Exhibit 10.8
SECURITY AGREEMENT dated as of June 23, 1999, among
ANTEON CORPORATION, a Virginia corporation (the "BORROWER"),
each subsidiary of the Borrower listed on Schedule I hereto
(each such subsidiary individually a "SUBSIDIARY GUARANTOR"
and collectively, the "SUBSIDIARY GUARANTORS"; the Subsidiary
Guarantors and the Borrower are referred to collectively
herein as the "GRANTORS") and MELLON BANK, N.A., a national
banking association ("MELLON"), as collateral agent (in such
capacity, the "COLLATERAL AGENT") for the Secured Parties (as
defined herein).
Reference is made to (a) the Credit Agreement dated as of June 23, 1999
(as amended, supplemented or otherwise modified from time to time, the "CREDIT
AGREEMENT"), among the Borrower, the lenders from time to time party thereto
(the "LENDERS"), Credit Suisse First Boston, a bank organized under the laws of
Switzerland, acting through its New York branch ("CSFB"), as administrative
agent for the Lenders (in such capacity, the "ADMINISTRATIVE AGENT") and as
issuing bank (in such capacity, the "ISSUING BANK"), Mellon, as Collateral
Agent, swingline lender and syndication agent, and Deutsche Bank AG, New York
Branch, as documentation agent, and (b) the Subsidiary Guarantee Agreement dated
as of June 23, 1999 (as amended, supplemented or otherwise modified from time to
time, the "GUARANTEE AGREEMENT"), among the Subsidiary Guarantors and the
Collateral Agent.
The Lenders have agreed to make Loans to the Borrower, and the Issuing
Bank has agreed to issue Letters of Credit for the account of the Borrower, in
each case pursuant to, and upon the terms and subject to the conditions
specified in, the Credit Agreement. Each of the Subsidiary Guarantors has agreed
to guarantee, among other things, all the obligations of the Borrower under the
Credit Agreement. The obligations of the Lenders to make Loans and of the
Issuing Bank to issue Letters of Credit are conditioned upon, among other
things, the execution and delivery by the Borrower of an agreement in the form
hereof to secure, and the execution and delivery by the Subsidiary Guarantors of
an agreement in the form hereof to secure their guarantees under the Guarantee
Agreement of, (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, (ii) each payment required to be
made by the Borrower under the Credit Agreement in respect of any Letter of
Credit, when and as due, including payments in respect of reimbursement of
disbursements, interest thereon and obligations to provide cash collateral, and
(iii) all other monetary obligations, including fees, costs, expenses and
indemnities, whether primary, secondary, direct, contingent, fixed or otherwise
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(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 Secured Parties
under this Agreement, the Credit Agreement and the other Loan Documents, (b) the
due and punctual performance of all covenants, agreements, obligations and
liabilities of the Borrower under or pursuant to this Agreement, the Credit
Agreement and the other Loan Documents, (c) the due and punctual payment and
performance of all the covenants, agreements, obligations and liabilities of
each Loan Party under or pursuant to this Agreement and the other Loan
Documents, (d) unless otherwise agreed upon in writing by the applicable Lender
party thereto, the due and punctual payment and performance of all obligations
of the Borrower, monetary or otherwise, under each Hedging Agreement entered
into with (i) Mellon, pursuant to a Master Agreement for Swaps dated May 6,
1998, between the Borrower and Mellon and (ii) any counterparty that was a
Lender (or an affiliate of a Lender) at the time such Hedging Agreement was
entered into and (e) the due and punctual payment and performance of all
obligations of any Loan Party in respect of (i) overdrafts and related
liabilities incurred in the ordinary course of business owed to Mellon or any of
its Affiliates and arising from treasury, depository and cash management
services or in connection with any automated clearing house transfers of funds
and (ii) indebtedness to Mellon in connection with purchase cards issued by
Mellon in an aggregate amount not to exceed $500,000 (all the monetary and other
obligations referred to in the preceding lettered clauses of this paragraph
being referred to collectively as the "OBLIGATIONS").
Accordingly, the Grantors and the Collateral Agent, on behalf of itself
and each Secured Party (and each of their respective successors or assigns),
hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITION OF TERMS USED HEREIN. Unless the context
otherwise requires, all capitalized terms used but not defined herein shall have
the meanings set forth in the Credit Agreement, and all references to the
Uniform Commercial Code shall mean the Uniform Commercial Code in effect in the
State of New York as of the date hereof.
SECTION 1.02. DEFINITION OF CERTAIN TERMS USED HEREIN. As used herein, the
following terms shall have the following meanings:
"ACCOUNT DEBTOR" shall mean any person who is or who may become obligated
to any Grantor under, with respect to or on account of an Account.
"ACCOUNTS" shall mean any and all right, title and interest of any Grantor
to payment for goods and services sold or leased, including any such right
evidenced by chattel paper,
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whether due or to become due, whether or not it has been earned by performance,
and whether now or hereafter acquired or arising in the future, including
accounts receivable from Affiliates of the Grantors.
"ACCOUNTS RECEIVABLE" shall mean all Accounts and all right, title and
interest in any returned goods, together with all rights, titles, securities and
guarantees with respect thereto, including any rights to stoppage in transit,
replevin, reclamation and resales, and all related security interests, liens and
pledges, whether voluntary or involuntary, in each case whether now existing or
owned or hereafter arising or acquired.
"CHATTEL PAPER" shall mean (a) a writing or writings which evidence both a
monetary obligation and a security interest in or a lease of specific Equipment
and (b) all other property now or hereafter constituting "chattel paper" under
the Uniform Commercial Code as in effect in the State of New York or its
equivalent in other jurisdictions, in each case that are now or hereafter owned
by Grantor.
"COLLATERAL" shall mean all (a) Accounts Receivable, (b) Chattel Paper,
(c) Contract Rights, (d) Documents, (e) Equipment, (f) General Intangibles, (g)
Inventory, (h) cash and cash accounts (including the Concentration Account and
the Collection Deposit Accounts), (i) Investment Property and (j) Proceeds;
PROVIDED that the Collateral shall not include (i) except as set forth in
Section 9-318 of the Uniform Commercial Code, any agreement or License which
cannot be pledged or assigned according to its terms or the pledge or assignment
of which requires the consent of any third party unless such third party has
consented thereto, (ii) Investment Property evidenced by a certificate pledged
under the Pledge Agreement, (iii) property subject to a Lien permitted by
Section 6.02(h) of the Credit Agreement and (iv) property acquired after the
Closing Date and subject to Liens permitted by Section 6.02 (l) of the Credit
Agreement to the extent that the terms of the Indebtedness secured by such Liens
do not permit the creation of additional Liens thereon.
"COLLECTION DEPOSIT ACCOUNT" shall mean a lockbox account of a Grantor
maintained for the benefit of the Secured Parties with the Collateral Agent or
with a Sub-Agent pursuant to a Lockbox and Depository Agreement.
"COMMODITY ACCOUNT" shall mean an account maintained by a Commodity
Intermediary in which a Commodity Contract is carried for a Commodity Customer.
"COMMODITY CONTRACT" shall mean a commodity futures contract, an option on
a commodity futures contract, a commodity option or any other contract that, in
each case, is (a) traded on or subject to the rules of a board of trade that has
been designated as a contract market for such a contract pursuant to the Federal
commodities laws or (b) traded on a foreign commodity board of trade, exchange
or market, and is carried on the books of a Commodity Intermediary for a
Commodity Customer.
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"COMMODITY CUSTOMER" shall mean a person for whom a Commodity Intermediary
carries a Commodity Contract on its books.
"COMMODITY INTERMEDIARY" shall mean (a) a person who is registered as a
futures commission merchant under the federal commodities laws or (b) a person
who in the ordinary course of its business provides clearance or settlement
services for a board of trade that has been designated as a contract market
pursuant to Federal commodities laws.
"CONCENTRATION ACCOUNT" shall mean the cash collateral account established
at the office of Mellon, at Mellon Bank, N.A., Philadelphia, PA in the name of
the Collateral Agent, ABA No. 000-000-000, Account No.0-000-000.
"CONTRACT RIGHT" shall mean any right of a Grantor to xxxx and receive
payment under any and all contracts, agreements or purchase orders, whether now
existing or owned or hereafter arising or acquired.
"COPYRIGHT LICENSE" shall mean any written agreement, now or hereafter in
effect, granting any right to any Grantor under any Copyright now or hereafter
owned by any third party, and all rights of such Grantor under any such
agreement.
"COPYRIGHTS" shall mean all of the following now owned or hereafter
acquired by any Grantor: (a) all copyright rights in any work subject to the
copyright laws of the United States or any other country, whether as author,
assignee, transferee or otherwise, and (b) all registrations and applications
for registration of any such copyright in the United States or any other
country, including registrations, recordings, supplemental registrations and
pending applications for registration in the United States Copyright Office (or
any successor office or any similar office in any other country), including
those listed on Schedule II.
"CREDIT AGREEMENT" shall have the meaning assigned to such term in the
preliminary statement of this Agreement.
"DOCUMENTS" shall mean all instruments, files, records, ledger sheets and
documents covering or relating to any of the Collateral.
"ENTITLEMENT HOLDER" shall mean a person identified in the records of a
Securities Intermediary as the person having a Security Entitlement against the
Securities Intermediary. If a person acquires a Security Entitlement by virtue
of Section 8-501(b)(2) or (3) of the Uniform Commercial Code, such person is the
Entitlement Holder.
"EQUIPMENT" shall mean all equipment, furniture and furnishings, and all
tangible personal property similar to any of the foregoing, including tools,
parts and supplies of every kind and description, and all improvements,
accessions or appurtenances thereto, that are now or hereafter owned by any
Grantor. The term Equipment shall include Fixtures.
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"FINANCIAL ASSET" shall mean (a) a Security, (b) an obligation of a person
or a share, participation or other interest in a person or in property or an
enterprise of a person, which is, or is of a type, dealt with in or traded on
financial markets, or which is recognized in any area in which it is issued or
dealt in as a medium for investment or (c) any property that is held by a
Securities Intermediary for another person in a Securities Account if the
Securities Intermediary has expressly agreed with the other person that the
property is to be treated as a Financial Asset under Article 8 of the Uniform
Commercial Code. As the context requires, the term Financial Asset shall mean
either the interest itself or the means by which a person's claim to it is
evidenced, including a certificated or uncertificated Security, a certificate
representing a Security or a Security Entitlement.
"FIXTURES" shall mean all items of Equipment, whether now owned or
hereafter acquired, of any Grantor that become so related to particular real
estate that an interest in them arises under any real estate law applicable
thereto.
