SECURITY AGREEMENT
Exhibit
10.2
This
SECURITY AGREEMENT, dated as of June 23, 2006 (the “Agreement”)
is by
and among IPIX Corporation, a Delaware corporation (the “Company”),
the
Purchasers identified on the signature pages hereto (each, a “Purchaser”
and
collectively, the “Purchasers”)
and
Iroquois Master Fund Ltd., as agent for the Purchasers (in such capacity,
together with its successors in such capacity, the “Agent”).
The
Company and each of the Purchasers are parties to a Securities Purchase
Agreement dated as of June 23, 2006 (as modified and supplemented and in effect
from time to time, the “Purchase
Agreement”),
that
provides, subject to the terms and conditions thereof, for the issuance and
sale
by the Company to each of the Purchasers, severally and not jointly, Notes
and
Warrants as more fully described in the Purchase Agreement.
To
induce
each of the Purchasers to enter into the Purchase Agreement, and for other
good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company has agreed to pledge and grant a security interest
in
the Collateral (as hereinafter defined) as security for the Secured Obligations
(as hereinafter defined). Accordingly, the parties hereto agree as
follows:
Section
1. Definitions.
Each
capitalized term used herein and not otherwise defined shall have the meaning
assigned to such term in the Purchase Agreement. In addition, as used
herein:
“Accounts”
shall
have the meaning ascribed thereto in Section 3(d) hereof.
“Business”
shall
mean the businesses from time to time, now or hereafter, conducted by the
Company and its Subsidiaries.
“Collateral”
shall
have the meaning ascribed thereto in Section 3 hereof.
“Copyright
Collateral”
shall
mean all Copyrights, whether now owned or hereafter acquired by the Company,
that are associated with the Business.
“Copyrights”
shall
mean all copyrights, copyright registrations and applications for copyright
registrations, including, without limitation, all renewals and extensions
thereof, the right to recover for all past, present and future infringements
thereof, and all other rights of any kind whatsoever accruing thereunder or
pertaining thereto.
“Documents”
shall
have the meaning ascribed thereto in Section 3(j) hereof.
“Equipment”
shall
have the meaning ascribed thereto in Section 3(h) hereof.
“Event
of Default”
shall
have the meaning ascribed thereto in Section 8 of the Notes.
“Excluded
Collateral”
shall
mean the assets of the Company which secure the Permitted Indebtedness and
the
assets listed on Annex
2
hereto.
“Instruments”
shall
have the meaning ascribed thereto in Section 3(e) hereof.
“Intellectual
Property”
shall
mean, collectively, all Copyright Collateral, all Patent Collateral and all
Trademark Collateral, together with (a) all inventions, processes, production
methods, proprietary information, know-how and trade secrets used or useful
in
the Business; (b) all licenses or user or other agreements granted to the
Company with respect to any of the foregoing, in each case whether now or
hereafter owned or used including, without limitation, the licenses or other
agreements with respect to the Copyright Collateral, the Patent Collateral
or
the Trademark Collateral; (c) all customer lists, identification of suppliers,
data, plans, blueprints, specifications, designs, drawings, recorded knowledge,
surveys, manuals, materials standards, processing standards, catalogs, computer
and automatic machinery software and programs, and the like pertaining to the
operation by the Company of the Business; (d) all sales data and other
information relating to sales now or hereafter collected and/or maintained
by
the Company that pertain to the Business; (e) all accounting information which
pertains to the Business and all media in which or on which any of the
information or knowledge or data or records which pertain to the Business may
be
recorded or stored and all computer programs used for the compilation or
printout of such information, knowledge, records or data; (f) all licenses,
consents, permits, variances, certifications and approvals of governmental
agencies now or hereafter held by the Company pertaining to the operation by
the
Company and its Subsidiaries of the Business; and (g) all causes of action,
claims and warranties now or hereafter owned or acquired by the Company in
respect of any of the items listed above.
“Inventory”
shall
have the meaning ascribed thereto in Section 3(f) hereof.
“Issuers”
shall
mean, collectively, the respective entities identified on Annex
1
hereto,
and all other entities formed by the Company or entities in which the Company
owns or acquires any capital stock or similar interest. For the avoidance of
doubt, the term “Issuer” shall not include AdMission Corporation.
“Motor
Vehicles”
shall
mean motor vehicles, tractors, trailers and other like property, whether or
not
the title thereto is governed by a certificate of title or
ownership.
“Patent
Collateral”
shall
mean all Patents, whether now owned or hereafter acquired by the Company that
are associated with the Business.
