EXHIBIT 10.23
SECURITY AND PLEDGE AGREEMENT
-- INTEGRITY DIRECT, LLC --
THIS SECURITY AND PLEDGE AGREEMENT, (this "Security Agreement") is
made and effective as of December 31, 2002, by INTEGRITY DIRECT, LLC , a
Delaware limited liability company ("Grantor"), in favor of LASALLE BANK
NATIONAL ASSOCIATION as Administrative Agent (including any successor,
participant, assignee, pledgee or transferee thereof, "Administrative Agent"),
for itself and the Lenders (as defined in the Credit Agreement referred to
below).
RECITALS
WHEREAS, pursuant to that certain Credit Agreement by and among
Borrower, Integrity Incorporated (n/k/a Integrity Media, Inc.), Lenders and
Administrative Agent dated as of April 25, 2001 (as may be amended from time to
time, "Credit Agreement"), Grantor is required to have executed and delivered
this Security Agreement encumbering all of Grantor's tangible and intangible
personal property assets in favor of Administrative Agent; and
WHEREAS, Grantor has determined that it is in its best interest to
execute this Security Agreement inasmuch as Grantor will derive substantial
direct and indirect benefits from the funding of the Advances by Lenders
pursuant to the Credit Agreement;
NOW, THEREFORE, for good and valuable consideration (the receipt and
sufficiency of which are hereby acknowledged) and intending to be legally bound
hereby, Grantor and Administrative Agent hereby agree as follows:
ARTICLE 1: SECURITY INTEREST, COLLATERAL ASSIGNMENT AND PLEDGE
1.1. Grant of Security. Grantor hereby collaterally assigns and
pledges to Administrative Agent, and hereby grants to Administrative Agent a
present, absolute, unconditional and continuing security interest in, all of
the following property, assets and equity interests, whether or not such
property and assets are covered by Article 9 of the applicable UCC
(collectively, and including all Pledged Collateral, "Collateral"):
a. Fixtures and Improvements. All of Grantor's fixtures
and improvements to real property in all of its forms, including the following:
all buildings, structures, furnishings, and all heating, electrical, lighting,
power and air conditioning equipment, and all antennas, transmitters, receivers
and related equipment, and all other equipment that under applicable law
constitutes a fixture, and all parts thereof and all accessions, additions,
attachments, improvements, substitutions and replacements thereto and therefor
(any and all of the foregoing being the "Fixtures"); and
b. Equipment (and Computer Hardware). All of Grantor's
equipment in all of its forms, including the following: all machinery, tools,
motor vehicles, furniture and furnishings, and all antennas, transmitters,
receivers and related equipment, all communications, telecommunications,
switches and related equipment, and all computer and other electronic data
processing hardware, integrated computer systems, central processing units,
memory units, display terminals, printers, features, computer elements, card
readers, tape drives, hard and soft disk drives, cables, electrical supply
hardware, generators, power equalizers, accessories and all peripheral devices
and other related computer hardware, and all documentation manuals and
materials with respect to such hardware, and all rights with respect to all of
the foregoing, including any
and all licenses, options, warranties, service contracts, program services,
test rights, maintenance rights, support rights, improvement rights, renewal
rights and indemnifications, and any model conversions of any of the foregoing,
and all parts thereof and all accessions, additions, parts (including
replacement parts), attachments, improvements, substitutions and replacements
thereto and therefor (any and all of the foregoing being the "Equipment"); and
c. Inventory. All of Grantor's inventory in all of its
forms, including the following: (1) all raw materials and work in process
therefor, finished goods thereof, and materials used or consumed in the
preparation, manufacture, creation or production thereof, and (2) all goods in
which Grantor has an interest in mass or a joint or other interest or right of
any kind (including goods in which Grantor has an interest or right as
consignee), and (3) all goods which are returned to or repossessed by Grantor,
and in each instance all accessions thereto, products thereof and documents
therefor (any and all of the foregoing being the "Inventory"); and
d. Receivables, Accounts, Contracts, Money,
Instruments, Chattel Paper and Related Documents. All of Grantor's accounts,
receivables, cash collateral accounts, lock box accounts, other deposit
accounts, security deposits, advance payments, contracts, contract rights,
leases, licenses, insurance policies, chattel paper, documents, instruments
(whether or not negotiable), money, general intangibles and other obligations
of any kind, and whether or not arising out of or in connection with the sale
or lease of goods or the rendering of services (any and all of the foregoing
being the "Contract Rights"), and all rights of Grantor in and to all
agreements, security agreements, guaranties, leases and other contracts
securing or otherwise relating to any such Contract Rights (any and all such
security agreements, guaranties, leases and other contracts being the "Related
Contracts"); and
e. Intellectual Property. Without limiting any of the
foregoing, all of Grantor's intellectual and information related property,
rights and assets, including the following (collectively, "Intellectual
Property Collateral"):
1. Computer Software and Data. (a) All
software programs and data bases (including source code, object code and all
related applications and data files) owned, licensed or leased by Grantor, and
(b) all firmware associated therewith or with any of the Equipment, and (c) all
documentation and materials (including all flow charts, logic diagrams,
algorithms, manuals, guides, instructions, indices, abstracts and
specifications) with respect to such software and firmware, and (d) all rights
with respect to all of the foregoing, including any and all copyrights,
trademarks, licenses, options, warranties, service contracts, program services,
test rights, maintenance rights, support rights, improvement rights, renewal
rights and indemnifications, and any substitutions, replacements, additions or
model conversions of any of the foregoing (collectively, "Computer Software
Collateral"), and
2. Copyrights. All tangible and/or
copyrightable works of authorship including, without limitation, all musical
compositions, including all lyrics, music and titles thereof, and sound
recordings, and all copyrights of Grantor in each work or authorship and
derivative works thereof, whether published or unpublished and whether or not
the same also constitutes a trade secret, whether statutory or common law,
registered or unregistered, throughout the world, including all of Grantor's
right, title and interest in and to all copyrights registered in the United
States Copyright Office or anywhere else in the world, and all applications for
registration thereof, whether pending or in preparation, and all copyright
licenses, and all treaty and convention rights, and all moral, attribution
and/or integrity rights associated therewith, and further including the right
to xxx for past, present and future infringements of any thereof, all rights
corresponding thereto throughout the world, and all goodwill associated
therewith, all extensions, supplemental registrations, continuations and
renewals of any thereof, and all proceeds of the foregoing,
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including licenses, fees, royalties, income, payments, claims, damages and
proceeds of suit (collectively, "Copyright Collateral"), and
3. Patents. All patents and like protections,
including all improvements, divisions, continuations, renewals,
re-examinations, reissues, extensions and continuations-in-part of the same,
and all applications for patent, whether pending or in preparation, all patent
licenses, the right to xxx for past, present and future infringements of any
thereof, all rights corresponding thereto throughout the world, and all
goodwill associated therewith, all extensions, continuations and renewals of
any thereof, and all proceeds of the foregoing, including licenses, fees,
royalties, income, payments, claims, damages and proceeds of suit
(collectively, "Patent Collateral"), and
4. Trademarks. (a) All trademarks, service
marks, trade names, corporate names, company names, business names, operating
names, domain names, fictitious business names, trade styles, certification
marks, collective marks, call signs, logos, other source of business
identifiers, prints, labels and goods on which any of the foregoing appear or
have appeared, designs (including product designs) and general intangibles of a
like nature (any and all of the foregoing being the "Trademarks"), anywhere in
the world, whether registered or not and whether currently in use or not, all
registrations and recordings thereof and all applications to register the same,
whether pending or in preparation for filing, including registrations,
recordings and applications in the United States Patent and Trademark Office or
in any office or agency of the United States of America or any State thereof or
any foreign country, and (b) all Trademark licenses, and (c) all reissues,
extensions or renewals of any of the foregoing, and (d) all of the goodwill of
the business connected with the use of, and symbolized by, the items described
in the foregoing, and (e) all proceeds, fees, royalties, income or payments of,
and rights associated with, the foregoing, including any claim by Grantor
against third parties for past, present or future infringement or dilution of
any Trademark, Trademark registration or Trademark license, or for any injury
to the goodwill associated with the use of any such Trademark or for breach or
enforcement of any Trademark license (collectively, "Trademark Collateral"),
and
5. Trade Secrets. All common law and statutory
trade secrets and all other confidential or proprietary or useful information
and all know-how obtained by or used in or contemplated at any time for use in
Grantor's business (any and all of the foregoing being the "Trade Secrets"),
whether or not such Trade Secret has been reduced to a writing or other
tangible form, including all documents and things embodying, incorporating or
referring in any way to such Trade Secrets, all Trade Secret licenses, and
including the right to xxx for and to enjoin and to collect damages for the
actual or threatened misappropriation of any Trade Secret and for the breach or
enforcement of any such Trade Secret license (collectively, "Trade Secret
Collateral"); and
f. Publication, Programming and Production-Related
Property. Without limiting any of the foregoing, all of Grantor's right, title,
interest and benefits in, to and under (a) all books, writings, journals,
articles and publications, and (b) all customer, subscriber, prospect, inquiry,
circulation, marketing, advertising, publicity, promotional and programming
files, lists, records, documents, contracts and agreements, including all
files, lists and records of active, expired, prospective, trial and conditional
customers and subscribers, and all files, lists and records of current, former
and prospective advertisers, and all internally generated, purchased and rented
mailing lists (but only to the extent of Grantor's rights therein), and all
promotional letters, catalogues, flyers, reply cards, sales materials,
promotional materials, sample mailing pieces, artwork, drawings, advertising
materials, space advertising and any similar materials, and (c) all publication
rights, programming rights, editorial rights, promotional rights, advertising
rights, licensing rights, distribution and redistribution rights, and printing
and reprinting rights (and any and all agreements, contracts, documents and
materials in any way governing or relating to any of the foregoing rights), and
(d) all editorial, publishing, programming, manufacturing, prepublication and
post-publication, royalty, sales, pricing, cost and promotional files, lists,
records and documents, and (e) all indices, abstracts, compilations, summaries,
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glossaries and archives of or for any of the foregoing items, and (f) all other
information and property relating to, used or useful in connection with,
evidencing, embodying, incorporating or referring to, any of the foregoing
property identified in this clause or elsewhere in this Section 1.1 and
regardless of whether such property is embodied in a tangible or intangible
medium; and
g. Licenses and Authorizations. Without limiting any of
the foregoing, all of Grantor's right, title, interest and benefits in, to and
under all present and future Licenses, Authorizations and other rights for the
construction, development, operation and ownership of its business and
properties and all proceeds of such Licenses, Authorizations and other rights,
and all rights of Grantor in and to all agreements, security agreements,
guaranties, leases and other contracts securing or otherwise relating to any
such Licenses, Authorizations and other rights; and
h. Other General Intangibles. Without limiting any of
the foregoing, but subject to Section 1.4 hereof including the express
limitations set forth therein, all of Grantor's right, title, interest and
benefits in, to and under all other general intangibles, wherever arising,
including the following: (a) all corporate, partnership, limited liability
company and joint venture investments and other interests in and to any other
entity (including all ownership rights and interests in Grantor's subsidiaries,
whether or not such rights and interests are certificated), and the proceeds
and general intangibles related thereto (including all dividends,
distributions, capital accounts and proceeds thereof), and (b) all leasehold
interests (whether as lessee or as lessor) and all related rights thereunder
and proceeds thereof, and (c) all tax refunds and other refunds or rights to
receive payment from U.S. federal, state, or local governments or from foreign
governments, whether or not arising out of or in connection with the sale or
lease of goods or the rendering of services, and (d) all settlements, judgments
and other awards (whether or not resulting from judicial or arbitration
proceedings) and all tort and contract claims and causes of action; and all
rights of Grantor in and to all security agreements, guaranties, leases and
other contracts securing or otherwise relating to any such general intangibles;
and
i. Securities and Investment Property. Without limiting
any of the foregoing, all of Grantor's right, title, interest and benefits in,
to and under all stocks, options, warrants, bonds, and other securities,
security entitlements, securities accounts, financial assets and other
investment property (including all such securities representing ownership in
Grantor's subsidiaries), and the proceeds and general intangibles related
thereto (including all dividends and distributions); and
j. Other General Property. All of Grantor's other
property and rights of every kind and description and interests therein; and
k. Products and Proceeds. All products, offspring,
rents, issues, profits, returns, refunds, income and proceeds of and from any
and all of the foregoing Collateral, including the following: all proceeds of
the Licenses and Authorizations, all proceeds that constitute property of the
types described in this Section 1.1, all proceeds deposited from time to time
in any lock boxes of Grantor, and, to the extent not otherwise included, all
payments, unearned premiums and cash or surrender value under insurance
policies (whether or not Administrative Agent or any Lender is a loss payee or
additional insured thereof), and any indemnity, warranty or guaranty payable by
reason of loss or damage to or otherwise with respect to any of the foregoing
Collateral;
in each instance (whether or not expressly specified above), wherever located,
and whether now existing, owned, leased or licensed or hereafter acquired ,
leased, licensed, arising, developed, generated, adopted or created for or by
Grantor, and howsoever Grantor's interest therein may arise or appear (whether
by ownership, security interest, claim or otherwise).
