EXHIBIT 10.2
SECURITY AGREEMENT DATED AS OF APRIL 25, 2003 BY AND AMONG EMAGIN AND CERTAIN
INITIAL INVESTORS IDENTIFIED ON THE SIGNATURE PAGES THERETO.
SECURITY AGREEMENT
among
EMAGIN CORPORATION and VIRTUAL VISION, INC.,
as Assignors
the SECURED CREDITORS, set out herein
and
ALLIGATOR HOLDINGS, INC.,
as Collateral Agent
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Dated as of April 25, 2003
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SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of April 25, 2003, made by and
among the undersigned assignors (eMagin Corporation and Virtual Vision, Inc.,
together the "Assignors") in favor of Alligator Holdings, Inc., as Collateral
Agent, together with any successor collateral agent appointed hereunder pursuant
to Section 8.10 (collectively, the "Collateral Agent"), for the benefit of the
undersigned Secured Creditors (the "Secured Creditors") and such Secured
Creditors as may become a party to this Agreement from time to time. Except as
otherwise defined herein, capitalized terms used herein and defined in the Note
Purchase Agreement (as defined below) shall be used herein as so defined.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Assignors propose to enter into a Global
Restructuring and Secured Note Purchase Agreement, dated as of April 25, 2003,
together with each of the Original Secured Parties and New Investors a party
thereto (and each such Original Secured Party and New Investor a "Secured
Creditor" under this Agreement), providing for the issuance or exchange of
secured convertible notes (the "Notes") by the Assignors as contemplated therein
(the "Note Purchase Agreement");
WHEREAS, the Original Secured Parties and eMagin entered into
the Original Security Agreement dated as of November 20, 2001;
WHEREAS, MDAS and eMagin entered into the Subordinated
Security Agreement dated June 20, 2002;
WHEREAS, MDAS and eMagin Sub entered into the eMagin Sub
Security Agreement dated as of June 20, 2002;
WHEREAS, in connection with the Note Purchase Agreement and
the issuance of the Notes, the Collateral Agent, the Assignors and each of the
Original Secured Parties have agreed to terminate the Original Security
Agreement, the Subordinated Security Agreement and the eMagin Sub Security
Agreement, and enter into this Agreement with the New Investors;
WHEREAS, the objective of this financing is to allow the New
Investors to provide the Company with capital to fund its accelerating
operations, increase marketing and sales, improve manufacturing capability, and
resolve its remaining outstanding prior obligations after restructuring of most
of its total debt and payables;
WHEREAS, the obligations accruing under the Notes to the
Assignors shall be secured by the Collateral upon the terms and conditions set
forth in this Agreement;
WHEREAS, it is a condition precedent to execution on delivery
of the Note Purchase Agreement that the Assignors shall have executed and
delivered to the Collateral Agent this Agreement;
WHEREAS, it is a condition precedent to the delivery of this
Agreement that the Assignors provide to the Collateral Agent completed copies of
form UCC-1 documentation suitable for filing and applicable federal assignment
forms required to perfect the security interests granted by the Assignors; and
NOW, THEREFORE, in consideration of the benefits accruing to
the Assignors, the receipt and sufficiency of which are hereby acknowledged, the
Assignors hereby make the following representations and warranties to the
Collateral Agent for the benefit of the Secured Creditors and hereby covenant
and agree with the Collateral Agent for the benefit of the Secured Creditors as
follows:
ARTICLE I
SECURITY INTERESTS
1.1 Grant of Security Interests. (a) Subject to 1.1(c) and
Section 1.1(d), as security for the prompt and complete payment and performance
when due (whether at stated maturity, by acceleration or otherwise) of all of
its Obligations, in order to induce the Secured Creditors to enter into the Note
Purchase Agreement the Assignors do hereby assign and transfer unto the
Collateral Agent, and do hereby pledge and grant to the Collateral Agent, for
the benefit of the Secured Creditors, a continuing security interest in all of
the right, title and interest of each Assignor in, to and under all of the
following (in each case whether now existing or hereafter from time to time
acquired):
(i) each and every Account (other than Accounts pledged
by each Assignor to any Person advancing funds under
a bona fide receivables-based, purchase order-based,
or inventory-based line offered under its factoring
arrangement or similar financing scheme (each a
"Collateralized Line of Credit"));
(ii) all cash;
(iii) the Cash Collateral Account and all monies,
securities, Instruments and other investments
deposited or required to be deposited in the Cash
Collateral Account;
(iv) all computer programs of the Assignors and all
intellectual property rights therein and all other
proprietary information of the Assignors, including
but not limited to Trade Secret Rights;
(v) all Contracts, together with all Contract Rights
arising thereunder, including, without limitation,
joint venture agreements, partnership agreements, and
limited liability company agreements (other than
Contracts or Contract Rights pledged to any Person
advancing funds under a Collateralized Line of
Credit);
(vi) all Copyrights;
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(vii) all Equipment, except for such Equipment as listed in
Schedule I;
(viii) all Documents (other than Documents pledged to any
Person advancing funds under a Collateralized Line of
Credit);
(ix) all Equipment in the name of any subsidiary of
Assignors not otherwise already pledged;
(x) all General Intangibles;
(xi) all Goods;
(xii) all Instruments not otherwise pledged pursuant to the
Collateralized Line of Credit (other than Instruments
pledged to any Person advancing funds under a
Collateralized Line of Credit);
(xiii) all Inventory created after the date hereof and
pledged to any Person advancing funds under a
Collateralized Line of Credit;
(xiv) all Investment Property;
(xv) all Marks, together with the registrations and right
to all renewals thereof, and the goodwill of the
business of the Assignors symbolized by the Marks;
(xvi) all Patents except for sublicenses or licenses;
(xvii) all Permits;
(xviii) all Software and all Software licensing rights, all
writings, plans, specifications and schematics, all
engineering drawings, customer lists, goodwill and
licenses, and all recorded data of any kind or
nature, regardless of the medium of recording;
(xix) all Supporting Obligations;
(xx) all manuals, training material, diagrams, know how
and other necessary or useful materials to utilize
Assignors' trade secrets and other business
intangibles; and
(xxi) all Proceeds and products of any and all of the
foregoing (all of the above, the "Collateral"),
except as noted below.
(b) The security interest of the Collateral Agent under this Agreement
extends to all Collateral which the Assignors may acquire, or with respect to
which the Assignors may obtain rights, at any time during the term of this
Agreement except as described below.
(c) Notwithstanding anything to the contrary set forth herein, the
Collateral shall not include any interest in the assets set forth on Schedule
1.1(c).
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(d) The Assignors will be allowed to enter into a Collateralized Line of
Credit and to grant first-priority security interests in their accounts
receivable purchase orders and inventory created after the date hereof to secure
such Collateralized Line of Credit, provided that (i) at least fifty percent
(50%) (in dollar terms of the principal amount) of the holders of Notes approve
such Collateralized Line of Credit in writing, and (ii) the advance rate of such
Collateralized Line of Credit shall be at least sixty percent (60%) of the value
of the Collateral so pledged. Any assets so pledged shall not constitute
Collateral if and to the extent so pledged.
1.2 Power of Attorney. The Assignors hereby constitute and appoint the
Collateral Agent its true and lawful attorney, irrevocably, with full power
after the occurrence of and during the continuance of an Event of Default (in
the name of the Assignors or otherwise) to act, require, demand, receive,
compound and give acquaintance for any and all moneys and claims for moneys due
or to become due to the Assignors under or arising out of the Collateral, to
endorse any checks or other instruments or orders in connection therewith and to
file any claims or take any action or institute any proceedings which the
Collateral Agent may deem to be necessary or advisable to protect the interests
of the Secured Creditors, which appointment as attorney is coupled with an
interest.
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS.
The Assignors represent, warrant and covenant, which representations,
warranties and covenants shall survive execution and delivery of this Agreement,
as follows:
2.1 Necessary Filings. All filings, registrations, recordings and other
actions necessary or appropriate to create, preserve and perfect the security
interest granted by the Assignors to the Collateral Agent hereby in respect of
the Collateral have been accomplished and the security interest granted to the
Collateral Agent pursuant to this Agreement in and to the Collateral creates a
valid and, together with all such filings, registrations, recordings and other
actions, a perfected security interest therein prior to the rights of all other
Persons therein and subject to no other Liens (other than Permitted Liens) and
is entitled to all the rights, priorities and benefits afforded by the Uniform
Commercial Code or other relevant law as enacted in any relevant jurisdiction to
perfected security interests, in each case to the extent that the Collateral
consists of the type of property in which a security interest may be perfected
by possession or control (within the meaning of the UCC as in effect on the date
hereof in the State of New York), by filing a financing statement under the
Uniform Commercial Code as enacted in any relevant jurisdiction or by a filing
of a Grant of Security Interest in the respective form attached as Annex I
hereto in the United States Patent and Trademark Office or in the United States
Copyright Office.
2.2 No Liens. The Assignors are, and as to all Collateral acquired by them
from time to time after the date hereof the Assignors will be, the owner of all
Collateral free from any Lien, security interest, encumbrance or other right,
title or interest of any Person (other than Permitted Liens), and the Assignors
shall defend the Collateral against all claims and demands of all Persons at any
time claiming the same or any interest therein adverse to the Collateral Agent.
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2.3 Other Financing Statements. As of the date hereof, there is no
financing statement (or similar statement or instrument of registration under
the law of any jurisdiction) covering or purporting to cover any interest of any
kind in the Collateral (other than financing statements filed in respect of
Permitted Liens), and so long as the Termination Date has not occurred, the
Assignors will not execute or authorize to be filed in any public office any
financing statement (or similar statement or instrument of registration under
the law of any jurisdiction) or statements relating to the Collateral, except
financing statements filed or to be filed in respect of and covering the
security interests granted hereby by the Assignors or in connection with
Permitted Liens.
2.4 Chief Executive Office, Record Locations. The chief executive offices
of the Assignors are, on the date of this Agreement, located at the addresses
indicated on Annex A hereto for the Assignors. During the period of the four
calendar months preceding the date of this Agreement, the chief executive
offices of the Assignors have not been located at any address other than that
indicated on Annex A in accordance with the immediately preceding sentence, in
each case unless each such other address is also indicated on Annex A hereto for
the Assignors.
