Exhibit 10.59
INTELLECTUAL PROPERTY SECURITY AGREEMENT
INTELLECTUAL PROPERTY SECURITY AGREEMENT (this "AGREEMENT"
dated as of February 13, 2007, by and among Midnight Holdings Group, Inc., a
Delaware corporation (the "COMPANY"), and the secured parties signatory hereto
and their respective endorsees, transferees and assigns (collectively, the
"SECURED PARTY").
W I T N E S S E T H :
WHEREAS, pursuant to a Securities Purchase Agreement, dated the date
hereof, between Company and the Secured Party (the "PURCHASE AGREEMENT"),
Company has agreed to issue to the Secured Party and the Secured Party has
agreed to purchase from Company certain of Company's 10% Secured Convertible
Notes, due three years from the date of issue (the "NOTES"), which are
convertible into shares of Company's Common Stock, par value $.00005 per share
(the "COMMON STOCK"). In connection therewith, Company shall issue the Secured
Party certain Common Stock purchase warrants dated as of the date hereof to
purchase the number of shares of Common Stock indicated below each Secured
Party's name on the Purchase Agreement (the "WARRANTS"); and
WHEREAS, in order to induce the Secured Party to purchase the Notes,
Company has agreed to execute and deliver to the Secured Party this Agreement
for the benefit of the Secured Party and to grant to it a first priority
security interest in certain Intellectual Property (defined below) of Company to
secure the prompt payment, performance and discharge in full of all of Company's
obligations under the Notes and exercise and discharge in full of Company's
obligations under the Warrants; and
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. DEFINED TERMS. Unless otherwise defined herein, terms which are
defined in the Purchase Agreement and used herein are so used as so defined; and
the following terms shall have the following meanings:
"SOFTWARE INTELLECTUAL PROPERTY" shall mean:
(a) all software programs (including all source code, object code
and all related applications and data files), whether now owned, upgraded,
enhanced, licensed or leased or hereafter acquired by the Company, above;
(b) all computers and electronic data processing hardware and
firmware associated therewith;
(c) all documentation (including flow charts, logic diagrams,
manuals, guides and specifications) with respect to such software, hardware and
firmware described in the preceding clauses (a) and (b); and
(d) all rights with respect to all of the foregoing, including,
without limitation, any and all upgrades, modifications, copyrights, licenses,
options, warranties, service contracts, program services, test rights,
maintenance rights, support rights, improvement rights, renewal rights and
indemnifications and substitutions, replacements, additions, or model
conversions of any of the foregoing.
"COPYRIGHTS" shall mean (a) all copyrights, registrations and
applications for registration, ISSUED or filed, including any reissues,
extensions or renewals thereof, by or with the United States Copyright Office or
any similar office or agency of the United States, any state thereof, or any
other country or political subdivision thereof, or otherwise, including, all
rights in and to the material constituting the subject matter thereof,
including, without limitation, any referred to in SCHEDULE B hereto, and (b) any
rights in any material which is copyrightable or which is protected by common
law, United States copyright laws or similar laws or any law of any State,
including, without limitation, any thereof referred to in SCHEDULE B hereto.
"COPYRIGHT LICENSE" shall mean any agreement, written or oral,
providing for a grant by the Company of any right in any Copyright, including,
without limitation, any thereof referred to in SCHEDULE B hereto.
"INTELLECTUAL PROPERTY" shall means, collectively, the Software
Intellectual Property, Copyrights, Copyright Licenses, Patents, Patent Licenses,
Trademarks, Trademark Licenses and Trade Secrets.
"OBLIGATIONS" means all of the Company's obligations under this
Agreement and the Notes, 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 decreased, 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 the Secured Party as a preference, fraudulent
transfer or otherwise as such obligations may be amended, supplemented,
converted, extended or modified from time to time.
"PATENTS" shall mean (a) all letters patent of the United States or
any other country or any political subdivision thereof, and all reissues and
extensions thereof, including, without limitation, any thereof referred to in
SCHEDULE B hereto, and (b) all applications for letters patent of the United
States and all divisions, continuations and continuations-in-part thereof or any
other country or any political subdivision, including, without limitation, any
thereof referred to in SCHEDULE B hereto.
