EXHIBIT 4.8
PLEDGE AND SECURITY AGREEMENT
PLEDGE AND SECURITY AGREEMENT, dated as of March 21, 2005 (this
"AGREEMENT") made by VERILINK CORPORATION, a Delaware corporation ("VRLK") and
each of its existing "Subsidiaries" (as defined in the Securities Purchase
Agreement defined below) named on the signature pages hereto (collectively, the
"EXISTING SUBSIDIARIES") and each other Subsidiary of VRLK hereafter becoming
party hereto (together with VRLK and the Existing Subsidiaries, each a "GRANTOR"
and, collectively, the "GRANTORS"), in favor of PORTSIDE GROWTH & OPPORTUNITY
FUND, a company organized under the laws of the Cayman Islands, in its capacity
as collateral agent (in such capacity, the "COLLATERAL AGENT") for the "Buyers"
(as defined below) party to the Securities Purchase Agreement, dated as of even
date herewith (as amended, restated, supplemented or otherwise modified from
time to time, the "SECURITIES PURCHASE AGREEMENT").
WITNESSETH:
WHEREAS, VRLK and each party listed as a "Buyer" on the Schedule of
Buyers attached thereto (collectively, the "BUYERS") are parties to the
Securities Purchase Agreement, pursuant to which VRLK shall be required to sell,
and the Buyers shall purchase or have the right to purchase, the Notes (as
defined therein);
WHEREAS, it is a condition precedent to the Buyers entering into the
Securities Purchase Agreement that each Grantor shall have executed and
delivered to the Collateral Agent this Agreement providing for the grant to the
Collateral Agent for the benefit of the Buyers of a security interest in all of
such Grantor's Collateral (as defined herein) to secure all of VRLK's
obligations under the Securities Purchase Agreement and the Notes issued
pursuant thereto;
WHEREAS, each of the Existing Subsidiaries is a wholly-owned
Subsidiary of VRLK and will derive substantial benefits from the execution of
the Securities Purchase Agreement;
WHEREAS, each of the Existing Subsidiaries, VRLK and each other
Grantor are or will be mutually dependent on each other in the conduct of their
respective businesses as an integrated operation, with the credit needed from
time to time by one often being provided through financing obtained by the other
and the ability to obtain such financing being dependent on the successful
operations of each of the Existing Subsidiaries, VRLK and each other Grantor;
WHEREAS, it is a condition precedent to the Buyers entering into the
Securities Purchase Agreement that each of the Existing Subsidiaries shall have
executed and delivered to the Collateral Agent the "Guaranty" with respect to
the obligations of VRLK under the Securities Purchase Agreement and the Notes
(as amended, restated or otherwise modified from time to time, the "GUARANTY"),
and this Agreement providing for the grant to the Collateral Agent for the
benefit of the Buyers of a security interest in all personal property of each of
the Existing Subsidiaries to secure its obligations under the Transaction
Documents, and that each future domestic and material foreign Subsidiary of VRLK
become a party to the Guaranty and this Agreement; and
WHEREAS, each of the Existing Subsidiaries and each other Grantor
has determined that the execution, delivery and performance of this Agreement
and the Guaranty directly benefits, and are in the best interest of VRLK; and
NOW, THEREFORE, in consideration of the premises and the agreements
herein and in order to induce the Buyers to perform under the Securities
Purchase Agreement, each Grantor agrees with the Collateral Agent, for the
benefit of the Buyers, as follows:
SECTION 1. Definitions.
(a) Reference is hereby made to the Securities Purchase Agreement
and the Notes for a statement of the terms thereof. All terms used in this
Agreement and the recitals hereto which are defined in the Securities Purchase
Agreement, the Notes or in Articles 8 or 9 of the Uniform Commercial Code (the
"CODE") as in effect from time to time in the State of New York, and which are
not otherwise defined herein shall have the same meanings herein as set forth
therein; provided that terms used herein which are defined in the Code as in
effect in the State of New York on the date hereof shall continue to have the
same meaning notwithstanding any replacement or amendment of such statute except
as the Collateral Agent may otherwise determine.
(b) The following terms shall have the respective meanings provided
for in the Code: "Accounts", "Cash Proceeds", "Chattel Paper", "Commercial Tort
Claim", "Commodity Account", "Commodity Contracts", "Deposit Account",
"Documents", "Equipment", "Fixtures", "General Intangibles", "Goods",
"Instruments", "Inventory", "Investment Property", "Letter-of-Credit Rights",
"Noncash Proceeds", "Payment Intangibles", "Proceeds", "Promissory Notes",
"Security", "Record", "Security Account", "Software", and "Supporting
Obligations".
(c) As used in this Agreement, the following terms shall have the
respective meanings indicated below, such meanings to be applicable equally to
both the singular and plural forms of such terms:
"COPYRIGHT LICENSES" means all licenses, contracts or other
agreements, whether written or oral, naming any Grantor as licensee or licensor
and providing for the grant of any right to use or sell any works covered by any
copyright (including, without limitation, all Copyright Licenses set forth in
Schedule II hereto).
"COPYRIGHTS" means all domestic and foreign copyrights, whether
registered or not, including, without limitation, all copyright rights
throughout the universe (whether now or hereafter arising) in any and all media
(whether now or hereafter developed), in and to all original works of authorship
fixed in any tangible medium of expression, acquired or used by any Grantor
(including, without limitation, all copyrights described in Schedule II hereto),
all applications, registrations and recordings thereof (including, without
limitation, applications, registrations and recordings in the United States
Copyright Office or in any similar office or agency of the United States or any
other country or any political subdivision thereof), and all reissues,
divisions, continuations, continuations in part and extensions or renewals
thereof.
"EVENT OF DEFAULT" shall have the meaning set forth in the Notes.
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"INSOLVENCY PROCEEDING" means any proceeding commenced by or against
any Person under any provision of the Bankruptcy Code (Chapter 11 of Title 11 of
the United States Code) or under any other bankruptcy or insolvency law,
assignments for the benefit of creditors, formal or informal moratoria,
compositions, or extensions generally with creditors, or proceedings seeking
reorganization, arrangement, or other similar relief.
"INTELLECTUAL PROPERTY" means the Copyrights, Trademarks and
Patents.
"LICENSES" means the Copyright Licenses, the Trademark Licenses and
the Patent Licenses.
"LIEN" means any mortgage, deed of trust, pledge, lien (statutory or
otherwise), security interest, charge or other encumbrance or security or
preferential arrangement of any nature, including, without limitation, any
conditional sale or title retention arrangement, any capitalized lease and any
assignment, deposit arrangement or financing lease intended as, or having the
effect of, security.
"PATENT LICENSES" means all licenses, contracts or other agreements,
whether written or oral, naming any Grantor as licensee or licensor and
providing for the grant of any right to manufacture, use or sell any invention
covered by any Patent (including, without limitation, all Patent Licenses set
forth in Schedule II hereto).
"PATENTS" means all domestic and foreign letters patent, design
patents, utility patents, industrial designs, inventions, trade secrets, ideas,
concepts, methods, techniques, processes, proprietary information, technology,
know-how, formulae, rights of publicity and other general intangibles of like
nature, now existing or hereafter acquired (including, without limitation, all
domestic and foreign letters patent, design patents, utility patents, industrial
designs, inventions, trade secrets, ideas, concepts, methods, techniques,
processes, proprietary information, technology, know-how and formulae described
in Schedule II hereto), all applications, registrations and recordings thereof
(including, without limitation, applications, registrations and recordings in
the United States Patent and Trademark Office, or in any similar office or
agency of the United States or any other country or any political subdivision
thereof), and all reissues, divisions, continuations, continuations in part and
extensions or renewals thereof.
"TRADEMARK LICENSES" means all licenses, contracts or other
agreements, whether written or oral, naming any Grantor as licensor or licensee
and providing for the grant of any right concerning any Trademark, together with
any goodwill connected with and symbolized by any such trademark licenses,
contracts or agreements and the right to prepare for sale or lease and sell or
lease any and all Inventory now or hereafter owned by any Grantor and now or
hereafter covered by such licenses (including, without limitation, all Trademark
Licenses described in Schedule II hereto).
"TRADEMARKS" means all domestic and foreign trademarks, service
marks, collective marks, certification marks, trade names, business names,
d/b/a's, Internet domain names, trade styles, designs, logos and other source or
business identifiers and all general intangibles of like nature, now or
hereafter owned, adopted, acquired or used by any Grantor
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(including, without limitation, all domestic and foreign trademarks, service
marks, collective marks, certification marks, trade names, business names,
d/b/a's, Internet domain names, trade styles, designs, logos and other source or
business identifiers described in Schedule II hereto), all applications,
registrations and recordings thereof (including, without limitation,
applications, registrations and recordings in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
state thereof or any other country or any political subdivision thereof), and
all reissues, extensions or renewals thereof, together with all goodwill of the
business symbolized by such marks and all customer lists, formulae and other
Records of any Grantor relating to the distribution of products and services in
connection with which any of such marks are used.
