SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement"), dated as of March 29,
1999, is made between Amerigon Incorporated, a California corporation (the
"Borrower") and Big Star Investments LLC ("Lender").
The Borrower and the Lender are parties to a Credit Agreement dated
as of March 29, 1999 (as amended, modified, renewed or extended from time to
time, the "Credit Agreement"). It is a condition precedent to the borrowings
under the Credit Agreement that the Borrower enter into this Agreement and
grant to the Lender the security interests hereinafter provided to secure the
obligations of the Borrower described below.
Accordingly, the parties hereto agree as follows:
SECTION 1 DEFINITIONS; INTERPRETATION.
(a) TERMS DEFINED IN CREDIT AGREEMENT. All capitalized terms
used in this Agreement and not otherwise defined herein shall have the
meanings assigned to them in the Credit Agreement.
(b) CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings:
"ACCOUNT CONTROL AGREEMENT" means any account control agreement or
other agreement with any securities intermediary granting control with
respect to any Investment Property for purposes of UCC Section 9115.
"ACCOUNTS" means any and all accounts of the Borrower, whether now
existing or hereafter acquired or arising, and in any event includes all
accounts receivable, contract rights, rights to payment and other obligations
of any kind owed to the Borrower arising out of or in connection with the
sale or lease of merchandise, goods or commodities or the rendering of
services or arising from any other transaction, however evidenced, and
whether or not earned by performance, all guaranties, indemnities and
security with respect to the foregoing, and all letters of credit relating
thereto, in each case whether now existing or hereafter acquired or arising.
"BOOKS" means all books, records and other written, electronic or
other documentation in whatever form maintained now or hereafter by or for
the Borrower in connection with the ownership of its assets or the conduct of
its business or evidencing or containing information relating to the
Collateral, including: (i) ledgers; (ii) records indicating, summarizing, or
evidencing the Borrower's assets (including Inventory and Rights to Payment),
business operations or financial condition; (iii) computer programs and
software; (iv) computer discs, tapes, files, manuals, spreadsheets; (v)
computer printouts and output of whatever kind; (vi) any other computer
prepared or electronically stored, collected or reported information and
equipment of any kind; and (vii) any and all other rights now or hereafter
arising out of any contract or agreement between the Borrower and any service
bureau, computer or data processing company or other Person charged with
preparing or maintaining any of the Borrower's books or records or with
credit reporting, including with regard to the Borrower's Accounts.
1.
"CHATTEL PAPER" means all writings of whatever sort which evidence
a monetary obligation and a security interest in or lease of specific goods,
whether now existing or hereafter arising.
"COLLATERAL" has the meaning set forth in Section 2.
"DEPOSIT ACCOUNT" means any demand, time, savings, passbook or like
account now or hereafter maintained by or for the benefit of the Borrower
with a bank, savings and loan association, credit union or like organization,
and all funds and amounts therein, whether or not restricted or designated
for a particular purpose.
"DOCUMENTS" means any and all documents of title, bills of lading,
dock warrants, dock receipts, warehouse receipts and other documents of the
Borrower, whether or not negotiable, and includes all other documents which
purport to be issued by a bailee or agent and purport to cover goods in any
bailee's or agent's possession which are either identified or are fungible
portions of an identified mass, including such documents of title made
available to the Borrower for the purpose of ultimate sale or exchange of
goods or for the purpose of loading, unloading, storing, shipping,
transshipping, manufacturing, processing or otherwise dealing with goods in a
manner preliminary to their sale or exchange, in each case whether now
existing or hereafter acquired or arising.
"EQUIPMENT" means all now existing or hereafter acquired equipment
of the Borrower in all of its forms, wherever located, and in any event
includes any and all machinery, furniture, equipment, furnishings and
fixtures in which the Borrower now or hereafter acquires any right, and all
other goods and tangible personal property (other than Inventory), including
tools, parts and supplies, automobiles, trucks, tractors and other vehicles,
computer and other electronic data processing equipment and other office
equipment, computer programs and related data processing software, and all
additions, substitutions, replacements, parts, accessories, and accessions to
and for the foregoing, now owned or hereafter acquired, and including any of
the foregoing which are or are to become fixtures on real property.
"FINANCING STATEMENTS" has the meaning set forth in Section 3.
"GENERAL INTANGIBLES" means all general intangibles of the
Borrower, now existing or hereafter acquired or arising, and in any event
includes: (i) all tax and other refunds, rebates or credits of every kind and
nature to which the Borrower is now or hereafter may become entitled; (ii)
all good will, choses in action and causes of action, whether legal or
equitable, whether in contract or tort and however arising; (iii) all
Intellectual Property Collateral; (iv) all interests in limited and general
partnerships and limited liability companies; (v) all rights of stoppage in
transit, replevin and reclamation; (vi) all licenses, permits, consents,
indulgences and rights of whatever kind issued in favor of or otherwise
recognized as belonging to the Borrower by any governmental authority; and
(vii) all indemnity agreements, guaranties, insurance policies and other
contractual, equitable and legal rights of whatever kind or nature; in each
case whether now existing or hereafter acquired or arising.
2.
"INSTRUMENTS" means any and all negotiable instruments and every
other writing which evidences a right to the payment of money, wherever
located and whether now existing or hereafter acquired.
