EXHIBIT 10.4
SECURITY AGREEMENT
This SECURITY AGREEMENT (this "Agreement") is made this 17th day of March,
2006, among Grantors listed on the signature pages hereof and those additional
entities that hereafter become parties hereto by executing the form of
Supplement attached hereto as Annex 1 (collectively, jointly and severally,
"Grantors" and each individually "Grantor"), and ABLECO FINANCE LLC, a Delaware
limited liability company, in its capacity as collateral agent for the
below-defined Lender Group (together with its successors and assigns,
"Collateral Agent").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Financing Agreement of even date herewith
(as amended, restated, supplemented or otherwise modified from time to time,
including all schedules thereto, the "Financing Agreement") among PRG-SCHULTZ
INTERNATIONAL, INC., a Georgia corporation ("Parent"), PRG-SCHULTZ USA, INC., a
Georgia corporation (the "Borrower"), each Subsidiary of Parent listed as a
"Guarantor" on the signatures pages thereto (such Subsidiaries, together with
the Parent, each individually a "Guarantor", and individually and collectively,
jointly and severally, the "Guarantors"), the lenders that are from time to time
parties thereto (each a "Lender" and, collectively, the "Lenders"), Collateral
Agent, and The CIT Group/Business Credit, Inc., a New York corporation, as
administrative agent for the Lender Group, the Lender Group is willing to make
certain financial accommodations available to Borrower from time to time
pursuant to the terms and conditions thereof, and
WHEREAS, Collateral Agent has agreed to act as collateral agent for the
benefit of the Lender Group in connection with the transactions contemplated by
this Agreement, and
WHEREAS, in order to induce the Lender Group to enter into the Financing
Agreement and the other Loan Documents and to induce the Lender Group to make
financial accommodations to Borrower as provided for in the Financing Agreement,
Grantors have agreed to grant a continuing security interest in and to the
Collateral in order to secure the prompt and complete payment, observance and
performance of, (a) all of the present and future obligations of each of the
Grantors arising from this Agreement, the Financing Agreement, or any of the
other Loan Documents, including under any Guaranty, and (b) all Obligations of
Borrower (clauses (a) and (b) being hereinafter referred to as the "Secured
Obligations"), and
NOW, THEREFORE, for and in consideration of the recitals made above and
other good and valuable consideration, the receipt, sufficiency and adequacy of
which are hereby acknowledged, the parties hereto agree as follows:
1. Defined Terms. All capitalized terms used herein (including in the
preamble and recitals hereof) without definition shall have the meanings
ascribed thereto in the Financing Agreement. Any terms used in this Agreement
that are defined in the Code shall be construed and defined as set forth in the
Code unless otherwise defined herein or in the Financing Agreement; provided,
however, that to the extent that the Code is used to define any term herein and
such term is defined differently in different Articles of the Code, the
definition of such term contained in Article 9 of the Code shall govern. In
addition to those terms defined elsewhere in this Agreement, as used in this
Agreement, the following terms shall have the following meanings:
(a) "Account" means an account (as that term is defined in the Code).
(b) "Account Debtor" means any Person who is obligated on an Account,
Chattel Paper, or a General Intangible.
(c) "Agreement" has the meaning specified therefor in the preamble hereto.
(d) "Books" means books and records (including each Grantor's Records
indicating, summarizing, or evidencing such Grantor's assets (including the
Collateral) or liabilities, each Grantor's Records relating to such Grantor's
business operations or financial condition, and each Grantor's goods or General
Intangibles related to such information).
(e) "Borrower" has the meaning specified therefor in the recitals to this
Agreement.
(f) "Capital Stock" has the meaning specified therefor in the Financing
Agreement
(g) "Cash Equivalents" has the meaning specified therefor in the Financing
Agreement.
(h) "Chattel Paper" means chattel paper (as that term is defined in the
Code) and includes tangible chattel paper and electronic chattel paper.
(i) "Code" means the New York Uniform Commercial Code, as in effect from
time to time; provided, however, that in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection, priority, or
remedies with respect to Collateral Agent's Lien on any Collateral is governed
by the Uniform Commercial Code as enacted and in effect in a jurisdiction other
than the State of New York, the term "Code" shall mean the Uniform Commercial
Code as enacted and in effect in such other jurisdiction solely for purposes of
the provisions thereof relating to such attachment, perfection, priority, or
remedies.
(j) "Collateral" has the meaning specified therefor in Section 2.
(k) "Collateral Agent" has the meaning specified therefor in the preamble
to this Agreement.
(l) "Commercial Tort Claims" means commercial tort claims (as that term is
defined in the Code), and includes those commercial tort claims listed on
Schedule 1 attached hereto and made a part hereof.
(m) "Copyrights" means copyrights and copyright registrations, including
the copyright registrations and recordings thereof and all applications in
connection therewith listed on Schedule 6.01(w) of the Financing Agreement and
made a part hereof, and (i) all reissues, continuations, extensions or renewals
thereof, (ii) all income, royalties, damages and payments now and hereafter due
or payable under and with respect thereto, including payments under all licenses
entered into in connection therewith and damages and payments for past or future
infringements or dilutions thereof, (iii) the right to sue for past, present and
future infringements and dilutions thereof, (iv) the goodwill of each Grantor's
business symbolized by the foregoing and connected therewith, and (v) all of
each Grantor's rights corresponding thereto throughout the world.
(n) "Copyright Security Agreement" means each Copyright Security Agreement
among Grantors, or any of them, and Collateral Agent, for the benefit of the
Lender Group, in substantially the form of Exhibit A attached hereto, pursuant
to which Grantors have granted to Collateral Agent, for the benefit of the
Lender Group, a security interest in all their respective Copyrights.
(o) "Deposit Account" means any deposit account (as that term is defined in
the Code).
(p) "Equipment" means equipment (as that term is defined in the Code).
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(q) "Event of Default" has the meaning specified therefor in Article IX of
the Financing Agreement.
(r) "Financing Agreement" has the meaning specified therefor in the
recitals to this Agreement.
(s) "Fixtures" means fixtures (as that term is defined in the Code).
(t) "General Intangibles" means general intangibles (as that term is
defined in the Code) and, in any event, including payment intangibles, contract
rights, rights to payment, rights arising under common law, statutes, or
regulations, choses or things in action, goodwill (including the goodwill
associated with any Trademark, Patent, or Copyright), Patents, Trademarks,
Copyrights, URLs and domain names, industrial designs, other industrial or
Intellectual Property or rights therein or applications therefor, whether under
license or otherwise, programs, programming materials, blueprints, drawings,
purchase orders, customer lists, monies due or recoverable from pension funds,
route lists, rights to payment and other rights under any royalty or licensing
agreements, including Intellectual Property Licenses, infringement claims,
computer programs, information contained on computer disks or tapes, software,
literature, reports, catalogs, pension plan refunds, pension plan refund claims,
insurance premium rebates, tax refunds, and tax refund claims, uncertificated
securities, and any other personal property other than Commercial Tort Claims,
money, Accounts, Chattel Paper, Deposit Accounts, goods, Investment Related
Property, Negotiable Collateral, and oil, gas, or other minerals before
extraction.
(u) "Grantor" and "Grantors" have the respective meanings specified
therefor in the preamble to this Agreement.
(v) "Guarantor" and "Guarantors" have the respective meanings specified
therefor in the recitals to this Agreement.
(w) "Guaranty" has the meaning specified therefor in the Financing
Agreement.
(x) "Insolvency Proceeding" has the meaning specified therefor in the
Financing Agreement.
(y) "Intellectual Property" means any and all Intellectual Property
Licenses, Patents, Copyrights, Trademarks, the goodwill associated with such
Trademarks, trade secrets and customer lists.
(z) "Intellectual Property Licenses" means rights under or interest in any
Patent, Trademark, Copyright or other intellectual property, including software
license agreements with any other party, whether the applicable Grantor is a
licensee or licensor under any such license agreement, including the license
agreements listed on Schedule 6.01(w) of the Financing Agreement (but excluding
any off-the-shelf software license agreement) and made a part hereof, and the
right to use the foregoing in connection with the enforcement of the Lender
Group's rights under the Loan Documents, subject in each case, to the terms of
such license agreement, and including the right to prepare for sale and sell any
and all Inventory and Equipment now or hereafter owned by any Grantor and now or
hereafter covered by such licenses.
(aa) "Inventory" means inventory (as that term is defined in the Code).
(bb) "Investment Related Property" means (i) investment property (as that
term is defined in the Code), and (ii) all of the following regardless of
whether classified as investment property under the Code: all Pledged Interests,
Pledged Operating Agreements, and Pledged Partnership Agreements.
(cc) "Lender" and "Lenders" have the respective meanings specified therefor
in the recitals to this Agreement.
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(dd) "Lender Group" means Collateral Agent, Administrative Agent, and the
Lenders.
(ee) "Loan Document" has the meaning specified therefor in the Financing
Agreement.
(ff) "Motor Vehicles" shall mean all trucks, trailers, tractors, service
vehicles, automobiles and other registered mobile equipment, in each case, to
the extent that Section 9-311 of the Code provides that a perfected security
interest may not be obtained therein through the filing of a financing
statement.
(gg) "Negotiable Collateral" means letters of credit, letter of credit
rights, instruments, promissory notes, drafts and documents (as that term is
defined in the Code).
(hh) "Obligations" has the meaning specified therefor in the Financing
Agreement.
(ii) "Parent" has the meaning specified therefor in the preamble to this
Agreement.
(jj) "Patents" means patents and patent applications, including the patents
and patent applications listed on Schedule 6.01(w) of the Financing Agreement
and made a part hereof, and (i) all renewals thereof, (ii) all income,
royalties, damages and payments now and hereafter due or payable under and with
respect thereto, including payments under all licenses entered into in
connection therewith and damages and payments for past or future infringements
or dilutions thereof, (iii) the right to sue for past, present and future
infringements and dilutions thereof, and (iv) all of each Grantor's rights
corresponding thereto throughout the world.
(kk) "Patent Security Agreement" means each Patent Security Agreement among
Grantors, or any of them, and Collateral Agent, for the benefit of the Lender
Group, in substantially the form of Exhibit B attached hereto, pursuant to which
Grantors have granted to Collateral Agent, for the benefit of the Lender Group,
a security interest in all their respective Patents.
(ll) "Permitted Liens" has the meaning specified therefor in the Financing
Agreement.
(mm) "Person" has the meaning specified therefor in the Financing
Agreement.
(nn) "Pledged Companies" means, each Person listed on Schedule 2 hereto as
a "Pledged Company", together with each other Person, all or a portion of whose
Capital Stock, is acquired or otherwise owned by a Grantor after the Effective
Date.
(oo) "Pledged Interests" means all of each Grantor's right, title and
interest in and to all of the Capital Stock now or hereafter owned by such
Grantor, regardless of class or designation, including, in each of the Pledged
Companies, and all substitutions therefor and replacements thereof, all proceeds
thereof and all rights relating thereto, including any certificates representing
the Capital Stock, the right to request after the occurrence and during the
continuation of an Event of Default that such Capital Stock be registered in the
name of Collateral Agent or any of its nominees, the right to receive any
certificates representing any of the Capital Stock and the right to require that
such certificates be delivered to Collateral Agent together with undated powers
or assignments of investment securities with respect thereto, duly endorsed in
blank by such Grantor, all warrants, options, share appreciation rights and
other rights, contractual or otherwise, in respect thereof and of all dividends,
distributions of income, profits, surplus, or other compensation by way of
income or liquidating distributions, in cash or in kind, and cash, instruments,
and other property from time to time received, receivable, or otherwise
distributed in respect of or in addition to, in substitution of, on account of,
or in exchange for any or all of the foregoing.
(pp) "Pledged Interests Addendum" means a Pledged Interests Addendum
substantially in the form of Exhibit C to this Agreement.
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(qq) "Pledged Operating Agreements" means all of each Grantor's rights,
powers, and remedies under the limited liability company operating agreements of
each of the Pledged Companies that are limited liability companies.
(rr) "Pledged Partnership Agreements" means all of each Grantor's rights,
powers, and remedies under the partnership agreements of each of the Pledged
Companies that are partnerships.
(ss) "Proceeds" has the meaning specified therefor in Section 2.
(tt) "Real Property" means any estates or interests in real property now
owned or hereafter acquired by any Grantor and the improvements thereto.
(uu) "Records" means information that is inscribed on a tangible medium or
which is stored in an electronic or other medium and is retrievable in
perceivable form.
(vv) "Security Interest" has the meaning specified therefor in Section 2.
