Document:

Exhibit 10.2

 

MOSYS, INC.

 

SECURITY AGREEMENT

 

THIS SECURITY AGREEMENT (this “Agreement”) dated as of March 14, 2016 (the “Effective Date”) is made by and among MoSys, Inc. (the “Company”), the 10% Senior Secured Convertible Note purchasers identified in Exhibit A hereto (the “Purchasers”), and Ingalls & Snyder LLC, a New York limited liability company, in its capacity as the agent for the Purchasers (“Purchasers’ Agent”).

 

RECITALS

 

A.                                    The Purchasers have agreed to lend the Company up to $8,000,000 pursuant to certain 10% Senior Secured Convertible Notes Due August 15, 2018 issued by the Company (the “Notes”), pursuant to the terms of the Senior Secured Convertible Note Purchase Agreement dated the same date as this Agreement (the “Purchase Agreement”).

 

B.                                    To induce the Purchasers to lend to the Company under the Notes, the Company has agreed to pledge and grant a security interest in the Collateral as security for the Secured Obligations (each as defined below).

 

NOW, THEREFORE, the parties agree as follows:

 

1.                                      DEFINITIONS.

 

All capitalized terms defined in the Purchase Agreement have the same meanings when used in this Agreement.  In addition, the following capitalized terms used in this Agreement shall have the following meanings under this Agreement:

 

1.1                               “Collateral” means the property described in Exhibit B hereto.

 

1.2                               “Company Intellectual Property Rights” means all of the Company’s:  (i) United States and foreign letters patent, utility models, and applications therefor, and other indicia of invention ownership, including any such rights granted upon any reissue, division, continuation or continuation-in-part applications; (ii) all copyright rights and all other literary property, software (in both object and source code), and author rights, whether or not copyrightable, all copyrights and copyrighted interests, and all mask works and registered mask works, including any registrations and renewals of any of the foregoing, which are owned by or licensed to the Company; (iii) trade secrets and knowhow with respect to all of the foregoing; (iv) trademarks and service marks; and (v) any and other intellectual property rights of any nature owned or licensed by the Company which are necessary to enable the Company to manufacture any of its products and other products which incorporate, contain, or embody any and all of the foregoing, including, without limitation, the registered intellectual property rights as listed on Exhibit C attached hereto.

 

1.3                               “Intellectual Property Security Agreement” means the instruments for perfecting security interests in Company Intellectual Property Rights referred to in Section 2.3.

 

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1.4                               “Secured Obligations” means the Company’s obligations and liabilities to the Purchasers under and pursuant to the Notes (including, without limitation, the Company’s obligation to timely pay the principal amount of, and interest on, the Notes) and any fees or other amounts payable by either the Company under any Loan Document.

 

1.5                               “Uniform Commercial Code” means the Uniform Commercial Code as in effect in the state of California from time to time or, by reason of mandatory application, any other applicable jurisdiction.

 

2.                                      GRANT OF SECURITY INTEREST; COLLATERAL.

 

2.1                               Grant.  Subject to the terms and conditions of the Loan Documents and as collateral security for the prompt payment in full when due (whether at stated maturity, by acceleration or otherwise) and performance of the Secured Obligations, the Company hereby pledges and grants to Purchasers’ Agent, for the exclusive benefit of Purchasers’ Agent and the Purchasers as their agent, a continuing security interest in all of the Company’s right, title and interest in and to the Collateral, whether now owned or hereafter acquired by the Company and whether now existing or hereafter coming into existence, which shall remain in effect until indefeasible payment and performance in full of all of the Secured Obligations.

 

2.2                               The Company Remains Liable.  The Company shall remain liable to perform its duties and obligations under the contracts and agreements included in the Collateral in accordance with their respective terms to the same extent as if this Agreement had not been executed and delivered.  The exercise by Purchasers’ Agent or any Purchaser of any right, remedy, power or privilege in respect of this Agreement shall not release the Company from any of its duties and obligations under such contracts and agreements.  Neither Purchasers’ Agent nor any Purchaser shall have any duty, obligation or liability under such contracts and agreements or in respect to any government approval included in the Collateral by reason of this Agreement or any other Loan Document, nor shall Purchasers’ Agent or any Purchaser be obligated to perform any of the duties or obligations of the Company under any such contract or agreement or any such government approval or to take any action to collect or enforce any claim (for payment) under any such contract or agreement or government approval.