2.5 Location of Inventory and Equipment. All Inventory and Equipment held
on the date hereof, or held at any time during the four (4) calendar months
prior to the date hereof, by the Assignors is located at one of the locations
shown on Annex B hereto for the Assignors.
2.6 Legal Names; Type of Organization; Jurisdiction of Organization;
Location; Organizational Identification Numbers; Changes Thereto, Etc. The exact
legal name of the Assignors, the type of organization of the Assignors, the
jurisdiction of organization of the Assignors, and the Assignors' Location, is
listed on Annex C hereto for each Assignor. Each Assignor shall not change its
legal name, its type of organization, its jurisdiction of organization, its
Location or its organizational identification number (if any) from that listed
on Annex C hereto for each Assignor or those that may have been established
after the date of this Agreement in accordance with the immediately succeeding
sentence of this Section 2.6. Each Assignor shall not change its legal name, its
type of organization, its jurisdiction of organization, its location, or its
organizational identification number (if any), except that any such changes
shall be permitted if (i) it shall have given to the Collateral Agent not less
than fifteen (15) days' prior written notice of each change to the information
listed on Annex C (as adjusted for any subsequent changes thereto previously
made in accordance with this sentence), together with a supplement to Annex C
which shall correct all information contained therein for the Assignors, and
(ii) in connection with the respective change or changes, it shall have taken
all action reasonably requested by the Collateral Agent to maintain the security
interests of the Collateral Agent in the Collateral intended to be granted
hereby at all times fully perfected and in full force and effect. In addition,
to the extent that any Assignor does not have an organizational identification
number on the date hereof and later obtains one, such Assignor shall promptly
thereafter notify the Collateral Agent of such organizational identification
number and shall take all actions reasonably satisfactory to the Collateral
Agent to the extent necessary to maintain the security interest of the
Collateral Agent in the Collateral intended to be granted hereby fully perfected
and in full force and effect.
2.7 Trade Names, Etc. Each Assignor has not nor operates in any
jurisdiction under, or in the preceding five (5) years has had or has operated
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in any jurisdiction under, any trade names, fictitious names or other names
except its legal name as specified in Annex C hereto and such other trade or
fictitious names as are listed on Annex D hereto for each Assignor. Each
Assignor shall not assume or operate in any jurisdiction under any new trade,
fictitious or other name until (i) it shall have given to the Collateral Agent
not less than fifteen (15) days' written notice of its intention so to do,
clearly describing such new name and the jurisdictions in which such new name
will be used and providing such other information in connection therewith as the
Collateral Agent may reasonably request, and (ii) with respect to such new name,
it shall have taken all action reasonably requested by the Collateral Agent to
maintain the security interest of the Collateral Agent in the Collateral
intended to be granted hereby at all times fully perfected and in full force and
effect.
2.8 Certain Significant Transactions. During the one year period preceding
the date of this Agreement, no Person shall have merged or consolidated with or
into any Assignor, and no Person shall have liquidated into, or transferred all
or substantially all of its assets to, any Assignor. With respect to any
transactions so described in Annex E hereto, the Assignors shall have furnished
such information with respect to the Person (and the assets of the Person and
locations thereof) which merged with or into or consolidated with such Assignor,
or was liquidated into or transferred all or substantially all of its assets to
such Assignor, and shall have furnished to the Collateral Agent such UCC lien
searches as may have been requested with respect to such Person and its assets,
to establish that no security interest (excluding Permitted Liens) continues
perfected on the date hereof with respect to any Person described above (or the
assets transferred to any Assignor by such Person), including, without
limitation, pursuant to Section 9-316(a)(3) of the UCC.
2.9 Recourse. This Agreement is made with full recourse to the Assignors
and pursuant to and upon all the warranties, representations, covenants and
agreements on the part of the Assignors contained herein and otherwise in
writing in connection herewith.
ARTICLE III
SPECIAL PROVISIONS CONCERNING ACCOUNTS, CONTRACT RIGHTS,
INSTRUMENTS, AND CERTAIN OTHER COLLATERAL
3.1 Additional Representations and Warranties. As of the time when each of
its Accounts constituting Collateral arises, each Assignor shall be deemed to
have represented and warranted that each such Account, and all records, papers
and documents relating thereto (if any) are genuine and what they purport to be,
and that all papers and documents (if any) relating thereto (i) will, to the
knowledge of each Assignor, represent the genuine, legal, valid and binding
obligation of the account debtor evidencing indebtedness unpaid and owed by the
respective account debtor arising out of the performance of labor or services or
the sale or lease and delivery of the merchandise listed therein, or both, (ii)
will be the only original writings evidencing and embodying such obligation of
the account debtor named therein (other than copies created for general
accounting purposes), (iii) will, to the knowledge of each Assignor, evidence
true and valid obligations, enforceable in accordance with their respective
terms, and (iv) will be in compliance and will conform in all material respects
with all applicable federal, state and local laws and applicable laws of any
relevant foreign jurisdiction.
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3.2 Maintenance of Records. Each Assignor will keep and maintain at its own
cost and expense accurate records of its Accounts and Contracts constituting
Collateral, including, but not limited to, originals of all documentation
(including each such Contract) with respect thereto, records of all payments
received, all credits granted thereon, all merchandise returned and all other
dealings therewith, and each Assignor will make the same available on the
Assignor's premises to the Collateral Agent for inspection, at the Assignor's
own cost and expense, at any and all reasonable times upon prior notice to such
Assignor. Upon the occurrence and during the continuance of an Event of Default
and at the request of the Collateral Agent, each Assignor shall, at its own cost
and expense, deliver all tangible evidence of its Accounts and Contract Rights
constituting Collateral (including, without limitation, all documents evidencing
such Accounts and all Contracts) and such books and records to the Collateral
Agent or to its representatives (copies of which evidence and books and records
may be retained by such Assignor). Upon the occurrence and during the
continuance of an Event of Default and if the Collateral Agent so directs, each
Assignor shall legend, in form and manner satisfactory to the Collateral Agent,
the Accounts and the Contracts constituting Collateral, as well as books,
records and documents (if any) of such Assignor evidencing or pertaining to such
Accounts and Contracts with an appropriate reference to the fact that such
Accounts and Contracts have been assigned to the Collateral Agent and that the
Collateral Agent has a security interest therein.
3.3 Direction to Account Debtors; Contracting Parties, Etc. Upon the
occurrence and during the continuance of an Event of Default, if the Collateral
Agent so directs the Assignors, the Assignors agree (x) to cause all payments on
account of the Accounts and Contracts constituting Collateral to be made
directly to the Cash Collateral Account, (y) that the Collateral Agent may, at
its option, directly notify the obligors with respect to any Accounts
constituting Collateral and/or under any Contracts constituting Collateral to
make payments with respect thereto as provided in the preceding clause (x), and
(z) that the Collateral Agent may enforce collection of any such Accounts and
Contracts and may adjust, settle or compromise the amount of payment thereof, in
the same manner and to the same extent as the Assignors. Without notice to or
assent by the Assignors, the Collateral Agent may, upon the occurrence and
during the continuance of an Event of Default, apply any or all amounts then in,
or thereafter deposited in, the Cash Collateral Account toward the payment of
the Obligations in the manner provided in Section 7.4 of this Agreement. The
reasonable costs and expenses of collection (including reasonable attorneys'
fees), whether incurred by the Assignors or the Collateral Agent, shall be borne
by the Assignors. The Collateral Agent shall deliver a copy of each notice
referred to in the preceding clause (y) to the Assignors, provided that the
failure by the Collateral Agent to so notify the Assignors shall not affect the
effectiveness of such notice or the other rights of the Collateral Agent created
by this Section 3.3.
3.4 Modification of Terms, Etc. Except in accordance with each Assignor's
ordinary course of business and consistent with reasonable business judgment,
each Assignor shall not rescind nor cancel any indebtedness evidenced by any
Account constituting Collateral or under any Contract constituting Collateral,
or modify any material term thereof or make any material adjustment with respect
thereto, nor extend or renew the same, nor compromise or settle any material
dispute, claim, suit or legal proceeding relating thereto, nor sell any Account
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or Contract, or interest therein, without the prior written consent of the
Collateral Agent. Each Assignor will not do anything to impair the rights of the
Collateral Agent in the Accounts or Contracts constituting Collateral.
3.5 Collection. Each Assignor shall endeavor in accordance with reasonable
business practices to cause to be collected from the account debtor named in
each of its Accounts constituting Collateral or obligor under any Contract
constituting Collateral, as and when due (including, without limitation, amounts
which are delinquent, such amounts to be collected in accordance with generally
accepted lawful collection procedures) any and all amounts owing under or on
account of such Account or Contract constituting Collateral, and apply forthwith
upon receipt thereof all such amounts as are so collected to the outstanding
balance of such Account constituting Collateral or under such Contract
constituting Collateral. Except as otherwise directed by the Collateral Agent
after the occurrence and during the continuation of an Event of Default, each
Assignor may allow in the ordinary course of business as adjustments to amounts
owing under its Accounts and Contracts constituting Collateral (i) an extension
or renewal of the time or times of payment, or settlement for less than the
total unpaid balance, which such Assignor finds appropriate in accordance with
reasonable business judgment and (ii) a refund or credit due as a result of
returned or damaged merchandise or improperly performed services or for other
reasons which such Assignor finds appropriate in accordance with reasonable
business judgment. The reasonable costs and expenses (including, without
limitation, reasonable attorneys' fees) of collection, whether incurred by the
Assignors or the Collateral Agent, shall be borne by the Assignors.
3.6 Instruments. If any Assignor owns or acquires any Instrument in excess
of $100,000 constituting Collateral (other than checks and other payment
instruments received and collected in the ordinary course of business), the
Assignors will within ten (10) Business Days notify the Collateral Agent
thereof.
