Exhibit 10.3
EXECUTION VERSION
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GUARANTY AND SECURITY AGREEMENT
Dated as of January 10, 2008
among
GOAMERICA, INC.,
as Borrower
and
Each Grantor From Time to Time Party Hereto
and
ABLECO FINANCE LLC,
as Collateral Agent
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TABLE OF CONTENTS
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ARTICLE I DEFINED TERMS 1
Section 1.1 Definitions ............................................. 1
Section 1.2 Certain Other Terms ..................................... 4
ARTICLE II GUARANTY 4
Section 2.1 Guaranty ................................................ 4
Section 2.2 Limitation of Guaranty .................................. 5
Section 2.3 Contribution ............................................ 5
Section 2.4 Authorization; Other Agreements ......................... 5
Section 2.5 Guaranty Absolute and Unconditional ..................... 6
Section 2.6 Waivers ................................................. 7
Section 2.7 Reliance ................................................ 7
ARTICLE III GRANT OF SECURITY INTEREST 7
Section 3.1 Collateral .............................................. 7
Section 3.2 Grant of Security Interest in Collateral ................ 8
ARTICLE IV REPRESENTATIONS AND WARRANTIES 8
Section 4.1 Title; No Other Liens ................................... 8
Section 4.2 Perfection and Priority ................................. 8
Section 4.3 Jurisdiction of Organization; Chief Executive Office .... 9
Section 4.4 Locations of Inventory, Equipment
and Books and Records ................................... 9
Section 4.5 Pledged Collateral ...................................... 9
Section 4.6 Instruments and Tangible Chattel
Paper Formerly Accounts ................................. 10
Section 4.7 Intellectual Property ................................... 10
Section 4.8 Commercial Tort Claims .................................. 10
Section 4.9 Specific Collateral ..................................... 10
Section 4.10 Promissory Notes and Debt Securities .................... 10
Section 4.11 Governmental Licenses ................................... 10
Section 4.12 Motor Vehicles .......................................... 10
Section 4.13 Representations and Warranties of the Credit Agreement .. 11
ARTICLE V COVENANTS 11
Section 5.1 Maintenance of Perfected Security
Interest; Further Documentation and Consents ............ 11
Section 5.2 Changes in Locations, Name, Etc ......................... 12
Section 5.3 Pledged Collateral ...................................... 12
Section 5.4 Accounts ................................................ 13
Section 5.5 Commodity Contracts ..................................... 13
Section 5.6 Delivery of Instruments and Tangible
Chattel Paper and Control of Investment
Property, Letter-of-Credit Rights and
Electronic Chattel Paper ................................ 13
Section 5.7 Intellectual Property ................................... 14
Section 5.8 Notices ................................................. 15
Section 5.9 Notice of Commercial Tort Claims ........................ 15
Section 5.10 Compliance with Credit Agreement ........................ 16
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ARTICLE VI REMEDIAL PROVISIONS 16
Section 6.1 Code and Other Remedies ................................. 16
Section 6.2 Accounts and Payments in Respect
of General Intangibles .................................. 19
Section 6.3 Pledged Collateral ...................................... 20
Section 6.4 Proceeds to be Turned Over to and
Held by Collateral Agent ................................ 21
Section 6.5 Private Sales ........................................... 21
Section 6.6 Deficiency .............................................. 22
ARTICLE VII THE COLLATERAL AGENT 22
Section 7.1 Collateral Agent's Appointment as Attorney-in-Fact ...... 22
Section 7.2 Authorization to File Financing Statements .............. 23
Section 7.3 Authority of Collateral Agent ........................... 24
Section 7.4 Duty; Obligations and Liabilities ....................... 24
ARTICLE VIII MISCELLANEOUS 24
Section 8.1 Reinstatement ........................................... 24
Section 8.2 Release of Collateral ................................... 25
Section 8.3 Independent Obligations ................................. 25
Section 8.4 No Waiver by Course of Conduct .......................... 26
Section 8.5 Amendments in Writing ................................... 26
Section 8.6 Additional Grantors; Additional Pledged Collateral ...... 26
Section 8.7 Notices ................................................. 26
Section 8.8 Successors and Assigns .................................. 26
Section 8.9 Counterparts ............................................ 26
Section 8.10 Severability ............................................ 27
Section 8.11 Governing Law ........................................... 27
Section 8.12 Jurisdiction ............................................ 27
Section 8.13 Waiver of Jury Trial .................................... 27
Section 8.14 Subordination ........................................... 28
Section 8.15 Hands On ................................................ 29
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ANNEXES AND SCHEDULES
Annex 1 Form of Pledge Amendment
Annex 2 Form of Joinder Agreement
Annex 3 Form of Intellectual Property Security Agreement
Schedule 1 Commercial Tort Claims
Schedule 2 Filings
Schedule 3 Jurisdiction of Organization; Chief Executive Office
Schedule 4 Location of Inventory and Equipment
Schedule 5 Pledged Collateral
Schedule 6 Intellectual Property
Schedule 7 Promissory Notes and Debt Securities
Schedule 8 Governmental Licenses
Schedule 9 Motor Vehicles
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GUARANTY AND SECURITY AGREEMENT, dated as of January 10, 2008, by
GOAMERICA, INC., a Delaware corporation, (the "Borrower"), and each of the other
entities listed on the signature pages hereof or that becomes a party hereto
pursuant to Section 8.6 (together with the Borrower, the "Grantors"), in favor
of ABLECO FINANCE LLC, a Delaware limited liability company, as collateral agent
(in such capacity, together with its successors and permitted assigns, the
"Collateral Agent") for the Lenders and the L/C Issuers and each other Secured
Party (each as defined in the Credit Agreement referred to below).
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement dated as of January 10,
2008 (as the same may be modified from time to time, the "Credit Agreement")
among the Borrower, the Collateral Agent, Xxxxxxxxx Financial LLC, as
administrative agent (the "Administrative Agent" together with the Collateral
Agent, the "Agents"), the Lenders and the L/C Issuers from time to time party
thereto, the Lenders and the L/C Issuers have severally agreed to make
extensions of credit to the Borrower upon the terms and subject to the
conditions set forth therein;
WHEREAS, each Grantor has agreed to guaranty the Obligations (as
defined in the Credit Agreement) of each other Loan Party;
WHEREAS, each Grantor will derive substantial direct and indirect
benefits from the making of the extensions of credit to the Borrower under the
Credit Agreement; and
WHEREAS, it is a condition precedent to the obligation of the
Lenders and the L/C Issuers to make their respective extensions of credit to the
Borrower under the Credit Agreement that the Grantors shall have executed and
delivered this Agreement to the Collateral Agent.
NOW, THEREFORE, in consideration of the premises and to induce the
Lenders, the L/C Issuers and the Agents to enter into the Credit Agreement and
to induce the Lenders and the L/C Issuers to make their respective extensions of
credit to the Borrower thereunder, each Grantor hereby agrees with the
Collateral Agent as follows:
ARTICLE I
DEFINED TERMS
Section 1.1 Definitions.
(a) Capital terms used herein without definition are used as defined
in the Credit Agreement.
(b) The following terms have the meanings given to them in the UCC
and terms used herein without definition that are defined in the UCC have the
meanings given to them in the UCC (such meanings to be equally applicable to
both the singular and plural forms of the terms defined): "account", "account
debtor", "as-extracted collateral", "certificated security", "chattel paper",
"commercial tort claim", "commodity contract", "deposit account", "electronic
chattel paper", "equipment", "farm products", "fixture", "general intangible",
"goods", "health-care-insurance receivable", "instruments", "inventory",
"investment property", "letter-of-credit
right", "proceeds", "record", "securities account", "security", "supporting
obligation" and "tangible chattel paper".
(c) The following terms shall have the following meanings:
"Agreement" means this Guaranty and Security Agreement.
"Applicable IP Office" means the United States Patent and Trademark
Office, the United States Copyright Office or any similar office or agency
within or outside the United States.
"Collateral" has the meaning specified in Section 3.1.
"Collateral Update Certificate" has the meaning specified in Section
5.1(c).
"Excluded Equity" means any voting stock in excess of 66% of the
outstanding voting stock of any Excluded Foreign Subsidiary. For the purposes of
this definition, "voting stock" means, with respect to any issuer, the issued
and outstanding shares of each class of Stock of such issuer entitled to vote
(within the meaning of Treasury Regulations ss. 1.956-2(c)(2)).
"Excluded Property" means, collectively, (i) Excluded Equity, (ii)
any permit or license of, or any Contractual Obligation entered into by, any
Grantor (A) that prohibits or requires the consent of any Person other than the
Borrower and its Affiliates as a condition to the creation by such Grantor of a
Lien on any right, title or interest in such permit, license or Contractual
Obligation or any Stock or Stock Equivalent related thereto or (B) to the extent
that any Requirement of Law applicable thereto prohibits the creation of a Lien
thereon, but only, with respect to the prohibition in (A) and (B), to the
extent, and for as long as, such prohibition is not terminated or rendered
unenforceable or otherwise deemed ineffective by the UCC or any other
Requirement of Law or required consent is not obtained (and immediately upon the
lapse, termination, unenforceability or ineffectiveness of any such prohibition
or grant of such required consent, the Collateral shall include, and Grantors
shall be deemed to have automatically granted a security interest in, all such
permits, licenses, Contractual Obligations or Stock or Stock Equivalents no
longer subject to such prohibition or required consent), (iii) fixed or capital
assets owned by any Grantor that is subject to a purchase money Lien or a
Capital Lease if the Contractual Obligation pursuant to which such Lien is
granted (or in the document providing for such Capital Lease) prohibits or
requires the consent of any Person other than the Borrower and its Affiliates as
a condition to the creation of any other Lien on such equipment and (iv) any
U.S. "intent to use" Trademark applications for which a statement of use has not
been filed and accepted (but only until such statement of use is filed and has
been accepted); provided, however, that "Excluded Property" shall not include
any proceeds, products, substitutions or replacements of Excluded Property
(unless such proceeds, products, substitutions or replacements would otherwise
constitute Excluded Property).
"Guaranteed Obligations" has the meaning set forth in Section 2.1.
"Guarantor" means each Grantor (other than the Borrower).
"Guaranty" means the guaranty of the Guaranteed Obligations made by
the Guarantors as set forth in this Agreement.
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"Inventory" means any "inventory," as such item is defined in the
code, now owned or hereafter acquired by any Loan Party, wherever located, and
in any event including inventory, merchandise, goods and other personal property
that are held by or on behalf of any Loan Party for sale or lease or are
furnished or are to be furnished under a contract of service, or that constitute
raw materials, work in process, finished goods, returned goods, supplies or
materials of any kind, nature or description used or consumed or to be used or
consumed in such Loan Party's business or in the processing, production,
packaging, promotion, delivery or shipping of the same, including other supplies
and embedded software.
"Pledged Certificated Stock" means all certificated securities and
any other Stock or Stock Equivalent of any Person evidenced by a certificate,
instrument or other similar document (as defined in the UCC), in each case owned
by any Grantor, and any distribution of property made on, in respect of or in
exchange for the foregoing from time to time, including all Stock and Stock
Equivalents listed on Schedule 5. Pledged Certificated Stock excludes any
Excluded Property.
