Execution Version
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement") is made and entered into as of
the 7th day of June, 2006, by and among Vitesse Semiconductor Corporation, a
Delaware corporation ("Vitesse" or "Grantor"), and each direct or indirect
Subsidiary of Grantor listed on Exhibit A attached hereto and on the signature
pages of this Agreement, and each Subsidiary of the Grantor or of any other
Subsidiary who executes a joinder agreement substantially in the form of Exhibit
B hereto (each individually a "Subsidiary" and all Subsidiaries, together with
the Grantor, collectively, the "Grantors") in favor of Obsidian, LLC, as
Collateral Agent (as defined in the Loan Agreement).
WHEREAS, Vitesse, Vitesse International, Inc. ("Vitesse International") and
Silicon Valley Bank entered into that certain Second Amended and Restated Loan
and Security Agreement dated March 2, 2006 (such loan agreement as so modified
and otherwise amended or modified from time to time being referred to herein as
the "Second Amended and Restated Loan Agreement"), pursuant to which Vitesse and
Vitesse International granted a security interest in certain of the Collateral
to Silicon Valley Bank;
WHEREAS, pursuant to certain assignment agreements, Silicon Valley Bank has
assigned all outstanding Obligations under and as defined in the Second Amended
and Restated Loan Agreement to certain new lenders;
WHEREAS, Grantors have requested that such new lenders make certain loans
to the Grantors and provide certain other financial accommodations to the
Grantors and, in connection therewith, Grantors have requested that such new
lenders amend and restate the Second Amended and Restated Loan Agreement;
WHEREAS, Vitesse, Vitesse International, Vitesse Manufacturing &
Development Corporation,a Delaware corporation and Vitesse Semiconductor Sales
Corporation,a Delaware corporation (each, a "Borrower" and together the
"Borrowers"), each of which is a Grantor, have entered into a certain Third
Amended and Restated Loan Agreement dated as of even date herewith with the
Lenders party thereto and Obsidian, LLC, as Agent and Collateral Agent (as the
same may be amended, restated, modified or supplemented, from time to time, the
"Loan Agreement") pursuant to which, among other things, the Lenders party
thereto have agreed to make loans to the Borrowers on the terms and conditions
described therein.
WHEREAS, the Lenders are willing to make loans to the Borrowers pursuant to
the Loan Agreement on certain conditions. One such condition is that the payment
and performance of the Obligations (as defined in the Loan Agreement) shall be
secured by, among other things, a security interest in the Collateral (as
defined below) in favor of the Collateral Agent for the ratable benefit of the
Secured Parties. In order to induce the Lenders to make such loans, and to
secure the Obligations (as defined in the Loan Agreement) of the Borrowers under
the Loan Agreement and otherwise, the Grantors are willing to ratify and
acknowledge the grant of a security interest (in respect of Collateral securing
the Obligations under and as defined in the Second Amended and Restated Loan
Agreement) and to grant to the Collateral Agent a security interest in all of
the Collateral.
Accordingly, the Grantors, intending to be legally bound, hereby agree with
the Collateral Agent, as follows:
1. DEFINITIONS.
(a) Unless otherwise defined herein, terms defined in the Loan
Agreement and used herein shall have the meanings given to them in the Loan
Agreement. Capitalized terms used herein but not defined herein or in the Loan
Agreement shall have the meaning given to such terms in the UCC then in effect
in the State of New York.
(b) The following terms shall have the following meanings:
"Blocked Accounts" means all Deposit Accounts of the Grantors which
are subject to one or more blocked account or lockbox agreements.
"Collateral" shall have the meaning ascribed to such term in Section 2
below.
"Copyright License" means any and all rights now owned or hereafter
acquired by any Person under any written agreement granting any right to use any
Copyright or Copyright registration.
"Copyrights" means all of the following now owned or hereafter adopted
or acquired by any Person: (a) all copyrights and General Intangibles of like
nature (whether registered or unregistered), all registrations and recordings
thereof, and all applications in connection therewith, including all
registrations, recordings and applications in the United States Copyright Office
or in any similar office or agency of the United States, any state or territory
thereof, or any other country or any political subdivision thereof, and (b) all
reissues, extensions or renewals thereof.
"Deposit Account" means all "deposit accounts" as such term is defined
in the UCC.
"Equity Interests" means all shares of stock, partnership interests,
interests in a joint venture, partnership or other similar arrangement, whether
in corporate, partnership or other legal form, limited liability company
interests and all other equity interests in a Person, whether such stock or
interests are classified as Investment Property or General Intangibles under the
UCC.
"Event of Default" shall be used herein as defined in the Loan
Agreement.
"Foreign Subsidiary" means any Subsidiary of the Company that is not a
Domestic Subsidiary.
"Intellectual Property" means any and all Licenses, Patents,
Copyrights, Trademarks, and the goodwill associated with such Trademarks.
"Letter-of-Credit Rights" means "letter-of-credit rights" as such term
is defined in the UCC, including rights to payment or performance under a letter
of credit whether or not beneficiary has demanded or is entitled to performance.
"License" means any Copyright License, Patent License, Trademark
License or other license of rights or interests now held or hereafter acquired
by any Person.
"Patent License" means rights under any written agreement now owned or
hereafter acquired by any Person granting any right with respect to any
invention on which a Patent is in existence.
"Patents" means all of the following in which any Person now holds or
hereafter acquires any interest: (a) all letters patent of the United States or
of any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or of any other country,
including registrations, recordings and applications in the United States Patent
and Trademark Office or in any similar office or agency of the United States,
any State, or any other country, and (b) all reissues, continuations,
continuations-in-part or extensions thereof.
"Real Property" means any estates or interests in real property now
owned or hereafter acquired by any Grantor and the improvements thereto.
