CHAR1\529364_ 6
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CHAR1\529364_ 6
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Security Agreement") is entered into as of
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April 28, 2000 among POLICY MANAGEMENT SYSTEMS CORPORATION, a South Carolina
corporation (the "Borrower"), certain Subsidiaries of the Borrower identified on
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the signature pages hereto and such other Subsidiaries of the Borrower as may
from time to time become an Obligor hereunder (individually a "Subsidiary
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Guarantor" and collectively the "Subsidiary Guarantors"; together with the
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Borrower, individually an "Obligor", and collectively the "Obligors") and BANK
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OF AMERICA, N.A. (formerly known as Bank of America National Trust and Savings
Association), in its capacity as administrative agent (in such capacity, the
"Administrative Agent") for the respective lenders from time to time party to
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the Revolving Credit Agreement and the Term Loan Agreement described below
(collectively, the "Lenders").
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RECITALS
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WHEREAS, pursuant to that certain Credit Agreement, dated as of August 8,
1997 as amended by a First Amendment to Credit Agreement dated as of November 5,
1999, as amended by a Second Amendment to Credit Agreement dated as of February
10, 2000, as amended by a Third Amendment to Credit Agreement dated as of March
30, 2000 and as further amended by a Fourth Amendment to Credit Agreement dated
as of April 24, 2000 (as may be subsequently amended, modified, extended,
renewed or replaced from time to time, the "Revolving Credit Agreement"), among
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the Borrower, the Subsidiary Guarantors, the Lenders party thereto (the
"Revolving Credit Lenders") and the Administrative Agent, the Revolving Credit
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Lenders have extended a revolving credit facility (the "Revolving Loans") upon
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the terms and subject to the conditions set forth therein; and
WHEREAS, pursuant to that certain Term Loan Agreement dated as of November
5, 1999, as amended by a First Amendment to Term Loan Agreement dated as of
February 10, 2000 , as amended by a Second Amendment to Term Loan Agreement
dated as of March 30, 2000 and as further amended by a Third Amendment to Credit
Agreement dated as of April 24, 2000 (as may be subsequently amended, modified,
extended, renewed or replaced from time to time, the "Term Loan Agreement"),
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among the Borrower, the Subsidiary Guarantors, the Lenders party thereto (the
"Term Loan Lenders") and the Administrative Agent, the Term Loan Lenders have
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extended a term loan (the "Term Loan") upon the terms and subject to the
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conditions set forth therein; and
WHEREAS, it is a requirement of each of the Revolving Credit Agreement and
the Term Loan Agreement and the continuing obligations of the Lenders to make
their respective Loans under the Revolving Credit Agreement and the Term Loan
Agreement, as applicable, that the Obligors shall have executed and delivered
this Security Agreement to the Administrative Agent for the ratable benefit of
the Lenders.
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Definitions.
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(a) Unless otherwise defined herein, capitalized terms used herein
shall have the meanings ascribed to such terms in the Revolving Credit Agreement
and the Term Loan Agreement, as applicable, and the following terms which are
defined in the Uniform Commercial Code in effect in the State of New York on the
date hereof (the "UCC") are used herein as so defined: Accounts, Chattel Paper,
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Deposit Accounts, Documents, Equipment, Farm Products, Fixtures, General
Intangibles, Instruments, Inventory, Investment Property and Proceeds.
(b) In addition, the following terms shall have the following
meanings:
"Bankruptcy Code": means the Bankruptcy Code in Title 11 of the United
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States Code, as amended, modified, succeeded or replaced from time to time.
"Copyright Licenses": any written agreement, naming any Obligor as
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licensor or licensee, granting any right under any Copyright including, without
limitation, any such agreement with those customers and other third parties
referred to in Schedule 1(b) attached hereto but excluding teaming agreements.
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"Copyrights": (a) all registered United States copyrights in all
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Works, now existing or hereafter created or acquired, all registrations and
recordings thereof, and all applications in connection therewith, including,
without limitation, registrations, recordings and applications in the United
States Copyright office including, without limitation, any thereof referred to
in Schedule 1(b) attached hereto, and (b) all renewals thereof including,
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without limitation, any thereof referred to in Schedule 1(b) hereto.
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"Credit Documents": means a collective reference to the Revolving Credit
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Agreement, the Term Loan Agreement, this Security Agreement, the Pledge
Agreement, the Mortgages and all other related agreements and documents issued
or delivered hereunder or thereunder or pursuant hereto or thereto.
"Event of Default": has the meaning set forth in Section 7 hereof.
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"GAAP": means generally accepted accounting principals as in effect from
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time to time in the United States of America as applied on a consistent basis by
the Borrower (except for changes concurred in by the Borrower's independent
public accountants).
"Governmental Authority": means any nation or government, any state or
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other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Patent License": all agreements, whether written or oral, providing
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for the grant by or to an Obligor of any right to manufacture, use or sell any
invention covered by a Patent,
including, without limitation, any such agreement with those customers and other
third parties referred to in Schedule 1(b) attached hereto but excluding teaming
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agreements.
"Patents": all letters patent of the United States or any other
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country and all reissues and extensions thereof, including, without limitation,
any thereof referred to in Schedule 1(b) attached hereto.
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"Revolving Loan Obligations": means the Borrower's obligations to the
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Revolving Credit Lenders arising under the Revolving Credit Agreement, including
without limitation all principal, interest, fees and other charges in respect of
the Revolving Loans.
"Secured Obligations": the collective reference to the following:
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(i) The Revolving Loan Obligations, including without limitation, all
unpaid principal of and interest on (including interest accruing after maturity
and after the commencement of bankruptcy or insolvency proceedings) the
Revolving Loans and other obligations owing under the Revolving Credit
Agreement, and all other indebtedness, liabilities and obligations owing
thereunder, whether now existing or hereafter arising, and whether primary,
secondary, direct, contingent, or joint and several; including without
limitation, all liabilities and obligations incurred in connection with
collecting and enforcing the foregoing.
(ii) The Term Loan Obligations, including without limitation all unpaid
principal of and interest on (including interest accruing after maturity and
after the commencement of bankruptcy or insolvency proceedings) the Term Loans
and other obligations owing under the Term Loan Agreement, whether now existing
or hereafter arising, and whether primary, secondary, direct, contingent, or
joint and several; including without limitation, all liabilities and obligations
incurred in connection with collecting and enforcing the foregoing.
(iii) all indebtedness, liabilities and obligations of any kind or nature, now
existing or hereafter arising, owing by the Obligors to the Lenders, arising
under the Credit Documents.
"Term Loan Obligations": means the Borrower's obligations to the Term Loan
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Lenders arising under the Term Loan Agreement, including without limitation all
principal, interest, fees and other charges in respect of the Term Loan.
