SECURITY AGREEMENT
Exhibit
10.4
SECURITY
AGREEMENT (as amended, restated, supplemented or otherwise modified from time to
time, this “Agreement”)
dated as of June 30, 2009 between the signatories listed on Schedule I to this
Agreement (each, an “Obligor” and together, the
“Obligors”), and
NORTHLIGHT FINANCIAL LLC, a Delaware limited liability Obligor, individually and
in its capacity as Collateral Agent (together with its successors and assigns in
each such capacity, the “Secured Party”).
WITNESSETH:
WHEREAS, as of the date hereof, the
Secured Party has made a loan (the “Loan”) to Composite Technology
Corporation (“CTC”), as
evidenced by that certain Note of even date herewith in the principal amount of
$5,000,000 (as the
same may be amended, supplemented, restated or modified and in effect from time
to time, the “Note”);
WHEREAS,
each of CTC Cable Corporation (“Cable”) and XxXxxx, Inc.
(“XxXxxx”), each a
wholly-owned subsidiary of CTC, has guaranteed the Note;
and
WHEREAS, to induce the Secured Party to
make the Loan, each Obligor has agreed to pledge and grant a security interest
in all of its right, title and interest in and to its Collateral (as hereinafter
defined) as security for the Note,
NOW,
THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
each Obligor and the Secured Party agree as follows:
Section
1. Definitions. Capitalized
terms used herein without definition and defined in the Loan Agreement are used
herein as defined therein. In addition, as used herein:
“Accounts” means any “account,”
as such term is defined in the Uniform Commercial Code, and, in any event, shall
include, without limitation, “supporting obligations” as defined in the Uniform
Commercial Code.
“As-extracted Collateral” means
any “as-extracted collateral,” as such term is defined in the Uniform Commercial
Code.
“Chattel Paper” means any
“chattel paper,” as such term is defined in the Uniform Commercial
Code.
“Collateral” has the meaning
ascribed thereto in Section 3
hereof.
“Commercial Tort Claims” means
“commercial tort claims”, as such term is defined in the Uniform Commercial
Code.
“Contracts” means all
contracts, undertakings, or other agreements (other than rights evidenced by
Chattel Paper, Documents or Instruments) in or under which each Obligor may now
or hereafter have any right, title or interest, including, without limitation,
with respect to an Account, any agreement relating to the terms of payment or
the terms of performance thereof.
“Copyrights” means any
copyrights, rights and interests in copyrights, works protectable by copyrights,
copyright registrations and copyright applications, including, without
limitation, the copyright registrations and applications listed on Schedule III attached
hereto (if any), and all renewals of any of the foregoing, all income,
royalties, damages and payments now and hereafter due and/or payable under or
with respect to any of the foregoing, including, without limitation, damages and
payments for past, present and future infringements of any of the foregoing and
the right to xxx for past, present and future infringements of any of the
foregoing.
“Deposit Accounts” means all
“deposit accounts” as such term is defined in the Uniform Commercial Code, now
or hereafter held in the name of the Obligor.
“XxXxxx Default” shall have the
meaning set forth in the Loan Agreement.
“Documents” means any
“documents,” as such term is defined in the Uniform Commercial Code, and shall
include, without limitation, all documents of title (as defined in the Uniform
Commercial Code), bills of lading or other receipts evidencing or representing
Inventory or Equipment.
“Equipment” means any
“equipment,” as such term is defined in the Uniform Commercial Code and, in any
event, shall include, Motor Vehicles.
“Event of Default” means (i) an
Event of Default, as such term is defined in the Loan Agreement, or (ii) an
attempt by the holder of an Excluded Judgment (as defined in the Loan Agreement)
to acquire a Lien on any Collateral held by XxXxxx to satisfy an Excluded
Judgment (each, an “Attempted
Attachment”).
“General Intangibles” means any
“general intangibles,” as such term is defined in the Uniform Commercial Code,
and, in any event, shall include, without limitation, all right, title and
interest in or under any Contract, models, drawings, materials and records,
claims, literary rights, goodwill, rights of performance, Copyrights,
Trademarks, Patents, warranties, rights under insurance policies and rights of
indemnification.
“Goods” means any “goods”, as
such term is defined in the Uniform Commercial Code, including, without
limitation, fixtures and embedded Software to the extent included in “goods” as
defined in the Uniform Commercial Code.
“Governmental Authority” means
the government of the United States of America or any other nation, or any
political subdivision thereof, whether state or local, or any agency, authority,
instrumentality, regulatory body, court, central bank or other entity exercising
executive, legislative, judicial, taxing, regulatory or administration powers or
functions of or pertaining to government over each Obligor or any of its
subsidiaries, or any of their respective properties, assets or
undertakings.
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“Instruments” means any
“instrument,” as such term is defined in the Uniform Commercial Code, and shall
include, without limitation, promissory notes, drafts, bills of exchange, trade
acceptances, letters of credit, letter of credit rights (as defined in the
Uniform Commercial Code), and Chattel Paper.
“Inventory” means any
“inventory,” as such term is defined in the Uniform Commercial
Code.
“Investment Property” means any
“investment property”, as such term is defined in the Uniform Commercial
Code.
“Liabilities” means all
obligations, liabilities and indebtedness of every nature of each Obligor from
time to time owed or owing under or in respect of this Agreement, and any of the
other Financing Documents, as the case may be, including, without
limitation, the principal amount of all debts, claims and indebtedness, accrued
and unpaid interest and all fees, costs and expenses, whether primary,
secondary, direct, contingent, fixed or otherwise, heretofore, now and/or from
time to time hereafter owing, due or payable whether before or after the filing
of a bankruptcy, insolvency or similar proceeding under applicable federal,
state, foreign or other law and whether or not an allowed claim in any such
proceeding.
“Lien” shall have the meaning
set forth in the Loan Agreement.
“Motor Vehicles” means motor
vehicles, tractors, trailers and other like property, whether or not the title
thereto is governed by a certificate of title or ownership.
“Patents” means any patents and
patent applications, including, without limitation, the inventions and
improvements described and claimed therein, all patentable inventions and those
patents and patent applications listed on Schedule IV
attached hereto (if any), and the reissues, divisions, continuations, renewals,
extensions and continuations-in-part of any of the foregoing, and all income,
royalties, damages and payments now or hereafter due and/or payable under or
with respect to any of the foregoing, including, without limitation, damages and
payments for past, present and future infringements of any of the foregoing and
the right to xxx for past, present and future infringements of any of the
foregoing.
