Exhibit 99.6
INTELLECTUAL PROPERTY SECURITY AGREEMENT
INTELLECTUAL PROPERTY SECURITY AGREEMENT, dated as of March 25, 2002,
between Visual Networks, Inc., a Delaware corporation (the "PARENT"), Visual
Networks Operations, Inc., a Delaware corporation ("VNO"), Visual Networks
Investments, Inc., a California corporation ("VNI"), Visual Networks
Technologies, Inc., a California corporation ("VNT"), Visual Networks of Texas,
LP, a Texas corporation ("VISUAL TEXAS"), Inverse Network Technology, a
California corporation ("INVERSE"), and Avesta Technologies, Inc., a Delaware
corporation ("Avesta"), (each of VNI, VNO, VNT, Visual Texas, Inverse and
Avesta, a "SUBSIDIARY" and, together with Parent, the "DEBTORS") and the
investors signatory hereto (each investor including their respective successors,
endorsees, transferees and assigns, a "SECURED PARTY", and collectively, the
"SECURED PARTIES").
W I T N E S S E T H:
WHEREAS, pursuant to the Securities Purchase Agreement, dated the date
hereof between the Parent and the Secured Parties (the "PURCHASE AGREEMENT"),
the Secured Parties have agreed to extend certain loans to the Parent which
shall be evidenced by the issuance to the Secured Parties of senior secured
convertible debentures, due March 25, 2006 (the "DEBENTURES"); and
WHEREAS, in order to induce the Secured Parties to enter into the
Purchase Agreement, the Debtors have agreed to execute and deliver to the
Secured Parties this Agreement for the benefit of the Secured Parties and a
separate agreement granting to them a first priority security interest in
certain intangible property of the Debtors (the "SECURITY AGREEMENT") to secure
the prompt payment, performance and discharge in full of all of the Debtors'
obligations under this Agreement, the Debentures and the Security Agreement.
NOW, THEREFORE, in consideration of the agreements herein contained and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto hereby agree as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms shall
have the meanings set forth in this Section 1. Terms used but not otherwise
defined in this Agreement that are defined in Article 9 of the UCC (such as
"GENERAL INTANGIBLES" and "PROCEEDS") shall have the respective meanings given
such terms in Article 9 of the UCC.
(a) "AGENT" means Smithfield Fiduciary LLC. as agent for each of the Secured
Parties pursuant to this Agreement and the Security Agreement, or such other
Person as shall have been subsequently appointed as a successor agent pursuant
to this Agreement.
(b) "Collateral" means all of the Debtors' right, title and interest in and to
all of Trademarks, Patents, Copyrights, and other general intangible property of
the Debtors, all Debtors' trade secrets, Debtors' intellectual property rights
in Debtors' computer software and Debtors' computer software products, design
rights which may be owned or licensed to the Debtors, Debtors' rights to
proceeds arising from any and all claims for damages by way of past, present and
future infringement of any Collateral with the right but not the obligation to
xxx on behalf of and collect such damages for said use or infringement of the
Copyrights, Patents or Trademarks, and Debtors' rights with respect to licenses
granted by Debtors' to third parties or licensed to Debtors to use any of the
Copyrights, Patents or Trademarks, and all license fees and royalties due to the
Debtors arising from such use to the extent permitted by such license or rights.
The term "Collateral" shall include all of the foregoing items, whether
presently owned or existing or hereafter acquired or coming into existence, all
of Debtors' additions and accessions thereto, all of Debtors' substitutions and
replacements thereof, and all of Debtors' proceeds, products and accounts
thereof, including without limitation all proceeds from the licensing or sale or
other transfer of Collateral and of insurance covering the same and of any tort
claims in connection therewith.
(c) "Copyrights" means any and all of Debtors' copyrights, copyright
applications, copyright registration and like protections in each work or
authorship and derivative work thereof, including computer programs, that is
created by the Debtors, whether published or unpublished and whether or not the
same also constitutes a trade secret, now or hereafter existing, created,
acquired or held by the Debtors, including, without limitation, those
registrations and applications set forth on EXHIBIT A attached hereto.
(d) "OBLIGATIONS" means all of the Debtors' obligations under this Agreement,
the Debentures and the Security Agreement, in each case, whether now or
hereafter existing, voluntary or involuntary, direct or indirect, absolute or
contingent, liquidated or unliquidated, whether or not jointly owed with others,
and whether or not from time to time decreased or extinguished and later
increased, created or incurred, and all or any portion of such obligations or
liabilities that are paid, to the extent all or any part of such payment is
avoided or recovered directly or indirectly from the Secured Parties as a
preference, fraudulent transfer or otherwise as such obligations may be amended,
supplemented, converted, extended or modified from time to time.
(e) "PATENTS" means all of the Debtors' patents, patent applications, letters
patent and like protections of the United States or any other country,
including, without limitation, improvements, divisions, continuations, renewals,
reissues, extensions and continuations-in-part of the same, and including,
without limitation, those registrations and applications set forth on EXHIBIT B
attached hereto.
(f) "Trademarks" means any Debtor trademark or service xxxx right, whether or
not registered, Debtors' applications to register and registrations of the same
and like protections, and the entire goodwill of the business of the Debtors
connected with or symbolized by such trademarks, including, without limitation,
those registrations and applications set forth on EXHIBIT C attached hereto.
(g) "UCC" means the Uniform Commercial Code and/or any other applicable law of
each jurisdiction in which any Debtor is incorporated or organized (including,
without limitation the State of Delaware, the State of Texas and the State of
California) and any jurisdiction as to any Collateral located therein.
