EXHIBIT 10.2
THIS GUARANTY and SECURITY AGREEMENT (this "Agreement") is
entered into as of October 21,2003 among Infocrossing, Inc., a Delaware
corporation (the "Borrower"), certain Subsidiaries of the Borrower listed on the
signature pages hereto (individually a "Guarantor" and collectively the
"Guarantors"; together with the Borrower, individually an "Obligor", and
collectively the "Obligors") and Infocrossing Agent, Inc., in its capacity as
agent (in such capacity, the "Agent") for the ratable benefit of the lenders
from time to time party to the Term Loan Agreement described below (the
"Lenders").
RECITALS
WHEREAS, pursuant to that certain Term Loan Agreement, dated
as of the date hereof (as amended, modified, extended, renewed or replaced from
time to time, the "Term Loan Agreement"), among the Borrower, the Agent and the
Lenders, the Lenders have agreed to hold loans (the "Loans") upon the terms and
subject to the conditions set forth therein; and
WHEREAS, it is a condition precedent to the effectiveness of
the Term Loan Agreement that the Obligors shall have executed and delivered this
Agreement to the Agent for the ratable benefit of the Lenders.
NOW, THEREFORE, in consideration of these premises and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Definitions.
(a) Unless otherwise defined herein, capitalized terms used herein shall
have the meanings ascribed to such terms in the Term Loan Agreement,
and the following terms which are defined in Article 9 of the Uniform
Commercial Code (the "UCC") in effect in the State of New York on the
date hereof are used herein as so defined: Accessions, Accounts,
As-Extracted Collateral, Chattel Paper, Commercial Tort Claim,
Consumer Goods, Deposit Accounts, Documents, Electronic Chattel Paper,
Equipment, Farm Products, Fixtures, General Intangibles, Goods,
Instruments, Inventory, Investment Property, Letter-of-Credit Rights,
Manufactured Home, Proceeds, Software, Supporting Obligation and
Tangible Chattel Paper.
(b) In addition, the following terms shall have the following meanings:
"Contracts": all licenses or other agreements to which an
Obligor is a party, as each may be amended, supplemented or otherwise modified
from time to time, including, without limitation, (a) all rights of an Obligor
to receive moneys due and to become due to it thereunder or in connection
therewith, (b) all rights of an Obligor to damages arising out of or for breach
or default in respect thereof and (c) all rights of an Obligor to exercise all
remedies thereunder.
"Control": (i) with respect to Electronic Chattel Paper,
"control" (within the meaning of Section 9-105 of the UCC) over such Electronic
Chattel Paper, (ii) with respect to Deposit Accounts , "control" (within the
meaning of Section 9-104 of the UCC) over such Deposit Accounts, (iii) with
respect to Investment Property constituting certificated securities,
uncertificated securities, securities accounts, securities entitlements,
commodity accounts or commodity contracts (each as referred to in the UCC),
"control" (within the meanings of Sections 8-106 and 9-106 of the UCC) over such
Investment Property, and (iv) with respect to Letter-of-Credit Rights, "control"
(within the meaning of Section 9-107 of the UCC) with respect to such
Letter-of-Credit Rights.
"Copyright Licenses": any written agreement, naming any
Obligor as licensor, granting any right under any Copyright including, without
limitation, any thereof referred to in Schedule 5(h) hereto.
"Copyrights": (a) all registered United States copyrights in
all Works, now existing or hereafter created or acquired, all registrations and
recordings thereof, and all applications in connection therewith, including,
without limitation, registrations, recordings and applications in the United
States Copyright Office including, without limitation, any thereof referred to
in Schedule 5(h) hereto, and (b) all renewals thereof including, without
limitation, any thereof referred to in Schedule 5(h) hereto.
"Notes": all notes issued by the Borrower to the Lenders
pursuant to the terms of the Term Loan Agreement.
"Patent License": all agreements, whether written or oral,
providing for the grant by or to an Obligor of any right to manufacture, use or
sell any invention covered by a Patent, including, without limitation, any
thereof referred to in Schedule 5(h) hereto.
"Patents": (a) all letters patent of the United States or any
other country and all reissues and extensions thereof, including, without
limitation, any thereof referred to in Schedule 5(h) hereto, and (b) all
applications for letters patent of the United States or any other country and
all divisions, continuations and continuations-in-part thereof, including,
without limitation, any thereof referred to in Schedule 5(h) hereto.
"Secured Obligations": (a) the due and punctual payment by the
Borrower of (i) the principal of, and premium, if any, and interest (including
interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on the Loans, when and as due, whether at
maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, and (ii) all other monetary obligations, including fees, costs,
expenses and indemnities, whether primary, secondary, direct, contingent, fixed
or otherwise (including monetary obligations incurred during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding), of the Borrower to the Agent
and the Lenders under the Loan Documents, (b) the due and punctual performance
of all covenants, agreements, obligations and liabilities of the Borrower under
or pursuant to the Loan Documents, and (c) the due and punctual payment and
performance of all the covenants, agreements, obligations and liabilities of the
Guarantors under or pursuant to the Loan Documents.
"Trademark License": means any agreement, written or oral,
providing for the grant by or to an Obligor of any right to use any Trademark,
including, without limitation, any thereof referred to in Schedule 5(h) hereto.
"Trademarks": (a) all trademarks, trade names, corporate
names, company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, and the goodwill
associated therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or any other
country or any political subdivision thereof, or otherwise, including, without
limitation, any thereof referred to in Schedule 5(h) hereto, and (b) all
renewals thereof.
"Work": any work which is subject to copyright protection
pursuant to Title 17 of the United States Code.
2. Guaranty.
(a) The Guarantee. Each of the Guarantors hereby jointly and severally
guarantees, as a primary obligor and not merely as a surety, to each
Lender and to the Agent as hereinafter provided, the prompt payment
and performance of the Secured Obligations in full when due (whether
at stated maturity, as a mandatory prepayment, by acceleration or
otherwise) strictly in accordance with the terms thereof. The
Guarantors hereby further agree that if any of the Secured Obligations
are not paid in full when due (whether at stated maturity, as a
mandatory prepayment, by acceleration or otherwise), the Guarantors
will, jointly and severally, promptly pay the same, without any demand
or notice whatsoever, and that in the case of any extension of time or
payment or renewal of any of the Secured Obligations, the same will be
promptly paid in full when due (whether at extended maturity, as a
mandatory prepayment, by acceleration or otherwise) in accordance with
the terms of such extension or renewal. Each Guarantor agrees that
this is a continuing guarantee of payment and not of collection.
Notwithstanding any provision to the contrary contained herein or in
any other of the Loan Documents, the obligations of each Guarantor
hereunder shall be limited to an aggregate amount equal to the largest
amount that would not render its obligations hereunder subject to
avoidance under Section 548 of the Bankruptcy Code or any comparable
provisions of any applicable state law.