“Person” means an individual, a
limited liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization, a Governmental Authority or any other
legal entity.
“Proceeds” means “proceeds,” as
such term is defined in the Uniform Commercial Code and, in any event, includes,
without limitation, (a) any and all proceeds of any insurance, indemnity,
warranty or guaranty payable with respect to any of the Collateral, (b) any and
all payments (in any form whatsoever) made or due and payable 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 body,
authority, bureau or agency (or any person acting under color of governmental
authority), and (c) any and all other amounts from time to time paid or payable
under, in respect of or in connection with any of the Collateral.
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“Representative” means any
Person acting as agent, representative or trustee on behalf of the Secured Party
from time to time.
“Software” means all “software”
as such term is defined in the Uniform Commercial Code, now owned or hereafter
acquired by the Obligor, other than software embedded in any category of Goods,
including, without limitation, all computer programs and all supporting
information provided in connection with a transaction related to any
program.
“Trademarks” means any
trademarks, trade names, corporate names, company names, business names,
fictitious business names, trade styles, service marks, logos, other business
identifiers, prints and labels on which any of the foregoing have appeared or
appear, all registrations and recordings thereof, and all applications in
connection therewith, including, without limitation, the trademarks and
applications listed in Schedule V attached
hereto (if any) and renewals thereof, and all income, royalties, damages and
payments now or hereafter due and/or payable under or with respect to any of the
foregoing, including, without limitation, damages and payments for past, present
and future infringements of any of the foregoing and the right to xxx for past,
present and future infringements of any of the foregoing.
“Uniform Commercial Code” means
the Uniform Commercial Code as in effect from time to time in the State of New
York; provided, that to the extent that the Uniform Commercial Code is used to
define any term herein and such term is defined differently in different
Articles or Divisions of the Uniform Commercial Code, the definition of such
term contained in Article or Division 9 shall govern.
Section
2. Representations, Warranties
and Covenants of each Obligor. Each Obligor represents and warrants to,
and covenants with, the Secured Party as follows:
(a) Such
Obligor has rights in and the power to transfer the Collateral in which it
purports to grant a security interest pursuant to Section 3 hereof
(subject, with respect to after acquired Collateral, to such Obligor acquiring
the same) and no Lien other than Permitted Liens exists or will exist upon the
Collateral at any time.
(b) This
Agreement is effective to create in favor of Secured Party a valid security
interest in all of such Obligor’s right, title and interest in and to
its Collateral, and upon (i) the filing of appropriate Uniform Commercial Code
financing statements, and (ii) in the case of Deposit Accounts, an
account control agreement, such security interest will be a duly perfected first
priority security interest in all of its Collateral (other than Instruments not
constituting Chattel Paper), and upon delivery of the Instruments to the Secured
Party or its Representative, duly endorsed by such Obligor or accompanied by
appropriate instruments of transfer duly executed by such Obligor, the security
interest in the Instruments will be duly perfected.
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(c) All
of the Equipment, Inventory and Goods owned by such Obligor is located at the
places as specified on Schedule II attached
hereto. Except as disclosed on Schedule II, none of
the Collateral is in the possession of any bailee, warehousemen, processor or
consignee. Such Obligor has not done business during the past five
(5) years under any trade name or fictitious business name.
(d) No
Copyrights, Patents or Trademarks listed on Schedules III, IV and V, respectively, if
any, have been adjudged invalid or unenforceable or have been canceled, in whole
or in part, or are not presently subsisting. Each of such Copyrights,
Patents and Trademarks (if any) is valid and enforceable unless such invalidity
or unenforceability will not have a Material Adverse Effect (as defined in the
Loan Agreement). Such Obligor is the sole and exclusive owner of the
entire and unencumbered right, title and interest in and to each of such
Copyrights, Patents and Trademarks, as applicable, as being owned by such
Obligor free and clear of any Liens, including without limitation licenses, shop
rights and covenants by such Obligor not to xxx third persons. Such
Obligor has adopted, used and is currently using, or has a current bona fide
intention to use, all of such Trademarks and Copyrights, if any. Such
Obligor has no notice of any legal proceedings commenced or threatened with
reference to the Copyrights, Patents or Trademarks owned by it.
(e) Such
Obligor agrees to deliver to the Secured Party an updated Schedule II, III, IV, and/or V within five (5)
Business Days of any material change thereto.
(f) All
depositary and other accounts including, without limitation, Deposit Accounts,
securities accounts, brokerage accounts and other similar accounts, maintained
by such Obligor are described on Schedule VI hereto,
which description includes for each such account the name of such Obligor
maintaining such account, the name, address and telephone and telecopy numbers
of the financial institution at which such account is maintained, the account
number and the account officer, if any, of such account. If such
Obligor shall open any new Deposit Accounts, securities accounts, brokerage
accounts or other accounts unless such Obligor shall have given Secured Party
five (5) Business Days’ prior written notice of its intention to open any such
new accounts. Such Obligor shall deliver to Secured Party a revised
version of Schedule
VI showing any changes thereto within five (5) Business Days of any such
change. Such Obligor hereby authorizes the financial institutions at
which such Obligor maintains an account to provide Secured Party with such
information with respect to such account as Secured Party from time to time
reasonably may request, and such Obligor hereby consents to such information
being provided to Secured Party. In addition, all of such Obligor’s
depositary, security, brokerage and other accounts including, without
limitation, Deposit Accounts shall be subject to the provisions of Section 4.5
hereof.
(g) Such
Obligor does not own any Commercial Tort Claim except for those disclosed on
Schedule VII
hereto (if any).
(h) Such
Obligor does not have any interest in real property. except as disclosed on
Schedule
VIII (if any). Such Obligor shall deliver to
Secured Party a revised version of Schedule VIII showing
any changes thereto within ten (10) Business Days of any such
change.
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(i) All
Equipment (including, without limitation, Motor Vehicles) owned by such Obligor
and subject to a certificate of title or ownership statute is described on Schedule IX
hereto.
(j) The
financial statement of each Obligor attached to Schedule X hereto
have been prepared in accordance with generally accepted accounting principles
and are true and correct. Except as set forth on Exhibit A hereto, the Borrower
has no liabilities of any nature, contingent or otherwise, except as disclosed
in such financial statements or the notes thereto.
