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Exhibit 10.36
Execution Copy
AMENDED AND RESTATED
SECURITY AGREEMENT
AMENDED AND RESTATED SECURITY AGREEMENT, dated as of April 9, 1997,
made by SOURCE MEDIA, INC., a Delaware corporation (the "Grantor"), in favor of
PECKS MANAGEMENT PARTNERS LTD., in its capacity as Collateral Agent (in such
capacity, the "Collateral Agent") for the ratable benefit of the Investors as
defined in and pursuant to the Intercreditor Agreement dated as of the date
hereof, among the Grantor, IT Network, Inc., a Texas corporation ("IT"),
Northstar High Total Return Fund ("Northstar"), the Pecks Investors listed on
Schedule 1 attached thereto, the Guarantors listed on Schedule 2 attached
thereto and the Collateral Agent (the "Intercreditor Agreement").
W I T N E S S E T H:
WHEREAS, pursuant to the terms of the Note Agreement dated as of
March 28, 1996, between the Grantor and Northstar, the Grantor entered into and
delivered to Northstar a Security Agreement dated as of April 3, 1996 (the
"Original Security Agreement"); and
WHEREAS, the Grantor, IT and the Investors have entered into an
Amended and Restated Note Agreement dated as of the date hereof (the "Amended
and Restated Note Agreement"), pursuant to which, among other things, (i) the
Investors have agreed to purchase the 1997 Notes (as defined in the Amended and
Restated Note Agreement) from the Grantor and IT and (ii) Northstar has agreed
to the amendment and restatement of the Original Notes (as defined in the
Amended and Restated Note Agreement); and
WHEREAS, it is a condition precedent to the obligations of the
Investors to purchase the 1997 Notes under the Amended and Restated Note
Agreement and the obligation of Northstar to agree to the amendment and
restatement of the Original Notes under the Amended and Restated Note Agreement,
that the Grantor shall have executed and delivered this Amended and Restated
Security Agreement to the Collateral Agent, amending and restating the Original
Security Agreement in its entirety;
NOW, THEREFORE, in consideration of the premises and to induce the
Investors to enter into the Amended and Restated Note Agreement and to purchase
the 1997 Notes and to induce Northstar to agree to the amendment and restatement
of the Original Notes, all as provided in the Amended and Restated Note
Agreement, the Grantor hereby agrees with the Collateral Agent, as follows:
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1. Defined Terms. Unless otherwise defined herein, terms which are
defined in the Amended and Restated Note Agreement and used herein are so used
as so defined, and the meanings assigned to terms defined herein or in the
Amended and Restated Note Agreement shall be equally applicable to both the
singular and plural forms of such terms; the following terms which are defined
in the Uniform Commercial Code in effect in the State of New York on the date
hereof are used herein as so defined: Accounts, Chattel Paper, Documents,
Equipment, Farm Products, General Intangibles, Instruments, Inventory and
Proceeds; and the following terms shall have the following meanings:
"Amended and Restated Security Agreement" means this Amended and
Restated Security Agreement, as amended, supplemented or otherwise
modified from time to time.
"Code" means the Uniform Commercial Code as from time to time in
effect in the State of New York.
"Collateral" shall have the meaning assigned to it in Section 2 of
this Amended and Restated Security Agreement.
"Computer Hardware and Software Collateral" means (a) all computer
and other electronic data processing hardware, integrated computer
systems, central processing units, memory units, display terminals,
printers, features, computer elements, card readers, tape drives, hard and
soft disk drives, cables, electrical supply hardware, generators, power
equalizers, accessories and all peripheral devices and other related
computer hardware; (b) all software programs (including both source code,
object code and related applications and data files), whether now owned,
licensed or leased or hereafter acquired by the Grantor, designed for use
on the computers and electronic data processing hardware described in
clause (a) above; (c) all firmware associated therewith; (d) all
documentation (including flow charts, logic diagrams, manuals, guides and
specifications) with respect to such hardware, software and firmware
described in the preceding clauses (a) through (c); and (e) all rights
with respect to all of the foregoing, including, without limitation, any
and all copyrights, licenses, options, warranties, service contracts,
program services, test rights, maintenance rights, support rights,
improvement rights, renewal rights and indemnifications and any
substitutions, replacements, additions or model conversions of any of the
foregoing.
"Contracts" means the contracts entered into by the Grantor,
including, without limitation, (a) all rights of the Grantor to receive
moneys due and to become due to it thereunder or in connection therewith,
(b) all rights of the Grantor to damages arising out of, or for, breach or
default
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in respect thereof and (c) all rights of the Grantor to perform and
exercise all remedies thereunder.
"Copyright License" means any written agreement naming the Grantor
as licensor or licensee or granting any right under any Copyright,
including the agreements described in Schedule I hereto.
"Copyrights" means (a) all copyrights of the Grantor, whether
published or unpublished and whether now or hereafter in force throughout
the world, all registrations and recordings thereof, and all applications
in connection therewith, including, without limitation, registrations,
recordings and applications in the United States Copyright office referred
to in Schedule I hereto and (b) all renewals thereof.
"Obligations" shall mean the unpaid principal amount of, or any
premium applicable to, and interest on (including, without limitation,
interest accruing after the maturity of the Notes and interest accruing
after the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to the Grantor,
whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding) and all other obligations and liabilities of
the Grantor to the Investors or the Collateral Agent, whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with,
the Amended and Restated Note Agreement, the Notes, the other Note
Purchase Documents or this Amended and Restated Security Agreement (in
each such case as the same may be amended, supplemented or modified from
time to time) and any other document made, delivered or given in
connection therewith or herewith, whether on account of principal,
premium, interest, reimbursement obligations, fees, indemnities, costs,
expenses (including, without limitation, all fees and disbursements of
counsel to the Investors that are required to be paid by the Grantor
pursuant to the terms of the Amended and Restated Note Agreement) or
otherwise.
