================================================================================
Exhibit 4.5
SECURITY AGREEMENT
among
EMAGIN CORPORATION,
the SECURED CREDITORS set out herein
and
VERUS SUPPORT SERVICES INC.,
as COLLATERAL AGENT
--------------------------------
Dated as of November 20, 2001
--------------------------------
================================================================================
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of November 20, 2001, made by and among
each of the undersigned assignor (the "Assignor") in favor of the undersigned
Verus Support Services Inc., as Collateral Agent, together with any successor
collateral agent appointed hereunder pursuant to Section 8.10 (collectively, the
"Collateral Agent"), for the benefit of the undersigned Secured Creditors (the
"Secured Creditors") and as such Secured Creditors may become a party to this
Agreement from time to time. Except as otherwise defined herein, capitalized
terms used herein and defined in the Note Purchase Agreement (as defined below)
shall be used herein as so defined.
W I T N E S S E T H:
WHEREAS, the Assignor proposes to enter into a Note Purchase
Agreement, dated as of November 27, 2001, together with each of the investors
from time to time a party thereto (and each such investor a Secured Creditor
under this Agreement), providing for the issuance of secured convertible notes
(the "Notes") by the Assignor as contemplated therein (the "Note Purchase
Agreement");
WHEREAS, the obligations accruing under the Notes to the Assignor
shall be secured by the Collateral upon the terms and conditions set out in this
Agreement;
WHEREAS, it is a condition precedent to execution on delivery of the
Note Purchase Agreement that the Assignor shall have executed and delivered to
the Collateral Agent this Agreement; and
WHEREAS, it is a condition precedent to the delivery of this Agreement
that the Assignor provide to the Collateral Agent completed copies of UCC form 1
documentation suitable for filing and applicable federal assignment forms
required to perfect the security interests granted by the Assignors herein, and
NOW, THEREFORE, in consideration of the benefits accruing to the
Assignor, the receipt and sufficiency of which are hereby acknowledged, the
Assignor hereby makes the following representations and warranties to the
Collateral Agent for the benefit of the Secured Creditors and hereby covenants
and agrees with the Collateral Agent for the benefit of the Secured Creditors as
follows:
ARTICLE I
SECURITY INTERESTS
1.1 Grant of Security Interests. (a) As security for the prompt and
complete payment and performance when due (whether at stated maturity, by
acceleration or otherwise) of all of its Obligations, in order to induce the
Secured Creditors to enter into the Note Purchase
Agreement the Assignor does hereby assign and transfer unto the Collateral
Agent, and does hereby pledge and grant to the Collateral Agent, for the benefit
of the Secured Creditors, a continuing security interest in all of the right,
title and interest of the Assignor in, to and under all of the following (in
each case whether now existing or hereafter from time to time acquired):
(i) each and every Account;
(ii) all cash;
(iii) the Cash Collateral Account and all monies, securities,
Instruments and other investments deposited or required to
be deposited in the Cash Collateral Account;
(iv) all computer programs of the Assignor and all intel-
lectual property rights therein and all other proprietary
information of the Assignor, including but not limited to
Trade Secret Rights;
(v) all Contracts, together with all Contract Rights arising
thereunder, including, without limitation, joint venture
agreements, partnership agreements, and limited liability
company agreements);
(vi) all Copyrights;
(vii) all Equipment;
(viii) all Documents;
(ix) all Equipment;
(x) all General Intangibles;
(xi) all Goods;
(xii) all Instruments;
(xiii) all Inventory;
(xiv) all Investment Property;
(xv) all Marks, together with the registrations and right to all
renewals thereof, and the goodwill of the business of the
Assignor symbolized by the Marks;
(xvi) all Patents;
(xvii) all Permits;
(xviii) all Software and all Software licensing rights, all
writings, plans, specifications and schematics, all
engineering drawings, customer lists, goodwill
-2-
and licenses, and all recorded data of any kind or nature,
regardless of the medium of recording;
(xix) all Supporting Obligations;
(xx) all manuals, training material, diagrams, know how and other
necessary or useful materials to utilize the Compan's trade
secrets and other business intangibles; and
(xxi) all Proceeds and products of any and all of the foregoing
(all of the above, the "Collateral").
(b) The security interest of the Collateral Agent under this Agreement
extends to all Collateral which the Assignor may acquire, or with respect to
which the Assignor may obtain rights, at any time during the term of this
Agreement.
1.2 Power of Attorney. The Assignor hereby constitutes and appoints
the Collateral Agent its true and lawful attorney, irrevocably, with full power
after the occurrence of and during the continuance of an Event of Default (in
the name of the Assignor or otherwise) to act, require, demand, receive,
compound and give acquaintance for any and all moneys and claims for moneys due
or to become due to the Assignor under or arising out of the Collateral, to
endorse any checks or other instruments or orders in connection therewith and to
file any claims or take any action or institute any proceedings which the
Collateral Agent may deem to be necessary or advisable to protect the interests
of the Secured Creditors, which appointment as attorney is coupled with an
interest.
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
The Assignor represents, warrants and covenants, which representations,
warranties and covenants shall survive execution and delivery of this Agreement,
as follows:
2.1 Necessary Filings. All filings, registrations, recordings and
other actions necessary or appropriate to create, preserve and perfect the
security interest granted by the Assignor to the Collateral Agent hereby in
respect of the Collateral have been accomplished and the security interest
granted to the Collateral Agent pursuant to this Agreement in and to the
Collateral creates a valid and, together with all such filings, registrations,
recordings and other actions, a perfected security interest therein prior to the
rights of all other Persons therein and subject to no other Liens (other than
Permitted Liens) and is entitled to all the rights, priorities and benefits
afforded by the Uniform Commercial Code or other relevant law as enacted in any
relevant jurisdiction to perfected security interests, in each case to the
extent that the Collateral consists of the type of property in which a security
interest may be perfected by possession or control (within the meaning of the
UCC as in effect on the date hereof in the State of New York), by filing a
financing statement under the Uniform Commercial Code as enacted in any relevant
jurisdiction or by a filing of a Grant of Security Interest in the respective
form attached hereto in the United States Patent and Trademark Office or in the
United States Copyright Office.
-3-
2.2 No Liens. The Assignor is, and as to all Collateral acquired by it
from time to time after the date hereof the Assignor will be, the owner of all
Collateral free from any Lien, security interest, encumbrance or other right,
title or interest of any Person (other than Permitted Liens), and the Assignor
shall defend the Collateral against all claims and demands of all Persons at any
time claiming the same or any interest therein adverse to the Collateral Agent.
2.3 Other Financing Statements. As of the date hereof, there is no
financing statement (or similar statement or instrument of registration under
the law of any jurisdiction) covering or purporting to cover any interest of any
kind in the Collateral (other than financing statements filed in respect of
Permitted Liens), and so long as the Termination Date has not occurred, the
Assignor will not execute or authorize to be filed in any public office any
financing statement (or similar statement or instrument of registration under
the law of any jurisdiction) or statements relating to the Collateral, except
financing statements filed or to be filed in respect of and covering the
security interests granted hereby by the Assignor or in connection with
Permitted Liens.
2.4 Chief Executive Office, Record Locations. The chief executive
office of the Assignor is, on the date of this Agreement, located at the address
indicated on Annex A hereto for the Assignor. During the period of the four
calendar month preceding the date of this Agreement, the chief executive office
of the Assignor has not been located at any address other than that indicated on
Annex A in accordance with the immediately preceding sentence, in each case
unless each such other address is also indicated on Annex A hereto for the
Assignor.
2.5 Location of Inventory and Equipment. All Inventory and Equipment
held on the date hereof, or held at any time during the four calendar months
prior to the date hereof, by the Assignor is located at one of the locations
shown on Annex B hereto for the Assignor.
2.6 Legal Names; Type of Organization; Jurisdiction of Organization;
Location; Organizational Identification Numbers; Changes Thereto; etc. The exact
legal name of the Assignor, the type of organization of the Assignor, the
jurisdiction of organization of the Assignor, and the Assignor's Location, is
listed on Annex C hereto for the Assignor. The Assignor shall not change its
legal name, its type of organization, its jurisdiction of organization, its
Location or its organizational identification number (if any) from that listed
on Annex C hereto for the Assignor or those that may have been established after
the date of this Agreement in accordance with the immediately succeeding
sentence of this Section 2.6. The Assignor shall not change its legal name, its
type of organization, its jurisdiction of organization, its Location, or its
organizational identification number (if any), except that any such changes
shall be permitted if (i) it shall have given to the Collateral Agent not less
than 15 days' prior written notice of each change to the information listed on
Annex C (as adjusted for any subsequent changes thereto previously made in
accordance with this sentence), together with a supplement to Annex C which
shall correct all information contained therein for the Assignor, and (ii) in
connection with the respective such change or changes, it shall have taken all
action reasonably requested by the Collateral Agent to maintain the security
interests of the Collateral Agent in the Collateral intended to be granted
hereby at all times fully perfected and in full force and effect. In addition,
to the extent that the Assignor does not have an organizational identification
number on the date hereof and later obtains one, the Assignor shall promptly
thereafter notify the Collateral Agent of such organizational identification
number and shall take all actions
-4-
reasonably satisfactory to the Collateral Agent to the extent necessary to
maintain the security interest of the Collateral Agent in the Collateral
intended to be granted hereby fully perfected and in full force and effect.
2.7 Trade Names; Etc. The Assignor has not nor operates in any
jurisdiction under, or in the preceding five years has had or has operated in
any jurisdiction under, any trade names, fictitious names or other names except
its legal name as specified in Annex C and such other trade or fictitious names
as are listed on Annex D hereto for the Assignor. The Assignor shall not assume
or operate in any jurisdiction under any new trade, fictitious or other name
until (i) it shall have given to the Collateral Agent not less than 15 days'
written notice of its intention so to do, clearly describing such new name and
the jurisdictions in which such new name will be used and providing such other
information in connection therewith as the Collateral Agent may reasonably
request and (ii) with respect to such new name, it shall have taken all action
reasonably requested by the Collateral Agent to maintain the security interest
of the Collateral Agent in the Collateral intended to be granted hereby at all
times fully perfected and in full force and effect.
2.8 Certain Significant Transactions. During the one year period
preceding the date of this Agreement, no Person shall have merged or
consolidated with or into the Assignor, and no Person shall have liquidated
into, or transferred all or substantially all of its assets to, the Assignor, in
each case except as described in Annex E hereto. With respect to any
transactions so described in Annex E hereto, the Assignor shall have furnished
such information with respect to the Person (and the assets of the Person and
locations thereof) which merged with or into or consolidated with the Assignor,
or was liquidated into or transferred all or substantially all of its assets to
the Assignor, and shall have furnished to the Collateral Agent such UCC lien
searches as may have been requested with respect to such Person and its assets,
to establish that no security interest (excluding Permitted Liens) continues
perfected on the date hereof with respect to any Person described above (or the
assets transferred to the Assignor by such Person), including without limitation
pursuant to Section 9-316(a)(3) of the UCC.
2.9 Recourse. This Agreement is made with full recourse to the
Assignor and pursuant to and upon all the warranties, representations, covenants
and agreements on the part of the Assignor contained herein and otherwise in
writing in connection herewith.
ARTICLE III
SPECIAL PROVISIONS CONCERNING ACCOUNTS; CONTRACT RIGHTS;
INSTRUMENTS; AND CERTAIN OTHER COLLATERAL
3.1 Additional Representations and Warranties. As of the time when
each of its Accounts arises, the Assignor shall be deemed to have represented
and warranted that each such Account, and all records, papers and documents
relating thereto (if any) are genuine and what they purport to be, and that all
papers and documents (if any) relating thereto (i) will, to the knowledge of the
Assignor, represent the genuine, legal, valid and binding obligation of the
account debtor evidencing indebtedness unpaid and owed by the respective account
debtor arising out of the performance of labor or services or the sale or lease
and delivery of the merchandise listed therein, or both, (ii) will be the only
original writings evidencing and
-5-
embodying such obligation of the account debtor named therein (other than copies
created for general accounting purposes), (iii) will, to the knowledge of the
Assignor, evidence true and valid obligations, enforceable in accordance with
their respective terms, and (iv) will be in compliance and will conform in all
material respects with all applicable federal, state and local laws and
applicable laws of any relevant foreign jurisdiction.