“Patents”
shall
mean all patents and patent applications, including, without limitation, the
inventions and improvements described and claimed therein together with the
reissues, divisions, continuations, renewals, extensions and
continuations-in-part thereof, all income, royalties, damages and payments
now
or hereafter due and/or payable under and with respect thereto, including,
without limitation, damages and payments for past or future infringements
thereof, the right to xxx for past, present and future infringements thereof,
and all rights corresponding thereto throughout the world.
“Permitted
Indebtedness”
shall
mean the Company’s existing indebtedness, liabilities and obligations as
disclosed on Annex
5
hereto
and any future capitalized leases, purchase money indebtedness and the
Notes.
“Permitted
Liens”
shall
mean (i) the Company’s existing Liens as disclosed in the Current SEC Report or
Xxxxx
0
xxxxxx,
(xx) the security interests created by this Agreement and the Pledge Agreement,
(iii) Liens of local or state authorities for franchise, real estate or other
like taxes, (iv) statutory Liens of landlords and liens of carriers,
warehousemen, bailees, mechanics, materialmen and other like Liens imposed
by
law, created in the ordinary course of business and for amounts not yet due,
(v)
tax Liens not yet due and payable and (vi) existing Liens which do not
materially affect the value of the Company’s property and do not materially
interfere with the use made and proposed to be made of such property by the
Company and the Subsidiaries.
“Pledged
Stock”
shall
have the meaning ascribed thereto in Section 3(a) hereof.
“Real
Estate”
shall
have the meaning ascribed thereto in Section 3(l) hereof.
“Secured
Obligations”
shall
mean, collectively, the principal of and interest on the Notes issued or
issuable (as applicable) by the Company and held by the applicable Purchaser
and
all other amounts from time to time owing to such Purchasers by the Company
under the Purchase Agreement and the Notes.
“Stock
Collateral”
shall
mean, collectively, the Collateral described in clauses (a) through (c) of
Section 3 hereof and the proceeds of and to any such property and, to the extent
related to any such property or such proceeds, all books, correspondence, credit
files, records, invoices and other papers.
“Trademark
Collateral”
shall
mean all Trademarks, whether now owned or hereafter acquired by the Company,
that are associated with the Business. Notwithstanding the foregoing, the
Trademark Collateral does not and shall not include any Trademark which would
be
rendered invalid, abandoned, void or unenforceable by reason of its being
included as part of the Trademark Collateral.
“Trademarks”
shall
mean all trade names, trademarks and service marks, logos, trademark and service
xxxx registrations, and applications for trademark and service xxxx
registrations, including, without limitation, all renewals of trademark and
service xxxx registrations, all rights corresponding thereto throughout the
world, the right to recover for all past, present and future infringements
thereof, all other rights of any kind whatsoever accruing thereunder or
pertaining thereto, together, in each case, with the product lines and goodwill
of the business connected with the use of, and symbolized by, each such trade
name, trademark and service xxxx.
“Uniform
Commercial Code”
shall
mean the Uniform Commercial Code as in effect in the State of New York from
time
to time.
Section
2. Representations
and Warranties.
The
Company represents and warrants to each of the Purchasers that:
| a. |
the
Company is the sole beneficial owner of the Collateral and no Lien
exists
or will exist upon any Collateral at any time (and, with respect
to the
Stock Collateral, no right or option to acquire the same exists in
favor
of any other Person), except for Permitted Liens and the pledge and
security interest in favor of each of the Purchasers created or provided
for herein which pledge and security interest constitutes a first
priority
perfected pledge and security interest in and to all of the Collateral
(other than Intellectual Property registered or otherwise located
outside
of the United States of America);
|
| b. |
the
Pledged Stock directly or indirectly owned by the Company in the
entities
identified in Annex
1
hereto is, and all other Pledged Stock, whether issued now or in
the
future, will be, duly authorized, validly issued, fully paid and
nonassessable, free and clear of all Liens other than Permitted Liens
and
none of such Pledged Stock is or will be subject to any contractual
restriction, preemptive and similar rights, or any restriction under
the
charter or by-laws of the respective Issuers of such Pledged Stock,
upon
the transfer of such Pledged Stock (except for any such restriction
contained herein);
|
| c. |
the
Pledged Stock directly or indirectly owned by the Company in the
entities
identified in Annex
1
hereto constitutes all of the issued and outstanding shares of capital
stock of any class of such Issuers beneficially owned by the Company
on
the date hereof (whether or not registered in the name of the Company)
and
said Annex
1
correctly identifies, as at the date hereof, the respective Issuers
of
such Pledged Stock;
|
| d. |
the
Company owns and possesses the right to use, and has done nothing
to
authorize or enable any other Person to use, all of its Copyrights,
Patents and Trademarks, and all registrations of its material Copyrights,
Patents and Trademarks are valid and in full force and effect. Except
as
may be set forth in said Annex
3,
the Company owns and possesses the right to use all material Copyrights,
Patents and Trademarks, necessary for the operation of the
Business;
|
| e. |
to
the Company’s knowledge, (i) except as set forth in Annex
3
hereto, there is no violation by others of any right of the Company
with
respect to any material Copyrights, Patents or Trademarks, respectively,
and (ii) the Company is not, in connection with the Business, infringing
in any respect upon any Copyrights, Patents or Trademarks of any
other
Person; and no proceedings have been instituted or are pending against
the
Company or, to the Company’s knowledge, threatened, and no claim against
the Company has been received by the Company, alleging any such violation,
except as may be set forth in said Annex
3;
