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Exhibit
10.4
DIGITAL LIGHTWAVE,
INC.
AMENDED AND RESTATED
SECURITY AGREEMENT
This Amended and Restated
Security Agreement (this “ Agreement ”) is made
as of April 4, 2008, by Digital Lightwave, Inc., a Delaware
corporation (the “ Debtor ”), in favor of Optel
Capital, LLC, a Delaware limited liability company (the “
Secured Party ”).
RECITALS
A. The Debtor and the Secured
Party previously entered into that certain Twenty Second Amended
and Restated Security Agreement, dated as of September 16,
2004 (the “ Existing Security Agreement ”),
pursuant to which the Debtor granted to the Secured Party a
security interest in all of the Debtor’s assets upon the
terms and subject to the conditions therein, to secure the
Debtor’s timely repayment of its obligations under those
several secured promissory notes (collectively, the “
Prior Secured Promissory Notes ”) made payable to the
Secured Party in the aggregate principal amount of $27,945,177,
plus unpaid interest thereon equal to $7,708,983 (collectively, the
“ Outstanding Debt ”).
B. Debtor and the Secured
Party have entered into that certain Credit and Restructuring
Agreement, dated as of the date hereof (as amended, restated or
otherwise modified from time to time, the “ Credit and
Restructuring Agreement ”), pursuant to which Secured
Party has agreed to restructure the Outstanding Debt and to make
additional credit accommodations available to Debtor in the form of
the New Commitment (as defined therein) in accordance with the
terms of the Credit and Restructuring Agreement and the Promissory
Notes.
C. The Secured Party’s
obligation to enter into the Credit and Restructuring Agreement,
restructure the Outstanding Debt and to make the New Commitment
available to the Debtor is subject, among other conditions, to
receipt by the Secured Party of this Security Agreement, duly
executed by the Debtor.
AGREEMENT
In consideration of the
foregoing and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the Debtor
hereby agrees with the Secured Parties as follows:
1. Grant of Security
Interest .
(a) To secure the
Debtor’s full and timely payment and performance of the
Obligations, the Debtor hereby grants to the Secured Party a
continuing Lien on and security interest (the “ Security
Interest ”) in, all of the Debtor’s right, title
and interest in and to all of its personal property and assets
(both tangible and intangible), including, without limitation, the
following, whether now owned or hereafter acquired and wherever
located: (a) all Receivables; (b) all Equipment;
(c) all Fixtures; (d) all General Intangibles;
(e) all Inventory; (f) all Investment Property;
(g) all Deposit Accounts; (h) all Cash; (i) all
other Goods of the Debtor; (j) all Intellectual Property; and
(l) all Proceeds of each of the foregoing and all accessions
to, and replacements for, each of the foregoing (collectively, the
“ Collateral ”). The Security Interest shall be
a first and prior interest in all of the Collateral, subject to the
Permitted Liens.
(b) The following terms shall
have the following meanings for purposes of this
Agreement:
“Account”
means any “Account,” as such term is defined in the
UCC, now owned or hereafter acquired by the Debtor or in which the
Debtor now holds or hereafter acquires any interest and, in any
event, shall include, without limitation, all accounts receivable,
book debts, rights to payment and other forms of obligations (other
than forms of obligations evidenced by Chattel Paper, Documents or
Instruments) now owned or hereafter received or acquired by or
belonging or owing to the Debtor whether or not arising out of
goods or software sold or services rendered by the Debtor or from
any other transaction, whether or not the same involves the sale of
goods or services by the Debtor and all of the Debtor’s
rights in, to and under all purchase orders or receipts now owned
or hereafter acquired by it for goods or services, and all of the
Debtor’s rights to any goods represented by any of the
foregoing, and all monies due or to become due to the Debtor under
all purchase orders and contracts for the sale of goods or the
performance of services or both by the Debtor or in connection with
any other transaction (whether or not yet earned by performance on
the part of the Debtor), now in existence or hereafter occurring,
including, without limitation, the right to receive the proceeds of
said purchase orders and contracts, and all collateral security and
guarantees of any kind given by any Person with respect to any of
the foregoing.
“Cash” has
the meaning set forth in the Credit and Restructuring
Agreement.
“Chattel
Paper” means any “Chattel paper,” as such
term is defined in the UCC, now owned or hereafter acquired by the
Debtor or in which the Debtor now holds or hereafter acquires any
interest.
“Credit
Documents” means and includes the Credit and
Restructuring Agreement, the Prior Secured Promissory Notes, each
Promissory Note, this Agreement, any UCC-1 Financing Statement
filed herewith and all other documents, instruments and agreements
delivered by the Debtor in connection with any of the
foregoing.