"GENERAL INTANGIBLES" shall mean all choses in action and causes of action
and all other assignable intangible personal property of any Grantor of every
kind and nature (other than Accounts Receivable) now owned or hereafter acquired
by any Grantor, including all rights and interests in partnerships, limited
partnerships, limited liability companies and other unincorporated entities,
corporate or other business records, indemnification claims, Contract Rights
(including rights under leases, whether entered into as lessor or lessee,
Hedging Agreements and other agreements), Intellectual Property, goodwill,
registrations, franchises, tax refund claims and any letter of credit,
guarantee, claim, security interest or other security held by or granted to any
Grantor to secure payment by an Account Debtor of any of the Accounts
Receivable.
"INTELLECTUAL PROPERTY" shall mean all intellectual and similar property
of any Grantor of every kind and nature now owned or hereafter acquired by any
Grantor, including inventions, designs, Patents, Copyrights, Licenses,
Trademarks, trade secrets, confidential or proprietary technical and business
information, know-how, show-how or other data or information, software and
databases and all embodiments or fixations thereof and related documentation,
registrations and franchises, and all additions, improvements and accessions to,
and books and records describing or used in connection with, any of the
foregoing.
"INVENTORY" shall mean all goods of any Grantor, whether now owned or
hereafter acquired, held for sale or lease, or furnished or to be furnished by
any Grantor under contracts of service, or consumed in any Grantor's business,
including raw materials, intermediates, work in process, packaging materials,
finished goods, semi-finished inventory, scrap inventory, manufacturing supplies
and spare parts, and all such goods that have been returned to or repossessed by
or on behalf of any Grantor.
"INVESTMENT PROPERTY" shall mean all Securities (whether certificated or
uncertificated), Security Entitlements, Securities Accounts, Commodity Contracts
and
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Commodity Accounts of any Grantor, whether now owned or hereafter acquired by
any Grantor.
"LICENSE" shall mean any Patent License, Trademark License, Copyright
License or other license or sublicense to which any Grantor is a party,
including those listed on Schedule III (other than those license agreements in
existence on the date hereof and listed on Schedule III and those license
agreements entered into after the date hereof, which by their terms or
applicable law prohibit assignment or a grant of a security interest by such
Grantor as licensee thereunder).
"LOCKBOX AND DEPOSITORY AGREEMENT" shall mean a Lockbox and Depository
Agreement substantially in the form of Annex 1 hereto among a Grantor, the
Collateral Agent and a Sub-Agent with such changes thereto, if any, as may be
approved by the Collateral Agent.
"LOCKBOX SYSTEM" shall have the meaning assigned to such term in Section
5.01.
"OBLIGATIONS" shall have the meaning assigned to such term in the
preliminary statement of this Agreement.
"PATENT LICENSE" shall mean any written agreement, now or hereafter in
effect, granting to any Grantor any right to make, use or sell any invention on
which a Patent, now or hereafter owned by any third party, is in existence, and
all rights of any Grantor under any such agreement.
"PATENTS" shall mean all of the following now owned or hereafter acquired
by any Grantor: (a) all letters patent of the United States or any other
country, all registrations and recordings thereof, and all applications for
letters patent of the United States or any other country, including
registrations, recordings and pending applications in the United States Patent
and Trademark Office (or any successor or any similar offices in any other
country), including those listed on Schedule IV, and (b) all reissues,
continuations, divisions, continuations-in-part, renewals or extensions thereof,
and the inventions disclosed or claimed therein, including the right to make,
use and/or sell the inventions disclosed or claimed therein.
"PERFECTION CERTIFICATE" shall mean a certificate substantially in the
form of Annex 2 hereto, completed and supplemented with the schedules and
attachments contemplated thereby, and duly executed by a Financial Officer and
the chief legal officer of the Borrower.
"PROCEEDS" shall mean any consideration received from the sale, exchange,
license, lease or other disposition of any asset or property that constitutes
Collateral, any value received as a consequence of the possession of any
Collateral and any payment received from any insurer or other person or entity
as a result of the destruction, loss, theft, damage
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or other involuntary conversion of whatever nature of any asset or property
which constitutes Collateral, and shall include (a) all cash and negotiable
instruments received by or held on behalf of the Collateral Agent pursuant to
the Lockbox System , (b) any claim of any Grantor against any third party for
(and the right to xxx and recover for and the rights to damages or profits due
or accrued arising out of or in connection with) (i) past, present or future
infringement of any Patent now or hereafter owned by any Grantor, or licensed
under a Patent License, (ii) past, present or future infringement or dilution of
any Trademark now or hereafter owned by any Grantor or licensed under a
Trademark License or injury to the goodwill associated with or symbolized by any
Trademark now or hereafter owned by any Grantor, (iii) past, present or future
breach of any License and (iv) past, present or future infringement of any
Copyright now or hereafter owned by any Grantor or licensed under a Copyright
License and (c) any and all other amounts from time to time paid or payable
under or in connection with any of the Collateral.
"SECURED PARTIES" shall mean (a) the Lenders, (b) the Administrative
Agent, (c) the Collateral Agent, (d) the Issuing Bank, (e) each counterparty to
a Hedging Agreement entered into with the Borrower if such counterparty was a
Lender (or an Affiliate of a Lender) at the time the Hedging Agreement was
entered into, (f) the beneficiaries of each indemnification obligation
undertaken by any Grantor under any Loan Document and (g) the successors and
assigns of each of the foregoing.
"SECURITIES" shall mean any obligations of an issuer or any shares,
participations or other interests in an issuer or in property or an enterprise
of an issuer which (a) are represented by a certificate representing a security
in bearer or registered form, or the transfer of which may be registered upon
books maintained for that purpose by or on behalf of the issuer, (b) are one of
a class or series or by its terms is divisible into a class or series of shares,
participations, interests or obligations and (c)(i) are, or are of a type, dealt
with or traded on securities exchanges or securities markets or (ii) are a
medium for investment and by their terms expressly provide that they are a
security governed by Article 8 of the Uniform Commercial Code (other than as
expressly excluded by Section 8-103(c), (e) and (f) of such Article).
"SECURITIES ACCOUNT" shall mean an account to which a Financial Asset is
or may be credited in accordance with an agreement under which the person
maintaining the account undertakes to treat the person for whom the account is
maintained as entitled to exercise rights that comprise the Financial Asset.
"SECURITY ENTITLEMENTS" shall mean the rights and property interests of an
Entitlement Holder with respect to a Financial Asset.
"SECURITY INTEREST" shall have the meaning assigned to such term in
Section 2.01.
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"SECURITIES INTERMEDIARY" shall mean (a) a clearing corporation or (b) a
person, including a bank or broker, that in the ordinary course of its business
maintains securities accounts for others and is acting in that capacity.
"SUB-AGENT" shall mean a financial institution which shall have delivered
to the Collateral Agent an executed Lockbox and Depository Agreement.
"TRADEMARK LICENSE" shall mean any written agreement, now or hereafter in
effect, granting to any Grantor any right to use any Trademark now or hereafter
owned by any third party, and all rights of any Grantor under any such
agreement.
"TRADEMARKS" shall mean all of the following now owned or hereafter
acquired by any Grantor: (a) all trademarks, service marks, trade names,
corporate names, company names, business names, fictitious business names, trade
styles, trade dress, logos, other source or business identifiers, designs and
general intangibles of like nature, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all registration and
recording applications filed in connection therewith, including registrations
and registration applications in the United States Patent and Trademark Office,
any State of the United States or any similar offices in any other country or
any political subdivision thereof, and all extensions or renewals thereof,
including those listed on Schedule V, (b) all goodwill associated therewith or
symbolized thereby and (c) all other assets, rights and interests that uniquely
reflect or embody such goodwill.
SECTION 1.03. RULES OF INTERPRETATION. The rules of interpretation
specified in Section 1.02 of the Credit Agreement shall be applicable to this
Agreement.
ARTICLE II
SECURITY INTEREST
SECTION 2.01. SECURITY INTEREST. As security for the payment or
performance, as the case may be, in full of the Obligations, each Grantor hereby
bargains, sells, conveys, assigns, sets over, mortgages, pledges, hypothecates
and transfers to the Collateral Agent, its successors and assigns, for the
ratable benefit of the Secured Parties, and hereby grants to the Collateral
Agent, its successors and assigns, for the ratable benefit of the Secured
Parties, a security interest in, all of such Grantor's right, title and interest
in, to and under the Collateral (the "SECURITY INTEREST"). Without limiting the
foregoing, the Collateral Agent is hereby authorized to file one or more
financing statements (including fixture filings), continuation statements,
filings with the United States Patent and Trademark Office or United States
Copyright Office (or any successor office or any similar office in any other
country) or other documents for the purpose of perfecting, confirming,
continuing, enforcing or protecting the Security Interest granted by each
Grantor, without the signature of any
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Grantor, and naming any Grantor or the Grantors as debtors and the Collateral
Agent as secured party.
SECTION 2.02. NO ASSUMPTION OF LIABILITY. The Security Interest is granted
as security only and shall not subject the Collateral Agent or any other Secured
Party to, or in any way alter or modify, any obligation or liability of any
Grantor with respect to or arising out of the Collateral.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Grantors jointly and severally represent and warrant to the Collateral
Agent and the Secured Parties that:
SECTION 3.01. TITLE AND AUTHORITY. Each Grantor has good and valid rights
in and title to the Collateral with respect to which it has purported to grant a
Security Interest hereunder and has full power and authority to grant to the
Collateral Agent the Security Interest in such Collateral pursuant hereto and to
execute, deliver and perform its obligations in accordance with the terms of
this Agreement, without the consent or approval of any other person other than
any consent or approval which has been obtained.
SECTION 3.02. FILINGS. (a) The Perfection Certificate has been duly
prepared, completed and executed and the information set forth therein is
correct and complete. Fully executed Uniform Commercial Code financing
statements (including fixture filings, as applicable) or other appropriate
filings, recordings or registrations containing a description of the Collateral
have been delivered to the Collateral Agent for filing in each governmental,
municipal or other office specified in Schedule 6 to the Perfection Certificate,
which are all the filings, recordings and registrations (other than filings
required to be made in the United States Patent and Trademark Office and the
United States Copyright Office in order to perfect the Security Interest in
Collateral consisting of United States Patents, Trademarks and Copyrights) that
are necessary to publish notice of and protect the validity of and to establish
a legal, valid and perfected security interest in favor of the Collateral Agent
(for the ratable benefit of the Secured Parties) in respect of all Collateral in
which the Security Interest may be perfected by filing, recording or
registration in the United States (or any political subdivision thereof) and its
territories and possessions, and no further or subsequent filing, refiling,
recording, rerecording, registration or reregistration is necessary in any such
jurisdiction, except as provided under applicable law with respect to the filing
of continuation statements.