Section
3. Collateral. As
collateral security for the prompt payment in full when due (whether at stated
maturity, by acceleration or otherwise) of the Liabilities, each Obligor hereby
pledges and grants to the Secured Party, a Lien on and security interest in and
to all of such Obligor’s right, title and interest in the following properties
and assets of such Obligor, whether now owned by such Obligor or hereafter
acquired and whether now existing or hereafter coming into existence and
wherever located: (all being collectively referred to herein as “Collateral”):
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(a)
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all
Instruments, together with all payments thereon or
thereunder:
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(b)
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all
Accounts;
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(c)
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all
Inventory;
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(d)
all
General Intangibles (including payment intangibles (as defined in the Uniform
Commercial Code) and Software);
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(e)
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all
Equipment;
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(f)
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all
Documents;
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(g)
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all
Contracts;
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(h)
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all
Goods;
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(i)
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all
Investment Property;
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(j)
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all
Deposit Accounts;
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(k)
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all
Commercial Tort Claims.;
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(l)
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all
As-extracted Collateral;
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(m)
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all
Trademarks, Patents and Copyrights;
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(n)
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all
books and records pertaining to the other Collateral;
and
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(o) all
other tangible and intangible property of such Obligor, including, without
limitation, all interests in real property, Proceeds, tort claims, products,
accessions, rents, profits, income, benefits, substitutions, additions and
replacements of and to any of the property of such Obligor described in the
preceding clauses of this Section 3 (including,
without limitation, any proceeds of insurance thereon, insurance claims and all
rights, claims and benefits against any Person relating thereto), other rights
to payments not otherwise included in the foregoing, and all books,
correspondence, files, records, invoices and other papers, including without
limitation all tapes, cards, computer runs, computer programs, computer files
and other papers, documents and records in the possession or under the control
of such Obligor, any computer bureau or service company from time to time acting
for such Obligor:
provided however, that the Collateral shall not include the Excluded Assets (as
defined in the Loan Agreement).
Section
4. Covenants;
Remedies. In furtherance of the grant of the pledge and
security interest pursuant to Section 3 hereof,
each Obligor hereby agrees with the Secured Party as follows:
4.1. Delivery and Other
Perfection; Maintenance, etc.
(a) Delivery of Instruments,
Documents, Etc. Such Obligor shall deliver and pledge to the
Secured Party or its Representative any and all Instruments, negotiable
Documents, Chattel Paper and certificated securities (accompanied by stock
powers executed in blank, which stock powers may be filled in and completed at
any time upon the occurrence of any Event of Default (provided, that if an Event
of Default is only an Attempted Attachment, such action may be taken only with
respect to the Collateral which is the subject of such Attempted Attachment)
duly endorsed and/or accompanied by such instruments of assignment and transfer
executed by such Obligor in such form and substance as the Secured Party or its
Representative may request; provided, that so
long as no Event of Default shall have occurred and be continuing, the Obligor
may (or if an Event of Default that is only a XxXxxx Default shall have occurred
and be continuing, only CTC and Cable may) retain for collection in the ordinary
course of business any Instruments, negotiable Documents and Chattel Paper
received by such Obligor in the ordinary course of business, and the Secured
Party or its Representative shall, promptly upon request of the Obligor, make
appropriate arrangements for making any other Instruments, negotiable Documents
and Chattel Paper pledged by such Obligor available to the Obligor for purposes
of presentation, collection or renewal (any such arrangement to be effected, to
the extent deemed appropriate by the Secured Party or its Representative,
against trust receipt or like document). If the Obligor retains possession of
any Chattel Paper, negotiable Documents or Instruments pursuant to the terms
hereof, such Chattel Paper, negotiable Documents and Instruments shall be marked
with the following legend: “This writing and the obligations evidenced or
secured hereby are subject to the security interest of the Secured
Party.
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(b) Other Documents and
Actions. The Obligor shall give, execute, deliver, file and/or
record any financing statement, registration, notice, instrument, document,
agreement, or other papers that may be necessary or desirable (in the
reasonable judgment of the Secured Party or its Representative) to create,
preserve, perfect or validate the security interest granted pursuant hereto (or
any security interest or mortgage contemplated or required hereunder, including
with respect to Section 2(h) of this
Agreement) or to enable the Secured Party or its Representative to exercise and
enforce the rights of the Secured Party hereunder with respect to such security
interest or mortgage, provided that notices
to account debtors in respect of any Accounts or Instruments shall be subject to
the provisions of clause (e) below. Notwithstanding the foregoing
such Obligor hereby irrevocably authorizes the Secured Party at any time and
from time to time to file in any filing office in any jurisdiction any Uniform
Commercial Code initial financing statements (and other similar filings or
registrations under other applicable laws and regulations pertaining to the
creation, attachment, or perfection of security interests) and amendments
thereto that (a) indicate its Collateral (i) as all assets of such Obligor or
words of similar effect, regardless of whether any particular asset comprised in
its Collateral falls within the scope of Article 9 of the Uniform Commercial
Code of the State of New York or such jurisdiction, or (ii) as being of an equal
or lesser scope or with greater detail, and (b) contain any other information
required by part 5 of Article 9 of the Uniform Commercial Code of the State of
New York or any other State for the sufficiency or filing office acceptance of
any financing statement or amendment, including (i) whether such Obligor is an
organization, the type of organization and any organization identification
number issued to such Obligor, and (ii) in the case of a financing statement
filed as a fixture filing or indicating Collateral as As-extracted Collateral, a
sufficient description of real property to which its Collateral
relates. Such Obligor agrees to furnish any such information to the
Secured Party promptly upon request. Such Obligor also ratifies its
authorization for the Secured Party to have filed in any jurisdiction any like
initial financing statements or amendments thereto if filed prior to the date
hereof.
(c) Books and
Records. Such Obligor shall maintain at its own cost and
expense complete and accurate books and records of its Collateral, including,
without limitation, a record of all payments received and all credits granted
with respect to its Collateral and all other dealings with its
Collateral. Upon the occurrence and during the continuation of any
Event of Default, such Obligor (or, if an Event of Default that is only a XxXxxx
Default shall have occurred and be continuing, XxXxxx) shall deliver and turn
over any such books and records (or true and correct copies thereof) to the
Secured Party or its Representative at any time on demand. Such
Obligor shall permit any Representative of the Secured Party to inspect such
books and records at any time during reasonable business hours and will provide
photocopies thereof at such Obligor’s expense to the Secured Party upon request
of the Secured Party.
