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EXHIBIT 10.29
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SECURITY AGREEMENT
By
TERREMARK WORLDWIDE, INC.,
as Issuer
and
THE GUARANTORS PARTY HERETO
and
FMP AGENCY SERVICES, LLC,
as Agent
----------------------
Dated as of December 31, 2004
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TABLE OF CONTENTS
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PREAMBLE..........................................................................................................1
RECITALS..........................................................................................................1
AGREEMENT.........................................................................................................2
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1.
Definitions...............................................................................2
SECTION 1.2.
Interpretation...........................................................................10
SECTION 1.3.
Resolution of Drafting
Ambiguities.......................................................10
SECTION 1.4.
Perfection
Certificate...................................................................10
ARTICLE II
GRANT OF SECURITY AND SECURED OBLIGATIONS
SECTION 2.1.
Grant of Security
Interest...............................................................10
SECTION 2.2.
Filings..................................................................................11
ARTICLE III
PERFECTION; SUPPLEMENTS; FURTHER ASSURANCES;
USE OF PLEDGED COLLATERAL
SECTION 3.1.
Delivery of Certificated Securities
Collateral...........................................12
SECTION 3.2.
Perfection of Uncertificated Securities
Collateral.......................................12
SECTION 3.3.
Financing Statements and Other Filings; Maintenance of Perfected
Security
Interest..............................................................................13
SECTION 3.4.
Other
Actions............................................................................13
SECTION 3.5.
Joinder of Additional
Guarantors.........................................................18
SECTION 3.6.
Supplements; Further
Assurances..........................................................18
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 4.1.
Title....................................................................................19
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SECTION 4.2.
Validity of Security
Interest............................................................19
SECTION 4.3.
Defense of Claims; Transferability of Pledged
Collateral.................................20
SECTION 4.4.
Other Financing
Statements...............................................................20
SECTION 4.5.
Chief Executive Office; Change of Name; Jurisdiction of
Organization.....................20
SECTION 4.6.
Location of Inventory and
Equipment......................................................21
SECTION 4.7.
Due Authorization and
Issuance...........................................................21
SECTION 4.8.
Consents,
etc............................................................................21
SECTION 4.9.
Pledged
Collateral.......................................................................21
SECTION 4.10.
Insurance................................................................................21
SECTION 4.11.
Payment of Taxes; Compliance with Laws; Contesting Liens;
Claims.........................22
SECTION 4.12.
Access to Pledged Collateral, Books and Records; Other
Information.......................22
ARTICLE V
CERTAIN PROVISIONS CONCERNING SECURITIES COLLATERAL
SECTION 5.1.
Pledge of Additional Securities
Collateral...............................................22
SECTION 5.2.
Voting Rights; Distributions;
etc........................................................23
SECTION 5.3.
Defaults,
etc............................................................................24
SECTION 5.4.
Certain Agreements of Pledgors As Issuers and Holders of Equity
Interests................24
ARTICLE VI
CERTAIN PROVISIONS CONCERNING INTELLECTUAL
PROPERTY COLLATERAL
SECTION 6.1.
Grant of
License.........................................................................25
SECTION 6.2.
Protection of Agent's
Security...........................................................25
SECTION 6.3.
After-Acquired
Property..................................................................26
SECTION 6.4.
Litigation...............................................................................26
ARTICLE VII
CERTAIN PROVISIONS CONCERNING ACCOUNTS
SECTION 7.1.
Maintenance of
Records...................................................................27
SECTION 7.2.
Legend...................................................................................27
SECTION 7.3.
Modification of Terms,
etc...............................................................27
SECTION 7.4.
Collection...............................................................................27
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ARTICLE VIII
TRANSFERS
SECTION 8.1.
Transfers of Pledged
Collateral..........................................................28
ARTICLE IX
REMEDIES
SECTION 9.1.
Remedies.................................................................................28
SECTION 9.2.
Notice of
Sale...........................................................................30
SECTION 9.3.
Waiver of Notice and
Claims..............................................................30
SECTION 9.4.
Certain Sales of Pledged
Collateral......................................................30
SECTION 9.5.
No Waiver; Cumulative
Remedies...........................................................32
SECTION 9.6.
Certain Additional Actions Regarding Intellectual
Property...............................32
ARTICLE X
PROCEEDS OF CASUALTY EVENTS AND COLLATERAL DISPOSITIONS;
APPLICATION OF PROCEEDS
SECTION 10.1.
Proceeds of Casualty Events and Collateral
Dispositions..................................33
SECTION 10.2.
Application of
Proceeds..................................................................33
ARTICLE XI
MISCELLANEOUS
SECTION 11.1.
Concerning
Agent.........................................................................33
SECTION 11.2.
Agent May
Perform; Agent Appointed
Attorney-in-Fact......................................34
SECTION 11.3.
Continuing Security Interest;
Assignment.................................................35
SECTION 11.4.
Termination;
Release.....................................................................35
SECTION 11.5.
Modification in
Writing..................................................................35
SECTION 11.6.
Notices..................................................................................35
SECTION 11.7.
Governing Law, Consent to Jurisdiction and Service of Process;
Waiver of Jury
Trial.................................................................................36
SECTION 11.8.
Severability of
Provisions...............................................................36
SECTION 11.9.
Execution in
Counterparts................................................................36
SECTION 11.10.
Business
Days............................................................................36
SECTION 11.11.
No Credit for Payment of Taxes or
Imposition.............................................36
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SECTION 11.12.
No Claims Against
Agent..................................................................36
SECTION 11.13.
No
Release...............................................................................36
SECTION 11.14.
