<DOCUMENT>
<TYPE>EX-4.7
<SEQUENCE>8
<FILENAME>exh4-7_13693.txt
<DESCRIPTION>SECURITY AGREEMENT
<TEXT>
EXHIBIT 4.7
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SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of June 8, 2005 (this "Agreement"), among
Western Power & Equipment Corp., a Delaware corporation (the "Company") and each
of the Subsidiaries of the Company who have executed this Agreement on the
signature page hereof (such subsidiaries, the "Subsidiary Guarantors") (the
Company and Subsidiary Guarantors are collectively referred to as the "Debtors")
and the holder or holders of the Company's Series A Variable Rate Secured
Convertible Debentures due June 7, 2010 in the original aggregate principal
amount of up to $30,000,000 and the Series B Variable Rate Secured Debentures
due December 7, 2005 in the original aggregate principal amount of up to
$2,000,000 (individually a "Debenture" and collectively the "Debentures"),
signatory hereto, their endorsees, transferees and assigns (collectively
referred to as, the "Secured Parties").
W I T N E S S E T H:
WHEREAS, pursuant to the Purchase Agreement and the Debentures, the
Secured Parties have severally agreed to extend the loans to the Company
evidenced by the Debentures;
WHEREAS, pursuant to a certain Subsidiary Guarantee dated as of the
date hereof (the "Guaranty"), the Subsidiary Guarantors have jointly and
severally agreed to guaranty and act as surety for payment of such loans; and
WHEREAS, in order to induce the Secured Parties to extend the loans
evidenced by the Debentures, each Debtor has agreed to execute and deliver to
the Secured Parties this Agreement and to grant the Secured Parties, PARI PASSU
with each other Secured Party, a perfected security interest in certain property
of such Debtor to secure the prompt payment, performance and discharge in full
of all of the Company's obligations under the Debenture and the other Debtor's
obligations under the Guaranty.
NOW, THEREFORE, in consideration of the agreements herein contained and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto hereby agree as follows:
1. CERTAIN DEFINITIONS. All capitalized terms, when used in this
Agreement, shall have the same meanings as are defined in the Purchase Agreement
and the Debentures. In addition, the following terms shall have the meanings set
forth in this Section 1. Terms used but not otherwise defined in this Agreement
that are defined in Article 9 of the UCC (such as "account", "chattel paper",
"commercial tort claim", "deposit account", "document", "equipment", "fixtures",
"general intangibles", "goods", "instruments", "inventory", "investment
property", "letter-of-credit rights", "proceeds" and "supporting obligations")
shall have the respective meanings given such terms in Article 9 of the UCC.
(a) "Account Debtor" means each debtor, customer or obligor
in any way obligated on or in connection with any Account Receivable.
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(b) "Account Receivable" means, with respect to any Debtor,
any and all rights of such Debtor to payment for goods sold and/or
services rendered, including accounts, general intangibles and any and
all such rights evidenced by chattel paper, instruments or documents,
whether due or to become due and whether or not earned by performance,
and whether now or hereafter acquired or arising in the future, and any
proceeds arising therefrom or relating thereto.
(c) "Collateral" means the collateral in which the Secured
Parties are granted a security interest by this Agreement and which
shall include the following personal property of the Debtors, whether
presently owned or existing or hereafter acquired or coming into
existence, wherever situated, and all additions and accessions thereto
and all substitutions and replacements thereof, and all proceeds,
products and accounts thereof, including, without limitation, all
proceeds from the sale or transfer of the Collateral and of insurance
covering the same and of any tort claims in connection therewith, and
all dividends, interest, cash, notes, securities, equity interest or
other property at any time and from time to time acquired, receivable
or otherwise distributed in respect of, or in exchange for, any or all
of the Pledged Securities (as defined below):
(i) All goods, including, without limitation, (A) all
machinery, equipment, computers, motor vehicles, trucks,
tanks, boats, ships, appliances, furniture, special and
general tools, fixtures, test and quality control devices and
other equipment of every kind and nature and wherever
situated, together with all documents of title and documents
representing the same, all additions and accessions thereto,
replacements therefor, all parts therefor, and all substitutes
for any of the foregoing and all other items used and useful
in connection with any Debtor's businesses and all
improvements thereto; and (B) all inventory;
(ii) All contract rights and other general
intangibles, including, without limitation, all partnership
interests, membership interests, stock or other securities,
rights under any of the Organizational Documents, agreements
related to the Pledged Securities, licenses, distribution and
other agreements, computer software (whether "off-the-shelf",
licensed from any third party or developed by any Debtor),
computer software development rights, leases, franchises,
customer lists, quality control procedures, grants and rights,
goodwill, trademarks, service marks, trade styles, trade
names, patents, patent applications, copyrights, and income
tax refunds;
(iii) All accounts, together with all instruments,
all documents of title representing any of the foregoing, all
rights in any merchandising, goods, equipment, motor vehicles
and trucks which any of the same may represent, and all right,
title, security and guaranties with respect to each account,
including any right of stoppage in transit;
(iv) All documents, letter-of-credit rights,
instruments and chattel paper;
(v) All commercial tort claims;
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(vi) All deposit accounts and all cash (whether or
not deposited in such deposit accounts);
(vii) All investment property;
(viii) All supporting obligations;
(ix) All files, records, books of account, business
papers, and computer programs; and
(x) the products and proceeds of all of the foregoing
Collateral set forth in clauses (i)-(ix) above.
Without limiting the generality of the foregoing, the
"Collateral" shall include (i) all investment property and
general intangibles respecting ownership and/or other equity
interests in each Subsidiary Guarantor, including, without
limitation, the shares of capital stock and the other equity
interests listed on Schedule H hereto (as the same may be
modified from time to time pursuant to the terms hereof); and
(ii) any other shares of capital stock and/or other equity
interests of any other direct or indirect Subsidiary of any
Subsidiary Guarantor created or obtained in the future, and,
in each case, all certificates representing such shares and/or
equity interests and, in each case, all rights, options,
warrants, stock, other securities and/or equity interests that
may hereafter be received, receivable or distributed in
respect of, or exchanged for, any of the foregoing (all of the
foregoing being referred to herein as the "Pledged
Securities") and all rights arising under or in connection
with the Pledged Securities, including, but not limited to,
all dividends, interest and cash.
Notwithstanding the foregoing, nothing herein shall
be deemed to constitute an assignment of any asset which, in
the event of an assignment, becomes void by operation of
applicable law or the assignment of which is otherwise
prohibited by applicable law (in each case to the extent that
such applicable law is not overridden by Sections 9-406, 9-407
and/or 9-408 of the UCC or other similar applicable law);
provided, however, that to the extent permitted by applicable
law, this Agreement shall create a valid security interest in
such asset and, to the extent permitted by applicable law,
this Agreement shall create a valid security interest in the
proceeds of such asset.
(d) "Intellectual Property" means the collective reference
to all rights, priorities and privileges relating to intellectual
property, whether arising under United States, multinational or foreign
laws or otherwise, including, without limitation, (i) all copyrights
arising under the laws of the United States, any other country or any
political subdivision thereof, whether registered or unregistered and
whether published or unpublished, all registrations and recordings
thereof, and all applications in connection therewith, including,
without limitation, all registrations, recordings and applications in
the United States Copyright Office, (ii) all letters patent of the
United States, any other
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country or any political subdivision thereof, all reissues and
extensions thereof, and all applications for letters patent of the
United States or any other country and all divisions, continuations and
continuations-in-part thereof, (iii) all trademarks, trade names,
corporate names, company names, business names, fictitious business
names, trade dress, service marks, logos, domain names and other source
or business identifiers, and all goodwill associated therewith, now
existing or hereafter adopted or acquired, all registrations and
recordings thereof, and all applications in connection therewith,
whether 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, or otherwise, and
all common law rights related thereto, (iv) all trade secrets arising
under the laws of the United States, any other country or any political
subdivision thereof, (v) all rights to obtain any reissues, renewals or
extensions of the foregoing, (vi) all licenses for any of the
foregoing, and (vii) all causes of action for infringement of the
foregoing.
(e) "Majority in Interest" shall mean, at any time of
determination, the majority in interest (based on then-outstanding
principal amounts of Debentures at the time of such determination) of
the Secured Parties.
(f) "Necessary Endorsement" shall mean undated stock powers
endorsed in blank or other proper instruments of assignment duly
executed and such other instruments or documents as the Agent (as that
term is defined below) may reasonably request.
(g) "Obligations" means all of the Debtors' obligations
under this Agreement, the Purchase Agreement, the Debentures, the
Registration Rights Agreement the Guaranty and any other instruments,
agreements or other documents executed and/or delivered in connection
herewith or therewith, in each case, whether now or hereafter existing,
voluntary or involuntary, direct or indirect, absolute or contingent,
liquidated or unliquidated, whether or not jointly owed with others,
and whether or not from time to time decreased or extinguished and
later increased, created or incurred, and all or any portion of such
obligations or liabilities that are paid, to the extent all or any part
of such payment is avoided or recovered directly or indirectly from any
of the Secured Parties as a preference, fraudulent transfer or
otherwise as such obligations may be amended, supplemented, converted,
extended or modified from time to time. Without limiting the generality
of the foregoing, the term "Obligations" shall include, without
limitation: (i) principal of, and interest on the Debentures and the
loans extended pursuant thereto; (ii) any and all other fees,
indemnities, costs, obligations and liabilities of the Debtors from
time to time under or in connection with this Agreement, the
Debentures, the Guaranty and any other instruments, agreements or other
documents executed and/or delivered in connection herewith or
therewith; and (iii) all amounts (including but not limited to
post-petition interest) in respect of the foregoing that would be
payable but for the fact that the obligations to pay such amounts are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving any Debtor.
