AGREEMENT dated as of February 11, 2009, between
JUNIPER CONTENT CORPORATION, a Delaware corporation
(“Juniper”), FIRESTONE COMMUNICATIONS, INC. , a
Delaware corporation (“Firestone”), SORPRESA! RIGHTS
LLC , a Delaware limited liability company (“Sorpresa!
Rights” and together with Firestone, the
“Subsidiaries,” and the Subsidiaries, together with
Juniper, collectively referred to herein as the
“Company”), each having an address at 521 Fifth Avenue,
Suite 822, New York, New York 10175 and the persons and
entities listed on Schedule I hereto, as
Schedule I may be amended from time to time to include
Additional Investors (as defined in Section 5.7) in accordance
with Section 5.7 of this Agreement (the
“Investors”).
THE
SENIOR FINANCING/GRANT OF SECURITY INTEREST
SECTION
1.1 Private Offering of Senior Notes . Concurrently with the
execution of this Agreement, Juniper has consummated an initial
closing of a private offering (“Offering”) of senior
secured convertible notes in the aggregate principal amount of
$900,000 (“Initial Notes”). Subsequent closings may
take place at which Juniper may issue additional notes of like
tenor to the Initial Notes (“Additional Notes”). At any
subsequent closing of the Offering, the Additional Investors (as
defined in Section 5.7) will become parties to this Agreement
in accordance with Section 5.7. The Initial Notes and
Additional Notes are hereinafter referred to collectively as the
“Notes” and individually as a “Note.” This
Security Agreement is being signed in connection with the Offering
to secure the indebtedness underlying the Notes.
SECTION
1.2 Notes . Concurrently with the execution of this
Agreement, Juniper has executed and delivered to each Investor a
Note in the principal amount of such Investor’s investment in
the Offering.
SECTION
1.3 Subsidiaries . The Subsidiaries hereby jointly and
severally guarantee the full payment and performance of the Notes
and are granting to the Investors the security interests created
hereby in order to secure such guarantee.
SECTION
1.4 Grant of Security Interest . In consideration of the
receipt of the funds raised in the Offering and to secure
Juniper’s obligation to repay to the Investors the principal
amount and interest represented by the Notes, the Company hereby
grants to the Investors a continuing first priority security
interest in and to all of the assets of the Company, whether now or
hereafter existing or now owned or hereafter acquired and wherever
located, of every kind and description, tangible or intangible,
including, but not limited to, all goods, equipment, inventory,
documents, accounts, deposit accounts, chattel paper, instruments,
investment property, money, contracts and rights to affiliates and
subscribers, general intangibles (including, but not limited to,
intellectual property and all rights relating to such intellectual
property), credits, claims, demands and any other property, rights
and interests of the Company, all substitutions and replacements
therefor and all products and proceeds thereof, new value thereof
or proceeds of insurance thereon (collectively,
“Collateral”).
The
security interest granted herein to each Investor is an undivided
interest in the Collateral as a tenant-in-common with every other
Investor. Each Investor may realize upon the Collateral, subject to
and in accordance with Section 4 hereof, to the extent of its
Investment Percentage (as hereinafter defined) of the Collateral,
as computed from time to time. The amount of each Investor’s
“Investment Percentage” shall be the percentage
computed by dividing the outstanding principal and interest owed to
such Investor pursuant to its Note, by the aggregate outstanding
principal and interest owed to all the Investors pursuant to the
Notes.
