EXHIBIT 10.3
PLEDGE AND SECURITY AGREEMENT
DATED AS OF APRIL 11, 2006
BETWEEN
EACH OF THE GRANTORS PARTY HERETO
AND
SILVER POINT FINANCE, LLC
AS COLLATERAL AGENT
TABLE OF CONTENTS
PAGE
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SECTION 1. DEFINITIONS; GRANT OF SECURITY............................... 1
1.1 General Definitions.......................................... 1
1.2 Definitions; Interpretation.................................. 8
SECTION 2. GRANT OF SECURITY............................................ 8
2.1 Grant of Security............................................ 8
2.2 Certain Limited Exclusions................................... 9
SECTION 3. SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE............. 9
3.1 Security for Obligations..................................... 9
3.2 Continuing Liability Under Collateral........................ 10
SECTION 4. REPRESENTATIONS AND WARRANTIES AND COVENANTS................. 10
4.1 Generally.................................................... 10
4.2 Equipment and Inventory...................................... 13
4.3 Receivables.................................................. 15
4.4 Investment Related Property.................................. 17
4.5 Material Contracts........................................... 24
4.6 Letter of Credit Rights...................................... 25
4.7 Intellectual Property........................................ 25
4.8 Commercial Tort Claims....................................... 29
SECTION 5. ACCESS; RIGHT OF INSPECTION AND FURTHER ASSURANCES;
ADDITIONAL GRANTORS.......................................... 30
5.1 Access; Right of Inspection.................................. 30
5.2 Further Assurances........................................... 30
5.3 Additional Grantors.......................................... 31
SECTION 6. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT.................. 32
6.1 Power of Attorney............................................ 32
6.2 No Duty on the Part of Collateral Agent or Secured Parties... 33
SECTION 7. REMEDIES..................................................... 33
7.1 Generally.................................................... 33
7.2 Application of Proceeds...................................... 35
7.3 Sales on Credit.............................................. 35
7.4 Deposit Accounts............................................. 35
7.5 Investment Related Property.................................. 35
7.6 Intellectual Property........................................ 36
7.7 Cash Proceeds................................................ 38
SECTION 8. COLLATERAL AGENT............................................. 38
SECTION 9. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS.............. 39
SECTION 10. STANDARD OF CARE; COLLATERAL AGENT MAY PERFORM............... 40
SECTION 11. MISCELLANEOUS................................................ 40
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SCHEDULE 4.1 -- GENERAL INFORMATION
SCHEDULE 4.2 -- LOCATION OF EQUIPMENT AND INVENTORY
SCHEDULE 4.4 -- INVESTMENT RELATED PROPERTY
SCHEDULE 4.5 -- MATERIAL CONTRACTS
SCHEDULE 4.6 -- DESCRIPTION OF LETTERS OF CREDIT
SCHEDULE 4.7 -- INTELLECTUAL PROPERTY
SCHEDULE 4.8 -- COMMERCIAL TORT CLAIMS
EXHIBIT A -- PLEDGE SUPPLEMENT
EXHIBIT B -- UNCERTIFICATED SECURITIES CONTROL AGREEMENT
EXHIBIT C -- SECURITIES ACCOUNT CONTROL AGREEMENT
EXHIBIT D -- DEPOSIT ACCOUNT CONTROL AGREEMENT
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This PLEDGE AND SECURITY AGREEMENT, dated as of April 11, 2006 (this
"AGREEMENT"), between EACH OF THE UNDERSIGNED, whether as an original signatory
hereto or as an Additional Grantor (as herein defined) (each, a "GRANTOR"), and
SILVER POINT FINANCE, LLC, a Delaware limited liability company, as collateral
agent for the Secured Parties (as herein defined) (in such capacity as
collateral agent, the "COLLATERAL AGENT").
RECITALS:
WHEREAS, reference is made to that certain Credit and Guaranty
Agreement, dated as of the date hereof (as it may be amended, restated,
supplemented or otherwise modified from time to time, the "CREDIT AGREEMENT"),
by and among NAVISITE, INC., a Delaware corporation ("COMPANY"), CERTAIN
SUBSIDIARIES OF COMPANY, as Guarantors, the lenders party thereto from time to
time (the "LENDERS"), and SILVER POINT FINANCE, LLC, a Delaware limited
liability company, as Administrative Agent and Collateral Agent;
WHEREAS, in consideration of the extensions of credit and other
accommodations of Lenders as set forth in the Credit Agreement, each Grantor has
agreed to secure such Grantor's obligations under the Credit Documents as set
forth herein; and
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, each Grantor and the Collateral Agent
agree as follows:
SECTION 1. DEFINITIONS; GRANT OF SECURITY.
1.1 GENERAL DEFINITIONS. In this Agreement, the following terms shall
have the following meanings:
"ACCOUNT DEBTOR" shall mean each Person who is obligated on a
Receivable or any Supporting Obligation related thereto.
"ACCOUNTS" shall mean all "accounts" as defined in Article 9 of the
UCC.
"ADDITIONAL GRANTORS" shall have the meaning assigned in Section 5.3.
"AGREEMENT" shall have the meaning set forth in the preamble.
"ASSIGNED AGREEMENTS" shall mean all agreements and contracts to which
such Grantor is a party as of the date hereof, or to which such Grantor becomes
a party after the date hereof, including, without limitation, each Material
Contract, as each such agreement may be amended, supplemented or otherwise
modified from time to time.
"BLOCKED ACCOUNT" shall mean, at any time, any Deposit Account of any
Grantor that is the subject of an agreement that establishes "control" over such
Deposit
Account in favor of the Collateral Agent pursuant to the requirements of Section
4.4.4 hereof.
"CASH PROCEEDS" shall have the meaning assigned in Section 7.7.
"CHATTEL PAPER" shall mean all "chattel paper" as defined in Article 9
of the UCC, including, without limitation, "electronic chattel paper" or
"tangible chattel paper", as each term is defined in Article 9 of the UCC.
"COLLATERAL" shall have the meaning assigned in Section 2.1.
"COLLATERAL ACCOUNT" shall mean any account established by the
Collateral Agent.
"COLLATERAL AGENT" shall have the meaning set forth in the preamble.
"COLLATERAL RECORDS" shall mean books, records, ledger cards, files,
correspondence, customer lists, blueprints, technical specifications, manuals,
computer software, computer printouts, tapes, disks and related data processing
software and similar items that at any time evidence or contain information
relating to any of the Collateral or are otherwise necessary or helpful in the
collection thereof or realization thereupon.
"COLLATERAL SUPPORT" shall mean all property (real or personal)
assigned, hypothecated or otherwise securing any Collateral and shall include
any security agreement or other agreement granting a lien or security interest
in such real or personal property.
"COMMERCIAL TORT CLAIMS" shall mean all "commercial tort claims" as
defined in Article 9 of the UCC, including, without limitation, all commercial
tort claims listed on Schedule 4.8 (as such schedule may be amended or
supplemented from time to time).
"COMMODITIES ACCOUNTS" (i) shall mean all "commodity accounts" as
defined in Article 9 of the UCC and (ii) shall include, in any event and without
limitation, all of the accounts listed on Schedule 4.4 under the heading
"Commodities Accounts" (as such schedule may be amended or supplemented from
time to time).
"COMPANY" shall have the meaning set forth in the recitals.
"CONTROLLED FOREIGN CORPORATION" shall mean "controlled foreign
corporation" as defined in the Tax Code.
"COPYRIGHT LICENSES" shall mean any and all agreements providing for
the granting of any right in or to Copyrights (whether such Grantor is licensee
or licensor thereunder) including, without limitation, each agreement referred
to in Schedule 4.7(B) (as such schedule may be amended or supplemented from time
to time).
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"COPYRIGHTS" shall mean all United States, and foreign copyrights
(including Community designs), including but not limited to copyrights in
software and databases, and all Mask Works (as defined under 17 U.S.C. 901 of
the U.S. Copyright Act), whether registered or unregistered, and, with respect
to any and all of the foregoing: (i) all registrations and applications therefor
including, without limitation, the registrations and applications referred to in
Schedule 4.7(A) (as such schedule may be amended or supplemented from time to
time), (ii) all extensions and renewals thereof, (iii) all rights corresponding
thereto throughout the world, (iv) all rights to ▇▇▇ for past, present and
future infringements thereof, and (v) all Proceeds of the foregoing, including,
without limitation, licenses, royalties, income, payments, claims, damages and
proceeds of suit.
"CREDIT AGREEMENT" shall have the meaning set forth in the recitals.
"DEPOSIT ACCOUNTS" (i) shall mean all "deposit accounts" as defined in
Article 9 of the UCC and (ii) shall include, in any event and without
limitation, all of the accounts listed on Schedule 4.4 under the heading
"Deposit Accounts" (as such schedule may be amended or supplemented from time to
time).
"DOCUMENTS" shall mean all "documents" as defined in Article 9 of the
UCC.
"EQUIPMENT" shall mean: (i) all "equipment" as defined in Article 9 of
the UCC, (ii) all machinery, manufacturing equipment, data processing equipment,
computers, office equipment, furnishings, furniture, appliances, fixtures and
tools (in each case, regardless of whether characterized as equipment under the
UCC) and (iii) all accessions or additions thereto, all parts thereof, whether
or not at any time of determination incorporated or installed therein or
attached thereto, and all replacements therefor, wherever located, now or
hereafter existing, including any fixtures.
"GENERAL INTANGIBLES" (i) shall mean all "general intangibles" as
defined in Article 9 of the UCC, including "payment intangibles" also as defined
in Article 9 of the UCC and (ii) shall include, without limitation, all interest
rate or currency protection or hedging arrangements, all tax refunds, all
licenses, permits, concessions and authorizations, all Assigned Agreements and
all Intellectual Property (in each case, regardless of whether characterized as
general intangibles under the UCC).
"GOODS" (i) shall mean all "goods" as defined in Article 9 of the UCC
and (ii) shall include, without limitation, all Inventory and Equipment.
"GRANTORS" shall have the meaning set forth in the preamble.
"INSTRUMENTS" shall mean all "instruments" as defined in Article 9 of
the UCC.
"INSURANCE" shall mean (i) all insurance policies covering any or all
of the Collateral (regardless of whether the Collateral Agent is the loss payee
thereof) and (ii) any key man life insurance policies.
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"INTELLECTUAL PROPERTY" shall mean, collectively, the Copyrights, the
Copyright Licenses, the Patents, the Patent Licenses, the Trademarks, the
Trademark Licenses, the Trade Secrets, and the Trade Secret Licenses.
"INVENTORY" shall mean all "inventory" as defined in Article 9 of the
UCC and shall include, in any event and without limitation, all goods held for
sale or lease or to be furnished under contracts of service or so leased or
furnished, all raw materials, work in process, finished goods, and materials
used or consumed in the manufacture, packing, shipping, advertising, selling,
leasing, furnishing or production of such inventory or otherwise used or
consumed in any Grantor's business; all goods in which any Grantor has an
interest in mass or a joint or other interest or right of any kind; and all
goods which are returned to or repossessed by any Grantor, all computer programs
embedded in any goods and all accessions thereto and products thereof.
"INVESTMENT ACCOUNTS" shall mean the Collateral Account, Securities
Accounts, Commodities Accounts and Deposit Accounts.
"INVESTMENT RELATED PROPERTY" shall mean and include: (i) all
"investment property" (as such term is defined in Article 9 of the UCC), (ii)
all "financial assets" (as such term is defined in Article 8 of the UCC) and
(iii) in any event, all of the following: all Pledged Equity Interests, Pledged
Debt, the Investment Accounts and certificates of deposit.
"LENDER" shall have the meaning set forth in the recitals.
"LETTER OF CREDIT RIGHT" shall mean "letter-of-credit right" as
defined in Article 9 of the UCC.
"MONEY" shall mean "money" as defined in Article 1 of the UCC.
"PATENT LICENSES" shall mean all agreements providing for the granting
of any right in or to Patents (whether such Grantor is licensee or licensor
thereunder) including, without limitation, each agreement referred to in
Schedule 4.7(D) (as such schedule may be amended or supplemented from time to
time).
