CREDIT AND SECURITY AGREEMENT
THIS
CREDIT AND SECURITY AGREEMENT ("Agreement")
is
made as of October 29, 2007, by ISECURETRAC CORP., a Delaware corporation
("Debtor"),
whose
principal place of business and chief executive office (as those terms are
used
in the Code) is located at 0000 X. 000xx Xxxxxx,
Xxxxx, Xxxxxxxx 00000, and whose federal taxpayer identification number is
00-0000000, and whose organizational number issued by the appropriate authority
of the State of Delaware is 2096427, in favor of CRESTPARK
LP, INC.
("Secured
Party"),
whose
address is c/o Sammons Corporation, 0000 Xxxxxx Xxxx, Xxxxx 0000,
Xxxxxx, Xxxxx 00000.
Debtor
is
executing a Promissory Note in the original principal amount of $8,491,863.90
of
even date herewith in favor of the Secured Party. As security for the
indebtedness represented thereunder, Debtor hereby agrees with Secured Party
as
follows:
1. Definitions.
As used
in this Agreement, the following terms shall have the meanings indicated
below:
(a) "Code"
means
the Delaware Uniform Commercial Code as in effect in the State of Delaware
on
the date of this Agreement or as it may hereafter be amended from time to
time.
(b) "Collateral"
means
all of the personal property of Debtor, including but not limited to, wherever
located, and now owned or hereafter acquired:
(i) All
"accounts", as defined in the Code (including all contractual rights to receive
commissions), together with any and all books of account, and agent lists,
and
in any case where an account arises from the sale of goods, the interest
of
Debtor in such goods.
(ii) All
"inventory" as defined in the Code.
(iii) All
"commodity accounts" as defined in the Code.
(iv) All
cash
and cash accounts.
(v) All
"chattel paper" as defined in the Code.
(vi) All
"equipment" as defined in the Code, of whatsoever kind and character now
or
hereafter possessed, held, acquired, leased or owned by Debtor and used or
usable in Debtor's business, and in any event shall include, but shall not
be
limited to, all machinery, tools, computer software, office equipment,
furniture, appliances, furnishings, fixtures, vehicles, motor vehicles, together
with all replacements, accessories, additions, substitutions and accessions
to
all of the foregoing, and all manuals and instructions. To the extent that
the
foregoing property is located on, attached to, annexed to, related to, or
used
in connection with, or otherwise made a part of, and is or shall become fixtures
upon, real property, such real property and the record owner thereof (if
other
than Debtor) is described on Schedule
1
attached
hereto and made a part hereof.
(vii) All
"fixtures" as defined in the Code.
(viii) All
"instruments" as defined in the Code (including promissory notes).
(ix) All
"investment property" as defined in the Code.
(x) All
"documents" as defined in the Code.
(xi) All
"deposit accounts" as defined in the Code.
(xii) All
"commercial tort claims" as defined in the Code, including but not limited
to
all commercial tort claims described on Schedule
5.
(xiii) All
"letters of credit" and "letter of credit rights" as defined in the
Code.
(xiv) All
"general intangibles" as defined in the Code, including all rights in all
royalty payments, payment intangibles, permits, regulatory approvals,
copyrights, patents, trademarks, service marks, trade names, mask works,
goodwill, licenses and all other intellectual property owned by Debtor or
used
in Debtor's business.
(xv) All
"supporting obligations" as defined in the Code.
(xvi) All
Patents, Trademarks, Copyrights, and IP Licenses.
(xvii) all
"software" as defined in the Code (for purposes of this Agreement "Software"
also consists of all (A) computer programs and supporting information
provided in connection with a transaction relating to the program, and
(B) computer programs embedded in goods and any supporting information
provided in connection with a transaction relating to the program whether
or not
the program is associated with the goods in such a manner that it customarily
is
considered part of the goods, and whether or not, by becoming the owner of
the
goods, a person acquires a right to use the program in connection with the
goods, and whether or not the program is embedded in goods that consist solely
of the medium in which the program is embedded).
(xviii) All
records relating in any way to the foregoing and following (including, without
limitation, any computer software, whether on tape, disk, card, strip, cartridge
or any other form).
(xix) All
royalty payments.
2
(xx) All
securities, including all Pledged Equity Interests.
(xxi) Collateral
also includes all PRODUCTS and PROCEEDS of all of the foregoing (including
without limitation, insurance payable by reason of loss or damage to the
foregoing property) and any property, securities, guaranties or monies of
Debtor
which may at any time come into the possession of Secured Party. The designation
of proceeds does not authorize Debtor to sell, transfer or otherwise convey
any
of the foregoing property except as otherwise provided herein or in the other
Loan Documents.
(c) "Copyright
License"
means
any agreement, now or hereafter in effect, granting any right to any third
party
under any Copyright now or hereafter owned by Debtor or which Debtor otherwise
has the right to license, or granting any right to Debtor under any Copyright
now or hereafter owned by any third party, and all rights of Debtor under
any
such agreement.
(d) "Copyrights"
means
(i) all
copyright rights in any work subject to the copyright laws of any governmental
authority, whether as author, assignee, transferee, or otherwise, (ii) all
registrations and applications for registration of any such copyright in
any
governmental authority, including registrations, recordings, supplemental
registrations, and pending applications for registration in any jurisdiction,
and (iii) all
rights to use and/or sell any of the foregoing.
(e) "Debtor
Relief Laws"
means
the Bankruptcy Code of the United States of America and all other liquidation,
conservatorship, bankruptcy, assignment for the benefit of creditors,
moratorium, rearrangement, receivership, insolvency, reorganization, or similar
debtor relief laws of the United States or other applicable jurisdictions
from
time to time in effect and affecting the rights of creditors
generally.
(f) "Indebtedness"
means
(i) all
indebtedness, obligations and liabilities of Debtor to Secured Party of any
kind
or character, now existing or hereafter arising, whether direct, indirect,
related, unrelated, fixed, contingent, liquidated, unliquidated, joint, several
or joint and several (excluding only indebtedness originally payable to or
in
favor of a person other than Secured Party and subsequently acquired by Secured
Party), including without limitation all indebtedness, obligations and
liabilities of Debtor to Secured Party now existing or hereafter arising
by
note, draft, acceptance, guaranty, endorsement, letter of credit, assignment,
purchase, overdraft, discount, indemnity agreement or otherwise, (ii) all
obligations now or hereafter existing of Debtor under the Note and each other
Loan Document (including, but not limited to, the Obligations), (iii) all
accrued but unpaid interest (including all interest that would accrue but
for
the existence of a proceeding under any Debtor Relief Laws) on any of the
indebtedness described in this definition of "Indebtedness," (iv) all
obligations of Debtor to Secured Party under any documents evidencing, securing,
governing and/or pertaining to all or any part of the indebtedness described
in
this definition of "Indebtedness," (v) all
costs and expenses incurred by Secured Party in connection with the collection
and administration of all or any part of the indebtedness and obligations
described in this definition of "Indebtedness" or the protection or preservation
of, or realization upon, the collateral securing all or any part of such
indebtedness and obligations, including without limitation all reasonable
attorneys' fees, and (vi) all
renewals, extensions, modifications and rearrangements of the indebtedness
and
obligations described in this definition of "Indebtedness".
3
(g) "IP License"
means
any Patent License, Trademark License, Copyright License, or other similar
license or sublicense.
(h) "Loan
Documents"
means
all documents executed in connection with the Note, as each may be amended,
restated or modified.
(i) "Note"
means
that certain Promissory Note executed by Debtor in favor of Secured Party
dated
as of even date herewith in the original principal amount of $8,491,863.90,
as
it may be amended, restated or modified.
(j) "Patent
License"
means
any agreement, now or hereafter in effect, granting to any third party any
right
to make, use or sell any invention on which a Patent, now or hereafter owned
by
Debtor or which Debtor otherwise has the right to license, is in existence,
or
granting to Debtor any right to make, use or sell any invention on which
a
Patent, now or hereafter owned by any third party, is in existence, and all
rights of Debtor under any such agreement.
(k) "Patents"
means
(i)
all
letters patent of any governmental authority, all registrations and recordings
thereof, and all applications for letters patent of any governmental authority,
and (ii) all
reissues, continuations, divisions, continuations-in-part, renewals, or
extensions thereof, and the inventions disclosed or claimed therein, including
the right to make, use and/or sell the inventions disclosed or claimed
therein.
(l) "Permitted
Liens"
means
liens covering certain of the Debtor's assets as set forth on Schedule 10
hereto.
(m) "Pledged
Equity Interests"
shall
mean all Pledged Stock, Pledged LLC Interests and Pledged Partnership
Interests.