SECTION 2. Grant of Security Interest. As collateral security for
all of the "Obligations" (as defined in Section 3 hereof), each Grantor hereby
pledges and assigns to the Collateral Agent, and grants to the Collateral Agent
for the benefit of the Buyers, a continuing security interest in, all personal
property of such Grantor, wherever located and whether now or hereafter existing
and whether now owned or hereafter acquired, of every kind and description,
tangible or intangible (collectively, the "COLLATERAL"), including, without
limitation, the following:
(a) all Accounts;
(b) all Chattel Paper (whether tangible or electronic);
(c) the Commercial Tort Claims specified on Schedule VI hereto;
(d) all Deposit Accounts (including, without limitation, the Cash
Collateral Account), all cash, and all other property from time to time
deposited therein and the monies and property in the possession or under the
control of the Collateral Agent or any Buyer or any affiliate, representative,
agent or correspondent of the Collateral Agent or any Buyer;
(e) all Documents;
(f) all Equipment;
(g) all Fixtures;
(h) all General Intangibles (including, without limitation, all
Payment Intangibles);
(i) all Goods;
(j) all Instruments (including, without limitation, Promissory Notes
and each certificated Security);
(k) all Inventory;
(l) all Investment Property;
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(m) all Copyrights, Patents and Trademarks, and all Licenses;
(n) all Letter-of-Credit Rights;
(o) all Supporting Obligations;
(p) all other tangible and intangible personal property of such
Grantor (whether or not subject to the Code), including, without limitation, all
bank and other accounts and all cash and all investments therein, all proceeds,
products, offspring, accessions, rents, profits, income, benefits, substitutions
and replacements of and to any of the property of such Grantor described in the
preceding clauses of this Section 2 (including, without limitation, any proceeds
of insurance thereon and all causes of action, claims and warranties now or
hereafter held by such Grantor in respect of any of the items listed above), and
all books, correspondence, files and other Records, including, without
limitation, all tapes, disks, cards, Software, data and computer programs in the
possession or under the control of such Grantor or any other Person from time to
time acting for such Grantor that at any time evidence or contain information
relating to any of the property described in the preceding clauses of this
Section 2 or are otherwise necessary or helpful in the collection or realization
thereof; and
(q) all Proceeds, including all Cash Proceeds and Noncash Proceeds,
and products of any and all of the foregoing Collateral;
in each case howsoever such Grantor's interest therein may arise or appear
(whether by ownership, security interest, claim or otherwise).
Notwithstanding anything contained in this Agreement to the contrary, the term
"Collateral" shall not include any rights or interest in any contract, lease,
permit, license, charter or license agreement covering real or personal property
of any Grantor if under the terms of such contract, lease, permit, license,
charter or license agreement, or applicable law with respect thereto, the valid
grant of a security interest or lien therein is prohibited as a matter of law or
under the terms of such contract, lease, permit, license, charter or license
agreement and such prohibition has not been waived or the consent of the other
party to such contract, lease, permit, license, charter or license agreement has
not been obtained; provided, that, the foregoing exclusions shall in no way be
construed (A) to apply if any described prohibition is unenforceable under
Section 9-406, 9-407, or 9-408 of the Code or other applicable law, or (B) to
limit, impair, or otherwise affect the Collateral Agents' continuing security
interests in and liens upon any rights or interests of any Grantor in or to (x)
monies due or to become due under any described contract, lease, permit,
license, charter or license agreement (including any Accounts), or (y) any
proceeds from the sale, license, lease, or other dispositions of any such
contract, lease, permit, license, charter, license agreement, or stock.
SECTION 3. Security for Obligations. The security interest created
hereby in the Collateral constitutes continuing collateral security for all of
the following obligations, whether now existing or hereafter incurred
(collectively, the "OBLIGATIONS"):
(a) (i) the payment by VRLK, as and when due and payable (by
scheduled maturity, required prepayment, acceleration, demand or otherwise), of
all amounts from time to
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time owing by it in respect of the Securities Purchase Agreement, the Notes and
the other "Transaction Documents" (as defined in the Securities Purchase
Agreement), and (ii) the payment by each of the Existing Subsidiaries and each
other Grantor other than VRLK as and when due and payable of all "Guaranteed
Obligations" under (as defined in) the Guaranty, including, without limitation,
(A) all principal of and interest on the Notes (including, without limitation,
all interest that accrues after the commencement of any Insolvency Proceeding of
any Grantor, whether or not the payment of such interest is unenforceable or is
not allowable due to the existence of such Insolvency Proceeding), and (B) all
fees, commissions, expense reimbursements, indemnifications and all other
amounts due or to become due under any of the Transaction Documents; and
(b) the due performance and observance by each Grantor of all of its
other obligations from time to time existing in respect of any of the
Transaction Documents for so long as the Notes are outstanding.
SECTION 4. Representations and Warranties. Each Grantor represents
and warrants as follows:
(a) Schedule I hereto sets forth (i) the exact legal name of such
Grantor, and (ii) the organizational identification number of such Grantor or
states that no such organizational identification number exists.
(b) There is no pending or written notice threatening any action,
suit, proceeding or claim affecting such Grantor before any governmental
authority or any arbitrator, or any order, judgment or award by any governmental
authority or arbitrator, that may adversely affect the grant by such Grantor, or
the perfection, of the security interest purported to be created hereby in the
Collateral, or the exercise by the Collateral Agent of any of its rights or
remedies hereunder.
(c) All Federal, state and local tax returns and other reports
required by applicable law to be filed by such Grantor have been filed, or
extensions have been obtained, and all taxes, assessments and other governmental
charges imposed upon such Grantor or any property of such Grantor (including,
without limitation, all federal income and social security taxes on employees'
wages) and which have become due and payable on or prior to the date hereof have
been paid, except to the extent contested in good faith by proper proceedings
which stay the imposition of any penalty, fine or Lien resulting from the
non-payment thereof and with respect to which adequate reserves have been set
aside for the payment thereof in accordance with generally accepted accounting
principles consistently applied ("GAAP").
(d) All Equipment, Fixtures, Goods and Inventory of such Grantor now
existing are, and all Equipment, Fixtures, Goods and Inventory of such Grantor
hereafter existing will be, located and/or based at the addresses specified
therefor in Schedule III hereto, except that such Grantor will give the
Collateral Agent not less than 30 days' prior written notice of any change of
the location of any such Collateral, other than to locations set forth on
Schedule III and with respect to which the Collateral Agent has filed financing
statements and otherwise fully perfected its Liens thereon. Such Grantor's chief
place of business and chief executive office, the place where such Grantor keeps
its Records concerning Accounts and all originals of all Chattel
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Paper are located at the addresses specified therefor in Schedule III hereto.
None of the Accounts is evidenced by Promissory Notes or other Instruments. Set
forth in Schedule IV hereto is a complete and accurate list, as of the date of
this Agreement, of (i) each Promissory Note, Security and other Instrument owned
by each Grantor and (ii) each Deposit Account, Securities Account and
Commodities Account of each Grantor, together with the name and address of each
institution at which each such Account is maintained, the account number for
each such Account and a description of the purpose of each such Account. Set
forth in Schedule II hereto is a complete and correct list of (i) each trade
name used by each Grantor and (ii) the name of, and each trade name used by,
each person from which such Grantor has acquired any substantial part of the
Collateral.
(e) Such Grantor has delivered to the Collateral Agent complete and
correct copies of each License, if any, described in Schedule II hereto,
including all schedules and exhibits thereto, which represents all of the
material Licenses existing on the date of this Agreement. Each such License sets
forth the entire agreement and understanding of the parties thereto relating to
the subject matter thereof, and there are no other agreements, arrangements or
understandings, written or oral, relating to the matters covered thereby or the
rights of such Grantor or any of its affiliates in respect thereof. Each
material License now existing is, and any material License entered into in the
future will be, the legal, valid and binding obligation of the parties thereto,
enforceable against such parties in accordance with its terms. No default under
any material License by any such party has occurred, nor does any defense,
offset, deduction or counterclaim exist thereunder in favor of any such party.
(f) Such Grantor owns and controls, or otherwise possesses adequate
rights to use, all material Trademarks, Patents and Copyrights, which are the
only trademarks, patents, copyrights, inventions, trade secrets, proprietary
information and technology, know-how, formulae, rights of publicity necessary to
conduct its business in substantially the same manner as conducted as of the
date hereof. Schedule II hereto sets forth a true and complete list of all
registered Copyrights and Trademarks, issued Patents and Licenses owned or used
by such Grantor as of the date hereof. To the best knowledge of each Grantor,
all such scheduled Intellectual Property of such Grantor is subsisting and in
full force and effect, has not been adjudged invalid or unenforceable, is valid
and enforceable and has not been abandoned in whole or in part. Except as set
forth in Schedule II, no such scheduled Intellectual Property is the subject of
any licensing or franchising agreement. Such Grantor has no knowledge of any
conflict with the rights of others to any Intellectual Property and, to the best
knowledge of such Grantor, such Grantor is not now infringing or in conflict
with any such rights of others in any material respect, and to the best
knowledge of such Grantor, no other Person is now infringing or in conflict in
any material respect with any such properties, assets and rights owned or used
by such Grantor. Such Grantor has not received any notice that it is violating
or has violated the trademarks, patents, copyrights, inventions, trade secrets,
proprietary information and technology, know-how, formulae, rights of publicity
or other Intellectual Property rights of any third party.
(g) Such Grantor is and will be at all times the sole and exclusive
owner of, or otherwise has and will have adequate rights in, the Collateral free
and clear of any Liens, except for Permitted Liens (as defined in the Notes) on
any Collateral. No effective financing statement or other instrument similar in
effect covering all or any part of the Collateral is on file in any
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recording or filing office except (A) such as may have been filed in favor of
the Collateral Agent relating to this Agreement, and (B) such as may have been
filed to perfect any Permitted Liens.
(h) The exercise by the Collateral Agent of any of its rights and
remedies hereunder will not contravene any material law or any material
contractual restriction binding on or otherwise affecting such Grantor or any of
its properties and will not result in or require the creation of any Lien, upon
or with respect to any of its properties.