(d) Motor
Vehicles. Such Obligor shall, promptly upon acquiring same,
cause the Secured Party to be listed as the lienholder on each certificate of
title or ownership covering any items of Equipment, including Motor Vehicles,
having a value in excess of $70,000 in the aggregate for all such items of
Equipment of the Obligor, or otherwise comply with the certificate of
title or ownership laws of the relevant jurisdiction issuing such certificate of
title or ownership in order to properly evidence and perfect Secured Party’s
security interest in the assets represented by such certificate of title or
ownership.
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(e) Notice to Account such
Obligor; Verification. (i) Upon the occurrence and during the
continuance of any Event of Default (except if upon the occurrence and during
the continuance of an Event of Default that is only a XxXxxx Default, then this
subsection (e) shall apply to only XxXxxx as an Obligor) (or if any rights of
set-off (other than set-offs against an Account arising under the Contract
giving rise to the same Account) or contra accounts may be asserted), upon
request of the Secured Party or its Representative, such Obligor shall promptly
notify (and such Obligor hereby authorizes the Secured Party and its
Representative so to notify) each account debtor in respect of any Accounts or
Instruments or other Persons obligated on its Collateral that such Collateral
has been assigned to the Secured Party hereunder, and that any payments due or
to become due in respect of such Collateral are to be made directly to the
Secured Party, and (ii) the Secured Party and its Representative shall have the
right at any time or times to make direct verification with the account debtors
or other Persons obligated on any and all of the Accounts or other Collateral;
provided, however, that if an
Event of Default is only an Attempted Attachment, the Secured Party shall have
the rights set forth herein only with respect to the Collateral which is the
subject of such Attempted Attachment.
(f) Intellectual
Property. Such Obligor represents and warrants that the
Copyrights, Patents and Trademarks listed on Schedules III, IV and V, respectively (if
any), constitute all of the registered Copyrights and all of the Patents and
Trademarks now owned by such Obligor. If such Obligor shall (i)
obtain rights to any new patentable inventions, any registered Copyrights or any
Patents or Trademarks, or (ii) become entitled to the benefit of any registered
Copyrights or any Patents or Trademarks or any improvement on any Patent, the
provisions of this Agreement above shall automatically apply thereto and such
Obligor shall give to Secured Party prompt written notice
thereof. Such Obligor hereby authorizes Secured Party to modify this
Agreement by amending Schedules III, IV and V, as applicable, to
include any such registered Copyrights or any such Patents and
Trademarks. Such Obligor shall have the duty (i) to prosecute
diligently any patent, trademark, or service xxxx applications pending as of the
date hereof or hereafter, (ii) to make application on unpatented but patentable
inventions and on trademarks, copyrights and service marks, as appropriate,
(iii) to preserve and maintain all rights in the Copyrights, Patents and
Trademarks, to the extent material to the operations of the business of such
Obligor and (iv) to ensure that the Copyrights, Patents and Trademarks are and
remain enforceable, to the extent material to the operations of the business of
such Obligor. Any expenses incurred in connection with such Obligor’s
obligations under this Section 4.1(f) shall
be borne by such Obligor. Except for any such items that such Obligor
reasonably believes (using prudent industry customs and practices) are no longer
necessary for the on-going operations of its business, such Obligor
shall not abandon any right to file a patent, trademark or service xxxx
application, or abandon any pending patent, trademark or service xxxx
application or any other Copyright, Patent or Trademark without the written
consent of Secured Party, which consent shall not be unreasonably
withheld.
(g) Further Identification of
Collateral. Such Obligor will, when and as often as requested
by the Secured Party or its Representative, furnish to the Secured Party or its
Representative, statements and schedules further identifying and describing its
Collateral and such other reports in connection with its Collateral as the
Secured Party or its Representative may reasonably request, all in reasonable
detail.
(h) Investment
Property. Such Obligor has no Investment
Property.
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(i) Commercial Tort
Claims. Such Obligor shall promptly notify Secured Party of
any Commercial Tort Claim acquired by it that concerns a claim in excess of
$50,000 and unless otherwise consented to by Secured Party, such Obligor shall
enter into a supplement to this Agreement granting to Secured Party
a security interest in such Commercial Tort Claim.
4.2 Other
Liens. Such Obligor will not create, permit or suffer to
exist, and will defend its Collateral against and take such other action as is
necessary to remove, any Lien on its Collateral except Permitted Liens, and will
defend the right, title and interest of the Secured Party in and to its
Collateral and in and to all Proceeds thereof against the claims and demands of
all Persons whatsoever.
4.3 Preservation of
Rights. Whether or not any Event of Default has occurred or is
continuing, the Secured Party and its Representative may, but shall not be
required to, take any steps the Secured Party or its Representative deems
necessary or appropriate to preserve the Collateral of such Obligor, including
obtaining insurance for such Collateral at any time when such Obligor has failed
to do so, and such Obligor shall promptly pay, or reimburse the Secured Party
for, all expenses incurred in connection therewith.
4.4 Form Change; Name Change;
Location; Bailees.
(a) Such
Obligor shall not (i) reincorporate or reorganize itself under the laws of
any jurisdiction other than the jurisdiction in which it is incorporated as of
the date hereof without the prior written consent of Secured Party, or
(ii) otherwise change its name, identity or corporate
structure. Such Obligor will notify Secured Party promptly in writing
prior to any such change in the proposed use by such Obligor of any tradename or
fictitious business name.
(b) Such
Obligor will give Secured Party thirty (30) day’s prior written notice of any
change in such Obligor’s chief place of business or of any new location for any
of its Collateral.
(c) If
any Collateral of such Obligor is at any time in the possession or
control of any warehousemen, bailee, consignee or processor, such Obligor shall,
upon the request of Secured Party or its Representative, notify such
warehousemen, bailee, consignee or processor of the Lien and security interest
created hereby and shall instruct such Person to hold all such Collateral for
Secured Party’s account subject to Secured Party’s instructions.
(d) Such
Obligor acknowledges that it is not authorized to file any financing statement
or amendment or termination statement with respect to any financing statement
without the prior written consent of Secured Party and agrees that it will not
do so without the prior written consent of Secured Party.
(e) Such
Obligor shall not enter into any Contract that restricts or prohibits the grant
to Secured Party of a security interest in Accounts, Chattel Paper, Instruments
or payment intangibles or the proceeds of the foregoing.
