EXHIBIT 10.02
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GUARANTEE AGREEMENT
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Whereas VantagePoint Venture Partners III(Q), L.P. ("VPVP") owns a significant
equity interest in XXX.xxx, Inc. ("DSLN"); and
Whereas DSLN has negotiated a commitment letter and summary of terms and
conditions from Fleet National Bank ("Fleet") for a credit facility (the "Fleet
Facility") for up to $15 million to finance acquisitions, working capital and
other general corporate requirements which is attached hereto as Exhibit 2 (the
"Fleet Term Sheet"); and
Whereas such commitment requires the guarantee of VPVP; and
Now, therefore, VPVP hereby agrees that concurrently upon satisfaction of the
conditions specified in the following sentence, it will provide to Fleet its
guaranty in substantially the form attached hereto as Exhibit 3 (with such
changes as may be agreed upon by Fleet and VPVP) (the "Guaranty) in an amount
and on such terms and conditions as set forth in the term sheet attached as
Exhibit 1 (the "Term Sheet"). VPVP's obligation to enter into the Guaranty is
subject to the following conditions: (a) DSLN and Network Access Solutions shall
have entered into an asset purchase agreement providing for the acquisition by
DSLN of certain assets of Network Access Solutions Corporation and the
transactions contemplated therein shall have been consummated pursuant to the
terms thereof; (b) DSLN shall enter into a credit agreement evidencing the Fleet
Facility on terms and conditions consistent with the Fleet Term Sheet; and (c)
DSLN and, if applicable, its subsidiaries (other than Regulated Subsidiaries (as
such term is defined in the Term Sheet)) shall execute and deliver a
Reimbursement Agreement in substantially the form attached hereto as Exhibit 4,
a Security Agreement substantially in the form attached hereto as Exhibit 5, a
Subsidiary Guaranty in substantially the form attached hereto as Exhibit 6 and
related documentation necessary to perfect the first priority security interests
granted to VPVP in DSLN's and its subsidiaries' assets as set forth in the Term
Sheet.
In consideration of the Guaranty, DSLN agrees to deliver to VPVP (or its
designee) warrants with registration rights in accordance with the terms set
forth in the Term Sheet. The warrants shall be deemed fully earned by VPVP upon
the execution of the Guaranty and the closing of the Fleet Facility.
In further consideration of VPVP's entering into this Guarantee Agreement and
recognizing that VPVP is incurring at DSLN's request substantial fees and
expenses (including without limitation, the fees and disbursements of counsel)
in connection herewith and the transactions contemplated hereby, DSLN agrees to
reimburse VPVP on demand from time to time for all such reasonable costs and
expenses (including those incurred prior to the date hereof), estimated to be
$30,000.00, regardless of whether or not any of the transactions contemplated
hereby are consummated and regardless of the reasons that the transactions are
not consummated. DSLN also agrees to pay any reasonable fees and expenses
(including without limitation, the fees and disbursements of counsel) incurred
in connection with the enforcement (whether or not suit is brought) of its
rights and remedies hereunder.
DSLN agrees to indemnify and hold harmless VPVP, and each of its affiliates and
each of their respective officers, directors, employees, agents, advisors,
attorneys and representatives (each, an "Indemnified Party") from and against
any and all claims, damages, losses, liabilities and expenses (including,
without limitation, reasonable fees and disbursements of VPVP's counsel and
reasonable fees and expenses incurred directly by VPVP), that may be incurred by
or asserted or awarded against any Indemnified Party, in each case arising out
of or in connection with or relating to any investigation, litigation or
proceeding or the preparation of any defense with respect thereto, arising out
of or in connection with or relating to this Guarantee Agreement or the
documentation or the transactions contemplated hereby, or any use made or
proposed to be made with the proceeds of the credit facility guaranteed by VPVP,
whether or not such investigation, litigation, or proceeding is brought by DSLN
or any of its affiliates, any shareholders or creditors of the foregoing, and
whether or not the transactions contemplated hereby are consummated, except to
the extent such claim, damage, loss, liability or expense is found in a final,
non-appealable judgment by a court of competent jurisdiction to have resulted
from such Indemnified Party's gross negligence or willful misconduct.
DSLN further agrees that no Indemnified Party shall have any liability (whether
direct or indirect, in contract, tort or otherwise) to DSLN or any of its
affiliates, or any shareholders or creditors of the foregoing, for or in
connection with the transactions contemplated hereby, except to the extent such
liability is found in a final, non-appealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party's gross negligence or
willful misconduct. In no event, however, shall any Indemnified Party be liable
on any theory of liability for any special, indirect, consequential or punitive
damages.
This Guarantee Agreement constitutes and contains the entire agreement of DSLN
and VPVP and supersedes any and all prior agreements, negotiations,
correspondence, understandings and communications among the parties or their
representatives, whether written or oral, respecting the subject matter hereof.
This Guarantee Agreement shall be governed by and construed in accordance with
the laws of the State of California, without reference to its conflicts of laws
doctrine.
[Remainder of Page Intentionally Left Blank.]
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IN WITNESS WHEREOF, each party has caused this Guarantee Agreement
to be executed and delivered as of October 8, 2002.
VantagePoint Venture Partners III (Q), L.P.
By: VantagePoint Venture Associates III, L.L.C.
By: /s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx, Managing Member
XXX.XXX, INC.
By: /s/ Xxxxx Xxxxxxx
--------------------------------
Name: Xxxxx Xxxxxxx
Title: Chairman and CEO
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Exhibit 1
TERM SHEET FOR GUARANTY OF INDEBTEDNESS OF XXX.XXX, INC.
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Guarantor.................. VantagePoint Venture Partners III (Q), L.P.
("Guarantor")
Guarantee.................. The Guarantor will initially guarantee an amount
up to $5,000,000 under a $15,000,000 credit
facility (the "Credit Facility") provided by Fleet
National Bank to XXX.xxx, Inc. ("XXX.xxx").
Guarantor may guarantee additional amounts only if
it agrees to do so in its sole and absolute
discretion.
Additional guarantors of the Credit Facility may
be added to guarantee up to an additional
$2,000,000 on terms and conditions not more
favorable than those terms and conditions provided
to Guarantor, provided, that XXX.xxx has requested
Guarantor to provide such additional guarantee and
Guarantor has not agreed to provide such
additional guarantee on such terms within five (5)
business days of such request. Any additional
guarantors of the Credit Facility that provide
credit support in excess of the sum of (i) the
initial $5,000,000 guarantee of the Guarantor and
(ii) any additional guarantees up to an additional
$2,000,000 referenced in the previous sentence,
may be added only with VPVP's prior written
consent, provided that such consent shall not be
unreasonably withheld so long as such additional
guarantors do not receive as consideration for
such guarantee a warrant exercisable for more than
666,666 shares of common stock of XXX.xxx for each
$1,000,000 of loans guaranteed and that all other
terms with respect to such guarantee are on terms
no more favorable than the terms of Guarantor's
guarantee.
The Reimbursement Agreement and the Credit
Facility shall provide that XXX.xxx shall not be
permitted to make the initial borrowing under the
Credit Facility until such time as its
unrestricted cash balance is less than $5,000,000,
unless VPVP provides its written consent.
Warrants................... The Guarantor (or its designee) shall receive a
ten year warrant to purchase 2,950,000 shares of
common stock of XXX.xxx plus the Unallocated
Shares (as defined below) of common stock of
XXX.xxx. The exercise price of the warrant shall
be $0.50 per share. The warrant will have net
exercise and other provisions customary for
warrants of this type. The warrants will be
exercisable upon issuance. The warrant shall
compensate the Guarantor for providing the initial
$5,000,000 guarantee and any additional guarantee
up to an aggregate of $7,000,000 (which includes
the initial $5,000,000) provided by the Guarantor
in its sole and absolute discretion.
Any additional guarantors that provide guarantees
of XXX.xxx's obligations under the Credit Facility
as of the date that Guarantor enters into a
definitive guarantee of XXX.xxx's obligations
under the Credit Facility, shall receive a warrant
to purchase 666,666 shares of common stock of
XXX.xxx for each $1,000,000 of loans guaranteed
and such warrant shall otherwise have terms no
more favorable than the warrant issued to
Guarantor (or its designee). The term "Unallocated
Shares" shall mean a number of shares equal to
10,000,000 minus the number of shares allocated to
additional guarantors pursuant to the previous
sentence.
Registration Rights........ The common stock issuable upon exercise or
conversion of the warrant will be subject to
XXX.xxx's existing registration rights pursuant to
a stockholders agreement ("Rights Agreement") with
the Guarantor and XXX.xxx's other preferred
stockholders and such common stock shall be
granted the same registration rights that other
holders of Series X Preferred Stock party to such
Rights Agreement have been granted pursuant to
such registration rights agreement. XXX.xxx, the
Guarantor and their affiliates shall use their
best efforts to amend its Rights Agreement to
effect the foregoing.
XXX.xxx shall use best efforts to obtain any
consents necessary to amend the Rights Agreement
to grant the registration rights referenced above.
Reimbursement Agreement.... XXX.xxx shall enter into a Reimbursement Agreement
and related security documentation with the
Guarantor providing that XXX.xxx shall reimburse
the Guarantor upon demand for any amounts drawn
under the guarantee. The Reimbursement Agreement
will have covenants (which will be operative in
the event amounts are drawn under the guarantees)
and other provisions similar to those in a credit
agreement. The Reimbursement Agreement shall
include a covenant to either (i) pay down the
loans early under the Credit Facility or (ii)
eliminate the guarantee requirement (as set forth
below), but only if (A) XXX.xxx has $1,000,000
increments (or if the outstanding loans are less
than $1,000,000, then such lesser amount) of
unrestricted cash balances in excess of
$10,000,000 of unrestricted cash balances and (B)
Guarantor requests that XXX.xxx apply such
$1,000,000 increments (or if the outstanding loans
are less than $1,000,000, then such lesser
amount), to either (x) pay down the loans or (y)
to eliminate an equal amount of the guarantee
requirement. If the conditions in the previous
sentence are satisfied and Guarantor elects to
require XXX.xxx to prepay the loans, then
Guarantor shall have the right to require that
XXX.xxx permanently reduce the outstanding
commitment under the Credit Facility, in an amount
equal to the amount of the loans that is required
to be prepaid.
Security .................. XXX.xxx's reimbursement obligations shall be
secured by a first priority security interest in
all of XXX.xxx's assets (including a pledge of the
stock of each of its subsidiaries), other than (i)
equipment financed by existing capitalized leases
or equipment loans that are subject to existing
security interests, (ii) cash collateral securing
letters of credit, provided that at all times
after demand by Fleet for payment under
Guarantor's guarantee, XXX.xxx shall only be
permitted to pledge cash collateral to secure
letters of credit with Guarantor's prior consent,
(iii) assets acquired subsequent to the date of
the Guaranty Agreement, between Guarantor and
XXX.xxx that are subject to a security interest,
provided that such security interest is limited to
the asset acquired and (iv) stock of the Regulated
Subsidiaries (as defined below). XXX.xxx's
subsidiaries (other than subsidiaries where the
granting of a security interest in its assets
would require approval from a federal or state
regulatory authority (the "Regulated
Subsidiaries") shall also guarantee XXX.xxx's
obligations and such guarantees shall be secured
by all of such subsidiaries' assets (other than
assets which would be excluded pursuant to clause
(i), (ii), (iii) or (iv) of the preceding
sentence).
Exhibit 2
October 9, 2002
Xxxxxx X. XxXxxxxx
Chief Financial Officer
XXX.xxx, Inc.
000 Xxxx Xxxxx Xxxxx, 0xx Xxxxx
Xxx Xxxxx, XX 00000
VIA FAX: 000.000.0000
RE: Revolver with VantagePoint and/or Columbia Capital Guarantee
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Dear Bob:
Fleet National Bank is pleased to provide a commitment for a revolving line of
credit to XXX.xxx in the amount of $15,000,000 (fifteen million dollars). The
revolver availability will be subject to guarantees provided by VantagePoint
Venture Partners and/or Columbia Capital. The terms and conditions of the
revolver are detailed in the attached Summary Terms and Conditions.
Our commitment is subject to definitive documentation satisfactory to the
guarantor and Fleet having been executed by November 15, 2002.
Sincerely,
/s/ Xxx X. Xxxxxx-Xxxxxxx
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Xxx X. Xxxxxx-Xxxxxxx
Director
Fleet National Bank
Accepted and Agreed:
/s/ Xxxxxx X. XxXxxxxx
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Xxxxxx X. XxXxxxxx, CFO
XXX.Xxx, Inc.
cc: Xxxxx Xxxxxxxx, CFO, VantagePoint Venture Partners:
via fax: 000.000.0000
XXX.XXX, INC.
SUMMARY OF TERMS AND CONDITIONS
FOR PROPOSED $15,000,000 SENIOR REVOLVING CREDIT FACILITY
WITH VANTAGEPOINT AND COLUMBIA CAPITAL GUARANTEES
OCTOBER 9, 2002
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THE PROPOSED TERMS AND CONDITIONS ARE PROVIDED FOR DISCUSSION PURPOSES ONLY AND
DO NOT CONSTITUTE AN OFFER, AGREEMENT OR COMMITMENT TO LEND. THE ACTUAL TERMS
AND CONDITIONS UPON WHICH FLEET NATIONAL BANK MIGHT EXTEND CREDIT TO THE
BORROWER ARE SUBJECT TO SATISFACTORY COMPLETION OF DUE DILIGENCE, SATISFACTORY
REVIEW OF DOCUMENTATION AND SUCH OTHER TERMS AND CONDITIONS AS ARE DETERMINED BY
FLEET NATIONAL BANK AND ITS COUNSEL.
FACILITY: $15,000,000 committed revolving line of credit.
BORROWER: XXX.xxx, Inc.
GUARANTORS: VantagePoint Venture Partners III (Q), L. P.
and/or Columbia Capital Partners Funds II and
III. Guarantees will be in form acceptable to
Fleet.
AVAILABILITY: Availability will be subject to guarantees from
the Guarantors for the amount of outstanding
loans.
TENOR/REPAYMENT: Loans can be borrowed, repaid and re-borrowed
for two years from the closing date. Any
borrowings which remain outstanding on the
second anniversary of the closing date will be
repaid in 12 equal quarterly installments; the
balance will be repaid to $0.00 upon the fifth
anniversary of the closing date.
USE OF PROCEEDS: General corporate purposes including working
capital, and acquisitions of other companies in
the Borrower's line of business.
LENDER: Fleet National Bank ("Fleet").
INITIAL CLOSING DATE: A mutually agreeable date to be determined but
not later than November 15, 2002.
SECURITY: REVOLVER: Unsecured.
GUARANTEE: The guarantee from Columbia Capital
funds other than Fund QP and Fund Cayman must be
secured by cash collateral equal to the
principal and interest of those Funds'
guarantees.
INTEREST RATE: Fleet's Alternate Base Rate.
DEFAULT INTEREST: 2% higher than the interest rate in effect at
the time of default. Default interest cancelled
upon cure of default.
INTEREST PERIODS: Base Rate Loans have no specified maturity. Base
Rate interest due quarterly in arrears,
calculated on 365-day calendar.
COMMITMENT FEE: 0.25% on the unused portion of the Facility,
calculated on 360-day calendar. In lieu of this
commitment fee in the first year, the Borrower
may pay an upfront fee of $17,500. Upon the
first anniversary, the Borrower may revert to
paying the Commitment Fee or reduce the Facility
amount to the Availability amount.
GUARANTOR COVENANT: The ratio of total uncalled capital commitments
to total indebtedness must exceed 1.50:1 at all
times for Columbia, and 1.33:1 at
all times for VantagePoint. Numerator will
exclude the uncalled capital commitment of any
Partner who is in default of a prior capital
call or otherwise in default of the Partnership
Agreement. Upon expiration of a Guarantor's
guarantee the Facility principal, interest and
fees become immediately payable in full.
DSL COVENANTS: o If the Borrower files for bankruptcy
protection, the Facility will be immediately
due and payable in full.
o The Borrower must maintain its operating
accounts and deposit/investment accounts with
Fleet National Bank or its affiliates until
the Facility is repaid or cancelled.
AFFIRMATIVE
COVENANTS: Usual and customary in transactions of this type
(see attachment).
NEGATIVE COVENANTS: Usual and customary in transactions of this type
(see attachment).
CONDITIONS PRECEDENT: o No material misrepresentations in or
omissions from materials furnished to Fleet
for its review.
o The negotiation, execution and delivery of
loan documentation satisfactory to the Fleet
and respective counsel
o The absence of any material adverse
litigation.
o Payment of all fees and expenses payable in
connection with the Facility.
o No default or event of default under any
material agreements.
REPRESENTATIONS
AND WARRANTIES: Usual and customary in transactions of this type
(see attachment).
REPORTING
REQUIREMENTS: Quarterly guarantor reports detailing
investments and capital calls, quarterly
financial guarantor covenant calculation, and
other financial reports and audits distributed
to the partnerships of the Guarantors. Quarterly
financial statements of the Borrower.
EVENTS OF DEFAULT: The following events of default: payment default
by the Borrower, covenant default by the
Guarantor(s), material misrepresentation,
bankruptcy of the Borrower or Guarantor(s),
insolvency of the Borrower or Guarantor(s).
EXPENSES AND
INDEMNIFICATION: The Borrower will pay all reasonable fees and
expenses incurred by Fleet in connection with
the preparation and execution of the Facility.
These will include, without limitation, legal
and other direct out-of-pocket expenses (not to
exceed $15,000) and will be paid even if
documentation is not executed.
The Borrower will indemnify and hold harmless
the Lenders (and their respective directors,
officers, employees and agents) against any
damages, loss, liability, cost or expense
incurred in respect of the financing
contemplated hereby or the use or the proposed
use of proceeds thereof (except to the extent
resulting from the gross negligence or willful
misconduct of the indemnified party).
GOVERNING LAW: Commonwealth of Massachusetts
ATTACHMENT detailing "Usual and Customary" provisions in the Borrower's loan
agreement. The following list details all the usual and customary provisions in
a loan agreement. Those which do not apply to the XXX.xxx agreement are noted by
(N/A). Please note that some others may not apply, but Fleet would like to ask
about them to confirm these provisions do not apply.
REPRESENTATIONS AND WARRANTIES AS TO:
Corporate Authority (incorporation, good standing, authorization and
enforceability)
Receipt of necessary Governmental Approvals (N/A);
Title to Properties (N/A);
Financial Statements/Solvency;
No Material Adverse Change (usually since last year end audit date);
Necessary IP (N/A);
Litigation (list any material suits);
No Materially Adverse Contracts; (N/A)
Compliance with contracts and laws (including environmental laws);
Payment of Taxes;
No Event of Default;
No Financing Statements of Record;
Perfection of Security Interest (N/A, but will need Guarantee);
Affiliate Transactions;
ERISA
Use of Proceeds;
Identity of subsidiaries;
Full Disclosure (no false statements);
Location of Bank Accounts
AFFIRMATIVE COVENANTS
Punctual Payment;
Accounts audited according to GAAP by auditor acceptable to Fleet;
Delivery of Financial Statements and other information;
Notices (of defaults, claims against assets, litigation, etc.)
Maintenance of Legal Existence and Properties;
Maintenance of Insurance; (N/A)
Payment of Taxes (N/A)
Inspection Rights (properties, books, etc.) Compliance with laws, contracts,
permits, etc.
ERISA compliance (N/A)
Use of proceeds (no margin stock purchases)
Location of Bank Accounts
Security (N/A);
NEGATIVE COVENANTS:
Restrictions on Indebtedness, liens and investments (N/A);
Restrictions on dividends, distributions and payments to shareholders (N/A);
Limitation on mergers, acquisitions and disposition of assets (Borrower needs to
remain survivor)
Limitation on sale/leasebacks (N/A)
No violation of Environmental Laws (N/A)
No violation of ERISA (N/A)
No change of business or fiscal year; (N/A)
Limitation on transactions with affiliates; (N/A)
Limitation on moving bank accounts;
Possible restriction on paying other debt (i.e. subdebt) (N/A)
Exhibit 3
GUARANTY
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GUARANTY, dated as of ____________, 2002, by [INSERT NAME OF
GUARANTORS], a _______________ (collecitvely, the "Guarantors"), in favor of
FLEET NATIONAL BANK, a national banking association (the "Lender").
WHEREAS, [INSERT NAME OF BORROWER], a ________________ corporation (the
"Company") and the Lender are parties to a certain Revolving Credit Agreement
dated as of the date hereof (as amended and in effect from time to time, the
"Credit Agreement"), pursuant to which the Lender, subject to the terms and
conditions contained therein, is to make certain loans and advances to the
Company;
WHEREAS, the Guarantors collectively own certain of the capital stock
of the Company;
WHEREAS, each of the Guarantor expects to receive substantial direct
and indirect benefits from the extensions of credit to the Company by the Lender
pursuant to the Credit Agreement (which benefits are hereby acknowledged);
WHEREAS, it is a condition precedent to the Lender's making any loans
to the Company under the Credit Agreement that the Guarantors execute and
deliver to the Lender a guaranty substantially in the form hereof; and
WHEREAS, each of the Guarantors jointly and severally wishes to
guaranty the Company's obligations to the Lender under or in respect of the
Credit Agreement as provided herein;
NOW, THEREFORE, each Guarantor hereby agrees with the Lender as
follows:
1. DEFINITIONS. Unless otherwise defined herein, all capitalized terms
used herein without definition shall have the respective meanings provided
therefor in the Credit Agreement.
The term "Capital Call Obligation" means, as to any Guarantor, the
obligation of each Partner to pay his, her or its Unpaid Capital Commitment in
accordance with the terms and obligations of the Partnership Agreement of such
Guarantor.
The term "Capital Commitment" means, as to any Guarantor, the total
amount agreed to be paid to such Guarantor by each Partner of such Guarantor,
all as set forth in the Partnership Agreement of such Guarantor.
The term "Capital Contribution" means, as to any Guarantor, with
respect to any Partner of such Guarantor, that portion of such Partner's Capital
Commitment which has already been paid, funded or otherwise satisfied by such
Partner as of any date of determination.
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The term "Defaulted Capital Call Obligations" means, as to any
Guarantor, any and all Capital Call Obligations of all Defaulting Partners, to
the extent that the Capital Commitments of such Defaulting Partners have not
otherwise been purchased by or allocated to other Partners of such Guarantor
which are not Defaulting Partners pursuant to the terms of the Partnership
Agreement of such Guarantor within thirty (30) days after any such Partner
becomes a Defaulting Partner.
The term "Defaulting Partner" means, as to any Guarantor, any Partner
who or which (a) is considered a "Defaulting Limited Partner" under the terms of
the applicable Partnership Agreement or (b) fails to pay any Capital Call
Obligation on or before the fifteenth (15th) Business Day following the date on
which the applicable General Partner requires such payment pursuant to a written
notice of a Capital Call to such Partners, unless and until such failure to pay
any such Capital Call Obligation is subsequently cured or waived with the
consent of, and to the satisfaction of, such General Partner and the Lender.