SECTION
1.5 Financing Statements . The Company shall, at its
expense, execute, file, record and deliver to Investors (in such
manner and form as the Investors shall reasonably require) any
financing statements and any other documents, necessary or
appropriate to preserve, perfect, validate or protect the security
interest granted to the Investors hereunder against the claims of
third parties and shall cause the same to be duly filed in all
places necessary, including, without limitation, the U.S. Patent
and Trademark Office, to perfect and/or record the security
interest of the Investors in the Collateral. This shall include
(a) all financing statements, (b) all carbon,
photographic or other reproductions of financing statements or this
Agreement (which shall be sufficient as a financing statement
hereunder), (c) all endorsements to title to any vehicles or other
Collateral as may be required in order to perfect the security
interest therein, and (d) all specific assignments or other
papers that may be
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necessary,
or that the Investors may reasonably request, in order to create,
preserve, perfect or validate any security interest or to enable
the Investors to exercise and enforce their rights hereunder with
respect to any of the Collateral. In the event that any recording
or re-filing thereof (or filing of any statements of continuation
or assignment of any financing statement) is required to protect
and preserve such security interest, the Company, at its own cost
and expense, shall cause the same to be re-recorded and/or re-filed
at the time and in the manner requested by the Investors. The
Company hereby authorizes the Investors to file or re-file any
financing statements, continuation statements, amended statements
and/or other customary instruments necessary to create, perfect,
preserve or maintain the security interest granted hereunder which
at any time may be required or appropriate. In addition, in the
event and to the extent that any of Collateral consists of or is
represented by instruments or other evidences of ownership such as
would require physical possession of same in order to perfect the
security interest therein, the Company will promptly upon request
of the Investors, at its expense, deliver same to a designee of the
Investors, as escrow agent, with any necessary endorsements thereon
or powers annexed thereto.
SECTION
1.6 Assignment . The rights under this Agreement and the
security interest granted hereby only may be assigned or
transferred by an Investor together with the Note in accordance
with the terms thereof.
REPRESENTATIONS
OF THE COMPANY
SECTION
2.1 In order to induce the Investors to lend money to Juniper and
purchase the Notes, the Company hereby represents and warrants to
the Investors as follows:
(a) Juniper
has full power to execute and deliver the Notes, and the Company
has full power to execute and deliver the other agreements,
instruments and documents contemplated hereby and thereby,
including without limitation a Uniform Commercial Code Financing
Statement (collectively the “Other Security
Documents”), and to incur and perform all the obligations
provided for herein and therein.
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(b) The
obligations of the Company under this Agreement constitute, and the
obligations of the Company under the Other Security Documents when
executed and delivered pursuant hereto will constitute, the valid
and legally binding obligations of the Company ranking senior in
all respects with all other obligations of the Company and
enforceable in accordance with their respective terms, except
(i) as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting
creditors’ rights generally, (ii) as enforceability of
any indemnification or contribution provision may be limited under
the federal and state securities laws, and (iii) that the
remedy of specific performance and injunctive and other forms of
equitable relief may be subject to the equitable defenses and to
the discretion of the court before which any proceeding therefor
may be brought.
(c) Except
as set forth on Schedule 2.1(c), the Company is not in default
under any indenture, mortgage, deed of trust, agreement or other
instrument to which it is a party or by which it may be bound.
Neither the execution nor the delivery of this Agreement, nor the
consummation of the transactions herein contemplated, nor
compliance with the provisions hereof, will violate any law or
regulation, or any order or decree of any court or governmental
authority, or will conflict with, or result in the breach of, or
constitute a default under, any indenture, mortgage, deed of trust,
agreement or other instrument to which the Company is a party or by
which the Company may be bound, or result in the creation or
imposition of any lien, claim or encumbrance upon any property of
Company.
(d) No
authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is
required for the due execution, delivery and performance by the
Company of this Agreement or the matters contemplated herein and
for the Investors to enjoy the benefits conferred hereby except
such filings as may be necessary to perfect the security interest
granted the Investors hereunder and under the Other Security
Documents.
(e) The
Company is the sole beneficial owner of the Collateral. The lien
granted by the Company to the Investors in the Collateral is a
first priority security interest. There are no other mortgages,
pledges, liens, security interests, claims, encumbrances or
charges
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of any
kind (“Encumbrances”) on any of the Collateral, other
than the liens permitted by Section 3.2(b) hereof.
(f) The
issuance of the Notes and the granting of a security interest in
the Collateral to the Investors are contemporaneous exchanges for
new value given by the Investors to Juniper in an amount equivalent
to the value given by Juniper to the Investors.
(g) Except
as set forth on Schedule 2.1(g), no material default or
impairment exists, and no event which with notice or the passage of
time or both, would constitute a default under, or impairment of,
the Collateral by any party thereto, and there are no material
offsets, claims or defenses against the obligations evidenced by
the Collateral.
