GUARANTY AND SECURITY
AGREEMENT
DATED AS OF MARCH 5,
2009
AMONG
WESTELL TECHNOLOGIES,
INC.,
WESTELL, INC.,
TELTREND LLC,
CONFERENCE PLUS,
INC.
AND
THE OTHER PARTIES
HERETO,
as Guarantors and
Grantors,
AND
THE PRIVATEBANK AND TRUST
COMPANY,
as the Lender
TABLE OF CONTENTS
Page
GUARANTY AND SECURITY
AGREEMENT
THIS GUARANTY AND SECURITY AGREEMENT
dated as of March 5, 2009 (this “ Agreement
”) is entered into among WESTELL TECHNOLOGIES, INC., a
Delaware corporation (“ Technologies ”),
WESTELL, INC., an Illinois corporation (“ Westell
”), TELTREND LLC, a Delaware limited liability company
(“ Teltrend ”) and CONFERENCE PLUS, INC., a
Delaware corporation (“ CPI ”, Technologies,
Westell, Teltrend and CPI being hereinafter collectively referred
to as the “ Borrowers ” and individually as a
“ Borrower ”) and each other Person signatory
hereto as a Grantor (together with any other Person that becomes a
party hereto as provided herein, the “ Grantors
”) in favor of THE PRIVATEBANK AND TRUST COMPANY (the “
Lender ”).
The Lender has agreed to extend
credit to the Borrowers pursuant to the Credit Agreement. The
Borrowers are affiliated with each other and each other Grantor.
The proceeds of credit extended under the Credit Agreement will be
used in part to enable the Borrowers to make valuable transfers to
each other and the other Grantors in connection with the operation
of their respective businesses. The Borrowers and the other
Grantors are engaged in interrelated businesses, and each Grantor
will derive substantial direct and indirect benefit from extensions
of credit under the Credit Agreement. It is a condition precedent
to the Lender’s obligation to extend credit under the Credit
Agreement that the Grantors shall have executed and delivered this
Agreement to the Lender.
In consideration of the premises and
to induce the Lender to enter into the Credit Agreement and to
induce the Lender to extend credit thereunder, each Grantor hereby
agrees with the Lender as follows:
SECTION 1.
DEFINITIONS .
1.1. Unless
otherwise defined herein, terms defined in the Credit Agreement and
used herein shall have the meanings given to them in the Credit
Agreement, and the following terms are used herein as defined in
the UCC: Accounts, Certificated Security, Commercial Tort Claims,
Deposit Accounts, Documents, Electronic Chattel Paper, Equipment,
Farm Products, Goods, Health Care Insurance Receivables,
Instruments, Inventory, Leases, Letter-of-Credit Rights, Money,
Payment Intangibles, Supporting Obligations, Tangible Chattel
Paper.
1.2. When
used herein the following terms shall have the following
meanings:
Agreement has the meaning set forth in the preamble
hereto.
Borrower Obligations
means all Obligations of the
Borrowers or any of them.
Chattel Paper
means all “chattel
paper” as such term is defined in Section 9-102(a)(11)
of the UCC and, in any event, including with respect to any
Grantor, all Electronic Chattel Paper and Tangible Chattel
Paper.
Collateral
means (a) all of the personal
property now owned or at any time hereafter acquired by any Grantor
or in which any Grantor now has or at any time in the future
may
acquire any right, title or
interest, including all of each Grantor’s Accounts, Chattel
Paper, Commercial Tort Claims, Deposit Accounts, Documents,
Equipment, Fixtures, General Intangibles, Health Care Insurance
Receivables, Farm Products, Goods, Instruments, Intellectual
Property, Inventory, Investment Property, Leases, Letter-of-Credit
Rights, Money, Supporting Obligations and Identified Claims, (b)
all books and records pertaining to any of the foregoing, (c) all
Proceeds and products of any of the foregoing, and (d) all
collateral security and guaranties given by any Person with respect
to any of the foregoing. Where the context requires, terms relating
to the Collateral or any part thereof, when used in relation to a
Grantor, shall refer to such Grantor’s Collateral or the
relevant part thereof.
Copyrights
means all copyrights arising under
the laws of the United States, any other country or any political
subdivision thereof, whether registered or unregistered and whether
published or unpublished, including those listed on Schedule
5 , all registrations and recordings thereof, and all
applications in connection therewith, including all registrations,
recordings and applications in the United States Copyright Office,
and the right to obtain all renewals of any of the
foregoing.
Copyright Licenses
means all written agreements naming
any Grantor as licensor or licensee, including those listed on
Schedule 5 , granting any right under any Copyright,
including the grant of rights to manufacture, distribute, exploit
and sell materials derived from any Copyright.
