EXHIBIT 10.3
GUARANTEE AND COLLATERAL AGREEMENT
dated as of
November 25, 2003
among
CRUNCH HOLDING CORP.,
PINNACLE FOODS HOLDING CORPORATION,
THE SUBSIDIARIES OF PINNACLE FOODS HOLDING CORPORATION
IDENTIFIED HEREIN
and
DEUTSCHE BANK TRUST COMPANY AMERICAS,
as Collateral Agent
TABLE OF CONTENTS
ARTICLE I
Definitions
SECTION 1.01. Credit Agreement.......................................................................... 1
SECTION 1.02. Other Defined Terms....................................................................... 1
ARTICLE II
Guarantee
SECTION 2.01. Guarantee ................................................................................ 5
SECTION 2.02. Guarantee of Payment...................................................................... 5
SECTION 2.03. No Limitations............................................................................ 5
SECTION 2.04. Reinstatement............................................................................. 7
SECTION 2.05. Agreement To Pay; Subrogation............................................................. 7
SECTION 2.06. Information............................................................................... 7
ARTICLE III
Pledge of Securities
SECTION 3.01. Pledge ................................................................................... 7
SECTION 3.02. Delivery of the Pledged Collateral........................................................ 8
SECTION 3.03. Representations, Warranties and Covenants................................................. 8
SECTION 3.04. Certification of Limited Liability Company and Limited Partnership Interests.............. 10
SECTION 3.05. Registration in Nominee Name; Denominations............................................... 10
SECTION 3.06. Voting Rights; Dividends and Interest..................................................... 10
ARTICLE IV
Security Interests in Personal Property
SECTION 4.01. Security Interest......................................................................... 12
SECTION 4.02. Representations and Warranties............................................................ 14
SECTION 4.03. Covenants ................................................................................ 16
SECTION 4.04. Other Actions............................................................................. 19
SECTION 4.05. Covenants Regarding Patent, Trademark and Copyright Collateral............................ 22
SECTION 4.06. Deposit and Concentration Accounts........................................................ 24
SECTION 4.07. Collections............................................................................... 24
ARTICLE V
Remedies
SECTION 5.01. Remedies Upon Default..................................................................... 25
SECTION 5.02. Application of Proceeds................................................................... 27
SECTION 5.03. Grant of License to Use Intellectual Property............................................. 27
SECTION 5.04. Securities Act............................................................................ 28
SECTION 5.05. Registration.............................................................................. 29
ARTICLE VI
Indemnity, Subrogation and Subordination
SECTION 6.01. Indemnity and Subrogation................................................................. 29
SECTION 6.02. Contribution and Subrogation.............................................................. 30
SECTION 6.03. Subordination............................................................................. 30
ARTICLE VII
Miscellaneous
SECTION 7.01. Notices .................................................................................. 30
SECTION 7.02. Waivers; Amendment........................................................................ 31
SECTION 7.03. Collateral Agent's Fees and Expenses; Indemnification..................................... 31
SECTION 7.04. Successors and Assigns.................................................................... 32
SECTION 7.05. Survival of Agreement..................................................................... 32
SECTION 7.06. Counterparts; Effectiveness; Several Agreement............................................ 32
SECTION 7.07. Severability.............................................................................. 33
SECTION 7.08. Right of Set-Off.......................................................................... 33
SECTION 7.09. Governing Law; Jurisdiction; Consent to Service of Process................................ 33
SECTION 7.10. WAIVER OF JURY TRIAL...................................................................... 34
SECTION 7.11. Headings.................................................................................. 34
SECTION 7.12. Security Interest Absolute................................................................ 34
SECTION 7.13. Termination or Release.................................................................... 35
SECTION 7.14. Additional Subsidiaries................................................................... 35
SECTION 7.15. Collateral Agent Appointed Attorney-in-Fact............................................... 36
Schedules
Schedule I Subsidiary Parties
Schedule II Equity Interests; Debt Securities
Schedule III Intellectual Property
Schedule IV Insurance Requirements
Schedule V Commercial Tort Claims
Exhibits
Exhibit I Form of Supplement
Exhibit II Form of Perfection Certificate
Exhibit III Form of Copyright Collateral Agreement
Exhibit IV Form of Patent Collateral Agreement
Exhibit V Form of Trademark Collateral Agreement
GUARANTEE AND COLLATERAL AGREEMENT dated as of November
25, 2003, among CRUNCH HOLDING CORP., PINNACLE FOODS HOLDING
CORPORATION, the Subsidiaries of PINNACLE FOODS HOLDING
CORPORATION identified herein and DEUTSCHE BANK TRUST COMPANY
AMERICAS, as Collateral Agent.
