Exhibit 10.2

 

PLEDGE AND SECURITY AGREEMENT

 

PLEDGE AND SECURITY AGREEMENT, dated as of March __, 2020 (this “Agreement”),
made by Genius Brands International, Inc., a Nevada corporation (the “Company”),
and each other Subsidiary of the Company hereafter becoming party hereto
(together with the Company, each a “Grantor” and, collectively, the “Grantors”),
in favor of Anson Investments Master Fund LP, in its capacity as collateral
agent (in such capacity, the “Collateral Agent”) for the Buyers (as defined
below) party to the Securities Purchase Agreement, dated as of March 11, 2020
(as amended, restated or otherwise modified from time to time, the “Securities
Purchase Agreement”).

 

W I T N E S S E T H:

 

WHEREAS, the Company and each party listed as a “Buyer” on the Schedule of
Buyers (as such schedule may be amended, restated or otherwise modified from
time to time) attached thereto, each a “Buyer”, and collectively, the “Buyers”)
are parties to the Securities Purchase Agreement, pursuant to which the Company
shall be required to sell, and the Buyers shall purchase or have the right to
purchase, the “Notes” (as defined in the Securities Purchase Agreement);

 

WHEREAS, it is a condition precedent to the Buyers consummating the transactions
contemplated by the Securities Purchase Agreement that the Grantors execute and
deliver to the Collateral Agent this Agreement providing for the grant to the
Collateral Agent for the benefit of the Buyers of a security interest in all
personal property of the Grantors to secure all of the Company's obligations
under the Securities Purchase Agreement and the “Notes” (as defined therein)
issued pursuant thereto (as such Notes may be amended, restated, replaced or
otherwise modified from time to time in accordance with the terms thereof,
collectively, the “Notes”) and the other Transaction Documents (as defined in
the Securities Purchase Agreement);

 

WHEREAS, the Grantors (i) are mutually dependent on each other in the conduct of
their respective businesses as an integrated operation, with the credit needed
from time to time by one often being provided through financing obtained by the
other Grantors and the ability to obtain such financing being dependent on the
successful operations of the Grantors and (ii) will receive a mutual benefit
from the proceeds received by the Company in respect of the issuance of the
Notes; and

 

WHEREAS, each Grantor has determined that the execution, delivery and
performance of this Agreement directly benefits, and are in the best interest of
the Company and such Grantor.

 

NOW, THEREFORE, in consideration of the premises and the agreements herein and
in order to induce the Buyers to perform under the Securities Purchase
Agreement, each Grantor agrees with the Collateral Agent, for the benefit of the
Buyers, as follows:

 

Section 1.      Definitions.

Reference is hereby made to the Securities Purchase Agreement and the Notes for
a statement of the terms thereof. All terms used in this Agreement and the
recitals hereto which are defined in the Securities Purchase Agreement, the
Notes or in Articles 8 or 9 of the Uniform Commercial Code (the “Code”) as in
effect from time to time in the State of New York, and which are not otherwise
defined herein shall have the same meanings herein as set forth therein;
provided that terms used herein which are defined in the Code as in effect in
the State of New York on the date hereof shall continue to have the same meaning
notwithstanding any replacement or amendment of such statute except as the
Collateral Agent may otherwise determine.

 

 

 

 1 

 

 

The following terms shall have the respective meanings provided for in the Code:
“Accounts”, “Account Debtor”, “Cash Proceeds”, “Chattel Paper”, “Commercial Tort
Claim”, “Commodity Account”, “Commodity Contracts”, “Deposit Account”,
“Documents”, “Electronic Chattel Paper”, “Equipment”, “Fixtures”, “General
Intangibles”, “Goods”, “Instruments”, “Inventory”, “Investment Property”,
“Letter-of-Credit Rights”, “Noncash Proceeds”, “Payment Intangibles”,
“Proceeds”, “Promissory Notes”, “Security”, “Record”, “Security Account”,
“Software”, and “Supporting Obligations”.

 

As used in this Agreement, the following terms shall have the respective
meanings indicated below, such meanings to be applicable equally to both the
singular and plural forms of such terms:

“Collateral” shall have the meaning set forth in Section 2 hereof.

 

“Copyright Licenses” means all licenses, contracts or other agreements, whether
written or oral, naming any Grantor as licensee or licensor and providing for
the grant of any rights with respect to any copyright (including, without
limitation, all Copyright Licenses set forth in Schedule II hereto).

 

“Copyrights” means all domestic and foreign copyrights, whether registered or
not, including, without limitation, all copyright rights throughout the universe
(whether now or hereafter arising) in any and all media (whether now or
hereafter developed), in and to all original works of authorship fixed in any
tangible medium of expression (including computer software and internet website
content), and all other general intangibles of like nature, now or hereafter
owned, acquired, licensed, used or held for use by any Grantor (including,
without limitation, all copyrights described in Schedule II hereto), all
applications, registrations and recordings thereof (including, without
limitation, applications, registrations and recordings in the United States
Copyright Office or in any similar office or agency of the United States or any
other country or any political subdivision thereof), and all renewals thereof.

 

“Event of Default” means (i) any defined event of default under any one or more
of the Transaction Documents, in each instance, after giving effect to any
notice, grace, or cure periods provided for in the applicable Transaction
Document, (ii) the failure by the Company to pay any amounts when due under the
Notes or any other Transaction Document, or (iii) the breach of any
representation, warranty or covenant by any Grantor under this Agreement.

 

“Existing Issuer” has the meaning specified therefor in the definition of the
term “Pledged Shares”.

 

“Guaranty” means the Guarantee Agreement, dated as of the date hereof, by [ ] in
favor of the Buyers and the Collateral Agent.

 

“Insolvency Proceeding” means any proceeding commenced by or against any Person
under any provision of the Bankruptcy Code (Chapter 11 of Title 11 of the United
States Code) or under any other bankruptcy or insolvency law, assignments for
the benefit of creditors, formal or informal moratoria, compositions, or
extensions generally with creditors, or proceedings seeking reorganization,
arrangement, or other similar relief.

 

“Intellectual Property” means the Copyrights, Trademarks, Patents and Other
Proprietary Rights.

 

“Licenses” means the Copyright Licenses, the Trademark Licenses, the Patent
Licenses and all licenses, contracts or other agreements, whether written or
oral, naming any Grantor as licensee or licensor and providing for the grant of
any rights with respect to any Other Proprietary Rights.

 

“Lien” means any mortgage, deed of trust, pledge, lien (statutory or otherwise),
security interest, charge or other encumbrance or security or preferential
arrangement of any nature, including, without limitation, any conditional sale
or title retention arrangement, any capitalized lease and any assignment,
deposit arrangement or financing lease intended as, or having the effect of,
security.

 

 

 

 2 

 

 

“Obligations” shall have the meaning set forth in Section 3 hereof.

 

“Other Proprietary Rights” means all inventions, trade secrets, ideas, concepts,
methods, techniques, processes, proprietary information, technology, know-how
and formulae, and all other intellectual or proprietary rights, in any
jurisdiction through the world, of any Grantor, now or hereafter owned,
acquired, licensed, used or held for use.

 

“Patent Licenses” means all licenses, contracts or other agreements, whether
written or oral, naming any Grantor as licensee or licensor and providing for
the grant of any right to make, use, offer for sale, sell or import any
invention covered by any Patent (including, without limitation, all Patent
Licenses set forth in Schedule II hereto).

 

“Patents” means all domestic and foreign letters patent, design patents, utility
patents, industrial designs, inventions, and other general intangibles of like
nature, of any Grantor, now or hereafter owned, acquired, licensed, used or held
for use (including, without limitation, all domestic and foreign letters patent,
design patents, utility patents and industrial designs described in Schedule II
hereto), all applications, registrations and recordings thereof (including,
without limitation, applications, registrations and recordings in the United
States Patent and Trademark Office, or in any similar office or agency of the
United States or any other country or any political subdivision thereof), and
all reissues, divisionals, continuations, continuations in part, reexaminations,
or extensions thereof.

 

“Permitted Liens” shall have the meaning set forth in the Notes.

 

“Pledged Debt” means the indebtedness described in Schedule VII hereto and all
indebtedness from time to time owned or acquired by a Grantor, the Promissory
Notes and other Instruments evidencing any or all of such indebtedness, and all
interest, cash, Instruments, Investment Property, financial assets, securities,
capital stock, other equity interests, stock options and Commodity Contracts,
notes, debentures, bonds, Promissory Notes or other evidences of indebtedness
and all other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such indebtedness.

 

“Pledged Interests” means, collectively, (a) the Pledged Debt, (b) the Pledged
Shares and (c) all security entitlements in any and all of the foregoing.

 

“Pledged Issuer” has the meaning specified therefor in the definition of the
term “Pledged Shares”.

 

“Pledged Shares” means (a) the shares of capital stock or other equity interests
described in Schedule VIII hereto, whether or not evidenced or represented by
any stock certificate, certificated security or other Instrument, issued by the
Persons described in such Schedule VIII (the “Existing Issuers”), (b) the shares
of capital stock or other equity interests at any time and from time to time
acquired by a Grantor of any and all Persons now or hereafter existing (such
Persons, together with the Existing Issuers, being hereinafter referred to
collectively as the “Pledged Issuers” and each individually as a “Pledged
Issuer”), whether or not evidenced or represented by any stock certificate,
certificated security or other Instrument, and (c) the certificates representing
such shares of capital stock, all options and other rights, contractual or
otherwise, in respect thereof and all dividends, distributions, cash,
Instruments, Investment Property, financial assets, securities, capital stock,
other equity interests, stock options and commodity contracts, notes,
debentures, bonds, Promissory Notes or other evidences of indebtedness and all
other property (including, without limitation, any stock dividend and any
distribution in connection with a stock split) from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such capital stock.

