GUARANTEE AND SECURITY AGREEMENT
among
TWISTBOX ENTERTAINMENT, INC.,
EACH OF THE SUBSIDIARIES PARTY HERETO,
THE INVESTOR PARTY HERETO,
and
VALUEACT SMALLCAP MASTER FUND,
L.P.,
as Collateral Agent
Dated as of July 30, 2007
TABLE OF CONTENTS
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Page
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ARTICLE
1. DEFINITIONS; GUARANTEE; GRANT OF SECURITY; CONTINUING
PERFECTION
AND PRIORITY
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1
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Section
1.1 General Definitions
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1
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Section
1.2 Other Definitions; Interpretation
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8
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Section
1.3 Guarantee
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9
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Section
1.4 Grant of Security
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13
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ARTICLE
2. SECURITY FOR OBLIGATIONS; NO ASSUMPTION OF
LIABILITY
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15
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Section
2.1 Security for Obligations
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15
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Section
2.2 No Assumption of Liability
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15
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ARTICLE
3. REPRESENTATIONS AND WARRANTIES AND COVENANTS
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15
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Section
3.1 Generally
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15
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Section
3.2 Equipment and Inventory
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19
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Section
3.3 Receivables
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19
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Section
3.4 Investment Property
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21
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Section
3.5 Letter of Credit Rights
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24
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Section
3.6 Intellectual Property Collateral
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24
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Section
3.7 Commercial Tort Claims
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25
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Section
3.8 Deposit Accounts; Control Accounts
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26
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ARTICLE
4. FURTHER ASSURANCES
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27
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ARTICLE
5. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT
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27
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ARTICLE
6. REMEDIES UPON DEFAULT
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28
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Section
6.1 Remedies Generally
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28
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Section
6.2 Application of Proceeds of Sale
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30
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Section
6.3 Investment Property
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30
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Section
6.4 Grant of License to Use Intellectual Property
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31
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ARTICLE
7. REIMBURSEMENT OF COLLATERAL AGENT
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31
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ARTICLE
8. WAIVERS; AMENDMENTS
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32
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ARTICLE
9. SECURITY INTEREST ABSOLUTE
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32
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ARTICLE
10. TERMINATION; RELEASE
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33
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ARTICLE
11. ADDITIONAL SUBSIDIARY GUARANTORS AND GRANTORS
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33
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ARTICLE
12. COLLATERAL AGENT
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34
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ARTICLE
13. NOTICES
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35
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ARTICLE
14. BINDING EFFECT; SEVERAL AGREEMENT;
ASSIGNMENTS
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36
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ARTICLE
15. SURVIVAL OF AGREEMENT; SEVERABILITY
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37
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ARTICLE
16. GOVERNING LAW
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37
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ARTICLE
17. COUNTERPARTS
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37
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ARTICLE
18. HEADINGS
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38
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ARTICLE
19. JURISDICTION; VENUE; CONSENT TO SERVICE OF
PROCESS
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38
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ARTICLE
20. WAIVER OF JURY TRIAL
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39
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SCHEDULES:
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Schedule
I
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List
of Subsidiary Guarantors and Addresses for Notices
List
of Foreign Subsidiaries which are not Subsidiary Guarantors as
of July 30, 2007,
and Addresses
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Schedule
1.4(a)
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Twistbox
Games Ltd. & Co KG Collateral
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Schedule
3.1(a)(i)
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List
of Chief Executive Offices, Jurisdictions of Organization,
Federal Employer
Identification Numbers and Company Organizational
Numbers
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Schedule
3.1(a)(ii)
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List
of Legal and Other Names
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Schedule
3.1(a)(v)(A)
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List
of Filing Offices
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Schedule
3.1(a)(v)(B)
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Excluded
Trademarks
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Schedule
3.2
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List
of Locations of Equipment and Inventory
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Schedule
3.4
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List
of Pledged Collateral, Investment Property and Securities
Accounts
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Schedule
3.5
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List
of Letters of Credit
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Schedule
3.6
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List
of Intellectual Property
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Schedule
3.7
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List
of Commercial Tort Claims
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Schedule
3.8
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List
of Deposit Accounts
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EXHIBITS:
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Exhibit
A
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Form
of Supplement
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Exhibit
B
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Form
of Control Agreement
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Exhibit
C
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Form
of Securities Control Account Letter
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GUARANTEE
AND SECURITY AGREEMENT, dated as of July 30, 2007 (this
“
Guarantee and Security Agreement” ),
among
Twistbox Entertainment, Inc., a Delaware corporation
(the
“Company” ), each
of the subsidiaries of the Company identified on Schedule I as
being a subsidiary guarantor (each such subsidiary, individually
a
“Subsidiary Guarantor” and,
collectively, the “
Subsidiary Guarantors ”; the Subsidiary
Guarantors and the Company are referred to collectively
herein as
the
“Grantors” ), the
Investors from time to time party hereto (including their
successors and permitted assigns,
the
“Investor” ) and
ValueAct SmallCap Master Fund, L.P.,
as
collateral agent for the benefit of the
Secured Parties (including its successors and permitted assigns and
in such capacity, the “ Collateral
Agent” ).
Reference
is made to the Securities Purchase Agreement, dated as of July
30, 2007, among
the Company and the Investors from time to time party thereto
(as amended, supplemented or otherwise
modified from time to time, the
“Securities Purchase Agreement”).
The
Investor has agreed to purchase Senior Secured Notes in the
aggregate principal amount
of $16,500,000 (as amended, supplemented or otherwise
modified, the
“Senior Secured Notes”) from
the Company pursuant to, and upon the terms and subject to the
conditions specified in, the Securities
Purchase Agreement. Each of the Subsidiary Guarantors has agreed to
guarantee, among other things,
all the obligations of the Company and each other Subsidiary
Guarantor under the Secured Transaction
Documents. The obligations of the Investor to purchase Senior
Secured Notes are conditioned
upon, among other things, the execution and delivery by the
Grantors of an agreement in the form
hereof to guarantee and secure the Obligations.
Accordingly,
the Grantors and the Collateral Agent, on behalf of itself and
each other Secured
Party (and each of their respective successors or permitted
assigns), hereby agree as follows:
ARTICLE
1.
