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SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the
“
Agreement ”),
is
entered into and made effective as of March 28, 2008, by and
among
INTREPID TECHNOLOGY AND RESOURCES, INC.,
an
Idaho corporation with its principal place of business located at
501 West Broadway - Suite 200 Idaho Falls, Idaho 83402 (the
“
Company ”),
and the undersigned subsidiaries of the Company (each a
“
Guarantor ”
and collectively together with the Company, the “
Grantors ”),
in favor
YA GLOBAL INVESTMENTS, L.P. (the
“
Secured Party ”).
WHEREAS, in
connection with the Securities Purchase Agreement, of even date
herewith, by and among the Company and the Secured Party
(the
“
Securities Purchase Agreement ”),
the Company has agreed, upon the terms and subject to the
conditions of the Securities Purchase Agreement, to issue to the
Secured Party (i) an aggregate original principal amount of Five
Hundred Eight Five Thousand Dollars ($585,000) of secured
convertible debentures (the “
Convertible Debentures ”),
which shall be convertible into shares of the Company’s
common stock, par value $0.0005 per share (“
Common Stock ”);
and (ii) warrants (the “
Warrants ”)
to be exercisable to acquire additional shares of Common Stock
initially in that number of shares of Common Stock set forth in the
Securities Purchase Agreement;
WHEREAS ,
each of the Guarantors (other than the Company) has executed and
delivered a Guaranty, dated the date hereof (the “
Guaranty ”),
in favor of the Secured Party with respect to the Company’s
obligations under the Transaction Documents; and
WHEREAS ,
in connection with the financial accommodations to the Company by
the Secured Party under the Convertible Debentures or otherwise,
each of the Guarantors shall receive a direct benefit from the
execution of such financial accommodations as part of the
affiliated business operations of the Company and the Guarantors;
and
WHEREAS, it
is a condition precedent to the Secured Party purchasing the
Convertible Debentures and Warrants pursuant to the Securities
Purchase Agreement that the Grantors shall have executed and
delivered to the Secured Party this Agreement providing for the
grant to the Secured Party of a security interest in all assets and
personal property of each Grantor to secure all of the
Grantors’ obligations under the Transaction Documents;
NOW, THEREFORE, in
consideration of the promises and the mutual covenants herein
contained, and for other good and valuable consideration, the
adequacy and receipt of which are hereby acknowledged, the parties
hereto hereby agree as follows:
ARTICLE 1.
DEFINITIONS AND INTERPRETATIONS
Section
1.1.
Recitals .
The above recitals are true and correct and are incorporated
herein, in their entirety, by this reference.
Section
1.2.
Interpretations .
Nothing herein expressed or implied is intended or shall be
construed to confer upon any person other than the Secured Party
any right, remedy or claim under or by reason hereof.
Section
1.3.
Definitions .
To
the extent used in this Agreement and not defined herein,
terms defined in the Code shall have the meanings (such
meanings to be equally applicable to both the singular and
plural forms of the terms defined) ascribed to such terms in
the Code. To the extent the definition of any category or type
of “collateral” or Pledged Property is expanded by
any amendment, modification or revision to the Code, such
expanded definition will apply automatically as of the date of
such amendment, modification or revision.
As
used in this Agreement, the following terms shall have the
respective meanings indicated below (such meanings to be
applicable equally to both the singular and plural forms of
such terms):
“
Code ”
means the
Uniform Commercial Code as in effect from time to time in the State
of New Jersey;
provided ,
however ,
that if a term is defined in Article 9 of the Uniform Commercial
Code differently than in another Article thereof, the term shall
have the meaning set forth in Article 9 of the Code;
provided
further that,
if by reason of mandatory provisions of law, perfection, or the
effect of perfection or non-perfection, of a security interest in
any Pledged Property or the availability of any remedy hereunder is
governed by the Uniform Commercial Code as in effect in a
jurisdiction other than New Jersey, “Uniform Commercial
Code” means the Uniform Commercial Code as in effect in such
other jurisdiction for purposes of the provisions hereof relating
to such perfection or effect of perfection or non-perfection or
availability of such remedy, as the case may be.