2. GRANT OF SECURITY INTEREST. As an inducement for the Secured Parties to enter
into the Purchase Agreement and to secure the complete and timely payment,
performance and discharge in full, as the case may be, of all of the
Obligations, the Debtors hereby, unconditionally and irrevocably, pledges,
grants and hypothecates to the Secured Parties, a continuing first priority
security interest in, a first lien upon and a right of set-off against all of
the Debtors' right, title and interest of whatsoever kind and nature in and to
the Collateral (the "Security Interest").
3. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF THE DEBTORS. The
Debtors jointly and severally represent and warrant to, and covenant and agree
with, the Secured Parties as follows:
(a) Each Debtor has the requisite corporate power and authority to enter into
this Agreement and otherwise to carry out its obligations thereunder. The
execution, delivery and performance by each Debtor of this Agreement and the
filings contemplated therein have been duly authorized by all necessary action
on the part of such Debtor and no further action is required by such Debtor.
(b) Except for the Security Interest and as set forth in SCHEDULE 3(B) hereto,
each Debtor is the sole owner of the Collateral (except for non-exclusive
licenses granted by the Debtors in the ordinary course of business), free and
clear of any liens, security interests or encumbrances, and is fully authorized
to grant the Security Interest in and to pledge the Collateral. There is not on
file in any governmental or regulatory authority, agency or recording office an
effective financing statement, security agreement or transfer or any notice of
any of the foregoing (other than those that have been filed in favor of the
Secured Parties pursuant to this Agreement) covering or affecting any of the
Collateral. So long as this Agreement shall be in effect, the Debtors shall not
execute and shall not knowingly permit to be on file in any such office or
agency any such financing statement or other document or instrument (except to
the extent filed or recorded in favor of the Secured Parties pursuant to the
terms of this Agreement) without the consent of the Secured Parties.
(c) EXHIBIT A sets forth a true and complete list of all Debtors' registrations
and applications for Copyrights in existence as of the date of this Agreement.
EXHIBIT B sets forth a true and complete list of all Debtors' registrations and
applications for Patents that have been filed as of the date of this Agreement.
EXHIBIT C sets forth a true and complete list of all Debtors' registrations and
applications for Trademarks filed as of the date of this Agreement. The Debtors
shall, within ten (10) days of obtaining knowledge thereof, advise the Secured
Parties in writing of any material change in the composition of the Collateral,
including, without limitation, any subsequent ownership rights of the Debtors in
or to any Copyrights, Patents or Trademarks.
(d) Each of the Patents, Trademarks and Copyrights is valid and enforceable, and
no part of the Collateral has been judged invalid or unenforceable. No written
claim has been received that any of the Patents, Trademarks or Copyrights or the
Debtors' use of any Collateral violates the rights of any third party. There has
been no adverse decision to the Debtors' claim of ownership rights in or
exclusive rights to use the Collateral in any jurisdiction or to the Debtors'
right to keep and maintain such Collateral in full force and effect, and there
is no proceeding involving said rights pending or, to the best knowledge of the
Debtors, threatened before any court, judicial body, administrative or
regulatory agency, arbitrator or other governmental authority.
(e) Each Debtor shall at all times maintain its books of account and records
relating to the Collateral at its principal place of business and may not
relocate such books of account and records unless it delivers to the Secured
Parties at least 30 days prior to such relocation (i) written notice of such
relocation and the new location thereof (which must be within the United States)
and (ii) evidence that appropriate financing statements and other necessary
documents have been filed and recorded and other steps have been taken to
perfect the Security Interest to create in favor of the Secured Parties a valid,
perfected and continuing first priority liens in the Collateral. The principal
place of business of the Debtors is located at the address set forth in SCHEDULE
A hereto.
(f) This Agreement creates in favor of the Secured Parties a valid security
interest in the Collateral, including the Collateral listed on the Exhibits
hereto, securing the payment and performance of the Obligations, and, upon
making the filings described in the immediately following sentence, a perfected
first priority security interest in such Collateral (subject to the Existing
Security Interest). Except for (x) the filing of this Agreement with the United
States Patent and Trademark Office with respect to the Patents and Trademarks
and the filing of this Agreement with the United States Copyrights Office with
respect to the Copyrights, and (y) the filing of financing statements on Form
UCC-1 under the UCC with the jurisdictions indicated in SCHEDULE A, attached
hereto, no authorization or approval of or filing with or notice to any
governmental authority or regulatory body is required either (i) for the grant
by the Debtors of, or the effectiveness of, the Security Interest granted hereby
or for the execution, delivery and performance of this Agreement by the Debtors
or (ii) for the perfection of or exercise by the Secured Parties of its rights
and remedies hereunder. The Debtors acknowledges and agrees that a copy of this
Agreement (or instruments executed and delivered pursuant hereto) will be filed
and recorded with each of the United States Patent and Trademark Office and the
United States Copyrights Office with respect to the Patents, Trademarks and
Copyrights that are now or hereafter in existence.
(g) On the date of execution of this Agreement, the Debtors will deliver to the
Secured Parties: (i) one or more executed financing statements under the UCC
with respect to the Security Interest for filing with the jurisdictions
indicated on SCHEDULE A, attached hereto and in such other jurisdictions as may
be requested by the Secured Parties and (ii) one or more executed recordation
sheets relating to the filing and recording of this Agreement with each of the
United States Patent and Trademark Office and the United States Copyrights
Office with respect to the Patents, Trademarks and Copyrights that are now in
existence.