The term "Eligible Capital Call Commitments" means, as to any
Guarantor, the aggregate Capital Call Obligations of such Guarantor's Partners
(a) that are not subject to any lien, security interest or other encumbrance;
(b) that have not been paid (and are not the subject of any capital call which
has been made by such Guarantor's general partner but not yet funded by the
Partner and are not otherwise committed by such general partner) or otherwise
funded by the Partner or Partners; and (c) that do not include amounts with
respect to Defaulted Capital Call Obligations or (without duplication) amounts
with respect to any other Capital Call Obligations payable by a Defaulting
Partner.
The term "Guarantors' Credit Agreement" means [insert description of
Guarantor's Credit Agreement].
The term "Indebtedness" shall mean, as to any individual, corporation,
partnership, trust, unincorporated association, business or other legal entity
and any government or any governmental agency or political subdivision thereof
(collectively, a "Person") and whether recourse is secured by or is otherwise
available against all or only a portion of the assets of such Person and whether
or not contingent, but without duplication: (i) every obligation of such Person
for money borrowed, (ii) every obligation of such Person evidenced by bonds,
debentures, notes or other similar instruments, including obligations incurred
in connection with the acquisition of property, assets or businesses, (iii)
every reimbursement obligation of such Person with respect to letters of credit,
bankers' acceptances or similar facilities issued for the account of such
Person, (iv) every obligation of such Person issued or assumed as the deferred
purchase price of property or services (including securities repurchase
agreements but excluding trade accounts payable or accrued liabilities arising
in the ordinary course of business which are not overdue or which are being
contested in good faith), (v) every obligation of such Person under any
capitalized lease, (vi) every obligation of such Person under any lease (a
"synthetic lease") treated as an operating lease under generally accepted
accounting principles and as a loan or financing for U.S. income tax purposes,
(vii) all sales by such Person of (A) accounts or general intangibles for money
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due or to become due, (B) chattel paper, instruments or documents creating or
evidencing a right to payment of money or (C) other receivables (collectively
"receivables"), whether pursuant to a purchase facility or otherwise, other than
in connection with the disposition of the business operations of such Person
relating thereto or a disposition of defaulted receivables for collection and
not as a financing arrangement, and together with any obligation of such Person
to pay any discount, interest, fees, indemnities, penalties, recourse, expenses
or other amounts in connection therewith, (viii) every obligation of such Person
(an "equity related purchase obligation") to purchase, redeem, retire or
otherwise acquire for value any shares of capital stock of any class issued by
such Person, any warrants, options or other rights to acquire any such shares,
or any rights measured by the value of such shares, warrants, options or other
rights, (ix) every obligation of such Person under any forward contract, futures
contract, swap, option or other financing agreement or arrangement (including,
without limitation, caps, floors, collars and similar agreements), the value of
which is dependent upon interest rates, currency exchange rates, commodities or
other indices (a "derivative contract"), (x) every obligation in respect of
Indebtedness of any other entity (including any partnership in which such Person
is a general partner) to the extent that such Person is liable therefor as a
result of such Person's ownership interest in or other relationship with such
entity, except to the extent that the terms of such Indebtedness provide that
such Person is not liable therefor and such terms are enforceable under
applicable law, (xi) every obligation, contingent or otherwise, of such Person
guaranteeing, or having the economic effect of guarantying or otherwise acting
as surety for, any obligation of a type described in any of clauses (i) through
(x) (the "primary obligation") of another Person (the "primary obligor"), in any
manner, whether directly or indirectly, and including, without limitation, any
obligation of such Person (A) to purchase or pay (or advance or supply funds for
the purchase of) any security for the payment of such primary obligation, (B) to
purchase property, securities or services for the purpose of assuring the
payment of such primary obligation, or (C) to maintain working capital, equity
capital or other financial statement condition or liquidity of the primary
obligor so as to enable the primary obligor to pay such primary obligation.
The term "Partner" means, as to any Guarantor, any Person who or which
holds a limited partnership interest in such Guarantor pursuant to the
Partnership Agreement of such Guarantor.
The term "Partnership Agreements" shall mean [detail each Guarantor's
Partnership Agreement].
The term "Total Guarantor Obligations" means, as to any Guarantor, the
sum of (a) the Obligations, plus (b) the sum of (i) outstanding Revolving Credit
Loans (as such term is defined in the Guarantor Credit Agreement) plus the
Maximum Drawing Amount (as such term is defined in the Guarantor Credit
Agreement) of all issued and outstanding Letters of Credit (as such term is
defined in the Guarantor Credit Agreement) plus all Unpaid Reimbursement
Obligations (as such term is defined in the Guarantor Credit Agreement) [plus
(ii) the aggregate amount of all Indebtedness of the Borrower], provided,
however, to the extent the Guarantor Credit Agreement has been terminated, then
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(b)(i) hereof shall be the aggregate amount of any obligations, whether
contingent or otherwise, of such Guarantor for borrowed money as of such date of
determination.
The term "Unpaid Capital Commitment" means, as to any Guarantor, with
respect to any Partner of such Guarantor, such Partner's Capital Commitment less
such Partner's Capital Contribution.
2. GUARANTY OF PAYMENT AND PERFORMANCE. Each of the Guarantors hereby
jointly and severally guarantees to the Lender the full and punctual payment
when due (whether at stated maturity, by required pre-payment, by acceleration
or otherwise), as well as the performance, of all of the Obligations including
all such which would become due but for the operation of the automatic stay
pursuant to ss.362(a) of the Federal Bankruptcy Code and the operation of
ss.ss.502(b) and 506(b) of the Federal Bankruptcy Code. In addition, each of the
Guarantors agrees that payments by the Guarantor hereunder shall be made without
recoupment, setoff or counterclaim and free and clear of and without deduction
for any taxes, levies, imposts, duties, charges, fees, deductions, withholdings,
compulsory loans, restrictions or conditions of any nature now or hereafter
imposed or levied by any jurisdiction or any political subdivision thereof or
taxing or other authority therein unless the Guarantor is compelled by law to
make such deduction or withholding. If any such obligation is imposed upon any
Guarantor with respect to any amount payable by it hereunder or under any of the
other Loan Documents, such Guarantor will pay to the Lender, on the date on
which such amount is due and payable under any Loan Document, such additional
amount in United States dollars as shall be necessary to enable the Lender to
receive the same net amount which the Lender would have received on such due
date had no such obligation been imposed upon such Guarantor. This Guaranty is
an absolute, unconditional and continuing guaranty of the full and punctual
payment and performance of all of the Obligations and not of their
collectibility only and is in no way conditioned upon any requirement that the
Lender first attempt to collect any of the Obligations from the Company or
resort to any collateral security or other means of obtaining payment. Should
the Company default in the payment or performance of any of the Obligations, the
joint and several obligations of the Guarantors hereunder with respect to such
Obligations in default shall, upon demand by the Lender, become immediately due
and payable to the Lender, without demand or notice of any nature, all of which
are expressly waived by each Guarantor. Payments by the Guarantors hereunder may
be required by the Lender on any number of occasions.
3. GUARANTOR'S AGREEMENT TO PAY ENFORCEMENT COSTS, ETC. Each Guarantor
further agrees, as the principal obligor and not as a guarantor only, to pay to
the Lender, on demand, all reasonable costs and expenses (including court costs
and legal expenses) incurred or expended by the Lender in connection with the
Obligations, this Guaranty and the enforcement thereof, together with interest
on amounts recoverable under this ss.3 from the time when such amounts become
due until payment, whether before or after judgment, at the rate of interest for
overdue principal set forth in the Credit Agreement, provided that if such
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interest exceeds the maximum amount permitted to be paid under applicable law,
then such interest shall be reduced to such maximum permitted amount.
4. LIMITED GUARANTY. Notwithstanding any other term or provision of
this Guaranty to the contrary, the Guarantors' liability hereunder shall be
limited to an amount equal to (a) $_____________ in principal amount, plus,
without limitation as to the amounts thereof, (b) all interest, banking charges,
commissions, costs and reasonable expenses chargeable to the Company in respect
of the Obligations (other than costs and expenses, including attorneys fees,
incurred in connection with the enforcement against the Company of the Credit
Agreement, unless the Lender is required to incur just costs and/or expenses
prior to being able to demand payment hereunder), plus (c) all interest and
other costs and reasonable expenses payable by the Guarantors pursuant to ss.3
hereof (other than costs and expenses, including attorneys fees, incurred in
connection with the enforcement against the Company of the Credit Agreement,
unless the Lender is required to incur just costs and/or expenses prior to being
able to demand payment hereunder). Each payment made by any Guarantor hereunder
which is applied against the Obligations referred to in clause (a) above shall
reduce such Guarantor's liability by such amount. The Lender's dealings with the
Company need not be limited to any particular sum notwithstanding any limitation
herein upon the liability of each Guarantor.
5. WAIVERS BY GUARANTOR; LENDER'S FREEDOM TO ACT. Each Guarantor agrees
that the Obligations will be paid and performed strictly in accordance with
their respective terms, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Lender with respect thereto. Each Guarantor waives promptness,
diligences, presentment, demand, protest, notice of acceptance, notice of any
Obligations incurred and all other notices of any kind, all defenses which may
be available by virtue of any valuation, stay, moratorium law or other similar
law now or hereafter in effect, any right to require the marshalling of assets
of the Company or any other entity or other person primarily or secondarily
liable with respect to any of the Obligations, and all suretyship defenses
generally. Without limiting the generality of the foregoing, each Guarantor
agrees to the provisions of any instrument evidencing, securing or otherwise
executed in connection with any Obligation and agrees that the obligations of
such Guarantor hereunder shall not be released or discharged, in whole or in
part, or otherwise affected by (a) the failure of the Lender to assert any claim
or demand or to enforce any right or remedy against the Company or any other
entity or other person primarily or secondarily liable with respect to any of
the Obligations; (b) any extensions, compromise, refinancing, consolidation or
renewals of any Obligation; (c) any change in the time, place or manner of
payment of any of the Obligations or any rescissions, waivers, compromise,
refinancing, consolidation, amendments or modifications of any of the terms or
provisions of the Credit Agreement, the other Loan Documents or any other
agreement evidencing, securing or otherwise executed in connection with any of
the Obligations; (d) the addition, substitution or release of any entity or
other person primarily or secondarily liable for any Obligation, (e) the
adequacy of any rights which the Lender may have against any collateral security
or other means of obtaining repayment of any of the Obligations; (f) the
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impairment of any collateral securing any of the Obligations, including without
limitation the failure to perfect or preserve any rights which the Lender might
have in such collateral security or the substitution, exchange, surrender,
release, loss or destruction of any such collateral security; or (g) any other
act or omission which might in any manner or to any extent vary the risk of the
Guarantor or otherwise operate as a release or discharge of such Guarantor, all
of which may be done without notice to such Guarantor. To the fullest extent
permitted by law, each Guarantor hereby expressly waives any and all rights or
defenses arising by reason of (i) any "one action" or "anti-deficiency" law
which would otherwise prevent the Lender from bringing any action, including any
claim for a deficiency, or exercising any other right or remedy (including any
right of set-off), against such Guarantor before or after the Lender's
commencement or completion of any foreclosure action, whether judicially, by
exercise of power of sale or otherwise, or (ii) any other law which in any other
way would otherwise require any election of remedies by the Lender.
6. UNENFORCEABILITY OF OBLIGATIONS AGAINST COMPANY. If for any reason
the Company has no legal existence or is under no legal obligation to discharge
any of the Obligations, or if any of the Obligations have become irrecoverable
from the Company by reason of the Company's insolvency, bankruptcy or
reorganization or by other operation of law or for any other reason, this
Guaranty shall nevertheless be binding on each Guarantor to the same extent as
if each Guarantor at all times had been the principal obligor on all such
Obligations. In the event that acceleration of the time for payment of any of
the Obligations is stayed upon the insolvency, bankruptcy or reorganization of
the Company, or for any other reason, all such amounts otherwise subject to
acceleration under the terms of the Credit Agreement, the other Loan Documents
or any other agreement evidencing, securing or otherwise executed in connection
with any Obligation shall be immediately due and payable by each Guarantor.
7. SUBROGATION; SUBORDINATION.
7.1. WAIVER OF RIGHTS AGAINST COMPANY. Until the final payment
and performance in full of all of the Obligations, neither Guarantor
shall exercise any rights against the Company arising as a result of
payment by any Guarantor hereunder, by way of subrogation,
reimbursement, restitution, contribution or otherwise, and will not
prove any claim in competition with the Lender in respect of any
payment hereunder in any bankruptcy, insolvency or reorganization case
or proceedings of any nature; neither Guarantor will claim any setoff,
recoupment or counterclaim against the Company in respect of any
liability of such Guarantor to the Company; and each Guarantor waives
any benefit of and any right to participate in any collateral security
which may be held by the Lender.
7.2. SUBORDINATION. The payment of any amounts due with
respect to any indebtedness of the Company now or hereafter owed to
each Guarantor is hereby subordinated to the prior payment in full of
all of the Obligations, to the extent and in the manner set forth in
the next sentence. Each Guarantor agrees that, after the occurrence and
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during the continuance of any default in the payment or performance of
any of the Obligations, such Guarantor will not demand, xxx for or
otherwise attempt to collect any such indebtedness of the Company to
such Guarantor until all of the Obligations shall have been paid in
full. If, notwithstanding the foregoing sentence, a Guarantor shall
collect, enforce or receive any amounts in respect of such
indebtedness, such amounts shall be collected, enforced and received by
such Guarantor as trustee for the Lender and be paid over to the Lender
on account of the Obligations without affecting in any manner the
liability of such Guarantor under the other provisions of this
Guaranty.
7.3. PROVISIONS SUPPLEMENTAL. The provisions of this ss.7
shall be supplemental to and not in derogation of any rights and
remedies of the Lender under any separate subordination agreement which
the Lender may at any time and from time to time enter into with the
Guarantors.
8. SECURITY; SETOFF. Each Guarantor grants to the Lender, as security
for the full and punctual payment and performance of all of such Guarantor's
obligations hereunder, a continuing lien on and security interest in all
securities or other property belonging to such Guarantor now or hereafter held
by the Lender and in all deposits (general or special, time or demand,
provisional or final) and other sums credited by or due from the Lender to such
Guarantor or subject to withdrawal by such Guarantor. Regardless of the adequacy
of any collateral security or other means of obtaining payment of any of the
Obligations, the Lender is hereby authorized at any time and from time to time,
without notice to such Guarantor (any such notice being expressly waived by such
Guarantor) and to the fullest extent permitted by law, to set off and apply such
deposits and other sums against the obligations of such Guarantor under this
Guaranty, whether or not the Lender shall have made any demand under this
Guaranty and although such obligations may be contingent or unmatured.
9. REPRESENTATIONS; COVENANTS AND FURTHER ASSURANCES.
9.1. REPRESENTATIONS. Each of the Guarantor and [Insert name
of GP of each Guarantor], in its capacity as sole general partner of
each Guarantor (the "General Partner") hereby represents and warrants
to the Lender that (a) each of the Guarantors and General Partner is
duly organized, validly existing, and in good standing under the laws
of its jurisdiction of formation, and the execution, delivery and
performance by such Guarantor and the General Partner of this Guaranty
and the other Loan Documents to which it is a party (i) are within its
partnership authority, (ii) have been duly authorized by all
appropriate action, (iii) do not conflict with or contravene its
Partnership Agreement, or any law, rule, order or regulation; (b) upon
the execution and delivery thereof, the Guaranty and each other Loan
Document shall constitute the legal, valid and binding obligation of
each such Guarantor party thereto, enforceable in accordance with its
terms; (c) the financial statements provided to the Lender as at
_____________________ are complete and correct and fairly present the
position of each Guarantor as at such date and for such period in
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accordance with generally accepted accounting principles consistently
applied; and (d) the execution, delivery, performance of its
obligations, and exercise of its rights under the Guaranty and the
other Loan Documents by each Guarantor (i) do not require any consents
or approvals; and (ii) are not and will not be in conflict with or
prohibited or prevented by (A) any law, rule, order or regulation, or
(B) its Partnership Agreement or any partnership action.
9.2. COVENANTS. Each Guarantor agrees that at all times the
ratio of (a) Eligible Capital Call Commitments of such Guarantor to (b)
Total Guarantor Obligations of such Guarantor shall not be less than
___:1.00. Not later than forty-five (45) days after the end of each
fiscal quarter, each Guarantor shall provide to the Lender evidence
demonstrating compliance with this covenant contained in ss.9.2 To the
extent the ratio of (a) Eligible Capital Call Commitments of a
Guarantor to (b) Total Guarantor Obligations for such Guarantor is less
than ____:1.00, upon demand by the Lender, such Guarantor shall deposit
with the Lender cash collateral in an amount sufficient so that when
added to the Eligible Capital Call Commitment portion of such ratio,
such Guarantor complies with the covenant set forth in this ss.9.2. In
addition, each Guarantor agrees that so long as any Obligation is
outstanding, such Guarantor will not (1) create, incur, assume,
guarantee or be or remain liable, contingently or otherwise, with
respect to any Indebtedness other than Indebtedness permitted by ss.9.1
of the Guarantor Credit Agreement; (2) create or incur or suffer to be
created or incurred or permit to exist any lien, encumbrance, mortgage,
pledge, charge, restriction or other security interest of any kind upon
any Capital Call Obligation or such Guarantor's rights to receive such
payments, or (3) or enter into any agreement prohibiting the creation
or assumption of any lien upon its properties, revenues or assets,
whether now owned or hereafter acquired, unless otherwise permitted by
the Guarantor Credit Agreement.
9.3. FURTHER ASSURANCES. Each Guarantor agrees that it will
from time to time, at the request of the Lender, provide to the Lender
such Guarantor's most recent audited and unaudited balance sheets and
related statements of income and changes in financial condition and
such other information relating to the business and affairs of such
Guarantor as the Lender may reasonably request. Each Guarantor also
agrees to do all such things and execute all such documents as the
Lender may consider reasonably necessary or desirable to give full
effect to this Guaranty and to perfect and preserve the rights and
powers of the Lender hereunder. Each Guarantor acknowledges and
confirms that such Guarantor itself has established its own adequate
means of obtaining from the Company on a continuing basis all
information desired by such Guarantor concerning the financial
condition of the Company and that such Guarantor will look to the
Company and not to the Lender in order for such Guarantor to keep
adequately informed of changes in the Company's financial condition.
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10. TERMINATION; REINSTATEMENT. This Guaranty shall remain in full
force and effect until the Lender is given written notice of any Guarantor's
intention to discontinue this Guaranty, notwithstanding any intermediate or
temporary payment or settlement of the whole or any part of the Obligations. No
such notice shall be effective unless received and acknowledged by an officer of
the Lender at the address of the Lender for notices set forth in the Credit
Agreement. No such notice shall affect any rights of the Lender hereunder,
including without limitation the rights set forth in ss.ss.5 and 7, with respect
to any Obligations incurred or accrued prior to the receipt of such notice or
any Obligations incurred or accrued pursuant to any contract or commitment in
existence prior to such receipt, and all checks, drafts, notes, instruments
(negotiable or otherwise) and writings made by or for the account of the Company
and drawn on the Lender or any of its agents purporting to be dated on or before
the date of receipt of such notice, although presented to and paid or accepted
by the Lender after that date, shall form part of the Obligations. This Guaranty
shall continue to be effective or be reinstated, notwithstanding any such
notice, if at any time any payment made or value received with respect to any
Obligation is rescinded or must otherwise be returned by the Lender upon the
insolvency, bankruptcy or reorganization of the Company, or otherwise, all as
though such payment had not been made or value received.
11. SUCCESSORS AND ASSIGNS. This Guaranty shall be binding upon each
Guarantor, its successors and assigns, and shall inure to the benefit of and be
enforceable by the Lender and its successors, transferees and assigns. Without
limiting the generality of the foregoing sentence, the Lender may assign or
otherwise transfer the Credit Agreement, the other Loan Documents or any other
agreement or note held by it evidencing, securing or otherwise executed in
connection with the Obligations, or sell participations in any interest therein,
to any other entity or other person, and such other entity or other person shall
thereupon become vested, to the extent set forth in the agreement evidencing
such assignment, transfer or participation, with all the rights in respect
thereof granted to the Lender herein. No Guarantor may assign any of its
obligations hereunder.
12. AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of
this Guaranty nor consent to any departure by any Guarantor therefrom shall be
effective unless the same shall be in writing and signed by the Guarantor and
the Lender. No failure on the part of the Lender to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right.
13. NOTICES. All notices and other communications called for hereunder
shall be made in writing and, unless otherwise specifically provided herein,
shall be deemed to have been duly made or given when delivered by hand or mailed
first class, postage prepaid, or, in the case of telegraphic or telexed notice,
when transmitted, answer back received, addressed as follows: if to a Guarantor,
at the address set forth beneath its signature hereto, and if to the Lender, at
the address for notices to the Lender set forth in the Credit Agreement, or at
such address as either party may designate in writing to the other.
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14. GOVERNING LAW; CONSENT TO JURISDICTION. THIS GUARANTY IS INTENDED
TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS. Each Guarantor
agrees that any suit for the enforcement of this Guaranty may be brought in the
courts of the Commonwealth of Massachusetts or any federal court sitting therein
and consents to the nonexclusive jurisdiction of such court and to service of
process in any such suit being made upon such Guarantor by mail at the address
specified by reference in ss.13 Each Guarantor hereby waives any objection that
it may now or hereafter have to the venue of any such suit or any such court or
that such suit was brought in an inconvenient court.
15. WAIVER OF JURY TRIAL. EACH GUARANTOR HEREBY WAIVES ITS RIGHT TO A
JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN
CONNECTION WITH THIS GUARANTY, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE
PERFORMANCE OF ANY OF SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law,
each Guarantor hereby waives any right which it may have to claim or recover in
any litigation referred to in the preceding sentence any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages. Each Guarantor (a) certifies that neither the Lender nor any
representative, agent or attorney of the Lender has represented, expressly or
otherwise, that the Lender would not, in the event of litigation, seek to
enforce the foregoing waivers and (b) acknowledges that, in entering into the
Credit Agreement and the other Loan Documents to which the Lender is a party,
the Lender is relying upon, among other things, the waivers and certifications
contained in this ss.15.
16. MISCELLANEOUS. This Guaranty constitutes the entire agreement of
the Guarantors and the Lender with respect to the matters set forth herein. The
rights and remedies herein provided are cumulative and not exclusive of any
remedies provided by law or any other agreement, and this Guaranty shall be in
addition to any other guaranty of or collateral security for any of the
Obligations. The invalidity or unenforceability of any one or more sections of
this Guaranty shall not affect the validity or enforceability of its remaining
provisions. Captions are for the ease of reference only and shall not affect the
meaning of the relevant provisions. The meanings of all defined terms used in
this Guaranty shall be equally applicable to the singular and plural forms of
the terms defined.