3.7 Assignors Remain Liable Under Accounts. Anything herein to the contrary
notwithstanding, each Assignor shall remain liable under each of the Accounts
constituting Collateral to observe and perform all of the conditions and
obligations to be observed and performed by it thereunder, all in accordance
with the terms of any agreement giving rise to such Accounts. Neither the
Collateral Agent nor any other Secured Creditor shall have any obligation or
liability under any Account constituting Collateral (or any agreement giving
rise thereto) by reason of or arising out of this Agreement or the receipt by
the Collateral Agent or any other Secured Creditor of any payment relating to
such Account pursuant hereto, nor shall the Collateral Agent or any other
Secured Creditor be obligated in any manner to perform any of the obligations of
any Assignor under or pursuant to any Account constituting Collateral (or any
agreement giving rise thereto), to make any payment, to make any inquiry as to
the nature or the sufficiency of any payment received by them or as to the
sufficiency of any performance by any party under any Account (or any agreement
giving rise thereto), 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 them or to which they may be entitled at any time or times.
3.8 Assignors Remains Liable Under Contracts Constituting Collateral.
Anything herein to the contrary notwithstanding, each Assignor shall remain
liable under each of the Contracts constituting Collateral to observe and
perform all of the conditions and obligations to be observed and performed by it
thereunder, all in accordance with and pursuant to the terms and provisions of
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each Contract constituting Collateral. Neither the Collateral Agent nor any
other Secured Creditor shall have any obligation or liability under any Contract
by reason of or arising out of this Agreement or the receipt by the Collateral
Agent or any other Secured Creditor of any payment relating to such Contract
pursuant hereto, nor shall the Collateral Agent or any other Secured Creditor be
obligated in any manner to perform any of the obligations of any Assignor under
or pursuant to any such Contract, to make any payment, to make any inquiry as to
the nature or the sufficiency of any performance by any party under any such
Contract, 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 them or to which they may be entitled at any time or times.
3.9 Further Actions. Each Assignor will, at its own expense, make, execute,
endorse, acknowledge, file and/or deliver to the Collateral Agent from time to
time such vouchers, invoices, schedules, confirmatory assignments, conveyances,
financing statements, transfer endorsements, certificates, reports and other
assurances or instruments and take such further steps, including any and all
actions as may be necessary or required under the Federal Assignment of Claims
Act, relating to its Accounts, Contracts, Instruments and other property or
rights covered by the security interest hereby granted, as the Collateral Agent
may reasonably require.
ARTICLE IV
SPECIAL PROVISIONS CONCERNING TRADEMARKS
4.1 Additional Representations and Warranties. Each Assignor represents and
warrants that it is the true and lawful owner of or otherwise has the right to
use the registered Marks listed on Annex F hereto for such Assignor and that
said listed Marks include all United States marks and applications for United
States marks registered in the United States Patent and Trademark Office that
such Assignor owns or uses in connection with its business as of the date hereof
and that such Assignor has not granted security interest in the listed Marks to
any other Person. Each Assignor represents and warrants that it owns, is
licensed to use or otherwise has the right to use, all Marks that it uses. Each
Assignor further warrants that it has no knowledge of any third party claim
received by it that any aspect of such Assignor's present or contemplated
business operations infringes or will infringe any trademark, service xxxx or
trade name of any other Person other than as could not, either individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect. Each
Assignor represents and warrants that it is the true and lawful owner of or
otherwise has the right to use all U.S. trademark registrations and applications
listed on Annex F hereto and that said registrations are valid, subsisting, have
not been canceled and that such Assignor is not aware of any third-party claim
that any of said registrations is invalid or unenforceable, and is not aware
that there is any reason that any of said registrations is invalid or
unenforceable. Each Assignor hereby grants to the Collateral Agent an absolute
power of attorney to sign, upon the occurrence and during the continuance of an
Event of Default, any document which may be required by the United States Patent
and Trademark Office in order to effect an absolute assignment of all right,
title and interest in each Xxxx, and record the same.
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4.2 Licenses and Assignments. Each Assignor hereby agrees not to divest
itself of any right under any material Xxxx absent prior written approval of the
Collateral Agent.
4.3 Infringements. Each Assignor agrees, promptly upon learning thereof, to
notify the Collateral Agent in writing of the name and address of, and to
furnish such pertinent information that may be available with respect to, any
party who such Assignor believes is infringing or diluting or otherwise
violating any of such Assignor's rights in and to any Xxxx in any manner that
could reasonably be expected to have a Material Adverse Effect, or with respect
to any party claiming that such Assignor's use of any Xxxx material to the
Assignor's business violates in any material respect any property right of that
party. Each Assignor further agrees to take appropriate action in accordance
with reasonable business practices against any Person infringing any Xxxx in any
manner that could reasonably be expected to have a Material Adverse Effect.
4.4 Preservation of Marks. Each Assignor agrees to use its Marks which are
material to such Assignor's business in interstate commerce during the time in
which this Agreement is in effect and to take all such other actions as are
reasonably necessary to preserve such Marks as trademarks or service marks under
the laws of the United States (other than any such Marks which are no longer
used or reasonably useful in its business or operations).
4.5 Maintenance of Registration. Each Assignor shall, at its own expense,
diligently process all documents reasonably required to maintain trademark
registrations, including but not limited to affidavits of use and applications
for renewals of registration in the United States Patent and Trademark Office
for all of its material registered Marks, and shall pay all fees and
disbursements in connection therewith and shall not abandon any such filing of
affidavit of use or any such application of renewal prior to the exhaustion of
all administrative and judicial remedies without prior written consent of the
Collateral Agent (other than with respect to registrations and applications
deemed by the Assignors to be no longer prudent to pursue).
4.6 Future Registered Marks. If any Xxxx registration is issued hereafter
to any Assignor as a result of any application now or hereafter pending before
the United States Patent and Trademark Office, within thirty (30) days of
receipt of such certificate, such Assignor shall deliver to the Collateral Agent
a copy of such certificate, and an assignment for security in such Xxxx, to the
Collateral Agent and at the expense of such Assignor, confirming the assignment
for security in such Xxxx to the Collateral Agent hereunder, the form of such
security to be substantially in the form of Annex I hereto or in such other form
as may be reasonably satisfactory to the Collateral Agent.
4.7 Remedies. If an Event of Default shall occur and be continuing, the
Collateral Agent may, by written notice to the Assignors, take any or all of the
following actions: (i) declare the entire right, title and interest of the
Assignors in and to each of the Marks, together with all trademark rights and
rights of protection to the same, vested in the Collateral Agent for the benefit
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of the Secured Creditors, in which event such rights, title and interest shall
immediately vest in the Collateral Agent for the benefit of the Secured
Creditors, and the Collateral Agent shall be entitled to exercise the power of
attorney referred to in Section 4.1 hereof to execute, cause to be acknowledged
and notarized, and record said absolute assignment with the applicable agency;
(ii) take and use or sell the Marks and the goodwill of each Assignor's business
symbolized by the Marks and the right to carry on the business and use the
assets of such Assignor in connection with which the Marks have been used; and
(iii) direct the Assignors to refrain, in which event the Assignors shall
refrain, from using the Marks in any manner whatsoever, directly or indirectly,
and the Assignors shall execute such further documents that the Collateral Agent
may reasonably request to further confirm this and to transfer ownership of the
Marks and registrations and any pending trademark application in the United
States Patent and Trademark Office to the Collateral Agent.
ARTICLE V
SPECIAL PROVISIONS CONCERNING PATENTS,
COPYRIGHTS AND TRADE SECRETS
5.1 Additional Representations and Warranties. Each Assignor represents and
warrants that it is the true and lawful owner of all rights in (i) all United
States trade secrets and proprietary information necessary to operate the
business of such Assignor (the "Trade Secret Rights"), (ii) the Patents listed
on Annex G hereto for each Assignor and that said Patents include all the United
States patents and applications for United States patents that each Assignor
owns as of the date hereof, and (iii) the Copyrights listed on Annex H hereto
for each Assignor and that said Copyrights constitute all the United States
copyrights registered with the United States Copyright Office and applications
to United States copyrights that each Assignor owns as of the date hereof, and
has not granted a security interest in the Trade Secret Rights, Patents or
Copyrights to any other Person. Each Assignor further warrants that it has no
knowledge of any third party claim that any aspect of the Assignor's present or
contemplated business operations infringes or will infringe any patent of any
other Person or that such Assignor has misappropriated any trade secret or
proprietary information which, either individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect. Each Assignor hereby
grants to the Collateral Agent an absolute power of attorney to sign, upon the
occurrence and during the continuance of any Event of Default, any document
which may be required by the United States Patent and Trademark Office in order
to effect an absolute assignment of all right, title and interest in each
Patent, and to record the same.
5.2 Licenses and Assignments. Each Assignor hereby agrees not to divest
itself of any right under any Patent or Copyright absent prior written approval
of the Collateral Agent.
5.3 Infringements. Each Assignor agrees, promptly upon learning thereof, to
furnish the Collateral Agent in writing with all pertinent information available
to such Assignor with respect to any infringement, contributing infringement or
active inducement to infringe in any Patent or Copyright or to any claim that
the practice of any Patent or use of any Copyright violates any property right
of a third party, or with respect to any misappropriation of any Trade Secret
11
Right or any claim that practice of any Trade Secret Right violates any property
right of a third party, in each case, in any manner which, either individually
or in the aggregate, could reasonably be expected to have a Material Adverse
Effect. Each Assignor further agrees, absent direction of the Collateral Agent
to the contrary, to diligently prosecute, in accordance with its reasonable
business judgment, any Person infringing any Patent or Copyright or any Person
misappropriating any Trade Secret Right, in each case to the extent that such
infringement or misappropriation, either individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
5.4 Maintenance of Patents or Copyright. At its own expense, each Assignor
shall make timely payment of all post-issuance fees required pursuant to 35
U.S.C. ss. 41 to maintain in force its rights under each Patent or Copyright,
absent prior written consent of the Collateral Agent (other than any such
Patents or Copyrights which are no longer used or useful in its business or
operations).
5.5 Prosecution of Patent Applications. At its own expense, each Assignor
shall diligently prosecute all material applications for (i) United States
Patents listed on Annex G hereto and (ii) Copyrights listed on Annex H hereto,
in each case such Assignor shall not abandon any such application prior to
exhaustion of all administrative and judicial remedies (other than applications
deemed by such Assignor to be no longer prudent to pursue), absent written
consent of the Collateral Agent.
