EXHIBIT 10.27
COLLATERAL
AGREEMENT
COLLATERAL AGREEMENT, dated as of
August 31, 2008, by and among GENERAL ENVIRONMENTAL MANAGEMENT,
INC., a Nevada corporation (“ Borrower ”),
GENERAL ENVIRONMENTAL MANAGEMENT, INC., a Delaware corporation
(“ GEM-DE ”), GENERAL ENVIRONMENTAL MANAGEMENT
OF RANCHO CORDOVA LLC, a California limited liability company
(“ GEMRC ”), GEM MOBILE TREATMENT SERVICES,
INC., a California corporation (“ GEMMTS ”), GEM
6 ACQUISITIONS CORPORATION, a Delaware corporation (“ GEM
6 ”), and any and all Additional Grantors who may become
a party to this Agreement from time to time (the Borrower, GEM-DE,
GEMRC, GEMMTS, GEM 6 and such Additional Grantors are each
hereinafter referred to as a “ Grantor ” and
collectively as the “ Grantors ”), and CVC
CALIFORNIA, LLC (the “ Secured Party ”) as
Lender under the Revolving Credit and Term Loan Agreement of even
date herewith (as amended, modified, supplemented and/or restated
from time to time, the “ Loan Agreement ”) by
and between the Borrower and the Secured Party.
STATEMENT OF
PURPOSE
Pursuant to the Loan Agreement, the
Secured Party is making and may hereafter from time to time make
Loans to the Borrower in the aggregate principal amount of up to
$13,500,000 at any time outstanding, upon the terms and subject to
the conditions set forth therein.
It is a condition precedent to the
obligation of the Secured Party to make the Loans to the Borrower
under the Loan Agreement that the Grantors shall have executed and
delivered this Agreement to the Secured Party.
NOW, THEREFORE, for good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by the parties hereto, and to induce the
Secured Party to enter into the Loan Agreement and make the Loans
to the Borrower thereunder, each Grantor hereby agrees with the
Secured Party, as follows:
ARTICLE I
DEFINED TERMS
Section 1.1. Terms
Defined in the Uniform Commercial Code
(a)
The following terms when used in this Agreement shall have the
meanings assigned to them in the UCC (as defined in Section
1.2 below) as in effect from time to time: “
Account ”, “ Account Debtor ”,
“ Authenticate ”, “ Certificated
Security ”, “ Chattel Paper ”; “
Commercial Tort Claim ”, “ Deposit
Account ”, “ Documents ”, “
Electronic Chattel Paper ”, “ Equipment
”, “ Farm Products ” “
Fixture ”, “ General Intangible ”,
“ Instrument ”, “ Inventory
”, “ Investment Company Security ”,
“ Investment Property ”, “ Issuer
”, “ Letter of Credit Rights ”, “
Proceeds ”, “ Record ”, “
Registered Organization ”, “ Security
”, “ Securities Entitlement ”, “
Securities Intermediary ”, “ Securities
Account ”, “ Supporting Obligation ”,
“ Tangible Chattel Paper ”, and “
Uncertificated Security ”.
(b)
Terms defined in the UCC and not otherwise defined herein or in the
Loan Agreement shall have the meaning assigned in the UCC as in
effect from time to time.
Section
1.2. Definitions
. The following terms when used in this Agreement shall
have the meanings assigned to them below:
“ Additional Grantor
” means each Subsidiary of the Borrower which hereafter
becomes a Grantor pursuant to Section 7.15 hereof and
Section 5.11 of the Loan Agreement.
“ Agreement ”
means this Collateral Agreement, as amended, restated, supplemented
or otherwise modified from time to time.
“ Applicable Insolvency
Laws ” means all Applicable Laws governing bankruptcy,
reorganization, arrangement, adjustment of debts, relief of
debtors, dissolution, insolvency, fraudulent transfers or
conveyances or other similar laws (including, without limitation,
11 U.S.C. Sections 547, 548 and 550 and other
“avoidance” provisions of Title 11 of the United States
Code, as amended or supplemented).
