Exhibit 10.34
EXECUTION COPY
SECURITY AGREEMENT
among
CII TECHNOLOGIES, INC.,
COMMUNICATIONS INSTRUMENTS, INC.,
CERTAIN SUBSIDIARIES
OF COMMUNICATIONS INSTRUMENTS, INC.
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Collateral Agent
Dated as of June 19, 1998
TABLE OF CONTENTS
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Page
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ARTICLE I
SECURITY INTERESTS...........................................................2
1.1. Grant of Security Interests...................................2
1.2. Power of Attorney.............................................2
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS...................3
2.1. Necessary Filings.............................................3
2.2. No Liens......................................................3
2.3. Other Financing Statements....................................3
2.4. Chief Executive Office; Records...............................4
2.5. Location of Inventory and Equipment...........................4
2.6. Recourse......................................................5
2.7. Trade Names; Change of Name...................................5
ARTICLE III
SPECIAL PROVISIONS CONCERNING
RECEIVABLES; CONTRACT RIGHTS; INSTRUMENTS...........................5
3.1. Additional Representations and Warranties.....................5
3.2. Maintenance of Records........................................5
3.3. Direction to Account Debtors; Contracting Parties; etc........6
3.4. Modification of Terms; etc....................................6
3.5. Collection....................................................7
3.6. Instruments...................................................7
3.7. Further Actions...............................................7
ARTICLE IV
SPECIAL PROVISIONS CONCERNING TRADEMARKS............................7
4.1. Additional Representations and Warranties.....................7
4.2. Licenses and Assignments......................................8
4.3. Infringements.................................................8
4.4. Preservation of Marks.........................................8
4.5. Maintenance of Registration...................................9
4.6. Future Registered Marks.......................................9
4.7. Remedies......................................................9
ARTICLE V
SPECIAL PROVISIONS CONCERNING
PATENTS, COPYRIGHTS AND TRADE SECRETS..............................10
5.1. Additional Representations and Warranties....................10
5.2. Licenses and Assignments.....................................11
5.3. Infringements................................................11
5.4. Maintenance of Patents.......................................11
5.5. Prosecution of Patent Application............................11
5.6. Other Patents and Copyrights.................................11
5.7. Remedies.....................................................11
ARTICLE VI
PROVISIONS CONCERNING ALL COLLATERAL...............................12
6.1. Protection of Collateral Agent's Security....................12
6.2. Warehouse Receipts Non-Negotiable............................12
6.3. Further Actions..............................................13
6.4. Financing Statements.........................................13
ARTICLE VII
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT.......................14
7.1. Remedies; Obtaining the Collateral Upon Default..............14
7.2. Remedies; Disposition of the Collateral......................15
7.3. Waiver of Claims.............................................16
7.4. Application of Proceeds......................................17
7.5. Remedies Cumulative..........................................19
7.6. Discontinuance of Proceedings................................19
ARTICLE VIII
INDEMNITY..........................................................19
8.1. Indemnity....................................................19
8.2. Indemnity Obligations Secured by Collateral; Survival........21
ARTICLE IX
DEFINITIONS........................................................21
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ARTICLE X
MISCELLANEOUS......................................................25
10.1. Notices.....................................................25
10.2. Waiver; Amendment...........................................26
10.3. Obligations Absolute........................................27
10.4. Successors and Assigns......................................27
10.5. Headings Descriptive........................................27
10.6. Governing Law...............................................27
10.7. Assignor's Duties...........................................27
10.8. Termination; Release........................................28
10.9. Counterparts................................................28
10.10. The Collateral Agent.......................................28
10.11. Additional Assignors.......................................29
ANNEX A Schedule of Chief Executive Offices and other Record
Locations
ANNEX B Schedule of Inventory and Equipment Locations
ANNEX C Trade and Fictitious Names
ANNEX D List of Marks
ANNEX E List of Patents and Applications
ANNEX F List of Copyrights and Applications
ANNEX G Grant of Security Interest in United States Trademarks
and Patents
ANNEX H Grant of Security Interest in United States Copyrights
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SECURITY AGREEMENT
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SECURITY AGREEMENT, dated as of June 19, 1998, among each of
the undersigned assignors (each, an "Assignor" and, together with any other
entity that becomes a party hereto pursuant to Section 10.11 hereof, the
"Assignors") and Bank of America National Trust and Savings Association, as
Collateral Agent (the "Collateral Agent"), for the benefit of the Secured
Creditors (as defined below). Except as otherwise defined herein, terms used
herein and defined in the Credit Agreement (as defined below) shall be used
herein as therein defined.
W I T N E S S E T H :
WHEREAS, CII Technologies, Inc. ("Holdings"), Communications
Instruments, Inc. (the "Borrower"), the several financial institutions from time
to time party thereto (the "Lenders"), Bank of America National Trust and
Savings Association, as an Issuing Lender and Swingline Lender, Bank of America
National Trust and Savings Association, as Administrative Agent together with
any successor agent, (the "Administrative Agent," and together with the
Collateral Agent, the Issuing Lenders, the Swingline Lender and the Lenders, the
"Lender Creditors"), have entered into a Credit Agreement, dated as of June 19,
1998 (as amended, restated, modified or supplemented from time to time, the
"Credit Agreement"), providing for the making of Loans to the Borrower and the
issuance of, and participation in, Letters of Credit for the account of the
Borrower, all as contemplated therein;
WHEREAS, the Borrower may from time to time be party to one or
more Interest Rate Protection Agreements or Other Hedging Agreements with one or
more Lenders or an affiliate of a Lender (each such Lender or affiliate, even if
the respective Lender subsequently ceases to be a Lender under the Credit
Agreement for any reason, together with such Lender's or affiliate's successors
and assigns, collectively, the "Other Creditors", and together with the Lender
Creditors, the "Secured Creditors");
WHEREAS, pursuant to Article X of the Credit Agreement,
Holdings has guaranteed to the Secured Creditors the payment when due of all
obligations and liabilities of the Borrower under or with respect to the Loan
Documents and the Interest Rate Protection Agreements or Other Hedging
Agreements;
WHEREAS, pursuant to the Subsidiary Guaranty, each Assignor
(other than Holdings and the Borrower) has jointly and severally guaranteed to
the Secured Creditors the payment when due of all obligations and liabilities of
the Borrower under or with respect to the Loan Documents and the Interest Rate
Protection Agreements or Other Hedging Agreements;
WHEREAS, it is a condition precedent to the making of Loans to
the Borrower and the issuance of Letters of Credit for the account of the
Borrower under the Credit Agreement that the Assignors shall have executed and
delivered to the Collateral Agent this Agreement; and
WHEREAS, each Assignor desires to execute this Agreement to
satisfy the condition described in the preceding paragraph;
NOW, THEREFORE, in consideration of the benefits accruing to
each Assignor, the receipt and sufficiency of which are hereby acknowledged,
each Assignor hereby makes the following representations and warranties to the
Collateral Agent and hereby covenants and agrees with the Collateral Agent as
follows:
ARTICLE I
SECURITY INTERESTS
1.1. Grant of Security Interests. (a) As security for the
prompt and complete payment and performance when due of all of its Obligations,
each Assignor does hereby assign and transfer unto the Collateral Agent, and
does hereby pledge and grant to the Collateral Agent for the benefit of the
Secured Creditors, a continuing security interest of first priority in, all of
the right, title and interest of such Assignor in, to and under all of the
following, whether now existing or hereafter from time to time acquired: (i)
each and every Receivable, (ii) all Contracts, together with all Contract Rights
arising thereunder (other than Contracts which by their terms cannot be pledged
(although the right to receive payments of money due or to become due thereunder
shall not be excluded from the security interest created hereunder)), (iii) all
Inventory, (iv) all Equipment, (v) all Marks, together with the registrations
and right to all renewals thereof, and the goodwill of the business of such
Assignor symbolized by the Marks, (vi) all Patents and Copyrights, (vii) all
computer programs of such Assignor and all intellectual property rights therein
(other than such programs and rights which by their terms cannot be pledged) and
all other proprietary information of such Assignor, including, but not limited
to, trade secrets, (viii) all other Goods, General Intangibles, Chattel Paper,
Documents and Instruments, (ix) the Cash Collateral Account and all monies,
securities and instruments deposited or required to be deposited in such Cash
Collateral Account, and (x) all Proceeds and products of any and all of the
foregoing (all of the above, collectively, the "Collateral"). Notwithstanding
anything to the contrary contained in the immediately preceding sentence, the
term Collateral shall not include motor vehicles.
(b) The security interest of the Collateral Agent under this
Agreement extends to all Collateral of the kind which is the subject of this
Agreement which any Assignor may acquire at any time during the continuation of
this Agreement.
1.2. Power of Attorney. Each Assignor hereby constitutes and
appoints the Collateral Agent its true and lawful attorney, irrevocably, with
full power after the occurrence of and during the continuance of an Event of
Default (in the name of such Assignor or otherwise) to act, require, demand,
receive, compound and give acquittance for any and all monies and claims for
monies due or to become due to such Assignor under or arising out of the
Collateral, to
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endorse any checks or other instruments or orders in connection therewith and to
file any claims or take any action or institute any proceedings which the
Collateral Agent may deem to be reasonably necessary or advisable to protect the
interests of the Secured Creditors, which appoint ment as attorney is coupled
with an interest.
