EXHIBIT 4.5
EXHIBIT D
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of May 2, 2005 (this "Agreement"), among
Knockout Holdings, Inc., a Delaware corporation (the "Company" or the "Debtor")
and the holder or holders of the Company's 11% Senior Secured Notes due May 2,
2008 in the aggregate principal amount of up to $3,000,000 (the "Notes"),
signatory hereto, their endorsees, transferees and assigns (collectively
referred to as, the "Secured Parties").
W I T N E S S E T H:
WHEREAS, pursuant to the Notes, the Secured Parties have severally agreed
to extend the loans to the Company evidenced by the Notes; and
WHEREAS, in order to induce the Secured Parties to extend the loans
evidenced by the Notes, the Debtor has agreed to execute and deliver to the
Secured Parties this Agreement and to grant the Secured Parties, pari passu with
each other Secured Party, a first priority perfected security interest in all
property of such Debtor to secure the prompt payment, performance and discharge
in full of all of the Company's obligations under the Notes.
NOW, THEREFORE, in consideration of the agreements herein contained and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto hereby agree as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the meanings set forth in this Section 1. Terms used but not
otherwise defined in this Agreement that are defined in Article 9 of the UCC
(such as "account", "chattel paper", "commercial tort claim", "deposit account",
"document", "equipment", "fixtures", "general intangibles", "goods",
"instruments", "inventory", "investment property", "letter-of-credit rights",
"proceeds" and "supporting obligations") shall have the respective meanings
given such terms in Article 9 of the UCC.
(a) "Collateral" means the collateral in which the Secured Parties
are granted a security interest by this Agreement and which shall include
the following personal property of the Debtors, whether presently owned or
existing or hereafter acquired or coming into existence, wherever
situated, and all additions and accessions thereto and all substitutions
and replacements thereof, and all proceeds, products and accounts thereof,
including, without limitation, all proceeds from the sale or transfer of
the Collateral and of insurance covering the same and of any tort claims
in connection therewith, and all dividends, interest, cash, notes,
securities, equity interest or other property at any time and from time to
time acquired, receivable or otherwise distributed in respect of, or in
exchange for, any or all of the Pledged Securities (as defined below):
(i) All goods, including, without limitations, (A) all
machinery, equipment, computers, motor vehicles, trucks, tanks,
boats, ships, appliances, furniture, special and general tools,
fixtures, test and quality control devices and other equipment of
every kind and nature and wherever situated, together with all
documents of title and documents representing the same, all
additions and accessions thereto, replacements therefor, all parts
therefor, and all substitutes for any of the foregoing and all other
items used and useful in connection with any Debtor's businesses and
all improvements thereto; and (B) all inventory;
(ii) All contract rights and other general intangibles,
including, without limitation, all partnership interests, membership
interests, stock or other securities, rights under any of the
Organizational Documents, agreements related to the Pledged
Securities, licenses, distribution and other agreements, computer
software (whether "off-the-shelf", licensed from any third party or
developed by any Debtor), computer software development rights,
leases, franchises, customer lists, quality control procedures,
grants and rights, goodwill, trademarks, service marks, trade
styles, trade names, patents, patent applications, copyrights,
Intellectual Property, and income tax refunds;
(iii) All accounts, together with all instruments, all
documents of title representing any of the foregoing, all rights in
any merchandising, goods, equipment, motor vehicles and trucks which
any of the same may represent, and all right, title, security and
guaranties with respect to each account, including any right of
stoppage in transit;
(iv) All documents, letter-of-credit rights, instruments and
chattel paper;
(v) All commercial tort claims;
(vi) All deposit accounts and all cash (whether or not
deposited in such deposit accounts);
(vii) All investment property;
(viii) All supporting obligations; and
(ix) All files, records, books of account, business papers,
and computer programs; and
(x) the products and proceeds of all of the foregoing
Collateral set forth in clauses (i)-(ix) above.
Without limiting the generality of the foregoing, the
"Collateral" shall include all investment property and general
intangibles respecting ownership and/or other equity interests in
each Subsidiary, including, without limitation, the shares of
capital stock and the other equity interests listed on Schedule H
hereto (as the same may be modified from time to time pursuant to
the terms hereof), and any other shares of capital stock and/or
other equity interests of any other direct or indirect subsidiary of
any Debtor obtained in the future, and, in each case, all
certificates representing such shares and/or equity interests and,
in each case, all rights, options, warrants, stock, other securities
and/or equity interests that may hereafter be received, receivable
or distributed in respect of, or exchanged for, any of the foregoing
(all of the foregoing being referred to herein as the "Pledged
Securities") and all rights arising under or in connection with the
Pledged Securities, including, but not limited to, all dividends,
interest and cash.
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Notwithstanding the foregoing, nothing herein shall be deemed
to constitute an assignment of any asset which, in the event of an
assignment, becomes void by operation of applicable law or the
assignment of which is otherwise prohibited by applicable law (in
each case to the extent that such applicable law is not overridden
by Sections 9-406, 9-407 and/or 9-408 of the UCC or other similar
applicable law); provided, however, that to the extent permitted by
applicable law, this Agreement shall create a valid security
interest in such asset and, to the extent permitted by applicable
law, this Agreement shall create a valid security interest in the
proceeds of such asset.
(b) "Intellectual Property" means the collective reference to all
rights, priorities and privileges relating to intellectual property,
whether arising under United States, multinational or foreign laws or
otherwise, including, without limitation, (i) all copyrights arising under
the laws of the United States, any other country or any political
subdivision thereof, whether registered or unregistered and whether
published or unpublished, all registrations and recordings thereof, and
all applications in connection therewith, including, without limitation,
all registrations, recordings and applications in the United States
Copyright Office, (ii) all letters patent of the United States, any other
country or any political subdivision thereof, all reissues and extensions
thereof, and all applications for letters patent of the United States or
any other country and all divisions, continuations and
continuations-in-part thereof, (iii) all trademarks, trade names,
corporate names, company names, business names, fictitious business names,
trade dress, service marks, logos, domain names and other source or
business identifiers, and all goodwill associated therewith, now existing
or hereafter adopted or acquired, all registrations and recordings
thereof, and all applications in connection therewith, whether in the
United States Patent and Trademark Office or in any similar office or
agency of the United States, any State thereof or any other country or any
political subdivision thereof, or otherwise, and all common law rights
related thereto, (iv) all trade secrets arising under the laws of the
United States, any other country or any political subdivision thereof, (v)
all rights to obtain any reissues, renewals or extensions of the
foregoing, (vi) all licenses for any of the foregoing, and (vii) all
causes of action for infringement of the foregoing.
(c) "Majority in Interest" shall mean, at any time of
determination, the majority in interest (based on then-outstanding
principal amounts of Notes at the time of such determination) of the
Secured Parties.
(d) "Necessary Endorsement" shall mean undated stock powers
endorsed in blank or other proper instruments of assignment duly executed
and such other instruments or documents as the Secured Parties may
reasonably request.