 

“Trademark Licenses” means all licenses, contracts or other agreements, whether
written or oral, naming any Grantor as licensor or licensee and providing for
the grant of any right with respect to any Trademark (including, without
limitation, all Trademark Licenses described in Schedule II hereto).

 

 

 

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“Trademarks” means all domestic and foreign trademarks, service marks,
collective marks, certification marks, trade names, business names, d/b/a's,
Internet domain names, trade styles, designs, logos and other source or business
identifiers and all general intangibles of like nature, now or hereafter owned,
adopted, acquired, licensed, used or held for use by any Grantor (including,
without limitation, all domestic and foreign trademarks, service marks,
collective marks, certification marks, trade names, business names, d/b/a's,
Internet domain names, trade styles, designs, logos and other source or business
identifiers described in Schedule II hereto), all applications, registrations
and recordings thereof (including, without limitation, applications,
registrations and recordings 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), and all renewals thereof,
together with all goodwill of the business symbolized by any of the foregoing
and all customer lists, formulae and other Records of any Grantor relating to
the distribution of products and services in connection with which any of the
foregoing are used.

 

Section 2.     Grant of Security Interest. As collateral security for the
payment, performance and observance of all of the Obligations, each Grantor
hereby pledges and assigns to the Collateral Agent (and its agents and
designees) for the benefit of the Buyers, and grants to the Collateral Agent
(and its agents and designees) for the benefit of the Buyers a continuing
security interest in, all personal property of such Grantor, wherever located
and whether now or hereafter existing and whether now owned or hereafter
acquired, of every kind and description, tangible or intangible, including,
without limitation, the following (all being collectively referred to herein as
the “Collateral”):

 

all Accounts;

 

all Chattel Paper (whether tangible or electronic);

 

the Commercial Tort Claims specified on Schedule VI hereto;

 

all Deposit Accounts (including, without limitation, all cash, and all other
property from time to time deposited therein or otherwise credited thereto and
the monies and property in the possession or under the control of the Collateral
Agent or a Buyer or any affiliate, representative, agent or correspondent of the
Collateral Agent or a Buyer;

 

all Documents;

 

all Equipment;

 

all Fixtures;

 

all General Intangibles (including, without limitation, all Payment
Intangibles);

 

all Goods;

 

all Instruments (including, without limitation, Promissory Notes and each
certificated Security);

 

all Inventory;

 

all Investment Property;

 

all Intellectual Property and all Licenses;

 

all Letter-of-Credit Rights;

 

all Supporting Obligations;

 

all Pledged Interests;

 

 

 

 4 

 

 

all other tangible and intangible personal property of such Grantor (whether or
not subject to the Code), including, without limitation, all bank and other
accounts and all cash and all investments therein, all proceeds, products,
offspring, accessions, rents, profits, income, benefits, substitutions and
replacements of and to any of the property of such Grantor described in the
preceding clauses of this Section 2 (including, without limitation, any proceeds
of insurance thereon and all causes of action, claims and warranties now or
hereafter held by such Grantor in respect of any of the items listed above), and
all books, correspondence, files and other Records, including, without
limitation, all tapes, disks, cards, Software, data and computer programs in the
possession or under the control of such Grantor or any other Person from time to
time acting for such Grantor that at any time evidence or contain information
relating to any of the property described in the preceding clauses of this
Section 2 or are otherwise necessary or helpful in the collection or realization
thereof; and

 

all Proceeds, including all Cash Proceeds and Noncash Proceeds, and products of
any and all of the foregoing Collateral;

 

in each case, howsoever such Grantor's interest therein may arise or appear
(whether by ownership, security interest, claim or otherwise). Notwithstanding
anything to the contrary herein, the security interest granted herein shall not
attach to, and no security interest is granted hereunder in, (i) any Trademark
application filed on an intent to use basis until such time as an Amendment to
Allege Use or Statement of Use, as applicable, if filed and accepted by the
United States Patent and Trademark Office, solely if and to the extent the grant
of a security interest in such application would result in the voiding or
abandonment, or impair the validity or enforceability, of such application or
any registration that issues therefrom, or (ii) any of the foregoing where the
granting of a security interest thereon is prohibited by applicable law (so long
as (x) such prohibition was not put in place with the intention of excluding
such property from Collateral, and (y) that immediately upon the
ineffectiveness, lapse, termination or waiver of any such provision, the
Collateral shall include, and such Grantor shall be deemed to have granted a
security interest in, all such right, title and interest as if such provision
had never been in effect).

 

Notwithstanding anything herein to the contrary, in no event shall the
Collateral include, and the Company shall be deemed not to have granted a
security interest in, any of the Company’s right, title and interest in the
issued and outstanding equity interests of Llama Productions LLC.

 

Section 3.    Security for Obligations. The security interest created hereby in
the Collateral constitutes continuing collateral security for all of the
following obligations, whether now existing or hereafter incurred (collectively,
the “Obligations”):

 

the prompt payment by each Grantor, as and when due and payable (by scheduled
maturity, required prepayment, acceleration, demand or otherwise), of all
amounts from time to time owing by it in respect of the Securities Purchase
Agreement, the Notes, the Guaranty and the other Transaction Documents,
including, without limitation, (A) all principal of and interest on the Notes
(including, without limitation, all interest that accrues after the commencement
of any Insolvency Proceeding of any Grantor, whether or not the payment of such
interest is unenforceable or is not allowable due to the existence of such
Insolvency Proceeding), (B) all amounts from time to time owing by such Grantor
under the Guaranty, and (C) all fees, commissions, expense reimbursements,
indemnifications and all other amounts due or to become due under any of the
Transaction Documents; and

 

the due performance and observance by each Grantor of all of its other
obligations from time to time existing in respect of any of the Transaction
Documents for so long as the Notes are outstanding.

 

Section 4.      Representations and Warranties. Each Grantor represents and
warrants as follows:

Schedule I hereto sets forth (i) the exact legal name of such Grantor, and (ii)
the organizational identification number of such Grantor or states that no such
organizational identification number exists.

 

There is no pending or written notice threatening any action, suit, proceeding
or claim affecting such Grantor before any governmental authority or any
arbitrator, or any order, judgment or award by any governmental authority or
arbitrator, that may adversely affect the grant by such Grantor, or the
perfection, of the security interest purported to be created hereby in the
Collateral, or the exercise by the Collateral Agent of any of its rights or
remedies hereunder.

 

 

 

 5 

 

 

All Federal, state and local tax returns and other reports required by
applicable law to be filed by such Grantor have been filed, or extensions have
been obtained, and all taxes, assessments and other governmental charges imposed
upon such Grantor or any property of such Grantor (including, without
limitation, all federal income and social security taxes on employees' wages)
and which have become due and payable on or prior to the date hereof have been
paid, except to the extent contested in good faith by proper proceedings which
stay the imposition of any penalty, fine or Lien resulting from the non-payment
thereof and with respect to which adequate reserves have been set aside for the
payment thereof in accordance with United States generally accepted accounting
principles consistently applied (“GAAP”).

 

All Equipment, Fixtures, Goods and Inventory of such Grantor now existing are,
and all Equipment, Fixtures, Goods and Inventory of such Grantor hereafter
existing will be, located and/or based at the addresses specified therefor in
Schedule III hereto, except that such Grantor will give the Collateral Agent not
less than 30 days' prior written notice of any change of the location of any
such Collateral, other than to locations set forth on Schedule III and with
respect to which the Collateral Agent has filed financing statements and
otherwise fully perfected its Liens thereon. Such Grantor's chief place of
business and chief executive office, the place where such Grantor keeps its
Records concerning Accounts and all originals of all Chattel Paper are located
at the addresses specified therefor in Schedule III hereto. None of the Accounts
is evidenced by Promissory Notes or other Instruments. Set forth in Schedule IV
hereto is a complete and accurate list, as of the date of this Agreement, of (i)
each Promissory Note, Security and other Instrument owned by each Grantor and
(ii) each Deposit Account, Securities Account and Commodities Account of each
Grantor, together with the name and address of each institution at which each
such Account is maintained, the account number for each such Account and a
description of the purpose of each such Account. Set forth in Schedule II hereto
is a complete and correct list of each trade name used by each Grantor and the
name of, and each trade name used by, each person from which such Grantor has
acquired any substantial part of the Collateral.

 

Such Grantor has delivered or made available to the Collateral Agent complete
and correct copies of each License described in Schedule II hereto, including
all schedules and exhibits thereto, which represents all of the Licenses
existing on the date of this Agreement. Each such License sets forth the entire
agreement and understanding of the parties thereto relating to the subject
matter thereof, and there are no other agreements, arrangements or
understandings, written or oral, relating to the matters covered thereby or the
rights of such Grantor or any of its affiliates in respect thereof. Each
material License now existing is, and any material License entered into in the
future will be, the legal, valid and binding obligation of the parties thereto,
enforceable against such parties in accordance with its terms, except as may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance, suretyship or other similar laws and equitable principles
(regardless of whether enforcement is sought in equity or in law). No default
under any material License by any such party has occurred, nor does any defense,
offset, deduction or counterclaim exist thereunder in favor of any such party.