(ww) "Secured Obligations" has the meaning specified in the recitals to
this Agreement.
(xx) "Securities Account" means a securities account (as that term is
defined in the Code).
(yy) "Supporting Obligations" means supporting obligations (as such term is
defined in the Code), and includes letters of credit and guaranties issued in
support of Accounts, Chattel Paper, documents, General Intangibles, instruments,
or Investment Related Property.
(zz) "Trademarks" means trademarks, trade names, registered trademarks,
trademark applications, service marks, registered service marks and service mark
applications, including the trade names, registered trademarks, trademark
applications, registered service marks and service mark applications listed on
Schedule 6.01(w) of the Financing Agreement and made a part hereof, and (i) all
renewals thereof, (ii) all income, royalties, damages and payments now and
hereafter due or payable under and with respect thereto, including payments
under all licenses entered into in connection therewith and damages and payments
for past or future infringements or dilutions thereof, (iii) the right to sue
for past, present and future infringements and dilutions thereof, (iv) the
goodwill of each Grantor's business symbolized by the foregoing and connected
therewith, and (v) all of each Grantor's rights corresponding thereto throughout
the world.
(aaa) "Trademark Security Agreement" means each Trademark Security
Agreement among Grantors, or any of them, and Collateral Agent, for the benefit
of the Lender Group, in substantially the form of Exhibit D attached hereto,
pursuant to which Grantors have granted to Collateral Agent, for the benefit of
the Lender Group, a security interest in all their respective Trademarks.
(bbb) "URL" means "uniform resource locator," an internet web address.
2. Grant of Security.
(a) Each Grantor, in order to secure the prompt payment of all of the
Secured Obligations (other than the Term Loan Obligations), hereby
unconditionally, grants, assigns and pledges to Collateral Agent, for the
benefit of the Revolving Loan Lenders, Collateral Agent, and Administrative
Agent, a continuing security interest in all personal property of such Grantor
whether now owned or hereafter acquired or arising and wherever located,
including such Grantor's right, title, and interest in and to the following,
whether now owned or hereafter acquired or arising and wherever located (the
"Collateral"):
(i) all of such Grantor's Accounts;
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(ii) all of such Grantor's Books;
(iii) all of such Grantor's Chattel Paper;
(iv) all of such Grantor's interest with respect to any Deposit Account;
(v) all of such Grantor's Equipment and Fixtures;
(vi) All of such Grantor's General Intangibles;
(vii) all of such Grantor's Inventory;
(viii) all of such Grantor's Investment Related Property;
(ix) all of such Grantor's Negotiable Collateral;
(x) all of such Grantor's rights in respect of Supporting Obligations;
(xi) all of such Grantor's interest with respect to any Commercial Tort
Claims;
(xii) all of such Grantor's money, cash and Cash Equivalents, or other
assets of each such Grantor that now or hereafter come into the possession,
custody, or control of Collateral Agent or any other member of the Lender Group;
(xiii) all of the proceeds and products, whether tangible or intangible, of
any of the foregoing, including proceeds of insurance or Commercial Tort Claims
covering or relating to any or all of the foregoing, and any and all Accounts,
Books, Chattel Paper, Deposit Accounts, Equipment, General Intangibles,
Inventory, Investment Related Property, Negotiable Collateral, Supporting
Obligations, money, or other tangible or intangible property resulting from the
sale, lease, license, exchange, collection, or other disposition of any of the
foregoing, the proceeds of any award in condemnation with respect to any of the
property of Grantors, any rebates or refunds, whether for taxes or otherwise,
and all proceeds of any such proceeds, or any portion thereof or interest
therein, and the proceeds thereof, and all proceeds of any loss of, damage to,
or destruction of the above, whether insured or not insured, and, to the extent
not otherwise included, any indemnity, warranty, or guaranty payable by reason
of loss or damage to, or otherwise with respect to any of the foregoing
Collateral (the "Proceeds"). Without limiting the generality of the foregoing,
the term "Proceeds" includes whatever is receivable or received when Investment
Related Property or proceeds are sold, exchanged, collected, or otherwise
disposed of, whether such disposition is voluntary or involuntary, and includes
proceeds of any indemnity or guaranty payable to any Grantor or Collateral Agent
from time to time with respect to any of the Investment Related Property.
Anything contained in this Agreement to the contrary notwithstanding, the term
"Collateral" (and any defined term used therein) shall not include:
(A) any contract, lease, permit, license, charter, or license agreement
covering real or personal property of any Grantor if (x) under the terms of such
contract, lease, permit, license, charter, or license agreement, or applicable
law with respect thereto, the grant of a security interest or Lien therein or
collateral assignment of rights, warranties or interests therein, requires the
consent of the other party to such contract, lease, permit, license, charter or
license agreement or is prohibited as a matter of law or under the terms of such
contract, lease, permit, license, charter, or license agreement, and (y) such
prohibition has not been waived or the consent thereto of the other party to
such contract, lease, permit, license, charter, or license agreement has not
been obtained; provided, that the foregoing exclusion (1) shall not apply if any
described prohibition is unenforceable under Section 9-406, 9-407, or 9-408 of
the Code or other applicable law, (2) shall not apply when such prohibition is
no longer in effect, and (3) shall not limit, impair, or otherwise affect
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Collateral Agent's continuing security interests in and Liens upon any rights or
interests of any Grantor in or to (I) monies due or to become due under any
described contract, lease, permit, license, charter, or license agreement
(including any Accounts), or (II) any proceeds from the sale, license, lease, or
other disposition of any such contract, lease, permit, license, charter, or
license agreement;
(B) any property (and any accessions, fixtures, and attachments thereto)
that is purchased or acquired with proceeds of, and subject to a Lien in favor
of the provider of, purchase money Indebtedness permitted to be incurred under
the Financing Agreement or Capitalized Lease Obligations permitted to be
incurred under the Financing Agreement, to the extent that (x) the contract
evidencing such purchase money Indebtedness or Capitalized Lease Obligations, as
the case may be, expressly prohibits the grant of a security interest or Lien
(other than the security interest or Lien securing such purchase money
Indebtedness or Capitalized Lease Obligations) on such property (and any
accessions, fixtures, and attachments thereto), and (y) such prohibition has not
been waived or the consent of the provider of such purchase money Indebtedness
or Capitalized Lease Obligations has not been obtained; provided, that the
foregoing exclusion (1) shall not apply when such prohibition is no longer in
effect, and (2) shall not limit, impair, or otherwise affect the Collateral
Agent's continuing security interests in and Liens upon any rights or interests
of any Grantor in or to any proceeds, substitutions, or replacements of such
goods (and any accessions, fixtures, and attachments thereto), to the extent not
covered, or to the extent permitted if covered, by the Lien securing such
purchase money Indebtedness or Capitalized Lease Obligations;
(C) any "intent to use" trademark or service mark application contained in
General Intangibles if granting a security interest therein is deemed to
invalidate, void, cancel, or abandon such application; provided, that the
foregoing exclusion (x) shall not apply when the granting of a security interest
in such application is no longer deemed to invalidate, void, cancel, or abandon
such application, and (y) shall not limit, impair, or otherwise affect
Collateral Agent's continuing security interests in and Liens upon any rights or
interests of any Grantor in or to any proceeds from the sale, license, lease, or
other dispositions of any such application;
(D) voting Capital Stock of any Subsidiary of a Grantor that is a CFC,
solely to the extent that (x) such Capital Stock represents more than 65% of the
outstanding voting Capital Stock of such Subsidiary, and (y) hypothecating more
than 65% of the total outstanding voting Capital Stock of such Subsidiary could
reasonably be expected to result in material adverse tax consequences; provided,
that (1) immediately upon the amendment of the IRC to allow for the pledge of a
greater percentage of voting Capital Stock in such Subsidiary without material
adverse tax consequences, such pledge shall include such greater percentage of
voting Stock of such Subsidiary from that time forward, and (2) the foregoing
exclusion shall in no way be construed to limit, impair, or otherwise affect
Agent's continuing security interests in and Liens upon any rights or interests
of any Grantor in or to any proceeds from the sale or other disposition of any
such Capital Stock; or
(E) any Deposit Accounts (and the funds on deposit from time to time
therein) that are zero balance employee benefit, payroll, fiduciary or trust
accounts; or
(F) Motor Vehicles.
(b) Each Grantor, in order to secure the prompt payment of all of the
Secured Obligations (other than the Revolving Loan Obligations), hereby grants
to Collateral Agent, for the benefit of the Term Loan Lenders, Collateral Agent,
and Administrative Agent, a continuing security interest in all personal
property of such Grantor whether now owned or hereafter acquired or arising and
wherever located, including such Grantor's right, title, and interest in and to
the Collateral, whether now owned or hereafter acquired or arising and wherever
located.
(c) This Agreement secures the payment of all amounts which constitute part
of the Secured Obligations and would be owed by Grantors, or any of them, to
Collateral Agent, the Lender Group, or any of them, but for the fact that they
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are unenforceable or not allowable due to the existence of an Insolvency
Proceeding involving any Grantor.
3. Grantors Remain Liable. Anything herein to the contrary notwithstanding,
(a) each of the Grantors shall remain liable under the contracts and agreements
included in the Collateral to perform all of the duties and obligations
thereunder to the same extent as if this Agreement had not been executed, (b)
the exercise by Collateral Agent or any other member of the Lender Group of any
of the rights hereunder shall not release any Grantor from any of its duties or
obligations under such contracts and agreements included in the Collateral, and
(c) none of the members of the Lender Group shall have any obligation or
liability under such contracts and agreements included in the Collateral by
reason of this Agreement, nor shall any of the members of the Lender Group be
obligated to perform any of the obligations or duties of any Grantors thereunder
or to take any action to collect or enforce any claim for payment assigned
hereunder. Until an Event of Default shall occur and be continuing, except as
otherwise provided in this Agreement, the Financing Agreement, or other Loan
Documents, Grantors shall have the right to possession and enjoyment of the
Collateral for the purpose of conducting the ordinary course of their respective
businesses, subject to and upon the terms hereof and of the Financing Agreement
and the other Loan Documents. Without limiting the generality of the foregoing,
it is the intention of the parties hereto that record and beneficial ownership
of the Pledged Interests, including all voting, consensual, and dividend rights,
shall remain in the applicable Grantor until the occurrence of an Event of
Default and until Collateral Agent shall notify the applicable Grantor of
Collateral Agent's exercise of voting, consensual, or dividend rights with
respect to the Pledged Interests pursuant to Section 15 hereof.
4. Representations and Warranties. Each Grantor hereby represents and
warrants as follows:
(a) As of the Effective Date, the exact legal name of each of the Grantors
is set forth on the signature pages of this Agreement.
(b) Schedule 6.01(o) of the Financing Agreement sets forth all Real
Property owned by Grantors as of the Effective Date.
(c) As of the Effective Date, no Grantor has any interest in, or title to,
any registered Copyrights, Intellectual Property Licenses, material Patents, or
material Trademarks except as set forth on Schedule 6.01(w) of the Financing
Agreement. This Agreement is effective to create a valid and continuing Lien on
such United States Copyrights, Intellectual Property Licenses, United States
Patents and United States Trademarks and, upon filing of the Copyright Security
Agreement with the United States Copyright Office and filing of the Patent
Security Agreement and the Trademark Security Agreement with the United States
Patent and Trademark Office, and the filing of appropriate financing statements
in the jurisdictions listed on Schedule 3 hereto, all action necessary or
desirable to protect and perfect the Collateral Agent's Liens on each Grantor's
United States Patents, United States Trademarks, or United States Copyrights has
been taken and such perfected Liens are enforceable as such as against any and
all creditors of and purchasers from any Grantor.
(d) This Agreement creates a valid security interest in favor of the
Collateral Agent, for the benefit of the Lender Group, in the Collateral of each
of Grantors, to the extent a security interest therein can be created under the
Code, securing the payment of the Secured Obligations. Except to the extent a
security interest in the Collateral cannot be perfected by the filing of a
financing statement under the Code, all filings and other actions necessary or
desirable to perfect and protect such security interest have been duly taken or
will have been taken upon the filing of financing statements listing each
applicable Grantor, as a debtor, and Collateral Agent, as secured party, in the
jurisdictions listed next to such Grantor's name on Schedule 3 attached hereto.
Upon the making of such filings, Collateral Agent shall have a first priority
(subject to Permitted Liens) perfected security interest in the Collateral of
each Grantor to the extent such security interest can be perfected by the filing
of a financing statement.