“ Assignment of Claims
Act ” means the Assignment of Claims Act of 1940 (41
U.S.C. Section 15, 31 U.S.C. Section 3737, and 31 U.S.C.
Section 3727), including all amendments thereto and regulations
promulgated thereunder.
“ Collateral ”
has the meaning assigned thereto in Section 2.1 .
“ Collateral Account
” means any collateral account established by the Secured
Party as provided in Section 5.2 .
“ Control ” means
the manner in which “control” is achieved under the UCC
with respect to any Collateral for which the UCC specifies a method
of achieving “control”.
“ Controlled Depository
” has the meaning assigned thereto in Section 4.6(a)
.
“ Copyrights ”
means collectively, all of the following of any Grantor:
(a) all copyrights, rights and interests in copyrights, works
protectable by copyright, copyright registrations and copyright
applications anywhere in the world, (b) all reissues,
extensions, continuations (in whole or in part) and renewals of any
of the foregoing, (c) all income, royalties, damages and
payments now or hereafter due and/or payable under any of the
foregoing or with respect to any of the foregoing, including,
without limitation, damages or payments for past or future
infringements of any of the foregoing, (d) the right to sue
for past, present and future infringements of any of the foregoing,
and (e) all rights corresponding to any of the foregoing
throughout the world.
“ Copyright Licenses
” means any written agreement naming any Grantor as licensor
or licensee, granting any right under any Copyright, including,
without limitation, the grant of rights to manufacture, distribute,
exploit and sell materials derived from any Copyright.
“ Effective Endorsement and
Assignment ” means, with respect to any
specific type of Collateral, all such endorsements, assignments and
other instruments of transfer reasonably requested by the Secured
Party with respect to the Security Interest granted in such
Collateral, and in each case, in form and substance satisfactory to
the Secured Party.
“ Government Contract
” means a contract between any Grantor and an agency,
department or instrumentality of the United States or any state,
municipal or local Governmental Authority located in the United
States or all obligations of any such Governmental Authority
arising under any Account now or hereafter owing by any such
Governmental Authority, as account debtor, to any
Grantor.
“ Grantors ” has
the meaning set forth in the preamble of this Agreement.
“ Guarantors ”
means the collective reference to each Person executing a guaranty
of the Obligations.
“ Guaranty Agreement
” means any guaranty of the Obligations in effect from time
to time.
“ Intellectual Property
” means collectively, all of the following of any Grantor:
(a) all systems software, applications software and internet
rights, including, without limitation, screen displays and formats,
internet domain names, web sites (including web links), program
structures, sequence and organization, all documentation for such
software, including, without limitation, user manuals, flowcharts,
programmer’s notes, functional specifications, and operations
manuals, all formulas, processes, ideas and know-how embodied in
any of the foregoing, and all program materials, flowcharts, notes
and outlines created in connection with any of the foregoing,
whether or not patentable or copyrightable, (b) concepts,
discoveries, improvements and ideas, (c) any useful
information relating to the items described in clause (a) or (b),
including know-how, technology, engineering drawings, reports,
design information, trade secrets, practices, laboratory notebooks,
specifications, test procedures, maintenance manuals, research,
development, manufacturing, marketing, merchandising, selling,
purchasing and accounting, (d) Patents and Patent Licenses,
Copyrights and Copyright Licenses, Trademarks and Trademark
Licenses, and (e) other licenses to use any of the items
described in the foregoing clauses (a), (b), (c) and (d) or any
other similar items of such Grantor necessary for the conduct of
its business.
“ Issuer ” means
any issuer of any Investment Property or Partnership/LLC Interests
(including, without limitation, any Issuer as defined in the
UCC).
“ Loan Agreement
” shall have the meaning assigned thereto in the preamble of
this Agreement.
