EXHIBIT E TO SCHEDULE 13D/A
SECURITY AGREEMENT
This SECURITY AGREEMENT ("AGREEMENT"), dated as of December 27, 2002,
is made between each entity set forth on the signature pages hereto as a grantor
(each such entity and each entity which hereafter executes and a Subsidiary
Joinder in substantially the form of Attachment 1 to the Guaranty (as defined
below) to be referred to herein as a "GRANTOR", and collectively as, the
"GRANTORS") and VantagePoint Venture Partners III (Q), L.P., as administrative
agent for itself and the other Guarantors which are or may become parties to the
Reimbursement Agreement ("AGENT").
RECITALS
A. Reference is made to that certain Revolving Credit and Term
Loan Agreement, dated as of December 13, 2002 (as amended and in effect from
time to time, the "CREDIT AGREEMENT"), by and between Fleet National Bank
("LENDER") and XXX.xxx, Inc. ("BORROWER").
B. It is a condition precedent to the extension of credit by
Lender under the Credit Agreement that the Guarantors party to the Reimbursement
Agreement enter into guaranties (as amended and in effect from time to time, the
"CREDIT GUARANTIES" and each a "CREDIT GUARANTY") to guaranty certain of the
obligations of Borrower to Lender under the Credit Agreement.
C. In order to induce Guarantors to enter into the Credit
Guaranty, (i) Borrower has agreed to enter into a Reimbursement Agreement, dated
as of the date hereof (as amended and in effect from time to time, the
"REIMBURSEMENT AGREEMENT"), (ii) certain of Borrower's subsidiaries party hereto
have agreed to enter into a Subsidiary Guaranty (as amended and in effect from
time to time, the "GUARANTY") to guaranty Borrower's obligations to Guarantors
under the Reimbursement Agreement and (iii) Borrower and the other Grantors have
agreed to enter into this Security Agreement, dated as of the date hereof, to
secure their respective obligations under the Reimbursement Agreement and the
Guaranty.
D. Terms defined in the Reimbursement Agreement and not otherwise
defined herein have the same respective meanings when used herein.
AGREEMENT
NOW, THEREFORE, in order to induce Agent and Guarantors to enter into
the Reimbursement Agreement and for other good and valuable consideration, the
receipt and adequacy of which hereby is acknowledged, each Grantor hereby
represents, warrants, covenants, agrees and grants as follows:
1. DEFINITIONS. Unless the context otherwise requires, terms defined in
the Uniform Commercial Code of the State of California (the "UNIFORM COMMERCIAL
CODE") and not otherwise defined in this Agreement or in the Reimbursement
Agreement shall have the meanings defined for those terms in the Uniform
Commercial Code. In addition, the following terms shall have the meanings
respectively set forth after each:
"CERTIFICATES" means all certificates, instruments and other documents
now or hereafter representing or evidencing any Pledged Securities or Pledged
Limited Liability Company Interests.
"CLOSING DATE" shall mean the date of this Agreement.
"COLLATERAL" means and includes all present and future right, title,
interest, claims and demands of each Grantor in or to any personal property or
assets whatsoever, whether now owned or existing or
hereafter arising or acquired and wheresoever located, including without
limitation, any and all of the following personal property:
(a) All present and future accounts, accounts receivable, payment
intangibles, agreements, guaranties, contracts (collectively, the "ACCOUNTS"),
together with all instruments, documents, chattel paper, security agreements,
guaranties, undertakings, surety bonds, insurance policies, notes and drafts,
and all forms of obligations owing to such Grantor or to which such Grantor may
have an interest, however created or arising;
(b) All present and future general intangibles, including without
limitation, (i) all tax refunds of every kind and nature to which such Grantor
now or hereafter may become entitled, however arising, (ii) all other refunds,
(iii) all commitments to extend financing to such Grantor, (iv) all deposits,
(v) all goodwill, (vi) all choses in action, (vii) all insurance proceeds, and
(viii) all trade secrets, computer programs, software, customer lists,
trademarks (excluding Intent to Use Applications), trade names, patents,
licenses, copyrights, technology, processes and proprietary information,
including without limitation, the Copyrights, the Patents and the Marks and the
goodwill of such Grantor's business connected with and symbolized by the Marks;
(c) All present and future demand, time, savings, passbook, deposit and
like accounts (general or special) (collectively, the "DEPOSIT ACCOUNTS") in
which such Grantor has any interest which is maintained with any bank, savings
and loan association, credit union or like organization, including without
limitation, each account listed on Schedule 1-B attached hereto and all money,
cash and cash equivalents of such Grantor, whether or not deposited in any
Deposit Account;
(d) All present and future books and records, including without
limitation, books of account and ledgers of every kind and nature, all
electronically recorded data relating to such Grantor, all receptacles and
containers for such records, and all files and correspondence;
(e) All present and future goods, including without limitation, all
equipment, machinery, tools, molds, dies, furniture, furnishings, fixtures,
trade fixtures and all other goods used in connection with or in the conduct of
such Grantor's business (collectively, the "EQUIPMENT");
(f) All present and future inventory and merchandise, including without
limitation, all present and future goods held for sale or lease or to be
furnished under a contract of service, all recorded media, all raw materials,
work in process and finished goods, all packing materials, supplies and
containers relating to or used in connection with any of the foregoing, and all
bills of lading, warehouse receipts and documents of title relating to any of
the foregoing (collectively, the "INVENTORY");
(g) All present and future commodity accounts, securities accounts,
investment and/or brokerage accounts and similar accounts, including without
limitation, each account listed on Schedule 1-B attached hereto (collectively,
"INVESTMENT ACCOUNTS"), all stocks, bonds, debentures, certificated and
uncertificated securities, security entitlements, subscription rights, options,
warrants, puts, calls, certificates, commodity contracts, partnership interests,
limited liability company interests, joint venture interests, and all other
investment property, including without limitation, the Certificates, the Pledged
Securities, the Pledged Partnership Interests, the Pledged Limited Liability
Company Interests and all rights, preferences, privileges, dividends,
distributions (in cash or in kind), redemption payments or liquidation payments
with respect thereto;
(h) All present and future accessions, appurtenances, components,
repairs, repair parts, spare parts, replacements, substitutions, additions,
issue and/or improvements to or of or with respect to any of the foregoing;
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(i) All other tangible and intangible personal property of such Grantor
not specifically excluded from this definition of "Collateral";
(j) All rights, remedies, powers and/or privileges of such Grantor with
respect to any of the foregoing; and
(k) Any and all proceeds and products of the foregoing, including
without limitation, all money, accounts, general intangibles, deposit accounts,
documents, instruments, chattel paper, goods, insurance proceeds and any other
tangible or intangible property received upon the sale or disposition of any of
the foregoing.
Notwithstanding the foregoing, the term "Collateral" shall not include
(i) any Equipment that is subject to a Lien otherwise permitted by subsections
(vi), (vii) or (viii) of the definition of Permitted Liens, (ii) cash collateral
securing letters of credit, provided that such cash collateral is pledged prior
to the date of demand by Lender for payment under the Credit Guaranties, (iii)
assets acquired subsequent to the date of this Agreement that are subject to a
security interest, provided that such security interest is limited to the asset
acquired and (iv) all equity interests in Regulated Entities; provided that each
of the assets referenced in clause (i), (ii) and (iii) of this sentence shall be
deemed to be Collateral and the Debtor shall be deemed to have granted a
security interest in, all of its right, title and interests in such assets, upon
the ineffectiveness, lapse or termination of the security interests referenced
in clauses (i), (ii) or (iii) of this sentence.
"COPYRIGHT" means all:
(a) Copyrights, whether or not published or registered under the
Copyright Act of 1976, 17 U.S.C. Section 101 et seq., as the same shall be
amended from time to time and any predecessor or successor statute thereto (the
"COPYRIGHT ACT"), and applications for registration of copyrights, and all works
of authorship and other intellectual property rights therein, including without
limitation, copyrights for computer programs, source code and object code
databases and related materials and documentation and including without
limitation, the registered copyrights and copyright applications listed on
Schedule 1-H attached hereto, and (i) all renewals, revisions, derivative works,
enhancements, modifications, updates, new releases and other revisions thereof,
(ii) all income, royalties, damages and payments now and hereafter due and/or
payable with respect thereto, including without limitation, payments under all
licenses entered into in connection therewith and damages and payments for past
or future infringements thereof, (iii) the right to xxx for past, present and
future infringements thereof and (iv) all of such Grantor's rights corresponding
thereto throughout the world;
(b) Rights under or interests in any copyright license agreements with
any other party, whether each Grantor is a licensee or licensor under any such
license agreement and the right to use the foregoing in connection with the
enforcement of the Agent's rights under the Operative Documents; and
(c) Copyrightable materials now or hereafter owned by such Grantor,
including without limitation, all tangible property embodying the copyright
described in clause (a) hereof or such copyrightable materials, and all tangible
property covered by the licenses described in clause (b) hereof.
