Exhibit 10.4
EXECUTION VERSION
================================================================================
SECOND LIEN GUARANTY AND SECURITY AGREEMENT
Dated as of January 10, 2008
among
GOAMERICA, INC.,
as Borrower
and
Each Grantor From Time to Time Party Hereto
and
CLEARLAKE CAPITAL GROUP, L.P.,
as Administrative Agent
================================================================================
TABLE OF CONTENTS
Page
ARTICLE I DEFINED TERMS 1
Section 1.1 Definitions .............................................. 1
Section 1.2 Certain Other Terms ...................................... 4
ARTICLE II GUARANTY 4
Section 2.1 Guaranty ................................................. 4
Section 2.2 Limitation of Guaranty ................................... 5
Section 2.3 Contribution ............................................. 5
Section 2.4 Authorization; Other Agreements .......................... 5
Section 2.5 Guaranty Absolute and Unconditional ...................... 6
Section 2.6 Waivers .................................................. 7
Section 2.7 Reliance ................................................. 7
ARTICLE III GRANT OF SECURITY INTEREST 7
Section 3.1 Collateral ............................................... 7
Section 3.2 Grant of Security Interest in Collateral ................. 8
ARTICLE IV REPRESENTATIONS AND WARRANTIES 8
Section 4.1 Title; No Other Liens .................................... 8
Section 4.2 Perfection and Priority .................................. 9
Section 4.3 Jurisdiction of Organization; Chief Executive Office ..... 9
Section 4.4 Locations of Inventory, Equipment and Books and Records .. 10
Section 4.5 Pledged Collateral ....................................... 10
Section 4.6 Instruments and Tangible Chattel Paper
Formerly Accounts ........................................ 10
Section 4.7 Intellectual Property .................................... 10
Section 4.8 Commercial Tort Claims ................................... 10
Section 4.9 Specific Collateral ...................................... 11
Section 4.10 Promissory Notes and Debt Securities ..................... 11
Section 4.11 Governmental Licenses .................................... 11
Section 4.12 Motor Vehicles ........................................... 11
Section 4.13 Representations and Warranties of the
Second Lien Credit Agreement ............................. 11
ARTICLE V COVENANTS 11
Section 5.1 Maintenance of Perfected Security Interest;
Further Documentation and Consents ....................... 11
Section 5.2 Changes in Locations, Name, Etc .......................... 13
Section 5.3 Pledged Collateral ....................................... 13
Section 5.4 Accounts ................................................. 14
Section 5.5 Commodity Contracts ...................................... 14
Section 5.6 Delivery of Instruments and Tangible Chattel
Paper and Control of Investment
Property, Letter-of-Credit Rights and
Electronic Chattel Paper ................................. 14
Section 5.7 Intellectual Property .................................... 15
Section 5.8 Notices .................................................. 16
Section 5.9 Notice of Commercial Tort Claims ......................... 16
Section 5.10 Compliance with Second Lien Credit Agreement ............. 16
i
TABLE OF CONTENTS
(continued)
Page
ARTICLE VI REMEDIAL PROVISIONS 17
Section 6.1 Code and Other Remedies .................................. 17
Section 6.2 Accounts and Payments in Respect of General Intangibles .. 20
Section 6.3 Pledged Collateral ....................................... 21
Section 6.4 Proceeds to be Turned Over to and Held
by Administrative Agent .................................. 21
Section 6.5 Private Sales ............................................ 22
Section 6.6 Deficiency ............................................... 22
ARTICLE VII THE ADMINISTRATIVE AGENT 23
Section 7.1 Administrative Agent's Appointment as Attorney-in-Fact ... 23
Section 7.2 Authorization to File Financing Statements ............... 24
Section 7.3 Authority of Administrative Agent ........................ 24
Section 7.4 Duty; Obligations and Liabilities ........................ 25
ARTICLE VIII MISCELLANEOUS 25
Section 8.1 Reinstatement ............................................ 25
Section 8.2 Release of Collateral .................................... 26
Section 8.3 Independent Obligations .................................. 26
Section 8.4 No Waiver by Course of Conduct ........................... 26
Section 8.5 Amendments in Writing .................................... 27
Section 8.6 Additional Grantors; Additional Pledged Collateral ....... 27
Section 8.7 Notices .................................................. 27
Section 8.8 Successors and Assigns ................................... 27
Section 8.9 Counterparts ............................................. 27
Section 8.10 Severability ............................................. 27
Section 8.11 Governing Law ............................................ 28
Section 8.12 Jurisdiction ............................................. 28
Section 8.13 WAIVER OF JURY TRIAL ..................................... 28
Section 8.14 Subordination ............................................ 28
Section 8.15 Hands On ................................................. 30
Section 8.16 Intercreditor Agreement .................................. 30
ii
TABLE OF CONTENTS
(continued)
ANNEXES AND SCHEDULES
Annex 1 Form of Pledge Amendment
Annex 2 Form of Joinder Agreement
Annex 3 Form of Intellectual Property Security Agreement
Schedule 1 Commercial Tort Claims
Schedule 2 Filings
Schedule 3 Jurisdiction of Organization; Chief Executive Office
Schedule 4 Location of Inventory and Equipment
Schedule 5 Pledged Collateral
Schedule 6 Intellectual Property
Schedule 7 Promissory Notes and Debt Securities
Schedule 8 Governmental Licenses
Schedule 9 Motor Vehicles
SECOND LIEN GUARANTY AND SECURITY AGREEMENT, dated as of January 10,
2008, by GOAMERICA, INC., a Delaware corporation, (the "Borrower"), and each of
the other entities listed on the signature pages hereof or that becomes a party
hereto pursuant to Section 8.6 (together with the Borrower, the "Grantors"), in
favor of CLEARLAKE CAPITAL GROUP, L.P., a Delaware limited partnership, as
Administrative Agent (in such capacity, together with its successors and
permitted assigns, the "Administrative Agent") for the Lenders and each other
Secured Party (each as defined in the Second Lien Credit Agreement referred to
below).
W I T N E S S E T H:
WHEREAS, pursuant to the Second Lien Credit Agreement dated as of
January 10, 2008 (as the same may be modified from time to time, the "Second
Lien Credit Agreement") among the Borrower, the Administrative Agent and the
Lenders from time to time party thereto, the Lenders have severally agreed to
make extensions of credit to the Borrower upon the terms and subject to the
conditions set forth therein;
WHEREAS, each Grantor has agreed to guaranty the Obligations (as
defined in the Second Lien Credit Agreement);
WHEREAS, each Grantor will derive substantial direct and indirect
benefits from the making of the extensions of credit to the Borrower under the
Second Lien Credit Agreement; and
WHEREAS, it is a condition precedent to the obligation of the
Lenders to make their respective extensions of credit to the Borrower under the
Second Lien Credit Agreement that the Grantors shall have executed and delivered
this Agreement to the Administrative Agent.
NOW, THEREFORE, in consideration of the premises and to induce the
Lenders and the Administrative Agent to enter into the Second Lien Credit
Agreement and to induce the Lenders to make their respective extensions of
credit to the Borrower thereunder, each Grantor hereby agrees with the
Administrative Agent as follows:
ARTICLE I
DEFINED TERMS
Section 1.1 Definitions.
(a) Capital terms used herein without definition are used as defined
in the Second Lien Credit Agreement.
(b) The following terms have the meanings given to them in the UCC
and terms used herein without definition that are defined in the UCC have the
meanings given to them in the UCC (such meanings to be equally applicable to
both the singular and plural forms of the terms defined): "account", "account
debtor", "as-extracted collateral", "certificated security", "chattel paper",
"commercial tort claim", "commodity contract", "deposit account", "electronic
chattel paper", "equipment", "farm products", "fixture", "general intangible",
"goods", "health-care-insurance receivable", "instruments", "inventory",
"investment property", "letter-of-credit
right", "proceeds", "record", "securities account", "security", "supporting
obligation" and "tangible chattel paper".
(c) The following terms shall have the following meanings:
"Agreement" means this Second Lien Guaranty and Security Agreement.
"Applicable IP Office" means the United States Patent and Trademark
Office, the United States Copyright Office or any similar office or agency
within or outside the United States.
"Collateral" has the meaning specified in Section 3.1.
"Collateral Update Certificate" has the meaning specified in Section
5.1(c).
"Excluded Equity" means any voting stock in excess of 66% of the
outstanding voting stock of any Excluded Foreign Subsidiary. For the purposes of
this definition, "voting stock" means, with respect to any issuer, the issued
and outstanding shares of each class of Stock of such issuer entitled to vote
(within the meaning of Treasury Regulations ss. 1.956-2(c)(2)).
"Excluded Property" means, collectively, (i) Excluded Equity, (ii)
any permit or license of, or any Contractual Obligation entered into by, any
Grantor (A) that prohibits or requires the consent of any Person other than the
Borrower and its Affiliates as a condition to the creation by such Grantor of a
Lien on any right, title or interest in such permit, license or Contractual
Obligation or any Stock or Stock Equivalent related thereto or (B) to the extent
that any Requirement of Law applicable thereto prohibits the creation of a Lien
thereon, but only, with respect to the prohibition in (A) and (B), to the
extent, and for as long as, such prohibition is not terminated or rendered
unenforceable or otherwise deemed ineffective by the UCC or any other
Requirement of Law or required consent is not obtained (and immediately upon the
lapse, termination, unenforceability or ineffectiveness of any such prohibition
or grant of such required consent, the Collateral shall include, and Grantors
shall be deemed to have automatically granted a security interest in, all such
permits, licenses, Contractual Obligations or Stock or Stock Equivalents no
longer subject to such prohibition or required consent), (iii) fixed or capital
assets owned by any Grantor that is subject to a purchase money Lien or a
Capital Lease if the Contractual Obligation pursuant to which such Lien is
granted (or in the document providing for such Capital Lease) prohibits or
requires the consent of any Person other than the Borrower and its Affiliates as
a condition to the creation of any other Lien on such equipment and (iv) any
U.S. "intent to use" Trademark applications for which a statement of use has not
been filed and accepted (but only until such statement of use is filed and has
been accepted); provided, however, that "Excluded Property" shall not include
any proceeds, products, substitutions or replacements of Excluded Property
(unless such proceeds, products, substitutions or replacements would otherwise
constitute Excluded Property).
"Guaranteed Obligations" has the meaning set forth in Section 2.1.
"Guarantor" means each Grantor (other than the Borrower).
"Guaranty" means the guaranty of the Guaranteed Obligations made by
the Guarantors as set forth in this Agreement.
2
"Inventory" means any "inventory," as such item is defined in the
code, now owned or hereafter acquired by any Loan Party, wherever located, and
in any event including inventory, merchandise, goods and other personal property
that are held by or on behalf of any Loan Party for sale or lease or are
furnished or are to be furnished under a contract of service, or that constitute
raw materials, work in process, finished goods, returned goods, supplies or
materials of any kind, nature or description used or consumed or to be used or
consumed in such Loan Party's business or in the processing, production,
packaging, promotion, delivery or shipping of the same, including other supplies
and embedded software.
"Pledged Certificated Stock" means all certificated securities and
any other Stock or Stock Equivalent of any Person evidenced by a certificate,
instrument or other similar document (as defined in the UCC), in each case owned
by any Grantor, and any distribution of property made on, in respect of or in
exchange for the foregoing from time to time, including all Stock and Stock
Equivalents listed on Schedule 5. Pledged Certificated Stock excludes any
Excluded Property.