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(h) "Organizational Documents" means with respect to any
Debtor, the documents by which such Debtor was organized (such as a
certificate of incorporation, certificate of limited partnership or
articles of organization, and including, without limitation, any
certificates of designation for preferred stock or other forms of
preferred equity) and which relate to the internal governance of such
Debtor (such as bylaws, a partnership agreement or an operating,
limited liability or members agreement).
(i) "UCC" means the Uniform Commercial Code of the State of
Delaware and or any other applicable law of any state or states which
has jurisdiction with respect to all, or any portion of, the Collateral
or this Agreement, from time to time. It is the intent of the parties
that defined terms in the UCC should be construed in their broadest
sense so that the term "Collateral" will be construed in its broadest
sense. Accordingly if there are, from time to time, changes to defined
terms in the UCC that broaden the definitions, they are incorporated
herein and if existing definitions in the UCC are broader than the
amended definitions, the existing ones shall be controlling.
2. GRANT OF PERFECTED SECURITY INTEREST. As an inducement for the
Secured Parties to extend the loans as evidenced by the Debentures and to secure
the complete and timely payment, performance and discharge in full, as the case
may be, of all of the Obligations, each Debtor hereby unconditionally and
irrevocably pledges, grants and hypothecates to the Secured Parties a continuing
and perfected security interest in and to, a lien upon and a right of set-off
against all of their respective right, title and interest of whatsoever kind and
nature in and to, the Collateral (the "Security Interest").
3. DELIVERY OF CERTAIN COLLATERAL. Contemporaneously or prior to
the execution of this Agreement, each Debtor shall deliver or cause to be
delivered to the Agent (a) any and all certificates and other instruments
representing or evidencing the Pledged Securities, and (b) any and all
certificates and other instruments or documents representing any of the other
Collateral, in each case, together with all Necessary Endorsements. The Debtors
are, contemporaneously with the execution hereof, delivering to Agent, or have
previously delivered to Agent, a true and correct copy of each Organizational
Document governing any of the Pledged Securities.
4. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF THE
DEBTORS. Each Debtor represents and warrants to, and covenants and agrees with,
the Secured Parties as follows:
(a) Each Debtor has the requisite corporate, partnership,
limited liability company or other power and authority to enter into
this Agreement and otherwise to carry out its obligations hereunder.
The execution, delivery and performance by each Debtor of this
Agreement and the filings contemplated therein have been duly
authorized by all necessary action on the part of such Debtor and no
further action is required by such Debtor. This Agreement has been duly
executed by each Debtor. This Agreement constitutes the legal, valid
and binding obligation of each Debtor, enforceable against each Debtor
in accordance with its terms except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization and
similar laws of general application
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relating to or affecting the rights and remedies of creditors and by
general principles of equity.
(b) The Debtors have no place of business or offices where
their respective books of account and records are kept (other than
temporarily at the offices of its attorneys or accountants) or places
where Collateral is stored or located, except as set forth on Schedule
A attached hereto. Except as specifically set forth on Schedule A, each
Debtor is the record owner of the real property where such Collateral
is located, and there exist no mortgages or other liens on any such
real property. Except as disclosed on Schedule A, none of such
Collateral is in the possession of any consignee, bailee, warehouseman,
agent or processor.
(c) Except for Existing Liens (i) the Debtors are the sole
owner of the Collateral (except for non-exclusive licenses granted by
any Debtor in the ordinary course of business), free and clear of any
Lien, and are fully authorized to grant the Security Interest, and (ii)
there is not on file in any governmental or regulatory authority,
agency or recording office an effective financing statement, security
agreement, license or transfer or any notice of any of the foregoing
(other than those that will be filed in favor of the Secured Parties
pursuant to this Agreement) covering or affecting any of the
Collateral. Except for Existing Liens and Permitted Liens, so long as
this Agreement shall be in effect, the Debtors shall not execute and
shall not knowingly permit to be on file in any such office or agency
any such financing statement or other document or instrument (except to
the extent filed or recorded in favor of the Secured Parties pursuant
to the terms of this Agreement).
(d) No written claim has been received that any Collateral
or Debtors' use of any Collateral violates the rights of any third
party, excluding any rights under the Existing Indebtedness. There has
been no adverse decision to any Debtor's claim of ownership rights in
or exclusive rights to use the Collateral in any jurisdiction or to any
Debtor's right to keep and maintain such Collateral in full force and
effect, and there is no proceeding involving said rights pending or, to
the best knowledge of any Debtor, threatened before any court, judicial
body, administrative or regulatory agency, arbitrator or other
governmental authority.
(e) Each Debtor shall at all times maintain its books of
account and records relating to the Collateral at its principal place
of business and its Collateral at the locations set forth on Schedule A
attached hereto and may not relocate such books of account and records
or tangible Collateral unless it delivers to the Secured Parties at
least 30 days prior to such relocation (i) written notice of such
relocation and the new location thereof (which must be within the
United States) and (ii) evidence that appropriate financing statements
under the UCC and other necessary documents have been filed and
recorded and other steps have been taken to perfect the Security
Interest to create in favor of the Secured Parties a valid, perfected
and continuing perfected lien in the Collateral.
(f) This Agreement creates in favor of the Secured Parties
a valid security interest in the Collateral, securing the payment and
performance of the Obligations.
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Other than as set forth in the preceding sentence, upon making the
filings described in the immediately following paragraph, all security
interests created hereunder in any Collateral which may be perfected by
filing Uniform Commercial Code financing statements shall have been
duly perfected. Except for the filing of the Uniform Commercial Code
financing statements referred to in the immediately following
paragraph, the recordation of the Intellectual Property Security
Agreement (as defined below) with respect to copyrights and copyright
applications in the United States Copyright Office referred to in
paragraph (m), the execution and delivery of the Lock Box Agreement and
any other deposit account control agreements satisfying the
requirements of Section 9-104(a)(2) of the UCC with respect to each
deposit account of the Debtors, and the delivery of the certificates
and other instruments provided in Section 3, no action is necessary to
create, perfect or protect the security interests created hereunder.
Without limiting the generality of the foregoing, except for the filing
of said financing statements, the recordation of said Intellectual
Property Security Agreement, no consent of any third parties and no
authorization, approval or other action by, and no notice to or filing
with, any governmental authority or regulatory body is required for (i)
the execution, delivery and performance of this Agreement, (ii) the
creation or perfection of the Security Interests created hereunder in
the Collateral or (iii) the enforcement of the rights of the Secured
Parties hereunder.
(g) Each Debtor hereby authorizes the Secured Parties, or
any of them, to file one or more financing statements under the UCC,
with respect to the Security Interest with the proper filing and
recording agencies in any jurisdiction deemed proper by them.
(h) Subject to application of the proceeds from the sale of
the Debentures under the Purchase Agreement to retire certain specified
Existing Indebtedness, the execution, delivery and performance of this
Agreement by the Debtors does not (i) violate any of the provisions of
any Organizational Documents of any Debtor or any judgment, decree,
order or award of any court, governmental body or arbitrator or any
applicable law, rule or regulation applicable to any Debtor, (ii)
conflict with, or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation
(with or without notice, lapse of time or both) of, any agreement,
credit facility, debt or other instrument (evidencing any Debtor's debt
or otherwise) or other understanding to which any Debtor is a party or
by which any property or asset of any Debtor is bound or affected, or
(iii) require the consent (including, without limitation, from
stockholders or creditors of any Debtor) for any Debtor to enter into
and perform its obligations hereunder.
(i) The capital stock and other equity interests listed on
Schedule H hereto represent all of the capital stock and other equity
interests of the Subsidiary Guarantors, and represent all capital stock
and other equity interests owned, directly or indirectly, by the
Company. All of the Pledged Securities are validly issued, fully paid
and nonassessable, and the Company is the legal and beneficial owner of
the Pledged Securities, free and clear of any lien, security interest
or other encumbrance except for the security interests created by this
Agreement.
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(j) The ownership and other equity interests in
partnerships and limited liability companies (if any) included in the
Collateral (the "Pledged Interests") by their express terms do not
provide that they are securities governed by Article 8 of the UCC and
are not held in a securities account or by any financial intermediary.
(k) Each Debtor shall at all times maintain the liens and
Security Interest provided for hereunder as valid and perfected liens
and security interests in the Collateral in favor of the Secured
Parties until this Agreement and the Security Interest hereunder shall
be terminated pursuant to Section 11 hereof. Each Debtor hereby agrees
to defend the same against the claims of any and all persons and
entities. Each Debtor shall safeguard and protect all Collateral for
the account of the Secured Parties. At the request of the Secured
Parties, each Debtor will sign and deliver to the Secured Parties at
any time or from time to time one or more financing statements pursuant
to the UCC in form reasonably satisfactory to the Secured Parties and
will pay the cost of filing the same in all public offices wherever
filing is, or is deemed by the Secured Parties to be, necessary or
desirable to effect the rights and obligations provided for herein.
Without limiting the generality of the foregoing, each Debtor shall pay
all fees, taxes and other amounts necessary to maintain the Collateral
and the Security Interest hereunder, and each Debtor shall obtain and
furnish to the Secured Parties from time to time, upon demand, such
releases and/or subordinations of claims and liens which may be
required to maintain the priority of the Security Interest hereunder.