"PATENTS" shall mean all United States and foreign patents and
certificates of invention, or similar industrial property rights, and
applications for any of the foregoing, including, but not limited to: (i) each
patent and patent application referred to in Schedule 4.7(C) hereto (as such
schedule may be amended or supplemented from time to time), (ii) all reissues,
divisions, continuations, continuations-in-part, extensions, renewals, and
reexaminations thereof, (iii) all rights corresponding thereto throughout the
world, (iv) all inventions and improvements described therein, (v) all rights to
▇▇▇ for past, present and future infringements thereof, (vi) all licenses,
claims, damages, and proceeds of suit arising therefrom, and (vii) all Proceeds
of the foregoing, including, without limitation, licenses, royalties, income,
payments, claims, damages, and proceeds of suit.
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"PLEDGE SUPPLEMENT" shall mean any supplement to this agreement in
substantially the form of Exhibit A.
"PLEDGED DEBT" shall mean all Indebtedness owed to such Grantor,
including, without limitation and in any event, all Indebtedness described on
Schedule 4.4 under the heading "Pledged Debt" (as such schedule may be amended
or supplemented from time to time), issued by the obligors named therein, the
instruments evidencing such Indebtedness, and all interest, cash, instruments
and other property or proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such
Indebtedness.
"PLEDGED EQUITY INTERESTS" shall mean all Pledged Stock, Pledged LLC
Interests, Pledged Partnership Interests and Pledged Trust Interests.
"PLEDGED LLC INTERESTS" shall mean all interests in any limited
liability company including, without limitation, all limited liability company
interests listed on Schedule 4.4 under the heading "Pledged LLC Interests" (as
such schedule may be amended or supplemented from time to time) and the
certificates, if any, representing such limited liability company interests and
any interest of such Grantor on the books and records of such limited liability
company or on the books and records of any securities intermediary pertaining to
such interest and all dividends, distributions, cash, warrants, rights, options,
instruments, securities and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of such limited liability company interests.
"PLEDGED PARTNERSHIP INTERESTS" shall mean all interests in any
general partnership, limited partnership, limited liability partnership or other
partnership including, without limitation, all partnership interests listed on
Schedule 4.4 under the heading "Pledged Partnership Interests" (as such schedule
may be amended or supplemented from time to time) and the certificates, if any,
representing such partnership interests and any interest of such Grantor on the
books and records of such partnership or on the books and records of any
securities intermediary pertaining to such interest and all dividends,
distributions, cash, warrants, rights, options, instruments, securities and
other property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such partnership
interests.
"PLEDGED STOCK" shall mean all shares of capital stock owned by such
Grantor, including, without limitation, all shares of capital stock described on
Schedule 4.4 under the heading "Pledged Stock" (as such schedule may be amended
or supplemented from time to time), and the certificates, if any, representing
such shares and any interest of such Grantor in the entries on the books of the
issuer of such shares or on the books of any securities intermediary pertaining
to such shares, and all dividends, distributions, cash, warrants, rights,
options, instruments, securities and other property or proceeds from time to
time received, receivable or otherwise distributed in respect of or in exchange
for any or all of such shares.
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"PLEDGED TRUST INTERESTS" shall mean all interests in a Delaware
business trust or other trust including, without limitation, all trust interests
listed on Schedule 4.4 under the heading "Pledged Trust Interests" (as such
schedule may be amended or supplemented from time to time) and the certificates,
if any, representing such trust interests and any interest of such Grantor on
the books and records of such trust or on the books and records of any
securities intermediary pertaining to such interest and all dividends,
distributions, cash, warrants, rights, options, instruments, securities and
other property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such trust interests.
"PROCEEDS" shall mean: (i) all "proceeds" as defined in Article 9 of
the UCC, (ii) payments or distributions made with respect to any other item of
Collateral and (iii) whatever is receivable or received when Collateral or
proceeds are sold, exchanged, collected or otherwise disposed of, whether such
disposition is voluntary or involuntary.
"RECEIVABLES" shall mean all rights to payment, whether or not earned
by performance, for goods or other property sold, leased, licensed, assigned or
otherwise disposed of, or services rendered or to be rendered, including,
without limitation all such rights constituting or evidenced by any Account,
Chattel Paper, Instrument, General Intangible or Investment Related Property,
together with all of such Grantor's rights, if any, in any goods or other
property giving rise to such right to payment and all Collateral Support and
Supporting Obligations related thereto and all Receivables Records.
"RECEIVABLES RECORDS" shall mean (i) all original copies of all
documents, instruments or other writings or electronic records or other Records
evidencing the Receivables, (ii) all books, correspondence, credit or other
files, Records, ledger sheets or cards, invoices, and other papers relating to
Receivables, including, without limitation, all tapes, cards, computer tapes,
computer discs, computer runs, record keeping systems and other papers and
documents relating to the Receivables, whether in the possession or under the
control of Grantor or any computer bureau or agent from time to time acting for
Grantor or otherwise, (iii) all evidences of the filing of financing statements
and the registration of other instruments in connection therewith, and
amendments, supplements or other modifications thereto, notices to other
creditors or secured parties, and certificates, acknowledgments, or other
writings, including, without limitation, lien search reports, from filing or
other registration officers, (iv) all credit information, reports and memoranda
relating thereto and (v) all other written or nonwritten forms of information
related in any way to the foregoing or any Receivable.
"RECORD" shall have the meaning specified in Article 9 of the UCC.
"SECURED OBLIGATIONS" shall have the meaning assigned in Section 3.1.
"SECURED PARTIES" shall mean the Agents and Lenders and shall include,
without limitation, all former Agents and Lenders to the extent that any
Obligations owing to such Persons were incurred while such Persons were Agents
or Lenders and such Obligations have not been paid or satisfied in full.
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"SECURITIES ACCOUNTS" (i) shall mean all "securities accounts" as
defined in Article 8 of the UCC and (ii) shall include, without limitation and
in any event, all of the accounts listed on Schedule 4.4 under the heading
"Securities Accounts" (as such schedule may be amended or supplemented from time
to time).
"SUPPORTING OBLIGATION" shall mean all "supporting obligations" as
defined in Article 9 of the UCC.
"TAX CODE" shall mean the United States Internal Revenue Code of 1986,
as amended from time to time.
"TRADEMARK LICENSES" shall mean any and all agreements providing for
the granting of any right in or to Trademarks (whether such Grantor is licensee
or licensor thereunder) including, without limitation, each agreement referred
to in Schedule 4.7(F) (as such schedule may be amended or supplemented from time
to time).
"TRADEMARKS" shall mean all United States, and foreign trademarks,
trade names, corporate names, company names, business names, fictitious business
names, Internet domain names, service marks, certification marks, collective
marks, logos, other source or business identifiers, designs and general
intangibles of a like nature, all registrations and applications for any of the
foregoing including, but not limited to: (i) the registrations and applications
referred to in Schedule 4.7(E) (as such schedule may be amended or supplemented
from time to time), (ii) all extensions or renewals of any of the foregoing,
(iii) all of the goodwill of the business connected with the use of and
symbolized by the foregoing, (iv) the right to ▇▇▇ for past, present and future
infringement or dilution of any of the foregoing or for any injury to goodwill,
and (v) all Proceeds of the foregoing, including, without limitation, licenses,
royalties, income, payments, claims, damages, and proceeds of suit.
"TRADE SECRET LICENSES" shall mean any and all agreements providing
for the granting of any right in or to Trade Secrets (whether such Grantor is
licensee or licensor thereunder) including, without limitation, each agreement
referred to in Schedule 4.7(G) (as such schedule may be amended or supplemented
from time to time).
"TRADE SECRETS" shall mean all trade secrets and all other
confidential or proprietary information and know-how whether or not such Trade
Secret has been reduced to a writing or other tangible form, including all
documents and things embodying, incorporating, or referring in any way to such
Trade Secret, including but not limited to: (i) the right to ▇▇▇ for past,
present and future misappropriation or other violation of any Trade Secret, and
(ii) all Proceeds of the foregoing, including, without limitation, licenses,
royalties, income, payments, claims, damages, and proceeds of suit.
"UCC" shall mean the Uniform Commercial Code as in effect from time to
time in the State of New York.
"UNITED STATES" shall mean the United States of America.
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1.2 DEFINITIONS; INTERPRETATION. All capitalized terms used herein
(including the preamble and recitals hereto) and not otherwise defined herein
shall have the meanings ascribed thereto in the Credit Agreement or, if not
defined therein, in the UCC. References to "Sections," "Exhibits" and
"Schedules" shall be to Sections, Exhibits and Schedules, as the case may be, of
this Agreement unless otherwise specifically provided. Section headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect. Any of the terms defined herein may, unless the context
otherwise requires, be used in the singular or the plural, depending on the
reference. The use herein of the word "include" or "including", when following
any general statement, term or matter, shall not be construed to limit such
statement, term or matter to the specific items or matters set forth immediately
following such word or to similar items or matters, whether or not nonlimiting
language (such as "without limitation" or "but not limited to" or words of
similar import) is used with reference thereto, but rather shall be deemed to
refer to all other items or matters that fall within the broadest possible scope
of such general statement, term or matter. If any conflict or inconsistency
exists between this Agreement and the Credit Agreement, the Credit Agreement
shall govern. All references herein to provisions of the UCC shall include all
successor provisions under any subsequent version or amendment to any Article of
the UCC.
SECTION 2. GRANT OF SECURITY.
2.1 GRANT OF SECURITY. Each Grantor hereby grants to the Collateral
Agent, for itself and for the ratable benefit of Secured Parties, a security
interest in and continuing lien on all of such Grantor's right, title and
interest in, to and under all personal property of such Grantor including, but
not limited to the following, in each case whether now owned or existing or
hereafter acquired or arising and wherever located (all of which being
hereinafter collectively referred to as the "COLLATERAL"):
(a) Accounts;
(b) Chattel Paper;
(c) Documents;
(d) General Intangibles;
(e) Goods, including, without limitation, all Inventory and
Equipment;
(f) Instruments, including, without limitation, the Intercompany
Note;
(g) Insurance;
(h) Intellectual Property;
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(i) Investment Related Property;
(j) Letter of Credit Rights;
(k) Money;
(l) Receivables and Receivable Records;
(m) Commercial Tort Claims;
(n) to the extent not otherwise included above, all Collateral
Records, Collateral Support and Supporting Obligations relating to any of the
foregoing; and
(o) to the extent not otherwise included above, all Proceeds,
products, accessions, rents and profits of or in respect of any of the
foregoing.
2.2 CERTAIN LIMITED EXCLUSIONS. Notwithstanding anything herein to the
contrary, in no event shall the Collateral include or the security interest
granted under Section 2.1 hereof attach to (a) any lease, license, contract,
property rights or agreement to which any Grantor is a party or any of its
rights or interests thereunder if and for so long as the grant of such security
interest shall constitute or result in (i) the abandonment, invalidation or
unenforceability of any right, title or interest of any Grantor therein or (ii)
in a breach or termination pursuant to the terms of, or a default under, any
such lease, license, contract property rights or agreement (other than to the
extent that any such term would be rendered ineffective pursuant to Sections
9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor provision or
provisions) of any relevant jurisdiction or any other applicable law (including
the Bankruptcy Code) or principles of equity), provided, however, that the
Collateral shall include and such security interest shall attach immediately at
such time as the condition causing such abandonment, invalidation or
unenforceability shall be remedied and to the extent severable, shall attach
immediately to any portion of such lease, license, contract, property rights or
agreement that does not result in any of the consequences specified in (i) or
(ii) above; or (b) any of the outstanding capital stock of a Controlled Foreign
Corporation in excess of 65% of the voting power of all classes of capital stock
of such Controlled Foreign Corporation entitled to vote; provided that
immediately upon the amendment of the Tax Code to allow the pledge of a greater
percentage of the voting power of capital stock in a Controlled Foreign
Corporation without adverse tax consequences, the Collateral shall include, and
the security interest granted by each Grantor shall attach to, such greater
percentage of capital stock of each Controlled Foreign Corporation.