"Pledged Collateral" means, collectively, the Pledged Stock and the
Pledged Debt Instruments.
"Pledged Debt Instruments" means all right, title and interest of
any Grantor in instruments evidencing any Indebtedness owed to such Grantor or
other obligations, and any distribution of property made on, in respect of or in
exchange for the foregoing from time to time, including all Indebtedness
described on Schedule 5, issued by the obligors named therein.
"Pledged Investment Property" means any investment property of any
Grantor, and any distribution of property made on, in respect of or in exchange
for the foregoing from time to time, other than any Pledged Stock or Pledged
Debt Instruments.
"Pledged Stock" means all Pledged Certificated Stock and all Pledged
Uncertificated Stock.
"Pledged Uncertificated Stock" means any Stock or Stock Equivalent
of any Person that is not Pledged Certificated Stock, including all right, title
and interest of any Grantor as a limited or general partner in any partnership
not constituting Pledged Certificated Stock or as a member of any limited
liability company, all right, title and interest of any Grantor in, to and under
any Constituent Document of any partnership or limited liability company to
which it is a party, and any distribution of property made on, in respect of or
in exchange for the foregoing from time to time, including in each case those
interests set forth on Schedule 5, to the extent such interests are not
certificated. Pledged Uncertificated Stock excludes any Excluded Property.
"Registered Intellectual Property" means all Patents, Trademarks and
Copyrights that are covered by issued patents or registrations or pending patent
application or applications for registration, excluding any Internet Domain
Names and any Excluded Property.
"Security Cash Collateral Account" means a Cash Collateral Account
that is not a L/C Cash Collateral Account under and as defined in the First Lien
Credit Agreement.
"Software" means (a) all computer programs, including source code
and object code versions, (b) all data, databases and compilations of data,
whether machine readable or
3
otherwise, and (c) all documentation, training materials and configurations
related to any of the foregoing.
"Subsidiary Guarantor" means any Guarantor that is a Subsidiary of
the Borrower.
"UCC" means the Uniform Commercial Code as from time to time in
effect in the State of New York; provided, however, that, in the event that, by
reason of mandatory provisions of any applicable Requirement of Law, any of the
attachment, perfection or priority of the Administrative Agent's or any other
Secured Party's security interest in any Collateral is governed by the Uniform
Commercial Code of a jurisdiction other than the State of New York, "UCC" shall
mean the Uniform Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such attachment, perfection or
priority and for purposes of the definitions related to or otherwise used in
such provisions.
"Vehicles" means all vehicles covered by a certificate of title law
of any state.
Section 1.2 Certain Other Terms.
(a) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms. The terms
"herein", "hereof" and similar terms refer to this Agreement as a whole and not
to any particular Article, Section or clause in this Agreement. References
herein to an Annex, Schedule, Article, Section or clause refer to the
appropriate Annex or Schedule to, or Article, Section or clause in this
Agreement. Where the context requires, provisions relating to any Collateral
when used in relation to a Grantor shall refer to such Grantor's Collateral or
any relevant part thereof.
(b) Section 1.5 (Interpretation) of the Second Lien Credit Agreement
is applicable to this Agreement as and to the extent set forth therein.
(c) The term "payment in full" or "paid in full" with respect to the
Obligations, the Secured Obligations, the Guaranteed Obligations or the Senior
Obligations means upon (A) termination of the Commitments, (B) payment and
satisfaction in full of all Loans and all other Obligations that the
Administrative Agent has been notified in writing are then due and payable by
the holder of such obligation, (C) deposit of cash collateral with respect to
all contingent Obligations (other than contingent indemnification obligations as
to which no claim has been asserted), in amounts required under Section 9.3 of
the Second Lien Credit Agreement and on terms and conditions and with parties
satisfactory to the Administrative Agent and each Indemnitee that is owed such
Obligations and (D) to the extent requested by the Administrative Agent, receipt
by the Secured Parties of liability releases from the Loan Parties each in form
and substance acceptable to the Administrative Agent.
ARTICLE II
GUARANTY
Section 2.1 Guaranty. To induce the Lenders to make the Loans, each
Guarantor hereby, jointly and severally, absolutely, unconditionally and
irrevocably guarantees, as primary obligor and not merely as surety, the full
and punctual payment when due, whether at stated maturity or earlier, by reason
of acceleration, mandatory prepayment or otherwise in accordance
4
with any Loan Document, of all the Obligations of each other Loan Party whether
existing on the date hereof or hereinafter incurred or created (the "Guaranteed
Obligations"). This Guaranty by each Guarantor hereunder constitutes a guaranty
of payment and not of collection. Each Guarantor agrees that its obligations
under this Agreement shall not be discharged until the Obligations (other than
contingent indemnification obligations as to which no claim has been asserted)
are paid in full. Each Guarantor shall be regarded, and shall be in the same
position, as principal debtor with respect to the Guaranteed Obligations.
Section 2.2 Limitation of Guaranty. Any term or provision of this Guaranty
or any other Loan Document to the contrary notwithstanding, the maximum
aggregate amount for which any Subsidiary Guarantor shall be liable hereunder
shall not exceed the maximum amount for which such Subsidiary Guarantor can be
liable without rendering this Guaranty or any other Loan Document, as it relates
to such Subsidiary Guarantor, subject to avoidance under applicable Requirements
of Law relating to fraudulent conveyance or fraudulent transfer (including the
Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act and
Section 548 of Title 11 of the United States Code or any applicable provisions
of comparable Requirements of Law) (collectively, "Fraudulent Transfer Laws").
Any analysis of the provisions of this Guaranty for purposes of Fraudulent
Transfer Laws shall take into account the right of contribution established in
Section 2.3 and, for purposes of such analysis, give effect to any discharge of
intercompany debt as a result of any payment made under the Guaranty.
Section 2.3 Contribution. To the extent that any Subsidiary Guarantor
shall be required hereunder to pay any portion of any Guaranteed Obligation
exceeding the greater of (a) the amount of the economic benefit actually
received by such Subsidiary Guarantor from the Loans and other Obligations and
(b) the amount such Subsidiary Guarantor would otherwise have paid if such
Subsidiary Guarantor had paid the aggregate amount of the Guaranteed Obligations
(excluding the amount thereof repaid by the Borrower) in the same proportion as
such Subsidiary Guarantor's net worth on the date enforcement is sought
hereunder bears to the aggregate net worth of all the Subsidiary Guarantors on
such date, then such Guarantor shall be reimbursed by such other Subsidiary
Guarantors for the amount of such excess, pro rata, based on the respective net
worth of such other Subsidiary Guarantors on such date.
Section 2.4 Authorization; Other Agreements. The Secured Parties are
hereby authorized, without notice to or demand upon any Guarantor and without
discharging or otherwise affecting the obligations of any Guarantor hereunder
and without incurring any liability hereunder, from time to time, to do each of
the following:
(a) (i) modify, amend, supplement or otherwise change, (ii)
accelerate or otherwise change the time of payment or (iii) waive or otherwise
consent to noncompliance with, any Guaranteed Obligation or any Loan Document,
in each case in accordance with the terms of the Second Lien Credit Agreement
and the other Loan Documents;
(b) apply to the Guaranteed Obligations any sums by whomever paid or
however realized to any Guaranteed Obligation in such order as provided in the
Loan Documents;
(c) refund at any time any payment received by any Secured Party in
respect of any Guaranteed Obligation;
(d) (i) Sell, exchange, enforce, waive, substitute, liquidate,
terminate, release, abandon, fail to perfect, subordinate, accept, substitute,
surrender, exchange, affect,
5
impair or otherwise alter or release any Collateral for any Guaranteed
Obligation or any other guaranty therefor in any manner, (ii) receive, take and
hold additional Collateral to secure any Guaranteed Obligation, (iii) add,
release or substitute any one or more other Guarantors, makers or endorsers of
any Guaranteed Obligation or any part thereof and (iv) otherwise deal in any
manner with the Borrower and any other Guarantor, maker or endorser of any
Guaranteed Obligation or any part thereof; and
(e) settle, release, compromise, collect or otherwise liquidate the
Guaranteed Obligations.
Section 2.5 Guaranty Absolute and Unconditional. To the maximum extent
permitted by Requirements of Law, each Guarantor hereby waives and agrees not to
assert any defense, whether arising in connection with or in respect of any of
the following or otherwise, and hereby agrees that its obligations under this
Guaranty are irrevocable, absolute and unconditional and shall not be discharged
as a result of or otherwise affected by any of the following (which may not be
pleaded and evidence of which may not be introduced in any proceeding with
respect to this Guaranty, in each case except as otherwise agreed in writing by
the Administrative Agent):
(a) the invalidity or unenforceability of any obligation of the
Borrower or any other Guarantor under any Loan Document or any other agreement
or instrument relating thereto (including any amendment, consent or waiver
thereto), or any security for, or other guaranty of, any Guaranteed Obligation
or any part thereof, or the lack of perfection or continuing perfection or
failure of priority of any security for the Guaranteed Obligations or any part
thereof;
(b) the absence of (i) any attempt to collect any Guaranteed
Obligation or any part thereof from the Borrower or any other Guarantor or other
action to enforce the same or (ii) any action to enforce any Loan Document or
any Lien thereunder;
(c) the failure by any Person to take any steps to perfect and
maintain any Lien on, or to preserve any rights with respect to, any Collateral;
(d) any workout, insolvency, bankruptcy proceeding, reorganization,
arrangement, liquidation or dissolution by or against the Borrower, any other
Guarantor or any of the Borrower's other Subsidiaries or any procedure,
agreement, order, stipulation, election, action or omission thereunder,
including any discharge or disallowance of, or bar or stay against collecting,
any Guaranteed Obligation (or any interest thereon) in or as a result of any
such proceeding;
(e) any foreclosure, whether or not through judicial sale, and any
other Sale of any Collateral or any election following the occurrence of an
Event of Default by any Secured Party to proceed separately against any
Collateral in accordance with such Secured Party's rights under any applicable
Requirement of Law; or
(f) any other defense, setoff, counterclaim or any other
circumstance that might otherwise constitute a legal or equitable discharge of
the Borrower, any other Guarantor or any of such Borrower's other Subsidiaries,
in each case other than the payment in full of the Guaranteed Obligations.
6
Section 2.6 Waivers. Each Guarantor hereby unconditionally and irrevocably
waives, to the maximum extent permitted by Requirements of Law, and agrees not
to assert any claim, defense, setoff or counterclaim based on diligence,
promptness, presentment, requirements for any demand or notice hereunder
including any of the following: (a) any demand for payment or performance and
protest and notice of protest, (b) any notice of acceptance, (c) any
presentment, demand, protest or further notice or other requirements of any kind
with respect to any Guaranteed Obligation (including any accrued but unpaid
interest thereon) becoming immediately due and payable and (d) any other notice
in respect of any Guaranteed Obligation or any part thereof, and any defense
arising by reason of any disability or other defense of the Borrower or any
other Guarantor. Each Guarantor further unconditionally and irrevocably agrees
not to (x) enforce or otherwise exercise any right of subrogation or any right
of reimbursement or contribution or similar right against the Borrower or any
other Guarantor by reason of any Loan Document or any payment made thereunder
prior to the payment in full of the Guaranteed Obligations or (y) assert any
claim, defense, setoff or counterclaim it may have against any other Loan Party
or set off any of its obligations to such other Loan Party against obligations
of such Loan Party to such Guarantor. No obligation of any Guarantor hereunder
shall be discharged other than by complete performance.
