EXHIBIT 4.2(c)
EXECUTION COPY
TELEX COMMUNICATIONS HOLDINGS, INC.,
TELEX COMMUNICATIONS INTERMEDIATE HOLDINGS, LLC,
TELEX COMMUNICATIONS, INC.,
TELEX COMMUNICATIONS INTERNATIONAL, LTD.,
(referred to herein individually as "GRANTOR" and collectively as "GRANTORS")
AND
GENERAL ELECTRIC CAPITAL CORPORATION,
AS AGENT
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SECURITY AGREEMENT
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TABLE OF CONTENTS
PAGE
1. DEFINED TERMS.............................................................................. 1
2. GRANT OF LIEN.............................................................................. 2
3. AGENT'S AND LENDERS' RIGHTS: LIMITATIONS ON AGENT'S AND LENDERS' OBLIGATIONS.............. 3
4. REPRESENTATIONS AND WARRANTIES............................................................. 4
5. COVENANTS.................................................................................. 6
6. BANK ACCOUNTS; COLLECTION OF ACCOUNTS AND PAYMENTS......................................... 10
7. AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT.................................................... 12
8. REMEDIES: RIGHTS UPON DEFAULT............................................................. 12
9. GRANT OF LICENSE TO USE INTELLECTUAL PROPERTY COLLATERAL................................... 14
10. LIMITATION ON AGENT'S AND LENDERS' DUTY IN RESPECT OF COLLATERAL........................... 15
11. REINSTATEMENT.............................................................................. 15
12. SURETYSHIP WAIVERS BY GRANTOR; OBLIGATIONS ABSOLUTE........................................ 15
13. EXPENSES AND ATTORNEY'S FEES............................................................... 16
14. NOTICES.................................................................................... 16
15. SEVERABILITY............................................................................... 17
16. NO WAIVER; CUMULATIVE REMEDIES............................................................. 17
17. LIMITATION BY LAW.......................................................................... 17
18. TERMINATION OF THIS AGREEMENT.............................................................. 18
19. SUCCESSORS AND ASSIGNS..................................................................... 18
20. COUNTERPARTS............................................................................... 18
21. GOVERNING LAW.............................................................................. 18
22. WAIVER OF JURY TRIAL....................................................................... 19
23. HEADINGS................................................................................... 19
24. NO STRICT CONSTRUCTION..................................................................... 19
25. ADVICE OF COUNSEL.......................................................................... 20
26. BENEFIT OF LENDERS......................................................................... 20
27. INTERCREDITOR AGREEMENT.................................................................... 20
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SECURITY AGREEMENT
THIS SECURITY AGREEMENT, dated as of November 19, 2003 (this "Agreement"), by
and among TELEX COMMUNICATIONS holdingS, INC., a Delaware corporation
("Holdings"), Telex Communications Intermediate Holdings, LLC, a Delaware
limited liability company ("Parent"), telex communications, inc., a Delaware
corporation ("Borrower"), telex communications international, ltd., a Delaware
corporation ("Telex International", and together with Holdings, Parent and
Borrower, each referred to herein individually as a "Grantor" and collectively
as "Grantors"), and GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware
corporation, in its capacity as Agent (in such capacity, "Agent") for itself and
Lenders from time to time party to the Credit Agreement as defined below
("Lenders").
WHEREAS:
(A) Pursuant to that certain Credit Agreement dated as of the date hereof
(including all annexes, exhibits and schedules thereto, and as from
time to time amended, restated, supplemented or otherwise modified, the
"Credit Agreement") by and among Grantors, Agent and Lenders, the
Lenders have agreed to make available to Borrower, upon the terms and
conditions thereof, a certain revolving credit facility;
(B) Borrower wishes to borrow certain Loans and cause certain Letters of
Credit to be issued (as such terms are defined in the Credit
Agreement);
(C) Parent is a wholly-owned subsidiary of Holdings, Borrower is a
wholly-owned subsidiary of Parent, Telex International is a
wholly-owned subsidiary of Borrower, Grantors engage in business
transactions with one another, and Holdings, Parent and Telex
International will benefit from the Loans and other financial
accommodations made under the Credit Agreement; and
(D) in order to induce Agent and Lenders to make the Loans and to incur the
Letter of Credit Obligations (as defined in the Credit Agreement) to be
made and incurred by Lenders as provided for in the Credit Agreement,
each Grantor has agreed to grant a continuing Lien on the Collateral
(as hereinafter defined) to secure the Obligations.
NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINED TERMS
(a) All capitalized terms used but not otherwise defined herein
have the meanings given to them in the Credit Agreement or in
Annex A thereto. All other terms contained in this Agreement,
unless the context indicates otherwise, have the meanings
provided for by the Code to the extent the same are used or
defined therein.
(b) "Uniform Commercial Code jurisdiction" means any jurisdiction
that has adopted all or substantially all of Article 9 as
contained in the 2000 Official Text of the Uniform Commercial
Code, as recommended by the National Conference of
Commissioners on Uniform State Laws and the American Law
Institute, together with any subsequent amendments or
modifications to the Official Text.
2. GRANT OF LIEN
(a) To secure the prompt and complete payment, performance and
observance of all of the Obligations and all renewals,
extensions, restructurings and refinancings thereof, and all
obligations, liabilities, and indebtedness of Grantors arising
under this Agreement, each Grantor hereby grants, assigns,
conveys, mortgages, pledges, hypothecates and transfers to
Agent, for itself and the benefit of Lenders, a Lien upon all
of its right, title and interest in, to and under all personal
property and other assets, whether now owned by or owing to,
or hereafter acquired by or arising in favor of such Grantor
(including under any trade names, styles or derivations
thereof), and whether owned or consigned by or to, or leased
from or to, such Grantor, and regardless of where located (all
of which being hereinafter collectively referred to as the
"Collateral"), including:
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Documents;
(iv) all General Intangibles (including all Payment
Intangibles (as defined in the Code), trademarks,
patents, copyrights, other intellectual property and
licenses thereof, payment intangibles and Software);
(v) all Goods (including Inventory, Equipment and
Fixtures);
(vi) all Instruments;
(vii) all Investment Property;
(viii) all Deposit Accounts (as defined in the Code) of such
Grantor, including all blocked accounts and all other
bank accounts and all deposits therein;
(ix) all money, cash or Cash Equivalents of such Grantor;
(x) all Supporting Obligations (as defined in the Code)
and Letter-of-Credit Rights (as defined in the Code)
of such Grantor;
(xi) all Intercompany Notes;
(xii) the following commercial tort claims: none; and
(xiii) to the extent not otherwise included, all Proceeds
(as defined in the Code), tort claims, insurance
claims and other rights to payments not otherwise
included in the foregoing and products of the
foregoing and all accessions to, substitutions and
replacements for, and income, benefits, rents and
profits of, each of the foregoing and, to the extent
related to any of the foregoing, all books,
correspondence, credit files, records, invoices, and
other papers (including without limitation all tapes,
cards, computer runs and other papers and documents
in the possession or under the control of such
Grantor or any computer bureau or service company
from time to time acting for such Grantor).
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(b) In addition, to secure the prompt and complete payment,
performance and observance of the Obligations, all renewals,
extensions, restructurings and refinancings thereof and all
obligations, liabilities and indebtedness of Grantors arising
under this Agreement, and in order to induce Agent and Lenders
as aforesaid, each Grantor hereby grants to Agent, for itself
and the benefit of Lenders, a right of setoff against the
property of such Grantor held by Agent or any Lender,
consisting of property described above in Section 2(a) now or
hereafter in the possession or custody of or in transit to
Agent or any Lender, for any purpose, including safekeeping,
collection or pledge, for the account of such Grantor, or as
to which such Grantor may have any right or power.
(c) Notwithstanding the foregoing, property now or hereafter
constituting collateral pledged under any Pledge Agreement,
all equity interests in any Subsidiary of each Grantor and all
equity interests in DRF 12000 Portland, LLC shall not
constitute Collateral under this Agreement and, in the case of
collateral pledged under any Pledge Agreement, shall be
governed by such Pledge Agreement.