Obligations
Absolute.....................................................................37
SIGNATURES......................................................................................................S-1
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EXHIBIT 1
Form of Issuer's Acknowledgment
EXHIBIT 2
Form of Securities Pledge Amendment
EXHIBIT 3
Form of Joinder Agreement
EXHIBIT 4
Form of Control Agreement Concerning Securities Accounts
EXHIBIT 5
Form of Control Agreement Concerning Deposit Accounts
EXHIBIT 6
Form of Copyright Security Agreement
EXHIBIT 7
Form of Patent Security Agreement
EXHIBIT 8
Form of Trademark Security Agreement
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SECURITY AGREEMENT
SECURITY AGREEMENT dated as of December 31, 2004 (as amended,
amended and restated, supplemented or
otherwise modified from time to time in
accordance with the provisions hereof, the
"AGREEMENT") made by TERREMARK
WORLDWIDE, INC., a Delaware corporation
(the "ISSUER") and THE GUARANTORS LISTED
ON THE SIGNATURE PAGES HERETO (the
"ORIGINAL GUARANTORS") OR FROM TIME TO TIME
PARTY HERETO BY EXECUTION OF A JOINDER
AGREEMENT (the "ADDITIONAL GUARANTORS,"
and together with the Original Guarantors,
the "GUARANTORS"), as pledgors,
assignors and debtors (the Issuer, together
with the Guarantors, in such
capacities and together with any successors
in such capacities, the "PLEDGORS,"
and each, a "PLEDGOR"), in favor of FMP
AGENCY SERVICES, LLC, a Delaware limited
liability company, in its capacity as
collateral agent for the Secured Parties
(as hereinafter defined), as pledgee,
assignee and secured party (in such
capacities and together with any successors
in such capacities, the "AGENT").
R E C I T A L S :
- - - - - - - -
A. Pursuant to that certain Purchase Agreement dated as of the
date hereof by and among the purchasers
listed on SCHEDULE A thereto (each
individually as a "PURCHASER" and
collectively as the "PURCHASERS"), the
Pledgors and the Agent (including all
annexes, exhibits and schedules thereto,
as from time to time amended, restated,
supplemented or otherwise modified, the
"PURCHASE AGREEMENT"), the Purchasers have
agreed to purchase the Purchased
Securities (as defined in the Purchase
Agreement).
B. Each Original Guarantor has, pursuant to the Purchase
Agreement, unconditionally guaranteed the
Obligations.
C. The Issuer and each Original Guarantor will receive
substantial benefits from the execution,
delivery and performance of the
obligations under the Purchase Agreement
and the other Basic Documents and each
is, therefore, willing to enter into this
Agreement.
D. This Agreement is given by each Pledgor in favor of the
Agent for the benefit of the Secured
Parties (as hereinafter defined) to secure
the payment and performance of all of the
Obligations.
F. It is a condition to the obligations of the Purchaser to
purchase the Purchased Securities that each
Pledgor execute and deliver the
applicable Basic Documents, including this
Agreement.
A G R E E M E N T :
- - - - - - - - -
NOW THEREFORE, in consideration of the foregoing premises and
other good and valuable consideration, the
receipt and sufficiency of which are
hereby acknowledged, each Pledgor and the
Agent hereby agree as follows:
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ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1. DEFINITIONS.
(a) Unless otherwise defined herein or in the Purchase
Agreement, capitalized terms used herein
that are defined in the UCC shall have
the meanings assigned to them in the
UCC.
(b) Terms used but not otherwise defined herein that are
defined in the Purchase Agreement shall
have the meanings given to them in the
Purchase Agreement.
(c) The following terms shall have the following meanings:
"ACQUISITION AGREEMENT RIGHTS" shall mean, with respect to
each Pledgor, collectively, all of such
Pledgor's rights, title and interest in,
to and under the Acquisition Agreement,
including (i) all rights and remedies
relating to monetary damages, including
indemnification rights and remedies, and
claims for damages or other relief pursuant
to or in respect of the Acquisition
Agreement, (ii) all rights and remedies
relating to monetary damages, including
indemnification rights and remedies, and
claims for monetary damages under or in
respect of the agreements, documents and
instruments referred to in the
Acquisition Agreement or related thereto
and (iii) all proceeds, collections,
recoveries and rights of subrogation with
respect to the foregoing.
"ADDITIONAL GUARANTORS" shall have the meaning assigned to
such term in the Preamble hereof.
"ADDITIONAL PLEDGED INTERESTS" shall mean, collectively, with
respect to each Pledgor, (i) all options,
warrants, rights, agreements,
additional membership, partnership or other
equity interests of whatever class
of any issuer of Initial Pledged Interests
or any interest in any such issuer,
together with all rights, privileges,
authority and powers of such Pledgor
relating to such interests in each such
issuer or under any Organizational
Document of any such issuer pertaining to
such membership, partnership or other
equity interests, and the certificates,
instruments and agreements representing
such membership, partnership or other
interests and any and all interest of such
Pledgor in the entries on the books of any
financial intermediary pertaining to
such membership, partnership or other
equity interests from time to time
acquired by such Pledgor in any manner and
(ii) all membership, partnership or
other equity interests, as applicable, of
each limited liability company,
partnership or other entity (other than a
corporation) hereafter acquired or
formed by such Pledgor and all options,
warrants, rights, agreements, additional
membership, partnership or other equity
interests of whatever class of such
limited liability company, partnership or
other entity, together with all
rights, privileges, authority and powers of
such Pledgor relating to such
interests or under any Organizational
Document of any such issuer pertaining to
such membership, partnership or other
equity
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interests, and the certificates,
instruments and agreements representing such
membership, partnership or other equity
interests and any and all interest of
such Pledgor in the entries on the books of
any financial intermediary
pertaining to such membership, partnership
or other interests, from time to time
acquired by such Pledgor in any manner.