3.2 Maintenance of Records. The Assignor will keep and maintain at its
own cost and expense accurate records of its Accounts and Contracts, including,
but not limited to, originals of all documentation (including each Contract)
with respect thereto, records of all payments received, all credits granted
thereon, all merchandise returned and all other dealings therewith, and the
Assignor will make the same available on the Assignor's premises to the
Collateral Agent for inspection, at the Assignor's own cost and expense, at any
and all reasonable times upon prior notice to the Assignor. Upon the occurrence
and during the continuance of an Event of Default and at the request of the
Collateral Agent, the Assignor shall, at its own cost and expense, deliver all
tangible evidence of its Accounts and Contract Rights (including, without
limitation, all documents evidencing the Accounts and all Contracts) and such
books and records to the Collateral Agent or to its representatives (copies of
which evidence and books and records may be retained by the Assignor). Upon the
occurrence and during the continuance of an Event of Default and if the
Collateral Agent so directs, the Assignor shall legend, in form and manner
satisfactory to the Collateral Agent, the Accounts and the Contracts, as well as
books, records and documents (if any) of the Assignor evidencing or pertaining
to such Accounts and Contracts with an appropriate reference to the fact that
such Accounts and Contracts have been assigned to the Collateral Agent and that
the Collateral Agent has a security interest therein.
3.3 Direction to Account Debtors; Contracting Parties; etc. Upon the
occurrence and during the continuance of an Event of Default, if the Collateral
Agent so directs the Assignor, the Assignor agrees (x) to cause all payments on
account of the Accounts and Contracts to be made directly to the Cash Collateral
Account, (y) that the Collateral Agent may, at its option, directly notify the
obligors with respect to any Accounts and/or under any Contracts to make
payments with respect thereto as provided in the preceding clause (x), and (z)
that the Collateral Agent may enforce collection of any such Accounts and
Contracts and may adjust, settle or compromise the amount of payment thereof, in
the same manner and to the same extent as the Assignor. Without notice to or
assent by the Assignor, the Collateral Agent may, upon the occurrence and during
the continuance of an Event of Default, apply any or all amounts then in, or
thereafter deposited in, the Cash Collateral Account toward the payment of the
Obligations in the manner provided in Section 7.4 of this Agreement. The
reasonable costs and expenses of collection (including reasonable attorneys'
fees), whether incurred by an Assignor or the Collateral Agent, shall be borne
by the Assignor. The Collateral Agent shall deliver a copy of each notice
referred to in the preceding clause (y) to the Assignor, provided that the
failure by the Collateral Agent to so notify the Assignor shall not affect the
effectiveness of such notice or the other rights of the Collateral Agent created
by this Section 3.3.
3.4 Modification of Terms; etc. Except in accordance with the
Assignor's ordinary course of business and consistent with reasonable business
judgment, the Assignor shall not rescind nor cancel any indebtedness evidenced
by any Account or under any Contract, or modify any material term thereof or
make any material adjustment with respect thereto, nor extend or renew the same,
nor compromise or settle any material dispute, claim, suit or legal
-6-
proceeding relating thereto, nor sell any Account or Contract, or interest
therein, without the prior written consent of the Collateral Agent. The Assignor
will not do anything to impair the rights of the Collateral Agent in the
Accounts or Contracts.
3.5 Collection. The Assignor shall endeavor in accordance with
reasonable business practices to cause to be collected from the account debtor
named in each of its Accounts or obligor under any Contract, as and when due
(including, without limitation, amounts which are delinquent, such amounts to be
collected in accordance with generally accepted lawful collection procedures)
any and all amounts owing under or on account of such Account or Contract, and
apply forthwith upon receipt thereof all such amounts as are so collected to the
outstanding balance of such Account or under such Contract. Except as otherwise
directed by the Collateral Agent after the occurrence and during the
continuation of an Event of Default, the Assignor may allow in the ordinary
course of business as adjustments to amounts owing under its Accounts and
Contracts (i) an extension or renewal of the time or times of payment, or
settlement for less than the total unpaid balance, which the Assignor finds
appropriate in accordance with reasonable business judgment and (ii) a refund or
credit due as a result of returned or damaged merchandise or improperly
performed services or for other reasons which the Assignor finds appropriate in
accordance with reasonable business judgment. The reasonable costs and expenses
(including, without limitation, reasonable attorneys' fees) of collection,
whether incurred by an Assignor or the Collateral Agent, shall be borne by the
Assignor.
3.6 Instruments. If the Assignor owns or acquires any Instrument in
excess of $1,000,000 constituting Collateral (other than checks and other
payment instruments received and collected in the ordinary course of business),
the Assignor will within 10 Business Days notify the Collateral Agent thereof.
3.7 Assignors Remain Liable Under Accounts. Anything herein to the
contrary notwithstanding, the Assignors shall remain liable under each of the
Accounts to observe and perform all of the conditions and obligations to be
observed and performed by it thereunder, all in accordance with the terms of any
agreement giving rise to such Accounts. Neither the Collateral Agent nor any
other Secured Creditor shall have any obligation or liability under any Account
(or any agreement giving rise thereto) by reason of or arising out of this
Agreement or the receipt by the Collateral Agent or any other Secured Creditor
of any payment relating to such Account pursuant hereto, nor shall the
Collateral Agent or any other Secured Creditor be obligated in any manner to
perform any of the obligations of the Assignor under or pursuant to any Account
(or any agreement giving rise thereto), to make any payment, to make any inquiry
as to the nature or the sufficiency of any payment received by them or as to the
sufficiency of any performance by any party under any Account (or any agreement
giving rise thereto), 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 them or to which they may be entitled at any time or times.
3.8 Assignors Remain Liable Under Contracts. Anything herein to the
contrary notwithstanding, the Assignors shall remain liable under each of the
Contracts to observe and perform all of the conditions and obligations to be
observed and performed by them thereunder, all in accordance with and pursuant
to the terms and provisions of each Contract. Neither the Collateral Agent nor
any other Secured Creditor shall have any obligation or liability under any
-7-
Contract by reason of or arising out of this Agreement or the receipt by the
Collateral Agent or any other Secured Creditor of any payment relating to such
Contract pursuant hereto, nor shall the Collateral Agent or any other Secured
Creditor be obligated in any manner to perform any of the obligations of the
Assignor under or pursuant to any Contract, to make any payment, to make any
inquiry as to the nature or the sufficiency of any performance by any party
under any Contract, to present or file any claim, to take any action to enforce
any performance or to collect the payment of any amounts which may have been
assigned to them or to which they may be entitled at any time or times.
3.9 Further Actions. The Assignor will, at its own expense, make,
execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from
time to time such vouchers, invoices, schedules, confirmatory assignments,
conveyances, financing statements, transfer endorsements, certificates, reports
and other assurances or instruments and take such further steps, including any
and all actions as may be necessary or required under the Federal Assignment of
Claims Act, relating to its Receivables, Contracts, Instruments and other
property or rights covered by the security interest hereby granted, as the
Collateral Agent may reasonably require.
ARTICLE IV
SPECIAL PROVISIONS CONCERNING TRADEMARKS
4.1 Additional Representations and Warranties. The Assignor represents
and warrants that it is the true and lawful owner of or otherwise has the right
to use the registered Marks listed in Annex F hereto for the Assignor and that
said listed Marks include all United States marks and applications for United
States marks registered in the United States Patent and Trademark Office that
the Assignor owns or uses in connection with its business as of the date hereof
and that Assignor has not granted security interest in the listed Marks to any
other Person. The Assignor represents and warrants that it owns, is licensed to
use or otherwise has the right to use, all Marks that it uses. The Assignor
further warrants that it has no knowledge of any third party claim received by
it that any aspect of the Assignor's present or contemplated business operations
infringes or will infringe any trademark, service mark or trade name of any
other Person other than as could not, either individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. The Assignor
represents and warrants that it is the true and lawful owner of or otherwise has
the right to use all U.S. trademark registrations and applications listed in
Annex F hereto and that said registrations are valid, subsisting, have not been
canceled and that the Assignor is not aware of any third-party claim that any of
said registrations is invalid or unenforceable, and is not aware that there is
any reason that any of said registrations is invalid or unenforceable. The
Assignor hereby grants to the Collateral Agent an absolute power of attorney to
sign, upon the occurrence and during the continuance of an Event of Default, any
document which may be required by the United States Patent and Trademark Office
in order to effect an absolute assignment of all right, title and interest in
each Mark, and record the same.
4.2 Licenses and Assignments. The Assignor hereby agrees not to divest
itself of any right under any Mark absent prior written approval of the
Collateral Agent.
-8-
4.3 Infringements. The Assignor agrees, promptly upon learning
thereof, to notify the Collateral Agent in writing of the name and address of,
and to furnish such pertinent information that may be available with respect to,
any party who the Assignor believes is infringing or diluting or otherwise
violating any of the Assignor's rights in and to any Mark in any manner that
could reasonably be expected to have a Material Adverse Effect, or with respect
to any party claiming that the Assignor's use of any Mark material to the
Assignor's business violates in any material respect any property right of that
party. The Assignor further agrees to prosecute in accordance with reasonable
business practices any Person infringing any Mark in any manner that could
reasonably be expected to have a Material Adverse Effect.
4.4 Preservation of Marks. The Assignor agrees to use its Marks which
are material to the Assignor's business in interstate commerce during the time
in which this Agreement is in effect and to take all such other actions as are
reasonably necessary to preserve such Marks as trademarks or service marks under
the laws of the United States (other than any such Marks which are no longer
used or useful in its business or operations).
4.5 Maintenance of Registration. The Assignor shall, at its own
expense, diligently process all documents reasonably required to maintain
trademark registrations, including but not limited to affidavits of use and
applications for renewals of registration in the United States Patent and
Trademark Office for all of its material registered Marks, and shall pay all
fees and disbursements in connection therewith and shall not abandon any such
filing of affidavit of use or any such application of renewal prior to the
exhaustion of all administrative and judicial remedies without prior written
consent of the Collateral Agent (other than with respect to registrations and
applications deemed by the Assignor to be no longer prudent to pursue).
4.6 Future Registered Marks. If any Mark registration is issued
hereafter to the Assignor as a result of any application now or hereafter
pending before the United States Patent and Trademark Office, within 30 days of
receipt of such certificate, the Assignor shall deliver to the Collateral Agent
a copy of such certificate, and an assignment for security in such Mark, to the
Collateral Agent and at the expense of the Assignor, confirming the assignment
for security in such Mark to the Collateral Agent hereunder, the form of such
security to be substantially in the form of Annex I hereto or in such other form
as may be reasonably satisfactory to the Collateral Agent.
4.7 Remedies. If an Event of Default shall occur and be continuing,
the Collateral Agent may, by written notice to the Assignor, take any or all of
the following actions: (i) declare the entire right, title and interest of the
Assignor in and to each of the Marks, together with all trademark rights and
rights of protection to the same, vested in the Collateral Agent for the benefit
of the Secured Creditors, in which event such rights, title and interest shall
immediately vest, in the Collateral Agent for the benefit of the Secured
Creditors, and the Collateral Agent shall be entitled to exercise the power of
attorney referred to in Section 4.1 hereof to execute, cause to be acknowledged
and notarized and record said absolute assignment with the applicable agency;
(ii) take and use or sell the Marks and the goodwill of the Assignor's business
symbolized by the Marks and the right to carry on the business and use the
assets of the Assignor in connection with which the Marks have been used; and
(iii) direct the Assignor to refrain, in which event the Assignor shall refrain,
from using the Marks in any manner whatsoever, directly or indirectly, and the
Assignor shall execute such further documents that the Collateral Agent
-9-
may reasonably request to further confirm this and to transfer ownership of the
Marks and registrations and any pending trademark application in the United
States Patent and Trademark Office to the Collateral Agent.
ARTICLE V
SPECIAL PROVISIONS CONCERNING PATENTS,
COPYRIGHTS AND TRADE SECRETS
5.1 Additional Representations and Warranties. The Assignor represents
and warrants that it is the true and lawful owner of all rights in (i) all
United States trade secrets and proprietary information necessary to operate the
business of the Assignor (the "Trade Secret Rights"), (ii) the Patents listed in
Annex G hereto for the Assignor and that said Patents include all the United
States patents and applications for United States patents that the Assignor owns
as of the date hereof and (iii) the Copyrights listed in Annex H hereto for the
Assignor and that said Copyrights constitute all the United States copyrights
registered with the United States Copyright Office and applications to United
States copyrights that the Assignor owns as of the date hereof, and has not
granted a security interest in the Trade Secret Rights, Patents or Copyrights to
any other Person. The Assignor further warrants that it has no knowledge of any
third party claim that any aspect of the Assignor's present or contemplated
business operations infringes or will infringe any patent of any other Person or
the Assignor has misappropriated any trade secret or proprietary information
which, either individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect. The Assignor hereby grants to the Collateral
Agent an absolute power of attorney to sign, upon the occurrence and during the
continuance of any Event of Default, any document which may be required by the
United States Patent and Trademark Office in order to effect an absolute
assignment of all right, title and interest in each Patent, and to record the
same.
