Exhibit 10.4
Execution Copy
SECURITY AND PLEDGE
AGREEMENT
THIS SECURITY AND PLEDGE
AGREEMENT (this “
Agreement ”) is entered into as of November 3,
2006 among INFRASTRUX GROUP, INC., a Washington corporation (the
“ Borrower ”), InfrastruX Holdings LLC, a
Delaware limited liability company (the “ Parent
”), certain Domestic Subsidiaries of the Borrower signatory
hereto (or that become party hereto in accordance with the terms of
the Credit Agreement referred to below) (the “ Subsidiary
Guarantors ”; together with the Borrower and the Parent,
individually an “ Obligor ”, and collectively
the “ Obligors ”), and CREDIT SUISSE, CAYMAN
ISLANDS BRANCH, in its capacity as administrative agent (in such
capacity, the “ Administrative Agent ”) for the
holders of the Secured Obligations (defined below).
RECITALS
WHEREAS , pursuant to that certain Credit Agreement
dated as of the date hereof (as amended, modified, extended,
renewed or replaced from time to time, the “ Credit
Agreement ”) among the Borrower, the Guarantors
identified therein, the Lenders identified therein and the
Administrative Agent, the Lenders have agreed to make Loans and
issue Letters of Credit upon the terms and subject to the
conditions set forth therein; and
WHEREAS , this Agreement is required by the terms of the
Credit Agreement.
NOW, THEREFORE
, in consideration of these premises
and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. Definitions .
(a) Capitalized terms used and not
otherwise defined herein shall have the meanings ascribed to such
terms in the Credit Agreement, and the following terms which are
defined in the Uniform Commercial Code in effect from time to time
in the State of New York except as such terms may be used in
connection with the perfection of the Collateral and then the
applicable jurisdiction with respect to such affected Collateral
shall apply (the “ UCC ”): Accession, Account,
As-Extracted Collateral, Certificated Securities, Chattel Paper,
Commercial Tort Claim, Consumer Goods, Deposit Account, Document,
Electronic Chattel Paper, Equipment, Farm Products, Financial
Asset, Fixtures, General Intangible, Goods, Instrument, Inventory,
Investment Property, Letter-of-Credit Right, Manufactured Home,
Proceeds, Securities Entitlement, Securities Account, Security,
Software, Supporting Obligation and Tangible Chattel
Paper.
(b) In addition, the following terms
shall have the meanings set forth below:
“ Collateral ”
has the meaning provided in Section 2 hereof.
“ Copyright License
” means any written agreement, naming any Obligor as
licensor, granting any right under any Copyright.
“ Copyrights ”
means (a) all registered United States copyrights in all
Works, now existing or hereafter created or acquired, all
registrations and recordings thereof, and all applications in
connection therewith, including, without limitation, registrations,
recordings and applications in the United States Copyright Office,
and (b) all renewals thereof.
“ Patent License
” means any agreement, whether written or oral, providing for
the grant by or to any Obligor of any right to manufacture, use or
sell any invention covered by a Patent.
“ Patents ” means
(a) all letters patent of the United States or any other
country and all reissues and extensions thereof, and (b) all
applications for letters patent of the United States or any other
country and all divisions, continuations and continuations-in-part
thereof.