17. CONTRIBUTION. To the extent any Guarantor makes a payment hereunder
in excess of the aggregate amount of the benefit received by such Guarantor in
respect of the extensions of credit under the Loan documents (the "Benefit
Amount"), then such Guarantor, after the payment in full, in cash, of all of the
Obligations, shall be entitled to recover from each other Guarantor such excess
payment, pro rata, in accordance with the ratio of the Benefit Amount received
by each such other Guarantor to the total Benefit Amount received by all
Guarantors, and the right to such recovery shall be deemed to be an asset and
property of such Guarantor so funding; provided, that all such rights to
recovery shall be subordinated and junior in right of payment to the final and
undefeasible payment in full in cash of all of the Obligations.
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IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be
executed and delivered as of the date first above written.
[INSERT NAME OF GUARANTOR]
By: _____________________________
Name:
Title:
Address:
[INSERT NAME OF GUARANTOR]
By: _____________________________
Name:
Title:
Address:
Exhibit 4
REIMBURSEMENT AGREEMENT
-----------------------
This REIMBURSEMENT AGREEMENT, dated as of [DATE], 2002 (this
"Agreement"), is entered into by and between XXX.XXX, INC., a Delaware
corporation ("Obligor") and VANTAGEPOINT VENTURE PARTNERS III (Q), L.P., a
Delaware limited partnership ("VantagePoint").
RECITALS
A. Obligor has requested that VantagePoint cause to be
issued a Guaranty (the "Guaranty") in the initial amount
of Five Million Dollars ($5,000,000) (which amount may
be increased) to support certain obligations of Obligor,
under a [Loan Agreement], dated as of August __, 2002
(as amended or supplemented to date, the "Credit
Agreement"), between Obligor and Fleet National Bank
("Bank").
B. In order to induce VantagePoint to issue the Guaranty,
Obligor has agreed to enter into this Agreement.
C. The obligations under this Agreement are secured by a
Security Agreement, dated the date hereof, executed by
Obligor and certain of its Subsidiaries in favor of
VantagePoint (the "Security Agreement"). The obligations
under this Agreement have been guarantied by certain of
the Subsidiaries of Obligor (each a "Subsidiary
Guarantor") pursuant to a Subsidiary Guaranty, dated as
of the date hereof (the "Subsidiary Guaranty")
D. Capitalized terms used and not otherwise defined in this
Agreement shall have the respective meanings set forth
in Section 6 hereof.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Obligor hereby agrees with VantagePoint as follows:
1. Reimbursement. (a) If VantagePoint shall at any time or from time to
time be required to make any payment (i) under the Guaranty for any Drawn
Amount, or (ii) in payment of a Guaranty Expense Amount, then VantagePoint may
give Obligor written notice of any such payment and Obligor shall reimburse
VantagePoint within two (2) business days of receipt of such written notice an
amount equal to such Drawn Amount and/or Guaranty Expense Amount, as applicable.
(b) Obligor's Obligations hereunder are absolute, unconditional and
irrevocable and shall not be reduced by any set-off or any event or occurrence
including any action or inaction by VantagePoint or any other party or by any
unenforceability of the Credit Agreement. Any Obligations not paid when due
shall bear interest a rate per annum of 10%.
2. Representations and Warranties of Obligor. Obligor represents and
warrants to VantagePoint that:
(a) Due Incorporation, Qualification, etc. Obligor (i) is a
corporation duly organized, validly existing and in good standing under the laws
of its state of incorporation; (ii) has the corporate power and authority to
own, lease and operate its properties and carry on its business as now
conducted; and (iii) is duly qualified, licensed to do business and in good
standing as a foreign corporation in each jurisdiction where the failure to be
so qualified or licensed could reasonably be expected to have a material adverse
effect on the business, financial condition or results of operations of Obligor.
(b) Authority. The execution, delivery and performance by Obligor of
this Agreement and the other Operative Documents to which it is a party and the
consummation of the transactions contemplated hereby (i) are within the
corporate power and authority of Obligor and (ii) have been duly authorized by
all necessary corporate actions on the part of Obligor.
(c) Enforceability. This Agreement and the other Operative Documents
to which Guarantor is a party has been duly executed and delivered by Obligor
and constitutes, or will constitute, a legal, valid and binding obligation of
Obligor, enforceable against Obligor in accordance with its terms, except as
limited by bankruptcy, insolvency or other laws of general application relating
to or affecting the enforcement of creditors' rights generally and general
principles of equity.
(d) Non-Contravention. The execution and delivery by Obligor of this
Agreement and the other Operative Documents and the performance and consummation
of the transactions contemplated hereby do not and will not (i) violate the
articles or certificate of incorporation or bylaws of Obligor or any material
judgment, order, writ, decree, statute, rule or regulation applicable to
Obligor; (ii) violate any provision of, or result in the breach or the
acceleration of, or entitle any other person to accelerate (whether after the
giving of notice or lapse of time or both), any material mortgage, indenture,
agreement, instrument or contract to which Obligor is a party or by which it is
bound; or (iii) result in the creation or imposition of any lien upon any
property, asset or revenue of Obligor (other than those in favor of
VantagePoint) or the suspension, revocation, impairment, forfeiture, or
nonrenewal of any material permit, license, authorization or approval applicable
to Obligor, its business or operations, or any of its assets or properties.
(e) Approvals. Other than those already obtained, no consent,
approval, order or authorization of, or registration, declaration or filing
with, any governmental authority or other person (including, without limitation,
the shareholders of Obligor) is required in connection with the execution and
delivery of this Agreement and the other Operative Documents and the performance
and consummation of the transactions contemplated hereby and thereby.
3. Deliveries. Simultaneously with the execution and delivery of this
Agreement, the following shall occur:
(a) Obligor and each Subsidiary Guarantor shall have executed and
delivered to VantagePoint the Security Agreement in the form attached hereto as
Exhibit A;
(b) Each Subsidiary Guarantor shall have executed and delivered to
VantagePoint the Subsidiary Guaranty in the form attached hereto as Exhibit B;
(c) Obligor shall have delivered to VantagePoint's designee a
warrant in the form attached hereto as Exhibit C;
(d) Obligor and each Subsidiary Guarantor shall have executed and
delivered each financing statement, instrument, agreement and other document as
VantagePoint shall have reasonably requested to perfect its security interest
and the priority thereof;
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(e) Obligor shall have delivered to VantagePoint an opinion of its
counsel in form and substance reasonably satisfactory to VantagePoint; and
(f) Obligor shall have delivered to VantagePoint an amendment to
Obligor's existing registration rights agreement, duly executed by the requisite
number of investors party thereto, pursuant to which VantagePoint shall receive
the same registration rights granted to other investors party to such
registration rights agreement with respect to the shares of common stock
issuable upon exercise or conversion of the warrant referenced in subsection (c)
of this Section 3.
To the extent any of the foregoing shall not have occurred upon the
execution and delivery of this Agreement, Obligor agrees (as a covenant and not
merely as a condition) to promptly accomplish the same.
4. Covenants of Obligor.
(a) Obligor agrees:
(i) To timely perform all of its obligations to Bank under the
Credit Agreement;
(ii) To give VantagePoint prompt notice of any default in the
observance of each Obligor's obligations under the Credit Agreement and to use
its commercially reasonable best efforts to cure any such default within the
time periods permitted;
(iii) Not to make any borrowing or otherwise utilize credit
under the Credit Agreement until such time as the unrestricted cash (determined
in accordance with GAAP) shown on Obligor's balance sheet is less than
$5,000,000;
(iv) Not to amend or otherwise modify the Credit Agreement
without the prior written consent of VantagePoint, and not to enter into any
loan or credit agreement or other credit arrangements with Bank outside the
Credit Agreement;
(v) To immediately notify VantagePoint if the unrestricted
cash (determined in accordance with GAAP) shown on Obligor's balance sheet
equals or exceeds $11,000,000; (vi) If the unrestricted cash (determined in
accordance with GAAP) shown on Obligor's balance sheet equals or exceeds
$11,000,000, then Obligor shall do either of the following at VantagePoint's
request:
(1) repay outstanding loans under the Credit Agreement
in increments of $1,000,000 for each such increment in excess of $10,000,000
(provided that if there is less than $1,000,000 of outstanding loans due under
the Credit Agreement, then Obligor shall repay such lesser amount to the extent
that Obligor retains unrestricted cash balances in an amount equal to
$10,000,000 after giving effect to such repayment), and if requested by
VantagePoint, permanently reduce the outstanding commitment under the Credit
Agreement in an amount equal to such repayment amount; or
(2) cause the guarantee requirement under the Credit
Agreement to be eliminated in an amount equal to the amount of outstanding loans
that would otherwise be required to be repaid pursuant to Section 4(a)(vi)(1)
hereof.
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(b) Obligor agrees, at all times after Obligor has received notice
of a demand by Bank for payment under the Guaranty and until such demand has
been rescinded by Bank, that without the prior written consent of VantagePoint:
(i) Indebtedness. Neither Obligor nor any of its Subsidiaries
shall create, incur, assume or permit to exist any Indebtedness except Permitted
Indebtedness.
(ii) Liens. Neither Obligor nor any of its Subsidiaries shall
create, incur, assume or permit to exist any Lien on or with respect to any of
its assets or property of any character, whether now owned or hereafter
acquired, except for Permitted Liens.
(iii) Asset Dispositions. Neither Obligor nor any of its
Subsidiaries shall sell, lease, transfer, license or otherwise dispose of
(collectively, a "Transfer") any of its assets or property, whether now owned or
hereafter acquired, except (i) Transfers in the ordinary course of its business
(A) consisting of the sale of inventory, (B) consisting of sales of worn-out or
obsolete equipment, and (C) consisting of cash payments in a manner that is not
prohibited by the terms of this Agreement or the other Operative Documents; and
(ii) Transfers by Obligor to any Subsidiary which is a Subsidiary Guarantor and
Transfers by any Subsidiary to Obligor or another Subsidiary which is a
Subsidiary Guarantor.
(iv) Mergers, Acquisitions, Etc. Neither Obligor nor any of
its Subsidiaries shall consolidate with or merge into any other Person or permit
any other Person to merge into it, or acquire all or substantially all of the
assets or capital stock of any other Person, except that any Subsidiary may
merger with and into Obligor or another Subsidiary which is a Guarantor.
(v) Investments. Neither Obligor nor any of its Subsidiaries
shall make any Investment except for Permitted Investments. Neither Obligor nor
any of its Subsidiaries shall create, acquire or permit to exist any Subsidiary
which is not a Subsidiary Guarantor other than Subsidiaries which are regulated
by a federal, state or local regulatory agency (each a "Regulated Subsidiary")
where the granting of a security interest in its assets would require approval
from such federal, state or local authority. Notwithstanding the foregoing,
neither Obligor nor any of its Subsidiaries shall make any Investment in a
Regulated Subsidiary to the extent that such Investment exceeds [amounts
necessary for such Regulated Subsidiary to make payments to local telephone
companies, public utility commissions or the Federal Communications Commission
in the ordinary course of business - SUBJECT TO VantagePoint's additional due
diligence].
(vi) Dividends, Redemptions, Etc. Neither Obligor nor any of
its Subsidiaries shall (i) pay any dividends or make any distributions on its
equity securities; (ii) purchase, redeem, retire, defease or otherwise acquire
for value any of its equity securities; (iii) return any capital to any holder
of its equity securities, other than equity securities in an aggregate amount
not to exceed $__________ purchased from terminated employees, consultants or
directors pursuant to employee stock purchase plans, employee restricted stock
agreements or similar agreements; (iv) make any distribution of assets, Equity
Securities, obligations or securities to any holder of its Equity Securities; or
(v) set apart any sum for any such purpose; provided, however, that any
Subsidiary may pay cash dividends to Obligor or any Subsidiary which is a
Subsidiary Guarantor.
(vii) Indebtedness Payments. Neither Obligor nor any of its
Subsidiaries shall (i) prepay, redeem, purchase, defease or otherwise satisfy in
any manner prior to the scheduled repayment thereof any Indebtedness for
borrowed money (other than amounts due under the Credit Agreement or this
Agreement) or lease obligations, (ii) amend, modify or otherwise change the
terms of any Indebtedness (other than the Obligations) or lease obligations so
as to accelerate the scheduled repayment thereof or (iii) repay any notes to
officers, directors or shareholders.
4
(viii) Affiliate Transactions. Except for this Agreement and
the other Operative Documents, neither Obligor nor any of its Subsidiaries shall
enter into any contractual obligation with any Affiliate or engage in any other
transaction with any Affiliate (other than transactions pursuant to existing
agreements between Obligor and holders of its Preferred Stock) except upon terms
at least as favorable to Borrower or such Subsidiary as an arms-length
transaction with unaffiliated Persons.
(ix) Notice of Defaults. Promptly upon the occurrence thereof,
provide written notice of the occurrence of any Event of Default hereunder.
5. Default and Remedies. Obligor shall be deemed in default under this
Agreement upon the occurrence and during the continuance of any of the following
events (each, an "Event of Default"):
(a) Obligor shall default with respect to any payment obligation
hereunder and such default shall continue uncured for a period of (5) business
days; or
(b) Any representation or warranty made by Obligor in this Agreement
or in the Credit Agreement, or as an inducement to VantagePoint to cause the
Guaranty to be issued, shall be false, incorrect, incomplete or misleading in
any material respect when made or furnished; or
(c) Obligor or any of its Subsidiaries shall fail to observe or
perform any other covenant, obligation, condition or agreement contained in this
Agreement or the other Operative Documents (other than those specified in
Sections 5(a)) and (i) such failure shall continue for fifteen (15) days, or
(ii) if such failure is not curable within such fifteen (15) day period, but is
reasonably capable of cure within thirty (30) days, either (A) such failure
shall continue for thirty (30) days or (B) Company or its Subsidiary shall not
have commenced a cure in a manner reasonably satisfactory to VantagePoint within
the initial fifteen (15) day period; or
(d) Obligor or any of its Subsidiaries shall default in the
observance or performance of any other agreement, term or condition contained in
any bond, debenture, note or other evidence of Indebtedness, and the effect of
such failure or default is to cause, or permit the holder or holders of such
Indebtedness thereof to cause, Indebtedness in an aggregate amount of One
Million Dollars ($1,000,000) or more to become due prior to its stated date of
maturity; or
(e) Obligor shall (i) apply for or consent to the appointment of a
receiver, trustee, liquidator or custodian of itself or of all or a substantial
part of its property, (ii) be unable, or admit in writing its inability, to pay
its debts generally as they mature, (iii) make a general assignment for the
benefit of its or any of its creditors, (iv) be dissolved or liquidated, (v)
become insolvent (as such term may be defined or interpreted under any
applicable statute), (vi) commence a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law now or hereafter in effect
or consent to any such relief or to the appointment of or taking possession of
its property by any official in an involuntary case or other proceeding
commenced against it, or (vii) take any action for the purpose of effecting any
of the foregoing; or
(f) Proceedings for the appointment of a receiver, trustee,
liquidator or custodian of any Obligor or of all or a substantial part of its
property, or an involuntary case or other proceedings seeking liquidation,
reorganization or other relief with respect to any Obligor or its debts under
any bankruptcy,
5
insolvency or other similar law now or hereafter in effect shall be commenced
and an order for relief entered or such proceeding shall not be dismissed or
discharged within sixty (60) days of commencement.
(g) A final judgment or order for the payment of money in excess of
One Hundred Dollars ($100,000) shall be rendered against Obligor or any of its
Subsidiaries and the same shall remain undischarged for a period of ten (10)
days after it is due during which execution shall not be effectively stayed, or
any judgment, writ, assessment, warrant of attachment, or execution or similar
process shall be issued or levied against a substantial part of the property of
Obligor or any of its Subsidiaries and such judgment, writ, or similar process
shall not be released, stayed, vacated or otherwise dismissed within fifteen
(15) days after issue or levy; or
Upon the occurrence and during the continuance of any such Event of Default,
VantagePoint shall have all of the rights set forth under this Agreement, the
other Operative Documents and under applicable law. Upon the occurrence and
during the continuance of any Event of Default under this Agreement at which
time no demand has been made under the Guaranty, Lender shall have the right, by
written notice to Borrower, to require Borrower to post cash collateral in an
amount equal to the maximum amount which may be demanded under the Guaranty, in
which case Obligor shall execute all such documentation as VantagePoint may
reasonably request to perfect VantagePoint's security interest in such cash
collateral.
6. Definitions. As used in this Agreement, the following capitalized terms
have the following meanings
(a) "Affiliate," with respect to any Person, means (i) any director,
officer or employee of such Person, (ii) any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such Person, and (iii) any Person beneficially owning or holding 5% or more of
any class of voting securities of such Person or any corporation of which such
Person beneficially owns or holds, in the aggregate, 5% or more of any class of
voting securities The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise. The term "Affiliate," when used herein without reference
to any Person, shall mean an Affiliate of Obligor.
(b) "Drawn Amount" means any amount required to be paid by
VantagePoint under the Guaranty upon a request for payment by Bank.
(c) "Equity Securities" of any Person shall mean (a) all common
stock, preferred stock, participations, shares, partnership interests or other
equity interests in and of such Person (regardless of how designated and whether
or not voting or non-voting) and (b) all warrants, options and other rights to
acquire any of the foregoing.
(d) "Event of Default" has the meaning given in Section 5 hereof.
(e) "GAAP" shall mean generally accepted accounting principles as in
effect in the United States of America from time to time.
(f) "Guaranty Expense Amount" means any costs or expenses (other
than Drawn Amounts) payable by VantagePoint or its affiliates in connection with
the Guaranty whether under the Credit Agreement or otherwise, including without
limitation, fees for the issuance or enforcement or collection of the Guaranty,
and reasonable attorneys fees and costs (including the fees of attorneys
employed by VantagePoint), incurred by VantagePoint in connection with the
demand related to a payment under the Guaranty or in connection with the
enforcement, collection of, or attempted collection or enforcement of any of the
obligations of Obligor which are not performed as and when required by this
Agreement.
6
(g) "Indebtedness" shall mean and include the aggregate amount of,
without duplication (i) all obligations for borrowed money, (ii) all obligations
evidenced by bonds, debentures, notes or other similar instruments, (iii) all
obligations to pay the deferred purchase price of property or services (other
than accounts payable incurred in the ordinary course of business determined in
accordance with GAAP), (iv) all obligations with respect to capital leases, (v)
all obligations created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person, (vi) all
reimbursement and other payment obligations, contingent or otherwise, in respect
of letters of credit and similar surety instruments; and (vii) all guaranty
obligations with respect to the types of Indebtedness listed in clauses (i)
through (vi) above.
(h) "Investment" of any Person shall mean any loan or advance of
funds by such Person to any other Person (other than advances to employees of
such Person for moving and travel expense, drawing accounts and similar
expenditures in the ordinary course of business), any purchase or other
acquisition of any Equity Securities or Indebtedness of any other Person, any
capital contribution by such Person to or any other investment by such Person in
any other Person (including, without limitation, any Indebtedness incurred by
such Person of the type described in clauses (i) and (ii) of the definition of
"Indebtedness" on behalf of any other Person); provided, however, that
Investments shall not include accounts receivable or other indebtedness owed by
customers of such Person which are current assets and arose from sales or
non-exclusive licensing in the ordinary course of such Person's business.
(i) "Lien" shall mean, with respect to any property, any security
interest, mortgage, pledge, lien, claim, charge or other encumbrance in, of, or
on such property or the income therefrom, including, without limitation, the
interest of a vendor or lessor under a conditional sale agreement, capital lease
or other title retention agreement, or any agreement to provide any of the
foregoing, and the filing of any financing statement or similar instrument under
the Uniform Commercial Code or comparable law of any jurisdiction.
(j) "Material Adverse Effect" shall mean a material adverse effect
on (a) the business, assets, operations, prospects or financial or other
condition of Obligor; (b) the ability of Obligor to pay or perform the
Obligations in accordance with the terms of this Agreement and the other
Operative Documents and to avoid an Event of Default, or an event which, with
the giving of notice or the passage of time or both, would constitute an Event
of Default, under any Operative Document; or (c) the rights and remedies of
VantagePoint under this Agreement, the other Operative Documents or any related
document, instrument or agreement.
(k) "Obligations" shall mean and include all loans, advances, debts,
liabilities and obligations, arising in connection with this Reimbursement
Agreement or the other Operative Documents and the issuance of, maintenance of
or payment by VantagePoint under the Guaranty, owed by Obligor to VantagePoint
of every kind and description (whether or not evidenced by any note or
instrument and whether or not for the payment of money), now existing or
hereafter arising, including, all interest, fees, charges, expenses, attorneys'
fees and costs and accountants' fees and costs chargeable to and payable by each
Obligor hereunder, in each case, whether direct or indirect, absolute or
contingent, due or to become due, and whether or not arising after the
commencement of a proceeding under Title 11 of the United States Code (11 U.S.C.
Section 101 et seq.), as amended from time to time (including post-petition
interest) and whether or not allowed or allowable as a claim in any such
proceeding.
(l) "Operative Documents" shall mean this Agreement, the Security
Agreement, the Subsidiary Guaranty and all other agreements or documents
executed in connection therewith.
7
(m) "Permitted Indebtedness" shall mean (a) Indebtedness of Obligor
or any of its Subsidiaries (i) in favor of Bank arising under the Credit
Agreement and (ii) in favor of VantagePoint arising under this Agreement or any
other Operative Document; (b) Indebtedness existing on the date hereof and
disclosed on Schedule 1 hereto; and (c) Indebtedness secured by a Lien that is
otherwise permitted pursuant to subsections (vi), (vii) or (viii) of the
definition of "Permitted Lien."
(n) "Permitted Investments" shall mean and include: (a) Deposits
accounts with commercial banks organized under the laws of the United States or
a state thereof to the extent VantagePoint has a perfected security interest
therein and such deposits are fully insured by the Federal Deposit Insurance
Corporation; (b) Investments in marketable obligations issued or fully
guaranteed by the United States and maturing not more than one (1) year from the
date of issuance; (c) Investments in open market commercial paper rated at least
"Al " or "PI " or higher by a national credit rating agency and maturing not
more than 270 days from the creation thereof; (d) Investments pursuant to or
arising under currency agreements or interest rate agreements entered into in
connection with bona fide hedging arrangements.
(o) "Permitted Liens" shall mean and include: (i) Liens for taxes or
other governmental charges not at the time delinquent or thereafter payable
without penalty or being contested in good faith, provided provision is made to
the reasonable satisfaction of Holder for the eventual payment thereof if
subsequently found payable; (ii) Liens of carriers, warehousemen, mechanics,
materialmen, vendors, and landlords incurred in the ordinary course of business
for sums not overdue or being contested in good faith, provided provision is
made to the reasonable satisfaction of Holder for the eventual payment thereof
if subsequently found payable; (iii) deposits under workers' compensation,
unemployment insurance and social security laws or to secure the performance of
bids, tenders, contracts (other than for the repayment of borrowed money) or
leases, or to secure statutory obligations of surety or appeal bonds or to
secure indemnity, performance or other similar bonds in the ordinary course of
business; (iv) easements, reservations, rights of way, restrictions, minor
defects or irregularities in title and other similar charges or encumbrances
affecting real property in a manner not materially or adversely affecting the
value or use of such property; (v) Liens in favor of VantagePoint (vi) Liens
securing obligations under a capital lease if such lease is permitted under this
Agreement and such Liens do not extend to property other than the property
leased under such capital lease; (vii) Liens upon any equipment or other assets
acquired or held by Obligor or any of its Subsidiaries to secure the purchase
price of such equipment or other assets or indebtedness incurred solely for the
purpose of financing the acquisition of such equipment or other assets, so long
as such Lien extends only to the equipment or other assets financed, and any
accessions, replacements, substitutions and proceeds (including insurance
proceeds) thereof or thereto and (viii) Liens on assets acquired from Network
Access Solutions Corporation or its affiliates, or IP Communications, provided
that such Liens are limited to such assets so acquired.