"Patents" means any and all now or in the future issued or
registered, anywhere in the world, patents and utility models, and any and
all now or in the future filed, anywhere in the world, patent applications
and utility model applications, whose subject matter is now or hereafter
conceived, or reduced to practice, or which is now or hereafter owned,
acquired or controlled, by the Grantor under which the Grantor has the
right to grant licenses; and all divisions, continuations, and
continuations-in-part of, substitutions for and additions to any of the
foregoing patent and utility
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model applications directly or through one or more intervening
applications, and all reissues, reexaminations, renewals, and extensions
of any such patents and utility models, including, without limitation, any
thereof referred to in Schedule II hereto.
"Patent License" means any agreement providing for the grant by or
to the Grantor of any right under any patent or patent application, or any
Patent, and all license rights, immunities from suit and all other rights
and interests conferred by or to the Grantor with respect to patents,
patent applications, utility models and utility model applications under
all licenses and agreements, including but not limited to all licenses and
agreements between the Grantor, on the one hand, and any member of the ICT
Group, on the other, and including, without limitation any thereof
referred to in Schedule II hereto.
"Security" means any "security," as such term is defined in Article
8 of the Code and, in any event, shall include, but not be limited to, any
obligation of an "issuer" (as such term is defined in Article 8 of the
Code), or a share, participation, or other interest in an issuer or in
property or an enterprise of an issuer: (a) which is represented by a
Security certificate in bearer or registered form, or the transfer of
which may be registered upon books maintained for that purpose by or on
behalf of the issuer; (b) which is one of a class or series or by its
terms is divisible into a class or series of shares, participations,
interests, or obligations; and (c) which (i) is, or is of a type, dealt in
or traded on securities exchanges or securities markets; or (ii) is a
medium for investment and by its terms expressly provides that it is a
security governed by Article 8 of the Code.
"Trademark License" means any agreement providing for the grant by
or to the Grantor of any right to use any Trademark, including, without
limitation, any thereof referred to in Schedule III hereto.
"Trademarks" means (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers of the
Grantor, now existing anywhere in the world or hereafter adopted or
acquired, whether currently in use or not, and the goodwill associated
therewith, all registrations and recordings thereof, and all applications
in connection therewith, including, without limitation, any thereof
referred to in Schedule III hereto, and (b) all renewals thereof.
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2. Grant of Security Interest. As collateral security for the prompt
and complete payment and performance when due (whether at the stated maturity,
by acceleration or otherwise) of the Obligations, the Grantor hereby grants to
the Collateral Agent a security interest in all of the following property now
owned or at any time hereafter acquired by the Grantor or in which the Grantor
now has or at any time in the future may acquire any right, title or interest
(collectively, the "Collateral"):
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Computer Hardware and Software Collateral
(iv) all Contracts;
(v) all Copyrights;
(vi) all Copyright Licenses;
(vii) all Documents;
(viii) all Equipment;
(ix) all General Intangibles;
(x) all Patents;
(xi) all Patent Licenses;
(xii) all Securities;(including, without limitation, any and all
Securities of any and all subsidiaries of the Grantor from time to time
owned or acquired by the Grantor in any manner, and the certificates and
all dividends, cash, Instruments and other property from time to time
received, receivable or otherwise distributed or distributable in respect
of or in exchange for all or any of such Securities)
(xiii) all Instruments;
(xiv) all Inventory;
(xv) all Trademarks;
(xvi) all Trademark Licenses;
(xvii) to the extent not otherwise included, all Proceeds and products
of any and all of the foregoing.
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3. Rights of the Collateral Agent; Limitations on the Collateral
Agent's Obligations.
(a) Grantor Remains Liable under Accounts and Contracts. Anything
herein to the contrary notwithstanding, the Grantor shall remain liable under
each of the Accounts and Contracts to observe and perform all the conditions and
obligations to be observed and performed by it thereunder, all in accordance
with the terms of any agreement giving rise to each such Account and in
accordance with and pursuant to the terms and provisions of each such Contract.
The Collateral Agent shall not have any obligation or liability under any
Account (or any agreement giving rise thereto) or under any Contract by reason
of or arising out of this Amended and Restated Security Agreement or the receipt
by the Collateral Agent of any payment relating to such Account or Contract
pursuant hereto, nor shall the Collateral Agent be obligated in any manner to
perform any of the obligations of the Grantor under or pursuant to any Account
(or any agreement giving rise thereto) or under or pursuant to any Contract, to
make any payment, to make any inquiry as to the nature or the sufficiency of any
payment received by it or as to the sufficiency of any performance by any party
under any Account (or any agreement giving rise thereto) or under any Contract,
to present or file any claim, to take any action to enforce any performance or
to collect the payment of any amounts which may have been assigned to it or to
which it may be entitled at any time or times.
(b) Notice to Account Debtors and Contracting Parties. Upon the
request of the Collateral Agent at any time after the occurrence and during the
continuance of an Event of Default, the Grantor shall notify account debtors on
the Accounts and parties to the Contracts that the Accounts and the Contracts
have been assigned to the Collateral Agent for the benefit of the Collateral
Agent and that payments in respect thereof shall be made directly to the
Collateral Agent. The Collateral Agent may in its own name or in the name of
others communicate with account debtors on the Accounts and parties to the
Contracts to verify with them to its satisfaction the existence, amount and
terms of any Accounts or Contracts.
(c) Analysis of Accounts. The Collateral Agent shall have the right
to make test verifications of the Accounts in any manner and through any medium
that it reasonably considers advisable, and the Grantor shall furnish all such
assistance and information as the Collateral Agent may require in connection
therewith. At any time and from time to time, upon the Collateral Agent's
request and at the expense of the Grantor, the Grantor shall cause independent
public accountants or others satisfactory to the Collateral Agent to furnish to
the Collateral Agent reports showing reconciliations, aging and test
verifications of, and trial balances for, the Accounts.
