EXHIBIT 4.5
FORM OF SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "AGREEMENT"), dated as of March 12, 2003,
is entered into by and between Novatel Wireless, Inc., a Delaware corporation
(the "GRANTOR"), and PS Capital LLC, as collateral agent and representative (in
such capacity, the "AGENT") for the holders ("NOTE HOLDERS") of the Secured
Convertible Subordinated Notes dated as of the date hereof (as amended and in
effect from time to time, the "SECURED NOTES"), issued by the Grantor to the
Note Holders. The Note Holders and the Agent, including their respective
successors and permitted assigns, are collectively referred to herein as the
"SECURED PARTIES."
RECITALS
WHEREAS, the Grantor and the Note Holders have entered into a
Securities Purchase Agreement (the "PURCHASE AGREEMENT"), pursuant to which,
among other things, the Note Holders have agreed to lend to the Grantor the
aggregate principal sum of $1,200,000 (the "LOAN"), which Loan will be evidenced
by the Secured Notes;
WHEREAS, in order to induce the Note Holders to make the Loan, the
Grantor has agreed to grant security interests in favor of the Agent, as
collateral agent and representative for the pro rata benefit of the Note
Holders, as more fully set forth herein;
WHEREAS, it is a condition precedent to the Note Holders entering into
the Purchase Agreement and making the Loan that the Grantor executes and
delivers this Security Agreement; and
WHEREAS, the Grantor previously granted security interests in favor of
two existing and senior secured parties;
NOW, THEREFORE, in consideration of the premises
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
AGREEMENT
Section 1. Definitions. Capitalized terms not otherwise defined
herein shall have the meanings set forth in the Purchase Agreement, or, if not
defined therein, shall have the meanings set forth in the Secured Notes. All
terms defined in the Uniform Commercial Code as from time to time enacted and in
effect in the State of California (the "UCC") and used herein without other
definitions shall have the same definitions herein as specified from time to
time therein. In addition, the following terms shall have the respective
meanings set forth below:
"OBLIGATIONS" means all indebtedness, obligations and
liabilities of the Grantor to the Secured Parties, in its capacity as such,
under the Secured Notes and this Agreement, including without limitation
principal, interest (whether accruing prior to or after the commencement of any
proceeding under bankruptcy, insolvency, receivership or similar laws), and all
fees, costs and expenses payable in respect thereof (including reasonable legal,
investment banking, accounting, and other professional fees and expenses
and court costs) existing on the date of this Agreement or arising thereafter,
whether direct or indirect, joint or several, absolute or contingent, matured or
unmatured, liquidated or unliquidated, arising by contract, operation of law or
otherwise, arising or incurred under this Agreement or the Secured Notes or in
respect of the Loan or any other extensions of credit made under the Secured
Notes or other instruments at any time evidencing any thereof or otherwise made
by the Secured Parties.
"PERMITTED LIENS" means (a) liens to secure taxes,
assessments and other government charges in respect of obligations not overdue
or being contested in good faith through appropriate procedures or liens to
secure claims for labor, material or supplies in respect of obligations not
overdue or being contested in good faith through appropriate procedures; (b)
deposits or pledges made in connection with, or to secure payment of, workmen's
compensation, unemployment insurance, old age pensions or other social security
obligations; (c) liens in respect of judgments or awards that otherwise do not
create an Event of Default; (d) liens of carriers, warehousemen, mechanics and
materialmen, and other like liens, in existence less than 60 days from the date
of creation thereof in respect of obligations not overdue or being contested in
good faith through appropriate procedures; (e) encumbrances on real estate
consisting of easements, rights of way, zoning restrictions, restrictions on the
use of real property and defects and irregularities in the title thereto,
landlord's or lessor's liens under leases to which the Grantor is a party; (f)
liens in favor of the Secured Parties; (g) purchase money security interests in
specific items of equipment; (h) liens granted pursuant to the Silicon Valley
Bank Agreement, so long as the aggregate principal amount of the obligations
outstanding with respect to such liens does not exceed the "Credit Limit" as
defined in the Silicon Valley Bank Agreement (as such definition is formulated
as of the date hereof); (i) liens granted pursuant to the Sanmina Agreements
(but only prior to the issuance of the Sanmina Notes); (j) liens granted
pursuant to the Sanmina Notes and related security agreement; and (k) liens
incurred in connection with the extension, renewal or refinancing of the
indebtedness secured by the lien described in clause (h) of this section,
subject to the principal limit set forth in such clause.