"PATENT LICENSE" shall mean all agreements, whether written or oral,
providing for the grant by the Company of any right to manufacture, use or sell
any invention covered by a Patent, including, without limitation, any thereof
referred to in SCHEDULE B hereto.
"SECURITY AGREEMENT" shall mean the a Security Agreement, dated the
date hereof between Company and the Secured Party.
"TRADEMARKS" shall mean (a) all trademarks, trade names, corporate
names, company names, business names, fictitious business names, trade styles,
service marks,
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logos and other source or business identifiers, and the goodwill associated
therewith, now existing or hereafter adopted or acquired, all registrations and
recordings thereof, and all applications in connection therewith, whether in the
United States Patent and Trademark Office or in any similar office or agency of
the United States, any state thereof or any other country or any political
subdivision thereof, or otherwise, including, without limitation, any thereof
referred to in SCHEDULE B hereto, and (b) all reissues, extensions or renewals
thereof.
"TRADEMARK LICENSE" shall mean any agreement, written or oral,
providing for the grant by the Company of any right to use any Trademark,
including, without limitation, any thereof referred to in SCHEDULE B hereto.
"TRADE SECRETS" shall mean common law and statutory trade secrets
and all other confidential or proprietary or useful information and all know-how
obtained by or used in or contemplated at any time for use in the business of
the Company (all of the foregoing being collectively called a "TRADE SECRET"),
whether or not such Trade Secret has been reduced to a writing or other tangible
form, including all documents and things embodying, incorporating or referring
in any way to such Trade Secret, all Trade Secret licenses, including each Trade
Secret license referred to in SCHEDULE B hereto, and including the right to ▇▇▇
for and to enjoin and to collect damages for the actual or threatened
misappropriation of any Trade Secret and for the breach or enforcement of any
such Trade Secret license.
2. GRANT OF SECURITY INTEREST. In accordance with Section 3(m) of the
Security Agreement, 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 Party, a continuing security interest in, a continuing first lien upon,
an unqualified right to possession and disposition of and a right of set-off
against, in each case to the fullest extent permitted by law, all of the
Company's right, title and interest of whatsoever kind and nature in and to the
Intellectual Property (the "SECURITY INTEREST").
3. REPRESENTATIONS AND WARRANTIES. The Company hereby represents and
warrants, and covenants and agrees with, the Secured Party as follows:
(a) The Company has the requisite corporate power and authority to
enter into this Agreement and otherwise to carry out its obligations thereunder.
The execution, delivery and performance by the Company of this Agreement and the
filings contemplated therein have been duly authorized by all necessary action
on the part of the Company and no further action is required by the Company.
This Agreement constitutes a legal, valid and binding obligation of the Company
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditor's rights generally.
(b) The Company represents and warrants that it 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 the Intellectual Property is stored or located, except as has been
disclosed to the Secured Party;
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(c) Except as set forth on SCHEDULE 3(C), the Company is the sole
owner of the Intellectual Property (except for non-exclusive licenses granted by
the Company in the ordinary course of business), free and clear of any liens,
security interests, encumbrances, rights or claims, and is fully authorized to
grant the Security Interest in and to pledge the Intellectual Property. 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 have been filed in
favor of the Secured Party pursuant to this Agreement) covering or affecting any
of the Intellectual Property. So 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 such financing statement or other document or
instrument (except to the extent filed or recorded in favor of the Secured Party
pursuant to the terms of this Agreement), except for a financing statement
covering assets acquired by the Company after the date hereof, provided that the
value of the Intellectual Property covered by this Agreement along with the
Collateral (as defined in the Security Agreement) is equal to at least 150% of
the Obligations.
(d) The Company shall at all times maintain its books of account and
records relating to the Intellectual Property at its principal place of business
and may not relocate such books of account and records unless it delivers to the
Secured Party at least 30 days prior to such relocation (i) written notice of
such relocation and the new location thereof (which must be within the United
States) and (ii) evidence that the necessary documents have been filed and
recorded and other steps have been taken to perfect the Security Interest to
create in favor of the Secured Party valid, perfected and continuing first
priority liens in the Intellectual Property to the extent they can be perfected
through such filings.
