SUPER LEAGUE GAMING, INC. SECURITY AGREEMENT
Exhibit
10.17
THIS
SECURITY AGREEMENT (this "Agreement”),is
entered into as of
by and between
Super League Gaming, Inc., a Delaware corporation (the
“Borrower”),
▇▇▇▇▇▇▇ ▇▇▇▇, an individual (the “Collateral
Agent”), and each of the secured parties whose name
appears on the signature pages to this Agreement (individually, a
“Secured
Party” and, collectively, the “Secured
Parties”). All capitalized terms not otherwise defined
herein shall the meanings ascribed to them in those certain Note
Purchase Agreements and the Notes (as defined below) by and between
Borrower and each Secured Party (the “Note
Purchase Agreements”).
RECITALS
WHEREAS, the
Secured Parties have loaned monies to Borrower as more particularly
described in the Note Purchase Agreements and as evidenced by the
9% Secured Convertible Promissory Notes issued by Borrower to the
Secured Parties (the “Notes”);
WHEREAS, Borrower,
Collateral Agent and the Secured Parties have entered into that
certain Intercreditor and Collateral Agent Agreement of even date
herewith (the “Intercreditor
Agreement”) whereby the security interests and liens
of the Secured Parties are to be of equal priority position,
notwithstanding the different dates of their Notes and perfection
their respective security interests;
WHEREAS, the term
“Secured Party” as used in this Agreement shall mean,
collectively, all holders of Notes, including those persons who
become holders of Notes subsequent to the date hereof;
and
WHEREAS, this
Agreement is being executed and delivered by Borrower to secure
the Notes.
NOW,
THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby
acknowledged, each of the parties hereto hereby agrees as
follows:
1. Obligations Secured. This
Agreement secures, in part, the prompt payment and performance of
all obligations of Borrower under the Notes, and all renewals,
extensions, modifications, amendments, and/or supplements thereto
(collectively, the “Secured
Obligations”).
2. Grant of Security
Interest.
(a) Collateral. Borrower hereby
grants, pledges, and collaterally assigns to the Collateral Agent
for the benefit of itself and each other Secured Party, and there
is hereby created in favor of the Secured Parties, a security
interest in and to all of Borrower’s right, title, and
interest in, to, and under all of the collateral set forth on
Exhibit A hereto (collectively, “Collateral”).
(b) Effective Date. This grant of
security shall be effective as of the date hereof.
-1-
(c) Senior Interest. Except as set
forth herein, the Notes and the Secured Obligations shall be senior
to all other obligations of Borrower other than trade debt and
other debt incurred in the ordinary course of
business.
3. Filings to Perfect Security
Interest. The Collateral Agent may (and is hereby authorized
to) file with any filing office such financing statements,
amendments, addenda, continuations, terminations, assignments and
other records (whether or not executed by Borrower) as Collateral
Agent may deem necessary in its sole discretion to perfect and to
maintain perfected security interests in the Collateral, where (a)
immediately upon the execution of this Agreement, a UCC-1 Financing
Statement shall be filed with the California Secretary of State
with respect to the Collateral; Such documents may designate the
Collateral Agent as the secured party and Borrower as the debtor,
identify the security interest in the Collateral, and contain any
other items required by law or deemed necessary by Collateral
Agent. Such financing statements shall contain a description of
collateral consistent with the description set forth herein and
shall not describe the collateral as “all assets” or
“all personal property.” Upon Collateral Agent’s
request, Borrower shall execute any such documents (whether or not
required by law).
4. Transfers and Other Liens.
Except as set forth herein or in the Notes or in the Intercreditor
Agreement, Borrower shall not, without the prior written consent of
the Collateral Agent, in its sole and absolute
discretion:
(a) Sell, transfer,
assign, or dispose of (by operation of law or otherwise), any of
the Collateral outside of the ordinary course of
business;
(b) Create or suffer to
exist any lien, security interest, or other charge or encumbrance
upon or with respect to any of the Collateral, except the security
interests created hereby; or
(c) Permit any of the
Collateral to be levied upon under any legal process.