"INTELLECTUAL PROPERTY COLLATERAL" means the following properties
and assets owned or held by the Borrower or in which the Borrower otherwise
has any interest, now existing or hereafter acquired or arising:
(i) all patents and patent applications, domestic or foreign, all
licenses relating to any of the foregoing and all income and royalties with
respect to any licenses (including such patents, patent applications and
patent licenses as described in Schedule 1), all rights to sue for past,
present or future infringement thereof, all rights arising therefrom and
pertaining thereto and all reissues, divisions, continuations, renewals,
extensions and continuations-in-part thereof;
(ii) all copyrights and applications for copyright, domestic or
foreign, together with the underlying works of authorship (including titles),
whether or not the underlying works of authorship have been published and
whether said copyrights are statutory or arise under the common law, and all
other rights and works of authorship (including the copyrights and copyright
applications described in Schedule 1), all rights, claims and demands in any
way relating to any such copyrights or works, including royalties and rights
to sue for past, present or future infringement, and all rights of renewal
and extension of copyright;
(iii) all state (including common law), federal and foreign
trademarks, service marks and trade names, and applications for registration
of such trademarks, service marks and trade names, all licenses relating to
any of the foregoing and all income and royalties with respect to any
licenses (including such marks, names, applications and licenses as described
in Schedule 1), whether registered or unregistered and wherever registered,
all rights to sue for past, present or future infringement or unconsented
thereof, all rights arising therefrom and pertaining thereto and all
reissues, extensions and renewals thereof;
(iv) all trade secrets, trade dress, trade styles, logos, other
source of business identifiers, mask-works, mask-work registrations,
mask-work applications, software, confidential information, customer lists,
license rights, advertising materials, operating manuals, methods, processes,
know-how, algorithms, formulae, databases, quality control procedures,
product, service and technical specifications, operating, production and
quality control manuals, sales literature, drawings, specifications, blue
prints, descriptions, inventions, name plates and catalogs; and
(v) the entire goodwill of or associated with the businesses now
or hereafter conducted by the Borrower connected with and symbolized by any
of the aforementioned properties and assets.
"INVENTORY" means any and all of the Borrower's inventory in all of
its forms, wherever located, whether now owned or hereafter acquired, and in any
event includes all goods (including goods in transit) which are held for sale,
lease or other disposition, including those held for display or demonstration or
out on lease or consignment or to be furnished under a
3.
contract of service, or which are raw materials, work in process, finished
goods or materials used or consumed in the Borrower's business, and the
resulting product or mass, and all repossessed, returned, rejected, reclaimed
and replevied goods, together with all parts, components, supplies, packing
and other materials used or usable in connection with the manufacture,
production, packing, shipping, advertising, selling or furnishing of such
goods; and all other items hereafter acquired by the Borrower by way of
substitution, replacement, return, repossession or otherwise, and all
additions and accessions thereto, and any Document representing or relating
to any of the foregoing at any time.
"INVESTMENT PROPERTY" means any and all investment property of the
Borrower, including all securities, whether certificated or uncertificated,
security entitlements, securities accounts, commodity contracts and commodity
accounts, and all financial assets held in any securities account or
otherwise, wherever located, and whether now existing or hereafter acquired
or arising.
"LETTER OF CREDIT PROCEEDS" means any and all proceeds of written
letters of credit.
"PROCEEDS" means whatever is receivable or received from or upon
the sale, lease, license, collection, use, exchange or other disposition,
whether voluntary or involuntary, of any Collateral or other assets of the
Borrower, including "proceeds" as defined at UCC Section 9306, any and all
proceeds of any insurance, indemnity, warranty or guaranty payable to or for
the account of the Borrower from time to time with respect to any of the
Collateral, any and all payments (in any form whatsoever) made or due and
payable to the Borrower from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral by any governmental authority (or any Person acting under color of
governmental authority), any and all other amounts from time to time paid or
payable under or in connection with any of the Collateral or for or on
account of any damage or injury to or conversion of any Collateral by any
Person, any and all other tangible or intangible property received upon the
sale or disposition of Collateral, and all proceeds of proceeds.
"RIGHTS TO PAYMENT" means all Accounts, and any and all rights and
claims to the payment or receipt of money or other forms of consideration of
any kind in, to and under all Chattel Paper, Documents, General Intangibles,
Instruments, Investment Property and Proceeds.
"SECURED OBLIGATIONS" means the indebtedness, liabilities and other
obligations of the Borrower to the Lender under or in connection with the
Credit Agreement, the Notes and the other Loan Documents, including all
unpaid principal of the Loans, all interest accrued thereon, all fees due
under the Credit Agreement and all other amounts payable by the Borrower to
the Lender thereunder or in connection therewith, whether now existing or
hereafter arising, and whether due or to become due, absolute or contingent,
liquidated or unliquidated, determined or undetermined.
"UCC" means the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of California; PROVIDED, HOWEVER, in the event
that, by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of the security interest in any Collateral is governed by
the Uniform Commercial Code as in effect in a jurisdiction other than the State
of California, the term "UCC" shall mean the Uniform
4.
Commercial Code as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such attachment, perfection or priority and for
purposes of definitions related to such provisions.
(c) TERMS DEFINED IN UCC. Where applicable and except as
otherwise defined herein, terms used in this Agreement shall have the
meanings assigned to them in the UCC.
(d) INTERPRETATION. The rules of interpretation set forth in
Section 1.03 of the Credit Agreement shall be applicable to this Agreement
and are incorporated herein by this reference.
SECTION 2 SECURITY INTEREST.
(a) GRANT OF SECURITY INTEREST. As security for the payment and
performance of the Secured Obligations, the Borrower hereby pledges, assigns,
transfers, hypothecates and sets over to the Lender, and hereby grants to the
Lender a security interest in, all of the Borrower's right, title and
interest in, to and under the following property, wherever located and
whether now existing or owned or hereafter acquired or arising (collectively,
the "Collateral"): (i) all Accounts; (ii) all Chattel Paper; (iii) all
Deposit Accounts; (iv) all Documents; (v) all Equipment; (vi) all General
Intangibles; (vii) all Instruments; (viii) all Inventory; (ix) all Investment
Property; (x) all Books; (xi) all products and Proceeds of any and all of the
foregoing; and (xii) all Letter of Credit Proceeds.