(h) The execution, delivery and performance of this Agreement does not conflict
with or cause a breach or default, or an event that with or without the passage
of time or notice, shall constitute a breach or default, under any agreement to
which the Debtors are a party or by the Debtors are bound. No consent
(including, without limitation, from stock holders or creditors of the Debtors)
is required for the Debtors to enter into and perform their obligations
hereunder except for any consents indicated in an Exhibit hereto.
(i) The Debtors shall at all times maintain the liens and Security Interest
provided for hereunder as valid and perfected first priority liens and security
interests in the Collateral in favor of the Secured Parties until this Agreement
and the Security Interest hereunder shall be terminated pursuant to Section 10
hereof. The Debtors hereby agrees to defend the same against any and all
persons. Each Debtor shall safeguard and protect all Collateral for the account
of the Secured Parties. At the request of the Agent and/or Secured Parties, the
Debtors will sign and deliver to the Secured Parties at any time or from time to
time one or more financing statements pursuant to the UCC in form reasonably
satisfactory to the Secured Parties and will pay the cost of filing the same in
all public offices wherever filing is, or is deemed by the Secured Parties to
be, necessary or desirable to effect the rights and obligations provided for
herein. Without limiting the generality of the foregoing, the Debtors shall pay
all fees, taxes and other amounts necessary to maintain the Collateral and the
Security Interest hereunder, and the Debtors shall obtain and furnish to the
Secured Parties from time to time, upon demand, such releases and/or
subordinations of claims and liens which may be required to maintain the
priority of the Security Interest hereunder.
(j) The Debtors will not allow any Collateral to be abandoned, forfeited or
dedicated to the public without the prior written consent of the Secured
Parties. The Debtors will not transfer, pledge, hypothecate, encumber, license
(except for non-exclusive licenses granted by the Debtors in the ordinary course
of business), sell or otherwise dispose of any of the material elements of the
Collateral without the prior written consent of the Secured Parties.
(k) Each Debtor shall, within ten (10) days of obtaining knowledge thereof,
advise the Agent, in reasonable detail, of any substantial change in the
composition of the Collateral, and of the occurrence of any event which would
have a material adverse effect on the value of the Collateral or on the Secured
Parties' security interest therein.
(l) The Debtors shall permit the Secured Parties and its representatives and
agents upon reasonable prior notice to inspect the Collateral at any time during
normal business hours, and to make copies of records pertaining to the
Collateral as may be requested by the Secured Parties from time to time.
(m) Each Debtor will take all steps reasonably necessary to diligently pursue
and seek to preserve, enforce and collect any rights, claims, causes of action
and accounts receivable in respect of the Collateral.
(n) Each Debtor shall promptly notify the Agent in sufficient detail upon
becoming aware of any attachment, garnishment, execution or other legal process
levied against any Collateral and of any other information received by the
Debtors that may materially affect the value of the Collateral, the Security
Interest or the rights and remedies of the Secured Parties hereunder.
(o) Each Debtor shall not use or permit any Collateral to be used unlawfully or
in violation of any provision of this Agreement or any applicable statute,
regulation or ordinance or any policy of insurance covering the Collateral where
violation is reasonably likely to have a material adverse effect on the Secured
Parties' rights in the Collateral or Secured Parties' ability to foreclose on
the Collateral.
(p) Each Debtor shall notify the Agent of any change in such Debtor's name,
identity, chief place of business, chief executive office or residence within 5
days of such change.
(q) All information heretofore, herein or hereafter supplied to the Secured
Parties by or on behalf of the Debtors with respect to the Collateral is
accurate and complete in all material respects as of the date furnished.
4. DEFAULTS. The following events shall be "EVENTS OF DEFAULT":
(a) The occurrence of a Triggering Event (as defined in the Debentures) under
the Debentures;
(b) Any representation or warranty of the Debtors in this Agreement or in the
Security Agreement, dated the date hereof between the Debtors and the Secured
Parties, shall prove to have been incorrect in any material respect when made;
and
(c) The failure by a Debtor to observe or perform any of its obligations
hereunder or in the Security Agreement, dated the date hereof between the
Debtors and the Secured Parties, for ten (10) days after receipt by the Debtors
of notice of such failure from the Secured Parties.
5. DUTY TO HOLD IN TRUST. Upon the occurrence and during the continuation of any
Event of Default, the Debtors shall, upon receipt by it of any revenue, income
or other sums subject to the Security Interest, whether payable pursuant to the
Debentures or otherwise, or of any check, draft, note, trade acceptance or other
instrument evidencing an obligation to pay any such sum, hold the same in trust
for the Secured Parties and shall forthwith endorse and transfer any such sums
or instruments, or both, to the Secured Parties for application to the
satisfaction of the Obligations.
6. RIGHTS AND REMEDIES UPON DEFAULT. Upon the occurrence and during the
continuation of any Event of Default, the Agent (on behalf of, and for the
benefit of itself and each Secured Party) shall have the right to exercise all
of the remedies conferred hereunder, under the Debentures or under the Security
Agreement, and the Agent and the Secured Parties shall have all the rights and
remedies of a secured party under the UCC. Without limitation, the Secured
Parties shall have the following rights and powers:
(a) The Agent shall have the right to take possession of all tangible
manifestations or embodiments of the Collateral and, for that purpose, enter,
with the aid and assistance of any person, any premises where the Collateral, or
any part thereof, is or may be placed and remove the same, and the Debtors shall
assemble the Collateral and make it available to the Agent at places which the
Agent shall reasonably select, whether at the Debtors' premises or elsewhere.