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(d) Collections on Accounts. If required by the Collateral Agent
after the occurrence and during the continuance of an Event of Default, any
payments of Accounts, when collected by the Grantor, shall be forthwith (and, in
any event, within two Business Days) deposited by the Grantor in the exact form
received, duly indorsed by the Grantor to the Collateral Agent if required, in a
special collateral account maintained by the Collateral Agent, and, until so
turned over, shall be held by the Grantor in trust for the Collateral Agent,
segregated from other funds of the Grantor. Each deposit of any such Proceeds
shall be accompanied by a report identifying in reasonable detail the nature and
source of the payments included in the deposit. All Proceeds constituting
collections of Accounts while held by the Collateral Agent (or by the Grantor in
trust for the Collateral Agent) shall continue to be collateral security for all
of the Obligations and shall not constitute payment thereof until applied as
hereinafter provided. At any time after the occurrence and during the
continuance of an Event of Default, at the Collateral Agent's election, the
Collateral Agent shall apply all or any part of the funds on deposit in said
special collateral account on account of the Obligations in such order as the
Collateral Agent may elect, and any part of such funds which the Collateral
Agent elects not so to apply and deems not required as collateral security for
the Obligations shall be paid over from time to time by the Collateral Agent to
the Grantor or to whomsoever may be lawfully entitled to receive the same. After
the occurrence and during the continuance of an Event of Default, at the
Collateral Agent's request, the Grantor shall deliver to the Collateral Agent
all original and other documents evidencing, and relating to, the agreements and
transactions which gave rise to the Accounts, including, without limitation, all
original orders, invoices and shipping receipts.
4. Representations and Warranties. The Grantor hereby represents and
warrants that:
(a) Title; No Other Liens. Except for the Lien granted to the
Collateral Agent pursuant to this Amended and Restated Security Agreement,
the Grantor owns each item of the Collateral free and clear of any and all
Liens or claims of others except as permitted by the Amended and Restated
Note Agreement. No security agreement, financing statement or other public
notice with respect to all or any part of the Collateral is on file or of
record in any public office, except as permitted by the Amended and
Restated Note Agreement and such as may have been filed in favor of the
Collateral Agent, pursuant to this Amended and Restated Security
Agreement.
(b) Perfected First Priority Liens. The Liens granted pursuant to
this Amended and Restated Security Agreement will constitute upon the
completion of all necessary filings
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or notices in proper public offices or the taking of any necessary
possessions or similar acts, perfected Liens on all Collateral, which are,
except as permitted by the Amended and Restated Note Agreement, prior to
all other Liens on such Collateral created by the Grantor and in existence
on the date hereof and which are enforceable as such against all creditors
of the Grantor.
(c) Accounts. The amount represented by the Grantor to the
Collateral Agent from time to time as owing by each account debtor or by
all account debtors in respect of the Accounts will at such time be the
correct amount actually owing by such account debtor or debtors
thereunder. No amount payable to the Grantor under or in connection with
any Account is evidenced by any Instrument or Chattel Paper which has not
been delivered to the Collateral Agent. The place where the Grantor keeps
its records concerning the Accounts is set forth on Schedule IV hereto.
(d) Consents. No consent of any party (other than the Grantor) to
any Contract is required, or purports to be required, in connection with
the execution, delivery and performance of this Amended and Restated
Security Agreement.
(e) Bank Accounts. The bank accounts with the banks listed on
Schedule V hereto are the only bank or deposit accounts that the Grantor
maintains.
(f) Inventory and Equipment. The Inventory and the Equipment are
kept at the locations listed on Schedule VI hereto and have not been kept
at any other location within the five-month period ending on the Closing
Date.
(g) Chief Executive Office. The Grantor's chief executive office and
chief place of business is located at 0000 Xxxxxx Xxxx Xxxx, Xxxxx 0000,
Xxxxxx, Xxxxx 00000.
(h) Farm Products. None of the Collateral constitutes, or is the
Proceeds of, Farm Products.
(i) Governmental Obligors. None of the obligors on any Accounts is a
Governmental Authority.
5. Covenants. The Grantor covenants and agrees with the Collateral
Agent, from and after the date of this Amended and Restated Security Agreement
until the Obligations are paid in full:
(a) Further Documentation; Pledge of Instruments and Chattel Paper.
At any time and from time to time, upon the written request of the
Collateral Agent, and at the sole expense of the Grantor, the Grantor will
promptly and duly
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execute and deliver such further instruments and documents and take such
further action as the Collateral Agent may reasonably request for the
purpose of obtaining or preserving the full benefits of this Amended and
Restated Security Agreement and of the rights and powers herein granted,
including, without limitation, the filing of any financing or continuation
statements under the Uniform Commercial Code in effect in any such
jurisdiction with respect to the Liens created hereby. The Grantor also
hereby authorizes the Collateral Agent to file any such financing or
continuation statement without the signature of the Grantor to the extent
permitted by applicable law. A carbon, photographic or other reproduction
of this Amended and Restated Security Agreement shall be sufficient as a
financing statement for filing in any jurisdiction. If any amount payable
under or in connection with any of the Collateral shall be or become
evidenced by any Instrument or Chattel Paper, such Instrument or Chattel
Paper shall be immediately delivered to the Collateral Agent, duly
endorsed in a manner satisfactory to the Collateral Agent, to be held as
Collateral pursuant to this Amended and Restated Security Agreement.