SECTION 3. SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE.
3.1 SECURITY FOR OBLIGATIONS. This Agreement secures, and the
Collateral is collateral security for, the prompt and complete payment or
performance in full when due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including the
payment of amounts that would become due but for the operation of the automatic
stay under Section 362(a) of the Bankruptcy
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Code, 11 U.S.C. Section 362(a) (and any successor provision thereof)), of all
Obligations with respect to every Grantor (the "SECURED OBLIGATIONS").
3.2 CONTINUING LIABILITY UNDER COLLATERAL. Notwithstanding anything
herein to the contrary, (i) each Grantor shall remain liable for all obligations
under the Collateral and nothing contained herein is intended or shall be a
delegation of duties thereunder to the Collateral Agent or any other Secured
Party, (ii) each Grantor shall remain liable under each of the agreements
included in the Collateral, including, without limitation, any agreements
relating to Pledged Partnership Interests or Pledged LLC Interests, to perform
all of the obligations undertaken by it thereunder all in accordance with and
pursuant to the terms and provisions thereof and neither the Collateral Agent
nor any other Secured Party shall have any obligation or liability under any of
such agreements by reason of or arising out of this Agreement or any other
document related thereto nor shall the Collateral Agent nor any other Secured
Party have any obligation to make any inquiry as to the nature or sufficiency of
any payment received by it or have any obligation to take any action to collect
or enforce any rights under any agreement included in the Collateral, including,
without limitation, any agreements relating to Pledged Partnership Interests or
Pledged LLC Interests, and (iii) the exercise by the Collateral Agent of any of
its rights hereunder shall not release any Grantor from any of its duties or
obligations under the contracts and agreements included in the Collateral.
SECTION 4. REPRESENTATIONS AND WARRANTIES AND COVENANTS.
4.1 GENERALLY. Representations and Warranties. Each Grantor hereby
represents and warrants, on the Closing Date and on each Credit Date, that:
(a) it owns the Collateral purported to be owned by it or
otherwise has the rights it purports to have in each item of Collateral and, as
to all Collateral whether now existing or hereafter acquired, will continue to
own or have such rights in each item of the Collateral, in each case free and
clear of any and all Liens, rights or claims of all other Persons, including,
without limitation, liens arising as a result of such Grantor becoming bound (as
a result of merger or otherwise) as debtor under a security agreement entered
into by another Person, other than Permitted Liens;
(i) it has indicated on Schedule 4.1(A)(as such schedule may
be amended or supplemented from time to time): (w) the type of organization
of such Grantor, (x) the jurisdiction of organization of such Grantor, (y)
its organizational identification number and (z) the jurisdiction where the
chief executive office or its sole place of business is (or the principal
residence if such Grantor is a natural person), and for the one-year period
preceding the date hereof has been, located.
(ii) the full legal name of such Grantor is as set forth on
Schedule 4.1(A) and it has not done in the last five (5) years, and does
not do, business under any other name (including any trade-name or
fictitious business name) except for those names set forth on Schedule
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4.1(B) (as such schedule may be amended or supplemented from time to time);
(iii) except as provided on Schedule 4.1(C), it has not
changed its name, jurisdiction of organization, chief executive office or
sole place of business (or principal residence if such Grantor is a natural
person) or its corporate structure in any way (e.g., by merger,
consolidation, change in corporate form or otherwise) within the past five
(5) years;
(iv) it has not within the last five (5) years become bound
(whether as a result of merger or otherwise) as debtor under a security
agreement entered into by another Person, which has not heretofore been
terminated;
(v) (v) upon the filing of all UCC financing statements
naming each Grantor as "debtor" and the Collateral Agent as "secured party"
and describing the Collateral in the filing offices set forth opposite such
Grantor's name on Schedule 4.1(D) hereof, (w) upon sufficient
identification of Commercial Tort Claims, (x) upon execution of a control
agreement establishing the Collateral Agent's "control" (within the meaning
of Section 8-106, 9-106 or 9-104 of the UCC, as applicable) with respect to
any Investment Account, (y) upon consent of the issuer with respect to
Letter of Credit Rights, and (z) to the extent not subject to Article 9 of
the UCC, upon recordation of the security interests granted hereunder in
Patents, Trademarks and Copyrights in the applicable intellectual property
registries, including but not limited to the United States Patent and
Trademark Office and the United States Copyright Office, the security
interests granted to the Collateral Agent hereunder constitute valid and
perfected first priority Liens (subject in the case of priority only to
Permitted Liens and to the rights of the United States government
(including any agency or department thereof) with respect to United States
government Receivables) on all of the Collateral;
(vi) all actions and consents, including all filings,
notices, registrations and recordings necessary or desirable for the
exercise by the Collateral Agent of the voting or other rights provided for
in this Agreement or the exercise of remedies in respect of the Collateral
have been made or obtained;
(vii) other than the financing statements filed in favor of
the Collateral Agent, no effective UCC financing statement, fixture filing
or other instrument similar in effect under any applicable law covering all
or any part of the Collateral is on file in any filing or recording office
except for (x) financing statements for which proper termination statements
have been delivered to the Collateral Agent for
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filing and (y) financing statements filed in connection with Permitted
Liens;
(viii) no authorization, approval or other action by, and no
notice to or filing with, any Governmental Authority or regulatory body is
required for either (i) the pledge or grant by any Grantor of the Liens
purported to be created in favor of the Collateral Agent hereunder or (ii)
the exercise by Collateral Agent of any rights or remedies in respect of
any Collateral (whether specifically granted or created hereunder or
created or provided for by applicable law), except (A) for the filings
contemplated by clause (vii) above and (B) as may be required, in
connection with the disposition of any Investment Related Property, by laws
generally affecting the offering and sale of Securities;
(ix) all information supplied by any Grantor with respect to
any of the Collateral (in each case taken as a whole with respect to any
particular Collateral) is accurate and complete in all material respects;
(x) none of the Collateral constitutes, or is the Proceeds
of, "farm products" (as defined in the UCC);
(xi) it does not own any "as extracted collateral" (as
defined in the UCC) or any timber to be cut;
(xii) such Grantor has not become bound as a debtor, either
by contract or by operation of law, by a security agreement previously
entered into by another Person; and
(xiii) such Grantor has been duly organized as an entity of
the type as set forth opposite such Grantor's name on Schedule 4.1(A)
solely under the laws of the jurisdiction as set forth opposite such
Grantor's name on Schedule 4.1(A) and remains duly existing as such. Such
Grantor has not filed any certificates of domestication, transfer or
continuance in any other jurisdiction.
(b) Covenants and Agreements. Each Grantor hereby covenants and
agrees that:
(i) except for the security interest created by this
Agreement, it shall not create or suffer to exist any Lien upon or with
respect to any of the Collateral, except Permitted Liens, and such Grantor
shall defend the Collateral against all Persons at any time claiming any
interest therein;
(ii) it shall not produce, use or permit any Collateral to
be used unlawfully or in violation of any provision of this Agreement or
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any applicable statute, regulation or ordinance or any policy of insurance
covering the Collateral;
(iii) it shall not change such Grantor's name, type of
organization or jurisdiction of organization unless it shall have (a)
notified the Collateral Agent in writing, by executing and delivering to
the Collateral Agent a completed Pledge Supplement, substantially in the
form of Exhibit A attached hereto, together with all supplements to
Schedules thereto, at least thirty (30) days prior to any such change or
establishment, identifying such new proposed name, jurisdiction of
organization and providing such other information in connection therewith
as the Collateral Agent may reasonably request and (b) taken all actions
necessary or advisable to maintain the continuous validity, perfection and
the same or better priority of the Collateral Agent's security interest in
the Collateral intended to be granted and agreed to hereby;
(iv) if the Collateral Agent or any Secured Party gives
value to enable Grantor to acquire rights in or the use of any Collateral,
it shall use such value for such purposes;
(v) it shall 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
Collateral, except to the extent the validity thereof is being contested in
good faith; provided, such Grantor shall in any event pay such taxes,
assessments, charges, levies or claims not later than five (5) days prior
to the date of any proposed sale under any judgment, writ or warrant of
attachment entered or filed against such Grantor or any of the Collateral
as a result of the failure to make such payment;
(vi) upon such Grantor or any officer of such Grantor
obtaining knowledge thereof, it shall promptly notify the Collateral Agent
in writing of any event that may have a Material Adverse Effect on the
value of the Collateral or any portion thereof, the ability of any Grantor
or the Collateral Agent to dispose of the Collateral or any portion
thereof, or the rights and remedies of the Collateral Agent in relation
thereto, including, without limitation, the levy of any legal process
against the Collateral or any portion thereof;
(vii) it shall not take or permit any action which could
impair the Collateral Agent's rights in the Collateral; and
(viii) it shall not sell, transfer or assign (by operation
of law or otherwise) any Collateral except as otherwise permitted under the
Credit Agreement.
4.2 EQUIPMENT AND INVENTORY.
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(a) Representations and Warranties. Each Grantor represents and
warrants, on the Closing Date and on each Credit Date, that:
(i) all of the Equipment and Inventory included in the Collateral
is kept only at the locations specified in Schedule 4.2 (as such schedule
may be amended or supplemented from time to time);
(ii) any Goods now or hereafter produced by any Grantor included
in the Collateral have been and will be produced in compliance with the
requirements of the Fair Labor Standards Act, as amended; and
(iii) none of the Inventory or Equipment is in the possession of
an issuer of a negotiable document (as defined in Section 7-104 of the UCC)
therefor or otherwise in the possession of a bailee or a warehouseman.
(b) Covenants and Agreements. Each Grantor covenants and agrees
that:
(i) it shall keep the Equipment, Inventory and any Documents
evidencing any Equipment and Inventory in the locations specified on
Schedule 4.2 (as such schedule may be amended or supplemented from time to
time) unless it shall have (a) notified the Collateral Agent in writing
prior to any change in locations, identifying such new locations and
providing such other information in connection therewith as the Collateral
Agent may reasonably request and (b) taken all actions necessary or
advisable to maintain the continuous validity, perfection and the same or
better priority of the Collateral Agent's security interest in the
Collateral intended to be granted and agreed to hereby, or to enable the
Collateral Agent to exercise and enforce its rights and remedies hereunder,
with respect to such Equipment and Inventory;
(ii) it shall keep correct and accurate records of the Inventory;
(iii) it shall not deliver any Document evidencing any Equipment
and Inventory to any Person other than the issuer of such Document to claim
the Goods evidenced therefor or the Collateral Agent;
(iv) if any Equipment or Inventory is in possession or control of
any third party, each Grantor shall join with the Collateral Agent in
notifying the third party of the Collateral Agent's security interest and
obtaining an acknowledgment from the third party that it is holding the
Equipment and Inventory for the benefit of the Collateral Agent; and
(v) with respect to any item of Equipment with a book value in
excess of $50,000 individually or $500,000 in the aggregate
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which is covered by a certificate of title under a statute of any
jurisdiction under the law of which indication of a security interest on
such certificate is required as a condition of perfection thereof, upon the
reasonable request of the Collateral Agent, (A) provide information with
respect to any such Equipment, (B) execute and file with the registrar of
motor vehicles or other appropriate authority in such jurisdiction an
application or other document requesting the notation or other indication
of the security interest created hereunder on such certificate of title,
and (C) deliver to the Collateral Agent copies of all such applications or
other documents filed during such calendar quarter and copies of all such
certificates of title issued during such calendar quarter indicating the
security interest created hereunder in the items of Equipment covered
thereby.
