EXHIBIT 99.5
EXHIBIT E
ISRAELI SECURITY AGREEMENT
This ISRAELI SECURITY AGREEMENT, dated as of September 8, 2008 (this
"AGREEMENT"), is among Metalink Ltd., an Israeli corporation (the "COMPANY"),
and the holders of the Company's 10% Senior Secured Promissory Notes due
September 9, 2009, in the original aggregate principal amount of up to
$8,000,000 (collectively, the "NOTES") signatory hereto, their endorsees,
transferees and assigns (collectively, the "SECURED PARTIES").
W I T N E S S E T H:
WHEREAS, pursuant to the Loan Agreement (as defined in the Notes), the
Secured Parties have severally agreed to extend the loans to the Company
evidenced by the Notes;
WHEREAS, pursuant to a certain Subsidiary Guarantee, dated as of the date
hereof (the "GUARANTEE"), certain of the subsidiaries of the Company (the
"GUARANTORS") have jointly and severally agreed to guarantee and act as surety
for payment of such Notes; and
WHEREAS, in order to induce the Secured Parties to extend the loans
evidenced by the Notes, the Company 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 and through the Agent (as defined in Section 18
hereof), a security interest in certain property of the Company to secure the
prompt payment, performance and discharge in full of all of the Company's
obligations under the Notes and the Guarantors' obligations under the Guarantee.
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. As used in this Agreement, the following terms
shall have the meanings set forth in this Section 1.
(a) "COLLATERAL" means the Fixed Collateral and the Floating
Collateral.
(b) "FIXED COLLATERAL" means the Intellectual Property (defined
below), all the capital stock and other equity interests of the Company in
all of the subsidiaries of the Company (the "SUBSIDIARIES") and the other
rights and assets of the Company in which the Secured Parties are granted a
fixed security interest by this Agreement, all as listed in SCHEDULE D
hereto 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 (but
not the non-exclusive license) of the Fixed 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
aforesaid assets and rights.
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(c) "FLOATING COLLATERAL" means the collateral in which the Secured
Parties are granted a security interest by this Agreement and which shall
include all assets of the Company and all of the following personal
property of the Company, 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 Floating 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 of the Company'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 the Company), 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, intellectual property
(including Intellectual Property), income tax refunds and rights under
and deriving from the Property Tax and Compensation Fund Law,
5721-1961 with respect to the Floating Collateral;
(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;
(vi) All deposit accounts and all cash (whether or not deposited
in such deposit accounts);
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(vii) All investment property;
(viii) All supporting obligations; and
(ix) All files, records, books of account, business papers, and
computer programs; and
(x) the products and proceeds of all of the foregoing Floating
Collateral set forth in clauses (i)-(ix) above.
Without limiting the generality of the foregoing, the "FLOATING
COLLATERAL" shall include all investment property and general
intangibles respecting ownership and/or other equity interests in each
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 any other shares of capital stock and/or other equity interests of
any other direct or indirect subsidiary of the Company 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 and all rights arising under or in
connection with the Pledged Securities, including, but not limited to,
all dividends, interest and cash received on account thereof.
(d) "INTELLECTUAL PROPERTY" means the collective reference to all
rights, priorities and privileges relating to intellectual property of the
Company, whether arising under United States, Israeli, multinational or
foreign laws or otherwise, including, without limitation, (i) all
copyrights arising under the laws of the United States, Israeli, 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, Israel any other country or any political subdivision
thereof, all reissues and extensions thereof, and all applications for
letters patent of the United States, Israel 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, the Israel Patent
and Trademark Office or in any similar office or agency of the United
States, any State thereof, Israeli 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, Israel, 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.
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(e) "MAJORITY IN INTEREST" means, at any time of determination, the
majority in interest (based on then-outstanding principal amounts of Notes
at the time of such determination) of the Secured Parties.
(f) "NECESSARY ENDORSEMENT" means 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 liabilities and obligations
(primary, secondary, direct, contingent, sole, joint or several) due or to
become due, or that are now or may be hereafter contracted or acquired, or
owing to, of the Company to the Secured Parties under the Transaction
Documents, including, without limitation, all obligations under this
Agreement, the Notes, the Guarantee 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
Notes and the loans extended pursuant thereto; (ii) any and all other fees,
indemnities, costs, obligations and liabilities of the Company from time to
time under or in connection with this Agreement, the Notes, the Guarantee
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 the Company.
(h) "ORGANIZATIONAL DOCUMENTS" means with respect to the Company, the
documents by which the Company 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 the Company (such as bylaws, a
partnership agreement or an operating, limited liability or members
agreement).
(i) "PLEDGED INTERESTS" shall have the meaning ascribed to such term
in Section 4(j).
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(j) "PLEDGED SECURITIES" shall have the meaning ascribed to such term
in Section 4(i).
(k) "PORTFOLIO SECURITIES" means, collectively, portfolio securities
that are traded on a stock exchange or other public market and which are
(i) designated as "trading investments" on the Company's consolidated
financial statements, (ii) designated as "available for sale investments"
on the Company's consolidated financial statements, or (iii) otherwise
designated as investments on the Company's consolidated financial
statements. For the avoidance of doubt, the Portfolio Securities shall not
include the capital stock and other equity interests of the Subsidiaries.