Reference is made to the Credit Agreement dated as of November 25,
2003 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among Crunch Holding Corp. ("Holdings"), Pinnacle Foods
Holding Corporation (the "Borrower"), the Lenders party thereto, Deutsche Bank
Trust Company Americas, as Administrative Agent, General Electric Capital
Corporation, as Syndication Agent, and JPMorgan Chase Bank, Citicorp North
America, Inc. and Canadian Imperial Bank of Commerce, as Co-Documentation
Agents. The Lenders have agreed to extend credit to the Borrower subject to the
terms and conditions set forth in the Credit Agreement. The obligations of the
Lenders to extend such credit are conditioned upon, among other things, the
execution and delivery of this Agreement. Holdings and the Subsidiary Parties
are affiliates of the Borrower, will derive substantial benefits from the
extension of credit to the Borrower pursuant to the Credit Agreement and are
willing to execute and deliver this Agreement in order to induce the Lenders to
extend such credit. Accordingly, the parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Credit Agreement. (a) Capitalized terms used in this
Agreement and not otherwise defined herein have the meanings specified in the
Credit Agreement. All terms defined in the New York UCC (as defined herein) and
not defined in this Agreement have the meanings specified therein; the term
"instrument" shall have the meaning specified in Article 9 of the New York UCC.
(a) The rules of construction specified in Section 1.03 of the
Credit Agreement also apply to this Agreement.
SECTION 1.02. Other Defined Terms. As used in this Agreement, the
following terms have the meanings specified below:
"Account Debtor" means any Person who is or who may become obligated
to any Grantor under, with respect to or on account of an Account.
"Article 9 Collateral" has the meaning assigned to such term in
Section 4.01.
"Collateral" means Article 9 Collateral and Pledged Collateral.
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"Concentration Account" means a cash collateral account established
at the office of Deutsche Bank Trust Company Americas located at 60 Wall Street,
New York, NY 10004, in the name of the Collateral Agent, for purposes of this
Agreement, as provided in Section 4.06.
"Copyright License" means any written agreement, now or hereafter in
effect, granting any right to any third party under any Copyright now or
hereafter owned by any Grantor or that such Grantor otherwise has the right to
license, or granting to any Grantor any right under any copyright now or
hereafter owned by any third party, and all rights of any Grantor under any such
agreement.
"Copyrights" means all of the following now owned or hereafter
acquired by any Grantor: (a) all copyright rights in any work subject to the
copyright laws of the United States or any other country, whether as author,
assignee, transferee or otherwise, and (b) all registrations and applications
for registration of any such copyright in the United States or any other
country, including registrations, recordings, supplemental registrations and
pending applications for registration in the United States Copyright Office,
including those listed on Schedule III.
"Credit Agreement" has the meaning assigned to such term in the
preliminary statement of this Agreement.
"Deposit Account" has the meaning specified in Section 9-102 of the
New York UCC and shall include any deposit account now or hereafter held by or
for the account of any Grantor.
"Fair Market Carrying Value" means (a) the greater of (i) the
present fair market value of the relevant Patent or Trademark and (ii) the
present value of the contribution of such Patent or Trademark to Consolidated
EBITDA minus (b) the present value of the associated costs (including, without
limitation, filing and other recordation costs) of (i) maintaining the Grantor's
right title and interest in such Patent or Trademark and (ii) maintaining the
Collateral Agent's Security Interest in such Patent or Trademark.