DEFINITIONS;
GUARANTEE; GRANT OF SECURITY;
CONTINUING
PERFECTION AND PRIORITY
Section
1.1
General Definitions
As
used in this Guarantee and Security Agreement, the following
terms shall have the meanings
specified below:
“Account Debtor” means
each Person who is obligated in respect of any Receivable or any
Supporting Obligation or Collateral Support related
thereto.
“Accounts” means
all “accounts” as defined in Article 9 of the
UCC.
“Additional Subsidiary Guarantor and
Grantor” has
the meaning assigned to such term
in Article 11.
“Applicable Date” means
(i) in the case of any Grantor (other than an Additional
Subsidiary
Guarantor and Grantor), the date hereof, and (ii) in the case of
any Additional Subsidiary Guarantor
and Grantor, the date of the Supplement executed and delivered by
such Additional Subsidiary Guarantor
and Grantor.
“Approved Securities Intermediary”
means
a Securities Intermediary or commodity intermediary
selected or approved by the Collateral Agent and with respect to
which a Grantor has delivered
to the Collateral Agent an executed Securities Control Account
Letter.
“Authorization” means,
collectively, any license, approval, permit or other authorization
issued by Governmental Authority.
“Bankruptcy Law” means
Title 11, U.S. Code, or any similar foreign, federal or
state law
for the relief of debtors.
“Business Day” means
any day other than Saturday, Sunday or other day on which
commercial banks in The City of New York are authorized or required
by law to remain closed.
“Cash Collateral Account” means
any Deposit Account or Securities Account established
by the Collateral Agent in which cash may from time to time be on
deposit or held therein pursuant
to the Secured Transaction Documents.
“Chattel Paper” means
all “chattel paper” as defined in Article 9 of the
UCC.
“Claim Proceeds” means,
with respect to any Commercial Tort Claim or any Collateral
Support
or Supporting Obligation relating thereto, all Proceeds thereof,
including all insurance proceeds and
other amounts and recoveries resulting or arising from the
settlement or other resolution thereof, in each case regardless of
whether characterized as a
“commercial tort claim” under
Article 9 of the UCC or “proceeds” under the
UCC.
“Collateral” has
the meaning assigned to such term in Section 1.4(a).
“Collateral Records” means
all books, instruments, certificates, Records, ledger cards, files,
correspondence, customer lists, blueprints, technical
specifications, manuals and other documents, and
all computer software, computer printouts, tapes, disks and related
data processing software and similar
items, in each case that at any time represent, cover or otherwise
evidence any of the Collateral.
“Collateral Support” means
all property (real or personal) assigned, hypothecated or
otherwise
securing any of the Collateral, and shall include any security
agreement or other agreement granting
a lien or security interest in such real or personal
property.
“Commercial Tort Claims” means
(i) all “commercial tort claims” as defined in
Article
9 of the UCC and (ii) all Claim Proceeds with respect to any of the
foregoing; including all claims described
on
Schedule 3.7.
“Company” has
the meaning assigned to such term in the preliminary statement of
this Guarantee
and Security Agreement.
“Control Account” means
a Deposit Account maintained by any Grantor with a Control
Account
Bank which account is the subject of an effective Control
Agreement, and includes all monies on deposit
therein.
“Control Account Bank” means
a financial institution selected or approved by the Collateral
Agent and with respect to which a Grantor has entered into a
Control Agreement.
“Control Agreement” means
a Control Agreement, substantially in the form of
Exhibit
B (with such changes thereto as may be agreed to by the Collateral
Agent), executed by the relevant Grantor and the Collateral Agent
and acknowledged and agreed to by the relevant Control
Account
Bank.
“Copyright License” means
any written agreement, now or hereafter in effect, granting any
right to any third party under any Copyright now or hereafter owned
or held by any Grantor or which any
Grantor otherwise has the right to license, or granting any right
to any Grantor under any Copyright now
or hereafter owned by any third party, and all rights of any
Grantor under any such agreement, including each agreement
described on
Schedule 3.6.
“Copyrights” means
all of the following: (i) all copyright rights in any work subject
to the
copyright laws of the United States or any other country, whether
as author, assignee, transferee or otherwise, and (ii) all
registrations and applications for registration of any such
copyright in the United States
or any other country, including registrations, recordings,
supplemental registrations and pending applications
for registration in the United States Copyright Office or any
similar offices in the United States
or any other country, including those described on
Schedule 3.6.
“Deposit Accounts” means
all “deposit accounts” as defined in Article 9 of the
UCC, including
all such accounts described on
Schedule 3.8.
“Documents” means
all “documents” as defined in Article 9 of the
UCC.
“Equipment” means
(i) all “equipment” as defined in Article 9 of the UCC,
(ii) all machinery,
manufacturing equipment, data processing equipment, computers,
office equipment, furnishings, furniture, appliances, fixtures and
tools, in each case, regardless of whether characterized as
“equipment”
under the UCC, and (iii) all accessions or additions to any of the
foregoing, all parts thereof, whether
or not at any time of determination incorporated or installed
therein or attached thereto, and all replacements therefor,
wherever located, now or hereafter existing.
“Equity Interest” means
(i) shares of corporate stock, partnership interests, membership
interests, and any other interest that confers on a Person the
right to receive a share of the profits and losses of, or
distribution of assets of, the issuing Person, and (ii) all
warrants, options or other rights to acquire any Equity Interest
set forth in clause (i) of this defined term.
“Equity Related Documents” means
the Securities Purchase Agreement, any Convertible Note or Warrant
issued pursuant to the Securities Purchase Agreement.
“Event of Default” has
the meaning assigned to such term in the Senior Secured
Notes.
“Excepted Deposit Accounts”
has the meaning assigned to such term in Section
3.8(b).
“Foreign Subsidiary” means
any direct subsidiary of any Grantor organized under the laws of
any jurisdiction outside the United States of America other than
any Subsidiary Guarantor and as designated
as such on
Schedule I hereto.
“Foreign Subsidiary Voting Stock”
means
the voting capital stock of any Foreign Subsidiary.
“Financial Assets” means
all “financial assets” as defined in Article 8 of the
UCC.
“General Intangibles” means
(i) all “general intangibles” as defined in Article 9
of the UCC
and (ii) all chooses in action and causes of action, all
indemnification claims, all goodwill, all tax refunds,
all licenses, permits, concessions, franchises and authorizations,
all Intellectual Property, all Payment
Intangibles and all Software, in each case, regardless of whether
characterized as a “general intangible”
under the UCC.