"Pledged Collateral" means, collectively, the Pledged Stock and the
Pledged Debt Instruments.
"Pledged Debt Instruments" means all right, title and interest of
any Grantor in instruments evidencing any Indebtedness owed to such Grantor or
other obligations, and any distribution of property made on, in respect of or in
exchange for the foregoing from time to time, including all Indebtedness
described on Schedule 5, issued by the obligors named therein.
"Pledged Investment Property" means any investment property of any
Grantor, and any distribution of property made on, in respect of or in exchange
for the foregoing from time to time, other than any Pledged Stock or Pledged
Debt Instruments.
"Pledged Stock" means all Pledged Certificated Stock and all Pledged
Uncertificated Stock.
"Pledged Uncertificated Stock" means any Stock or Stock Equivalent
of any Person that is not Pledged Certificated Stock, including all right, title
and interest of any Grantor as a limited or general partner in any partnership
not constituting Pledged Certificated Stock or as a member of any limited
liability company, all right, title and interest of any Grantor in, to and under
any Constituent Document of any partnership or limited liability company to
which it is a party, and any distribution of property made on, in respect of or
in exchange for the foregoing from time to time, including in each case those
interests set forth on Schedule 5, to the extent such interests are not
certificated. Pledged Uncertificated Stock excludes any Excluded Property.
"Registered Intellectual Property" means all Patents, Trademarks and
Copyrights that are covered by issued patents or registrations or pending patent
application or applications for registration, excluding any Internet Domain
Names and any Excluded Property.
"Security Cash Collateral Account" means a Cash Collateral Account
that is not a L/C Cash Collateral Account.
"Software" means (a) all computer programs, including source code
and object code versions, (b) all data, databases and compilations of data,
whether machine readable or
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otherwise, and (c) all documentation, training materials and configurations
related to any of the foregoing.
"Subsidiary Guarantor" means any Guarantor that is a Subsidiary of
the Borrower.
"UCC" means the Uniform Commercial Code as from time to time in
effect in the State of New York; provided, however, that, in the event that, by
reason of mandatory provisions of any applicable Requirement of Law, any of the
attachment, perfection or priority of the Collateral Agent's or any other
Secured Party's security interest in any Collateral is governed by the Uniform
Commercial Code of a jurisdiction other than the State of New York, "UCC" shall
mean the Uniform Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such attachment, perfection or
priority and for purposes of the definitions related to or otherwise used in
such provisions.
"Vehicles" means all vehicles covered by a certificate of title law
of any state.
Section 1.2 Certain Other Terms.
(a) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms. The terms
"herein", "hereof" and similar terms refer to this Agreement as a whole and not
to any particular Article, Section or clause in this Agreement. References
herein to an Annex, Schedule, Article, Section or clause refer to the
appropriate Annex or Schedule to, or Article, Section or clause in this
Agreement. Where the context requires, provisions relating to any Collateral
when used in relation to a Grantor shall refer to such Grantor's Collateral or
any relevant part thereof.
(b) Section 1.5 (Interpretation) of the Credit Agreement is
applicable to this Agreement as and to the extent set forth therein.
(c) The term "payment in full" or "paid in full" with respect to the
Obligations, the Secured Obligations, the Guaranteed Obligations or the Senior
Obligations means upon (A) termination of the Commitments, (B) payment and
satisfaction in full of all Loans, all L/C Reimbursement Obligations and all
other Obligations that the Collateral Agent has been notified in writing are
then due and payable by the holder of such obligation, (C) deposit of cash
collateral with respect to all contingent Obligations (other than contingent
indemnification obligations as to which no claim has been asserted) (or, in the
case of any L/C Obligation, a back-up letter of credit has been issued), in
amounts required under Section 9.3 of the Credit Agreement and on terms and
conditions and with parties satisfactory to the Agents and each Indemnitee that
is owed such Obligations and (D) to the extent requested by the Agents, receipt
by the Secured Parties of liability releases from the Loan Parties each in form
and substance acceptable to the Agents.
ARTICLE II
GUARANTY
Section 2.1 Guaranty. To induce the Lenders to make the Loans and the L/C
Issuers to Issue Letters of Credit, each Guarantor hereby, jointly and
severally, absolutely, unconditionally and irrevocably guarantees, as primary
obligor and not merely as surety, the full
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and punctual payment when due, whether at stated maturity or earlier, by reason
of acceleration, mandatory prepayment or otherwise in accordance with any Loan
Document, of all the Obligations of each other Loan Party whether existing on
the date hereof or hereinafter incurred or created (the "Guaranteed
Obligations"). This Guaranty by each Guarantor hereunder constitutes a guaranty
of payment and not of collection. Each Guarantor agrees that its obligations
under this Agreement shall not be discharged until the Obligations (other than
contingent indemnification obligations as to which no claim has been asserted)
are paid in full. Each Guarantor shall be regarded, and shall be in the same
position, as principal debtor with respect to the Guaranteed Obligations.
Section 2.2 Limitation of Guaranty. Any term or provision of this Guaranty
or any other Loan Document to the contrary notwithstanding, the maximum
aggregate amount for which any Subsidiary Guarantor shall be liable hereunder
shall not exceed the maximum amount for which such Subsidiary Guarantor can be
liable without rendering this Guaranty or any other Loan Document, as it relates
to such Subsidiary Guarantor, subject to avoidance under applicable Requirements
of Law relating to fraudulent conveyance or fraudulent transfer (including the
Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act and
Section 548 of Title 11 of the United States Code or any applicable provisions
of comparable Requirements of Law) (collectively, "Fraudulent Transfer Laws").
Any analysis of the provisions of this Guaranty for purposes of Fraudulent
Transfer Laws shall take into account the right of contribution established in
Section 2.3 and, for purposes of such analysis, give effect to any discharge of
intercompany debt as a result of any payment made under the Guaranty.
Section 2.3 Contribution. To the extent that any Subsidiary Guarantor
shall be required hereunder to pay any portion of any Guaranteed Obligation
exceeding the greater of (a) the amount of the economic benefit actually
received by such Subsidiary Guarantor from the Loans and other Obligations and
(b) the amount such Subsidiary Guarantor would otherwise have paid if such
Subsidiary Guarantor had paid the aggregate amount of the Guaranteed Obligations
(excluding the amount thereof repaid by the Borrower) in the same proportion as
such Subsidiary Guarantor's net worth on the date enforcement is sought
hereunder bears to the aggregate net worth of all the Subsidiary Guarantors on
such date, then such Guarantor shall be reimbursed by such other Subsidiary
Guarantors for the amount of such excess, pro rata, based on the respective net
worth of such other Subsidiary Guarantors on such date.
Section 2.4 Authorization; Other Agreements. The Secured Parties are
hereby authorized, without notice to or demand upon any Guarantor and without
discharging or otherwise affecting the obligations of any Guarantor hereunder
and without incurring any liability hereunder, from time to time, to do each of
the following:
(a) (i) modify, amend, supplement or otherwise change, (ii)
accelerate or otherwise change the time of payment or (iii) waive or otherwise
consent to noncompliance with, any Guaranteed Obligation or any Loan Document,
in each case in accordance with the terms of the Credit Agreement and the other
Loan Documents;
(b) apply to the Guaranteed Obligations any sums by whomever paid or
however realized to any Guaranteed Obligation in such order as provided in the
Loan Documents;
(c) refund at any time any payment received by any Secured Party in
respect of any Guaranteed Obligation;
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(d) (i) Sell, exchange, enforce, waive, substitute, liquidate,
terminate, release, abandon, fail to perfect, subordinate, accept, substitute,
surrender, exchange, affect, impair or otherwise alter or release any Collateral
for any Guaranteed Obligation or any other guaranty therefor in any manner, (ii)
receive, take and hold additional Collateral to secure any Guaranteed
Obligation, (iii) add, release or substitute any one or more other Guarantors,
makers or endorsers of any Guaranteed Obligation or any part thereof and (iv)
otherwise deal in any manner with the Borrower and any other Guarantor, maker or
endorser of any Guaranteed Obligation or any part thereof; and
(e) settle, release, compromise, collect or otherwise liquidate the
Guaranteed Obligations.
Section 2.5 Guaranty Absolute and Unconditional. To the maximum extent
permitted by Requirements of Law, each Guarantor hereby waives and agrees not to
assert any defense, whether arising in connection with or in respect of any of
the following or otherwise, and hereby agrees that its obligations under this
Guaranty are irrevocable, absolute and unconditional and shall not be discharged
as a result of or otherwise affected by any of the following (which may not be
pleaded and evidence of which may not be introduced in any proceeding with
respect to this Guaranty, in each case except as otherwise agreed in writing by
the Agents):
(a) the invalidity or unenforceability of any obligation of the
Borrower or any other Guarantor under any Loan Document or any other agreement
or instrument relating thereto (including any amendment, consent or waiver
thereto), or any security for, or other guaranty of, any Guaranteed Obligation
or any part thereof, or the lack of perfection or continuing perfection or
failure of priority of any security for the Guaranteed Obligations or any part
thereof;
(b) the absence of (i) any attempt to collect any Guaranteed
Obligation or any part thereof from the Borrower or any other Guarantor or other
action to enforce the same or (ii) any action to enforce any Loan Document or
any Lien thereunder;
(c) the failure by any Person to take any steps to perfect and
maintain any Lien on, or to preserve any rights with respect to, any Collateral;
(d) any workout, insolvency, bankruptcy proceeding, reorganization,
arrangement, liquidation or dissolution by or against the Borrower, any other
Guarantor or any of the Borrower's other Subsidiaries or any procedure,
agreement, order, stipulation, election, action or omission thereunder,
including any discharge or disallowance of, or bar or stay against collecting,
any Guaranteed Obligation (or any interest thereon) in or as a result of any
such proceeding;
(e) any foreclosure, whether or not through judicial sale, and any
other Sale of any Collateral or any election following the occurrence of an
Event of Default by any Secured Party to proceed separately against any
Collateral in accordance with such Secured Party's rights under any applicable
Requirement of Law; or
(f) any other defense, setoff, counterclaim or any other
circumstance that might otherwise constitute a legal or equitable discharge of
the Borrower, any other Guarantor or any of such Borrower's other Subsidiaries,
in each case other than the payment in full of the Guaranteed Obligations.
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Section 2.6 Waivers. Each Guarantor hereby unconditionally and irrevocably
waives, to the maximum extent permitted by Requirements of Law, and agrees not
to assert any claim, defense, setoff or counterclaim based on diligence,
promptness, presentment, requirements for any demand or notice hereunder
including any of the following: (a) any demand for payment or performance and
protest and notice of protest, (b) any notice of acceptance, (c) any
presentment, demand, protest or further notice or other requirements of any kind
with respect to any Guaranteed Obligation (including any accrued but unpaid
interest thereon) becoming immediately due and payable and (d) any other notice
in respect of any Guaranteed Obligation or any part thereof, and any defense
arising by reason of any disability or other defense of the Borrower or any
other Guarantor. Each Guarantor further unconditionally and irrevocably agrees
not to (x) enforce or otherwise exercise any right of subrogation or any right
of reimbursement or contribution or similar right against the Borrower or any
other Guarantor by reason of any Loan Document or any payment made thereunder
prior to the payment in full of the Guaranteed Obligations or (y) assert any
claim, defense, setoff or counterclaim it may have against any other Loan Party
or set off any of its obligations to such other Loan Party against obligations
of such Loan Party to such Guarantor. No obligation of any Guarantor hereunder
shall be discharged other than by complete performance.