(e) "Obligations" means all of the Debtors' obligations under this
Agreement, the Notes and any other instruments, agreements or other
documents executed and/or delivered in connection herewith or therewith,
in each case, whether now or hereafter existing, voluntary or involuntary,
direct or indirect, absolute or contingent, liquidated or unliquidated,
whether or not jointly owed with others, and whether or not from time to
time decreased or extinguished and later increased, created or incurred,
and all or any portion of such obligations or liabilities that are paid,
to the extent all or any part of such payment is avoided or recovered
directly or indirectly from any of the Secured Parties as a preference,
fraudulent transfer or otherwise as such obligations may be amended,
supplemented, converted, extended or modified from time to time. Without
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limiting the generality of the foregoing, the term "Obligations" shall
include, without limitation: (i) principal of, and interest on the Notes
and the loans extended pursuant thereto; (ii) any and all other fees,
indemnities, costs, obligations and liabilities of the Debtors from time
to time under or in connection with this Agreement, the Notes and any
other instruments, agreements or other documents executed and/or delivered
in connection herewith or therewith; and (iii) all amounts (including but
not limited to post-petition interest) in respect of the foregoing that
would be payable but for the fact that the obligations to pay such amounts
are unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving any Debtor.
(f) "Organizational Documents" means with respect to any Debtor,
the documents by which such Debtor was organized (such as a certificate of
incorporation, certificate of limited partnership or articles of
organization, and including, without limitation, any certificates of
designation for preferred stock or other forms of preferred equity) and
which relate to the internal governance of such Debtor (such as bylaws, a
partnership agreement or an operating, limited liability or members
agreement).
(g) "UCC" means the Uniform Commercial Code of the State of New
York and or any other applicable law of any state or states which has
jurisdiction with respect to all, or any portion of, the Collateral or
this Agreement, from time to time. It is the intent of the parties that
defined terms in the UCC should be construed in their broadest sense so
that the term "Collateral" will be construed in its broadest sense.
Accordingly if there are, from time to time, changes to defined terms in
the UCC that broaden the definitions, they are incorporated herein and if
existing definitions in the UCC are broader than the amended definitions,
the existing ones shall be controlling.
2. GRANT OF PERFECTED SECURITY INTEREST. As an inducement for the
Secured Parties to extend the loans as evidenced by the Notes and to secure the
complete and timely payment, performance and discharge in full, as the case may
be, of all of the Obligations, the Debtor hereby unconditionally and irrevocably
pledges, grants and hypothecates to the Secured Parties a continuing and
perfected security interest in and to, a lien upon and a right of set-off
against all of their respective right, title and interest of whatsoever kind and
nature in and to, the Collateral (the "Security Interest").
3. DELIVERY OF CERTAIN COLLATERAL. Contemporaneously or prior to the
execution of this Agreement, the Debtor shall deliver or cause to be delivered
to the Secured Parties (a) any and all certificates and other instruments
representing or evidencing the Pledged Securities, and (b) any and all
certificates and other instruments or documents representing any of the other
Collateral, in each case, together with all Necessary Endorsements. The Debtors
are, contemporaneously with the execution hereof, delivering to the Secured
Parties, or have previously delivered to the Secured Parties, a true and correct
copy of each Organizational Document governing any of the Pledged Securities.
4. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF THE
DEBTORS. The Debtor represents and warrants to, and covenants and agrees with,
the Secured Parties as follows:
(a) The Debtor has the requisite corporate, partnership, limited
liability company or other power and authority to enter into this
Agreement and otherwise to carry out its obligations hereunder. The
execution, delivery and performance by the Debtor of this Agreement and
the filings contemplated therein have been duly authorized by all
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necessary action on the part of such Debtor and no further action is
required by such Debtor. This Agreement has been duly executed by the
Debtor. This Agreement constitutes the legal, valid and binding obligation
of the Debtor, enforceable against the Debtor in accordance with its terms
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization and similar laws of general application
relating to or affecting the rights and remedies of creditors and by
general principles of equity.
(b) The Debtors have no place of business or offices where their
respective books of account and records are kept (other than temporarily
at the offices of its attorneys or accountants) or places where Collateral
is stored or located, except as set forth on Schedule A attached hereto.
Except as specifically set forth on Schedule A, the Debtor is the record
owner of the real property where such Collateral is located, and there
exist no mortgages or other liens on any such real property. Except as
disclosed on Schedule A, none of such Collateral is in the possession of
any consignee, bailee, warehouseman, agent or processor.
(c) Except as set forth on Schedule B attached hereto, the Debtors
are the sole owner of the Collateral (except for non-exclusive licenses
granted by any Debtor in the ordinary course of business), free and clear
of any liens, security interests, encumbrances, rights or claims, and are
fully authorized to grant the Security Interest. Other than those filings
made in connection with the Notes, there is not on file in any
governmental or regulatory authority, agency or recording office an
effective financing statement, security agreement, license or transfer or
any notice of any of the foregoing (other than those that will be filed in
favor of the Secured Parties pursuant to this Agreement) covering or
affecting any of the Collateral. So long as this Agreement shall be in
effect, the Debtors shall not execute and shall not knowingly permit to be
on file (other than those on file to evidence the liens granted in
connection the Notes) in any such office or agency any such financing
statement or other document or instrument (except to the extent filed or
recorded in favor of the Secured Parties pursuant to the terms of this
Agreement).
(d) No written claim has been received that any Collateral or
Debtor's use of any Collateral violates the rights of any third party.
There has been no adverse decision to any Debtor's claim of ownership
rights in or exclusive rights to use the Collateral in any jurisdiction or
to any Debtor's right to keep and maintain such Collateral in full force
and effect, and there is no proceeding involving said rights pending or,
to the best knowledge of any Debtor, threatened before any court, judicial
body, administrative or regulatory agency, arbitrator or other
governmental authority.
(e) The Debtor shall at all times maintain its books of account
and records relating to the Collateral at its principal place of business
and its Collateral at the locations set forth on Schedule A attached
hereto and may not relocate such books of account and records or tangible
Collateral unless it delivers to the Secured Parties at least 30 days
prior to such relocation (i) written notice of such relocation and the new
location thereof (which must be within the United States) and (ii)
evidence that appropriate financing statements under the UCC and other
necessary documents have been filed and recorded and other steps have been
taken to perfect the Security Interest to create in favor of the Secured
Parties a valid, perfected and continuing perfected second priority lien
in the Collateral.
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(f) This Agreement creates in favor of the Secured Parties a
valid, security interest in the Collateral, securing the payment and
performance of the Obligations. Upon making the filings described in the
immediately following paragraph, all security interests created hereunder
in any Collateral which may be perfected by filing Uniform Commercial Code
financing statements shall have been duly perfected. Except for the filing
of the Uniform Commercial Code financing statements referred to in the
immediately following paragraph, the recordation of the Intellectual
Property Security Agreement (as defined below) with respect to copyrights
and copyright applications in the United States Copyright Office referred
to in paragraph (p), the execution and delivery of deposit account control
agreements satisfying the requirements of Section 9-104(a)(2) of the UCC
with respect to each deposit account of the Debtors, and the delivery of
the certificates and other instruments provided in Section 3, no action is
necessary to create, perfect or protect the security interests created
hereunder. Without limiting the generality of the foregoing, except for
the filing of said financing statements, the recordation of said
Intellectual Property Security Agreement, and the execution and delivery
of said deposit account control agreements, no consent of any third
parties and no authorization, approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body is
required for (i) the execution, delivery and performance of this
Agreement, (ii) the creation or perfection of the Security Interests
created hereunder in the Collateral or (iii) the enforcement of the rights
of the Secured Parties hereunder.