“Deposit
Accounts” means any “Deposit accounts,” as
such term is defined in the UCC, and includes any checking account,
savings account, or certificate of deposit, now owned or hereafter
acquired by the Debtor or in which the Debtor now holds or
hereafter acquires any interest.
“Documents” means any
“Documents,” as such term is defined in the UCC, now
owned or hereafter acquired by the Debtor or in which the Debtor
now holds or hereafter acquires any interest.
“Electronic Chattel
Paper” means any “Electronic chattel paper,”
as such term is defined in the UCC, now owned or hereafter acquired
by the Debtor or in which the Debtor now holds or hereafter
acquires any interest.
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“Equipment” has the meaning set forth in the
Credit and Restructuring Agreement.
“ Extraordinary
Transaction ” means any transaction or a series of
related transactions, including, without limitation, a sale of
assets of Borrower (excluding sales of inventory in the ordinary
course of business), a license or transfer of Borrower’s
intellectual property, pursuant to which Borrower receives at the
time of such transaction(s), or could receive during the term of
such transaction(s), gross proceeds equal to or in excess of
$500,000.
“Fixtures”
means any “Fixtures,” as such term is defined in the
UCC, together with all right, title and interest of the Debtor in
and to all extensions, improvements, betterments, accessions,
renewals, substitutes, and replacements of, and all additions and
appurtenances to any of the foregoing property, and all conversions
of the security constituted thereby, immediately upon any
acquisition or release thereof or any such conversion, as the case
may be, now owned or hereafter acquired by the Debtor or in which
the Debtor now holds or hereafter acquires any interest.
“General
Intangible” means any “General intangible,”
as such term is defined in the UCC, now owned or hereafter acquired
by the Debtor or in which the Debtor now holds or hereafter
acquires any interest and, in any event, shall include, without
limitation, all right, title and interest that the Debtor may now
or hereafter have in or under any contracts, rights to payment,
payment intangibles, confidential information, interests in
partnerships, limited liability companies, corporations, joint
ventures and other business associations, permits, goodwill, claims
in or under insurance policies, including unearned premiums and
premium adjustments, uncertificated securities, deposit, checking
and other bank accounts, but shall not include any Intellectual
Property (including the right to receive all proceeds and damages
therefrom), rights to receive tax refunds and other payments and
rights of indemnification.
“Goods”
means any “Goods,” as such term is defined in the UCC,
now owned or hereafter acquired by the Debtor or in which the
Debtor now holds or hereafter acquires any interest.
“Instruments” means any
“Instrument,” as such term is defined in the UCC, now
owned or hereafter acquired by the Debtor or in which the Debtor
now holds or hereafter acquires any interest.
“Intellectual
Property” means, collectively, all rights, priorities and
privileges of the Debtor relating to intellectual property, whether
arising under United States, multinational or foreign laws or
otherwise, including copyrights, copyright licenses, inventions,
patents, patent licenses, trademarks, trademark licenses and trade
secrets (including customer lists), domain names, Web sites and
know-how , including, but not limited to, the patents,
trademarks and copyrights set forth on Schedule 1
.
“Inventory” means any
“Inventory,” as such term is defined in the UCC, now
owned or hereafter acquired by the Debtor or in which the Debtor
now holds or hereafter acquires any interest, and, in any event,
shall include, without limitation, all inventory, goods and other
personal property that are held by or on behalf of the Debtor for
sale or lease or are
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furnished or are to be furnished under a
contract of service or that constitute raw materials, work in
process or materials used or consumed or to be used or consumed in
the Debtor’s business, or the processing, packaging,
promotion, delivery or shipping of the same, and all finished
goods, whether or not the same is in transit or in the
constructive, actual or exclusive possession of the Debtor or is
held by others for the Debtor’s account, including, without
limitation, all goods covered by purchase orders and contracts with
suppliers and all goods billed and held by suppliers and all such
property that may be in the possession or custody of any carriers,
forwarding agents, truckers, warehousemen, vendors, selling agents
or other Persons.
“Investment
Property” means any “Investment property,” as
such term is defined in the UCC, and includes certificated
securities, uncertificated securities, money market funds and U.S.
Treasury bills or notes, now owned or hereafter acquired by the
Debtor or in which the Debtor now holds or hereafter acquires any
interest.
“Letter of Credit
Right” means any “Letter-of-credit right,” as
such term is defined in the UCC, now owned or hereafter acquired by
the Debtor or in which the Debtor now holds or hereafter acquires
any interest, including any right to payment or performance under
any letter of credit.
“Lien” has
the meaning set forth in the Credit and Restructuring
Agreement.