(b) BORROWER REMAINS LIABLE. Anything herein to the contrary
notwithstanding, (i) the Borrower shall remain liable under any contracts,
agreements and other documents included in the Collateral, to the extent set
forth therein, to perform all of its duties and obligations thereunder to the
same extent as if this Agreement had not been executed, (ii) the exercise by
the Lender of any of the rights hereunder shall not release the Borrower from
any of their duties or obligations under such contracts, agreements and other
documents included in the Collateral and (iii) the Lender shall not have any
obligation or liability under any contracts, agreements and other documents
included in the Collateral by reason of this Agreement, nor shall the Lender
be obligated to perform any of the obligations or duties of the Borrower
thereunder or to take any action to collect or enforce any such contract,
agreement or other document included in the Collateral hereunder.
(c) CONTINUING SECURITY INTEREST. The Borrower agrees that this
Agreement shall create a continuing security interest in the Collateral which
shall remain in effect until terminated in accordance with Section 22.
SECTION 3 PERFECTION PROCEDURES.
(a) FINANCING STATEMENTS, ETC. The Borrower shall execute and
deliver to the Lender concurrently with the execution of this Agreement, and
at any time and from time to time thereafter, all financing statements,
continuation financing statements, termination statements, security
agreements, chattel mortgages, assignments, patent, copyright and trademark
collateral assignments, fixture filings, warehouse receipts, documents of
title, affidavits, reports, notices,
5.
schedules of account, letters of authority and all other documents and
instruments, in form satisfactory to the Lender (the "Financing Statements"),
and take all other action, as the Lender may request, to perfect and continue
perfected, maintain the priority of or provide notice of the Lender's
security interest in the Collateral and to accomplish the purposes of this
Agreement.
(b) CERTAIN AGENTS. Any third person at any time and from time
to time holding all or any portion of the Collateral shall be deemed to, and
shall, hold the Collateral as the agent of, and as pledge holder for, the
Lender. At any time and from time to time, the Lender may give notice to any
third person holding all or any portion of the Collateral that such third
person is holding the Collateral as the agent of, and as pledge holder for,
the Lender.
SECTION 4 REPRESENTATIONS AND WARRANTIES. In addition to the
representations and warranties of the Borrower set forth in the Credit
Agreement, which are incorporated herein by this reference, the Borrower
represents and warrants to the Lender that:
(a) LOCATION OF CHIEF EXECUTIVE OFFICE AND COLLATERAL. The
Borrower's chief executive office and principal place of business is located
at the address set forth in Schedule 1, and all other locations where the
Borrower conducts business or Collateral is kept are set forth in Schedule 1.
(b) LOCATIONS OF BOOKS. All locations where Books pertaining to
the Rights to Payment are kept, including all equipment necessary for
accessing such Books and the names and addresses of all service bureaus,
computer or data processing companies and other Persons keeping any Books or
collecting Rights to Payment for the Borrower, are set forth in Schedule 1.
(c) TRADE NAMES AND TRADE STYLES. All trade names and trade
styles under which the Borrower presently conducts its business operations
are set forth in Schedule 1, and, except as set forth in Schedule 1, the
Borrower has not, at any time in the past: (i) been known as or used any
other corporate, trade or fictitious name; (ii) changed its name; (iii) been
the surviving or resulting corporation in a merger or consolidation; or (iv)
acquired through asset purchase or otherwise any business of any Person.
(d) OWNERSHIP OF COLLATERAL. The Borrower is, and, except as
permitted by Section 5(i), will continue to be, the sole and complete owner
of the Collateral (or, in the case of after-acquired Collateral, at the time
the Borrower acquires rights in such Collateral, will be the sole and
complete owner thereof), free from any Lien other than Permitted Liens.
(e) ENFORCEABILITY; PRIORITY OF SECURITY INTEREST. (i) This
Agreement creates a security interest which is enforceable against the
Collateral in which the Borrower now has rights and will create a security
interest which is enforceable against the Collateral in which the Borrower
hereafter acquires rights at the time the Borrower acquires any such rights;
and (ii) the Lender has a perfected and first priority security interest in
the Collateral, in which the Borrower now has rights, and will have a
perfected and first priority security interest in the Collateral in which the
Borrower hereafter acquires rights at the time the Borrower acquires any such
rights, in each case securing the payment and performance of the Secured
Obligations.
6.
(f) OTHER FINANCING STATEMENTS. Other than (i) Financing
Statements disclosed to the Lender and (ii) Financing Statements in favor of
the Lender, no effective Financing Statement naming the Borrower as debtor,
assignor, grantor, mortgagor, pledgor or the like and covering all or any
part of the Collateral is on file in any filing or recording office in any
jurisdiction.
(g) RIGHTS TO PAYMENT.
(i) The Rights to Payment represent valid, binding and
enforceable obligations of the account debtors or other Persons obligated
thereon, representing undisputed, bona fide transactions completed in
accordance with the terms and provisions contained in any documents related
thereto, and are and will be genuine, free from Liens, and not subject to any
adverse claims, counterclaims, setoffs, defaults, disputes, defenses,
discounts, retainages, holdbacks or conditions precedent of any kind of
character, except to the extent reflected by the Borrower's reserves for
uncollectible Rights to Payment or to the extent, if any, that such account
debtors or other Persons may be entitled to normal and ordinary course trade
discounts, returns, adjustments and allowances in accordance with Section
5(m), or as otherwise disclosed to the Lender in writing;
(ii) to the best of the Borrower's knowledge and belief, all
account debtors and other obligors on the Rights to Payment are solvent and
generally paying their debts as they come due;
(iii) all Rights to Payment comply with all applicable laws
concerning form, content and manner of preparation and execution, including
where applicable any federal or state consumer credit laws;
(iv) the Borrower has not assigned any of its rights under the
Rights to Payment except as provided in this Agreement or as set forth in the
other Loan Documents;
(v) all statements made, all unpaid balances and all other
information in the Books and other documentation relating to the Rights to
Payment are true and correct and in all respects what they purport to be; and
(vi) the Borrower has no knowledge of any fact or circumstance
which would impair the validity or collectibility of any of the Rights to
Payment.
(h) INVENTORY. No Inventory is stored with any bailee,
warehouseman or similar Person, nor has any Inventory been consigned to the
Borrower or consigned by the Borrower to any Person or is held by the
Borrower for any Person under any "bill and hold" or other arrangement,
except as set forth in Schedule 1.