"Trademark License": means any agreement, written or oral, providing
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for the grant by or to an Obligor of any right to use any Trademark, including,
without limitation, any such agreement with those customers and other third
parties referred to in Schedule 1(b) attached hereto but excluding teaming
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agreements.
"Trademarks": (a) all trademarks, trade names, corporate names,
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company names, business names, fictitious business names, trade styles, service
marks, logos and other
source or business identifiers, and the goodwill associated therewith, now
existing or hereafter adopted or acquired, all registrations and recordings
thereof, and all applications in connection therewith, whether in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any State thereof or any other country or any political
subdivision thereof, or otherwise, including, without limitation, those referred
to in Schedule 1(b) attached hereto, and (b) all renewals thereof.
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"Work": any work which is subject to copyright protection pursuant to
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Title 17 of the United States Code, as amended, modified, succeeded or replaced
from time to time, including but not limited to the works set forth on Schedule
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1(b) attached hereto.
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2. Grant of Security Interest in the Collateral. To secure the prompt
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payment and performance in full when due, whether by lapse of time, acceleration
or otherwise, of the Secured Obligations, each Obligor hereby grants to the
Administrative Agent, for the benefit of the Lenders, a continuing security
interest in, and a right to set off against, any and all right, title and
interest of such Obligor in and to the following, whether now owned or existing
or owned, acquired, or arising hereafter (collectively, the "Collateral"):
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(a) all Accounts;
(b) all cash and Cash Equivalents maintained on deposit with the
Administrative Agent or any other Lender;
(c) all Chattel Paper;
(d) all Copyrights;
(e) all Copyright Licenses but only to the extent that such a pledge is
permitted and not otherwise prohibited thereunder;
(f) all Deposit Accounts;
(g) all Documents;
(h) all Equipment;
(i) all Fixtures;
(j) all General Intangibles but only to the extent that such a pledge
is permitted and not otherwise prohibited thereunder;
(k) all Instruments;
(l) all Inventory;
(m) all Investment Property;
(n) all Patents;
(o) all Patent Licenses but only to the extent that such a pledge is
permitted and not otherwise prohibited thereunder;
(p) all Trademarks;
(q) all Trademark Licenses but only to the extent that such a pledge is
permitted and not otherwise prohibited thereunder;
(r) all books, records, ledger cards, files, correspondence, computer
programs, tapes, disks, and related data processing software (owned by such
Obligor or in which it has an interest) that at any time evidence or contain
information relating to any Collateral or are otherwise necessary or helpful in
the collection thereof or realization thereupon; and
(s) to the extent not otherwise included, all Proceeds and products of
any and all of the foregoing.
The Obligors and the Administrative Agent, on behalf of the Lenders, hereby
acknowledge and agree that the security interest created hereby in the
Collateral (i) constitutes continuing collateral security for all of the Secured
Obligations, whether now existing or hereafter arising and (ii) is not to be
construed as an assignment of any Copyrights, Copyright Licenses, Patents,
Patent Licenses, Trademarks or Trademark Licenses.
3. Provisions Relating to Accounts.
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(a) Anything herein to the contrary notwithstanding, each of the
Obligors shall remain liable under each of the Accounts to observe and perform
all the conditions and obligations to be observed and performed by it
thereunder, all in accordance with the terms of any agreement giving rise to
each such Account. Neither the Administrative Agent nor any Lender shall have
any obligation or liability under any Account (or any agreement giving rise
thereto) by reason of or arising out of this Security Agreement or the receipt
by the Administrative Agent or any Lender of any payment relating to such
Account pursuant hereto, nor shall the Administrative Agent or any Lender be
obligated in any manner to perform any of the obligations of an Obligor under or
pursuant to any Account (or any agreement giving rise thereto), to make any
payment, to make any inquiry as to the nature or the sufficiency of any payment
received by it or as to the sufficiency of any performance by any party under
any Account (or any agreement giving rise thereto), to present or file any
claim, to take any action to enforce any performance or to collect the payment
of any amounts which may have been assigned to it or to which it may be entitled
at any time or times.
(b) Once during each calendar year or at any time after the occurrence
and during the continuation of an Event of Default, the Administrative Agent
shall have the right, but not the obligation, to make test verifications of the
Accounts in any manner and through any medium that it reasonably considers
advisable, and the Obligors shall furnish all such assistance and information as
the Administrative Agent may require in connection with such test verifications.
At any time and from time to time, upon the Administrative Agent's request and
at the expense of the Obligors, the Obligors shall cause independent public
accountants or others satisfactory to the Administrative Agent to furnish to the
Administrative Agent reports showing reconciliations, aging and test
verifications of, and trial balances for, the Accounts. The Administrative
Agent in its own name or in the name of others may communicate with account
debtors on the Accounts to verify with them to the Administrative Agent's
satisfaction the existence, amount and terms of any Accounts.
4. Representations and Warranties. Each Obligor hereby represents and
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warrants to the Administrative Agent, for the benefit of the Lenders, that so
long as any of the Secured Obligations remain outstanding or any Credit Document
is in effect or any Loan under the Revolving Credit Agreement or the Term Loan
Agreement shall remain outstanding, and until all of the Commitments under the
Revolving Credit Agreement and the Term Loan Agreement shall have been
terminated:
(a) Chief Executive Office; Books & Records. Each Obligor's chief
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executive office and chief place of business is (and for the prior four months
have been) located at the locations set forth on Schedule 4(a) attached hereto,
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and each Obligor primarily keeps its books and records at such locations.
(b) Location of Collateral. The location of all Collateral (other
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than de minimis amounts of personal property that may be at branch locations
and/or customer sites) owned by each Obligor is as shown on Schedule 4(b)
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attached hereto.
(c) Ownership. Each Obligor is the legal and beneficial owner of
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its Collateral and has the right to pledge, sell, assign or transfer the same.
Each Obligor's legal name is as shown in this Security Agreement and no Obligor
has in the past four months changed its name, been party to a merger,
consolidation or other change in structure or used any tradename except as set
forth in Schedule 4(c) attached hereto.
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(d) Security Interest/Priority. This Security Agreement creates a
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valid security interest in favor of the Administrative Agent, for the benefit of
the Lenders, in the Collateral of such Obligor and, when properly perfected by
filing, shall constitute a valid perfected security interest in such Collateral,
to the extent such security can be perfected by filing under the UCC, free and
clear of all Liens except for Liens permitted under the Credit Documents.
(e) Farm Products. None of the Collateral constitutes, or is the
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Proceeds of, Farm Products.
(f) Accounts. (i) Each Account of the Obligors and the papers and
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documents relating thereto are genuine and in all material respects what they
purport to be, (ii) each Account arises out of (A) a bona fide sale of goods
sold and delivered by such Obligor (or is in the process of being delivered) or
(B) bona fide licensing or similar transactions or (C) services theretofore
actually rendered or in the process of being delivered by such Obligor to, the
account debtor named therein, (iii) no Account of an Obligor is evidenced by any
Instrument or Chattel Paper unless such Instrument or Chattel Paper has been
theretofore endorsed over and delivered to the Administrative Agent and (iv) no
surety bond (other than those set forth on Schedule 4(f), as applicable,
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attached hereto) was required or given in connection with any Account of an
Obligor or the contracts or purchase orders out of which they arose.