"GUARANTEED OBLIGATIONS" has the meaning given to that term in the
Guaranty.
"GUARANTOR" has the meaning given to that term in the Reimbursement
Agreement.
"ISSUER ACKNOWLEDGEMENT" has the meaning given to that term in Section
3(b) of this Agreement.
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"INTENT TO USE APPLICATION" means any application of the type described
in 00 Xxxxxx Xxxxxx Code Section 1051(b) that has been or may hereafter be filed
by the Borrower with the United States Patent and Trademark Office.
"LIENS" has the meaning given to that term in the Reimbursement
Agreement.
"LIMITED LIABILITY COMPANY INTERESTS" means the entire limited
liability company interest at any time owned by each Grantor in any Pledged
Entity.
"MARKS" means all (a) trademarks, trademark registrations, interest
under trademark license agreements, trade names, trademark applications, service
marks, business names, trade styles, designs, logos and other source or business
identifiers for which registrations have been issued or applied for in the
United States Patent and Trademark Office or in any other office or with any
other official anywhere in the world or which are used in the United States or
any state, territory or possession thereof, or in any other place, nation or
jurisdiction anywhere in the world including without limitation, the trademarks,
trademark registrations, applications, service marks, business names, trade
styles, design logos and other source or business identifiers listed on Schedule
1-F attached hereto, but excluding any Intent to Use Applications, (b) licenses
pertaining to any such xxxx whether such Grantor is licensor or licensee, (c)
all income, royalties, damages and payments for past, present or future
infringements thereof, (d) rights to xxx for past, present and future
infringements thereof, (e) rights corresponding thereto throughout the world,
(f) all product specification documents and production and quality control
manuals used in the manufacture of products sold under or in connection with
such marks, (g) all documents that reveal the name and address of all sources of
supply of, and all terms of purchase and delivery for, all materials and
components used in the production of products sold under or in connection with
such marks, (h) all documents constituting or concerning the then current or
proposed advertising and promotion by such Grantor, their subsidiaries or
licensees of products sold under or in connection with such marks, including
without limitation, all documents that reveal the media used or to be used and
the cost for all such advertising conducted within the described period or
planned for such products and (i) renewals and proceeds of any of the foregoing.
"MATERIAL ADVERSE EFFECT" has the meaning given to that term in the
Reimbursement Agreement.
"OBLIGATIONS" with respect to Borrower, such term has the meaning given
to that term in the Reimbursement Agreement and with respect to Guarantors, such
term means the Guaranteed Obligations.
"OPERATIVE DOCUMENTS" has the meaning given to that term in the
Reimbursement Agreement.
"PATENTS" means all (a) letters patent, design patents, utility
patents, inventions and trade secrets, all patents and patent applications in
the United States Patent and Trademark Office, and interests under patent
license agreements, including without limitation, the inventions and
improvements described and claimed therein, including without limitation, those
patents listed on Schedule 1-G attached hereto, (b) licenses pertaining to any
patent whether such Grantor is licensor or licensee, (c) income, royalties,
damages and payments now and hereafter due and /or payable under and with
respect thereto, including without limitation, damages and payments for past,
present or future infringements, (d) rights to xxx for past, present and future
infringements thereof, (e) rights corresponding thereto throughout the world in
all jurisdictions in which such patents have been issued or applied for and (f)
the reissues, divisions, continuations, renewals, extensions and
continuations-in-part of any of the foregoing.
"PERMITTED LIENS" has the meaning given to that term in the
Reimbursement Agreement.
"PERSON" has the meaning given to that term in the Reimbursement
Agreement.
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"PARTNERSHIP INTERESTS" means the entire partnership interest at any
time owned by each Grantor in any Pledged Partnership Entity.
"PLEDGED COLLATERAL" means the Certificates, the Pledged Securities,
the Pledged Partnership Interests and the Pledged Limited Liability Company
Interests.
"PLEDGED ENTITY" means each limited liability company set forth in
Schedule 1-C attached hereto, together with any other limited liability company
(other than a Regulated Entity) in which any Grantor may have an interest at any
time.
"PLEDGED LIMITED LIABILITY COMPANY INTERESTS" means all limited
liability company interests (other than in, of or with respect to a Regulated
Entity) held by each Grantor, including, but not limited to those limited
liability company interests set forth in Schedule 1-C attached hereto, as such
Schedule may be supplemented from time to time in accordance with the terms of
this Agreement and all capital, limited liability company assets, dividends,
cash, instruments and other properties from time to time received, to be
received or otherwise distributed in respect of or in exchange for any or all of
such interests and all certificates and instruments representing or evidencing
such other property received, receivable or otherwise distributed in respect of
or in exchange for any or all thereof.
"PLEDGE NOTICE" shall have the meaning ascribed to it in Section 3(b)
of this Agreement.
"PLEDGED PARTNERSHIP ENTITY" means each partnership interest set forth
in Schedule 1-C attached hereto, together with any other partnership interest
(other than in, of or with respect to a Regulated Entity) in which any Grantor
may have an interest at any time.
"PLEDGED PARTNERSHIP INTERESTS" means all interests in any partnership
or joint venture held by each Grantor (other than in, of or with respect to a
Regulated Entity), including, but not limited to those partnership interests set
forth in Schedule 1-C attached hereto, as such Schedule may be supplemented from
time to time in accordance with the terms of this Agreement, and all dividends,
cash, instruments and other properties from time to time received, to be
received or otherwise distributed in respect of or in exchange for any or all of
such interests.
"PLEDGED SECURITIES" means all shares of capital stock of each issuer
in which each Grantor has an interest (other than in, of or with respect to a
Regulated Entity), including, but not limited to those shares of capital stock
set forth in Schedule 1-C attached hereto, as such Schedule may be supplemented
from time to time in accordance with the terms of this Agreement, and all
dividends, cash, instruments and other properties from time to time received, to
be received or otherwise distributed in respect of or in exchange for any or all
of such shares.
"REGULATED ENTITY" means any Person, subject to federal, state,
provincial, local or other statute, regulation or other law which limits,
restricts or affects the authority or ability of (i) such Person or (ii) the
owner of any equity interest in or of such Person, to enter into a guaranty of,
or grant a security interest in, or pledge of any of its assets to secure, the
indebtedness, liabilities or obligations of any other Person or affiliate
thereof.
"REQUIRED GUARANTORS" has the meaning given to that term in the
Reimbursement Agreement.
2. CREATION OF SECURITY INTEREST. (a) Each Grantor, in order to secure
the Obligations, does hereby grant and pledge to Agent, for the benefit of
Guarantors and itself, a security interest in and to, all right, title and
interest of such Grantor in and to all presently existing and hereafter acquired
Collateral.
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The security interest and pledge created by this Section 2 shall continue in
effect so long as any Obligation remains outstanding.
(b) Each Grantor may sell worn-out, obsolete or excess
equipment, provided that such sales are made on an arms length basis and upon
the consummation of such sales in the manner contemplated by this Section 2(b)
the security interest granted herein with respect to such worn-out, obsolete or
excess equipment shall be deemed released.
3. DELIVERY OF PLEDGED COLLATERAL.
(a) Each Certificate shall, on (i) the Closing Date (with
respect to Certificates delivered on such date) and (ii) the day on which such
Certificate shall be received or acquired by a Grantor (with respect to any
Certificate received or acquired after the Closing Date), be delivered to and
held by Agent, and shall be in suitable form for transfer by delivery, or shall
be accompanied by duly executed undated endorsements, instruments of transfer or
assignment in blank, all in form and substance reasonably satisfactory to Agent.
(b) With respect to each uncertificated Limited Liability
Company Interest and each uncertificated Partnership Interest, on (i) the
Closing Date (with respect such Limited Liability Company Interests and such
Partnership Interests existing on such date) and (ii) the day on which any such
Limited Liability Company Interest and any such Partnership Interest shall be
acquired by a Grantor (with respect to such Limited Liability Company Interests
and such Partnership Interests acquired after the Closing Date), a notice in the
form set forth in Exhibit A-1 attached hereto (the "Pledge Notice") shall be
appropriately completed and delivered to each Pledged Entity and each Pledged
Partnership Entity, notifying each Pledged Entity and each Pledged Partnership
Entity of the existence of this Agreement, a certified copy of this Agreement
shall be delivered by the Grantor to the relevant Pledged Entity and relevant
Pledged Partnership Entity, and such Grantor shall have received and delivered
to Agent a copy of such Pledge Notice, along with an acknowledgment in the form
set forth in Exhibit A-2 attached hereto (the "Issuer Acknowledgment"), duly
executed by the relevant Pledged Entity.