(p) "Person" shall mean and include an individual, a partnership, a
corporation (including a business trust), a joint stock company, a limited
liability company, an unincorporated association, a joint venture or other
entity or a governmental authority.
(q) "Subsidiary" shall mean (a) any corporation of which more than
50% of the issued and outstanding equity securities having ordinary voting power
to elect a majority of the Board of Directors of such corporation is at the time
directly or indirectly owned or controlled by Obligor, (b) any partnership,
joint venture, or other association of which more than 50% of the equity
interest having the power to vote, direct or control the management of such
partnership, joint venture or other association is at the time directly or
indirectly owned and controlled by Obligor, (c) any other entity included in the
financial statements of Obligor on a consolidated basis.
8
7. Miscellaneous.
(a) Notices. Except as otherwise provided herein, all notices,
requests, demands, consents, instructions or other communications to or upon
Obligor or VantagePoint under this Agreement shall be in writing and delivered
by facsimile, hand delivery, overnight courier service or certified mail, return
receipt requested, to each party at the address most recently provided by such
party to the other party.
(b) Nonwaiver. No failure or delay on VantagePoint's part in
exercising any right hereunder shall operate as a waiver thereof or of any other
right nor shall any single or partial exercise of any such right preclude any
other further exercise thereof or of any other right.
(c) Amendments and Waivers. This Agreement may not be amended or
modified, nor may any of its terms be waived, except by written instruments
signed by Obligor and VantagePoint. Each waiver or consent under any provision
hereof shall be effective only in the specific instances for the purpose for
which given.
(d) Assignments. This Agreement shall be binding upon and inure to
the benefit of VantagePoint and each Obligor and their respective successors and
assigns; provided, however, that Obligor may not assign or delegate rights and
obligations hereunder without the prior written consent of VantagePoint.
(e) Cumulative Rights, etc. The rights, powers and remedies of
VantagePoint under this Agreement shall be in addition to all rights, powers and
remedies given to VantagePoint by virtue of any applicable law, rule or
regulation of any governmental authority or any other agreement, all of which
rights, powers, and remedies shall be cumulative and may be exercised
successively or concurrently without impairing VantagePoint's rights hereunder.
(f) Partial Invalidity. If at any time any provision of this
Agreement is or becomes illegal, invalid or unenforceable in any respect under
the law or any jurisdiction, neither the legality, validity or enforceability of
the remaining provisions of this Agreement nor the legality, validity or
enforceability of such provision under the law of any other jurisdiction shall
in any way be affected or impaired thereby.
(g) Expenses. Each Obligor shall pay on demand all reasonable fees
and expenses, including reasonable attorneys' fees and expenses, incurred by
VantagePoint in connection with any enforcement or attempt to enforce any of the
obligations of any Obligor which are not performed as and when required by this
Agreement.
(h) Entire Agreement. This Agreement constitutes and contains the
entire agreement of Obligor and VantagePoint with respect to the subject matter
hereof and supersedes any and all prior agreements, negotiations,
correspondence, understandings and communications among the parties, whether
written or oral, respecting the subject matter hereof.
(i) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California without reference to
conflicts of law rules.
(j) Jury Trial. EACH OBLIGOR AND VANTAGEPOINT, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY
JURY AS TO ANY ISSUE RELATING HERETO IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS AGREEMENT.
9
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first written above.
XXX.XXX, INC.,
as Obligor
By: ____________________________________
Name: __________________________________
Title: _________________________________
AGREED & ACCEPTED:
VANTAGEPOINT VENTURE PARTNERS III (Q), L.P., as VantagePoint
By: VantagePoint Venture Associates III, L.L.C.
By: _____________________________________
___________________ , Managing Member
10
SCHEDULE 1
Existing Indebtedness:
11
Exhibit 5
SECURITY AGREEMENT
------------------
This SECURITY AGREEMENT ("Agreement"), dated as of [Date], is made
between each entity set forth on the signature pages hereto as a grantor (each
such entity and each entity which hereafter executes and a Subsidiary Joinder in
substantially the form of Attachment 1 to the Guaranty (as defined below) to be
referred to herein as a "Grantor", and collectively as, the "Grantors") and
VantagePoint Venture Partners III (Q), L.P. ("Secured Party").
RECITALS
A. Reference is made to that certain [Credit Agreement, dated as of
[DATE], 2002 (the "Credit Agreement"), by and between [Fleet National Bank]
("Lender") and XXX.xxx, Inc. ("Borrower").
B. It is a condition precedent to the extension of credit by Lender
under the Credit Agreement that VPVP enter into a guaranty (the "Credit
Guaranty") to guaranty certain of the obligations of Borrower to Lender under
the Credit Agreement.
C. In order to induce VPVP to enter into the Credit Guaranty, (i)
Borrower has agreed to enter into a Reimbursement Agreement, dated as of [DATE],
2002 (the "Reimbursement Agreement"), (ii) Borrower's subsidiaries party hereto
have agreed to enter into a Guaranty (the "Guaranty") to guaranty Borrower's
obligations to VPVP under the Reimbursement Agreement and (iii) Borrower and
Guarantors have agreed to enter into this Security Agreement, dated as of the
date hereof, to secure their respective obligations under the Reimbursement
Agreement and the Guaranty.
D. Terms defined in the Reimbursement Agreement and not otherwise
defined herein have the same respective meanings when used herein.
AGREEMENT
NOW, THEREFORE, in order to induce Secured Party to enter into the
Reimbursement Agreement and for other good and valuable consideration, the
receipt and adequacy of which hereby is acknowledged, each Grantor hereby
represents, warrants, covenants, agrees and grants as follows: 1. Definitions.
Unless the context otherwise requires, terms defined in the Uniform Commercial
Code of the State of California (the "Uniform Commercial Code") and not
otherwise defined in this Agreement or in the Reimbursement Agreement shall have
the meanings defined for those terms in the Uniform Commercial Code. In
addition, the following terms shall have the meanings respectively set forth
after each:
"Certificates" means all certificates, instruments and other
documents now or hereafter representing or evidencing any Pledged Securities or
Pledged Limited Liability Company Interests.
"Closing Date" shall mean the date of this Agreement.
"Collateral" means and includes all present and future right, title,
interest, claims and demands of each Grantor in or to any personal property or
assets whatsoever, whether now owned or existing or hereafter arising or
acquired and wheresoever located, including without limitation, any and all of
the following personal property:
(a) All present and future accounts, accounts receivable, payment
intangibles, agreements, guaranties, contracts (collectively, the "Accounts"),
together with all instruments, documents, chattel paper, security agreements,
guaranties, undertakings, surety bonds, insurance policies, notes and drafts,
and all forms of obligations owing to such Grantor or to which such Grantor may
have an interest, however created or arising;
(b) All present and future general intangibles, including without
limitation, (i) all tax refunds of every kind and nature to which such Grantor
now or hereafter may become entitled, however arising, (ii) all other refunds,
(iii) all commitments to extend financing to such Grantor, (iv) all deposits,
(v) all goodwill, (vi) all choses in action, (vii) all insurance proceeds, and
(viii) all trade secrets, computer programs, software, customer lists,
trademarks (excluding Intent to Use Applications), trade names, patents,
licenses, copyrights, technology, processes and proprietary information,
including without limitation, the Copyrights, the Patents and the Marks and the
goodwill of such Grantor's business connected with and symbolized by the Marks;
(c) All present and future demand, time, savings, passbook, deposit
and like accounts (general or special) (collectively, the "Deposit Accounts") in
which such Grantor has any interest which is maintained with any bank, savings
and loan association, credit union or like organization, including without
limitation, each account listed on Schedule 1-B attached hereto and all money,
cash and cash equivalents of such Grantor, whether or not deposited in any
Deposit Account;
(d) All present and future books and records, including without
limitation, books of account and ledgers of every kind and nature, all
electronically recorded data relating to such Grantor, all receptacles and
containers for such records, and all files and correspondence;
(e) All present and future goods, including without limitation, all
equipment, machinery, tools, molds, dies, furniture, furnishings, fixtures,
trade fixtures and all other goods used in connection with or in the conduct of
such Grantor's business (collectively, the "Equipment");
(f) All present and future inventory and merchandise, including
without limitation, all present and future goods held for sale or lease or to be
furnished under a contract of service, all recorded media, all raw materials,
work in process and finished goods, all packing materials, supplies and
containers relating to or used in connection with any of the foregoing, and all
bills of lading, warehouse receipts and documents of title relating to any of
the foregoing (collectively, the "Inventory");
(g) All present and future commodity accounts, securities accounts,
investment and/or brokerage accounts and similar accounts, including without
limitation, each account listed on Schedule 1-B attached hereto (collectively,
"Investment Accounts"), all stocks, bonds, debentures, certificated and
uncertificated securities, security entitlements, subscription rights, options,
warrants, puts, calls, certificates, commodity contracts, partnership interests,
limited liability company interests, joint venture interests, and all other
investment property, including without limitation, the Certificates, the Pledged
Securities, the Pledged Partnership Interests, the Pledged Limited Liability
Company Interests and all rights, preferences, privileges, dividends,
distributions (in cash or in kind), redemption payments or liquidation payments
with respect thereto;
(h) All present and future accessions, appurtenances, components,
repairs, repair parts, spare parts, replacements, substitutions, additions,
issue and/or improvements to or of or with respect to any of the foregoing;
(i) All other tangible and intangible personal property of such
Grantor not specifically excluded from this definition of "Collateral";
2
(j) All rights, remedies, powers and/or privileges of such Grantor
with respect to any of the foregoing; and
(k) Any and all proceeds and products of the foregoing, including
without limitation, all money, accounts, general intangibles, deposit accounts,
documents, instruments, chattel paper, goods, insurance proceeds and any other
tangible or intangible property received upon the sale or disposition of any of
the foregoing.
Notwithstanding the foregoing, the term "Collateral" shall not include (i)
any Equipment that is subject to a Lien otherwise permitted by subsections (vi),
(vii) or (viii) of the definition of Permitted Liens, (ii) cash collateral
securing letters of credit, provided that such cash collateral is pledged prior
to the date of demand by Lender for payment under the Credit Guaranty, (iii)
assets acquired subsequent to the date of this Agreement that are subject to a
security interest, provided that such security interest is limited to the asset
acquired and (iv) all equity interests in Regulated Entities; provided that each
of the assets referenced in clause (i), (ii) and (iii) of this sentence shall be
deemed to be Collateral and the Debtor shall be deemed to have granted a
security interest in, all of its right, title and interests in such assets, upon
the ineffectiveness, lapse or termination of the security interests referenced
in clauses (i), (ii) or (iii) of this sentence.
"Copyright" means all:
(a) Copyrights, whether or not published or registered under the
Copyright Act of 1976, 17 U.S.C. Section 101 et seq., as the same shall be
amended from time to time and any predecessor or successor statute thereto (the
"Copyright Act"), and applications for registration of copyrights, and all works
of authorship and other intellectual property rights therein, including without
limitation, copyrights for computer programs, source code and object code
databases and related materials and documentation and including without
limitation, the registered copyrights and copyright applications listed on
Schedule 1-H attached hereto, and (i) all renewals, revisions, derivative works,
enhancements, modifications, updates, new releases and other revisions thereof,
(ii) all income, royalties, damages and payments now and hereafter due and/or
payable with respect thereto, including without limitation, payments under all
licenses entered into in connection therewith and damages and payments for past
or future infringements thereof, (iii) the right to xxx for past, present and
future infringements thereof and (iv) all of such Grantor's rights corresponding
thereto throughout the world;
(b) Rights under or interests in any copyright license agreements
with any other party, whether each Grantor is a licensee or licensor under any
such license agreement and the right to use the foregoing in connection with the
enforcement of the Secured Party's rights under the Operative Documents; and
(c) Copyrightable materials now or hereafter owned by such Grantor,
including without limitation, all tangible property embodying the copyright
described in clause (a) hereof or such copyrightable materials, and all tangible
property covered by the licenses described in clause (b) hereof.
"Guaranteed Obligations" has the meaning given to that term in the
Guaranty.
"Issuer Acknowledgement" has the meaning given to that term in Section
3(b) of this Agreement.
"Intent to Use Application" means any application of the type described in
00 Xxxxxx Xxxxxx Code Section 1051(b) that has been or may hereafter be filed by
the Borrower with the United States Patent and Trademark Office.
3
"Liens" has the meaning given to that term in the Reimbursement Agreement.
"Limited Liability Company Interests" means the entire limited liability
company interest at any time owned by each Grantor in any Pledged Entity.
"Marks" means all (a) trademarks, trademark registrations, interest under
trademark license agreements, trade names, trademark applications, service
marks, business names, trade styles, designs, logos and other source or business
identifiers for which registrations have been issued or applied for in the
United States Patent and Trademark Office or in any other office or with any
other official anywhere in the world or which are used in the United States or
any state, territory or possession thereof, or in any other place, nation or
jurisdiction anywhere in the world including without limitation, the trademarks,
trademark registrations, applications, service marks, business names, trade
styles, design logos and other source or business identifiers listed on Schedule
1-F attached hereto, but excluding any Intent to Use Applications, (b) licenses
pertaining to any such xxxx whether such Grantor is licensor or licensee, (c)
all income, royalties, damages and payments for past, present or future
infringements thereof, (d) rights to xxx for past, present and future
infringements thereof, (e) rights corresponding thereto throughout the world,
(f) all product specification documents and production and quality control
manuals used in the manufacture of products sold under or in connection with
such marks, (g) all documents that reveal the name and address of all sources of
supply of, and all terms of purchase and delivery for, all materials and
components used in the production of products sold under or in connection with
such marks, (h) all documents constituting or concerning the then current or
proposed advertising and promotion by such Grantor, their subsidiaries or
licensees of products sold under or in connection with such marks, including
without limitation, all documents that reveal the media used or to be used and
the cost for all such advertising conducted within the described period or
planned for such products and (i) renewals and proceeds of any of the foregoing.
"Material Adverse Effect" has the meaning given to that term in the
Reimbursement Agreement.
"Obligations" with respect to Borrower, such term has the meaning given to
that term in the Reimbursement Agreement and with respect to Guarantors, such
term means the Guaranteed Obligations.
"Operative Documents" has the meaning given to that term in the
Reimbursement Agreement.
"Patents" means all (a) letters patent, design patents, utility patents,
inventions and trade secrets, all patents and patent applications in the United
States Patent and Trademark Office, and interests under patent license
agreements, including without limitation, the inventions and improvements
described and claimed therein, including without limitation, those patents
listed on Schedule 1-G attached hereto, (b) licenses pertaining to any patent
whether such Grantor is licensor or licensee, (c) income, royalties, damages and
payments now and hereafter due and /or payable under and with respect thereto,
including without limitation, damages and payments for past, present or future
infringements, (d) rights to xxx for past, present and future infringements
thereof, (e) rights corresponding thereto throughout the world in all
jurisdictions in which such patents have been issued or applied for and (f) the
reissues, divisions, continuations, renewals, extensions and
continuations-in-part of any of the foregoing.
"Permitted Liens" has the meaning given to that term in the Reimbursement
Agreement.
"Person" has the meaning given to that term in the Reimbursement
Agreement.
"Partnership Interests" means the entire partnership interest at any time
owned by each Grantor in any Pledged Partnership Entity.
4
"Pledged Collateral" means the Certificates, the Pledged Securities, the
Pledged Partnership Interests and the Pledged Limited Liability Company
Interests.
"Pledged Entity" means each limited liability company set forth in
Schedule 1-D attached hereto, together with any other limited liability company
(other than a Regulation Entity) in which any Grantor may have an interest at
any time.
"Pledged Limited Liability Company Interests" means all limited liability
company interests (other than in, of or with respect to a Regulated Entity) held
by each Grantor, including, but not limited to those limited liability company
interests set forth in Schedule 1-D attached hereto, as such Schedule may be
supplemented from time to time in accordance with the terms of this Agreement
and all capital, limited liability company assets, dividends, cash, instruments
and other properties from time to time received, to be received or otherwise
distributed in respect of or in exchange for any or all of such interests and
all certificates and instruments representing or evidencing such other property
received, receivable or otherwise distributed in respect of or in exchange for
any or all thereof.
"Pledge Notice" shall have the meaning ascribed to it in Section 3(b) of
this Agreement.
"Pledged Partnership Entity" means each partnership interest set forth in
Schedule 1-D attached hereto, together with any other partnership interest
(other than in, of or with respect to a Regulated Entity) in which any Grantor
may have an interest at any time.
"Pledged Partnership Interests" means all interests in any partnership or
joint venture held by each Grantor (other than in, of or with respect to a
Regulated Entity), including, but not limited to those partnership interests set
forth in Schedule 1-D attached hereto, as such Schedule may be supplemented from
time to time in accordance with the terms of this Agreement, and all dividends,
cash, instruments and other properties from time to time received, to be
received or otherwise distributed in respect of or in exchange for any or all of
such interests.
"Pledged Securities" means all shares of capital stock of each issuer in
which each Grantor has an interest (other than in, of or with respect to a
Regulated Entity), including, but not limited to those shares of capital stock
set forth in Schedule 1-D attached hereto, as such Schedule may be supplemented
from time to time in accordance with the terms of this Agreement, and all
dividends, cash, instruments and other properties from time to time received, to
be received or otherwise distributed in respect of or in exchange for any or all
of such shares.
"Regulated Entity" means any Person, subject to federal, state,
provincial, local or other statute, regulation or other law which limits,
restricts or affects the authority or ability of (i) such Person or (ii) the
owner of any equity interest in or of such Person, to enter into a guaranty of,
or grant a security interest or pledge of any of its assets to secure, the
indebtedness, liabilities or obligations of any other Person or affiliate
thereof.
2. Creation of Security Interest. Each Grantor, in order to secure the
Obligations, does hereby grant and pledge to Secured Party a security interest
in and to, all right, title and interest of such Grantor in and to all presently
existing and hereafter acquired Collateral. The security interest and pledge
created by this Section 2 shall continue in effect so long as any Obligation
remains outstanding.
3. Delivery of Pledged Collateral.
(a) Each Certificate shall, on (i) the Closing Date (with respect to
Certificates delivered on such date) and (ii) the day on which such Certificate
5
shall be received or acquired by a Grantor (with respect to any Certificate
received or acquired after the Closing Date), be delivered to and held by
Secured Party and shall be in suitable form for transfer by delivery, or shall
be accompanied by duly executed undated endorsements, instruments of transfer or
assignment in blank, all in form and substance reasonably satisfactory to
Secured Party.
(b) With respect to each uncertificated Limited Liability Company
Interest and each uncertificated Partnership Interest, on (i) the Closing Date
(with respect such Limited Liability Company Interests and such Partnership
Interests existing on such date) and (ii) the day on which any such Limited
Liability Company Interest and any such Partnership Interest shall be acquired
by a Grantor (with respect to such Limited Liability Company Interests and such
Partnership Interests acquired after the Closing Date), a notice in the form set
forth in Exhibit A-1 attached hereto (the "Pledge Notice") shall be
appropriately completed and delivered to each Pledged Entity and each Pledged
Partnership Entity, notifying each Pledged Entity and each Pledged Partnership
Entity of the existence of this Agreement, a certified copy of this Agreement
shall be delivered by the Grantor to the relevant Pledged Entity and relevant
Pledged Partnership Entity, and such Grantor shall have received and delivered
to Secured Party a copy of such Pledge Notice, along with an acknowledgment in
the form set forth in Exhibit A-2 attached hereto (the "Issuer Acknowledgment"),
duly executed by the relevant Pledged Entity
(c) Secured Party shall have the right, during the existence of an
Event of Default, without notice to any of the Grantors, in connection with a
commercially reasonable foreclosure sale, to transfer to, or to direct the
applicable Grantor or any nominee of such Grantor to register or cause to be
registered in the name of, Secured Party or any of its nominees any or all of
the Pledged Securities, Pledged Partnership Interests or Pledged Limited
Liability Company Interests. In addition, Secured Party shall have the right at
any time to exchange certificates or instruments representing or evidencing
Pledged Securities for certificates or instruments of smaller or larger
denominations.
4. Further Assurances.
(a) At any time and from time to time at the reasonable written
request of Secured Party, each Grantor shall execute and deliver to Secured
Party, at such Grantor's expense, all such financing statements and other
instruments, certificates and documents (including account control agreements)
in form and substance reasonably satisfactory to Secured Party, and perform all
such other acts as shall be necessary or reasonably desirable to fully perfect
or protect or maintain, when filed, recorded, delivered or performed, Secured
Party's security interests granted pursuant to this Agreement or to enable
Secured Party to exercise and enforce its rights and remedies hereunder with
respect to any Collateral. Without limiting the generality of the foregoing,
each Grantor shall: (i) at the request of the Secured Party, xxxx conspicuously
each document included in the Inventory and each other contract relating to the
Accounts, and all chattel paper, instruments and other documents and each of its
records pertaining to the Collateral with a legend, in form and substance
satisfactory to Secured Party, indicating that such document, contract, chattel
paper, instrument or Collateral is subject to the security interest granted
hereby, (ii) at the request of Secured Party, if any Account or contract or
other writing relating thereto shall be evidenced by a promissory note or other
instrument, deliver and pledge to the Secured Party, such note or other
instrument duly endorsed and accompanied by duly executed undated instruments of
transfer or assignment, all in form and substance reasonably satisfactory to the
Secured Party; (iii) execute and file such financing or continuation statements,
or amendments thereto, and such other instruments or notices, as may be
necessary or desirable, or as Secured Party may reasonably request, in order to
perfect and preserve, with the required priority, the security interests
granted, or purported to be granted hereby, (iv) upon any Grantor's registration
or application of any copyright under the Copyright Act, execute and deliver
promptly and in any event, within 5 days of registration or application, to
Secured Party for recordation and filing in the United States Copyright Office a
Grant of Security Interest, in the form of Exhibit B attached hereto, (v) upon
any Grantor's registration or
6
application of any Patent or Xxxx, execute and deliver promptly and in any
event, with 5 days of registration or application, to Secured Party for
recordation and filing in the United States Patent and Trademark Office a Grant
of Security Interest, in the form of Exhibit B attached hereto, and (vi) with
respect to any license or agreement in which any Grantor now has or hereafter
acquires an interest which by its terms prohibits assignment, upon Secured
Party's request such Grantor will use its commercially reasonable best efforts
to procure the consent of the counterpart party thereto.
(b) At any time and from time to time, Secured Party shall be
entitled to file and/or record any or all such financing statements, instruments
and documents held by it, and any or all such further financing statements,
documents and instruments, relative to the Collateral or any part thereof in
each instance, and to take all such other actions as Secured Party may
reasonably deem appropriate to perfect and to maintain perfected the security
interests granted herein provided that Secured Party delivers copies thereof to
the applicable Grantor(s) substantially contemporaneously with such filing or
recording.