Credit Agreement
means the Credit Agreement of even
date herewith among the Borrowers and the Lender, as amended,
supplemented, restated or otherwise modified from time to
time.
Fixtures means all of the following, whether now owned or
hereafter acquired by a Grantor: plant fixtures; business fixtures;
other fixtures and storage facilities, wherever located; and all
additions and accessories thereto and replacements
therefor.
General Intangibles
means all “general
intangibles” as such term is defined in
Section 9-102(a)(42) of the UCC and, in any event, including
with respect to any Grantor, all Payment Intangibles, all contracts
and contract rights, agreements, instruments and indentures in any
form, and portions thereof, to which such Grantor is a party or
under which such Grantor has any right, title or interest or to
which such Grantor or any property of such Grantor is subject, as
the same from time to time may be amended, supplemented or
otherwise modified, including, without limitation, (a) all rights
of such Grantor to receive moneys due and to become due to it
thereunder or in connection therewith, (b) all rights of such
Grantor to damages arising thereunder and (c) all rights of such
Grantor to perform and to exercise all remedies thereunder;
provided , that the foregoing limitation shall not affect,
limit, restrict or impair the grant by such Grantor of a security
interest pursuant to this Agreement in any Receivable or any money
or other amounts due or to become due under any such Payment
Intangible, contract, agreement, instrument or
indenture.
Guarantor Obligations
means, collectively, with respect to
each Guarantor, all Obligations of such Guarantor.
Guarantors
means the collective reference to
each Borrower with respect to the Obligations of the other
Borrowers and each other Grantor, it being understood and agreed
that no Grantor shall be a Guarantor of any Obligations for which
it is primarily liable.
Identified Claims
means the Commercial Tort Claims
described on Schedule 7 as such schedule shall be
supplemented from time to time.
Intellectual Property
means the collective reference to
all rights, priorities and privileges relating to intellectual
property, whether arising under United States, multinational or
foreign laws or otherwise, including the Copyrights, the Copyright
Licenses, the Patents, the Patent Licenses, the Trademarks and the
Trademark Licenses, and all rights to sue at law or in equity for
any infringement or other impairment thereof, including the right
to receive all proceeds and damages therefrom.
Intercompany Note
means any promissory note evidencing
loans made by any Grantor to any other Grantor.
Investment Property
means the collective reference to
(a) all “investment property” as such term is defined
in Section 9-102(a)(49) of the UCC (other than the equity interest
of any foreign Subsidiary excluded from the definition of Pledged
Equity), (b) all “financial assets” as such term is
defined in Section 8-102(a)(9) of the UCC, and (b) whether or not
constituting “investment property” as so defined, all
Pledged Notes and all Pledged Equity.
Issuers means the collective reference to each issuer of
any Investment Property.
Paid in Full
means (a) the payment in full in
cash and performance of all Secured Obligations, (b) the
termination of all Commitments and (c) either (i) the cancellation
and return to the Lender of all Letters of Credit or (ii) the cash
collateralization of all Letters of Credit in accordance with the
Credit Agreement.
Patents means (a) all letters patent of the United
States, any other country or any political subdivision thereof, all
reissues and extensions thereof and all goodwill associated
therewith, including any of the foregoing referred to in
Schedule 5, (b) all applications for letters patent of the
United States or any other country and all divisions, continuations
and continuations-in-part thereof, including any of the foregoing
referred to in Schedule 5, and (c) all rights to obtain any
reissues or extensions of the foregoing.
Patent Licenses
means all agreements, whether
written or oral, providing for the grant by or to any Grantor of
any right to manufacture, use or sell any invention covered in
whole or in part by a Patent, including any of the foregoing
referred to in Schedule 5 .
Pledged Equity
means the equity interests listed on
Schedule 1 , together with any other equity interests,
certificates, options or rights of any nature whatsoever in respect
of the equity interests of any Person that may be issued or granted
to, or held by, any Grantor while this Agreement is in effect;
provided that in no event shall more than 65% of the total
outstanding equity interests of any foreign Subsidiary be required
to be pledged hereunder.
Pledged Notes
means all promissory notes listed on
Schedule 1 , all Intercompany Notes at any time issued to
any Grantor and all other promissory notes issued to or held by any
Grantor
(other than (a) promissory notes
issued in connection with extensions of trade credit by any Grantor
in the ordinary course of business and (b) any individual
promissory note which is less than $100,000 in principal amount, up
to an aggregate of $100,000 for all such promissory notes excluded
under this clause (b)).
Proceeds means all “proceeds” as such term is
defined in Section 9-102(a)(64) of the UCC and, in any event, shall
include all dividends or other income from the Investment Property,
collections thereon or distributions or payments with respect
thereto.