"Federal Securities Laws" has the meaning assigned to such term in
Section 5.04.
"General Intangibles" has the meaning specified in Section 9-102 of
the New York UCC and shall include all choses in action and all other intangible
personal property of every kind and nature (other than Accounts) now owned or
hereafter acquired by any Grantor, including corporate or other business
records, indemnification claims, contract rights (including rights under leases,
whether entered into as lessor or lessee, Swap Agreements and other agreements),
Intellectual Property, goodwill, registrations, franchises, tax refund claims,
guarantee, claim, security interest or other security held by or granted to any
Grantor to secure or support payment by an Account Debtor of any of the
Accounts.
"Grantors" means Holdings, the Borrower and the Subsidiary Parties.
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"Guarantors" means Holdings and the Subsidiary Parties.
"Intellectual Property" means all intellectual and similar property
of every kind and nature now owned or hereafter acquired by any Grantor,
including inventions, designs, Patents, Copyrights, Licenses, Trademarks, trade
secrets, confidential or proprietary technical and business information,
know-how, methods or other data or information, software and databases and all
embodiments or fixations thereof and related documentation, registrations and
franchises, and all additions, improvements and accessions to, in connection
with, any of the foregoing.
"License" means any Patent License, Trademark License, Copyright
License or other license or sublicense agreement to which any Grantor is a
party, including those listed on Schedule III.
"Loan Document Obligations" means (a) the due and punctual payment
by the Borrower of (i) the principal of and interest (including interest
accruing during the pendency of any bankruptcy, insolvency, receivership or
other similar proceeding, regardless of whether allowed or allowable in such
proceeding) on the Loans, when and as due, whether at maturity, by acceleration,
upon one or more dates set for prepayment or otherwise, (ii) each payment
required to be made by the Borrower under the Credit Agreement in respect of any
Letter of Credit, when and as due, including payments in respect of
reimbursement of disbursements, interest thereon (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) and
obligations to provide cash collateral, and (iii) all other monetary obligations
of the Borrower to any of the Secured Parties under the Credit Agreement and
each of the other Loan Documents, including obligations to pay fees, expense
reimbursement obligations and indemnification obligations, whether primary,
secondary, direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), (b) the due and punctual performance of all other
obligations of the Borrower under or pursuant to the Credit Agreement and each
of the other Loan Documents, and (c) the due and punctual payment and
performance of all the obligations of each other Loan Party under or pursuant to
this Agreement and each of the other Loan Documents.
"New York UCC" means the Uniform Commercial Code as from time to
time in effect in the State of New York.
"Obligations" means (a) Loan Document Obligations and (b) the due
and punctual payment and performance of all obligations of each Loan Party under
each Swap Agreement that (i) is in effect on the Effective Date with a
counterparty that is a Lender or an Affiliate of a Lender as of the Effective
Date or (ii) is entered into after the Effective Date with any counterparty that
is a Lender or an Affiliate of a Lender at the time such Swap Agreement is
entered into.
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"Patent License" means any written agreement, now or hereafter in
effect, granting to any third party any right to make, use or sell any invention
on which a Patent, now or hereafter owned by any Grantor or that any Grantor
otherwise has the right to license, is in existence, or granting to any Grantor
any right to make, use or sell any invention on which a patent, now or hereafter
owned by any third party, is in existence, and all rights of any Grantor under
any such agreement.
"Patents" means all of the following now owned or hereafter acquired
by any Grantor: (a) all letters patent of the United States or the equivalent
thereof in any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or the equivalent thereof
in any other country, including registrations, recordings and pending
applications in the United States Patent and Trademark Office or any similar
offices in any other country, including those listed on Schedule III, and (b)
all reissues, continuations, divisions, continuations-in-part, renewals or
extensions thereof, and the inventions disclosed or claimed therein, including
the right to make, use and/or sell the inventions disclosed or claimed therein.
