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EXHIBIT 99.2
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SECURITY AGREEMENT
Dated as of May 16, 2001
between
NEXT LEVEL COMMUNICATIONS, INC.
and
MOTOROLA, INC.
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TABLE OF CONTENTS
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Section 1. Definitions and Interpretation............................................ 1
1.01 Certain Defined Terms................................................... 1
1.02 Interpretation.......................................................... 3
Section 2. Collateral................................................................ 4
2.01 Grant................................................................... 4
2.02 Intellectual Property................................................... 7
2.03 Perfection.............................................................. 7
2.04 Preservation and Protection of Security Interests....................... 8
2.05 Attorney-in-Fact........................................................ 9
2.06 Special Provisions Relating to Stock Collateral.........................10
2.07 Use of Intellectual Property............................................11
2.08 Instruments.............................................................11
2.09 Use of Collateral.......................................................12
2.10 Rights and Obligations..................................................12
2.11 Termination.............................................................13
Section 3. Cash Proceeds of Collateral...............................................13
3.01 Collateral Account......................................................13
3.02 Certain Proceeds........................................................13
3.03 Investment of Balance in Collateral Account.............................14
Section 4. Representations and Warranties............................................14
4.01 Title...................................................................14
4.02 Pledged Stock...........................................................14
4.03 Intellectual Property...................................................15
4.04 Goods...................................................................16
4.05 Not a Retail Merchant...................................................16
4.06 Deposit Accounts........................................................16
4.07 Investment Property.....................................................16
Section 5. Covenants.................................................................16
5.01 Books and Records.......................................................16
5.02 Removals, Etc...........................................................17
5.03 Sales and Other Liens...................................................17
5.04 Stock Collateral........................................................17
5.05 Intellectual Property...................................................17
5.06 Further Assurances......................................................19
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Section 6. Remedies..................................................................19
6.01 Events of Default, Etc..................................................19
6.02 Deficiency..............................................................20
6.03 Private Sale............................................................20
6.04 Application of Proceeds.................................................21
Section 7. Miscellaneous.............................................................21
7.01 Waiver..................................................................21
7.02 Notices.................................................................21
7.03 Expenses, Etc...........................................................22
7.04 Amendments, Etc.........................................................22
7.05 Successors and Assigns..................................................22
7.06 Survival................................................................23
7.07 Agreements Superseded...................................................23
7.08 Severability............................................................23
7.09 Captions................................................................23
7.10 Counterparts............................................................23
7.11 GOVERNING LAW; SUBMISSION TO JURISDICTION...............................23
7.12 WAIVER OF JURY TRIAL....................................................24
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SECURITY AGREEMENT
This SECURITY AGREEMENT (this "Agreement") dated as of May 16, 2001 is
made between NEXT LEVEL COMMUNICATIONS, INC. (the "Borrower") and MOTOROLA, INC.
(the "Lender").
The Credit Agreement dated as of May 16, 2001 (the "Credit Agreement")
between the Borrower and the Lender provides, subject to its terms and
conditions, for certain extensions of credit to the Borrower. It is a condition
to the obligations of the Lender under the Credit Agreement that the Borrower
shall have executed and delivered, and granted the Liens provided for in, this
Agreement.
To induce the Lender to enter into, and to extend credit under, the
Credit Agreement and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower has agreed to pledge
and grant a security interest in the Collateral as security for the Secured
Obligations. Accordingly, the Borrower agrees with the Lender as follows:
Section 1. Definitions and Interpretation.
1.01 Certain Defined Terms. Unless otherwise defined, all capitalized
terms used in this Agreement that are defined in the Credit Agreement (including
those terms incorporated by reference) shall have the respective meanings
assigned to them in the Credit Agreement. In addition, the following terms shall
have the following meanings under this Agreement:
"Accounts" shall have the meaning assigned to that term in Section
2.01(b).
"Casualty Event" shall mean, with respect to any Property of any Person,
any loss of or damage to, or any condemnation or other taking of, such Property
for which such Person or any of its Subsidiaries receives insurance proceeds, or
proceeds of a condemnation award or other compensation.
"Collateral" shall have the meaning assigned to that term in Section
2.01.
"Collateral Account" shall have the meaning assigned to that term in
Section 3.01.
"Copyright Collateral" shall mean all Copyrights, whether now owned or
hereafter acquired by the Borrower, including each Copyright identified in Annex
2.
"Copyrights" shall mean, collectively, (a) all copyrights, copyright
registrations and applications for copyright registrations, (b) all renewals and
extensions of all copyrights, copyright registrations and applications for
copyright registration and (c) all rights, now existing or hereafter coming into
existence, (i) to all income, royalties, damages and other payments (including
in respect of all past, present or future infringements) now or hereafter due or
payable under or with respect to any of the foregoing, (ii) to ▇▇▇ for all past,
present and future infringements with respect to any of
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the foregoing and (iii) otherwise accruing under or pertaining to any of the
foregoing throughout the world.
"Documents" shall have the meaning assigned to that term in Section
2.01(f).
"Equipment" shall have the meaning assigned to that term in Section
2.01(e).
"Equity Rights" shall mean, with respect to any Person, any outstanding
subscriptions, options, warrants, commitments, preemptive rights or agreements
of any kind (including any stockholders' or voting trust arrangements) for the
issuance, sale, registration or voting of, or outstanding securities convertible
into, any additional shares of capital stock of any class, or partnership or
other ownership interests of any type in, such Person.
"Governmental Approval" shall mean any authorization, consent, approval,
license, lease, ruling, permit, waiver, exemption, filing, registration or
notice by or with any Governmental Person.
"Instruments" shall have the meaning assigned to that term in Section
2.01(c).
"Intellectual Property" shall mean all Copyright Collateral, all Patent
Collateral and all Trademark Collateral, together with (a) all inventions,
processes, production methods, proprietary information, know-how and trade
secrets; (b) all licenses or user or other agreements granted to the Borrower
with respect to any of the foregoing, in each case whether now or hereafter
owned or used, including the licenses or other agreements with respect to the
Copyright Collateral, the Patent Collateral or the Trademark Collateral listed
in Annex 5; (c) all Governmental Approvals now held or hereafter obtained by the
Borrower in respect of any of the foregoing; and (d) all causes of action,
claims and warranties now owned or hereafter acquired by the Borrower in respect
of any of the foregoing. It is understood that Intellectual Property shall
include all of the foregoing owned or acquired by the Borrower on a worldwide
basis.
"Inventory" shall have the meaning assigned to that term in Section
2.01(d).
"Investment Property" shall have the meaning assigned to that term in
the Uniform Commercial Code, but shall exclude Stock Collateral.
"Issuers" shall mean, collectively, Virtual Access PLC, a corporation
registered in England and Wales, and each Subsidiary, directly or indirectly, of
the Borrower that is the issuer (as defined in the Uniform Commercial Code) of
any shares of capital stock now owned or hereafter acquired by the Borrower,
including the respective corporations identified in Annex 1 under the caption
"Issuer."
"Material Adverse Effect" shall mean a material adverse effect on (a)
the financial condition of the Borrower and its Subsidiaries taken as a whole,
(b) the validity or enforceability of this Agreement or any of the other Loan
Documents or (c) the rights, remedies and powers of the Lender under the Loan
Documents.