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Provided, however, notwithstanding the foregoing, in the
event that the Grantor's rights in or with respect to any Collateral consisting
of (A) Related Contracts, (B) Contract Rights, (C) Equipment that is subject to
a prior leasehold interest or security interest in favor of a third party which
prohibits the Grantor from encumbering its interest in such Equipment, or (D) a
general intangible, in each case, would be forfeited or would become void,
voidable, terminable or revocable, or if the Grantor would be deemed to have
breached, violated or defaulted under any Related Contract, solely as a
consequence of the collateral assignment or grant of a security interest
created by this Agreement (collectively, the "Excepted Collateral"), then such
Collateral shall be excepted and excluded from the Security Interest granted by
this Agreement and the related definitions of Accounts, Contract Rights,
Related Contracts, Receivables, Inventory and Equipment contained in this
Agreement, as applicable, but only to the extent necessary to avoid such
forfeiture, voidness, voidability, terminability, revocability, breach,
violation or default and only in the event that any such breach, violation,
default or other event cannot be remedied by the Grantor using its good faith
efforts (but without any obligation to make any expenditures of money or
commence legal proceedings) unless any such provision in any Assigned Contract
shall not be effective in accordance with Sections 9-406 and 9-408 of the UCC
or any other Applicable Law. And further provided, however, notwithstanding the
foregoing, the grant of security interest, collateral assignment and pledge
under this Agreement shall not include or apply to "margin stock" within the
meaning of the FRB's Margin Regulations acquired with the proceeds of the Term
Loan A Facility.
1.2. Security for Secured Obligations. This Security Agreement
secures the payment and performance in full of (a) all obligations (monetary or
otherwise) of Borrower and each other Obligor now or hereafter existing under
the Credit Agreement or any other Loan Document as well as under any other
agreement with Administrative Agent or any Lender to extend credit to Borrower
(whether for principal, interest, costs, fees, expenses, protective advances or
otherwise), and (b) all obligations (monetary or otherwise) of Grantor now or
hereafter existing under this Security Agreement or any other Loan Document
(all such obligations under Clauses "(a)" and "(b)" being referred to
collectively as the "Secured Obligations").
1.3. Continuing Security Interest; Assignment; Termination. This
Security Agreement creates a continuing security interest in and collateral
assignment and pledge of the Collateral and will remain in full force and
effect until terminated as described below in this Section. This Security
Agreement is binding upon Grantor and its successors, transferees and
assignees, and (together with the rights and remedies of Administrative Agent
hereunder) inures to the benefit of Administrative Agent and its successors,
transferees, participants and assignees. Without limiting the generality of the
foregoing, except to the extent restricted under the Credit Agreement,
Administrative Agent and each Lender may assign, syndicate, participate or
otherwise transfer (in whole or in part, and without Grantor's consent) any
Loan Document and any indebtedness thereunder to any other Person, and such
other Person or entity will thereupon become vested with all the rights and
benefits in respect thereof granted to Administrative Agent or such Lender
under any such Loan Document (including this Security Agreement) or otherwise,
subject, however, to any contrary provisions in such assignment or transfer.
The security interest, collateral assignment and pledge granted herein will
terminate (and all rights to the Collateral will revert to Grantor) upon
satisfaction of the following conditions: (a) payment and performance in full
of all Secured Obligations (unconditionally and indefeasibly) and (b) the
termination of the Credit Agreement (and the Facilities thereunder). Upon any
such termination, Administrative Agent (at Grantor's request and sole expense)
(a) will promptly execute and deliver to Grantor (without any representation,
warranty or recourse of any kind whatsoever) such documents as Grantor may
reasonably request and provide to Administrative Agent to evidence such
termination, and (b) will promptly deliver to Grantor or to another Person that
Administrative Agent reasonably believes may be entitled thereto (without any
representation, warranty or recourse of any kind whatsoever) all stock
certificates and instruments representing or evidencing Collateral being
physically held by Administrative Agent hereunder.
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1.4. Equity Pledge.
x. Xxxxx of Security Interest. Pursuant to Section 1.1,
without limiting the generality thereof, Grantor pledges, hypothecates,
assigns, charges, mortgages, delivers, and transfers to Administrative Agent
and grants to Administrative Agent a present, absolute, unconditional and
continuing security interest in all of the following property (collectively,
"Pledged Equity Collateral"):
1. All Pledged Equity currently owned by
Grantor; provided, however, Grantor shall
not be required by the terms hereof to
grant to the Administrative Agent a
security interest with respect to a
Subsidiary that is not a Domestic
Subsidiary to the extent that, as a result
thereof, more than 65% of the Pledged
Equity of such Subsidiary would then be
pledged to the Administrative Agent for the
benefit of the Lenders; and
2. All Pledged Equity issued from time to time
hereafter to Grantor; provided, however,
Grantor shall not be required by the terms
hereof to grant to the Administrative Agent
a security interest with respect to a
subsidiary that is not a Domestic
Subsidiary to the extent that, as a result
thereof, more than 65% of the Pledged
Equity would then be pledged to the
Administrative Agent for the benefit of the
Lenders; and
3. All other Pledged Equity Property
(including, all options and warrants for
Pledged Equity) owned by Grantor, whether
now or hereafter delivered to
Administrative Agent in connection with
this Security Agreement; and
4. All Dividends, Distributions, capital
accounts, and other payments and rights
with respect to any Pledged Equity Property
received or receivable by Grantor; and
5. All proceeds of any of the foregoing; and
in each case, whether now existing or owned or hereafter acquired by Grantor
and howsoever Grantor's interest therein may arise or appear (whether by
ownership, security interest, claim or otherwise).
b. Delivery of Pledged Equity Property. To the extent
that any of the Collateral is evidenced by a certificate or instrument, then
all such certificates or instruments (a) must be delivered to and held by or on
behalf of Administrative Agent pursuant hereto, and (b) must be in suitable
form for transfer by delivery, and (c) must be accompanied by all necessary
powers, appointments and instruments of transfer or assignment, duly executed
in blank.
c. Dividends and Distributions on Pledged Shares.
Except as otherwise provided in the Credit Agreement (including but not limited
to Section 5.10 thereof), all Dividends, Distributions, non-Dividend cash
payments, and proceeds thereof paid or payable to Grantor must be paid directly
to Administrative Agent (properly endorsed if required hereby or requested by
Administrative Agent) as additional Collateral hereunder, unless and until
Administrative Agent has terminated this Security Agreement as provided in
Section 1.3. All Dividends, Distributions, cash payments, and proceeds that at
any time and from time to time may be delivered to Grantor but which Grantor is
then obligated to deliver to Administrative Agent, until delivery to
Administrative Agent, must be held by Grantor (a) in trust for Administrative
Agent and (b) separate, segregated and apart from its other property.
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1.5. Collateral Assignment of Contracts.
x. Xxxxx of Security Interest. Pursuant to Section 1.1
(and subject to the limitations set forth in the last paragraph thereof),
without limiting the generality thereof, Grantor collaterally assigns to
Administrative Agent all of Grantor's right, title and interest in and to all
of Grantor's contracts, licenses, leases and other agreements and all rights,
interests, powers, privileges and other benefits thereunder (including the
rights to receive all proceeds and payments under each such contract, license,
lease and other agreement). This assignment of each contract, license, lease
and other agreement constitutes a fully perfected, absolute, unconditional and
present assignment, provided, however, that prior to the occurrence of an Event
of Default, Grantor may exercise any rights and powers under and may receive
all payments and enjoy all other benefits of each such contract, license, lease
and other agreement, subject to the terms and provisions of this Security
Agreement and the other Loan Documents.
b. Administrative Agent's Right to Cure. After an Event
of Default and during the continuation thereof, Administrative Agent shall have
the right (but not the obligation) to cure or remedy any breach or default
under any contract, license, lease or other agreement on the part of Grantor.
The exercise by Administrative Agent of any of its rights hereunder will not
release Grantor from any of its duties or obligations under any such contracts,
licenses, leases or other agreements included in the Collateral. Neither
Administrative Agent nor any Lender has any obligation or liability under any
such contracts, licenses, leases or other agreements included in the Collateral
by reason of this Security Agreement, nor is Administrative Agent or any Lender
obligated to perform any of the obligations or duties of Grantor thereunder or
to take any action to collect or enforce any claim for payment assigned
hereunder.