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(e) (i) Except for the Liens created hereby, each Grantor is and will at
all times be, subject to the right to dispose of the same in accordance with the
terms of the Financing Agreement, the sole holder of record and the legal and
beneficial owner, free and clear of all Liens other than Permitted Liens, of the
Pledged Interests indicated on Schedule 2 as being owned by such Grantor and,
when acquired by such Grantor, any Pledged Interests acquired after the
Effective Date; (ii) all of the Pledged Interests are duly authorized, validly
issued, fully paid and nonassessable and the Pledged Interests constitute or
will constitute the percentage of the issued and outstanding Capital Stock of
the Pledged Companies of such Grantor identified on Schedule 2 hereto as
supplemented or modified by any Pledged Interests Addendum or any Supplement to
this Agreement; (iii) such Grantor has the right and requisite authority to
pledge, the Investment Related Property pledged by such Grantor to Collateral
Agent as provided herein; (iv) all actions necessary or desirable to perfect,
establish the first priority (subject to Permitted Liens) of, or otherwise
protect, Collateral Agent's Liens in the Investment Related Collateral, and the
proceeds thereof, have been duly taken, (A) upon the execution and delivery of
this Agreement; (B) upon the taking of possession by Collateral Agent of any
certificates constituting the Pledged Interests, to the extent such Pledged
Interests are represented by certificates, together with undated powers endorsed
in blank by the applicable Grantor; (C) upon the filing of financing statements
in the applicable jurisdiction set forth on Schedule 3 attached hereto for such
Grantor with respect to the Pledged Interests of such Grantor that are not
represented by certificates, and/or (D) with respect to any Securities Accounts,
upon the delivery of Control Agreements with respect thereto; and (iv) each
Grantor has delivered to and deposited with Collateral Agent (or, with respect
to any Pledged Interests created or obtained after the Effective Date, will
deliver and deposit in accordance with Sections 6 and 8 hereof) all certificates
representing the Pledged Interests owned by such Grantor to the extent such
Pledged Interests are represented by certificates, and undated powers endorsed
in blank with respect to such certificates. None of the Pledged Interests owned
or held by such Grantor has been issued or transferred in violation of any
securities registration, securities disclosure or similar laws of any
jurisdiction to which such issuance or transfer may be subject.
(f) No consent, approval, authorization, or other order or other action by,
and no notice to or filing with, any Governmental Authority or any other Person
is required (i) for the grant of a Lien by such Grantor on the Collateral
pursuant to this Agreement or for the execution, delivery, or performance of
this Agreement by such Grantor except (x) as have been obtained or made and are
in full force and effect, (y) filings necessary to perfect the Liens created
hereby, and (z) those the failure to obtain, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect, or (ii)
for the exercise by Collateral Agent of the voting or other rights provided for
in this Agreement with respect to the Investment Related Property or the
remedies in respect of the Collateral pursuant to this Agreement, except as may
be required in connection with such disposition of Investment Related Property
by laws affecting the offering and sale of securities generally.
5. [Intentionally Omitted]
6. Covenants. Each Grantor, jointly and severally, covenants and agrees
with Collateral Agent and the Lender Group that from and after the date of this
Agreement and until the date of termination of this Agreement in accordance with
Section 22 hereof:
(a) Possession of Collateral. In the event that any Collateral, including
proceeds, is evidenced by or consists of Negotiable Collateral, Investment
Related Property, or Chattel Paper, and if and to the extent that perfection or
priority of Collateral Agent's Liens is dependent on or enhanced by possession,
the applicable Grantor, immediately upon the request of Collateral Agent and in
accordance with Section 8 hereof, shall execute such other documents and
instruments as shall be requested by Collateral Agent or, if applicable (subject
to any limitations on delivery set forth in any other subclause of this Section
6), endorse and deliver physical possession of such Negotiable Collateral,
Investment Related Property, or Chattel Paper to Collateral Agent, together with
such undated powers endorsed in blank as shall be requested by Collateral Agent;
9
(b) Chattel Paper.
(i) Each Grantor shall take all steps reasonably necessary to grant
Collateral Agent control of all electronic Chattel Paper in accordance with the
Code and all "transferable records" as that term is defined in Section 16 of the
Uniform Electronic Transaction Act and Section 201 of the federal Electronic
Signatures in Global and National Commerce Act as in effect in any relevant
jurisdiction; provided that Grantors shall have no obligation to comply with
this Section 6(b)(i) until the aggregate value of electronic Chattel Paper in
which Grantors have an interest exceeds $50,000;
(ii) If any Grantor retains possession of any Chattel Paper or instruments
(which retention of possession shall be subject to the extent permitted hereby
and by the Financing Agreement), promptly upon the request of Collateral Agent,
such Chattel Paper and instruments shall be marked with the following legend:
"This writing and the obligations evidenced or secured hereby are subject to the
Liens of Ableco Finance LLC, as Collateral Agent for the benefit of the Lender
Group "; provided that Grantors shall have no obligation to comply with this
Section 6(b)(ii) or to deliver Chattel Paper or instruments to Collateral Agent
until the aggregate value of Chattel Paper or instruments in which Grantors have
an interest exceeds $50,000;
(c) Control Agreements.
(i) Except to the extent otherwise permitted by the Financing Agreement,
each Grantor shall obtain an authenticated Control Agreement, from each bank
holding a Deposit Account for such Grantor;
(ii) Except to the extent otherwise permitted by the Financing Agreement,
each Grantor shall obtain authenticated Control Agreements, from each issuer of
uncertificated securities, securities intermediary, or commodities intermediary
issuing or holding any financial assets or commodities to or for any Grantor;
provided that anything to the contrary contained herein or in the other
Loan Documents notwithstanding, (A) the Grantors need not deliver Control
Agreements with respect to Deposit Accounts of the type described in Section
2(a)(E); (B) the Grantors need not deliver Control Agreements for Deposit
Accounts of any Grantor maintained as of the date hereof in any jurisdiction
other than the United States (or any state or other political subdivision
thereof) other than (x) the Deposit Account of the German Guarantor with account
number 396695900 located at Deutsche Bank; and (y) the Deposit Account(s) of the
Canadian Guarantor with account numbers 1029263 and 4006433 located at the Royal
Bank of Canada (the "RBC Operating Accounts"); (B) with respect to the
Securities Account with account number 2583439844 located at Merrill Lynch, the
Collateral Agent shall not give any instructions directing the disposition of
funds from time to time credited to such account or withhold any withdrawal
rights from such Grantor with respect to such funds from time to time credited
to such Securities Account or give any notice of sole or exclusive control over
such Securities Account unless an Event of Default shall have occurred and be
continuing; (C) with respect to the RBC Operating Accounts, all funds in excess
of $3,000,000 therein shall be sent by wire transfer or Automated Clearing
House, Inc. payment to the Payment Office to be credited to the Administrative
Agent's Account for application at the end of each Business Day to reduce the
then principal balance of the Revolving Loans, conditional upon final payment to
the Administrative Agent.
(d) Letter of Credit Rights. Each Grantor that is or becomes the
beneficiary of a letter of credit shall promptly (and in any event within 15
days after becoming a beneficiary), notify Collateral Agent thereof and, upon
the reasonable request by Collateral Agent, use its commercially reasonable
efforts to into a tri-party agreement with Collateral Agent and the issuer or
confirmation bank with respect to letter-of-credit rights (as that term is
defined in the Code) assigning such letter-of-credit rights to Collateral Agent
and directing all payments thereunder to Collateral Agent's Account, all in form
and substance reasonably satisfactory to Collateral Agent; provided that no
10
Grantors shall have no obligation to comply with this Section 6(d) until the
aggregate face amount of all letters of credit for which any Grantor is or
becomes a beneficiary of exceeds $50,000;
(e) Commercial Tort Claims. Each Grantor shall promptly (and in any event
within 15 days of receipt thereof), notify Collateral Agent in writing upon
incurring or otherwise obtaining a Commercial Tort Claim involving a claim in
excess of $250,000 after the date hereof against any third party and, upon
request of Collateral Agent, promptly amend Schedule 1 to this Agreement,
authorize the filing of additional financing statements or amendments to
existing financing statements and do such other acts or things deemed necessary
or desirable by Collateral Agent to give Collateral Agent a first priority
(subject to Permitted Liens), perfected security interest in any such Commercial
Tort Claim;
(f) Government Contracts. If any Account or Chattel Paper arises out of a
contract or contracts with the United States of America or any department,
agency, or instrumentality thereof, Grantors shall promptly (and in any event
within 15 days of the creation thereof) notify Collateral Agent thereof in
writing and execute any instruments or take any steps reasonably required by
Collateral Agent in order that all moneys due or to become due under such
contract or contracts shall be assigned to Collateral Agent, for the benefit of
the Lender Group, and notice thereof given under the Assignment of Claims Act or
other applicable law; provided that Grantors shall not be required to comply
with this Section 6(f) with respect to any contract if the aggregate annual
revenue arising thereunder during the most recently ended Fiscal Year of the
Parent was less than $50,000;
(g) Intellectual Property.
(i) Upon the reasonable request of Collateral Agent, in order to facilitate
filings with the United States Patent and Trademark Office and the United States
Copyright Office, each Grantor shall execute and deliver to Collateral Agent one
or more Copyright Security Agreements, Trademark Security Agreements, or Patent
Security Agreements to evidence Collateral Agent's Lien on such Grantor's
Patents, Trademarks, or Copyrights, and the General Intangibles of such Grantor
relating thereto or represented thereby;
(ii) Each Grantor shall have the duty, to the extent necessary or
economically desirable in the operation of such Grantor's business, (A) to
promptly sue for infringement, misappropriation, or dilution and to recover any
and all damages for such infringement, misappropriation, or dilution, (B) to
prosecute diligently any trademark application or service mark application that
is part of the material Trademarks pending as of the date hereof or hereafter
until the termination of this Agreement, (C) to prosecute diligently any patent
application that is part of the material Patents pending as of the date hereof
or hereafter until the termination of this Agreement, and (D) to take all
reasonable and necessary action to preserve and maintain all of such Grantor's
material Copyrights, Intellectual Property Licenses, material Trademarks, and
material Patents, and its rights therein, including the filing of applications
for renewal, affidavits of use, affidavits of noncontestability and opposition
and interference and cancellation proceedings. Any expenses incurred in
connection with the foregoing shall be borne by the appropriate Grantor in
accordance with Section 12.04 of the Financing Agreement. Each Grantor further
agrees not to abandon any Trademark, Patent, Copyright, or Intellectual Property
License that is necessary or economically desirable in the operation of such
Grantor's business without the prior written consent of Collateral Agent;
(iii) Grantors acknowledge and agree that the Lender Group shall have no
duties with respect to the Trademarks, Patents, Copyrights, or Intellectual
Property Licenses. Without limiting the generality of this Section 6(g),
Grantors acknowledge and agree that no member of the Lender Group shall be under
any obligation to take any steps necessary to preserve rights in the Trademarks,
Patents, Copyrights, or Intellectual Property Licenses against any other Person,
but any member of the Lender Group may do so at its option from and after the
11
occurrence and during the continuance of an Event of Default, and all expenses
incurred in connection therewith (including reasonable fees and expenses of
attorneys and other professionals) shall be for the sole account of Borrower and
shall be chargeable to the Loan Account pursuant to Section 4.02 of the
Financing Agreement;
(iv) In no event shall such Grantor, either itself or through any agent,
employee, licensee, or designee, file an application for the registration of any
Copyright with the United States Copyright Office without giving Collateral
Agent prior written notice thereof or any Patent or Trademark with the United
States Patent and Trademark Office without giving Collateral Agent written
notice thereof promptly thereafter. Promptly upon any such filing, each Grantor
shall comply with Section 6(g)(i) hereof;
(h) Investment Related Property.