(b) Each Grantor represents and warrants that fully executed security
agreements in the form hereof and containing a description of all Collateral
consisting of Intellectual
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Property with respect to United States Patents and United States registered
Trademarks (and Trademarks for which United States registration applications are
pending) and United Sates registered Copyrights have been delivered to the
Collateral Agent for recording by the United States Patent and Trademark Office
and the United States Copyright Office pursuant to 35 U.S.C. ss. 261, 15 U.S.C.
ss. 1060 or 17 U.S.C. ss. 205 and the regulations thereunder, as applicable, and
otherwise as may be required pursuant to the laws of any other necessary
jurisdiction, to protect the validity of and to establish a legal, valid and
perfected security interest in favor of the Collateral Agent (for the ratable
benefit of the Secured Parties) in respect of all Collateral consisting of
Patents, Trademarks and Copyrights in which a security interest may be perfected
by filing, recording or registration in the United States (or any political
subdivision thereof) and its territories and possessions, or in any other
necessary jurisdiction, and no further or subsequent filing, refiling,
recording, rerecording, registration or reregistration is necessary (other than
such actions as are necessary to perfect the Security Interest with respect to
any Collateral consisting of Patents, Trademarks and Copyrights (or registration
or application for registration thereof) acquired or developed after the date
hereof).
SECTION 3.03. VALIDITY OF SECURITY INTEREST. The Security Interest
constitutes (a) a legal and valid security interest in all the Collateral
securing the payment and performance of the Obligations, (b) subject to the
filings described in Section 3.02 above, a perfected security interest in all
Collateral in which a security interest may be perfected by filing, recording or
registering a financing statement or analogous document in the United States (or
any political subdivision thereof) and its territories and possessions pursuant
to the Uniform Commercial Code or other applicable law in such jurisdictions and
(c) a security interest that shall be perfected in all Collateral in which a
security interest may be perfected upon the receipt and recording of this
Agreement with the United States Patent and Trademark Office and the United
States Copyright Office, as applicable. The Security Interest is and shall be
prior to any other Lien on any of the Collateral, other than Liens expressly
permitted to be prior to the Security Interest pursuant to Section 6.02 of the
Credit Agreement.
SECTION 3.04. ABSENCE OF OTHER LIENS. The Collateral is owned by the
Grantors free and clear of any Lien, except for Liens expressly permitted
pursuant to Section 6.02 of the Credit Agreement. No Grantor has filed or
consented to the filing of (a) any financing statement or analogous document
under the Uniform Commercial Code or any other applicable laws covering any
Collateral, (b) any assignment in which any Grantor assigns any Collateral or
any security agreement or similar instrument covering any Collateral with the
United States Patent and Trademark Office or the United States Copyright Office,
(c) any notice under the Assignment of Claims Act or (d) any assignment in which
any Grantor assigns any Collateral or any security agreement or similar
instrument covering any Collateral with any foreign governmental, municipal or
other office, which financing statement or analogous document, assignment,
security agreement or similar instrument is
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still in effect, except, in each case, for Liens expressly permitted pursuant to
Section 6.02 of the Credit Agreement.
ARTICLE IV
COVENANTS
SECTION 4.01. CHANGE OF NAME; LOCATION OF COLLATERAL; RECORDS; PLACE OF
BUSINESS. (a) Each Grantor agrees promptly to notify the Collateral Agent in
writing of any change (i) in its corporate name or in any trade name used to
identify it in the conduct of its business or in the ownership of its
properties, (ii) in the location of its chief executive office, its principal
place of business, any office in which it maintains books or records relating to
Collateral owned by it or any office or facility at which Collateral owned by it
is located (including the establishment of any such new office or facility),
(iii) in its identity or corporate structure or (iv) in its Federal Taxpayer
Identification Number. Each Grantor agrees not to effect or permit any change
referred to in the preceding sentence unless all filings have been made under
the Uniform Commercial Code or otherwise that are required in order for the
Collateral Agent to continue at all times following such change to have a valid,
legal and perfected first priority security interest in all the Collateral. Each
Grantor agrees promptly to notify the Collateral Agent if any material portion
of the Collateral owned or held by such Grantor is damaged or destroyed.
(b) Each Grantor agrees to maintain, at its own cost and expense, such
complete and accurate records with respect to the Collateral owned by it as is
consistent with its current practices and in accordance with such prudent and
standard practices used in industries that are the same as or similar to those
in which such Grantor is engaged, but in any event to include complete
accounting records indicating all payments and proceeds received with respect to
any part of the Collateral, and, at such time or times as the Collateral Agent
may reasonably request, promptly to prepare and deliver to the Collateral Agent
a duly certified schedule or schedules in form and detail satisfactory to the
Collateral Agent showing the identity, amount and location of any and all
Collateral.
SECTION 4.02. PROTECTION OF SECURITY. Each Grantor shall, at its own cost
and expense, take any and all actions necessary to defend title to the
Collateral against all persons and to defend the Security Interest of the
Collateral Agent in the Collateral and the priority thereof against any Lien not
expressly permitted pursuant to Section 6.02 of the Credit Agreement.
SECTION 4.03. FURTHER ASSURANCES. Each Grantor agrees, at its own expense,
to execute, acknowledge, deliver and cause to be duly filed all such further
instruments and documents and take all such actions as the Collateral Agent may
from time to time reasonably request to better assure, preserve, protect and
perfect the Security Interest and the
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rights and remedies created hereby, including the payment of any fees and taxes
required in connection with the execution and delivery of this Agreement, the
granting of the Security Interest and the filing of any financing statements
(including fixture filings) or other documents in connection herewith or
therewith. If any amount payable to any Grantor under or in connection with any
of the Collateral shall be or become evidenced by any promissory note or other
instrument, such note or instrument in excess of $200,000 shall be immediately
pledged and delivered to the Collateral Agent, duly endorsed in a manner
satisfactory to the Collateral Agent, PROVIDED that promissory notes or
instruments evidencing advances permitted under Section 6.04(d) of the Credit
Agreement will not be required to be so pledged.
Without limiting the generality of the foregoing, each Grantor hereby
authorizes the Collateral Agent, with prompt notice thereof to the Grantors, to
supplement this Agreement by supplementing Schedule II, III, IV or V hereto or
adding additional schedules hereto to specifically identify any asset or item
that may constitute Copyrights, Licenses, Patents or Trademarks; PROVIDED,
HOWEVER, that any Grantor shall have the right, exercisable within 10 days after
it has been notified by the Collateral Agent of the specific identification of
such Collateral, to advise the Collateral Agent in writing of any inaccuracy of
the representations and warranties made by such Grantor hereunder with respect
to such Collateral. Each Grantor agrees that it will use its best efforts to
take such action as shall be necessary in order that all representations and
warranties hereunder shall be true and correct in all material respects with
respect to such Collateral within 30 days after the date it has been notified by
the Collateral Agent of the specific identification of such Collateral.
SECTION 4.04. INSPECTION AND VERIFICATION. The Collateral Agent and such
persons as the Collateral Agent may reasonably designate shall have the right,
at the Grantors' own cost and expense, to inspect the Collateral, all records
related thereto (and to make extracts and copies from such records) and the
premises upon which any of the Collateral is located, to discuss the Grantors'
affairs with the officers of the Grantors and their independent accountants and
to verify under reasonable procedures, in accordance with Section 5.11 of the
Credit Agreement, the validity, amount, quality, quantity, value, condition and
status of, or any other matter relating to, the Collateral, including, in the
case of Accounts or Collateral in the possession of any third person, by
contacting Account Debtors or the third person possessing such Collateral for
the purpose of making such a verification. The Collateral Agent shall have the
absolute right to share any information it gains from such inspection or
verification with any Secured Party (it being understood that any such
information shall be deemed to be "Information" subject to the provisions of
Section 9.16 of the Credit Agreement).
SECTION 4.05. TAXES; ENCUMBRANCES. At its option, the Collateral Agent may
discharge past due taxes, assessments, charges, fees, Liens, security interests
or other encumbrances at any time levied or placed on the Collateral and not
permitted pursuant to Section 6.02 of the Credit Agreement, and may pay for the
maintenance and preservation of
13
the Collateral to the extent any Grantor fails to do so as required by the
Credit Agreement or this Agreement, and each Grantor jointly and severally
agrees to reimburse the Collateral Agent on demand for any payment made or any
expense incurred by the Collateral Agent pursuant to the foregoing
authorization; PROVIDED, HOWEVER, that nothing in this Section 4.06 shall be
interpreted as excusing any Grantor from the performance of, or imposing any
obligation on the Collateral Agent or any Secured Party to cure or perform, any
covenants or other promises of any Grantor with respect to taxes, assessments,
charges, fees, liens, security interests or other encumbrances and maintenance
as set forth herein or in the other Loan Documents.
SECTION 4.06. ASSIGNMENT OF SECURITY INTEREST. If at any time any Grantor
shall take a security interest in any property of an Account Debtor or any other
person to secure payment and performance of an Account, such Grantor shall
promptly assign such security interest to the Collateral Agent. Such assignment
need not be filed of public record unless necessary to continue the perfected
status of the security interest against creditors of and transferees from the
Account Debtor or other person granting the security interest.
SECTION 4.07. CONTINUING OBLIGATIONS OF THE GRANTORS. Each Grantor shall
remain liable to observe and perform all the conditions and obligations to be
observed and performed by it under each contract, agreement or instrument
relating to the Collateral, all in accordance with the terms and conditions
thereof, and each Grantor jointly and severally agrees to indemnify and hold
harmless the Collateral Agent and the Secured Parties from and against any and
all liability for such performance.
SECTION 4.08. USE AND DISPOSITION OF COLLATERAL. None of the Grantors
shall make or permit to be made an assignment, pledge or hypothecation of the
Collateral or shall grant any other Lien in respect of the Collateral or permit
any notice to be filed under the Assignment of Claims Act except for any such
notice in favor of the Collateral Agent, except as expressly permitted by
Section 6.02 of the Credit Agreement. None of the Grantors shall make or permit
to be made any transfer of the Collateral and each Grantor shall remain at all
times in possession of the Collateral owned by it, except that (a) Inventory may
be sold in the ordinary course of business and (b) unless and until the
Collateral Agent shall notify the Grantors that an Event of Default shall have
occurred and be continuing and that during the continuance thereof the Grantors
shall not sell, convey, lease, assign, transfer or otherwise dispose of any
Collateral (which notice may be given by telephone if promptly confirmed in
writing), the Grantors may use and dispose of the Collateral in any lawful
manner not inconsistent with the provisions of this Agreement, the Credit
Agreement or any other Loan Document. Without limiting the generality of the
foregoing, each Grantor agrees that it shall not permit any Inventory in excess
of $500,000 to be in the possession or control of any warehouseman, bailee,
agent or processor at any time unless such warehouseman, bailee, agent or
processor shall have been notified of the Security Interest and shall have
agreed in writing to hold the Inventory subject to the Security Interest and the
instructions
14
of the Collateral Agent and to waive and release any Lien held by it with
respect to such Inventory, whether arising by operation of law or otherwise.