Section 2.7 Reliance. Each Guarantor hereby assumes responsibility for
keeping itself informed of the financial condition of the Borrower, each other
Guarantor and any other guarantor, maker or endorser of any Guaranteed
Obligation or any part thereof, and of all other circumstances bearing upon the
risk of nonpayment of any Guaranteed Obligation or any part thereof that
diligent inquiry would reveal, and each Guarantor hereby agrees that no Secured
Party shall have any duty to advise any Guarantor of information known to it
regarding such condition or any such circumstances. In the event any Secured
Party, in its sole discretion, undertakes at any time or from time to time to
provide any such information to any Guarantor, such Secured Party shall be under
no obligation to (a) undertake any investigation not a part of its regular
business routine, (b) disclose any information that such Secured Party, pursuant
to accepted or reasonable commercial finance or banking practices, wishes to
maintain confidential or (c) make any future disclosures of such information or
any other information to any Guarantor.
ARTICLE III
GRANT OF SECURITY INTEREST
Section 3.1 Collateral. For the purposes of this Agreement, all of the
following property now owned or at any time hereafter acquired by a Grantor or
in which a Grantor now has or at any time in the future may acquire any right,
title or interests is collectively referred to as the "Collateral":
(a) all accounts, chattel paper, deposit accounts, documents (as
defined in the UCC), equipment, general intangibles, instruments, inventory,
investment property and any supporting obligations related thereto (including
any Pledged Collateral);
(b) the commercial tort claims described on Schedule 1 and on any
supplement thereto received by the Administrative Agent pursuant to Section 5.9;
(c) all books and records pertaining to the other property described
in this Section 3.1;
7
(d) all property of such Grantor held by any Secured Party,
including all property of every description, in the custody of or in transit to
such Secured Party for any purpose, including safekeeping, collection or pledge,
for the account of such Grantor or as to which such Grantor may have any right
or power, including but not limited to cash;
(e) all other goods (including but not limited to fixtures) and
personal property of such Grantor, whether tangible or intangible and wherever
located; and
(f) to the extent not otherwise included, all proceeds of the
foregoing;
provided, however, that "Collateral" shall not include any Excluded Property;
and provided, further, that if and when any property shall cease to be Excluded
Property, such property shall automatically be deemed at all times from and
after the date such property ceases to be Excluded Property to constitute
Collateral.
Section 3.2 Grant of Security Interest in Collateral.
(a) Each Grantor, as collateral security for the prompt and complete
payment and performance when due (whether at stated maturity, by acceleration or
otherwise) of the Obligations (the "Secured Obligations"), hereby mortgages,
pledges and hypothecates to the Administrative Agent, for the benefit of the
Secured Parties, and grants to the Administrative Agent, for the benefit of the
Secured Parties a Lien on and security interest in, all of its right, title and
interest in, to and under the Collateral of such Grantor.
(b) With respect to any provision in this Agreement which requires
any Grantor to deliver possession or control of any negotiable document,
instrument, certificated securities, promissory notes, deposit accounts,
securities accounts, commodity accounts, and letter of credit rights or other
Collateral requiring possession or control thereof in order to perfect the
security interest of the Administrative Agent therein under the UCC or for the
secured party to be named as such under any control agreement, until no
Obligations (as defined in the First Lien Credit Agreement) are outstanding, no
such delivery or giving of control to the Agent shall be required to the extent
such Collateral is delivered to or control is given to the First Lien Collateral
Agent in accordance with the First Lien Loan Documents and the Intercreditor
Agreement., it being understood that the First Lien Collateral Agent is acting
as agent and bailee for the benefit of the Administrative Agent pursuant to the
terms of the Intercreditor Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce the Lenders and the Administrative Agent to enter into the
Loan Documents, each Grantor represents and warrants to each of them and the
other Secured Parties each of the following after giving effect to the Verizon
TRS Acquisition and the consummation of the Hands On Merger on the Closing Date:
Section 4.1 Title; No Other Liens. Except for the Lien granted to the
Administrative Agent pursuant to this Agreement and other Permitted Liens
(except for those Permitted Liens not permitted to exist on any Collateral)
under any Loan Document (including Section 4.2), such Grantor owns each item of
the Collateral free and clear of any and all Liens or claims of others. Such
Grantor (a) is the record and beneficial owner of the Collateral pledged by it
hereunder
8
constituting instruments or certificates and (b) has rights in or the power to
transfer each other item of Collateral in which a Lien is granted by it
hereunder, free and clear of any other Lien, other than Permitted Liens.
Section 4.2 Perfection and Priority. The security interest granted
pursuant to this Agreement constitutes a valid and continuing perfected security
interest in favor of the Administrative Agent, for the benefit of the Secured
Parties, in all Collateral subject, for the following Collateral, to the
occurrence of the following filings and other actions: (i) in the case of all
Collateral in which a security interest may be perfected by filing a financing
statement under the UCC, the proper and timely completion of the filings and
other actions specified on Schedule 2 (which, in the case of all filings and
other documents referred to on such schedule, have been delivered to the
Administrative Agent in completed and duly authorized form) and to the filing of
continuation statements as provided under applicable law, (ii) with respect to
any deposit account, the execution of Control Agreements, (iii) in the case of
all Registered Intellectual Property for which UCC filings are insufficient, all
appropriate filings having been made with the Applicable IP Office (it being
understood that additional filings may be required to perfect the Administrative
Agent's security interest in any Registered Intellectual Property acquired by
such Grantor after the date hereof, subject to the qualifications set forth in
Section 5.7(e), (iv) in the case of letter-of-credit rights that are not
supporting obligations of Collateral, the execution of a Contractual Obligation
granting control to the Administrative Agent over such letter-of-credit rights,
(v) in the case of electronic chattel paper, the completion of all steps
necessary to grant control to the Administrative Agent over such electronic
chattel paper and (vi) in the case of Vehicles, the actions required under
Section 5.1(e). Such security interest shall be prior to all other Liens on the
Collateral except for Permitted Liens upon (i) in the case of all Pledged
Certificated Stock, Pledged Debt Instruments and Pledged Investment Property,
the delivery thereof to the Administrative Agent of such Pledged Certificated
Stock, Pledged Debt Instruments and Pledged Investment Property consisting of
instruments and certificates, in each case properly endorsed for transfer to the
Administrative Agent or in blank, (ii) in the case of all Pledged Investment
Property not in certificated form held in a securities account, the execution of
Control Agreements with respect to such investment property and (iii) in the
case of all other instruments and tangible chattel paper that are not Pledged
Certificated Stock, Pledged Debt Instruments or Pledged Investment Property, the
delivery thereof to the Administrative Agent of such instruments and tangible
chattel paper. Except as set forth in this Section 4.2, all actions by each
Grantor necessary or desirable to protect and perfect the Lien granted hereunder
on the Collateral have been duly taken.
Section 4.3 Jurisdiction of Organization; Chief Executive Office. Such
Grantor's (a) jurisdiction of organization or formation, (b) exact legal name
(as it appears in such Grantor's Constituent Documents), (c) organizational
identification number, if any, issued by the jurisdiction of organization or
formation, (d) type of organization, (e) Federal Taxpayer Identification Number,
(f) other jurisdictions in which it is qualified to do business, (g) location of
its chief executive office or sole place of business, (h) legal name,
jurisdiction of organization or formation, location of chief executive office,
identity or organizational structure (including by merger or consolidation with
any other Person) if different than otherwise provided in this Section 4.3
within the prior five (5)-year period, and (i) assets acquired from any other
Person (other than Inventory and Equipment in the ordinary course from persons
in the business of selling such goods), in each case as of the date hereof, is
specified on Schedule 3.
9
Section 4.4 Locations of Inventory, Equipment and Books and Records. On
the date hereof, such Grantor's inventory and equipment (other than inventory or
equipment in transit in the ordinary course of business or Collateral having an
aggregate value of less than $100,000) and books and records concerning the
Collateral are kept at the locations listed on Schedule 4.
Section 4.5 Pledged Collateral.
(a) As of the Closing Date the Pledged Stock pledged by such Grantor
hereunder (i) is listed on Schedule 5 and constitutes that percentage of the
issued and outstanding equity of all classes of each issuer thereof as set forth
on Schedule 5, (ii) has been duly authorized, validly issued and is fully paid
and nonassessable (other than Pledged Stock in limited liability companies and
partnerships), and (iii) constitutes the legal, valid and binding obligation of
the obligor with respect thereto, enforceable in accordance with its terms,
except as may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally or by
general equitable principles relating to enforceability.
(b) As of the Closing Date, all Pledged Collateral (other than
Pledged Uncertificated Stock) and all Pledged Investment Property consisting of
instruments and certificates has been delivered to the First Lien Collateral
Agent in accordance with Section 5.3(a).
(c) Upon the occurrence and during the continuance of an Event of
Default, the Administrative Agent shall be entitled to exercise all of the
rights of the Grantor granting the security interest in any Pledged Stock, and a
transferee or assignee of such Pledged Stock shall become a holder of such
Pledged Stock to the same extent as such Grantor and, subject to the governing
documents of such issuer, and applicable law, be entitled to participate in the
management of the issuer of such Pledged Stock to the same extent as such
Grantor and, upon the transfer of the entire interest of such Grantor, such
Grantor shall, by operation of law, cease to be a holder of such Pledged Stock.
Section 4.6 Instruments and Tangible Chattel Paper Formerly Accounts. No
amount payable to such Grantor under or in connection with any account is
evidenced by any instrument or tangible chattel paper that has not been
delivered to the First Lien Collateral Agent, properly endorsed for transfer, to
the extent delivery is required by Section 5.6(a).
Section 4.7 Intellectual Property. As of the Closing Date, Schedule 6 sets
forth a true and complete list of the following Intellectual Property such
Grantor owns, licenses or otherwise has the right to use: (i) Registered
Intellectual Property, (ii) Internet Domain Names and (iii) Material
Intellectual Property and material Software, separately identifying that owned
and licensed to such Grantor and including for each of the foregoing items (1)
the owner, (2) the title, (3) as applicable, the jurisdiction in which such item
has been registered or otherwise arises or in which a patent application or an
application for registration has been filed and is pending, (4) as applicable,
the patent, registration or application number and issuance, registration or
application date and (5) any IP Licenses granted by the Grantor with respect
thereto.
Section 4.8 Commercial Tort Claims. The only commercial tort claims of any
Grantor existing on the date hereof (regardless of whether the amount, defendant
or other material facts can be determined and regardless of whether such
commercial tort claim has been asserted, threatened or has otherwise been made
known to the obligee thereof or whether litigation has
10
been commenced for such claims) are those listed on Schedule 1, which sets forth
such information separately for each Grantor.
Section 4.9 Specific Collateral. Except as disclosed from time to time to
the Administrative Agent, none of the Collateral is or is proceeds or products
of farm products, as-extracted collateral, health-care-insurance receivables or
timber to be cut.
Section 4.10 Promissory Notes and Debt Securities. As of the Closing Date,
Schedule 7 hereto sets forth for each Grantor a list of all promissory notes and
debt securities payable or due to such Grantor by or from any other Person
(including any other Grantor) that will not be repaid on the Closing Date.
Section 4.11 Governmental Licenses. Schedule 8 hereto sets forth for each
Grantor a description of each material license from a Governmental Authority
which is, as of the date hereof, necessary to the conduct of the business of
such Grantor as conducted on the date hereof.