"ADDITIONAL PLEDGED SHARES" shall mean, collectively, with
respect to each Pledgor, (i) all options,
warrants, rights, agreements,
additional shares of capital stock of
whatever class of any issuer of the
Initial Pledged Shares or any other equity
interest in any such issuer, together
with all rights, privileges, authority and
powers of such Pledgor relating to
such interests issued by any such issuer
under any Organizational Document of
any such issuer pertaining to such
interests, and the certificates, instruments
and agreements representing such interests
and any and all interest of such
Pledgor in the entries on the books of any
financial intermediary pertaining to
such interests, from time to time acquired
by such Pledgor in any manner and
(ii) all the issued and outstanding shares
of capital stock of each corporation
hereafter acquired or formed by such
Pledgor and all options, warrants, rights,
agreements or additional shares of capital
stock of whatever class of such
corporation, together with all rights,
privileges, authority and powers of such
Pledgor relating to such shares or under
any Organizational Document of such
corporation pertaining to such interests,
and the certificates, instruments and
agreements representing such shares and any
and all interest of such Pledgor in
the entries on the books of any financial
intermediary pertaining to such
shares, from time to time acquired by such
Pledgor in any manner.
"AGENT" shall have the meaning assigned to such term in the
Preamble hereof.
"AGREEMENT" shall have the meaning assigned to such term in
the Preamble hereof.
"CLAIMS" shall mean any and all property and other taxes,
assessments and special assessments,
levies, fees and all governmental charges
imposed upon or assessed against, and
landlords', carriers', mechanics',
workmen's, repairmen's, laborers',
materialmen's, suppliers' and warehousemen's
Liens and other claims arising by operation
of law against, all or any portion
of the Pledged Collateral.
"COMMODITY ACCOUNT CONTROL AGREEMENT" shall mean a commodity
account control agreement in a form that is
reasonably satisfactory to the
Administrative Agent.
"CONTESTED LIENS" shall mean, collectively, any Liens incurred
in respect of any Claims to the extent that
the amounts owing in respect thereof
are not yet delinquent or are being
contested and otherwise comply with the
provisions of SECTION 4.11 hereof;
PROVIDED, HOWEVER, that such Liens shall in
all respects be subject and subordinate in
priority to the Lien and security
interest created by this Agreement, except
if and to the extent that the law or
regulation creating, permitting or
authorizing such Lien provides that such Lien
must be superior to the Lien and security
interest created and evidenced hereby.
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"CONTRACTS" shall mean, collectively, with respect to each
Pledgor, all sale, service, performance,
equipment or property lease contracts,
agreements and grants and all other
contracts, agreements or grants (in each
case, whether written or oral, or third
party or intercompany), between such
Pledgor and third parties, and all
assignments, amendments, restatements,
supplements, extensions, renewals,
replacements or modifications thereof.
"CONTROL" shall mean (i) in the case of each Deposit Account,
"control," as such term is defined in
Section 9-104 of the UCC, and (ii) in the
case of any Security Entitlement,
"control," as such term is defined in Section
8-106 of the UCC and (iii) in the case of
any Commodity Contract, "control," as
such term is defined in Section 9-106 of
the UCC.
"CONTROL AGREEMENTS" shall mean, collectively, the Deposit
Account Control Agreement, the Securities
Account Control Agreement and the
Commodity Account Control Agreement.
"COPYRIGHTS" shall mean, collectively, with respect to each
Pledgor, all copyrights (whether statutory
or common law, whether established or
registered in the United States or any
other country or any political
subdivision thereof, whether registered or
unregistered and whether published or
unpublished) and all copyright
registrations and applications made by such
Pledgor, in each case, whether now owned or
hereafter created or acquired by or
assigned to such Pledgor, together with any
and all (i) rights and privileges
arising under applicable law with respect
to such Pledgor's use of such
copyrights, (ii) reissues, renewals,
continuations and extensions thereof, (iii)
income, fees, royalties, damages, claims
and payments now or hereafter due
and/or payable with respect thereto,
including damages and payments for past,
present or future infringements thereof,
(iv) rights corresponding thereto
throughout the world and (v) rights to sue
for past, present or future
infringements thereof.
"COPYRIGHT SECURITY AGREEMENT" shall mean an agreement
substantially in the form annexed hereto as
EXHIBIT 6.
"DEPOSIT ACCOUNT CONTROL AGREEMENT" shall mean an agreement
substantially in the form annexed hereto as
EXHIBIT 5 or such other form that is
reasonably satisfactory to the Agent.
"DEPOSIT ACCOUNTS" shall mean, collectively, with respect to
each Pledgor, (i) all "deposit accounts" as
such term is defined in the UCC and
(ii) all cash, funds, checks, notes and
instruments from time to time on deposit
in any of the accounts described in clause
(i) of this definition.
"DISTRIBUTIONS" shall mean, collectively, with respect to each
Pledgor, all dividends, cash, options,
warrants, rights, instruments,
distributions, returns of capital or
principal, income, interest, profits and
other property, interests (debt or equity)
or proceeds, including as a result of
a split, revision, reclassification or
other like change of the Pledged
Securities, from time to time received,
receivable or otherwise distributed to
such Pledgor in respect of or in exchange
for any or all of the Pledged
Securities or Intercompany Notes.