“Goods” means
(i) all “goods” as defined in Article 9 of the UCC and
(ii) all Equipment and
Inventory and any computer program embedded in goods and any
supporting information provided in connection
with such program, to the extent (a) such program is associated
with such goods in such a manner
that it is customarily considered part of such goods or (b) by
becoming the owner of such goods, a Person
acquires a right to use the program in connection with such goods,
in each case, regardless of whether characterized as a
“good” under the UCC.
“Governmental Authority” means
any nation or government, any state, province, city,
municipal
entity or other political subdivision thereof, and any
governmental, executive, legislative, judicial,
administrative or regulatory agency, department, authority,
instrumentality, commission, board, bureau
or similar body, whether federal, state, provincial, territorial,
local or foreign.
“Grantor” and
“Grantors” have
the meanings assigned to such terms in the preliminary
statement
of this Guarantee and Security Agreement.
“Guaranteed Obligations” has
the meaning assigned to such term in Section
1.3(a)(i).
“Instruments” means
all “instruments” as defined in Article 9 of the
UCC.
“Insurance” means
all insurance policies covering any or all of the Collateral
(regardless of
whether the Collateral Agent or any other Secured Party is an
additional named insured or the loss payee
thereof) and all business interruption insurance
policies.
“Intellectual Property” means
all intellectual and similar property owned by any
Grantor
of every kind and nature, including inventions, designs, Patents,
Copyrights, Trademarks, Licenses,
domain names, Trade Secrets, confidential or proprietary technical
and business information, know
how, show how or other data or information, software and databases
and all embodiments or fixations
thereof and related documentation, registrations and franchises,
and all additions, improvements and accessions to, and books and
records describing or used in connection with, any of the
foregoing.
“Inventory” means
(i) all “inventory” as defined in Article 9 of the UCC
and (ii) all goods held for sale or lease or to be furnished under
contracts of service or so leased or furnished, all raw
materials,
work in process, finished goods and materials used or consumed in
the manufacture, packing, shipping,
advertising, selling, leasing, furnishing or production of such
inventory or otherwise used or consumed
in any Grantor's business, all goods which are returned to or
repossessed by or on behalf of any
Grantor, and all computer programs embedded in any goods, and all
accessions thereto and products thereof,
in each case, regardless of whether characterized as
“inventory” under the UCC.
“Investor” has
the meaning assigned to such term in the preliminary statements of
this Guarantee
and Security Agreement.
“Investment Property” means,
collectively, all
“investment property” as
defined in Article
9 of the UCC including all Pledged Collateral.
“Letter of Credit Rights” means
all “letter-of-credit rights” as defined in Article 9
of the UCC
and all rights, title and interests of each Grantor to any letter
of credit, in each case regardless of whether
characterized as a “letter-of-credit right” under the
UCC.
“License” means
any Copyright License, Patent License, Trademark License,
Trade Secret
License or other license or sublicense to which any Grantor is a
party.
“Lien” means
any lien, mortgage, charge, claim, security interest, encumbrance,
or right of
first refusal.
“Net Receivables Balance” means
all amounts recorded on the Company's balance sheet
as
Receivables or accrued Receivables net of allowance for doubtful
accounts consistent with past practice.
“New Deposit Account” has
the meaning assigned to such term in Section 3.8.
“Obligations” means
(i) the due and punctual payment of (a) principal of and
premium, if
any, and interest (including interest accruing during the pendency
of any bankruptcy, insolvency, receivership
or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on
the Senior Secured Notes, when and as due, whether at maturity or
by acceleration or otherwise, and (b)
all other monetary obligations, including fees, commissions, costs,
expenses and indemnities, whether primary, secondary, direct,
contingent, fixed or otherwise (including monetary obligations
incurred during the
pendency of any bankruptcy, insolvency, receivership or other
similar proceeding, regardless of whether
allowed or allowable in such proceeding), of the Grantors to the
Secured Parties when and as due, or
that are otherwise payable to any Investor, in each case under the
Secured Transaction Documents when
and as due, (ii) the due and punctual performance of all covenants,
agreements, obligations and liabilities of the Grantors or any
other party (other than an Investor) under or pursuant to the
Secured Transaction
Documents, and (iii) with respect to the Subsidiary Guarantor, the
Guaranteed Obligations.
“Patent License” means
any written agreement, now or hereafter in effect, granting
to any
third party any right to make, use or sell any invention on which a
Patent, now or hereafter owned or held
by or on behalf of any Grantor or which any Grantor otherwise has
the right to license, is in existence, or granting to any Grantor
any right to make, use or sell any invention on which a Patent,
now or
hereafter owned by any third party, is in existence, and all rights
of any Grantor under any such agreement, including each agreement
described on
Schedule 3.6.
“Patents” means
all of the following: (i) all letters patent of the United States
or any other
country, all registrations and recordings thereof and all
applications for letters patent of the United States
or any other country, including registrations, recordings and
pending applications in the United States
Patent and Trademark Office or any similar offices in the United
States or any other country, including
those described on
Schedule 3.6,
and
(ii) all reissues, continuations, divisions, continuations
in part,
renewals or extensions thereof, and the inventions disclosed or
claimed therein, including the right to make,
use and/or sell the inventions disclosed or claimed
therein.
“Payment Intangibles” means
all “payment intangibles” as defined in Article 9 of
the UCC.
“Person” means
any individual or corporation, partnership, trust, incorporated
or unincorporated
association, joint venture, limited liability company, or joint
stock company.
“Pledged
Collateral ” means, collectively, Pledged Debt and
Pledged Equity Interests.
“Pledged Debt” means
all indebtedness for borrowed money owed or owing to any Grantor,
including all indebtedness described on
Schedule 3.4, all
Instruments other than checks received in the ordinary course of
business, Chattel Paper or other documents, if any, representing or
evidencing such
debt, and all interest, cash, instruments and other property or
proceeds from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or
all of such debt.