Section 4.12 Motor Vehicles. Schedule 9 sets forth a list of each Vehicle
owned by such Grantor as of the Closing Date.
Section 4.13 Representations and Warranties of the Second Lien Credit
Agreement. The representations and warranties as to such Grantor and its
Subsidiaries made by the Borrower in Article IV (Representations and Warranties)
of the Second Lien Credit Agreement are true and correct, (a) if such date is
the Closing Date, on and as of such date or, to the extent such representations
and warranties expressly relate to an earlier date, on and as of such earlier
date and (b) otherwise, in all material respects (provided, that if any
representation or warranty is by its terms qualified by concepts of materiality,
such representation shall be true and correct in all respects) on and as of such
date or, to the extent such representations and warranties expressly relate to
an earlier date, on and as of such earlier date.
ARTICLE V
COVENANTS
Each Grantor agrees with the Administrative Agent to the following,
as long as any Obligation (other than contingent indemnification obligations as
to which no claim has been asserted) or Commitment remains outstanding and, in
each case, unless the Required Lenders otherwise consent in writing:
Section 5.1 Maintenance of Perfected Security Interest; Further
Documentation and Consents.
(a) Generally. Such Grantor shall (i) not use or permit any
Collateral to be used unlawfully or in violation of any provision of any Loan
Document, any Requirement of Law or any policy of insurance covering the
Collateral and (ii) not enter into any Contractual Obligation or undertaking
restricting the right or ability of such Grantor or the Administrative Agent to
Sell any Collateral or which would cause any Collateral to become after the
Closing Date Excluded Property set forth in clause (ii) of the definition
thereof, except in the ordinary course of business and in connection with
transactions permitted by the Second Lien Credit Agreement or as may otherwise
be authorized by the Administrative Agent.
11
(b) Such Grantor shall maintain the security interest created by
this Agreement as a perfected security interest having at least the priority
described, and subject to the limitations set forth in Section 4.2 and shall
defend such security interest and such priority against the claims and demands
of all Persons.
(c) Pursuant to Section 6.1(e) of the Second Lien Credit Agreement,
at the time of delivery of annual financial statements with respect to the
preceding Fiscal Year (starting with the Fiscal Year ending December 31, 2008)
pursuant to Section 6.1(c) of the Second Lien Credit Agreement, the Borrower
shall deliver to the Administrative Agent a certificate executed by a
Responsible Officer containing updated Schedules 3, 4, 5, 6, 7, 8 and 9 to any
matter hereafter arising that, if existing or occurring at the Closing Date as
of the end of the immediately preceding month ending at least ten (10) Business
Days prior to the date of such certificate setting forth would have been
required to be set forth or described in such Schedules; provided that no such
supplement to any such Schedule shall amend, supplement or otherwise modify any
Loan Document or be or be deemed a waiver of any Default or Event of Default
resulting from the matters disclosed therein (each such certificate a
"Collateral Update Certificate").
(d) At any time and from time to time, upon the written request of
an Agent and subject to the limitations set forth in Section 4.2, such Grantor
shall, for the purpose of obtaining or preserving the full benefits of this
Agreement and of the rights and powers herein granted, (i) promptly and duly
execute and deliver, and have recorded, such further documents, including an
authorization to file (or, as applicable, the filing) of any financing statement
or amendment under the UCC (or other filings under similar Requirements of Law)
in effect in any jurisdiction with respect to the security interest created
hereby and (ii) take such further action as an Agent may reasonably request,
including (A) so long as any Event of Default exists, using its commercially
reasonable efforts to secure all approvals necessary or appropriate for the
assignment to or for the benefit of the Administrative Agent of any Contractual
Obligation, including any IP License, held by such Grantor and to enforce the
security interests granted hereunder and (B) executing and delivering any
Control Agreements with respect to deposit accounts and securities accounts to
the extent required under Section 7.11 of the Second Lien Credit Agreement.
(e) If, at any time, the aggregate fair market value of the
Collateral consisting of Vehicles (other than Vehicles constituting Excluded
Property) exceeds $500,000, the applicable Grantors shall, if requested by the
Administrative Agent arrange for the Administrative Agent's second priority
security interest to be noted on the certificate of title of each such Vehicle
and shall file any other necessary documentation in each jurisdiction that the
Administrative Agent shall reasonably deem necessary to perfect its security
interests in such Vehicle.
(f) Such Grantor shall comply with the requirements of Section
7.10(e) of the Second Lien Credit Agreement providing for delivery to
Administrative Agent of a landlord's agreement or bailee letter, as applicable,
from the lessors of leased property or bailees with respect to warehouse,
processor or converter facility or other locations where Collateral is stored or
located.
(g) Notwithstanding anything to the contrary in this Agreement, the
Administrative Agent may, without the consent of any Secured Party, not require
the Loan Parties to perfect any security interest granted to the Administrative
Agent as to which the Administrative Agent has determined in its sole discretion
that the collateral value thereof is
12
insufficient to justify the difficulty, time and/or expense of obtaining a
perfected security interest therein.
Section 5.2 Changes in Locations, Name, Etc. Except upon 15 days' prior
written notice to the Administrative Agent (or such shorter period as the
Administrative Agent may agree to) and delivery to the Administrative Agent of
all documents reasonably requested by the Administrative Agent to maintain the
validity, perfection and priority of the security interests provided for herein,
no Grantor shall do any of the following:
(i) permit any inventory or equipment to be kept at a location other
than those listed on Schedule 4, or as to which the Loan Parties have
complied with Section 5.1(f), except for inventory or equipment in transit
in the ordinary course of business;
(ii) change its jurisdiction of organization or its location (for
purposes of the UCC), in each case from that referred to in Section 4.3;
or
(iii) change its legal name or organizational identification number,
if any, or corporation, limited liability company, partnership or other
organizational structure to such an extent that any financing statement
filed in connection with this Agreement would become misleading.
Section 5.3 Pledged Collateral. (a) Delivery of Pledged Collateral.
Subject to Section 3.2(b) hereof, such Grantor shall (i) deliver to the
Administrative Agent, in suitable form for transfer and in form and substance
satisfactory to the Administrative Agent, (A) all Pledged Certificated Stock,
(B) all Pledged Debt Instruments in excess of $50,000 in the aggregate, and (C)
all certificates and instruments evidencing Pledged Investment Property in
excess of $50,000 in the aggregate and (ii) maintain all other Pledged
Investment Property in excess of $50,000 in the aggregate in a Controlled
Securities Account; provided that, so long as no Event of Default shall have
occurred and be continuing, the Administrative Agent shall, promptly upon
request of such Grantor, make appropriate arrangements for making any Pledged
Debt Instruments pledged by such Grantor available to such Grantor for purposes
of prosecution, collection or renewal.
(b) Event of Default. During the continuance of an Event of Default,
the Administrative Agent shall have the right, at any time in its discretion and
without notice to the Grantor, to (i) transfer to or to register in its name or
in the name of its nominees any Pledged Collateral or any Pledged Investment
Property and (ii) exchange any certificate or instrument representing or
evidencing any Pledged Collateral or any Pledged Investment Property for
certificates or instruments of smaller or larger denominations.
(c) Cash Distributions with respect to Pledged Collateral. Except as
provided in Article VI, such Grantor shall be entitled to receive all cash
distributions paid in respect of the Pledged Collateral.
(d) Voting Rights. Except as provided in Article VI, such Grantor
shall be entitled to exercise all voting, consent and corporate, partnership,
limited liability company and similar rights with respect to the Pledged
Collateral; provided, however, that no vote shall be cast, consent given or
right exercised or other action taken by such Grantor that would impair the
Collateral that would be inconsistent with or result in any violation of any
provision of any Loan Document.
13
Section 5.4 Accounts.
(a) Such Grantor shall not, other than in the ordinary course of
business or in a transaction permitted under the Second Lien Credit Agreement,
(i) grant any extension of the time of payment of any account, (ii) compromise
or settle any account for less than the full amount thereof, (iii) release,
wholly or partially, any Person liable for the payment of any account, (iv)
allow any credit or discount on any account or (v) amend, supplement or modify
any account in any manner that could materially adversely affect the value
thereof.
(b) If any Event of Default has occurred and is continuing the
Administrative Agent shall have the right to make test verifications of the
Accounts in any manner and through any medium that it reasonably considers
advisable, and such Grantor shall furnish all such assistance and information as
the Administrative Agent may reasonably require in connection therewith. If any
Event of Default has occurred and is continuing, upon the Administrative Agent's
request, such Grantor shall cause independent public accountants or others
satisfactory to the Administrative Agent to furnish to the Administrative Agent
reports showing reconciliations, aging and test verifications of, and trial
balances for, the accounts.
Section 5.5 Commodity Contracts. Such Grantor shall not have any commodity
contract other than with a Person reasonably acceptable to the Administrative
Agent and subject to a Control Agreement.
Section 5.6 Delivery of Instruments and Tangible Chattel Paper and Control
of Investment Property, Letter-of-Credit Rights and Electronic Chattel Paper.
(a) If any amount in excess of $50,000 payable under or in
connection with any Collateral owned by such Grantor shall be or become
evidenced by an instrument or tangible chattel paper other than such instrument
delivered in accordance with Section 5.3(a) and in the possession of the
Administrative Agent, such Grantor shall ▇▇▇▇ all such instruments and tangible
chattel paper with the following legend: "This writing and the obligations
evidenced or secured hereby are subject to the security interest of CLEARLAKE
CAPITAL GROUP, L.P., as Administrative Agent" and, at the request of the
Administrative Agent, shall promptly deliver such instrument or tangible chattel
paper to the Administrative Agent, duly indorsed in a manner satisfactory to the
Administrative Agent.
(b) Except pursuant to the Second Lien Loan Documents and to the
extent permitted under the Second Lien Credit Agreement, such Grantor shall not
grant "control" (within the meaning of such term under Article 9-106 of the UCC)
over any investment property to any Person other than the Administrative Agent.
(c) If such Grantor is or becomes the beneficiary of a letter of
credit in excess of $50,000 that is not a supporting obligation of any
Collateral, such Grantor shall promptly, and in any event within 5 Business Days
after becoming a beneficiary, notify the Administrative Agent thereof and, if so
requested by the Administrative Agent, use commercially reasonable efforts to
enter into a Contractual Obligation with the Administrative Agent, the issuer of
such letter of credit or any nominated person with respect to the
letter-of-credit rights under such letter of credit. Such Contractual Obligation
shall assign such letter-of-credit rights to the Administrative Agent and such
assignment shall be sufficient to grant control for the purposes of Section
9-107 of the UCC (or any similar section under any equivalent UCC). Such
Contractual Obligation shall also permit the Administrative Agent, after the
occurrence and during the
14
continuance of an Event of Default, to direct all payments thereunder to a
Security Cash Collateral Account. The provisions of the Contractual Obligation
shall be in form and substance reasonably satisfactory to the Administrative
Agent.
(d) If any amount in excess of $50,000 payable under or in
connection with any Collateral owned by such Grantor shall be or become
evidenced by electronic chattel paper, such Grantor shall take all steps
necessary to grant the Administrative Agent control of all such electronic
chattel paper for the purposes of Section 9-105 of the UCC (or any similar
section under any equivalent UCC) and all "transferable records" as defined in
each of the Uniform Electronic Transactions Act and the Electronic Signatures in
Global and National Commerce Act.
Section 5.7 Intellectual Property.