(c) Agent (at the direction of the Required Guarantors
(provided, that if the Columbia Entities desire to take an enforcement action
that Required Guarantors have not consented to, the Agent shall take such
enforcement action as the Columbia Entities direct the Agent to take, provided
further, that Agent shall not take such enforcement action until the earlier of
(A) the 120th day after receipt by Agent of written notice of such enforcement
action from the Columbia Entities or (B) such time as the Required Guarantors
have provided their consent to such enforcement actions)) shall have the right,
during the existence of an Event of Default, without notice to any of the
Grantors, in connection with a commercially reasonable foreclosure sale, to
transfer to, or to direct the applicable Grantor or any nominee of such Grantor
to register or cause to be registered in the name of, Agent or any of its
nominees any or all of the Pledged Securities, Pledged Partnership Interests or
Pledged Limited Liability Company Interests. In addition, Agent, in furtherance
of any action referenced in the previous sentence, shall have the right at any
time to exchange certificates or instruments representing or evidencing Pledged
Securities for certificates or instruments of smaller or larger denominations.
4. FURTHER ASSURANCES.
(a) At any time and from time to time at the reasonable
written request of Agent, each Grantor shall execute and deliver to Agent, at
such Grantor's expense, all such financing statements and other instruments,
certificates and documents (including account control agreements) in form and
substance reasonably satisfactory to Agent, and perform all such other acts as
shall be necessary or reasonably desirable to fully perfect or protect or
maintain, when filed, recorded, delivered or performed,
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Agent's security interests granted pursuant to this Agreement or to enable Agent
to exercise and enforce its rights and remedies hereunder with respect to any
Collateral. Without limiting the generality of the foregoing, each Grantor
shall: (i) at the request of the Agent, xxxx conspicuously each document
included in the Inventory and each other contract relating to the Accounts, and
all chattel paper, instruments and other documents and each of its records
pertaining to the Collateral with a legend, in form and substance satisfactory
to Agent, indicating that such document, contract, chattel paper, instrument or
Collateral is subject to the security interest granted hereby, (ii) at the
request of Agent, if any Account or contract or other writing relating thereto
shall be evidenced by a promissory note or other instrument, deliver and pledge
to the Agent, such note or other instrument duly endorsed and accompanied by
duly executed undated instruments of transfer or assignment, all in form and
substance reasonably satisfactory to the Agent; (iii) execute and file such
financing or continuation statements, or amendments thereto, and such other
instruments or notices, as may be necessary or desirable, or as Agent may
reasonably request, in order to perfect and preserve, with the required
priority, the security interests granted, or purported to be granted hereby,
(iv) upon any Grantor's registration or application of any copyright under the
Copyright Act, execute and deliver promptly and in any event, within 5 days of
registration or application, to Agent for recordation and filing in the United
States Copyright Office a Grant of Security Interest, in the form of Exhibit B
attached hereto, (v) upon any Grantor's registration or application of any
Patent or Xxxx, execute and deliver promptly and in any event, with 5 days of
registration or application, to Agent for recordation and filing in the United
States Patent and Trademark Office a Grant of Security Interest, in the form of
Exhibit B attached hereto, and (vi) with respect to any license or agreement in
which any Grantor now has or hereafter acquires an interest which by its terms
prohibits assignment, upon Agent's request such Grantor will use its
commercially reasonable best efforts to procure the consent of the counterpart
party thereto.
(b) At any time and from time to time, Agent shall be
entitled to file and/or record any or all such financing statements, instruments
and documents held by it, and any or all such further financing statements,
documents and instruments, relative to the Collateral or any part thereof in
each instance, and to take all such other actions as Agent may reasonably deem
appropriate to perfect and to maintain perfected the security interests granted
herein provided that Agent delivers copies thereof to the applicable Grantor(s)
substantially contemporaneously with such filing or recording.
(c) Each Grantor hereby authorizes Agent to file one or
more financing or continuation statements, and amendments thereto, relative to
all or any part of the Collateral without the signature of such Grantor where
permitted by law provided that Agent delivers copies thereof to the applicable
Grantor(s) substantially contemporaneously with such filing. A carbon,
photographic or other reproduction of this Agreement or any financing statement
covering the Collateral or any part thereof shall be sufficient as a financing
statement where permitted by law.
(d) With respect to any Collateral consisting of
securities, instruments, partnership or joint venture interests, limited
liability company interests, or the like, each Grantor hereby consents and
agrees that, during the existence of an Event of Default, the issuers of, or
obligors on, any such Collateral, or any registrar or transfer agent or trustee
for any such Collateral, shall be entitled to accept the provisions of this
Agreement as conclusive evidence of the right of Agent to effect any transfer or
exercise any right hereunder or with respect to any such Collateral subject to
the terms hereof, notwithstanding any other notice or direction to the contrary
heretofore or hereafter given by any Grantor or any other Person to such issuers
or such obligors or to any such registrar or transfer agent or trustee.
5. VOTING RIGHTS; DIVIDENDS; ETC. So long as no Event of Default shall
have occurred and be continuing:
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(a) Voting Rights. Each Grantor shall be entitled to
exercise any and all voting and other consensual rights pertaining to its
Pledged Securities, its Pledged Partnership Interests and its Pledged Limited
Liability Company Interests, or any part thereof, for any purpose not
inconsistent with the terms of this Agreement, the Reimbursement Agreement or
the other Operative Documents; provided, however, that each Grantor shall not
exercise, or shall refrain from exercising, any such right if it would result in
an Event of Default.
(b) Dividend and Distribution Rights. Subject to the
terms of the Reimbursement Agreement, each Grantor shall be entitled to receive
and to retain and use any and all dividends or distributions paid in respect of
its Pledged Securities, its Pledged Partnership Interests or its Pledged Limited
Liability Company Interests; provided, however, that any and all:
(i) non-cash dividends or distributions in the
form of capital stock, certificated limited liability company interests,
instruments or other property received, receivable or otherwise distributed in
respect of, or in exchange for, any Pledged Securities, Pledged Partnership
Interests, Pledged Limited Liability Company Interests,
(ii) dividends and other distributions paid or
payable in cash in respect of any Pledged Securities, Pledged Partnership
Interests or Pledged Limited Liability Company Interests in connection with a
partial or total liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid-in-surplus, and
(iii) cash paid, payable or otherwise distributed
in redemption of, or in exchange for, any Pledged Securities, Pledged
Partnership Interests or Pledged Limited Liability Company Interests,
shall, except as otherwise provided for in the Reimbursement Agreement or the
other Operative Documents, forthwith be delivered to Agent, in the case of (i)
above, to be held as Collateral and shall, if received by such Grantor, be
received in trust for the benefit of Agent, be segregated from the other
property of such Grantor and forthwith be delivered to Agent as Collateral in
the same form as so received (with any necessary endorsements), and in the case
of (ii) and (iii) above, to be applied to the Obligations to the extent
permitted by the Reimbursement Agreement or otherwise to be held as Collateral.
6. RIGHTS AS TO PLEDGED COLLATERAL DURING EVENT OF DEFAULT. When an
Event of Default has occurred and is continuing:
(a) Voting, Dividend and Distribution Rights. Upon notice
from Agent to the Grantors, all rights of each Grantor to exercise the voting
and other consensual rights which it would otherwise be entitled to exercise
pursuant to Section 5(a) above, and to receive the dividends and distributions
which it would otherwise be authorized to receive and retain pursuant to Section
5(b) above, shall cease, and all such rights shall thereupon become vested in
Agent who shall thereupon have the sole right to exercise such voting and other
consensual rights and to receive and to hold as Pledged Collateral such
dividends and distributions during the continuance of such Event of Default.
(b) Dividends and Distributions Held in Trust. All
dividends and other distributions which are received by any Grantor contrary to
the provisions of Section 6(a) of this Agreement shall be received in trust for
the benefit of Agent, shall be segregated from other funds of such Grantor and
forthwith shall be paid over to Agent as Collateral in the same form as so
received (with any necessary endorsements).
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7. IRREVOCABLE PROXY. Each Grantor hereby revokes all previous proxies
with regard to its Pledged Securities, its Pledged Partnership Interests and its
Pledged Limited Liability Company Interests and, appoints Agent as its
respective proxyholder to (a) attend and vote at any and all meetings of the
shareholders of the corporation(s) which issued the Pledged Securities, and any
adjournments thereof, held on or after the date of the giving of this proxy and
prior to the termination of this proxy and to execute any and all written
consents of shareholders of such corporation(s) executed on or after the date of
the giving of this proxy and prior to the termination of this proxy, with the
same effect as if such Grantor had personally attended the meetings or had
personally voted its shares or had personally signed the written consents,
waivers or ratification, and (b) to attend and vote at any and all meetings of
the members of the Pledged Entities or partners of the Pledged Partnership
Entities (whether or not such Pledged Limited Liability Company Interests or
Pledged Partnership Interests are transferred into the name of Agent), and any
adjournments thereof, held on or after the date of the giving of this proxy and
to execute any and all written consents, waivers and ratifications of the
Pledged Entities or Pledged Partnership Entities executed on or after the date
of the giving of this proxy and prior to the termination of this proxy with the
same effect as if such Grantor had personally attended the meetings or had
personally voted on their respective Limited Liability Company Interests or
Partnership Interests or had personally signed the consents, waivers or
ratifications; provided, however, that Agent as proxyholder shall have rights
hereunder only during the existence of an Event of Default. Each Grantor hereby
authorizes Agent to substitute another Person (which Person shall be a successor
to the rights of Agent hereunder, a nominee appointed by Agent to serve as
proxyholder, or otherwise as approved by such Grantor in writing, such approval
not to be unreasonably withheld) as the proxyholder and, during the existence of
any Event of Default, hereby authorizes and directs the proxyholder to file this
proxy and the substitution instrument with the secretary of the appropriate
corporation. This proxy is-coupled with an interest and is irrevocable until
such time as all Obligations have been indefeasibly paid in full.