(b) The Agent shall have the right to operate the business of the Debtors using
the Collateral and shall have the right to assign, sell, or otherwise dispose of
and deliver all or any part of the Collateral, at public or private sale or
otherwise, either with or without special conditions or stipulations, for cash
or on credit or for future delivery, in such parcel or parcels and at such time
or times and at such place or places, and upon such terms and conditions as the
Agent may deem commercially reasonable, all without (except as shall be required
by applicable statute and cannot be waived) advertisement or demand upon or
notice to the Debtors or right of redemption of the Debtors, which are hereby
expressly waived. Upon each such sale, assignment or other transfer of
Collateral, the Agent may, unless prohibited by applicable law which cannot be
waived, purchase all or any part of the Collateral being sold, free from and
discharged of all trusts, claims, right of redemption and equities of the
Debtors, which are hereby waived and released.
(c) The Agent may license or, to the same extent the Debtors is permitted by law
and contract to do so, sublicense, whether or an exclusive or non-exclusive
basis, any of the Collateral throughout the world for such period, on such
conditions and in such manner as the Secured Parties shall, in its reasonable
discretion, determine.
(d) The Agent may (without assuming any obligations or liabilities thereunder),
at any time, enforce (and shall have the exclusive right to enforce) against
licensee or sublicensee all rights and remedies of the Debtors in, to and under
any license agreement with respect to such Collateral, and take or refrain from
taking any action thereunder.
(e) The Agent may, in order to implement the assignment, license, sale or other
disposition of any of the Collateral pursuant to this Section, pursuant to the
authority provided for in Section 11, execute and deliver on behalf of the
Debtors one or more instruments of assignment of the Collateral in form suitable
for filing, recording or registration in any jurisdictions as the Secured
Parties may determine advisable.
(f) In the event that any Secured Party shall recover from the Debtors or the
Collateral more than its pro rata share of the Obligations owed to all Secured
Parties hereunder, whether by agreement, understanding or arrangement with the
Debtors or any other Person, set off or other means, such Secured Party shall
immediately deliver or pay over to the other Secured Parties their pro rata
portion of any such recovery in the form received.
(g) Agent may, at any time or times that an Event of Default exists or has
occurred and is continuing, (i) notify any or all account debtors that the
Accounts have been assigned to Secured Parties and that Secured Parties have a
security interest therein and Agent may direct any or all accounts debtors to
make payment of Accounts directly to Secured Parties, (ii) extend the time of
payment of, compromise, settle or adjust for cash, credit, return of merchandise
or otherwise, and upon any terms or conditions, any and all Accounts or other
obligations included in the Collateral and thereby discharge or release the
account debtor or any other party or parties in any way liable for payment
thereof without affecting any of the Obligations, (iii) demand, collect or
enforce payment of any Accounts or such other obligations, but without any duty
to do so, and Agent shall not be liable for its failure to collect or enforce
the payment thereof nor for the negligence of its agents or attorneys with
respect thereto and (iv) take whatever other action Agent may deem necessary or
desirable for the protection of its interests. At any time that an Event of
Default exists or has occurred and is continuing, at Agent's request, all
invoices and statements sent to any account debtor shall state that the Accounts
and such other obligations have been assigned to Secured Parties and are payable
directly and only to Secured Parties and the Debtors shall deliver to Agent such
originals of documents evidencing the sale and delivery of goods or the
performance of services giving rise to any Accounts as Agent may require.
7. APPLICATIONS OF PROCEEDS; EXPENSES. (a) The proceeds of any such sale, lease,
license or other disposition of the Collateral hereunder shall be applied first,
to the expenses of retaking, holding, storing, processing and preparing for
sale, selling, and the like (including, without limitation, any taxes, fees and
other costs incurred in connection therewith) of the Collateral, to the
reasonable attorneys' fees and expenses incurred by the Agent and/or Secured
Parties in enforcing its rights hereunder and in connection with collecting,
storing and disposing of the Collateral, and then to satisfaction of the
Obligations, and to the payment of any other amounts required by applicable law,
after which the Secured Parties shall pay to the Debtors any surplus proceeds.
If, upon the sale, license or other disposition of the Collateral, the proceeds
thereof are insufficient to pay all amounts to which the Secured Parties is
legally entitled, the Debtors will be liable for the deficiency, together with
interest thereon, at the rate of 15% per annum or the lesser amount permitted by
applicable law (the "DEFAULT RATE"), and the reasonable fees of any attorneys
employed by the Agent and/or Secured Parties to collect such deficiency. To the
extent permitted by applicable law, the Debtors waives all claims, damages and
demands against the Secured Parties arising out of the repossession, removal,
retention or sale of the Collateral, unless due to the gross negligence or
willful misconduct of the Agent and/or Secured Parties.
(b) The Debtors agree to pay all out-of-pocket fees, costs and expenses incurred
in connection with any filing required hereunder, including, without limitation,
any financing statements, continuation statements, partial releases and/or
termination statements related thereto or any expenses of any searches
reasonably required by the Agent. The Debtors shall also pay all other claims
and charges which in the reasonable opinion of the Agent and/or Secured Parties
might prejudice, imperil or otherwise affect the Collateral or the Security
Interest therein. The Debtors will also, upon demand, pay to the Agent and/or
Secured Parties the amount of any and all reasonable expenses, including the
reasonable fees and expenses of its counsel and of any experts and agents, which
the Agent and/or Secured Parties may incur in connection with (i) the
enforcement of this Agreement, (ii) the custody or preservation of, or the sale
of, collection from, or other realization upon, any of the Collateral, or (iii)
the exercise or enforcement of any of the rights of the Secured Parties under
the Debentures. Until so paid, any fees payable hereunder shall be added to the
principal amount of the Debentures and shall bear interest at the Default Rate.
