GENERAL SECURITY AGREEMENT
Exhibit 10.6
Execution Copy
This General Security Agreement (“Agreement”) dated November 20, 2007 is by Saitek Industries
Limited, a Delaware corporation (“Debtor”) in favor of Wachovia Capital Finance Corporation
(Central), an Illinois corporation (“Secured Party”).
WITNESSETH
WHEREAS, Lender has entered into a Second Amended and Restated Loan Agreement (as defined
below) with Mad Catz Inc., a Delaware corporation (the “Borrower”) pursuant to which Lender has
provided certain financial accommodations to Borrower;
WHEREAS, Debtor has executed and delivered or is about to execute and deliver to Secured Party
a guarantee in favor of Secured Party pursuant to which Debtor absolutely and unconditionally
guarantees to Secured Party the payment and performance of all now existing and hereafter arising
obligations, liabilities and indebtedness of Borrower to Secured Party; and
NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth herein, and
for other good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS
For purposes of this Agreement, the following terms shall have the respective meanings given
to them below:
1.1 “Accounts” shall mean all present and future rights of Debtor to payment of a monetary
obligation, whether or not earned by performance, which is not evidenced by chattel paper or an
instrument, (a)for property that has been or is to be sold, leased, licensed, assigned, or
otherwise disposed of, (b) for services rendered or to be rendered, (c) for a secondary obligation
incurred or to be incurred, or (d) arising out of the use of a credit or charge card or information
contained on or for use with the card.
1.2 “Equipment” shall mean all of Debtor’s now owned and hereafter acquired equipment,
wherever located, including machinery, data processing and computer equipment and computer hardware
and software, whether owned or licensed, and including embedded software, vehicles, tools,
furniture, fixtures, all attachments, accessions and property now or hereafter affixed thereto or
used in connection therewith, and substitutions and replacements thereof, wherever located.
1.3 “Event of Default” shall have the meaning set forth in Section 6.1 hereof.
1.4 “Financing Agreements” shall mean, collectively, the Second Amended and Restated Loan
Agreement, this Agreement and all notes, guarantees, security agreements and other agreements,
documents and instruments now or at any time hereafter executed and/or delivered by Borrower,
Debtor or any Obligor in connection with the Second Amended and Restated Loan Agreement.
1.5 “First Amending Agreement” shall mean the First Amending Agreement (as amended, modified,
supplemented, extended, renewed, restated or replaced from time to time), dated as of the date
hereof, by and between Borrower and Lender, amending the Second Amended and Restated Loan
Agreement.
1.6 “Information Certificate” shall mean the Information Certificate of Debtor constituting
Exhibit A to the First Amending Agreement containing material information with respect to Debtor,
its business and assets provided by or on behalf of Debtor to Secured Party in connection with the
preparation of this Agreement and the other Financing Agreements and the financing arrangements
provided for herein.
1.7 “Intellectual Property” shall mean Debtor’s now owned and hereafter arising or acquired:
patents, patent rights, patent applications, copyrights, works which are the subject matter of
copyrights, copyright registrations, trademarks, trade names, trade styles, trademark and service
xxxx applications, and licenses and rights to use any of the foregoing; all extensions, renewals,
reissues, divisions, continuations, and continuations-in-part of any of the foregoing; all rights
to xxx for past, present and future infringement of any of the foregoing; inventions, trade
secrets, formulae, processes, compounds, drawings, designs, blueprints, surveys, reports, manuals,
and operating standards; goodwill (including any goodwill associated with any trademark or the
license of any trademark); customer and other lists in whatever form maintained; and trade secret
rights, copyright rights, rights in works of authorship, domain names and domain name
registrations; software and contract rights relating to software, in whatever form created or
maintained.
1.8 “Inventory” shall mean all of Debtor’s now owned and hereafter existing or acquired goods,
wherever located, which (a) are leased by Debtor as lessor; (b)are held by Debtor for sale or lease
or to be furnished under a contract of service; (c)are furnished by Debtor under a contract of
service; or (d) consist of raw materials, work in process, finished goods or materials used or
consumed in its business.
1.9 “Obligations” shall mean any and all obligations, liabilities and indebtedness of every
kind, nature and description owing by Debtor to Secured Party and/or its affiliates, including
principal, interest, charges, fees, costs and expenses, however evidenced, whether as principal,
surety, endorser, Debtor or otherwise, whether arising under this Agreement or otherwise, whether
now existing or hereafter arising, whether arising before, during or after the initial or any
renewal term of the Second Amended and Restated Loan Agreement or after the commencement of any
case with respect to Borrower or Debtor under the United States Bankruptcy Code or any similar
statute (including the payment of interest and other amounts which would accrue and become due but
for the commencement of such case, whether or not
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such amounts are allowed or allowable in whole or in part in such case), whether direct or
indirect, absolute or contingent, joint or several, due or not due, primary or secondary,
liquidated or unliquidated, secured or unsecured, and however acquired by Secured Party.
1.10 “Obligor” shall mean any guarantor, endorser, acceptor, surety or other person liable on
or with respect to the Obligations or who is the owner of any property which is security for the
Obligations, other than Borrower and Debtor.
1.11 “Person” or “person” shall mean any individual, sole proprietorship, partnership,
corporation (including any corporation which elects subchapter S status under the Internal Revenue
Code of 1986, as amended), limited liability company, limited liability partnership, business
trust, unincorporated association, joint stock corporation, trust, joint venture or other entity or
any government or any agency or instrumentality or political subdivision thereof.
1.12 “Receivables” shall mean all of the following now owned or hereafter arising or acquired
property of Debtor: (a) all Accounts; (b) all interest, fees, late charges, penalties, collection
fees and other amounts due or to become due or otherwise payable in connection with any Account;
(c) all payment intangibles of Debtor and other contract rights, chattel paper, instruments, notes,
and other forms of obligations owing to Debtor, whether from the sale and lease of goods or other
property, licensing of any property (including Intellectual Property or other general intangibles),
rendition of services or from loans or advances by Debtor or to or for the benefit of any third
person (including loans or advances to any affiliates or subsidiaries of Debtor) or otherwise
associated with any Accounts, Inventory or general intangibles of Debtor (including, without
limitation, choses in action, causes of action, tax refunds, tax refund claims, any funds which may
become payable to Debtor in connection with the termination of any employee benefit plan and any
other amounts payable to Debtor from any employee benefit plan, rights and claims against carriers
and shippers, rights to indemnification, business interruption insurance and proceeds thereof,
casualty or any similar types of insurance and any proceeds thereof and proceeds of insurance
covering the lives of employees on which Debtor is a beneficiary).
1.13 “Records” shall mean all of Debtor’s present and future books of account of every kind or
nature, purchase and sale agreements, invoices, ledger cards, bills of lading and other shipping
evidence, statements, correspondence, memoranda, credit files and other data relating to the
Collateral or any account debtor, together with the tapes, disks, diskettes and other data and
software storage media and devices, file cabinets or containers in or on which the foregoing are
stored (including any rights of Debtor with respect to the foregoing maintained with or by any
other person).
1.14 “Second Amended and Restated Loan Agreement” shall mean the Second Amended and Restated
Loan Agreement (as amended, modified, supplemented, extended, renewed, restated or replaced from
time to time), dated October 30, 2007, by and between Borrower and Secured Party.
1.15 “UCC” shall mean the Uniform Commercial Code as in effect in the State of New
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York, and any successor statute, as in effect from time to time (except that terms used herein
which are defined in the Uniform Commercial Code as in effect in the State of New York on the date
hereof shall continue to have the same meaning notwithstanding any replacement or amendment of such
statute except as Secured Party may otherwise determine).