4.3 RECEIVABLES.
(a) Representations and Warranties. Each Grantor represents and
warrants, on the Closing Date and on each Credit Date, that:
(i) each Receivable (a) is and will be the legal, valid and
binding obligation of the Account Debtor in respect thereof, representing
an unsatisfied obligation of such Account Debtor, (b) is and will be
enforceable in accordance with its terms, (c) is not and will not be
subject to any setoffs, defenses, taxes, counterclaims (except with respect
to refunds, returns and allowances in the ordinary course of business with
respect to damaged merchandise) and (d) is and will be in compliance with
all applicable laws, whether federal, state, local or foreign;
(ii) none of the Account Debtors in respect of any Receivable is
the government of the United States, any agency or instrumentality thereof,
any state or municipality or any foreign sovereign. No Receivable requires
the consent of the Account Debtor in respect thereof in connection with the
pledge hereunder, except any consent which has been obtained;
(iii) no Receivable is evidenced by, or constitutes, an
Instrument or Chattel Paper which has not been delivered to, or otherwise
subjected to the control of, the Collateral Agent to the extent required
by, and in accordance with Section 4.3(c); and
(iv) each Grantor has delivered to the Collateral Agent a
complete and correct copy of each standard form of document under which a
Receivable may arise.
(b) Covenants and Agreements: Each Grantor hereby covenants and
agrees that:
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(i) it shall keep and maintain at its own cost and expense
satisfactory and complete records of the Receivables, including, but not
limited to, the originals of all documentation with respect to all
Receivables and records of all payments received and all credits granted on
the Receivables, all merchandise returned and all other dealings therewith;
(ii) at the request of the Collateral Agent, it shall ▇▇▇▇
conspicuously, in form and manner reasonably satisfactory to the Collateral
Agent, all Chattel Paper, Instruments and other evidence of Receivables
(other than any delivered to the Collateral Agent as provided herein), as
well as the Receivables Records with an appropriate reference to the fact
that the Collateral Agent has a security interest therein;
(iii) it shall perform in all material respects all of its
obligations with respect to the Receivables;
(iv) it shall not amend, modify, terminate or waive any provision
of any Receivable in any manner which could reasonably be expected to have
a Material Adverse Effect on the value of such Receivable as Collateral.
Other than in the ordinary course of business as generally conducted by it
on and prior to the date hereof, and except as otherwise provided in
subsection (v) below, following an Event of Default, such Grantor shall not
(w) grant any extension or renewal of the time of payment of any
Receivable, (x) compromise or settle any dispute, claim or legal proceeding
with respect to any Receivable for less than the total unpaid balance
thereof, (y) release, wholly or partially, any Person liable for the
payment thereof, or (z) allow any credit or discount thereon;
(v) except as otherwise provided in this subsection, each Grantor
shall continue to collect all amounts due or to become due to such Grantor
under the Receivables and any Supporting Obligation and diligently exercise
each material right it may have under any Receivable any Supporting
Obligation or Collateral Support, in each case, at its own expense, and in
connection with such collections and exercise, such Grantor shall take such
action as such Grantor or the Collateral Agent may deem necessary or
advisable. Notwithstanding the foregoing, the Collateral Agent shall have
the right at any time to notify, or require any Grantor to notify, any
Account Debtor of the Collateral Agent's security interest in the
Receivables and any Supporting Obligation and, in addition, at any time
following the occurrence and during the continuation of an Event of
Default, the Collateral Agent may: (1) direct the Account Debtors under any
Receivables to make payment of all amounts due or to become due to such
Grantor thereunder directly to the Collateral Agent; (2) notify, or require
any Grantor to notify, each Person maintaining a lockbox or similar
arrangement to which Account Debtors under any Receivables have been
directed to make payment to remit all amounts
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representing collections on checks and other payment items from time to
time sent to or deposited in such lockbox or other arrangement directly to
the Collateral Agent; and (3) enforce, at the expense of such Grantor,
collection of any such Receivables 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. If the Collateral Agent notifies any Grantor
that it has elected to collect the Receivables in accordance with the
preceding sentence, any payments of Receivables received by such Grantor
shall be forthwith (and in any event within two (2) Business Days)
deposited by such Grantor in the exact form received, duly indorsed by such
Grantor to the Collateral Agent if required, in the Collateral Account
maintained under the sole dominion and control of the Collateral Agent, and
until so turned over, all amounts and proceeds (including checks and other
instruments) received by such Grantor in respect of the Receivables, any
Supporting Obligation or Collateral Support shall be received in trust for
the benefit of the Collateral Agent hereunder and shall be segregated from
other funds of such Grantor and such Grantor shall not adjust, settle or
compromise the amount or payment of any Receivable, or release wholly or
partly any Account Debtor or obligor thereof, or allow any credit or
discount thereon; and
(vi) it shall use its best efforts to keep in full force and
effect any Supporting Obligation or Collateral Support relating to any
Receivable.
(c) Delivery and Control of Receivables. With respect to any
Receivables in excess of $50,000 individually or $500,000 in the aggregate that
is evidenced by, or constitutes, Chattel Paper or Instruments, each Grantor
shall cause each originally executed copy thereof to be delivered to the
Collateral Agent (or its agent or designee) appropriately indorsed to the
Collateral Agent or indorsed in blank: (i) with respect to any such Receivables
in existence on the date hereof, on or prior to the date hereof and (ii) with
respect to any such Receivables hereafter arising, within ten (10) days of such
Grantor acquiring rights therein. With respect to any Receivables in excess of
$50,000 individually or $500,000 in the aggregate which would constitute
"electronic chattel paper" under Article 9 of the UCC, each Grantor shall take
all steps necessary to give the Collateral Agent control over such Receivables
(within the meaning of Section 9-105 of the UCC): (i) with respect to any such
Receivables in existence on the date hereof, on or prior to the date hereof and
(ii) with respect to any such Receivables hereafter arising, within ten (10)
days of such Grantor acquiring rights therein. Any Receivable not otherwise
required to be delivered or subjected to the control of the Collateral Agent in
accordance with this subsection (c) shall be delivered or subjected to such
control upon request of the Collateral Agent.
4.4 INVESTMENT RELATED PROPERTY.
4.4.1 INVESTMENT RELATED PROPERTY GENERALLY.
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(a) Covenants and Agreements. Each Grantor hereby covenants and
agrees that:
(i) in the event it acquires rights in any Investment Related
Property after the date hereof, it shall deliver to the Collateral Agent a
completed Pledge Supplement, substantially in the form of Exhibit A
attached hereto, together with all supplements to Schedules thereto,
reflecting such new Investment Related Property and all other Investment
Related Property. Notwithstanding the foregoing, it is understood and
agreed that the security interest of the Collateral Agent shall attach to
all Investment Related Property immediately upon any Grantor's acquisition
of rights therein and shall not be affected by the failure of any Grantor
to deliver a supplement to Schedule 4.4 as required hereby; and
(ii) except as provided in the next sentence, in the event such
Grantor receives any dividends, interest or distributions on any Investment
Related Property, or any securities or other property upon the merger,
consolidation, liquidation or dissolution of any issuer of any Investment
Related Property, then (a) such dividends, interest or distributions and
securities or other property shall be included in the definition of
Collateral without further action and (b) such Grantor shall immediately
take all steps, if any, necessary or advisable to ensure the validity,
perfection, priority and, if applicable, control of the Collateral Agent
over such Investment Related Property (including, without limitation,
delivery thereof to the Collateral Agent) and pending any such action such
Grantor shall be deemed to hold such dividends, interest, distributions,
securities or other property in trust for the benefit of the Collateral
Agent and shall segregate such dividends, distributions, Securities or
other property from all other property of such Grantor. Notwithstanding the
foregoing, so long as no Event of Default shall have occurred and be
continuing, the Collateral Agent authorizes each Grantor to retain all
ordinary cash dividends and distributions paid in the normal course of the
business of the issuer and consistent with the past practice of the issuer
and all scheduled payments of interest.
(b) Delivery and Control.
(i) Each Grantor agrees that with respect to any Investment
Related Property in which it currently has rights it shall comply with the
provisions of this Section 4.4.1(b) on or before the Closing Date and with
respect to any Investment Related Property hereafter acquired by such
Grantor it shall comply with the provisions of this Section 4.4.1(b)
immediately upon acquiring rights therein, in each case in form and
substance satisfactory to the Collateral Agent. With respect to any
Investment Related Property that is represented by a certificate or that is
an "instrument" (other than any Investment Related
18
Property credited to a Securities Account) it shall cause such certificate
or instrument to be delivered to the Collateral Agent, indorsed in blank by
an "effective indorsement" (as defined in Section 8-107 of the UCC),
regardless of whether such certificate constitutes a "certificated
security" for purposes of the UCC. With respect to any Investment Related
Property that is an "uncertificated security" for purposes of the UCC
(other than any "uncertificated securities" credited to a Securities
Account), it shall cause the issuer of such uncertificated security to
either (i) register the Collateral Agent as the registered owner thereof on
the books and records of the issuer or (ii) execute an agreement
substantially in the form of Exhibit B hereto, pursuant to which such
issuer agrees to comply with the Collateral Agent's instructions with
respect to such uncertificated security without further consent by such
Grantor.
(c) Voting and Distributions.
(i) So long as no Event of Default shall have occurred and be
continuing:
(1) except as otherwise provided under the covenants and
agreements relating to Investment Related Property in this Agreement
or elsewhere herein or in the Credit Agreement, each Grantor shall be
entitled to exercise or refrain from exercising any and all voting and
other consensual rights pertaining to the Investment Related Property
or any part thereof for any purpose not inconsistent with the terms of
this Agreement or the Credit Agreement; provided, no Grantor shall
exercise or refrain from exercising any such right if such action
could reasonably be expected to have a Material Adverse Effect on the
value of the Investment Related Property or any part thereof;
(2) the Collateral Agent shall promptly execute and deliver
(or cause to be executed and delivered) to each Grantor all proxies,
and other instruments as such Grantor may from time to time reasonably
request for the purpose of enabling such Grantor to exercise the
voting and other consensual rights when and to the extent which it is
entitled to exercise pursuant to clause (1) above; and
(3) Upon the occurrence and during the continuation of an
Event of Default and notice from the Collateral Agent to such effect:
(A) all rights of each Grantor to exercise or refrain
from exercising the voting and other
19
consensual rights which it would otherwise be entitled to exercise
pursuant hereto shall cease and all such rights shall thereupon become
vested in the Collateral Agent who shall thereupon have the sole right
to exercise such voting and other consensual rights; and
(B) in order to permit the Collateral Agent to exercise
the voting and other consensual rights which it may be entitled to
exercise pursuant hereto and to receive all dividends and other
distributions which it may be entitled to receive hereunder: (1) each
Grantor shall promptly execute and deliver (or cause to be executed
and delivered) to the Collateral Agent all proxies, dividend payment
orders and other instruments as the Collateral Agent may from time to
time reasonably request and (2) each Grantor acknowledges that the
Collateral Agent may utilize the power of attorney set forth in
Section 6.1.
4.4.2 PLEDGED EQUITY INTERESTS.
(a) Representations and Warranties. Each Grantor hereby
represents and warrants, on the Closing Date and on each Credit Date, that:
(i) Schedule 4.4 (as such schedule may be amended or supplemented
from time to time) sets forth under the headings "Pledged Stock, "Pledged
LLC Interests," "Pledged Partnership Interests" and "Pledged Trust
Interests," respectively, all of the Pledged Stock, Pledged LLC Interests,
Pledged Partnership Interests and Pledged Trust Interests owned by any
Grantor and such Pledged Equity Interests constitute the percentage of
issued and outstanding shares of stock, percentage of membership interests,
percentage of partnership interests or percentage of beneficial interest of
the respective issuers thereof indicated on such Schedule;
(ii) it is the record and beneficial owner of the Pledged Equity
Interests free of all Liens, rights or claims of other Persons and there
are no outstanding warrants, options or other rights to purchase, or
shareholder, voting trust or similar agreements outstanding with respect
to, or property that is convertible into, or that requires the issuance or
sale of, any Pledged Equity Interests;
(iii) without limiting the generality of Section 4.1(a)(v), no
consent of any Person including any other general or limited partner, any
other member of a limited liability company, any other shareholder or any
other trust beneficiary is necessary or desirable in connection with the
creation, perfection or first priority status of the security interest of
the Collateral Agent in any Pledged Equity Interests or the exercise by the
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Collateral Agent of the voting or other rights provided for in this
Agreement or the exercise of remedies in respect thereof; and
(iv) none of the Pledged LLC Interests nor Pledged Partnership
Interests are or represent interests in issuers that: (a) are registered as
investment companies, (b) are dealt in or traded on securities exchanges or
markets or (c) have opted to be treated as securities under the Uniform
Commercial Code of any jurisdiction.