(e) This Agreement creates in favor of the Secured Party a valid
security interest in the Intellectual Property securing the payment and
performance of the Obligations and, upon making the filings required hereunder,
a perfected first priority security interest in such Intellectual Property to
the extent that it can be perfected through such filings.
(f) Upon request of the Secured Party, the Company shall execute and
deliver any and all agreements, instruments, documents, and papers as the
Secured Party may request to evidence the Secured Party's security interest in
the Intellectual Property and the goodwill and general intangibles of the
Company relating thereto or represented thereby, and the Company hereby appoints
the Secured Party its attorney-in-fact to execute and file all such writings for
the foregoing purposes, all acts of such attorney being hereby ratified and
confirmed; such power being coupled with an interest is irrevocable until the
Obligations have been fully satisfied and are paid in full.
(g) The execution, delivery and performance of this Agreement does
not conflict with or cause a breach or default, or an event that with or without
the passage of time or notice, shall constitute a breach or default, under any
agreement to which the Company is a party or by which the Company is bound. No
consent (including, without limitation, from stock holders or creditors of the
Company) is required for the Company to enter into and perform its obligations
hereunder.
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(h) The Company shall at all times maintain the liens and Security
Interest provided for hereunder as valid and perfected liens and security
interests in the Intellectual Property to the extent they can be perfected by
filing in favor of the Secured Party until this Agreement and the Security
Interest hereunder shall terminate pursuant to Section 11. The Company hereby
agrees to defend the same against any and all persons. The Company shall
safeguard and protect all Intellectual Property for the account of the Secured
Party. Without limiting the generality of the foregoing, the Company shall pay
all fees, taxes and other amounts necessary to maintain the Intellectual
Property and the Security Interest hereunder, and the Company shall obtain and
furnish to the Secured Party from time to time, upon demand, such releases
and/or subordinations of claims and liens which may be required to maintain the
priority of the Security Interest hereunder.
(i) The Company will not transfer, pledge, hypothecate, encumber,
license (except for non-exclusive licenses granted by the Company in the
ordinary course of business), sell or otherwise dispose of any of the
Intellectual Property without the prior written consent of the Secured Party.
(j) The Company shall, within ten (10) days of obtaining knowledge
thereof, advise the Secured Party promptly, in sufficient detail, of any
substantial change in the Intellectual Property, and of the occurrence of any
event which would have a material adverse effect on the value of the
Intellectual Property or on the Secured Party's security interest therein.
(k) The Company shall permit the Secured Party and its
representatives and agents to inspect the Intellectual Property at any time, and
to make copies of records pertaining to the Intellectual Property as may be
requested by the Secured Party from time to time.
(l) The Company will 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 Intellectual
Property.
(m) The Company shall promptly notify the Secured Party in
sufficient detail upon becoming aware of any attachment, garnishment, execution
or other legal process levied against any Intellectual Property and of any other
information received by the Company that may materially affect the value of the
Intellectual Property, the Security Interest or the rights and remedies of the
Secured Party hereunder.
(n) All information heretofore, herein or hereafter supplied to the
Secured Party by or on behalf of the Company with respect to the Intellectual
Property is accurate and complete in all material respects as of the date
furnished.
(o) SCHEDULE 3(A) to the Purchase Agreement contains a list of all
of the subsidiaries of Company.
(p) SCHEDULE B attached hereto includes all Patents and Patent
Licenses, if any, owned by the Company in its own name as of the date hereof.
SCHEDULE B hereto includes all Trademarks and Trademark Licenses, if any, owned
by the Company in its own name as of the date hereof. SCHEDULE B hereto includes
all Copyrights and Copyright
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Licenses, if any, owned by the Company in its own name as of the date hereof.