“ Pledged Equity
” means, with respect to each Obligor, (i) 100% of the
issued and outstanding Equity Interest of each Domestic Subsidiary
and the Joint Venture, in each case, owned directly by such Obligor
(other than the Permitted Management Equity Interests) and
(ii) 65% (or such greater percentage that, due to a change in
an applicable Law after the date hereof, (A) could not
reasonably be expected to cause the undistributed earnings of such
Foreign Subsidiary as determined for United States federal income
tax purposes to be treated as a deemed dividend to such Foreign
Subsidiary’s United States parent and (B) could not
reasonably be expected to cause any material adverse tax
consequences) of the combined voting power of all issued and
outstanding Equity Interest entitled to vote (within the meaning of
Treas. Reg. Section 1.956-2(c)(2)) and 100% of the issued and
outstanding Equity Interest not entitled to vote (within the
meaning of Treas. Reg. Section 1.956-2(c)(2)) of each Foreign
Subsidiary owned directly by such Obligor, including such
respective percentages of the Equity Interest of the Subsidiaries
owned by such Obligor as set forth on Schedule 1(b)
attached hereto, in each case together with the certificates (or
other agreements or instruments), if any, representing such shares,
and all options and other rights, contractual or otherwise, with
respect thereto, including, but not limited to, the
following:
(1) all shares, securities,
membership interest or other Equity Interest representing a
dividend thereon, or representing a distribution or return of
capital upon or in respect thereof, or resulting from a stock
split, revision, reclassification or other exchange therefor, and
any subscriptions, warrants, rights or options issued to the holder
thereof, or otherwise in respect thereof; and
(2) in the event of any
consolidation or merger involving the issuer thereof and in which
such issuer is not the surviving Person, all shares of each class
of the Equity Interest of the successor Person formed by or
resulting from such consolidation or merger, to the extent that
such successor Person is a direct Subsidiary of an
Obligor.
“ Secured Obligations
” means the Obligations and all costs and expenses incurred
in connection with enforcement and collection of such Obligations,
including the reasonable fees, charges and disbursements of
counsel.
“ Secured Party ”
means the Administrative Agent.
“ Trademark License
” means any agreement, written or oral, providing for the
grant by or to any Obligor of any right to use any
Trademark.
“ Trademarks ”
means (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade
styles, service marks, logos and other source or business
identifiers, and the goodwill associated therewith, now existing or
hereafter adopted or acquired, all registrations and recordings
thereof, and all applications in connection therewith, whether in
the United States Patent and Trademark Office or in any similar
office or agency of the United States, any state thereof or any
other country or any political subdivision thereof, or otherwise
and (b) all renewals thereof.
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“ Work ” means
any work that is subject to copyright protection pursuant to Title
17 of the United States Code.
2. Grant of Security Interest in
the Collateral . To secure the prompt payment and performance
in full when due, whether by lapse of time, acceleration, mandatory
prepayment or otherwise, of the Secured Obligations, each Obligor
hereby grants to the Secured Party, for the benefit of the holders
of the Secured Obligations, a continuing security interest in, and
a right to set off against, any and all right, title and interest
of such Obligor in and to all of the following, whether now owned
or existing or hereafter owned, acquired, or arising (collectively,
the “ Collateral ”): (a) all Accounts;
(b) all cash and currency; (c) all Chattel Paper;
(d) those certain Commercial Tort Claims set forth on
Schedule 2(d) attached hereto; (e) all Copyrights;
(f) all Copyright Licenses; (g) all Deposit Accounts;
(h) all Documents; (i) all Equipment; (j) all
Fixtures; (k) all General Intangibles; (l) all
Instruments; (m) all Inventory; (n) all Investment
Property; (o) all Letter-of-Credit Rights; (p) all
Patents; (q) all Patent Licenses; (r) all Software;
(s) all Pledged Equity; (t) all Supporting Obligations;
(u) all Trademarks; (v) all Trademark Licenses; and
(w) all Accessions and all Proceeds of any and all of the
foregoing.
Notwithstanding anything to the
contrary contained in any Loan Document, the security interests
granted under this Agreement shall not extend to, and the
Collateral shall not include, any (i) Excluded Property, and
(ii) General Intangible, permit, lease, license, contract or
other Instrument of an Obligor if the grant of a security interest
in such General Intangible, permit, lease, license, contract or
other Instrument in the manner contemplated by this Agreement,
under the terms thereof or under applicable Law, is prohibited and
would result in the termination thereof or give the other parties
thereto the right to terminate, accelerate or otherwise alter such
Obligor’s rights, titles and interests thereunder (including
upon the giving of notice or the lapse of time or both);
provided that (a) any such limitation described in the
foregoing clause (ii) on the security interests granted
hereunder shall only apply to the extent that any such prohibition
could not be rendered ineffective pursuant to the UCC or any other
applicable Law (including Debtor Relief Laws) or principles of
equity and (b) in the event of the termination or elimination
of any such prohibition or the requirement for any consent
contained in any applicable Law, General Intangible, permit, lease,
license, contract or other Instrument, to the extent sufficient to
permit any such item to become Collateral hereunder, or upon the
granting of any such consent, or waiving or terminating any
requirement for such consent, a security interest in such General
Intangible, permit, lease, license, contract or other Instrument
shall be automatically and simultaneously granted hereunder and
shall be included as Collateral hereunder.