SECTION 2. GRANT OF SECURITY INTEREST
2.1 Grant of Security Interest. To secure payment and performance of all Obligations,
Debtor hereby grants to Secured Party a continuing security interest in, a lien upon, and a right
of set off against, and hereby assigns to Secured Party as security, all personal property and
interests in property and fixtures of Debtor, whether now owned or hereafter acquired or existing,
and wherever located (together with all other collateral security for the Obligations at any time
granted to or held or acquired by Secured Party, collectively, the “Collateral”), including:
(a) all Accounts;
(b) all general intangibles, including, without limitation, all Intellectual Property;
(c) all goods, including, without limitation, Inventory and Equipment;
(d) all chattel paper (including all tangible and electronic chattel paper);
(e) all instruments (including all promissory notes);
(f) all documents;
(g) all deposit accounts;
(h) all letters of credit, banker’s acceptances and similar instruments and including all
letter-of-credit rights;
(i) all supporting obligations and all present and future liens, security interests, rights,
remedies, title and interest in, to and in respect of Receivables and other Collateral, including
(i) rights and remedies under or relating to guaranties, contracts of suretyship, letters of credit
and credit and other insurance related to the Collateral, (ii) rights of stoppage in transit,
replevin, repossession, reclamation and other rights and remedies of an unpaid vendor, lienor or
secured party, (iii) goods described in invoices, documents, contracts or instruments with respect
to, or otherwise representing or evidencing, Receivables or other Collateral, including returned,
repossessed and reclaimed goods, and (iv) deposits by and property of account debtors or other
persons securing the obligations of account debtors;
(j) all (i) investment property (including securities, whether certificated or uncertificated,
securities accounts, security entitlements, commodity contracts or commodity accounts) and (ii)
monies, credit balances, deposits and other property of Debtor now or hereafter
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held or received by or in transit to Secured Party or its affiliates or at any other
depository or other institution from or for the account of Debtor, whether for safekeeping, pledge,
custody, transmission, collection or otherwise;
(k) all commercial tort claims, including, without limitation, those identified in the
Information Certificate;
(l) to the extent not otherwise described above, all Receivables;
(m) all Records; and
(n) all products and proceeds of the foregoing, in any form, including insurance proceeds and
all claims against third parties for loss or damage to or destruction of or other involuntary
conversion of any kind or nature of any or all of the other Collateral.
2.2 Perfection of Security Interests.
(a) Debtor irrevocably and unconditionally authorizes Secured Party (or its agent) to file at
any time and from time to time such financing statements with respect to the Collateral naming
Secured Party or its designee as the secured party and Debtor as debtor, as Secured Party may
require, and including any other information with respect to Debtor or otherwise required by part 5
of Article 9 of the Uniform Commercial Code of such jurisdiction as Secured Party may determine,
together with any amendment and continuations with respect thereto, which authorization shall apply
to all financing statements filed on, prior to or after the date hereof. Debtor hereby ratifies
and approves all financing statements naming Secured Party or its designee as secured party and
Debtor as debtor with respect to the Collateral (and any amendments with respect to such financing
statements) filed by or on behalf of Secured Party prior to the date hereof and ratifies and
confirms the authorization of Secured Party to file such financing statements (and amendments, if
any). Debtor hereby authorizes Secured Party to adopt on behalf of Debtor any symbol required for
authenticating any electronic filing. In the event that the description of the collateral in any
financing statement naming Secured Party or its designee as the secured party and Debtor as debtor
includes assets and properties of Debtor that do not at any time constitute Collateral, whether
hereunder, under any of the other Financing Agreements or otherwise, the filing of such financing
statement shall nonetheless be deemed authorized by Debtor to the extent of the Collateral included
in such description and it shall not render the financing statement ineffective as to any of the
Collateral or otherwise affect the financing statement as it applies to any of the Collateral. In
no event shall Debtor at any time file, or permit or cause to be filed, any correction statement or
termination statement with respect to any financing statement (or amendment or continuation with
respect thereto) naming Secured Party or its designee as secured party and Debtor as debtor.
(b) Debtor does not have any chattel paper (whether tangible or electronic) or instruments as
of the date hereof, except as set forth in the Information Certificate. In the event that Debtor
shall be entitled to or shall receive any chattel paper or instrument after the date hereof, Debtor
shall promptly notify Secured Party thereof in writing. Promptly upon the receipt
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thereof by or on behalf of Debtor (including by any agent or representative), Debtor shall
deliver, or cause to be delivered to Secured Party, all tangible chattel paper and instruments that
Debtor has or may at any time acquire, accompanied by such instruments of transfer or assignment
duly executed in blank as Secured Party may from time to time specify, in each case except as
Secured Party may otherwise agree. At Secured Party’s option, Debtor shall, or Secured Party may
at any time on behalf of Debtor, cause the original of any such instrument or chattel paper to be
conspicuously marked in a form and manner acceptable to Secured Party with the following legend
referring to chattel paper or instruments as applicable: “This [chattel paper][instrument] is
subject to the security interest of Wachovia Capital Finance Corporation (Central) and any sale,
transfer, assignment or encumbrance of this [chattel paper][instrument] violates the rights of such
secured party.”
(c) In the event that Debtor shall at any time hold or acquire an interest in any electronic
chattel paper or any “transferable record” (as such term is defined in Section 201 of the Federal
Electronic Signatures in Global and National Commerce Act or in Section 16 of the Uniform
Electronic Transactions Act as in effect in any relevant jurisdiction), Debtor shall promptly
notify Secured Party thereof in writing. Promptly upon Secured Party’s request, Debtor shall take,
or cause to be taken, such actions as Secured Party may reasonably request to give Secured Party
control of such electronic chattel paper under Section 9-105 of the UCC and control of such
transferable record under Section 201 of the Federal Electronic Signatures in Global and National
Commerce Act or, as the case may be, Section 16 of the Uniform Electronic Transactions Act, as in
effect in such jurisdiction.
(d) Debtor does not have any deposit accounts as of the date hereof, except as set forth in
the Information Certificate. Debtor shall not, directly or indirectly, after the date hereof open,
establish or maintain any deposit account unless each of the following conditions is satisfied:
(i) Secured Party shall have received not less than five (5) Business days prior written notice of
the intention of Debtor to open or establish such account which notice shall specify in reasonable
detail and specificity acceptable to Secured Party the name of the account, the owner of the
account, the name and address of the bank at which such account is to be opened or established, the
individual at such bank with whom Debtor is dealing and the purpose of the account, (ii) the bank
where such account is opened or maintained shall be acceptable to Secured Party, and (iii) on or
before the opening of such deposit account, Debtor shall as Secured Party may specify either (A)
deliver to Secured Party a Deposit Account Control Agreement with respect to such deposit account
duly authorized, executed and delivered by Debtor and the bank at which such deposit account is
opened and maintained or (B) arrange for Secured Party to become the customer of the bank with
respect to the deposit account on terms and conditions acceptable to Secured Party. The terms of
this subsection (d) shall not apply to deposit accounts specifically and exclusively used for
payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of
Debtor’s salaried employees.
(e) Debtor does not own or hold, directly or indirectly, beneficially or as record owner or
both, any investment property, as of the date hereof, or have any investment account, securities
account, commodity account or other similar account with any bank or other financial
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institution or other securities intermediary or commodity intermediary as of the date hereof,
in each case except as set forth in the Information Certificate.
(i) In the event that Debtor shall be entitled to or shall at any time after the date hereof
hold or acquire any certificated securities, Debtor shall promptly endorse, assign and deliver the
same to Secured Party, accompanied by such instruments of transfer or assignment duly executed in
blank as Secured Party may from time to time specify. If any securities, now or hereafter acquired
by Debtor are uncertificated and are issued to Debtor or its nominee directly by the issuer
thereof, Debtor shall immediately notify Secured Party thereof and shall as Secured Party may
specify, either (A) cause the issuer to agree to comply with instructions from Secured Party as to
such securities, without further consent of Debtor or such nominee, or (B) arrange for Secured
Party to become the registered owner of the securities.