"PERSON" means any individual, corporation, partnership, limited
partnership, limited liability partnership, limited liability company, trust,
association, organization, or other entity.
"RIGHTS OF THE SENIOR SECURED LENDERS" shall mean (i) the rights of
Silicon Valley Bank pursuant to the Silicon Valley Bank Agreement (subject to
the provisions of the Subordination Agreement of even date herewith among
Silicon Valley Bank, the Grantor and the Secured Parties), and (ii) prior to the
Sanmina Closing (as defined in the Purchase Agreement), the rights of
Sanmina-SCI Corporation and Sanmina Canada ULC pursuant to the Sanmina
Agreements. After the issuance of the Sanmina Notes, Silicon Valley Bank shall
be the sole lender with a security interest that is senior to the security
interest granted in this Agreement, and the security interest granted hereunder
shall be pari-passu with that security interest granted pursuant to the security
agreement entered into by the Grantor in connection with the Sanmina Notes.
"SILICON VALLEY BANK AGREEMENT" shall mean that certain Loan and
Security Agreement, dated as of November 29, 2001, between the Company and
Silicon Valley Bank, Commercial Finance Division (as amended, provided that any
such amendment shall
- 2 -
not provide for aggregate obligations in excess of the limit provided in clause
(h) of the "Permitted Liens" definition above).
"SANMINA AGREEMENTS" shall mean (i) that certain Settlement Agreement
and Mutual General Release, dated as of January 12, 2002, between the Company
and Sanmina-SCI Corporation and Sanmina Canada ULC; and (ii) that certain
Security Agreement, dated as of January 12, 2002, between the Company and
Sanmina-SCI Corporation, in each case as in effect on the date hereof.
Section 2. Grant of Security Interest.
(a) The Grantor hereby grants to the Agent, as
collateral agent and representative for the pro rata benefit of the Note
Holders, to secure the timely payment and performance in full of all of the
Obligations, a continuing security interest in and so pledges and assigns to the
Agent (as collateral agent and representative for the pro rata benefit of the
Note Holders) the following properties, assets and rights of the Grantor,
wherever located, whether now owned or hereafter acquired or arising, and all
proceeds, products, rents, offspring and profits thereof, accessions thereto,
and supporting obligations relating thereto (all of the same being hereinafter
called the "COLLATERAL"):
All personal and fixture property of every kind and
nature including, without limitation, all furniture, fixtures, equipment, raw
materials, inventory, goods, vehicles, accounts, contract rights, payment
intangibles, rights to the payment of money, insurance refund claims,
health-care-insurance receivables and all other insurance claims and proceeds,
tort claims, proceeds of fraudulent transfer, preference, or similar claims,
pension fund overfunded amounts, chattel paper, documents, instruments, letters
of credit, letter-of-credit rights, investment accounts, securities, security
entitlements, securities accounts, securities contracts, commodities contracts,
commodities accounts, financial assets, investment property, and all general
intangibles, tax refund claims, recoveries for preference and fraudulent
conveyance actions, license fees, patents, patent applications, trademarks,
trademark applications, trade names, trade styles, trade dress, logos, other
source of business identifiers, associated product lines, rights to use,
advertise, market and sell all inventions disclosed or claimed in any of the
foregoing, copyrights, copyright applications, mask-works, rights to xxx and
recover for past infringement of patents, trademarks, copyrights and mask-works,
renewals, reissues and extensions of all of the foregoing, computer programs,
software, engineering drawings, service marks, customer lists, goodwill, and all
licenses, permits, agreements of any kind or nature pursuant to which the
Grantor possesses, uses or has authority to possess or use property (whether
tangible or intangible) of others or others possess, use or have authority to
possess or use property (whether tangible or intangible) of the Grantor, and all
recorded data of any kind or nature, regardless of the medium of recording
including, without limitation, all software, writings, plans, specifications and
schematics, and all proceeds, products, rents and profits, of all of the
foregoing, however evidenced; provided, however, that Collateral shall not
include, and the Company shall not be deemed to have granted a security interest
in, (i) any of the Company's rights or interests in any license, contract or
agreement to which the Company is a party or any of its rights or interests
thereunder to the extent, but only to the extent, that such a grant would, under
the terms of a prohibition on assignment (which is otherwise valid and
enforceable) contained in such license, contract or agreement or otherwise; and
(ii) any real property.