Obligations
” means, with respect to the
Borrower, the meaning assigned to such term in the Loan Agreement,
and with respect to each Guarantor, the obligations of such
Guarantor under its Guaranty Agreement, and with respect to all
Grantors, all liabilities and obligations of the Grantors
hereunder.
“ Partnership/LLC
Interests ” means, with respect to any Grantor, the
entire partnership, membership interest or limited liability
company interest, as applicable, of such Grantor in each
partnership, limited partnership or limited liability company owned
thereby, including, without limitation, such Grantor’s
capital account, its interest as a partner or member, as
applicable, in the net cash flow, net profit and net loss, and
items of income, gain, loss, deduction and credit of any such
partnership, limited partnership or limited liability company, as
applicable, such Grantor’s interest in all distributions made
or to be made by any such partnership, limited partnership or
limited liability company, as applicable, to such Grantor and all
of the other economic rights, titles and interests of such Grantor
as a partner or member, as applicable, of any such partnership,
limited partnership or limited liability company, as applicable,
whether set forth in the partnership agreement or membership
agreement, as applicable, of such partnership, limited partnership
or limited liability company, as applicable, by separate agreement
or otherwise.
“ Patents ” means
collectively, all of the following of any Grantor: (a) all
patents, rights and interests in patents, patentable inventions and
patent applications anywhere in the world, (b) all reissues,
extensions, continuations (in whole or in part) and renewals of any
of the foregoing, (c) all income, royalties, damages or
payments now or hereafter due and/or payable under any of the
foregoing or with respect to any of the foregoing, including,
without limitation, damages or payments for past or future
infringements of any of the foregoing, (d) the right to sue
for past, present and future infringements of any of the foregoing,
and (e) all rights corresponding to any of the foregoing
throughout the world.
“ Patent License
” means all agreements now or hereafter in existence, 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.
“ Perfection
Certificate ” means (a) the perfection certificate dated
as of the date hereof, substantially in the form of Exhibit
A attached hereto, and otherwise in form and substance
satisfactory to the Secured Party, and duly certified by an
authorized officer of the Borrower, and (b) a perfection
certificate in form and substance satisfactory to the Secured
Party, delivered by each Additional Grantor at the time that such
Additional Grantor becomes a party hereto, which shall be duly
certified by an authorized officer of such Additional
Grantor.
“ Secured Party ”
has the meaning assigned thereto in the preamble of this
Agreement.
“ Securities Act
” means the Securities Act of 1933, including all amendments
thereto and regulations promulgated thereunder.
“ Security Interests
” means the liens and security interests granted pursuant to
Article II .
“ Subsidiary Issuer
” means any Issuer of Investment Property or any
Partnership/LLC Interests, which is a direct or indirect Subsidiary
of any Grantor.
“ Trademarks ”
means collectively, all of the following of any Grantor:
(a) all trademarks, rights and interests in trademarks, trade
names, corporate names, company names, business names, fictitious
business names, trade styles, service marks, logos, other business
identifiers, prints and labels on which any of the foregoing have
appeared or appear, all registrations and recordings thereof, and
all applications in connection therewith anywhere in the world,
(b) all reissues, extensions, continuations (in whole or in
part) and renewals of any of the foregoing, (c) all income,
royalties, damages and payments now or hereafter due and/or payable
under any of the foregoing or with respect to any of the foregoing,
including, without limitation, damages or payments for past or
future infringements of any of the foregoing, (d) the right to
sue for past, present and future infringements of any of the
foregoing, and (e) all rights corresponding to any of the
foregoing throughout the world.
“ Trademark License
” means any agreement now or hereafter in existence, whether
written or oral, providing for the grant by or to any Grantor of
any right to use any Trademark.
“ UCC ” means the
Uniform Commercial Code as in effect in the State of New York, as
amended or modified from time to time.
“ Vehicles ”
means all cars, trucks, trailers, and other vehicles covered by a
certificate of title under the laws of any state, all tires and all
other appurtenances to any of the foregoing.