(ii) Debtor shall not, directly or indirectly, after the date hereof open, establish or
maintain any investment account, securities account, commodity account or any other similar account
(other than a deposit account) with any securities intermediary or commodity intermediary unless
each of the following conditions is satisfied: (A) Secured Party shall have received not less than
five (5) Business days prior written notice of the intention of Debtor to open or establish such
account which notice shall specify in reasonable detail and specificity acceptable to Secured Party
the name of the account, the owner of the account, the name and address of the securities
intermediary or commodity intermediary at which such account is to be opened or established, the
individual at such intermediary with whom Debtor is dealing and the purpose of the account, (B) the
securities intermediary or commodity intermediary (as the case may be) where such account is opened
or maintained shall be acceptable to Secured Party, and (C) on or before the opening of such
investment account, securities account or other similar account with a securities intermediary or
commodity intermediary, Debtor shall as Secured Party may specify either (1) execute and deliver,
and cause to be executed and delivered to Secured Party, an Investment Property Control Agreement
with respect thereto duly authorized, executed and delivered by Debtor and such securities
intermediary or commodity intermediary or (2) arrange for Secured Party to become the entitlement
holder with respect to such investment property on terms and conditions acceptable to Secured
Party.
(f) Debtor is not the beneficiary or otherwise entitled to any right to payment under any
letter of credit, banker’s acceptance or similar instrument as of the date hereof, except as set
forth in the Information Certificate. In the event that Debtor shall be entitled to or shall
receive any right to payment under any letter of credit, banker’s acceptance or any similar
instrument, whether as beneficiary thereof or otherwise after the date hereof, Debtor shall
promptly notify Secured Party thereof in writing. Debtor shall immediately, as Secured Party may
specify, either (i) deliver, or cause to be delivered to Secured Party, with respect to any such
letter of credit, banker’s acceptance or similar instrument, the written agreement of the issuer
and any other nominated person obligated to make any payment in respect thereof (including any
confirming or negotiating bank), in form and substance satisfactory to Secured Party, consenting to
the assignment of the proceeds of the letter of credit to Secured Party by Debtor and agreeing to
make all payments thereon directly to Secured Party or as Secured Party may otherwise direct or
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(ii) cause Secured Party to become, at Debtor’s expense, the transferee beneficiary of the
letter of credit, banker’s acceptance or similar instrument (as the case may be).
(g) Debtor has no commercial tort claims as of the date hereof, except as set forth in the
Information Certificate. In the event that Debtor shall at any time after the date hereof have any
commercial tort claims, Debtor shall promptly notify Secured Party thereof in writing, which notice
shall (i) set forth in reasonable detail the basis for and nature of such commercial tort claim and
(ii) include the express grant by Debtor to Secured Party of a security interest in such commercial
tort claim (and the proceeds thereof). In the event that such notice does not include such grant
of a security interest, the sending thereof by Debtor to Secured Party shall be deemed to
constitute such grant to Secured Party. Upon the sending of such notice, any commercial tort claim
described therein shall constitute part of the Collateral and shall be deemed included therein.
Without limiting the authorization of Secured Party provided in Section 2.2(a) hereof or otherwise
arising by the execution by Debtor of this Agreement or any of the other Financing Agreements,
Secured Party is hereby irrevocably authorized from time to time and at any time to file such
financing statements naming Secured Party or its designee as secured party and Debtor as debtor, or
any amendments to any financing statements, covering any such commercial tort claim as Collateral.
In addition, Debtor shall promptly upon Secured Party’s request, execute and deliver, or cause to
be executed and delivered, to Secured Party such other agreements, documents and instruments as
Secured Party may require in connection with such commercial tort claim.
(h) Debtor does not have any goods, documents of title or other Collateral in the custody,
control or possession of a third party as of the date hereof, except as set forth in the
Information Certificate and except for goods located in the United States in transit to a location
of Debtor permitted herein in the ordinary course of business of Debtor in the possession of the
carrier transporting such goods. In the event that any goods, documents of title or other
Collateral are at any time after the date hereof in the custody, control or possession of any other
person not referred to in the Information Certificate or such carriers, Debtor shall promptly
notify Secured Party thereof in writing. Promptly upon Secured Party’s request, Debtor shall
deliver to Secured Party a Collateral Access Agreement duly authorized, executed and delivered by
such person and Debtor.
(i) Debtor shall take any other actions reasonably requested by Secured Party from time to
time to cause the attachment, perfection and first priority of, and the ability of Secured Party to
enforce, the security interest of Secured Party in any and all of the Collateral, including,
without limitation, (i) executing, delivering and, where appropriate, filing financing statements
and amendments relating thereto under the UCC or other applicable law, to the extent, if any, that
Debtor’s signature thereon is required therefor, (ii) causing Secured Party’s name to be noted as
secured party on any certificate of title for a titled good if such notation is a condition to
attachment, perfection or priority of, or ability of Secured Party to enforce, the security
interest of Secured Party in such Collateral, (iii) complying with any provision of any statute,
regulation or treaty of the United States as to any Collateral if compliance with such provision is
a condition to attachment, perfection or priority of, or ability of Secured Party to enforce, the
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security interest of Secured Party in such Collateral, (iv) obtaining the consents and
approvals of any governmental authority or third party, including, without limitation, any consent
of any licensor, lessor or other person obligated on Collateral, and taking all actions required by
any earlier versions of the UCC or by other law, as applicable in any relevant jurisdiction.
SECTION 3. COLLATERAL COVENANTS
3.1 Accounts Covenants. Secured Party shall have the right at any time or times, in
Secured Party’s name or in the name of a nominee of Secured Party, to verify the validity, amount
or any other matter relating to any Account or other Collateral, by mail, telephone, facsimile
transmission or otherwise.
3.2 Inventory Covenants. With respect to the Inventory: (a) Debtor shall at all times
maintain inventory records reasonably satisfactory to Secured Party, keeping correct and accurate
records itemizing and describing the kind, type, quality and quantity of Inventory, Debtor’s cost
therefor and daily withdrawals therefrom and additions thereto; (b) Debtor shall conduct a physical
count of the Inventory at least once each year, but at any time or times as Secured Party may
request on or after an Event of Default, and promptly following such physical inventory shall
supply Secured Party with a report in the form and with such specificity as may be reasonably
satisfactory to Secured Party concerning such physical count; (c) Debtor shall not remove any
Inventory from the locations set forth or permitted herein, without the prior written consent of
Secured Party, except for sales of Inventory in the ordinary course of Debtor’s business and except
to move Inventory directly from one location set forth or permitted herein to another such
location; (d) upon Secured Party’s request, Debtor shall, at its expense, no more than once in any
three (3) month period, but at any time or times as Secured Party may request on or after an Event
of Default, deliver or cause to be delivered to Secured Party written reports or appraisals as to
the Inventory in form, scope and methodology acceptable to Secured Party and by an appraiser
acceptable to Secured Party, addressed to Secured Party or upon which Secured Party is expressly
permitted to rely; (e) Debtor shall produce, use, store and maintain the Inventory, with all
reasonable care and caution and in accordance with applicable standards of any insurance and in
conformity with applicable laws (including the requirements of the Federal Fair Labor Standards Act
of 1938, as amended and all rules, regulations and orders related thereto); (f) Debtor assumes all
responsibility and liability arising from or relating to the production, use, sale or other
disposition of the Inventory; (g) Debtor shall not sell Inventory to any customer on approval, or
any other basis which entitles the customer to return or may obligate Debtor to repurchase such
Inventory; (h) Debtor shall keep the Inventory in good and marketable condition; and (i) Debtor
shall not, without prior written notice to Secured Party, acquire or accept any Inventory on
consignment or approval.
