EXHIBIT 10.6
PLEDGE AND SECURITY AGREEMENT
PLEDGE AND SECURITY AGREEMENT, dated as of January [__], 2014 (this
"Agreement"), made by Advanced Cannabis Solutions, Inc., a Colorado corporation
("Company"), and each of its existing "Subsidiaries" (as defined in the
Securities Purchase Agreement defined below) as named on the signature pages
hereto (collectively, the "Existing Subsidiaries") and each other Subsidiary of
the Company hereafter becoming party hereto (together with the Company and the
Existing Subsidiaries, each a "Grantor" and, collectively, the "Grantors"), in
favor of Full Circle Capital Corporation, in its capacity as collateral agent
(in such capacity, the "Collateral Agent") for the Buyers (as defined below)
party to the Securities Purchase Agreement, dated as of even date herewith (as
amended, restated or otherwise modified from time to time, the "Securities
Purchase Agreement").
W I T N E S S E T H:
WHEREAS, Company and each party listed as a "Buyer" on the Schedule of
Buyers (as such schedule may be amended, restated or otherwise modified from
time to time) attached thereto, each a "Buyer", and collectively, the "Buyers")
are parties to the Securities Purchase Agreement, pursuant to which the Company
shall be required to sell, and the Buyers shall purchase or have the right to
purchase, the "Notes" (as defined in the Securities Purchase Agreement);
WHEREAS, the Buyers and the Collateral Agent have required that the
Existing Subsidiaries execute a Guaranty and this Agreement;
WHEREAS, it is a condition precedent to the Buyers consummating the
transactions contemplated by the Securities Purchase Agreement that the Company
shall have executed and delivered to the Collateral Agent this Agreement
providing for the grant to the Collateral Agent for the benefit of the Buyers of
a security interest in all personal property of the Company to secure all of the
Company's obligations under the Securities Purchase Agreement and the "Notes"
(as defined therein) issued pursuant thereto (as such Notes may be amended,
restated, replaced or otherwise modified from time to time in accordance with
the terms thereof, collectively, the "Notes") and the other Transaction
Documents (as defined in the Securities Purchase Agreement);
WHEREAS, each of the Existing Subsidiaries is a wholly-owned Subsidiary of
the Company and will derive substantial benefits from the execution of the
Securities Purchase Agreement;
WHEREAS, each of the Existing Subsidiaries, the Company and each other
Grantor (i) are or will be mutually dependent on each other in the conduct of
their respective businesses as an integrated operation, with the credit needed
from time to time by one often being provided through financing obtained by the
other and the ability to obtain such financing being dependent on the successful
operations of each of the Existing Subsidiaries, the Company and each other
Grantor and (ii) will receive a mutual benefit from the proceeds received by the
Company in respect of the issuance of the Notes;
WHEREAS, it is a condition precedent to the Buyers consummating the
transaction contemplated by the Securities Purchase Agreement that each of the
Existing Subsidiaries shall have granted to the Collateral Agent for the benefit
of the Buyers a security interest in all personal property of each of the
Existing Subsidiaries to secure the Company's obligations under the Securities
Purchase Agreement and the Notes, and that each future Subsidiary of the Company
becomes a party to this Agreement; and
WHEREAS, each of the Existing Subsidiaries and each other Grantor has
determined that the execution, delivery and performance of this Agreement
directly benefits, and are in the best interest of the Company; and
NOW, THEREFORE, in consideration of the premises and the agreements herein
and in order to induce the Buyers to perform under the Securities Purchase
Agreement, each Grantor agrees with the Collateral Agent, for the benefit of the
Buyers, as follows:
SECTION 1. Definitions.
(a) Reference is hereby made to the Securities Purchase Agreement and the
Notes for a statement of the terms thereof. All terms used in this Agreement and
the recitals hereto which are defined in the Securities Purchase Agreement, the
Notes or in Articles 8 or 9 of the Uniform Commercial Code (the "Code") as in
effect from time to time in the State of New York, and which are not otherwise
defined herein shall have the same meanings herein as set forth therein;
provided that terms used herein which are defined in the Code as in effect in
the State of New York on the date hereof shall continue to have the same meaning
notwithstanding any replacement or amendment of such statute except as the
Collateral Agent may otherwise determine.
(b) The following terms shall have the respective meanings provided for in
the Code: "Accounts", "Cash Proceeds", "Chattel Paper", "Commercial Tort Claim",
"Commodity Account", "Commodity Contracts", "Deposit Account", "Documents",
"Equipment", "Fixtures", "General Intangibles", "Goods", "Instruments",
"Inventory", "Investment Property", "Letter-of-Credit Rights", "Noncash
Proceeds", "Payment Intangibles", "Proceeds", "Promissory Notes", "Security",
"Record", "Security Account", "Software", and "Supporting Obligations".
(c) As used in this Agreement, the following terms shall have the
respective meanings indicated below, such meanings to be applicable equally to
both the singular and plural forms of such terms:
"Collateral" shall have the meaning set forth in Section 2 hereof.
"Copyright Licenses" means all licenses, contracts or other agreements,
whether written or oral, naming any Grantor as licensee or licensor and
providing for the grant of any right to use or sell any works covered by any
copyright (including, without limitation, all Copyright Licenses set forth in
Schedule II hereto).
"Copyrights" means all domestic and foreign copyrights, whether registered
or not, including, without limitation, all copyright rights throughout the
universe (whether now or hereafter arising) in any and all media (whether now or
2
hereafter developed), in and to all original works of authorship fixed in any
tangible medium of expression, acquired or used by any Grantor (including,
without limitation, all copyrights described in Schedule II hereto), all
applications, registrations and recordings thereof (including, without
limitation, applications, registrations and recordings in the United States
Copyright Office or in any similar office or agency of the United States or any
other country or any political subdivision thereof), and all reissues,
divisions, continuations, continuations in part and extensions or renewals
thereof.
"Event of Default" means (i) any defined event of default under any one or
more of the Transaction Documents, in each instance, after giving effect to any
notice, grace, or cure periods provided for in the applicable Transaction
Document, (ii) the failure by the Company to pay any amounts when due under the
Notes or any other Transaction Document, or (iii) the breach of any
representation, warranty or covenant by any Grantor under this Agreement.
"Existing Issuer" has the meaning specified therefor in the definition of
the term "Pledged Shares".
"Guaranty" means the Guaranty, dated as of the date hereof, by the Existing
Subsidiaries in favor of the Buyers and the Collateral Agent.
"Insolvency Proceeding" means any proceeding commenced by or against any
Person under any provision of the Bankruptcy Code (Chapter 11 of Title 11 of the
United States Code) or under any other bankruptcy or insolvency law, assignments
for the benefit of creditors, formal or informal moratoria, compositions, or
extensions generally with creditors, or proceedings seeking reorganization,
arrangement, or other similar relief.
"Intellectual Property" means the Copyrights, Trademarks and Patents.
"Licenses" means the Copyright Licenses, the Trademark Licenses and the
Patent Licenses.
"Lien" means any mortgage, deed of trust, pledge, lien (statutory or
otherwise), security interest, charge or other encumbrance or security or
preferential arrangement of any nature, including, without limitation, any
conditional sale or title retention arrangement, any capitalized lease and any
assignment, deposit arrangement or financing lease intended as, or having the
effect of, security.
"Obligations" shall have the meaning set forth in Section 3 hereof.
"Patent Licenses" means all licenses, contracts or other agreements,
whether written or oral, naming any Grantor as licensee or licensor and
providing for the grant of any right to manufacture, use or sell any invention
covered by any Patent (including, without limitation, all Patent Licenses set
forth in Schedule II hereto).
"Patents" means all domestic and foreign letters patent, design patents,
utility patents, industrial designs, inventions, trade secrets, ideas, concepts,
methods, techniques, processes, proprietary information, technology, know-how,
formulae, rights of publicity and other general intangibles of like nature, of
3
any Grantor, now existing or hereafter acquired (including, without limitation,
all domestic and foreign letters patent, design patents, utility patents,
industrial designs, inventions, trade secrets, ideas, concepts, methods,
techniques, processes, proprietary information, technology, know-how and
formulae described in Schedule II hereto), all applications, registrations and
recordings thereof (including, without limitation, applications, registrations
and recordings in the United States Patent and Trademark Office, or in any
similar office or agency of the United States or any other country or any
political subdivision thereof), and all reissues, divisions, continuations,
continuations in part and extensions or renewals thereof.
"Permitted Liens" means (i) any Lien for taxes not yet due or delinquent or
being contested in good faith by appropriate proceedings for which adequate
reserves have been established in accordance with GAAP, (ii) any Lien created by
operation of law, such as materialmen's liens, mechanics' liens and other
similar liens, arising in the ordinary course of business with respect to a
liability that is not yet due or delinquent or that are being contested in good
faith by appropriate proceedings, (iii) Liens granted hereunder securing the
Obligations and (iv) leases or subleases and licenses and sublicenses granted to
others in the ordinary course of the Grantors' business, not interfering in any
material respect with the business of a Grantor.
"Pledged Debt" means the indebtedness described in Schedule VII hereto and
all indebtedness from time to time owned or acquired by a Grantor, the
promissory notes and other Instruments evidencing any or all of such
indebtedness, and all interest, cash, Instruments, Investment Property,
financial assets, securities, capital stock, other equity interests, stock
options and commodity contracts, notes, debentures, bonds, promissory notes or
other evidences of indebtedness and all other property from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of such indebtedness.