(b) Obligations Unconditional. The obligations of the Guarantors under
Section 2 hereof are joint and several, absolute, irrevocable and
unconditional, irrespective of the value, genuineness, validity,
regularity or enforceability of any of the Loan Documents, or any
other agreement or instrument referred to therein, or any
substitution, release or exchange of any other guarantee of or
security for any of the Secured Obligations, and, to the fullest
extent permitted by applicable law, irrespective of any other
circumstance whatsoever which might otherwise constitute a legal or
equitable discharge or defense of a surety or guarantor, it being the
intent of this Section 2 that the obligations of the Guarantors
hereunder shall be absolute, irrevocable and unconditional under any
and all circumstances. Each Guarantor agrees that such Guarantor shall
have no right of subrogation, indemnity, reimbursement or contribution
against the Borrower or any other Guarantor of the Secured Obligations
for amounts paid under this guaranty until such time as the Lenders
have been paid in full. Without limiting the generality of the
foregoing, it is agreed that, to the fullest extent permitted by law,
the occurrence of any one or more of the following shall not alter or
impair the liability of any Guarantor hereunder which shall remain
absolute, irrevocable and unconditional as described above:
(i) at any time or from time to time, without notice to any
Guarantor, the time for any performance of or compliance with any
of the Secured Obligations shall be extended, or such performance
or compliance shall be waived;
(ii) any of the acts mentioned in any of the provisions of any of the
Loan Documents or any other agreement or instrument referred to
in the Loan Documents shall be done or omitted;
(iii) the maturity of any of the Secured Obligations shall be
accelerated, or any of the Secured Obligations shall be modified,
supplemented or amended in any respect, or any right under any of
the Loan Documents or any other agreement or instrument referred
to in the Loan Documents shall be waived or any other guarantee
of any of the Secured Obligations or any security therefor shall
be released or exchanged in whole or in part or otherwise dealt
with;
(iv) any Lien granted to, or in favor of, the Agent or any Lender or
Lenders as security for any of the Secured Obligations shall fail
to attach or be perfected; or
(v) any of the Secured Obligations shall be determined to be void or
voidable (including, without limitation, for the benefit of any
creditor of any Guarantor) or shall be subordinated to the claims
of any Person (including, without limitation, any creditor of any
Guarantor).
With respect to its obligations hereunder, each Guarantor hereby expressly
waives diligence, presentment, demand of payment, protest and all notices
whatsoever, and any requirement that the Agent or any Lender exhaust any right,
power or remedy or proceed against any Person under any of the Loan Documents or
any other agreement or instrument referred to in the Loan Documents, or against
any other Person under any other guarantee of, or security for, any of the
Secured Obligations.
(c) Reinstatement. The obligations of the Guarantors under this Section 2
shall be automatically reinstated if and to the extent that for any
reason any payment by or on behalf of any Person in respect of the
Secured Obligations is rescinded or must be otherwise restored by any
holder of any of the Secured Obligations, whether as a result of any
proceedings in bankruptcy or reorganization or otherwise, and each
Guarantor agrees that it will indemnify the Agent and each Lender on
demand for all reasonable costs and expenses (including, without
limitation, fees and expenses of counsel) incurred by the Agent or any
Lender and each of their Affiliates and their respective members,
partners, directors, officers, employees, agents and advisors of the
Agent, each Lender and each of their Affiliates (each such Person
being called an "Indemnitee") in connection with such rescission or
restoration, including any such costs and expenses incurred in
defending against any claim alleging that such payment constituted a
preference, fraudulent or similar payment under any bankruptcy,
insolvency or similar law; provided that such indemnity shall not be
available to the extent that such losses, claims, damages, liabilities
or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from
the gross negligence or willful misconduct of such Indemnitee.
(d) Certain Additional Waivers. Each Guarantor further agrees that such
Guarantor shall have no right of recourse to security for the Secured
Obligations until such time as all of the Secured Obligations have
been paid in full and all of the Loan Documents have been terminated.
(e) Remedies. The Guarantors agree that, to the fullest extent permitted
by law, as between the Guarantors, on the one hand, and the Agent and
the Lenders on the other hand, the Secured Obligations may be declared
to be forthwith due and payable as provided in Section 7 of the Term
Loan Agreement (and shall be deemed to have become automatically due
and payable in the circumstances provided in said Section 7) for
purposes of this Section 2, notwithstanding any stay, injunction or
other prohibition preventing such declaration (or preventing the
Secured Obligations from becoming automatically due and payable) as
against any other Person and that, in the event of such declaration
(or the Secured Obligations being deemed to have become automatically
due and payable), the Secured Obligations (whether or not due and
payable by any other Person) shall forthwith become due and payable by
the Guarantors for purposes of this Section 2.
(f) Continuing Guarantee. The guarantee in this Section 2 is a continuing
guarantee, and shall apply to all Secured Obligations whenever
arising.
3. Grant of Security Interest in the Collateral. To secure the prompt payment
and performance in full when due, whether by lapse of time, acceleration,
mandatory prepayment or otherwise, of the Secured Obligations, each Obligor
hereby grants to the Agent, for the ratable benefit of the Lenders, a continuing
security interest in, and a right to set off against, any and all right, title
and interest of such Obligor in and to the personal property of such Obligor,
whether now owned or existing or owned, acquired, or arising hereafter
(collectively, the "Collateral") including, without limitation, the following:
(a) all Accounts;
(b) all cash and Cash Equivalents;
(c) all Chattel Paper;
(d) those certain Commercial Tort Claims set forth on Schedule 2(d)
attached hereto;
(e) all Contracts;
(f) all Copyrights;
(g) all Copyright Licenses;
(h) all Deposit Accounts;
(i) all Documents;
(j) all Equipment;
(k) all Fixtures;
(l) all General Intangibles;
(m) all Instruments;
(n) all Inventory;
(o) all Investment Property;
(p) all Letter-of-Credit Rights;
(q) all Patents;
(r) all Patent Licenses;
(s) all Software;
(t) all Supporting Obligations;
(u) all Trademarks;
(v) all Trademark Licenses;
(w) all Accessions; and
(x) to the extent not otherwise included, all Proceeds and products of any
and all of the foregoing and all collateral security and guarantees
given by any Person with respect to any of the foregoing;
provided however, the Collateral shall not include contract rights in any
agreement (i) the grant of a security interest in which would violate the
agreement under which such rights arise except to the extent provided under the
UCC, or (ii) to the extent that the pledge or assignment of such agreement
requires the consent of any third party unless such third party has consented
thereto except to the extent provided under the UCC.
The Obligors and the Agent, on behalf of the Lenders, hereby
acknowledge and agree that the security interest created hereby in the
Collateral constitutes continuing collateral security for all of the Secured
Obligations, whether now existing or hereafter arising.
4. Provisions Relating to Accounts/Contracts.
(a) Anything herein to the contrary notwithstanding, each of the Obligors
shall remain liable under each of the Accounts to observe and perform
all the conditions and obligations to be observed and performed by it
thereunder, all in accordance with the terms of any agreement giving
rise to each such Account. Neither the Agent nor any Lender shall have
any obligation or liability under any Account (or any agreement giving
rise thereto) by reason of or arising out of this Agreement or the
receipt by the Agent or any Lender of any payment relating to such
Account pursuant hereto, nor shall the Agent or any Lender be
obligated in any manner to perform any of the obligations of an
Obligor under or pursuant to any Account (or any agreement giving rise
thereto), to make any payment, to make any inquiry as to the nature or
the sufficiency of any payment received by it or as to the sufficiency
of any performance by any party under any Account (or any agreement
giving rise thereto), to present or file any claim, to take any action
to enforce any performance or to collect the payment of any amounts
which may have been assigned to it or to which it may be entitled at
any time or times.