"Secured Obligations" shall mean any "Obligations" as that term is
defined in the Loan Agreement.
"Secured Parties" means, collectively, the Lenders, the Agent and the
Collateral Agent. For purposes hereof, it is understood that any Secured
Obligations to any Person arising at a time such Person is party to the Loan
Agreement as a Lender shall continue to constitute Secured Obligations,
notwithstanding that such Person has ceased to be a Lender party thereto at the
time a claim is to be made in respect of such Secured Obligations.
"Trademark License" means rights under any written agreement now owned
or hereafter acquired by any Person granting any right to use any Trademark.
"Trademarks" means all of the following now owned or hereafter
existing or adopted or acquired by any Person: (a) all trademarks, trade names,
corporate names, business names, trade styles, service marks, logos, other
source or business identifiers, prints and labels on which and of the foregoing
have appeared or appear, designs and general intangibles of like nature (whether
registered or unregistered), all registrations and recordings thereof, and all
applications in connection therewith, including registrations, recordings and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any state or territory thereof, or any
other country or any political subdivision thereof; (b) all reissues, extensions
or renewals thereof; and (c) all goodwill associated with or symbolized by any
of the foregoing.
"UCC" shall mean the Uniform Commercial Code in effect on the date
hereof and as amended from time to time, and as enacted in the State of New York
or in any state or states which, pursuant to the Uniform Commercial Code as
enacted in the State of New York, has jurisdiction with respect to all, or any
portion of, the Collateral or this Agreement, from time to time. It is the
intent of the parties that the definitions set forth above should be construed
in their broadest sense so that Collateral will be construed in its broadest
sense. Accordingly if there are, from time to time, proposed changes to defined
terms in the UCC that broaden the definitions, they are incorporated herein and
if existing definitions in the UCC are broader than the amended definitions, the
existing ones shall be controlling.
2. GRANT OF SECURITY INTEREST. As security for the prompt and complete
payment, performance and observance of all the Secured Obligations (including
the payment of amounts that would become due but for the operation of the
automatic stay under Section 362(c) of the Bankruptcy Code), each Grantor hereby
(A) pledges, hypothecates, delivers, transfers and assigns to the Collateral
Agent for the benefit of the Secured Parties, and grants to the Collateral Agent
for the benefit of the Secured Parties, a security interest in and to all of
such Grantor's right, title and interest in and to all real and personal
property of such Grantor or in which such Grantor has any rights, and (B) in
respect of real and personal property of such Grantor or in which such Grantor
has any rights securing the Obligations under the Second Amended and Restated
Loan Agreement, such Grantor ratifies, acknowledges, confirms and continues its
pledge, hypothecation, delivery, transfer, assignment and grant to the
Collateral Agent for the benefit of the Secured Parties of a security interest
in and to all such real and personal property of such Grantor or in which such
Grantor has any rights, in each case including, without limitation, the
following property, in all its forms, in each case whether now or hereafter
existing, whether now owned or hereafter acquired, created or arising, and
wherever located (collectively, but without duplication, the "Collateral"):
(a) all Accounts;
(b) all Chattel Paper;
(c) all Documents;
(d) all Equipment;
(e) all Fixtures;
(f) all General Intangibles (including payment intangibles and
Software);
(g) all Instruments;
(h) all Intellectual Property;
(i) all Inventory;
(j) all Investment Property;
(k) all Deposit Accounts, including all Blocked Accounts, and all
other bank accounts and all deposits therein;
(l) all money, cash or cash equivalents;
(m) all Goods and other property not otherwise described above;
(n) all Supporting Obligations and Letter-of-Credit Rights;
(o) the following commercial tort claims: none;
(p) all Equity Interests and all certificates evidencing the same,
together with, in each case, (i) all shares, securities, moneys
or property representing a dividend on any of the Equity
Interests, or representing a distribution or return of capital
upon or in respect of the Equity Interests, or resulting from a
split-up, revision, reclassification or other like change of the
Equity Interests or otherwise received in exchange therefor, and
any subscription warrants, rights or options issued to the
holders of, or otherwise in respect of, the Equity Interests, and
(ii) without affecting the obligations of such Grantor under any
provision prohibiting such action hereunder or under the Loan
Agreement, in the event of any consolidation or merger in which
an issuer of Equity Interests is not the surviving corporation,
all shares of each class of the capital stock of the successor
corporation (unless such successor corporation is such Grantor
itself) formed by or resulting from such consolidation or merger;
provided that in no event shall the security interest granted
under this Section 2(p) and Sections 2(f) and (j) attach to any
Collateral if the grant of such security interest would
constitute or result in a grant of the Equity Interests of any
non-U.S. Person (other than Vitesse International, Inc.) that
represents more than 65% of the total combined voting power in
such non-U.S. Person, whether now owned or hereafter acquired and
which may be issued and outstanding at any time and from time to
time;
(q) all books and records pertaining to the Collateral; and
(r) to the extent not otherwise included, all Proceeds, tort claims,
insurance claims and other rights to payments not otherwise
included in the foregoing and products of the foregoing and all
accessions to, substitutions and replacements for, and rents,
profits, benefits and income of, each of the foregoing.
Notwithstanding anything herein to the contrary, in no event shall the
Collateral include, and no Grantor shall be deemed to have granted a security
interest in, any of such Grantor's rights or interests in or under, any specific
asset identified on Schedule 7 ("Temporarily Excluded Assets") hereto, but only
to the extent, that such a grant would, under the terms of such Temporarily
Excluded Asset, result in a breach of the terms of, or constitute a default
under, such asset; provided, that immediately upon the ineffectiveness, lapse or
termination of any such provision the Collateral shall include, and such Grantor
shall be deemed to have granted a security interest in, all such rights and
interests in Temporarily Excluded Assets as if such provision had never been in
effect.