2. GRANT OF SECURITY INTEREST IN COLLATERAL. (a) As an inducement for the
Secured Parties to extend the loans as evidenced by the Notes and to secure the
complete and timely payment, performance and discharge in full, as the case may
be, of all of the Obligations, the Company hereby unconditionally and
irrevocably pledges, grants and hypothecates to the Secured Parties a 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 (a "SECURITY INTEREST" and, collectively, the "SECURITY
INTERESTS"). The Security Interest with respect to the Fixed Collateral shall be
a first priority fixed charge. The Security Interest with respect to the
Floating Collateral shall be a first priority floating charge. The Company
specifically acknowledges that all of the Security Interests created by the
Company hereunder shall rank in priority to any other security interests created
by the Company with respect to the Collateral. For the avoidance of doubt, it is
hereby clarified that the fixed charge and the floating charge are in addition
to one another, and each of such charges shall independently serve as aforesaid
to secure the Obligations in their entirety. Without derogating from the
generality of the foregoing or from any other right of the Secured Parties, the
Secured Parties shall have the right to act on either of the charges, or on
both, in each case in connection with the Security Interest created by each
(including, without limitation, with respect to any and all Collateral subject
to both charges); and no action or omission relating to any such Security
Interest shall prevent or estop the Secured Parties from invoking such other
Security Interest, at the same time or subsequently, provided however, that the
Secured Parties shall only be entitled to receive payment of any amount owed to
them once, whether through acting on either charge or both.
(b) 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; 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. In addition, in no event shall Collateral include, and
Secured Parties shall not be deemed to have an interest in, any of the
Company's right, title or interest in: (a) any Intellectual Property if the
grant of such interest shall constitute or result in the abandonment,
invalidation or rendering unenforceable any right, title or interest of the
Company therein, (b) any license, contract or agreement to which the
Company is a party or any of its rights or interests thereunder to the
extent, but only to the extent, that such a grant would, under the terms of
such license, contract or agreement, or otherwise, result in a breach or
termination of the terms or, constitute a default under or termination of,
any such license, agreement or contract (other than to the extent that any
such term would be rendered ineffective pursuant to any applicable law or
principles of equity); provided that immediately upon the ineffectiveness,
lapse or termination of any such provision, the Collateral shall include,
and the Company shall be deemed to have granted a security interest in, all
such rights and interests as if such provision had never been in effect;
and (c) the authorized share capital of the Company (including treasury
shares); PROVIDED, HOWEVER, that the Company shall promptly notify the
Agent in the event that subsections (a) or (b) above are, or become,
relevant.
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(c) Notwithstanding anything to the contrary hereunder, the Security
Interests will be subordinated in right of payment to all indebtedness of
the Company set forth in SCHEDULE 2(C) attached hereto.
3. DELIVERY OF CERTAIN COLLATERAL. Contemporaneously or prior to the
execution of this Agreement, the Company 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, to the extent such delivery and
possession by the Agent is required under any applicable law to perfect the
Security Interests created hereby. The Company is, 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. The Company shall forthwith deliver or cause to be delivered
to the Agent any and all certificates and other instruments or documents
representing any of the other Collateral, which shall hereafter come into
existence or be acquired by the Company, in each case, together with all
Necessary Endorsements.
4. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF THE COMPANY.
Except as set forth under the corresponding section of the disclosure schedules
delivered to the Secured Parties concurrently herewith (the "DISCLOSURE
SCHEDULES"), which Disclosure Schedules shall be deemed a part hereof, the
Company represents and warrants to, and covenants and agrees with, the Secured
Parties as follows:
(a) The Company 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 the Company of this Agreement and the filings
contemplated therein have been duly authorized by all necessary corporate
action on the part of the Company and no further action is required by the
Company. This Agreement has been duly executed by the Company. This
Agreement constitutes the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization and similar laws of general application relating
to or affecting the rights and remedies of creditors.
(b) The Company has no place of business or offices where its
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 and
except to the extent any Collateral is in transit or located at a Company's
job site in the ordinary course of business. The Company owns no real
property. Except as disclosed on SCHEDULE A, none of the Collateral is in
the possession of any consignee, bailee, warehouseman, agent or processor.
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(c) Except for Permitted Liens (as defined in the Notes) and except as
set forth on SCHEDULE B attached hereto, the Company is the sole owner of
the Collateral (except for non-exclusive licenses granted by the Company in
the ordinary course of business and for those items of Collateral which are
leased or licensed from third parties), free and clear of any liens,
security interests, encumbrances, rights or claims, and are fully
authorized to grant the Security Interests. Except as set forth on SCHEDULE
C attached hereto, 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 as set forth on SCHEDULE C attached hereto and Permitted
Liens and except pursuant to the Transaction Documents, as long as this
Agreement shall be in effect, the Company shall not execute and shall not
knowingly permit to be on file in any such office or agency any other
financing statement, pledge 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 any
Company's use of any Collateral violates the rights of any third party.
There has been no adverse decision to the Company's claim of ownership
rights in or exclusive rights to use the Collateral in any jurisdiction or
to the Company'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 the Company, threatened before any court, judicial
body, administrative or regulatory agency, arbitrator or other governmental
authority.
(e) The Company 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 Fixed
Collateral unless it delivers to the Secured Parties at least 7 days prior
to such relocation (i) written notice of such relocation and the new
location thereof (which must be within the State of Israel) and (ii)
evidence that appropriate statements under applicable law and other
necessary documents, if legally required, have been filed and recorded and
other steps have been taken to perfect the Security Interests to create in
favor of the Secured Parties a valid, perfected and continuing perfected
first priority lien.