Receivable
means any right to payment for goods
sold or leased or for services rendered, whether or not such right
is evidenced by an Instrument or Chattel Paper and whether or not
it has been earned by performance (including any
Accounts).
Secured Obligations
means, collectively, the Borrower
Obligations and Guarantor Obligations.
Securities Act
means the Securities Act of 1933, as
amended.
Trademarks
means (a) all trademarks, trade
names, corporate names, company business names, fictitious business
names, trade styles, service marks, logos and other source or
business identifiers, and all goodwill associated therewith, now
existing or hereafter adopted or acquired, all registrations and
recordings thereof, and all applications in connection therewith,
whether in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or
any other country or any political subdivision thereof, or
otherwise, and all common-law rights related thereto, including any
of the foregoing referred to in Schedule 5 , and (b) the
right to obtain all renewals thereof.
Trademark Licenses
means, collectively, each agreement,
whether written or oral, providing for the grant by or to any
Grantor of any right to use any Trademark, including any of the
foregoing referred to in Schedule 5 .
UCC means the Uniform Commercial Code as in effect
on the date hereof and from time to time in the State of
Illinois, provided that if by reason of mandatory provisions
of law, the perfection or the effect of perfection or
non-perfection of the security interests in any Collateral or the
availability of any remedy hereunder is governed by the Uniform
Commercial Code as in effect on or after the date hereof in any
other jurisdiction, “UCC” means the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such perfection or effect of
perfection or non-perfection or availability of such
remedy.
SECTION 2.
GUARANTY .
2.1.
Guaranty . (a) Each of the Guarantors hereby, jointly and
severally, unconditionally and irrevocably, as a primary obligor
and not only a surety, guaranties to the Lender and its successors,
endorsees, transferees and assigns, the prompt and complete payment
and performance by each Borrower when due (whether at the stated
maturity, by acceleration or otherwise) of the Borrower
Obligations.
(b) Anything
herein or in any other Loan Document to the contrary
notwithstanding, the maximum liability of each Guarantor hereunder
and under the other Loan Documents shall in no event exceed the
amount which can be guarantied by such Guarantor under applicable
federal and state laws relating to the insolvency of debtors (after
giving effect to the right of contribution established in
Section 2.2 ).
(c) Each
Guarantor agrees that the Secured Obligations may at any time and
from time to time exceed the amount of the liability of such
Guarantor hereunder without impairing the guaranty contained in
this Section 2 or affecting the rights and remedies of the
Lender hereunder.
(d) The
guaranty contained in this Section 2 shall remain in full
force and effect until all of the Secured Obligations shall have
been Paid in Full.
(e) No
payment made by any Borrower, any of the Guarantors, any other
guarantor or any other Person or received or collected by the
Lender from any Borrower, any of the Guarantors, any other
guarantor or any other Person by virtue of any action or proceeding
or any set-off or appropriation or application at any time or from
time to time in reduction of or in payment of the Secured
Obligations shall be deemed to modify, reduce, release or otherwise
affect the liability of any Guarantor hereunder which shall,
notwithstanding any such payment (other than any payment made by
such Guarantor in respect of the Secured Obligations or any payment
received or collected from such Guarantor in respect of the Secured
Obligations), remain liable for the Secured Obligations up to the
maximum liability of such Guarantor hereunder until the Secured
Obligations are Paid in Full.
2.2.
Right of Contribution . Each Guarantor hereby agrees that to
the extent that a Guarantor shall have paid more than its
proportionate share of any payment made hereunder, such Guarantor
shall be entitled to seek and receive contribution from and against
any other Guarantor hereunder which has not paid its proportionate
share of such payment. Each Guarantor’s right of contribution
shall be subject to the terms and conditions of Section 2.3
. The provisions of this Section 2.2 shall in no respect
limit the obligations and liabilities of any Guarantor to the
Lender, and each Guarantor shall remain liable to the Lender for
the full amount guarantied by such Guarantor hereunder.
2.3.
No Subrogation . Notwithstanding any payment made by any
Guarantor hereunder or any set-off or application of funds of any
Guarantor by the Lender, no Guarantor shall be entitled to be
subrogated to any of the rights of the Lender against any Borrower
or any other Guarantor or any collateral security or guaranty or
right of offset held by the Lender for the payment of the Secured
Obligations, nor shall any Guarantor seek or be entitled to seek
any contribution or reimbursement from any Borrower or any other
Guarantor in respect of payments made by such Guarantor hereunder,
until all of the Secured Obligations are Paid in Full, no Letter of
Credit shall be outstanding and the Commitments are terminated. If
any amount shall be paid to any Guarantor on account of such
subrogation rights at any time when all of the Secured Obligations
shall not have been Paid in Full, such amount shall be held by such
Guarantor in trust for the Lender, segregated from other funds of
such Guarantor, and shall, forthwith upon receipt by such
Guarantor, be turned over to the Lender in the exact form received
by such Guarantor (duly
indorsed by such Guarantor to the
Lender, if required), to be applied against the Secured
Obligations, whether matured or unmatured, in such order as the
Lender may determine.