8. THE GRANTORS' REPRESENTATIONS AND WARRANTIES. Each Grantor
represents and warrants as follows:
(a) (i) The locations listed on the Schedule 1-A
constitute all locations at which Collateral owned by such Grantor is located;
(ii) the chief executive office of such Grantor, where such Grantor keeps its
records concerning the Collateral, is located at the address set forth for such
Grantor on Schedule 1-D; (iii) such Grantor has exclusive possession and control
of the Collateral owned by such Grantor and (iv) such Grantor has only the
Deposit Accounts and Investment Accounts listed on Schedule 1-B.
(b) Such Grantor currently conducts business only under
its own name and the trade names listed on Schedule 1-E. Neither such Grantor
nor any corporate predecessor has, during the preceding five years, been known
as or used any other corporate or fictitious name, except the names disclosed on
Schedule 1-E.
(c) Such Grantor is the legal and beneficial owner of the
Collateral owned by such Grantor free and clear of all Liens except for
Permitted Liens. Such Grantor has the power, authority and legal right to grant
the security interests in such Collateral purported to be granted hereby, and to
execute, deliver and perform this Agreement. The pledge of such Collateral
pursuant to this Agreement creates a valid first priority security interest in
such Collateral (except for any Permitted Liens).
(d) No consent of any Person, including, without
limitation, any partner in a partnership with respect to which such Grantor has
pledged its interests as a Pledged Partnership Interest or any member in a
Pledged Entity, is required for the pledge by such Grantor of the Collateral
owned by such Grantor other than consents required under the agreements
described in the Disclosure Schedule.
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(e) Except as set forth on Schedule 1-C, the Pledged
Securities described on Schedule 1-C attached hereto constitute (i) all of the
shares of capital stock of any Person, other than a Regulated Entity, owned by
such Grantor and (ii) that percentage of the issued and outstanding shares of
the respective issuers thereof indicated on Schedule 1-C attached hereto, and
there is no other class of shares issued and outstanding of the respective
issuers thereof except as set forth on Schedule 1-C attached hereto. Except as
set forth in Schedule 1-C, the Pledged Partnership Interests described on
Schedule 1-C attached hereto constitute all of the partnerships or joint
ventures other than Regulated Entities in which each Grantor has an interest,
and such Grantor's percentage interest in each such partnership or joint venture
is as set forth on such Schedule 1-C attached hereto. Except as set forth in
Schedule 1-C, the Pledged Limited Liability Company Interests described on
Schedule 1-C attached hereto constitute all of the Limited Liability Company
Interests other than in, of or with respect to Regulated Entities of each
Grantor and such Grantor's percentage interest in each such Pledged Entity is as
set forth on Schedule 1-C attached hereto.
(f) No authorization, approval or other action by, and no
notice to or filing with, any governmental authority (other than such
authorizations, approvals and other actions as have already been taken and are
in full force and effect) is required (A) for the pledge of the Collateral or
the grant of the security interest in the Collateral by any of the Grantors
hereby or for the execution, delivery or performance of this Agreement by any of
the Grantors, or (B) for the exercise by Agent of the voting rights in the
Pledged Securities, the Pledged Partnership Interest or the Pledged Limited
Liability Company Interests or of any other rights or remedies in respect of the
Collateral hereunder except as may be required in connection with any
disposition of Collateral consisting of securities by laws affecting the
offering and sale of securities generally.
(g) XXX.xxx Communications, LLC is a Regulated Entity.
9. COPYRIGHTS.
(a) Royalties. Each Grantor hereby agrees that the use by
Agent of the Copyrights as authorized hereunder in connection with Agent's
exercise of its rights and remedies hereunder shall be without any liability for
royalties or other related charges from Agent to Grantors.
(b) Restrictions on Future Agreements. Subject to the
terms hereof and of the Reimbursement Agreement, each Grantor shall be permitted
to manage, license and administer its Copyrights in such manner as such Grantor
in its reasonable business judgment deems desirable, provided, however, that
such Grantor will not, without the Agent's prior written consent, such consent
not to be unreasonably withheld or delayed, (i) enter into any copyright license
agreements except license agreements entered into in the ordinary course of its
business consistent with past practices and containing such additional
provisions to protect Agent's interest hereunder as Agent may from time to time
reasonably request or (ii) take any action, or permit any action to be taken by
others, including, without limitation, licensees, or fail to take any action,
which would customarily be taken by a Person in the same business and in similar
circumstances as such Grantor, which could in any respect reasonably be expected
to have a Material Adverse Effect.
(c) Duties of Grantors. Each Grantor shall have the duty
to:
In accordance with its standard commercial practices, (i)
prosecute diligently any copyright application included in the Copyrights, (ii)
place notices of copyright on all copyrightable property produced or owned by
such Grantor embodying the Copyrights and use diligent reasonable efforts to
have its licensees do the same and (iii) take all reasonable action necessary in
such Grantor's reasonable business judgment consistent with past practices to
preserve and maintain all of Grantor's
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rights in the Copyrights that are or shall be necessary in the operation of
Grantor's business, including, without limitation, making timely filings for
renewals and extensions of registered Copyrights and diligently monitoring
unauthorized use thereof. Any expenses incurred in connection with the foregoing
shall be borne by Grantors. Agent shall have no duty with respect to the
Copyrights other than to act lawfully and without gross negligence or willful
misconduct. Without limiting the generality of the foregoing, Agent shall not be
under any obligation to take any steps necessary to preserve rights in the
Copyrights against any other parties, but Agent may do so at its option upon the
occurrence and during the continuance of an Event of Default, and all reasonable
expenses incurred in connection therewith shall be for the sole account of
Grantors and shall be added to the Obligations.
10. PATENTS AND MARKS.
(a) Royalties. Each Grantor hereby agrees that any rights
granted hereunder to Agent with respect to Patents and Marks shall be applicable
to all jurisdictions in which such Grantor has the right to use such Patents and
Marks, from time to time, and without any liability for royalties or other
related charges from Agent to Grantors.
(b) Restrictions on Future Agreements. Each Grantor will
not, except in accordance with its standard commercial practices, abandon any
Patent or Xxxx in which such Grantor now owns or hereafter acquires any rights
or interests if such abandonment could reasonably be expected to have a Material
Adverse Effect or enter into any agreement, including, without limitation, any
license agreement, which is inconsistent with such Grantor's obligations under
this Agreement, if such actions could reasonably be expected to have a Material
Adverse Effect. Each Grantor further agrees that it will not take any action, or
permit any action to be taken by others subject to its control, including
licensees, or fail to take any action which would customarily be taken by a
Person in the same business and in similar circumstances as such Grantor, which
could reasonably be expected to have a Material Adverse Effect.
(c) Duties of Grantors. In accordance with its standard
commercial practices, each Grantor shall have the duty to (i) prosecute
diligently any patent application or trademark application pending as of the
date hereof or thereafter until the Obligations shall have been indefeasibly
paid in full and Agent has no obligation to make any Loans under the
Reimbursement Agreement, (ii) file and prosecute opposition and cancellation
proceedings if the failure to do so could reasonably be expected to have a
Material Adverse Effect and (iii) take all reasonable action necessary in such
Grantor's reasonable business judgment consistent with past practices to
preserve and maintain all rights in patent applications of the Patents and in
applications for registrations of the Marks unless the failure so to do could
not reasonably be expected to have a Material Adverse Effect. Any expenses
incurred in connection with the foregoing applications shall be borne by
Grantors. Each Grantor shall not abandon any right to file a Patent application
or Xxxx application except in accordance with its standard commercial practices
if such abandonment could reasonably be expected to have a Material Adverse
Effect. Each Grantor shall give proper statutory notice in connection with its
use of each of the Marks to the extent necessary for the protection of each of
the Marks. Grantors shall notify the Agent of any suits it commences to enforce
the Patents and Marks and shall provide Agent with copies of any documents
reasonably requested by Agent relating to such suits.