(l) No Debtor will transfer, pledge, hypothecate, encumber,
license, sell or otherwise dispose of any of the Collateral (except for
non-exclusive licenses granted by a Debtor in its ordinary course of
business and sales of inventory by a Debtor in its ordinary course of
business) without the prior written consent of a Majority in Interest.
(m) Each Debtor shall keep and preserve its equipment,
inventory and other tangible Collateral in good condition, repair and
order and shall not operate or locate any such Collateral (or cause to
be operated or located) in any area excluded from insurance coverage.
(n) Each Debtor shall maintain with financially sound and
reputable insurers, insurance with respect to the Collateral against
loss or damage of the kinds and in the amounts customarily insured
against by entities of established reputation having similar properties
similarly situated and in such amounts as are customarily carried under
similar circumstances by other such entities and otherwise as is
prudent for entities engaged in similar businesses but in any event
sufficient to cover the full replacement cost thereof. Each Debtor
shall use its reasonable best efforts to cause each insurance policy
issued in connection herewith to provide, and the insurer issuing such
policy to certify to the Agent that (a) the Agent will be named as
lender loss payee and additional insured under each such insurance
policy; (b) if such insurance be proposed to be cancelled or materially
changed for any reason whatsoever, such insurer will promptly notify
the Agent and such cancellation or change shall not be effective as to
the Agent for at least thirty (30) days after receipt by the Agent of
such notice, unless the effect of such change is to extend or
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increase coverage under the policy; and (c) the Agent will have the
right (but no obligation) at its election to remedy any default in the
payment of premiums within thirty (30) days of notice from the insurer
of such default. If no Event of Default (as defined in the Debenture)
exists and if the proceeds arising out of any claim or series of
related claims do not exceed $100,000, loss payments in each instance
will be applied by the applicable Debtor to the repair and/or
replacement of property with respect to which the loss was incurred to
the extent reasonably feasible, and any loss payments or the balance
thereof remaining, to the extent not so applied, shall be payable to
the applicable Debtor, provided, however, that payments received by any
Debtor after an Event of Default occurs and is continuing or in excess
of $100,000 for any occurrence or series of related occurrences shall
be paid to the Agent and, if received by such Debtor, shall be held in
trust for and immediately paid over to the Agent unless otherwise
directed in writing by the Agent. Copies of such policies or the
related certificates, in each case, naming the Agent as lender loss
payee and additional insured shall be delivered to the Agent at least
annually and at the time any new policy of insurance is issued.
(o) Each Debtor shall, within ten (10) days of obtaining
knowledge thereof, advise the Secured Parties promptly, in sufficient
detail, of any substantial change in the Collateral, and of the
occurrence of any event which would have a material adverse effect on
the value of the Collateral or on the Secured Parties' security
interest therein.
(p) Each Debtor shall promptly execute and deliver to the
Secured Parties such further deeds, mortgages, assignments, security
agreements, financing statements or other instruments, documents,
certificates and assurances and take such further action as the Secured
Parties may from time to time reasonably request and may in its sole
discretion deem necessary to perfect, protect or enforce its security
interest in the Collateral including, without limitation, if
applicable, the execution and delivery of a separate security agreement
with respect to each Debtor's Intellectual Property ("Intellectual
Property Security Agreement") in which the Secured Parties have been
granted a security interest hereunder, substantially in a form
acceptable to the Secured Parties, which Intellectual Property Security
Agreement, other than as stated therein, shall be subject to all of the
terms and conditions hereof.
(q) Each Debtor shall permit the Secured Parties and their
representatives and agents to inspect the Collateral at any time, and
to make copies of records pertaining to the Collateral as may be
requested by a Secured Party from time to time.
(r) Each Debtor shall take all steps reasonably necessary
to diligently pursue and seek to preserve, enforce and collect any
rights, claims, causes of action and accounts receivable in respect of
the Collateral.
(s) Each Debtor shall promptly notify the Secured Parties
in sufficient detail upon becoming aware of any attachment,
garnishment, execution or other legal process levied against any
Collateral and of any other information received by such Debtor that
may materially affect the value of the Collateral, the Security
Interest or the rights and remedies of the Secured Parties hereunder.
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(t) All information heretofore, herein or hereafter
supplied to the Secured Parties by or on behalf of any Debtor with
respect to the Collateral is accurate and complete in all material
respects as of the date furnished.
(u) The Debtors shall at all times preserve and keep in
full force and effect their respective valid existence and good
standing and any rights and franchises material to its business.
(v) No Debtor will change its name, type of organization,
jurisdiction of organization, organizational identification number (if
it has one), legal or corporate structure, or identity, or add any new
fictitious name unless it provides at least 30 days prior written
notice to the Secured Parties of such change and, at the time of such
written notification, such Debtor provides any financing statements or
fixture filings necessary to perfect and continue perfected the
perfected security Interest granted and evidenced by this Agreement.
(w) No Debtor may consign any of its Inventory or sell any
of its Inventory on bill and hold, sale or return, sale on approval, or
other conditional terms of sale without the consent of a Majority in
Interest which shall not be unreasonably withheld, except to the extent
such consignment or sale does not exceed 15% of the total value of all
of the Company's finished goods in Inventory.
(x) No Debtor may relocate its chief executive office to a
new location without providing 30 days prior written notification
thereof to the Secured Parties and so long as, at the time of such
written notification, such Debtor provides any financing statements or
fixture filings necessary to perfect and continue perfected the
perfected security Interest granted and evidenced by this Agreement.
(y) Each Debtor was organized and remains organized solely
under the laws of the state set forth next to such Debtor's name in the
first paragraph of this Agreement. Schedule D attached hereto sets
forth each Debtor's organizational identification number or, if any
Debtor does not have one, states that one does not exist.
(z) (i) The actual name of each Debtor is the name set
forth in the preamble above; (ii) no Debtor has any trade names except
as set forth on Schedule E attached hereto; (iii) no Debtor has used
any name other than that stated in the preamble hereto or as set forth
on Schedule E for the preceding five years; and (iv) no entity has
merged into any Debtor or been acquired by any Debtor within the past
five years except as set forth on Schedule E.
(aa) At any time and from time to time that any Collateral
consists of instruments, certificated securities or other items that
require or permit possession by the secured party to perfect the
security interest created hereby, the applicable Debtor shall deliver
such Collateral to the Agent.
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(bb) Each Debtor, in its capacity as issuer, hereby agrees
to comply with any and all orders and instructions of Agent regarding
the Pledged Interests consistent with the terms of this Agreement
without the further consent of any Debtor as contemplated by Section
8-106 (or any successor section) of the UCC. Further, each Debtor
agrees that it shall not enter into a similar agreement (or one that
would confer "control" within the meaning of Article 8 of the UCC) with
any other person or entity.
(cc) Each Debtor shall cause all tangible chattel paper
constituting Collateral to be delivered to the Agent, or, if such
delivery is not possible, then to cause such tangible chattel paper to
contain a legend noting that it is subject to the security interest
created by this Agreement. To the extent that any Collateral consists
of electronic chattel paper, the applicable Debtor shall cause the
underlying chattel paper to be "marked" within the meaning of Section
9-105 of the UCC (or successor section thereto).
(dd) If there is any investment property or deposit account
included as Collateral that can be perfected by "control" through an
account control agreement, the applicable Debtor shall cause such
property or deposit account to be deposited pursuant to the Lock Box
Agreement.
(ee) To the extent that any Collateral consists of
letter-of-credit rights, the applicable Debtor shall cause the issuer
of each underlying letter of credit to consent to an assignment of the
proceeds thereof to the Secured Parties.
(ff) To the extent that any Collateral is in the possession
of any third party, the applicable Debtor shall join with the Secured
Parties in notifying such third party of the Secured Parties' security
interest in such Collateral and shall use its best efforts to obtain an
acknowledgement and agreement from such third party with respect to the
Collateral, in form and substance satisfactory to the Secured Parties.
(gg) If any Debtor shall at any time hold or acquire a
commercial tort claim, such Debtor shall promptly notify the Secured
Parties in a writing signed by such Debtor of the particulars thereof
and grant to the Secured Parties in such writing a security interest
therein and in the proceeds thereof, all upon the terms of this
Agreement, with such writing to be in form and substance satisfactory
to the Secured Parties.
(hh) Each Debtor shall immediately provide written notice to
the Secured Parties of any and all accounts which arise out of
contracts with any governmental authority and, to the extent necessary
to perfect or continue the perfected status of the Security Interest in
such accounts and proceeds thereof, shall execute and deliver to the
Secured Parties an assignment of claims for such accounts and cooperate
with the Secured Parties in taking any other steps required, in their
judgment, under the Federal Assignment of Claims Act or any similar
federal, state or local statute or rule to perfect or continue the
perfected status of the Security Interest in such accounts and proceeds
thereof.
(ii) Each Debtor shall cause each subsidiary of such Debtor
to immediately become a party hereto (an "Additional Debtor"), by
executing and delivering an
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Additional Debtor Joinder in substantially the form of Annex A attached
hereto and comply with the provisions hereof applicable to the Debtors.
Concurrent therewith, the Additional Debtor shall deliver replacement
schedules for, or supplements to all other Schedules to (or referred to
in) this Agreement, as applicable, which replacement schedules shall
supersede, or supplements shall modify, the Schedules then in effect.