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"Patent Collateral" shall mean all Patents, whether now owned or
hereafter acquired by the Borrower, including each Patent identified in Annex 3.
"Patents" shall mean, collectively, (a) all patents and patent
applications, (b) all reissues, divisions, continuations, renewals, extensions
and continuations-in-part of all patents or patent applications and (c) all
rights, now existing or hereafter coming into existence, (i) to all income,
royalties, damages, and other payments (including in respect of all past,
present and future infringements) now or hereafter due or payable under or with
respect to any of the foregoing, (ii) to ▇▇▇ for all past, present and future
infringements with respect to any of the foregoing and (iii) otherwise accruing
under or pertaining to any of the foregoing throughout the world, including all
inventions and improvements described or discussed in all such patents and
patent applications.
"Pledged Stock" shall have the meaning assigned to that term in Section
2.01(a).
"Secured Obligations" shall mean any and all obligations of the Borrower
for the performance of its agreements, covenants and undertakings under or in
respect of the Loan Documents, including the principal of any Loan, interest,
fees and any other amount payable by the Borrower under any Loan Document.
"Securities Account" shall have the meaning assigned to that term in the
Uniform Commercial Code.
"Stock Collateral" shall have the meaning assigned to that term in
Section 2.01(a).
"Trademark Collateral" shall mean all Trademarks, whether now owned or
hereafter acquired by the Borrower, including each Trademark identified in Annex
4. Notwithstanding the foregoing, the Trademark Collateral shall not include any
Trademark which would be rendered invalid, abandoned, void or unenforceable by
reason of its being included as part of the Trademark Collateral.
"Trademarks" shall mean, collectively, (a) all trade names, trademarks
and service marks, logos, trademark and service ▇▇▇▇ registrations and
applications for trademark and service ▇▇▇▇ registrations, (b) all renewals and
extensions of any of the foregoing and (c) all rights, now existing or hereafter
coming into existence, (i) to all income, royalties, damages and other payments
(including in respect of all past, present and future infringements) now or
hereafter due or payable under or with respect to any of the foregoing, (ii) to
▇▇▇ for all past, present and future infringements with respect to any of the
foregoing and (iii) otherwise accruing under or pertaining to any of the
foregoing throughout the world, together, in each case, with the product lines
and goodwill of the business connected with the use of, or otherwise symbolized
by, each such trade name, trademark and service ▇▇▇▇.
"Uniform Commercial Code" shall mean the Uniform Commercial Code as in
effect in the State of New York from time to time or, by reason of mandatory
application, any other applicable jurisdiction.
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1.02 Interpretation. In this Agreement, unless otherwise indicated, the
singular includes the plural and plural the singular; words importing either
gender include the other gender; references to statutes or regulations are to be
construed as including all statutory or regulatory provisions consolidating,
amending or replacing the statute or regulation referred to; references to
"writing" include printing, typing, lithography and other means of reproducing
words in a tangible visible form; the words "including," "includes" and
"include" shall be deemed to be followed by the words "without limitation";
references to articles, sections (or subdivisions of sections), exhibits,
annexes or schedules are to this Agreement; references to agreements and other
contractual instruments shall be deemed to include all subsequent amendments,
extensions and other modifications to such instruments (without, however,
limiting any prohibition on any such amendments, extensions and other
modifications by the terms of any Loan Document); and references to Persons
include their respective permitted successors and assigns and, in the case of
Governmental Persons, Persons succeeding to their respective functions and
capacities.
Section 2. Collateral.
2.01 Grant. As collateral security for the prompt payment in full when
due (whether at stated maturity, by acceleration or otherwise) and performance
of the Secured Obligations, the Borrower hereby pledges and grants to the Lender
a security interest in all of the Borrower's right, title and interest in and to
the following property, whether now owned or hereafter acquired by the Borrower
and whether now existing or hereafter coming into existence (collectively, the
"Collateral"):
(a) (i) all of the shares of capital stock of the Issuers
represented by the respective certificates identified in Annex 1 and all other
shares of capital stock of whatever class of the Issuers, now owned or hereafter
acquired by the Borrower, together with in each case the certificates
representing the same (collectively, the "Pledged Stock");
(ii) all shares, securities, moneys or property
representing a dividend on, or a distribution or return of capital in respect of
any of the Pledged Stock, resulting from a split-up, revision, reclassification
or other like change of any of the Pledged Stock or otherwise received in
exchange for any of the Pledged Stock and all Equity Rights issued to the
holders of, or otherwise in respect of, any of the Pledged Stock; and
(iii) without affecting the obligations of the Borrower
under any provision prohibiting such action under any Loan Document, in the
event of any consolidation or merger in which any Issuer is not the surviving
corporation, all shares of each class of the capital stock of the successor
corporation (unless such successor corporation is the Borrower itself) formed by
or resulting from such consolidation or merger (collectively, and together with
the property described in clauses (i) and (ii) above, the "Stock Collateral");
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(b) all accounts and general intangibles (each as defined in the
Uniform Commercial Code) of the Borrower constituting a right to the payment of
money, whether or not earned by performance, including all moneys due and to
become due to the Borrower in repayment of any loans or advances, in payment for
goods (including Inventory and Equipment) sold or leased or for services
rendered, in payment of tax refunds and in payment of any guarantee of any of
the foregoing (collectively, the "Accounts");
(c) all instruments, chattel paper or letters of credit (to the
extent assignable) (each as defined in the Uniform Commercial Code) of the
Borrower evidencing, representing, arising from or existing in respect of,
relating to, securing or otherwise supporting the payment of, any of the
Accounts (collectively, the "Instruments");
(d) all inventory (as defined in the Uniform Commercial Code) and
all other goods of the Borrower that are held by the Borrower for sale, lease or
furnishing under a contract of service (including to its Subsidiaries or
affiliates), that are so leased or furnished or that constitute raw materials,
work in process or material used or consumed in its business, including all
spare parts and related supplies, all goods obtained by the Borrower in exchange
for any such goods, all products made or processed from any such goods and all
substances, if any, commingled with or added to any such goods (collectively,
the "Inventory");
(e) all equipment (as defined in the Uniform Commercial Code) and
all other goods of the Borrower that are used or bought for use primarily in its
business, including all spare parts and related supplies, all goods obtained by
the Borrower in exchange for any such goods, all substances, if any, commingled
with or added to such goods and all upgrades and other improvements to such
goods, in each case to the extent not constituting Inventory (collectively, the
"Equipment");
(f) all documents of title (as defined in the Uniform Commercial
Code) or other receipts of the Borrower covering, evidencing or representing
Inventory or Equipment (collectively, the "Documents");
(g) all contracts and other agreements of the Borrower relating
to the sale or other disposition of all or any part of the Inventory, Equipment
or Documents and all rights, warranties, claims and benefits of the Borrower
against any Person arising out of, relating to or in connection with all or any
part of the Inventory, Equipment or Documents of the Borrower, including any
such rights, warranties, claims or benefits against any Person storing or
transporting any such Inventory or Equipment or issuing any such Documents;
(h) all other accounts or general intangibles of the Borrower not
constituting Accounts, including, to the extent related to all or any part of
the other Collateral, all books, correspondence, credit files, records,
invoices, tapes, cards, computer runs and other papers and documents in the
possession or under the control of
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the Borrower or any computer bureau or service company from time to time acting
for the Borrower;
(i) the Collateral Account, the deposit accounts listed on Annex
7 and all other deposit accounts maintained by the Borrower; any and all cash or
other sums of money, from any source whatsoever, now or hereafter transferred to
or comprising any of the foregoing accounts, including any and all interests and
dividends or other income derived from any such monies; and all statements,
certificates, passbooks and instruments representing any of the foregoing and