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Each Assignor represents, warrants and covenants, which
representations, warranties and covenants shall survive execution and delivery
of this Agreement, as follows:
2.1. Necessary Filings. All filings, registrations and
recordings necessary or appropriate to create, preserve and perfect the security
interest granted by such Assignor to the Collateral Agent hereby in respect of
the Collateral have been accomplished (or will have been accomplished on the
Business Day immediately following the Effective Date) and the security in
terest granted to the Collateral Agent pursuant to this Agreement in and to the
Collateral creates a perfected security interest therein prior to the rights of
all other Persons therein and subject to no other Liens (other than Permitted
Liens) and is entitled to all the rights, priorities and benefits afforded by
the Uniform Commercial Code or other relevant law as enacted in any relevant
juris diction to perfected security interests, in each case to the extent that
the Collateral consists of the type of property in which a security interest may
be perfected by filing a financing statement under the Uniform Commercial Code
as enacted in any relevant jurisdiction or by filing a security agreement in the
United States Patent and Trademark Office or United States Copyright Office or,
to the extent provided in Section 6.3(b) hereof, in any foreign equivalent
office of the United States Patent and Trademark or United States Copyright
Office.
2.2. No Liens. Such Assignor is, and as to Collateral acquired
by it from time to time after the date hereof such Assignor will be, the owner
of, or has rights in, all Collateral free from any Lien, security interest,
encumbrance or other right, title or interest of any Person (other than
Permitted Liens), and such Assignor shall defend the Collateral to the extent of
its rights therein against all claims and demands of all Persons at any time
claiming the same or any interest therein adverse to the Collateral Agent.
2.3. Other Financing Statements. As of the date hereof, there
is no financing statement (or similar statement or instrument of registration
under the law of any jurisdiction) covering or purporting to cover any interest
of any kind in the Collateral (other than financing statements filed in respect
of Permitted Liens), and so long as the Aggregate Commitment has not been
terminated or any promissory note issued under the Credit Agreement remains
unpaid or any of the Obligations remain unpaid or any Interest Rate Protection
Agreement or Other Hedging Agreement or Letter of Credit remains in effect
(other than Letters of Credit, together with all fees that have accrued and will
accrue thereon through the stated termination date of such Letters
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of Credit, which have been secured in a manner satisfactory to the applicable
Issuing Lenders in their sole and absolute discretion) or any Obligations are
owed with respect thereto, such Assignor will not execute or authorize to be
filed in any public office any financing statement (or similar statement or
instrument of registration under the law of any jurisdiction) or statements
relating to the Collateral, except (a) financing statements and other perfection
instruments filed or to be filed in respect of and covering the security
interests granted hereby by such Assignor or as permitted by the Credit
Agreement and (b) financing statements with respect to Permitted Liens.
2.4. Chief Executive Office; Records. The chief executive
office of such Assignor is located at the address or addresses indicated on
Annex A hereto for such Assignor. Such Assignor will not move its chief
executive office except to such new location as such Assignor may establish in
accordance with the last sentence of this Section 2.4. The originals of all
documents evidencing all Receivables and Contract Rights of such Assignor and
the only original books of account and records of such Assignor relating thereto
are, and will continue to be, kept at such chief executive office, at one or
more of the locations set forth on Annex A hereto or at such new locations as
such Assignor may establish in accordance with the last sentence of this Section
2.4. All Receivables and Contract Rights of such Assignor are, and will continue
to be, maintained at, and controlled and directed (including, without
limitation, for general accounting purposes) from, the office locations
described above or such new location established in accordance with the last
sentence of this Section 2.4. No Assignor shall establish new locations for such
offices until it shall have given to the Collateral Agent notice of its
intention to do so unless (i) such Assignor shall give to the Collateral Agent
written notice of any such relocation of its chief executive office within 10
days following such relocation, clearly describing such new location and
providing such other information in connection therewith as the Collateral Agent
may reasonably request and (ii) with respect to such new location, it shall take
all action, reasonably satisfactory to the Collateral Agent, to maintain the
security interest of the Collateral Agent in the Collateral intended to be
granted hereby at all times fully perfected and in full force and effect.
2.5. Location of Inventory and Equipment. All Inventory and
Equipment held on the date hereof by each Assignor is located at one of the
locations shown on Annex B hereto for such Assignor (other than (i) immaterial
portions of Inventory (x) sold on consignment or held on display for
demonstration purposes or (y) transferred to another location in connection with
a sale of such Inventory in the ordinary course of business, so long as such
sale occurs within 60 days from the date of such transfer and (ii) various spare
parts held for maintenance or repair of Equipment). Each Assignor agrees that
all Inventory and Equipment now held or subsequently acquired by it shall be
kept at (or shall be in transport to) any one of the locations shown on Annex B
hereto, or such new location as such Assignor may establish in accordance with
the last sentence of this Section 2.5 (other than (i) immaterial portions of
Inventory (x) sold on consignment or held on display for demonstration purposes
or (y) may be transferred to another location in connection with a sale of such
Inventory in the ordinary course of business, so long as such sale occurs within
60 days from the date of such transfer and (ii) various spare parts held for
maintenance or repair of Equipment). Any Assignor may establish a new location
for Inventory
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and Equipment only if (i) it shall have given to the Collateral Agent written
notice within 10 days following any such relocation clearly describing such new
location and providing such other information in connection therewith as the
Collateral Agent may request and (ii) with respect to such new location, it
shall have taken all action reasonably satisfactory to the Collateral Agent to
maintain the security interest of the Collateral Agent in the Collateral
intended to be granted hereby at all times fully perfected and in full force and
effect.
2.6. Recourse. This Agreement is made with full recourse to
each Assignor and pursuant to and upon all the warranties, representations,
covenants and agreements on the part of such Assignor contained herein, in the
other Loan Documents, in the Interest Rate Protection Agreements or Other
Hedging Agreements and otherwise in writing in connection herewith or therewith.
2.7. Trade Names; Change of Name. No Assignor has or operates
in any jurisdiction under, or in the preceding 12 months has had or has operated
in any jurisdiction under, any trade names, fictitious names or other names
except its legal name and such other trade or fictitious names as are listed on
Annex C hereto. No Assignor shall change its legal name or assume or operate in
any jurisdiction under any trade, fictitious or other name except those names
listed on Annex C hereto and new names established in accordance with the last
sentence of this Section 2.7. No Assignor shall assume or operate in any
jurisdiction under any new trade, fictitious or other name unless (i) it shall
have given to the Collateral Agent written notice within 10 days following any
assumption of, or operation under, such new name clearly describing such new
name and the jurisdictions in which such new name shall be used and providing
such other information in connection therewith as the Collateral Agent may
reasonably request and (ii) with respect to such new name, it shall have taken
all action requested by the Collateral Agent, to maintain the security interest
of the Collateral Agent in the Collateral intended to be granted hereby at all
times fully perfected and in full force and effect.
ARTICLE III
SPECIAL PROVISIONS CONCERNING
RECEIVABLES; CONTRACT RIGHTS; INSTRUMENTS
3.1. Additional Representations and Warranties. As of the time
when each of its Receivables arises, each Assignor shall be deemed to have
represented and warranted that such Receivable, and all records, papers and
documents relating thereto (if any) are what they purport to be, and that all
papers and documents (if any) relating thereto will be the only original
writings evidencing and embodying such obligation of the account debtor named
therein (other than copies created for general accounting purposes).
3.2. Maintenance of Records. Each Assignor will keep and
maintain at its own cost and expense accurate records of its Receivables and
Contracts, records of all payments
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received, all credits granted thereon, all merchandise returned and all other
dealings therewith, and such Assignor will make the same available on such
Assignor's premises to the Collateral Agent for inspection, at such Assignor's
own cost and expense, at any and all reasonable times upon prior notice to a
Responsible Officer of such Assignor. Upon the occurrence and during the
continuance of an Event of Default and at the request of the Collateral Agent,
such Assignor shall, at its own cost and expense, deliver all tangible evidence
of its Receivables and Contract Rights (including, without limitation, all
documents evidencing the Receivables and all Contracts) and such books and
records to the Collateral Agent or to its representatives (copies of which
evidence and books and records may be retained by such Assignor). Upon the
occurrence and during the continuance of an Event of Default and if the
Collateral Agent so directs, such Assignor shall legend, in form and manner
reasonably satisfactory to the Collateral Agent, the Receivables and the
Contracts, as well as books, records and documents (if any) of such Assignor
evidencing or pertaining to such Receivables and Contracts with an appropriate
reference to the fact that such Receivables and Contracts have been assigned to
the Collateral Agent and that the Collateral Agent has a security interest
therein.
3.3. Direction to Account Debtors; Contracting Parties; etc.
Upon the occurrence and during the continuance of an Event of Default, and if
the Collateral Agent so directs any Assignor, such Assignor agrees (x) to cause
all payments on account of the Receivables and Contracts to be made directly to
the Cash Collateral Account, (y) that the Collateral Agent may, at its option,
directly notify the obligors with respect to any Receivables and/or under any
Contracts to make payments with respect thereto as provided in the preceding
clause (x) and (z) that the Collateral Agent may enforce collection of any such
Receivables and Contracts and may adjust, settle or compromise the amount of
payment thereof, in the same manner and to the same extent as such Assignor.