"Pledged Interests" means, collectively, (a) the Pledged Debt, (b) the
Pledged Shares and (c) all security entitlements in any and all of the
foregoing.
"Pledged Issuer" has the meaning specified therefor in the definition of
the term "Pledged Shares".
"Pledged Shares" means (a) the shares of capital stock or other equity
interests described in Schedule VIII hereto, whether or not evidenced or
represented by any stock certificate, certificated security or other Instrument,
issued by the Persons described in such Schedule VIII (the "Existing Issuers"),
(b) the shares of capital stock or other equity interests at any time and from
time to time acquired by a Grantor of any and all Persons now or hereafter
existing (such Persons, together with the Existing Issuers, being hereinafter
referred to collectively as the "Pledged Issuers" and each individually as a
"Pledged Issuer"), whether or not evidenced or represented by any stock
certificate, certificated security or other Instrument, and (c) the certificates
representing such shares of capital stock, all options and other rights,
contractual or otherwise, in respect thereof and all dividends, distributions,
cash, Instruments, Investment Property, financial assets, securities, capital
stock, other equity interests, stock options and commodity contracts, notes,
debentures, bonds, promissory notes or other evidences of indebtedness and all
other property (including, without limitation, any stock dividend and any
distribution in connection with a stock split) from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such capital stock.
4
"Trademark Licenses" means all licenses, contracts or other agreements,
whether written or oral, naming any Grantor as licensor or licensee and
providing for the grant of any right concerning any Trademark, together with any
goodwill connected with and symbolized by any such trademark licenses, contracts
or agreements and the right to prepare for sale or lease and sell or lease any
and all Inventory now or hereafter owned by any Grantor and now or hereafter
covered by such licenses (including, without limitation, all Trademark Licenses
described in Schedule II hereto).
"Trademarks" means all domestic and foreign trademarks, service marks,
collective marks, certification marks, trade names, business names, d/b/a's,
Internet domain names, trade styles, designs, logos and other source or business
identifiers and all general intangibles of like nature, now or hereafter owned,
adopted, acquired or used by any Grantor (including, without limitation, all
domestic and foreign trademarks, service marks, collective marks, certification
marks, trade names, business names, d/b/a's, Internet domain names, trade
styles, designs, logos and other source or business identifiers described in
Schedule II hereto), all applications, registrations and recordings thereof
(including, without limitation, applications, registrations and recordings in
the United States Patent and Trademark Office or in any similar office or agency
of the United States, any state thereof or any other country or any political
subdivision thereof), and all reissues, extensions or renewals thereof, together
with all goodwill of the business symbolized by such marks and all customer
lists, formulae and other Records of any Grantor relating to the distribution of
products and services in connection with which any of such marks are used.
SECTION 2. Grant of Security Interest. As collateral security for all of
the Obligations, each Grantor hereby pledges and assigns to the Collateral Agent
for the benefit of the Buyers, and grants to the Collateral Agent for the
benefit of the Buyers a continuing security interest in, all personal property
of such Grantor, wherever located and whether now or hereafter existing and
whether now owned or hereafter acquired, of every kind and description, tangible
or intangible (collectively, the "Collateral"), including, without limitation,
the following:
(a) all Accounts;
(b) all Chattel Paper (whether tangible or electronic);
(c) the Commercial Tort Claims specified on Schedule VI hereto;
(d) all Deposit Accounts (including, without limitation, all cash,
and all other property from time to time deposited therein and
the monies and property in the possession or under the control of
the Collateral Agent or a Buyer or any affiliate, representative,
agent or correspondent of the Collateral Agent or a Buyer;
(e) all Documents;
(f) all Equipment;
(g) all Fixtures;
5
(h) all General Intangibles (including, without limitation, all
Payment Intangibles);
(i) all Goods;
(j) all Instruments (including, without limitation, Promissory Notes
and each certificated Security);
(k) all Inventory;
(l) all Investment Property;
(m) all Copyrights, Patents and Trademarks, and all Licenses;
(n) all Letter-of-Credit Rights;
(o) all Supporting Obligations;
(p) all Pledged Interests;
(q) all other tangible and intangible personal property of such
Grantor (whether or not subject to the Code), including, without
limitation, all bank and other accounts and all cash and all
investments therein, all proceeds, products, offspring,
accessions, rents, profits, income, benefits, substitutions and
replacements of and to any of the property of such Grantor
described in the preceding clauses of this Section 2 (including,
without limitation, any proceeds of insurance thereon and all
causes of action, claims and warranties now or hereafter held by
such Grantor in respect of any of the items listed above), and
all books, correspondence, files and other Records, including,
without limitation, all tapes, desks, cards, Software, data and
computer programs in the possession or under the control of such
Grantor or any other Person from time to time acting for such
Grantor that at any time evidence or contain information relating
to any of the property described in the preceding clauses of this
Section 2 or are otherwise necessary or helpful in the collection
or realization thereof; and
(r) all Proceeds, including all Cash Proceeds and Noncash Proceeds,
and products of any and all of the foregoing Collateral;
in each case howsoever such Grantor's interest therein may arise or appear
(whether by ownership, security interest, claim or otherwise).
SECTION 3. Security for Obligations. The security interest created hereby
in the Collateral constitutes continuing collateral security for all of the
following obligations, whether now existing or hereafter incurred (collectively,
the "Obligations"):
(a) the prompt payment by each Grantor, as and when due and payable (by
scheduled maturity, required prepayment, acceleration, demand or otherwise), of
all amounts from time to time owing by it in respect of the Securities Purchase
Agreement, the Notes, the Guaranty and the other Transaction Documents,
including, without limitation, (A) all principal of and interest on the Notes
6
(including, without limitation, all interest that accrues after the commencement
of any Insolvency Proceeding of any Grantor, whether or not the payment of such
interest is unenforceable or is not allowable due to the existence of such
Insolvency Proceeding), (B) all amounts from time to time owing by such Grantor
under the Guaranty, and (C) all fees, commissions, expense reimbursements,
indemnifications and all other amounts due or to become due under any of the
Transaction Documents; and
(b) the due performance and observance by each Grantor of all of its other
obligations from time to time existing in respect of any of the Transaction
Documents for so long as the Notes are outstanding.
SECTION 4. Representations and Warranties. Each Grantor represents and
warrants as follows:
(a) Schedule I hereto sets forth (i) the exact legal name of such Grantor,
and (ii) the organizational identification number of such Grantor or states that
no such organizational identification number exists.
(b) There is no pending or written notice threatening any action, suit,
proceeding or claim affecting such Grantor before any governmental authority or
any arbitrator, or any order, judgment or award by any governmental authority or
arbitrator, that may adversely affect the grant by such Grantor, or the
perfection, of the security interest purported to be created hereby in the
Collateral, or the exercise by the Collateral Agent of any of its rights or
remedies hereunder.
(c) All Federal, state and local tax returns and other reports required by
applicable law to be filed by such Grantor have been filed, or extensions have
been obtained, and all taxes, assessments and other governmental charges imposed
upon such Grantor or any property of such Grantor (including, without
limitation, all federal income and social security taxes on employees' wages)
and which have become due and payable on or prior to the date hereof have been
paid, except to the extent contested in good faith by proper proceedings which
stay the imposition of any penalty, fine or Lien resulting from the non-payment
thereof and with respect to which adequate reserves have been set aside for the
payment thereof in accordance with United States generally accepted accounting
principles consistently applied ("GAAP").
(d) All Equipment, Fixtures, Goods and Inventory of such Grantor now
existing are, and all Equipment, Fixtures, Goods and Inventory of such Grantor
hereafter existing will be, located and/or based at the addresses specified
therefor in Schedule III hereto, except that such Grantor will give the
Collateral Agent not less than 30 days' prior written notice of any change of
the location of any such Collateral, other than to locations set forth on
Schedule III and with respect to which the Collateral Agent has filed financing
statements and otherwise fully perfected its Liens thereon. Such Grantor's chief
place of business and chief executive office, the place where such Grantor keeps
its Records concerning Accounts and all originals of all Chattel Paper are
located at the addresses specified therefor in Schedule III hereto. None of the
Accounts is evidenced by Promissory Notes or other Instruments. Set forth in
Schedule IV hereto is a complete and accurate list, as of the date of this
Agreement, of (i) each Promissory Note, Security and other Instrument owned by
each Grantor and (ii) each Deposit Account, Securities Account and Commodities
Account of each Grantor, together with the name and address of each institution
7
at which each such Account is maintained, the account number for each such
Account and a description of the purpose of each such Account. Set forth in
Schedule II hereto is a complete and correct list of each trade name used by
each Grantor and the name of, and each trade name used by, each person from
which such Grantor has acquired any substantial part of the Collateral.
(e) Such Grantor has delivered or made available to the Collateral Agent
complete and correct copies of each License described in Schedule II hereto,
including all schedules and exhibits thereto, which represents all of the
Licenses existing on the date of this Agreement. Each such License sets forth
the entire agreement and understanding of the parties thereto relating to the
subject matter thereof, and there are no other agreements, arrangements or
understandings, written or oral, relating to the matters covered thereby or the
rights of such Grantor or any of its affiliates in respect thereof. Each
material License now existing is, and any material License entered into in the
future will be, the legal, valid and binding obligation of the parties thereto,
enforceable against such parties in accordance with its terms, except as may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance, suretyship or other similar laws and equitable principles
(regardless of whether enforcement is sought in equity or in law). No default
under any material License by any such party has occurred, nor does any defense,
offset, deduction or counterclaim exist thereunder in favor of any such party.