(g) Inventory. No Inventory is held by an Obligor pursuant to
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consignment, sale or return, sale on approval or similar arrangement.
(h) Copyrights, Patents and Trademarks.
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(i) Schedule 1(b) attached hereto includes all domestic
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Copyrights, Patents and Trademarks owned by the Obligors in their own names as
of the date hereof, and substantially all customers and/or other third parties
which have entered into any Copyright Licenses, Patent Licenses and Trademark
Licenses with any of the Obligors for which the Obligors are the licensor and
which are in effect as of the date hereof.
(ii) To the best of each Obligor's knowledge, each Copyright,
Patent and Trademark of such Obligor is valid, subsisting, unexpired,
enforceable and has not been abandoned.
(iii) Except as set forth in Schedule 1(b) attached hereto, none
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of such Copyrights, Patents and Trademarks is the subject of any licensing or
franchise agreement, excluding teaming agreements.
(iv) Other than standard prosecution proceedings, no holding,
decision or judgment has been rendered by any Governmental Authority which would
limit, cancel or question the validity of any Copyright, Patent or Trademark.
(v) No action or proceeding is pending seeking to limit, cancel or
question the validity of any Copyright, Patent or Trademark, or which, if
adversely determined, would have a material adverse effect on the value of any
Copyright, Patent or Trademark.
(vi) All applications identified in Schedule 1(b) pertaining to
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the Copyrights and Trademarks of each Obligor have been duly and properly filed,
and all registrations or letters identified in Schedule 1(b) pertaining to such
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Copyrights, Patents and Trademarks have been duly and properly filed and issued,
and, to our
knowledge, all of such Copyrights, Patents and Trademarks are valid and
enforceable.
(vii) No Obligor has made any assignment or agreement in conflict
with the security interest in the Copyrights, Patents or Trademarks of each
Obligor hereunder.
(viii) To the best of each Obligor's knowledge and except as
identified in Schedule 1(b), no Copyright, Patent or Trademark infringes the
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intellectual property rights of a third-party.
(ix) To the best of each Obligor's knowledge and except as
identified in Schedule 1(b), no third-party copyright, patent or trademark
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infringes the rights of the Obligors in the Copyrights, Patents, and Trademarks
owned by the Obligors and identified in Schedule 1(b).
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(x) After taking into account the Obligors' belief concerning the
likelihood of obtaining alternative or replacement arrangements, and the costs
thereof, termination (which would result from a change of ownership or control
of each such Obligor or an assignment of such Obligor's interest in such
licenses)of any Patent License, trade secret license, Trademark License,
Copyright License or other General intangible license in favor of any Obligor as
licensee which is excluded from the Collateral hereunder pursuant to Section 2
hereof will not, in the aggregate, result in a material adverse effect on the
operations of the business of the Borrower and its Subsidiaries taken as a
whole.
5. Covenants. Each Obligor covenants that, so long as any of the
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Secured Obligations remain outstanding or any Credit Document is in effect or
any Loan shall remain outstanding, and until all of the Commitments under the
Revolving Credit Agreement and the Term Loan Agreement shall have been
terminated, such Obligor shall:
(a) Other Liens. Defend the Collateral against the claims and
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demands of all other parties claiming an interest therein, keep the Collateral
free from all Liens, except Liens permitted under the Revolving Credit Agreement
or the Term Loan Agreement and not sell, exchange, transfer, assign, lease or
otherwise dispose of the Collateral or any interest therein, except as permitted
under the Credit Documents.
(b) Preservation of Collateral. Keep the Collateral in good
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order, condition and repair and not use the Collateral in violation of the
provisions of this Security Agreement, the Credit Documents or any other
agreement relating to the Collateral or any policy insuring the Collateral or
any applicable statute, law, bylaw, rule, regulation or ordinance.
(c) Instruments/Chattel Paper. If any amount payable under or in
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connection with any of the Collateral shall be or become evidenced by any
Instrument or Chattel Paper, immediately deliver such Instrument or Chattel
Paper to the Administrative Agent, duly
endorsed in a manner satisfactory to the Administrative Agent, to be held as
Collateral pursuant to this Security Agreement.
(d) Change in Location. Not, without providing 45 days prior
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written notice to the Administrative Agent and without filing such amendments to
any previously filed financing statements as the Administrative Agent may
require, (a) change the location of its chief executive office and chief place
of business (as well as its books and records) from the locations set forth on
Schedule 4(a) hereto, (b) change the location of its Collateral from the
locations set forth for such Obligor on Schedule 4(b) hereto, or (c) change its
name, be party to a merger, consolidation or other change in structure or use
any tradename other than as set forth on Schedule 4(c) attached hereto.
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(e) Inspection. Upon reasonable notice, and during reasonable
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hours, at all times allow the Administrative Agent or its representatives to
visit and inspect the Collateral as the Administrative Agent may reasonably
determine.