(i) INTELLECTUAL PROPERTY.
(i) Except as set forth in Schedule 1, the Borrower (directly or
through any Subsidiary) does not own, possess or use under any licensing
arrangement any patents, copyrights, trademarks, service marks or trade names,
nor is there currently pending before any
7.
governmental authority any application for registration of any patent,
copyright, trademark, service mark or trade name;
(ii) all patents, copyrights, trademarks, service marks and trade
names are subsisting and have not been adjudged invalid or unenforceable in
whole or in part;
(iii) all maintenance fees required to be paid on account of any
patents have been timely paid for maintaining such patents in force, and, to
the best of the Borrower's knowledge, each of the patents is valid and
enforceable and the Borrower has notified the Lender in writing of all prior
art (including public uses and sales) of which it is aware;
(iv) to the best of the Borrower's knowledge after due inquiry, no
material infringement or unauthorized use presently is being made of any
Intellectual Property Collateral by any Person;
(v) the Borrower is the sole and exclusive owner of the
Intellectual Property Collateral and the past, present and contemplated
future use of such Intellectual Property Collateral by the Borrower has not,
does not and will not infringe or violate any right, privilege or license
agreement of or with any other Person; and
(vi) the Borrower owns, has material rights under, is a party to,
or an assignee of a party to all material licenses, patents, patent
applications, copyrights, service marks, trademarks, trademark applications,
trade names and all other Intellectual Property Collateral necessary to
continue to conduct its business as heretofore conducted.
(j) EQUIPMENT.
(i) None of the Equipment or other Collateral is affixed to real
property, except Collateral with respect to which the Borrower has supplied
the Lender with all information and documentation necessary to make all
fixture filings required to perfect and protect the priority of the Lender's
security interest in all such Collateral which may be fixtures as against all
Persons having an interest in the premises to which such property may be
affixed; and
(ii) none of the Equipment is leased from or to any Person, except
as set forth at Schedule 1 or as otherwise disclosed to the Lender.
(k) DEPOSIT ACCOUNTS. The names and addresses of all financial
institutions at which the Borrower maintains its Deposit Accounts, and the
account numbers and account names of such Deposit Accounts, are set forth in
SCHEDULE 1.
(l) INVESTMENT PROPERTY; INSTRUMENTS. All securities accounts of
Borrower and other Investment Property of Borrower are set forth in SCHEDULE
1, and all Instruments held by Borrower are also set forth in SCHEDULE 1. No
Account Control Agreements exist with respect to any Investment Property
other than any Account Control Agreements in favor of the Lender.
SECTION 5 COVENANTS. In addition to the covenants of the Borrower set
forth in the Credit Agreement, which are incorporated herein by this reference,
so long as any of the
8.
Secured Obligations remain unsatisfied or the Lender shall have any
Commitment, the Borrower agrees that:
(a) DEFENSE OF COLLATERAL. The Borrower will appear in and
defend any action, suit or proceeding which may affect to a material extent
its title to, or right or interest in, or the Lender's right or interest in,
the Collateral.
(b) PRESERVATION OF COLLATERAL. The Borrower will do and perform
all reasonable acts that may be necessary and appropriate to maintain,
preserve and protect the Collateral.
(c) COMPLIANCE WITH LAWS, ETC. The Borrower will comply with all
material laws, regulations and ordinances, and all policies of insurance,
relating to the possession, operation, maintenance and control of the
Collateral.
(d) LOCATION OF BOOKS AND CHIEF EXECUTIVE OFFICE. The Borrower
will: (i) keep all Books pertaining to the Rights to Payment at the
locations set forth in Schedule 1; and (ii) give at least 30 days' prior
written notice to the Lender of (A) any changes in any such location where
Books pertaining to the Rights to Payment are kept, including any change of
name or address of any service bureau, computer or data processing company or
other Person preparing or maintaining any Books or collecting Rights to
Payment for the Borrower or (B) any changes in the location of the Borrower's
chief executive office or principal place of business.
(e) LOCATION OF COLLATERAL. The Borrower will: (i) keep the
Collateral at the locations set forth in Schedule 1 and not remove the
Collateral from such locations (other than disposals of Collateral permitted
by subsection (i)) except upon at least 30 days' prior written notice of any
removal to the Lender; and (ii) give the Lender at least 30 days' prior
written notice of any change in the locations set forth in Schedule 1.
(f) CHANGE IN NAME, IDENTITY OR STRUCTURE. The Borrower will
give at least 30 days' prior written notice to the Lender of (i) any change
in name, (ii) any changes in, additions to or other modifications of its
trade names and trade styles set forth in Schedule 1, and (iii) any changes
in its identity or structure in any manner which might make any Financing
Statement filed hereunder incorrect or misleading.
(g) MAINTENANCE OF RECORDS. The Borrower will keep separate,
accurate and complete Books with respect to the Collateral, disclosing the
Lender's security interest hereunder.
(h) INVOICING OF SALES. The Borrower will invoice all of its
sales upon forms customary in the industry and to maintain proof of delivery
and customer acceptance of goods.
(i) DISPOSITION OF COLLATERAL. The Borrower will not surrender
or lose possession of (other than to the Lender), sell, lease, rent, or
otherwise dispose of or transfer any of the Collateral or any right or
interest therein, except for sales of inventory in the ordinary course of
business or to the extent permitted by the Loan Documents; PROVIDED that no
such disposition or transfer of Investment Property or Instruments shall be
permitted while any Event of Default exists.
9.
(j) LIENS. The Borrower will keep the Collateral free of all
Liens except Permitted Liens.
(k) EXPENSES. The Borrower will pay all expenses of protecting,
storing, warehousing, insuring, handling and shipping the Collateral.
(l) LEASED PREMISES. At the Lender's request, the Borrower will
obtain from each Person from whom the Borrower leases any premises at which
any Collateral is at any time present such subordination, waiver, consent and
estoppel agreements as the Lender may require, in form and substance
satisfactory to the Lender.