(i) Under laws applicable in the United States, no authorization or
approval or other action by, and no notice to or filing with, any governmental
authority or other regulatory body or any other Person, is required for (i) the
grant by such Grantor, or the perfection, of the security interest purported to
be created hereby in the Collateral, or (ii) the exercise by the Collateral
Agent of any of its rights and remedies hereunder, except (A) for the filing
under the Uniform Commercial Code as in effect in the applicable jurisdiction of
the financing statements, all of which financing statements, have been duly
filed and are in full force and effect, (B) with respect to the perfection of
the security interest created hereby in the Intellectual Property, for the
recording of the appropriate Grant of Security Interest with respect to
registered Copyrights, if any, substantially in the form of Exhibit A hereto, in
the United States Copyright Office, and (C) with respect to the perfection of
the security interest created hereby in foreign Intellectual Property and
Licenses, for registrations and filings in jurisdictions located outside of the
United States and covering rights in such jurisdictions relating to the
Intellectual Property and Licenses.
(j) Under laws applicable in the United States, this Agreement
creates in favor of the Collateral Agent for the benefit of the Buyers, a legal,
valid and enforceable security interest in the Collateral, as security for the
Obligations. The Collateral Agent's having possession of all Instruments and
cash constituting Collateral from time to time, the recording of the appropriate
Grant of Security Interest executed pursuant hereto in the United States Patent
and Trademark Office and the United States Copyright Office, as applicable, and
the filing of the financing statements and the other filings and recordings, as
applicable, described in Schedule V hereto and, with respect to the Intellectual
Property hereafter existing and not covered by an appropriate Grant of Security
Interest, the recording in the United States Patent and Trademark Office or the
United States Copyright Office, as applicable, of appropriate instruments of
assignment, result in the perfection of such security interests. Such security
interests are, or in the case of Collateral in which such Grantor obtains rights
after the date hereof, will be, perfected, first priority security interests,
subject only to Permitted Liens and the recording of such instruments of
assignment. Such recordings and filings and all other action necessary or
desirable to perfect and protect such security interest have been duly taken,
except for the Collateral Agent's having possession of Instruments and cash
constituting Collateral after the date hereof and the other filings and
recordations described in Section 4(i) hereof.
(k) As of the date hereof, such Grantor does not hold any Commercial
Tort Claims nor is aware of any such pending claims, except for such claims
described in Schedule VI.
(l) Each of the Existing Subsidiaries is a wholly owned Subsidiary
of VRLK. As of the date hereof, (i) each of VRLK's domestic Subsidiaries in
existence as of the date hereof (other than the domestic Existing Subsidiaries)
are inactive and have no assets, operations or
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income and (ii) the foreign Existing Subsidiaries are the only material foreign
Subsidiaries of VRLK.
(m) No Grantor owns any individual motor vehicle having an original
purchase price of $50,000 or more, and the aggregate purchase price of all motor
vehicles owned by all of the Grantors is less than $250,000.
SECTION 5. Covenants as to the Collateral. So long as any of the
Obligations shall remain outstanding, unless the Collateral Agent shall
otherwise consent in writing:
(a) Further Assurances. Each Grantor will at its expense, at any
time and from time to time, promptly execute and deliver all further instruments
and documents and take all further action that the Collateral Agent may
reasonably request in order to: (i) perfect and protect any domestic and any
material foreign security interest purported to be created hereby under the laws
applicable in the United States or the laws of any other applicable foreign
jurisdiction (including, without limitation, providing applicable opinions of
counsel); (ii) enable the Collateral Agent to exercise and enforce its rights
and remedies hereunder in respect of any domestic or material foreign
Collateral; or (iii) otherwise effect the purposes of this Agreement, including,
without limitation: (A) marking conspicuously all Chattel Paper and each License
and, at the request of the Collateral Agent, each of its Records pertaining to
any domestic or material foreign Collateral with a legend, in form and substance
satisfactory to the Collateral Agent, indicating that such Chattel Paper,
License or Collateral is subject to the security interest created hereby, (B)
delivering and pledging to the Collateral Agent hereunder each Promissory Note,
Security, Chattel Paper or other Instrument constituting domestic or material
foreign Collateral, now or hereafter owned by such Grantor, duly endorsed and
accompanied by executed instruments of transfer or assignment, all in form and
substance satisfactory to the Collateral Agent, (C) executing and filing (to the
extent, if any, that such Grantor's signature is required thereon) or
authenticating the filing of, such financing or continuation statements, or
amendments thereto, as may be necessary or desirable or that the Collateral
Agent may request in order to perfect and preserve the security interest in any
domestic or material foreign Collateral purported to be created hereby, (D)
furnishing to the Collateral Agent from time to time statements and schedules
further identifying and describing the Collateral and such other reports in
connection with any domestic or material foreign Collateral in each case as the
Collateral Agent may reasonably request, all in reasonable detail, (E) if any
domestic or material foreign Collateral shall be in the possession of a third
party, notifying such Person of the Collateral Agent's security interest created
hereby and obtaining a written acknowledgment from such Person that such Person
holds possession of such Collateral for the benefit of the Collateral Agent,
which such written acknowledgement shall be in form and substance reasonably
satisfactory to the Collateral Agent, (F) if at any time after the date hereof,
such Grantor acquires or holds any Commercial Tort Claim constituting domestic
or material foreign Collateral, promptly notifying the Collateral Agent in a
writing signed by such Grantor setting forth a brief description of such
Commercial Tort Claim and granting to the Collateral Agent a security interest
therein and in the proceeds thereof, which writing shall incorporate the
provisions hereof and shall be in form and substance satisfactory to the
Collateral Agent, (G) upon the acquisition after the date hereof by such Grantor
of any motor vehicle or other Equipment constituting domestic or material
foreign Collateral with a purchase price of $50,000 or more subject to a
certificate of title or ownership (other than a motor vehicle or Equipment that
is subject to a
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purchase money security interest), notifying the Collateral Agent promptly
thereof and, upon the Collateral Agent's request, causing the Collateral Agent
to be listed as the lienholder on such certificate of title or ownership and
delivering evidence of the same to the Collateral Agent in accordance with the
Securities Purchase Agreement; and (H) taking all actions required by any
earlier versions of the Uniform Commercial Code or by other law, as applicable,
in any relevant Uniform Commercial Code jurisdiction, or by other law as
applicable in any foreign jurisdiction with respect to any and all domestic and
material foreign Collateral.
(b) Location of Equipment and Inventory. Each Grantor will keep the
Equipment and Inventory at the locations specified therefor in Section 4(d)
hereof or, upon not less than thirty (30) days' prior written notice to the
Collateral Agent accompanied by a new Schedule III hereto indicating each new
location of the Equipment and Inventory, at such other locations in the United
States. Upon the reasonable written request of the Collateral Agent, each
Grantor shall use its reasonable best efforts to obtain written access
agreements, in form and substance reasonably satisfactory to the Collateral
Agent, providing access to Collateral located on any premises not owned by a
Grantor in order to remove such Collateral from such premises during an Event of
Default.
(c) Condition of Equipment. Each Grantor will maintain or cause the
Equipment (necessary or useful to its business) to be maintained and preserved
in good condition, repair and working order, ordinary wear and tear excepted,
and will forthwith, or in the case of any loss or damage to any Equipment of
such Guarantor within a commercially reasonable time after the occurrence
thereof, make or cause to be made all repairs, replacements and other
improvements in connection therewith which are necessary or desirable,
consistent with past practice, or which the Collateral Agent may request to such
end. Such Grantor will promptly furnish to the Collateral Agent a statement
describing in reasonable detail any such loss or damage in excess of $250,000 to
any Equipment.
(d) Taxes, Etc. Each Grantor agrees to pay promptly when due all
property and other taxes, assessments and governmental charges or levies imposed
upon, and all claims (including claims for labor, materials and supplies)
against, the Equipment and Inventory, except to the extent the validity thereof
is being contested in good faith by proper proceedings which stay the imposition
of any penalty, fine or Lien resulting from the non-payment thereof and with
respect to which adequate reserves in accordance with GAAP have been set aside
for the payment thereof.
(e) Insurance.
(i) Each Grantor will, at its own expense, maintain insurance
(including, without limitation, commercial general liability, hazard, rent,
business interruption and property insurance) with respect to all of its
properties, including, without limitation, its Equipment and Inventory and all
real properties leased or owned by it in such amounts, against such risks, in
such form and with responsible and reputable insurance companies or associations
as is required by any governmental authority having jurisdiction with respect
thereto or as is carried generally in accordance with sound business practice by
companies in similar businesses similarly situated and in any event, in amount,
adequacy and scope reasonably satisfactory to the Collateral Agent. Each such
policy for liability insurance shall provide for all losses to be paid
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on behalf of the Collateral Agent and such Grantor as their respective interests
may appear, and each policy for property damage insurance shall provide for all
losses to be adjusted with, and paid directly to, the Collateral Agent. Each
such policy shall in addition (A) name the Collateral Agent as an additional
insured party thereunder (without any representation or warranty by or
obligation upon the Collateral Agent) as their interests may appear, (B) contain
an agreement by the insurer that any loss thereunder shall be payable to the
Collateral Agent on its own account during the continuance of an Event of
Default, notwithstanding any action, inaction or breach of representation or
warranty by such Grantor, (C) provide that there shall be no recourse against
the Collateral Agent for payment of premiums or other amounts with respect
thereto, and (D) provide that at least 30 days' prior written notice of
cancellation, lapse, expiration or other adverse change shall be given to the
Collateral Agent by the insurer. Such Grantor will, if so requested by the
Collateral Agent, deliver to the Collateral Agent original or duplicate policies
of such insurance and, as often as the Collateral Agent may reasonably request,
a report of a reputable insurance broker with respect to such insurance. Such
Grantor will also, at the request of the Collateral Agent, execute and deliver
instruments of assignment of such insurance policies and cause the respective
insurers to acknowledge notice of such assignment.