The Additional Debtor shall also deliver such opinions of counsel,
authorizing resolutions, good standing certificates, incumbency
certificates, organizational documents, financing statements and other
information and documentation as the Secured Parties may reasonably
request. Upon delivery of the foregoing to the Secured Parties, the
Additional Debtor shall be and become a party to this Agreement with
the same rights and obligations as the Debtors, for all purposes hereof
as fully and to the same extent as if it were an original signatory
hereto and shall be deemed to have made the representations, warranties
and covenants set forth herein as of the date of execution and delivery
of such Additional Debtor Joinder, and all references herein to the
"Debtors" shall be deemed to include each Additional Debtor.
(jj) Each Debtor shall vote the Pledged Securities to comply
with the covenants and agreements set forth herein and in the
Debentures.
(kk) Each Debtor shall register the pledge of the applicable
Pledged Securities on the books of such Debtor. Each Debtor shall
notify each issuer of Pledged Securities to register the pledge of the
applicable Pledged Securities in the name of the Secured Parties on the
books of such issuer. Further, except with respect to certificated
securities delivered to the Agent, the applicable Debtor shall deliver
to Agent an acknowledgement of pledge (which, where appropriate, shall
comply with the requirements of the relevant UCC with respect to
perfection by registration) signed by the issuer of the applicable
Pledged Securities, which acknowledgement shall confirm that: (a) it
has registered the pledge on its books and records; and (b) at any time
directed by Agent during the continuation of an Event of Default, such
issuer will transfer the record ownership of such Pledged Securities
into the name of any designee of Agent, will take such steps as may be
necessary to effect the transfer, and will comply with all other
instructions of Agent regarding such Pledged Securities without the
further consent of the applicable Debtor.
(ll) In the event that, upon an occurrence of an Event of
Default, Agent shall sell all or any of the Pledged Securities to
another party or parties (herein called the "Transferee") or shall
purchase or retain all or any of the Pledged Securities, each Debtor
shall, to the extent applicable: (i) deliver to Agent or the
Transferee, as the case may be, the articles of incorporation, bylaws,
minute books, stock certificate books, corporate seals, deeds, leases,
indentures, agreements, evidences of indebtedness, books of account,
financial records and all other Organizational Documents and records of
the Debtors and their direct and indirect subsidiaries; (ii) use its
best efforts to obtain resignations of the persons then serving as
officers and directors of the Debtors and their direct and indirect
subsidiaries, if so requested; and (iii) use its best efforts to obtain
any approvals that are required by any governmental or regulatory body
in order to permit the sale of the Pledged Securities to the Transferee
or the purchase or retention of the Pledged Securities
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by Agent and allow the Transferee or Agent to continue the business of
the Debtors and their direct and indirect subsidiaries.
(mm) Without limiting the generality of the other
obligations of the Debtors hereunder, each Debtor shall promptly (i)
cause to be registered at the United States Copyright Office all of its
material copyrights, (ii) cause the security interest contemplated
hereby with respect to all Intellectual Property registered at the
United States Copyright Office or United States Patent and Trademark
Office to be duly recorded at the applicable office, and (iii) give the
Agent notice whenever it acquires (whether absolutely or by license) or
creates any additional material Intellectual Property.
(nn) Each Debtor will from time to time, at the joint and
several expense of the Debtors, promptly execute and deliver all such
further instruments and documents, and take all such further action as
may be necessary or desirable, or as the Secured Parties may reasonably
request, in order to perfect and protect any security interest granted
or purported to be granted hereby or to enable the Secured Parties to
exercise and enforce their rights and remedies hereunder and with
respect to any Collateral or to otherwise carry out the purposes of
this Agreement.
(oo) Schedule F attached hereto lists all of the patents,
patent applications, trademarks, trademark applications, registered
copyrights, and domain names owned by any of the Debtors as of the date
hereof. Schedule F lists all material licenses in favor of any Debtor
for the use of any patents, trademarks, copyrights and domain names as
of the date hereof. All material patents and trademarks of the Debtors
have been duly recorded at the United States Patent and Trademark
Office and all material copyrights of the Debtors have been duly
recorded at the United States Copyright Office.
(pp) Except as set forth on Schedule G attached hereto, none
of the account debtors or other persons or entities obligated on any of
the Collateral is a governmental authority covered by the Federal
Assignment of Claims Act or any similar federal, state or local statute
or rule in respect of such Collateral.
5. EFFECT OF PLEDGE ON CERTAIN RIGHTS. If any of the Collateral
subject to this Agreement consists of nonvoting equity or ownership interests
(regardless of class, designation, preference or rights) that may be converted
into voting equity or ownership interests upon the occurrence of certain events
(including, without limitation, upon the transfer of all or any of the other
stock or assets of the issuer), it is agreed that the pledge of such equity or
ownership interests pursuant to this Agreement or the enforcement of any of
Agent's rights hereunder shall not be deemed to be the type of event which would
trigger such conversion rights notwithstanding any provisions in the
Organizational Documents or agreements to which any Debtor is subject or to
which any Debtor is party.
6. DEFAULTS. The following events shall be "Events of Default"
under this Agreement:
(a) The occurrence of an Event of Default (as defined in
the Debentures) under any Debenture;
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(b) Any representation or warranty of any Debtor in this
Agreement shall prove to have been incorrect in any material respect
when made; or
(c) The failure by any Debtor to observe or perform any of
its obligations hereunder for 15 days after delivery to such Debtor of
notice of such failure by or on behalf of a Secured Party unless such
default is capable of cure but cannot be cured within such time frame
and such Debtor is using best efforts to cure same in a timely fashion;
or
(d) If any provision of this Agreement shall at any time
for any reason be declared to be null and void, or the validity or
enforceability thereof shall be contested by any Debtor, or a
proceeding shall be commenced by any Debtor, or by any governmental
authority having jurisdiction over any Debtor, seeking to establish the
invalidity or unenforceability thereof, or any Debtor shall deny that
any Debtor has any liability or obligation purported to be created
under this Agreement.
7. DUTY TO HOLD IN TRUST.
(a) Upon the occurrence of any Event of Default and at any
time thereafter, each Debtor shall, upon receipt of any revenue,
income, dividend, interest or other sums subject to the Security
Interest, whether payable pursuant to the Debenture or otherwise, or of
any check, draft, note, trade acceptance or other instrument evidencing
an obligation to pay any such sum, hold the same in trust for the
Secured Parties and shall forthwith endorse and transfer any such sums
or instruments, or both, to the Secured Parties, pro-rata in proportion
to their initial purchases of Debentures for application to the
satisfaction of the Obligations (and if any Debenture is not
outstanding, pro-rata in proportion to the initial purchases of the
remaining Debentures).
(b) If any Debtor shall become entitled to receive or shall
receive any securities or other property (including, without
limitation, shares of Pledged Securities or instruments representing
Pledged Securities acquired after the date hereof, or any options,
warrants, rights or other similar property or certificates representing
a dividend, or any distribution in connection with any
recapitalization, reclassification or increase or reduction of capital,
or issued in connection with any reorganization of such Debtor or any
of its direct or indirect subsidiaries) in respect of the Pledged
Securities (whether as an addition to, in substitution of, or in
exchange for, such Pledged Securities or otherwise), such Debtor agrees
to (i) accept the same as the agent of the Secured Parties; (ii) hold
the same in trust on behalf of and for the benefit of the Secured
Parties; and (iii) to deliver any and all certificates or instruments
evidencing the same to Agent on or before the close of business on the
fifth business day following the receipt thereof by such Debtor, in the
exact form received together with the Necessary Endorsements, to be
held by Agent subject to the terms of this Agreement as Collateral.
8. RIGHTS AND REMEDIES UPON DEFAULT.
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(a) Upon the occurrence of any Event of Default and at any
time thereafter, the Secured Parties, acting through any agent
appointed by them for such purpose, shall have the right to exercise
all of the remedies conferred hereunder and under the Debentures, and
the Secured Parties shall have all the rights and remedies of a secured
party under the UCC. Without limitation, the Secured Parties shall have
the following rights and powers:
(i) The Secured Parties shall have the right to take
possession of the Collateral and, for that purpose, enter,
with the aid and assistance of any person, any premises where
the Collateral, or any part thereof, is or may be placed and
remove the same, and each Debtor shall assemble the Collateral
and make it available to the Secured Parties at places which
the Secured Parties shall reasonably select, whether at such
Debtor's premises or elsewhere, and make available to the
Secured Parties, without rent, all of such Debtor's respective
premises and facilities for the purpose of the Secured Parties
taking possession of, removing or putting the Collateral in
saleable or disposable form.
(ii) Upon notice to the Debtors by Agent, all rights
of each Debtor to exercise the voting and other consensual
rights which it would otherwise be entitled to exercise and
all rights of each Debtor to receive the dividends and
interest which it would otherwise be authorized to receive and
retain, shall cease. Upon such notice, Agent shall have the
right to receive any interest, cash dividends or other
payments on the Collateral and, at the option of Agent, to
exercise in such Agent's discretion all voting rights
pertaining thereto. Without limiting the generality of the
foregoing, Agent shall have the right (but not the obligation)
to exercise all rights with respect to the Collateral as if it
were the sole and absolute owner thereof, including, without
limitation, to vote and/or to exchange, at its sole
discretion, any or all of the Collateral in connection with a
merger, reorganization, consolidation, recapitalization or
other readjustment concerning or involving the Collateral or
any Debtor or any of its direct or indirect subsidiaries.