5.2 Licenses and Assignments. The Assignor hereby agrees not to divest
itself of any right under any Patent or Copyright absent prior written approval
of the Collateral Agent.
5.3 Infringements. The Assignor agrees, promptly upon learning
thereof, to furnish the Collateral Agent in writing with all pertinent
information available to the Assignor with respect to any infringement,
contributing infringement or active inducement to infringe in any Patent or
Copyright or to any claim that the practice of any Patent or use of any
Copyright violates any property right of a third party, or with respect to any
misappropriation of any Trade Secret Right or any claim that practice of any
Trade Secret Right violates any property right of a third party, in each case,
in any manner which, either individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect. The Assignor further agrees,
absent direction of the Collateral Agent to the contrary, to diligently
prosecute, in accordance with its reasonable business judgment, any Person
infringing any Patent or Copyright or any Person misappropriating any Trade
Secret Right, in each case to the extent that such infringement or
misappropriation, either individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
5.4 Maintenance of Patents or Copyright. At its own expense, the
Assignor shall make timely payment of all post-issuance fees required pursuant
to 35 U.S.C. Section 41 to maintain in
-10-
force its rights under each Patent or Copyright, absent prior written consent of
the Collateral Agent (other than any such Patents or Copyrights which are no
longer used or useful in its business or operations).
5.5 Prosecution of Patent Applications. At its own expense, the
Assignor shall diligently prosecute all material applications for (i) United
States Patents listed in Annex G hereto and (ii) Copyrights listed on Annex H
hereto, in each case for the Assignor and shall not abandon any such application
prior to exhaustion of all administrative and judicial remedies (other than
applications deemed by the Assignor to be no longer prudent to pursue), absent
written consent of the Collateral Agent.
5.6 Other Patents and Copyrights. Within 30 days of the acquisition or
issuance of a United States Patent, registration of a Copyright, or acquisition
of a registered Copyright, or of filing of an application for a United States
Patent or Copyright, the Assignor shall deliver to the Collateral Agent a copy
of said Copyright or Patent, or certificate or registration of, or application
therefor, as the case may be, with an assignment for security as to such Patent
or Copyright, as the case may be, to the Collateral Agent and at the expense of
the Assignor, confirming the assignment for security, the form of such
assignment for security to be substantially in the form of Annex J or K hereto,
as appropriate, or in such other form as may be reasonably satisfactory to the
Collateral Agent.
5.7 Remedies. If an Event of Default shall occur and be continuing,
the Collateral Agent may, by written notice to the Assignor, take any or all of
the following actions: (i) declare the entire right, title, and interest of the
Assignor in each of the Patents and Copyrights vested in the Collateral Agent
for the benefit of the Secured Creditors, in which event such right, title, and
interest shall immediately vest in the Collateral Agent for the benefit of the
Secured Creditors, in which case the Collateral Agent shall be entitled to
exercise the power of attorney referred to in Section 5.1 hereof to execute,
cause to be acknowledged and notarized and to record said absolute assignment
with the applicable agency; (ii) take and practice or sell the Patents and
Copyrights; and (iii) direct the Assignor to refrain, in which event the
Assignor shall refrain, from practicing the Patents and using the Copyrights
directly or indirectly, and the Assignor shall execute such further documents as
the Collateral Agent may reasonably request further to confirm this and to
transfer ownership of the Patents and Copyrights to the Collateral Agent for the
benefit of the Secured Creditors.
ARTICLE VI
PROVISIONS CONCERNING ALL COLLATERAL
6.1 Protection of Collateral Agent's Security. The Assignor will do
nothing to impair the rights of the Collateral Agent in the Collateral. The
Assignor will at all times maintain insurance, at the Assignor's own expense, to
the extent and in a manner consistent with commercially reasonable business
practice. Except to the extent otherwise permitted to be retained by the
Assignor, the Collateral Agent shall, at the time any proceeds of such insurance
are distributed to the Secured Creditors, apply such proceeds in accordance with
Section 7.4 hereof. The Assignor assumes all liability and responsibility in
connection with the Collateral acquired by it and the liability of the Assignor
to pay the Obligations shall in no way be affected
-11-
or diminished by reason of the fact that such Collateral may be lost, destroyed,
stolen, damaged or for any reason whatsoever unavailable to the Assignor.
6.2 Warehouse Receipts Non-negotiable. To the extent practicable, the
Assignor agrees that if any warehouse receipt or receipt in the nature of a
warehouse receipt is issued with respect to any of its Inventory, the Assignor
shall request that such warehouse receipt or receipt in the nature thereof shall
not be "negotiable" (as such term is used in Section 7-104 of the Uniform
Commercial Code as in effect in any relevant jurisdiction or under other
relevant law).
6.3 Additional Information. The Assignor will, at its own expense,
from time to time upon the reasonable request of the Collateral Agent, promptly
(and in any event within 10 days after its receipt of the respective request)
furnish to the Collateral Agent such information with respect to the Collateral
(including the identity of the Collateral or such components thereof as may have
been requested by the Collateral Agent, the value and location of such
Collateral, etc.) as may be requested by the Collateral Agent. Without limiting
the forgoing, the Assignor agrees that it shall promptly (and in any event
within 10 days after its receipt of the respective request) furnish to the
Collateral Agent such updated Annexes hereto as may from time to time be
reasonably requested by the Collateral Agent.
6.4 Further Actions. The Assignor will, at its own expense and upon
the reasonable request of the Collateral Agent, make, execute, endorse,
acknowledge, file and/or deliver to the Collateral Agent from time to time such
lists, descriptions and designations of its Collateral, warehouse receipts,
receipts in the nature of warehouse receipts, bills of lading, documents of
title, vouchers, invoices, schedules, confirmatory assignments, conveyances,
financing statements, transfer endorsements, certificates, reports and other
assurances or instruments and take such further steps relating to the Collateral
and other property or rights covered by the security interest hereby granted,
which the Collateral Agent deems reasonably appropriate or advisable to perfect,
preserve or protect its security interest in the Collateral.
6.5 Financing Statements. The Assignor agrees to execute and deliver
to the Collateral Agent such financing statements, in form reasonably acceptable
to the Collateral Agent, as the Collateral Agent may from time to time
reasonably request or as are reasonably necessary or desirable in the opinion of
the Collateral Agent to establish and maintain a valid, enforceable, perfected
security interest in the Collateral as provided herein and the other rights and
security contemplated hereby. The Assignor will pay any applicable filing fees,
recordation taxes and related expenses relating to its Collateral. The Assignor
hereby authorizes the Collateral Agent to file any such financing statements
without the signature of the Assignor where permitted by law (and such
authorization includes describing the Collateral as "all assets" of the
Assignor).
ARTICLE VII
REMEDIES UPON OCCURRENCE OF AN EVENT OF DEFAULT
7.1 Remedies; Obtaining the Collateral Upon Default. The Assignor
agrees that, if any Event of Default shall have occurred and be continuing, then
and in every such case, the Collateral Agent, in addition to any rights now or
hereafter existing under applicable law and
-12-
under the other provisions of this Agreement, shall have all rights as a secured
creditor under any UCC, and such additional rights and remedies to which a
secured creditor is entitled under the laws in effect in all relevant
jurisdictions and may:
(i) personally, or by agents or attorneys, immediately take possession
of the Collateral or any part thereof, from the Assignor or any other
Person who then has possession of any part thereof with or without notice
or process of law, and for that purpose may enter upon the Assignor's
premises where any of the Collateral is located and remove the same and use
in connection with such removal any and all services, supplies, aids and
other facilities of the Assignor;
(ii) instruct the obligor or obligors on any agreement, instrument or
other obligation (including, without limitation, the Accounts and the
Contracts) constituting the Collateral to make any payment required by the
terms of such agreement, instrument or other obligation directly to the
Collateral Agent and may exercise any and all remedies of the Assignor in
respect of such Collateral;
(iii) instruct all banks which have entered into a control agreement
with the Collateral Agent to transfer all monies, securities and
instruments held by such depositary bank to the Cash Collateral Account;
(iv) sell, assign or otherwise liquidate any or all of the Collateral
or any part thereof in accordance with Section 7.2 hereof, or direct the
Assignor to sell, assign or otherwise liquidate any or all of the
Collateral or any part thereof, and, in each case, take possession of the
proceeds of any such sale or liquidation;
(v) take possession of the Collateral or any part thereof, by
directing the Assignor in writing to deliver the same to the Collateral
Agent at any reasonable place or places designated by the Collateral Agent,
in which event the Assignor shall at its own expense:
(x) forthwith cause the same to be moved to the place or places
so designated by the Collateral Agent and there delivered to the
Collateral Agent;
(y) store and keep any Collateral so delivered to the Collateral
Agent at such place or places pending further action by the Collateral
Agent as provided in Section 7.2 hereof; and
(z) while the Collateral shall be so stored and kept, provide
such security and maintenance services as shall be reasonably
necessary to protect the same and to preserve and maintain it in good
condition;
(vi) license or sublicense, whether on an exclusive or nonexclusive
basis, any Marks, Patents or Copyrights included in the Collateral for such
term and on such conditions and in such manner as the Collateral Agent
shall in its sole judgment determine;
(vii) apply any monies constituting Collateral or proceeds thereof in
accordance with the provisions of Section 7.4; and
-13-
(viii) take any other action as specified in clauses (1) through (5),
inclusive, of Section 9-607 of the UCC;
it being understood that the Assignor's obligation so to deliver the Collateral
is of the essence of this Agreement and that, accordingly, upon application to a
court of equity having jurisdiction, the Collateral Agent shall be entitled to a
decree requiring specific performance by the Assignor of said obligation. By
accepting the benefits of this Agreement, the Secured Creditors expressly
acknowledge and agree that this Agreement may be enforced only by the action of
the Collateral Agent acting upon the written instructions of all of the Secured
Creditors and that no Secured Creditor shall have any right individually to seek
to enforce this Agreement or to realize upon the security to be granted hereby,
it being understood and agreed that such rights and remedies may be exercised by
the Collateral Agent for the benefit of the Secured Creditors upon the terms of
this Agreement.
7.2 Remedies; Disposition of the Collateral. If any Event of Default
shall have occurred and be continuing, then any Collateral repossessed by the
Collateral Agent under or pursuant to Section 7.1 hereof and any other
Collateral whether or not so repossessed by the Collateral Agent, may be sold,
assigned, leased or otherwise disposed of under one or more contracts or as an
entirety, and without the necessity of gathering at the place of sale the
property to be sold, and in general in such manner, at such time or times, at
such place or places and on such terms as the Collateral Agent may, in
compliance with any mandatory requirements of applicable law, determine to be
commercially reasonable. Any of the Collateral may be sold, leased or otherwise
disposed of, in the condition in which the same existed when taken by the
Collateral Agent or after any overhaul or repair at the expense of the Assignor
which the Collateral Agent shall determine to be commercially reasonable. Any
such sale, lease or other disposition may be effected by means of a public
disposition or private disposition, effected in accordance with the applicable
requirements (in each case if and to the extent applicable) of Sections 9-610
through 9-613 of the UCC and/or such other mandatory requirements of applicable
law as may apply to the respective disposition. The Collateral Agent may,
without notice or publication, adjourn any public or private disposition or
cause the same to be adjourned from time to time by announcement at the time and
place fixed for the disposition, and such disposition may be made at any time or
place to which the disposition may be so adjourned. To the extent permitted by
any such requirement of law, the Collateral Agent may bid for and become the
purchaser (and may pay all or any portion of the purchase price by crediting
Obligations against the purchase price) of the Collateral or any item thereof,
offered for disposition in accordance with this Section 7.2 without
accountability to the Assignor. If, under applicable law, the Collateral Agent
shall be permitted to make disposition of the Collateral within a period of time
which does not permit the giving of notice to the Assignor as herein above
specified, the Collateral Agent need give the Assignor only such notice of
disposition as shall be required by such applicable law. The Assignor agrees to
do or cause to be done all such other acts and things as may be reasonably
necessary to make such disposition or dispositions of all or any portion of the
Collateral valid and binding and in compliance with any and all applicable laws,
regulations, orders, writs, injunctions, decrees or awards of any and all
courts, arbitrators or governmental instrumentalities, domestic or foreign,
having jurisdiction over any such sale or sales, all at the Assignor's expense.