(m) RIGHTS TO PAYMENT. The Borrower will:
(i) with such frequency as the Lender may require, furnish to the
Lender full and complete reports, in form and substance satisfactory to the
Lender, with respect to the Accounts, including information as to
concentration, aging, identity of account debtors, letters of credit securing
Accounts, disputed Accounts and other matters, as the Lender shall request;
(ii) give only normal discounts, allowances and credits as to
Accounts and other Rights to Payment, in the ordinary course of business,
according to normal trade practices utilized by the Borrower in the past, and
enforce all Accounts and other Rights to Payment strictly in accordance with
their terms, and take all such action to such end as may from time to time be
reasonably requested by the Lender, except that the Borrower may grant any
extension of the time for payment or enter into any agreement to make a
rebate or otherwise to reduce the amount owing on or with respect to, or
compromise or settle for less than the full amount thereof, any Account or
other Right to Payment, in the ordinary course of business, according to
normal trade practices utilized by the Borrower in the past, and where the
amount involved does not exceed $10,000 or where the Account or Right to
Payment does not exceed $10,000 or would not be materially impaired;
(iii) if any discount, allowance, credit, extension of time for
payment, agreement to make a rebate or otherwise to reduce the amount owing
on, or compromise or settle, an Account or other Right to Payment exists or
occurs, or if, to the knowledge of the Borrower, any dispute, setoff, claim,
counterclaim or defense exists or has been asserted or threatened with
respect to an Account or other Right to Payment, disclose such fact fully to
the Lender in the Books relating to such Account or other Right to Payment
and in connection with any invoice or report furnished by the Borrower to the
Lender relating to such Account or other Right to Payment;
(iv) if any Accounts arise from contracts with the United States
or any department, agency or instrumentality thereof, immediately notify the
Lender thereof and execute any documents and instruments and take any other
steps requested by the Lender in order that all monies due and to become due
thereunder shall be assigned to the Lender and notice thereof given to the
federal authorities under the Federal Assignment of Claims Act;
(v) in accordance with its sound business judgment perform and
comply in all material respects with its obligations in respect of the
Accounts and other Rights to Payment;
10.
(vi) upon the request of the Lender (A) at any time, notify all or
any designated portion of the account debtors and other obligors on the
Rights to Payment of the security interest hereunder, and (B) upon the
occurrence of an Event of Default, notify the account debtors and other
obligors on the Rights to Payment or any designated portion thereof that
payment shall be made directly to the Lender or to such other Person or
location as the Lender shall specify; and
(vii) upon the occurrence of any Event of Default, establish such
lockbox or similar arrangements for the payment of the Accounts and other
Rights to Payment as the Lender shall require.
(n) INSTRUMENTS, INVESTMENT PROPERTY, ETC. Upon the request of
the Lender, the Borrower will (i) immediately deliver to the Lender, or an
agent designated by them, appropriately endorsed or accompanied by
appropriate instruments of transfer or assignment, all Instruments,
Documents, Chattel Paper and certificated securities with respect to any
Investment Property, all letters of credit, and all other Rights to Payment
at any time evidenced by promissory notes, trade acceptances or other
instruments, (ii) cause any securities intermediaries to show on their books
that the Lender is the entitlement holder with respect to any Investment
Property, and/or obtain Account Control Agreements in favor of the Lender
from such securities intermediaries, in form and substance satisfactory to
the Lender, with respect to any Investment Property, as requested by Lender,
(iii) mark all Documents and Chattel Paper with such legends as the Lender
shall reasonably specify, and (iv) obtain consents from any letter of credit
issuers with respect to the assignment to the Agent of any Letter of Credit
Proceeds.
(o) DEPOSIT ACCOUNTS AND SECURITIES ACCOUNTS. The Borrower will
give the Lender immediate notice of the establishment of any new Deposit
Account and any new securities account with respect to any Investment
Property.
(p) INVENTORY. The Borrower will:
(i) at such times as the Lender shall request, prepare and
deliver to the Lender a report of all Inventory, in form and substance
satisfactory to the Lender;
(ii) upon the request of the Lender, take a physical listing of
the Inventory and promptly deliver a copy of such physical listing to the
Lender; and
(iii) not store any Inventory with a bailee, warehouseman or
similar Person or on premises leased to the Borrower, nor dispose of any
Inventory on a bill-and-hold, guaranteed sale, sale and return, sale on
approval, consignment or similar basis, nor acquire any Inventory from any
Person on any such basis.
(q) EQUIPMENT. The Borrower will, upon the Lender's request,
deliver to the Lender a report of each item of Equipment, in form and
substance reasonably satisfactory to the Lender.
11.
(r) INTELLECTUAL PROPERTY COLLATERAL. The Borrower will:
(i) not enter into any agreement (including any license or
royalty agreement) pertaining to any Intellectual Property Collateral,
without the prior written consent of the Lender;
(ii) not allow or suffer any Intellectual Property Collateral to
become abandoned, nor any registration thereof to be terminated, forfeited,
expired or dedicated to the public;
(iii) promptly give the Lender notice of any rights the Borrower
may obtain to any new patentable inventions, copyrightable works or other new
Intellectual Property Collateral, prior to the filing of any application for
registration thereof; and
(iv) diligently prosecute all applications for patents, copyrights
and trademarks, and file and prosecute any and all continuations,
continuations-in-part, applications for reissue, applications for certificate
of correction and like matters as shall be reasonable and appropriate in
accordance with prudent business practice, and promptly and timely pay any
and all maintenance, license, registration and other fees, taxes and expenses
incurred in connection with any Intellectual Property Collateral.