(iii) The Secured Parties shall have the right to
operate the business of each Debtor using the Collateral and
shall have the right to assign, sell, lease or otherwise
dispose of and deliver all or any part of the Collateral, at
public or private sale or otherwise (including, but not
limited to, pursuant to the terms of that certain Master
Factoring Agreement executed by the Debtors prior to the
Closing and attached as Annex C hereto (the "Factoring
Agreement"), either with or without special conditions or
stipulations, for cash or on credit or for future delivery, in
such parcel or parcels and at such time or times and at such
place or places, and upon such terms and conditions as the
Secured Parties may deem commercially reasonable, all without
(except as shall be required by applicable statute and cannot
be waived) advertisement or demand upon or notice to any
Debtor or right of redemption of a Debtor, which are hereby
expressly waived. Upon each such sale, lease, assignment or
other transfer of Collateral, the Secured Parties may, unless
prohibited by applicable law which cannot be waived,
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purchase all or any part of the Collateral being sold, free
from and discharged of all trusts, claims, right of redemption
and equities of any Debtor, which are hereby waived and
released.
(iv) The Secured Parties shall have the right (but
not the obligation) to notify any account debtors and any
obligors under instruments or accounts to make payments
directly to the Secured Parties and to enforce the Debtors'
rights against such account debtors and obligors.
(v) The Secured Parties may (but are not obligated
to) direct any financial intermediary or any other person or
entity holding any investment property to transfer the same to
the Secured Parties or their designee.
(vi) The Secured Parties may (but are not obligated
to) transfer any or all Intellectual Property registered in
the name of any Debtor at the United States Patent and
Trademark Office and/or Copyright Office into the name of the
Secured Parties or any designee or any purchaser of any
Collateral.
(b) The Agent may comply with any applicable law in
connection with a disposition of Collateral and such compliance will
not be considered adversely to affect the commercial reasonableness of
any sale of the Collateral. The Agent may sell the Collateral without
giving any warranties and may specifically disclaim such warranties. If
the Agent sells any of the Collateral on credit, the Debtors will only
be credited with payments actually made by the purchaser. In addition,
each Debtor waives any and all rights that it may have to a judicial
hearing in advance of the enforcement of any of the Agent's rights and
remedies hereunder, including, without limitation, its right following
an Event of Default to take immediate possession of the Collateral and
to exercise its rights and remedies with respect thereto.
(c) For the purpose of enabling the Agent to further
exercise rights and remedies under this Section 8 or elsewhere provided
by agreement or applicable law, each Debtor hereby grants to the Agent,
for the benefit of the Agent and the Secured Parties, an irrevocable,
nonexclusive license (exercisable without payment of royalty or other
compensation to such Debtor) to use, license or sublicense following an
Event of Default, any Intellectual Property now owned or hereafter
acquired by such Debtor, and wherever the same may be located, and
including in such license access to all media in which any of the
licensed items may be recorded or stored and to all computer software
and programs used for the compilation or printout thereof.
9. APPLICATIONS OF PROCEEDS. The proceeds of any such sale, lease
or other disposition of the Collateral hereunder shall be applied first, to the
expenses of retaking, holding, storing, processing and preparing for sale,
selling, and the like (including, without limitation, any taxes, fees and other
costs incurred in connection therewith) of the Collateral, to the reasonable
attorneys' fees and expenses incurred by the Secured Parties in enforcing their
rights hereunder and in connection with collecting, storing and disposing of the
Collateral, and then to satisfaction of the Obligations pro rata among the
Secured Parties (based on then-outstanding principal amounts of Debentures at
the time of any such determination), and to the payment of any other
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amounts required by applicable law, after which the Secured Parties shall pay to
the applicable Debtor any surplus proceeds. If, upon the sale, license or other
disposition of the Collateral, the proceeds thereof are insufficient to pay all
amounts to which the Secured Parties are legally entitled, the Debtors will be
liable for the deficiency, together with interest thereon, at the rate of 10%
per annum or the lesser amount permitted by applicable law (the "Default Rate"),
and the reasonable fees of any attorneys employed by the Secured Parties to
collect such deficiency. To the extent permitted by applicable law, each Debtor
waives all claims, damages and demands against the Secured Parties arising out
of the repossession, removal, retention or sale of the Collateral, unless due
solely to the gross negligence or willful misconduct of the Secured Parties as
determined by a final judgment (not subject to further appeal) of a court of
competent jurisdiction.
10. SECURITIES LAW PROVISION. Each Debtor recognizes that Agent
may be limited in its ability to effect a sale to the public of all or part of
the Pledged Securities by reason of certain prohibitions in the Securities Act
of 1933, as amended, or other federal or state securities laws (collectively,
the "Securities Laws"), and may be compelled to resort to one or more sales to a
restricted group of purchasers who may be required to agree to acquire the
Pledged Securities for their own account, for investment and not with a view to
the distribution or resale thereof. Each Debtor agrees that sales so made may be
at prices and on terms less favorable than if the Pledged Securities were sold
to the public, and that Agent has no obligation to delay the sale of any Pledged
Securities for the period of time necessary to register the Pledged Securities
for sale to the public under the Securities Laws. Each Debtor shall cooperate
with Agent in its attempt to satisfy any requirements under the Securities Laws
(including, without limitation, registration thereunder if requested by Agent)
applicable to the sale of the Pledged Securities by Agent.
11. COSTS AND EXPENSES. Each Debtor agrees to pay all reasonable
out-of-pocket fees, costs and expenses incurred in connection with any filing
required hereunder, including without limitation, any financing statements
pursuant to the UCC, continuation statements, partial releases and/or
termination statements related thereto or any expenses of any searches
reasonably required by the Secured Parties. The Debtors shall also pay all other
claims and charges which in the reasonable opinion of the Secured Parties might
prejudice, imperil or otherwise affect the Collateral or the Security Interest
therein. The Debtors will also, upon demand, pay to the Secured Parties the
amount of any and all reasonable expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, which the Secured Parties
may incur in connection with (i) the enforcement of this Agreement, (ii) the
custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, or (iii) the exercise or enforcement of
any of the rights of the Secured Parties under the Debentures. Until so paid,
any fees payable hereunder shall be added to the principal amount of the
Debentures and shall bear interest at the Default Rate.
12. RESPONSIBILITY FOR COLLATERAL. The Debtors assume all
liabilities and responsibility in connection with all Collateral, and the
Obligations shall in no way be affected or diminished by reason of the loss,
destruction, damage or theft of any of the Collateral or its unavailability for
any reason. Without limiting the generality of the foregoing, (a) neither the
Agent nor any Secured Party (i) has any duty (either before or after an Event of
Default) to collect any amounts in respect of the Collateral or to preserve any
rights relating to the Collateral, or (ii) has any obligation to clean-up or
otherwise prepare the Collateral for sale, and
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(b) each Debtor shall remain obligated and liable under each contract or
agreement included in the Collateral to be observed or performed by such Debtor
thereunder. Neither the Agent nor any Secured Party shall have any obligation or
liability under any such contract or agreement by reason of or arising out of
this Agreement or the receipt by the Agent or any Secured Party of any payment
relating to any of the Collateral, nor shall the Agent or any Secured Party be
obligated in any manner to perform any of the obligations of any Debtor under or
pursuant to any such contract or agreement, to make inquiry as to the nature or
sufficiency of any payment received by the Agent or any Secured Party in respect
of the Collateral or as to the sufficiency of any performance by any party under
any such contract or agreement, to present or file any claim, to take any action
to enforce any performance or to collect the payment of any amounts which may
have been assigned to the Agent or to which the Agent or any Secured Party may
be entitled at any time or times.
13. SECURITY INTEREST ABSOLUTE. All rights of the Secured Parties
and all obligations of the Debtors hereunder, shall be absolute and
unconditional, irrespective of: (a) any lack of validity or enforceability of
this Agreement, the Debentures or any agreement entered into in connection with
the foregoing, or any portion hereof or thereof; (b) any change in the time,
manner or place of payment or performance of, or in any other term of, all or
any of the Obligations, or any other amendment or waiver of or any consent to
any departure from the Debentures or any other agreement entered into in
connection with the foregoing; (c) any exchange, release or nonperfection of any
of the Collateral, or any release or amendment or waiver of or consent to
departure from any other collateral for, or any guaranty, or any other security,
for all or any of the Obligations; (d) any action by the Secured Parties to
obtain, adjust, settle and cancel in its sole discretion any insurance claims or
matters made or arising in connection with the Collateral; or (e) any other
circumstance which might otherwise constitute any legal or equitable defense
available to a Debtor, or a discharge of all or any part of the Security
Interest granted hereby. Until the Obligations shall have been paid and
performed in full, the rights of the Secured Parties shall continue even if the
Obligations are barred for any reason, including, without limitation, the
running of the statute of limitations or bankruptcy. Each Debtor expressly
waives presentment, protest, notice of protest, demand, notice of nonpayment and
demand for performance. In the event that at any time any transfer of any
Collateral or any payment received by the Secured Parties hereunder shall be
deemed by final order of a court of competent jurisdiction to have been a
voidable preference or fraudulent conveyance under the bankruptcy or insolvency
laws of the United States, or shall be deemed to be otherwise due to any party
other than the Secured Parties, then, in any such event, each Debtor's
obligations hereunder shall survive cancellation of this Agreement, and shall
not be discharged or satisfied by any prior payment thereof and/or cancellation
of this Agreement, but shall remain a valid and binding obligation enforceable
in accordance with the terms and provisions hereof. Each Debtor waives all right
to require the Secured Parties to proceed against any other person or entity or
to apply any Collateral which the Secured Parties may hold at any time, or to
marshal assets, or to pursue any other remedy. Each Debtor waives any defense
arising by reason of the application of the statute of limitations to any
obligation secured hereby.