(f) Perfection of Security Interest. Execute and deliver to the
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Administrative Agent such agreements, assignments or instruments (including
affidavits, notices, reaffirmations and amendments and restatements of existing
documents, as the Administrative Agent may reasonably request) and do all such
other things as the Administrative Agent may reasonably deem necessary or
appropriate (i) to assure to the Administrative Agent its security interests
hereunder, including (A) such financing statements (including renewal
statements) or amendments thereof or supplements thereto or other instruments as
the Administrative Agent may from time to time reasonably request in order to
perfect and maintain the security interests granted hereunder in accordance with
the UCC, (B) with regard to Copyrights, a Notice of Grant of Security Interest
in Copyrights for filing with the United States Copyright Office in the form of
Schedule 5(f)(i) attached hereto, (C) with regard to Patents, a Notice of Grant
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of Security Interest in Patents for filing with the United States Patent and
Trademark Office in the form of Schedule 5(f)(ii) attached hereto and (D) with
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regard to Trademarks, a Notice of Grant of Security Interest in Trademarks for
filing with the United States Patent and Trademark Office in the form of
Schedule 5(f)(iii) attached hereto, (ii) to consummate the transactions
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contemplated hereby and (iii) to otherwise protect and assure the Administrative
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Agent of its rights and interests hereunder. To that end, each Obligor agrees
that the Administrative Agent may file one or more financing statements
disclosing the Administrative Agent's security interest in any or all of the
Collateral of such Obligor without, to the extent permitted by law, such
Obligor's signature thereon, and further each Obligor also hereby irrevocably
makes, constitutes and appoints the Administrative Agent, its nominee or any
other person whom the Administrative Agent may designate, as such Obligor's
attorney in fact with full power and for the limited purpose to sign in the name
of such Obligor any such financing statements, or amendments and supplements to
financing statements, renewal financing statements, notices or any similar
documents which in the Administrative Agent's reasonable discretion would be
necessary, appropriate or convenient in order to perfect and maintain perfection
of the security interests granted hereunder, such power, being coupled with an
interest, being and remaining irrevocable so long as either of the Revolving
Credit Agreement or Term
Loan Agreement in effect or any amounts payable thereunder or under any other
Credit Document shall remain outstanding, and until all of the Commitments
thereunder shall have terminated. Each Obligor hereby agrees that a carbon,
photographic or other reproduction of this Security Agreement or any such
financing statement is sufficient for filing as a financing statement by the
Administrative Agent without notice thereof to such Obligor wherever the
Administrative Agent may in its sole discretion desire to file the same. In the
event for any reason the law of any jurisdiction other than New York becomes or
is applicable to the Collateral of any Obligor or any part thereof, or to any of
the Secured Obligations, such Obligor agrees to execute and deliver all such
instruments and to do all such other things as the Administrative Agent in its
sole discretion reasonably deems necessary or appropriate to preserve, protect
and enforce the security interests of the Administrative Agent under the law of
such other jurisdiction (and, if an Obligor shall fail to do so promptly upon
the request of the Administrative Agent, then the Administrative Agent may
execute any and all such requested documents on behalf of such Obligor pursuant
to the power of attorney granted hereinabove). If any Collateral is in the
possession or control of an Obligor's agents and the Administrative Agent so
requests, such Obligor agrees to notify such agents in writing of the
Administrative Agent's security interest therein and, upon the Administrative
Agent's request, instruct them to hold all such Collateral for the Lenders'
account and subject to the Administrative Agent's instructions. Each Obligor
agrees to xxxx its books and records to reflect the security interest of the
Administrative Agent in the Collateral.
(g) Treatment of Accounts. Other than as normal and customary in
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the ordinary course of an Obligor's business, not grant or extend the time for
payment of any Account, or compromise or settle any Account for less than the
full amount thereof, or release any person or property, in whole or in part,
from payment thereof, or allow any credit or discount thereon.
(h) Covenants Relating to Copyrights.
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(i) Employ the Copyright for each Work with such notice of
copyright as may be required by law to secure copyright protection in accordance
with the Borrower's standard business practice.
(ii) In accordance with the Borrower's standard business practice,
not knowingly do any act or knowingly omit to do any act whereby any material
Copyright may become invalidated and (A) not knowingly do any act, or knowingly
omit to do any act, whereby any material Copyright may become injected into the
public domain; (B) notify the Administrative Agent immediately if it knows, or
has reason to know, that any material Copyright may become injected into the
public domain or of any adverse determination or development (including, without
limitation, the institution of, or any such determination or development in, any
court or tribunal in the United States or any other country) regarding an
Obligor's ownership of any such Copyright or its validity; (C) take all
necessary steps as it shall deem appropriate under the circumstances, to
maintain and pursue each
application (and to obtain the relevant registration) and to maintain each
registration of each material Copyright owned by an Obligor including, without
limitation, filing of applications for renewal where necessary; and (D) promptly
notify the Administrative Agent of any material infringement of any material
Copyright of an Obligor of which it becomes aware and take such actions as it
shall reasonably deem appropriate under the circumstances to protect such
Copyright, including, where appropriate, the bringing of suit for infringement,
seeking injunctive relief and seeking to recover any and all damages for such
infringement.
(iii) Not make any assignment or agreement in conflict with the
security interest in the Copyrights of each Obligor hereunder or as otherwise
permitted by the Credit Agreement.
(i) Covenants Relating to Patents and Trademarks.
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(i) In accordance with the Borrower's standard business practice,
(A) continue to use each Trademark on each and every trademark class of goods
applicable to its current line as reflected in its current catalogs, brochures
and price lists in order to maintain such Trademark in full force free from any
claim of abandonment for non-use, (B) maintain as in the past the quality of
products and services offered under such Trademark, (C) employ such Trademark
with the appropriate notice of registration, (D) not adopt or use any xxxx which
is confusingly similar or a colorable imitation of such Trademark unless the
Administrative Agent, for the ratable benefit of the Lenders, shall obtain a
perfected security interest in such xxxx pursuant to this Security Agreement,
and (E) not knowingly (and not knowingly permit any licensee or sublicensee
thereof to) do any act or knowingly omit to do any act whereby any Trademark may
become invalidated.
(ii) Not knowingly do any act, or knowingly omit to do any act,
whereby any Patent may become abandoned or dedicated.
(iii) Notify the Administrative Agent and the Lenders immediately
if it knows that any registration relating to any Patent or application or
registration relating to any Trademark may become abandoned or dedicated, or of
any adverse determination or development (including, without limitation, the
institution of, or any such determination or development in, any proceeding in
the United States Patent and Trademark Office or any court or tribunal in any
country) regarding an Obligor's ownership of any Patent or Trademark or its
right to register the same or to keep and maintain the same.
(iv) Whenever an Obligor, either by itself or through an agent,
employee, licensee or designee, shall file an application for the registration
of any Trademark with the United States Patent and Trademark Office or any
similar office or agency in any other country or any political subdivision
thereof, an Obligor shall report
such filing to the Administrative Agent and the Lenders within five Business
Days after the last day of the fiscal quarter in which such filing occurs. Upon
request of the Administrative Agent, an Obligor shall execute and deliver any
and all agreements, instruments, documents and papers as the Administrative
Agent may request to evidence the Administrative Agent's and the Lenders'
security interest in any Patent or Trademark and the goodwill and general
intangibles of an Obligor relating thereto or represented thereby.
(v) In accordance with the Borrower's standard business practice,
take all reasonable and necessary steps, including, without limitation, in any
proceeding before the United States Patent and Trademark Office, or any similar
office or agency in any other country or any political subdivision thereof, to
maintain and pursue each application (and to obtain the relevant registration)
and to maintain each registration of the Patents and Trademarks, including,
without limitation, filing of applications for renewal, affidavits of use and
affidavits of incontestability.
(vi) Promptly notify the Administrative Agent and the Lenders
after it learns that any Patent or Trademark included in the Collateral is
infringed, misappropriated or diluted by a third party and, in accordance with
the Borrower's standard business practice (A) promptly xxx for infringement,
misappropriation or dilution, (B) to seek injunctive relief where appropriate,
(C) to recover any and all damages for such infringement, misappropriation or
dilution, or (D) take such other actions as it shall reasonably deem appropriate
under the circumstances to protect such Patent or Trademark.
(vii) Not make any assignment or agreement in conflict with the
security interest in the Patents or Trademarks of each Obligor hereunder or as
otherwise permitted by the Credit Agreement.