|
| f. |
the
Company does not own any material Trademarks registered in the United
States of America to which the last sentence of the definition of
Trademark Collateral applies; and
|
Section
3. Collateral.
As
collateral security for the prompt payment in full when due (whether at stated
maturity, by acceleration or otherwise) of the Secured Obligations, the Company
hereby pledges, grants, assigns, hypothecates and transfers to the Agent on
behalf of the Purchasers as hereinafter provided, a security interest in and
Lien upon all of the Company’s right, title and interest in, to and under all
personal property and other assets of the Company, whether now owned or
hereafter acquired by or arising in favor of the Company, whether now existing
or hereafter coming into existence, whether owned or consigned by or to, or
leased from or to the Company and regardless of where located, except for the
Excluded Collateral, (all being collectively referred to herein as “Collateral”)
including:
| a. |
the
Company’s direct or indirect ownership interest in the respective shares
of capital stock of the Issuers and all other shares of capital stock
of
whatever class of the Issuers, now or hereafter owned by the Company,
together with in each case the certificates evidencing the same
(collectively, the “Pledged
Stock”);
|
| b. |
all
shares, securities, moneys or property representing a dividend on
any of
the Pledged Stock, or representing a distribution or return of capital
upon or in respect of the Pledged Stock, or resulting from a split-up,
revision, reclassification or other like change of the Pledged Stock
or
otherwise received in exchange therefor, and any subscription warrants,
rights or options issued to the holders of, or otherwise in respect
of,
the Pledged Stock;
|
| c. |
without
affecting the obligations of the Company under any provision prohibiting
such action hereunder or under the Purchase Agreement or the Notes,
in the
event of any consolidation or merger in which any Issuer is not the
surviving corporation, all shares of each class of the capital stock
of
the successor corporation (unless such successor corporation is the
Company itself) formed by or resulting from such consolidation or
merger
(the Pledged Stock, together with all other certificates, shares,
securities, properties or moneys as may from time to time be pledged
hereunder pursuant to clause (a) or (b) above and this clause (c)
being
herein collectively called the “Stock
Collateral”);
|
| d. |
all
accounts and general intangibles (each as defined in the Uniform
Commercial Code) of the Company constituting any right to the payment
of
money, including (but not limited to) all moneys due and to become
due to
the Company in respect of any loans or advances for the purchase
price of
Inventory or Equipment or other goods sold or leased or for services
rendered, all moneys due and to become due to the Company under any
guarantee (including a letter of credit) of the purchase price of
Inventory or Equipment sold by the Company and all tax refunds (such
accounts, general intangibles and moneys due and to become due being
herein called collectively “Accounts”);
|
| e. |
all
instruments, chattel paper or letters of credit (each as defined
in the
Uniform Commercial Code) of the Company evidencing, representing,
arising
from or existing in respect of, relating to, securing or otherwise
supporting the payment of, any of the Accounts, including (but not
limited
to) promissory notes, drafts, bills of exchange and trade acceptances
(herein collectively called “Instruments”);
|
| f. |
all
inventory (as defined in the Uniform Commercial Code) of the Company
and
all goods obtained by the Company in exchange for such inventory
(herein
collectively called “Inventory”);
|
| g. |
all
Intellectual Property and all other accounts or general intangibles
of the
Company not constituting Intellectual Property or
Accounts;
|
| h. |
all
equipment (as defined in the Uniform Commercial Code) of the Company
(herein collectively called “Equipment”);
|
| i. |
each
contract and other agreement of the Company relating to the sale
or other
disposition of Inventory or
Equipment;
|
| j. |
all
documents of title (as defined in the Uniform Commercial Code) or
other
receipts of the Company covering, evidencing or representing Inventory
or
Equipment (herein collectively called “Documents”);
|
| k. |
all
rights, claims and benefits of the Company against any Person arising
out
of, relating to or in connection with Inventory or Equipment purchased
by
the Company, including, without limitation, any such rights, claims
or
benefits against any Person storing or transporting such Inventory
or
Equipment;
|
| l. |
all
estates in land together with all improvements and other structures
now or
hereafter situated thereon, together with all rights, privileges,
tenements, hereditaments, appurtenances, easements, including, but
not
limited to, rights and easements for access and egress and utility
connections, and other rights now or hereafter appurtenant thereto
("Real
Estate");
|
| m. |
all
other tangible or intangible property of the Company, including,
without
limitation, all proceeds, products and accessions of and to any of
the
property of the Company described in clauses (a) through (l) above
in this
Section 3 (including, without limitation, any proceeds of insurance
thereon), and, to the extent related to any property described in
said
clauses or such proceeds, products and accessions, all books,
correspondence, credit files, records, invoices and other papers,
including without limitation all tapes, cards, computer runs and
other
papers and documents in the possession or under the control of the
Company
or any computer bureau or service company from time to time acting
for the
Company.