(a) Within 60 days after such Grantor acquires any Registered
Intellectual Property, such Grantor shall provide the Administrative Agent
notification thereof and the short-form intellectual property agreements as
described in this Section 5.7 and other documents that the Administrative Agent
reasonably requests with respect thereto.
(b) Such Grantor shall (and shall use commercially reasonable
efforts to cause all its licensees to) (i) (1) continue to use each Trademark
included in the Material Intellectual Property in order to maintain such
Trademark in full force and effect with respect to each class of goods for which
such Trademark is currently used, free from any claim of abandonment for
non-use, (2) maintain at least the same standards of quality of products and
services offered under Trademarks included in the Material Intellectual Property
as are maintained as of the date hereof, (3) use Trademarks included in the
Material Intellectual Property with the appropriate notice of registration and
all other notices and legends required by applicable Requirements of Law, (4)
not adopt or use any other Trademark that is confusingly similar or a colorable
imitation of any Trademark included in the Material Intellectual Property unless
the Administrative Agent shall obtain a perfected security interest in such
other Trademark pursuant to, and subject to the terms and conditions of, this
Agreement (including without limitation any applicable qualifications set forth
in Sections 4.2 and 5.7(e)) and (ii) not do any act or omit to do any act
whereby (w) any Trademark included in the Material Intellectual Property (or any
goodwill associated therewith) may become destroyed, invalidated, tarnished or
abandoned in any way, (x) any Patent included in the Material Intellectual
Property may become forfeited, abandoned or dedicated to the public, (y) any
portion of the Copyrights included in the Material Intellectual Property may
become invalidated or fall into the public domain or (z) any Trade Secret that
is included in the Material Intellectual Property may become publicly available
or otherwise unprotectable, unless with respect to (i) and (ii) such action may
be otherwise authorized by the Administrative Agent in writing.
(c) Such Grantor shall notify the Administrative Agent promptly if
it knows or has reason to know that any application or registration relating to
any Material Intellectual Property may become forfeited, abandoned or dedicated
to the public, or of any adverse determination or development regarding the
validity or enforceability of or such Grantor's ownership of, interest in, or
right to use, register or maintain any such Material Intellectual Property
(including the institution of, or any such determination or development in, any
proceeding relating to the foregoing in any Applicable IP Office, other than,
for the avoidance of doubt, office actions that arise in the ordinary course of
prosecution of any pending applications for patenting or registering any
Material Intellectual Property). Such Grantor shall take all commercially
reasonable actions that are necessary or reasonably requested by the
Administrative
15
Agent to maintain and prosecute each application (and to obtain the relevant
registration or recordation) and to maintain each registration and recordation
included in the Material Intellectual Property, except as may otherwise be
authorized by the Administrative Agent in writing.
(d) Such Grantor shall not knowingly infringe, misappropriate,
dilute or violate the Intellectual Property of any other Person. In the event
that any Material Intellectual Property of such Grantor is or has been
infringed, misappropriated, violated or diluted by a third party, such Grantor
shall take such action as it reasonably deems appropriate under the
circumstances in response thereto, including promptly bringing suit and
recovering all damages therefor.
(e) Such Grantor shall execute and deliver to the Administrative
Agent in form and substance reasonably acceptable to the Administrative Agent
the short-form intellectual property security agreements in the form attached
hereto as Annex 3, and such other documents suitable for filing in the
Applicable IP Office as may be reasonably requested by the Administrative Agent,
for all Registered Intellectual Property acquired by such Grantor after the date
hereof in which a security interest may be perfected under applicable law.
Section 5.8 Notices. Such Grantor shall promptly notify the Administrative
Agent in writing of its acquisition of any material interest hereafter in
property (other than Intellectual Property) that is of a type where a security
interest or lien must be or may be registered, recorded or filed under, or
notice thereof given under, any federal statute or regulation.
Section 5.9 Notice of Commercial Tort Claims. Such Grantor agrees that, if
it shall acquire any interest in any commercial tort claim with an aggregate
value in excess of $50,000 (whether from another Person or because such
commercial tort claim shall have come into existence), (i) such Grantor shall,
promptly upon such acquisition, deliver to the Administrative Agent, in each
case in form and substance reasonably satisfactory to the Administrative Agent,
a notice of the existence and nature of such commercial tort claim and a
supplement to Schedule 1 containing a specific description of such commercial
tort claim, (ii) Section 3.1 shall apply to such commercial tort claim and (iii)
such Grantor shall execute and deliver to the Administrative Agent, in each case
in form and substance reasonably satisfactory to the Administrative Agent, any
document, and take all other action, deemed by the Administrative Agent to be
reasonably necessary for the Administrative Agent to obtain, on behalf of the
Lenders, a perfected security interest having at least the priority set forth in
Section 4.2 in all such commercial tort claims. Any supplement to Schedule 1
delivered pursuant to this Section 5.9 shall, after the receipt thereof by the
Administrative Agent, become part of Schedule 1 for all purposes hereunder other
than in respect of representations and warranties made prior to the date of such
receipt.
Section 5.10 Compliance with Second Lien Credit Agreement. Such Grantor
agrees to comply with all covenants and other provisions applicable to it under
the Second Lien Credit Agreement, including Sections 2.17 (Taxes), 11.3 (Costs
and Expenses) and 11.4 (Indemnities) of the Second Lien Credit Agreement and
agrees to the same submission to jurisdiction as that agreed to by the Borrower
in the Second Lien Credit Agreement.
16
ARTICLE VI
REMEDIAL PROVISIONS
Section 6.1 Code and Other Remedies.
(a) UCC Remedies. During the existence and continuance of an Event
of Default, the Administrative Agent may exercise, in addition to all other
rights and remedies granted to it in this Agreement and in any other instrument
or agreement securing, evidencing or relating to any Secured Obligation, all
rights and remedies of a secured party under the UCC or any other applicable
law.
(b) Disposition of Collateral. Without limiting the generality of
the foregoing, the Administrative Agent may, without demand of performance or
other demand, presentment, protest, advertisement or notice of any kind (except
any notice required by law referred to below) to or upon any Grantor or any
other Person (all and each of which demands, defenses, advertisements and
notices are hereby waived to the maximum extent permitted by Requirements of
Law), during the existence and continuance of any Event of Default (personally
or through its agents or attorneys), (i) enter upon the premises where any
Collateral is located, without any obligation to pay rent, through self-help,
without judicial process, without first obtaining a final judgment or giving any
Grantor or any other Person notice or opportunity for a hearing on the
Administrative Agent's claim or action, (ii) collect, receive, appropriate and
realize upon any Collateral and (iii) Sell, grant option or options to purchase
and deliver any Collateral (enter into Contractual Obligations to do any of the
foregoing), in one or more parcels at public or private sale or sales, at any
exchange, broker's board or office of any Secured Party or elsewhere upon such
terms and conditions as it may deem advisable and at such prices as it may deem
best, for cash or on credit or for future delivery without assumption of any
credit risk. The Administrative Agent shall have the right, upon any such public
sale or sales and, to the extent permitted by the UCC and other applicable
Requirements of Law, upon any such private sale, to purchase the whole or any
part of the Collateral so sold, free of any right or equity of redemption of any
Grantor, which right or equity is hereby waived and released to the extent
permitted by Requirements of Law.
(c) Management of the Collateral. Each Grantor further agrees, that,
during the existence and continuance of any Event of Default, (i) at the
Administrative Agent's request, it shall assemble the Collateral and make it
available to the Administrative Agent at places that the Administrative Agent
shall reasonably select, whether at such Grantor's premises or elsewhere, (ii)
without limiting the foregoing, the Administrative Agent also has the right to
require that each Grantor store and keep any Collateral pending further action
by the Administrative Agent and, while any such Collateral is so stored or kept,
take such actions as shall be necessary to protect the same and to preserve and
maintain such Collateral in good condition, (iii) until the Administrative Agent
is able to Sell any Collateral, the Administrative Agent shall have the right to
hold or use such Collateral to the extent that it deems appropriate for the
purpose of preserving the Collateral or its value or for any other purpose
deemed appropriate by the Administrative Agent and (iv) the Administrative Agent
may, if it so elects, seek the appointment of a receiver or keeper to take
possession of any Collateral and to enforce any of the Administrative Agent's
remedies (for the benefit of the Secured Parties), with respect to such
appointment without prior notice or hearing as to such appointment. The
Administrative Agent shall not have any obligation to any Grantor to maintain or
preserve the rights of any Grantor as
17
against third parties with respect to any Collateral while such Collateral is in
the possession of the Administrative Agent.
(d) Application of Proceeds. The Administrative Agent shall apply
the cash proceeds of any action taken by it pursuant to this Section 6.1, after
deducting all reasonable costs and expenses of every kind incurred in connection
therewith or incidental to the care or safekeeping of any Collateral or in any
way relating to the Collateral or the rights of the Administrative Agent and any
other Secured Party hereunder, including reasonable attorneys' fees and
disbursements, to the payment in whole or in part of the Secured Obligations, as
set forth in the Second Lien Credit Agreement, and only after such application
and after the payment by the Administrative Agent of any other amount required
by any Requirement of Law, need the Administrative Agent account for the
surplus, if any, to any Grantor.
(e) Direct Obligation. Neither the Administrative Agent nor any
other Secured Party shall be required to make any demand upon, or pursue or
exhaust any right or remedy against, any Grantor, any other Loan Party or any
other Person with respect to the payment of the Obligations or to pursue or
exhaust any right or remedy with respect to any Collateral therefor or any
direct or indirect guaranty thereof. All of the rights and remedies of the
Administrative Agent and any other Secured Party under any Loan Document shall
be cumulative, may be exercised individually or concurrently and not exclusive
of any other rights or remedies provided by any Requirement of Law. To the
extent it may lawfully do so, each Grantor absolutely and irrevocably waives and
relinquishes the benefit and advantage of, and covenants not to assert against
the Administrative Agent or any Lender, any valuation, stay, appraisement,
extension, redemption or similar laws and any and all rights or defenses it may
have as a surety, now or hereafter existing, arising out of the exercise by them
of any rights hereunder. If any notice of a proposed sale or other disposition
of any Collateral shall be required by law, such notice shall be deemed
reasonable and proper if given at least 10 days before such sale or other
disposition.
(f) Commercially Reasonable. To the extent that applicable
Requirements of Law impose duties on the Administrative Agent to exercise
remedies in a commercially reasonable manner, each Grantor acknowledges and
agrees that it is not commercially unreasonable for the Administrative Agent to
do any of the following after the occurrence and during the continuance of an
Event of Default:
(i) fail to incur significant costs, expenses or other Liabilities
reasonably deemed as such by the Administrative Agent to prepare any
Collateral for disposition or otherwise to complete raw material or work
in process into finished goods or other finished products for disposition;
(ii) fail to obtain Permits, or other consents, for access to any
Collateral to Sell or for the collection or Sale of any Collateral, or, if
not required by other Requirements of Law, fail to obtain Permits or other
consents for the collection or disposition of any Collateral;
(iii) fail to exercise remedies against account debtors or other
Persons obligated on any Collateral or to remove Liens on any Collateral
or to remove any adverse claims against any Collateral;
18
(iv) advertise dispositions of any Collateral through publications
or media of general circulation, whether or not such Collateral is of a
specialized nature or to contact other Persons, whether or not in the same
business as any Grantor, for expressions of interest in acquiring any such
Collateral;
(v) exercise collection remedies against account debtors and other
Persons obligated on any Collateral, directly or through the use of
collection agencies or other collection specialists, hire one or more
professional auctioneers to assist in the disposition of any Collateral,
whether or not such Collateral is of a specialized nature or, to the
extent deemed appropriate by the Administrative Agent, obtain the services
of other brokers, investment bankers, consultants and other professionals
to assist the Administrative Agent in the collection or disposition of any
Collateral, or utilize Internet sites that provide for the auction of
assets of the types included in the Collateral or that have the reasonable
capacity of doing so, or that match buyers and sellers of assets to
dispose of any Collateral;
(vi) dispose of assets in wholesale rather than retail markets;
(vii) disclaim disposition warranties, such as title, possession or
quiet enjoyment; or
(viii) purchase insurance or credit enhancements to insure the
Administrative Agent against risks of loss, collection or disposition of
any Collateral or to provide to the Administrative Agent a guaranteed
return from the collection or disposition of any Collateral.