2.4.
Amendments, etc. with respect to the Secured Obligations .
Each Guarantor shall remain obligated hereunder notwithstanding
that, without any reservation of rights against any Guarantor and
without notice to or further assent by any Guarantor, any demand
for payment of any of the Secured Obligations made by the Lender
may be rescinded by the Lender and any of the Secured Obligations
continued, and the Secured Obligations, or the liability of any
other Person upon or for any part thereof, or any collateral
security or guaranty therefor or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed,
extended, amended, modified, accelerated, compromised, waived,
surrendered or released by the Lender, and the Credit Agreement and
the other Loan Documents and any other documents executed and
delivered in connection therewith may be amended, modified,
supplemented or terminated, in whole or in part, as the Lender may
deem advisable from time to time. The Lender shall not have any
obligation to protect, secure, perfect or insure any Lien at any
time held by it as security for the Secured Obligations or for the
guaranty contained in this Section 2 or any property subject
thereto.
The Lender may, from time to time,
at its sole discretion and without notice to any Guarantor, take
any or all of the following actions: (a) retain or obtain a
security interest in any property to secure any of the Secured
Obligations or any obligation hereunder, (b) retain or obtain the
primary or secondary obligation of any obligor or obligors, in
addition to the undersigned, with respect to any of the Secured
Obligations, (c) extend or renew any of the Secured Obligations for
one or more periods (whether or not longer than the original
period), alter or exchange any of the Secured Obligations, or
release or compromise any obligation of any of the undersigned
hereunder or any obligation of any nature of any other obligor with
respect to any of the Secured Obligations, (d) release any guaranty
or right of offset or its security interest in, or surrender,
release or permit any substitution or exchange for, all or any part
of any property securing any of the Secured Obligations or any
obligation hereunder, or extend or renew for one or more periods
(whether or not longer than the original period) or release,
compromise, alter or exchange any obligations of any nature of any
obligor with respect to any such property, and (e) resort to the
undersigned (or any of them) for payment of any of the Secured
Obligations when due, whether or not the Lender shall have resorted
to any property securing any of the Secured Obligations or any
obligation hereunder or shall have proceeded against any other of
the undersigned or any other obligor primarily or secondarily
obligated with respect to any of the Secured
Obligations.
2.5.
Waivers . Each Guarantor waives any and all notice of the
creation, renewal, extension or accrual of any of the Secured
Obligations and notice of or proof of reliance by the Lender upon
the guaranty contained in this Section 2 or acceptance of
the guaranty contained in this Section 2 ; the Secured
Obligations, and any of them, shall conclusively be deemed to have
been created, contracted or incurred, or renewed, extended, amended
or waived, in reliance upon the guaranty contained in this
Section 2 , and all dealings between any Borrower and any of
the Guarantors, on the one hand, and the Lender, on the other hand,
likewise shall be
conclusively presumed to have been
had or consummated in reliance upon the guaranty contained in this
Section 2 . Each Guarantor waives (a) diligence,
presentment, protest, demand for payment and notice of default,
dishonor or nonpayment and all other notices whatsoever to or upon
any Borrower or any of the Guarantors with respect to the Secured
Obligations, (b) notice of the existence or creation or non-payment
of all or any of the Secured Obligations and (c) all diligence in
collection or protection of or realization upon any Secured
Obligations or any security for or guaranty of any Secured
Obligations.
2.6.
Payments . Each Guarantor hereby guaranties that payments
hereunder will be paid to the Lender without set-off or
counterclaim in Dollars at the office of the Lender specified in
the Credit Agreement.
SECTION 3.
GRANT OF SECURITY INTEREST .
3.1.
Grant . Each Grantor hereby assigns and transfers to the
Lender, and hereby grants to the Lender, for the benefit of the
Lender and (to the extent provided herein) its Affiliates, a
continuing security interest in all of its Collateral, as
collateral security for the prompt and complete payment and
performance when due (whether at the stated maturity, by
acceleration or otherwise) of the Secured Obligations.