(j) New Patents, Copyrights and Trademarks. Promptly provide the
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Administrative Agent with (i) a listing of all applications, if any, for the
issuance of registrations or letters of new Copyrights or Trademarks and of the
issuance of registrations or letters of new Copyrights, Trademarks or Patents,
together with a listing of the issuance of registrations or letters on present
applications for Copyrights and Trademarks, which new applications and issued
registrations or letters shall be subject to the terms and conditions hereunder,
and (ii) (A) with respect to Copyrights, a duly executed Notice of Security
Interest in Copyrights, (B) with respect to Patents, a duly executed Notice of
Security Interest in Patents, (C) with respect to Trademarks, a duly executed
Notice of Security Interest in Trademarks or (D) such other duly executed
documents as the Administrative Agent may request in a form acceptable to
counsel for the Administrative Agent and suitable for recording to evidence the
security interest in the Copyright or Trademark which is the subject of such new
application or the new Copyright, Trademark or Patent.
(k) Insurance. Insure, repair and replace the Collateral of such
---------
Obligor as set forth in each of the Revolving Credit Agreement and Term Loan
Agreement. All insurance proceeds shall be subject to the security interest of
the Administrative Agent hereunder.
6. Advances by Lenders. On failure of any Obligor to perform any of
---------------------
the covenants and agreements contained herein, the Administrative Agent may, at
its sole option and in its sole discretion, perform the same and in so doing may
expend such sums as the Administrative Agent may reasonably deem advisable in
the performance thereof, including, without limitation, the payment of any
insurance premiums, the payment of any taxes, a payment to obtain a release of a
Lien or potential Lien, expenditures made in defending against any adverse claim
and all other expenditures which the Administrative Agent or the Lenders may
make for the protection of the security hereof or which may be compelled to make
by operation of law. All such sums and amounts so expended shall be repayable
by the Obligors on a joint and several basis promptly upon timely notice thereof
and demand therefor, shall constitute additional Secured Obligations and shall
bear interest from the date said amounts are expended at the default rate
specified in Section 2.8(a) of the Revolving Credit Agreement for overdue Base
Rate Committed Loans. No such performance of any covenant or agreement by the
Administrative Agent or the Lenders on behalf of any Obligor, and no such
advance or expenditure therefor, shall relieve the Obligors of any default under
the terms of this Security Agreement or the other Credit Documents. The Lenders
may make any payment hereby authorized in accordance with any xxxx, statement or
estimate procured from the appropriate public office or holder of the claim to
be discharged without inquiry into the accuracy of such xxxx, statement or
estimate or into the validity of any tax assessment, sale, forfeiture, tax lien,
title or claim except to the extent such payment is being contested in good
faith by an Obligor in appropriate proceedings and against which adequate
reserves are being maintained in accordance with GAAP.
7. Events of Default.
-------------------
The occurrence of an event which under the Revolving Credit Agreement or
the Term Loan Agreement would constitute an Event of Default (which has not
otherwise been cured or waived in accordance with the provisions thereof) shall
be an Event of Default hereunder (an "Event of Default").
------------------
8. Remedies.
--------
(a) General Remedies. Upon the occurrence of an Event of Default
-----------------
and during continuation thereof, the Lenders shall have, in addition to the
rights and remedies provided herein, in the Credit Documents, or by law
(including, but not limited to, the rights and remedies set forth in the Uniform
Commercial Code of the jurisdiction applicable to the affected Collateral), the
rights and remedies of a secured party under the UCC (regardless of whether the
UCC is the law of the jurisdiction where the rights and remedies are asserted
and regardless of whether the UCC applies to the affected Collateral), and
further, the Administrative Agent may, with or without judicial process or the
aid and assistance of others, (i) enter on any premises on which any of the
Collateral may be located and, without resistance or interference by the
Obligors, take possession of the Collateral, (ii) dispose of
any Collateral on any such premises, (iii) require the Obligors to assemble and
make available to the Administrative Agent at the expense of the Obligors any
Collateral at any place and time designated by the Administrative Agent which is
reasonably convenient to both parties, (iv) remove any Collateral from any such
premises for the purpose of effecting sale or other disposition thereof, and/or
(v) without demand and without advertisement, notice, hearing or process of law,
all of which each of the Obligors hereby waives to the fullest extent permitted
by law, at any place and time or times, sell and deliver any or all Collateral
held by or for it at public or private sale, by one or more contracts, in one or
more parcels, for cash, upon credit or otherwise, at such prices and upon such
terms as the Administrative Agent deems advisable, in its sole discretion
(subject to any and all mandatory legal requirements). In addition to all other
sums due the Administrative Agent and the Lenders with respect to the Secured
Obligations, the Obligors shall pay the Administrative Agent and each of the
Lenders all reasonable costs and expenses incurred by the Administrative Agent
or any such Lender, including, but not limited to, reasonable attorneys' fees
and court costs, in obtaining or liquidating the Collateral, in enforcing
payment of the Secured Obligations, or in the prosecution or defense of any
action or proceeding by or against the Administrative Agent or the Lenders or
the Obligors concerning any matter arising out of or connected with this
Security Agreement, any Collateral or the Secured Obligations, including,
without limitation, any of the foregoing arising in, arising under or related to
a case under the Bankruptcy Code. To the extent the rights of notice cannot be
legally waived hereunder, each Obligor agrees that any requirement of reasonable
notice shall be met if such notice is personally served on or mailed, postage
prepaid, to the Borrower in accordance with the notice provisions of Section
10.1 of the Revolving Credit Agreement at least 10 days before the time of sale
or other event giving rise to the requirement of such notice. The
Administrative Agent and the Lenders shall not be obligated to make any sale or
other disposition of the Collateral regardless of notice having been given. To
the extent permitted by law, any Lender may be a purchaser at any such sale. To
the extent permitted by applicable law, each of the Obligors hereby waives all
of its rights of redemption with respect to any such sale. Subject to the
provisions of applicable law, the Administrative Agent and the Lenders may
postpone or cause the postponement of the sale of all or any portion of the
Collateral by announcement at the time and place of such sale, and such sale
may, without further notice, to the extent permitted by law, be made at the time
and place to which the sale was postponed, or the Administrative Agent and the
Lenders may further postpone such sale by announcement made at such time and
place.