|
Section
4. Further
Assurances; Remedies.
In
furtherance of the grant of the pledge and security interest pursuant to Section
3 hereof, the Company hereby agrees with the Agent and each of the Purchasers
as
follows:
4.01 Delivery
and Other Perfection.
The
Company shall:
| a. |
if
any of the above-described shares, securities, monies or property
required
to be pledged by the Company under clauses (a), (b) and (c) of Section
3
hereof are received by the Company, forthwith either (x) transfer
and
deliver to the Agent such shares or securities so received by the
Company
(together with the certificates for any such shares and securities
duly
endorsed in blank or accompanied by undated stock powers duly executed
in
blank) all of which thereafter shall be held by the Agent, pursuant
to the
terms of this Agreement, as part of the Collateral or (y) take such
other
action as the Agent shall reasonably deem necessary or appropriate
to duly
record the Lien created hereunder in such shares, securities, monies
or
property referred to in said clauses (a), (b) and (c) of Section
3;
|
| b. |
deliver
and pledge to the Agent, at the Agent's request, any and all Instruments,
endorsed and/or accompanied by such instruments of assignment and
transfer
in such form and substance as the Agent may request; provided, that
so
long as no Event of Default shall have occurred and be continuing,
the
Company may retain for collection in the ordinary course any Instruments
received by it in the ordinary course of business and the Agent shall,
promptly upon request of the Company, make appropriate arrangements
for
making any other Instrument pledged by the Company available to it
for
purposes of presentation, collection or renewal (any such arrangement
to
be effected, to the extent deemed appropriate by the Agent, against
trust
receipt or like document);
|
| c. |
give,
execute, deliver, file and/or record any financing statement, notice,
instrument, document, agreement or other papers that may be necessary
(in
the reasonable judgment of the Agent) to create, preserve, perfect
or
validate any security interest granted pursuant hereto or to enable
the
Agent to exercise and enforce their rights hereunder with respect
to such
security interest, including, without limitation, causing any or
all of
the Stock Collateral to be transferred of record into the name of
the
Agent or its nominee (and the Agent agrees that if any Stock Collateral
is
transferred into its name or the name of its nominee, the Agent will
thereafter promptly give to the Company copies of any notices and
communications received by it with respect to the Stock Collateral),
provided that notices to account debtors in respect of any Accounts
or
Instruments shall be subject to the provisions of Section 4.09
below;
|
| d. |
upon
the acquisition after the date hereof by the Company of any Equipment
covered by a certificate of title or ownership cause the Agent to
be
listed as the lienholder on such certificate of title and within
120 days
of the acquisition thereof deliver evidence of the same to the
Agent;
|
| e. |
keep
accurate books and records relating to the Collateral, and stamp
or
otherwise xxxx such books and records in such manner as the Agent
may
reasonably require in order to reflect the security interests granted
by
this Agreement;
|
| f. |
furnish
to the Agent from time to time (but, unless an Event of Default shall
have
occurred and be continuing, no more frequently than quarterly) statements
and schedules further identifying and describing the Copyright Collateral,
the Patent Collateral and the Trademark Collateral, respectively,
and such
other reports in connection with the Copyright Collateral, the Patent
Collateral and the Trademark Collateral, as the Agent may reasonably
request, all in reasonable detail;
|
| g. |
permit
representatives of the Agent, upon reasonable notice, at any time
during
normal business hours to inspect and make abstracts from its books
and
records pertaining to the Collateral, and permit representatives
of the
Agent to be present at the Company’s place of business to receive copies
of all communications and remittances relating to the Collateral,
and
forward copies of any notices or communications by the Company with
respect to the Collateral, all in such manner as the Agent may reasonably
require; and
|
| h. |
upon
the occurrence and during the continuance of any Event of Default,
upon
request of the Agent, promptly notify each account debtor in respect
of
any Accounts or Instruments that such Collateral has been assigned
to the
Agent hereunder, and that any payments due or to become due in respect
of
such Collateral are to be made directly to the
Agent.
|
4.02 Other
Financing Statements and Liens.