The Obligors and the Secured Party,
on behalf of the holders of the Secured Obligations, hereby
acknowledge and agree that the security interest created hereby in
the Collateral (i) constitutes continuing collateral security
for all of the Secured Obligations, whether now existing or
hereafter arising and (ii) is not to be construed as an
assignment of any Copyrights, Copyright Licenses, Patents, Patent
Licenses, Trademarks or Trademark Licenses.
3. Representations and
Warranties . Each Obligor hereby represents and warrants to the
Secured Party, for the benefit of the holders of the Secured
Obligations, that:
(a) Ownership . Each Obligor
is the legal and beneficial owner of its Collateral and has the
right to pledge, sell, assign or transfer the same. There exists no
“adverse claim” within the meaning of
Section 8-102 of the UCC with respect to the Pledged Equity of
such Obligor.
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(b) Security
Interest/Priority . This Agreement creates a valid security
interest in favor of the Secured Party, for the benefit of the
holders of the Secured Obligations, in the Collateral of such
Obligor and, when properly perfected by filing a UCC-1 financing
statement in the appropriate jurisdiction, will constitute a valid
and perfected, first priority security interest in such Collateral
(including all uncertificated Pledged Equity consisting of
partnership or limited liability company interests that do not
constitute Securities), to the extent such security interest can be
perfected, and such priority can be established, by such filing
under the UCC, free and clear of all Liens except for Permitted
Liens. The taking possession by the Secured Party of the
Certificated Securities (if any) evidencing the Pledged Equity and
all other Instruments constituting Collateral will perfect and
establish the first priority of the Secured Party’s security
interest in all the Pledged Equity evidenced by such Certificated
Securities and such Instruments. With respect to any Collateral
consisting of a Deposit Account, Securities Entitlement or held in
a Securities Account, upon execution and delivery by the applicable
Obligor, the applicable bank or Securities Intermediary and the
Secured Party of an agreement granting control to the Secured Party
over such Collateral, the Secured Party shall have a valid and
perfected, first priority security interest in such
Collateral.
(c) Types of Collateral .
None of the Collateral consists of, or is the Proceeds of,
As-Extracted Collateral, Consumer Goods, Farm Products,
Manufactured Homes or standing timber.
(d) Accounts . (i) Each
Account of the Obligors and the papers and documents relating
thereto are in all material respects genuine and what they purport
to be, (ii) each Account arises out of (A) a bona fide
sale of goods sold and delivered (or in the process of being
delivered) by such Obligor or (B) services theretofore
actually rendered (or in the process of being rendered) by such
Obligor to, the account debtor named therein, (iii) other than
with respect to any such property that is not Collateral, no
Account of an Obligor is evidenced by any Instrument or Chattel
Paper required under Section 4(a) hereof to be pledged and
delivered to the Secured Party unless such Instrument or Chattel
Paper, to the extent requested by the Secured Party, has been
endorsed over and delivered to, or submitted to the control of, the
Secured Party pursuant to Section 4(a), (iv) except as
permitted under the Credit Agreement, no surety bond was required
or given in connection with any Account of an Obligor or the
contracts or purchase orders out of which they arose and
(v) to the extent any Account constitutes Collateral, the
right to receive payment under each such Account is
assignable.
(e) Equipment and Inventory .
With respect to any Equipment and/or Inventory of an Obligor, each
such Obligor has exclusive possession and control of such Equipment
and Inventory of such Obligor except for (i) Equipment leased
by such Obligor as a lessee and (ii) Equipment or Inventory in
transit with common carriers or in the possession or control of a
warehouseman, bailee or any agent or processor of any Credit Party.