(s) NOTICES, REPORTS AND INFORMATION. The Borrower will (i)
notify the Lender of any other modifications of or additions to the
information contained in SCHEDULE 1; (ii) notify the Lender of any material
claim made or asserted against the Collateral by any Person and of any change
in the composition of the Collateral or other event which could materially
adversely affect the value of the Collateral or the Lender's Lien thereon;
(iii) furnish to the Lender such statements and schedules further identifying
and describing the Collateral and such other reports and other information in
connection with the Collateral as the Lender may reasonably request, all in
reasonable detail; and (iv) upon request of the Lender make such demands and
requests for information and reports as the Borrower is entitled to make in
respect of the Collateral.
SECTION 6 RIGHTS TO PAYMENT.
(a) COLLECTION OF RIGHTS TO PAYMENT. Until the Lender exercises
its rights hereunder to collect Rights to Payment, the Borrower shall
endeavor in the first instance diligently to collect all amounts due or to
become due on or with respect to the Rights to Payment. At the request of
the Lender, upon and after the occurrence of any Event of Default, all
remittances received by the Borrower shall be held in trust for the Lender
and, in accordance with the Lender's instructions, remitted to the Lender or
deposited to an account with the Lender in the form received (with any
necessary endorsements or instruments of assignment or transfer).
(b) INVESTMENT PROPERTY AND INSTRUMENTS. At the request of the
Lender, upon and after the occurrence of any Event of Default, the Lender shall
be entitled to receive all distributions and payments of any nature with respect
to any Investment Property or Instruments, and all such distributions or
payments received by the Borrower shall be held in trust for the Lender and, in
accordance with the Lender's instructions, remitted to the Lender or deposited
to an account with the Lender in the form received (with any necessary
endorsements or instruments of assignment or transfer). Following the
occurrence of an Event of Default any
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such distributions and payments with respect to any Investment Property held
in any securities account shall be held and retained in such securities
account, in each case as part of the Collateral hereunder. Additionally, the
Lender shall have the right, upon the occurrence of an Event of Default,
following prior written notice to the Borrower, to vote and to give consents,
ratifications and waivers with respect to any Investment Property and
Instruments, and to exercise all rights of conversion, exchange, subscription
or any other rights, privileges or options pertaining thereto, as if the
Lender was the absolute owner thereof; PROVIDED that the Lender shall have no
duty to exercise any of the foregoing rights afforded to them and shall not
be responsible to the Borrower or any other Person for any failure to do so
or delay in doing so.
SECTION 7 AUTHORIZATION; LENDER APPOINTED ATTORNEY-IN-FACT. The
Lender shall have the right to, in the name of the Borrower, or in the name
of the Lender or otherwise, without notice to or assent by the Borrower, and
the Borrower hereby constitutes and appoints the Lender (and any of Lender's
officers, employees or agents designated by Lender) as the Borrower's true
and lawful attorney-in-fact, with full power and authority to:
(i) sign any of the Financing Statements which must be executed
or filed to perfect or continue perfected, maintain the priority of or
provide notice of the Lender's security interest in the Collateral;
(ii) Upon the occurrence of an Event of Default:
(A) take possession of and endorse any notes, acceptances,
checks, drafts, money orders or other forms of payment or security and
collect any Proceeds of any Collateral;
(B) sign and endorse any invoice or bill of lading relating
to any of the Collateral, warehouse or storage receipts, drafts against
customers or other obligors, assignments, notices of assignment,
verifications and notices to customers or other obligors;
(C) send requests for verification of Rights to Payment to
the customers or other obligors of the Borrower;
(D) contact, or direct the Borrower to contact, all account
debtors and other obligors on the Rights to Payment and instruct such account
debtors and other obligors to make all payments directly to the Lender;
(E) assert, adjust, sue for, compromise or release any claims
under any policies of insurance;
(F) exercise dominion and control over, and refuse to permit
further withdrawals from, Deposit Accounts maintained with any financial
institution or other Person;
(G) notify each Person maintaining lockbox or similar
arrangements for the payment of the Rights to Payment to remit all amounts
representing collections on the Rights to Payment directly to the Lender;
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(H) ask, demand, collect, receive and give acquittances and
receipts for any and all Rights to Payment, enforce payment or any other
rights in respect of the Rights to Payment and other Collateral, grant
consents, agree to any amendments, modifications or waivers of the agreements
and documents governing the Rights to Payment and other Collateral, and
otherwise file any claims, take any action or institute, defend, settle or
adjust any actions, suits or proceedings with respect to the Collateral, as
the Lender may deem necessary or desirable to maintain, preserve and protect
the Collateral, to collect the Collateral or to enforce the rights of the
Lender with respect to the Collateral;
(I) execute any and all applications, documents, papers and
instruments necessary for the Lender to use the Intellectual Property
Collateral and grant or issue any exclusive or non-exclusive license or
sublicense with respect to any Intellectual Property Collateral;
(J) execute any and all endorsements, assignments or other
documents and instruments necessary to sell, lease, assign, convey or
otherwise transfer title in or dispose of the Collateral; and
(K) execute and deliver to any securities intermediary or
other Person any entitlement order, Account Control Agreement or other
notice, document or instrument which the Lender may deem necessary of
advisable to maintain, protect, realize upon and preserve the Investment
Property and the Lender's security interest therein; and
(L) execute any and all such other documents and instruments,
and do any and all acts and things for and on behalf of the Borrower, which
the Lender may deem necessary or advisable to maintain, protect, realize upon
and preserve the Collateral and the Lender's security interest therein and to
accomplish the purposes of this Agreement.
The foregoing power of attorney is coupled with an interest and
irrevocable so long as the Lender has any Commitment or the Secured
Obligations have not been paid and performed in full. The Borrower hereby
ratifies, to the extent permitted by law, all that the Lender shall lawfully
and in good faith do or cause to be done by virtue of and in compliance with
this Section 7.
SECTION 8 LENDER PERFORMANCE OF BORROWER OBLIGATIONS. The Lender
may perform or pay any obligation which the Borrower has agreed to perform or
pay under or in connection with this Agreement, and the Borrower shall
reimburse the Lender on demand for any amounts paid by the Lender pursuant to
this Section 8.