(b) Remedies relating to Accounts. Upon the occurrence of an
--------------------------------
Event of Default and during the continuation thereof, whether or not the
Administrative Agent has exercised any or all of its rights and remedies
hereunder, each Obligor will promptly upon request of the Administrative Agent
instruct all account debtors to remit all payments in respect of Accounts to a
mailing location selected by the Administrative Agent. In addition, the
Administrative Agent or its designee may notify any Obligor's customers and
account debtors that the Accounts of such Obligor have been assigned to the
Administrative Agent or of the Administrative Agent's security interest therein,
and may (either in its own name or in the name of an Obligor or both) demand,
collect (including without limitation by way
of a lockbox arrangement), receive, take receipt for, sell, xxx for, compound,
settle, compromise and give acquittance for any and all amounts due or to become
due on any Account, and, in the Administrative Agent's discretion, file any
claim or take any other action or proceeding to protect and realize upon the
security interest of the Lenders in the Accounts. Each Obligor acknowledges and
agrees that the Proceeds of its Accounts remitted to or on behalf of the
Administrative Agent in accordance with the provisions hereof shall be solely
for the Administrative Agent's own convenience and that such Obligor shall not
have any right, title or interest in such Accounts or in any such other amounts
except as expressly provided herein. The Administrative Agent and the Lenders
shall have no liability or responsibility to any Obligor for acceptance of a
check, draft or other order for payment of money bearing the legend "payment in
full" or words of similar import or any other restrictive legend or endorsement
or be responsible for determining the correctness of any remittance. Each
Obligor hereby agrees to indemnify the Administrative Agent and the Lenders from
and against all liabilities, damages, losses, actions, claims, judgments, costs,
expenses, charges and reasonable attorneys' fees suffered or incurred by the
Administrative Agent or the Lenders (each, an "Indemnified Party") because of
-----------------
the maintenance of the foregoing arrangements except as relating to or arising
out of the gross negligence or willful misconduct of an Indemnified Party or its
officers, employees or agents. In the case of any investigation, litigation or
other proceeding, the foregoing indemnity shall be effective whether or not such
investigation, litigation or proceeding is brought by an Obligor, its directors,
shareholders or creditors or an Indemnified Party or any other Person or any
other Indemnified Party is otherwise a party thereto.
(c) Access. In addition to the rights and remedies hereunder,
------
upon the occurrence of an Event of Default and during the continuance thereof,
the Administrative Agent shall have the right to enter and remain upon the
various premises of the Obligors without cost or charge to the Administrative
Agent, and use the same, together with materials, supplies, books and records of
the Obligors for the purpose of collecting and liquidating the Collateral, or
for preparing for sale and conducting the sale of the Collateral, whether by
foreclosure, auction or otherwise. In addition, the Administrative Agent may
remove Collateral, or any part thereof, from such premises and/or any records
with respect thereto, in order to effectively collect or liquidate such
Collateral.
(d) Nonexclusive Nature of Remedies. Failure by the
----------------------------------
Administrative Agent or the Lenders to exercise any right, remedy or option
under this Security Agreement or the Credit Documents or as provided by law, or
any delay by the Administrative Agent or the Lenders in exercising the same,
shall not operate as a waiver of any such right, remedy or option. No waiver
hereunder shall be effective unless it is in writing, signed by the party
against whom such waiver is sought to be enforced and then only to the extent
specifically stated, which in the case of the Administrative Agent or the
Lenders shall only be granted as provided herein. To the extent permitted by
law, neither the Administrative Agent, the Lenders, nor any party acting as
attorney for the Administrative Agent or the Lenders, shall be liable hereunder
for any acts or omissions or for any error of judgment or mistake of fact or law
other than their gross negligence or willful misconduct hereunder. The rights
and remedies of the Administrative Agents and the Lenders under this Security
Agreement shall
be cumulative and not exclusive of any other right or remedy which the
Administrative Agent or the Lenders may have.
(e) Retention of Collateral. The Administrative Agent may, after
------------------------
providing the notices required by Section 9-505(2) of the UCC or otherwise
complying with the requirements of applicable law of the relevant jurisdiction,
to the extent the Administrative Agent is in possession of any of the
Collateral, retain the Collateral in satisfaction of the Secured Obligations.
Unless and until the Administrative Agent shall have provided such notices,
however, the Administrative Agent shall not be deemed to have retained any
Collateral in satisfaction of any Secured Obligations for any reason.
(f) Deficiency. In the event that the proceeds of any sale,
----------
collection or realization are insufficient to pay all amounts to which the
Administrative Agent or the Lenders are legally entitled, the Obligors shall be
jointly and severally liable for the deficiency, together with interest thereon
at the default rate specified in Section 2.8(a) of the Revolving Credit
Agreement for overdue Base Rate Committed Loans, together with the costs of
collection and the reasonable fees of any attorneys employed by the
Administrative Agent to collect such deficiency. Any surplus remaining after
the full payment and satisfaction of the Secured Obligations shall be returned
to the Obligors or to whomsoever a court of competent jurisdiction shall
determine to be entitled thereto.
9. Rights of the Administrative Agent.
--------------------------------------
(a) Power of Attorney. In addition to other powers of attorney
-------------------
contained herein, each Obligor hereby designates and appoints the Administrative
Agent, on behalf of the Lenders, and each of its designees or agents, as
attorney-in-fact of such Obligor, irrevocably and with power of substitution,
with authority to take any or all of the following actions upon the occurrence
and during the continuance of an Event of Default:
(i) to demand, collect, settle, compromise, adjust, give
discharges and releases, all as the Administrative Agent may reasonably
determine;
(ii) to commence and prosecute any actions at any court for the
purposes of collecting any Collateral and enforcing any other right in respect
thereof;
(iii) to defend, settle or compromise any action brought regarding
the Collateral and, in connection therewith, give such discharge or release as
the Administrative Agent may deem reasonably appropriate;
(iv) receive, open and dispose of mail addressed to an Obligor and
endorse checks, notes, drafts, acceptances, money orders, bills of lading,
warehouse receipts or other instruments or documents evidencing payment,
shipment or storage of the goods giving rise to the Collateral of such Obligor
on behalf of and in the name of such Obligor, or securing, or relating to such
Collateral;
(v) sell, assign, transfer, make any agreement in respect of, or
otherwise deal with or exercise rights in respect of, any Collateral or the
goods or services which have given rise thereto, as fully and completely as
though the Administrative Agent were the absolute owner thereof for all
purposes;
(vi) adjust and settle claims under any insurance policy relating
to the Collateral;
(vii) execute and deliver all assignments, conveyances,
statements, financing statements, renewal financing statements, security
agreements, affidavits, notices and other agreements, instruments and documents
that the Administrative Agent may determine necessary in order to perfect and
maintain the security interests and liens granted in this Security Agreement and
in order to fully consummate all of the transactions contemplated therein;
(viii) institute any foreclosure proceedings that the Administrative
Agent may deem appropriate; and
(ix) do and perform all such other acts and things as the
Administrative Agent may reasonably deem to be necessary, proper or convenient
in connection with the Collateral.
