Exhibit 10.7
Execution Version
- --------------------------------------------------------------------------------
GUARANTEE AND COLLATERAL AGREEMENT
dated as of
August 1, 2007
among
GOAMERICA, INC.,
the Subsidiaries of the Borrower
from time to time party hereto
and
CLEARLAKE CAPITAL GROUP, LP,
as Collateral Agent
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
----
ARTICLE I
Definitions
SECTION 1.01. Credit Agreement.................................................1
SECTION 1.02. Other Defined Terms..............................................1
ARTICLE II
Guarantee
SECTION 2.01. Guarantee........................................................4
SECTION 2.02. Guarantee of Payment.............................................4
SECTION 2.03. No Limitations, Etc..............................................5
SECTION 2.04. Reinstatement....................................................6
SECTION 2.05. Agreement To Pay; Subrogation....................................6
SECTION 2.06. Information......................................................6
ARTICLE III
Pledge of Securities
SECTION 3.01. Pledge...........................................................6
SECTION 3.02. Delivery of the Pledged Collateral...............................7
SECTION 3.03. Representations, Warranties and Covenants........................8
SECTION 3.04. Certification of Limited Liability Company Interests
and Limited Partnership Interests..............................9
SECTION 3.05. Denominations....................................................9
SECTION 3.06. Voting Rights; Dividends and Interest, Etc.......................9
ARTICLE IV
Security Interests in Personal Property
SECTION 4.01. Security Interest...............................................11
SECTION 4.02. Representations and Warranties..................................13
SECTION 4.03. Covenants 15
SECTION 4.04. Other Actions...................................................18
SECTION 4.05. Covenants Regarding Patent, Trademark and
Copyright Collateral..........................................20
ii
ARTICLE V
Remedies
SECTION 5.01. Remedies Upon Default...........................................22
SECTION 5.02. Application of Proceeds.........................................24
SECTION 5.03. Grant of License to Use Intellectual Property...................24
SECTION 5.04. Securities Act, Etc.............................................25
ARTICLE VI
Indemnity, Subrogation and Subordination
SECTION 6.01. Indemnity and Subrogation.......................................26
SECTION 6.02. Contribution and Subrogation....................................26
SECTION 6.03. Subordination...................................................26
ARTICLE VII
Miscellaneous
SECTION 7.01. Notices.........................................................27
SECTION 7.02. Security Interest Absolute......................................27
SECTION 7.03. Survival of Agreement...........................................27
SECTION 7.04. Limitation by Law...............................................27
SECTION 7.05. Binding Effect; Several Agreement...............................28
SECTION 7.06. Successors and Assigns..........................................28
SECTION 7.07. Collateral Agent's Fees and Expenses; Indemnification...........28
SECTION 7.08. Collateral Agent Appointed Attorney-in-Fact.....................29
SECTION 7.09. Applicable Law..................................................30
SECTION 7.10. Waivers; Amendment..............................................30
SECTION 7.11. WAIVER OF JURY TRIAL............................................30
SECTION 7.12. Severability....................................................31
SECTION 7.13. Counterparts....................................................31
SECTION 7.14. Headings........................................................31
SECTION 7.15. Jurisdiction; Consent to Service of Process.....................31
SECTION 7.16. Termination or Release..........................................32
SECTION 7.17. Additional Subsidiaries.........................................32
SECTION 7.18. Right of Setoff.................................................32
iii
Schedules
- ---------
Schedule I Subsidiary Guarantors
Schedule II Equity Interests; Pledged Debt Securities
Schedule III Intellectual Property
Exhibits
- --------
Exhibit A Form of Supplement
Exhibit B Form of Perfection Certificate
GUARANTEE AND COLLATERAL AGREEMENT dated as of August 1, 2007 (this
"Agreement"), among GOAMERICA, INC., a Delaware corporation (the "Borrower"),
the Subsidiaries of the Borrower from time to time party hereto and CLEARLAKE
CAPITAL GROUP, LP ("Clearlake"), as collateral agent (in such capacity, the
"Collateral Agent").
PRELIMINARY STATEMENT
Reference is made to the Credit Agreement dated as of August 1, 2007 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Credit Agreement"), among the Borrower, the lenders from time to time
party thereto (each a "Lender" and collectively, the "Lenders") and Clearlake,
as administrative agent (in such capacity, the "Administrative Agent") and
Collateral Agent.
The Lenders (such term and each other capitalized term used but not
defined in this preliminary statement having the meaning given or ascribed to it
in Article I) have agreed to extend credit to the Borrower pursuant to, and upon
the terms and conditions specified in, the Credit Agreement. The obligations of
the Lenders to extend credit to the Borrower are conditioned upon, among other
things, the execution and delivery of this Agreement by the Borrower and each
Subsidiary Guarantor. Each Subsidiary Guarantor is an affiliate of the Borrower,
will derive substantial benefits from the extension of credit to the Borrower
pursuant to the Credit Agreement and is willing to execute and deliver this
Agreement in order to induce the Lenders to extend such credit. Accordingly, the
parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Credit Agreement. (a) Capitalized terms used in this
Agreement and not otherwise defined herein have the meanings set forth in the
Credit Agreement. All capitalized terms defined in the New York UCC (as such
term is defined herein) and not defined in this Agreement have the meanings
specified therein. Except where the usage dictates otherwise, all references to
the Uniform Commercial Code shall mean the New York UCC.
(b) The rules of construction specified in Section 1.02 of the Credit
Agreement also apply to this Agreement.
SECTION 1.02. Other Defined Terms. As used in this Agreement, the
following terms have the meanings specified below:
"Accounts Receivable" shall mean all Accounts and all right, title and
interest in any returned goods, together with all rights, titles, securities and
guarantees with respect thereto, including any rights to stoppage in transit,
replevin, reclamation and resales, and all related security interests, liens and
pledges, whether voluntary or involuntary, in each case whether now existing or
owned or hereafter arising or acquired.
2
"Administrative Agent" shall have the meaning assigned to such term in the
preliminary statement.
"Article 9 Collateral" shall have the meaning assigned to such term in
Section 4.01.
"Borrower" shall have the meaning assigned to such term in the preamble.
"Collateral" shall mean the Article 9 Collateral and the Pledged
Collateral.
"Collateral Agent" shall have the meaning assigned to such term in the
preamble.
"Copyright License" shall mean any written agreement, now or hereafter in
effect, granting any right to any third person under any copyright now or
hereafter owned by any Grantor or that such Grantor otherwise has the right to
license, or granting any right to any Grantor under any copyright now or
hereafter owned by any third person, and all rights of such Grantor under any
such agreement.
"Copyrights" shall mean all of the following now owned or hereafter
acquired by any Grantor: (a) all copyright rights in any work subject to the
copyright laws of the United States or any other country, whether as author,
assignee, transferee or otherwise, and (b) all registrations and applications
for registration of any such copyright in the United States or any other
country, including registrations, recordings, supplemental registrations and
pending applications for registration in the United States Copyright Office (or
any successor office or any similar office in any other country), including
those listed on Schedule III.
"Federal Securities Laws" shall have the meaning assigned to such term in
Section 5.04.
"General Intangibles" shall mean all choses in action and causes of action
and all other intangible personal property of any Grantor of every kind and
nature (other than Accounts) now owned or hereafter acquired by any Grantor,
including all rights and interests in partnerships, limited partnerships,
limited liability companies and other unincorporated entities, corporate or
other business records, indemnification claims, contract rights (including
rights under leases, whether entered into as lessor or lessee, Hedging
Agreements and other agreements), Intellectual Property, goodwill,
registrations, franchises, tax refund claims and any letter of credit,
guarantee, claim, security interest or other security held by or granted to any
Grantor to secure payment by an Account Debtor of any of the Accounts.
"Grantors" shall mean the Borrower and the Subsidiary Guarantors.
"Intellectual Property" shall mean all intellectual and similar property
of any Grantor of every kind and nature now owned or hereafter acquired by any
Grantor, including inventions, designs, Patents, Copyrights, Licenses,
Trademarks, trade secrets,
3
confidential or proprietary technical and business information, know-how,
show-how or other data or information, software and databases and all
embodiments or fixations thereof and related documentation, registrations and
franchises, and all additions, improvements and accessions to, and books and
records describing or used in connection with, any of the foregoing.
"License" shall mean any Patent License, Trademark License, Copyright
License or other license or sublicense agreement relating to Intellectual
Property to which any Grantor is a party, including those listed on Schedule
III.
"New York UCC" shall mean the Uniform Commercial Code as from time to time
in effect in the State of New York.
"Patent License" shall mean any written agreement, now or hereafter in
effect, granting to any third person any right to make, use or sell any
invention on which a patent, now or hereafter owned by any Grantor or that any
Grantor otherwise has the right to license, is in existence, or granting to any
Grantor any right to make, use or sell any invention on which a patent, now or
hereafter owned by any third person, is in existence, and all rights of any
Grantor under any such agreement.
"Patents" shall mean all of the following now owned or hereafter acquired
by any Grantor: (a) all letters patent of the United States or the equivalent
thereof in any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or the equivalent thereof
in any other country, including registrations, recordings and pending
applications in the United States Patent and Trademark Office (or any successor
or any similar offices in any other country), including those listed on Schedule
III, and (b) all reissues, continuations, divisions, continuations-in-part,
renewals or extensions thereof, and the inventions disclosed or claimed therein,
including the right to make, use and/or sell the inventions disclosed or claimed
therein.
"Perfection Certificate" shall mean a certificate substantially in the
form of Exhibit B hereto, completed and supplemented with the schedules and
attachments contemplated thereby, and duly executed by a Responsible Officer of
the Borrower.
"Pledged Collateral" shall have the meaning assigned to such term in
Section 3.01.
"Pledged Debt Securities" shall have the meaning assigned to such term in
Section 3.01.
"Pledged Securities" shall mean any promissory notes, stock certificates
or other securities now or hereafter included in the Pledged Collateral,
including all certificates, instruments or other documents representing or
evidencing any Pledged Collateral.
"Pledged Stock" shall have the meaning assigned to such term in Section
3.01.
4
"Secured Parties" shall mean (a) the Lenders, (b) the Administrative
Agent, (c) the Collateral Agent, (d) the beneficiaries of each indemnification
obligation undertaken by any Loan Party under any Loan Document and (e) the
successors and assigns of each of the foregoing.
"Security Interest" shall have the meaning assigned to such term in
Section 4.01.
"Subsidiary Guarantor" shall mean (a) the Subsidiaries identified on
Schedule I hereto as Subsidiary Guarantors and (b) each other Subsidiary that
becomes a party to this Agreement as a Subsidiary Guarantor after the Closing
Date.
"Trademark License" shall mean any written agreement, now or hereafter in
effect, granting to any third person any right to use any trademark now or
hereafter owned by any Grantor or that any Grantor otherwise has the right to
license, or granting to any Grantor any right to use any trademark now or
hereafter owned by any third person, and all rights of any Grantor under any
such agreement.