-14-
7.3 Waiver of Claims. Except as otherwise provided in this Agreement,
THE ASSIGNOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, NOTICE
AND JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL AGENT'S TAKING POSSESSION
OR THE COLLATERAL AGENT'S DISPOSITION OF ANY OF THE COLLATERAL, INCLUDING,
WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING FOR ANY PREJUDGMENT
REMEDY OR REMEDIES, and the Assignor hereby further waives, to the extent
permitted by law:
(i) all damages occasioned by such taking of possession or any such
disposition except any damages which are the direct result of the
Collateral Agent's gross negligence or willful misconduct (as determined by
a court of competent jurisdiction in a final and non-appealable decision);
(ii) all other requirements as to the time, place and terms of sale or
other requirements with respect to the enforcement of the Collateral
Agent's rights hereunder; and
(iii) all rights of redemption, appraisement, valuation, stay,
extension or moratorium now or hereafter in force under any applicable law
in order to prevent or delay the enforcement of this Agreement or the
absolute sale of the Collateral or any portion thereof, and the Assignor,
for itself and all who may claim under it, insofar as it or they now or
hereafter lawfully may, hereby waives the benefit of all such laws.
Any sale of, or the grant of options to purchase, or any other realization upon,
any Collateral shall operate to divest all right, title, interest, claim and
demand, either at law or in equity, of the Assignor therein and thereto, and
shall be a perpetual bar both at law and in equity against the Assignor and
against any and all Persons claiming or attempting to claim the Collateral so
sold, optioned or realized upon, or any part thereof, from, through and under
the Assignor.
7.4 Application of Proceeds. (a) All moneys collected by the
Collateral Agent upon any sale or other disposition of the Collateral, together
with all other moneys received by the Collateral Agent hereunder, shall be
applied as follows:
(i) first, to the payment of all amounts owing the Collateral Agent of
the type described in clauses (iii) and (iv) of the definition of
"Obligations";
(ii) second, to the extent proceeds remain after the application
pursuant to the preceding clause (i), an amount equal to the outstanding
Obligations shall be paid to the Secured Creditors, with each Secured
Creditor receiving an amount equal to its outstanding Obligations or, if
the proceeds are insufficient to pay in full all such Obligations, its Pro
Rata Share of the amount remaining to be distributed; and
(iii) third, to the extent proceeds remain after the application
pursuant to the preceding clauses (i) through (iii), inclusive, and
following the termination of this Agreement pursuant to Section 10.8(a)
hereof, to the Assignor or to whomever may be lawfully entitled to receive
such surplus.
-15-
(b) For purposes of this Agreement, (x) "Pro Rata Share" shall mean,
when calculating a Secured Creditor's portion of any distribution or amount,
that amount (expressed as a percentage) equal to a fraction the numerator of
which is the then unpaid amount of such Secured Creditor's Obligations and the
denominator of which is the then outstanding amount of all Obligations.
(c) This Agreement is made with full recourse to the Assignor
(including, without limitation, with full recourse to all assets of the
Assignor) and pursuant to and upon all the warranties, representations,
covenants and agreements on the part of the Assignor contained herein, and
otherwise in writing in connection herewith.
7.5 Remedies Cumulative. Each and every right, power and remedy hereby
specifically given to the Collateral Agent shall be in addition to every other
right, power and remedy specifically given to the Collateral Agent under this
Agreement, or now or hereafter existing at law, in equity or by statute and each
and every right, power and remedy whether specifically herein given or otherwise
existing may be exercised from time to time or simultaneously and as often and
in such order as may be deemed expedient by the Collateral Agent. All such
rights, powers and remedies shall be cumulative and the exercise or the
beginning of the exercise of one shall not be deemed a waiver of the right to
exercise any other or others. No delay or omission of the Collateral Agent in
the exercise of any such right, power or remedy and no renewal or extension of
any of the Obligations shall impair any such right, power or remedy or shall be
construed to be a waiver of any Default or Event of Default or an acquiescence
thereof. No notice to or demand on the Assignor in any case shall entitle it to
any other or further notice or demand in similar or other circumstances or
constitute a waiver of any of the rights of the Collateral Agent to any other or
further action in any circumstances without notice or demand. In the event that
the Collateral Agent shall bring any suit to enforce any of its rights hereunder
and shall be entitled to judgment, then in such suit the Collateral Agent may
recover reasonable expenses, including reasonable attorneys' fees, and the
amounts thereof shall be included in such judgment.
7.6 Discontinuance of Proceedings. In case the Collateral Agent shall
have instituted any proceeding to enforce any right, power or remedy under this
Agreement by foreclosure, sale, entry or otherwise, and such proceeding shall
have been discontinued or abandoned for any reason or shall have been determined
adversely to the Collateral Agent, then and in every such case the Assignor, the
Collateral Agent and each holder of any of the Obligations shall be restored to
their former positions and rights hereunder with respect to the Collateral
subject to the security interest created under this Agreement, and all rights,
remedies and powers of the Collateral Agent shall continue as if no such
proceeding had been instituted.
ARTICLE VIII
INDEMNITY; APPOINTMENT OF COLLATERAL AGENT BY SECURED PARTIES
8.1 Indemnity.(a) Indemnity by Assignor. The Assignor agrees to
indemnify, reimburse and hold the Collateral Agent, each Secured Creditor and
their respective successors, assigns, employees, affiliates and agents
(hereinafter in this Section 8.1 referred to individually as "Indemnitee," and
collectively as "Indemnitees") harmless from any and all liabilities,
-16-
obligations, damages, injuries, penalties, claims, demands, actions, suits,
judgments and any and all costs, expenses or disbursements (including reasonable
attorneys' fees and expenses) (for the purposes of this Section 8.1 and Section
8.5(b) the foregoing are collectively called "expenses") of whatsoever kind and
nature imposed on, asserted against or incurred by any of the Indemnitees in any
way relating to or arising out of this Agreement or any other document executed
in connection herewith or in any other way connected with the administration of
the transactions contemplated hereby or thereby or the enforcement of any of the
terms of, or the preservation of any rights under any thereof, or in any way
relating to or arising out of the manufacture, ownership, ordering, purchase,
delivery, control, acceptance, lease, financing, possession, operation,
condition, sale, return or other disposition, or use of the Collateral
(including, without limitation, latent or other defects, whether or not
discoverable), the violation of the laws of any country, state or other
governmental body or unit, any tort (including, without limitation, claims
arising or imposed under the doctrine of strict liability, or for or on account
of injury to or the death of any Person (including any Indemnitee), or property
damage), or contract claim; provided that no Indemnitee shall be indemnified
pursuant to this Section 8.1(a) for losses, damages or liabilities to the extent
caused by the gross negligence or willful misconduct of such Indemnitee (as
determined by a court of competent jurisdiction in a final and non-appealable
decision). The Assignor agrees that upon written notice by any Indemnitee of the
assertion of such a liability, obligation, damage, injury, penalty, claim,
demand, action, suit or judgment, the Assignor shall assume full responsibility
for the defense thereof. Each Indemnitee agrees to use its best efforts to
promptly notify the Assignor of any such assertion of which such Indemnitee has
knowledge.
(b) Without limiting the application of Section 8.1(a) hereof, the
Assignor agrees to pay or reimburse the Collateral Agent for any and all
reasonable fees, costs and expenses incurred in connection with the creation,
preservation or protection of the Collateral Agent's Liens on, and security
interest in, the Collateral, including, without limitation, all fees and taxes
in connection with the recording or filing of instruments and documents in
public offices, payment or discharge of any taxes or Liens upon or in respect of
the Collateral, premiums for insurance with respect to the Collateral and all
other fees, costs and expenses in connection with protecting, maintaining or
preserving the Collateral and the Collateral Agent's interest therein, whether
through judicial proceedings or otherwise, or in defending or prosecuting any
actions, suits or proceedings arising out of or relating to the Collateral.
(c) If and to the extent that the obligations of the Assignor under
this Section 8.1 are unenforceable for any reason, the Assignor hereby agrees to
make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
8.2 Indemnity Obligations Secured by Collateral; Survival. Any amounts
paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Collateral. The
indemnity obligations of the Assignor contained in this Section 8.1 and 8.2
shall continue in full force and effect notwithstanding the full payment of all
of the other Obligations and notwithstanding the full payment of all the Notes
issued under the Note Purchase Agreement.
8.3 Appointment and Authorization of Collateral Agent.
-17-
Each Secured Creditor hereby irrevocably (subject to Section 8.10)
appoints, designates and authorizes the Collateral Agent to take such action on
its behalf under the provisions of this Agreement and the Notes and to exercise
such powers and perform such duties as are expressly delegated to it by the
terms of this Agreement or the Notes, together with such powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or the Notes, the Collateral Agent shall
not have any duty or responsibility except those expressly set forth herein, nor
shall the Collateral Agent have or be deemed to have any fiduciary relationship
with any Secured Creditor, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or the Notes or otherwise exist against the Collateral Agent.
8.4 Delegation of Duties.
The Collateral Agent may execute any of its duties under this
Agreement or the Notes by or through agents, employees or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters pertaining to such
duties. The Collateral Agent shall not be responsible for the negligence or
misconduct of any agent or attorney-in-fact that it selects with reasonable
care.
8.5 Liability of Collateral Agent.
(a) None of the Collateral Agent nor any of its directors, officers,
employees or agents shall (i) be liable for any action taken or omitted to be
taken by any of them under or in connection with this Agreement or the Notes or
the transactions contemplated hereby (except for its own gross negligence or
willful misconduct), or (ii) be responsible in any manner to any of the Secured
Creditors for any recital, statement, representation or warranty made by the
Assignor or any subsidiary or affiliate of the Assignor, or any officer thereof,
contained in this Agreement or in the Notes , or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Collateral Agent under or in connection with, this Agreement or the Notes, or
the validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or the Notes, or for any failure of the Assignor or any other party to
this Agreement or the Notes to perform its obligations hereunder or thereunder.
The Collateral Agent shall not be under any obligation to any Secured Creditor
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or the Notes, or to
inspect the properties, books or records of the Assignor or any of the
Assignor's subsidiaries or affiliates.
(b) The Secured Creditors hereby agree to indemnify, reimburse and
hold the Collateral Agent and its respective successors, assigns and employees
(hereinafter in this Section 8.5(b) referred to individually as an "Agent
Indemnitee," and collectively as "Agent Indemnitees") harmless from any and all
expenses of whatsoever kind and nature imposed on, asserted against or incurred
by any of the Agent Indemnitees relating to or arising out of the performance by
the Collateral Agent of its obligations under this Agreement as collateral agent
or other document executed in connection herewith or in any other way connected
with the administration of the transactions contemplated hereby or thereby by
the Collateral Agent as the collateral agent or the enforcement of any of the
terms of, or the preservation of any rights under
-18-
any thereof, or in any way relating to or arising out of the manufacture,
ownership, ordering, purchase, delivery, control, acceptance, lease, financing,
possession, operation, condition, sale, return or other disposition, or use of
the Collateral (including, without limitation, latent or other defects, whether
or not discoverable), the violation of the laws of any country, state or other
governmental body or unit, any tort (including, without limitation, claims
arising or imposed under the doctrine of strict liability, or for or on account
of injury to or the death of any Person (including any Agent Indemnitee), or
property damage), or contract claim; provided that no Agent Indemnitee shall be
indemnified pursuant to this Section 8.5(b) for losses, damages or liabilities
to the extent caused by the gross negligence or willful misconduct of such Agent
Indemnitee (as determined by a court of competent jurisdiction in a final and
non-appealable decision).
8.6 Reliance by Collateral Agent.
The Collateral Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper person or persons,
and upon advice and statements of legal counsel (including counsel to the
Assignor), independent accountants and other experts selected by the Collateral
Agent. The Collateral Agent shall be fully justified in failing or refusing to
take any action under this Agreement or the Notes unless it shall first receive
such advice or concurrence of the Secured Creditors as it deems appropriate and,
if it so requests, confirmation from the Secured Creditors of their obligation
to indemnify the Collateral Agent against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any such
action. The Collateral Agent shall in all cases be fully protected in acting, or
in refraining from acting, under this Agreement or the Notes in accordance with
a request or consent of the Secured Creditors and such request and any action
taken or failure to act pursuant thereto shall be binding upon all of the
Secured Creditors.
8.7 Notice of Default.
The Collateral Agent shall not be deemed to have knowledge or notice
of the occurrence of any Default unless the Collateral Agent shall have received
written notice from a Secured Creditor or the Assignor referring to this
Agreement, describing such Default and stating that such notice is a "notice of
default". The Collateral Agent will notify the Secured Creditors of its receipt
of any such notice. The Collateral Agent shall take such action with respect to
such Default as may be requested by the Secured Creditors; provided that unless
and until the Collateral Agent has received any such request, the Collateral
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to Default as it shall deem advisable or in the
best interest of the Secured Creditors.
