PLEDGE AND SECURITY AGREEMENT
This PLEDGE AND SECURITY AGREEMENT, dated as of December 4, 1998, is made
by SmarTalk Teleservices, Inc. ("SmarTalk") and the Subsidiaries listed on the
signature page hereto, as Borrower (the "Borrower"), in favor of Fletcher
International Limited, as Secured Party (the "Secured Party").
RECITALS:
WHEREAS, the parties hereto have entered into a Credit Agreement, dated as
of December 4, 1998, between SmarTalk and the Secured Party (said Agreement, as
it may hereafter be amended or otherwise modified from time to time, the "Credit
Agreement");
WHEREAS, pursuant to the Credit Agreement, the Secured Party has agreed to
make extensions of credit to SmarTalk upon the terms and subject to the
conditions set forth therein;
WHEREAS, it is a condition precedent to the obligations of the Secured
Party to extend credit to SmarTalk under the Credit Agreement that the
obligations of SmarTalk thereunder be secured as provided herein;
NOW, THEREFORE, in consideration of the premises and in order to induce the
Secured Party to enter into the Credit Agreement and to make its extensions of
credit to SmarTalk thereunder, and in consideration of other Secured Obligations
hereinafter incurred, the Borrower hereby agrees with the Secured Party, as
follows:
ARTICLE II
DEFINITIONS
2.2 Definitions. Capitalized terms used herein but not otherwise defined
herein shall have the meanings ascribed thereto in the Credit Agreement. The
following terms shall have the following meanings:
"Account Debtor" shall mean the person who is obligated on a
Receivable.
"Accounts" shall mean "accounts" as such term is defined in Section
9-106 of the UCC.
"Agreement" shall mean this Pledge and Security Agreement, as the same
may from time to time be amended, supplemented or otherwise modified.
"Capital Stock" shall mean any and all shares, interests,
participations or other equivalents (however designated) of capital stock
of a corporation, any and all equivalent ownership interests in a Person
(other than a corporation) and any and all warrants, rights or options to
purchase any of the foregoing.
"Chattel Paper" shall mean "chattel paper" as such term is defined in
Section 9-105(b) of the UCC.
"Collateral" shall have the meaning assigned to it in Section 2
hereof.
"Collateral Account" shall mean the account (which may be a securities
account) maintained pursuant to this Agreement by the Secured Party
entitled "[Wells Fargo Account # 4091382788 ]," and all funds, investment
property and instruments or other items from time to time credited to such
account and all interest thereon.
"Collateral Records" shall mean books, records, computer software,
computer printouts, customer lists, blueprints, technical specifications,
manuals, and similar items which relate to any Collateral other than such
items obtained under license or franchise agreements which prohibit
assignment or disclosure of such items.
"Contracts" shall mean all contracts to which any Borrower now is, or
hereafter will be, bound, or a party, beneficiary or assignee (including
without limitation Copyright Licenses, Patent Licenses, Trademark Licenses
and Trade Secret Licenses), and all other instruments, agreements and
documents executed and delivered with respect to such contracts, and all
revenues, rentals, Proceeds and other sums of money due and to become due
from any of the foregoing, as the same may be modified, supplemented or
amended from time to time in accordance with their terms.
"Copyright Licenses" shall mean all of any Borrower's right, title,
and interest in and to any and all agreements providing for the granting of
any right in or to Copyrights (whether the Borrower is licensee or licensor
thereunder) including, without limitation, each agreement referred to in
Item B of Schedule IV.
"Copyrights" shall mean all of any Borrower's right, title, and
interest in and to all United States and foreign copyrights, all mask works
fixed in semi-conductor chip products (as defined under 17 U.S.C. 901 of
the U.S. Copyright Act), whether registered or unregistered, now or
hereafter in force throughout the world, all registrations and applications
therefor including, without limitation, the registrations and applications
referred to in Item A of Schedule IV, all rights corresponding thereto
throughout the world, all extensions and renewals of any thereof, the right
to sue for past infringements of any of the foregoing, and all proceeds of
the foregoing, including, without limitation, licenses, royalties, income,
payments, claims, damages, and proceeds of suit.
"Deposit Accounts" shall mean the Collateral Account and any deposit
account, including without limitation, "deposit accounts" as such term is
defined in Section 9-105(e) of the UCC and any other deposit or securities
account, together with any funds, instruments or other items credited to
any such account from time to time, and all interest thereon.
"Documents" shall mean "documents" as such term is defined in Section
9-105(f) of the UCC.
"Equipment" shall mean "equipment" as such term is defined in Section
9-109(2) of the UCC, including, without limitation, machinery,
manufacturing equipment, data processing equipment, computers, office
equipment, furniture, appliances, tools, furnishings, fixtures, vehicles,
motor vehicles, and any manuals, instructions, blueprints, computer
software and similar items which relate to the above, and any and all
additions, substitutions and replacements of any of the foregoing, wherever
located, together with all improvements thereon and all attachments,
components, parts, equipment and accessories installed thereon or affixed
thereto.
"Event of Default" shall have the meaning assigned thereto in the
Credit Agreement.
"Fixtures" shall mean "fixtures" as such term is defined in Section
9-313 of the UCC.
"General Intangibles" shall mean "general intangibles" as such term is
defined in Section 9-106 of the UCC, including, without limitation, rights
to the payment of money (other than Receivables), Trademarks, Copyrights,
Patents and Contracts, licenses including, without limitation, Trademark
Licenses, Copyright Licenses, Patent Licenses and Trade Secret Licenses and
franchises, partnership interests, joint venture interests, federal income
tax refunds, computer software, databases, inventions, designs, Trade
Secrets, goodwill, tradenames, fictitious business names, business names,
company names, business identifiers, trade styles and service marks
(whether or not registered), proprietary rights, customer lists, supplier
and customer contracts, sale orders, correspondence, advertising materials,
payments due in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of any property, reversionary interests
in pension and profit-sharing plans and
reversionary, beneficial and residual interests in trusts, credits with and
other claims against any Person, together with any collateral for any of
the foregoing and the rights under any security agreement granting a
security interest in such collateral.
"Instruments" shall mean "instruments" as such term is defined in
Section 9-105(1)(i) of the UCC.
"Insurance Policies" shall mean insurance policies, including without
limitation the following insurance policies: attached hereto on Schedule
VII.
"Intellectual Property" shall mean, collectively, the Copyrights, the
Copyright Licenses, the Patents, the Patent Licenses, the Trademarks, the
Trademark Licenses, the Trade Secrets and the Trade Secret Licenses.
"Interest Rate Agreements" shall mean interest rate or currency
protection or hedging arrangements, including without limitation, caps,
collars, floors, forwards and any other similar or dissimilar interest rate
or currency exchange agreements or other interest rate or currency hedging
arrangements (including the Hedge Agreements).
"Inventory" shall mean "inventory" as such term is defined in ss.
9-109(4) of the UCC, including without limitation, all goods (whether such
goods are in the possession of any Borrower or of a bailee or other Person
for sale, lease, storage, transit, processing, use or otherwise and whether
consisting of whole goods, spare parts, components, supplies, materials or
consigned or returned or repossessed goods), including without limitation,
all such goods whether raw, in process or finished, all materials usable in
processing the same and all documents of title covering any inventory,
including but not limited to work in process, materials used or consumed in
Borrower's business, now owned or hereafter acquired or manufactured by any
Borrower and held for sale in the ordinary course of its business; all
present and future substitutions therefor, parts and accessories thereof
and all additions thereto; and all proceeds thereof and products of such
inventory in any form whatsoever.
"Money" shall mean "money" as such term is defined in Section
1-201(24) of the UCC.
"Motor Vehicles" shall mean motor vehicles, tractors, trailers and
other like property, if title thereto is governed by a certificate of title
ownership.
"Patent Licenses" means all of any Borrower's right, title, and
interest in and to any and all agreements providing for the granting of any
right in or to Patents (whether the Borrower is licensee or licensor
thereunder) including, without limitation, each agreement referred to in
Item D of Schedule IV.
"Patents" means all of any Borrower's right, title, and interest in
and to all United States and foreign patents and applications for letters
patent throughout the world, including, but not limited to each patent and
patent application referred to in Item C of Schedule IV, all reissues,
divisions, continuations, continuations-in-part, and reexaminations of any
of the foregoing, all rights corresponding thereto throughout the world,
and all proceeds of the foregoing including, without limitation, licenses,
royalties, income, payments, claims, damages, and proceeds of suit and the
right to sue for past infringements of any of the foregoing.
"Person" shall mean and include any individual, partnership, joint
venture, firm, corporation, association, trust or other enterprise or any
government or political subdivision or agency, department or
instrumentality thereof.
"Pledged Notes" shall mean any promissory notes listed on Schedule I
hereto, all intercompany notes at any time issued to any Borrower and all
other promissory notes issued or held by any Borrower (other than
promissory notes to be issued in connection with extensions of trade credit
by any Borrower in the ordinary course of business).
"Pledged Stock" shall mean any shares of Capital Stock listed on
Schedule I hereto, together with any other shares, stock certificates,
options or rights of any nature whatsoever in respect of the Capital Stock
of any Person that may be issued or granted to, or held by, any Borrower
while this Agreement is in effect; provided, only the outstanding capital
stock of a foreign controlled corporation possessing up to but not
exceeding 65% of the total voting power of all classes of capital stock of
such foreign controlled foreign corporation entitled to vote shall be
deemed to be pledged hereunder.
