EXHIBIT 10.20
GENERAL SECURITY AGREEMENT
(Floating Lien)
SECURITY AGREEMENT, dated as of July 11, 2002, between eB2B
Commerce, Inc., a New Jersey corporation with its principal executive office
located at 000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Debtor"), and Xxxxxx
Xxxxxx with an address at 0000 Xxxxxxxxx Xxxx, Xxx. 0000, Xxxxxxx, Xxxxxxx 00000
(the "Investor Representative"), as representative for the investors (the
"Investors") from time to time set forth on Annex I hereto (the Investor
Representative, acting in such capacity, the "Secured Party");
W I T N E S S E T H :
WHEREAS, Debtor has issued and/or will issue to the Investors a
series of 7% senior subordinated secured convertible promissory notes in the
aggregate principal amount of up to $1,350,000 from time to time in a private
placement (herein collectively, as at any time amended, extended, restated,
renewed or modified, the "Notes"), pursuant to a Confidential Term Sheet of the
Debtor dated July 11, 2002;
WHEREAS, it is a condition to the willingness of the Investors to
make the loan evidenced by the Notes that Debtor enter into this Agreement and
grant to the Secured Party, for the ratable benefit of the Investors, the
security interest provided for herein;
WHEREAS, the Investors have appointed the Investor Representative
pursuant to the Investor Representative Appointment Agreement attached as
Exhibit 4 hereto.
NOW, THEREFORE, FOR VALUE RECEIVED, IT IS AGREED:
Section 1. Terms. Unless otherwise defined herein, capitalized terms used
in this Agreement shall have the meaning specified therefor in the Notes. As
used herein the following terms shall have the meanings specified and shall
include in the singular number the plural and in the plural number the singular:
"Assigned Agreements" shall mean all contracts and agreements of the
Debtor.
"Collateral" means all of the Debtor's right, title and interest in
and under or arising out of each and all of the following:
All personal property and fixtures of the Debtor of any type
or description, wherever located and now existing or hereafter
arising or acquired, including but not limited to the following:
(i) all of the Debtor's goods including, without limitation:
(A) all inventory, including without limitation, equipment held
for lease, whether raw materials, in process or finished, all
material or equipment usable in processing the same and all
documents of title covering any inventory (as such term is
defined in the Uniform Commercial Code, as in effect from time
to time in the State of New York (the "NYUCC")) (all of the
foregoing, "Inventory"), including without limitation that
located at the locations listed on Schedule 1 annexed hereto;
(B) all equipment (the "Equipment") employed in connection with
the Debtor's business, together with all present and future
additions, attachments and accessions thereto and all
substitutions therefor and replacements thereof, including
without limitation that located at the locations listed on
Schedule 1 annexed hereto;
(ii) all of the Debtor's present and future accounts, accounts
receivable, general intangibles, as such terms are defined in the NYUCC,
and all contracts and contract rights (herein sometimes referred to as
"Receivables"), including but not limited to the Debtor's rights
(including rights to payment) under all Assigned Agreements, together with
(A) all claims, rights, powers or privileges and remedies of the
Debtor relating thereto or arising in connection therewith
including, without limitation, all rights of the Debtor to
make determinations, to exercise any election (including, but
not limited to, election of remedies) or option or to give or
receive any notice, consent, waiver or approval, together with
full power and authority to demand, receive, enforce, collect
or receipt for any of the foregoing or any property which is
the subject of the Assigned Agreements, to enforce or execute
any checks, or other instruments or orders, to file any claims
and to take any action which (in the opinion of the Secured
Party) may be necessary or advisable in connection with any of
the foregoing, (B) all liens, security, guaranties,
endorsements, warranties and indemnities and all insurance and
claims for insurance relating thereto or arising in connection
therewith,
(C) all rights to property forming the subject matter of the
Receivables including, without limitation, rights to stoppage
in transit and rights to returned or repossessed property,
(D) all writings relating thereto or arising in connection
therewith including without limitation, all notes, contracts,
security agreements, guaranties, chattel paper and other
evidence of indebtedness or security, all powers-of-attorney,
all books, records, ledger cards and invoices, all credit
information, reports or memoranda and all evidence of filings
or registrations relating thereto,
(E) all catalogs, computer and automatic machinery software and
programs, and the like pertaining to operations by the Debtor
in, on or about any of its plants or warehouses, all sales
data and other information relating to sales or service of
products now or hereafter manufactured on or about any of its
plants, and all accounting information pertaining to
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operations in, on or about any of its plants, and all media in
which or on which any of the information or knowledge or data
is stored or contained, and all computer programs used for the
compilation or printout of such information, knowledge,
records or data, and
(F) all accounts, contract rights, general intangibles and other
property rights of any nature whatsoever arising out of or in
connection with the foregoing, including without limitation,
payments due and to become due, whether as repayments,
reimbursements, contractual obligations, indemnities, damages
or otherwise;
(iii) all other personal property of the Debtor of any nature
whatsoever, including, without limitation, all accounts, bank accounts,
deposits, credit balances, contract rights, inventory, general
intangibles, goods, equipment, instruments, chattel paper, machinery,
furniture, furnishings, fixtures, tools, supplies, appliances, plans and
drawings, together with all customer and supplier lists and records of the
business, and all property from time to time described in any financing
statement signed by the Debtor naming the Investor Representative as
secured party;
(iv) all of the Debtor's right, title, and market in and to any
shares of capital stock of any subsidiary corporation and the certificates
representing any such shares;
(v) any and all of Debtor's right, title and interest in its
intellectual property, including, without limitation, (a) each of the
Trademarks (as hereinafter defined), and the goodwill of the business
symbolized by each of the Trademarks, all customer lists and other records
of the Debtor relating to the distribution of products bearing the
Trademarks and each of the registrations described in Schedule 2-A hereto;
(b) each of the Patents (as hereinafter defined) and each of the
registrations listed on Schedule 2-B hereto; (c) all of the tradenames
listed on Schedule 1 hereto (the "Tradenames") and (d) any and all
proceeds of the foregoing, including, without limitation, any claims by
Debtor against third parties for infringement of the Trademarks or the
Patents (collectively, the "Intellectual Property");
(vi) all additions, accessions, replacements, substitutions or
improvements and all products and proceeds including, without limitation,
proceeds of insurance, of any and all of the Collateral described in
clauses (i) through (iv) above; and
(vii) any consideration received from the sale, exchange, lease or
other disposition of any asset or property which constitutes Collateral,
any other value received as a consequence of the possession of any
Collateral and any payment received from any insurer or other person or
entity as a result of the destruction, loss, theft or other involuntary
conversion of whatever nature of any asset or property that constitutes
Collateral.
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Notwithstanding the foregoing, the term "Collateral" does not include any
license or contract rights to the extent the granting of a security interest in
it would be contrary to applicable law.
"Instrument" shall have the meaning specified in Article 3 of the
NYUCC and shall also include any other writing which evidences a right to the
payment of money and is not itself a security agreement or lease and is of a
type which is in the ordinary course of business transferred by delivery with
any necessary endorsement or assignment.
"Lien" means any mortgage, pledge, hypothecation, assignment,
security interest, deposit arrangement, encumbrance (including any easement,
right of way, zoning restriction and the like), lien (statutory or other) or
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever (including any conditional sale or other title
retention agreement, any financing lease involving substantially the same
economic effect as any of the foregoing and the filing of any financing
statement under the NYUCC or comparable law of any jurisdiction).