(i) If any Grantor shall receive or become entitled to receive any Pledged
Interests after the Effective Date, it shall promptly (and in any event within
15 days of receipt thereof) deliver to Collateral Agent a duly executed Pledged
Interests Addendum identifying such Pledged Interests;
(ii) All sums of money and property paid or distributed in respect of the
Investment Related Property which are received by any Grantor shall be held by
the Grantors in trust for the benefit of Collateral Agent segregated from such
Grantor's other property, and such Grantor shall deliver it forthwith to
Collateral Agent in the exact form received;
(iii) [intentionally omitted];
(iv) Such Grantor shall not make or consent to any amendment or other
modification or waiver with respect to any Pledged Interests, Pledged Operating
Agreement, or Pledged Partnership Agreement, or enter into any agreement or
permit to exist any restriction with respect to any Pledged Interests, in each
case, that would materially adversely affect the rights of Collateral Agent and
the other members of the Lender Group or the value of the applicable Collateral
other than pursuant to the Loan Documents;
(v) Each Grantor agrees that it will use commercially reasonable efforts
upon the reasonable request of the Collateral Agent in obtaining all necessary
approvals and making all necessary filings under federal, state, local, or
foreign law in connection with the Collateral Agent's Liens on the Investment
Related Property or any sale or transfer thereof;
(vi) As to all limited liability company or partnership interests, issued
under any Pledged Operating Agreement or Pledged Partnership Agreement, each
Grantor hereby represents, warrants and covenants that the Pledged Interests
issued pursuant to such agreement (A) are not and shall not be dealt in or
traded on securities exchanges or in securities markets, (B) do not and will not
constitute investment company securities, and (C) are not and will not be held
by such Grantor in a securities account unless simultaneously therewith the
securities intermediary and such Grantor shall have executed and delivered a
Control Agreement in favor of the Collateral Agent. In addition, none of the
Pledged Operating Agreements, the Pledged Partnership Agreements, or any other
agreements governing any of the Pledged Interests issued under any Pledged
Operating Agreement or Pledged Partnership Agreement, provide or shall provide
that such Pledged Interests are securities governed by Article 8 of the Uniform
Commercial Code as in effect in any relevant jurisdiction;
(i) [Intentionally Omitted];
(j) [Intentionally Omitted]; and
(k) Other Actions as to Any and All Collateral. Each Grantor shall promptly
(and in any event within 15 days of acquiring or obtaining such Collateral)
notify Collateral Agent in writing upon (i) acquiring or otherwise obtaining any
Collateral after the date hereof consisting of Trademarks, Patents, Copyrights,
Intellectual Property Licenses, Investment Related Property, Chattel Paper
(electronic, tangible or otherwise), documents (as defined in Article 9 of the
12
Code), promissory notes (as defined in the Code), or instruments (as defined in
the Code), or (ii) any amount in excess of $50,000 payable under or in
connection with any of the Collateral being or becoming evidenced after the date
hereof by any Chattel Paper, documents, promissory notes, or instruments, and,
in each such case upon the request of Agent and in accordance with Section 8
hereof, promptly execute such other documents, or if applicable, deliver such
Chattel Paper, other documents, promissory notes, or instruments in accordance
with Section 6 hereof, or do such other acts or things deemed necessary or
desirable by Collateral Agent to protect Collateral Agent's Liens therein.
7. Relation to Other Security Documents. The provisions of this Agreement
shall be read and construed with the other Loan Documents referred to below in
the manner so indicated.
(a) Financing Agreement. In the event of any conflict between any provision
in this Agreement and a provision in the Financing Agreement, such provision of
the Financing Agreement shall control.
(b) Patent, Trademark, Copyright Security Agreements. The provisions of the
Copyright Security Agreements, Trademark Security Agreements, and Patent
Security Agreements are supplemental to the provisions of this Agreement, and
nothing contained in the Copyright Security Agreements, Trademark Security
Agreements, or the Patent Security Agreements shall limit any of the rights or
remedies of Collateral Agent hereunder.
8. Further Assurances.
(a) Each Grantor agrees that from time to time, at its own expense, such
Grantor will promptly execute and deliver all further instruments and documents,
and take all further action, that may be necessary or that Collateral Agent may
reasonably request, in order to perfect and protect Collateral Agent's Liens
granted or purported to be granted hereby or to enable Collateral Agent to
exercise and enforce its rights and remedies hereunder with respect to any of
the Collateral.
(b) Each Grantor authorizes the filing by Collateral Agent of such
financing or continuation statements, or amendments thereto, and such Grantor
will execute and deliver to Collateral Agent such other instruments or notices,
as may be necessary or as Collateral Agent may reasonably request, in order to
perfect and preserve the Liens granted or purported to be granted hereby.
(c) Each Grantor authorizes Collateral Agent at any time and from time to
time to file, transmit, or communicate, as applicable, financing statements and
amendments (i) describing the Collateral as "all personal property of debtor" or
"all assets of debtor" or words of similar effect, (ii) describing the
Collateral as being of equal or lesser scope or with greater detail, or (iii)
that contain any information required by part 5 of Article 9 of the Code for the
sufficiency or filing office acceptance. Each Grantor also hereby ratifies any
and all financing statements or amendments previously filed by Collateral Agent
in any jurisdiction. The Collateral Agent agree to, upon the reasonable request
of the Borrower, furnish copies of such filings to the extent available.
(d) Each Grantor hereby further authorizes Collateral Agent to make filings
with the United States Patent and Trademark Office or United States Copyright
Office (or any successor office or any similar office in any other country) or
other documents for the purpose of perfecting, confirming, continuing, enforcing
or protecting the security interest granted by such Grantor hereunder, without
the signature of such Grantor, and naming such Grantor, as debtor, and
Collateral Agent, as secured party. Collateral Agent agrees to, upon the
reasonable request of the Borrower, furnish copies of such filings to the extent
available.
(e) Each Grantor acknowledges that it is not authorized to file any
financing statement or amendment or termination statement with respect to any
financing statement filed in connection with this Agreement without the prior
13
written consent of Collateral Agent, subject to such Grantor's rights under
Section 9-509(d)(2) of the Code.
9. Collateral Agent's Right to Perform Contracts. Upon the occurrence and
during the continuance of an Event of Default, Collateral Agent (or its
designee) may proceed to perform any and all of the obligations of any Grantor
contained in any contract, lease, or other agreement and exercise any and all
rights of any Grantor therein contained as fully as such Grantor itself could.
The reasonable expenses of Collateral Agent incurred in connection therewith
shall be payable, jointly and severally, by Grantors.
10. Collateral Agent Appointed Attorney-in-Fact. Each Grantor hereby
irrevocably appoints Collateral Agent its attorney-in-fact, with full authority
in the place and stead of such Grantor and in the name of such Grantor or
otherwise, at such time as an Event of Default has occurred and is continuing
under the Financing Agreement, to take any action and to execute any instrument
which Collateral Agent may reasonably deem necessary or advisable to accomplish
the purposes of this Agreement, including:
(a) to ask, demand, collect, sue for, recover, compromise, receive and give
acquittance and receipts for moneys due and to become due under or in connection
with the Accounts or any other Collateral of such Grantor;
(b) to receive and open all mail addressed to such Grantor and to notify
postal authorities to change the address for the delivery of mail to such
Grantor to that of Collateral Agent;
(c) to receive, indorse, and collect any drafts or other instruments,
documents, Negotiable Collateral or Chattel Paper;
(d) to file any claims or take any action or institute any proceedings
which Collateral Agent may deem necessary or desirable for the collection of any
of the Collateral of such Grantor or otherwise to enforce the rights of
Collateral Agent with respect to any of the Collateral;
(e) to repair, alter, or supply goods, if any, necessary to fulfill in
whole or in part the purchase order of any Person obligated to such Grantor in
respect of any Account of such Grantor;
(f) subject to pre-existing rights and licenses, to use any labels,
Patents, Trademarks, trade names, URLs, domain names, industrial designs,
Copyrights, advertising matter or other industrial or intellectual property
rights, in advertising for sale and selling Inventory and other Collateral; and
(g) subject to pre-existing rights and licenses, Collateral Agent on behalf
of the Lender Group shall have the right, but shall not be obligated, to bring
suit in its own name to enforce the Trademarks, Patents, Copyrights and
Intellectual Property Licenses and, if Collateral Agent shall commence any such
suit, the appropriate Grantor shall, at the request of Collateral Agent, do any
and all lawful acts and execute any and all proper documents reasonably required
by Collateral Agent in aid of such enforcement.
To the extent permitted by law, each Grantor hereby ratifies all that such
attorney-in-fact shall lawfully do or cause to be done by virtue hereof. This
power of attorney is coupled with an interest and shall be irrevocable until
this Agreement is terminated.
11. Collateral Agent May Perform. If any of Grantors fails to perform any
agreement contained herein, Collateral Agent may itself perform, or cause
performance of, such agreement, and the reasonable expenses of Collateral Agent
incurred in connection therewith shall be payable, jointly and severally, by
Grantors.
12. Collateral Agent's Duties. The powers conferred on Collateral Agent
hereunder are solely to protect Collateral Agent's interest in the Collateral,
for the benefit of the Lender Group, and shall not impose any duty upon
Collateral Agent to exercise any such powers. Except for the safe custody of any
14
Collateral in its actual possession and the accounting for moneys actually
received by it hereunder, Collateral Agent shall have no duty as to any
Collateral or as to the taking of any necessary steps to preserve rights against
prior parties or any other rights pertaining to any Collateral. Collateral Agent
shall be deemed to have exercised reasonable care in the custody and
preservation of any Collateral in its actual possession if such Collateral is
accorded treatment substantially equal to that which Collateral Agent accords
its own property.
13. Collection of Accounts, General Intangibles and Negotiable Collateral.
At any time upon the occurrence and during the continuation of an Event of
Default, Collateral Agent or Collateral Agent's designee may (a) notify Account
Debtors of any Grantor that the Accounts, General Intangibles, Chattel Paper or
Negotiable Collateral have been assigned to Collateral Agent, for the benefit of
the Lender Group, or that Collateral Agent has a security interest therein, and
(b) collect the Accounts, General Intangibles and Negotiable Collateral
directly, and any collection costs and expenses shall constitute part of such
Grantor's Secured Obligations under the Loan Documents.
14. Disposition of Pledged Interests by Collateral Agent. None of the
Pledged Interests existing as of the date of this Agreement are, and none of the
Pledged Interests hereafter acquired on the date of acquisition thereof will be,
registered or qualified under the various federal or state securities laws of
the United States and disposition thereof after an Event of Default may be
restricted to one or more private (instead of public) sales in view of the lack
of such registration. Each Grantor understands that in connection with such
disposition, Collateral Agent may approach only a restricted number of potential
purchasers and further understands that a sale under such circumstances may
yield a lower price for the Pledged Interests than if the Pledged Interests were
registered and qualified pursuant to federal and state securities laws and sold
on the open market. Each Grantor, therefore, agrees that: (a) if Collateral
Agent shall, pursuant to the terms of this Agreement, sell or cause the Pledged
Interests or any portion thereof to be sold at a private sale, Collateral Agent
shall have the right to rely upon the advice and opinion of any nationally
recognized brokerage or investment firm (but shall not be obligated to seek such
advice and the failure to do so shall not be considered in determining the
commercial reasonableness of such action) as to the best manner in which to
offer the Pledged Interest or any portion thereof for sale and as to the best
price reasonably obtainable at the private sale thereof; and (b) such reliance
shall be conclusive evidence that Collateral Agent has handled the disposition
in a commercially reasonable manner.
15. Voting Rights.
(a) Upon the occurrence and during the continuation of an Event of Default,
(i) Collateral Agent may, at its option, and with 2 Business Days prior notice
to any Grantor, and in addition to all rights and remedies available to
Collateral Agent under any other agreement, at law, in equity, or otherwise,
exercise all voting rights, and all other ownership or consensual rights in
respect of the Pledged Interests owned by such Grantor, but under no
circumstances is Collateral Agent obligated by the terms of this Agreement to
exercise such rights, and (ii) if Collateral Agent duly exercises its right to
vote any of such Pledged Interests, each Grantor hereby appoints Collateral
Agent, such Grantor's true and lawful attorney-in-fact and IRREVOCABLE PROXY to
vote such Pledged Interests in any manner Collateral Agent deems advisable for
or against all matters submitted or which may be submitted to a vote of
shareholders, partners or members, as the case may be. The power-of-attorney
granted hereby is coupled with an interest and shall be irrevocable until this
Agreement is terminated.
(b) For so long as any Grantor shall have the right to vote the Pledged
Interests owned by it, such Grantor covenants and agrees that it will not,
without the prior written consent of Collateral Agent, vote or take any
consensual action with respect to such Pledged Interests which would materially
adversely affect the rights of Collateral Agent and the other members of the
Lender Group, the value of the Pledged Interests, or that would be inconsistent
with or result in any violation of any provision of the Financing Agreement or
any other Loan Document.