 

2.3                               Perfection; Financing Statement.  Concurrently with the execution and delivery of this Agreement, the Company shall (a) file such financing statements and other documents in such offices (including without limitation the filing of notices with the United States Copyright Office and Patent and Trademark Office and any office in any other country for the perfection of security interests in the Company Intellectual Property Rights), including one or more Intellectual Property Security Agreements, as shall be necessary or as Purchasers’ Agent may request to perfect and establish the priority (subject only to Permitted Liens) of the Liens granted by this Agreement, and (b) take all such other actions as shall be necessary or as Purchasers’ Agent may request to perfect and establish the priority (subject only to such Permitted Liens) of the Liens granted by this Agreement.  If any recording or filing thereof (or the filing of any statements of continuation or assignment of any financing statement) is required to protect and preserve such lien or security interest, the Company shall at its cost execute the same at the time and in the manner requested by the Purchasers.  To the fullest extent permitted by applicable law, the Company authorizes Purchasers’ Agent to file any such financing statements without the

 

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signature of the Company, and each of the Purchasers authorizes Purchasers’ Agent to sign the Intellectual Property Security Agreements and other documents, certificates and instruments and take all other actions necessary or material to perfect and establish the priority of the Liens granted by this Agreement.

 

2.4                               Use of Collateral.  So long as an Event of Default does not exist, the Company shall have the right (a) to use and possess the Collateral, (b) to exercise its rights, title and interest in all contracts, agreements, licenses and government approvals related thereto, and (c) to manage its property and sell its inventory in the ordinary course of business.

 

3.                                      REPRESENTATIONS, WARRANTIES AND COVENANTS.

 

3.1                               Other Financing Statements.  The Company represents and warrants to the Purchasers and Purchasers’ Agent that, other than financing statements, security agreements, chattel mortgages, assignments, copyright security agreements or collateral assignments, patent or trademark security agreements or collateral assignments, fixture filings and other agreements or instruments executed, delivered, filed or recorded for the purpose of granting or perfecting any Lien in connection with any Permitted Lien and financing statements in favor of Purchasers’ Agent and the Purchasers, no effective financing statement or similar document naming the Company as debtor, assignor, grantor, mortgagor, pledgor or the like and covering all or any part of the Collateral is on file in any filing or recording office in any jurisdiction.

 

3.2                               Separate Obligations and Liens.  The Company acknowledges and agrees that, subject to Section 5:  (a) the Secured Obligations represent separate and distinct indebtedness, obligations and liabilities of the Company to each of the Purchasers, which the Company is separately obligated to each Purchaser to pay and perform, in each case regardless of whether or not any indebtedness, obligation or liability to any other Purchaser or any other person or entity, or any agreement, instrument or guaranty that evidences any such other indebtedness, liability or obligation, or any provision thereof, shall for any reason be or become void, voidable, unenforceable or discharged, whether by payment, performance, avoidance or otherwise; and (b) the Lien that secures each Purchaser’s respective Secured Obligations (i) is separate and distinct from any and all other Liens on the Collateral, (ii) is enforceable without regard to whether or not any other Lien shall be or become void, voidable or unenforceable or the indebtedness, obligations or liabilities secured by any such other Lien shall be discharged, whether by payment, performance, avoidance or otherwise, and (iii) shall not merge with or be impaired by any other Lien.

 

3.3                               Other Liens.  Without the prior written consent of Purchasers’ Agent, the Company shall not dispose of any Collateral, create, incur, assume or suffer to exist any Liens, except Permitted Liens, upon any Collateral, or file or suffer to be on file or authorize to be filed, in any jurisdiction, any financing statement or like instrument with respect to all or any part of the Collateral in which Purchasers Agent is not named as the sole lender for the benefit of the Purchasers; provided that no such consent will be required with respect to any disposition of Collateral pursuant to a Fundamental Change or in the ordinary course of the Company’s business;.

 

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3.4                               Applicable laws.  The Company shall not use the Collateral in violation of any applicable statute, ordinance, law or regulation or in violation of any insurance policy maintained by the Company with respect to the Collateral.

 

3.5                               Records; Insurance.  The Company will at all times keep in a manner reasonably satisfactory to Purchasers’ Agent accurate· and complete records of the-Collateral and will keep such Collateral insured to the extent similarly situated companies insure their assets.  Purchasers’ Agent shall be entitled, at reasonable times and intervals after reasonable notice to the Company, to enter any of the Company’s premises for purposes of inspecting the Collateral and the Company’s books and records relating thereto.

 

3.6                               Notices, Reports and Information.  The Company will (i) notify Purchasers’ Agent of any material claim made or asserted against the Collateral by any person or entity and of any material change in the composition of the Collateral or other event which could materially adversely affect the value of the Collateral or any Purchaser’s Lien thereon; (ii) furnish to Purchasers’ Agent such statements and schedules further identifying and describing the Collateral and such other reports and other information in connection with the Collateral as Purchasers’ Agent may reasonably request, all in reasonable detail; and (iii) upon request of Purchasers’ Agent make such demands and requests for information and reports as the Company is entitled to make in respect of the Collateral.

 

3.7                               Disposition of Collateral.  The Company will not, except in the ordinary course of its business which includes the granting of non-exclusive licenses to customers and other parties assisting the Company from time to time, (i) surrender or lose possession of (other than to Purchasers’ Agent), sell, lease, rent, or otherwise dispose of or transfer any of the Collateral or any right or interest therein, except to the extent permitted by this Agreement or the Purchase Agreement, or in the case of transactions not in excess of $100,000, or (ii) remove any of the Collateral from its present location (other than disposals of Collateral permitted by Section 3.7(i)) except upon at least 30 days’ prior written notice to Purchasers’ Agent.