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"EXCLUDED ACCOUNTS" shall mean (i) account number 10144611828
of the Issuer maintained with Ocean Bank
(or any replacement account) so long as
such account shall be pledged to Ocean Bank
to secure the reimbursement
obligations under the stand by letter of
credit issued to Rainbow Property
Management, LLC or any successor and the
balance of such account shall not at
any time exceed $750,000 plus accrued
interest, (ii) account number
00720541210000100250 of the Issuer
maintained with Banco Pastor (or any
replacement account or accounts) so long as
(x) such account or accounts shall
be pledged to secure (A) the lease
obligations of NAP de las Americas - Madrid,
S.A. in connection with the lease of a
facility located at Calle Yecora 4, Las
Mercedes, Madrid, Paraje Coto de
Corralejos, Spain and (B) the loan obligations
of NAP de las Americas - Madrid, S.A to
Banco de Pastor (or any successor) and
(y) the aggregate balance of such account
or accounts shall not at any time
exceed Euro1,725,000 plus accrued interest
and (iii) account number
7431079115687 of the Issuer maintained with
Lehman Brothers, Inc. so long as the
balance of such account shall not at any
time exceed $1,000.
"EXCLUDED PROPERTY" shall mean (a) all personal property and
fixtures of the Issuer or any Guarantor
located at the Facility so long as such
property is pledged to secure the
obligations under the SPV Financing Agreement
and (b) Special Property other than the
following:
(i) the right to receive any payment of money (including
Accounts, General Intangibles and Payment Intangibles) or any
other
rights referred to in Sections 9-406(d), 9-407(a) or 9-408(a) of
the
UCC to the extent that such sections of the UCC are effective to
limit
the prohibitions which make such property "Special Property";
and
(ii) any Proceeds, substitutions or replacements of any
Special Property (unless such Proceeds, substitutions or
replacements
would constitute Special Property).
"GENERAL INTANGIBLES" shall mean, collectively, with respect
to each Pledgor, all "general intangibles,"
as such term is defined in the UCC,
of such Pledgor and, in any event, shall
include (i) all of such Pledgor's
rights, title and interest in, to and under
all insurance policies and
Contracts, (ii) all know-how and warranties
relating to any of the Pledged
Collateral, (iii) any and all other rights,
claims, choses-in-action and causes
of action of such Pledgor against any other
person and the benefits of any and
all collateral or other security given by
any other person in connection
therewith, (iv) all guarantees,
endorsements and indemnifications on, or of, any
of the Pledged Collateral, (v) all lists,
books, records, correspondence,
ledgers, printouts, files (whether in
printed form or stored electronically),
tapes and other papers or materials
containing information relating to any of
the Pledged Collateral, including all
customer or tenant lists, identification
of suppliers, data, plans, blueprints,
specifications, designs, drawings,
appraisals, recorded knowledge, surveys,
studies, engineering reports, test
reports, manuals, standards, processing
standards, performance standards,
catalogs, research data, computer and
automatic machinery software and programs
and the like, field repair data, accounting
information pertaining to such
Pledgor's operations or any of the Pledged
Collateral and all media in which or
on which any of the 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,
(vi) all licenses, consents, permits,
variances,
<PAGE>
-6-
certifications, authorizations and
approvals, however characterized, of any
Governmental Authority (or any person
acting on behalf of a Governmental
Authority) now or hereafter acquired or
held by such Pledgor pertaining to
operations now or hereafter conducted by
such Pledgor or any of the Pledged
Collateral including building permits,
certificates of occupancy, environmental
certificates, industrial permits or
licenses and certificates of operation and
(vii) all rights to reserves, deferred
payments, deposits, refunds,
indemnification of claims to the extent the
foregoing relate to any Pledged
Collateral and claims for tax or other
refunds against any Governmental
Authority relating to any Pledged
Collateral.
"GOODWILL" shall mean, collectively, with respect to each
Pledgor, the goodwill connected with such
Pledgor's business including all
goodwill connected with (i) the use of and
symbolized by any Trademark or
Trademark License in which such Pledgor has
any interest, (ii) all know-how,
trade secrets, customer and supplier lists,
proprietary information, inventions,
methods, procedures, formulae,
descriptions, compositions, technical data,
drawings, specifications, name plates,
catalogs, confidential information and
the right to limit the use or disclosure
thereof by any person, pricing and cost
information, business and marketing plans
and proposals, consulting agreements,
engineering contracts and such other assets
which relate to such goodwill and
(iii) all product lines of such Pledgor's
business.
"GUARANTORS" shall have the meaning assigned to such term in
the Preamble hereof.
"INITIAL PLEDGED INTERESTS" shall mean, with respect to each
Pledgor, all membership, partnership or
other equity interests (other than in a
corporation), as applicable, of each issuer
described in SCHEDULE 10 annexed to
the Perfection Certificate, together with
all rights, privileges, authority and
powers of such Pledgor in and to each such
issuer or under any Organizational
Document of each such issuer pertaining to
such membership, partnership or other
interests, and the certificates,
instruments and agreements representing such
membership, partnership or other interests
and any and all interest of such
Pledgor in the entries on the books of any
financial intermediary pertaining to
such membership, partnership or other
interests.
"INITIAL PLEDGED SHARES" shall mean, collectively, with
respect to each Pledgor, the issued and
outstanding shares of capital stock of
each issuer described in SCHEDULE 10
annexed to the Perfection Certificate
together with all rights, privileges,
authority and powers of such Pledgor
relating to such interests in each such
issuer or under any Organizational
Document of each such issuer pertaining to
the Initial Pledged Shares, and the
certificates, instruments and agreements
representing such shares of capital
stock and any and all interest of such
Pledgor in the entries on the books of
any financial intermediary pertaining to
the Initial Pledged Shares.