No Inventory of an Obligor is held by a Person other than an
Obligor pursuant to consignment, sale or return, sale on approval
or similar arrangement.
(f) Authorization of Pledged
Equity . All Pledged Equity is duly authorized and validly
issued, is fully paid and, to the extent applicable, nonassessable
and is not subject to the preemptive rights of any
Person.
(g) No Other Equity Interest,
Instruments, Etc . As of the Closing Date, (i) no Obligor
owns any Pledged Equity other than the Pledged Equity described on
Schedule 1(b) attached hereto, and (ii) Schedule
3(g) sets forth all Certificated Securities, Instruments, Documents
or Tangible Chattel Paper required to be pledged and delivered to
the Secured Party pursuant to Section 4(a) of this
Agreement. All such Certificated Securities, Instruments, Documents
and Tangible Chattel Paper have been delivered to the Secured Party
pursuant to Section 4(a).
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(h) Partnership and Limited
Liability Company Interests . Other than Pledged Equity
consisting of partnership or limited liability company interests
that constitute General Intangibles, there is no Pledged Equity
other than that represented by Certificated Securities that have
been delivered to the Secured Party.
(i) Commercial Tort Claims .
As of the Closing Date, no Obligor has any Commercial Tort Claims
of the type and in the amount described in Section 4(f)
other than as set forth on Schedule 2(d) attached
hereto.
(j) Organization Information,
Mergers, Etc. Schedule 3(j) , Section (a)
sets forth each other name each Obligor has had in the past
five years, together with the date of the relevant change. Except
as set forth in Schedule 3(j) , Section (b) , no
Obligor has been party to a merger, consolidation or other change
in structure within the past five years. Schedule 3(j) ,
Section (c) states all other names (including trade,
assumed, and similar names) used by each Obligor or any of its
divisions or other business units at any time during the past five
years.
(k) Exercising of Rights;
Consents . There are no restrictions in any Organizational
Document governing any Pledged Equity which would limit or restrict
(i) the grant of a Lien in the Pledged Equity, (ii) the
perfection of such Lien or (iii) the exercise of remedies in
respect of such perfected Lien in the Pledged Equity as
contemplated by this Agreement. Except as otherwise provided or
contemplated by Section 4(a)(iii) and except for (i) the
filing or recording of UCC financing statements, (ii) the
filing of appropriate notices with the United States Patent and
Trademark Office and the United States Copyright Office,
(iii) obtaining control to perfect the Liens created by this
Agreement (to the extent required under Section 4(a)
hereof), (iv) such actions as may be required by the Laws
affecting the offering and sale of securities, (v) such
actions as may be required by applicable foreign Laws affecting the
pledge of the Pledged Equity of Foreign Subsidiaries, and
(vi) consents, authorizations, filings or other actions which
have been obtained or made, no consent or authorization of, filing
with, or other act by or in respect of, any arbitrator or
Governmental Authority and no consent of any other Person
(including, without limitation, any stockholder, member or creditor
of such Obligor), is required for (A) the grant by such
Obligor of the security interest in the Collateral granted hereby
or for the execution, delivery or performance of this Agreement by
such Obligor, or (B) the perfection of such security interest
(to the extent such security interest can be perfected by filing
under the UCC, the granting of control (to the extent required
under Section 4(a) hereof) or by filing an appropriate notice
with the United States Patent and Trademark Office or the United
States Copyright Office).
(l) Copyrights, Patents and
Trademarks .
(i) To the best of each
Obligor’s knowledge without conducting a search of applicable
filing offices, each Copyright, Patent and Trademark of such
Obligor is valid, subsisting, unexpired, enforceable (other than
pending applications therefor) and has not been
abandoned.
(ii) To the best of each
Obligor’s knowledge, no holding, decision or judgment has
been rendered by any Governmental Authority that would limit,
cancel or question the validity of any Copyright, Patent or
Trademark of any Obligor.
(iii) No action or proceeding is
pending (A) seeking to limit, cancel or question the validity
of any Copyright, Patent or Trademark of any Obligor, or
(B) with respect to any Copyright, Patent or Trademark that,
if adversely determined, could reasonably be expected to have a
Material Adverse Effect.