In the event that any Temporarily Excluded Assets of a Grantor is
excluded from the Collateral by virtue of the foregoing paragraph, such Grantor
agrees to use all reasonable efforts to obtain all requisite consents to enable
such Grantor to provide a security interest in such Temporarily Excluded Asset
pursuant hereto as promptly as practicable. 3. REPRESENTATIONS AND WARRANTIES OF
THE GRANTORS.
Each Grantor hereby represents and warrants to the Secured Parties
that:
(a) Representations in the Loan Agreement. In the case of each
Grantor, the representations and warranties set forth in Section 5 of the Loan
Agreement as they relate to such Grantor or to the Loan Documents to which such
Grantor is a party, each of which is hereby incorporated herein by reference,
are true and correct, and the Secured Parties shall be entitled to rely on each
of them as if they were fully set forth herein, provided that each reference in
each such representation and warranty to the Borrower's knowledge shall, for the
purposes of this Section 3(a), be deemed to be a reference to such Grantor's
knowledge.
(b) Each Grantor's Title. Except for the security interests granted
hereunder, each Grantor owns its right, title and interest in and to each item
of the Collateral free and clear of any and all liens, claims or encumbrances of
others, other than Permitted Encumbrances.
(c) Legal Name; Jurisdiction of Organization; Chief Executive Office.
Each Grantor's exact legal name is shown in the introductory paragraph hereof or
on Exhibit A attached hereto. On the date hereof, such Grantor's jurisdiction of
organization, identification number from the jurisdiction of organization (if
any), and the location of such Grantor's chief executive office or sole place of
business or principal residence, as the case may be, are specified on Schedule
1.
(d) Location of Equipment and Inventory. All of the Equipment and
Inventory is located at the locations specified on Schedule 2 hereto, except for
Inventory which, in the ordinary course of business is in transit either (i)
from a supplier to a Grantor, (ii) between the locations set forth on Schedule 2
hereto, or (iii) to customers of a Grantor. Each Grantor is either the owner of
such locations or the tenant of such locations pursuant to valid and enforceable
lease agreements. Except as set forth on Schedule 2 hereto and except for
mortgages entered into by the landlord (who is the fee owner) of such location
which do not attach to any property owned by any Grantor, there exists no
mortgages or other liens on any such real property. Upon reasonable request,
each Grantor shall obtain landlord waivers from its landlords as Collateral
Agent may require, in form and substance reasonably satisfactory to Collateral
Agent.
(e) Intellectual Property. Schedule 3 lists all material Intellectual
Property owned by each Grantor in its own name on the date hereof. On the date
hereof, to each Grantor's knowledge, all material Intellectual Property of such
Grantor described on Schedule 3 is valid, subsisting, unexpired and enforceable,
has not been abandoned and does not infringe upon the intellectual property
rights of any other Person.
(f) Perfected Security Interest. This Agreement creates a valid
security interest in the Collateral securing the payment of the Secured
Obligations subject only to Permitted Encumbrances and the disclosures set forth
in the Loan Documents. Upon (i) the filing of UCC financing statements naming
each Grantor as "debtor", naming the Collateral Agent as "secured party" and
describing the Collateral in the filing offices with respect to such Grantor set
forth on Schedule 4 annexed hereto, (ii)in the case of the Collateral
consisting of certificated Securities or evidenced by Instruments, in addition
to filing of such UCC financing statements, delivery of the certificates
representing such certificated Securities and delivery of such Instruments to
the Collateral Agent, in each case duly endorsed or accompanied by duly executed
instruments of assignment or transfer in blank, (iii) in the case of the
Intellectual Property, in addition to the filing of such UCC financing
statements, the recordation of a grant with the applicable United States
Trademark and Patent Office, (iv) in the case of Equipment that is covered by a
certificate of title, the filing with the registrar of motor vehicles or other
appropriate authority in the applicable jurisdiction of an application
requesting the notation of the security interest created hereunder on such
certificate of title, and (v), in the case of any Deposit Account, the execution
and delivery to the Collateral Agent of an agreement providing for control by
the Collateral Agent thereof, the security interests in the Collateral granted
to the Collateral Agent will constitute perfected security interests therein
prior to all other liens (except for Permitted Encumbrances), and all filings
and other actions necessary or desirable to perfect and protect such security
interests have been, or promptly after the Closing Date will be, duly made or
taken. Without limiting the generality of the foregoing, except as set forth on
Schedule 4 and the Loan Documents and except for the filing of said financing
statements, no consent of any third parties and no authorization, approval or
other action by, and no notice to or filing with any governmental authority or
regulatory body is required for (i) the execution, delivery and performance of
this Agreement, (ii) the creation or perfection of the security interest in the
Collateral, or (iii) the enforcement of the Collateral Agent's rights hereunder.
(g) Bank Accounts. Schedule 5 sets forth the account numbers and
locations of all bank accounts and Accounts containing Investment Property of
each Grantor.
(h) Investment Property. Schedule 6 lists all Investment Property of
each Grantor.
4. COVENANTS OF THE GRANTORS. Each Grantor covenants and agrees with the
Collateral Agent that, as long as the Loans remain outstanding and until payment
in full of all Secured Obligations:
(a) Covenants in Loan Agreement. Each Grantor shall take, or shall
refrain from taking, as the case may be, each action that is necessary to be
taken or not taken, as the case may be, so that no Default or Event of Default
is caused by the failure to take such action or to refrain from taking such
action by such Grantor.