"INSTRUMENTS" shall mean, collectively, with respect to each
Pledgor, all "instruments," as such term is
defined in Article 9, rather than
Article 3, of the UCC, and shall include
all promissory notes, drafts, bills of
exchange or acceptances.
<PAGE>
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"INTELLECTUAL PROPERTY COLLATERAL" shall mean, collectively,
the Patents, Trademarks, Copyrights,
Licenses and Goodwill other than any
non-U.S. Intellectual Property
Collateral.
"INTERCOMPANY NOTES" shall mean, with respect to each Pledgor,
all intercompany notes described in
SCHEDULE 11 annexed to the Perfection
Certificate and intercompany notes
hereafter acquired by such Pledgor and all
certificates, instruments or agreements
evidencing such intercompany notes, and
all assignments, amendments, restatements,
supplements, extensions, renewals,
replacements or modifications thereof to
the extent permitted pursuant to the
terms hereof.
"INVESTMENT PROPERTY" shall mean a security, whether
certificated or uncertificated, Security
Entitlement, Securities Account,
Commodity Contract or Commodity Account,
excluding, however, the Securities
Collateral.
"ISSUER" shall have the meaning assigned to such term in the
Preamble hereof.
"JOINDER AGREEMENT" shall mean an agreement substantially in
the form annexed hereto as EXHIBIT 3.
"LICENSES" shall mean, collectively, with respect to each
Pledgor, all license and distribution
agreements with, and covenants not to sue,
any other party with respect to any Patent,
Trademark or Copyright or any other
patent, trademark or copyright, whether
such Pledgor is a licensor or licensee,
distributor or distributee under any such
license or distribution agreement,
together with any and all (i) renewals,
extensions, supplements and
continuations thereof, (ii) income, fees,
royalties, damages, claims and
payments now and hereafter due and/or
payable thereunder and with respect
thereto including damages and payments for
past, present or future infringements
or violations thereof, (iii) rights to sue
for past, present and future
infringements or violations thereof and
(iv) other rights to use, exploit or
practice any or all of the Patents,
Trademarks or Copyrights or any other
patent, trademark or copyright.
"ORGANIZATIONAL DOCUMENTS" shall mean, with respect to any
person, (i) in the case of any corporation,
the certificate of incorporation and
by-laws (or similar documents) of such
person, (ii) in the case of any limited
liability company, the certificate of
formation and operating agreement (or
similar documents) of such person, (iii) in
the case of any limited partnership,
the certificate of formation and limited
partnership agreement (or similar
documents) of such person, (iv) in the case
of any general partnership, the
partnership agreement (or similar document)
of such person and (v) in any other
case, the functional equivalent of the
foregoing.
"ORIGINAL GUARANTORS" shall have the meaning assigned to such
term in the Preamble hereof.
"PATENTS" shall mean, collectively, with respect to each
Pledgor, all patents issued or assigned to
and all patent applications and
registrations made by such Pledgor
(whether
<PAGE>
-8-
established or registered or recorded in
the United States or any other country
or any political subdivision thereof),
together with any and all (i) rights and
privileges arising under applicable law
with respect to such Pledgor's use of
any patents, (ii) inventions and
improvements described and claimed therein,
(iii) reissues, divisions, continuations,
renewals, extensions and
continuations-in-part thereof, (iv) income,
fees, royalties, damages, claims and
payments now or hereafter due and/or
payable thereunder and with respect thereto
including damages and payments for past,
present or future infringements
thereof, (v) rights corresponding thereto
throughout the world and (vi) rights
to sue for past, present or future
infringements thereof.
"PATENT SECURITY AGREEMENT" shall mean an agreement
substantially in the form annexed hereto as
EXHIBIT 7.
"PERFECTION CERTIFICATE" shall mean that certain perfection
certificate dated as of the date hereof,
executed and delivered by each Pledgor
in favor of the Agent for the benefit of
the Secured Parties, and each other
Perfection Certificate (which shall be in
form and substance reasonably
acceptable to the Agent) executed and
delivered by the applicable Guarantor in
favor of the Agent for the benefit of the
Secured Parties contemporaneously with
the execution and delivery of each Joinder
Agreement executed in accordance with
SECTION 3.5 hereof, in each case, as the
same may be amended, amended and
restated, supplemented or otherwise
modified from time to time in accordance
with the Purchase Agreement or upon the
request of the Agent.
"PLEDGE AMENDMENT" shall have the meaning assigned to such
term in SECTION 5.1 hereof.
"PLEDGED COLLATERAL" shall have the meaning assigned to such
term in SECTION 2.1 hereof.
"PLEDGED INTERESTS" shall mean, collectively, the Initial
Pledged Interests and the Additional
Pledged Interests; PROVIDED, HOWEVER, that
to the extent applicable, Pledged Interests
shall not include any interest which
is not required to be pledged pursuant to
SECTION 7.13(B) of the Purchase
Agreement.
"PLEDGED SECURITIES" shall mean, collectively, the Pledged
Interests, the Pledged Shares and the
Successor Interests.
"PLEDGED SHARES" shall mean, collectively, the Initial Pledged
Shares and the Additional Pledged Shares;
PROVIDED, HOWEVER, that Pledged Shares
shall not include any shares which are not
required to be pledged pursuant to
SECTION 7.13(B) of the Purchase
Agreement.
"PLEDGOR" shall have the meaning assigned to such term in the
Preamble hereof.
"PURCHASE AGREEMENT" shall have the meaning assigned to such
term in RECITAL A hereof.
"SECURED PARTIES" shall mean, collectively, the Agent and the
Noteholders.