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4.5 Bank Accounts and Securities
Accounts.
(a) Within
five (5) business days of the date hereof, such Obligor shall deliver to Secured
Party a fully executed original copy of written instructions to each financial
institution with which such Obligor maintains any Deposit Accounts (general or
special), securities accounts, brokerage accounts or other similar accounts
substantially in the form provided by Secured Party directing such financial
institution to provide Secured Party with duplicate copies of all bank
statements which are sent to such Obligor (until such time as such financial
institution receives contrary direction from Secured Party) and such other
information with respect to such Deposit Accounts or other accounts as Secured
Party may from time to time reasonably request. Secured Party may
deliver such written instruction to such financial institutions at any time as
it deems appropriate in its sole and absolute discretion. After the
date hereof, at the sole expense of such Obligor, Borrower shall take such
further actions as are necessary, or the Secured Party or its Representative may
reasonably require, to cause such financial institution to provide Secured Party
with duplicate copies of all bank statements which are sent to such Obligor
(until such time as such financial institution receives contrary direction from
Secured Party) and such other information with respect to such Deposit Account
or other accounts as Secured Party may from time to time reasonably
request.
(b) Such
Obligor will not at any time grant any Lien other than Permitted
Liens to any Person other than Secured Party in any Deposit Accounts (general or
special), securities accounts, brokerage accounts or other similar accounts held
by such Obligor.
(c) Upon
the Secured Party’s request following the occurrence and during the continuance
of an Event of Default, such Obligor shall establish lock-box or blocked
accounts (collectively, “Blocked Accounts”) in such
Obligor’s name with such banks as are reasonably acceptable to the Secured Party
(“Collecting Banks”),
subject to irrevocable instructions in a form reasonably acceptable to the
Secured Party, to which such Obligor shall directly remit all payments on
Accounts and in which such Obligor will immediately deposit all cash payments
for Inventory or other cash payments constituting proceeds of its
Collateral in the identical form in which such payment was made, whether by cash
or check; provided however, that if such
Event of Default is only a XxXxxx Default, then this subsection (c) shall apply
only to XxXxxx and its Accounts. In addition, the Secured Party may
establish one or more depository accounts at each Collecting Bank or at a
centrally located bank (collectively, the “Depository
Account”). All amounts held or deposited in the Blocked
Accounts held by such Collecting Bank shall be transferred to the Depository
Account without any further notice or action required by Secured
Party. Subject to the foregoing, such Obligor hereby agrees that all
payments received by the Secured Party whether by cash, check, wire transfer or
any other instrument, made to such Blocked Accounts or otherwise received by the
Secured Party and whether in respect of the Accounts or as proceeds of other
Collateral or otherwise will be the sole and exclusive property of the Secured
Party. Such Obligor, and any of its affiliates, employees, agents and
other Persons acting for or in concert with such Obligor shall, acting as
trustee for the Secured Party, receive, as the sole and exclusive property of
the Secured Party, any moneys, checks, notes, drafts or other payments relating
to and/or proceeds of Accounts or other Collateral which come into the
possession or under the control of such Obligor or any affiliates, employees,
agent or other Persons acting for or in concert with such Obligor, and
immediately upon receipt thereof, such Obligor or Persons shall deposit the same
or cause the same to be deposited in kind, in a Blocked Account.
11
4.6 Events of Default,
Etc. During the period during which an Event of Default shall
have occurred and be continuing:
(a) such
Obligor shall, at the request of the Secured Party or its Representative,
assemble its Collateral and make it available to Secured Party or its
Representative at a place or places designated by the Secured Party or its
Representative which are reasonably convenient to Secured Party or its
Representative, as applicable, and such Obligor;
(b) The
Secured Party or its Representative may make any reasonable compromise or
settlement deemed desirable with respect to any of the Collateral of such
Obligor and may extend the time of payment, arrange for payment in installments,
or otherwise modify the terms of, any of such Collateral;
(c) the
Secured Party shall have all of the rights and remedies with respect to the
Collateral of such Obligor of a secured party under the Uniform Commercial Code
(whether or not said Uniform Commercial Code is in effect in the jurisdiction
where the rights and remedies are asserted) and such additional rights and
remedies to which a secured party is entitled under the laws in effect in any
jurisdiction where any rights and remedies hereunder may be asserted, including,
without limitation, the right, to the maximum extent permitted by law, to: (i)
exercise all voting, consensual and other powers of ownership pertaining to such
Collateral as if the Secured Party were the sole and absolute owner thereof (and
such Obligor agrees to take all such action as may be appropriate to give effect
to such right) and (ii) to the appointment of a receiver or receivers for all or
any part of such Collateral or business of such Obligor, whether such
receivership be incident to a proposed sale or sales of such Collateral or
otherwise and without regard to the value of such Collateral or the solvency of
any person or persons liable for the payment of the Liabilities secured by such
Collateral. Such Obligor hereby consents to the appointment of such
receiver or receivers, waives any and all defenses to such appointment and
agrees that such appointment shall in no manner impair, prejudice or otherwise
affect the rights of Secured Party under this Agreement. Such Obligor
hereby expressly waives notice of a hearing for appointment of a receiver and
the necessity for bond or an accounting by the receiver;
(d) the
Secured Party or its Representative in their discretion may, in the name of the
Secured Party or in the name of such Obligor or otherwise, demand, xxx for,
collect or receive any money or property at any time payable or receivable on
account of or in exchange for any of its Collateral, but shall be under no
obligation to do so;
(e) the
Secured Party or its Representative may take immediate possession and occupancy
of any premises (other than the headquarters of such Obligor) owned, used or
leased by such Obligor and exercise all other rights and remedies which may be
available to the Secured Party;
12
(f) the
Secured Party may, upon reasonable notice to such Obligor as determined by the
Secured Party of the time and place, with respect to its Collateral or any part
thereof which shall then be or shall thereafter come into the possession,
custody or control of the Secured Party or its Representative, sell, lease,
license, assign or otherwise dispose of all or any part of its Collateral, at
such place or places as the Secured Party deems best, and for cash or for credit
or for future delivery (without thereby assuming any credit risk), at public or
private sale, without demand of performance or notice of intention to effect any
such disposition or of the time or place thereof (except such notice as is
required above or by applicable statute and cannot be waived), and the Secured
Party or anyone else may be the purchaser, lessee, licensee, assignee or
recipient of any or all of its Collateral so disposed of at any public sale (or,
to the extent permitted by law, at any private sale) and thereafter hold the
same absolutely, free from any claim or right of whatsoever kind, including any
right or equity of redemption (statutory or otherwise), of such Obligor, any
such demand, notice and right or equity being hereby expressly waived and
released. The Secured Party may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for the sale, and such sale
may be made at any time or place to which the sale may be so adjourned;
and
(g) the
rights, remedies and powers conferred by this Section 4.6 are in addition to,
and not in substitution for, any other rights, remedies or powers that the
Secured Party may have under any Financing Document, at law, in equity or by or
under the Uniform Commercial Code or any other statute or
agreement. The Secured Party may proceed by way of any action, suit
or other proceeding at law or in equity and no right, remedy or power of the
Secured Party will 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;
provided, however, that if an
Event of Default is only a XxXxxx Default, the Secured Party may exercise the
remedies provided for in this Section 4.6 only with respect to the Collateral
provided by XxXxxx; provided, further, that if an
Event of Default is only an Attempted Attachment, the Secured Party may exercise
the remedies provided for in this Section 4.6 only with respect to the
Collateral which is the subject of such Attempted Attachment. The
proceeds of each collection, sale or other disposition under this Section 4.6
shall be applied in accordance with Section 4.9
hereof.