(n) "Pledged
LLC Interests"
shall
mean all interests of the Debtor in any limited liability company and the
certificates, if any, representing such limited liability company interests
and
any interest of the Debtor on the books and records of such limited liability
company or on the books and records of any Securities Intermediary pertaining
to
such interest and all dividends, distributions, cash, warrants, rights, options,
instruments, securities and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange
for
any or all of such limited liability company interests.
(o) "Pledged
Partnership Interests"
shall
mean all interests of the Debtor in any general partnership, limited
partnership, limited liability partnership or other partnership and the
certificates, if any, representing such partnership interests and any interest
of the Debtor on the books and records of such partnership or on the books
and
records of any Securities Intermediary pertaining to such interest and all
dividends, distributions, cash, warrants, rights, options, instruments,
securities and other property or proceeds from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all of such
partnership interests.
4
(p) "Pledged
Stock"
shall
mean all shares of capital stock owned by the Debtor and the certificates,
if
any, representing such shares and any interest of the Debtor in the entries
on
the books of the issuer of such shares or on the books of any Securities
Intermediary pertaining to such shares, and all dividends, distributions,
cash,
warrants, rights, options, instruments, securities and other property or
proceeds from time to time received, receivable or otherwise distributed
in
respect of or in exchange for any or all of such shares.
(q) "Securities
Intermediary"
means
(a) a clearing corporation, or (b) a person, including a bank or
broker, that in the ordinary course of its business maintains securities
accounts for others and is acting in that capacity.
(r) "Security"
means
all right, title, and interest of the Debtor (in each case whether now or
hereafter existing, owned, arising, or acquired) in and to any obligations
of an
issuer or any shares, participations or other interests in an issuer or in
property or an enterprise of an issuer which (a) are represented by a
certificate representing a security in bearer or registered form, or the
transfer of which may be registered upon books maintained for that purpose
by or
on behalf of the issuer, (b) are one of a class or series or by its terms
is divisible into a class or series of shares, participations, interests
or
obligations, and (c)(i) are, or are of a type, dealt with or traded on
securities exchanges or securities markets or (ii) are a medium for
investment and by their terms expressly provide that they are a security
governed by Chapter 8 of the UCC.
(s) "Trademark
License"
means
any agreement, now or hereafter in effect, granting to any third party any
right
to use any Trademark now or hereafter owned by Debtor or which Debtor otherwise
has the right to license, or granting to Debtor any right to use any Trademark
now or hereafter owned by any third party, and all rights of Debtor under
any
such agreement.
(t) "Trademarks"
means
(i) all
trademarks, service marks, trade names, corporate names, company names, business
names, fictitious business names, trade styles, trade dress, logos, other
source
or business identifiers, designs and general intangibles of like nature,
all
registrations and recordings thereof, and all registration and recording
applications filed with any governmental authority in connection therewith,
and
all extensions or renewals thereof, (ii) all
goodwill associated therewith or symbolized thereby, (iii) all
other assets, rights and interests that uniquely reflect or embody such
goodwill, and (iv) all
rights to use and/or sell any of the foregoing.
All
words
and phrases used herein which are expressly defined in Section 1.201 or
Article 9 of the Code shall have the meaning provided for therein. Other
words
and phrases defined elsewhere in the Code shall have the meaning specified
therein except to the extent such meaning is inconsistent with a definition
in
Section 1.201 or Article 9 of the Code.
5
2. Security
Interest.
As
security for the Indebtedness, Debtor, for value received, hereby pledges
and
grants to Secured Party a continuing security interest in the
Collateral.
3. Representations
and Warranties.
In
addition to any representations and warranties of Debtor set forth in the
Loan
Documents, which are incorporated herein by this reference, Debtor hereby
represents and warrants the following to Secured Party:
(a) Authority.
The
execution, delivery and performance of this Agreement and all of the other
Loan
Documents by Debtor have been duly authorized by all necessary corporate
action
of Debtor.
(b) Accuracy
of Information.
All
information contained herein with respect to the Collateral is true and correct
in all material respects. The exact legal name and federal taxpayer
identification number of Debtor are correctly shown in the first paragraph
hereof.
(c) Enforceability.
This
Agreement and the other Loan Documents constitute legal, valid and binding
obligations of Debtor, enforceable in accordance with their respective terms,
except as limited as to enforcement of remedies by Debtor Relief Laws and
except
to the extent specific remedies may generally be limited by equitable
principles.
(d) Ownership
and Liens.
Debtor
has good and marketable title to the Collateral free and clear of all liens
or
adverse claims, except for Permitted Liens. No dispute, right of setoff,
counterclaim or defense exists with respect to all or any part of the
Collateral. Debtor has not executed any other security agreement currently
affecting the Collateral and no effective financing statement or other
instrument similar in effect covering all or any part of the Collateral is
on
file in any recording office except as may have been executed or filed in
favor
of Secured Party or except with respect to Permitted Liens. Debtor has not
been
a party to a securitization or similar transaction involving assets of Debtor
during the preceding two years.
(e) No
Conflicts or Consents.
Neither
the ownership, the intended use of the Collateral by Debtor, the grant of
the
security interest by Debtor to Secured Party herein nor the exercise by Secured
Party of its rights or remedies hereunder, will (i)
conflict
with any provision of (A) any material law, (B) the articles or certificate
of
incorporation or bylaws of Debtor, or (C) any material agreement, judgment,
license, order or permit applicable to or binding upon Debtor, or (ii)
result
in or require the creation of any lien upon any assets or properties of Debtor
or of any person except as may be expressly contemplated in the Loan Documents.
Except as expressly contemplated in the Loan Documents, no consent, approval,
authorization or order of, and no notice to or filing with, any governmental
authority or other person is required in connection with the grant by Debtor
of
the security interest herein or the exercise by Secured Party of its rights
and
remedies hereunder.
6
(f) Security
Interest.
Debtor
has and will have at all times full right, power and authority to grant a
security interest in the Collateral to Secured Party in the manner provided
herein, free and clear of any lien or other charge or encumbrance (other
than
Permitted Liens). This Agreement creates a legal, valid and binding security
interest in favor of Secured Party in the Collateral securing the Indebtedness.
To the extent permitted in the Code, possession by Secured Party of all
certificates, instruments and cash constituting Collateral from time to time
and/or the filing of the financing statements delivered prior hereto and/or
concurrently herewith by Debtor to Secured Party will perfect and establish
the
first priority of Secured Party's security interest hereunder in the Collateral,
except with respect to those assets covered by Permitted Liens. Upon the
filing
of a financing statement describing the Collateral with the Uniform Commercial
Code central filing officer of the jurisdiction of Debtor's location, the
security interest granted pursuant to this Agreement shall be perfected and
prior to all other liens (other than Permitted Liens) therein (to the extent
such security interest can be perfected by the filing of a financing
statement).
(g) Location/Identity.
Debtor's principal place of business and chief executive office (as those
terms
are used in the Code), as the case may be, is located at the address set
forth
on the first page hereof. Except as specified elsewhere herein, all Collateral
and records concerning the Collateral shall be kept at such address. Debtor's
entity type, state of organization, and organizational identification number
issued by the appropriate authority of the State of Delaware (the
"Organizational Information") are as set forth in the first page hereof.
Debtor
is not organized in more than one jurisdiction. Except as provided herein,
the
Organizational Information shall not change. During the preceding three years,
Debtor has not had or operated under any name other than its name as stated
on
the signature page of this Agreement, has not been organized under the laws
of
any jurisdiction other than Delaware, has not been organized as any type
of
entity other than a corporation and the chief executive office of Debtor
has not
been located at any address other than as set forth on the first page
hereof.
(h) Creditors.
Debtor
is not entering into this Agreement or any other Loan Document to which Debtor
is a party or its property is subject with the intent of hindering, delaying
or
defrauding any creditor.
(i) Compliance
with Environmental Laws.
Debtor is conducting Debtor's businesses in material compliance with all
applicable federal, state and local laws, orders, determinations and court
decisions, including all environmental laws.
(j) Inventory.
The
security interest in the inventory shall continue through all stages of
manufacture and shall, without further action, attach to the accounts or
other
proceeds resulting from the sale or other disposition thereof and to all
such
inventory as may be returned to Debtor by its account debtors.
(k) Accounts.
Each
account represents the valid and legally binding indebtedness of a bona fide
account debtor arising from the sale or lease by Debtor of goods or the
rendition by Debtor of services and is not subject to contra accounts, setoffs,
defenses or counterclaims by or available to account debtors obligated on
the
accounts except as disclosed by Debtor to Secured Party from time to time
in
writing. The amount shown as to each account on Debtor's books is the true
and
undisputed amount owing and unpaid thereon, subject only to discounts,
allowances, rebates, credits and adjustments to which the account debtor
has a
right and which have been disclosed to Secured Party in writing.
7
(l) Chattel
Paper, Documents and Instruments.