"Perfection Certificate" means a certificate substantially in the
form of Exhibit II, completed and supplemented with the schedules and
attachments contemplated thereby, and duly executed by a Financial Officer and a
legal officer of the Borrower.
"Pledged Collateral" has the meaning assigned to such term in
Section 3.01.
"Pledged Debt Securities" has the meaning assigned to such term in
Section 3.01.
"Pledged Securities" means any promissory notes, stock certificates
or other securities now or hereafter included in the Pledged Collateral,
including all certificates, instruments or other documents representing or
evidencing any Pledged Collateral.
"Pledged Stock" has the meaning assigned to such term in Section
3.01.
"Proceeds" has the meaning specified in Section 9-102 of the New
York UCC.
"Secured Parties" means (a) the Lenders, (b) the Collateral Agent,
(c) each Issuing Bank, (d) each counterparty to any Swap Agreement with a Loan
Party the obligations under which constitute Obligations, (e) the beneficiaries
of each indemnification obligation undertaken by any Loan Party under any Loan
Document and (f) the successors and permitted assigns of each of the foregoing.
"Security Interest" has the meaning assigned to such term in Section
4.01.
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"Subsidiary Parties" means (a) the Subsidiaries identified on
Schedule I and (b) each other Subsidiary that becomes a party to this Agreement
as a Subsidiary Party after the Effective Date.
"Trademark License" means any written agreement, now or hereafter in
effect, granting to any third party any right to use any Trademark now or
hereafter owned by any Grantor or that any Grantor otherwise has the right to
license, or granting to any Grantor any right to use any trademark or service
mark now or hereafter owned by any third party, and all rights of any Grantor
under any such agreement.
"Trademarks" means all of the following now owned or hereafter
acquired by any Grantor: (a) all trademarks, service marks, trade names,
corporate names, company names, business names, fictitious business names, trade
styles, trade dress, logos, other source or business identifiers, designs and
general intangibles of like nature, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all registration and
recording applications filed in connection therewith, including registrations
and registration applications in the United States Patent and Trademark Office
or any similar offices in any State of the United States or any other country or
any political subdivision thereof, and all extensions or renewals thereof,
including those listed on Schedule III, (b) all goodwill associated therewith or
symbolized thereby and (c) all trademark and service mark assets, rights and
interests that uniquely reflect or embody such goodwill.
ARTICLE II
Guarantee
SECTION 2.01. Guarantee. Each Guarantor absolutely, irrevocably and
unconditionally guarantees, jointly with the other Guarantors and severally, as
a primary obligor and not merely as a surety, the due and punctual payment and
performance of the Obligations. Each of the Guarantors further agrees that the
Obligations may be extended or renewed, in whole or in part, or amended or
modified, without notice to or further assent from it, and that it will remain
bound upon its guarantee notwithstanding any extension, renewal, amendment or
modification of any Obligation. Each of the Guarantors waives presentment to,
demand of payment from and protest to the Borrower or any other Loan Party of
any of the Obligations, and also waives notice of acceptance of its guarantee
and notice of protest for nonpayment.
SECTION 2.02. Guarantee of Payment. Each of the Guarantors further
agrees that its guarantee hereunder constitutes a guarantee of payment when due
and not of collection, and waives any right to require that any resort be had by
the Collateral Agent or any other Secured Party to any security held for the
payment of the Obligations or to any balance of any deposit account or credit on
the books of the Collateral Agent or any other Secured Party in favor of the
Borrower or any other Person.