- 3 -
Section 3. Title to Collateral, etc. The Grantor is the owner of
the Collateral free from any adverse lien, security interest or other
encumbrance, except for the security interest created by this Agreement and
other Permitted Liens. The Grantor has full power and authority to grant the
security interests granted pursuant to Section 2 hereof and to execute, deliver
and perform its obligations in accordance with the terms of this Agreement,
without the consent or approval of any other Person, other than any consent or
approval that has been obtained. None of the Collateral constitutes, or is the
proceeds of, "farm products" as defined in Section 9102(34) or "consumer goods"
as defined in Section 9102(23), of the UCC.
Section 4. Continuous Perfection. The Grantor's principal place
of business and jurisdiction of organization are as indicated on Schedule 1
hereto. Until all Obligations have been paid and performed and this Agreement
has been terminated, the Grantor will not change the same, or the name,
identity, corporate structure or jurisdiction of organization of the Grantor in
any manner, without providing at least thirty (30) days' prior written notice to
the Agent.
Section 5. No Liens. Except for the security interest herein
granted and other Permitted Liens, the Grantor shall be the owner of the
Collateral free from any lien, security interest or other encumbrance, and the
Grantor shall defend the same against all claims and demands of all Persons at
any time claiming the same or any interests therein adverse to the Secured
Parties. The Grantor shall not pledge, mortgage or create, or suffer to exist a
security interest in the Collateral in favor of any Person other than the Agent
(as collateral agent and for the pro rata benefit of the Secured Parties),
except for Permitted Liens.
Section 6. No Transfers. The Grantor will not sell or offer to
sell or otherwise transfer the Collateral or any interest therein except for (a)
licenses of general intangibles in the ordinary course of business and (b) sales
or other dispositions in the ordinary course of business.
Section 7. Maintenance of Collateral; Compliance with Law. The
Grantor will keep the Collateral in good order and repair (subject to ordinary
wear and tear) and will not use the same in violation of law or any policy of
insurance thereon. The Agent, or its designee, may inspect the Collateral at any
reasonable time and upon reasonable notice, wherever located. The Grantor will
pay promptly when due, or contest in good faith via appropriate procedures, all
taxes, assessments, governmental charges and levies upon the Collateral or
incurred in connection with the use or operation of such Collateral or incurred
in connection with this Agreement.
Section 8. Collateral Protection Expenses; Preservation of
Collateral.
(a) In its discretion, but subject to Rights of
the Senior Secured Lenders, the Agent may discharge taxes and other encumbrances
at any time levied or placed on any of the Collateral, make repairs thereto and
pay any necessary filing fees. The Grantor agrees to reimburse the Agent on
demand for any and all expenditures so made. The Agent shall have no obligation
to the Grantor to make any such expenditures, nor shall the making thereof
relieve the Grantor of any default.
- 4 -
(b) Anything herein to the contrary
notwithstanding, the Grantor shall remain liable under each contract or
agreement comprised in the Collateral to be observed or performed by the Grantor
thereunder. Neither the Agent nor any Secured Party shall have any obligation or
liability under any such contract or agreement by reason of or arising out of
this Agreement or the receipt by the Agent or any Secured Party of any payment
relating to any of the Collateral, nor shall the Agent or any Secured Party be
obligated in any manner to perform any of the obligations of the Grantor under
or pursuant to any such contract or agreement, to make inquiry as to the nature
or sufficiency of any payment received by the Agent or any Secured Party in
respect of the Collateral or as to the sufficiency of any performance by any
party under any such contract or agreement, to present or file any claim, to
take any action to enforce any performance or to collect the payment of any
amounts that may have been assigned to the Agent or to which the Agent may be
entitled at any time or times. The Agent's sole duty with respect to the
custody, safe keeping and physical preservation of the Collateral in its
possession, under Section 9207 and, with respect to Collateral under the Agent's
control, Section 9208, of the UCC or otherwise, shall be to deal with such
Collateral in the same manner as the Agent deals with similar property for its
own account.
Section 9. Securities and Deposits. Subject to the Rights of the
Senior Secured Lenders, the Agent may at any time, at its option, transfer to
itself or any nominee any securities constituting Collateral, receive any income
thereon and hold such income as additional Collateral or apply it on the
Obligations. Whether or not Obligations are due the Agent may (subject to the
Rights of the Senior Secured Lenders) demand, xxx for, collect, or make any
settlement or compromise it deems desirable with respect to the Collateral.