Without notice to or assent by any Assignor, the Collateral Agent may apply any
or all amounts then in, or thereafter deposited in, the Cash Collateral Account
which application shall be effected in the manner provided in Section 7.4 of
this Agreement. The costs and expenses (including reasonable attorneys' fees) of
collection, whether incurred by the relevant Assignor or the Collateral Agent,
shall be borne by the relevant Assignor. The Collateral Agent shall deliver a
copy of each notice referred to in the preceding clause (y) to the relevant
Assignor; provided, that the failure by the Collateral Agent to so notify such
Assignor shall not affect the effectiveness of such notice or the other rights
of the Collateral Agent created by this Section 3.3. The Collateral Agent's
rights and the Assignor's Obligations under this Section 3.3 shall be in
addition to, and not in lieu of, their respective rights and obligations under
Section 7.11 of the Credit Agreement.
3.4. Modification of Terms; etc. No Assignor shall rescind or
cancel any indebtedness evidenced by any Receivable or under any Contract, or
modify in any material respect any term thereof or make any material adjustment
with respect thereto, or extend or renew the same, or compromise or settle any
material dispute, claim, suit or legal proceeding relating thereto, or sell any
Receivable or Contract, or interest therein, without the prior written consent
of the Collateral Agent, except as permitted by Section 3.5 hereof or in the
Credit Agreement. Each Assignor will duly fulfill all obligations on its part to
be fulfilled under or in
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connection with the Receivables and Contracts and will do nothing to impair the
rights of the Collateral Agent in the Receivables or Contracts.
3.5. Collection. Each Assignor shall endeavor in accordance
with reasonable business practices to cause to be collected from the account
debtor named in each of its Receivables or obligor under any Contract, as and
when due (including, without limitation, amounts which are delinquent, such
amounts to be collected in accordance with generally accepted lawful collection
procedures) any and all amounts owing under or on account of such Receivable or
Contract, and apply forthwith upon receipt thereof all such amounts as are so
col lected to the outstanding balance of such Receivable or under such Contract,
except that, prior to the occurrence of an Event of Default, any Assignor may
allow in the ordinary course of business as adjustments to amounts owing under
its Receivables and Contracts (i) an extension or renewal of the time or times
of payment, or settlement for less than the total unpaid balance, which such
Assignor finds appropriate in accordance with reasonable business judgment and
(ii) a refund or credit due as a result of returned or damaged merchandise or
improperly performed services or for other reasons which such Assignor finds
appropriate in accordance with reasonable business judgment. The reasonable
costs and expenses (including, without limitation, attorneys' fees) of
collection, whether incurred by an Assignor or the Collateral Agent, shall be
borne by the relevant Assignor.
3.6. Instruments. If any Assignor owns or acquires any
Instrument constituting Collateral, such Assignor will within 10 Business Days
notify the Collateral Agent thereof, and upon request by the Collateral Agent
will promptly deliver such Instrument to the Collateral Agent appropriately
endorsed to the order of the Collateral Agent as further security hereunder.
3.7. Further Actions. Each Assignor will, at its own expense,
make, execute, endorse, acknowledge, file and/or deliver to the Collateral Agent
from time to time such vouchers, invoices, schedules, confirmatory assignments,
conveyances, financing statements, transfer endorsements, powers of attorney,
certificates, reports and other assurances or instruments and take such further
steps relating to its Receivables, Contracts, Instruments and other property or
rights covered by the security interest hereby granted, as the Collateral Agent
may reasonably require.
ARTICLE IV
SPECIAL PROVISIONS CONCERNING TRADEMARKS
4.1. Additional Representations and Warranties. Each Assignor
represents and warrants that it is the true and lawful owner of or otherwise has
the right to use the registered Marks listed in Annex D hereto for such Assignor
and that said listed Marks constitute all the marks and applications for marks
registered in the United States Patent and Trademark Office or the equivalent
thereof in any foreign country that such Assignor owns or uses in connection
with
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its business as of the Effective Date. Each Assignor represents and warrants
that it owns, is licensed to use or otherwise has the right to use all Marks
that it uses. Each Assignor further warrants that it has no knowledge of any
third party claim that any aspect of such Assignor's pre sent or contemplated
business operations infringes or will infringe any trademark, service mark or
trade name. Each Assignor represents and warrants that it is the true and lawful
owner of or otherwise has the right to use all trademark registrations and
applications listed in Annex D hereto and that said registrations are valid,
subsisting, have not been canceled and that such Assignor is not aware of any
third-party claim that any of said registrations is invalid or unenforceable, or
is not aware that there is any reason that any of said registrations is invalid
or unenforceable, or is not aware that there is any reason that any of said
applications will not pass to registration. Each Assignor represents and
warrants that upon the recordation of a Grant of Security Interest in United
States Trademarks and Patents in the form of Annex G hereto in the United States
Patent and Trademark Office, together with filings on Form UCC-1 pursuant to
this Agreement, all filings, registrations and recordings necessary or
appropriate to perfect the security interest granted to the Collateral Agent in
the United States Marks covered by this Agreement under federal law will have
been accomplished. Each Assignor agrees to execute such a Grant of Security
Interest in United States Trademark and Patents covering all right, title and
interest in each United States Mark, and the associated goodwill, of such
Assignor, and to record the same. Each Assignor hereby grants to the Collateral
Agent an absolute power of attorney to sign, upon the occurrence and during the
continuance of an Event of Default, any document which may be required by the
United States Patent and Trademark Office or the equivalent thereof in any
foreign country in order to effect an absolute assignment of the Assignor's
right, title and interest in each Mark, and record the same.
4.2. Licenses and Assignments. Except as otherwise permitted
by the Credit Agreement or this Agreement, each Assignor hereby agrees not to
divest itself of any right under any Mark absent prior written approval of the
Collateral Agent.
4.3. Infringements. Each Assignor agrees, promptly upon
learning thereof, to notify the Collateral Agent in writing of the name and
address of, and to furnish such pertinent information that may be available with
respect to, any party who such Assignor believes is infringing or diluting or
otherwise violating in any material respect any of such Assignor's rights in and
to any Mark, or with respect to any party claiming that such Assignor's use of
any Mark violates in any material respect any property right of that party. Each
Assignor further agrees, unless otherwise agreed by the Collateral Agent, to
prosecute any Person infringing any Mark in accordance with commercially
reasonable business practices.
4.4. Preservation of Marks. Each Assignor agrees to use its
Marks in interstate commerce (or the equivalent thereof in any foreign
jurisdiction) during the time in which this Agreement is in effect, sufficiently
to preserve such Marks as trademarks or service marks under the laws of the
United States or under the laws of the applicable foreign country, as the case
may be; provided, that, to the extent permitted by the Credit Agreement, no
Assignor shall be
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obligated to preserve any Mark in the event such Assignor determines, in its
reasonable business judgment, that the preservation of such Mark is no longer
desirable in the conduct of its business.
4.5. Maintenance of Registration. Each Assignor shall, at its
own expense, diligently process all documents required by the Trademark Act of
1946, 15 U.S.C. Sections 1051 et seq. (or the equivalent thereof in any foreign
jurisdiction) to maintain trademark registrations, including but not limited to
affidavits of use and applications for renewals of registration in the United
States Patent and Trademark Office (or the equivalent thereof in any foreign
jurisdiction) for all of its registered Marks pursuant to 15 U.S.C. Sections
1058(a), 1059 and 1065 (or the equivalent thereof in any foreign jurisdiction),
and shall pay all fees and disbursements in connection therewith and shall not
abandon any such filing of affidavit of use or any such application of renewal
prior to the exhaustion of all administrative and judicial remedies without
prior written consent of the Collateral Agent; provided, that no Assignor shall
be obligated to maintain registration of any Mark in the event that such
Assignor determines, in its reasonable business judgment, that such maintenance
of such Mark is no longer necessary or desirable in the conduct of its business.
Each Assignor agrees to notify the Collateral Agent three (3) months prior to
the dates on which the affidavits of use or the applications for renewal
registration are due with respect to any registered Mark that the affidavits of
use or the renewal is being processed or being abandoned, as the case may be.
4.6. Future Registered Marks. If any registration for a Mark
issues hereafter to any Assignor as a result of any application now or hereafter
pending before the United States Patent and Trademark Office (or the equivalent
thereof in any foreign jurisdiction), within 30 days of receipt of such
certificate, such Assignor shall deliver to the Collateral Agent a copy of such
certificate, and a grant of security in such Mark, to the Collateral Agent and
at the expense of such Assignor, confirming the grant of security in such Mark
to the Collateral Agent hereunder, the form of such security to be substantially
the same as the form hereof or in such other form as may be reasonably
satisfactory to the Collateral Agent.