“Pledged Equity Interests” means
all Equity Interests owned or held by or on behalf of
any
Grantor, including all such Equity Interests described on
Schedule 3.4,
and
all certificates, instruments
and other documents, if any, representing or evidencing such Equity
Interests and all interests of
such Grantor on the books and records of the issuers of such Equity
Interests, all of such Grantor's right,
title and interest in, to and under any partnership, limited
liability company, shareholder or similar agreements to which it is
a party, and all dividends, distributions, cash, warrants, rights,
options, instruments,
securities and other property or proceeds from time to time
received, receivable or otherwise distributed
in respect of or in exchange for any or all of such Equity
Interests;
provided,
however,
that
in no
event shall more than 65% of the total outstanding Foreign
Subsidiary Voting Stock of any Foreign Subsidiary
be pledged (or deemed to be pledged) hereunder.
“Proceeds” means
(i) all “proceeds” as defined in Article 9 of the UCC,
(ii) payments or distributions
made with respect to any Investment Property, (iii) any payment
received from any insurer or
other Person or entity as a result of the destruction, loss, theft,
damage or other involuntary conversion of
whatever nature of any asset or property that constitutes the
Collateral, and (iv) whatever is receivable or
received when any of the Collateral or proceeds are sold,
exchanged, collected or otherwise disposed of, whether
such disposition is voluntary or involuntary, including any claim
of any Grantor against any third party
for (and the right to sue and recover for and the rights to damages
or profits due or accrued arising out
of or in connection with) (a) past, present or future infringement
of any Patent now or hereafter owned or
held by or on behalf of any Grantor, or licensed under a Patent
License, (b) past, present or future infringement or dilution of
any Trademark now or hereafter owned or held by or on behalf of any
Grantor, or
licensed under a Trademark License, or injury to the goodwill
associated with or symbolized by any Trademark
now or hereafter owned or held by or on behalf of any Grantor, (c)
past, present or future infringement
of any Copyright now or hereafter owned or held by or on behalf of
any Grantor, or licensed under a Copyright License, (d) past,
present or future infringement of any Trade Secret now or hereafter
owned or held by or on behalf of any Grantor, or licensed under a
Trade Secret License, and (e) past, present
or future breach of any License, in each case, regardless of
whether characterized as “proceeds” under
the UCC.
“QRF Deposit Account” has
the meaning assigned to such term in Section 1.4(c).
“QRF Lender” has
the meaning assigned to such term in Section 1.4(c).
“Qualified
Receivables Facility” means a receivables facility not
to exceed the lesser of (i)
$5,000,000, or (ii) 85% of the Net Receivables Balance at any
point in time.
“Receivables” means
all rights to payment, whether or not earned by performance,
for goods
or other property sold, leased, licensed, assigned or otherwise
disposed of, or services rendered or to
be rendered, including all such rights constituting or evidenced by
any Account, Chattel Paper, Instrument
or other document, General Intangible or Investment Property,
together with all of the applicable
Grantor's rights, if any, in any goods or other property giving
rise to such right to payment, and all Collateral Support and
Supporting Obligations related thereto and all Receivables
Records.
“Receivables Records” means
(i) all originals of all documents, instruments or other writings
or electronic records or other Records evidencing any Receivable,
(ii) all books, correspondence, credit
or other files, Records, ledger sheets or cards, invoices, and
other papers relating to such Receivable,
including all tapes, cards, computer tapes, computer discs,
computer runs and record keeping systems,
whether in the possession or under the control of the applicable
Grantor or any computer bureau or
agent from time to time acting for such Grantor or otherwise, (iii)
all evidences of the filing of financing
statements relating to such Receivable and the registration of
other instruments in connection therewith,
and amendments, supplements or other modifications thereto, notices
to other creditors or secured
parties, and certificates, acknowledgments, or other writings,
including lien search reports, from filing or other registration
officers and (iv) all credit information, reports and memoranda
relating to such Receivable.
“
Record ” means
a “record” as defined in Article 9 of the
UCC.
“
Related Party ” means,
with respect to any specified Person, such Person's affiliates
and the
respective directors, officers, employees, agents and advisors
of such Person and such Person's affiliates.
“
Secured Parties ” means
(i) the Collateral Agent, (ii) the Investor under the
Senior Secured
Notes, (iii) the beneficiaries of each indemnification
obligation undertaken by or on behalf of any
Grantor
under any Secured Transaction Document, and (iv) the
successors and permitted assigns of each of
the foregoing.
“
Secured Transaction Documents ”
means
the Senior Secured Notes, this Guarantee and
Security
Agreement, any Control Agreement, any Securities Control
Account Letter, and all other instruments,
documents, certificates and agreements related thereto
(exclusive of the Equity Related Documents).
“
Securities Accounts ”
means
all “securities accounts” as defined in Article 8
of the UCC, including
all such accounts described on
Schedule 3.4.
“
Securities Control Account ”
means
a Securities Account or commodity account maintained by any
Grantor with an Approved Securities Intermediary which account
is the subject of an effective
Control Account Letter, and includes all Financial Assets held
therein and all certificates and instruments, if any,
representing or evidencing the Financial Assets held
therein.
“
Securities Control Account Letter
” means
a Securities Control Account Letter, substantially
in the form of Exhibit C (with such changes thereto as may be
agreed to by the Collateral Agent), executed by any Grantor
and the Collateral Agent and acknowledged and agreed to by
the relevant
Approved Securities Intermediary.
“
Securities Intermediary ”
has
the meaning specified in Article 8 of the UCC.
“
Securities Purchase Agreement ”
has
the meaning assigned to such term in the preliminary
statement of this Guarantee and Security
Agreement.
“
Security Interest ” has
the meaning assigned to such term in Section
1.4(a).
“
Senior Secured Notes ”
has
the meaning assigned to such term in the preliminary
statement
of this Guarantee and Security Agreement.
“
Software ” means
all “software” as defined in Article 9 of the
UCC.
“
Subordinated Obligations ”
has
the meaning assigned to such term in Section
1.3(e).
“
Subsidiary Guarantee ”
has
the meaning assigned to such term in Section
1.3(a)(i).
“
Subsidiary Guarantor ”
has
the meaning assigned to such term in the preliminary statement
of this Guarantee and Security Agreement.
“
Supplement ” means
a supplement hereto, substantially in the form of Exhibit
A.
“
Supporting Obligation ”
means
(i) all “supporting obligations” as defined in
Article 9 of
the UCC and (ii) all Guaranties and other secondary
obligations supporting any of the Collateral, in
each
case regardless of whether characterized as a
“supporting obligation” under the
UCC.