(f) This Agreement creates in favor of the Secured Parties a valid
security interest in the Collateral, subject only to Permitted Liens (as
defined in the Notes) securing the payment and performance of the
Obligations. Upon making the filings described in the immediately following
paragraph, all security interests created hereunder in any Collateral which
may be perfected by filing appropriate statements shall have been duly
perfected. Except for the filing of the statements referred to in the
immediately following paragraph, no action is necessary to create, protect
or perfect the Security Interests created hereunder. Without limiting the
generality of the foregoing, except for the filing of said statements, 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 Agent and the Secured Parties hereunder.
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(g) The Company hereby authorizes the Agent to file one or more
financing statements under applicable law, with respect to the Security
Interests, with the proper filing and recording agencies in any
jurisdiction deemed proper by it.
(h) The execution, delivery and performance of this Agreement by the
Company does not (i) violate any of the provisions of any Organizational
Documents of the Company or any judgment, decree, order or award of any
court, governmental body or arbitrator or any applicable law, rule or
regulation applicable to the Company or (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 the Company's debt or otherwise) or other understanding to
which the Company is a party or by which any property or asset of the
Company is bound or affected. If any, all required consents (including,
without limitation, from stockholders or creditors of the Company)
necessary for the Company to enter into and perform its obligations
hereunder have been obtained.
(i) The capital stock and other equity interests listed on SCHEDULE H
hereto (the "PLEDGED SECURITIES") represent all of the capital stock and
other equity interests of the Subsidiaries, and represent all capital stock
and other equity interests owned, directly or indirectly, by the Company,
other than Portfolio Securities. 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 and other Permitted Liens (as defined in the
Notes). Future purchases of capital stock and other equity interests
(subject to the Agent's approval or made pursuant to the provisions of the
Transaction Documents), other than Portfolio Securities, shall in addition
form part of the Fixed Collateral and shall be charged by way of additional
fixed charge, with Schedule D to be amended accordingly and submitted to
and registered with the Israeli Registrar of Companies, in each case, on
one or more occasions at such time(s) as the Agent may request, at the
Agent's discretion. Without derogating from the above, upon the Agent's
reasonable request, on one or more occasions at the Agent's discretion,
Schedule D hereto shall be replaced or supplemented from time to time to
reflect any addition of such assets as aforesaid, such replacement or
supplemented Schedule D to be automatically incorporated herein and
constitute an integral part hereof, with no need to otherwise amend 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") are not held in a securities account or by any
financial intermediary.
(k) Except for Permitted Liens (as defined in the Notes), the Company
shall at all times maintain the liens and Security Interests provided for
hereunder as valid and perfected first priority 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 14 hereof. The Company hereby agrees to defend the same against
the claims of any and all persons and entities. The Company shall safeguard
and protect all Collateral for the account of the Secured Parties. At the
request of the Agent, the Company will sign and deliver to the Agent on
behalf of the Secured Parties at any time or from time to time one or more
statements pursuant to applicable law in form reasonably satisfactory to
the Agent and will pay the cost of filing the same in all public offices
wherever filing is, or is deemed by the Agent to be, reasonably necessary
or desirable to effect the rights and obligations provided for herein
(including with the Israeli Registrar of Companies). Without limiting the
generality of the foregoing, the Company shall pay all fees, taxes and
other amounts necessary to maintain the Collateral and the Security
Interests hereunder, and the Company shall obtain and furnish to the Agent
from time to time, upon demand, such releases and/or subordinations of
claims and liens which may be reasonably required to maintain the priority
of the Security Interests hereunder. The Company undertakes to file the
applicable documents for the registration of the Security Interests with
the Israeli Registrar of Companies, and any other relevant registrar or
government office, within 10 days and make its reasonable best efforts to
receive the registration certificates as soon as possible thereafter.
(l) Except for Permitted Liens (as defined in the Notes), the Company
will not (i) transfer, pledge, hypothecate, encumber, license, sell, pledge
or otherwise dispose of, or give any other rights in, any of the Fixed
Collateral (except for non-exclusive licenses granted by the Company in its
ordinary course of business and sales of inventory by the Company in its
ordinary course of business), (ii) pledge, encumber, or otherwise place a
lien on any of the Floating Collateral (except for non-exclusive licenses
granted by the Company in its ordinary course of business and sales of
inventory by the Company in its ordinary course of business), or (iii) make
any Distribution (as such term in Hebrew (HALUKA) is defined in the Israeli
Companies Law of 1999) - all without the prior written consent of a
Majority in Interest.
(m) The Company shall keep and preserve its equipment, inventory and
other tangible Collateral in good condition, repair and order (ordinary
wear and tear excepted) and shall not operate or locate any such Collateral
(or cause to be operated or located) in any area excluded from insurance
coverage, other than, in the case of Floating Collateral, in the ordinary
course and consistent with past practices.