(b) Filing of Financing Statements and Preservation of Interests. Each
Grantor hereby authorizes the Collateral Agent, and appoints the Collateral
Agent as its attorney-in-fact, to file all UCC financing statements including
any financing and continuation statements and amendments and supplements
thereto, and such other documents as the Collateral Agent may require to
perfect, preserve and protect the security interests granted herein and ratifies
all such actions taken by the Collateral Agent. Without limiting the foregoing,
each Grantor consents that UCC financing statements may be filed describing the
Collateral as "all assets" or "all personal property" of such Grantor (provided
that no such description shall be deemed to modify the description of Collateral
set forth in Section 2).
(c) Collateral In Possession of Third Parties. To the extent that any
Collateral is in the possession of a third party, each Grantor promptly upon
reasonable request from the Collateral Agent will join with the Collateral Agent
in notifying such third party of the Collateral Agent's security interest and
will make commercially reasonable efforts to obtain an acknowledgement from such
third party that it is holding the Collateral for the benefit of the Collateral
Agent.
(d) Collateral Records. The Grantors shall keep full and accurate
books and records relating to the Collateral and shall xxxx such books and
records to indicate the Collateral Agent's security interests in the Collateral.
(e) Transfer of Collateral. Other than the disposition of goods in the
ordinary course of each Grantor's business as presently conducted or as
otherwise permitted under the terms of the Loan Documents, no Grantor will sell,
assign, transfer, encumber or otherwise dispose of any Collateral other than to
another Grantor without the prior written consent of the Collateral Agent. For
purposes of this provision, "dispose of any Collateral" shall include, without
limitation, the creation of a security interest or other encumbrance (whether
voluntary or involuntary) on such Collateral which is not a Permitted
Encumbrance.
(f) Changes in Name, etc. No Grantor will, except upon 30 days' prior
written notice to the Collateral Agent and delivery to the Collateral Agent of
all additional financing statements and other documents reasonably requested by
the Collateral Agent to maintain the validity, perfection and priority of the
security interests provided for herein, (i) change its jurisdiction of
organization or the location of its chief executive office or sole place of
business or principal residence from that referred to in Section 3(c), or (ii)
change its name.
(g) Notice of Changes in Representations. Each Grantor shall notify
the Collateral Agent in advance of any event or condition which could reasonably
be expected to cause any representations set forth in Section 3 above to fail to
be true, correct and complete.
(h) Use and Condition of Equipment. Each material item of Equipment
used or useful in the business of each Grantor will be maintained in good
operating condition (ordinary wear and tear excepted), and each Grantor will
provide all maintenance service and repairs reasonably appropriate (as
determined in such Grantor's commercially reasonable judgment) for such purpose.
(i) Account Covenants. Each Grantor shall, at its own reasonable
expense, use its best efforts in the ordinary course of business to assure
prompt payment of all amounts due or to become due under the Accounts. The
Collateral Agent shall have the right, at any time or times hereafter, to verify
the validity, amount or any other matter relating to an Account, by mail,
telephone or in person, subject to state and federal privacy laws regarding
patient information.
(j) Taxes and Assessments. Each Grantor will pay and discharge or
otherwise satisfy at or before maturity or before they become delinquent, as the
case may be, all taxes, assessments and governmental charges or levies imposed
upon the Collateral or in respect of income or profits therefrom, as well as all
claims of any kind (including, without limitation, claims for labor, materials
and supplies) against or with respect to the Collateral, except that no such
tax, assessment, charge, levy or claim need be paid if the amount or validity
thereof is currently being contested in good faith by appropriate proceedings,
reserves in conformity with GAAP with respect thereto have been provided on the
books of such Grantor and such proceedings could not reasonably be expected to
result in the sale, forfeiture or loss of any material portion of the Collateral
or such Grantor's interest in such material portion of the Collateral.
(k) Insurance. Each Grantor shall maintain with financially sound and
reputable insurers, insurance with respect to the Collateral against loss or
damage of the kinds and in the amounts customarily insured against by entities
of established reputation having similar properties similarly situated and in
such amounts as are customarily carried under similar circumstances by other
such Persons and otherwise as is prudent for Persons engaged in similar
businesses but in any event sufficient to cover the full replacement cost
thereof (or other insurable value acceptable to the Collateral Agent). Unless
the Loan Agreement expressly provides otherwise, each Grantor shall cause each
insurance policy issued in connection herewith to provide, and the insurer
issuing such policy to certify to the Collateral Agent that (i) the Collateral
Agent will be named as lender loss payee and additional insured under each such
insurance policy; (ii) if such insurance is proposed to be cancelled or
materially changed for any reason whatsoever, such insurer will promptly notify
the Collateral Agent and such cancellation or change shall not be effective as
to the Collateral Agent for at least thirty (30) days after receipt by the
Collateral Agent of such notice, unless the effect of such change is to extend
or increase coverage under the policy; and (iii) the Collateral Agent will have
the right (but no obligation) at its election to remedy any default in the
payment of premiums within thirty (30) days of notice from the insurer of such
default. Unless the Loan Agreement expressly provides otherwise, the following
sentence will control application of proceeds of insurance. If no Event of
Default exists, loss payments in each instance will be applied by each Grantor
to the repair and/or replacement of property with respect to which the loss was
incurred to the extent reasonably feasible, and any loss payments or the balance
thereof remaining, to the extent not so applied, shall be payable to the
Grantors, provided, however, that payments received by any Grantor after an
Event of Default occurs and is continuing shall be paid to the Collateral Agent
and, if received by any Grantor, shall be held in trust for and immediately paid
over to the Collateral Agent unless otherwise directed in writing by the
Collateral Agent. Copies of such policies or the related certificates, in each
case, naming the Collateral Agent as lender loss payee shall be delivered to the
Collateral Agent upon request and at the time any new policy of insurance is
issued.
(l) Defense of Collateral Agent's Rights. Each Grantor warrants and
will defend the Collateral Agent's right, title and security interest in and to
the Collateral against the claims of any Persons.