(f) Such Grantor owns and controls, or otherwise possesses adequate rights
to use, all Trademarks, Patents and Copyrights, which are the only trademarks,
patents, copyrights, inventions, trade secrets, proprietary information and
technology, know-how, formulae, rights of publicity necessary to conduct its
business in substantially the same manner as conducted as of the date hereof.
Schedule II hereto sets forth a true and complete list of all registered
copyrights, issued patents, Trademarks (including, without limitation, any
Internet domain names and the registrar of each such Internet domain name), and
Licenses annually owned or used by such Grantor as of the date hereof. To the
best knowledge of each Grantor, all such Intellectual Property of such Grantor
is subsisting and in full force and effect, has not been adjudged invalid or
unenforceable, is valid and enforceable and has not been abandoned in whole or
in part. Except as set forth in Schedule II, no such Intellectual Property is
the subject of any licensing or franchising agreement. Such Grantor has no
knowledge of any conflict with the rights of others to any Intellectual Property
and, to the best knowledge of such Grantor, such Grantor is not now infringing
or in conflict with any such rights of others in any material respect, and to
the best knowledge of such Grantor, no other Person is now infringing or in
conflict in any material respect with any such properties, assets and rights
owned or used by such Grantor. Such Grantor has not received any notice that it
is violating or has violated the trademarks, patents, copyrights, inventions,
trade secrets, proprietary information and technology, know-how, formulae,
rights of publicity or other intellectual property rights of any third party.
(g) Such Grantor is and will be at all times the sole and exclusive owner
of, or otherwise has and will have adequate rights in, the Collateral free and
clear of any Liens, except for Permitted Liens on any Collateral. No effective
financing statement or other instrument similar in effect covering all or any
part of the Collateral is on file in any recording or filing office except (A)
such as may have been filed in favor of the Collateral Agent relating to this
Agreement, and (B) such as may have been filed to perfect any Permitted Liens.
8
(h) The exercise by the Collateral Agent of any of its rights and remedies
hereunder will not contravene any law or any contractual restriction binding on
or otherwise affecting such Grantor or any of its properties and will not result
in or require the creation of any Lien, upon or with respect to any of its
properties.
(i) No authorization or approval or other action by, and no notice to or
filing with, any governmental authority or other regulatory body, or any other
Person, is required for (i) the grant by such Grantor, or the perfection, of the
security interest purported to be created hereby in the Collateral, or (ii) the
exercise by the Collateral Agent of any of its rights and remedies hereunder,
except (A) for the filing under the Uniform Commercial Code as in effect in the
applicable jurisdiction of the financing statements, all of which financing
statements, have been duly filed and are in full force and effect, (B) with
respect to the perfection of the security interest created hereby in the
Intellectual Property, for the recording of the appropriate Assignment for
Security, substantially in the form of Exhibit A hereto, as applicable, in the
United States Patent and Trademark Office or the United States Copyright Office,
as applicable, and (C) with respect to the perfection of the security interest
created hereby in foreign Intellectual Property and Licenses, for registrations
and filings in jurisdictions located outside of the United States and covering
rights in such jurisdictions relating to the Intellectual Property and Licenses.
(j) This Agreement creates in favor of the Collateral Agent a legal, valid
and enforceable security interest in the Collateral, as security for the
Obligations. The Collateral Agent's having possession of all Instruments and
cash constituting Collateral from time to time, the recording of the appropriate
Assignment for Security executed pursuant hereto in the United States Patent and
Trademark Office and the United States Copyright Office, as applicable, and the
filing of the financing statements and the other filings and recordings, as
applicable, described in Schedule V hereto and, with respect to the Intellectual
Property hereafter existing and not covered by an appropriate Assignment for
Security, the recording in the United States Patent and Trademark Office or the
United States Copyright Office, as applicable, of appropriate instruments of
assignment, result in the perfection of such security interests. Such security
interests are, or in the case of Collateral in which such Grantor obtains rights
after the date hereof, will be, perfected, first priority security interests,
subject only to Permitted Liens and the recording of such instruments of
assignment. Such recordings and filings and all other action necessary or
desirable to perfect and protect such security interest have been duly taken,
except for the Collateral Agent's having possession of Instruments and cash
constituting Collateral after the date hereof and the other filings and
recordations described in Section 4(l) hereof.
(k) As of the date hereof, such Grantor does not hold any Commercial Tort
Claims nor is aware of any such pending claims, except for such claims described
in Schedule VI.
(l) Each of the Existing Subsidiaries is a wholly-owned Subsidiary of the
Company and are the only Subsidiaries of the Company, as of the date hereof.
9
SECTION 5. Covenants as to the Collateral. So long as any of the
Obligations shall remain outstanding, unless the Collateral Agent shall
otherwise consent in writing:
(a) Further Assurances. Each Grantor will at its expense, at any time and
from time to time, promptly execute and deliver all further instruments and
documents and take all further action that the Collateral Agent may reasonably
request in order to: (i) perfect and protect the security interest purported to
be created hereby; (ii) enable the Collateral Agent to exercise and enforce its
rights and remedies hereunder in respect of the Collateral; or (iii) otherwise
effect the purposes of this Agreement, including, without limitation: (A)
marking conspicuously all Chattel Paper and each License and, at the request of
the Collateral Agent, each of its Records pertaining to the Collateral with a
legend, in form and substance satisfactory to the Collateral Agent, indicating
that such Chattel Paper, License or Collateral is subject to the security
interest created hereby, (B) delivering and pledging to the Collateral Agent
hereunder each Promissory Note, Security, Chattel Paper or other Instrument, now
or hereafter owned by such Grantor, duly endorsed and accompanied by executed
instruments of transfer or assignment, all in form and substance satisfactory to
the Collateral Agent, (C) executing and filing (to the extent, if any, that such
Grantor's signature is required thereon) or authenticating the filing of, such
financing or continuation statements, or amendments thereto, as may be necessary
or desirable or that the Collateral Agent may request in order to perfect and
preserve the security interest purported to be created hereby, (D) furnishing to
the Collateral Agent from time to time statements and schedules further
identifying and describing the Collateral and such other reports in connection
with the Collateral in each case as the Collateral Agent may reasonably request,
all in reasonable detail, (E) if any Collateral shall be in the possession of a
third party, notifying such Person of the Collateral Agent's security interest
created hereby and obtaining a written acknowledgment from such Person that such
Person holds possession of the Collateral for the benefit of the Collateral
Agent, which such written acknowledgement shall be in form and substance
satisfactory to the Collateral Agent, (F) if at any time after the date hereof,
such Grantor acquires or holds any Commercial Tort Claim, promptly notifying the
Collateral Agent in a writing signed by such Grantor setting forth a brief
description of such Commercial Tort Claim and granting to the Collateral Agent a
security interest therein and in the proceeds thereof, which writing shall
incorporate the provisions hereof and shall be in form and substance
satisfactory to the Collateral Agent, (G) upon the acquisition after the date
hereof by such Grantor of any motor vehicle or other Equipment subject to a
certificate of title or ownership (other than a Motor Vehicle or Equipment that
is subject to a purchase money security interest), causing the Collateral Agent
to be listed as the lienholder on such certificate of title or ownership and
delivering evidence of the same to the Collateral Agent in accordance with the
Securities Purchase Agreement; and (H) taking all actions required by any
earlier versions of the Uniform Commercial Code or by other law, as applicable,
in any relevant Uniform Commercial Code jurisdiction, or by other law as
applicable in any foreign jurisdiction.
(b) Location of Equipment and Inventory. Each Grantor will keep the
Equipment and Inventory at the locations specified therefor in Section 4(g)
hereof or, upon not less than thirty (30) days' prior written notice to the
Collateral Agent accompanied by a new Schedule V hereto indicating each new
location of the Equipment and Inventory, at such other locations in the
United States.
10
(c) Condition of Equipment. Each Grantor will maintain or cause the
Equipment (necessary or useful to its business) to be maintained and preserved
in good condition, repair and working order, ordinary wear and tear excepted,
and will forthwith, or in the case of any loss or damage to any Equipment of
such Grantor within a commercially reasonable time after the occurrence thereof,
make or cause to be made all repairs, replacements and other improvements in
connection therewith which are necessary or desirable, consistent with past
practice, or which the Collateral Agent may reasonably request to such end. Such
Grantor will promptly furnish to the Collateral Agent a statement describing in
reasonable detail any such loss or damage in excess of $25,000 to any Equipment.
(d) Taxes, Etc. Each Grantor agrees to pay promptly when due all property
and other taxes, assessments and governmental charges or levies imposed upon,
and all claims (including claims for labor, materials and supplies) against, the
Equipment and Inventory, except to the extent the validity thereof is being
contested in good faith by proper proceedings which stay the imposition of any
penalty, fine or Lien resulting from the non-payment thereof and with respect to
which adequate reserves in accordance with GAAP have been set aside for the
payment thereof.
(e) Insurance.
(i) Each Grantor will, at its own expense, maintain insurance
(including, without limitation, commercial general liability and property
insurance) with respect to the Equipment and Inventory in such amounts,
against such risks, in such form and with responsible and reputable
insurance companies or associations as is required by any governmental
authority having jurisdiction with respect thereto or as is carried by such
Grantor as of the date hereof and in any event, in amount, adequacy and
scope reasonably satisfactory to the Collateral Agent. Each such policy for
liability insurance shall provide for all losses to be paid on behalf of
the Collateral Agent and such Grantor as their respective interests may
appear, and each policy for property damage insurance shall provide for all
losses to be adjusted with, and paid directly to, the Collateral Agent.