15
16. Remedies. Upon the occurrence and during the continuance of an Event of
Default:
(a) Collateral Agent may exercise in respect of the Collateral, in addition
to other rights and remedies provided for herein, in the other Loan Documents,
or otherwise available to it, all the rights and remedies of a secured party on
default under the Code or any other applicable law. Without limiting the
generality of the foregoing, each Grantor expressly agrees that, in any such
event, Collateral Agent without demand of performance or other demand,
advertisement or notice of any kind (except a notice specified below of time and
place of public or private sale) to or upon any of Grantors or any other Person
(all and each of which demands, advertisements and notices are hereby expressly
waived to the maximum extent permitted by the Code or any other applicable law),
may take immediate possession of all or any portion of the Collateral and (i)
require Grantors to, and each Grantor hereby agrees that it will at its own
expense and upon request of Collateral Agent forthwith, assemble all or part of
the Collateral as directed by Collateral Agent and make it available to
Collateral Agent at one or more locations where such Grantor regularly maintains
Inventory, and (ii) without notice except as specified below, sell the
Collateral or any part thereof in one or more parcels at public or private sale,
at any of Collateral Agent's offices or elsewhere, for cash, on credit, and upon
such other terms as Collateral Agent may deem commercially reasonable. Each
Grantor agrees that, to the extent notice of sale shall be required by law, at
least 10 days notice to any of Grantors of the time and place of any public sale
or the time after which any private sale is to be made shall constitute
reasonable notification and specifically such notice shall constitute a
reasonable "authenticated notification of disposition" within the meaning of
Section 9-611 of the Code. Collateral Agent shall not be obligated to make any
sale of Collateral regardless of notice of sale having been given. Collateral
Agent may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned.
(b) Subject to pre-existing rights and licenses that are permitted under
the Financing Agreement, Collateral Agent is hereby granted a non-exclusive
license or other right to use, without liability for royalties or any other
charge, each Grantor's labels, Patents, Copyrights, rights of use of any name,
trade secrets, trade names, Trademarks, service marks and advertising matter,
URLs, domain names, industrial designs, other industrial or intellectual
property or any property of a similar nature, whether owned by any of Grantors
or with respect to which any of Grantors have rights under license, sublicense,
or other agreements, as it pertains to the Collateral, in preparing for sale,
advertising for sale and selling any Collateral, and each Grantor's rights under
all licenses and all franchise agreements shall inure to the benefit of
Collateral Agent.
(c) Any cash held by Collateral Agent as Collateral and all cash proceeds
received by Collateral Agent in respect of any sale of, collection from, or
other realization upon all or any part of the Collateral shall be applied
against the Secured Obligations in the order set forth in the Financing
Agreement. In the event the proceeds of Collateral are insufficient to satisfy
all of the Secured Obligations in full, each Grantor shall remain jointly and
severally liable for any such deficiency.
(d) Each Grantor hereby acknowledges that the Secured Obligations arose out
of a commercial transaction, and agrees that if an Event of Default shall occur
and be continuing Collateral Agent shall have the right to an immediate writ of
possession without notice of a hearing. Collateral Agent shall have the right to
the appointment of a receiver for the properties and assets of each of Grantors,
and each Grantor hereby consents to such rights and such appointment and hereby
waives any objection such Grantors may have thereto or the right to have a bond
or other security posted by Collateral Agent.
17. Remedies Cumulative. Each right, power, and remedy of Collateral Agent
as provided for in this Agreement or in the other Loan Documents or now or
hereafter existing at law or in equity or by statute or otherwise shall be
cumulative and concurrent and shall be in addition to every other right, power,
or remedy provided for in this Agreement or in the other Loan Documents or now
or hereafter existing at law or in equity or by statute or otherwise, and the
exercise or beginning of the exercise by Collateral Agent, of any one or more of
such rights, powers, or remedies shall not preclude the simultaneous or later
exercise by Collateral Agent of any or all such other rights, powers, or
remedies.
16
18. Marshaling. Collateral Agent shall not be required to marshal any
present or future collateral security (including but not limited to the
Collateral) for, or other assurances of payment of, the Secured Obligations or
any of them or to resort to such collateral security or other assurances of
payment in any particular order, and all of its rights and remedies hereunder
and in respect of such collateral security and other assurances of payment shall
be cumulative and in addition to all other rights and remedies, however existing
or arising. To the extent that it lawfully may, each Grantor hereby agrees that
it will not invoke any law relating to the marshaling of collateral which might
cause delay in or impede the enforcement of Collateral Agent's rights and
remedies under this Agreement or under any other instrument creating or
evidencing any of the Secured Obligations or under which any of the Secured
Obligations is outstanding or by which any of the Secured Obligations is secured
or payment thereof is otherwise assured, and, to the extent that it lawfully
may, each Grantor hereby irrevocably waives the benefits of all such laws.
19. [Intentionally Omitted]
20. Merger, Amendments; Etc. THIS WRITTEN AGREEMENT, TOGETHER WITH THE
OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE
PARTIES. No waiver of any provision of this Agreement, and no consent to any
departure by any of Grantors herefrom, shall in any event be effective unless
the same shall be in writing and signed by Collateral Agent, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given. No amendment of any provision of this
Agreement shall be effective unless the same shall be in writing and signed by
Collateral Agent and each of Grantors to which such amendment applies.
21. Addresses for Notices. All notices and other communications provided
for hereunder shall be given in the form and manner and delivered to Collateral
Agent at its address specified in Section 12.01 of the Financing Agreement, and
to any of the Grantors at their respective addresses specified in the Financing
Agreement or Guaranty, as applicable, or, as to any party, at such other address
as shall be designated by such party in a written notice to the other party.
22. Continuing Security Interest: Assignments under Financing Agreement.
This Agreement shall create a continuing security interest in the Collateral and
shall (a) remain in full force and effect until the Obligations have been paid
in full in cash in accordance with the provisions of the Financing Agreement and
the Commitments have expired or have been terminated, (b) be binding upon each
of Grantors, and their respective successors and assigns, and (c) inure to the
benefit of, and be enforceable by, Collateral Agent, and its successors,
transferees and permitted assigns. Without limiting the generality of the
foregoing clause (c), any the Lender may, in accordance with the provisions of
Section 12.07 of the Financing Agreement, assign or otherwise transfer all or
any portion of its rights and obligations under the Financing Agreement to any
other Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such the Lender herein or otherwise. Upon
payment in full in cash of the Obligations in accordance with the provisions of
the Financing Agreement and the expiration or termination of the Commitments,
the Liens granted hereby shall terminate and all rights to the Collateral shall
revert to Grantors or any other Person entitled thereto. At such time,
Collateral Agent will execute and deliver such documents and termination
statements to terminate such Liens as such Grantor reasonably requests to
evidence such termination. No transfer or renewal, extension, assignment, or
termination of this Agreement or of the Financing Agreement, any other Loan
Document, or any other instrument or document executed and delivered by any
Grantor to Collateral Agent nor any additional Advances or other loans made by
any the Lender to Borrower, nor the taking of further security, nor the retaking
or re-delivery of the Collateral to Grantors, or any of them, by Collateral
Agent, nor any other act of the Lender Group, or any of them, shall release any
of Grantors from any obligation, except a release or discharge executed in
writing by Collateral Agent in accordance with the provisions of the Financing
Agreement. Collateral Agent shall not by any act, delay, omission or otherwise,
17
be deemed to have waived any of its rights or remedies hereunder, unless such
waiver is in writing and signed by Collateral Agent and then only to the extent
therein set forth. A waiver by Collateral Agent of any right or remedy on any
occasion shall not be construed as a bar to the exercise of any such right or
remedy which Collateral Agent would otherwise have had on any other occasion.
23. GOVERNING LAW; CONSENT TO JURISDICTION; SERVICE OF PROCESS AND VENUE;
WAIVER OF JURY TRIAL, ETC.
(a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED
TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN
DOCUMENT), SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN THE
STATE OF NEW YORK.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK IN THE
COUNTY OF NEW YORK OR OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH
PARTY HERETO HEREBY IRREVOCABLY ACCEPTS IN RESPECT OF ITS PROPERTY, GENERALLY
AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH PARTY HERETO
HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL LEGAL PROCESS,
SUMMONS, NOTICES, AND DOCUMENTS IN ANY SUIT, ACTION, OR PROCEEDING BROUGHT IN
THE UNITED STATES OF AMERICA ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT
OR ANY OF THE OTHER LOAN DOCUMENTS BY THE MAILING (BY REGISTERED MAIL OR
CERTIFIED MAIL, POSTAGE PREPAID) OR DELIVERING OF A COPY OF SUCH PROCESS TO SUCH
PARTY, AT SUCH PARTY'S ADDRESS FOR NOTICES AS SET FORTH IN SECTION 12.01 OF THE
FINANCING AGREEMENT. THE PARTIES HERETO AGREE THAT A FINAL NON-APPEALABLE
JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW. NOTHING HEREIN SHALL AFFECT THE RIGHT ANY PARTY TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST SUCH PARTY IN ANY OTHER JURISDICTION. EACH PARTY
HERETO HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE JURISDICTION OR
LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO
ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. TO THE EXTENT THAT PARTY HERETO HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY
FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH
SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION
OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, EACH PARTY HERETO HEREBY
IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS.
(c) EACH GRANTOR, EACH AGENT AND EACH LENDER HEREBY WAIVES ANY RIGHT TO A
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS
UNDER THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS, OR UNDER ANY AMENDMENT,
WAIVER, CONSENT, INSTRUMENT, DOCUMENT OR OTHER AGREEMENT DELIVERED OR WHICH IN
THE FUTURE MAY BE DELIVERED IN CONNECTION THEREWITH, OR ARISING FROM ANY
FINANCING RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREES
THAT ANY SUCH ACTION, PROCEEDINGS OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT
AND NOT BEFORE A JURY. EACH GRANTOR CERTIFIES THAT NO OFFICER, REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY AGENT OR ANY LENDER HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT ANY AGENT OR ANY LENDER WOULD NOT, IN THE EVENT OF ANY ACTION,
18
PROCEEDING OR COUNTERCLAIM, SEEK TO ENFORCE THE FOREGOING WAIVERS. EACH GRANTOR
HEREBY ACKNOWLEDGES THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENTS
AND THE LENDERS ENTERING INTO THIS AGREEMENT.
24. New Subsidiaries. Pursuant to Section 7.01(b) of the Financing
Agreement, any new direct or indirect Subsidiary (whether by acquisition or
creation) of Grantor is required to enter into this Agreement by executing and
delivering in favor of Collateral Agent a supplement to this Agreement in the
form of Annex 1 attached hereto. Upon the execution and delivery of Annex 1 by
such new Subsidiary, such Subsidiary shall become a Grantor hereunder with the
same force and effect as if originally named as a Grantor herein. The execution
and delivery of any instrument adding an additional Grantor as a party to this
Agreement shall not require the consent of any Grantor hereunder. The rights and
obligations of each Grantor hereunder shall remain in full force and effect
notwithstanding the addition of any new Grantor hereunder.
25. Collateral Agent. Each reference herein to any right granted to,
benefit conferred upon or power exercisable by the "Collateral Agent" shall be a
reference to Collateral Agent, for the benefit of the Lender Group.
26. Miscellaneous.
(a) This Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which, when executed and
delivered, shall be deemed to be an original, and all of which, when taken
together, shall constitute but one and the same Agreement. Delivery of an
executed counterpart of this Agreement by telefacsimile or other electronic
method of transmission shall be equally as effective as delivery of an original
executed counterpart of this Agreement. Any party delivering an executed
counterpart of this Agreement by telefacsimile or other electronic method of
transmission also shall deliver an original executed counterpart of this
Agreement but the failure to deliver an original executed counterpart shall not
affect the validity, enforceability, and binding effect of this Agreement. The
foregoing shall apply to each other Loan Document mutatis mutandis.
(b) Any provision of this Agreement which is prohibited or unenforceable
shall be ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof in that jurisdiction or
affecting the validity or enforceability of such provision in any other
jurisdiction.
(c) Headings used in this Agreement are for convenience only and shall not
be used in connection with the interpretation of any provision hereof.
(d) The pronouns used herein shall include, when appropriate, either gender
and both singular and plural, and the grammatical construction of sentences
shall conform thereto.
(e) Unless the context of this Agreement or any other Loan Document clearly
requires otherwise, references to the plural include the singular, references to
the singular include the plural, the terms "includes" and "including" are not
limiting, and the term "or" has, except where otherwise indicated, the inclusive
meaning represented by the phrase "and/or." The words "hereof," "herein,"
"hereby," "hereunder," and similar terms in this Agreement or any other Loan
Document refer to this Agreement or such other Loan Document, as the case may
be, as a whole and not to any particular provision of this Agreement or such
other Loan Document, as the case may be. Section, subsection, clause, schedule,
and exhibit references herein are to this Agreement unless otherwise specified.