“
Deposit Account ”
has the meaning set forth in Section 6.15.
“
Deposit Account Control Agreement ”
has the meaning set forth in Section 6.15.
“
Event of Default ”
shall be deemed to have occurred under this Agreement upon the
failure by the Grantors to perform, observe, or comply with any of
the covenants, agreements, terms or conditions set forth herein or
in the other Transaction Documents.
“
GAAP ”
means generally accepted accounting principles in the United States
of America.
“
Intellectual Property ”
shall mean all present and future trade secrets, know-how and other
proprietary information; trademarks, trademark applications,
internet domain names, service marks, trade dress, trade names,
business names, designs, logos, slogans (and all translations,
adaptations, derivations and combinations of the foregoing) indicia
and other source and/or business identifiers, and all registrations
or applications for registrations which have heretofore been or may
hereafter be issued thereon throughout the world; copyrights and
copyright applications; (including copyrights for computer
programs) and all tangible and intangible property embodying the
copyrights, unpatented inventions (whether or not patentable);
patents and patent applications; industrial design applications and
registered industrial designs; license agreements related to any of
the foregoing and income therefrom; books, records, writings,
computer tapes or disks, flow diagrams, specification sheets,
computer software, source codes, object codes, executable code,
data, databases and other physical manifestations, embodiments or
incorporations of any of the foregoing; all other intellectual
property; and all common law and other rights throughout the world
in and to all of the foregoing .
“
Lien ”
has the meaning set forth in Section 4.2.
“
Loan Instruments ”
has the meaning set forth in Section 6.1.
“
Material Adverse Effect ”
has the meaning set forth in Section 6.1.
“
Obligations ”
has the meaning set forth in Section 2.1.
“
Permitted Indebtedness ”
has the meaning set forth in Section 7.3.
“
Permitted Liens ”
has the meaning set forth in Section 4.2
“
Pledged Property ”
has the meaning set forth in Section 2.1.
“
Transaction Documents ”
means (i) the Convertible Debentures, (ii) the Securities Purchase
Agreement, (iii) the Warrants, (iv) the Loan Instruments and (v)
any other or related documents.
ARTICLE 2.
PLEDGED PROPERTY
Section
2.1.
Grant of Security Interest .
(a)
As
collateral security for the payment or performance in full of
the Obligations, each Grantor hereby pledges and assigns to
the Secured Party, its successors and assigns, and grants to
the Secured Party, its successors and assigns, a continuing
security interest in and to all assets and personal property
of each Grantor, wherever located and whether now or
hereinafter existing and whether now owned or hereafter
acquired, of every kind and description, tangible or
intangible, including without limitation, all Goods,
Inventory, Equipment, Fixtures, Instruments (including
promissory notes), Documents, Accounts (including
health-care-insurance receivables, and license fees),
Contracts, Contract Rights, Chattel Paper (whether tangible or
electronic), Deposit Accounts (and in and to any deposits or
other sums at any time credited to each such Deposit Account),
Money, Letters of Credit and Letter-of-Credit Rights (whether
or not the letter of credit is evidenced by a writing),
Commercial Tort Claims, Securities and all other Investment
Property, General Intangibles (including payment intangibles
and software), Farm Products, all books and records relating
to any of the foregoing, and all Supporting Obligations, and
any and all proceeds and products of any thereof, including
proceeds of insurance covering any or all of the foregoing,
wherever located, whether now owned, or now due, in which a
Grantor has an interest or the power to transfer rights, or
hereafter acquired, arising, or to become due, or in which a
Grantor obtains an interest, or the power to transfer rights,
and as more particularly described on
Exhibit A attached
hereto (collectively, the “
Pledged Property ”).