(ii) Reimbursement under any liability insurance maintained by
a Grantor pursuant to this Section 5(e) may be paid directly to the Person who
shall have incurred liability covered by such insurance. In the case of any loss
involving damage to Equipment or Inventory, any proceeds of insurance maintained
by a Grantor pursuant to this Section 5(e) shall be paid to the Collateral Agent
(except as to which paragraph (iii) of this Section 5(e) is not applicable),
such Grantor will make or cause to be made the necessary repairs to or
replacements of such Equipment or Inventory, and any proceeds of insurance
maintained by such Grantor pursuant to this Section 5(e) shall be paid by the
Collateral Agent to such Grantor as reimbursement for the costs of such repairs
or replacements.
(iii) Upon the occurrence and during the continuance of an
Event of Default, all insurance payments in respect of such Equipment or
Inventory shall be paid to the Collateral Agent and applied as specified in
Section 7(b) hereof.
(f) Provisions Concerning the Accounts and the Licenses.
(i) Each Grantor will (A) give the Collateral Agent at least
30 days' prior written notice of any change in such Grantor's name, identity or
organizational structure, or its jurisdiction of incorporation as set forth in
Section 4(b) hereto, (B) immediately notify the Collateral Agent upon obtaining
an organizational identification number, if on the date hereof such Grantor did
not have such identification number, and (C) keep adequate records concerning
the Accounts and Chattel Paper and permit representatives of the Collateral
Agent during normal business hours on reasonable notice to such Grantor, to
inspect and make abstracts from such Records and Chattel Paper.
(ii) Each Grantor will, except as otherwise provided in this
subsection (f), continue to collect, at its own expense, all amounts due or to
become due under the Accounts. In connection with such collections, such Grantor
may (and, during the continuance of an Event of Default, at the Collateral
Agent's direction, will) take such action as such Grantor or the Collateral
Agent may deem necessary or advisable to enforce collection or
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performance of the Accounts; provided, however, that the Collateral Agent shall
have the right at any time, upon the occurrence and during the continuance of an
Event of Default, to notify the account debtors or obligors under any Accounts
of the assignment of such Accounts to the Collateral Agent and to direct such
account debtors or obligors to make payment of all amounts due or to become due
to such Grantor thereunder directly to the Collateral Agent or its designated
agent and, upon such notification and at the expense of such Grantor and to the
extent permitted by law, to enforce collection of any such Accounts and to
adjust, settle or compromise the amount or payment thereof, in the same manner
and to the same extent as such Grantor might have done. After receipt by a
Grantor of a notice from the Collateral Agent that the Collateral Agent has
notified, intends to notify, or has enforced or intends to enforce a Grantor's
rights against the account debtors or obligors under any Accounts as referred to
in the proviso to the immediately preceding sentence, (A) all amounts and
proceeds (including Instruments) received by such Grantor in respect of the
Accounts shall be received in trust for the benefit of the Collateral Agent
hereunder, shall be segregated from other funds of such Grantor and shall be
forthwith paid over to the Collateral Agent in the same form as so received
(with any necessary endorsement) to be held as cash collateral and applied as
specified in Section 7(b) hereof, and (B) such Grantor will not adjust, settle
or compromise the amount or payment of any Account or release wholly or partly
any account debtor or obligor thereof or allow any credit or discount thereon.
In addition, upon the occurrence and during the continuance of an Event of
Default, the Collateral Agent may (in its sole and absolute discretion) direct
any or all of the banks and financial institutions with which such Grantor
either maintains a Deposit Account or a lockbox or deposits the proceeds of any
Accounts to send immediately to the Collateral Agent by wire transfer (to such
account as the Collateral Agent shall specify, or in such other manner as the
Collateral Agent shall direct) all or a portion of such securities, cash,
investments and other items held by such institution. Any such securities, cash,
investments and other items so received by the Collateral Agent shall (in the
sole and absolute discretion of the Collateral Agent) be held as additional
Collateral for the Obligations or distributed in accordance with Section 7
hereof.
(iii) Upon the occurrence and during the continuance of any
breach or default under any material License referred to in Schedule II hereto
by any party thereto other than a Grantor, the Grantor party thereto will,
promptly after obtaining knowledge thereof, give the Collateral Agent written
notice of the nature and duration thereof, specifying what action, if any, it
has taken and proposes to take with respect thereto and thereafter will take
reasonable steps to protect and preserve its rights and remedies in respect of
such breach or default, or will obtain or acquire an appropriate substitute
License.
(iv) During the continuance of an Event of Default, each
Grantor will, at its expense, promptly deliver to the Collateral Agent a copy of
each notice or other communication received by it by which any other party to
any material License referred to in Schedule II hereto purports to exercise any
of its rights or affect any of its obligations thereunder, together with a copy
of any reply by such Grantor thereto.
(v) Each Grantor will exercise promptly and diligently each
and every right which it may have under each material License (other than any
right of termination) and will duly perform and observe in all respects all of
its obligations under each material License and will take all action reasonably
necessary to maintain such Licenses in full force and effect. During the
continuance of an Event of Default, no Grantor will, without the prior written
consent
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of the Collateral Agent, cancel, terminate, amend or otherwise modify in any
respect, or waive any provision of, any material License referred to in Schedule
II hereto.
(g) Transfers and Other Liens.
(i) No Grantor will sell, assign (by operation of law or
otherwise), lease, license, exchange or otherwise transfer or dispose of any of
the Collateral, except (A) Inventory in the ordinary course of business, (B)
licenses and similar arrangements for the use of property in the ordinary course
of business, and (C) worn-out or obsolete assets not necessary to the business.
(ii) No Grantor will create, suffer to exist or grant any Lien
upon or with respect to any Collateral other than a Permitted Lien.
(h) Intellectual Property.
(i) If applicable, each Grantor (A) has duly executed and
delivered the applicable Grant of Security Interest in the form attached hereto
as Exhibit A and (B) shall, upon the reasonable written request of the
Collateral Agent, execute and deliver the applicable Grant of Security Interest
in the forms attached hereto as Exhibit B and Exhibit C. Each Grantor (either
itself or through licensees) will, and will cause each licensee thereof to, take
all action reasonably necessary to maintain all of the Intellectual Property in
full force and effect, including, without limitation, using the proper statutory
notices and markings and using the Trademarks on each applicable trademark class
of goods in order to so maintain the Trademarks in full force and free from any
claim of abandonment for non-use, and such Grantor will not (nor permit any
licensee thereof to) do any act or knowingly omit to do any act whereby any
Intellectual Property may become invalidated; provided, however, that so long as
no Event of Default has occurred and is continuing, such Grantor shall not have
an obligation to use or to maintain any Intellectual Property (A) that relates
solely to any product or work, that has been, or is in the process of being,
discontinued, abandoned or terminated, (B) that is being replaced with
Intellectual Property substantially similar to the Intellectual Property that
may be abandoned or otherwise become invalid, so long as the failure to use or
maintain such Intellectual Property does not materially adversely affect the
validity of such replacement Intellectual Property and so long as such
replacement Intellectual Property is subject to the Lien created by this
Agreement or (C) that is substantially the same as another Intellectual Property
that is in full force, so long the failure to use or maintain such Intellectual
Property does not materially adversely affect the validity of such replacement
Intellectual Property and so long as such other Intellectual Property is subject
to the Lien and security interest created by this Agreement. Each Grantor will
cause to be taken all necessary steps in any proceeding before the United States
Patent and Trademark Office and the United States Copyright Office or any
similar office or agency in any other country or political subdivision thereof
to maintain each registration of the Intellectual Property (other than the
Intellectual Property described in the proviso to the immediately preceding
sentence), including, without limitation, filing of renewals, affidavits of use,
affidavits of incontestability and opposition, interference and cancellation
proceedings and payment of maintenance fees, filing fees, taxes or other
governmental fees. If any Intellectual Property (other than Intellectual
Property described in the proviso to the first sentence of subsection (i) of
this clause (h)) is infringed, misappropriated, diluted or otherwise violated in
any material respect by a third party, such
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Grantor shall (x) upon learning of such infringement, misappropriation, dilution
or other violation, promptly notify the Collateral Agent, and (y) to the extent
such Grantor shall reasonably deem appropriate under the circumstances, promptly
sue for infringement, misappropriation, dilution or other violation, seek
injunctive relief where appropriate and recover any and all damages for such
infringement, misappropriation, dilution or other violation, or take such other
actions as such Grantor shall reasonably deem appropriate under the
circumstances to protect such Intellectual Property. Each Grantor shall furnish
to the Collateral Agent from time to time upon its request statements and
schedules further identifying and describing the Intellectual Property and
Licenses and such other reports in connection with the Intellectual Property and
Licenses as the Collateral Agent may reasonably request, all in reasonable
detail and promptly upon request of the Collateral Agent, following receipt by
the Collateral Agent of any such statements, schedules or reports, such Grantor
shall modify this Agreement by amending Schedule II hereto, as the case may be,
to include any registered or other material Intellectual Property and Licenses,
as the case may be, which becomes part of the Collateral under this Agreement
and shall execute and authenticate such documents and do such acts as shall be
necessary or, in the reasonable judgment of the Collateral Agent, desirable to
subject such Intellectual Property and Licenses to the Lien and security
interest created by this Agreement. Notwithstanding anything herein to the
contrary, upon the occurrence and during the continuance of an Event of Default,
such Grantor may not abandon or otherwise permit any Intellectual Property to
become invalid without the prior written consent of the Collateral Agent, and if
any Intellectual Property is infringed, misappropriated, diluted or otherwise
violated in any material respect by a third party, such Grantor will take such
action as the Collateral Agent shall reasonably deem appropriate under the
circumstances to protect such Intellectual Property.