 

3.8                               Further Assurances.  The Company agrees that, from time to time upon the written request of Purchasers’ Agent, the Company will execute and deliver such further documents and do such other acts and things as Purchasers’ Agent may reasonably request in order fully to effect the purposes of this Agreement.

 

3.9                               Organization and Qualification.  The Company is a corporation duly organized, validly existing and in good standing under the laws of Delaware.  The Company has all requisite power and authority to conduct its business and own its property.

 

3.10                        Intellectual Property.  The Company represents and warrants that Exhibit C lists all registered patents, trademarks, service marks, copyrights and mask works of the Company, and any and all applications for each of the foregoing, and the registration status of each of the foregoing.  The Company shall maintain the registration of its registered intellectual property, including, but not limited to, by paying required fees and submitting required filings with respect to such registered intellectual property from time to time, except with the consent of Purchasers’ Agent, which consent cannot be withheld unreasonably.  The Company shall continue to  prosecute patent applications as long as the Company in the exercise of reasonable discretion

 

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considers the inventions described in the applications to have potential material value to the Company in light of the costs and expenses of prosecution.

 

4.                                      DEFAULT.

 

4.1                               Remedies Upon Default.  Upon the occurrence and during the continuation of any Event of Default, the Purchasers shall have, in addition to all other rights and remedies provided under any of the Loan Documents or by applicable law, all of the rights and remedies of a secured party under the Uniform Commercial Code, including, but not limited to, the right to take possession of the Collateral (subject, in all cases, to the provisions set forth in the Security Agreement), and for that purpose Purchasers’ Agent may, and the Company hereby authorizes Purchasers’ Agent and its authorized representatives to, enter upon any premises on which Collateral may be located or situated and remove the same therefrom or without removal render the same unusable and may use or dispose of the Collateral on such premises without any liability for rent, storage, utilities or other sums, and upon request the Company shall, to the extent practicable, assemble and make the Collateral available to Purchasers’ Agent at a place to be designated by Purchasers’ Agent, which is reasonably convenient to the Company and Purchasers’ Agent.  The Company agrees that, to the extent notice of sale shall be required by law, at least five days’ notice to the Company of the time and place of any public sale or the time after which any private sale or any other intended disposition is to be made shall constitute reasonable notification of such sale or disposition.  Purchasers’ Agent shall also have the right to apply for and have a receiver appointed by a court of competent jurisdiction in any action taken by Purchasers’ Agent to enforce its rights and remedies hereunder, to manage, protect and preserve the Collateral or continue the operation of the business of the Company, and Purchasers’ Agent shall be entitled to collect all revenues and profits thereof and apply the same to the payment of all expenses and other charges of such receivership, including the compensation of the receiver, and to the payment of the Note until a sale or other disposition of such Collateral shall be finally made and consummated.  In the event of any disposition or collection of or any other realization upon all or any part of the Collateral, Purchasers’ Agent shall apply the proceeds of such disposition, collection or other realization as follows:

 

(1)                                 First, to the payment of the reasonable costs and expenses of Purchasers’ Agent and the Purchasers in exercising or enforcing their rights hereunder, including, but not limited to, costs and expenses incurred in retaking, holding or preparing the Collateral for sale, lease or other disposition, and to the payment of all expenses of the Purchasers pursuant to Section 6.4;

 

(2)                                 Second, to the payment of the Note and all other Obligations (as that term is defined in the Security Agreement); and

 

(3)                                 Third, the surplus, if any, shall be paid to the Company or to whomsoever may be lawfully entitled to receive such surplus.

 

4.2                               NO WAIVER OF RIGHTS BY PURCHASERS’ AGENT OR THE PURCHASERS.  PURCHASERS’ AGENT’S OR THE PURCHASERS’ ACCEPTANCE OF PARTIAL OR DELINQUENT PAYMENT FROM THE COMPANY UNDER ANY NOTE OR HEREUNDER, OR PURCHASERS’ AGENT’S OR THE PURCHASERS’ FAILURE TO

 

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EXERCISE ANY RIGHT HEREUNDER, SHALL NOT CONSTITUTE A WAIVER OF ANY OBLIGATION OF THE COMPANY HEREUNDER, OR ANY RIGHT OF PURCHASERS’ AGENT’S OR THE PURCHASERS HEREUNDER, AND SHALL NOT AFFECT IN ANY WAY THE RIGHT TO REQUIRE FULL PERFORMANCE AT ANY TIME THEREAFTER.