Section 2.7 Reliance. Each Guarantor hereby assumes responsibility for
keeping itself informed of the financial condition of the Borrower, each other
Guarantor and any other guarantor, maker or endorser of any Guaranteed
Obligation or any part thereof, and of all other circumstances bearing upon the
risk of nonpayment of any Guaranteed Obligation or any part thereof that
diligent inquiry would reveal, and each Guarantor hereby agrees that no Secured
Party shall have any duty to advise any Guarantor of information known to it
regarding such condition or any such circumstances. In the event any Secured
Party, in its sole discretion, undertakes at any time or from time to time to
provide any such information to any Guarantor, such Secured Party shall be under
no obligation to (a) undertake any investigation not a part of its regular
business routine, (b) disclose any information that such Secured Party, pursuant
to accepted or reasonable commercial finance or banking practices, wishes to
maintain confidential or (c) make any future disclosures of such information or
any other information to any Guarantor.
ARTICLE III
GRANT OF SECURITY INTEREST
Section 3.1 Collateral. For the purposes of this Agreement, all of the
following property now owned or at any time hereafter acquired by a Grantor or
in which a Grantor now has or at any time in the future may acquire any right,
title or interests is collectively referred to as the "Collateral":
(a) all accounts, chattel paper, deposit accounts, documents (as
defined in the UCC), equipment, general intangibles, instruments, inventory,
investment property and any supporting obligations related thereto (including
any Pledged Collateral);
(b) the commercial tort claims described on Schedule 1 and on any
supplement thereto received by the Collateral Agent pursuant to Section 5.9;
(c) all books and records pertaining to the other property described
in this Section 3.1;
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(d) all property of such Grantor held by any Secured Party,
including all property of every description, in the custody of or in transit to
such Secured Party for any purpose, including safekeeping, collection or pledge,
for the account of such Grantor or as to which such Grantor may have any right
or power, including but not limited to cash;
(e) all other goods (including but not limited to fixtures) and
personal property of such Grantor, whether tangible or intangible and wherever
located; and
(f) to the extent not otherwise included, all proceeds of the
foregoing;
provided, however, that "Collateral" shall not include any Excluded
Property; and provided, further, that if and when any property shall cease to be
Excluded Property, such property shall automatically be deemed at all times from
and after the date such property ceases to be Excluded Property to constitute
Collateral.
Section 3.2 Grant of Security Interest in Collateral. Each Grantor, as
collateral security for the prompt and complete payment and performance when due
(whether at stated maturity, by acceleration or otherwise) of the Obligations
(the "Secured Obligations"), hereby mortgages, pledges and hypothecates 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 Lien on and security
interest in, all of its right, title and interest in, to and under the
Collateral of such Grantor.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce the Lenders, the L/C Issuers and the Agents to enter into
the Loan Documents, each Grantor represents and warrants to each of them and the
other Secured Parties each of the following after giving effect to the Verizon
TRS Acquisition and the consummation of the Hands on Merger on the Closing Date:
Section 4.1 Title; No Other Liens. Except for the Lien granted to the
Collateral Agent pursuant to this Agreement and other Permitted Liens (except
for those Permitted Liens not permitted to exist on any Collateral) under any
Loan Document (including Section 4.2), such Grantor owns each item of the
Collateral free and clear of any and all Liens or claims of others. Such Grantor
(a) is the record and beneficial owner of the Collateral pledged by it hereunder
constituting instruments or certificates and (b) has rights in or the power to
transfer each other item of Collateral in which a Lien is granted by it
hereunder, free and clear of any other Lien, other than Permitted Liens.
Section 4.2 Perfection and Priority. The security interest granted
pursuant to this Agreement constitutes a valid and continuing perfected security
interest in favor of the Collateral Agent, for the benefit of the Secured
Parties, in all Collateral subject, for the following Collateral, to the
occurrence of the following filings and other actions: (i) in the case of all
Collateral in which a security interest may be perfected by filing a financing
statement under the UCC, the proper and timely completion of the filings and
other actions specified on Schedule 2 (which, in the case of all filings and
other documents referred to on such schedule, have been delivered to the
Collateral Agent in completed and duly authorized form) and to the filing of
continuation statements as provided under applicable law, (ii) with respect to
any deposit account, the
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execution of Control Agreements, (iii) in the case of all Registered
Intellectual Property for which UCC filings are insufficient, all appropriate
filings having been made with the Applicable IP Office (it being understood that
additional filings may be required to perfect the Collateral Agent's security
interest in any Registered Intellectual Property acquired by such Grantor after
the date hereof, subject to the qualifications set forth in Section 5.7(e), (iv)
in the case of letter-of-credit rights that are not supporting obligations of
Collateral, the execution of a Contractual Obligation granting control to the
Collateral Agent over such letter-of-credit rights, (v) in the case of
electronic chattel paper, the completion of all steps necessary to grant control
to the Collateral Agent over such electronic chattel paper and (vi) in the case
of Vehicles, the actions required under Section 5.1(e). Such security interest
shall be prior to all other Liens on the Collateral except for Permitted Liens
upon (i) in the case of all Pledged Certificated Stock, Pledged Debt Instruments
and Pledged Investment Property, the delivery thereof to the Collateral Agent of
such Pledged Certificated Stock, Pledged Debt Instruments and Pledged Investment
Property consisting of instruments and certificates, in each case properly
endorsed for transfer to the Collateral Agent or in blank, (ii) in the case of
all Pledged Investment Property not in certificated form held in a securities
account, the execution of Control Agreements with respect to such investment
property and (iii) in the case of all other instruments and tangible chattel
paper that are not Pledged Certificated Stock, Pledged Debt Instruments or
Pledged Investment Property, the delivery thereof to the Collateral Agent of
such instruments and tangible chattel paper. Except as set forth in this Section
4.2, all actions by each Grantor necessary or desirable to protect and perfect
the Lien granted hereunder on the Collateral have been duly taken.
Section 4.3 Jurisdiction of Organization; Chief Executive Office.
Such Grantor's (a) jurisdiction of organization or formation, (b) exact legal
name (as it appears in such Grantor's Constituent Documents), (c) organizational
identification number, if any, issued by the jurisdiction of organization or
formation, (d) type of organization, (e) Federal Taxpayer Identification Number,
(f) other jurisdictions in which it is qualified to do business, (g) location of
its chief executive office or sole place of business, (h) legal name,
jurisdiction of organization or formation, location of chief executive office,
identity or organizational structure (including by merger or consolidation with
any other Person) if different than otherwise provided in this Section 4.3
within the prior five (5)-year period, and (i) assets acquired from any other
Person (other than Inventory and Equipment in the ordinary course from persons
in the business of selling such goods), in each case as of the date hereof, is
specified on Schedule 3.
Section 4.4 Locations of Inventory, Equipment and Books and Records. On
the date hereof, such Grantor's inventory and equipment (other than inventory or
equipment in transit in the ordinary course of business or Collateral having an
aggregate value of less than $100,000) and books and records concerning the
Collateral are kept at the locations listed on Schedule 4.
Section 4.5 Pledged Collateral.
(a) As of the Closing Date the Pledged Stock pledged by such Grantor
hereunder (i) is listed on Schedule 5 and constitutes that percentage of the
issued and outstanding equity of all classes of each issuer thereof as set forth
on Schedule 5, (ii) has been duly authorized, validly issued and is fully paid
and nonassessable (other than Pledged Stock in limited liability companies and
partnerships), and (iii) constitutes the legal, valid and binding obligation of
the obligor with respect thereto, enforceable in accordance with its terms,
except as may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally or by
general equitable principles relating to enforceability.
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(b) As of the Closing Date, all Pledged Collateral (other than
Pledged Uncertificated Stock) and all Pledged Investment Property consisting of
instruments and certificates has been delivered to the Collateral Agent in
accordance with Section 5.3(a).
(c) Upon the occurrence and during the continuance of an Event of
Default, the Collateral Agent shall be entitled to exercise all of the rights of
the Grantor granting the security interest in any Pledged Stock, and a
transferee or assignee of such Pledged Stock shall become a holder of such
Pledged Stock to the same extent as such Grantor and, subject to the governing
documents of such issuer, and applicable law, be entitled to participate in the
management of the issuer of such Pledged Stock to the same extent as such
Grantor and, upon the transfer of the entire interest of such Grantor, such
Grantor shall, by operation of law, cease to be a holder of such Pledged Stock.
Section 4.6 Instruments and Tangible Chattel Paper Formerly Accounts. No
amount payable to such Grantor under or in connection with any account is
evidenced by any instrument or tangible chattel paper that has not been
delivered to the Collateral Agent, properly endorsed for transfer, to the extent
delivery is required by Section 5.6(a).
Section 4.7 Intellectual Property. As of the Closing Date, Schedule 6 sets
forth a true and complete list of the following Intellectual Property such
Grantor owns, licenses or otherwise has the right to use: (i) Registered
Intellectual Property, (ii) Internet Domain Names and (iii) Material
Intellectual Property and material Software, separately identifying that owned
and licensed to such Grantor and including for each of the foregoing items (1)
the owner, (2) the title, (3) as applicable, the jurisdiction in which such item
has been registered or otherwise arises or in which a patent application or an
application for registration has been filed and is pending, (4) as applicable,
the patent, registration or application number and issuance, registration or
application date and (5) any IP Licenses granted by the Grantor with respect
thereto.
Section 4.8 Commercial Tort Claims. The only commercial tort claims of any
Grantor existing on the date hereof (regardless of whether the amount, defendant
or other material facts can be determined and regardless of whether such
commercial tort claim has been asserted, threatened or has otherwise been made
known to the obligee thereof or whether litigation has been commenced for such
claims) are those listed on Schedule 1, which sets forth such information
separately for each Grantor.
Section 4.9 Specific Collateral. Except as disclosed from time to time to
the Collateral Agent, none of the Collateral is or is proceeds or products of
farm products, as-extracted collateral, health-care-insurance receivables or
timber to be cut.
Section 4.10 Promissory Notes and Debt Securities. As of the Closing Date,
Schedule 7 hereto sets forth for each Grantor a list of all promissory notes and
debt securities payable or due to such Grantor by or from any other Person
(including any other Grantor) that will not be repaid on the Closing Date.
Section 4.11 Governmental Licenses. Schedule 8 hereto sets forth for each
Grantor a description of each material license from a Governmental Authority
which is, as of the date hereof, necessary to the conduct of the business of
such Grantor as conducted on the date hereof.
Section 4.12 Motor Vehicles. Schedule 9 sets forth a list of each Vehicle
owned by such Grantor as of the Closing Date.