(b)
Simultaneously
with the execution and delivery of this Agreement, each
Grantor shall make, execute, acknowledge, file, record and
deliver to the Secured Party such documents, instruments, and
agreements, including, without limitation, financing
statements, certificates, affidavits and forms as may, in the
Secured Party’s reasonable judgment, be necessary to
effectuate, complete or perfect, or to continue and preserve,
the security interest of the Secured Party in the Pledged
Property.
Section
2.2
Security for Obligations .
The security interest created hereby in the Pledged Property
constitutes continuing collateral security for all of the following
obligations, whether now existing or hereinafter incurred
(collectively, the “
Obligations ”):
(a)
(i) the payment by the Company, as and when due and payable
(by scheduled maturity, acceleration, demand or otherwise), of
all amounts from time to time owing by it in respect of the
Convertible Debentures, the other Transaction Documents, or
any other amounts owing by it to the Secured Party, or (ii) in
the case of any Guarantor, the payment by such Guarantor, as
and when due and payable of all “Guaranteed
Obligations” under (and as defined in) the Guaranty;
and
(b)
the due performance and observance by each Grantor of all of
its other debts, liabilities, obligations, covenants and
duties owing by any Grantor to the Secured Party, of every
nature, type and description, whether liquidated,
unliquidated, primary, secondary, secured, unsecured, direct,
indirect, absolute, or contingent, and whether or not
evidenced by a note, guaranty or other instrument, and any
amendments, extensions, renewals or increases thereof,
including, without limitation, all those under the Transaction
Documents or any agreement or document related to the
Transaction Documents, including without limitation, (i) with
respect to any conversion or redemption rights of the Secured
Party under the Convertible Debentures; or (ii) any interest
accruing thereon after insolvency, reorganization or like
proceeding relating to the Grantors, whether or not a claim
for post petition interest is allowed in such proceeding, and
all costs and expenses of the Secured Party incurred in the
enforcement, collection or otherwise in connection with any of
the foregoing, including, but not limited to, reasonable
attorneys’ fees and expenses.
ARTICLE 3.
ATTORNEY-IN-FACT; PERFORMANCE
Section
3.1.
Secured Party Appointed Attorney-In-Fact .
Each
Grantor hereby appoints the Secured Party as its
attorney-in-fact, with full authority in the place and stead
of such Grantor and in the name of each Grantor or otherwise,
exercisable after and during the continuance of an Event of
Default, from time to time in the Secured Party’s
discretion to take any action and to execute any instrument
which the Secured Party may reasonably deem necessary to
accomplish the purposes of this Agreement, or for the purpose
of perfecting, confirming, continuing , enforcing or
protecting the security interest in the Pledged Property,
including, without limitation, to (a) file one or more
financing statements, continuing statements, filings with the
United States Patent and Trademark Office or United States
Copyright Office (or any successor office) or other documents;
(b) receive and collect all instruments made payable to the
Grantor representing any payments in respect of the Pledged
Property or any part thereof and to give full discharge for
the same; (c) demand, collect, receipt for, settle,
compromise, adjust, sue for, foreclose, or realize on the
Pledged Property as and when the Secured Party may determine;
and (d) to facilitate collection, the Secured Party may notify
account debtors and obligors on any Pledged Property to make
payments directly to the Secured Party. The foregoing power of
attorney is a power coupled with an interest and shall be
irrevocable until all Obligations are paid and performed in
full. The Grantors agree that the powers conferred on the
Secured Party hereunder are solely to protect the Secured
Party’s interests in the Pledged Property and shall not
impose any duty upon the Secured Party to exercise any such
powers.
Section
3.2.
Secured Party May Perform .
If
a Grantor fails to perform any agreement contained herein, the
Secured Party, at its option, may itself perform, or cause
performance of, such agreement, and the expenses of the
Secured Party incurred in connection therewith shall be
included in the Obligations secured hereby and payable by such
Grantor under Section 8.3.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES
Section
4.1.
Authorization; Enforceability .