SCHEDULE B hereto includes all Trade Secrets and Trade Secret Licenses, if any,
owned by the Company as of the date hereof. To the best of the Company's
knowledge, each License, Patent, Trademark, Copyright and Trade Secret is valid,
subsisting, unexpired, enforceable and has not been abandoned. Except as set
forth in SCHEDULE B, none of such Licenses, Patents, Trademarks, Copyrights and
Trade Secrets is the subject of any licensing or franchise agreement. To the
best of the Company's knowledge, no holding, decision or judgment has been
rendered by any Governmental Body which would limit, cancel or question the
validity of any License, Patent, Trademark, Copyright and Trade Secrets . No
action or proceeding is pending (i) seeking to limit, cancel or question the
validity of any License, Patent, Trademark, Copyright or Trade Secret, or (ii)
which, if adversely determined, would have a material adverse effect on the
value of any License, Patent, Trademark, Copyright or Trade Secret. The Company
has used and will continue to use for the duration of this Agreement, proper
statutory notice in connection with its use of the Patents, Trademarks and
Copyrights and consistent standards of quality in products leased or sold under
the Patents, Trademarks and Copyrights.
(q) With respect to any Intellectual Property:
(i) such Intellectual Property is subsisting and has not
been adjudged invalid or unenforceable, in whole or
in part;
(ii) such Intellectual Property is valid and enforceable;
(iii) the Company has made all necessary filings and
recordations to protect its interest in such
Intellectual Property, including, without
limitation, recordations of all of its interests in
the Patents, Patent Licenses, Trademarks and
Trademark Licenses in the United States Patent and
Trademark Office and in corresponding offices
throughout the world and its claims to the
Copyrights and Copyright Licenses in the United
States Copyright Office and in corresponding offices
throughout the world;
(iv) other than as set forth in SCHEDULE B, the Company
is the exclusive owner of the entire and
unencumbered right, title and interest in and to
such Intellectual Property and no claim has been
made that the use of such Intellectual Property
infringes on the asserted rights of any third party;
and
(v) the Company has performed and will continue to
perform all acts and has paid all required fees and
taxes to maintain each and every item of
Intellectual Property in full force and effect
throughout the world, as applicable.
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(r) Except with respect to any Trademark or Copyright that the
Company shall reasonably determine is of negligible economic value to the
Company, the Company shall:
(i) maintain each Trademark and Copyright in full force free
from any claim of abandonment for non-use, maintain as in the past the
quality of products and services offered under such Trademark or
Copyright; employ such Trademark or Copyright with the appropriate
notice of registration; not adopt or use any ▇▇▇▇ which is confusingly
similar or a colorable imitation of such Trademark or Copyright unless
the Secured Party shall obtain a perfected security interest in such
▇▇▇▇ pursuant to this Agreement; and not (and not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act
whereby any Trademark or Copyright may become invalidated;
(ii) not, except with respect to any Patent that it shall
reasonably determine is of negligible economic value to it, do any act,
or omit to do any act, whereby any Patent may become abandoned or
dedicated; and
(iii) notify the Secured Party immediately if it knows, or has
reason to know, that any application or registration relating to any
Patent, Trademark or Copyright may become abandoned or dedicated, or of
any adverse determination or development (including, without limitation,
the institution of, or any such determination or development in, any
proceeding in the United States Patent and Trademark Office, United
States Copyright Office or any court or tribunal in any country)
regarding its ownership of any Patent, Trademark or Copyright or its
right to register the same or to keep and maintain the same.
(s) Whenever the Company, either by itself or through any agent,
employee, licensee or designee, shall file an application for the registration
of any Patent, Trademark or Copyright with the United States Patent and
Trademark Office, United States Copyright Office or any similar office or agency
in any other country or any political subdivision thereof or acquire rights to
any new Patent, Trademark or Copyright whether or not registered, report such
filing to the Secured Party within five business days after the last day of the
fiscal quarter in which such filing occurs.
(t) The Company shall take all reasonable and necessary steps,
including, without limitation, in any proceeding before the United States Patent
and Trademark Office, United States Copyright Office or any similar office or
agency in any other country or any political subdivision thereof, to maintain
and pursue each application (and to obtain the relevant registration) and to
maintain each registration of the Patents, Trademarks and Copyrights, including,
without limitation, filing of applications for renewal, affidavits of use and
affidavits of incontestability.