(b) Covenants and Agreements. Each Grantor hereby covenants and
agrees that:
(i) without the prior written consent of the Collateral Agent, it
shall not vote to enable or take any other action to: (a) amend or
terminate any partnership agreement, limited liability company agreement,
certificate of incorporation, by-laws or other organizational documents in
any way that materially changes the rights of such Grantor with respect to
any Investment Related Property or adversely affects the validity,
perfection or priority of the Collateral Agent's security interest, (b)
permit any issuer of any Pledged Equity Interest that is a Subsidiary to
issue any additional stock, partnership interests, limited liability
company interests or other equity interests of any nature or to issue
securities convertible into or granting the right of purchase or exchange
for any stock or other equity interest of any nature of such issuer, (c)
other than as permitted under the Credit Agreement, permit any issuer of
any Pledged Equity Interest to dispose of all or a material portion of
their assets, (d) waive any default under or breach of any terms of
organizational document relating to the issuer of any Pledged Equity
Interest or the terms of any Pledged Debt, or (e) cause any issuer of any
Pledged Partnership Interests or Pledged LLC Interests which are not
securities (for purposes of the Uniform Commercial Code) on the date hereof
to elect or otherwise take any action to cause such Pledged Partnership
Interests or Pledged LLC Interests to be treated as securities for purposes
of the Uniform Commercial Code; provided, however, notwithstanding the
foregoing, if any issuer of any Pledged Partnership Interests or Pledged
LLC Interests takes any such action in violation of the foregoing in this
clause (e), such Grantor shall promptly notify the Collateral Agent in
writing of any such election or action and, in such event, shall take all
steps necessary or advisable to establish the Collateral Agent's "control"
thereof;
(ii) it shall comply with all of its obligations under any
partnership agreement or limited liability company agreement relating to
Pledged Partnership Interests or Pledged LLC Interests and shall enforce
all of its rights with respect to any Investment Related Property; and
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(iii) each Grantor consents to the grant by each other Grantor of
a security interest in all Investment Related Property to the Collateral
Agent and, without limiting the foregoing, consents to the transfer of any
Pledged Partnership Interest and any Pledged LLC Interest to the Collateral
Agent or its nominee following an Event of Default and to the substitution
of the Collateral Agent or its nominee as a partner in any partnership or
as a member in any limited liability company with all the rights and powers
related thereto.
4.4.3 PLEDGED DEBT.
(a) Representations and Warranties. Each Grantor hereby
represents and warrants, on the Closing Date and each Credit Date, that:
(i) Schedule 4.4 (as such schedule may be amended or supplemented
from time to time) sets forth under the heading "Pledged Debt" all of the
Pledged Debt owned by any Grantor and all of such Pledged Debt has been
duly authorized, authenticated or issued, and delivered and is the legal,
valid and binding obligation of the issuers thereof and is not in default
and constitutes all of the issued and outstanding inter-company
Indebtedness;
(b) Covenants and Agreements. Each Grantor hereby covenants and
agrees that:
(i) it shall notify the Collateral Agent of any default under any
Pledged Debt that has caused, either in any individual case or in the
aggregate, a Material Adverse Effect.
4.4.4 INVESTMENT ACCOUNTS.
(a) Representations and Warranties. Each Grantor hereby
represents and warrants, on the Closing Date and each Credit Date, that:
(i) Schedule 4.4 hereto (as such schedule may be amended or
supplemented from time to time) sets forth under the headings "Securities
Accounts" and "Commodities Accounts," respectively, all of the Securities
Accounts and Commodities Accounts in which each Grantor has an interest.
Each Grantor is the sole entitlement holder of each such Securities Account
and Commodity Account, and such Grantor has not consented to, and is not
otherwise aware of, any Person (other than the Collateral Agent pursuant
hereto) having "control" (within the meanings of Sections 8-106 and 9-106
of the UCC) over, or any other interest in, any such Securities Account or
Commodity Account or securities or other property credited thereto;
(ii) Schedule 4.4 hereto (as such schedule may be amended or
supplemented from time to time) sets forth under the headings
22
"Deposit Accounts" all of the Deposit Accounts in which each Grantor has an
interest. Each Grantor is the sole account holder of each such Deposit
Account and such Grantor has not consented to, and is not otherwise aware
of, any Person (other than the Collateral Agent pursuant hereto) having
"control" (within the meanings of Section 9-104 of the UCC) over, or any
other interest in, any such Deposit Account or any money or other property
deposited therein; and
(iii) Each Grantor has taken all actions necessary or desirable,
including those specified in Section 4.4.4(c), to: (a) establish Collateral
Agent's "control" (within the meanings of Sections 8-106 and 9-106 of the
UCC) over the Securities Accounts, Securities Entitlements and Commodities
Accounts (each as defined in the UCC) and (b) establish the Collateral
Agent's "control" (within the meaning of Section 9-104 of the UCC) over all
Deposit Accounts.
(b) Covenant and Agreement. Each Grantor hereby covenants and
agrees with the Collateral Agent and each other Secured Party that it shall not
close or terminate any Investment Account without the prior consent of the
Collateral Agent and unless a successor or replacement account has been
established with the consent of the Collateral Agent with respect to which
successor or replacement account a control agreement has been entered into by
the appropriate Grantor, Collateral Agent and securities intermediary or
depository institution at which such successor or replacement account is to be
maintained in accordance with the provisions of Section 4.4.4(c).
(c) Delivery and Control.
(i) With respect to any Investment Related Property consisting of
Securities Accounts or Securities Entitlements, it shall cause the
securities intermediary maintaining such Securities Account or Securities
Entitlement to enter into an agreement substantially in the form of Exhibit
C hereto pursuant to which it shall agree to comply with the Collateral
Agent's "entitlement orders" without further consent by such Grantor. With
respect to any Deposit Account, it shall cause the depositary institution
maintaining such account to enter into an agreement substantially in the
form of Exhibit D hereto, pursuant to which the Collateral Agent shall have
"control" (within the meaning of Section 9-104 of the UCC) over such
Deposit Account. Each Grantor shall have entered into such control
agreement or agreements with respect to: (i) any Securities Accounts,
Securities Entitlements or Deposit Accounts that exist on the Closing Date,
as of or prior to the Closing Date and (ii) any Securities Accounts,
Securities Entitlements or Deposit Accounts that are created or acquired
after the Closing Date, as of or prior to the deposit or transfer of any
such Securities Entitlements or funds, whether constituting moneys or
investments, into such Securities Accounts or Deposit Accounts.
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In addition to the foregoing, if any issuer of any Investment Related
Property is located in a jurisdiction outside of the United States,
each Grantor shall take such additional actions, including, without
limitation, causing the issuer to register the pledge on its books and
records or making such filings or recordings, in each case as may be
necessary or advisable, under the laws of such issuer's jurisdiction to
insure the validity, perfection and priority of the security interest
of the Collateral Agent. Upon the occurrence and during the continuance
of an Event of Default, the Collateral Agent shall have the right,
without notice to any Grantor, to transfer all or any portion of the
Investment Related Property to its name or the name of its nominee or
agent. In addition, the Collateral Agent shall have the right at any
time, without notice to any Grantor, to exchange any certificates or
instruments representing any Investment Related Property for
certificates or instruments of smaller or larger denominations.
4.5 MATERIAL CONTRACTS.
(a) Representations and Warranties. Each Grantor hereby
represents and warrants, on the Closing Date and on each Credit Date, that:
(i) Schedule 4.5 (as such schedule may be amended or supplemented
from time to time) sets forth all of the Material Contracts to which such
Grantor has rights; and
(ii) the Material Contracts, true and complete copies (including
any amendments or supplements thereof) of which have been furnished to the
Collateral Agent, have been duly authorized, executed and delivered by all
parties thereto, are in full force and effect and are binding upon and
enforceable against all parties thereto in accordance with their respective
terms. There exists no default under any Material Contract by any party
thereto and neither such Grantor, nor to its best knowledge, any other
Person party thereto is likely to become in default thereunder and no
Person party thereto has any defenses, counterclaims or right of set-off
with respect to any Material Contract.
(b) Covenants and Agreements. Each Grantor hereby covenants and
agrees that:
(i) each Grantor shall deliver promptly to the Collateral Agent a
copy of each material demand, notice or document received by it relating in
any way to any Material Contract;
(ii) each Grantor shall deliver promptly to the Collateral Agent,
and in any event within ten (10) days, after (1) any Material Contract of
such Grantor is terminated or amended in a manner that is materially
adverse to such Grantor or (2) any new Material Contract is entered into by
such Grantor, a written statement describing such event, with copies of
such material amendments or new contracts, delivered to
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the Collateral Agent (to the extent such delivery is permitted by the terms
of any such Material Contract, provided, no prohibition on delivery shall
be effective if it were bargained for by such Grantor with the intent of
avoiding compliance with this Section 4.5(b)(iii)), and an explanation of
any actions being taken with respect thereto;
(iii) it shall perform in all material respects all of its
obligations with respect to the Material Contracts;
(iv) it shall promptly and diligently exercise each material
right (except the right of termination) it may have under any Material
Contract, any Supporting Obligation or Collateral Support, in each case, at
its own expense, and in connection with such collections and exercise, such
Grantor shall take such action as such Grantor or the Collateral Agent may
deem necessary or advisable; and
(v) it shall use its best efforts to keep in full force and
effect any Supporting Obligation or Collateral Support relating to any
Material Contract.
4.6 LETTER OF CREDIT RIGHTS.
(a) Representations and Warranties. Each Grantor hereby
represents and warrants, on the Closing Date and on each Credit Date, that:
(i) all material letters of credit to which such Grantor has
rights is listed on Schedule 4.6 (as such schedule may be amended or
supplemented from time to time) hereto; and
(ii) it has obtained the consent of each issuer of any material
letter of credit to the assignment of the proceeds of the letter of credit
to the Collateral Agent.
(b) Covenants and Agreements. Each Grantor hereby covenants and
agrees that with respect to any material letter of credit hereafter arising it
shall obtain the consent of the issuer thereof to the assignment of the proceeds
of the letter of credit to the Collateral Agent and shall deliver to the
Collateral Agent a completed Pledge Supplement, substantially in the form of
Exhibit A attached hereto, together with all Supplements to Schedules thereto.