SECTION 2.03. No Limitations. (a) Except for termination of a
Guarantor's obligations hereunder as expressly provided in Section 7.13, the
obligations
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of each Guarantor hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason, including any claim of waiver,
release, surrender, alteration or compromise, and shall not be subject to any
defense or set-off, counterclaim, recoupment or termination whatsoever by reason
of the invalidity, illegality or unenforceability of the Obligations or
otherwise. Without limiting the generality of the foregoing, the obligations of
each Guarantor hereunder shall not be discharged or impaired or otherwise
affected by (i) the failure of the Collateral Agent or any other Secured Party
to assert any claim or demand or to enforce any right or remedy under the
provisions of any Loan Document or otherwise, (ii) any rescission, waiver,
amendment or modification of, or any release from any of the terms or provisions
of, any Loan Document or any other agreement, including with respect to any
other Guarantor under this Agreement, (iii) the release of, or any impairment of
or failure to perfect any Lien on or security interest in, any security held by
the Collateral Agent or any other Secured Party for the Obligations or any of
them, (iv) any default, failure or delay, wilful or otherwise, in the
performance of the Obligations, or (v) any other act or omission that may or
might in any manner or to any extent vary the risk of any Guarantor or otherwise
operate as a discharge of any Guarantor as a matter of law or equity (other than
the indefeasible payment in full in cash of all the Obligations (except for
contingent indemnities and cost and expense reimbursement obligations to the
extent no claim has been made)). Each Guarantor expressly authorizes the Secured
Parties to take and hold security for the payment and performance of the
Obligations, to exchange, waive or release any or all such security (with or
without consideration), to enforce or apply such security and direct the order
and manner of any sale thereof in their sole discretion or to release or
substitute any one or more other guarantors or obligors upon or in respect of
the Obligations, all without affecting the obligations of any Guarantor
hereunder.
(b) To the fullest extent permitted by applicable law, each
Guarantor waives any defense based on or arising out of any defense of the
Borrower or any other Loan Party or the unenforceability of the Obligations or
any part thereof from any cause, or the cessation from any cause of the
liability of the Borrower or any other Loan Party, other than the indefeasible
payment in full in cash of all the Obligations (except for contingent
indemnities and cost and expense reimbursement obligations to the extent no
claim has been made). The Collateral Agent and the other Secured Parties may, at
their election, foreclose on any security held by one or more of them by one or
more judicial or nonjudicial sales, accept an assignment of any such security in
lieu of foreclosure, compromise or adjust any part of the Obligations, make any
other accommodation with the Borrower or any other Loan Party or exercise any
other right or remedy available to them against the Borrower or any other Loan
Party, without affecting or impairing in any way the liability of any Guarantor
hereunder except to the extent the Obligations (except for contingent
indemnities and cost and expense reimbursement obligations to the extent no
claim has been made) have been fully and indefeasibly paid in full in cash. To
the fullest extent permitted by applicable law, each Guarantor waives any
defense arising out of any such election even though such election operates,
pursuant to applicable law, to impair or to extinguish any right of
reimbursement or subrogation or other right or remedy of such Guarantor against
the Borrower or any other Loan Party, as the case may be, or any security.
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SECTION 2.04. Reinstatement. Each of the Guarantors agrees that its
guarantee hereunder shall continue to be effective or be reinstated, as the case
may be, if at any time payment, or any part thereof, of any Obligation is
rescinded or must otherwise be restored (including the payment of any contingent
indemnities and cost and expense reimbursement obligations) by the Collateral
Agent or any other Secured Party upon the bankruptcy or reorganization of the
Borrower, any other Loan Party or otherwise.
SECTION 2.05. Agreement To Pay; Subrogation. In furtherance of the
foregoing and not in limitation of any other right that the Collateral Agent or
any other Secured Party has at law or in equity against any Guarantor by virtue
hereof, upon the failure of the Borrower or any other Loan Party to pay any
Obligation when and as the same shall become due, whether at maturity, by
acceleration, after notice of prepayment or otherwise, each Guarantor hereby
promises to and will forthwith pay, or cause to be paid, to the Collateral Agent
for distribution to the applicable Secured Parties in cash the amount of such
unpaid Obligation. Upon payment by any Guarantor of any sums to the Collateral
Agent as provided above, all rights of such Guarantor against the Borrower or
any other Loan Party arising as a result thereof by way of right of subrogation,
contribution, reimbursement, indemnity or otherwise shall in all respects be
subject to Article VI.