5.6 Other Patents and Copyrights. Within thirty (30) days of the
acquisition or issuance of a United States Patent, registration of a Copyright,
or acquisition of a registered Copyright, or of filing of an application for a
United States Patent or Copyright, each Assignor shall deliver to the Collateral
Agent a copy of said Copyright or Patent, or certificate or registration of, or
application therefor, as the case may be, with an assignment for security as to
such Patent or Copyright, as the case may be, to the Collateral Agent and at the
expense of such Assignor, confirming the assignment for security, the form of
such assignment for security to be substantially in the form of Annex J or K
hereto, as appropriate, or in such other form as may be reasonably satisfactory
to the Collateral Agent.
5.7 Remedies. If an Event of Default shall occur and be continuing, the
Collateral Agent may, by written notice to the Assignors, take any or all of the
following actions: (i) declare the entire right, title, and interest of the
Assignors in each of the Patents and Copyrights vested in the Collateral Agent
for the benefit of the Secured Creditors, in which event such right, title, and
interest shall immediately vest in the Collateral Agent for the benefit of the
Secured Creditors, in which case the Collateral Agent shall be entitled to
exercise the power of attorney referred to in Section 5.1 hereof to execute,
cause to be acknowledged and notarized and to record said absolute assignment
with the applicable agency; (ii) take and practice or sell the Patents and
Copyrights; and (iii) direct each Assignor to refrain, in which event the
Assignor shall refrain, from practicing the Patents and using the Copyrights
directly or indirectly, and each Assignor shall execute such further documents
as the Collateral Agent may reasonably request further to confirm this and to
transfer ownership of the Patents and Copyrights to the Collateral Agent for the
benefit of the Secured Creditors.
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ARTICLE VI
PROVISIONS CONCERNING ALL COLLATERAL
6.1 Protection of Collateral Agent's Security. The Assignors will do
nothing to impair the rights of the Collateral Agent in the Collateral. The
Assignors will at all times maintain insurance, at the Assignors' own expense,
to the extent and in a manner consistent with commercially reasonable business
practice. Except to the extent otherwise permitted to be retained by the
Assignors, the Collateral Agent shall, at the time any proceeds of such
insurance are distributed to the Secured Creditors, apply such proceeds in
accordance with Section 7.4 hereof. The Assignors assume all liability and
responsibility in connection with the Collateral acquired by it and the
liability of the Assignors to pay the Obligations shall in no way be affected or
diminished by reason of the fact that such Collateral may be lost, destroyed,
stolen, damaged or for any reason whatsoever unavailable to the Assignors.
6.2 Warehouse Receipts Non-negotiable. To the extent practicable, each
Assignor agrees that if any warehouse receipt or receipt in the nature of a
warehouse receipt is issued with respect to any of its Inventory, such Assignor
shall request that such warehouse receipt or receipt in the nature thereof shall
not be "negotiable" (as such term is used in Section 7-104 of the Uniform
Commercial Code as in effect in any relevant jurisdiction or under other
relevant law).
6.3 Additional Information. Each Assignor will, at its own expense, from
time to time upon the reasonable request of the Collateral Agent, promptly (and
in any event within ten (10) days after its receipt of the respective request)
furnish to the Collateral Agent such information with respect to the Collateral
(including the identity of the Collateral or such components thereof as may have
been requested by the Collateral Agent, the value and location of such
Collateral, etc.) as may be requested by the Collateral Agent. Without limiting
the foregoing, each Assignor agrees that it shall promptly (and in any event
within ten (10) days after its receipt of the respective request) furnish to the
Collateral Agent such updated Annexes hereto as may from time to time be
reasonably requested by the Collateral Agent.
6.4 Further Actions. Each Assignor will, at its own expense and upon the
reasonable request of the Collateral Agent, make, execute, endorse, acknowledge,
file and/or deliver to the Collateral Agent from time to time such lists,
descriptions and designations of its Collateral, warehouse receipts, receipts in
the nature of warehouse receipts, bills of lading, documents of title, vouchers,
invoices, schedules, confirmatory assignments, conveyances, financing
statements, transfer endorsements, certificates, reports and other assurances or
instruments and take such further steps relating to the Collateral and other
property or rights covered by the security interest hereby granted, which the
Collateral Agent deems reasonably appropriate or advisable to perfect, preserve
or protect its security interest in the Collateral.
6.5 Financing Statements. Each Assignor agrees to execute and deliver to
the Collateral Agent such financing statements, in a form reasonably acceptable
to the Collateral Agent, as the Collateral Agent may from time to time
reasonably request or as are reasonably necessary or desirable in the opinion of
the Collateral Agent to establish and maintain a valid, enforceable, perfected
13
security interest in the Collateral as provided herein and the other rights and
security contemplated hereby. Each Assignor will pay any applicable filing fees,
recordation taxes and related expenses relating to its Collateral. Each Assignor
hereby authorizes the Collateral Agent to file any such financing statements
without the signature of such Assignor where permitted by law (and such
authorization includes describing the Collateral as "all assets" of such
Assignor).
ARTICLE VII
REMEDIES UPON OCCURRENCE OF AN EVENT OF DEFAULT
7.1 Remedies; Obtaining the Collateral Upon Default. The Assignors agree that,
if any Event of Default shall have occurred and be continuing, then, and in
every such case, the Collateral Agent, in addition to any rights now or
hereafter existing under applicable law and under the other provisions of this
Agreement, shall have all rights as a secured creditor under any UCC, and such
additional rights and remedies to which a secured creditor is entitled under the
laws in effect in all relevant jurisdictions and may:
(i) personally, or by agents or attorneys, immediately
take possession of the Collateral or any part
thereof, from the Assignors
or any other Person who then has possession of any
part thereof with or without notice or process of
law, and for that purpose may enter upon the
Assignors' premises where any of the Collateral is
located and remove the same and use in connection
with such removal any and all services, supplies,
aids and other facilities of the Assignors;
(ii) instruct the obligor or obligors on any agreement,
instrument or other obligation (including, without
limitation, the Accounts and the Contracts)
constituting the Collateral to make any payment
required by the terms of such agreement, instrument
or other obligation directly to the Collateral Agent
and may exercise any and all remedies of any Assignor
in respect of such Collateral;
(iii) instruct all banks which have entered into a control
agreement with the Collateral Agent to transfer all
monies, securities and instruments held by such
depositary bank to the Cash Collateral Account;
(iv) sell, assign or otherwise liquidate any or all of the
Collateral or any part thereof in accordance with
Section 7.2 hereof, or direct the Assignor to sell,
assign or otherwise liquidate any or all of the
Collateral or any part thereof, and, in each case,
take possession of the proceeds of any such sale or
liquidation;
(v) take possession of the Collateral or any part
thereof, by directing the Assignors in writing to
deliver the same to the Collateral Agent at any
reasonable place or places designated by the
Collateral Agent, in which event the Assignors shall
at their own expense:
(x) forthwith cause the same to be moved to
the place or places so designated by the Collateral
Agent and there delivered to the Collateral Agent;
(y) store and keep any Collateral so
delivered to the Collateral Agent at such place or
places pending further action by the Collateral Agent
as provided in Section 7.2 hereof; and
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(z) while the Collateral shall be so stored
and kept, provide such security and maintenance
services as shall be reasonably necessary to protect
the same and to preserve and maintain it in good
condition;
(vi) license or sublicense, whether on an exclusive or
nonexclusive basis, any Marks, Patents or Copyrights
included in the Collateral for such term and on such
conditions and in such manner as the Collateral Agent
shall in its sole judgment determine;
(vii) apply any monies constituting Collateral or proceeds
thereof in accordance with the provisions of Section
7.4; and
(viii) take any other action as specified in clauses (i)
through (v) in this Section 7.1, inclusive, of
Section 9-607 of the UCC;
it being understood that each Assignor's obligation so to deliver the Collateral
is of the essence of this Agreement and that, accordingly, upon application to a
court of equity having jurisdiction, the Collateral Agent shall be entitled to a
decree requiring specific performance by any such Assignor of said obligation.
By accepting the benefits of this Agreement, the Secured Creditors expressly
acknowledge and agree that this Agreement may be enforced only by the action of
the Collateral Agent acting upon the written instructions of Secured Creditors
holding at least fifty percent (50%) (in dollar terms of the principal amount)
of the Notes, and that no Secured Creditor shall have any right individually to
seek to enforce this Agreement or to realize upon the security to be granted
hereby, it being understood and agreed that such rights and remedies may be
exercised by the Collateral Agent for the benefit of the Secured Creditors upon
the terms of this Agreement.
7.2 Remedies; Disposition of the Collateral. If any Event of Default shall
have occurred and be continuing, then any Collateral repossessed by the
Collateral Agent under or pursuant to Section 7.1 hereof and any other
Collateral whether or not so repossessed by the Collateral Agent, may be sold,
assigned, leased or otherwise disposed of under one or more contracts or as an
entirety, and without the necessity of gathering at the place of sale the
property to be sold, and in general in such manner, at such time or times, at
such place or places and on such terms as the Collateral Agent may, in
compliance with any mandatory requirements of applicable law, determine to be
commercially reasonable. Any of the Collateral may be sold, leased or otherwise
disposed of, in the condition in which the same existed when taken by the
Collateral Agent or after any overhaul or repair at the expense of the Assignors
which the Collateral Agent shall determine to be commercially reasonable. Any
such sale, lease or other disposition may be effected by means of a public
disposition or private disposition, effected in accordance with the applicable
requirements (in each case if and to the extent applicable) of Sections 9-610
15
through 9-613 of the UCC and/or such other mandatory requirements of applicable
law as may apply to the respective disposition. The Collateral Agent may,
without notice or publication, adjourn any public or private disposition or
cause the same to be adjourned from time to time by announcement at the time and
place fixed for the disposition, and such disposition may be made at any time or
place to which the disposition may be so adjourned. To the extent permitted by
any such requirement of law, the Collateral Agent may bid for and become the
purchaser (and may pay all or any portion of the purchase price by crediting
Obligations against the purchase price) of the Collateral or any item thereof,
offered for disposition in accordance with this Section 7.2 without
accountability to the Assignors. If, under applicable law, the Collateral Agent
shall be permitted to make disposition of the Collateral within a period of time
which does not permit the giving of notice to the Assignors as herein above
specified, the Collateral Agent need give the Assignors only such notice of
disposition as shall be required by such applicable law. The Assignors agree to
do or cause to be done all such other acts and things as may be reasonably
necessary to make such disposition or dispositions of all or any portion of the
Collateral valid and binding and in compliance with any and all applicable laws,
regulations, orders, writs, injunctions, decrees or awards of any and all
courts, arbitrators or governmental instrumentalities, domestic or foreign,
having jurisdiction over any such sale or sales, all at the Assignors' expense.