(ii) In no event shall a Grantor, either itself or through any
agent, employee, licensee or designee, file an application for the registration
of any Trademark (or any Statement of Use with respect to any intent to use any
Trademark application) or Copyright or the issuance of any Patent with the
United States Patent and Trademark Office or the United States Copyright Office,
as applicable, or in any similar office or agency of the United States or any
country or any political subdivision thereof unless it gives the Collateral
Agent prior written notice thereof. Upon request of the Collateral Agent, each
Grantor shall execute, authenticate and deliver any and all assignments,
agreements, instruments, documents and papers as the Collateral Agent may
reasonably request to evidence the Collateral Agent's security interest
hereunder in such Intellectual Property and the General Intangibles of such
Grantor relating thereto or represented thereby, and such Grantor hereby
appoints the Collateral Agent its attorney-in-fact to execute and/or
authenticate and file all such writings for the foregoing purposes, all acts of
such attorney being hereby ratified and confirmed, and such power (being coupled
with an interest) shall be irrevocable until the indefeasible payment in full in
cash of all of the Obligations in full and the termination of each of the
Transaction Documents.
(i) Deposit, Commodities and Securities Accounts. Within 30 days of
Closing, each Grantor shall cause each bank and other financial institution with
an account referred to in Schedule IV hereto to execute and deliver to the
Collateral Agent a control agreement, in form and substance reasonably
satisfactory to the Collateral Agent, duly executed by such Grantor and such
bank or financial institution, or enter into other arrangements in form and
substance satisfactory to the Collateral Agent, pursuant to which such
institution shall irrevocably agree, inter alia, that (i) it will comply at any
time with the instructions originated by
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the Collateral Agent to such bank or financial institution directing the
disposition of cash, Commodity Contracts, securities, Investment Property and
other items from time to time credited to such account, without further consent
of such Grantor, which instructions the Collateral Agent will not give to such
bank or other financial institution in the absence of a continuing Event of
Default, (ii) all cash, Commodity Contracts, securities, Investment Property and
other items of such Grantor deposited with such institution shall be subject to
a perfected, first priority security interest in favor of the Collateral Agent
(iii) any right of set off, banker's Lien or other similar Lien, security
interest or encumbrance shall be fully waived as against the Collateral Agent
(except for customary fees and/or the amount of any loss to such financial
institution or bank for the face amount of check, draft, wire transfer or
similar instrument), and (iv) upon receipt of written notice from the Collateral
Agent during the continuance of an Event of Default, such bank or financial
institution shall immediately send to the Collateral Agent by wire transfer (to
such account as the Collateral Agent shall specify, or in such other manner as
the Collateral Agent shall direct) all such cash, the value of any Commodity
Contracts, securities, Investment Property and other items held by it. Without
the prior written consent of the Collateral Agent, such Grantor shall not make
or maintain any Deposit Account, Commodity Account or Securities Account except
for the accounts set forth in Schedule IV hereto. The provisions of this
paragraph 5(i) shall not apply to (i) Deposit Accounts for which the Collateral
Agent is the depositary, (ii) Deposit Accounts specially and exclusively used
for payroll, payroll taxes and other employee wage and benefit payments to or
for the benefit of a Grantor's salaried employees, and (iii) any Deposit Account
which individually does not at any time have a balance of more than $1,000.
(j) Motor Vehicles.
(i) Upon the Collateral Agent's written request, each Grantor
shall deliver to the Collateral Agent originals of the certificates of title or
ownership for all motor vehicles owned by it with the Collateral Agent listed as
lienholder, for the benefit of the Buyers with respect to (A) any such
individual motor vehicle having an original purchase price of 50,000 or more, or
(B) all such motor vehicles, if the aggregate purchase price thereof is $250,000
or more.
(ii) Each Grantor hereby appoints the Collateral Agent as its
attorney-in-fact, effective the date hereof and terminating upon the termination
of this Agreement, for the purpose of (A) executing on behalf of such Grantor
title or ownership applications for filing with appropriate state agencies to
enable such motor vehicles now owned or hereafter acquired by such Grantor to be
retitled and the Collateral Agent listed as lienholder thereof, (B) filing such
applications with such state agencies, and (C) executing such other documents
and instruments on behalf of, and taking such other action in the name of, such
Grantor as the Collateral Agent may deem necessary or advisable to accomplish
the purposes hereof (including, without limitation, for the purpose of creating
in favor of the Collateral Agent a perfected Lien on such motor vehicles and
exercising the rights and remedies of the Collateral Agent hereunder). This
appointment as attorney-in-fact is coupled with an interest and is irrevocable
until all of the Obligations are indefeasibly paid in full in cash and after all
Transaction Documents have been terminated.
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(iii) Any certificates of title or ownership delivered
pursuant to the terms hereof shall be accompanied by odometer statements for
each motor vehicle covered thereby.
(iv) So long as no Event of Default shall have occurred and be
continuing, upon the request of such Grantor, the Collateral Agent shall execute
and deliver to such Grantor such instruments as such Grantor shall reasonably
request to remove the notation of the Collateral Agent as lienholder on any
certificate of title for any such motor vehicle; provided, however, that any
such instruments shall be delivered, and the release effective, only upon
receipt by the Collateral Agent of a certificate from such Grantor stating that
such motor vehicle is to be sold or has suffered a casualty loss (with title
thereto passing to the casualty insurance company therefor in settlement of the
claim for such loss) and the amount that such Grantor will receive as sale
proceeds or insurance proceeds. Any proceeds of such sale or casualty loss shall
be paid to the Collateral Agent hereunder immediately upon receipt, to be
applied to the Obligations then outstanding.
(k) Control. Each Grantor hereby agrees to take any or all action
that may be necessary or desirable or that the Collateral Agent may request in
order for the Collateral Agent to obtain control in accordance with Sections
9-104 - 9-107 of the Code with respect to the following Collateral: (i) Deposit
Accounts, (ii) Electronic Chattel Paper, (iii) Investment Property, and (iv)
Letter-of-Credit Rights.
(l) Inspection and Reporting. Each Grantor shall permit the
Collateral Agent, or any agent or representatives thereof or such professionals
or other Persons as the Collateral Agent may designate, not more than once a
year in the absence of an Event of Default, (i) to examine and make copies of
and abstracts from such Grantor's records and books of account, (ii) to visit
and inspect its properties, (iii) to verify materials, leases, Instruments,
Accounts, Inventory and other assets of such Grantor from time to time, (iii) to
conduct audits, physical counts, appraisals and/or valuations, examinations at
the locations of such Grantor. Each Grantor shall also permit the Collateral
Agent, or any agent or representatives thereof or such professionals or other
Persons as the Collateral Agent may designate to discuss such Grantor's affairs,
finances and accounts with any of its directors, officers, managerial employees,
independent accountants or any of its other representatives.
(m) Future Subsidiaries. If any of VRLK's domestic Subsidiaries in
existence as of the date hereof (other than the domestic Existing Subsidiaries)
ever become active or have assets, operations or income, or if VRLK or any other
Grantor shall hereafter own, create or acquire any other domestic or material
foreign Subsidiary that is not a Grantor hereunder or a party to the Guaranty,
then, VRLK or such other Grantor shall promptly notify the Collateral Agent
thereof and, upon the Collateral Agent's request, VRLK or such other such
Grantor shall cause such Subsidiary to become a party to the Guaranty as an
additional "Guarantor" thereunder and a party to this Agreement as an additional
"Grantor" hereunder, and to duly execute and/or deliver such opinions of counsel
and other documents, in form and substance reasonably acceptable to the
Collateral Agent, as the Collateral Agent shall reasonably request with respect
thereto.
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SECTION 6. Additional Provisions Concerning the Collateral.
(a) Each Grantor hereby (i) authorizes the Collateral Agent at any
time and from time to time to file one or more Uniform Commercial Code financing
or continuation statements and amendments thereto that describe the Collateral
as "all assets" or words of similar effect and that contain any other
information required by Part 5 of Article 9 of the Code for the sufficiency or
filing office acceptance of any financing statement, continuation statement or
amendment, including, without limitation, whether such Grantor is an
organization, the type of organization and any organization number issued to
such Grantor and (ii) ratifies such authorization to the extent that the
Collateral Agent has filed any such financing or continuation statements, or
amendments thereto, prior to the date hereof. A photocopy or other reproduction
of this Agreement or any financing statement covering the Collateral or any part
thereof shall be sufficient as a financing statement where permitted by law.
(b) Each Grantor hereby irrevocably appoints the Collateral Agent as
its attorney-in-fact and proxy, with full authority in the place and stead of
such Grantor and in the name of such Grantor or otherwise, from time to time in
the Collateral Agent's discretion, so long as an Event of Default shall have
occurred and is continuing, to take any action and to execute any instrument
which the Collateral Agent may deem necessary or advisable to accomplish the
purposes of this Agreement (subject to the rights of such Grantor under Section
5 hereof), including, without limitation, (i) to obtain and adjust insurance
required to be paid to the Collateral Agent pursuant to Section 5(e) hereof,
(ii) to ask, demand, collect, sue for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in respect of
any Collateral, (iii) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper in connection with clause (i) or (ii)
above, (iv) to file any claims or take any action or institute any proceedings
which the Collateral Agent may deem necessary or desirable for the collection of
any Collateral or otherwise to enforce the rights of the Collateral Agent and
the Buyers with respect to any Collateral, and (v) to execute assignments,
licenses and other documents to enforce the rights of the Collateral Agent and
the Buyers with respect to any Collateral. This power is coupled with an
interest and is irrevocable until all of the Obligations are indefeasibly paid
in full in cash.