4.7 INTELLECTUAL PROPERTY.
(a) Representations and Warranties. Except as disclosed in
Schedule 4.7(H) (as such schedule may be amended or supplemented from time to
time), each Grantor hereby represents and warrants, on the Closing Date and on
each Credit Date, that:
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(i) Schedule 4.7 (as such schedule may be amended or supplemented
from time to time) sets forth a true and complete list of (i) all United
States, state and foreign registrations of and applications for Patents,
Trademarks, and Copyrights owned by each Grantor and (ii) all Patent
Licenses, Trademark Licenses, Trade Secret Licenses and Copyright Licenses
material to the business of such Grantor;
(ii) it is the sole and exclusive owner of the entire right,
title, and interest in and to all Intellectual Property listed on Schedule
4.7 (as such schedule may be amended or supplemented from time to time),
and owns or has the valid right to use all other Intellectual Property used
in or necessary to conduct its business, free and clear of all Liens,
claims, encumbrances and licenses, except for Permitted Liens and the
licenses set forth on Schedule 4.7(B), (D), (F) and (G) (as each may be
amended or supplemented from time to time);
(iii) all Intellectual Property is subsisting and has not been
adjudged invalid or unenforceable, in whole or in part, and each Grantor
has performed all acts and has paid all renewal, maintenance, and other
fees and taxes required to maintain each and every registration and
application of Copyrights, Patents and Trademarks in full force and effect;
(iv) all Intellectual Property is valid and enforceable; no
holding, decision, or judgment has been rendered in any action or
proceeding before any court or administrative authority challenging the
validity of, such Grantor's right to register, or such Grantor's rights to
own or use, any Intellectual Property and no such action or proceeding is
pending or, to the best of such Grantor's knowledge, threatened;
(v) all registrations and applications for Copyrights, Patents
and Trademarks are standing in the name of each Grantor, and none of the
Trademarks, Patents, Copyrights or Trade Secrets has been licensed by any
Grantor to any Affiliate or third party, except as disclosed in Schedule
4.7(B), (D), (F), or (G) (as each may be amended or supplemented from time
to time);
(vi) each Grantor has been using appropriate statutory notice of
registration in connection with its use of registered Trademarks, proper
marking practices in connection with the use of Patents, and appropriate
notice of copyright in connection with the publication of Copyrights
material to the business of such Grantor;
(vii) each Grantor uses adequate standards of quality in the
manufacture, distribution, and sale of all products sold and in the
provision of all services rendered under or in connection with all
Trademark Collateral and has taken all action necessary to insure that all
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licensees of the Trademark Collateral owned by such Grantor use such
adequate standards of quality;
(viii) the conduct of such Grantor's business does not infringe
upon or otherwise violate any trademark, patent, copyright, trade secret or
other intellectual property right owned or controlled by a third party; no
claim has been made that the use of any Intellectual Property owned or used
by Grantor (or any of its respective licensees) violates the asserted
rights of any third party;
(ix) to the best of each Grantor's knowledge, no third party is
infringing upon or otherwise violating any rights in any Intellectual
Property owned or used by such Grantor, or any of its respective licensees;
(x) no settlement or consents, covenants not to ▇▇▇, nonassertion
assurances, or releases have been entered into by Grantor or to which
Grantor is bound that adversely affect Grantor's rights to own or use any
Intellectual Property; and
(xi) each Grantor has not made a previous assignment, sale,
transfer or agreement constituting a present or future assignment, sale,
transfer or agreement of any Intellectual Property that has not been
terminated or released. There is no effective financing statement or other
document or instrument now executed, or on file or recorded in any public
office, granting a security interest in or otherwise encumbering any part
of the Intellectual Property, other than in favor of the Collateral Agent.
(b) Covenants and Agreements. Each Grantor hereby covenants and
agrees as follows:
(i) it shall not do any act or omit to do any act whereby any of
the Intellectual Property which is material to the business of Grantor may
lapse, or become abandoned, dedicated to the public, or unenforceable, or
which would adversely affect the validity, grant, or enforceability of the
security interest granted therein;
(ii) it shall not, with respect to any Trademarks which are
material to the business of any Grantor, cease the use of any of such
Trademarks or fail to maintain the level of the quality of products sold
and services rendered under any of such Trademark at a level at least
substantially consistent with the quality of such products and services as
of the date hereof, and each Grantor shall take all steps necessary to
insure that licensees of such Trademarks use such consistent standards of
quality;
(iii) it shall, within thirty (30) days of the creation or
acquisition of any Copyrightable work which is material to the business of
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Grantor, apply to register the Copyright in the United States Copyright
Office;
(iv) it shall promptly notify the Collateral Agent if it knows or
has reason to know that any item of the Intellectual Property that is
material to the business of any Grantor may become (a) abandoned or
dedicated to the public or placed in the public domain, (b) invalid or
unenforceable, or (c) subject to any adverse determination or development
(including the institution of proceedings) in any action or proceeding in
the United States Patent and Trademark Office, the United States Copyright
Office, any state registry, any foreign counterpart of the foregoing, or
any court;
(v) it shall take all reasonable steps in the United States
Patent and Trademark Office, the United States Copyright Office, any state
registry or any foreign counterpart of the foregoing, to pursue any
application and maintain any registration of each Trademark, Patent, and
Copyright owned by any Grantor and material to its business which is now or
shall become included in the Intellectual Property including, but not
limited to, those items on Schedule 4.7(A), (C) and (E) (as each may be
amended or supplemented from time to time);
(vi) in the event that any Intellectual Property owned by or
exclusively licensed to any Grantor is infringed, misappropriated, or
diluted by a third party, such Grantor shall promptly take all reasonable
actions to stop such infringement, misappropriation, or dilution and
protect its rights in such Intellectual Property including, but not limited
to, the initiation of a suit for injunctive relief and to recover damages;
(vii) it shall promptly (but in no event more than thirty (30)
days after any Grantor obtains knowledge thereof) report to the Collateral
Agent (i) the filing of any application to register any Intellectual
Property with the United States Patent and Trademark Office, the United
States Copyright Office, or any state registry or foreign counterpart of
the foregoing (whether such application is filed by such Grantor or through
any agent, employee, licensee, or designee thereof) and (ii) the
registration of any Intellectual Property by any such office, in each case
by executing and delivering to the Collateral Agent a completed Pledge
Supplement, substantially in the form of Exhibit A attached hereto,
together with all Supplements to Schedules thereto;
(viii) it shall, promptly upon the reasonable request of the
Collateral Agent, execute and deliver to the Collateral Agent any document
required to acknowledge, confirm, register, record, or perfect the
Collateral Agent's interest in any part of the Intellectual Property,
whether now owned or hereafter acquired;
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(ix) except with the prior consent of the Collateral Agent or as
permitted under the Credit Agreement, each Grantor shall not execute, and
there will not be on file in any public office, any financing statement or
other document or instruments, except financing statements or other
documents or instruments filed or to be filed in favor of the Collateral
Agent and each Grantor shall not sell, assign, transfer, license, grant any
option, or create or suffer to exist any Lien upon or with respect to the
Intellectual Property, except for the Lien created by and under this
Agreement and the other Credit Documents;
(x) it shall hereafter use best efforts so as not to permit the
inclusion in any contract to which it hereafter becomes a party of any
provision that could or might in any way materially impair or prevent the
creation of a security interest in, or the assignment of, such Grantor's
rights and interests in any property included within the definitions of any
Intellectual Property acquired under such contracts;
(xi) it shall take all steps reasonably necessary to protect the
secrecy of all Trade Secrets, including, without limitation, entering into
confidentiality agreements with employees and labeling and restricting
access to secret information and documents;
(xii) it shall use proper statutory notice in connection with its
use of any of the Intellectual Property; and
(xiii) it shall continue to collect, at its own expense, all
amounts due or to become due to such Grantor in respect of the Intellectual
Property or any portion thereof. In connection with such collections, each
Grantor may take (and, at the Collateral Agent's reasonable direction,
shall take) such action as such Grantor or the Collateral Agent may deem
reasonably necessary or advisable to enforce collection of such amounts.
Notwithstanding the foregoing, the Collateral Agent shall have the right at
any time, to notify, or require any Grantor to notify, any obligors with
respect to any such amounts of the existence of the security interest
created hereby.
4.8 COMMERCIAL TORT CLAIMS.
(a) Representations and Warranties. Each Grantor hereby
represents and warrants, on the Closing Date and on each Credit Date, that
Schedule 4.8 (as such schedule may be amended or supplemented from time to time)
sets forth all Commercial Tort Claims of each Grantor; and
(b) Covenants and Agreements. Each Grantor hereby covenants and
agrees that with respect to any Commercial Tort Claim in excess of $50,000
individually or $500,000 in the aggregate hereafter arising it shall deliver to
the Collateral Agent a completed Pledge Supplement, substantially in the form of
Exhibit A attached
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hereto, together with all Supplements to Schedules thereto, identifying such new
Commercial Tort Claims.
SECTION 5. ACCESS; RIGHT OF INSPECTION AND FURTHER ASSURANCES; ADDITIONAL
GRANTORS.
5.1 ACCESS; RIGHT OF INSPECTION. The Collateral Agent shall at all
times have full and free access during normal business hours to all the books,
correspondence and records of each Grantor, and the Collateral Agent and its
representatives may examine the same, take extracts therefrom and make
photocopies thereof, and each Grantor agrees to render to the Collateral Agent,
at such Grantor's cost and expense, such clerical and other assistance as may be
reasonably requested with regard thereto. The Collateral Agent and its
representatives shall at all times also have the right to enter any premises of
each Grantor and inspect any property of each Grantor where any of the
Collateral of such Grantor granted pursuant to this Agreement is located for the
purpose of inspecting the same, observing its use or otherwise protecting its
interests therein.
5.2 FURTHER ASSURANCES.
(a) Each Grantor agrees that from time to time, at the expense of
such Grantor, that it shall promptly execute and deliver all further instruments
and documents, and take all further action, that may be necessary or desirable,
or that the Collateral Agent may reasonably request, in order to create and/or
maintain the validity, perfection or priority of and protect any security
interest granted hereby or to enable the Collateral Agent to exercise and
enforce its rights and remedies hereunder with respect to any Collateral.
Without limiting the generality of the foregoing, each Grantor shall:
(i) file (or authorize the filing of) such financing or
continuation statements, or amendments thereto, and execute and deliver
such other agreements, instruments, endorsements, powers of attorney or
notices, as may be necessary or desirable, or as the Collateral Agent may
reasonably request, in order to perfect and preserve the security interests
granted or purported to be granted hereby;
(ii) take all actions necessary to ensure the recordation of
appropriate evidence of the liens and security interest granted hereunder
in the Intellectual Property with any intellectual property registry in
which said Intellectual Property is registered or in which an application
for registration is pending including, without limitation, the United
States Patent and Trademark Office, the United States Copyright Office, the
various Secretaries of State, and the foreign counterparts on any of the
foregoing;
(iii) at any reasonable time, upon request by the Collateral
Agent, assemble the Collateral and allow inspection of the
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Collateral by the Collateral Agent, or persons designated by the Collateral
Agent; and
(iv) at the Collateral Agent's request, appear in and defend any
action or proceeding that may affect such Grantor's title to or the
Collateral Agent's security interest in all or any part of the Collateral.
(b) Each Grantor hereby authorizes the Collateral Agent to file a
Record or Records, including, without limitation, financing or continuation
statements, and amendments thereto, in any jurisdictions and with any filing
offices as the Collateral Agent may determine, in its sole discretion, are
necessary or advisable to perfect the security interest granted to the
Collateral Agent herein. Such financing statements may describe the Collateral
in the same manner as described herein or may contain an indication or
description of collateral that describes such property in any other manner as
the Collateral Agent may determine, in its sole discretion, is necessary,
advisable or prudent to ensure the perfection of the security interest in the
Collateral granted to the Collateral Agent herein, including, without
limitation, describing such property as "all assets" or "all personal property,
whether now owned or hereafter acquired." Each Grantor shall furnish to the
Collateral Agent from time to time statements and schedules further identifying
and describing the Collateral and such other reports in connection with the
Collateral as the Collateral Agent may reasonably request, all in reasonable
detail.
(c) Each Grantor hereby authorizes the Collateral Agent to modify
this Agreement after obtaining such Grantor's approval of or signature to such
modification by amending Schedule 4.7 (as such schedule may be amended or
supplemented from time to time) to include reference to any right, title or
interest in any existing Intellectual Property or any Intellectual Property
acquired or developed by any Grantor after the execution hereof or to delete any
reference to any right, title or interest in any Intellectual Property in which
any Grantor no longer has or claims any right, title or interest.
5.3 ADDITIONAL GRANTORS. From time to time subsequent to the date
hereof, additional Persons may become parties hereto as additional Grantors
(each, an "ADDITIONAL GRANTOR"), by executing a Counterpart Agreement. Upon
delivery of any such counterpart agreement to the Collateral Agent, notice of
which is hereby waived by Grantors, each Additional Grantor shall be a Grantor
and shall be as fully a party hereto as if Additional Grantor were an original
signatory hereto. Each Grantor expressly agrees that its obligations arising
hereunder shall not be affected or diminished by the addition or release of any
other Grantor hereunder, nor by any election of Collateral Agent not to cause
any Subsidiary of Company to become an Additional Grantor hereunder. This
Agreement shall be fully effective as to any Grantor that is or becomes a party
hereto regardless of whether any other Person becomes or fails to become or
ceases to be a Grantor hereunder.
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SECTION 6. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT.