 

Such Grantor owns and controls, or possesses a valid and enforceable right to
use, all Intellectual Property, and such Intellectual Property constitutes all
trademarks, patents, copyrights, inventions, trade secrets, proprietary
information and technology, know-how, formulae, rights of publicity, and other
intellectual property or proprietary rights necessary to conduct its business in
substantially the same manner as conducted as of the date hereof. Schedule II
hereto sets forth a true and complete list of all (i) registered Copyrights,
issued Patents, Trademarks (including, without limitation, any Internet domain
names and the registrar and expiry date of each such Internet domain name), and
all applications for any of the foregoing, owned, used or held for use by such
Grantor as of the date hereof and (ii) Licenses. To the knowledge of each
Grantor, all such Intellectual Property of such Grantor is subsisting and in
full force and effect, has not been adjudged invalid or unenforceable, is valid
and enforceable and has not been abandoned in whole or in part. Except as set
forth in Schedule II, no such Intellectual Property is the subject of any
licensing or franchising agreement. To the knowledge of such Grantor, such
Grantor is not now infringing, misappropriating or otherwise in conflict with
any trademarks, patents, copyrights, inventions, trade secrets, proprietary
information and technology, know-how, formulae, rights of publicity, or other
intellectual property or proprietary rights of others in any material respect,
and to the knowledge of such Grantor, no other Person is now infringing,
misappropriating or otherwise in conflict with, in any material respect, any
Intellectual Property. Such Grantor has not received any notice that it is
infringing, misappropriating or otherwise conflicting with the trademarks,
patents, copyrights, inventions, trade secrets, proprietary information and
technology, know-how, formulae, rights of publicity or other intellectual
property or proprietary rights of any other Person.

 

 

 

 6 

 

 

Such Grantor is and will be at all times the sole and exclusive owner of, or
otherwise has and will have adequate rights in, the Collateral free and clear of
any Liens, except for Permitted Liens. No effective financing statement or other
instrument similar in effect covering all or any part of the Collateral is on
file in any recording or filing office except (A) such as may have been filed in
favor of the Collateral Agent relating to this Agreement, and (B) such as may
have been filed to perfect any Permitted Liens.

 

The exercise by the Collateral Agent of any of its rights and remedies hereunder
will not contravene any law or any contractual restriction binding on or
otherwise affecting such Grantor or any of its properties and will not result in
or require the creation of any Lien, upon or with respect to any of its
properties.

 

No authorization or approval or other action by, and no notice to or filing
with, any governmental authority or other regulatory body, or any other Person,
is required for (i) the grant by such Grantor, or the perfection, of the
security interest purported to be created hereby in the Collateral, or (ii) the
exercise by the Collateral Agent of any of its rights and remedies hereunder,
except (A) for the filing under the Uniform Commercial Code as in effect in the
applicable jurisdiction of the financing statements, all of which financing
statements, have been duly filed and are in full force and effect, (B) with
respect to the perfection of the security interest created hereby in the
Intellectual Property, for the recording of the appropriate Intellectual
Property Security Agreement, substantially in the form of Exhibit A hereto, as
applicable, in the United States Patent and Trademark Office or the United
States Copyright Office, as applicable, and (C) with respect to the perfection
of the security interest created hereby in foreign Intellectual Property, for
registrations and filings in jurisdictions located outside of the United States
and covering rights in such jurisdictions relating to the Intellectual Property
and Licenses.

 

This Agreement creates in favor of the Collateral Agent a legal, valid and
enforceable security interest in the Collateral, as security for the
Obligations. The Collateral Agent's having possession of all Instruments and
cash constituting Collateral from time to time, the recording of the appropriate
Intellectual Property Security Agreement executed pursuant hereto in the United
States Patent and Trademark Office and the United States Copyright Office, as
applicable, and the filing of the financing statements and the other filings and
recordings, as applicable, described in Schedule V hereto and, with respect to
the Intellectual Property hereafter existing or acquired, and not covered by an
appropriate Intellectual Property Security Agreement, the recording in the
United States Patent and Trademark Office or the United States Copyright Office,
as applicable, of appropriate security agreements, result in the perfection of
such security interests. Such security interests are, or in the case of
Collateral in which such Grantor obtains rights after the date hereof, will be,
perfected, first priority security interests, subject only to Permitted Liens
and the recording of such instruments of assignment. Such recordings and filings
and all other action necessary or desirable to perfect and protect such security
interest have been duly taken, except for the Collateral Agent's having
possession of Instruments and cash constituting Collateral after the date hereof
and the other filings and recordations described in Section 4(l) hereof.

 

As of the date hereof, such Grantor does not hold any Commercial Tort Claims nor
is such Grantor aware of any such pending claims, except for such claims
described in Schedule VI.

 

Each of the Grantors (other than the Company) is a wholly-owned Subsidiary of
the Company and are the only Subsidiaries of the Company, as of the date hereof.

 

 

 

 7 

 

 

Section 5.     Covenants as to the Collateral. So long as any of the Obligations
shall remain outstanding, unless the Collateral Agent shall otherwise consent in
writing:

 

Further Assurances. Each Grantor will at its expense, at any time and from time
to time, promptly execute and deliver all further instruments and documents and
take all further action that the Collateral Agent may reasonably request in
order to: (i) perfect and protect the security interest purported to be created
hereby; (ii) enable the Collateral Agent to exercise and enforce its rights and
remedies hereunder in respect of the Collateral; or (iii) otherwise effect the
purposes of this Agreement, including, without limitation: (A) marking
conspicuously all Chattel Paper and each License and, at the request of the
Collateral Agent, each of its Records pertaining to the Collateral with a
legend, in form and substance satisfactory to the Collateral Agent, indicating
that such Chattel Paper, License or Collateral is subject to the security
interest created hereby, (B) delivering and pledging to the Collateral Agent
hereunder each Promissory Note, Security, Chattel Paper or other Instrument, now
or hereafter owned by such Grantor, duly endorsed and accompanied by executed
instruments of transfer or assignment, all in form and substance satisfactory to
the Collateral Agent, (C) executing and filing (to the extent, if any, that such
Grantor's signature is required thereon) or authenticating the filing of, such
financing or continuation statements, or amendments thereto, as may be necessary
or desirable or that the Collateral Agent may request in order to perfect and
preserve the security interest purported to be created hereby, (D) furnishing to
the Collateral Agent from time to time statements and schedules further
identifying and describing the Collateral and such other reports in connection
with the Collateral in each case as the Collateral Agent may reasonably request,
all in reasonable detail, (E) if any Collateral shall be in the possession of a
third party, notifying such Person of the Collateral Agent's security interest
created hereby and obtaining a written acknowledgment from such Person that such
Person holds possession of the Collateral for the benefit of the Collateral
Agent, which such written acknowledgement shall be in form and substance
satisfactory to the Collateral Agent, (F) if at any time after the date hereof,
such Grantor acquires or holds any Commercial Tort Claim, promptly notifying the
Collateral Agent in a writing signed by such Grantor setting forth a brief
description of such Commercial Tort Claim and granting to the Collateral Agent a
security interest therein and in the proceeds thereof, which writing shall
incorporate the provisions hereof and shall be in form and substance
satisfactory to the Collateral Agent, (G) upon the acquisition after the date
hereof by such Grantor of any motor vehicle or other Equipment subject to a
certificate of title or ownership (other than a Motor Vehicle or Equipment that
is subject to a purchase money security interest), causing the Collateral Agent
to be listed as the lienholder on such certificate of title or ownership and
delivering evidence of the same to the Collateral Agent in accordance with the
Securities Purchase Agreement; and (H) taking all actions required by any
earlier versions of the Uniform Commercial Code or by other law, as applicable,
in any relevant Uniform Commercial Code jurisdiction, or by other law as
applicable in any foreign jurisdiction.

 

Location of Equipment and Inventory. Each Grantor will keep the Equipment and
Inventory at the locations specified therefor in Section 4(d) hereof or, upon
not less than thirty (30) days' prior written notice to the Collateral Agent
accompanied by a new Schedule III hereto indicating each new location of the
Equipment and Inventory, at such other locations in the United States.

 

Condition of Equipment. Each Grantor will maintain or cause the Equipment
(necessary or useful to its business) to be maintained and preserved in good
condition, repair and working order, ordinary wear and tear excepted, and will
forthwith, or in the case of any loss or damage to any material Equipment of
such Grantor within a commercially reasonable time after the occurrence thereof,
make or cause to be made all repairs, replacements and other improvements in
connection therewith which are necessary or desirable, consistent with past
practice, or which the Collateral Agent may reasonably request to such end. Such
Grantor will promptly furnish to the Collateral Agent a statement describing in
reasonable detail any such loss or damage to any such Equipment.

 

Taxes, Etc. Each Grantor agrees to pay promptly when due all property and other
taxes, assessments and governmental charges or levies imposed upon, and all
claims (including claims for labor, materials and supplies) against, the
Equipment and Inventory, except to the extent the validity thereof is being
contested in good faith by proper proceedings which stay the imposition of any
penalty, fine or Lien resulting from the non-payment thereof and with respect to
which adequate reserves in accordance with GAAP have been set aside for the
payment thereof.

 

 

 

 8 

 

 

Insurance.