(c) Each Grantor hereby authorizes Secured Party to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Collateral without the signature of such Grantor where permitted
by law provided that Secured Party delivers copies thereof to the applicable
Grantor(s) substantially contemporaneously with such filing. A carbon,
photographic or other reproduction of this Agreement or any financing statement
covering the Collateral or any part thereof shall be sufficient as a financing
statement where permitted by law.
(d) With respect to any Collateral consisting of securities,
instruments, partnership or joint venture interests, limited liability company
interests, or the like, each Grantor hereby consents and agrees that, during the
existence of an Event of Default, the issuers of, or obligors on, any such
Collateral, or any registrar or transfer agent or trustee for any such
Collateral, shall be entitled to accept the provisions of this Agreement as
conclusive evidence of the right of Secured Party to effect any transfer or
exercise any right hereunder or with respect to any such Collateral subject to
the terms hereof, notwithstanding any other notice or direction to the contrary
heretofore or hereafter given by any Grantor or any other Person to such issuers
or such obligors or to any such registrar or transfer agent or trustee.
5. Voting Rights; Dividends; etc. So long as no Event of Default shall
have occurred and be continuing:
(a) Voting Rights. Each Grantor shall be entitled to exercise any
and all voting and other consensual rights pertaining to its Pledged Securities,
its Pledged Partnership Interests and its Pledged Limited Liability Company
Interests, or any part thereof, for any purpose not inconsistent with the terms
of this Agreement, the Reimbursement Agreement or the other Operative Documents;
provided, however, that each Grantor shall not exercise, or shall refrain from
exercising, any such right if it would result in an Event of Default.
(b) Dividend and Distribution Rights. Subject to the terms of the
Reimbursement Agreement, each Grantor shall be entitled to receive and to retain
and use any and all dividends or distributions paid in respect of its Pledged
Securities, its Pledged Partnership Interests or its Pledged Limited Liability
Company Interests; provided, however, that any and all:
(i) non-cash dividends or distributions in the form of capital
stock, certificated limited liability company interests, instruments or other
property received, receivable or otherwise distributed in respect of, or in
exchange for, any Pledged Securities, Pledged Partnership Interests, Pledged
Limited Liability Company Interests,
7
(ii) dividends and other distributions paid or payable in cash
in respect of any Pledged Securities, Pledged Partnership Interests or Pledged
Limited Liability Company Interests in connection with a partial or total
liquidation or dissolution or in connection with a reduction of capital, capital
surplus or paid-in-surplus, and
(iii) cash paid, payable or otherwise distributed in
redemption of, or in exchange for, any Pledged Securities, Pledged Partnership
Interests or Pledged Limited Liability Company Interests,
shall, except as otherwise provided for in the Reimbursement Agreement or the
other Operative Documents, forthwith be delivered to Secured Party, in the case
of (i) above, to be held as Collateral and shall, if received by such Grantor,
be received in trust for the benefit of Secured Party, be segregated from the
other property of such Grantor and forthwith be delivered to Secured Party as
Collateral in the same form as so received (with any necessary endorsements),
and in the case of (ii) and (iii) above, to be applied to the Obligations to the
extent permitted by the Reimbursement Agreement or otherwise to be held as
Collateral.
6. Rights as to Pledged Collateral During Event of Default. When an Event
of Default has occurred and is continuing:
(a) Voting, Dividend and Distribution Rights. Upon notice from
Secured Party to the Grantors, all rights of each Grantor to exercise the voting
and other consensual rights which it would otherwise be entitled to exercise
pursuant to Section 5(a) above, and to receive the dividends and distributions
which it would otherwise be authorized to receive and retain pursuant to Section
5(b) above, shall cease, and all such rights shall thereupon become vested in
Secured Party who shall thereupon have the sole right to exercise such voting
and other consensual rights and to receive and to hold as Pledged Collateral
such dividends and distributions during the continuance of such Event of
Default.
(b) Dividends and Distributions Held in Trust. All dividends and
other distributions which are received by any Grantor contrary to the provisions
of Section 6(a) of this Agreement shall be received in trust for the benefit of
Secured Party, shall be segregated from other funds of such Grantor and
forthwith shall be paid over to Secured Party as Collateral in the same form as
so received (with any necessary endorsements).
7. Irrevocable Proxy. Each Grantor hereby revokes all previous proxies
with regard to its Pledged Securities, its Pledged Partnership Interests and its
Pledged Limited Liability Company Interests and, appoints Secured Party as its
respective proxyholder to (a) attend and vote at any and all meetings of the
shareholders of the corporation(s) which issued the Pledged Securities, and any
adjournments thereof, held on or after the date of the giving of this proxy and
prior to the termination of this proxy and to execute any and all written
consents of shareholders of such corporation(s) executed on or after the date of
the giving of this proxy and prior to the termination of this proxy, with the
same effect as if such Grantor had personally attended the meetings or had
personally voted its shares or had personally signed the written consents,
waivers or ratification, and (b) to attend and vote at any and all meetings of
the members of the Pledged Entities or partners of the Pledged Partnership
Entities (whether or not such Pledged Limited Liability Company Interests or
Pledged Partnership Interests are transferred into the name of Secured Party),
and any adjournments thereof, held on or after the date of the giving of this
proxy and to execute any and all written consents, waivers and ratifications of
the Pledged Entities or Pledged Partnership Entities executed on or after the
date of the giving of this proxy and prior to the termination of this proxy with
the same effect as if such Grantor had personally attended the meetings or had
personally voted on their respective Limited Liability Company Interests or
Partnership Interests or had personally signed the consents, waivers or
ratifications; provided, however, that Secured Party as
8
proxyholder shall have rights hereunder only during the existence of an Event of
Default. Each Grantor hereby authorizes Secured Party to substitute another
Person (which Person shall be a successor to the rights of Secured Party
hereunder, a nominee appointed by Secured Party to serve as proxyholder, or
otherwise as approved by such Grantor in writing, such approval not to be
unreasonably withheld) as the proxyholder and, during the existence of any Event
of Default, hereby authorizes and directs the proxyholder to file this proxy and
the substitution instrument with the secretary of the appropriate corporation.
This proxy is-coupled with an interest and is irrevocable until such time as all
Obligations have been indefeasibly paid in full.
8. The Grantors' Representations and Warranties. Each Grantor represents
and warrants as follows:
(a) (i) The locations listed on the Schedule 1-A constitute all
locations at which Collateral owned by such Grantor is located; (ii) the chief
executive office of such Grantor, where such Grantor keeps its records
concerning the Collateral, is located at the address set forth for such Grantor
on Schedule 1-D; (iii) such Grantor has exclusive possession and control of the
Collateral owned by such Grantor and (iv) such Grantor has only the Deposit
Accounts and Investment Accounts listed on Schedule 1-B.
(b) Such Grantor currently conducts business only under its own name
and the trade names listed on Schedule 1-E. Neither such Grantor nor any
corporate predecessor has, during the preceding five years, been known as or
used any other corporate or fictitious name, except the names disclosed on
Schedule 1-E.
(c) Such Grantor is the legal and beneficial owner of the Collateral
free and clear of all Liens except for Permitted Liens. Such Grantor has the
power, authority and legal right to grant the security interests in the
Collateral purported to be granted hereby, and to execute, deliver and perform
this Agreement. The pledge of the Collateral pursuant to this Agreement creates
a valid first priority security interest in the Collateral (except for any
Permitted Liens).
(d) No consent of any Person, including, without limitation, any
partner in a partnership with respect to which such Grantor has pledged its
interests as a Pledged Partnership Interest or any member in a Pledged Entity,
is required for the pledge by such Grantor of the Collateral other than consents
required under the agreements described in the Disclosure Schedule.
(e) Except as set forth on Schedule 1-C, the Pledged Securities
described on Schedule 1-C attached hereto constitute (i) all of the shares of
capital stock of any Person, other than a Regulated Entity, owned by such
Grantor and (ii) that percentage of the issued and outstanding shares of the
respective issuers thereof indicated on Schedule 1-C attached hereto, and there
is no other class of shares issued and outstanding of the respective issuers
thereof except as set forth on Schedule 1-C attached hereto. Except as set forth
in Schedule 1-C, the Pledged Partnership Interests described on Schedule 1-C
attached hereto constitute all of the partnerships or joint ventures other than
Regulated Entities in which each Grantor has an interest, and such Grantor's
percentage interest in each such partnership or joint venture is as set forth on
such Schedule 1-C attached hereto. Except as set forth in Schedule 1-C, the
Pledged Limited Liability Company Interests described on Schedule 1-C attached
hereto constitute all of the Limited Liability Company Interests other than in,
of or with respect to Regulated Entities of each Grantor and such Grantor's
percentage interest in each such Pledged Entity is as set forth on Schedule 1-C
attached hereto.
(f) No authorization, approval or other action by, and no notice to
or filing with, any governmental authority (other than such authorizations,
9
approvals and other actions as have already been taken and are in full force and
effect) is required (A) for the pledge of the Collateral or the grant of the
security interest in the Collateral by any of the Grantors hereby or for the
execution, delivery or performance of this Agreement by any of the Grantors, or
(B) for the exercise by Secured Party of the voting rights in the Pledged
Securities, the Pledged Partnership Interest or the Pledged Limited Liability
Company Interests or of any other rights or remedies in respect of the
Collateral hereunder except as may be required in connection with any
disposition of Collateral consisting of securities by laws affecting the
offering and sale of securities generally.
(g) XXX.xxx Communications, LLC, XXX.xxx Communications VA, Inc.,
and XXX.xxx Communications Puerto Rico, Inc. are each a Regulated Entity.
9. Copyrights.
(a) Royalties. Each Grantor hereby agrees that the use by Secured
Party of the Copyrights as authorized hereunder in connection with Secured
Party's exercise of its rights and remedies hereunder shall be without any
liability for royalties or other related charges from Secured Party to Grantors.
(b) Restrictions on Future Agreements. Subject to the terms hereof
and of the Reimbursement Agreement, each Grantor shall be permitted to manage,
license and administer its Copyrights in such manner as such Grantor in its
reasonable business judgment deems desirable, provided, however, that such
Grantor will not, without the Secured Party's prior written consent, such
consent not to be unreasonably withheld or delayed, (i) enter into any copyright
license agreements except license agreements entered into in the ordinary course
of its business consistent with past practices and containing such additional
provisions to protect Secured Party's interest hereunder as Secured Party may
from time to time reasonably request or (ii) take any action, or permit any
action to be taken by others, including, without limitation, licensees, or fail
to take any action, which would customarily be taken by a Person in the same
business and in similar circumstances as such Grantor, which could in any
respect reasonably be expected to have a Material Adverse Effect.
(c) Duties of Grantors. Each Grantor shall have the duty to:
In accordance with its standard commercial practices, (i) prosecute
diligently any copyright application included in the Copyrights, (ii) place
notices of copyright on all copyrightable property produced or owned by such
Grantor embodying the Copyrights and use diligent reasonable efforts to have its
licensees do the same and (iii) take all reasonable action necessary in such
Grantor's reasonable business judgment consistent with past practices to
preserve and maintain all of Grantor's rights in the Copyrights that are or
shall be necessary in the operation of Grantor's business, including, without
limitation, making timely filings for renewals and extensions of registered
Copyrights and diligently monitoring unauthorized use thereof. Any expenses
incurred in connection with the foregoing shall be borne by Grantors. Secured
Party shall have no duty with respect to the Copyrights other than to act
lawfully and without gross negligence or willful misconduct. Without limiting
the generality of the foregoing, Secured Party shall not be under any obligation
to take any steps necessary to preserve rights in the Copyrights against any
other parties, but Secured Party may do so at its option upon the occurrence and
during the continuance of an Event of Default, and all reasonable expenses
incurred in connection therewith shall be for the sole account of Grantors and
shall be added to the Obligations.
10
10. Patents and Marks.
(a) Royalties. Each Grantor hereby agrees that any rights granted
hereunder to Secured Party with respect to Patents and Marks shall be applicable
to all jurisdictions in which such Grantor has the right to use such Patents and
Marks, from time to time, and without any liability for royalties or other
related charges from Secured Party to Grantors.
(b) Restrictions on Future Agreements. Each Grantor will not, except
in accordance with its standard commercial practices, abandon any Patent or Xxxx
in which such Grantor now owns or hereafter acquires any rights or interests if
such abandonment could reasonably be expected to have a Material Adverse Effect
or enter into any agreement, including, without limitation, any license
agreement, which is inconsistent with such Grantor's obligations under this
Agreement, if such actions could reasonably be expected to have a Material
Adverse Effect. Each Grantor further agrees that it will not take any action, or
permit any action to be taken by others subject to its control, including
licensees, or fail to take any action which would customarily be taken by a
Person in the same business and in similar circumstances as such Grantor, which
could reasonably be expected to have a Material Adverse Effect.
(c) Duties of Grantors. In accordance with its standard commercial
practices, each Grantor shall have the duty to (i) prosecute diligently any
patent application or trademark application pending as of the date hereof or
thereafter until the Obligations shall have been indefeasibly paid in full and
Secured Party has no obligation to make any Loans under the Reimbursement
Agreement, (ii) file and prosecute opposition and cancellation proceedings if
the failure to do so could reasonably be expected to have a Material Adverse
Effect and (iii) take all reasonable action necessary in such Grantor's
reasonable business judgment consistent with past practices to preserve and
maintain all rights in patent applications of the Patents and in applications
for registrations of the Marks unless the failure so to do could not reasonably
be expected to have a Material Adverse Effect. Any expenses incurred in
connection with the foregoing applications shall be borne by Grantors. Each
Grantor shall not abandon any right to file a Patent application or Xxxx
application except in accordance with its standard commercial practices if such
abandonment could reasonably be expected to have a Material Adverse Effect. Each
Grantor shall give proper statutory notice in connection with its use of each of
the Marks to the extent necessary for the protection of each of the Marks.
Grantors shall notify the Secured Party of any suits it commences to enforce the
Patents and Marks and shall provide Secured Party with copies of any documents
reasonably requested by Secured Party relating to such suits.
11. Grantors' Covenants. In addition to the other covenants and agreements
set forth herein and in the other Operative Documents, each Grantor covenants
and agrees as follows:
(a) Such Grantor will pay, prior to delinquency, all taxes, charges,
Liens and assessments against the Collateral owned by it, except those with
respect to which the amount or validity is being contested in good faith by
appropriate proceedings and with respect to which reserves in conformity with
GAAP have been provided on the books of such Grantor and except those which
could not reasonably be expected to have a Material Adverse Effect.
(b) The Collateral will not be used in violation of any material
law, regulation or ordinance or any applicable laws (including without
limitation, all applicable regulations, rules and orders), nor used in any way
that will void or impair any insurance required to be carried in connection
therewith.
(c) Such Grantor will keep the tangible Collateral in reasonably
good repair, working order and operating condition (normal wear and tear
excluded), and from time to time make all necessary and proper repairs,
renewals, replacements, additions and improvements thereto and, as appropriate
and applicable, will otherwise deal with the Collateral in all such ways as are
considered customary practice by owners of like property.
11
(d) Such Grantor will take all reasonable steps to preserve and
protect the Collateral except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect.
(e) Such Grantor will maintain all insurance coverage required
pursuant to the terms of the Reimbursement Agreement.
(f) Such Grantor will promptly notify Secured Party in writing in
the event of any material damage to the Collateral from any source whatsoever
which could reasonably be expected to have a Material Adverse Effect.
(g) Such Grantor will not (i) establish any location of Collateral
not listed in Schedule 1-A, (ii) move its principal place of business, chief
executive offices or any other office listed in Schedule 1-D , (iii) change its
jurisdiction of incorporation or organization, or (iv) adopt, use or conduct
business under any trade name or other corporate or fictitious name not
disclosed in Schedule 1-E, except upon not less than 30 days prior written
notice to Secured Party and such Grantor's prior compliance with all applicable
requirements of Section 4 hereof necessary to perfect Secured Party's security
interest hereunder.
(h) Such Grantor shall cause all of its equipment constituting
Collateral to be operated and maintained in accordance with any applicable
manufacturer's manuals or instructions and the requirements of its insurance
policies. Such Grantor, at its expense, shall maintain such equipment in good
condition, reasonable wear and tear excepted, and will comply with all laws,
ordinances and regulations to which the use and operation of such equipment may
be or become subject. Such obligation shall extend to repair and replacement of
any partial loss or damage to such equipment, regardless of the cause. If
maintenance is mandated by the manufacturer, such Grantor shall obtain and keep
in effect at all times while the Obligations are outstanding maintenance service
contracts with the vendor of such equipment or suppliers. All parts furnished in
connection with such maintenance or repair shall immediately become part of such
equipment. All such maintenance, repair and replacement services shall be
promptly paid for and discharged by such Grantor with the result that no lien
will attach to such equipment. Only qualified personnel of such Grantor or
qualified contract personnel shall operate such equipment. Such equipment shall
be used only for the purposes for which it was designed.
(i) Such Grantor shall not establish any additional Deposit Account
not listed on Schedule 1-B, or any Investment Account not listed on Schedule
1-B, except upon prior written notice to Secured Party and such Grantor's
compliance with all applicable requirements of Section 4 hereof necessary to
perfect Secured Party's security interest hereunder.
12. Secured Party's Rights Regarding Collateral. At any time and from time
to time, Secured Party may, to the extent necessary or desirable to protect the
security hereunder, but Secured Party shall not be obligated to: (a) (whether or
not an Event of Default has occurred) itself or through its representatives, at
its own expense, upon reasonable notice and at such reasonable times during
usual business hours, visit and inspect any of the Grantors' properties and
examine and make abstracts from any of its books and records at any reasonable
time and as often as may reasonably be desired and discuss the business,
operations, properties and financial and other condition of any of the Grantors
with officers of such Grantors and with their accountants or (b) if an Event of
Default has occurred and is continuing, at the expense of the Grantors, perform
any obligation of any of the Grantors under this Agreement. At any time and from
time to time, at the expense of the Grantors, Secured Party may, to the extent
necessary or desirable to protect the security hereunder, but Secured Party
shall not be obligated to: (i) notify obligors of the Collateral that the
Collateral has been pledged as security to Secured Party; (ii) after an Event of
Default has occurred and is continuing, at any time and from time to time
request from obligors of the Collateral, in the name of the applicable Grantor
or in the name of Secured Party, information concerning
12
the Collateral and the amounts owing thereon; and (iii) after an Event of
Default has occurred and is continuing, direct obligors under the contracts
included in the Collateral to direct their performance to Secured Party. Each
Grantor shall keep proper books and records and accounts in which full, true and
correct entries in conformity with GAAP and all applicable laws (including
without limitation, all applicable regulations, rules and orders) shall be made
of all material dealings and transactions pertaining to the Collateral. Secured
Party shall at all reasonable times on reasonable prior notice have full access
to and the right to audit any and all of Grantors' books and records pertaining
to the Collateral, and to confirm and verify the value of the Collateral.
Secured Party shall not be under any duty or obligation whatsoever to take any
action to preserve any rights of or against any prior or other parties in
connection with the Collateral, to exercise any voting rights or managerial
rights with respect to any Collateral or to make or give any presentments for
payment, demands for performance, notices of non-performance, protests, notices
of protest, notices of dishonor or notices of any other nature whatsoever in
connection with the Collateral or the Obligations. Secured Party shall not be
under any duty or obligation whatsoever to take any action to protect or
preserve the Collateral or any rights of the Grantors' therein, or to make
collections or enforce payment thereon, or to participate in any foreclosure or
other proceeding in connection therewith. Nothing contained herein or in any
consent shall constitute an assumption by Secured Party of any of the Grantors'
obligations under the contracts assigned hereunder unless Secured Party shall
have given written notice to the counterpart to such assigned contract of
Secured Party's intention to assume such contract. Each Grantor shall continue
to be liable for performance of its obligations under such contracts.
13. Collections on the Collateral. Except as provided to the contrary in
the Reimbursement Agreement, each Grantor shall have the right to use and to
continue to make collections on and receive dividends and other proceeds of all
of the Collateral in the ordinary course of business so long as no Event of
Default shall have occurred and be continuing. Upon the occurrence and during
the continuance of an Event of Default, upon notice from Secured Party to the
Grantors, each Grantor's right to make collections on and receive dividends and
other proceeds of the Collateral and to use or dispose of such collections and
proceeds shall terminate, and any and all dividends, proceeds and collections,
including all partial or total prepayments, then held or thereafter received on
or on account of the Collateral will be held or received by such Grantor in
trust for Secured Party and promptly delivered in kind to Secured Party (duly
endorsed to Secured Party, if required), to be applied to the obligations or
held as Collateral, as Secured Party shall elect. During the existence of an
Event of Default, Secured Party shall have the right at all times to receive,
receipt for, endorse, assign, deposit and deliver, in the name of any of the
Grantors, any and all checks, notes, drafts and other instruments for the
payment of money constituting proceeds of or otherwise relating to the
Collateral; and each Grantor hereby authorizes Secured Party to affix, by
facsimile signature or otherwise, the general or special endorsement of such
Grantor, in such manner as Secured Party shall deem advisable, to any such
instrument in the event the same has been delivered to or obtained by Secured
Party without appropriate endorsement, and Secured Party and any collecting bank
are hereby authorized to consider such endorsement to be a sufficient, valid and
effective endorsement by such Grantor, to the same extent as though it were
manually executed by the duly authorized representative of such Grantor,
regardless of by whom or under what circumstances or by what authority such
endorsement actually is affixed, without duty of inquiry or responsibility as to
such matters, and such Grantor hereby expressly waives demand, presentment,
protest and notice of protest or dishonor and all other notices of every kind
and nature with respect to any such instrument.
14. Possession of Collateral by Secured Party. All the Collateral now,
heretofore or hereafter delivered to Secured Party shall be held by Secured
Party in its possession, custody and control. During the existence of an Event
of Default, whenever any of the Collateral is in Secured Party's possession,
custody or control, Secured Party may use, operate and consume the Collateral,
whether for the purpose of preserving and/or protecting the Collateral, or for
the purpose of performing any of the Grantors' obligations with respect thereto,
or otherwise so long as consistent with the Operative
13
Documents or transactions contemplated thereby. Secured Party may at any time
deliver or redeliver the Collateral or any part thereof to the Grantors, and the
receipt of any of the same by the Grantors shall be complete and full
acquittance for the Collateral so delivered, and Secured Party thereafter shall
be discharged from any liability or responsibility arising after such delivery
to the Grantors. So long as Secured Party exercises reasonable care and complies
with Section 9207 of the UCC with respect to any Collateral in its possession,
custody or control, Secured Party shall have no liability for any loss of or
damage to any Collateral, and in no event shall Secured Party have liability for
any diminution in value of Collateral occasioned by economic or market
conditions or events.