3.3 Equipment Covenants. With respect to the Equipment: (a) upon Secured Party’s
request, Debtor shall, at its expense, at any time or times as Secured Party may request on or
after an Event of Default, deliver or cause to be delivered to Secured Party written appraisals as
to the Equipment in form, scope and methodology acceptable to Secured Party and by an appraiser
acceptable to Secured Party, addressed to Secured Party and upon which Secured Party
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is expressly permitted to rely; (b) Debtor shall keep the Equipment in good order, repair,
running and marketable condition (ordinary wear and tear excepted); (c) Debtor shall use the
Equipment with all reasonable care and caution and in accordance with applicable standards of any
insurance and in conformity with all applicable laws; (d) the Equipment is and shall be used in
Debtor’s business and not for personal, family, household or farming use; (e) Debtor shall not
remove any Equipment from the locations set forth in its Information Certificate, except to the
extent necessary to have any Equipment repaired or maintained in the ordinary course of the
business of Debtor or to move Equipment directly from one location set forth or permitted herein to
another such location and except for the movement of motor vehicles used by or for the benefit of
Debtor in the ordinary course of business; (f) the Equipment is now and shall remain personal
property and Debtor shall not permit any of the Equipment to be or become a part of or affixed to
real property; and (g) Debtor assumes all responsibility and liability arising from the use of the
Equipment.
3.4 Power of Attorney. Debtor hereby irrevocably designates and appoints Secured
Party (and all persons designated by Secured Party) as Debtor’s true and lawful attorney-in-fact,
and authorizes Secured Party, in Debtor’s or Secured Party’s name, to: (a) at any time an Event of
Default exists or has occurred and is continuing (i) demand payment on Receivables or other
Collateral, (ii) enforce payment of Receivables by legal proceedings or otherwise, (iii) exercise
all of Debtor’s rights and remedies to collect any Receivable or other Collateral, (iv) sell or
assign any Receivable upon such terms, for such amount and at such time or times as the Secured
Party deems advisable, (v) settle, adjust, compromise, extend or renew an Account, (vi) discharge
and release any Receivable, (vii) prepare, file and sign Debtor’s name on any proof of claim in
bankruptcy or other similar document against an account debtor or other obligor in respect of any
Receivables or other Collateral, (viii) notify the post office authorities to change the address
for delivery of remittances from account debtors or other obligors in respect of Receivables or
other proceeds of Collateral to an address designated by Secured Party, and open and dispose of all
mail addressed to Debtor and handle and store all mail relating to the Collateral; and (ix) do all
acts and things which are necessary, in Secured Party’s determination, to fulfill Debtor’s
obligations under this Agreement and the other Financing Agreements and (x) at any time to (xi)
take control in any manner of any item of payment in respect of Receivables or constituting
Collateral or otherwise received in or for deposit in any deposit accounts maintained by Debtor or
otherwise received by Secured Party, (xii) have access to any lockbox or postal box into which
remittances from account debtors or other obligors in respect of Receivables or other proceeds of
Collateral are sent or received, (xiii) endorse Debtor’s name upon any items of payment in respect
of Receivables or constituting Collateral or otherwise received by Secured Party and deposit the
same in Secured Party’s account for application to the Obligations, (xiv) endorse Debtor’s name
upon any chattel paper, document, instrument, invoice, or similar document or agreement relating to
any Receivable or any goods pertaining thereto or any other Collateral, including any warehouse or
other receipts, or bills of lading and other negotiable or non-negotiable documents, and (xv) sign
Debtor’s name on any verification of Receivables and notices thereof to account debtors or any
secondary obligors or other obligors in respect thereof. Debtor hereby releases Secured Party and
its officers, employees and designees from any liabilities arising from any act or acts under this
power of attorney and in furtherance
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thereof, whether of omission or commission, except as a result of Secured Party’s own gross
negligence or wilful misconduct as determined pursuant to a final non-appealable order of a court
of competent jurisdiction.
3.5 Right to Cure. Secured Party may, at its option, (a) upon notice to Debtor, cure
any default by Debtor under any material agreement with a third party that affects the Collateral,
its value or the ability of Secured Party to collect, sell or otherwise dispose of the Collateral
or the rights and remedies of Secured Party therein or the ability of Debtor to perform its
obligations hereunder or under the other Financing Agreements, (b) pay or bond on appeal any
judgment entered against Debtor, (c) discharge taxes, liens, security interests or other
encumbrances at any time levied on or existing with respect to the Collateral and (d) pay any
amount, incur any expense or perform any act which, in Secured Party’s judgment, is necessary or
appropriate to preserve, protect, insure or maintain the Collateral and the rights of Secured Party
with respect thereto. Secured Party may add any amounts so expended to the Obligations and charge
Debtor’s account therefor, such amounts to be repayable by Debtor on demand. Secured Party shall
be under no obligation to effect such cure, payment or bonding and shall not, by doing so, be
deemed to have assumed any obligation or liability of Debtor. Any payment made or other action
taken by Secured Party under this Section shall be without prejudice to any right to assert an
Event of Default hereunder and to proceed accordingly.
3.6 Access to Premises. From time to time as requested by Secured Party, at the cost
and expense of Debtor, (a) Secured Party or its designee shall have complete access to all of
Debtor’s premises during normal business hours and after notice to Debtor, or at any time and
without notice to Debtor if an Event of Default exists or has occurred and is continuing, for the
purposes of inspecting, verifying and auditing the Collateral and all of Debtor’s books and
records, including the Records, and (b) Debtor shall promptly furnish to Secured Party such copies
of such books and records or extracts therefrom as Secured Party may request, and (c) use during
normal business hours such of Debtor’s personnel, equipment, supplies and premises as may be
reasonably necessary for the foregoing and if an Event of Default exists or has occurred and is
continuing for the collection of Accounts and realization of other Collateral.
SECTION 4. REPRESENTATIONS AND WARRANTIES
Debtor hereby represents and warrants to Secured Party the following (which shall survive the
execution and delivery of this Agreement):
4.1 Corporate Existence; Power and Authority. Debtor is a corporation duly organized
and in good standing under the laws of its state of incorporation and is duly qualified as a
foreign corporation and in good standing in all states or other jurisdictions where the nature and
extent of the business transacted by it or the ownership of assets makes such qualification
necessary, except for those jurisdictions in which the failure to so qualify would not have a
material adverse effect on Debtor’s financial condition, results of operation or business or the
rights of Secured Party in or to any of the Collateral. The execution, delivery and performance of
this Agreement, the other Financing Agreements and the transactions contemplated hereunder and
thereunder (a) are all within Debtor’s corporate powers, (b) have been duly authorized, (c) are not
in
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contravention of law or the terms of Debtor’s certificate of incorporation, by-laws, or other
organizational documentation, or any indenture, agreement or undertaking to which Debtor is a party
or by which Debtor or its property are bound and (d) will not result in the creation or imposition
of, or require or give rise to any obligation to grant, any lien, security interest, charge or
other encumbrance upon any property of Debtor. This Agreement and the other Financing Agreements
constitute legal, valid and binding obligations of Debtor enforceable in accordance with their
respective terms.
4.2 Name; State of Organization; Chief Executive Office; Collateral Locations.
(a) The exact legal name of Debtor is as set forth on the signature page of this Agreement and
in the Information Certificate. Debtor has not, during the past five years, been known by or used
any other corporate or fictitious name or been a party to any merger or consolidation, or acquired
all or substantially all of the assets of any Person, or acquired any of its property or assets out
of the ordinary course of business, except as set forth in the Information Certificate.