SECTION 9 LENDER'S DUTIES. Notwithstanding any provision contained
in this Agreement, the Lender shall have no duty to exercise any of the
rights, privileges or powers afforded to them and shall not be responsible to
the Borrower or any other Person for any failure to do so or delay in doing
so. Beyond the exercise of reasonable care to assure the safe custody of
Collateral in the Lender's possession and the accounting for moneys actually
received by the Lender hereunder, the Lender shall have no duty or liability
to exercise or preserve any rights, privileges or powers pertaining to the
Collateral.
14.
SECTION 10 REMEDIES.
(a) REMEDIES. Upon the occurrence of any Event of Default, the
Lender shall have, in addition to all other rights and remedies granted to
them in this Agreement, the Credit Agreement or any other Loan Document, all
rights and remedies of a secured party under the UCC and other applicable
laws. Without limiting the generality of the foregoing, the Borrower agrees
that:
(i) The Lender may peaceably and without notice enter any
premises of the Borrower, take possession of any the Collateral, remove or
dispose of all or part of the Collateral on any premises of the Borrower or
elsewhere, or, in the case of Equipment, render it nonfunctional, and
otherwise collect, receive, appropriate and realize upon all or any part of
the Collateral, and demand, give receipt for, settle, renew, extend,
exchange, compromise, adjust, or sue for all or any part of the Collateral,
as the Lender may determine.
(ii) The Lender may require the Borrower to assemble all or any
part of the Collateral and make it available to the Lender at any place and
time designated by the Lender.
(iii) The Lender may use or transfer any of the Borrower's rights
and interests in any Intellectual Property Collateral, by license, by
sublicense (to the extent permitted by an applicable license) or otherwise,
on such conditions and in such manner as the Lender may determine.
(iv) The Lender may secure the appointment of a receiver of the
Collateral or any part thereof (to the extent and in the manner provided by
applicable law).
(v) The Lender may withdraw (or cause to be withdrawn) any and
all funds from any Deposit Accounts or securities accounts.
(vi) The Lender may sell, resell, lease, use, assign, transfer or
otherwise dispose of any or all of the Collateral in its then condition or
following any commercially reasonable preparation or processing (utilizing in
connection therewith any of the Borrower's assets, without charge or liability
to the Lender therefor) at public or private sale, by one or more contracts, in
one or more parcels, at the same or different times, for cash or credit, or for
future delivery without assumption of any credit risk, all as the Lender deems
advisable; PROVIDED, HOWEVER, that the Borrower shall be credited with the net
proceeds of sale only when such proceeds are finally collected by the Lender.
The Lender shall have the right upon any such public sale, and, to the extent
permitted by law, upon any such private sale, to purchase the whole or any part
of the Collateral so sold, free of any right or equity of redemption, which
right or equity of redemption the Borrower hereby releases, to the extent
permitted by law. The Borrower hereby agrees that the sending of notice by
ordinary mail, postage prepaid, to the address of the Borrower set forth in the
Credit Agreement, of the place and time of any public sale or of the time after
which any private sale or other intended disposition is to be made, shall be
deemed reasonable notice thereof if such notice is sent ten days prior to the
date of such sale
15.
or other disposition or the date on or after which such sale or other
disposition may occur, PROVIDED that the Lender may provide the Borrower
shorter notice or no notice, to the extent permitted by the UCC or other
applicable law. The Borrower recognizes that the Lender may be unable to
make a public sale of any or all of the Investment Property, by reason of
prohibitions contained in applicable securities laws or otherwise, and
expressly agrees that a private sale to a restricted group of purchasers for
investment and not with a view to any distribution thereof shall be
considered a commercially reasonable sale.
(b) LICENSE. For the purpose of enabling the Lender to exercise
its rights and remedies under this Section 10 or otherwise in connection with
this Agreement, the Borrower hereby grants to the Lender an irrevocable,
non-exclusive and assignable license (exercisable without payment or royalty
or other compensation to the Borrower) to use, license or sublicense any
Intellectual Property Collateral, except to the extent a grant of such
license would violate the terms of an existing agreement to which the
Borrower is a party.
APPLICATION OF PROCEEDS. The cash proceeds actually received from
the sale or other disposition or collection of Collateral, and any other
amounts received in respect of the Collateral the application of which is not
otherwise provided for herein, shall be applied be applied (i) first, to any
fees, costs, expenses and other amounts (other than principal and interest)
then due to the Lender under the Loan Documents; (ii) second, to accrued and
unpaid interest due the Lender; and (iii) third, to principal due the Lender.
Any surplus thereof which exists after payment and performance in full of
the Secured Obligations shall be promptly paid over to the Borrower or
otherwise disposed of in accordance with the UCC or other applicable law.
The Borrower shall remain liable to the Lender for any deficiency which
exists after any sale or other disposition or collection of Collateral.
SECTION 11 CERTAIN WAIVERS. The Borrower waives, to the fullest
extent permitted by law, (i) any right of redemption with respect to the
Collateral, whether before or after sale hereunder, and all rights, if any,
of marshalling of the Collateral or other collateral or security for the
Secured Obligations; (ii) any right to require the Lender (A) to proceed
against any Person, (B) to exhaust any other collateral or security for any
of the Secured Obligations, (C) to pursue any remedy in the Lender's power,
or (D) to make or give any presentments, demands for performance, notices of
nonperformance, protests, notices of protests or notices of dishonor in
connection with any of the Collateral; and (iii) all claims, damages, and
demands against the Lender arising out of the repossession, retention, sale
or application of the proceeds of any sale of the Collateral
SECTION 12 NOTICES. All notices or other communications hereunder
shall be given in the manner and to the addresses specified in the Credit
Agreement. All such notices and other communications shall be effective (i)
if delivered by hand, when delivered; (ii) if sent by mail, upon the earlier
of the date of receipt or five Business Days after deposit in the mail, first
class (or air mail, with respect to communications to be sent to or from the
United States); and (iii) if sent by facsimile transmission, when sent.