(g) The Debtor hereby authorizes the Secured Parties, or any of
them, to file one or more financing statements under the UCC, with respect
to the Security Interest with the proper filing and recording agencies in
any jurisdiction deemed proper by them.
(h) The execution, delivery and performance of this Agreement by
the Debtors does not (i) violate any of the provisions of any
Organizational Documents of any Debtor or any judgment, decree, order or
award of any court, governmental body or arbitrator or any applicable law,
rule or regulation applicable to any Debtor or (ii) conflict with, or
constitute a default (or an event that with notice or lapse of time or
both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any agreement, credit facility, debt or
other instrument (evidencing any Debtor's debt or otherwise) or other
understanding to which any Debtor is a party or by which any property or
asset of any Debtor is bound or affected. No consent (including, without
limitation, from stockholders or creditors of any Debtor) is required for
any Debtor to enter into and perform its obligations hereunder, other than
consents that have already been received.
(i) The capital stock and other equity interests listed on
Schedule H hereto represent all capital stock and other equity interests
owned, directly or indirectly, by the Company. All of the Pledged
Securities are validly issued, fully paid and nonassessable, and the
Company is the legal and beneficial owner of the Pledged Securities, free
and clear of any lien, security interest or other encumbrance.
(j) The ownership and other equity interests in partnerships and
limited liability companies (if any) included in the Collateral (the
"Pledged Interests") by their express terms do not provide that they are
securities governed by Article 8 of the UCC and are not held in a
securities account or by any financial intermediary.
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(k) The Debtor shall at all times maintain the liens and Security
Interest provided for hereunder as valid and perfected second priority
liens and security interests in the Collateral in favor of the Secured
Parties until this Agreement and the Security Interest hereunder shall be
terminated pursuant to Section 11 hereof. The Debtor hereby agrees to
defend the same against the claims of any and all persons and entities.
The Debtor shall safeguard and protect all Collateral for the account of
the Secured Parties. At the request of the Secured Parties, the Debtor
will sign and deliver to the Secured Parties at any time or from time to
time one or more financing statements pursuant to the UCC in form
reasonably satisfactory to the Secured Parties and will pay the cost of
filing the same in all public offices wherever filing is, or is deemed by
the Secured Parties to be, necessary or desirable to effect the rights and
obligations provided for herein. Without limiting the generality of the
foregoing, the Debtor shall pay all fees, taxes and other amounts
necessary to maintain the Collateral and the Security Interest hereunder,
and the Debtor shall obtain and furnish to the Secured Parties from time
to time, upon demand, such releases and/or subordinations of claims and
liens which may be required to maintain the priority of the Security
Interest hereunder.
(l) No Debtor will transfer, pledge, hypothecate, encumber,
license, sell or otherwise dispose of any of the Collateral (except for
non-exclusive licenses granted by a Debtor in its ordinary course of
business and sales of inventory by a Debtor in its ordinary course of
business) without the prior written consent of a Majority in Interest.
(m) The Debtor shall keep and preserve its equipment, inventory
and other tangible Collateral in good condition, repair and order and
shall not operate or locate any such Collateral (or cause to be operated
or located) in any area excluded from insurance coverage.
(n) The Debtor shall maintain with financially sound and reputable
insurers, insurance with respect to the Collateral against loss or damage
of the kinds and in the amounts customarily insured against by entities of
established reputation having similar properties similarly situated and in
such amounts as are customarily carried under similar circumstances by
other such entities and otherwise as is prudent for entities engaged in
similar businesses but in any event sufficient to cover the full
replacement cost thereof. The Debtor shall cause each insurance policy
issued in connection herewith to provide, and the insurer issuing such
policy to certify to the Secured Parties that (a) the Secured Parties will
be named as lender loss payees and additional insured under each such
insurance policy; (b) if such insurance be proposed to be cancelled or
materially changed for any reason whatsoever, such insurer will promptly
notify the Secured Parties and such cancellation or change shall not be
effective as to the Secured Parties for at least thirty (30) days after
receipt by the Secured Parties of such notice, unless the effect of such
change is to extend or increase coverage under the policy; and (c) the
Secured Parties will have the right (but no obligation) at its election to
remedy any default in the payment of premiums within thirty (30) days of
notice from the insurer of such default. If no Event of Default (as
defined in the Debenture) exists and if the proceeds arising out of any
claim or series of related claims do not exceed $50,000, loss payments in
each instance will be applied by the applicable Debtor to the repair
and/or replacement of property with respect to which the loss was incurred
to the extent reasonably feasible, and any loss payments or the balance
thereof remaining, to the extent not so applied, shall be payable to the
applicable Debtor, provided, however, that payments received by any Debtor
after an Event of Default occurs and is continuing or in excess of $50,000
for any occurrence or series of related occurrences shall be paid to the
Secured Parties and, if received by such Debtor, shall be held in trust
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for and immediately paid over to the Secured Parties unless otherwise
directed in writing by the Secured Parties. Copies of such policies or the
related certificates, in each case, naming the Secured Parties as lender
loss payee and additional insured shall be delivered to the Secured
Parties at least annually and at the time any new policy of insurance is
issued.
(o) The Debtor shall, within ten (10) days of obtaining knowledge
thereof, advise the Secured Parties promptly, in sufficient detail, of any
substantial change in the Collateral, and of the occurrence of any event
which would have a material adverse effect on the value of the Collateral
or on the Secured Parties' security interest therein.
(p) The Debtor shall promptly execute and deliver to the Secured
Parties such further deeds, mortgages, assignments, security agreements,
financing statements or other instruments, documents, certificates and
assurances and take such further action as the Secured Parties may from
time to time request and may in its sole discretion deem necessary to
perfect, protect or enforce its security interest in the Collateral
including, without limitation, if applicable, the execution and delivery
of a separate security agreement with respect to the Debtor's Intellectual
Property ("Intellectual Property Security Agreement") in which the Secured
Parties have been granted a security interest hereunder, substantially in
a form acceptable to the Secured Parties, which Intellectual Property
Security Agreement, other than as stated therein, shall be subject to all
of the terms and conditions hereof.
(q) The Debtor shall permit the Secured Parties and their
representatives and agents to inspect the Collateral at any time, and to
make copies of records pertaining to the Collateral as may be requested by
a Secured Party from time to time.
(r) The Debtor shall take all steps reasonably necessary to
diligently pursue and seek to preserve, enforce and collect any rights,
claims, causes of action and accounts receivable in respect of the
Collateral.