SECTION 4.09. LIMITATION ON MODIFICATION OF ACCOUNTS. None of the Grantors
will, without the Collateral Agent's prior written consent, grant any extension
of the time of payment of any of the Accounts Receivable, compromise, compound
or settle the same for less than the full amount thereof, release, wholly or
partly, any person liable for the payment thereof or allow any credit or
discount whatsoever thereon, other than extensions, credits, discounts,
compromises or settlements granted or made in the ordinary course of business
and consistent with its current practices and in accordance with such prudent
and standard practices used in industries that are the same as or similar to
those in which such Grantor is engaged.
SECTION 4.10. INSURANCE. The Grantors, at their own expense, shall
maintain or cause to be maintained insurance covering physical loss or damage to
the Inventory and Equipment in accordance with Section 5.02 of the Credit
Agreement. Each Grantor irrevocably makes, constitutes and appoints the
Collateral Agent (and all officers, employees or agents designated by the
Collateral Agent) as such Grantor's true and lawful agent (and attorney-in-fact)
for the purpose, during the continuance of an Event of Default, of making,
settling and adjusting claims in respect of Collateral under policies of
insurance, endorsing the name of such Grantor on any check, draft, instrument or
other item of payment for the proceeds of such policies of insurance and for
making all determinations and decisions with respect thereto. In the event that
any Grantor at any time or times shall fail to obtain or maintain any of the
policies of insurance required hereby or to pay any premium in whole or part
relating thereto, the Collateral Agent may, without waiving or releasing any
obligation or liability of the Grantors hereunder or any Event of Default, in
its sole discretion, obtain and maintain such policies of insurance and pay such
premium and take any other actions with respect thereto as the Collateral Agent
deems advisable. All sums disbursed by the Collateral Agent in connection with
this Section 4.11, including reasonable attorneys' fees, court costs, expenses
and other charges relating thereto, shall be payable, upon demand, by the
Grantors to the Collateral Agent and shall be additional Obligations secured
hereby.
SECTION 4.11. LEGEND. Each Grantor shall legend, in form and manner
reasonably satisfactory to the Collateral Agent, its Accounts Receivable and its
books, records and documents evidencing or pertaining thereto with an
appropriate reference to the fact that such Accounts Receivable have been
assigned to the Collateral Agent for the benefit of the Secured Parties and that
the Collateral Agent has a security interest therein.
SECTION 4.12. COVENANTS REGARDING PATENT, TRADEMARK AND COPYRIGHT
COLLATERAL. (a) Each Grantor agrees that it will not, nor will it permit any of
its licensees to, do any act, or omit to do any act, whereby any Patent which is
material to the conduct of such Grantor's business may become invalidated or
dedicated to the public, and agrees that it shall continue
15
to xxxx any products covered by a Patent with the relevant patent number as
necessary and sufficient to establish and preserve its maximum rights under
applicable patent laws.
(b) Each Grantor (either itself or through its licensees or its
sublicensees) will, for each Trademark material to the conduct of such Grantor's
business, (i) maintain such Trademark in full force free from any claim of
abandonment or invalidity for non-use, (ii) maintain the quality of products and
services offered under such Trademark, (iii) display such Trademark with notice
of Federal or foreign registration to the extent necessary and sufficient to
establish and preserve its maximum rights under applicable law and (iv) not
knowingly use or knowingly permit the use of such Trademark in violation of any
third party rights.
(c) Each Grantor (either itself or through licensees) will, for each work
covered by a material Copyright, continue to publish, reproduce, display, adopt
and distribute the work with appropriate copyright notice as necessary and
sufficient to establish and preserve its maximum rights under applicable
copyright laws.
(d) Each Grantor shall notify the Collateral Agent immediately if it knows
or has reason to know that any Patent, Trademark or Copyright material to the
conduct of its business may become abandoned, lost or dedicated to the public,
or of any adverse determination or development (including the institution of, or
any such determination or development in, any proceeding in the United States
Patent and Trademark Office, United States Copyright Office or any court or
similar office of any country) regarding such Grantor's ownership of any Patent,
Trademark or Copyright, its right to register the same, or to keep and maintain
the same.
(e) In no event shall any Grantor, either itself or through any agent,
employee, licensee or designee, file an application for any Patent, Trademark or
Copyright (or for the registration of any Trademark or Copyright) with the
United States Patent and Trademark Office, United States Copyright Office or any
office or agency in any political subdivision of the United States or in any
other country or any political subdivision thereof, unless it promptly informs
the Collateral Agent, and, upon request of the Collateral Agent, executes and
delivers any and all agreements, instruments, documents and papers as the
Collateral Agent may request to evidence the Collateral Agent's security
interest in such Patent, Trademark or Copyright, and each Grantor hereby
appoints the Collateral Agent as its attorney-in-fact to execute and file such
writings for the foregoing purposes, all acts of such attorney being hereby
ratified and confirmed; such power, being coupled with an interest, is
irrevocable.
(f) Each Grantor will take all necessary steps that it deems appropriate
under the circumstances and are consistent with the practice in any proceeding
before the United States Patent and Trademark Office, United States Copyright
Office or any office or agency in any political subdivision of the United States
or in any other country or any political subdivision
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thereof, to maintain and pursue each material application relating to the
Patents, Trademarks and/or Copyrights (and to obtain the relevant grant or
registration) and to maintain each issued Patent and each registration of the
Trademarks and Copyrights that is material to the conduct of any Grantor's
business, including timely filings of applications for renewal, affidavits of
use, affidavits of incontestability and payment of maintenance fees, and, if
consistent with good business judgment, to initiate opposition, interference and
cancelation proceedings against third parties.
(g) In the event that any Grantor has reason to believe that any
Collateral consisting of a Patent, Trademark or Copyright material to the
conduct of any Grantor's business has been or is about to be infringed,
misappropriated or diluted by a third party, such Grantor promptly shall notify
the Collateral Agent and shall, if consistent with good business judgment,
promptly xxx for infringement, misappropriation or dilution and to recover any
and all damages for such infringement, misappropriation or dilution, and take
such other actions as are appropriate under the circumstances to protect such
Collateral. Such Grantor may discontinue or settle any such suit or other action
if the Grantor deems such discontinuance or settlement to be appropriate in its
reasonable business judgment.
(h) Upon and during the continuance of an Event of Default, each Grantor
shall, at the request of the Collateral Agent, use its best efforts to obtain
all requisite consents or approvals by the licensor of each Copyright License,
Patent License or Trademark License to effect the assignment of all of such
Grantor's right, title and interest thereunder to the Collateral Agent or its
designee.
ARTICLE V
COLLECTIONS
SECTION 5.01. LOCKBOX SYSTEM. (a) The Grantors have established in the
name of the Collateral Agent, and subject to the control of the Collateral Agent
pursuant to the Lockbox and Depository Agreements, for the ratable benefit of
the Collateral Agent and the other Secured Parties, a system of lockboxes and
related deposit accounts (the "LOCKBOX SYSTEM") with one or more financial
institutions that are reasonably satisfactory to the Collateral Agent into which
the Proceeds of all Accounts Receivable and Inventory shall be deposited and
forwarded to the Collateral Agent in accordance with the Lockbox and Depository
Agreements.
(b) All Proceeds of Inventory and Accounts Receivable that have been
received on any Business Day through the Lockbox System will be transferred into
the Concentration Account on such Business Day to the extent required by the
applicable Lockbox and Depository Agreement. All Proceeds stemming from the sale
of a substantial portion of the Collateral (other than Proceeds of Accounts)
that have been received by a Grantor on any
17
Business Day will be transferred into the Concentration Account within one
Business Day. All Proceeds received on any Business Day by the Collateral Agent
pursuant to Section 5.02 will be transferred into the Concentration Account on
such Business Day.
(c) The Concentration Account is, and shall remain, under the sole
dominion and control of the Collateral Agent. Each Grantor acknowledges and
agrees that (i) such Grantor has no right of withdrawal from the Concentration
Account, (ii) the funds on deposit in the Concentration Account shall continue
to be collateral security for all of the Obligations and (iii) upon the
occurrence and during the continuance of an Event of Default, at the Collateral
Agent's election, the funds on deposit in the Concentration Account shall be
applied as provided in Section 6.02.
(d) Effective upon notice to the Grantors from the Collateral Agent after
the occurrence and during the continuance of an Event of Default (which notice
may be given by telephone if promptly confirmed in writing), the Concentration
Account will, without any further action on the part of any Grantor, the
Collateral Agent or any Sub-Agent, convert into a closed lockbox account under
the exclusive dominion and control of the Collateral Agent in which funds are
held subject to the rights of the Collateral Agent hereunder. Each Grantor
irrevocably authorizes the Collateral Agent to notify each Sub-Agent (i) of the
occurrence of an Event of Default and (ii) of the matters referred to in this
paragraph (d). Following the occurrence of an Event of Default, the Collateral
Agent may instruct each Sub-Agent to transfer immediately all funds held in each
deposit account to the Concentration Account.
SECTION 5.02. COLLECTIONS. (a) Each Grantor agrees (i) to notify and
direct promptly each Account Debtor and every other person obligated to make
payments on Accounts Receivable or in respect of any Inventory to make all such
payments directly to the Lockbox System established in accordance with Section
5.01, (ii) to use all reasonable efforts to cause each Account Debtor and every
other person identified in clause (i) above to make all payments with respect to
Accounts Receivable and Inventory directly to such Lockbox System and (iii) to
deposit all payments received by it on account of Accounts Receivable and
Inventory, whether in the form of cash, checks, notes, drafts, bills of
exchange, money orders or otherwise, in the Lockbox System in precisely the form
in which received (but with any endorsements of such Grantor necessary for
deposit or collection) within one Business Day of receipt thereof, and until
they are so deposited such payments shall be held in trust by such Grantor for
and as the property of the Collateral Agent.
(b) Without the prior written consent of the Collateral Agent, no Grantor
shall, in a manner adverse to the Lenders, change the general instructions given
to Account Debtors in respect of payment on Accounts to be deposited in the
Lockbox System. Until the Collateral Agent shall have advised the Grantors to
the contrary, each Grantor shall, and the Collateral Agent hereby authorizes
each Grantor to, enforce and collect all amounts owing on the Inventory and
Accounts Receivable, for the benefit and on behalf of the Collateral Agent and
the other Secured Parties; PROVIDED, HOWEVER, that such privilege may at the
18
option of the Collateral Agent be terminated upon the occurrence and during the
continuance of any Event of Default.