all cash and other property from time to time received or receivable by, or
otherwise distributed to, the Borrower in respect of or in exchange for any of
the foregoing;
(j) all information, customer lists, identification of suppliers,
data, plans, blueprints, specifications, designs, drawings, recorded knowledge,
surveys, engineering reports, test reports, manuals, materials standards,
processing standards, performance standards, catalogs, computer and automatic
machinery software and programs; all field repair data, sales data and other
information relating to sales or service of products now or hereafter
manufactured; and all accounting information and all media in which or on which
any information or knowledge or data or records may be recorded or stored and
all computer programs used for the compilation or printout of such information,
knowledge, records or data;
(k) (i) all of the equity interests of (1) Outreach
Communications, L.L.C., a Delaware limited liability company, (2) Expanse
Networks Inc., a Delaware corporation, and (3) Next Level Communications Vietnam
Co., Ltd., now owned or hereafter acquired by the Borrower, together with in
each case any certificates representing the same (collectively, the "Pledged
Interests"); and
(ii) all shares, securities, moneys or property
representing a dividend on, or a distribution or return of capital in respect of
any of the Pledged Interests, resulting from a split-up, revision,
reclassification or other like change of any of the Pledged Interests or
otherwise received in exchange for any of the Pledged Interests and all Equity
Rights issued to the holders of, or otherwise in respect of, any of the Pledged
Interests; and
(l) all Securities Accounts maintained by the Borrower,
including, without limitation, those listed on Annex 8 attached hereto, together
with the cash, revenues and all other funds to be deposited in the Securities
Accounts, and all the investments made by any securities intermediary with the
cash funds and other property in the Securities Accounts;
(m) all other tangible and intangible personal property of the
Borrower, including all Intellectual Property and all Investment Property,
including that identified on Annex 8; and
(n) all proceeds and products in whatever form of all or any part
of the Collateral, including all proceeds of insurance and all condemnation
awards and all
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other compensation for any Casualty Event with respect to all or any part of the
Collateral (together with all rights to recover and proceed with respect to the
same), and all accessories to, substitutions for and replacements of all or any
part of the Collateral.
Notwithstanding anything herein to the contrary, Collateral shall not include,
and the Borrower shall not be deemed to have granted a security interest in (i)
any of the Borrower's rights or interests in any license, contract or agreement
to which the Borrower is a party or any of its rights or interests thereunder to
the extent, but only to the extent, that such a grant would, under the terms of
such license, contract or agreement or otherwise, result in a breach of the
terms of, or constitute a default under any such license, contract or agreement;
(ii) any real property; (iii) notes evidencing loans to employees and directors
of the Borrower in an aggregate principal amount outstanding not to exceed
$1,000,000; (iv) assets owned by the Borrower that are subject to Liens incurred
by the Borrower pursuant to Section 8.05 of the Credit Agreement permitting
purchase money security interests to the extent a Lien in favor of the Lender is
expressly prohibited by the documents creating such Lien, so long as such
purchase money security interests are in effect; (v) non-assignable letters of
credit, letter of credit rights (but only prior to July 1, 2001) and commercial
tort claims; (vi) more than 65% of the outstanding equity interests in any
foreign corporation; and (vi) any foreign corporation having total assets the
fair market value of which is less than $250,000.
2.02 Intellectual Property. For the purpose of enabling the Lender to
exercise its rights, remedies, powers and privileges under Section 6 at such
time or times as the Lender shall be lawfully entitled to exercise such rights,
remedies, powers and privileges, and for no other purpose, the Borrower hereby
grants to the Lender, to the extent assignable, an irrevocable, nonexclusive
license (exercisable without payment of royalty or other compensation to the
Borrower) to use, assign the right to license, license or sublicense any of the
Intellectual Property of the Borrower, together with reasonable access to all
media in which any of the licensed items may be recorded or stored and to all
computer programs used for the compilation or printout of such items.
2.03 Perfection. Concurrently with the execution and delivery of this
Agreement, the Borrower shall (i) file such financing statements and other
documents in such offices as shall be necessary or as the Lender may reasonably
request to perfect and establish the priority (subject only to Liens permitted
under Section 8.05 of the Credit Agreement) of the Liens granted by this
Agreement, (ii) deliver and pledge to the Lender any and all Instruments
reasonably requested by the Lender, endorsed or accompanied by such instruments
of assignment and transfer in such form and substance as the Lender may request,
(iii) deliver to the Lender all certificates identified in Annex 1, accompanied
by undated stock powers duly executed in blank and (iv) take all such other
actions as shall be necessary or as the Lender may reasonably request to perfect
and establish the priority (subject only to such permitted Liens) of the Liens
granted by this Agreement. Notwithstanding the foregoing, the Borrower shall not
be required to take any actions in any foreign country with respect to
perfecting the Lender's security interest in the Collateral unless the Lender
shall reasonably request in writing that the Borrower do so.
2.04 Preservation and Protection of Security Interests. The Borrower
shall:
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(a) upon the acquisition after the Effective Date by the Borrower
of any Stock Collateral, promptly either (x) transfer and deliver to the Lender
all such Stock Collateral (together with the certificates representing such
Stock Collateral securities duly endorsed in blank or accompanied by undated
stock powers duly executed in blank) or (y) take such other action as the Lender
shall deem necessary or appropriate to perfect, and establish the priority of,
the Liens granted by this Agreement in such Stock Collateral;
(b) upon the acquisition after the Effective Date by the Borrower
of any Instrument, promptly give notice to the Lender and, upon request thereof,
deliver and pledge to the Lender all such Instruments (subject to Section 2.08
below), endorsed or accompanied by such instruments of assignment and transfer
in such form and substance as the Lender may request;
(c) upon the acquisition after the Effective Date by the Borrower
of any Equipment covered by a certificate of title or ownership, promptly give
notice to the Lender and, upon request thereof, cause the Lender to be listed as
the lienholder on such certificate of title and within 120 days thereof deliver
evidence of the same to the Lender;
(d) upon the Borrower's acquiring, or otherwise becoming entitled
to the benefits of, any Copyright (or copyrightable material), Patent (or
patentable invention), Trademark (or associated goodwill) or other Intellectual
Property or upon or prior to the Borrower's filing, either directly or through
any agent, licensee or other designee, of any application with any Governmental
Person for any Copyright, Patent, Trademark, or other Intellectual Property, in
each case after the Effective Date, execute and deliver such contracts,
agreements and other instruments as the Lender may reasonably request to
evidence, validate, perfect and establish the priority (subject only to Liens
permitted under Section 8.05 of the Credit Agreement) of the Liens granted by
this Agreement in such and any related Intellectual Property and, if requested
by the Lender, amend Annex 2, 3 or 4 (as the case may be), to reflect the
inclusion of any such Intellectual Property as part of the Collateral (it being
understood that the failure to amend any such Annex shall not affect the Liens
granted by this Agreement on any such Intellectual Property); and
(e) give, execute, deliver, file or record any and all financing
statements, notices, contracts, agreements or other instruments, obtain any and
all Governmental Approvals and take any and all steps that may be necessary or
as the Lender may reasonably request to create, perfect, establish the priority
(subject only to Liens permitted under Section 8.05 of the Credit Agreement) of,
or to preserve the validity, perfection or priority (subject only to such
permitted Liens) of, the Liens granted by this Agreement or to enable the Lender
to exercise and enforce its rights, remedies, powers and privileges under this
Agreement with respect to such Liens, including causing any or all of the Stock
Collateral to be transferred of record into the name of the Lender or its
nominee (and the Lender agrees that if any Stock Collateral is transferred into
its name or the name of its nominee, the Lender will thereafter promptly give to
the Borrower copies of any notices and communications received by it with
respect to the
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Stock Collateral pledged by the Borrower), provided that notices to account
debtors in respect of any Accounts or Instruments shall be subject to the
provisions of Section 3.02.