5. Representations and Warranties.
Borrower hereby represents and warrants to Collateral Agent and the
Secured Parties as follows: (a) to Borrower’s knowledge,
Borrower is the owner of the Collateral (or, in the case of
after-acquired Collateral, at the time Borrower acquires rights in
the Collateral, will be the owner thereof) and that, except as
expressly provided herein, no other person has (or, in the case of
after-acquired Collateral, at the time Borrower acquires rights
therein, will have) any right, title, claim or interest (by way of
Lien or otherwise) in, against or to the Collateral; (b) to
Borrower’s knowledge, except as expressly provided herein,
upon the filing of a UCC-1 financing statement with the California
Secretary of State, the Collateral Agent will have for the benefit
of the Secured Parties (or in the case of after-acquired
Collateral, at the time Borrower acquires rights therein, will
have) a perfected security interest in the Collateral to the extent
that a security interest in the Collateral can be perfected by such
filing; (c) all Accounts
Receivable (as defined in Exhibit A) are genuine and enforceable
against the party obligated to pay the same; (d) Borrower has full
power and authority to enter into the transactions provided for in
this Agreement, the Notes and the Intercreditor Agreement; (e) this
Agreement, the Notes and the Intercreditor Agreement, when executed
and delivered by Borrower, will constitute the legal, valid and
binding obligations of Borrower enforceable in accordance with
their
-2-
terms;
(f) the execution and delivery by Borrower of this Agreement, the
Intercreditor Agreement and the Notes and the performance and
consummation of the transactions contemplated hereby and thereby do
not and will not violate Borrower’s Certificate of
Incorporation or Bylaws or any material judgment, order, writ,
decree, statute, rule or regulation applicable to Borrower (g)
there does not exist any default or violation by Borrower of or
under any of the terms, conditions or obligations of (i) any
indenture, mortgage, deed of trust, franchise, permit, contract,
agreement, or other instrument to which Borrower is a party or by
which Borrower is bound, or (ii) any law, ordinance, regulation,
ruling, order, injunction, decree, condition or other requirement
applicable to or imposed upon Borrower by any law, the action of
any court or any governmental authority or agency; and the
execution, delivery and performance of this Agreement will not
result in any such default or violation; (h) there is no action,
suit, proceeding, hearing, investigation, charge, complaint, claim,
or demand pending or, to the knowledge of Borrower, threatened
which adversely affects Borrower’s business or financial
condition and there is no basis known to Borrower for any action,
suit, proceeding, hearing, investigation, charge, complaint, claim,
or demand which could result in the same; and (i) this Agreement,
the Notes and the Intercreditor Agreement do not contain any untrue
statement of material fact or omit to state a material fact
necessary in order to make the statements contained in this
Agreement, the Notes and the Intercreditor Agreement not
misleading.
6. Events of Default. For purposes
of this Agreement, the term “Event of Default” shall
mean and refer to any of the following:
(a) Failure of Borrower
to perform or observe any covenant set forth in this Agreement, or
to perform or observe any other term, condition, covenant,
warranty, agreement or other provision contained in this Agreement,
where such failure continues for twenty (20) business days after
receipt of written notice from Lender specifying such
failure;
(b) Any representation
or warranty made or furnished by Borrower in writing in connection
with this Agreement, the Notes or the Intercreditor Agreement or
any statement or representation made in any certificate, report or
opinion delivered pursuant to this Agreement or in connection with
this Agreement is false, incorrect or incomplete in any material
respect at the time it is furnished; or
(c) Occurrence of any
other Event of Default as defined in the Note.
7. Remedies. Upon the occurrence
and during the continuance of an Event of Default (subject to the
notice and cure provisions provided for herein, if any), the
Collateral Agent for the benefit of itself and each Secured Party
shall have the rights of a secured creditor under the California
Uniform Commercial Code, all rights granted by the Notes, this
Security Agreement and by law, including the right to require
Borrower to assemble the Collateral and make it available to the
Collateral Agent at a place to be designated by Borrower. The
rights and remedies provided in this Agreement, the Notes and the
Intercreditor Agreement are cumulative and may be exercised
independently or concurrently and are not exclusive of any other
right or remedy provided at law or in equity. No failure to
exercise or delay by the Collateral Agent for the benefit of itself
and the Secured Parties in exercising any right or remedy under
this Agreement, the Notes or the Intercreditor Agreement shall
impair or prohibit the exercise of any such rights or remedies in
the
-3-
future
or be deemed to constitute a waiver or limitation of any such right
or remedy or acquiescence therein. Every right and remedy granted
to the Collateral Agent and the Secured Parties under this
Agreement, the Notes and the Intercreditor Agreement or by law or
in equity may be exercised by the Collateral Agent at any time and
from time to time, and as often as the Collateral Agent may deem it
expedient.
8. Further Assurances. Borrower
agrees that, from time to time, at its own expense,
it
will:
(a) Protect and defend
the Collateral against all claims and demands of all
persons
at any time claiming the same or any interest therein and preserve
and protect Secured Party’s security interest in the
Collateral.
(b) Promptly execute
and deliver to Collateral Agent all instruments and documents, and
take all further action necessary or desirable, as Collateral Agent
may reasonably request to (i) continue, perfect, or protect any
security interest granted or purported to be granted hereby, and
(ii) enable Collateral Agent to exercise and enforce any of Secured
Party’s rights and remedies hereunder with respect to any
Collateral.