8.8 Credit Decision.
-19-
Each Secured Creditor acknowledges that the Collateral Agent has not
made any representation or warranty to it, and that no act by the Collateral
Agent hereafter taken, including any review of the affairs of the Assignor,
shall be deemed to constitute any representation or warranty by the Collateral
Agent to any Secured Creditor. Each Secured Creditor represents to the
Collateral Agent that it has, independently and without reliance upon the
Collateral Agent and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Assignor, and made its own decision to enter into this
Agreement and the Notes and to complete the transactions contemplated hereunder
and thereunder. Each Secured Creditor also represents that it will,
independently and without reliance upon the Collateral Agent and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own analysis, appraisals and decisions in taking or not taking action
under this Agreement, the Notes and the transactions contemplated thereby , and
to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Assignor. The Collateral Agent shall not have any duty
or responsibility to provide any Secured Creditor with any credit or other
information concerning the business, prospects, operations, property, financial
or other condition or creditworthiness of the Assignor which may come into the
possession of the Collateral Agent.
8.9 Reimbursement.
To the extent the Assignor does not reimburse the Collateral Agent
within 60 days of billing, each Secured Creditor shall reimburse the Collateral
Agent upon demand for its ratable share of any costs or out-of-pocket expenses
(including attorneys fees and costs) incurred by the Collateral Agent to the
extent such costs or out-of-pocket expenses arise in connection with the
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, , or any document contemplated
by or referred to herein, to the extent that the Collateral Agent is not
reimbursed for such expenses by or on behalf of the Assignor; provided that the
Collateral Agent will use its reasonable efforts to obtain the approval of the
Secured Creditors before incurring any material reimbursable costs or expenses.
The undertaking in this Section shall survive the cancellation and/or conversion
of the Notes, any foreclosure under, or modification, release or discharge of,
any or all of the documents contemplated by the Notes, termination of this
Agreement and the resignation or replacement of the Collateral Agent.
8.10 Successor Agent.
The Collateral Agent may resign as Collateral Agent at any time, and
shall resign as Collateral Agent if requested to do so by Secured Creditors who
in aggregate hold 75% or more of the outstanding debt, upon 30 days' notice to
the Company and the Secured Creditors. If the Collateral Agent resigns under
this Agreement, the Note holders shall agree by the effective date of the
resignation notice to appoint a new Collateral Agent by 75% or more of the
holders of the outstanding Notes. If such holders fail to elect a new collateral
agent by the requisite majority by the effective date of the resignation Notice
then the party holding the
-20-
largest proportion of the outstanding Note balances shall become the Collateral
Agent. Upon the acceptance of its appointment as successor agent hereunder, such
successor agent shall succeed to all the rights, powers and duties of the
retiring Collateral Agent and the term "Collateral Agent" shall mean such
successor agent, and the retiring Collateral Agent's appointment, powers and
duties as Collateral Agent shall be terminated. After any retiring Collateral
Agent's resignation hereunder as Collateral Agent, the provisions of this
Section 8 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Collateral Agent under this Agreement. If no successor
agent has accepted appointment as Collateral Agent by the date which is 30 days
following a retiring Collateral Agent's notice of resignation, the retiring
Collateral Agent's resignation shall nevertheless thereupon become effective and
the Secured Creditors shall perform all of the duties of the Collateral Agent
hereunder until such time, if any, as the Secured Creditors shall appoint a
successor agent as provided for above.
8.11 Collateral Matters.
The Secured Creditors irrevocably authorize the Collateral Agent, at
its option and in its discretion, to release any Lien or security interest
granted to or held by the Collateral Agent under the Security Agreements (a)
upon cancellation of the Notes and payment in full of all obligations of the
Assignor thereunder; (b) constituting property sold or to be sold or disposed of
as part of or in connection with any disposition permitted by this Agreement or
the Notes; or (c) if approved, authorized or ratified in writing by the Secured
Creditors. Upon request by the Collateral Agent at any time, the Secured
Creditors will confirm in writing the Collateral Agent's authority to release,
or subordinate its interest in, particular types or items of collateral pursuant
to this Section 8.11.
ARTICLE IX
DEFINITIONS
The following terms shall have the meanings herein specified. Such
definitions shall be equally applicable to the singular and plural forms of the
terms defined.
"Account" shall mean any "account" as such term is defined in the
Uniform Commercial Code as in effect on the date hereof in the State of New
York, and in any event shall include but shall not be limited to, all rights to
payment of any monetary obligation, whether or not earned by performance, (i)
for property that has been or is to be sold, leased, licensed, assigned or
otherwise disposed of, (ii) for services rendered or to be rendered, (iii) for a
policy of insurance issued or to be issued, (iv) for a secondary obligation
incurred or to be incurred, (v) for energy provided or to be provided, (vi) for
the use or hire of a vessel under a charter or other contract, (vii) arising out
of the use of a credit or charge card or information contained on or for use
with the card, or (viii) as winnings in a lottery or other game of chance
operated or sponsored by a State, governmental unit of a State, or person
licensed or authorized to operate the game by a State or governmental unit of a
State.
-21-
"Agreement" shall mean this Security Agreement as the same may be
modified, supplemented or amended from time to time in accordance with its
terms.
"Assignor" shall have the meaning provided in the first paragraph of
this Agreement.
"Cash Collateral Account" shall mean a cash collateral account
maintained with, and in the sole dominion and control of, the Collateral Agent
for the benefit of the Secured Creditors.
"Collateral" shall have the meaning provided in Section 1.1(a) of this
Agreement.
"Collateral Agent" shall have the meaning provided in the first
paragraph of this Agreement.
"Contract Rights" shall mean all rights of the Assignor under each
Contract, including, without limitation, (i) any and all rights to receive and
demand payments under any or all Contracts, (ii) any and all rights to receive
and compel performance under any or all Contracts and (iii) any and all other
rights, interests and claims now existing or in the future arising in connection
with any or all Contracts.
"Contracts" shall mean all contracts between the Assignor and one or
more additional parties (including, without limitation, licensing agreements and
any partnership agreements, joint venture agreements and limited liability
company agreements).
"Copyrights" shall mean any United States copyright owned by the
Assignor, including any registrations of any copyrights, in the United States
Copyright Office or any foreign equivalent office, as well as any application
for a copyright registration now or hereafter made with the United States
Copyright Office or any foreign equivalent office by the Assignor.
"Default" shall mean any event which with notice or lapse of time, or
both, would constitute an Event of Default.
"Documents" shall mean "documents" as such term is defined in the
Uniform Commercial Code as in effect on the date hereof in the State of New
York.
"Equipment" shall mean any "equipment" as such term is defined in the
Uniform Commercial Code as in effect on the date hereof in the State of New
York, and in any event, shall include, but shall not be limited to, all
machinery, equipment, furnishings, fixtures and vehicles now or hereafter owned
by the Assignor and any and all additions, substitutions and replacements of any
of the foregoing and all accessions thereto, wherever located, together with all
attachments, components, parts, equipment and accessories installed thereon or
affixed thereto.
"Event of Default" shall mean any payment default on any of the
Obligations after the expiration of any applicable grace period.
-22-
"General Intangibles" shall mean "general intangibles" as such term is
defined in the Uniform Commercial Code as in effect on the date hereof in the
State of New York.
"Goods" shall mean "goods" as such term is defined in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
"Indemnitee" shall have the meaning provided in Section 8.1(a) of this
Agreement.
"Instrument" shall mean "instruments" as such term is defined in the
Uniform Commercial Code as in effect on the date hereof in the State of New
York.
"Inventory" shall mean merchandise, inventory and goods, and all
additions, substitutions and replacements thereof and all accessions thereto,
wherever located, together with all goods, supplies, incidentals, packaging
materials, labels, materials and any other items used or usable in
manufacturing, processing, packaging or shipping same, in all stages of
production from raw materials through work in process to finished goods, and all
products and proceeds of whatever sort and wherever located any portion thereof
which may be returned, rejected, reclaimed or repossessed by the Collateral
Agent from the Assignor's customers, and shall specifically include all
"inventory" as such term is defined in the Uniform Commercial Code as in effect
on the date hereof in the State of New York.
"Investment Property" shall mean "investment property" as such term is
defined in the Uniform Commercial Code as in effect on the date hereof in the
State of New York.
"Liens" shall mean any security interest, deed of trust, mortgage,
pledge, lien, claim, charge, encumbrance, title retention agreement, lessor's
interest in a financing lease or analogous instrument, in, of, or on the
Assignor's property.
"Location" of the Assignor, shall mean the Assignor's "location" as
determined pursuant to Section 9-307 of the UCC.
"Marks" shall mean all right, title and interest in and to any
trademarks, service marks and trade names now held or hereafter acquired by the
Assignor, including any registration of any trademarks and service marks in the
United States Patent and Trademark Office or in any equivalent foreign office
and any trade dress including logos and/or designs used by the Assignor.
"Material Adverse Effect" shall mean a material adverse effect on the
business, property, assets, liabilities (actual or contingent), operations or
condition (financial or otherwise) of the Assignor and its Subsidiaries taken as
a whole.
"Obligations" shall mean (i) the full and prompt payment when due of
all obligations and indebtedness (including, without limitation, indemnities,
fees and interest thereon) of the Assignor to the Investors, whether now
existing or hereafter incurred under, arising out of, or in connection with the
Note Purchase Agreement and the Notes issued thereunder and the due performance
and compliance by the Assignor with all of the terms, conditions and agreements
contained in the Note Purchase Agreement and the Notes issued thereunder; (ii)
any and all sums advanced by the Assignee in order to preserve the Collateral or
-23-
preserve its security interest in the Collateral; (iii) in the event of any
proceeding for the collection or enforcement of any indebtedness, obligations,
or liabilities of the Assignor after an Event of Default shall have occurred and
be continuing, the reasonable expenses of retaking, holding, preparing for sale
or lease, selling or otherwise disposing of or realizing on the Collateral, or
of any exercise by the Assignee of its rights hereunder, together with
reasonable attorneys' fees and court costs; and (iv) all amounts paid by any
Indemnitee as to which such Indemnitee has the right to reimbursement under
Section 8.1 of this Agreement.
"Patents" shall mean any patent to which the Assignor now or hereafter
has any right, title or interest therein, and any divisions, continuations
(including, but not limited to, continuations-in-parts) and improvements
thereof, as well as any application for a patent now or hereafter made by the
Assignor.
"Permits" shall mean, to the extent permitted to be assigned by the
terms thereof or by applicable law, all licenses, permits, rights, orders,
variances, franchises or authorizations of or from any governmental authority or
agency.
"Permitted Liens" shall mean
(i) inchoate Liens for taxes, assessments or governmental charges or
levies not yet due or Liens for taxes, assessments or governmental charges
or levies being contested in good faith and by appropriate proceedings for
which adequate reserves have been established in accordance with generally
accepted accounting principles;
(ii) Liens in respect of property or assets of the Assignor or any of
its subsidiaries imposed by law, which were incurred in the ordinary course
of business and do not secure indebtedness for borrowed money, such as
carriers', warehousemen's, materialmen's and mechanics' liens and other
similar Liens arising in the ordinary course of business, and (x) which do
not in the aggregate materially detract from the value of Assignor's or
such subsidiary's property or assets or materially impair the use thereof
in the operation of the business of Assignor or such Subsidiary or
(y) which are being contested in good faith by appropriate proceedings,
which proceedings have the effect of preventing the forfeiture or sale of
the property or assets subject to any such Lien;
(iii) leases or subleases granted to other Persons not materially
interfering with the conduct or value of the business of Assignor or any of
its subsidiaries and non-assignable, non-exclusive licenses and
sub-licenses to third parties;
(iv) Liens upon assets of the Assignor or any of its subsidiaries
subject to capitalized lease obligations, provided that (x) such Liens only
serve to secure the payment of indebtedness arising under such capitalized
lease obligation and (y) the Lien encumbering the asset giving rise to the
capitalized lease obligation does not encumber any asset of Assignor or any
subsidiary of the Assignor;
(v) Liens placed upon equipment or machinery and used in the ordinary
course of business of the Assignor or any of its subsidiaries and placed at
the time of the acquisition thereof by the Assignor or such subsidiary or
-24-
within 90 days thereafter to secure indebtedness incurred to pay all or a
portion of the purchase price thereof or to secure indebtedness incurred
solely for the purpose of financing the acquisition of any such equipment
or machinery or extensions, renewals or replacements of any of the
foregoing for the same or a lesser amount;
(vi) easements, rights-of-way, restrictions, encroachments and other
similar charges or encumbrances, and minor title deficiencies, in each case
not securing indebtedness and not materially interfering with the conduct
or value of the business of Assignor or any of its subsidiaries;
(vii) Liens arising from precautionary UCC financing statement filings
regarding operating leases or bailee arrangements entered into in the
ordinary course of business;
(viii) Liens arising out of the existence of judgments or awards in
respect of which Assignor or any of its subsidiaries shall in good faith be
prosecuting an appeal or proceedings for review and in respect of which
there shall have been secured a subsisting stay of execution pending such
appeal or proceedings, provided that the aggregate amount of all cash and
the fair market value of all other property subject to such Liens does not
exceed $125,000 at any time outstanding;
(ix) statutory and common law landlords' liens under leases to which
the Assignor or any of its subsidiaries is a party;
(x) Liens incurred in the ordinary course of business in connection
with workers compensation claims, unemployment insurance and social
security benefits and Liens securing the performance of bids, tenders,
leases and contracts in the ordinary course of business, statutory
obligations, surety bonds, performance bonds and other obligations of a
like nature incurred in the ordinary course of business and consistent with
past practice (exclusive of obligations in respect of the payment for
borrowed money), provided that the aggregate amount of all cash and the
fair market value of all other property subject to all Liens permitted by
this clause (xii) shall not at any time exceed $125,000; and
(xi) other Liens incidental to the conduct of the business of the
Assignor or any of its subsidiaries that (i) were not incurred in
connection with indebtedness, (ii) do not materially detract from the value
of the assets subject to such Liens or materially impair the use thereof in
the operation of such business (provided to the extent that any such Liens
attach to any Collateral such Liens shall be junior to the Liens created in
favor of the Collateral Agent) and (iii) do not at any time for all such
Liens encumber cash and other property having an aggregate value in excess
of, or secure outstanding obligations in the aggregate in excess of,
$100,000.