Any reference in this Agreement or in any other Loan Document to any agreement,
instrument, or document shall include all alterations, amendments, changes,
extensions, modifications, renewals, replacements, substitutions, joinders, and
supplements, thereto and thereof, as applicable (subject to any restrictions on
such alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements set forth herein). Any
reference herein or in any other Loan Document to the satisfaction or repayment
in full of the Obligations shall mean the repayment in full in cash (or cash
collateralization in accordance with the terms hereof) of all Obligations other
than unasserted contingent indemnification Obligations. Any reference herein to
any Person shall be construed to include such Person's successors and permitted
assigns. Any requirement of a writing contained herein or in any other Loan
Document shall be satisfied by the transmission of a Record and any Record so
transmitted shall constitute a representation and warranty as to the accuracy
and completeness of the information contained therein.
19
IN WITNESS WHEREOF, the undersigned parties hereto have executed this
Agreement by and through their duly authorized officers, as of the day and year
first above written.
GRANTORS:
PRG-SCHULTZ INTERNATIONAL, INC.,
a Georgia corporation
By: /s/ C. McKellar, Jr.
---------------------------------------
Name: Clinton McKellar, Jr.
Title: Senior Vice President,
General Counsel & Secretary
PRG-SCHULTZ USA, INC.,
a Georgia corporation
By: /s/ C. McKellar, Jr.
---------------------------------------
Name: Clinton McKellar, Jr.
Title: Senior Vice President,
General Counsel & Secretary
PRG-SCHULTZ CANADA, INC.,
a Georgia corporation
By: /s/ C. McKellar, Jr.
---------------------------------------
Name: Clinton McKellar, Jr.
Title: Senior Vice President,
General Counsel & Secretary
THE PROFIT RECOVERY GROUP MEXICO, INC.,
a Georgia corporation
By: /s/ C. McKellar, Jr.
---------------------------------------
Name: Clinton McKellar, Jr.
Title: Senior Vice President,
General Counsel & Secretary
PRG-SCHULTZ PUERTO RICO, INC.,
a Georgia corporation
By: /s/ C. McKellar, Jr.
---------------------------------------
Name: Clinton McKellar, Jr.
Title: Senior Vice President,
General Counsel & Secretary
THE PROFIT RECOVERY GROUP COSTA RICA,
INC.,
a Georgia corporation
By: /s/ C. McKellar, Jr.
---------------------------------------
Name: Clinton McKellar, Jr.
Title: Senior Vice President,
General Counsel & Secretary
GRANTORS:
PRG-SCHULTZ CHILE, INC.,
a Georgia corporation
By: /s/ C. McKellar, Jr.
---------------------------------------
Name: Clinton McKellar, Jr.
Title: Senior Vice President,
General Counsel & Secretary
PRG INTERNATIONAL, INC.,
a Georgia corporation
By: /s/ C. McKellar, Jr.
---------------------------------------
Name: Clinton McKellar, Jr.
Title: Senior Vice President,
General Counsel & Secretary
PRGFS, INC.,
a Delaware corporation
By: /s/ C. McKellar, Jr.
---------------------------------------
Name: Clinton McKellar, Jr.
Title: Senior Vice President,
General Counsel & Secretary
PRGTS, LLC,
a Georgia limited liability company
By: /s/ C. McKellar, Jr.
---------------------------------------
Name: Clinton McKellar, Jr.
Title: Senior Vice President,
General Counsel & Secretary
HS&A ACQUISITION - UK, INC.,
a Texas corporation
By: /s/ C. McKellar, Jr.
---------------------------------------
Name: Clinton McKellar, Jr.
Title: Senior Vice President,
General Counsel & Secretary
PRG-SCHULTZ AUSTRALIA, INC.,
a Georgia corporation
By: /s/ C. McKellar, Jr.
---------------------------------------
Name: Clinton McKellar, Jr.
Title: Senior Vice President,
General Counsel & Secretary
GRANTORS:
PRG-SCHULTZ BELGIUM, INC.,
a Georgia corporation
By: /s/ C. McKellar, Jr.
---------------------------------------
Name: Clinton McKellar, Jr.
Title: Senior Vice President,
General Counsel & Secretary
THE PROFIT RECOVERY GROUP
GERMANY, INC.,
a Georgia corporation
By: /s/ C. McKellar, Jr.
---------------------------------------
Name: Clinton McKellar, Jr.
Title: Senior Vice President,
General Counsel & Secretary
PRG-SCHULTZ FRANCE, INC.,
a Georgia corporation
By: /s/ C. McKellar, Jr.
---------------------------------------
Name: Clinton McKellar, Jr.
Title: Senior Vice President,
General Counsel & Secretary
THE PROFIT RECOVERY GROUP NETHERLANDS,
INC.,
a Georgia corporation
By: /s/ C. McKellar, Jr.
---------------------------------------
Name: Clinton McKellar, Jr.
Title: Senior Vice President,
General Counsel & Secretary
THE PROFIT RECOVERY GROUP NEW ZEALAND,
INC.,
a Georgia corporation
By: /s/ C. McKellar, Jr.
---------------------------------------
Name: Clinton McKellar, Jr.
Title: Senior Vice President,
General Counsel & Secretary
PRG-SCHULTZ SCANDINAVIA, INC.,
a Georgia corporation
By: /s/ C. McKellar, Jr.
---------------------------------------
Name: Clinton McKellar, Jr.
Title: Senior Vice President,
General Counsel & Secretary
GRANTORS:
PRG-SCHULTZ PORTUGAL, INC.,
a Georgia corporation
By: /s/ C. McKellar, Jr.
---------------------------------------
Name: Clinton McKellar, Jr.
Title: Senior Vice President,
General Counsel & Secretary
PRG-SCHULTZ SWITZERLAND, INC.,
a Georgia corporation
By: /s/ C. McKellar, Jr.
---------------------------------------
Name: Clinton McKellar, Jr.
Title: Senior Vice President,
General Counsel & Secretary
THE PROFIT RECOVERY GROUP ITALY, INC.,
a Georgia corporation
By: /s/ C. McKellar, Jr.
---------------------------------------
Name: Clinton McKellar, Jr.
Title: Senior Vice President,
General Counsel & Secretary
THE PROFIT RECOVERY GROUP SPAIN, INC.,
a Georgia corporation
By: /s/ C. McKellar, Jr.
---------------------------------------
Name: Clinton McKellar, Jr.
Title: Senior Vice President,
General Counsel & Secretary
THE PROFIT RECOVERY GROUP ASIA, INC.,
a Georgia corporation
By: /s/ C. McKellar, Jr.
---------------------------------------
Name: Clinton McKellar, Jr.
Title: Senior Vice President,
General Counsel & Secretary
THE PROFIT RECOVERY GROUP SOUTH AFRICA,
INC.,
a Georgia corporation
By: /s/ C. McKellar, Jr.
---------------------------------------
Name: Clinton McKellar, Jr.
Title: Senior Vice President,
General Counsel & Secretary
PRG-SCHULTZ JAPAN, INC.,
a Georgia corporation
By: /s/ C. McKellar, Jr.
---------------------------------------
Name: Clinton McKellar, Jr.
Title: Senior Vice President,
General Counsel & Secretary
GRANTORS:
PRG-SCHULTZ EUROPE, INC.,
a Georgia corporation
By: /s/ C. McKellar, Jr.
---------------------------------------
Name: Clinton McKellar, Jr.
Title: Senior Vice President,
General Counsel & Secretary
PRG-SCHULTZ PUERTO RICO,
a Puerto Rico partnership
By: /s/ C. McKellar, Jr.
---------------------------------------
Name: Clinton McKellar, Jr.
Title: Senior Vice President,
General Counsel & Secretary
COLLATERAL AGENT:
ABLECO FINANCE LLC, a Delaware limited
liability company, as Collateral Agent
By: /s/ Eric Miller
---------------------------------------
Name: Eric Miller
Title: Senior Vice President
SCHEDULE 1
COMMERCIAL TORT CLAIMS
[include specific case caption or description per Official Code Comment 5 to
Section 9-108 of the Code]
SCHEDULE 1
PLEDGED COMPANIES
- -------------------------------- ------------------------------- ------------------ --------------- ----------------- --------------
NUMBER OF CLASS OF PERCENTAGE OF CERTIFICATE
NAME OF PLEDGOR NAME OF PLEDGED COMPANY SHARES/UNITS INTERESTS CLASS OWNED NOS.
- -------------------------------- ------------------------------- ------------------ --------------- ----------------- --------------
SCHEDULE 3
LIST OF UNIFORM COMMERCIAL CODE FILING JURISDICTIONS
Grantor Jurisdictions
ANNEX 1 TO SECURITY AGREEMENT
FORM OF SUPPLEMENT
Supplement No. ____ (this "Supplement") dated as of _______________, 200__,
to the Security Agreement dated as of March 17, 2006 (as amended, restated,
supplemented or otherwise modified from time to time, the "Security Agreement")
by each of the parties listed on the signature pages thereto and those
additional entities that thereafter become parties thereto (collectively,
jointly and severally, "Grantors" and each individually "Grantor") and ABLECO
FINANCE LLC, in its capacity as Collateral Agent for the Lender Group (together
with its successors, "Collateral Agent").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Financing Agreement dated as of March 17,
2006 (as amended, restated, supplemented or otherwise modified from time to
time, including all schedules thereto, the "Financing Agreement") among
PRG-SCHULTZ INTERNATIONAL, INC., a Georgia corporation ("Parent"), PRG-SCHULTZ
USA, INC., a Georgia corporation (the "Borrower"), each Subsidiary of Parent
listed as a "Guarantor" on the signatures pages thereto (such Subsidiaries,
together with the Parent, each individually a "Guarantor", and individually and
collectively, jointly and severally, the "Guarantors"), the lenders that are
from time to time parties thereto (each a "Lender" and, collectively, the
"Lenders"), Collateral Agent, and The CIT Group/Business Credit, Inc., a New
York corporation, as administrative agent for the Lender Group, the Lender Group
is willing to make certain financial accommodations available to Borrower from
time to time pursuant to the terms and conditions thereof;
WHEREAS, capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to such terms in the Security Agreement or the
Financing Agreement; and
WHEREAS, Grantors have entered into the Security Agreement in order to
induce the Lender Group to make certain financial accommodations to Borrower;
and
WHEREAS, pursuant to Section 7.01(b) of the Financing Agreement, new direct
or indirect Subsidiaries of Borrower, must execute and deliver certain Loan
Documents, including the Security Agreement, and the execution of the Security
Agreement by the undersigned new Grantor or Grantors (collectively, the "New
Grantors") may be accomplished by the execution of this Supplement in favor of
Collateral Agent, for the benefit of the Lender Group;
NOW, THEREFORE, for and in consideration of the foregoing and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, each New Grantor hereby agrees as follows:
1. In accordance with Section 24 of the Security Agreement, each New
Grantor, by its signature below, becomes a "Grantor" under the Security
Agreement with the same force and effect as if originally named therein as a
"Grantor" and each New Grantor hereby (a) agrees to all of the terms and
provisions of the Security Agreement applicable to it as a "Grantor" thereunder
and (b) represents and warrants that the representations and warranties made by
it as a "Grantor" thereunder are true and correct on and as of the date hereof.
In furtherance of the foregoing, (i) each New Grantor, as security for the
payment and performance in full of the Secured Obligations (other than the Term
Loan Obligations), does hereby grant, assign, and pledge to Collateral Agent,
for the benefit of the Revolving Loan Lenders, Collateral Agent, and
Administrative Agent, a security interest in and security title to all assets of
such New Grantor including, all property of the type described in Section 2 of
the Security Agreement to secure the full and prompt payment of such Secured
Obligations, and (ii) each New Grantor, as security for the payment and
performance in full of the Secured Obligations (other than the Revolving Loan
Obligations), does hereby grant, assign, and pledge to Collateral Agent, for the
benefit of the Term Loan Lenders, Collateral Agent, and Administrative Agent, a
security interest in and security title to all assets of such New Grantor
including, all property of the type described in Section 2 of the Security
Agreement to secure the full and prompt payment of such Secured Obligations.
Schedule 6.01(w), "Intellectual Property", attached hereto shall be made a part
of the Security Agreement for all purposes of the Security Agreement. Schedule
1, "Commercial Tort Claims", Schedule 2, "Pledged Companies" and Schedule 3,
"List of Uniform Commercial Code Filing Jurisdictions", attached hereto
supplement Schedule 1, Schedule 2, and Schedule 3 respectively, to the Security
Agreement and shall be deemed a part thereof for all purposes of the Security
Agreement. Each reference to a "Grantor" in the Security Agreement shall be
deemed to include each New Grantor. The Security Agreement is incorporated
herein by reference.