4.7. Remedies. If an Event of Default shall occur and be
continuing, the Collateral Agent may, by written notice to the relevant
Assignor, take any or all of the following actions: (i) declare the entire
right, title and interest of such Assignor in and to each of the Marks, together
with all trademark rights and rights of protection to the same, vested in the
Collateral Agent for the benefit of the Secured Creditors, in which event such
rights, title and interest shall immediately vest, in the Collateral Agent for
the benefit of the Secured Creditors, and the Collateral Agent shall be entitled
to exercise the power of attorney referred to in Section 4.1 hereof to execute,
cause to be acknowledged and notarized and record said absolute assignment with
the applicable agency; (ii) take and use or sell the Marks and the goodwill of
such Assignor's business symbolized by the Marks and the right to carry on the
business and use the assets of such Assignor in connection with which the Marks
have been used; and (iii) direct such Assignor to re frain, in which event such
Assignor shall refrain, from using the Marks in any manner whatsoever, directly
or indirectly, and, if requested by the Collateral Agent, change such Assignor's
corporate name to eliminate therefrom any use of any Mark and execute such other
and further documents
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that the Collateral Agent may request to further confirm this and to transfer
ownership of the Marks and registrations and any pending trademark application
in the United States Patent and Trademark Office (or the equivalent thereof in
any foreign jurisdiction) to the Collateral Agent.
ARTICLE V
SPECIAL PROVISIONS CONCERNING
PATENTS, COPYRIGHTS AND TRADE SECRETS
5.1. Additional Representations and Warranties. Each Assignor
represents and warrants that it is the true and lawful owner of or otherwise has
the right to use (i) all material United States and foreign trade secrets and
proprietary information necessary to operate the business of the Assignor (the
"Trade Secret Rights"), (ii) the Patents listed in Annex E hereto for such
Assignor and that said Patents constitute all the patents and applications for
patents that such Assignor owns or uses as of the Effective Date and (iii) the
Copyrights listed in Annex F hereto for such Assignor and that said Copyrights
constitutes all registrations of copyrights and applications for copyright
registrations that such Assignor owns or uses as of the Effective Date. Each
Assignor further warrants that it has no knowledge of any third party claim that
any aspect of such Assignor's present or contemplated business operations
infringes or will infringe any patent or any copyright or such Assignor has
misappropriated any trade secret or proprietary information, except those claims
which in the aggregate could not be reasonably expected to have a Material
Adverse Effect. Each Assignor represents and warrants that upon the recordation
of a Grant of Security Interest in United States Trademarks and Patents in the
form of Annex G hereto in the United States Patent and Trademark Office and the
recordation of a Grant of Security Interest in United States Copyrights in the
form of Annex H hereto in the United States Copyright Office, together with
filings on Form UCC-1 pursuant to this Agreement, all filings, registrations and
recordings necessary or appropriate to perfect the security interest granted to
the Collateral Agent in the United States Patents and United States Copyrights
covered by this Agreement under federal law will have been accomplished. Each
Assignor agrees to execute such a Grant of Security Interest in United States
Trademarks and Patents covering all right, title and interest in each United
States Patent of such Assignor and to record the same, and to execute such a
Grant of Security Interest in United States Copyrights covering all right, title
and interest in each United States Copyright of such Assignor and to record the
same. Each Assignor hereby grants to the Collateral Agent an absolute power of
attorney to sign, upon the occurrence and during the continuance of any Event of
Default, any document which may be required by the United States Patent and
Trademark Office (or the equivalent thereof in any foreign jurisdiction) or the
United States Copyright Office (or the equivalent thereof in any foreign
jurisdiction) in order to effect an absolute assignment of all right, title and
interest in each Patent and Copyright, and to record the same.
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5.2. Licenses and Assignments. Except as otherwise permitted
by the Credit Agreement or this Agreement, each Assignor hereby agrees not to
divest itself of any right under any Patent or Copyright absent prior written
approval of the Collateral Agent.
5.3. Infringements. Each Assignor agrees, promptly upon
learning thereof, to furnish the Collateral Agent in writing with all pertinent
information available to such Assignor with respect to any infringement,
contributing infringement or active inducement to infringe any of such
Assignor's rights in and to in any Patent or Copyright or to any claim that such
Assignor's practice of any Patent or use of any Copyright violates any property
right of a third party, or with respect to any misappropriation of any Trade
Secret Right or any claim that such Assignor's practice of any Trade Secret
Right violates any property right of a third party. Each Assignor further
agrees, absent direction of the Collateral Agent to the contrary, diligently to
prosecute any Person infringing any Patent or Copyright or any Person
misappropriating any Trade Secret Right in accordance with commercially
reasonable business practices.
5.4. Maintenance of Patents. At its own expense, each Assignor
shall make timely payment of all post-issuance fees required pursuant to 35
U.S.C. Section 41 (or the equivalent thereof in any foreign jurisdiction) to
maintain in force rights under each Patent, absent prior written consent of the
Collateral Agent; provided, that, to the extent permitted by the Credit
Agreement, no Assignor shall be obligated to maintain any Patent in the event
such Assignor determines, in its reasonable business judgment, that the
maintenance of such Patent is no longer necessary or desirable in the conduct of
its business.
5.5. Prosecution of Patent Application. At its own expense,
each Assignor shall diligently prosecute all applications for Patents listed in
Annex E hereto for such Assignor and shall not abandon any such application
prior to exhaustion of all administrative and judicial remedies, absent written
consent of the Collateral Agent; provided, that, to the extent permitted by the
Credit Agreement, no Assignor shall be obligated to prosecute any application in
the event such Assignor determines, in its reasonable business judgment, that
the prosecuting of such application is no longer necessary or desirable in the
conduct of its business.
5.6. Other Patents and Copyrights. Within 30 days of the
acquisition or issuance of a Patent, registration of a Copyright, or acquisition
of a registered Copyright, or of filing of an application for a Patent or
registration of Copyright, the relevant Assignor shall deliver to the Collateral
Agent a copy of said Copyright or certificate or registration of, or application
therefor, said Patents, as the case may be, with an assignment for security as
to such Patent or Copyright, as the case may be, to the Collateral Agent and at
the expense of such Assignor, confirming the assignment for security, the form
of such assignment for security to be substantially the same as the form hereof
or in such other form as may be reasonably satisfactory to the Collateral Agent.
5.7. Remedies. If an Event of Default shall occur and be
continuing, the Collateral Agent may by written notice to the relevant Assignor,
take any or all of the following actions: (i) declare the entire right, title,
and interest of such Assignor in each of the Patents and Copyrights
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vested in the Collateral Agent for the benefit of the Secured Creditors, in
which event such right, title, and interest shall immediately vest in the
Collateral Agent for the benefit of the Secured Creditors, in which case the
Collateral Agent shall be entitled to exercise the power of attorney referred to
in Section 5.1 hereof to execute, cause to be acknowledged and notarized and to
record said absolute assignment with the applicable agency; (ii) take and
practice or sell the Patents and Copyrights; and (iii) direct such Assignor to
refrain, in which event such Assignor shall refrain, from practicing the Patents
and using the Copyrights directly or indirectly, and such Assignor shall execute
such other and further documents as the Collateral Agent may request fur ther to
confirm this and to transfer ownership of the Patents and Copyrights to the
Collateral Agent for the benefit of the Secured Creditors.
ARTICLE VI
PROVISIONS CONCERNING ALL COLLATERAL
6.1. Protection of Collateral Agent's Security. Each Assignor
will do nothing to impair the rights of the Collateral Agent in the Collateral
except to the extent such impairment shall be waived in accordance with the
terms of Section 10.2 hereof. Each Assignor will at all times keep its Inventory
and Equipment insured in favor of the Collateral Agent, at such Assignor's own
expense to the extent and in the manner provided in the Credit Agreement; all
policies or certificates with respect to such insurance (and any other insurance
maintained by such Assignor) (i) shall be endorsed to the Collateral Agent's
reasonable satisfaction for the benefit of the Collateral Agent (including,
without limitation, by naming the Collateral Agent as additional insured and
loss payee) and (ii) shall state that such insurance policies shall not be
canceled or revised without 30 days' prior written notice thereof (or 10 days
prior written notice in the case of nonpayment of premium) by the insurer to the
Collateral Agent; and certified copies of such policies or certificates shall be
deposited with the Collateral Agent. If any Assignor shall fail to insure its
Inventory and Equipment in accordance with the preceding sentence, or if any
Assignor shall fail to so endorse and deposit all policies or certificates with
respect thereto, the Collateral Agent shall have the right (but shall be under
no obligation) to procure such insurance and such Assignor agrees to promptly
reimburse the Collateral Agent for all costs and expenses of procuring such
insurance. Except as otherwise permitted to be retained by the relevant Assignor
pursuant to the Credit Agreement, the Collateral Agent shall, at the time such
proceeds of such insurance are distributed to the Secured Creditors, apply such
proceeds in accordance with Section 7.4 hereof. Each Assignor assumes all
liability and responsibility in connection with the Collateral acquired by it
and the liability of such Assignor to pay the Obligations shall in no way be
affected or diminished by reason of the fact that such Collateral may be lost,
destroyed, stolen, damaged or for any reason whatsoever unavailable to such
Assignor.