"Proceeds" shall mean "proceeds" as such term is defined in Section
9-306(1) of the UCC.
"Receivables" shall mean all rights to payment for goods sold or
leased or services rendered, whether or not earned by performance and all
rights in respect of the Account Debtor, including without limitation, all
such rights in which the Borrower has any right, title or interest by
reason of the purchase thereof by the Borrower, and including without
limitation all such rights constituting or evidenced by any Account,
Chattel Paper, Instrument, General Intangible, note, contract, invoice,
purchase order,
draft, acceptance, intercompany account, security agreement, or other
evidence of indebtedness or security, together with (a) any collateral
assigned, hypothecated or held to secure any of the foregoing and the
rights under any security agreement granting a security interest in such
collateral, (b) all goods, the sale of which gave rise to any of the
foregoing, including, without limitation, all rights in any returned or
repossessed goods and unpaid seller's rights, (c) all guarantees,
endorsements and indemnifications on, or of, any of the foregoing, and (d)
all powers of attorney for the execution of any evidence of indebtedness or
security or other writing in connection therewith.
"Receivables Records" shall mean (a) all original copies of all
documents, instruments or other writings evidencing the Receivables, (b)
all books, correspondence, credit or other files, records, ledger sheets or
cards, invoices, and other papers relating to Receivables, including
without limitation all tapes, cards, computer tapes, computer discs,
computer runs, record keeping systems and other papers and documents
relating to the Receivables, whether in the possession or under the control
of the Borrower or any computer bureau or agent from time to time acting
for the Borrower or otherwise, (c) all evidences of the filing of financing
statements and the registration of other instruments in connection
therewith and amendments, supplements or other modifications thereto,
notices to other creditors or secured parties, and certificates,
acknowledgments, or other writings, including, without limitation, lien
search reports, from filing or other registration officers, (d) all credit
information, reports and memoranda relating thereto, and (e) all other
written or non-written forms of information related in any way to the
foregoing or any Receivable.
"Secured Obligations" shall mean (a) all obligations, liabilities
(including, without limitation, contingent obligations) and indebtedness of
every nature of the Borrower, now existing or hereafter incurred, arising
under or in connection with the Credit Agreement, any Note, any other
Credit Document or this Agreement; (b) all obligations, liabilities
(including, without limitation, contingent obligations) and indebtedness of
every nature of the Borrower, now existing or hereafter incurred, arising
under or in connection with Hedge Agreements entered into in connection
with the Credit Agreement and prior to the termination thereof; and (c) all
other obligations, liabilities of every kind, nature or description, direct
or indirect, primary or secondary, joint or several, absolute or contingent
of the Borrower to the Secured Party whether due or to become due and
whether now existing or hereafter incurred and whether similar or
dissimilar to the obligations described in clauses (a) and (b) hereof, and
including, without limitation, all consumer or commercial transactions, all
purchase money and nonpurchase money transactions, all overdrafts, all
letters of credit, all lines of credit and all other extensions of credit,
regardless of how they may be evidenced.
"Secured Party" shall mean Fletcher International Limited.
"Security Collateral" shall mean:
(i) any Pledged Stock and the certificates representing the Pledged
Stock, and all dividends, cash, instruments and other property from time to
time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the Pledged Stock;
(ii) any Pledged Notes and the instruments evidencing the Pledged
Notes, and all interest, cash, instruments and other property from time to
time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the Pledged Notes;
(iii) all additional shares of stock (of any issuer of the Pledged
Stock) from time to time acquired by any Borrower in any manner, and the
certificates representing such additional shares, and all dividends, cash,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such
shares; and
(iv) all additional indebtedness from time to time owed to any
Borrower by any obligor of the Pledged Notes and the instruments evidencing
such indebtedness, and all interest, cash, instruments and other property
from time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of such indebtedness.
"Trademark Licenses" shall mean all of the Borrower's right, title and
interest in, and to any and all agreements providing for the granting of
any right in or to Trademarks (whether such Borrower is licensee or
licensor thereunder) including, without limitation, any agreement referred
to in Item F of Schedule IV.
"Trademarks" shall mean all of the Borrower's right, title and
interest in, and to all United States and foreign trademarks, trade names,
corporate names, fictitious business names, trade styles, service marks,
certification marks, collective marks, logos, other source or business
identifiers, designs, internet domain names and general intangibles of a
like nature, all registrations and applications for any of the foregoing
including, but not limited to the registrations and applications referred
to in Item E of Schedule IV, all extensions or renewals of any of the
foregoing; rights of publicity and privacy relating to the use of names,
likenesses, signatures and biographical information of real persons; all of
the goodwill
of the business connected with the use of and symbolized by the foregoing;
the right to sue for past infringement or dilution of any of the foregoing
or for any injury to goodwill, and all proceeds of the foregoing,
including, without limitation, licenses, royalties, income, payments,
claims, damages and proceeds of suit.
"Trade Secret Licenses" shall mean all of the Borrower's right, title
and interest in and to any and all payments providing for the granting of
any right in or to Trade Secrets (whether the Borrower is licensee or
licensor thereunder) including, without limitation, any agreement referred
to in Item G of Schedule IV.
"Trade Secrets" shall mean all of the Borrower's right, title and
interest in and to trade secrets and all other confidential or proprietary
information and know-how now or hereafter owned or used in, or contemplated
at any time for use in, the business of the Borrower (all of the foregoing
being collectively called a "Trade Secret"), whether or not such Trade
Secret has been reduced to a writing or other tangible form, including all
documents and things embodying, incorporating or referring in any way to
such Trade Secret, the right to sue for past infringement of any Trade
Secret and all proceeds of the foregoing, including, without limitation,
licenses, royalties, income, payments, claims, damages and proceeds of
suit.
"UCC" shall mean the Uniform Commercial Code as in effect from time to
time in the State of New York.
ARTICLE IV
GRANT OF SECURITY INTERESTS
4.2 As security for the prompt and complete payment and performance in full
of all the Secured Obligations when due (whether at stated maturity, by
acceleration or otherwise), the Borrower hereby grants to the Secured Party a
security interest in and lien on all of such Borrower's right, title and
interest in, to and under the following, in each case, whether now owned or
existing or hereafter acquired or arising and wherever located (all of which
being hereinafter collectively called the "Collateral"):
(1) all Accounts;
(2) all Chattel Paper;
(3) all Contracts;
(4) the Collateral Account;
(5) all Collateral Records;
(6) all Deposit Accounts;
(7) all Documents;
(8) all Equipment;
(9) all Fixtures;
(10) all General Intangibles;
(11) all Intellectual Property;
(12) all Interest Rate Agreements;
(13) all Instruments;
(14) all Insurance Policies;
(15) all Inventory;
(16) all Money;
(17) all Motor Vehicles;
(18) all Receivables;
(19) all Receivables Records;
(20) all other tangible and intangible personal property;
(21) all of the Security Collateral; and
(22) all accessions and additions to any or all of the foregoing, all
substitutions and replacements for any or all of the foregoing and all Proceeds
or products of any or all of the foregoing.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents and warrants to the Secured Party, which
representations and warranties shall survive execution and delivery of this
Agreement, as follows:
6.2 Credit Agreement Representations and Warranties. Each of the
representations and warranties made by and/or in respect of such Borrower in
Section 4 of the Credit Agreement is true and correct as of the date hereof.
6.4 No Other Liens. (a) Except for the Lien granted to the Secured Party
hereunder, the Borrower owns and, as to all Collateral whether now existing or
hereafter acquired will continue to own, each item of the Collateral pledged by
it free and clear of any and all Liens, rights or claims of all other Persons
other than Permitted Liens, and the Borrower shall defend the Collateral against
all claims and demands of all Persons at any time claiming the same or any
interest therein adverse to the Secured Party.
(b) No effective financing statement or other evidence of lien
covering or purporting to cover any of the Collateral is on file in any public
office other than (i) financing statements filed or to be filed in connection
with the security interests granted to the Secured Party hereunder, (ii)
financing statements for which proper termination statements have been delivered
to the Secured Party for filing and (iii) financing statements filed in
connection with Permitted Liens. The Borrower has not consented to any other
Person other than the Secured Party having "control" (within the meaning of
Section 8-106 of the UCC) over the Collateral Account.
6.6 Perfected Liens; Priority. (a) The security interests in the Collateral
granted to the Secured Party hereunder constitute valid security interests in
the Collateral.
(b) (i) Upon filing financing statements naming the Borrower as
"debtor" and the Secured Party as "secured party" and describing the Collateral
in the filing offices set forth on Schedule V hereto and (ii) to the extent not
subject to Article 9 of the UCC, (x) in the case of Intellectual Property, upon
the recordation of the security interests granted hereunder in Patents,
Trademarks and Copyrights in the applicable patent, trademark and copyright
registries or (y) in the case of the Security Collateral, upon the delivery of
the Security Collateral and Investments to the Secured Party, the security
interests in the Collateral granted to the Secured Party hereunder will
constitute perfected security interests therein superior and prior to all Liens
(other than Permitted Liens), rights or claims of all other Persons.
6.8 Security Collateral. (a) The Pledged Stock has been duly authorized and
validly issued and is fully paid and non-assessable. The Pledged Notes have been
duly authorized, authenticated or issued and delivered, and is the legal, valid
and binding obligation of the issuers thereof, and is not in default.