<PAGE>
-9-
"SECURITIES ACCOUNT CONTROL AGREEMENT" shall mean an agreement
substantially in the form annexed hereto as
EXHIBIT 4 or such other form that is
reasonably satisfactory to the Agent.
"SECURITIES COLLATERAL" shall mean, collectively, the Pledged
Securities, the Intercompany Notes and the
Distributions.
"SPECIAL PROPERTY" shall mean:
(a) any permit, lease or contract held by any Pledgor that
prohibits the creation by such Pledgor of a security interest
therein
without the consent of any of the other parties thereto to the
extent
they are not
Pledgors;
(b) any permit, lease or contract held by any Pledgor to the
extent that any Requirement of Law applicable thereto prohibits
the
creation of a security interest therein without the consent of any
of
the other parties thereto to the extent they are not Pledgors;
(c) Equipment owned by any Pledgor on the date hereof or
hereafter acquired that is subject to a Lien securing a Purchase
Money
Obligation or Capital Lease Obligation permitted to be incurred
pursuant to the provisions of the Purchase Agreement if the
contract or
other agreement in which such Lien is granted (or the
documentation
providing for such Purchase Money Obligation or Capital Lease
Obligation) validly prohibits the creation of any other Lien on
such
Equipment; and
(d) Excluded Accounts.
PROVIDED, HOWEVER, that in each case
described in clauses (a), (b) and (c) of
this definition, such property shall
constitute "Special Property" only to the
extent and for so long as such permit or
lease or Requirement of Law applicable
thereto validly prohibits the creation of a
Lien on such property in favor of
the Agent and, upon the termination of such
prohibition (howsoever occurring),
such property shall cease to constitute
"Special Property."
"SUCCESSOR INTERESTS" shall mean, collectively, with respect
to each Pledgor, all shares of each class
of the capital stock of the successor
corporation or interests or certificates of
the successor limited liability
company, partnership or other entity owned
by such Pledgor (unless such
successor is such Pledgor itself) formed by
or resulting from any consolidation
or merger in which any person listed in
SCHEDULE 1(A) annexed to the Perfection
Certificate is not the surviving entity;
PROVIDED, HOWEVER, that to the extent
applicable, Successor Interest shall not
include any shares or interests which
are not required to be pledged pursuant to
SECTION 7.13(B) of the Purchase
Agreement.
"TRADEMARKS" shall mean, collectively, with respect to each
Pledgor, all trademarks (including service
marks), slogans, logos, certification
marks, trade dress, uniform resource
locations (URL's), domain names, corporate
names and trade names, whether registered
or unregistered, owned by or assigned
to such Pledgor and all registrations and
applications for
<PAGE>
-10-
the foregoing (whether statutory or common
law and whether established or
registered in the United States or any
other country or any political
subdivision thereof), together with any and
all (i) rights and privileges
arising under applicable law with respect
to such Pledgor's use of any
trademarks, (ii) reissues, continuations,
extensions and renewals thereof, (iii)
income, fees, royalties, damages and
payments now and hereafter due and/or
payable thereunder and with respect
thereto, including damages, claims and
payments for past, present or future
infringements thereof, (iv) rights
corresponding thereto throughout the world
and (v) rights to sue for past,
present and future infringements
thereof.
"TRADEMARK SECURITY AGREEMENT" shall mean an agreement
substantially in the form annexed hereto as
EXHIBIT 8.
"UCC" shall mean the Uniform Commercial Code as in effect on
the date hereof in the State of New York;
PROVIDED, HOWEVER, that if by reason
of mandatory provisions of law, any or all
of the attachment, perfection or
priority of the Agent's and the Secured
Parties' security interest in any item
or portion of the Pledged Collateral is
governed by the Uniform Commercial Code
as in effect in a jurisdiction other than
the State of New York, the term "UCC"
shall mean the Uniform Commercial Code as
in effect on the date hereof in such
other jurisdiction for purposes of the
provisions hereof relating to such
attachment, perfection or priority and for
purposes of definitions relating to
such provisions.
SECTION 1.2. INTERPRETATION. The rules of interpretation
specified in the Purchase Agreement shall
be applicable to this Agreement.
SECTION 1.3. RESOLUTION OF DRAFTING AMBIGUITIES. Each Pledgor
acknowledges and agrees that it was
represented by counsel in connection with
the execution and delivery hereof, that it
and its counsel reviewed and
participated in the preparation and
negotiation hereof and that any rule of
construction to the effect that ambiguities
are to be resolved against the
drafting party (I.E., the Agent) shall not
be employed in the interpretation
hereof.
SECTION 1.4. PERFECTION CERTIFICATE. The Agent and each
Secured Party agree that the Perfection
Certificate and all descriptions of
Pledged Collateral, schedules, amendments
and supplements thereto are and shall
at all times remain a part of this
Agreement.
ARTICLE II
GRANT OF SECURITY AND SECURED OBLIGATIONS
SECTION 2.1.