Each
of the parties hereto represents and warrants that it has
taken all action necessary to authorize the execution,
delivery and performance of this Agreement and the
transactions contemplated hereby; and upon execution and
delivery, this Agreement shall constitute a valid and binding
obligation of the respective party, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar
laws affecting creditors’ rights or by the principles
governing the availability of equitable remedies.
Section
4.2.
Ownership of Pledged Property; Priority of Security
Interest .
Each
Grantor represents and warrants that it is the legal and
beneficial owner of the Pledged Property free and clear of any
lien, security interest, option or other charge or encumbrance
(each, a “
Lien ”)
except for the security interest created by this Agreement and
other Permitted Liens. For purposes of this Agreement,
“
Permitted Liens ”
means: (1) the security interest created by this Agreement, (2)
existing Liens which have been disclosed by the Grantors to the
Secured Party on
Schedule 4.2 attached
hereto; (3) inchoate Liens for taxes, assessments or governmental
charges or levies not yet due, as to which the grace period, if
any, related thereto has not yet expired, or being contested in
good faith and by appropriate proceedings for which adequate
reserves have been established in accordance with GAAP; (4) Liens
of carriers, materialmen, warehousemen, mechanics and landlords and
other similar Liens which secure amounts which are not yet overdue
or which are being contested in good faith by appropriate
proceedings for which adequate reserves have been established in
accordance with GAAP; (5) licenses, sublicenses, leases or
subleases granted to other persons not materially interfering with
the conduct of the business of the Grantors; (6) Liens securing
capitalized lease obligations and purchase money indebtedness
incurred solely for the purpose of financing an acquisition or
lease; (7) easements, rights-of-way, restrictions, encroachments,
municipal zoning ordinances and other similar charges or
encumbrances, and minor title deficiencies, in each case not
securing debt and not materially interfering with the conduct of
the business of the Grantors and not materially detracting from the
value of the property subject thereto; (8) Liens arising out of the
existence of judgments or awards which judgments or awards do not
constitute an Event of Default; (9) Liens incurred in the ordinary
course of business in connection with workers compensation claims,
unemployment insurance, pension liabilities and social security
benefits and Liens securing the performance of bids, tenders,
leases and contracts in the ordinary course of business, statutory
obligations, surety bonds, performance bonds and other obligations
of a like nature (other than appeal bonds) incurred in the ordinary
course of business (exclusive of obligations in respect of the
payment for borrowed money); (10) Liens in favor of a banking
institution arising by operation of law encumbering deposits
(including the right of set-off) and contractual set-off rights
held by such banking institution and which are within the general
parameters customary in the banking industry and only burdening
deposit accounts or other funds maintained with a creditor
depository institution; (11) usual and customary set-off rights in
leases and other contracts; and (12) escrows in connection with
acquisitions and dispositions.
Section
4.3
Location of Pledged Property .
The
Pledged Property is or will be kept at the address(es) of each
Grantor set forth on the signature pages hereof, or such other
locations as the Grantors have given the Secured Party written
notice prior to the date hereof, and, unless otherwise
provided herein, the Grantors will not remove any Pledged
Property from such locations without the prior written consent
of the Secured Party which consent shall not be unreasonably
withheld.
Section
4.4
Location, State of Incorporation and Name of Grantors
.
Each
Grantor’s principal place of business, state of
incorporation or organization, organization identification
number, and exact legal name is as set forth on each such
Grantor’s signature page to this Agreement.
Section
4.5
Priority of Security Interest .
The
security interest granted to the Secured Party hereunder shall
be a first priority security interest subject to no other
Liens. Except for the Permitted Liens, no financing statement
covering any of the Pledged Property or any proceeds thereof
is on file in any public office.
ARTICLE 5.
DEFAULT; REMEDIES
Section
5.1
Method of Realizing Upon the Pledged Property: Other
Remedies .