Without limiting the generality of Section 2.04(e), the Borrower shall (i) upon
the reasonable written request of the Lender, use reasonable commercial efforts
to seek consent, from the relevant counterparty, to the collateral assignment of
any of the Borrower's rights or interests in any license, contract or agreement
to which the Borrower is a party or any of its rights or interests thereunder to
the extent that such a collateral assignment would, under the terms of such
license, contract or agreement or otherwise, result in a breach of the terms of,
or constitute a default under any such license, contract or agreement; (ii) use
reasonable commercial efforts to cause to be executed and delivered to the
Lender an "authenticated record" within the meaning of Section 9104 of the
revised California Uniform Commercial Code (to become effective July 1, 2001)
with respect to each deposit account maintained by the Borrower now or
hereafter, and the Borrower shall not open any new deposit accounts without
causing to be executed and delivered to the Lender such an authenticated record
with respect thereto; (iii) use reasonable commercial efforts to cause to be
executed and delivered to the Lender a customary "securities account control
agreement" with respect to each Securities Account maintained by the Borrower
now or hereafter, and (A) the Borrower shall not open any new Securities
Accounts without causing to be executed and delivered to the Lender a customary
"securities account control agreement" with respect thereto and (B) until such a
securities account control agreement is delivered with respect to the ▇▇▇▇▇▇
Brothers account listed on Annex 8, the Borrower shall not maintain a balance in
such account in excess of $250,000 at any time; (iv) use reasonable commercial
efforts to deliver to the Lender all certificates representing the Borrower's
ownership interest in Expanse Networks Inc., a Delaware corporation; (v) not
later than the earlier of ten (10) days after the date of this Agreement or the
date of the second borrowing under the Credit Agreement, deliver to the Lender
all certificates representing the Borrower's ownership interests in the
companies identified in Annex 1 not previously delivered to the Lender,
accompanied by undated stock powers duly executed in blank; and (vi) not later
than the earlier of twenty (20) days after the date of this Agreement or the
date of the second borrowing under the Credit Agreement, execute and deliver to
the Lender the appropriate forms for filing a security interest in the United
States Patent and Trademark Office with respect to those United States
registered patents and patent applications identified in Annex 3.
2.05 Attorney-in-Fact.
(a) Subject to the rights of the Borrower under Sections 2.06,
2.07, 2.08 and 2.09, the Lender is hereby appointed the attorney-in-fact of the
Borrower for the purpose of carrying out the provisions of this Agreement and
taking any action and executing any instruments which the Lender may deem
necessary or reasonably advisable to accomplish the purposes of this Agreement,
to preserve the validity, perfection and priority (subject only to Liens
permitted under Section 8,05 of the Credit Agreement) of the Liens granted by
this Agreement and, following any Event of Default, to exercise its rights,
remedies, powers and privileges under this Agreement. This appointment as
attorney-in-fact is irrevocable and coupled with an interest. Without limiting
the
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generality of the foregoing, the Lender shall be entitled under this Agreement
upon the occurrence and continuation of any Event of Default (i) to ask, demand,
collect, ▇▇▇ for, recover, receive and give receipt and discharge for amounts
due and to become due under and in respect of all or any part of the Collateral;
(ii) to receive, endorse and collect any Instruments or other drafts,
instruments, documents and chattel paper in connection with clause (i) above
(including any draft or check representing the proceeds of insurance or the
return of unearned premiums); (iii) to file any claims or take any action or
proceeding that the Lender may deem necessary or advisable for the collection of
all or any part of the Collateral, including the collection of any compensation
due and to become due under any contract or agreement with respect to all or any
part of the Collateral; and (iv) to execute, in connection with any sale or
disposition of the collateral under Section 6, any endorsements, assignments,
bills of sale or other instruments of conveyance or transfer with respect to all
or any part of the Collateral.
(b) Without limiting the rights and powers of the Lender under
Section 2.05(a), the Borrower hereby appoints the Lender as its
attorney-in-fact, effective the Effective Date and terminating upon the
termination of this Agreement, for the purpose of (i) executing on behalf of the
Borrower title or ownership applications for filing with appropriate state
agencies to enable motor vehicles now owned or hereafter acquired by the
Borrower to be retitled and the Lender to be listed as lienholder as to such
motor vehicles, (ii) filing such applications with such state agencies and (iii)
executing such other documents and instruments on behalf of, and taking such
other action in the name of, the Borrower as the Lender may deem necessary or
advisable to accomplish the purposes of this Agreement (including the purpose of
creating in favor of the Lender a perfected lien on the motor vehicles and
exercising the rights and remedies of the Lender under Section 6). This
appointment as attorney-in-fact is irrevocable and coupled with an interest.
(c) Without limiting the rights and powers of the Lender under
Section 2.05(a), the Borrower hereby appoints the Lender as its
attorney-in-fact, effective the Effective Date and terminating upon the
termination of this Agreement, for the purpose of executing and filing all such
contracts, agreements and other documents as are contemplated by Section
2.04(d). This appointment as attorney-in-fact is irrevocable and coupled with an
interest.
(d) The power-of-attorney provided for in this Section 2.06 shall
only be used by the Lender if an Event of Default exists or if the Borrower has
failed to take the action proposed to be taken by the Lender following Lender's
written request therefor.
2.06 Special Provisions Relating to Stock Collateral.
(a) So long as no Event of Default shall have occurred and be
continuing, the Borrower shall have the right to exercise all voting, consensual
and other powers of ownership pertaining to the Stock Collateral for all
purposes not inconsistent with the terms of any Loan Document, provided that the
Borrower agrees that it will not vote the Stock Collateral in any manner that is
inconsistent with the terms of any Loan
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Document; and the Lender shall, at the Borrower's expense, execute and deliver
to the Borrower or cause to be executed and delivered to the Borrower all such
proxies, powers of attorney, dividend and other orders and other instruments,
without recourse, as the Borrower may reasonably request for the purpose of
enabling the Borrower to exercise the rights and powers which it is entitled to
exercise pursuant to this Section 2.06(a).
(b) So long as no Event of Default shall have occurred and be
continuing, the Borrower shall be entitled to receive and retain any dividends
on the Stock Collateral.