The
chattel paper, documents and instruments of Debtor pledged hereunder have
only
one original counterpart and no party other than Debtor or Secured Party
is in
actual or constructive possession of any such chattel paper, documents or
instruments. No chattel paper is electronic chattel paper.
(m) Patents.
Schedule
2
includes
a complete and correct list of each Patent in which Debtor has any interest
(whether as owner, licensee, or otherwise), including the name of the registered
owner, the nature of Debtor's interest, the Patent registration number, the
date
of Patent issuance, and the country issuing the Patent.
(n) Patent
Applications.
Schedule
2
also
includes a complete and correct list of each Patent application in which
Debtor
has any interest (whether as owner, licensee, or otherwise), including the
name
of the person applying to be the registered owner, the nature of Debtor's
interest, the Patent application number, the date of Patent filing, and the
country with which the Patent application was filed.
(o) Trademarks.
Schedule
3
is a
complete and correct list of each Trademark in which Debtor has any interest
(whether as owner, licensee, or otherwise), including the name of the registered
owner, the nature of Debtor's interest, the registered Trademark, the Trademark
registration number, the international class covered, the goods and services
covered, the date of Trademark registration, and the country registering
the
Trademark.
(p) Trademark
Applications.
Schedule
3
also
includes a complete and correct list of each Trademark application in which
Debtor has any interest (whether as owner, licensee, or otherwise), including
the name of the person applying to be the registered owner, the nature of
Debtor's interest, the Trademark the subject of the application, the Trademark
application serial number, the international class covered, the goods and
services covered, the date of Trademark application filing, and the country
with
which the Trademark application was filed.
(q) Copyrights.
Schedule
4
includes
a complete and correct list of each Copyright in which Debtor has any interest
(whether as owner, licensee, or otherwise), including the name of the registered
owner, the nature of Debtor's interest, the registered Copyright, the date
of
Copyright issuance, and the country issuing the Copyright.
(r) Copyright
Applications.
Schedule
4
also
includes a complete and correct list of each Copyright application in which
Debtor has any interest (whether as owner, licensee, or otherwise), including
the name of the person applying to be the registered owner, the nature of
Debtor's interest, the Copyright the subject of the application, the date
of
Copyright application filing, and the country with which the Copyright
application was filed.
8
(s) Commercial
Tort Claims.
Schedule
5
is a
complete and correct list of all commercial tort claims in which Debtor has
any
interest, including the complete case name or style, the case number, and
the
court or other governmental authority in which the case is pending.
(t) Deposit
Accounts.
Schedule
6
is a
complete and correct list of all deposit accounts maintained by or in which
Debtor has any interest and correctly describes the bank in which such account
is maintained (including the specific branch), the street address (including
the
specific branch) and ABA number of such bank, the account number, and account
type.
(u) Commodity
Accounts.
Schedule
7
includes
a complete and correct list of all commodity accounts in which Debtor has
any
interest, including the complete name and identification number of the account,
a description of the governing agreement, and the name and street address
of the
commodity intermediary maintaining the account.
(v) Securities
Accounts.
Schedule
7
also
includes a complete and correct list of all securities accounts in which
Debtor
has any interest, including the complete name and identification number of
the
account, a description of the governing agreement, and the name and street
address of the securities intermediary maintaining the account.
(w) Letters
of Credit.
Schedule
8
is a
complete and correct list of all letters of credit in which Debtor has any
interest (other than solely as an applicant) and correctly describes the
bank
which issued the letter of credit, and the letter of credit's number, issue
date, expiry, and face amount.
(x) Equity
Interests.
Schedule 9
is a
complete and correct list of all the issued and outstanding stock, partnership
interests, limited liability company membership interests, or other equity
interest owned by the Debtor and the record and beneficial owners of such
stock,
partnership interests, membership interests or other equity interests. All
of
the Pledged Equity Interests have been duly and validly issued, and the Pledged
Stock is fully paid and nonassessable. All of the Pledged Equity Interests
consisting of certificated securities have been delivered to the Secured
Party.
Other than Pledged Partnership Interests and Pledged LLC Interests constituting
general intangibles, there are no Pledged Equity Interests other than that
represented by certificated securities in the possession of the Secured Party.
There are no restrictions in any organization document governing any Pledged
Equity Interest or any other document related thereto which would limit or
restrict (i) the grant of a lien in the Pledged Equity Interests,
(ii) the perfection of such lien or (iii) the exercise of remedies in
respect of such perfected lien in the Pledged Equity Interests as contemplated
by this Agreement. Upon the exercise of remedies in respect of Pledged
Partnership Interests and Pledged LLC Interests, a transferee or assignee
of a
partnership interests or membership interest, as the case may be, of such
partnership or limited liability company, as the case may be, shall become
a
partner or member, as the case may be, of such partnership or limited liability
company, as the case may be, entitled to participate in the management thereof
and, upon the transfer of the entire interest of the Debtor, the Debtor ceases
to be a partner or member, as the case may be.
9
4. Affirmative
Covenants.
In
addition to all covenants and agreements of Debtor set forth in the Loan
Documents, which are incorporated herein by this reference, Debtor will comply
with the covenants contained in this Section
4
at all
times during the period of time this Agreement is effective unless Secured
Party
shall otherwise consent in writing.
(a) Ownership
and Liens.
Debtor
will maintain good and marketable title to all Collateral free and clear
of all
liens or adverse claims, except for the security interest created by this
Agreement and the security interests and other encumbrances expressly permitted
herein or by the other Loan Documents (including any Permitted Liens). Debtor
will not permit any dispute, right of setoff, counterclaim or defense to
exist
with respect to all or any part of the Collateral. Debtor will cause any
financing statement or other security instrument with respect to the Collateral
to be terminated, except as may exist or as may have been filed in favor
of
Secured Party or as permitted under this Agreement. Debtor hereby irrevocably
appoints Secured Party as Debtor's attorney-in-fact, such power of attorney
being coupled with an interest, with full authority in the place and stead
of
Debtor and in the name of Debtor or otherwise, for the purpose of terminating
any financing statements currently filed with respect to the Collateral except
with respect to Permitted Liens. Debtor will defend at its expense Secured
Party's right, title and security interest in and to the Collateral against
the
claims of any third party.
(b) Further
Assurances.
Debtor
will from time to time at its expense promptly execute and deliver all further
instruments and documents and take all further action necessary or appropriate
or that Secured Party may request in order (i) to perfect and protect the
security interest created or purported to be created hereby and the first
priority of such security interest, (ii) to enable Secured Party to exercise
and
enforce its rights and remedies hereunder in respect of the Collateral, and
(iii) to otherwise effect the purposes of this Agreement, including without
limitation: (A) executing (if requested) and filing such financing or
continuation statements, or amendments thereto; and (B) furnishing (if
requested) to Secured Party from time to time statements and schedules further
identifying and describing the Collateral and such other reports in connection
with the Collateral, all in reasonable detail satisfactory to Secured
Party.
(c) Inspection
of Collateral.
Debtor
will keep adequate records concerning the Collateral. Debtor will permit
Secured
Party and all representatives and agents appointed by Secured Party to inspect
any of the Collateral and the books and records of or relating to the Collateral
at any time.
(d) Payment
of Taxes; Claims.
Debtor
will timely pay all property and other taxes, assessments and governmental
charges or levies and all other claims imposed upon the Collateral or any
part
thereof. Notwithstanding any other provision contained in this subsection,
Secured
Party may at its discretion exercise its rights under subsection 6(c)
of this
Agreement at any time to pay such taxes, assessments, governmental charges,
interest, costs and penalties.
(e) Mortgagee's
and Landlord's Waivers.
If
required by the Secured Party, Debtor shall use its best efforts to cause
each
mortgagee of real property owned by Debtor and each landlord of real property
leased by Debtor to execute and deliver agreements satisfactory in form and
substance to Secured Party by which such mortgagee or landlord waives or
subordinates any rights it may have in the Collateral.
10
(f) Control
Agreements.
Debtor
will cooperate with Secured Party in obtaining a control agreement in form
and
substance satisfactory to Secured Party with respect to Collateral consisting
of:
(i) Deposit
accounts;
(ii) Investment
property;
(iii) Letter-of-credit
rights; and
(iv) Electronic
chattel paper.
(g) Condition
of Goods.
Debtor
will maintain, preserve, protect and keep all Collateral which constitutes
goods
in good condition, repair and working order and will cause such Collateral
to be
used and operated in good and workmanlike manner, in accordance with applicable
laws and in a manner which will not make void or cancelable any insurance
with
respect to any material portion of such Collateral. Debtor will promptly
make or
cause to be made all repairs, replacements and other improvements to or in
connection with the Collateral which Secured Party may reasonably request
from
time to time.
(h) Insurance.