Each Grantor acknowledges that the purpose of this Section 6.1 is to provide a
non-exhaustive list of actions or omissions that are commercially reasonable
when exercising remedies against any Collateral and that other actions or
omissions by the Secured Parties shall not be deemed commercially unreasonable
solely on account of not being indicated in this Section 6.1. Without limitation
upon the foregoing, nothing contained in this Section 6.1 shall be construed to
grant any rights to any Grantor or to impose any duties on the Administrative
Agent that would not have been granted or imposed by this Agreement or by
applicable Requirements of Law in the absence of this Section 6.1.
(g) IP Licenses. For the purpose of enabling the Administrative
Agent to exercise rights and remedies under this Section 6.1 (including in order
to take possession of, collect, receive, assemble, process, appropriate, remove,
realize upon, Sell or grant options to purchase any Collateral) upon the
occurrence and during the continuance of an Event of Default, each Grantor
hereby grants to the Administrative Agent, for the benefit of the Secured
Parties, (i) an irrevocable, nonexclusive, worldwide license (exercisable
without payment of royalty or other compensation to such Grantor, but
exercisable only upon the occurrence and during the continuance of an Event of
Default), including in such license the right to sublicense, use and practice
any Intellectual Property now owned or hereafter acquired by such Grantor and
access to all media in which any of the licensed items may be recorded or stored
and to all Software and programs used for the compilation or printout thereof
and (ii) an irrevocable license (without payment of rent or other compensation
to such Grantor), exercisable only upon the occurrences and during the
continuance of an Event of Default, to use, operate and occupy all Real Property
owned, operated, leased, subleased or otherwise occupied by such Grantor.
19
Section 6.2 Accounts and Payments in Respect of General Intangibles.
(a) In addition to, and not in substitution for, any similar
requirement in the Second Lien Credit Agreement, if required by the
Administrative Agent at any time during the existence and continuance of an
Event of Default, any payment of accounts or payment in respect of general
intangibles, when collected by any Grantor, shall be promptly (and, in any
event, within 5 Business Days) deposited by such Grantor in the exact form
received, duly indorsed by such Grantor to the Administrative Agent, in a
Security Cash Collateral Account, subject to withdrawal by the Administrative
Agent as provided in Section 6.4. Until so turned over, such payment shall be
held by such Grantor in trust for the Administrative Agent, segregated from
other funds of such Grantor. Each such deposit of proceeds of accounts and
payments in respect of general intangibles shall be accompanied by a report
identifying in reasonable detail the nature and source of the payments included
in the deposit.
(b) At any time during the existence and continuance of an Event of
Default:
(i) each Grantor shall, upon the Administrative Agent's request,
deliver to the Administrative Agent all original and other documents
evidencing, and relating to, the Contractual Obligations and transactions
that gave rise to any account or any payment in respect of general
intangibles, including all original orders, invoices and shipping receipts
and notify account debtors that the accounts or general intangibles have
been collaterally assigned to the Administrative Agent and that payments
in respect thereof shall be made directly to the Administrative Agent;
(ii) the Administrative Agent may, without notice, at any time
during the continuance of an Event of Default, limit or terminate the
authority of a Grantor to collect its accounts or amounts due under
general intangibles or any thereof and, in its own name or in the name of
others, communicate with account debtors to verify with them to the
Administrative Agent's satisfaction the existence, amount and terms of any
account or amounts due under any general intangible. In addition, the
Administrative Agent may at any time during the continuance of an Event of
Default enforce such Grantor's rights against such account debtors and
obligors of general intangibles; and
(iii) each Grantor shall take all actions, deliver all documents and
provide all information necessary or reasonably requested by the
Administrative Agent to ensure any Internet Domain Name is registered.
(c) Anything herein to the contrary notwithstanding, each Grantor
shall remain liable under each account and each payment in respect of general
intangibles to observe and perform all the conditions and obligations to be
observed and performed by it thereunder, all in accordance with the terms of any
agreement giving rise thereto. No Secured Party shall have any obligation or
liability under any agreement giving rise to an account or a payment in respect
of a general intangible by reason of or arising out of any Loan Document or the
receipt by any Secured Party of any payment relating thereto, nor shall any
Secured Party be obligated in any manner to perform any obligation of any
Grantor under or pursuant to any agreement giving rise to an account or a
payment in respect of a general intangible, to make any payment, to make any
inquiry as to the nature or the sufficiency of any payment received by it or as
to the sufficiency of any performance by any party thereunder, to present or
file any claim, to take any action to enforce any performance or to collect the
payment of any amounts that may have been assigned to it or to which it may be
entitled at any time or times.
20
Section 6.3 Pledged Collateral.
(a) Voting Rights. During the existence and continuance of an Event
of Default, upon notice by the Administrative Agent to the relevant Grantor or
Grantors, the Administrative Agent or its nominee may exercise (A) any voting,
consent, corporate and other right pertaining to the Pledged Collateral at any
meeting of shareholders, partners or members, as the case may be, of the
relevant issuer or issuers of Pledged Collateral or otherwise and (B) any right
of conversion, exchange and subscription and any other right, privilege or
option pertaining to the Pledged Collateral as if it were the absolute owner
thereof (including the right to exchange at its discretion any Pledged
Collateral upon the merger, amalgamation, consolidation, reorganization,
recapitalization or other fundamental change in the corporate or equivalent
structure of any issuer of Pledged Stock, the right to deposit and deliver any
Pledged Collateral with any committee, depositary, transfer agent, registrar or
other designated agency upon such terms and conditions as the Administrative
Agent may determine), all without liability except to account for property
actually received by it; provided, however, that the Administrative Agent shall
have no duty to any Grantor to exercise any such right, privilege or option and
shall not be responsible for any failure to do so or delay in so doing.
(b) Proxies. In order to permit the Administrative Agent to exercise
the voting and other consensual rights that it may be entitled to exercise
pursuant hereto and to receive all dividends and other distributions that it may
be entitled to receive hereunder, (i) each Grantor shall promptly execute and
deliver (or cause to be executed and delivered) to the Administrative Agent all
such proxies, dividend payment orders and other instruments as the
Administrative Agent may from time to time reasonably request (upon the
occurrence and during the continuance of an Event of Default) and (ii) without
limiting the effect of clause (i) above, such Grantor hereby grants to the
Administrative Agent an irrevocable proxy to vote all or any part of the Pledged
Collateral and to exercise all other rights, powers, privileges and remedies to
which a holder of the Pledged Collateral would be entitled (including giving or
withholding written consents of shareholders, partners or members, as the case
may be, calling special meetings of shareholders, partners or members, as the
case may be, and voting at such meetings), which proxy shall be effective,
automatically and without the necessity of any action (including any transfer of
any Pledged Collateral on the record books of the issuer thereof) by any other
person (including the issuer of such Pledged Collateral or any officer or agent
thereof) during the existence and continuance of an Event of Default and which
proxy shall only terminate upon the payment in full of the Secured Obligations
(other than contingent indemnification obligations as to which no claim has been
asserted).
(c) Authorization of Issuers. Each Grantor hereby expressly
irrevocably authorizes and instructs, without any further instructions from such
Grantor, each issuer of any Pledged Collateral pledged hereunder by such Grantor
to (i) comply with any instruction received by it from the Administrative Agent
in writing that states that an Event of Default exists and is continuing and is
otherwise in accordance with the terms of this Agreement and each Grantor agrees
that such issuer shall be fully protected from Liabilities to such Grantor in so
complying and (ii) upon the occurrence and during the continuance of an Event of
Default, pay any dividend or make any other payment with respect to the Pledged
Collateral directly to the Administrative Agent.
Section 6.4 Proceeds to be Turned Over to and Held by Administrative
Agent. Unless otherwise expressly provided in the Second Lien Credit Agreement
or this Agreement, upon the occurrence and during the continuance of an Event of
Default, all proceeds of any
21
Collateral received by any Grantor hereunder in cash or Cash Equivalents shall
be held by such Grantor in trust for the Administrative Agent and the other
Secured Parties, segregated from other funds of such Grantor, and shall,
promptly upon receipt by any Grantor, be turned over to the Administrative Agent
in the exact form received (with any necessary endorsement). All such proceeds
of Collateral and any other proceeds of any Collateral received by the
Administrative Agent in cash or Cash Equivalents shall be held by the
Administrative Agent in a Security Cash Collateral Account. All proceeds being
held by the Administrative Agent in a Security Cash Collateral Account (or by
such Grantor in trust for the Administrative Agent) shall continue to be held as
collateral security for the Secured Obligations and shall not constitute payment
thereof until applied as provided in the Second Lien Credit Agreement.
Section 6.5 Private Sales.
(a) Each Grantor recognizes that the Administrative Agent may be
unable to effect a public sale of any Pledged Collateral by reason of certain
prohibitions contained in the Securities Act and applicable state or foreign
securities laws or otherwise or may determine that a public sale is
impracticable, not desirable or not commercially reasonable and, accordingly,
may resort to one or more private sales thereof to a restricted group of
purchasers that shall be obliged to agree, among other things, to acquire such
securities for their own account for investment and not with a view to the
distribution or resale thereof. Each Grantor acknowledges and agrees that any
such private sale may result in prices and other terms less favorable than if
such sale were a public sale and, notwithstanding such circumstances, agrees
that any such private sale shall be deemed to have been made in a commercially
reasonable manner. The Administrative Agent shall be under no obligation to
delay a sale of any Pledged Collateral for the period of time necessary to
permit the issuer thereof to register such securities for public sale under the
Securities Act or under applicable state securities laws even if such issuer
would agree to do so.
(b) Each Grantor agrees to use its best efforts to do or cause to be
done all such other acts as may be necessary to make such sale or sales of any
portion of the Pledged Collateral pursuant to this Section 6.5 valid and binding
and in compliance with all applicable Requirements of Law. Each Grantor further
agrees that a breach of any covenant contained in this Section 6.5 will cause
irreparable injury to the Administrative Agent and other Secured Parties, that
the Administrative Agent and the other Secured Parties have no adequate remedy
at law in respect of such breach and, as a consequence, that each and every
covenant contained in this Section 6.5 shall be specifically enforceable against
such Grantor, and such Grantor hereby waives and agrees not to assert any
defense against an action for specific performance of such covenants except for
a defense that no Event of Default has occurred under the Second Lien Credit
Agreement.
Section 6.6 Deficiency. Each Grantor shall remain liable for any
deficiency if the proceeds of any sale or other disposition of any Collateral
are insufficient to pay the Secured Obligations and the fees and disbursements
of any attorney employed by the Administrative Agent or any other Secured Party
to collect such deficiency.