(c) If any Event of Default shall have occurred and be
continuing, and whether or not the Lender exercises any available right to
declare any Secured Obligation due and payable or seeks or pursues any other
right, remedy, power or privilege available to it under applicable law, this
Agreement or any other Loan Document, all dividends and other distributions on
the Stock Collateral shall be paid directly to the Lender and retained by it in
the Collateral Account as part of the Stock Collateral, subject to the terms of
this Agreement, and, if the Lender shall so request, the Borrower agrees to
execute and deliver to the Lender appropriate additional dividend, distribution
and other orders and instruments to that end, provided that if such Event of
Default is cured, any such dividend or distribution paid to the Lender prior to
such cure shall, upon request of the Borrower (except to the extent applied to
the Secured Obligations), be returned by the Lender to the Borrower.
2.07 Use of Intellectual Property. Subject to such action not otherwise
constituting a Default and so long as no Event of Default shall have occurred
and be continuing, the Borrower will be permitted to exploit, use, enjoy,
protect, license, sublicense, assign, sell, dispose of or take other actions
with respect to the Intellectual Property in the ordinary course of the business
of the Borrower. In furtherance of the foregoing, so long as no Event of Default
shall have occurred and be continuing, the Lender shall from time to time, upon
the request of the Borrower, execute and deliver any instruments, certificates
or other documents, in the form so requested, which the Borrower shall have
certified are appropriate (in its judgment) to allow it to take any action
permitted above (including relinquishment of the license provided pursuant to
Section 2.02 as to any specific Intellectual Property). The exercise of rights,
remedies, powers and privileges under Section 6 by the Lender shall not
terminate the rights of the holders of any licenses or sublicenses theretofore
granted by the Borrower in accordance with the first sentence of this Section
2.07.
2.08 Instruments. So long as no Event of Default shall have occurred and
be continuing, the Borrower may retain for collection in the ordinary course of
business any Instruments obtained by it in the ordinary course of business, and
the Lender shall, promptly upon the request, and at the expense of, the
Borrower, make appropriate arrangements for making any Instruments pledged by
the Borrower available to the Borrower for purposes of presentation, collection
or renewal. Any such arrangement shall be effected, to the extent deemed
appropriate by the Lender, against trust receipt or like document.
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2.09 Use of Collateral. So long as no Event of Default shall have
occurred and be continuing, the Borrower shall, in addition to its rights under
Sections 2.06, 2.07 and 2.08 in respect of the Collateral contemplated in those
sections, be entitled to use and possess the other Collateral and to exercise
its rights, title and interest in all contracts, agreements, licenses and
Governmental Approvals), subject to the rights, remedies, powers and privileges
of the Lender under Sections 3 and 6 and to such use, possession or exercise not
otherwise constituting a Default. The Lender will not give a notice of exclusive
control, an entitlement order or any other notification to any securities
intermediary with respect to any Securities Account unless an Event of Default
has occurred and is continuing.
2.10 Rights and Obligations.
(a) The Borrower shall remain liable to perform its duties and
obligations under the contracts and agreements included in the Collateral in
accordance with their respective terms to the same extent as if this Agreement
had not been executed and delivered. The exercise by the Lender of any right,
remedy, power or privilege in respect of this Agreement shall not release the
Borrower from any of its duties and obligations under such contracts and
agreements. The Lender shall have no duty, obligation or liability under such
contracts and agreements or in respect to any Governmental Approval included in
the Collateral by reason of this Agreement or any other Loan Document, nor shall
the Lender be obligated to perform any of the duties or obligations of the
Borrower under any such contract or agreement or any such Governmental Approval
or to take any action to collect or enforce any claim (for payment) under any
such contract or agreement or Governmental Approval.
(b) No Lien granted by this Agreement in the Borrower's right,
title and interest in any contract, agreement or Governmental Approval shall be
deemed to be a consent by the Lender to any such contract, agreement or
Governmental Approval.
(c) No reference in this Agreement to proceeds or to the sale or
other disposition of Collateral shall authorize the Borrower to sell or
otherwise dispose of any Collateral except to the extent otherwise expressly
permitted by the terms of any Loan Document. Any such permitted disposition,
however, shall be free and clear of any Liens created by the Loan Documents on
the Collateral disposed of, without, however, terminating any Lien on the
proceeds of such disposition.
(d) The Lender shall not be required to take steps necessary to
preserve any rights against prior parties to any part of the Collateral.
2.11 Termination. When all Secured Obligations shall have been paid in
full and the Commitments shall have expired or been terminated, this Agreement
shall terminate, and the Lender shall forthwith cause to be assigned,
transferred and delivered, against receipt but without any recourse, warranty or
representation whatsoever, any remaining Collateral and money received in
respect of the Collateral, to or on the order of the Borrower and to be
released, canceled and granted back all licenses and rights referred to in
Section 2.02. The Lender shall also execute and deliver to the Borrower
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upon such termination such Uniform Commercial Code termination statements and
such other documentation as shall be reasonably requested by the Borrower to
effect the termination and release of the Liens granted by this Agreement on the
Collateral.
Section 3. Cash Proceeds of Collateral.
3.01 Collateral Account. The Lender may establish with a financial
institution a cash collateral account (the "Collateral Account") in the name and
under the control of the Lender into which there shall be deposited from time to
time the cash proceeds of any of the Collateral (including proceeds resulting
from insurance or condemnation) required to be delivered to the Lender pursuant
to this Agreement after an Event of Default and notice from the Lender to the
Borrower and into which the Borrower may from time to time deposit any
additional amounts which it wishes to pledge to the Lender as additional
collateral security under this Agreement. The balance from time to time in the
Collateral Account shall constitute part of the Collateral and shall not
constitute payment of the Secured Obligations until applied as provided in this
Agreement. Except as expressly provided in the next sentence, the Lender shall
remit the collected balance outstanding to the credit of the Collateral Account
to or upon the order of the Borrower as the Borrower shall from time to time
instruct. However, if any Event of Default shall have occurred and be
continuing, the Lender may in its discretion apply or cause to be applied
(subject to collection) the balance from time to time outstanding to the credit
of the Collateral Account to the payment of the Secured Obligations in the
manner specified in section 6. The balance from time to time in the Collateral
Account shall be subject to withdrawal only as provided in this paragraph.
3.02 Certain Proceeds.
(a) If any Event of Default shall have occurred and be continuing, the
Borrower shall, upon request of the Lender, promptly notify (and the Borrower
hereby authorizes the Lender so to notify) each account debtor in respect of any
Accounts or Instruments that such Collateral has been assigned to the Lender
under this Agreement and that any payments due or to become due in respect of
such Collateral are to be made directly to the Lender. All such payments made to
the Lender shall be immediately deposited in the Collateral Account.
(b) During the continuation of an Event of Default and following notice
by the Lender, the Borrower agrees that if the proceeds of any Collateral
(including payments made in respect of Accounts and Instruments) shall be
received by it, the Borrower shall as promptly as possible deposit such proceeds
into the Collateral Account. To the extent required to be so deposited pursuant
to the preceding sentence and until so deposited, all such proceeds shall be
held in trust by the Borrower for and as the property of the Lender and shall
not be commingled with any other funds or property of the Borrower.