Debtor
will, at its own expense, maintain insurance with respect to all Collateral
in a
manner in which similarly situated entities maintain insurance. If requested
by
Secured Party, each policy for property damage insurance shall provide for
all
losses to be paid directly to Secured Party. If requested by Secured Party,
each
policy of insurance maintained by Debtor shall (i) name
Debtor and Secured Party as insured parties thereunder (without any
representation or warranty by or obligation upon Secured Party) as their
interests may appear, (ii)
contain
the agreement by the insurer that any loss thereunder shall be payable to
Secured Party notwithstanding any action, inaction or breach of representation
or warranty by Debtor, (iii) provide
that there shall be no recourse against Secured Party for payment of premiums
or
other amounts with respect thereto, and (iv) provide
that at least thirty (30) days prior written notice of cancellation or of
lapse
shall be given to Secured Party by the insurer. Debtor will, if requested
by
Secured Party, deliver to Secured Party original or duplicate policies of
such
insurance and, as often as Secured Party may reasonably request, a report
of a
reputable insurance broker with respect to such insurance. Debtor will also,
at
the request of Secured Party, duly execute and deliver instruments of assignment
of such insurance policies and cause the respective insurers to acknowledge
notice of such assignment. All insurance payments in respect of loss of or
damage to any Collateral shall be paid to Secured Party.
(i) Accounts
and General Intangibles.
Debtor
will, except as otherwise provided in subsection 6(e)
of this
Agreement, collect, at Debtor's own expense, all amounts due or to become
due
under each of the accounts and general intangibles. In connection with such
collections, Debtor may and, at Secured Party's direction, will take such
action
not otherwise forbidden by subsection 5(e)
of this
Agreement as Debtor or Secured Party may reasonably deem necessary or advisable
to enforce collection or performance of each of the accounts and general
intangibles. Debtor will also duly perform and cause to be performed all
of its
obligations with respect to the goods or services, the sale or lease or
rendition of which gave rise or will give rise to each account and all of
its
obligations to be performed under or with respect to the general intangibles.
Debtor also covenants and agrees to take any action and/or execute any documents
that Secured Party may reasonably request in order to comply with the Federal
Assignment of Claims Act, as amended.
11
(j) Chattel
Paper, Documents and Instruments.
Debtor
will take such action as may be requested by Secured Party in order to cause
any
chattel paper, documents or instruments to be valid and enforceable and will
cause all chattel paper to have only one original counterpart. Upon request
by
Secured Party, Debtor will deliver to Secured Party all originals of chattel
paper, documents or instruments and will xxxx all chattel paper with a legend
indicating that such chattel paper is subject to the security interest granted
hereunder.
(k) Delivery
of Security Collateral.
All
certificates constituting or evidencing the Collateral shall be delivered
to and
held by or on behalf of the Secured Party pursuant hereto and shall be in
suitable form for transfer by delivery, or shall be accompanied by undated
and
duly executed instruments of transfer or assignment in blank, all in form
and
substance reasonably satisfactory to the Secured Party. If an Event of Default
exists, the Secured Party has the right, without notice to the Debtor, to
transfer to or to register in the name of the Secured Party or any of its
nominees any or all of such Collateral. In addition, the Secured Party has
the
right at any time, with the consent of the Debtor prior to an Event of Default,
to exchange certificates or instruments representing or evidencing Collateral
for certificates or instruments of smaller or larger denominations.
(l) Patents,
Trademarks, and Copyrights.
(i) Debtor
shall use commercially reasonable means to cause fully executed security
agreements in the form of this Agreement and containing a description of
all
Collateral consisting of Patents, Trademarks, Copyrights, and IP Licenses
to be recorded by the United States Patent and Trademark Office within three
months after the execution of this Agreement with respect to United States
Patents and Trademarks and by the United States Copyright Office within one
month after the execution of this Agreement with respect to United States
registered Copyrights, and otherwise as may be required pursuant to the laws
of
any other necessary jurisdiction, to protect the validity of and to establish
a
legal, valid, and perfected security interest in favor of Secured Party in
respect of all Collateral consisting of Patents, Trademarks, Copyrights,
and
IP Licenses in which a security interest may be perfected by filing,
recording, or registration in the United States and its territories and
possessions, or in any other necessary jurisdiction, and no further or
subsequent filing, refiling, recording, rerecording, registration, or
reregistration is necessary (other than such actions as are necessary to
perfect
the security interest with respect to any Collateral consisting of Patents,
Trademarks, Copyrights, and IP Licenses (or registration or application for
registration thereof) acquired or developed after the date hereof).
12
(ii) Debtor
(either itself or through licensees or sublicensees) will not do any act,
or
omit to do any act, whereby any Patent which is material to the conduct of
Debtor's business may become invalidated or dedicated to the public, and
shall
continue to xxxx any products covered by a Patent with the relevant patent
number as necessary and sufficient to establish and preserve its maximum
rights
under applicable laws.
(iii) Debtor
(either itself or through licensees or sublicensees) will, for each Trademark
material to the conduct of Debtor's business, (A) maintain
such Trademark in full force free from any claim of abandonment or invalidity
for non-use, (B) maintain
the quality of products and services offered under such Trademark, (C) display
such Trademark with notice of United States federal or foreign registration
to
the extent necessary and sufficient to establish and preserve its maximum
rights
under applicable law, and (D) not
use or permit the use of such Trademark in violation of any third party
rights.
(iv) Debtor
(either itself or through licensees or sublicensees) will, for each work
covered
by a Copyright material to the conduct of Debtor's business, continue to
publish, reproduce, display, adopt, and distribute the work with appropriate
copyright notice as necessary and sufficient to establish and preserve its
maximum rights under applicable laws.
(v) In
no
event shall Debtor, either itself or through any agent, employee, licensee,
or
designee, file an application for any Patent, Trademark, or Copyright (or
for
the registration of any Patent, Trademark or Copyright) with the United States
Patent and Trademark Office, United States Copyright Office, or any governmental
authority in any jurisdiction, unless it promptly informs Secured Party,
and,
upon request of Secured Party, executes and delivers any and all agreements,
instruments, documents, and papers as Secured Party may reasonably request
to
evidence Secured Party's security interest in such Patent, Trademark, or
Copyright, and Debtor hereby appoints Secured Party as its attorney-in-fact
to
execute and file such writings for the foregoing purposes.
(m) Legal
Opinion.
Contemporaneously with the execution of this Agreement, the Debtor's counsel
shall provide an opinion in a form acceptable to the Secured Party and its
counsel that each of the Loan Documents have been duly authorized, are valid
and
binding instruments enforceable against the Debtor in accordance with their
respective terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, arrangement, moratorium or other similar laws affecting
creditors' rights generally, and subject to general equity principles and
principles of public policy.
5. Negative
Covenants.
Debtor
will comply with the covenants contained in this Section 5 at all times during
the period of time this Agreement is effective, unless Secured Party shall
otherwise consent in writing.
13
(a) Transfer
or Encumbrance.
Except
in the ordinary course of the Debtor's business, Debtor will not (i)
sell,
assign (by operation of law or otherwise), transfer, exchange, lease or
otherwise dispose of any of the Collateral, (ii) xxxxx
x xxxx or security interest in or execute, authorize, file or record any
financing statement or other security instrument with respect to the Collateral
to any party other than Secured Party, or (iii) deliver
actual or constructive possession of any of the Collateral to any party other
than Secured Party.
(b) Impairment
of Security Interest.
Debtor
will not take or fail to take any action which would in any manner impair
the
value or enforceability of Secured Party's security interest in any
Collateral.
(c) Possession
of Collateral.
Debtor
will not cause or permit the removal of any Collateral from its possession,
control and risk of loss, nor will Debtor cause or permit the removal of
any
Collateral (or records concerning the Collateral) from the address on the
first
page hereof other than (i) as
permitted by Subsection 5(a),
or
(ii) in
connection with the possession of any Collateral by Secured Party or by its
bailee. Upon the Secured Party's request, if any Collateral is in the possession
of a third party, Debtor will join with Secured Party in notifying the third
party of Secured Party's security interest therein and obtaining an
acknowledgment from the third party that it is holding the Collateral for
the
benefit of Secured Party.
(d) Goods.
Debtor
will not permit any Collateral which constitutes goods to at any time
(i) be
covered by any document except documents in the possession of the Secured
Party,
(ii) become
so related to, attached to or used in connection with any particular real
property so as to become a fixture upon such real property, or (iii) be
installed in or affixed to other goods so as to become an accession to such
other goods unless such other goods are subject to a perfected first priority
security interest under this Agreement.
(e) Compromise
of Collateral.
Debtor
will not adjust, settle, compromise, amend or modify any Collateral, except
an
adjustment, settlement, compromise, amendment or modification in good faith
and
in the ordinary course of business; provided, however, this exception shall
automatically terminate if an Event of Default exists or upon Secured Party's
written request. Debtor shall provide to Secured Party such information
concerning (i)
any
adjustment, settlement, compromise, amendment or modification of any Collateral,
and (ii)
any
claim asserted by any account debtor for credit, allowance, adjustment, dispute,
setoff or counterclaim, as Secured Party may request from time to
time.