(u) In the event that any Patent, Trademark or Copyright included in
the Intellectual Property is infringed, misappropriated or diluted by a third
party, promptly notify the Secured Party after it learns thereof and shall,
unless it shall reasonably determine that such Patent, Trademark or Copyright is
of negligible economic value to it, which determination it
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shall promptly report to the Secured Party, promptly ▇▇▇ for infringement,
misappropriation or dilution, to seek injunctive relief where appropriate and to
recover any and all damages for such infringement, misappropriation or dilution,
or take such other actions as it shall reasonably deem appropriate under the
circumstances to protect such Patent, Trademark or Copyright. If the Company
lacks the financial resources to comply with this Section 3(t), the Company
shall so notify the Secured Party and shall cooperate fully with any enforcement
action undertaken by the Secured Party on behalf of the Company.
4. 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
or in the 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 or in the Security Agreement for ten (10) days after
receipt by the Company of notice of such failure from the Secured Party; and
(d) Any breach of, or default under, the Warrants.
5. DUTY TO HOLD IN TRUST. Upon the occurrence of any Event of Default and
at any time thereafter, the Company shall, upon receipt by it of any revenue,
income or other sums subject to the Security Interest, 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 Party and shall forthwith endorse and transfer any such
sums or instruments, or both, to the Secured Party for application to the
satisfaction of the Obligations.
6. RIGHTS AND REMEDIES UPON DEFAULT. Upon occurrence of any Event of
Default and at any time thereafter, the Secured Party shall have the right to
exercise all of the remedies conferred hereunder and under the Notes, and the
Secured Party shall have all the rights and remedies of a secured party under
the UCC and/or any other applicable law (including the Uniform Commercial Code
of any jurisdiction in which any Intellectual Property is then located). Without
limitation, the Secured Party shall have the following rights and powers:
(a) The Secured Party shall have the right to take possession of the
Intellectual Property and, for that purpose, enter, with the aid and assistance
of any person, any premises where the Intellectual Property, or any part
thereof, is or may be placed and remove the same, and the Company shall assemble
the Intellectual Property and make it available to the Secured Party at places
which the Secured Party shall reasonably select, whether at the Company's
premises or elsewhere, and make available to the Secured Party, without rent,
all of the Company's respective premises and facilities for the purpose of the
Secured Party taking possession of, removing or putting the Intellectual
Property in saleable or disposable form.
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(b) The Secured Party shall have the right to operate the business
of the Company using the Intellectual Property and shall have the right to
assign, sell, lease or otherwise dispose of and deliver all or any part of the
Intellectual Property, 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 Secured Party 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 Intellectual
Property, the Secured Party may, unless prohibited by applicable law which
cannot be waived, purchase all or any part of the Intellectual Property being
sold, free from and discharged of all trusts, claims, right of redemption and
equities of the Company, which are hereby waived and released.
7. APPLICATIONS OF PROCEEDS. The proceeds of any such sale, lease or
other disposition of the Intellectual Property hereunder shall be applied first,
to the expenses of retaking, holding, storing, processing and preparing for
sale, selling, and the like (including, without limitation, any taxes, fees and
other costs incurred in connection therewith) of the Intellectual Property, to
the reasonable attorneys' fees and expenses incurred by the Secured Party in
enforcing its rights hereunder and in connection with collecting, storing and
disposing of the Intellectual Property, and then to satisfaction of the
Obligations, and to the payment of any other amounts required by applicable law,
after which the Secured Party shall pay to the Company any surplus proceeds. If,
upon the sale, license or other disposition of the Intellectual Property, the
proceeds thereof are insufficient to pay all amounts to which the Secured Party
is legally entitled, the Company will be liable for the deficiency, together
with interest thereon, at the rate of 15% per annum (the "DEFAULT RATE"), and
the reasonable fees of any attorneys employed by the Secured Party to collect
such deficiency. To the extent permitted by applicable law, the Company waives
all claims, damages and demands against the Secured Party arising out of the
repossession, removal, retention or sale of the Intellectual Property, unless
due to the gross negligence or willful misconduct of the Secured Party.