"Pro Rata Share" shall have the meaning provided in Section 7.4(b) of
this Agreement.
"Proceeds" shall mean all "proceeds" as such term is defined in the
Uniform Commercial Code as in effect in the State of New York on the date hereof
and, in any event, shall also include, but not be limited to, (i) any and all
proceeds of any insurance, indemnity, warranty or guaranty payable to the
Collateral Agent or the Assignor from time to time with respect to any of the
-25-
Collateral, (ii) any and all payments (in any form whatsoever) made or due and
payable to the Assignor from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral by any governmental authority (or any person acting under color of
governmental authority) and (iii) any and all other amounts from time to time
paid or payable under or in connection with any of the Collateral.
"Software" shall mean "software" as such term is defined in the
Uniform Commercial Code as in effect on the date hereof in the State of New
York.
"Supporting Obligations" shall mean any "supporting obligation" as
such term is defined in the Uniform Commercial Code as in effect on the date
hereof in the State of New York, now or hereafter owned by the Assignor, or in
which the Assignor has any rights, and, in any event, shall include, but shall
not be limited to all of the Assignor's rights in any letter-of-credit right or
secondary obligation that supports the payment or performance of, and all
security for, any Account, Document, General Intangible, Instrument or
Investment Property.
"Termination Date" shall have the meaning provided in Section 10.9(a)
of this Agreement.
"Trade Secret Rights" shall have the meaning provided in Section 5.1
of this Agreement.
"UCC" shall mean the Uniform Commercial Code as in effect from time to
time in the relevant jurisdiction.
ARTICLE X
MISCELLANEOUS
10.1 Notices. Except as otherwise specified herein, all notices,
requests, demands or other communications to or upon the respective parties
hereto shall be sent or delivered by hand, overnight mail or courier service and
all such notices and communications shall, when mailed, delivered or sent by
courier, be effective when deposited in the mails, delivered or overnight
courier, as the case may be, except that notices and communications to the
Collateral Agent or the Assignor shall not be effective until received by the
Collateral Agent or the Assignor, as the case may be. All notices and other
communications shall be in writing and addressed as follows:
-26-
(a) if to the Assignor,:
eMagin Corporation
2070 Route 52
Hopewell Junction, NY 12533
Attention: Chief Financial Officer
Telephone No.: (845) 892-1900
Telecopier No.: (845) 892-1901
(b) if to the Collateral Agent, at:
Verus Support Services Inc.
520 Madison Avenue, 38th Floor
New York, New York 10016
Attention: Chief Operating Officer
Telephone No.: (212) 588-0865
Fax. No. (212) 588-0869; and
(c) if to any Secured Creditor, at such address as such
Secured Creditor shall have specified in the Note Purchase Agreement;
or at such other address or addressed to such other individual as shall have
been furnished in writing by any Person described above to the party required to
give notice hereunder.
10.2 Waiver; Amendment. Except as provided in Sections 10.8 and 10.13,
none of the terms and conditions of this Agreement may be changed, waived,
modified or varied in any manner whatsoever unless in writing duly signed by the
Assignor and the Collateral Agent (with the written consent of the Secured
Creditors.
10.3 Obligations Absolute. The obligations of the Assignor hereunder
shall remain in full force and effect without regard to, and shall not be
impaired by, (a) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of the Assignor; (b) any
exercise or non-exercise, or any waiver of, any right, remedy, power or
privilege under or in respect of this Agreement; or (c) any amendment to or
modification of any security for any of the Obligations; whether or not the
Assignor shall have notice or knowledge of any of the foregoing.
10.4 Unequal Payment:. Each Secured Creditor agrees that if it shall,
through the exercise of any right granted to the Secured Creditors under this
Agreement, under the Note Purchase Agreement, the Notes or by applicable law,
including, but not limited to any right of set-off, any secured claim under
Section 506 of the Bankruptcy Code or any other security or interest arising
from, or in lieu of such secured claim, and received by such Secured Creditor
under any applicable bankruptcy, insolvency, or other similar law, or otherwise,
obtain payment in respect of its Note as a result of which the unpaid portion of
its Note is proportionately less than the unpaid portion of the Notes of the
other Secured Creditors, then (a) it shall promptly purchase at par (and shall
be deemed to have thereupon purchased) from such other Secured Creditors a
participation in the Notes of each such other Secured Creditor, so that the
-27-
amount of such Secured Creditor's Note in the total participation in the Notes
of the other Secured Creditors shall be in the same proportion to all Notes then
outstanding as the amount of its Note prior to the obtaining of such payment was
to the amount all Notes outstanding prior to the obtaining such payment and (b)
such other adjustments shall be made from time to time as shall be equitable to
ensure that Secured Creditors share the benefits of such payment pro rata. The
term "Note" as used in this paragraph shall include accrued interest thereon.
10.5 Successors and Assigns. This Agreement shall be binding upon the
Assignor and its successors and assigns and shall inure to the benefit of the
Collateral Agent and the other Secured Creditors and their respective successors
and assigns. All agreements, statements, representations and warranties made by
the Assignor herein or in any certificate or other instrument delivered by the
Assignor or on its behalf under this Agreement shall be considered to have been
relied upon by the Secured Creditors and shall survive the execution and
delivery of this Agreement regardless of any investigation made by the Secured
Creditors or on their behalf.
10.6 Headings Descriptive. The headings of the several sections of
this Agreement are inserted for convenience only and shall not in any way affect
the meaning or construction of any provision of this Agreement.
10.7 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY
TRIAL.(a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF
NEW YORK. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
THE ASSIGNOR HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS. THE ASSIGNOR HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT
ANY SUCH COURTS LACK JURISDICTION OVER THE ASSIGNOR, AND AGREES NOT TO PLEAD OR
CLAIM IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT BROUGHT
IN ANY OF THE AFORESAID COURTS THAT ANY SUCH COURT LACKS JURISDICTION OVER THE
ASSIGNOR. THE ASSIGNOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS
OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE
MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO
ANY THE ASSIGNOR AT ITS ADDRESS FOR NOTICES AS PROVIDED IN SECTION 10.1 ABOVE,
SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. THE ASSIGNOR HEREBY
IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF PROCESS AND FURTHER
IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY ACTION OR PROCEEDING
COMMENCED HEREUNDER THAT SUCH SERVICE OF PROCESS WAS IN ANY WAY INVALID OR
INEFFECTIVE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE COLLATERAL AGENT UNDER
THIS AGREEMENT, OR ANY SECURED CREDITOR, TO SERVE PROCESS IN ANY OTHER MANNER
-28-
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
THE ASSIGNOR IN ANY OTHER JURISDICTION.
(b) THE ASSIGNOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR
PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT BROUGHT IN THE
COURTS REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND
AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES
ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
10.8 Assignor's Duties. It is expressly agreed, anything herein
contained to the contrary notwithstanding, that the Assignor shall remain liable
to perform all of the obligations, if any, assumed by it with respect to the
Collateral and the Collateral Agent shall not have any obligations or
liabilities with respect to any Collateral by reason of or arising out of this
Agreement, nor shall the Collateral Agent be required or obligated in any manner
to perform or fulfill any of the obligations of the Assignor under or with
respect to any Collateral.
10.9 Termination; Release. (a) After the Termination Date, this
Agreement shall terminate (provided that all indemnities set forth herein
including, without limitation in Section 8.1 hereof, shall survive such
termination) and the Collateral Agent, at the request and expense of the
Assignor, will promptly execute and deliver to the Assignor a proper instrument
or instruments (including Uniform Commercial Code termination statements on form
UCC-3) acknowledging the satisfaction and termination of this Agreement, and
will duly assign, transfer and deliver to the Assignor (without recourse and
without any representation or warranty) such of the Collateral as may be in the
possession of the Collateral Agent and as has not theretofore been sold or
otherwise applied or released pursuant to this Agreement. As used in this
Agreement, "Termination Date" shall mean the date upon which no Note issued
under the Note Purchase Agreement is outstanding (including the cancellation of
such Notes by way of the conversion of the Notes to common shares pursuant to
the terms of such Notes) and all Obligations then due and payable have been paid
in full.
(b) At any time that the Assignor desires that the Collateral Agent
take any action to acknowledge or give effect to any release of Collateral
pursuant to the foregoing Section 10.9(a), the Assignor shall deliver to the
Collateral Agent a certificate signed by a senior officer of the Assignor
stating that the release of the respective Collateral is permitted pursuant to
such Section 10.9(a).
10.10 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
-29-
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Assignor and the
Collateral Agent.
10.11 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.12 The Collateral Agent and the other Secured Creditors. The
Collateral Agent will hold in accordance with this Agreement all items of the
Collateral at any time received under this Agreement. It is expressly understood
and agreed that the obligations of the Collateral Agent as holder of the
Collateral and interests therein and with respect to the disposition thereof,
and otherwise under this Agreement, are only those expressly set forth in this
Agreement. The Collateral Agent shall act hereunder on the terms and conditions
set forth herein.
10.13 Benefit of Agreement. This Agreement shall be binding upon the
parties hereto and their respective successors and assigns and shall inure to
the benefit of and be enforceable by each of the parties hereto and its
successors and assigns.
10.14 Joinder by Additional Secured Creditors Notwithstanding anything
to the contrary in this Agreement, the parties hereto expressly agree that
additional parties may join this Agreement as Secured Creditors, from time to
time (and prior to January 30, 2002) and become a party hereto provided, that,
each such additional party shall agree to be bound by the terms and conditions
of this Agreement and shall agree to assume the rights and obligations of a
Secured Creditor hereunder as if such additional party was an original signatory
hereto as of the date of this Agreement, and, provided, further, that such
additional party shall be permitted under Section 1(e) of the Note Purchase
Agreement to join the Note Purchase Agreement as an additional Investor (as such
term is defined in the Note Purchase Agreement).
[Remainder of this page intentionally left blank; signature page
follows]
-30-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their duly authorized officers as of the date first
above written.
ASSIGNOR:
EMAGIN CORPORATION, as Assignor
By: /s/
----------------------------------
Name:
Title:
SECURED PARTIES:
RAINBOW GATE CORPORATION
By /s/
----------------------------------
Name:
Title:
MORTIMER D. A. SACKLER
By
----------------------------------
Mortimer D. A. Sackler
Address:
MARTIN SOLOMON
------------------------------------------
Mr. Martin Solomon
Address:
SOVEREIGN BANCORP LTD.
By
-----------------------------------------
Name:
Title:
JAMES M. ARKOOSH
---------------------------------------------
Mr. James M. Arkoosh
Address:
JACK RIVKIN
---------------------------------------------
Mr. Jack Rivkin
Address:
Accepted and Agreed to:
VERUS SUPPORT SERVICES INC.,
as Collateral Agent
By:
--------------------------------------
Name: Mr. James M. Arkoosh
Title: Chief Operating Officer
ANNEX A
to
SECURITY AGREEMENT
SCHEDULE OF CHIEF EXECUTIVE OFFICES
Name Address(es) of Chief Executive Office
eMagin Corporation 2070 Route 52, Hopewell Junction
New York, NY 12533
ANNEX B
to
SECURITY AGREEMENT
SCHEDULE OF INVENTORY AND EQUIPMENT LOCATIONS
Assignor Location
eMagin Corporation 2070 Route 52, Hopewell Junction
New York, NY 12533
ANNEX C
to
SECURITY AGREEMENT
SCHEDULE OF LEGAL NAMES, TYPE OF ORGANIZATION
(AND WHETHER A REGISTERED ORGANIZATION AND/OR
A TRANSMITTING UTILITY), JURISDICTION OF ORGANIZATION,
LOCATION AND ORGANIZATIONAL IDENTIFICATION NUMBERS
Assignor's
Type of Assignor's Organization
Organization (or Location (for Identification
Exact Legal if the Assignor is Registered Purposes of NY Number (or, if it Transmitting
Name of an Individual, so Organization? Jurisidiction of UCC has none, so Utility?