(b) Debtor is an organization of the type and organized in the jurisdiction set forth in the
Information Certificate. The Information Certificate accurately sets forth the organizational
identification number of Debtor or accurately states that Debtor has none and accurately sets forth
the federal employer identification number of Debtor.
(c) The chief executive office and mailing address of Debtor and Debtor’s Records concerning
Accounts are located only at the address identified as such in the Information Certificate and its
only other places of business and the only other locations of Collateral, if any, are the addresses
set forth in the Information Certificate, subject to the right of Debtor to establish new locations
in accordance with Section 5.2 below. The Information Certificate correctly identifies any of such
locations which are not owned by Debtor and sets forth the owners and/or operators thereof.
4.3 Priority of Liens. The security interests and liens granted to Secured Party
under this Agreement and the other Financing Agreements constitute valid and perfected first
priority liens and security interests in and upon the Collateral subject only to the existing liens
indicated on the Information Certificate and the other liens permitted under Section 5.6 hereof.
Debtor has valid leasehold interests in all of its real property and good, valid and merchantable
title to all of its other properties and assets subject to no liens, mortgages, pledges, security
interests, encumbrances or charges of any kind, except those granted to Secured Party and such
others as are specifically listed on the Information Certificate or permitted under Section 5.6
hereof.
4.4 Accuracy and Completeness of Information. All information furnished by or on
behalf of Debtor in writing to Secured Party in connection with this Agreement or any of the other
Financing Agreements or any transaction contemplated hereby or thereby, including all information
on the Information Certificate is true and correct in all material respects on the date as of which
such information is dated or certified and does not omit any material fact necessary in order to make such information not misleading. No event or circumstance has occurred which
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has had or could reasonably be expected to have a material adverse affect on the business, assets
or prospects of Debtor, which has not been fully and accurately disclosed to Secured Party in
writing.
4.5 Survival of Warranties; Cumulative. All representations and warranties contained
in this Agreement or any of the other Financing Agreements shall survive the execution and delivery
of this Agreement and shall be deemed to have been made again to Secured Party on the date of each
additional borrowing or other credit accommodation under the Second Amended and Restated Loan
Agreement and shall be conclusively presumed to have been relied on by Secured Party regardless of
any investigation made or information possessed by Secured Party. The representations and
warranties set forth herein shall be cumulative and in addition to any other representations or
warranties which Debtor shall now or hereafter give, or cause to be given, to Secured Party.
SECTION 5. AFFIRMATIVE AND NEGATIVE COVENANTS
| 5.1 | Maintenance of Existence. |
(a) Debtor shall at all times preserve, renew and keep in full force and effect its corporate
existence and rights and franchises with respect thereto and maintain in full force and effect all
permits, licenses, trademarks, tradenames, approvals, authorizations, leases and contracts
necessary to carry on the business as presently or proposed to be conducted.
(b) Debtor shall not change its name unless each of the following conditions is satisfied: (i)
Secured Party shall have received not less than thirty (30) days prior written notice from Debtor
of such proposed change in its corporate name, which notice shall accurately set forth the new
name; and (ii) Secured Party shall have received a copy of the amendment to the Certificate of
Incorporation of Debtor providing for the name change certified by the Secretary of State of the
jurisdiction of incorporation or organization of Debtor as soon as it is available.
(c) Debtor shall not change its chief executive office or its mailing address or
organizational identification number (or if it does not have one, shall not acquire one) unless
Secured Party shall have received not less than thirty (30) days’ prior written notice from Debtor
of such proposed change, which notice shall set forth such information with respect thereto as
Secured Party may require and Secured Party shall have received such agreements as Secured Party
may reasonably require in connection therewith. Debtor shall not change its type of organization,
jurisdiction of organization or other legal structure.
5.2 New Collateral Locations. Debtor may only open any new location within the
continental United States provided Debtor (a) gives Secured Party thirty (30) days prior written
notice from Debtor of the intended opening of any such new location and (b) executes and delivers,
or causes to be executed and delivered, to Secured Party such agreements, documents, and
instruments as Secured Party may deem necessary or desirable to protect its interests in the
Collateral at such location.
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5.3 New Real Property. Debtor may acquire real property within the continental United
States provided Debtor (a) gives Secured Party sixty (60) days prior written notice from Debtor of
the intended acquisition of real property and (b) executes and delivers, or causes to be executed
and delivered, to Secured Party such agreements, documents, and instruments as Secured Party may
deem necessary or desirable.
5.4 Insurance. Debtor shall, at all times maintain with financially sound and
reputable insurers insurance with respect to the Collateral against loss or damage and all other
insurance of the kinds and in the amounts customarily insured against or carried by corporations of
established reputation engaged in the same or similar businesses and similarly situated. Said
policies of insurance shall be satisfactory to Secured Party as to form, amount and insurer.
Debtor shall furnish certificates, policies or endorsements to Secured Party as Secured Party shall
require as proof of such insurance, and, if Debtor fails to do so, Secured Party is authorized, but
not required, to obtain such insurance at the expense of Debtor. All policies shall provide for at
least thirty (30) days prior written notice to Secured Party of any cancellation or reduction of
coverage and that Secured Party may act as attorney for Debtor in obtaining, and at any time an
Event of Default exists or has occurred and is continuing, adjusting, settling, amending and
canceling such insurance. Debtor shall cause Secured Party to be named as a loss payee and an
additional insured (but without any liability for any premiums) under such insurance policies and
Debtor shall obtain non-contributory lender’s loss payable endorsements to all insurance policies
in form and substance satisfactory to Secured Party. Such lender’s loss payable endorsement shall
specify that the proceeds of such insurance shall be payable to Secured Party as its interests may
appear and further specify that Secured Party shall be paid regardless of any act or omission by
Debtor or any of its affiliates. At its option, Secured Party may apply any insurance proceeds
received by Secured Party at any time to the cost of repairs or replacement of Collateral and/or to
payment of the Obligations, whether or not then due, in any order and in such manner as Secured
Party may determine or hold such proceeds as cash collateral for the Obligations.
5.5 Financial Statements and Other Information. Debtor shall keep proper books and
records in which true and complete entries shall be made of all dealings or transactions of or in
relation to the Collateral and the business of Debtor in accordance with GAAP. Debtor shall
promptly furnish to Secured Party all such financial and other information as Secured Party shall
reasonably request relating to the Collateral and the assets, business and operations of Debtor.
5.6 Encumbrances. Debtor shall not create, incur, assume or suffer to exist any
security interest, mortgage, pledge, lien, charge or other encumbrance of any nature whatsoever on
any of its assets or properties, including the Collateral, except: (a) liens and security
interests of Secured Party; (b) liens securing the payment of taxes, either not yet overdue or the
validity of which are being contested in good faith by appropriate proceedings diligently pursued
and available to Debtor and with respect to which adequate reserves have been set aside on its
books; (c) non-consensual statutory liens (other than liens securing the payment of taxes) arising
in the ordinary course of Debtor’s business to the extent: (i) such liens secure indebtedness which
is not overdue or (ii) such liens secure indebtedness relating to claims or liabilities which are
fully insured and being defended at the sole cost and expense and at the sole risk of the insurer or
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being contested in good faith by appropriate proceedings diligently pursued and available to
Debtor, in each case prior to the commencement of foreclosure or other similar proceedings and with
respect to which adequate reserves have been set aside on its books; (d) purchase money security
interests in Equipment (including capital leases) not to exceed $100,000 in the aggregate at any
time outstanding so long as such security interests do not apply to any property of Debtor other
than the Equipment so acquired, and the indebtedness secured thereby does not exceed the cost of
the Equipment so acquired, as the case may be; and (e) the security interests and liens set forth
on the Information Certificate.