SECTION 2.06. Information. Each Guarantor assumes all responsibility
for being and keeping itself informed of the Borrower's and each other Loan
Party's financial condition and assets, and of all other circumstances bearing
upon the risk of nonpayment of the Obligations and the nature, scope and extent
of the risks that such Guarantor assumes and incurs hereunder, and agrees that
none of the Collateral Agent or the other Secured Parties will have any duty to
advise such Guarantor of information known to it or any of them regarding such
circumstances or risks.
ARTICLE III
Pledge of Securities
SECTION 3.01. Pledge. As security for the payment or performance, as
the case may be, in full of the Obligations, each Grantor hereby assigns and
pledges to the Collateral Agent, its successors and assigns, for the ratable
benefit of the Secured Parties, and hereby grants to the Collateral Agent, its
successors and assigns, for the ratable benefit of the Secured Parties, a
security interest in, all of such Grantor's right, title and interest in, to and
under (a) the shares of capital stock and other Equity Interests owned by it and
listed on Schedule II and any other Equity Interests obtained in the future by
such Grantor and the certificates representing all such Equity Interests (the
"Pledged Stock"), provided that the Pledged Stock shall not include (i) more
than 65% of the issued and outstanding voting Equity Interests of any Foreign
Subsidiary that is not a Loan Party but is owned directly by a Loan Party, (ii)
any Equity Interest of a Foreign Subsidiary that is not owned directly by a Loan
Party and (iii) any Equity Interests in a Joint Venture to the extent such
Equity Interests are prohibited from being pledged pursuant to the constitutive
documents of such Joint Venture, (b)(i) the debt securities
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listed opposite the name of such Grantor on Schedule II, (ii) any debt
securities in the future issued to such Grantor and (iii) the promissory notes
and any other instruments evidencing such debt securities (the "Pledged Debt
Securities"), (c) all other property that may be delivered to and held by the
Collateral Agent pursuant to the terms of this Section 3.01, (d) subject to
Section 3.06, all payments of principal or interest, dividends, cash,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of, in exchange for or upon the conversion of,
and all other Proceeds received in respect of, the securities referred to in
clauses (a) and (b) above, (e) subject to Section 3.06, all rights and
privileges of such Grantor with respect to the securities and other property
referred to in clauses (a), (b), (c) and (d) above, and (f) all Proceeds of any
of the foregoing (the items referred to in clauses (a) through (f) above being
collectively referred to as the "Pledged Collateral").
TO HAVE AND TO HOLD the Pledged Collateral, together with all right,
title, interest, powers, privileges and preferences pertaining or incidental
thereto, unto the Collateral Agent, its successors and assigns, for the ratable
benefit of the Secured Parties, forever; subject, however, to the terms,
covenants and conditions hereinafter set forth.
SECTION 3.02. Delivery of the Pledged Collateral. (a) Each Grantor
agrees promptly to deliver or cause to be delivered to the Collateral Agent any
and all certificates or other instruments evidencing any Pledged Securities.
(b) Each Grantor will cause any Indebtedness for borrowed money owed
to such Grantor by any Person to be evidenced by a duly executed promissory note
that is pledged and delivered to the Collateral Agent pursuant to the terms
hereof, provided that the foregoing shall not apply to any Indebtedness owed to
any Grantor by any Person (other than another Grantor) in an amount less than
$500,000.
(c) Upon delivery to the Collateral Agent, (i) any Pledged
Securities shall be accompanied by undated stock powers duly executed in blank
or other undated instruments of transfer reasonably satisfactory to the
Collateral Agent, duly executed in blank, and by such other instruments and
documents as the Collateral Agent may reasonably request and (ii) all other
property comprising part of the Pledged Collateral shall be accompanied by
proper instruments of assignment duly executed by the applicable Grantor and
such other instruments or documents as the Collateral Agent may reasonably
request. Each delivery of Pledged Securities shall be accompanied by a schedule
describing such Pledged Securities, which schedule shall be attached hereto as
an amended and restated Schedule II and made a part hereof, provided that
failure to attach any such schedule hereto shall not affect the validity of such
pledge of such Pledged Securities. Each schedule so delivered shall supplement
any prior schedules so delivered.
