Common use of COLLATERAL SECURITIES Clause in Contracts

COLLATERAL SECURITIES. 3.01 If at any time and from time to time Secured Party determines that the total amount of all then outstanding Advances on any date are greater than the Borrowing Base as in effect on such date, Debtor shall, consistent with and as required under Section 2.01 of the Loan Agreement, immediately either (a) prepay the amount by which the total amount of all then outstanding Advances exceed the Borrowing Base, or (b) deliver to Secured Party additional Securities, such that following said prepayment or delivery, the total amount of all then outstanding Advances no longer exceed the Borrowing Base. 3.02 Upon the occurrence and continuation of any Event of Default, that portion of the pledged Securities consisting of distributions and payments upon or in connection therewith (whether such distributions or payments are dividends, interest, principal or other distributions, or in partial or complete liquidation, or the result of reclassification, readjustment or other changes in the capital structure of the Persons issuing the same or otherwise) shall be delivered by Debtor to Secured Party in the form that the distribution or payment is received by Debtor, and Secured Party shall hold any such distribution or payment as additional Collateral to secure the Borrower’s Obligations. Any shares of capital stock, securities or evidence of indebtedness so distributed to Debtor shall be delivered to Secured Party accompanied with irrevocable stock powers relating thereto or assignments thereof duly signed by Debtor in form acceptable to Secured Party and duly endorsed in blank by Debtor. 3.03 Upon the occurrence and continuation of any Event of Default, that portion of the pledged Securities consisting of subscriptions, warrants, options and any other rights issued upon or in connection therewith or any portion thereof, shall be delivered by Debtor to Secured Party, and Secured Party shall hold such subscriptions, warrants, options and other rights to secure Borrower’s Obligations; provided, however, that if Secured Party determines in its sole discretion that the value of any of such subscriptions, warrants, options or other rights shall terminate, expire or be materially reduced by holding the same as Collateral, Secured Party shall have the right, in its sole discretion, to sell or exercise the same, and if exercised, then the monies disbursed by Secured Party in connection therewith shall be deemed Advances by Secured Party to Debtor, and shall constitute part of Borrower’s Obligations, payable by Debtor to Secured Party on demand. 3.04 Upon the occurrence and continuation of any Event of Default, and after written notice to Debtor, Secured Party may transfer any or all of the Securities into the name of Secured Party, or into the name of Secured Party’s nominee, without disclosing that such Securities so transferred are pledged or hypothecated, and without any indication on any new certificate or other document issued to evidence such Securities, that such Securities are pledged, and the Persons issuing the same, or their transfer agents, shall not be bound to inquire in the event that Secured Party or said nominee makes any other transfer of the Securities, as to whether Secured Party or its nominee has the right to make such further transfer, and the Persons issuing the same, or their transfer agents, shall not be liable for transferring the same. 3.05 Unless and until an Event of Default shall have occurred and is continuing, Debtor shall be entitled to exercise any and all voting or consensual rights and powers and stock purchase or subscription rights relating or pertaining to the Securities or any part thereof for any purpose; provided, however, that Debtor agrees that it will not exercise or refrain from exercising any such right or power if, as a result of so doing, it would have a Material Adverse Effect on the value of the Securities or any part thereof. 3.06 Debtor further warrants and represents to Secured Party, to its knowledge, that: (a) the Securities are, and/or upon issuance thereof will be, validly issued, fully paid and non-assessable; and (b) the Securities are, and/or upon issuance thereof will be, freely transferable without restriction under federal and state securities laws.