 

5.                                      APPOINTMENT OF AGENT.

 

5.1                               Appointment; Joint Action.  Each Purchaser hereby irrevocably appoints and authorizes Purchasers’ Agent to act as its agent under this Agreement with such powers as are specifically delegated to Purchasers’ Agent by the terms of the Purchase Agreement, together with such other powers as are reasonably incidental to such powers; provided, however, that any action required or permitted to be taken by Purchasers’ Agent under this Agreement or any other Loan Documents shall require the consent of Purchasers’ Agent. Without limiting the generality of the foregoing, Purchasers’ Agent shall be entitled under this Agreement upon the occurrence and continuation of any Event of Default (i) to ask, demand, collect, sue for, recover, receive and give receipt and discharge for amounts due and to become due under and in respect of all or any part of the Collateral; (ii) to receive; endorse and collect any instruments, documents and chattel paper in connection with clause (i) above (including any draft or check representing the proceeds of insurance or the return of unearned premiums); (iii) to file any claims or take any action or proceeding that Purchasers’ Agent may deem necessary or advisable for the collection of all or any part of the Collateral, including the collection of any compensation due and to become due under any contract or agreement with respect to all or any part of the Collateral; and (iv) to execute, in connection with any sale or disposition of the collateral under Section 4, any endorsements, assignments, bills of sale or other instruments of conveyance or transfer with respect to all or any part of the Collateral.

 

5.2                               Payments Pro Rata.  Purchasers’ Agent and the Purchasers agree that payments to the Purchasers under the Notes shall be made in proportion to the principal and accrued interest then outstanding under each Note on any such date of payment to each, until such obligations are paid or retired in full.

 

5.3                               Sharing of Payments.  If any Purchaser shall at any time receive any payment of principal, interest or other charge arising under a Note, or upon any other obligation of the Company or any sums by virtue of counterclaim, offset, or other lien that may be exercised, or from any security, other than payments made on the same date and pro rata to all the Purchasers, such Purchaser shall return such payment to Purchasers’ Agent, who shall immediately dispense such payment or payments ratably among all the Purchasers so as to maintain as near as possible the unpaid balance of the loans pro rata according to the Purchasers’ proportionate interests.

 

6.                                      MISCELLANEOUS.

 

6.1                               Termination.  When all Secured Obligations shall have been paid in full, this Agreement shall terminate, and Purchasers’ Agent shall forthwith cause to be assigned, transferred and delivered, against receipt but without any recourse, warranty or representation whatsoever, any remaining Collateral and money received in respect of the Collateral, to or on the order of the Company and to be released, canceled and granted back all licenses and rights referred to in Section 2.  Purchasers’ Agent shall also execute and deliver to the Company upon

 

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such termination such Uniform Commercial Code termination statements and such other documentation as shall be reasonably requested by the Company to effect the termination and release of the Liens granted by this Agreement on the Collateral.

 

6.2                               Waiver.  No failure on the part of Purchasers’ Agent or any Purchaser to exercise and no delay in exercising, and no course of dealing with respect to, any right, remedy, power or privilege under this Agreement shall operate as a waiver of such right, remedy, power or privilege, nor shall any single or partial exercise of any right, power or privilege under this Agreement preclude any other or further exercise of any such right, remedy, power or privilege or the exercise of any other right, remedy, power or privilege.  The rights, remedies, powers and privileges provided in this Agreement are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

 

6.3                               Notices.  All notices and other communications given in accordance with the provisions of Section 12.5 of the Purchase Agreement and addressed shall be deemed to have been given and received for all purposes of this Agreement and addressed to the intended recipient as follows, or to such other address or number as may be specified from time to time by like notice to the parties:

 

To the Company:

 

MoSys, Inc.
 3301 Olcott Street
 Santa Clara, CA 95054
 Facsimile No.:  (408) 418-7501
 Attention:  Chief Financial Officer

 

To Purchasers’ Agent:

 

Ingalls & Snyder  LLC
 1325 Avenue of the Americas
 New York, NY 10019
 Facsimile No.:  (212) 269-7893
 Attention:  Thomas Boucher

 

To the Purchasers:

 

To the address of each Purchaser as set forth on Exhibit A.

 

Any party may from time to time specify a different address for notices by like notice to the other parties.

 

6.4                               Expenses.  The Company agrees to pay or to reimburse Purchasers’ Agent and the Purchasers for reasonable costs and expenses (including reasonable attorney’s fees and expenses) that may be incurred by Purchasers’ Agent or the Purchasers in any effort to enforce any of the provisions of Section 4 or any of the obligations of the Company in respect of the Collateral or in connection with the preservation of the Lien of, or the rights of Purchasers’ Agent and the Purchasers, under this Agreement or with any actual or attempted sale, lease, disposition,

 

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exchange, collection, compromise, settlement or other realization in respect of, or care of the Collateral, including all such costs and expenses (and reasonable attorney’s fees and expenses) incurred in any bankruptcy, reorganization, workout or other similar proceeding.