"Patents" shall mean (i) all letters patent of the United States or
any other country, all right, title and interest therein and thereto, and all
applications, registrations and recordings thereof, including, without
limitation, applications, registrations and recordings in the United States
Patent and Trademark Office or in any similar office or agency of the United
States, any state or province thereof or any other country or any political
subdivision thereof, all whether now owned or hereafter acquired by Debtor,
including, but not limited to, those described in Schedule 2-B annexed hereto
and made a part hereof, and (ii) all reissues, continuations,
continuations-in-part, extensions or divisionals thereof and all licenses
thereof.
"Permitted Liens" means:
(i) Liens for taxes, assessments or other governmental charges or
levies not at the time delinquent or thereafter payable without penalty or
being contested in good faith by appropriate proceedings and for which
adequate reserves in accordance with generally accepted accounting
principles shall have been set aside on its books;
(ii) Liens of carriers, warehousemen, mechanics, materialmen and
landlords incurred in the ordinary course of business for sums not overdue
or being contested in good faith by appropriate proceedings and for which
adequate reserves shall have been set aside on its books;
(iii) Liens (other than Liens arising under the Employee Retirement
Income Security Act of 1974, as amended, or Section 412(n) of the Internal
Revenue Code of 1986, as amended) incurred in the ordinary course of
business in connection with workers' compensation, unemployment insurance
or other forms of governmental insurance or benefits, or to secure
performance of tenders, statutory obligations, leases and contracts (other
than for borrowed money) entered into in the ordinary course of business
or to secure obligations on surety or appeal bonds;
(iv) judgment Liens in existence less than 60 days after the entry
thereof or with respect to which execution has been stayed;
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(v) ground leases in respect of real property on which facilities
owned or leased by the Debtor or any of its subsidiaries are located;
(vi) easements, rights-of-way, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances not
interfering in any material respect with the business of the Debtor and
its subsidiaries taken as a whole;
(vii) any interest or title of a lessor secured by a lessor's
interest under any lease of real property on which facilities owned or
leased by the Debtor or any of its subsidiaries are located;
(viii) leases or subleases and licenses or sublicenses granted to
others not interfering in any material respect with the business of the
Debtor and its subsidiaries taken as a whole;
(ix) a Lien on any asset securing indebtedness (including
capitalized lease obligations) incurred or assumed for the purpose of
financing the purchase price (including capitalized lease payments in the
nature thereof) of such asset, provided that such Lien attaches only to
the asset acquired with the proceeds of such indebtedness and attaches
concurrently with or within ten (10) days following the acquisition
thereof;
(x) Liens securing Senior Debt (as defined in the Notes); and
(xi) Liens existing on the date hereof as disclosed on Schedule (1)
hereto.
"Person" means any natural person, corporation, firm, association,
partnership, joint venture, limited liability company, joint-stock company,
trust, unincorporated organization, government, governmental agency or
subdivision, or any other entity, whether acting in an individual, fiduciary or
other capacity.
"Receivables" has the meaning specified therefor in clause (ii) of
the definition of Collateral.
"Secured Obligations" means all obligations of the Debtor, whether
for fees, expenses or otherwise, now existing or hereafter arising under this
Agreement and the Notes, including, without limitation, full and prompt payment
and performance of (i) all principal and interest on the Notes when and as due,
whether at maturity, by acceleration, or otherwise and (ii) all obligations of
the Debtor at any time and from time to time under this Agreement.
"Trademarks" shall mean (i) all trademarks, trade names, trade
styles, service marks, prints and labels on which said trademarks, trade names,
trade styles and service marks have appeared or appear, designs and general
intangibles of like nature, now existing or hereafter adopted or acquired, all
right, title and interest therein and thereto, and all applications,
registrations and recordings thereof, including, without limitation,
applications, registrations and recordings in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
state or province thereof, or any other country or any political subdivision
thereof, all whether now owned or hereafter acquired by Debtor, including, but
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not limited to, those described in Schedule 2-A annexed hereto and made a part
hereof, and (ii) all reissues, extensions or renewals thereof and all licenses
thereof.
Section 2. Security Interests.
(a) As security for the payment and performance of all Secured
Obligations, and subject to the last sentence of this Section 2, the Debtor does
hereby create, grant and assign to the Secured Party, for its own benefit and
for the ratable benefit of the Investors, a continuing security interest in all
of the Collateral, whether now existing or hereafter arising or acquired and
wherever located, subject to the priority, if any, of Permitted Liens (the
"Security Interest"). Without limiting the foregoing, the Secured Party is
hereby authorized to file one or more financing statements, continuation
statements or such other documents, including, without limitation, the
Assignment of Security (Trademarks) attached hereto as Exhibit 1, for the
purpose of perfecting, confirming, continuing, enforcing or protecting the
Security Interest.
(b) The Debtor hereby assigns to the Secured Party all of Debtor's right,
title and interest in and to any and all moneys which may become due and payable
with respect to the Collateral under any policy insuring the Collateral (except
proceeds relating to tangible personal property which are applied to restoration
or replacement), including return of unearned premium, and shall cause any such
insurance company, after the occurrence of an Event of Default or, if prior to
the Maturity Date (as such term is defined in the Notes) acceleration of the
Notes ("Acceleration") to make payment directly to the Secured Party for
application to amounts outstanding under the Notes in accordance with the terms
of the Notes and, to the extent not provided therein, in such order as the
Secured Party shall determine.
Section 3. General Representations, Warranties and Covenants. The Debtor
represents, warrants and covenants, which representations, warranties and
covenants shall survive execution and delivery of this Agreement, as follows:
(a) This Agreement is made with full recourse to the Debtor and pursuant
to and upon all the warranties, representations, covenants, and agreements on
the part of the Debtor contained herein, in the Notes and otherwise made in
writing in connection herewith or therewith.
(b) Except for the Security Interest of the Secured Party therein, the
Debtor is, and as to Collateral acquired from time to time after the date hereof
the Debtor will be, the owner of all the Collateral free from any lien, security
interest, encumbrance or other right, title or interest of any Person (other
than Permitted Liens and licenses granted in the ordinary course of business)
and the Debtor 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
Secured Party (other than Permitted Liens and licenses granted in the ordinary
course of business).
(c) There is no financing statement, assignment of trademark, or
assignment of patent (or similar statement or instrument of registration under
the law of any jurisdiction) now on file or registered in any public office
covering any interest of any kind in the Collateral, or, to the knowledge of
Debtor intended to cover any such interest, which has not been terminated or
released by the secured party named therein and so long as the Notes remain
outstanding or any of the Secured Obligations of the Debtor remain unpaid, the
Debtor will not execute and there will not be on file in any public office any
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financing statement, assignment of trademark, or assignment of patent (or
similar statement or instrument of registration under the law of any
jurisdiction) or statements relating to the Collateral, except (i) financing
statements, assignment of trademark, or assignment of patent filed or to be
filed in respect of and covering the Security Interest of the Secured Party
hereby granted and provided for, (ii) those listed on Schedule 2, and (iii) with
respect to Permitted Liens.