Notwithstanding the foregoing, the Collateral shall not include:
any Intellectual Property to the extent (and only to the extent)
the granting of a security interest pursuant to this Agreement
would render such Intellectual Property unenforceable or is
prohibited by, or would result in a breach of the terms of, or
constitute a default thereunder; provided that the foregoing
exclusion shall not apply if: (A) such prohibition has been waived
or a security interest with respect thereto has been consented to
by the other party thereto or (B) such prohibition would be
rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or
9-409 of Article 9 of the UCC, as applicable and as then in effect
in any relevant jurisdiction, or pursuant to any other applicable
law or principles of equity; provided, further, immediately upon
the ineffectiveness, lapse or termination of any such provision,
Grantors shall be deemed to have granted a security interest in,
all of their right, title and interest in and to such property of
Grantors as if such provisions had never been in effect; and
provided, further, the foregoing exclusion shall in no way be
construed so as to limit, impair or otherwise affect the
Lender’s unconditional, continuing security interest in and
to all rights, title and interests of Grantors in or to any payment
obligations or other rights to receive monies due or to become due
under any such property. Grantors hereby represent and warrant to
the Lender that the property excluded from the Collateral pursuant
to any of the provisions of this paragraph is not material to the
business, operations or financial condition of Grantors or their
Subsidiaries, taken as a whole. Upon the Lender’s request
therefor, each Grantor shall provide the Lender with a schedule of
the Intellectual Property that contain any such restrictions of the
type set forth in this paragraph. Each Grantor shall give written
notice to the Lender prior to entering into any material license,
contract, agreement, Intellectual Property or General Intangible
containing any such restriction on the grant of a security interest
therein. At Lender’s request, each Grantor hereby covenants
to use its commercially reasonable efforts to obtain any such
consents or approvals to the grant of a security interest
therein.
SECTION 4.
REPRESENTATIONS AND WARRANTIES .
To induce the Lender to enter into
the Credit Agreement and to make its extensions of credit to the
Borrowers thereunder, each Grantor jointly and severally hereby
represents and warrants to the Lender that:
4.1.
Title; No Other Liens . Except for Permitted Liens, the
Grantors own each item of the Collateral free and clear of any and
all Liens or claims of others. No financing statement or other
public notice with respect to all or any part of the Collateral is
on file or of record in any public office, except filings
evidencing Permitted Liens and filings for which termination
statements have been delivered to the Lender.
4.2.
Perfected First Priority Liens . The security interests
granted pursuant to this Agreement (a) upon completion of the
filings and other actions specified on Schedule 2 (which, in
the case of all filings and other documents referred to on
Schedule 2 , have been delivered to the Lender in completed
and duly executed form) will constitute valid perfected security
interests in all of the Collateral in favor of the Lender as
collateral security for each Grantor’s Obligations,
enforceable in accordance with the terms hereof against all
creditors of each Grantor and any Persons purporting to purchase
any Collateral from each Grantor and (b) are prior to all other
Liens on the Collateral in existence on the date hereof except for
Permitted Liens for which priority is accorded under applicable
law. The filings and other actions specified on Schedule 2
constitute all of the filings and other actions necessary to
perfect all security interests granted hereunder.
4.3.
Grantor Information . On the date hereof, Schedule 3
sets forth (a) each Grantor’s jurisdiction of organization,
(b) the location of each Grantor’s chief executive office,
(c) each Grantor’s exact legal name as it appears on its
organizational documents and (d) each Grantor’s
organizational identification number (to the extent a Grantor is
organized in a jurisdiction which assigns such numbers) and federal
employer identification number.
4.4.
Collateral Locations . On the date hereof, Schedule 4
sets forth (a) each place of business of each Grantor (including
its chief executive office), (b) all locations where all Inventory
and the Equipment owned by each Grantor is kept, except with
respect to Inventory and Equipment with a fair market value of less
than $100,000 (in the aggregate for all Grantors) which may be
located at other locations and (c) whether each such Collateral
location and place of business (including each Grantor’s
chief executive office) is owned or leased (and if leased,
specifies the complete name and notice address of each lessor). No
Collateral is located outside the United States or in the
possession of any lessor, bailee, warehouseman or consignee, except
as indicated on Schedule 4 .
4.5.
Certain Property . None of the Collateral constitutes, or is
the Proceeds of, (a) Farm Products, (b) Health Care Insurance
Receivables or (c) vessels, aircraft or any other property subject
to any certificate of title or other registration statute of the
United States, any State or other jurisdiction.
4.6.
Investment Property . (a) The Pledged Equity pledged by each
Grantor hereunder constitute all the issued and outstanding equity
interests of each Issuer owned by such Grantor or, in the case of
any foreign Subsidiary, 65% of all issued and outstanding equity
interests of such foreign Subsidiary.
(b) All
of the Pledged Equity has been duly and validly issued and is fully
paid and nonassessable.