(b) Indemnification. The Grantor agrees to pay, and to save the
Collateral Agent harmless from, any and all liabilities, costs and
expenses (including, without limitation, legal fees and expenses) (i) with
respect to, or resulting from, any delay in paying, any and all excise,
sales or other taxes which may be payable or determined to be payable with
respect to any of the Collateral, (ii) with respect to, or resulting from,
any delay in complying with any requirement of law applicable to any of
the Collateral or (iii) in connection with any of the transactions
contemplated by this Amended and Restated Security Agreement. In any suit,
proceeding or action brought by the Collateral Agent under any Account or
Contract for any sum owing there-under, or to enforce any provisions of
any Account or Contract, the Grantor will save, indemnify and keep the
Collateral Agent harmless from and against all expense, loss or damage
suffered by reason of any defense, setoff, counterclaim, recoupment or
reduction or liability whatsoever of the account debtor or obligor
thereunder, arising out of a breach by the Grantor of any obligation
thereunder or arising out of any other agreement, indebtedness or
liability at any time owing to or in favor of such account debtor or
obligor or its successors from the Grantor.
(c) Maintenance of Records. The Grantor will keep and maintain at
its own cost and expense satisfactory and complete records of the
Collateral, including, without limitation, a record of all payments
received and all credits granted with respect to the Accounts. For the
Collateral Agent's further security, the Collateral Agent shall have a
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security interest in all of the Grantor's books and records pertaining to
the Collateral, and the Grantor shall turn over any such books and records
for inspection at the office of the Grantor to the Collateral Agent or to
its representatives during normal business hours at the request of the
Collateral Agent.
(d) Limitation on Liens on Collateral. The Grantor (x) will not
create, incur or permit to exist, will defend the Collateral against, and
will take such other action as is necessary to remove, any Lien or claim
on or to the Collateral, other than the Liens created hereby and other
than as permitted pursuant to the Amended and Restated Note Agreement, and
(y) will defend the right, title and interest of the Collateral Agent in
and to any of the Collateral against the claims and demands of all Persons
whomsoever.
(e) Limitations on Dispositions of Collateral. The Grantor will not
sell, transfer, lease or otherwise dispose of any of the Collateral, or
attempt, offer or contract to do so except for (x) sales of Inventory in
the ordinary course of its business, (y) so long as no Default or Event of
Default has occurred and is continuing, the disposition in the ordinary
course of business of items of Equipment and which have become worn out or
obsolete and (z) as otherwise permitted by the Amended and Restated Note
Agreement.
(f) Limitations on Modifications, Waivers, Extensions of Contracts
and Agreements Giving Rise to Accounts. The Grantor will not (i) amend,
modify, terminate or waive any provision of any Contract or any agreement
giving rise to an Account in any manner which could reasonably be expected
to materially adversely affect the value of such Contract or Account as
Collateral, (ii) fail to exercise promptly and diligently each and every
material right which it may have under each Contract and each agreement
giving rise to an Account (other than any right of termination) or (iii)
fail to deliver to the Collateral Agent a copy of each material demand,
notice or document received by it relating in any way to any Contract or
any agreement giving rise to an Account.
(g) Limitations on Discounts, Compromises, Extensions of Accounts.
Other than in the ordinary course of business as generally conducted by
the Grantor over a period of time, the Grantor will not grant any
extension of the time of payment of any of the Accounts, compromise,
compound or settle the same for less than the full amount thereof,
release, wholly or partially, any Person liable for the payment thereof,
or allow any credit or discount whatsoever thereon, to the extent that the
same, individually or in the aggregate, could have a material adverse
effect on the
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business, properties, assets, liabilities, results of operations,
condition (financial or other) or prospects of the Grantor.
(h) Further Identification of Collateral. The Grantor will furnish
to the Collateral Agent from time to time, statements and schedules
further identifying and describing the Collateral and such other reports
in connection with the Collateral as the Collateral Agent may reasonably
request, all in reasonable detail.
(i) Notices. The Grantor will advise the Collateral Agent promptly,
in reasonable detail, (i) of any Lien (other than Liens created hereby or
permitted under the Amended and Restated Note Agreement) on, or claim
asserted against, any of the Collateral, (ii) of the opening by the
Grantor of any bank or deposit account after the Closing Date, (iii) of
any Account arising after the Closing Date with respect to which the
obligor thereon is a Governmental Authority and (iv) of the occurrence of
any other event which could reasonably be expected to have a material
adverse effect on the aggregate value of the Collateral or on the Liens
created hereunder.
(j) Changes in Locations, Name, etc. The Grantor will not (i) change
the location of its chief executive office/chief place of business from
that specified in Section 4(g) or remove its books and records from the
location specified in Section 4(c), (ii) permit any of the Inventory or
Equipment to be kept at a location other than that specified in Section
4(f) or (iii) change its name, identity or corporate structure to such an
extent that any financing statement filed by the Collateral Agent in
connection with this Amended and Restated Security Agreement would become
misleading, unless it shall have given the Collateral Agent at least 30
days' prior written notice thereof.
(k) Copyrights.
(i) The Grantor (either itself or through licensees) will (a) employ
each Copyright with appropriate copyright notice consistent with its past
practice and (b) not knowingly (and not permit any licensee or sublicensee
thereof knowingly to) do any act or knowingly omit to do any act whereby
any Copyright or any portion of the Copyright may become invalidated.
(ii) The Grantor will not (either itself or through licensees)
knowingly do any act, or omit to do any act, whereby any Copyright or any
portion of the Copyrights may become injected into the public domain.
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(iii) The Grantor shall notify the Collateral Agent immediately if it
knows, or has reason to know, that any Copyright or any portion of the
Copyrights may become injected into the public domain or of any adverse
determination (including, without limitation, the institution of, or any
such determination or development in, any court or tribunal in the United
States or any other country) regarding the Grantor's ownership of any
Copyright or any portion of the Copyrights.
(iv) The Grantor will, with respect to any Copyright that the Grantor
registers after the Closing Date or any Copyright License that the Grantor
knowingly acquires after the Closing Date, promptly (i) take all actions
necessary so that the Collateral Agent shall obtain a perfected security
interest in such Copyright or Copyright License and (ii) provide to the
Collateral Agent a revised Schedule I hereto listing all registered
Copyright and all Copyright Licenses owned by the Grantor.