(d) The chief executive office and chief place of business of the Debtor
is located at the address of the Debtor listed on the signature page hereof, and
the Debtor will not move its chief executive office and chief place of business
except to such new location as the Debtor may establish in accordance with the
last sentence of this Section 3(d). The originals of all Assigned Agreements and
all documents (as well as all duplicates thereof) evidencing all Receivables and
all other contract rights or accounts and other property of the Debtor and the
only original books of account and records of the Debtor relating thereto are,
and will continue to be, kept at such chief executive office or at such new
location as the Debtor may establish in accordance with the last sentence of
this Section 3(d). The Debtor shall establish no such new location until (i) it
shall have given to the Secured Party not less than 15 days' prior written
notice of its intention to do so, clearly describing such new location and
providing such other information in connection therewith as the Secured Party
may reasonably request, and (ii) with respect to such new location, it shall
have taken such action, satisfactory to the Secured Party (including, without
limitation, all action required by Section 7 hereof), to maintain the Security
Interest of the Secured Party in the Receivables intended to be granted at all
times fully perfected and in full force and effect.
(e) Debtor has no Collateral located outside of the State of New York or
other states in which inventory may be held on consignment.
(f) The name of the Debtor is as set forth on the signature page hereto
and the Debtor shall not change such name, conduct its business in any other
name or take title to the Collateral in any other name while this Agreement
remains in effect. The Debtor has never had any name, or conducted business
under any name in any jurisdiction, other than its name set forth on the
signature page hereto, during the past six years other than as set forth in
Schedule 2 annexed hereto.
(g) At the Debtor's own expense, the Debtor will: (i) without limiting the
provisions of the Notes, keep the Collateral fully insured at all times with
financially sound and responsible insurance carriers against loss or damage by
fire and other risks, casualties and contingencies and in such manner and to the
same extent that like properties are customarily so insured by other entities
engaged in the same or similar businesses similarly situated and keep adequate
insurance at all times against liability on account of damage to persons and
properties and under all applicable workers' compensation laws, by financially
sound and reputable insurers and in amounts usually carried by similar
businesses, for the benefit of the Debtor and the Secured Party, (ii) upon
request by the Secured Party, promptly deliver the insurance policies or
certificates thereof to the Secured Party, and (iii) keep the Collateral in good
condition at all times (normal wear and tear excepted). Upon any failure of the
Debtor to comply with its obligations pursuant to this Section 3(g), the Secured
Party may at its option and after 20 days' prior written notice to Debtor, and
without affecting any of its other rights or remedies provided herein or as a
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secured party under the NYUCC, procure the insurance protection it deems
necessary to be made to the Collateral and the cost of either or both of which
shall be a lien against the Collateral added to the amount of the indebtedness
secured hereby and payable on demand with interest at a rate per annum equal to
8%. (h) The Debtor will not use the Collateral in material violation of any
statute or ordinance or applicable insurance policy and will promptly pay all
material taxes and assessments levied against the Collateral; provided that the
Debtor shall not be required to pay any such tax or assessment that is being
contested in good faith and by proper proceedings and as to which appropriate
reserves are being maintained. (i) The Debtor will not sell, transfer, change
the registration, if any, dispose of, attempt to dispose of, substantially
modify (other than in the ordinary course of business) or abandon the Collateral
or any material part thereof other than sales of Inventory in the ordinary
course of business and the disposition of obsolete or worn-out Equipment in the
ordinary course of business.
(j) The Debtor will not assert against the Secured Party any claim or
defense which the Debtor may have against any seller of the Collateral or any
part thereof or against any other Person with respect to the Collateral or any
part thereof.
(k) The Debtor will indemnify and hold the Secured Party harmless from and
against any loss, liability, damage, costs and expenses whatsoever arising from
the Debtor's use, operation, ownership or possession of the Collateral or any
part thereof other than liabilities arising as a result of Secured Party's gross
negligence or willful misconduct.
(l) The Debtor will maintain the confidentiality of all customer lists and
not sell or otherwise dispose of such lists except that the Debtor shall deliver
copies thereof to the Secured Party upon its request, which may be made at any
time and from time to time after an Event of Default (as such term is defined in
the Notes).
(m) In addition to, and not in limitation of, the foregoing, with respect
to the Intellectual Property, the Debtor hereby represents and warrants:
(i) Subject to Permitted Liens, Debtor has the sole, full and clear
title to the Trademarks shown on Schedule 2-A hereto for the goods and
services covered by the registrations thereof and such registrations are
valid and subsisting.
(ii) Debtor will perform all acts and execute all documents, to the
extent reasonable, including, without limitation, assignments for security
in form suitable for filing with the United States Patent and Trademark
Office, substantially in the forms of Exhibits 1 and 2 hereof,
respectively, requested by the Secured Party at any time to evidence,
perfect, maintain, record and enforce the Secured Party's interest in the
Patents and Trademarks or otherwise in furtherance of the provisions of
this Agreement, and Debtor hereby authorizes the Secured Party to execute
and file one or more financing statements (and similar documents) or
copies thereof or of this Agreement with respect to the Intellectual
Property signed only by the Secured Party.
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(iii) None of the Trademarks have been abandoned or invalidated,
and, except to the extent that the Secured Party, upon 10 days' prior
written notice by the Debtors, shall consent, and except to the extent
such Debtor has a valid business purpose for doing otherwise (so long as
any action on the part of any such Debtor would not have a material
adverse effect on Debtor's business), Debtor (either itself or through
licensees) will continue to use the Trademarks on each and every trademark
class of goods in order to maintain the Trademarks in full force free from
any claim of abandonment for nonuse and Debtor will not (nor will it
permit any licensee thereof to) do any act or knowingly omit to do any act
whereby any Trademark may become abandoned or invalidated, and Debtor
shall notify the Secured Party immediately if it knows of any reason or
has reason to know that any pending application or issued Trademark may
become abandoned or invalidated.
(iv) Subject to Permitted Liens, Debtor has the sole, full and clear
title to each of the Patents shown on Schedule 2-B hereto and the issued
Patents are subsisting. None of the Patents has been abandoned or
dedicated, and, except to the extent that the Secured Party, upon 10 days'
prior written notice by the Debtor, shall consent, and except to the
extent such Debtor has a valid business purpose for doing otherwise (so
long as any action on the part of any such Debtor would not have a
material adverse effect on Debtor's business), Debtor will not do any act,
or omit to do any act, whereby the Patents may become abandoned or
dedicated and shall notify the Secured Party immediately if it knows of
any reason or has reason to know that any pending application or issued
Patent may become abandoned or dedicated.
(v) In no event shall Debtor, either itself or through any agent,
employee, licensee or designee, (A) file an application for the
registration of any Patent or Trademark with the United States Patent and
Trademark Office or any similar office or agency of the United States, any
state or province thereof, any other country or any political subdivision
thereof or (B) file any assignment of any patent or trademark, which
Debtor may acquire from a third party, with the United States Patent and
Trademark Office or any similar office or agency of the United States, any
state or province thereof, any other country or any political subdivision
thereof, unless Debtor shall promptly notify the Secured Party thereof,
and, upon request of the Secured Party, execute and deliver any and all
assignments, agreements, instruments, documents and papers as the Secured
Party may reasonably request to evidence the Secured Party's interest in
such Patent or Trademark and the goodwill and general intangibles of
Debtor relating thereto or represented thereby, and Debtor hereby
constitutes the Secured Party its attorney-in-fact to execute and file all
such writings for the foregoing purposes, all acts of such attorney being
hereby ratified and confirmed, such power being coupled with an interest
is irrevocable until the Secured Obligations are paid in full.