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(iv) Except as set forth on Schedule
3(l), all applications pertaining to the Copyrights, Patents and
Trademarks of each Obligor have been duly and properly filed, and
all registrations or letters pertaining to such Copyrights, Patents
and Trademarks have been duly and properly filed and
issued.
(v) No Obligor has made any
assignment of or agreement in conflict with the security interest
in the Copyrights, Patents or Trademarks of any Obligor hereunder
except as permitted by the Credit Agreement.
4. Covenants . Each Obligor
covenants that until such time as the Secured Obligations arising
under the Loan Documents have been paid in full (other than those
Obligations which survive pursuant to Section 11.13 of the
Credit Agreement) and the Commitments have expired or been
terminated, such Obligor shall:
(a) Instruments/Chattel
Paper/Pledged Equity/Control .
(i) If any amount in excess of
$1,000,000 payable to any Obligor shall be or become evidenced by
any Instrument or Tangible Chattel Paper, or if any property
constituting Collateral having a value of more than $1,000,000
shall be stored or shipped subject to a Document, ensure that such
Instrument, Tangible Chattel Paper or Document is either in the
possession of such Obligor at all times or, if requested by the
Secured Party to perfect its security interest in such Collateral,
promptly delivered to the Secured Party duly endorsed in a manner
reasonably satisfactory to the Secured Party. Such Obligor shall
ensure that any Collateral consisting of Tangible Chattel Paper
which is required to be delivered to the Secured Party pursuant to
this Section 4(a) is marked with a legend reasonably
acceptable to the Secured Party indicating the Secured
Party’s security interest in such Tangible Chattel
Paper.
(ii) Deliver to the Secured Party
promptly upon the receipt thereof by or on behalf of an Obligor,
all certificates and instruments constituting Pledged Equity. Prior
to delivery to the Secured Party, all such certificates
constituting Pledged Equity shall be held in trust by such Obligor
for the benefit of the Secured Party pursuant hereto. All such
certificates representing Pledged Equity shall be delivered in
suitable form for transfer by delivery or shall be accompanied by
duly executed instruments of transfer or assignment in blank,
substantially in the form provided in Exhibit 4(a)
attached hereto.
(iii) Execute and deliver all
agreements, assignments, instruments or other documents (in each
case in such form as may be required by any bank, financial
institution or other third party executing such document,
agreement, assignment or instrument) reasonably promptly after they
are reasonably requested by the Secured Party for the purpose of
obtaining and maintaining control with respect to any Collateral
consisting of (i) Deposit Accounts, (ii) Investment
Property, (iii) Letter-of-Credit Rights and
(iv) Electronic Chattel Paper (other than with respect to
Deposit Accounts containing less than $500,000 or such other
Collateral with a value of less than $1,000,000, with respect to
which no such action shall be required, unless requested by the
Secured Party).
(b) Change in Corporate Structure
or Location . Not, without providing 30 days prior written
notice to the Secured Party, change its registered legal name,
change its state of organization, be party to a merger or
consolidation or change its organizational existence.