(b) At any time after the occurrence and during the continuation of an
Event of Default, the Agent shall have the right, but not the
obligation, to make test verifications of the Accounts in any manner
and through any medium that it reasonably considers advisable, and the
Obligors shall furnish all such assistance and information as the
Agent may reasonably require in connection with such test
verifications. Furthermore, at any time after the occurrence and
during the continuation of an Event of Default, upon the Agent's
request and at the expense of the Obligors, the Obligors shall cause
independent public accountants or others satisfactory to the Agent to
furnish to the Agent reports showing reconciliations, aging and test
verifications of, and trial balances for, the Accounts. At any time
after the occurrence and during the continuation of an Event of
Default, or after having provided written notice to the Borrower upon
a determination by the Agent that that communication is reasonably
necessary, the Agent in its own name or in the name of others may
communicate with account debtors on the Accounts to verify with them
to the Agent's satisfaction the existence, amount and terms of any
Accounts.
(c) Neither the Agent nor any Lender shall have any obligation or
liability under any Contract by reason of or arising out of this
Agreement or the receipt by the Agent or any such Lender of any
payment relating to such Contract pursuant hereto, nor shall the Agent
or any Lender be obligated in any manner to perform any of the
obligations of an Obligor under or pursuant to any Contract, to make
any payment, to make any inquiry as to the nature or the sufficiency
of any payment received by it or as to the sufficiency of any
performance by any party under any Contract, to present or file any
claim, to take any action to enforce any performance or to collect the
payment of any amounts which may have been assigned to it or to which
it may be entitled at any time or times.
(d) (i) At any time after the occurrence and during the continuation of an
Event of Default or (ii) in connection with any audit of the Contracts
by the Agent or any other Person designated by the Agent, after having
provided written notice to the Borrower, the Agent in its own name or
in the name of others may communicate with parties to the Contracts to
verify with them to the Agent's satisfaction the existence, amount and
terms of any Contract.
(e) At the Agent's request after the occurrence and during the continuance
of an Event of Default, the Obligors shall deliver to the Agent all
original and other documents in their possession or control (or as to
which they have a right or ability to get) evidencing, and relating
to, the agreements and transactions which gave rise to the Accounts.
5. Representations and Warranties. Each Obligor hereby represents and warrants
to the Agent, for the ratable benefit of the Lenders:
(a) Legal Name and Location of Obligor; Location of Collateral. As of the
Closing Date, each Obligor's exact legal name and state of formation
is (and for the prior four months has been) as shown on the signature
pages to this Agreement. As of the Closing Date, the principal place
of business and chief executive office of each Obligor is as set forth
on Schedule 5(a) attached hereto. As of the Closing Date, no Obligor
has in the past four months changed its name, been party to a merger,
consolidation or other change in structure or used any tradename
except as set forth in Schedule 5(a) attached hereto.
(b) Location of Collateral. As of the Closing Date, the location of all
Collateral owned by each Obligor is as shown on Schedule 5(b) attached
hereto.
(c) Ownership. Each Obligor is the legal and beneficial owner of its
Collateral and has the right to pledge, sell, assign or transfer the
same.
(d) Security Interest/Priority. This Agreement creates a valid security
interest in favor of the Agent, for the ratable benefit of the
Lenders, in the Collateral of such Obligor and, when properly
perfected by filing, shall constitute a valid first priority perfected
security interest in such Collateral (except with respect to any
Collateral subject to Liens permitted by Section 6.3(f) of the Term
Loan Agreement as of the Closing Date, and thereafter any Collateral
subject to Liens permitted by Sections 6.3(f), (g), (h) and (l) of the
Term Loan Agreement), to the extent such security can be perfected by
filing under the UCC and/or by filing in the United States Copyright
Office or the United States Patent and Trademark Office, free and
clear of all Liens except for Liens permitted by Section 6.3 of the
Term Loan Agreement.
(e) Types of Collateral. None of the Collateral consists of, or is the
Proceeds of, Farm Products, As-Extracted Collateral, Consumer Goods,
Manufactured Homes or timber to be cut.
(f) Accounts. (i) Each Account of the Obligors and the papers and
documents relating thereto are genuine and in all material respects
what they purport to be, (ii) each Account arises out of (A) a bona
fide sale of goods sold and delivered by such Obligor (or is in the
process of being delivered) or (B) services theretofore actually
rendered by such Obligor to, the account debtor named therein, (iii)
no Account of an Obligor relating to an amount in excess of $100,000
is evidenced by any Instrument or Chattel Paper unless such Instrument
or Chattel Paper has been theretofore endorsed over and delivered to,
or submitted to the Control of, the Agent and (iv) no surety bond was
required or given in connection with any Account of an Obligor or the
contracts or purchase orders out of which they arose, other than as
permitted by the Term Loan Agreement.
(g) Inventory. No Inventory is held by an Obligor pursuant to consignment,
sale or return, sale on approval or similar arrangement.
(h) Copyrights, Patents and Trademarks.
(i) As of the Closing Date, to the best of each Obligor's knowledge,
each Copyright, Patent and Trademark of such Obligor is valid,
subsisting, unexpired, enforceable and has not been abandoned.
(ii) As of the Closing Date, except as set forth in Schedule 5(h)
attached hereto, none of such Copyrights, Patents and Trademarks
is the subject of any licensing or franchise agreement.
(iii) As of the Closing Date, no holding, decision or judgment has
been rendered against any Obligor by any Governmental Authority
which would limit, cancel or question the validity of any
Copyright, Patent or Trademark.
(iv) No action or proceeding is pending against any Obligor seeking to
limit, cancel or question the validity of any material Copyright,
Patent or Trademark, or which, if adversely determined, would
have a material adverse effect on the value of such Copyright,
Patent or Trademark.
(v) As of the Closing Date, all applications pertaining to the
material Copyrights, Patents and Trademarks of each Obligor have
been duly and properly filed, and all registrations or letters
pertaining to such material Copyrights, Patents and Trademarks
have been duly and properly filed and issued, and all of such
material Copyrights, Patents and Trademarks are valid and
enforceable.
(vi) No Obligor has made any assignment or agreement in conflict with
the security interest in the Copyrights, Patents or Trademarks of
each Obligor hereunder.
(i) Contracts.
(i) Each material Contract is in full force and effect and
constitutes a valid and legally enforceable obligation of the
parties thereto, except as affected by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good
faith and fair dealing.
(ii) No consent or authorization of, filing with or other act by or in
respect of any Governmental Authority is required in connection
with the execution, delivery, performance, validity or
enforceability of any of the Contracts by any party thereto other
than those which have been duly obtained, made or performed, are
in full force and effect and do not subject the scope of any such
Contract to any material adverse limitation, either specific or
general in nature.
(iii) No Obligor nor (to the best of any Obligor's knowledge) any
other party to any material Contract is in default or is likely
to become in default in the performance or observance of any of
the terms thereof.
(iv) The Obligors have fully performed in all material respects all
their obligations under each material Contract.
(v) The right, title and interest of any Obligor in, to and under
each material Contract are not subject to any defense, offset,
counterclaim or claim which would materially adversely affect the
value of such Contract as Collateral, nor have any of the
foregoing been asserted or alleged against any Obligor as to any
material Contract.
(vi) The Obligors have delivered, or made available, to the Agent a
complete and correct copy of each material Contract requested by
the Agent, including all amendments, supplements and other
modifications thereto.