(f) Financing
Statement Filings.
Debtor
recognizes that financing statements pertaining to the Collateral have been
or
may be filed in one or more of the following jurisdictions: the location
of
Debtor's principal place of business, the location of Debtor's chief executive
office, or other such place as the Debtor may be "located" under the provisions
of the Code or where Debtor maintains any Collateral, or has its records
concerning any Collateral, as the case may be. Without limitation of any
other
covenant herein, Debtor will neither cause or permit any change in the location
of (i) any
Collateral, (ii) any
records concerning any Collateral, or (iii) Debtor's
principal place of business, or the location of Debtor's chief executive
office,
as the case may be, to a jurisdiction other than as represented in subsection 3(g)
of this
Agreement, nor will Debtor change its name or the Organizational Information
as
represented in subsection 3(g)
of this
Agreement, unless Debtor shall have notified Secured Party in writing of
such
change at least thirty (30) days prior to the effective date of such change,
and
shall have first taken all actions required by Secured Party for the purpose
of
further perfecting or protecting the security interest in favor of Secured
Party
in the Collateral. In any written notice furnished pursuant to this subsection,
Debtor
will expressly state that the notice is required by this Agreement and contains
facts that may require additional filings of financing statements or other
notices for the purpose of continuing perfection of Secured Party's security
interest in the Collateral.
14
(g) Marking
of Chattel Paper.
Debtor
will not create any chattel paper without placing a legend on the chattel
paper
acceptable to Secured Party indicating that Secured Party has a security
interest in the chattel Paper. Debtor will not permit any chattel paper to
be
electronic chattel paper.
(h) Deposit
Accounts, Investment Property.
Debtor
shall not establish or maintain, or have any interest in, any (i) deposit
account not listed on Schedule 6,
(ii) commodity
account not listed on Schedule 7,
or
(iii) securities
account not listed on Schedule 7.
6. Rights
of Secured Party.
Secured
Party shall have the rights contained in this Section 6 at all times during
the
period of time this Agreement is effective.
(a) Additional
Financing Statements Filings.
Debtor
hereby authorizes Secured Party to file, without the signature or further
authentication of Debtor, one or more financing or continuation statements,
and
amendments thereto, relating to the Collateral. Debtor further agrees that
a
carbon, photographic or other reproduction of this Security Agreement or
any
financing statement describing any Collateral is sufficient as a financing
statement and may be filed in any jurisdiction Secured Party may deem
appropriate.
(b) Power
of Attorney.
Debtor
hereby irrevocably appoints Secured Party as Debtor's attorney-in-fact, such
power of attorney being coupled with an interest, with full authority in
the
place and stead of Debtor and in the name of Debtor or otherwise, exercisable
if
an Event of Default exists, to take any action and to execute any instrument
which Secured Party may deem necessary or appropriate to accomplish the purposes
of this Agreement, including without limitation: (i) to
obtain and adjust insurance required by Secured Party hereunder; (ii) to
demand, collect, xxx for, recover, compound, receive and give acquittance
and
receipts for moneys due and to become due under or in respect of the Collateral;
(iii) to
receive, endorse and collect any drafts or other instruments, documents and
chattel paper in connection with clause (i) or (ii) above; and (iv) to file
any claims or take any action or institute any proceedings which Secured
Party
may deem necessary or appropriate for the collection and/or preservation
of the
Collateral or otherwise to enforce the rights of Secured Party with respect
to
the Collateral.
15
(c) Performance
by Secured Party.
If
Debtor fails to perform any agreement or obligation provided herein, Secured
Party may itself perform, or cause performance of, such agreement or obligation,
and the expenses of Secured Party incurred in connection therewith shall
be a
part of the Indebtedness, secured by the Collateral and payable by Debtor
on
demand.
(d) Debtor's
Receipt of Proceeds.
All
amounts and proceeds (including instruments and writings) received by Debtor
in
respect of accounts or general intangibles shall be received in trust for
the
benefit of Secured Party hereunder and, upon request of Secured Party upon
an
Event Default, shall be segregated from other property of Debtor and shall
be
forthwith delivered to Secured Party in the same form as so received (with
any
necessary endorsement).
(e) Notification
of Account Debtors.
Secured
Party may at its discretion from time to time, upon an Event of Default,
notify
any or all obligors under any accounts or general intangibles (i)
of
Secured Party's security interest in such accounts or general intangibles
and
direct such obligors to make payment of all amounts due or to become due
to
Debtor thereunder directly to Secured Party, and (ii) to
verify the accounts or general intangibles with such obligors. Upon an Event
of
Default, Secured Party shall have the right, at the expense of Debtor, to
enforce collection of any such accounts or general intangibles and adjust,
settle or compromise the amount or payment thereof, in the same manner and
to
the same extent as Debtor.
(f) Licenses.
For
purposes of enabling Secured Party to exercise rights and remedies under
this
Agreement, Debtor grants to Secured Party an irrevocable, nonexclusive license
(exercisable without payment of royalty or other compensation to Debtor or
any
other person, provided,
that if
the license granted to Secured Party is a sublicense, Debtor shall be solely
responsible for, and indemnify Secured Party against, any royalty or other
compensation payable to Debtor's licensor or other person) to use all of
Debtor's software, and including in such license reasonable access to all
media
in which any of the licensed items may be recorded and all related manuals.
For
the purpose of enabling Secured Party to exercise rights and remedies under
this
Agreement, Debtor grants to Secured Party an irrevocable, nonexclusive license
(exercisable without payment of royalty or other compensation to Debtor or
any
other person) to use, license, or sub-license any of the Collateral consisting
of Patents, Trademarks, Copyrights, and IP Licenses and wherever the same
may be located, and including in such license reasonable access to all media
in
which any of the licensed items may be recorded or stored and to all software
used for the use, compilation, or printout thereof. The use of such license
by
Secured Party shall be exercised, at the option of Secured Party, if an Event
of
Default exists; provided
that any
license, sub-license, or other transaction entered into by Secured Party
in
accordance herewith shall be binding upon Debtor notwithstanding any subsequent
cure of an Event of Default.
16
7. Events
of Default.
Each of
the following constitutes an "Event
of Default"
under
this Agreement:
(a) Default
Under Note or Agreement.
Any
failure to timely make any payment required to be made under this Agreement
or
under the Note, or the occurrence of a default or breach of any term or
condition of the Note; or
(b) Default
Under This Agreement.
Any
failure of Debtor to comply with, or any breach by Debtor of, any term of
Article 5 of this Agreement, or any failure of Debtor to comply with, or
any
breach by Debtor of, any other term of this Agreement or any term of any
other
Loan Document that has occurred and has continued for 20 days after actual
notice thereof by any executive officer of Debtor (except with respect to
payment defaults which are covered by subsection (a) above); or
(c) False
Representation.
Any
representation of Debtor contained herein is not true and correct in any
material respect on or as of the date made; or
(d) Execution
on Property.
If
Debtor fails to have discharged within a period of sixty (60) days any
attachment, sequestration or similar writ levied upon any property of Debtor
having a value of or greater than $50,000 (either as to a single asset or
cumulatively as to separate assets), or any property of Debtor having a value
of
or greater than $50,000 (either as to a single asset or cumulatively as to
separate assets) is taken on execution or other process of law in any action
against Debtor; or any attachment, sequestration or similar writ is levied
upon
any property of Debtor having a value of or greater than $50,000 (either
as to a
single asset or cumulatively as to separate assets); or
(e) Abandonment.
Debtor
abandons any Collateral having a value of or greater than $50,000 (either
as to
a single asset or cumulatively as to separate assets), other than Collateral
that is obsolete or no longer useful in the Debtor's business; or
(f) Action
by Other Lienholder.
The
holder of any lien on the Collateral (without hereby implying the consent
of
Secured Party to the existence or creation of any such lien on the Collateral)
or any other asset of Debtor having a value of $50,000 or greater declares
a
default thereunder or institutes foreclosure or other proceedings for the
enforcement of its remedies thereunder; or
(g) Search
Report; Opinion.
Secured
Party shall receive at any time following the execution of this Agreement
a
search report or an opinion of counsel indicating that Secured Party's security
interest is not prior to all other liens or security interests (other than
Permitted Liens) reflected in the report or opinion.
8. Remedies
and Related Rights.
If an
Event of Default shall have occurred, and without limiting any other rights
and
remedies provided herein, under any of the other Loan Documents or otherwise
available to Secured Party, Secured Party may exercise one or more of the
rights
and remedies provided in this Section.
17
(a) Remedies.