 

6.5                               Amendments.  Any provision of this Agreement may be modified, supplemented or waived only by an instrument in writing duly executed by the Company and Purchasers’ Agent (with the consent of the Majority-in-Interest of the Notes).  Any such modification, supplement or waiver shall be for such period and subject to such conditions as shall be specified in the instrument effecting the same and shall be binding upon Purchasers’ Agent and each Purchaser, each holder of any of the Secured Obligations and the Company, and any such waiver shall be effective only in the specific instance and for the purposes for which given.

 

6.6                               Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the Company, Purchasers’ Agent, the Purchasers and each holder of any of the Secured Obligations and their respective successors and permitted assigns.

 

6.7                               Survival.  All representations and warranties made in this Agreement or in any certificate or other document delivered pursuant to or in connection with this.  Agreement shall survive the execution and delivery of this Agreement or such certificate or other document (as the case may be) or any deemed repetition of any such representation or warranty.

 

6.8                               Severability.  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 provisions of this Agreement, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

6.9                               Captions.  The table of contents and captions and section headings appearing in this Agreement are included solely for convenience of reference and are not intended to affect the interpretation of any provision of this Agreement.

 

6.10                        Counterparts.  This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument and any of the parties to this Agreement may execute this Agreement by signing any such counterpart.

 

6.11                        Governing Law; Submission to Jurisdiction.  This Agreement shall be governed by and construed under the laws of New York, without reference to its principles of conflicts of laws.

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the day and year first above written.

 

COMPANY:

 

	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    
					

 

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PURCHASERS’ AGENT:

 

	
 
    	
INGALLS &   SNYDER LLC
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    
					

 

PURCHASERS:

 

	
 
    	
Per attached   counterpart Purchaser signature pages
    

 

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MoSys, Inc.

 

Security Agreement

 

Purchaser Signature Page

 

The undersigned Purchaser hereby executes this Agreement as of the Effective Date specified therein and agrees to be bound by the same.

 

Instructions:  Please sign where indicated below and complete the information requested at the bottom of the page regarding your investment.

 

	
(Individual   Purchasers sign below)
    	
 
    	
(Investing   entities sign below)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Exact Legal Name 
    
	
 
    	
 
    	
of Entity: 
    	
 
    
	
Print   Purchaser’s name below:
    	
 
    	
 
    
	
 
    	
 
    	
By: 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Print name of   authorized signature below:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Title: 
    	
 
    
	
 
    	
 
    	
 
    
	
Address to which 
    	
 
    	
Address to which 
    
	
notices may be sent 
    	
 
    	
notices may be sent 
    
	
to Purchaser:
    	
 
    	
 
    	
to Purchaser: 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
Fax: 
    	
 
    	
 
    	
Fax:
    	
 
    
	
 
    	
Email:
    	
 
    	
 
    	
Email: 
    	
 
    
	
 
    	
 
    	
Tax ID Number:
    	
 
    
									

 

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EXHIBIT A

 

PURCHASERS

 

(See Exhibit A to Purchase Agreement)

 

A-1

 

EXHIBIT B

 

COLLATERAL

 

“Collateral” means all current and hereafter acquired personal Property of the Company, including all insurance relating thereto, and including all Accounts, Deposit Accounts, Equipment, General Intangibles, Inventory and Negotiable Collateral, and any and all proceeds, as defined in the UCC, thereof, to the extent that the Company is not contractually prohibited from granting a security interest in such Property; provided, however, that the Collateral shall in no event include more than sixty-five percent of the equity interest of any subsidiary which is not incorporated, formed or organized under the laws of any state of the United States or the District of Columbia.  For purposes of this definition of Collateral the foregoing terms have the following meaning:

 

“Account Debtor” means any Person who is or who may become obligated under, with respect to or on account of an Account.

 

“Accounts” means all of the Company’s currently existing and hereafter arising accounts, as defined in UCC Section 9102(a)(2), including any contract rights to payment arising out of the sale or lease of goods or the rendition of services by the Company, irrespective of whether earned by performance, and any and all credit insurance, guarantees or security therefor.

 

“Deposit Accounts” means all deposit accounts, as defined in UCC Section 9102(a)(29), now or hereafter held in the Company’s name.

 

“Equipment” means all of the Company’s present and hereafter acquired machinery machine tools, motors, computers, equipment, furniture, furnishings, fixtures, vehicles (including motor vehicles and trailers), tools, parts, goods, wherever located, including all attachments, accessories, accessions, replacements, substitutions, additions and improvements to any of the foregoing.

 

“General Intangibles” means all of the Company’s present and future general intangibles and other personal Property (including contract rights, rights arising under common law, statutes or regulations, choses or other things in action, goodwill, patents, trade names, trade secrets, trademarks, service marks, copyrights, blueprints, drawings, purchase orders, customer lists, monies due or recoverable from pension funds, route lists, rights to payment, and other rights under any royalty or licensing agreements, infringement claims, computer programs, information contained on computer disks or tapes, literature, reports, catalogs, deposit accounts, insurance premium rebates, tax refunds and tax refund claims), other than goods, Accounts and Negotiable Collateral.