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(c) Filing of Financing
Statements, Notices, etc . In each case except as otherwise
contemplated or not required by the Loan Documents, including
Section 4(a)(iii) hereof and Sections 6.15 and 6.17 of the
Credit Agreement, promptly execute and deliver to the Secured Party
such agreements, assignments or instruments (including affidavits,
notices, reaffirmations and amendments and restatements of existing
documents) as the Secured Party may reasonably request and do all
such other things promptly after notice to such Obligor that the
Secured Party has reasonably determined that such action is
necessary or appropriate (i) to assure to the Secured Party
its security interests hereunder, including (A) such
instruments as the Secured Party may from time to time reasonably
request in order to perfect and maintain the security interests
granted hereunder in accordance with the UCC, (B) with regard
to Copyrights that constitute Collateral, a Notice of Grant of
Security Interest in Copyrights in the form of
Schedule 4(c)(i) , (C) with regard to Patents that
constitute Collateral, a Notice of Grant of Security Interest in
Patents for filing with the United States Patent and Trademark
Office in the form of Schedule 4(c)(ii) attached hereto
and (D) with regard to Trademarks that constitute Collateral,
a Notice of Grant of Security Interest in Trademarks for filing
with the United States Patent and Trademark Office in the form of
Schedule 4(c)(iii) attached hereto, (ii) to
consummate the transactions contemplated hereby and (iii) to
otherwise protect and assure the Secured Party of its rights and
interests hereunder. Each Obligor hereby irrevocably makes,
constitutes and appoints the Secured Party, its nominee or any
other person whom the Secured Party may designate, as such
Obligor’s attorney in fact with full power and for the
limited purpose to sign in the name of such Obligor any such
financing statements, or amendments and supplements to financing
statements, renewal financing statements, notices or any similar
documents which in the Secured Party’s reasonable discretion
would be necessary, or appropriate in order to perfect and maintain
perfection of the security interests granted hereunder, such power,
being coupled with an interest, being and remaining irrevocable
until such time as the Secured Obligations arising under the Loan
Documents have been paid in full (other than those Obligations
which survive pursuant to Section 11.13 of the Credit
Agreement), and the Commitments have expired or been terminated.
Each Obligor hereby authorizes the Secured Party to prepare and
file such financing statements (including continuation statements)
or amendments thereof or supplements thereto or other instruments
as the Secured Party may reasonably from time to time deem
necessary or appropriate in order to perfect and maintain the
security interests granted hereunder in accordance with the UCC
(including authorization to describe the Collateral as “all
personal property” or “all assets”).
(d) Collateral Held by
Warehouseman, Bailee, etc. If any Collateral (other than
(i) motor vehicles subject to a certificate of title or
(ii) any tangible personal property located at a Temporary
Staging Site) with a value in excess of $2,000,000 is at any time
in the possession or control of a warehouseman, bailee or any agent
or processor of such Obligor and the Secured Party so requests such
Obligor in writing (i) notify such Person in writing of the
Secured Party’s security interest therein, (ii) instruct
such Person to hold all such Collateral for the Secured
Party’s account and subject to the Secured Party’s
instructions and (iii) use commercially reasonable efforts to
obtain a written acknowledgment from such Person that it is holding
such Collateral for the benefit of the Secured Party. If such
Obligor, using commercially reasonable efforts for a period of 45
days is unable to obtain any of the letters, consents and waivers
requested by Secured Party from any warehouseman, bailee, agent or
processor, such Obligor shall have no further obligation to pursue
such acknowledgement from such Person.
(e) Treatment of Accounts .
Not grant or extend the time for payment of any Account, or
compromise or settle any Account for less than the full amount
thereof, or release any person or property, in whole or in part,
from payment thereof, or allow any credit or discount thereon, in
each case other than as is normal and customary in the ordinary
course of an Obligor’s business.
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(f) Commercial Tort Claims;
Notice of Litigation . (i) Within 120 days after the close
of each fiscal year of the Borrower, forward to the Secured Party
any updates to Schedule 2(d) necessary to ensure that any
and all Commercial Tort Claims by or in favor of such Obligor
seeking damages in excess of $1,000,000 are listed thereon and
(ii) execute and deliver such statements, documents and
notices and do and cause to be done all such things as may
reasonably be required by the Secured Party, or required by Law to
create, preserve, perfect and maintain the Secured Party’s
security interest in any such Commercial Tort Claims.
(g) Books and Records . Mark
its books and records (and shall cause the issuer of the Pledged
Equity of such Obligor to mark its books and records) to reflect
the security interest in Pledged Equity granted pursuant to this
Agreement.
(h) Nature of Collateral .
Except in the ordinary course of such Obligor’s business, at
all times maintain the Collateral as personal property and not
affix any of the Collateral having a value in excess of $1,000,000
to any Real Property in a manner which would change its nature from
personal property to Real Property or a Fixture to Real Property,
unless such Obligor shall then be in compliance with the provisions
of the Loan Documents in respect of the granting and maintenance of
a perfected Lien on such Fixture or Real Property.