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Section 4.13 Representations and Warranties of the Credit Agreement. The
representations and warranties as to such Grantor and its Subsidiaries made by
the Borrower in Article IV (Representations and Warranties) of the Credit
Agreement are true and correct, (a) if such date is the Closing Date, on and as
of such date or, to the extent such representations and warranties expressly
relate to an earlier date, on and as of such earlier date and (b) otherwise, in
all material respects (provided, that if any representation or warranty is by
its terms qualified by concepts of materiality, such representation shall be
true and correct in all respects) on and as of such date or, to the extent such
representations and warranties expressly relate to an earlier date, on and as of
such earlier date.
ARTICLE V
COVENANTS
Each Grantor agrees with the Collateral Agent to the following, as
long as any Obligation (other than contingent indemnification obligations as to
which no claim has been asserted) or Commitment remains outstanding and, in each
case, unless the Required Lenders otherwise consent in writing:
Section 5.1 Maintenance of Perfected Security Interest; Further
Documentation and Consents.
(a) Generally. Such Grantor shall (i) not use or permit any
Collateral to be used unlawfully or in violation of any provision of any Loan
Document, any Requirement of Law or any policy of insurance covering the
Collateral and (ii) not enter into any Contractual Obligation or undertaking
restricting the right or ability of such Grantor or the Collateral Agent to Sell
any Collateral or which would cause any Collateral to become after the Closing
Date Excluded Property set forth in clause (ii) of the definition thereof,
except in the ordinary course of business and in connection with transactions
permitted by the Credit Agreement or as may otherwise be authorized by the
Agents.
(b) Such Grantor shall maintain the security interest created by
this Agreement as a perfected security interest having at least the priority
described, and subject to the limitations set forth in Section 4.2 and shall
defend such security interest and such priority against the claims and demands
of all Persons.
(c) Pursuant to Section 6.1(e) of the Credit Agreement, at the time
of delivery of annual financial statements with respect to the preceding Fiscal
Year (starting with the Fiscal Year ending December 31, 2008) pursuant to
Section 6.1(c) of the Credit Agreement, the Borrower shall deliver to the Agents
a certificate executed by a Responsible Officer containing updated Schedules 3,
4, 5, 6, 7, 8 and 9 to any matter hereafter arising that, if existing or
occurring at the Closing Date as of the end of the immediately preceding month
ending at least ten (10) Business Days prior to the date of such certificate
setting forth would have been required to be set forth or described in such
Schedules; provided that no such supplement to any such Schedule shall amend,
supplement or otherwise modify any Loan Document or be or be deemed a waiver of
any Default or Event of Default resulting from the matters disclosed therein
(each such certificate a "Collateral Update Certificate").
(d) At any time and from time to time, upon the written request of
an Agent and subject to the limitations set forth in Section 4.2, such Grantor
shall, for the purpose of
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obtaining or preserving the full benefits of this Agreement and of the rights
and powers herein granted, (i) promptly and duly execute and deliver, and have
recorded, such further documents, including an authorization to file (or, as
applicable, the filing) of any financing statement or amendment under the UCC
(or other filings under similar Requirements of Law) in effect in any
jurisdiction with respect to the security interest created hereby and (ii) take
such further action as an Agent may reasonably request, including (A) so long as
any Event of Default exists, using its commercially reasonable efforts to secure
all approvals necessary or appropriate for the assignment to or for the benefit
of the Collateral Agent of any Contractual Obligation, including any IP License,
held by such Grantor and to enforce the security interests granted hereunder and
(B) executing and delivering any Control Agreements with respect to deposit
accounts and securities accounts to the extent required under Section 7.11 of
the Credit Agreement.
(e) If, at any time, the aggregate fair market value of the
Collateral consisting of Vehicles (other than Vehicles constituting Excluded
Property) exceeds $500,000, the applicable Grantors shall, if requested by the
Collateral Agent arrange for the Collateral Agent's first priority security
interest to be noted on the certificate of title of each such Vehicle and shall
file any other necessary documentation in each jurisdiction that the Collateral
Agent shall reasonably deem necessary to perfect its security interests in such
Vehicle.
(f) Such Grantor shall comply with the requirements of Section
7.10(e) of the Credit Agreement providing for delivery to Agents of a landlord's
agreement or bailee letter, as applicable, from the lessors of leased property
or bailees with respect to warehouse, processor or converter facility or other
locations where Collateral is stored or located.
(g) Notwithstanding anything to the contrary in this Agreement, the
Agents may, without the consent of any Secured Party, not require the Loan
Parties to perfect any security interest granted to the Collateral Agent as to
which the Agents have determined in their sole discretion that the collateral
value thereof is insufficient to justify the difficulty, time and/or expense of
obtaining a perfected security interest therein.
Section 5.2 Changes in Locations, Name, Etc. Except upon 15 days' prior
written notice to the Agents (or such shorter period as Agents may agree to) and
delivery to the Agents of all documents reasonably requested by the Agents to
maintain the validity, perfection and priority of the security interests
provided for herein, no Grantor shall do any of the following:
(i) permit any inventory or equipment to be kept at a location other
than those listed on Schedule 4, or as to which the Loan Parties have
complied with Section 5.1(f), except for inventory or equipment in transit
in the ordinary course of business;
(ii) change its jurisdiction of organization or its location (for
purposes of the UCC), in each case from that referred to in Section 4.3;
or
(iii) change its legal name or organizational identification number,
if any, or corporation, limited liability company, partnership or other
organizational structure to such an extent that any financing statement
filed in connection with this Agreement would become misleading.
Section 5.3 Pledged Collateral. (a) Delivery of Pledged Collateral. Such
Grantor shall (i) deliver to the Collateral Agent, in suitable form for transfer
and in form and substance satisfactory to the Collateral Agent, (A) all Pledged
Certificated Stock, (B) all Pledged Debt
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Instruments in excess of $50,000 in the aggregate, and (C) all certificates and
instruments evidencing Pledged Investment Property in excess of $50,000 in the
aggregate and (ii) maintain all other Pledged Investment Property in excess of
$50,000 in the aggregate in a Controlled Securities Account; provided that, so
long as no Event of Default shall have occurred and be continuing, the
Collateral Agent shall, promptly upon request of such Grantor, make appropriate
arrangements for making any Pledged Debt Instruments pledged by such Grantor
available to such Grantor for purposes of prosecution, collection or renewal.
(b) Event of Default. During the continuance of an Event of Default,
the Collateral Agent shall have the right, at any time in its discretion and
without notice to the Grantor, to (i) transfer to or to register in its name or
in the name of its nominees any Pledged Collateral or any Pledged Investment
Property and (ii) exchange any certificate or instrument representing or
evidencing any Pledged Collateral or any Pledged Investment Property for
certificates or instruments of smaller or larger denominations.
(c) Cash Distributions with respect to Pledged Collateral. Except as
provided in Article VI, such Grantor shall be entitled to receive all cash
distributions paid in respect of the Pledged Collateral.
(d) Voting Rights. Except as provided in Article VI, such Grantor
shall be entitled to exercise all voting, consent and corporate, partnership,
limited liability company and similar rights with respect to the Pledged
Collateral; provided, however, that no vote shall be cast, consent given or
right exercised or other action taken by such Grantor that would impair the
Collateral that would be inconsistent with or result in any violation of any
provision of any Loan Document.
Section 5.4 Accounts.
(a) Such Grantor shall not, other than in the ordinary course of
business or in a transaction permitted under the Credit Agreement, (i) grant any
extension of the time of payment of any account, (ii) compromise or settle any
account for less than the full amount thereof, (iii) release, wholly or
partially, any Person liable for the payment of any account, (iv) allow any
credit or discount on any account or (v) amend, supplement or modify any account
in any manner that could materially adversely affect the value thereof.
(b) If any Event of Default has occurred and is continuing the
Agents shall have the right to make test verifications of the Accounts in any
manner and through any medium that it reasonably considers advisable, and such
Grantor shall furnish all such assistance and information as the Collateral
Agent may reasonably require in connection therewith. If any Event of Default
has occurred and is continuing, upon the Collateral Agent's request, such
Grantor shall cause independent public accountants or others satisfactory to the
Agents to furnish to the Agents reports showing reconciliations, aging and test
verifications of, and trial balances for, the accounts.
Section 5.5 Commodity Contracts. Such Grantor shall not have any commodity
contract other than with a Person reasonably acceptable to the Collateral Agent
and subject to a Control Agreement.
Section 5.6 Delivery of Instruments and Tangible Chattel Paper and Control
of Investment Property, Letter-of-Credit Rights and Electronic Chattel Paper.
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(a) If any amount in excess of $50,000 payable under or in
connection with any Collateral owned by such Grantor shall be or become
evidenced by an instrument or tangible chattel paper other than such instrument
delivered in accordance with Section 5.3(a) and in the possession of the
Collateral Agent, such Grantor shall xxxx all such instruments and tangible
chattel paper with the following legend: "This writing and the obligations
evidenced or secured hereby are subject to the security interest of Ableco
Finance LLC, as Collateral Agent" and, at the request of the Collateral Agent,
shall promptly deliver such instrument or tangible chattel paper to the
Collateral Agent, duly indorsed in a manner satisfactory to the Collateral
Agent.
(b) Except pursuant to the Second Lien Loan Documents and to the
extent permitted under the Credit Agreement, such Grantor shall not grant
"control" (within the meaning of such term under Article 9-106 of the UCC) over
any investment property to any Person other than the Collateral Agent.
(c) If such Grantor is or becomes the beneficiary of a letter of
credit in excess of $50,000 that is not a supporting obligation of any
Collateral, such Grantor shall promptly, and in any event within 5 Business Days
after becoming a beneficiary, notify the Collateral Agent thereof and, if so
requested by the Collateral Agent, use commercially reasonable efforts to enter
into a Contractual Obligation with the Collateral Agent, the issuer of such
letter of credit or any nominated person with respect to the letter-of-credit
rights under such letter of credit. Such Contractual Obligation shall assign
such letter-of-credit rights to the Collateral Agent and such assignment shall
be sufficient to grant control for the purposes of Section 9-107 of the UCC (or
any similar section under any equivalent UCC). Such Contractual Obligation shall
also permit the Collateral Agent, after the occurrence and during the
continuance of an Event of Default, to direct all payments thereunder to a
Security Cash Collateral Account. The provisions of the Contractual Obligation
shall be in form and substance reasonably satisfactory to the Collateral Agent.
(d) If any amount in excess of $50,000 payable under or in
connection with any Collateral owned by such Grantor shall be or become
evidenced by electronic chattel paper, such Grantor shall take all steps
necessary to grant the Collateral Agent control of all such electronic chattel
paper for the purposes of Section 9-105 of the UCC (or any similar section under
any equivalent UCC) and all "transferable records" as defined in each of the
Uniform Electronic Transactions Act and the Electronic Signatures in Global and
National Commerce Act.
Section 5.7 Intellectual Property.
(a) Within 60 days after such Grantor acquires any Registered
Intellectual Property, such Grantor shall provide the Collateral Agent
notification thereof and the short-form intellectual property agreements as
described in this Section 5.7 and other documents that the Collateral Agent
reasonably requests with respect thereto.