Each such policy shall in addition (A) name the Collateral Agent as an
additional insured party thereunder (without any representation or warranty
by or obligation upon the Collateral Agent) as their interests may appear,
(B) contain an agreement by the insurer that any loss thereunder shall be
payable to the Collateral Agent on its own account notwithstanding any
action, inaction or breach of representation or warranty by such Grantor,
(C) provide that there shall be no recourse against the Collateral Agent
for payment of premiums or other amounts with respect thereto, and (D)
provide that at least 30 days' prior written notice of cancellation, lapse,
expiration or other adverse change shall be given to the Collateral Agent
by the insurer. Such Grantor will, if so requested by the Collateral Agent,
deliver to the Collateral Agent original or duplicate policies of such
insurance and, as often as the Collateral Agent may reasonably request, a
report of a reputable insurance broker with respect to such insurance. Such
Grantor will also, at the request of the Collateral Agent, execute and
deliver instruments of assignment of such insurance policies and cause the
respective insurers to acknowledge notice of such assignment.
(ii) Reimbursement under any liability insurance maintained by a
Grantor pursuant to this Section 5(e) may be paid directly to the Person
11
who shall have incurred liability covered by such insurance. In the case of
any loss involving damage to Equipment or Inventory, any proceeds of
insurance maintained by a Grantor pursuant to this Section 5(e) shall be
paid to the Collateral Agent (except as to which paragraph (iii) of this
Section 5(e) is not applicable), such Grantor will make or cause to be made
the necessary repairs to or replacements of such Equipment or Inventory,
and any proceeds of insurance maintained by such Grantor pursuant to this
Section 5(e) shall be paid by the Collateral Agent to such Grantor as
reimbursement for the costs of such repairs or replacements.
(iii) All insurance payments in respect of such Equipment or Inventory
shall be paid to the Collateral Agent and applied as specified in Section
7(b) hereof.
(f) Provisions Concerning the Accounts and the Licenses.
(i) Each Grantor will (A) give the Collateral Agent at least 30 days'
prior written notice of any change in such Grantor's name, identity or
organizational structure, (B) maintain its jurisdiction of incorporation as
set forth in Section 4(b) hereto, (C) immediately notify the Collateral
Agent upon obtaining an organizational identification number, if on the
date hereof such Grantor did not have such identification number, and (D)
keep adequate records concerning the Accounts and Chattel Paper and permit
representatives of the Collateral Agent during normal business hours on
reasonable notice to such Grantor, to inspect and make abstracts from such
Records and Chattel Paper.
(ii) Each Grantor will, except as otherwise provided in this
subsection (f), continue to collect, at its own expense, all amounts due or
to become due under the Accounts. In connection with such collections, such
Grantor may (and, at the Collateral Agent's direction, will) take such
action as such Grantor or the Collateral Agent may deem necessary or
advisable to enforce collection or performance of the Accounts; provided,
however, that the Collateral Agent shall have the right at any time, upon
the occurrence and during the continuance of an Event of Default, to notify
the account debtors or obligors under any Accounts of the assignment of
such Accounts to the Collateral Agent and to direct such account debtors or
obligors to make payment of all amounts due or to become due to such
Grantor thereunder directly to the Collateral Agent or its designated agent
and, upon such notification and at the expense of such Grantor and to the
extent permitted by law, to enforce collection of any such Accounts and to
adjust, settle or compromise the amount or payment thereof, in the same
manner and to the same extent as such Grantor might have done. After
receipt by a Grantor of a notice from the Collateral Agent that the
Collateral Agent has notified, intends to notify, or has enforced or
intends to enforce a Grantor's rights against the account debtors or
obligors under any Accounts as referred to in the proviso to the
immediately preceding sentence, (A) all amounts and proceeds (including
Instruments) received by such Grantor in respect of the Accounts shall be
received in trust for the benefit of the Collateral Agent hereunder, shall
be segregated from other funds of such Grantor and shall be forthwith paid
over to the Collateral Agent in the same form as so received (with any
necessary endorsement) to be held as cash collateral and applied as
specified in Section 7(b) hereof, and (B) such Grantor will not adjust,
settle or compromise the amount or payment of any Account or release wholly
or partly any account debtor or obligor thereof or allow any credit or
discount thereon. In addition, upon the occurrence and during the
continuance of an Event of Default, the Collateral Agent may (in its sole
and absolute discretion) direct any or all of the banks and financial
institutions with which such Grantor either maintains a Deposit Account or
a lockbox or deposits the proceeds of any Accounts to send immediately to
12
the Collateral Agent by wire transfer (to such account as the Collateral
Agent shall specify, or in such other manner as the Collateral Agent shall
direct) all or a portion of such securities, cash, investments and other
items held by such institution. Any such securities, cash, investments and
other items so received by the Collateral Agent shall (in the sole and
absolute discretion of the Collateral Agent) be held as additional
Collateral for the Obligations or distributed in accordance with Section 7
hereof.
(iii) Upon the occurrence and during the continuance of any breach or
default under any material License referred to in Schedule II hereto by any
party thereto other than a Grantor, the Grantor party thereto will,
promptly after obtaining knowledge thereof, give the Collateral Agent
written notice of the nature and duration thereof, specifying what action,
if any, it has taken and proposes to take with respect thereto and
thereafter will take reasonable steps to protect and preserve its rights
and remedies in respect of such breach or default, or will obtain or
acquire an appropriate substitute License.
(iv) Each Grantor will, at its expense, promptly deliver to the
Collateral Agent a copy of each notice or other communication received by
it by which any other party to any material License referred to in Schedule
II hereto purports to exercise any of its rights or affect any of its
obligations thereunder, together with a copy of any reply by such Grantor
thereto.
(v) Each Grantor will exercise promptly and diligently each and every
right which it may have under each material License (other than any right
of termination) and will duly perform and observe in all respects all of
its obligations under each material License and will take all action
reasonably necessary to maintain such Licenses in full force and effect. No
Grantor will, without the prior written consent of the Collateral Agent,
cancel, terminate, amend or otherwise modify in any respect, or waive any
provision of, any material License referred to in Schedule II hereto.
(g) Transfers and Other Liens.
(i) No Grantor will sell, assign (by operation of law or otherwise),
lease, license, exchange or otherwise transfer or dispose of any of the
Collateral, except (A) Inventory in the ordinary course of business and (B)
worn-out or obsolete assets not necessary to the business.
(ii) No Grantor will create, suffer to exist or grant any Lien upon or
with respect to any Collateral other than a Permitted Lien.
(h) Intellectual Property.
(i) If applicable, each Grantor shall, upon the Collateral Agent's
written request, duly execute and delivered the applicable Assignment for
Security in the form attached hereto as Exhibit A. Each Grantor (either
itself or through licensees) will, and will cause each licensee thereof to,
take all action necessary to maintain all of the Intellectual Property in
full force and effect, including, without limitation, using the proper
statutory notices and markings and using the Trademarks on each applicable
trademark class of goods in order to so maintain the Trademarks in full
force and free from any claim of abandonment for non-use, and such Grantor
13
will not (nor permit any licensee thereof to) do any act or knowingly omit
to do any act whereby any Intellectual Property may become invalidated;
provided, however, that so long as no Event of Default has occurred and is
continuing, such Grantor shall not have an obligation to use or to maintain
any Intellectual Property (A) that relates solely to any product or work,
that has been, or is in the process of being, discontinued, abandoned or
terminated, (B) that is being replaced with Intellectual Property
substantially similar to the Intellectual Property that may be abandoned or
otherwise become invalid, so long as the failure to use or maintain such
Intellectual Property does not materially adversely affect the validity of
such replacement Intellectual Property and so long as such replacement
Intellectual Property is subject to the Lien created by this Agreement or
(C) that is substantially the same as another Intellectual Property that is
in full force, so long the failure to use or maintain such Intellectual
Property does not materially adversely affect the validity of such
replacement Intellectual Property and so long as such other Intellectual
Property is subject to the Lien and security interest created by this
Agreement. Each Grantor will cause to be taken all necessary steps in any
proceeding before the United States Patent and Trademark Office and the
United States Copyright Office or any similar office or agency in any other
country or political subdivision thereof to maintain each registration of
the Intellectual Property (other than the Intellectual Property described
in the proviso to the immediately preceding sentence), including, without
limitation, filing of renewals, affidavits of use, affidavits of
incontestability and opposition, interference and cancellation proceedings
and payment of maintenance fees, filing fees, taxes or other governmental
fees in the ordinary course of business. If any Intellectual Property
(other than Intellectual Property described in the proviso to the first
sentence of subsection (i) of this clause (h)) is infringed,
misappropriated, diluted or otherwise violated in any material respect by a
third party, such Grantor shall (x) upon learning of such infringement,
misappropriation, dilution or other violation, promptly notify the
Collateral Agent and (y) to the extent such Grantor shall deem appropriate
under the circumstances, promptly sue for infringement, misappropriation,
dilution or other violation, seek injunctive relief where appropriate and
recover any and all damages for such infringement, misappropriation,
dilution or other violation, or take such other actions as such Grantor
shall deem appropriate under the circumstances to protect such Intellectual
Property. Each Grantor shall furnish to the Collateral Agent from time to
time upon its request statements and schedules further identifying and
describing the Intellectual Property and Licenses and such other reports in
connection with the Intellectual Property and Licenses as the Collateral
Agent may reasonably request, all in reasonable detail and promptly upon
request of the Collateral Agent, following receipt by the Collateral Agent
of any such statements, schedules or reports, such Grantor shall modify
this Agreement by amending Schedule II hereto, as the case may be, to
include any Intellectual Property and License, as the case may be, which
becomes part of the Collateral under this Agreement and shall execute and
authenticate such documents and do such acts as shall be necessary or, in
the judgment of the Collateral Agent, desirable to subject such
Intellectual Property and Licenses to the Lien and security interest
created by this Agreement. Notwithstanding anything herein to the contrary,
upon the occurrence and during the continuance of an Event of Default, such
Grantor may not abandon or otherwise permit any Intellectual Property to
become invalid without the prior written consent of the Collateral Agent,
and if any Intellectual Property is infringed, misappropriated, diluted or
otherwise violated in any material respect by a third party, such Grantor
will take such action as the Collateral Agent shall deem appropriate under
the circumstances to protect such Intellectual Property.