 

“Inventory” means all present and future inventory in which the Company has any interest, including goods held for sale or lease or to be furnished under a contract of service and all of the Company’s present and future raw materials, work in process, finished goods and packing and shipping materials, wherever located.

 

“Negotiable Collateral” means all of the Company’s present and future letters of credit, letter of credit rights, notes, drafts, instruments, investment property, securities (including the

 

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shares of capital stock or other equity or membership interests of United States subsidiaries of the Company), documents, personal property leases (wherein the Company is the lessor) and chattel paper.  (Any terms used in the preceding sentence that are defined in the DCC shall have the meanings set forth therein.)

 

B-2

 

EXHIBIT C

 

INTELLECTUAL PROPERTY SECURITY AGREEMENT

 

C-1Exhibit 10.3

 

THIS NOTE AND SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE SECURITIES LAWS. THIS NOTE AND SUCH SHARES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THIS NOTE AND SUCH SHARES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT.

 

MOSYS, INC.

 

10% SENIOR SECURED CONVERTIBLE NOTE DUE AUGUST 15, 2018

 

	
Name   and Address of Registered Holder
    	
 
    
	
(or   Assignee) to whom Interest and
    	
(Print   or type name of Holder)
    
	
Principal   is to be paid under this Note
    	
 
    
	
(“Holder”)
    	
 
    
	
 
    	
[
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Attn:             ]
    
	
 
    	
 
    
	
 
    	
[     ]Million   and no/00 Dollars $[ ],000,000.00)
    
	
Principal   Amount
    	
 
    
	
 
    	
 
    
	
Maturity   Date on which Principal is
    	
August 15,   2018
    
	
due   to Holder
    	
 
    
	
 
    	
 
    

 

MoSys, Inc. agrees to pay and perform the accompanying terms of this Note in accordance therewith. The rights and obligations of Holder are subject to the accompanying terms of this Note.

 

Executed by the undersigned duly authorized officer of the Company at the Company’s principal office in Santa Clara, California as of March   , 2016.

 

	
 
    	
 
    	
 
    
	
 
    	
MOSYS, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Its:
    	
 
    
	
 
    	
 
    	
 
    
				

 

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1.                                      INTEREST

 

MoSys, Inc., a Delaware corporation (the “Company”, which term shall include any successor corporation under the Purchase Agreement hereinafter referred to), promises to pay interest on the principal amount of this Note at the rate of ten percent (10%) per annum. The Company shall pay interest semiannually on August 15 and February 15 of each year, commencing on August 15, 2016. Interest on the Notes shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the Purchase Agreement Closing Date; provided, however, that if there is not an existing default in the payment of interest and if this Note is authenticated between a record date referred, to on the face hereof and the next succeeding interest payment date, interest shall accrue from such interest payment date. Interest will be computed on the basis of a 365-day year and 30-day months.

 

2.                                      METHOD OF PAYMENT

 

The Company shall pay interest on this Note (except defaulted interest) to the person who is the Holder of this Note at the close of business on the related interest payment date. The Holder must surrender this Note to the Company to collect payment of principal. The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. If there is no pending Event of Default under the Loan Documents as of the interest payment date for which interest will be paid the Company may, however, upon 15 days’ prior written notice to the Holder or Purchaser’s Agent, pay interest due by issuing a new Note in the principal amount of the interest due, and in all other respects having terms identical to this Note, and may convert accrued and unpaid interest as of the Conversion Date into Shares in accordance with Section 2.8 of the Purchase Agreement. The Company will pay principal due upon surrender of Notes by check sent to the Holder’s address on the books and records of the Company, or, if the Holder has provided wire transfer instructions to the Company at least five Business Days prior to the payment date, in immediately available funds by wire transfer.

 

3.                                      PURCHASE AGREEMENT

 

This Note is one of a duly authorized issue of Notes of the Company designated as its 10% Senior Secured Convertible Notes Due August 15, 2018 (the “Notes”) issued under the Purchase Agreement. The terms of this Note include those stated in the Purchase Agreement. The Notes are secured obligations of the Company and are convertible upon the conditions stated in the Purchase Agreement and the Note.

 

4.                                      SECURITY INTEREST; ADDITIONAL SECURED CREDITORS

 

This Note is secured by all of the assets of the Company in accordance with the terms and subject to the conditions of the Security Agreement dated as of the Purchase Agreement Closing Date among the Company, Purchasers’ Agent, and the Purchasers. In case of an Event of Default, the Purchasers shall have the rights set forth in the Security Agreement; provided that such rights shall be subject to such senior or contemporaneous rights of the Senior Lender as

 

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may be agreed by Purchasers’ Agent and the Company with the Senior Lender as permitted under the Purchase Agreement.

 

5.                                      DEFAULT

 

If an Event of Default shall occur, the aggregate unpaid principal balance plus accrued and unpaid interest on this Note shall become or may be declared to be due and payable in the manner and with the effect provided in the Loan Documents.