1.6. Collateral Interest in Certain Intellectual Property.
Notwithstanding the language of Section 1.1, Administrative Agent's interest in
Copyrights, Patents and Trademarks (and any applications therefor) is as a
security interest and pledge and not as an absolute assignment.
ARTICLE 2: REPRESENTATIONS AND WARRANTIES
Grantor hereby represents and warrants to Administrative Agent as set
forth in this Article.
2.1. Location of Collateral. Except as identified on Schedule 2.1,
all of the Equipment and Inventory of Grantor is located at the address set
forth below the name of Grantor on the signature page hereof. Except as
identified on Schedule 2.1, within the four months preceding the date of this
Security Agreement, none of the Equipment or Inventory has been located at any
place other than at such address. The principal places of business and chief
executive office of Grantor and the offices where Grantor keeps its records
concerning the Contract Rights and Related Contracts are located at the address
identified on Schedule 2.1.
2.2. Operating Names. Except as identified on Schedule 2.2, during
the preceding six (6) years, Grantor has not been (a) operating under or known
by any legal or trade name different from the one set forth on the signature
page hereto or (b) the subject of any merger or other corporate reorganization.
2.3. Ownership; No Liens. Except as identified on Schedule 2.3,
Grantor is the sole and exclusive owner of or has the irrevocable, exclusive
and transferable right to possess and use the Collateral, and Grantor has full
authority to pledge, assign and grant a security interest in the Collateral.
The Collateral is free and clear of any Lien except (a) the security interest,
collateral assignment and pledge created by this Security Agreement and (b) as
otherwise permitted by the Credit Agreement. Borrower has not authorized the
filing of any financing statement or other instrument similar in effect
covering all or any part of the Collateral, except (1) financing statements and
intellectual property security agreements filed in favor of Administrative
Agent
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relating to this Security Agreement and (2) such other financing statements and
instruments as identified on Schedule 2.3 and (3) as otherwise permitted by the
Credit Agreement.
2.4. Government Contracts. Except as identified on Schedule 2.4,
Grantor is not a party to any Federal, state or local government contract
(either domestic or foreign).
2.5. Negotiable Documents, Instruments, Certificated Securities
and Chattel Paper. Grantor will deliver possession of all originals of each of
the following owned or held property (duly endorsed in blank, if requested by
Administrative Agent) to Administrative Agent: (a) certificated securities, to
be delivered contemporaneously with the execution of this Security Agreement;
and (b) negotiable documents, instruments and chattel paper (other than checks
received in the ordinary course of business) to be delivered immediately upon
request by Administrative Agent.
2.6. Intellectual Property Collateral. With respect to each item
of Intellectual Property Collateral:
a. Such Intellectual Property Collateral is subsisting,
valid and enforceable, and to Grantor's knowledge (after due inquiry), such
Intellectual Property Collateral has not been adjudged invalid or
unenforceable, in whole or in part.
b. Except as disclosed on Schedule 3.11 of the Credit
Agreement, to Grantor's knowledge (after due inquiry), no claim has been made
that the use of any Intellectual Property Collateral does or may violate the
asserted rights of any third party.
c. Grantor has performed all acts and has paid all
required fees and taxes to maintain each and every item of its Intellectual
Property Collateral which has been registered with the appropriate Official
Body in full force and effect throughout the world, as applicable, except where
such fees and taxes are being contested in good faith with diligent
prosecution.
d. Grantor owns directly, or is entitled to use by
license or otherwise, all Patents, Trademarks, Trade Secrets, Copyrights,
licenses, technology, know-how, processes and rights with respect to any of the
foregoing used in or necessary for the conduct of Grantor's business. To the
extent any such Intellectual Property Collateral was developed or created for
or on behalf of Grantor as a "work for hire," then Grantor has obtained a
waiver of any rights herein by the author or creator hereof.
2.7. As to Pledged Shares. With respect to any Pledged Equity
constituting Collateral, all of such Pledged Equity is duly authorized and
validly issued, fully paid, and non-assessable. The Pledged Equity constitutes
all of the issued and outstanding shares (and other rights) of equity ownership
of each domestic Pledged Equity Issuer owned by Grantor and 65% of each foreign
Pledged Equity Issuer.
2.8. Valid and Perfected Security Interest. This Security
Agreement creates a valid security interest in and collateral assignment and
pledge of the Collateral and proceeds thereof securing the payment of the
Secured Obligations. All filings and other actions necessary or desirable to
perfect and protect such security interest, collateral assignment and pledge
have been duly taken or will be duly taken as of the effective date hereof,
unless otherwise consented to by the Administrative Agent. Schedule 2.8 (a)
lists each filing (including filing locations and "debtor" names) that is
necessary or appropriate to perfect the security interests, collateral
assignments and pledges created hereby (including with respect to Intellectual
Property Collateral), and (b) identifies the items of Collateral that must be
delivered to or possessed by Administrative Agent to perfect Administrative
Agent's interest hereunder. Upon perfection (as described in this Section),
such security interest, collateral assignment and pledge will be of a first
priority ranking except as and to the extent noted in Section 2.3 (or on the
corresponding schedule thereto).
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2.9. Authorization and Approval. Except as noted in Section 2.8
(or on the corresponding schedule thereto), no authorization, approval or other
action by (and no notice to or filing with) any Official Body or other Person
is required either (a) for the grant by Grantor of the security interest,
collateral assignment and pledge granted hereby, or (b) for the execution,
delivery and performance of this Security Agreement by Grantor, or (c) for the
perfection by Administrative Agent of its rights and interests hereunder, or
(d) for the exercise by Administrative Agent of its rights and remedies
hereunder.
2.10. Compliance with Laws and Contracts. Grantor is (and after
execution and delivery of the Loan Documents to which Grantor is a party,
Grantor will be) in compliance in all material respects with the requirements
of all applicable laws, rules, regulations, policies, orders and decrees of
every Official Body and with all contractual restrictions, in either instance
the non-compliance with which individually or in the aggregate could reasonably
be expected to have or cause a Material Adverse Effect.
2.11. Validity of Obligations. This Security Agreement constitutes
the legal, valid and binding obligation of Grantor and is enforceable against
Grantor in accordance with the terms hereof.
2.12. Solvency; Fraudulent Transfers. Grantor is not "insolvent,"
as such term is defined in Section 101(32) of the Bankruptcy Code (11 U.S.C.
ss. 101(32)). Grantor, by virtue of its obligations and actions in connection
with the Loan Documents, has neither engaged in nor is engaging in any
transaction that constitutes a fraudulent transfer or fraudulent conveyance
under applicable federal or state law (including under Section 548 of the
Bankruptcy Code or under the Uniform Fraudulent Transfer Act or the Uniform
Fraudulent Conveyance Act).
2.13 State of Organization; Transferability. Grantor is organized
in the State of Delaware and has been so organized for the four month period
preceding the date of the Credit Agreement. Grantor has rights in, or the power
to transfer, the Collateral.
ARTICLE 3: COVENANTS
Grantor covenants and agrees that, so long as this Security Agreement
remains effective, Grantor will comply with the covenants set forth in this
Article, unless Administrative Agent otherwise consents in writing.
3.1. As to Equipment and Inventory.
a. Except as permitted by Section 5.14 of the Credit
Agreement, Grantor will keep all the Equipment and Inventory (other than
Inventory and Equipment sold in the ordinary course of business or as otherwise
permitted by the Credit Agreement) at the places therefor specified in Section
2.1 or (upon prior written notice to Administrative Agent of at least 30
calendar days) at such other places in a jurisdiction where all of the
representations and warranties in Article 2 at that time will be true and
correct. Grantor will take all actions reasonably necessary to ensure the
continued perfection of Administrative Agent's interest in such Equipment and
Inventory.
b. Grantor will maintain and preserve the Equipment in
proper repair and working order (ordinary wear and tear excepted). Grantor will
forthwith (or, in the case of any loss or damage to any Equipment, as quickly
as practicable after the occurrence thereof) make or cause to be made all
repairs, replacements and other improvements in connection with the Equipment
that are reasonably necessary to maintain the Equipment in accordance with the
standard set forth in this Section. Grantor will promptly furnish to
Administrative Agent a statement respecting any material loss or damage to any
of the Equipment.
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c. Grantor will pay promptly before delinquent all
property and other taxes, assessments and governmental charges or levies
imposed upon, and all claims (whether for labor, materials or supplies)
against, the Equipment and Inventory, except to the extent the validity thereof
is being contested in good faith by appropriate proceedings diligently
prosecuted and for which adequate reserves in accordance with GAAP have been
set aside.
3.2. As to Contracts and Related Rights.
a. Grantor will keep its principal place of business
and chief executive office and the office where it keeps its records concerning
the Contract Rights and Related Contracts, and all originals of all chattel
paper which evidence Contract Rights, located at the places therefor specified
in Section 2.1 or (upon prior written notice to Administrative Agent of at
least 30 calendar days) at such other places in a jurisdiction where all of the
representations and warranties in Article 2 at that time will be true and
correct. Grantor will take all actions necessary to ensure the continued
perfection of Administrative Agent's interest in the Contract Rights and
Related Contracts. Grantor will not change its name except upon prior written
notice to Administrative Agent of at least 30 calendar days. Grantor will hold
and preserve such records and chattel paper concerning the Contract Rights and
Related Contracts and will permit representatives of Administrative Agent or
any Lender at any time during normal business hours to inspect and make
abstracts from such records and chattel paper. Upon the occurrence and during
the continuation of a Default or an Event of Default, Administrative Agent
shall have the right at any time, and from time to time, to verify the validity
and amount of any Contract Right by communication in writing or orally directly
with the parties thereto.
b. Grantor will remain liable under the contracts,
licenses, leases and other agreements included in the Collateral to the extent
set forth therein. Without limiting the foregoing, unless Grantor otherwise
receives Administrative Agent's prior written consent (which consent will not
be unreasonably withheld while no Default is occurring), then Grantor (a) will
faithfully abide by, perform and discharge each and every material obligation,
covenant and agreement under each Material Contract (as such term is defined in
the Credit Agreement) to be performed by Grantor, and (b) will not materially
adversely amend, modify or otherwise alter the terms of any Material Contract
(including the term or duration thereof or the amount of or methodology for
calculating the compensation due thereunder), and (c) will not assign its
rights under any Material Contract, and (d) will not accept (and will not take
any action to cause) a surrender, termination, revocation or cancellation of
any Material Contract unless replaced by a substantially similar contractual
relationship reasonably acceptable to Administrative Agent, and (e) will
enforce the performance of each and every material obligation, covenant and
condition of each Material Contract to be performed by the other parties
thereto, and (f) will appear in and defend any action or proceeding arising
under or in any manner connected with any Material Contract.
c. Grantor will give prompt written notice to
Administrative Agent of the occurrence of any default, breach or other material
event, condition or circumstance relating to any of Grantor's Material
Contracts (together, if applicable, with a true and complete copy of any
related written notice that Grantor may have given to or received from any
other party thereto).