5.7 Indebtedness. Debtor shall not incur, create, assume, become or be liable in any
manner with respect to, or permit to exist, any obligations or indebtedness, or guarantee, assume,
endorse, or otherwise become responsible for (directly or indirectly) the indebtedness,
performance, obligations or dividends of any other Person, except (a) the Obligations; (b)
trade obligations and normal accruals in the ordinary course of business not yet due and payable,
or with respect to which the Debtor is contesting in good faith the amount or validity thereof by
appropriate proceedings diligently pursued and available to Debtor, and with respect to which
adequate reserves have been set aside on its books; (c) purchase money indebtedness (including
capital leases) to the extent not incurred or secured by liens (including capital leases) in
violation of any other provision of this Agreement; and (d) the obligations, indebtedness and
guarantees set forth on the Information Certificate; provided, that, (i) Debtor may
only make regularly scheduled payments of principal and interest in respect of such indebtedness in
accordance with the terms of the agreement or instrument evidencing or giving rise to such
indebtedness as in effect on the date hereof, (ii) Debtor shall not, directly or indirectly, (A)
amend, modify, alter or change the terms of such obligations, indebtedness or guarantees or any
agreement, document or instrument related thereto as in effect on the date hereof, or (B) redeem,
retire, defease, purchase or otherwise acquire such obligations, indebtedness or guarantees or set
aside or otherwise deposit or invest any sums for such purpose, and (iii) Debtor shall furnish to
Secured Party all notices or demands in connection with such obligations, indebtedness or
guarantees either received by Debtor or on its behalf, promptly after the receipt thereof, or sent
by Debtor or on its behalf, concurrently with the sending thereof, as the case may be.
5.8 Costs and Expenses. Debtor shall pay to Secured Party on demand all costs,
expenses, filing fees and taxes paid or payable in connection with the preparation, negotiation,
execution, delivery, recording, administration, collection, liquidation, enforcement and defense of
the Obligations, Secured Party’s rights in the Collateral, this Agreement, the other Financing
Agreements and all other documents related hereto or thereto, including any amendments, supplements
or consents which may hereafter be contemplated (whether or not executed) or entered into in
respect hereof and thereof, including: (a) all costs and expenses of filing or recording (including
Uniform Commercial Code financing statement filing taxes and fees, documentary taxes, intangibles
taxes and mortgage recording taxes and fees, if applicable); (b)insurance premiums, appraisal fees
and search fees; (c) costs and expenses of preserving and protecting the Collateral; (d) costs and expenses paid or incurred in connection with
obtaining payment of the Obligations, enforcing the security interests and liens of Secured Party,
selling or otherwise realizing upon the Collateral, and otherwise enforcing the provisions of this
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Agreement and the other Financing Agreements or defending any claims made or threatened against
Secured Party arising out of the transactions contemplated hereby and thereby (including
preparations for and consultations concerning any such matters); and (e) the fees and disbursements
of counsel (including legal assistants) to Secured Party in connection with any of the foregoing.
5.9 Further Assurances. At the request of Secured Party at any time and from time to
time, Debtor shall, at its expense, at any time or times duly execute and deliver, or cause to be
duly executed and delivered, such further agreements, documents and instruments, and do or cause to
be done such further acts as may be necessary or proper to evidence, perfect, maintain and enforce
the security interests and the priority thereof in the Collateral and to otherwise effectuate the
provisions or purposes of this Agreement or any of the other Financing Agreements.
SECTION 6. EVENTS OF DEFAULT AND REMEDIES
6.1 Events of Default. The occurrence or existence of any Event of Default under the
Second Amended and Restated Loan Agreement is referred to herein individually as an “Event of
Default”, and collectively as “Events of Default”.
6.2 Remedies.
(a) At any time an Event of Default exists or has occurred and is continuing, Secured Party
shall have all rights and remedies provided in this Agreement, the other Financing Agreements, the
UCC and other applicable law, all of which rights and remedies may be exercised without notice to
or consent by Debtor or any Obligor, except as such notice or consent is expressly provided for
hereunder or required by applicable law. All rights, remedies and powers granted to Secured Party
hereunder, under any of the other Financing Agreements, the UCC or other applicable law, are
cumulative, not exclusive and enforceable, in Secured Party’s discretion, alternatively,
successively, or concurrently on any one or more occasions, and shall include, without limitation,
the right to apply to a court of equity for an injunction to restrain a breach or threatened breach
by Debtor of this Agreement or any of the other Financing Agreements. Secured Party may, at any
time or times, proceed directly against Debtor or any Obligor to collect the Obligations without
prior recourse to any Obligor or any of the Collateral.
(b) Without limiting the foregoing, at any time an Event of Default exists or has occurred and
is continuing, Secured Party may, in its discretion and, without limitation, (i)accelerate the
payment of all Obligations and demand immediate payment thereof to Secured Party (provided,
that, upon the occurrence of any Event of Default described in Sections 10.1(g) and 10.1(h)
of the Second Amended and Restated Loan Agreement, all Obligations shall automatically become
immediately due and payable), (ii) with or without judicial process or the aid or assistance of
others, enter upon any premises on or in which any of the Collateral may be located and take possession of the Collateral or complete processing, manufacturing and repair
of all or any portion of the Collateral, (iii) require Debtor, at Debtor’s expense, to assemble and
make available to Secured Party any part or all of the Collateral at any place and time designated
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by Secured Party, (iv)collect, foreclose, receive, appropriate, setoff and realize upon any and all
Collateral, (v) remove any or all of the Collateral from any premises on or in which the same may
be located for the purpose of effecting the sale, foreclosure or other disposition thereof or for
any other purpose, and/or (vi) sell, lease, transfer, assign, deliver or otherwise dispose of any
and all Collateral (including entering into contracts with respect thereto, public or private sales
at any exchange, broker’s board, at any office of Secured Party or elsewhere) at such prices or
terms as Secured Party may deem reasonable, for cash, upon credit or for future delivery, with the
Secured Party having the right to purchase the whole or any part of the Collateral at any such
public sale, all of the foregoing being free from any right or equity of redemption of Debtor,
which right or equity of redemption is hereby expressly waived and released by Debtor. If any of
the Collateral is sold or leased by Secured Party upon credit terms or for future delivery, the
Obligations shall not be reduced as a result thereof until payment therefor is finally collected by
Secured Party. If notice of disposition of Collateral is required by law, ten (10) days prior
notice by Secured Party to Debtor designating the time and place of any public sale or the time
after which any private sale or other intended disposition of Collateral is to be made, shall be
deemed to be reasonable notice thereof and Debtor waives any other notice. In the event Secured
Party institutes an action to recover any Collateral or seeks recovery of any Collateral by way of
prejudgment remedy, Debtor waives the posting of any bond which might otherwise be required.
