Exhibit 10.6
SECURITY AGREEMENT
This SECURITY AGREEMENT is entered into as of January 30, 2003, by and
among SILICON VALLEY BANK, a California-based bank (the "Bank") with its
principal place of business at 0000 Xxxxxx Xxxxx, Xxxxx Xxxxx, XX 00000, and
with a loan production office located at One Xxxxxx Executive Park, Suite 200,
0000 Xxxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, doing business under the name
"Silicon Valley East" and ASPENTECH SECURITIES CORP., a Massachusetts
corporation with its chief executive office located at Xxx Xxxxx Xxxx,
Xxxxxxxxx, Xxxxxxxxxxxxx 00000 (the "Debtor").
RECITALS
Debtor has executed and delivered a certain instrument of Unconditional
Guaranty to Bank of even date herewith (as may be amended from time to time, the
"Guaranty"), pursuant to which the Debtor unconditionally guarantied the payment
and performance of the obligations and liabilities (hereinafter, the
"Liabilities") of ASPEN TECHNOLOGY, INC., a Delaware corporation, ASPENTECH,
INC., a Texas corporation and HYPROTECH COMPANY, a company organized under the
laws of Nova Scotia, Canada (collectively, "Borrower") to Bank (as may be
amended from time to time, the "Guaranty"). Bank has agreed to lend money to
Borrower, but only upon the condition that Debtor execute and deliver this
Security Agreement to secure the payment and performance of the Guaranty.
Capitalized terms used but not otherwise defined herein shall have the same
meaning as in the Loan and Security Agreement by and between the Bank and
Borrower of even date herewith, as amended from time to time (the "Loan
Agreement")
AGREEMENT
The parties agree as follows:
1. CREATION OF SECURITY INTEREST
1.1 GRANT OF SECURITY INTEREST. Debtor grants to Bank a security
interest in the property described in EXHIBIT A attached hereto (the
"Collateral") to secure the Guaranty, and any and all liabilities and
obligations of Debtor to Bank under the Guaranty and any other agreements
entered into between Debtor and Bank in connection therewith (the "Loan
Documents"). Such security interest constitutes a first priority security
interest in the presently existing Collateral subject to Permitted Liens, and
will constitute a first priority security interest in Collateral acquired after
the date hereof subject to Permitted Liens.
1.2 FINANCING STATEMENTS. This Agreement constitutes an
authenticated record which authorizes the Bank to file such financing statements
as Bank reasonably determines appropriate. Without limiting the generality of
the foregoing, Debtor hereby expressly authorizes Bank to file financing
statements without notice to Debtor, with all appropriate jurisdictions, as Bank
in its reasonable discretion deems appropriate from time to time, in order to
further perfect, protect, or vest more securely Bank's interest in the
Collateral.
1.3 DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED. Debtor shall
from time to time execute and deliver to Bank, at the request of Bank, all
financing statements and other documents that Bank may reasonably request, in
form satisfactory to Bank, to perfect and continue perfected Bank's security
interests in the Collateral and in order to fully consummate all of the
transactions contemplated under the Loan Documents.
2. REPRESENTATIONS AND WARRANTIES
Debtor represents and warrants as follows:
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2.1 DUE ORGANIZATION AND QUALIFICATION. Debtor is a corporation
duly existing and in good standing under the laws of its state of incorporation
and qualified and licensed to do business in, and is in good standing in, any
state in which the conduct of its business or its ownership of property requires
that it be so qualified and where the failure to be so qualified would have a
material adverse effect on the Debtor. Debtor represents and warrants that its
legal name, type of organization, jurisdiction or incorporation, organizational
identification number and place of business are indicated on its perfection
certificate. Debtor shall not, without at least thirty (30) days prior written
notice to Bank: (i) relocate its chief executive office, or add any new offices
or business locations with assets in excess of $100,000, or (ii) change its
jurisdiction of organization, or (iii) change its organizational structure or
type, or (iv) change its legal name, or (v) change any organizational number (if
any) assigned by its jurisdiction of organization.
2.2 DUE AUTHORIZATION; NO CONFLICT. The execution, delivery, and
performance of this Agreement are within Debtor's powers, have been duly
authorized, and are not in conflict with nor constitute a breach of any
provision contained in Debtor's organizational documents, nor will they
constitute an event of default under any material agreement to which Debtor is a
party or by which Debtor is bound.
2.3 NO PRIOR ENCUMBRANCES. Debtor has good and indefeasible title
to the Collateral, free and clear of any liens, security interests, or other
encumbrances (other than the Permitted Liens).