Except
with respect to Permitted Indebtedness or as otherwise permitted under Schedule
3.1(a) of the Purchase Agreement, without the prior written consent of the
Agent, the Company shall not file or suffer to be on file, or authorize or
permit to be filed or to be on file, in any jurisdiction, any financing
statement or like instrument with respect to the Collateral in which the Agent
is not named as the sole secured party for the benefit of each of the
Purchasers.
4.03 Preservation
of Rights.
The
Agent shall not be required to take steps necessary to preserve any rights
against prior parties to any of the Collateral.
4.04 Special
Provisions Relating to Certain Collateral.
| a. |
Stock
Collateral.
|
| (1) |
The
Company will cause the Stock Collateral to constitute at all times
100% of
the total number of shares of each class of capital stock of each
Issuer
then outstanding that is owned directly or indirectly by the Company.
|
| (2) |
So
long as no Event of Default shall have occurred and be continuing,
the
Company shall have the right to exercise all voting, consensual and
other
powers of ownership pertaining to the Stock Collateral for all purposes
not inconsistent with the terms of this Agreement, the Purchase Agreement,
the Notes or any other instrument or agreement referred to herein
or
therein, provided that the Company agrees that it will not vote the
Stock
Collateral in any manner that is inconsistent with the terms of this
Agreement, the Purchase Agreement, the Notes or any such other instrument
or agreement; and the Agent shall execute and deliver to the Company
or
cause to be executed and delivered to the Company all such proxies,
powers
of attorney, dividend and other orders, and all such instruments,
without
recourse, as the Company may reasonably request for the purpose of
enabling the Company to exercise the rights and powers which it is
entitled to exercise pursuant to this Section
4.04(a)(2).
|
| (3) |
Unless
and until an Event of Default has occurred and is continuing, the
Company
shall be entitled to receive and retain any dividends on the Stock
Collateral paid in cash out of earned
surplus.
|
| (4) |
If
any Event of Default shall have occurred, then so long as such Event
of
Default shall continue, and whether or not the Agent exercises any
available right to declare any Secured Obligations due and payable
or
seeks or pursues any other relief or remedy available to it under
applicable law or under this Agreement, the Purchase Agreement, the
Notes
or any other agreement relating to such Secured Obligations, all
dividends
and other distributions on the Stock Collateral shall be paid directly
to
the Agent and retained by it as part of the Stock Collateral, subject
to
the terms of this Agreement, and, if the Agent shall so request in
writing, the Company agrees to execute and deliver to the Agent
appropriate additional dividend, distribution and other orders and
documents to that end, provided that if such Event of Default is
cured,
any such dividend or distribution theretofore paid to the Agent shall,
upon request of the Company (except to the extent theretofore applied
to
the Secured Obligations) be returned by the Agent to the
Company.
|
| b. |
Intellectual
Property.
|
| (1) |
For
the purpose of enabling the Agent to exercise rights and remedies
under
Section 4.05 hereof at such time as the Agent shall be lawfully entitled
to exercise such rights and remedies, and for no other purpose, the
Company hereby grants to the Agent, to the extent assignable, an
irrevocable, non-exclusive license (exercisable without payment of
royalty
or other compensation to the Company) to use, assign, license or
sublicense any of the Intellectual Property (other than the Trademark
Collateral or goodwill associated therewith) now owned or hereafter
acquired by the Company, wherever the same may be located, including
in
such license reasonable access to all media in which any of the licensed
items may be recorded or stored and to all computer programs used
for the
compilation or printout thereof.
|
| (2) |
Notwithstanding
anything contained herein to the contrary, so long as no Event of
Default
shall have occurred and be continuing, the Company will be permitted
to
exploit, use, enjoy, protect, license, sublicense, assign, sell,
dispose
of or take other actions with respect to the Intellectual Property
in the
ordinary course of the business of the Company. In furtherance of
the
foregoing, unless an Event of Default shall have occurred and is
continuing, the Agent shall from time to time, upon the request of
the
Company, execute and deliver any instruments, certificates or other
documents, in the form so requested, which the Company shall have
certified are appropriate (in its judgment) to allow it to take any
action
permitted above (including relinquishment of the license provided
pursuant
to clause (1) immediately above as to any specific Intellectual Property).