(c) To
the knowledge of each Grantor (other than with respect to any
Pledged Notes to which a Grantor is a maker), each of the Pledged
Notes constitutes the legal, valid and binding obligation of the
obligor with respect thereto, enforceable in accordance with its
terms (subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors’ rights generally, general
equitable principles (whether considered in a proceeding in equity
or at law) and an implied covenant of good faith and fair
dealing).
(d)
Schedule 1 lists all Investment Property owned by each
Grantor. Each Grantor is the record and beneficial owner of, and
has good and marketable title to, the Investment Property pledged
by it hereunder, free of any and all Liens or options in favor of,
or claims of, any other Person, except Permitted Liens.
4.7.
Receivables . (a) No material amount payable to such Grantor
under or in connection with any Receivable is evidenced by any
Instrument or Chattel Paper which has not been delivered to the
Lender.
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(b)
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No obligor on any Receivable is a governmental
authority.
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(c) The
amounts represented by such Grantor to the Lender from time to time
as owing to such Grantor in respect of the Receivables (to the
extent such representations are required by any of the Loan
Documents) will at all such times be accurate.
4.8.
Intellectual Property . (a) Schedule 5 lists all
Intellectual Property owned by such Grantor in its own name on the
date hereof.
(b) On
the date hereof, all material Intellectual Property owned by any
Guarantor is valid, subsisting, unexpired and enforceable and has
not been abandoned.
(c) Except
as set forth in Schedule 5 , none of the material
Intellectual Property is the subject of any licensing or franchise
agreement pursuant to which such Grantor is the licensor or
franchisor.
(d) Each
Grantor owns and possesses or has a license or other right to use
all Intellectual Property as is necessary for the conduct of the
businesses of such Grantor, without any infringement upon rights of
others which could reasonably be expected to have a Material
Adverse Effect.
4.9.
Depositary and Other Accounts . All depositary and other
accounts maintained by each Grantor are described on Schedule
6 hereto, which description includes for each such account the
name of the Grantor maintaining such account, the
name, address, telephone and fax
numbers of the financial institution at which such account is
maintained, the account number and the account officer, if any, of
such account.
SECTION 5.
COVENANTS .
Each Grantor covenants and agrees
with the Lender that, from and after the date of this Agreement
until the Secured Obligations shall have been Paid in
Full:
5.1.
Delivery of Instruments, Certificated Securities and Chattel
Paper . If any amount payable under or in connection with any
of the Collateral in excess of $100,000 (in the aggregate for all
Grantors) shall be or become evidenced by any Instrument,
Certificated Security or Chattel Paper, such Instrument,
Certificated Security or Chattel Paper shall be immediately
delivered to the Lender, duly indorsed in a manner reasonably
satisfactory to the Lender, to be held as Collateral pursuant to
this Agreement. In the event that an Unmatured Event of Default or
Event of Default shall have occurred and be continuing, upon the
request of the Lender, any Instrument, Certificated Security or
Chattel Paper not theretofore delivered to the Lender and at such
time being held by any Grantor shall be immediately delivered to
the Lender, duly indorsed in a manner reasonably satisfactory to
the Lender, to be held as Collateral pursuant to this
Agreement.
5.2.
Maintenance of Perfected Security Interest; Further
Documentation . (a) Such Grantor shall maintain the security
interest created by this Agreement as a perfected security interest
having at least the priority described in Section 4.2 and
shall defend such security interest against the claims and demands
of all Persons whomsoever.
(b) Such
Grantor will furnish to the Lender from time to time statements and
schedules further identifying and describing the assets and
property of such Grantor and such other reports in connection
therewith as the Lender may reasonably request, all in reasonable
detail.
(c) At
any time and from time to time, upon the written request of the
Lender, and at the sole expense of such Grantor, such Grantor will
promptly and duly execute and deliver, and have recorded, such
further instruments and documents and take such further actions as
the Lender may reasonably request for the purpose of obtaining or
preserving the full benefits of this Agreement and of the rights
and powers herein granted, including (i) filing any financing or
continuation statements under the UCC (or other similar laws) in
effect in any jurisdiction with respect to the security interests
created hereby and (ii) in the case of Investment Property and any
other relevant Collateral, taking any actions necessary to enable
the Lender to obtain “control” (within the meaning of
the applicable UCC) with respect thereto.
5.3.
Changes in Locations, Name, etc . Such Grantor shall not,
except upon 30 days’ prior written notice to the Lender and
delivery to the Lender of (a) all additional financing statements
and other documents reasonably requested by the Lender as to the
validity, perfection and priority of the security interests
provided for
herein and (b) if applicable, a
written supplement to Schedule 4 showing any additional
location at which Inventory or Equipment shall be kept:
(i) permit
any of the Inventory or Equipment to be kept at a location other
than those listed on Schedule 4 ; provided , that up
to $100,000 (in the aggregate for all Grantors) in fair market
value of any such Inventory and Equipment may be kept at other
locations;
(ii) change
its jurisdiction of organization or the location of its chief
executive office from that specified on Schedule 3 or in any
subsequent notice delivered pursuant to this Section 5.3 ;
or
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(iii)
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change its name, identity or corporate
structure.