11. GRANTORS' COVENANTS. In addition to the other covenants and
agreements set forth herein and in the other Operative Documents, each Grantor
covenants and agrees as follows:
(a) Such Grantor will pay, prior to delinquency, all
taxes, charges, Liens and assessments against the Collateral owned by it, except
those with respect to which the amount or validity is being contested in good
faith by appropriate proceedings and with respect to which reserves in
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conformity with GAAP have been provided on the books of such Grantor and except
those which could not reasonably be expected to have a Material Adverse Effect.
(b) The Collateral owned by it will not be used in
violation of any material law, regulation or ordinance or any applicable laws
(including without limitation, all applicable regulations, rules and orders),
nor used in any way that will void or impair any insurance required to be
carried in connection therewith.
(c) Such Grantor will keep the tangible Collateral owned
by it in reasonably good repair, working order and operating condition (normal
wear and tear excluded), and from time to time make all necessary and proper
repairs, renewals, replacements, additions and improvements thereto and, as
appropriate and applicable, will otherwise deal with the Collateral in all such
ways as are considered customary practice by owners of like property.
(d) Such Grantor will take all reasonable steps to
preserve and protect the Collateral owned by it except where the failure to do
so could not reasonably be expected to have a Material Adverse Effect.
(e) Such Grantor will maintain all insurance coverage
required pursuant to the terms of the Reimbursement Agreement.
(f) Such Grantor will promptly notify Agent in writing in
the event of any material damage to the Collateral from owned by it any source
whatsoever which could reasonably be expected to have a Material Adverse Effect.
(g) Such Grantor will not (i), except for equipment
located at such Grantor's customer's premises in the ordinary course of
business, establish any location of Collateral owned by it not listed in
Schedule 1-A, (ii) move its principal place of business, chief executive offices
or any other office listed in Schedule 1-D , (iii) change its jurisdiction of
incorporation or organization, or (iv) adopt, use or conduct business under any
trade name or other corporate or fictitious name not disclosed in Schedule 1-E,
except upon not less than 30 days prior written notice to Agent and such
Grantor's prior compliance with all applicable requirements of Section 4 hereof
necessary to perfect Agent's security interest hereunder.
(h) Such Grantor shall cause all of its equipment
constituting Collateral owned by it to be operated and maintained in accordance
with any applicable manufacturer's manuals or instructions and the requirements
of its insurance policies. Such Grantor, at its expense, shall maintain such
equipment in good condition, reasonable wear and tear excepted, and will comply
with all laws, ordinances and regulations to which the use and operation of such
equipment may be or become subject. Such obligation shall extend to repair and
replacement of any partial loss or damage to such equipment, regardless of the
cause. All parts furnished in connection with such maintenance or repair shall
immediately become part of such equipment. All such maintenance, repair and
replacement services shall be promptly paid for and discharged by such Grantor
with the result that no lien will attach to such equipment. Only qualified
personnel of such Grantor or qualified contract personnel shall operate such
equipment. Such equipment shall be used only for the purposes for which it was
designed.
(i) Such Grantor shall not establish any additional
Deposit Account not listed on Schedule 1-B, or any Investment Account not listed
on Schedule 1-B, except upon prior written notice to Agent and such Grantor's
compliance with all applicable requirements of Section 4 hereof necessary to
perfect Agent's security interest hereunder. With respect to account number
9428391015 (the "Disbursement Account") maintained at Lender, the Grantors agree
that they shall not deposit or transfer
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cash or other assets into such Disbursement Account, or permit any cash or other
asset to be deposited or transferred into such Disbursement Account, or maintain
a positive balance in such Disbursement Account, except that cash may be
transferred from other accounts at Lender into such Disbursement Account for the
sole purpose of clearing outstanding checks issued from such Disbursement
Account in the ordinary course of business.
12. AGENT'S RIGHTS REGARDING COLLATERAL. At any time and from time to
time, Agent may, to the extent necessary or desirable to protect the security
hereunder, but Agent shall not be obligated to: (a) (whether or not an Event of
Default has occurred) itself or through its representatives, at its own expense,
upon reasonable prior notice and at such reasonable times during usual business
hours, visit and inspect any of the Grantors' properties and examine and make
abstracts from any of its books and records at any reasonable time and as often
as may reasonably be desired and discuss the business, operations, properties
and financial and other condition of any of the Grantors with officers of such
Grantors and with their accountants or (b) if an Event of Default has occurred
and is continuing, at the expense of the Grantors, perform any obligation of any
of the Grantors under this Agreement. At any time and from time to time, at the
expense of the Grantors, Agent may, to the extent necessary or desirable to
protect the security hereunder, but Agent shall not be obligated to: (i) notify
obligors of the Collateral that the Collateral has been pledged as security to
Agent; (ii) after an Event of Default has occurred and is continuing, at any
time and from time to time request from obligors of the Collateral, in the name
of the applicable Grantor or in the name of Agent, information concerning the
Collateral and the amounts owing thereon; and (iii) after an Event of Default
has occurred and is continuing, direct obligors under the contracts included in
the Collateral to direct their performance to Agent. Each Grantor shall keep
proper books and records and accounts in which full, true and correct entries in
conformity with GAAP and all applicable laws (including without limitation, all
applicable regulations, rules and orders) shall be made of all material dealings
and transactions pertaining to the Collateral owned by it. Agent shall at all
reasonable times on reasonable prior notice have full access to and the right to
audit any and all of Grantors' books and records pertaining to the Collateral,
and to confirm and verify the value of the Collateral. Agent shall not be under
any duty or obligation whatsoever to take any action to preserve any rights of
or against any prior or other parties in connection with the Collateral, to
exercise any voting rights or managerial rights with respect to any Collateral
or to make or give any presentments for payment, demands for performance,
notices of non-performance, protests, notices of protest, notices of dishonor or
notices of any other nature whatsoever in connection with the Collateral or the
Obligations. Agent shall not be under any duty or obligation whatsoever to take
any action to protect or preserve the Collateral or any rights of the Grantors'
therein, or to make collections or enforce payment thereon, or to participate in
any foreclosure or other proceeding in connection therewith. Nothing contained
herein or in any consent shall constitute an assumption by Agent of any of the
Grantors' obligations under the contracts assigned hereunder unless Agent shall
have given written notice to the counterpart to such assigned contract of
Agent's intention to assume such contract. Each Grantor shall continue to be
liable for performance of its obligations under such contracts.
13. COLLECTIONS ON THE COLLATERAL. Except as provided to the contrary
in the Reimbursement Agreement, each Grantor shall have the right to use and to
continue to make collections on and receive dividends and other proceeds of all
of the Collateral in the ordinary course of business so long as no Event of
Default shall have occurred and be continuing. Upon the occurrence and during
the continuance of an Event of Default, upon notice from Agent to the Grantors,
each Grantor's right to make collections on and receive dividends and other
proceeds of the Collateral owned by it and to use or dispose of such collections
and proceeds shall terminate, and any and all dividends, proceeds and
collections, including all partial or total prepayments, then held or thereafter
received on or on account of the Collateral will be held or received by such
Grantor in trust for Agent and promptly delivered in kind to Agent (duly
endorsed to Agent, if required), to be applied to the obligations or held as
Collateral, as Agent shall elect. During the existence of an Event of Default,
Agent shall have the right at all times to receive, receipt for,
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endorse, assign, deposit and deliver, in the name of any of the Grantors, any
and all checks, notes, drafts and other instruments for the payment of money
constituting proceeds of or otherwise relating to the Collateral; and each
Grantor hereby authorizes Agent to affix, by facsimile signature or otherwise,
the general or special endorsement of such Grantor, in such manner as Agent
shall deem advisable, to any such instrument in the event the same has been
delivered to or obtained by Agent without appropriate endorsement, and Agent and
any collecting bank are hereby authorized to consider such endorsement to be a
sufficient, valid and effective endorsement by such Grantor, to the same extent
as though it were manually executed by the duly authorized representative of
such Grantor, regardless of by whom or under what circumstances or by what
authority such endorsement actually is affixed, without duty of inquiry or
responsibility as to such matters, and such Grantor hereby expressly waives
demand, presentment, protest and notice of protest or dishonor and all other
notices of every kind and nature with respect to any such instrument.
14. POSSESSION OF COLLATERAL BY AGENT. All the Collateral now,
heretofore or hereafter delivered to Agent shall be held by Agent in its
possession, custody and control. During the existence of an Event of Default,
whenever any of the Collateral is in Agent's possession, custody or control,
Agent may use, operate and consume the Collateral, whether for the purpose of
preserving and/or protecting the Collateral, or for the purpose of performing
any of the Grantors' obligations with respect thereto, or otherwise so long as
consistent with the Operative Documents or transactions contemplated thereby.
Agent may at any time deliver or redeliver the Collateral or any part thereof to
the Grantors, and the receipt of any of the same by the Grantors shall be
complete and full acquittance for the Collateral so delivered, and Agent
thereafter shall be discharged from any liability or responsibility arising
after such delivery to the Grantors. So long as Agent exercises reasonable care
and complies with Section 9207 of the UCC with respect to any Collateral in its
possession, custody or control, Agent shall have no liability for any loss of or
damage to any Collateral, and in no event shall Agent have liability for any
diminution in value of Collateral occasioned by economic or market conditions or
events.