"Trademarks" shall mean all of the following now owned or hereafter
acquired by any Grantor: (a) all trademarks, service marks, trade names,
corporate names, company names, business names, fictitious business names, trade
styles, trade dress, logos, other source or business identifiers, designs and
general intangibles of like nature, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all registration and
recording applications filed in connection therewith, including registrations
and registration applications in the United States Patent and Trademark Office
(or any successor office) or any similar offices in any State of the United
States or any other country or any political subdivision thereof, and all
extensions or renewals thereof, including those listed on Schedule III, (b) all
goodwill associated therewith or symbolized thereby and (c) all other assets,
rights and interests that uniquely reflect or embody such goodwill.
ARTICLE II
Guarantee
SECTION 2.01. Guarantee. Each Subsidiary Guarantor unconditionally
guarantees, jointly with the other Subsidiary Guarantors and severally, as a
primary obligor and not merely as a surety, the due and punctual payment and
performance of the Obligations. Each Subsidiary Guarantor further agrees that
the Obligations may be extended or renewed, in whole or in part, without notice
to or further assent from it, and that it will remain bound upon its guarantee
notwithstanding any extension or renewal of any Obligation. Each Subsidiary
Guarantor waives presentment to, demand of payment from and protest to the
Borrower or any other Loan Party of any Obligation, and also waives notice of
acceptance of its guarantee and notice of protest for nonpayment.
SECTION 2.02. Guarantee of Payment. Each Subsidiary Guarantor further
agrees that its guarantee hereunder constitutes a guarantee of payment when due
5
and not of collection, and waives any right to require that any resort be had by
the Collateral Agent or any other Secured Party to any security held for the
payment of the Obligations or to any balance of any Deposit Account or credit on
the books of the Collateral Agent or any other Secured Party in favor of the
Borrower or any other person.
SECTION 2.03. No Limitations, Etc. (a) Except for termination of a
Subsidiary Guarantor's obligations hereunder as expressly provided in Section
7.16, the obligations of each Subsidiary Guarantor hereunder shall not be
subject to any reduction, limitation, impairment or termination for any reason,
including any claim of waiver, release, surrender, alteration or compromise, and
shall not be subject to any defense or setoff, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of each Subsidiary Guarantor
hereunder shall not be discharged or impaired or otherwise affected by (i) the
failure of the Collateral Agent or any other Secured Party to assert any claim
or demand or to enforce any right or remedy under the provisions of any Loan
Document or otherwise, (ii) any rescission, waiver, amendment or modification
of, or any release from any of the terms or provisions of, any Loan Document or
any other agreement, including with respect to any other Subsidiary Guarantor
under this Agreement, (iii) the release of, or any impairment of or failure to
perfect any Lien on or security interest in, any security held by the Collateral
Agent or any other Secured Party for the Obligations or any of them, (iv) any
default, failure or delay, willful or otherwise, in the performance of the
Obligations or (v) any other act or omission that may or might in any manner or
to any extent vary the risk of any Subsidiary Guarantor or otherwise operate as
a discharge of any Subsidiary Guarantor as a matter of law or equity (other than
the indefeasible payment in full in cash of all the Obligations). Each
Subsidiary Guarantor expressly authorizes the Collateral Agent to take and hold
security for the payment and performance of the Obligations, to exchange, waive
or release any or all such security (with or without consideration), to enforce
or apply such security and direct the order and manner of any sale thereof in
its sole discretion or to release or substitute any one or more other guarantors
or obligors upon or in respect of the Obligations, all without affecting the
obligations of any Subsidiary Guarantor hereunder.
(b) To the fullest extent permitted by applicable law, each Subsidiary
Guarantor waives any defense based on or arising out of any defense of the
Borrower or any other Loan Party or the unenforceability of the Obligations or
any part thereof from any cause, or the cessation from any cause of the
liability of the Borrower or any other Loan Party, other than the indefeasible
payment in full in cash of all the Obligations. The Collateral Agent and the
other Secured Parties may, at their election, foreclose on any security held by
one or more of them by one or more judicial or nonjudicial sales, accept an
assignment of any such security in lieu of foreclosure, compromise or adjust any
part of the Obligations, make any other accommodation with the Borrower or any
other Loan Party or exercise any other right or remedy available to them against
the Borrower or any other Loan Party, without affecting or impairing in any way
the liability of any Subsidiary Guarantor hereunder except to the extent the
Obligations have been fully and indefeasibly paid in full in cash. To the
fullest extent permitted by applicable law, each Subsidiary Guarantor waives any
defense arising out of any such election even though
6
such election operates, pursuant to applicable law, to impair or to extinguish
any right of reimbursement or subrogation or other right or remedy of such
Subsidiary Guarantor against the Borrower or any other Loan Party, as the case
may be, or any security.
SECTION 2.04. Reinstatement. Each Subsidiary Guarantor agrees that its
guarantee hereunder shall continue to be effective or be reinstated, as the case
may be, if at any time payment, or any part thereof, of any Obligation is
rescinded or must otherwise be restored by the Collateral Agent or any other
Secured Party upon the bankruptcy or reorganization of the Borrower, any other
Loan Party or otherwise.
SECTION 2.05. Agreement To Pay; Subrogation. In furtherance of the
foregoing and not in limitation of any other right that the Collateral Agent or
any other Secured Party has at law or in equity against any Subsidiary Guarantor
by virtue hereof, upon the failure of the Borrower or any other Loan Party to
pay any Obligation when and as the same shall become due, whether at maturity,
by acceleration, after notice of prepayment or otherwise, each Subsidiary
Guarantor hereby promises to and will forthwith pay, or cause to be paid, to the
Collateral Agent for distribution to the applicable Secured Parties in cash the
amount of such unpaid Obligation. Upon payment by any Subsidiary Guarantor of
any sums to the Collateral Agent as provided above, all rights of such
Subsidiary Guarantor against the Borrower or any other Subsidiary Guarantor
arising as a result thereof by way of right of subrogation, contribution,
reimbursement, indemnity or otherwise shall in all respects be subject to
Article VI.
SECTION 2.06. Information. Each Subsidiary Guarantor assumes all
responsibility for being and keeping itself informed of the Borrower's and each
other Loan Party's financial condition and assets and of all other circumstances
bearing upon the risk of nonpayment of the Obligations and the nature, scope and
extent of the risks that such Subsidiary Guarantor assumes and incurs hereunder,
and agrees that neither the Collateral Agent nor any other Secured Party will
have any duty to advise such Subsidiary Guarantor of information known to it or
any of them regarding such circumstances or risks.
ARTICLE III
Pledge of Securities
SECTION 3.01. Pledge. As security for the payment or performance, as the
case may be, in full of the Obligations, each Grantor hereby assigns and pledges
to the Collateral Agent, and its successors and assigns, for the ratable benefit
of the Secured Parties, and hereby grants to the Collateral Agent, and its
successors and assigns, for the ratable benefit of the Secured Parties, a
security interest in, all of such Grantor's right, title and interest in, to and
under (a)(i) the Equity Interests owned by such Grantor on the date hereof
(including all such Equity Interests listed on Schedule II), (ii) any other
Equity Interests obtained in the future by such Grantor and (iii) the
certificates representing all such Equity Interests (all the foregoing
collectively referred to herein as the "Pledged Stock"); provided, however, that
the Pledged Stock shall not include more
7
than 66% of the issued and outstanding voting Equity Interests of any Foreign
Subsidiary, (b)(i) the debt securities held by such Grantor on the date hereof
(including all such debt securities listed opposite the name of such Grantor on
Schedule II), (ii) any debt securities in the future issued to such Grantor and
(iii) the promissory notes and any other instruments evidencing such debt
securities (all the foregoing collectively referred to herein as the "Pledged
Debt Securities"), (c) all other property that may be delivered to and held by
the Collateral Agent pursuant to the terms of this Section 3.01, (d) subject to
Section 3.06, all payments of principal or interest, dividends, cash,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of, in exchange for or upon the conversion of,
and all other Proceeds received in respect of, the securities referred to in
clauses (a) and (b) above, (e) subject to Section 3.06, all rights and
privileges of such Grantor with respect to the securities and other property
referred to in clauses (a), (b), (c) and (d) above, and (f) all Proceeds of any
of the foregoing (the items referred to in clauses (a) through (f) above being
collectively referred to as the "Pledged Collateral").
TO HAVE AND TO HOLD the Pledged Collateral, together with all right,
title, interest, powers, privileges and preferences pertaining or incidental
thereto, unto the Collateral Agent, its successors and assigns, for the ratable
benefit of the Secured Parties, forever; subject, however, to the terms,
covenants and conditions hereinafter set forth.
SECTION 3.02. Delivery of the Pledged Collateral. (a) Each Grantor agrees
promptly to deliver or cause to be delivered to the Collateral Agent any and all
certificates, instruments or other documents representing or evidencing Pledged
Securities.
(b) Each Grantor agrees promptly to deliver or cause to be delivered to
the Collateral Agent any and all Pledged Debt Securities; provided that, so long
as no Event of Default shall have occurred and be continuing, Collateral Agent
shall, promptly upon request of such Grantor, make appropriate arrangements for
making any promissory notes pledged by such Grantor available to such Grantor
for purposes of prosecution, collection or renewal.
(c) Upon delivery to the Collateral Agent, (i) any certificate, instrument
or document representing or evidencing Pledged Securities required to be
delivered pursuant to paragraphs (a) and (b) of this Section 3.02 shall be
accompanied by undated stock powers duly executed in blank or other undated
instruments of transfer satisfactory to the Collateral Agent and duly executed
in blank and by such other instruments and documents as the Collateral Agent may
reasonably request and (ii) all other property comprising part of the Pledged
Collateral delivered pursuant to the terms of this Agreement shall be
accompanied by proper instruments of assignment duly executed by the applicable
Grantor and such other instruments or documents as the Collateral Agent may
reasonably request. Each delivery of Pledged Securities shall be accompanied by
a schedule describing the applicable securities, which schedule shall be
attached hereto as Schedule II and made a part hereof; provided that failure to
attach any such schedule hereto shall not affect the validity of the pledge of
such Pledged Securities. Each schedule so delivered shall supplement any prior
schedules so delivered.
8
SECTION 3.03. Representations, Warranties and Covenants. The Grantors
jointly and severally represent, warrant and covenant to and with the Collateral
Agent, for the benefit of the Secured Parties, that:
(a) Schedule II (i) correctly sets forth, in respect of each issuer
that is a Loan Party or a Subsidiary thereof, the percentage of the issued
and outstanding shares of each class of the Equity Interests of the issuer
thereof represented by such Pledged Stock and (ii) includes all Equity
Interests, debt securities and promissory notes required to be pledged
hereunder;
(b) the Pledged Stock and Pledged Debt Securities issued by a Loan
Party or a Subsidiary thereof have been duly and validly authorized and
issued by the issuers thereof and (i) in the case of Pledged Stock, are
fully paid and nonassessable and (ii) in the case of Pledged Debt
Securities, are legal, valid and binding obligations of the issuers
thereof;
(c) except for the security interests granted hereunder (or
otherwise permitted under the Credit Agreement), each Grantor (i) is and,
subject to any transfers made in compliance with the Credit Agreement,
will continue to be the direct owner, beneficially and of record, of the
Pledged Securities indicated on Schedule II as owned by such Grantor, (ii)
holds the same free and clear of all Liens, (iii) will make no assignment,
pledge, hypothecation or transfer of, or create or permit to exist any
security interest in or other Lien on, the Pledged Collateral, other than
transfers made in compliance with the Credit Agreement, and (iv) subject
to Section 3.06, will cause any and all Pledged Collateral, whether for
value paid by such Grantor or otherwise, to be forthwith deposited with
the Collateral Agent and pledged or assigned hereunder;
(d) except for restrictions and limitations imposed by the Loan
Documents or securities laws generally, the Pledged Collateral is and will
continue to be freely transferable and assignable, and none of the Pledged
Collateral constituting Equity Interests of a Loan Party or a Subsidiary
thereof is or will be subject to any option, right of first refusal,
shareholders agreement, charter or by-law provisions or contractual
restriction of any nature that might prohibit, impair, delay or otherwise
affect the pledge of such Pledged Collateral hereunder, the sale or
disposition thereof pursuant hereto or the exercise by the Collateral
Agent of rights and remedies hereunder;
(e) each Grantor (i) has the power and authority to pledge the
Pledged Collateral pledged by it hereunder in the manner hereby done or
contemplated and (ii) will defend its title or interest thereto or therein
against any and all Liens (other than any Lien created or permitted by the
Loan Documents), however arising, of all persons whomsoever;
(f) no consent or approval of any Governmental Authority, any
securities exchange or any other person was or is necessary to the
validity of the
9
pledge effected hereby (other than such as have been obtained and are in
full force and effect);
(g) by virtue of the execution and delivery by each Grantor of this
Agreement, when any Pledged Securities are delivered to the Collateral
Agent in accordance with this Agreement, the Collateral Agent will obtain
a legal, valid and perfected first priority lien upon and security
interest in such Pledged Securities as security for the payment and
performance of the Obligations; and
(h) the pledge effected hereby is effective to vest in the
Collateral Agent, for the ratable benefit of the Secured Parties, the
rights of the Collateral Agent in the Pledged Collateral as set forth
herein and all action by any Grantor necessary or desirable to protect and
perfect the Lien on the Pledged Collateral has been duly taken.
SECTION 3.04. Certification of Limited Liability Company Interests and
Limited Partnership Interests. Each interest in any limited liability company or
limited partnership which is a Subsidiary and pledged hereunder shall be
represented by a certificate, shall be a "security" within the meaning of
Article 8 of the New York UCC and shall be governed by Article 8 of the New York
UCC.
SECTION 3.05. Denominations. The Collateral Agent, on behalf of the
Secured Parties, shall hold the Pledged Securities in the name of the applicable
Grantor, endorsed or assigned in blank or in favor of the Collateral Agent. Each
Grantor will promptly give to the Collateral Agent copies of any notices or
other communications received by it with respect to Pledged Securities in its
capacity as the registered owner thereof. The Collateral Agent shall at all
times have the right to require the applicable Grantors to exchange the
certificates representing Pledged Securities for certificates of smaller or
larger denominations for any purpose consistent with this Agreement.
SECTION 3.06. Voting Rights; Dividends and Interest, Etc. (a) Unless and
until an Event of Default shall have occurred and be continuing and the
Collateral Agent shall have given the Grantors notice of its intent to exercise
its rights under this Agreement (which notice shall be deemed to have been given
immediately upon the occurrence of an Event of Default under paragraph (g) or
(h) of Article VII of the Credit Agreement):
(i) Each Grantor shall be entitled to exercise any and all voting
and/or other consensual rights and powers inuring to an owner of Pledged
Securities or any part thereof for any purpose consistent with the terms
of this Agreement, the Credit Agreement and the other Loan Documents;
provided, however, that such rights and powers shall not be exercised in
any manner that will materially and adversely affect the rights inuring to
a holder of any Pledged Securities or the rights and remedies of any of
the Collateral Agent or the other Secured Parties under this Agreement or
the Credit Agreement or any other Loan Document or the ability of the
Secured Parties to exercise the same.
10
(ii) The Collateral Agent shall execute and deliver to each Grantor,
or cause to be executed and delivered to each Grantor, all such proxies,
powers of attorney and other instruments as such Grantor may reasonably
request for the purpose of enabling such Grantor to exercise the voting
and/or consensual rights and powers it is entitled to exercise pursuant to
paragraph (i) above.
(iii) Each Grantor shall be entitled to receive and retain any and
all dividends, interest, principal and other distributions paid on or
distributed in respect of the Pledged Securities to the extent and only to
the extent that such dividends, interest, principal and other
distributions are permitted by, and otherwise paid or distributed in
accordance with, the terms and conditions of the Credit Agreement, the
other Loan Documents and applicable law; provided, however, that any
noncash dividends, interest, principal or other distributions that would
constitute Pledged Stock or Pledged Debt Securities, whether resulting
from a subdivision, combination or reclassification of the outstanding
Equity Interests of the issuer of any Pledged Securities or received in
exchange for Pledged Securities or any part thereof, or in redemption
thereof, or as a result of any merger, consolidation, acquisition or other
exchange of assets to which such issuer may be a party or otherwise, shall
be and become part of the Pledged Collateral, and, if received by any
Grantor, shall not be commingled by such Grantor with any of its other
funds or property but shall be held separate and apart therefrom, shall be
held in trust for the ratable benefit of the Secured Parties and shall be
forthwith delivered to the Collateral Agent in the same form as so
received (with any necessary endorsement or instrument of assignment).
This paragraph (iii) shall not apply to dividends between or among the
Borrower, the Subsidiary Guarantors and any Subsidiaries only of property
subject to a perfected security interest under this Agreement; provided
that the Borrower notifies the Collateral Agent in writing, specifically
referring to this Section 3.06 at the time of such non-cash dividend and
takes any actions the Collateral Agent reasonably specifies to ensure the
continuance of its perfected security interest in such property under this
Agreement.
(b) Upon the occurrence and during the continuance of an Event of Default,
after the Collateral Agent shall have notified (or shall be deemed to have
notified pursuant to Section 3.06(a)) the Grantors of the suspension of their
rights under paragraph (a)(iii) of this Section 3.06, then all rights of any
Grantor to dividends, interest, principal or other distributions that such
Grantor is authorized to receive pursuant to paragraph (a)(iii) of this Section
3.06 shall cease, and all such rights shall thereupon become vested in the
Collateral Agent, which shall have the sole and exclusive right and authority to
receive and retain such dividends, interest, principal or other distributions.
All dividends, interest, principal or other distributions received by any
Grantor contrary to the provisions of this Section 3.06 shall be held in trust
for the benefit of the Collateral Agent, shall be segregated from other property
or funds of such Grantor and shall be forthwith delivered to the Collateral
Agent upon demand in the same form as so received (with any necessary
11
endorsement or instrument of assignment). Any and all money and other property
paid over to or received by the Collateral Agent pursuant to the provisions of
this paragraph (b) shall be retained by the Collateral Agent in an account to be
established by the Collateral Agent upon receipt of such money or other property
and shall be applied in accordance with the provisions of Section 5.02. After
all Events of Default have been cured or waived and each applicable Grantor has
delivered to the Administrative Agent certificates to that effect, the
Collateral Agent shall, promptly after all such Events of Default have been
cured or waived, repay to each applicable Grantor (without interest) all
dividends, interest, principal or other distributions that such Grantor would
otherwise be permitted to retain pursuant to the terms of paragraph (a)(iii) of
this Section 3.06 and that have not been applied to payment of the Obligations.
(c) Upon the occurrence and during the continuance of an Event of Default,
after the Collateral Agent shall have notified (or shall be deemed to have
notified pursuant to Section 3.06(a)) the Grantors of the suspension of their
rights under paragraph (a)(i) of this Section 3.06, then all rights of any
Grantor to exercise the voting and consensual rights and powers it is entitled
to exercise pursuant to paragraph (a)(i) of this Section 3.06, and the
obligations of the Collateral Agent under paragraph (a)(ii) of this Section
3.06, shall cease, and all such rights shall thereupon become vested in the
Collateral Agent, which shall have the sole and exclusive right and authority to
exercise such voting and consensual rights and powers; provided that, unless
otherwise directed by the Required Lenders, the Collateral Agent shall have the
right from time to time following and during the continuance of an Event of
Default to permit the Grantors to exercise such rights.
(d) Any notice given by the Collateral Agent to the Grantors exercising
its rights under paragraph (a) of this Section 3.06 (i) may suspend the rights
of the Grantors under paragraph (a)(i) or paragraph (a)(iii) in part without
suspending all such rights (as specified by the Collateral Agent in its sole and
absolute discretion) and without waiving or otherwise affecting the Collateral
Agent's rights to give additional notices from time to time suspending other
rights so long as an Event of Default has occurred and is continuing.
ARTICLE IV
Security Interests in Personal Property
SECTION 4.01. Security Interest. (a) As security for the payment or
performance, as the case may be, in full of the Obligations, each Grantor hereby
assigns and pledges to the Collateral Agent, its successors and assigns, for the
ratable benefit of the Secured Parties, and hereby grants to the Collateral
Agent, its successors and assigns, for the ratable benefit of the Secured
Parties, a security interest (the "Security Interest"), in all right, title or
interest in or to any and all of the following assets and properties now owned
or at any time hereafter acquired by such Grantor or in which such Grantor now
has or at any time in the future may acquire any right, title or interest
(collectively, the "Article 9 Collateral"):
(i) all Accounts;
12
(ii) all Chattel Paper;
(iii) all cash and Deposit Accounts;
(iv) all Documents;
(v) all Equipment;
(vi) all Fixtures;
(vii) all General Intangibles;
(viii) all Instruments;
(ix) all Inventory;
(x) all Investment Property;
(xi) all Letter-of-Credit Rights;
(xii) all Commercial Tort Claims;
(xiii) all books and records pertaining to the Article 9 Collateral;
and
(xiv) to the extent not otherwise included, all Proceeds and
products of any and all of the foregoing and all collateral security and
guarantees given by any person with respect to any of the foregoing;
provided, however, that the Article 9 Collateral shall not include, and in no
event shall the security interest granted under this Section 4.01 attach to (A)
any lease, license, contract, property rights or agreement to which any Grantor
is a party (or to any of its rights or interests thereunder) if the grant of
such security interest would constitute or result in either (x) the abandonment,
invalidation or unenforceability of any right, title or interest of any Grantor
therein or (y) in a breach or termination pursuant to the terms of, or a default
under, any such lease, license, contract, property rights or agreement (other
than, in each case, to the extent that any such term would be rendered
ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC, any
provision of the Bankruptcy Code or otherwise), (B) any Grantor's directors and
officers liability insurance policies, or (C) any application for registration
of a trademark filed with the United States Patent and Trademark Office on an
intent-to-use basis until such time (if any) as a statement of use or amendment
to allege use is filed, at which time such trademark shall automatically become
part of the Collateral and subject to the security interest pledged.
(b) Each Grantor hereby irrevocably authorizes the Collateral Agent at any
time and from time to time to file in any relevant jurisdiction any initial
financing statements (including fixture filings) with respect to the Article 9
Collateral or any part thereof and amendments thereto that (i) indicate the
Article 9 Collateral as "all assets" of
13
such Grantor or words of similar effect, and (ii) contain the information
required by Article 9 of the Uniform Commercial Code of each applicable
jurisdiction for the filing of any financing statement or amendment, including
(A) whether such Grantor is an organization, the type of organization and any
organizational identification number issued to such Grantor and (B) in the case
of a financing statement filed as a fixture filing, a sufficient description of
the real property to which such Article 9 Collateral relates. Each Grantor
agrees to provide such information to the Collateral Agent promptly upon
request.
Each Grantor also ratifies its authorization for the Collateral Agent to
file in any relevant jurisdiction any initial financing statements or amendments
thereto if filed prior to the date hereof.
The Collateral Agent is further authorized to file with the United States
Patent and Trademark Office or United States Copyright Office (or any successor
office or any similar office in any other country) such documents as may be
necessary or advisable for the purpose of perfecting, confirming, continuing,
enforcing or protecting the Security Interest granted by each Grantor, without
the signature of any Grantor, and naming any Grantor or the Grantors as debtors
and the Collateral Agent as secured party.
(c) The Security Interest is granted as security only and shall not
subject the Collateral Agent or any other Secured Party to, or in any way alter
or modify, any obligation or liability of any Grantor with respect to or arising
out of the Article 9 Collateral.
SECTION 4.02. Representations and Warranties. The Grantors jointly and
severally represent and warrant to the Collateral Agent and the Secured Parties
that:
(a) Each Grantor has good and valid rights in and title to the
Article 9 Collateral with respect to which it has purported to grant a
Security Interest hereunder and has full power and authority to grant to
the Collateral Agent, for the ratable benefit of the Secured Parties, the
Security Interest in such Article 9 Collateral pursuant hereto and to
execute, deliver and perform its obligations in accordance with the terms
of this Agreement, without the consent or approval of any other person
other than any consent or approval that has been obtained.
(b) The Perfection Certificate has been duly prepared, completed and
executed and the information set forth therein (including (x) the exact
legal name of each Grantor and (y) the jurisdiction of organization of
each Grantor) is correct and complete as of the Closing Date. Uniform
Commercial Code financing statements (including fixture filings, as
applicable) or other appropriate filings, recordings or registrations
containing a description of the Article 9 Collateral have been prepared by
the Collateral Agent based upon the information provided to the
Administrative Agent and the Secured Parties in the Perfection Certificate
for filing in each governmental, municipal or other office specified in
Section 2 of the Perfection Certificate (or specified by notice from the
Borrower to the Administrative Agent after the Closing Date in the case of
filings, recordings or registrations required by Sections 5.06 or 5.12 of
the Credit Agreement), which
14
are all the filings, recordings and registrations (other than filings
required to be made in the United States Patent and Trademark Office and
the United States Copyright Office in order to perfect the Security
Interest in the Article 9 Collateral consisting of United States Patents,
Trademarks and Copyrights) that are necessary to publish notice of and
protect the validity of and to establish a legal, valid and perfected
security interest in favor of the Collateral Agent (for the ratable
benefit of the Secured Parties) in respect of all Article 9 Collateral in
which the Security Interest may be perfected by filing, recording or
registration in the United States (or any political subdivision thereof),
and no further or subsequent filing, refiling, recording, rerecording,
registration or reregistration is necessary in any such jurisdiction,
except as provided under applicable law with respect to the filing of
continuation statements and as may be required with respect to
after-acquired United States Patents, Trademarks and Copyrights and as to
unregistered Copyrights that become registered after the date hereof. Each
Grantor represents and warrants that a fully executed agreement in the
form hereof (or a fully executed short form agreement in form and
substance reasonably satisfactory to the Collateral Agent), and containing
a description of all Article 9 Collateral consisting of Intellectual
Property with respect to United States Patents and United States
registered Trademarks (and Trademarks for which United States registration
applications are pending) and United States registered Copyrights has been
delivered to the Collateral Agent for recording by the United States
Patent and Trademark Office and the United States Copyright Office
pursuant to 35 U.S.C. ss. 261, 15 U.S.C. ss. 1060 or 17 U.S.C. ss. 205 and
the regulations thereunder, as applicable, and otherwise as may be
required pursuant to the laws of any other necessary jurisdiction, to
protect the validity of and to establish a legal, valid and perfected
security interest in favor of the Collateral Agent (for the ratable
benefit of the Secured Parties) in respect of all Article 9 Collateral
consisting of Patents, Trademarks and Copyrights in which a security
interest may be perfected by filing, recording or registration in the
United States (or any political subdivision thereof), and no further or
subsequent filing, refiling, recording, rerecording, registration or
reregistration is necessary (other than such actions as are necessary to
perfect the Security Interest with respect to any Article 9 Collateral
consisting of Patents, Trademarks and Copyrights (or registration or
application for registration thereof) acquired or developed after the date
hereof) and as to unregistered Copyrights that become registered after the
date hereof.
(c) The Security Interest constitutes (i) a legal and valid security
interest in all Article 9 Collateral securing the payment and performance
of the Obligations, (ii) subject to the filings described in Section
4.02(b), a perfected security interest in all Article 9 Collateral in
which a security interest may be perfected by filing, recording or
registering a financing statement or analogous document in the United
States (or any political subdivision thereof) pursuant to the Uniform
Commercial Code or other applicable law in such jurisdictions and (iii) a
security interest that shall be perfected in all Article 9 Collateral in
which a security interest may be perfected upon the receipt and recording
of this Agreement with the United States Patent and Trademark Office and
the United
15
States Copyright Office, as applicable. The Security Interest is and shall
be prior to any other Lien on any of the Article 9 Collateral, other than
Liens expressly permitted pursuant to Section 6.02 of the Credit Agreement
that have priority as a matter of law.
(d) The Article 9 Collateral is owned by the Grantors free and clear
of any Lien, except for Liens expressly permitted pursuant to Section 6.02
of the Credit Agreement. No Grantor has filed or consented to the filing
of (i) any financing statement or analogous document under the Uniform
Commercial Code or any other applicable laws covering any Article 9
Collateral, (ii) any assignment in which any Grantor assigns any
Collateral or any security agreement or similar instrument covering any
Article 9 Collateral with the United States Patent and Trademark Office or
the United States Copyright Office, (iii) any notice under the Assignment
of Claims Act, or (iv) any assignment in which any Grantor assigns any
Article 9 Collateral or any security agreement or similar instrument
covering any Article 9 Collateral with any foreign governmental, municipal
or other office, which financing statement or analogous document,
assignment, security agreement or similar instrument is still in effect,
except, in each case, for Liens expressly permitted pursuant to Section
6.02 of the Credit Agreement. No Grantor holds any Commercial Tort Claims
except as indicated on the Perfection Certificate.
SECTION 4.03. Covenants. (a) Each Grantor agrees promptly to notify the
Collateral Agent in writing of any change in (i) its legal name and/or address,
(ii) its identity or type of organization or corporate structure, (iii) its
Federal Taxpayer Identification Number or organizational identification number
or (iv) its jurisdiction of organization. Each Grantor agrees promptly to
provide the Collateral Agent with certified copies of organizational documents
reflecting any of the changes described in the first sentence of this paragraph.
Each Grantor agrees not to effect or permit any change referred to in the
preceding sentence unless all filings have been made (or concurrently will be
made) under the Uniform Commercial Code or otherwise that are required in order
for the Collateral Agent to continue at all times following such change to have
a valid, legal and perfected first priority security interest in all the Article
9 Collateral. Each Grantor agrees promptly to notify the Collateral Agent if any
material portion of the Article 9 Collateral owned or held by such Grantor is
damaged or destroyed.
(b) [Intentionally omitted]
(c) Each Grantor shall, at its own expense, use commercially reasonable
efforts to defend title to the Article 9 Collateral against all persons and to
defend the Security Interest of the Collateral Agent in the Article 9 Collateral
and the priority thereof against any Lien not expressly permitted pursuant to
Section 6.02 of the Credit Agreement.
(d) Each Grantor agrees, at its own expense, promptly to execute,
acknowledge, deliver and cause to be duly filed all such further instruments and
documents and take all such actions as the Collateral Agent may from time to
time
16
reasonably request to better assure, obtain, preserve, protect and perfect the
Security Interest and the rights and remedies created hereby, including the
payment of any fees and Taxes required in connection with the execution and
delivery of this Agreement, the granting of the Security Interest and the filing
of any financing or continuation statements (including fixture filings) or other
documents in connection herewith or therewith. If any amount payable to any
Grantor under or in connection with any of the Article 9 Collateral shall be or
become evidenced by any promissory note or other instrument, such note or
instrument shall be promptly pledged and delivered to the Collateral Agent, duly
endorsed in a manner satisfactory to the Collateral Agent.
Without limiting the generality of the foregoing, each Grantor hereby
authorizes the Collateral Agent, with prompt notice thereof to the Grantors made
not more than once per calendar quarter, to supplement this Agreement by
supplementing Schedule III or adding additional schedules hereto to identify
specifically any asset or item of a Grantor that may, in the Collateral Agent's
reasonable judgment, constitute Copyrights, Licenses, Patents or Trademarks that
are the subject of applications or registrations; provided that any Grantor
shall have the right, exercisable within 10 days after it has been notified by
the Collateral Agent of the specific identification of such Collateral, to
advise the Collateral Agent in writing of any inaccuracy of the representations
and warranties made by such Grantor hereunder with respect to such Collateral.
Each Grantor agrees that it will use its commercially reasonable efforts to take
such action as shall be necessary in order that all representations and
warranties hereunder shall be true and correct with respect to such Collateral
within 30 days after the date it has been notified by the Collateral Agent of
the specific identification of such Collateral.
(e) The Collateral Agent and such persons as the Collateral Agent may
designate shall have the right, upon reasonable notice, at the applicable
Grantor's own cost and expense, to inspect the Article 9 Collateral, all records
related thereto (and to make extracts and copies from such records) and the
premises upon which any of the Article 9 Collateral is located, to discuss the
applicable Grantor's affairs with the officers of such Grantor and its
independent accountants and to verify, under reasonable procedures, the
existence, validity, amount, quality, quantity, value, condition and status of,
or any other matter relating to, the Article 9 Collateral, including, in the
case of Accounts or other Article 9 Collateral in the possession of any third
person, by (but only after the occurrence and during the continuance of an Event
of Default) contacting Account Debtors or the third person possessing such
Article 9 Collateral for the purpose of making such a verification. The
Collateral Agent shall have the absolute right, subject to Section 9.16 of the
Credit Agreement, to share any information it gains from such inspection or
verification with any Secured Party. Unless an Event of Default has occurred and
is continuing, Collateral Agent shall coordinate and conduct such inspections so
as to occur concurrently with inspections being conducted by the Administrative
Agent pursuant to Section 5.07 of the Credit Agreement.
(f) Upon the occurrence and during the continuance of an Event of Default,
at its option, the Collateral Agent may discharge past due Taxes, assessments,
charges, fees, Liens, security interests or other encumbrances at any time
levied or placed on the
17
Article 9 Collateral and not expressly permitted pursuant to Section 5.03 or
Section 6.02 of the Credit Agreement, and may pay for the maintenance and
preservation of the Article 9 Collateral to the extent any Grantor fails to do
so as expressly required by the Credit Agreement or this Agreement, and each
Grantor jointly and severally agrees to reimburse the Collateral Agent on demand
for any payment made or any expense incurred by the Collateral Agent pursuant to
the foregoing authorization; provided, however, that nothing in this paragraph
shall be interpreted as excusing any Grantor from the performance of, or
imposing any obligation on the Collateral Agent or any Secured Party to cure or
perform, any covenants or other promises of any Grantor with respect to Taxes,
assessments, charges, fees, Liens, security interests or other encumbrances and
maintenance as set forth herein or in the other Loan Documents.
(g) If at any time any Grantor shall take a security interest in any
property of an Account Debtor or any other person to secure payment and
performance of an Account, such Grantor shall promptly notify the Collateral
Agent of such security interest and, upon the reasonable request of the
Collateral Agent, shall promptly assign such security interest to the Collateral
Agent for the ratable benefit of the Secured Parties. Such assignment need not
be filed of public record unless necessary to continue the perfected status of
the security interest against creditors of and transferees from the Account
Debtor or other person granting the security interest.
(h) Each Grantor shall remain liable to observe and perform all the
conditions and obligations to be observed and performed by it under each
contract, agreement or instrument relating to the Article 9 Collateral, all in
accordance with the terms and conditions thereof, and each Grantor jointly and
severally agrees to indemnify and hold harmless the Collateral Agent and the
Secured Parties from and against any and all liability for such performance.
(i) No Grantor shall make or permit to be made an assignment, pledge or
hypothecation of the Article 9 Collateral or shall grant any other Lien in
respect of the Article 9 Collateral or permit any notice to be filed under the
Assignment of Claims Act, except, in each case, as expressly permitted by
Section 6.02 of the Credit Agreement. No Grantor shall make or permit to be made
any transfer of the Article 9 Collateral and each Grantor shall remain at all
times in possession or otherwise in control of the Article 9 Collateral owned by
it, except as permitted by the Credit Agreement.
(j) Except as permitted by the Credit Agreement, no Grantor will, without
the Collateral Agent's prior written consent, grant any extension of the time
for payment of any Accounts included in the Article 9 Collateral, compromise,
compound or settle the same for less than the full amount thereof, release,
wholly or partly, any person liable for the payment thereof or allow any credit
or discount whatsoever thereon, other than extensions, credits, discounts,
compromises, compoundings or settlements granted or made in the ordinary course
of business and consistent with its current practices and in accordance with
such prudent and standard practice used in industries that are the same as or
similar to those in which such Grantor is engaged.
18
(k) Each Grantor, at its own expense, shall maintain or cause to be
maintained insurance covering physical loss or damage to the Inventory and
Equipment in accordance with the requirements set forth in Section 5.02 of the
Credit Agreement. Each Grantor irrevocably makes, constitutes and appoints the
Collateral Agent (and all officers, employees or agents designated by the
Collateral Agent) as such Grantor's true and lawful agent (and attorney-in-fact)
for the purpose, upon the occurrence and during the continuance of an Event of
Default, of reasonably making, settling and adjusting claims in respect of
Article 9 Collateral under policies of insurance, endorsing the name of such
Grantor on any check, draft, instrument or other item of payment for the
proceeds of such policies of insurance and for making all determinations and
decisions with respect thereto. In the event that any Grantor at any time or
times shall fail to obtain or maintain any of the policies of insurance required
hereby or under the Credit Agreement or to pay any premium in whole or part
relating thereto, the Collateral Agent may, without waiving or releasing any
obligation or liability of any Grantor hereunder or any Default or Event of
Default, in its sole discretion, obtain and maintain such policies of insurance
and pay such premium and take any other actions with respect thereto as the
Collateral Agent deems advisable. All sums disbursed by the Collateral Agent in
connection with this paragraph, including reasonable attorneys' fees, court
costs, expenses and other charges relating thereto, shall be payable, upon
demand, by the Grantors to the Collateral Agent and shall be additional
Obligations secured hereby.
(l) Each Grantor shall maintain, in form and manner reasonably
satisfactory to the Collateral Agent, records of its Chattel Paper and its
books, records and documents evidencing or pertaining thereto.
SECTION 4.04. Other Actions. In order to further ensure the attachment,
perfection and priority of, and the ability of the Collateral Agent to enforce,
the Security Interest in the Article 9 Collateral, each Grantor agrees, in each
case at such Grantor's own expense, to take the following actions with respect
to the following Article 9 Collateral:
(a) Instruments. If any Grantor shall at any time hold or acquire
any Instruments, such Grantor shall forthwith endorse, assign and deliver
the same to the Collateral Agent, accompanied by such undated instruments
of endorsement, transfer or assignment duly executed in blank as the
Collateral Agent may from time to time reasonably specify; provided that,
so long as no Event of Default shall have occurred and be continuing, the
Collateral Agent shall, promptly upon request of such Grantor, make
appropriate arrangements for making any promissory notes pledged by such
Grantor available to such Grantor for purposes of prosecution, collection
or renewal.
(b) Deposit Accounts. For each Deposit Account that any Grantor at
any time opens or maintains, such Grantor shall, upon the Collateral
Agent's request, cause the depositary bank to agree to comply at any time
with instructions from the Collateral Agent to such depositary bank
directing the disposition of funds from time to time credited to such
Deposit Account, without further consent of such Grantor or any other
person, pursuant to an agreement in
19
form and substance satisfactory to the Collateral Agent. The Collateral
Agent agrees with each Grantor that the Collateral Agent shall not give
any such instructions or withhold any withdrawal rights from any Grantor,
unless an Event of Default has occurred and is continuing. The provisions
of this paragraph shall not apply to any Deposit Account (i) for which any
Grantor, the depositary bank and the Collateral Agent have entered into a
cash collateral agreement specially negotiated among such Grantor, the
depositary bank and the Collateral Agent for the specific purpose set
forth therein, or (ii) which is a zero balance or payroll account.
(c) Investment Property. Except to the extent otherwise provided in
Article III, if any Grantor shall at any time hold or acquire any
certificated securities, such Grantor shall forthwith endorse, assign and
deliver the same to the Collateral Agent, accompanied by such undated
instruments of transfer or assignment duly executed in blank as the
Collateral Agent may from time to time reasonably specify. If any
securities now or hereafter acquired by any Grantor are uncertificated and
are issued to such Grantor or its nominee directly by the issuer thereof,
such Grantor shall promptly notify the Collateral Agent thereof and, at
the Collateral Agent's request, pursuant to an agreement in form and
substance reasonably satisfactory to the Collateral Agent, cause the
issuer to agree to comply with instructions from the Collateral Agent as
to such securities, without further consent of any Grantor or such
nominee. If any securities, whether certificated or uncertificated, or
other Investment Property now or hereafter acquired by any Grantor are
held by such Grantor or its nominee through a Securities Intermediary or
Commodity Intermediary, such Grantor shall promptly notify the Collateral
Agent thereof and, at the Collateral Agent's request, pursuant to an
agreement in form and substance reasonably satisfactory to the Collateral
Agent cause such Securities Intermediary or Commodity Intermediary, as the
case may be, to agree to comply with Entitlement Orders from the
Collateral Agent to such Securities Intermediary as to such securities or
other Investment Property, or (as the case may be) to apply any value
distributed on account of any commodity contract as directed by the
Collateral Agent to such Commodity Intermediary, in each case without
further consent of any Grantor or such nominee. The Collateral Agent
agrees with each Grantor that the Collateral Agent shall not give any such
Entitlement Orders or instructions or directions to any such issuer,
Securities Intermediary or Commodity Intermediary, and shall not withhold
its consent to the exercise of any withdrawal or dealing rights by any
Grantor, unless an Event of Default has occurred and is continuing.
(d) Electronic Chattel Paper and Transferable Records. If any
Grantor at any time holds or acquires an interest in any Electronic
Chattel Paper or any "transferable record", as that term is defined in
Section 201 of the Federal Electronic Signatures in Global and National
Commerce Act, or in Section 16 of the Uniform Electronic Transactions Act
as in effect in any relevant jurisdiction, such Grantor shall promptly
notify the Collateral Agent thereof and, at the request of the Collateral
Agent, shall take such action as the Collateral Agent may reasonably
request to vest in the Collateral Agent control under New York UCC
20
Section 9-105 of such Electronic Chattel Paper or control under Section
201 of the Federal Electronic Signatures in Global and National Commerce
Act or, as the case may be, Section 16 of the Uniform Electronic
Transactions Act, as so in effect in such jurisdiction, of such
transferable record. The Collateral Agent agrees with such Grantor that
the Collateral Agent will arrange, pursuant to procedures satisfactory to
the Collateral Agent and so long as such procedures will not result in the
Collateral Agent's loss of control, for the Grantor to make alterations to
the Electronic Chattel Paper or transferable record permitted under UCC
Section 9-105 or, as the case may be, Section 201 of the Federal
Electronic Signatures in Global and National Commerce Act or Section 16 of
the Uniform Electronic Transactions Act for a party in control to allow
without loss of control, unless an Event of Default has occurred and is
continuing or would occur after taking into account any action by such
Grantor with respect to such Electronic Chattel Paper or transferable
record.
(e) Letter-of-Credit Rights. If any Grantor is at any time a
beneficiary under a letter of credit now or hereafter issued in favor of
such Grantor, such Grantor shall promptly notify the Collateral Agent
thereof and, at the request and option of the Collateral Agent, such
Grantor shall, pursuant to an agreement in form and substance satisfactory
to the Collateral Agent, either (i) use commercially reasonable efforts to
arrange for the issuer and any confirmer of such letter of credit to
consent to an assignment to the Collateral Agent of the proceeds of any
drawing under the letter of credit or (ii) arrange for the Collateral
Agent to become the transferee beneficiary of the letter of credit, with
the Collateral Agent agreeing, in each case, that the proceeds of any
drawing under the letter of credit are to be paid to the applicable
Grantor unless an Event of Default has occurred or is continuing.
(f) Commercial Tort Claims. If any Grantor shall at any time hold or
acquire a Commercial Tort Claim in an amount reasonably estimated to
exceed $50,000, the Grantor shall promptly notify the Collateral Agent
thereof in a writing signed by such Grantor including a summary
description of such claim and grant to the Collateral Agent, for the
ratable benefit of the Secured Parties, in such writing a security
interest therein and in the proceeds thereof, all upon the terms of this
Agreement, with such writing to be in form and substance satisfactory to
the Collateral Agent.
SECTION 4.05. Covenants Regarding Patent, Trademark and Copyright
Collateral. (a) Each Grantor agrees that it will not, and will not permit any of
its licensees to, do any act, or omit to do any act, whereby any Patent that is
material to the conduct of such Grantor's business may become invalidated or
dedicated to the public, and agrees that it shall use commercially reasonable
efforts to mark any products covered by a Patent with the relevant patent number
as necessary and sufficient to establish and preserve its maximum rights under
applicable patent laws.
(b) Each Grantor (either itself or through its licensees or its
sublicensees) will, for each Trademark material to the conduct of such Grantor's
business, (i) maintain
21
such Trademark in full force free from any claim of abandonment or invalidity
for non-use, (ii) maintain the quality of products and services offered under
such Trademark, (iii) display such Trademark with notice of Federal or foreign
registration to the extent necessary and sufficient to establish and preserve
its maximum rights under applicable law and (iv) not knowingly use or knowingly
permit the use of such Trademark in violation of any third party rights.
(c) Each Grantor (either itself or through its licensees or sublicensees)
will, for each work covered by a material Copyright, continue to publish,
reproduce, display, adopt and distribute the work with appropriate copyright
notice as necessary and sufficient to establish and preserve its maximum rights
under applicable copyright laws.
(d) Each Grantor shall notify the Collateral Agent promptly if it knows or
has reason to know that any Patent, Trademark or Copyright material to the
conduct of its business may become abandoned, lost or dedicated to the public,
or of any adverse determination or development (including the institution of, or
any such determination or development in, any proceeding in the United States
Patent and Trademark Office, United States Copyright Office or any court or
similar office of any country) regarding such Grantor's ownership of any Patent,
Trademark or Copyright, its right to register the same, or its right to keep and
maintain the same (other than non-final office action in the course of
prosecution).
(e) In no event shall any Grantor, either itself or through any agent,
employee, licensee or designee, file an application for any Patent, Trademark or
Copyright (or for the registration of any Trademark or Copyright) with the
United States Patent and Trademark Office, United States Copyright Office or any
office or agency in any political subdivision of the United States or in any
other country or any political subdivision thereof, unless it promptly notifies
the Collateral Agent (which notice may be given after such filing), and, upon
request of the Collateral Agent, executes and delivers any and all agreements,
instruments, documents and papers as the Collateral Agent may reasonably request
to evidence the Security Interest in such Patent, Trademark or Copyright, and
each Grantor hereby appoints the Collateral Agent as its attorney-in-fact to
execute and file such writings for the foregoing purposes, all acts of such
attorney being hereby ratified and confirmed; such power, being coupled with an
interest, is irrevocable until the termination or release, pursuant to Section
7.16 hereof, of the Lien created hereunder.
(f) Each Grantor will take all reasonably necessary steps that are
consistent with the practice in any proceeding before the United States Patent
and Trademark Office, United States Copyright Office or any office or agency in
any political subdivision of the United States or in any other country or any
political subdivision thereof, to maintain and pursue each material application
relating to the Patents, Trademarks and/or Copyrights (and to obtain the
relevant grant or registration) and to maintain each issued Patent and each
registration of the Trademarks and Copyrights that is material to the conduct of
any Grantor's business, including timely filings of applications for renewal,
affidavits of use, affidavits of incontestability and payment of maintenance
fees, and, if consistent with good business judgment, to initiate opposition,
interference and cancellation proceedings against third parties.
22
(g) In the event that any Grantor knows or has reason to believe that any
Article 9 Collateral consisting of a Patent, Trademark or Copyright material to
the conduct of any Grantor's business has been or is about to be infringed,
misappropriated or diluted by a third person in a material respect, such Grantor
promptly shall notify the Collateral Agent and shall, if desirable in such
Grantor's business judgment, promptly sue for infringement, misappropriation or
dilution and to recover any and all damages for such infringement,
misappropriation or dilution, and take such other actions as are appropriate
under the circumstances to protect such Article 9 Collateral.
(h) Upon the occurrence and during the continuance of an Event of Default,
each Grantor shall use its reasonable best efforts to obtain all requisite
consents or approvals by the licensor of each Copyright License, Patent License
or Trademark License, and each other material License, to effect the assignment
of all such Grantor's right, title and interest thereunder to the Collateral
Agent, for the ratable benefit of the Secured Parties, or its designee.
ARTICLE V
Remedies
SECTION 5.01. Remedies Upon Default. Upon the occurrence and during the
continuance of an Event of Default, each Grantor agrees to deliver each item of
Collateral to the Collateral Agent on demand, and it is agreed that the
Collateral Agent shall have the right to take any of or all the following
actions at the same or different times: (a) with respect to any Article 9
Collateral consisting of Intellectual Property, on demand, to cause the Security
Interest to become an assignment, transfer and conveyance of any of or all such
Article 9 Collateral by the applicable Grantor to the Collateral Agent, or to
license or sublicense, whether general, special or otherwise, and whether on an
exclusive or nonexclusive basis, any such Article 9 Collateral throughout the
world on such terms and conditions and in such manner as the Collateral Agent
shall reasonably determine (other than in violation of any then-existing
licensing arrangements to the extent that waivers cannot be obtained), and (b)
with or without legal process and with or without prior notice or demand for
performance, to take possession of the Article 9 Collateral and without
liability for trespass to enter any premises where the Article 9 Collateral may
be located for the purpose of taking possession of or removing the Article 9
Collateral and, generally, to exercise any and all rights afforded to a secured
party under the Uniform Commercial Code or other applicable law. Without
limiting the generality of the foregoing, each Grantor agrees that the
Collateral Agent shall have the right, subject to the mandatory requirements of
applicable law, to sell or otherwise dispose of all or any part of the
Collateral at a public or private sale or at any broker's board or on any
securities exchange, for cash, upon credit or for future delivery as the
Collateral Agent shall deem appropriate. The Collateral Agent shall be
authorized at any such sale (if it deems it advisable to do so) to restrict the
prospective bidders or purchasers to persons who will represent and agree that
they are purchasing the Collateral for their own account for investment and not
with a view to the distribution or sale thereof, and upon consummation of any
such sale the Collateral Agent shall have the
23
right to assign, transfer and deliver to the purchaser or purchasers thereof the
Collateral so sold. Each such purchaser at any such sale shall hold the property
sold absolutely, free from any claim or right on the part of any Grantor, and
each Grantor hereby waives (to the extent permitted by law) all rights of
redemption, stay and appraisal which such Grantor now has or may at any time in
the future have under any rule of law or statute now existing or hereafter
enacted.
The Collateral Agent shall give each applicable Grantor 10 days' written
notice (which each Grantor agrees is reasonable notice within the meaning of
Section 9-611 of the New York UCC or its equivalent in other jurisdictions) of
the Collateral Agent's intention to make any sale of Collateral. Such notice, in
the case of a public sale, shall state the time and place for such sale and, in
the case of a sale at a broker's board or on a securities exchange, shall state
the board or exchange at which such sale is to be made and the day on which the
Collateral, or portion thereof, will first be offered for sale at such board or
exchange. Any such public sale shall be held at such time or times within
ordinary business hours and at such place or places as the Collateral Agent may
fix and state in the notice (if any) of such sale. At any such sale, the
Collateral, or portion thereof, to be sold may be sold in one lot as an entirety
or in separate parcels, as the Collateral Agent may (in its sole and absolute
discretion) determine. The Collateral Agent shall not be obligated to make any
sale of any Collateral if it shall determine not to do so, regardless of the
fact that notice of sale of such Collateral shall have been given. The
Collateral Agent may, without notice or publication, adjourn any public or
private sale or cause the same to be adjourned from time to time by announcement
at the time and place fixed for sale, and such sale may, without further notice,
be made at the time and place to which the same was so adjourned. In case any
sale of all or any part of the Collateral is made on credit or for future
delivery, the Collateral so sold may be retained by the Collateral Agent until
the sale price is paid by the purchaser or purchasers thereof, but the
Collateral Agent shall not incur any liability in case any such purchaser or
purchasers shall fail to take up and pay for the Collateral so sold and, in case
of any such failure, such Collateral may be sold again upon like notice. At any
public (or, to the extent permitted by law, private) sale made pursuant to this
Agreement, any Secured Party may bid for or purchase, free (to the extent
permitted by applicable law) from any right of redemption, stay, valuation or
appraisal on the part of any Grantor (all said rights being also hereby waived
and released to the extent permitted by applicable law), the Collateral or any
part thereof offered for sale and may make payment on account thereof by using
any claim then due and payable to such Secured Party from any Grantor as a
credit against the purchase price, and such Secured Party may, upon compliance
with the terms of sale, hold, retain and dispose of such property without
further accountability to any Grantor therefor. For purposes hereof, a written
agreement to purchase the Collateral or any portion thereof shall be treated as
a sale thereof; the Collateral Agent shall be free to carry out such sale
pursuant to such agreement and no Grantor shall be entitled to the return of the
Collateral or any portion thereof subject thereto, notwithstanding the fact that
after the Collateral Agent shall have entered into such an agreement all Events
of Default shall have been remedied and the Obligations paid in full. As an
alternative to exercising the power of sale herein conferred upon it, the
Collateral Agent may proceed by a suit or suits at law or in equity to foreclose
this Agreement and to sell the Collateral or any portion thereof pursuant to a
24
judgment or decree of a court or courts having competent jurisdiction or
pursuant to a proceeding by a court-appointed receiver. Any sale pursuant to the
provisions of this Section 5.01 shall be deemed to conform to the commercially
reasonable standards as provided in Section 9-610(b) of the New York UCC or its
equivalent in other jurisdictions.
SECTION 5.02. Application of Proceeds. The Collateral Agent shall apply
the proceeds of any collection, sale, foreclosure or other realization upon any
Collateral, including any Collateral consisting of cash, as follows:
FIRST, to the payment of all costs and expenses incurred by the
Administrative Agent or the Collateral Agent (in their respective
capacities as such hereunder or under any other Loan Document) in
connection with such collection, sale, foreclosure or realization or
otherwise in connection with this Agreement, any other Loan Document or
any of the Obligations, including all court costs and the fees and
expenses of its agents and legal counsel, the repayment of all advances
made by the Administrative Agent and/or the Collateral Agent hereunder or
under any other Loan Document on behalf of any Grantor and any other costs
or expenses incurred in connection with the exercise of any right or
remedy hereunder or under any other Loan Document;
SECOND, to the payment in full of all other Obligations (the amounts
so applied to be distributed among the Secured Parties pro rata in
accordance with the amounts of the Obligations owed to them on the date of
any such distribution);
THIRD, to the Grantors, their successors or assigns, or as a court
of competent jurisdiction may otherwise direct.