(ii) In no event shall a Grantor, either itself or through any agent,
employee, licensee or designee, file an application for the registration of
14
any Trademark or Copyright or the issuance of any Patent with the United
States Patent and Trademark Office or the United States Copyright Office,
as applicable, or in any similar office or agency of the United States or
any country or any political subdivision thereof unless it gives the
Collateral Agent prior written notice thereof. Upon request of the
Collateral Agent, each Grantor shall execute, authenticate and deliver any
and all assignments, agreements, instruments, documents and papers as the
Collateral Agent may reasonably request to evidence the Collateral Agent's
security interest hereunder in such Intellectual Property and the General
Intangibles of such Grantor relating thereto or represented thereby, and
such Grantor hereby appoints the Collateral Agent its attorney-in-fact to
execute and/or authenticate and file all such writings for the foregoing
purposes, all acts of such attorney being hereby ratified and confirmed,
and such power (being coupled with an interest) shall be irrevocable until
the complete conversion of all of the Company's obligations under the Notes
to equity securities of the Company and/or indefeasible payment in full in
cash of all obligations under the Notes (together with any matured
indemnification obligations as of the date of such conversion and/or
payment, but excluding any inchoate or unmatured contingent indemnification
obligations).
(iii) Upon the Collateral Agent's request, each Grantor shall cause
each domain registrar where any of such Grantor's Internet domain names are
registered, whether as of the date of this Agreement or at any time
hereafter, to execute and Statedeliver to the StateCollateral Agent a
domain name control agreement, in form and substance reasonably
satisfactory to the Collateral Agent, duly executed by such Grantor and
such domain registrar, or enter into other arrangements in form and
substance satisfactory to the Collateral Agent, pursuant to which such
domain registrar shall irrevocably agree, inter alia, that (i) it will
comply at any time with the instructions originated by the Collateral Agent
to such domain registrar directing substitution of the Collateral Agent or
its designee as the registered owner of such Internet domain names, without
further consent of such Grantor, which instructions the Collateral Agent
will not give to such domain registrar in the absence of a continuing Event
of Default.
(i) Deposit, Commodities and Securities Accounts. Upon the Collateral
Agent's request, each Grantor shall cause each bank and other financial
institution with an account referred to in Schedule IV hereto to execute and
deliver to the Collateral Agent a control agreement, in form and substance
reasonably satisfactory to the Collateral Agent, duly executed by such Grantor
and such bank or financial institution, or enter into other arrangements in form
and substance satisfactory to the Collateral Agent, pursuant to which such
institution shall irrevocably agree, inter alia, that (i) it will comply at any
time with the instructions originated by the Collateral Agent to such bank or
financial institution directing the disposition of cash, Commodity Contracts,
securities, Investment Property and other items from time to time credited to
such account, without further consent of such Grantor, which instructions the
Collateral Agent will not give to such bank or other financial institution in
the absence of a continuing Event of Default, (ii) all cash, Commodity
Contracts, securities, Investment Property and other items of such Grantor
deposited with such institution shall be subject to a perfected, first priority
security interest in favor of the Collateral Agent, (iii) any right of set off,
banker's Lien or other similar Lien, security interest or encumbrance shall be
fully waived as against the Collateral Agent, and (iv) upon receipt of written
notice from the Collateral Agent during the continuance of an Event of Default,
such bank or financial institution shall immediately send to the Collateral
Agent by wire transfer (to such account as the Collateral Agent shall specify,
or in such other manner as the Collateral Agent shall direct) all such cash, the
15
value of any Commodity Contracts, securities, Investment Property and other
items held by it. Without the prior written consent of the Collateral Agent,
such Grantor shall not make or maintain any Deposit Account, Commodity Account
or Securities Account except for the accounts set forth in Schedule IV hereto.
The provisions of this paragraph 5(i) shall not apply to (i) Deposit Accounts
for which the Collateral Agent is the depositary and (ii) Deposit Accounts
specially and exclusively used for payroll, payroll taxes and other employee
wage and benefit payments to or for the benefit of a Grantor's salaried
employees.
(j) Motor Vehicles.
(i) Upon the Collateral Agent's written request, each Grantor shall
deliver to the Collateral Agent originals of the certificates of title or
ownership for all motor vehicles owned by it with the Collateral Agent
listed as lienholder, for the benefit of the Buyers.
(ii) Each Grantor hereby appoints the Collateral Agent as its
attorney-in-fact, effective the date hereof and terminating upon the
termination of this Agreement, for the purpose of (A) executing on behalf
of such Grantor title or ownership applications for filing with appropriate
state agencies to enable motor vehicles now owned or hereafter acquired by
such Grantor to be retitled and the Collateral Agent listed as lienholder
thereof, (B) filing such applications with such state agencies, and (C)
executing such other documents and instruments on behalf of, and taking
such other action in the name of, such Grantor as the Collateral Agent may
deem necessary or advisable to accomplish the purposes hereof (including,
without limitation, for the purpose of creating in favor of the Collateral
Agent a perfected Lien on the motor vehicles and exercising the rights and
remedies of the Collateral Agent hereunder). This appointment as
attorney-in-fact is coupled with an interest and is irrevocable until the
complete conversion of all of the Company's obligations under the Notes to
equity securities of the Company and/or indefeasible payment in full in
cash of all obligations under the Notes (together with any matured
indemnification obligations as of the date of such conversion and/or
payment, but excluding any inchoate or unmatured contingent indemnification
obligations).
(iii) Any certificates of title or ownership delivered pursuant to the
terms hereof shall be accompanied by odometer statements for each motor
vehicle covered thereby.
(iv) So long as no Event of Default shall have occurred and be
continuing, upon the request of such Grantor, the Collateral Agent shall
execute and deliver to such Grantor such instruments as such Grantor shall
reasonably request to remove the notation of the Collateral Agent as
lienholder on any certificate of title for any motor vehicle; provided,
however, that any such instruments shall be delivered, and the release
effective, only upon receipt by the Collateral Agent of a certificate from
such Grantor stating that such motor vehicle is to be sold or has suffered
a casualty loss (with title thereto passing to the casualty insurance
company therefor in settlement of the claim for such loss) and the amount
that such Grantor will receive as sale proceeds or insurance proceeds. Any
proceeds of such sale or casualty loss shall be paid to the Collateral
Agent hereunder immediately upon receipt, to be applied to the Obligations
then outstanding.
16
(k) Control. Each Grantor hereby agrees to take any or all action that may
be necessary or desirable or that the Collateral Agent may request in order for
the Collateral Agent to obtain control in accordance with Sections 9-105 - 9-107
of the Code with respect to the following Collateral: (i) Electronic Chattel
Paper, (ii) Investment Property, (iii) Pledged Interests and (iv)
Letter-of-Credit Rights.
(l) Inspection and Reporting. Each Grantor shall permit the Collateral
Agent, or any agent or representatives thereof or such professionals or other
Persons as the Collateral Agent may designate, not more than once a year in the
absence of an Event of Default, (i) to examine and make copies of and abstracts
from such Grantor's records and books of account, (ii) to visit and inspect its
properties, (iii) to verify materials, leases, Instruments, Accounts, Inventory
and other assets of such Grantor from time to time, (iii) to conduct audits,
physical counts, appraisals and/or valuations, examinations at the locations of
such Grantor. Each Grantor shall also permit the Collateral Agent, or any agent
or representatives thereof or such professionals or other Persons as the
Collateral Agent may designate to discuss such Grantor's affairs, finances and
accounts with any of its officers subject to the execution by the Collateral
Agent or its designee(s) of a mutually agreeable confidentiality agreement.
(m) Future Subsidiaries. If any Grantor shall hereafter create or acquire
any Subsidiary, simultaneously with the creation of acquisition of such
Subsidiary, such Grantor shall cause such Subsidiary to become a party to this
Agreement as an additional "Grantor" hereunder and to become a party to the
Guaranty as an additional "Guarantor" thereunder, and to duly execute and/or
deliver such opinions of counsel and other documents, in form and substance
acceptable to the Collateral Agent, as the Collateral Agent shall reasonably
request with respect thereto.
SECTION 6. Additional Provisions Concerning the Collateral.