3.3. As to Pledged Equity Collateral.
x. Xxxxxx and Appointments. Grantor agrees that all
Pledged Equity (and all other equity ownership interests constituting Pledged
Equity Collateral) delivered by Grantor pursuant to this Security Agreement
will be accompanied by duly executed undated blank powers, appointments or
other equivalent instruments of transfer acceptable to Administrative Agent.
From time to time at Administrative Agent's request, Grantor will promptly
deliver to Administrative Agent such powers, appointments, instruments and
similar documents (satisfactory in form and substance to Administrative Agent)
with respect
10
to the Collateral. From time to time at Administrative Agent's request after
acceleration of all or any portion of the Secured Obligations, Grantor will
promptly transfer any Pledged Equity or other shares of capital stock or
ownership interests constituting Collateral into the name of any nominee
designated by Administrative Agent.
b. Continuous Pledge; Protect Pledged Equity
Collateral. At all times, Grantor will keep pledged to Administrative Agent
pursuant hereto all Pledged Equity, all other Pledged Collateral, all Dividends
and Distributions with respect thereto (subject, however, to Section 1.4.c),
and all other securities, instruments, proceeds, capital accounts, and rights
from time to time received by or distributable to Grantor in respect of any
Pledged Equity Collateral. Grantor will warrant and defend the right and title
herein granted to Administrative Agent in and to the Pledged Equity Collateral
(and all right, title, and interest represented by the Pledged Equity
Collateral) against the claims and demands of all persons whomsoever.
c. Delivery of Dividends, Distributions and Other
Collateral. Promptly upon receipt and without any request by Administrative
Agent, Grantor agrees to deliver to Administrative Agent (properly endorsed if
required hereby or requested by Administrative Agent) all Distributions, all
Dividends (subject, however, in each case to Section 1.4.c), all other
non-Dividend cash payments, and all proceeds thereof, all of which will be held
by Administrative Agent as additional Pledged Equity Collateral. All Dividends,
Distributions, cash payments, and proceeds that at any time and from time to
time may be delivered to Grantor but which Grantor is then obligated to deliver
to Administrative Agent, until delivery to Administrative Agent, must be held
by Grantor (a) in trust for Administrative Agent and (b) separate, segregated
and apart from its other property.
d. Voting Rights.
1. Unless and until an Event of Default has
occurred and is continuing, Grantor will have the exclusive right to exercise
all voting rights with respect to its Pledged Equity. Upon written request from
Grantor (and at Grantor's sole expense), Administrative Agent will promptly
execute and deliver such proxies and other documents, if any, as reasonably
requested in writing by Grantor (together with a reasonably acceptable form
thereof) that are necessary to allow Grantor to exercise voting power with
respect to any such Pledged Equity owned by Grantor constituting Pledged Equity
Collateral; provided, however, that no vote may be cast or other action taken
by Grantor (including, the giving of any consent, waiver, or ratification) that
could impair any Pledged Equity Collateral or would otherwise be inconsistent
with or violate any provision of any Loan Document (including this Security
Agreement).
2. After any Event of Default has occurred and
is continuing and Administrative Agent has notified Grantor of Administrative
Agent's intention to exercise its voting power, unless otherwise then expressly
impermissible under applicable law, Administrative Agent may exercise (to the
exclusion of Grantor) the voting power and all other incidental rights of
ownership with respect to any Pledged Equity or other ownership interests
constituting Pledged Equity Collateral. Grantor hereby grants Administrative
Agent an irrevocable proxy, exercisable under such circumstances, to vote the
Pledged Equity and such other Pledged Equity Collateral. Grantor hereby
covenants to promptly deliver to Administrative Agent such additional proxies,
appointments and other documents as may be necessary to allow Administrative
Agent to exercise such voting power and other incidental ownership rights.
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3.4. As to Intellectual Property Collateral.
a. Grantor (1) will maintain (in a manner consistent
with its historical practices) the quality of products and services offered
under all of the material Trademark Collateral, or (2) will employ with all of
the material Trademark Collateral (whether or not registered with any Official
Body) an appropriate notice of such trademark, or (3) will employ with all of
the material Copyright Collateral an appropriate notice of such copyright, or
(4) will employ with any issued Patent within the Patent Collateral an
appropriate notice of such registration.
b. Grantor will not permit any act to be done (or
knowingly omit to do any act) whereby any of the material Intellectual Property
Collateral may lapse or become abandoned, forfeited, invalid, dedicated to the
public or unenforceable (except upon expiration of the end of an unrenewable
term of a registration thereof) without the prior written consent of
Administrative Agent (which consent will not be unreasonably withheld while no
Default is occurring).
c. Grantor will promptly notify Administrative Agent if
Grantor believes (or has reason to believe) that (1) any application or
registration relating to any material item of the Intellectual Property
Collateral may become abandoned, dedicated to the public, placed in the public
domain, invalid or unenforceable, or (2) there has been or will be an adverse
determination or development (including the institution of, or any
determination or development in, any proceeding in the United States Patent and
Trademark Office, the United States Copyright Office or any other Official
Body) regarding Grantor's ownership of any material item of the Intellectual
Property Collateral, its right to register the same, or its right to keep,
maintain and enforce the same.
d. If Grantor files an application for the registration
of any Intellectual Property Collateral with the United States Patent and
Trademark Office, the United States Copyright Office or any other Official
Body, then Grantor must notify Administrative Agent thereof within 90 calendar
days thereafter, and upon request of Administrative Agent, must promptly
execute and deliver any and all agreements, instruments, documents and papers
that Administrative Agent may request to evidence Administrative Agent's
security interest in such Intellectual Property Collateral.
e. Grantor will perform all acts and will pay all
required fees and taxes (including in any proceeding before the United States
Patent and Trademark Office, the United States Copyright Office or any other
Official Body) to maintain each and every item of material Intellectual
Property Collateral in full force and effect in the United States, and to
pursue any application filed with respect to the Intellectual Property
Collateral, including the filing of applications for renewal, affidavits of
use, affidavits of incontestability and opposition, and interference and
cancellation proceedings.
f. Grantor will notify the Administrative Agent at such
times and in such manner as is required under Section 4.2.2 of the Credit
Agreement upon Grantor's acquiring any Intellectual Property Collateral and,
upon Administrative Agent's request, Grantor will promptly thereafter record
Administrative Agent's interest therein.
g. Grantor (1) will protect, defend and maintain the
validity and enforceability of the material Intellectual Property Collateral,
and (2) will use its best efforts to detect infringements of the material
Intellectual Property Collateral and promptly notify Administrative Agent in
writing of material infringements detected.
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h. Grantor, on a continuing basis, will register
Grantor's material Trademarks, pursue patent protection for Grantor's material
inventions, and register the most recent versions of any of Grantor's material
Copyrights.
i. Grantor will not enter into any agreement that would
materially impair or conflict with Grantor's obligations hereunder with respect
to its Intellectual Property Collateral. Grantor will not permit the inclusion
in any material contract to which it becomes a party any provisions that could
in any way prevent the creation of a security interest in Grantor's rights and
interest in any property included within the definition of the Intellectual
Property Collateral acquired or licensed under such contracts. Grantor will not
arrange for the creation or development of any Intellectual Property Collateral
as a "work for hire" without concurrently obtaining an assignment and/or waiver
of all rights therein by the author or creator thereof.
j. Grantor will promptly notify Administrative Agent in
writing upon obtaining knowledge of any event that materially adversely affects
(1) the value of any material Intellectual Property Collateral, or (2) the
ability of Grantor to dispose of any material Intellectual Property Collateral,
or (3) the rights and remedies of Administrative Agent in relation thereto,
including the levy of any legal process against any of the Intellectual
Property Collateral.
k. Grantor, on a continuing basis, will make, execute,
acknowledge and deliver, and will file and record in the proper filing and
recording places in the United States, all such instruments, collateral
agreements and filings (including all appropriate financing and continuation
statements) with the United States Patent and Trademarks Office and the
Register of Copyrights, and any other appropriate official body located in the
United States, as are necessary or advisable to perfect or protect
Administrative Agent's security interest in all material Intellectual Property
Collateral located or deemed located in the United States and otherwise to
carry out the intent and purpose of this Security Agreement, or for assuring
and confirming to Administrative Agent the grant or perfection of a security
interest in all Intellectual Property Collateral.
1. Grantor will continue to use each material Trademark
within the Trademark Collateral on or in connection with the goods and/or
services in each and every Trademark class of goods and services applicable to
its current line as reflected in its current catalogs, brochures and price
lists in order to maintain such material Trademark in full force and effect,
free from any claim of abandonment for non-use.
3.5. As to Customer and Material Business Records and Computer
Software.
a. Upon Administrative Agent's request, Grantor (at its
cost and expense) will maintain at a separate location a duplicate current copy
of (1) all lists, files and records of active and prospective customers and
subscribers, and (2) all material computer software and data bases (including
all material application and operating system software and all material data
files and operating manuals), and (3) all other material business files,
records and software that Administrative Agent may reasonably request in
writing from time to time. Unless Administrative Agent otherwise consents, such
records, materials and information must be kept (at Grantor's election) either
with Administrative Agent or with an unrelated business that is engaged in the
business of storing such items and that is reasonably acceptable to
Administrative Agent. For purposes of this Clause, such records, materials and
information will be considered "current" if they were accurate and complete
within the immediately preceding 30 calendar days.
b. If Grantor elects to keep such records, materials
and information with an unrelated business, then (upon Administrative Agent's
request) Grantor will notify such business at which such records, materials and
information are maintained (1) that Administrative Agent, each Lender and their
representatives are authorized from time to time to inspect, examine, audit and
make copies and abstracts of such records, materials and information during
normal business hours, and (2) that, upon receipt of written notice from
13
Administrative Agent that an Event of Default has occurred under the Loan
Documents, such business is to release and deliver such records, materials and
information to Administrative Agent in such manner and at such place as
Administrative Agent may direct (in its sole and absolute discretion), and (3)
that such business is not to release or return such records, materials or
information to Grantor without Administrative Agent's prior written consent
unless (a) Grantor has delivered a more current version thereof to such
business or (b) this Security Agreement has been terminated in accordance with
Section 1.3.
c. Grantor will also otherwise utilize standard
industry precautions to safeguard the utility, value and confidentiality of all
such records, materials and information covered by this Section.