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(n) The Company shall maintain with financially sound and reputable
insurers, insurance with respect to the Collateral, including Collateral
hereafter acquired, against loss or damage of the kinds and in the amounts
customarily insured against by entities 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. The Company shall use its 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
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 Notes) exists and if the
proceeds arising out of any claim or series of related claims do not exceed
$100,000 at a time when no Event of Default otherwise exists, loss payments
in each instance will be applied by the Company 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 Company;
PROVIDED, HOWEVER, that payments received by the Company after an Event of
Default occurs and is continuing or in excess of $100,000 for any
occurrence or series or related occurrences shall be, unless prohibited by
applicable law, paid to the Agent on behalf of the Secured Parties and, if
received by the Company, shall be held in trust for the Secured Parties
and, subject to applicable law, immediately paid over to the Agent unless
otherwise directed in writing by the Agent or required by law. 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) The Company shall, within ten (10) days of obtaining knowledge
thereof, advise the Secured Parties promptly, in sufficient detail, of any
material adverse 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, through the Agent,
therein.
(p) The Company shall promptly execute and deliver to the Agent such
further deeds, mortgages, assignments, security agreements, statements or
other instruments, documents, certificates and assurances and take such
further action as the Agent may from time to time reasonably request to
perfect, protect or enforce the Secured Parties' security interest in the
Collateral including, without limitation, if applicable, the execution and
delivery of a separate security agreement with respect to the Company's
Intellectual Property ("INTELLECTUAL PROPERTY SECURITY AGREEMENT") in which
the Secured Parties have been granted a security interest hereunder,
substantially in a form reasonably acceptable to the Agent, which
Intellectual Property Security Agreement, other than as stated therein,
shall be subject to all of the terms and conditions hereof.
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(q) The Company shall permit the Agent and its representatives and
agents to inspect the Collateral during normal business hours and upon
reasonable prior notice, and to make copies of records pertaining to the
Collateral as may be reasonably requested by the Agent from time to time.
(r) The Company 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) The Company 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 the Company that may materially adversely
affect the value of the Collateral, the Security Interest or the rights and
remedies of the Secured Parties hereunder.
(t) All information heretofore, herein or hereafter supplied to the
Secured Parties by or on behalf of the Company with respect to the
Collateral is true and accurate in all material respects as of the date
furnished.
(u) The Company shall at all times preserve and keep in full force and
effect its valid existence and any rights and franchises material to its
business.
(v) The Company will not 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 (including a "d/b/a" or "SHEM ESEK") unless it provides at
least 21 days prior written notice to the Secured Parties of such change
and, at the time of such written notification, the Company provides any
statements or fixture filings necessary to perfect and continue the
perfection of the Security Interests granted and evidenced by this
Agreement.
(w) Except in the ordinary course of business, the Company may not
consign any of its inventory or sell any of its inventory on ▇▇▇▇ and hold,
sale or return, sale on approval, or other conditional terms of sale
without the consent of the Agent which shall not be unreasonably withheld.
(x) The Company may not 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, the Company provides any statements or filings necessary to
perfect and continue the perfection of the Security Interests granted and
evidenced by this Agreement.
(y) The Company was organized and remains organized solely under the
laws of the State of Israel, and the Company's organizational
identification number is ▇▇-▇▇▇▇▇▇-▇.
11
(z) (i) The actual name of the Company is as stated in the preamble
hereto; (ii) the Company does not have any trade names, "d/b/a"s or "SHEMOT
ESEK" except as set forth on SCHEDULE E attached hereto; (iii) the Company
has not 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 the Company or been acquired by the Company 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 possession
by the secured party to perfect the security interest created hereby, the
Company shall deliver such Collateral to the Agent.
(bb) The Company, in its capacity as issuer, hereby agrees to comply
with any and all reasonable orders and instructions of Agent regarding the
Pledged Interests consistent with the terms of this Agreement. Further, the
Company and each Additional Debtor agrees that it shall not enter into a
similar agreement (or one that would confer control of the Pledged
Interests) with any other person or entity.
(cc) The Company 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, provided such delivery or legend is required under any
applicable law in order to perfect or protect the security interest created
hereby. To the extent that any Collateral consists of electronic chattel
paper, the Company shall cause the underlying chattel paper to be marked.
(dd) Intentionally Omitted.
(ee) To the extent that any Collateral consists of letter-of-credit
rights, the Company shall cause the issuer of each underlying letter of
credit to consent, to the extent such consent is required, 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 Company shall join with the Agent in notifying such third
party of the Secured Parties' security interest in such Collateral.
(gg) If the Company shall at any time hold or acquire a commercial
tort claim, the Company shall promptly notify the Secured Parties in a
writing signed by the Company of the particulars thereof and, subject to
applicable law, 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 Agent.
(hh) The Company shall promptly 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 Interests in such accounts and
proceeds thereof, shall execute and deliver to the Agent an assignment of
claims for such accounts and cooperate with the Agent in taking any other
steps required, in its reasonable judgment, under any applicable statute or
rule to perfect or continue the perfected status of the Security Interests
in such accounts and proceeds thereof.
12
(ii) The Company shall cause each subsidiary of the Company formed in
the State of Israel to immediately become a party hereto (an "ADDITIONAL
DEBTOR"), by executing and delivering an Additional Debtor Joinder in
substantially the form of ANNEX A attached hereto and comply with the
provisions hereof applicable to the Company. 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, incumbency
certificates, organizational documents, financing statements and other
information and documentation as the Agent may reasonably request. Upon
delivery of the foregoing to the Agent, the Additional Debtor shall be and
become a party to this Agreement with the same rights and obligations as
the Company, 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
applicable 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 "Company" shall be deemed to include each
Additional Debtor.
(jj) The Company shall vote the Pledged Securities to comply with the
covenants and agreements set forth herein and in the Notes.