4.7 Deficiency. If
the proceeds of sale, collection or other realization of or upon its Collateral
are insufficient to cover the costs and expenses of such realization and the
payment in full of the Liabilities, such Obligor shall remain liable for any
deficiency.
4.8 Private
Sale. Such Obligor recognizes that the Secured Party may be
unable to effect a public sale of any or all of its Collateral consisting of
securities by reason of certain prohibitions contained in the Securities Act of
1933, as amended (the “Act”), and applicable state
securities laws, but may be compelled to resort to one or more private sales
thereof to a restricted group of purchasers who will be obliged to agree, among
other things, to acquire such Collateral for their own account for investment
and not with a view to the distribution or resale thereof. Such
Obligor acknowledges and agrees that any such private sale may result in prices
and other terms less favorable to the seller than if such sale were a public
sale and, notwithstanding such circumstances, agrees that any such private sale
shall be deemed to have been made in a commercially reasonable
manner. The Secured Party shall be under no obligation to delay a
sale of any of its Collateral to permit such Obligor to register such Collateral
for public sale under the Act, or under applicable state securities laws, even
if such Obligor would agree to do so. The Secured Party shall not
incur any liability as a result of the sale of any such Collateral, or any part
thereof, at any private sale provided for in this Agreement conducted in a
commercially reasonable manner, and such Obligor hereby waives any claims
against the Secured Party arising by reason of the fact that the price at which
its Collateral may have been sold at such a private sale was less than the price
which might have been obtained at a public sale or was less than the aggregate
amount of the Liabilities, even if the Secured Party accepts the first offer
received and does not offer its Collateral to more than one
offeree.
13
Such
Obligor further agrees to do or cause to be done all such other acts and things
as may be necessary to make such sale or sales of any portion or all of any of
its 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 such Obligor’s expense,
provided that
such Obligor shall be under no obligation to take any action to enable any or
all of its Collateral to be registered under the provisions of the
Act. Such Obligor further agrees that a breach of any of the
covenants contained in this Section 4.8 will
cause irreparable injury to the Secured Party, that the Secured Party has no
adequate remedy at law in respect of such breach and, as a consequence, agrees
that each and every covenant contained in this Section 4.8 shall be
specifically enforceable against such Obligor, and such Obligor hereby waives
and agrees not to assert any defenses against an action for specific performance
of such covenants except for a defense that no Event of Default has occurred and
is continuing.
4.9 Application of
Proceeds. The proceeds of any collection, sale or other
realization of all or any part of its Collateral, and any other cash at the time
held by the Secured Party under this Agreement, shall be applied in the manner
acceptable to, and at the election of, the Secured
Party. Notwithstanding anything to the contrary herein or in the Loan
Agreement, if the Secured Party exercises its rights under this Agreement in
connection with a XxXxxx Default or an Attempted Attachment, all proceeds
received by the Secured Party as a result of the collection, sale or other
realization of Collateral hereunder shall be applied to prepay any outstanding
amounts under the Note.
4.10 Attorney-in-Fact. Such
Obligor hereby irrevocably constitutes and appoints the Secured Party, with full
power of substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of such Obligor and in
the name of such Obligor or in its own name, from time to time in the discretion
of the Secured Party, for the purpose of carrying out the terms of this
Agreement, to take any and all appropriate action and to execute and deliver any
and all documents and instruments which may be necessary or desirable to perfect
or protect any security interest granted hereunder or to maintain the perfection
or priority of any security interest granted hereunder, and, without limiting
the generality of the foregoing, hereby gives the Secured Party the power and
right, on behalf of such Obligor, without notice to or assent by such Obligor,
to do the following upon the occurrence and during the continuation of any Event
of Default (provided, that if an
Event of Default is only a XxXxxx Default, the Secured Party may exercise the
remedies provided for in this Section 4.10 only with respect to the Collateral
provided by XxXxxx; provided, further, that if an
Event of Default is only an Attempted Attachment, the Secured Party may exercise
the remedies provided for in this Section 4.10 only with respect to the
Collateral which is the subject of such Attempted Attachment):
14
(a) to
take any and all appropriate action and to execute and deliver any and all
documents and instruments which may be necessary or desirable to accomplish the
purposes of this Agreement;
(b) to
ask, demand, collect, receive and give acquittance and receipts for any and all
moneys due and to become due under any of its Collateral and, in the name of
such Obligor or its own name or otherwise, to take possession of and endorse and
collect any checks, drafts, notes, acceptances or other Instruments for the
payment of moneys due under any of its Collateral and to file any claim or to
take any other action or proceeding in any court of law or equity or otherwise
deemed appropriate by the Secured Party for the purpose of collecting any and
all such moneys due under any of its Collateral whenever payable and to file any
claim or to take any other action or proceeding in any court of law or equity or
otherwise deemed appropriate by the Secured Party for the purpose of collecting
any and all such moneys due under any of its Collateral whenever
payable;
(c) to
pay or discharge charges or liens levied or placed on or threatened against its
Collateral, to effect any insurance called for by the terms of this Agreement
and to pay all or any part of the premiums therefor;
(d) to
direct any party liable for any payment under any of its Collateral to make
payment of any and all moneys due, and to become due thereunder, directly to the
Secured Party or as the Secured Party shall direct, and to receive payment of
and receipt for any and all moneys, claims and other amounts due, and to become
due at any time, in respect of or arising out of any of its
Collateral;
(e) to
sign and indorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with accounts and other Documents
constituting or relating to its Collateral;
(f) to
commence and prosecute any suits, actions or proceedings at law or in equity in
any court of competent jurisdiction to collect its Collateral or any part
thereof and to enforce any other right in respect of any of
its Collateral;
(g) to
defend any suit, action or proceeding brought against such Obligor with respect
to any of its Collateral;
(h) to
settle, compromise or adjust any suit, action or proceeding described above and,
in connection therewith, to give such discharges or releases as the Secured
Party may deem appropriate;
15
(i) to
the extent that such Obligor’s authorization given in Section 4.1(b) of
this Agreement is not sufficient to file such financing statements with respect
to this Agreement, with or without such Obligor’s signature, or to file a
photocopy of this Agreement in substitution for a financing statement, as the
Secured Party may deem appropriate and to execute in such Obligor’s name such
financing statements and amendments thereto and continuation statements which
may require such Obligor’s signature; and
(j) generally
to sell, transfer, pledge, make any agreement with respect to or otherwise deal
with any of its Collateral as fully and completely as though the Secured Party
were the absolute owners thereof for all purposes, and to do, at the Secured
Party’s option and at such Obligor’s expense, at any time, or from time to time,
all acts and things which the Secured Party reasonably deems necessary to
protect, preserve or realize upon its Collateral and the Secured Party’s lien
therein, in order to effect the intent of this Agreement, all as fully and
effectively as such Obligor might do.