(vii) No amount payable to any Obligor under or in connection with any
Contract in excess of $100,000 is evidenced by any Instrument or
Chattel Paper which has not been delivered to the Agent.
(viii) None of the parties to any material Contracts is a Governmental
Authority.
6. Covenants. Each Obligor covenants that, so long as any Loans remain
outstanding or any other amount is due and owing to any Lender or the Agent
under the Term Loan Agreement or under any other Loan Document, such Obligor
shall:
(a) Other Liens. Defend the Collateral against the claims and demands of
all other parties claiming an interest therein, keep the Collateral
free from all Liens, except for Liens permitted by Section 6.3 of the
Term Loan Agreement. Neither the Agent nor any Lender authorizes any
Obligor to, and no Obligor shall sell, exchange, transfer, assign,
lease or otherwise dispose of the Collateral or any interest therein,
except as permitted under the Term Loan Agreement or this Agreement.
(b) Preservation of Collateral. Keep the Collateral in good order,
condition and repair (other than any Collateral that has become
obsolete or is not material to such Obligor) and not use the
Collateral in violation of the provisions of this Agreement or any
other agreement relating to the Collateral or any policy insuring the
Collateral or any applicable statute, law, bylaw, rule, regulation or
ordinance.
(c) Instruments/Tangible Chattel Paper/Negotiable Documents. If any amount
payable in excess of $100,000 under or in connection with any of the
Collateral shall be or become evidenced by any Instrument or Tangible
Chattel Paper, or if any property constituting Collateral with a value
in excess of $100,000 shall be stored or shipped subject to a
negotiable document, such Obligor shall ensure that such Instrument,
Tangible Chattel Paper or negotiable document is either in the
possession of such Obligor at all times or, if requested by the Agent
to perfect its security interest in such Collateral, is delivered to
the Agent duly indorsed in a manner satisfactory to the Agent. Such
Obligor shall ensure that any Collateral consisting of Tangible
Chattel Paper is marked with a legend acceptable to the Agent
indicating the Agent's security interest in such Tangible Chattel
Paper.
(d) Change in Organizational Structure or Location. Not, without providing
30 days prior written notice to the Agent and without filing such
amendments to any previously filed financing statements as the Agent
may reasonably require, (i) alter its corporate existence or, in one
transaction or a series of transactions, merge into or consolidate
with any other entity, or sell all or substantially all of its assets,
(ii) change its state of incorporation or formation or (iii) change
its registered legal name.
(e) Inspection. Allow the Agent or its representatives to visit and
inspect the Collateral as set forth in Section 5.6 of the Term Loan
Agreement.
(f) Perfection of Security Interest. Each Obligor hereby authorizes the
Agent to prepare and file such financing statements (including renewal
statements) or amendments thereof or supplements thereto or other
instruments as the Agent may from time to time deem reasonably
necessary or appropriate in order to perfect and maintain the security
interests granted hereunder in accordance with the UCC, which
financing statements may be without the signature of such Obligor (to
the extent such signature is not required under the laws of any
applicable jurisdiction), and which may describe the Collateral as
"all assets" or "all personal property" or words of like import. Each
Obligor shall also execute and deliver to the Agent such agreements,
assignments or instruments (including affidavits, notices,
reaffirmations and amendments and restatements of existing documents,
as the Agent may reasonably request) and do all such other things as
the Agent may reasonably deem necessary or appropriate (i) to assure
to the Agent its security interests hereunder, including (A) with
regard to Copyrights, a Notice of Grant of Security Interest in
Copyrights in the form of Schedule 6(f)(i) attached hereto, (B) with
regard to Patents, a Notice of Grant of Security Interest in Patents
for filing with the United States Patent and Trademark Office in the
form of Schedule 6(f)(ii) attached hereto, (C) with regard to
Trademarks, a Notice of Grant of Security Interest in Trademarks for
filing with the United States Patent and Trademark Office in the form
of Schedule 6(f)(iii) attached hereto and (D) with regard to Deposit
Accounts, Investment Property, Letter-of-Credit Rights and Electronic
Chattel Paper, all agreements, assignments, instruments or other
documents as requested by the Agent for the purpose of obtaining and
maintaining Control, including any deposit account control agreements,
(ii) to consummate the transactions contemplated hereby and (iii) to
otherwise protect and assure the Agent of its rights and interests
hereunder. To that end, each Obligor hereby irrevocably makes,
constitutes and appoints the Agent, its nominee or any other person
whom the Agent may designate, as such Obligor's attorney in fact with
full power and for the limited purpose to sign in the name of such
Obligor any such notices or similar documents which in the Agent's
reasonable discretion would be necessary, appropriate or convenient in
order to perfect and maintain perfection of the security interests
granted hereunder, such power, being coupled with an interest, being
and remaining irrevocable for so long as this Agreement is in effect
and until this Agreement is terminated in accordance with Section
13(a) hereof. Each Obligor hereby agrees that a carbon, photographic
or other reproduction of this Agreement or any such financing
statement is sufficient for filing as a financing statement by the
Agent without notice thereof to such Obligor wherever the Agent may in
its sole discretion desire to file the same. In the event for any
reason the law of any jurisdiction other than New York becomes or is
applicable to the Collateral of any Obligor or any part thereof, or to
any of the Secured Obligations, such Obligor agrees to execute and
deliver all such instruments and to do all such other things as the
Agent in its sole discretion reasonably deems necessary or appropriate
to preserve, protect and enforce the security interests of the Agent
under the law of such other jurisdiction (and, if an Obligor shall
fail to do so promptly upon the request of the Agent, then the Agent
may execute any and all such requested documents on behalf of such
Obligor pursuant to the power of attorney granted hereinabove). If any
Collateral having a value of $100,000 or more is in the possession or
control of a warehouseman, bailee or any agent or processor of an
Obligor and the Agent so requests, such Obligor agrees to (i) notify
such agents in writing of the Agent's security interest therein, (ii)
instruct them to hold all such Collateral for the Lenders' account and
subject to the Agent's instructions and (iii) obtain an acknowledgment
from such Person that it is holding such Collateral for the benefit of
the Agent. Each Obligor agrees to xxxx its books and records to
reflect the security interest of the Agent in the Collateral.
(g) Treatment of Accounts. Not grant or extend the time for payment of any
Account, or compromise or settle any Account for less than the full
amount thereof, or release any person or property, in whole or in
part, from payment thereof, or allow any credit or discount thereon,
other than as normal and customary in the ordinary course of an
Obligor's business.
(h) Covenants Relating to Copyrights.
(i) Employ the Copyrights included in the Collateral for each
material published Work with such notice of copyright as may be
required by law to secure copyright protection.
(ii) Not do any act or knowingly omit to do any act whereby any
material Copyright included in the Collateral may become
invalidated and (A) not do any act, or knowingly omit to do any
act, whereby any material Copyright included in the Collateral
may become injected into the public domain; (B) notify the Agent
immediately if it knows, or has reason to know, that any material
Copyright included in the Collateral may become injected into the
public domain or of any adverse determination or development
(including, without limitation, the institution of, or any such
determination or development in, any court or tribunal in the
United States or any other country) regarding an Obligor's
ownership of any such Copyright or its validity; (C) take all
necessary steps as it shall deem appropriate under the
circumstances, to maintain and pursue each application (and to
obtain the relevant registration) and to maintain each
registration of each material Copyright owned by an Obligor
including, without limitation, filing of applications for renewal
where necessary; and (D) promptly notify the Agent of any
material infringement of any material Copyright of an Obligor of
which it becomes aware and take such actions as it shall
reasonably deem appropriate under the circumstances to protect
such Copyright, including, where appropriate, the bringing of
suit for infringement, seeking injunctive relief and seeking to
recover any and all damages for such infringement, unless, in
such Obligor's reasonable good faith judgment, there is a valid
business reason to taking or omitting to take any such action.