8. RESPONSIBILITY FOR COLLATERAL. Each Debtor assumes all liabilities and
responsibility in connection with all Collateral, and the obligations of such
Debtor hereunder, under the Debentures or under the Security Agreement shall in
no way be affected or diminished by reason of the loss, destruction, damage or
theft of any of the Collateral or its unavailability for any reason.
9. SECURITY INTEREST ABSOLUTE. All rights of the Secured Parties and all
Obligations of the Debtors hereunder, shall be absolute and unconditional,
irrespective of: (a) any lack of validity or enforceability of this Agreement,
the Debentures, the Security Agreement or any agreement entered into in
connection with the foregoing, or any portion hereof or thereof; (b) any change
in the time, manner or place of payment or performance of, or in any other term
of, all or any of the Obligations, or any other amendment or waiver of or any
consent to any departure from the Debentures, the Security Agreement or any
other agreement entered into in connection with the foregoing; (c) any exchange,
release or nonperfection of any of the Collateral, or any release or amendment
or waiver of or consent to departure from any other collateral for, or any
guaranty, or any other security, for all or any of the Obligations; (d) any
action by the Secured Parties to obtain, adjust, settle and cancel in its sole
discretion any insurance claims or matters made or arising in connection with
the Collateral; or (e) any other circumstance which might otherwise constitute
any legal or equitable defense available to the Debtors, or a discharge of all
or any part of the Security Interest granted hereby. Until the Obligations shall
have been paid and performed in full, the rights of the Secured Parties shall
continue even if the Obligations are barred for any reason, including, without
limitation, the running of the statute of limitations or bankruptcy. Each Debtor
expressly waives presentment, protest, notice of protest, demand, notice of
nonpayment and demand for performance. In the event that at any time any
transfer of any Collateral or any payment received by the Secured Parties
hereunder shall be deemed by final order of a court of competent jurisdiction to
have been a voidable preference or fraudulent conveyance under the bankruptcy or
insolvency laws of the United States, or shall be deemed to be otherwise due to
any party other than the Secured Parties, then, in any such event, the Debtors'
obligations hereunder shall survive cancellation of this Agreement, and shall
not be discharged or satisfied by any prior payment thereof and/or cancellation
of this Agreement, but shall remain a valid and binding obligation enforceable
in accordance with the terms and provisions hereof. Each Debtor waives all right
to require the Secured Parties to proceed against any other person or to apply
any Collateral which the Secured Parties may hold at any time, or to marshal
assets, or to pursue any other remedy. Each Debtor waives any defense arising by
reason of the application of the statute of limitations to any obligation
secured hereby.
10. TERM OF AGREEMENT. This Agreement and the Security Interest shall terminate
on the earlier of (i) the Parent's Adjusted EBIDTA (as defined in the
Debentures) for the fiscal year ending December 31, 2002 is greater than
$2,750,000 (as reflected in the 2002 Annual Report(as defined in the
Debentures)) and (ii) the date on which all payments under the Debentures have
been made in full or otherwise converted pursuant to the terms thereof and all
other Obligations have been paid or discharged. Upon such termination, the
Secured Parties, at the request and at the expense of the Debtors, will join in
executing any termination statement with respect to any financing statement
executed and filed pursuant to this Agreement.
11. POWER OF ATTORNEY; FURTHER ASSURANCES. (a) Each Debtor authorizes the
Secured Parties, and does hereby make, constitute and appoint it, and its
respective officers, agents, successors or assigns with full power of
substitution, as the Debtors' true and lawful attorney-in-fact, with power, in
its own name or in the name of the Debtors, to, after the occurrence and during
the continuance of an Event of Default, (i) endorse any notes, checks, drafts,
money orders, or other instruments of payment (including payments payable under
or in respect of any policy of insurance) in respect of the Collateral that may
come into possession of the Secured Parties; (ii) to sign and endorse any UCC
financing statement or any invoice, freight or express xxxx, xxxx of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with accounts, and other documents
relating to the Collateral; (iii) to pay or discharge taxes, liens, security
interests or other encumbrances at any time levied or placed on or threatened
against the Collateral; (iv) to demand, collect, receipt for, compromise, settle
and xxx for monies due in respect of the Collateral; and (v) generally, to do,
at the option of the Secured Parties, and at the Debtors' expense, at any time,
or from time to time, all acts and things which the Secured Parties deems
necessary to protect, preserve and realize upon the Collateral and the Security
Interest granted therein in order to effect the intent of this Agreement, the
Debentures and the Security Agreement, all as fully and effectually as the
Debtors might or could do; and each Debtor hereby ratifies all that said
attorney shall lawfully do or cause to be done by virtue hereof. This power of
attorney is coupled with an interest and shall be irrevocable for the term of
this Agreement and thereafter as long as any of the Obligations shall be
outstanding.
(b) On a continuing basis, each Debtor will make, execute, acknowledge, deliver,
file and record, as the case may be, in the proper filing and recording places
in any jurisdiction, including, without limitation, the jurisdictions indicated
on SCHEDULE A, attached hereto, all such instruments, including appropriate
financing and continuation statements and collateral agreements and filings with
the United States Patent and Trademark Office and the United States Copyrights
Office, and take all such action as may reasonably be deemed necessary or
advisable, or as reasonably requested by the Secured Parties, to perfect the
Security Interest granted hereunder and otherwise to carry out the intent and
purposes of this Agreement, or for assuring and confirming to the Secured
Parties the grant or perfection of a first priority security interest in all the
Collateral.