3.03 Investment of Balance in Collateral Account. Amounts on deposit in
the Collateral Account shall be invested from time to time in such Permitted
Investments as the Borrower (or, if any Event of Default shall have occurred and
be continuing, the Lender) shall determine. All such Permitted Investments shall
be held in the name and be
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under the control of the Lender. At any time after the occurrence and during the
continuance of an Event of Default, the Lender may in its discretion at any time
and from time to time elect to liquidate any such Permitted Investments and to
apply or cause to be applied the proceeds of such action to the payment of the
Secured Obligations in the manner specified in Section 6.
Section 4. Representations and Warranties. As of the Effective Date and as of
the date of each extension of credit by the Lender, the Borrower represents and
warrants to the Lender as follows:
4.01 Title. The Borrower owns good and marketable title of the
Collateral in which it purports to ▇▇▇▇▇ ▇ ▇▇▇▇ pursuant to this Agreement, and
such Collateral is free and clear of all Liens (and, with respect to the Stock
Collateral, of any Equity Right in favor of any other Person), except for Liens
permitted under Section 8.05 of the Credit Agreement. The Liens granted by this
Agreement in favor of the Lender have attached and constitute a perfected
security interest in all of such Collateral (other than Intellectual Property
registered or otherwise located outside of the United States of America) prior
to all other Liens (except such permitted Liens).
4.02 Pledged Stock.
(a) The Pledged Stock evidenced by the certificates identified in
Annex 1 is duly authorized, validly existing, fully paid and nonassessable, and
none of such Pledged Stock is subject to any contractual restriction, or any
restriction under the charter or by-laws of the respective Issuer of such
Pledged Stock, upon the transfer of such Pledged Stock (except for any such
restriction contained in any Loan Document).
(b) The Pledged Stock evidenced by the certificates identified in
Annex 1 constitutes all of the issued and outstanding shares of capital stock of
any class of the Issuers beneficially owned by the Borrower on the Effective
Date (whether or not registered in the name of the Borrower), and Annex 1
correctly identifies, as at the Effective Date, the respective Issuers of such
Pledged Stock, the respective class and par value of the shares comprising such
Pledged Stock and the respective number (and registered owners of) of the shares
evidenced by each such certificate.
(c) The Borrower is in the process of liquidating Next Level
Communications (Vietnam), a Wholly Owned Subsidiary, the assets of which have a
fair market value as of the date hereof of less than $250,000. The certificates
representing such Subsidiary are located in Vietnam. The Borrower's ownership
interests in OutReach Communications, L.L.C. are uncertificated. The Borrower's
ownership interests in Expanse Networks were never certificated.
4.03 Intellectual Property.
(a) Annexes 2, 3 and 4 set forth completely and correctly all
Copyrights, Patents and Trademarks owned by the Borrower (and, for the avoidance
of doubt, any applications or registrations listed on such Annexes are in the
name of the Borrower, except as otherwise noted on such Annexes) on the
Effective Date except for
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those Copyrights, Patents and Trademarks that individually or in the aggregate
are not material; except pursuant to licenses and other user agreements entered
into by the Borrower in the ordinary course of business and listed in Annex 5,
the Borrower owns and possesses the right to use, and has done nothing to
authorize or enable any other Person to use, any Copyright, Patent or Trademark
listed in Annex 2, 3 or 4; all registrations listed in Annexes 2, 3 and 4 are
valid and in full force and effect; and, except as may be set forth in Annex 5,
the Borrower owns and possesses the right to use all Copyrights, Patents and
Trademarks listed in Annexes 2, 3 and 4.
(b) Annex 5 sets forth completely and correctly all licenses and
other user agreements included in the Intellectual Property on the Effective
Date except for those licenses and other user agreements that individually or in
the aggregate are not material;
(c) To the Borrower's knowledge, except with respect to any
Copyright, Patent or Trademark, the loss of which would not reasonably be
expected to result in a Material Adverse Effect, (i) except as set forth in
Annex 5, there is no violation by others of any right of the Borrower with
respect to any Copyright, Patent or Trademark listed in Annex 2, 3 or 4 and (ii)
the Borrower is not infringing in any respect upon any Copyright, Patent or
Trademark of any other Person; and no proceedings have been instituted and are
pending against the Borrower or, to the Borrower's knowledge, have been
threatened against, and no claim has been received by, the Borrower, alleging
any such violation, except as may be set forth in Annex 5.
(d) The Borrower does not own any Trademarks registered in the
United States of America to which the last sentence of the definition of
Trademark Collateral applies, to the extent the loss or termination of any or
all such Trademarks would reasonably be expected to result in a Material Adverse
Effect.
4.04 Goods. Any goods now or hereafter manufactured or otherwise
produced by the Borrower or any of its Subsidiaries included in the Collateral
have been and will be produced in compliance with the requirements of the Fair
Labor Standards Act.
4.05 Not a Retail Merchant. Sales for resale (including sales of goods
to a contractor, who is required to be licensed, for the purposes of
incorporating such goods at any time into improvements or repairs to real
property) of the Borrower were not less than 75% in dollar volume of the
Borrower's total sales of goods during the 12 months preceding the filing of the
financing statement perfecting the security interest in the Inventory.
4.06 Deposit Accounts. Annex 7 sets forth completely and correctly all
deposit accounts maintained by the Borrower as of the date hereof.
4.07 Investment Property. Annex 8 sets forth completely and correctly
each item of Investment Property owned by the Borrower as of the date hereof
having a fair market value (or book value, if fair market value is not
reasonably ascertainable) in excess of $100,000 as of the date hereof.
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Section 5. Covenants.
5.01 Books and Records. The Borrower shall:
(a) keep full and accurate books and records relating to the
Collateral and stamp or otherwise ▇▇▇▇ such books and records in such manner as
the Lender may reasonably require in order to reflect the Liens granted by this
Agreement;
(b) furnish to the Lender from time to time (but, unless a
Default shall have occurred and be continuing, no more frequently than
quarterly) statements and schedules further identifying and describing the
Copyright Collateral, the Patent Collateral and the Trademark Collateral and
such other reports in connection with the Copyright Collateral, the Patent
Collateral and the Trademark Collateral, as the Lender may reasonably request,
all in reasonable detail;
(c) prior to filing, either directly or through an agent,
licensee or other designee, any application for any Copyright, Patent or
Trademark, furnish to the Lender prompt notice of such proposed filing; and
(d) permit representatives of the Lender, during normal business
hours and upon reasonable notice, to inspect and make abstracts from its books
and records pertaining to the Collateral and to discuss its business and affairs
with its officers, all to the extent reasonably requested by the Lender so long
as any such examination or inspection shall not unreasonably interfere with the
operations of the Borrower and its Subsidiaries.
5.02 Removals, Etc. Without at least 30 days' prior written notice to
the Lender, the Borrower shall not (i) (other than in the ordinary course of
business), maintain any of its books and records with respect to the Collateral
at any office, or permit any Inventory or Equipment to be located anywhere,
other than at the address initially indicated for notices to it under Section 7
or at one of the locations identified in Annex 6 or in transit from one of such
locations to another or (ii) change its corporate name, or the name under which
it does business, from the name shown on the signature pages to this Agreement,
or maintain its principal place of business at any place other than at the
address initially indicated for notices to it under Section 7.