Secured
Party may from time to time at its discretion, without limitation and without
notice except as expressly provided in any of the Loan Documents:
(i) exercise
in respect of the Collateral all the rights and remedies of a secured party
under the Code (whether or not the Code applies to the affected
Collateral);
(ii) require
Debtor to, and Debtor hereby agrees that it will at its expense and upon
request
of Secured Party, assemble the Collateral as directed by Secured Party and
make
it available to Secured Party at a place to be designated by Secured Party
which
is reasonably convenient to both parties;
(iii) reduce
its claim to judgment or foreclose or otherwise enforce, in whole or in part,
the security interest granted hereunder by any available judicial
procedure;
(iv) sell
or
otherwise dispose of, at its office, on the premises of Debtor or elsewhere,
the
Collateral, as a unit or in parcels, by public or private proceedings, and
by
way of one or more contracts (it being agreed that the sale or other disposition
of any part of the Collateral shall not exhaust Secured Party's power of
sale,
but sales or other dispositions may be made from time to time until all of
the
Collateral has been sold or disposed of or until the Indebtedness has been
paid
and performed in full), and at any such sale or other disposition it shall
not
be necessary to exhibit any of the Collateral;
(v) buy
the
Collateral, or any portion thereof, at any public sale;
(vi) buy
the
Collateral, or any portion thereof, at any private sale if the Collateral
is of
a type customarily sold in a recognized market or is of a type which is the
subject of widely distributed standard price quotations;
(vii) apply
for
the appointment of a receiver for the Collateral, and Debtor hereby consents
to
any such appointment; and
(viii) at
its
option, retain the Collateral in satisfaction of the Indebtedness whenever
the
circumstances are such that Secured Party is entitled to do so under the
Code or
otherwise, to the full extent permitted by the Code, Secured Party shall
be
permitted to elect whether such retention shall be in full or partial
satisfaction of the Indebtedness.
In
connection with the exercise by Secured Party of rights under this Agreement
that effects the disposition of or use of any Collateral, it may be necessary
to
obtain the prior consent or approval of governmental authorities and other
persons, to a transfer or assignment of Collateral. If an Event of Default
exists, Debtor shall execute, deliver, and file, and hereby appoints (to
the
extent not prohibited by applicable law) Secured Party as its attorney, to
execute, deliver, and file on Debtor's behalf and in Debtor's name, all
applications, certificates, filings, instruments, and other documents (including
without limitation any application for an assignment or transfer of control
or
ownership) that may be necessary or appropriate, in Secured Party's opinion,
to
obtain such consents or approvals. Debtor shall use its best efforts to obtain
such consents or approvals if an Event of Default exists. Debtor acknowledges
that there is no adequate remedy at law for failure by it to comply with
the
provisions of this Section
and that
such failure would not be adequately compensable in damages, and therefore
agrees that this Section
may be
specifically enforced.
18
In
the
event Secured Party shall elect to sell the Collateral, Secured Party may
sell
the Collateral without giving any warranties and shall be permitted to
specifically disclaim any warranties of title or the like. Further, if Secured
Party sells any of the Collateral on credit, Debtor will be credited only
with
payments actually made by the purchaser, received by Secured Party and applied
to the Indebtedness. In the event the purchaser fails to pay for the Collateral,
Secured Party may resell the Collateral and Debtor shall be credited with
the
proceeds of the sale. Debtor agrees that in the event Debtor is entitled
to
receive any notice under the Uniform Commercial Code, as it exists in the
state
governing any such notice, of the sale or other disposition of any Collateral,
reasonable notice shall be deemed given when such notice is deposited in
a
depository receptacle under the care and custody of the United States Postal
Service, postage prepaid, at such party's address set forth on the first
page
hereof, ten (10) days prior to the date of any public sale, or after which
a
private sale, of any of such Collateral is to be held. Secured Party shall
not
be obligated to make any sale of Collateral regardless of notice of sale
having
been given. Secured Party may adjourn any public or private sale from time
to
time by announcement at the time and place fixed therefor, and such sale
may,
without further notice, be made at the time and place to which it was so
adjourned.
(b) Private
Sale; Further Approvals.
(i) Debtor
recognizes that Secured Party may be unable to effect a public sale of all
or
any part of the Collateral because of restrictions in applicable laws and
contractual restrictions and that Secured Party may, therefore, determine
to
make one or more private sales of any such Collateral to a restricted group
of
purchasers who will be obligated to agree, among other things, to acquire
such
Collateral subject to applicable laws and contractual restrictions. Debtor
acknowledges that any such private sale may be at prices and other terms
less
favorable than what might have been obtained at a public sale and,
notwithstanding the foregoing, agrees that each such private sale shall be
deemed to have been made in a commercially reasonable manner.
(ii) In
connection with the exercise by Secured Party of its rights hereunder that
effects the disposition of or use of any Collateral, it may be necessary
to
obtain the prior consent or approval of governmental authorities and other
persons to a transfer or assignment of Collateral.
(iii) Debtor
agrees, if an Event of Default exists, to execute, deliver, and file, and
authorizes Secured Party pursuant to the power of attorney herein granted,
to
execute, deliver, and file on Debtor's behalf and in Debtor's name, all
applications, certificates, filings, instruments, and other documents (including
without limitation any application for an assignment or transfer of control
or
ownership) that may be necessary or appropriate, in Secured Party's opinion,
and
to obtain such consents, waivers, and approvals under applicable laws and
agreements prior to an Event of Default. Debtor acknowledges that there is
no
adequate remedy at law for failure by it to comply with the provisions of
this
Section
and that
such failure would not be adequately compensable in damages, and therefore
agrees that this Section
may be
specifically enforced.
19
(c) Application
of Proceeds.
Secured
Party shall apply or use any cash held by Secured Party as Collateral, and
any
cash proceeds received by Secured Party in respect of any sale or other
disposition of, collection from, or other realization upon, all or any part
of
the Collateral as follows:
(i) to
the
repayment or reimbursement of the costs and expenses (including, without
limitation, attorneys' fees and expenses) incurred by Secured Party in
connection with (A) the
custody, preservation, use or operation of, or the sale of, collection from,
or
other realization upon, the Collateral, and (B) the
exercise or enforcement of any of the rights and remedies of Secured Party
hereunder; and
(ii) to
the
payment of any other amounts required by applicable law (including without
limitation, Section 9-615(a)(3) of the Code or any other applicable statutory
provision).
(d) Deficiency.
In the
event that the proceeds of any sale of, collection from, or other realization
upon, all or any part of the Collateral by Secured Party are insufficient
to pay
all amounts to which Secured Party is legally entitled, Debtor shall be liable
for the deficiency, together with interest thereon as provided in the Loan
Documents, to the full extent not prohibited by law.
(e) Non-Judicial
Remedies.
In
granting to Secured Party the power to enforce its rights hereunder without
prior judicial process or judicial hearing, Debtor expressly waives, renounces
and knowingly relinquishes any legal right which might otherwise require
Secured
Party to enforce its rights by judicial process. Debtor recognizes and concedes
that non-judicial remedies are consistent with the usage of trade, are
responsive to commercial necessity and are the result of a bargain at arm's
length. Nothing herein is intended to prevent Secured Party or Debtor from
resorting to judicial process at either party's option.
(f) Other
Recourse.
Debtor
waives any right to require Secured Party to proceed against any third party,
exhaust any Collateral or other security for the Indebtedness, or to have
any
third party joined with Debtor in any suit arising out of the Indebtedness
or
any of the Loan Documents, or pursue any other remedy available to Secured
Party. Debtor further waives any and all notice of acceptance of this Agreement
and of the creation, modification, rearrangement, renewal or extension of
the
Indebtedness. Debtor further waives any defense arising by reason of any
disability or other defense of any third party or by reason of the cessation
from any cause whatsoever of the liability of any third party. Until all
of the
Indebtedness shall have been paid in full, Debtor shall have no right of
subrogation and Debtor waives the right to enforce any remedy which Secured
Party has or may hereafter have against any third party, and waives any benefit
of and any right to participate in any other security whatsoever now or
hereafter held by Secured Party. Debtor authorizes Secured Party, and without
notice or demand and without any reservation of rights against Debtor and
without affecting Debtor's liability hereunder or on the Indebtedness to
(if an
Event of Default exists) (i)
take or
hold any other property of any type from any third party as security for
the
Indebtedness, and exchange, enforce, waive and release any or all of such
other
property, (ii)
apply
such other property and direct the order or manner of sale thereof as Secured
Party may in its discretion determine, (iii)
renew,
extend, accelerate, modify, compromise, settle or release any of the
Indebtedness or other security for the Indebtedness, (iv)
waive,
enforce or modify any of the provisions of any of the Loan Documents executed
by
any third party, and (v)
release
or substitute any third party.
20
(g) Rights
to Dividends and Distributions.