3.6. As to Certain Investment Property (including Margin Stock).
Without obtaining Administrative Agent's prior written consent, Grantor will
not establish or maintain any "securities account" or "financial asset" with
any "securities intermediary" (as such terms are defined in Article 8 of the
UCC), unless a control agreement acceptable in form and substance to
Administrative Agent is first executed by such "securities intermediary"
securing Administrative Agent's first priority interest and rights in and to
all "financial assets" and "security entitlements" associated with such
"securities account". Without obtaining Administrative Agent's prior written
consent (which consent will not be unreasonably withheld while no Default is
occurring), and except as otherwise permitted under Section 5.16 of the Credit
Agreement, Grantor will not purchase or carry any "Margin Stock" within the
meaning of Regulations T, U or X of the Board of Governors of the Federal
Reserve System.
3.7. Insurance. Grantor will maintain insurance coverages to the
same extent and subject to the same requirements and conditions as required for
Borrower under the Credit Agreement. At any time during the occurrence of an
Event of Default payments and proceeds in respect of insurance coverage
("Insurance Proceeds") are to be delivered to Administrative Agent and may be
held by Administrative Agent (at its discretion) as additional Collateral for
and may be applied by Administrative Agent in whole or in part against, all or
any part of the Secured Obligations in such order as Administrative Agent
elects. All other Insurance Proceeds received by Grantor will be used to repair
or replace the lost, stolen, damaged or destroyed property which formed the
basis of Grantor's receipt of such Insurance Proceeds.
3.8. Transfers and Other Liens.
a. Grantor will not sell, transfer, assign, lease,
license or otherwise dispose of any of the Collateral, except (1) Inventory
sold, leased or licensed in the ordinary course of business to unrelated third
parties for value received, and (2) Equipment that has become obsolete or worn
out, and (3) Equipment leased or licensed in the ordinary course of business to
unrelated third parties for value received, and (4) Intellectual Property
Collateral licensed to unrelated third parties for value received and subject
to at least commercially reasonable terms and conditions from the perspective
of Grantor, and (5) as otherwise permitted by the Credit Agreement.
b. Grantor will maintain the security interest,
collateral assignment and pledge created hereby as a first priority interest
(except as otherwise permitted by the Credit Agreement), and Grantor will not
create or suffer to exist any Lien upon or with respect to any of the
Collateral to secure any indebtedness or obligations of any Person, (except as
otherwise permitted by the Credit Agreement).
3.9. Further Assurances. Grantor (from time to time at its own
expense) will promptly execute and deliver all further instruments and
documents, and will take all further action, that may be necessary or desirable
(or that Administrative Agent may reasonably request) in order to perfect,
preserve and protect any security interest, collateral assignment or pledge
granted or purported to be granted hereby or to enable
14
Administrative Agent to exercise and enforce its rights and remedies hereunder
with respect to any Collateral. Without limiting the generality of the
foregoing, Grantor:
a. Will xxxx conspicuously each chattel paper included
in the Contract Rights and, at the request of Administrative Agent, each of its
records pertaining to the Collateral with a legend (in form and substance
reasonably satisfactory to Administrative Agent) indicating that such chattel
paper is subject to the security interest, collateral assignment and pledge
granted hereby; and
b. If any Contract Rights shall be evidenced by a
promissory note or other instrument, negotiable document or chattel paper, then
will deliver and pledge to Administrative Agent hereunder such promissory note,
instrument, negotiable document or chattel paper duly endorsed and accompanied
by duly executed instruments of transfer or assignment, all in form and
substance reasonably satisfactory to Administrative Agent; and
c. Will execute and file such financing or continuation
statements, or amendments thereto, and such other instruments or notices as may
be necessary (or as Administrative Agent may reasonably request) in order to
perfect and preserve the security interests, collateral assignments, pledges
and other rights granted or purported to be granted to Administrative Agent
hereby; and
d. Will furnish to Administrative Agent (from time to
time at Administrative Agent's request) statements and schedules further
identifying and describing the Collateral and such other reports in connection
with the Collateral as Administrative Agent may reasonably request, all in
reasonable detail; and
e. Grantor will promptly notify the Administrative
Agent in writing of any change (i) in its legal name or in any trade name used
to identify it in the conduct of its business or in the ownership of its
properties, (ii) in the location of its chief executive office, principal place
of business, any office in which it maintains books or records relating to any
of the Collateral owned or held by it or on its behalf or any office or
facility at which any such Collateral is located (including the establishment
of any such new office or facility), (iii) in its identity or legal or
organizational structure or its jurisdiction of formation, or (iv) in its
Federal Taxpayer Identification Number. Grantor agrees not to effect or permit
any change referred to in the preceding sentence unless all filings have been
made under the UCC or otherwise that are required in order for the
Administrative Agent to continue at all times following such changes to have a
valid, legal and perfected security interest in all the Collateral with the
priority required hereby; and
f. Grantor shall not permit any Equipment or Inventory
to be in the possession or control of any warehouseman, bailee, agent or
processor for a period of greater than thirty (30) consecutive days, unless
such warehouseman, bailee, agent or processor shall have been notified of
Administrative Agent's security interest and shall have acknowledged and agreed
in writing to hold such Equipment and Inventory subject to Administrative
Agent's security interest and the instructions of the Administrative Agent and
to waive and release any lien held by it with respect to such Equipment and/or
Inventory, whether arising by operation of law or otherwise.
With respect to the foregoing and the grant of the security interest,
collateral assignment and pledge hereunder, Grantor hereby authorizes
Administrative 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 Grantor where permitted by law. A carbon, photographic or
other reproduction of this Security Agreement or any financing statement
covering the Collateral or any part thereof shall be sufficient as a financing
statement where permitted by law.
15
ARTICLE 4: LENDER
4.1. Administrative Agent Appointed Attorney-in-Fact. Grantor
hereby irrevocably appoints Administrative Agent as Grantor's attorney-in-fact,
with full authority in the name, place and stead of Grantor or otherwise, from
time to time in Administrative Agent's reasonable discretion, after an Event of
Default, to take any action and to execute any instrument which Administrative
Agent may deem reasonably necessary or advisable to accomplish the purposes of
this Security Agreement. This authority includes the following:
a. To ask, demand, collect, xxx for, recover,
compromise, restructure, receive and give
acquittance and receipts for moneys due and to
become due under or in respect of any of the
Collateral; and/or
b. To notify the parties obligated on any of the
Collateral to make payment to Administrative Agent
of any amount due or to become due in connection
therewith; and/or
c. To receive, endorse, and collect any drafts, checks
or other instruments, documents and chattel paper in
connection with Clause "a" of this Section; and/or
d. To file any claims or take any action or institute
any proceedings which Administrative Agent may deem
reasonably necessary or desirable for the collection
of any of the Collateral or otherwise to enforce the
rights of Administrative Agent, any Lender or
Grantor with respect to any of the Collateral;
and/or
e. To execute (in the name, place and stead of Grantor)
endorsements, assignments, powers and other
instruments of conveyance or transfer with respect
to all or any of the Collateral; and/or
f. To execute (in the name, place and stead of Grantor)
UCC financing statements, amendments and
continuations; and/or
g. To perform any and all of the affirmative
obligations and covenants of Grantor hereunder (with
notice thereof to be provided to Grantor by
Administrative Agent within a reasonable time
thereafter).
Grantor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest,
but that it will terminate upon the termination of this Security Agreement
pursuant to Section 1.3.
4.2. Administrative Agent May Perform. From time to time,
Administrative Agent (at its option) may perform (or may cause the performance
of) any act which Grantor agrees hereunder to perform and which Grantor fails
to perform after being requested in writing so to perform (it being understood
that no such request need be given during the continuance of an Event of
Default), and Administrative Agent from time to time may also take any other
action which Administrative Agent reasonably deems necessary for the
maintenance, preservation or protection of any of the Collateral or of its
security interest therein or collateral assignments or pledges thereof. The
costs and expenses of Administrative Agent incurred in connection with any such
performance will be payable by Grantor pursuant to Section 5.3 hereof.
4.3. Administrative Agent Has No Duty. The rights and powers
conferred upon Administrative Agent hereunder are solely to protect
Administrative Agent's and each Lender's interest in the Collateral and
16
do not impose any duty on Administrative Agent to exercise any such rights or
powers. Except for reasonable care of any Collateral in Administrative Agent's
possession and the accounting for moneys actually received by it hereunder,
Administrative Agent has no duty as to any Collateral or as to the taking of
any necessary steps to preserve rights against prior parties or any other
rights pertaining to any Collateral.
4.4. Reasonable Care. Administrative Agent is required to exercise
reasonable care in the custody and preservation of any of the Collateral in its
possession; provided, however, Administrative Agent will be deemed to have
exercised such reasonable care in the custody and preservation of any of the
Collateral if Administrative Agent takes such action for that purpose as
Grantor reasonably requests in writing at times other than after the occurrence
or during the continuance of a Default. Notwithstanding the foregoing, any
failure or refusal by Administrative Agent at any time to comply with any such
request by Grantor will not in itself be deemed a failure to exercise
reasonable care.
ARTICLE 5: DEFAULTS AND REMEDIES
5.1. Events of Default. The occurrence of any "Event of Default"
under and as defined in the Credit Agreement will constitute an independent
Event of Default ("Event of Default") hereunder.
