and year first above written.
PALLADIUM COMMUNICATIONS, INC.
By: /s/ WILF SHORROCKS
Wilf Shorrocks
President and Chief Executive Officer
AJW PARTNERS, LLC
By: SMS Group, LLC
By: /s/ XXXXX X. XXXXXXXX
Xxxxx X. Xxxxxxxx
Manager
AJW OFFSHORE, LTD.
By: First Street Manager II, LLC
By: /s/ XXXXX X. XXXXXXXX
Xxxxx X. Xxxxxxxx
Manager
AJW QUALIFIED PARTNERS, LLC
By: AJW Manager, LLC
By: /s/ XXXXX X. XXXXXXXX
Xxxxx X. Xxxxxxxx
Manager
NEW MILLENNIUM CAPITAL
PARTNERS II, LLC
By: First Street Manager II, LLC
By: /s/ XXXXX X. XXXXXXXX
Xxxxx X. Xxxxxxxx
Manager