SECTION 5.03. POWER OF ATTORNEY. Each Grantor irrevocably makes,
constitutes and appoints the Collateral Agent (and all officers, employees or
agents designated by the Collateral Agent) as such Grantor's true and lawful
agent and attorney-in-fact, and in such capacity the Collateral Agent shall have
the right, with power of substitution for each Grantor and in each Grantor's
name or otherwise, for the use and benefit of the Collateral Agent and the
Secured Parties, upon the occurrence and during the continuance of an Event of
Default (a) to receive, endorse, assign and/or deliver any and all notes,
acceptances, checks, drafts, money orders or other evidences of payment relating
to the Collateral or any part thereof; (b) to demand, collect, receive payment
of, give receipt for and give discharges and releases of all or any of the
Collateral; (c) to sign the name of any Grantor on any invoice or xxxx of lading
relating to any of the Collateral; (d) to send verifications of Accounts
Receivable to any Account Debtor; (e) to commence and prosecute any and all
suits, actions or proceedings at law or in equity in any court of competent
jurisdiction to collect or otherwise realize on all or any of the Collateral or
to enforce any rights in respect of any Collateral; (f) to settle, compromise,
compound, adjust or defend any actions, suits or proceedings relating to all or
any of the Collateral; (g) to notify, or to require any Grantor to notify,
Account Debtors to make payment directly to the Collateral Agent; and (h) to
use, sell, assign, transfer, pledge, make any agreement with respect to or
otherwise deal with all or any of the Collateral, and to do all other acts and
things necessary to carry out the purposes of this Agreement, as fully and
completely as though the Collateral Agent were the absolute owner of the
Collateral for all purposes; PROVIDED, HOWEVER, that nothing herein contained
shall be construed as requiring or obligating the Collateral Agent or any
Secured Party to make any commitment or to make any inquiry as to the nature or
sufficiency of any payment received by the Collateral Agent or any Secured
Party, or to present or file any claim or notice, or to take any action with
respect to the Collateral or any part thereof or the moneys due or to become due
in respect thereof or any property covered thereby, and no action taken or
omitted to be taken by the Collateral Agent or any Secured Party with respect to
the Collateral or any part thereof shall give rise to any defense, counterclaim
or offset in favor of any Grantor or to any claim or action against the
Collateral Agent or any Secured Party. It is understood and agreed that the
appointment of the Collateral Agent as the agent and attorney-in-fact of the
Grantors for the purposes set forth above is coupled with an interest and is
irrevocable. The provisions of this Section shall in no event relieve any
Grantor of any of its obligations hereunder or under any other Loan Document
with respect to the Collateral or any part thereof or impose any obligation on
the Collateral Agent or any Secured Party to proceed in any particular manner
with respect to the Collateral or any part thereof, or in any way limit the
exercise by the Collateral Agent or any Secured Party of any other or further
right which it may have on the date of this Agreement or hereafter, whether
hereunder, under any other Loan Document, by law or otherwise.
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ARTICLE VI
REMEDIES
SECTION 6.01. REMEDIES UPON DEFAULT. Upon the occurrence and during the
continuance of an Event of Default, each Grantor agrees to deliver each item of
Collateral to the Collateral Agent on demand, and it is agreed that the
Collateral Agent shall have the right to take any of or all the following
actions at the same or different times: (a) with respect to any Collateral
consisting of Intellectual Property, on demand, to cause the Security Interest
to become an assignment, transfer and conveyance of any of or all such
Collateral by the applicable Grantors to the Collateral Agent, or to license or
sublicense, whether general, special or otherwise, and whether on an exclusive
or non-exclusive basis, any such Collateral throughout the world on such terms
and conditions and in such manner as the Collateral Agent shall determine (other
than in violation of any then-existing licensing arrangements to the extent that
waivers cannot be obtained), and (b) with or without legal process and with or
without prior notice or demand for performance, to take possession of the
Collateral and without liability for trespass to enter any premises where the
Collateral may be located for the purpose of taking possession of or removing
the Collateral and, generally, to exercise any and all rights afforded to a
secured party under the Uniform Com mercial Code or other applicable law.
Without limiting the generality of the foregoing, each Grantor agrees that the
Collateral Agent shall have the right, subject to the mandatory requirements of
applicable law, to sell or otherwise dispose of all or any part of the
Collateral, at public or private sale or at any broker's board or on any
securities exchange, for cash, upon credit or for future delivery as the
Collateral Agent shall deem appropriate. The Collateral Agent shall be
authorized at any such sale (if it deems it advisable to do so) to restrict the
prospective bidders or purchasers to persons who will represent and agree that
they are purchasing the Collateral for their own account for investment and not
with a view to the distribution or sale thereof, and upon consummation of any
such sale the Collateral Agent shall have the right to assign, transfer and
deliver to the purchaser or purchasers thereof the Collateral so sold. Each such
purchaser at any such sale shall hold the property sold absolutely, free from
any claim or right on the part of any Grantor, and each Grantor hereby waives
(to the extent permitted by law) all rights of redemption, stay and appraisal
which such Grantor now has or may at any time in the future have under any rule
of law or statute now existing or hereafter enacted.
The Collateral Agent shall give the Grantors 10 days' written notice
(which each Grantor agrees is reasonable notice within the meaning of Section
9-504(3) of the Uniform Commercial Code as in effect in the State of New York or
its equivalent in other jurisdictions) of the Collateral Agent's intention to
make any sale of Collateral. Such notice, in the case of a public sale, shall
state the time and place for such sale and, in the case of a sale at a broker's
board or on a securities exchange, shall state the board or exchange at which
such sale is to be made and the day on which the Collateral, or portion thereof,
will first be offered for sale at such board or exchange. Any such public sale
shall be held at such
20
time or times within ordinary business hours and at such place or places as the
Collateral Agent may fix and state in the notice (if any) of such sale. At any
such sale, the Collateral, or portion thereof, to be sold may be sold in one lot
as an entirety or in separate parcels, as the Collateral Agent may (in its sole
and absolute discretion) determine. The Collateral Agent shall not be obligated
to make any sale of any Collateral if it shall determine not to do so,
regardless of the fact that notice of sale of such Collateral shall have been
given. The Collateral Agent may, without notice or publication, adjourn any
public or private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for sale, and such sale may, without
further notice, be made at the time and place to which the same was so
adjourned. In case any sale of all or any part of the Collateral is made on
credit or for future delivery, the Collateral so sold may be retained by the
Collateral Agent until the sale price is paid by the purchaser or purchasers
thereof, but the Collateral Agent shall not incur any liability in case any such
purchaser or purchasers shall fail to take up and pay for the Collateral so sold
and, in case of any such failure, such Collateral may be sold again upon like
notice. At any public (or, to the extent permitted by law, private) sale made
pursuant to this Section, any Secured Party may bid for or purchase, free (to
the extent permitted by law) from any right of redemption, stay, valuation or
appraisal on the part of any Grantor (all said rights being also hereby waived
and released to the extent permitted by law), the Collateral or any part thereof
offered for sale and may make payment on account thereof by using any claim then
due and payable to such Secured Party from any Grantor as a credit against the
purchase price, and such Secured Party may, upon compliance with the terms of
sale, hold, retain and dispose of such property without further accountability
to any Grantor therefor. For purposes hereof, a written agreement to purchase
the Collateral or any portion thereof shall be treated as a sale thereof; the
Collateral Agent shall be free to carry out such sale pursuant to such agreement
and no Grantor shall be entitled to the return of the Collateral or any portion
thereof subject thereto, notwithstanding the fact that after the Collateral
Agent shall have entered into such an agreement all Events of Default shall have
been remedied and the Obligations paid in full. As an alternative to exercising
the power of sale herein conferred upon it, the Collateral Agent may proceed by
a suit or suits at law or in equity to foreclose this Agreement and to sell the
Collateral or any portion thereof pursuant to a judgment or decree of a court or
courts having competent jurisdiction or pursuant to a proceeding by a
court-appointed receiver.
SECTION 6.02. APPLICATION OF PROCEEDS. The Collateral Agent shall apply
the proceeds of any collection or sale of the Collateral, as well as any
Collateral consisting of cash, as follows:
FIRST, to the payment of all costs and expenses incurred by the
Administrative Agent or the Collateral Agent (in its capacity as such
hereunder or under any other Loan Document) in connection with such
collection or sale or otherwise in connection with this Agreement, any of
the Obligations, including all court costs and the reasonable fees and
expenses of its agents and legal counsel, the repayment of all advances
made by the Collateral Agent hereunder or under any
21
other Loan Document on behalf of any Grantor and any other reasonable
costs or expenses incurred in connection with the exercise of any right or
remedy hereunder or under any other Loan Document;
SECOND, to the payment in full of the Obligations (the amounts so
applied to be distributed among the Secured Parties pro rata in accordance
with the amounts of the Obligations owed to them on the date of any such
distribution); and
THIRD, to the Grantors, their successors or assigns, or as a court
of competent jurisdiction may otherwise direct.
The Administrative Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of the Collateral by the Collateral Agent (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the Collateral Agent or of the officer making the sale shall be a
sufficient discharge to the purchaser or purchasers of the Collateral so sold
and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the Collateral Agent
or such officer or be answerable in any way for the misapplication thereof.
SECTION 6.03. GRANT OF LICENSE TO USE INTELLECTUAL PROPERTY. For the
purpose of enabling the Collateral Agent to exercise rights and remedies under
this Article at such time as the Collateral Agent shall be lawfully entitled to
exercise such rights and remedies, each Grantor hereby grants to the Collateral
Agent an irrevocable, non-exclusive license (exercisable without payment of
royalty or other compensation to the Grantors) to use, license or sub-license
any of the Collateral consisting of Intellectual Property now owned or hereafter
acquired by such Grantor, and wherever the same may be located, and including in
such license reasonable access to all media in which any of the licensed items
may be recorded or stored and to all computer software and programs used for the
compilation or printout thereof. The use of such license by the Collateral Agent
shall be exercised, at the option of the Collateral Agent, upon the occurrence
and during the continuation of an Event of Default; PROVIDED that any license,
sub-license or other transaction entered into by the Collateral Agent in
accordance herewith shall be binding upon the Grantors notwithstanding any
subsequent cure of an Event of Default.
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ARTICLE VII
MISCELLANEOUS
SECTION 7.01. NOTICES. All communications and notices hereunder shall
(except as otherwise expressly permitted herein) be in writing and given as
provided in Section 9.01 of the Credit Agreement. All communications and notices
hereunder to any Subsidiary Guarantor shall be given to it at its address or fax
number set forth on Schedule I, with a copy to the Borrower.
SECTION 7.02. SECURITY INTEREST ABSOLUTE. All rights of the Collateral
Agent hereunder, the Security Interest and all obligations of the Grantors
hereunder shall be absolute and unconditional irrespective of (a) any lack of
validity or enforceability of the Credit Agreement, any other Loan Document, any
agreement with respect to any of the Obligations or any other agreement or
instrument relating to any of the foregoing, (b) any change in the time, manner
or place of payment 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
Credit Agreement, any other Loan Document or any other agreement or instrument,
(c) any exchange, release or non-perfection of any Lien on other collateral, or
any release or amendment or waiver of or consent under or departure from any
guarantee, securing or guaranteeing all or any of the Obligations, or (d) any
other circumstance that might otherwise constitute a defense available to, or a
discharge of, any Grantor in respect of the Obligations or this Agreement.