7.3 Waiver of Claims. EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT, EACH
ASSIGNOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, NOTICE AND
JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL AGENT'S TAKING POSSESSION OR
THE COLLATERAL AGENT'S DISPOSITION OF ANY OF THE COLLATERAL, INCLUDING, WITHOUT
LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING FOR ANY PREJUDGMENT REMEDY OR
REMEDIES, AND EACH ASSIGNOR HEREBY FURTHER WAIVES, TO THE EXTENT PERMITTED BY
LAW:
(i) all damages occasioned by such taking of possession or any
such disposition except any damages which are the direct result of the
Collateral Agent's gross negligence or willful misconduct (as
determined by a court of competent jurisdiction in a final and
non-appealable decision);
(ii) all other requirements as to the time, place and terms of
sale or other requirements with respect to the enforcement of the
Collateral Agent's rights hereunder; and
(iii) all rights of redemption, appraisement, valuation, stay,
extension or moratorium now or hereafter in force under any applicable
law in order to prevent or delay the enforcement of this Agreement or
the absolute sale of the Collateral or any portion thereof, and the
Assignors, for themselves and all who may claim under it, insofar as it
or they now or hereafter lawfully may, hereby waive the benefit of all
such laws.
Any sale of, or the grant of options to purchase, or any other realization upon,
any Collateral shall operate to divest all right, title, interest, claim and
demand, either at law or in equity, of the Assignors therein and thereto, and
shall be a perpetual bar both at law and in equity against the Assignors and
against any and all Persons claiming or attempting to claim the Collateral so
sold, optioned or realized upon, or any part thereof, from, through and under
the Assignors.
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7.4 Application of Proceeds. (a) All monies collected by the Collateral Agent
upon any sale or other disposition of the Collateral, together with all other
monies received by the Collateral Agent hereunder, shall be applied as follows:
(i) first, to the payment of all amounts owing to the
Collateral Agent of the type described in clauses (iii) and (iv) of the
definition of "Obligations";
(ii) second, to the extent proceeds remain after the application
pursuant to the preceding clause (i), an amount equal to the
outstanding Obligations shall be paid to the Secured Creditors, with
each Secured Creditor receiving an amount equal to its outstanding
Obligations or, if the proceeds are insufficient to pay in full all
such Obligations, its Pro Rata Share of the amount remaining to be
distributed; and
(iii) third, to the extent proceeds remain after the application
pursuant to the preceding clauses (i) through (ii), inclusive, and
following the termination of this Agreement pursuant to Section 10.9(a)
hereof, to the Assignors or to whomever may be lawfully entitled to
receive such surplus.
(b) For purposes of this Agreement, "Pro Rata Share" shall mean, when
calculating a Secured Creditor's portion of any distribution or amount, that
amount (expressed as a percentage) equal to a fraction the numerator of which is
the then unpaid amount of such Secured Creditor's Obligations and the
denominator of which is the then outstanding amount of all Obligations.
(c) This Agreement is made with full recourse to the Assignors (including,
without limitation, with full recourse to all assets of the Assignors) and
pursuant to and upon all warranties, representations, covenants and agreements
on the part of the Assignors contained herein, and otherwise in writing in
connection herewith.
7.5 Remedies Cumulative. Each and every right, power and remedy hereby
specifically given to the Collateral Agent shall be in addition to every other
right, power and remedy specifically given to the Collateral Agent under this
Agreement, or now or hereafter existing at law, in equity or by statute, and
each and every right, power and remedy whether specifically herein given or
otherwise existing may be exercised from time to time or simultaneously and as
often and in such order as may be deemed expedient by the Collateral Agent. All
such rights, powers and remedies shall be cumulative and the exercise or the
beginning of the exercise of one shall not be deemed a waiver of the right to
exercise any other or others. No delay or omission of the Collateral Agent in
the exercise of any such right, power or remedy and no renewal or extension of
any of the Obligations shall impair any such right, power or remedy or shall be
construed to be a waiver of any Default or Event of Default or an acquiescence
thereof. No notice to or demand on the Assignors in any case shall entitle it to
any other or further notice or demand in similar or other circumstances or
constitute a waiver of any of the rights of the Collateral Agent to any other or
further action in any circumstances without notice or demand. In the event that
the Collateral Agent shall bring any suit to enforce any of its rights hereunder
and shall be entitled to judgment, then in such suit the Collateral Agent may
recover reasonable expenses, including reasonable attorneys' fees, and the
amounts thereof shall be included in such judgment.
17
7.6 Discontinuance of Proceedings. In case the Collateral Agent shall have
instituted any proceeding to enforce any right, power or remedy under this
Agreement by foreclosure, sale, entry or otherwise, and such proceeding shall
have been discontinued or abandoned for any reason or shall have been determined
adversely to the Collateral Agent, then and in every such case the Assignors,
the Collateral Agent and each holder of any of the Obligations shall be restored
to their former positions and rights hereunder with respect to the Collateral
subject to the security interest created under this Agreement, and all rights,
remedies and powers of the Collateral Agent shall continue as if no such
proceeding had been instituted.
ARTICLE VIII
INDEMNITY; APPOINTMENT OF COLLATERAL AGENT BY SECURED PARTY.
8.1 Indemnity by Assignors. (a) The Assignors agree to indemnify, reimburse
and hold the Collateral Agent, each Secured Creditor and their respective
successors, assigns, employees, affiliates and agents (hereinafter in this
Section 8.1 referred to individually as "Indemnitee," and collectively as
"Indemnitees") harmless from any and all liabilities, obligations, damages,
injuries, penalties, claims, demands, actions, suits, judgments and any and all
costs, expenses or disbursements (including reasonable attorneys' fees and
expenses) (for the purposes of this Section 8.1 and Section 8.5(b) the foregoing
are collectively called "expenses") of whatsoever kind and nature imposed on,
asserted against or incurred by any of the Indemnitees in any way relating to or
arising out of this Agreement or any other document executed in connection
herewith, or in any other way connected with the administration of the
transactions contemplated hereby or thereby or the enforcement of any of the
terms of, or the preservation of any rights under any thereof, or in any way
relating to or arising out of the manufacture, ownership, ordering, purchase,
delivery, control, acceptance, lease, financing, possession, operation,
condition, sale, return or other disposition, or use of the Collateral
(including, without limitation, latent or other defects, whether or not
discoverable), the violation of the laws of any country, state or other
governmental body or unit, any tort (including, without limitation, claims
arising or imposed under the doctrine of strict liability, or for or on account
of injury to or the death of any Person (including any Indemnitee), or property
damage), or contract claim; provided that no Indemnitee shall be indemnified
pursuant to this Section 8.1(a) for losses, damages or liabilities to the extent
caused by the gross negligence or willful misconduct of such Indemnitee (as
determined by a court of competent jurisdiction in a final and non-appealable
decision). The Assignors agree that upon written notice by any Indemnitee of the
assertion of such a liability, obligation, damage, injury, penalty, claim,
demand, action, suit or judgment, the Assignors shall assume full responsibility
for the defense thereof. Each Indemnitee agrees to use its best efforts to
promptly notify the Assignors of any such assertion of which such Indemnitee has
knowledge.
(b) Without limiting the application of Section 8.1(a) hereof, the
Assignors agree to pay or reimburse the Collateral Agent for any and all
reasonable fees, costs and expenses incurred in connection with the creation,
preservation or protection of the Collateral Agent's Liens on, and security
interest in, the Collateral, including, without limitation, all fees and taxes
18
in connection with the recording or filing of instruments and documents in
public offices, payment or discharge of any taxes or Liens upon or in respect of
the Collateral, premiums for insurance with respect to the Collateral and all
other fees, costs and expenses in connection with protecting, maintaining or
preserving the Collateral and the Collateral Agent's interest therein, whether
through judicial proceedings or otherwise, or in defending or prosecuting any
actions, suits or proceedings arising out of or relating to the Collateral.
(c) If and to the extent that the obligations of the Assignors under this
Section 8.1 are unenforceable for any reason, the Assignors hereby agree to make
the maximum contribution to the payment and satisfaction of such obligations
which is permissible under applicable law.
8.2 Indemnity Obligations Secured by Collateral; Survival. Any amounts paid
by any Indemnitee as to which such Indemnitee has the right to reimbursement
shall constitute Obligations secured by the Collateral. The indemnity
obligations of the Assignors contained in Sections 8.1 and 8.2 shall continue in
full force and effect, notwithstanding the full payment of all of the other
Obligations and notwithstanding the full payment of all the Notes issued under
the Note Purchase Agreement.
8.3 Appointment and Authorization of Collateral Agent. Each of the Secured
Creditors hereby irrevocably (subject to Section 8.10) appoints, designates and
authorizes the Collateral Agent to take such action on its behalf under the
provisions of this Agreement and the Notes and to exercise such powers and
perform such duties as are expressly delegated to it by the terms of this
Agreement or the Notes, together with such powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary contained elsewhere in
this Agreement or the Notes, the Collateral Agent shall not have any duties or
responsibilities except those expressly set forth herein, nor shall the
Collateral Agent have or be deemed to have any fiduciary relationship with the
Secured Creditor, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or the Notes or
otherwise exist against the Collateral Agent.
8.4 Delegation of Duties. The Collateral Agent may execute any of its
duties under this Agreement or the Notes by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Collateral Agent shall not be responsible
for the negligence or misconduct of any agent or attorney-in-fact that it
selects with reasonable care.