6.1 POWER OF ATTORNEY. Each Grantor hereby irrevocably appoints the
Collateral Agent (such appointment being coupled with an interest) as such
Grantor's attorney-in-fact, with full authority in the place and stead of such
Grantor and in the name of such Grantor, the Collateral Agent or otherwise, from
time to time in the Collateral Agent's discretion to take any action and to
execute any instrument that the Collateral Agent may deem reasonably necessary
or advisable to accomplish the purposes of this Agreement, including, without
limitation, the following:
(a) upon the occurrence and during the continuance of any Event
of Default, to obtain and adjust insurance required to be maintained by such
Grantor or paid to the Collateral Agent pursuant to the Credit Agreement;
(b) upon the occurrence and during the continuance of any Event
of Default, to ask for, demand, collect, ▇▇▇ for, recover, compound, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;
(c) upon the occurrence and during the continuance of any Event
of Default, to receive, endorse and collect any drafts or other instruments,
documents and chattel paper in connection with clause (b) above;
(d) upon the occurrence and during the continuance of any Event
of Default, to file any claims or take any action or institute any proceedings
that the Collateral Agent may deem necessary or desirable for the collection of
any of the Collateral or otherwise to enforce the rights of the Collateral Agent
with respect to any of the Collateral;
(e) to prepare and file any UCC financing statements against such
Grantor as debtor;
(f) to prepare, sign, and file for recordation in any
intellectual property registry, appropriate evidence of the lien and security
interest granted herein in the Intellectual Property in the name of such Grantor
as debtor;
(g) to take or cause to be taken all actions necessary to perform
or comply or cause performance or compliance with the terms of this Agreement,
including, without limitation, access to pay or discharge taxes or Liens (other
than Permitted Liens) levied or placed upon or threatened against the
Collateral, the legality or validity thereof and the amounts necessary to
discharge the same to be determined by the Collateral Agent in its sole
discretion, any such payments made by the Collateral Agent to become obligations
of such Grantor to the Collateral Agent, due and payable immediately without
demand; and
(h) upon the occurrence and during the continuance of any Event
of Default, generally to sell, transfer, pledge, make any agreement with respect
to or
32
otherwise deal with any of the Collateral as fully and completely as though the
Collateral Agent were the absolute owner thereof for all purposes; and
(i) to do, at the Collateral Agent's option and such Grantor's
expense, at any time or from time to time, all acts and things that the
Collateral Agent deems reasonably necessary to protect, preserve or realize upon
the Collateral and the Collateral Agent's security interest therein in order to
effect the intent of this Agreement, all as fully and effectively as such
Grantor might do.
6.2 NO DUTY ON THE PART OF COLLATERAL AGENT OR SECURED PARTIES. The
powers conferred on the Collateral Agent hereunder are solely to protect the
interests of the Secured Parties in the Collateral and shall not impose any duty
upon the Collateral Agent or any Secured Party to exercise any such powers. The
Collateral Agent and the other Secured Parties shall be accountable only for
amounts that they actually receive as a result of the exercise of such powers,
and neither they nor any of their officers, directors, employees or agents shall
be responsible to any Grantor for any act or failure to act hereunder, except
for their own gross negligence or willful misconduct.
SECTION 7. REMEDIES.
7.1 GENERALLY.
(a) If any Event of Default shall have occurred and be
continuing, the Collateral Agent may exercise in respect of the Collateral, in
addition to all other rights and remedies provided for herein or otherwise
available to it at law or in equity, all the rights and remedies of the
Collateral Agent on default under the Uniform Commercial Code (whether or not
the Uniform Commercial Code applies to the affected Collateral) to collect,
enforce or satisfy any Secured Obligations then owing, whether by acceleration
or otherwise, and also may pursue any of the following separately, successively
or simultaneously:
(i) require any Grantor to, and each Grantor hereby agrees
that it shall at its expense and promptly upon request of the Collateral
Agent forthwith, assemble all or part of the Collateral as directed by the
Collateral Agent and make it available to the Collateral Agent at a place
to be designated by the Collateral Agent that is reasonably convenient to
both parties;
(ii) enter onto the property where any Collateral is located
and take possession thereof with or without judicial process;
(iii) prior to the disposition of the Collateral, store,
process, repair or recondition the Collateral or otherwise prepare the
Collateral for disposition in any manner to the extent the Collateral Agent
deems appropriate; and
(iv) without notice except as specified below or under the
Uniform Commercial Code, sell, assign, lease, license (on an exclusive
33
or nonexclusive basis) or otherwise dispose of 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, at such time or times and at such price or prices and upon such
other terms as the Collateral Agent may deem commercially reasonable.
(b) The Collateral Agent or any Secured Party may be the
purchaser of any or all of the Collateral at any public or private (to the
extent to the portion of the Collateral being privately sold is of a kind that
is customarily sold on a recognized market or the subject of widely distributed
standard price quotations) sale in accordance with the Uniform Commercial Code
and the Collateral Agent, as collateral agent for and representative of the
Secured Parties, shall be entitled, for the purpose of bidding and making
settlement or payment of the purchase price for all or any portion of the
Collateral sold at any such sale made in accordance with the Uniform Commercial
Code, to use and apply any of the Secured Obligations as a credit on account of
the purchase price for any Collateral payable by the Collateral Agent at such
sale. Each purchaser at any such sale shall hold the property sold absolutely
free from any claim or right on the part of any Grantor, and each Grantor hereby
waives (to the extent permitted by applicable law) all rights of redemption,
stay and/or appraisal which it now has or may at any time in the future have
under any rule of law or statute now existing or hereafter enacted. Each Grantor
agrees that, to the extent notice of sale 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 is to be made shall constitute reasonable
notification. The Collateral Agent shall not be obligated to make any sale of
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 agrees
that it would not be commercially unreasonable for the Collateral Agent to
dispose of the Collateral or any portion thereof by using Internet sites that
provide for the auction of assets of the types included in the Collateral or
that have the reasonable capability of doing so, or that match buyers and
sellers of assets. Each Grantor hereby waives any claims against the Collateral
Agent arising by reason of the fact that the price at which any Collateral may
have been sold at such a private sale was less than the price which might have
been obtained at a public sale, even if the Collateral Agent accepts the first
offer received and does not offer such Collateral to more than one offeree. If
the proceeds of any sale or other disposition of the Collateral are insufficient
to pay all the Secured Obligations, Grantors shall be liable for the deficiency
and the fees of any attorneys employed by the Collateral Agent to collect such
deficiency. Each Grantor further agrees that a breach of any of the covenants
contained in this Section will cause irreparable injury to the Collateral Agent,
that the Collateral Agent has no adequate remedy at law in respect of such
breach and, as a consequence, that each and every covenant contained in this
Section shall be specifically enforceable against such Grantor, and such Grantor
hereby waives and agrees not to assert any defenses against an action for
specific performance of such covenants except for a defense that no default has
occurred giving rise to the Secured Obligations becoming due and payable prior
to their stated maturities. Nothing in this Section shall in any way alter the
rights of the Collateral Agent hereunder.
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(c) The Collateral Agent may sell the Collateral without giving
any warranties as to the Collateral. The Collateral Agent may specifically
disclaim or modify any warranties of title or the like. This procedure will not
be considered to adversely affect the commercial reasonableness of any sale of
the Collateral.
(d) The Collateral Agent shall have no obligation to marshal any
of the Collateral.
7.2 APPLICATION OF PROCEEDS. Except as expressly provided elsewhere in
this Agreement, all proceeds received by the Collateral Agent in respect of any
sale, any collection from, or other realization upon all or any part of the
Collateral shall be applied in full or in part by the Collateral Agent against
the Secured Obligations in the order set forth in Section 2.14(b) of the Credit
Agreement.
7.3 SALES ON CREDIT. If Collateral Agent sells any of the Collateral
upon credit, Grantor will be credited only with payments actually made by
purchaser and received by Collateral Agent and applied to indebtedness of the
purchaser. In the event the purchaser fails to pay for the Collateral,
Collateral Agent may resell the Collateral and Grantor shall be credited with
proceeds of the sale.
7.4 DEPOSIT ACCOUNTS. If any Event of Default shall have occurred and
be continuing, the Collateral Agent may apply the balance from any Deposit
Account or instruct the bank at which any Deposit Account is maintained to pay
the balance of any Deposit Account to or for the benefit of the Collateral
Agent.
7.5 INVESTMENT RELATED PROPERTY. Each Grantor recognizes that, by
reason of certain prohibitions contained in the Securities Act and applicable
state securities laws, the Collateral Agent may be compelled, with respect to
any sale of all or any part of the Investment Related Property conducted without
prior registration or qualification of such Investment Related Property under
the Securities Act and/or such state securities laws, to limit purchasers to
those who will agree, among other things, to acquire the Investment Related
Property for their own account, for investment and not with a view to the
distribution or resale thereof. Each Grantor acknowledges that any such private
sale may be at prices and on terms less favorable than those obtainable through
a public sale without such restrictions (including a public offering made
pursuant to a registration statement under the Securities Act) and,
notwithstanding such circumstances, each Grantor agrees that any such private
sale shall be deemed to have been made in a commercially reasonable manner and
that the Collateral Agent shall have no obligation to engage in public sales and
no obligation to delay the sale of any Investment Related Property for the
period of time necessary to permit the issuer thereof to register it for a form
of public sale requiring registration under the Securities Act or under
applicable state securities laws, even if such issuer would, or should, agree to
so register it. If the Collateral Agent determines to exercise its right to sell
any or all of the Investment Related Property, upon written request, each
Grantor shall and shall cause each issuer of any Pledged Stock to be sold
hereunder, each partnership and each limited liability company from time to time
to furnish to the Collateral Agent all such information as the Collateral Agent
may request in order to determine the number and
35
nature of interest, shares or other instruments included in the Investment
Related Property which may be sold by the Collateral Agent in exempt
transactions under the Securities Act and the rules and regulations of the
Securities and Exchange Commission thereunder, as the same are from time to time
in effect.
7.6 INTELLECTUAL PROPERTY.
(a) Anything contained herein to the contrary notwithstanding,
upon the occurrence and during the continuation of an Event of Default:
(i) the Collateral Agent shall have the right (but not the
obligation) to bring suit or otherwise commence any action or proceeding in
the name of any Grantor, the Collateral Agent or otherwise, in the
Collateral Agent's sole discretion, to enforce any Intellectual Property,
in which event such Grantor shall, at the request of the Collateral Agent,
do any and all lawful acts and execute any and all documents required by
the Collateral Agent in aid of such enforcement and such Grantor shall
promptly, upon demand, reimburse and indemnify the Collateral Agent as
provided in Sections 10.2 and 10.3 of the Credit Agreement in connection
with the exercise of its rights under this Section, and, to the extent that
the Collateral Agent shall elect not to bring suit to enforce any
Intellectual Property as provided in this Section, each Grantor agrees to
use all reasonable measures, whether by action, suit, proceeding or
otherwise, to prevent the infringement or other violation of any of such
Grantor's rights in the Intellectual Property by others and for that
purpose agrees to diligently maintain any action, suit or proceeding
against any Person so infringing as shall be necessary to prevent such
infringement or violation;
(ii) upon written demand from the Collateral Agent, each
Grantor shall grant, assign, convey or otherwise transfer to the Collateral
Agent or such Collateral Agent's designee all of such Grantor's right,
title and interest in and to the Intellectual Property and shall execute
and deliver to the Collateral Agent such documents as are necessary or
appropriate to carry out the intent and purposes of this Agreement;
(iii) each Grantor agrees that such an assignment and/or
recording shall be applied to reduce the Secured Obligations outstanding
only to the extent that the Collateral Agent (or any Secured Party)
receives cash proceeds in respect of the sale of, or other realization
upon, the Intellectual Property;
(iv) within five (5) Business Days after written notice from
the Collateral Agent, each Grantor shall make available to the Collateral
Agent, to the extent within such Grantor's power and authority, such
personnel in such Grantor's employ on the date of such Event of Default as
the Collateral Agent may reasonably designate, by name, title
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or job responsibility, to permit such Grantor to continue, directly or
indirectly, to produce, advertise and sell the products and services sold
or delivered by such Grantor under or in connection with the Trademarks,
Trademark Licenses, such persons to be available to perform their prior
functions on the Collateral Agent's behalf and to be compensated by the
Collateral Agent at such Grantor's expense on a per diem, pro rata basis
consistent with the salary and benefit structure applicable to each as of
the date of such Event of Default; and
(v) the Collateral Agent shall have the right to notify, or
require each Grantor to notify, any obligors with respect to amounts due or
to become due to such Grantor in respect of the Intellectual Property, of
the existence of the security interest created herein, to direct such
obligors to make payment of all such amounts directly to the Collateral
Agent, and, upon such notification and at the expense of such Grantor, to
enforce collection of any such amounts 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;
(1) all amounts and proceeds (including checks and
other instruments) received by Grantor in respect of amounts due to
such Grantor in respect of the Collateral or any portion thereof 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 or delivered to the Collateral Agent in
the same form as so received (with any necessary endorsement) to be
held as cash Collateral and applied as provided by Section 7.7 hereof;
and
(2) Grantor shall not adjust, settle or compromise the
amount or payment of any such amount or release wholly or partly any
obligor with respect thereto or allow any credit or discount thereon.