“Obligations” has the meaning set forth in
the Credit and Restructuring Agreement.
“Permitted
Liens” shall mean (a) Liens for taxes or other
governmental charges not at the time delinquent or thereafter
payable without penalty or being contested in good faith, provided
that adequate reserves for the payment thereof have been
established in accordance with generally accepted accounting
principles, (b) Liens of carriers, warehousemen, mechanics,
materialmen, vendors, and landlords and other similar Liens imposed
by law incurred in the ordinary course of business for sums not
overdue more than 90 days or being contested in good faith,
provided that adequate reserves for the payment thereof have been
established in accordance with generally accepted accounting
principles, (c) deposits under workers’ compensation,
unemployment insurance and social security laws or to secure the
performance of bids, tenders, contracts (other than for the
repayment of borrowed money) or leases, or to secure statutory
obligations of surety or appeal bonds or to secure indemnity,
performance or other similar bonds in the ordinary course of
business, (d) zoning restrictions, easements, rights-of-way,
title irregularities and other similar encumbrances, which alone or
in the aggregate are not substantial in amount and do not
materially detract from the value of the property subject thereto
or interfere with the ordinary conduct of the business of the
Debtor, (e) banker’s Liens and similar Liens (including
set-off rights) in respect of bank deposits, (f) Liens in
favor of customs and revenue authorities arising as a matter of law
to secure payment of customs duties and in connection with the
importation of goods in the ordinary course of the Debtor’s
business, (g) Liens on the property or assets of any
subsidiary of the Debtor in favor of the Debtor, (h) purchase
money Liens that will be discharged upon the Debtor’s payment
of the purchase price for the applicable property, to the extent
such Liens relate solely to the property so purchased,
(i) leases of specific items of Equipment so long as such
Liens do not extend beyond the equipment so leased and any proceeds
applicable thereto, (j) additional security interests or Liens
consented
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to in writing by Lender, (k) Liens
being terminated substantially concurrently on the date of this
Agreement, (l) Liens incurred in connection with the
extension, renewal or refinancing of the indebtedness secured by
Liens of the type described in clauses (h) and (i) above,
provided that any extension, renewal or replacement Lien is limited
to the property encumbered by the existing Lien and the principal
amount of the indebtedness being extended, renewed or refinanced
does not increase and (m) the Liens set forth on
Schedule 2 .
“Person”
has the meaning set forth in the Credit and Restructuring
Agreement.
“Proceeds”
means “Proceeds,” as such term is defined in the UCC
and, in any event, shall include, without limitation, (a) any
and all Accounts, Chattel Paper, Instruments, cash or other forms
of money or currency or other proceeds payable to the Debtor from
time to time in respect of the Collateral, (b) any and all
proceeds of any insurance, indemnity, warranty or guaranty payable
to the Debtor from time to time with respect to any of the
Collateral, (c) any and all payments (in any form whatsoever)
made or due and payable to the Debtor from time to time in
connection with any requisition, confiscation, condemnation,
seizure or forfeiture of all or any part of the Collateral by any
governmental authority (or any Person acting under color of
governmental authority), (d) the proceeds, damages, or
recovery based on any claim of the Debtor against third parties
(i) for past, present or future infringement of any copyright,
patent or patent license or (ii) for past, present or future
infringement or dilution of any trademark or trademark license or
for injury to the goodwill associated with any trademark, trademark
registration or trademark licensed under any trademark license and
(e) any and all other amounts from time to time paid or
payable under or in connection with any of the
Collateral.
“Promissory
Notes” has the meaning set forth in the Credit and
Restructuring Agreement
“Receivables” means all of the
Debtor’s Accounts, Instruments, Documents, Chattel Paper,
Supporting Obligations, and letters of credit and Letter of Credit
Rights.
“Supporting
Obligation” means any “Supporting
obligation,” as such term is defined in the UCC, now owned or
hereafter acquired by the Debtor or in which the Debtor now holds
or hereafter acquires any interest.
“UCC” has
the meaning set forth in the Credit and Restructuring
Agreement.
Unless otherwise defined
herein, all capitalized terms used herein and defined in the Credit
and Restructuring Agreement and the Promissory Notes shall have the
respective meanings given to those terms therein, and terms that
are defined in the UCC and used herein shall have the meanings
given to them in the UCC.
2. Representations and
Warranties . The Debtor hereby represents and warrants to
the Secured Party that:
(a) Ownership of
Collateral . The Debtor is the legal and beneficial owner
of the Collateral (or, in the case of after-acquired Collateral, at
the time the Debtor acquires rights in the Collateral, will be the
legal and beneficial owner thereof). Except for the Security
Interest granted to the Secured Party pursuant to this Agreement,
the Debtor has rights in or the power to
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transfer the Collateral free and clear
of any adverse Lien, security interest or encumbrance except for
Permitted Liens. Except for the financing statements listed in
Schedule 2 , no financing statements covering any
Collateral or any proceeds thereof are on file in any public office
(other than filings listing the Secured Party as the secured
party).