(m) Inspections. Each Grantor will permit the Collateral Agent, or its
designee, at Collateral Agent's sole cost and expense, to inspect the Collateral
and any Grantor's books and records of account and relating to the Collateral at
any reasonable time during ordinary business hours, wherever located. All such
inspections conducted during the continuance of an Event of Default shall be at
the sole cost and expense of the Grantors. Information obtained by any
inspection shall be subject to any applicable confidentiality obligation of
Collateral Agent under the Loan Agreement. All inspections shall be conducted in
a manner designed to minimize unreasonable disruption to the business and
employees of the Grantors.
(n) Collection of Accounts and Payments.
(i) Each Grantor will establish or maintain deposit accounts
(collectively, "Controlled Accounts") in such Grantor's name with such banks as
are reasonably acceptable to the Collateral Agent to which each Grantor will
deposit all payments on Accounts of such Grantor and in which such Grantor will
immediately deposit all payments constituting proceeds of Collateral or advances
under the Loan Agreement in the identical form in which such payment was made,
whether by cash or check, subject further to provisions of account control
agreements in form and substance reasonably acceptable to the Collateral Agent.
(ii) Each Grantor shall continue to collect, at its own expense,
all amounts due or to become due to such Grantor under the Accounts. In
connection with such collections, each Grantor may take (and, upon the
occurrence and during the continuance of an Event of Default at Collateral
Agent's direction, shall take) such action as such Grantor or Collateral Agent
may deem necessary or advisable to enforce collection of amounts due or to
become due under the Accounts; provided, however, that Collateral Agent shall
have the right at any time, upon the occurrence and during the continuation of
an Event of Default and upon written notice to such Grantor of its intention to
do so, to (i) notify the account debtors or obligors under any Accounts of the
assignment of such Accounts to Secured Party and to direct such account debtors
or obligors to make payment of all amounts due or to become due to such Grantor
thereunder directly to Collateral Agent, (ii) notify each Person maintaining a
lockbox or similar arrangement to which account debtors or obligors under any
Accounts have been directed to make payment to remit all amounts representing
collections on checks and other payment items from time to time sent to or
deposited in such lockbox or other arrangement directly to Collateral Agent,
(iii) enforce collection of any such Accounts at the expense of Grantors, and
(iv) adjust, settle or compromise the amount or payment thereof, in the same
manner and to the same extent as such Grantor might have done. After receipt by
such Grantor of the notice from Collateral Agent referred to in the proviso to
the preceding sentence
(o) Other Assurances. Each Grantor agrees that from time to time, at
the reasonable expense of the Grantors, it will promptly execute and deliver all
such further instruments and documents, and take all such further action as may
be reasonably necessary or desirable, or as the Collateral Agent may reasonably
request, in order to perfect, preserve and protect any security interest granted
or purported to be granted hereby or to enable the Collateral Agent to exercise
and enforce its rights and remedies hereunder and with respect to any Collateral
or to otherwise carry out the purposes of this Agreement. Without limiting the
foregoing, each Grantor agrees to deliver to the Collateral Agent all
certificated Securities and all Instruments immediately upon receipt,
accompanied by undated instruments of assignment and transfer duly executed in
blank, and to execute and deliver such short form assignments or security
agreements relating to Collateral consisting of the Intellectual Property as the
Collateral Agent may reasonably request.
5. REMEDIES UPON DEFAULT.
(a) Upon the occurrence and during the continuation of an Event of
Default, the Collateral Agent may exercise, in addition to any other rights and
remedies provided herein and in Section 8 of the Loan Agreement, under other
contracts and under law, all the rights and remedies of a secured party under
the UCC.
(b) The Collateral Agent may comply with any applicable law in
connection with a disposition of Collateral and compliance will not be
considered adversely to affect the commercial reasonableness of any sale of the
Collateral. The Collateral Agent may sell the Collateral without giving any
warranties and may specifically disclaim such warranties. If the Collateral
Agent sells any of the Collateral on credit, the Grantors will only be credited
with payments actually made by the purchaser. In addition, each Grantor waives
any and all rights that it may have to a judicial hearing in advance of the
enforcement of any of the Collateral Agent's rights and remedies hereunder,
including, without limitation, its right following an Event of Default to take
immediate possession of the Collateral and to exercise its rights and remedies
with respect thereto
6. AGENCY.
(a) Attorney-in-Fact. Each Grantor hereby irrevocably and presently
makes, constitutes and appoints each of the officers of the Collateral Agent as
the true and lawful attorney for such Grantor (without requiring any of them to
act as such) with full power of substitution to do the following (such power to
be deemed coupled with an interest): (i) endorse the name of any Grantor upon
any and all checks, drafts, money orders and other instruments for the payment
of monies that are payable to any Grantor and constitute proceeds of any
Collateral; (ii) execute in the name of each Grantor (to the extent execution is
required) and/or file any financing statements, schedules, assignments,
instruments, documents and statements that each Grantor is obligated to give the
Collateral Agent hereunder or the Collateral Agent in good faith determines is
necessary to perfect the Collateral Agent's security interest or lien in the
Collateral; (iii) during the continuation of an Event of Default, to verify
validity, amount or any other matter relating to the collateral by mail,
telephone, telecopy or otherwise; and (iv) do such other and further acts and
deeds in the name of each Grantor that the Collateral Agent may reasonably deem
necessary or desirable in furtherance of or to enforce its rights hereunder or
under any of the other Loan Documents. Each Grantor also ratifies its
authorization for the Collateral Agent to have filed in any jurisdiction any
like initial financing statements or amendments thereto filed prior to the date
of this Agreement.