 

(i)       Each Grantor will, at its own expense, maintain insurance (including,
without limitation, commercial general liability and property insurance) with
respect to the Equipment and Inventory in such amounts, against such risks, in
such form and with responsible and reputable insurance companies or associations
as is required by any governmental authority having jurisdiction with respect
thereto or as is carried by such Grantor as of the date hereof and in any event,
in amount, adequacy and scope reasonably satisfactory to the Collateral Agent.
Unless otherwise agreed to by the Collateral Agent, each such policy for
liability insurance shall provide for all losses to be paid on behalf of the
Collateral Agent and such Grantor as their respective interests may appear, and
each policy for property damage insurance shall provide for all losses to be
adjusted with, and paid directly to, the Collateral Agent. Unless otherwise
agreed to by the Collateral Agent, each such policy shall in addition (A) name
the Collateral Agent as an additional insured party thereunder (without any
representation or warranty by or obligation upon the Collateral Agent) as their
interests may appear, (B) contain an agreement by the insurer that any loss
thereunder shall be payable to the Collateral Agent on its own account
notwithstanding any action, inaction or breach of representation or warranty by
such Grantor, (C) provide that there shall be no recourse against the Collateral
Agent for payment of premiums or other amounts with respect thereto, and (D)
provide that at least 30 days' prior written notice of cancellation, lapse,
expiration or other adverse change shall be given to the Collateral Agent by the
insurer. Such Grantor will, if so requested by the Collateral Agent, deliver to
the Collateral Agent original or duplicate policies of such insurance and, as
often as the Collateral Agent may reasonably request, a report of a reputable
insurance broker with respect to such insurance. Such Grantor will also, at the
request of the Collateral Agent, execute and deliver instruments of assignment
of such insurance policies and cause the respective insurers to acknowledge
notice of such assignment.

 

(ii)      Reimbursement under any liability insurance maintained by a Grantor
pursuant to this Section 5(e) may be paid directly to the Person who shall have
incurred liability covered by such insurance. In the case of any loss involving
damage to Equipment or Inventory, any proceeds of insurance maintained by a
Grantor pursuant to this Section 5(e) shall be paid to the Collateral Agent
(except as to which paragraph (iii) of this Section 5(e) is not applicable),
such Grantor will make or cause to be made the necessary repairs to or
replacements of such Equipment or Inventory, and any proceeds of insurance
maintained by such Grantor pursuant to this Section 5(e) shall be paid by the
Collateral Agent to such Grantor as reimbursement for the costs of such repairs
or replacements.

 

(iii)      All insurance payments in respect of such Equipment or Inventory
shall be paid to the Collateral Agent and applied as specified in Section 7(b)
hereof.

Provisions Concerning the Accounts and the Licenses.

 

(iv)     Each Grantor will (A) give the Collateral Agent at least 30 days' prior
written notice of any change in such Grantor's name, identity or organizational
structure, (B) maintain its jurisdiction of incorporation as set forth in
Section 4(a) hereto, (C) immediately notify the Collateral Agent upon obtaining
an organizational identification number, if on the date hereof such Grantor did
not have such identification number, and (D) keep adequate records concerning
the Accounts and Chattel Paper and permit representatives of the Collateral
Agent during normal business hours on reasonable notice to such Grantor, to
inspect and make abstracts from such Records and Chattel Paper.

 

(v)      Each Grantor will, except as otherwise provided in this subsection (f),
continue to collect, at its own expense, all amounts due or to become due under
the Accounts. In connection with such collections, such Grantor may (and, at the
Collateral Agent's direction, will) take such action as such Grantor or the
Collateral Agent may deem necessary or advisable to enforce collection or
performance of the Accounts; provided, however, that the Collateral Agent shall
have the right at any time, upon the occurrence and during the continuance of an
Event of Default, to notify the Account Debtors or obligors under any Accounts
of the assignment of such Accounts to the Collateral Agent and to direct such
Account Debtors or obligors to make payment of all amounts due or to become due
to such Grantor thereunder directly to the Collateral Agent or its designated
agent and, upon such notification and at the expense of such Grantor and to the
extent permitted by law, to enforce collection of any such Accounts and to
adjust, settle or compromise the amount or payment thereof, in the same manner
and to the same extent as such Grantor might have done. After receipt by a
Grantor of a notice from the Collateral Agent that the Collateral Agent has
notified, intends to notify, or has enforced or intends to enforce a Grantor's
rights against the Account Debtors or obligors under any Accounts as referred to
in the proviso to the immediately preceding sentence, (A) all amounts and
proceeds (including Instruments) received by such Grantor in respect of the
Accounts shall be received in trust for the benefit of the Collateral Agent
hereunder, shall be segregated from other funds of such Grantor and shall be
forthwith paid over to the Collateral Agent in the same form as so received
(with any necessary endorsement) to be held as cash collateral and applied as
specified in Section 7(b) hereof, and (B) such Grantor will not adjust, settle
or compromise the amount or payment of any Account or release wholly or partly
any Account Debtors or obligor thereof or allow any credit or discount thereon.
In addition, upon the occurrence and during the continuance of an Event of
Default, the Collateral Agent may (in its sole and absolute discretion) direct
any or all of the banks and financial institutions with which such Grantor
either maintains a Deposit Account or a lockbox or deposits the proceeds of any
Accounts to send immediately to the Collateral Agent by wire transfer (to such
account as the Collateral Agent shall specify, or in such other manner as the
Collateral Agent shall direct) all or a portion of such securities, cash,
investments and other items held by such institution. Any such securities, cash,
investments and other items so received by the Collateral Agent shall (in the
sole and absolute discretion of the Collateral Agent) be held as additional
Collateral for the Obligations or distributed in accordance with Section 7
hereof.

 

 

 

 9 

 

 

(vi)     Upon the occurrence and during the continuance of any breach or default
under any material License referred to in Schedule II hereto by any party
thereto other than a Grantor, the Grantor party thereto will, promptly after
obtaining knowledge thereof, give the Collateral Agent written notice of the
nature and duration thereof, specifying what action, if any, it has taken and
proposes to take with respect thereto and thereafter will take reasonable steps
to protect and preserve its rights and remedies in respect of such breach or
default, or will obtain or acquire an appropriate substitute License.

 

(vii)    Each Grantor will, at its expense, promptly deliver to the Collateral
Agent a copy of each notice or other communication received by it by which any
other party to any material License referred to in Schedule II hereto purports
to exercise any of its rights or affect any of its obligations thereunder,
together with a copy of any reply by such Grantor thereto.

 

(viii)  Each Grantor will exercise promptly and diligently each and every right
which it may have under each material License (other than any right of
termination) and will duly perform and observe in all respects all of its
obligations under each material License and will take all action reasonably
necessary to maintain such Licenses in full force and effect. No Grantor will,
without the prior written consent of the Collateral Agent, cancel, terminate,
amend or otherwise modify in any respect, or waive any provision of, any
material License referred to in Schedule II hereto.

Transfers and Other Liens.

 

(ix)      No Grantor will sell, assign (by operation of law or otherwise),
lease, license, exchange or otherwise transfer or dispose of any of the
Collateral, except (A) Inventory in the ordinary course of business and (B)
worn-out or obsolete assets not necessary to the business.

 

(x)       No Grantor will create, suffer to exist or grant any Lien upon or with
respect to any Collateral other than a Permitted Lien.

Intellectual Property.

 

(xi)     If applicable, each Grantor shall, upon the Collateral Agent's written
request, duly execute and deliver the applicable Intellectual Property Security
Agreement in the form attached hereto as Exhibit A. Each Grantor (either itself
or through licensees) will, and will cause each licensee thereof to, take all
action necessary to maintain all of the Intellectual Property in full force and
effect, including, without limitation, using the proper statutory notices and
markings and using the Trademarks on each applicable trademark class of goods in
order to so maintain the Trademarks in full force and free from any claim of
abandonment for non-use, and such Grantor will not (nor permit any licensee
thereof to) do any act or knowingly omit to do any act whereby any Intellectual
Property may become invalidated. Each Grantor will (A) cause to be taken all
necessary steps in any proceeding before the United States Patent and Trademark
Office and the United States Copyright Office or any similar office or agency in
any other country or political subdivision thereof to maintain each registration
of the Intellectual Property, including, without limitation, filing of renewals,
affidavits of use, affidavits of incontestability and opposition, interference
and cancellation proceedings and payment of maintenance fees, filing fees, taxes
or other governmental fees in the ordinary course of business and (B) take
commercially reasonable steps to protect, maintain and enforce all other
Intellectual Property. If any Intellectual Property is infringed,
misappropriated, diluted or otherwise violated in any material respect by a
third party, such Grantor shall (x) upon learning of such infringement,
misappropriation, dilution or other violation, promptly notify the Collateral
Agent and (y) to the extent such Grantor shall deem appropriate under the
circumstances, in the exercise of its reasonable judgment, promptly sue for
infringement, misappropriation, dilution or other violation, seek injunctive
relief where appropriate and recover any and all damages for such infringement,
misappropriation, dilution or other violation, or take such other actions as
such Grantor shall deem appropriate under the circumstances, in the exercise of
its reasonable judgment, to maintain, enforce and protect such Intellectual
Property. Each Grantor shall furnish to the Collateral Agent from time to time
upon its request statements and schedules further identifying and describing the
Intellectual Property and Licenses and such other reports in connection with the
Intellectual Property and Licenses as the Collateral Agent may reasonably
request, all in reasonable detail and promptly upon request of the Collateral
Agent, following receipt by the Collateral Agent of any such statements,
schedules or reports, such Grantor shall modify this Agreement by amending
Schedule II hereto, as the case may be, to include any Intellectual Property and
License, as the case may be, which becomes part of the Collateral under this
Agreement and shall execute and authenticate such documents, including, without
limitation, the applicable Intellectual Property Security Agreements, and do
such acts as shall be necessary or, in the judgment of the Collateral Agent,
desirable to subject such Intellectual Property and Licenses to the Lien and
security interest created by this Agreement. Notwithstanding anything herein to
the contrary, upon the occurrence and during the continuance of an Event of
Default, such Grantor may not abandon or otherwise permit any Intellectual
Property to become invalid without the prior written consent of the Collateral
Agent, and if any Intellectual Property is infringed, misappropriated, diluted
or otherwise violated by a third party, such Grantor will take such action as
the Collateral Agent shall deem appropriate under the circumstances to maintain,
enforce and protect such Intellectual Property.