14. TERM OF AGREEMENT. This Agreement and the Security Interest
shall terminate on the date on which all payments under the Debentures have been
indefeasibly paid in full and all other Obligations have been paid or
discharged; provided, however, that all indemnities of the
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Debtors contained in this Agreement (including, without limitation, Annex B
hereto) shall survive and remain operative and in full force and effect
regardless of the termination of this Agreement.
15. POWER OF ATTORNEY; FURTHER ASSURANCES.
(a) Each Debtor authorizes the Secured Parties, and does
hereby make, constitute and appoint the Secured Parties and their
respective officers, agents, successors or assigns with full power of
substitution, as such Debtor's true and lawful attorney-in-fact, with
power, in the name of the various Secured Parties or such Debtor, to,
after the occurrence and during the continuance of an Event of Default,
(i) endorse any note, checks, drafts, money orders or other instruments
of payment (including payments payable under or in respect of any
policy of insurance) in respect of the Collateral that may come into
possession of the Secured Parties; (ii) to sign and endorse any
financing statement pursuant to the UCC or any invoice, freight or
express bill, bill of lading, storage or warehouse receipts, drafts
against debtors, assignments, verifications and notices in connection
with accounts, and other documents relating to the Collateral; (iii) to
pay or discharge taxes, liens, security interests or other encumbrances
at any time levied or placed on or threatened against the Collateral;
(iv) to demand, collect, receipt for, compromise, settle and sue for
monies due in respect of the Collateral; (v) to transfer any
Intellectual Property or provide licenses respecting any Intellectual
Property; (vi) to cause the sale of any accounts pursuant to the
Factoring Agreement and (vii) generally, at the option of the Secured
Parties, and at the expense of the Debtors, at any time, or from time
to time, to execute and deliver any and all documents and instruments
and to do all acts and things which the Secured Parties deem necessary
to protect, preserve and realize upon the Collateral and the Security
Interest granted therein in order to effect the intent of this
Agreement and the Debentures all as fully and effectually as the
Debtors might or could do; and each Debtor hereby ratifies all that
said attorney shall lawfully do or cause to be done by virtue hereof.
This power of attorney is coupled with an interest and shall be
irrevocable for the term of this Agreement and thereafter as long as
any of the Obligations shall be outstanding. The designation set forth
herein shall be deemed to amend and supersede any inconsistent
provision in the Organizational Documents or other documents or
agreements to which any Debtor is subject or to which any Debtor is a
party. Without limiting the generality of the foregoing, after the
occurrence and during the continuance of an Event of Default, each
Secured Party is specifically authorized to execute and file any
applications for or instruments of transfer and assignment of any
patents, trademarks, copyrights or other Intellectual Property with the
United States Patent and Trademark Office and the United States
Copyright Office.
(b) On a continuing basis, each Debtor will make, execute,
acknowledge, deliver, file and record, as the case may be, with the
proper filing and recording agencies in any jurisdiction, including,
without limitation, the jurisdictions indicated on Schedule C attached
hereto, all such instruments, and take all such action as may
reasonably be deemed necessary or advisable, or as reasonably requested
by the Secured Parties, to perfect the Security Interest granted
hereunder and otherwise to carry out the intent and
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purposes of this Agreement, or for assuring and confirming to the
Secured Parties the grant or perfection of a perfected security
interest in all the Collateral under the UCC.
(c) Each Debtor hereby irrevocably appoints the Secured
Parties as such Debtor's attorney-in-fact, with full authority in the
place and instead of such Debtor and in the name of such Debtor, from
time to time in the Secured Parties' discretion, to take any action and
to execute any instrument which the Secured Parties may deem necessary
or advisable to accomplish the purposes of this Agreement, including
the filing, in its sole discretion, of one or more financing or
continuation statements and amendments thereto, relative to any of the
Collateral without the signature of such Debtor where permitted by law,
which financing statements may (but need not) describe the Collateral
as "all assets" or "all personal property" or words of like import, and
ratifies all such actions taken by the Secured Parties. This power of
attorney is coupled with an interest and shall be irrevocable for the
term of this Agreement and thereafter as long as any of the Obligations
shall be outstanding.
16. NOTICES. All notices, requests, demands and other
communications hereunder shall be subject to the notice provision of the
Purchase Agreement (as such term is defined in the Debentures).
17. OTHER SECURITY. To the extent that the Obligations are now or
hereafter secured by property other than the Collateral or by the guarantee,
endorsement or property of any other person, firm, corporation or other entity,
then the Secured Parties shall have the right, in its sole discretion, to
pursue, relinquish, subordinate, modify or take any other action with respect
thereto, without in any way modifying or affecting any of the Secured Parties'
rights and remedies hereunder.
18. APPOINTMENT OF AGENTS. The Secured Parties hereby appoint
Omicron Master Trust (the "Agent") to act as their agent for purposes of
exercising any and all rights and remedies of the Secured Parties hereunder
except with respect to the rights and remedies afforded the Secured Parties
pursuant to Section 19 below, wherefore CCA (US) Fund I, L.P. is hereby
appointed to act as the agent of the Secured Parties (the "Lockbox Agent"). Such
appointments shall continue until revoked in writing by a Majority in Interest,
at which time a Majority in Interest shall appoint a new Agent and or Lockbox
Agent, as the case may be; provided, that Omicron Master Trust may not be
removed as Agent unless it shall then hold less than $500,000 of principal
amount of Debentures. The Agent and Lockbox Agent, as applicable, shall have the
rights, responsibilities and immunities set forth in Annex B hereto. Nothing
herein contained shall be construed to constitute Agent or Lockbox Agent as
agent of Debtors for any purpose whatsoever, and Agent and Lockbox Agent shall
not be responsible or liable for any shortage, discrepancy, damage, loss or
destruction of any part of the Collateral wherever the same may be located and
regardless of the cause thereof (other than from acts of omission or commission
constituting gross negligence or willful misconduct as determined by a final
judgment of a court of competent jurisdiction). Agent and Lockbox Agent shall
not, under any circumstance or in any event whatsoever, have any liability for
any error or omission or delay of any kind occurring in the settlement,
collection or payment of any of the Collateral or any instrument received in
payment thereof or for any damage resulting therefrom (other than acts of
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omission or commission constituting gross negligence or willful misconduct as
determined by a final judgment of a court of competent jurisdiction). Agent and
Lockbox Agent, by anything herein or in any assignment or otherwise, do not
assume any of the obligations under any contract or agreement assigned to Agent
or Lockbox Agent and shall not be responsible in any way for the performance by
Debtors of any of the terms and conditions thereof.
19. LOCK BOX.
(a) Upon the Closing and until the Obligations are no
longer outstanding, pursuant to the terms of the Lock Box Agreement
delivered at the Closing, the Debtors shall (i) maintain one or more
lockboxes in the name of the Lockbox Agent, as agent for the Secured
Parties, and identified on Schedule I hereto (collectively, the
"Lockboxes") with Wells Fargo Bank, N.A. or such other financial
institutions selected by Debtors and acceptable to the Lockbox Agent in
its sole discretion (each being referred to as a "Lockbox Bank"), and
(ii) maintain an account (a "Collection Account" and, collectively, the
"Collection Accounts") in the name the Lockbox Agent with each Lockbox
Bank. The Debtors shall irrevocably instruct their Account Debtors,
with respect to Accounts Receivable of Debtors, to remit all payments
to be made by checks or other drafts to the Lockboxes and to remit all
payments to be made by wire transfer or by Automated Clearing House,
Inc. payment as directed by Lockbox Agent and shall instruct each
Lockbox Bank to deposit all amounts received in its Lockbox to the
Collection Account at such Lockbox Bank on the day received or, if such
day is not a business day, on the next succeeding business day. Until
Lockbox Agent has advised Debtors to the contrary after the occurrence
and during the continuance of an Event of Default, Debtors may and will
enforce, collect and receive all amounts owing on the Accounts
Receivable of Debtors for Lockbox Agent's benefit and on Lockbox
Agent's behalf, but at Debtors' expense, jointly and severally; such
privilege shall terminate, at the election of Lockbox Agent, upon the
occurrence and during the continuance of an Event of Default. All
checks, drafts, notes, money orders, acceptances, cash and other
evidences of Indebtedness received directly by Debtors from any of
their Account Debtors, as proceeds from Accounts Receivable, or as
proceeds of any other Collateral, shall be held by Debtors in trust for
Lockbox Agent and upon receipt be deposited by Debtors in original form
and no later than the next business day after receipt thereof into a
Collection Account. Debtors shall not commingle such collections with
Debtors' own funds or the funds of any of its Affiliates or with the
proceeds of any assets not included in the Collateral. Upon delivery of
notice of an Event of Default, the Lockbox Agent shall have the right
to control all aspects of the disposal of the contents and proceeds of
the Collection Accounts.