(c) Permit Collateral
Agent’s representatives to inspect and make copies of all
books and records relating to the Collateral, wherever such books
and records are located, and to conduct an audit relating to the
Collateral at any reasonable time or times.
9. Attorney-in-Fact. In case
Borrower fails to do any act or execute any documents, for the
perfection or continuation of any security interest granted to
Secured Parties hereunder, Borrower hereby irrevocably appoints
Collateral Agent as its true and lawful attorney-in-fact, with full
power of substitution, to do such acts and execute any such
documents on its behalf; provided, however, that Collateral Agent
shall not exercise such power of attorney unless it shall have
previously requested Borrower to take such action and Borrower
shall have failed to do so within five (5) business
days.
10. Notices.All
notices required or permitted hereunder shall be in writing and
shall be deemed effectively given: (a) upon personal delivery to
the party to be notified, (b) when sent by confirmed telex, e-mail
or facsimile if sent during normal business hours of the recipient,
if not, then on the next business day, (c) five (5) days after
having been sent by registered or certified mail, return receipt
requested, postage prepaid, or (d) one (1) day after deposit with a
nationally recognized overnight courier, specifying next day
delivery, with written verification of receipt. All communications
shall be sent as follows:
If to the Collateral
Agent:
▇▇▇▇▇▇▇
▇▇▇▇, CFO
Super
League Gaming, Inc. ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to Borrower:
To Holder’s
address listed in Exhibit A to the Note Purchase
Agreement
-4-
If to the
Company:
▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: CEO
& President
or to
such other address or telecopy number as the party to whom notice
is to be given may have furnished to the other party in writing in
accordance herewith.
11. Amendments and Waivers. No
modification, amendment or waiver of any provision of, or consent
required by, this Agreement, nor any consent to any departure
herefrom, shall be effective unless it is in writing and signed by
each of the parties hereto. Such modification, amendment, waiver or
consent shall be effective only in the specific instance and for
the purpose for which given.
12. Exclusivity and Waiver of
Rights. No failure to exercise and no delay in exercising on
the part of any party, any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege preclude any other right,
power or privilege. The rights and remedies herein provided are
cumulative and are not exclusive of any other rights or remedies
provided by law.
13. Invalidity. Any term or
provision of this Agreement shall be ineffective to the extent it
is declared invalid or unenforceable, without rendering invalid or
enforceable the remaining terms and provisions of this
Agreement.
14. Headings. Headings used in this
Agreement are inserted for convenience only and shall not affect
the meaning of any term or provision of this
Agreement.
15. Counterparts. This Agreement
may be executed in one or more counterparts, each of which shall be
deemed an original instrument, but all of which collectively shall
constitute one and the same agreement.
16. Assignment. This Agreement and
the rights and obligations hereunder shall not be assignable or
transferable by the any of the parties without the prior written
consent of the other parties.
17. Survival. Unless otherwise
expressly provided herein, all representations warranties,
agreements and covenants contained in this Agreement shall survive
the execution hereof and shall remain in full force and effect
until the earliest to occur of (a) the payment in full of the
Notes, and (b) the conversion of the principal and accrued and
unpaid interest and all other amounts owing under the Notes into
equity securities of Borrower.
18. Miscellaneous. This Agreement
shall inure to the benefit of each of the parties hereto and all
their respective successors and permitted assigns. Nothing in this
Agreement is intended or shall be construed to give to any other
person, firm or corporation any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision herein
contained.
-5-
19. GOVERNING
LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE (WITHOUT GIVING
EFFECT TO ANY CHOICE OR CONFLICT OF LAWS PROVISIONS).
20. CONSENT
TO JURISDICTION. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE NON- EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF CALIFORNIA. EACH OF THE
PARTIES HERETO AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY MUST BE LITIGATED EXCLUSIVELY IN ANY SUCH STATE OR FEDERAL
COURT, AND ACCORDINGLY, EACH OF THE PARTIES HERETO IRREVOCABLY
WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF THE VENUE OF ANY SUCH LITIGATION IN ANY SUCH
COURT.
21. WAIVER
OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT. EACH OF THE PARTIES HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND EACH OF THE OTHER PARTIES
HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION
21
22. Attorneys’ Fees. In
the event that any suit or action is instituted to enforce any
provision in this Agreement, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs
and expenses of enforcing any right of such prevailing party under
or with respect to this Agreement, including without limitation,
such reasonable fees and expenses of attorneys and accountants,
which shall include, without limitation, all fees, costs and
expenses of appeals.
23. Entire Agreement. This
Agreement contains the entire agreement among the parties with
respect to the transactions contemplated by this Agreement and
supersedes all prior agreements or understandings among the
parties.