(b) The Pledged Stock constitutes the percentage of the issued and
outstanding shares of stock of the respective issuers thereof indicated on
Schedule I. The Pledged Notes are outstanding in the principal amount indicated
on Schedule I.
6.10 Chief Executive Office; Records. The chief executive office of the
Borrower is located at the location specified on Schedule III. The Receivables
Records and all Contracts and Collateral Records are located at the locations
identified on Schedule III as such or at the chief executive office of the
Borrower. All Receivables and Contracts are maintained at and controlled and
directed (including, without limitation, for general accounting purposes) from
the chief executive office of the Borrower or the offices identified on Schedule
III as such.
6.12 Location of Inventory and Equipment. All Inventory and Equipment now
or from time to time included in the Collateral is kept only at the locations
listed on Schedule IV. None of such Inventory or Equipment is in the possession
of an issuer of a negotiable document (as defined in UCC Section 7-104) therefor
or otherwise in the possession of a bailee.
6.14 Receivables. (a) Each Receivable (i) is and will be the legal, valid
and binding obligation of the Account Debtor in respect thereof, representing an
unsatisfied obligation of such Account Debtor, (ii) is and will be enforceable
in accordance with its terms, (iii) is not and will not be subject to any
setoffs, defenses, taxes or counterclaims (except (x) with respect to refunds,
returns and allowances in the ordinary course of business with respect to
damaged merchandise and (y) to the extent that such Receivable may not yet have
been earned by performance) and (iv) is and will be in compliance with all
applicable laws, whether federal, state, local or foreign.
(b) None of the Account Debtors in respect of any Receivable is the
United States Government or an instrumentality thereof.
(c) No Receivables which are evidenced by Chattel Paper require the
consent of the Account Debtor in respect thereof in connection with assignment
hereunder and no other receivable purports to prohibit assignment or require the
consent of the Account Debtor thereunder in connection with assignment.
(d) No Receivables are evidenced by any Instrument or Chattel Paper
which has not been delivered to the Secured Party.
(e) The Borrower has delivered to the Secured Party a complete and
correct copy of each form of document under which a Receivable may arise,
including without limitation, a form of each invoice, security agreement,
contract, master contract, promissory note, order form or similar
document used by the Borrower in the ordinary course of its business.
The representations and warranties contained in this Section 3.7 shall be
deemed to be repeated by the Borrower as of the time when each Receivable
pledged by it arises.
6.16 Contracts. (a) Each Contract (i) is and will be the legal, valid and
binding obligation of each of the parties thereto, (ii) is and will be
enforceable against each party thereto in accordance with its terms, (iii) is
and will be in full force and effect and is not subject to any setoffs,
defenses, taxes, counterclaims or other claims, nor have any of the foregoing
been asserted or alleged as to any Contract and (iv) is and will be in
compliance with all applicable laws, whether federal, state, local or foreign.
(b) No consent or authorization or filing with or other act by or in
respect of any governmental authority is required in connection with the
execution, delivery, performance, validity or enforceability of any Contract by
any party thereto other than those which have been duly obtained, made or
performed, are in full force and effect and do not subject the scope of any
Contract to any material adverse limitation, either specific or general in
nature.
(c) Neither the Borrower nor any other party to any Contract is in
default or likely to become in default in the performance or observance of any
of the terms thereof.
(d) The Borrower has fully performed all of its obligations under each
Contract to which it is a party.
(e) The Borrower has delivered to the Secured Party a complete and
correct copy of each Contract, including all amendments, supplements and other
modifications thereto.
(f) No payments due the Borrower under any Contract are evidenced by
any Instrument or Chattel Paper which has not been delivered to the Secured
Party.
(g) No party to any Contract is the United States government or an
instrumentality thereof.
(h) Except as set forth in Schedule VI, no Contract prohibits
assignment or requires or purports to require consent of or notice to any Person
in connection with assignment hereunder.
6.18 Farm Products. None of the Collateral constitutes, or is the proceeds
of, Farm Products (as defined in the UCC).
6.20 Fair Labor Standards Act. Any goods now or hereafter
produced by the Borrower included in the Collateral have been and will be
produced in compliance with the requirements of the Fair Labor Standards Act, as
amended.
6.22 Intellectual Property Collateral. Except as disclosed in Item H of
Schedule IV:
(a) all Intellectual Property is subsisting and has not been adjudged
invalid or unenforceable, in whole or in part, and the Borrower has performed
all acts and has paid all renewal, maintenance and other fees and taxes required
to maintain each and every registration and application of Intellectual Property
Collateral in full force and effect;
(b) all Intellectual Property is valid and enforceable; no holding,
decision or judgment has been rendered in any action or proceeding before any
court or administrative authority challenging the validity or enforceability of
the Borrower's right to register, own or use any Intellectual Property and no
such action or proceeding is pending or, to the best of the Borrower's
knowledge, threatened;
(c) all registrations and applications for Copyrights, Patents and
Trademarks are standing in the name of the Borrower and none of the Trademarks,
Patents, Copyrights or Trade Secret Collateral has been licensed by the Borrower
to any affiliate or third party, except as disclosed in Items B, D, F or G of
Schedule IV;
(d) the Borrower has been using appropriate statutory notice of
registration in connection with its use of registered Trademarks, proper marking
practices in connection with the use of Patents and appropriate notice of
copyright in connection with the publication of Copyrighted works which are
material to the business of the Borrower;
(e) the Borrower uses adequate standards of quality in the
manufacture, distribution and sale of all products sold and in the provision of
all services rendered under or in connection with all Trademark Collateral in
order to protect the value of such Trademarks and has taken all action necessary
to insure that all licensees of any portion of the Trademark Collateral owned by
the Borrower has been used with such adequate standards of quality.
(f) Schedule IV sets forth a true and accurate list of (i) all United
States, state and foreign registrations of and applications for Patents,
Trademarks and Copyrights owned by the Borrower and (ii) all Patent Licenses,
Trademark Licenses and Copyright Licenses material to the business of the
Borrower;
(g) the Borrower is the sole and exclusive owner of the entire
right, title and interest in and to all Intellectual Property on Schedule IV,
and owns or has the valid right to use all other Intellectual Property used in
or necessary to conduct its business free and clear of all Liens, claims and
encumbrances or licenses, except for Permitted Liens and the licenses set forth
on Schedule IV items B, D, F and G;
(h) the conduct of the Borrower's business does not infringe upon any
trademark, patent, copyright, trade secret or similar intellectual property
right owned or controlled by a third party; and no claim has been made that the
use of any Intellectual Property owned or used by Borrower (or any of its
respective licensees) violates the asserted rights of any third party;
(i) to the best of the Borrower's knowledge, no third party is
infringing in any material respect upon any Intellectual Property owned or used
by Borrower or any of its respective licensees;
(j) no settlement or consents, covenants not to sue, non-assertion
assurances or releases have been entered into by Borrower or to which the
Borrower is bound that adversely affect the Borrower's rights to own or use any
Intellectual Property; and
(k) the Borrower has not made a previous assignment, sale, transfer or
agreement constituting a present or future assignment sale or transfer of any
Intellectual Property that has not been terminated or released. There is no
effective financing statement or other document or instrument now executed or on
file or recorded in any public office, granting a security interest in or
otherwise encumbering any part of the Intellectual Property, other than in favor
of the Secured Party.
ARTICLE VIII
COVENANTS
The Borrower covenants and agrees with the Secured Party that from and
after the date of this Agreement:
8.2 Further Assurances. At any time and from time to time, upon the request
of the Secured Party and at the sole expense of the Borrower, the Borrower will
promptly and duly execute and deliver any and all such further instruments,
endorsements, powers of attorney and other documents, make such filings, give
such notices and take such further action as the Secured Party may reasonably
deem desirable in obtaining the full benefits of this Agreement and of the
rights, remedies and powers herein granted, including, without limitation, the
following:
(a) the filing of any financing statements, in a form acceptable to
the Secured Party under the Uniform Commercial Code in effect in any
jurisdiction with respect to the liens and security interests granted hereby.
The Borrower also hereby authorizes the Secured Party to file any such financing
statement without the signature of the Borrower to the extent permitted by
applicable law. A photocopy or other reproduction of this Agreement shall be
sufficient as a financing statement and may be filed in lieu of the original to
the extent permitted by applicable law. The Borrower will pay or reimburse the
Secured Party for all filing fees and related expenses;
(b) the recordation of appropriate evidence of the liens and security
interests granted hereunder in the Intellectual Property with any intellectual
property registry in which said Intellectual Property is registered or in which
an application for registration is pending including, without limitation, the
United States Patent and Trademark Office, the United States Copyright Office,
the various Secretaries of State and the foreign counterparts on any of the
foregoing;
(c) will make or reimburse the Secured Party for making all searches
deemed necessary by the Secured Party to establish and determine the priority of
the security interests of the Secured Party or to determine the presence or
priority of other secured parties;
(d) upon request of the Secured Party, cause the Secured Party to be
listed as the lienholder on the certificate of title or ownership covering any
Collateral covered by such a certificate of title or ownership and to deliver
evidence thereof to the Secured Party promptly; and
(e) furnish to the Secured Party from time to time statements and
schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as the Secured Party may reasonably
request, all in reasonable detail and in a form satisfactory to the Secured
Party.