(b) After the occurrence and during the continuance of an
Event of Default, Lockbox Agent may send a notice of assignment and/or
notice of the security interest evidenced by this Agreement to any and
all Account Debtors or third parties holding or otherwise concerned
with any of the Collateral, and thereafter Lockbox Agent shall have the
sole right to collect the Accounts Receivable and the books and records
relating thereto. After the occurrence of an Event of Default, Debtors
shall not, without prior written consent of Lockbox Agent, grant any
extension of time of payment of any Account Receivable, compromise or
settle any Account Receivable for less than the full
21
<PAGE>
amount thereof, release, in whole or in part, any Person or property
liable for the payment thereof, or allow any credit or discount
whatsoever thereon.
(c) If any Account Receivable includes a charge for any tax
payable to any governmental authority, Lockbox Agent is hereby
authorized (but in no event obligated) in its discretion to pay the
amount thereof to the proper taxing authority for Debtors' account and
to charge Debtors therefor. Debtors shall notify Lockbox Agent if any
Account Receivable includes any taxes due to any such governmental
authority and, in the absence of such notice, Lockbox Agent shall have
the right to retain the full proceeds of such Account Receivable and
shall not be liable for any taxes that may be due by reason of the sale
and delivery creating such Account Receivable.
(d) Debtors will at such intervals as Lockbox Agent may
require, execute and deliver confirmatory written assignments of the
Accounts Receivable to Lockbox Agent and furnish such further schedules
and/or information as Lockbox Agent may require relating to the
Accounts Receivable, including, without limitation, sales invoices or
the equivalent, credit memos issued, remittance advices, reports and
copies of deposit slips and copies of original shipping or delivery
receipts for all merchandise sold. In addition, Debtors shall notify
Lockbox Agent of any non-compliance in respect of the representations,
warranties and covenants contained in this Agreement. The items to be
provided under this Section 19 are to be in form and substance
reasonably satisfactory to Lockbox Agent and are to be executed and
delivered to Lockbox Agent from time to time solely for its convenience
in maintaining records of the Collateral. Debtors' failure to give any
of such items to Lockbox Agent shall not affect, terminate, modify or
otherwise limit Lockbox Agent's Lien on the Collateral. Debtors shall
not re-date any invoice or sale or make sales on extended dating beyond
that customary in Debtors' industry, and shall not re-bill any Accounts
Receivable without promptly disclosing the same to Lockbox Agent and
providing Lockbox Agent with a copy of such re-billing, identifying the
same as such. If either Debtors become aware of anything materially
detrimental to any of Debtors' customer credit, Debtors will promptly
advise Lockbox Agent thereof.
(e) Debtors shall not establish a deposit account at any
financial institution which is not an account that is (a) subject to a
Collection Account or (b) a zero balance account with no right of
withdrawal by any party save for a automatic sweep of all funds in a
Collection Account into a Collection Account no less often than once
each Business Day.
20. MISCELLANEOUS.
(a) No course of dealing between the Debtors and the
Secured Parties, nor any failure to exercise, nor any delay in
exercising, on the part of the Secured Parties, any right, power or
privilege hereunder or under the Debentures shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power
or privilege hereunder or thereunder preclude any other or further
exercise thereof or the exercise of any other right, power or
privilege.
22
<PAGE>
(b) All of the rights and remedies of the Secured Parties
with respect to the Collateral, whether established hereby or by the
Debentures or by any other agreements, instruments or documents or by
law shall be cumulative and may be exercised singly or concurrently.
(c) This Agreement constitutes the entire agreement of the
parties with respect to the subject matter hereof and is intended to
supersede all prior negotiations, understandings and agreements with
respect thereto. Except as specifically set forth in this Agreement, no
provision of this Agreement may be modified or amended except by a
written agreement specifically referring to this Agreement and signed
by the parties hereto.
(d) In the event any provision of this Agreement is held to
be invalid, prohibited or unenforceable in any jurisdiction for any
reason, unless such provision is narrowed by judicial construction,
this Agreement shall, as to such jurisdiction, be construed as if such
invalid, prohibited or unenforceable provision had been more narrowly
drawn so as not to be invalid, prohibited or unenforceable. If,
notwithstanding the foregoing, any provision of this Agreement is held
to be invalid, prohibited or unenforceable in any jurisdiction, such
provision, as to such jurisdiction, shall be ineffective to the extent
of such invalidity, prohibition or unenforceability without
invalidating the remaining portion of such provision or the other
provisions of this Agreement and without affecting the validity or
enforceability of such provision or the other provisions of this
Agreement in any other jurisdiction.
(e) No waiver of any breach or default or any right under
this Agreement shall be considered valid unless in writing and signed
by the party giving such waiver, and no such waiver shall be deemed a
waiver of any subsequent breach or default or right, whether of the
same or similar nature or otherwise.
(f) This Agreement shall be binding upon and inure to the
benefit of each party hereto and its successors and assigns.
(g) Each party shall take such further action and execute
and deliver such further documents as may be necessary or appropriate
in order to carry out the provisions and purposes of this Agreement.
(h) All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by
and construed and enforced in accordance with the internal laws of the
State of New York, without regard to the principles of conflicts of law
thereof. Each Debtor agrees that all proceedings concerning the
interpretations, enforcement and defense of the transactions
contemplated by this Agreement and the Debenture (whether brought
against a party hereto or its respective affiliates, directors,
officers, shareholders, partners, members, employees or agents) shall
be commenced exclusively in the state and federal courts sitting in the
City of New York, Borough of Manhattan. Each Debtor hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts
sitting in the City of New York, Borough of
23
<PAGE>
Manhattan for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or
discussed herein, and hereby irrevocably waives, and agrees not to
assert in any proceeding, any claim that it is not personally subject
to the jurisdiction of any such court, that such proceeding is
improper. Each party hereto hereby irrevocably waives personal service
of process and consents to process being served in any such proceeding
by mailing a copy thereof via registered or certified mail or overnight
delivery (with evidence of delivery) to such party at the address in
effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and
notice thereof. Nothing contained herein shall be deemed to limit in
any way any right to serve process in any manner permitted by law. Each
party hereto hereby irrevocably waives, to the fullest extent permitted
by applicable law, any and all right to trial by jury in any legal
proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby. If any party shall commence a
proceeding to enforce any provisions of this Agreement, then the
prevailing party in such proceeding shall be reimbursed by the other
party for its reasonable attorney's fees and other costs and expenses
incurred with the investigation, preparation and prosecution of such
proceeding.
(i) This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an
original and, all of which taken together shall constitute one and the
same Agreement. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile
signature were the original thereof.
(j) All Debtors shall jointly and severally be liable for
the obligations of each Debtor to the Secured Parties hereunder.
(k) Each Debtor shall indemnify, reimburse and hold
harmless the Secured Parties and their respective partners, members,
shareholders, officers, directors, employees and agents (collectively,
"Indemnitees") from and against any and all losses, claims,
liabilities, damages, penalties, suits, costs and expenses, of any kind
or nature, (including fees relating to the cost of investigating and
defending any of the foregoing) imposed on, incurred by or asserted
against such Indemnitee in any way related to or arising from or
alleged to arise from this Agreement or the Collateral, except any such
losses, claims, liabilities, damages, penalties, suits, costs and
expenses which result from the gross negligence or willful misconduct
of the Indemnitee as determined by a final, nonappealable decision of a
court of competent jurisdiction. This indemnification provision is in
addition to, and not in limitation of, any other indemnification
provision in the Debentures, the Purchase Agreement (as such term is
defined in the Debentures) or any other agreement, instrument or other
document executed or delivered in connection herewith or therewith.
(l) Nothing in this Agreement shall be construed to subject
Agent or any Secured Party to liability as a partner in any Debtor or
any if its direct or indirect subsidiaries that is a partnership or as
a member in any Debtor or any of its direct or
24
<PAGE>
indirect subsidiaries that is a limited liability company, nor shall
Agent or any Secured Party be deemed to have assumed any obligations
under any partnership agreement or limited liability company agreement,
as applicable, of any such Debtor or any if its direct or indirect
subsidiaries or otherwise, unless and until any such Secured Party
exercises its right to be substituted for such Debtor as a partner or
member, as applicable, pursuant hereto.
(m) To the extent that the grant of the security interest
in the Collateral and the enforcement of the terms hereof require the
consent, approval or action of any partner or member, as applicable, of
any Debtor or any direct or indirect subsidiary of any Debtor or
compliance with any provisions of any of the Organizational Documents,
the Debtors hereby grant such consent and approval and waive any such
noncompliance with the terms of said documents.
[SIGNATURE PAGES FOLLOW]
25
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed on the day and year first above written.
WESTERN POWER & EQUIPMENT CORP.
By: _________________________________
Name:
Title:
[SUBSIDIARY]
By: _________________________________
Name:
Title:
[SIGNATURE PAGE OF HOLDERS FOLLOWS]
26
<PAGE>
[SIGNATURE PAGE OF HOLDERS TO WPEC SECURITY AGREEMENT]
Name of Investing Entity: _____________________________________________
SIGNATURE OF AUTHORIZED SIGNATORY OF INVESTING ENTITY: ________________
Name of Authorized Signatory: _________________________________________
Title of Authorized Signatory: ________________________________________
[SIGNATURE PAGE OF HOLDERS FOLLOWS]
27
<PAGE>
SCHEDULE A
Principal Place of Business of Debtors:
Locations Where Collateral is Located or Stored:
28
<PAGE>
SCHEDULE B
29
<PAGE>
SCHEDULE C
30
<PAGE>
SCHEDULE D
Organizational Identification Numbers
31
<PAGE>
SCHEDULE E
Names; Mergers and Acquisitions
32
<PAGE>
SCHEDULE F
Intellectual Property
33
<PAGE>
SCHEDULE G
Account Debtors
34
<PAGE>
SCHEDULE H
Pledged Securities
35
<PAGE>
ANNEX A
TO
SECURITY
AGREEMENT
FORM OF ADDITIONAL DEBTOR JOINDER
Security Agreement dated as of June 8, 2005 made by
Western Power & Equipment Corp.
and its subsidiaries party thereto from time to time, as Debtors
to and in favor of
the Secured Parties identified therein (the "Security Agreement")
Reference is made to the Security Agreement as defined above;
capitalized terms used herein and not otherwise defined herein shall have the
meanings given to such terms in, or by reference in, the Security Agreement.