8. COSTS AND EXPENSES. The Company agrees to pay all out-of-pocket fees,
costs and expenses incurred in connection with any filing required hereunder,
including without limitation, any financing statements, continuation statements,
partial releases and/or termination statements related thereto or any expenses
of any searches reasonably required by the Secured Party. The Company shall also
pay all other claims and charges which in the reasonable opinion of the Secured
Party might prejudice, imperil or otherwise affect the Intellectual Property or
the Security Interest therein. The Company will also, upon demand, pay to the
Secured Party the amount of any and all reasonable expenses, including the
reasonable fees and expenses of its counsel and of any experts and agents, which
the Secured Party 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 Intellectual Property, or (iii) the
exercise or enforcement of any of the rights of the Secured Party under the
Notes. Until so paid, any fees payable hereunder shall be added to the principal
amount of the Notes and shall bear interest at the Default Rate.
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9. RESPONSIBILITY FOR INTELLECTUAL PROPERTY. The Company assumes all
liabilities and responsibility in connection with all Intellectual Property, and
the obligations of the Company hereunder or under the Notes and the Warrants
shall in no way be affected or diminished by reason of the loss, destruction,
damage or theft of any of the Intellectual Property or its unavailability for
any reason.
10. SECURITY INTEREST ABSOLUTE. All rights of the Secured Party 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, the Warrants 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, the Warrants or any other agreement entered into in
connection with the foregoing; (c) any exchange, release or nonperfection of any
of the Intellectual Property, or any release or amendment or waiver of or
consent to departure from any other Intellectual Property for, or any guaranty,
or any other security, for all or any of the Obligations; (d) any action by the
Secured Party to obtain, adjust, settle and cancel in its sole discretion any
insurance claims or matters made or arising in connection with the Intellectual
Property; 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 Interest granted hereby. Until the Obligations shall
have been paid and performed in full, the rights of the Secured Party 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. In the event that at any time any
transfer of any Intellectual Property or any payment received by the Secured
Party hereunder shall be deemed by final order of a court of competent
jurisdiction to have been a voidable preference or fraudulent conveyance under
the bankruptcy or insolvency laws of the United States, or shall be deemed to be
otherwise due to any party other than the Secured Party, 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 all right to require the Secured Party to proceed against any
other person or to apply any Intellectual Property which the Secured Party may
hold at any time, or to marshal assets, or to pursue any other remedy. The
Company waives any defense arising by reason of the application of the statute
of limitations to any obligation secured hereby.
11. TERM OF AGREEMENT. This Agreement and the Security Interest shall
terminate on the date on which all amounts outstanding under the Notes are no
longer outstanding and all other Obligations have been paid or discharged. Upon
such termination, the Secured Party, at the request and at the expense of the
Company, will join in executing any termination statement with respect to any
financing statement executed and filed pursuant to this Agreement.
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12. POWER OF ATTORNEY; FURTHER ASSURANCES.
(a) The Company authorizes the Secured Party, and does hereby make,
constitute and appoint it, and its respective officers, agents, successors or
assigns with full power of substitution, as the Company's true and lawful
attorney-in-fact, with power, in its own name or in the name of the Company, to,
after the occurrence and during the continuance of an Event of Default, (i)
endorse any notes, 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 Intellectual Property that may come into possession of the
Secured Party; (ii) to sign and endorse any UCC financing statement 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 Intellectual Property; (iii)
to pay or discharge taxes, liens, security interests or other encumbrances at
any time levied or placed on or threatened against the Intellectual Property;
(iv) to demand, collect, receipt for, compromise, settle and ▇▇▇ for monies due
in respect of the Intellectual Property; and (v) generally, to do, at the option
of the Secured Party, and at the Company's expense, at any time, or from time to
time, all acts and things which the Secured Party deems necessary to protect,
preserve and realize upon the Intellectual Property and the Security Interest
granted therein in order to effect the intent of this Agreement, the Notes and
the Warrants, 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.