(a) Each Grantor hereby (i) authorizes the Collateral Agent to file one or
more Uniform Commercial Code financing or continuation statements, and
amendments thereto, relating to the Collateral (including, without limitation,
financing statements describing the Collateral as "all assets" or "all personal
property" or words of similar effect) and (ii) ratifies such authorization to
the extent that the Collateral Agent has filed any such financing or
continuation statements, or amendments thereto, prior to the date hereof. A
photocopy or other reproduction of this Agreement or any financing statement
covering the Collateral or any part thereof shall be sufficient as a financing
statement where permitted by law.
(b) Each Grantor hereby irrevocably appoints the Collateral Agent as its
attorney-in-fact and proxy, with full authority in the place and stead of such
Grantor and in the name of such Grantor or otherwise, from time to time in the
Collateral Agent's discretion, so long as an Event of Default shall have
occurred and is continuing, to take any action and to execute any instrument
which the Collateral Agent may deem necessary or advisable to accomplish the
purposes of this Agreement (subject to the rights of such Grantor under Section
5 hereof), including, without limitation, (i) to obtain and adjust insurance
required to be paid to the Collateral Agent pursuant to Section 5(e) hereof,
17
(ii) to ask, demand, collect, sue for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in respect of
any Collateral, (iii) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper in connection with clause (i) or (ii)
above, (iv) to file any claims or take any action or institute any proceedings
which the Collateral Agent may deem necessary or desirable for the collection of
any Collateral or otherwise to enforce the rights of the Collateral Agent and
the Buyers with respect to any Collateral, and (v) to execute assignments,
licenses and other documents to enforce the rights of the Collateral Agent and
the Buyers with respect to any Collateral. This power is coupled with an
interest and is irrevocable until the complete conversion of all of the
Company's obligations under the Notes to equity securities of the Company and/or
indefeasible payment in full in cash of all obligations under the Notes
(together with any matured indemnification obligations as of the date of such
conversion and/or payment, but excluding any inchoate or unmatured contingent
indemnification obligations).
(c) For the purpose of enabling the Collateral Agent to exercise rights and
remedies hereunder, at such time as the Collateral Agent shall be lawfully
entitled to exercise such rights and remedies upon and during an Event of
Default, and for no other purpose, each Grantor hereby grants to the Collateral
Agent, to the extent assignable, an irrevocable, non-exclusive license
(exercisable without payment of royalty or other compensation to such Grantor)
to use, assign, license or sublicense any Intellectual Property now owned or
hereafter acquired by such Grantor, wherever the same may be located, including
in such license reasonable access to all media in which any of the licensed
items may be recorded or stored and to all computer programs used for the
compilation or printout thereof. Notwithstanding anything contained herein to
the contrary, but subject to the provisions of the Securities Purchase Agreement
that limit the right of such Grantor to dispose of its property and Section 5(h)
hereof, so long as no Event of Default shall have occurred and be continuing,
such Grantor may exploit, use, enjoy, protect, license, sublicense, assign,
sell, dispose of or take other actions with respect to the Intellectual Property
in the ordinary course of its business. In furtherance of the foregoing, unless
an Event of Default shall have occurred and be continuing, the Collateral Agent
shall from time to time, upon the request of a Grantor, execute and deliver any
instruments, certificates or other documents, in the form so requested, which
such Grantor shall have certified are appropriate (in such Grantor's judgment)
to allow it to take any action permitted above (including relinquishment of the
license provided pursuant to this clause (c) as to any Intellectual Property).
Further, upon the complete conversion of all of the Company's obligations under
the Notes to equity securities of the Company and/or indefeasible payment in
full in cash of all obligations under the Notes (together with any matured
indemnification obligations as of the date of such conversion and/or payment,
but excluding any inchoate or unmatured contingent indemnification obligations),
the Collateral Agent (subject to Section 10(e) hereof) shall release and
reassign to such Grantor all of the Collateral Agent's right, title and interest
in and to the Intellectual Property, and the Licenses, all without recourse,
representation or warranty whatsoever. The exercise of rights and remedies
hereunder by the Collateral Agent shall not terminate the rights of the holders
of any licenses or sublicenses theretofore granted by such Grantor in accordance
with the second sentence of this clause (c). Each Grantor hereby releases the
Collateral Agent from any claims, causes of action and demands at any time
arising out of or with respect to any actions taken or omitted to be taken by
the Collateral Agent under the powers of attorney granted herein other than
actions taken or omitted to be taken through the Collateral Agent's gross
negligence or willful misconduct, as determined by a final determination of a
court of competent jurisdiction.
18
(d) If a Grantor fails to perform any agreement contained herein, the
Collateral Agent may itself perform, or cause performance of, such agreement or
obligation, in the name of such Grantor or the Collateral Agent, and the
expenses of the Collateral Agent incurred in connection therewith shall be
payable by such Grantor pursuant to Section 8 hereof and shall be secured by the
Collateral.
(e) The powers conferred on the Collateral Agent hereunder are solely to
protect its interest in the Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the safe custody of any Collateral in its
possession and the accounting for moneys actually received by it hereunder, the
Collateral Agent shall have no duty as to any Collateral or as to the taking of
any necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral.
(f) Anything herein to the contrary notwithstanding (i) each Grantor shall
remain liable under the Licenses and otherwise with respect to any of the
Collateral to the extent set forth therein to perform all of its obligations
thereunder to the same extent as if this Agreement had not been executed, (ii)
the exercise by the Collateral Agent of any of its rights hereunder shall not
release such Grantor from any of its obligations under the Licenses or otherwise
in respect of the Collateral, and (iii) the Collateral Agent shall not have any
obligation or liability by reason of this Agreement under the Licenses or with
respect to any of the other Collateral, nor shall the Collateral Agent be
obligated to perform any of the obligations or duties of such Grantor thereunder
or to take any action to collect or enforce any claim for payment assigned
hereunder.
SECTION 7. Remedies Upon Event of Default. If any Event of Default shall
have occurred and be continuing:
(a) The Collateral Agent may exercise in respect of the Collateral, in
addition to any other rights and remedies provided for herein or otherwise
available to it, all of the rights and remedies of a secured party upon default
under the Code (whether or not the Code applies to the affected Collateral), and
also may (i) take absolute control of the Collateral, including, without
limitation, transfer into the Collateral Agent's name or into the name of its
nominee or nominees (to the extent the Collateral Agent has not theretofore done
so) and thereafter receive, for the benefit of the Collateral Agent, all
payments made thereon, give all consents, waivers and ratifications in respect
thereof and otherwise act with respect thereto as though it were the outright
owner thereof, (ii) require each Grantor to, and each Grantor hereby agrees that
it will at its expense and upon request of the Collateral Agent forthwith,
assemble all or part of its respective Collateral as directed by the Collateral
Agent and make it available to the Collateral Agent at a place or places to be
designated by the Collateral Agent that is reasonably convenient to both
parties, and the Collateral Agent may enter into and occupy any premises owned
or leased by such Grantor where the Collateral or any part thereof is located or
assembled for a reasonable period in order to effectuate the Collateral Agent's
rights and remedies hereunder or under law, without obligation to such Grantor
in respect of such occupation, and (iii) without notice except as specified
below and without any obligation to prepare or process the Collateral for sale,
(A) sell the Collateral or any part thereof in one or more parcels at public or
private sale, at any of the Collateral Agent's offices or elsewhere, for cash,
on credit or for future delivery, and at such price or prices and upon such
other terms as the Collateral Agent may deem commercially reasonable and/or (B)
lease, license or dispose of the Collateral or any part thereof upon such terms
as the Collateral Agent may deem commercially reasonable. Each Grantor agrees
that, to the extent notice of sale or any other disposition of its respective
Collateral shall be required by law, at least ten (10) days' notice to such
Grantor of the time and place of any public sale or the time after which any
private sale or other disposition of its respective Collateral is to be made
shall constitute reasonable notification. The Collateral Agent shall not be
obligated to make any sale or other disposition of any Collateral regardless of
notice of sale having been given. The Collateral Agent may adjourn any public or
private sale from time to time by announcement at the time and place fixed
19
therefor, and such sale may, without further notice, be made at the time and
place to which it was so adjourned. Each Grantor hereby waives any claims
against the Collateral Agent and the Buyers arising by reason of the fact that
the price at which its respective Collateral may have been sold at a private
sale was less than the price which might have been obtained at a public sale or
was less than the aggregate amount of the Obligations, even if the Collateral
Agent accepts the first offer received and does not offer such Collateral to
more than one offeree, and waives all rights that such Grantor may have to
require that all or any part of such Collateral be marshalled upon any sale
(public or private) thereof. Each Grantor hereby acknowledges that (i) any such
sale of its respective Collateral by the Collateral Agent shall be made without
warranty, (ii) the Collateral Agent may specifically disclaim any warranties of
title, possession, quiet enjoyment or the like, and (iii) such actions set forth
in clauses (i) and (ii) above shall not adversely effect the commercial
reasonableness of any such sale of Collateral. In addition to the foregoing, (1)
upon written notice to any Grantor from the Collateral Agent, such Grantor shall
cease any use of the Intellectual Property or any trademark, patent or copyright
similar thereto for any purpose described in such notice; (2) the Collateral
Agent may, at any time and from time to time, upon 10 days' prior notice to such
Grantor, license, whether general, special or otherwise, and whether on an
exclusive or non-exclusive basis, any of the Intellectual Property, throughout
the universe for such term or terms, on such conditions, and in such manner, as
the Collateral Agent shall in its sole discretion determine to the extent
consistent with any restrictions or conditions imposed upon such Grantor with
respect to such Intellectual Property by license or other contractual
arrangement; and (2) the Collateral Agent may, at any time, pursuant to the
authority granted in Section 6 hereof (such authority being effective upon the
occurrence and during the continuance of an Event of Default), execute and
deliver on behalf of such Grantor, one or more instruments of assignment of the
Intellectual Property (or any application or registration thereof), in form
suitable for filing, recording or registration in any country.