Section
1.3. Other Definitional
Provisions . Terms defined in the Loan Agreement and
not otherwise defined herein shall have the meanings assigned
thereto in the Loan Agreement. The words “hereof,”
“herein”, “hereto” and
“hereunder” and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement, and Section and
Schedule references are to this Agreement unless otherwise
specified. The meanings given to terms defined herein
shall be equally applicable to both the singular and plural forms
of such terms. 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. The word
“including” and words of similar import when used in
this Agreement shall mean “including, without
limitation,” unless otherwise specified.
ARTICLE II
SECURITY INTEREST
Section
2.1. Grant of Security
Interest .
(a) Each
Grantor hereby grants, pledges and collaterally assigns to the
Secured Party a security interest in all of such Grantor’s
right, title and interest in the following property now owned or at
any time hereafter acquired by such Grantor or in which such
Grantor now has or at any time in the future may acquire any right,
title or interest, and wherever located or deemed located
(collectively, the “ 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 Obligations:
(ii) all cash and
currency;
(iv) all Commercial Tort
Claims;
(v) all Deposit
Accounts;
(ix)
all General Intangibles (including, without limitation, any and all
indemnification claims against the Seller under the Acquisition
Agreement);
(x) all
Instruments;
(xi) all Intellectual
Property;
(xii) all Inventory;
(xiii) all Investment
Property;
(xiv) all Letter of Credit
Rights;
(xv) all Vehicles;
(xvi) all other personal property not
otherwise described above;
(xvii) all books and records pertaining to
the Collateral; and
(xviii)
to the extent not otherwise included, all Proceeds and products of
any and all of the foregoing and all collateral security and
Supporting Obligations (as now or hereafter defined in the UCC)
given by any Person with respect to any of the
foregoing.
(b)
Notwithstanding clause (a) of this Section 2.1 , to the
extent that, at any time, the grant of a security interest in any
contract rights would, notwithstanding Sections 9-407 and 9-408 of
the UCC or other applicable law, cause a breach of the subject
Contract permitting the conterparty thereto to terminate such
Contract under applicable law, such contract rights shall not at
such time be part of the Collateral (but the proceeds thereof and
any Supporting Obligations therefor shall be part of the
Collateral). Each Grantor shall use all commercially
reasonable efforts to obtain any necessary consents or waivers
required in order for such Grantor to grant the Security Interests
in any affected Contract.
Section
2.2. Grantors Remain
Liable . Anything herein to the contrary
notwithstanding: (a) each Grantor shall remain liable under the
contracts and agreements included in the Collateral to the extent
set forth therein to perform all of its duties and obligations
thereunder to the same extent as if this Agreement had not been
executed, (b) the exercise by Secured Party of any of the rights
hereunder shall not release any Grantor from any of its duties or
obligations under the contracts and agreements included in the
Collateral, (c) the Secured Party shall have no obligation or
liability under the contracts and agreements included in the
Collateral by reason of this Agreement, nor shall the Secured Party
be obligated to perform any of the obligations or duties of any
Grantor thereunder or to take any action to collect or enforce any
claim for payment assigned hereunder, and (d) the Secured Party
shall have no liability in contract or tort for any Grantor’s
acts or omissions.
ARTICLE III
REPRESENTATIONS AND
WARRANTIES
To induce the Secured Party to enter
into the Loan Agreement and to make the Loans to the Borrower
thereunder, each Grantor hereby represents and warrants to the
Secured Party that:
Section
3.1. Existence
. Each Grantor is duly organized, validly existing and
in good standing under the laws of the jurisdiction of its
incorporation or formation, has the requisite power and authority
to own, lease and operate its properties and to carry on its
business as now being and hereafter proposed to be conducted and is
duly qualified and authorized to do business in each jurisdiction
in which the character of its properties or the nature of its
business requires such qualification and authorization other than
in any such jurisdiction where failure to so qualify would not
reasonably be expected to have a Material Adverse
Effect.