(iii) Not make any assignment or agreement in conflict with the
security interest in the Copyrights of each Obligor hereunder.
(i) Covenants Relating to Patents and Trademarks.
(i) (A) Continue to use each material Trademark on each and every
trademark class of goods applicable to its current line as
reflected in its current catalogs, brochures and price lists in
order to maintain such material Trademark in full force free from
any claim of abandonment for non-use, (B) maintain as in the past
the quality of products and services offered under such material
Trademark, (C) employ such Trademark with the appropriate notice
of registration, (D) not adopt or use any xxxx which is
confusingly similar or a colorable imitation of such Trademark
unless the Agent, for the ratable benefit of the Lenders, shall
obtain a perfected security interest in such xxxx pursuant to
this Agreement, and (E) not (and not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any
act whereby any material Trademark may become invalidated.
(ii) Not do any act, or omit to do any act, whereby any Patent may
become abandoned or dedicated unless, in such Obligor's
reasonable good faith judgment, there is a valid business reason
to taking or omitting to take any such action.
(iii) Notify the Agent and the Lenders immediately if it knows, or has
reason to know, that any application or registration relating to
any material Patent or Trademark included in the Collateral may
become abandoned or dedicated, or of any adverse determination or
development (including, without limitation, the institution of,
or any such determination or development in, any proceeding in
the United States Patent and Trademark Office or any court or
tribunal in any country) regarding an Obligor's ownership of any
material Patent or Trademark or its right to register the same or
to keep and maintain the same.
(iv) Unless, in such Obligor's reasonable good faith judgment, there
is a valid business reason to taking or omitting to take any such
action, take all reasonable and necessary steps, including,
without limitation, in any proceeding before the United States
Patent and Trademark Office, or any similar office or agency in
any other country or any political subdivision thereof, to
maintain and pursue each application (and to obtain the relevant
registration) and to maintain each registration of each Patent
and each Trademark included in the Collateral, including, without
limitation, filing of applications for renewal, affidavits of use
and affidavits of incontestability.
(v) Promptly notify the Agent and the Lenders after it learns that
any material Patent or Trademark included in the Collateral is
infringed, misappropriated or diluted by a third party and
promptly xxx for infringement, misappropriation or dilution, to
seek injunctive relief where appropriate and to recover any and
all damages for such infringement, misappropriation or dilution,
or take such other actions as it shall reasonably deem
appropriate under the circumstances to protect such Patent or
Trademark unless, in such Obligor's reasonable good faith
judgment, there is a valid business reason to taking or omitting
to so xxx, seek, recover or take any such action.
(vi) Not make any assignment or agreement in conflict with the
security interest in the Patents or Trademarks of each Obligor
hereunder.
(j) New Patents, Copyrights and Trademarks. Promptly provide the Agent (i)
with respect to Copyrights, a duly executed Notice of Security
Interest in Copyrights, (ii) with respect to Patents, a duly executed
Notice of Security Interest in Patents, (iii) with respect to
Trademarks, a duly executed Notice of Security Interest in Trademarks
or (iv) such other duly executed documents as the Agent may request in
a form acceptable to counsel for the Agent and suitable for recording
to evidence the security interest in the Copyright, Patent or
Trademark which is the subject of such new application.
(k) Insurance. Insure, repair and replace the Collateral of such Obligor
as required in Section 5.5 of the Term Loan Agreement. All insurance
proceeds shall be subject to the security interest of the Agent
hereunder.
(l) Covenants Relating to Contracts.
(i) The Obligors will perform and comply with all their respective
obligations under material Contracts and all its other
contractual obligations relating to the Collateral.
(ii) Except as otherwise provided in the Term Loan Agreement, the
Obligors will not fail to exercise promptly and diligently each
and every material right which it may have under each Contract
except in the exercise of reasonable business judgment.
(iii) The Obligors will deliver to the Agent a copy of each material
demand, notice or document received by it relating in any way to
any material Contract.
(iv) In any suit, proceeding or action brought by the Agent or any
Lender under any Contract for any sum owing thereunder, or to
enforce any provisions of any Contract, the Obligors will save,
indemnify and keep the Agent and such Lender harmless from and
against all expense, loss or damage suffered by reason of any
defense, setoff, counterclaim, recoupment or reduction or
liability whatsoever of the obligor thereunder, arising out of a
breach by any Obligor of any obligation thereunder or arising out
of any other agreement, indebtedness or liability at any time
owing to or in favor of such obligor or its successors from any
Obligor except for any such expense, loss or damage which results
from the gross negligence of the willful misconduct of the Agent
or such Lender.
(m) Commercial Tort Claims; Notice of Litigation. (i) Promptly forward to
the Agent written notification of any and all Commercial Tort Claims
in excess of $100,000, including, but not limited to, any and all
actions, suits, and proceedings before any court or Governmental
Authority by or affecting such Obligor or any of its Subsidiaries and
(ii) execute and deliver such statements, documents and notices and do
and cause to be done all such things as may be reasonably required by
the Agent, or required by law, including all things which may from
time to time be necessary under the UCC to fully create, preserve,
perfect and protect the priority of the Agent's security interest in
any Commercial Tort Claims.
(n) Deposit Accounts. (i) Maintain the current use of XX Xxxxxx Xxxxx
Bank, Account #000-0-000000, which shall not be required to be subject
to a control agreement so long as such account is used exclusively in
connection with the administration of an employee benefits program,
and (ii) not open any new Deposit Account, without providing prior
written notice to the Agent and simultaneously therewith executing and
delivering to the Agent a control agreement, in form and substance
reasonably satisfactory to the Agent, unless the Agent (in its sole
discretion) has waived such requirement of a control agreement.
(o) At all times maintain the Collateral as personal property and not
affix any of the Collateral to any real property in a manner which
would change its nature from personal property to real property or a
Fixture to real property.
7. Advances by Lenders. On failure of any Obligor to perform any of the
covenants and agreements contained herein, the Agent may, at its sole option and
in its sole discretion, perform the same and in so doing may expend such sums as
the Agent may reasonably deem advisable in the performance thereof, including,
without limitation, the payment of any insurance premiums, the payment of any
taxes, a payment to obtain a release of a Lien or potential Lien, expenditures
made in defending against any adverse claim and all other expenditures which the
Agent or the Lenders may make for the protection of the security hereof or which
may be compelled to make by operation of law. All such sums and amounts so
expended shall be repayable by the Obligors on a joint and several basis
promptly upon timely notice thereof and demand therefor, shall constitute
additional Secured Obligations and shall bear interest from the date said
amounts are expended at the default rate specified in Section 2.4(b) of the Term
Loan Agreement. No such performance of any covenant or agreement by the Agent or
the Lenders on behalf of any Obligor, and no such advance or expenditure
therefor, shall relieve the Obligors of any default under the terms of this
Agreement or the other Loan Documents. The Lenders may make any payment hereby
authorized in accordance with any xxxx, statement or estimate procured from the
appropriate public office or holder of the claim to be discharged without
inquiry into the accuracy of such xxxx, statement or estimate or into the
validity of any tax assessment, sale, forfeiture, tax lien, title or claim
except to the extent such payment is being contested in good faith by an Obligor
in appropriate proceedings and against which adequate reserves are being
maintained in accordance with GAAP provided, that the Agent has given written
notice to the applicable Obligor of its intent to pay such sums.