(vi) Except to the extent that the Secured Party, upon prior written
notice from Debtor, shall consent (which consent shall not be unreasonably
withheld), Debtor will not assign, sell, mortgage, lease, transfer,
pledge, hypothecate, grant a security interest in or lien upon, encumber,
grant an exclusive or non-exclusive license (except in the ordinary course
of business), or otherwise dispose of any of the Intellectual Property,
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and nothing in this Agreement shall be deemed a consent by the Secured
Party to any such action except as expressly permitted herein.
Notwithstanding the foregoing, the Debtor may sell its training center
operations.
(vii) As of the date hereof neither Debtor nor any affiliate or
subsidiary thereof owns any Patents or Trademarks registered in, or the
subject of pending applications in, the United States Patent and Trademark
Office or any similar office or agency of the United States, any state or
province thereof, any other country or any political subdivision thereof,
other than those described in Schedules 2-A and 2-B hereto.
(viii) Except to the extent Debtor has a valid business purpose for
doing otherwise (so long as any action on the part of Debtor would not
have a material adverse effect on Debtor's business), Debtor will take all
necessary steps in any proceeding before the United States Patent and
Trademark Office or any similar office or agency of the United States, any
state or province thereof, any other country or any political subdivision
thereof, to maintain each application and registration of the Trademarks
and Patents, including, without limitation, filing of renewals, affidavits
of use, affidavits of incontestability and opposition, interference and
cancellation proceedings (except to the extent that dedication,
abandonment or invalidation is permitted under paragraphs (ii) and (iii)
hereof).
(ix) Debtor agrees that the Secured Party does not assume, and shall
have no responsibility for, the payment of any sums due or to become due
under any agreement or contract included in the Intellectual Property or
the performance of any obligations to be performed under or with respect
to any such agreement or contract by Debtor, and the Debtor hereby agrees
to indemnify and hold the Secured Party harmless with respect to any and
all claims by any person relating thereto.
(x) Debtor agrees that if it, or any affiliate or subsidiary
thereof, learns of any use by any person of any term or design likely to
cause confusion with any Trademark, it shall promptly notify the Secured
Party of such use and, if requested by the Secured Party, shall join with
the Secured Party, at the Secured Party's expense, in such action as the
Secured Party, in its reasonable discretion may deem advisable for the
protection of the Secured Party's interest in and to such Trademarks.
(xi) All licenses of Trademarks and Patents which Debtor has granted
to third parties are set forth in Schedule B hereto.
(xii) If Debtor shall acquire title to any new Trademarks or
Patents, the provisions of this Agreement shall automatically apply
thereto. Debtor shall promptly notify the Secured Party in writing of any
rights to any new Trademarks or Patents acquired by Debtor after the date
hereof and of any registrations issued or applications for registration
made after the date hereof. Concurrently with the filing of an application
for registration for any Trademarks or Patents, Debtor shall execute,
deliver and record in all places where this Agreement is recorded an
appropriate agreement, substantially in the form hereof, with appropriate
insertions, or an amendment to this Agreement, in form and substance
reasonably satisfactory to the Secured Party, pursuant to which Debtor
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shall grant a security interest to the extent of its interest in such
registration as provided herein to the Secured Party.
Section 4. Special Provisions Concerning Assigned Agreements. The Debtor
represents, warrants and agrees as follows:
(a) The Assigned Agreements constitute the legal, valid and binding
obligations of the Debtor and, to the best of its knowledge, the other parties
thereto, enforceable in accordance with their respective terms, except to the
extent that enforceability may be limited by applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting the enforcement of
creditors' rights or by the effect of general equitable principles.
(b) The Debtor will use best efforts to abide by, perform and discharge
each and every material obligation, covenant and agreement to be performed by
the Debtor under the Assigned Agreements.
(c) At the request of the Secured Party, and at the sole cost and expense
of the Debtor, the Debtor will use best efforts to enforce or secure the
performance of each and every material obligation, covenant, condition and
agreement contained in the Assigned Agreements to be performed by the other
parties thereto.
(d) The Debtor will not modify, amend or agree to vary any of the Assigned
Agreements in any material respect other than in the ordinary course of
business, or otherwise act or fail to act in a manner likely (directly or
indirectly) to entitle any party thereto to claim that the Debtor is in material
default under the terms thereof.
(e) The Debtor will not terminate or permit the termination of any
material Assigned Agreement, except in accordance with its terms, other than in
the ordinary course of business.
(f) Without the prior written consent of the Secured Party, the Debtor
will not, other than in the ordinary course of business, waive or in any manner
release or discharge any party to any material Assigned Agreement from any of
the material obligations, covenants, conditions and agreements to be performed
by it under such Assigned Agreement including, without limitation, the
obligation to make all payments in the manner and at the time and places
specified.
(g) If the Secured Party so requests after the occurrence and continuance
of an Event of Default and, if prior to the Maturity Date, Acceleration, the
Debtor will hold any payments received by it which are assigned and set over to
the Secured Party by this Agreement for and on behalf of the Secured Party and
turn them promptly over to the Secured Party forthwith in the same form in which
they are received (together with any necessary endorsement) for application to
amounts outstanding under the Notes in accordance with the terms of the Notes
and, to the extent not provided therein, in such order as the Secured Party
shall determine.
(h) The Debtor will appear in and defend every action or proceeding
arising under, growing out of or in any manner connected with the Assigned
Agreements or the obligations, duties or liabilities of the Debtor and any
assignee thereunder.
11
(i) Should the Debtor fail to make any payment or to do any act as herein
provided after 30 days' notice by the Secured Party, the Secured Party may (but
without obligation on the Secured Party's part to do so and without notice to or
demand on the Debtor and without releasing the Debtor from any obligation
hereunder) make or do the same in such manner and to such extent as the Secured
Party may deem reasonably necessary to protect the Security Interests provided
hereby, including specifically, without limiting the general powers, the right
to appear in and defend any action or proceeding purporting to affect the
Security Interests provided hereby and the Debtor, and the Secured Party may
also perform and discharge each and every obligation, covenant and agreement of
the Debtor contained in any Assigned Agreement and, in exercising any such
powers, pay necessary costs and expenses, employ counsel and incur and pay
reasonable attorneys' fees.
(j) Upon the request of the Secured Party, the Debtor will send to the
Secured Party copies of all material notices, documents and other papers
furnished or received by it with respect to any of the Assigned Agreements.
Section 5. Special Provisions Concerning Receivables.
(a) As of the time when each Receivable arises, the Debtor shall be deemed
to have warranted as to each such Receivable that such Receivable and all papers
and documents relating thereto are genuine and in all respects what they purport
to be, and that all papers and documents relating thereto:
(i) will be signed by the account debtor named therein (or such
account debtor's duly authorized agent) or otherwise be binding on the
account debtor;
(ii) will represent the genuine, legal, valid and binding obligation
of the account debtor evidencing indebtedness unpaid and owed by such
account debtor arising out of the performance of labor or services or the
sale and delivery of merchandise or both;
(iii) to the extent evidenced by writings, will be the only original
writings evidencing and embodying such obligation of the account debtor
named therein; and
(iv) will be in compliance and will conform, in all material
respects, with all applicable federal, state and local laws (including
applicable usury laws) and applicable laws of any relevant foreign
jurisdiction.