SECTION 13 NO WAIVER; CUMULATIVE REMEDIES. No failure on the part of
the Lender to exercise, and no delay in exercising, any right, remedy, power or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right,
16.
remedy, power or privilege preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights and
remedies under this Agreement are cumulative and not exclusive of any rights,
remedies, powers and privileges that may otherwise be available to the Lender.
SECTION 14 COSTS AND EXPENSES; INDEMNIFICATION; OTHER CHARGES.
(a) COSTS AND EXPENSES. The Borrower agrees to pay on demand:
(i) the reasonable out-of-pocket costs and expenses of the Lender
and any of its Affiliates, and the reasonable fees and disbursements of
counsel to the Lender, in connection with the negotiation, preparation,
execution, delivery and administration of this Agreement (but, together with
the costs associated with the preparation of the Loan Documents, not in
excess of $50,000), and any amendments, modifications or waivers of the terms
thereof, and the custody of the Collateral;
(ii) all title, appraisal (including the allocated costs of
internal appraisal services), survey, audit, consulting, search, recording,
filing and similar costs, fees and expenses incurred or sustained by the
Lender or any of its Affiliates in connection with this Agreement or the
Collateral; and
(iii) all costs and expenses of the Lender and its Affiliates, and
the reasonable fees and disbursements of counsel, in connection with the
enforcement or attempted enforcement of, and preservation of any rights or
interests under, this Agreement, including in any out-of-court workout or
other refinancing or restructuring or in any bankruptcy case, and the
protection, sale or collection of, or other realization upon, any of the
Collateral, including all expenses of taking, collecting, holding, sorting,
handling, preparing for sale, selling, or the like, and other such expenses
of sales and collections of Collateral, and any and all losses, costs and
expenses sustained by the Lender as a result of any failure by the Borrower
to perform or observe its obligations contained herein.
(b) INDEMNIFICATION. The Borrower hereby agrees to indemnify the
Lender, any Affiliate thereof, and their respective directors, officers,
employees, agents, counsel and other advisors (each an "Indemnified Person")
against, and hold each of them harmless from, any and all liabilities,
obligations, losses, claims, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever, including
the reasonable fees and disbursements of counsel to an Indemnified Person,
which may be imposed on, incurred by, or asserted against any Indemnified
Person, in any way relating to or arising out of this Agreement or the
transactions contemplated hereby or any action taken or omitted to be taken
by it hereunder (the "Indemnified Liabilities"); PROVIDED that the Borrower
shall not be liable to any Indemnified Person for any portion of such
Indemnified Liabilities to the extent they are found by a final decision of a
court of competent jurisdiction to have resulted from such Indemnified
Person's gross negligence or willful misconduct. If and to the extent that
the foregoing indemnification is for any reason held unenforceable, the
Borrower agrees to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible
under applicable law.
17.
(c) OTHER CHARGES. The Borrower agrees to indemnify the Lender
against and hold it harmless from any and all present and future stamp,
transfer, documentary and other such taxes, levies, fees, assessments and
other charges made by any jurisdiction by reason of the execution, delivery,
performance and enforcement of this Agreement.
(d) INTEREST. Any amounts payable to the Lender under this
Section 14 or otherwise under this Agreement if not paid upon demand shall
bear interest from the date of such demand until paid in full, at the rate of
interest set forth in Section 2.04 of the Credit Agreement.
SECTION 15 BINDING EFFECT. This Agreement shall be binding upon,
inure to the benefit of and be enforceable by the Borrower, the Lender and
their respective successors and assigns.
SECTION 16 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA, EXCEPT AS
REQUIRED BY MANDATORY PROVISIONS OF LAW AND TO THE EXTENT THE VALIDITY OR
PERFECTION OF THE SECURITY INTERESTS HEREUNDER, OR THE REMEDIES HEREUNDER, IN
RESPECT OF ANY COLLATERAL ARE GOVERNED BY THE LAW OF A JURISDICTION OTHER
THAN CALIFORNIA.
SECTION 17 ENTIRE AGREEMENT; AMENDMENT. This Agreement contains
the entire agreement of the parties with respect to the subject matter hereof
and shall not be amended except by the written agreement of the parties as
provided in the Credit Agreement.
SECTION 18 SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under all applicable laws and regulations. If, however, any provision of
this Agreement shall be prohibited by or invalid under any such law or
regulation in any jurisdiction, it shall, as to such jurisdiction, be deemed
modified to conform to the minimum requirements of such law or regulation,
or, if for any reason it is not deemed so modified, it shall be ineffective
and invalid only to the extent of such prohibition or invalidity without
affecting the remaining provisions of this Agreement, or the validity or
effectiveness of such provision in any other jurisdiction.
SECTION 19 COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute but one and the
same agreement.
SECTION 20 INCORPORATION OF PROVISIONS OF THE CREDIT AGREEMENT. To
the extent the Credit Agreement contains provisions of general applicability
to the Loan Documents, such provisions are incorporated herein by this
reference.
SECTION 21 NO INCONSISTENT REQUIREMENTS. The Borrower acknowledges
that this Agreement and the other Loan Documents may contain covenants and other
terms and provisions variously stated regarding the same or similar matters, and
agrees that all such
18.
covenants, terms and provisions are cumulative and all shall be performed and
satisfied in accordance with their respective terms.
SECTION 22 TERMINATION. Upon termination of the Commitment of the
Lender and payment and performance in full of all Secured Obligations, this
Agreement shall terminate and the Lender shall promptly execute and deliver
to the Borrower such documents and instruments reasonably requested by the
Borrower as shall be necessary to evidence termination of all security
interests given by the Borrower to the Lender hereunder; PROVIDED, HOWEVER,
that the obligations of the Borrower under Section 14 shall survive such
termination.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, as of the date first above written.
THE BORROWER
AMERIGON INCORPORATED, a California
corporation
By /s/ LON E. BELL
---------------------------------------
Title:
THE LENDER
BIG STAR INVESTMENTS LLC
By /s/ JOHN W. CLARK
---------------------------------------
Title:
19.