SECTION
3.1 Affirmative Covenants . The Company hereby covenants
that so long as this Agreement remains in effect or any amount due
hereunder or under the Notes remains outstanding and unpaid, it
will, unless otherwise consented to in writing by any Investor or
Investors holding Notes evidencing, in the aggregate, an amount
equal to not less than 50.1% of the aggregate principal amount of
all Notes then outstanding (“Majority Consent of the Note
holders”):
(a) Do
all things necessary to preserve and keep in full force and effect
its legal existence, including, without limitation, all licenses or
similar qualifications required by it to engage in its business in
all jurisdictions in which it is at the time so engaged; and
continue to engage in business of the same general type as
conducted as of the date hereof; and (ii) continue to conduct
its business substantially as now conducted or as otherwise
permitted hereunder;
(b) Pay
and discharge promptly when due all taxes, assessments and
governmental charges or levies imposed upon it or upon its income
or profits or in respect of its property before the same shall
become delinquent or in default, which, if unpaid, might reasonably
be expected to give rise to liens or charges upon such properties
or any part thereof, unless, in each case, the validity or amount
thereof is being contested in good faith by
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appropriate
proceedings and the Company has maintained adequate reserves with
respect thereto in accordance with generally accepted accounting
principles of the United States (“GAAP”);
(c) Comply
in all material respects with all federal, state and local laws and
regulations, orders, judgments, decrees, injunctions, rules,
regulations, permits, licenses, authorizations and requirements
applicable to it (collectively, “Requirements”) of all
governmental bodies, departments, commissions, boards, companies or
associations insuring the premises, courts, authorities, officials
or officers which are applicable to the Company or any of its
properties, except where the failure to so comply would not have a
material adverse effect (“Material Adverse Effect”) on
the Company or any of its properties; provided ,
however , that nothing provided herein shall prevent the
Company from contesting the validity or the application of any
Requirements;
(d) Keep
and maintain complete, proper and accurate records and books of
account with respect to its business activities and the Collateral,
in which proper entries, reflecting all of their financial
transactions, are made in accordance with GAAP. Such books and
records shall be open at reasonable times and upon reasonable
notice to the inspection of each Investor;
(e) Notify
the Investors in writing, promptly upon learning thereof, of any
litigation or administrative proceeding commenced against the
Company which involves a claim in excess of $50,000;
(f) Promptly
pay and discharge all taxes, assessments and governmental charges
or levies imposed upon it or upon its income and profits, or upon
any properties belonging to it before the same shall be in default;
provided, however, that the Company shall not be required to pay
any such tax, assessment, charge or levy which is being contested
in good faith by proper proceedings and adequate reserves for the
accrual of same are maintained if required by GAAP;
(g) Maintain
at all times, preserve, protect and keep its property used or
useful in the conduct of its business in good repair, working order
and condition, and from time make
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all
needful and proper repairs, renewals, replacements and improvement
thereof as shall be reasonably required in the conduct of its
business;
(h) To
the extent necessary for the operation of its business, keep
adequately insured by financially sound reputable insurers, all
property of a character usually insured by similar corporations and
carry such other insurance as is usually carried by similar
corporations;
(i) Defend
the title to the Collateral against all persons and against all
claims and demands whatsoever;
(j) Keep
the Collateral free and clear of all further Encumbrances except as
authorized herein;
(k) On
at least twenty (20) days notice in writing by the Investors,
furnish further assurance of title, execute any reasonable written
agreement or do any other acts reasonably necessary to effectuate
the purposes and provisions of this Agreement, execute any
instrument or statement required by law or otherwise in order to
perfect, continue or terminate the security interest of the
Investors in the Collateral and pay all costs of filing in
connection therewith;
(l) Retain
possession of the Collateral and not remove, sell, exchange,
assign, loan, deliver, lease, license, mortgage or otherwise
dispose of same outside of the ordinary course of
business;
(m) Promptly
give notice in writing to the Investors of the occurrence of any
default or Event of Default (as hereinafter defined) under this
Agreement or of any default under any other material instrument or
agreement to which it is a party;
(n) Timely
file and pay all fees, including renewal fees, required for the
maintenance and preservation of the Company’s registered
trademarks; and
(o) Upon
the occurrence and during the continuance of any Event of Default,
upon the request of the Investors, promptly notify (and the Company
hereby authorizes the Investors so to notify) each account debtor
in respect of any account or instrument that the Collateral has
been assigned to the Investors, or their designee(s), hereunder,
and that any
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payments
due or to become due in respect of such
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