15. REMEDIES.
(a) Rights During Event of Default. During the existence
of an Event of Default, the Grantors shall be in default hereunder and, subject
to applicable law, Agent, shall have, in any jurisdiction where enforcement is
sought, in addition to all other rights and remedies that Agent may have under
this Agreement and under applicable laws or in equity, all rights and remedies
of a secured party under the Uniform Commercial Code as enacted in any such
jurisdiction in effect at that time, and in addition the following rights and
remedies in accordance with applicable law, all of which may be exercised at the
direction of Required Guarantors (provided, that if the Columbia Entities desire
to take an enforcement action that Required Guarantors have not consented to,
the Agent shall take such enforcement action as the Columbia Entities direct the
Agent to take, provided further, that Agent shall not take such enforcement
action until the earlier of (A) the 120th day after receipt by Agent of written
notice of such enforcement action from the Columbia Entities or (B) such time as
the Required Guarantors have provided their consent to such enforcement
actions), with or without further prior notice to the Grantors except such
notice as may be specifically required by applicable law: (i) to foreclose the
Liens and security interests created hereunder or under any other Operative
Document by any available judicial procedure or without judicial process; (ii)
to enter peaceably any premises where any Collateral may be located for the
purpose of securing, protecting, inventorying, appraising, inspecting,
repairing, preserving, storing, preparing, processing, taking possession of or
removing the same; (iii) to sell, assign, lease or otherwise dispose of any
Collateral or any part thereof, either at public or private sale or at any
broker's board, in lot or in bulk, for cash, on credit or otherwise, with or
without representations or warranties and upon such terms as shall be
commercially reasonable; (iv) to notify obligors on the Collateral that the
Collateral has been assigned to Agent and that all payments thereon, or
performance with respect thereto, are to be made directly and exclusively to
Agent; (v) to collect by legal proceedings or otherwise all
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dividends, distributions, interest, principal or other sums now or hereafter
payable upon or on account of the Collateral; (vi) to enter into any extension,
reorganization, disposition, merger or consolidation agreement, or any other
agreement relating to or affecting the Collateral, and in connection therewith
Agent may deposit or surrender control of the Collateral and/or accept other
property in exchange for the Collateral as Agent reasonably deems appropriate
and is commercially reasonable; (vii) to settle, compromise or release, on terms
acceptable to Agent, in whole or in part, any amounts owing on the Collateral
and/or any disputes with respect thereto; (viii) to extend the time of payment,
make allowances and adjustments and issue credits in connection with the
Collateral in the name of the applicable Grantor for the benefit of Agent; (ix)
to enforce payment and prosecute any action or proceeding with respect to any or
all of the Collateral and take or bring, on behalf of itself or in the name of
the applicable Grantor, any and all steps, actions, suits or proceedings deemed
necessary or reasonably desirable by Agent to effect collection of or to realize
upon the Collateral, including any judicial or nonjudicial foreclosure thereof
or thereon, and each Grantor specifically consents to any nonjudicial
foreclosure of any or all of the Collateral or any other action taken by Agent
which may release any obligor from personal liability on any of the Collateral,
and each Grantor waives, to the extent permitted by applicable law, any right to
receive prior notice of any public or private judicial or nonjudicial sale or
foreclosure of any security or any of the Collateral, and any money or other
property received by Agent in exchange for or on account of the Collateral,
whether representing collections or proceeds of Collateral, and whether
resulting from voluntary payments or foreclosure proceedings or other legal
action taken by Agent or any of the Grantors, may be applied by Agent, without
notice to the Grantors, to the Obligations in such order and manner as Agent in
its sole discretion shall determine; (x) to insure, protect and preserve the
Collateral; (xi) to exercise all rights, remedies, powers or privileges provided
under any of the Operative Documents; and (xii) to remove peaceably, from any
premises where the same may be located, the Collateral and any and all
documents, instruments, files and records, and any receptacles and cabinets
containing the same, relating to the Collateral, and Agent may, at the cost and
expense of the Grantors and subject to the rights of third parties, use such of
its supplies, equipment, facilities and space at its places of business as may
be necessary or appropriate to properly administer, process, store, control,
prepare for sale or disposition and/or sell or dispose of the Collateral or to
properly administer and control the handling of collections and realizations
thereon, and, subject to the rights of third parties, Agent shall be deemed to
have a rent-free tenancy of any premises of the Grantors for such purposes and
for such periods of time as reasonably required by Agent. So long as an Event of
Default has occurred and is continuing, each Grantor will, at Agent's request,
assemble the Collateral and make it available to Agent at places which Agent may
designate, whether at the premises of such Grantor or elsewhere, which are
reasonably convenient to Agent and the Grantors and will make available to
Agent, free of cost and subject to the rights of third parties, all premises,
equipment and facilities of such Grantor for the purpose of Agent's taking
possession of the Collateral or storing the same or removing or putting the
Collateral in salable form or selling or disposing of the same.
(b) Possession by Agent. During the existence of an Event
of Default, Agent also shall have the right, without prior notice or demand,
either in person, by Agent or by a receiver to be appointed by a court in
accordance with the provisions of applicable law (and each Grantor hereby
expressly consents, to the fullest extent permitted by applicable law, during
the existence of an Event of Default to the appointment of such a receiver),
and, to the extent permitted by applicable law, without regard to the adequacy
of any security for the Obligations, to take possession of the Collateral or any
part thereof and to collect and receive the rents, issues, profits, income and
proceeds thereof. The taking possession of the Collateral by Agent shall not
cure or waive any Event of Default or notice thereof or invalidate any act done
pursuant to such notice. The rights, remedies and powers of any receiver
appointed by a court shall be as ordered by said court.
(c) Sale of Collateral. Any public or private sale or
other disposition of the Collateral pursuant to this Section 15 may be held,
subject to the rights of third parties, at any office of
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Agent, or at the Grantors' places of business, or at any other place permitted
by applicable law, and without the necessity of the Collateral being within the
view of prospective purchasers. Agent may direct the order and manner of sale of
the Collateral, or portions thereof, as it in its sole and absolute discretion
may determine provided such sale is commercially reasonable, and each Grantor
expressly waives, to the extent permitted by applicable law, any right to direct
the order and manner of sale of any Collateral. Agent or any Person acting on
Agent's behalf may bid and purchase at any such sale or other disposition. In
furtherance of Agent's rights hereunder, each Grantor hereby grants to Agent an
irrevocable, non-exclusive license (exercisable without royalty or other payment
by Agent) to use, license or sublicense any patent, trademark, trade name,
copyright or other intellectual property in which Grantor now or hereafter has
any right, title or interest together with the right of access to all media in
which any of the foregoing may be recorded or stored; provided, however, that
such license shall only be exercisable in connection with the disposition of
Collateral upon Agent's exercise of its remedies hereunder.
(d) Notice of Sale. Unless the Collateral is perishable
or threatens to decline speedily in value or is of a type customarily sold on a
recognized market, Agent will give the Grantors reasonable notice of the time
and place of any public sale thereof or of the time on or after which any
private sale thereof is to be made. The requirement of reasonable notice
conclusively shall be met if such notice is mailed, certified mail, postage
prepaid, to the Grantors at their addresses set forth on the signature page
hereto or delivered or otherwise sent to the Grantors, at least seven (7)
Business Days before the date of the sale. Each Grantor expressly waives, to the
fullest extent permitted by applicable law, any right to receive notice of any
public or private sale of any Collateral or other security for the Obligations
except as expressly provided for in this paragraph. Agent shall not be obligated
to make any sale of the Collateral if it shall determine not to do so regardless
of the fact that notice of sale of the Collateral may have been given. Agent
may, without notice or publication, except as required by applicable law,
adjourn the sale from time to time by announcement at the time and place fixed
for sale, and such sale may, without further notice (except as required by
applicable law), be made at the time and place to which the same was so
adjourned.
(e) Private Sales. With respect to any Collateral
consisting of securities, partnership interests, limited liability company
interests, joint venture interests or the like, and whether or not any of such
Collateral has been effectively registered under the Securities Act of 1933, as
amended, or other applicable laws, Agent may, in its sole and absolute
discretion, sell all or any part of such Collateral at private sale pursuant to
this Section 15 in such manner and under such circumstances as Agent may deem
necessary or advisable in order that the sale may be lawfully conducted in a
commercially reasonable manner. Without limiting the foregoing, Agent may (i)
approach and negotiate with a limited number of potential purchasers, and (ii)
restrict the prospective bidders or purchasers to persons who will represent and
agree that they are purchasing such Collateral for their own account for
investment and not with a view to the distribution or resale thereof. In the
event that any such Collateral is sold at private sale pursuant to this Section
15, each Grantor agrees to the extent permitted by applicable law that if such
Collateral is sold for a price which is commercially reasonable, then (A) the
Grantors shall not be entitled to a credit against the Obligations in an amount
in excess of the purchase price, and (B) Agent shall not incur any liability or
responsibility to the Grantors in connection therewith, notwithstanding the
possibility that a substantially higher price might have been realized at a
public sale. Each Grantor recognizes that a ready market may not exist for such
Collateral if it is not regularly traded on a recognized securities exchange,
and that a sale by Agent of any such Collateral for an amount substantially less
than a pro rata share of the fair market value of the issuer's assets minus
liabilities may be commercially reasonable in view of the difficulties that may
be encountered in attempting to sell a large amount of such Collateral or
Collateral that is privately traded.