SECTION 3.03. Representations, Warranties and Covenants. The
Grantors jointly and severally represent, warrant and covenant to and with the
Collateral Agent, for the benefit of the Secured Parties, that:
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(a) Schedule II correctly sets forth the percentage of the issued
and outstanding shares (or units or other comparable measure) of each
class of the Equity Interests of the issuer thereof represented by such
Pledged Stock (as of the date of such Pledge) and includes all Equity
Interests, debt securities and promissory notes required to be pledged
hereunder in order to satisfy the Collateral and Guarantee Requirement;
(b) the Pledged Stock and, to the best of each Grantor's knowledge,
the Pledged Debt Securities have been duly and validly authorized and
issued by the issuers thereof and (i) in the case of Pledged Stock, are
fully paid and nonassessable and (ii) in the case of Pledged Debt
Securities, to the best of each Grantor's knowledge, are legal, valid and
binding obligations of the issuers thereof and there exists no defense,
offset or counterclaim to any obligation of the maker or issuer of any
Pledged Debt Securities;
(c) except for the security interests granted hereunder, each of the
Grantors (i) is and, subject to any transfers made in compliance with the
Credit Agreement, will continue to be the direct owner, beneficially and
of record, of the Pledged Securities indicated on Schedule II as owned by
such Grantor, (ii) holds the same free and clear of all Liens, other than
(A) Liens created by this Agreement, (B) other Liens not prohibited by
Section 6.02 of the Credit Agreement and (C) transfers made in compliance
with the Credit Agreement, (iii) will make no assignment, pledge,
hypothecation or transfer of, or create or permit to exist any security
interest in or other Lien on, the Pledged Collateral, other than (A) Liens
created by this Agreement, (B) other Liens not prohibited by Section 6.02
of the Credit Agreement and (C) transfers made in compliance with the
Credit Agreement and (iv) will defend its title or interest thereto or
therein against any and all Liens (other than the Lien created by this
Agreement and Permitted Encumbrances), however arising, of all Persons
whomsoever;
(d) except for restrictions and limitations imposed by the Loan
Documents or securities laws generally, the Pledged Collateral is and will
continue to be freely transferable and assignable, and none of the Pledged
Collateral is or will be subject to any option, right of first refusal,
shareholders agreement, charter or by-law provisions or contractual
restriction of any nature that might prohibit, impair, delay or otherwise
affect the pledge of such Pledged Collateral hereunder, the sale or
disposition thereof pursuant hereto or the exercise by the Collateral
Agent of rights and remedies hereunder;
(e) each of the Grantors has the power and authority to pledge the
Pledged Collateral pledged by it hereunder in the manner hereby done or
contemplated;
(f) no consent or approval of any Governmental Authority, any
securities exchange or any other Person was or is necessary to the
validity of the pledge effected hereby (other than such as have been
obtained and are in full force and effect);
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(g) by virtue of the execution and delivery by the Grantors of this
Agreement, when any Pledged Securities are delivered to the Collateral
Agent in accordance with this Agreement, the Collateral Agent will obtain,
for the benefit of the Secured Parties, a legal, valid and perfected first
priority lien upon and security interest in such Pledged Securities as
security for the payment and performance of the Obligations; and
(h) the pledge effected hereby is effective to vest in the
Collateral Agent, for the benefit of the Secured Parties, the rights of
the Collateral Agent in the Pledged Collateral as set forth herein.
SECTION 3.04. Certification of Limited Liability Company and Limited
Partnership Interests. Each interest in any limited liability company or limited
partnership controlled by any Grantor and pledged hereunder shall be represented
by a certificate and shall be a "security" within the meaning of Article 8 of
the applicable UCC.