(b) If (i) an Event of Default shall have occurred and, by reason
of cure, waiver, modification, amendment or otherwise, no longer be continuing,
(ii) no other Event of Default shall have occurred and be continuing, (iii) an
assignment or other transfer to the Collateral Agent of any rights, title and
interests in and to the Intellectual Property shall have been previously made
and shall have become absolute and effective, and (iv) the Secured Obligations
shall not have become immediately due and payable, upon the written request of
any Grantor, the Collateral Agent shall promptly execute and deliver to such
Grantor, at such Grantor's sole cost and expense, such assignments or other
transfer as may be necessary to reassign to such Grantor any such rights, title
and interests as may have been assigned to the Collateral Agent as aforesaid,
subject to any disposition thereof that may have been made by the Collateral
Agent; provided, after giving effect to such reassignment, the Collateral
Agent's security interest granted
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pursuant hereto, as well as all other rights and remedies of the Collateral
Agent granted hereunder, shall continue to be in full force and effect; and
provided further, the rights, title and interests so reassigned shall be free
and clear of any other Liens granted by or on behalf of the Collateral Agent and
the Secured Parties.
(c) Solely for the purpose of enabling the Collateral Agent to
exercise rights and remedies under this Section 7 and at such time as the
Collateral Agent shall be lawfully entitled to exercise such rights and
remedies, each Grantor hereby grants to the Collateral Agent, to the extent it
has the right to do so, an irrevocable, nonexclusive license (exercisable
without payment of royalty or other compensation to such Grantor), subject, in
the case of Trademarks, to sufficient rights to quality control and inspection
in favor of such Grantor to avoid the risk of invalidation of said Trademarks,
to use, operate under, license, or sublicense any Intellectual Property now
owned or hereafter acquired by such Grantor, and wherever the same may be
located.
7.7 CASH PROCEEDS. In addition to the rights of the Collateral Agent
specified in Section 4.3 with respect to payments of Receivables, all proceeds
of any Collateral received by any Grantor consisting of cash, checks and other
non-cash items (collectively, "CASH PROCEEDS") shall be held by such Grantor in
trust for the Collateral Agent, segregated from other funds of such Grantor, and
shall, forthwith upon receipt by such Grantor, unless otherwise provided
pursuant to Section 4.4(a)(ii), be turned over to the Collateral Agent in the
exact form received by such Grantor (duly indorsed by such Grantor to the
Collateral Agent, if required) and held by the Collateral Agent in the
Collateral Account. Any Cash Proceeds received by the Collateral Agent (whether
from a Grantor or otherwise): (i) if no Event of Default shall have occurred and
be continuing, shall be held by the Collateral Agent for the ratable benefit of
the Secured Parties, as collateral security for the Secured Obligations (whether
matured or unmatured) and (ii) if an Event of Default shall have occurred and be
continuing, may, in the sole discretion of the Collateral Agent, (A) be held by
the Collateral Agent for the ratable benefit of the Secured Parties, as
collateral security for the Secured Obligations (whether matured or unmatured)
and/or (B) then or at any time thereafter may be applied by the Collateral Agent
against the Secured Obligations then due and owing.
SECTION 8. COLLATERAL AGENT.
The Collateral Agent has been appointed to act as Collateral Agent
hereunder by Lenders and, by their acceptance of the benefits hereof, the other
Secured Parties. The Collateral Agent shall be obligated, and shall have the
right hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any action (including,
without limitation, the release or substitution of Collateral), solely in
accordance with this Agreement and the Credit Agreement. In furtherance of the
foregoing provisions of this Section, each Secured Party other than the
Collateral Agent, by its acceptance of the benefits hereof, agrees that it shall
have no right individually to realize upon any of the Collateral hereunder, it
being understood and agreed by such Secured Party that all rights and remedies
hereunder may be exercised solely by the Collateral Agent for the benefit of
Secured Parties in accordance with the terms of this Section. Collateral Agent
may resign at any time by
38
giving thirty (30) days' prior written notice thereof to Lenders and the
Grantors, and Collateral Agent may be removed at any time with or without cause
by an instrument or concurrent instruments in writing delivered to the Grantors
and Collateral Agent signed by the Requisite Lenders. Upon any such notice of
resignation or any such removal, Requisite Lenders shall have the right, upon
five (5) Business Days' notice to the Administrative Agent, to appoint a
successor Collateral Agent. Upon the acceptance of any appointment as Collateral
Agent hereunder by a successor Collateral Agent, that successor Collateral Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring or removed Collateral Agent under this
Agreement, and the retiring or removed Collateral Agent under this Agreement
shall promptly (i) transfer to such successor Collateral Agent all sums,
Securities and other items of Collateral held hereunder, together with all
records and other documents necessary or appropriate in connection with the
performance of the duties of the successor Collateral Agent under this
Agreement, and (ii) execute and deliver to such successor Collateral Agent or
otherwise authorize the filing of such amendments to financing statements, and
take such other actions, as may be necessary or appropriate in connection with
the assignment to such successor Collateral Agent of the security interests
created hereunder, whereupon such retiring or removed Collateral Agent shall be
discharged from its duties and obligations under this Agreement. After any
retiring or removed Collateral Agent's resignation or removal hereunder as the
Collateral Agent, the provisions of this Agreement shall inure to its benefit as
to any actions taken or omitted to be taken by it under this Agreement while it
was the Collateral Agent hereunder.
SECTION 9. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS.
This Agreement shall create a continuing security interest in the
Collateral and shall remain in full force and effect until the payment in full
of all Secured Obligations and the cancellation or termination of the
Commitments, be binding upon each Grantor, its successors and assigns, and
inure, together with the rights and remedies of the Collateral Agent hereunder,
to the benefit of the Collateral Agent and its successors, transferees and
assigns. Without limiting the generality of the foregoing, but subject to the
terms of the Credit Agreement, any Lender may assign or otherwise transfer any
Loans held by it to any other Person, and such other Person shall thereupon
become vested with all the benefits in respect thereof granted to Lenders herein
or otherwise. Upon the payment in full of all Secured Obligations and the
cancellation or termination of the Commitments, the security interest granted
hereby shall automatically terminate hereunder and of record and all rights to
the Collateral shall revert to Grantors. Upon any such termination the
Collateral Agent shall, at Grantors' expense, execute and deliver to Grantors or
otherwise authorize the filing of such documents as Grantors shall reasonably
request, including financing statement amendments to evidence such termination.
Upon any disposition of property permitted by the Credit Agreement, the Liens
granted herein shall be deemed to be automatically released and such property
shall automatically revert to the applicable Grantor with no further action on
the part of any Person. The Collateral Agent shall, at Grantor's expense,
execute and deliver or otherwise authorize the filing of such documents as
Grantors shall reasonably request, in form and substance reasonably satisfactory
to the Collateral Agent, including financing statement amendments to evidence
such release.
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SECTION 10. STANDARD OF CARE; COLLATERAL AGENT MAY PERFORM.
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 exercise of reasonable care in the
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. The
Collateral Agent shall be deemed to have exercised reasonable care in the
custody and preservation of Collateral in its possession if such Collateral is
accorded treatment substantially equal to that which the Collateral Agent
accords its own property. Neither the Collateral Agent nor any of its directors,
officers, employees or agents shall be liable for failure to demand, collect or
realize upon all or any part of the Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise dispose of any Collateral
upon the request of any Grantor or otherwise. If any Grantor fails to perform
any agreement contained herein, the Collateral Agent may itself perform, or
cause performance of, such agreement, and the expenses of the Collateral Agent
incurred in connection therewith shall be payable by each Grantor under Section
10.2 of the Credit Agreement.
SECTION 11. MISCELLANEOUS.
Any notice required or permitted to be given under this Agreement
shall be given in accordance with Section 10.1 of the Credit Agreement. No
failure or delay on the part of the Collateral Agent in the exercise of any
power, right or privilege hereunder or under any other Credit Document shall
impair such power, right or privilege or be construed to be a waiver of any
default or acquiescence therein, nor shall any single or partial exercise of any
such power, right or privilege preclude other or further exercise thereof or of
any other power, right or privilege. All rights and remedies existing under this
Agreement and the other Credit Documents are cumulative to, and not exclusive
of, any rights or remedies otherwise available. In case any provision in or
obligation under this Agreement shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby. All
covenants hereunder shall be given independent effect so that if a particular
action or condition is not permitted by any of such covenants, the fact that it
would be permitted by an exception to, or would otherwise be within the
limitations of, another covenant shall not avoid the occurrence of a Default or
an Event of Default if such action is taken or condition exists. This Agreement
shall be binding upon and inure to the benefit of the Collateral Agent and
Grantors and their respective successors and assigns. No Grantor shall, without
the prior written consent of the Collateral Agent given in accordance with the
Credit Agreement, assign any right, duty or obligation hereunder. This Agreement
and the other Credit Documents embody the entire agreement and understanding
between Grantors and the Collateral Agent and supersede all prior agreements and
understandings between such parties relating to the subject matter hereof and
thereof. Accordingly, the Credit Documents may not be contradicted by evidence
of
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prior, contemporaneous or subsequent oral agreements of the parties. There are
no unwritten oral agreements between the parties. This Agreement may be executed
in one or more counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ITS CONFLICTS OF LAW
PROVISIONS (OTHER THAN SECTION 5-1401 AND SECTION 5-1402 OF THE NEW YORK GENERAL
OBLIGATION LAWS).
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, each Grantor and the Collateral Agent have caused
this Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
NAVISITE, INC.
AVASTA, INC.
CLEARBLUE TECHNOLOGIES MANAGEMENT, INC.
CLEARBLUE TECHNOLOGIES/ CHICAGO-▇▇▇▇▇,
INC.
CLEAR BLUE TECHNOLOGIES/LAS VEGAS, INC.
CLEARBLUE TECHNOLOGIES/LOS ANGELES, INC.
CLEARBLUE TECHNOLOGIES/MILWAUKEE, INC.
CLEARBLUE TECHNOLOGIES/OAK BROOK, INC.
CLEARBLUE TECHNOLOGIES/ VIENNA, INC.
CLEARBLUE TECHNOLOGIES/ DALLAS, INC.
CLEARBLUE TECHNOLOGIES/NEW YORK, INC.
CLEARBLUE TECHNOLOGIES/SAN FRANCISCO,
INC.
CLEARBLUE TECHNOLOGIES/SANTA ▇▇▇▇▇, INC.
CONXION CORPORATION
INTREPID ACQUISITION CORP.
LEXINGTON ACQUISITION CORP.
▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
SUREBRIDGE ACQUISITION CORP.
SUREBRIDGE SERVICES, INC.
SITEROCK CORPORATION
NAVISITE ACQUISITION SUBSIDIARY, INC.
CLICKHEAR, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
CFO and Treasurer
SILVER POINT FINANCE, LLC,
as the Collateral Agent
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Authorized Signatory
EXHIBIT D-B-1