3. AFFIRMATIVE COVENANTS
Debtor covenants and agrees that, until payment in full of all
outstanding obligations and liabilities under the Guaranty and this Agreement,
Debtor shall do all of the following:
3.1 GOOD STANDING. Debtor shall maintain its corporate existence
and its good standing in its jurisdiction of incorporation and maintain
qualification in each jurisdiction in which the failure to so qualify could
reasonably be expected to have a material adverse effect on Debtor's business.
Debtor shall maintain in force all licenses, approvals and agreements, the loss
of which could reasonably be expected to have a material adverse effect on
Debtor's business.
3.2 GOVERNMENT COMPLIANCE. Debtor shall comply with all statutes,
laws, ordinances and government rules and regulations to which it is subject,
noncompliance with which could reasonably be expected to have a material adverse
effect on Debtor's business.
3.3 INSURANCE.
(a) Debtor, at its expense, shall keep the Collateral insured
against loss or damage by fire, theft, explosion, sprinklers, and all other
hazards and risks, and in such amounts, as ordinarily insured against by other
owners in similar businesses conducted in the locations where Debtor's business
is conducted on the date hereof. Debtor shall also maintain insurance relating
to Debtor's ownership and use of the Collateral in amounts and of a type that
are customary to businesses similar to Debtor's.
(b) All such policies of insurance shall be in such form, with
such companies, and in such amounts as reasonably satisfactory to Bank. All such
policies of property insurance shall contain a lender's loss payable
endorsement, in a form satisfactory to Bank, showing Bank as an additional loss
payee thereof and all liability insurance policies shall show the Bank as an
additional insured, and shall specify that the insurer must give at least twenty
(20) days notice to Bank before canceling its policy for any reason.
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4. NEGATIVE COVENANTS
Debtor covenants and agrees that until payment in full of all
outstanding obligations and liabilities under the Guaranty and this Agreement,
Debtor will not do any of the following:
4.1 DISPOSITIONS. Convey, sell, lease, transfer or otherwise
dispose of (collectively, a "Transfer"), all or any part of the Collateral other
than: (i) Transfers in the ordinary course of business; (ii) Transfers of
non-exclusive licenses and similar arrangements for the use of the Collateral;
or (iii) Transfers of worn-out or obsolete Equipment.
4.2 MERGERS OR ACQUISITIONS. Merge or consolidate, or permit any of
its Subsidiaries to merge or consolidate, with any other Person, or acquire, or
permit any of its Subsidiaries to acquire, all or substantially all of the
capital stock or property of another Person.
4.3 INDEBTEDNESS. Create, incur, assume, or be liable for any
indebtedness for borrowed money, or permit any Subsidiary to do so, other than
indebtedness subject to a subordination agreement between the Bank and the
holder of such indebtedness ("Subordinated Debt").
4.4 ENCUMBRANCE. Create, incur, or allow any Lien on any of its
property, or assign or convey any right to receive income, including the sale of
any Receivables, or permit any of its Subsidiaries to do so, except for
Permitted Liens, or permit any Collateral not to be subject to Bank's first
priority security interest.
4.5 INVESTMENTS; DISTRIBUTIONS. (i) Directly or indirectly acquire
or own any Person, or make any Investment in any Person, other than investments
permitted in writing by Bank or consistent with Debtor's current board approved
investment policy, or permit any of its Subsidiaries to do so; or (ii) pay any
dividends or make any distribution or payment or redeem, retire or purchase any
capital stock (except for dividends payable solely in stock of Debtor).
4.6 TRANSACTIONS WITH AFFILIATES. Directly or indirectly enter or
permit any material transaction with any Affiliate, except transactions that are
in the ordinary course of Debtor's business, on terms no less favorable to
Debtor than would be obtained in an arm's length transaction with a
non-affiliated Person (except the foregoing shall not restrict Debtor's ability
to transfer or have transferred to it cash or securities or other property
consistent with its role as a securities corporation).
4.7 SUBORDINATED DEBT. Make or permit any payment on any
Subordinated Debt, except under the terms of the Subordinated Debt, or amend any
material provision in any document relating to the Subordinated Debt, without
Bank's prior written consent.