Assignor indicate) (Yes/No) Organization Section 9-307) indicate) (Yes/No)
- ------------------------------------------------------------------------------------------------------------------------------------
eMagin Corporation A Delaware No Delaware Delaware None No
corporation
ANNEX D
to
SECURITY AGREEMENT
SCHEDULE OF TRADE AND FICTITIOUS NAMES
Name of Trade and/or
Assignor Fictitious Names
--------- ----------------
eMagin Corporation f/k/a FED Corporation
ANNEX E
to
SECURITY AGREEMENT
DESCRIPTION OF CERTAIN SIGNIFICANT TRANSACTIONS OCCURRING WITHIN
ONE YEAR PRIOR TO THE DATE OF THE SECURITY AGREEMENT
Name of Assigor Description of any Transactions as required
by Section 2.8 of the Security Agreement
eMargin Corporation Merger of predecessor, eMargin Corporation
a Nevada corporation, on July 16, 2001 with
wholly owned subsidiary, FED Corporation
(a Delaware corporation). The Assignor has
since continued business as eMagin
Corporation, a Delaware corporation.
ANNEX F
to
SECURITY AGREEMENT
SCHEDULE OF U.S. MARKS
MARK SERIAL NO. FILING DATE
EGLASS 75/739,315 6/99
LUMINATOR 75/739,316 6/99
POCKET MONITOR 75/739,318 6/99
SPECTRA 75/739,317 6/99
VISIONARY 75/739,319 6/99
EMAGIN 75/856,770 11/99
EVANTEC 75/853,675 11/99
EVANTIC 75/853,676 11/99
LUMIC 75/853,894 11/99
ELUMIC 75/853,679 11/99
ANNEX G
to
SECURITY AGREEMENT
SCHEDULE OF PATENTS
Title or Topic US Patent No.
Self-Aligned Electron Emitter Fabrication & Devices Formed 5,126,287
Horizontal Microelectronic Field Emission Devices & Method 5,144,191
Vertical Microelectronic Field Emission Devices Including Elongate 5,371,431
Vertical Pillars Having Resistive Bottom Portions
Vertical microelectronic field emission devices 5,475,280
Vertical Microelectronic Field Emission Devices & Method 5,647,785
Method of Forming a Spacer in Display Panels 5,529,524
Field Emission Electron Beam Source and Isolation Structure 5,534,743
Field Emission Device Comprising Dielectric Overlayer 5,548,181
Field Emission Array Magnetic Field Sensor 5,561,339
Selectively Shaped Field Emission Source and Phosphor Array 5,583,393
Field Emitter Structure and Method of Making (Divisional) 5,587,623
Panel Display with Dielectric Spacer Structure 5,619,097
Field Emitter Display Using Photoformed Spacers 5,629,583
Field Emission Electron Beam Source and Isolation Structure (Divisional) 5,663,608
Light emission device comprising light emitting organic material and 5,672,938
electron injection enhancement structure
Planarizing Process for Field Emitter Displays 5,688,158
Laser Interference Lithographic System with Automatic Fringe Spacing 5,771,098
Field Emitter Display Using Photoformed Spacers (Divisional) 5,788,550
Field Emitter Device with a Current Limiter Structure 5,828,163
Pedestal Edge Emitter and Non-Linear Current Limiters for Field Emitter 5,828,288
Displays and Other Electron Source Applications
Field Emitter Device, and Veil Process for the Fabrication Thereof 5,844,351
Matrix Getter for Use in Vacuum Panels 5,866,978
Microstructural Surgical Instruments 5,619,889
Field Emission Device Having Multiplicity of Through Conductive Vias and 5,903,098
a Backside Connector
Large Area Energy Beam Intensity Profiler 5,959,725
Emissive Display Using Organic Light Emitting Diodes 5,920,080
Annex G
Page 2
Passive Matrix OLED Display 6,069,443
An Electrode Structure for High Resolution Organic Light Emitting Diode 6,016,033
Displays and Method for Making Same
OLED Active Matrix Using a Single Transistor Current Mode Design 6,023,259
High Aspect Ratio Field Emitter Tips and Method of Making 5,965,898
Field Emitter Device, and Veil Process for the Fabrication Thereof 5,886,460
(Divisional)
Multilayer Emitter Element And Display Comprising Same 5,869,169
Compact, Body-Mountable Field Emission Display Device, And Display Panel 5,903,243
Having Utility For Use Therewith
Lithographic Structure & Method for Making Field Emitters 6,027,388
Wand Optics Column And Associated Array Wand and Charged Particle Source 4,902,898
Portable interface unit for a head-up display system (VV) D359,729
Head-mounted display system (VV) 5,539,422
Head-mounted display system with aspheric optics (VV) 5,543,816
Head-mounted display system with light blocking structure (VV) 5,546,099
Head-mounted display system (VV) D380,482
Binocular head mounted display system (VV) 5,708,449
Support for a Head Mounted Display System (VV) 5,796,374
Speech Recognition Manager (VV) 5,867,817
Reflective Micro-Display System (VV) 6,005,720
Gate Electrode Structure for Field emission Devices and Method of Making 6,010,918
Organic Light Emitting Device Structure and Process 6,060,728
High Aspect Ratio Field Emitter Tips and Method of Making (Divisional of 6,136,621
Patent #5,965,898)
Miniature microscope 6,101,028
Head-Mounted Display System (VV) 6,157,291
Laser Interferometric Lithographic System Providing Automatic Change Of 6,166,820
Fringe Spacing
Flashover Control Structures for Field Emitter Displays 6,169,358
High Performance Field Emitter & Method of Producing the Same 6,144,145
Convertible Right Eye/Left Eye Monocular Head Mounted Display System (VV) 6,181,304
Reflective Micro-Display System (VV) 6,204,975 B1
Large Area Spacerless Field Emissive Display Package 6,198,214 B1
Sealing Structure for OLEDs 6,198,220 B1
Annex G
Page 3
Field Emission Display Spacer with Guard Electrode 6,218,777 B1
Method and Apparatus for Sequential Memory Addressing 6,215,840 B1
Binocular Head Mounted Display System (VV) 6,232,934 B1
Heat Removal System for HighBrightness OLEDs 6,265,820
Flashover Control Structure for Field Emitter Displays 6,255,771
Laterally Structured, High Resolution Multicolor OLED Device 6,278,237
Vertical Sidewall Current Limiter for Field Emission Displays 08/958,925 10/28/97
High Brightness, High Efficiency Stacked Organic Light Emitting Diodes NOA 8/01
Gate Electrode Design for Coplanar Focusing in FEDs 08/958,926 7/11/97
Organic Electroluminescent Device with Improved Anode Stability 09/313,285 5/99
Fabrication Method for High Resolution Full Color Organic LED Displays 09/384,201 9/99
Field Emitter Device, and Veil Process for the Fabrication Thereof 08/290,238 8/95
Flat Panel Display Assembly Comprising Photoformed Spacer Structure, And 08/280,355 3/96
Method Of Making The Same
Head-Mounted Video Display System with Portable Video Interface Unit (VV) 07/986,422 5/94
Head-Mounted Display System With Light Blocking Structure (VV) 08/101,553 8/93
Improved Color Organic Light Emitting Diode Cell Design for Miniature 09/335,852 6/99
Displays
Lithography Using Blue OLEDs to Expose Resist 09/403,282 10/99
Bonded Active Matrix OLED Display & Method of Making 09/462,463 1/00
Current Limiter for High Resolution Field Emission Structure 09/463,137 1999
Anhydrous Method of Packaging Organic Light Emitting Displays 09/462,462 1/00
Laser Ablation Fabrication of Color OLED Displays 09/462,646 1/00
Organic Electroluminescence Devices with High Efficiency Reflecting 09/559,435 4/00
Element
Active Matrix Organic Light Emitting Diode with Doped Organic Layer 09/555,016 5/00
Having Increased Thickness
Nanocrystal-based CCM for Color OLED Devices 09/530,604 5/00
Color Conversion Media (CCM) Integrated on Emitter Array 09/530,563 5/00
Up-Emitting OLED Structure With Refractory Compound Anode 09/554,066 5/00
Hermetic Metal-to-Silicon Seals Using a Parallel Seam Sealer 09/619,617 7/00
Gray Scale Pixel Drivers 09/600,813 7/00
Method of Packaging for Si-based OLEDs 09/582,878 7/00
Annex G
Page 4
Fabrication of Novel Structure for Performance Improvement of Color 60/225,403 8/00
Organic Light Emitting Devices
Organic Light Emitting Diode Device Having High Work Function Metal-Oxide 09/642,012 8/00
Anode Layer and Method of Making
An Improved Anode Structure for OLEDs Using Molybdenum 09/700,173 2/99
Improved Pixel Driver for Accurate and Finer Gray Scale Resolution 09/647,429 11/00
Sputter Protection Layer for Up-Emitting OLED Structures 2/01
Thin Film Encapsulation of Organic Light Emitting Diode Devices 2/01
Display Method and System 2/01
Twin Capacitor Pixel Driver Circuit for Microdisplays 09/784,020 2/01
Method of Solder-Sealing Active Matrix Organic Light Emitting Diode 09/778,797 2/01
Synthesis of Pyrazolinylnaphthalic Acid Derivatives 6,288,232 B1 9/01
Gray Scale Pixel Driver for Active Matrix OLED Displays 09/765,582 1/01
Light Extraction from Color Changing Medium Layers in Organic Light 09/814,853 3/01
Emitting Diodes
Green Organic Luminophor 09/827,184 4/01
Portable Communication Device with Virtual Image Display Module TBD 5/01
Virtual Imaging System for Small Font Text 09/805,712 3/01
Thin Film Encapsulation of Organic Light Emitting Diode Devices 09/860,155 5/01
Field Sequential Reflective Liquid Crystal Displays Without External 09/786,417 3/01
Frame Buffer
Improvement of Color OLED Fabrication Process TBD 4/01
Portable Communication Device w/Virtual Image Display Module TBD 5/01
New Organic Aromatic Amines with High and Tunable Tg Values as 09/894,744 6/01
Hole-Injection or Hole-Transport Materials in OLED Technology
Organic Light Emitting Diode Devices Using Thermostable Hole-Injection 09/894,502 6/01
and Hole-Transport Compounds
A Current-Type Driver for Organic Light Emitting Diode Displays 09/908,044 7/01
Grayscale Static Pixel Cell for OLED Active Matrix Display 09/933,419 8/01
Organic Light Emitting Diode Devices With Improved Anode Stability 09/919,467 7/01
Means of Stabilizing Thin Film Transistor Amoleds TBD 9/01
Gate Electrode Structure for Field Emission Devices and Method of Making 09/436,215
Method of Patterning Color Changing Media for Organic Light Emitting 60/222,325 8/00
Diode Display Devices
ANNEX H
to
SECURITY AGREEMENT
SCHEDULE OF COPYRIGHTS
NUMBERS PUBLICATION COPYRIGHT
REGISTRATION DATE TITLE
NONE NONE NONE
ANNEX I
to
SECURITY AGREEMENT
GRANT OF SECURITY INTEREST
IN UNITED STATES TRADEMARKS
FOR GOOD AND VALUABLE CONSIDERATION, receipt and sufficiency of which
are hereby acknowledged, EMAGIN CORPORATION, a Delaware corporation (the
"Grantor") with principal offices at 2070 Route 52, Hopewell Junction, New York
12533, hereby assigns and grants to [Name of Collateral Agent], as Collateral
Agent, with principal offices at [Address] (the "Grantee"), a security interest
in (i) all of the Grantor's right, title and interest in and to the United
States trademarks, trademark registrations and trademark applications (the
"Marks") set forth on Schedule A attached hereto, (ii) all Proceeds (as such
term is defined in the Security Agreement referred to below) and products of the
Marks, (iii) the goodwill of the businesses with which the Marks are associated
and (iv) all causes of action arising prior to or after the date hereof for
infringement of any of the Marks or unfair competition regarding the same.
THIS GRANT is made to secure the satisfactory performance and payment
of all the Obligations of the Grantor, as such term is defined in the Security
Agreement among the Grantor, the other assignors from time to time party thereto
and the Grantee, dated as of _________, 200__ (as amended from time to time, the
"Security Agreement"). Upon the occurrence of the Termination Date (as defined
in the Security Agreement), the Grantee shall execute, acknowledge, and deliver
to the Grantor an instrument in writing releasing the security interest in the
Marks acquired under this Grant.