(kk) The Company shall register the pledge of the applicable Pledged
Securities with the Israeli Registrar of Companies and, to the extent
required under applicable law, on the books of the Company or the
Additional Debtor - both within 10 days -- and on its pledge register. The
Company 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, the Company shall deliver to
Agent an acknowledgement of pledge (which, where appropriate, shall comply
with the requirements of applicable law 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) to the extent permitted pursuant to
applicable law - 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 Company.
13
(ll) In the event that, upon an occurrence of an Event of Default,
Agent shall be permitted pursuant to applicable law to sell all or any of
the Pledged Securities to another party or parties (herein called the
"TRANSFEREE") or to purchase or retain all or any of the Pledged
Securities, the Company 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 Company and its direct and indirect subsidiaries; (ii) use
its best efforts to obtain resignations of the persons then serving as
officers and directors of the Company and its 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 by Agent and allow the
Transferee or Agent to continue the business of the Company and its direct
and indirect subsidiaries.
(mm) Without limiting the generality of the other obligations of the
Company hereunder, the Company shall promptly (i) 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 or the Israel Patent and Trademark Office to be duly
recorded at the applicable office and at the Israeli Registrar of
Companies, (ii) cause the Israeli Office of the Chief Scientist to consent
to the registration of the Security Interests contemplated hereby with
respect to Intellectual Property of the Company that was supported by
grants from the Israeli Office of the Chief Scientist, and (iii) give the
Agent notice whenever it acquires (whether absolutely or by license) or
creates any additional material Intellectual Property.
(nn) The Company will from time to time, at the expense of the
Company, promptly execute and deliver all such further instruments and
documents, and take all such further action as may be necessary, or as the
Agent 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 the Company as of the date hereof. SCHEDULE F
lists all material licenses in favor of the Company for the use of any
patents, trademarks, copyrights and domain names as of the date hereof. All
material patents and trademarks of the Company have been duly recorded, or
are in the process of recording, at the United States Patent and Trademark
Office, and all material copyrights of the Company have been duly recorded,
or are in the process of recording, 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.
14
5. EFFECT OF PLEDGE ON CERTAIN RIGHTS. (a) 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 be modified so as to 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 the Company is
subject or to which the Company is party.
(b) The Secured Parties acknowledge and agree that certain of the
Collateral may have been developed with the assistance of funds received
from the Israeli Office of the Chief Scientist and consequently the use,
transfer, sale and foreclosure of such Collateral is subject to the Law for
the Encouragement of Industrial Research and Development, 5744-1984, as
amended or supplemented from time to time and all rules and regulations
issued thereunder (the "R&D LAW") and, in enforcing their rights hereunder,
the Secured Parties undertake to comply with the R&D Law.
6. DEFAULTS. The following events shall be "EVENTS OF DEFAULT":
(a) The occurrence of an Event of Default (as defined in the Notes)
under the Notes;
(b) Any representation or warranty of the Company in this Agreement
and/or the US Security Agreement shall prove to have been incorrect in any
material respect when made;
(c) The failure by the Company to observe or perform any of its
obligations hereunder and/or under the US Security Agreement for five (5)
days after delivery to the Company of written 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 the Company 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 the Company, or a proceeding shall be
commenced by the Company, or by any governmental authority having
jurisdiction over the Company, seeking to establish the invalidity or
unenforceability thereof, or the Company shall deny that the Company 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 until such Event of Default is cured, the Company shall, upon
receipt of any revenue, income, dividend, interest or other sums subject to
the Security Interests, whether payable pursuant to the Notes 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, subject to applicable law, forthwith endorse
and transfer any such sums or instruments, or both, to the Secured Parties,
pro-rata in proportion to their respective then-currently outstanding
principal amount of Notes for application to the satisfaction of the
Obligations (and if any Note is not outstanding, pro-rata in proportion to
the initial Lenders of the remaining Notes).
15
(b) If the Company 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
the Company 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), the Company agrees
to (i) accept the same as the agent of the Secured Parties; (ii) upon the
occurrence of any Event of Default and at any time thereafter, hold the
same in trust on behalf of and for the benefit of the Secured Parties;
(iii) to deliver any and all certificates or instruments evidencing the
same to Agent on or before the close of business on the seventh (7th)
business day following the receipt thereof by the Company, in the exact
form received, together with the Necessary Endorsements and (iv) file any
notifications that need to be filed with the Israeli Registrar of
Companies, to be held and/or filed by Agent subject to the terms of this
Agreement as Collateral.
8. RIGHTS AND REMEDIES UPON DEFAULT.
(a) Upon the occurrence of any Event of Default and at any time
thereafter until such Event of Default is cured, the Secured Parties,
acting through the Agent, shall have the right to exercise all of the
remedies conferred hereunder and under the Notes, and the Secured Parties
shall have all the rights and remedies of a secured party under applicable
law. Without limitation, the Agent, for the benefit of the Secured Parties,
shall have the following rights and powers, all of which shall be conducted
pursuant to applicable law (including, without limitation, Israeli law
regarding the process for realization and foreclosure of security
interests):
(i) The Agent 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 the Company shall
assemble the Collateral and make it available to the Agent at places
which the Agent shall reasonably select, whether at the Company's
premises or elsewhere, and make available to the Agent, without rent,
all of the Company's respective premises and facilities for the
purpose of the Agent taking possession of, removing or putting the
Collateral in saleable or disposable form.