(c) Secured Party may, at any time or times that an Event of Default exists or has occurred
and is continuing, enforce Debtor’s rights against any account debtor, secondary obligor or other
obligor in respect of any of the Accounts or other Receivables. Without limiting the generality of
the foregoing, Secured Party may at such time or times (i) notify any or all account debtors,
secondary obligors or other obligors in respect thereof that the Receivables have been assigned to
Secured Party and that Secured Party has a security interest therein and Secured Party may direct
any or all account debtors, secondary obligors and other obligors to make payment of Receivables
directly to Secured Party, (ii) extend the time of payment of, compromise, settle or adjust for
cash, credit, return of merchandise or otherwise, and upon any terms or conditions, any and all
Receivables or other obligations included in the Collateral and thereby discharge or release the
account debtor or any secondary obligors or other obligors in respect thereof without affecting any
of the Obligations, (iii) demand, collect or enforce payment of any Receivables or such other
obligations, but without any duty to do so, and Secured Party shall not be liable for its failure
to collect or enforce the payment thereof nor for the negligence of its agents or attorneys with
respect thereto and (iv) take whatever other action Secured Party may deem necessary or desirable
for the protection of its interests. At any time that an Event of Default exists or has occurred
and is continuing, at Secured Party’s request, all invoices and statements sent to any account
debtor shall state that the Accounts and such other obligations have been assigned to Secured Party
and are payable directly and only to Secured Party and Debtor shall deliver to Secured Party such
originals of documents evidencing the sale and delivery of goods or the performance of services
giving rise to any Accounts as Secured Party may require. In the event any account debtor returns
Inventory when an Event of Default exists or has occurred and is continuing, Debtor shall, upon Secured Party’s request, hold the
returned Inventory in trust for Secured Party, segregate all returned Inventory from all of its
other property, dispose of the returned Inventory solely according to Secured Party’s instructions,
and
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not issue any credits, discounts or allowances with respect thereto without Secured Party’s
prior written consent.
(d) To the extent that applicable law imposes duties on Secured Party to exercise remedies in
a commercially reasonable manner (which duties cannot be waived under such law), Debtor
acknowledges and agrees that it is not commercially unreasonable for Secured Party (i) to fail to
incur expenses reasonably deemed significant by Secured Party to prepare Collateral for disposition
or otherwise to complete raw material or work in process into finished goods or other finished
products for disposition, (ii) to fail to obtain third party consents for access to Collateral to
be disposed of, or to obtain or, if not required by other law, to fail to obtain consents of any
governmental authority or other third party for the collection or disposition of Collateral to be
collected or disposed of, (iii) to fail to exercise collection remedies against account debtors,
secondary obligors or other persons obligated on Collateral or to remove liens or encumbrances on
or any adverse claims against Collateral, (iv) to exercise collection remedies against account
debtors and other persons obligated on Collateral directly or through the use of collection
agencies and other collection specialists, (v) to advertise dispositions of Collateral through
publications or media of general circulation, whether or not the Collateral is of a specialized
nature, (vi) to contact other persons, whether or not in the same business as Debtor for
expressions of interest in acquiring all or any portion of the Collateral, (vii) to hire one or
more professional auctioneers to assist in the disposition of Collateral, whether or not the
collateral is of a specialized nature, (viii) to dispose of Collateral by utilizing Internet sites
that provide for the auction of assets of the types included in the Collateral or that have the
reasonable capability of doing so, or that match buyers and sellers of assets, (ix) to dispose of
assets in wholesale rather than retail markets, (x) to disclaim disposition warranties, (xi) to
purchase insurance or credit enhancements to insure Secured Party against risks of loss, collection
or disposition of Collateral or to provide to Secured Party a guaranteed return from the collection
or disposition of Collateral, or (xii) to the extent deemed appropriate by Secured Party, to obtain
the services of other brokers, investment bankers, consultants and other professionals to assist
Secured Party in the collection or disposition of any of the Collateral. Debtor acknowledges that
the purpose of this Section is to provide non-exhaustive indications of what actions or omissions
by Secured Party would not be commercially unreasonable in Secured Party’s exercise of remedies
against the Collateral and that other actions or omissions by Secured Party shall not be deemed
commercially unreasonable solely on account of not being indicated in this Section. Without
limitation of the foregoing, nothing contained in this Section shall be construed to grant any
rights to Debtor or to impose any duties on Secured Party that would not have been granted or
imposed by this Agreement or by applicable law in the absence of this Section.
(e) For the purpose of enabling Secured Party to exercise the rights and remedies hereunder,
Debtor hereby grants to Secured Party, to the extent assignable, an irrevocable, non-exclusive
license (exercisable without payment of royalty or other compensation to Debtor) to use, assign,
license or sublicense any of the trademarks, service-marks, trade names, business names, trade styles, designs, logos and other source of business identifiers and other
Intellectual Property and general intangibles now owned or hereafter acquired by Debtor, wherever
the same maybe located, including in such license reasonable access to all media in which any of
the
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licensed items may be recorded or stored and to all computer programs used for the compilation
or printout thereof.
(f) Secured Party may apply the cash proceeds of Collateral actually received by Secured Party
from any sale, lease, foreclosure or other disposition of the Collateral to payment of the
Obligations, in whole or in part and in such order as Secured Party may elect, whether or not then
due. Debtor shall remain liable to Secured Party for the payment of any deficiency with interest
at the highest rate provided for in the Second Amended and Restated Loan Agreement and all costs
and expenses of collection or enforcement, including attorneys’ fees and legal expenses.
SECTION 7. JURY TRIAL WAIVER; OTHER WAIVERS
AND CONSENTS; GOVERNING LAW
7.1 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver.
(a) The validity, interpretation and enforcement of this Agreement and any dispute arising out
of the relationship between the parties hereto, whether in contract, tort, equity or otherwise,
shall be governed by the internal laws of the State of California but excluding any principles of
conflicts of law or other rule of law that would cause the application of the law of any
jurisdiction other than the laws of the State of California.
(b) Debtor and Secured Party irrevocably consent and submit to the non-exclusive jurisdiction
of the California State Courts located in the County of San Diego and the United States District
Court for the Southern District of California, whichever Secured Party may elect, and waive any
objection based on venue or forum non conveniens with respect to any action
instituted therein arising under this Agreement or any of the other Financing Agreements or in any
way connected with or related or incidental to the dealings of the parties hereto in respect of
this Agreement or any of the other Financing Agreements or the transactions related hereto or
thereto, in each case whether now existing or hereafter arising, and whether in contract, tort,
equity or otherwise, and agree that any dispute with respect to any such matters shall be heard
only in the courts described above (except that Secured Party shall have the right to bring any
action or proceeding against Debtor or its property in the courts of any other jurisdiction which
Secured Party deems necessary or appropriate in order to realize on the Collateral or to otherwise
enforce its rights against Debtor or its property).
(c) Debtor hereby waives personal service of any and all process upon it and consents that all
such service of process may be made by certified mail (return receipt requested) directed to its
address set forth on the signature pages hereof and service so made shall be deemed to be completed
five (5) days after the same shall have been so deposited in the U.S. mails, or, at Secured Party’s
option, by service upon Debtor in any other manner provided under the rules of any such courts.
Within thirty (30) days after such service, Debtor shall appear in answer to such process, failing which Debtor shall be deemed in default and judgment may be
entered by Secured Party against Debtor for the amount of the claim and other relief requested.
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(d) DEBTOR HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION (1) ARISING UNDER THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR (2) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF DEBTOR AND SECURED PARTY IN RESPECT OF
THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS RELATED HERETO OR
THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT,
EQUITY OR OTHERWISE. DEBTOR HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT DEBTOR OR SECURED PARTY MAY
FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENT OF DEBTOR AND SECURED PARTY TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(e) Secured Party shall not have any liability to Debtor (whether in tort, contract, equity or
otherwise) for losses suffered by Debtor in connection with, arising out of, or in any way related
to the transactions or relationships contemplated by this Agreement, or any act, omission or event
occurring in connection herewith, unless it is determined by a final and non-appealable judgment or
court order binding on Secured Party that the losses were the result of acts or omissions
constituting gross negligence or willful misconduct. In any such litigation, Secured Party shall
be entitled to the benefit of the rebuttable presumption that it acted in good faith and with the
exercise of ordinary care in the performance by it of the terms of this Agreement and the other
Financing Agreements.