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5.4.
Notices . Such Grantor will advise the Lender promptly, in
reasonable detail, of:
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(a)
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any Lien (other than Permitted Liens) on any of
the Collateral; and
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(b) the
occurrence of any other event which could reasonably be expected to
have a material adverse effect on the aggregate value of the
Collateral or on the Liens created hereby.
5.5.
Investment Property . (a) If such Grantor shall become
entitled to receive or shall receive any certificate, option or
rights in respect of the equity interests of any Issuer, whether in
addition to, in substitution of, as a conversion of, or in exchange
for, any of the Pledged Equity, or otherwise in respect thereof,
such Grantor shall accept the same as the agent of the Lender, hold
the same in trust for the Lender and deliver the same forthwith to
the Lender in the exact form received, duly indorsed by such
Grantor to the Lender, if required, together with an undated
instrument of transfer covering such certificate duly executed in
blank by such Grantor and with, if the Lender so requests,
signature guarantied, to be held by the Lender, subject to the
terms hereof, as additional Collateral for the Secured Obligations.
Upon the occurrence and during the continuance of an Event of
Default, (i) any sums paid upon or in respect of the Investment
Property upon the liquidation or dissolution of any Issuer shall be
paid over to the Lender to be held by it hereunder as additional
Collateral for the Secured Obligations, and (ii) in case any
distribution of capital shall be made on or in respect of the
Investment Property or any property shall be distributed upon or
with respect to the Investment Property pursuant to the
recapitalization or reclassification of the capital of any Issuer
or pursuant to the reorganization thereof, the property so
distributed shall, unless otherwise subject to a perfected Lien in
favor of the Lender, be delivered to the Lender to be held by it
hereunder as additional Collateral for the Secured Obligations.
Upon the occurrence and during the continuance of an Event of
Default, if any sums of money or property so paid or distributed in
respect of the Investment Property shall be received by such
Grantor, such Grantor shall, until such money or property is paid
or delivered to the Lender, hold such money or property in trust
for the Lender, segregated from other funds of such Grantor, as
additional Collateral for the Secured Obligations.
(b) Without
the prior written consent of the Lender, such Grantor will not (i)
vote to enable, or take any other action to permit, any Issuer to
issue any equity interests of any nature or
to issue any other securities or
interests convertible into or granting the right to purchase or
exchange for any equity interests of any nature of any Issuer,
except, in each case, as permitted by the Credit Agreement and the
other Loan Documents, (ii) sell, assign, transfer, exchange, or
otherwise dispose of, or grant any option with respect to, the
Investment Property or Proceeds thereof (except pursuant to a
transaction expressly permitted by the Credit Agreement and the
other Loan Documents) other than, with respect to Investment
Property not constituting Pledged Equity or Pledged Notes, any such
action which is not prohibited by the Credit Agreement, (iii)
create, incur or permit to exist any Lien or option in favor of, or
any claim of any Person with respect to, any of the Investment
Property or Proceeds thereof, or any interest therein, except for
Permitted Liens, or (iv) enter into any agreement or undertaking
restricting the right or ability of such Grantor or the Lender to
sell, assign or transfer any of the Investment Property or Proceeds
thereof, except, with respect to such Investment Property,
shareholders’ agreements entered into by such Grantor with
respect to Persons in which such Grantor maintains an ownership
interest of 50% or less.
(c) In
the case of each Grantor which is an Issuer, such Issuer agrees
that (i) it will be bound by the terms of this Agreement relating
to the Investment Property issued by it and will comply with such
terms insofar as such terms are applicable to it, (ii) it will
notify the Lender promptly in writing of the occurrence of any of
the events described in Section 5.5(a) with respect to the
Investment Property issued by it and (iii) the terms of Sections
6.3(c) and 6.7 shall apply to such Grantor with respect
to all actions that may be required of it pursuant to Section
6.3(c) or 6.7 regarding the Investment Property issued
by it.
5.6.
Receivables . (a) Other than in the ordinary course of
business consistent with its past practice and in amounts which are
not material to such Grantor, such Grantor will not (i) grant any
extension of the time of payment of any Receivable, (ii) compromise
or settle any Receivable for less than the full amount thereof,
(iii) release, wholly or partially, any Person liable for the
payment of any Receivable, (iv) allow any credit or discount
whatsoever on any Receivable or (v) amend, supplement or modify any
Receivable in any manner that could adversely affect the value
thereof.