Regardless of the adequacy of the Collateral or any other security for the
Obligations, any deposits or other sums at any time credited by or due from any
Secured Party to the Grantor may at any time be applied or set off against any
of the Obligations.
Section 10. Notification to Account Debtors and Other Obligors.
Subject to the Rights of the Senior Secured Lenders, the Grantor shall, at any
time upon the request of the Agent, notify account debtors on accounts, chattel
paper and general intangibles of the Grantor and obligors on instruments or
other collateral for which the Grantor is an obligee of the security interest of
the Agent in any account, chattel paper, general intangible or instrument and
that payment thereof is to be made directly to the Agent or the Secured Parties
or to any financial institution designated by the Agent as the Agent's agent
therefor, and the Agent may itself, without notice to or demand upon the
Grantor, so notify account debtors and obligors. After the making of such a
request or the giving of any such notification, the Grantor shall hold any
proceeds of collection of accounts, chattel paper, general intangibles and
instruments received by the Grantor as trustee for the Agent and the Secured
Parties without commingling the same with other funds of the Grantor and shall
turn the same over to the Agent in the identical form received, together with
any necessary endorsements or assignments. Subject to the Rights of the Senior
Secured Lenders, the Grantor shall apply the proceeds of collection of accounts,
chattel paper, general intangibles, and instruments received by the Agent to the
Obligations, such proceeds to be immediately entered after final payment in cash
or solvent credits of the items giving rise to them.
Section 11. Further Assurances. The Grantor, at its own expense,
shall promptly do, make, execute and deliver all such additional and further
acts, things, deeds, assurances and instruments as the Agent may reasonably
request more completely to vest in and assure to
- 5 -
the Agent its rights hereunder or in any of the Collateral (on behalf of, and
for the pro rata benefit of, the Secured Parties), including, without
limitation, (a) executing (if necessary), delivering and, where appropriate,
filing financing statements and continuation statements under the UCC and
documents having comparable functions under other applicable law; (b) obtaining
governmental and other third party consents and approvals, including without
limitation any consent of any licensor, lessor or other applicable party; (c)
obtaining waivers from mortgagees and landlords; (d) subject to the Rights of
the Senior Secured Lenders, taking all actions required by the UCC, including
obtaining any necessary agreements from securities intermediaries, depository
banks, or, as applicable, letter of credit issuers, to establish and maintain
the Agent's control over all investment property, deposit accounts, chattel
paper, and letter of credit rights; (e) obtaining insurance endorsements,
including (subject to the Rights of the Senior Secured Lenders) loss payee and
additional insured endorsements, as applicable; and (f) promptly notifying the
Agent of any commercial tort claim arising after the date hereof. The Grantor
authorizes the Agent from time to time to file such financing statements or
other documents as the Agent may deem appropriate to perfect the security
interest granted hereunder, or to ensure the continuing perfection, priority and
enforceability thereof. The Grantor acknowledges that any such financing
statements may describe the Collateral as "all assets" of the Grantor or contain
any other description of similar import. Subject to the Rights of the Senior
Secured Lenders, if any amount greater than $50,000, in the aggregate, payable
under or in connection with any of the Collateral shall be or become evidenced
by any promissory note or other instrument, such note or instrument shall be
immediately pledged and delivered to the Agent, duly endorsed in a manner
satisfactory to the Agent.
Section 12. Power of Attorney.