8.4 Delivery of Security Collateral. All certificates or instruments
representing or evidencing the Security Collateral shall be delivered to and
held by or on behalf of the Secured Party pursuant hereto and shall be in
suitable form for transfer by delivery or shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory to the Secured Party. The Secured Party shall have the right, at
any time in its discretion and without notice to the Borrower, to transfer to or
to register in the name of the Secured Party any or all of the Security
Collateral, subject only to the revocable rights specified in Section 6.1(b).
For the better perfection of the Secured Party's rights in and to the Security
Collateral, the Borrower shall forthwith, upon the pledge of any Security
Collateral hereunder, cause such Security Collateral to be registered in the
name of such nominee or nominees as the Secured Party shall direct, subject only
to the revocable rights specified in Section 6.1(b). In addition, the Secured
Party shall have the right at any time to exchange certificates or instruments
representing or evidencing Security Collateral for certificates or instruments
of smaller or larger denominations.
8.6 Change of Chief Executive Office. The Borrower will not move its chief
executive office except to such new location as the Borrower may establish in
accordance with the last sentence of this Section. The originals of all
Receivables Records and Contracts and all Collateral Records will continue to be
kept at such chief executive office or at the locations identified on Schedule
III as such, or at such new locations as the Borrower may establish in
accordance with the last sentence of this Section. All Receivables, Receivables
Records and Contracts of the Borrower will continue to be maintained at and
controlled and directed (including, without limitation, for general accounting
purposes) from, a location identified as such on Schedule III or such new
locations as the Borrower may establish in accordance with the last sentence of
this Section. The Borrower shall not establish a new location for its chief
executive office or such activities (or move any such activities form the
location listed in Schedule III therefor) until (i) it shall have given to the
Secured Party not less than 30 days' prior written notice of its intention to do
so, clearly describing such new location and providing such other information in
connection therewith as the Secured Party may reasonably request and (ii) with
respect to such new location, it shall have taken all action satisfactory to the
Secured Party as the Secured Party may reasonably request, to maintain the
security interest of the Secured Party in the Collateral intended to be granted
hereby at all times fully perfected, with the same or better priority and in
full force and effect.
8.8 Change of Location of Inventory and Equipment. The Borrower agrees that
all Inventory and Equipment now held or subsequently acquired by it shall be
kept at (or shall be in transport to) any one of the locations
shown on Schedule II or such new location as the Borrower may establish in
accordance with the last sentence of this Section. The Borrower may establish a
new location for Inventory and Equipment only if (i) it shall have given to the
Secured Party not less than 30 days' prior written notice of its intention to do
so, clearly describing such new location and providing such other information in
connection therewith as the Secured Party may reasonably request and (ii) with
respect to such new location, it shall have taken all action satisfactory to the
Secured Party, as the Secured Party may reasonably request, to maintain the
security interest of the Secured Party in the Collateral intended to be granted
hereby at all times fully perfected, with the same or better priority and in
full force and effect.
8.10 Change of Name; Identity or Corporate Structure. The Borrower shall
not change its name (or conduct any significant portion of its business under
any new tradenames), identity or corporate structure until (i) it shall have
given to the Secured Party not less than 30 days' prior written notice of its
intention to do so, clearly describing such new name, identity or corporate
structure or such new trade name and providing such other information in
connection therewith as the Secured Party may reasonably request and (ii) with
respect to such new name, identify or corporate structure or such new trade
name, it shall have taken all action satisfactory to the Secured Party as the
Secured Party may reasonably request, to maintain the security interest of the
Secured Party in the Collateral intended to be granted hereby at all times fully
perfected, with the same or better priority and in full force and effect.
8.12 Delivery of Instruments and Chattel Paper. If any amount payable under
or in connection with any of the Collateral shall be or become evidenced by any
Instrument or Chattel Paper, such Instrument or Chattel Paper shall be
immediately delivered to the Secured Party, duly indorsed in a manner
satisfactory to the Secured Party, to be held as Collateral pursuant to this
Agreement.
8.14 Maintain and Mark Records and Receivables. The Borrower will keep and
maintain at its own cost and expense satisfactory and complete records of the
Collateral, including, but not limited to, the originals of all documentation
with respect to all Receivables and records of all payments received and all
credits granted on the Receivables and all merchandise returned and all other
dealings therewith. The Borrower shall legend, in form and manner reasonably
satisfactory to the Secured Party, all Chattel Paper and other evidence of
Receivables, as well as the Receivables Records, with an appropriate reference
to the fact that the Chattel Paper and all other Receivables have been assigned
to the Secured Party and that the Secured Party has a security interest therein.
8.16 Right of Inspection. The Secured Party shall at all times have full
and free access during normal business hours to all the books, correspondence
and records of the Borrower and the Secured Party and its
representatives may examine the same, take extracts therefrom and make
photocopies thereof and the Borrower agrees to render to the Secured Party, at
the Borrower's cost and expense, such clerical and other assistance as may be
reasonably requested with regard thereto. The Secured Party and its respective
representatives shall at all times have the right to enter and inspect any
property of the Borrower and enter into and upon any premises where any of the
Inventory or Equipment is located for the purpose of inspecting the same,
observing its use or otherwise protecting its interests therein.
8.18 Insurance. The Borrower shall maintain insurance as required by the
Credit Agreement.
8.20 Receivables. (a) The Borrower shall perform in all material respects
all of its obligations with respect to the Receivables.
(b) The Borrower shall not amend, modify, terminate or waive any
provision of any Receivable in any manner which could reasonably be expected to
materially adversely affect the value of such Receivable as Collateral. Other
than (i) in the ordinary course of business and (ii) while no Default or Event
of Default shall have occurred and be continuing, the Borrower shall not (w)
grant any extension or renewal of the time of payment of any Receivable, (x)
compromise or settle any dispute, claim or legal proceeding with respect to any
Receivable for less than the total unpaid balance thereof, (y) release, wholly
or partially, any Person liable for the payment thereof or (z) allow any credit
or discount thereon.
(c) The Borrower shall use its best efforts (including, without
limitation, prompt and diligent exercise of each material right it may have
under any Receivable (other than any right of termination)) to cause to be
collected from each Account Debtor, as and when due (including, without
limitation, amounts which are delinquent, such amounts to be collected in
accordance with generally accepted lawful collection procedures), any and all
amounts owing under or on account of any Receivable and apply all collected
amounts to the outstanding balance of such Receivable immediately upon receipt
thereof.
8.22 Contracts. (a) The Borrower shall perform in all material respects all
of its obligations under each Contract.
(b) The Borrower shall deliver promptly to the Secured Party a copy of
each material demand, notice or document received by it relating in any way to
any Contract.
(c) Without the prior written consent of the Secured Party, the
Borrower shall not amend, modify, terminate or supplement any provision of any
Contract or compromise or settle any dispute, claim or legal proceeding with
respect to any Contract, in any such case in any manner which could reasonably
be expected to materially adversely affect the value of such Contract as
Collateral and shall not terminate any Contract. Each such permitted amendment,
modification, termination, supplement, compromise or settlement shall be in
writing, a copy of which shall be delivered promptly to the Secured Party.
(d) The Borrower shall promptly and diligently exercise each material
right it may have under any Contract (except the right of termination). All
costs and expenses in connection therewith, whether incurred by the Borrower or
the Secured Party, shall be borne by the Borrower.
8.24 Warehouse Receipts Non-negotiable. The Borrower agrees that if any
warehouse receipt or receipt in the nature of a warehouse receipt or other
Document is issued with respect to any of its Inventory, such warehouse receipt
or receipt in the nature thereof or other Document shall not be "negotiable" (as
such term is used in Section 7-104 of the UCC or under other relevant law).
8.26 No Impairment. The Borrower will not take or permit to be taken any
action which could impair the Secured Party's rights in the Collateral.
8.28 Limitations on Dispositions of Collateral. The Borrower will not sell,
transfer, lease, license or otherwise dispose of any of the Collateral or any
rights therein or attempt, offer or contract to do so, except as permitted in
the Credit Agreement.
8.30 Intellectual Property.
(a) The Borrower shall not do any act or omit to do any act, whereby
any of the Intellectual Property which is used in or otherwise material to the
business of the Borrower may lapse or become abandoned, dedicated to the public,
or unenforceable, or which would adversely affect the validity, grant, or
enforceability of the security interest granted therein.
(b) The Borrower shall not, with respect to any Trademarks which are
used in or otherwise material to the business of the Borrower, cease the use of
any of such Trademarks or fail to maintain the level of the quality of products
sold and services rendered under any of such Trademark at a level at least
substantially consistent with the quality of such products and services as of
the date hereof, and the Borrower shall take all steps necessary to insure that
licensees of such Trademarks use such consistent standards of quality.
(c) The Borrower shall, within thirty (30) days of the creation or
acquisition of any Copyrightable work which is material to the business of the
Borrower, apply to register the Copyright in the United States Copyright Office;
the Borrower shall, within thirty (30) days of the acquisition of any
registrations or applications for any Patents or Trademarks from any third
party, record its
interest in the United States Patent and Trademark Office.