 

6.                                      REPURCHASE OF NOTES AT OPTION OF HOLDER UPON A FUNDAMENTAL CHANGE

 

A.            Subject to the terms and conditions of the Purchase Agreement, if a Fundamental Change occurs at any time prior to the Maturity Date, the Holder will, upon receipt of the notice of the occurrence of a Fundamental Change, have the right to require the Company to repurchase any or all of such Holder’s Notes for cash in an amount equal to 120% of the principal amount of the Notes to be repurchased plus accrued and unpaid interest, if any, to (but not including) the Fundamental Change Repurchase Date, unless such Fundamental Change Repurchase Date falls after an interest payment record date and on or prior to the corresponding interest payment date, in which case the Fundamental Change Repurchase Price will include the full amount of accrued and unpaid interest payable on such interest payment date to the Holder of record at the close of business on the corresponding interest payment record date. Subject to Section 3.1 of the Purchase Agreement, on or before the 10th Business Day prior to the effective date of a Fundamental Change, or as soon as practicable after the occurrence of a Fundamental Change described in Section 1.11(c) of the Purchase Agreement, the Company will provide to the Holder and Purchasers’ Agent a notice of the occurrence of the Fundamental Change and of the resulting repurchase right. To exercise the repurchase right, the Holder must deliver a Repurchase Exercise Notice duly completed to the Company as described in the Purchase Agreement.

 

B.            Holder has the right to withdraw any Fundamental Change repurchase notice, in whole or in part, by delivering to the Company a written notice of withdrawal in accordance with the provisions of the Purchase Agreement.

 

C.            All interest shall cease to accrue on this Note (or portions thereof) immediately after such Fundamental Change Repurchase Date, and the Holder shall have no other rights as such other than the right to receive the Fundamental Change Repurchase Price upon surrender of the Note.

 

7.                                      OPTIONAL CONVERSION

 

A.            The Holder, at the Holder’s sole option, may convert the principal amount of this Note (or any portion thereof equal to $100,000 or any integral multiple of $100,000 in excess thereof) into Shares, and/or such other consideration as provided in Section 4 of the Purchase Agreement, at any time prior to the close of business on the last Business Day prior to the Maturity Date, at the Applicable Conversion Price (which is the Initial Conversion Price as adjusted from time to time in accordance with the Purchase Agreement) in effect on the

 

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Conversion Date; provided,  however, that, if such Note is submitted or presented for purchase pursuant to Section 3.1 of the Purchase Agreement, such conversion right shall terminate at the close of business on the Business Day immediately preceding the Fundamental Change Repurchase Date for such Note, or such earlier date as the Holder presents such Note for repurchase (unless the Company shall default in making the Fundamental Change Repurchase Price payment when due, as the case may be, in which case the conversion right shall terminate at the close of business on the date such default is cured and such Note is redeemed or purchased, as the case may be).  The Initial Conversion Price is $0.90 per Share, and the initial Conversion Rate is one Share per $0.90 principal amount of Note.  The Initial Conversion Price and the Conversion Rate are subject to adjustment as provided in the Purchase Agreement. All accrued and unpaid interest on the Note through the Business Day immediately preceding the Conversion Date shall be paid in accordance with Paragraph 2, provided that if the Company elected to pay the interest with the issuance of a new Note thereof, the full amount thereof shall be converted into additional Shares as Note principal.  Upon surrender of this Note for conversion and timely delivery to the Company of the Holder’s conversion notice (which may be submitted on Holder’s behalf by Purchaser’s Agent), the Company will issue, or will cause its transfer agent to issue, the Shares to the Holder on the requested Conversion Date.  No fractional Shares will be issued upon conversion; in lieu thereof, an amount will be paid in cash based upon the Closing Sale Price of the Common Stock on the Trading Day immediately prior to the Conversion Date.  The Shares when issued may be represented by book entry, or by certificates if so requested by Holder.

 

B.            To convert this Note under Paragraph 7A, the Holder must (a) complete and manually sign the conversion notice set forth below and deliver such notice to the Company at least 15 days in advance of the Conversion Date, (b) surrender the Note to the Company, (c) furnish appropriate endorsements and transfer documents if required by the transfer agent or the Company, and (d) pay any transfer or similar tax, if required.

 

C.            If Holder has delivered a Fundamental Change Repurchase Right Notice exercising the option of the Holder to require the Company to repurchase this Note, then this Note may be converted pursuant to Paragraph 7A only if the Fundamental Change Repurchase Right Notice is withdrawn by the Holder in accordance with the terms of the Purchase Agreement.

 

8.                                      DENOMINATIONS, TRANSFER, EXCHANGE

 

The Notes are issued without coupons in denominations of $100,000 and integral multiples of $100,000 and are recorded in the name of the Holder on the books and records of the Company. The Holder may register the transfer of or exchange of this Note in accordance with the Purchase Agreement. The Company may require the Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes or other governmental charges that may be imposed in relation thereto by law or permitted by the Purchase Agreement.