(b) The Debtor will keep and maintain at the Debtor's own cost and expense
satisfactory and complete records of the Receivables, including, but not limited
to, records of all payments received, all credits granted thereon, all
merchandise returned and all other dealings therewith, and the Debtor will make
the same available to the Secured Party, at the Debtor's own cost and expense,
at any and all reasonable times during the existence of an Event of Default upon
demand of the Secured Party. The Debtor shall, at the Debtor's own cost and
expense, deliver the Receivables (including, without limitation, all documents
evidencing the Receivables) and such books and records to the Secured Party or
to its representatives upon its demand at any time during the existence of an
Event of Default and, if prior to the Maturity Date, Acceleration. If the
12
Secured Party shall so request during the existence of an Event of Default, the
Debtor shall legend, in form and manner satisfactory to the Secured Party, the
Receivables and other books, records and documents of the Debtor evidencing or
pertaining to the Receivables with an appropriate reference to the fact that the
Receivables have been assigned to the Secured Party and that the Secured Party
has a security interest therein.
(c) Except in the ordinary course of business prior to an Event of Default
and, if prior to the Maturity Date, Acceleration, the Debtor will not rescind or
cancel any indebtedness evidenced by any Receivable or modify any term thereof
or make any adjustment with respect thereto, or extend or renew the same, or
compromise or settle any dispute, claim, suit or legal proceeding relating
thereto, or sell any Receivable or interest therein, without the prior written
consent of the Secured Party, except that the Debtor may grant discounts in
connection with the prepayment of any Receivable in an amount which is customary
in the line of business in which the Debtor is engaged and consistent with the
Debtor's past practices.
(d) The Debtor will duly fulfill all obligations on its part to be
fulfilled under or in connection with the Receivables and will do nothing to
impair the rights of the Secured Party in the Receivables.
(e) The Debtor shall endeavor to collect or cause to be collected from the
account debtor named in each Receivable, as and when due (including, without
limitation, Receivables which are delinquent, such Receivables to be collected
in accordance with generally accepted lawful collection procedures) any and all
amounts owing under or on account of such Receivable, and credit forthwith (on a
daily basis) upon receipt thereof all such amounts as are so collected to the
outstanding balance of such Receivable. The costs and expenses (including
attorney's fees) of collection, whether incurred by the Debtor or the Secured
Party, shall be borne by the Debtor.
(f) If any of the Receivables becomes evidenced by an Instrument (other
than a check received in payment of a Receivable and deposited in the ordinary
course of business), the Debtor will notify the Secured Party thereof, and, upon
request by the Secured Party after an Event of Default, promptly deliver such
Instrument to the Secured Party appropriately endorsed to the order of the
Secured Party as further security for the satisfaction in full of the Secured
Obligations.
(g) Upon request of the Secured Party, at any time when an Event of
Default and, if prior to the Maturity Date, Acceleration shall exist, the Debtor
shall promptly notify (in manner, form and substance satisfactory to the Secured
Party) all Persons who are at any time obligated under any Receivable that the
Secured Party possesses a Security Interest in such Receivable and that all
payments in respect thereof are to be made to such account as the Secured Party
directs.
Section 6. Special Provisions Concerning Equipment. The Debtor will do
nothing to impair the rights of the Secured Party in the Equipment. The Debtor
shall cause the Equipment to at all times constitute and remain personal
property. The Debtor retains all liability and responsibility in connection with
the Equipment and the liability of the Debtor to pay the Secured Obligations
shall in no way be affected or diminished by reason of the fact that such
13
Equipment may be lost, destroyed, stolen, damaged or for any reason whatsoever
unavailable to the Debtor.
Section 7. Financing Statements; Documentary Stamp Taxes.
(a) The Debtor will, at its own expense, make, execute, endorse,
acknowledge, file and/or deliver to the Secured Party from time to time such
lists, descriptions and designations of Inventory, warehouse receipts, bills of
lading, documents of title, vouchers, invoices, schedules, confirmatory
assignments, conveyances, financing statements, transfer endorsements, powers of
attorney, 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 Secured Party
reasonably deems appropriate or advisable to perfect, preserve or protect its
Security Interest in the Collateral. The Debtor hereby constitutes the Secured
Party its attorney-in-fact to execute and file in the name and on behalf of the
Debtor such additional financing statements as the Secured Party may reasonably
request, such acts of such attorney being hereby ratified and confirmed; such
power, being coupled with an interest, is irrevocable until the Secured
Obligations are paid in full. Further, to the extent permitted by applicable
law, the Debtor authorizes the Secured Party to file any such financing
statements without the signature of the Debtor and Secured Party shall use
reasonable efforts to notify Debtor of any such filings. The Debtor will pay all
applicable filing fees and related expenses in connection with any such
financing statements.
(b) The Debtor agrees to procure, pay for, affix to any and all documents
and cancel any documentary tax stamps required by and in accordance with,
applicable law and the Debtor will indemnify and hold the Secured Party harmless
against any liability (including interest and penalties) in respect of such
documentary stamp taxes.
Section 8. Special Provisions Concerning Remedies and Sale.
(a) In addition to any rights and remedies now or hereafter granted under
applicable law and not by way of limitation of any such rights and remedies,
during the existence of an Event of Default and, if prior to the Maturity Date,
Acceleration, the Secured Party shall have all of the rights and remedies of a
secured party under the NYUCC as enacted in any applicable jurisdiction in
addition to the rights and remedies provided herein, in the Notes and in any
other agreement executed in connection with the Notes whereby the Debtor has
granted any Lien to the Secured Party. Without in any way limiting the
foregoing, at any time when an Event of Default and, if prior to the Maturity
Date, Acceleration shall exist upon the giving of notice to the Debtor of
Secured Party's intent to pursue any one or all of the following or any other
remedies the Secured Party shall have the right, in the name of the Debtor or in
the name of the Secured Party or otherwise:
(i) to ask for, demand, collect, receive, compound and give
acquittance for the Receivables or any part thereof;
(ii) to extend the time of payment of, compromise or settle for
cash, credit or otherwise, but only upon commercially reasonable terms and
conditions, any of the Receivables;
14
(iii) to endorse the name of the Debtor on any checks, drafts or
other orders or instruments for the payment of moneys payable to the
Debtor which shall be issued in respect of any Receivable;
(iv) to file any claims, commence, maintain or discontinue any
actions, suits or other proceedings deemed by the Secured Party necessary
or advisable for the purpose of collecting or enforcing payment of any
Receivable;
(v) to make test verifications of the Receivables or any portion
thereof;
(vi) to notify any or all account debtors under any or all of the
Receivables to make payment thereof directly to the Secured Party for the
account of the Secured Party and to require the Debtor to forthwith give
similar notice to the account debtors;
(vii) to require the Debtor forthwith to account for and transmit to
the Secured Party in the same form as received all proceeds (other than
physical property) of collection of Receivables received by the Debtor
and, until so transmitted, to hold the same in trust for the Secured Party
and not commingle such proceeds with any other funds of the Debtor;
(viii) to take possession of any or all of the Collateral and, for
that purpose, to enter, with the aid and assistance of any Person or
Persons and with or without legal process, any premises where the
Collateral, or any part thereof, are, or may be, placed or assembled, and
to remove any of such Collateral;
(ix) to execute any instrument and do all other things necessary and
proper to protect and preserve and realize upon the Collateral and the
other rights contemplated hereby;
(x) upon notice to such effect, to require the Debtor to deliver, at
the Debtor's expense, any or all Collateral to the Secured Party at a
place designated by the Secured Party;
(xi) without obligation to resort to other security, at any time and
from time to time, to sell, re-sell, assign and deliver all or any of the
Collateral, in one or more parcels at the same or different times, and all
right, title and interest, claim and demand therein and right of
redemption thereof, at public or private sale, for cash, upon credit or
for future delivery, and at such price or prices and on such terms as the
Secured Party may determine, with the amounts realized from any such sale
to be applied to the Secured Obligations in the manner determined by the
Secured Party;
(xii) to enforce (and shall have the exclusive right to enforce), at
any time (without assuming any liability or obligation thereunder),
against any licensee or sublicensee, all rights and remedies of Debtor in,
to and under any one or more license agreements with respect to the
Intellectual Property, and take or refrain from taking any action under
any thereof, and Debtor hereby releases the Secured Party from, and agrees
15
to hold the Secured Party free and harmless from and against any claims
arising out of, any action taken or omitted to be taken with respect to
any such license agreement;
(xiii) in addition to the foregoing, in order to implement the
assignment, sale or other disposal of any of the Intellectual Property
pursuant to this Agreement, the Secured Party may, at any time, pursuant
to the authority granted in the Power of Attorney described herein (such
authority becoming effective on the occurrence or continuation as
hereinabove provided of an Event of Default), execute and deliver on
behalf of the applicable Debtor, one or more instruments of assignment of
the Patents or Trademarks (or any application or registration thereof), in
form suitable for filing, recording or registration in any country. Debtor
agrees to pay when due all reasonable costs incurred in any such transfer
of the Patents or Trademarks, including any taxes, fees and reasonable
attorneys' fees, and all such costs shall be added to the Secured
Obligations.