(b) Such Grantor shall (and shall use commercially reasonable
efforts to cause all its licensees to) (i) (1) continue to use each Trademark
included in the Material Intellectual Property in order to maintain such
Trademark in full force and effect with respect to each class of goods for which
such Trademark is currently used, free from any claim of abandonment for
non-use, (2) maintain at least the same standards of quality of products and
services offered under Trademarks included in the Material Intellectual Property
as are maintained as of the date hereof, (3) use Trademarks included in the
Material Intellectual Property with the appropriate notice of registration and
all other notices and legends required by
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applicable Requirements of Law, (4) not adopt or use any other Trademark that is
confusingly similar or a colorable imitation of any Trademark included in the
Material Intellectual Property unless the Collateral Agent shall obtain a
perfected security interest in such other Trademark pursuant to, and subject to
the terms and conditions of, this Agreement (including without limitation any
applicable qualifications set forth in Sections 4.2 and 5.7(e)) and (ii) not do
any act or omit to do any act whereby (w) any Trademark included in the Material
Intellectual Property (or any goodwill associated therewith) may become
destroyed, invalidated, tarnished or abandoned in any way, (x) any Patent
included in the Material Intellectual Property may become forfeited, abandoned
or dedicated to the public, (y) any portion of the Copyrights included in the
Material Intellectual Property may become invalidated or fall into the public
domain or (z) any Trade Secret that is included in the Material Intellectual
Property may become publicly available or otherwise unprotectable, unless with
respect to (i) and (ii) such action may be otherwise authorized by the
Collateral Agent in writing.
(c) Such Grantor shall notify the Agents promptly if it knows or has
reason to know that any application or registration relating to any Material
Intellectual Property may become forfeited, abandoned or dedicated to the
public, or of any adverse determination or development regarding the validity or
enforceability of or such Grantor's ownership of, interest in, or right to use,
register or maintain any such Material Intellectual Property (including the
institution of, or any such determination or development in, any proceeding
relating to the foregoing in any Applicable IP Office, other than, for the
avoidance of doubt, office actions that arise in the ordinary course of
prosecution of any pending applications for patenting or registering any
Material Intellectual Property). Such Grantor shall take all commercially
reasonable actions that are necessary or reasonably requested by the Collateral
Agent to maintain and prosecute each application (and to obtain the relevant
registration or recordation) and to maintain each registration and recordation
included in the Material Intellectual Property, except as may otherwise be
authorized by the Agents in writing.
(d) Such Grantor shall not knowingly infringe, misappropriate,
dilute or violate the Intellectual Property of any other Person. In the event
that any Material Intellectual Property of such Grantor is or has been
infringed, misappropriated, violated or diluted by a third party, such Grantor
shall take such action as it reasonably deems appropriate under the
circumstances in response thereto, including promptly bringing suit and
recovering all damages therefor.
(e) Such Grantor shall execute and deliver to the Collateral Agent
in form and substance reasonably acceptable to the Collateral Agent the
short-form intellectual property security agreements in the form attached hereto
as Annex 3, and such other documents suitable for filing in the Applicable IP
Office as may be reasonably requested by the Collateral Agent, for all
Registered Intellectual Property acquired by such Grantor after the date hereof
in which a security interest may be perfected under applicable law.
Section 5.8 Notices. Such Grantor shall promptly notify the Agents in
writing of its acquisition of any material interest hereafter in property (other
than Intellectual Property) that is of a type where a security interest or lien
must be or may be registered, recorded or filed under, or notice thereof given
under, any federal statute or regulation.
Section 5.9 Notice of Commercial Tort Claims. Such Grantor agrees that, if
it shall acquire any interest in any commercial tort claim with an aggregate
value in excess of $50,000 (whether from another Person or because such
commercial tort claim shall have come into
15
existence), (i) such Grantor shall, promptly upon such acquisition, deliver to
the Collateral Agent, in each case in form and substance reasonably satisfactory
to the Collateral Agent, a notice of the existence and nature of such commercial
tort claim and a supplement to Schedule 1 containing a specific description of
such commercial tort claim, (ii) Section 3.1 shall apply to such commercial tort
claim and (iii) such Grantor shall execute and deliver to the Collateral Agent,
in each case in form and substance reasonably satisfactory to the Collateral
Agent, any document, and take all other action, deemed by the Collateral Agent
to be reasonably necessary for the Collateral Agent to obtain, on behalf of the
Lenders, a perfected security interest having at least the priority set forth in
Section 4.2 in all such commercial tort claims. Any supplement to Schedule 1
delivered pursuant to this Section 5.9 shall, after the receipt thereof by the
Collateral Agent, become part of Schedule 1 for all purposes hereunder other
than in respect of representations and warranties made prior to the date of such
receipt.
Section 5.10 Compliance with Credit Agreement. Such Grantor agrees to
comply with all covenants and other provisions applicable to it under the Credit
Agreement, including Sections 2.17 (Taxes), 11.3 (Costs and Expenses) and 11.4
(Indemnities) of the Credit Agreement and agrees to the same submission to
jurisdiction as that agreed to by the Borrower in the Credit Agreement.
ARTICLE VI
REMEDIAL PROVISIONS
Section 6.1 Code and Other Remedies.
(a) UCC Remedies. During the existence and continuance of an Event
of Default, the Collateral Agent may exercise, in addition to all other rights
and remedies granted to it in this Agreement and in any other instrument or
agreement securing, evidencing or relating to any Secured Obligation, all rights
and remedies of a secured party under the UCC or any other applicable law.
(b) Disposition of Collateral. Without limiting the generality of
the foregoing, the Collateral Agent may, without demand of performance or other
demand, presentment, protest, advertisement or notice of any kind (except any
notice required by law referred to below) to or upon any Grantor or any other
Person (all and each of which demands, defenses, advertisements and notices are
hereby waived to the maximum extent permitted by Requirements of Law), during
the existence and continuance of any Event of Default (personally or through its
agents or attorneys), (i) enter upon the premises where any Collateral is
located, without any obligation to pay rent, through self-help, without judicial
process, without first obtaining a final judgment or giving any Grantor or any
other Person notice or opportunity for a hearing on the Collateral Agent's claim
or action, (ii) collect, receive, appropriate and realize upon any Collateral
and (iii) Sell, grant option or options to purchase and deliver any Collateral
(enter into Contractual Obligations to do any of the foregoing), in one or more
parcels at public or private sale or sales, at any exchange, broker's board or
office of any Secured Party or elsewhere upon such terms and conditions as it
may deem advisable and at such prices as it may deem best, for cash or on credit
or for future delivery without assumption of any credit risk. The Collateral
Agent shall have the right, upon any such public sale or sales and, to the
extent permitted by the UCC and other applicable Requirements of Law, upon any
such private sale, to purchase the whole or any part of the Collateral so sold,
free of any right or equity of redemption of any
16
Grantor, which right or equity is hereby waived and released to the extent
permitted by Requirements of Law.
(c) Management of the Collateral. Each Grantor further agrees, that,
during the existence and continuance of any Event of Default, (i) at the
Collateral Agent's request, it shall assemble the Collateral and make it
available to the Collateral Agent at places that the Collateral Agent shall
reasonably select, whether at such Grantor's premises or elsewhere, (ii) without
limiting the foregoing, the Collateral Agent also has the right to require that
each Grantor store and keep any Collateral pending further action by the
Collateral Agent and, while any such Collateral is so stored or kept, take such
actions as shall be necessary to protect the same and to preserve and maintain
such Collateral in good condition, (iii) until the Collateral Agent is able to
Sell any Collateral, the Collateral Agent shall have the right to hold or use
such Collateral to the extent that it deems appropriate for the purpose of
preserving the Collateral or its value or for any other purpose deemed
appropriate by the Collateral Agent and (iv) the Collateral Agent may, if it so
elects, seek the appointment of a receiver or keeper to take possession of any
Collateral and to enforce any of the Collateral Agent's remedies (for the
benefit of the Secured Parties), with respect to such appointment without prior
notice or hearing as to such appointment. The Collateral Agent shall not have
any obligation to any Grantor to maintain or preserve the rights of any Grantor
as against third parties with respect to any Collateral while such Collateral is
in the possession of the Collateral Agent.
(d) Application of Proceeds. The Collateral Agent shall apply the
cash proceeds of any action taken by it pursuant to this Section 6.1, after
deducting all reasonable costs and expenses of every kind incurred in connection
therewith or incidental to the care or safekeeping of any Collateral or in any
way relating to the Collateral or the rights of the Collateral Agent and any
other Secured Party hereunder, including reasonable attorneys' fees and
disbursements, to the payment in whole or in part of the Secured Obligations, as
set forth in the Credit Agreement, and only after such application and after the
payment by the Collateral Agent of any other amount required by any Requirement
of Law, need the Collateral Agent account for the surplus, if any, to any
Grantor.
(e) Direct Obligation. Neither the Collateral Agent nor any other
Secured Party shall be required to make any demand upon, or pursue or exhaust
any right or remedy against, any Grantor, any other Loan Party or any other
Person with respect to the payment of the Obligations or to pursue or exhaust
any right or remedy with respect to any Collateral therefor or any direct or
indirect guaranty thereof. All of the rights and remedies of the Collateral
Agent and any other Secured Party under any Loan Document shall be cumulative,
may be exercised individually or concurrently and not exclusive of any other
rights or remedies provided by any Requirement of Law. To the extent it may
lawfully do so, each Grantor absolutely and irrevocably waives and relinquishes
the benefit and advantage of, and covenants not to assert against the Collateral
Agent or any Lender, any valuation, stay, appraisement, extension, redemption or
similar laws and any and all rights or defenses it may have as a surety, now or
hereafter existing, arising out of the exercise by them of any rights hereunder.
If any notice of a proposed sale or other disposition of any Collateral shall be
required by law, such notice shall be deemed reasonable and proper if given at
least 10 days before such sale or other disposition.
(f) Commercially Reasonable. To the extent that applicable
Requirements of Law impose duties on the Collateral Agent to exercise remedies
in a commercially reasonable manner, each Grantor acknowledges and agrees that
it is not commercially unreasonable for the
17
Collateral Agent to do any of the following after the occurrence and during the
continuance of an Event of Default:
(i) fail to incur significant costs, expenses or other Liabilities
reasonably deemed as such by the Collateral Agent to prepare any
Collateral for disposition or otherwise to complete raw material or work
in process into finished goods or other finished products for disposition;
(ii) fail to obtain Permits, or other consents, for access to any
Collateral to Sell or for the collection or Sale of any Collateral, or, if
not required by other Requirements of Law, fail to obtain Permits or other
consents for the collection or disposition of any Collateral;
(iii) fail to exercise remedies against account debtors or other
Persons obligated on any Collateral or to remove Liens on any Collateral
or to remove any adverse claims against any Collateral;
(iv) advertise dispositions of any Collateral through publications
or media of general circulation, whether or not such Collateral is of a
specialized nature or to contact other Persons, whether or not in the same
business as any Grantor, for expressions of interest in acquiring any such
Collateral;
(v) exercise collection remedies against account debtors and other
Persons obligated on any Collateral, directly or through the use of
collection agencies or other collection specialists, hire one or more
professional auctioneers to assist in the disposition of any Collateral,
whether or not such Collateral is of a specialized nature or, to the
extent deemed appropriate by the Collateral Agent, obtain the services of
other brokers, investment bankers, consultants and other professionals to
assist the Collateral Agent in the collection or disposition of any
Collateral, or utilize Internet sites that provide for the auction of
assets of the types included in the Collateral or that have the reasonable
capacity of doing so, or that match buyers and sellers of assets to
dispose of any Collateral;
(vi) dispose of assets in wholesale rather than retail markets;
(vii) disclaim disposition warranties, such as title, possession or
quiet enjoyment; or
(viii) purchase insurance or credit enhancements to insure the
Collateral Agent against risks of loss, collection or disposition of any
Collateral or to provide to the Collateral Agent a guaranteed return from
the collection or disposition of any Collateral.