5.2. Certain Remedies. If any Event of Default occurs and is
continuing:
a. In addition to other rights and remedies provided
for herein (including under Article 4) or otherwise available to Administrative
Agent or any Lender (including under the other Loan Documents and/or applicable
law), Administrative Agent may also exercise in respect of the Collateral all
the rights and remedies of a secured party upon default under the UCC (whether
or not the UCC applies to the affected Collateral). Upon the occurrence of any
Event of Default, Administrative Agent will have the immediate right to enforce
and realize upon any and all collateral security granted under the Loan
Documents (including the Collateral hereunder) in any manner or order that
Administrative Agent deems expedient without regard to any equitable principles
of marshalling or otherwise. All rights and remedies available to
Administrative Agent or any Lender are to be considered cumulative in nature.
b. Without notice except as expressly specified herein
or required by applicable law, Administrative Agent may also sell the
Collateral or any part thereof in one or more parcels at public or private
sale, at any of Administrative Agent's offices or elsewhere, for cash, on
credit or for future delivery, and upon such other terms as Administrative
Agent may deem commercially reasonable. To the extent notice of sale is
required by law, Grantor agrees that prior notice to Grantor of at least ten
(10) calendar days indicating the time and place of any public sale or the time
after which any private sale is to be made shall constitute reasonable
notification. Administrative Agent shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. Administrative Agent
may adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale (without further notice) may be
made at the time and place to which it was so adjourned.
c. Administrative Agent may require Grantor to, and
Grantor hereby agrees (at its expense) that it will, forthwith assemble all or
part of the Collateral as directed by Administrative Agent and make it
available to Administrative Agent at a place designated by Administrative Agent
that is reasonably convenient to both Administrative Agent and Grantor.
d. Unless Administrative Agent otherwise consents, and
except as otherwise provided for in Sections 1.1.5.3 and 1.2.8.5 of the Credit
Agreement, Grantor will remit to Administrative Agent all cash proceeds
received in respect of any sale of, or collection from, or other realization
upon all or any part of the Collateral. All cash proceeds received by
Administrative Agent from Grantor or otherwise in respect of
17
any sale of, collection from, or other realization upon all or any part of the
Collateral (in the discretion of Administrative Agent) may be held by
Administrative Agent as additional Collateral for the Secured Obligations,
and/or then or at any time thereafter may be applied in whole or in part by
Administrative Agent against all or any part of the Secured Obligations in an
order consistent with the designated application of payments provided for in
Section 1.5 of the Credit Agreement. Any surplus of such cash or cash proceeds
held by Administrative Agent and remaining after payment in full of all the
Secured Obligations will be paid over to Grantor or to whomsoever
Administrative Agent reasonably believes may be lawfully entitled to receive
such surplus.
e. To the extent any of the Collateral represents an
interest in a partnership, a limited liability company or other unincorporated
enterprise, in addition to any other rights and remedies available to
Administrative Agent or any Lender under the Loan Documents or applicable law,
Administrative Agent (at its option but with notice to the relevant Grantor)
may also exercise all rights and privileges of the holder of such interest
under the agreements governing such Collateral and the Organic Documents for
the related organization or may instruct Grantor how to exercise such rights
and privileges (with which instructions Grantor hereby agrees to comply).
Grantor, in addition, covenants and agrees (at Administrative Agent's request)
to amend (and to use its best efforts to cause others to amend) any of the
Organic Documents for such organization in order to authorize Administrative
Agent to so exercise any such rights and privileges associated with such
Collateral (including voting rights and the rights to participate in management
decisions). The rights of Administrative Agent under this Subsection may be
transferred to and exercised by any subsequent acquiror or transferee of the
Collateral pursuant to any sale of or foreclosure on such Collateral. Grantor
hereby agrees that the rights of Administrative Agent and each Lender (or any
subsequent acquiror or transferee of the Collateral) under this Subsection may
be enforced by specific performance or otherwise.
5.3. Special Securities-Related Remedies.
a. Additional Rights. If, during the continuance of an
Event of Default, Administrative Agent determines to exercise its right to sell
all or any portion of the Pledged Equity Collateral pursuant to Section 5.2,
upon Administrative Agent's request, then Grantor (at its own expense):
1. Will execute and deliver, and will use best
efforts to cause each issuer of the Pledged
Equity Collateral contemplated to be sold
(and the directors and officers thereof) to
execute and deliver, all such instruments
and documents, and will do or use best
efforts to cause to be done all such other
acts and things as may be necessary or, in
Administrative Agent's opinion, advisable
(1) to register such Pledged Equity
Collateral under the provisions of the
Securities Act, and (2) to cause the
registration statement relating thereto to
become effective and to remain effective
for such period as prospectuses are
required by law to be furnished, and (3) to
make all amendments and supplements thereto
and to the related prospectus which, in
Administrative Agent's opinion, are
necessary or advisable, all in conformity
with the requirements of the Securities Act
and the rules and regulations of the
Securities and Exchange Commission
applicable thereto; and
2. Will use its best efforts to qualify the
Pledged Equity Collateral under the state
securities or "Blue Sky" laws and to obtain
all necessary governmental approvals for
the sale of the Pledged Equity Collateral,
as requested by Administrative Agent; and
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3. Will use best efforts to cause each such
issuer to make available to its security
holders, as soon as practicable, an
earnings statement that will satisfy the
provisions of Section 11(a) of the
Securities Act; and
4. Will do or use best efforts to cause to be
done all such other acts and things as may
be reasonably necessary, or in
Administrative Agent's opinion, advisable
to make such sale of the Pledged Equity
Collateral or any part thereof valid and
binding and in compliance with applicable
law.
In furtherance of the foregoing (and not in limitation of any other obligations
under the Loan Documents), Grantor covenants that it will fully cooperate with
the Administrative Agent, and will comply with all requests of Administrative
Agent, in order to permit Administrative Agent to fully and timely exercise the
remedies under this Section.
b. Compliance with Restrictions. Grantor agrees that,
in any sale of any of the Pledged Equity Collateral, Administrative Agent is
authorized to comply with any limitation or restriction in connection with the
type of such sale pursued as Administrative Agent may be advised by counsel is
necessary or desirable in order to avoid any violation of applicable law
(including compliance with such procedures as may restrict the number of
prospective bidders and purchasers, require that such prospective bidders and
purchasers have certain qualifications, and restrict such prospective bidders
and purchasers to persons who will represent and agree that they are purchasing
for their own account for investment and not with a view to the distribution or
resale of such Collateral), or in order to obtain any required approval of the
sale or of the purchaser by any Official Body. Grantor further agrees that such
compliance will not result in such sale being considered or deemed not to have
been made in a commercially reasonable manner, nor will Administrative Agent or
any Lender be liable or accountable to Grantor for any discount allowed by
reason of the fact that such Collateral is sold at foreclosure or otherwise in
compliance with any such limitation or restriction or by reason of the fact
that such Pledge Equity Collateral may represent a minority interest in
Grantor.
5.4. Special IP-Related Remedies (License of Intellectual Property
Collateral). Grantor hereby grants Administrative Agent a royalty-free,
non-exclusive, worldwide, irrevocable license (the "Remedies License") to make,
use and sell from time to time after the occurrence of any Event of Default
that is not waived by Administrative Agent and delivery of notice thereof by
Administrative Agent (unless such Event of Default is under Section 7.1.10 of
the Credit Agreement, in which case no such notification shall be required) all
present and future Intellectual Property Collateral of Grantor (including the
right to sub-license such Intellectual Property Collateral) in connection with
the maintenance, preservation, preparation, sale, disposition, collection,
foreclosure, or other realization of, upon, or with respect to the Collateral
or payment of the Secured Obligations in accordance with the Loan Documents.
Any such license for any Trademark shall include appropriate quality control
measures designed to protect the goodwill of such Trademarks. The Remedies
License shall remain in full force and effect until this Security Agreement is
terminated in accordance with Section 1.3 (but any sub-license or transfer of
the Remedies License prior to the termination of the Remedies License shall
survive such termination of the Remedies Licenses unless otherwise provided on
such sub-license or transfer document). The rights of Administrative Agent
under the Remedies License are assignable by Administrative Agent (without the
consent of Grantor) in connection with (a) any sale or other disposition of
Collateral in accordance with the Loan Documents to the extent necessary or
appropriate to permit the purchaser of such Collateral to have continuing and
royalty-free, worldwide rights with respect to such Collateral or (b) any
assignment or other transfer by Administrative Agent of all or any part of its
rights under and in accordance with the Loan Documents. Upon or at any time
after the occurrence of any Event of Default, Grantor will deliver to
Administrative Agent (at Administrative Agent's request but at Grantor's
expense) a copy of all such Intellectual Property Collateral and all related
other Collateral in a form requested by Administrative Agent. Administrative
Agent's rights as a licensee under this Section constitute a
19
separately enforceable contract from the balance of this Security Agreement.
5.5. Indemnity and Expenses.
a. Grantor agrees to indemnify and hold Administrative
Agent and each Lender harmless from and against any and all claims, losses and
liabilities arising out of or in any manner resulting from any or all of the
following: (1) Grantor's failure to perform or otherwise observe any of its
obligations hereunder, or (2) Administrative Agent's enforcement of any of the
provisions hereof, or (3) Grantor's gross negligence, misrepresentation,
willful misconduct or fraud.
b. Upon demand, Grantor will pay Administrative Agent
the amount of any and all costs and expenses that Administrative Agent or any
Lender may incur in connection with any of the matters described under clause
"a" of this Section. Without limitation, Grantor's obligation to reimburse
Administrative Agent for such fees, costs and expenses includes all reasonable
fees and disbursements of Administrative Agent's or any Lender's counsel and
any other experts and agents that Administrative Agent or any Lender may retain
in connection herewith (whether or not litigation is commenced).
5.6. Administrative Agent's Rights Upon Occurrence of Liquidation
Events.
a. Right to Certain Payments and Distributions. Upon
the occurrence of any Liquidation Event, any payment or distribution of any
kind or character (whether in cash, securities or other property) that but for
this Security Agreement would be payable or deliverable to Grantor must instead
be paid or delivered directly to Administrative Agent for application on the
Secured Obligations, whether or not then due or mature.
b. Non-Cash Payments and Distributions. Notwithstanding
the provisions of Clause "a" of this Section, if Administrative Agent receives
delivery of any such payment or distribution in connection with a Liquidation
Event in a form other than cash, then Administrative Agent may hold such
property as additional Collateral for the Secured Obligations, and neither
Grantor nor any other Obligor of the Secured Obligations will be entitled to a
credit with respect to the Secured Obligations, nor will the Secured
Obligations otherwise be adjusted in any respect, until such time as
Administrative Agent (in its sole and absolute discretion) has sold, discounted
or otherwise liquidated such distribution (at a price considered by
Administrative Agent to be in its sole best interest) and then (subject to the
terms of Section 7.8), such credit or adjustment to the Secured Obligations
will be limited only to the net cash proceeds realized therefrom after the
payment of all costs and expenses associated with such sale or liquidation.
c. Collection of Payments and Distributions. In
addition to any rights otherwise permitted under the Loan Documents or
applicable law, Grantor hereby irrevocably authorizes and empowers
Administrative Agent, upon the occurrence of a Liquidation Event, to file
and/or vote claims and take such other proceedings, in each instance in
Administrative Agent's own name or in the name of Grantor, or otherwise, all as
Administrative Agent may deem reasonably necessary or advisable for the
enforcement of this Security Agreement. Grantor further agrees duly and
promptly (i) to take such action as may be requested by Administrative Agent to
assist in the collection and/or compromise of any amounts owed to Grantor, and
(ii) to file appropriate proofs of claim in respect of such amounts, and (iii)
to execute and deliver to Administrative Agent on demand such powers of
attorney, proofs of claim, assignments of claim or other instruments as may be
requested by Administrative Agent to enable Administrative Agent to enforce any
and all claims upon or with respect to such amounts, and (iv) to collect,
compromise and receive any and all payments or distributions which may be
payable or deliverable at any time upon or with respect to such amounts.