(s) The Debtor shall promptly notify the Secured Parties in
sufficient detail upon becoming aware of any attachment, garnishment,
execution or other legal process levied against any Collateral and of any
other information received by such Debtor that may materially affect the
value of the Collateral, the Security Interest or the rights and remedies
of the Secured Parties hereunder.
(t) All information heretofore, herein or hereafter supplied to
the Secured Parties by or on behalf of any Debtor with respect to the
Collateral is accurate and complete in all material respects as of the
date furnished.
(u) The Debtor shall at all times preserve and keep in full force
and effect their respective valid existence and good standing and any
rights and franchises material to its business.
(v) No Debtor will change its name, type of organization,
jurisdiction of organization, organizational identification number (if it
has one), legal or corporate structure, or identity, or add any new
fictitious name unless it provides at least 30 days prior written notice
to the Secured Parties of such change and, at the time of such written
notification, such Debtor provides any financing statements or fixture
filings necessary to perfect and continue perfected the perfected Security
Interest granted and evidenced by this Agreement.
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(w) No Debtor may consign any of its Inventory or sell any of its
Inventory on xxxx and hold, sale or return, sale on approval, or other
conditional terms of sale without the consent of a Majority in Interest
which shall not be unreasonably withheld, except to the extent such
consignment or sale does not exceed 15% of the total value of all of the
Company's finished goods in Inventory.
(x) No Debtor may relocate its chief executive office to a new
location without providing 30 days prior written notification thereof to
the Secured Parties and so long as, at the time of such written
notification, such Debtor provides any financing statements or fixture
filings necessary to perfect and continue perfected the perfected security
Interest granted and evidenced by this Agreement.
(y) The Debtor was organized and remains organized solely under
the laws of the state set forth next to such Debtor's name in the first
paragraph of this Agreement. Schedule D attached hereto sets forth the
Debtor's organizational identification number or, if any Debtor does not
have one, states that one does not exist.
(z) (i) The actual name of the Debtor is the name set forth in the
preamble above; (ii) no Debtor has any trade names except as set forth on
Schedule E attached hereto; (iii) no Debtor has used any name other than
that stated in the preamble hereto or as set forth on Schedule E for the
preceding five years; and (iv) no entity has merged into any Debtor or
been acquired by any Debtor within the past five years except as set forth
on Schedule E.
(aa) At any time and from time to time that any Collateral consists
of instruments, certificated securities or other items that require or
permit possession by the secured party to perfect the security interest
created hereby, the applicable Debtor shall deliver such Collateral to the
Secured Parties.
(bb) The Debtor, in its capacity as issuer, hereby agrees to comply
with any and all orders and instructions of the Secured Parties regarding
the Pledged Interests consistent with the terms of this Agreement without
the further consent of any Debtor as contemplated by Section 8-106 (or any
successor section) of the UCC. Further, the Debtor agrees that it shall
not enter into a similar agreement (or one that would confer "control"
within the meaning of Article 8 of the UCC) with any other person or
entity.
(cc) The Debtor shall cause all tangible chattel paper constituting
Collateral to be delivered to the Secured Parties, or, if such delivery is
not possible, then to cause such tangible chattel paper to contain a
legend noting that it is subject to the security interest created by this
Agreement. To the extent that any Collateral consists of electronic
chattel paper, the applicable Debtor shall cause the underlying chattel
paper to be "marked" within the meaning of Section 9-105 of the UCC (or
successor section thereto).
(dd) If there is any investment property or deposit account
included as Collateral that can be perfected by "control" through an
account control agreement, the applicable Debtor shall cause such an
account control agreement, in form and substance in each case satisfactory
to the Secured Parties, to be entered into and delivered to the Secured
Parties.
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(ee) To the extent that any Collateral consists of letter-of-credit
rights, the applicable Debtor shall cause the issuer of each underlying
letter of credit to consent to an assignment of the proceeds thereof to
the Secured Parties.
(ff) To the extent that any Collateral is in the possession of any
third party, the applicable Debtor shall join with the Secured Parties in
notifying such third party of the Secured Parties' security interest in
such Collateral and shall use its best efforts to obtain an
acknowledgement and agreement from such third party with respect to the
Collateral, in form and substance satisfactory to the Secured Parties.
(gg) If any Debtor shall at any time hold or acquire a commercial
tort claim, such Debtor shall promptly notify the Secured Parties in a
writing signed by such Debtor of the particulars thereof and grant to the
Secured Parties in such writing a security interest therein and in the
proceeds thereof, all upon the terms of this Agreement, with such writing
to be in form and substance satisfactory to the Secured Parties.
(hh) The Debtor shall immediately provide written notice to the
Secured Parties of any and all accounts which arise out of contracts with
any governmental authority and, to the extent necessary to perfect or
continue the perfected status of the Security Interest in such accounts
and proceeds thereof, shall execute and deliver to the Secured Parties an
assignment of claims for such accounts and cooperate with the Secured
Parties in taking any other steps required, in their judgment, under the
Federal Assignment of Claims Act or any similar federal, state or local
statute or rule to perfect or continue the perfected status of the
Security Interest in such accounts and proceeds thereof.
(ii) Intentionally Omitted.
(jj) The Debtor shall vote the Pledged Securities to comply with
the covenants and agreements set forth herein and in the Notes.
(kk) The Debtor shall register the pledge of the applicable Pledged
Securities on the books of such Debtor. The Debtor shall notify each
issuer of Pledged Securities to register the pledge of the applicable
Pledged Securities in the name of the Secured Parties on the books of such
issuer. Further, except with respect to certificated securities delivered
to the Secured Parties, if any, the applicable Debtor shall deliver to
Secured Parties an acknowledgement of pledge (which, where appropriate,
shall comply with the requirements of the relevant UCC with respect to
perfection by registration) signed by the issuer of the applicable Pledged
Securities, which acknowledgement shall confirm that: (a) it has
registered the pledge on its books and records; and (b) at any time
directed by Secured Parties during the continuation of an Event of
Default, such issuer will transfer the record ownership of such Pledged
Securities into the name of any designee of Secured Parties, will take
such steps as may be necessary to effect the transfer, and will comply
with all other instructions of Secured Parties regarding such Pledged
Securities without the further consent of the applicable Debtor.
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(ll) In the event that, upon an occurrence of an Event of Default,
the Secured Parties shall sell all or any of the Pledged Securities to
another party or parties (herein called the "Transferee") or shall
purchase or retain all or any of the Pledged Securities, the Debtor shall,
to the extent applicable: (i) deliver to the Secured Parties or the
Transferee, as the case may be, the articles of incorporation, bylaws,
minute books, stock certificate books, corporate seals, deeds, leases,
indentures, agreements, evidences of indebtedness, books of account,
financial records and all other Organizational Documents and records of
the Debtor and their direct and indirect subsidiaries; (ii) use its best
efforts to obtain resignations of the persons then serving as officers and
directors of the Debtor and their direct and indirect subsidiaries, if so
requested; and (iii) use its best efforts to obtain any approvals that are
required by any governmental or regulatory body in order to permit the
sale of the Pledged Securities to the Transferee or the purchase or
retention of the Pledged Securities by the Secured Parties and allow the
Transferee or the Secured Parties to continue the business of the Debtor
and their direct and indirect subsidiaries.