6.2. Warehouse Receipts Non-Negotiable. Each Assignor agrees
that if any warehouse receipt or receipt in the nature of a warehouse receipt is
issued with respect to any of its Inventory, such warehouse receipt or receipt
in the nature thereof shall not be "negotiable" (as
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such term is used in Section 7-104 of the Uniform Commercial Code as in effect
in any relevant jurisdiction or under other relevant law) or, if any warehouse
receipt or any receipt in the nature of a warehouse receipt is "negotiable" (as
such term is used in Section 7-104 of the Uniform Commercial Code as in effect
in any relevant jurisdiction or under other relevant law) then the respective
Assignor shall promptly take all action as may be required under the relevant
jurisdiction to grant a perfected security interest in such Collateral to the
Collateral Agent for the benefit of the Secured Creditors.
6.3. Further Actions. (a) Each Assignor will, at its own
expense, make, execute, endorse, acknowledge, file and/or deliver to the
Collateral Agent from time to time such lists, descriptions and designations of
its Collateral, warehouse receipts, receipts in the nature of warehouse
receipts, bills of lading, documents of title, vouchers, invoices, schedules,
confirmatory assignments, conveyances, financing statements, transfer
endorsements, powers of attorney, cer tificates, reports and other assurances or
instruments and take such further steps relating to the Collateral and other
property or rights covered by the security interest hereby granted, which the
Collateral Agent deems reasonably appropriate or advisable to perfect, preserve
or protect its security interest in the Collateral.
(b) Each Assignor hereby agrees that it will from time to
time, at its own expense and at the request of the Collateral Agent or the
Majority Lenders, take all actions (including making all appropriate filings) as
may be necessary or in the reasonable opinion of the Collateral Agent desirable
to perfect (and maintain the perfection of) any security interest in any
material foreign Mark, Patent and/or Copyright, and in connection therewith
shall deliver one or more opinions of foreign counsel confirming the validity
and perfection of such foreign Marks, Patents and/or Copyrights.
6.4. Financing Statements. Each Assignor agrees to execute and
deliver to the Collateral Agent such financing statements, in form reasonably
acceptable to the Collateral Agent, as the Collateral Agent may from time to
time reasonably request or as are necessary or desirable in the opinion of the
Collateral Agent to establish and maintain a valid, enforceable, first priority
perfected security interest in the Collateral as provided herein and the other
rights and security contemplated hereby all in accordance with the Uniform
Commercial Code as enacted in any and all relevant jurisdictions or any other
relevant law. Each Assignor will pay any applicable filing fees, recordation
taxes and related expenses relating to its Collateral. Each Assignor hereby au
thorizes the Collateral Agent to file any such financing statements without the
signature of such Assignor where permitted by law.
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ARTICLE VII
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT
7.1. Remedies; Obtaining the Collateral Upon Default. Each
Assignor agrees that, if any Event of Default shall have occurred and be
continuing, then and in every such case, the Collateral Agent, in addition to
any rights now or hereafter existing under applicable law, shall have all rights
as a secured creditor under the Uniform Commercial Code in all relevant
jurisdictions and may:
(i) personally, or by agents or attorneys, immediately take
possession of the Collateral or any part thereof, from such Assignor or
any other Person who then has possession of any part thereof with or
without notice or process of law, and for that purpose may enter upon
such Assignor's premises where any of the Collateral is located and
remove the same and use in connection with such removal any and all
services, supplies, aids and other facilities of such Assignor;
(ii) instruct the obligor or obligors on any agreement,
instrument or other obligation (including, without limitation, the
Receivables and the Contracts) constituting the Collateral to make any
payment required by the terms of such agreement, instrument or other
obligation directly to the Collateral Agent;
(iii) withdraw all monies, securities and instruments in the
Cash Collateral Account for application to the Obligations in
accordance with Section 7.4 hereof;
(iv) sell, assign or otherwise liquidate any or all of the
Collateral or any part thereof in accordance with Section 7.2 hereof,
or direct the relevant Assignor to sell, assign or otherwise liquidate
any or all of the Collateral or any part thereof, and, in each case,
take possession of the proceeds of any such sale or liquidation;
(v) take possession of the Collateral or any part thereof, by
directing the relevant Assignor in writing to deliver the same to the
Collateral Agent at any place or places designated by the Collateral
Agent, in which event such Assignor shall at its own expense:
(x) forthwith cause the same to be moved to the place or
places so designated by the Collateral Agent and there
delivered to the Collateral Agent;
(y) store and keep any Collateral so delivered to the
Collateral Agent at such place or places pending further
action by the Collateral Agent as provided in Section 7.2
hereof; and
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(z) while the Collateral shall be so stored and kept,
provide such guards and maintenance services as shall be
necessary to protect the same and to preserve and maintain
them in good condition; and
(vi) license or sublicense, whether on an exclusive or
nonexclusive basis, any Marks, Patents or Copyrights included in the
Collateral for such term and on such conditions and in such manner as
the Collateral Agent shall in its sole judgment determine (taking into
account such provisions as may be necessary to protect and preserve
such Marks, Patents or Copyrights);
it being understood that each Assignor's obligation so to deliver the Collateral
is of the essence of this Agreement and that, accordingly, upon application to a
court of equity having jurisdiction, the Collateral Agent shall be entitled to a
decree requiring specific performance by such Assignor of said obligation. The
Secured Creditors agree that this Agreement may be enforced only by the action
of the Administrative Agent or the Collateral Agent, in each case acting upon
the instructions of the Majority Lenders (or, after the date on which all Loan
Document Obligations have been paid in full and the Aggregate Commitment has
been terminated, the holders of at least the majority of the outstanding Other
Obligations) and that no other Secured Creditor shall have any right
individually to seek to enforce or to enforce this Agreement or to realize upon
the security to be granted hereby, it being understood and agreed that such
rights and remedies may be exercised by the Administrative Agent or the
Collateral Agent or the holders of at least a majority of the outstanding
Interest Rate Obligations, as the case may be, for the benefit of the Secured
Creditors upon the terms of this Agreement.
7.2. Remedies; Disposition of the Collateral. Any Collateral
repossessed by the Collateral Agent under or pursuant to Section 7.1 hereof and
any other Collateral whether or not so repossessed by the Collateral Agent, may
be sold, assigned, leased or otherwise disposed of under one or more contracts
or as an entirety, and without the necessity of gathering at the place of sale
the property to be sold, and in general in such manner, at such time or times,
at such place or places and on such terms as the Collateral Agent may, in
compliance with any mandatory re quirements of applicable law, determine to be
commercially reasonable. Any of the Collateral may be sold, leased or otherwise
disposed of, in the condition in which the same existed when taken by the
Collateral Agent or after any overhaul or repair at the expense of the relevant
Assignor which the Collateral Agent shall determine to be commercially
reasonable. Any such disposition which shall be a private sale or other private
proceedings permitted by such require ments shall be made upon not less than 10
days' written notice to the relevant Assignor specifying the time at which such
disposition is to be made and the intended sale price or other consideration
therefor, and shall be subject, for the 10 days after the giving of such notice,
to the right of the relevant Assignor or any nominee of such Assignor to acquire
the Collateral involved at a price or for such other consideration at least
equal to the intended sale price or other consideration so specified. Any such
disposition which shall be a public sale permitted by such requirements shall be
made upon not less than 10 days' written notice to the relevant Assignor
specifying the time and place of such sale and, in the absence of applicable
requirements of law, shall be by public
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auction (which may, at the Collateral Agent's option, be subject to reserve),
after publication of notice of such auction not less than 10 days prior thereto
in two newspapers in general circulation in the City of Chicago. To the extent
permitted by any such requirement of law, the Collateral Agent may bid for and
become the purchaser of the Collateral or any item thereof, offered for sale in
accordance with this Section without accountability to the relevant Assignor.
If, under man datory requirements of applicable law, the Collateral Agent shall
be required to make disposition of the Collateral within a period of time which
does not permit the giving of notice to the relevant Assignor as hereinabove
specified, the Collateral Agent need give such Assignor only such notice of
disposition as shall be reasonably practicable in view of such mandatory
requirements of applicable law.
7.3. Waiver of Claims. Except as otherwise provided in this
Agreement, EACH ASSIGNOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL AGENT'S
TAKING POSSESSION OR THE COLLATERAL AGENT'S DISPOSITION OF ANY OF THE
COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING
FOR ANY PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT WHICH SUCH ASSIGNOR
WOULD OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED STATES
OR OF ANY STATE, and each Assignor hereby further waives, to the extent
permitted by law:
(i) all damages occasioned by such taking of possession except
any damages which are the direct result of the Collateral Agent's gross
negligence or willful misconduct;
(ii) all other requirements as to the time, place and terms of
sale or other requirements with respect to the enforcement of the
Collateral Agent's rights hereunder; and
(iii) all rights of redemption, appraisement, valuation, stay,
extension or moratorium now or hereafter in force under any applicable
law in order to prevent or delay the enforcement of this Agreement or
the absolute sale of the Collateral or any portion thereof, and each
Assignor, for itself and all who may claim under it, insofar as it or
they now or hereafter lawfully may, hereby waives the benefit of all
such laws.