20
5.7. Delivery of Payments and Distributions. If Grantor receives
any payment, distribution or any other funds or property in contravention of
the provisions hereof or any other Loan Document, then Grantor must immediately
forthwith deliver such payment, distribution or other funds or property (or
proceeds thereof) to Administrative Agent in precisely the form received
(except for the endorsement or assignment without recourse of Grantor where
necessary) for application on the Secured Obligations (or, at Administrative
Agent's option, held as additional Collateral therefor), whether or not then
due or mature. Until such funds or property are delivered to Administrative
Agent, Grantor must hold such payment, distribution or other funds or property
(or proceeds thereof) (a) in trust for the benefit of and as property of
Administrative Agent and (b) separate from (i.e., not commingled with) its
other assets. If Grantor fails or refuses to make any such endorsement or
assignment, then Administrative Agent (or any of its officers or employees) are
hereby irrevocably authorized by Grantor to make the endorsement and/or
assignment.
5.8. Cooperation and Assistance. Grantor agrees (during the
existence of a Default) to take any actions that Administrative Agent may
reasonably request in order to enable Administrative Agent and each Lender to
receive the full rights and benefits granted to Administrative Agent and each
Lender by the Loan Documents. Grantor further agrees that, during the existence
of a Default or an Event of Default, Grantor will assist and cooperate with
Administrative Agent (and will use its best efforts to cause others to assist
and cooperate with Administrative Agent) to ensure that Grantor continues (a)
to operate in the normal course of business, and (b) to fulfill all of its
legal, regulatory and contractual obligations and (c) to otherwise be properly
and professionally managed. At Administrative Agent's request and the expense
of Grantor, at any time during the existence of an Event of Default, such
assistance and cooperation may include the employment of (and, to the maximum
extent not prohibited by the rules, regulations and orders of any Official Body
with jurisdiction, the delegation of appropriate management authority to) one
or more qualified and independent consultants and professional managers
acceptable to Administrative Agent to assist in the interim operations of
Grantor; all of which Grantor hereby agrees not to challenge.
ARTICLE 6: DEFINITIONS
6.1. Credit Agreement Definitions. Unless otherwise defined herein
or the context otherwise requires, terms used in this Security Agreement
(including the preamble and recitals hereof) have the meanings provided in the
Credit Agreement.
6.2. Rules of Construction. The rules of interpretation and
construction set forth in Section 9.2 of the Credit Agreement apply to the
interpretation and construction of this Security Agreement.
6.3. Certain Terms. The following terms (whether or not
underscored) when used in this Security Agreement (including the preamble and
recitals hereof) have the following meanings:
a. "Administrative Agent" means LaSalle Bank National
Association and any successor, assignee, transferee, pledgee or participant
thereof as administrative agent for itself and the Lenders.
b. "Borrower" means Borrower under and as defined in
the Credit Agreement, including any successor or assignee thereof.
c. "Collateral" is defined in Section 1.1.
d. "Computer Software Collateral" is defined in Section
1.1.
e. "Contract Rights" is defined in Section 1.1.
21
f. "Copyright Collateral" is defined in Section 1.1.
g. "Credit Agreement" is defined in the Recitals.
h. "Distribution" means all equity dividends,
liquidating dividends, shares or interests of equity resulting from (or in
connection with the exercise of) equity splits, reclassifications, warrants,
options, non-cash dividends, mergers, consolidations, distributions of capital
accounts, and all other distributions (whether similar or dissimilar to the
foregoing) on or with respect to any Pledged Equity or other shares or
interests of equity constituting Pledged Equity Collateral, but such term does
not include Dividends.
i. "Dividend" means cash dividends and cash distributions
with respect to any Pledged Equity or other Pledged Equity Property made in the
ordinary course of business, but such term shall not include a liquidating
dividend.
j. "Domestic Subsidiary" means a Subsidiary organized
under the laws of the United States or any political subdivision or any agency,
department or instrumentality thereof.
j. "Equipment" is defined in Section 1.1.
k. "Fixture" is defined in Section 1.1.
l. "Grantor" means the Person that from time to time
executes this Security Agreement (or a counterpart hereof or supplemental
addendum hereto) as a grantor hereunder, and any successor or permitted
assignee thereof.
m. "Intellectual Property Collateral" means,
collectively, the Computer Software Collateral, the Copyright Collateral, the
Patent Collateral, the Trademark Collateral and the Trade Secrets Collateral,
as defined in Section 1.1.
n. "Inventory" is defined in Section 1.1.
o. "License" means any authorization, permit, call
sign, frequency designation, consent, franchise, ordinance, registration,
certificate, license, agreement or other right filed with, granted by, or
entered into by a federal, state or local Official Body.
p. "Lien" means any security interest, mortgage,
pledge, hypothecation, assignment, deposit arrangement, option, claim,
encumbrance, lien (statutory or otherwise), charge against or interest in
property to secure payment of a debt or performance of an obligation or other
priority or preferential arrangement of any kind or nature whatsoever.
q. "Liquidation Event" means any foreclosure on or any
sale of all or any material part of the assets of Grantor, or any liquidation,
dissolution or other winding up (partial or complete) of Grantor's business, or
any sale, receivership, insolvency or bankruptcy proceeding, any assignment for
the benefit of creditors, or any other proceeding by or against Grantor or its
assets for any relief under any bankruptcy or insolvency law relating to the
relief of debtors, readjustment of indebtedness, arrangements, reorganizations,
compositions or extensions.
r. "Official Body" means any federal, state, local, or
other government (or any political subdivision, agency, authority, bureau,
commission, department or instrumentality thereof) and any court, tribunal,
grand jury or arbitrator, in each instance whether foreign or domestic.
22
s. "Operating Agreements" means any consulting
agreement, management agreement, employment agreement, cost allocation
agreement or other similar agreement relating to the operation of Grantor's
business.
t. "Patent Collateral" is defined in Section 1.1.
u. "Person" means any natural person, corporation,
partnership, limited liability company, firm, association, trust, government,
governmental agency or any other entity, whether acting in an individual,
fiduciary or other capacity.
v. "Pledged Equity" means all shares of capital stock
and all other forms of equity or ownership rights and interests (whether in the
form of partnership interests, membership interests or otherwise) of or in any
corporation, partnership, limited liability company business trust or other
business entity.
w. "Pledged Equity Collateral" is defined in Section
1.4.
x. "Pledged Equity Issuer" means each Person who is an
issuer of Pledged Equity Collateral.
y. "Pledged Equity Property" means all Pledged Equity
and all other forms of equity interests and rights, all other securities
(including, without limitation, all options, warrants and puts for Pledged
Equity), all assignments of any amounts due or to become due, all other
instruments which are now being delivered by any Pledgor to Administrative
Agent or may from time to time hereafter be delivered by any Pledgor to
Administrative Agent for the purpose of pledge under the Security Agreement,
and all proceeds of any of the foregoing.
z. "Pledgor" means each Person (a) who is a Grantor
hereunder and (b) who pledges Pledged Equity Collateral.
aa. "Related Contracts" is defined in Section 1.1.
bb. "Secured Obligations" is defined in Section 1.2.
cc. "Security Agreement" means this Security and Pledge
Agreement, and all exhibits, schedules and supplemental addenda hereto, all as
may be amended and otherwise modified from time to time hereafter.
dd. "Securities Act" means the Securities Act of 1933,
as amended from time to time, and as implemented by the Securities Exchange
Commission.
ee. "Trademark Collateral" is defined in Section 1.1.
ff. "Trade Secrets Collateral" is defined in Section
1.1.
gg. "UCC" means the Uniform Commercial Code, as amended
from time to time, in effect in the State of Illinois or, if the laws of some
other jurisdiction otherwise dictates, then the Uniform Commercial Code, as
amended from time to time, as in effect in the jurisdiction whose laws govern
the interpretation of the relevant provisions of this Security Agreement.
23
6.4. UCC Definitions. Unless otherwise defined herein or the
context otherwise requires, terms for which meanings are provided in the UCC
are used in this Security Agreement (including in the preamble and recitals
hereof) with such meanings.
ARTICLE 7: MISCELLANEOUS PROVISIONS
7.1. Loan Document. This Security Agreement and each separate
assignment executed in connection herewith are Loan Documents executed pursuant
to the Credit Agreement and (unless otherwise expressly indicated herein) are
to be construed, administered and applied in accordance with the terms and
provisions thereof.
7.2. Amendments. No amendment to or waiver of any provision of
this Security Agreement, nor consent to any departure by Grantor herefrom,
shall in any event be effective unless such amendment, waiver or consent is in
writing and signed by Administrative Agent. Any such waiver or consent will be
effective only in the specific instance and for the specific purpose for which
given.
7.3. Addresses for Notices. Any notice, request, consent, waiver
or other communication required or permitted under or in connection with this
Security Agreement will be deemed satisfactorily given if it is in writing and
is delivered either personally to the addressee thereof, or by prepaid
registered or certified U.S. mail (return receipt requested), or by a
nationally recognized commercial courier service with next-day delivery charges
prepaid, or by telegraph, or by facsimile (voice confirmed), or by any other
reasonable means of personal delivery to the party entitled thereto at its
respective address set forth below its signature to this Security Agreement
(or, if blank, then to such party at its address or facsimile number set forth
in the Credit Agreement). If Grantor fails to insert an address below (and in
the Credit Agreement), then such failure shall constitute a designation of its
last known address as the address for all notices, including notices of default
and sale. Any party to this Security Agreement may change its address or
facsimile number for notice purposes by giving notice thereof to the other
parties hereto in accordance with this Section, provided that such change shall
not be effective until two (2) calendar days after notice of such change. All
such notices and other communications will be deemed given and effective (a) if
by mail, then upon actual receipt or five (5) calendar days after mailing as
provided above (whichever is earlier), or (b) if by facsimile, then upon
successful transmittal to such party's designated number, or (c) if by
telegraph, then upon actual receipt or two (2) Business Days after delivery to
the telegraph company (whichever is earlier), or (d) if by nationally
recognized commercial courier service, then upon actual receipt or two (2)
Business Days after delivery to the courier service (whichever is earlier), or
(e) if otherwise delivered, then upon actual receipt.
7.4. Severability. Wherever possible, each provision of this
Security Agreement shall be interpreted in such manner as to be effective and
valid under applicable law. If any provision of this Security Agreement shall
be prohibited by or invalid under such law, then such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Security Agreement.