This Grant has been granted in conjunction with the security interest
granted to the Grantee under the Security Agreement. The rights and remedies of
the Grantee with respect to the security interest granted herein are as set
forth in the Security Agreement, all terms and provisions of which are
incorporated herein by reference. In the event that any provisions of this Grant
Annex I
Page 2
are deemed to conflict with the Security Agreement, the provisions of the
Security Agreement shall govern.
[Remainder of this page intentionally left blank; signature page follows]
Annex I
Page 3
IN WITNESS WHEREOF, the undersigned have executed this Grant as of the
____ day of November, 2001.
EMAGIN CORPORATION, Grantor
By
------------------------------------
Name:
Title:
[NAME OF COLLATERAL AGENT],
as Collateral Agent and Grantee
By
------------------------------------
Name:
Title:
STATE OF ______________ )
) ss.:
COUNTY OF ____________ )
On this ____ day of _________, ____, before me personally came
________ _____________ who, being by me duly sworn, did state as follows: that
[s]he is ____________ of [Name of Grantor], that [s]he is authorized to execute
the foregoing Grant on behalf of said ____________ and that [s]he did so by
authority of the [Board of Directors] of said ____________.
----------------------------
Notary Public
STATE OF ______________ )
) ss.:
COUNTY OF ____________ )
On this ____ day of _________, ____, before me personally came
________ ________________ who, being by me duly sworn, did state as follows:
that [s]he is _______________ of [Name of Collateral Agent], N.A., that [s]he is
authorized to execute the foregoing Grant on behalf of said corporation and that
[s]he did so by authority of the Board of Directors of said corporation.
----------------------------
Notary Public
SCHEDULE A
MARK REG. NO. REG. DATE
ANNEX J
to
SECURITY AGREEMENT
GRANT OF SECURITY INTEREST
IN UNITED STATES PATENTS
FOR GOOD AND VALUABLE CONSIDERATION, receipt and sufficiency of which
are hereby acknowledged, eMagin Corporation, a Delaware corporation (the
"Grantor") with principal offices at 2070 Route 52, Hopewell Junction, New York
12533, hereby assigns and grants to [Name of Collateral Agent], as Collateral
Agent, with principal offices at [address], (the "Grantee"), a security interest
in (i) all of the Grantor's rights, title and interest in and to the United
States patents (the "Patents") set forth on Schedule A attached hereto, in each
case together with (ii) all Proceeds (as such term is defined in the Security
Agreement referred to below) and products of the Patents, and (iii) all causes
of action arising prior to or after the date hereof for infringement of any of
the Patents or unfair competition regarding the same.
THIS GRANT is made to secure the satisfactory performance and payment
of all the Obligations of the Grantor, as such term is defined in the Security
Agreement among the Grantor, the other assignors from time to time party thereto
and the Grantee, dated as of November __, 2001 (as amended from time to time,
the "Security Agreement"). Upon the occurrence of the Termination Date (as
defined in the Security Agreement), the Grantee shall execute, acknowledge, and
deliver to the Grantor an instrument in writing releasing the security interest
in the Patents acquired under this Grant.
Annex J
Page 2
This Grant has been granted in conjunction with the security interest
granted to the Grantee under the Security Agreement. The rights and remedies of
the Grantee with respect to the security interest granted herein are as set
forth in the Security Agreement, all terms and provisions of which are
incorporated herein by reference. In the event that any provisions of this Grant
are deemed to conflict with the Security Agreement, the provisions of the
Security Agreement shall govern.
[Remainder of this page intentionally left blank; signature page follows]
Annex J
Page 3
IN WITNESS WHEREOF, the undersigned have executed this Grant as of the
____ day of November, 2001.
EMAGIN CORPORATION, Grantor
By
---------------------------------
Name:
Title:
[NAME OF COLLATERAL AGENT],
as Collateral Agent and Grantee
By
---------------------------------
Name:
Title:
STATE OF )
) ss:
COUNTY OF )
On this ____ day of _________, ____, before me personally came
________ _____________ who, being by me duly sworn, did state as follows: that
[s]he is ____________ of [Name of Grantor], that [s]he is authorized to execute
the foregoing Grant on behalf of said ____________ and that [s]he did so by
authority of the Board of Directors of said ____________.
-----------------------------
Notary Public
STATE OF )
) ss:
COUNTY OF )
On this ____ day of _________, ____, before me personally came
________ ________________ who, being by me duly sworn, did state as follows:
that [s]he is ________________ of [Name of Collateral Agent], that [s]he is
authorized to execute the foregoing Grant on behalf of said corporation and that
[s]he did so by authority of the Board of Directors of said corporation.
-----------------------------
Notary Public
SCHEDULE A
PATENT PATENT NO. ISSUE DATE
------ ---------- ----------
ANNEX K
to
SECURITY AGREEMENT
GRANT OF SECURITY INTEREST
IN UNITED STATES COPYRIGHTS
WHEREAS, eMagin Corporation, a Delaware corporation (the "Grantor"),
having its chief executive office at 2070 Route 52, Hopewell Junction, New York
12533, is the owner of all right, title and interest in and to the United States
copyrights and associated United States copyright registrations and applications
for registration set forth in Schedule A attached hereto;
WHEREAS, [NAME OF COLLATERAL AGENT], as Collateral Agent, having its
principal offices at [address] (the "Grantee"), desires to acquire a security
interest in said copyrights and copyright registrations and applications
therefor; and
WHEREAS, the Grantor is willing to assign to the Grantee, and to grant
to the Grantee a security interest in and lien upon the copyrights and copyright
registrations and applications therefor described above.
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, and subject to the terms and conditions of the
Security Agreement, dated as of November __, 2001, made by the Grantor, the
other assignors from time to time party thereto and the Grantee (as amended from
time to time, the "Security Agreement"), the Grantor hereby assigns to the
Grantee as collateral security, and grants to the Grantee a security interest
in, the copyrights and copyright registrations and applications therefor set
forth in Schedule A attached hereto.
This Grant has been granted in conjunction with the security interest
granted to the Grantee under the Security Agreement. The rights and remedies of
the Grantee with respect to the security interest granted herein are as set
forth in the Security Agreement, all terms and provisions of which are
incorporated herein by reference. In the event that any provisions of this Grant
are deemed to conflict with the Security Agreement, the provisions of the
Security Agreement shall govern.
[Remainder of this page intentionally left blank; signature page follows]
Annex K
Page 2
IN WITNESS WHEREOF, the undersigned have executed this Grant as of the
20th day of November, 2001.
EMAGIN CORPORATION, Grantor
By
----------------------------------------
Name:
Title:
[NAME OF COLLATERAL AGENT],
as Collateral Agent and Grantee
----------------------------------------
Name:
Title:
STATE OF )
) ss:
COUNTY OF )
On this __ day of _________, ____, before me personally came
___________ _____________, who being duly sworn, did depose and say that [s]he
is ___________________ of [Name of Grantor], that [s]he is authorized to execute
the foregoing Grant on behalf of said corporation and that [s]he did so by
authority of the Board of Directors of said corporation.
-----------------------------
Notary Public
STATE OF )
) ss:
COUNTY OF )
On this ____ day of _________, ____, before me personally came
________ _______________ who, being by me duly sworn, did state as follows: that
[s]he is _______________ of [Name of Collateral Agent], that [s]he is authorized
to execute the foregoing Grant on behalf of said __________ and that [s]he did
so by authority of the Board of Directors of said _____________.
-----------------------------
Notary Public
ARTICLE I SECURITY INTERESTS............................................................................1
1.1 Grant of Security Interests...................................................................1
1.2 Power of Attorney.............................................................................3
ARTICLE II GENERAL REPRESENTATIONS, WARRANTIES AND
COVENANTS................................................................................3
2.1 Necessary Filings.............................................................................3
2.2 No Liens......................................................................................4
2.3 Other Financing Statements....................................................................4
2.4 Chief Executive Office, Record Locations......................................................4
2.5 Location of Inventory and Equipment...........................................................4
2.6 Legal Names; Type of Organization; Jurisdiction of Organization;
Location; Organizational Identification Numbers; Changes Thereto; etc.........................4
2.7 Trade Names; Etc..............................................................................5
2.8 Certain Significant Transactions..............................................................5
2.9 Recourse......................................................................................6
ARTICLE III SPECIAL PROVISIONS CONCERNING ACCOUNTS; CONTRACT
RIGHTS; INSTRUMENTS; AND CERTAIN
OTHER COLLATERAL.........................................................................6
3.1 Additional Representations and Warranties.....................................................6
3.2 Maintenance of Records........................................................................6
3.3 Direction to Account Debtors; Contracting Parties; etc........................................6
3.4 Modification of Terms; etc....................................................................7
3.5 Collection....................................................................................7
3.6 Instruments...................................................................................8
3.7 Assignors Remain Liable Under Accounts........................................................8
3.8 Assignors Remain Liable Under Contracts.......................................................8
3.9 Further Actions...............................................................................8
ARTICLE IV SPECIAL PROVISIONS CONCERNING TRADEMARKS......................................................9
4.1 Additional Representations and Warranties.....................................................9
4.2 Licenses and Assignments......................................................................9
4.3 Infringements.................................................................................9
4.4 Preservation of Marks.........................................................................9
4.5 Maintenance of Registration..................................................................10
4.6 Future Registered Marks......................................................................10
4.7 Remedies.....................................................................................10
ARTICLE V SPECIAL PROVISIONS CONCERNING PATENTS, COPYRIGHTS
AND TRADE SECRETS.......................................................................11
5.1 Additional Representations and Warranties....................................................11
5.2 Licenses and Assignments.....................................................................11
5.3 Infringements................................................................................11
(i)
5.4 Maintenance of Patents or Copyright..........................................................11
5.5 Prosecution of Patent Applications...........................................................12
5.6 Other Patents and Copyrights.................................................................12
5.7 Remedies.....................................................................................12
ARTICLE VI PROVISIONS CONCERNING ALL COLLATERAL.........................................................12
6.1 Protection of Collateral Agent's Security....................................................12
6.2 Warehouse Receipts Non-negotiable............................................................13
6.3 Additional Information.......................................................................13
6.4 Further Actions..............................................................................13
6.5 Financing Statements.........................................................................13
ARTICLE VII REMEDIES UPON OCCURRENCE OF AN EVENT OF DEFAULT..............................................14
7.1 Remedies; Obtaining the Collateral Upon Default..............................................14
7.2 Remedies; Disposition of the Collateral......................................................15
7.3 Waiver of Claims.............................................................................16
7.4 Application of Proceeds......................................................................16
7.5 Remedies Cumulative..........................................................................17
7.6 Discontinuance of Proceedings................................................................18
ARTICLE VIII INDEMNITY....................................................................................18
8.1 Indemnity....................................................................................18
8.2 Indemnity Obligations Secured by Collateral; Survival........................................19
ARTICLE IX DEFINITIONS..................................................................................23
ARTICLE X MISCELLANEOUS................................................................................28
10.1 Notices......................................................................................28
10.2 Waiver; Amendment............................................................................28
10.3 Obligations Absolute.........................................................................28
[10.4 Unequal Payment by Collateral Agent..........................................................29
10.5 Successors and Assigns.......................................................................29
10.6 Headings Descriptive.........................................................................29
10.7 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL.......................29
10.8 Assignor's Duties............................................................................30
10.9 Termination; Release.........................................................................31
10.10 Counterparts.................................................................................31
10.11 Severability.................................................................................31
10.12 The Collateral Agent and the other Secured Creditors.........................................31
10.13 Benefit of Agreement.........................................................................31
ANNEX A Schedule of Chief Executive Offices Address(es) of Chief Executive Office
ANNEX B Schedule of Inventory and Equipment Locations
(ii)
ANNEX C Schedule of Legal Names, Type of Organization (and Whether a Registered Organization and/or a
Transmitting Utility), Jurisdiction of Organization, Location and Organizational Identification
Numbers
ANNEX D Schedule of Trade and Fictitious Names
ANNEX E Description of Certain Significant Transactions Occurring Within One Year Prior to the
Date of the Security Agreement
ANNEX F Schedule of Deposit Accounts
ANNEX G Form of Control Agreement Regarding Deposit Accounts
ANNEX H Schedule of Commercial Tort Claims
ANNEX I Schedule of Marks
ANNEX J Schedule of Patents
ANNEX K Schedule of Copyrights
ANNEX L Grant of Security Interest in United States Trademarks
ANNEX M Grant of Security Interest in United States Patents
ANNEX N Grant of Security Interest in United States Copyrights
[Remainder of this page intentionally left blank]
(iii)