(b) Any cash held by the Collateral Agent as Collateral and all Cash
Proceeds received by the Collateral Agent in respect of any sale of or
collection from, or other realization upon, all or any part of the Collateral
may, in the discretion of the Collateral Agent, be held by the Collateral Agent
as collateral for, and/or then or at any time thereafter applied (after payment
of any amounts payable to the Collateral Agent pursuant to Section 8 hereof) in
whole or in part by the Collateral Agent against, all or any part of the
Obligations in such order as the Collateral Agent shall elect, consistent with
the provisions of the Securities Purchase Agreement. Any surplus of such cash or
Cash Proceeds held by the Collateral Agent and remaining after the complete
conversion of all of the Company's obligations under the Notes to equity
securities of the Company and/or indefeasible payment in full in cash of all
20
obligations under the Notes (together with any matured indemnification
obligations as of the date of such conversion and/or payment, but excluding any
inchoate or unmatured contingent indemnification obligations) shall be paid over
to whomsoever shall be lawfully entitled to receive the same or as a court of
competent jurisdiction shall direct.
(c) In the event that the proceeds of any such sale, collection or
realization are insufficient to pay all amounts to which the Collateral Agent
and the Buyers are legally entitled, such each shall be liable for the
deficiency, together with interest thereon at the highest rate specified in any
of the applicable Transaction Documents for interest on overdue principal
thereof or such other rate as shall be fixed by applicable law, together with
the costs of collection and the reasonable fees, costs, expenses and other
client charges of any attorneys employed by the Collateral Agent to collect such
deficiency.
(d) Each Grantor hereby acknowledges that if the Collateral Agent complies
with any applicable state, provincial, or federal law requirements in connection
with a disposition of the Collateral, such compliance will not adversely affect
the commercial reasonableness of any sale or other disposition of the
Collateral.
(e) The Collateral Agent shall not be required to marshal any present or
future collateral security (including, but not limited to, this Agreement and
the Collateral) for, or other assurances of payment of, the Obligations or any
of them or to resort to such collateral security or other assurances of payment
in any particular order, and all of the Collateral Agent's rights hereunder and
in respect of such collateral security and other assurances of payment shall be
cumulative and in addition to all other rights, however existing or arising. To
the extent that each Grantor lawfully may, such Grantor hereby agrees that it
will not invoke any law relating to the marshalling of collateral which might
cause delay in or impede the enforcement of the Collateral Agent's rights under
this Agreement or under any other instrument creating or evidencing any of the
Obligations or under which any of the Obligations is outstanding or by which any
of the Obligations is secured or payment thereof is otherwise assured, and, to
the extent that it lawfully may, such Grantor hereby irrevocably waives the
benefits of all such laws.
SECTION 8. Indemnity and Expenses.
(a) Each Grantor agrees, jointly and severally, to defend, protect,
indemnify and hold the Collateral Agent and each of the Buyers, jointly and
severally, harmless from and against any and all claims, damages, losses,
liabilities, obligations, penalties, fees, costs and expenses (including,
without limitation, reasonable legal fees, costs, expenses, and disbursements of
such Person's counsel) to the extent that they arise out of or otherwise result
from this Agreement (including, without limitation, enforcement of this
Agreement), except claims, losses or liabilities resulting solely and directly
from such Person's gross negligence or willful misconduct, as determined by a
final judgment of a court of competent jurisdiction.
(b) Each Grantor agrees, jointly and severally, to upon demand pay to the
Collateral Agent the amount of any and all costs and expenses, including the
reasonable fees, costs, expenses and disbursements of counsel for the Collateral
Agent and of any experts and agents (including, without limitation, any
collateral trustee which may act as agent of the Collateral Agent), which the
Collateral Agent may incur in connection with (i) the preparation, negotiation,
execution, delivery, recordation, administration, amendment, waiver or other
21
modification or termination of this Agreement, (ii) the custody, preservation,
use or operation of, or the sale of, collection from, or other realization upon,
any Collateral, (iii) the exercise or enforcement of any of the rights of the
Collateral Agent hereunder, or (iv) the failure by any Grantor to perform or
observe any of the provisions hereof.
SECTION 9. Notices, Etc. All notices and other communications provided for
hereunder shall be in writing and shall be mailed (by certified mail, postage
prepaid and return receipt requested), telecopied or delivered, if to a Grantor
at its address specified below and if to the Collateral Agent to it, at its
address specified below; or as to any such Person, at such other address as
shall be designated by such Person in a written notice to such other Person
complying as to delivery with the terms of this Section 9. All such notices and
other communications shall be effective (a) if sent by certified mail, return
receipt requested, when received or five days after deposited in the mails,
whichever occurs first, (b) if telecopied, when transmitted (during normal
business hours) and confirmation is received, otherwise, the day after the
notice was transmitted if confirmation is received, or (c) if delivered, upon
delivery.
SECTION 10. Miscellaneous.
(a) No amendment of any provision of this Agreement shall be effective
unless it is in writing and signed by each Grantor and the Collateral Agent, and
no waiver of any provision of this Agreement, and no consent to any departure by
a Grantor therefrom, shall be effective unless it is in writing and signed by
the Collateral Agent, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
(b) No failure on the part of the Collateral Agent to exercise, and no
delay in exercising, any right hereunder or under any of the other Transaction
Documents shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or the
exercise of any other right. The rights and remedies of the Collateral Agent or
any Buyer provided herein and in the other Transaction Documents are cumulative
and are in addition to, and not exclusive of, any rights or remedies provided by
law. The rights of the Collateral Agent or any Buyer under any of the other
Transaction Documents against any party thereto are not conditional or
contingent on any attempt by such Person to exercise any of its rights under any
of the other Transaction Documents against such party or against any other
Person, including but not limited to, any Grantor.
(c) To the extent permitted by applicable law, each Grantor hereby waives
promptness, diligence, notice of acceptance and any other notice with respect to
any of the Obligations and this Agreement and any requirement that the
Collateral Agent exhaust any right or take any action against any other Person
or any Collateral. Each Grantor acknowledges that it will receive direct and
indirect benefits from the financing arrangements contemplated herein and that
the waiver set forth in this Section 10(c) is knowingly made in contemplation of
such benefits. The Grantors hereby waive any right to revoke this Agreement, and
acknowledge that this Agreement is continuing in nature and applies to all
Obligations, whether existing now or in the future.
(d) No Grantor may exercise any rights that it may now or hereafter acquire
against any other Grantor that arise from the existence, payment, performance or
22
enforcement of any Grantor's obligations under this Agreement, including,
without limitation, any right of subrogation, reimbursement, exoneration,
contribution or indemnification and any right to participate in any claim or
remedy of the Collateral Agent against any Grantor or any Collateral, whether or
not such claim, remedy or right arises in equity or under contract, statute or
common law, including, without limitation, the right to take or receive from any
Grantor, directly or indirectly, in cash or other property or by set-off or in
any other manner, payment or security solely on account of such claim, remedy or
right, unless and until the complete conversion of all of the Company's
obligations under the Notes to equity securities of the Company and/or
indefeasible payment in full in cash of all obligations under the Notes
(together with any matured indemnification obligations as of the date of such
conversion and/or payment, but excluding any inchoate or unmatured contingent
indemnification obligations). If any amount shall be paid to a Grantor in
violation of the immediately preceding sentence at any time prior to the
complete conversion of all of the Company's obligations under the Notes to
equity securities of the Company and/or indefeasible payment in full in cash of
all obligations under the Notes (together with any matured indemnification
obligations as of the date of such conversion and/or payment, but excluding any
inchoate or unmatured contingent indemnification obligations), such amount shall
be held in trust for the benefit of the Collateral Agent and shall forthwith be
paid to the Collateral Agent to be credited and applied to the Obligations and
all other amounts payable under the Transaction Documents, whether matured or
unmatured, in accordance with the terms of the Transaction Documents, or to be
held as Collateral for any Obligations or other amounts payable under the
Transaction Documents thereafter arising.
(e) Any provision of this Agreement that 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 portions
hereof or thereof or affecting the validity or enforceability of such provision
in any other jurisdiction.
(f) This Agreement shall create a continuing security interest in the Collateral
and shall (i) remain in full force and effect until the complete conversion of
all of the Company's obligations under the Notes to equity securities of the
Company and/or indefeasible payment in full in cash of all obligations under the
Notes (together with any matured indemnification obligations as of the date of
such conversion and/or payment, but excluding any inchoate or unmatured
contingent indemnification obligations), and (ii) be binding on each Grantor and
all other Persons who become bound as debtor to this Agreement in accordance
with Section 9-203(d) of the Code and shall inure, together with all rights and
remedies of the Collateral Agent and the Buyers hereunder, to the benefit of the
Collateral Agent and the Buyers and their respective permitted successors,
transferees and assigns. Without limiting the generality of clause (ii) of the
immediately preceding sentence, without notice to any Grantor, the Collateral
Agent and the Buyers may assign or otherwise transfer their rights and
obligations under this Agreement and any of the other Transaction Documents, to
any other Person and such other Person shall thereupon become vested with all of
the benefits in respect thereof granted to the Collateral Agent and the Buyers
herein or otherwise. Upon any such assignment or transfer, all references in
this Agreement to the Collateral Agent or any such Buyer shall mean the assignee
of the Collateral Agent or such Buyer. None of the rights or obligations of any
Grantor hereunder may be assigned or otherwise transferred without the prior
written consent of the Collateral Agent, and any such assignment or transfer
without the consent of the Collateral Agent shall be null and void.