Further, upon the payment in full of all of the Secured Obligations
or
earlier expiration of this Agreement or release of the Collateral,
the
Agent shall grant back to the Company the license granted pursuant
to
clause (1) immediately above. The exercise of rights and remedies
under
Section 4.05 hereof by the Agent shall not terminate the rights of
the
holders of any licenses or sublicenses theretofore granted by the
Company
in accordance with the first sentence of this clause
(2).
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4.05 Events
of Default, etc.
During
the period during which an Event of Default shall have occurred and be
continuing:
| a. |
the
Company shall, at the request of the Agent, assemble the Collateral
owned
by it at such place or places, reasonably convenient to both the
Agent and
the Company, designated in its
request;
|
| b. |
the
Agent may make any reasonable compromise or settlement deemed desirable
with respect to any of the Collateral and may extend the time of
payment,
arrange for payment in installments, or otherwise modify the terms
of, any
of the Collateral;
|
| c. |
the
Agent shall have all of the rights and remedies with respect to the
Collateral of a secured party under the Uniform Commercial Code (whether
or not said 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
exercise all voting, consensual and other powers of ownership pertaining
to the Collateral as if the Agent were the sole and absolute owner
thereof
(and the Company agrees to take all such action as may be appropriate
to
give effect to such right);
|
| d. |
the
Agent in its discretion may, in its name or in the name of the Company
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 the
Collateral, but shall be under no obligation to do so;
and
|
| e. |
the
Agent may, upon 10 Business Days, prior written notice to the Company
of
the time and place, with respect to the Collateral or any part thereof
which shall then be or shall thereafter come into the possession,
custody
or control of the Agent, or any of its respective agents, sell, lease,
assign or otherwise dispose of all or any of such Collateral, at
such
place or places as the Agent deems best, and for cash or on 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 time or place thereof (except such
notice as is required above or by applicable statute and cannot be
waived)
and the Agent or anyone else may be the purchaser, lessee, assignee
or
recipient of any or all of the 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 the Company, any such demand, notice or right and
equity
being hereby expressly waived and released. In the event of any sale,
assignment, or other disposition of any of the Trademark Collateral,
the
goodwill of the Business connected with and symbolized by the Trademark
Collateral subject to such disposition shall be included, and the
Company
shall supply to the Agent or its designee, for inclusion in such
sale,
assignment or other disposition, all Intellectual Property relating
to
such Trademark Collateral. The Agent 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 same may
be so
adjourned.
|
The
proceeds of each collection, sale or other disposition under this Section 4.05,
including by virtue of the exercise of the license granted to the Agent in
Section 4.04(b)(1) hereof, shall be applied in accordance with Section 4.09
hereof.
The
Company recognizes that, by reason of certain prohibitions contained in the
Securities Act of 1933, as amended, and applicable state securities laws, the
Agent may be compelled, with respect to any sale of all or any part of the
Collateral, to limit purchasers to those who will agree, among other things,
to
acquire the Collateral for their own account, for investment and not with a
view
to the distribution or resale thereof. The Company acknowledges that any such
private sales to an unrelated third party in an arm’s length transaction may be
at prices and on terms less favorable to the Agent than those obtainable through
a public sale without such restrictions, and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner and that the Agent shall have no
obligation to engage in public sales and no obligation to delay the sale of
any
Collateral for the period of time necessary to permit the respective Issuer
thereof to register it for public sale.
4.06 Deficiency.
If the
proceeds of sale, collection or other realization of or upon the Collateral
pursuant to Section 4.05 hereof are insufficient to cover the costs and expenses
of such realization and the payment in full of the Secured Obligations, the
Company shall remain liable for any deficiency.
4.07 Removals,
etc.
Without
at least 30 days’ prior written notice to the Agent or unless otherwise required
by law, the Company shall not (i) maintain any of its books or records with
respect to the Collateral at any office or maintain its chief executive office
or its principal place of business at any place, or permit any Inventory or
Equipment to be located anywhere other than at the address indicated for the
Company in Section 7.4 of the Purchase Agreement or at one of the locations
identified in Annex
4
hereto
or in transit from one of such locations to another or (ii) change its corporate
name, or the name under which it does business, from the name shown on the
signature page hereto.
4.08 Private
Sale.