SECTION 7.03. SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made by any Grantor herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement shall be considered to have been relied upon by the
Secured Parties and shall survive the making by the Lenders of the Loans, and
the execution and delivery to the Lenders of any notes evidencing such Loans,
regardless of any investigation made by the Lenders or on their behalf, and
shall continue in full force and effect until this Agreement shall terminate.
SECTION 7.04. BINDING EFFECT; SEVERAL AGREEMENT. This Agreement shall
become effective as to any Grantor when a counterpart hereof executed on behalf
of such Grantor shall have been delivered to the Collateral Agent and a
counterpart hereof shall have been executed on behalf of the Collateral Agent,
and thereafter shall be binding upon such Grantor and the Collateral Agent and
their respective successors and assigns, and shall inure to the benefit of such
Grantor, the Collateral Agent and the other Secured Parties and their respective
successors and assigns, except that no Grantor shall have the right to assign or
transfer its rights or obligations hereunder or any interest herein or in the
Collateral (and any such assignment or transfer shall be void) except as
expressly contemplated by this Agreement or the Credit Agreement. This Agreement
shall be construed as a separate agreement with respect to each Grantor and may
be amended, modified, supplemented,
23
waived or released with respect to any Grantor without the approval of any other
Grantor and without affecting the obligations of any other Grantor hereunder.
SECTION 7.05. SUCCESSORS AND ASSIGNS. Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party; and all covenants, promises and agreements
by or on behalf of any Grantor or the Collateral Agent that are contained in
this Agreement shall bind and inure to the benefit of their respective
successors and assigns.
SECTION 7.06. COLLATERAL AGENT'S FEES AND EXPENSES; INDEMNIFICATION. (a)
Each Grantor jointly and severally agrees to pay upon demand to the Collateral
Agent the amount of any and all reasonable expenses, including the reasonable
fees, disbursements and other charges of its counsel and of any experts or
agents, which the Collateral Agent may incur in connection with (i) the
administration of this Agreement (including the customary fees and charges of
the Collateral Agent for any audits conducted by it or on its behalf with
respect to the Accounts Receivable or Inventory), (ii) the custody or
preservation of, or the sale of, collection from or other realization upon any
of the Collateral, (iii) the exercise, enforcement or protection of any of the
rights of the Collateral Agent hereunder or (iv) the failure of any Grantor to
perform or observe any of the provisions hereof.
(b) Without limitation of its indemnification obligations under the other
Loan Documents, each Grantor jointly and severally agrees to indemnify the
Collateral Agent and the other Indemnitees against, and hold each of them
harmless from, any and all losses, claims, damages, liabilities and related
expenses, including reasonable fees, disbursements and other charges of counsel,
incurred by or asserted against any of them arising out of, in any way connected
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 wilful misconduct of any
Indemnitee.
(c) Any such amounts payable as provided hereunder shall be additional
Obligations secured hereby and by the other Security Documents. The provisions
of this Section 7.06 shall remain operative and in full force and effect
regardless of the termination of this Agreement or any other Loan Document, the
consummation of the transactions contemplated hereby, the repayment of any of
the Obligations, the invalidity or unenforceability of any term or provision of
this Agreement or any other Loan Document, or any investigation made by or on
behalf of the Collateral Agent or any Secured Party. All amounts due under this
Section 7.06 shall be payable on written demand therefor and shall bear interest
at the rate specified in Section 2.06 of the Credit Agreement.
24
SECTION 7.07. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 7.08. WAIVERS; AMENDMENT. (a) No failure or delay of the
Collateral Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
and of the Collateral Agent, the Issuing Bank, the Administrative Agent and the
Lenders under the other Loan Documents are cumulative and are not exclusive of
any rights or remedies that they would otherwise have. No waiver of any
provisions of this Agreement or any other Loan Document or consent to any
departure by any Grantor therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) below, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice to or demand on any Grantor in any case shall entitle such
Grantor or any other Grantor to any other or further notice or demand in similar
or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived, amended
or modified except pursuant to an agreement or agreements in writing entered
into by the Collateral Agent and the Grantor or Grantors with respect to which
such waiver, amendment or modification is to apply, subject to any consent
required in accordance with Section 9.08 of the Credit Agreement.
SECTION 7.09. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.09.
SECTION 7.10. SEVERABILITY. In the event any one or more of the provisions
contained in this Agreement should be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired thereby
(it being understood that the invalidity of a
25
particular provision in a particular jurisdiction shall not in and of itself
affect the validity of such provision in any other jurisdiction). The parties
shall endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 7.11 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original but all of which when
taken together shall constitute but one contract (subject to Section 7.04), and
shall become effective as provided in Section 7.04. Delivery of an executed
signature page to this Agreement by facsimile transmission shall be effective as
delivery of a manually executed counterpart hereof.
SECTION 7.12. HEADINGS. Article and Section headings used herein are for
the purpose of reference only, are not part of this Agreement and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Agreement.
SECTION 7.13. JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) Each
Grantor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees 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. Nothing in this Agreement shall affect any right that the
Collateral Agent, the Administrative Agent, the Issuing Bank or any Lender may
otherwise have to bring any action or proceeding relating to this Agreement or
the other Loan Documents against any Grantor or its properties in the courts of
any jurisdiction.
(b) Each Grantor hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other Loan Documents in any
New York State or Federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 7.01. Nothing in this
Agreement will affected the right of any party to this Agreement to serve
process in any other manner permitted by law.
26
SECTION 7.14. TERMINATION. This Agreement and the Security Interest shall
terminate when all the Obligations (other than wholly contingent indemnification
obligations) then due and owing have been indefeasibly paid in full, the Lenders
have no further commitment to lend, the L/C Exposure has been reduced to zero
and the Issuing Bank has no further commitment to issue Letters of Credit under
the Credit Agreement, at which time the Collateral Agent shall execute and
deliver to the Grantors, at the Grantors' expense, all Uniform Commercial Code
termination statements and similar documents which the Grantors shall reasonably
request to evidence such termination. Any execution and delivery of termination
statements or documents pursuant to this Section 7.14 shall be without recourse
to or warranty by the Collateral Agent. A Subsidiary Guarantor shall
automatically be released from its obligations hereunder and the Security
Interest in the Collateral of such Subsidiary Guarantor shall be automatically
released in the event that all the capital stock of such Subsidiary Guarantor
shall be sold, transferred or otherwise disposed of to a person that is not an
Affiliate of the Borrower in accordance with the terms of the Credit Agreement;
PROVIDED that the Required Lenders shall have consented to such sale, transfer
or other disposition (to the extent required by the Credit Agreement) and the
terms of such consent did not provide otherwise.
SECTION 7.15. ADDITIONAL GRANTORS. Upon execution and delivery by the
Collateral Agent and a Subsidiary of an instrument in the form of Annex 3
hereto, such Subsidiary shall become a Grantor hereunder with the same force and
effect as if originally named as a Grantor herein. The execution and delivery of
any such instrument shall not require the consent of any Grantor hereunder. The
rights and obligations of each Grantor hereunder shall remain in full force and
effect notwithstanding the addition of any new Grantor as a party to this
Agreement.
27
28
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
ANTEON CORPORATION,
by:
-----------------------------
Name:
Title:
ANALYSIS & TECHNOLOGY,
INC.,
by:
-----------------------------
Name:
Title:
INTERACTIVE MEDIA CORP.,
by:
-----------------------------
Name:
Title:
TECHMATICS, INC.,
by:
-----------------------------
Name:
Title:
VECTOR DATA SYSTEMS, INC.,
29
by:
-----------------------------
Name:
Title:
30
MELLON BANK, N.A., as Collateral
Agent,
by:
-----------------------------
Name:
Title:
SCHEDULE I
SUBSIDIARY GUARANTORS
Analysis & Technology, Inc.
Interactive Media Corp.
Techmatics, Inc.
Vector Data Systems, Inc.
SCHEDULE II
COPYRIGHTS
SCHEDULE III
LICENSES
SCHEDULE IV
PATENTS
SCHEDULE V
TRADEMARKS
Annex 1 to the
Security Agreement
LOCKBOX AND DEPOSITORY AGREEMENT dated as of
[ ], among [Name of Grantor], a [ ] corporation (the "GRANTOR"),
MELLON BANK, N.A., a national banking association ("MELLON"), as
collateral agent (in such capacity, the "COLLATERAL AGENT") for the
Secured Parties (such term, and each other capitalized term used but
not defined herein, having the meaning given it in the Security
Agreement referred to below) and [ ], a [ ] banking
corporation (the "SUB-AGENT").
A. The Grantor and the Collateral Agent are parties to a Security
Agreement dated as of June 23, 1999 (as amended, supplemented or otherwise
modified from time to time, the "SECURITY AGREEMENT"). Pursuant to the terms of
the Security Agreement, the Grantor has granted to the Collateral Agent, for the
ratable benefit of the Secured Parties, a security interest in its Accounts
Receivable and other Collateral (including Inventory, cash, cash accounts and
Proceeds) to secure the payment and performance of the Obligations and has
irrevocably appointed the Collateral Agent as its agent to collect amounts due
in respect of Accounts Receivable and Inventory.
B. The Sub-Agent has agreed to act as collection sub-agent of the
Collateral Agent to receive and forward payments with respect to the Accounts
Receivable and Inventory on the terms and subject to the conditions set forth
herein.
NOW, THEREFORE, the parties hereto agree as follows:
1. The Collateral Agent hereby appoints the Sub-Agent as its collection
sub-agent under the Security Agreement and authorizes the Sub-Agent, on the
terms and subject to the conditions set forth herein, to receive payments in
respect of Collateral consisting of Accounts Receivable and Inventory.
2. The Sub-Agent has established and shall maintain deposit account number
[ ] (including all subaccounts thereof) for the benefit of the Collateral Agent
(such account being called the "COLLECTION DEPOSIT ACCOUNT"). The Collection
Deposit Account shall be designated with the title "Mellon Bank, N.A., as
Collateral Agent under the Anteon Corporation Security Agreement dated as of
June 23, 1999" (or a similar title). [Subject to the Sub-Agent's Terms for
Remittance Banking (Lockbox) Services attached hereto as Exhibit A, to the
extent that the terms thereof relate to procedures or fees and to the extent not
inconsistent with the terms hereof,] all payments received by the Sub-Agent in
Lockbox Number [ ] and [ ] or any replacements in respect thereof (the
"LOCKBOXES") shall be promptly deposited in the Collection Deposit Account and
shall not be commingled with other funds. All funds at any time on deposit in
the Collection Deposit Account shall be held by the Sub-Agent for application in
accordance with the terms of this
2
Agreement. The Sub-Agent agrees to give the Collateral Agent prompt notice if
the Collection Deposit Account shall become subject to any writ, judgment,
warrant of attachment, execution or similar process. As security for the payment
and performance of the Obligations, the Grantor hereby confirms and pledges,
assigns and transfers to the Collateral Agent, and hereby creates and grants to
the Collateral Agent, a security interest in the Collection Deposit Account, all
property and assets held therein and all Proceeds thereof.