(v) On each December 31 of each year following the Date of the Initial
Closing (or, if the Collateral Agent so requests in writing, more often),
the Grantor either itself or through any agent, employee, licensee or
designee, shall provide to the Collateral Agent a document confirming the
Collateral Agent's security interest in all Copyrights and Copyright
Licenses acquired by the Grantor during the preceding calendar year. Upon
request of the Collateral Agent, the Grantor shall execute and deliver any
and all additional agreements, instruments, documents, and papers as the
Collateral Agent may reasonably request to confirm the Collateral Agent's
security interest in such Copyrights and Copyright Licenses, and the
Grantor hereby constitutes the Collateral Agent its attorney-in-fact to
file all such writings for the foregoing purposes, all lawful acts of such
attorney being hereby ratified and confirmed; such power being coupled
with an interest is irrevocable until the Obligations are paid in full.
(vi) The Grantor will take all reasonable and necessary steps as it
shall deem appropriate under the circumstances, to maintain and pursue
each application (and to obtain the relevant registration) and to maintain
each registration of each Copyright owned by the Grantor including,
without limitation, filing of applications for renewal, where necessary.
(vii) The Grantor will promptly notify the Collateral Agent of any
infringement of any Copyright or any portion of the Copyrights of which it
becomes aware and will take all appropriate steps to stop the infringement
as are reasonably
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mutually agreed upon by the Grantor and the Collateral Agent.
(1) Trademarks.
(i) The Grantor (either itself or through licensees) will, with
respect to each Trademark, (i) continue to use such Trademark to the extent
necessary to maintain such Trademark in full force free from any claim of
abandonment for non-use, if consistent with its overall business plan or if to
do otherwise would be an unsound commercial and business judgment, (ii) maintain
as in the past the quality of products and services offered under such
Trademark, (iii) employ such Trademark with the appropriate notice of
registration, (iv) not (and not permit any licensee or sublicensee thereof to)
do any act or knowingly omit to do any act whereby any Trademark may become
invalidated other than solely (x) through the discontinuance of the sale of
goods or the provision of services or (y) the abandonment of a Trademark where,
in each such case covered by (x) and (y) above, the Collateral Agent shall have
received not less than fifteen (15) days' prior written notice of any such
discontinuance or abandonment and the Grantor shall have acted in a manner
consistent with its overall business plan and the exercise of sound commercial
and business judgment. Nothing in this Amended and Restated Security Agreement
shall restrict the Grantor from adding new goods and services to its business
or, upon not less than fifteen (15) days' prior written notice to the Collateral
Agent and in a manner consistent with the Grantor's overall business plan and
the exercise of sound commercial and business judgment, discontinuing the
provision of goods or services and thereby abandoning any Trademark relating
thereto.
(ii) The Grantor will notify the Collateral Agent immediately if it
knows, or has reason to know, that any application or registration relating to
any Trademark may become abandoned, or of any adverse determination or
development (including, without limitation, the institution of, or any such
determination or development in, any proceeding in the United States Patent and
Trademark Office or any court or tribunal in any country) regarding the
Grantor's ownership of any Trademark or its right to register the same or to
keep and maintain the same.
(iii) The Grantor will, with respect to any Trademark that the Grantor
registers after the Closing Date or any Trademark License that the Grantor
acquires after the Closing Date, promptly (i) take all actions necessary so that
the Collateral Agent shall obtain a perfected security interest in such
Trademark or Trademark License and (ii) provide to the Collateral Agent a
revised Schedule II hereto listing all registered Trademarks and all Trademark
Licenses owned by the Grantor.
(iv) On each December 31 of each year following the Date of the
Initial Closing (or, if the Collateral Agent so
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requests in writing, more often), the Grantor either itself or through any
agent, employee, licensee or designee, shall provide to the Collateral Agent, a
document confirming the Collateral Agent's security interest in any Trademark
with respect to which the Grantor has filed an application for registration
during the preceding calendar year. Upon request of the Collateral Agent, the
Grantor shall execute and deliver any and all agreements, instruments,
documents, and papers as the Collateral Agent may request to evidence the
Collateral Agent's security interest in any Trademark and the goodwill and
general intangibles of the Grantor relating thereto or represented thereby, and
the Grantor hereby constitutes the Collateral Agent its attorney-in-fact to
execute and file all such writings for the foregoing purposes, all acts of such
attorney being hereby ratified and confirmed; such power being coupled with an
interest is irrevocable until the Obligations are paid in full.
(v) The Grantor will take all reasonable and necessary steps,
including, without limitation, in any proceeding before the United States Patent
and Trademark office, or any similar office or agency in any other country or
any political subdivision thereof, to maintain and pursue each application (and
to obtain the relevant registration) and to maintain each registration of the
Trademarks, including, without limitation, filing of applications for renewal,
affidavits of use and affidavits of incontestability. Notwithstanding the
foregoing, the Grantor may decline to maintain and pursue each application and
decline to maintain each registration as aforesaid upon not less than fifteen
(15) days' prior written notice to the Collateral Agent and if so to decline is
consistent with the Grantor's overall business plan and is an exercise of sound
commercial and business judgment.
(vi) In the event that any Trademark included in the Collateral is
infringed, misappropriated or diluted by a third party, the Grantor shall
promptly notify the Collateral Agent after it learns thereof and shall promptly
take all appropriate steps to stop the infringement as are reasonably mutually
agreed upon by the Grantor and the Collateral Agent.
(m) Patents
(i) The Grantor will notify the Collateral Agent immediately if it
knows, of has reason to know, that any application relating to any Patent may
become abandoned or of any adverse determination or development (including,
without limitation, the institution of, or any such determination or development
in, any proceeding in the United States Patent and Trademark Office or any court
or tribunal in any country) regarding the Grantor's ownership of any Patent.