7.2 Waiver of Notices. Debtor hereby expressly waives demand, presentment, protest
and notice of protest and notice of dishonor with respect to any and all instruments and commercial
paper, included in or evidencing any of the Obligations or the Collateral, and any and all other
demands and notices of any kind or nature whatsoever with respect to the Obligations, the
Collateral and this Agreement, except such as are expressly provided for herein. No notice to or
demand on Debtor which Secured Party may elect to give shall entitle Debtor to any other or further
notice or demand in the same, similar or other circumstances.
7.3 Amendments and Waivers. Neither this Agreement nor any provision hereof shall be
amended, modified, waived or discharged orally or by course of conduct, but only by a written
agreement signed by an authorized officer of Secured Party, and as to amendments, as also signed by
an authorized officer of Debtor. Secured Party shall not, by any act, delay, omission or otherwise
be deemed to have expressly or impliedly waived any of its rights, powers and/or remedies unless
such waiver shall be in writing and signed by an authorized officer of Secured Party. Any such
waiver shall be enforceable only to the extent specifically set forth therein. A waiver by Secured
Party of any right, power and/or remedy on any one occasion shall not be construed as a bar to or waiver of any such right, power and/or remedy which Secured
Party would otherwise have on any future occasion, whether similar in kind or otherwise.
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7.4 Waiver of Counterclaims. Debtor waives all rights to interpose any claims,
deductions, setoffs or counterclaims of any nature (other then compulsory counterclaims) in any
action or proceeding with respect to this Agreement, the Obligations, the Collateral or any matter
arising therefrom or relating hereto or thereto.
7.5 Indemnification. Debtor shall indemnify and hold Secured Party, and its
directors, agents, employees and counsel, harmless from and against any and all losses, claims,
damages, liabilities, costs or expenses imposed on, incurred by or asserted against any of them in
connection with any litigation, investigation, claim or proceeding commenced or threatened related
to the negotiation, preparation, execution, delivery, enforcement, performance or administration of
this Agreement, any other Financing Agreements, or any undertaking or proceeding related to any of
the transactions contemplated hereby or any act, omission, event or transaction related or
attendant thereto, including amounts paid in settlement, court costs, and the fees and expenses of
counsel. To the extent that the undertaking to indemnify, pay and hold harmless set forth in this
Section may be unenforceable because it violates any law or public policy, Debtor shall pay the
maximum portion which it is permitted to pay under applicable law to Secured Party in satisfaction
of indemnified matters under this Section. To the extent permitted by applicable law, Debtor shall
not assert, and Debtor hereby waives, any claim against Secured Party, on any theory of liability,
for special, indirect, consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement, any of the other Financing
Agreements or any undertaking or transaction contemplated hereby. The foregoing indemnity shall
survive the payment of the Obligations and the termination or non-renewal of the Second Amended and
Restated Loan Agreement.
SECTION 8. MISCELLANEOUS
8.1 Interpretative Provisions.
(a) All terms used herein which are defined in Article 1 or Article 9 of the UCC shall have
the meanings given therein unless otherwise defined in this Agreement.
(b) All references to the plural herein shall also mean the singular and to the singular shall
also mean the plural unless the context otherwise requires.
(c) All references to Debtor and Secured Party pursuant to the definitions set forth in the
recitals hereto, or to any other person herein, shall include their respective successors and
assigns.
(d) The words “hereof”, “herein”, “hereunder”, “this Agreement” and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not any particular
provision of this Agreement and as this Agreement now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
(e) The word “including” when used in this Agreement shall mean “including, without
limitation”.
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(f) All references to the term “good faith” used herein when applicable to Secured Party shall
mean, notwithstanding anything to the contrary contained herein or in the UCC, honesty in fact in
the conduct or transaction concerned. Debtor shall have the burden of proving any lack of good
faith on the part of Secured Party alleged by Debtor at any time.
(g) An Event of Default shall exist or continue or be continuing until such Event of Default
is waived in accordance with Section 7.3 or is cured in a manner satisfactory to Secured Party, if
such Event of Default is capable of being cured as determined by Secured Party.
(h) In the computation of periods of time from a specified date to a later specified date, the
word “from” means “from and including”, the words “to” and “until” each mean “to but excluding” and
the word “through” means “to and including”.
(i) Unless otherwise expressly provided herein, (i) references herein to any agreement,
document or instrument shall be deemed to include all subsequent amendments, modifications,
supplements, extensions, renewals, restatements or replacements with respect thereto, but only to
the extent the same are not prohibited by the terms hereof or of any other Financing Agreement, and
(ii) references to any statute or regulation are to be construed as including all statutory and
regulatory provisions consolidating, amending, replacing, recodifying, supplementing or
interpreting the statute or regulation.
(j) The captions and headings of this Agreement are for convenience of reference only and
shall not affect the interpretation of this Agreement.
(k) This Agreement and other Financing Agreements may use several different limitations, tests
or measurements to regulate the same or similar matters. All such limitations, tests and
measurements are cumulative and shall each be performed in accordance with their terms.
(l) This Agreement and the other Financing Agreements are the result of negotiations among and
have been reviewed by counsel to Secured Party and the other parties, and are the products of all
parties. Accordingly, this Agreement and the other Financing Agreements shall not be construed
against Secured Party merely because of Secured Party’s involvement in their preparation.
8.2 Notices. All notices, requests and demands hereunder shall be in writing and
deemed to have been given or made: if delivered in person, immediately upon delivery; if by telex,
telegram or facsimile transmission, immediately upon sending and upon confirmation of receipt; if
by nationally recognized overnight courier service with instructions to deliver the next business
day, one (1) business day after sending; and if by certified mail, return receipt requested, five
(5) days after mailing. All notices, requests and demands upon the parties are to be given to the
following addresses (or to such other address as any party may designate by notice in accordance with this Section):
| If to Debtor: | 0000 Xxxxxxx Xxxxxx Xxxx, Xxxxx 000 |
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| Xxx Xxxxx, Xxxxxxxxxx 00000 Attention: Xxxxxxx Xxxxxxxx Telephone No.: Telecopy No.: (000) 000-0000 |
||||
| If to Secured Party: | Wachovia Capital Finance Corporation (Central) 000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000 Xxxxxxx, Xxxxxxxx 00000-0000 Attention: Portfolio Manager Telephone No.: 000-000-0000 Telecopy No.: 000-000-0000 |
8.3 Partial Invalidity. If any provision of this Agreement is held to be invalid or
unenforceable, such invalidity or unenforceability shall not invalidate this Agreement as a whole,
but this Agreement shall be construed as though it did not contain the particular provision held to
be invalid or unenforceable and the rights and obligations of the parties shall be construed and
enforced only to such extent as shall be permitted by applicable law.
8.4 Successors. This Agreement, the other Financing Agreements and any other document
referred to herein or therein shall be binding upon Debtor and its successors and assigns and inure
to the benefit of and be enforceable by Secured Party and its successors and assigns, except that
Debtor may not assign its rights under this Agreement, the other Financing Agreements and any other
document referred to herein or therein without the prior written consent of Secured Party.
8.5 Entire Agreement. This Agreement, the other Financing Agreements, any supplements
hereto or thereto, and any instruments or documents delivered or to be delivered in connection
herewith or therewith represents the entire agreement and understanding concerning the subject
matter hereof and thereof between the parties hereto, and supersede all other prior agreements,
understandings, negotiations and discussions, representations, warranties, commitments, proposals,
offers and contracts concerning the subject matter hereof, whether oral or written. In the event
of any inconsistency between the terms of this Agreement and any schedule or exhibit hereto, the
terms of this Agreement shall govern.
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IN WITNESS WHEREOF, Debtor has caused these presents to be duly executed as of the day and
year first above written.
| SAITEK INDUSTRIES LIMITED |
||||
| /s/ Xxxxxxx Xxxxxxx | ||||
| By: Xxxxxxx Xxxxxxx | ||||
| Title: | Chief Financial Officer | |||
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