(b) Valid Security
Interest . Other than with respect to the Collateral set
forth on Schedule 2 , the Security Interest granted pursuant
to this Agreement will constitute a valid and continuing first
priority, perfected security interest in favor of the Secured Party
in the Collateral for which perfection is governed by the UCC or
filing with the United States Copyright Office or United States
Patent and Trademark Office. Such Security Interest will be prior
to all other Liens on the Collateral, subject to the Permitted
Liens.
(c) Organization and
Good Standing . Except as set forth on Schedule 2(c)
, the Debtor has been duly incorporated, and is validly existing
and in good standing, under the laws of the State of
Delaware.
(d) Location, State of
Organization and Name of the Debtor . The Debtor’s
state of organization is Delaware and the Debtor’s exact
legal name as it appears in the official filings in the State of
Delaware is as set forth in the first paragraph of this Agreement.
The Debtor has only one jurisdiction of organization.
(e) Location of
Equipment and Inventory . All Equipment and Inventory are
(i) located at the locations indicated on Schedule 3
(ii) in transit to such locations or (iii) in transit to
a third party purchaser which will become obligated on a Receivable
to the Debtor upon receipt. Except for Equipment and Inventory
referred to in clauses (ii) and (iii) of the preceding
sentence, the Debtor has exclusive possession and control of the
Inventory and Equipment.
(g) Delivery of
Items . Schedule 4 lists all Instruments (other
than checks received in the ordinary course of business),
Letter-of-Credit Rights, Electronic Chattel paper and Chattel Paper
of the Debtor as of the date hereof. Upon the written request of
the Secured Party, the Debtor will deliver to the Secured Party,
together with all necessary stock powers, endorsements, assignments
and other necessary instruments of transfer, the originals of all
Receivables consisting of instruments and Chattel Paper and the
originals of all certificated securities owned directly by the
Debtor.
(h) Receivables
. Each Receivable is genuine and enforceable against the party
obligated to pay the same (an “ Account Debtor
”) free from any right of rescission, defense, setoff or
discount.
(i) Insurance .
Each insurance policy maintained by the Debtor is validly existing
and is in full force and effect. The Debtor is not in default in
any material respect under the provisions of any insurance policy,
and there are no facts which, with the giving of notice or passage
of time (or both), would result in such a default under any
material provision of any such insurance policy. Set forth in
Schedule 5 is a complete and accurate list of the
insurance of the Debtor in effect on the date of this Agreement
covering fire, public liability, property damage and worker’s
compensation, showing as of such date, (i) the type of
insurance carried, (ii) the name of the insurance carrier, and
(iii) the amount of each type of insurance carried.
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(j) Creation of
Lien. This Agreement is effective to create a valid and
continuing Lien upon the Collateral. Upon the written request of
the Secured Party, the Debtor shall take all action necessary to
protect and perfect such Lien on each item of the
Collateral.
3. [ Reserved
.]
4. Covenants .
The Debtor covenants and agrees with the Secured Party that, from
and after the date of this Agreement until the Obligations are paid
in full:
(a) Other Liens
. Except for the Security Interest and Permitted Liens, the
Debtor has rights in or the power to transfer the Collateral and
its title and will be able to do so hereafter free from any adverse
Lien, security interest or encumbrance, and the Debtor will defend
the Collateral against the claims and demands of all persons at any
time claiming the same or any interest therein.
(b) Further
Documentation . At any time and from time to time, upon the
written request of the Secured Party, and at the sole expense of
the Debtor, the Debtor will promptly and duly authenticate and
deliver such further instruments and documents and take such
further action as the Secured Party 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,
without limitation, filing any financing or continuation statements
under the UCC in effect with respect to the Liens created hereby.
The Debtor also hereby authorizes the Secured Party to file any
such financing, amendment or continuation statement without the
authentication of the Debtor to the extent permitted by applicable
law. A reproduction of this Agreement shall be sufficient as a
financing statement (or as an exhibit to a financing statement on
form UCC-1) for filing in any jurisdiction.
(c) Indemnification
. The Debtor agrees to defend, indemnify and hold harmless the
Secured Party against any and all liabilities, costs and expenses
(including, without limitation, legal fees and expenses) (“
Liabilities ”): (i) with respect to, or resulting
from, any delay in paying, any and all excise, sales or other taxes
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