(b) Such
Grantor will deliver to the Lender a copy of each material demand,
notice or document received by it that questions or calls into
doubt the validity or enforceability of more than 5% of the
aggregate amount of the then outstanding Receivables for all
Grantors.
5.7.
Intellectual Property . (a) Such Grantor (either itself or
through licensees) will (i) continue to use each Trademark material
to its business in order to maintain such Trademark in full force
free from any claim of abandonment for non-use, (ii) maintain as in
the past the quality of products and services offered under such
Trademark, (iii) use such Trademark with the appropriate notice of
registration and all other notices and legends required by
applicable law, (iv) not adopt or use any mark which is confusingly
similar or a colorable imitation of such Trademark unless the
Lender shall obtain a perfected security interest in such mark
pursuant to this Agreement, and (v) not (and not permit any
licensee or sublicensee thereof to) do any act or knowingly omit to
do any act whereby such Trademark may become invalidated or
impaired in any way.
(b) Such
Grantor (either itself or through licensees) will not do any act,
or omit to do any act, whereby any Patent material to its business
may become forfeited, abandoned or dedicated to the
public.
(c) Such
Grantor (either itself or through licensees) (i) will employ each
Copyright material to its business and (ii) will not (and will not
permit any licensee or sublicensee thereof to) do any act or
knowingly omit to do any act whereby any material portion of such
Copyrights may become invalidated or otherwise impaired. Such
Grantor will not (either itself or through licensees) do any act
whereby any material portion of such Copyrights may fall into the
public domain.
(d) Such
Grantor (either itself or through licensees) will not do any act
that knowingly uses any Intellectual Property material to its
business to infringe the intellectual property rights of any other
Person.
(e) Such
Grantor will notify the Lender within fifteen (15) days 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 (including the institution of, or any
such determination or development in, any proceeding in the United
States Patent and Trademark Office, the United States Copyright
Office or any court or tribunal in any country) regarding, such
Grantor’s ownership of, or the validity of, any material
Intellectual Property or such Grantor’s right to register the
same or to own and maintain the same.
(f) Whenever
such Grantor, either by itself or through any agent, employee,
licensee or designee, shall file an application for the
registration of any Intellectual Property with the United States
Patent and Trademark Office, the United States Copyright Office or
any similar office or agency in any other country or any political
subdivision thereof, such Grantor shall report such filing to the
Lender concurrently with the next delivery of financial statements
of the Borrowers pursuant to Section 10.1 of the Credit
Agreement. Upon the request of the Lender, such Grantor shall
execute and deliver, and have recorded, any and all agreements,
instruments, documents, and papers as the Lender may request to
evidence the Lender’s security interest in any Copyright,
Patent or Trademark and the goodwill and general intangibles of
such Grantor relating thereto or represented thereby.
(g) Such
Grantor will take all reasonable and necessary steps to maintain
and pursue each application (and to obtain the relevant
registration) and to maintain each registration of all material
Intellectual Property owned by it.
(h) In
the event that any material Intellectual Property is infringed upon
or misappropriated or diluted by a third party, such Grantor shall
(i) take such actions as such Grantor shall reasonably deem
appropriate under the circumstances to protect such Intellectual
Property and (ii) if such Intellectual Property is of material
economic value, promptly notify the Lender after it learns thereof
and, to the extent, in its reasonable judgment, such Grantor
determines it appropriate under the circumstances, sue for
infringement, misappropriation or dilution, to seek injunctive
relief where appropriate and to recover any and all damages for
such infringement, misappropriation or dilution.
5.8.
Depositary and Other Deposit Accounts . Each Grantor shall
maintain all of its principal deposit accounts with the Lender. No
Grantor shall open any depositary or other deposit accounts unless
such Grantor shall have given the Lender 10 days’ prior
written notice of its intention to open any such new deposit
accounts. The Grantors shall deliver to the Lender a revised
version of Schedule 6 showing any changes thereto within 30
days of any such change. Each Grantor hereby authorizes the
financial institutions at which such Grantor maintains a deposit
account to provide the Lender with such information with respect to
such deposit account as the Lender may from time to time reasonably
request, and each Grantor hereby consents to such information being
provided to the Lender. Each Grantor will, upon the Lender’s
request, cause each financial institution at which such Grantor
maintains a depositary or other deposit account to enter into a
bank agency or other similar agreement with the Lender and such
Grantor, in form and substance satisfactory to the Lender, in order
to give the Lender “control” (as defined in the UCC) of
such account. Upon Lender’s request to do so following the
occurrence and during the continuance o