22
ARTICLE VII
THE ADMINISTRATIVE AGENT
Section 7.1 Administrative Agent's Appointment as Attorney-in-Fact.
(a) Each Grantor hereby irrevocably constitutes and appoints the
Administrative Agent and any Related Person thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of such Grantor and in the name of
such Grantor or in its own name, for the purpose of carrying out the terms of
the Loan Documents, to take any appropriate action and to execute any document
or instrument that may be necessary or desirable to accomplish the purposes of
the Loan Documents following the occurrence and during the continuance of an
Event of Default, and, without limiting the generality of the foregoing, each
Grantor hereby gives the Administrative Agent and its Related Persons the power
and right, on behalf of such Grantor, without notice to or assent by such
Grantor, to do any of the following when an Event of Default exists and is
continuing (as at any time with respect to clause (ii) below):
(i) in the name of such Grantor, in its own name or otherwise, take
possession of and indorse and collect any check, draft, note, acceptance
or other instrument for the payment of moneys due under any account or
general intangible or with respect to any other Collateral and file any
claim or take any other action or proceeding in any court of law or equity
or otherwise deemed appropriate by the Administrative Agent for the
purpose of collecting any such moneys due under any account or general
intangible or with respect to any other Collateral whenever payable;
(ii) in the case of any Intellectual Property that is part of the
Collateral, execute, deliver and have recorded any document that the
Administrative Agent may request to evidence, effect, publicize or record
the Administrative Agent's security interest in such Intellectual Property
and the goodwill and general intangibles of such Grantor relating thereto
or represented thereby;
(iii) pay or discharge taxes and Liens levied or placed on or
threatened against any Collateral, effect any repair or pay any insurance
called for by the terms of the Second Lien Credit Agreement (including all
or any part of the premiums therefor and the costs thereof);
(iv) execute, in connection with any sale provided for in Section
6.1 or Section 6.5, any document to effect or otherwise necessary or
appropriate in relation to evidence the Sale of any Collateral; or
(v) (A) direct any party liable for any payment under any Collateral
to make payment of any moneys due or to become due thereunder directly to
the Administrative Agent or as the Administrative Agent shall direct, (B)
ask or demand for, and collect and receive payment of and receipt for, any
moneys, claims and other amounts due or to become due at any time in
respect of or arising out of any Collateral, (C) sign and indorse any
invoice, freight or express ▇▇▇▇, ▇▇▇▇ of lading, storage or warehouse
receipt, draft against debtors, assignment, verification, notice and other
document in connection with any Collateral, (D) commence and prosecute any
suit, action or proceeding at law or in equity in any court of competent
jurisdiction to collect any Collateral and to enforce any
23
other right in respect of any Collateral, (E) defend any actions, suits,
proceedings, audits, claims, demands, orders or disputes brought against
such Grantor with respect to any Collateral, (F) settle, compromise or
adjust any such actions, suits, proceedings, audits, claims, demands,
orders or disputes and, in connection therewith, give such discharges or
releases as the Administrative Agent may deem appropriate, (G) assign, to
the extent permissible, any Intellectual Property owned by the Grantors or
any IP Licenses of the Grantors throughout the world on such terms and
conditions and in such manner as the Administrative Agent shall in its
sole discretion determine, including the execution and filing of any
document necessary to effectuate or record such assignment and (H)
generally, Sell, ▇▇▇▇▇ ▇ ▇▇▇▇ on, make any Contractual Obligation with
respect to and otherwise deal with, any Collateral as fully and completely
as though the Administrative Agent were the absolute owner thereof for all
purposes and do, at the Administrative Agent's option, at any time or from
time to time, all acts and things that the Administrative Agent deems
necessary to protect, preserve or realize upon any Collateral and the
Secured Parties' security interests therein and to effect the intent of
the Loan Documents, all as fully and effectively as such Grantor might do.
(b) If any Grantor fails to perform or comply with any Contractual
Obligation contained herein, the Administrative Agent, at its option, but
without any obligation so to do, may perform or comply, or otherwise cause
performance or compliance, with such Contractual Obligation.
(c) The expenses of the Administrative Agent incurred in connection
with actions undertaken as provided in this Section 7.1, together with interest
thereon at a rate set forth in Section 2.9 (Interest) of the Second Lien Credit
Agreement, from the date of payment by the Administrative Agent to the date
reimbursed by the relevant Grantor, shall be payable by such Grantor to the
Administrative Agent on demand.
(d) Each Grantor hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue of this Section 7.1. All powers,
authorizations and agencies contained in this Agreement are coupled with an
interest and are irrevocable until this Agreement is terminated and the security
interests created hereby are released.
Section 7.2 Authorization to File Financing Statements. Each Grantor
authorizes the Administrative Agent and its Related Persons, at any time and
from time to time, to file or record financing statements, amendments thereto,
and other filing or recording documents or instruments with respect to any
Collateral in such form and in such offices as the Administrative Agent
reasonably determines appropriate to perfect the security interests of the
Administrative Agent under this Agreement, and such financing statements and
amendments may describe the Collateral covered thereby as "all assets of the
debtor". A photographic or other reproduction of this Agreement shall be
sufficient as a financing statement or other filing or recording document or
instrument for filing or recording in any jurisdiction. Such Grantor also hereby
ratifies its authorization for the Administrative Agent to have filed any
initial financing statement or amendment thereto under the UCC (or other similar
laws) in effect in any jurisdiction if filed prior to the date hereof.
Section 7.3 Authority of Administrative Agent. Each Grantor acknowledges
that the rights and responsibilities of the Administrative Agent under this
Agreement with respect to any action taken by the Administrative Agent or the
exercise or non-exercise by the Administrative Agent of any option, voting
right, request, judgment or other right or remedy provided for herein
24
or resulting or arising out of this Agreement shall, as between the
Administrative Agent and the other Secured Parties, be governed by the Second
Lien Credit Agreement and by such other agreements with respect thereto as may
exist from time to time among them, but, as between the Administrative Agent and
the Grantors, the Administrative Agent shall be conclusively presumed to be
acting as agent for the Secured Parties with full and valid authority so to act
or refrain from acting, and no Grantor shall be under any obligation or
entitlement to make any inquiry respecting such authority.
Section 7.4 Duty; Obligations and Liabilities.
(a) Duty of Administrative Agent. The Administrative Agent's sole
duty with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession shall be to deal with it in the same manner as the
Administrative Agent deals with similar property for its own account. The powers
conferred on the Administrative Agent hereunder are solely to protect the
Administrative Agent's interest in the Collateral and shall not impose any duty
upon the Administrative Agent to exercise any such powers. The Administrative
Agent shall be accountable only for amounts that it receives as a result of the
exercise of such powers, and neither it nor any of its Related Persons shall be
responsible to any Grantor for any act or failure to act hereunder, except for
their own gross negligence or willful misconduct as finally determined by a
court of competent jurisdiction. In addition, the Administrative Agent shall not
be liable or responsible for any loss or damage to any Collateral, or for any
diminution in the value thereof, by reason of the act or omission of any
warehousemen, carrier, forwarding agency, consignee or other bailee if such
Person has been selected by the Administrative Agent in good faith.
(b) Obligations and Liabilities with respect to Collateral. No
Secured Party and no Related Person thereof shall be liable for failure to
demand, collect or realize upon any 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 any other Person or to take any other action
whatsoever with regard to any Collateral. The powers conferred on the
Administrative Agent hereunder shall not impose any duty upon any other Secured
Party to exercise any such powers. 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 respective 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 as finally determined by a court of competent jurisdiction.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Reinstatement. Each Grantor agrees that, if any payment made
by any Loan Party or other Person and applied to the Secured Obligations is at
any time annulled, avoided, set aside, rescinded, invalidated, declared to be
fraudulent or preferential or otherwise required to be refunded or repaid, or
the proceeds of any Collateral are required to be returned by any Secured Party
to such Loan Party, its estate, trustee, receiver or any other party, including
any Grantor, under any bankruptcy law, state or federal law, common law or
equitable cause, then, to the extent of such payment or repayment, any Lien or
other Collateral securing such liability shall be and remain in full force and
effect, as fully as if such payment had never been made. If, prior to any of the
foregoing, (a) any Lien or other Collateral securing such Grantor's liability
25
hereunder shall have been released or terminated by virtue of the foregoing or
(b) any provision of the Guaranty hereunder shall have been terminated,
cancelled or surrendered, such Lien, other Collateral or provision shall be
reinstated in full force and effect and such prior release, termination,
cancellation or surrender shall not diminish, release, discharge, impair or
otherwise affect the obligations of any such Grantor in respect of any Lien or
other Collateral securing such obligation or the amount of such payment.
Section 8.2 Release of Collateral.
(a) At the time provided in clause (b)(iii) of Section 10.10
(Release of Collateral or Guarantors) of the Second Lien Credit Agreement, the
Collateral shall be released from the Lien created hereby and this Agreement and
all obligations (other than those expressly stated to survive such termination)
of the Administrative Agent and each Grantor hereunder shall terminate, all
without delivery of any instrument or performance of any act by any party, and
all rights to the Collateral shall revert to the Grantors. Each Grantor is
hereby authorized to file UCC amendments at such time evidencing the termination
of the Liens so released. At the request of any Grantor following any such
termination, the Administrative Agent shall deliver to such Grantor any
Collateral of such Grantor held by the Administrative Agent hereunder and
execute and deliver to such Grantor such documents as such Grantor shall
reasonably request to evidence such termination.
(b) If the Administrative Agent shall be directed or permitted
pursuant to clause (i) or (ii) of Section 10.10(b) of the Second Lien Credit
Agreement to release any Lien or any Collateral, such Collateral shall be
released from the Lien created hereby to the extent provided under, and subject
to the terms and conditions set forth in, such clauses (i) and (ii). In
connection therewith, the Administrative Agent, at the request of any Grantor,
shall execute and deliver to such Grantor such documents as such Grantor shall
reasonably request to evidence such release.
(c) At the time provided in Section 10.10(a) of the Second Lien
Credit Agreement and at the request of the Borrower, a Grantor shall be released
from its obligations hereunder in the event that all the Securities of such
Grantor shall be Sold to any Person in a transaction permitted by the Loan
Documents. In connection therewith, the Administrative Agent, upon receipt of
reasonable advance notice from any Grantor, shall execute and deliver such
documents as such Grantor shall reasonably request to evidence such release.
Section 8.3 Independent Obligations. The obligations of each Grantor
hereunder are independent of and separate from the Secured Obligations and the
Guaranteed Obligations of each other Grantor. Upon the occurrence and during the
continuance of any Event of Default, the Administrative Agent may, at its sole
election, proceed directly and at once, without notice, against any Grantor and
any Collateral to collect and recover the full amount of any Secured Obligation
or Guaranteed Obligation then due, without first proceeding against any other
Grantor, any other Loan Party or any other Collateral and without first joining
any other Grantor or any other Loan Party in any proceeding.
Section 8.4 No Waiver by Course of Conduct. No Secured Party shall by any
act (except by a written instrument pursuant to Section 8.6), delay, indulgence,
omission or otherwise be deemed to have waived any right or remedy hereunder or
to have acquiesced in any Default or Event of Default. No failure to exercise,
nor any delay in exercising, on the part of any Secured Party, any right, power
or privilege hereunder shall operate as a waiver thereof. No single or
26
partial exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by any Secured Party of any right or remedy hereunder on any
one occasion shall not be construed as a bar to any right or remedy that such
Secured Party would otherwise have on any future occasion.