(f) Title of Purchasers. Upon consummation of any sale of
Collateral hereunder, Agent shall have the right to assign, transfer and deliver
to the purchaser or purchasers thereof the
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Collateral so sold. Each such purchaser at any such sale shall hold the
Collateral so sold absolutely free from any claim or right upon the part of any
Grantor or any other Person claiming through any Grantor, and each Grantor
hereby waives (to the extent permitted by applicable laws) all rights of
redemption, stay and appraisal which it now has or may at any time in the future
have under any rule of law or statute now existing or hereafter enacted. If the
sale of all or any part of the Collateral hereunder is made on credit or for
future delivery, Agent shall not be required to apply any portion of the sale
price to the Obligations until such amount actually is received by Agent, and
any Collateral so sold may be retained by Agent until the sale price is paid in
full by the purchaser or purchasers thereof. Agent shall not incur any liability
in case any such purchaser or purchasers shall fail to pay for the Collateral so
sold, and, in case of any such failure, the Collateral may be sold again.
(g) Disposition of Proceeds of Sale. The proceeds
resulting from the collection, liquidation, sale or other disposition of the
Collateral hereunder shall be applied, first, to the reasonable costs and
expenses (including reasonable attorneys' fees) of retaking, holding, storing,
processing and preparing for sale, selling, collecting and liquidating the
Collateral, and the like; second, to the satisfaction of all Obligations; and
third, any surplus remaining after the satisfaction of all Obligations, to be
paid over to the Grantors or to whomsoever may be lawfully entitled to receive
such surplus.
(h) Certain Waivers. To the extent permitted by
applicable law, each Grantor waives all claims, damages and demands against
Agent arising out of the repossession, retention or sale of the Collateral, or
any part or parts thereof hereunder, except to the extent any such claims,
damages and awards arise out of the gross negligence or willful misconduct of
Agent.
(i) Remedies Cumulative. The rights and remedies provided
under this Agreement are cumulative and may be exercised singly or concurrently,
and are not exclusive of any other rights and remedies provided by law or
equity.
(j) Account Control Agreements. With respect to any
account control agreements or other similar agreements entered into by Agent,
any Guarantor and any financial institution to perfect Agent's security interest
in deposit or investment accounts held at such financial institution, Agent
agrees that it shall only cause such financial institution to agree to comply,
without further consent of Borrower, with entitlement orders, notices of
exclusive control or other instructions from Agent to such financial institution
as to such deposit or investment accounts during the existence of an Event of
Default. Agent agrees to provide Borrower with a copy of any notices of
exclusive control or other similar notices.
16. NOTICE. Agent shall use reasonable efforts to give the Grantors
reasonable prior written notice of the exercise of any remedy provided for
herein, provided that the failure to give such notice shall not subject Agent to
liability and shall not affect the validity or exercise of any remedy hereunder.
17. AGENT APPOINTED ATTORNEY-IN-FACT. To the full extent permitted by
applicable law, each Grantor hereby irrevocably appoints Agent as such Grantor's
attorney-in-fact, with full authority in the place and stead of such Grantor,
and in the name of such Grantor, or otherwise, from time to time, in Agent's
sole and absolute discretion to do any of the following acts or things during
the existence of an Event of Default: (a) to do all acts and things and to
execute all documents necessary or advisable to perfect and continue perfected
the security interests created by this Agreement and to preserve, maintain and
protect the Collateral; (b) to do any and every act which such Grantor is
obligated to do under this Agreement; (c) to prepare, sign, file and record, in
such Grantor's name, any financing statement covering the Collateral; (d) to
endorse and transfer the Collateral upon foreclosure by Agent; and (e) to file
any claims or take any action or institute any proceedings which Agent may
reasonably deem necessary or desirable for the protection or enforcement of any
of the rights of Agent with respect to any of the Collateral; provided, however,
that Agent shall be under no obligation whatsoever to take any of the
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foregoing actions, and Agent shall have no liability or responsibility for any
act or omission (other than Agent's own gross negligence or willful misconduct)
taken with respect thereto.
18. COSTS AND EXPENSES. Each Grantor shall pay on demand (i) all
reasonable fees and expenses, including reasonable attorneys' fees and expenses,
incurred by Agent in connection with the preparation, execution and delivery of,
and the exercise of its duties under, this Agreement and the preparation,
execution and delivery of amendments and waivers hereunder and (ii) all
reasonable fees and expenses, including reasonable attorneys' fees and expenses,
incurred by Agent in connection with the enforcement or attempted enforcement of
this Agreement or any of the Obligations or in preserving any of Agent's rights
and remedies (including, without limitation, all such fees and expenses incurred
in connection with any "workout" or restructuring affecting the Operative
Documents or the Obligations or any bankruptcy or similar proceeding involving
such Grantor, any other Grantor, Borrower or any of their Affiliates).
19. INTENTIONALLY OMITTED.
20. OTHER AGREEMENTS; GOVERNING AGREEMENT. Nothing herein shall in any
way modify or limit the effect of terms or conditions set forth in any other
Operative Document executed by the Grantors or any other Person in connection
with the Obligations, but each and every term and condition hereof shall be in
addition thereto; provided, however, that in the event of inconsistency between
this Agreement and the Reimbursement Agreement, the Reimbursement Agreement
shall govern.
21. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which shall be deemed to be an original, but all of which taken together shall
constitute one and the same agreement.
22. UNDERSTANDINGS WITH RESPECT TO WAIVERS AND CONSENTS. Each Grantor
warrants and agrees that each of the waivers and consents set forth herein are
made with full knowledge of their significance and consequences, with the
understanding that events giving rise to any defense or right waived may
diminish, destroy or otherwise adversely affect rights which such Grantor
otherwise may have against Agent or others, or against any Collateral. If any of
the waivers or consents herein are determined to be unenforceable under
applicable law, such waivers and consents shall be effective to the maximum
extent permitted by law.
23. INDEMNITY. Each Grantor shall indemnify, reimburse and hold Agent,
each of Agent's members, and each of their respective successors, assigns,
agents, officers, directors, shareholders, servants, agents and employees
harmless from and against all liabilities, losses, damages, actions, suits,
demands, claims of any kind and nature (including claims relating to
environmental discharge, cleanup or compliance), all costs and expenses
whatsoever to the extent they may be incurred or suffered by such indemnified
party in connection therewith (including reasonable attorneys' fees and
expenses), fines, penalties (and other charges of applicable governmental
authorities), licensing fees relating to any item of Collateral, damage to or
loss of use of property (including consequential or special damages to third
parties or damages to Borrower's property), or bodily injury to or death of any
person (including any agent or employee of Borrower) (each, a "CLAIM" and
collectively, the "CLAIMS"), directly or indirectly relating to or arising out
of the use of the proceeds of the Loan or otherwise, the falsity of any
representation or warranty of such Grantor or such Grantor's failure to comply
with the terms of this Agreement or any other Operative Document while the
Obligations are outstanding. The foregoing indemnity shall cover, without
limitation, (i) any Claim in connection with a design or other defect (latent or
patent) in any item of equipment included in the Collateral, (ii) any Claim for
infringement of any patent, copyright, trademark or other intellectual property
right, (iii) any Claim resulting from the presence on or under or the escape,
seepage, leakage, spillage, discharge, emission or release of any hazardous
materials on the premises of such Grantor, including any Claims asserted or
arising under any
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environmental law, or (iv) any Claim for negligence or strict or absolute
liability in tort; provided, however, that such Grantor shall not indemnify
Agent for any liability incurred by Agent as a direct and sole result of Agent's
gross negligence or willful misconduct. Such indemnities shall continue in full
force and effect, notwithstanding the expiration or termination of this
Agreement. Upon an indemnitee's written demand, such Grantor shall assume and
diligently conduct, at its sole cost and expense, the entire defense of Agent,
each of its members, and each of their respective agents, employees, directors,
officers, shareholders, successors and assigns, using counsel reasonably
acceptable to such indemnitee against any indemnified Claim. Such Grantor shall
not settle or compromise any Claim against or involving Agent without first
obtaining Agent's written consent thereto, which consent shall not be
unreasonably withheld or delayed.