(c) For the purpose of enabling the Collateral Agent to exercise
rights and remedies hereunder, at such time as the Collateral Agent shall be
lawfully entitled to exercise such rights and remedies, and for no other
purpose, each Grantor hereby grants to the Collateral Agent, to the extent
assignable, an irrevocable, non-exclusive license (exercisable without payment
of royalty or other compensation to such Grantor) to use, assign, license or
sublicense any Intellectual Property constituting Collateral now owned or
hereafter acquired by such Grantor, wherever the same may be located, including
in such license reasonable access to all media in which any of the licensed
items may be recorded or stored and to all computer programs used for the
compilation or printout thereof; provided however, that the Collateral Agent
shall not use, assign, license or sublicense any such Intellectual Property
unless an Event of Default has occurred and is continuing. Notwithstanding
anything contained herein to the contrary, but subject to the provisions of the
Securities Purchase Agreement that limit the right of such Grantor to dispose of
its property and Section 5(h) hereof, so long as no Event of Default shall have
occurred and be continuing, such Grantor may exploit, use, enjoy, protect,
license, sublicense, assign, sell, dispose of or take other actions with respect
to the Intellectual Property
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in the ordinary course of its business. In furtherance of the foregoing, unless
an Event of Default shall have occurred and be continuing, the Collateral Agent
shall from time to time, upon the request of a Grantor, execute and deliver any
instruments, certificates or other documents, in the form so requested, which
such Grantor shall have certified are appropriate (in such Grantor's judgment)
to allow it to take any action permitted above (including relinquishment of the
license provided pursuant to this clause (c) as to any Intellectual Property).
Further, upon the indefeasible payment in full in cash of all of the
Obligations, the Collateral Agent (subject to Section 10(e) hereof) shall
release and reassign to such Grantor all of the Collateral Agent's right, title
and interest in and to the Intellectual Property, and the Licenses, all without
recourse, representation or warranty whatsoever. The exercise of rights and
remedies hereunder by the Collateral Agent shall not terminate the rights of the
holders of any licenses or sublicenses theretofore granted by such Grantor in
accordance with the second sentence of this clause (c). Each Grantor hereby
releases the Collateral Agent from any claims, causes of action and demands at
any time arising out of or with respect to any actions taken or omitted to be
taken by the Collateral Agent under the powers of attorney granted herein other
than actions taken or omitted to be taken through the Collateral Agent's gross
negligence or willful misconduct, as determined by a final determination of a
court of competent jurisdiction.
(d) If a Grantor fails to perform any agreement contained herein,
the Collateral Agent may itself perform, or cause performance of, such agreement
or obligation, in the name of such Grantor or the Collateral Agent, and the
expenses of the Collateral Agent incurred in connection therewith shall be
payable by such Grantor pursuant to Section 8 hereof and shall be secured by the
Collateral.
(e) The powers conferred on the Collateral Agent hereunder are
solely to protect its interest in the Collateral and shall not impose any duty
upon it to exercise any such powers. Except for the safe custody of any
Collateral in its possession and the accounting for moneys actually received by
it hereunder, the Collateral Agent shall have no duty as to any Collateral or as
to the taking of any necessary steps to preserve rights against prior parties or
any other rights pertaining to any Collateral.
(f) Anything herein to the contrary notwithstanding (i) each Grantor
shall remain liable under the Licenses and otherwise with respect to any of the
Collateral to the extent set forth therein to perform all of its obligations
thereunder to the same extent as if this Agreement had not been executed, (ii)
the exercise by the Collateral Agent of any of its rights hereunder shall not
release such Grantor from any of its obligations under the Licenses or otherwise
in respect of the Collateral, and (iii) the Collateral Agent shall not have any
obligation or liability by reason of this Agreement under the Licenses or with
respect to any of the other Collateral, nor shall the Collateral Agent be
obligated to perform any of the obligations or duties of such Grantor thereunder
or to take any action to collect or enforce any claim for payment assigned
hereunder.
SECTION 7. Remedies Upon Event of Default. If any Event of Default
shall have occurred and be continuing:
(a) The Collateral Agent may exercise in respect of the Collateral,
in addition to any other rights and remedies provided for herein or otherwise
available to it, all of the rights and
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remedies of a secured party upon default under the Code (whether or not the Code
applies to the affected Collateral), and also may (i) take absolute control of
the Collateral, including, without limitation, transfer into the Collateral
Agent's name or into the name of its nominee or nominees (to the extent the
Collateral Agent has not theretofore done so) and thereafter receive, for the
benefit of the Collateral Agent, all payments made thereon, give all consents,
waivers and ratifications in respect thereof and otherwise act with respect
thereto as though it were the outright owner thereof, (ii) require each Grantor
to, and each Grantor hereby agrees that it will at its expense and upon request
of the Collateral Agent forthwith, assemble all or part of its respective
Collateral as directed by the Collateral Agent and make it available to the
Collateral Agent at a place or places to be designated by the Collateral Agent
that is reasonably convenient to both parties, and the Collateral Agent may
enter into and occupy any premises owned or leased by such Grantor where the
Collateral or any part thereof is located or assembled for a reasonable period
in order to effectuate the Collateral Agent's rights and remedies hereunder or
under law, without obligation to such Grantor in respect of such occupation, and
(iii) without notice except as specified below and without any obligation to
prepare or process the Collateral for sale, (A) sell the Collateral or any part
thereof in one or more parcels at public or private sale, at any of the
Collateral Agent's offices or elsewhere, for cash, on credit or for future
delivery, and at such price or prices and upon such other terms as the
Collateral Agent may deem commercially reasonable and/or (B) lease, license or
dispose of the Collateral or any part thereof upon such terms as the Collateral
Agent may deem commercially reasonable. Each Grantor agrees that, to the extent
notice of sale or any other disposition of its respective Collateral shall be
required by law, at least ten (10) days' notice to such Grantor of the time and
place of any public sale or the time after which any private sale or other
disposition of its respective Collateral is to be made shall constitute
reasonable notification. The Collateral Agent shall not be obligated to make any
sale or other disposition of any Collateral regardless of notice of sale having
been given. The Collateral Agent may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so
adjourned. Each Grantor hereby waives any claims against the Collateral Agent
and the Buyers arising by reason of the fact that the price at which its
respective Collateral may have been sold at a private sale was less than the
price which might have been obtained at a public sale or was less than the
aggregate amount of the Obligations, even if the Collateral Agent accepts the
first offer received and does not offer such Collateral to more than one
offeree, and waives all rights that such Grantor may have to require that all or
any part of such Collateral be marshalled upon any sale (public or private)
thereof. Each Grantor hereby acknowledges that (i) any such sale of its
respective Collateral by the Collateral Agent shall be made without warranty,
(ii) the Collateral Agent may specifically disclaim any warranties of title,
possession, quiet enjoyment or the like, and (iii) such actions set forth in
clauses (i) and (ii) above shall not adversely effect the commercial
reasonableness of any such sale of Collateral. In addition to the foregoing, (1)
upon written notice to any Grantor from the Collateral Agent, such Grantor shall
cease any use of the Intellectual Property or any trademark, patent or copyright
similar thereto for any purpose described in such notice; (2) the Collateral
Agent may, at any time and from time to time, upon 10 days' prior notice to such
Grantor, license, whether general, special or otherwise, and whether on an
exclusive or non-exclusive basis, any of the Intellectual Property, throughout
the universe for such term or terms, on such conditions, and in such manner, as
the Collateral Agent shall in its sole discretion determine; and (3) the
Collateral Agent may, at any time, pursuant to the authority granted in
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Section 6 hereof (such authority being effective upon the occurrence and during
the continuance of an Event of Default), execute and deliver on behalf of such
Grantor, one or more instruments of assignment of the Intellectual Property (or
any application or registration thereof), in form suitable for filing, recording
or registration in any country.
(b) Any cash held by the Collateral Agent (or its agents or
designee) as Collateral and all Cash Proceeds received by the Collateral Agent
in respect of any sale of or collection from, or other realization upon, all or
any part of the Collateral may, in the discretion of the Collateral Agent, be
held by the Collateral Agent as collateral for, and/or then or at any time
thereafter applied (after payment of any amounts payable to the Collateral Agent
pursuant to Section 8 hereof) in whole or in part by the Collateral Agent
against, all or any part of the Obligations in such order as the Collateral
Agent shall elect, consistent with the provisions of the Securities Purchase
Agreement. Any surplus of such cash or Cash Proceeds held by the Collateral
Agent and remaining after the indefeasible payment in full in cash of all of the
Obligations shall be paid over to whomsoever shall be lawfully entitled to
receive the same or as a court of competent jurisdiction shall direct.
(c) In the event that the proceeds of any such sale, collection or
realization are insufficient to pay all amounts to which the Collateral Agent
and the Buyers are legally entitled, such each shall be liable for the
deficiency, together with interest thereon at the highest rate specified in any
of the applicable Transaction Documents for interest on overdue principal
thereof or such other rate as shall be fixed by applicable law, together with
the costs of collection and the reasonable fees, costs, expenses and other
client charges of any attorneys employed by the Collateral Agent to collect such
deficiency.
