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SUBORDINATED SECURITY AGREEMENT
among
EMAGIN CORPORATION,
the SECURED CREDITOR set out herein
and
ALLIGATOR HOLDINGS, INC.,
as COLLATERAL AGENT
--------------------------------
Dated as of June 20, 2002
--------------------------------
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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.....................................................5
ARTICLE III SPECIAL PROVISIONS CONCERNING ACCOUNTS; CONTRACT
RIGHTS; INSTRUMENTS; AND CERTAIN OTHER COMPANY
COLLATERAL.................................................5
3.1 Additional Representations and Warranties....................5
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..................................................7
3.7 Assignor Remains Liable Under Accounts.......................7
3.8 Assignor Remains Liable Under Contracts......................8
3.9 Further Actions..............................................8
ARTICLE IV SPECIAL PROVISIONS CONCERNING TRADEMARKS...................8
4.1 Additional Representations and Warranties....................8
4.2 Licenses and Assignments.....................................9
4.3 Infringements................................................9
4.4 Preservation of Marks........................................9
4.5 Maintenance of Registration..................................9
4.6 Future Registered Marks......................................9
4.7 Remedies.....................................................9
ARTICLE V SPECIAL PROVISIONS CONCERNING PATENTS, COPYRIGHTS
AND TRADE SECRETS.........................................10
5.1 Additional Representations and Warranties...................10
5.2 Licenses and Assignments....................................10
5.3 Infringements...............................................10
(i)
5.4 Maintenance of Patents or Copyright.........................11
5.5 Prosecution of Patent Applications..........................11
5.6 Other Patents and Copyrights................................11
5.7 Remedies....................................................11
ARTICLE VI PROVISIONS CONCERNING ALL COMPANY COLLATERAL..............11
6.1 Protection of Collateral Agent's Security...................11
6.2 Warehouse Receipts Non-negotiable...........................12
6.3 Additional Information......................................12
6.4 Further Actions.............................................12
6.5 Financing Statements........................................12
ARTICLE VII REMEDIES UPON OCCURRENCE OF AN EVENT OF DEFAULT...........13
7.1 Remedies; Obtaining the Company Collateral Upon Default.....13
7.2 Remedies; Disposition of the Company Collateral.............14
7.3 Waiver of Claims............................................15
7.4 Application of Proceeds.....................................15
7.5 Remedies Cumulative.........................................16
7.6 Discontinuance of Proceedings...............................16
ARTICLE VIII INDEMNITY; APPOINTMENT OF COLLATERAL AGENT BY
SECURED PARTIES...........................................16
8.1 Indemnity; Indemnity by Assignor............................16
8.2 Indemnity Obligations Secured by Company Collateral;
Survival....................................................17
8.3 Appointment and Authorization of Collateral Agent...........17
8.4 Delegation of Duties........................................18
8.5 Liability of Collateral Agent...............................18
8.6 Reliance by Collateral Agent................................19
8.7 Notice of Default...........................................19
8.8 Credit Decision.............................................19
8.9 Reimbursement...............................................20
8.10 Successor Agent.............................................20
8.11 Company Collateral Matters..................................20
ARTICLE IX DEFINITIONS...............................................21
ARTICLE X MISCELLANEOUS.............................................26
10.1 Notices.....................................................26
10.2 Waiver; Amendment...........................................26
10.3 Obligations Absolute........................................27
10.4 [Intentionally left blank.].................................27
10.5 Successors and Assigns......................................27
10.6 Headings Descriptive........................................27
10.7 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE;
WAIVER OF JURY TRIAL........................................27
(ii)
10.8 Assignor's Duties...........................................28
10.9 Termination; Release........................................28
10.10 Counterparts................................................29
10.11 Severability................................................29
10.12 The Collateral Agent and the Secured Creditor...............29
10.13 Benefit of Agreement........................................29
10.14 Subordination...............................................29
ANNEX A Schedule of Chief Executive Offices Address(es) of Chief Executive
Office
ANNEX B Schedule of Inventory and Equipment Locations
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)
SUBORDINATED SECURITY AGREEMENT
SUBORDINATED SECURITY AGREEMENT, dated as of June 20, 2002, made by
the undersigned assignor (the "Assignor") in favor of the undersigned Alligator
Holdings, 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 Creditor (the
"Secured Creditor"). 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:
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WHEREAS, the Assignor proposes to enter into a Secured Note Purchase
Agreement, dated as of June 20, 2002, with Mortimer D.A. Sackler (the Secured
Creditor under this Agreement), providing for the issuance of a secured note
(the "Note") by the Assignor as contemplated therein (the "Note Purchase
Agreement");
WHEREAS, the obligations accruing under the Note to the Assignor shall
be secured by the Subsidiary Collateral upon the terms and conditions set out in
the Security Agreement and the Company 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 Assignor 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 Creditor and hereby covenants
and agrees with the Collateral Agent for the benefit of the Secured Creditor 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 Creditor 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 Creditor, 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 intellectual
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
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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 Company'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 "Company Collateral").