This power of attorney is a power coupled with an interest and shall be
irrevocable (i) for so long as any of the Secured Obligations remain outstanding
under any of the Credit Documents is in effect or any Loan shall remain
outstanding and (ii) until all of the Commitments under the Revolving Credit
Agreement and the Term Loan Agreement shall have been terminated. The
Administrative Agent shall be under no duty to exercise or withhold the exercise
of any of the rights, powers, privileges and options expressly or implicitly
granted to the Administrative Agent in this Security Agreement, and shall not be
liable for any failure to do so or any delay in doing so. The Administrative
Agent shall not be liable for any act or omission or for any error of judgment
or any mistake of fact or law in its individual capacity or its capacity as
attorney-in-fact except acts or omissions resulting from its gross negligence or
willful misconduct. This power of attorney is conferred on the Administrative
Agent solely to protect, preserve and realize upon its security interest in the
Collateral.
(b) Performance by the Administrative Agent of Obligations. If
---------------------------------------------------------
any Obligor fails to perform any agreement or obligation contained herein, the
Administrative Agent itself may perform, or cause performance of, such agreement
or obligation, and the
expenses of the Administrative Agent incurred in connection therewith shall be
payable by the Obligors on a joint and several basis pursuant to Section 11
hereof.
(c) Assignment by the Administrative Agent. The Administrative
-----------------------------------------
Agent may from time to time assign the Secured Obligations and any portion
thereof and/or the Collateral and any portion thereof, and the assignee shall be
entitled to all of the rights and remedies of the Administrative Agent under
this Security Agreement in relation thereto.
(d) The Administrative Agent's Duty of Care. Other than the
--------------------------------------------
exercise of reasonable care to assure the safe custody of the Collateral while
being held by the Administrative Agent hereunder, the Administrative Agent shall
have no duty or liability to preserve rights pertaining thereto, it being
understood and agreed that the Obligors shall be responsible for preservation of
all rights in the Collateral, and the Administrative Agent shall be relieved of
all responsibility for the Collateral upon surrendering it or tendering the
surrender of it to the Obligors. The Administrative 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 Administrative Agent accords its own property, which shall be no
less than the treatment employed by a reasonable and prudent agent in the
industry, it being understood that the Administrative Agent shall not have
responsibility for taking any necessary steps to preserve rights against any
parties with respect to any of the Collateral.
10. Application of Proceeds. Upon the occurrence and during the
-------------------------
continuance of an Event of Default, all amounts collected or received in respect
of the Collateral, when received by the Administrative Agent or any of the
Lenders in cash or its equivalent, shall be paid over or delivered as follows:
(a) FIRST, to the payment of all reasonable, documented
out-of-pocket costs and expenses (including without limitation reasonable,
documented attorneys' fees) of the Administrative Agent or any Lender in
connection with enforcing the rights of the Lenders under the Credit Documents
in respect of the Collateral and any protective advances made by the
Administrative Agent or any Lender with respect to the Collateral under or
pursuant to the terms of the Collateral Documents, pro rata as set forth below;
(b) SECOND, to the payment of all accrued fees and interest
payable to the Administrative Agent and the Lenders under the Credit Documents,
pro rata as set forth below;
(c) THIRD, to the payment of the outstanding principal amount of
the Secured Obligations, pro rata, as set forth below; and
(d) FOURTH, to all other obligations which shall have become due
and payable under the Credit Documents and not repaid pursuant to clauses
"FIRST" through "THIRD" above, pro rata, as set forth below; and
(e) FIFTH, to the payment of the surplus, if any, to whomever may
be lawfully entitled to receive such surplus.
In carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; (ii) each of the Lenders shall receive an amount under the
applicable category equal to its pro rata share of amounts available to be
applied above (based on the proportion that the then outstanding obligations
owed by the Borrower to such Lender under the Credit Documents with respect to
the applicable category bears to the aggregate outstanding obligations of the
Borrower to the Lenders under the Credit Documents with respect to the
applicable category); and (iii) each Obligor irrevocably waives the right to
direct the application of such payments and proceeds and acknowledges and agrees
that the Administrative Agent shall have the continuing and exclusive right to
apply and reapply any and all such payments and proceeds in the Administrative
Agent's sole discretion, notwithstanding any entry to the contrary upon any of
its books and records.
11. Costs of Counsel. If at any time hereafter, whether upon the
------------------
occurrence of an Event of Default or not, the Administrative Agent employs
counsel to prepare or consider amendments, waivers or consents with respect to
this Security Agreement, or to take action or make a response in or with respect
to any legal or arbitral proceeding relating to this Security Agreement or
relating to the Collateral, or to protect the Collateral or exercise any rights
or remedies under this Security Agreement or with respect to the Collateral,
then the Obligors agree to promptly pay upon demand any and all such reasonable
documented costs and expenses of the Administrative Agent or the Lenders, all of
which costs and expenses shall constitute Secured Obligations hereunder.
12. Continuing Agreement.
---------------------
(a) This Security Agreement shall be a continuing agreement in
every respect and shall remain in full force and effect so long as any of the
Secured Obligations remain outstanding or any Credit Document is in effect or
any Loan under the Revolving Credit Agreement and the Term Loan Agreement shall
remain outstanding, and until all of the Commitments under the Revolving Credit
Agreement and the Term Loan Agreement shall have been terminated (other than any
obligations with respect to the indemnities and the representations and
warranties set forth in the Credit Documents). Upon such payment and
termination, this Security Agreement shall be automatically terminated and the
Administrative Agent and the Lenders shall, upon the request and at the expense
of the Obligors, forthwith release all of its liens and security interests
hereunder and shall execute and deliver all UCC termination statements and/or
other documents reasonably requested by the Obligors evidencing such
termination. Notwithstanding the foregoing all releases and indemnities
provided hereunder shall survive termination of this Security Agreement.
(b) This Security Agreement shall continue to be effective or be
automatically reinstated, as the case may be, if at any time payment, in whole
or in part, of any of the Secured Obligations is rescinded or must otherwise be
restored or returned by the Administrative Agent or any Lender as a preference,
fraudulent conveyance or otherwise under any bankruptcy, insolvency or similar
law, all as though such payment had not been
made; provided that in the event payment of all or any part of the Secured
Obligations is rescinded or must be restored or returned, all reasonable costs
and expenses (including without limitation any reasonable legal fees and
disbursements) incurred by the Administrative Agent or any Lender in defending
and enforcing such reinstatement shall be deemed to be included as a part of the
Secured Obligations.
13. Amendments; Waivers; Modifications. This Security Agreement and
------------------------------------
the provisions hereof may not be amended, waived, modified, changed, discharged
or terminated except as set forth in each of Section 10.5 of the Revolving
Credit Agreement and Section 10.5 of the Term Loan Agreement.
14. Successors in Interest. This Security Agreement shall create a
------------------------
continuing security interest in the Collateral and shall be binding upon each
Obligor, its successors and assigns and shall inure, together with the rights
and remedies of the Administrative Agent and the Lenders hereunder, to the
benefit of the Administrative Agent and the Lenders and their successors and
permitted assigns; provided, however, that none of the Obligors may assign its
-------- -------
rights or delegate its duties hereunder without the prior written consent of
each Lender or the Required Lenders, as required by the Revolving Credit
Agreement and the Term Loan Agreement. To the fullest extent permitted by law,
each Obligor hereby releases the Administrative Agent and each Lender, and its
successors and assigns, from any liability for any act or omission relating to
this Security Agreement or the Collateral, except for any liability arising from
the gross negligence or willful misconduct of the Administrative Agent, or such
Lender, or its officers, employees or agents.