2. Each New Grantor represents and warrants to Collateral Agent and the
Lender Group that this Supplement has been duly executed and delivered by such
New Grantor and constitutes its legal, valid and binding obligation, enforceable
against it in accordance with its terms, except as enforceability thereof may be
limited by bankruptcy, insolvency, reorganization, fraudulent transfer,
moratorium or other similar laws affecting creditors' rights generally and
general principles of equity (regardless of whether such enforceability is
considered in a proceeding at law or in equity).
3. This Supplement may be executed in multiple counterparts, each of which
shall be deemed to be an original, but all such separate counterparts shall
together constitute but one and the same instrument. Delivery of a counterpart
hereof by facsimile transmission or by e-mail transmission shall be as effective
as delivery of a manually executed counterpart hereof.
4. Except as expressly supplemented hereby, the Security Agreement shall
remain in full force and effect.
5. This Supplement shall be construed in accordance with and governed by
the laws of the State of New York, without regard to the conflict of laws
principles thereof.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, each New Grantor and Collateral Agent have duly
executed this Supplement to the Security Agreement as of the day and year first
above written.
NEW GRANTORS: [NAME OF NEW GRANTOR]
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
[NAME OF NEW GRANTOR]
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
AGENT: ABLECO FINANCE LLC, a Delaware limited
liability company, as Collateral Agent
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
EXHIBIT A
COPYRIGHT SECURITY AGREEMENT
This COPYRIGHT SECURITY AGREEMENT (this "Copyright Security Agreement") is
made this ___ day of ___________, 200__, among Grantors listed on the signature
pages hereof (collectively, jointly and severally, "Grantors" and each
individually "Grantor"), and ABLECO FINANCE LLC, a Delaware limited liability
company, in its capacity as Collateral Agent for the Lender Group (together with
its successors, the "Collateral Agent").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to that certain Financing Agreement dated as of March 17,
2006 (as amended, restated, supplemented or otherwise modified from time to
time, including all schedules thereto, the "Financing Agreement") among
PRG-SCHULTZ INTERNATIONAL, INC., a Georgia corporation ("Parent"), PRG-SCHULTZ
USA, INC., a Georgia corporation (the "Borrower"), each Subsidiary of Parent
listed as a "Guarantor" on the signatures pages thereto (such Subsidiaries,
together with the Parent, each individually a "Guarantor", and individually and
collectively, jointly and severally, the "Guarantors"), the lenders that are
from time to time parties thereto (each a "Lender" and, collectively, the
"Lenders"), Collateral Agent, and The CIT Group/Business Credit, Inc., a New
York corporation, as administrative agent for the Lender Group, the Lender Group
is willing to make certain financial accommodations available to Borrower from
time to time pursuant to the terms and conditions thereof;
WHEREAS, the members of the Lender Group are willing to make the financial
accommodations to Borrower as provided for in the Financing Agreement, but only
upon the condition, among others, that Grantors shall have executed and
delivered to Collateral Agent, for the benefit of the Lender Group, that certain
Security Agreement of even date herewith (including all annexes, exhibits or
schedules thereto, as from time to time amended, restated, supplemented or
otherwise modified, the "Security Agreement"); and
WHEREAS, pursuant to the Security Agreement, Grantors are required to
execute and deliver to Collateral Agent, for the benefit of the Lender Group,
this Copyright Security Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantors hereby agree as follows:
1. DEFINED TERMS. All capitalized terms used but not otherwise defined
herein have the meanings given to them in the Security Agreement or the
Financing Agreement.
2. GRANT OF SECURITY INTEREST IN COPYRIGHT COLLATERAL.
(a) Each Grantor, in order to secure the prompt payment of all of the
Secured Obligations (other than the Term Loan Obligations), hereby grants to
Collateral Agent, for the benefit of the Revolving Loan Lenders, Collateral
Agent, and Administrative Agent, a continuing first priority security interest
in all of such Grantor's right, title and interest in, to and under the
following, whether presently existing or hereafter created or acquired
(collectively, the "Copyright Collateral"):
(i) all of such Grantor's Copyrights and Intellectual Property Licenses
relating to Copyrights to which it is a party including those referred to on
Schedule I hereto;
(ii) all reissues, continuations or extensions of the foregoing; and
(iii) all products and proceeds of the foregoing, including any claim by
such Grantor against third parties for past, present or future infringement or
dilution of any Copyright or any Copyright licensed under any Intellectual
Property License.
(b) Each Grantor, in order to secure the prompt payment of all of the
Secured Obligations (other than the Revolving Loan Obligations), hereby grants
to Collateral Agent, for the benefit of the Term Loan Lenders, Collateral Agent,
and Administrative Agent, a continuing first priority security interest in all
of such Grantor's right, title and interest in, to and under the Copyright
Collateral, whether presently existing or hereafter created or acquired.
(c) This Copyright Security Agreement secures the payment of all amounts
which constitute part of the Secured Obligations and would be owed by Grantors,
or any of them, to Collateral Agent, the Lender Group, or any of them, whether
or not they are unenforceable or not allowable due to the existence of an
Insolvency Proceeding involving any Grantor.
3. SECURITY AGREEMENT. The security interests granted pursuant to this
Copyright Security Agreement are granted in conjunction with the security
interests granted to Collateral Agent, for the benefit of the Lender Group,
pursuant to the Security Agreement. Each Grantor hereby acknowledges and affirms
that the rights and remedies of Collateral Agent with respect to the security
interest in the Copyright Collateral made and granted hereby are more fully set
forth in the Security Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth herein.
4. AUTHORIZATION TO SUPPLEMENT. Grantors shall give Collateral Agent prompt
notice in writing of any additional United States copyright registrations or
applications therefor as provided in the Security Agreement. Grantors hereby
authorize Collateral Agent unilaterally to modify this Agreement by amending
Schedule I to include any future United States registered copyrights or
applications therefor of Grantors. Notwithstanding the foregoing, no failure to
so modify this Copyright Security Agreement or amend Schedule I shall in any way
affect, invalidate or detract from Collateral Agent's continuing security
interest in all Collateral, whether or not listed on Schedule I.
5. COUNTERPARTS. This Copyright Security Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
such separate counterparts shall together constitute but one and the same
instrument. In proving this Copyright Security Agreement or any other Loan
Document in any judicial proceedings, it shall not be necessary to produce or
account for more than one such counterpart signed by the party against whom such
enforcement is sought. Any signatures delivered by a party by facsimile
transmission or by e-mail transmission shall be deemed an original signature
hereto.
6. CONSTRUCTION. Unless the context of this Copyright Security Agreement or
any other Loan Document clearly requires otherwise, references to the plural
include the singular, references to the singular include the plural, the terms
"includes" and "including" are not limiting, and the term "or" has, except where
otherwise indicated, the inclusive meaning represented by the phrase "and/or."
The words "hereof," "herein," "hereby," "hereunder," and similar terms in this
Copyright Security Agreement or any other Loan Document refer to this Copyright
Security Agreement or such other Loan Document, as the case may be, as a whole
and not to any particular provision of this Copyright Security Agreement or such
other Loan Document, as the case may be. Section, subsection, clause, schedule,
and exhibit references herein are to this Copyright Security Agreement unless
otherwise specified. Any reference in this Copyright Security Agreement or in
any other Loan Document to any agreement, instrument, or document shall include
all alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). Any reference herein or in any
other Loan Document to the satisfaction or repayment in full of the Obligations
shall mean the repayment in full in cash (or cash collateralization in
accordance with the terms hereof) of all Obligations other than unasserted
contingent indemnification Obligations. Any reference herein to any Person shall
be construed to include such Person's successors and permitted assigns. Any
requirement of a writing contained herein or in any other Loan Document shall be
satisfied by the transmission of a Record and any Record so transmitted shall
constitute a representation and warranty as to the accuracy and completeness of
the information contained therein.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, each Grantor has caused this Copyright Security
Agreement to be executed and delivered by its duly authorized officer as of the
date first set forth above.
------------------------------------------
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
------------------------------------------
By:
---------------------------------------
Name:
---------------------------------------
Title:
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ACCEPTED AND ACKNOWLEDGED BY:
ABLECO FINANCE LLC, a Delaware limited
liability company, as Collateral Agent
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
SCHEDULE I
TO
COPYRIGHT SECURITY AGREEMENT
COPYRIGHT REGISTRATIONS
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
GRANTOR COUNTRY COPYRIGHT REGISTRATION NO. REGISTRATION DATE
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
COPYRIGHT LICENSES
EXHIBIT B
PATENT SECURITY AGREEMENT
This PATENT SECURITY AGREEMENT (this "Patent Security Agreement") is made
this ___ day of ___________, 200__, among the Grantors listed on the signature
pages hereof (collectively, jointly and severally, "Grantors" and each
individually "Grantor"), and ABLECO FINANCE LLC, a Delaware limited liability
company, in its capacity as collateral agent for the Lender Group (together with
its successors, "Collateral Agent").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to that certain Financing Agreement dated as of March 17,
2006 (as amended, restated, supplemented or otherwise modified from time to
time, including all schedules thereto, the "Financing Agreement") among
PRG-SCHULTZ INTERNATIONAL, INC., a Georgia corporation ("Parent"), PRG-SCHULTZ
USA, INC., a Georgia corporation (the "Borrower"), each Subsidiary of Parent
listed as a "Guarantor" on the signatures pages thereto (such Subsidiaries,
together with the Parent, each individually a "Guarantor", and individually and
collectively, jointly and severally, the "Guarantors"), the lenders that are
from time to time parties thereto (each a "Lender" and, collectively, the
"Lenders"), Collateral Agent, and The CIT Group/Business Credit, Inc., a New
York corporation, as administrative agent for the Lender Group, the Lender Group
is willing to make certain financial accommodations available to Borrower from
time to time pursuant to the terms and conditions thereof;
WHEREAS, the members of Lender Group are willing to make the financial
accommodations to Borrower as provided for in the Financing Agreement, but only
upon the condition, among others, that the Grantors shall have executed and
delivered to Collateral Agent, for the benefit of the Lender Group, that certain
Security Agreement of even date herewith (including all annexes, exhibits or
schedules thereto, as from time to time amended, restated, supplemented or
otherwise modified, the "Security Agreement"); and
WHEREAS, pursuant to the Security Agreement, Grantors are required to
execute and deliver to Collateral Agent, for the benefit of the Lender Group,
this Patent Security Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Grantor hereby agrees as
follows:
1. DEFINED TERMS. All capitalized terms used but not otherwise defined
herein have the meanings given to them in the Security Agreement or the
Financing Agreement.
2. GRANT OF SECURITY INTEREST IN PATENT COLLATERAL.
(a) Each Grantor, in order to secure the prompt payment of all of the
Secured Obligations (other than the Term Loan Obligations), hereby grants to
Collateral Agent, for the benefit of the Revolving Loan Lenders, Collateral
Agent, and Administrative Agent, a continuing first priority security interest
in all of such Grantor's right, title and interest in, to and under the
following, whether presently existing or hereafter created or acquired
(collectively, the "Patent Collateral"):
(i) all of its Patents and Intellectual Property Licenses relating to
Patents to which it is a party including those referred to on Schedule I hereto;
(ii) all reissues, continuations or extensions of the foregoing; and
(iii) all products and proceeds of the foregoing, including any claim by
such Grantor against third parties for past, present or future infringement or
dilution of any Patent or any Patent licensed under any Intellectual Property
License.
(b) Each Grantor, in order to secure the prompt payment of all of the
Secured Obligations (other than the Revolving Loan Obligations), hereby grants
to Collateral Agent, for the benefit of the Term Loan Lenders, Collateral Agent,
and Administrative Agent, a continuing first priority security interest in all
of such Grantor's right, title and interest in, to and under the Patent
Collateral, whether presently existing or hereafter created or acquired.
(c) This Patent Security Agreement secures the payment of all amounts which
constitute part of the Obligations and would be owed by Grantors, or any of
them, to Collateral Agent, the Lender Group, or any of them, whether or not they
are unenforceable or not allowable due to the existence of an Insolvency
Proceeding involving any Grantor.