Each Grantor acknowledges that the purpose of this Section 6.1 is to provide a
non-exhaustive list of actions or omissions that are commercially reasonable
when exercising remedies against any Collateral and that other actions or
omissions by the Secured Parties shall not be deemed commercially unreasonable
solely on account of not being indicated in this Section 6.1. Without limitation
upon the foregoing, nothing contained in this Section 6.1 shall be construed to
grant any rights to any Grantor or to impose any duties on the Collateral Agent
that would not have been granted or imposed by this Agreement or by applicable
Requirements of Law in the absence of this Section 6.1.
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(g) IP Licenses. For the purpose of enabling the Collateral Agent to
exercise rights and remedies under this Section 6.1 (including in order to take
possession of, collect, receive, assemble, process, appropriate, remove, realize
upon, Sell or grant options to purchase any Collateral) upon the occurrence and
during the continuance of an Event of Default, each Grantor hereby grants to the
Collateral Agent, for the benefit of the Secured Parties, (i) an irrevocable,
nonexclusive, worldwide license (exercisable without payment of royalty or other
compensation to such Grantor, but exercisable only upon the occurrence and
during the continuance of an Event of Default), including in such license the
right to sublicense, use and practice any Intellectual Property now owned or
hereafter acquired by such Grantor and access to all media in which any of the
licensed items may be recorded or stored and to all Software and programs used
for the compilation or printout thereof and (ii) an irrevocable license (without
payment of rent or other compensation to such Grantor), exercisable only upon
the occurrences and during the continuance of an Event of Default, to use,
operate and occupy all Real Property owned, operated, leased, subleased or
otherwise occupied by such Grantor.
Section 6.2 Accounts and Payments in Respect of General Intangibles.
(a) In addition to, and not in substitution for, any similar
requirement in the Credit Agreement, if required by the Collateral Agent at any
time during the existence and continuance of an Event of Default, any payment of
accounts or payment in respect of general intangibles, when collected by any
Grantor, shall be promptly (and, in any event, within 5 Business Days) deposited
by such Grantor in the exact form received, duly indorsed by such Grantor to the
Collateral Agent, in a Security Cash Collateral Account, subject to withdrawal
by the Collateral Agent as provided in Section 6.4. Until so turned over, such
payment shall be held by such Grantor in trust for the Collateral Agent,
segregated from other funds of such Grantor. Each such deposit of proceeds of
accounts and payments in respect of general intangibles shall be accompanied by
a report identifying in reasonable detail the nature and source of the payments
included in the deposit.
(b) At any time during the existence and continuance of an Event of
Default:
(i) each Grantor shall, upon the Collateral Agent's request, deliver
to the Collateral Agent all original and other documents evidencing, and
relating to, the Contractual Obligations and transactions that gave rise
to any account or any payment in respect of general intangibles, including
all original orders, invoices and shipping receipts and notify account
debtors that the accounts or general intangibles have been collaterally
assigned to the Collateral Agent and that payments in respect thereof
shall be made directly to the Collateral Agent;
(ii) the Collateral Agent may, without notice, at any time during
the continuance of an Event of Default, limit or terminate the authority
of a Grantor to collect its accounts or amounts due under general
intangibles or any thereof and, in its own name or in the name of others,
communicate with account debtors to verify with them to the Collateral
Agent's satisfaction the existence, amount and terms of any account or
amounts due under any general intangible. In addition, the Collateral
Agent may at any time during the continuance of an Event of Default
enforce such Grantor's rights against such account debtors and obligors of
general intangibles; and
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(iii) each Grantor shall take all actions, deliver all documents and
provide all information necessary or reasonably requested by the
Collateral Agent to ensure any Internet Domain Name is registered.
(c) Anything herein to the contrary notwithstanding, each Grantor
shall remain liable under each account and each payment in respect of general
intangibles 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 thereto. No Secured Party shall have any obligation or
liability under any agreement giving rise to an account or a payment in respect
of a general intangible by reason of or arising out of any Loan Document or the
receipt by any Secured Party of any payment relating thereto, nor shall any
Secured Party be obligated in any manner to perform any obligation of any
Grantor under or pursuant to any agreement giving rise to an account or a
payment in respect of a general intangible, 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 thereunder, to present or
file any claim, to take any action to enforce any performance or to collect the
payment of any amounts that may have been assigned to it or to which it may be
entitled at any time or times.
Section 6.3 Pledged Collateral.
(a) Voting Rights. During the existence and continuance of an Event
of Default, upon notice by the Collateral Agent to the relevant Grantor or
Grantors, the Collateral Agent or its nominee may exercise (A) any voting,
consent, corporate and other right pertaining to the Pledged Collateral at any
meeting of shareholders, partners or members, as the case may be, of the
relevant issuer or issuers of Pledged Collateral or otherwise and (B) any right
of conversion, exchange and subscription and any other right, privilege or
option pertaining to the Pledged Collateral as if it were the absolute owner
thereof (including the right to exchange at its discretion any Pledged
Collateral upon the merger, amalgamation, consolidation, reorganization,
recapitalization or other fundamental change in the corporate or equivalent
structure of any issuer of Pledged Stock, the right to deposit and deliver any
Pledged Collateral with any committee, depositary, transfer agent, registrar or
other designated agency upon such terms and conditions as the Collateral Agent
may determine), all without liability except to account for property actually
received by it; provided, however, that the Collateral Agent shall have no duty
to any Grantor to exercise any such right, privilege or option and shall not be
responsible for any failure to do so or delay in so doing.
(b) Proxies. In order to permit the Collateral Agent to exercise the
voting and other consensual rights that it may be entitled to exercise pursuant
hereto and to receive all dividends and other distributions that it may be
entitled to receive hereunder, (i) each Grantor shall promptly execute and
deliver (or cause to be executed and delivered) to the Collateral Agent all such
proxies, dividend payment orders and other instruments as the Collateral Agent
may from time to time reasonably request (upon the occurrence and during the
continuance of an Event of Default) and (ii) without limiting the effect of
clause (i) above, such Grantor hereby grants to the Collateral Agent an
irrevocable proxy to vote all or any part of the Pledged Collateral and to
exercise all other rights, powers, privileges and remedies to which a holder of
the Pledged Collateral would be entitled (including giving or withholding
written consents of shareholders, partners or members, as the case may be,
calling special meetings of shareholders, partners or members, as the case may
be, and voting at such meetings), which proxy shall be effective, automatically
and without the necessity of any action (including any transfer of any Pledged
Collateral on the record books of the issuer thereof) by any other person
(including the issuer of
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such Pledged Collateral or any officer or agent thereof) during the existence
and continuance of an Event of Default and which proxy shall only terminate upon
the payment in full of the Secured Obligations (other than contingent
indemnification obligations as to which no claim has been asserted).
(c) Authorization of Issuers. Each Grantor hereby expressly
irrevocably authorizes and instructs, without any further instructions from such
Grantor, each issuer of any Pledged Collateral pledged hereunder by such Grantor
to (i) comply with any instruction received by it from the Collateral Agent in
writing that states that an Event of Default exists and is continuing and is
otherwise in accordance with the terms of this Agreement and each Grantor agrees
that such issuer shall be fully protected from Liabilities to such Grantor in so
complying and (ii) upon the occurrence and during the continuance of an Event of
Default, pay any dividend or make any other payment with respect to the Pledged
Collateral directly to the Collateral Agent.
Section 6.4 Proceeds to be Turned Over to and Held by Collateral Agent.
Unless otherwise expressly provided in the Credit Agreement or this Agreement,
upon the occurrence and during the continuance of an Event of Default, all
proceeds of any Collateral received by any Grantor hereunder in cash or Cash
Equivalents shall be held by such Grantor in trust for the Collateral Agent and
the other Secured Parties, segregated from other funds of such Grantor, and
shall, promptly upon receipt by any Grantor, be turned over to the Collateral
Agent in the exact form received (with any necessary endorsement). All such
proceeds of Collateral and any other proceeds of any Collateral received by the
Collateral Agent in cash or Cash Equivalents shall be held by the Collateral
Agent in a Security Cash Collateral Account. All proceeds being held by the
Collateral Agent in a Security Cash Collateral Account (or by such Grantor in
trust for the Collateral Agent) shall continue to be held as collateral security
for the Secured Obligations and shall not constitute payment thereof until
applied as provided in the Credit Agreement.
Section 6.5 Private Sales.
(a) Each Grantor recognizes that the Collateral Agent may be unable
to effect a public sale of any Pledged Collateral by reason of certain
prohibitions contained in the Securities Act and applicable state or foreign
securities laws or otherwise or may determine that a public sale is
impracticable, not desirable or not commercially reasonable and, accordingly,
may resort to one or more private sales thereof to a restricted group of
purchasers that shall be obliged to agree, among other things, to acquire such
securities for their own account for investment and not with a view to the
distribution or resale thereof. Each Grantor acknowledges and agrees that any
such private sale may result in prices and other terms less favorable than if
such sale were a public sale and, notwithstanding such circumstances, agrees
that any such private sale shall be deemed to have been made in a commercially
reasonable manner. The Collateral Agent shall be under no obligation to delay a
sale of any Pledged Collateral for the period of time necessary to permit the
issuer thereof to register such securities for public sale under the Securities
Act or under applicable state securities laws even if such issuer would agree to
do so.
(b) Each Grantor agrees to use its best efforts to do or cause to be
done all such other acts as may be necessary to make such sale or sales of any
portion of the Pledged Collateral pursuant to this Section 6.5 valid and binding
and in compliance with all applicable Requirements of Law. Each Grantor further
agrees that a breach of any covenant contained in this Section 6.5 will cause
irreparable injury to the Collateral Agent and other Secured Parties, that the
Collateral Agent and the other Secured Parties have no adequate remedy at law in
respect of such breach and, as a consequence, that each and every covenant
contained in this Section 6.5
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shall be specifically enforceable against such Grantor, and such Grantor hereby
waives and agrees not to assert any defense against an action for specific
performance of such covenants except for a defense that no Event of Default has
occurred under the Credit Agreement.
Section 6.6 Deficiency. Each Grantor shall remain liable for any
deficiency if the proceeds of any sale or other disposition of any Collateral
are insufficient to pay the Secured Obligations and the fees and disbursements
of any attorney employed by the Collateral Agent or any other Secured Party to
collect such deficiency.
ARTICLE VII
THE COLLATERAL AGENT
Section 7.1 Collateral Agent's Appointment as Attorney-in-Fact.