(a) Subject to the Rights of the Senior Secured
Lenders, the Grantor hereby irrevocably constitutes and appoints the Agent and
any officer or agent thereof, with full power of substitution, as its true and
lawful attorneys-in-fact with full irrevocable power and authority in the place
and stead of the Grantor or in the Agent's own name, for the purpose of carrying
out the terms of this Agreement, to take any and all appropriate action and to
execute any and all documents and instruments that may be necessary or desirable
to accomplish the purposes of this Agreement and, without limiting the
generality of the foregoing, hereby gives said attorneys the power and right, on
behalf of the Grantor, without notice to or assent by the Grantor, to do the
following:
(i) upon the occurrence and during the
continuance of an Event of Default, generally to sell, transfer, pledge, make
any agreement with respect to or otherwise deal with any of the Collateral in
such manner as is consistent with the UCC and as fully and completely as though
the Agent were the absolute owner thereof for all purposes, and to do at the
Grantor's expense, at any time, or from time to time, all acts and things that
the Agent deems necessary to protect, preserve or realize upon the Collateral
and the Agent's security interest therein, in order to effect the intent of this
Agreement, all as fully and effectively as the Grantor might do, including,
without limitation, (A) the filing and prosecuting of registration and transfer
applications with the appropriate federal or local agencies or authorities with
respect to trademarks, copyrights and patentable inventions and processes, (B)
upon written notice to the Grantor and any other secured lenders, the exercise
of voting rights with respect to voting securities, which rights may be
exercised, if the Agent so elects,
- 6 -
with a view to causing the liquidation in a commercially reasonable manner of
assets of the issuer of any such securities and (C) the execution, delivery and
recording, in connection with any sale or other disposition of any Collateral,
the endorsements, assignments or other instruments of conveyance or transfer
with respect to such Collateral; and
(ii) to file such financing statements,
including amendments, assignments, continuation statements and initial financing
statements in lieu of continuation statements, with respect hereto, with or
without the Grantor's signature, or a photocopy of this Agreement in
substitution for a financing statement, in tangible form, electronically or by
any other available means, at such times and with such filing offices as the
Agent may deem appropriate and to execute in the Grantor's name any financing
statements and continuation statements which may for any reason require the
Grantor's signature. Any such financing statements may describe the Collateral
as described herein, may indicate that the Agent has a security interest in all
assets or all personal property of the Grantor, or may otherwise appropriately
describe the Collateral.
(b) To the extent permitted by law, the Grantor
hereby ratifies all that said attorneys shall lawfully do or cause to be done by
virtue hereof. This power of attorney is a power coupled with an interest and
shall be irrevocable.
(c) The powers conferred on the Agent hereunder
are solely to protect the interests of the Agent (and the Secured Parties) in
the Collateral and shall not impose any duty upon the Agent to exercise any such
powers. The Agent shall be accountable only for the amounts that it actually
receives as a result of the exercise of such powers and neither it nor any of
its officers, directors, employees or agents shall be responsible to the Grantor
for any act or failure to act, except for the Agent's own gross negligence or
willful misconduct.
Section 13. Remedies. Subject to the Rights of the Senior Secured
Lenders, if an Event of Default shall have occurred and be continuing, the Agent
may, without notice or demand to the Grantor, declare this Agreement to be in
default, and the Agent shall thereafter have in any jurisdiction in which
enforcement hereof is sought, in addition to all other rights and remedies, the
rights and remedies of a secured party under the UCC, including, without
limitation, the right to take possession of the Collateral for the pro rata
benefit of the Secured Parties, and for that purpose the Agent may, so far as
the Grantor can give authority therefor, enter upon any premises on which the
Collateral may be situated and remove the same therefrom. Subject to the Rights
of the Senior Secured Lenders, the Agent may in its discretion require the
Grantor to assemble all or any part of the Collateral at such location or
locations within the state(s) of the Grantor's principal office(s) or at such
other locations as the Agent may designate. Subject to the Rights of the Senior
Secured Lenders, unless the Collateral is perishable or threatens to decline
speedily in value or is of a type customarily sold on a recognized market, the
Agent shall give to the Grantor at least ten (10) business days' prior written
notice of the time and place of any public sale of Collateral or of the time
after which any private sale or any other intended disposition is to be made.
The Grantor waives any and all rights that it may have to judicial hearing in
advance of the enforcement of any of the Agent's and the Secured Parties' rights
hereunder, including, without limitation, its right following an Event of
Default to take immediate possession of the Collateral and exercise its rights
with respect thereto.
- 7 -
Section 14. Waivers; Amendment.
(a) The Grantor waives (to the extent permitted
by applicable law) demand, notice, protest, notice of acceptance of this
Agreement, notice of Loan made, credit extended, Collateral received or
delivered or other action taken in reliance hereon and all other demands and
notices of any description. With respect to both the Obligations and the
Collateral, the Grantor assents to any extension or postponement of the time of
payment or any other indulgence, to any substitution, exchange or release of
Collateral, to the addition or release of any party or Person primarily or
secondarily liable, to the acceptance of partial payment thereon and the
settlement, compromising or adjusting of any thereof, all in such manner and at
such time or times as the Agent may deem advisable. Neither the Secured Parties
nor the Agent shall have any duty as to the collection or protection of the
Collateral or any income thereon, nor as to the preservation of rights against
prior parties, nor as to the preservation of any rights pertaining thereto
beyond the safe custody thereof.