(d) Each Grantor hereby acknowledges that if the Collateral Agent
complies with any applicable state, provincial, or federal law requirements in
connection with a disposition of the Collateral, such compliance will not
adversely affect the commercial reasonableness of any sale or other disposition
of the Collateral.
(e) The Collateral Agent shall not be required to marshal any
present or future collateral security (including, but not limited to, this
Agreement and the Collateral) for, or other assurances of payment of, the
Obligations or any of them or to resort to such collateral security or other
assurances of payment in any particular order, and all of the Collateral Agent's
rights hereunder and in respect of such collateral security and other assurances
of payment shall be cumulative and in addition to all other rights, however
existing or arising. To the extent that each Grantor lawfully may, such Grantor
hereby agrees that it will not invoke any law relating to the marshalling of
collateral which might cause delay in or impede the enforcement of the
Collateral Agent's rights under this Agreement or under any other instrument
creating or evidencing any of the Obligations or under which any of the
Obligations is outstanding or by which any of the Obligations is secured or
payment thereof is otherwise assured, and, to the extent that it lawfully may,
such Grantor hereby irrevocably waives the benefits of all such laws.
SECTION 8. Indemnity and Expenses.
(a) Each Grantor agrees, jointly and severally, to defend, protect,
indemnify and hold the Collateral Agent and each of the Buyers, jointly and
severally, harmless from and
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against any and all claims, damages, losses, liabilities, obligations,
penalties, fees, costs and expenses (including, without limitation, reasonable
legal fees, costs, expenses, and disbursements of such Person's counsel) to the
extent that they arise out of or otherwise result from this Agreement
(including, without limitation, enforcement of this Agreement), except to the
extent that such claims, losses or liabilities resulting solely and directly
from such Person's gross negligence or willful misconduct, as determined by a
final judgment of a court of competent jurisdiction.
(b) Each Grantor agrees, jointly and severally, to upon demand pay
to the Collateral Agent the amount of any and all costs and expenses, including
the reasonable fees, costs, expenses and disbursements of counsel for the
Collateral Agent and of any experts and agents (including, without limitation,
any collateral trustee which may act as agent of the Collateral Agent), which
the Collateral Agent may incur in connection with (i) the preparation,
negotiation, execution, delivery, recordation, administration, amendment, waiver
or other modification or termination of this Agreement, (ii) the custody,
preservation, use or operation of, or the sale of, collection from, or other
realization upon, any Collateral, (iii) the exercise or enforcement of any of
the rights of the Collateral Agent hereunder, or (iv) the failure by any Grantor
to perform or observe any of the provisions hereof.
SECTION 9. Notices, Etc. All notices and other communications
provided for hereunder shall be in writing and shall be mailed (by certified
mail, postage prepaid and return receipt requested), telecopied or delivered, if
to a Grantor at its address specified on the signature pages hereto and if to
the Collateral Agent to it, at its address specified on the signature pages
hereto; or as to any such Person, at such other address as shall be designated
by such Person in a written notice to such other Person complying as to delivery
with the terms of this Section 9. All such notices and other communications
shall be effective (a) if sent by certified mail, return receipt requested, when
received or three days after deposited in the mails, whichever occurs first, (b)
if telecopied, when transmitted (during normal business hours) and confirmation
is received, otherwise, the day after the notice was transmitted if confirmation
is received, or (c) if delivered, upon delivery.
SECTION 10. Miscellaneous.
(a) No amendment of any provision of this Agreement shall be
effective unless it is in writing and signed by each Grantor and the Collateral
Agent, and no waiver of any provision of this Agreement, and no consent to any
departure by a Grantor therefrom, shall be effective unless it is in writing and
signed by the Collateral Agent, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
(b) No failure on the part of the Collateral Agent to exercise, and
no delay in exercising, any right hereunder or under any of the other
Transaction Documents shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right. The rights and remedies of the
Collateral Agent or any Buyer provided herein and in the other Transaction
Documents are cumulative and are in addition to, and not exclusive of, any
rights or remedies provided by law. The rights of the Collateral Agent or any
Buyer under any of the other Transaction Documents
-21-
against any party thereto are not conditional or contingent on any attempt by
such Person to exercise any of its rights under any of the other Transaction
Documents against such party or against any other Person, including but not
limited to, any Grantor.
(c) Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining portions hereof or thereof or affecting the validity or enforceability
of such provision in any other jurisdiction.
(d) This Agreement shall create a continuing security interest in
the Collateral and shall (i) remain in full force and effect until the
indefeasible payment in full in cash of the Obligations, and (ii) be binding on
each Grantor and all other Persons who become bound as debtor to this Agreement
in accordance with Section 9-203(d) of the Code and shall inure, together with
all rights and remedies of the Collateral Agent and the Buyers hereunder, to the
benefit of the Collateral Agent and the Buyers and their respective permitted
successors, transferees and assigns. Without limiting the generality of clause
(ii) of the immediately preceding sentence, without notice to any Grantor, the
Collateral Agent and the Buyers may assign or otherwise transfer their rights
and obligations under this Agreement and any of the other Transaction Documents,
to any other Person and such other Person shall thereupon become vested with all
of the benefits in respect thereof granted to the Collateral Agent and the
Buyers herein or otherwise. Upon any such assignment or transfer, all references
in this Agreement to the Collateral Agent or any such Buyer shall mean the
assignee of the Collateral Agent or such Buyer. None of the rights or
obligations of any Grantor hereunder may be assigned or otherwise transferred
without the prior written consent of the Collateral Agent, and any such
assignment or transfer without the consent of the Collateral Agent shall be null
and void.
(e) Upon the indefeasible payment in full in cash of the
Obligations, (i) this Agreement and the security interests created hereby shall
terminate and all rights to the Collateral shall revert to the respective
Grantor that granted such security interests hereunder, and (ii) the Collateral
Agent will, upon such Grantor's request and at such Grantor's expense, (A)
return to such Grantor such of the Collateral as shall not have been sold or
otherwise disposed of or applied pursuant to the terms hereof, and (B) execute
and deliver to such Grantor such documents as such Grantor shall reasonably
request to evidence such termination, all without any representation, warranty
or recourse whatsoever.
(f) THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT AS REQUIRED BY
MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT THE VALIDITY AND
PERFECTION OR THE PERFECTION AND THE EFFECT OF PERFECTION OR NON-PERFECTION OF
THE SECURITY INTEREST CREATED HEREBY, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL ARE GOVERNED BY THE LAW OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK.
(g) ANY LEGAL ACTION, SUIT OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY DOCUMENT RELATED THERETO MAY BE BROUGHT IN THE COURTS OF THE
STATE OF NEW YORK IN THE COUNTY OF NEW YORK OR
-22-
THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND
APPELLATE COURTS THEREOF, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH
GRANTOR HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH GRANTOR HEREBY
EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY SUCH ACTION, SUIT OR PROCEEDING IN SUCH RESPECTIVE
JURISDICTIONS AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS
IS DEEMED APPROPRIATE BY THE COURT.
(h) EACH GRANTOR AND (BY ITS ACCEPTANCE OF THE BENEFITS OF THIS
AGREEMENT) THE COLLATERAL AGENT WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN
RESPECT OF ANY LITIGATION BASED ON, ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION DOCUMENTS, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, VERBAL OR WRITTEN STATEMENT OR OTHER ACTION OF THE
PARTIES HERETO.
(i) Each Grantor irrevocably consents to the service of process of
any of the aforesaid courts in any such action, suit or proceeding by the
mailing of copies thereof by registered or certified mail (or any substantially
similar form of mail), postage prepaid, to such Grantor at its address provided
herein, such service to become effective 10 days after such mailing.
(j) Nothing contained herein shall affect the right of the
Collateral Agent to serve process in any other manner permitted by law or
commence legal proceedings or otherwise proceed against any Grantor or any
property of such Grantor in any other jurisdiction.
(k) Each Grantor irrevocably and unconditionally waives any right it
may have to claim or recover in any legal action, suit or proceeding referred to
in this Section any special, exemplary, punitive or consequential damages.
(l) Section headings herein are included for convenience of
reference only and shall not constitute a part of this Agreement for any other
purpose.
(m) This Agreement may be executed in any number of counterparts and
by different parties hereto in separate counterparts, each of which shall be
deemed to be an original, but all of which taken together constitute one in the
same Agreement.
(n) All of the obligations of the Grantors hereunder are joint and
several. The Collateral Agent may, in its sole and absolute discretion, enforce
the provisions hereof against any of the Grantors and shall not be required to
proceed against all Grantors jointly or seek payment from the Grantors ratably.
In addition, the Collateral Agent may, in its sole and absolute discretion,
select the Collateral of any one or more of the Grantors for sale or
-23-
application to the Obligations, without regard to the ownership of such
Collateral, and shall not be required to make such selection ratably from the
Collateral owned by all of the Grantors. The release or discharge of any Grantor
by the Collateral Agent shall not release or discharge any other Grantor from
the obligations of such Person hereunder.
(o) Notwithstanding anything to the contrary herein, VRLK's
obligations hereunder and under the other Transaction Documents are subject to
the prior performance of any conflicting obligation under the documents
evidencing the Alabama Mortgage to the extent (but only to the extent) that
performance of such obligation hereunder or thereunder at such time would be
precluded by VRLK's prior satisfaction of the obligations under such documents;
provided, however, that such preclusion shall not be deemed to relieve any such
obligations which shall be duly performed as soon as practicable thereafter.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
-24-
IN WITNESS WHEREOF, each Grantor has caused this Agreement to be
executed and delivered by its officer thereunto duly authorized, as of the date
first above written.