If
any Event of Default shall have occurred and be
continuing:
(a)
The
Secured Party may exercise in respect of the Pledged Property,
in addition to any other rights and remedies provided for
herein or otherwise available to it, all of the rights and
remedies of a secured party upon default under the Code
(whether or not the Code applies to the affected Pledged
Property), and also may (i) take absolute control of the
Pledged Property, including, without limitation, transfer into
the Secured Party's name or into the name of its nominee or
nominees (to the extent the Secured Party has not theretofore
done so) and thereafter receive, for the benefit of the
Secured Party, all payments made thereon, give all consents,
waivers and ratifications in respect thereof and otherwise act
with respect thereto as though it were the outright owner
thereof, (ii) require each Grantor to assemble all or
part of the Pledged Property as directed by the Secured Party
and make it available to the Secured Party at a place or
places to be designated by the Secured Party that is
reasonably convenient to both parties, and the Secured Party
may enter into and occupy any premises owned or leased by a
Grantor where the Pledged Property or any part thereof is
located or assembled for a reasonable period in order to
effectuate the Secured Party's rights and remedies hereunder
or under law, without obligation to such Grantor in respect of
such occupation, and (iii) without notice except as
specified below and without any obligation to prepare or
process the Pledged Property for sale, (A) sell the
Pledged Property or any part thereof in one or more parcels at
public or private sale, at any of the Secured Party's offices
or elsewhere, for cash, on credit or for future delivery, and
at such price or prices and upon such other terms as the
Secured Party may deem commercially reasonable and/or
(B) lease, license or dispose of the Pledged Property or
any part thereof upon such terms as the Secured Party may deem
commercially reasonable. Each Grantor agrees that, to the
extent notice of sale or any other disposition of the Pledged
Property shall be required by law, at least ten (10) days'
notice to such Grantor of the time and place of any public
sale or the time after which any private sale or other
disposition of the Pledged Property is to be made shall
constitute reasonable notification. The Secured Party shall
not be obligated to make any sale or other disposition of any
Pledged Property regardless of notice of sale having been
given. The Secured Party may adjourn any public or private
sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned. Each
Grantor hereby waives any claims against the Secured Party
arising by reason of the fact that the price at which the
Pledged Property may have been sold at a private sale was less
than the price which might have been obtained at a public sale
or was less than the aggregate amount of the Obligations, even
if the Secured Party accepts the first offer received and does
not offer such Pledged Property to more than one offeree, and
waives all rights that such Grantor may have to require that
all or any part of such Pledged Property be marshaled upon any
sale (public or private) thereof. Each Grantor hereby
acknowledges that (i) any such sale of the Pledged
Property by the Secured Party may be made without warranty,
(ii) the Secured Party may specifically disclaim any
warranties of title, possession, quiet enjoyment or the like,
and (iii) such actions set forth in clauses (i) and
(ii) above shall not adversely affect the commercial
reasonableness of any such sale of Pledged
Property.
(b)
Any
cash held by the Secured Party as Pledged Property and all
cash proceeds received by the Secured Party in respect of any
sale of or collection from, or other realization upon, all or
any part of the Pledged Property shall be applied (after
payment of any amounts payable to the Secured Party pursuant
to Section 8.3 hereof) by the Secured Party against, all or
any part of the Obligations in such order as the Secured Party
shall elect, consistent with the provisions of the Securities
Purchase Agreement. Any surplus of such cash or cash proceeds
held by the Secured Party and remaining after the indefeasible
payment in full in cash of all of the Obligations shall be
paid over to whomsoever shall be lawfully entitled to receive
the same or as a court of competent jurisdiction shall
direct.
(c)
In
the event that the proceeds of any such sale, collection or
realization are insufficient to pay all amounts to which the
Secured Party is legally entitled, each Grantor shall be
liable for the deficiency, together with interest thereon at
the rate specified in the Convertible Debentures for interest
on overdue principal thereof or such other rate as shall be
fixed by applicable law, together with the costs of collection
and the reasonable fees, costs, expenses and other client
charges of any attorneys employed by the Secured Party to
collect such deficiency.