(mm) Without limiting the generality of the other obligations of
the Debtor hereunder, the Debtor shall promptly (i) cause to be registered
at the United States Copyright Office all of its material copyrights, (ii)
cause the security interest contemplated hereby with respect to all
Intellectual Property registered at the United States Copyright Office or
United States Patent and Trademark Office to be duly recorded at the
applicable office, and (iii) give the Secured Parties notice whenever it
acquires (whether absolutely or by license) or creates any additional
material Intellectual Property.
(nn) The Debtor will from time to time, at the joint and several
expense of the Debtor, promptly execute and deliver all such further
instruments and documents, and take all such further action as may be
necessary or desirable, or as the Secured Parties may reasonably request,
in order to perfect and protect any security interest granted or purported
to be granted hereby or to enable the Secured Parties to exercise and
enforce their rights and remedies hereunder and with respect to any
Collateral or to otherwise carry out the purposes of this Agreement.
(oo) Schedule F attached hereto lists all of the patents, patent
applications, trademarks, trademark applications, registered copyrights,
and domain names owned by the Debtor as of the date hereof. Schedule F
lists all material licenses in favor of any Debtor for the use of any
patents, trademarks, copyrights and domain names as of the date hereof.
All material patents and trademarks of the Debtor have been duly recorded
at the United States Patent and Trademark Office and all material
copyrights of the Debtor have been duly recorded at the United States
Copyright Office.
(pp) Except as set forth on Schedule G attached hereto, none of the
account debtors or other persons or entities obligated on any of the
Collateral is a governmental authority covered by the Federal Assignment
of Claims Act or any similar federal, state or local statute or rule in
respect of such Collateral.
5. EFFECT OF PLEDGE ON CERTAIN RIGHTS. If any of the Collateral subject
to this Agreement consists of nonvoting equity or ownership interests
(regardless of class, designation, preference or rights) that may be converted
into voting equity or ownership interests upon the occurrence of certain events
(including, without limitation, upon the transfer of all or any of the other
stock or assets of the issuer), it is agreed that the pledge of such equity or
ownership interests pursuant to this Agreement or the enforcement of any of the
Secured Parties' rights hereunder shall not be deemed to be the type of event
which would trigger such conversion rights notwithstanding any provisions in the
Organizational Documents or agreements to which any Debtor is subject or to
which any Debtor is party.
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6. DEFAULTS. The following events shall be "Events of Default":
(a) The occurrence of an Event of Default (as defined in the
Notes) under the Notes;
(b) Any representation or warranty of any Debtor in this Agreement
shall prove to have been incorrect in any material respect when made;
(c) The failure by any Debtor to observe or perform any of its
obligations hereunder for five (5) days after delivery to such Debtor of
notice of such failure by or on behalf of a Secured Party unless such
default is capable of cure but cannot be cured within such time frame and
such Debtor is using best efforts to cure same in a timely fashion; or
(d) If any provision of this Agreement shall at any time for any
reason be declared to be null and void, or the validity or enforceability
thereof shall be contested by any Debtor, or a proceeding shall be
commenced by any Debtor, or by any governmental authority having
jurisdiction over any Debtor, seeking to establish the invalidity or
unenforceability thereof, or any Debtor shall deny that any Debtor has any
liability or obligation purported to be created under this Agreement.
7. DUTY TO HOLD IN TRUST.
(a) Upon the occurrence of any Event of Default and at any time
thereafter, the Debtor shall, upon receipt of any revenue, income,
dividend, interest or other sums subject to the Security Interest, whether
payable pursuant to the Notes or otherwise, or of any check, draft, note,
trade acceptance or other instrument evidencing an obligation to pay any
such sum, hold the same in trust for the Secured Parties and shall
forthwith endorse and transfer any such sums or instruments, or both, to
the Secured Parties, pro-rata in proportion to their initial purchases of
Notes for application to the satisfaction of the Obligations (and if any
Debenture is not outstanding, pro-rata in proportion to the initial
purchases of the remaining Notes).
(b) If any Debtor shall become entitled to receive or shall
receive any securities or other property (including, without limitation,
shares of Pledged Securities or instruments representing Pledged
Securities acquired after the date hereof, or any options, warrants,
rights or other similar property or certificates representing a dividend,
or any distribution in connection with any recapitalization,
reclassification or increase or reduction of capital, or issued in
connection with any reorganization of such Debtor or any of its direct or
indirect subsidiaries) in respect of the Pledged Securities (whether as an
addition to, in substitution of, or in exchange for, such Pledged
Securities or otherwise), such Debtor agrees to (i) accept the same as the
agent of the Secured Parties; (ii) hold the same in trust on behalf of and
for the benefit of the Secured Parties; and (iii) to deliver any and all
certificates or instruments evidencing the same to the Secured Parties on
or before the close of business on the fifth business day following the
receipt thereof by such Debtor, in the exact form received together with
the Necessary Endorsements, to be held by the Secured Parties subject to
the terms of this Agreement as Collateral.
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8. RIGHTS AND REMEDIES UPON DEFAULT.
(a) Upon the occurrence of any Event of Default and at any time
thereafter, the Secured Parties, acting through any agent appointed by
them for such purpose, shall have the right to exercise all of the
remedies conferred hereunder and under the Notes, and the Secured Parties
shall have all the rights and remedies of a secured party under the UCC.
Without limitation, the Secured Parties shall have the following rights
and powers:
(i) The Secured Parties shall have the right to take
possession of the Collateral and, for that purpose, enter, with the
aid and assistance of any person, any premises where the Collateral,
or any part thereof, is or may be placed and remove the same, and
the Debtor shall assemble the Collateral and make it available to
the Secured Parties at places which the Secured Parties shall
reasonably select, whether at such Debtor's premises or elsewhere,
and make available to the Secured Parties, without rent, all of such
Debtor's respective premises and facilities for the purpose of the
Secured Parties taking possession of, removing or putting the
Collateral in saleable or disposable form.
(ii) Upon notice to the Debtor by the Secured Parties, all
rights of the Debtor to exercise the voting and other consensual
rights which it would otherwise be entitled to exercise and all
rights of the Debtor to receive the dividends and interest which it
would otherwise be authorized to receive and retain, shall cease.
Upon such notice, the Secured Parties shall have the right to
receive any interest, cash dividends or other payments on the
Collateral and, at the option of the Secured Parties, to exercise in
the Secured Parties' discretion all voting rights pertaining
thereto. Without limiting the generality of the foregoing, the
Secured Parties shall have the right (but not the obligation) to
exercise all rights with respect to the Collateral as it were the
sole and absolute owners thereof, including, without limitation, to
vote and/or to exchange, at its sole discretion, any or all of the
Collateral in connection with a merger, reorganization,
consolidation, recapitalization or other readjustment concerning or
involving the Collateral or any Debtor or any of its direct or
indirect subsidiaries.