(b) The security interest of the Collateral Agent under this Agreement
extends to all Company 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 Company 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 Creditor, 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 Company Collateral have been accomplished and the security
interest granted to the Collateral Agent pursuant to this Agreement in and to
the Company 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 Company 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
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Interest in the respective form attached hereto in the United States Patent and
Trademark Office or in the United States Copyright Office.
2.2 No Liens. The Assignor is, and as to all Company Collateral
acquired by it from time to time after the date hereof the Assignor will be, the
owner of all Company 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 Company 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 Company 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 Company 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 months 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 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
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Company 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
reasonably satisfactory to the Collateral Agent to the extent necessary to
maintain the security interest of the Collateral Agent in the Company 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 Company 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 COMPANY 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
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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 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.
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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 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 $50,000 constituting Company 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 Assignor Remains Liable Under Accounts. Anything herein to the
contrary notwithstanding, the Assignor 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 the
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 the Secured Creditor of any payment
relating to such Account pursuant hereto, nor shall the Collateral Agent or the
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 it 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.
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3.8 Assignor Remains Liable Under Contracts. Anything herein to the
contrary notwithstanding, the Assignor shall remain liable under each of the
Contracts to observe and perform all of the conditions and obligations to be
observed and performed by it thereunder, all in accordance with and pursuant to
the terms and provisions of each Contract. Neither the Collateral Agent nor the
Secured Creditor shall have any obligation or liability under any Contract by
reason of or arising out of this Agreement or the receipt by the Collateral
Agent or the Secured Creditor of any payment relating to such Contract pursuant
hereto, nor shall the Collateral Agent or the 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 any security interest in the listed Marks to
any other Person, except as granted pursuant to the Company Senior Security
Agreement. 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
docu-
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ment 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.
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 Creditor, in which event such rights, title and interest shall
immediately vest, in the Collateral Agent for the benefit of the Secured
Creditor, and the Collateral Agent shall be entitled to exercise the power of
attorney referred to in Section 4.1 hereof to
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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 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, except as granted pursuant to the Company Senior Security
Agreement. 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
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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. ss. 41 to maintain in 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 Creditor, in which event such right, title, and
interest shall immediately vest in the Collateral Agent for the benefit of the
Secured Creditor, 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 Creditor.
ARTICLE VI
PROVISIONS CONCERNING ALL COMPANY COLLATERAL
6.1 Protection of Collateral Agent's Security. The Assignor will do
nothing to impair the rights of the Collateral Agent in the Company Collateral.
The Assignor will at all
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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
Creditor, apply such proceeds in accordance with Section 7.4 hereof. The
Assignor assumes all liability and responsibility in connection with the Company
Collateral acquired by it and the liability of the Assignor to pay the
Obligations shall in no way be affected or diminished by reason of the fact that
such Company 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 Company
Collateral (including the identity of the Company Collateral or such components
thereof as may have been requested by the Collateral Agent, the value and
location of such Company 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 Company 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
Company 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 Company
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 Company 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 Company
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 Company Collateral as "all
assets" of the Assignor).
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ARTICLE VII
REMEDIES UPON OCCURRENCE OF AN EVENT OF DEFAULT
7.1 Remedies; Obtaining the Company 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 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 Company 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 Company 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 Company 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 Company 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 Company
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 Company 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 Company 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 Company 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 Company 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;
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(vi) license or sublicense, whether on an exclusive or nonexclusive
basis, any Marks, Patents or Copyrights included in the Company 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 Company Collateral or proceeds
thereof in accordance with the provisions of Section 7.4; and
(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 Company
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.