Any sale of, or the grant of options to purchase, or any other realization upon,
any Collateral shall operate to divest all right, title, interest, claim and
demand, either at law or in equity, of the relevant Assignor therein and
thereto, and shall be a perpetual bar both at law and in equity against such
Assignor and against any and all Persons claiming or attempting to claim the
Collateral so sold, optioned or realized upon, or any part thereof, from,
through and under such Assignor.
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7.4. Application of Proceeds. (a) All moneys collected by the
Collateral Agent (or, to the extent the Pledge Agreement or any other Collateral
Documents require proceeds of collateral under such Collateral Documents to be
applied in accordance with the provisions of this Agreement, the Pledgee under
such other Collateral Document) upon any sale or other disposition of the
Collateral, together with all other moneys received by the Collateral Agent
hereunder, shall be applied as follows:
(i) first, to the payment of all Obligations owing the
Collateral Agent of the type provided in clauses (iii) and (iv) of the
definition of Obligations herein;
(ii) second, to the extent proceeds remain after the
application pursuant to the preceding clause (i), an amount equal to
the outstanding Obligations shall be paid to the Secured Creditors as
provided in Section 7.4(c) hereof with each Secured Creditor receiving
an amount equal to its outstanding Obligations or, if the proceeds are
insufficient to pay in full all such Obligations, its Pro Rata Share
(as defined below) of the amount remaining to be distributed; and
(iii) third, to the extent proceeds remain after the
application pursuant to the preceding clauses (i) and (ii) and
following the termination of this Agreement pursuant to Section 10.8
hereof, to the relevant Assignor or, to the extent directed by such
Assignor or a court of competent jurisdiction, to whomever may be
lawfully entitled to receive such surplus.
(b) For purposes of this Agreement, "Pro Rata Share" shall
mean, when calculating a Secured Creditor's portion of any distribution or
amount, that amount (expressed as a percentage) equal to a fraction the
numerator of which is the then unpaid amount of such Secured Creditor's
Obligations and the denominator of which is the then outstanding amount of all
Obligations.
(c) All payments required to be made to the Lender Creditors
hereunder shall be made to the Administrative Agent under the Credit Agreement
for the account of the Lender Creditors and all payments required to be made to
the Other Creditors hereunder shall be made directly to the respective Other
Creditor.
(d) For purposes of applying payments received in accordance
with this Section 7.4, the Collateral Agent shall be entitled to rely upon (i)
the Administrative Agent under the Credit Agreement and (ii) the Other Creditors
for a determination (which the Administrative Agent, each Other Creditor and the
Secured Creditors agree (or shall agree) to provide upon request of the
Collateral Agent) of the outstanding Obligations owed to the Lender Creditors or
the Other Creditors, as the case may be. Unless it has actual knowledge
(including by way of written notice from a Lender Creditor or an Other Creditor)
to the contrary, the Administrative 6Agent under the Credit Agreement, in
furnishing information pursuant to the preceding sentence, and the Collateral
Agent, in acting hereunder, shall be entitled to assume that (x) no Loan
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Document Obligations other than principal, interest and regularly accruing fees
are owing to any Lender Creditor and (y) no Interest Rate Protection Agreement
or Other Hedging Agreement, or Other Obligations in respect thereof, are in
existence.
(e) It is understood that the Assignors shall remain jointly
and severally liable to the extent of any deficiency between the amount of the
proceeds of the Collateral and the aggregate amount of the sums referred to in
clause (a) of this Section 7.4 with respect to the relevant Assignor.
7.5. Remedies Cumulative. Each and every right, power and
remedy hereby specifically given to the Collateral Agent shall be in addition to
every other right, power and remedy specifically given under this Agreement, the
Interest Rate Protection Agreements or Other Hedging Agreements, the other Loan
Documents or now or hereafter existing at law, in equity or by statute and each
and every right, power and remedy whether specifically herein given or other
wise existing may be exercised from time to time or simultaneously and as often
and in such order as may be deemed expedient by the Collateral Agent. All such
rights, powers and remedies shall be cumulative and the exercise or the
beginning of the exercise of one shall not be deemed a waiver of the right to
exercise any other or others. No delay or omission of the Collateral Agent in
the exercise of any such right, power or remedy and no renewal or extension of
any of the Obligations shall impair any such right, power or remedy or shall be
construed to be a waiver of any Default or Event of Default or an acquiescence
therein. No notice to or demand on any Assignor in any case shall entitle it to
any other or further notice or demand in similar or other circumstances or
constitute a waiver of any of the rights of the Collateral Agent to any other or
further action in any circumstances without notice or demand. In the event that
the Collateral Agent shall bring any suit to enforce any of its rights hereunder
and shall be entitled to judgment, then in such suit the Collateral Agent may
recover reasonable expenses, including attorneys' fees, and the amounts thereof
shall be included in such judgment.
7.6. Discontinuance of Proceedings. In case the Collateral
Agent shall have instituted any proceeding to enforce any right, power or remedy
under this Agreement by foreclosure, sale, entry or otherwise, and such
proceeding shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Collateral Agent, then and in every such
case the relevant Assignor, the Collateral Agent and each holder of any of the
Obligations shall be restored to their former positions and rights hereunder
with respect to the Collateral subject to the security interest created under
this Agreement, and all rights, remedies and powers of the Collateral Agent
shall continue as if no such proceeding had been instituted.
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ARTICLE VIII
INDEMNITY
8.1. Indemnity. (a) Each Assignor jointly and severally agrees
to indemnify, reimburse and hold the Collateral Agent, each other Secured
Creditor and their respective successors, permitted assigns, employees, agents
and servants (hereinafter in this Section 8.1 referred to individually as
"Indemnitee," and collectively as "Indemnitees") harmless from any and all
liabilities, obligations, damages, injuries, penalties, claims, demands,
actions, suits, judgments and any and all costs, expenses or disbursements
(including attorneys' fees and expenses) (for the purposes of this Section 8.1
the foregoing are collectively called "expenses") of whatsoever kind and nature
imposed on, asserted against or incurred by any of the Indemnitees in any way
relating to or arising out of this Agreement, any Interest Rate Protection
Agreement or Other Hedging Agreement, any other Loan Document or any other
document executed in connection herewith or therewith or in any other way
connected with the administration of the transactions contemplated hereby or
thereby or the enforcement of any of the terms of, or the preservation of any
rights under any thereof, or in any way relating to or arising out of the
manufacture, ownership, ordering, purchase, delivery, control, acceptance,
lease, financing, possession, operation, condition, sale, return or other
disposition, or use of the Collateral (including, without limitation, latent or
other defects, whether or not discoverable), the violation of the laws of any
country, state or other governmental body or unit, any tort (including, without
limitation, claims arising or imposed under the doctrine of strict liability, or
for or on account of injury to or the death of any Person (including any
Indemnitee), or property damage), or contract claim; provided that no Indemnitee
shall be indemnified pursuant to this Section 8.1(a) for losses, damages or
liabilities to the extent caused by the gross negligence or willful misconduct
of such Indemnitee. Each Assignor agrees that upon written notice by any
Indemnitee of the assertion of such a liability, obligation, damage, injury,
penalty, claim, demand, action, suit or judgment, the relevant Assignor shall
assume full responsibility for the defense thereof. Each Indemnitee agrees to
use its best efforts to promptly notify the relevant Assignor of any such
assertion of which such Indemnitee has knowledge.
(b) Without limiting the application of Section 8.1(a) hereof,
each Assignor agrees, jointly and severally, to pay, or reimburse the Collateral
Agent for any and all reasonable fees, costs and expenses of whatever kind or
nature incurred in connection with the creation, preservation or protection of
the Collateral Agent's Liens on, and security interest in, the Collateral,
including, without limitation, all fees and taxes in connection with the
recording or filing of instruments and documents in public offices, payment or
discharge of any taxes or Liens upon or in respect of the Collateral, premiums
for insurance with respect to the Collateral and all other fees, costs and
expenses in connection with protecting, maintaining or preserving the Collateral
and the Collateral Agent's interest therein, whether through judicial
proceedings or otherwise, or in defending or prosecuting any actions, suits or
proceedings arising out of or relating to the Collateral.
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(c) Without limiting the application of Section 8.1(a) or (b)
hereof, each Assignor agrees, jointly and severally, to pay, indemnify and hold
each Indemnitee harmless from and against any loss, costs, damages and expenses
which such Indemnitee may suffer, expend or incur in consequence of or growing
out of any misrepresentation by any Assignor in this Agreement, any Interest
Rate Protection Agreement or Other Hedging Agreement, any other Loan Document or
in any writing contemplated by or made or delivered pursuant to or in connection
with this Agreement, any Interest Rate Protection Agreement or Other Hedging
Agreement or any other Loan Document.
(d) If and to the extent that the obligations of any Assignor
under this Section 8.1 are unenforceable for any reason, such Assignor hereby
agrees to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
8.2. Indemnity Obligations Secured by Collateral; Survival.
Any amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Collateral. The
indemnity obligations of each Assignor contained in this Article VIII shall
continue in full force and effect notwithstanding the full payment of all the
promissory notes issued under the Credit Agreement, the termination of all
Interest Rate Protection Agreements or Other Hedging Agreements and the payment
of all other Obligations and notwithstanding the discharge thereof.