4.8 COMPLIANCE. Undertake as one of its important activities
extending credit to purchase or carry margin stock, or use the proceeds of any
Advance for that purpose; fail to meet the minimum funding requirements of
ERISA, permit a Reportable Event or Prohibited Transaction, as defined in ERISA,
to occur; fail to comply with the Federal Fair Labor Standards Act or violate
any other law or regulation, if the violation could reasonably be expected to
have a material adverse effect on Debtor's business or operations, or permit any
of its Subsidiaries to do so.
5. EVENTS OF DEFAULT
Any one or more of the following events shall constitute an Event
of Default by Debtor under this Agreement:
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5.1 LOAN DOCUMENTS. If an Event of Default occurs under the
Guaranty or any of the Loan Documents.
5.2 COVENANT DEFAULT. Debtor does not perform any obligation in
Article 3 or violates any covenant in Article 4 or does not perform or observe
any other material term, condition or covenant in this Agreement, any Loan
Documents, or in any agreement between Debtor and Bank within twenty (20) days
of becoming aware of such default (or within three (3) Business Days of such
default if the default can not be cured).
5.3 ATTACHMENT. (i) Any material portion of Debtor's assets is
attached, seized, levied on, or comes into possession of a trustee or receiver
and the attachment, seizure or levy is not removed in thirty (30) days; (ii)
Debtor is enjoined, restrained, or prevented by court order from conducting a
material part of its business; (iii) a judgment or other claim becomes a Lien on
a material portion of Debtor's assets other than Permitted Liens; or (iv) a
notice of lien, levy, or assessment is filed against a material portion of
Debtor's assets by any government agency and not paid or contested in good faith
in compliance with appropriate procedures within thirty (30) days after Debtor
receives notice. These are not Events of Default if stayed or if a bond is
posted pending contest by Debtor.
5.4 INSOLVENCY. (i) Dissolution, termination of existence,
insolvency or business failure of Debtor; or appointment of a receiver, trustee
or custodian, for all or any part of the property of, assignment for the benefit
of creditors by, or the commencement of any proceeding by Debtor under any
reorganization, bankruptcy, insolvency, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction, now or in the
future in effect; or (ii) the commencement of any proceeding against Debtor
under any reorganization, bankruptcy, insolvency, arrangement, readjustment of
debt, dissolution or liquidation law or statute of any jurisdiction, now or in
the future in effect, which is not cured by the dismissal thereof within 45 days
after the date commenced.
5.5 OTHER AGREEMENTS. If there is a default in any agreement to
which Debtor is a party with a third party or parties resulting in a right by
such third party or parties, whether or not exercised, to accelerate the
maturity of any indebtedness for borrowed money of Debtor in an amount in excess
of One Hundred Thousand Dollars ($100,000), including, without limitation, any
Subordinated Debt.
5.6 JUDGMENTS. If a final judgment or judgments for the payment of
money in an amount, individually or in the aggregate, of at least Two Hundred
Thousand Dollars ($200,000) which is not covered by insurance shall be rendered
against Debtor and shall remain unsatisfied and unstayed for a period of thirty
(30) days.
5.7 MISREPRESENTATIONS. If Debtor or any Person acting for Debtor
makes any material misrepresentation or material misstatement now or later in
any warranty or representation in this Agreement or in any communication
delivered to Bank or to induce Bank to enter this Agreement or any Loan
Document.
6. BANK'S RIGHTS AND REMEDIES
6.1 RIGHTS AND REMEDIES. Upon the occurrence and during the
continuance of an Event of Default, Bank may, at its election, without notice of
its election and without demand, do any one or more of the following, all of
which are authorized by Debtor:
(a) Exercise all rights available to it under the Massachusetts
Uniform Commercial Code and applicable law;
(b) Set off and apply to the obligations any and all (i)
balances and deposits of Debtor held by Bank, or (ii) indebtedness at any time
owing to or for the credit or the account of Debtor held by Bank; and
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(c) Sell the Collateral at either a public or private sale, or
both, by way of one or more contracts or transactions, for cash or on terms, in
such manner and at such places (including Debtor's premises) as is commercially
reasonable pursuant to such standards for commercial reasonableness as described
in Section 7.3 of the Loan Agreement.
6.2 REMEDIES CUMULATIVE. Bank's rights and remedies under this
Agreement, the Loan Documents, and all other agreements shall be cumulative.
Bank shall have all other rights and remedies not inconsistent herewith as
provided under the Code, by law, or in equity. No exercise by Bank of one right
or remedy shall be deemed an election, and no waiver by Bank of any Event of
Default on Debtor's part shall be deemed a continuing waiver. No delay by Bank
shall constitute a waiver, election, or acquiescence by it.