The undersigned hereby agrees that upon delivery of this Additional
Debtor Joinder to the Secured Parties referred to above, the undersigned shall
(a) be an Additional Debtor under the Security Agreement, (b) have all the
rights and obligations of the Debtors under the Security Agreement as fully and
to the same extent as if the undersigned was an original signatory thereto and
(c) be deemed to have made the representations and warranties set forth in
Section ___ therein as of the date of execution and delivery of this Additional
Debtor Joinder. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE
UNDERSIGNED SPECIFICALLY GRANTS TO THE SECURED PARTIES A SECURITY INTEREST IN
THE COLLATERAL AS MORE FULLY SET FORTH IN THE SECURITY AGREEMENT AND
ACKNOWLEDGES AND AGREES TO THE WAIVER OF JURY TRIAL PROVISIONS SET FORTH
THEREIN.
Attached hereto are supplemental and/or replacement Schedules to the
Security Agreement, as applicable.
An executed copy of this Joinder shall be delivered to the Secured
Parties, and the Secured Parties may rely on the matters set forth herein on or
after the date hereof. This Joinder shall not be modified, amended or terminated
without the prior written consent of the Secured Parties.
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Joinder to be
executed in the name and on behalf of the undersigned.
[Name of Additional Debtor]
By:
Name:
Title:
Address:
Dated:
<PAGE>
[ANNEX B
TO
SECURITY
AGREEMENT
THE AGENT
1. Appointment. The Secured Parties (all capitalized terms used herein
and not otherwise defined shall have the respective meanings provided in the
Security Agreement to which this Annex B is attached (the "Agreement")), by
their acceptance of the benefits of the Agreement, hereby designate Omicron
Master Trust (the "Agent") as the Agent to act as specified herein and in the
Agreement, except that _________________ shall be appointed agent with respect
to Section 19 of the Agreement. Each Secured Party shall be deemed irrevocably
to authorize the Agent to take such action on its behalf under the provisions of
the Agreement and any other Transaction Document (as such term is defined in the
Debentures) and to exercise such powers and to perform such duties hereunder and
thereunder as are specifically delegated to or required of the Agent by the
terms hereof and thereof and such other powers as are reasonably incidental
thereto. The Agent may perform any of its duties hereunder by or through its
agents or employees.
2. Nature of Duties. The Agent shall have no duties or responsibilities
except those expressly set forth in the Agreement. Neither the Agent nor any of
its partners, members, shareholders, officers, directors, employees or agents
shall be liable for any action taken or omitted by it as such under the
Agreement or hereunder or in connection herewith or therewith, be responsible
for the consequence of any oversight or error of judgment or answerable for any
loss, unless caused solely by its or their gross negligence or willful conduct
as determined by a final judgment (not subject to further appeal) of a court of
competent jurisdiction. The duties of the Agent shall be mechanical and
administrative in nature; the Agent shall not have by reason of the Agreement or
any other Transaction Document a fiduciary relationship in respect of any Debtor
or any Secured Party; and nothing in the Agreement or any other Transaction
Document, expressed or implied, is intended to or shall be so construed as to
impose upon the Agent any obligations in respect of the Agreement or any other
Transaction Document except as expressly set forth herein and therein.
3. Lack of Reliance on the Agent. Independently and without reliance upon
the Agent, each Secured Party, to the extent it deems appropriate, has made and
shall continue to make (i) its own independent investigation of the financial
condition and affairs of the Debtors and its subsidiaries in connection with
such Secured Party's investment in the Debtors, the creation and continuance of
the Obligations, the transactions contemplated by the Transaction Documents, and
the taking or not taking of any action in connection therewith, and (ii) its own
appraisal of the creditworthiness of the Debtors and its subsidiaries, and of
the value of the Collateral from time to time, and the Agent shall have no duty
or responsibility, either initially or on a continuing basis, to provide any
Secured Party with any credit, market or other information with respect
<PAGE>
thereto, whether coming into its possession before any Obligations are incurred
or at any time or times thereafter. The Agent shall not be responsible to the
Debtors or any Secured Party for any recitals, statements, information,
representations or warranties herein or in any document, certificate or other
writing delivered in connection herewith, or for the execution, effectiveness,
genuineness, validity, enforceability, perfection, collectibility, priority or
sufficiency of the Agreement or any other Transaction Document, or for the
financial condition of the Debtors or the value of any of the Collateral, or be
required to make any inquiry concerning either the performance or observance of
any of the terms, provisions or conditions of the Agreement or any other
Transaction Document, or the financial condition of the Debtors, or the value of
any of the Collateral, or the existence or possible existence of any default or
Event of Default under the Agreement, the Debentures or any of the other
Transaction Documents.
4. Certain Rights of the Agent. The Agent shall have the right to take any
action with respect to the Collateral, on behalf of all of the Secured Parties.
To the extent practical, the Agent shall request instructions from the Secured
Parties with respect to any material act or action (including failure to act) in
connection with the Agreement or any other Transaction Document, and shall be
entitled to act or refrain from acting in accordance with the instructions of
Secured Parties holding a majority in principal amount of Debentures (based on
then-outstanding principal amounts of Debentures at the time of any such
determination); if such instructions are not provided despite the Agent's
request therefor, the Agent shall be entitled to refrain from such act or taking
such action, and if such action is taken, shall be entitled to appropriate
indemnification from the Secured Parties in respect of actions to be taken by
the Agent; and the Agent shall not incur liability to any person or entity by
reason of so refraining. Without limiting the foregoing, (a) no Secured Party
shall have any right of action whatsoever against the Agent as a result of the
Agent acting or refraining from acting hereunder in accordance with the terms of
the Agreement or any other Transaction Document, and the Debtors shall have no
right to question or challenge the authority of, or the instructions given to,
the Agent pursuant to the foregoing and (b) the Agent shall not be required to
take any action which the Agent believes (i) could reasonably be expected to
expose it to personal liability or (ii) is contrary to this Agreement, the
Transaction Documents or applicable law.
5. Reliance. The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, statement,
certificate, telex, teletype or telecopier message, cablegram, radiogram, order
or other document or telephone message signed, sent or made by the proper person
or entity, and, with respect to all legal matters pertaining to the Agreement
and the other Transaction Documents and its duties thereunder, upon advice of
counsel selected by it and upon all other matters pertaining to this Agreement
and the other Transaction Documents and its duties thereunder, upon advice of
other experts selected by it.
6. Indemnification. To the extent that the Agent is not reimbursed and
indemnified by the Debtors, the Secured Parties will jointly and severally
reimburse and indemnify the Agent, in proportion to their initially purchased
respective principal
<PAGE>
amounts of Debentures, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by or asserted against the Agent in performing its duties hereunder or under the
Agreement or any other Transaction Document, or in any way relating to or
arising out of the Agreement or any other Transaction Document except for those
determined by a final judgment (not subject to further appeal) of a court of
competent jurisdiction to have resulted solely from the Agent's own gross
negligence or willful misconduct. Prior to taking any action hereunder as Agent,
the Agent may require each Secured Party to deposit with it sufficient sums as
it determines in good faith is necessary to protect the Agent for costs and
expenses associated with taking such action.
7. Resignation by the Agent.
(a) The Agent may resign from the performance of all its functions and
duties under the Agreement and the other Transaction Documents at any time
by giving 30 days' prior written notice (as provided in the Agreement) to
the Debtors and the Secured Parties. Such resignation shall take effect
upon the appointment of a successor Agent pursuant to clauses (b) and (c)
below.
(b) Upon any such notice of resignation, the Secured Parties, acting
by a Majority in Interest, shall appoint a successor Agent hereunder.
(c) If a successor Agent shall not have been so appointed within said
30-day period, the Agent shall then appoint a successor Agent who shall
serve as Agent until such time, if any, as the Secured Parties appoint a
successor Agent as provided above. If a successor Agent has not been
appointed within such 30-day period, the Agent may petition any court of
competent jurisdiction or may interplead the Debtors and the Secured
Parties in a proceeding for the appointment of a successor Agent, and all
fees, including, but not limited to, extraordinary fees associated with the
filing of interpleader and expenses associated therewith, shall be payable
by the Debtors on demand.
8. Rights with respect to Collateral. Each Secured Party agrees with all
other Secured Parties and the Agent (i) that it shall not, and shall not attempt
to, exercise any rights with respect to its security interest in the Collateral,
whether pursuant to any other agreement or otherwise (other than pursuant to
this Agreement), or take or institute any action against the Agent or any of the
other Secured Parties in respect of the Collateral or its rights hereunder
(other than any such action arising from the breach of this Agreement) and (ii)
that such Secured Party has no other rights with respect to the Collateral other
than as set forth in this Agreement and the other Transaction Documents.
</TEXT>
</DOCUMENT>