“
Trade Secret Licenses ”
means
any written agreement, now or hereafter in effect,
granting
to any third party any right to use any Trade Secrets now or
hereafter owned or held by or on behalf
of any Grantor or which such Grantor otherwise has the right
to license, or granting to any Grantor any right to use any
Trade Secrets now or hereafter owned by any third party, and
all rights of any Grantor
under any such agreement, including each agreement described
on
Schedule 3.6.
“
Trade Secrets ” means
all trade secrets and all other confidential or
proprietary information
and know-how now or hereafter owned or used in, or
contemplated at any time for use in, the business of any
Grantor (all of the foregoing being collectively called a
“Trade Secret”), whether or not such
Trade Secret has been reduced to a writing or other tangible
form, including all documents and things
embodying, incorporating or referring in any way to such Trade
Secret, the right to sue for any past, present and future
infringement of any Trade Secret, and all proceeds of the
foregoing, including licenses, royalties,
income, payments, claims, damages and proceeds of
suit.
“
Trademark License ” means
any written agreement, now or hereafter in effect, granting to
any third party any right to use any Trademark now or
hereafter owned or held by any Grantor or which
such Grantor otherwise has the right to license, or granting
to any Grantor any right to use any Trademark
now or hereafter owned by any third party, and all rights of
any Grantor under any such agreement,
including each agreement described on
Schedule 3.6.
“
Trademarks ” means
all of the following: (i) all trademarks, service marks, trade
names, corporate
names, company names, business names, fictitious business
names, trade styles, trade dress, logos, other source or
business identifiers, designs and general intangibles of like
nature, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all registration and
recording applications filed in connection therewith,
including registrations and registration applications in
the United
States Patent and Trademark Office or any similar offices in
the United States or any other country, and
all extensions or renewals thereof, including those described
on
Schedule 3.6,
(ii)
all goodwill associated
therewith or symbolized by any of the foregoing and (iii) all other
assets, rights and interests that
uniquely reflect or embody such goodwill.
“
QRF Lender ” has
the meaning assigned to such term in Section
1.4(c).
“
UCC ” means the Uniform Commercial Code
as in effect from time to time in the State of
New York or, when the context implies, the Uniform Commercial
Code as in effect from time to time in
any other applicable jurisdiction.
Section
1.2
Other Definitions; Interpretation
(a)
Other Definitions.
Capitalized
terms used herein and not otherwise defined
herein, and the term “subsidiary” shall have the
meanings assigned to such terms in the Securities
Purchase
Agreement.
(b)
Rules of Interpretation.
The
definitions of terms herein shall apply equally to
the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words
“include”, “includes” and
“including” shall be deemed to be followed by the
phrase “without limitation”. The word
“will” shall be construed to have the same meaning and
effect as the word “shall”. Unless the context
requires otherwise,
(i) any definition of or reference to any agreement, instrument or
other document herein shall be
construed as referring to such agreement, instrument or other
document as from time to time amended, supplemented
or otherwise modified, (ii) any definition of or reference to any
law shall be construed as referring
to such law as from time to time amended and any successor thereto
and the rules and regulations
promulgated from time to time thereunder, (iii) any reference
herein to any Person shall be construed
to include such Person's successors and permitted assigns, (iv) the
words “herein”, “hereof ”
and
“hereunder”, and words of similar import, shall be
construed to refer to this Guarantee and Security
Agreement
in its entirety and not to any particular provision hereof, (v) all
references herein to Articles, Sections,
Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules
to and any Supplement thereto, this Guarantee and Security
Agreement, and (vi) the words “asset”
and “property” shall be construed to have the same
meaning and effect and to refer to any and all tangible
and intangible assets and properties, including cash, securities,
accounts and contract rights. All references herein to provisions
of the UCC shall include all successor provisions under any
subsequent version
or amendment to any Article of the UCC.
Section
1.3
Guarantee
(a)
Subsidiary Guarantee; Limitation of Liability .
(i)
Each Subsidiary Guarantor jointly and severally, hereby
absolutely,
unconditionally and irrevocably guarantees, as a primary
obligor and not merely as surety, to the Collateral Agent for
the ratable benefit of the Secured Parties the punctual
payment when due (but subject to the expiration of any grace
period granted by the Secured Parties in their sole discretion
or the giving of any required notice provided for in any
secured Transaction Document),
whether at scheduled maturity or on any date of a required
prepayment or by acceleration, demand or otherwise, of the
Obligations of the Company and each other Grantor now or
hereafter existing under or in respect of the Secured
Transaction Documents (including, without limitation, any
extensions, modifications, substitutions, amendments or
renewals of any or all of the foregoing Obligations), whether
direct or indirect, absolute or contingent, and
whether
for principal, interest, premiums, fees, indemnities, contract
causes of action, costs, expenses
or otherwise (such Obligations being the “
Guaranteed Obligations ”),
and
agrees to pay any and all reasonable expenses (including,
without limitation, reasonable fees and out-of-
pocket
expenses of counsel) incurred by the Collateral Agent or any
other Investor in enforcing any
rights under this Subsidiary Guarantee (the “
Subsidiary Guarantee ”)
or
any other Secured Transaction
Document. Without limiting the generality of the foregoing,
each Subsidiary Guarantor's liability shall extend to all
amounts that constitute part of the Guaranteed
Obligations and
would be owed by any other Grantor to the Collateral Agent or
any Investor under or in respect
of the Secured Transaction Documents but for the fact that
they are unenforceable or not allowable
due to the existence of a bankruptcy, reorganization or
similar proceeding involving such
other Grantor.
(ii)
Each
Subsidiary Guarantor, and by its acceptance of this
Subsidiary
Guarantee, the Collateral Agent and each other Investor,
hereby confirms that it is the intention
of all such Persons that this Subsidiary Guarantee and the
Obligations of each Subsidiary
Guarantor hereunder not constitute a fraudulent transfer or
conveyance for purposes of Bankruptcy
Law, the Uniform Fraudulent Conveyance Act, the Uniform
Fraudulent Transfer Act or
any similar foreign, federal or state law to the extent
applicable to this Subsidiary Guarantee and
the Obligations of each Subsidiary Guarantor hereunder. To
effectuate the foregoing intention,
the Collateral Agent, each Investor and the Subsidiary
Guarantors hereby irrevocably agree
that the Guaranteed Obligations of each Subsidiary Guarantor
under this Subsidiary Guarantee
at any time shall be limited to the maximum amount as will
result in the Guaranteed Obligations
of such Subsidiary Guarantor under this Subsidiary Guarantee
not constituting a fraudulent
transfer or conveyance.