GRANT OF SECURITY INTEREST. As collateral
security for the payment and performance in
full of all the Obligations, each
Pledgor hereby pledges and grants to the
Agent for the benefit of the Secured
Parties, a lien on and security interest in
and to all of the right, title and
interest of such Pledgor in, to and under
the following property, wherever
<PAGE>
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located, whether now existing or hereafter
arising or acquired from time to time
(collectively, the "PLEDGED
COLLATERAL"):
(i) all
Accounts;
(ii)
all Equipment, Goods, Inventory and Fixtures;
(iii) all
Documents, Instruments and Chattel Paper;
(iv)
all Letters of Credit and Letter-of-Credit Rights;
(v) all
Securities Collateral;
(vi)
all Investment Property;
(vii) all
Intellectual Property Collateral;
(viii) the
Commercial Tort Claims described on SCHEDULE 13
to the Perfection Certificate;
(ix)
all General Intangibles;
(x) all
Deposit Accounts;
(xi)
the Acquisition Agreement and Acquisition Agreement
Rights;
(xii) all
Supporting Obligations;
(xiii) all books
and records relating to the Pledged
Collateral; and
(xiv) to
the extent not covered by clauses (i) through
(xiv) of this sentence, all other personal property
of such Pledgor, whether tangible or intangible and
all Proceeds and products of each of the foregoing
and all accessions to, substitutions and replacements
for, and rents, profits and products of, each of the
foregoing, any and all Proceeds of any insurance,
indemnity, warranty or guaranty payable to such
Pledgor from time to time with respect to any of the
foregoing.
Notwithstanding anything to the contrary contained in clauses
(i) through (xv) above, no Pledgor shall be
required to take any action outside
of the United States to perfect a security
interest in any non-U.S. Intellectual
Property Collateral, the security interest
created by this Agreement shall not
extend to, and the term "Pledged
Collateral" shall not include, any Excluded
Property and (i) the Pledgors shall from
time to time at the request of the
Agent give written notice to the Agent
identifying in reasonable detail the
Special Property (and stating in such
notice that such Special Property
constitutes "Excluded Property") and shall
provide to the Agent such other
information regarding the Special Property
as the Agent may reasonably
<PAGE>
-12-
request and (ii) from and after the Closing
Date, no Pledgor shall permit to
become effective in any document creating,
governing or providing for any
permit, lease or license, a provision that
would prohibit the creation of a Lien
on such permit, lease or license in favor
of the Agent unless such Pledgor
believes, in its reasonable judgment, that
such prohibition is usual and
customary in transactions of such type.
In the event of any conflict between the terms of the
Intercreditor Agreement and this Agreement,
the terms of the Intercreditor
Agreement shall govern and control.
SECTION 2.2. FILINGS. (a) Each Pledgor hereby irrevocably
authorizes the Agent at any time and from
time to time to file in any relevant
jurisdiction any initial financing
statements (including fixture filings) and
amendments thereto that contain the
information required by Article 9 of the
Uniform Commercial Code of each applicable
jurisdiction for the filing of any
financing statement or amendment relating
to the Pledged Collateral, including
(i) whether such Pledgor is an
organization, the type of organization and any
organizational identification number issued
to such Pledgor, (ii) any financing
or continuation statements or other
documents without the signature of such
Pledgor where permitted by law, including
the filing of a financing statement
describing the Pledged Collateral as "all
assets in which the Pledgor now owns
or hereafter acquires rights" and (iii) in
the case of a financing statement
filed as a fixture filing or covering
Pledged Collateral constituting minerals
or the like to be extracted or timber to be
cut, a sufficient description of the
real property to which such Pledged
Collateral relates. Each Pledgor agrees to
provide all information described in the
immediately preceding sentence to the
Agent promptly upon request.
(b) Each Pledgor hereby ratifies its authorization for the
Agent to file in any relevant jurisdiction
any initial financing statements or
amendments thereto relating to the Pledged
Collateral if filed prior to the date
hereof.
(c) Each Pledgor hereby further authorizes the Agent to file
filings with the United States Patent and
Trademark Office or United States
Copyright Office (or any successor office
or any similar office in any other
country), including this Agreement, the
Copyright Security Agreement, the Patent
Security Agreement and the Trademark
Security Agreement, or other documents for
the purpose of perfecting, confirming,
continuing, enforcing or protecting the
security interest granted by such Pledgor
hereunder, without the signature of
such Pledgor, and naming such Pledgor, as
debtor, and the Agent, as secured
party.
ARTICLE III
PERFECTION; SUPPLEMENTS; FURTHER ASSURANCES;
USE OF PLEDGED COLLATERAL
SECTION 3.1. DELIVERY OF CERTIFICATED SECURITIES COLLATERAL.
Each Pledgor represents and warrants that
all certificates, agreements or
instruments representing or
<PAGE>
-13-
evidencing the Securities Collateral in
existence on the date hereof have been
delivered to the Agent in suitable form for
transfer by delivery or accompanied
by duly executed instruments of transfer or
assignment in blank and that the
Agent has a perfected first priority
security interest therein. Each Pledgor
hereby agrees that all certificates,
agreements or instruments representing or
evidencing Securities Collateral acquired
by such Pledgor after the date hereof
shall immediately upon receipt thereof by
such Pledgor be delivered to and held
by or on behalf of the Agent pursuant
hereto. All certificated Securities
Collateral shall be in suitable form for
transfer by delivery or shall be
accompanied by duly executed instruments of
transfer or assignment in blank, all
in form and substance satisfactory to the
Agent. The Agent shall have the right,
at any time upon the occurrence and during
the continuance of any Event of
Default, to endorse, assign or otherwise
transfer to or to register in the name
of the Agent or any of its nominees or
endorse for negotiation any or all of the
Securities Collateral, without any
indication that such Securities Collateral is
subject to the security interest hereunder.
In addition, upon the occurrence and
during the continuance of an Event of
Default, the Agent shall have the right at
any time to exchange certificates
representing or evidencing Securities
Collateral for certificates of smaller or
larger denominations.