(iii) The Secured Parties shall have the right to operate the
business of the Debtor using the Collateral and shall have the right
to assign, sell, lease or otherwise dispose of and deliver all or
any part of the Collateral, at public or private sale or otherwise,
either with or without special conditions or stipulations, for cash
or on credit or for future delivery, in such parcel or parcels and
at such time or times and at such place or places, and upon such
terms and conditions as the Secured Parties may deem commercially
reasonable, all without (except as shall be required by applicable
statute and cannot be waived) advertisement or demand upon or notice
to any Debtor or right of redemption of a Debtor, which are hereby
expressly waived. Upon each such sale, lease, assignment or other
transfer of Collateral, the Secured Parties may, unless prohibited
by applicable law which cannot be waived, purchase all or any part
of the Collateral being sold, free from and discharged of all
trusts, claims, right of redemption and equities of any Debtor,
which are hereby waived and released.
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(iv) The Secured Parties shall have the right (but not the
obligation) to notify any account debtors and any obligors under
instruments or accounts to make payments directly to the Secured
Parties and to enforce the Debtor's rights against such account
debtors and obligors.
(v) The Secured Parties may (but are not obligated to)
direct any financial intermediary or any other person or entity
holding any investment property to transfer the same to the Secured
Parties or their designee.
(vi) The Secured Parties may (but are not obligated to)
transfer any or all Intellectual Property registered in the name of
any Debtor at the United States Patent and Trademark Office and/or
Copyright Office into the name of the Secured Parties or any
designee or any purchaser of any Collateral.
(b) The Secured Parties may comply with any applicable law in
connection with a disposition of Collateral and such compliance will not
be considered adversely to affect the commercial reasonableness of any
sale of the Collateral. The Secured Parties may sell the Collateral
without giving any warranties and may specifically disclaim such
warranties. If the Secured Parties sell any of the Collateral on credit,
the Debtor will only be credited with payments actually made by the
purchaser. In addition, the Debtor waives any and all rights that it may
have to a judicial hearing in advance of the enforcement of any of the
Secured Parties' rights and remedies hereunder, including, without
limitation, its right following an Event of Default to take immediate
possession of the Collateral and to exercise its rights and remedies with
respect thereto.
(c) For the purpose of enabling the Secured Parties to further
exercise rights and remedies under this Section 8 or elsewhere provided by
agreement or applicable law, the Debtor hereby grants to the Secured
Parties an irrevocable, nonexclusive license (exercisable without payment
of royalty or other compensation to such Debtor) to use, license or
sublicense following an Event of Default, any Intellectual Property now
owned or hereafter acquired by such Debtor, and wherever the same may be
located, and including in such license access to all media in which any of
the licensed items may be recorded or stored and to all computer software
and programs used for the compilation or printout thereof.
9. APPLICATIONS OF PROCEEDS. The proceeds of any such sale, lease or
other disposition of the Collateral hereunder shall be applied first, to the
expenses of retaking, holding, storing, processing and preparing for sale,
selling, and the like (including, without limitation, any taxes, fees and other
costs incurred in connection therewith) of the Collateral, to the reasonable
attorneys' fees and expenses incurred by the Secured Parties in enforcing their
rights hereunder and in connection with collecting, storing and disposing of the
Collateral, and then to satisfaction of the Obligations pro rata among the
Secured Parties (based on then-outstanding principal amounts of Notes at the
time of any such determination), and to the payment of any other amounts
required by applicable law, after which the Secured Parties shall pay to the
applicable Debtor any surplus proceeds. If, upon the sale, license or other
disposition of the Collateral, the proceeds thereof are insufficient to pay all
amounts to which the Secured Parties are legally entitled, the Debtor will be
liable for the deficiency, together with interest thereon, at the rate of 20%
per annum or the lesser amount permitted by applicable law (the "Default Rate"),
and the reasonable fees of any attorneys employed by the Secured Parties to
collect such deficiency. To the extent permitted by applicable law, the Debtor
waives all claims, damages and demands against the Secured Parties arising out
of the repossession, removal, retention or sale of the Collateral, unless due
solely to the gross negligence or willful misconduct of the Secured Parties as
determined by a final judgment (not subject to further appeal) of a court of
competent jurisdiction.
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10. SECURITIES LAW PROVISION. The Debtor recognizes that Secured Parties
may be limited in their ability to effect a sale to the public of all or part of
the Pledged Securities by reason of certain prohibitions in the Securities Act
of 1933, as amended, or other federal or state securities laws (collectively,
the "Securities Laws"), and may be compelled to resort to one or more sales to a
restricted group of purchasers who may be required to agree to acquire the
Pledged Securities for their own account, for investment and not with a view to
the distribution or resale thereof. The Debtor agrees that sales so made may be
at prices and on terms less favorable than if the Pledged Securities were sold
to the public, and that the Secured Parties have no obligation to delay the sale
of any Pledged Securities for the period of time necessary to register the
Pledged Securities for sale to the public under the Securities Laws. The Debtor
shall cooperate with the Secured Parties in their attempt to satisfy any
requirements under the Securities Laws (including, without limitation,
registration thereunder if requested by the Secured Parties) applicable to the
sale of the Pledged Securities by the Secured Parties.
11. COSTS AND EXPENSES. The Debtor agrees to pay all reasonable
out-of-pocket fees, costs and expenses incurred in connection with any filing
required hereunder, including without limitation, any financing statements
pursuant to the UCC, continuation statements, partial releases and/or
termination statements related thereto or any expenses of any searches
reasonably required by the Secured Parties. The Debtor shall also pay all other
claims and charges which in the reasonable opinion of the Secured Parties might
prejudice, imperil or otherwise affect the Collateral or the Security Interest
therein. The Debtor will also, upon demand, pay to the Secured Parties the
amount of any and all reasonable expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, which the Secured Parties
may incur in connection with (i) the enforcement of this Agreement, (ii) the
custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, or (iii) the exercise or enforcement of
any of the rights of the Secured Parties under the Notes. Until so paid, any
fees payable hereunder shall be added to the principal amount of the Notes and
shall bear interest at the Default Rate.
12. RESPONSIBILITY FOR COLLATERAL. The Debtor assumes all liabilities
and responsibility in connection with all Collateral, and the Obligations shall
in no way be affected or diminished by reason of the loss, destruction, damage
or theft of any of the Collateral or its unavailability for any reason. Without
limiting the generality of the foregoing, (a) no Secured Party (i) has any duty
(either before or after an Event of Default) to collect any amounts in respect
of the Collateral or to preserve any rights relating to the Collateral, or (ii)
has any obligation to clean-up or otherwise prepare the Collateral for sale, and
(b) the Debtor shall remain obligated and liable under each contract or
agreement included in the Collateral to be observed or performed by such Debtor
thereunder. No 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 any Secured Party of any payment relating to any of the Collateral,
nor any Secured Party be obligated in any manner to perform any of the
obligations of any Debtor under or pursuant to any such contract or agreement,
to make inquiry as to the nature or sufficiency of any payment received by 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 which may have been assigned to any Secured Party or to
which any Secured Party may be entitled at any time or times.