8. Events of Default.
The occurrence of an event which under the Term Loan Agreement
would constitute a Default or Event of Default shall be a Default or Event of
Default, as the case may be, hereunder.
9. Remedies.
(a) General Remedies. Upon the occurrence of an Event of Default and
during continuation thereof, the Lenders shall have, in addition to
the rights and remedies provided herein, in the Loan Documents or by
law (including, but not limited to, levy of attachment, garnishment
and the rights and remedies set forth in the UCC of the jurisdiction
applicable to the affected Collateral), the rights and remedies of a
secured party under the UCC (regardless of whether the UCC is the law
of the jurisdiction where the rights and remedies are asserted and
regardless of whether the UCC applies to the affected Collateral), and
further, the Agent may, with or without judicial process or the aid
and assistance of others, to the extent permitted by the UCC, (i)
enter on any premises on which any of the Collateral may be located
and, without resistance or interference by the Obligors, take
possession of the Collateral, (ii) dispose of any Collateral on any
such premises, (iii) require the Obligors to assemble and make
available to the Agent at the expense of the Obligors any Collateral
at any place and time designated by the Agent which is reasonably
convenient to both parties, (iv) remove any Collateral from any such
premises for the purpose of effecting sale or other disposition
thereof, and/or (v) without demand and without advertisement, notice,
hearing or process of law, all of which each of the Obligors hereby
waives to the fullest extent permitted by law, at any place and time
or times, sell and deliver any or all Collateral held by or for it at
public or private sale, by one or more contracts, in one or more
parcels, for cash, upon credit or otherwise, at such prices and upon
such terms as the Agent deems advisable, in its sole discretion
(subject to any and all mandatory legal requirements). Neither the
Agent's compliance with any applicable state or federal law in the
conduct of such sale, nor its disclaimer of any warranties relating to
the Collateral, shall be considered to adversely affect the commercial
reasonableness of such sale. In addition to all other sums due the
Agent and the Lenders with respect to the Secured Obligations, the
Obligors shall pay the Agent and each of the Lenders all reasonable
documented costs and expenses incurred by the Agent or any such
Lender, including, but not limited to, reasonable attorneys' fees and
court costs, in obtaining or liquidating the Collateral, in enforcing
payment of the Secured Obligations, or in the prosecution or defense
of any action or proceeding by or against the Agent or the Lenders or
the Obligors concerning any matter arising out of or connected with
this Agreement, any Collateral or the Secured Obligations, including,
without limitation, any of the foregoing arising in, arising under or
related to a case under the Bankruptcy Code, to the extent that the
Borrower would be obligated to pay such costs and expenses pursuant to
Section 9.5 of the Term Loan Agreement. To the extent the rights of
notice cannot be legally waived hereunder, each Obligor agrees that
any requirement of reasonable notice shall be met if such notice is
personally served on or mailed, postage prepaid, to the Borrower in
accordance with the notice provisions of Section 9.2 of the Term Loan
Agreement at least 10 days before the time of sale or other event
giving rise to the requirement of such notice. The Agent and the
Lenders shall not be obligated to make any sale or other disposition
of the Collateral regardless of notice having been given. To the
extent permitted by law, any Lender may be a purchaser at any such
sale. To the extent permitted by applicable law, each of the Obligors
hereby waives all of its rights of redemption with respect to any such
sale. Subject to the provisions of applicable law, the Agent and the
Lenders may postpone or cause the postponement of the sale of all or
any portion of the Collateral by announcement at the time and place of
such sale, and such sale may, without further notice, to the extent
permitted by law, be made at the time and place to which the sale was
postponed, or the Agent and the Lenders may further postpone such sale
by announcement made at such time and place.
(b) Remedies relating to Accounts. Upon the occurrence of an Event of
Default and during the continuation thereof, whether or not the Agent
has exercised any or all of its rights and remedies hereunder, the
Agent shall have the right to enforce any Obligor's rights against any
account debtors and obligors on such Obligor's Accounts. Each Obligor
acknowledges and agrees that the Proceeds of its Accounts remitted to
or on behalf of the Agent in accordance with the provisions hereof
shall be solely for the Agent's own convenience and that such Obligor
shall not have any right, title or interest in such Accounts or in any
such other amounts except as expressly provided herein. The Agent and
the Lenders shall have no liability or responsibility to any Obligor
for acceptance of a check, draft or other order for payment of money
bearing the legend "payment in full" or words of similar import or any
other restrictive legend or endorsement or be responsible for
determining the correctness of any remittance. Each Obligor hereby
agrees to indemnify the Agent and the Lenders from and against all
liabilities, damages, losses, actions, claims, judgments, costs,
expenses, charges and attorneys' fees suffered or incurred by each
Indemnitee (as defined in Section 2(c) above) because of the
maintenance of the foregoing arrangements; provided that such
indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related expenses are
determined by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from the gross negligence or
willful misconduct of such Indemnitee. In the case of any
investigation, litigation or other proceeding, the foregoing indemnity
shall be effective whether or not such investigation, litigation or
proceeding is brought by an Obligor, its directors, shareholders or
creditors or an Indemnitee or any other Person or any other Indemnitee
is otherwise a party thereto.
(c) Access. In addition to the rights and remedies hereunder, upon the
occurrence of an Event of Default and during the continuance thereof,
the Agent shall have the right to enter and remain upon the various
premises of the Obligors without cost or charge to the Agent, and use
the same, together with materials, supplies, books and records of the
Obligors for the purpose of collecting and liquidating the Collateral,
or for preparing for sale and conducting the sale of the Collateral,
whether by foreclosure, auction or otherwise. In addition, the Agent
may remove Collateral, or any part thereof, from such premises and/or
any records with respect thereto, in order to effectively collect or
liquidate such Collateral.
(d) Nonexclusive Nature of Remedies. Failure by the Agent or the Lenders
to exercise any right, remedy or option under this Agreement, any
other Loan Document or as provided by law, or any delay by the Agent
or the Lenders in exercising the same, shall not operate as a waiver
of any such right, remedy or option. No waiver hereunder shall be
effective unless it is in writing, signed by the party against whom
such waiver is sought to be enforced and then only to the extent
specifically stated, which in the case of the Agent or the Lenders
shall only be granted as provided herein. To the extent permitted by
law, neither the Agent, the Lenders, nor any party acting as attorney
for the Agent or the Lenders, shall be liable hereunder for any acts
or omissions or for any error of judgment or mistake of fact or law
other than their gross negligence or willful misconduct hereunder. The
rights and remedies of the Agents and the Lenders under this Agreement
shall be cumulative and not exclusive of any other right or remedy
which the Agent or the Lenders may have.