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(ii) The Grantor will, with respect to any Patent that the Grantor
obtains after the Date of the Initial Closing or any Patent License that the
Grantor acquires after the Date of the Initial Closing, promptly (i) take all
actions necessary so that the Collateral Agent shall obtain a perfected security
interest in such Patent or Patent License and (ii) provide to the Collateral
Agent a revised Schedule II hereto listing all Patents and all Patent Licenses
owned by the Grantor.
(iii) On each December 31 of each year following the Date of the
Initial Closing (or, if the Collateral Agent so requests in writing, more
often), the Grantor either itself or through any agent, employee, licensee or
designee, shall provide to the Collateral Agent, a document confirming the
Collateral Agent's security interest in any Patent or Patent License which the
Grantor has obtained during the preceding calendar year. Upon request of the
Collateral Agent, the Grantor shall execute and deliver any and all agreements,
instruments, documents, and papers as the Collateral Agent may request to
evidence the Collateral Agent's security interest in such Patents or Patent
Licenses, and the Grantor hereby constitutes the Collateral Agent its
attorney-in-fact to execute and file all such writings for the foregoing
purposes, all acts of such attorney being hereby ratified and confirmed; such
power being coupled with an interest is irrevocable until the Obligations are
paid in full.
(iv) The Grantor will take all reasonable and necessary steps,
including, without limitation, in any proceeding before the United States Patent
and Trademark office, or any similar office or agency in any other country or
any political subdivision thereof, to maintain and pursue each patent or
application for patent and to maintain each Patent, including, without
limitation, payment of maintenance fees. Notwithstanding the foregoing, the
Grantor may decline to maintain and pursue each patent and application for
patent and decline to maintain each Patent as aforesaid upon not less than
fifteen (15) days' prior written notice to the Collateral Agent and if so to
decline is consistent with the Grantor's overall business plan and is an
exercise of sound commercial and business judgment.
(v) In the event that any Patent included in the Collateral is infringed
by a third party, the Grantor shall promptly notify the Collateral Agent after
it learns thereof and shall promptly take all appropriate steps to stop the
infringement as are reasonably mutually agreed upon by the Grantor and the
Collateral Agent.
(n) Patent Licenses
The Grantor shall comply with its obligations under each of its
Patent License Agreements.
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6. Collateral Agent's Appointment as Attorney-in-Fact.
(a) Powers. The Grantor hereby irrevocably constitutes and appoints
the Collateral Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of the Grantor and in the name of the
Grantor or in its own name, from time to time (in the Collateral Agent's
discretion) for the purpose of carrying out the terms of this Amended and
Restated Security Agreement, to take any and all appropriate action and to
execute any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this Amended and Restated Security
Agreement, and, without limiting the generality of the foregoing, the Grantor
hereby gives the Collateral Agent the power and right, on behalf of the Grantor,
without notice to or assent by the Grantor, except any notice required by law
referred to in Section 9 hereof, to do the following:
(i) at any time when any Event of Default shall have occurred and is
continuing, in the name of the Grantor or its own name, or otherwise, to
take possession of and indorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
Account, Instrument, General Intangible or Contract or with respect to any
other Collateral and to file any claim or to take any other action or
proceeding in any court of law or equity or otherwise deemed appropriate
by the Collateral Agent for the purpose of collecting any and all such
moneys due under any Account, Instrument, General Intangible or Contract
or with respect to any other Collateral whenever payable;
(ii) to pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, to effect any repairs or any insurance
called for by the terms of this Amended and Restated Security Agreement
and to pay all or any part of the premiums therefor and the costs thereof;
and
(iii) upon the occurrence and during the continuance of any Event of
Default, (A) to direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Collateral Agent or as the Collateral Agent
shall direct; (B) to ask or demand for, collect, receive payment of and
receipt for, any and all moneys, claims and other amounts due or to become
due at any time in respect of or arising out of any Collateral; (C) to
sign and indorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents in connection
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with any of the Collateral; (D) to commence and prosecute any suits,
actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any thereof and to enforce any
other right in respect of any Collateral; (E) to defend any suit, action
or proceeding brought against the Grantor with respect to any Collateral;
(F) to settle, compromise or adjust any suit, action or proceeding
described in clause (E) above and, in connection therewith, to give such
discharges or releases as the Collateral Agent may deem appropriate; (G)
to assign any Copyright or Trademark (along with the goodwill of the
business to which any such Copyright or Trademark pertains), throughout
the world for such term or terms, on such conditions, and in such manner,
as the Collateral Agent shall in its sole discretion determine; and (H)
generally, to sell, transfer, pledge and make any agreement with respect
to or otherwise deal with any of the Collateral as fully and completely as
though the Collateral Agent were the absolute owner thereof for all
purposes, and to do, at the Collateral Agent's option and the Grantor's
expense, at any time, or from time to time, all acts and things which the
Collateral Agent deems necessary to protect, preserve or realize upon the
Collateral and the Collateral Agent's Liens thereon and to effect the
intent of this Amended and Restated Security Agreement, all as fully and
effectively as the Grantor might do.
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 until the Obligations are paid in full.
(b) Other Powers. The Grantor also authorizes the Collateral Agent,
at any time and from time to time, to execute, in connection with the sale
provided for in Section 9 hereof, any endorsements, assignments or other
instruments of conveyance or transfer with respect to the Collateral.
(c) No Duty on Collateral Agent's Part. The powers conferred on the
Collateral Agent hereunder are solely to protect the Collateral Agent's
interests in the Collateral and shall not impose any duty upon the Collateral
Agent to exercise any such powers. The Collateral Agent shall be accountable
only for 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 hereunder,
except for their own gross negligence or willful misconduct.