8.5 Liability of Collateral Agent. (a) None of the Collateral Agent nor any
of its directors, officers, employees or agents shall (i) be liable for any
action taken or omitted to be taken by any of them under or in connection with
this Agreement or the Notes or the transactions contemplated hereby (except for
its own gross negligence or willful misconduct), or (ii) be responsible in any
manner to any of the Secured Creditors for any recital, statement,
representation or warranty made by the Assignors or any subsidiary or affiliate
of the Assignors, or any officer thereof, contained in this Agreement or in the
Notes, or in any certificate, report, statement or other document referred to or
provided for in, or received by the Collateral Agent under or in connection
with, this Agreement or the Notes, or the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or the Notes, or for any failure
of the Assignors or any other party to this Agreement or the Notes to perform
19
its obligations hereunder or thereunder. The Collateral Agent shall not be under
any obligation to any Secured Creditor to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or the Notes, or to inspect the properties, books or records
of the Assignors or any of the Assignors' subsidiaries or affiliates.
(b) The Secured Creditors hereby agree to indemnify, reimburse and hold the
Collateral Agent and its respective successors, assigns and employees
(hereinafter in this Section 8.5(b) referred to individually as an "Agent
Indemnitee," and collectively as "Agent Indemnitees") harmless from any and all
expenses of whatsoever kind and nature imposed on, asserted against or incurred
by any of the Agent Indemnitees relating to or arising out of the performance by
the Collateral Agent of its obligations under this Agreement as collateral agent
or other document executed in connection herewith or in any other way connected
with the administration of the transactions contemplated hereby or thereby by
the Collateral Agent as the collateral agent or the enforcement of any of the
terms of, or the preservation of any rights under any thereof, or in any way
relating to or arising out of the manufacture, ownership, ordering, purchase,
delivery, control, acceptance, lease, financing, possession, operation,
condition, sale, return or other disposition, or use of the Collateral
(including, without limitation, latent or other defects, whether or not
discoverable), the violation of the laws of any country, state or other
governmental body or unit, any tort (including, without limitation, claims
arising or imposed under the doctrine of strict liability, or for or on account
of injury to or the death of any Person (including any Agent Indemnitee), or
property damage), or contract claim; provided that no Agent Indemnitee shall be
indemnified pursuant to this Section 8.5(b) for losses, damages or liabilities
to the extent caused by the gross negligence or willful misconduct of such Agent
Indemnitee (as determined by a court of competent jurisdiction in a final and
non-appealable decision).
8.6 Reliance by Collateral Agent. The Collateral Agent shall be entitled to
rely, and shall be fully protected in relying, upon any writing, resolution,
notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or
telephone message, statement or other document or conversation believed by it to
be genuine and correct and to have been signed, sent or made by the proper
person or persons, and upon advice and statements of legal counsel (including
counsel to the Assignors), independent accountants and other experts selected by
the Collateral Agent. The Collateral Agent shall be fully justified in failing
or refusing to take any action under this Agreement or the Notes unless it shall
first receive such advice or concurrence of the Secured Creditors as it deems
appropriate and, if it so requests, confirmation from the Secured Creditors of
their obligation to indemnify the Collateral Agent against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. The Collateral Agent shall in all cases be fully protected
in acting, or in refraining from acting, under this Agreement or the Notes in
accordance with a request or consent of the Secured Creditors and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all of the Secured Creditors.
8.7 Notice of Default. The Collateral Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default unless the Collateral Agent
shall have received written notice from a Secured Creditor or the Assignors
referring to this Agreement, describing such Default and stating that such
notice is a "notice of default." The Collateral Agent will notify the Secured
20
Creditors of its receipt of any such notice. The Collateral Agent shall take
such action with respect to such Default as may be requested by the Secured
Creditors pursuant to Section 7.1 hereof; provided that unless and until the
Collateral Agent has received any such request, the Collateral Agent may (but
shall not be obligated to) take such action, or refrain from taking such action,
with respect to Default as it shall deem advisable or in the best interest of
the Secured Creditors.
8.8 Credit Decision. Each Secured Creditor acknowledges that the Collateral
Agent has not made any representation or warranty to it, and that no act by the
Collateral Agent hereafter taken, including any review of the affairs of the
Assignors, shall be deemed to constitute any representation or warranty by the
Collateral Agent to any Secured Creditor. Each Secured Creditor represents to
the Collateral Agent that it has, independently and without reliance upon the
Collateral Agent and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Assignors, and made its own decision to enter into this
Agreement and the Notes and to complete the transactions contemplated hereunder
and thereunder. Each Secured Creditor also represents that it will,
independently and without reliance upon the Collateral Agent and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own analysis, appraisals and decisions in taking or not taking action
under this Agreement, the Notes and the transactions contemplated thereby, and
to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Assignors. The Collateral Agent shall not have any duty
or responsibility to provide any Secured Creditor with any credit or other
information concerning the business, prospects, operations, property, financial
or other condition or creditworthiness of the Assignors which may come into the
possession of the Collateral Agent.
8.9 Reimbursement. To the extent the Assignors do not reimburse the
Collateral Agent within 60 days of billing, each Secured Creditor shall
reimburse the Collateral Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including attorneys' fees and costs) incurred by the
Collateral Agent to the extent such costs or out-of-pocket expenses arise in
connection with the administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement, or any
document contemplated by or referred to herein, to the extent that the
Collateral Agent is not reimbursed for such expenses by or on behalf of the
Assignors; provided that the Collateral Agent will use its reasonable efforts to
obtain the approval of the Secured Creditors before incurring any material
reimbursable costs or expenses. The undertaking in this Section shall survive
the cancellation and/or conversion of the Notes, any foreclosure under, or
modification, release or discharge of, any or all of the documents contemplated
by the Notes, termination of this Agreement and the resignation or replacement
of the Collateral Agent.
8.10 Successor Agent. The Collateral Agent may resign as Collateral Agent
at any time, and shall resign as Collateral Agent if requested to do so by the
Secured Creditors who in aggregate hold at least fifty percent (50%) (in dollar
terms of the principal amount) of the Notes, upon thirty (30) days' notice to
the Assignors and the Secured Creditors. If the Collateral Agent resigns under
this Agreement, the Secured Creditors who in aggregate hold at least fifty
21
percent (50%) (in dollar terms of the principal amount) of the Notes shall, by
the effective date of the resignation notice, appoint a new Collateral Agent. If
such Secured Creditors fail to elect a new collateral agent by the requisite
majority by the effective date of the resignation notice, then the Secured Party
beneficially holding the largest proportion of the outstanding Note balances
shall appoint the Collateral Agent. Upon the acceptance of its appointment as
successor agent hereunder, such successor agent shall succeed to all the rights,
powers and duties of the retiring Collateral Agent and the term "Collateral
Agent" shall mean such successor agent, and the retiring Collateral Agent's
appointment, powers and duties as Collateral Agent shall be terminated. After
any retiring Collateral Agent's resignation hereunder as Collateral Agent, the
provisions of this Section 8 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Collateral Agent under this Agreement.
If no successor agent has accepted appointment as Collateral Agent by the date
which is thirty (30) days following a retiring Collateral Agent's notice of
resignation, the retiring Collateral Agent's resignation shall nevertheless
thereupon become effective and the Secured Creditors shall perform all of the
duties of the Collateral Agent hereunder until such time, if any, as the Secured
Creditors shall appoint a successor agent as provided for above.
8.11 Collateral Matters. The Secured Creditors irrevocably authorize the
Collateral Agent, at its option and in its discretion, to release any Lien or
security interest granted to or held by the Collateral Agent under the Security
Agreements (a) upon cancellation of the Notes and payment in full of all
obligations of the Assignors thereunder, (b) constituting property sold or to be
sold or disposed of as part of or in connection with any disposition permitted
by this Agreement or the Notes, or (c) if approved, authorized or ratified in
writing by the Secured Creditors holding at least fifty percent (50%) (in dollar
terms of the principal amount) of the Notes. Upon request by the Collateral
Agent at any time, the Secured Creditors will confirm in writing the Collateral
Agent's authority to release, or subordinate its interest in, particular types
or items of collateral pursuant to this Section 8.11.
ARTICLE IX
DEFINITIONS
The following terms shall have the meanings herein specified.
Such definitions shall be equally applicable to the singular and plural forms of
the terms defined.
"Account" shall mean any "account" as such term is defined in
the Uniform Commercial Code as in effect on the date hereof in the State of New
York, and in any event shall include but shall not be limited to, all rights to
payment of any monetary obligation, whether or not earned by performance, (i)
for property that has been or is to be sold, leased, licensed, assigned or
otherwise disposed of, (ii) for services rendered or to be rendered, (iii) for a
policy of insurance issued or to be issued, (iv) for a secondary obligation
incurred or to be incurred, (v) for energy provided or to be provided, (vi) for
22
the use or hire of a vessel under a charter or other contract, (vii) arising out
of the use of a credit or charge card, or information contained on or for use
with the card, or (viii) as winnings in a lottery or other game of chance
operated or sponsored by a State, governmental unit of a State, or person
licensed or authorized to operate the game by a State or governmental unit of a
State.
"Agreement" shall mean this Amended and Restated Security
Agreement as the same may be modified, supplemented or amended from time to time
in accordance with its terms.
"Assignors" shall have the meaning provided in the first
paragraph of this Agreement.
"Business Day" shall mean any day other than Saturday, Sunday
or any legal holiday observed in the State of New York.
"Cash Collateral Account" shall mean a cash collateral account
maintained with, and in the sole dominion and control of, the Collateral Agent
for the benefit of the Secured Creditors.
"Collateral" shall have the meaning provided in Section 1.1(a)
of this Agreement.
"Collateral Agent" shall have the meaning provided in the
first paragraph of this Agreement.
"Contract Rights" shall mean all rights of the Assignors under
each Contract, including, without limitation, (i) any and all rights to receive
and demand payments under any or all Contracts, (ii) any and all rights to
receive and compel performance under any or all Contracts and (iii) any and all
other rights, interests and claims now existing or in the future arising in
connection with any or all Contracts.
"Contracts" shall mean all contracts between any Assignor and
one or more additional parties (including, without limitation, licensing
agreements and any partnership agreements, joint venture agreements and limited
liability company agreements).
"Copyrights" shall mean any United States copyright owned by
any Assignor, including any registrations of any copyrights, in the United
States Copyright Office or any foreign equivalent office, as well as any
application for a copyright registration now or hereafter made with the United
States Copyright Office or any foreign equivalent office by any Assignor.