5.03 Sales and Other Liens. Except as otherwise permitted under Section
8.04 or Section 8.05 of the Credit Agreement, without the prior written consent
of the Lender, the Borrower shall not dispose of any Collateral, create, incur,
assume or suffer to exist any Lien upon any Collateral or file or suffer to be
on file or authorize to be filed, in any jurisdiction, any financing statement
or like instrument with respect to all or any part of the Collateral in which
the Lender is not named as the sole secured party for its own benefit.
5.04 Stock Collateral. The Borrower will cause the Stock Collateral to
constitute at all times 100% of the total number of shares of each class of
capital stock of each Issuer then outstanding and shall not permit any such
Issuer to issue any shares of capital stock other than to the Borrower. The
Borrower shall cause all such shares to be
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duly authorized, validly issued, fully paid and nonassessable and to be free of
any contractual restriction or any restriction under the charter or bylaws of
the respective Issuer of such Stock Collateral, upon the transfer of such Stock
Collateral (except for any such restriction contained in any Loan Document).
This Section 5.04 shall not apply to the Stock Collateral consisting of the
shares of Virtual Access PLC.
5.05 Intellectual Property.
(a) The Borrower (either itself or through licensees) will, for
each Trademark, continue to use such Trademark as is necessary (including the
use of appropriate notice of registration) in order to maintain such Trademark
in full force and effect free from any claim of abandonment for nonuse, and will
not (and not permit any licensee or sublicensee to) knowingly omit to do any act
whereby any Trademark may become invalidated, in each case except for such
Trademarks the loss or termination of which would not reasonably be expected to
result in a Material Adverse Effect.
(b) The Borrower (either itself or through licensees) will not do
any act or knowingly omit to do any act whereby any Patent material to the
conduct of its business may become abandoned or dedicated.
(c) The Borrower shall notify the Lender immediately if it knows
or has reason to know that any Intellectual Property material to the conduct of
its business may become abandoned or dedicated, or of any adverse determination
or development (including the institution of, or any such determination or
development in, any proceeding before any Governmental Person) regarding the
Borrower's ownership of any Intellectual Property material to its business, its
right to copyright, patent or register the same (as the case may be), or its
right to keep, use and maintain the same.
(d) The Borrower will take all necessary steps that are
consistent with good business practices in any proceeding before any appropriate
Governmental Person to maintain and pursue each application relating to any
Intellectual Property (and to obtain the relevant registrations) and to maintain
each registration material to the conduct of its business, including payment of
maintenance fees, filing of applications for renewal, affidavits of use,
affidavits of incontestability and opposition, interference and cancellation
proceedings.
(e) In the event that any Intellectual Property material to the
conduct of its business is infringed, misappropriated or diluted by a third
party, the Borrower shall notify the Lender within (10) days after it learns of
such event and shall, if consistent with good business practice, promptly ▇▇▇
for infringement, misappropriation or dilution, seek temporary restraints and
preliminary injunctive relief to the extent practicable, seek to recover any and
all damages for such infringement, misappropriation or dilution and take such
other actions as are appropriate under the circumstances to protect such
Collateral.
(f) The Borrower shall, prosecute diligently any application for
any Intellectual Property pending as of the date of this Agreement or thereafter
made until the
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termination of this Agreement, make application on uncopyrighted but
copyrightable material, unpatented but patentable inventions and unregistered
but registerable Trademarks and preserve and maintain all rights in applications
for any Intellectual Property; provided, however, that the Borrower shall have
no obligation to make any such application if making such application would be
unnecessary or imprudent in the good faith business judgment of the Borrower or
is otherwise immaterial. Any expenses incurred in connection with such an
application shall be borne by the Borrower. The Borrower shall not abandon any
right to file a application for any material Intellectual Property or any
pending application in the United States without the consent of the Lender,
which consent shall not be unreasonably withheld.
(g) After an Event of Default, the Lender shall have the right
but shall in no way be obligated to bring suit in its own name to enforce the
Copyrights, Patents and Trademarks and any license under such Intellectual
Property, in which event the Borrower shall, at the request of the Lender, do
any and all lawful acts and execute and deliver any and all proper documents
required by the Lender in aid of such enforcement action.
5.06 Further Assurances. The Borrower agrees that, from time to time
upon the written request of the Lender, the Borrower will execute and deliver
such further documents and do such other acts and things as the Lender may
reasonably request in order fully to effect the purposes of this Agreement.
Section 6. Remedies.
6.01 Events of Default, Etc. If any Event of Default shall have occurred
and be continuing:
(a) the Lender in its discretion may require the Borrower to, and
the Borrower shall, assemble the Collateral owned by it at such place or places,
reasonably convenient to both the Lender and the Borrower, designated in the
Lender's request;
(b) the Lender in its discretion may make any reasonable
compromise or settlement it deems desirable with respect to any of the
Collateral and may extend the time of payment, arrange for payment in
installments, or otherwise modify the terms of, all or any part of the
Collateral;
(c) the Lender in its discretion may, in its name or in the name
of the Borrower or otherwise, demand, ▇▇▇ for, collect or receive any money or
property at any time payable or receivable on account of or in exchange for all
or any part of the Collateral, but shall be under no obligation to do so;
(d) the Lender in its discretion may, upon ten Business Days'
prior written notice to the Borrower of the time and place, with respect to all
or any part of the Collateral which shall then be or shall thereafter come into
the possession, custody or control of the Lender or any of its agents, sell,
lease or otherwise dispose of all or any part of such Collateral, at such place
or places as the Lender deems best, for cash, for credit or for future delivery
(without thereby assuming any credit risk) and at public or
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private sale, without demand of performance or notice of intention to effect any
such disposition or of time or place of any such sale (except such notice as is
required above or by applicable statute and that cannot be waived), and the
Lender or any other Person may be the purchaser, lessee or recipient of any or
all of the Collateral so disposed of at any public sale (or, to the extent
permitted by law, at any private sale) and thereafter hold the same absolutely,
free from any claim or right of whatsoever kind, including any right or equity
of redemption (statutory or otherwise), of the Borrower, any such demand, notice
and right or equity being hereby expressly waived and released. In the event of
any sale, license or other disposition of any of the Trademark Collateral, the
goodwill connected with and symbolized by the Trademark Collateral subject to
such disposition shall be included, and the Borrower shall supply to the Lender
or its designee, for inclusion in such sale, assignment or other disposition,
all Intellectual Property relating to such Trademark Collateral. The Lender may,
without notice or publication, adjourn any public or private sale or cause the
same to be adjourned from time to time by announcement at the time and place
fixed for the sale, and such sale may be made at any time or place to which the
sale may be so adjourned; and
(e) the Lender shall have, and in its discretion may exercise,
all of the rights, remedies, powers and privileges with respect to the
Collateral of a secured party under the Uniform Commercial Code (whether or not
the Uniform Commercial Code is in effect in the jurisdiction where such rights,
remedies, powers and privilege are asserted) and such additional rights,
remedies, powers and privilege to which a secured party is entitled under the
laws in effect in any jurisdiction where any rights, remedies, powers and
privileges in respect of this Agreement or the Collateral may be asserted,
including the right, to the maximum extent permitted by law, to exercise all
voting, consensual and other powers of ownership pertaining to the Collateral as
if the Lender were the sole and absolute owner of the Collateral (and the
Borrower agrees to take all such action as may be appropriate to give effect to
such right).