(ii) Upon notice to the Company by Agent, all rights of the
Company to exercise the voting and other consensual rights which it
would otherwise be entitled to exercise and all rights of the Company
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, for the benefit of the Secured
Parties, 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 the Company or any of its direct or
indirect subsidiaries.
16
(iii) The Agent shall have the right to operate the business of
the Company 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, 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 Agent 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 the Company or right of
redemption of the Company, which are hereby expressly waived. Upon
each such sale, lease, assignment or other transfer of Collateral, the
Agent, for the benefit of the Secured Parties, may, unless prohibited
by applicable law which cannot be waived, purchase all or any part of
the Collateral being sold, free from and discharged of all trusts,
claims, right of redemption and equities of the Company, which are
hereby waived and released.
(iv) The Agent 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 Agent, on behalf of the
Secured Parties, and to enforce the Company's rights against such
account debtors and obligors.
(v) The Agent, for the benefit of the Secured Parties, may (but
is not obligated to) direct any financial intermediary or any other
person or entity holding any investment property to transfer the same
to the Agent, on behalf of the Secured Parties, or its designee.
(vi) The Agent may (but is not obligated to) transfer any or all
Intellectual Property registered in the name of the Company at the
United States Patent and Trademark Office and/or Copyright Office
and/or Israeli Patent and Trademark Office into the name of the
Secured Parties or any designee or any purchaser of any Collateral,
subject to Section 5(b) above.
(b) The Agent shall 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 Company will only be credited with payments
actually made by the purchaser. In addition, the Company waives, to the
extent permitted by applicable law, 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 rights
following an Event of Default to take immediate possession of the
Collateral and to exercise its rights and remedies with respect thereto.
17
(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, the Company 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 the
Company) to use, license or sublicense, following an Event of Default, any
Intellectual Property now owned or hereafter acquired by the Company, 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.
(d) For the purpose of Sections 8, 9, 10, 11 and 15, the term "Agent"
shall be deemed to include any receiver, temporary receiver, liquidator,
temporary liquidator, trustee or any other similar functionary duly
appointed with respect to the Collateral according to applicable law.
9. APPLICATIONS OF PROCEEDS. The proceeds of any such sale, lease or other
disposition of the Collateral hereunder or from payments made on account of any
insurance policy insuring any portion of the Collateral shall be applied,
subject to applicable law, in the following order: (i) 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 Agent in enforcing the Secured Parties' rights
hereunder and in connection with collecting, storing and disposing of the
Collateral, and (ii) then to satisfaction of the Obligations pro rata among the
Secured Parties (based on then-outstanding principal amounts of Notes at the
time of any such determination), and to the payment of any other amounts
required by applicable law, after which the Secured Parties shall pay to the
Company 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 Company will be liable for
the deficiency, together with interest thereon, at the rate of 15% 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, the Company 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.
18
10. SECURITIES LAW PROVISION. The Company 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 United States
Securities Act of 1933, as amended, the Israeli Securities Law of 1968 or other
federal, state or foreign 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. The Company agrees that, subject to applicable law (including,
without limitation, Israeli law regarding the process for realization and
foreclosure of security interests), 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. The Company 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. The Company agrees to bear 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, any filings with the Israeli Registrar of Companies, the
United States Patent and Trademark Office and/or Copyright Office and/or Israeli
Patent and Trademark Office, continuation statements, partial releases and/or
termination statements related thereto or any expenses of any searches
reasonably required by the Agent. The Company shall also pay all other claims
and charges which in the reasonable opinion of the Agent is reasonably likely to
prejudice, imperil or otherwise affect the Collateral or the Security Interests
therein. The Company will also, upon demand, pay to the Agent 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 Agent, for the benefit of the
Secured Parties, may incur in connection with the perfection, protection,
satisfaction, foreclosure, collection or enforcement of the Security Interest
and the preparation, administration, continuance, amendment or enforcement of
this Agreement and pay to the Agent 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 Agent, for the benefit of the Secured Parties, and
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 Notes. Until
so paid, any fees payable hereunder and not paid seven days following written
demand, shall be added to the principal amount of the Notes and shall bear
interest at the Default Rate.
12. RESPONSIBILITY FOR COLLATERAL. The Company assumes 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 (b) the Company shall remain obligated and liable under
each contract or agreement included in the Collateral to be observed or
performed by the Company 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 the Company 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.
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13. SECURITY INTERESTS ABSOLUTE. All rights of the Secured Parties and all
obligations of the Company hereunder, shall be absolute and unconditional,
irrespective of: (a) any lack of validity or enforceability of this Agreement,
the Notes 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 Notes 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 guarantee, 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 the Company, or
a discharge of all or any part of the Security Interests granted hereby (except
if, and to the extent, attributable to the Secured Parties' gross negligence or
willful misconduct). 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. The Company expressly waives presentment,
protest, notice of protest, demand, notice of nonpayment and demand for
performance, except as provided herein or in the Notes. 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 State of Israel, or shall be deemed to
be otherwise due to any party other than the Secured Parties, then, in any such
event, the Company'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. The
Company waives, if such waiver is permitted by applicable law, 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. The Company waives, if such
waiver is permitted by applicable law, 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 Interests shall
terminate on the date on which all payments under the Notes have been
indefeasibly paid in full and all other Obligations have been paid or discharged
(other than indemnity and other contingent obligations, unless such are
actionable at the time such other Obligations have been paid or discharged);
provided, however, that (i) all indemnities of the Company 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 and (ii) the Secured Parties and the Agent shall, at the
Company's expense, return all property, documents and the like to the Company
and cooperate with the Company to cancel any such Security Interests, including
without limitation, execution of all reasonably requested documents and
termination statements to effect such cancellation and release of the Security
Interests.