(c) Each Debtor hereby irrevocably appoints the Secured Parties as such Debtors'
attorney-in-fact, with full authority in the place and stead of such Debtor and
in the name of such Debtor, from time to time in the Secured Parties'
discretion, to take any action and to execute any instrument which the Agent may
deem necessary or advisable to accomplish the purposes of this Agreement,
including:
(i) To modify, in its sole discretion, this Agreement without first
obtaining the Debtors' approval of or signature to such modification by amending
EXHIBIT A, EXHIBIT B and EXHIBIT C, hereof, as appropriate, to include reference
to any right, title or interest in any Copyrights, Patents or Trademarks
acquired by the Debtors after the execution hereof or to delete any reference to
any right, title or interest in any Copyrights, Patents or Trademarks in which
the Debtors no longer has or claims any right, title or interest; and
(ii) To file, in its sole discretion, one or more financing or continuation
statements and amendments thereto, relative to any of the Collateral without the
signature of the Debtors where permitted by law.
12. AGENT.
(a) ACTIONS The Agent shall at all times act upon and in accordance with written
instructions received from a Majority-in-Interest (as defined below) time to
time. The Agent shall be deemed to be authorized on behalf of each Secured
Parties to act on behalf of such Secured Parties under this Agreement and the IP
Security Agreement and, in the absence of written instructions from a
Majority-in-Interest (with respect to which the Agent agrees that it will,
subject to the last two sentences of this Section, comply, except as otherwise
advised by counsel), to exercise such powers hereunder and thereunder as are
specifically delegated to or required of the Agent by the terms hereof and
thereof, together with such powers as may be reasonably incidental thereto. The
Agent shall have no duty to ascertain or inquire as to the performance or
observance of any of the terms of this Agreement IP Security Agreement by the
Debtors. By accepting their Debentures each Secured Parties shall be deemed to
have agreed to indemnify the Agent (which agreement shall survive any
termination of such Secured Parties' percentage), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may at
any time be imposed on, incurred by, or asserted against the Agent in any way
relating to or arising out of this Agreement, the Debentures and the IP Security
Agreement, including the reimbursement of the Agent for all out-of-pocket
expenses (including attorneys' fees) incurred by the Agent hereunder or in
connection herewith or in enforcing the Obligations of the Debtors under this
Agreement, the Debentures or the IP Security Agreement, in all cases as to which
the Agent is not reimbursed by the Debtors; PROVIDED that no Secured Parties
shall be liable for the payment of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements determined by a court of competent jurisdiction in a final
proceeding to have resulted solely from the Agent's gross negligence or willful
misconduct. The Agent shall not be required to take any action hereunder, under
the Debentures or under IP Security Agreement, or to prosecute or defend any
suit in respect of this Agreement or under the Debentures or under IP Security
Agreement, unless the Agent is indemnified to its reasonable satisfaction by the
Secured Parties against loss, costs, liability and expense. If any indemnity in
favor of the Agent shall become impaired, it may call for additional indemnity
and cease to do the acts indemnified against until such additional indemnity is
given.
(b) EXCULPATION. Neither the Agent nor any of its directors, officers, partners,
members, shareholders, employees or agents shall be liable to any Secured
Parties for any action taken or omitted to be taken by it under this Agreement,
the Debentures or the IP Security Agreement, or in connection herewith or
therewith, except for its own willful misconduct or gross negligence or be
responsible for the consequences of any error in judgement. Neither the Agent
nor any of its directors, officers, partners, members, shareholders, employees
or agents has any fiduciary relationship with any Secured Parties by virtue of
this Agreement or the IP Security Agreement. The Agent shall not be responsible
to any Secured Parties for any recitals, statements, representations or
warranties herein or in any certificate or other document delivered in
connection herewith or for the authorization, execution, effectiveness,
genuineness, validity, enforceability, perfection, collectibility, or
sufficiency this Agreement, the Debentures or the IP Security Agreement, the
financial condition of the Debtors or the condition or value of any of the
Collateral, or be required to make any inquiry concerning either the performance
or observance of any of the terms, provisions or conditions of this Agreement,
the Debentures or the IP Security Agreement, the financial condition of the
Debtors or the existence or possible existence of any default or event of
default. The Agent shall be entitled to rely upon advice of counsel concerning
legal matters and upon any notice, consent, certificate, statement or writing
which it believes to be genuine and to have presented by a proper person.
(c) OBLIGATIONS HELD BY THE AGENT. The Agent shall have the same rights and
powers with respect to any Debentures held by it or any of its affiliates, as
any Secured Parties and may exercise the same as if it were not the Agent. Each
of the Debtors and the Secured Parties hereby waives, and each successor to any
Secured Parties shall be deemed to waive, any right to disqualify any Secured
Parties from serving as the Agent or any claim against that Secured Parties for
serving as Agent.
(d) COPIES, ETC. The Agent shall give prompt notice to each Secured Parties of
each notice or request required or permitted to be given to the Agent by the
Debtors pursuant to the terms of this Agreement. The Agent will distribute to
each Secured Parties each instrument and other agreement received for its
account and copies of all other communications received by the Agent from a
Debtor for distribution to the Secured Parties by the Agent in accordance with
the terms of this Agreement. Notwithstanding anything herein contained to the
contrary, all notices to and communications with the Debtors under this
Agreement shall be effected by the Secured Parties through the Agent.