(a) Each Grantor hereby irrevocably constitutes and appoints the
Collateral Agent and any Related Person thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of such Grantor and in the name of
such Grantor or in its own name, for the purpose of carrying out the terms of
the Loan Documents, to take any appropriate action and to execute any document
or instrument that may be necessary or desirable to accomplish the purposes of
the Loan Documents following the occurrence and during the continuance of an
Event of Default, and, without limiting the generality of the foregoing, each
Grantor hereby gives the Collateral Agent and its Related Persons the power and
right, on behalf of such Grantor, without notice to or assent by such Grantor,
to do any of the following when an Event of Default exists and is continuing (as
at any time with respect to clause (ii) below):
(i) in the name of such Grantor, in its own name or otherwise, take
possession of and indorse and collect any check, draft, note, acceptance
or other instrument for the payment of moneys due under any account or
general intangible or with respect to any other Collateral and file any
claim or take any other action or proceeding in any court of law or equity
or otherwise deemed appropriate by the Collateral Agent for the purpose of
collecting any such moneys due under any account or general intangible or
with respect to any other Collateral whenever payable;
(ii) in the case of any Intellectual Property that is part of the
Collateral, execute, deliver and have recorded any document that the
Collateral Agent may request to evidence, effect, publicize or record the
Collateral Agent's security interest in such Intellectual Property and the
goodwill and general intangibles of such Grantor relating thereto or
represented thereby;
(iii) pay or discharge taxes and Liens levied or placed on or
threatened against any Collateral, effect any repair or pay any insurance
called for by the terms of the Credit Agreement (including all or any part
of the premiums therefor and the costs thereof);
(iv) execute, in connection with any sale provided for in Section
6.1 or Section 6.5, any document to effect or otherwise necessary or
appropriate in relation to evidence the Sale of any Collateral; or
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(v) (A) direct any party liable for any payment under any Collateral
to make payment of any moneys due or to become due thereunder directly to
the Collateral Agent or as the Collateral Agent shall direct, (B) ask or
demand for, and collect and receive payment of and receipt for, any
moneys, claims and other amounts due or to become due at any time in
respect of or arising out of any Collateral, (C) sign and indorse any
invoice, freight or express xxxx, xxxx of lading, storage or warehouse
receipt, draft against debtors, assignment, verification, notice and other
document in connection with any Collateral, (D) commence and prosecute any
suit, action or proceeding at law or in equity in any court of competent
jurisdiction to collect any Collateral and to enforce any other right in
respect of any Collateral, (E) defend any actions, suits, proceedings,
audits, claims, demands, orders or disputes brought against such Grantor
with respect to any Collateral, (F) settle, compromise or adjust any such
actions, suits, proceedings, audits, claims, demands, orders or disputes
and, in connection therewith, give such discharges or releases as the
Collateral Agent may deem appropriate, (G) assign, to the extent
permissible, any Intellectual Property owned by the Grantors or any IP
Licenses of the Grantors throughout the world on such terms and conditions
and in such manner as the Collateral Agent shall in its sole discretion
determine, including the execution and filing of any document necessary to
effectuate or record such assignment and (H) generally, Sell, xxxxx x Xxxx
on, make any Contractual Obligation with respect to and otherwise deal
with, any Collateral as fully and completely as though the Collateral
Agent were the absolute owner thereof for all purposes and do, at the
Collateral Agent's option, at any time or from time to time, all acts and
things that the Collateral Agent deems necessary to protect, preserve or
realize upon any Collateral and the Secured Parties' security interests
therein and to effect the intent of the Loan Documents, all as fully and
effectively as such Grantor might do.
(b) If any Grantor fails to perform or comply with any Contractual
Obligation contained herein, the Collateral Agent, at its option, but without
any obligation so to do, may perform or comply, or otherwise cause performance
or compliance, with such Contractual Obligation.
(c) The expenses of the Collateral Agent incurred in connection with
actions undertaken as provided in this Section 7.1, together with interest
thereon at a rate set forth in Section 2.9 (Interest) of the Credit Agreement,
from the date of payment by the Collateral Agent to the date reimbursed by the
relevant Grantor, shall be payable by such Grantor to the Collateral Agent on
demand.
(d) Each Grantor hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue of this Section 7.1. All powers,
authorizations and agencies contained in this Agreement are coupled with an
interest and are irrevocable until this Agreement is terminated and the security
interests created hereby are released.
Section 7.2 Authorization to File Financing Statements. Each Grantor
authorizes the Collateral Agent and its Related Persons, at any time and from
time to time, to file or record financing statements, amendments thereto, and
other filing or recording documents or instruments with respect to any
Collateral in such form and in such offices as the Collateral Agent reasonably
determines appropriate to perfect the security interests of the Collateral Agent
under this Agreement, and such financing statements and amendments may describe
the Collateral covered thereby as "all assets of the debtor". A photographic or
other reproduction of this Agreement shall be sufficient as a financing
statement or other filing or recording document or instrument for
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filing or recording in any jurisdiction. Such Grantor also hereby ratifies its
authorization for the Collateral Agent to have filed any initial financing
statement or amendment thereto under the UCC (or other similar laws) in effect
in any jurisdiction if filed prior to the date hereof.
Section 7.3 Authority of Collateral Agent. Each Grantor acknowledges that
the rights and responsibilities of the Collateral Agent under this Agreement
with respect to any action taken by the Collateral Agent or the exercise or
non-exercise by the Collateral Agent of any option, voting right, request,
judgment or other right or remedy provided for herein or resulting or arising
out of this Agreement shall, as between the Collateral Agent and the other
Secured Parties, be governed by the Credit Agreement and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Collateral Agent and the Grantors, the Collateral Agent shall be
conclusively presumed to be acting as agent for the Secured Parties with full
and valid authority so to act or refrain from acting, and no Grantor shall be
under any obligation or entitlement to make any inquiry respecting such
authority.
Section 7.4 Duty; Obligations and Liabilities.
(a) Duty of Collateral Agent. The Collateral Agent's sole duty with
respect to the custody, safekeeping and physical preservation of the Collateral
in its possession shall be to deal with it in the same manner as the Collateral
Agent deals with similar property for its own account. The powers conferred on
the Collateral Agent hereunder are solely to protect the Collateral Agent's
interest in the Collateral and shall not impose any duty upon the Collateral
Agent to exercise any such powers. The Collateral Agent shall be accountable
only for amounts that it receives as a result of the exercise of such powers,
and neither it nor any of its Related Persons shall be responsible to any
Grantor for any act or failure to act hereunder, except for their own gross
negligence or willful misconduct as finally determined by a court of competent
jurisdiction. In addition, the Collateral Agent shall not be liable or
responsible for any loss or damage to any Collateral, or for any diminution in
the value thereof, by reason of the act or omission of any warehousemen,
carrier, forwarding agency, consignee or other bailee if such Person has been
selected by the Collateral Agent in good faith.
(b) Obligations and Liabilities with respect to Collateral. No
Secured Party and no Related Person thereof shall be liable for failure to
demand, collect or realize upon any Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise dispose of any Collateral
upon the request of any Grantor or any other Person or to take any other action
whatsoever with regard to any Collateral. The powers conferred on the Collateral
Agent hereunder shall not impose any duty upon any other Secured Party to
exercise any such powers. The other Secured Parties shall be accountable only
for amounts that they actually receive as a result of the exercise of such
powers, and neither they nor any of their respective officers, directors,
employees or agents shall be responsible to any Grantor for any act or failure
to act hereunder, except for their own gross negligence or willful misconduct as
finally determined by a court of competent jurisdiction.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Reinstatement. Each Grantor agrees that, if any payment made
by any Loan Party or other Person and applied to the Secured Obligations is at
any time annulled, avoided, set aside, rescinded, invalidated, declared to be
fraudulent or preferential or otherwise
24
required to be refunded or repaid, or the proceeds of any Collateral are
required to be returned by any Secured Party to such Loan Party, its estate,
trustee, receiver or any other party, including any Grantor, under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or repayment, any Lien or other Collateral securing
such liability shall be and remain in full force and effect, as fully as if such
payment had never been made. If, prior to any of the foregoing, (a) any Lien or
other Collateral securing such Grantor's liability hereunder shall have been
released or terminated by virtue of the foregoing or (b) any provision of the
Guaranty hereunder shall have been terminated, cancelled or surrendered, such
Lien, other Collateral or provision shall be reinstated in full force and effect
and such prior release, termination, cancellation or surrender shall not
diminish, release, discharge, impair or otherwise affect the obligations of any
such Grantor in respect of any Lien or other Collateral securing such obligation
or the amount of such payment.
Section 8.2 Release of Collateral.
(a) At the time provided in clause (b)(iii) of Section 10.10
(Release of Collateral or Guarantors) of the Credit Agreement, the Collateral
shall be released from the Lien created hereby and this Agreement and all
obligations (other than those expressly stated to survive such termination) of
the Collateral Agent and each Grantor hereunder shall terminate, all without
delivery of any instrument or performance of any act by any party, and all
rights to the Collateral shall revert to the Grantors. Each Grantor is hereby
authorized to file UCC amendments at such time evidencing the termination of the
Liens so released. At the request of any Grantor following any such termination,
the Collateral Agent shall deliver to such Grantor any Collateral of such
Grantor held by the Collateral Agent hereunder and execute and deliver to such
Grantor such documents as such Grantor shall reasonably request to evidence such
termination.
(b) If the Collateral Agent shall be directed or permitted pursuant
to clause (i) or (ii) of Section 10.10(b) of the Credit Agreement to release any
Lien or any Collateral, such Collateral shall be released from the Lien created
hereby to the extent provided under, and subject to the terms and conditions set
forth in, such clauses (i) and (ii). In connection therewith, the Collateral
Agent, at the request of any Grantor, shall execute and deliver to such Grantor
such documents as such Grantor shall reasonably request to evidence such
release.
(c) At the time provided in Section 10.10(a) of the Credit Agreement
and at the request of the Borrower, a Grantor shall be released from its
obligations hereunder in the event that all the Securities of such Grantor shall
be Sold to any Person in a transaction permitted by the Loan Documents. In
connection therewith, the Collateral Agent, upon receipt of reasonable advance
notice from any Grantor, shall execute and deliver such documents as such
Grantor shall reasonably request to evidence such release.
Section 8.3 Independent Obligations. The obligations of each Grantor
hereunder are independent of and separate from the Secured Obligations and the
Guaranteed Obligations of each other Grantor. Upon the occurrence and during the
continuance of any Event of Default, the Collateral Agent may, at its sole
election, proceed directly and at once, without notice, against any Grantor and
any Collateral to collect and recover the full amount of any Secured Obligation
or Guaranteed Obligation then due, without first proceeding against any other
Grantor, any other Loan Party or any other Collateral and without first joining
any other Grantor or any other Loan Party in any proceeding.
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Section 8.4 No Waiver by Course of Conduct. No Secured Party shall by any
act (except by a written instrument pursuant to Section 8.6), delay, indulgence,
omission or otherwise be deemed to have waived any right or remedy hereunder or
to have acquiesced in any Default or Event of Default. No failure to exercise,
nor any delay in exercising, on the part of any Secured Party, any right, power
or privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
A waiver by any Secured Party of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy that such
Secured Party would otherwise have on any future occasion.