(b) In the event of any license, assignment, sale or other disposition of
the Intellectual Property, or any of it, after the occurrence or continuation as
hereinabove provided of an Event of Default, Debtor shall supply its know-how
and expertise relating to the manufacture and sale of the products bearing or in
connection with the Trademarks or Patents, and its customer lists and other
records relating to the Trademarks or Patents and to the distribution of said
products, to the Secured Party or its designee.
(c) The Secured Party shall not be obligated to do any of the acts
hereinabove authorized, but in the event that the Secured Party elects to do any
such act, the Secured Party shall not be responsible to the Debtor except for
its gross negligence or willful misconduct.
(d) Such remedies may be exercised from time to time separately or in
combination with respect to or all or any part of the Collateral and are in
addition to and not in substitution for any other rights of the Secured Party,
however created. The Secured Party may proceed by way of any action, suit or
other proceeding available at law or in equity and no right, remedy or power of
the Secured Party shall be exclusive of or dependent on any other. The Secured
Party may exercise any of its rights, remedies or powers separately or in
combination and at any time.
(e) The Secured Party shall not be bound to exercise any such right,
remedy or power and the exercise of such right, remedy and power shall be
without prejudice to the rights of the Secured Party in respect of the Secured
Obligations including the right to claim for any deficiency. At any time when an
Event of Default and, if prior to the Maturity Date, Acceleration shall exist,
the Secured Party may take legal proceedings for the appointment of a receiver
or receivers (to which the Secured Party shall be entitled as a matter of right)
to take possession of the Collateral pending the sale thereof pursuant either to
the powers of sale granted by this Agreement or to a judgment, order or decree
made in any judicial proceeding for the foreclosure or involving the enforcement
of this Agreement. If, after the exercise of any or all of such rights and
remedies, any of the Secured Obligations shall remain unpaid, the Debtor shall
remain liable for any deficiency. After the indefeasible payment in full of the
Secured Obligations, any proceeds of the Collateral received or held by the
Secured Party shall be turned over to the Debtor and the Collateral shall be
reassigned to the Debtor by the Secured Party without recourse to the Secured
Party and without any representations, warranties or agreements of any kind.
16
(f) Upon any sale of any of the Collateral, whether made under the power
of sale hereby given or under judgment, order or decree in any judicial
proceeding for the foreclosure or involving the enforcement of this Agreement:
(i) the Secured Party may, to the extent permitted by law, bid for
and purchase the property being sold, and upon compliance with the terms
of sale may hold, retain and possess and dispose of such property in its
own absolute right without further accountability, and may, in paying the
purchase money therefor, deliver any Notes or claims for interest thereon
and any other instruments evidencing the Secured Obligations or agree to
the satisfaction of all or a portion of the Secured Obligations in lieu of
cash in payment of the amount which shall be payable thereon, and the
Notes and such instruments, in case the amounts so payable thereon shall
be less than the amount due thereon, shall be returned to the Secured
Party after being appropriately stamped to show partial payment;
(ii) the Secured Party may make and deliver to the purchaser or
purchasers a good and sufficient deed, xxxx of sale and instrument of
assignment and transfer of the property sold;
(iii) the Secured Party is hereby irrevocably appointed the true and
lawful attorney-in-fact of the Debtor in its name and stead, to make all
necessary deeds, bills of sale and instruments of assignment and transfer
of the property thus sold and for such other purposes as are necessary or
desirable to effectuate the provisions (including, without limitation,
this Section 8) of this Agreement, and for that purpose it may execute and
deliver all necessary deeds, bills of sale and instruments of assignment
and transfer, and may substitute one or more Persons with like power, the
Debtor hereby ratifying and confirming all that its said attorney, or such
substitute or substitutes, shall lawfully do by virtue hereof; but if so
requested by the Secured Party or by any purchaser, the Debtor shall
ratify and confirm any such sale or transfer by executing and delivering
to the Secured Party or to such purchaser all property, deeds, bills of
sale, instruments or assignment and transfer and releases as may be
designated in any such request;
(iv) all right, title, interest, claim and demand whatsoever, either
at law or in equity or otherwise, of the Debtor of, in and to the property
so sold shall be divested; such sale shall be a perpetual bar both at law
and in equity against the Debtor, its successors and assigns, and against
any and all Persons claiming or who may claim the property sold or any
part thereof from, through or under the Debtor, its successors or assigns;
(v) the receipt of the Secured Party or of the officer thereof
making such sale shall be a sufficient discharge to the purchaser or
purchasers at such sale for his or their purchase money, and such
purchaser or purchasers, and his or their assigns or personal
representatives, shall not, after paying such purchase money and receiving
such receipt of the Secured Party or of such officer therefor, be obliged
to see to the application of such purchase money or be in any way
answerable for any loss, misapplication or nonapplication thereof; and
17
(vi) to the extent that it may lawfully do so, and subject to any
legal requirement that the Secured Party act in a commercially reasonable
manner, the Debtor agrees that it will not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit or advantage
of, any appraisement, valuation, stay, extension or redemption laws, or
any law permitting it to direct the order in which the Collateral or any
part thereof shall be sold, now or at any time hereafter in force, which
may delay, prevent or otherwise affect the performance or enforcement of
this Agreement, the Notes or any other agreement executed in connection
with the Notes whereby the Debtor has granted any Lien to the Secured
Party, and the Debtor hereby expressly waives all benefit or advantage of
any such laws and covenants that it will not hinder, delay or impede the
execution of any power granted or delegated to the Secured Party in this
Agreement, but will suffer and permit the execution of every such power as
though no such laws were in force. In the event of any sale of Collateral
pursuant to this Section, the Secured Party shall, at least 10 days before
such sale, give the Debtor written, telecopied or telex notice of its
intention to sell.