SECTION 3.2. PERFECTION OF UNCERTIFICATED SECURITIES
COLLATERAL. Each Pledgor represents and
warrants that the Agent has a perfected
first priority security interest in all
uncertificated Pledged Securities
pledged by it hereunder that is in
existence on the date hereof. Each Pledgor
hereby agrees that if any of the Pledged
Securities are at any time not
evidenced by certificates of ownership,
then each applicable Pledgor shall, to
the extent permitted by applicable law (i)
if necessary or desirable to perfect
a security interest in such Pledged
Securities, cause such pledge to be recorded
on the equityholder register or the books
of the issuer, cause the issuer to
execute and deliver to the Agent an
acknowledgment of the pledge of such Pledged
Securities substantially in the form of
EXHIBIT 1 annexed hereto, execute any
customary pledge forms or other documents
necessary or appropriate to complete
the pledge and give the Agent the right to
transfer such Pledged Securities
under the terms hereof and, upon request,
provide to the Agent an opinion of
counsel, in form and substance reasonably
satisfactory to the Agent, confirming
such pledge and perfection thereof and (ii)
use its commercially reasonable
efforts to cause such Pledged Securities to
become certificated and delivered to
the Agent in accordance with the provisions
of SECTION 3.1.
SECTION 3.3. FINANCING STATEMENTS AND OTHER FILINGS;
MAINTENANCE OF PERFECTED SECURITY INTEREST.
Each Pledgor represents and warrants
that all filings necessary to perfect the
security interest granted by it to the
Agent in respect of the Pledged Collateral
have been delivered to the Agent in
completed and, to the extent necessary or
appropriate, duly executed form for
filing in each governmental, municipal or
other office specified in SCHEDULE 7
annexed to the Perfection Certificate (to
the extent required to be listed on
the schedules to the Perfection Certificate
as of the date this representation
is made or deemed made). Each Pledgor
agrees that at the sole cost and expense
of the Pledgors, (i) such Pledgor will
maintain the security interest created by
this Agreement in the Pledged Collateral as
a perfected first priority security
interest and shall defend such security
interest against the claims and demands
of all persons except Permitted Collateral
Liens, (ii) such Pledgor shall
furnish to the Agent from time
<PAGE>
-14-
to time statements and schedules further
identifying and describing the Pledged
Collateral and such other reports in
connection with the Pledged Collateral as
the Agent may reasonably request, all in
reasonable detail and (iii) at any time
and from time to time, upon the written
request of the Agent, such Pledgor shall
promptly and duly execute and deliver, and
file and have recorded, such further
instruments and documents and take such
further action as the Agent may
reasonably request for the purpose of
obtaining or preserving the full benefits
of this Agreement and the rights and powers
herein granted, including the filing
of any financing statements, continuation
statements and other documents
(including this Agreement) under the
Uniform Commercial Code (or other similar
laws) in effect in any jurisdiction with
respect to the security interest
created hereby and the execution and
delivery of Control Agreements, all in form
reasonably satisfactory to the Agent and in
such offices (including the United
States Patent and Trademark Office and the
United States Copyright Office)
wherever required by law to perfect,
continue and maintain a valid, enforceable,
first priority security interest in the
Pledged Collateral as provided herein
and to preserve the other rights and
interests granted to the Agent hereunder,
as against third parties, with respect to
the Pledged Collateral.
SECTION 3.4. OTHER ACTIONS. In order to further insure the
attachment, perfection and priority of, and
the ability of the Agent to enforce,
the Agent's security interest in the
Pledged Collateral, each Pledgor represents
and warrants (as to itself) as follows and
agrees, in each case at such
Pledgor's own expense, to take the
following actions with respect to the
following Pledged Collateral:
(a) INSTRUMENTS AND TANGIBLE CHATTEL PAPER. (i) No amounts
payable under or in connection with any of the Pledged Collateral
are
evidenced by any Instrument or Tangible Chattel Paper other than
such
Instruments and Tangible Chattel Paper listed in SCHEDULE 11
annexed to
the Perfection Certificate (to the extent required to be listed on
the
schedules to the Perfection Certificate as of the date this
representation is made or deemed made) and (ii) each Instrument
and
each item of Tangible Chattel Paper listed in SCHEDULE 11 annexed
to
the Perfection Certificate has been properly endorsed, assigned
and
delivered to the Agent, accompanied by instruments of transfer
or
assignment duly executed in blank. If any amount then payable under
or
in connection with any of the Pledged Collateral shall be evidenced
by
any Instrument or Tangible Chattel Paper, and such amount,
together
with all amounts payable evidenced by any Instrument or
Tangible
Chattel Paper not previously delivered to the Agent exceeds
$500,000 in
the aggregate for all Pledgors, the Pledgor acquiring such
Instrument
or Tangible Chattel Paper shall forthwith endorse, assign and
deliver
the same to the Agent, accompanied by such instruments of transfer
or
assignment duly executed in blank as the Agent may from time to
time
specify.
(b) DEPOSIT ACCOUNTS. (i) Each Pledgor has neither opened nor
maintains any Deposit Accounts other than the accounts listed
in
SCHEDULE 14 annexed to the Perfection Certificate (to the
extent
required to be listed on the schedules to the Perfection
Certificate as
of the date this representation is made or deemed made) and (ii)
the
Agent has a perfected first priority security interest in each
Deposit
Account listed in SCHEDULE 14 annexed to the Perfection
Certificate
(other
than the Excluded Accounts) by Control.
<PAGE>
-15-
No Pledgor shall hereafter establish and maintain any Deposit
Account
unless (1) the applicable Pledgor shall have given the Agent 30
days'
prior written notice of its intention to establish such new
Deposit
Account with a Bank, (2) such Bank shall be reasonably acceptable
to
the Agent and (3) such Bank and such Pledgor shall have duly
executed
and delivered to the Agent a Deposit Account Control Agreement
with
respect to such Deposit Account. Each Pledgor agrees that at the
time
it establishes any additio