(d)
Each
Grantor hereby acknowledges that if the Secured Party complies
with any applicable state, provincial, or federal law
requirements in connection with a disposition of the Pledged
Property, such compliance will not adversely affect the
commercial reasonableness of any sale or other disposition of
the Pledged Property.
(e)
The
Secured Party shall not be required to marshal any present or
future collateral security (including, but not limited to,
this Agreement and the Pledged Property) for, or other
assurances of payment of, the Obligations or any of them or to
resort to such collateral security or other assurances of
payment in any particular order, and all of the Secured
Party's rights hereunder and in respect of such collateral
security and other assurances of payment shall be cumulative
and in addition to all other rights, however existing or
arising. To the extent that it lawfully may, each Grantor
hereby agrees that it will not invoke any law relating to the
marshaling of collateral which might cause delay in or impede
the enforcement of the Secured Party's rights under this
Agreement or under any other instrument creating or evidencing
any of the Obligations or under which any of the Obligations
is outstanding or by which any of the Obligations is secured
or payment thereof is otherwise assured, and, to the extent
that it lawfully may, each Grantor hereby irrevocably waives
the benefits of all such laws.
Section
5.2
Duties Regarding Pledged Property .
The
Secured Party shall have no duty as to the collection or
protection of the Pledged Property or any income thereon or as
to the preservation of any rights pertaining thereto, beyond
the safe custody and reasonable care of any of the Pledged
Property actually in the Secured Party’s
possession.
ARTICLE 6.
AFFIRMATIVE COVENANTS
So
long as any of the Obligations shall remain outstanding,
unless the Secured Party shall otherwise consent in
writing:
Section
6.1.
Existence, Properties, Etc.
(a)
Each Grantor shall do, or cause to be done, all things, or
proceed with due diligence with any actions or courses of
action, that may be reasonably necessary (i) to maintain
Grantor’s due organization, valid existence and good
standing under the laws of its state of incorporation, and
(ii) to preserve and keep in full force and effect all
qualifications, licenses and registrations in those
jurisdictions in which the failure to do so could have a
Material Adverse Effect; and (b) each Grantor shall not
do, or cause to be done, any act impairing the Grantor’s
corporate power or authority (i) to carry on such
Grantor’s business as now conducted, and (ii) to
execute or deliver this Agreement or any other agreement or
document delivered in connection herewith, including, without
limitation, the Guaranty , any other collateral documents, any
UCC-1 Financing Statements required by the Secured
Party (which documents, instruments, and agreements
collectively shall be referred to as the “
Loan Instruments ”) to
which it is or will be a party, or perform any of its obligations
hereunder or thereunder. For purpose of this Agreement, the term
“
Material Adverse Effect ”
means any material and adverse affect as determined by Secured
Party in its reasonable discretion, whether individually or in the
aggregate, upon (a) the Grantors’ assets, business,
operations, properties or condition, financial or otherwise;
(b) the Grantors’ ability to make payment as and when
due of all or any part of the Obligations; or (c) the Pledged
Property.
Section
6.2.
Financial Statements and Reports .
Each
Grantor shall furnish to the Secured Party within a reasonable
time such financial data as the Secured Party may reasonably
request.
Section
6.3.
Accounts and Reports .
Each
Grantor shall maintain a standard system of accounting in
accordance with
GAAP and
provide, at its sole expense, to the Secured Party the
following:
(a)
as
soon as available, a copy of any notice or other communication
alleging any nonpayment or other material breach or default,
or any foreclosure or other action respecting any material
portion of its assets and properties, received respecting any
of the indebtedness of such Grantor in excess of $500,000
(other than the Obligations), or any demand or other request
for payment under any guaranty, assumption, purchase agreement
or similar agreement or arrangement respecting the
indebtedness or obligations of others in excess of $500,000;
and
(b)
within
fifteen (15) days after the making of each submission or
filing, a copy of any report, financial statement, notice or
other document, whether periodic or otherwise, submitted to
the shareholders of the Grantors, or submitted to or filed by
the Grantors with any governmental authority involving or
affecting (i) the Grantors that could reasonably be expected
to have a Material Adverse Effect; (ii) the Obligations;
(iii) any part of the Pledged Property; or (iv) any
of the transactions contemplated in this Agreement or the Loan
Instruments (except, in each case, to the extent any such
submission, filing, report, financial statement, notice or
other document is posted on EDGAR Online).