(iii)
Each Subsidiary Guarantor hereby unconditionally and
irrevocably
agrees that in the event any payment shall be required to be
made to the Collateral Agent
or any Investor under this Subsidiary Guarantee, such
Subsidiary Guarantor will contribute, to
the maximum extent permitted by law, such amounts to each
other Subsidiary Guarantor so as to
maximize the aggregate amount then required to be paid to the
Collateral Agent and Investor under
or in respect of the Secured Transaction
Documents.
(b)
Subsidiary Guarantee Absolute.
Each
Subsidiary Guarantor guarantees that
the Guaranteed Obligations will be paid strictly in accordance with
the terms of the Secured Transaction Documents, regardless of any
law, regulation or order now or hereafter in effect in any
jurisdiction
affecting any of such terms or the rights of the Collateral Agent
or any Investor with respect thereto.
The Obligations of each Subsidiary Guarantor under or in respect of
this Subsidiary Guarantee are
independent of the Guaranteed Obligations or any other Obligations
of any other Grantor under or in respect of the Secured Transaction
Documents, and a separate action or actions may be brought
and prosecuted
against each Subsidiary Guarantor to enforce this Subsidiary
Guarantee, irrespective of whether
any action is brought against the Company or any other Grantor or
whether the Company or any other
Grantor is joined in any such action or actions. The liability of
each Subsidiary Guarantor under this Subsidiary Guarantee shall be
irrevocable, absolute and unconditional irrespective of, and each
Subsidiary Guarantor hereby irrevocably waives any defenses it may
now have or hereafter acquire in any way
relating to, any or all of the following:
(i)
any lack of validity or enforceability of any Secured
Transaction
Document or any agreement or instrument relating
thereto;
(ii)
any change in the time, manner or place of payment of,
or in
any other term of, all or any of the Guaranteed Obligations or
any other Obligations of any other
Grantor under or in respect of the Secured Transaction
Documents, or any other amendment or
waiver of or any consent to departure from any Secured
Transaction Document, including, without
limitation, any increase in the Guaranteed Obligations
resulting from the extension of additional
credit to any Grantor or any of its Subsidiaries or
otherwise;
(iii)
any taking, release or amendment or waiver of, or
consent to
departure from, any other guarantee, for all or any of the
Guaranteed Obligations it being understood
that any such amendment, waiver or consent shall be applicable
to the Guaranteed Obligations
of the Subsidiary Guarantors;
(iv)
any change, restructuring or termination of the
corporate structure
or existence of any Grantor or any of its
Subsidiaries;
(v)
any
failure of any Investor to disclose to any Grantor any
information relating to the business, condition (financial or
otherwise), operations, performance, properties
or prospects of any other Grantor now or hereafter known to
such Investor (each Subsidiary
Guarantor waiving any duty on the part of the Investor to
disclose such information);
(vi)
the failure of any other Person to execute or deliver
this Agreement,
any Supplement or any other guarantee or agreement or the
release or reduction of liability
of any Subsidiary Guarantor or other guarantor or surety with
respect to the Guaranteed Obligations;
or
(vii)
any other circumstance (including, without limitation,
any statute
of limitations) or any existence of or reliance on any
representation by any Investor that might
otherwise constitute a defense available to, or a discharge
of, any Grantor or any other guarantor or surety, in each case
other than payment in full of the Guaranteed Obligations
(other than
contingent indemnification obligations).
This
Subsidiary Guarantee shall continue to be effective or be
reinstated, as the case may be, if at any time
any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by any Investor
or any other Person upon the insolvency, bankruptcy or
reorganization of the Company or any other
Grantor or otherwise, all as though such payment had not been
made.
(c)
Waivers and Acknowledgments . Each
Subsidiary Guarantor hereby unconditionally
and irrevocably waives:
(i)
promptness, diligence, notice of acceptance,
presentment, demand
for performance, notice of nonperformance, default,
acceleration, protest or dishonor and any
other notice with respect to any of the Guaranteed Obligations
and this Subsidiary Guarantee and
any requirement that any Investor protect, secure, perfect or
insure any Lien or any property subject
thereto or exhaust any right or take any action against any
Grantor or any other Person;
(ii)
any right to revoke this Subsidiary Guarantee and
acknowledges
that this Subsidiary Guarantee is continuing in nature and
applies to all Guaranteed Obligations,
whether existing now or in the future;
(iii)
(A) any defense arising by reason of any claim or
defense based
upon an election of remedies by any Investor that in any
manner impairs, reduces, releases or
otherwise adversely affects the subrogation, reimbursement,
exoneration, contribution or indemnification
rights of such Subsidiary Guarantor or other rights of such
Subsidiary Guarantor to
proceed against any of the other Grantors, any other guarantor
or any other Person, and (B) any defense
based on any right of set-off or counterclaim against or in
respect of the Obligations of such
Subsidiary Guarantor hereunder;
(iv)
any duty on the part of any Investor to disclose to
such Subsidiary
Guarantor any matter, fact or thing relating to the business,
condition (financial or otherwise),
operations, performance, properties or prospects of any other
Grantor or any of its Subsidiaries
now or hereafter known by such Investor; and
(v)
each Subsidiary Guarantor acknowledges that it will
receive
substantial direct and indirect benefits from the financing
arrangements contemplated by the
Secured Transaction Documents and that the waivers set forth
in Section 1.3(b) and this Section
1.3(c) are knowingly made in contemplation of such
benefits.
(d)
Subrogation .
Each
Subsidiary Guarantor hereby unconditionally and irrevocably
agrees not to exercise any rights that it may now have or hereafter
acquire against the Company
or any other Grantor that arise from the existence, payment,
performance or enforcement of such
Subsidiary Guarantor's obligations under or in respect of this
Subsidiary Guarantee or any other Secured
Transaction Document, including, without limitation, any right of
subrogation, reimbursement, exoneration,
contribution or indemnification and any right to participate in any
claim or remedy of any Investor
against the Company or any other Grantor, 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
the Company or any other Grantor, directly or indirectly, in cash
or other property or by set-off or in any other manner, payment or
security on account of such claim, remedy or right, unless and
until all of the
Guaranteed Obligations (other than contingent indemnification
rights) shall have been paid in full in cash.