Section
3.2. Authorization of
Agreement; No Conflict . Each Grantor has the right,
power and authority and has taken all necessary corporate or other
organizational action to authorize the execution, delivery and
performance of, this Agreement. This Agreement has been
duly executed and delivered by the duly authorized officers of each
Grantor and this Agreement constitutes the legal, valid and binding
obligation of the Grantors enforceable in accordance with its
terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar state or federal
debtor relief laws from time to time in effect which affect the
enforcement of creditors’ rights in general, and general
limitations on the availability of equitable
remedies. The execution, delivery and performance by the
Grantors of this Agreement will not, by the passage of time, the
giving of notice or otherwise, violate any material provision of
any Applicable Law or any Contract material to the business of any
Grantor and will not result in the creation or imposition of any
Lien, other than the Security Interests, upon or with respect to
any property or revenues of any Grantor.
Section 3.3.
Consents . No approval, consent, exemption,
authorization or other action by, or notice to, or filing with, any
Governmental Authority or any other Person is necessary or required
in connection with the execution, delivery or performance by, or
enforcement against any Grantor or any Subsidiary Issuer of this
Agreement, except (i) as may be required by laws affecting the
offering and sale of securities generally, (ii) filings with
the United States Copyright Office and/or the United States Patent
and Trademark Office, and (iii) filings under the UCC and/or the
Assignment of Claims Act.
Section 3.4.
Perfected Priority Liens . The Security Interests
granted pursuant to this Agreement (a) constitute valid
security interests in all of the Collateral in favor of the Secured
Party, as collateral security for the Obligations, enforceable in
accordance with the terms hereof against all creditors of such
Grantor and any Persons purporting to purchase any Collateral from
such Grantor, and (b) are prior to all other Liens on the
Collateral in existence on the date hereof except to the extent of
any priority accorded under Applicable Law to any Permitted
Liens. Upon the filing of financing statements in the
jurisdiction of formation of the respective Grantors reflected in
the respective Perfection Certificates, and the filing of
appropriate collateral assignments with the United States Copyright
Office and the United States Patent and Trademark Office, the
Security Interests will be perfected first priority security
interests (subject only to the exceptions noted in the immediately
preceding sentence) in all Collateral in which a security interest
can be perfected by means of filing; and upon delivery to the
Secured Party of the certificates representing the Collateral
consisting of Certificated Securities, the Security Interests will
be perfected first priority security interests in such
Collateral.
Section 3.5.
Title; No Other Liens . Except for the Security
Interests, each Grantor owns each item of the Collateral free and
clear of any and all Liens or claims other than Permitted
Liens. No financing statement under the UCC of any state
which names a Grantor as debtor 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 such as have been filed in favor of the
Secured Party pursuant to this Agreement or in respect of Permitted
Liens. No Collateral is in the possession or Control of
any Person asserting any claim thereto or security interest
therein, except that (a) the Secured Party or its designee may have
possession or Control of Collateral as contemplated hereby, (b) a
depositary bank may have Control of a Deposit Account owned by a
Grantor at such depositary bank and a Securities Intermediary may
have Control over a Securities Account owned by a Grantor at such
Securities Intermediary, in each case subject to the terms of any
Deposit Account control agreement or Securities Account control
agreement, as applicable and to the extent required by Section
4 , in favor of the Secured Party, and (c) a bailee, consignee
or other Person may have possession of Collateral as contemplated
by, and so long as, the applicable Grantors have complied to the
satisfaction of the Secured Party with the applicable provisions of
Section 4 .
Section
3.6. State of Organization;
Location of Inventory, Equipment and Fixtures; Other
Information .
(a)
The exact legal name of each Grantor is as set forth in its
Perfection Certificate.
(b)
Each Grantor is a Registered Organization organized under the laws
of the jurisdiction identified for such Grantor in its Perfection
Certificate. The taxpayer identification number and
Registered Organization number of each Grantor is as set forth for
such Grantor in its Perfection Certificate.