"Default" shall mean any event which with notice or lapse of
time, or both, would constitute an Event of Default.
"Documents" shall mean "documents" as such term is defined in
the Uniform Commercial Code as in effect on the date hereof in the State of New
York.
"Equipment" shall mean any "equipment" as such term is defined
in the Uniform Commercial Code as in effect on the date hereof in the State of
New York, and in any event, shall include, but shall not be limited to, all
machinery, equipment, furnishings, fixtures and vehicles now or hereafter owned
by the Assignors and any and all additions, substitutions and replacements of
any of the foregoing and all accessions thereto, wherever located, together with
all attachments, components, parts, equipment and accessories installed thereon
or affixed thereto.
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"Event of Default" shall mean any payment default on any of
the Obligations after the expiration of any applicable grace period.
"General Intangibles" shall mean "general intangibles" as such
term is defined in the Uniform Commercial Code as in effect on the date hereof
in the State of New York.
"Goods" shall mean "goods" as such term is defined in the
Uniform Commercial Code as in effect on the date hereof in the State of New
York.
"Indemnitee" shall have the meaning provided in Section 8.1(a)
of this Agreement.
"Instrument" shall mean "instruments" as such term is defined
in the Uniform Commercial Code as in effect on the date hereof in the State of
New York.
"Inventory" shall mean merchandise, inventory and goods, and
all additions, substitutions and replacements thereof and all accessions
thereto, wherever located, together with all goods, supplies, incidentals,
packaging materials, labels, materials and any other items used or usable in
manufacturing, processing, packaging or shipping same, in all stages of
production from raw materials through work in process to finished goods, and all
products and proceeds of whatever sort and wherever located any portion thereof
which may be returned, rejected, reclaimed or repossessed by the Collateral
Agent from each Assignor's customers, and shall specifically include all
"inventory" as such term is defined in the Uniform Commercial Code as in effect
on the date hereof in the State of New York.
"Investment Property" shall mean "investment property" as such
term is defined in the Uniform Commercial Code as in effect on the date hereof
in the State of New York.
"Liens" shall mean any security interest, deed of trust,
mortgage, pledge, lien, claim, charge, encumbrance, title retention agreement,
lessor's interest in a financing lease or analogous instrument, in, of, or on
each Assignor's property.
"Location" of the Assignors, shall mean each Assignor's
"location" as determined pursuant to Section 9-307 of the UCC.
"Marks" shall mean all right, title and interest in and to any
trademarks, service marks and trade names now held or hereafter acquired by the
Assignors, including any registration of any trademarks and service marks in the
United States Patent and Trademark Office or in any equivalent foreign office
and any trade dress including logos and/or designs used by any Assignor.
"Material Adverse Effect" shall mean a material adverse effect
on the business, property, assets, liabilities (actual or contingent),
operations or condition (financial or otherwise) of each Assignor and its
subsidiaries taken as a whole.
"Obligations" shall mean (i) the full and prompt payment when
due of all obligations and indebtedness (including, without limitation,
indemnities, fees and interest thereon) of the Assignors to the Investors,
whether now existing or hereafter incurred under, arising out of, or in
connection with the Note Purchase Agreement and the Notes issued thereunder and
the due performance and compliance by the Assignors with all of the terms,
conditions and agreements contained in the Note Purchase Agreement and the Notes
issued thereunder; (ii) any and all sums advanced by the Assignee in order to
preserve the Collateral or preserve its security interest in the Collateral;
(iii) in the event of any proceeding for the collection or enforcement of any
indebtedness, obligations, or liabilities of the Assignors after an Event of
25
Default shall have occurred and be continuing, the reasonable expenses of
retaking, holding, preparing for sale or lease, selling or otherwise disposing
of or realizing on the Collateral, or of any exercise by the Assignee of its
rights hereunder, together with reasonable attorneys' fees and court costs; and
(iv) all amounts paid by any Indemnitee as to which such Indemnitee has the
right to reimbursement under Section 8.1 of this Agreement.
"Patents" shall mean any patent to which any Assignor now or
hereafter has any right, title or interest therein, and any divisions,
continuations (including, but not limited to, continuations-in-parts) and
improvements thereof, as well as any application for a patent now or hereafter
made by the Assignors.
"Permits" shall mean, to the extent permitted to be assigned
by the terms thereof or by applicable law, all licenses, permits, rights,
orders, variances, franchises or authorizations of or from any governmental
authority or agency.
"Permitted Liens" shall mean:
(i) inchoate Liens for taxes, assessments or governmental
charges or levies not yet due or Liens for taxes, assessments or
governmental charges or levies being contested in good faith and by
appropriate proceedings for which adequate reserves have been
established in accordance with generally accepted accounting
principles;
(ii) Liens in respect of property or assets of the Assignors or
any of its subsidiaries imposed by law, which were incurred in the
ordinary course of business and do not secure indebtedness for borrowed
money, such as carrier's, warehousemen's, materialmen's and mechanics'
liens and other similar Liens arising in the ordinary course of
business, and (x) which do not in the aggregate materially detract from
the value of Assignors' or their subsidiary's property or assets or
materially impair the use thereof in the operation of the business of
such Assignor or such subsidiary, or (y) which are being contested in
good faith by appropriate proceedings, which proceedings have the
effect of preventing the forfeiture or sale of the property or assets
subject to any such Lien;
(iii) leases or subleases granted to other Persons not materially
interfering with the conduct or value of the business of Assignors or
any of their subsidiaries and non-assignable, non-exclusive licenses
and sub-licenses to third parties;
(iv) Liens upon assets of the Assignors or any of their
subsidiaries subject to capitalized lease obligations, provided that
(x) such Liens only serve to secure the payment of indebtedness arising
under such capitalized lease obligation, and (y) the Lien encumbering
the asset giving rise to the capitalized lease obligation does not
encumber any asset of the Assignors or any subsidiary of the Assignors;
26
(v) Liens placed upon equipment or machinery and used in the
ordinary course of business of the Assignors or any of their
subsidiaries and placed at the time of the acquisition thereof by the
Assignors or such subsidiary or within 90 days thereafter to secure
indebtedness incurred to pay all or a portion of the purchase price
thereof or to secure indebtedness incurred solely for the purpose of
financing the acquisition of any such equipment or machinery or
extensions, renewals or replacements of any of the foregoing for the
same or a lesser amount;
(vi) easements, rights-of-way, restrictions, encroachments and
other similar charges or encumbrances, and minor title deficiencies, in
each case not securing indebtedness and not materially interfering with
the conduct or value of the business of Assignors or any of their
subsidiaries;
(vii) Liens arising from precautionary UCC financing statement
filings regarding operating leases or bailee arrangements entered into
in the ordinary course of business;
(viii) Liens arising out of the existence of judgments or awards
in respect of which Assignors or any of their subsidiaries shall in
good faith be prosecuting an appeal or proceedings for review and in
respect of which there shall have been secured a subsisting stay of
execution pending such appeal or proceedings, provided that the
aggregate amount of all cash and the fair market value of all other
property subject to such Liens does not exceed $50,000 at any time
outstanding;
(ix) statutory and common law landlords' liens under leases to
which the Assignors or any of their subsidiaries is a party;
(x) Liens incurred in the ordinary course of business in
connection with workers compensation claims, unemployment insurance and
social security benefits and Liens securing the performance of bids,
tenders, leases and contracts in the ordinary course of business,
statutory obligations, surety bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of
business and consistent with past practice (exclusive of obligations in
respect of the payment for borrowed money), provided that the aggregate
amount of all cash and the fair market value of all other property
subject to all Liens permitted by this clause (x) shall not at any time
exceed $50,000; and
(xi) other Liens incidental to the conduct of the business of
the Assignors or any of their subsidiaries that (i) were not incurred
in connection with indebtedness, (ii) do not materially detract from
the value of the assets subject to such Liens or materially impair the
use thereof in the operation of such business (provided to the extent
that any such Liens attach to any Collateral such Liens shall be junior
to the Liens created in favor of the Collateral Agent), and (iii) do
not at any time for all such Liens encumber cash and other property
having an aggregate value in excess of, or secure outstanding
obligations in the aggregate in excess of $50,000.
"Person" shall mean any individual, partnership, joint
venture, trust, corporation, limited liability entity, unincorporated
organization or other entity (including a governmental entity).
27
"Pro Rata Share" shall have the meaning provided in Section
7.4(b) of this Agreement.
"Proceeds" shall mean all "proceeds" as such term is defined
in the Uniform Commercial Code as in effect in the State of New York on the date
hereof and, in any event, shall also include, but not be limited to, (i) any and
all proceeds of any insurance, indemnity, warranty or guaranty payable to the
Collateral Agent or the Assignors from time to time with respect to any of the
Collateral, (ii) any and all payments (in any form whatsoever) made or due and
payable to the Assignors from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral by any governmental authority (or any person acting under color of
governmental authority) and (iii) any and all other amounts from time to time
paid or payable under or in connection with any of the Collateral.
"Secured Creditors" shall have the meaning provided in the
first paragraph to this Agreement.
"Software" shall mean "software" as such term is defined in
the Uniform Commercial Code as in effect on the date hereof in the State of New
York.
"Supporting Obligations" shall mean any "supporting
obligation" as such term is defined in the Uniform Commercial Code as in effect
on the date hereof in the State of New York, now or hereafter owned by the
Assignors, or in which any Assignor has any rights, and, in any event, shall
include, but shall not be limited to all of the Assignors' rights in any
letter-of-credit right or secondary obligation that supports the payment or
performance of, and all security for, any Account, Document, General Intangible,
Instrument or Investment Property.
"Termination Date" shall have the meaning provided in Section
10.9(a) of this Agreement.
"Trade Secret Rights" shall have the meaning provided in
Section 5.1 of this Agreement.
"UCC" shall mean the Uniform Commercial Code as in effect from
time to time in the relevant jurisdiction.
ARTICLE X
MISCELLANEOUS.