ARTICLE IX
DEFINITIONS
The following terms shall have the meanings herein specified.
Such definitions shall be equally applicable to the singular and plural forms of
the terms defined.
"Administrative Agent" shall have the meaning provided in the
recitals to this Agreement.
"Agreement" shall mean this Security Agreement as the same may
be modified, supplemented or amended from time to time in accordance with its
terms.
"Assignor" shall have the meaning provided in the first
paragraph of this Agreement.
"Borrower" shall have the meaning provided in the recitals to
this Agreement.
"Cash Collateral Account" shall mean, collectively, each cash
collateral account maintained with, and in the sole dominion and control of, the
Collateral Agent for the benefit of the Secured Creditors.
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"Chattel Paper" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of Illinois.
"Class" shall have the meaning provided in Section 10.2 of
this Agreement.
"Collateral" shall have the meaning provided in Section 1.1(a)
of this Agreement.
"Collateral Agent" shall have the meaning provided in the
first paragraph of this Agreement.
"Contract Rights" shall mean all rights of any Assignor
(including, without limitation, all rights to payment) under each Contract.
"Contracts" shall mean all contracts between any Assignor and
one or more additional parties (including, without limitation, any Interest Rate
Protection Agreements or Other Hedging Agreements).
"Copyrights" shall mean any United States or foreign copyright
owned by any Assignor, including any registrations of any Copyrights, in the
United States Copyright Office or the equivalent thereof in any foreign country,
as well as any application for a United States or foreign copyright registration
now or hereafter made with the United States Copyright Office or the equivalent
thereof in any foreign country by any Assignor, other than those countries
outside the United States where the grant of a security interest would
invalidate such Copyrights.
"Credit Agreement" shall have the meaning provided in the
recitals to this Agreement.
"Default" shall mean any event which, with notice or lapse of
time, or both, would constitute an Event of Default.
"Documents" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of Illinois.
"Equipment" shall mean any "equipment," as such term is
defined in the Uniform Commercial Code as in effect on the date hereof in the
State of Illinois, now or hereafter owned by any Assignor and, in any event,
shall include, but shall not be limited to, all machinery, equip ment,
furnishings, movable trade fixtures and vehicles now or hereafter owned by any
Assignor and any and all additions, substitutions and replacements of any of the
foregoing, wherever located, together with all attachments, components, parts,
equipment and accessories installed thereon or affixed thereto.
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"Event of Default" shall mean any Event of Default under, and
as defined in, the Credit Agreement and shall in any event, without limitation,
include any payment default on any of the Obligations after the expiration of
any applicable grace period.
"General Intangibles" shall have the meaning provided in the
Uniform Commercial Code as in effect on the date hereof in the State of
Illinois.
"Goods" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of Illinois.
"Holdings" shall have the meaning provided in the recitals to
this Agreement.
"Indemnitee" shall have the meaning provided in Section 8.1 of
this Agreement.
"Instrument" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of Illinois.
"Inventory" shall mean merchandise, inventory and goods, and
all additions, substitutions and replacements thereof, wherever located,
together with all goods, supplies, incidentals, packaging materials, labels,
materials and any other items used or usable in manufacturing, processing,
packaging or shipping same; in all stages of production -- from raw materials
through work-in-process to finished goods -- and all products and proceeds of
whatever sort and wherever located and any portion thereof which may be
returned, rejected, reclaimed or repossessed by the Collateral Agent from any
Assignor's customers, and shall specifically include all "inventory" as such
term is defined in the Uniform Commercial Code as in effect on the date hereof
in the State of Illinois, now or hereafter owned by any Assignor.
"Lender Creditors" shall have the meaning provided in the
recitals to this Agreement.
"Lenders" shall have the meaning provided in the recitals to
this Agreement.
"Liens" shall mean any security interest, mortgage, pledge,
lien, claim, charge, encumbrance, title retention agreement, lessor's interest
in a financing lease or analogous instrument, in, of, or on any Assignor's
property.
"Loan Document Obligations" shall have the meaning provided in
the definition of "Obligations" in this Article IX.
"Marks" shall mean all right, title and interest in and to any
United States or foreign trademarks, service marks and trade names now held or
hereafter acquired by any Assignor, including any registration of any trademarks
and service marks in the United States Patent and Trademark Office, or the
equivalent thereof in any foreign country, other than those
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countries outside the United States, where the grant of a security interest
would invalidate such trademarks, service marks and trade names, and any trade
dress including logos and/or designs used by any Assignor in the United States
or any foreign country.
"Obligations" shall mean (i) the full and prompt payment when
due (whether at the stated maturity, by acceleration or otherwise) of all
obligations (including obligations which, but for the automatic stay under
Section 362(a) of the Bankruptcy Code, would become due) and liabilities of each
Assignor, now existing or hereafter incurred under, arising out of or in
connection with any Loan Document to which such Assignor is a party and the due
performance and compliance by each Assignor with the terms of each such Loan
Document, including, without limitation, in the case of the Borrower, all
"Obligations" under and as defined in the Credit Agreement, and in the case of
each other Assignor, all "Guaranteed Obligations" under and as defined in the
Credit Agreement or the Subsidiary Guaranty, as applicable (all such obligations
and liabilities under this clause (i), except to the extent consisting of
obligations or indebtedness with respect to Interest Rate Protection Agreements
or Other Hedging Agreements, being herein collectively called the "Loan Document
Obligations"); (ii) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations (including
obligations which, but for the automatic stay under Section 362(a) of the
Bankruptcy Code, would become due) and liabilities of each Assignor now existing
or hereafter incurred under, arising out of or in connection with any Interest
Rate Protection Agreement or Other Hedging Agreement including, in the case of
the Assignors other than the Borrower, all obligations of such Assignor under
Article X of the Credit Agreement or under the Subsidiary Guaranty, as the case
may be, in respect of Interest Rate Protection Agreements or Other Hedging
Agreements (all such obligations and liabilities under this clause (ii) being
herein collectively called the "Other Obligations"); (iii) any and all sums
advanced by the Collateral Agent in order to preserve the Collateral or preserve
its security interest in the Collateral; (iv) in the event of any proceeding for
the collection or enforcement of any indebtedness, obligations, or liabilities
of each Assignor referred to in clauses (i) and (ii), after an Event of Default
shall have occurred and be continuing, the reasonable expenses of re-taking,
holding, preparing for sale or lease, selling or otherwise disposing of or
realizing on the Collateral, or of any exercise by the Collateral Agent of its
rights hereunder, together with reasonable attorneys' fees and court costs; and
(v) all amounts paid by any Indemnitee as to which such Indemnitee has the right
to reimbursement under Section 8.1 of this Agreement.
"Other Creditors" shall have the meaning provided in the
recitals to this Agree ment.
"Other Obligations" shall have the meaning provided in the
definition of "Obligations" in this Article IX.
"Patents" shall mean any United States or foreign patent to
which any Assignor now or hereafter has title and any divisions or continuations
thereof, as well as any application for a United States or foreign patent now or
hereafter made by any Assignor, except those patents or
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patent applications in those countries outside the United States where the
granting of a security interest in such patents is not permissible under the
laws of that country.
"Proceeds" shall have the meaning provided in the Uniform
Commercial Code as in effect in the State of Illinois on the date hereof or
under other relevant law and, in any event, shall include, but not be limited
to, (i) any and all proceeds of any insurance, indemnity, warranty or guaranty
payable to the Collateral Agent or any Assignor from time to time with respect
to any of the Collateral, (ii) any and all payments (in any form whatsoever)
made or due and payable to any Assignor from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any governmental authority (or any person acting under
color of governmental authority) and (iii) any and all other amounts from time
to time paid or payable under or in connection with any of the Collateral.
"Pro Rata Share" shall have the meaning provided in Section
7.4(b) of this Agreement.
"Receivables" shall mean any "account" as such term is defined
in the Uniform Commercial Code as in effect on the date hereof in the State of
Illinois, now or hereafter owned by any Assignor and, in any event, shall
include, but shall not be limited to, all of such Assignor's rights to payment
for goods sold or leased or services performed by such Assignor, whether now in
existence or arising from time to time hereafter, including, without limitation,
rights evidenced by an account, note, contract, security agreement, chattel
paper, or other evidence of indebtedness or security, together with (a) all
security pledged, assigned, hypothecated or granted to or held by such Assignor
to secure the foregoing, (b) all of any Assignor's right, title and inter est in
and to any goods, the sale of which gave rise thereto, (c) all guarantees,
endorsements and indemnifications on, or of, any of the foregoing, (d) all
powers of attorney for the execution of any evidence of indebtedness or security
or other writing in connection therewith, (e) all books, records, ledger cards,
and invoices relating thereto, (f) all evidences of the filing of financing
statements and other statements and the registration of other instruments in
connection therewith and amendments thereto, notices to other creditors or
secured parties, and certificates from filing or other registration officers,
(g) all credit information, reports and memoranda relating thereto and (h) all
other writings related in any way to the foregoing.
"Requisite Creditors" shall have the meaning provided in
Section 10.2 of this Agreement.