(e) Retention of Collateral. The Agent may, after providing the notices
required by Sections 9-620 and 9-621 of the UCC or otherwise complying
with the requirements of applicable law of the relevant jurisdiction,
accept or retain the Collateral in satisfaction of the Secured
Obligations. Unless and until the Agent shall have provided such
notices, however, the Agent shall not be deemed to have retained any
Collateral in satisfaction of any Secured Obligations for any reason.
(f) Deficiency. In the event that the proceeds of any sale, collection or
realization are insufficient to pay all amounts to which the Agent or
the Lenders are legally entitled, the Obligors shall be jointly and
severally liable for the deficiency, together with interest thereon at
the default rate specified in Section 2.4(b) of the Term Loan
Agreement together with the costs of collection and the reasonable
fees of any attorneys employed by the Agent to collect such
deficiency. Any surplus remaining after the full payment and
satisfaction of the Secured Obligations shall be returned to the
Obligors or to whomsoever a court of competent jurisdiction shall
determine to be entitled thereto.
10. Rights of the Agent.
(a) Power of Attorney. In addition to other powers of attorney contained
herein, each Obligor hereby designates and appoints the Agent, on
behalf of the Lenders, and each of its designees or agents, as
attorney-in-fact of such Obligor, irrevocably and with power of
substitution, with authority to take any or all of the following
actions upon the occurrence and during the continuance of an Event of
Default:
(i) to demand, collect, settle, compromise, adjust, give discharges
and releases, all as the Agent may reasonably determine;
(ii) to commence and prosecute any actions at any court for the
purposes of collecting any Collateral and enforcing any other
right in respect thereof;
(iii) to defend, settle or compromise any action brought and, in
connection therewith, give such discharge or release as the Agent
may deem reasonably appropriate;
(iv) receive, open and dispose of mail addressed to an Obligor and
endorse checks, notes, drafts, acceptances, money orders, bills
of lading, warehouse receipts or other instruments or documents
evidencing payment, shipment or storage of the goods giving rise
to the Collateral of such Obligor on behalf of and in the name of
such Obligor, or securing, or relating to such Collateral;
(v) sell, assign, transfer, make any agreement in respect of, or
otherwise deal with or exercise rights in respect of, any
Collateral or the goods or services which have given rise
thereto, as fully and completely as though the Agent were the
absolute owner thereof for all purposes;
(vi) adjust and settle claims under any insurance policy relating
thereto;
(vii) execute and deliver all assignments, conveyances, statements,
financing statements, renewal financing statements, agreements,
affidavits, notices and other agreements, instruments and
documents that the Agent may determine necessary in order to
perfect and maintain the security interests and liens granted in
this Agreement and in order to fully consummate all of the
transactions contemplated therein;
(viii) institute any foreclosure proceedings that the Agent may deem
appropriate; and
(ix) do and perform all such other acts and things as the Agent may
reasonably deem to be necessary, proper or convenient in
connection with the Collateral.
This power of attorney is a power coupled with an interest and shall
be irrevocable and shall remain in full force and effect for so long
as this Agreement is in effect and until this Agreement is terminated
in accordance with Section 13(a) hereof. The Agent shall be under no
duty to exercise or withhold the exercise of any of the rights,
powers, privileges and options expressly or implicitly granted to the
Agent in this Agreement, and shall not be liable for any failure to do
so or any delay in doing so. The Agent shall not be liable for any act
or omission or for any error of judgment or any mistake of fact or law
in its individual capacity or its capacity as attorney-in-fact except
acts or omissions resulting from its gross negligence or willful
misconduct. This power of attorney is conferred on the Agent solely to
protect, preserve and realize upon its security interest in the
Collateral.
(b) Performance by the Agent of Obligations. If any Obligor fails to
perform any agreement or obligation contained herein, after notice by
the Agent to the Obligor the Agent itself may perform, or cause
performance of, such agreement or obligation, and the expenses of the
Agent incurred in connection therewith shall be payable by the
Obligors on a joint and several basis pursuant to Section 9 hereof.
(c) Assignment by the Agent. Upon the occurrence of an Event of Default,
or as otherwise permitted under the Term Loan Agreement, the Agent may
assign the Secured Obligations and any portion thereof and/or the
Collateral and any portion thereof, and the assignee shall be entitled
to all of the rights and remedies of the Agent under this Agreement in
relation thereto.
(d) The Agent's Duty of Care in Respect of Pledged Collateral. The Agent's
sole duty with respect to the safe custody of the Collateral, while
being held by the Agent hereunder, under Section 9-207 of the UCC,
shall be substantially equal to that which the Agent accords its own
property. Other than this duty, the Agent shall have no duty or
liability to preserve rights pertaining thereto, it being understood
and agreed that the Obligors shall be responsible for the preservation
of all rights in the Collateral of such Obligor, and the Agent shall
be relieved of all responsibility for Collateral upon surrendering it
or tendering the surrender of it to the Obligors. It is understood and
agreed that the Agent shall not have responsibility for cleaning up,
repairing or otherwise preparing the Collateral for sale in the event
of a public or private sale of Collateral pursuant to Section 8
hereof.
11. Application of Proceeds. Upon the acceleration of the Secured Obligations
pursuant to Section 7 of the Term Loan Agreement, any payments in respect of the
Secured Obligations and any proceeds of the Collateral, when received by the
Agent or any of the Lenders in cash or its equivalent, will be applied first, to
the payment of costs and expenses of the Agent in connection with the collection
or sale or otherwise in connection with this Agreement, any other Loan Document
or any of the Secured Obligations, including all court costs and the fees and
expenses of its agents and legal counsel, the repayment of all advances made by
the Agent hereunder or under any other Loan Document on behalf of any Obligor
and any other costs or expenses incurred in connection with the exercise of any
right or remedy hereunder or under any other Loan Document, and second, in
reduction of the Secured Obligations in the order set forth in this Agreement
and the Term Loan Agreement, and each Obligor irrevocably waives the right to
direct the application of such payments and proceeds and acknowledges and agrees
that the Agent shall have the continuing and exclusive right to apply and
reapply any and all such payments and proceeds in the Agent's sole discretion,
notwithstanding any entry to the contrary upon any of its books and records.
12. Costs of Counsel. At all times hereafter, the Obligors agree to promptly pay
upon demand any and all reasonable costs and expenses of the Agent or the
Lenders, (a) as required under Section 9.5 of the Term Loan Agreement and (b)
subject to the limitations on the fees of counsel to the Agent and the Lenders
set forth in Section 9.5 of the Term Loan Agreement, as reasonably necessary to
protect the Collateral or to exercise any rights or remedies under this
Agreement or with respect to any Collateral, including the costs and expenses of
the Agent's counsel and of any experts or agents that the Agent may incur in
connection with (i) the administration of this Agreement, (ii) the custody,
preservation, sale or collection of, or realization upon, any Collateral or
(iii) the failure of an Obligor to perform or observe any covenant or agreement
hereunder. All of the foregoing costs and expenses shall constitute Secured
Obligations hereunder.
13. Continuing Agreement.
(a) This Agreement shall be a continuing agreement in every respect and
shall remain in full force and effect until the Secured Obligations
have been paid in full (other than any contingent indemnification
obligations set forth in the Loan Documents). Upon such payment in
full this Agreement shall be automatically terminated and the Agent
and the Lenders shall, upon the request and at the expense of the
Obligors, forthwith release all of its liens and security interests
hereunder and shall execute and deliver all UCC termination statements
and/or other documents reasonably requested by the Obligors evidencing
such termination.