7. Performance by Collateral Agent of Grantor's Obligations. If the
Grantor fails to perform or comply with any of its agreements contained herein
and the Collateral Agent, as
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provided for by the terms of this Amended and Restated Security Agreement, shall
itself perform or comply, or otherwise cause performance or compliance, with
such agreement, the expenses of the Collateral Agent incurred in connection with
such performance or compliance, together with interest thereon at a rate per
annum specified in the last sentence of the first paragraph of the Notes, shall
be payable by the Grantor to the Collateral Agent on demand and shall constitute
Obligations secured hereby.
8. Proceeds. In addition to the rights of the Collateral Agent
specified in Section 3(d) with respect to payments of Accounts, it is agreed
that if an Event of Default shall occur and be continuing (a) all Proceeds
received by the Grantor consisting of cash, checks and other instruments shall
be held by the Grantor in trust for the Collateral Agent, segregated from other
funds of the Grantor, and shall, forthwith upon receipt by the Grantor, be
turned over to the Collateral Agent in the exact form received by the Grantor
(duly indorsed by the Grantor to the Collateral Agent, if required), and (b) any
and all such Proceeds received by the Collateral Agent (whether from the Grantor
or otherwise) may, in the sole discretion of the Collateral Agent, be held by
the Collateral Agent as collateral security for, and/or then or at any time
thereafter may be applied by the Collateral Agent against, the Obligations
(whether matured or unmatured), such application to be in such order as the
Collateral Agent shall elect. Any balance of such Proceeds remaining after the
Obligations shall have been paid in full shall have been terminated shall be
paid over to the Grantor or to whomsoever may be lawfully entitled to receive
the same.
9. Remedies. If an Event of Default shall occur and be continuing,
the Collateral Agent may exercise, in addition to all other rights and remedies
granted to them in this Amended and Restated Security Agreement and in any other
instrument or agreement securing, evidencing or relating to the Obligations, all
rights and remedies of a secured party under the Code. Without limiting the
generality of the foregoing, the Collateral Agent, without demand of performance
or other demand, presentment, protest, advertisement or notice of any kind
(except any notice required by law referred to below) to or upon the Grantor or
any other Person (all and each of which demands, defenses, advertisements and
notices are, to the extent permitted by applicable law, hereby waived), may in
such circumstances forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give
option or options to purchase, or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do any of the foregoing), in one
or more parcels at public or private sale or sales, at any exchange, broker's
board or office of the Collateral Agent or elsewhere upon such terms and
conditions as it may deem advisable and at such prices as it may deem best, for
cash or on credit or for future delivery without
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assumption of any credit risk. The Collateral Agent shall have the right upon
any such public sale or sales, and, to the extent permitted by law, upon any
such private sale or sales, to purchase the whole or any part of the Collateral
so sold, free of any right or equity of redemption in the Grantor, which right
or equity is hereby waived, to the extent permitted by applicable law, or
released. The Grantor further agrees, at the Collateral Agent's request, to
assemble the Collateral and make it available to the Collateral Agent at places
which the Collateral Agent shall reasonably select, whether at the Grantor's
premises or elsewhere. The Collateral Agent shall apply the net proceeds of any
such collection, recovery, receipt, appropriation, realization or sale, after
deducting all costs and expenses of every kind incurred therein or incidental to
the care or safekeeping of any of the Collateral or in any way relating to the
Collateral or the rights of the Collateral Agent hereunder, including, without
limitation, reasonable attorneys' fees and disbursements, to the payment in
whole or in part of the Obligations, in such order as the Collateral Agent may
elect, and only after such application and after the payment by the Collateral
Agent of any other amount required by any provision of law, including, without
limitation, Section 9-504(1)(c) of the Code, need the Collateral Agent account
for the surplus, if any, to the Grantor. To the extent permitted by applicable
law, the Grantor waives all claims, damages and demands it may acquire against
the Collateral Agent arising out of the exercise by them of any rights
hereunder. If any notice of a proposed sale or other disposition of Collateral
shall be required by law, such notice shall be deemed reasonable and proper if
given at least 10 days before such sale or other disposition. The Grantor shall
remain liable for any deficiency if the proceeds of any sale or other
disposition of the Collateral are insufficient to pay the Obligations and the
fees and disbursements of any attorneys employed by the Collateral Agent to
collect such deficiency.
In furtherance, but not in limitation of, the foregoing, if an Event
of Default shall occur and be continuing, the Grantor shall assign, license, or
sublicense, as requested by Collateral Agent, any or all of the Patent Licenses
to the Collateral Agent.
10. Limitation on Duties Regarding Preservation of Collateral. The
Collateral Agent's sole duty with respect to the custody, safekeeping and
physical preservation of the Collateral in its possession, under Section 9-207
of the Code or otherwise, shall be to deal with it in the same manner as the
Collateral Agent deals with similar property for its own account. Neither the
Collateral Agent, nor any of its directors, officers, employees or agents shall
be liable for failure to demand, collect or realize upon all or any part of the
Collateral or for any delay in doing so or shall be under any obligation to sell
or otherwise
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dispose of any Collateral upon the request of the Grantor or otherwise.
11. Powers Coupled with an Interest. All authorizations and agencies
herein contained with respect to the Collateral are irrevocable and powers
coupled with an interest until the Obligations are indefeasibly paid in full.
12. Severability. Any provision of this Amended and Restated
Security Agreement which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
13. Paragraph Headings. The paragraph headings used in this Amended
and Restated Security Agreement are for convenience of reference only and are
not to affect the construction hereof or be taken into consideration in the
interpretation hereof.
14. No Waiver; Cumulative Remedies. The Collateral Agent shall not
by any act (except by a written instrument pursuant to Section 15 hereof),
delay, indulgence, omission or otherwise be deemed to have waived any right or
remedy hereunder or to have acquiesced in any Default or Event of Default or in
any breach of any of the terms and conditions hereof. No failure to exercise,
nor any delay in exercising, on the part of the Collateral Agent, any right,
power or privilege hereunder shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Collateral Agent of any right or remedy hereunder on
any one occasion shall not be construed as a bar to any right or remedy which
the Collateral Agent would otherwise have on any future occasion. The rights and
remedies herein provided are cumulative, may be exercised singly or concurrently
and are not exclusive of any rights or remedies provided by law.