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13. SECURITY INTEREST ABSOLUTE. All rights of the Secured Parties and
all obligations of the Debtor hereunder, shall be absolute and unconditional,
irrespective of: (a) any lack of validity or enforceability of this Agreement,
the Notes or any agreement entered into in connection with the foregoing, or any
portion hereof or thereof; (b) any change in the time, manner or place of
payment or performance of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of or any consent to any departure
from the Notes or any other agreement entered into in connection with the
foregoing; (c) any exchange, release or nonperfection of any of the Collateral,
or any release or amendment or waiver of or consent to departure from any other
collateral for, or any guaranty, or any other security, for all or any of the
Obligations; (d) any action by the Secured Parties to obtain, adjust, settle and
cancel in its sole discretion any insurance claims or matters made or arising in
connection with the Collateral; or (e) any other circumstance which might
otherwise constitute any legal or equitable defense available to a Debtor, or a
discharge of all or any part of the Security Interest granted hereby. Until the
Obligations shall have been paid and performed in full, the rights of the
Secured Parties shall continue even if the Obligations are barred for any
reason, including, without limitation, the running of the statute of limitations
or bankruptcy. The Debtor expressly waives presentment, protest, notice of
protest, demand, notice of nonpayment and demand for performance. In the event
that at any time any transfer of any Collateral or any payment received by the
Secured Parties hereunder shall be deemed by final order of a court of competent
jurisdiction to have been a voidable preference or fraudulent conveyance under
the bankruptcy or insolvency laws of the United States, or shall be deemed to be
otherwise due to any party other than the Secured Parties, then, in any such
event, the Debtor's obligations hereunder shall survive cancellation of this
Agreement, and shall not be discharged or satisfied by any prior payment thereof
and/or cancellation of this Agreement, but shall remain a valid and binding
obligation enforceable in accordance with the terms and provisions hereof. The
Debtor waives all right to require the Secured Parties to proceed against any
other person or entity or to apply any Collateral which the Secured Parties may
hold at any time, or to marshal assets, or to pursue any other remedy. The
Debtor waives any defense arising by reason of the application of the statute of
limitations to any obligation secured hereby.
14. TERM OF AGREEMENT. This Agreement and the Security Interest shall
terminate on the date on which all payments under the Notes have been
indefeasibly paid in full and all other Obligations have been paid or
discharged; provided, however, that all indemnities of the Debtor contained in
this Agreement shall survive and remain operative and in full force and effect
regardless of the termination of this Agreement.
15. POWER OF ATTORNEY; FURTHER ASSURANCES.
(a) The Debtor authorizes the Secured Parties, and does hereby
make, constitute and appoint the Secured Parties and their respective
officers, agents, successors or assigns with full power of substitution,
as such Debtor's true and lawful attorney-in-fact, with power, in the name
of the various Secured Parties or such Debtor, to, after the occurrence
and during the continuance of an Event of Default, (i) endorse any note,
checks, drafts, money orders or other instruments of payment (including
payments payable under or in respect of any policy of insurance) in
respect of the Collateral that may come into possession of the Secured
Parties; (ii) to sign and endorse any financing statement pursuant to the
UCC or any invoice, freight or express xxxx, xxxx of lading, storage or
warehouse receipts, drafts against debtors, assignments, verifications and
notices in connection with accounts, and other documents relating to the
Collateral; (iii) to pay or discharge taxes, liens, security interests or
other encumbrances at any time levied or placed on or threatened against
16
the Collateral; (iv) to demand, collect, receipt for, compromise, settle
and xxx for monies due in respect of the Collateral; (v) to transfer any
Intellectual Property or provide licenses respecting any Intellectual
Property; and (vi) generally, at the option of the Secured Parties, and at
the expense of the Debtor, at any time, or from time to time, to execute
and deliver any and all documents and instruments and to do all acts and
things which the Secured Parties deem necessary to protect, preserve and
realize upon the Collateral and the Security Interest granted therein in
order to effect the intent of this Agreement and the Notes all as fully
and effectually as the Debtor might or could do; and the Debtor hereby
ratifies all that said attorney shall lawfully do or cause to be done by
virtue hereof. This power of attorney is coupled with an interest and
shall be irrevocable for the term of this Agreement and thereafter as long
as any of the Obligations shall be outstanding. The designation set forth
herein shall be deemed to amend and supersede any inconsistent provision
in the Organizational Documents or other documents or agreements to which
any Debtor is subject or to which any Debtor is a party. Without limiting
the generality of the foregoing, after the occurrence and during the
continuance of an Event of Default, each Secured Party is specifically
authorized to execute and file any applications for or instruments of
transfer and assignment of any patents, trademarks, copyrights or other
Intellectual Property with the United States Patent and Trademark Office
and the United States Copyright Office.
(b) On a continuing basis, the Debtor will make, execute,
acknowledge, deliver, file and record, as the case may be, with the proper
filing and recording agencies in any jurisdiction, including, without
limitation, the jurisdictions indicated on Schedule C attached hereto, all
such instruments, and take all such action as may reasonably be deemed
necessary or advisable, or as reasonably requested by the Secured Parties,
to perfect the Security Interest granted hereunder and otherwise to carry
out the intent and purposes of this Agreement, or for assuring and
confirming to the Secured Parties the grant or perfection of a perfected
security interest in all the Collateral under the UCC.
(c) The Debtor hereby irrevocably appoints the Secured Parties as
such Debtor's attorney-in-fact, with full authority in the place and
instead of such Debtor and in the name of such Debtor, from time to time
in the Secured Parties' discretion, to take any action and to execute any
instrument which the Secured Parties may deem necessary or advisable to
accomplish the purposes of this Agreement, including the filing, in its
sole discretion, of one or more financing or continuation statements and
amendments thereto, relative to any of the Collateral without the
signature of such Debtor where permitted by law, which financing
statements may (but need not) describe the Collateral as "all assets" or
"all personal property" or words of like import, and ratifies all such
actions taken by the Secured Parties. This power of attorney is coupled
with an interest and shall be irrevocable for the term of this Agreement
and thereafter as long as any of the Obligations shall be outstanding.
16. NOTICES. All notices, requests, demands and other communications
hereunder shall be subject to the notice provision of the Purchase Agreement (as
such term is defined in the Notes).
17. OTHER SECURITY. To the extent that the Obligations are now or
hereafter secured by property other than the Collateral or by the guarantee,
endorsement or property of any other person, firm, corporation or other entity,
then the Secured Parties shall have the right, in its sole discretion, to
pursue, relinquish, subordinate, modify or take any other action with respect
thereto, without in any way modifying or affecting any of the Secured Parties'
rights and remedies hereunder.