Such
Obligor hereby ratifies, to the extent permitted by law, all that such attorneys
lawfully do or cause to be done by virtue hereof. The power of
attorney granted hereunder is a power coupled with an interest and shall be
irrevocable until the Liabilities are indefeasibly paid in full in cash and this
Agreement is terminated in accordance with Section 4.12
hereof.
Such
Obligor also authorizes the Secured Party, at any time from and after the
occurrence and during the continuation of any Event of Default, (x) to
communicate in its own name with any party to any Contract with regard to the
assignment of the right, title and interest of such Obligor in and under the
Contracts hereunder and other matters relating thereto and (y) to execute, in
connection with any sale of any of its Collateral provided for in Section 4.6 hereof,
any endorsements, assignments or other instruments of conveyance or transfer
with respect to its Collateral.
4.11 Perfection. Prior
to or concurrently with the execution and delivery of this Agreement, such
Obligor shall:
(a) file
such financing statements, assignments for security and other documents in such
offices as may be necessary or as the Secured Party or the Representative may
request to perfect the security interests granted by Section 3 of this
Agreement; and
(b) at
Secured Party’s request, deliver to the Secured Party or its Representative the
originals of all Instruments together with, in the case of Instruments
constituting promissory notes, allonges attached thereto showing such promissory
notes to be payable to the order of a blank payee.
4.12 Termination.
(a) This
Agreement and the Liens and security interests granted hereunder shall not
terminate until the termination of the Note and the full and complete
performance and indefeasible satisfaction of all the Liabilities (including,
without limitation, the indefeasible payment in full in cash of all such
Liabilities) and with respect to which claims have been asserted by the Secured
Party, whereupon the Secured Party shall forthwith cause to be assigned,
transferred and delivered, against receipt but without any recourse, warranty or
representation whatsoever, any remaining Collateral of such Obligor to or on the
order of such Obligor. The Secured Party shall also execute and
deliver to such Obligor upon such termination and at such Obligor’ expense such
Uniform Commercial Code termination statements, certificates for terminating the
liens on the Motor Vehicles (if any) and such other documentation as shall be
reasonably requested by such Obligor to effect the termination and release of
the Liens and security interests in favor of the Secured Party affecting its
Collateral.
16
(b) If
a XxXxxx Sale occurs that constitutes a sale of assets of XxXxxx or any of its
Subsidiaries (as defined in the Loan Agreement), the Net Proceeds (as defined in
the Loan Agreement) thereof shall be applied to prepay the Loan pursuant to
Section 2.3(a) of the Loan Agreement. Upon such prepayment, the
Secured Party shall take such steps as XxXxxx requests to release the Lien of
this Agreement upon such assets.
4.13 Further
Assurances. At any time and from time to time, upon the
written request of the Secured Party or its Representative, and at the sole
expense of such Obligor, such Obligor will promptly and duly execute and deliver
any and all such further instruments, documents and agreements and take such
further actions as are necessary or the Secured Party or its Representative may
reasonably require in order for the Secured Party to obtain the full benefits of
this Agreement and of the rights and powers herein granted in favor of the
Secured Party, including, without limitation, using such Obligor’s best efforts
to secure all consents and approvals necessary or appropriate for the assignment
to the Secured Party of any Collateral held by such Obligor or in which such
Obligor has any rights not heretofore assigned, the filing of any financing or
continuation statements under the Uniform Commercial Code with respect to the
liens and security interests granted hereby, transferring Collateral to the
Secured Party’s possession (if a security interest in such Collateral can be
perfected by possession), placing the interest of the Secured Party as
lienholder on the certificate of title of any Motor Vehicle and obtaining
waivers of liens from landlords and mortgagees. Such Obligor also
hereby authorizes the Secured Party and its Representative to file any such
financing or continuation statement without the signature of such Obligor to the
extent permitted by applicable law.
4.14 Limitation on Duty of
Secured Party. The powers conferred on the Secured Party under
this Agreement are solely to protect the Secured Party’s interest in the
Collateral and shall not impose any duty upon it to exercise any such
powers. The Secured Party shall be accountable only for amounts that
it actually receives as a result of the exercise of such powers and neither the
Secured Party nor its Representative nor any of their respective officers,
directors, employees or agents shall be responsible to such Obligor for any act
or failure to act, except for willful misconduct or gross
negligence. Without limiting the foregoing, the Secured Party and any
Representative shall be deemed to have exercised reasonable care in the custody
and preservation of its Collateral in their possession if such Collateral is
accorded treatment substantially equivalent to that which the relevant Secured
Party or any Representative, in its individual capacity, accords its own
property consisting of the type of Collateral involved, it being understood and
agreed that neither the Secured Party nor any Representative shall have any
responsibility for taking any necessary steps (other than steps taken in
accordance with the standard of care set forth above) to preserve rights against
any Person with respect to any Collateral.