15. Notices. All notices required or permitted to be given under this
-------
Security Agreement shall be in conformance with Section 10.1 of the Revolving
Credit Agreement.
16. Counterparts. This Security Agreement may be executed in any
------------
number of counterparts, each of which where so executed and delivered shall be
an original, but all of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this Security Agreement to produce or
account for more than one such counterpart.
17. Headings. The headings of the sections and subsections hereof are
--------
provided for convenience only and shall not in any way affect the meaning or
construction of any provision of this Security Agreement.
18. Governing Law; Submission to Jurisdiction; Venue.
-----------------------------------------------------
(a) THIS SECURITY AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Any legal action or
proceeding with respect to this Security Agreement may be brought in the courts
of the State of New York, or of the United States for the Eastern District of
New York, and, by execution and delivery of this Security Agreement, each
Obligor hereby irrevocably accepts for itself and in respect of its property,
generally and unconditionally, the
jurisdiction of such courts. Each Obligor further irrevocably consents to the
service of process out of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to it at the address for notices pursuant to Section 10.1 of
the Revolving Credit Agreement such service to become effective 30 days after
such mailing. Nothing herein shall affect the right of the Administrative Agent
to serve process in any other manner permitted by law or to commence legal
proceedings or to otherwise proceed against any Obligor in any other
jurisdiction.
(b) Each Obligor hereby irrevocably waives any objection which it
may now or hereafter have to the laying of venue of any of the aforesaid actions
or proceedings arising out of or in connection with this Security Agreement
brought in the courts referred to in subsection (a) hereof and hereby further
irrevocably waives and agrees not to plead or claim in any such court that any
such action or proceeding brought in any such court has been brought in an
inconvenient forum.
19. Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE LAW,
----------------------
EACH OF THE PARTIES TO THIS SECURITY AGREEMENT HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF
OR RELATING TO THIS SECURITY AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
20. Severability. If any provision of any of the Security Agreement is
------------
determined to be illegal, invalid or unenforceable, such provision shall be
fully severable and the remaining provisions shall remain in full force and
effect and shall be construed without giving effect to the illegal, invalid or
unenforceable provisions.
21. Entirety. This Security Agreement and the other Credit Documents
--------
represent the entire agreement of the parties hereto and thereto, and supersede
all prior agreements and understandings, oral or written, if any, including any
commitment letters or correspondence relating to the Credit Documents or the
transactions contemplated herein and therein.
22. Survival. All representations and warranties of the Obligors
--------
hereunder shall survive the execution and delivery of this Security Agreement,
the Revolving Credit Agreement, the Term Loan Agreement and other related
documents, the delivery of the Notes and the making of the Loans under each of
the Revolving Credit Agreement and the Term Loan Agreement.
23. Other Security. To the extent that any of the Secured Obligations
---------------
are now or hereafter secured by property other than the Collateral (including,
without limitation, real property and securities owned by an Obligor), or by a
guarantee, endorsement or property of any other Person, then the Administrative
Agent and the Lenders shall have the right to proceed against such other
property, guarantee or endorsement upon the occurrence of any Event of Default,
and the Administrative Agent and the Lenders have the right, in their sole
discretion, to determine which rights, security, liens, security interests or
remedies the Administrative Agent and the Lenders shall at any time pursue,
relinquish, subordinate, modify or take with respect thereto, without in any way
modifying or affecting any of them or any of the Administrative Agent's and the
Lenders' rights or the Secured Obligations under this Security Agreement or
under any other of the Credit Documents.
24. Joint and Several Obligations of Obligors.
----------------------------------------------
(a) Each of the Obligors is accepting joint and several liability
hereunder in consideration of the financial accommodation to be provided by the
Lenders under each of the Revolving Credit Agreement and the Term Loan
Agreement, for the mutual benefit, directly and indirectly, of each of the
Obligors and in consideration of the undertakings of each of the Obligors to
accept joint and several liability for the obligations of each of them.
(b) Each of the Obligors jointly and severally hereby irrevocably
and unconditionally accepts, not merely as a surety but also as a co-debtor,
joint and several liability with the other Obligors with respect to the payment
and performance of all of the Secured Obligations arising under this Security
Agreement and the other Credit Documents, it being the intention of the parties
hereto that all the Obligations shall be the joint and several obligations of
each of the Obligors without preferences or distinction among them.
(c) Notwithstanding any provision to the contrary contained herein
or in any other of the Credit Documents, the obligations of each Subsidiary
Guarantor under the Credit Documents shall be limited to an aggregate amount
equal to the largest amount that would not render such obligations subject to
avoidance under Section 548 of the Bankruptcy Code or any comparable provisions
of any applicable state law.
25. Rights of Required Lenders. All rights of the Administrative Agent
--------------------------
hereunder, if not exercised by the Administrative Agent, may be exercised by the
Required Lenders under each of the Revolving Credit Agreement and the Term Loan
Agreement.
[remainder of page intentionally left blank]
CHAR1\529364_ 6
Each of the parties hereto has caused a counterpart of this Security
Agreement to be duly executed and delivered as of the date first above written.
BORROWER: POLICY MANAGEMENT SYSTEMS CORPORATION,
--------
a South Carolina corporation
By: /S
--
Name: Xxxxxxx X. Xxxxxxxx
---------------------
Title: Executive Vice President and General Counsel
--------------------------------------------
SUBSIDIARY
----------
GUARANTORS: MYND CORPORATION
----------
f/k/a The Leverage Group, Inc.,
a Connecticut corporation
MYND INTERNATIONAL, LTD.,
a Delaware corporation
MYND CORPORATION
f/k/a XXXX Technology Group, Inc.,
a Michigan corporation
MYND CORPORATION
f/k/a CYBERTEK Corporation,
a Texas corporation
MYND PARTNERS, L.P.,
f/k/a Cybertek Solutions, L.P.,
a Texas limited partnership
By: /S/
---
Name: Xxxxxxx X. Xxxxxxxx
---------------------
Title: Secretary
---------
of each of the foregoing
Subsidiary Guarantors
POLICY MANAGEMENT SYSTEMS
INVESTMENTS, INC.,
A Delaware corporation
By: /S/
---
Name: Xxxxxxxxx Xxxxxx
-----------------
Title: President
---------
Accepted and agreed to as of the date first above written.
BANK OF AMERICA, N.A.,
as Administrative Agent
By: /S/
---
Name: Xxxxxxx X. XxXxxxxx
---------------------
Title:_________________________