(g) Any receiver appointed by the Secured Party shall be vested with the
rights and remedies which could be exercised by the Secured Party in respect of
the Debtor or the Collateral and such other powers and discretions as are
granted in the instrument of appointment and any instrument or instruments
supplemental thereto. The identity of the received, any replacement thereof and
any remuneration thereof shall be within the sole and unfettered discretion of
the Secured Party. Any receiver appointed by the Secured Party shall act as
agent for the Secured Party for the purposes of taking possession of the
Collateral, but otherwise and for all other purposes (except as provided below
and with respect to its discharge), as agent for the Debtor or as agent for the
Secured Party (but in all cases shall take direction from the Secured Party) as
the Secured Party may determine in its sole and unfettered discretion. The
Debtor agrees to ratify and confirm all actions of the receiver acting as agent
for the Debtor, and to release and indemnify the receiver in respect of all such
actions. The Secured Party, in appointing or refraining from appointing any
receiver, shall not incur liability to the receiver, the Debtor or otherwise and
shall not be responsible for any misconduct or negligence of such receiver.
Section 9. Application of Moneys.
(a) Except as otherwise provided herein or in the Notes, all moneys which
the Secured Party shall receive, in accordance with the provisions hereof, shall
be applied (to the extent thereof) in the following manner: First, to the
payment of all costs and expenses reasonably incurred in connection with the
administration and enforcement of, or the preservation of any rights under, this
Agreement or any of the reasonable expenses and disbursements of the Secured
Party (including, without limitation, the reasonable fees and disbursements of
its counsel and agents); Second, to the payment of all Secured Obligations
arising out of the Notes in accordance with the terms of the Notes and, if not
therein provided, in such order as the Secured Party may determine; and Third,
to the payment of all other Secured Obligations in such order as the Secured
Party may determine.
(b) If after applying any amounts which the Secured Party has received in
respect of the Collateral any of the Secured Obligations remain unpaid, the
Debtor shall continue to be liable for any deficiency, together with interest.
18
Section 10. Fees and Expenses, etc. Any and all reasonable fees, costs and
expenses of whatever kind or nature, including but not limited to the reasonable
attorneys' fees and legal expenses incurred by the Secured Party in connection
with this Agreement, the filing or recording of any documents (including all
taxes in connection therewith) in public offices, the payment or discharge of
any taxes, counsel fees, maintenance fees, fees and other costs relating to the
encumbrances or otherwise protecting, maintaining, preserving the Collateral, or
in defending or prosecuting any actions or proceedings arising out of or related
to the Collateral, shall be borne and paid by the Debtor on written demand by
the Secured Party setting forth in reasonable detail the nature of such expenses
and until so paid shall be added to the principal amount of the Secured
Obligations and shall bear interest at the rate accruing thereon. In addition,
the Debtor will pay, and indemnify and hold the Secured Party harmless from and
against, any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever with respect to the Collateral, including (without limitation)
claims of patent or trademark infringement and any claim of unfair competition
or anti-trust violation, other than liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements arising
as a result of Secured Party's gross negligence or willful misconduct.
Section 11. Power of Attorney.
Concurrently with the execution and delivery hereof, the Debtor is
executing and delivering to the Secured Party, in the form of Exhibit 2 hereto,
three originals of a Power of Attorney for the implementation of the assignment,
sale or other disposal of the Collateral, including the Trademarks and Patents
pursuant to this Agreement and Debtor hereby releases the Secured Party from any
claims, causes of action and demands at any time arising out of or with respect
to any actions taken or omitted to be taken by the Secured Party under the
powers of attorney granted herein, other than actions taken or omitted to be
taken through the gross negligence or willful misconduct of the Secured Party.
Section 12. Miscellaneous.
(a) All notices, communications and distributions hereunder shall be in
writing (including telecopied communication) and mailed by certified mail,
telecopied, personally delivered or delivered by Federal Express or other
reputable overnight courier service, if to the Debtor addressed to it at its
address set forth opposite its signature below, if to the Secured Party,
addressed to it at its address set forth opposite its signature below, or as to
either party at such other address as shall be designated by such party in a
written notice to such other party complying as to delivery with the terms of
this Section. All such notices and other communications shall be effective (i)
if mailed by certified mail, three days after the date of deposit thereof with
the U.S. Postal Service, properly addressed with postage prepaid, (ii) if
telecopied, upon receipt by the addressee, (iii) if personally delivered, upon
such delivery and (iv) if delivered by overnight courier service, on the
business day following delivery thereof to such courier service in time for
next-business-day delivery.
(b) No delay on the part of the Secured Party in exercising any of its
rights, remedies, powers and privileges hereunder or partial or single exercise
thereof, shall constitute a waiver thereof. None of the terms and conditions of
this Agreement may be changed, waived, modified or varied in any manner
19
whatsoever unless in writing duly signed by the Debtor and the Secured Party. No
notice to or demand on the Debtor in any case shall entitle the Debtor to any
other or further notice or demand in similar or other circumstances or
constitute a waiver of any of the rights of the Secured Party to any other or
further action in any circumstances without notice or demand.
(c) The obligations of the Debtor hereunder shall remain in full force and
effect without regard to, and shall not be impaired by, (i) any bankruptcy,
insolvency, reorganization, arrangement, readjustment, composition, liquidation
or the like of the Debtor; (ii) any exercise or non-exercise, or any waiver of,
any right, remedy, power or privilege under or in respect of the Notes, this
Agreement or any other agreement executed in connection with the Notes whereby
the Debtor has granted any Lien to the Secured Party or any other agreement
executed in connection with any of the foregoing, the Secured Obligations or any
security for any of the Secured Obligations; or (iii) any amendment to or
modification of any of the foregoing; whether or not the Debtor shall have
notice or knowledge of any of the foregoing. The rights and remedies of the
Secured Party herein provided are cumulative and not exclusive of any rights or
remedies which the Secured Party would otherwise have.
(d) This Agreement shall be binding upon the Debtor and its successors and
assigns and shall inure to the benefit of the Secured Party and its successors
and assigns, except that the Debtor may not transfer or assign any of its
obligations, rights or interest hereunder without the prior written consent of
the Secured Party and any such purported assignment by the Debtor shall be void.
All agreements, representations and warranties made herein shall survive the
execution and delivery of this Agreement. (e) The descriptive 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.
(f) 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.
(g) All rights, remedies and powers provided by this Agreement may be
exercised only to the extent that the exercise thereof does not violate any
applicable provision of law, and the provisions hereof are intended to be
subject to all applicable mandatory provisions of law that may be controlling
and to be limited to the extent necessary so that they will not render this
Agreement invalid, unenforceable in whole or in part or not entitled to be
recorded, registered or filed under the provisions of any applicable law.
(h) 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 except to the extent that matters of title, or creation, perfection
and priority of the Security Interests created hereby, or procedural issues of
foreclosure are required to be governed by the laws of the state in which the
Collateral, or part thereof, is located.
20
(i) It is expressly agreed, anything herein, in the Notes or in any other
agreement or instrument executed in connection with the Notes to the contrary
notwithstanding, that the Debtor shall remain liable to perform all of the
obligations, if any, assumed by it with respect to the Collateral and the
Secured Party shall not have any obligations or liabilities with respect to any
Collateral by reason of or arising out of this Agreement, nor shall the Secured
Party be required or obligated in any manner to perform or fulfill any of the
obligations of the Debtor under or pursuant to any or in respect of any
Collateral.
(j) 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 counterparts taken
together shall be deemed to constitute one and the same instrument.