(c)
All Collateral consisting of Inventory, Equipment and Fixtures
(whether now owned or hereafter acquired) is (or will be) located
at the locations specified in the Perfection
Certificates.
(d)
The mailing address, chief place of business, chief executive
office and office where each Grantor keeps its books and records
relating to the Accounts, Documents, General Intangibles,
Instruments and Investment Property in which it has any interest is
located at the locations specified for such Grantor in its
Perfection Certificate. No Grantor has any other places
of business. No Grantor does business nor has done
business during the past five years under any trade name or
fictitious business name except as disclosed for such Grantor in
its Perfection Certificate. Except as disclosed in its
Perfection Certificate, no Grantor has acquired assets from any
Person, other than assets acquired in the ordinary course of such
Grantor’s business, during the past five years.
Section 3.7.
Accounts . Each existing Account constitutes, and
each hereafter arising Account will constitute, the legally valid
and binding obligation of the applicable Account
Debtor. The amount represented by each Grantor to the
Secured Party as owing by each Account Debtor is, or will be, the
correct amount actually and unconditionally owing, except for
normal cash discounts and allowances in the ordinary course of
business where applicable. No Account Debtor has any
defense, set-off, claim or counterclaim against any Grantor that
can be asserted against the Secured Party, whether in any
proceeding to enforce Secured Party’s rights in the
Collateral or otherwise, except defenses, set-offs, claims or
counterclaims that are not, in the aggregate, material to the value
of the Accounts. None of the Accounts is, nor will any
hereafter arising Account be, evidenced by a promissory note or
other Instrument, other than a check, that has not been pledged and
delivered to the Secured Party in accordance with the terms
hereof.
Section
3.8. Chattel Paper
. As of the date hereof, the Borrower does not hold any
Chattel Paper.
Section
3.9. Commercial Tort
Claims . As of the date hereof, the Borrower does
not hold any Commercial Tort Claims except as described in its
Perfection Certificate; and, upon becoming aware at any time and
from time to time of any further Commercial Tort Claims, the
Grantors shall notify the Secured Party thereof in accordance with
Section 4.4 .
Section
3.10. Deposit Accounts
. As of the date hereof, all Deposit Accounts
(including, without limitation, cash management accounts that are
Deposit Accounts) owned by the Borrower are listed in its
Perfection Certificate.
Section
3.11. Intellectual Property
. None of the Intellectual Property owned by any Grantor
is the subject of any written licensing or franchise agreement
pursuant to which such Grantor is the licensor or franchisor,
except as would not reasonably be expected to have a Material
Adverse Effect.
Section
3.12. Inventory
. Collateral consisting of Inventory is of good and
merchantable quality, free from any material defects, and has, to
the knowledge of each Grantor, been manufactured in accordance with
the requirements of the Fair Labor Standards Act and all other
Applicable Law. To the knowledge of each Grantor, none
of such Inventory is subject to any licensing, Patent, Trademark,
trade name or Copyright with any Person that restricts any
Grantor’s ability to manufacture and/or sell such
Inventory.
Section 3.13.
Investment Property; Partnership/LLC Interests .
(a) As
of the date hereof, all Investment Property (including, without
limitation, Securities Accounts and cash management accounts that
are Investment Property) and all Partnership/LLC Interests owned by
the Borrower are listed in its Perfection Certificate.
(b)
All Investment Property and all Partnership/LLC Interests issued by
any Subsidiary Issuer to any Grantor (i) have been duly and validly
issued and, if applicable, are fully paid and nonassessable, (ii)
are beneficially owned as of record by such Grantor, and (iii)
represent the percentage ownership of all classes of the capital
stock or equity interests of such Subsidiary Issuer as set forth in
such Grantor’s Perfection Certificate.
(c)
None of the Partnership/LLC Interests (i) are traded on a
securities exchange or in securities markets, (ii) by their terms
expressly provide that they are Securities governed by Article 8 of
the UCC, or (iii) are Investment Company Securities.
Section 3.14.