7.2 Remedies; Disposition of the Company Collateral. If any Event of
Default shall have occurred and be continuing, then any Company Collateral
repossessed by the Collateral Agent under or pursuant to Section 7.1 hereof and
any other Company 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 Company 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 Secured Creditor 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 Company
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 Company
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 Company 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.
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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 COMPANY 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 Company 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 Company 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 Company
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 Company 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 Creditor; and
(iii) third, to the extent proceeds remain after the application
pursuant to the preceding clauses (i) through (ii), inclusive, and
following the termination of this Agreement pursuant to Section 10.9(a)
hereof, to the Assignor or to whomever may be lawfully entitled to receive
such surplus.
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(b) 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 Company
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; Indemnity by Assignor.
(a) The Assignor agrees to indemnify, reimburse and hold the
Collateral Agent, the 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, 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
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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 Company 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 Company 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 Company Collateral, premiums for insurance with respect to the Company
Collateral and all other fees, costs and expenses in connection with protecting,
maintaining or preserving the Company 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 Company 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 Company Collateral; Survival. Any
amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Company 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 the Note issued
under the Note Purchase Agreement.
8.3 Appointment and Authorization of Collateral Agent. The Secured
Creditor hereby irrevocably (subject to Section 8.10) appoints, designates and
authorizes the Collateral Agent to take such action on his behalf under the
provisions of this Agreement and the Note and to exercise such powers and
perform such duties as are expressly delegated to it by the terms of this
Agreement or the Note, together with such powers as are reasonably incidental
thereto.
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Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or the Note, 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 the Secured
Creditor, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or the Note 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 Note 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 Note or
the transactions contemplated hereby (except for its own gross negligence or
willful misconduct), or (ii) be responsible in any manner to the Secured
Creditor 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 Note, 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 Note, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or the Note, or for any failure of the Assignor or any other party to
this Agreement or the Note to perform its obligations hereunder or thereunder.
The Collateral Agent shall not be under any obligation to the 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 Note, or to
inspect the properties, books or records of the Assignor or any of the
Assignor's subsidiaries or affiliates.
(b) The Secured Creditor hereby agrees 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 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 Company 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;
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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 Note unless it shall first receive such advice or concurrence of the
Secured Creditor as it deems appropriate and, if it so requests, confirmation
from the Secured Creditor of his 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 Note in accordance with a request or consent of the Secured
Creditor and such request and any action taken or failure to act pursuant
thereto shall be binding upon the Secured Creditor.
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 the 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 Creditor 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
Creditor; 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 Creditor.
8.8 Credit Decision. The 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 the Secured Creditor. The Secured Creditor represents to
the Collateral Agent that he has, independently and without reliance upon the
Collateral Agent and based on such documents and information as he has deemed
appropriate, made his own appraisal of and investigation into the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Assignor, and made his own decision to enter into this
Agreement and the Note and to complete the transactions contemplated hereunder
and thereunder. The Secured Creditor also represents that he will, independently
and without reliance upon the Collateral Agent and based on such documents and
information as he shall deem appropriate at the time, continue to make his own
analysis, appraisals and decisions in taking or not taking action under this
Agreement, the Note and the transactions contemplated thereby, and to make such
investigations as he deems necessary to inform himself 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 the
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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, the Secured Creditor shall reimburse
the Collateral Agent upon demand for 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
Creditor before incurring any material reimbursable costs or expenses. The
undertaking in this Section shall survive the cancellation of the Note, any
foreclosure under, or modification, release or discharge of, any or all of the
documents contemplated by the Note, 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
the Secured Creditor. If the Collateral Agent resigns under this Agreement, the
Secured Creditor shall appoint a new Collateral Agent by the effective date of
such resignation notice. 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 Creditor shall perform all of the duties of the
Collateral Agent hereunder until such time, if any, as the Secured Creditor
shall appoint a successor agent as provided for above.
8.11 Company Collateral Matters. The Secured Creditor irrevocably
authorizes 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 Note 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 Note; or (c) if approved, authorized or
ratified in writing by the Secured Creditor. Upon request by the Collateral
Agent at any time, the Secured Creditor will confirm in writing the Collateral
Agent's authority to release, or subordinate its interest in, particular types
or items of Company Collateral pursuant to this Section 8.11.