 

 

 

 10 

 

 

(xii)     In no event shall a Grantor, either itself or through any agent,
employee, licensee or designee, file an application for the registration of any
Trademark or Copyright or the issuance of any Patent with the United States
Patent and Trademark Office or the United States Copyright Office, as
applicable, or in any similar office or agency of the United States or any
country or any political subdivision thereof unless it gives the Collateral
Agent prior written notice thereof. In the event that, after the date hereof, a
Grantor acquires any registration, or application for the registration, of any
Trademark or Copyright, or any issued Patent, or application for any Patent,
such Grantor shall provide the Collateral Agent written notice thereof with
thirty (30) days of acquiring such Trademark, Copyright or Patent, as
applicable. Upon request of the Collateral Agent, each Grantor shall execute,
authenticate and deliver any and all assignments, agreements, instruments,
documents and papers, including, without limitation, the applicable Intellectual
Property Security Agreements, as the Collateral Agent may reasonably request to
evidence the Collateral Agent's security interest hereunder in the foregoing
Intellectual Property and the General Intangibles of such Grantor relating
thereto or represented thereby, and such Grantor hereby appoints the Collateral
Agent its attorney-in-fact to execute and/or authenticate and file all such
writings for the foregoing purposes, all acts of such attorney being hereby
ratified and confirmed, and such power (being coupled with an interest) shall be
irrevocable until the complete conversion of all of the Company's obligations
under the Notes to equity securities of the Company and/or indefeasible payment
in full in cash of all obligations under the Notes (together with any matured
indemnification obligations as of the date of such conversion and/or payment,
but excluding any inchoate or unmatured contingent indemnification obligations).

 

(xiii)    Upon the Collateral Agent's request, each Grantor shall cause each
domain registrar where any of such Grantor's Internet domain names are
registered, whether as of the date of this Agreement or at any time hereafter,
to execute and deliver to the Collateral Agent a domain name control agreement,
in form and substance reasonably satisfactory to the Collateral Agent, duly
executed by such Grantor and such domain registrar, or enter into other
arrangements in form and substance satisfactory to the Collateral Agent,
pursuant to which such domain registrar shall irrevocably agree, inter alia,
that it will comply at any time with the instructions originated by the
Collateral Agent to such domain registrar directing substitution of the
Collateral Agent or its designee as the registered owner of such Internet domain
names, without further consent of such Grantor, which instructions the
Collateral Agent will not give to such domain registrar in the absence of a
continuing Event of Default.

 

Deposit, Commodities and Securities Accounts. Upon the Collateral Agent's
request and unless otherwise agreed by Agent, each Grantor shall cause each bank
and other financial institution with an account referred to in Schedule IV
hereto to execute and deliver to the Collateral Agent a control agreement, in
form and substance reasonably satisfactory to the Collateral Agent, duly
executed by such Grantor and such bank or financial institution, or enter into
other arrangements in form and substance satisfactory to the Collateral Agent,
pursuant to which such institution shall irrevocably agree, inter alia, that (i)
it will comply at any time with the instructions originated by the Collateral
Agent to such bank or financial institution directing the disposition of cash,
Commodity Contracts, securities, Investment Property and other items from time
to time credited to such account, without further consent of such Grantor, which
instructions the Collateral Agent will not give to such bank or other financial
institution in the absence of a continuing Event of Default, (ii) all cash,
Commodity Contracts, securities, Investment Property and other items of such
Grantor deposited with such institution shall be subject to a perfected, first
priority security interest in favor of the Collateral Agent, (iii) any right of
set off, banker's Lien or other similar Lien, security interest or encumbrance
shall be fully waived as against the Collateral Agent, and (iv) upon receipt of
written notice from the Collateral Agent during the continuance of an Event of
Default, such bank or financial institution shall immediately send to the
Collateral Agent by wire transfer (to such account as the Collateral Agent shall
specify, or in such other manner as the Collateral Agent shall direct) all such
cash, the value of any Commodity Contracts, securities, Investment Property and
other items held by it. Without the prior written consent of the Collateral
Agent, such Grantor shall not make or maintain any Deposit Account, Commodity
Account or Securities Account except for the accounts set forth in Schedule IV
hereto. The provisions of this paragraph 5(i) shall not apply to (i) Deposit
Accounts for which the Collateral Agent is the depositary and (ii) Deposit
Accounts specially and exclusively used for payroll, payroll taxes and other
employee wage and benefit payments to or for the benefit of a Grantor's salaried
employees.

 

Motor Vehicles.

 

(xiv)    Each Grantor shall deliver to the Collateral Agent originals of the
certificates of title or ownership for all motor vehicles owned by it with the
Collateral Agent listed as lienholder, for the benefit of the Buyers.

 

 

 

 11 

 

 

(xv)    Each Grantor hereby appoints the Collateral Agent as its
attorney-in-fact, effective the date hereof and terminating upon the termination
of this Agreement, for the purpose of (A) executing on behalf of such Grantor
title or ownership applications for filing with appropriate state agencies to
enable motor vehicles now owned or hereafter acquired by such Grantor to be
retitled and the Collateral Agent listed as lienholder thereof, (B) filing such
applications with such state agencies, and (C) executing such other documents
and instruments on behalf of, and taking such other action in the name of, such
Grantor as the Collateral Agent may deem necessary or advisable to accomplish
the purposes hereof (including, without limitation, for the purpose of creating
in favor of the Collateral Agent a perfected Lien on the motor vehicles and
exercising the rights and remedies of the Collateral Agent hereunder). This
appointment as attorney-in-fact is coupled with an interest and is irrevocable
until the complete conversion of all of the Company's obligations under the
Notes to equity securities of the Company and/or indefeasible payment in full in
cash of all obligations under the Notes (together with any matured
indemnification obligations as of the date of such conversion and/or payment,
but excluding any inchoate or unmatured contingent indemnification obligations).

 

(xvi)   Any certificates of title or ownership delivered pursuant to the terms
hereof shall be accompanied by odometer statements for each motor vehicle
covered thereby.

 

(xvii)  So long as no Event of Default shall have occurred and be continuing,
upon the request of such Grantor, the Collateral Agent shall execute and deliver
to such Grantor such instruments as such Grantor shall reasonably request to
remove the notation of the Collateral Agent as lienholder on any certificate of
title for any motor vehicle; provided, however, that any such instruments shall
be delivered, and the release effective, only upon receipt by the Collateral
Agent of a certificate from such Grantor stating that such motor vehicle is to
be sold or has suffered a casualty loss (with title thereto passing to the
casualty insurance company therefor in settlement of the claim for such loss)
and the amount that such Grantor will receive as sale proceeds or insurance
proceeds. Any proceeds of such sale or casualty loss shall be paid to the
Collateral Agent hereunder immediately upon receipt, to be applied to the
Obligations then outstanding.

 

Control. Each Grantor hereby agrees to take any or all action that may be
necessary or desirable or that the Collateral Agent may request in order for the
Collateral Agent to obtain control in accordance with Sections 9-105 – 9-107 of
the Code with respect to the following Collateral: (i) Electronic Chattel Paper,
(ii) Investment Property, (iii) Pledged Interests and (iv) Letter-of-Credit
Rights.

 

Inspection and Reporting. Each Grantor shall permit the Collateral Agent, or any
agent or representatives thereof or such professionals or other Persons as the
Collateral Agent may designate, not more than once a year in the absence of an
Event of Default, (i) to examine and make copies of and abstracts from such
Grantor's records and books of account, (ii) to visit and inspect its
properties, (iii) to verify materials, leases, Instruments, Accounts, Inventory
and other assets of such Grantor from time to time, (iii) to conduct audits,
physical counts, appraisals and/or valuations, examinations at the locations of
such Grantor. Each Grantor shall also permit the Collateral Agent, or any agent
or representatives thereof or such professionals or other Persons as the
Collateral Agent may designate to discuss such Grantor's affairs, finances and
accounts with any of its officers subject to the execution by the Collateral
Agent or its designee(s) of a mutually agreeable confidentiality agreement.

 

Future Subsidiaries. If any Grantor shall hereafter create or acquire any
Subsidiary, simultaneously with the creation of acquisition of such Subsidiary,
such Grantor shall cause such Subsidiary to become a party to this Agreement as
an additional “Grantor” hereunder and to become a party to the Guaranty as an
additional “Guarantor” thereunder, and to duly execute and/or deliver such
opinions of counsel and other documents, in form and substance acceptable to the
Collateral Agent, as the Collateral Agent shall reasonably request with respect
thereto.