3. The Collection Deposit Account shall be under the sole dominion and
control of the Collateral Agent, who shall possess all right, title and interest
in all of the items from time to time in the Collection Deposit Account and
their Proceeds. The Sub-Agent shall be the Collateral Agent's agent for the
purpose of holding and collecting such items and their Proceeds. Neither the
Grantor nor any person or entity claiming by, through or under the Grantor shall
have any right, title or interest in, or control over the use of, or any right
to withdraw any amount from, the Collection Deposit Account, except that the
Collateral Agent shall have the right to withdraw amounts from the Collection
Deposit Account. The Sub-Agent shall be entitled to rely on, and shall act in
accordance with, all instructions given to it by the Collateral Agent with
respect to the Collection Deposit Account. The Collateral Agent shall have the
sole power to agree with the Sub-Agent as to specifications for Lockbox
services.
4. On a daily basis, the Sub-Agent shall (subject to the Sub-Agent's right
to request that the Collateral Agent furnish, in form satisfactory to the
Sub-Agent, signature cards and/or other appropriate documentation) promptly
transmit or deliver to the Collateral Agent at the office specified in paragraph
12 hereof (or such other office as the Collateral Agent shall specify) (a) all
funds, if any, then on deposit in, or otherwise to the credit of, the Collection
Deposit Account (PROVIDED that funds on deposit that are subject to collection
may be transmitted promptly upon availability for withdrawal), (b) all checks,
drafts and other instruments for the payment of money received in the Lockboxes
and in the possession of the Sub-Agent, without depositing such checks, drafts
or other instruments in the Collection Deposit Account or any other account and
(c) any checks, drafts and other instruments for the payment of money received
in the Lockboxes by the Sub-Agent after such notice, in whatever form received,
PROVIDED that the Sub-Agent may retain a reasonable reserve in a separate
deposit account with the Sub-Agent in respect of unpaid fees and amounts which
may be subject to collection.
5. The Sub-Agent is hereby instructed and authorized to transfer by wire
transfer or Automated Clearing House ("ACH") from the Collection Deposit Account
all funds that are from time to time deposited or otherwise credited to such
account (after such funds become available to the Sub-Agent, either through the
Federal Reserve System or other clearing mechanism used by the Sub-Agent's
branch and to the extent such funds exceed $[1,000]), to such account as the
Collateral Agent may from time to time direct, PROVIDED that, unless the
Collateral Agent otherwise instructs, no such transfer shall be required if such
transfer
3
would result in the transfer of an amount less than $[1,000]. Unless otherwise
directed by the Collateral Agent, such funds shall be transferred on each
business day by wire transfer or ACH and shall be identified as follows:
Mellon Bank, N.A.
ABA Number 000-000-000
For Credit to Mellon Bank, N.A.,
Philadelphia, PA
Account Number 0-000-000
Re: Anteon Cash Collateral
Account
These transfer instructions and authorizations may not be amended, altered
or revoked by the Grantor without the prior written consent of the Collateral
Agent. The Collateral Agent, however, shall have the right to amend or revoke
these transfer instructions and authorizations at any time without the consent
of the Grantor.
6. The Sub-Agent shall furnish the Collateral Agent with monthly
statements setting forth the amounts deposited in the Collection Deposit Account
and all transfers and withdrawals therefrom, and shall furnish such other
information at such times as shall be reasonably requested by the Collateral
Agent.
7. The fees for the services of the Sub-Agent shall be mutually agreed
upon between the Grantor and the Sub-Agent and shall be the obligation of the
Grantor; PROVIDED, HOWEVER, that, notwithstanding the terms of any agreement
under which the Collection Deposit Account shall have been established with the
Sub-Agent, the Grantor and the Sub-Agent agree not to terminate such Collection
Deposit Account for any reason (including the failure of the Grantor to pay such
fees) for so long as this Agreement shall remain in effect (it being understood
that the foregoing shall not be construed to prohibit the resignation of the
SubAgent in accordance with paragraph 9 below). Neither the Collateral Agent nor
the Secured Parties shall have any liability for the payment of any such fees.
The Sub-Agent may perform any of its duties hereunder by or through its agents,
officers or employees.
8. The Sub-Agent hereby represents and warrants that (a) it is a banking
corporation duly organized, validly existing and in good standing under the laws
of [] and has full corporate power and authority under such laws to execute,
deliver and perform its obligations under this Agreement and (b) the execution,
delivery and performance of this Agreement by the Sub-Agent have been duly and
effectively authorized by all necessary corporate action and this Agreement has
been duly executed and delivered by the Sub-Agent and constitutes a valid and
binding obligation of the Sub-Agent enforceable in accordance with its terms.
4
9. The Sub-Agent may resign at any time as Sub-Agent hereunder by delivery
to the Collateral Agent of written notice of resignation not less than thirty
days prior to the effective date of such resignation. The Sub-Agent may be
removed by the Collateral Agent at any time, with or without cause, by written,
fax or telephonic notice (which, in the case of telephonic notice, shall be
promptly confirmed in writing or by fax) of removal delivered to the Sub-Agent.
Upon receipt of such notice of removal, or delivery of such notice of
resignation, the Sub-Agent shall (subject to the Sub-Agent's right to request
that the Collateral Agent furnish, in form satisfactory to the Sub-Agent,
signature cards and/or other appropriate documentation), promptly transmit or
deliver to the Collateral Agent at the office specified in paragraph 12 (or such
other office as the Collateral Agent shall specify) (a) all funds, if any, then
on deposit in, or otherwise to the credit of, the Collection Deposit Account
(PROVIDED that funds on deposit that are subject to collection may be
transmitted promptly upon availability for withdrawal), (b) all checks, drafts
and other instruments for the payment of money received in the Lockboxes and in
the possession of the Sub-Agent, without depositing such checks, drafts or other
instruments in the Collection Deposit Account or any other account and (c) any
checks, drafts and other instruments for the payment of money received in the
Lockboxes by the Sub-Agent after such notice, in what ever form received.
10. The Grantor consents to the appointment of the Sub-Agent and agrees
that the Sub-Agent shall incur no liability to the Grantor as a result of any
action taken pursuant to an instruction given by the Collateral Agent in
accordance with the provisions of this Agreement. The Grantor agrees to
indemnify and defend the Sub-Agent against any loss, liability, claim or expense
(including reasonable attorneys' fees) arising from the Sub-Agent's entry into
this Agreement and actions taken hereunder, except to the extent resulting from
the Sub-Agent's gross negligence or willful misconduct.
11. The term of this Agreement shall extend from the date hereof until the
earlier of (a) the date on which the Sub-Agent has been notified in writing by
the Collateral Agent that the Sub-Agent has no further duties under this
Agreement and (b) the date of termination specified in the notice of removal
given by the Collateral Agent, or notice of resignation given by the Sub-Agent,
as the case may be, pursuant to paragraph 9. The obligations of the Sub-Agent
contained in the last sentence of paragraph 9 and in paragraph 15, and the
obligations of the Grantor contained in paragraphs 7 and 10, shall survive the
termination of this Agreement.
12. All notices and communications hereunder shall be in writing and shall
be delivered by hand or by courier service, mailed by certified or registered
mail or sent by fax (except where telephonic instructions or notices are
authorized herein) and shall be effective on the day on which received (a) in
the case of the Collateral Agent, to Mellon Bank, N.A., at [ ], Attention of
[Collateral Monitoring Department], and (b) in the case of the SubAgent,
addressed to [ ], Attention of [ ]. For
5
purposes of this Agreement, any officer of the Collateral Agent shall be
authorized to act, and to give instructions and notices, on behalf of the
Collateral Agent hereunder.
13. The Sub-Agent will not assign or transfer any of its rights or
obligations hereunder (other than to the Collateral Agent) without the prior
written consent of the other parties hereto, and any such attempted assignment
or transfer shall be void.
14. Except as provided in paragraph 5 above, this Agreement may be amended
only by a written instrument executed by the Collateral Agent, the Sub-Agent and
the Grantor, acting by their duly authorized representative officers.
15. Except as otherwise provided in the Credit Agreement with respect to
rights of set off available to the Sub-Agent in its capacity as a Lender (if and
so long as the Sub-Agent is a Lender thereunder), the Sub-Agent hereby
irrevocably waives any right to set off against, or otherwise deduct from, any
funds held in the Collection Deposit Account and all items (and Proceeds
thereof) that come into its possession in connection with the Collection Deposit
Account any indebtedness or other claim owed by the Grantor or any affiliate
thereof to the Sub-Agent; PROVIDED, HOWEVER, that this paragraph shall not limit
the ability of the Sub-Agent to, and the Sub-Agent may, (a) exercise any right
to set off against, or otherwise deduct from, any such funds to the extent
necessary for the Sub-Agent to collect any fees owed to it by the Grantor in
connection with the Collection Deposit Account, (b) charge back and net against
the Collection Deposit Account any returned or dishonored items or other
adjustments in accordance with the Sub-Agent's usual practices and (c) (i)
establish the reserves contemplated in paragraph 4 in respect of unpaid fees and
amounts which may be subject to collection and (ii) transfer funds in respect of
such reserves from the Collection Deposit Account to the separate deposit
account with the Sub-Agent as contemplated in paragraph 4.
16. This Agreement shall inure to the benefit of and be binding upon the
Collateral Agent, the Sub-Agent, the Grantor and their respective permitted
successors and assigns.
17. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument. Delivery of an executed signature page to this
Agreement by facsimile transmission shall be effective as delivery of a manually
executed counterpart hereof.
18. EXCEPT TO THE EXTENT THE LAWS OF THE STATE OF [ ] GOVERN THE
COLLECTION DEPOSIT ACCOUNT, THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
19. The Sub-Agent shall be an independent contractor. This Agreement does
not give rise to any partnership, joint venture or fiduciary relationship.