(i) Issuance or Acquisition of
Equity Interest . Not without executing and delivering, or
causing to be executed and delivered, to the Secured Party such
agreements, documents and instruments as the Secured Party may
reasonably require in order to establish and perfect the Secured
Party’s security interest granted hereunder in such Pledged
Equity, issue or acquire any Pledged Equity consisting of an
interest in a partnership or a limited liability company that
(i) is dealt in or traded on a securities exchange or in a
securities market, (ii) by its terms expressly provides that
it is a Security governed by Article 8 of the UCC, (iii) is an
investment company security, (iv) is held in a Securities
Account or (v) constitutes a Security or a Financial Asset. By
not later than the Joint Venture Effective Date, the Obligors shall
cause all Pledged Equity to be certificated and treated as a
Security governed by Article 8 of the UCC and shall deliver such
certificates to the Secured Party along with executed stock powers
therefor, in the form of Exhibit 4(a) .
(j) Intellectual Property .
Other than with respect to any such property that is not
Collateral,
(i) not do any act or knowingly omit
to do any act whereby any material Copyright is reasonably likely
become invalidated and (A) not do any act, or knowingly omit
to do any act, whereby any material Copyright is reasonably likely
to become injected into the public domain; (B) notify the
Secured Party promptly if it knows that any material Copyright has
become injected into the public domain or of any materially adverse
determination or development (including, without limitation, the
institution of, or any such determination or development in, any
court or tribunal in the United States or any other country)
regarding an Obligor’s ownership of any such Copyright or its
validity; (C) take all necessary steps as it shall deem
reasonably appropriate under the circumstances, to maintain and
pursue each application (and to obtain the relevant registration)
of each material Copyright owned by an Obligor and to maintain each
registration of each material Copyright owned by an Obligor
including, without limitation, filing of applications for renewal
where necessary; and (D) promptly notify the Secured Party of
any material infringement of any material Copyright of an Obligor
of which it obtains knowledge and take such actions as it shall
reasonably deem appropriate under the circumstances to protect such
Copyright, including, where appropriate, the bringing of suit for
infringement, seeking injunctive relief and seeking to recover any
and all damages for such infringements;
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(ii) not make any assignment or
agreement in conflict with the security interest in the Copyrights
of each Obligor hereunder (except as permitted by the Credit
Agreement);
(iii)(A) continue to use each
material Trademark on each and every trademark class of goods
applicable to its current line as reflected in its current
catalogs, brochures and price lists in order to maintain such
material Trademark in full force free from any claim of abandonment
for non-use, (B) maintain in all material respects as in the
past the quality of products and services offered under such
material Trademark, (C) employ such material Trademark with
the appropriate notice of registration, if applicable, (D) not
adopt or use any mark that is confusingly similar or a colorable
imitation of such material Trademark unless the Secured Party, for
the ratable benefit of the holders of the Secured Obligations,
shall obtain a perfected security interest in such mark pursuant to
this Agreement, and (E) not (and not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act
whereby any such material Trademark is reasonably likely to become
invalidated;
(iv) not do any act, or omit to do
any act, whereby any material Patent is reasonably likely to become
abandoned or dedicated.
(v) notify the Secured Party and the
holders of the Secured Obligations promptly if it knows that any
application or registration relating to any material Patent or
material Trademark is reasonably likely to become abandoned or
dedicated, or of any materially adverse determination or
development (including, without limitation, the institution of, or
any such determination or development in, any proceeding in the
United States Patent and Trademark Office or any court or tribunal
in any country) regarding such Obligor’s ownership of any
material Patent or material Trademark or its right to register the
same or to keep and maintain the same.
(vi) take all reasonable and
necessary steps, including, without limitation, in any proceeding
before the United States Patent and Trademark Office, or any
similar office or agency in any other country or any political
subdivision thereof, to maintain and pursue each application (and
to obtain the relevant registration) and to maintain each
registration of each material Patent and material Trademark,
including, without limitation, filing of applications for renewal,
affidavits of use and affidavits of incontestability.