The
Agent shall incur no liability as a result of the sale of the Collateral, or
any
part thereof, at any private sale to an unrelated third party in an arm’s length
transaction pursuant to Section 4.05 hereof conducted in a commercially
reasonable manner. The Company hereby waives any claims against the Agent
arising by reason of the fact that the price at which the 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 Secured
Obligations, even if the Agent accepts the first offer received and does not
offer the Collateral to more than one offeree.
4.09 Application
of Proceeds.
Except
as otherwise herein expressly provided, the proceeds of any collection, sale
or
other realization of all or any part of the Collateral pursuant hereto, and
any
other cash at the time held by the Agent under this Section 4, shall be applied
by the Agent:
First,
to the
payment of the costs and expenses of such collection, sale or other realization,
including reasonable out-of-pocket costs and expenses of the Agent and the
fees
and expenses of its agents and counsel, and all expenses, and advances made
or
incurred by the Agent in connection therewith;
Next,
to the
payment in full of the Secured Obligations in each case equally and ratably
in
accordance with the respective amounts thereof then due and owing to each of
the
Purchasers; and
Finally,
to the
payment to the Company, or its successors or assigns, or as a court of competent
jurisdiction may direct, of any surplus then remaining.
As
used
in this Section 4, “proceeds”
of
Collateral shall mean cash, securities and other property realized in respect
of, and distributions in kind of, Collateral, including any thereof received
under any reorganization, liquidation or adjustment of debt of the Company
or
any issuer of or obligor on any of the Collateral.
4.10 Attorney-in-Fact.
Without
limiting any rights or powers granted by this Agreement to the Agent while
no
Event of Default has occurred and is continuing, upon the occurrence and during
the continuance of any Event of Default, the Agent is hereby appointed the
attorney-in-fact of the Company for the purpose of carrying out the provisions
of this Section 4 and taking any action and executing any instruments which
the
Agent may deem necessary or advisable to accomplish the purposes hereof, which
appointment as attorney-in-fact is irrevocable and coupled with an interest.
Without limiting the generality of the foregoing, so long as the Purchasers
shall be entitled under this Section 4 to make collections in respect of the
Collateral, the Agent shall have the right and power to receive, endorse and
collect all checks made payable to the order of the Company representing any
dividend, payment, or other distribution in respect of the Collateral or any
part thereof and to give full discharge for the same.
4.11 Perfection.
(i)
Prior to or concurrently with the execution and delivery of this Agreement,
the
Company shall file such financing statements and other documents in such offices
as the Agent may request to perfect the security interests granted by Section
3
of this Agreement, and (ii) at any time requested by the Agent, the Company
shall deliver to the Agent all share certificates of capital stock directly
or
indirectly owned by the Company in the entities identified in Annex
1
hereto,
accompanied by undated stock powers duly executed in blank.
4.12 Termination.
When
all Secured Obligations shall have been paid in full under the Purchase
Agreement, this Agreement shall terminate, and the Agent shall forthwith cause
to be assigned, transferred and delivered, against receipt but without any
recourse, warranty or representation whatsoever, any remaining Collateral and
money received in respect thereof, to or on the order of the Company and to
be
released and cancelled all licenses and rights referred to in Section 4.04(b)(1)
hereof. The Agent shall also execute and deliver to the Company upon such
termination such Uniform Commercial Code termination statements, certificates
for terminating the Liens on the Motor Vehicles and such other documentation
as
shall be reasonably requested by the Company to effect the termination and
release of the Liens on the Collateral.
4.13 Expenses.
The
Company agrees to pay to the Agent all out-of-pocket expenses (including
reasonable expenses for legal services of every kind) of, or incident to, the
enforcement of any of the provisions of this Section 4, or performance by the
Agent of any obligations of the Company in respect of the Collateral which
the
Company has failed or refused to perform upon reasonable notice, or any actual
or attempted sale, or any exchange, enforcement, collection, compromise or
settlement in respect of any of the Collateral, and for the care of the
Collateral and defending or asserting rights and claims of the Agent in respect
thereof, by litigation or otherwise, including expenses of insurance, and all
such expenses shall be Secured Obligations to the Agent secured under Section
3
hereof.
4.14 Further
Assurances.
The
Company agrees that, from time to time upon the written request of the Agent,
the Company will execute and deliver such further documents and do such other
acts and things as the Agent may reasonably request in order fully to effect
the
purposes of this Agreement.