 

 

 

 12 

 

 

Section 6.      Additional Provisions Concerning the Collateral.

 

Each Grantor hereby (i) authorizes the Collateral Agent to file one or more
Uniform Commercial Code financing or continuation statements, and amendments
thereto, relating to the Collateral (including, without limitation, financing
statements describing the Collateral as “all assets” or “all personal property”
or words of similar effect) and (ii) ratifies such authorization to the extent
that the Collateral Agent has filed any such financing or continuation
statements, or amendments thereto, prior to the date hereof. A photocopy or
other reproduction of this Agreement or any financing statement covering the
Collateral or any part thereof shall be sufficient as a financing statement
where permitted by law.

 

Each Grantor hereby irrevocably appoints the Collateral Agent as its
attorney-in-fact and proxy, with full authority in the place and stead of such
Grantor and in the name of such Grantor or otherwise, from time to time in the
Collateral Agent's discretion, so long as an Event of Default shall have
occurred and is continuing, to take any action and to execute any instrument
which the Collateral Agent may deem necessary or advisable to accomplish the
purposes of this Agreement (subject to the rights of such Grantor under Section
5 hereof), including, without limitation, (i) to obtain and adjust insurance
required to be paid to the Collateral Agent pursuant to Section 5(e) hereof,
(ii) to ask, demand, collect, sue for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in respect of
any Collateral, (iii) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper in connection with clause (i) or (ii)
above, (iv) to file any claims or take any action or institute any proceedings
which the Collateral Agent may deem necessary or desirable for the collection of
any Collateral or otherwise to enforce the rights of the Collateral Agent and
the Buyers with respect to any Collateral, and (v) to execute assignments,
licenses and other documents to enforce the rights of the Collateral Agent and
the Buyers with respect to any Collateral. This power is coupled with an
interest and is irrevocable until the complete conversion of all of the
Company's obligations under the Notes to equity securities of the Company and/or
indefeasible payment in full in cash of all obligations under the Notes
(together with any matured indemnification obligations as of the date of such
conversion and/or payment, but excluding any inchoate or unmatured contingent
indemnification obligations).

 

For the purpose of enabling the Collateral Agent to exercise rights and remedies
hereunder, at such time as the Collateral Agent shall be lawfully entitled to
exercise such rights and remedies upon and during an Event of Default, and for
no other purpose, each Grantor hereby grants to the Collateral Agent, to the
extent assignable, an irrevocable, non-exclusive license (exercisable without
payment of royalty or other compensation to such Grantor) to use, assign,
license or sublicense any Intellectual Property now owned or hereafter acquired
by such Grantor, wherever the same may be located, including in such license
reasonable access to all media in which any of the licensed items may be
recorded or stored and to all computer programs used for the compilation or
printout thereof. Notwithstanding anything contained herein to the contrary, but
subject to the provisions of the Securities Purchase Agreement that limit the
right of such Grantor to dispose of its property and Section 5(h) hereof, so
long as no Event of Default shall have occurred and be continuing, such Grantor
may exploit, use, enjoy, protect, license, sublicense, assign, sell, dispose of
or take other actions with respect to the Intellectual Property in the ordinary
course of its business. In furtherance of the foregoing, unless an Event of
Default shall have occurred and be continuing, the Collateral Agent shall from
time to time, upon the request of a Grantor, execute and deliver any
instruments, certificates or other documents, in the form so requested, which
such Grantor shall have certified are appropriate (in such Grantor's judgment)
to allow it to take any action permitted above (including relinquishment of the
license provided pursuant to this clause (c) as to any Intellectual Property).
Further, upon the complete conversion of all of the Company's obligations under
the Notes to equity securities of the Company and/or indefeasible payment in
full in cash of all obligations under the Notes (together with any matured
indemnification obligations as of the date of such conversion and/or payment,
but excluding any inchoate or unmatured contingent indemnification obligations),
the Collateral Agent (subject to Section 10(f) hereof) shall release and
reassign to such Grantor all of the Collateral Agent's right, title and interest
in and to the Intellectual Property, all without recourse, representation or
warranty whatsoever. The exercise of rights and remedies hereunder by the
Collateral Agent shall not terminate the rights of the holders of any licenses
or sublicenses theretofore granted by such Grantor in accordance with the second
sentence of this clause (c). Each Grantor hereby releases the Collateral Agent
from any claims, causes of action and demands at any time arising out of or with
respect to any actions taken or omitted to be taken by the Collateral Agent
under the powers of attorney granted herein other than actions taken or omitted
to be taken through the Collateral Agent's gross negligence or willful
misconduct, as determined by a final determination of a court of competent
jurisdiction.

 

 

 

 13 

 

 

If a Grantor fails to perform any agreement contained herein, the Collateral
Agent may itself perform, or cause performance of, such agreement or obligation,
in the name of such Grantor or the Collateral Agent, and the expenses of the
Collateral Agent incurred in connection therewith shall be payable by such
Grantor pursuant to Section 8 hereof and shall be secured by the Collateral.

 

The powers conferred on the Collateral Agent hereunder are solely to protect its
interest in the Collateral and shall not impose any duty upon it to exercise any
such powers. Except for the safe custody of any Collateral in its possession and
the accounting for moneys actually received by it hereunder, the Collateral
Agent shall have no duty as to any Collateral or as to the taking of any
necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral.

 

Anything herein to the contrary notwithstanding (i) each Grantor shall remain
liable under the Licenses and otherwise with respect to any of the Collateral to
the extent set forth therein to perform all of its obligations thereunder to the
same extent as if this Agreement had not been executed, (ii) the exercise by the
Collateral Agent of any of its rights hereunder shall not release such Grantor
from any of its obligations under the Licenses or otherwise in respect of the
Collateral, and (iii) the Collateral Agent shall not have any obligation or
liability by reason of this Agreement under the Licenses or with respect to any
of the other Collateral, nor shall the Collateral Agent be obligated to perform
any of the obligations or duties of such Grantor thereunder or to take any
action to collect or enforce any claim for payment assigned hereunder.

 

Section 7.      Remedies Upon Event of Default. If any Event of Default shall
have occurred and be continuing:

 

The Collateral Agent may exercise in respect of the Collateral, in addition to
any other rights and remedies provided for herein or otherwise available to it,
all of the rights and remedies of a secured party upon default under the Code
(whether or not the Code applies to the affected Collateral), and also may (i)
take absolute control of the Collateral, including, without limitation, transfer
into the Collateral Agent's name or into the name of its nominee or nominees (to
the extent the Collateral Agent has not theretofore done so) and thereafter
receive, for the benefit of the Collateral Agent, all payments made thereon,
give all consents, waivers and ratifications in respect thereof and otherwise
act with respect thereto as though it were the outright owner thereof, (ii)
require each Grantor to, and each Grantor hereby agrees that it will at its
expense and upon request of the Collateral Agent forthwith, assemble all or part
of its respective Collateral as directed by the Collateral Agent and make it
available to the Collateral Agent at a place or places to be designated by the
Collateral Agent that is reasonably convenient to both parties, and the
Collateral Agent may enter into and occupy any premises owned or leased by such
Grantor where the Collateral or any part thereof is located or assembled for a
reasonable period in order to effectuate the Collateral Agent's rights and
remedies hereunder or under law, without obligation to such Grantor in respect
of such occupation, and (iii) without notice except as specified below and
without any obligation to prepare or process the Collateral for sale, (A) sell
the Collateral or any part thereof in one or more parcels at public or private
sale, at any of the Collateral Agent's offices or elsewhere, for cash, on credit
or for future delivery, and at such price or prices and upon such other terms as
the Collateral Agent may deem commercially reasonable and/or (B) lease, license
or dispose of the Collateral or any part thereof upon such terms as the
Collateral Agent may deem commercially reasonable. Each Grantor agrees that, to
the extent notice of sale or any other disposition of its respective Collateral
shall be required by law, at least ten (10) days' notice to such Grantor of the
time and place of any public sale or the time after which any private sale or
other disposition of its respective Collateral is to be made shall constitute
reasonable notification. The Collateral Agent shall not be obligated to make any
sale or other disposition of any Collateral regardless of notice of sale having
been given. The Collateral Agent may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so
adjourned. Each Grantor hereby waives any claims against the Collateral Agent
and the Buyers arising by reason of the fact that the price at which its
respective Collateral may have been sold at a private sale was less than the
price which might have been obtained at a public sale or was less than the
aggregate amount of the Obligations, even if the Collateral Agent accepts the
first offer received and does not offer such Collateral to more than one
offeree, and waives all rights that such Grantor may have to require that all or
any part of such Collateral be marshalled upon any sale (public or private)
thereof. Each Grantor hereby acknowledges that (i) any such sale of its
respective Collateral by the Collateral Agent shall be made without warranty,
(ii) the Collateral Agent may specifically disclaim any warranties of title,
possession, quiet enjoyment or the like, and (iii) such actions set forth in
clauses (i) and (ii) above shall not adversely affect the commercial
reasonableness of any such sale of Collateral. In addition to the foregoing, (1)
upon written notice to any Grantor from the Collateral Agent, such Grantor shall
cease any use of the Intellectual Property or any Trademark similar to any
Trademark contained in the Collateral for any purpose described in such notice;
(2) the Collateral Agent may, at any time and from time to time, upon 10 days'
prior notice to such Grantor, license, whether general, special or otherwise,
and whether on an exclusive or non-exclusive basis, any of the Intellectual
Property, throughout the universe for such term or terms, on such conditions,
and in such manner, as the Collateral Agent shall in its sole discretion
determine to the extent consistent with any restrictions or conditions imposed
upon such Grantor with respect to such Intellectual Property by license or other
contractual arrangement; and (2) the Collateral Agent may, at any time, pursuant
to the authority granted in Section 6 hereof (such authority being effective
upon the occurrence and during the continuance of an Event of Default), execute
and deliver on behalf of such Grantor, one or more instruments of assignment of
the Intellectual Property (or any application or registration thereof), in form
suitable for filing, recording or registration in any country.