17
Also
without limiting the generality of the foregoing, neither the Secured Party nor
its Representative shall have any obligation or liability under any Contract or
license by reason of or arising out of this Agreement or the granting to the
Secured Party of a security interest therein or assignment thereof or the
receipt by the Secured Party or any Representative of any payment relating to
any Contract or license pursuant hereto, nor shall the Secured Party or its
Representative be required or obligated in any manner to perform or fulfill any
of the obligations of such Obligor under or pursuant to any Contract or license,
or to make any payment, or to make any inquiry as to the nature or the
sufficiency of any payment received by it or the sufficiency of any performance
by any party under any Contract or license, or to present or file any claim, or
to take any action to collect or enforce any performance or the payment of any
amounts which may have been assigned to it or to which it may be entitled at any
time or times.
Section
5. Miscellaneous.
5.1 No
Waiver. No failure on the part of the Secured Party or any of
its Representatives to exercise, and no course of dealing with respect to, and
no delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise by the Secured Party or
any of its Representatives of any right, power or remedy hereunder preclude any
other or further exercise thereof or the exercise of any other right, power or
remedy. The rights and remedies hereunder provided are cumulative and
may be exercised singly or concurrently, and are not exclusive of any rights and
remedies provided by law.
5.2 Governing
Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by the
internal laws of the State of New York, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of New York or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of New York
5.3 Notices. All
notices, approvals, requests, demands and other communications hereunder shall
be effective as to each Obligor when received if sent to its address
set forth on the signature page hereof and as to the Secured Party when received
if sent to its address set forth on such page. Each Obligor and the Secured
Party may change their respective notice addresses by written notice given to
each other five (5) days prior to the effectiveness of such change.
5.4 Amendments,
Etc. The terms of this Agreement may be waived, altered or
amended only by an instrument in writing duly executed by
each Obligor and the Secured Party.
5.5 Successors and
Assigns. This Agreement shall be binding upon and inure to the
benefit of the respective successors and assigns of each of the parties hereto,
provided,
that no Obligor shall assign or transfer its rights hereunder without
the prior written consent of the Secured Party.
5.6 Counterparts;
Headings. This Agreement may be authenticated in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may authenticate this Agreement by
signing any such counterpart. This Agreement may be authenticated by
manual signature or facsimile, .pdf or similar electronic signature, all of
which shall be equally valid. The headings in this Agreement are for convenience
of reference only and shall not alter or otherwise affect the meaning
hereof.
18
5.7 Severability. If
any provision hereof is invalid and unenforceable in any jurisdiction, then, to
the fullest extent permitted by law, (a) the other provisions hereof shall
remain in full force and effect in such jurisdiction and shall be liberally
construed in favor of the Secured Party and its Representative in order to carry
out the intentions of the parties hereto as nearly as may be possible and (b)
the invalidity or unenforceability of any provision hereof in any jurisdiction
shall not affect the validity or enforceability of such provision in any other
jurisdiction.
5.8 SUBMISSION TO JURISDICTION;
WAIVER OF VENUE; SERVICE OF PROCESS. EACH OBLIGOR HEREBY
IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL
OR NEW YORK STATE COURT SITTING IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN IN
ANY ACTION OR OTHER PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND
EACH OBLIGOR HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION
OR OTHER PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND
IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF
ANY SUCH SUIT, ACTION OR OTHER PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH
COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT
OF THE SECURED PARTY TO BRING PROCEEDINGS AGAINST EACH OBLIGOR IN THE COURTS OF
ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY AN OBLIGOR AGAINST
THE SECURED PARTY INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY
ARISING OUT OF, RELATED TO, OR CONNECTION WITH THIS AGREEMENT SHALL BE BROUGHT
ONLY IN A COURT IN NEW YORK, NEW YORK (AND THE SECURED PARTY HEREBY SUBMIT TO
THE JURISDICTION OF SUCH COURT). EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY
SUCH ACTION OR OTHER PROCEEDING BY MAILING A COPY THEREOF TO SUCH PARTY AT THE
ADDRESS FOR NOTICES TO IT IN ACCORDANCE WITH SECTION 5.3
OF THIS AGREEMENT AND AGREES THAT SUCH NOTICE SHALL CONSTITUTE GOOD
AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING
CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS
IN ANY MANNER PERMITTED BY LAW.
5.9 WAIVER OF RIGHT TO TRIAL BY
JURY. EACH OBLIGOR AND THE SECURED PARTY EACH WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY
PARTY AGAINST AN OTHER PARTY, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT
CLAIMS, OR OTHERWISE. EACH OBLIGOR AND THE SECURED PARTY AGREE
THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A
JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT
THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF
THIS SECTION
5.9 AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN
WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT
OR ANY PROVISION HEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT.
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5.12 No Strict
Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any
party.
5.13 Entire
Agreement. This Agreement supersedes all other prior oral or
written agreements between each Obligor and the Secured Party and
their affiliates and persons acting on their behalf with respect to the matters
discussed herein, and this Agreement and the other Financing Documents and
instruments referenced herein and therein contain the entire understanding of
the parties with respect to the matters covered herein and therein.
[Remainder
of Page Intentionally Left Blank; Signature Page Follows]
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IN
WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be
duly executed and delivered as of the day and year first above
written.
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OBLIGORS:
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COMPOSITE
TECHNOLOGY
CORPORATION
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By:
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Name:
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Title:
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CTC
CABLE CORPORATION
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By:
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Name:
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Title:
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XXXXXX,
INC.
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By:
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Name:
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Title:
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Notice
Address:
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0000
XxXxx Xxxxxx
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Xxxxxx,
Xxxxxxxxxx 00000
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SECURED
PARTY:
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NORTHLIGHT FINANCIAL LLC,
individually
and in
its capacity as Collateral Agent
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By:
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| Name: Xxxx X. Xxxxxxxxxx | ||
| Title: Managing Member | ||
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Notice
Address:
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00
Xxxx 00xx Xxxxxx, 00 Xxxxx
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Xxx
Xxxx, XX 00000
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Attention: Xxxxxx
X.
Xxxxx
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