20
15. POWER OF ATTORNEY; FURTHER ASSURANCES.
(a) To the extent permitted by applicable law (including, without
limitation, Israeli law regarding the process for realization and
foreclosure of security interests), the Company authorizes the Agent, and
does hereby make, constitute and appoint the Agent and its officers,
agents, successors or assigns with full power of substitution, as the
Company's true and lawful attorney-in-fact, with power, in the name of the
Agent or the Company, 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 Agent; (ii) to sign and endorse any financing
statement pursuant to the UCC, any notification to the Israeli Registrar of
Companies, to the United States Copyright Office, to the United States
Patent and Trademark Office and to the Israeli Patent and Trademark Office
or any invoice, freight or express ▇▇▇▇, ▇▇▇▇ 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 ▇▇▇ for monies due in respect of the Collateral; (v) to transfer any
Intellectual Property or provide licenses respecting any Intellectual
Property; and (vi) generally, at the option of the Agent, and at the
expense of the Company, 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 Agent deems necessary to protect, preserve and realize upon the
Collateral and the Security Interests granted therein in order to effect
the intent of this Agreement and the Notes all as fully and effectually as
the Company might or could do; and the Company 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 and the Agent and its officers, agents, successors or
assigns may perform all of such actions permitted hereunder for the benefit
of the Agent and the Secured Parties. Without limiting the generality of
the foregoing, solely after the occurrence and during the continuance of an
Event of Default, the Agent, on behalf of the Secured Parties, 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, the Israeli Patent and Trademark Office and the United
States Copyright Office.
21
(b) On a continuing basis, the Company 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 Agent, to perfect
the Security Interests granted hereunder and otherwise to carry out the
intent and purposes of this Agreement, or for assuring and confirming to
the Agent the grant or perfection of a perfected security interest in all
the Collateral under applicable law.
(c) The Company hereby irrevocably appoints the Agent as the Company's
attorney-in-fact, with full authority in the place and instead of the
Company and in the name of the Company, from time to time in the Agent's
discretion, to take any action and to execute any instrument which the
Agent 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 the Company 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 Agent. 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, and the Agent and its officers, agents, successors or assigns
may perform all of such actions permitted hereunder for the benefit of the
Agent and the Secured Parties. Such appointment to take place immediately
and automatically upon the occurrence of an Event of Default.
16. NOTICES. All notices, requests, demands and other communications
hereunder shall be subject to the notice provision of the Loan Agreement (as
such term is defined in the Notes).
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
Agent shall have subject to applicable law (including, without limitation,
Israeli law regarding the process for realization and foreclosure of security
interests) 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 AGENT. The Secured Parties hereby appoint Enable Growth
Partners LP to act as their agent ("ENABLE" or "AGENT") for purposes of
exercising any and all rights and remedies of the Secured Parties hereunder. By
executing the signature page hereto, Enable accepts such appointment. Such
appointment shall continue until revoked in writing by a Majority in Interest,
at which time a Majority in Interest shall appoint a new Agent, provided that
Enable may not be removed as Agent unless Enable shall then hold less than
$200,000 in principal amount of Notes; PROVIDED, FURTHER, that such removal may
occur only if each of the other Secured Parties shall then hold not less than an
aggregate of $200,000 in principal amount of Notes. The Agent shall have the
rights, responsibilities and immunities set forth in ANNEX B hereto.
22
19. MISCELLANEOUS.
(a) No course of dealing between the Company 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
Notes 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.
(b) All of the rights and remedies of the Secured Parties with respect
to the Collateral, whether established hereby or by the Notes or by any
other agreements, instruments or documents or by law shall be cumulative
and may be exercised singly or concurrently.
(c) This Agreement, together with the exhibits and schedules hereto,
contain the entire understanding of the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, oral
or written, with respect to such matters, which the parties acknowledge
have been merged into this Agreement and the exhibits and schedules hereto.
Except as expressly set forth herein, no provision of this Agreement may be
waived, modified, supplemented or amended except in a written instrument
signed, in the case of an amendment, by the Company and the Majority in
Interest or, in the case of a waiver, by the party against whom enforcement
of any such waived provision is sought.
(d) If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction to be invalid, illegal, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and
shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their commercially reasonable efforts to find and employ
an alternative means to achieve the same or substantially the same result
as that contemplated by such term, provision, covenant or restriction. It
is hereby stipulated and declared to be the intention of the parties that
they would have executed the remaining terms, provisions, covenants and
restrictions without including any of such that may be hereafter declared
invalid, illegal, void or unenforceable.
(e) No waiver of any default with respect to any provision, condition
or requirement of this Agreement shall be deemed to be a continuing waiver
in the future or a waiver of any subsequent default or a waiver of any
other provision, condition or requirement hereof, nor shall any delay or
omission of any party to exercise any right hereunder in any manner impair
the exercise of any such right.
23
(f) This Agreement shall be binding upon and inure to the benefit of
the parties and their successors and permitted assigns. The Company may not
assign this Agreement or any rights or obligations hereunder without the
prior written consent of each Secured Party (other than by merger). Any
Secured Party may assign any or all of its rights under this Agreement to
any Person (as defined in the Loan Agreement) to whom such Secured Party
assigns or transfers any Obligations, provided such transferee agrees in
writing (and provides a copy thereof to the Company) to be bound, with
respect to the transferred Obligations, by the provisions of this Agreement
that apply to the "Secured Parties."