10.1 Notices. Except as otherwise specified herein, all notices, requests,
demands or other communications to or upon the respective parties hereto shall
be sent or delivered by hand, overnight mail or courier service and all such
notices and communications shall, when mailed, delivered or sent by courier, be
effective when deposited in the mails, delivered or sent by overnight courier,
as the case may be, except that notices and communications to the Collateral
Agent or the Assignors shall not be effective until received by the Collateral
Agent or the Assignors, as the case may be. All notices and other communications
shall be in writing and addressed as follows:
27
(a) if to the Assignors:
eMagin Corporation
0000 Xxxxx 00
Xxxxxxxx Xxxxxxxx, XX 00000
Attention: Chief Financial Officer
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
Virtual Vision, Inc.
c/o eMagin Corporation
0000 Xxxxx 00
Xxxxxxxx Xxxxxxxx, XX 00000
Attention: Chief Financial Officer
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
(b) if to the Collateral Agent:
Alligator Holdings, Inc.
000 Xxxx Xxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxx X. Gold, President
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
(c) if to any Secured Creditor, at such address as such Secured Creditor
shall have specified in the Note Purchase Agreement;
or at such other address or addressed to such other individual as shall have
been furnished in writing by any Person described above to the party required to
give notice hereunder.
10.2 Waiver; Amendment. None of the terms and conditions of this Agreement
may be changed, waived, modified or varied in any manner whatsoever unless in
writing duly signed by the Assignors and the Collateral Agent (with the written
consent of the Secured Creditors holding at least fifty percent (50%) (in dollar
terms of the principal amount) of the Notes.
10.3 Obligations Absolute. The Obligations of the Assignors hereunder shall
remain in full force and effect without regard to, and shall not be impaired by
(a) any bankruptcy, insolvency, reorganization, arrangement, readjustment,
composition, liquidation or the like of the Assignors; (b) any exercise or
non-exercise, or any waiver of, any right, remedy, power or privilege under or
in respect of this Agreement; or (c) any amendment to or modification of any
security for any of the Obligations, whether or not the Assignors shall have
notice or knowledge of any of the foregoing.
29
10.4 Unequal Payment. Each Secured Creditor agrees that if it shall,
through the exercise of any right granted to the Secured Creditors under this
Agreement, under the Note Purchase Agreement, the Notes or by applicable law,
including, but not limited to any right of set-off, any secured claim under
Section 506 of the Bankruptcy Code or any other security or interest arising
from, or in lieu of such secured claim, and received by such Secured Creditor
under any applicable bankruptcy, insolvency, or other similar law, or otherwise,
obtain payment in respect of its Note as a result of which the unpaid portion of
its Note is proportionately less than the unpaid portion of the Notes of the
other Secured Creditors, then (a) it shall promptly purchase at par (and shall
be deemed to have thereupon purchased) from such other Secured Creditors a
participation in the Notes of each such other Secured Creditor, so that the
amount of such Secured Creditor's Note in the total participation in the Notes
of the other Secured Creditors shall be in the same proportion to all Notes then
outstanding as the amount of its Note prior to the obtaining of such payment was
to the amount all Notes outstanding prior to the obtaining such payment and (b)
such other adjustments shall be made from time to time as shall be equitable to
ensure that Secured Creditors share the benefits of such payment pro rata. The
term "Note" as used in this paragraph shall include accrued interest thereon.
10.5 Successors and Assigns. This Agreement shall be binding upon the
Assignors and their successors and assigns and shall inure to the benefit of the
Collateral Agent and the other Secured Creditors and their respective successors
and assigns; provided, however, that the Assignors shall not assign their rights
or obligations hereunder without the prior written consent of the Collateral
Agent. All agreements, statements, representations and warranties made by the
Assignors herein or in any certificate or other instrument delivered by the
Assignors or on their behalf under this Agreement shall be considered to have
been relied upon by the Secured Creditors and shall survive the execution and
delivery of this Agreement regardless of any investigation made by the Secured
Creditors or on their behalf.
10.6 Headings Descriptive. The headings of the several sections of this
Agreement are inserted for convenience only and shall not in any way affect the
meaning or construction of any provision of this Agreement.
10.7 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY
TRIAL. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE
OF NEW YORK. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY
BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR
THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH ASSIGNOR HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF
ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF
THE AFORESAID COURTS. EACH ASSIGNOR HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM
THAT ANY SUCH COURT LACKS JURISDICTION OVER SUCH ASSIGNOR, AND AGREES NOT TO
PLEAD OR CLAIM IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
BROUGHT IN ANY OF THE AFORESAID COURTS THAT ANY SUCH COURT LACKS JURISDICTION
OVER SUCH ASSIGNOR. EACH ASSIGNOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF
29
PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING
BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE
PREPAID, TO THE ASSIGNORS AT THEIR ADDRESS FOR NOTICES AS PROVIDED IN SECTION
10.1 ABOVE, SUCH SERVICE TO BECOME EFFECTIVE THIRTY (30) DAYS AFTER SUCH
MAILING. EACH ASSIGNOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE
OF PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN
ANY ACTION OR PROCEEDING COMMENCED HEREUNDER THAT SUCH SERVICE OF PROCESS WAS IN
ANY WAY INVALID OR INEFFECTIVE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE
COLLATERAL AGENT UNDER THIS AGREEMENT, OR ANY SECURED CREDITOR, TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST THE ASSIGNORS IN ANY OTHER JURISDICTION.
(a) EACH ASSIGNOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR
PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT BROUGHT IN THE
COURTS REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND
AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(b) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
10.8 Assignors' Duties. It is expressly agreed, anything herein contained
to the contrary notwithstanding, that each Assignor shall remain liable to
perform all of the obligations, if any, assumed by it with respect to the
Collateral and the Collateral Agent shall not have any obligations or
liabilities with respect to any Collateral by reason of or arising out of this
Agreement, nor shall the Collateral Agent be required or obligated in any manner
to perform or fulfill any of the obligations of the Assignors under or with
respect to any Collateral.
10.9 Termination; Release. (a) After the Termination Date, this Agreement
shall terminate (provided that all indemnities set forth herein, including
without limitation, in Section 8.1 hereof, shall survive such termination), and
the Collateral Agent, at the request and expense of the Assignors, will promptly
execute and deliver to the Assignors a proper instrument or instruments
(including Uniform Commercial Code termination statements on form UCC-3)
acknowledging the satisfaction and termination of this Agreement, and will duly
assign, transfer and deliver to the Assignors (without recourse and without any
representation or warranty) such of the Collateral as may be in the possession
of the Collateral Agent and as has not theretofore been sold or otherwise
applied or released pursuant to this Agreement. As used in this Agreement,
30
"Termination Date" shall mean the date upon which no Note issued under the Note
Purchase Agreement is outstanding (including the cancellation of such Notes by
way of the conversion of the Notes to common shares pursuant to the terms of
such Notes) and all Obligations then due and payable have been paid in full.
(b) At any time that the Assignors desire that the Collateral Agent take
any action to acknowledge or give effect to any release of Collateral pursuant
to the foregoing Section 10.9(a), the Assignors shall deliver to the Collateral
Agent a certificate signed by a senior officer of the Assignor stating that the
release of the respective Collateral is permitted pursuant to such Section
10.9(a).
10.10 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Assignors and the
Collateral Agent.
10.11 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
10.12 The Collateral Agent. The Collateral Agent will hold in accordance
with this Agreement all items of the Collateral at any time received under this
Agreement. It is expressly understood and agreed that the obligations of the
Collateral Agent as holder of the Collateral and interests therein and with
respect to the disposition thereof, and otherwise under this Agreement, are only
those expressly set forth in this Agreement. The Collateral Agent shall act
hereunder on the terms and conditions set forth herein.
10.13 Benefit of Agreement. This Agreement shall be binding upon the
parties hereto and their respective successors and assigns and shall inure to
the benefit of and be enforceable by each of the parties hereto and its
successors and assigns.
10.14 Joinder by Additional Secured Creditors. Notwithstanding anything to
the contrary in this Agreement, the parties hereto expressly agree that
additional parties may join this Agreement as Secured Creditors, from time to
time (and prior to June 30, 2003) and become a party hereto, provided that each
such additional party shall agree to be bound by the terms and conditions of
this Agreement and shall agree to assume the rights and obligations of a Secured
Creditor hereunder as if such additional party was an original signatory hereto
as of the date of this Agreement, and; provided, further, that such additional
party shall be permitted under Section 2(f) of the Note Purchase Agreement to
join the Note Purchase Agreement as an additional New Investor (as such term is
defined in the Note Purchase Agreement).
[Remainder of this page intentionally left blank; signature page follows]
31
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
ASSIGNORS: EMAGIN CORPORATION, as Assignor
By/s/Xxxx X. Xxxxx
Name: Xxxx X. Xxxxx
Title: Chief Executive Officer
VIRTUAL VISION, Inc., as Assignor
By/s/Xxxx X. Xxxxx
Name: Xxxx X. Xxxxx
Title: Chief Executive Officer
SECURED PARTIES:
/s/Xxxxxxxx X.X. Xxxxxxx
Xxxxxxxx X.X. Xxxxxxx
/s/Xxxx Xxxxxx
XXXX XXXXXX
GINOLA LIMITED
By: /s/Xxxxxxxx Xxxxx
Name: Xxxxxxxx Xxxxx
Title: Director
/s/XXXXXX XXXXXXX
XXXXXX XXXXXXX
EMERALD ADVANTAGE FUND LP
By:/s/ Xxxxxx X Xxxxxxxx
Name: Xxxxxx X Xxxxxxxx
Title: Managing Member
EMERALD ADVANTAGE OFFSHORE FUND LTD
By: /s/ Xxxxxx X Xxxxxxxx
Name: Xxxxxx X Xxxxxxxx
Title: Managing Member
EMERALD VENTURE CAPITAL I LP
By: /s/ Xxxxxx X Xxxxxxxx
Name: Xxxxxx X. Xxxxxxxx
Title: President
/s/Xxxxxx X. Xxxxxxxx
XXXXXX X. XXXXXXXX
STILLWATER LLC
By: Xxxxxxxx X.X. Xxxxxxx, its sole member
/s/Xxxxxxxx X.X. Xxxxxxx
Xxxxxxxx X.X. Xxxxxxx
Accepted and Agreed to:
ALLIGATOR HOLDINGS, INC.
as Collateral Agent
By: /s/Xxxxxx X. Gold
Name: Xx. Xxxxxx X. Gold
Title: President