3. AGENT'S AND LENDERS' RIGHTS: LIMITATIONS ON AGENT'S AND LENDERS'
OBLIGATIONS
(a) It is expressly agreed by each Grantor that, anything herein
or in any other Loan Document to the contrary notwithstanding,
each Grantor shall remain liable under each of its respective
Contractual Obligations, including all Licenses, to observe
and perform all the conditions and obligations to be observed
and performed by it thereunder. Neither Agent nor any Lender
shall have any obligation or liability under any Contractual
Obligation by reason of or arising out of this Agreement or
any other Loan Document or the granting herein of a Lien
thereon or the receipt by Agent or any Lender of any payment
relating to any Contractual Obligation pursuant hereto.
Neither Agent nor any Lender shall be required or obligated in
any manner to perform or fulfill any of the obligations of any
Grantor under or pursuant to any Contractual Obligation, or to
make any payment, or to make any inquiry as to the nature or
the sufficiency of any payment received by it or the
sufficiency of any performance by any party under any
Contractual Obligation, or to present or file any claims, or
to take any action to collect or enforce any performance or
the payment of any amounts which may have been assigned to it
or to which it may be entitled at any time or times.
(b) Agent may at any time after an Event of Default has occurred
and is continuing (or if any rights of set-off (other than
set-offs against an Account arising under the Contract giving
rise to the same Account) or contra accounts may be asserted
with respect to the following), without prior notice to any
Grantor, notify each Grantor's Account Debtors and all other
Persons obligated on any of the Collateral that Agent has a
security interest therein, and that payments shall be made
directly to Agent, for itself and the benefit of Lenders. Upon
the request of Agent, each Grantor shall so notify its Account
Debtors and other Persons obligated on the Collateral. Once
any such notice has been given to any Account Debtor or other
Person obligated on the Collateral, none of the Grantors shall
give any contrary instructions to such Account Debtor or other
Person without Agent's prior written consent.
(c) Agent may at any time in Agent's own name, in the name of a
nominee of Agent or in the name of any Grantor communicate (by
mail, telephone, facsimile or otherwise) with Account Debtors,
parties to Contractual Obligations and obligors in respect of
Instruments to verify with such Persons, to Agent's
satisfaction, the existence, amount,
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terms of, and any other matter relating to, Accounts,
Instruments, Chattel Paper and/or payment intangibles,
provided that Agent shall use commercially reasonable efforts
to provide concurrent notice of such communication to
Borrower. If an Event of Default shall have occurred and be
continuing, each Grantor, at its own expense, shall cause the
independent certified public accountants then engaged by such
Grantor to prepare and deliver to Agent and each Lender at any
time and from time to time promptly upon Agent's request the
following reports with respect to such Grantor: (i) a
reconciliation of all Accounts; (ii) an aging of all Accounts;
(iii) trial balances; and (iv) a test verification of such
Accounts as Agent may request. Each Grantor, at its own
expense, shall deliver to Agent the results of each physical
verification, if any, which such Grantor may in its discretion
have made, or caused any other Person to have made on its
behalf, of all or any portion of its Inventory.
4. REPRESENTATIONS AND WARRANTIES
Each Grantor, jointly and severally, represents and warrants that:
(a) Each Grantor has rights in and the power to transfer each item
of the Collateral upon which it purports to ▇▇▇▇▇ ▇ ▇▇▇▇
hereunder free and clear of any and all Liens other than
Permitted Encumbrances.
(b) No effective security agreement, financing statement,
equivalent security or Lien instrument or continuation
statement covering all or any part of the Collateral (other
than those instruments and statements Agent is authorized to
terminate and release in full upon the initial funding of the
Loans) is on file or of record in any public office, except
such as may have been filed (i) by any Grantor in favor of
Agent pursuant to this Agreement or the other Loan Documents
and (ii) in connection with any other Permitted Encumbrances.
(c) This Agreement is effective to create a valid and continuing
Lien on and, upon the filing of the appropriate financing
statements in the filing offices listed on Schedule I hereto
or the entering into of three-party control agreements, as
applicable, a perfected Lien in favor of Agent, for itself and
the benefit of Lenders, on the Collateral with respect to
which a Lien may be perfected by filing pursuant to the Code.
Such Lien is prior to all other Liens, except Permitted
Encumbrances that would be prior to Liens in favor of Agent
for the benefit of Agent and Lenders as a matter of law, and
is enforceable as such as against any and all creditors of and
purchasers from any Grantor (other than purchasers and lessees
of Inventory in the ordinary course of business and
non-exclusive licensees of General Intangibles in the ordinary
course of business). All action by each of the Grantors
necessary or desirable to protect and perfect such Lien on
each item of the Collateral has been duly taken.
(d) Schedule II hereto lists all Instruments, Documents, Letter of
Credit Rights and Chattel Paper (including any Intercompany
Notes) of each Grantor. All actions by each Grantor necessary
or desirable to protect and perfect the Lien of Agent on each
item set forth on Schedule II (including the delivery of all
originals thereof to Agent and the legending of all Chattel
Paper as required by Section 5(b) hereof) have been duly
taken. The Lien of Agent, for the benefit of Agent and
Lenders, on the Collateral listed on Schedule II hereto is
prior to all other Liens, except Permitted Encumbrances that
would be prior to the Liens in favor of Agent as a matter of
law, and is enforceable as such against any and all creditors
of and purchasers from each Grantor.
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(e) Each Grantor's name as it appears in official filings in the
state of its incorporation or other organization, all prior
names of each Grantor used during the past five years, as they
appeared from time to time in official filings in the state of
its incorporation or other organization, the type of entity of
each Grantor (including corporation, partnership, limited
partnership or limited liability company), organizational
identification number issued by each Grantor's state of
incorporation or organization or a statement that no such
number has been issued, each Grantor's state of organization
or incorporation, the mailing address of each Grantor as of
the date hereof, the location of each Grantor's chief
executive office, principal place of business, other offices,
all warehouses and premises where Collateral is stored or
located, and the locations of each Grantor's books and records
concerning the Collateral are set forth on Schedule IIIA,
Schedule IIIB, Schedule IIIC and Schedule IIID, respectively,
hereto. Each Grantor is a registered organization and has
only one state of incorporation or organization.
(f) With respect to the Accounts, except as specifically disclosed
in writing to Agent, (i) they represent bona fide sales of
Inventory or rendering of services to Account Debtors in the
ordinary course of each Grantor's business and are not
evidenced by a judgment, Instrument or Chattel Paper; (ii)
there are no set-offs, claims or disputes existing or asserted
with respect thereto and none of the Grantors has made any
agreement with any of its Account Debtors for any extension of
time for the payment thereof, any compromise or settlement for
less than the full amount thereof, any release of any of its
Account Debtors from liability therefor, or any deduction
therefrom except a discount or allowance allowed by any
Grantor in the ordinary course of its business for prompt
payment and disclosed to Agent; (iii) to each Grantor's
knowledge, there are no facts, events or occurrences which in
any way impair the validity or enforceability thereof or could
reasonably be expected to reduce the amount payable thereunder
as shown on such Grantor's books and records and any invoices,
statements or other collateral report delivered to Agent and
Lenders with respect thereto; (iv) none of the Grantors has
received any notice of proceedings or actions which are
threatened or pending against any of its Account Debtors which
might result in any adverse change in such Account Debtor's
financial condition; (v) none of the Grantors has knowledge
that any of its Account Debtors is unable generally to pay its
debts as they become due; and (vi) they constitute the legally
valid and binding obligation of the applicable Account
Debtors. Further, with respect to the Accounts (x) the amounts
shown on all invoices, statements or other collateral reports
which may be delivered to Agent with respect thereto are
actually owing to such Grantor as indicated thereon and are
not in any way contingent, except for such contingencies as
may exist under trade custom and practice; (y) no payments
have been or shall be made thereon except payments immediately
delivered to the applicable blocked accounts or Agent as
required pursuant to the terms of Annex C to the Credit
Agreement; and (z) to each Grantor's knowledge, all of its
Account Debtors have the capacity to contract.
(g) With respect to any Inventory, (i) such Inventory is located
at one of the applicable Grantor's locations set forth on
Schedule IIIA, Schedule IIIB, Schedule IIIC or Schedule IIID
hereto, as applicable, (ii) no Inventory is now, or shall at
any time or times hereafter be stored at any other location
without prior notice to Agent, and the applicable Grantor will
concurrently therewith obtain, to the extent required by the
Credit Agreement, bailee, landlord and mortgagee agreements,
(iii) each Grantor has good, indefeasible and merchantable
title to its Inventory and such Inventory is not subject to
any Lien or security interest or document whatsoever except
for the Lien granted to Agent, for the benefit of Agent and
Lenders, and except for Permitted Encumbrances, (iv) except as
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specifically disclosed to Agent, such Inventory is of good and
merchantable quality, free from any defects, ordinary wear and
tear excepted, (v) such Inventory is not subject to any
licensing, patent, royalty, trademark, trade name or copyright
agreements with any third parties that would require any
consent of any third party upon sale or other disposition of
that Inventory or the payment of any monies to any third party
upon such sale or other disposition, and (vi) the completion
of manufacture, sale or other disposition of such Inventory by
Agent following an Event of Default shall not require the
consent of any Person and shall not constitute a breach or
default under any contract or agreement to which any Grantor
is a party or to which such property is subject.
(h) Schedule IVA sets forth under the name of each Grantor a
complete and correct list of all issued Patents, registered
Trademarks and registered Copyrights, and pending applications
for the foregoing, owned by such Grantor on the date hereof;
and all registrations listed in Schedule IVA are valid and in
full force and effect. None of the Grantors has any interest
in, or title to, any Patent, Trademark or Copyright except as
set forth in Schedule IVA hereto. This Agreement is effective
to create a valid and continuing Lien on and, upon filing of
appropriate financing statements in the filing offices listed
on Schedule I hereto and of the Copyright Security Agreements
with the United States Copyright Office and filing of the
Patent Security Agreements and the Trademark Security
Agreements with the United States Patent and Trademark Office,
perfected Liens in favor of Agent on each Grantor' s Patents,
Trademarks and Copyrights and such perfected Liens are
enforceable as such as against any and all creditors of and
purchasers from any Grantor. Upon filing of the Copyright
Security Agreements with the United States Copyright Office
and filing of the Patent Security Agreements and the Trademark
Security Agreements with the United States Patent and
Trademark Office and the filing of appropriate financing
statements listed on Schedule I hereto, all action necessary
or desirable to protect and perfect Agent's Lien on each
Grantor's Patents, Trademarks or Copyrights shall have been
duly taken.
Schedule IVB sets forth a complete and correct list of all
licenses and other user agreements included in the
Intellectual Property on the date hereof.
(i) All titled motor vehicles owned by each Grantor are listed
under the name of such Grantor on Schedule V hereto, by make,
model, model year and vehicle identification number ("VIN").
5. COVENANTS
Without limiting any Grantor's covenants and agreements contained in
the Credit Agreement and other Loan Documents, each Grantor covenants
and agrees with Agent, for the benefit of Agent and Lenders, that from
and after the date of this Agreement and until the Termination Date:
(a) Further Assurances; Pledge of Instruments; Chattel Paper.
(i) At any time and from time to time, upon the written
request of Agent and at the sole expense of such
Grantor, such Grantor shall promptly and duly execute
and deliver any and all such further instruments and
documents and take such further actions as Agent may
deem desirable to obtain the full benefits of this
Agreement and of the rights and powers herein
granted, including (A) securing all consents and
approvals necessary or appropriate for the assignment
to or for the benefit of Agent of any Contractual
Obligation, including any License, held by such
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Grantor and to enforce the security interests granted
hereunder; and (B) filing any financing or
continuation statements under the Code with respect
to the Liens granted hereunder or under any other
Loan Document as to those jurisdictions that are not
Uniform Commercial Code jurisdictions.
(ii) Unless Agent shall otherwise consent in writing
(which consent may be revoked), such Grantor shall
deliver to Agent all Collateral consisting of
negotiable Documents, certificated securities,
Chattel Paper and Instruments (including Intercompany
Notes) (in each case, accompanied by stock powers,
allonges or other instruments of transfer executed in
blank) promptly after such Credit Party receives the
same. Upon acquiring any negotiable Documents,
certificated securities, Chattel Paper or Instruments
(including any Intercompany Notes), such Grantor will
provide prompt written notice thereof to Agent.
(iii) Such Grantor shall, in accordance with the terms of
the Credit Agreement, obtain waivers or
subordinations of Liens from landlords, bailees and
mortgagees, and such Grantor shall in all instances
obtain signed acknowledgements of Agent's Liens from
bailees having possession of such Grantor's Goods
that they hold for the benefit of Agent.
(iv) To the extent required by Agent, such Grantor shall
obtain authenticated control letters in form and
substance satisfactory to Agent from each issuer of
uncertificated securities, securities intermediary,
or commodities intermediary issuing or holding any
financial assets or commodities to or for such
Grantor. Agent shall not terminate such Grantor's
access to any such financial assets or commodities
except during the continuation of an Event of
Default.
(v) As required by Section 6 of this Agreement, and in
accordance with Section 2.10 of the Credit Agreement,
such Grantor shall obtain a blocked account, lockbox
or similar agreement with each bank or financial
institution holding a Deposit Account for such
Grantor.
(vi) If such Grantor is or becomes the beneficiary of a
letter of credit, such Grantor shall promptly, and in
any event within two (2) Business Days after becoming
a beneficiary, notify Agent thereof and enter into a
tri-party agreement with Agent and the issuer and/or
confirmation bank with respect to Letter-of-Credit
Rights assigning such Letter-of-Credit Rights to
Agent and directing all payments thereunder to the
Agent's account identified in Section 1.4 of the
Credit Agreement, all in form and substance
reasonably satisfactory to Agent.
(vii) Such Grantor shall take all steps necessary to grant
Agent control of all electronic Chattel Paper in
accordance with the Code and all "transferable
records" as defined in each of the Uniform Electronic
Transactions Act and the Electronic Signatures in
Global and National Commerce Act.
(viii) Such Grantor hereby irrevocably authorizes Agent at
any time and from time to time to file in any filing
office in any Uniform Commercial Code jurisdiction
any initial financing statements and amendments
thereto that (a) indicate the Collateral (i) as all
assets or personal property of such Grantor or words
of similar effect, regardless of whether any
particular asset comprised in the Collateral falls
within the scope of Article 9 of the Code or such
jurisdiction, or
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(ii) as being of an equal or lesser scope or with
greater detail, and (b) contain any other information
required by part 5 of Article 9 of the Code for the
sufficiency or filing office acceptance of any
financing statement or amendment, including (i)
whether such Grantor is an organization, the type of
organization and any organization identification
number issued to such Grantor, and (ii) in the case
of a financing statement filed as a fixture filing or
indicating Collateral as as-extracted collateral or
timber to be cut, a sufficient description of real
property to which the Collateral relates. Such
Grantor agrees to furnish any such information to
Agent promptly upon request. Such Grantor also hereby
ratifies its authorization for Agent to have filed in
any Uniform Commercial Code jurisdiction any initial
financing statements or amendments thereto if filed
prior to the date hereof.
(ix) Such Grantor shall promptly, and in any event within
two (2) Business Days after the same is acquired by
it, notify Agent of any Commercial Tort Claim (as
defined in the Code) acquired by it and unless
otherwise consented by Agent (which consent may be
revoked), such Grantor shall enter into a supplement
to this Agreement, granting to Agent a Lien in such
commercial tort claim.
(b) Maintenance of Records. Such Grantor shall keep and maintain,
at its own cost and expense, satisfactory and complete records
of the Collateral, including a record of any and all payments
received and any and all credits granted with respect to the
Collateral and all other dealings with the Collateral. Such
Grantor shall ▇▇▇▇ its books and records pertaining to the
Collateral to evidence this Agreement and the Liens granted
hereby. If any Grantor retains possession of any Chattel Paper
or Instruments (including Intercompany Notes) with Agent's
consent, such Chattel Paper and Instruments (including
Intercompany Notes) shall be marked with the following legend:
"This writing and the obligations evidenced or secured hereby
are subject to the security interest of General Electric
Capital Corporation, as Agent, for the benefit of Agent and
certain Lenders."
(c) Covenants Regarding Patent, Trademark and Copyright
Collateral.
(i) Such Grantor shall notify Agent immediately if it
knows or has reason to know that any application or
registration relating to any Patent, Trademark or
Copyright (now or hereafter existing) may become
abandoned or dedicated, or of any adverse
determination or development (including the
institution of, or any such determination or
development in, any proceeding in the United States
Patent and Trademark Office, the United States
Copyright Office or any court) regarding such
Grantor's ownership of any Patent, Trademark or
Copyright, its right to register the same, or to keep
and maintain the same.
(ii) In no event shall such Grantor, either directly or
through any agent, employee, licensee or designee,
file an application for the registration of any
Patent, Trademark or Copyright with the United States
Patent and Trademark Office, the United States
Copyright Office or any similar office or agency
without giving Agent prior written notice thereof,
and, upon request of Agent, such Grantor shall
execute and deliver any and all Patent Security
Agreements, Copyright Security Agreements or
Trademark Security Agreements as Agent may request to
evidence Agent's Lien on such Patent, Trademark or
Copyright, and the General Intangibles of such
Grantor relating thereto or represented thereby.
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(iii) Such Grantor shall take all actions necessary or
requested by Agent to maintain and pursue (and not
abandon) each application, to obtain the relevant
registration and to maintain the registration of each
of the Patents, Trademarks and Copyrights (now or
hereafter existing), including the filing of
applications for renewal, affidavits of use,
affidavits of noncontestability and opposition and
interference and cancellation proceedings, unless
such Grantor shall determine that such Patent,
Trademark or Copyright is not material to the conduct
of its business.
(iv) In the event that any of the Patent, Trademark or
Copyright Collateral is infringed upon, or
misappropriated or diluted by a third party, each
Grantor shall comply with Section 5(a)(ix) of this
Agreement. Such Grantor shall, unless it shall
reasonably determine that such infringement,
misappropriation or dilution of Patent, Trademark or
Copyright Collateral is in no way material to the
conduct of its business or operations, promptly ▇▇▇
for infringement, misappropriation or dilution and to
recover any and all damages for such infringement,
misappropriation or dilution, and shall take such
other actions as Agent shall deem appropriate under
the circumstances to protect such Patent, Trademark
or Copyright Collateral.
(d) Indemnification. In any suit, proceeding or action brought by
Agent or any Lender relating to any Collateral for any sum
owing with respect thereto or to enforce any rights or claims
with respect thereto, such Grantor will save, indemnify and
keep Agent and Lenders harmless from and against all expense
(including reasonable attorneys' fees and expenses), loss or
damage suffered by reason of any defense, set-off,
counterclaim, recoupment or reduction of liability whatsoever
of its Account Debtors or other Person obligated on the
Collateral, arising out of a breach by such Grantor of any
obligation thereunder or arising out of any other agreement,
indebtedness or liability at any time owing to, or in favor
of, such obligor or its successors from such Grantor, except
in the case of Agent or any Lender, to the extent such
expense, loss, or damage is attributable solely to the gross
negligence or willful misconduct of Agent or such Lender as
finally determined by a court of competent jurisdiction. All
such obligations of each Grantor shall be and remain
enforceable against and only against such Grantor and shall
not be enforceable against Agent or any Lender.
(e) Compliance with Terms of Accounts, etc. In all material
respects, such Grantor will perform and comply with all
obligations in respect of the Collateral and all other
agreements to which it is a party or by which it is bound
relating to the Collateral.
(f) Limitation on Liens on Collateral. Such Grantor will not
create, permit or suffer to exist, and will defend the
Collateral against, and take such other action as is necessary
to remove, any Lien on any of the Collateral except Permitted
Encumbrances, and will defend the right, title and interest of
Agent and Lenders in and to any of such Grantor's rights under
the Collateral against the claims and demands of all Persons
whomsoever, except claims pursuant to the Permitted
Encumbrances.
(g) Limitations on Disposition. Such Grantor will not sell,
license, lease, transfer or otherwise dispose of any of the
Collateral, or attempt or contract to do so except as
permitted by this Agreement or the Credit Agreement.
- 9 -
(h) Further Identification of Collateral. Such Grantor will, if so
requested by Agent, furnish to Agent, as often as Agent
requests, statements and schedules further identifying and
describing the Collateral and such other reports in connection
with the Collateral as Agent may request, all in such detail
as Agent may specify. Grantor shall promptly notify Agent in
writing upon acquiring any interest hereafter in property that
is of a type where a security interest or Lien must be or may
be registered, recorded or filed under, or notice thereof
given under, any federal statute or regulation and that is not
already covered by this Agreement.
(i) Notices. Such Grantor will advise Agent promptly, in
reasonable detail (i) of any Lien (other than Permitted
Encumbrances) or claim made or asserted against any of the
Collateral, and (ii) of the occurrence of any other event
which could reasonably be expected to have a Material Adverse
Effect on the aggregate value of the Collateral or on the
Liens created hereunder or under any other Loan Document.
(j) Good Standing Certificates. Not less frequently than twice
during each calendar year, such Grantor shall, unless Agent
shall otherwise consent (which consent may be revoked),
provide to Agent a certificate of good standing from its state
of incorporation or organization.
(k) Organizational/Collateral Location Changes; No
Reincorporation. Such Grantor will give Agent at least thirty
(30) days prior written notice of any change required to be
made to Schedule IIIA, Schedule IIIB, Schedule IIIC or
Schedule IIID. Without limiting the prohibitions on mergers
involving any Grantor as contained in the Credit Agreement,
none of the Grantors shall reincorporate or reorganize itself
under the laws of any jurisdiction other than the jurisdiction
in which it is incorporated or organized as of the date hereof
without the prior written consent of Agent.
(l) Terminations; Amendments Not Authorized. Such Grantor
acknowledges that it is not authorized to file any financing
statement or amendment or termination statement with respect
to any financing statement without the prior written consent
of Agent and agrees that it will not do so without the prior
written consent of Agent, subject to such Grantor's rights
under Section 9-509(d)(2) of the Code.
(m) Authorized Terminations. Agent will promptly deliver to such
Grantor for filing or authorize such Grantor to prepare and
file termination statements and releases in accordance with
Section 9.20 of the Credit Agreement.
6. BANK ACCOUNTS; COLLECTION OF ACCOUNTS AND PAYMENTS
Within the time periods specified in the Credit Agreement, each Grantor
shall enter into a bank agency and control agreement ("Bank Agency and
Control Agreement"), in a form specified by Agent, with each financial
institution with which each Grantor maintains from time to time any
Deposit Account. Each Bank Agency and Control Agreement shall provide,
among other things, that (a) all items of payment deposited in each
Deposit Account subject thereto shall be held by the applicable
financial institution as Agent or bailee-in-possession for Agent, on
behalf of itself and Lenders, (b) the financial institution executing
such agreement has no rights of offset or recoupment of any other claim
against any Deposit Account subject thereto, as the case may be, other
than for payment of its services and other charges directly related to
the administration of each such Deposit Account and for returned checks
or other items of payment, and (c) to the extent provided below, the
financial institution will transfer all amounts held or deposited from
- 10 -
time to time in any such Deposit Account as Agent may so direct. Each
Grantor hereby grants to Agent, for the benefit of Agent and Lenders, a
continuing lien upon, and security interest in, all such accounts and
all funds at any time paid, deposited, credited or held in such
accounts (whether for collection, provisionally or otherwise) or
otherwise in the possession of such financial institutions, and each
such financial institution shall act as Agent's agent in connection
therewith. No Grantor shall establish any Deposit Account with any
financial institution unless prior thereto Agent and such Grantor shall
have entered into a Bank Agency and Control Agreement satisfactory to
Agent with such financial institution.
To the extent requested by the Agent, each Grantor shall establish a
lockbox account ("Lockbox Account") and blocked accounts (collectively,
"Blocked Accounts") in such Grantor's name with such banks as are
reasonably acceptable to Agent ("Collecting Banks"), subject to a Bank
Agency and Control Agreement pursuant to which all Account Debtors
shall directly remit all payments on Accounts and in which each Grantor
will immediately deposit all cash payments constituting proceeds of
Collateral in the identical form in which such payment was made,
whether by cash or check. In addition, Agent, for the benefit of Agent
and Lenders, may establish one or more depository accounts at each
Collecting Bank or at a centrally located bank in the name of Agent or
any one or more Grantors as customer (collectively, the "Concentration
Accounts"). From and after receipt by any Collecting Bank of written
notice from Agent to such Collecting Bank that an Event of Default has
occurred and is continuing, all amounts held or deposited from time to
time in the Blocked Accounts held by such Collecting Bank shall be
transferred on a daily basis to Agent (as Agent may direct) or any of
the Concentration Accounts; provided, that whether or not an Event of
Default is continuing all accounts credited to the Lockbox Account
shall be transferred to Agent's account on a daily basis. Subject to
the foregoing, each Grantor hereby agrees that all payments received by
Agent or any Lender whether by cash, check, wire transfer or any other
instrument, made to such Blocked Accounts, Lockbox Account or
Concentration Accounts or otherwise received by Agent or any Lender and
whether on the Accounts or as proceeds of other Collateral or otherwise
will be the sole and exclusive property of Lenders. Each Grantor, and
any of its Affiliates, employees, agents and other Persons acting for
or in concert with such Grantor shall, acting as trustee for Agent and
Lenders, receive, as the sole and exclusive property of Lenders, any
moneys, checks, notes, drafts or other payments relating to and/or
constituting proceeds of Accounts or other Collateral which come into
the possession or under the control of such Grantor or any Affiliates,
employees, agent, or other Persons acting for or in concert with such
Grantor, and immediately upon receipt thereof, such Grantor or such
Persons shall deposit the same or cause the same to be deposited in
kind, in a Blocked Account or other account subject to a Bank Agency
and Control Agreement.
If at any time a Collecting Bank is obligated to transfer to Agent or
any Concentration Account all amounts held or deposited in the Blocked
Accounts held by such Collecting Bank, no Grantor shall, and no Grantor
shall permit any Subsidiary to, accumulate or maintain cash in any
disbursement or payroll account, as of any date, in an amount in excess
of checks outstanding against such account as of such date and amounts
necessary to meet minimum balance requirements.
Each Grantor shall close each of its deposit accounts (and promptly
establish replacement deposit accounts with a financial institution
which has executed, or is willing to execute, a Bank Agency and Control
Agreement) maintained with any financial institution which is the
subject of a notice from Agent that the creditworthiness of such
financial institution or any of its affiliates is no longer acceptable
to Agent, or that the operating performance, funds transfer or
availability procedures or performance with respect to any Bank Agency
and Control Agreement of such financial institution is no longer
acceptable in Agent's reasonable judgment.
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7. AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT
On the Closing Date each Grantor shall execute and deliver to Agent a
power of attorney (the "Power of Attorney") substantially in the form
attached hereto as Exhibit A. The power of attorney granted pursuant to
the Power of Attorney is a power coupled with an interest and shall be
irrevocable until the Termination Date. The powers conferred on Agent,
for the benefit of Agent and Lenders, under the Power of Attorney are
solely to protect Agent's interests (for the benefit of Agent and
Lenders) in the Collateral and shall not impose any duty upon Agent or
any Lender to exercise any such powers. Agent agrees that (a) except
for the powers granted in clause (h) of the Power of Attorney, it shall
not exercise any power or authority granted under the Power of Attorney
unless an Event of Default has occurred and is continuing, and (b)
Agent shall account for any moneys received by Agent in respect of any
foreclosure on or disposition of Collateral pursuant to the Power of
Attorney provided that none of Agent nor any Lender shall have any duty
as to any Collateral, and Agent and Lenders shall be accountable only
for amounts they actually receive as a result of the exercise of such
powers. NONE OF AGENT, LENDERS OR THEIR RESPECTIVE AFFILIATES,
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES SHALL BE
RESPONSIBLE TO ANY GRANTOR FOR ANY ACT OR FAILURE TO ACT UNDER ANY
POWER OF ATTORNEY OR OTHERWISE, EXCEPT IN RESPECT OF DAMAGES
ATTRIBUTABLE SOLELY TO THEIR OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT
AS FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION, NOR FOR ANY
PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES.
8. REMEDIES: RIGHTS UPON DEFAULT
(a) In addition to all other rights and remedies granted to it
under this Agreement, the Credit Agreement, the other Loan
Documents and under any other instrument or agreement
securing, evidencing or relating to any of the Obligations, if
any Event of Default shall have occurred and be continuing,
Agent may exercise all rights and remedies of a secured party
under the Code. Without limiting the generality of the
foregoing, each Grantor expressly agrees that in any such
event Agent, without demand of performance or other demand,
advertisement or notice of any kind (except the notice
specified below of time and place of public or private sale)
to or upon any Grantor or any other Person (all and each of
which demands, advertisements and notices are hereby expressly
waived to the maximum extent permitted by the Code and other
applicable law), may forthwith (personally or through its
agents) enter upon the premises where any Collateral is
located through self-help, without judicial process, without
first obtaining a final judgment or giving any Grantor or any
other Person notice and opportunity for a hearing on Agent's
claim or action and may take possession of, collect, receive,
assemble, process, appropriate, remove and realize upon the
Collateral, or any part thereof, and may forthwith sell,
lease, license, assign, give an option or options to purchase,
or sell or otherwise dispose of and deliver said Collateral
(or contract to do so), or any part thereof, in one or more
parcels at a public or private sale or sales, at any exchange
at such prices as it may deem acceptable, for cash or on
credit or for future delivery without assumption of any credit
risk. Agent or any Lender shall have the right upon any such
public sale or sales and, to the extent permitted by law, upon
any such private sale or sales, to purchase for the benefit of
Agent and Lenders, the whole or any part of said Collateral so
sold, free of any right or equity of redemption, which equity
of redemption each Grantor hereby releases. Such sales may be
adjourned and continued from time to time with or without
notice. Agent shall have the right to conduct such sales on
each Grantor's premises or
- 12 -
elsewhere and shall have the right to use each Grantor's
premises without charge for such time or times as Agent deems
necessary or advisable.
If any Event of Default shall have occurred and be continuing,
each Grantor further agrees, at Agent's request, to assemble
the Collateral and make it available to Agent at a place or
places designated by Agent which are reasonably convenient to
Agent and such Grantor, whether at such Grantor's premises or
elsewhere. Without limiting the foregoing, Agent shall also
have the right to require that each Grantor store and keep any
Collateral pending further action by Agent, and while
Collateral is so stored or kept, provide such guards and
maintenance services as shall be necessary to protect the same
and to preserve and maintain Collateral in good condition.
Until Agent is able to effect a sale, lease, license or other
disposition of Collateral, Agent shall have the right to hold
or use Collateral, or any part thereof, to the extent that it
deems appropriate for the purpose of preserving Collateral or
its value or for any other purpose deemed appropriate by
Agent. Agent shall not have any obligation to any Grantor to
maintain or preserve the rights of any Grantor as against
third parties with respect to Collateral while Collateral is
in the possession of Agent. Agent may, if it so elects, seek
the appointment of a receiver or keeper to take possession of
Collateral and to enforce any of Agent's remedies (for the
benefit of Agent and Lenders), with respect to such
appointment without prior notice or hearing as to such
appointment. Agent shall apply the net proceeds of any such
collection, recovery, receipt, appropriation, realization or
sale to the Obligations as provided in the Credit Agreement,
and only after so paying over such net proceeds, and after the
payment by Agent of any other amount required by any provision
of law, need Agent account for the surplus, if any, to any
Grantor. To the maximum extent permitted by applicable law,
each Grantor waives all claims, damages, and demands against
Agent or any Lender arising out of the repossession, retention
or sale of the Collateral except such as arise solely out of
the gross negligence or willful misconduct of Agent or such
Lender as finally determined by a court of competent
jurisdiction. Each Grantor agrees that ten (10) days prior
notice by Agent of the time and place of any public sale or of
the time after which a private sale may take place is
reasonable notification of such matters. Notwithstanding any
such notice of sale, Agent shall not be obligated to make any
sale of Collateral. In connection with any sale, lease,
license or other disposition of Collateral, Agent may disclaim
any warranties that might arise in connection therewith and
Agent shall have no obligation to provide any warranties at
such time. Each Grantor shall remain liable for any deficiency
if the proceeds of any sale or disposition of the Collateral
are insufficient to pay all Obligations, including any
attorneys' fees or other expenses incurred by Agent or any
Lender to collect such deficiency.
(b) Except as otherwise specifically provided herein, each Grantor
hereby waives presentment, demand, protest or any notice (to
the maximum extent permitted by applicable law) of any kind in
connection with this Agreement or any Collateral.
(c) To the extent that applicable law imposes duties on Agent to
exercise remedies in a commercially reasonable manner, each
Grantor acknowledges and agrees that it is not commercially
unreasonable for Agent (i) to fail to incur expenses
reasonably deemed significant by Agent to prepare Collateral
for disposition or otherwise to complete raw material or work
in process into finished goods or other finished products for
disposition, (ii) if not required by other law, to fail to
obtain governmental or third party consents for the collection
or disposition of Collateral to be collected or disposed of,
(iii) to fail to exercise collection remedies against Account
Debtors or other Persons obligated on Collateral or to remove
Liens on or any adverse claims against Collateral, (iv) to
exercise
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collection remedies against Account Debtors and other Persons
obligated on Collateral directly or through the use of
collection agencies and other collection specialists, (v) to
advertise dispositions of Collateral through publications or
media of general circulation, whether or not the Collateral is
of a specialized nature, (vi) to contact other Persons,
whether or not in the same business as any Grantor, for
expressions of interest in acquiring all or any portion of
such Collateral, (vii) to hire one or more professional
auctioneers to assist in the disposition of Collateral,
whether or not the Collateral is of a specialized nature,
(viii) to dispose of Collateral by utilizing internet sites
that provide for the auction of assets of the types included
in the Collateral or that have the reasonable capacity of
doing so, or that match buyers and sellers of assets, (ix) to
dispose of assets in wholesale rather than retail markets, (x)
to disclaim disposition warranties, such as title, possession
or quiet enjoyment, (xi) to purchase insurance or credit
enhancements to insure Agent against risks of loss, collection
or disposition of Collateral or to provide to Agent a
guaranteed return from the collection or disposition of
Collateral, or (xii) to the extent deemed appropriate by
Agent, to obtain the services of other brokers, investment
bankers, consultants and other professionals to assist Agent
in the collection or disposition of any of the Collateral.
Each Grantor acknowledges that the purpose of this Section
8(c) is to provide non-exhaustive indications of what actions
or omissions by Agent would be commercially reasonable in
Agent's exercise of remedies against the Collateral and that
other actions or omissions by Agent shall not be deemed
commercially unreasonable solely on account of not being
indicated in this Section 8(c). Without limitation upon the
foregoing, nothing contained in this Section 8(c) shall be
construed to grant any rights to any Grantor or to impose any
duties on Agent that would not have been granted or imposed by
this Agreement or by applicable law in the absence of this
Section 8(c).
(d) Neither Agent nor any Lender shall be required to make any
demand upon, or pursue or exhaust any of their rights or
remedies against, any Grantor, any other obligor, guarantor,
pledgor or any other Person with respect to the payment of the
Obligations or to pursue or exhaust any of their rights or
remedies with respect to any Collateral therefor or any direct
or indirect guarantee thereof. Neither Agent nor any Lender
shall be required to marshal the Collateral or any guarantee
of the Obligations or to resort to the Collateral or any such
guarantee in any particular order, and all of its and their
rights hereunder or under any other Loan Document shall be
cumulative. To the extent it may lawfully do so, each Grantor
absolutely and irrevocably waives and relinquishes the benefit
and advantage of, and covenants not to assert against Agent or
any Lender, any valuation, stay, appraisement, extension,
redemption or similar laws and any and all rights or defenses
it may have as a surety now or hereafter existing which, but
for this provision, might be applicable to the sale of any
Collateral made under the judgment, order or decree of any
court, or privately under the power of sale conferred by this
Agreement, or otherwise.
9. GRANT OF LICENSE TO USE INTELLECTUAL PROPERTY COLLATERAL
For the purpose of enabling Agent to exercise rights and remedies under
Section 8 hereof (including, without limiting the terms of Section 8
hereof, in order to take possession of, hold, preserve, process,
assemble, prepare for sale, market for sale, sell or otherwise dispose
of Collateral) at such time as Agent shall be lawfully entitled to
exercise such rights and remedies, each Grantor hereby grants to Agent,
for the benefit of Agent and Lenders, an irrevocable, nonexclusive
license (exercisable without payment of royalty or other compensation
to such Grantor) to use, license or sublicense any Intellectual
Property now owned or hereafter acquired
- 14 -
by such Grantor, and wherever the same may be located, and including in
such license access to all media in which any of the licensed items may
be recorded or stored and to all computer software and programs used
for the compilation or printout thereof and an irrevocable license
(exercisable without payment of rent or other compensation to such
Grantor) to use and occupy all real estate owned or leased by such
Grantor; provided, however, that if and to the extent that the grant of
license to Agent would result in a violation of any agreements relating
to the Intellectual Property or the real estate or cause any such
agreement to be void or voidable, the license granted hereunder shall
be deemed limited to only such license or rights as Grantors may be
authorized to give without consent under such agreements without
breaching or voiding such agreements.
10. LIMITATION ON AGENT'S AND LENDERS' DUTY IN RESPECT OF COLLATERAL
Agent and each Lender shall use reasonable care with respect to the
Collateral in its possession or under its control. Neither Agent nor
any Lender shall have any other duty as to any Collateral in its
possession or control or in the possession or control of any agent or
nominee of Agent or such Lender, or any income thereon or as to the
preservation of rights against prior parties or any other rights
pertaining thereto. Agent shall not be liable or responsible for any
loss or damage to any of the Collateral, or for any diminution in the
value thereof, by reason of the act or omission of any warehousemen,
carrier, forwarding agency, consignee or other agent or bailee selected
by Agent in good faith.
11. REINSTATEMENT
This Agreement shall remain in full force and effect and continue to be
effective should any petition be filed by or against any Grantor for
liquidation or reorganization, should any Grantor become insolvent or
make an assignment for the benefit of any creditor or creditors or
should a receiver or trustee be appointed for all or any significant
part of any Grantor's assets, and shall continue to be effective or be
reinstated, as the case may be, if at any time payment and performance
of the Obligations, or any part thereof, is, pursuant to applicable
law, rescinded or reduced in amount, or must otherwise be restored or
returned by any obligee of the Obligations, whether as a "voidable
preference," "fraudulent conveyance," or otherwise, all as though such
payment or performance had not been made. In the event that any
payment, or any part thereof, is rescinded, reduced, restored or
returned, the Obligations shall be reinstated and deemed reduced only
by such amount paid and not so rescinded, reduced, restored or
returned.
12. SURETYSHIP WAIVERS BY GRANTOR; OBLIGATIONS ABSOLUTE
(a) Except as expressly provided herein, each Grantor waives
demand, notice, protest, notice of acceptance of this
Agreement, notice of loans made, credit extended, collateral
received or delivered or other action taken in reliance hereon
and all other demands and notices of any description thereof,
all in such manner and at such time or times as Agent may deem
advisable. Agent shall have no duty as to the collection or
protection of the Collateral or any income thereon, nor as to
the preservation of rights against prior parties, nor as to
the preservation of any rights pertaining thereto beyond the
safe custody thereof.
(b) All rights of Agent hereunder, the Security Interests and all
obligations of each Grantor hereunder shall be absolute and
unconditional irrespective of (a) any lack of validity or
enforceability of the Credit Agreement, any other Loan
Document, any agreement with respect to any of the Obligations
or any other agreement or instrument relating to any of the
foregoing, (b) any change in the time, manner or place of
payment of, or in any other
- 15 -
term of, all or any of the Obligations, or any other amendment
or waiver of or any consent to any departure from the Credit
Agreement, any other Loan Document, or any other agreement or
instrument, (c) any exchange, release or non-perfection of any
Lien on other collateral, or any release or amendment or
waiver of or consent under or departure from or any acceptance
of partial payment thereon and or settlement, compromise or
adjustment of any Obligation or of any guarantee, securing or
guaranteeing all or any of the Obligations, or (d) any other
circumstance that might otherwise constitute a defense
available to, or a discharge of, such Grantor in respect of
the Obligations or this Agreement.
13. EXPENSES AND ATTORNEY'S FEES
Without limiting any Grantor's obligations under the Credit Agreement
or the other Loan Documents, Grantors agree, jointly and severally, to
promptly pay all fees, costs and expenses (including reasonable
attorneys' fees and expenses and allocated costs of internal legal
staff) incurred in connection with (a) protecting, storing,
warehousing, appraising, insuring, handling, maintaining and shipping
the Collateral, (b) creating, perfecting, maintaining and enforcing
Agent's Liens and (c) collecting, enforcing, retaking, holding,
preparing for disposition, processing and disposing of Collateral.
14. NOTICES
Any notice or other communication required shall be in writing
addressed to the respective party as set forth below and may be
personally served, telecopied, sent by overnight courier service or
U.S. mail and shall be deemed to have been given: (a) if delivered in
person, when delivered; (b) if delivered by fax, on the date of
transmission if transmitted on a Business Day before 4:00 p.m. New York
Time; (c) if delivered by overnight courier, one (1) Business Day after
delivery to the courier properly addressed; or (d) if delivered by U.S.
mail, four (4) Business Days after deposit with postage prepaid and
properly addressed.
Notices shall be addressed as follows:
If to any Grantor: c/oTELEX COMMUNICATIONS, INC.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President and CEO
Fax No.: (▇▇▇)▇▇▇-▇▇▇▇
With a copy to: STROOCK & STROOCK & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Agent or GE Capital: GENERAL ELECTRIC CAPITAL CORPORATION
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: Telex Communications, Inc. Account
Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
- 16 -
With a copy to: GENERAL ELECTRIC CAPITAL CORPORATION
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Corporate Counsel
Corporate Financial Services - Global
Sponsor Finance
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
And: GENERAL ELECTRIC CAPITAL CORPORATION
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Corporate Counsel
Corporate Financial Services - Global
Sponsor Finance
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
15. SEVERABILITY
The invalidity, illegality, or unenforceability in any jurisdiction of
any provision under the Loan Documents shall not affect or impair the
remaining provisions in the Loan Documents.
16. NO WAIVER; CUMULATIVE REMEDIES
Neither Agent nor any Lender shall by any act, delay, omission or
otherwise be deemed to have waived any of its rights or remedies
hereunder, and no waiver shall be valid unless in writing, signed by
Agent and then only to the extent therein set forth. A waiver by Agent
of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which Agent would otherwise
have had on any future occasion. No failure to exercise nor any delay
in exercising on the part of Agent or any Lender, any right, power or
privilege hereunder, shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or privilege hereunder
preclude any other or future exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies hereunder
provided are cumulative and may be exercised singly or concurrently,
and are not exclusive of any rights and remedies provided by law. None
of the terms or provisions of this Agreement may be waived, altered,
modified or amended except by an instrument in writing, duly executed
by Agent and each Grantor.
17. LIMITATION BY LAW
All rights, remedies and powers provided in this Agreement may be
exercised only to the extent that the exercise thereof does not violate
any applicable provision of law, and all the provisions of this
Agreement are intended to be subject to all applicable mandatory
provisions of law that may be controlling and to be limited to the
extent necessary so that they shall not render this Agreement invalid,
unenforceable, in whole or in part, or not entitled to be recorded,
registered or filed under the provisions of any applicable law.
18. TERMINATION OF THIS AGREEMENT
Subject to Section 11 hereof, this Agreement shall terminate upon the
Termination Date. Following the termination of this agreement, Agent
shall, upon reasonable request, and at the sole cost and expense of
Grantors, execute such termination statements and other releases (in
form and substance reasonably satisfactory to Agent) with respect to
security granted hereunder, and Agent shall at such time transfer any
Instrument or Chattel Paper or other item of Collateral delivered to
the Agent hereunder to the Grantors, without recourse and without
representation of warranty.
- 17 -
19. SUCCESSORS AND ASSIGNS
This Agreement and all obligations of each Grantor hereunder shall be
binding upon the successors and permitted assigns of such Grantor
(including any debtor-in-possession on behalf of such Grantor) and
shall, together with the rights and remedies of Agent, for the benefit
of Agent and Lenders, hereunder, inure to the benefit of Agent and
Lenders, all future holders of any instrument evidencing any of the
Obligations and their respective successors and permitted assigns
except that Grantors may not assign any of their rights or obligations
hereunder without the written consent of all Lenders which assignment
without such consent shall be void. No sales of participations, other
sales, assignments, transfers or other dispositions of any agreement
governing or instrument evidencing the Obligations or any portion
thereof or interest therein shall in any manner impair the Lien granted
to Agent, for the benefit of Agent and Lenders, hereunder.
20. COUNTERPARTS
This Agreement and any amendments, waivers, consents or supplements may
be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all of which counterparts
together shall constitute but one in the same instrument. This
Agreement shall become effective upon the execution of a counterpart
hereof by each of the parties hereto.
21. GOVERNING LAW
(a) THIS SECURITY AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES WHICH SHALL BE
DEEMED NOT TO INCLUDE SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW.
(b) EACH GRANTOR HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE
OR FEDERAL COURT LOCATED WITHIN NEW YORK COUNTY, STATE OF NEW
YORK AND IRREVOCABLY AGREES THAT, SUBJECT TO AGENT'S ELECTION,
ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE OTHER LOAN DOCUMENTS SHALL BE LITIGATED IN
SUCH COURTS. EACH GRANTOR EXPRESSLY SUBMITS AND CONSENTS TO
THE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY
DEFENSE OF FORUM NON CONVENIENS. EACH GRANTOR HEREBY WAIVES
PERSONAL SERVICE OF ANY AND ALL PROCESS AND AGREES THAT ALL
SUCH SERVICE OF PROCESS MAY BE MADE UPON SUCH GRANTOR BY
CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED,
ADDRESSED TO SUCH GRANTOR, AT THE ADDRESS SET FORTH IN THIS
AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE TEN (10) DAYS
AFTER THE SAME HAS BEEN POSTED. IN ANY LITIGATION, TRIAL,
ARBITRATION OR OTHER DISPUTE RESOLUTION PROCEEDING RELATING TO
THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, ALL THEN
CURRENT DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS OF GRANTORS,
CREDIT PARTIES OR ANY OF THEIR RESPECTIVE SUBSIDIARIES SHALL
BE DEEMED TO BE EMPLOYEES OR MANAGING AGENTS OF GRANTORS OR
SUCH CREDIT PARTIES FOR PURPOSES OF ALL APPLICABLE LAW OR
COURT RULES REGARDING THE
- 18 -
PRODUCTION OF WITNESSES BY NOTICE FOR TESTIMONY (WHETHER IN A
DEPOSITION, AT TRIAL OR OTHERWISE). GRANTORS AND CREDIT
PARTIES AGREE THAT AGENT'S OR ANY LENDER'S COUNSEL IN ANY SUCH
DISPUTE RESOLUTION PROCEEDING MAY EXAMINE ANY OF THESE
INDIVIDUALS AS IF UNDER CROSS-EXAMINATION AND THAT ANY
DISCOVERY DEPOSITION OF ANY OF THEM MAY BE USED IN THAT
PROCEEDING AS IF IT WERE AN EVIDENCE DEPOSITION. GRANTORS AND
CREDIT PARTIES IN ANY EVENT WILL USE ALL COMMERCIALLY
REASONABLE EFFORTS TO PRODUCE IN ANY SUCH DISPUTE RESOLUTION
PROCEEDING, AT THE TIME AND IN THE MANNER REQUESTED BY AGENT
OR ANY LENDER, ALL PERSONS, DOCUMENTS (WHETHER IN TANGIBLE,
ELECTRONIC OR OTHER FORM) OR OTHER THINGS UNDER THEIR CONTROL
AND RELATING TO THE DISPUTE.
22. WAIVER OF JURY TRIAL
EACH GRANTOR HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS SECURITY AGREEMENT
AND THE OTHER LOAN DOCUMENTS. EACH GRANTOR ACKNOWLEDGES THAT THIS
WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP,
AND THAT AGENT HAS RELIED ON THE WAIVER IN ENTERING INTO THIS SECURITY
AGREEMENT AND THE OTHER LOAN DOCUMENTS AND WILL CONTINUE TO RELY ON THE
WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH GRANTOR WARRANTS AND
REPRESENTS THAT SUCH GRANTOR HAS HAD THE OPPORTUNITY OF REVIEWING THIS
JURY WAIVER WITH LEGAL COUNSEL, AND THAT SUCH GRANTOR KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.
23. HEADINGS
Section and subsection headings are included herein for convenience of
reference only and shall not constitute a part of this Agreement for
any other purposes or be given substantive effect.
24. NO STRICT CONSTRUCTION
The parties hereto have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as
if drafted jointly by the parties hereto and no presumption or burden
of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement.
25. ADVICE OF COUNSEL
Each of the parties represents to each other party hereto that it has
discussed this Agreement and, specifically, the provisions of Section
21 and Section 22, with its counsel.
26. BENEFIT OF LENDERS
All Liens granted or contemplated hereby shall be for the benefit of
Agent and Lenders, and all proceeds or payments realized from
Collateral in accordance herewith shall be applied to the Obligations
in accordance with the terms of the Credit Agreement.
- 19 -
27. INTERCREDITOR AGREEMENT
The security interest of Agent in favor of Lenders granted hereunder
and the rights of such parties in respect thereof shall be subject to
and entitled to the benefits of the terms of the Intercreditor
Agreement referred to in clause (i) of the definition of "Intercreditor
Agreements" and Section 12.02 of the Senior Notes Indenture.
[SIGNATURE PAGE FOLLOWS]
- 20 -
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed and delivered by its duly authorized officer as of the date first set
forth above.
TELEX COMMUNICATIONS, INC.,
AS A GRANTOR
By: __________________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chief Financial Officer
TELEX COMMUNICATIONS HOLDINGS, INC.,
AS A GRANTOR
By: __________________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chief Financial Officer
TELEX COMMUNICATIONS INTERMEDIATE
HOLDINGS, LLC,
AS A GRANTOR
By: __________________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chief Financial Officer
TELEX COMMUNICATIONS INTERNATIONAL, LTD.,
AS A GRANTOR
By: __________________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chief Financial Officer
GENERAL ELECTRIC CAPITAL CORPORATION,
AS AGENT
By: __________________________________
Name: ____________________________
Title: ___________________________
SIGNATURE PAGE TO TELEX SECURITY AGREEMENT
EXHIBIT A
POWER OF ATTORNEY
This Power of Attorney is executed and delivered by each of Telex
Communications, Inc., Telex Communications Holdings, Inc., Telex Communications
Intermediate Holdings, LLC and Telex Communications International, Ltd.
(referred to herein individually as "Grantor" and collectively as "Grantors") to
General Electric Capital Corporation, a Delaware corporation (hereinafter
referred to as "Attorney"), as Agent for the benefit of Agent and Lenders, under
a Credit Agreement and a Security Agreement, both dated as of November 19, 2003,
and other related documents (the "Loan Documents"). No person to whom this Power
of Attorney is presented, as authority for Attorney to take any action or
actions contemplated hereby, shall be required to inquire into or seek
confirmation from any Grantor as to the authority of Attorney to take any action
described below, or as to the existence of or fulfillment of any condition to
this Power of Attorney, which is intended to grant to Attorney unconditionally
the authority to take and perform the actions contemplated herein, and each
Grantor irrevocably waives any right to commence any suit or action, in law or
equity, against any person or entity which acts in reliance upon or acknowledges
the authority granted under this Power of Attorney. The power of attorney
granted hereby is coupled with an interest, and may not be revoked or canceled
by any Grantor without Attorney's written consent.
Each Grantor hereby irrevocably constitutes and appoints Attorney (and
all officers, employees or agents designated by Attorney), with full power of
substitution, as such Grantor's true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of such Grantor and in
the name of such Grantor or in its own name, from time to time in Attorney's
discretion, to take any and all appropriate action and to execute and deliver
any and all documents and instruments which may be necessary or desirable to
accomplish the purposes of the Loan Documents upon the occurrence and during the
continuance of an Event of Default as defined and described in the Loan
Documents. Without limiting the generality of the foregoing, each Grantor hereby
grants to Attorney the power and right, on behalf of such Grantor, without
notice to or assent by any Grantor, and at any time, to do the following upon
the occurrence and during the continuance of an Event of Default: (a) change the
mailing address of such Grantor, open a post office box on behalf of such
Grantor, open mail for such Grantor, and ask, demand, collect, give acquittances
and receipts for, take possession of, endorse any invoices, freight or express
bills, bills of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications, and notices in connection with any property of such
Grantor; (b) effect any repairs to any asset of such Grantor, or continue or
obtain any insurance and pay all or any part of the premiums therefor and costs
thereof, and make, settle and adjust all claims under such policies of
insurance, and make all determinations and decisions with respect to such
policies; (c) pay or discharge any taxes, liens, security interests, or other
encumbrances levied or placed on or threatened against such Grantor or its
property; (d) defend any suit, action or proceeding brought against such Grantor
if such Grantor does not defend such suit, action or proceeding or if Attorney
believes that such Grantor is not pursuing such defense in a manner that will
maximize the recovery to Attorney, and settle, compromise or adjust any suit,
action, or proceeding described above and, in connection therewith, give such
discharges or releases as Attorney may deem appropriate; (e) file or prosecute
any claim, litigation, suit or proceeding in any court of competent jurisdiction
or before any arbitrator, or take any other action otherwise deemed appropriate
by Attorney for the purpose of collecting any and all such moneys due to such
Grantor whenever payable and to enforce any other right in respect of such
Grantor's property; (f) cause the certified public accountants then engaged by
such Grantor to prepare and deliver to Attorney at any time and from time to
time, promptly upon Attorney's request, the following reports: (1) a
reconciliation of all accounts, (2) an aging of all accounts, (3) trial
balances, (4) test verifications of such accounts as Attorney may request, and
(5) the results of each physical verification of inventory; (g) communicate in
its own name with any party to any Contract with regard to the assignment of the
right, title and interest of such Grantor in and
A-1
under the Contracts and other matters relating thereto; (h) to file such
financing statements with respect to the Security Agreement, with or without
such Grantor's signature, or to file a photocopy of the Security Agreement in
substitution for a financing statement, as Agent may deem appropriate and to
execute in such Grantor's name such financing statements and amendments thereto
and continuation statements which may require such Grantor's signature; (i)
execute, in connection with any sale provided for in any Loan Document, any
endorsements, assignments or other instruments of conveyance or transfer with
respect to any collateral subject to the Loan Documents and to otherwise direct
such sale or resale; (j) exercise the rights of such Grantor with respect to the
obligation of all account debtors to make payment or otherwise render
performance to such Grantor; (k) exercise the rights of such Grantor to, and
take any and all actions that Attorney deems appropriate to realize the benefit
of, any intellectual property; and (l) assert any claims such Grantor may have,
from time to time, against any other party to any contract to which such Grantor
is a party and to otherwise exercise any right or remedy of such Grantor
thereunder, all as though Attorney were the absolute owner of the property of
such Grantor for all purposes, and to do, at Attorney's option and such
Grantor's expense, at any time or from time to time, all acts and other things
that Attorney reasonably deems necessary to perfect, preserve, or realize upon
such Grantor's property or assets and Attorney's Liens thereon, all as fully and
effectively as such Grantor might do. Each Grantor hereby ratifies, to the
extent permitted by law, all that said Attorney shall lawfully do or cause to be
done by virtue hereof.
A-2
IN WITNESS WHEREOF, this Power of Attorney is executed by each Grantor
pursuant to the authority of its board of directors on this _____ day of
November, 2003.
TELEX COMMUNICATIONS, INC.
By: ______________________________________________
Name:
Title
TELEX COMMUNICATIONS HOLDINGS, INC.
By: ______________________________________________
Name:
Title
TELEX COMMUNICATIONS INTERMEDIATE HOLDINGS, INC.
By: ______________________________________________
Name:
Title
TELEX COMMUNICATIONS INTERNATIONAL, LTD.
By: ______________________________________________
Name:
Title
NOTARY PUBLIC CERTIFICATE
On this _____ day of ______________, 2003, ________ who is personally
known to me appeared before me in his/her capacity as the ________ of Telex
Communications, Inc. and executed on behalf of Telex Communications, Inc. the
Power of Attorney in favor of General Electric Capital Corporation to which this
Certificate is attached.
________________________
Notary Public
NOTARY PUBLIC CERTIFICATE
On this _____ day of ______________, 2003, __________ who is personally
known to me appeared before me in his/her capacity as the ____________ of Telex
Communications Holdings, Inc. and executed on behalf of Telex Communications
Holdings, Inc. the Power of Attorney in favor of General Electric Capital
Corporation to which this Certificate is attached.
________________________
Notary Public
NOTARY PUBLIC CERTIFICATE
On this _____ day of ______________, 2003, __________ who is personally
known to me appeared before me in his/her capacity as the ___________ of Telex
Communications Intermediate Holdings, LLC and executed on behalf of Telex
Communications Intermediate Holdings, LLC the Power of Attorney in favor of
General Electric Capital Corporation to which this Certificate is attached.
________________________
Notary Public
NOTARY PUBLIC CERTIFICATE
On this _____ day of ______________, 2003, __________ who is personally
known to me appeared before me in his/her capacity as the ___________ of Telex
Communications International, Ltd. and executed on behalf of Telex
Communications International, Ltd. the Power of Attorney in favor of General
Electric Capital Corporation to which this Certificate is attached.
________________________
Notary Public