15. Remedies.
(a) Rights Upon Event of Default. During the existence of an Event
of Default, the Grantors shall be in default hereunder and, subject to
applicable law, Secured Party shall have, in any jurisdiction where enforcement
is sought, in addition to all other rights and remedies that Secured Party may
have under this Agreement and under applicable laws or in equity, all rights and
remedies of a secured party under the Uniform Commercial Code as enacted in any
such jurisdiction in effect at that time, and in addition the following rights
and remedies in accordance with applicable law, all of which may be exercised
with or without further prior notice to the Grantors except such notice as may
be specifically required by applicable law: (i) to foreclose the Liens and
security interests created hereunder or under any other Operative Document by
any available judicial procedure or without judicial process; (ii) to enter
peaceably any premises where any Collateral may be located for the purpose of
securing, protecting, inventorying, appraising, inspecting, repairing,
preserving, storing, preparing, processing, taking possession of or removing the
same; (iii) to sell, assign, lease or otherwise dispose of any Collateral or any
part thereof, either at public or private sale or at any broker's board, in lot
or in bulk, for cash, on credit or otherwise, with or without representations or
warranties and upon such terms as shall be commercially reasonable; (iv) to
notify obligors on the Collateral that the Collateral has been assigned to
Secured Party and that all payments thereon, or performance with respect
thereto, are to be made directly and exclusively to Secured Party; (v) to
collect by legal proceedings or otherwise all dividends, distributions,
interest, principal or other sums now or hereafter payable upon or on account of
the Collateral; (vi) to enter into any extension, reorganization, disposition,
merger or consolidation agreement, or any other agreement relating to or
affecting the Collateral, and in connection therewith Secured Party may deposit
or surrender control of the Collateral and/or accept other property in exchange
for the Collateral as Secured Party reasonably deems appropriate and is
commercially reasonable; (vii) to settle, compromise or release, on terms
acceptable to Secured Party, in whole or in part, any amounts owing on the
Collateral and/or any disputes with respect thereto; (viii) to extend the time
of payment, make allowances and adjustments and issue credits in connection with
the Collateral in the name of the applicable Grantor for the benefit of Secured
Party; (ix) to enforce payment and prosecute any action or proceeding with
respect to any or all of the Collateral and take or bring, on behalf of itself
or in the name of the applicable Grantor, any and all steps, actions, suits or
proceedings deemed necessary or reasonably desirable by Secured Party to effect
collection of or to realize upon the Collateral, including any judicial or
nonjudicial foreclosure thereof or thereon, and each Grantor specifically
consents to any nonjudicial foreclosure of any or all of the Collateral or any
other action taken by Secured Party which may release any obligor from personal
liability on any of the Collateral, and each Grantor waives, to the extent
permitted by applicable law, any right to receive prior notice of any public or
private judicial or nonjudicial sale or foreclosure of any security or any of
the Collateral, and any money or other property received by Secured Party in
exchange for or on account of the Collateral, whether representing collections
or proceeds of Collateral, and whether resulting from voluntary payments or
foreclosure proceedings or other legal action taken by Secured Party or any of
the Grantors, may be applied by Secured Party, without notice to the Grantors,
to the Obligations in such order and manner as Secured Party in its sole
discretion shall determine; (x) to insure, protect and preserve the Collateral;
(xi) to exercise all rights, remedies, powers or privileges provided under any
of the Operative Documents; and
14
(xii) to remove peaceably, from any premises where the same may be located, the
Collateral and any and all documents, instruments, files and records, and any
receptacles and cabinets containing the same, relating to the Collateral, and
Secured Party may, at the cost and expense of the Grantors and subject to the
rights of third parties, use such of its supplies, equipment, facilities and
space at its places of business as may be necessary or appropriate to properly
administer, process, store, control, prepare for sale or disposition and/or sell
or dispose of the Collateral or to properly administer and control the handling
of collections and realizations thereon, and, subject to the rights of third
parties, Secured Party shall be deemed to have a rent-free tenancy of any
premises of the Grantors for such purposes and for such periods of time as
reasonably required by Secured Party. So long as an Event of Default has
occurred and is continuing, each Grantor will, at Secured Party's request,
assemble the Collateral and make it available to Secured Party at places which
Secured Party may designate, whether at the premises of such Grantor or
elsewhere, which are reasonably convenient to Secured Party and the Grantors and
will make available to Secured Party, free of cost and subject to the rights of
third parties, all premises, equipment and facilities of such Grantor for the
purpose of Secured Party's taking possession of the Collateral or storing the
same or removing or putting the Collateral in salable form or selling or
disposing of the same.
(b) Possession by Secured Party. During the existence of an Event of
Default, Secured Party also shall have the right, without prior notice or
demand, either in person, by Secured Party or by a receiver to be appointed by a
court in accordance with the provisions of applicable law (and each Grantor
hereby expressly consents, to the fullest extent permitted by applicable law,
during the existence of an Event of Default to the appointment of such a
receiver), and, to the extent permitted by applicable law, without regard to the
adequacy of any security for the Obligations, to take possession of the
Collateral or any part thereof and to collect and receive the rents, issues,
profits, income and proceeds thereof. The taking possession of the Collateral by
Secured Party shall not cure or waive any Event of Default or notice thereof or
invalidate any act done pursuant to such notice. The rights, remedies and powers
of any receiver appointed by a court shall be as ordered by said court.
(c) Sale of Collateral. Any public or private sale or other
disposition of the Collateral pursuant to this Section 15 may be held, subject
to the rights of third parties, at any office of Secured Party, or at the
Grantors' places of business, or at any other place permitted by applicable law,
and without the necessity of the Collateral being within the view of prospective
purchasers. Secured Party may direct the order and manner of sale of the
Collateral, or portions thereof, as it in its sole and absolute discretion may
determine provided such sale is commercially reasonable, and each Grantor
expressly waives, to the extent permitted by applicable law, any right to direct
the order and manner of sale of any Collateral. Secured Party or any Person
acting on Secured Party's behalf may bid and purchase at any such sale or other
disposition. In furtherance of Secured Party's rights hereunder, each Grantor
hereby grants to Secured Party an irrevocable, non-exclusive license
(exercisable without royalty or other payment by Secured Party) to use, license
or sublicense any patent, trademark, trade name, copyright or other intellectual
property in which Grantor now or hereafter has any right, title or interest
together with the right of access to all media in which any of the foregoing may
be recorded or stored; provided, however, that such license shall only be
exercisable in connection with the disposition of Collateral upon Secured
Party's exercise of its remedies hereunder.
(d) Notice of Sale. Unless the Collateral is perishable or threatens to decline
speedily in value or is of a type customarily sold on a recognized market,
Secured Party will give the Grantors reasonable notice of the time and place of
any public sale thereof or of the time on or after which any private sale
thereof is to be made. The requirement of reasonable notice conclusively shall
be met if such notice is mailed, certified mail, postage prepaid, to the
Grantors at their addresses set forth on the signature page hereto or delivered
or otherwise sent to the Grantors, at least seven (7) Business Days before the
date of the sale. Each Grantor expressly waives, to the fullest extent permitted
by applicable law, any right to receive notice of any public or private sale of
any Collateral or other security for the
15
Obligations except as expressly provided for in this paragraph. Secured Party
shall not be obligated to make any sale of the Collateral if it shall determine
not to do so regardless of the fact that notice of sale of the Collateral may
have been given. Secured Party may, without notice or publication, except as
required by applicable law, adjourn the sale from time to time by announcement
at the time and place fixed for sale, and such sale may, without further notice
(except as required by applicable law), be made at the time and place to which
the same was so adjourned.
(e) Private Sales. With respect to any Collateral consisting of
securities, partnership interests, limited liability company interests, joint
venture interests or the like, and whether or not any of such Collateral has
been effectively registered under the Securities Act of 1933, as amended, or
other applicable laws, Secured Party may, in its sole and absolute discretion,
sell all or any part of such Collateral at private sale pursuant to this Section
15 in such manner and under such circumstances as Secured Party may deem
necessary or advisable in order that the sale may be lawfully conducted in a
commercially reasonable manner. Without limiting the foregoing, Secured Party
may (i) approach and negotiate with a limited number of potential purchasers,
and (ii) restrict the prospective bidders or purchasers to persons who will
represent and agree that they are purchasing such Collateral for their own
account for investment and not with a view to the distribution or resale
thereof. In the event that any such Collateral is sold at private sale pursuant
to this Section 15, each Grantor agrees to the extent permitted by applicable
law that if such Collateral is sold for a price which is commercially
reasonable, then (A) the Grantors shall not be entitled to a credit against the
Obligations in an amount in excess of the purchase price, and (B) Secured Party
shall not incur any liability or responsibility to the Grantors in connection
therewith, notwithstanding the possibility that a substantially higher price
might have been realized at a public sale. Each Grantor recognizes that a ready
market may not exist for such Collateral if it is not regularly traded on a
recognized securities exchange, and that a sale by Secured Party of any such
Collateral for an amount substantially less than a pro rata share of the fair
market value of the issuer's assets minus liabilities may be commercially
reasonable in view of the difficulties that may be encountered in attempting to
sell a large amount of such Collateral or Collateral that is privately traded.
(f) Title of Purchasers. Upon consummation of any sale of Collateral
hereunder, Secured Party 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 Collateral so sold absolutely free from any
claim or right upon the part of any Grantor or any other Person claiming through
any Grantor, and each Grantor hereby waives (to the extent permitted by
applicable laws) all rights of redemption, stay and appraisal which it now has
or may at any time in the future have under any rule of law or statute now
existing or hereafter enacted. If the sale of all or any part of the Collateral
hereunder is made on credit or for future delivery, Secured Party shall not be
required to apply any portion of the sale price to the Obligations until such
amount actually is received by Secured Party, and any Collateral so sold may be
retained by Secured Party until the sale price is paid in full by the purchaser
or purchasers thereof. Secured Party shall not incur any liability in case any
such purchaser or purchasers shall fail to pay for the Collateral so sold, and,
in case of any such failure, the Collateral may be sold again.
(g) Disposition of Proceeds of Sale. The proceeds resulting from the
collection, liquidation, sale or other disposition of the Collateral hereunder
shall be applied, first, to the reasonable costs and expenses (including
reasonable attorneys' fees) of retaking, holding, storing, processing and
preparing for sale, selling, collecting and liquidating the Collateral, and the
like; second, to the satisfaction of all Obligations; and third, any surplus
remaining after the satisfaction of all Obligations, to be paid over to the
Grantors or to whomsoever may be lawfully entitled to receive such surplus.
(h) Certain Waivers. To the extent permitted by applicable law, each
Grantor waives all claims, damages and demands against Secured Party arising out
16
of the repossession, retention or sale of the Collateral, or any part or parts
thereof hereunder, except to the extent any such claims, damages and awards
arise out of the gross negligence or willful misconduct of Secured Party.
(i) Remedies Cumulative. The rights and remedies provided under this
Agreement are cumulative and may be exercised singly or concurrently, and are
not exclusive of any other rights and remedies provided by law or equity. 16.
Notice. Secured Party shall use reasonable efforts to give the Grantors
reasonable prior written notice of the exercise of any remedy provided for
herein, provided that the failure to give such notice shall not subject Secured
Party to liability and shall not affect the validity or exercise of any remedy
hereunder.
17. Secured Party Appointed Attorney-in-Fact. To the full extent permitted
by applicable law, each Grantor hereby irrevocably appoints Secured Party as
such Grantor's attorney-in-fact, with full authority in the place and stead of
such Grantor, and in the name of such Grantor, or otherwise, from time to time,
in Secured Party's sole and absolute discretion to do any of the following acts
or things during the existence of an Event of Default: (a) to do all acts and
things and to execute all documents necessary or advisable to perfect and
continue perfected the security interests created by this Agreement and to
preserve, maintain and protect the Collateral; (b) to do any and every act which
such Grantor is obligated to do under this Agreement; (c) to prepare, sign, file
and record, in such Grantor's name, any financing statement covering the
Collateral; (d) to endorse and transfer the Collateral upon foreclosure by
Secured Party; and (e) to file any claims or take any action or institute any
proceedings which Secured Party may reasonably deem necessary or desirable for
the protection or enforcement of any of the rights of Secured Party with respect
to any of the Collateral; provided, however, that Secured Party shall be under
no obligation whatsoever to take any of the foregoing actions, and Secured Party
shall have no liability or responsibility for any act or omission (other than
Secured Party's own gross negligence or willful misconduct) taken with respect
thereto.
18. Costs and Expenses. Each Grantor shall pay on demand (i) all
reasonable fees and expenses, including reasonable attorneys' fees and expenses,
incurred by Secured Party in connection with the preparation, execution and
delivery of, and the exercise of its duties under, this Agreement and the
preparation, execution and delivery of amendments and waivers hereunder and (ii)
all reasonable fees and expenses, including reasonable attorneys' fees and
expenses, incurred by Secured Party in connection with the enforcement or
attempted enforcement of this Agreement or any of the Obligations or in
preserving any of Secured Party's rights and remedies (including, without
limitation, all such fees and expenses incurred in connection with any "workout"
or restructuring affecting the Operative Documents or the Obligations or any
bankruptcy or similar proceeding involving such Grantor, any other Grantor,
Borrower or any of their Affiliates).
19. Intentionally omitted.
20. Other Agreements; Governing Agreement. Nothing herein shall in any way
modify or limit the effect of terms or conditions set forth in any other
Operative Document executed by the Grantors or any other Person in connection
with the Obligations, but each and every term and condition hereof shall be in
addition thereto; provided, however, that in the event of inconsistency between
this Agreement and the Reimbursement Agreement, the Reimbursement Agreement
shall govern.
21. Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which shall be deemed to be an original, but all of which taken together shall
constitute one and the same agreement.
17
22. Understandings With Respect to Waivers and Consents. Each Grantor
warrants and agrees that each of the waivers and consents set forth herein are
made with full knowledge of their significance and consequences, with the
understanding that events giving rise to any defense or right waived may
diminish, destroy or otherwise adversely affect rights which such Grantor
otherwise may have against Secured Party or others, or against any Collateral.
If any of the waivers or consents herein are determined to be unenforceable
under applicable law, such waivers and consents shall be effective to the
maximum extent permitted by law.
23. Indemnity. Each Grantor shall indemnify, reimburse and hold Secured
Party, each of Secured Party's members, and each of their respective successors,
assigns, agents, officers, directors, shareholders, servants, agents and
employees harmless from and against all liabilities, losses, damages, actions,
suits, demands, claims of any kind and nature (including claims relating to
environmental discharge, cleanup or compliance), all costs and expenses
whatsoever to the extent they may be incurred or suffered by such indemnified
party in connection therewith (including reasonable attorneys' fees and
expenses), fines, penalties (and other charges of applicable governmental
authorities), licensing fees relating to any item of Collateral, damage to or
loss of use of property (including consequential or special damages to third
parties or damages to Borrower's property), or bodily injury to or death of any
person (including any agent or employee of Borrower) (each, a "Claim"), directly
or indirectly relating to or arising out of the use of the proceeds of the Loan
or otherwise, the falsity of any representation or warranty of such Grantor or
such Grantor's failure to comply with the terms of this Agreement or any other
Operative Document while the Obligations are outstanding. The foregoing
indemnity shall cover, without limitation, (i) any Claim in connection with a
design or other defect (latent or patent) in any item of equipment included in
the Collateral, (ii) any Claim for infringement of any patent, copyright,
trademark or other intellectual property right, (iii) any Claim resulting from
the presence on or under or the escape, seepage, leakage, spillage, discharge,
emission or release of any hazardous materials on the premises of such Grantor,
including any Claims asserted or arising under any environmental law, or (iv)
any Claim for negligence or strict or absolute liability in tort; provided,
however, that such Grantor shall not indemnify Secured Party for any liability
incurred by Secured Party as a direct and sole result of Secured Party's gross
negligence or willful misconduct. Such indemnities shall continue in full force
and effect, notwithstanding the expiration or termination of this Agreement.
Upon an indemnitee's written demand, such Grantor shall assume and diligently
conduct, at its sole cost and expense, the entire defense of Secured Party, each
of its members, and each of their respective agents, employees, directors,
officers, shareholders, successors and assigns, using counsel reasonably
acceptable to such indemnitee against any indemnified Claim. Such Grantor shall
not settle or compromise any Claim against or involving Secured Party without
first obtaining Secured Party's written consent thereto, which consent shall not
be unreasonably withheld or delayed.
24. Amendments, Etc. No amendment or waiver of any provision of this
Agreement nor consent to any departure by the Grantors herefrom (other than
supplements to the Schedules hereto in accordance with the terms of this
Agreement) shall in any event be effective unless the same shall be in writing
and made in accordance with the terms of the Reimbursement Agreement, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.
25. Notices. All notices and other communications provided for hereunder
shall be given in writing in the manner and to the addresses set forth either in
the Reimbursement Agreement or in the Guaranty dated as of even date herewith
made by the Grantors.
26. Continuing Security Interest: Transfer of Notes; Termination. This
Agreement shall create a continuing security interest in the Collateral pursuant
to Section 2 hereof and shall (i) remain in full force and effect until (A)
indefeasible payment in full of the Obligations and the termination or
expiration of Lender's obligation to make loans under the Credit Agreement or
(B) the termination of the
18
Secured Party's obligations under the Credit Guaranty, (ii) be binding upon each
Grantor, their successors and assigns and (iii) inure, together with the rights
and remedies of Secured Party hereunder, to the benefit of Secured Party and any
successor Secured Party, subject to the terms and conditions of the
Reimbursement Agreement. Subject to the terms of the Reimbursement Agreement,
any Secured Party may assign or otherwise transfer any Loan, or any rights in
Collateral held by it to any other Person, and such other Person shall thereupon
become vested with all the benefits in respect thereof granted to such Secured
Party or Secured Party herein or otherwise. Nothing set forth herein or in any
other Operative Document is intended or shall be construed to give to any other
party any right, remedy or claim under, to or in respect of this Agreement or
any other Operative Document or any Collateral. The Grantors' successors and
assigns shall include, without limitation, a receiver, trustee or
debtor-in-possession thereof or therefor, provided that, except as otherwise
permitted under the Reimbursement Agreement or any other Operative Document,
none of the rights or obligations of the Grantors hereunder may be assigned or
otherwise transferred without the prior written consent of Secured Party.
27. Release of the Grantors. This Agreement and all obligations of each
Grantor hereunder and all security interests granted hereby shall be released
and terminated when all Obligations have been paid in full in cash and when
Lender's obligation to make loans under the Credit Agreement has expired or have
otherwise been terminated, or when the Secured Party's obligations under the
Credit Guarantee shall have otherwise been terminated. Upon such release and
termination of all Obligations and the security interest hereunder, all rights
in and to the Collateral granted or pledged by the Grantors hereunder shall
automatically revert to the Grantors, and Secured Party shall return any pledged
Collateral in their possession to the Grantors, or to the Person or Persons
legally entitled thereto, and shall endorse, execute, deliver, record and file
all instruments and documents, and do all other acts and things, reasonably
required for the return of the Collateral to the Grantors, or to the Person or
Persons legally entitled thereto, and to evidence or document the release of the
interests of Secured Party arising under this Agreement, all as reasonably
requested by, and at the sole expense of, the Grantors.
28. Governing Law. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA (WITHOUT REFERENCE TO ITS
CHOICE OF LAW PROVISIONS), EXCEPT AS OTHERWISE REQUIRED BY MANDATORY PROVISIONS
OF LAW AND EXCEPT TO THE EXTENT THAT REMEDIES PROVIDED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF CALIFORNIA ARE GOVERNED BY THE LAWS OF SUCH
JURISDICTION.
29. Jury Trial. EACH GRANTOR AND LENDER, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY AS TO
ANY ISSUE RELATING HERETO IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM ARISING OUT
OF OR RELATING TO THIS AGREEMENT.
30. Limitation of Liability. NO CLAIM MAY BE MADE BY ANY GRANTOR AGAINST
LENDER OR THE MEMBERS, AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, ATTORNEYS OF
LENDER FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES IN RESPECT
OF ANY CLAIM (WHETHER BASED UPON ANY BREACH OF CONTRACT, TORT, BREACH OF
STATUTORY DUTY OR ANY OTHER THEORY OF LIABILITY) ARISING OUT OF OR RELATED TO
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, OR ANY ACT, OMISSION OR EVENT
OCCURRING IN CONNECTION THEREWITH AND EACH GRANTOR HEREBY WAIVES, RELEASES AND
AGREES NOT TO XXX UPON ANY CLAIM FOR ANY SUCH DAMAGES, WHETHER OR NOT NOW
ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.
19
34. Covenant Not to Issue Uncertificated Securities. Each Grantor
covenants to Secured Party that any Pledged Securities held by it shall be in
certificated form (as contemplated by Article 8 of the Uniform Commercial Code),
and that it will not seek to convert all or any part of any Pledged Securities
into uncertificated form (as contemplated by Article 8 of the Uniform Commercial
Code).
35. Covenant Not to Dilute Interests of Secured Party in Securities. Each
Grantor represents, warrants and covenants to Secured Party that it will (a) not
at any time cause or permit any Subsidiary that is an issuer of Pledged
Securities to issue any capital stock or any warrant options or other rights to
acquire any capital stock, other than to such Grantor or as otherwise permitted
under the Reimbursement Agreement and (b) pledge to Secured Party in accordance
with the terms hereof, promptly upon its acquisition (directly or indirectly)
thereof, and in any event, within 5 days of such acquisition, any and all shares
of stock or other securities of each issuer of Pledged Securities.
36. Pledged Limited Liability Company Interests/Covenant Not to Dilute.
Each Grantor represents, warrants and covenants to Secured Party that it will
(a) not at any time cause or permit any Pledged Entities to issue any additional
membership interests or any other rights or options to acquire any additional
limited liability company interests, other than to the Grantors or as otherwise
permitted under the Reimbursement Agreement, and (b) pledge to Secured Party in
accordance with the terms hereof, promptly upon its acquisition (directly or
indirectly) thereof, and in any event, within 5 days of such acquisition, any
and all additional Limited Liability Company Interests of each Pledged Entity.
37. Pledged Partnership Interests/Covenant Not to Dilute. Each Grantor
represents, warrants and covenants to Secured Party that it will (a) not at any
time cause or permit any Pledged Partnership Entities to issue any additional
partnership interests or any other rights or options to acquire any additional
partnership interests, other than to the Grantors or as otherwise permitted
under the Reimbursement Agreement, and (b) pledge to Secured Party in accordance
with the terms hereof, promptly upon its acquisition (directly or indirectly)
thereof, and in any event, within 5 days of such acquisition, any and all
additional Partnership Interests of each Pledged Partnership Entity.
[Remainder of page intentionally left blank]
20
IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly
authorized, have executed this Agreement as of the day and year first above
written.
XXX.XXX, INC.
By: ______________________________
Name: ____________________________
Title: ___________________________
[SUBSIDIARY]
By: ______________________________
Name: ____________________________
Title: ___________________________
[SUBSIDIARY]
By: ______________________________
Name: ____________________________
Title: ___________________________
VANTAGEPOINT VENTURE PARTNERS III (Q), L.P.