[Signature page follows]
-6-
IN
WITNESS WHEREOF, this Security Agreement has been executed as of
the date first set written above.
SECURED
PARTY
By:
_____________________________
Name:
__________________________
Title:
___________________________
COLLATERAL
AGENT
By:
▇▇▇▇▇▇▇ ▇▇▇▇., an individual
BORROWER
By: ▇▇▇
▇▇▇▇
Chief
Executive Officer & President
-7-
EXHIBIT
A COLLATERAL
All
cash and cash equivalents, bank and Deposit accounts (including any
control account, disbursement account and any other bank accounts),
commercial tort claims, insurance claims, rights and policies,
letter of credit rights, investment property, Accounts, Goods,
Fixtures, Securities, Documents of Title, Inventory, General
Intangibles, Equipment and Records now owned or acquired at any
time hereafter by Debtor, wherever located or situated, and the
products and proceeds (including condemnation proceeds) of the
foregoing.
The
capitalized terms used hereinabove shall have the meanings set
forth below. All other terms used herein are used as defined in the
UCC.
"Accounts" means
any and all rights to payment for goods, including Inventory, sold
or leased or to be sold or leased or for services rendered or to be
rendered, whether or not evidenced by an instrument or chattel
paper, and no matter how evidenced, including such rights in the
form of accounts (as that term is defined in the UCC), accounts
receivable, exchange Receivables, contract rights, Instruments,
Documents, Chattel Paper, purchase orders, notes drafts,
acceptances and all other forms of obligations and receivables,
including all right, title and interest of the Debtor in the
Inventory which gave rise to any of the foregoing, including the
right of stoppage in transit and all returned, rejected, rerouted
or repossessed Inventory.
"Chattel paper"
means "chattel paper" as that term is defined in the
UCC.
"Deposit Account"
means a demand, time, savings, passbook or like account maintained
with a bank, savings and loan association, credit union or like
organization, other than an account evidenced by a certificate of
deposit.
"Documents" means
"documents" as that term is defined in the UCC, "Documents of
Title" means "documents of title" as defined in the
UCC.
"Equipment" means
"equipment" as defined in the UCC, and also all motor vehicles,
rolling stock, machinery, office
equipment, plant equipment, tools, dies, molds, store fixtures,
furniture, and other goods, property, and assets which are used
and/or were purchased for use in the operation of furtherance of
the Debtor's business, and any and all accessions, additions
thereto, and substitutions therefore.
"Fixtures" means
"fixtures" as that term is defined in the UCC.
"General
Intangibles" means "general intangibles" as defined in the UCC and
also all books and records; customer lists; goodwill; causes of
action; judgments; literary rights; rights to performance;
licenses, permits, certificates of convenience and necessity, and
similar rights granted by any governmental authority; copyrights,
trademarks, patents, patent applications, proprietary processes,
blueprints, drawings, designs, diagrams, plans, reports, charts,
catalogs, manuals, literature, technical data, proposals, cost
estimates, source codes, object codes, computer
-8-
programs, computer
program flow diagrams, and tangible property embodying or
incorporating any of the foregoing, and all other reproductions on
paper, or otherwise, of any and all the design, development,
manufacture, sale, marketing, lease or use of any or all goods
produced or sold or leased or credit extended, or service performed
by the Debtor, whether intended for an individual customer or the
general business of Debtor.
"Goods"
means "goods" as that term is defined in the UCC. "Instruments"
means "instruments" as that term is defined in the
UCC.
"Inventory" means
any and all raw materials, supplies, work in process, finished
goods, goods returned by customers, and inventory (as that term is
defined in the UCC), including goods in transit, wherever located,
which are-held for sale (but excluding goods subject to leases and
goods not manufactured by the Debtor or an affiliate and which were
purchased for resale directly or indirectly by the Debtor from a
non-affiliate pursuant to a then existing agreement or arrangement
with a non-affiliate customer), including the right of stoppage in
transit, or goods which are or might be used in connection with the
manufacturing or packing of such goods, and all such goods, the
sale or disposition of which has given rise to an Account, which
are returned to and/or repossessed and/or stopped in transit by the
Debtor or by the Secured Party, or at any time hereafter in the
possession or under the control of the Debtor or the Secured Party
or any agent or bailee of the Debtor or the Secured Party, and any
documents of title representing any of the above.
"Records" means all
books, records, customer lists, ledger cards, computer programs,
computer tapes, disks, printouts and records and other property and
general intangibles at any time evidencing or relating to any of
the types (or items) of property covered by this financing
statement, whether now in existence or hereafter
created.
"Securities" means
"securities" as that term is defined in the UCC.
"UCC"
means the Uniform Commercial Code as in effect in the State of
California.
-9-