(b) No amendment of any provision of this
Agreement shall in any event be effective unless the same shall be in writing
and signed by both parties hereto. The Agent shall not be deemed to have waived
any of its or the Secured Parties' rights upon or under the Obligations or the
Collateral unless such waiver shall be in writing and signed by the Agent. No
delay or omission on the part of the Agent in exercising any right shall operate
as a waiver of such right or any other right. A waiver on any one occasion shall
not be construed as a bar to or waiver of any right on any future occasion. All
rights and remedies of the Agent and the Secured Parties with respect to the
Obligations or the Collateral, whether evidenced hereby or by any other
instrument or papers, shall be cumulative and may be exercised singularly,
alternatively, successively or concurrently at such time or at such times as the
Agent deems expedient.
Section 15. Marshalling. The Agent shall not be required to
marshal any present or future collateral security (including but not limited to
this Agreement and the Collateral) for, or other assurances of payment of, the
Obligations or any of them or to resort to such collateral security or other
assurances of payment in any particular order, and all of the rights of the
Agent and the Secured Parties hereunder in respect of such collateral security
and other assurances of payment shall be cumulative and in addition to all other
rights, however existing or arising. To the extent that it lawfully may, the
Grantor hereby agrees that it will not invoke any law relating to the
marshalling of collateral that might cause delay in or impede the enforcement of
the Agent's or the Secured Parties' rights under this Agreement or under any
other instrument creating or evidencing any of the Obligations or under which
any of the Obligations is outstanding or by which any of the Obligations is
secured or payment thereof is otherwise assured, and, to the extent that it
lawfully may, the Grantor hereby irrevocably waives the benefits of all such
laws.
Section 16. Proceeds of Dispositions; Expenses. The Grantor shall
pay to the Agent and the Secured Parties on demand any and all reasonable
expenses, including expenses of its counsel, accountants and of any experts,
agents or other professional advisors, incurred or paid by the Agent or the
Secured Parties in protecting, preserving or enforcing the Agent's or the
Secured Parties' rights under or in respect of any of the Obligations or any of
the Collateral. After deducting all of said expenses, the residue of any
proceeds of collection or sale of the Obligations or Collateral shall, to the
extent actually received in cash, be applied
- 8 -
to the payment of the Obligations in such order or preference as the Agent may
determine, proper allowance being made for any Obligations not then due. Upon
the final payment and satisfaction in full of all of the Obligations and after
making any payments required by Sections 9608 and 9615 of the UCC, any excess
shall be returned to the Grantor. In the event that the proceeds of dispositions
of all Collateral are not sufficient to pay the Obligations in full, the Grantor
shall remain liable for any deficiency.
Section 17. Overdue Amounts. Until paid, all amounts due and
payable by the Grantor hereunder shall be a debt secured by the Collateral and
shall bear, whether before or after judgment, interest at the rate of interest
for overdue principal set forth in the Secured Note.
Section 18. Continuing Security Interest; Termination. This
Agreement shall create a continuing security interest in all of the Collateral
and the security interest shall survive until, and this Agreement shall remain
in full force and effect and terminate only upon, the payment and performance in
full of all Obligations (including payment in full in cash in immediately
available funds in the case of Obligations consisting of payment obligations).
Section 19. Reinstatement. This Agreement shall remain in full
force and effect and continue to be effective should any petition be filed by or
against Company for liquidation or reorganization, should Company become
insolvent or make an assignment for the benefit of any creditor or creditors, or
should a receiver or trustee be appointed for all or any significant part of
Company's assets, and shall continue to be effective or be reinstated, as the
case may be, if at any time payment and performance of the Obligations, or any
part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or
must otherwise be restored or returned by any obligee of the Obligations,
whether as a "voidable preference," "fraudulent transfer," or otherwise, all as
though such payment or performance had not been made. In the event that any
payment, or any part thereof, is rescinded, reduced, restored or returned, the
Obligations shall be reinstated and deemed reduced only by such amount paid and
not so rescinded, reduced, restored or returned.
Section 20. Governing Law. THIS AGREEMENT SHALL FOR ALL PURPOSES
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL SUBSTANTIVE LAWS
OF THE STATE OF CALIFORNIA (EXCEPT TO THE EXTENT THAT THE UNIFORM COMMERCIAL
CODE OF ANOTHER STATE WOULD GOVERN MATTERS PERTAINING TO COLLATERAL PURSUANT TO
THE CHOICE OF LAW RULES SET FORTH IN THE APPLICABLE UNIFORM COMMERCIAL CODE).