3. SECURITY AGREEMENT. The security interests granted pursuant to this
Patent Security Agreement are granted in conjunction with the security interests
granted to Collateral Agent, for the benefit of the Lender Group, pursuant to
the Security Agreement. Each Grantor hereby acknowledges and affirms that the
rights and remedies of Collateral Agent with respect to the security interest in
the Patent Collateral made and granted hereby are more fully set forth in the
Security Agreement, the terms and provisions of which are incorporated by
reference herein as if fully set forth herein.
4. AUTHORIZATION TO SUPPLEMENT. If any Grantor shall obtain rights to any
new patentable inventions or become entitled to the benefit of any patent
application or patent for any reissue, division, or continuation, of any patent,
the provisions of this Patent Security Agreement shall automatically apply
thereto. Grantors shall give prompt notice in writing to Collateral Agent with
respect to any such new patent rights as provided in the Security Agreement.
Without limiting Grantors' obligations under this Section 5, Grantors hereby
authorize Collateral Agent unilaterally to modify this Agreement by amending
Schedule I to include any such new patent rights of Grantors. Notwithstanding
the foregoing, no failure to so modify this Patent Security Agreement or amend
Schedule I shall in any way affect, invalidate or detract from Collateral
Agent's continuing security interest in all Collateral, whether or not listed on
Schedule I.
5. COUNTERPARTS. This Patent Security Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
such separate counterparts shall together constitute but one and the same
instrument. In proving this Patent Security Agreement or any other Loan Document
in any judicial proceedings, it shall not be necessary to produce or account for
more than one such counterpart signed by the party against whom such enforcement
is sought. Any signatures delivered by a party by facsimile transmission or by
e-mail transmission shall be deemed an original signature hereto.
6. CONSTRUCTION. Unless the context of this Patent Security Agreement or
any other Loan Document clearly requires otherwise, references to the plural
include the singular, references to the singular include the plural, the terms
"includes" and "including" are not limiting, and the term "or" has, except where
otherwise indicated, the inclusive meaning represented by the phrase "and/or."
The words "hereof," "herein," "hereby," "hereunder," and similar terms in this
Patent Security Agreement or any other Loan Document refer to this Patent
Security Agreement or such other Loan Document, as the case may be, as a whole
and not to any particular provision of this Patent Security Agreement or such
other Loan Document, as the case may be. Section, subsection, clause, schedule,
and exhibit references herein are to this Patent Security Agreement unless
otherwise specified. Any reference in this Patent Security Agreement or in any
other Loan Document to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). Any reference herein or in any
other Loan Document to the satisfaction or repayment in full of the Obligations
shall mean the repayment in full in cash (or cash collateralization in
accordance with the terms hereof) of all Obligations other than unasserted
contingent indemnification Obligations. Any reference herein to any Person shall
be construed to include such Person's successors and permitted assigns. Any
requirement of a writing contained herein or in any other Loan Document shall be
satisfied by the transmission of a Record and any Record so transmitted shall
constitute a representation and warranty as to the accuracy and completeness of
the information contained therein.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, each Grantor has caused this Patent Security Agreement
to be executed and delivered by its duly authorized officer as of the date first
set forth above.
------------------------------------------
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
------------------------------------------
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
ACCEPTED AND ACKNOWLEDGED BY:
ABLECO FINANCE LLC, a Delaware limited
liability, as Collateral Agent
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
EXHIBIT C
PLEDGED INTERESTS ADDENDUM
This Pledged Interests Addendum, dated as of _________ ___, 20___, is
delivered pursuant to Section 6 of the Security Agreement referred to below. The
undersigned hereby agrees that this Pledged Interests Addendum may be attached
to that certain Security Agreement, dated as of March 17, 2006 (as amended,
restated, supplemented or otherwise modified from time to time, the "Security
Agreement"), made by the undersigned, together with the other Grantors named
therein, to Ableco Finance LLC, a Delaware limited liability company, as
Collateral Agent. Initially capitalized terms used but not defined herein shall
have the meaning ascribed to such terms in the Security Agreement. The
undersigned hereby agrees that the additional interests listed on this Pledged
Interests Addendum as set forth below shall be and become part of the Pledged
Interests pledged by the undersigned to the Collateral Agent in the Security
Agreement and any pledged company set forth on this Pledged Interests Addendum
as set forth below shall be and become a "Pledged Company" under the Security
Agreement, each with the same force and effect as if originally named therein.
The undersigned hereby certifies that the representations and warranties
set forth in Section 4 of the Security Agreement of the undersigned are true and
correct as to the Pledged Interests listed herein on and as of the date hereof.
------------------------------------------
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
- -------------------------------- ------------------------------ ------------------ ---------------- ----------------- --------------
NUMBER OF CLASS OF PERCENTAGE OF CERTIFICATE
NAME OF PLEDGOR NAME OF PLEDGED COMPANY SHARES/UNITS INTERESTS CLASS OWNED NOS.
- -------------------------------- ------------------------------ ------------------ ---------------- ----------------- --------------
EXHIBIT D
TRADEMARK SECURITY AGREEMENT
This TRADEMARK SECURITY AGREEMENT (this "Trademark Security Agreement") is
made this ___ day of ___________, 200__, among Grantors listed on the signature
pages hereof (collectively, jointly and severally, "Grantors" and each
individually "Grantor"), and ABLECO FINANCE LLC, a Delaware limited liability
company, in its capacity as Collateral Agent for the Lender Group (together with
its successors, "Collateral Agent").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Financing Agreement dated as of March 17,
2006 (as amended, restated, supplemented or otherwise modified from time to
time, including all schedules thereto, the "Financing Agreement") among
PRG-SCHULTZ INTERNATIONAL, INC., a Georgia corporation ("Parent"), PRG-SCHULTZ
USA, INC., a Georgia corporation (the "Borrower"), each Subsidiary of Parent
listed as a "Guarantor" on the signatures pages thereto (such Subsidiaries,
together with the Parent, each individually a "Guarantor", and individually and
collectively, jointly and severally, the "Guarantors"), the lenders that are
from time to time parties thereto (each a "Lender" and, collectively, the
"Lenders"), Collateral Agent, and The CIT Group/Business Credit, Inc., a New
York corporation, as administrative agent for the Lender Group, the Lender Group
is willing to make certain financial accommodations available to Borrower from
time to time pursuant to the terms and conditions thereof;
WHEREAS, the members of the Lender Group are willing to make the financial
accommodations to Borrower as provided for in the Financing Agreement, but only
upon the condition, among others, that Grantors shall have executed and
delivered to Collateral Agent, for the benefit of Lender Group, that certain
Security Agreement dated of even date herewith (including all annexes, exhibits
or schedules thereto, as from time to time amended, restated, supplemented or
otherwise modified, the "Security Agreement"); and
WHEREAS, pursuant to the Security Agreement, Grantors are required to
execute and deliver to Collateral Agent, for the benefit of Lender Group, this
Trademark Security Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Grantor hereby agrees as
follows:
1. DEFINED TERMS. All capitalized terms used but not otherwise defined
herein have the meanings given to them in the Security Agreement or the
Financing Agreement.
2. GRANT OF SECURITY INTEREST IN TRADEMARK COLLATERAL.
(a) Each Grantor, in order to secure the prompt payment of all of the
Secured Obligations (other than the Term Loan Obligations), hereby grants to
Collateral Agent, for the benefit of the Revolving Loan Lenders, Collateral
Agent, and Administrative Agent, a continuing first priority security interest
in all of such Grantor's right, title and interest in, to and under the
following, whether presently existing or hereafter created or acquired
(collectively, the "Trademark Collateral"):
(i) all of its Trademarks and Intellectual Property Licenses relating to
Trademarks to which it is a party including those referred to on Schedule I
hereto;
(ii) all reissues, continuations or extensions of the foregoing; and
(iii) all products and proceeds of the foregoing, including any claim by
such Grantor against third parties for past, present or future (i) infringement
or dilution of any Trademark or any Trademark licensed under any Intellectual
Property License or (ii) injury to the goodwill associated with any Trademark or
any Trademark licensed under any Intellectual Property License.
(b) Each Grantor, in order to secure the prompt payment of all of the
Secured Obligations (other than the Revolving Loan Obligations), hereby grants
to Collateral Agent, for the benefit of the Term Loan Lenders, Collateral Agent,
and Administrative Agent, a continuing first priority security interest in all
of such Grantor's right, title and interest in, to and under the Trademark
Collateral, whether presently existing or hereafter created or acquired.
(c) Without limiting the generality of the foregoing, this Trademark
Security Agreement secures the payment of all amounts which constitute part of
the Obligations and would be owed by Grantors, or any of them, to Collateral
Agent, the Lender Group, or any of them, whether or not they are unenforceable
or not allowable due to the existence of an Insolvency Proceeding involving any
Grantor.
3. SECURITY AGREEMENT. The security interests granted pursuant to this
Trademark Security Agreement are granted in conjunction with the security
interests granted to Collateral Agent, for the benefit of the Lender Group,
pursuant to the Security Agreement. Each Grantor hereby acknowledges and affirms
that the rights and remedies of Collateral Agent with respect to the security
interest in the Trademark Collateral made and granted hereby are more fully set
forth in the Security Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth herein.
4. AUTHORIZATION TO SUPPLEMENT. If any Grantor shall obtain rights to any
new trademarks, the provisions of this Trademark Security Agreement shall
automatically apply thereto. Grantors shall give prompt notice in writing to
Collateral Agent with respect to any such new trademarks or renewal or extension
of any trademark registration as provided in the Security Agreement. Without
limiting Grantors' obligations under this Section 5, Grantors hereby authorize
Collateral Agent unilaterally to modify this Agreement by amending Schedule I to
include any such new trademark rights of Grantors. Notwithstanding the
foregoing, no failure to so modify this Trademark Security Agreement or amend
Schedule I shall in any way affect, invalidate or detract from Collateral
Agent's continuing security interest in all Collateral, whether or not listed on
Schedule I.
5. COUNTERPARTS. This Trademark Security Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
such separate counterparts shall together constitute but one and the same
instrument. In proving this Trademark Security Agreement or any other Loan
Document in any judicial proceedings, it shall not be necessary to produce or
account for more than one such counterpart signed by the party against whom such
enforcement is sought. Any signatures delivered by a party by facsimile
transmission or by e-mail transmission shall be deemed an original signature
hereto.
6. CONSTRUCTION. Unless the context of this Trademark Security Agreement or
any other Loan Document clearly requires otherwise, references to the plural
include the singular, references to the singular include the plural, the terms
"includes" and "including" are not limiting, and the term "or" has, except where
otherwise indicated, the inclusive meaning represented by the phrase "and/or."
The words "hereof," "herein," "hereby," "hereunder," and similar terms in this
Trademark Security Agreement or any other Loan Document refer to this Trademark
Security Agreement or such other Loan Document, as the case may be, as a whole
and not to any particular provision of this Trademark Security Agreement or such
other Loan Document, as the case may be. Section, subsection, clause, schedule,
and exhibit references herein are to this Agreement unless otherwise specified.
Any reference in this Trademark Security Agreement or in any other Loan Document
to any agreement, instrument, or document shall include all alterations,
amendments, changes, extensions, modifications, renewals, replacements,
substitutions, joinders, and supplements, thereto and thereof, as applicable
(subject to any restrictions on such alterations, amendments, changes,
extensions, modifications, renewals, replacements, substitutions, joinders, and
supplements set forth herein). Any reference herein or in any other Loan
Document to the satisfaction or repayment in full of the Obligations shall mean
the repayment in full in cash (or cash collateralization in accordance with the
terms hereof) of all Obligations other than unasserted contingent
indemnification Obligations. Any reference herein to any Person shall be
construed to include such Person's successors and permitted assigns. Any
requirement of a writing contained herein or in any other Loan Document shall be
satisfied by the transmission of a Record and any Record so transmitted shall
constitute a representation and warranty as to the accuracy and completeness of
the information contained therein.
[signature page follows]
IN WITNESS WHEREOF, each Grantor has caused this Trademark Security
Agreement to be executed and delivered by its duly authorized officer as of the
date first set forth above.
------------------------------------------
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
------------------------------------------
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
ACCEPTED AND ACKNOWLEDGED BY:
ABLECO FINANCE LLC, a Delaware limited
liability company, as Collateral Agent
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
SCHEDULE I
to
TRADEMARK SECURITY AGREEMENT
TRADEMARK REGISTRATIONS/APPLICATIONS
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
APPLICATION/
GRANTOR COUNTRY MARK REGISTRATION NO. APP/REG DATE
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
TRADE NAMES
COMMON LAW TRADEMARKS
TRADEMARKS NOT CURRENTLY IN USE
TRADEMARK LICENSES