23
(g) Upon the complete conversion of all of the Company's obligations under the
Notes to equity securities of the Company and/or indefeasible payment in full in
cash of all obligations under the Notes (together with any matured
indemnification obligations as of the date of such conversion and/or payment,
but excluding any inchoate or unmatured contingent indemnification obligations),
(i) this Agreement and the security interests created hereby shall terminate and
all rights to the Collateral shall revert to the respective Grantor that granted
such security interests hereunder, and (ii) the Collateral Agent will, upon such
Grantor's request and at such Grantor's expense, (A) return to such Grantor such
of the Collateral as shall not have been sold or otherwise disposed of or
applied pursuant to the terms hereof, and (B) execute and deliver to such
Grantor such documents as such Grantor shall reasonably request to evidence such
termination, all without any representation, warranty or recourse whatsoever.
(h) THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT AS REQUIRED BY MANDATORY
PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT THE VALIDITY AND PERFECTION OR
THE PERFECTION AND THE EFFECT OF PERFECTION OR NON-PERFECTION OF THE SECURITY
INTEREST CREATED HEREBY, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE GOVERNED BY THE LAW OF A JURISDICTION OTHER THAN THE STATE OF NEW
YORK.
(i) ANY LEGAL ACTION, SUIT OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
DOCUMENT RELATED THERETO MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK
IN THE COUNTY OF NEW YORK OR THE UNITED STATES OF AMERICA FOR THE SOUTHERN
DISTRICT OF NEW YORK, AND APPELLATE COURTS THEREOF, AND, BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH GRANTOR HEREBY ACCEPTS FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS. EACH GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION, INCLUDING, WITHOUT LIMITATION,
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION, SUIT OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS AND CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE
COURT.
(j) EACH GRANTOR AND (BY ITS ACCEPTANCE OF THE BENEFITS OF THIS AGREEMENT) THE
COLLATERAL AGENT WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED ON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT
OR ANY OF THE OTHER TRANSACTION DOCUMENTS, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, VERBAL OR WRITTEN STATEMENT OR OTHER ACTION OF THE PARTIES HERETO.
24
(k) Nothing contained herein shall affect the right of the Collateral Agent to
serve process in any other manner permitted by law or commence legal proceedings
or otherwise proceed against any Grantor or any property of such Grantor in any
other jurisdiction.
(l) Each Grantor irrevocably and unconditionally waives any right it may have to
claim or recover in any legal action, suit or proceeding referred to in this
Section any special, exemplary, punitive or consequential damages.
(m) Section headings herein are included for convenience of reference only and
shall not constitute a part of this Agreement for any other purpose.
(n) This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which shall be deemed
to be an original, but all of which taken together constitute one in the same
Agreement.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
25
IN WITNESS WHEREOF, each Grantor has caused this Agreement to be executed
and delivered by its officer thereunto duly authorized, as of the date first
above written.
ADVANCED CANNABIS SOLUTIONS, INC., a
Colorado corporation
By:
---------------------------------
Name:
Title:
Address for Notices:
-----------------------
-----------------------
Facsimile:_______________
[ACS ACQUISITION CO.], a [Colorado
corporation]
By:
---------------------------------
Name:
Title:
Address for Notices:
-----------------------
-----------------------
Facsimile:_______________
26
[ADDITIONAL SUBSIDIARIES], a [_________ __________]
By:
---------------------------------
Name:
Title:
Address for Notices:
-----------------------
-----------------------
Facsimile:_______________
27
ACCEPTED BY:
FULL CIRCLE CAPITAL CORPORATION,
as Collateral Agent
By:
---------------------------------
Name:
Title:
Address:
28
SCHEDULE I
LEGAL NAMES; ORGANIZATIONAL IDENTIFICATION NUMBERS;
STATES OR JURISDICTION OF ORGANIZATION
Sched. I-1
SCHEDULE II
INTELLECTUAL PROPERTY AND LICENSES
Sched. II-1
EXISTING SUBSIDIARIES
INTELLECTUAL PROPERTY AND LICENSES
Sched. II-1
SCHEDULE III
LOCATIONS
LOCATION Description of Location (State if
Location (i) contains Rolling Stock,
other Equipment, Fixtures, Goods or
Inventory, (ii) is chief place of
business and chief executive office,
or (iii) contains Records concerning
Accounts and originals of Chattel Paper)
Sched. III-1
LOCATIONS OF EXISTING SUBSIDIARIES
LOCATION Description of Location (State if
Location (i) contains Rolling Stock,
other Equipment, Fixtures, Goods or
Inventory, (ii) is chief place of
business and chief executive office, or
(iii) contains Records concerning
Accounts and originals of Chattel Paper)
Sched. III-1
SCHEDULE IV
PROMISSORY NOTES, SECURITIES, DEPOSIT ACCOUNTS,
SECURITIES ACCOUNTS AND COMMODITIES ACCOUNTS
Promissory Notes:
Securities and Other Instruments:
Name and Address
of Institution
Maintaining Account Account Number Type of Account
------------------- -------------- ---------------
Sched. IV-1
EXISTING SUBSIDIARIES
Promissory Notes
Securities and Other Instruments
Name and Address
of Institution
Maintaining Account Account Number Type of Account
------------------- -------------- ---------------
Sched. IV-1
SCHEDULE V
UCC-1 FINANCING STATEMENTS
Sched. V-1
EXISTING SUBSIDIARIES
UCC-1 FINANCING STATEMENTS
Sched. V-1
SCHEDULE VI
COMMERCIAL TORT CLAIMS
EXISTING SUBSIDIARIES
COMMERCIAL TORT CLAIMS
Sched. VI-1
SCHEDULE VII
PLEDGED DEBT
Sched. VII-1
SCHEDULE VIII
PLEDGED SHARES
Sched. VIII-1
EXHIBIT A
ASSIGNMENT FOR SECURITY
[TRADEMARKS] [PATENTS] [COPYRIGHTS]
WHEREAS, ______________________________ (the "Assignor") [has
adopted, used and is using, and holds all right, title and interest in and to,
the trademarks and service marks listed on the annexed Schedule 1A, which
trademarks and service marks are registered or applied for in the United States
Patent and Trademark Office (the "Trademarks")] [holds all right, title and
interest in the letter patents, design patents and utility patents listed on the
annexed Schedule 1A, which patents are issued or applied for in the United
States Patent and Trademark Office (the "Patents")] [holds all right, title and
interest in the copyrights listed on the annexed Schedule 1A, which copyrights
are registered in the United States Copyright Office (the "Copyrights")];
WHEREAS, the Assignor has entered into a Security Agreement, dated
as of December [__], 2013 (as amended, restated or otherwise modified from time
to time the "Security Agreement"), in favor of Full Circle Capital Corporation,
as collateral agent for certain buyers (the "Assignee");
WHEREAS, pursuant to the Security Agreement, the Assignor has
assigned to the Assignee and granted to the Assignee for the benefit of the
Buyers (as defined in the Security Agreement) a continuing security interest in
all right, title and interest of the Assignor in, to and under the [Trademarks,
together with, among other things, the good-will of the business symbolized by
the Trademarks] [Patents] [Copyrights] and the applications and registrations
thereof, and all proceeds thereof, including, without limitation, any and all
causes of action which may exist by reason of infringement thereof and any and
all damages arising from past, present and future violations thereof (the
"Collateral"), to secure the payment, performance and observance of the
"Obligations" (as defined in the Security Agreement);
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Assignor does hereby pledge,
convey, sell, assign, transfer and set over unto the Assignee and grants to the
Assignee for the benefit of the Buyers a continuing security interest in the
Collateral to secure the prompt payment, performance and for the benefit of the
Buyers observance of the Obligations.
The Assignor does hereby further acknowledge and affirm that the
rights and remedies of the Assignee with respect to the Collateral are more
fully set forth in the Security Agreement, the terms and provisions of which are
hereby incorporated herein by reference as if fully set forth herein.
Exh. A-1
IN WITNESS WHEREOF, the Assignor has caused this Assignment to be
duly executed by its officer thereunto duly authorized as of _____________, 20__
[GRANTOR]
By:____________________________
Name:
Title:
Exh. A-2
STATE OF ____________
ss.:
COUNTY OF __________
On this ____ day of _______________, 20__, before me personally came
________________, to me known to be the person who executed the foregoing
instrument, and who, being duly sworn by me, did depose and say that s/he is the
________________ of _______________________________________, a
____________________, and that s/he executed the foregoing instrument in the
firm name of _______________________________________, and that s/he had
authority to sign the same, and s/he acknowledged to me that he executed the
same as the act and deed of said firm for the uses and purposes therein
mentioned.
SCHEDULE 1A TO ASSIGNMENT FOR SECURITY
[Trademarks and Trademark Applications]
[Patent and Patent Applications]
[Copyright and Copyright Applications]
Owned by ______________________________
Exh. A-3