(d) The Borrower shall promptly notify the Secured Party if it knows
or has reason to know, that any item of the Intellectual Property that is used
in or otherwise material to its business may become or has become (a) abandoned
or dedicated to the public or placed in the public domain, (b) invalid or
unenforceable or (c) subject to any adverse determination or development
(including the institution of proceedings) in any action or proceeding in the
United States Patent and Trademark Office, the United States Copyright Office
any state registry or international or foreign counterpart of the foregoing or
any court.
(e) The Borrower shall take all reasonable steps in the United States
Patent and Trademark Office, the United States Copyright Office, any state
registry or international or foreign counterpart of the foregoing, to pursue any
application and maintain any registration of each Trademark, Patent or Copyright
owned by the Borrower and used in or otherwise material to its business, which
is now or shall become included in the Intellectual Property including, but not
limited to, those items on Schedule IV Items A, C or E.
(f) In the event that any Intellectual Property owned by or
exclusively licensed to the Borrower is infringed, misappropriated or diluted by
a third party, the Borrower shall promptly take all reasonable actions to stop
such infringement, misappropriation or dilution and protect its exclusive rights
in such Intellectual Property including, but not limited to, the initiation of a
suit to obtain injunctive relief and to recover damages.
(g) The Borrower shall promptly (but in no event more than thirty (30)
days after the Borrower obtains knowledge thereof) report to the Secured Party
(i) the filing of any application to register any Intellectual Property with the
United States Patent and Trademark Office, the United States Copyright Office or
any state registry or international or foreign counterpart of the foregoing
(whether such application is filed by the Borrower or through any agent,
employee, licensee or designee thereof) and (ii) the registration of any
Intellectual Property by any such office. The Borrower hereby authorizes the
Secured Party to modify this Agreement by amending Schedule IV and will
otherwise cooperate with the Secured Party in effecting any such amendment to
include any item of Intellectual Property which shall become part of the
Intellectual Property after the date hereof.
(h) The Borrower shall, promptly upon the reasonable request of the
Secured Party, execute and deliver to the Secured Party any document required to
acknowledge, confirm, register, record or perfect the Secured Party's interest
in any part of the Intellectual Property, whether now owned or hereafter
acquired.
(i) Except with the prior consent of the Secured Party or as
permitted under the Credit Agreement, the Borrower will not execute and there
will not be on file in any public office, any effective financing statement or
other document or instruments, except financing statements or other documents or
instruments filed or to be filed in favor of the Secured Party and the Borrower
will not sell, assign, transfer, license, grant any option or create or suffer
to exist any Lien upon or with respect to the Intellectual Property, except for
the Lien created by and under this Agreement and the other Loan Documents.
8.32 Notice. The Borrower will advise the Secured Party promptly, in
reasonable detail and in accordance with the provisions hereof (a) of any Lien
(other than Permitted Liens) on, or claim asserted against, any of the
Collateral and (b) of the occurrence of any other event which could reasonably
be expected to have a material adverse effect on the aggregate value of the
Collateral or on the Liens created hereunder.
8.34 Performance by Secured Party of Borrower's Obligations; Reimbursement.
If the Borrower fails to perform or comply with any of its agreements contained
herein, the Secured Party may, without notice to or consent by the Borrower,
perform or comply or cause performance or compliance therewith and the expenses
of the Secured Party incurred in connection with such performance or compliance,
together with interest thereon at a rate per annum 2% above the Interest Rate,
shall be payable by the Borrower to the Secured Party on demand and such
reimbursement obligation shall be secured hereby.
ARTICLE X
SPECIAL PROVISIONS REGARDING
RECEIVABLES AND CONTRACTS
10.2 Borrower Remains Liable under Receivables and Contracts. Anything
herein to the contrary notwithstanding (including, without limitation, the grant
of any rights to the Secured Party), the Borrower shall remain liable under each
of the Receivables and Contracts to observe and perform all the conditions and
obligations to be observed and performed by it thereunder, all in accordance
with the terms of any agreement giving rise to each such Receivable or Contract.
The Secured Party shall have no obligation or liability under any Receivable (or
any agreement giving rise thereto) or Contract by reason of or arising out of
this Agreement or the receipt by the Secured Party of any payment relating to
such Receivable or Contract pursuant hereto, nor shall the Secured Party be
obligated in any manner to perform any of the obligations of the Borrower under
or pursuant to any Receivable (or any agreement giving rise thereto) or under or
pursuant to any Contract, to make any payment, to make any inquiry as to the
nature or the sufficiency of any payment received by it or as to the sufficiency
of any performance by any party under any Receivable (or any agreement giving
rise thereto) or under any Contract, to present or file any claim, to take any
action to enforce any performance or to collect the payment of any amounts which
may have been assigned to it or to which it may be entitled at any time or
times.
10.4 Notice to Account Debtors and Contracting Parties. At any time after
an Event of Default has occurred and is continuing, the Secured Party may, and
upon request of the Secured Party, the Borrower shall notify Account Debtors and
parties to the Contracts that the Accounts and the Contracts have been assigned
to the Secured Party and that payments in respect thereof shall be made directly
to the Secured Party. The Secured Party may in its own name or in the name of
others, communicate with Account Debtors and parties to the Contracts to verify
with them to the Secured Party's satisfaction the existence, amount and terms of
any Receivables or Contracts.
10.6 Collections on Receivables and Contracts. The Secured Party hereby
authorizes the Borrower to collect the Receivables and Contracts and, at any
time after an Event of Default has occurred and is continuing, the Secured Party
may curtail or terminate said authority and by itself or by its agents, collect
all Receivables and amounts owing under the Contracts. After an Event of Default
has occurred and is continuing, if required by the Secured Party, any payments
of Receivables and Contracts, when collected by the Borrower, shall be forthwith
(and, in any event, within two Business Days) delivered by the Borrower to the
Secured Party in the exact form received, duly indorsed to the Secured Party if
required, for deposit into the Collateral Account, and until so turned over,
shall be held by the Borrower in trust for the Secured Party, segregated from
other funds of the Borrower. All Proceeds, while held by the Secured Party (or
by the Borrower in trust for the Secured Party) shall continue to be Collateral
securing all of the Secured Obligations and shall not constitute payment thereof
until applied as hereinafter provided.
ARTICLE XII
SPECIAL PROVISIONS REGARDING
SECURITY COLLATERAL
12.2 Voting Rights; Dividends; Etc. (a) So long as no Event of Default or
event which, with the giving of notice or the lapse of time or both, would
become an Event of Default, shall have occurred and be continuing:
(i) The Borrower shall be entitled to exercise or refrain from
exercising any and all voting and other consensual rights pertaining to the
Security Collateral or any part thereof, for any purpose not inconsistent
with the terms of this Agreement or the Credit Agreement; provided,
however, that such Borrower shall not exercise or refrain from exercising
any such right if, in the Secured Party's judgment, such action would have
a material adverse effect on the value of the Security Collateral or any
part thereof, and, provided further, that the Borrower shall give the
Secured Party at least five days' written notice of the manner in which it
intends to exercise or the reasons for refraining from exercising, any such
right;
(ii) The Borrower shall be entitled to receive and retain any and all
dividends and interest paid in respect of the Security Collateral,
provided, however, that any and all
(A) dividends and interest paid or payable other than in cash in
respect of, and instruments and other property received, receivable or
otherwise distributed in respect of, or in exchange for, any Security
Collateral,
(B) dividends and other distributions paid or payable in cash in
respect of any Security Collateral in connection with a partial or
total liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid-in-surplus, and
(C) cash paid, payable or otherwise distributed in respect of
principal of, or in redemption of, or in exchange for, any Security
Collateral, shall be forthwith delivered to the Secured Party to hold
as Security Collateral and shall, if received by the Borrower, be
received in trust for the benefit of the Secured Party, be segregated
from the other property or funds of the Borrower and be forthwith
delivered to the Secured Party as Security Collateral in the same form
as so received (with any necessary indorsement or assignment); and
(iii) The Secured Party shall execute and deliver (or cause to be
executed and delivered) to the Borrower all such proxies and other
instruments as the Borrower may reasonably request for the purpose of
enabling the Borrower to exercise the voting and other rights which it is
entitled to exercise pursuant to paragraph (i) above and to receive the
dividends or interest payments which it is authorized to receive and retain
pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuance of an Event of
Default or an event which, with the giving of notice or the lapse of time or
both, would become an Event of Default:
(i) All rights of the Borrower (x) to exercise or refrain from
exercising the voting and other consensual rights which it would otherwise
be entitled to exercise pursuant to Section 6(a)(i) shall, upon notice to
the Borrower by the Secured Party cease and (y) to receive the
dividends and interest payments which it would otherwise be authorized to
receive and retain pursuant to Section 6(a)(ii) shall automatically cease
and all such rights shall thereupon become vested in the Secured Party who
shall thereupon have the sole right to exercise or refrain from exercising
such voting and other consensual rights and to receive and hold as Security
Collateral such dividends and interest payments; and
(ii) All dividends and interest payments which are received by the
Borrower contrary to the provisions of paragraph (i) of this Section
6.1(b), shall be received in trust for the benefit of the Secured Party,
shall be segregated from other funds of the Borrower and shall be forthwith
paid over to the Secured Party as Security Collateral in the same form as
so received (with any necessary indorsement).