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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.
"Agreement" shall mean this Subordinated 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 Creditor.
"Collateral Agent" shall have the meaning provided in the first
paragraph of this Agreement.
"Company Collateral" shall have the meaning provided in Section 1.1(a)
of this Agreement.
"Company Senior Security Agreement" shall mean the Security Agreement
dated as of November 20, 2001 among the Assignor, the Secured Creditors named
therein and Versus Support Services, Inc., as Collateral Agent.
"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).
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"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.
"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.
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"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, the Subsidiary, and any
other subsidiary of the Company or Subsidiary 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 Secured Creditor, whether now
existing or hereafter incurred under, arising out of, or in connection with the
Note Purchase Agreement and the Note 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 Note issued thereunder; (ii)
any and all sums advanced by the Assignee in order to preserve the Company
Collateral or preserve its security interest in the Company 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 Company 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;
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(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 the
Subsidiary's property or assets or materially impair the use thereof in the
operation of the business of Assignor or the 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 the Subsidiary 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 the
Subsidiary;
(v) Liens placed upon equipment or machinery and used in the ordinary
course of business of the Assignor or the Subsidiary and placed at the time
of the acquisition thereof by the Assignor or the Subsidiary or 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 the Subsidiary;
(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 the Subsidiary 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 $50,000 at any time outstanding;
(ix) statutory and common law landlords' liens under leases to which
the Assignor or the Subsidiary 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
-24-
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 (x) shall not at any
time exceed $50,000; and
(xi) other Liens incidental to the conduct of the business of the
Assignor or any of the Subsidiary 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 Company 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 $10,000; and
(xii) first Lien in favor of the secured creditors under the Company
Senior Security 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
Company 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 Company 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
Company Collateral.
"Secured Creditor" shall have the meaning provided in the preamble to
this Agreement.
"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.
"Subsidiary" shall mean Virtual Vision, Inc., a Delaware corporation.
"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.
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"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:
(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:
Alligator Holdings, Inc.
444 Park Avenue South, 11th Floor
New York, NY 10016
Attn: Mr. Steven W. Gold, President
Telephone No.: (212) 696-4848
Fax. No.: (212) 696-1231; and
(c) if to the Secured Creditor, at such address as the 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. 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 Creditor);
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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 [Intentionally left blank.]
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 Secured Creditor 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 Creditor and shall survive the execution and delivery
of this Agreement regardless of any investigation made by the Secured Creditor
or on his 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 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 COM-
-27-
MENCED 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 THE SECURED CREDITOR, TO SERVE PROCESS IN ANY OTHER MANNER
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
Company Collateral and the Collateral Agent shall not have any obligations or
liabilities with respect to any Company 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 Company 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 Company 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 the Note issued under the Note Purchase Agreement is not
outstanding 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 Company
Collateral pursuant to the foregoing Section 10.9(a), the Assignor shall deliver
to the Collateral Agent a certificate signed
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by a senior officer of the Assignor stating that the release of the respective
Company 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
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. Execution of counterparts may be by facsimile.
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 Secured Creditor. The Collateral
Agent will hold in accordance with this Agreement all items of the Company
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 Company
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 Subordination. Notwithstanding anything contained herein to the
contrary, the Secured Creditor recognizes and acknowledges that all of the
Collateral Agent's and its respective rights and remedies hereunder are junior
and subordinate in right to the prior rights and remedies of the "Collateral
Agent" and the "Secured Creditors" (each as defined in the Company Senior
Security Agreement) under the Company Senior Security Agreement, and that the
relative rights and priorities to and in the Company Collateral as between the
Collateral Agent and the Secured Creditor, on the one hand, and the "Collateral
Agent" and the "Secured Creditors" (each as defined in the Company Senior
Security Agreement), on the other hand is set forth in Section 4 of the Note
Purchase Agreement.
[Remainder of this page intentionally left blank; signature page follows]
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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:
------------------------------------
Name:
Title:
SECURED PARTY:
----------------------------------------
Mortimer D. A. Sackler
Address: 15 East 62nd Street
New York, NY 10021
Accepted and Agreed to:
ALLIGATOR HOLDINGS, INC.,
as Collateral Agent
By:
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Name: Mr. Steven W. Gold
Title: President