VERILINK CORPORATION
By: /s/ Leigh S. Belden
--------------------------------
Name: Leigh S. Belden
Title: President & CEO
Address: 11551 E. Arapahoe Rd., Suite 150,
Centennial, Colorado 80112
LARSCOM INCORPORATED
By: /s/ Leigh S. Belden
--------------------------------
Name: Leigh S. Belden
Title: President
Address: 39745 Eureka Drive
Newark, CA 94560
VERILINK EUROPE LIMITED
By: /s/ Leigh S. Belden
--------------------------------
Name: Leigh S. Belden
Title: Director
Address: 8 Lincoln's Inn Fields
London WC2A 3 BP
United Kingdom
ACCEPTED BY:
PORTSIDE GROWTH & OPPORTUNITY FUND,
as Collateral Agent
By: /s/ Marran Ogilvie
---------------------------------------
Name: Marran Ogilvie
Title: Partner
Address: c/o Ramius Capital Group, L.L.C.
666 Third Avenue, 26th Floor
New York, New York 10017
Attention: Jeffrey Smith
EXHIBIT 4.8
SCHEDULE I
LEGAL NAMES; ORGANIZATIONAL IDENTIFICATION NUMBERS; STATES OR
JURISDICTION OF ORGANIZATION
SCHEDULE II
INTELLECTUAL PROPERTY AND LICENSES; TRADE NAMES
SCHEDULE III
LOCATIONS OF GRANTORS
SCHEDULE IV
PROMISSORY NOTES, SECURITIES, DEPOSIT ACCOUNTS, SECURITIES ACCOUNTS
AND COMMODITIES ACCOUNTS
SCHEDULE V
SCHEDULE VI
COMMERCIAL TORT CLAIMS
EXHIBIT A
GRANT OF SECURITY INTEREST IN COPYRIGHT
WHEREAS, ____________________ ("Grantor") holds all right, title and
interest in the copyrights listed on Schedule A attached hereto, which
copyrights are issued or applied for in the United States Copyright Office (the
"Copyrights");
WHEREAS, the Grantor has entered into a Security Agreement, dated
March 20, 2005 (as amended, restated, supplemented or as otherwise modified or
replaced from time to time, the "Security Agreement"), in favor of Portside
Growth & Opportunity Fund, as collateral agent for certain purchasers (in such
capacity, together with any successors and assigns, the "Grantee");
WHEREAS, pursuant to the Security Agreement, the Grantor has
assigned to the Grantee, and granted to the Grantee for the benefit of the
lenders, a continuing security interest in all right, title and interest of
Grantors in, to and under the Copyrights, and the applications and registrations
thereof, and all proceeds thereof, including, without limitation, any and all
causes of action which may exist by reason of infringement thereof and any and
all damages arising from past, present and future violations thereof (the
"Copyright Collateral"), to secure the payment, performance and observance of
the Obligations (as such term is defined in the Security Agreement);
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Grantor does hereby pledge,
convey, sell, assign, transfer and set over unto the Grantee and grants to the
Grantee for the benefit of the lenders a continuing security interest in the
Copyright Collateral to secure the prompt payment, performance and observance of
the Obligations.
The Grantor does hereby further acknowledge and affirm that the
rights and remedies of the Grantee with respect to the Copyright Collateral are
more fully set forth in the Security Agreement, the terms and provisions of
which are hereby incorporated herein by reference as if fully set forth herein.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the Grantor has caused this Agreement to be duly
executed by its officer thereunto duly authorized as of _____________ __, 20__.
[GRANTOR]
By:____________________________________
Name:
Title:
2
CERTIFICATE OF ACKNOWLEDGMENT
STATE OF _______________________
ss.:
COUNTY OF_______________________
On this ____ day of _________________ 2005, before me, the
undersigned, personally appeared ___________________________________, personally
known to me or proved to me on the basis of satisfactory evidence to be the
individual whose name is subscribed to the within instrument and acknowledged to
me that he/she executed the same in his/her capacity, and that by his/her
signature on the instrument, the individual, or the person upon behalf of which
the individual acted, executed the instrument.
______________________________
[NOTARY SEAL]
SCHEDULE A
EXHIBIT B
GRANT OF SECURITY INTEREST IN PATENTS
WHEREAS, ____________________ ("Grantor") holds all right, title and
interest in the letter patents, design patents and utility patents listed on
Schedule A attached hereto, which patents are issued or applied for in the
United States Patent and Trademark Office (the "Patents");
WHEREAS, the Grantor has entered into a Security Agreement, dated
March 20, 2005 (as amended, restated, supplemented or as otherwise modified or
replaced from time to time, the "Security Agreement"), in favor of Portside
Growth & Opportunity Fund, as collateral agent for certain purchasers (in such
capacity, together with any successors and assigns, the "Grantee");
WHEREAS, pursuant to the Security Agreement, the Grantor has
assigned to the Grantee, and granted to the Grantee for the benefit of the
lenders, a continuing security interest in all right, title and interest of the
Grantor in, to and under the Patents and the applications and registrations
thereof, and all proceeds thereof, including, without limitation, any and all
causes of action which may exist by reason of infringement thereof and any and
all damages arising from past, present and future violations thereof (the
"Patent Collateral"), to secure the payment, performance and observance of the
Obligations (as defined in the Security Agreement);
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Grantor does hereby pledge,
convey, sell, assign, transfer and set over unto the Grantee and grants to the
Grantee for the benefit of the lenders a continuing security interest in the
Patent Collateral to secure the prompt payment, performance and observance of
the Obligations.
The Grantor does hereby further acknowledge and affirm that the
rights and remedies of the Grantee with respect to the Patent Collateral are
more fully set forth in the Security Agreement, the terms and provisions of
which are hereby incorporated herein by reference as if fully set forth herein.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the Grantor has caused this Agreement to be duly
executed by its officer thereunto duly authorized as of _____________ __, 20__.
[GRANTOR]
By:____________________________________
Name:
Title:
2
CERTIFICATE OF ACKNOWLEDGMENT
STATE OF _______________________
ss.:
COUNTY OF ______________________
On this ____ day of _________________ 2005, before me, the
undersigned, personally appeared ___________________________________, personally
known to me or proved to me on the basis of satisfactory evidence to be the
individual whose name is subscribed to the within instrument and acknowledged to
me that he/she executed the same in his/her capacity, and that by his/her
signature on the instrument, the individual, or the person upon behalf of which
the individual acted, executed the instrument.
_____________________________________
[NOTARY SEAL]
SCHEDULE A
EXHIBIT C
GRANT OF SECURITY INTEREST IN TRADEMARKS
WHEREAS, ____________________ ("Grantor") has adopted, used and is
using, and holds all right, title and interest in and to, the trademarks and
service marks listed on Schedule A attached hereto, which trademarks and service
marks are registered or applied for in the United States Patent and Trademark
Office (the "Trademarks");
WHEREAS, the Grantor has entered into a Security Agreement, dated
March 20, 2005 (as amended, restated, supplemented or as otherwise modified or
replaced from time to time, the "Security Agreement"), in favor of Portside
Growth & Opportunity Fund, as collateral agent for certain purchasers (in such
capacity, together with any successors and assigns, the "Grantee");
WHEREAS, pursuant to the Security Agreement, the Grantor has
assigned to the Grantee, and granted to the Grantee for the benefit of the
lenders, a continuing security interest in all right, title and interest of the
Grantor in, to and under the Trademarks, together with, among other things, the
good-will of the business symbolized by the Trademarks and the applications (but
excluding in all cases all intent-to-use United States trademark applications
for which an amendment to allege use or statement of use has not been filed
under 15 U.S.C. Section 1051(c) or 15 U.S.C. Section 1051(d), respectively, or
if filed, has not been deemed in conformance with 15 U.S.C. Section 1051(a) or
examined and accepted, respectively, by the United States Patent and Trademark
Office provided that upon such filing and acceptance, such intent-to-use
applications shall be included in the definition of Trademark) and registrations
thereof, and all proceeds thereof, including, without limitation, any and all
causes of action which may exist by reason of infringement thereof and any and
all damages arising from past, present and future violations thereof (the
"Trademark Collateral"), to secure the payment, performance and observance of
the Obligations (as defined in the Security Agreement);
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Grantor does hereby pledge,
convey, sell, assign, transfer and set over unto the Grantee and grants to the
Grantee for the benefit of the lenders a continuing security interest in the
Trademark Collateral to secure the prompt payment, performance and observance of
the Obligations.
The Grantor does hereby further acknowledge and affirm that the
rights and remedies of the Grantee with respect to the Trademark Collateral are
more fully set forth in the Security Agreement, the terms and provisions of
which are hereby incorporated herein by reference as if fully set forth herein.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the Grantor has caused this Agreement to be duly
executed by its officer thereunto duly authorized as of _____________ __, 20__.
[GRANTOR]
By:_____________________________________
Name:
Title:
2
CERTIFICATE OF ACKNOWLEDGMENT
STATE OF ______________________
ss.:
COUNTY OF _____________________
On this ____ day of _________________ 2005, before me, the
undersigned, personally appeared ___________________________________, personally
known to me or proved to me on the basis of satisfactory evidence to be the
individual whose name is subscribed to the within instrument and acknowledged to
me that he/she executed the same in his/her capacity, and that by his/her
signature on the instrument, the individual, or the person upon behalf of which
the individual acted, executed the instrument.
__________________________________________
[NOTARY SEAL]
SCHEDULE A