12.4 Additional Shares. The Borrower agrees that it will (i) cause each
issuer of the Pledged Shares not to issue any stock or other securities in
addition to or in substitution for the Pledged Shares issued by such issuer,
except to the Borrower and (ii) immediately upon its acquisition (directly or
indirectly) thereof, deliver to the Secured Party as additional security
hereunder any and all additional shares of stock or other securities of each
issuer of the Pledged Shares.
ARTICLE XIV
COLLATERAL ACCOUNT
14.2 Collateral Account. There is hereby established with [name of bank]
the Collateral Account. The Collateral Account shall be under the sole and
exclusive dominion and control of the Secured Party and the Borrower shall have
no rights with respect to the Collateral Account, except as specifically set
forth below with regard to determination of the nature of investments to be made
with amounts credited to the Collateral Account. Without limiting the generality
of the foregoing, the Borrower shall have no right of withdrawal or transfer
from the Collateral Account.
14.4 Deposit of Proceeds. There shall be deposited in the Collateral
Account from time to time the cash proceeds (as defined in Section 9-306(1) of
the UCC) of any of the Collateral (including insurance proceeds thereon)
required to be delivered to the Secured Party pursuant hereto. All amounts and
investments and other items credited to the Collateral Account from time to time
shall constitute Collateral hereunder and shall not constitute payment of the
Secured Obligations until applied as hereinafter provided. At any time following
the occurrence and during the continuance of an Event of Default, the Secured
Party may in its discretion apply or cause to be applied (subject to collection)
the balance from time to time outstanding to the credit of the
Collateral Account to the payment of the Secured Obligations in the manner
specified herein.
14.6 Investment of Balance in Collateral Account. Amounts credited to the
Collateral Account shall be invested from time to time in such Permitted
Investments as the Borrower (or, after the occurrence and during the continuance
of a Default or Event of Default, the Secured Party) shall determine, which
Permitted Investments shall be held in the name and be under the control of the
Secured Party.
ARTICLE XVI
POWER OF ATTORNEY
16.2 Secured Party's Appointment as Attorney-in-Fact. (a) The Borrower
hereby irrevocably constitutes and appoints the Secured Party and any officer or
agent thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of the Borrower and in the name of the Borrower or in its own name, from
time to time in the Secured Party's discretion, for the purpose of carrying out
the terms of this Agreement, to take any and all appropriate action and to
execute any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this Agreement and, without limiting the
generality of the foregoing, the Borrower hereby gives the Secured Party the
power and right, on behalf of the Borrower, without notice to or assent by the
Borrower, to do the following:
(i) in the case of any Receivable, at any time when the authority of
the Borrower to collect the Receivables has been curtailed or terminated
pursuant hereto, or in the case of any other Collateral, at any time when
any Event of Default shall have occurred and be continuing, in the name of
the Borrower or its own name or otherwise, (A) to take possession of and
indorse and collect any checks, drafts, notes, acceptances or other
instruments for the payment of moneys due under or with respect to, any
Collateral; (B) to direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Secured Party or as the Secured Party shall
direct; and (C) to ask or demand for, collect, receive payment of and
receipt for, any and all moneys, claims and other amounts due or to become
due at any time in respect of or arising out of any Collateral;
(ii) to prepare, sign and file any UCC financing statements in the
name of the Borrower as debtor;
(iii) to prepare, sign, and file for recordation in any intellectual
property registry, appropriate evidence of the lien and security interest
granted herein in the Intellectual Property in the name of the Borrower as
the Borrower;
(iv) to take or cause to be taken all actions necessary to perform or
comply or cause performance or compliance with the terms of this Agreement,
including, without limitation, actions to pay or discharge taxes and Liens
levied or placed on or threatened against the Collateral, to effect any
repairs or obtain any insurance called for by the terms of this Agreement
and to pay all or any part of the premiums therefor and the costs thereof;
(v) upon the occurrence and during the continuance of any Event of
Default (A) to sign and indorse any invoices, freight or express bills,
bills of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications, notices and other documents in connection with
any of the Collateral; (B) to commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction to
collect the Collateral or any Proceeds thereof and to enforce any other
right in respect of any Collateral; (C) to defend any suit, action or
proceeding brought against the Borrower with respect to any Collateral; (D)
to settle, compromise or adjust any suit, action or proceeding described in
the preceding clause and, in connection therewith, to give such discharges
or releases as the Secured Party may deem appropriate; and (E) generally,
to sell or transfer and make any agreement with respect to, or otherwise
deal with, any of the Collateral as fully and completely as though the
Secured Party were the absolute owner thereof for all purposes, and to do,
at the Secured Party's option and the Borrower's expense, at any time or
from time to time, all acts and things which the Secured Party deems
necessary to protect, preserve or realize upon the Collateral and the Liens
of the Secured Party thereon and to effect the intent of this Agreement,
all as fully and effectively as the Borrower might do; and
(vi) at any time and from time to time, to execute, in connection with
any foreclosure, any indorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral.
The Borrower hereby ratifies all that said attorney shall lawfully do or
cause to be done by virtue hereof. This power of attorney is a power coupled
with an interest and shall be irrevocable.
The Borrower hereby acknowledges and agrees that in acting pursuant to this
power-of-attorney, the Secured Party shall be acting in its own interest and the
Borrower acknowledges and agrees that the Secured
Party shall have no fiduciary duties to the Borrower and the Borrower hereby
waives any claims to the rights of a beneficiary of a fiduciary relationship
hereunder.
(b) No Duty on the Part of Secured Party. The powers conferred on the
Secured Party hereunder are solely to protect the interests of the Secured Party
in the Collateral and shall not impose any duty upon the Secured Party to
exercise any such powers. The Secured Party shall be accountable only for
amounts that it actually receives as a result of the exercise of such powers and
neither it nor any of its officers, directors, employees or agents shall be
responsible to the Borrower for any act or failure to act hereunder, except for
their own gross negligence or willful misconduct.
ARTICLE XVIII
REMEDIES; RIGHTS UPON DEFAULT
18.2 Rights and Remedies Generally. If an Event of Default shall occur and
be continuing, then and in every such case, the Secured Party shall have all the
rights of a secured party under the UCC, shall have all rights now or hereafter
existing under all other applicable laws or in equity and, subject to any
mandatory requirements of applicable law then in effect, shall have all the
rights set forth in this Agreement and all the rights set forth with respect to
the Collateral or this Agreement or in any other agreement between the parties.
No enumeration of rights in this Article or elsewhere in this Agreement or in
any related document or other agreement, shall be deemed to in any way limit the
rights of the Secured Party as described in this Article.
18.4 Collection of Receivables and other Proceeds. If an Event of Default
shall occur and be continuing, in addition to the rights of the Secured Party
specified in Section 5.3 with respect to the collection of Receivables and
Contracts, all Proceeds received by the Borrower consisting of cash, checks and
other near-cash items shall be held by the Borrower in trust for the Secured
Party, segregated from other funds of the Borrower and shall forthwith upon
receipt by the Borrower, be turned over to the Secured Party, in the same form
received by the Borrower (appropriately indorsed or assigned by the Borrower to
the order of the Secured Party or in such other manner as shall be satisfactory
to the Secured Party) for deposit into the Collateral Account.
18.6 Direct Borrower to Dispose of Collateral. If an Event of Default shall
occur and be continuing, the Secured Party may direct the Borrower to sell,
assign or otherwise liquidate or dispose of all, or from time to time any,
portion of the Collateral and the Borrower shall do so, and the Secured Party
may, at its option, take possession of the Proceeds of such Collateral. The
Secured Party may direct the Borrower to direct that all Proceeds of such
Collateral be paid directly to the Secured Party or may permit the Proceeds of
such Collateral to be paid to the Borrower and, if directed by the Secured
Party, all such Proceeds consisting of cash, checks or near-cash items shall be
held by the Borrower in trust for the Secured Party, segregated from other funds
of the Borrower and shall forthwith upon receipt by the Borrower, be turned over
to the Secured Party, in the same form received by the Borrower (appropriately
indorsed or assigned by the Borrower to the order of the Secured Party or in
such other manner as shall be satisfactory to the Secured Party) for deposit
into the Collateral Account.
18.8 Collateral Account. If an Event of Default shall occur and be
continuing, the Secured Party may liquidate any securities credited to the
Collateral Account (including any Permitted Investments) and apply the proceeds
thereof and any other amounts credited to the Collateral Account to the Secured
Obligations (whether matured or unmatured), in such order as the Secured Party
may elect. Any balance of such Proceeds remaining after the Secured Obligations
have been paid and performed in full, shall be paid over to the Borrower or to
whomsoever may lawfully be entitled to receive the same or as a court of
competent jurisdiction may direct.
18.10 Possession of Collateral. (a) If an Event of Default shall occur and
be continuing: (
i) the Secured Party may, personally or by agents or attorneys,
immediately retake possession of the Collateral (including the originals of all
or any Receivables or Receivables Records) or any part thereof, from the
Borrower or any other Person who then has possession of any part thereof, with
or without notice or judicial process and for that purpose may enter upon the
Borrower's premises where any of the Collateral is located and remove the same
and, the Secured Party may use in connection with such removal, any and all
services, supplies, aids and other facilities of the Borrower; and
(ii) upon five (5) days notice to the Borrower, the Borrower shall, at
its own expense, assemble the Collateral, including, without limitation, the
originals of all Receivables Records (or from time to time any portion thereof)
and make it available to the Secured Party at any place or places designated by
the Secured Party which is reasonably convenient to both parties, whether at the
Borrower's or the Secured Party's premises or elsewhere. The Borrower, shall at
its sole expense, store and keep any Collateral so assembled at such place or
places pending further action by the Secured Party and while the Collateral
shall be so stored and kept, provide such guards and maintenance services as
shall be necessary to protect the same and to preserve and maintain the
Collateral in good condition. The Borrower's obligation so to assemble and
deliver the Collateral is of the essence of this Agreement and, accordingly,
upon application to a court of equity having jurisdiction, the Secured Party
shall be entitled to a decree requiring specific performance by the Borrower of
said
obligation.