6.3 DEMAND; PROTEST. Except as set forth herein or in the Guaranty,
Debtor waives demand, protest, notice of protest, notice of default or dishonor,
notice of payment and nonpayment, notice of any default, nonpayment at maturity,
release, compromise, settlement, extension, or renewal of accounts, documents,
instruments, chattel paper, and guarantees at any time held by Bank on which
Debtor may in any way be liable.
7. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER
The laws of the Commonwealth of Massachusetts shall apply to this
Agreement. DEBTOR AND BANK ACCEPT FOR THEMSELVES AND IN CONNECTION WITH THEIR
PROPERTIES, UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF ANY STATE OR
FEDERAL COURT OF COMPETENT JURISDICTION IN THE COMMONWEALTH OF MASSACHUSETTS IN
ANY ACTION, SUIT, OR PROCEEDING OF ANY KIND, AGAINST IT WHICH ARISES OUT OF OR
BY REASON OF THIS AGREEMENT; PROVIDED, HOWEVER, THAT IF FOR ANY REASON BANK
CANNOT AVAIL ITSELF OF THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS, DEBTOR
AND BANK ACCEPT JURISDICTION OF THE COURTS AND VENUE IN SANTA XXXXX COUNTY,
CALIFORNIA. NOTWITHSTANDING THE FOREGOING, THE BANK SHALL HAVE THE RIGHT TO
BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER OR ITS PROPERTY IN THE
COURTS OR ANY OTHER JURISDICTION WHICH THE BANK REASONABLY DEEMS NECESSARY OR
APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR TO OTHERWISE ENFORCE THE
BANK'S RIGHT AGAINST THE DEBTOR OR ITS PROPERTY.
DEBTOR AND BANK EACH HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE
LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES THAT THE FOREGOING WAIVER
CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT. EACH
PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL
COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
8. GENERAL PROVISIONS
8.1 SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure to
the benefit of the respective successors and permitted assigns of each of the
parties; PROVIDED, HOWEVER, that neither this Agreement nor any rights hereunder
may be assigned by Debtor without Bank's prior written consent, which consent
may be granted or withheld in Bank's reasonable discretion. Bank shall have the
right without the consent of or notice to Debtor to sell, transfer, negotiate,
or grant participations in all or any part of, or any interest in Bank's
obligations, rights and benefits hereunder.
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8.2 INDEMNIFICATION. Debtor shall defend, indemnify and hold
harmless Bank and its officers, employees, and agents against: (a) all
obligations, demands, claims, and liabilities claimed or asserted by any other
party in connection with the transactions contemplated by this Agreement; and
(b) all reasonable losses or Bank Expenses in any way suffered, incurred, or
paid by Bank as a result of or in any way arising out of, following, or
consequential to transactions between Bank and Debtor whether under this
Agreement, or otherwise (including without limitation reasonable attorneys' fees
and expenses), except for losses caused by Bank's gross negligence or willful
misconduct.
8.3 RIGHT OF SET-OFF. Debtor hereby grants to Bank, a lien,
security interest and right of setoff as security for all obligations and
liabilities to Bank, whether now existing or hereafter arising upon and against
all deposits, credits, collateral and property, now or hereafter in the
possession, custody, safekeeping or control of Bank or any entity under the
control of the Bank or in transit to any of them. At any time after the
occurrence and during the continuance of an Event of Default, without demand or
notice, Bank may set off the same or any part thereof and apply the same to any
liability or obligation of Debtor even though unmatured and regardless of the
adequacy of any other collateral securing the loan. ANY AND ALL RIGHTS TO
REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER
COLLATERAL WHICH SECURES THE LIABILITIES OF DEBTOR TO BANK, PRIOR TO EXERCISING
ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF
THE Debtor, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.
8.4 TIME OF ESSENCE. Time is of the essence for the performance of
all obligations set forth in this Agreement.
8.5 SEVERABILITY OF PROVISIONS. Each provision of this Agreement
shall be severable from every other provision of this Agreement for the purpose
of determining the legal enforceability of any specific provision.
8.6 AMENDMENTS IN WRITING, INTEGRATION. This Agreement cannot be
changed or terminated orally. All prior agreements, understandings,
representations, warranties, and negotiations between the parties hereto with
respect to the subject matter of this Agreement, if any, are merged into this
Agreement and the Loan Documents.
8.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, shall be deemed to be an original, and all of
which, when taken together, shall constitute but one and the same Agreement.