With
respect to any Securities constituting a part of the Collateral, the Secured
Party shall have authority if an Event of Default exists and is continuing,
either to have the same registered in the Secured Party's name or in the
name of
a nominee, and, with or without such registration, to demand of the issuer
thereof, and to receive and receipt for, any and all dividends (including
any
stock or similar dividend or distribution) payable in respect thereof, whether
they be ordinary or extraordinary. The Secured Party shall send to the Debtor
notice of the Secured Party's election to take any action described in the
preceding sentence; provided any failure of the Debtor to receive any such
notice shall not invalidate any action taken by the Secured Party or impair
any
of its rights. If the Debtor shall become entitled to receive or shall receive
any interest in or certificate (including, without limitation, any interest
in
or certificate representing a dividend or a distribution in connection with
any
reclassification, increase, or reduction of capital, or issued in connection
with any reorganization), or any option or rights arising from or relating
to
any of the Collateral, whether as an addition to, in substitution of, as
a
conversion of, or in exchange for any of the Collateral, or otherwise, the
Debtor agrees to accept the same as the Secured Party's agent and to hold
the
same in trust on behalf of and for the benefit of the Secured Party, and
to
deliver the same immediately to the Secured Party in the exact form received,
with appropriate undated stock or similar powers, duly executed in blank,
to be
held by the Secured Party, subject to the terms hereof, as Collateral. Unless
an
Event of Default exists, the Debtor shall be entitled to receive all cash
dividends and distributions paid in respect of any of the Collateral (subject
to
the restrictions of any other Loan Document). The Secured Party shall be
entitled to all dividends and distributions, and to any sums paid upon or
in
respect of any Collateral, upon the liquidation, dissolution, or reorganization
of the issuer thereof which shall be paid to the Secured Party to be held
by it
as additional collateral security for and application to the Secured Obligations
at the discretion of the Secured Party. All dividends paid or distributed
in
respect of the Collateral which are received by the Debtor in violation of
this
Agreement shall, until paid or delivered to the Secured Party, be held by
the
Debtor in trust as additional Collateral for the Secured
Obligations.
(h) Right
of the Secured Party to Notify Issuers.
If
an
Event of Default exists and is continuing and at such other times as the
Secured
Party is entitled to receive dividends and other property in respect of or
consisting of any Collateral which is or represents an equity or ownership
interest in any person ("Securities
Collateral"),
the
Secured Party may notify issuers of the Securities Collateral to make payments
of all dividends and distributions directly to the Secured Party and the
Secured
Party may take control of all Proceeds of any Securities Collateral. Until
the
Secured Party elects to exercise such rights, if an Event of Default exists,
the
Debtor, as agent of the Secured Party, shall collect and segregate all dividends
and other amounts paid or distributed with respect to the Securities
Collateral.
21
(i) Securities
Act.
Because
of the Securities Act of 1933, as amended ("Securities
Act"),
and
other laws, including without limitation state "blue sky" laws, or contractual
restrictions or agreements, there may be legal restrictions or limitations
affecting the Secured Party in any attempts to dispose of the Collateral
and the
enforcement of rights under this Agreement. For these reasons, the Secured
Party
is authorized by the Debtor, but not obligated, if any Event of Default exists,
to sell or otherwise dispose of any of the Collateral at private sale, subject
to an investment letter, or in any other manner which will not require the
Collateral, or any part thereof, to be registered in accordance with the
Securities Act, or any other law. The Secured Party is also hereby authorized
by
the Debtor, but not obligated, to take such actions, give such notices, obtain
such consents, and do such other things as the Secured Party may deem required
or appropriate under the Securities Act or other securities laws or other
laws
or contractual restrictions or agreements in the event of a sale or disposition
of any Collateral. The Debtor understands that the Secured Party may in its
discretion approach a restricted number of potential purchasers and that
a sale
under such circumstances may yield a lower price for the Collateral than
would
otherwise be obtainable if same were registered and/or sold in the open market.
No sale so made in good faith by the Secured Party shall be deemed to be
not
"commercially reasonable" because so made. The Debtor agrees that if an Event
of
Default exists, and the Secured Party sells the Collateral or any portion
thereof at any private sale or sales, the Secured Party shall have the right
to
rely upon the advice and opinion of appraisers and other persons, which
appraisers and other persons are acceptable to the Secured Party, as to the
best
price reasonably obtainable upon such a private sale thereof. In the absence
of
bad faith or gross negligence, such reliance shall be prima
facie
evidence
that the Secured Party handled such matter in a commercially reasonable manner
under applicable law.
9. Indemnity.
DEBTOR
HEREBY INDEMNIFIES AND AGREES TO HOLD HARMLESS SECURED PARTY, AND ITS OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS AND REPRESENTATIVES (EACH AN "INDEMNIFIED
PERSON")
FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, CLAIMS, LOSSES, DAMAGES,
PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS OF
ANY
KIND OR NATURE (COLLECTIVELY, THE "CLAIMS")
WHICH MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST, ANY INDEMNIFIED
PERSON ARISING IN CONNECTION WITH THE LOAN DOCUMENTS, THE INDEBTEDNESS OR
THE
COLLATERAL (INCLUDING WITHOUT LIMITATION, THE ENFORCEMENT OF THE LOAN DOCUMENTS
AND THE DEFENSE OF ANY INDEMNIFIED PERSON'S ACTIONS AND/OR INACTIONS IN
CONNECTION WITH THE LOAN DOCUMENTS), IN
ALL CASES, WHETHER OR NOT CAUSED BY OR ARISING, IN WHOLE OR IN PART, OUT
OF THE
NEGLIGENCE OF THE INDEMNITEE;
OTHER THAN ANY CLAIM ARISING AS A RESULT OF THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF ANY INDEMNIFIED PERSON, AS FINALLY DETERMINED BY A COURT OF
COMPETENT JURISDICTION. THE INDEMNIFICATION PROVIDED FOR IN THIS
SECTION
SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT AND SHALL EXTEND AND CONTINUE
TO
BENEFIT EACH INDIVIDUAL OR ENTITY WHO IS OR HAS AT ANY TIME BEEN AN INDEMNIFIED
PERSON HEREUNDER.
22
10. Miscellaneous.
(a) Amendment.
No
modification, consent or amendment of any provision of this Agreement or
any of
the other Loan Documents shall be valid or effective unless the same is
authenticated by the party against whom it is sought to be enforced, except
to
the extent of amendments specifically permitted by the Code without
authentication by the Debtor.
(b) Actions
by Secured Party.
The
lien and other security rights of Secured Party hereunder shall not be impaired
by (i) any
renewal, extension, increase or modification with respect to the Indebtedness,
(ii) any
surrender, compromise, release, renewal, extension, exchange or substitution
which Secured Party may grant with respect to the Collateral, or (iii) any
release or indulgence granted to the Debtor or any endorser, guarantor or
surety
of the Indebtedness. The taking of additional security by Secured Party shall
not release or impair the lien, security interest or other security rights
of
Secured Party hereunder or affect the obligations of Debtor
hereunder.
(c) Waiver
by Secured Party.
Secured
Party may waive any Event of Default without waiving any other prior or
subsequent Event of Default. Secured Party may remedy any default without
waiving the Event of Default remedied. Neither the failure by Secured Party
to
exercise, nor the delay by Secured Party in exercising, any right or remedy
upon
any Event of Default shall be construed as a waiver of such Event of Default
or
as a waiver of the right to exercise any such right or remedy at a later
date.
No single or partial exercise by Secured Party of any right or remedy hereunder
shall exhaust the same or shall preclude any other or further exercise thereof,
and every such right or remedy hereunder may be exercised at any time. No
waiver
of any provision hereof or consent to any departure by Debtor therefrom shall
be
effective unless the same shall be in writing and signed by Secured Party
and
then such waiver or consent shall be effective only in the specific instances,
for the purpose for which given and to the extent therein specified. No notice
to or demand on Debtor in any case shall of itself entitle Debtor to any
other
or further notice or demand in similar or other circumstances.
(d) Costs
and Expenses.
Debtor
will upon demand pay to Secured Party the amount of any and all reasonable
costs
and expenses (including without limitation, attorneys' fees and expenses),
which
Secured Party may incur in connection with (i)
the
custody, preservation, use or operation of, or the sale of, collection from,
or
other realization upon, the Collateral, (ii)
the
exercise or enforcement of any of the rights of Secured Party under the Loan
Documents, or (iii)
the
failure by Debtor to perform or observe any of the provisions
hereof.
23
(e) GOVERNING
LAW.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF
THE STATE OF TEXAS AND APPLICABLE FEDERAL LAWS, EXCEPT TO THE EXTENT PERFECTION
AND THE EFFECT OF PERFECTION OR NON-PERFECTION OF THE SECURITY INTEREST GRANTED
HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL, ARE GOVERNED BY THE LAWS
OF
A JURISDICTION OTHER THAN THE STATE OF TEXAS.
(f) Venue.