If any amount shall be paid to any Subsidiary Guarantor in
violation of the immediately preceding sentence
at any time prior to the latest of the payment in full in cash of
the Guaranteed Obligations (other than
contingent indemnification rights), such amount shall be received
and held in trust for the benefit of the
Investor, shall be segregated from other property and funds of such
Subsidiary Guarantor and shall forthwith be paid or delivered to
the Collateral Agent in the same form as so received (with any
necessary endorsement
or assignment) to be credited and applied to the Guaranteed
Obligations, whether matured or unmatured,
in accordance with the terms of the Secured Transaction Documents,
or to be held as collateral
for any Guaranteed Obligations. If (i) any Subsidiary Guarantor
shall make payment to any Investor
of all or any part of the Guaranteed Obligations and (ii) all of
the Guaranteed Obligations (other than
contingent indemnification rights) shall have been paid in full in
cash, the Investor will, at such Subsidiary
Guarantor ’ s
request and expense, execute and deliver to such Subsidiary
Guarantor appropriate
documents, without recourse and without representation or warranty,
necessary to evidence the transfer by subrogation to such
Subsidiary Guarantor of an interest in the Guaranteed Obligations
resulting from such payment made by such Subsidiary Guarantor
pursuant to this Subsidiary Guarantee.
(e)
Subordination .
Each
Subsidiary Guarantor hereby subordinates any and all debts,
liabilities and other obligations owed to such Subsidiary Guarantor
by each other Grantor (the
“Subordinated Obligations” )
to
the Guaranteed Obligations to the extent and in the manner
hereinafter set
forth in this Section 1.3:
(i)
Prohibited Payments, Etc .
Except
during the continuance of
an Event of Default, each Subsidiary Guarantor may receive payments
from any other Grantor on account of the Subordinated Obligations.
Upon the occurrence and during the continuance of
any
Event of Default, however, any Subsidiary Guarantor may demand,
accept or take any action to collect any payment on account of the
Subordinated Obligations.
(ii)
Prior Payment of Guaranteed Obligations .
In
any proceeding
under any Bankruptcy Law relating to any other Grantor, each
Subsidiary Guarantor agrees that the Investor shall be entitled to
receive payment in full in cash of all Guaranteed
Obligations
(includings all interest and expenses accruing after the
commencement of a proceeding
under any Bankruptcy Law, whether or not constituting an allowed
claim in such proceeding
(
“Post-Petition Interest” ))
(other
than contingent indemnification obligations) before
such
Subsidiary Guarantor receives payment of any Subordinated
Obligations.
(iii)
Turn-Over. Upon
the occurrence and during the continuance of any Event of Default,
each Subsidiary Guarantor shall upon written request by the
Collateral
Agent, collect, enforce and receive payments on account of the
Subordinated Obligations
as trustee for the Investor and deliver such payments to the
Collateral Agent on account
of the Guaranteed Obligations (including all Post-Petition
Interest), together with any necessary endorsements or other
instruments of transfer, but without reducing or affecting in any
manner
the liability of such Subsidiary Guarantor under the other
provisions of this Subsidiary Guarantee.
(iv)
Collateral Agent Authorization .
Upon
the occurrence and during the continuance of any Event of Default,
the Collateral Agent is authorized and empowered (but without any
obligation to so do), in its reasonable discretion, (A) in the name
of each
Subsidiary Guarantor, to collect and enforce, and to submit claims
in respect of, the Subordinated
Obligations and to apply any amounts received thereon to the
Guaranteed Obligations (including any and all Post-Petition
Interest), and (B) to require each Subsidiary Guarantor
(1) to collect and enforce, and to submit claims in respect of, the
Subordinated Obligations
and (2) to pay any amounts received on such obligations to the
Collateral Agent for application to the Guaranteed Obligations
(including any and all Post-Petition Interest).
(f)
Continuing Subsidiary Guarantee; Assignments .
This
Subsidiary Guarantee
is a continuing guarantee and shall (i) remain in full force and
effect until the payment in full in cash of the Guaranteed
Obligations, (ii) be binding upon each Subsidiary Guarantor, its
successors and assigns, and (iii) inure to the benefit of and be
enforceable by the Investor and their successors and permitted
transferees and assigns.
(g)
Mandatory Provisions of Bankruptcy Law .
Nothing
in this Section 1.3 shall limit any rights a receiver, liquidator,
insolvency administrator may have under the German
Insolvency
Act (Insolvenzordnung).
Section
1.4
Grant of Security
(a)
Grant by Grantors .
As
security for the payment or performance, as applicable, in full of
the Obligations, each Grantor hereby pledges and grants to the
Collateral Agent, for the ratable benefit of the Secured Parties, a
lien on and security interest (the
“Security Interest” ) in
and to
all of the right, title and interest of such Grantor in, to and
under the following property, wherever located, whether now
existing or hereafter arising or acquired from time to time (all of
which being hereinafter collectively referred to as the
“Collateral” ):
(i)
all Accounts,
(ii)
all Deposit Accounts and Securities Accounts, including
all
Cash Collateral Accounts and Control Accounts,
(iii)
all Chattel Paper, Documents and Instruments,
(iv)
all Commercial Tort Claims,
(v)
all Equipment,
(vi)
all General Intangibles,
(vii)
all Goods,
(viii)
all Insurance,
(ix)
all Instruments,
(x)
all
Intellectual Property,
(xi)
all Inventory,
(xii)
all Investment Property, including all Pledged
Collateral and
all Securities Control Accounts,
(xiii)
all Proceeds of Authorizations,
(xiv)
all Receivables and Receivables Records,
(xv)
all
other goods and personal property of such Grantor, whether
tangible or intangible, wherever located, including letters of
credit,
(xvi)
to the extent not otherwise included in clauses (i)
through (xv)
of this Section, all Collateral Records, Collateral Support
and Supporting Obligations in respect
of any of the foregoing,
(xvii)
to the extent not otherwise included in clauses (i)
through (xvi)
of this Section, all other property in which a security
interest may be granted under the UCC or which may be
delivered to and held by the Collateral Agent pursuant to the
terms hereof (including the account referred to in Section
3.4(c)(ii) and all funds and other property from time to time
therein or credited thereto),
(xviii)
all Collateral of Twistbox Games Ltd. & Co. KG as
further defined
in
Schedule 1.4(a)
in
compliance with mandatory German law, and
(xix)
to the extent not otherwise included in clauses (i)
through (xvii)
of this Section, all Proceeds, products, substitutions,
accessions, rents and profits of or in respect
of any of the foregoing.