Section
6.4.
Maintenance of Books and Records; Inspection
.
Each
Grantor shall maintain its books, accounts and records in
accordance with GAAP, and permit the Secured Party, its
officers and employees and any professionals designated by the
Secured Party in writing, at any time during normal business
hours and upon reasonable notice to visit and inspect any of
its properties (including but not limited to the collateral
security described in the Transaction Documents and/or the
Loan Instruments), corporate books and financial records, and
to discuss its accounts, affairs and finances with any
employee, officer or director thereof (it being agreed that,
unless an Event of Default shall have occurred and be
continuing, there shall be no more than two (2) such visits
and inspections in any fiscal year).
Section
6.5.
Maintenance and Insurance .
(a)
Each
Grantor shall maintain or cause to be maintained, at its own
expense, all of its material assets and properties in good
working order and condition, ordinary wear and tear excepted,
making all necessary repairs thereto and renewals and
replacements thereof.
(b)
The
Grantors shall maintain or cause to be maintained, at their
own expense, insurance in form, substance and amounts
(including deductibles), which the Grantors deems reasonably
necessary to the Grantors’ business, (i) adequate
to insure all assets and properties of the Grantors of a
character usually insured by persons engaged in the same or
similar business against loss or damage resulting from fire or
other risks included in an extended coverage policy;
(ii) against public liability and other tort claims that
may be incurred by the Grantors; (iii) as may be required
by the Transaction Documents and/or applicable law and (iv) as
may be reasonably requested by Secured Party, all with
financially sound and reputable insurers.
Section
6.6.
Contracts and Other Collateral .
Each
Grantor shall perform all of its obligations under or with
respect to each instrument, receivable, contract and other
intangible included in the Pledged Property to which such
Grantor is now or hereafter will be party on a timely basis
and in the manner therein required, including, without
limitation, this Agreement, except to the extent the failure
to so perform such obligations would not reasonably be
expected to have a Material Adverse Effect.
Section
6.7.
Defense of Collateral, Etc.
Each
Grantor shall defend and enforce its right, title and interest
in and to any part of: (a) the Pledged Property; and
(b) if not included within the Pledged Property, those
assets and properties whose loss would reasonably be expected
to have a Material Adverse Effect, each against all manner of
claims and demands on a timely basis to the full extent
permitted by applicable law (other than any such claims and
demands by holders of Permitted Liens).
Section
6.8.
Taxes and Assessments .
Each
Grantor shall (a) file all material tax returns and
appropriate schedules thereto that are required to be filed
under applicable law, prior to the date of delinquency (taking
into account any extensions of the original due date),
(b) pay and discharge all material taxes, assessments and
governmental charges or levies imposed upon a Grantor, upon
its income and profits or upon any properties belonging to it,
prior to the date on which penalties attach thereto, and
(c) pay all material taxes, assessments and governmental
charges or levies that, if unpaid, might become a lien or
charge upon any of its properties;
provided, however ,
that the Grantors in good faith may contest any such tax,
assessment, governmental charge or levy described in the foregoing
clauses (b) and (c) so long as appropriate reserves are maintained
with respect thereto if and to the extent required by
GAAP.
Section
6.9.
Compliance with Law and Other Agreements .
Each
Grantor shall maintain its business operations and property
owned or used in connection therewith in compliance with
(a) all applicable federal, state and local laws,
regulations and ordinances governing such business operations
and the use and
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