 

 

 

 14 

 

 

Any cash held by the Collateral Agent as Collateral and all Cash Proceeds
received by the Collateral Agent in respect of any sale of or collection from,
or other realization upon, all or any part of the Collateral may, in the
discretion of the Collateral Agent, be held by the Collateral Agent as
collateral for, and/or then or at any time thereafter applied (after payment of
any amounts payable to the Collateral Agent pursuant to Section 8 hereof) in
whole or in part by the Collateral Agent against, all or any part of the
Obligations in such order as the Collateral Agent shall elect, consistent with
the provisions of the Securities Purchase Agreement. Any surplus of such cash or
Cash Proceeds held by the Collateral Agent and remaining after the complete
conversion of all of the Company's obligations under the Notes to equity
securities of the Company and/or indefeasible payment in full in cash of all
obligations under the Notes (together with any matured indemnification
obligations as of the date of such conversion and/or payment, but excluding any
inchoate or unmatured contingent indemnification obligations) shall be paid over
to whomsoever shall be lawfully entitled to receive the same or as a court of
competent jurisdiction shall direct.

 

In the event that the proceeds of any such sale, collection or realization are
insufficient to pay all amounts to which the Collateral Agent and the Buyers are
legally entitled, each Grantor shall be liable for the deficiency, together with
interest thereon at the highest rate specified in any of the applicable
Transaction Documents for interest on overdue principal thereof or such other
rate as shall be fixed by applicable law, together with the costs of collection
and the reasonable fees, costs, expenses and other client charges of any
attorneys employed by the Collateral Agent to collect such deficiency.

 

Each Grantor hereby acknowledges that if the Collateral Agent complies with any
applicable state, provincial, or federal law requirements in connection with a
disposition of the Collateral, such compliance will not adversely affect the
commercial reasonableness of any sale or other disposition of the Collateral.

 

The Collateral Agent shall not be required to marshal any present or future
collateral security (including, but not limited to, this Agreement and the
Collateral) for, or other assurances of payment of, the Obligations or any of
them or to resort to such collateral security or other assurances of payment in
any particular order, and all of the Collateral Agent's rights hereunder and in
respect of such collateral security and other assurances of payment shall be
cumulative and in addition to all other rights, however existing or arising. To
the extent that each Grantor lawfully may, such Grantor hereby agrees that it
will not invoke any law relating to the marshalling of collateral which might
cause delay in or impede the enforcement of the Collateral Agent's rights under
this Agreement or under any other instrument creating or evidencing any of the
Obligations or under which any of the Obligations is outstanding or by which any
of the Obligations is secured or payment thereof is otherwise assured, and, to
the extent that it lawfully may, such Grantor hereby irrevocably waives the
benefits of all such laws.

 

Section 8.      Indemnity and Expenses.

 

Each Grantor agrees, jointly and severally, to defend, protect, indemnify and
hold the Collateral Agent and each of the Buyers, jointly and severally,
harmless from and against any and all claims, damages, losses, liabilities,
obligations, penalties, fees, costs and expenses (including, without limitation,
reasonable legal fees, costs, expenses, and disbursements of such Person's
counsel) to the extent that they arise out of or otherwise result from this
Agreement (including, without limitation, enforcement of this Agreement), except
claims, losses or liabilities resulting solely and directly from such Person's
gross negligence or willful misconduct, as determined by a final judgment of a
court of competent jurisdiction.

 

Each Grantor agrees, jointly and severally, to, upon demand, pay to the
Collateral Agent the amount of any and all costs and expenses, including the
reasonable fees, costs, expenses and disbursements of counsel for the Collateral
Agent and of any experts and agents (including, without limitation, any
collateral trustee which may act as agent of the Collateral Agent), which the
Collateral Agent may incur in connection with (i) the preparation, negotiation,
execution, delivery, recordation, administration, amendment, waiver or other
modification or termination of this Agreement subject to and to the extent under
Section 4(f) of the Securities Purchase Agreement, (ii) the custody,
preservation, use or operation of, or the sale of, collection from, or other
realization upon, any Collateral, (iii) the exercise or enforcement of any of
the rights of the Collateral Agent hereunder, or (iv) the failure by any Grantor
to perform or observe any of the provisions hereof.

 

 

 

 15 

 

 

Section 9.      Notices, Etc. All notices and other communications provided for
hereunder shall be in writing and shall be mailed (by certified mail, postage
prepaid and return receipt requested), telecopied or delivered, if to a Grantor
at its address specified below and if to the Collateral Agent to it, at its
address specified below; or as to any such Person, at such other address as
shall be designated by such Person in a written notice to such other Person
complying as to delivery with the terms of this Section 9. All such notices and
other communications shall be effective (a) if sent by certified mail, return
receipt requested, when received or five days after deposited in the mails,
whichever occurs first, (b) if telecopied or sent by electronic mail, when
transmitted (during normal business hours), or (c) if delivered, upon delivery.

 

Section 10.    Miscellaneous.

 

No amendment of any provision of this Agreement shall be effective unless it is
in writing and signed by each Grantor and the Collateral Agent, and no waiver of
any provision of this Agreement, and no consent to any departure by a Grantor
therefrom, shall be effective unless it is in writing and signed by the
Collateral Agent, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.

 

No failure on the part of the Collateral Agent to exercise, and no delay in
exercising, any right hereunder or under any of the other Transaction Documents
shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right preclude any other or further exercise thereof or the exercise of
any other right. The rights and remedies of the Collateral Agent or any Buyer
provided herein and in the other Transaction Documents are cumulative and are in
addition to, and not exclusive of, any rights or remedies provided by law. The
rights of the Collateral Agent or any Buyer under any of the other Transaction
Documents against any party thereto are not conditional or contingent on any
attempt by such Person to exercise any of its rights under any of the other
Transaction Documents against such party or against any other Person, including
but not limited to, any Grantor.

 

To the extent permitted by applicable law, each Grantor hereby waives
promptness, diligence, notice of acceptance and any other notice with respect to
any of the Obligations and this Agreement and any requirement that the
Collateral Agent exhaust any right or take any action against any other Person
or any Collateral. Each Grantor acknowledges that it will receive direct and
indirect benefits from the financing arrangements contemplated herein and that
the waiver set forth in this Section 10(c) is knowingly made in contemplation of
such benefits. The Grantors hereby waive any right to revoke this Agreement, and
acknowledge that this Agreement is continuing in nature and applies to all
Obligations, whether existing now or in the future.

 

No Grantor may exercise any rights that it may now or hereafter acquire against
any other Grantor that arise from the existence, payment, performance or
enforcement of any Grantor's obligations under this Agreement, including,
without limitation, any right of subrogation, reimbursement, exoneration,
contribution or indemnification and any right to participate in any claim or
remedy of the Collateral Agent against any Grantor or any Collateral, whether or
not such claim, remedy or right arises in equity or under contract, statute or
common law, including, without limitation, the right to take or receive from any
Grantor, directly or indirectly, in cash or other property or by set-off or in
any other manner, payment or security solely on account of such claim, remedy or
right, unless and until the complete conversion of all of the Company's
obligations under the Notes to equity securities of the Company and/or
indefeasible payment in full in cash of all obligations under the Notes
(together with any matured indemnification obligations as of the date of such
conversion and/or payment, but excluding any inchoate or unmatured contingent
indemnification obligations). If any amount shall be paid to a Grantor in
violation of the immediately preceding sentence at any time prior to the
complete conversion of all of the Company's obligations under the Notes to
equity securities of the Company and/or indefeasible payment in full in cash of
all obligations under the Notes (together with any matured indemnification
obligations as of the date of such conversion and/or payment, but excluding any
inchoate or unmatured contingent indemnification obligations), such amount shall
be held in trust for the benefit of the Collateral Agent and shall forthwith be
paid to the Collateral Agent to be credited and applied to the Obligations and
all other amounts payable under the Transaction Documents, whether matured or
unmatured, in accordance with the terms of the Transaction Documents, or to be
held as Collateral for any Obligations or other amounts payable under the
Transaction Documents thereafter arising.

 

Any provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining portions
hereof or thereof or affecting the validity or enforceability of such provision
in any other jurisdiction.