(b) Duty of Collateral Agent. Beyond the safe custody thereof, the
Collateral Agent shall have no duty with respect to any Collateral in its
possession or control (or in the possession or control of any agent or bailee)
or with respect to any income thereon or the preservation of rights against
prior parties or any other rights pertaining thereto. The Collateral Agent shall
be deemed to have exercised reasonable care in the custody and preservation of
the Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which the Collateral Agent accords its own property.
The Collateral Agent shall not be liable or responsible for any loss or damage
to any of the Collateral, or for any diminution in the value thereof, by reason
of the act or omission of any agent or bailee selected by the Collateral Agent
in good faith.
7. MISCELLANEOUS.
(a) Assignment. Except as may be otherwise provided in the Loan
Agreement, the Collateral Agent may upon prior written notice to each of the
Grantors assign or transfer this Agreement and any or all rights or obligations
hereunder without the consent of any Grantor. Each Grantor shall not assign or
transfer this Agreement or any rights or obligations hereunder without the prior
written consent of the Collateral Agent or as expressly provided in the Loan
Agreement. Notwithstanding the foregoing, if there should be any assignment of
any rights or obligations by operation of law or in contravention of the terms
of this Agreement or otherwise, then all covenants, agreements, representations
and warranties made herein or pursuant hereto by or on behalf of any Grantor
shall bind the successors and assigns of such Grantor, together with the
preexisting Grantor, whether or not such new or additional Persons execute a
joinder hereto or assumption hereof (without the same being deemed a waiver of
any default caused thereby) which condition shall not be deemed to be a waiver
of any Default or Event of Default arising out of such assignment.
(b) Benefit. The rights, privileges and obligations of each party to
this Agreement shall inure to the benefit of each such party's successors,
assigns and participants.
(c) Waivers, Amendments, Etc. The terms of this Agreement may be
waived, altered or amended only by an instrument in writing duly executed by the
Collateral Agent and the Grantor or Grantors affected.
(d) Notices. Any notice contemplated herein or required or permitted
to be given hereunder shall be made in the manner set forth in the Loan
Agreement and delivered at the notice addresses set forth in the Loan Agreement,
or to such other address as any party hereto may have last specified by written
notice to the other party or parties.
(e) Governing Law. This Agreement shall be governed by, construed in
accordance with and enforced under the laws of the State of New York, without
regard to the principles of conflicts of law of such state.
(f) Severability. Every provision of this Agreement is intended to be
severable. If any term or provision of this Agreement shall be invalid, illegal
or unenforceable for any reason, the validity, legality and enforceability of
the remaining provisions shall not be affected or impaired thereby. Any
invalidity, illegality or unenforceability in any jurisdiction shall not affect
the validity, legality or enforceability of any such term or provision in any
other jurisdiction.
(g) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original and all of which, when taken
together, shall constitute one instrument. Delivery of a photocopy or facsimile
of an executed counterpart of a signature page to this Agreement shall be as
effective as delivery of a manually executed counterpart.
(h) Costs and Expenses. The Grantors jointly and severally agree to
reimburse each of the Secured Parties for all costs, fees and expenses incurred
by them (including, without limitation, the fees and expenses of legal counsel)
and to pay to the Collateral Agent reasonable compensation for its actions taken
in connection with (i) any Default or Event of Default and any enforcement or
collection proceeding resulting therefrom, including, without limitation, all
manner of participation in or other involvement with (w) performance by the
Collateral Agent of any obligations of the Grantors in respect of the Collateral
that the Grantors have failed or refused to perform, (x) bankruptcy, insolvency,
receivership, foreclosure, winding up or liquidation proceedings, or any actual
or attempted sale, or any exchange, enforcement, collection, compromise or
settlement in respect of any of the Collateral, and for the care of the
Collateral and defending or asserting rights and claims of the Collateral Agent
in respect thereof, by litigation or otherwise, including expenses of insurance,
(y) judicial or regulatory proceedings and (z) workout, restructuring or other
negotiations or proceedings (whether or not the workout, restructuring or
transaction contemplated thereby is consummated) and (ii) the enforcement of
this Section 7(h), and all such costs, fees and expenses shall be Secured
Obligations entitled to the benefits of the collateral security provided
pursuant to Section 2.
(i) Indemnification. Whether or not the transactions contemplated
hereby are consummated and without limiting any other indemnification provisions
in any Loan Document, the Grantors shall indemnify, reimburse and hold harmless
the Collateral Agent from and against any and all losses, claims, liabilities,
damages, penalties, suits, costs and expenses, of any kind or nature (including
fees relating to the cost of investigating and defending any of the foregoing)
imposed on, incurred by or asserted against the Collateral Agent in any way
related to or arising from or alleged to arise from this Agreement or the use or
possession of the Collateral or any part thereof excluding any such losses,
claims, liabilities, damages, penalties, suits, costs and expenses which result
from the gross negligence or willful misconduct of the Collateral Agent as
determined by a final nonappealable decision of a court of competent
jurisdiction. The obligations under this Section shall survive termination of
this Agreement. A certification by the Collateral Agent or other indemnified
Person of the amount of losses, costs, expenses, claims and/or charges payable
pursuant to this paragraph shall be conclusive, absent manifest error.
(j) Specific Performance. Each Grantor hereby authorizes the
Collateral Agent to demand specific performance of this Agreement at any time
when any Grantor shall have failed to comply with any provision hereof, and each
Grantor hereby irrevocably waives any defense based on the adequacy of a remedy
at law which might be asserted as a bar to the remedy of specific performance
hereof in any action brought therefore.
(k) Entire Agreement. This Agreement and the other Loan Documents
represent the entire agreement between the parties hereto with respect to the
transactions contemplated hereunder and, except as expressly provided herein,
shall not be affected by reference to any other documents.