8.8 SURVIVAL. All covenants, representations and warranties made in
this Agreement shall continue in full force and effect so long as any
liabilities and obligations under the Guaranty and this Agreement remain
outstanding. The obligations of Debtor to indemnify Bank with respect to the
expenses, damages, losses, costs and liabilities described in this Agreement
shall survive until all applicable statute of limitations periods with respect
to actions that may be brought against Bank have run.
8.9 DEBTOR WAIVERS. Debtor waives any right to require Bank to (a)
proceed against Borrower, the Debtor, any other guarantor or any other person;
(b) proceed against or exhaust any security held from Borrower or Debtor; (c)
marshal any assets of Borrower or Debtor; or (d) pursue any other remedy in
Bank's power whatsoever. Bank may, at its election, exercise or decline or fail
to exercise any right or remedy it may have against Borrower or Debtor or any
security held by Bank, including without limitation the right to foreclose upon
any such security by judicial or nonjudicial sale, without affecting or
impairing in any way the liability of Debtor hereunder. Debtor waives any
defense arising by reason of any disability or other defense of Borrower or
Debtor or by reason of the cessation from any cause whatsoever of the liability
of Borrower or Debtor. Debtor waives any setoff, defense or counterclaim that
Borrower or Debtor may have against Bank. Debtor waives any defense arising out
of
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the absence, impairment or loss of any right of reimbursement or subrogation or
any other rights against Borrower or Debtor. Until Bank is paid in full for the
Obligations, Debtor shall have no right of subrogation or reimbursement,
contribution or other rights against Borrower, and Debtor waives any right to
enforce any remedy that Bank now has or may hereafter have against Borrower.
Until Bank is paid in full for the Obligations, Debtor waives all rights to
participate in any security now or hereafter held by Bank. Debtor waives all
presentments, demands for performance, notices of nonperformance, protests,
notices of protest, notices of dishonor, and notices of acceptance of this
Agreement and of the existence, creation, or incurring of new or additional
indebtedness. Debtor assumes the responsibility for being and keeping itself
informed of the financial condition of Borrower and of all other circumstances
bearing upon the risk of nonpayment of any indebtedness or nonperformance of any
obligation of Borrower, warrants to Bank that it will keep so informed, and
agrees that absent a request for particular information by Debtor, Bank shall
have no duty to advise Debtor of information known to Bank regarding such
condition or any such circumstances.
8.10 INSOLVENCY. If Borrower becomes insolvent or is adjudicated
bankrupt or files a petition for reorganization, arrangement, composition or
similar relief under any present or future provision of the United States
Bankruptcy Code, or if such a petition is filed against Borrower, and in any
such proceeding some or all of any indebtedness or obligations under the Loan
Documents are terminated or rejected or any obligation of Borrower is modified
or abrogated, or if Borrower's obligations are otherwise avoided for insolvency,
bankruptcy or any similar reason, Debtor agrees that Debtor's liability
hereunder shall not thereby be affected or modified and such liability shall
continue in full force and effect as if no such action or proceeding had
occurred. This Agreement shall continue to be effective or be reinstated, as the
case may be, if any payment must be returned by Bank upon the insolvency,
bankruptcy or reorganization of Borrower or Debtor, any other person, or
otherwise, as though such payment had not been made.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
("Debtor")
ASPENTECH SECURITIES CORP.
By: /s/ Xxxx X. Xxxxxxx
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Name: Xxxx X. Xxxxxxx
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Title: Treasurer
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("Bank")
SILICON VALLEY BANK
By: /s/ Xxxx X. Xxxxxxxxx
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Name: Xxxx X. Xxxxxxxxx
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Title: Vice President
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EXHIBIT A
The Collateral shall consist of all right, title and interest of Debtor
in and to the following:
All assets, including without limitation, all goods, equipment,
inventory, contract rights or rights to payment of money, leases, license
agreements, franchise agreements, general intangibles (including payment
intangibles), accounts (including health-care receivables), documents,
instruments (including any promissory notes), chattel paper (whether tangible or
electronic), cash, deposit accounts, fixtures, letters of credit rights (whether
or not the letter of credit is evidenced by a writing), commercial tort claims,
securities and all other investment property, supporting obligations, and
financial assets, whether now owned or hereafter acquired, wherever located; and
All Debtor's books relating to the foregoing and any and all claims,
rights and interests in any of the above and all substitutions for, additions,
attachments, accessories, accessions and improvements to and replacements,
products, proceeds and insurance proceeds of any or all of the foregoing.
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