 

 

 

 16 

 

 

This Agreement shall create a continuing security interest in the Collateral and
shall (i) remain in full force and effect until the complete conversion of all
of the Company's obligations under the Notes to equity securities of the Company
and/or indefeasible payment in full in cash of all obligations under the Notes
(together with any matured indemnification obligations as of the date of such
conversion and/or payment, but excluding any inchoate or unmatured contingent
indemnification obligations), and (ii) be binding on each Grantor and all other
Persons who become bound as debtor to this Agreement in accordance with Section
9-203(d) of the Code and shall inure, together with all rights and remedies of
the Collateral Agent and the Buyers hereunder, to the benefit of the Collateral
Agent and the Buyers and their respective permitted successors, transferees and
assigns. Without limiting the generality of clause (ii) of the immediately
preceding sentence, without notice to any Grantor, the Collateral Agent and the
Buyers may assign or otherwise transfer their rights and obligations under this
Agreement and any of the other Transaction Documents, to any other Person and
such other Person shall thereupon become vested with all of the benefits in
respect thereof granted to the Collateral Agent and the Buyers herein or
otherwise. Upon any such assignment or transfer, all references in this
Agreement to the Collateral Agent or any such Buyer shall mean the assignee of
the Collateral Agent or such Buyer. None of the rights or obligations of any
Grantor hereunder may be assigned or otherwise transferred without the prior
written consent of the Collateral Agent, and any such assignment or transfer
without the consent of the Collateral Agent shall be null and void.

 

Upon the complete conversion of all of the Company's obligations under the Notes
to equity securities of the Company and/or indefeasible payment in full in cash
of all obligations under the Notes (together with any matured indemnification
obligations as of the date of such conversion and/or payment, but excluding any
inchoate or unmatured contingent indemnification obligations), (i) this
Agreement and the security interests created hereby shall terminate and all
rights to the Collateral shall revert to the respective Grantor that granted
such security interests hereunder, and (ii) the Collateral Agent will, upon such
Grantor's request and at such Grantor's expense, (A) return to such Grantor such
of the Collateral as shall not have been sold or otherwise disposed of or
applied pursuant to the terms hereof, and (B) execute and deliver to such
Grantor such documents as such Grantor shall reasonably request to evidence such
termination, all without any representation, warranty or recourse whatsoever.

 

THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT AS REQUIRED BY MANDATORY
PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT THE VALIDITY AND PERFECTION OR
THE PERFECTION AND THE EFFECT OF PERFECTION OR NON-PERFECTION OF THE SECURITY
INTEREST CREATED HEREBY, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE GOVERNED BY THE LAW OF A JURISDICTION OTHER THAN THE STATE OF NEW
YORK.

 

ANY LEGAL ACTION, SUIT OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
DOCUMENT RELATED THERETO MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK
IN THE COUNTY OF NEW YORK OR THE UNITED STATES OF AMERICA FOR THE SOUTHERN
DISTRICT OF NEW YORK, AND APPELLATE COURTS THEREOF, AND, BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH GRANTOR HEREBY ACCEPTS FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS. EACH GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION, INCLUDING, WITHOUT LIMITATION,
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION, SUIT OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS AND CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE
COURT.

 

EACH GRANTOR AND (BY ITS ACCEPTANCE OF THE BENEFITS OF THIS AGREEMENT) THE
COLLATERAL AGENT WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED ON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT
OR ANY OF THE OTHER TRANSACTION DOCUMENTS, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, VERBAL OR WRITTEN STATEMENT OR OTHER ACTION OF THE PARTIES HERETO.

 

Nothing contained herein shall affect the right of the Collateral Agent to serve
process in any other manner permitted by law or commence legal proceedings or
otherwise proceed against any Grantor or any property of such Grantor in any
other jurisdiction.

 

Each Grantor irrevocably and unconditionally waives any right it may have to
claim or recover in any legal action, suit or proceeding referred to in this
Section any special, exemplary, punitive or consequential damages.

 

Section headings herein are included for convenience of reference only and shall
not constitute a part of this Agreement for any other purpose.

 

This Agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which shall be deemed to be an
original, but all of which taken together constitute one in the same Agreement.

 

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

 

 

 

 17 

 

 

IN WITNESS WHEREOF, each Grantor has caused this Agreement to be executed and
delivered by its officer thereunto duly authorized, as of the date first above
written.

 

 

  GENIUS BRANDS INTERNATIONAL, INC., a Nevada corporation           By:   Name:
 
Title:       Address for Notices:               Email: bdenton@gnusbrands.com  
Facsimile: (310) 273-4202           A SQUARED ENTERTAINMENT LLC, a Delaware
limited liability company           By:   Name:   Title:           RAINBOW
RANGERS PRODUCTIONS LLC, a California limited liability company           By:  
Name:   Title:         ACCEPTED BY:           By:   Name:   Title:   Address:  

 

 

 

 

 18 

 

 

SCHEDULE I

LEGAL NAMES; ORGANIZATIONAL IDENTIFICATION NUMBERS; STATES OR JURISDICTION OF
ORGANIZATION

 

Legal Name

State of Organization

Type of Organization

Organizational Identification Number    

 

 

 

 

   

 

 

 

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 I-1 

 

 

SCHEDULE II

 

 

 

INTELLECTUAL PROPERTY AND LICENSES; TRADE NAMES

 

A.COPYRIGHTS

 

 

B.PATENTS

 

 

C.TRADEMARKS

 

 

D.OTHER PROPRIETARY RIGHTS

 

 

E.TRADE NAMES

 

 

F.NAME OF, AND EACH TRADE NAME USED BY, EACH PERSON FROM WHICH A GRANTOR HAS
ACQUIRED ANY SUBSTANTIAL PART OF THE COLLATERAL WITHIN THE PRECEDING FIVE YEARS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 II-1 

 

 

SCHEDULE III

 

 

LOCATIONS

 

 

Grantor

 

 

Location

 

 

Description

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 III-1 

 

 

SCHEDULE IV

PROMISSORY NOTES, SECURITIES, DEPOSIT ACCOUNTS, SECURITIES ACCOUNTS AND
COMMODITIES ACCOUNTS

 

 

 

A. Promissory Notes:

 

 

B. Securities and Other Instruments:

 

 

C. Deposit Accounts, Securities Accounts and Commodities Accounts:

 

 

Grantor

 

Name and Address of Institution Maintaining Account

Account Number

Type of Account

 

 

 

 

   

 

 

 

   

 

 

 

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 IV-1 

 

 

SCHEDULE V

 

 

UCC-1 FINANCING STATEMENTS

 

 

Name of Grantor

 

 

Secretary of State

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 V-1 

 

 

SCHEDULE VI

 

COMMERCIAL TORT CLAIMS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 VI-1 

 

 

SCHEDULE VII

PLEDGED DEBT

 

 

Grantor

 

Name of Maker Description Original Principal Amount

 

 

     

 

 

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 VII-1 

 

 

SCHEDULE VIII

PLEDGED SHARES

 

Grantor

Name of Pledged Issuer

Percentage of

Outstanding

Shares/Units

Class

Certificate Number

 

 

       

 

 

       

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 VIII-1 

 

 

EXHIBIT A

 

 

[TRADEMARK] [PATENT] [COPYRIGHT] SECURITY AGREEMENT

 

WHEREAS, ______________________________ (the “Assignor”) [has adopted, used and
is using, and holds all right, title and interest in and to, the trademarks and
service marks listed on the annexed Schedule 1A, which trademarks and service
marks are registered or applied for in the United States Patent and Trademark
Office (the “Trademarks”)] [holds all right, title and interest in the letter
patents, design patents and utility patents, and all applications therefor,
listed on the annexed Schedule 1A, which patents are issued or applied for in
the United States Patent and Trademark Office (the “Patents”)] [holds all right,
title and interest in the copyrights listed on the annexed Schedule 1A, which
copyrights are registered or applied for in the United States Copyright Office
(the “Copyrights”)];

 

WHEREAS, the Assignor has entered into a Pledge and Security Agreement, dated as
of [__], 2020 (as amended, restated or otherwise modified from time to time the
“Security Agreement”), in favor of ___________________, as collateral agent for
certain buyers (the “Assignee”);

 

WHEREAS, pursuant to the Security Agreement, the Assignor has assigned and
granted to the Assignee for the benefit of the Buyers (as defined in the
Security Agreement) a continuing security interest in all right, title and
interest of the Assignor in, to and under the [Trademarks, together with, among
other things, the good-will of the business symbolized by the Trademarks]
[Patents] [Copyrights], including, without limitation, all applications,
registrations and recordings thereof, as applicable, and all proceeds thereof,
including, without limitation, any and all causes of action which may exist by
reason of infringement, misappropriation or other violation thereof and any and
all damages arising from past, present and future infringements,
misappropriations or other violations thereof (the “Collateral”), to secure the
payment, performance and observance of the “Obligations” (as defined in the
Security Agreement);

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Assignor does hereby pledge, convey, sell,
assign, transfer and set over unto the Assignee and grants to the Assignee for
the benefit of the Buyers a continuing security interest in the Collateral.

 

The Assignor does hereby further acknowledge and affirm that the rights and
remedies of the Assignee with respect to the Collateral are more fully set forth
in the Security Agreement, the terms and provisions of which are hereby
incorporated herein by reference as if fully set forth herein. In the event of a
conflict between any provision of this [Trademark][Patent][Copyright] Security
and the Security Agreement, the terms of the Security Agreement shall govern.

 

IN WITNESS WHEREOF, the Assignor has caused this [Trademark][Patent][Copyright]
Security Agreement to be duly executed by its officer thereunto duly authorized
as of _____________, 2020

 

[GRANTOR]       By:____________________________

Name:

Title:

 

 

 A-1 

 

 

SCHEDULE 1A TO [TRADEMARK][PATENT][COPYRIGHT] SECURITY AGREEMENT

 

 

[Trademarks and Trademark Applications]

[Patent and Patent Applications]

[Copyright and Copyright Applications]

Owned by ______________________________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 A-2