"Secured Creditors" shall have the meaning provided in the
recitals to this Agreement.
"Termination Date" shall have the meaning provided in Section
10.8 of this Agreement.
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"Trade Secret Rights" shall have the meaning provided in
Section 5.1 of this Agreement.
ARTICLE X
MISCELLANEOUS
10.1. Notices. Except as otherwise specified herein, all
notices, requests, demands or other communications to or upon the respective
parties hereto shall be deemed to have been duly given or made when delivered to
the party to which such notice, request, demand or other communication is
required or permitted to be given or made under this Agreement, addressed:
(a) if to any Assignor, at:
c/o CII Technologies, Inc.
1396 Charlotte Highway
Fairview, N.C. 28730
Attention: David Henning
Telephone No.: (704) 628-1711
Telecopier No.: (704) 628-1439
(b) if to the Collateral Agent, at:
Bank of America National Trust and Savings Association
231 South LaSalle Street
Chicago, IL 60697
Attention: Agency Management - 8th Floor
David A. Johanson, Vice President
Telephone No.: (312) 828-7933
Telecopier No.: (312) 705-0573
(c) if to any Lender Creditor (other than the Collateral
Agent), at such address as such Lender Creditor shall have specified in
the Credit Agreement;
(d) if to any Other Creditor, at such address as such Other
Creditor shall have specified in writing to each Assignor and the
Collateral Agent;
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
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10.2. Waiver; Amendment. None of the terms and conditions of
this Agreement may be changed, waived, modified or varied in any manner
whatsoever unless in writing duly signed by each Assignor directly affected
thereby and the Collateral Agent (with the consent of (x) either the Majority
Lenders (or, to the extent required by Section 12.01 of the Credit Agreement,
all of the Lenders) at all times prior to the time on which all Loan Document
Obligations have been paid in full and the Aggregate Commitment has been
terminated or (y) the holders of at least a majority of the outstanding Other
Obligations at all times after the time on which all Loan Document Obligations
have been paid in full and the Aggregate Commitment has been terminated);
provided, that any change, waiver, modification or variance affecting the rights
and benefits of a single Class of Secured Creditors (and not all Secured
Creditors in a like or similar manner) shall require the written consent of the
Requisite Creditors of such Class of Secured Creditors. For the purpose of this
Agreement the term "Class" shall mean each class of Secured Creditors, i.e.,
whether (x) the Lender Creditors as holders of the Loan Document Obligations or
(y) the Other Creditors as the holders of the Other Obligations. For the purpose
of this Agreement, the term "Requisite Creditors" of any Class shall mean each
of (x) with respect to the Loan Document Obligations, the Majority Lenders and
(y) with respect to the Other Obligations, the holders of at least a majority of
all obligations outstanding from time to time under the Interest Rate Protection
Agreements or Other Hedging Agreements.
10.3. Obligations Absolute. The obligations of each Assignor
hereunder shall remain in full force and effect without regard to, and shall not
be impaired by, (a) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of such Assignor; (b) any
exercise or non-exercise, or any waiver of, any right, remedy, power or
privilege under or in respect of this Agreement, any other Loan Document or any
Interest Rate Protection Agreement or Other Hedging Agreement; or (c) any
amendment to or modification of any Loan Document or any Interest Rate
Protection Agreement or Other Hedging Agreement or any security for any of the
Obligations; whether or not any Assignor shall have notice or knowledge of any
of the foregoing.
10.4. Successors and Assigns. This Agreement shall be binding
upon each Assignor and its successors and assigns and shall inure to the benefit
of the Collateral Agent and its successors and assigns; provided, that no
Assignor may transfer or assign any or all of its rights or obligations
hereunder without the prior written consent of the Collateral Agent. All
agreements, statements, representations and warranties made by each Assignor
herein or in any certificate or other instrument delivered by such Assignor or
on its behalf under this Agreement shall be considered to have been relied upon
by the Secured Creditors and shall survive the execution and delivery of this
Agreement, the other Loan Documents and the Interest Rate Protection Agreements
or Other Hedging Agreements regardless of any investigation made by the Secured
Creditors or on their behalf.
10.5. Headings Descriptive. The headings of the several
sections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
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10.6. Governing Law. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND
BE GOVERNED BY THE LAW OF THE STATE OF ILLINOIS (INCLUDING, WITHOUT LIMITATION,
135 ILCS 105/5-1, ET. SEQ., BUT WITHOUT GIVING EFFECT TO ANY OTHER CONFLICTS OF
LAW PROVISIONS).
10.7. Assignor's Duties. It is expressly agreed, anything
herein contained to the contrary notwithstanding, that each Assignor shall
remain liable to perform all of the obligations, if any, assumed by it with
respect to the Collateral and the Collateral Agent shall not have any
obligations or liabilities with respect to any Collateral by reason of or
arising out of this Agreement, nor shall the Collateral Agent be required or
obligated in any manner to perform or fulfill any of the obligations of each
Assignor under or with respect to any Collateral.
10.8. Termination; Release. (a) After the Termination Date,
this Agreement shall terminate (provided that all indemnities set forth herein
including, without limitation, in Section 8.1 hereof shall survive such
termination) and the Collateral Agent, at the request and expense of the
respective Assignor, will promptly execute and deliver to such Assignor a proper
instrument or instruments (including Uniform Commercial Code termination
statements on form UCC-3) acknowledging the satisfaction and termination of this
Agreement, and will duly assign, transfer and deliver to such Assignor (without
recourse and without any representation or warranty) such of the Collateral as
may be in the possession of the Collateral Agent and as has not theretofore been
sold or otherwise applied or released pursuant to this Agreement. As used in
this Agree ment, "Termination Date" shall mean the date upon which the Aggregate
Commitment and all Interest Rate Protection Agreements or Other Hedging
Agreements have been terminated, no promissory note or Letter of Credit under
the Credit Agreement is outstanding (other than Letters of Credit, together with
all fees that have accrued and will accrue thereon through the stated
termination date of such Letters of Credit, which have been secured in a manner
satisfactory to the applicable Issuing Lenders in their sole and absolute
discretion) and all other Obligations (other than any indemnities described in
Section 8.1 hereof and in Section 12.05 of the Credit Agreement which are not
then due and payable) have been paid in full.
(b) In the event that any part of the Collateral is sold or
otherwise disposed of in connection with a sale or other disposition permitted
by Section 8.02 of the Credit Agreement or is otherwise released at the
direction of the Majority Lenders (or all the Lenders if required by Section
12.01 of the Credit Agreement), the Collateral Agent, at the request and expense
of such Assignor, will duly release from the security interest created hereby
and assign, transfer and deliver to such Assignor (without recourse and without
any representation or warranty) such of the Collateral as is then being (or has
been) so sold or released and as may be in the possession of the Collateral
Agent and has not theretofore been released pursuant to this Agreement.
(c) At any time that the respective Assignor desires that
Collateral be released as provided in the foregoing Section 10.8(a) or (b), it
shall deliver to the Collateral Agent a certifi-
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cate signed by a Responsible Officer of such Assignor stating that the release
of the respective Collateral is permitted pursuant to Section 10.8(a) or (b)
hereof.
10.9. Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument. A set of
counterparts executed by all the parties hereto shall be lodged with the
Borrower and the Collateral Agent.
10.10. The Collateral Agent. The Collateral Agent will hold in
accordance with this Agreement all items of the Collateral at any time received
under this Agreement. It is expressly understood and agreed that the obligations
of the Collateral Agent as holder of the Collateral and interests therein and
with respect to the disposition thereof, and otherwise under this Agreement, are
only those expressly set forth in this Agreement and as provided in the Uniform
Commercial Code in the State of Illinois. The Collateral Agent shall act
hereunder on the terms and conditions set forth in Article XI of the Credit
Agreement.
10.11. Additional Assignors. It is understood and agreed that
any Subsidiary of the Borrower that is required to execute a counterpart of this
Agreement after the date hereof pursuant to Sections 7.12 and/or 8.15 of the
Credit Agreement shall automatically become an Assignor hereunder by executing a
counterpart hereof and delivering the same to the Collateral Agent.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered by their duly authorized officers as of
the date first above written.
CII TECHNOLOGIES, INC., as an Assignor
By: /s/ David Henning
----------------------------------
Name: David Henning
--------------------------
Title: CFO
-------------------------
COMMUNICATIONS INSTRUMENTS, INC.,
as an Assignor
By: /s/ David Henning
----------------------------------
Name: David Henning
--------------------------
Title: CFO
-------------------------
KILOVAC CORPORATION, as an Assignor
By: /s/ David Henning
----------------------------------
Name: David Henning
--------------------------
Title: CFO
-------------------------
KILOVAC INTERNATIONAL, INC.,
as an Assignor
By: /s/ David Henning
----------------------------------
Name: David Henning
--------------------------
Title: CFO
-------------------------
CORCOM, INC.,
as an Assignor
By: /s/ David Henning
----------------------------------
Name: David Henning
--------------------------
Title: CFO
-------------------------
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
Collateral Agent
By: /s/ David A. Johanson
----------------------------------
Name: David A. Johanson
--------------------------
Title: Vice President
-------------------------