(l) Jurisdiction; Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT
HEREBY IRREVOCABLY AGREES THAT ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK
OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK AND
HEREBY EXPRESSLY SUBMITS TO THE PERSONAL JURISDICTION AND VENUE OF SUCH COURTS
FOR THE PURPOSES THEREOF AND EXPRESSLY WAIVES ANY CLAIM OF IMPROPER VENUE AND
ANY CLAIM THAT SUCH COURTS ARE AN INCONVENIENT FORUM. EACH PARTY HEREBY
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF
BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ITS ADDRESS SET FORTH IN
THE LOAN AGREEMENT, SUCH SERVICE TO BECOME EFFECTIVE 10 DAYS AFTER SUCH MAILING.
EACH OF THE GRANTORS AND THEIR SUBSIDIARIES HEREBY WAIVES ITS RIGHT TO A
JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN
CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE
PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. EACH OF THE GRANTORS (I) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE COLLATERAL AGENT HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT COLLATERAL AGENT WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (II) ACKNOWLEDGES
THAT THE COLLATERAL AGENT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS CONTAINED HEREIN.
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be executed and delivered by their respective officers hereunto
duly authorized as of the date first above written.
"Grantors"
VITESSE SEMICONDUCTOR CORPORATION,
a Delaware corporation
By: /s/ XXXXX XXXXXX
---------------------------------
Name: Xxxxx C. A. Xxxxxx
Title: Chief Financial Officer
VITESSE INTERNATIONAL, INC.,
a Barbados corporation
By: /s/ XXXXX XXXXXX
---------------------------------
Name: Xxxxx C. A. Xxxxxx
Title: Chief Financial Officer
VITESSE MANUFACTURING & DEVELOPMENT
CORPORATION, a Delaware corporation
By: /s/ XXXXX XXXXXX
---------------------------------
Name: Xxxxx C. A. Xxxxxx
Title: Chief Financial Officer
VITESSE SEMICONDUCTOR SALES CORPORATION,
a Delaware corporation
By: /s/ XXXXX XXXXXX
---------------------------------
Name: Xxxxx C. A. Xxxxxx
Title: Chief Financial Officer
"Collateral Agent"
OBSIDIAN, LLC
By: /s/ XXXX X. XXXXXXXXXX
--------------------------------
Name: Xxxx X. Xxxxxxxxxx
Title: Authorized Signatory
EXHIBIT A
Grantors
1. Vitesse Semiconductor Corporation
2. Vitesse International, Inc.
3. Vitesse Manufacturing & Development Corporation
4. Vitesse Semiconductor Sales Corporation
SCHEDULE 4
Perfected Security Interest
1. The perfection of security interests in the Intellectual Property
may require filings with the U.S. Patent & Trademark Office or the U.S.
Copyright Office.
2. In addition to or in lieu of the filing of financing statements as
described in Section 3(f) of the Security Agreement, third party consents,
notices thereto, other filings, and or further actions may be required to create
and perfect security interests in any contracts and/or any other property of the
Grantors in each case if and to the extent any grant of security interest
therein by the relevant Grantor is prohibited by legally enforceable provisions
of any contract, agreement, instrument or indenture governing such property, or
by any law, would give any other party to such contract, agreement, instrument
or indenture a legally enforceable right to terminate its obligations
thereunder, or is permitted only with the consent of another party, except to
the extent any such provision or law is ineffective under applicable law
(including, without limitation, Section 9-408 and 9-409 of the UCC).
3. In addition to or in lieu of the filing of financing statements as
described in Section 3(f) of the Security Agreement, third party consents,
notices thereto, other filings, and/or further actions may be required to
perfect security interests in the following Collateral, if any: (i) Real
Property, (ii) money, (iii) letter-of-credit rights, (iv) motor vehicles, boats,
and any other property for which certificates of title are issued, (v)
Collateral arising from a consumer transaction (vi) agriculture liens, (vii)
farm products, (viii) any manufactured home Collateral, (ix) consigned goods,
(x) standing timber, (xi) permits, licenses, franchises or similar rights or
interests whether issued by federal, state or local governments or agencies or
otherwise, (xii) any Collateral subject to Medicaid, Medicare, and/or any other
similar federal and state laws, (xiii) any rights (including rights of payment)
under any account or other obligation with respect to which the United States
government or any other federal, state, local, foreign or other government or
any agency, department or subdivision thereof is an obligor, and/or (xiv) any
Collateral not subject to Article 9 of the NY UCC (whether such Collateral is
not subject to such statute by reason of Section 9-109(c), 9-109(d), or
otherwise).
4. In addition to the filing of financing statements as described in
Section 3(f) of the Security Agreement, other filings and/or further actions may
be required to protect (as to priority) security interests in any fixtures.
EXHIBIT B
Form of Joinder Agreement
JOINDER TO SECURITY AGREEMENT
This Joinder to Security Agreement is dated ____________, 200__ (this
"Joinder"), by and between _______________, a _________ corporation [limited
liability company] (the "Borrower"), and Obsidian, LLC (the "Collateral Agent"),
as the Collateral Agent (as defined in the Loan Agreement). Reference is made to
that certain Security Agreement dated _____________, 2006 (the "Security
Agreement"), by and among Vitesse Semiconductor Corporation., a Delaware
corporation ("Vitesse"), and certain Subsidiaries of Vitesse as identified on
Exhibit A attached thereto (together with Vitesse, the "Grantors"), a copy of
which is attached hereto as Exhibit A. Capitalized terms used herein not
otherwise defined herein shall have the meanings ascribed to them in the
Security Agreement.
R E C I T A L S
The parties to this Joinder hereby acknowledge that:
A. As of June __, 2006, the Grantors entered into that certain Third
Amended and Restated Loan Agreement (as the same may be amended, restated,
modified or supplemented, from time to time, the "Loan Agreement"), by and among
the Grantors, the Lenders party thereto and the Agent and Collateral Agent party
thereto, pursuant to which, among other things, the Lenders agreed to make loans
to the Grantors on the terms and conditions described therein.