7.5. Governing Law; Entire Agreement. This Security Agreement
shall be governed by and construed in accordance with the internal laws of the
State of Illinois, except to the extent that the validity or perfection of the
security interest, collateral assignment or pledge hereunder (or remedies
hereunder) in respect of any particular Collateral are required to be governed
by the laws of a jurisdiction other than the State of Illinois. This Security
Agreement and the other loan documents constitute the entire understanding
among the parties hereto with respect to the subject matter hereof and
supersede any prior agreements (written or oral) with respect thereto.
24
7.6. Reinstatement. To the maximum extent not prohibited by
applicable law, this Security Agreement shall continue to be effective or be
reinstated if at any time any amount received by Administrative Agent or any
Lender in respect of the Credit Agreement or any other Loan Document is
rescinded or must otherwise be restored or returned by Administrative Agent or
such Lender upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of Grantor or upon the appointment of any receiver, intervenor,
conservator, trustee or similar official for Grantor or any substantial part of
Grantor's assets, or otherwise, all as though such payments had not been made.
7.7. Conflict Provision. In the event of any irreconcilable
conflict between the terms and conditions of this Security Agreement and the
terms and conditions of the Credit Agreement, the terms and conditions of the
Credit Agreement shall govern.
7.8. Incorporation of Separate IP Security Agreements and
Collateral Assignments of Material Contracts. Each representation, warranty,
covenant and further assurance by Grantor contained in any separate assignment
or security agreement relating to any Intellectual Property Collateral or any
material contract executed in connection the Credit Agreement is hereby
incorporated herein by reference.
7.9. Incorporation of Financing Statements and Exhibits Thereto.
Each UCC financing statement (including each exhibit thereto) executed by
Grantor in connection with this Security Agreement is hereby incorporated
herein by reference.
7.10. Administrative Agent. References in this Security Agreement
to Administrative Agent shall mean either to Administrative Agent in such
capacity or (where appropriate) to Administrative Agent for the benefit of
itself and other Lenders. Unless otherwise indicated in this Security Agreement
or the other Loan Documents, all Collateral held and all payments received by
Administrative Agent are deemed to be held and received, respectively, for the
benefit of Lenders.
7.11. Waiver of Suretyship Defenses. Grantor hereby waives any and
all defenses and rights of discharge based on suretyship or impairment of
collateral (including any lack of attachment or perfection with respect
thereto) that it may now have or may hereafter acquire with respect to
Administrative Agent or any Lender or any of Grantor's obligations hereunder or
under any other agreement that it may have or hereafter enter into with
Administrative Agent or any Lender.
7.12. Waiver of Subrogation. Until this Security Agreement is
terminated in accordance with Section 1.3, Grantor hereby irrevocably waives
any claim or other rights which it may now have or may hereafter acquire
against any other Obligor that arise from the existence, payment, performance
or enforcement of Grantor's obligations under this Security Agreement or any
other Loan Document, including any right of subrogation, reimbursement,
contribution, exoneration, or indemnification, any right to participate in any
claim or remedy of Administrative Agent or any Lender against any other Obligor
or any collateral which Administrative Agent or any Lender now has or hereafter
acquires, whether or not such claim, remedy or right arises in equity, or under
contract, statute or common law.
7.13. WAIVER OF NOTICE; WAIVER OF BOND. GRANTOR WAIVES ALL RIGHTS
OF NOTICE AND HEARING OF ANY KIND PRIOR TO THE EXERCISE BY ADMINISTRATIVE AGENT
OR ANY LENDER OF ITS RIGHTS DURING THE CONTINUANCE OF ANY EVENT OF DEFAULT TO
REPOSSESS THE COLLATERAL WITH JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY
UPON THE COLLATERAL. GRANTOR WAIVES THE POSTING OF ANY BOND OTHERWISE REQUIRED
OF ADMINISTRATIVE AGENT OR ANY LENDER IN CONNECTION WITH ANY JUDICIAL PROCESS
OR PROCEEDING TO OBTAIN POSSESSION OF, REPLEVY, ATTACH OR LEVY UPON COLLATERAL
OR OTHER SECURITY FOR THE
25
SECURED OBLIGATIONS, TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN
FAVOR OF ADMINISTRATIVE AGENT OR ANY LENDER, OR TO ENFORCE BY SPECIFIC
PERFORMANCE, TEMPORARY RESTRAINING ORDER OR PRELIMINARY OR PERMANENT INJUNCTION
THIS SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT.
7.14. WAIVER OF LIABILITY. GRANTOR (A) AGREES THAT NEITHER
ADMINISTRATIVE AGENT NOR ANY LENDER (NOR ANY DIRECTOR, OFFICER, EMPLOYEE OR
AGENT OF ADMINISTRATIVE AGENT OR ANY LENDER) SHALL HAVE ANY LIABILITY TO
GRANTOR (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) FOR LOSSES OR COSTS
SUFFERED OR INCURRED BY GRANTOR IN ANY WAY RELATED TO THE TRANSACTIONS
CONTEMPLATED OR THE RELATIONSHIP ESTABLISHED BY ANY LOAN DOCUMENT, OR ANY ACT,
OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, EXCEPT FOR FORESEEABLE
ACTUAL LOSSES RESULTING DIRECTLY AND EXCLUSIVELY FROM ADMINISTRATIVE AGENT OR
SUCH LENDER'S OWN GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR FRAUD, AND (B)
WAIVES, RELEASES AND AGREES NOT TO XXX UPON ANY CLAIM AGAINST ADMINISTRATIVE
AGENT OR ANY LENDER (OR THEIR DIRECTORS, OFFICERS, EMPLOYEES OR AGENTS) WHETHER
SOUNDING IN TORT, CONTRACT OR OTHERWISE, EXCEPT FOR CLAIMS FOR FORESEEABLE
ACTUAL LOSSES RESULTING DIRECTLY AND EXCLUSIVELY FROM ADMINISTRATIVE AGENT'S OR
SUCH LENDER'S OWN GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR FRAUD. MOREOVER,
WHETHER OR NOT SUCH DAMAGES ARE RELATED TO A CLAIM THAT IS SUBJECT TO THE
WAIVER EFFECTED ABOVE AND WHETHER OR NOT SUCH WAIVER IS EFFECTIVE, NEITHER
ADMINISTRATIVE AGENT NOR ANY LENDER (NOR ANY DIRECTOR, OFFICER, EMPLOYEE OR
AGENT OF ADMINISTRATIVE AGENT OR ANY LENDER) SHALL HAVE ANY LIABILITY WITH
RESPECT TO (AND GRANTOR HEREBY WAIVES, RELEASES AND AGREES NOT TO XXX UPON ANY
CLAIM FOR) ANY SPECIAL, INDIRECT, CONSEQUENTIAL, PUNITIVE OR NON-FORESEEABLE
DAMAGES SUFFERED BY GRANTOR IN ANY WAY RELATED TO THE TRANSACTIONS CONTEMPLATED
OR THE RELATIONSHIP ESTABLISHED BY ANY LOAN DOCUMENT, OR ANY ACT, OMISSION OR
EVENT OCCURRING IN CONNECTION THEREWITH.
7.15. FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LITIGATION
IN ANY WAY RELATED TO ANY LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), ACTIONS OR INACTIONS OF
ADMINISTRATIVE AGENT OR ANY LENDER OR GRANTOR WILL BE BROUGHT AND MAINTAINED
EXCLUSIVELY IN THE COURTS OF XXXX COUNTY IN THE STATE OF ILLINOIS OR IN THE
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS; PROVIDED,
HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST GRANTOR OR ANY COLLATERAL
MAY ALSO BE BROUGHT (AT ADMINISTRATIVE AGENT'S OR SUCH LENDER'S OPTION) IN THE
COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL MAY BE FOUND OR WHERE
ADMINISTRATIVE AGENT OR ANY LENDER MAY OTHERWISE OBTAIN PERSONAL JURISDICTION
OVER GRANTOR. GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE
JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS AND OF THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY
SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY
FINAL AND NON-APPEALABLE JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH
LITIGATION. GRANTOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF
26
PROCESS BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, OR BY PERSONAL
SERVICE WITHIN OR OUTSIDE THE STATE OF ILLINOIS. GRANTOR HEREBY EXPRESSLY AND
IRREVOCABLY WAIVES (TO THE FULLEST EXTENT PERMITTED BY LAW) ANY OBJECTION WHICH
IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION
BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH
LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT
GRANTOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY
COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT
PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO
ITSELF OR ITS PROPERTY, THEN GRANTOR HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN
RESPECT OF ITS OBLIGATIONS UNDER THIS SECURITY AGREEMENT.
7.16. WAIVER OF JURY TRIAL. ADMINISTRATIVE AGENT, EACH LENDER AND
THE GRANTOR EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY
RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION (WHETHER AS
CLAIM, COUNTER-CLAIM, AFFIRMATIVE DEFENSE OR OTHERWISE) IN ANY WAY RELATED TO
ANY LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN), ACTIONS OR INACTIONS OF ADMINISTRATIVE AGENT, ANY
LENDER OR THE GRANTOR. GRANTOR ACKNOWLEDGES AND AGREES (A) THAT IT HAS RECEIVED
FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION
OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY), AND (B) THAT IT HAS BEEN
ADVISED BY LEGAL COUNSEL IN CONNECTION HEREWITH, AND (C) THAT THIS PROVISION IS
A MATERIAL INDUCEMENT FOR ADMINISTRATIVE AGENT AND EACH LENDER ENTERING INTO
THE LOAN DOCUMENTS AND FUNDING ADVANCES THEREUNDER.
7.17. Counterparts. This Security Agreement may be executed in any
number of counterparts with the same effect as if all the signatures on such
counterparts appeared on one document. Each counterpart will be deemed to be an
original, but all counterparts together will constitute one and the same
instrument.
[BALANCE OF PAGE INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this
Security Agreement, through their duly authorized officers, as of the date
first written above.
ATTEST: INTEGRITY DIRECT, LLC
(as Grantor)
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------ ----------------------------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxxx X. Xxxxxxxxx
Title: Mgr. Corp. Financial Serv. Title: Secretary
Address: 0000 Xxxx Xxxx
Xxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
LASALLE BANK NATIONAL ASSOCIATION
(as Administrative Agent)
By: /s/ Xxxx Xxxxxxxxxxxx
----------------------------------------
Name: Xxxx Xxxxxxxxxxxx
Title: Vice President
Address: One Metropolitan Square
000 X. Xxxxxxxx, Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000-0000
Facsimile: (000) 000-0000