17
18. INTENTIONALLY OMITTED
19. MISCELLANEOUS.
(a) No course of dealing between the Debtor and the Secured
Parties, nor any failure to exercise, nor any delay in exercising, on the
part of the Secured Parties, any right, power or privilege hereunder or
under the Notes shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, power or privilege hereunder or thereunder
preclude any other or further exercise thereof or the exercise of any
other right, power or privilege.
(b) All of the rights and remedies of the Secured Parties with
respect to the Collateral, whether established hereby or by the Notes or
by any other agreements, instruments or documents or by law shall be
cumulative and may be exercised singly or concurrently.
(c) This Agreement constitutes the entire agreement of the parties
with respect to the subject matter hereof and is intended to supersede all
prior negotiations, understandings and agreements with respect thereto.
Except as specifically set forth in this Agreement, no provision of this
Agreement may be modified or amended except by a written agreement
specifically referring to this Agreement and signed by the parties hereto.
(d) In the event any provision of this Agreement is held to be
invalid, prohibited or unenforceable in any jurisdiction for any reason,
unless such provision is narrowed by judicial construction, this Agreement
shall, as to such jurisdiction, be construed as if such invalid,
prohibited or unenforceable provision had been more narrowly drawn so as
not to be invalid, prohibited or unenforceable. If, notwithstanding the
foregoing, any provision of this Agreement is held to be invalid,
prohibited or unenforceable in any jurisdiction, such provision, as to
such jurisdiction, shall be ineffective to the extent of such invalidity,
prohibition or unenforceability without invalidating the remaining portion
of such provision or the other provisions of this Agreement and without
affecting the validity or enforceability of such provision or the other
provisions of this Agreement in any other jurisdiction.
(e) No waiver of any breach or default or any right under this
Agreement shall be considered valid unless in writing and signed by the
party giving such waiver, and no such waiver shall be deemed a waiver of
any subsequent breach or default or right, whether of the same or similar
nature or otherwise.
(f) This Agreement shall be binding upon and inure to the benefit
of each party hereto and its successors and assigns.
(g) Each party shall take such further action and execute and
deliver such further documents as may be necessary or appropriate in order
to carry out the provisions and purposes of this Agreement.
18
(h) All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State
of New York, without regard to the principles of conflicts of law thereof.
The Debtor agrees that all proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement
and the Notes (whether brought against a party hereto or its respective
affiliates, directors, officers, shareholders, partners, members,
employees or agents) shall be commenced exclusively in the state and
federal courts sitting in the City of New York, Borough of Manhattan. The
Debtor hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in the City of New York, Borough of
Manhattan for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein,
and hereby irrevocably waives, and agrees not to assert in any proceeding,
any claim that it is not personally subject to the jurisdiction of any
such court, that such proceeding is improper. Each party hereto hereby
irrevocably waives personal service of process and consents to process
being served in any such proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under
this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any
manner permitted by law. Each party hereto hereby irrevocably waives, to
the fullest extent permitted by applicable law, any and all right to trial
by jury in any legal proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby. If any party shall
commence a proceeding to enforce any provisions of this Agreement, then
the prevailing party in such proceeding shall be reimbursed by the other
party for its reasonable attorney's fees and other costs and expenses
incurred with the investigation, preparation and prosecution of such
proceeding.
(i) This Agreement may be executed in any number of counterparts,
each of which when so executed shall be deemed to be an original and, all
of which taken together shall constitute one and the same Agreement. In
the event that any signature is delivered by facsimile transmission, such
signature shall create a valid binding obligation of the party executing
(or on whose behalf such signature is executed) the same with the same
force and effect as if such facsimile signature were the original thereof.
(j) Intentionally Omitted.
(k) The Debtor shall indemnify, reimburse and hold harmless the
Secured Parties and their respective partners, members, shareholders,
officers, directors, employees and agents (collectively, "Indemnitees")
from and against any and all losses, claims, liabilities, damages,
penalties, suits, costs and expenses, of any kind or nature, (including
fees relating to the cost of investigating and defending any of the
foregoing) imposed on, incurred by or asserted against such Indemnitee in
any way related to or arising from or alleged to arise from this Agreement
or the Collateral, except any such losses, claims, liabilities, damages,
penalties, suits, costs and expenses which result from the gross
negligence or willful misconduct of the Indemnitee as determined by a
final, nonappealable decision of a court of competent jurisdiction. This
indemnification provision is in addition to, and not in limitation of, any
other indemnification provision in the Notes, the Purchase Agreement (as
such term is defined in the Notes) or any other agreement, instrument or
other document executed or delivered in connection herewith or therewith.
19
(l) Nothing in this Agreement shall be construed to subject any
Secured Party to liability as a partner in any Debtor or any if its direct
or indirect subsidiaries that is a partnership or as a member in any
Debtor or any of its direct or indirect subsidiaries that is a limited
liability company, nor shall any Secured Party be deemed to have assumed
any obligations under any partnership agreement or limited liability
company agreement, as applicable, of any such Debtor or any if its direct
or indirect subsidiaries or otherwise, unless and until any such Secured
Party exercises its right to be substituted for such Debtor as a partner
or member, as applicable, pursuant hereto.
(m) To the extent that the grant of the security interest in the
Collateral and the enforcement of the terms hereof require the consent,
approval or action of any partner or member, as applicable, of any Debtor
or any direct or indirect subsidiary of any Debtor or compliance with any
provisions of any of the Organizational Documents, the Debtor hereby
grants such consent and approval and waives any such noncompliance with
the terms of said documents.
[SIGNATURE PAGES FOLLOW]
20
IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement
to be duly executed on the day and year first above written.
KNOCKOUT HOLDINGS, INC.
/s/ Xxxxx Xxxxxx
----------------------------------
Name: Xxxxx Xxxxxx
Title: Chief Financial Officer
[SIGNATURE PAGE OF HOLDERS FOLLOWS]
21
[SIGNATURE PAGE OF HOLDERS TO KNOCKOUT HOLDINGS SA]
Name of Investing Entity: DCOFI Master LDC
----------------
Signature of Authorized Signatory of Investing entity: /s/ Xxxxxxx Xxxxxxxxx
---------------------
Name of Authorized Signatory: Xxxxxxx Xxxxxxxxx
-----------------
Title of Authorized Signatory: Director
--------
[SIGNATURE PAGE OF HOLDERS FOLLOWS]
22
SCHEDULE A
LOCATION OF COLLATERAL
Principal Place of Business of Debtor:
Knockout Holdings, Inc.
Locations Where Collateral is Located or Stored:
23
SCHEDULE B
EXISTING LIENS ON COLLATERAL
NONE
24
SCHEDULE C
JURISDICTIONS IN WHICH COLLATERAL LOCATED
25
SCHEDULE D
ORGANIZATIONAL IDENTIFICATION NUMBERS
26
SCHEDULE E
NAMES; MERGERS AND ACQUISITIONS
27
SCHEDULE F
INTELLECTUAL PROPERTY
28
SCHEDULE G
ACCOUNT DEBTORS
29
SCHEDULE H
PLEDGED SECURITIES
30