(b) This Agreement shall continue to be effective or be automatically
reinstated, as the case may be, if at any time payment, in whole or in
part, of any of the Secured Obligations is rescinded or must otherwise
be restored or returned by the Agent or any Lender as a preference,
fraudulent conveyance or otherwise under any bankruptcy, insolvency or
similar law, all as though such payment had not been made; provided
that in the event payment of all or any part of the Secured
Obligations is rescinded or must be restored or returned, all
reasonable costs and expenses (including without limitation any
reasonable legal fees and disbursements) incurred by the Agent or any
Lender in defending and enforcing such reinstatement shall be deemed
to be included as a part of the Secured Obligations.
14. Indemnity. Without limitation of its indemnification obligations under the
other Loan Documents, each Obligor jointly and severally agrees to indemnify
each Indemnitee (as defined in Section 2(c) above) against, and hold each
Indemnitee harmless from, any and all losses, claims, damages, liabilities and
related expenses, including the fees, charges and disbursements of any counsel
for any Indemnitee, incurred by or asserted against any Indemnitee arising out
of, in connection with, or as a result of, the execution, delivery or
performance of this Agreement or any claim, litigation, investigation or
proceeding relating hereto or to the Collateral, whether or not any Indemnitee
is a party thereto; provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Indemnitee.
15. Amendments; Waivers; Modifications. This Agreement and the provisions hereof
may not be amended, waived, modified, changed, discharged or terminated except
as set forth in Section 9.1 of the Term Loan Agreement.
16. Successors in Interest. This Agreement shall create a continuing security
interest in the Collateral and shall be binding upon each Obligor, its
successors and assigns and shall inure, together with the rights and remedies of
the Agent and the Lenders hereunder, to the benefit of the Agent and the Lenders
and their successors and permitted assigns; provided, however, that none of the
Obligors may assign its rights or delegate its duties hereunder without the
prior written consent of each Lender or the Required Lenders, as required by the
Term Loan Agreement. To the fullest extent permitted by law, each Obligor hereby
releases the Agent and each Lender, and its successors and assigns, from any
liability for any act or omission relating to this Agreement or the Collateral,
except for any liability arising from the gross negligence or willful misconduct
of the Agent, or such Lender, or its officers, employees or agents.
17. Notices. All notices required or permitted to be given under this Agreement
shall be in conformance with Section 9.2 of the Term Loan Agreement.
18. Counterparts. This Agreement may be executed in any number of counterparts,
each of which where so executed and delivered shall be an original, but all of
which shall constitute one and the same instrument. It shall not be necessary in
making proof of this Agreement to produce or account for more than one such
counterpart.
19. Headings. The headings of the sections and subsections hereof are provided
for convenience only and shall not in any way affect the meaning or construction
of any provision of this Agreement.
20. Governing Law; Submission to Jurisdiction; Venue. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF. The parties hereto
irrevocably submit to the exclusive jurisdiction of any state or federal court
sitting in the County of New York, in the State of New York over any suit,
action or proceeding arising out of or relating to this Agreement, the Term Loan
Agreement, the other Loan Documents or the transactions contemplated thereby. To
the fullest extent they may effectively do so under applicable law, the parties
hereto irrevocably waive and agree not to assert, by way of motion, as a defense
or otherwise, any claim that they are not subject to the jurisdiction or any
such court, any objection that they may now or hereafter have to the laying of
the venue of any such suit, action or proceeding brought in any such court and
any claim that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum.
21. Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE
PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
22. Severability. If any provision of any of the Agreement is determined to be
illegal, invalid or unenforceable, such provision shall be fully severable and
the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
23. Entirety. This Agreement and the other Loan Documents represent the entire
agreement of the parties hereto and thereto, and supersede all prior agreements
and understandings, oral or written, if any, including any commitment letters or
correspondence relating to the Loan Documents or the transactions contemplated
herein and therein.
24. Survival. All representations and warranties of the Obligors hereunder shall
survive the execution and delivery of this Agreement and the other Loan
Documents, the delivery of the Notes and the making of the Loans.
25. Other Security. To the extent that any of the Secured Obligations are now or
hereafter secured by property other than the Collateral (including, without
limitation, real property and securities owned by an Obligor), or by a
guarantee, endorsement or property of any other Person, then the Agent and the
Lenders shall have the right to proceed against such other property, guarantee
or endorsement upon the occurrence and continuation of any Event of Default, and
the Agent and the Lenders have the right, in their sole discretion, to determine
which rights, security, liens, security interests or remedies the Agent and the
Lenders shall at any time pursue, relinquish, subordinate, modify or take with
respect thereto, without in any way modifying or affecting any of them or any of
the Agent's and the Lenders' rights or the Secured Obligations under this
Agreement, under any other of the Loan Documents.
26. Joint and Several Obligations of Obligors.
(a) Each of the Obligors is accepting joint and several liability
hereunder in consideration of the financial accommodation to be
provided by the Lenders under the Term Loan Agreement, for the mutual
benefit, directly and indirectly, of each of the Obligors and in
consideration of the undertakings of each of the Obligors to accept
joint and several liability for the obligations of each of them.
(b) Each of the Obligors jointly and severally hereby irrevocably and
unconditionally accepts, not merely as a surety but also as a
co-debtor, joint and several liability with the other Obligors with
respect to the payment and performance of all of the Secured
Obligations arising under this Agreement and the other Loan Documents,
it being the intention of the parties hereto that all of the Secured
Obligations shall be the joint and several obligations of each of the
Obligors without preferences or distinction among them.
(c) Notwithstanding any provision to the contrary contained herein, in any
other of the Loan Documents, the obligations of each Guarantor under
the Term Loan Agreement and the other Loan Documents shall be limited
to an aggregate amount equal to the largest amount that would not
render such obligations subject to avoidance under Section 548 of the
Bankruptcy Code or any comparable provisions of any applicable state
law.
27. Rights of Required Lenders. All rights of the Agent hereunder, if not
exercised by the Agent, may be exercised by the Required Lenders.
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Each of the parties hereto has caused a counterpart of this
Agreement to be duly executed and delivered as of the date first above written.
BORROWER: INFOCROSSING, INC.
a Delaware corporation
By: /s/ Xxxxxxxx X. Xxxxxxx
Name: Xxxxxxxx X. Xxxxxxx
Title: Senior Vice President
GUARANTORS: AMQUEST, INC.,
a Georgia corporation
By: /s/ Xxxxxxxx X. Xxxxxxx
Name: Xxxxxxxx X. Xxxxxxx
Title: Vice President
ETG, INC.
a Delaware corporation
By: /s/ Xxxxxxxx X. Xxxxxxx
Name: Xxxxxxxx X. Xxxxxxx
Title: Vice President
INFOCROSSING SERVICES, INC.,
a Delaware corporation
By: /s/ Xxxxxxxx X. Xxxxxxx
Name: Xxxxxxxx X. Xxxxxxx
Title: Vice President
AMQUEST SERVICES, INC.,
a Georgia corporation
By: /s/ Xxxxxxxx X. Xxxxxxx
Name: Xxxxxxxx X. Xxxxxxx
Title: Vice President
Accepted and agreed to as of the date first above written.
INFOCROSSING AGENT, INC., as Agent
By: /s/ Xxxxx Xxxxxx
________________________________
Name: Xxxxx Xxxxxx
Title: President