(e) RESIGNATION OF AGENT. The Agent may resign as such at any time upon at least
thirty (30) days' prior notice to the Debtors and all the Secured Parties, such
resignation not to be effective until a successor Agent is in place. If the
Agent at any time shall resign, a Majority-in-Interest may jointly appoint
another Secured Parties as a successor Agent which shall thereupon become the
Agent hereunder. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall be entitled to receive from the
retiring Agent such documents of transfer and assignment as such successor Agent
may reasonably request, and shall thereupon succeed to and become vested with
all rights, powers, privileges, and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations under this
Agreement.
(f) REPLACEMENT OF AGENT. A Majority-in-Interest may at any time and for any
reason replace the Agent with a successor Agent jointly selected by them, upon
at least ten days written notice to the Debtors and the other Secured Parties.
Upon the acceptance of any appointment as Agent hereunder by a successor Agent,
such successor Agent shall be ENTITLED to receive from the terminated Agent such
documents of transfer and assignment as such successor Agent may reasonably
request, and shall thereupon succeed to and become vested with all rights,
powers, privileges, and duties of the retiring Agent, and the terminated Agent
shall be discharged from its duties and obligations under this Agreement.
13. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing, with copies to all the other parties hereto, and
shall be deemed to have been duly given when (i) if delivered by hand, upon
receipt, (ii) if sent by facsimile, upon receipt of proof of sending thereof,
(iii) if sent by nationally recognized overnight delivery service (receipt
requested), the next business day or (iv) if mailed by first-class registered or
certified mail, return receipt requested, postage prepaid, four days after
posting in the U.S. mails, in each case if delivered to the following addresses:
If to the Debtors: Visual Networks, Inc.
2092GaitherRoad
Xxxxxxxxx, Xxxxxxxx 00000
Fax No.: (000) 000-0000
Attn: Chief Financial Officer
With a copy to: Xxxxx Xxxxxxx Xxxxxxx & Xxxxx LLP
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Fax No.: (000) 000-0000
Attn: Xxxxx X. Xxxxxxxx, Esq.
If to Secured Parties: To the address set forth under such Secured Parties'
name on the signature pages hereto.
14. OTHER SECURITY. To the extent that the Obligations are now or hereafter
secured by property other than the Collateral or by the guarantee, endorsement
or property of any other person, firm, corporation or other entity, then the
Secured Parties shall have the right, in its sole discretion, to pursue,
relinquish, subordinate, modify or take any other action with respect thereto,
without in any way modifying or affecting any of the Secured Parties' rights and
remedies hereunder.
15. ACTIONS BY SECURED PARTIES. Any action required or permitted hereunder to be
taken by or on behalf of the Secured Parties shall, for such action to be valid,
require the approval of the Majority-in-Interest prior to the taking of such
action. If the consent, approval or disapproval of the Secured Parties is
required or permitted pursuant to this Agreement, such consent, approval or
disapproval shall only be valid if given by the Majority-in-Interest.
"Majority-in-Interest" means the Secured Parties or Secured Parties (as the case
may be) holding in excess of two-thirds of the outstanding aggregate principal
amount under the Debentures, determined on a cumulative basis.
16. MISCELLANEOUS. (a) No course of dealing between the Debtors and the Secured
Parties, nor any failure to exercise, nor any delay in exercising, on the part
of the Secured Parties, any right, power or privilege hereunder, under the
Debentures or under the Security Agreement shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, power or privilege
hereunder or thereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.
(b) All of the rights and remedies of the Secured Parties with respect to the
Collateral, whether established hereby, by the Debentures, by the Security
Agreement or by any other agreements, instruments or documents or by law shall
be cumulative and may be exercised singly or concurrently.
(c) This Agreement constitutes the entire agreement of the parties with respect
to the subject matter hereof and is intended to supersede all prior
negotiations, understandings and agreements with respect thereto. Except as
specifically set forth in this Agreement, no provision of this Agreement may be
modified or amended except by a written agreement specifically referring to this
Agreement and signed by the Debtors and the Secured Parties then holding
two-thirds of the outstanding aggregate principal amount of the Debentures. Any
waivers or consents to departures from the provisions hereof may be given only
by the party against whom enforcement of any such waiver is sought or in favor
of whom any such consent is sought.
(d) In the event that any provision of this Agreement is held to be invalid,
prohibited or unenforceable in any jurisdiction for any reason, unless such
provision is narrowed by judicial construction, this Agreement shall, as to such
jurisdiction, be construed as if such invalid, prohibited or unenforceable
provision had been more narrowly drawn so as not to be invalid, prohibited or
unenforceable. If, notwithstanding the foregoing, any provision of this
Agreement is held to be invalid, prohibited or unenforceable in any
jurisdiction, such provision, as to such jurisdiction, shall be ineffective to
the extent of such invalidity, prohibition or unenforceability without
invalidating the remaining portion of such provision or the other provisions of
this Agreement and without affecting the validity or enforceability of such
provision or the other provisions of this Agreement in any other jurisdiction.
(e) No waiver of any breach or default or any right under this Agreement shall
be considered valid unless in writing and signed by the party giving such
waiver, and no such waiver shall be deemed a waiver of any subsequent breach or
default or right, whether of the same or similar nature or otherwise.
(f) This Agreement shall be binding upon and inure to the benefit of each
party hereto and its successors and assigns.
(g) Each party shall take such further action and execute and deliver such
further documents as may be necessary or appropriate in order to carry out the
provisions and purposes of this Agreement.