(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) GOVERNING LAW. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be
exclusively governed by and construed and enforced in accordance with, and
any dispute between the parties relating to or arising from this Agreement
shall be exclusively governed by, the internal laws of the State of Israel,
without regard to the principles of conflicts of law thereof. Each party
hereby irrevocably agrees and submits to the exclusive jurisdiction of the
courts located in the Tel Aviv District of the State of Israel, for any
suit, action or proceeding, and each party hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it
is not personally subject to the jurisdiction of such courts, or that such
suit, action or proceeding is an inconvenient venue. Each party hereby
irrevocably waives personal service of process and consents to process
being served in any such suit, action or 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 other manner permitted by law.
(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) Additional Debtors and the Company shall jointly and severally be
liable for the obligations of each Additional Debtor and the Company to the
Secured Parties hereunder.
24
(k) The Company shall indemnify, reimburse and hold harmless the Agent
and the Secured Parties and their respective partners, members,
shareholders, officers, directors, employees and agents (and any other
persons with other titles that have similar functions) (collectively,
"INDEMNITEES") from and against any and all losses, claims, liabilities,
damages, penalties, suits, costs and expenses, of any kind or nature,
(including reasonable 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 Notes, the Loan
Agreement (as such term is defined in the Notes) or any other agreement,
instrument or other document executed or delivered in connection herewith
or therewith (including the Transaction Documents).
(l) Nothing in this Agreement shall be construed to subject Agent or
any Secured Party to liability as a partner in the Company or any if its
direct or indirect subsidiaries that is a partnership or as a member in the
Company or any of its direct or 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 the Company or any of its
direct or indirect subsidiaries or otherwise, unless and until any such
Secured Party exercises its right to be substituted for the Company 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 the Company
or any direct or indirect subsidiary of the Company or compliance with any
provisions of any of the Organizational Documents, the Company hereby grant
such consent and approval and waive any such noncompliance with the terms
of said documents.
(n) Except as expressly set forth in the Transaction Documents: (i)
the Company shall not be entitled to discharge any amount of the loans as
evidenced by the Notes prior to the agreed date for payment thereof; and
(ii) neither the Company nor any third party having a right liable to be
affected by the charges hereby created or the realization thereof shall
have any right under Section 13(b) of the Pledges Law, 5727-1967 (as
amended) or any other statutory provisions in substitution therefor.
[SIGNATURE PAGES FOLLOW]
25
IN WITNESS WHEREOF, the parties hereto have caused this Israeli Security
Agreement to be duly executed on the day and year first above written.
METALINK LTD.
By:_____________________________
Name:
Title:
[SIGNATURE PAGE OF HOLDERS FOLLOWS]
26
[SIGNATURE PAGE OF HOLDERS TO MTLK ISRAELI SA]
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
SCHEDULE A
Principal Place of Business of the Company:
_____________
Israel
Locations Where Collateral is Located or Stored:
SCHEDULE B
SCHEDULE C
SCHEDULE D
List of Fixed Collateral
SCHEDULE E
Names; Mergers and Acquisitions
SCHEDULE F
Intellectual Property
SCHEDULE G
Account Debtors
SCHEDULE H
Pledged Securities
28
ANNEX A
TO
ISRAELI SECURITY
AGREEMENT
FORM OF ADDITIONAL DEBTOR JOINDER
Israeli Security Agreement dated as of September ___, 2008 made by
Metalink Ltd., as debtor
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 Company 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 therein as of the date
of execution and delivery of this Additional Debtor Joinder, except as set forth
in the Additional Debtor Disclosure Schedule attached hereto (which shall be
subject to the approval of the Agent). 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.
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.
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:
ANNEX B
TO
ISRAELI 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 Enable
Growth Partners LP ("ENABLE" or "AGENT") as the Agent to act as specified herein
and in 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
Loan Agreement) 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
misconduct 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 the Company 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 or imposed by applicable law.
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 Company and its subsidiaries in connection with
such Secured Party's investment in the Company, 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 Company 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 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 Company 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 Company 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 Company, 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 Notes 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 at Agent's sole discretion, 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 a Majority in Interest; 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 Company 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. Anything to the contrary notwithstanding, the
Agent shall have no obligation whatsoever to any Secured Party to assure that
the Collateral exists or is owned by the Company or is cared for, protected or
insured or that the liens granted pursuant to the Agreement have been properly
or sufficiently or lawfully created, perfected, or enforced or are entitled to
any particular priority.
6. INDEMNIFICATION. To the extent that the Agent is not reimbursed and
indemnified by the Company, the Secured Parties will jointly and severally
reimburse and indemnify the Agent, in proportion to their initially respective
principal amounts of Notes, 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 Company 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 Company 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 Company 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. Upon
the acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent and the retiring
Agent shall be discharged from its duties and obligations under the Agreement.
After any retiring Agent's resignation or removal hereunder as Agent, the
provisions of the Agreement including this Annex B shall inure to its benefit as
to any actions taken or omitted to be taken by it while it was Agent.
9. NOTICES. All notices, requests, demands and other communications
hereunder to Agent shall be made and directed as provided in the Loan Agreement.