Instruments . As of the date hereof, the Borrower
does not hold any Instruments and is not named a payee of any
promissory note or other evidence of indebtedness.
ARTICLE IV
COVENANTS
Until the Obligations shall have
been indefeasibly paid in full and the Revolving Credit Commitment
has been terminated, unless express written consent has been
obtained from the Lender, the Grantors covenant and agree
that:
Section
4.1. Maintenance of
Perfected Security Interest; Further Information .
(a) Each
Grantor shall maintain the Security Interest created by this
Agreement as a perfected Security Interest having at least the
priority described in Section 3.4 and shall defend such
Security Interest against the claims and demands of all Persons
whomsoever.
(b)
Each Grantor will furnish to the Secured Party 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 Secured Party may reasonably request,
all in reasonable detail.
Section
4.2. Maintenance of
Insurance .
(a) Each Grantor will
maintain, with financially sound and reputable companies, insurance
policies (i) insuring the Collateral against loss by fire,
explosion, theft, fraud and such other casualties, including
business interruption, as may be reasonably satisfactory to the
Secured Party in amounts and with deductibles at least as favorable
as those generally maintained by businesses of similar size engaged
in similar activities, and (ii) insuring such Grantor and the
Secured Party against liability for hazards, risks and liability to
persons and property relating to the Collateral, in amounts and
with deductibles at least as favorable as those generally
maintained by businesses of similar size engaged in similar
activities, such policies to be in such form and having such
coverage as may be reasonably satisfactory to the
Lender.
(b)
All such insurance (other than workers’ compensation) shall
(i) name the Secured Party as loss payee (to the extent
covering risk of loss or damage to tangible property) and as an
additional insured as its interests may appear (to the extent
covering any other risk), (ii) provide that no cancellation
shall be effective until at least thirty (30) days after receipt by
the Secured Party of written notice thereof, and (iii) be
reasonably satisfactory in all other respects to the Secured
Party.
(c)
Upon the request of the Secured Party, each Grantor shall deliver
to the Secured Party periodic information from a reputable
insurance broker with respect to the insurance referred to in this
Section 4.2 .
Section
4.3. Changes in Locations;
Changes in Name or Structure . No Grantor will,
except upon fifteen (15) days’ prior written notice to the
Secured Party and delivery to the Secured Party of (a) all
additional financing statements (executed if necessary for any
particular filing jurisdiction) and other instruments and documents
reasonably requested by the Secured Party to maintain the validity,
perfection and priority of the Security Interests, and (b) if
applicable, a written supplement to its Perfection
Certificate:
(i)
permit any Deposit Account to be held by or at a depositary bank
other than the depositary bank that held such Deposit Account as of
the date hereof as set forth in the Perfection
Certificate;
(ii)
permit any of the Inventory, Equipment or Fixtures to be kept at a
location other than those listed in the Perfection Certificate,
except as otherwise permitted hereunder;
(iii)
permit any Investment Property (other than Certificated Securities
delivered to the Secured Party pursuant to Section 4.5 ) to
be held by a Securities Intermediary;
(iv)
change its jurisdiction of organization or the location of its
chief executive office from that identified in the Perfection
Certificate; or
(v)
change its name, identity or corporate or organizational structure
to such an extent that any financing statement filed by the Secured
Party in connection with this Agreement would become
misleading.
Section
4.4. Required
Notifications . Each Grantor shall promptly notify
the Secured Party, in writing, of: (a) any Lien (other than the
Security Interests or Permitted Liens) on any of the Collateral,
(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 Security Interests, (c) any Collateral
which, to the knowledge of such Grantor, constitutes a Government
Contract, and (d) the acquisition or ownership by such Grantor
of any (i) Commercial Tort Claim, (ii) Deposit Account, or (iii)
Investment Property after the date hereof.