Section 8.5 Amendments in Writing. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except in
accordance with Section 11.1 of the Second Lien Credit Agreement; provided,
however, that annexes to this Agreement may be supplemented (but no existing
provisions may be modified and no Collateral may be released) through Pledge
Amendments and Joinder Agreements, in substantially the form of Annex 1 and
Annex 2, respectively, in each case duly executed by the Administrative Agent
and each Grantor directly affected thereby.
Section 8.6 Additional Grantors; Additional Pledged Collateral.
(a) Joinder Agreements. If, at the option of the Borrower or as
required pursuant to Section 7.10 of the Second Lien Credit Agreement, the
Borrower shall cause any Subsidiary that is not a Grantor to become a Grantor
hereunder, such Subsidiary shall execute and deliver to the Administrative Agent
a joinder agreement substantially in the form of Annex 2 (each, a "Joinder
Agreement") and shall thereafter for all purposes be a party hereto and have the
same rights, benefits and obligations as a Grantor party hereto on the Closing
Date.
(b) Pledge Amendments. To the extent any Pledged Collateral has not
been delivered as of the Closing Date, such Grantor shall deliver a pledge
amendment duly executed by the Grantor in substantially the form of Annex 1
(each, a "Pledge Amendment"). Such Grantor authorizes the Administrative Agent
to attach each Pledge Amendment to this Agreement.
Section 8.7 Notices. All notices, requests and demands to or upon the
Administrative Agent or any Grantor hereunder shall be effected in the manner
provided for in Section 11.11 of the Second Lien Credit Agreement; provided,
however, that any such notice, request or demand to or upon any Grantor shall be
addressed to the Borrower's notice address set forth in such Section 11.11 of
the Second Lien Credit Agreement.
Section 8.8 Successors and Assigns. This Agreement shall be binding upon
the successors and assigns of each Grantor and shall inure to the benefit of
each Secured Party and their successors and assigns; provided, however, that no
Grantor may assign, transfer or delegate any of its rights or obligations under
this Agreement without the prior written consent of the Administrative Agent.
Section 8.9 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Signature pages may be
detached from multiple separate counterparts and attached to a single
counterpart. Delivery of an executed signature page of this Agreement by
facsimile transmission or by Electronic Transmission shall be as effective as
delivery of a manually executed counterpart hereof.
Section 8.10 Severability. Any provision of this Agreement being held
illegal, invalid or unenforceable in any jurisdiction shall not affect any part
of such provision not held illegal,
27
invalid or unenforceable, any other provision of this Agreement or any part of
such provision in any other jurisdiction.
Section 8.11 Governing Law. This Agreement and the rights and obligations
of the parties hereto shall be governed by, and construed and interpreted in
accordance with, the law of the State of New York.
Section 8.12 Jurisdiction.
(a) Submission to Jurisdiction. Any legal action or proceeding with
respect to any Loan Document may be brought in the courts of the State of New
York located in the City of New York, Borough of Manhattan, or of the United
States of America for the Southern District of New York and, by execution and
delivery of this Agreement, each Grantor hereby accepts for itself and in
respect of its property, generally and unconditionally, the jurisdiction of the
aforesaid courts. The parties hereto (and, to the extent set forth in any other
Loan Document, each other Loan Party) hereby irrevocably waive any objection,
including any objection to the laying of venue or based on the grounds of forum
non conveniens, that any of them may now or hereafter have to the bringing of
any such action or proceeding in such jurisdictions.
(b) Service of Process. Each Grantor (and, to the extent set forth
in any other Loan Document, each other Loan Party) hereby irrevocably waives
personal service of any and all legal process, summons, notices and other
documents and other service of process of any kind and consents to such service
in any suit, action or proceeding brought in the United States of America with
respect to or otherwise arising out of or in connection with any Loan Document
by any means permitted by applicable Requirements of Law, including by the
mailing thereof (by registered or certified mail, postage prepaid) to the
address of the Borrower specified in Section 11.11 of the Second Lien Credit
Agreement (and shall be effective when such mailing shall be effective, as
provided therein). Each Grantor (and, to the extent set forth in any other Loan
Document, each other Loan Party) agrees that a final judgment in any such action
or proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.
(c) Non-Exclusive Jurisdiction. Nothing contained in this Section
8.12 shall affect the right of the Administrative Agent or any Lender to serve
process in any other manner permitted by applicable Requirements of Law or
commence legal proceedings or otherwise proceed against any Grantor in any other
jurisdiction.
Section 8.13 WAIVER OF JURY TRIAL. Each party hereto hereby irrevocably
waives trial by jury in any suit, action or proceeding with respect to, or
directly or indirectly arising out of, under or in connection with, any loan
document or the transactions contemplated therein or related thereto (whether
founded in contract, tort or any other theory). Each party hereto (A) certifies
that no other party and no Related Person of any other party has represented,
expressly or otherwise, that such other party would not, in the event of
litigation, seek to enforce the foregoing waiver and (B) acknowledges that it
and the other parties hereto have been induced to enter into this agreement by
the mutual waivers and certifications in this Section 8.13.
Section 8.14 Subordination.
(a) Each Grantor executing this Agreement covenants and agrees that
the payment of all indebtedness, principal, interest (including interest which
accrues after the
28
commencement of any case or proceeding in bankruptcy, or for the reorganization
of any Loan Party), fees, charges, expenses, attorneys' fees and any other sum,
obligation or liability owing by any other Grantor to such Grantor, including
any intercompany trade payables or royalty or licensing fees (collectively, the
"Intercompany Obligations"), is subordinated, to the extent and in the manner
provided in this Section 8.14, to the prior payment in full of all Secured
Obligations (other than contingent indemnification obligations as to which no
claim has been asserted) (herein, the "Senior Obligations") and that the
subordination is for the benefit of Administrative Agent and the other Secured
Parties, and Administrative Agent may enforce such provisions directly.
(b) Each Grantor executing this Agreement hereby (i) authorizes
Administrative Agent to demand specific performance of the terms of this Section
8.14, whether or not any other Grantor shall have complied with any of the
provisions hereof applicable to it, at any time when such Grantor shall have
failed to comply with any provisions of this Section 8.14 which are applicable
to it and (ii) irrevocably waives (to the maximum extent permitted by
Requirements of Law) any defense based on the adequacy of a remedy at law, which
might be asserted as a bar to such remedy of specific performance.
(c) Upon any distribution of assets of any Loan Party in any
dissolution, winding up, liquidation or reorganization (whether in bankruptcy,
insolvency or receivership proceedings or upon an assignment for the benefit of
creditors or otherwise):
(i) Administrative Agent and other Secured Parties shall first be
entitled to receive payment in full in cash of the Senior Obligations
before any Grantor is entitled to receive any payment on account of the
Intercompany Obligations.
(ii) Any payment or distribution of assets of any Grantor of any
kind or character, whether in cash, property or securities, to which any
other Grantor would be entitled except for the provisions of this Section
8.14(c), shall be paid by the liquidating trustee or agent or other Person
making such payment or distribution directly to Administrative Agent, to
the extent necessary to make payment in full of all Senior Obligations
(other than contingent indemnification obligations as to which no claim
has been asserted) remaining unpaid after giving effect to any concurrent
payment or distribution or provisions therefore to Administrative Agent
and the other Secured Parties.
(iii) In the event that notwithstanding the foregoing provisions of
this Section 8.14(c), any payment or distribution of assets of any Grantor
of any kind or character, whether in cash, property or securities, shall
be received by any other Grantor on account of the Intercompany
Obligations before all Senior Obligations (other than contingent
indemnification obligations as to which no claim has been asserted) are
paid in full, such payment or distribution shall be received and held in
trust for and shall be paid over to Administrative Agent for application
to the payment of the Senior Obligations (other than contingent
indemnification obligations as to which no claim has been asserted) until
all of the Senior Obligations (other than contingent indemnification
obligations as to which no claim has been asserted) shall have been paid
in full, after giving effect to any concurrent payment or distribution or
provision therefore to Administrative Agent and other Secured Parties.
29
(d) No right of Administrative Agent and the other Secured Parties
or any other present or future holders of any Senior Obligations to enforce the
subordination provisions herein shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of any Grantor or by any act
or failure to act, in good faith, by any such holder, or by any noncompliance by
any Grantor with the terms hereof, regardless of any knowledge thereof which any
such holder may have or be otherwise charged with.
Section 8.15 Hands On. Upon the effective time of the Hands On Merger,
this Agreement will be duly executed and delivered by Hands On in its capacity
as successor to Merger Sub as the surviving corporation (the "Surviving
Corporation") of the Hands On Merger upon the effective time of the Hands On
Merger, and Hands On will succeed and replace Merger Sub as a party to this
Agreement. Each of the Schedules to this Agreement includes all such information
required to be set forth on such Schedules with respect to Hands On as the
Surviving Corporation after giving effect to the Hands On Merger.
Section 8.16 Intercreditor Agreement. Notwithstanding anything herein to
the contrary, the lien and security interest granted to the Administrative Agent
pursuant to this Agreement and the exercise of any right or remedy by the
Administrative Agent hereunder are subject to the provisions of the
Intercreditor Agreement. In the event of any conflict between the terms of the
Intercreditor Agreement and this Agreement, the terms of the Intercreditor
Agreement shall govern and control. The Administrative Agent covenants and
agrees that it shall provide the Grantors with a copy of any amendments,
waivers, supplements or other modifications to the Intercreditor Agreement
promptly after it has knowledge of the same and no changes to the Intercreditor
Agreement (other than those acknowledged by the Borrower) shall effect the
obligations of the Grantors hereunder other than in connection with the
perfection of the liens and security interests granted herein as set forth in
Section 3.2(b) hereof.
[SIGNATURE PAGES FOLLOW]
30
IN WITNESS WHEREOF, each of the undersigned has caused this Second
Lien Guaranty and Security Agreement to be duly executed and delivered as of the
date first above written.
GOAMERICA, INC., as Borrower
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chief Executive Officer
HOVRS ACQUISITION CORPORATION, as Grantor
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chief Executive Officer
GOAMERICA RELAY SERVICES CORP., as Grantor
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chief Executive Officer
GOAMERICA COMMUNICATIONS CORP., as Grantor
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chief Executive Officer
WYND COMMUNICATIONS CORPORATION,
as Grantor
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chief Executive Officer
▇▇▇▇▇▇▇▇.▇▇▇, INC., as Grantor
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chief Executive Officer
OUTBACK RESOURCE GROUP, INC., as Grantor
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chief Executive Officer
HOSLS ACQUISITION CORPORATION, as Grantor
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chief Executive Officer
2
IN WITNESS WHEREOF, the undersigned Grantor, in its capacity as
successor to Merger Sub and the Surviving Corporation of the Hands On Merger,
has caused this Second Lien Guaranty and Security Agreement to be executed and
delivered by its duly authorized officer as of the date first set forth above at
the effective time of the Hands On Merger.
HANDS ON VIDEO RELAY SERVICES INC.,
as Grantor
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Co-Chief Executive Officer
3
ACCEPTED AND AGREED
as of the date first above written:
CLEARLAKE CAPITAL GROUP, L.P., as
Administrative Agent
By: CCG Operations, LLC
Its: General Partner
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Authorized Signatory
4