                                 CODE OF VIRGINIA

FINANCING ARRANGEMENTS; REMEDIES OR ENFORCEMENT (§ 59.1-505.10)

a. Except as otherwise provided in subsection (b), on material breach of a
financial accommodation contract by the accommodated licensee, the following
rules apply:

   1. The financier may cancel the financial accommodation contract.

   2. Subject to paragraphs (3) and (4), the financier may pursue its remedies
   against the accommodated licensee under the financial accommodation contract.

   3. If the financier became a licensee and made a transfer or sublicense that
   was effective under &#xA7; 59.1-505.8, it may exercise the remedies of a
   licensor for breach, including the rights of an aggrieved party under &#xA7;
   59.1-508.15, subject to the limitations of &#xA7; 59.1-508.16.

   4. If the financier did not become a licensee or did not make a transfer that
   was effective under &#xA7; 59.1-505.8, it may enforce a contractual right
   contained in the financial accommodation contract to preclude the
   licensee&#8217;s further use of the information. However, the following rules
   apply:

A. The financier has no right to take possession of copies, use the information
or informational rights, or transfer any contractual interest in the license.

B. If the accommodated licensee agreed to transfer possession of copies to the
financier in the event of material breach of the financial accommodation
contract, the financier may enforce that contractual right only if permitted to
do so under subsection (b) (1) and &#xA7; 59.1-505.3.

b. The following additional limitations apply to a financier&#8217;s remedies
under subsection (a):

   1. A financier described in subsection (a) (3) which is entitled under the
   financial accommodation contract to take possession or prevent use of
   information, copies, or related materials may do so only if the licensor
   consents or if doing so would not result in a material adverse change of the
   duty of the licensor, materially increase the burden or risk imposed on the
   licensor, disclose or threaten to disclose trade secrets or confidential
   material of the licensor, or materially impair the licensor&#8217;s likelihood
   or expectation of obtaining return performance.

   2. The financier may not otherwise exercise control over, have access to, or
   sell, transfer, or otherwise use the information or copies without the consent
   of the licensor unless the financier or transferee is subject to the terms of
   the license and:

A. the licensee owns the licensed copy, the license does not preclude transfer
of the licensee&#8217;s contractual rights, and the transfer complies with
federal copyright law for the owner of a copy to make the transfer; or

B. the license is transferable by its express terms and the financier fulfills
any conditions to, or complies with any restrictions on, transfer.

   3. The financier&#8217;s remedies under the financial accommodation contract
   are subject to the licensor&#8217;s rights and the terms of the license.

HISTORY: 2000, cc. 101, 996.