(b)
Revisions to UCC . For
the avoidance of doubt, it is expressly understood
and
agreed that, to the extent the UCC is revised after the date hereof
such that the definition of any of the foregoing terms included in
the description or definition of the Collateral is changed, the
parties hereto desire
that any property which is included in such changed definitions,
but which would not otherwise be included
in the Security Interest on the date hereof, nevertheless be
included in the Security Interest upon the effective date of such
revision. Notwithstanding the immediately preceding sentence, the
Security Interest is intended to apply immediately on the date
hereof to all of the Collateral to the fullest extent permitted by
applicable law, regardless of whether any particular item of the
Collateral was then subject to
the UCC.
(c)
Qualified Receivables Facility .
The
Secured Parties agree with each Grantor that the Collateral Agent
shall, upon receipt of written notice of such Grantor's imminent
entry into a Qualified Receivables Facility, release the Security
Interest granted hereunder in all of such Grantor's right, title
and interest in, to and under (i) all Receivables of such Grantor,
whereupon such Grantor shall be permitted to pledge and grant a
first priority lien on and security interest in all of its right,
title and interest in, to and under such Receivables in favor of
the lender under such Qualified Receivables Facility
(the
“QRF Lender” ) and
(ii) an amount of cash not to exceed $1,000,000 which shall be
placed in
a Deposit Account not subject to a Control Agreement (the
“QRF Deposit Account” ) whereupon
such Grantor
shall be permitted to pledge and grant a first priority lien on and
security interest in all of its right, title
and interest in, to and under the QRF Deposit Account in favor of
the QRF Lender;
provided ,
that
the QRF
Deposit Account shall not be commingled with and shall be separate
from the Deposit Accounts on which
the Secured Party has an existing Lien. Promptly after the QRF
Lender's filing of a UCC-1 financing
statement in respect of such Receivables, such Grantor shall, at
its own cost and expense, execute, acknowledge, deliver and/or
cause to be duly filed all such agreements, instruments and other
documents that may be reasonably requested by the Collateral Agent,
and take all such further actions, that
the Collateral Agent may from time to time reasonably request (i)
in order to pledge and grant to the Collateral
Agent, for the ratable benefit of the Secured Parties, subject to
an intercreditor agreement which
shall contain customary limitations on the exercise of remedies and
pay-over provisions, a second priority
Security Interest in all of such Grantor's right title and interest
in, to and under all of such Grantor's
Receivables and (ii) to enable the Collateral Agent to perfect such
Security Interest. The Secured
Parties acknowledge and agree that nothing in any Secured
Transaction Document shall restrict or
be deemed to restrict a Grantor from agreeing with the QRF Lender
that, upon the occurrence of an event
of default under the Qualified Receivables Facility, the QRF Lender
shall be entitled to instruct each
Account Debtor to remit all payments in respect of Receivables
directly to the QRF Lender or its designee.
If any Grantor proposes to enter into a Qualified Receivables
Facility, the Collateral Agent agrees
to negotiate an intercreditor agreement with the QRF Lender
reasonably and in good faith. Any costs reasonably incurred by the
Collateral Agent in connection with the negotiation of and its
entry into an
intercreditor agreement with the QRF Lender shall be borne by the
Grantors.
ARTICLE
2.
SECURITY
FOR OBLIGATIONS; NO ASSUMPTION OF LIABILITY
Section
2.1
Security for Obligations
This
Guarantee and Security Agreement secures, and the Collateral
is collateral security for,
the prompt and complete payment or performance in full when
due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise
(including the payment of amounts that
would become due but for the operation of the automatic stay
under Section 362(a) of Title 11 of the United
States Code, or any similar provision of any other bankruptcy,
insolvency, receivership or other similar law), of all
Obligations with respect to each Grantor.
Section
2.2
No Assumption of Liability
Notwithstanding
anything to the contrary herein, the Security Interest is
granted as security
only and shall not subject the Collateral Agent or any other
Secured Party to, or in any way alter or
modify, any obligation or liability of any Grantor with
respect to or arising out of the Collateral.
ARTICLE
3.
REPRESENTATIONS
AND WARRANTIES AND COVENANTS
Section
3.1
Generally
(a)
Representations and Warranties .
Each
of the Grantors, jointly with the other
Grantors and severally, represents and warrants to the Collateral
Agent and the other Secured Parties
that:
(i)
As of the Applicable Date, (A) such Grantor's chief
executive
office or its principal place of business is, and for the
preceding four months has been, located
at the office indicated on
Schedule
3.1(a)(i) ,
(B)
such Grantor's jurisdiction of organization
is the jurisdiction indicated on
Schedule
3.1(a)(i) ,
and
(C) such Grantor's Federal Employer
Identification Number and/or company organizational number is as
set forth on
Schedule
3.1(a)(i) .
(ii)
As of the Applicable Date, (A) such Grantor's full
legal name
is as set forth on
Schedule 3.1(a)(ii)
and
(B) such Grantor has not changed its legal name in the preceding
five years, except as set forth on
Schedule 3.1(a)(ii) .
(iii)
Such Grantor has not within the five years preceding
the Applicable
Date become bound (whether as a result of merger or otherwise)
as debtor under a security agreement entered into by another
Person, which has not theretofore been
terminated.
(iv)
Such Grantor has good and valid rights in, and title to,
the Collateral
with respect to which it has purported to grant the Security
Interest, except for minor defects
in title that do not materially interfere with its ability to
conduct its business as currently conducted
or to utilize such Collateral for its intended purposes, and
except for Liens expressly permitted
pursuant to the Secured Transaction Documents.
(v)
To the best of such Grantor's knowledge, all actions
and consents,
including all filings, notices, registrations and recordings,
necessary or desirable to create, perfect or ensure the first
priority (subject only to Liens expressly permitted by the
Secured Transaction Documents) of the Security Interest in the
Collateral owned or held by it or on its behalf or for the
exercise by the Collateral Agent or any other Secured Party of
any voting or
other rights provided for in this Guarantee and Security
Agreement or th
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