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.
EB2B COMMERCE, INC.
as Debtor
By:
------------------------------------
Name:
Title:
----------------------------------------
Xxxxxx Xxxxxx, as Investor
Representative and Secured Party
21
Schedule 1
LOCATION OF CERTAIN INVENTORY AND EQUIPMENT COLLATERAL
Current place(s) of business of the Debtor:
-------------------------------------------
Corporate Headquarters:
000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000
00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
Locations of Inventory and Equipment:
-------------------------------------
Same as above
Currently Existing Lien Which Constitutes a Permitted Lien:
-----------------------------------------------------------
Security interest of holders of 7% senior subordinated secured convertible notes
issued on January 11, 2002, but subject to the subordination agreement related
thereto.
22
Schedule 2
EXISTING FINANCING STATEMENTS
Date of Number of Description Amount of
Secured Financing Financing Location of Indebtedness
Party Statement Statement Filed Collateral Secured
----- --------- --------- ----- ---------- -------
Cisco
Systems
Capital
Corporation 12/4/00 232456 NYSOS
--------------------------------------------------------------------------------
OTHER NAMES UNDER WHICH DEBTOR HAS CONDUCTED BUSINESS
DynamicWeb Enterprises, Inc.
Seahawk Capital Corporation
Seahawk Oil International, Inc.
Netlan Inc.
23
Schedule 2-A
TRADEMARKS
----------
Trademark Status/Registration Date Registration Number
--------- ------------------------ -------------------
EB2B Pending 75/677470
EB2B Commerce Pending 75/677469
XX0X.xxx Pending 75/677471
DynamicWeb Active 2380214
NETLAN Active 1984055
Former Netlan N Logo Design Active 1979722
Schedule 2-B
PATENTS
-------
NONE
The definition of Intellectual Property shall also include the Domain Names
listed below.
DOMAIN NAMES
------------
Description Domain Name
----------- -----------
EB2B Domain Name
EB2B Commerce Domain Name
XX0X.xxx Domain Name
EB2B Buy Domain Name
DynamicWeb Domain Name
Xxxxxx.xxx Domain Name
Xxxxxxxxxxxx.xxx Domain Name
Xxxxxxxx.xxx Domain Name
Xxxxxxxxxxxxxx.xxx Domain Name
Xxxxxxxx.xxx Domain Name
24
Schedule B
LICENSES
25
Exhibit 1 to Security Agreement
SCHEDULE 1-A TO ASSIGNMENT FOR SECURITY
(TRADEMARKS)
WHEREAS, eB2B Commerce, Inc., a New Jersey corporation (herein
referred to as "Assignor"), has adopted, used and is using the trademarks listed
on Schedule 1-A annexed hereto as part hereof (the "Trademarks");
WHEREAS, Assignor is obligated to Xxxxxx Xxxxxx as investor
representative (referred to herein as the "Assignee") for the investors to whom
Assignor has issued a series of 7% senior subordinated secured convertible notes
in the aggregate principal amount of up to $1,350,000 and Assignor has entered
into a Security Agreement dated the date hereof (the "Agreement") in favor of
Assignee; and
WHEREAS, pursuant to the Agreement, Assignor has assigned to
Assignee and granted to Assignee a security interest in, and mortgage on, all
right, title and interest of Assignor in and to the Trademarks, together with
the goodwill of the business symbolized by the Trademarks and the applications
and registrations thereof, and all proceeds thereof, including, without
limitation, any and all causes of action which may exist by reason of
infringement thereof (the "Collateral"), to secure the payment, performance and
observance of the Secured Obligations (as defined in the Agreement);
NOW, THEREFORE, for good and valuable consideration, receipt of
which is hereby acknowledged, Assignor does hereby further assign unto Assignee
and grant to Assignee a security interest in, and mortgage on, the Collateral to
secure the prompt payment, performance and observance of the Secured
Obligations.
Assignor does hereby further acknowledge and affirm that the rights
and remedies of Assignee with respect to the assignment of, security interest in
and mortgage on the Collateral made and granted hereby are more fully set forth
in the Agreement, the terms and provisions of which are hereby incorporated
herein by reference as if fully set forth herein.
Assignee's address is 000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 .
IN WITNESS WHEREOF, Assignor has caused this Assignment to be duly
executed by its officer thereunto duly authorized as of the day of
________________, 2002.
EB2B COMMERCE, INC.
By:
-------------------------------
Name:
-------------------------
Title:
-------------------------
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SCHEDULE 1-A TO ASSIGNMENT FOR SECURITY
TRADEMARKS
Trademark Status/Registration Date Registration Number
--------- ------------------------ -------------------
EB2B Pending 75/677470
EB2B Commerce Pending 75/677469
XX0X.xxx Pending 75/677471
DynamicWeb Active 2380214
NETLAN Active 1984055
Former Netlan N Logo Design Active 1979722
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Exhibit 2 to
Security Agreement
SPECIAL POWER OF ATTORNEY
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
KNOW ALL MEN BY THESE PRESENTS, THAT eB2B Commerce, Inc., a New
Jersey corporation with its principal office at 000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00000 (hereinafter called "Assignor") hereby appoints and constitutes Xxxxxx
Xxxxxx (referred to herein as the "Assignee") for the investors to whom Assignor
has issued a series of 7% senior subordinated secured convertible notes in the
aggregate principal amount of up to $1,350,000 its true and lawful attorney,
with full power of substitution, and with full power and authority to perform
the following acts on behalf of Assignor:
1. For the purpose of assigning, selling, licensing or
otherwise disposing of all right, title and interest of Assignor in
and to any letters patent of the United States or any other country
or political subdivision thereof, and all registrations, recordings,
reissues, continuations, continuations-in-part and extensions
thereof, and all pending applications therefor, and for the purpose
of the recording, registering and filing of, or accomplishing any
other formality with respect to, the foregoing, to execute and
deliver any and all agreements, documents, instruments of assignment
or other papers necessary or advisable to effect such purpose;
2. For the purpose of assigning, selling, licensing or
otherwise disposing of all right, title and interest of Assignor in
and to any trademarks, trade names, trade styles and service marks,
and all registrations, recordings, reissues, extensions and renewals
thereof, and all pending applications therefor, and for the purpose
of the recording, registering and filing of, or accomplishing any
other formality with respect to, the foregoing, to execute and
deliver any and all agreements, documents, instruments of assignment
or other papers necessary or advisable to effect such purpose;
3. To execute any and all documents, statements, certificates
or other papers necessary or advisable in order to obtain the
purposes described above as Assignee may in its sole discretion
determine.
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This power of attorney is made pursuant to a Security Agreement,
dated the date hereof, between Assignor and Assignee and takes effect solely for
the purposes of Section 8 thereof and is subject to the conditions thereof and
may not be revoked until the payment in full of all "Secured Obligations" as
defined in such Security Agreement.
Dated: ___________, 2002
[Corporate Seal] EB2B COMMERCE INC.
By:
-------------------------------
Name:
-------------------------
Title:
-------------------------
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this __________ day of _______ 200_, before me personally
appeared [__________________], to me known, who, being by me duly sworn, did
depose and say that he resides at __________________ and that he is
__________________ of eB2B Commerce, Inc., the New Jersey corporation described
in and which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was affixed pursuant to authority of the Board of Directors of said
corporation, and that he signed his name thereto pursuant to such authority.
----------------------------------
Notary Public
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