Section
4.5. Delivery
Covenants
. Each Grantor will
deliver and pledge to the Secured Party all Certificated
Securities, Partnership/LLC Interests evidenced by a certificate,
negotiable Documents, Instruments, and Tangible Chattel Paper owned
or held by such Grantor, in each case, together with an Effective
Endorsement and Assignment and all Supporting Obligations, as
applicable, unless such delivery and pledge has been waived in
writing by the Secured Party.
Section
4.6. Control Covenants
.
(a)
Each Grantor shall instruct (and otherwise use its reasonable
efforts to cause) (i) each depositary bank holding a Deposit
Account owned by such Grantor, and (ii) each Securities
Intermediary holding any Investment Property owned by such Grantor,
to execute and deliver a control agreement, sufficient to provide
the Secured Party with Control of such Deposit Account or
Investment Property, and otherwise in form and substance reasonably
satisfactory to the Secured Party (any such depositary bank
executing and delivering any such control agreement, a “
Controlled Depositary ”, and any such Securities
Intermediary executing and delivering any such control agreement, a
“ Controlled Intermediary ”). In the
event any such depositary bank or Securities Intermediary refuses
to execute and deliver such control agreement, the Secured Party,
in its sole discretion, may require the applicable Deposit Account
and Investment Property to be transferred to the Secured Party or a
different Controlled Depositary or Controlled Intermediary, as
applicable, reasonably selected by the Grantor and reasonably
satisfactory to the Secured Party, which agrees to execute and
deliver such control agreement.
(b)
Each Grantor will take such actions and deliver all such agreements
as are requested by the Secured Party to provide the Secured Party
with Control of all Letter of Credit Rights and Electronic Chattel
Paper owned or held by such Grantor, including, without limitation,
with respect to any such Electronic Chattel Paper, by having the
Secured Party identified as the assignee of the Record(s)
pertaining to the single authoritative copy thereof.
(c)
If any Collateral (other than Collateral specifically subject to
the provisions of Section 4.6(a) and Section 4.6(b) )
exceeding in value $5,000 in the aggregate (such Collateral
exceeding such amount, the “ Excess Collateral
”) is at any time in the possession or control of any
consignee, warehouseman, bailee (other than a carrier transporting
Inventory to a purchaser in the ordinary course of business),
processor, or any other third party, such Grantor shall notify in
writing such Person of the Security Interests created hereby, shall
use its reasonable efforts to obtain such Person’s written
agreement in writing to hold all such Collateral for the Secured
Party’s account subject to the Secured Party’s
instructions, and shall cause such Person to issue and deliver to
the Secured Party warehouse receipts, bills of lading or any
similar documents relating to such Collateral to the Secured Party
together with an Effective Endorsement and Assignment;
provided that if such Grantor is not able to obtain such
agreement and cause the delivery of such items, the Secured Party,
in its sole discretion, may require such Excess Collateral to be
moved to another location specified by the Secured
Party. Further, each Grantor shall perfect and protect
such Grantor’s ownership interests in all Inventory stored
with a consignee against creditors of the consignee by filing and
maintaining financing statements against the consignee reflecting
the consignment arrangement filed in all appropriate filing
offices, providing any written notices required to notify any prior
creditors of the consignee of the consignment arrangement, and
taking such other actions as may be appropriate to perfect and
protect such Grantor’s interests in such inventory under
Section 2-326, Section 9-103, Section 9-324 and Section 9-505 of
the UCC or otherwise. All such financing statements
filed pursuant to this Section 4.6(c) shall be assigned, on
the face thereof, to the Secured Party.
Section
4.7. Filing Covenants
. Pursuant to Section 9-509 of the UCC and any other
Applicable Law, each Grantor authorizes the Secured Party to file
or record financing statements and other filing or recording
documents or instruments with respect to the Collateral without the
signature of such Grantor in such form and in such offices as the
Secured Party determines appropriate to perfect the Security
Interests of the Secured Party under this
Agreement. Such financing statements may describe the
Collateral in the same manner as described herein or may contain an
indication or description of Collateral that describes such
property in any other manner as the Secured Party may