B. In connection with the Loan Agreement, and as a condition for the
Lenders to be willing to make the loans to the Grantors pursuant to the Loan
Agreement, the Grantors granted a security interest in the Collateral in favor
of the Collateral Agent for the ratable benefit of the Secured Parties, as
evidenced in the Security Agreement.
C. The Company is a Subsidiary of certain Borrower(s), duly formed and
organized subsequent to the Closing Date. As a condition to the Lenders' consent
to the creation of the Company, the Company is required to, among other things,
execute and deliver to the Collateral Agent a joinder to the Security Agreement
in a form satisfactory to the Collateral Agent.
A G R E E M E N T
For good and valuable consideration, the receipt and sufficiency of which
is hereby expressly acknowledged, the parties to this Joinder hereby agree as
follows:
1. Joinder. The Company hereby joins the Security Agreement as a Grantor
thereunder and agrees to be bound by all the terms thereof, and shall be as
fully a party thereto in said capacity as if the Company were an original
signatory thereto. The Company hereby assumes all of the obligations of a
Grantor under the Security Agreement and ratifies and affirms as of the date
hereof each and every term, representation, warranty, covenant and condition set
forth in the Security Agreement and agrees to be bound by all of the terms,
provisions and conditions contained in the Security Agreement applicable to a
Grantor. Each reference to a "Grantor" in the Security Agreement shall be deemed
to include the Company.
2. Representations and Warranties. The Company hereby represents and
warrants to the Collateral Agent that (i) this Joinder has been duly authorized,
executed and delivered by the Company, and (ii) all of the representations and
warranties set forth in Section 3 of the Security Agreement, as applicable to
the Company, are true and correct in all material respects on and as of the date
of this Joinder and after giving effect to this Joinder, except to the extent
that such representation or warranty expressly relates to an earlier date (in
which case such representation or warranty is true and correct as of such
earlier date) and except for changes therein expressly permitted or expressly
contemplated by any of the Loan Documents; provided, however, the Company makes
the following additional representations and warranties as applicable to the
Company:
(a) Legal Name. The Company's exact legal name is shown in the
introductory paragraph hereof.
(b) Jurisdiction of Organization; Chief Executive Office. On the date
hereof, the Company's jurisdiction of organization, identification number from
the jurisdiction of organization (if any), and the location of the Company's
chief executive office or sole place of business or principal residence, as the
case may be, are specified on Schedule 1 attached hereto.
(c) Location of Collateral. The Collateral owned by the Company or in
which the Company has any right or interest is located at the location(s)
specified on Schedule 2 hereto. The Company is either the owner of such
location(s) or the tenant of such location(s) pursuant to valid and enforceable
lease agreements. Except as set forth on Schedule 2 hereto and except for any
mortgages entered into by the applicable landlord (who is the fee owner) of such
location(s) which do not attach to any property owned by the Company, there
exists no mortgages or other liens on any such real property.
(d) Intellectual Property. Schedule 3 hereto lists all material
Intellectual Property owned by the Company in its own name on the date hereof.
On the date hereof, to the Company's knowledge, all material Intellectual
Property described on Schedule 3 is valid, subsisting, unexpired and
enforceable, has not been abandoned and does not infringe upon the intellectual
property rights of any other Person.
(e) Necessary Actions or Consents. Except as set forth on Schedule 4
hereto and except for the filing of UCC financing statements referred to in
Section 3(f) of the Security Agreement, no other action is necessary to create,
perfect or protect the Collateral Agent's security interest in any Collateral
owned by the Company or in which the Company has any right or interest. Without
limiting the generality of the foregoing, except as set forth on Schedule 4
hereto and except for the filing of said financing statements, no consent of any
third parties and no authorization, approval or other action by, and no notice
to or filing with any governmental authority or regulatory body is required for
(i) the execution, delivery and performance of this Joinder, (ii) the creation
or perfection of the security interest in the Collateral owned by the Company or
in which the Company has any right or interest, or (iii) the enforcement of the
Collateral Agent's rights hereunder and/or under the Security Agreement.
3. Bank Accounts. Schedule 5 sets forth the account numbers and locations
of all bank accounts and Accounts containing Investment Property of each
Grantor.
4. Loan Documents. This Joinder shall be deemed a Loan Document for all
purposes under the Loan Agreement. The Company hereby confirms that it has
received a copy as executed of the Loan Agreement, Security Agreement and all
annexes, exhibits and schedules to the foregoing.
5. Severability. Any provision of this Joinder which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction. To the extent permitted by applicable law,
the Company hereby waives any provision of law that renders any provision hereof
prohibited or unenforceable in any respect.
6. Counterparts. This Joinder may be executed in counterparts, each of
which will constitute an original and all of which together will constitute one
agreement.
7. Governing Law. This Joinder shall be governed by and construed in
accordance with the General Corporation Law of the State of New York as to
matters within the scope thereof, and as to all other matters shall be governed
by and construed in accordance with the internal laws of the State of New York,
without regard to its principles of conflicts of laws
8. Conditions to Effectiveness of Joinder. This Joinder shall not become
effective unless and until (i) one or more counterparts of the same have duly
executed by the Company and delivered to Collateral Agent, and (ii) this Joinder
shall have been accepted in writing by the Collateral Agent.
IN WITNESS WHEREOF, the undersigned have executed this Joinder as of the
date first written above.
[Company]
By: _______________________________
Name:______________________________
Title:_____________________________
OBSIDIAN, LLC, as Collateral Agent
By:____________________________
Name:__________________________
Title: Authorized Signatory