(h) This Agreement shall be construed in accordance with the laws of the State
of New York, except to the extent the validity, perfection or enforcement of a
security interest hereunder in respect of any particular Collateral which are
governed by a jurisdiction other than the State of New York in which case such
law shall govern. Each of the parties hereto irrevocably submits to the
exclusive jurisdiction of any New York State or United States Federal court
sitting in New York county over any action or proceeding arising out of or
relating to this Agreement, and the parties hereto hereby irrevocably agree that
all claims in respect of such action or proceeding may be heard and determined
in such New York State or Federal court. The parties hereto agree that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. The parties hereto further waive any objection to venue in the
State of New York and any objection to an action or proceeding in the State of
New York on the basis of forum non convenient.
(i) EACH PARTY HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY
DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF
THIS AGREEMENT, INCLUDING WITHOUT LIMITATION CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY
HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR EACH PARTY TO
ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH PARTY HAS ALREADY RELIED ON THIS
WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH PARTY WILL CONTINUE TO RELY
ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH PARTY FURTHER WARRANTS AND
REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT
SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS RIGHTS TO A JURY TRIAL FOLLOWING
SUCH CONSULTATION. THIS WAIVER IS IRREVOCABLE, MEANING THAT, NOTWITHSTANDING
ANYTHING HEREIN TO THE CONTRARY, IT MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS AND
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. IN THE EVENT OF A LITIGATION,
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
(j) This Agreement may be executed in any number of counterparts, each of which
when so executed shall be deemed to be an original and, all of which taken
together shall constitute one and the same Agreement. In the event that any
signature is delivered by facsimile transmission, such signature shall create a
valid binding obligation of the party executing (or on whose behalf such
signature is executed) the same with the same force and effect as if such
facsimile signature were the original thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Intellectual
Property Security Agreement to be duly executed on the day and year first above
written.
VISUAL NETWORKS, INC.
By: /S/ Xxxx Xxxxxxxx
Name: Xxxx Xxxxxxxx
Title: Chief Financial Officer
VISUAL NETWORKS OPERATIONS, INC.
By: /S/ Xxxx Xxxxxxxx
Name: Xxxx Xxxxxxxx
Title: Chief Financial Officer
VISUAL NETWORKS INVESTMENTS, INC.
By: /S/ Xxxx Xxxxxxxx
Name: Xxxx Xxxxxxxx
Title: Chief Financial Officer
VISUAL NETWORKS TECHNOLOGIES, INC.
By: /S/ Xxxx Xxxxxxxx
Name: Xxxx Xxxxxxxx
Title: Chief Financial Officer
VISUAL NETWORKS OF TEXAS, LP
By: /S/ Xxxx Xxxxxxxx
Name: Xxxx Xxxxxxxx
Title: Chief Financial Officer
INVERSE NETWORK TECHNOLOGY
By: /S/ Xxxx Xxxxxxxx
Name: Xxxx Xxxxxxxx
Title: Chief Financial Officer
AVESTA TECHNOLOGIES, INC.
By: /S/ Xxxx Xxxxxxxx
Name: Xxxx Xxxxxxxx
Title: Chief Financial Officer
IN WITNESS WHEREOF, the parties hereto have caused this Intellectual
Property Security Agreement to be duly executed on the day and year first above
written.
PINE RIDGE FINANCIAL, INC.
By: /S/ Xxxxxxx X. Xxxxxxxxx
Xxxxxxx X. Xxxxxxxxx
Attorney-in-fact
Address for Notice:
c/x Xxxxxxx Capital Corp.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn.: Avi Vigder and Eldad Gal
With a copy to:
Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx
& Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000 and (000) 000-0000
Attn: Xxxx X. Xxxxx, Esq.
IN WITNESS WHEREOF, the parties hereto have caused this Intellectual
Property Security Agreement to be duly executed on the day and year first above
written.
SMITHFIELD FIDUCIARY LLC
By: /S/ Xxx Xxxxxx
Name: Xxx Xxxxxx
Title: Authorized Signatory
Address for Notice:
c/o Highbridge Capital Management, LLC
0 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn.: Xxx X. Xxxxxx and Xxxx X. Chill
IN WITNESS WHEREOF, the parties hereto have caused this Intellectual
Property Security Agreement to be duly executed on the day and year first above
written.
SPECIAL SITUATIONS PRIVATE EQUITY FUND, L.P.
By: /S/ Xxxxx Greenhouse
Name: Xxxxx Greenhouse
Title: Managing Director
SPECIAL SITUATIONS TECHNOLOGY FUND, L.P.
By: /S/ Xxxxx Greenhouse
NAME: Xxxxx Greenhouse
Title: Managing Director
Address for Notice:
Special Situations Funds
000 X. 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
With Copy to:
Xxxxxxxxxx Xxxxxxx PC
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Facsimile No.(000) 000-0000
Attn.: Xxxx X. Xxxxxxxx, Esq.
IN WITNESS WHEREOF, the parties hereto have caused this Intellectual
Property Security Agreement to be duly executed on the day and year first above
written.
PEQUOT SCOUT FUND, L.P.
BY: /S/ Xxxxx Xxxxxxx
NAME: Xxxxx Xxxxxxx
Title: Senior Vice President
Pequot Capital Management, Inc.
Its Investment Manager
Address For Notice:
c/o Pequot Capital Management, Inc.
000 Xxxxx Xxxx Xxxx
Xxxxxxxx, XX 00000
PEQUOT NAVIGATOR OFFSHORE, INC.
BY: /S/ Xxxxx Xxxxxxx
NAME: Xxxxx Xxxxxxx
Title: Senior Vice President
Pequot Capital Management, Inc.
Its Investment Manager
Address For Notice:
c/o Pequot Capital Management, Inc.
000 Xxxxx Xxxx Xxxx
Xxxxxxxx, XX 00000