Section 8.5 Amendments in Writing. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except in
accordance with Section 11.1 of the Credit Agreement; provided, however, that
annexes to this Agreement may be supplemented (but no existing provisions may be
modified and no Collateral may be released) through Pledge Amendments and
Joinder Agreements, in substantially the form of Annex 1 and Annex 2,
respectively, in each case duly executed by the Collateral Agent and each
Grantor directly affected thereby.
Section 8.6 Additional Grantors; Additional Pledged Collateral.
(a) Joinder Agreements. If, at the option of the Borrower or as
required pursuant to Section 7.10 of the Credit Agreement, the Borrower shall
cause any Subsidiary that is not a Grantor to become a Grantor hereunder, such
Subsidiary shall execute and deliver to the Collateral Agent a joinder agreement
substantially in the form of Annex 2 (each, a "Joinder Agreement") and shall
thereafter for all purposes be a party hereto and have the same rights, benefits
and obligations as a Grantor party hereto on the Closing Date.
(b) Pledge Amendments. To the extent any Pledged Collateral has not
been delivered as of the Closing Date, such Grantor shall deliver a pledge
amendment duly executed by the Grantor in substantially the form of Annex 1
(each, a "Pledge Amendment"). Such Grantor authorizes the Collateral Agent to
attach each Pledge Amendment to this Agreement.
Section 8.7 Notices. All notices, requests and demands to or upon the
Collateral Agent or any Grantor hereunder shall be effected in the manner
provided for in Section 11.11 of the Credit Agreement; provided, however, that
any such notice, request or demand to or upon any Grantor shall be addressed to
the Borrower's notice address set forth in such Section 11.11 of the Credit
Agreement.
Section 8.8 Successors and Assigns. This Agreement shall be binding upon
the successors and assigns of each Grantor and shall inure to the benefit of
each Secured Party and their successors and assigns; provided, however, that no
Grantor may assign, transfer or delegate any of its rights or obligations under
this Agreement without the prior written consent of the Collateral Agent.
Section 8.9 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Signature pages may be
detached from multiple separate counterparts and attached to a single
counterpart. Delivery of an executed signature page of this Agreement by
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facsimile transmission or by Electronic Transmission shall be as effective as
delivery of a manually executed counterpart hereof.
Section 8.10 Severability. Any provision of this Agreement being held
illegal, invalid or unenforceable in any jurisdiction shall not affect any part
of such provision not held illegal, invalid or unenforceable, any other
provision of this Agreement or any part of such provision in any other
jurisdiction.
Section 8.11 Governing Law. This Agreement and the rights and obligations
of the parties hereto shall be governed by, and construed and interpreted in
accordance with, the law of the State of New York.
Section 8.12 Jurisdiction.
(a) Submission to Jurisdiction. Any legal action or proceeding with
respect to any Loan Document may be brought in the courts of the State of New
York located in the City of New York, Borough of Manhattan, or of the United
States of America for the Southern District of New York and, by execution and
delivery of this Agreement, each Grantor hereby accepts for itself and in
respect of its property, generally and unconditionally, the jurisdiction of the
aforesaid courts. The parties hereto (and, to the extent set forth in any other
Loan Document, each other Loan Party) hereby irrevocably waive any objection,
including any objection to the laying of venue or based on the grounds of forum
non conveniens, that any of them may now or hereafter have to the bringing of
any such action or proceeding in such jurisdictions.
(b) Service of Process. Each Grantor (and, to the extent set forth
in any other Loan Document, each other Loan Party) hereby irrevocably waives
personal service of any and all legal process, summons, notices and other
documents and other service of process of any kind and consents to such service
in any suit, action or proceeding brought in the United States of America with
respect to or otherwise arising out of or in connection with any Loan Document
by any means permitted by applicable Requirements of Law, including by the
mailing thereof (by registered or certified mail, postage prepaid) to the
address of the Borrower specified in Section 11.11 of the Credit Agreement (and
shall be effective when such mailing shall be effective, as provided therein).
Each Grantor (and, to the extent set forth in any other Loan Document, each
other Loan Party) agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.
(c) Non-Exclusive Jurisdiction. Nothing contained in this Section
8.12 shall affect the right of the Collateral Agent or any Lender to serve
process in any other manner permitted by applicable Requirements of Law or
commence legal proceedings or otherwise proceed against any Grantor in any other
jurisdiction.
Section 8.13 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING WITH RESPECT TO, OR
DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH, ANY LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREIN OR RELATED THERETO (WHETHER
FOUNDED IN CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO OTHER PARTY AND NO RELATED PERSON OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES
27
HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 8.13.
Section 8.14 Subordination.
(a) Each Grantor executing this Agreement covenants and agrees that
the payment of all indebtedness, principal, interest (including interest which
accrues after the commencement of any case or proceeding in bankruptcy, or for
the reorganization of any Loan Party), fees, charges, expenses, attorneys' fees
and any other sum, obligation or liability owing by any other Grantor to such
Grantor, including any intercompany trade payables or royalty or licensing fees
(collectively, the "Intercompany Obligations"), is subordinated, to the extent
and in the manner provided in this Section 8.14, to the prior payment in full of
all Secured Obligations (other than contingent indemnification obligations as to
which no claim has been asserted) (herein, the "Senior Obligations") and that
the subordination is for the benefit of Collateral Agent and the other Secured
Parties, and Collateral Agent may enforce such provisions directly.
(b) Each Grantor executing this Agreement hereby (i) authorizes
Collateral Agent to demand specific performance of the terms of this Section
8.14, whether or not any other Grantor shall have complied with any of the
provisions hereof applicable to it, at any time when such Grantor shall have
failed to comply with any provisions of this Section 8.14 which are applicable
to it and (ii) irrevocably waives (to the maximum extent permitted by
Requirements of Law) any defense based on the adequacy of a remedy at law, which
might be asserted as a bar to such remedy of specific performance.
(c) Upon any distribution of assets of any Loan Party in any
dissolution, winding up, liquidation or reorganization (whether in bankruptcy,
insolvency or receivership proceedings or upon an assignment for the benefit of
creditors or otherwise):
(i) Collateral Agent and other Secured Parties shall first be
entitled to receive payment in full in cash of the Senior Obligations
before any Grantor is entitled to receive any payment on account of the
Intercompany Obligations.
(ii) Any payment or distribution of assets of any Grantor of any
kind or character, whether in cash, property or securities, to which any
other Grantor would be entitled except for the provisions of this Section
8.14(c), shall be paid by the liquidating trustee or agent or other Person
making such payment or distribution directly to Collateral Agent, to the
extent necessary to make payment in full of all Senior Obligations (other
than contingent indemnification obligations as to which no claim has been
asserted) remaining unpaid after giving effect to any concurrent payment
or distribution or provisions therefore to Collateral Agent and the other
Secured Parties.
(iii) In the event that notwithstanding the foregoing provisions of
this Section 8.14(c), any payment or distribution of assets of any Grantor
of any kind or character, whether in cash, property or securities, shall
be received by any other Grantor on account of the Intercompany
Obligations before all Senior Obligations (other than contingent
indemnification obligations as to which no claim has been asserted) are
paid in full, such payment or distribution shall be received and held in
trust for and shall be paid over to Collateral Agent for application to
the payment of the Senior Obligations (other than contingent
indemnification obligations as to which no claim has been asserted) until
all of the Senior Obligations (other than contingent indemnification
obligations as to which no
28
claim has been asserted) shall have been paid in full, after giving effect
to any concurrent payment or distribution or provision therefore to
Collateral Agent and other Secured Parties.
(d) No right of Collateral Agent and the other Secured Parties or
any other present or future holders of any Senior Obligations to enforce the
subordination provisions herein shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of any Grantor or by any act
or failure to act, in good faith, by any such holder, or by any noncompliance by
any Grantor with the terms hereof, regardless of any knowledge thereof which any
such holder may have or be otherwise charged with.
Section 8.15 Hands On. Upon the effective time of the Hands On Merger,
this Agreement will be duly executed and delivered by Hands On in its capacity
as successor to Merger Sub as the surviving corporation (the "Surviving
Corporation") of the Hands On Merger upon the effective time of the Hands On
Merger, and Hands On will succeed and replace Merger Sub as a party to this
Agreement. Each of the Schedules to this Agreement includes all such information
required to be set forth on such Schedules with respect to Hands On as the
Surviving Corporation after giving effect to the Hands On Merger.
[SIGNATURE PAGES FOLLOW]
29
SIGNATURE PAGE
IN WITNESS WHEREOF, each of the undersigned has caused this Guaranty
and Security Agreement to be duly executed and delivered as of the date first
above written.
GOAMERICA, INC., as Borrower
By: /s/ Xxxxxx X. Xxxx
--------------------------
Name: Xxxxxx X. Xxxx
Title: Chief Executive Officer
HOVRS ACQUISITION CORPORATION, as Grantor
By: /s/ Xxxxxx X. Xxxx
--------------------------
Name: Xxxxxx X. Xxxx
Title: Chief Executive Officer
GOAMERICA RELAY SERVICES CORP., as Grantor
By: /s/ Xxxxxx X. Xxxx
--------------------------
Name: Xxxxxx X. Xxxx
Title: Chief Executive Officer
GOAMERICA COMMUNICATIONS CORP., as Grantor
By: /s/ Xxxxxx X. Xxxx
--------------------------
Name: Xxxxxx X. Xxxx
Title: Chief Executive Officer
WYND COMMUNICATIONS CORPORATION,
as Grantor
By: /s/ Xxxxxx X. Xxxx
--------------------------
Name: Xxxxxx X. Xxxx
Title: Chief Executive Officer
XXXXXXXX.XXX, INC., as Grantor
By: /s/ Xxxxxx X. Xxxx
--------------------------
Name: Xxxxxx X. Xxxx
Title: Chief Executive Officer
OUTBACK RESOURCE GROUP, INC., as Grantor
By: /s/ Xxxxxx X. Xxxx
--------------------------
Name: Xxxxxx X. Xxxx
Title: Chief Executive Officer
HOSLS ACQUISITION CORPORATION, as Grantor
By: /s/ Xxxxxx X. Xxxx
--------------------------
Name: Xxxxxx X. Xxxx
Title: Chief Executive Officer
2
IN WITNESS WHEREOF, the undersigned Grantor, in its capacity as
successor to Merger Sub and the Surviving Corporation of the Hands On Merger,
has caused this Guaranty and Security Agreement to be executed and delivered by
its duly authorized officer as of the date first set forth above at the
effective time of the Hands On Merger.
HANDS ON VIDEO RELAY SERVICES INC., as
Grantor
By: /s/ Xxxxxx X. Xxxx
-----------------------------
Name: Xxxxxx X. Xxxx
Title: Co-Chief Executive Officer
3
ACCEPTED AND AGREED
as of the date first above written:
ABLECO FINANCE LLC, as Collateral Agent
By /s/ Xxxxxx Xxxx
-----------------
Name: Xxxxxx Xxxx
Title: President
4