(b) On a continuing basis, the Company will make, execute,
acknowledge, deliver, file and record, as the case may be, in the proper filing
and recording places in any jurisdiction, all such instruments, and take all
such action as may reasonably be deemed necessary or advisable, or as reasonably
requested by the Secured Party, to perfect the Security Interest granted
hereunder and otherwise to carry out the intent and purposes of this Agreement,
or for assuring and confirming to the Secured Party the grant or perfection of a
security interest in all the Intellectual Property.
(c) The Company hereby irrevocably appoints the Secured Party as the
Company's attorney-in-fact, with full authority in the place and stead of the
Company and in the name of the Company, from time to time in the Secured Party's
discretion, to take any action and to execute any instrument which the Secured
Party 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 Intellectual Property without the signature of the Company where permitted
by law.
13. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing, with copies to all the other parties hereto, and
shall be deemed to have been duly given when (i) if delivered by hand, upon
receipt, (ii) if sent by facsimile, upon receipt of proof of sending thereof,
(iii) if sent by nationally recognized overnight delivery service (receipt
requested), the next business day or (iv) if mailed by first-class registered or
certified mail, return receipt requested, postage prepaid, four days after
posting in the U.S. mails, in each case if delivered to the following addresses:
11
If to the Company: Midnight Holdings Group, Inc.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
With copies to: Reitler ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
If to the Secured Party: AJW Partners, LLC
AJW Offshore, Ltd.
AJW Qualified Partners, LLC
New Millennium Capital Partners II, LLC
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
With copies to: ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esquire
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
14. OTHER SECURITY. To the extent that the Obligations are now or
hereafter secured by property other than the Intellectual Property or by the
guarantee, endorsement or property of any other person, firm, corporation or
other entity, then the Secured Party shall have the right, in its sole
discretion, to pursue, relinquish, subordinate, modify or take any other action
with respect thereto, without in any way modifying or affecting any of the
Secured Party's rights and remedies hereunder.
12
15. MISCELLANEOUS.
(a) No course of dealing between the Company and the Secured Party,
nor any failure to exercise, nor any delay in exercising, on the part of the
Secured Party, 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 Party with respect
to the Intellectual Property, 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 and the Security Agreement constitute the entire
agreement of the parties with respect to the subject matter hereof and is
intended to supersede all prior negotiations, understandings and agreements with
respect thereto. Except as specifically set forth in this Agreement, no
provision of this Agreement may be modified or amended except by a written
agreement specifically referring to this Agreement and signed by the parties
hereto.
(d) In the event that any provision of this Agreement is held to be
invalid, prohibited or unenforceable in any jurisdiction for any reason, unless
such provision is narrowed by judicial construction, this Agreement shall, as to
such jurisdiction, be construed as if such invalid, prohibited or unenforceable
provision had been more narrowly drawn so as not to be invalid, prohibited or
unenforceable. If, notwithstanding the foregoing, any provision of this
Agreement is held to be invalid, prohibited or unenforceable in any
jurisdiction, such provision, as to such jurisdiction, shall be ineffective to
the extent of such invalidity, prohibition or unenforceability without
invalidating the remaining portion of such provision or the other provisions of
this Agreement and without affecting the validity or enforceability of such
provision or the other provisions of this Agreement in any other jurisdiction.
(e) No waiver of any breach or default or any right under this
Agreement shall be considered valid unless in writing and signed by the party
giving such waiver, and no such waiver shall be deemed a waiver of any
subsequent breach or default or right, whether of the same or similar nature or
otherwise.
(f) This Agreement shall be binding upon and inure to the benefit of
each party hereto and its successors and assigns.
(g) Each party shall take such further action and execute and
deliver such further documents as may be necessary or appropriate in order to
carry out the provisions and purposes of this Agreement.
(h) This Agreement shall be construed in accordance with the laws of
the State of New York, except to the extent the validity, perfection or
enforcement of a security interest hereunder in respect of any particular
Intellectual Property which are governed by a jurisdiction other than the State
of New York in which case such law shall govern. Each of the parties hereto
irrevocably submit to the exclusive jurisdiction of any New York State or United
States Federal court sitting in Manhattan county over any action or proceeding
arising out of or
13
relating to this Agreement, and the parties hereto hereby irrevocably agree that
all claims in respect of such action or proceeding may be heard and determined
in such New York State or Federal court. The parties hereto agree that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. The parties hereto further waive any objection to venue in the
State of New York and any objection to an action or proceeding in the State of
New York on the basis of forum non conveniens.