6
20. In the event any one or more of the provisions contained in this
Agreement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby (it being understood
that the invalidity of a particular provision in a particular jurisdiction shall
not in and of itself affect the validity of such provision in any other
jurisdiction). The parties shall endeavor in good-faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
[Name of Grantor],
by:
-----------------------
Name:
Title:
MELLON BANK, N.A., as Collateral
Agent,
by:
-----------------------
Name:
Title:
[Sub-Agent],
by:
-----------------------
Name:
Title:
Annex 2 to the
Security Agreement
[Form Of]
PERFECTION CERTIFICATE
Reference is made to (a) the Credit Agreement dated as of June 23, 1999
(as amended, supplemented or otherwise modified from time to time, the "CREDIT
AGREEMENT"), among Anteon Corporation (the "BORROWER"), Azimuth Technologies,
Inc. ("AZIMUTH"), the lenders from time to time party thereto (the "LENDERS"),
Credit Suisse First Boston, as administrative agent for the Lenders (in such
capacity, the "ADMINISTRATIVE AGENT") and as issuing bank, Mellon Bank, N.A., as
collateral agent (in such capacity, the "COLLATERAL AGENT"), syndication agent
and swingline lender, and Deutsche Bank AG, New York Branch, as documentation
agent, (b) the Subsidiary Guarantee Agreement dated as of June 23, 1999 (as
amended, supplemented or otherwise modified from time to time, the "SUBSIDIARY
GUARANTEE AGREEMENT"), among the Subsidiary Guarantors and the Collateral Agent,
and (c) the Security Agreement dated as of June 23, 1999 (as amended,
supplemented or otherwise modified from time to time, the "SECURITY AGREEMENT")
among the Borrower, the Subsidiary Guarantors and the Collateral Agent.
Capitalized terms used herein and not defined herein shall have the meanings
assigned to such terms in the Credit Agreement or the Security Agreement, as
applicable.
The undersigned, a Financial Officer and the general counsel,
respectively, of the Borrower, hereby certify to the Collateral Agent and each
other Secured Party as follows:
1. NAMES.
(a) The exact corporate name of each Grantor, as such name appears in its
respective certificate of incorporation, is as follows:
(b) Set forth below is each other corporate name each Grantor has had in
the past five years, together with the date of the relevant change:
(c) Except as set forth in Schedule 1 hereto, no Grantor has changed its
identity or corporate structure in any way within the past five years. Changes
in identity or corporate structure would include mergers, consolidations and
acquisitions, as well as any change in the form, nature or jurisdiction of
corporate organization. If any such change has occurred, include in Schedule 1
the information required by Sections 1 and 2 of this certificate as to each
acquiree or constituent party to a merger or consolidation.
(d) The following is a list of all other names (including trade names or
similar appellations) used by each Grantor or any of its divisions or other
business units in connection with the conduct of its business or the ownership
of its properties at any time during the past five years:
2
(e) Set forth below is the Federal Taxpayer Identification Number of each
Grantor:
2. CURRENT LOCATIONS.
(a) The chief executive office of each Grantor is located at the address
set forth opposite its name below:
Grantor Mailing Address County State
------- --------------- ------ -----
(b) Set forth below opposite the name of each Grantor are all locations
where such Grantor maintains any books or records relating to any Accounts
Receivable (with each location at which chattel paper, if any, is kept being
indicated by an "*"):
Grantor Mailing Address County State
------- --------------- ------ -----
(c) Set forth below opposite the name of each Grantor are all the places
of business of such Grantor not identified in paragraph (a) or (b) above:
Grantor Mailing Address County State
------- --------------- ------ -----
(d) Set forth below opposite the name of each Grantor are all the
locations where such Grantor maintains any Collateral not identified above:
Grantor Mailing Address County State
------- --------------- ------ -----
(e) Set forth below opposite the name of each Grantor are the names and
addresses of all persons other than such Grantor that have possession of any of
the Collateral of such Grantor:
Grantor Mailing Address County State
------- --------------- ------ -----
3
3. UNUSUAL TRANSACTIONS. All Accounts Receivable have been originated by
the Grantors and all Inventory has been acquired by the Grantors in the ordinary
course of business.
4. FILE SEARCH REPORTS. Attached hereto as Schedule 4(A) are true copies
of file search reports from the Uniform Commercial Code filing offices where
filings described in Section 3.19 of the Credit Agreement are to be made.
Attached hereto as Schedule 4(B) is a true copy of each financing statement or
other filing identified in such file search reports.
5. UCC FILINGS. Duly signed financing statements on Form UCC-1 in
substantially the form of Schedule 5 hereto have been prepared for filing in the
Uniform Commercial Code filing office in each jurisdiction where a Grantor has
Collateral as identified in Section 2 hereof.
6. SCHEDULE OF FILINGS. Attached hereto as Schedule 6 is a schedule
setting forth, with respect to the filings described in Section 5 above, each
filing and the filing office in which such filing is to be made.
7. STOCK OWNERSHIP AND OTHER EQUITY INTERESTS. Attached hereto as Schedule
7 is a true and correct list of all the duly authorized, issued and outstanding
stock, partnership interests, limited liability company membership interests or
other equity interests of the Borrower and each Subsidiary and the record and
beneficial owners of such equity interests. Also set forth on Schedule 7 is each
equity investment of the Borrower and each Subsidiary that represents 50% or
less of the equity of the entity in which such investment was made.
8. NOTES. Attached hereto as Schedule 8 is a true and correct list of all
notes held by the Borrower and each Subsidiary and all intercompany notes
between Azimuth, the Borrower and each Subsidiary and between each Subsidiary
and each other Subsidiary.
9. INVESTMENT ACCOUNTS. Attached hereto as Schedule 9 is a true and
correct list of all bank, brokerage and other deposits or securities investment
accounts maintained by the Borrower and the Subsidiaries.
10. ASSIGNMENT OF CLAIMS ACT. Attached hereto as Schedule 10 is a true and
correct list of all Government Contracts that as of the date hereof constitute
Material Contracts, setting forth the contract number, name and address of
contracting officer (or other party to whom a notice of assignment under the
Assignment of Claims Act should be sent), contract start date and end date,
agency with which the contract was entered into, and a description of the
contract type.
11. ADVANCES. Attached hereto as Schedule 11 is a true and correct list of
all advances made by the Borrower or any Subsidiary to Azimuth, the Borrower or
any
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Subsidiary, which advances will be on and after the date hereof evidenced by one
or more intercompany notes pledged to the Collateral Agent under the Pledge
Agreement.
IN WITNESS WHEREOF, the undersigned have duly executed this certificate on
this [ ] day of [ ].
ANTEON CORPORATION,
by:
------------------------
Name:
Title:[Financial Officer]
by:
------------------------
Name:
Title: [General Counsel]
Annex 3 to the
Security Agreement
SUPPLEMENT NO. __ dated as of , to the Security Agreement
dated as of June 23, 1999, among ANTEON CORPORATION, a Virginia
corporation (the "BORROWER"), each subsidiary of the Borrower listed
on Schedule I thereto (each such subsidiary individually a
"SUBSIDIARY GUARANTOR" and collectively, the "SUBSIDIARY
GUARANTORS"; the Subsidiary Guarantors and the Borrower are referred
to collectively herein as the "GRANTORS") and MELLON BANK, N.A., a
national banking association ("MELLON"), as collateral agent (in
such capacity, the "COLLATERAL AGENT") for the Secured Parties (as
defined herein).
A. Reference is made to (a) the Credit Agreement dated as of June 23, 1999
(as amended, supplemented or otherwise modified from time to time, the "CREDIT
AGREEMENT"), among the Borrower, the lenders from time to time party thereto
(the "LENDERS"), Credit Suisse First Boston, a bank organized under the laws of
Switzerland, acting through its New York branch ("CSFB"), as administrative
agent for the Lenders (in such capacity, the "ADMINISTRATIVE AGENT") and as
issuing bank, Mellon, as Collateral Agent, syndication agent and swingline
lender, and Deutsche Bank AG, New York Branch, as documentation agent, and (b)
the Subsidiary Guarantee Agreement dated as of June 23, 1999 (as amended,
supplemented or otherwise modified from time to time, the "GUARANTEE
AGREEMENT"), among the Subsidiary Guarantors and the Collateral Agent.
B. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Security Agreement or the Credit
Agreement, as applicable.
C. The Grantors have entered into the Security Agreement in order to
induce the Lenders to make Loans and the Issuing Bank to issue Letters of
Credit. Section 7.15 of Security Agreement provides that additional Subsidiaries
of the Borrower may become Grantors under the Security Agreement by execution
and delivery of an instrument in the form of this Supplement. The undersigned
Subsidiary (the "NEW GRANTOR") is executing this Supplement in accordance with
the requirements of the Credit Agreement to become a Grantor under the Security
Agreement in order to induce the Lenders to make additional Loans and the
Issuing Bank to issue additional Letters of Credit and as consideration for
Loans previously made and Letters of Credit previously issued.
Accordingly, the Collateral Agent and the New Grantor agree as follows:
SECTION 1. In accordance with Section 7.15 of the Security Agreement, the
New Grantor by its signature below becomes a Grantor under the Security
Agreement with the same force and effect as if originally named therein as a
Grantor and the New Grantor hereby (a) agrees to all the terms and provisions of
the Security Agreement applicable to it as a Grantor thereunder and (b)
represents and warrants that the representations and warranties made by it as a
Grantor thereunder are true and correct on and as of the date hereof. In
furtherance of the
2
foregoing, the New Grantor, as security for the payment and performance in full
of the Obligations (as defined in the Security Agreement), does hereby create
and grant to the Collateral Agent, its successors and assigns, for the benefit
of the Secured Parties, their successors and assigns, a security interest in and
lien on all of the New Grantor's right, title and interest in and to the
Collateral (as defined in the Security Agreement) of the New Grantor. Each
reference to a "Grantor" in the Security Agreement shall be deemed to include
the New Grantor. The Security Agreement is hereby incorporated herein by
reference.
SECTION 2. The New Grantor represents and warrants to the Collateral Agent
and the other Secured Parties that this Supplement has been duly authorized,
executed and delivered by it and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts (and by
different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. This Supplement shall become effective when the Collateral
Agent shall have received counterparts of this Supplement that, when taken
together, bear the signatures of the New Grantor and the Collateral Agent.
Delivery of an executed signature page to this Supplement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Supplement.
SECTION 4. The New Grantor hereby represents and warrants that (a) set
forth on Schedule I attached hereto is a true and correct schedule of the
location of any and all Collateral of the New Grantor and (b) set forth under
its signature hereto, is the true and correct location of the chief executive
office of the New Grantor.
SECTION 5. Except as expressly supplemented hereby, the Security Agreement
shall remain in full force and effect.
SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 7. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and in the Security Agreement shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction). The parties hereto shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
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SECTION 8. All communications and notices hereunder shall be in writing
and given as provided in Section 7.01 of the Security Agreement. All
communications and notices hereunder to the New Grantor shall be given to it at
the address set forth under its signature below.
SECTION 9. The New Grantor agrees to reimburse the Collateral Agent for
its reasonable out-of-pocket expenses in connection with this Supplement,
including the reasonable fees, other charges and disbursements of counsel for
the Collateral Agent.
IN WITNESS WHEREOF, the New Grantor and the Collateral Agent have duly
executed this Supplement to the Security Agreement as of the day and year first
above written.
[Name Of New Grantor],
by:
--------------------------
Name:
Title:
Address:
MELLON BANK, N.A., as Collateral Agent,
by:
--------------------------
Name:
Title:
SCHEDULE I
to Supplement No.___ to the
Security Agreement
LOCATION OF COLLATERAL
Description Location
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