24. AMENDMENTS, ETC. No amendment or waiver of any provision of this
Agreement nor consent to any departure by the Grantors herefrom (other than
supplements to the Schedules hereto in accordance with the terms of this
Agreement) shall in any event be effective unless the same shall be in writing
and made in accordance with the terms of the Reimbursement Agreement, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.
25. NOTICES. All notices and other communications provided for
hereunder shall be given in writing in the manner and to the addresses set forth
either in the Reimbursement Agreement or in the Guaranty dated as of even date
herewith made by the Grantors.
26. CONTINUING SECURITY INTEREST: TRANSFER OF NOTES; TERMINATION. This
Agreement shall create a continuing security interest in the Collateral pursuant
to Section 2 hereof and shall (i) remain in full force and effect until (A)
indefeasible payment in full of the Obligations and the termination or
expiration of Lender's obligation to make loans under the Credit Agreement or
(B) the termination of the Guarantors' obligations under the Credit Guaranties,
(ii) be binding upon each Grantor, their successors and assigns and (iii) inure,
together with the rights and remedies of Agent and the Guarantors hereunder, to
the benefit of Agent and the Guarantors and any successors hereof, subject to
the terms and conditions of the Reimbursement Agreement. Subject to the terms of
the Reimbursement Agreement, any Guarantor may assign or otherwise transfer its
rights thereof, or any rights in Collateral held by it to any other Person, and
such other Person shall thereupon become vested with all the benefits in respect
thereof granted to such Guarantor or Agent herein or otherwise. Nothing set
forth herein or in any other Operative Document is intended or shall be
construed to give to any other party any right, remedy or claim under, to or in
respect of this Agreement or any other Operative Document or any Collateral. The
Grantors' successors and assigns shall include, without limitation, a receiver,
trustee or debtor-in-possession thereof or therefor, provided that, except as
otherwise permitted under the Reimbursement Agreement or any other Operative
Document, none of the rights or obligations of the Grantors hereunder may be
assigned or otherwise transferred without the prior written consent of Agent.
27. RELEASE OF THE GRANTORS. This Agreement and all obligations of each
Grantor hereunder and all security interests granted hereby shall be released
and terminated when all Obligations have been paid in full in cash and when
Lender's obligation to make loans under the Credit Agreement has expired or have
otherwise been terminated, or when the Guarantors' obligations under the Credit
Guaranties shall have otherwise been terminated. Upon such release and
termination of all Obligations and the security interest hereunder, all rights
in and to the Collateral granted or pledged by the Grantors hereunder shall
automatically revert to the Grantors, and Agent shall return any pledged
Collateral in its possession to the Grantors, or to the Person or Persons
legally entitled thereto, and shall endorse, execute, deliver, record and file
all instruments and documents, and do all other acts and things, reasonably
required for the return of the Collateral to the Grantors, or to the Person or
Persons legally entitled thereto, and to evidence or document the release of the
interests of Agent arising under this Agreement, all as reasonably requested by,
and at the sole expense of, the Grantors.
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28. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA (WITHOUT REFERENCE TO ITS
CHOICE OF LAW PROVISIONS), EXCEPT AS OTHERWISE REQUIRED BY MANDATORY PROVISIONS
OF LAW AND EXCEPT TO THE EXTENT THAT REMEDIES PROVIDED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF CALIFORNIA ARE GOVERNED BY THE LAWS OF SUCH
JURISDICTION.
29. JURY TRIAL. EACH GRANTOR, EACH GUARANTOR AND AGENT, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL
BY JURY AS TO ANY ISSUE RELATING HERETO IN ANY ACTION, PROCEEDING, OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.
30. LIMITATION OF LIABILITY. NO CLAIM MAY BE MADE BY ANY GRANTOR
AGAINST ANY GUARANTOR OR AGENT OR THE MEMBERS, AFFILIATES, DIRECTORS, OFFICERS,
EMPLOYEES, OR ATTORNEYS OF ANY GUARANTOR OR AGENT FOR ANY SPECIAL, INDIRECT,
CONSEQUENTIAL OR PUNITIVE DAMAGES IN RESPECT OF ANY CLAIM (WHETHER BASED UPON
ANY BREACH OF CONTRACT, TORT, BREACH OF STATUTORY DUTY OR ANY OTHER THEORY OF
LIABILITY) ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH AND
EACH GRANTOR HEREBY WAIVES, RELEASES AND AGREES NOT TO XXX UPON ANY CLAIM FOR
ANY SUCH DAMAGES, WHETHER OR NOT NOW ACCRUED AND WHETHER OR NOT KNOWN OR
SUSPECTED TO EXIST IN ITS FAVOR.
31. COVENANT NOT TO ISSUE UNCERTIFICATED SECURITIES. Each Grantor
covenants to Agent that any Pledged Securities held by it shall be in
certificated form (as contemplated by Article 8 of the Uniform Commercial Code),
and that it will not seek to convert all or any part of any Pledged Securities
into uncertificated form (as contemplated by Article 8 of the Uniform Commercial
Code).
32. COVENANT NOT TO DILUTE INTERESTS OF AGENT IN SECURITIES. Each
Grantor represents, warrants and covenants to Agent that it will (a) not at any
time cause or permit any Subsidiary that is an issuer of Pledged Securities to
issue any capital stock or any warrant options or other rights to acquire any
capital stock, other than to such Grantor or as otherwise permitted under the
Reimbursement Agreement and (b) pledge to Agent in accordance with the terms
hereof, promptly upon its acquisition (directly or indirectly) thereof, and in
any event, within 5 days of such acquisition, any and all shares of stock or
other securities of each issuer of Pledged Securities.
33. PLEDGED LIMITED LIABILITY COMPANY INTERESTS/COVENANT NOT TO DILUTE.
Each Grantor represents, warrants and covenants to Agent that it will (a) not at
any time cause or permit any Pledged Entities to issue any additional membership
interests or any other rights or options to acquire any additional limited
liability company interests, other than to the Grantors or as otherwise
permitted under the Reimbursement Agreement, and (b) pledge to Agent in
accordance with the terms hereof, promptly upon its acquisition (directly or
indirectly) thereof, and in any event, within 5 days of such acquisition, any
and all additional Limited Liability Company Interests of each Pledged Entity.
34. PLEDGED PARTNERSHIP INTERESTS/COVENANT NOT TO DILUTE. Each Grantor
represents, warrants and covenants to Agent that it will (a) not at any time
cause or permit any Pledged Partnership Entities to issue any additional
partnership interests or any other rights or options to acquire any additional
partnership interests, other than to the Grantors or as otherwise permitted
under the Reimbursement Agreement, and (b) pledge to Agent in accordance with
the terms hereof, promptly upon its acquisition (directly or indirectly)
thereof, and in any event, within 5 days of such acquisition, any and all
additional Partnership Interests of each Pledged Partnership Entity.
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35. CONFIDENTIALITY. All information (other than any periodic reports
filed by a Grantor with the Securities and Exchange Commission) disclosed by
Grantors to Agent in writing or through inspection pursuant to this Agreement
shall be considered confidential. Agent agrees to use the same degree of care to
safeguard and prevent disclosure of such confidential information as Agent uses
with its own confidential information, but in any event no less than a
reasonable degree of care. Agent shall not disclose such information to any
third party (other than Guarantors, or Agent's partners, or Agent's attorneys
and auditors subject to the same confidentiality obligation set forth herein)
and shall use such information primarily for purposes of evaluation of its
extension of credit to Grantors and the exercise of Agent's rights and the
enforcement of its remedies under this Agreement and the other Operative
Documents. The obligations of confidentiality shall not apply to any information
that (a) was known to the public prior to disclosure by any of the Grantors
under this Agreement, (b) becomes known to the public through no fault of Agent,
(c) is disclosed to Agent by a third party having a legal right to make such
disclosure, or (d) is independently developed by Agent.
[Remainder of page intentionally left blank]
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EXHIBIT E TO SCHEDULE 13D/A
IN WITNESS WHEREOF, the parties hereto, by their officers thereunto
duly authorized, have executed this Agreement as of the day and year first above
written.
XXX.XXX, INC.
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxx X. Xxxxxxx
----------------------------------------
Title: CEO
---------------------------------------
DSLNET COMMUNICATIONS PUERTO RICO, INC.
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxx X. Xxxxxxx
----------------------------------------
Title: President
---------------------------------------
DSLNET COMMUNICATIONS VA, INC.
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxx X. Xxxxxxx
----------------------------------------
Title: President
---------------------------------------
TYCHO NETWORKS, INC.
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxx X. Xxxxxxx
----------------------------------------
Title: President
---------------------------------------
VECTOR INTERNET SERVICES, INC.
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxx X. Xxxxxxx
----------------------------------------
Title: President
---------------------------------------
ACCEPTED:
VANTAGEPOINT VENTURE PARTNERS III (Q), L.P., as Agent
By: VantagePoint Venture Associates III, LLC
By: /s/
-----------------------------------------
Name:
---------------------------------------
Title: Managing Member
-------------------------------------