(vii) promptly notify the Secured
Party and the holders of the Secured Obligations after it acquires
knowledge that any material Patent or material Trademark included
in the Collateral is infringed, misappropriated or diluted by a
third party and promptly take such actions as it shall reasonably
deem appropriate under the circumstances to protect such Patent or
Trademark, including if reasonably appropriate, suing for
infringement, misappropriation or dilution or seeking injunctive or
other appropriate relief and seeking to recover any and all damages
for such infringement, misappropriation or dilution; and
(viii) not make any assignment or
agreement in conflict with the security interest in the material
Patents or material Trademarks of each Obligor hereunder (except as
permitted by the Credit Agreement).
9
Notwithstanding the foregoing, any
Obligor may (and no breach or default under this Section 4(j)
shall occur or be deemed to exist if such Obligor), in its
reasonable business judgment, elect not to, or fail to maintain,
pursue, preserve or protect any Copyright, Patent or Trademark
which is not material to its businesses or which is not
Collateral.
5. Advances . On failure of
any Obligor to perform any of the covenants and agreements
contained herein, the Secured Party may, upon reasonably prior
notice to such Obligor and expiration of all applicable grace or
cure periods for such failure under the Loan Documents (unless such
delay attributable to the expiration of such grace or cure periods
would result in material diminution to the value of the
Collateral), at its sole option and in its sole discretion, perform
the same and in so doing may expend such sums as the Secured Party
may reasonably deem advisable in the performance thereof,
including, without limitation, the payment of any insurance
premiums, the payment of any taxes, a payment to obtain a release
of a Lien, reasonable expenditures made in defending against any
adverse claim and all other reasonable expenditures which the
Secured Party may make for the protection of the security hereof or
which may be compelled to make by operation of Law. All such
reasonable sums and amounts so expended shall be repayable by the
Obligors on a joint and several basis promptly upon timely notice
thereof and demand therefor, shall constitute additional Secured
Obligations and shall bear interest from the date said amounts are
expended at the Default Rate. No such performance of any covenant
or agreement by the Secured Party on behalf of any Obligor, and no
such advance or expenditure therefor, shall relieve the Obligors of
any Default or Event of Default except upon cure of such Default or
Event of Default and full repayment of such advance or expenditure
and all accrued interest thereon. The Secured Party may make any
payment hereby authorized in accordance with any bill, statement or
estimate procured from the appropriate public office or holder of
the claim to be discharged without inquiry into the accuracy of
such bill, statement or estimate or into the validity of any tax
assessment, sale, forfeiture, tax lien, title or claim except to
the extent such payment is being contested in good faith by an
Obligor in appropriate proceedings and against which adequate
reserves are being maintained in accordance with GAAP.
6. Remedies .
(a) General Remedies . Upon
the occurrence of an Event of Default and during continuation
thereof, the Secured Party shall have, in addition to the rights
and remedies provided herein, in the Loan Documents, in any other
documents relating to the Secured Obligations, or by Law
(including, but not limited to, levy of attachment, garnishment and
the rights and remedies set forth in the UCC of the jurisdiction
applicable to the affected Collateral), the rights and remedies of
a secured party under the UCC (regardless of whether the UCC is the
law of the jurisdiction where the rights and remedies are asserted
and regardless of whether the UCC applies to the affected
Collateral), and further, the Secured Party may, with or without
judicial process or the aid and assistance of others, to the extent
permitted by applicable Law, (i) enter on any premises on
which any of the Collateral may be located and, without resistance
or interference by the Obligors, take possession of the Collateral,
(ii) dispose of any Collateral on any such premises,
(iii) require the Obligors to assemble and make available to
the Secured Party at the expense of the Obligors any Collateral at
any place and time designated by the Secured Party which is
reasonably convenient to both parties, (iv) remove any
Collateral from any such premises for the purpose of effecting sale
or other disposition thereof, and/or (v) without demand and
without advertisement, notice (except as expressly provided below),
hearing or process of law, all of which each of the Obligors hereby
waives to the fullest extent permitted by Law, at any place and
time or times, sell and deliver any or all Collateral held by or
for it at public or private sale (which in the case of a private
sale of Pledged Equity, may be to a restricted group of purchasers
who will be obligated to agree, among other things, to acquire such
securities for their own