The parties hereto (a) agree that any legal suit, action or proceeding arising
out of or relating to this Agreement will be instituted exclusively in the
courts of the State of California sitting in the County of Los Angeles, or any
Federal court in such State, (b) waive any objection which such party may have
now or hereafter based upon forum non conveniens or to the venue of any such
suit, action or proceeding, and (c) irrevocably consent to the jurisdiction of
the State Courts located in said State in any such suit, action or proceeding.
Each such party further agrees to accept and acknowledge service of any and all
process which may be served in any such suit, action or proceeding in said
courts in said State, and agrees that service of process upon such party, mailed
by certified mail to such party's address specified in Section 22, will be
deemed in every respect effective service of process upon such party, in any
suit, action or proceeding.
- 9 -
Section 21. Waiver of Jury Trial. EACH PARTY HERETO WAIVES THEIR
RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY
DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER
OR THE PERFORMANCE OF ANY SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by
law, each party waives any right that it may have to claim or recover in any
litigation referred to in the preceding sentence any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages. The Grantor (a) certifies that neither the Agent y nor any
representative, agent or attorney of the Agent has represented, expressly or
otherwise, that the Agent would not, in the event of litigation, seek to enforce
the foregoing waivers and (b) acknowledges that, in making the Loan evidenced by
the Secured Note, the Secured Parties and the Agent are relying upon, among
other things, the waivers and certifications contained in this Section 21.
Section 22. Miscellaneous.
(a) The headings of each section of this
Agreement are for convenience only and shall not define or limit the provisions
thereof.
(b) This Agreement and all rights and
obligations hereunder shall be binding upon the Grantor and its respective
successors and assigns, and shall inure to the benefit of the Agent, the Secured
Parties, and their successors and assigns.
(c) If any term of this Agreement shall be held
to be invalid, illegal or unenforceable, the validity of all other terms hereof
shall in no way be affected thereby, and this Agreement shall be construed and
be enforceable as if such invalid, illegal or unenforceable term had not been
included herein.
(d) This Agreement and the Exhibits and
Schedules, taken together with the Secured Note and the Purchase Agreement and
the other documents contemplated therein and herein represents the final
agreement between the parties hereto with respect to the matters set forth
herein and may supersede any prior oral or written, or any contemporaneous oral
agreements or understandings of the parties hereto.
(e) Notices, demands, consents or other
communications given or made in connection with this Note shall be in writing
and shall be sent via facsimile or mailed by first-class registered or certified
airmail, or nationally recognized overnight express courier postage prepaid, and
deemed given when so mailed to the following addresses:
if to Grantor, to:
Novatel Wireless, Inc.
0000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Attention: Xxxxx Xxxxxxxx, Chief
Executive Officer
Facsimile: (000) 000-0000
with a copy so mailed to:
- 10 -
Xxxxxx & Xxxxxxx LLP
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000-0000
Attention: J. Xxxxx Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
if to Agent to:
PS Capital LLC
000 Xxxxx Xxxxxx, Xxxxx 00x
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxx
Facsimile: (000) 000-0000
with a copy so mailed to:
Irell & Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
(f) This Agreement may be executed in two or
more counterparts and/or by facsimile, each of which shall constitute an
original but all of which when taken together shall constitute but one contract.
The Grantor acknowledges receipt of a copy of this Agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
- 11 -
[Signature Page to Security Agreement]
IN WITNESS WHEREOF, intending to be legally bound, the undersigned
Grantor has caused this Agreement to be duly executed as of the date first above
written.
GRANTOR
Novatel Wireless, Inc.,
a Delaware corporation
By: /s/ Xxxxx X. Xxxxxxxx
Name: Xxxxx X. Xxxxxxxx
Title: Chief Executive Officer
Accepted:
AGENT
PS Capital LLC
/s/Xxxxxxx X. Xxxx
-------------------------------------
By: Xxxxxxx X. Xxxx
Its: Managing Director
SCHEDULE 1
GRANTOR'S PRINCIPAL PLACE OF BUSINESS AND JURISDICTION OF ORGANIZATION
Jurisdiction of Organization: Delaware
Principal Place of Business: California