4.15 Indemnity.
Each of
the Purchasers hereby jointly and severally covenants and agrees to reimburse,
indemnify and hold the Agent harmless from and against any and all claims,
actions, judgments, damages, losses, liabilities, costs, transfer or other
taxes, and expenses (including, without limitation, reasonable attorneys’ fees
and expenses) incurred or suffered without any bad faith or willful misconduct
by the Agent, arising out of or incident to this Agreement or the administration
of the Agent’s duties hereunder, or resulting from its actions or inactions as
Agent.
Section
5. Miscellaneous.
5.01 No
Waiver.
No
failure on the part of the Agent or any of its agents 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 Agent or any of its agents 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 remedies herein are cumulative and are not
exclusive of any remedies provided by law.
5.02 Governing
Law.
This
Agreement shall be governed by, and construed in accordance with, the law of
the
State of New York, including Sections 5-1401 and 5-1402 of the New York General
Obligations Law.
5.03 Notices.
All
notices, requests, consents and demands hereunder shall be in writing and
facsimile (facsimile confirmation required) or delivered to the intended
recipient at its address or telex number specified pursuant to Section 7.4
of
the Purchase Agreement and shall be deemed to have been given at the times
specified in said Section 7.4.
5.04 Waivers,
etc.
The
terms of this Agreement may be waived, altered or amended only by an instrument
in writing duly executed by the Company and the Agent. Any such amendment or
waiver shall be binding upon each of the Purchasers and the
Company.
5.05 Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the respective
successors and assigns of the Company and each of the Purchasers (provided,
however, that the Company shall not assign or transfer its rights hereunder
without the prior written consent of the Agent).
5.06 Counterparts.
This
Agreement may be executed in any number of counterparts, all of which together
shall constitute one and the same instrument and any of the parties hereto
may
execute this Agreement by signing any such counterpart.
5.07 Agent.
Each
Purchaser agrees to appoint Iroquois Master Fund Ltd. as its Agent for purposes
of this Agreement. The Agent may employ agents and attorneys-in-fact in
connection herewith and shall not be responsible for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it in good
faith.
5.08 Severability.
If any
provision hereof is invalid and unenforceable in any jurisdiction, then, to
the
fullest extent permitted by law, (i) the other provisions hereof shall remain
in
full force and effect in such jurisdiction and shall be liberally construed
in
favor of the Purchasers in order to carry out the intentions of the parties
hereto as nearly as may be possible and (ii) 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.
IN
WITNESS WHEREOF, the parties hereto have caused this Security Agreement to
be
duly executed as of the day and year first above written.
COMPANY:
IPIX
CORPORATION
By:
______________________________
Name:
Title:
AGENT:
IROQUOIS
MASTER FUND LTD.
By:
______________________________
Name:
Title:
PURCHASERS: IROQUOIS
MASTER FUND LTD.
By:
______________________________
Name:
Title:
OTHER
PURCHASERS
By:
______________________________
Name:
Title:
ANNEX
1
ENTITIES
IN WHICH THE COMPANY IS PLEDGING ITS CAPITAL STOCK
Approximate
Entity Percentage
Interest
Interactive
Pictures Corporation UK
Limited United
Kingdom
100%
PW
Technology,
Inc. Delaware
100%
Internet
Pictures (Canada),
Inc.
Canada 100%
ANNEX
2
EXCLUDED
COLLATERAL
| § |
1,035,000
shares of AdMission Corporation Series A Convertible Preferred
Stock;
|
| § |
All
of the Company’s rights and interests in that certain Investors Rights
Agreement between the Company and AdMission dated February 17, 2005;
and
|
| § |
A
warrant to purchase 200,000 shares of AdMission common stock dated
February 11, 2005.
|
ANNEX
3
EXCEPTIONS
FOR COPYRIGHTS, PATENTS AND TRADEMARKS
None.
ANNEX
4
LIST
OF
LOCATIONS
Corporate
Offices
IPIX
Corporation
00000
Xxxxxx Xxxxx Xxxx
Xxxxx
000
Xxxxxx,
XX 00000
Inventory
&
Distribution
Centers
AigisMechtronics
0000
Xxxxxx Xxxx
Xxxxxxx-Xxxxx,
XX 00000
AigisMechtronics
0000
Xxxxxxxxxx Xxxxx
Xxxxxxx-Xxxxx,
XX 00000
Lumenera
0
Xxxxxxx Xxxxx
Xxxxxx
XX X0X 0X0
Xxxxxx
Tuss
Vision, Inc.
0-00-00
Xxxxxxxxx
Xxxxx,
Xxxxx
000-0000
Xxxxx
ANNEX
5
EXISTING
INDEBTEDNESS
None.
ANNEX
6
EXISTING
LIENS
None.