(b) When Collateral is in the Secured Party's possession, (i) the
Borrower shall pay (or reimburse the Secured Party on demand for) all reasonable
expenses (including the cost of any insurance and payment of taxes or other
charges) incurred in the custody, preservation, use or operation of the
Collateral and the obligation to reimburse all such expenses shall be secured
hereby and (ii) the risk of accidental loss or damage shall be on the Borrower
to the extent of any deficiency in any effective insurance coverage.
18.12 Disposition of the Collateral. If an Event of Default shall occur and
be continuing, the Secured Party may sell, assign, lease, license (on an
exclusive or non-exclusive basis) give an option or options to purchase or
otherwise dispose of the Collateral (or contract to do any of the foregoing)
under one or more contracts or as an entirety and without the necessity of
gathering at the place of sale the property to be sold, at public or private
sale or sales, conducted by any Officer, nominee or agent of, or auctioneer or
attorney for, the Secured Party at any location of any third party conducting or
otherwise involved in such sale or any office of the Secured Party or elsewhere
and in general, in such manner, at such time or times and upon such terms and
conditions and at such prices as it may consider commercially reasonable, for
cash or on credit or for future delivery without assumption of any credit risk.
The Secured Party may in its sole discretion restrict prospective bidders as to
their number, nature of their business and investment intention. Any of the
Collateral may be sold, leased, assigned or options or contracts entered to do
so or otherwise disposed of, in the condition in which the same existed when
taken by the Secured Party or after any overhaul or repair which the Collateral
Agent shall determine to be commercially reasonable. To the extent permitted by
applicable law, the Secured Party may bid for and become the purchaser of the
Collateral or any item thereof, offered for sale in accordance with this Section
without accountability to the Borrower (except to the extent of surplus money
received) as provided below. In the payment of the purchase price of the
Collateral, the purchaser shall be entitled to have credit on account of the
purchase price thereof of amounts owing to such purchaser on account of any of
the Obligations and any such purchaser may deliver notes, claims for interest or
claims for other payment with respect to such Obligations in lieu of cash up to
the amount which would, upon distribution of the net proceeds of such sale, be
payable thereon. Such notes, if the amount payable hereunder shall be less than
the amount due thereon, shall be returned to the holder thereof after being
appropriately stamped to show partial payment.
18.14 Registration Rights. If the Secured Party shall determine to exercise
its right to sell all or any of the Security Collateral pursuant to Section 9.6,
the Borrower agrees that, upon request of the Secured Party, the Borrower will,
at its own expense:
(a) execute and deliver, and cause each issuer of the Security
Collateral contemplated to be sold and the directors and officers thereof to
execute and deliver, all such instruments and documents and do or cause to be
done all such other acts and things, as may be necessary or, in the opinion of
the Secured Party, advisable to register such Security Collateral under the
provisions of the Securities Act of 1933, as from time to time amended (the
"Securities Act"), and to cause the registration statement relating thereto to
become effective and to remain effective for such period as prospectuses are
required by law to be furnished, and to make all amendments and supplements
thereto and to the related prospectus which, in the opinion of the Secured
Party, are necessary or advisable, all in conformity with the requirements of
the Securities Act and the rules and regulations of the Securities and Exchange
Commission applicable thereto;
(b) use its best efforts to qualify the Security Collateral under the
state securities or "Blue Sky" laws and to obtain all necessary governmental
approvals for the sale of the Security Collateral, as requested by the Secured
Party;
(c) cause each such issuer to make available to its security holders,
as soon as practicable, an earning statement which will satisfy the provisions
of Section 11(a) of the Securities Act; and
(d) do or cause to be done all such other acts and things as may be
necessary to make such sale of the Security Collateral or any part thereof valid
and binding and in compliance with applicable law. The Borrower further
acknowledges the impossibility of ascertaining the amount of damages which would
be suffered by the Secured Party or the Secured Party by reason of the failure
by the Borrower to perform any of the covenants contained in this Section and,
consequently, agrees that, if the Borrower shall fail to perform any of such
covenants, it shall pay, as liquidated damages and not as a penalty, an amount
equal to the value of the Security Collateral on the date the Secured Party
shall demand compliance with this Section.
18.16 Recourse. The Borrower shall remain liable for any deficiency if the
proceeds of any sale or other disposition of the Collateral are insufficient to
satisfy the Secured Obligations. The Borrower shall also be liable for all
expenses of the Secured Party incurred in connection with collecting such
deficiency including, without limitation, the fees and disbursements of any
attorneys employed by the Secured Party to collect such deficiency.
18.18 Intellectual Property License. Solely for the purpose of enabling the
Secured Party to exercise rights and remedies under this Article IX, the
Borrower hereby grants to the Secured Party, to the extent it has the right to
do so, an irrevocable, non-exclusive license (exercisable without payment of
royalty or other compensation to the Borrower) to use, operate under, license or
sublicense any Intellectual Property now owned or hereafter acquired by the
Borrower and wherever the same may be located, subject, in the case of
Trademarks, to sufficient rights to quality control and inspection in favor of
the Borrower to avoid the risk of invalidation of said Trademarks.
18.20 Expenses; Attorneys' Fees. The Borrower shall reimburse the Secured
Party for all its expenses in connection with the exercise of its rights
hereunder, including, without limitation, all reasonable attorneys' fees and
legal expenses incurred by the Secured Party.
18.22 Application of Proceeds. The proceeds of any disposition of
Collateral shall be applied as follows:
(a) to the payment of any and all expenses and fees (including
reasonable attorneys' fees and disbursements) incurred by the Secured Party in
connection with the exercise of its rights and remedies hereunder, including,
without limitation, expenses and fees in connection with obtaining, taking
possession of, removing, holding, insuring, repairing, preparing for sale or
lease, storing and disposing of Collateral;
(b) to the satisfaction of the Secured Obligations (in such order as
the Secured Party may decide);
(c) any other payment of any amount required to be paid by the Secured
Party by law;
(d) the satisfaction of indebtedness secured by any subordinate
security interest in the Collateral if written notification of demand therefor
is received before distribution of the proceeds is completed, but only to the
extent of the proceeds undistributed when such notification is received; and
(e) upon termination of the Commitments and the expiration,
cancellation or return to the issuer thereof undrawn upon of any letters of
credit, to the Borrower or as a court of competent jurisdiction may direct.
18.24 Limitation on Duties Regarding Preservation of Collateral. (a) The
Secured Party's sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of the UCC
or otherwise, shall be to deal with it in the same manner as the Secured Party
deals with similar property for its own account.
(b) The Secured Party shall have no obligation to take any steps to
preserve rights against prior parties to any Collateral.
(c) Neither the Secured Party nor any of its directors, officers,
employees or agents shall be liable for failure to demand, collect or
realize upon all or any part of the Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise dispose of any Collateral
upon the request of the Borrower or otherwise.
18.26 Waiver of Claims. Except as otherwise provided in this Agreement, THE
BORROWER HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, NOTICE AND
JUDICIAL HEARING IN CONNECTION WITH THE SECURED PARTY'S TAKING POSSESSION OR THE
SECURED PARTY'S DISPOSITION OF ANY OF THE COLLATERAL, INCLUDING, WITHOUT
LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING FOR ANY PREJUDGMENT REMEDY OR
REMEDIES AND ANY SUCH RIGHT WHICH BORROWER WOULD OTHERWISE HAVE UNDER THE
CONSTITUTION OR ANY STATUTE OF THE STATES OR OF ANY STATE, and the Borrower
hereby further waives, to the extent permitted by law:
(a) all damages occasioned by such taking of possession except any
damages which are the direct result of the Secured Party's gross negligence or
willful misconduct;
(b) all other requirements as to the time, place and terms of sale or
other requirements with respect to the enforcement of the Secured Party's rights
hereunder;
(c) demand of performance or other demand, notice of intent to demand
or accelerate, notice of acceleration presentment, protest, advertisement or
notice of any kind to or upon the Borrower or any other Person; and
(d) all rights of redemption, appraisement, valuation, diligence,
stay, extension or moratorium now or hereafter in force under any applicable law
in order to prevent or delay the enforcement of this Agreement, the absolute
sale of the Collateral or any portion thereof and the Borrower, for itself and
all who may claim under it, insofar as it or they now or hereafter lawfully may,
hereby waives the benefit of all such laws.
18.28 Discontinuance of Proceedings. In case the Secured Party shall have
instituted any proceeding to enforce any right, power or remedy under this
Agreement by foreclosure, sale, entry or otherwise, and such proceeding shall
have been discontinued or abandoned for any reason or shall have been determined
adversely to the Secured Party's_____, then and in every such case the Borrower
and the Secured Party shall be returned to their former positions and rights
hereunder with respect to the Collateral subject to the security interest
created under this Agreement, and all rights, remedies and powers of the Secured
Party shall continue as if no such proceeding had been instituted.