The Collateral Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of Collateral by the Collateral Agent (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the Collateral Agent or of the officer making the sale shall be a
sufficient discharge to the purchaser or purchasers of the Collateral so sold
and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the Collateral Agent
or such officer or be answerable in any way for the misapplication thereof.
SECTION 5.03. Grant of License to Use Intellectual Property. For the
purpose of enabling the Collateral Agent to exercise rights and remedies under
this Agreement at such time as the Collateral Agent shall be lawfully entitled
to exercise such rights and remedies, each Grantor hereby grants to the
Collateral Agent an irrevocable, nonexclusive license (exercisable without
payment of royalty or other compensation to the Grantors), to use, license or
sublicense any of the Article 9 Collateral consisting of Intellectual Property
now owned or hereafter acquired by such Grantor, and wherever the same may be
located, and including in such license access to all media in which any of the
licensed items may be recorded or stored and to all computer software and
programs used for the compilation or printout thereof, subject, in the case of
Trademarks, to the
25
observance of standards of quality and inspection in connection with the use of
such Trademarks as are sufficient to maintain the validity and enforceability of
such Trademarks. The use of such license by the Collateral Agent may be
exercised, at the option of the Collateral Agent, only upon the occurrence and
during the continuation of an Event of Default; provided, however, that any
license, sublicense or other transaction entered into by the Collateral Agent in
accordance herewith shall be binding upon each Grantor notwithstanding any
subsequent cure of an Event of Default.
SECTION 5.04. Securities Act, Etc. In view of the position of the Grantors
in relation to the Pledged Collateral, or because of other current or future
circumstances, a question may arise under the U.S. Securities Act of 1933, as
now or hereafter in effect, or any similar statute hereafter enacted analogous
in purpose or effect (such Act and any such similar statute as from time to time
in effect being called the "Federal Securities Laws") with respect to any
disposition of the Pledged Collateral permitted hereunder. Each Grantor
understands that compliance with the Federal Securities Laws might very strictly
limit the course of conduct of the Collateral Agent if the Collateral Agent were
to attempt to dispose of all or any part of the Pledged Collateral, and might
also limit the extent to which or the manner in which any subsequent transferee
of any Pledged Collateral could dispose of the same. Similarly, there may be
other legal restrictions or limitations affecting the Collateral Agent in any
attempt to dispose of all or part of the Pledged Collateral under applicable
"blue sky" or other state securities laws or similar laws analogous in purpose
or effect. Each Grantor recognizes that in light of such restrictions and
limitations the Collateral Agent may, with respect to any sale of the Pledged
Collateral, limit the purchasers to those who will agree, among other things, to
acquire such Pledged Collateral for their own account, for investment, and not
with a view to the distribution or resale thereof. Each Grantor acknowledges and
agrees that in light of such restrictions and limitations, the Collateral Agent,
in its sole and absolute discretion (a) may proceed to make such a sale whether
or not a registration statement for the purpose of registering such Pledged
Collateral or part thereof shall have been filed under the Federal Securities
Laws and (b) may approach and negotiate with a limited number of potential
purchasers (including a single potential purchaser) to effect such sale. Each
Grantor acknowledges and agrees that any such sale might result in prices and
other terms less favorable to the seller than if such sale were a public sale
without such restrictions. In the event of any such sale, the Collateral Agent
shall incur no responsibility or liability for selling all or any part of the
Pledged Collateral at a price that the Collateral Agent, in its sole and
absolute discretion, may in good faith deem reasonable under the circumstances,
notwithstanding the possibility that a substantially higher price might have
been realized if the sale were deferred until after registration as aforesaid or
if more than a limited number of purchasers (or a single purchaser) were
approached. The provisions of this Section 5.04 will apply notwithstanding the
existence of a public or private market upon which the quotations or sales
prices may exceed substantially the price at which the Collateral Agent sells.
26
ARTICLE VI
Indemnity, Subrogation and Subordination
SECTION 6.01. Indemnity and Subrogation. In addition to all such rights of
indemnity and subrogation as the Subsidiary Guarantors may have under applicable
law (but subject to Section 6.03), the Borrower agrees that (a) in the event a
payment shall be made by any Subsidiary Guarantor under this Agreement, the
Borrower shall indemnify such Subsidiary Guarantor for the full amount of such
payment and such Subsidiary Guarantor shall be subrogated to the rights of the
person to whom such payment shall have been made to the extent of such payment
and (b) in the event any assets of any Subsidiary Guarantor shall be sold
pursuant to this Agreement or any other Security Document to satisfy in whole or
in part a claim of any Secured Party, the Borrower shall indemnify such
Subsidiary Guarantor in an amount equal to the greater of the book value or the
fair market value of the assets so sold.
SECTION 6.02. Contribution and Subrogation. Each Subsidiary Guarantor (a
"Contributing Subsidiary Guarantor") agrees (subject to Section 6.03) that, in
the event a payment shall be made by any other Subsidiary Guarantor hereunder in
respect of any Obligation, or assets of any other Subsidiary Guarantor shall be
sold pursuant to any Security Document to satisfy any Obligation owed to any
Secured Party, and such other Subsidiary Guarantor (the "Claiming Subsidiary
Guarantor") shall not have been fully indemnified by the Borrower as provided in
Section 6.01, the Contributing Subsidiary Guarantor shall indemnify the Claiming
Subsidiary Guarantor in an amount equal to (i) the amount of such payment or
(ii) the greater of the book value or the fair market value of such assets, as
the case may be, in each case multiplied by a fraction of which the numerator
shall be the net worth of the Contributing Subsidiary Guarantor on the date
hereof and the denominator shall be the aggregate net worth of all the
Subsidiary Guarantors on the date hereof (or, in the case of any Subsidiary
Guarantor becoming a party hereto pursuant to Section 7.16, the date of the
supplement hereto executed and delivered by such Subsidiary Guarantor). Any
Contributing Subsidiary Guarantor making any payment to a Claiming Subsidiary
Guarantor pursuant to this Section 6.02 shall be subrogated to the rights of
such Claiming Subsidiary Guarantor under Section 6.01 to the extent of such
payment.
SECTION 6.03. Subordination. (a) Notwithstanding any provision of this
Agreement to the contrary, all rights of the Subsidiary Guarantors under
Sections 6.01 and 6.02 and all other rights of indemnity, contribution or
subrogation under applicable law or otherwise shall be fully subordinated to the
indefeasible payment in full of the Obligations. No failure on the part of the
Borrower or any Subsidiary Guarantor to make the payments required by Sections
6.01 and 6.02 (or any other payments required under applicable law or otherwise)
shall in any respect limit the obligations and liabilities of any Subsidiary
Guarantor with respect to its obligations hereunder, and each Subsidiary
Guarantor shall remain liable for the full amount of its obligations hereunder.
27
(b) The Borrower and each Subsidiary Guarantor hereby agree that all
Indebtedness and other monetary obligations owed by it to the Borrower or any
Subsidiary shall be fully subordinated to the indefeasible payment in full of
the Obligations.
ARTICLE VII
Miscellaneous
SECTION 7.01. Notices. All communications and notices hereunder shall
(except as otherwise expressly permitted herein) be in writing and given as
provided in Section 9.01 of the Credit Agreement. All communications and notices
hereunder to any Subsidiary Guarantor shall be given to it in care of the
Borrower as provided in Section 9.01 of the Credit Agreement.
SECTION 7.02. Security Interest Absolute. All rights of the Collateral
Agent hereunder, the Security Interest, the grant of a security interest in the
Pledged Collateral and all obligations of each Grantor hereunder shall be
absolute and unconditional irrespective of (a) any lack of validity or
enforceability of the Credit Agreement, any other Loan Document, any agreement
with respect to any of the Obligations or any other agreement or instrument
relating to any of the foregoing, (b) any change in the time, manner or place of
payment of, or in any other term of, all or any of the Obligations, or any other
amendment or waiver of or any consent to any departure from the Credit
Agreement, any other Loan Document or any other agreement or instrument relating
to the foregoing, (c) any exchange, release or non-perfection of any Lien on
other collateral, or any release or amendment or waiver of or consent under or
departure from any guarantee, securing or guaranteeing all or any of the
Obligations, or (d) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, any Grantor in respect of the
Obligations or this Agreement.
SECTION 7.03. Survival of Agreement. All covenants, agreements,
representations and warranties made by the Loan Parties in the Loan Documents
and in the certificates or other instruments prepared or delivered in connection
with or pursuant to this Agreement or any other Loan Document shall be
considered to have been relied upon by the Lenders and shall survive the
execution and delivery of the Loan Documents and the making of any Loans,
regardless of any investigation made by any Lender or on its behalf and
notwithstanding that the Collateral Agent or any Lender may have had notice or
knowledge of any Default or incorrect representation or warranty at the time any
credit is extended under the Credit Agreement, and shall continue in full force
and effect as long as the principal of or any accrued interest on any Loan or
any fee or any other amount payable under any Loan Document is outstanding and
unpaid.
SECTION 7.04. Limitation by Law. All rights, remedies and powers provided
in this Agreement may be exercised only to the extent that the exercise thereof
does not violate any applicable provision of law, and all the provisions of this
Agreement are intended to be subject to all mandatory provisions of law that may
be controlling and to be limited to the extent necessary so that they shall not
render this Agreement invalid,
28
unenforceable, in whole or in part, or not entitled to be recorded, registered
or filed under the provisions of any applicable law.
SECTION 7.05. Binding Effect; Several Agreement. This Agreement shall
become effective as to any Loan Party when a counterpart hereof executed on
behalf of such Loan Party shall have been delivered to the Collateral Agent and
a counterpart hereof shall have been executed on behalf of the Collateral Agent,
and thereafter shall be binding upon such Loan Party and the Collateral Agent
and their respective permitted successors and assigns, and shall inure to the
benefit of such Loan Party, the Collateral Agent and the other Secured Parties
and their respective successors and assigns, except that no Loan Party shall
have the right to assign or transfer its rights or obligations hereunder or any
interest herein or in the Collateral (and any such assignment or transfer shall
be void) except as expressly contemplated or permitted by this Agreement or the
Credit Agreement. This Agreement shall be construed as a separate agreement with
respect to each Loan Party and may be amended, modified, supplemented, waived or
released with respect to any Loan Party without the approval of any other Loan
Party and without affecting the obligations of any other Loan Party hereunder.
SECTION 7.06. Successors and Assigns. Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to include the
permitted successors and assigns of such party; and all covenants, promises and
agreements by or on behalf of any Grantor or the Collateral Agent that are
contained in this Agreement shall bind and inure to the benefit of their
respective successors and assigns.
SECTION 7.07. Collateral Agent's Fees and Expenses; Indemnification. (a)
The parties hereto agree that the Collateral Agent shall be entitled to
reimbursement of its expenses incurred hereunder as provided in Section 9.05 of
the Credit Agreement.