By: VantagePoint Venture Associates III, LLC
By: ______________________________
Name: ____________________________
Title: Managing Member
21
SCHEDULE 1-A
LIST OF ASSET LOCATIONS
Grantor Brief Description of Assets Location (county, state)
------- --------------------------- ------------------------
SCHEDULE 1-B
LIST OF DEPOSIT ACCOUNTS
Grantor/Depositor's Name Depositary Bank Account Number Account Type
------------------------ --------------- -------------- ------------
LIST OF DEPOSIT ACCOUNTS
Grantor/Depositor's Name Bank/Brokerage Firm Account Number Account Type
------------------------ ------------------- -------------- ------------
SCHEDULE 1-C
LIST OF PLEDGED COLLATERAL
Shares or Shares Issued
Grantor Issuer Cert. No. Interst Pledged and Outstanding Shares Authorized
------- ------ --------- --------------- --------------- -----------------
SCHEDULE 1-D
LOCATION OF CHIEF EXECUTIVE OFFICE OF EACH GRANTOR
Grantor Location
------- --------
SCHEDULE 1-E
LIST OF TRADENAMES
Grantor Trade Names (including any used in the preceding 5 years)
------- ---------------------------------------------------------
SCHEDULE 1-F
Trademark Registration Number Registration Date
--------- ------------------- -----------------
Trademark Application Application Number Application Date
--------------------- ------------------ ----------------
SCHEDULE 1-G
Patent Registration Number Registration Date
------ ------------------- -----------------
Patent Application Application Number Application Date
------------------ ------------------ ----------------
SCHEDULE 1-H
Copyright Registration Number Registration Date
--------- ------------------- -----------------
Copyright Application Application Number Application Date
--------------------- ------------------ ----------------
EXHIBIT A-1
TO SECURITY AGREEMENT
FORM OF PLEDGE NOTICE
[Letterhead of Grantor]
[Date]
TO: [Name of Pledged Entity]
Notice is hereby given that, pursuant to the Security Agreement (a
true and correct copy of which is attached hereto), dated as of [Date] (as
amended, modified or supplemented from time to time in accordance with the terms
thereof, the "Security Agreement"), among [NAME OF GRANTOR] (the "Grantor"), the
other pledgors from time to time party thereto and VantagePoint Venture III (Q),
L.P. (the "Secured Party"), the Grantor has pledged and assigned to the Secured
Party, and granted to the Secured Party a continuing security interest in, all
right, title and interest of the Grantor, whether now existing or hereafter
arising or acquired, as a [[limited partner] [general partner]] [member] in
[NAME OF PLEDGED ENTITY] (the ["Partnership"] ["LLC"]), and in, to and under the
[TITLE OF APPLICABLE AGREEMENT] (the "[Partnership] [LLC] Agreement"),
including, without limitation:
(i) all the capital of the [Partnership] [LLC] and the
Grantor's interest in all profits, income, surplus, losses,
[Partnership] [LLC] assets and other distributions to which the
Grantor shall at any time be entitled in respect of such
[Partnership] [Membership] interest;
(ii) all other payments due or to become due to the Grantor in
respect of such [partnership [limited liability company] interest,
whether under the [Partnership] [LLC] Agreement or otherwise,
whether as contractual obligations, damages, insurance proceeds or
otherwise;
(iii) all of its claims, rights, powers, privileges,
authority, options, security interest, liens and remedies, if any,
under the [Partnership] [LLC] Agreement or at law or otherwise in
respect of such [Partnership] [Membership] Interest;
(iv) all present and future claims, if any, of the Grantor
against the [Partnership] [LLC] for moneys loaned or advanced, for
services rendered or otherwise;
(v) all of the Grantor's rights under the [Partnership] [LLC]
Agreement or at law to exercise and enforce every right, power,
remedy, authority, option and privilege of the Grantor relating to
the [Partnership] [Membership] Interest, including any power to
terminate, cancel or modify the [Partnership] [LLC] Agreement, to
execute any instruments and to take any and all other action on
behalf of and in the name of the Grantor in respect of the
[Partnership] [Membership] Interest and the [Partnership] [LLC], to
make determinations, to exercise any election (including, but not
limited, election of remedies) or option or to give or receive any
notice, consent, amendment, waiver or approval, together with full
power and authority to demand, receive, enforce, collect or receipt
for any of the foregoing, to enforce or execute any checks, or other
instruments or orders, to file any claims and to take any action in
connection with any of the foregoing;
(vi) all other property hereafter delivered in substitution
for or in addition to any of the foregoing, all certificates and
instruments representing or evidencing such other property and all
cash, securities, interest, dividends, rights and other property at
any time and from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all thereof; and
(vii) to the extent not otherwise included, all proceeds of
any or all of the foregoing.
Pursuant to the Security Agreement, the [Partnership] [LLC] is
hereby authorized and directed to register the Grantor's pledge to the Secured
Party of the interest of the Grantor on the [Partnership's] [LLC's] books.
The Grantor hereby requests the [Partnership] [LLC] to indicate the
[Partnership's] [LLC's] acceptance of this Notice and consent to and
confirmation of its terms and provisions by signing a copy hereof where
indicated on the attached page and returning the same to the Secured Party.
[NAME OF GRANTOR]
By ______________________________
Name:
Title:
EXHIBIT A-2
To Security Agreement
FORM OF ISSUER ACKNOWLEDGMENT
[NAME OF PLEDGED ENTITY] (the ["Partnership"] ["LLC"]) hereby
acknowledges receipt of a copy of the assignment by [NAME OF GRANTOR]
("Grantor") of its interest under the [TITLE OF APPLICABLE AGREEMENT] (the
"[Partnership] [LLC] Agreement") pursuant to the terms of the Security
Agreement, dated as of [Date] (as amended, modified or supplemented from time to
time in accordance with the terms thereof, the "Security Agreement"), among the
Grantor, the other grantors from time to time party thereto, and VantagePoint
Venture Partners III (Q), L.P. (the "Secured Party"). The undersigned hereby
further confirms (i) the registration of the Grantor's pledge of its interest to
the Secured Party on behalf of the Secured Creditors on the [Partnership's]
[LLC's] books and (ii) upon receipt from the Secured Party of a notice stating
that an "Event of Default" has occurred and is continuing, the undersigned shall
only comply with instructions originated by the Secured Party with respect to
the pledge of the interest referred to above notwithstanding contrary
instructions given by any other person or entity, including the Grantor until
such time as otherwise notified by the Secured Party.
Dated: _______, ____
[NAME OF PLEDGED ENTITY]
BY _____________________________
Name:
Title:
EXHIBIT B
TO SECURITY AGREEMENT
[SEPARATE INSTRUMENT FOR
EACH FORM OF COLLATERAL]
GRANT OF SECURITY INTEREST
[PATENTS][TRADEMARKS][COPYRIGHTS]
THIS GRANT OF SECURITY INTEREST, dated as of ________________, 2002,
is executed by [GRANTOR], a [state of incorporation] corporation ("Grantor"), in
favor of VantagePoint Venture Partners III (Q), L.P. ("Secured Party").
A. Grantor has entered into a Security Agreement, dated the date
hereof (the "Security Agreement"), by and between _______________________ in
favor of Secured Party;
[B. Grantor owns the letters patent, and/or applications for letters
patent, of the United States, more particularly described on Schedules 1-A and
1-B annexed hereto as part hereof (collectively, the "Patents");]
[B. Grantor has adopted, used and is using the trademarks, more
particularly described on Schedules 1-A and 1-B annexed hereto as part hereof,
which trademarks are registered or subject to an application for registration in
the United States Patent and Trademark Office (collectively, the "Trademarks");]
[B. Grantor owns the copyrights registered in the United States
Copyright Office, more particularly described on Schedule 1-A annexed hereto as
part hereof (collectively, the "Copyrights");]
[C. Pursuant to the Security Agreement, Grantor has granted to
Secured Party a security interest in all right, title and interest of Grantor in
and to the Patents, together with any reissue, continuation,
continuation-in-part or extension thereof, and all proceeds thereof, including
any and all causes of action which may exist by reason of infringement thereof
for the full term of the Patents (the "Collateral"), to secure the prompt
payment, performance and observance of the Obligations, as defined in the
Security Agreement;
[C. Pursuant to the Security Agreement, Grantor has granted to
Secured Party a security interest in all right, title and interest of Grantor in
and to the Trademarks, together with the goodwill of the business symbolized by
the Trademarks and the customer lists and records related to the Trademarks and
the applications and registrations thereof, and all proceeds thereof, including
any and all causes of action which may exist by reason of infringement thereof
(the "Collateral"), to secure the payment, performance and observance of the
Obligations, as defined in the Security Agreement;]
[C. Pursuant to the Security Agreement, Grantor has granted to
Secured Party a security interest in all right, title and interest of Grantor in
and to the Copyrights and the registrations thereof, together with any renewals
or extensions thereof, and all proceeds thereof, including any and all causes of
action which may exist by reason of infringement thereof for the full term of
the Copyrights (the "Collateral"), to secure the prompt payment, performance and
observance of the Obligations, as defined in the Security Agreement;]
NOW, THEREFORE, for good and valuable consideration, receipt of
which is hereby acknowledged, Grantor does hereby further grant to Secured Party
a security interest in the Collateral to secure the prompt payment, performance
and observance of the Obligations.
Grantor does hereby further acknowledge and affirm that the rights
and remedies of Secured Party with respect to the security interest in the
Collateral granted hereby are more fully set forth in the Security Agreement,
the terms and provisions of which are hereby incorporated herein by reference as
if fully set forth herein.
Secured Party's address is: VantagePoint Venture Partners III (Q), L.P.
__________________________________________
__________________________________________
__________________________________________
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, Grantor has caused this instrument to be
executed as of the day and year first above written.
[GRANTOR]
By: _________________________
Name: _______________________
Title: ______________________
SCHEDULE 1-A TO GRANT OF SECURITY INTEREST
PATENTS
Title Date Issued Patent No.
----- ----------- ----------
SCHEDULE 1-B TO GRANT OF SECURITY INTEREST
PATENT APPLICATIONS
Title Application Date Application No.
----- ---------------- ---------------
SCHEDULE 1-A TO GRANT OF SECURITY INTEREST
TRADEMARKS
Xxxx Registration Date Registration No.
---- ----------------- ----------------
SCHEDULE 1-B TO GRANT OF SECURITY INTEREST
TRADEMARK APPLICATIONS
Xxxx Application Date Application No.
---- ---------------- ---------------
SCHEDULE 1-A TO GRANT OF SECURITY INTEREST
COPYRIGHTS
Description Registration Date Registration No.
----------- ----------------- ----------------
Exhibit 6
GUARANTY
--------
THIS GUARANTY (this "Guaranty"), dated as of [DATE], 2002, is
executed by each of the undersigned (each such entity and each entity which
hereafter executes and delivers a Subsidiary Joinder in substantially the form
of Attachment 1 hereto to be referred to herein as a "Guarantor"), in favor of
VANTAGEPOINT VENTURE PARTNERS III (Q), L.P. ("VPVP").
RECITALS
A. Reference is made to that certain [Credit Agreement, dated as of
the date hereof (the "Credit Agreement"), by and between [Fleet National Bank]
("Lender") and XXX.xxx, Inc. ("Borrower").
B. It is a condition precedent to the extension of credit by Lender
under the Credit Agreement that VPVP enter into a guaranty (the "Credit
Guaranty") to guaranty certain of the obligations of Borrower to Lender under
the Credit Agreement.
C. In order to induce VPVP to enter into the Credit Guaranty: (i)
Borrower has agreed to enter into a Reimbursement Agreement, dated as of the
date hereof (the "Reimbursement Agreement"), (ii) Borrower's subsidiaries party
hereto have agreed to enter into this Guaranty to guaranty Borrower's
obligations to VPVP under the Reimbursement Agreement and (iii) Borrower and
Guarantors have agreed to enter into a Security Agreement, dated as of the date
hereof, to secure their respective obligations under the Reimbursement Agreement
and this Guaranty.
D. Each of the undersigned Guarantors is a subsidiary of Borrower
and expects to derive substantial direct and indirect benefit from the
transactions contemplated by the Credit Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals
and for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, each Guarantor, and VPVP hereby agree as follows:
1. Definitions and Interpretation.
(a) Definition. When used in this Guaranty, the following terms
shall have the following respective meanings:
"Adjusted Maximum Guaranty Amount" shall mean, with respect to any
Guarantor, the maximum liability of such Guarantor under this Guaranty, limited
to the extent provided in Section 2(d) hereof (except that, for purposes of
calculating the Adjusted Maximum Guaranty Amount of a Guarantor only, any assets
or liabilities of such Guarantor arising under Section 8 hereof shall be
ignored).
"Aggregate Guaranty Payments" shall mean, with respect to any
Guarantor at any time, the aggregate net amount of all payments made by such
Guarantor under this Guaranty (including, without limitation, under Section 8
hereof) at or prior to such time.
"Borrower" shall have the meaning given to that term in Recital A
hereof.
"Credit Agreement" shall have the meaning given to that term in the
Recital hereof.
"Disallowed Post-Commencement Interest and Expenses" shall mean
interest computed at the rate provided in the Reimbursement Agreement and claims
for reimbursement, costs, expenses or indemnities under the terms of any of the
Operative Documents accruing or claimed at any time after the commencement of
any Insolvency Proceeding, if the claim for such interest, reimbursement, costs,
expenses or indemnities is not allowable, allowed or enforceable against
Borrower in such Insolvency Proceeding.
"Fair Share" shall mean, with respect to any Guarantor at any time,
an amount equal to (i) a fraction, the numerator of which is the Adjusted
Maximum Guaranty Amount of such Guarantor and the denominator of which is the
aggregate Adjusted Maximum Guaranty Amounts of all Guarantors, multiplied by
(ii) the aggregate amount paid by all Funding Guarantors under this Guaranty at
or prior to such time.
"Fair Share Shortfall" shall mean, with respect to any Guarantor at
any time, the amount, if any, by which the Fair Share of such Guarantor at such
time exceeds the Aggregate Guaranty Payments of such Guarantor at such time.
"Funding Guarantor" shall have the meaning given to that term in
Section 8 hereof.
"Guaranteed Obligations" shall mean the Obligations.
"Guarantor" shall have the meaning given to that term in the
introductory paragraph hereof.
"Insolvency Proceeding" shall mean any case or proceeding under the
United States Bankruptcy Code or any other similar law, rule or regulation of
the United States or any jurisdiction or any other action or proceeding for the
reorganization, liquidation, appointment of a receiver, rearrangement of debts,
marshalling of assets or similar action relating to Borrower or any Guarantor,
their respective creditors or any substantial part of their respective assets,
whether or not any such case, proceeding or action is voluntary or involuntary.
"Operative Documents" shall have the meaning given to that term in
the Reimbursement Agreement.
"Person" shall mean and include an individual, a partnership, a
corporation, a business trust, a joint stock company, a limited liability
company, an unincorporated association or other entity and any domestic or
foreign national, state or local government, any political subdivision thereof,
and any department, agency, authority or bureau of any of the foregoing.
"Solvent" shall mean, with respect to any Person on any date, that
on such date (a) the present fair saleable value of the assets of such Person is
not less than the amount that will be required to pay the probable liability of
such Person on its debts as they become absolute and matured, (b) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature and (c) such Person is not engaged in a business or a transaction, and is
not about to engage in a business or a transaction, for which such Person's
property would constitute an unreasonably small capital.
"Subordinated Obligations" shall have the meaning given to that term
in Section 6 hereof.
2
"Subsidiary Joinder" shall mean an agreement substantially in the
form of Attachment 1 hereto.
"VPVP" shall have the meaning given to that term in the introductory
paragraph hereof.
Unless otherwise defined herein, all other capitalized terms used
herein and defined in the Reimbursement Agreement shall have the respective
meanings given to those terms in the Reimbursement Agreement.
(b) Other Interpretive Provisions. The rules of construction set
forth in the Reimbursement Agreement shall, to the extent not inconsistent with
the terms of this Guaranty, apply to this Guaranty and are hereby incorporated
by reference. Each Guarantor acknowledges receipt of copies of the Reimbursement
Agreement and the other Operative Documents.
2. Guaranty.
(a) Payment Guaranty. Each Guarantor unconditionally guarantees and
promises to pay and perform as and when due, whether at stated maturity, upon
acceleration or otherwise, any and all of the Guaranteed Obligations. If any
Insolvency Proceeding relating to Borrower is commenced, each Guarantor further
unconditionally guarantees and promises to pay and perform, upon the demand of
VPVP, any and all of the Guaranteed Obligations (including any and all
Disallowed Post-Commencement Interest and Expenses) in accordance with the terms
of the Operative Documents, whether or not such obligations are then due and
payable by Borrower and whether or not such obligations are modified, reduced or
discharged in such Insolvency Proceeding. This Guaranty is a guaranty of payment
and not of collection.
(b) Continuing Guaranty. This Guaranty is an irrevocable continuing
guaranty of the Guaranteed Obligations which shall continue in effect until all
obligations of Lender to extend credit to Borrower have terminated and all of
the Guaranteed Obligations have been fully, finally and indefensibly paid or
until the Credit Guaranty is terminated. If any payment on any Guaranteed
Obligation is set aside, avoided or rescinded or otherwise recovered from VPVP,
such recovered payment shall constitute a Guaranteed Obligation hereunder and,
if this Guaranty was previously released or terminated, it automatically shall
be fully reinstated, as if such payment was never made.
(c) Independent Obligation. The liability of each Guarantor
hereunder is independent of the Guaranteed Obligations and of the obligations of
each other Guarantor hereunder, and a separate action or actions may be brought
and prosecuted against each Guarantor irrespective of whether action is brought
against Borrower, any other Guarantor or any other guarantor of the Guaranteed
Obligations or whether Borrower, any other Guarantor or any other guarantor of
the Guaranteed Obligations is joined in any such action or actions.
(d) Fraudulent Transfer Limitation. If, in any action to enforce
this Guaranty, any court of competent jurisdiction determines that enforcement
against any Guarantor for the full amount of the Guaranteed Obligations is not
lawful under or would be subject to avoidance under Xxxxxxx 000 xx xxx Xxxxxx
Xxxxxx Bankruptcy Code or any applicable provision of any comparable law of any
state or other jurisdiction, the liability of such Guarantor under this Guaranty
shall be limited to the maximum amount lawful and not subject to such avoidance.
(e) Termination. Notwithstanding any termination of this Guaranty in
accordance with Section 6 hereof, this Guaranty shall continue to be in full
force and effect and applicable to any Guaranteed Obligations arising thereafter
which arise because prior payments of Guaranteed Obligations are rescinded or
otherwise required to be surrendered by VPVP after receipt.
3
3. Representations and Warranties. Each Guarantor makes the following
representations and warranties to VPVP:
(a) Due Incorporation, Qualification, etc. Such Guarantor and its
Subsidiaries (i) is duly organized, validly existing and in good standing under
the laws of its state of incorporation or formation; (ii) has the power and
authority to own, lease and operate its properties and carry on its business as
now conducted; and (iii) is duly qualified, licensed to do business and in good
standing as a foreign corporation in each jurisdiction where the failure to be
so qualified or licensed could reasonably be expected to have a Material Adverse
Effect.
(b) Authority. The execution, delivery and performance by such
Guarantor of each Operative Document to be executed by such Guarantor and the
consummation of the transactions contemplated thereby (i) are within the power
of such Guarantor and (ii) have been duly authorized by all necessary actions on
the part of such Guarantor.
(c) Enforceability. Each Operative Document executed, or to be
executed, by such Guarantor has been, or will be, duly executed and delivered by
such Guarantor and constitutes, or will constitute, a legal, valid and binding
obligation of such Guarantor, enforceable against such Guarantor in accordance
with its terms, except as limited by bankruptcy, insolvency or other laws of
general application relating to or affecting the enforcement of creditors'
rights generally and general principles of equity.
(d) Non-Contravention. The execution and delivery by such Guarantor
of the Operative Documents executed by such Guarantor and the performance and
consummation of the transactions contemplated thereby do not and will not (i)
violate the certificate of incorporation or bylaws or comparable formation
documents of such Guarantor or any material judgment, order, writ, decree,
statute, rule or regulation applicable to such Guarantor; (ii) violate any
provision of, or result in the breach or the acceleration of, or entitle any
other Person to accelerate (whether after the giving of notice or lapse of time
or both), any material mortgage, indenture, agreement, instrument or contract to
which such Guarantor is a party or by which it is bound; or (iii) result in the
creation or imposition of any Lien upon any property, asset or revenue of such
Guarantor (other than any Lien arising under the Operative Documents) or the
suspension, revocation, impairment, forfeiture, or nonrenewal of any material
permit, license, authorization or approval applicable to such Guarantor, its
business or operations, or any of its assets or properties.
(e) Approvals. No consent, approval, order or authorization of, or
registration, declaration or filing with, any governmental authority or other
Person (including, without limitation, the shareholders of any Person) is
required in connection with the execution and delivery of the Operative
Documents executed by such Guarantor and the performance and consummation of the
transactions contemplated thereby.
(f) No Violation or Default. Neither such Guarantor nor such
Guarantor's Subsidiaries is in violation of or in default with respect to (i)
its certificate of incorporation or bylaws or comparable formation documents or
any material judgment, order, writ, decree, statute, rule or regulation
applicable to such Person; (ii) any material mortgage, indenture, agreement,
instrument or contract to which such Person is a party or by which it is bound
(nor is there any waiver in effect which, if not in effect, would result in such
a violation or default), where, in each case, such violation or default,
individually, or together with all such violations or defaults, could reasonably
be expected to have a Material Adverse Effect. No default under this Guaranty
has occurred and is continuing.
(g) Litigation. No actions (including, without limitation,
derivative actions), suits, proceedings or investigations are pending or, to the
knowledge of such Guarantor, threatened against such Guarantor or such
Guarantor's Subsidiaries at law or in equity in any court or before any other
governmental authority
4
which if adversely determined (i) would (alone or in the aggregate) have a
Material Adverse Effect or (ii) seeks to enjoin, either directly or indirectly,
the execution, delivery or performance by such Guarantor of the Operative
Documents or the transactions contemplated thereby.
(h) Other Regulations. Neither such Guarantor nor its Subsidiaries
is subject to regulation under the Investment Company Act of 1940, the Public
Utility Holding Company Act of 1935, the Federal Power Act, the Interstate
Commerce Act, any state public utilities code or to any federal or state statute
or regulation limiting its ability to incur Indebtedness.
(i) Governmental Charges. Each of such Guarantor and its
Subsidiaries has filed or caused to be filed all tax returns which are required
to be filed by it. Such Guarantor and such Guarantor's Subsidiaries have paid,
or made provision for the payment of, all taxes and other levies, assessments,
fees, claims or other charges imposed by any governmental authority which have
or may have become due pursuant to said returns, except such taxes, levies,
assessments, fees, claims or other charges, if any, which are being contested in
good faith and as to which adequate reserves (determined in accordance with
GAAP) have been provided or which could not reasonably be expected to have a
Material Adverse Effect if unpaid.
(j) Subsidiaries, etc. Except as set forth in the Disclosure
Schedule attached hereto (setting forth the jurisdiction of incorporation or
formation, capital structure and percentage ownership of each shareholder), such
Guarantor has no Subsidiaries, is not a partner in any partnership, a member of
any limited liability company or a joint venturer in any joint venture.