The proceeds of, and other realization upon, the Collateral by virtue of the
exercise of remedies under this Section 6.01 and of the exercise of the license
granted to the Lender in Section 2.02 shall be applied in accordance with
Section 6.04.
6.02 Deficiency. If the proceeds of, or other realization upon, the
Collateral by virtue of the exercise of remedies under Section 6.01 and of the
exercise of the license granted by the Lender in Section 2.02 are insufficient
to cover the costs and expenses of such exercise and the payment in full of the
other Secured Obligations, the Borrower shall remain liable for any deficiency.
6.03 Private Sale.
(a) The Lender shall incur no liability as a result of the sale,
lease or other disposition of all or any part of the Collateral at any private
sale pursuant to Section 6.01 conducted in a commercially reasonable manner. The
Borrower hereby waives any claims against the Lender arising by reason of the
fact that the price at which the Collateral may have been sold at such a private
sale was less than the price which might have been obtained at a public sale or
was less than the aggregate amount of the Secured
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Obligations, even if the Lender accepts the first offer received and does not
offer the Collateral to more than one offeree.
(b) The Borrower recognizes that, by reason of certain
prohibitions contained in the Securities Act of 1933 and applicable state
securities laws, the Lender may be compelled, with respect to any sale of all or
any part of the Collateral, to limit purchasers to those who will agree, among
other things, to acquire the Collateral for their own account, for investment
and not with a view to distribution or resale. The Borrower acknowledges that
any such private sales may be at prices and on terms less favorable to the
Lender than those obtainable through a public sale without such restrictions,
and, notwithstanding such circumstances, agrees that any such private sale shall
be deemed to have been made in a commercially reasonable manner and that the
Lender shall have no obligation to engage in public sales and no obligation to
delay the sale of any Collateral for the period of time necessary to permit the
respective Issuer of such Collateral to register it for public sale.
6.04 Application of Proceeds. Except as otherwise expressly provided in
this Agreement and except as provided below in this Section 6.04, the proceeds
of, or other realization upon, all or any part of the Collateral by virtue of
the exercise of remedies under Section 6.01 or of the exercise of the license
granted in Section 2.02, and any other cash at the time held by the Lender under
Section 3 or this Section 6, shall be applied by the Lender:
First, to the payment of the costs and expenses of such exercise of
remedies, including reasonable out-of-pocket costs and expenses of the Lender,
the fees and expenses of its agents and counsel and all other expenses incurred
and advances made by the Lender in that connection;
Next, to the payment in full of the remaining Secured Obligations in
such manner as the Lender may determine; and
Finally, to the payment to the Borrower, or its respective successors or
assigns, or as a court of competent jurisdiction may direct, of any surplus then
remaining.
As used in this Section 6, "proceeds" of Collateral shall mean cash,
securities and other property realized in respect of, and distributions in kind
of, Collateral, including any property received under any bankruptcy,
reorganization or other similar proceeding as to the Borrower or any issuer of,
or account debtor or other obligor on, any of the Collateral.
Section 7. Miscellaneous.
7.01 Waiver. No failure on the part of the Lender to exercise and no
delay in exercising, and no course of dealing with respect to, any right, power
or privilege under this Agreement or any other Loan Document shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, power or
privilege under this Agreement or any other Loan Document preclude any other or
further exercise thereof or the exercise of any
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other right, power or privilege. The remedies provided in this Agreement are
cumulative and not exclusive of any remedies provided by law.
7.02 Notices. All notices, requests and other communications provided
for herein (including any modifications of, or waivers, requests or consents
under, this Agreement) shall be given or made in writing (including by
telecopy):
(a) if to the Borrower, to it at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention of ▇▇▇▇▇ ▇▇▇▇▇▇▇ (Telephone No. ▇▇▇-▇▇▇-▇▇▇▇,
Facsimile No. 707-584-6437); and
(b) if to the Lender, to it at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention of ▇▇▇▇▇▇▇ ▇▇▇▇▇ (Telephone No.
▇▇▇-▇▇▇-▇▇▇▇, Facsimile No. 847-576-4768).
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. Except as
otherwise provided in this Agreement, all such communications shall be deemed to
have been duly given when transmitted by telecopier, or personally delivered or,
in the case of a mailed notice, upon receipt, in each case given or addressed as
aforesaid.
7.03 Expenses, Etc. The Borrower agrees to pay or to reimburse the
Lender for all costs and expenses (including reasonable attorney's fees and
expenses) that may be incurred by the Lender in any effort to enforce any of the
provisions of Section 6 or any of the obligations of the Borrower in respect of
the Collateral or in connection with the preservation of the Lien of, or the
rights of the Lender, under this Agreement or with any actual or attempted sale,
lease, disposition, exchange, collection, compromise, settlement or other
realization in respect of, or care of the Collateral, including all such costs
and expenses (and reasonable attorney's fees and expenses) incurred in any
bankruptcy, reorganization, workout or other similar proceeding.
7.04 Amendments, Etc. Except as otherwise expressly provided in this
Agreement, any provision of this Agreement may be modified or supplemented only
by an instrument in writing duly signed by the Borrower and the Lender.
7.05 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. The Borrower may not assign any of its rights or obligations
hereunder or under the other Loan Documents without the prior consent of the
Lender. The Lender may assign any of its Loans, its Notes, and its Commitment
(but only with the consent of the Borrower, which consent shall not be
unreasonably withheld); provided that each such assignment by the Lender of its
Loans or Commitment shall be made in such manner so that the same portion of its
Loans and Commitment is assigned to the respective assignee. The Lender may
furnish any information concerning the Borrower or any of its Subsidiaries in
the possession of the Lender from time to time to assignees (including
prospective assignees).
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7.06 Survival. All representations and warranties made in this Agreement
or in any certificate or other document delivered pursuant to or in connection
with this Agreement shall survive the execution and delivery of this Agreement
or such certificate or other document (as the case may be) or any deemed
repetition of any such representation or warranty.
7.07 Agreements Superseded. This Agreement supersedes all prior
agreements and understandings, written or oral, among the parties with respect
to the subject matter of this Agreement.
7.08 Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions of this Agreement, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
7.09 Captions. The table of contents and captions and section headings
appearing herein are included solely for convenience of reference and are not
intended to affect the interpretation of any provision of this Agreement.
7.10 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
7.11 GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK;
PROVIDED, HOWEVER THAT PERFECTION OF SECURITY INTERESTS IN DEPOSIT ACCOUNTS
SHALL BE GOVERNED BY THE CALIFORNIA UNIFORM COMMERCIAL CODE. EACH OF THE LENDER
AND THE BORROWER HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK
STATE COURT SITTING IN NEW YORK CITY FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT. EACH OF THE LENDER AND THE BORROWER IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH
A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.
7.12 WAIVER OF JURY TRIAL. EACH OF THE BORROWER AND THE LENDER HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS
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AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
NEXT LEVEL COMMUNICATIONS, INC.
By: /s/ ▇▇▇▇▇ ▇. Zar
Title: Senior Vice President, General
Counsel, Chief Administrative Officer and
Secretary
MOTOROLA, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
Title: Senior Vice President and Treasurer
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