(b) Without limitation of its indemnification obligations under the other
Loan Documents, each Grantor jointly and severally agrees to indemnify the
Collateral Agent and the other Indemnitees against, and hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities, and related out
of pocket expenses, including the reasonable fees, charges and disbursements of
any counsel for any Indemnitee, incurred by or asserted against any Indemnitee
arising out of, in any way connected with, or as a result of, the execution,
delivery or performance of this Agreement or any agreement or instrument
contemplated hereby or any claim, litigation, investigation or proceeding
relating to any of the foregoing or to the Collateral, regardless of whether any
Indemnitee is a party thereto or whether initiated by a third party or by a Loan
Party or any Affiliate thereof; provided, however, that such indemnity shall
not, as to any Indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Indemnitee. To the extent permitted by
applicable law, no Grantor shall assert, and each Grantor hereby waives any
claim against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of,
29
in connection with, or as a result of, this Agreement or any agreement or
instrument contemplated hereby, the Transactions or any Loan or the use of
proceeds thereof.
(c) Any such amounts payable as provided hereunder shall be additional
Obligations secured hereby and by the other Security Documents. The provisions
of this Section 7.06 shall remain operative and in full force and effect
regardless of the termination of this Agreement or any other Loan Document, the
consummation of the transactions contemplated hereby, the repayment of any of
the Obligations, the invalidity or unenforceability of any term or provision of
this Agreement or any other Loan Document, or any investigation made by or on
behalf of the Collateral Agent or any other Secured Party. All amounts due under
this Section 7.07 shall be payable on written demand therefor and shall bear
interest, on and from the date of demand, at the rate specified in Section
2.04(a) of the Credit Agreement.
SECTION 7.08. Collateral Agent Appointed Attorney-in-Fact. Each Grantor
hereby appoints the Collateral Agent as the attorney-in-fact of such Grantor for
the purpose of carrying out the provisions of this Agreement and taking any
action and executing any instrument that the Collateral Agent may deem necessary
or advisable to accomplish the purposes hereof following the occurrence and
during the continuance of an Event of Default, which appointment is irrevocable
and coupled with an interest. Without limiting the generality of the foregoing,
the Collateral Agent shall have the right, upon the occurrence and during the
continuance of an Event of Default, with full power of substitution either in
the Collateral Agent's name or in the name of such Grantor (a) to receive,
endorse, assign and/or deliver any and all notes, acceptances, checks, drafts,
money orders or other evidences of payment relating to the Collateral or any
part thereof, (b) to demand, collect, receive payment of, give receipt for and
give discharges and releases of all or any of the Collateral, (c) to sign the
name of any Grantor on any invoice or bill of lading relating to any of the
Collateral, (d) to send verifications of Accounts Receivable to any Account
Debtor, (e) to commence and prosecute any and all suits, actions or proceedings
at law or in equity in any court of competent jurisdiction to collect or
otherwise realize on all or any of the Collateral or to enforce any rights in
respect of any Collateral, (f) to settle, compromise, compound, adjust or defend
any actions, suits or proceedings relating to all or any of the Collateral, (g)
to notify, or to require any Grantor to notify, Account Debtors to make payment
directly to the Collateral Agent, and (h) to use, sell, assign, transfer,
pledge, make any agreement with respect to or otherwise deal with all or any of
the Collateral, and to do all other acts and things necessary to carry out the
purposes of this Agreement in accordance with its terms, as fully and completely
as though the Collateral Agent were the absolute owner of the Collateral for all
purposes; provided, however, that nothing herein contained shall be construed as
requiring or obligating the Collateral Agent to make any commitment or to make
any inquiry as to the nature or sufficiency of any payment received by the
Collateral Agent, or to present or file any claim or notice, or to take any
action with respect to the Collateral or any part thereof or the moneys due or
to become due in respect thereof or any property covered thereby. The Collateral
Agent and the other Secured Parties shall be accountable only for amounts
actually received as a result of the exercise of the powers granted to them
herein, and neither they nor their officers, directors, employees or agents
shall be responsible to
30
any Grantor for any act or failure to act hereunder, except for their own gross
negligence, willful misconduct or bad faith.
SECTION 7.09. Applicable Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 7.10. Waivers; Amendment. (a) No failure or delay by the
Collateral Agent, the Administrative Agent or any Lender in exercising any right
or power hereunder or under any other Loan Document shall operate as a waiver
hereof or thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent, the
Administrative Agent and the Lenders hereunder and under the other Loan
Documents are cumulative and are not exclusive of any rights or remedies that
they would otherwise have. No waiver of any provision of any Loan Document or
consent to any departure by any Loan Party therefrom shall in any event be
effective unless the same shall be permitted by paragraph (b) of this Section
7.10, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. Without limiting the generality of
the foregoing, the making of a Loan shall not be construed as a waiver of any
Default, regardless of whether the Collateral Agent or any Lender may have had
notice or knowledge of such Default at the time. No notice or demand on any Loan
Party in any case shall entitle any Loan Party to any other or further notice or
demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived, amended
or modified except pursuant to an agreement or agreements in writing entered
into by the Collateral Agent and the Loan Party or Loan Parties with respect to
which such waiver, amendment or modification is to apply, subject to any consent
required in accordance with Section 9.08 of the Credit Agreement.
SECTION 7.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS. EACH PARTY HERETO HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT
OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS
APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 7.11.
31
SECTION 7.12. Severability. In the event any one or more of the provisions
contained in this Agreement or in any other Loan Document should be held
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby (it being understood that the
invalidity of a particular provision in a particular jurisdiction shall not in
and of itself affect the validity of such provision in any other jurisdiction).
The parties shall endeavor in good-faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
SECTION 7.13. Counterparts. This Agreement may be executed in counterparts
(and by different parties hereto on different counterparts), each of which shall
constitute an original but all of which when taken together shall constitute a
single contract, and shall become effective as provided in Section 7.05.
Delivery of an executed signature page to this Agreement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Agreement.
SECTION 7.14. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 7.15. Jurisdiction; Consent to Service of Process. (a) Each of the
Grantors hereby irrevocably and unconditionally submits, for itself and its
property, to the exclusive jurisdiction of any New York State court or Federal
court of the United States of America, sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or any other Loan Document, or for recognition or
enforcement of any judgment, and each of the Loan Parties hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State court or, to the
extent permitted by law, in such Federal court. Each of the Loan Parties agrees
that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Nothing in this Agreement or any other Loan Document
shall affect any right that the Collateral Agent, the Administrative Agent or
any Lender may otherwise have to bring any action or proceeding relating to this
Agreement or any other Loan Document against any Grantor or its properties in
the courts of any jurisdiction.
(b) Each of the Loan Parties hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or any other
Loan Document in any court referred to in paragraph (a) of this Section 7.15.
Each of the Loan Parties hereby irrevocably waives, to the fullest extent
permitted by law, the defense of an inconvenient forum to the maintenance of
such action or proceeding in any such court.
32
(c) Each of the Loan Parties hereby irrevocably consents to service of
process in the manner provided for notices in Section 7.01. Nothing in this
Agreement or any other Loan Document will affect the right of the Collateral
Agent to serve process in any other manner permitted by law.
SECTION 7.16. Termination or Release. (a) This Agreement, the guarantees
made herein, the Security Interest, the pledge of the Pledged Collateral and all
other security interests granted hereby shall terminate when all the Obligations
have been indefeasibly paid in full and the Lenders have no further commitment
to lend under the Credit Agreement.
(b) A Subsidiary Guarantor shall automatically be released from its
obligations hereunder and the Security Interests created hereunder in the
Collateral of such Subsidiary Guarantor shall be automatically released upon the
consummation of any transaction permitted by the Credit Agreement as a result of
which such Subsidiary Guarantor ceases to be a Subsidiary.
(c) Upon any sale or other transfer by any Grantor of any Collateral that
is permitted under the Credit Agreement to any person that is not the Borrower
or a Subsidiary Guarantor, or, upon the effectiveness of any written consent to
the release of the Security Interest granted hereby in any Collateral pursuant
to Section 9.08 of the Credit Agreement, the Security Interest in such
Collateral shall be automatically released.
(d) In connection with any termination or release pursuant to paragraph
(a), (b) or (c) above, the Collateral Agent shall promptly execute and deliver
to any Grantor, at such Grantor's expense, all Uniform Commercial Code
termination statements and similar documents that such Grantor shall reasonably
request to evidence such termination or release. Any execution and delivery of
documents pursuant to this Section 7.16 shall be without recourse to or
representation or warranty by the Collateral Agent or any Secured Party. Without
limiting the provisions of Section 7.07, the Borrower shall reimburse the
Collateral Agent upon demand for all costs and out-of-pocket expenses, including
the reasonable fees, charges and expenses of counsel, incurred by it in
connection with any action contemplated by this Section 7.16.
SECTION 7.17. Additional Subsidiaries. Any Subsidiary that is required to
become a party hereto pursuant to Section 5.12 of the Credit Agreement shall
enter into this Agreement as a Subsidiary Guarantor and a Grantor upon becoming
such a Subsidiary. Upon execution and delivery by the Collateral Agent and such
Subsidiary of a supplement in the form of Exhibit A hereto, such Subsidiary
shall become a Subsidiary Guarantor and a Grantor hereunder with the same force
and effect as if originally named as a Subsidiary Guarantor and a Grantor
herein. The execution and delivery of any such instrument shall not require the
consent of any other Loan Party hereunder. The rights and obligations of each
Loan Party hereunder shall remain in full force and effect notwithstanding the
addition of any new Loan Party as a party to this Agreement.
SECTION 7.18. Right of Setoff. If an Event of Default shall have occurred
and is continuing, each Secured Party is hereby authorized at any time and from
33
time to time, to the fullest extent permitted by law, to set off and apply any
and all Collateral (including any deposits (general or special, time or demand,
provisional or final)) at any time held and other obligations at any time owing
by such Secured Party to or for the credit or the account of any Grantor against
any and all of the obligations of such Grantor now or hereafter existing under
this Agreement and the other Loan Documents held by such Secured Party,
irrespective of whether or not such Secured Party shall have made any demand
under this Agreement or any other Loan Document and although such obligations
may be unmatured. The rights of each Secured Party under this Section 7.18 are
in addition to other rights and remedies (including other rights of setoff)
which such Secured Party may have.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
GOAMERICA, INC.
by: /s/ Daniel R. Luis
------------------------------
Name: Daniel R. Luis
Title: Chief Executive Officer
GOAMERICA COMMUNICATIONS CORP.
by: /s/ Daniel R. Luis
------------------------------
Name: Daniel R. Luis
Title: President
WYND COMMUNICATIONS CORPORATION
by: /s/ Daniel R. Luis
------------------------------
Name: Daniel R. Luis
Title: President
ACQUISITION 1 CORP.
by: /s/ Daniel R. Luis
------------------------------
Name: Daniel R. Luis
Title: President
CLEARLAKE CAPITAL GROUP, LP, as
Collateral Agent
By: CCG Operations, LLC
Its: General Partner
by: /s/ Behdad Eghbali
------------------------------
Name: Behdad Eghbali
Title: Manager