ARTICLE XX
INDEMNITY
20.2 Indemnity and Expenses. (a) The Borrower agrees to indemnify,
reimburse and hold the Secured Party and its respective officers, directors,
employees, representatives and agents (hereinafter in this Section referred to
individually as "Indemnitee" and collectively as "Indemnitees") harmless from
any and all liabilities, obligations, losses, damages, penalties, claims,
actions, judgments, suits, costs, expenses or disbursements (including
reasonable attorneys' fees and expenses) (for the purposes of this Section the
foregoing are collectively called "expenses") for whatsoever kind or nature
which may be imposed on, asserted against or incurred by any of the Indemnitees
in any way relating to or arising out of this Agreement or the documents
executed in connection herewith or in any other way connected with the
administration of the transactions contemplated hereby or the enforcement of any
of the terms of or the preservation of any rights hereunder or in any way
relating to or arising out of the manufacture, ownership, ordering, purchase,
delivery, control, acceptance, lease, financing, possession, operation,
condition, sale, return or other disposition or use of the Collateral
(including, without limitation, latent or other defects, whether or not
discoverable), the violation of the laws of any country, state or other
governmental body or unit, any tort (including, without limitation, claims
arising or imposed under the doctrine of strict liability, or for or on account
of injury to or the death of any Person (including any Indemnitee), or for
property damage) or any contract claim; provided that no Indemnitee shall be
indemnified pursuant to this Section for expenses to the extent caused by the
gross negligence or wilful misconduct of such Indemnitee. The Borrower agrees
that upon written notice by any Indemnitee of any assertion that could give rise
to an expense, the Borrower shall assume full responsibility for the defense
thereof. Each Indemnitee agrees to use its best efforts to promptly notify the
Borrower of any such assertion of which such Indemnitee has knowledge.
(b) Without limiting the application of clause (a) of this Section,
the Borrower agrees to pay, or reimburse the Secured Party for any and all fees,
costs and expenses of whatever kind or nature incurred in connection with the
creation, preservation or protection of the Secured Party's Liens on, and
security interest for the benefit of the Secured Party in, the Collateral,
including, without limitation, all fees and taxes in connection with the
recording or filing of instruments and documents in public offices, payment or
discharge of any taxes or Liens upon or in respect of the Collateral, premiums
for insurance with respect to the Collateral and all other fees, costs and
expenses in connection with protecting, maintaining or preserving the Collateral
and the Secured Party's interest therein, whether through judicial proceedings
or otherwise, or in defending or prosecuting any actions, suits or proceedings
arising out of or relating to the Collateral.
(c) Without limiting the application of clause (a) or (b) of this
Section, the Borrower agrees to pay, indemnify and hold each Indemnitee harmless
from and against any expenses which such Indemnitee may suffer, expend or incur
in consequence of or growing out of any misrepresentation by the Borrower in
this Agreement or in any statement or writing contemplated by or made or
delivered pursuant to or in connection with this Agreement.
(d) If and to the extent that the obligations of the Borrower under
this Section are unenforceable for any reason, the Borrower hereby agrees to
make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
20.4 Indemnity Obligations Secured by Collateral; Survival. Any amounts
paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Secured Obligations secured by the Collateral.
The indemnity obligations of the Borrower contained in this Article shall
continue in full force and effect notwithstanding the full payment and
performance of the Secured Obligations and notwithstanding the discharge
thereof.
ARTICLE XXII
MISCELLANEOUS
22.2 Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK.
22.4 Submission to Jurisdiction. Any legal action or proceeding with
respect to this Agreement and any action for enforcement of any judgment in
respect thereof may be brought in the courts of the State of New York or of the
United States of America for the Southern District of New York and, by execution
and delivery of this Agreement, the Borrower hereby accepts for itself and in
respect of its property, generally and unconditionally, the non-exclusive
jurisdiction of the aforesaid courts and appellate courts from any thereof. The
Borrower irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, the Borrower at its
address set forth under its signature below. The Borrower hereby irrevocably
waives any objection which it may now or hereafter have to the laying of venue
of any of the aforesaid actions or proceedings arising out of or in connection
with this Agreement brought in the courts referred to above and hereby further
irrevocably waives and agrees not to plead or claim in any such court that any
such action or proceeding brought in any such court has been brought in an
inconvenient forum. Nothing herein shall affect the right of the Secured Party
to
serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against the Borrower in any other jurisdiction.
22.6 Waiver of Trial by Jury. TO THE EXTENT PERMITTED BY APPLICABLE LAW,
EACH OF THE BORROWER AND THE SECURED PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHT
OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT OR ANY MATTER ARISING HEREUNDER.
22.8 Limitation of Liability. No claim may be made by the Borrower or any
other Person against the Secured Party or the affiliates, directors, officers,
employees, attorneys or agents of any of them for any special, indirect,
consequential or punitive damages in respect of any claim for breach of contract
or any other theory of liability arising out of or related to the transactions
contemplated by this Agreement or any act, omission or event occurring in
connection therewith; and the Borrower hereby waives, releases and agrees not to
sue upon any claim for any such damages, whether or not accrued and whether or
not known or suspected to exist in its favor.
22.10 Notices. Except as otherwise expressly provided herein, all notices,
requests and demands to or upon the respective parties hereto to be effective
shall be in writing (including by telecopy, telex, or cable communication) and
shall be deemed to have been duly given or made when delivered by hand, or five
days after being deposited in the United States mail, postage prepaid, or, in
the case of telex notice, when sent, answerback received, or, in the case of
telecopy notice, when sent, or, in the case of a nationally recognized overnight
courier service, one Business Day after delivery to such courier service,
addressed, in the case of each party hereto, at its address specified opposite
its signature below, or to such other address as may be designated by any party
in a written notice to the other party hereto, provided that notices and
communications to the Secured Party shall not be effective until received by the
Secured Party.
22.12 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Borrower, the Secured Party, all future holders of
the Secured Obligations and their respective successors and assigns, except that
the Borrower may not assign or transfer any of its rights or obligations under
this Agreement without the prior written consent of the Secured Party.
22.14 Waivers and Amendments. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except by a
written instrument executed by the Borrower and the Secured Party, provided that
any provision of this Agreement may be waived by the Secured Party in a written
letter or agreement executed by the Secured Party
or by telex or facsimile transmission from the Secured Party. Any such
amendment, supplement, modification or waiver shall be binding upon the Borrower
and the Secured Party and all future holders of the Secured Obligations. In the
case of any waiver, the Borrower and the Secured Party shall be restored to
their former position and rights hereunder and under the outstanding Secured
Obligations, and any Default or Event of Default waived shall be deemed to be
cured and not continuing, but no such waiver shall extend to any subsequent or
other Default or Event of Default, or impair any right consequent thereon.
22.16 No Waiver; Remedies Cumulative. No failure or delay on the part of
the Secured Party in exercising any right, power or privilege hereunder and no
course of dealing between the Borrower and the Secured Party shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. A waiver by the Secured Party
of any right or remedy hereunder on any one occasion shall not be construed as a
bar to any right or remedy which the Secured Party would otherwise have on any
future occasion. The rights and remedies herein expressly provided are
cumulative and may be exercised singly or concurrently and as often and in such
order as the Secured Party deems expedient and are not exclusive of any rights
or remedies which the Secured Party would otherwise have whether by agreement or
now or hereafter existing under applicable law. No notice to or demand on the
Borrower in any case shall entitle the Borrower to any other or further notice
or demand in similar or other circumstances or constitute a waiver of the rights
of the Secured Party to any other or further action in any circumstances without
notice or demand.
22.18 Termination; Release. When the Secured Obligations have been
indefeasibly paid and performed in full this Agreement shall terminate and the
Secured Party, at the request and sole expense of the Borrower, will execute and
deliver to the Borrower the proper instruments (including UCC termination
statements) acknowledging the termination of this Agreement, and will duly
assign, transfer and deliver to the Borrower, without recourse, representation
or warranty of any kind whatsoever, such of the Collateral as may be in
possession of the Secured Party and has not theretofore been disposed of,
applied or released.
22.20 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument.
22.22 Effectiveness. This Agreement shall become effective on the date on
which the Borrower shall have signed a counterpart hereof and shall have
delivered the same to the Secured Party.
22.24 Headings Descriptive. The headings of the several Sections and
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
22.26 Severability. In case any provision in or obligation under this
Agreement or the Secured Obligations shall be invalid, illegal or unenforceable
in any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
22.28 Survival. All indemnities set forth herein shall survive the
execution and delivery of this Agreement and the making and repayment of the
Secured Obligations.
22.30 Powers Coupled with an Interest. All authorizations and agencies
herein contained with respect to the Collateral are irrevocable and powers
coupled with an interest.
22.32 [RESERVED]
IN WITNESS WHEREOF, the Borrower and the Secured Party have caused this
Agreement to be duly executed and delivered as of the date first above written.
SMARTALK TELESERVICES, INC.
By________________________
Name:
Title:
[_________________________]
By________________________
Name:
Title:
[_________________________]
By________________________
Name:
Title:
[_________________________]
By________________________
Name:
Title:
FLETCHER INTERNATIONAL LIMITED
By________________________
Name:
Title: