Document:

Exhibit 10.22

 

THIS AGREEMENT IS SUBJECT TO THE TERMS OF AN INTERCREDITOR AND
SUBORDINATION AGREEMENT DATED AS OF AUGUST 6, 2004 (THE “SUBORDINATION
AGREEMENT”), BY AND AMONG BANK
OF AMERICA, N.A., VANTAGEPOINT VENTURE PARTNERS IV, L.P., AND VANTAGEPOINT VENTURE
PARTNERS IV (Q), L.P.

 

SECURITY AGREEMENT

 

This
SECURITY AGREEMENT (“Agreement”),
dated as of August 6, 2004, is made between each entity set forth on the
signature pages hereto as a grantor (each such entity and each entity which
hereafter executes a Subsidiary Joinder in substantially the form of Attachment
1 to the Guaranty (as defined below) to be referred to herein as a “Grantor”, and
collectively as, the “Grantors”)
and VantagePoint Venture Partners IV (Q), L.P., as administrative agent for itself
and the other Guarantors which are or may become parties to the Reimbursement
Agreement (“Agent”).

 

RECITALS

 

A.                                   Reference
is made to that certain Credit Agreement, dated as of August 6, 2004 (as
amended and in effect from time to time, the “Credit Facility”), by and between Bank
of America, N.A. (“Bank”)
and Obligor.  It is a condition precedent
to the extension of Loans under the Credit Facility that Guarantors provide a
guaranty of the Loans to be borrowed under the Credit Facility.

 

B.                                     Obligor
has requested that Guarantors enter into that certain Continuing Guaranty,
dated as of August 6, 2004 (as amended and in effect from time to time,
the “Credit Guaranty”),
to be executed by each of the Guarantors for the benefit of Bank, pursuant to
which the Guarantors will guarantee up to Twenty Million Dollars ($20,000,000)
in principal amount of Loans under the Credit Facility.

 

C.                                     In
order to induce Guarantors to enter into the Credit Guaranty, (i) Borrower has
agreed to enter into a Reimbursement Agreement, dated as of the date hereof (as
amended and in effect from time to time, the “Reimbursement Agreement”), with
Guarantors, (ii) each Subsidiary Guarantor has agreed to enter into a
Subsidiary Guaranty (as amended and in effect from time to time, the “Guaranty”) to
guaranty Borrower’s obligations to Guarantors under the Reimbursement Agreement
and (iii) Borrower and the other Grantors have agreed to enter into this
Agreement, dated as of the date hereof, to secure their respective obligations
under the Reimbursement Agreement and the Guaranty.

 

AGREEMENT

 

NOW,
THEREFORE, in order to induce the Guarantors to enter into the Credit Guaranty
and for other good and valuable consideration, the receipt and adequacy of
which hereby is acknowledged, each Grantor hereby represents, warrants,
covenants, agrees and grants as follows:

 

1.                                      Definitions.  Unless the context otherwise requires,
terms defined in the Reimbursement Agreement and not otherwise defined herein
have the same respective meanings when used herein and terms defined in the
Uniform Commercial Code of the State of California (the “UCC”) and not otherwise defined in this
Agreement or in the Reimbursement Agreement shall have the meanings defined for
those terms in the UCC.  In addition, the
following terms shall have the meanings respectively set forth after each:

 

1

 

“BofA Loan Documents” mean (i) that certain Security Agreement, dated as of the date hereof,
by and among Aviza Technology, Inc. and Bank of America, N.A., (ii) that
certain Security Agreement, dated as of the date hereof, by and among Aviza
Technology International, Inc. and Bank of America, N.A., (iii) that certain
Stock Pledge, dated as of the date hereof, by and between Aviza Technology,
Inc. and Bank of America, N.A. and (iv) that certain Stock Pledge, dated as of
the date hereof, by and between Aviza Technology International, Inc. and Bank
of America, N.A.

 

“Borrower” has the
meaning given to that term in the Recitals.

 

“Certificates”
means all certificates now or hereafter representing or evidencing any Pledged
Securities, Pledged Partnership Interests, or Pledged Limited Liability Company
Interests.

 

“Collateral” means
and includes all right, title and interest in or to any and all of the following
assets and properties of each Grantor, wherever located, and now owned or
hereafter acquired:

 

(a)                                  All
Accounts;

 

(b)                                 All
Chattel paper;

 

(c)                                  All
Commercial Tort Claims listed on Schedule 1-A.

 

(d)                                 All
Deposit Accounts and cash;

 

(e)                                  All
Documents;

 

(f)                                    All
Equipment;

 

(g)                                 All
General Intangibles;

 

(h)                                 All
Goods;

 

(i)                                     All
Instruments;

 

(j)                                     All
Intellectual Property;

 

(k)                                  All
Inventory;

 

(l)                                     All
Investment Property;

 

(m)                               All
Letter-of-Credit rights;

 

(n)                                 To
the extent not otherwise included, all Proceeds and products of any and all of
the foregoing, and all accessions to, substitutions and replacements for, and
rents profits of each of the foregoing.

 

Notwithstanding
the foregoing, the Collateral shall not include (i) more than 65% of the issued
and outstanding voting capital stock of any Foreign Subsidiary, or (ii) any property owned by any Foreign
Subsidiary.

 

2

 

“Controlled” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ability to exercise voting power, by contract or otherwise.

 

“Copyright” means
all:

 

(a)                                  Copyrights,
whether or not published or registered under the Copyright Act of 1976, 17
U.S.C. Section 101 et seq., as the same shall be amended from time to time
and any predecessor or successor statute thereto (the “Copyright Act”), and applications for
registration of copyrights, and all works of authorship and other intellectual
property rights therein, including without limitation, copyrights for computer
programs, source code and object code databases and related materials and
documentation (i) all renewals, revisions, derivative works, enhancements,
modifications, updates, new releases and other revisions thereof, (ii) all
income, royalties, damages and payments now and hereafter due and/or payable
with respect thereto, including without limitation, payments under all licenses
entered into in connection therewith and damages and payments for past or
future infringements thereof, (iii) the right to sue for past, present and
future infringements thereof and (iv) all of such Grantor’s rights
corresponding thereto throughout the world;

 

(b)                                 Rights
under or interests in any copyright license agreements with any other party,
whether each Grantor is a licensee or licensor under any such license agreement
and the right to use the foregoing in connection with the enforcement of the
Agent’s rights under the Transaction Documents; and

 

(c)                                  Copyrightable
materials now or hereafter owned by such Grantor, including without limitation,
all tangible property embodying the copyright described in clause (a) hereof or
such copyrightable materials, and all tangible property covered by the licenses
described in clause (b) hereof.

 

“Credit
Facility” has the meaning given to that term in the Recitals.

 

“Credit
Guaranty”
has the meaning given to that term in the Recitals.

 

“Foreign
Subsidiary” has the meaning given to that term in the
Reimbursement Agreement.

 

“GAAP”
has the meaning give to that term in the Reimbursement Agreement.

 

“Governmental
Authority” means the government of the United States, any other
nation or any political subdivision thereof, whether state or local, and any
agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.

 

“Guaranteed
Obligations” has the meaning given to that term in the Guaranty.

 

“Guarantors”
has the meaning given to that term in the Reimbursement Agreement.

 

“Guaranty”
has the meaning given to that term in the Recitals.

 

“Intellectual
Property” means
all intellectual and similar property of every kind and nature now owned or
hereafter acquired by any Grantor, including inventions, designs, Patents,
Copyrights, Trademarks, trade secrets, domain names, confidential or
proprietary technical and business information, know-how, methods, processes,
drawings, specifications or other data or information and all memoranda,

 

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notes
and records with respect to any research and development, software and
databases and all embodiments or fixations thereof whether in tangible or
intangible form or contained on magnetic media readable by machine together
with all such magnetic media and related documentation, registrations and
franchises, and all additions, improvements and accessions to, and books and
records describing or used in connection with, any of the foregoing.

 

“Liens” means,
with respect to any property, any security interest, mortgage, pledge, lien,
claim, charge or other encumbrance in, of, or on such property or the income
therefrom, including, without limitation, the interest of a vendor or lessor
under a conditional sale agreement, capital lease or other title retention
agreement, or any agreement to provide any of the foregoing.

 

“Loans” has the
meaning given to that term in the Reimbursement Agreement.

 

“Material Adverse Effect”
has the meaning given to that term in the Reimbursement Agreement.

 

“Obligations” with
respect to the Grantor that is also the Borrower, such term has the meaning
given to that term in the Reimbursement Agreement, and with respect to each
Grantor that is also a Guarantor, such term means the Guaranteed Obligations.

 

“Patents” means
all (a) letters patent, design patents, utility patents, inventions and trade
secrets, all patents and patent applications in the United States Patent and
Trademark Office, and interests under patent license agreements, including
without limitation, the inventions and improvements described and claimed
therein, (b) licenses pertaining to any patent whether such Grantor is licensor
or licensee, (c) income, royalties, damages and payments now and hereafter due
and /or payable under and with respect thereto, including without limitation,
damages and payments for past, present or future infringements, (d) rights to
sue for past, present and future infringements thereof, (e) rights
corresponding thereto throughout the world in all jurisdictions in which such
patents have been issued or applied for and (f) the reissues, divisions,
continuations, renewals, extensions and continuations-in-part of any of the
foregoing.

 

“Permitted Liens”
shall mean and include: (i) Liens for taxes or other governmental charges
not at the time delinquent or thereafter payable without penalty or being
contested in good faith, provided provision is made to the reasonable
satisfaction of Agent for the eventual payment thereof if subsequently found
payable; (ii) Liens of carriers, warehousemen, mechanics, materialmen,
vendors, and landlords incurred in the ordinary course of business for sums not
overdue or being contested in good faith, provided provision is made to the
reasonable satisfaction of Agent for the eventual payment thereof if
subsequently found payable; (iii) deposits under workers’ compensation,
unemployment insurance and social security laws or to secure the performance of
bids, tenders, contracts (other than for the repayment of borrowed money) or
leases, or to secure statutory obligations of surety or appeal bonds or to
secure indemnity, performance or other similar bonds in the ordinary course of
business; (iv) easements, reservations, rights of way, restrictions, minor
defects or irregularities in title and other similar charges or encumbrances
affecting real property in a manner not materially or adversely affecting the
value or use of such property; (v)  Liens in favor of Agent, (vi) Liens
upon any equipment, or real property, acquired or held by Obligor or any of its
Subsidiaries to secure the purchase price of such equipment, or real property,
or indebtedness incurred solely for the purpose of financing the acquisition of
such equipment, or real property, so long as such Lien extends only to the
equipment, or real property, financed, and any accessions, replacements,
substitutions and proceeds (including insurance proceeds) thereof or thereto,
(vii) Liens in favor of Bank; and (viii) other Liens not described in clauses
(i)-(vii) permitted under Section 7.18 of the Credit Facility.

 

“Person” has the
meaning given to that term in the Reimbursement Agreement.

 

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“Pledged Collateral”
means the Pledged Securities, the Pledged Partnership Interests and the Pledged
Limited Liability Company Interests.

 

“Pledged Limited Liability
Company Interests” means all limited liability company interests
owned by each Grantor, including, but not limited to those limited liability
company interests set forth in Schedule 1-C attached hereto, as
such Schedule may be supplemented from time to time in accordance with the
terms of this Agreement and all capital, limited liability company assets,
dividends, cash, instruments and other properties from time to time received,
to be received or otherwise distributed in respect of or in exchange for any or
all of such interests and all certificates and instruments representing or
evidencing such other property received, receivable or otherwise distributed in
respect of or in exchange for any or all thereof.

 

“Pledged Partnership Interests”
means all interests in any partnership or joint venture owned by each Grantor,
including, but not limited to those partnership interests set forth in Schedule 1-C
attached hereto, as such Schedule may be supplemented from time to time in
accordance with the terms of this Agreement, and all dividends, cash,
instruments and other properties from time to time received, to be received or
otherwise distributed in respect of or in exchange for any or all of such
interests.

 

“Pledged Securities”
means all shares of capital stock of each issuer in which each Grantor owns an
interest, including, but not limited to those shares of capital stock set forth
in Schedule 1-C attached hereto, as such Schedule may be
supplemented from time to time in accordance with the terms of this Agreement,
and all dividends, cash, instruments and other properties from time to time
received, to be received or otherwise distributed in respect of or in exchange
for any or all of such shares.

 

“Reimbursement Agreement”
has the meaning given to that term in the Recitals.

 

 “Subsidiary” has the meaning given to that
term in the Reimbursement Agreement.

 

“Trademarks” means all
(a) trademarks, trademark registrations, interest under trademark license
agreements, trade names, trademark applications, service marks, business names,
trade styles, designs, logos and other source or business identifiers for which
registrations have been issued or applied for in the United States Patent and
Trademark Office or in any other office or with any other official anywhere in
the world or which are used in the United States or any state, territory or
possession thereof, or in any other place, nation or jurisdiction anywhere in
the world, (b) licenses pertaining to any such mark whether such Grantor is
licensor or licensee, (c) all income, royalties, damages and payments for past,
present or future infringements thereof, (d) rights to sue for past, present
and future infringements thereof, (e) rights corresponding thereto throughout
the world, (f) all product specification documents and production and quality
control manuals used in the manufacture of products sold under or in connection
with such marks, (g) all documents that reveal the name and address of all
sources of supply of, and all terms of purchase and delivery for, all materials
and components used in the production of products sold under or in connection
with such marks, (h) all documents constituting or concerning the then current
or proposed advertising and promotion by such Grantor, their subsidiaries or
licensees of products sold under or in connection with such marks, including
without limitation, all documents that reveal the media used or to be used and
the cost for all such advertising conducted within the described period or
planned for such products and (i) renewals and proceeds of any of the
foregoing.

 

“Transaction Documents”
has the meaning given to that term in the Loan Agreement.

 

2.                                      Creation
of Security Interest.  Each
Grantor, in order to secure its Obligations, does hereby grant and pledge to
Agent for its benefit and the benefit of the Guarantors a security interest in

 

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and to, all right, title
and interest of such Grantor in and to all presently existing and hereafter
acquired Collateral.  The security
interest and pledge created by this Section 2 shall continue in
effect so long as any Obligation (other than inchoate indemnity obligations)
remains outstanding or Agent has any obligation to make Loans under the Credit
Facility.

 

3.                                      Delivery
of Pledged Collateral.

 

(a)                                  At the request of Agent, and
subject to the Subordnation Agreement, each Certificate (other than
Certificates representing any Foreign Subsidiary) shall be delivered to and
held by Agent and shall be in suitable form for transfer by delivery, or shall
be accompanied by duly executed undated endorsements, instruments of transfer
or assignment in blank, all in form and substance reasonably satisfactory to
Agent.

 

(b)                                 Agent shall have the right, upon
the occurrence and during the continuance of an Event of Default, without
notice to any of the Grantors, in connection with a commercially reasonable
foreclosure sale, to transfer to, or to direct the applicable Grantor or any
nominee of such Grantor to register or cause to be registered in the name of,
Agent or any of its nominees any or all of the Pledged Securities, Pledged
Partnership Interests or Pledged Limited Liability Company Interests.  In addition, Agent shall have the right at
any time to exchange certificates or instruments representing or evidencing
Pledged Securities for certificates or instruments of smaller or larger denominations.

 

(c)                                  Each Grantor acknowledges and agrees that (i) each Pledged Limited
Liability Company Interest and each Pledged Partnership Interest Controlled by
such Grantor and that is represented by a Certificate shall be a “security”
within the meaning of Article 8 of the Uniform Commercial Code of the
applicable issuer’s jurisdiction and shall be governed by Article 8 of
such Uniform Commercial Code and (ii) each such interest shall at all times
hereafter be represented only by a certificate.

 

(d)                                 Each Grantor further acknowledges and agrees that (i) each Pledged
Limited Liability Company Interest or Pledged Partnership Interest Controlled
by such Grantor and pledged hereunder that is not represented by a certificate
shall not be a “security” within the meaning of Article 8 of the Uniform Commercial
Code of the applicable issuer’s jurisdiction and (ii) such Grantor shall at no
time elect to treat any such interest as a “security” within the meaning of Article 8
of such Uniform Commercial Code or issue any certificate representing such
interest, unless such Grantor provides prior written notification to Agent of
such election and immediately pledges any such certificate to Agent pursuant to
the terms hereof.

 

4.                                      Further
Assurances.

 

(a)                                  At
any time and from time to time at the request of Agent, each Grantor shall
execute and deliver to Agent, at such Grantor’s expense, all instruments,
certificates and documents, including account control agreements, in form and
substance reasonably satisfactory to Agent, and perform all such other acts as
shall be necessary or reasonably desirable to fully perfect or protect or
maintain, when filed, recorded, delivered or performed, Agent’s security
interests granted pursuant to this Agreement or to enable Agent to exercise and
enforce its rights and remedies hereunder with respect to any Collateral.  Without limiting the generality of the
foregoing, each Grantor shall: (i) at the request of the Agent, mark
conspicuously all chattel paper, instruments and other documents and each of
its records pertaining to the Collateral with a legend, in form and substance
satisfactory to Agent, indicating that such document, contract, chattel paper,
instrument or Collateral is subject to the security interest granted hereby,
(ii) at the request of Agent, if any Account or contract or other writing
relating thereto shall be

 

6

 

evidenced by a promissory
note or other instrument, deliver and pledge to the Agent, such note or other
instrument duly endorsed and accompanied by duly executed undated instruments
of transfer or assignment, all in form and substance reasonably satisfactory to
the Agent; (iii) execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices, as may be necessary
or desirable, or as Agent may reasonably request, in order to perfect and
preserve, with the required priority, the security interests granted, or
purported to be granted hereby, and (iv) with respect to any material license
or agreement in which any Grantor now has or hereafter acquires an interest
which by its terms prohibits assignment, upon Agent’s request, such Grantor
will use its best efforts to procure the consent of the counterpart party
thereto.

 

(b)                                 At
any time and from time to time, Agent shall be entitled to file and/or record
any or all such financing statements, instruments and documents held by it, and
any or all such further financing statements, documents and instruments,
relative to the Collateral or any part thereof in each instance, and to take
all such other actions as Agent may reasonably deem appropriate to perfect and
to maintain perfected the security interests granted herein.

 

(c)                                  With
respect to any Collateral consisting of securities, instruments, partnership or
joint venture interests, limited liability company interests, or the like, each
Grantor hereby consents and agrees that, upon the occurrence and during the
continuance of an Event of Default, the issuers of, or obligors on, any such
Collateral, or any registrar or transfer agent or trustee for any such
Collateral, shall be entitled to accept the provisions of this Agreement as
conclusive evidence of the right of Agent to effect any transfer or exercise
any right hereunder or with respect to any such Collateral subject to the terms
hereof, notwithstanding any other notice or direction to the contrary
heretofore or hereafter given by any Grantor or any other Person to such
issuers or such obligors or to any such registrar or transfer agent or trustee.

 

5.                                      Voting
Rights; Dividends; etc.  So long
as no Event of Default shall have occurred and be continuing:

 

(a)                                  Voting
Rights.  Each Grantor shall be
entitled to exercise any and all voting and other consensual rights pertaining
to its Pledged Collateral, or any part thereof, for any purpose not
inconsistent with the terms of this Agreement or the Transaction Documents; provided,
however, that each Grantor shall not exercise, or shall refrain from
exercising, any such right if it would result in a Default or an Event of Default.

 

(b)                                 Dividend
and Distribution Rights.  Subject to
the terms of the Transaction Documents, each Grantor shall be entitled to
receive and to retain and use any and all dividends or distributions paid in
respect of its Pledged Collateral; provided,  however, that any
and all:

 

(i)                                     non-cash
dividends or distributions in the form of capital stock, certificated limited
liability company interests, instruments or other property received, receivable
or otherwise distributed in respect of, or in exchange for, any Pledged
Collateral,

 

(ii)                                  dividends
and other distributions paid or payable in cash in respect of any Pledged
Collateral in connection with a partial or total liquidation or dissolution or
in connection with a reduction of capital, capital surplus or paid-in-surplus,
and

 

(iii)                               cash
paid, payable or otherwise distributed in redemption of, or in exchange for,
any Pledged Collateral,

 

7

 

shall,
except as otherwise provided for in the Transaction Documents, forthwith be
delivered to Agent, in the case of paragraph (i) above, to be held as
Collateral and shall, if received by such Grantor, be received in trust for the
benefit of Agent, be segregated from the other property of such Grantor and
forthwith be delivered to Agent as Collateral in the same form as so received
(with any necessary endorsements), and in the case of paragraph (ii) and
paragraph (iii) above, to be applied to the Obligations to the extent
permitted by the Transaction Documents or otherwise to be held as Collateral.

 

6.                                      Rights
as to Pledged Collateral During Event of Default.  When an Event of Default has occurred and
is continuing:

 

(a)                                  Voting,
Dividend and Distribution Rights.  At
the option of Agent, all rights of each Grantor to exercise the voting and
other consensual rights which it would otherwise be entitled to exercise
pursuant to Section 5(a) above, and to receive the dividends and
distributions which it would otherwise be authorized to receive and retain
pursuant to Section 5(b) above, shall cease, and all such rights
shall thereupon become vested in Agent who shall thereupon have the sole right
to exercise such voting and other consensual rights and to receive and such
dividends and distributions during the continuance of such Event of Default to
be applied to the Obligations or otherwise to be held as Collateral.

 

(b)                                 Dividends
and Distributions Held in Trust.  All
dividends and other distributions which are received by any Grantor contrary to
the provisions of Section 6(a) of this Agreement shall be received
in trust for the benefit of Agent, shall be segregated from other funds of such
Grantor and forthwith shall be paid over to Agent as Collateral in the same
form as so received (with any necessary endorsements).

 

7.                                      Irrevocable
Proxy.  Each Grantor hereby
revokes all previous proxies with regard to its Pledged Collateral and appoints
Agent as its respective proxyholder to (a) attend and vote at any and all
meetings of the shareholders of the corporation(s) which issued the Pledged
Securities, and any adjournments thereof, held on or after the date of the
giving of this proxy and prior to the termination of this proxy and to execute
any and all written consents of shareholders of such corporation(s) executed on
or after the date of the giving of this proxy and prior to the termination of
this proxy, with the same effect as if such Grantor had personally attended the
meetings or had personally voted its shares or had personally signed the
written consents, waivers or ratification, and (b) to attend and vote at
any and all meetings of the members of the issuer of any Pledged Limited
Liability Company Interests or partners of the issuer of any Pledged
Partnership Interests (whether or not such Pledged Limited Liability Company
Interests or Pledged Partnership Interests are transferred into the name of
Agent), and any adjournments thereof, held on or after the date of the giving
of this proxy and to execute any and all written consents, waivers and
ratifications of any applicable issuer executed on or after the date of the
giving of this proxy and prior to the termination of this proxy with the same
effect as if such Grantor had personally attended the meetings or had
personally voted on their respective limited liability company interests or
partnership interests or had personally signed the consents, waivers or
ratifications; provided, however, that Agent as proxyholder shall
have rights hereunder only upon the occurrence and during the continuance of an
Event of Default.  Each Grantor hereby
authorizes Agent to substitute another Person (which Person shall be a
successor to the rights of Agent hereunder, a nominee appointed by Agent to
serve as proxyholder, or otherwise as approved by such Grantor in writing, such
approval not to be unreasonably withheld) as the proxyholder and, upon the
occurrence or during the continuance of any Event of Default, hereby authorizes
and directs the proxyholder to file this proxy and the substitution instrument
with the secretary of the appropriate corporation.  This proxy is-coupled with an interest and is
irrevocable until such time as the Credit Guaranty is terminated and all
Obligations (other than inchoate indemnity obligations) have been indefeasibly
paid in full.

 

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8.                                      The
Grantors’ Representations and Warranties.  Each Grantor represents and warrants as
follows:

 

(a)                                  Such
Grantor (i) is incorporated in the jurisdiction disclosed on Schedule 1-A
and neither such Grantor nor any corporate predecessor has, during the
preceding five years, been incorporated in any other jurisdiction, except as
disclosed on Schedule 1-A, and (ii) has the organizational
identification number disclosed on Schedule 1-A.

 

(b)                                 Such
Grantor currently conducts business only under its own name and the trade names
listed on Schedule 1-A. 
Neither such Grantor nor any corporate predecessor has, during the
preceding five years, been known as or used any other corporate or fictitious
name, except the names disclosed on Schedule 1-A.

 

(c)                                  Such
Grantor (i) has Collateral in the United States with an aggregate value in
excess of $1,000,000 only at the locations listed on Schedule 1-A;
(ii) has exclusive possession and control of such Collateral owned by such
Grantor, except for each location indicated on Schedule 1-A where
such Collateral is possessed by a lessee, consignee, warehouseman or other
third party; and (iii) maintains its chief executive office, where such
Grantor keeps its records concerning the Collateral, at the address set forth for
such Grantor on Schedule 1-A.

 

(d)                                 Such
Grantor has only the Deposit Accounts and securities accounts disclosed on Schedule 1-B.

 

(e)                                  Such
Grantor is the legal and beneficial owner of the Collateral free and clear of
all Liens except for Permitted Liens. 
Such Grantor has the power, authority and legal right to grant the
security interests in the Collateral purported to be granted hereby, and to
execute, deliver and perform this Agreement. 
The grant of security interest in the Collateral pursuant to this
Agreement creates a valid first priority security interest in the Collateral,
except for Permitted Liens.

 

(f)                                    No consent of any Person,
including, without limitation, any partner in a partnership with respect to
which such Grantor has pledged its interests as a Pledged Partnership Interests
or any member in a limited liability company with respect to which such Grantor
has pledged its interests in the Pledged Limited Liability Company Interests,
is required for the pledge by such Grantor of the Pledged Collateral or the
grant of security interest by such Grantor in the Collateral.

 

(g)                                 Except
as set forth on Schedule 1-C, the Pledged Securities described on Schedule 1-C
constitute (i) all of the shares of capital stock of any Person owned by
such Grantor and (ii) that percentage of the issued and outstanding shares
of the respective issuers thereof indicated on Schedule 1-C, and
there is no other class of shares issued and outstanding of the respective
issuers thereof except as set forth on Schedule 1-C.  Except as set forth in Schedule 1-C,
the Pledged Partnership Interests described on Schedule 1-C
constitute all of the partnerships or joint ventures in which each Grantor has
an interest, and such Grantor’s percentage interest in each such partnership or
joint venture is as set forth on such Schedule 1-C.  Except as set forth in Schedule 1-C,
the Pledged Limited Liability Company Interests described on Schedule 1-C
attached hereto constitute all of the limited liability company interests of
each Grantor and such Grantor’s percentage interest in each such issuer is as
set forth on Schedule 1-C attached hereto.  Unless specified otherwise on Schedule 1-C,
each of the Pledged Partnership Interests and Pledged Limited Liability Company
Interests described on Schedule 1-C are uncertificated securities.

 

9

 

(h)                                 None
of the Grantors holds any Commercial Tort Claim individually in excess of
$100,000 as of the date of this Agreement, except as indicated on Schedule 1-A.

 

(i)                                     No
authorization, approval or other action by, and no notice to or filing with,
any Governmental Authority (other than such authorizations, approvals and other
actions as have already been taken and are in full force and effect) is
required (A) for the pledge of the Collateral or the grant of the security
interest in the Collateral by any of the Grantors hereby or for the execution,
delivery or performance of this Agreement by any of the Grantors, or
(B) for the exercise by Agent of the voting rights in the Pledged
Securities, the Pledged Partnership Interest or the Pledged Limited Liability
Company Interests or of any other rights or remedies in respect of the
Collateral hereunder except as may be required in connection with any
disposition of Collateral consisting of securities by laws affecting the
offering and sale of securities generally.

 

9.                                      Grantors’
Covenants.  In addition to the
other covenants and agreements set forth herein and in the other Transaction
Documents, each Grantor covenants and agrees as follows:

 

(a)                                  Such
Grantor will pay, prior to delinquency, all taxes, charges, Liens and
assessments against the Collateral owned by it, except those with respect to
which the amount or validity is being contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with GAAP have
been provided on the books of such Grantor and except those which could not
reasonably be expected to have a Material Adverse Effect.

 

(b)                                 The
Collateral will not be used in violation of any applicable material law,
regulation or ordinance (including without limitation, all applicable
regulations, rules and orders), nor used in any way that will void or impair
any insurance required to be carried in connection therewith.

 

(c)                                  Such
Grantor will keep the Collateral in reasonably good repair, working order and
operating condition (normal wear and tear excluded), and from time to time make
all necessary and proper repairs, renewals, replacements, additions and
improvements thereto and, as appropriate and applicable, will otherwise deal
with the Collateral in all such ways as are considered customary practice by
owners of like property.

 

(d)                                 Such
Grantor will take all reasonable steps to preserve and protect the Collateral
except where the failure to do so could not reasonably be expected to have a
Material Adverse Effect.

 

(e)                                  Grantors
shall (i) carry and maintain insurance at its expense of the types and in
the amounts customarily carried by others engaged in substantially the same
business as such Person and operating in the same geographic area as such
Person, including, but not limited to, fire, property damage and worker’s
compensation, such insurance to be in such form as is carried with companies
and in amounts satisfactory to Agent, and (ii) deliver to Agent from time
to time, as Agent may request, schedules or insurance certificates setting
forth all insurance then in effect.  All
property policies shall name Agent as loss payee with respect to the Collateral
and all liability policies shall name Agent as an additional insured in the
full amount of Grantors’ liability coverage limits.

 

(f)                                    Such
Grantor will promptly notify Agent in writing in the event of any material
damage to the Collateral from any source whatsoever.

 

(g)                                 Such
Grantor will not (i) establish any location of Collateral not listed in Schedule 1-A,
(ii) move its principal place of business, chief executive offices or any
other office listed in Schedule 1-A or (iii) adopt, use or
conduct business under any trade name or other corporate or

 

10

 

fictitious name not
disclosed in Schedule 1-A, except upon not less than 30 days prior
written notice to Agent and such Grantor’s prior compliance with all applicable
requirements of Section 4 hereof necessary to perfect Agent’s
security interest hereunder.

 

(h)                                 Such
Grantor shall not establish any additional Deposit Account or securities
account not listed on Schedule 1-B, except upon prior written
notice to Agent and such Grantor’s compliance with all applicable requirements
of Section 4 hereof necessary to perfect Agent’s security interest
hereunder, including without limitation, delivery of duly executed account
control agreements by all necessary parties, in form and substance satisfactory
to Agent.

 

(i)                                     Such
Grantor covenants to Agent that any Pledged Securities held by it shall be in
certificated form (as contemplated by Article 8 of the applicable Uniform
Commercial Code), and that it will not seek to convert all or any part of any
Pledged Securities into uncertificated form (as contemplated by Article 8
of the applicable Uniform Commercial Code).

 

(j)                                     Such
Grantor will (i) not at any time cause or permit any Subsidiary that is an
issuer of Pledged Securities to issue any capital stock, warrants, options or
other rights to acquire any capital stock, other than to such Grantor or as
otherwise permitted under the Transaction Documents and (ii) pledge to
Agent in accordance with the terms hereof, immediately upon its acquisition
(directly or indirectly) thereof, any and all shares of stock or other securities
of each issuer of Pledged Securities.

 

(k)                                  Such
Grantor will (i) not at any time cause or permit any issuer of Pledged
Limited Liability Company Interests to issue any additional limited liability
company interests or any other rights or options to acquire any additional
limited liability company interests, other than to the Grantors or as otherwise
permitted under the Transaction Documents, and (ii) pledge to Agent in
accordance with the terms hereof, immediately upon its acquisition (directly or
indirectly) thereof, any and all additional limited liability company
interests.

 

(l)                                     Such
Grantor will (i) not at any time cause or permit any issuer of Pledged
Partnership Interests to issue any additional partnership interests or any
other rights or options to acquire any additional partnership interests, other
than to the Grantors or as otherwise permitted under the Transaction Documents,
and (ii) pledge to Agent in accordance with the terms hereof, immediately
upon its acquisition (directly or indirectly) thereof, any and all additional
partnership interests.

 

(m)                               If
any Grantor shall at any time hold or acquire a Commercial Tort Claim in an
amount reasonably estimated to exceed $100,000, such Grantor shall promptly
notify Agent thereof in a writing signed by such Guarantor, including a summary
description of such claim, and grant to Agent in writing a security interest
therein and in the proceeds thereof, all upon the terms of this Agreement, with
such writing to be in form and substance reasonably satisfactory to Agent.

 

10.                               Agent’s
Rights Regarding Collateral.  At
any time and from time to time, Agent may, to the extent necessary or desirable
to protect the security hereunder, but Agent shall not be obligated to:
(a) (whether or not a Default or Event of Default has occurred) itself or
through its representatives, at its own expense, upon reasonable notice and at
such reasonable times during usual business hours, visit and inspect any of the
Grantors’ properties and examine and make abstracts from any of its books and
records at any reasonable time and as often as may reasonably be desired and
discuss the business, operations, properties and financial and other condition
of any of the Grantors with officers of such Grantors and with their
accountants or (b) if an Event of Default has occurred and is continuing,
at the expense of the Grantors, perform any obligation of any of the Grantors
under this Agreement.  Agent may, but
shall not be obligated to, after an Event of Default has occurred and is
continuing: (i) request from obligors of the

 

11

 

Collateral, in the name
of the applicable Grantor or in the name of Agent, information concerning the
Collateral and the amounts owing thereon; and (ii) direct obligors under
the contracts included in the Collateral to direct their performance to
Agent.  Each Grantor shall keep proper
books and records and accounts in which full, true and correct entries in
conformity with GAAP and all applicable laws shall be made of all material
dealings and transactions pertaining to the Collateral.  Agent shall not be under any duty or
obligation whatsoever to take any action to preserve any rights of or against
any prior or other parties in connection with the Collateral, to exercise any
voting rights or managerial rights with respect to any Collateral or to make or
give any presentments for payment, demands for performance, notices of
non-performance, protests, notices of protest, notices of dishonor or notices
of any other nature whatsoever in connection with the Collateral or the
Obligations.  Agent shall not be under
any duty or obligation whatsoever to take any action to protect or preserve the
Collateral or any rights of the Grantors’ therein, or to make collections or
enforce payment thereon, or to participate in any foreclosure or other
proceeding in connection therewith. 
Nothing contained herein or in any consent shall constitute an
assumption by Agent of any of the Grantors’ obligations under the contracts
assigned hereunder unless Agent shall have given written notice to the
counterpart to such assigned contract of Agent’s intention to assume such
contract.  Each Grantor shall continue to
be liable for performance of its obligations under such contracts.

 

11.                               Collections
on the Collateral.  Subject to
the terms and conditions of the Reimbursement Agreement, each Grantor shall
have the right to use and to continue to make collections on and receive
dividends and other proceeds of all of the Collateral in the ordinary course of
business so long as no Event of Default shall have occurred and be
continuing.  Upon the occurrence and
during the continuance of an Event of Default, at the option of Agent, each
Grantor’s right to make collections on and receive dividends and other proceeds
of the Collateral and to use or dispose of such collections and proceeds shall
terminate, and any and all dividends, proceeds and collections, including all
partial or total prepayments, then held or thereafter received on or on account
of the Collateral will be held or received by such Grantor in trust for Agent
and immediately delivered in kind to Agent (duly endorsed to Agent, if
required), to be applied to the Obligations or held as Collateral, as Agent
shall elect.  Upon the occurrence and
during the continuance of an Event of Default, Agent shall have the right at
all times to receive, receipt for, endorse, assign, deposit and deliver, in the
name of any of the Grantors, any and all checks, notes, drafts and other
instruments for the payment of money constituting proceeds of or otherwise
relating to the Collateral; and each Grantor hereby authorizes Agent to affix,
by facsimile signature or otherwise, the general or special endorsement of such
Grantor, in such manner as Agent shall deem advisable, to any such instrument
in the event the same has been delivered to or obtained by Agent without
appropriate endorsement, and Agent and any collecting bank are hereby
authorized to consider such endorsement to be a sufficient, valid and effective
endorsement by such Grantor, to the same extent as though it were manually
executed by the duly authorized representative of such Grantor, regardless of
by whom or under what circumstances or by what authority such endorsement
actually is affixed, without duty of inquiry or responsibility as to such
matters, and such Grantor hereby expressly waives demand, presentment, protest
and notice of protest or dishonor and all other notices of every kind and
nature with respect to any such instrument.

 

12.                               Possession
of Collateral by Agent.  All the
Collateral now, heretofore or hereafter delivered to Agent shall be held by
Agent in its possession, custody and control. 
Upon the occurrence and during the continuance of an Event of Default,
whenever any of the Collateral is in Agent’s possession, custody or control,
Agent may use, operate and consume the Collateral, whether for the purpose of
preserving and/or protecting the Collateral, or for the purpose of performing
any of the Grantors’ obligations with respect thereto, or otherwise so long as
consistent with the Transaction Documents or transactions contemplated
thereby.  Agent may at any time deliver
or redeliver the Collateral or any part thereof to the Grantors, and the
receipt of any of the same by the Grantors shall be

 

12

 

complete and full
acquittance for the Collateral so delivered, and Agent thereafter shall be
discharged from any liability or responsibility arising after such delivery to
the Grantors.  So long as Agent exercises
reasonable care and complies with Section 9207 of the UCC with respect to
any Collateral in its possession, custody or control, Agent shall have no
liability for any loss of or damage to any Collateral, and in no event shall
Agent have liability for any diminution in value of Collateral occasioned by
economic or market conditions or events.

 

13.                               Remedies.

 

(a)                                  Rights Upon Event of Default. 
Upon the occurrence and during the continuance of an Event of Default,
the Grantors shall be in default hereunder and, subject to applicable law,
Agent shall have, in any jurisdiction where enforcement is sought, in addition
to all other rights and remedies that Agent may have under this Agreement and
under applicable laws or in equity, all rights and remedies of a secured party
under the Uniform Commercial Code as enacted in any such jurisdiction in effect
at that time, and in addition the following rights and remedies, all of which
may be exercised with or without further notice to the Grantors except such notice
as may be specifically required by applicable law: (i) to foreclose the
Liens and security interests created hereunder or under any other Transaction
Document by any available judicial procedure or without judicial process;
(ii) to enter any premises where any Collateral may be located for the
purpose of securing, protecting, inventorying, appraising, inspecting,
repairing, preserving, storing, preparing, processing, taking possession of or
removing the same; (iii) to sell, assign, lease or otherwise dispose of
any Collateral or any part thereof, either at public or private sale, in lot or
in bulk, for cash, on credit or otherwise, with or without representations or
warranties and upon such terms as shall be commercially reasonable;
(iv) to notify obligors on the Collateral that the Collateral has been
assigned to Agent and that all payments thereon, or performance with respect
thereto, are to be made directly and exclusively to Agent; (v) to collect
by legal proceedings or otherwise all dividends, distributions, interest,
principal or other sums now or hereafter payable upon or on account of the
Collateral; (vi) to enter into any extension, reorganization, disposition,
merger or consolidation agreement, or any other agreement relating to or
affecting the Collateral, and in connection therewith Agent may deposit or
surrender control of the Collateral and/or accept other property in exchange
for the Collateral as Agent reasonably deems appropriate and is commercially
reasonable; (vii) to settle, compromise or release, on terms acceptable to
Agent, in whole or in part, any amounts owing on the Collateral and/or any
disputes with respect thereto; (viii) to extend the time of payment, make
allowances and adjustments and issue credits in connection with the Collateral
in the name of the applicable Grantor for the benefit of Agent; (ix) to
enforce payment and prosecute any action or proceeding with respect to any or
all of the Collateral and take or bring, on behalf of itself or in the name of
the applicable Grantor, any and all steps, actions, suits or proceedings deemed
necessary or reasonably desirable by Agent to effect collection of or to
realize upon the Collateral, including any judicial or nonjudicial foreclosure
thereof or thereon, and each Grantor specifically consents to any nonjudicial
foreclosure of any or all of the Collateral or any other action taken by Agent
which may release any obligor from personal liability on any of the Collateral,
and each Grantor waives, to the extent permitted by applicable law, any right
to receive notice of any public or private judicial or nonjudicial sale or
foreclosure of any security or any of the Collateral, and any money or other
property received by Agent in exchange for or on account of the Collateral,
whether representing collections or proceeds of Collateral, and whether
resulting from voluntary payments or foreclosure proceedings or other legal
action taken by Agent or any of the Grantors, may be applied by Agent, without
notice to the Grantors, to the Obligations in such order and manner as Agent in
their sole discretion shall determine; (x) to insure, protect and preserve
the Collateral; (xi) to exercise all rights, remedies, powers or
privileges provided under any of the Transaction Documents; and (xii) to
remove, from any premises where the same may be located, the Collateral and any
and all documents, instruments, files and records, and any receptacles and
cabinets containing the same, relating to the Collateral, and Agent may, at the
cost and expense of the Grantors,

 

13

 

use such of its supplies, equipment, facilities and
space at its places of business as may be necessary or appropriate to properly
administer, process, store, control, prepare for sale or disposition and/or
sell or dispose of the Collateral or to properly administer and control the
handling of collections and realizations thereon, and Agent shall be deemed to
have a rent-free tenancy of any premises of the Grantors for such purposes and
for such periods of time as reasonably required by Agent.  So long as an Event of Default has occurred
and is continuing, each Grantor will, at Agent’s request, assemble the
Collateral and make it available to Agent at places which Agent may designate,
whether at the premises of such Grantor or elsewhere, and will make available
to Agent, free of cost, all premises, equipment and facilities of such Grantor
for the purpose of Agent’s taking possession of the Collateral or storing the
same or removing or putting the Collateral in salable form or selling or
disposing of the same.

 

 (b)                              Possession by Agent.  Upon the occurrence and during the
continuance of an Event of Default, Agent also shall have the right, without
notice or demand, either in person, by Agent or by a receiver to be appointed
by a court in accordance with the provisions of applicable law (and each
Grantor hereby expressly consents, to the fullest extent permitted by
applicable law, upon the occurrence and during the continuance of an Event of
Default to the appointment of such a receiver), and, to the extent permitted by
applicable law, without regard to the adequacy of any security for the
Obligations, to take possession of the Collateral or any part thereof and to
collect and receive the rents, issues, profits, income and proceeds
thereof.  The taking possession of the
Collateral by Agent shall not cure or waive any Event of Default or notice
thereof or invalidate any act done pursuant to such notice.  The rights, remedies and powers of any
receiver appointed by a court shall be as ordered by said court.

 

(c)                                  Sale
of Collateral.  Any public or private
sale or other disposition of the Collateral may be held at any office of Agent,
or at the Grantors’ places of business, or at any other place permitted by applicable
law, and without the necessity of the Collateral being within the view of
prospective purchasers.  Agent may direct
the order and manner of sale of the Collateral, or portions thereof, as it in
its sole and absolute discretion may determine provided such sale is
commercially reasonable, and each Grantor expressly waives, to the extent
permitted by applicable law, any right to direct the order and manner of sale
of any Collateral.  Agent or any Person
acting on Agent’s behalf may bid and purchase at any such sale or other
disposition.  In furtherance of Agent’s
rights hereunder, each Grantor hereby grants to Agent an irrevocable,
non-exclusive license (exercisable without royalty or other payment by Agent)
to use, license or sublicense any patent, trademark, trade name, copyright or
other intellectual property in which Grantor now or hereafter has any right,
title or interest together with the right of access to all media in which any
of the foregoing may be recorded or stored; provided, however, that such
license shall only be exercisable in connection with the disposition of
Collateral upon Agent’s exercise of its remedies hereunder.

 

(d)                                 Notice
of Sale.  Unless the Collateral is
perishable or threatens to decline speedily in value or is of a type customarily
sold on a recognized market, Agent will give the Grantors reasonable notice of
the time and place of any public sale thereof or of the time on or after which
any private sale thereof is to be made. 
The requirement of reasonable notice conclusively shall be met if: such
notice is mailed, certified mail, postage prepaid, to the Grantors at their
addresses set forth on the signature page hereto or delivered or otherwise sent
to the Grantors, at least ten (10) days before the date of the sale.  Each Grantor expressly waives, to the fullest
extent permitted by applicable law, any right to receive notice of any public
or private sale of any Collateral or other security for the Obligations except
as expressly provided for in this paragraph. 
Agent shall not be obligated to make any sale of the Collateral if it
shall determine not to do so regardless of the fact that notice of sale of the
Collateral may have been given.  Agent
may, without notice or publication, except as required by applicable law,
adjourn the sale from time to time by announcement at the time and place fixed
for sale, and such sale

 

14

 

may, without further
notice (except as required by applicable law), be made at the time and place to
which the same was so adjourned.

 

(e)                                  Private
Sales.  With respect to any
Collateral consisting of securities, partnership interests, limited liability
company interests, joint venture interests or the like, and whether or not any
of such Collateral has been effectively registered under the Securities Act of
1933, as amended, or other applicable laws, Agent may, in its sole and absolute
discretion, sell all or any part of such Collateral at private sale in such
manner and under such circumstances as Agent may deem necessary or advisable in
order that the sale may be lawfully conducted in a commercially reasonable
manner.  Without limiting the foregoing,
Agent may (i) approach and negotiate with a limited number of potential
purchasers, and (ii) restrict the prospective bidders or purchasers to
persons who will represent and agree that they are purchasing such Collateral
for their own account for investment and not with a view to the distribution or
resale thereof.  In the event that any
such Collateral is sold at private sale, each Grantor agrees to the extent
permitted by applicable law that if such Collateral is sold for a price which
is commercially reasonable, then (A) the Grantors shall not be entitled to
a credit against the Obligations in an amount in excess of the purchase price,
and (B) Agent shall not incur any liability or responsibility to the
Grantors in connection therewith, notwithstanding the possibility that a
substantially higher price might have been realized at a public sale.  Each Grantor recognizes that a ready market
may not exist for such Collateral if it is not regularly traded on a recognized
securities exchange, and that a sale by Agent of any such Collateral for an
amount substantially less than a pro rata share of the fair market value of the
issuer’s assets minus liabilities may be commercially reasonable in view of the
difficulties that may be encountered in attempting to sell a large amount of
such Collateral or Collateral that is privately traded.

 

(f)                                    Title
of Purchasers.  Upon consummation of
any sale of Collateral hereunder, Agent shall have the right to assign,
transfer and deliver to the purchaser or purchasers thereof the Collateral so
sold.  Each such purchaser at any such
sale shall hold the Collateral so sold absolutely free from any claim or right
upon the part of any Grantor or any other Person claiming through any Grantor,
and each Grantor hereby waives (to the extent permitted by applicable laws) all
rights of redemption, stay and appraisal which it now has or may at any time in
the future have under any rule of law or statute now existing or hereafter
enacted.  If the sale of all or any part
of the Collateral is made on credit or for future delivery, Agent shall not be
required to apply any portion of the sale price to the Obligations until such
amount actually is received by Agent, and any Collateral so sold may be
retained by Agent until the sale price is paid in full by the purchaser or
purchasers thereof.  Agent shall not
incur any liability in case any such purchaser or purchasers shall fail to pay
for the Collateral so sold, and, in case of any such failure, the Collateral
may be sold again.

 

(g)                                 Disposition
of Proceeds of Sale.  The proceeds
resulting from the collection, liquidation, sale or other disposition of the Collateral
shall be applied, first, to the reasonable costs and expenses (including
reasonable attorneys’ fees) of retaking, holding, storing, processing and
preparing for sale, selling, collecting and liquidating the Collateral, and the
like; second, to the satisfaction of all Obligations; and third,
any surplus remaining after the satisfaction of all Obligations, to be paid
over to the Grantors or to whomsoever may be lawfully entitled to receive such
surplus.

 

(h)                                 Certain
Waivers.  To the extent permitted by
applicable law, each Grantor waives all claims, damages and demands against
Agent arising out of the repossession, retention or sale of the Collateral, or
any part or parts thereof, except to the extent any such claims, damages and
awards arise out of the gross negligence or willful misconduct of Agent.

 

15

 

(i)                                     Remedies
Cumulative.  The rights and remedies
provided under this Agreement are cumulative and may be exercised singly or
concurrently, and are not exclusive of any other rights and remedies provided
by law or equity.

 

14.                               Miscellaneous.

 

(a)                                  Agent Appointed Attorney-in-Fact. 
To the full extent permitted by applicable law, each Grantor hereby
irrevocably appoints Agent as such Grantor’s attorney-in-fact, with full
authority in the place and stead of such Grantor, and in the name of such
Grantor, or otherwise, from time to time, in Agent’s sole and absolute
discretion to do any of the following acts or things upon the occurrence and
during the continuance of an Event of Default: (a) to do all acts and
things and to execute all documents necessary or advisable to perfect and
continue perfected the security interests created by this Agreement and to
preserve, maintain and protect the Collateral; (b) to do any and every act
which such Grantor is obligated to do under this Agreement; (c) to endorse
and transfer the Collateral upon foreclosure by Agent; and (d) to file any
claims or take any action or institute any proceedings which Agent may reasonably
deem necessary or desirable for the protection or enforcement of any of the
rights of Agent with respect to any of the Collateral; provided, however,
that Agent shall be under no obligation whatsoever to take any of the foregoing
actions, and Agent shall have no liability or responsibility for any act or
omission (other than Agent’s own gross negligence or willful misconduct) taken
with respect thereto.

 

(b)                                 Costs and Expenses. Each Grantor shall pay on demand (i) all reasonable fees
and expenses, including reasonable attorneys’ fees and expenses, incurred by
Agent in connection with the exercise of its duties under this Agreement and
the preparation, execution and delivery of amendments and waivers hereunder and
(ii) all reasonable fees and expenses, including reasonable attorneys’ fees and
expenses, incurred by Agent in connection with the enforcement or attempted
enforcement of this Agreement or any of the Obligations or in preserving any of
Agent’s rights and remedies (including, without limitation, all such fees and
expenses incurred in connection with any “workout” or restructuring affecting
the Transaction Documents or the Obligations or any bankruptcy or similar
proceeding involving such Grantor, any other Grantor, Borrower or any of their
affiliates).

 

(c)                                  Counterparts.  This
Agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which shall be deemed to be an
original, but all of which taken together shall constitute one and the same
agreement.

 

(d)                                 Understandings With Respect to Waivers and
Consents.  Each Grantor warrants and agrees that each of
the waivers and consents set forth herein are made with full knowledge of their
significance and consequences, with the understanding that events giving rise
to any defense or right waived may diminish, destroy or otherwise adversely
affect rights which such Grantor otherwise may have against Agent or others, or
against any Collateral.  If any of the
waivers or consents herein are determined to be unenforceable under applicable
law, such waivers and consents shall be effective to the maximum extent
permitted by law.

 

(e)                                  Indemnity.  Each Grantor shall
indemnify, defend, and hold harmless Agent, each Guarantor and each of Agent’s
and such Guarantor’s Subsidiaries, affiliates, directors, officers, employees
and agents (collectively, the “Indemnified Persons”), and reimburse the
Indemnified Persons for, from, and against all demands, claims, actions or
causes of action, assessments, losses, damages, liabilities, costs and
expenses, including, without limitation, interest, penalties and reasonable
attorneys’ fees, disbursements and expenses, arising out of or in connection
with (i) any breach by any Grantor of any of the representations and
warranties contained in this Agreement or the other Transaction

 

16

 

Documents, (ii) any
failure by a Grantor to perform any covenant, undertaking or obligation
hereunder, (iii) any matter arising out of any use by any Grantor of any
proceeds of the Loans, (iv) any licensing fees relating to any item of
Collateral, or (v) any matter arising out of any use by any Grantor of any
item of Collateral, except, in each case, to the extent such liability arises
from the gross negligence or willful misconduct of the Indemnified Person
seeking indemnity hereunder.

 

(f)                                    Amendments, etc.  No
amendment or waiver of any provision of this Agreement nor consent to any
departure by the Grantors herefrom (other than supplements to the Schedules
hereto in accordance with the terms of this Agreement) shall in any event be
effective unless the same shall be in writing and executed by the party against
whom enforcement is sought, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.

 

(g)                                 Notices.  All notices and other
communications provided for hereunder shall be given in the manner and to the
addresses set forth either in the Reimbursement Agreement or in the Guaranty
dated as of even date herewith entered into by the Grantors.

 

(h)                                 Continuing Security Interest: Transfer of
Notes; Termination. This
Agreement shall create a continuing security interest in the Collateral and
shall (i) remain in full force and effect until indefeasible
payment in full of the Obligations (other than inchoate indemnity obligations)
and the termination of the Credit Guaranty, (ii) be binding upon each
Grantor, their successors and assigns and (iii) inure, together with the
rights and remedies of Agent hereunder, to the benefit of Agent and any
successor Agent, subject to the terms and conditions of the Reimbursement
Agreement.  Nothing set forth herein or
in any other Transaction Document is intended or shall be construed to give to
any other party any right, remedy or claim under, to or in respect of this
Agreement or any other Transaction Document or any Collateral.  The Grantors’ successors and assigns shall
include, without limitation, a receiver, trustee or debtor-in-possession
thereof or therefor, provided that, except as otherwise permitted under
the Transaction Documents, none of the rights or obligations of the Grantors
hereunder may be assigned or otherwise transferred without the prior written
consent of Agent.

 

(j)                                     Release of the Grantors.  This
Agreement and all obligations of each Grantor hereunder and all security
interests granted hereby shall be released and terminated when all Obligations
(other than inchoate indemnity obligations) have been paid in full in cash and
when the Credit Guaranty has been terminated. 
Upon such release and termination of all such Obligations and the
security interest hereunder, all rights in and to the Collateral granted or
pledged by the Grantors hereunder shall automatically revert to the Grantors,
and Agent shall return any pledged Collateral in their possession to the
Grantors, or to the Person or Persons legally entitled thereto, and shall
endorse, execute, deliver, record and file all instruments and documents, and
do all other acts and things, reasonably required for the return of the
Collateral to the Grantors, or to the Person or Persons legally entitled
thereto, and to evidence or document the release of the interests of Agent
arising under this Agreement, all as reasonably requested by, and at the sole
expense of, the Grantors.

 

(k)                                  Governing Law.  This
Agreement shall be governed and construed in accordance with the laws of the
State of California (without reference to its choice of law provisions), except
as otherwise required by mandatory provisions of law and except to the extent
that remedies provided by the laws of a jurisdiction other than the State of
California are governed by the laws of such jurisdiction.

 

(l)                                     Jury Trial.  EACH GRANTOR AND AGENT,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES
ALL RIGHT TO TRIAL BY JURY AS TO ANY ISSUE RELATING HERETO IN ANY ACTION,
PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.

 

17

 

(m)                               Conflicts with BofA Loan Documents.  Notwithstanding anything contained in this Agreement, to the extent that
any terms or conditions of this Agreement conflict with or are otherwise
inconsistent with the BofA Loan Documents, then the conflicting or otherwise
inconsistent term in the BofA Loan Documents shall take precedent in all
respects until such time as the BofA Loan Documents are terminated.  Any such conflict or inconsistency shall not
be deemed a default under this Agreement. 
In addition, notwithstanding anything contained in this Agreement, all
rights and remedies of Agent under this Agreement shall be subject to the terms
and conditions of the Subordination Agreement.

 

[Remainder of page intentionally
left blank.]

 

18

 

IN
WITNESS WHEREOF, the parties hereto, by their officers thereunto duly
authorized, have executed this Agreement as of the day and year first above
written.

 

 

	
   

  	
  Grantors:

  	
  Aviza
  Technology, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Patrick C. O’Connor

  	
   

  
	
   

  	
  Name:

  	
  Patrick C. O’Connor

  	
   

  
	
   

  	
  Title:

  	
  Chief Financial
  Officer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Aviza
  Technology International, Inc.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Patrick C. O’Connor

  	
   

  
	
   

  	
  Name:

  	
  Patrick C. O’Connor

  	
   

  
	
   

  	
  Title:

  	
  Chief Financial
  Officer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Agent:

  	
   

  
	
   

  	
   

  
	
  VantagePoint
  Venture Partners IV (Q), L.P.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Alan E.
  Salzman

  	
   

  	
   

  
	
  Name:

  	
  Alan E. Salzman

  	
   

  	
   

  
	
  Title:

  	
  Managing Member

  	
   

  	
   

  
													

 

 

[Signature Page to Security Agreement]Exhibit
10.23

 

THIS AGREEMENT IS SUBJECT TO
THE TERMS OF AN INTERCREDITOR AND SUBORDINATION AGREEMENT DATED AS OF AUGUST 6,
2004, BY AND AMONG BANK OF AMERICA, N.A., VANTAGEPOINT VENTURE PARTNERS
IV, L.P., AND VANTAGEPOINT VENTURE PARTNERS IV (Q), L.P.

 

REIMBURSEMENT
AGREEMENT

 

This REIMBURSEMENT AGREEMENT, dated as of August 6,
2004 (this “Agreement”),
is entered into by and between Aviza
Technology, Inc., a Delaware corporation (“Obligor”), VantagePoint Venture Partners IV, L.P., a
Delaware limited partnership and VantagePoint
Venture Partners IV (Q), L.P., a Delaware limited partnership
(collectively, the “Guarantors”
and each a “Guarantor”)
and VantagePoint Venture Partners IV (Q),
L.P., a Delaware limited partnership, as the administrative agent
for the Guarantors (“Agent”).

 

RECITALS

 

A.            Reference is made to that certain Credit Agreement, dated
as of August 6, 2004 (as amended and in effect from time to time, the “Credit Facility”), by
and between Bank of America, N.A. (“Bank”) and Obligor.  It is a condition precedent to the extension
of Loans under the Credit Facility that Guarantors provide a guaranty of the
Loans to be borrowed under the Credit Facility.

 

B.            Obligor has requested that Guarantors enter into that
certain Continuing Guaranty, dated as of August 6, 2004 (as amended and in
effect from time to time, the “Credit Guaranty”), to be executed by each of the
Guarantors for the benefit of Bank, pursuant to which the Guarantors will
guarantee up to Twenty Million Dollars ($20,000,000) in principal amount of
Loans under the Credit Facility.

 

C.            In order to induce Guarantors to enter into the Credit
Guaranty, (i) Obligor has agreed to enter into this Agreement with
Guarantors, (ii) Aviza Technology International, Inc., a Delaware
corporation (together with any other Subsidiary that executes a Subsidiary
Joinder pursuant to Section 4(a)(iv), the “Subsidiary Guarantors”
and each a “Subsidiary
Guarantor”) has agreed to enter into a Subsidiary Guaranty (as
amended and in effect from time to time, the “Subsidiary  Guaranty”) to guaranty Obligor’s
obligations to Guarantors under this Agreement and (iii) Obligor and the
other Grantors (as defined in the Security Agreement) have agreed to enter into
a Security Agreement, dated as of the date hereof (as amended and in effect
from time to time, the “Security Agreement”),
to secure their respective obligations under this Agreement and the Subsidiary
Guaranty.

 

D.            Capitalized terms used and not
otherwise defined in this Agreement shall have the respective meanings set
forth in Section 6 hereof.

 

 

AGREEMENT

 

NOW, THEREFORE, in
consideration of the above recitals and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged,
Obligor hereby agrees with Guarantors and Agent as follows:

 

1.             Reimbursement.  (a) 
If Guarantors shall at any time or from time to time be required to make any
payment (i) under the Credit Guaranty for any Drawn Amounts, or (ii) in
payment of a Guaranty Expense Amount, then Agent, at the direction of Required
Guarantors, may give Obligor written notice of any such payments and Obligor
shall, if not prohibited under the terms of the Credit Facility, reimburse
Agent within two (2) business days of receipt of such written notice an
amount equal to such Drawn Amounts and/or Guaranty Expense Amount, as
applicable.

 

(b)           Obligor’s Obligations hereunder are
absolute, unconditional and irrevocable and shall not be reduced by any set-off
or any event or occurrence including any action or inaction by Agent or Guarantors
or any other party or by any unenforceability of the Credit Facility. Any
Obligations not paid when due shall bear interest a rate per annum of 10%.

 

(c)           All
payments by Obligor shall be made to Agent for the account of all of the
Guarantors and shall be made in immediately available funds, no later than 1:00 p.m.
(California time) on the date specified herein. 
Any payment received by Agent later than 1:00 p.m. (California
time), shall be deemed to have been received on the following business day and
any applicable interest shall continue to accrue until such following business
day.

 

(d)           Except
as otherwise provided in this Agreement, aggregate payments made pursuant to
this Section 1 shall be apportioned ratably among the Guarantors
and payments of Guaranty Expense Amounts (other than fees or expenses that are
for Agent’s separate account) shall be apportioned ratably among the
Guarantors.  All payments shall be
remitted to Agent and all such payments and all proceeds of Collateral received
by Agent, shall be applied as follows:

 

(i)            first,
to pay any Guaranty Expense Amounts then due to Agent under the Transaction
Documents, until paid in full;

 

(ii)           second,
to pay any Guaranty Expense Amount then due to the Guarantors under the
Transaction Documents, on a ratable basis, until paid in full;

 

(iii)          third,
to pay any interest due in respect of Drawn Amounts to the Guarantors under
this Agreement, on a ratable basis, until paid in full; and

 

(iv)          fourth,
to pay any Drawn Amounts then due to the Guarantors under this Agreement, on a
ratable basis, until paid in full.

 

Except as otherwise
provided in this Agreement, rights, interests and obligations of each Guarantor
under this Agreement and related Transaction Documents, including security
interests in the Collateral under the Security Agreement, shall be shared by
each Guarantor in the ratio of (a) the aggregate Drawn Amount paid by such
Guarantor to Bank pursuant to the Credit Guaranty to (b) the aggregate
Drawn Amounts paid by all Guarantors to Bank pursuant to the Credit Guaranty;
and if no Drawn Amounts have been paid to Bank, then the ratio of (y) a
Guarantor’s Guaranty Commitment to (z) the aggregate Guaranty Commitments of
all

 

2

 

Guarantors.  Any reference in this Agreement to an
allocation between or sharing by Guarantors of any right, interest or
obligation “ratably,” “proportionally” or in similar terms shall refer to this
ratio.

 

2.             Representations and Warranties of
Obligor.  Obligor represents and warrants to Agent and
Guarantors that:

 

(a)  Due
Incorporation, Qualification, etc. 
Obligor (i) is a corporation duly organized, validly existing and
in good standing under the laws of its state of incorporation; (ii) has
the corporate power and authority to own, lease and operate its properties and
carry on its business as now conducted; and (iii) is duly qualified,
licensed to do business and in good standing as a foreign corporation in each
jurisdiction where the failure to be so qualified or licensed could reasonably
be expected to have a material adverse effect on the business, financial
condition or results of operations of Obligor.

 

(b)           Authority. 
The execution, delivery and performance by Obligor of this Agreement and
the other Transaction Documents to which it is a party and the consummation of
the transactions contemplated hereby (i) are within the corporate power
and authority of Obligor and (ii) have been duly authorized by all
necessary corporate actions on the part of Obligor.

 

(c)  Enforceability.  This Agreement and the other Transaction
Documents to which Obligor is a party has been duly executed and delivered by
Obligor and constitutes, or will constitute, a legal, valid and binding
obligation of Obligor, enforceable against Obligor in accordance with its
terms, except as limited by bankruptcy, insolvency or other laws of general
application relating to or affecting the enforcement of creditors’ rights
generally and general principles of equity.

 

(d)  Non-Contravention.  The execution and delivery by Obligor of this
Agreement and the other Transaction Documents and the performance and
consummation of the transactions contemplated hereby do not and will not (i) violate
the articles or certificate of incorporation or bylaws of Obligor or any material
judgment, order, writ, decree, statute, rule or regulation applicable to
Obligor; (ii) violate any provision of, or result in the breach or the
acceleration of, or entitle any other person to accelerate (whether after the
giving of notice or lapse of time or both), any material mortgage, indenture,
agreement, instrument or contract to which Obligor is a party or by which it is
bound; or (iii) result in the creation or imposition of any lien upon any
property, asset or revenue of Obligor (other than those in favor of Agent) or
the suspension, revocation, impairment, forfeiture, or nonrenewal of any
material permit, license, authorization or approval applicable to Obligor, its
business or operations, or any of its assets or properties.

 

(e)  Approvals.
 Other than those already obtained, no
consent, approval, order or authorization of, or registration, declaration or
filing with, any governmental authority or other person (including, without
limitation, the shareholders of Obligor) is required in connection with the
execution and delivery of this Agreement and the other Transaction Documents
and the performance and consummation of the transactions contemplated hereby
and thereby.

 

(f)  Subsidiaries,
etc.  Except as set forth
in Schedule 1 attached hereto (setting forth the jurisdiction of
incorporation or formation and percentage ownership of each shareholder),
Obligor has no direct or indirect Subsidiaries, is not a partner in any
partnership, a member of any limited liability company or a joint venturer in
any joint venture.

 

3.             Deliveries. 
Simultaneously with the
execution and delivery of this Agreement, the following shall occur:

 

3

 

(a)  Obligor and each Subsidiary Guarantor shall
have executed and delivered to Agent the Security Agreement;

 

(b)  Each Subsidiary Guarantor shall have executed
and delivered to Agent the Subsidiary Guaranty;

 

(c)  Obligor and each Subsidiary Guarantor shall
have executed and delivered each instrument, agreement and other document as
Agent shall have reasonably requested to perfect its security interest and the
priority thereof;

 

(d)  Obligor shall have delivered to Agent a copy,
certified by an officer of Obligor, of the resolutions of Obligor’s board of
directors (which shall include the approval of the disinterested members of
Obligor’s board of directors) authorizing the Transaction Documents to which it
is a party;

 

(e)  Each Subsidiary Guarantor shall have
delivered to Agent a copy, certified by an officer of such Subsidiary
Guarantor, of the resolutions of such Subsidiary Guarantor’s board of directors
(which shall include the approval of the disinterested members of such
Subsidiary Guarantor’s board of directors) authorizing the Transaction
Documents to which it is a party; and

 

(f)  Agent shall have received a copy of the Credit
Facility, executed by Obligor and the Bank.

 

To the extent any of the
foregoing shall not have occurred upon the execution and delivery of this
Agreement, Obligor agrees (as a covenant and not merely as a condition) to
promptly accomplish the same.

 

4.             Covenants of Obligor.

 

(a)  Obligor agrees:

 

(i)            To
timely perform all of its obligations to Bank under the Credit Facility;

 

(ii)           To
give Agent prompt notice of any payment default by Obligor under the Credit
Facility and to use its commercially reasonable best efforts to cure any such
default within the time periods permitted;

 

(iii)          Obligor
will cause each of its Subsidiaries (other than Foreign Subsidiaries) hereafter
formed or acquired, to execute and deliver to Agent a Subsidiary Joinder in the
form of Attachment 1 to the Subsidiary Guaranty, to cause such
Subsidiary to become a Subsidiary Guarantor under the Subsidiary Guaranty and a
Grantor under the Security Agreement. 
Obligor and such Subsidiary shall fully cooperate with Agent and perform
all additional acts requested by Agent to effect the purposes of this Section 4(a)(iv),
including without limitation, execution and delivery of agreements,
instruments, UCC financing statements, documents, and certificates all in form
and substance reasonably satisfactory to Agent.

 

(iv)          Promptly
upon the occurrence thereof, to provide written notice to Agent of the
occurrence of any Event of Default hereunder.

 

(b)  Until indefeasible payment in full of the
Obligations (other than inchoate indemnity obligations) and the termination of
the Credit Guaranty, Obligor agrees that without the prior written consent of
Agent, Obligor shall, and shall cause each of its Subsidiaries to, comply with
the covenants set forth in

 

4

 

Sections
7.9, 7.10, 7.12 through 7.15 and 7.18 of the Credit Facility, each of which is
hereby incorporated by reference as though fully set forth herein.

 

5.             Default and Remedies.  Obligor
shall be in default under this Agreement upon the occurrence and during the
continuance of any of the following events (each, an “Event of Default”):

 

(a)  Obligor shall default with respect to any
payment obligation hereunder; or

 

(b)  Any representation or warranty made by
Obligor in this Agreement, any Transaction Document or in the Credit Facility,
or as an inducement to any of the Guarantors to enter into the Credit Guaranty,
shall be false, incorrect, incomplete or misleading in any material respect
when made or furnished; or

 

(c)  Obligor or any Subsidiaries shall fail to
observe or perform any provision of Section 4 of this Agreement.

 

(d)  Obligor or any of its Subsidiaries shall fail
to observe or perform any other covenant, obligation, condition or agreement
contained in this Agreement or the other Transaction Documents (other than
those specified in Section 5(a) and Section 5(c))
and (i) such failure shall continue for fifteen (15) days, or (ii) if
such failure is not curable within such fifteen (15) day period, but is
reasonably capable of cure within thirty (30) days, either (A) such
failure shall continue for thirty (30) days or (B) Obligor or any
such Subsidiary shall not have commenced a cure in a manner reasonably
satisfactory to Agent within the initial fifteen (15) day period; or

 

(e)  Obligor or any of its Subsidiaries shall
default in the observance or performance of any other agreement, term or
condition contained in any bond, debenture, note or other evidence of
Indebtedness, and the effect of such failure or default is to cause, or permit
the holder or holders of such Indebtedness thereof to cause, Indebtedness in an
aggregate amount for all such collective defaults of Two Hundred Fifty Thousand
Dollars ($250,000) or more to become due prior to its stated date of
maturity; or

 

(f)  Obligor shall (i) apply for or consent
to the appointment of a receiver, trustee, liquidator or custodian of itself or
of all or a substantial part of its property, (ii) be unable, or admit in
writing its inability, to pay its debts generally as they mature, (iii) make
a general assignment for the benefit of its or any of its creditors, (iv) be
dissolved or liquidated, (v) become insolvent (as such term may be defined
or interpreted under any applicable statute), (vi) commence a voluntary
case or other proceeding seeking liquidation, reorganization or other relief
with respect to itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or consent to any such relief or to the
appointment of or taking possession of its property by any official in an
involuntary case or other proceeding commenced against it, or (vii) take
any action for the purpose of effecting any of the foregoing; or

 

(g)  Proceedings for the appointment of a receiver,
trustee, liquidator or custodian of any Obligor or of all or a substantial part
of its property, or an involuntary case or other proceedings seeking
liquidation, reorganization or other relief with respect to any Obligor or its
debts under any bankruptcy, insolvency or other similar law now or hereafter in
effect shall be commenced and an order for relief entered or such proceeding
shall not be dismissed or discharged within sixty (60) days of commencement.

 

(h)  A final judgment or order for the payment of
money in excess of One Hundred Dollars ($100,000) shall be rendered
against Obligor or any of its Subsidiaries and the same shall remain
undischarged for a period of ten (10) days after it is due during
which execution shall not be effectively stayed, or any judgment, writ,
assessment, warrant of attachment, or execution or similar process shall be

 

5

 

issued
or levied against a substantial part of the property of Obligor or any of its
Subsidiaries and such judgment, writ, or similar process shall not be released,
stayed, vacated or otherwise dismissed within fifteen (15) days after
issue or levy.

 

Upon the occurrence and
during the continuance of any such Event of Default, Agent shall have all of the
rights set forth under this Agreement, the other Transaction Documents and
under applicable law. Upon the occurrence and during the continuance of any
Event of Default under this Agreement at which time no demand has been made
under the Credit Guaranty, Agent shall have the right, at the direction of the
Required Guarantors, by written notice to Obligor, to require Obligor to post
cash collateral in an amount equal to the maximum amount which may be demanded
under the Credit Guaranty, in which case Obligor shall execute all such
documentation as Agent may reasonably request to perfect Agent’s security
interest in such cash collateral.

 

6.             Definitions. 
As used in this Agreement,
the following capitalized terms have the following meanings:

 

(a)  “Additional Guarantors” has the meaning given
in Section 4(d) hereof.

 

(b)  “Affiliate,” with respect to any Person, means
(i) any director or officer of such Person, (ii) any Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such Person, and (iii) any Person beneficially owning or
holding 5% or more of any class of voting securities of such Person or any
corporation of which such Person beneficially owns or holds, in the
aggregate, 5% or more of any class of voting securities The term “control”
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.  The term “Affiliate,” when used herein
without reference to any Person, shall mean an Affiliate of Obligor.

 

(c)  “Collateral” has the meaning given to such
term in the Security Agreement.

 

(d)  “Dollar” and “$” means lawful money of the United
States.

 

(e)  “Drawn Amount” means any amount required to be
paid by a Guarantor under the Credit Guaranty upon a request for payment by Bank.

 

(f)  “Equity Securities” of any Person shall mean (i) all
common stock, preferred stock, participations, shares, partnership interests or
other equity interests in and of such Person (regardless of how designated and
whether or not voting or non-voting) and (ii) all warrants, options and
other rights to acquire any of the foregoing.

 

(g)  “Event of Default” has the meaning given in Section 5
hereof.

 

(h)  “Foreign
Subsidiary” means any Subsidiary that is organized under the
laws of a jurisdiction other than the United States or any State thereof or the
District of Columbia.

 

(i)  “GAAP” shall mean generally accepted
accounting principles as in effect in the United States of America from time to
time.

 

(j)  “Guaranty Commitment” means with respect to
each Guarantor, the amount set forth on Schedule 2 hereto as the
maximum principal amount of such Guarantor’s Guaranty.

 

6

 

(k)  “Guaranty Expense Amount” means any costs or
expenses (other than Drawn Amounts) payable by Agent or Guarantors or their
affiliates in connection with the Credit Guaranty whether under the Credit
Facility or otherwise, including without limitation, fees for the issuance or
enforcement or collection of the Credit Guaranty, and reasonable attorneys fees
and costs (including the fees of attorneys employed by Guarantors), incurred by
Agent or Guarantors in connection with the demand related to a payment under
any of the Credit Guaranty or in connection with the enforcement, collection
of, or attempted collection or enforcement of any of the obligations of Obligor
which are not performed as and when required by this Agreement.

 

(l)  “Indebtedness” shall mean and include the
aggregate amount of, without duplication (i) all obligations for borrowed
money, (ii) all obligations evidenced by bonds, debentures, notes or other
similar instruments, (iii) all obligations to pay the deferred purchase
price of property or services (other than accounts payable and accrued expenses
incurred in the ordinary course of business determined in accordance with
GAAP), (iv) all obligations with respect to capital leases, (v) all
obligations created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person, (vi) all
reimbursement and other payment obligations, contingent or otherwise, in
respect of letters of credit and similar surety instruments; and (vii) all
guaranty obligations with respect to the types of Indebtedness listed in
clauses (i) through (vi) above.

 

(m)  “Loans”
means extensions of credit under the Credit Facility.

 

(n)  “Material Adverse Effect” shall mean a
material adverse effect on (i) the business, assets, operations, prospects
or financial or other condition of Obligor; (ii) the ability of Obligor to
pay or perform the Obligations in accordance with the terms of this Agreement
and the other Transaction Documents and to avoid an Event of Default, or an
event which, with the giving of notice or the passage of time or both, would
constitute an Event of Default, under any Transaction Document; or (iii) the
rights and remedies of Agent and the Guarantors under this Agreement, the other
Transaction Documents or any related document, instrument or agreement.

 

(o)  “Obligations” shall mean and include all
loans, advances, debts, liabilities and obligations, arising in connection with
this Reimbursement Agreement or the other Transaction Documents and the issuance
of, maintenance of or payment by Guarantors under their respective Credit
Guaranty, owed by Obligor to Guarantors of every kind and description (whether
or not evidenced by any note or instrument and whether or not for the payment
of money), now existing or hereafter arising, including, all interest, fees,
charges, expenses, attorneys’ fees and costs and accountants’ fees and costs
chargeable to and payable by each Obligor hereunder, in each case, whether
direct or indirect, absolute or contingent, due or to become due, and whether
or not arising after the commencement of a proceeding under Title 11 of the
United States Code (11 U.S.C. Section 101 et  seq.), as
amended from time to time (including post-petition interest) and whether or not
allowed or allowable as a claim in any such proceeding.

 

(p)  “Person” shall mean and include an individual,
a partnership, a corporation (including a business trust), a joint stock
company, a limited liability company, an unincorporated association, a joint
venture or other entity or a governmental authority.

 

(q)  “Required Guarantors” shall mean, as of any
date, Guarantors that have paid to Bank more than fifty percent (50%) of the
aggregate Drawn Amounts, and if no Drawn Amounts are outstanding, the
Guarantors whose aggregate Guaranty Commitment constitutes more than fifty
percent (50%) of the aggregate Guaranty Commitments of all Guarantors.

 

7

 

(r)  “Subsidiary” shall mean (a) any
corporation of which more than 50% of the issued and outstanding equity
securities having ordinary voting power to elect a majority of the Board of
Directors of such corporation is at the time directly or indirectly owned or
controlled by Obligor, (b) any partnership, joint venture, or other association
of which more than 50% of the equity interest having the power to vote,
direct or control the management of such partnership, joint venture or other
association is at the time directly or indirectly owned and controlled by
Obligor, (c) any other entity included in the financial statements of
Obligor on a consolidated basis.

 

(s)  “Subsidiary Guarantor” has the meaning given
to that term in the Recitals.

 

(t)  “Transaction Documents” shall mean this
Agreement, the Security Agreement, the Subsidiary Guaranty and all other
agreements or documents executed in connection therewith.

 

7.             Agent.

 

(a)  Appointment and Authorization of Agent.  Each Guarantor hereby designates and appoints
VantagePoint Venture Partners IV (Q), L. P. as its representative and agent
under this Agreement and the other Transaction Documents and each Guarantor
hereby irrevocably authorizes Agent, or any successor Agent to take such action
on its behalf under the provisions of this Agreement and each other Transaction
Document and to exercise such powers and perform such duties as are expressly
delegated to Agent by the terms of this Agreement or any other Transaction
Document, together with such powers as are reasonably incidental thereto

 

(b)  Delegation of Duties.  Agent may execute any of its duties hereunder
by or through agents or employees and shall be entitled to request and act in
reliance upon the advise of counsel concerning all matters pertaining to its
duties hereunder and shall not be liable for any action taken or omitted to be
taken by it in good faith in accordance therewith.

 

(c)  Liability of Agent.  Neither Agent nor any of its directors,
officers, members, partners or employees shall be liable or responsible to any
Guarantor or to Obligor for any action taken or omitted to be taken by Agent or
any other such person hereunder or under any related agreement, instrument or
document, except in the case of gross negligence or willful misconduct on the
part of the Agent or any other such person, nor shall the Agent or any of its
directors, officers, members, partners or employees be liable or responsible
for (i) the validity, effectiveness, sufficiency, enforceability or
enforcement of the Transaction Documents, or any instrument or document
delivered hereunder or relating hereto; (ii) the title of Obligor or any
Subsidiary Guarantor to any of the Collateral or the freedom of any of the
Collateral from any prior or other liens or security interests; (iii) the
determination, verification or enforcement of Obligor’s or any Subsidiary
Guarantor’s compliance with any of the terms and conditions of the Transaction
Documents; (iv) the failure by Obligor or any Subsidiary Guarantor to
deliver any instrument or document required to be delivered pursuant to the
terms hereof or any Transaction Document; or (v) the receipt,
disbursement, waiver, extension or other handling of payments or proceeds made
or received with respect to the Collateral, the servicing of the Collateral or
the enforcement or the collection of any amounts owing with respect to the
Collateral.

 

(d)  Expenses of Agent.  In the case of the Transaction Documents and
the transactions contemplated thereto and any related document relating to any
of the Collateral, each Guarantor agrees to pay to Agent, on demand, its ratable
share of all fees and all expenses incurred in connection with the operation
and enforcement of the Transaction Documents or any related agreement to the
extent that such fees or expenses have not been paid by Obligor or any
Subsidiary Guarantor.  In the case of the
Transaction Documents and each instrument and document relating to any of the
Collateral, each Guarantor, the Obligor and each Subsidiary Guarantor hereby
agrees to hold Agent and all of its directors, officers, members,

 

8

 

partners
or employees harmless, and to indemnify Agent and all of its directors,
officers, members, partners or employees from and against any and all loss,
damage, expense or liability which may be incurred by Agent under the
Transaction Documents and the transactions contemplated thereto and any related
agreement or other instrument or document, as the case may be, unless such
liability shall be caused by the willful misconduct or gross negligence of
Agent or any of its directors, officers, members, partners or employees.

 

(e)  Successor Agent.  Agent may resign as Agent upon 30 days notice
to the Guarantors.  If Agent resigns
under this Agreement, the Required Guarantors shall appoint a successor Agent
for the Guarantors.  If no successor
Agent is appointed prior to the effective date of the resignation of Agent,
Agent may appoint, after consulting with the Guarantors, a successor
Agent.  If Agent has materially breached
or failed to perform any material provision of this Agreement or of applicable
law, the Required Guarantors may agree in writing to remove and replace Agent
with a successor Agent from among the Guarantors.  In any such event, upon the acceptance of its
appointment as successor Agent hereunder, such successor Agent shall succeed to
all the rights, powers, and duties of the retiring Agent and the term “Agent”
shall mean such successor Agent and the retiring Agent’s appointment, powers,
and duties as Agent shall be terminated. 
After any retiring Agent’s resignation hereunder as Agent, the
provisions of this Section 7 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement.  If no successor Agent has
accepted appointment as Agent by the date which is 30 days following a retiring
Agent’s notice of resignation, the retiring Agent’s resignation shall
nevertheless thereupon become effective and the Guarantors shall perform all of
the duties of Agent hereunder until such time, if any, as the Guarantors appoint
a successor Agent as provided for above.

 

(f)  Concerning the Collateral and Related
Transaction Documents.  Each of the
Guarantors authorizes and directs Agent to enter into this Agreement and the
other Transaction Documents relating to the Collateral, for the benefit of the
Guarantors.  Each of the Guarantors
agrees that any action taken by Agent in accordance with the terms of this
Agreement or the other Transaction Documents relating to the Collateral and the
exercise by Agent of its powers set forth therein or herein, together with such
other powers that are reasonably incidental thereto, shall be binding upon all
of the Guarantors.

 

8.             Miscellaneous.

 

(a)  Notices.  Except as otherwise provided herein, all
notices, requests, demands, consents, instructions or other communications to
or upon Obligor, Agent or Guarantors under this Agreement shall be in writing
and delivered by facsimile, hand delivery, overnight courier service or
certified mail, return receipt requested, to each party at the address set
forth below (or to such other address most recently provided by such party to
the other party).  All such notices and
communications shall be effective (a) when sent by Federal Express or
other overnight service of recognized standing, on the business day following
the deposit with such service; (b) when mailed, by registered or certified
mail, first class postage prepaid and addressed as aforesaid through the United
States Postal Service, upon receipt; (c) when delivered by hand, upon
delivery; and (d) when faxed, upon confirmation of receipt.

 

	
   

  	
  Agent/Guarantors:

  	
  1001 Bayhill Drive

  
	
   

  	
   

  	
  Suite 100

  
	
   

  	
   

  	
  San Bruno, CA 94066

  
	
   

  	
   

  	
  Attention: Geoff
  Fletcher

  
	
   

  	
   

  	
  Telephone: 650-866-3100

  
	
   

  	
   

  	
  Facsimile: 650-869-6078

  
	
   

  	
   

  	
   

  
	
   

  	
  Obligor/Subsidiary
  Guarantor:

  	
  440 Kings Village Road

  
	
   

  	
   

  	
  Scotts Valley, CA 95066

  

 

9

 

Attention:  Chief Financial Officer

Telephone:
(831) 439-6360

Facsimile:
(831) 439-6329

 

(b)  Nonwaiver.  No failure or delay on Agent’s or any
Guarantor’s part in exercising any right hereunder shall operate as a waiver
thereof or of any other right nor shall any single or partial exercise of any
such right preclude any other further exercise thereof or of any other right.

 

(c)  Amendments and Waivers.  This Agreement may not be amended or
modified, nor may any of its terms be waived, except by written instruments
signed by Obligor and Required Guarantors. 
Each waiver or consent under any provision hereof shall be effective
only in the specific instances for the purpose for which given.

 

(d)  Assignments.  This Agreement shall be binding upon and
inure to the benefit of Agent, Guarantors and Obligor and their respective
successors and assigns; provided, however, that Obligor may not
assign or delegate rights and obligations hereunder without the prior written
consent of Required Guarantors.

 

(e)  Cumulative Rights, etc.  The rights, powers and remedies of Agent and
Guarantors under this Agreement shall be in addition to all rights, powers and
remedies given to Agent and Guarantors by virtue of any applicable law, rule or
regulation of any governmental authority or any other agreement, all of which
rights, powers, and remedies shall be cumulative and may be exercised
successively or concurrently without impairing Agent’s or Guarantor’s rights
hereunder.

 

(f)  Partial Invalidity.  If at any time any provision of this
Agreement is or becomes illegal, invalid or unenforceable in any respect under
the law or any jurisdiction, neither the legality, validity or enforceability
of the remaining provisions of this Agreement nor the legality, validity or
enforceability of such provision under the law of any other jurisdiction shall
in any way be affected or impaired thereby.

 

(g)  Expenses.  Each Obligor shall pay on demand all reasonable
fees and expenses, including reasonable attorneys’ fees and expenses, incurred
by Agent and Guarantors in connection with any enforcement or attempt to
enforce any of the obligations of any Obligor which are not performed as and
when required by this Agreement.

 

(h)  Entire Agreement.  This Agreement and the other Transaction
Documents constitutes and contains the entire agreement of Obligor and Agent
and Guarantors with respect to the subject matter hereof and supersedes any and
all prior agreements, negotiations, correspondence, understandings and
communications among the parties, whether written or oral, respecting the
subject matter hereof.

 

(i)  Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of California without
reference to conflicts of law rules.

 

(j)  Jury Trial.  OBLIGOR, AGENT AND EACH GUARANTOR, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES ALL RIGHT
TO TRIAL BY JURY AS TO ANY ISSUE RELATING HERETO IN ANY ACTION, PROCEEDING, OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.

 

[Remainder of page intentionally
left blank]

 

10

 

IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be executed as of the
day and year first written above.

 

 

	
   

  	
  Aviza
  Technology, Inc.,

  as Obligor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Patrick C. O’Connor

  	
   

  
	
   

  	
  Name:

  	
   

  	
  Patrick C. O’Connor

  	
   

  
	
   

  	
  Title:

  	
   

  	
  Chief Financial Officer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  AGREED &
  ACCEPTED:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  VANTAGEPOINT
  VENTURE PARTNERS IV (Q), L.P., as Agent and a Guarantor

  
	
   

  	
   

  
	
  By: VantagePoint
  Venture Associates IV, L.L.C.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Alan E. Salzman

  	
   

  
	
   

  	
  Alan E. Salzman

  	
  , Managing Member

  
	
   

  	
   

  
	
   

  	
   

  
	
  VANTAGEPOINT
  VENTURE PARTNERS IV, L.P., as a Guarantor

  
	
   

  	
   

  
	
  By: VantagePoint
  Venture Associates IV, L.L.C.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Alan E. Salzman

  	
   

  	
   

  
	
   

  	
  Alan E. Salzman

  	
  , Managing Member

  
										

 

Signature Page to
Reimbursement Agreement

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