(k) Solvency, Etc. Such Guarantor is Solvent and, after the
execution and delivery of the Operative Documents and the consummation of the
transactions contemplated thereby, each of such Guarantor and its Subsidiaries
will be Solvent.
4. Covenants. Until all obligations of Lender to extend credit
to Borrower have terminated and all of the Guaranteed Obligations have been
fully, finally and indefensibly paid, each Guarantor shall comply with the
following covenants:
(a) Financial Statements, Reports, Etc(i) . Such Guarantor shall
furnish to VPVP such financial statements, certificates, opinions, statements,
documents and information relating to the operations or condition (financial or
otherwise) of such Guarantor or its Subsidiaries, and compliance by Borrower and
such Guarantor with the terms of the Operative Documents as VPVP may from time
to time reasonably request.
(b) Inspections. Such Guarantor and its Subsidiaries shall permit
any Person designated by VPVP, upon reasonable prior notice and during normal
business hours, to visit and inspect any of the properties and offices of such
Guarantor and its Subsidiaries, to examine the books and records of such
Guarantor and its Subsidiaries and make copies thereof and to discuss the
affairs, finances and accounts of such Guarantor and its Subsidiaries with, and
to be advised as to the same by, their officers, auditors and accountants, all
at such times and intervals as VPVP may reasonably request.
(c) Insurance. Such Guarantor and its Subsidiaries shall maintain
the insurance required to be maintained under the Reimbursement Agreement.
(d) Governmental Charges. To the extent failure to do so could
reasonably be expected to have a Material Adverse Effect, such Guarantor and its
Subsidiaries shall promptly pay and discharge all taxes and other charges
imposed by any government authority upon such Guarantor or its Subsidiaries or
their property as and when they become due.
5
(e) General Business Operations. To the extent failure to do so
could reasonably be expected to have a Material Adverse Effect, such Guarantor
and its Subsidiaries shall (i) maintain its corporate existence and all rights,
privileges and franchises necessary for the conduct of its business and (ii)
comply with any material judgment, order, writ, decree, statute, rule or
regulation applicable to such Person and any material mortgage, indenture,
agreement, instrument or contract to which such Person is a party or by which it
is bound.
5. Authorizations, Waivers, Etc.
(a) Authorizations. Each Guarantor authorizes VPVP, in its
discretion, without prior notice to such Guarantor, irrespective of any change
in the financial condition of Borrower, such Guarantor, any other Guarantor or
any other guarantor of the Guaranteed Obligations since the date hereof, and
without affecting or impairing in any way the liability of such Guarantor
hereunder, from time to time to:
(i) Create new Guaranteed Obligations and renew, compromise,
extend, accelerate or otherwise change the time for payment or performance of,
or otherwise amend or modify the Operative Documents or change the terms of the
Guaranteed Obligations or any part thereof, including increase or decrease of
the rate of interest thereon;
(ii) Take and hold security for the payment or performance of
the Guaranteed Obligations and exchange, enforce, waive or release any such
security; apply such security and direct the order or manner of sale thereof;
and purchase such security at public or private sale;
(iii) Otherwise exercise any right or remedy they may have
against Borrower, such Guarantor, any other Guarantor, any other guarantor of
the Guaranteed Obligations or any security, including, without limitation, the
right to foreclose upon any such security by judicial or nonjudicial sale;
(iv) Settle, compromise with, release or substitute any one or
more makers, endorsers or guarantors of the Guaranteed Obligations; and
(v) Assign the Guaranteed Obligations, this Guaranty or the
other Operative Documents in whole or in part to the extent provided in the
Reimbursement Agreement and the other Operative Documents.
(b) Waivers. To the extent permitted by applicable law, each
Guarantor hereby waives:
(i) Any right to require VPVP to (A) proceed against Borrower,
any other Guarantor or any other guarantor of the Guaranteed Obligations, (B)
proceed against or exhaust any security received from Borrower, such Guarantor,
any other Guarantor or any other guarantor of the Guaranteed Obligations or
otherwise marshal the assets of Borrower, such Guarantor, any other Guarantor or
any other guarantor of the Guaranteed Obligations or (C) pursue any other remedy
in VPVP's power whatsoever;
(ii) Any defense arising by reason of the application by
Borrower of the proceeds of any borrowing;
(iii) Any defense resulting from the absence, impairment or
loss of any right of reimbursement, subrogation, contribution or other right or
remedy of Guarantor against Borrower, any other Guarantor, any other guarantor
of the Guaranteed Obligations or any security, whether resulting from an
election by VPVP to foreclose upon security by nonjudicial sale, or otherwise;
6
(iv) Any setoff or counterclaim of Borrower or any defense
which results from any disability or other defense of Borrower or the cessation
or stay of enforcement from any cause whatsoever of the liability of Borrower
(including, without limitation, the lack of validity or enforceability of any of
the Operative Documents);
(v) Any defense based upon any law, rule or regulation which
provides that the obligation of a surety must not be greater or more burdensome
than the obligation of the principal;
(vi) Until all obligations of Lender to extend credit to
Borrower have terminated and all of the Guaranteed Obligations have been fully,
finally and indefensibly paid, any right of subrogation, reimbursement,
indemnification or contribution and other similar right to enforce any remedy
which VPVP or any other Person now has or may hereafter have against Borrower on
account of the Guaranteed Obligations, and any benefit of, and any right to
participate in, any security now or hereafter received by VPVP or any other
Person on account of the Guaranteed Obligations;
(vii) All presentments, demands for performance, notices of
nonperformance, notices delivered under the Operative Documents, protests,
notice of dishonor, and notices of acceptance of this Guaranty and of the
existence, creation or incurring of new or additional Guaranteed Obligations and
notices of any public or private foreclosure sale;
(viii) The benefit of any statute of limitations to the extent
permitted by law;
(ix) Any appraisement, valuation, stay, extension, moratorium
redemption or similar law or similar rights for marshalling;
(x) Any right to be informed by VPVP of the financial
condition of Borrower, any other Guarantor or any other circumstances bearing
upon the risk of nonpayment or nonperformance of the Guaranteed Obligations;
(xi) Until all obligations of Lender to extend credit to
Borrower have terminated and all of the Guaranteed Obligations have been fully,
finally and indefensibly paid, any right to revoke this Guaranty;
(xii) Any defense arising from an election for the application
of Section 1111(b)(2) of the United States Bankruptcy Code which applies to the
Guaranteed Obligations;
(xiii) Any defense based upon any borrowing or grant of a
security interest under Section 364 of the United States Bankruptcy Code; and
(xiv) Any right it may have to a fair value hearing to
determine the size of a deficiency judgment following any foreclosure on any
security for the Guaranteed Obligations.
Without limiting the scope of any of the foregoing provisions of this Section 5,
to the extent permitted by applicable law, each Guarantor hereby further waives
(A) all rights and defenses arising out of an election of remedies by VPVP, even
though that election of remedies, such as a nonjudicial foreclosure with respect
to security for a Guaranteed Obligation, has destroyed such Guarantor's rights
of subrogation and reimbursement against Borrower by the operation of Section
580d of the Code of Civil Procedure or otherwise, (B) all rights and defenses
such Guarantor may have by reason of protection afforded to Borrower with
respect to the Guaranteed Obligations pursuant to the antideficiency or other
laws of California limiting or discharging the Guaranteed Obligations,
including, without limitation, Section 580a, 580b, 580d, or 726 of the
California Code of Civil Procedure, and (C) all other rights and defenses
available to such Guarantor by reason of Sections 2787 to 2855, inclusive,
Section 2899 or Section 3433 of the California Civil Code or Section 3605 of the
California Commercial Code.
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(c) Financial Condition of Borrower, Etc. Each Guarantor is fully
aware of the financial condition and affairs of Borrower. Each Guarantor has
executed this Guaranty without reliance upon any representation, warranty,
statement or information concerning Borrower furnished to such Guarantor by VPVP
and has, independently and without reliance on VPVP and based on such documents
and information as it has deemed appropriate, made its own appraisal of the
financial condition and affairs of Borrower and of other circumstances affecting
the risk of nonpayment or nonperformance of the Guaranteed Obligations. Each
Guarantor is in a position to obtain, and assumes full responsibility for
obtaining, any additional information about the financial condition and affairs
of Borrower and of other circumstances affecting the risk of nonpayment or
nonperformance of the Guaranteed Obligations and will, independently and without
reliance upon VPVP, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own appraisals and decisions in
taking or not taking action in connection with this Guaranty.
6. Subordination. Each Guarantor hereby subordinates any and all debts,
liabilities and obligations owed to such Guarantor by Borrower or any Subsidiary
of Borrower (the "Subordinated Obligations") to the Guaranteed Obligations as
provided in this Section 6.
(a) Prohibited Payments, Etc. Except during the existence of an
Event of Default or any default by any Guarantor hereunder, each Guarantor and
its Subsidiaries may receive regularly scheduled payments from Borrower on
account of Subordinated Obligations. During the existence of any Event of
Default or any default by any Guarantor hereunder (including the commencement
and continuation of any Insolvency Proceeding relating to Borrower, however,
unless VPVP otherwise requests, such Guarantor shall not, nor shall it permit
any of its Subsidiaries to, demand, accept or take any action to collect any
payment on account of the Subordinated Obligations.
(b) Prior Payment of Guaranteed Obligation. In any Insolvency
Proceeding relating to Borrower, each Guarantor agrees that VPVP shall be
entitled to receive payment of all Guaranteed Obligations (including any and all
Disallowed Post-Commencement Interest and Expenses) before such Guarantor or any
of its Subsidiaries receives payment of any Subordinated Obligations.
(c) Turn-Over. During the existence of any Event of Default
(including the commencement and continuation of any Insolvency Proceeding
relating to Borrower), each Guarantor and its Subsidiaries shall, if VPVP so
requests, collect, enforce and receive payments on account of the Subordinated
Obligations as trustee for VPVP and deliver such payments to VPVP on account of
the Guaranteed Obligations (including any and all Disallowed Post-Commencement
Interest and Expenses), together with any necessary endorsements or other
instruments of transfer, but without reducing or affecting in any manner the
liability of such Guarantor under the other provisions of this Guaranty.
(d) VPVP Authorization. During the existence of any Event of Default
or any default by a Guarantor hereunder (including the commencement and
continuation of any Insolvency Proceeding relating to Borrower, VPVP is
authorized and empowered (but without any obligation to so do), in its
discretion, (i) in the name of each Guarantor and its Subsidiaries, to collect
and enforce, and to submit claims in respect of, Subordinated Obligations and to
apply any amounts received thereon to the Guaranteed Obligations (including any
and all Disallowed Post-Commencement Interest and Expenses), and (ii) to require
each Guarantor (A) to collect and enforce, and to submit claims in respect of,
Subordinated Obligations and (B) to pay any amounts received on such obligations
to VPVP for application to the Guaranteed Obligations (including any and all
Disallowed Post-Commencement Interest and Expenses).
8
7. General Pledge; Setoff.
(a) Pledge. In addition to all liens upon and rights of setoff
against the property of any Guarantor given to VPVP by law or separate agreement
to secure the liabilities of any Guarantor hereunder, to the extent permitted by
law, each Guarantor hereby grants to VPVP, as security for such Guarantor's
obligations hereunder, a security interest in all monies, securities and other
property of such Guarantor now or hereafter in the possession of VPVP; and VPVP
shall have all rights and remedies of a secured party with respect to such
property.
(b) Setoff. In addition to any rights and remedies of VPVP provided
by law, VPVP shall have the right, without prior notice to any Guarantor, any
such notice being expressly waived by each Guarantor to the extent permitted by
applicable law, during the existence of an Event of Default, to set-off and
apply against the Guaranteed Obligations then due and payable any amount owing
from VPVP to such Guarantor.
(c) Nonwaiver. No security interest or right of setoff shall be
deemed to have been waived by any act or conduct on the part of VPVP or by any
failure to exercise such right of setoff or to enforce such security interest,
or by any delay in so doing; and every right of setoff and security interest
shall continue in full force and effect until such right of setoff or security
interest is specifically waived or released by an instrument in writing executed
by VPVP.
8. Contribution among Guarantors. The Guarantors desire to allocate
among themselves, in a fair and equitable manner, their rights of contribution
from each other when any payment is made by any Guarantor under this Guaranty.
Accordingly, if any payment is made by any Guarantor under this Guaranty (a
"Funding Guarantor"') that exceeds its Fair Share, the Funding Guarantor shall
be entitled to a contribution from each other Guarantor in the amount of such
other Guarantor's Fair Share Shortfall, so that all such contributions shall
cause each Guarantor's Aggregate Guaranty Payments to equal its Fair Share. The
amounts payable as contributions hereunder shall be determined by the Funding
Guarantor as of the date on which the related payment or distribution is made by
the Funding Guarantor, and such determination shall be binding on the other
Guarantors absent manifest error. The allocation and right of contribution among
the Guarantors set forth in this Section 8 shall not be construed to limit in
any way the liability of any Guarantor under this Guaranty or the amount of the
Guaranteed Obligations.
9. Miscellaneous.
(a) Notices. Except as otherwise provided herein, all notices,
requests, demands, consents, instructions or other communications to or upon any
Guarantor or VPVP under this Guaranty or the other Operative Documents to which
a Guarantor is a party shall be in writing and fixed, mailed or delivered, if to
a Guarantor or VPVP, at its respective facsimile number or address set forth
below or in the respective Subsidiary Joinder for such Guarantor (or to such
other facsimile number or address for any party as indicated in any notice given
by that party to the other parties). All such notices and communications shall
be effective (i) when sent by overnight service of recognized standing, on the
second Business Day following the deposit with such service; (ii) when mailed,
first class postage prepaid and addressed as aforesaid through the United States
Postal Service, upon receipt; (iii) when delivered by hand, upon delivery; and
(iv) when faxed, upon confirmation of receipt.
9
Guarantor: ___________________________________________
___________________________________________
___________________________________________
Attention:
Facsimile:
Telephone:
Guarantor: ___________________________________________
___________________________________________
___________________________________________
Attention:
Facsimile:
Telephone:
Guarantor: ___________________________________________
___________________________________________
___________________________________________
Attention:
Facsimile:
Telephone:
VPVP VANTAGEPOINT VENTURE PARTNERS III (Q), L.P.
Attention:
Telephone:
Facsimile:
(b) Payments. Each Guarantor shall make all payments required
hereunder to VPVP, or its order, at VPVP's office located at the address set
forth in Section 9(a) hereof, or at such other office as VPVP may designate, on
demand, in U.S. dollars. If any amounts required to be paid by a Guarantor under
this Guaranty are not paid when due, such Guarantor shall pay interest on the
aggregate, outstanding balance of such amounts from the date due until those
amounts are paid in full at a per annum rate equal to the [Default Rate].
(c) Expenses . Each Guarantor shall pay on demand (i) all reasonable
fees and expenses, including reasonable attorneys' fees and expenses, incurred
by VPVP in connection with the preparation, execution and delivery of, and the
exercise of its duties under, this Guaranty and the preparation, execution and
delivery of amendments and waivers hereunder and (ii) all reasonable fees and
expenses, including reasonable attorneys' fees and expenses, incurred by VPVP in
connection with the enforcement or attempted enforcement of this Guaranty or any
of the Guaranteed Obligations or in preserving any of VPVP's rights and remedies
(including, without limitation, all such fees and expenses incurred in
connection with any "workout" or restructuring affecting the Operative Documents
or the Guaranteed Obligations or any bankruptcy or similar proceeding involving
Guarantor, any other Guarantor, Borrower or any of their Affiliates).
(d) Waivers, Amendments. This Guaranty may not be amended or
modified, nor may any of its terms be waived, except by written instruments
signed by each Guarantor and VPVP. Each waiver or consent under any provision
hereof shall be effective only in the specific instances for the purpose for
which given. No failure or delay on VPVP's part in exercising any right
hereunder shall operate as a waiver thereof or of any other right nor shall any
single or partial exercise of any such right preclude any other further exercise
thereof or of any other right.
10
(e) Assignment. This Guaranty shall be binding upon and inure to the
benefit of VPVP, the Guarantors and their respective successors and assigns;
provided, however, that no Guarantor may assign or transfer any of its rights
and obligations under this Guaranty without the prior written consent of VPVP,
and, provided, further, that VPVP may sell, assign and delegate their respective
rights and obligations hereunder only as permitted by the Reimbursement
Agreement. All references in this Guaranty to any Person shall be deemed to
include all permitted successors and assigns of such Person.
(f) Cumulative Rights, etc. The rights, powers and remedies of VPVP
under this Guaranty shall be in addition to all rights, powers and remedies
given to VPVP by virtue of any applicable law, rule or regulation of any
governmental authority, the Reimbursement Agreement, any other Operative
Document or any other agreement, all of which rights, powers, and remedies shall
be cumulative and may be exercised successively or concurrently without
impairing VPVP's rights hereunder. Each Guarantor waives any right to require
VPVP to proceed against any Person or to exhaust any Collateral or to pursue any
remedy in VPVP's power.
(g) Payments Free of Taxes, Etc. All payments made by each Guarantor
under this Guaranty shall be made by each Guarantor free and clear of and
without deduction for any and all present and future taxes, levies, charges,
deductions and withholdings. In addition, each Guarantor shall pay upon demand
any stamp or other taxes, levies or charges of any jurisdiction with respect to
the execution, delivery, registration, performance and enforcement of this
Guaranty. If any taxes, levies, charges or other amounts are required to be
withheld from any amounts payable to VPVP, hereunder, the amounts so payable to
VPVP shall be increased to the extent necessary to yield to VPVP (after payment
of all such amounts) any such amounts payable hereunder in the amounts,
specified in this Guaranty. Upon reasonable request by VPVP, each Guarantor
shall furnish evidence satisfactory to VPVP that all requisite authorizations
and approvals by, and notices to and filings with, governmental authorities and
regulatory bodies have been obtained and made and that all requisite taxes,
levies and charges have been paid.
(h) Partial Invalidity. If at any time any provision of this
Guaranty is or becomes illegal, invalid or unenforceable in any respect under
the law or any jurisdiction, neither the legality, validity or enforceability of
the remaining provisions of this Guaranty nor the legality, validity or
enforceability of such provision under the law of any other jurisdiction shall
in any way be affected or impaired thereby.
(i) Joint and Several Obligation. The obligations of the Guarantors
under this Guaranty are joint and several obligations of each Guarantor and may
be freely enforced against each Guarantor, for the full amount of the Guaranteed
Obligations, without regard to whether enforcement is sought or available
against any other Guarantor.
(j) Governing Law. THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF CALIFORNIA (WITHOUT REFERENCE TO ITS CHOICE OF
LAWS PROVISIONS).
(k) Jury Trial. EACH GUARANTOR AND VPVP, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY
JURY AS TO ANY ISSUE RELATING HERETO IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS GUARANTY.
11
(l) Limitation of Liability. NO CLAIM MAY BE MADE BY ANY GUARANTOR
AGAINST VPVP OR THE MEMBERS, AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES,
ATTORNEYS OF VPVP FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES
IN RESPECT OF ANY CLAIM (WHETHER BASED UPON ANY BREACH OF CONTRACT, TORT, BREACH
OF STATUTORY DUTY OR ANY OTHER THEORY OF LIABILITY) ARISING OUT OF OR RELATED TO
THE TRANSACTIONS CONTEMPLATED BY THIS GUARANTY, OR ANY ACT, OMISSION OR EVENT
OCCURRING IN CONNECTION THEREWITH AND EACH GUARANTOR HEREBY WAIVES, RELEASES AND
AGREES NOT TO XXX UPON ANY CLAIM FOR ANY SUCH DAMAGES, WHETHER OR NOT NOW
ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.
12
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be
executed as of the day and year first above written.
[GUARANTOR]
By: ________________________________
Name: ________________________
Title: _______________________
[GUARANTOR]
By: ________________________________
Name: ________________________
Title: _______________________
DISCLOSURE SCHEDULE
ATTACHMENT 1
SUBSIDIARY JOINDER
THIS SUBSIDIARY JOINDER (this "Agreement"), dated as of __________,
____, is executed by [NEW SUBSIDIARY], a ___________ [corporation] [partnership]
[etc.] ("New Subsidiary"), in favor of VANTAGEPOINT VENTURE PARTNERS III (Q),
L.P. (the "VPVP").
RECITALS
A. Reference is made to that certain [Credit Agreement, dated as of
[DATE], 2002 (the "Credit Agreement"), by and between [Fleet National Bank]
("Lender") and XXX.xxx, Inc. ("Borrower").
B. VPVP entered into a Guaranty, dated as of [DATE], 2002 (the
"Credit Guaranty"), to guaranty certain of the obligations of Borrower under the
Credit Agreement.
C. In order to induce VPVP to enter into the Credit Guaranty, (i)
Borrower entered into a Reimbursement Agreement, dated as of [DATE], 2002 (the
"Reimbursement Agreement"), (ii) certain of Borrower's subsidiaries
("Guarantors") entered into a Guaranty, dated as of [DATE], 2002 (the
"Guaranty"), to guaranty Borrower's obligations to VPVP under the Reimbursement
Agreement and (iii) Borrower and Guarantors entered into a Security Agreement,
dated as of [DATE], 2002, to secure their respective obligations under the
Reimbursement Agreement and the Guaranty.
D. New Subsidiary is a [new] Subsidiary of Borrower and expects to
derive substantial direct and indirect benefit from the transactions
contemplated by the Reimbursement Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, New Subsidiary hereby agrees with VPVP, as follows:
1. Definitions and Interpretation. Unless otherwise defined herein,
all capitalized terms used herein and defined in the Guaranty shall have the
respective meanings given to those terms in the Guaranty. New Subsidiary
acknowledges receipt of copies of the Guaranty, the Security Agreement, the Loan
Agreement and the other Operative Documents.
2. Representations and Warranties. On and as of the date of this
Agreement (the "Effective Date") and for the benefit of VPVP, New Subsidiary
hereby makes each of the representations and warranties made by each Guarantor
in the Guaranty.
3. Agreement to be Bound. New Subsidiary agrees that, on and as of
the Effective Date, it shall become a Guarantor under the Guaranty and a Grantor
(as such term is defined in the Security Agreement) under the Security Agreement
and shall be bound by all the provisions of the Guaranty and the Security
Agreement to the same extent as if New Subsidiary had executed the Guaranty and
the Security Agreement on the Closing Date.
4. Waiver. Without limiting the generality of the waivers in the
Guaranty, New Subsidiary specifically agrees to be bound by the Guaranty and the
Security Agreement and waives any right to notice of acceptance of its execution
of this Agreement and of its agreement to be bound by the Guaranty and the
Security Agreement.
5. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of California.
[Remainder of page intentionally left blank]
2
IN WITNESS WHEREOF, New Subsidiary has caused this Agreement to be
executed by its duly authorized officer.
[NEW SUBSIDIARY]
By: _____________________________
Name: ________________________
Title: _______________________
Address:
[_________________________________]
[_________________________________]
[_________________________________]
Attn:
Telephone:
Facsimile:
3