This
Agreement has been entered into in the county in Texas where Secured Party's
address for notice purposes is located, and it shall be performable for all
purposes in such county. Courts within the State of Texas shall have
jurisdiction over any and all disputes arising under or pertaining to this
Agreement and venue for any such disputes shall be in the county or judicial
district where this Agreement has been executed and delivered.
(g) Severability.
If any
provision of this Agreement is held by a court of competent jurisdiction
to be
illegal, invalid or unenforceable under present or future laws, such provision
shall be fully severable, shall not impair or invalidate the remainder of
this
Agreement and the effect thereof shall be confined to the provision held
to be
illegal, invalid or unenforceable.
(h) Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original (including electronic copies), but all of which together
shall constitute one and the same instrument.
(i) No
Obligation.
Nothing
contained herein shall be construed as an obligation on the part of Secured
Party to extend or continue to extend credit to Debtor.
(j) Notices.
All
notices, requests, demands or other communications required or permitted
to be
given pursuant to this Agreement shall be in writing and given by telecopy,
or
in writing and telecopied, mailed by certified mail return receipt requested,
or
delivered to the intended recipient at the address specified in this Agreement;
or, as to any party at such other address as shall be designated by such
party in a notice to the other party given in accordance with this Section.
Except as otherwise provided in this Agreement, all such communications shall
be
deemed to have been duly
given when transmitted by telecopy, subject to telephone confirmation of
receipt, or when personally delivered or, in the case of a mailed notice,
five
business days after being duly deposited in the mails, in each case given
or
addressed as aforesaid.
(k) Binding
Effect and Assignment.
This
Agreement (i)
creates
a continuing security interest in the Collateral, (ii)
shall be
binding on Debtor and the heirs, executors, administrators, personal
representatives, successors and assigns of Debtor, and (iii)
shall
inure to the benefit of Secured Party and its successors and assigns. Without
limiting the generality of the foregoing, Secured Party may pledge, assign
or
otherwise transfer the Indebtedness and its rights under this Agreement and
any
of the other Loan Documents to any other party. Debtor's rights and obligations
hereunder may not be assigned or otherwise transferred without the prior
written
consent of Secured Party.
24
(l) Cumulative
Rights.
All
rights and remedies of Secured Party hereunder are cumulative of each other
and
of every other right or remedy which Secured Party may otherwise have at
law or
in equity or under any of the other Loan Documents, and the exercise of one
or
more of such rights or remedies shall not prejudice or impair the concurrent
or
subsequent exercise of any other rights or remedies. Further, except as
specifically noted as a waiver herein, no provision of this Agreement is
intended by the parties to this Agreement to waive any rights, benefits or
protection afforded to Secured Party under the Code.
(m) Gender
and Number.
Within
this Agreement, words of any gender shall be held and construed to include
the
other gender, and words in the singular number shall be held and construed
to
include the plural and words in the plural number shall be held and construed
to
include the singular, unless in each instance the context requires
otherwise.
(n) Descriptive
Headings.
The
headings in this Agreement are for convenience only and shall in no way enlarge,
limit or define the scope or meaning of the various and several provisions
hereof.
(o) Release.
The
Debtor hereby unconditionally and irrevocably remises, acquits, and fully
and
forever releases and discharges the Secured Party and all respective affiliates
and subsidiaries of the Secured Party, its officers, servants, employees,
agents, predecessors, attorneys, advisors, parents, subsidiaries, equity
interest holders, loan participants, principals, directors and shareholders,
and
its heirs, legal representatives, successors and assigns (collectively, the
"Released
Lender Parties")
from
any and all claims, demands, causes of action, obligations, remedies, suits,
damages and liabilities (collectively, the "Debtor
Claims")
of any
nature whatsoever, whether now known, suspected or claimed, whether arising
under common law, in equity or under statute, which the Debtor ever had or
now
has against the Released Lender Parties which may have arisen at any time
on or
prior to the date of this Agreement and which were in any manner related
to any
of the Loan Documents or the enforcement or attempted enforcement by the
Secured
Party of rights, remedies or recourses related thereto. The Debtor covenants
and
agree never to commence, voluntarily aid in any way, prosecute or cause to
be
commenced or prosecuted against any of the Released Lender Parties any action
or
other proceeding based upon any of the Debtor Claims which may have arisen
at
any time on or prior to the date of this Agreement and were in any manner
related to any of the Loan Documents.
25
(P) ENTIRE
AGREEMENT.
THIS AGREEMENT CONTAINS THE ENTIRE AGREEMENT OF SECURED PARTY AND DEBTOR
WITH
RESPECT TO THE COLLATERAL. IF THE PARTIES HERETO ARE PARTIES TO ANY PRIOR
AGREEMENT, EITHER WRITTEN OR ORAL, RELATING TO THE COLLATERAL, THE TERMS
OF THIS
AGREEMENT SHALL AMEND AND SUPERSEDE THE TERMS OF SUCH PRIOR AGREEMENTS AS
TO
TRANSACTIONS ON OR AFTER THE EFFECTIVE DATE OF THIS AGREEMENT, BUT ALL SECURITY
AGREEMENTS, FINANCING STATEMENTS, GUARANTIES, OTHER CONTRACTS AND NOTICES
FOR
THE BENEFIT OF SECURED PARTY SHALL CONTINUE IN FULL FORCE AND EFFECT TO SECURE
THE INDEBTEDNESS UNLESS SECURED PARTY SPECIFICALLY RELEASES ITS RIGHTS
THEREUNDER BY SEPARATE RELEASE.
The
Remainder of This Page Is Intentionally Left
Blank.
|
26
EXECUTED
as of the date first written above.
DEBTOR:
|
|||
By:
|
Printed
Name:
|
|||
Printed
Title:
|
SECURED
PARTY:
|
|||
CRESTPARK
LP, INC.
|
|||
By:
|
Schedule
1
|
Real
Property
|
Schedule
1 - page
1
Schedule
2
|
Registered
Patents
|
Registered
Owner
|
Nature
of Debtor’s Interest
(e.g.
owner, licensee)
|
Registered
Patent No.
|
Issue
Date
|
Country
of Issue
|
Schedule
2
|
Patent
Applications
|
Registered
Owner
|
Nature
of Debtor's
Interest
(e.g.
owner, licensee)
|
Serial
No.
|
Filing
Date
|
Country
of Issue
|
|
Schedule
2 - page
1
Schedule
3
|
Registered
Trademarks
|
||||||
Registered
Owner
|
Nature
of Debtor's Interest
(e.g.
owner, licensee)
|
Registered
Trademark
|
Registration
No.
|
Int'l
Class
Covered
|
Goods
or
Services
Covered
|
Date
Registered
|
Country
of Registration
|
Schedule
3
|
Trademark
Applications
|
||||||
Registered
Owner
|
Nature
of Debtor's Interest
(e.g.
owner, licensee)
|
Trademark
Application
relates to following Trademark
|
Serial
No.
|
Int'l
Class
Covered
|
Goods
or
Services
Covered
|
Date
of
Application
|
Country
of
Application
|
Schedule
3 - page
1
Schedule
4
|
Registered
Copyrights
|
||||
Registered
Owner
|
Nature
of Debtor's Interest
(e.g.
owner, licensee)
|
Serial
No.
|
Copyright
|
Issue
Date
|
Country
of Issue
|
Schedule
4
|
Copyright
Applications
|
||||
Registered
Owner
|
Nature
of Debtor's Interest
(e.g.
owner, licensee)
|
Registration
No.
|
Copyright
|
Application
Date
|
Country
of
Application
|
Schedule
4 - page
1
Schedule
5
|
Commercial
Tort Claims
|
Case
Name or Style
|
Case
Number
|
Court
in Which Pending
|
|
Schedule
5 - page
1
Schedule
6
|
Deposit
Accounts
|
|||||
Bank
|
Branch
Name,
Street
Address
|
ABA
No.
|
Account
No.
|
Account
Name
|
Account
Type
|
|
Schedule
6 - page
1
Schedule
7
|
Commodity
Accounts
|
Commodity
Intermediary
|
Street
Address
|
Account
Name
|
Account
Number
|
Commodity
Contract
Description
|
|
Schedule
7
|
Securities
Accounts
|
Securities
Intermediary
|
Street
Address
|
Account
Name
|
Account
Number
|
Securities
Contract
Description
|
|
Schedule
7 - page
1
Schedule
8
|
Letters
of Credit
|
||||||
Bank
Issuer
|
Branch
Name,
Street
Address
|
Letter
of Credit No.
|
Issue
Date
|
Expiry
|
Face
Amount
|
||
Schedule
8 - page
1
Schedule
9
|
Equity
Interests
|
||
Owner
|
Interest
|
Certificate
Number
|
Number
of Shares
|
Schedule
9 - page
1
Schedule
10
|
Permitted
Liens
|
|
Schedule
10 - page
1