(i) EACH PARTY HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS
TO A JURY TRAIL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
THIS AGREEMENT. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF
ANY DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT
MATTER OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.
EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR
EACH PARTY TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH PARTY HAS ALREADY
RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH PARTY WILL
CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH PARTY
FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL
COUNSEL, AND THAT SUCH PARTY HAS KNOWINGLY AND VOLUNTARILY WAIVES ITS RIGHTS TO
A JURY TRIAL FOLLOWING SUCH CONSULTATION. THIS WAIVER IS IRREVOCABLE, MEANING
THAT, NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IT MAY NOT BE MODIFIED
EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS AND SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. IN THE
EVENT OF A LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.
(j) 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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
14
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day and year first above written.
MIDNIGHT HOLDINGS GROUP, INC.
By:
-------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Chief Executive Officer
AJW PARTNERS, LLC
By: SMS Group, LLC
By:
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Manager
AJW OFFSHORE, LTD.
By: First Street Manager II, LLC
By:
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Manager
AJW QUALIFIED PARTNERS, LLC
By: AJW Manager, LLC
By:
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Manager
NEW MILLENNIUM CAPITAL PARTNERS II, LLC
By: First Street Manager II, LLC
By:
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Manager
15
WHOLLY-OWNED SUBSIDIARIES OF
MIDNIGHT HOLDINGS GROUP, INC.:
By:_______________________________
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Chief Executive Officer and/or
President on behalf of the
following entities:
MIDNIGHT AUTO HOLDINGS, INC.,
a Michigan corporation
MIDNIGHT AUTO FRANCHISE CORP.,
a Michigan corporation
ALL NIGHT AUTO(R) STORES, INC.,
a Michigan corporation
ALL NIGHT AUTO INC.,
a Michigan corporation - business
done as All Night Auto of
Troy
ALL NIGHT AUTO-GROSSE POINTE, INC.,
a Michigan corporation - business
done as All Night Auto of
Grosse Pointe
ALL NIGHT AUTO OF NORMAL NORTH,
a Michigan corporation
ALL NIGHT AUTO OF AURORA,
a Michigan corporation
ALL NIGHT AUTO OF JOLIET,
a Michigan corporation
ALL NIGHT AUTO OF FORT ▇▇▇▇▇,
a Michigan corporation
16
SCHEDULE A
PRINCIPAL PLACE OF BUSINESS OF THE COMPANY:
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
LOCATIONS WHERE COLLATERAL IS LOCATED OR STORED:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
LIST OF SUBSIDIARIES OF THE COMPANY:
Midnight Auto Holdings, Inc.
Midnight Auto Franchise Corp.
All Night Auto, Inc.
All Night Auto Grosse Pointe, Inc.
All Night Auto Stores, Inc.
All Night Auto of Normal North, Inc.
All Night Auto of Aurora, Inc.
All Night Auto of Joliet, Inc.
All Night Auto of Fort ▇▇▇▇▇, Inc.
17
SCHEDULE B
A. LICENSES, PATENTS AND PATENT LICENSES
--------------------------------------
Registration or
PATENT APPLICATION OR REGISTRATION NO. COUNTRY FILING DATE
------ ------------------------------- ------- ----------------
B. TRADEMARKS AND TRADEMARK LICENSES
Registration or
SERVICE ▇▇▇▇ 2,290,780. USA NOV 9 1999
------------ ---------- ----------------
C. COPYRIGHTS AND COPYRIGHT LICENSES
Registration or
NAME APPLICATION OR REGISTRATION NO. COUNTRY FILING DATE
------ ------------------------------- ------- ----------------
D. TRADE SECRETS AND TRADE SECRET LICENSES
Registration or
NAME APPLICATION OR REGISTRATION NO. COUNTRY FILING DATE
------ ------------------------------- ------- ----------------
18
SCHEDULE C
Jurisdictions
19