15. Waivers and Amendments; Successors and Assigns. None of the
terms or provisions of this Amended and Restated Security Agreement may be
waived, amended, supplemented or otherwise modified except by a written
instrument executed by the Grantor and the Collateral Agent, provided that any
provision of this Amended and Restated Security Agreement may be waived by the
Collateral Agent in a written letter or agreement executed by the Collateral
Agent or by facsimile transmission from the Collateral Agent. This Amended and
Restated Security Agreement shall be binding upon the successors and assigns of
the Grantor and shall
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inure to the benefit of the Collateral Agent and its successors and assigns.
16. Termination of Security Interest; Release of Collateral. (a)
Upon the repayment in full of all Obligations, the security interest granted in
the Collateral pursuant to this Agreement (the "Security Interest") shall
terminate and all rights to the Collateral shall revert to the Grantor.
(b) Upon any such termination of the Security Interest or release of
Collateral pursuant to this Section , the Collateral Agent will, at the expense
of the Grantor, execute and deliver to the Grantor such documents as the Grantor
shall reasonably request to evidence the termination of the Security Interest
and deliver to the Grantor all Collateral so released then in its possession.
17. Notices. All notices or other communications provided for
hereunder shall be in writing and sent by first class mail or nationwide
overnight delivery service, if to Grantor, addressed to it at 0000 Xxxxxx Xxxx
Xxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000, Attention: Xxxxxxx X. Xxxx, or at such
other address as the Grantor shall have specified to the Collateral Agent in
writing, with a copy to Xxxxxxxx & Knight, P.C., 0000 Xxxxxxx Xxxxxx, Xxxxx
0000, Xxxxxx, Xxxxx 00000, Attention: Xxxxxxx X. Xxxxxxxx, and (ii) if to the
Collateral Agent, addressed to it at Xxx Xxxxxxxxxxx Xxxxx, Xxxxx 000, Xxx Xxxx,
Xxx Xxxx 00000, Attention: Xxxxxx X. Xxxxxx, with a copy to Xxxxxxx Xxxx &
Xxxxxxxxx, One Citicorp Center, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000-0000, Attention: Xxxxxxx X. Xxxxx, Xx.
18. Grant of Access to Trademark. Copyright, Patent or Patent
License or Collateral. For the purposes of enabling the Collateral Agent to
exercise rights and remedies under Sections 6 and 9 hereof at such time as the
Collateral Agent shall be lawfully entitled to exercise such rights and
remedies, the Grantor hereby grants to the Collateral Agent during the
continuance of an Event of Default access to all media in which any Trademark,
Copyright, Trademark License, Copyright Patent or Patent License may be recorded
or stored and to all computer and automatic machinery software and programs used
for the compilation or printout thereof to the extent that the Grantor may
lawfully do so.
19. Integration. This Amended and Restated Security Agreement
represents the agreement of the Grantor and the Collateral Agent with respect to
the subject matter hereof, and there are no promises, undertakings,
representations or warranties by the Collateral Agent relative to subject matter
hereof not expressly set forth or referred to herein or in the other Note
Purchase Documents.
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20. GOVERNING LAW. THIS AMENDED AND RESTATED SECURITY AGREEMENT AND
THE RIGHTS AND OBLIGATIONS OF THE GRANTOR UNDER THIS AMENDED AND RESTATED
SECURITY AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE
PERFECTION AND THE EFFECT OF PERFECTION OR NON-PERFECTION OF THE SECURITY
INTEREST CREATED HEREBY, IN RESPECT OF ANY PARTICULAR COLLATERAL, ARE GOVERNED
BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
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IN WITNESS WHEREOF, the Grantor has caused this Amended and Restated
Security Agreement to be duly executed and delivered as of the date first above
written.
SOURCE MEDIA, INC.
By:_________________________________
Xxxxxxx X. Xxxx
Chief Financial Officer
and Treasurer
Accepted and Agreed:
PECKS MANAGEMENT PARTNERS LTD.,
as Collateral Agent
By:_______________________________
Xxxxxx X. Xxxxxx
Managing Director
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SOURCE MEDIA
SCHEDULE I
Copyrights and Copyright Licenses
Development and Licensing Agreement entered into as of April 1, 1995, between
IT Network, Inc., Source Media, Inc., Interactive Channel Technologies, Inc.,
Cable Xxxxx Xxxxxxxxxxxxx Inc., Cableshare (U.S.) Limited and Cableshare B.V.
First Amendment to Development and Licensing Agreement, dated October 31, 1996.
Second Amendment to Development and Licensing Agreement, dated March 17, 1997.
25
SOURCE MEDIA
SCHEDULE II
Patents and Patent Licenses
Development and Licensing Agreement entered into as of April 1, 1995, between
IT Network, Inc., Source Media, Inc., Interactive Channel Technologies, Inc.,
Cable Xxxxx Xxxxxxxxxxxxx Inc., Cableshare (U.S.) Limited and Cableshare B.V.
First Amendment to Development and Licensing Agreement, dated October 31, 1996.
Second Amendment to Development and Licensing Agreement, dated March 17, 1997.
26
SOURCE MEDIA
SCHEDULE III
Trademarks and Trademark Licenses
NONE
27
SOURCE MEDIA
SCHEDULE IV
Location of Records Regarding Accounts
0000 Xxxxxx Xxxx Xxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
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SOURCE MEDIA
SCHEDULE V
Bank Accounts
- None -
29
SOURCE MEDIA
SCHEDULE VI
Location of Inventory and Equipment
0000 Xxxxxx Xxxx Xxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
0000 Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000-0000
0000 XXX Xxxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