 

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9.                                      PERSONS DEEMED OWNERS

 

The Holder of this Note may be treated as the owner of it for all purposes.

 

10.                               AMENDMENT, SUPPLEMENT AND WAIVER

 

Subject to certain exceptions, the Purchase Agreement or the Notes may be amended or supplemented with the consent of the Holders of at least a Majority-in-Interest of the Notes, and an existing default or Event of Default and its consequence or compliance with any provision of the Purchase Agreement or the Notes may be waived in a particular instance with the consent of the Holders of a Majority-in-Interest of the Notes. Without the consent of or notice to any Holder, the Company and the Purchasers’ Agent may amend or supplement the Purchase Agreement or the Notes to, among other things, cure any ambiguity, defect or inconsistency or make any other change that does not adversely affect the rights of any Holder.

 

11.                               SUCCESSOR ENTITY

 

When a successor corporation assumes all the obligations of its predecessor under the Notes and the Purchase Agreement in accordance with the terms and conditions of the Purchase Agreement, the predecessor corporation (except in certain circumstances specified in the Purchase Agreement) shall be released from those obligations.

 

12.                               NO RECOURSE AGAINST OTHERS

 

No past, present or future director, officer, employee, incorporator or stockholder of the Company, as such, shall have any liability for any obligations of the Company under the Notes, the Purchase Agreement or for any claim based on, in respect of, or by reason of, such obligations or their creation. The Holder of this Note by accepting this Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of this Note.

 

13.                               ABBREVIATIONS AND DEFINITIONS

 

Customary abbreviations may be used in the name of the Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian) and UGMA (= Uniform Gifts to Minors Act).

 

All terms used in this Note but not specifically defined herein are defined in the Purchase Agreement and are used herein as so defined.

 

14.                               PURCHASE AGREEMENT TO CONTROL; GOVERNING LAW

 

In the case of any conflict between the provisions of this Note and the Purchase Agreement, the provisions of the Purchase Agreement shall control.

 

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THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAW OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

 

The Company will furnish to any Holder, upon written request and without charge, a copy of the Purchase Agreement. Requests may be made to: MoSys, Inc., 3301 Olcott Street, Santa Clara, CA 95054.

 

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ASSIGNMENT FORM

 

To assign this Note, fill in the form below:

 

I or we assign and transfer this Note to:

	
 
    
	
(Insert assignee’s social security or tax I.D. number)
    
	
 
    
	
 
    
	
 
    
	
 
    
	
 
    
	
(Print or type assignee’s name, address and zip code)
    
	
 
    
	
and   irrevocably appoint
    
	
 
    
	
 
    
	
agent   to transfer this Note on the books of the Company. The agent may substitute   another to act for him or her.
    

 

	
Date:
    	
 
    	
Your   Signature:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(Sign   exactly as your name appears on the other side of this Note)
    
	
*   Signature guaranteed by:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
				

 

* Signature(s) must have a Medallion signature guarantee.

 

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CONVERSION NOTICE

 

To convert this Note into Common Stock of the Company, check the box:  ̈

 

To convert only part of this Note into Common Stock of the Company, state the principal amount to be converted (must be $100,000 or an integral multiple of $100,000): $                       , and check the box:  ̈

 

If you want the stock certificate made out in another person’s name, fill in the form below:

 

	
 
    
	
(Insert assignee’s social   security or tax I.D. number)
    
	
 
    
	
 
    
	
 
    
	
 
    
	
 
    
	
(Print or type assignee’s   name, address and zip code)
    

 

	
Date:
    	
 
    	
Your   Signature:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(Sign   exactly as your name appears on the other side of this Note)
    

 

	
*   Signature guaranteed by:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    	
 
    
					

 

* Signature(s) must have a Medallion signature guarantee.

 

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REPURCHASE EXERCISE NOTICE 
 UPON A FUNDAMENTAL CHANGE

 

To: MoSys, Inc.

 

The undersigned registered owner of this Note hereby irrevocably acknowledges receipt of a notice from MoSys, Inc. (the “Company”) as to the occurrence of a Fundamental Change with respect to the Company and requests and instructs the Company to redeem the entire principal amount of this Note, or the portion thereof (which is $100,000 or an integral multiple thereof) below designated, in accordance with the terms of the Purchase Agreement referred to in this Note at the Fundamental Change Repurchase Price, together with accrued interest to, but excluding, the Repurchase Date, to the registered Holder hereof.

 

	
Dated:
    	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Signature(s)
    
	
 
    	
 
    
	
 
    	
Signature(s) must   have a Medallion signature guarantee.
    
	
 
    	
 
    
	
 
    	
Medallion   Signature Guarantee
    
	
Principal   amount to be redeemed (in an integral multiple of $100,000, if less than   all):
    	
 
    
	
 
    	
 
    	
 
    
	
NOTICE:   The signature to the foregoing Election must correspond to the name as   written upon the face of the Note in every particular, without alteration or   any change whatsoever.
    

 

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