SECTION 3.05. Registration in Nominee Name; Denominations. The
Collateral Agent, on behalf of the Secured Parties, shall have the right (in its
sole and absolute discretion) to hold the Pledged Securities in its own name as
pledgee, the name of its nominee (as pledgee or as sub-agent) or the name of the
applicable Grantor, endorsed or assigned in blank or in favor of the Collateral
Agent. Each Grantor will promptly give to the Collateral Agent copies of any
material notices or other communications received by it with respect to Pledged
Securities registered in the name of such Grantor. The Collateral Agent shall at
all times have the right to exchange the certificates representing Pledged
Securities for certificates of smaller or larger denominations for any purpose
consistent with this Agreement.
SECTION 3.06. Voting Rights; Dividends and Interest. (a) Unless and
until an Event of Default shall have occurred and be continuing and the
Collateral Agent shall have notified the Grantors that their rights under this
Section 3.06 are being suspended:
(i) Each Grantor shall be entitled to exercise any and all voting
and/or other consensual rights and powers inuring to an owner of Pledged
Securities or any part thereof for any purpose consistent with the terms
of this Agreement, the Credit Agreement and the other Loan Documents,
provided that such rights and powers shall not be exercised in any manner
that could materially and adversely affect the rights inuring to a holder
of any Pledged Securities or the rights and remedies of any of the
Collateral Agent or the other Secured Parties under this Agreement or the
Credit Agreement or any other Loan Document or the ability of the Secured
Parties to exercise the same.
(ii) The Collateral Agent shall execute and deliver to each Grantor,
or cause to be executed and delivered to such Grantor, all such proxies,
powers of attorney and other instruments as such Grantor may reasonably
request for the
11
purpose of enabling such Grantor to exercise the voting and/or consensual
rights and powers it is entitled to exercise pursuant to subparagraph (i)
above.
(iii) Each Grantor shall be entitled to receive and retain any and
all dividends, interest, principal and other distributions paid on or
distributed in respect of the Pledged Securities to the extent and only to
the extent that such dividends, interest, principal and other
distributions are permitted by, and otherwise paid or distributed in
accordance with, the terms and conditions of the Credit Agreement, the
other Loan Documents and applicable laws, provided that any noncash
dividends, interest, principal or other distributions that would
constitute Pledged Stock or Pledged Debt Securities, whether resulting
from a subdivision, combination or reclassification of the outstanding
Equity Interests of the issuer of any Pledged Securities or received in
exchange for Pledged Securities or any part thereof, or in redemption
thereof, or as a result of any merger, consolidation, acquisition or other
exchange of assets to which such issuer may be a party or otherwise, shall
be and become part of the Pledged Collateral, and, if received by any
Grantor, shall not be commingled by such Grantor with any of its other
funds or property but shall be held separate and apart therefrom, shall be
held in trust for the benefit of the Collateral Agent and the other
Secured Parties and shall be forthwith delivered to the Collateral Agent
in the same form as so received endorsed in a manner reasonably
satisfactory to the Collateral Agent.
(b) Upon the occurrence and during the continuance of an Event of
Default, after the Collateral Agent shall have notified the Grantors of the
suspension of their rights under paragraph (a)(iii) of this Section 3.06, then
all rights of any Grantor to dividends, interest, principal or other
distributions that such Grantor is authorized to receive pursuant to paragraph
(a)(iii) of this Section 3.06 shall cease, and all such rights shall thereupon
become vested in the Collateral Agent, which shall have the sole and exclusive
right and authority to receive and retain such dividends, interest, principal or
other distributions (except as provided in Section 6.08 of the Credit
Agreement). All dividends, interest, principal or other distributions received
by any Grantor contrary to the provisions of this Section 3.06 shall be held in
trust for the benefit of the Collateral Agent and the other Secured Parties,
shall be segregated from other property or funds of such Grantor and shall be
forthwith delivered to the Collateral Agent upon demand in the same form as so
received, endorsed in a manner reasonably satisfactory to the Collateral Agent.
Any and all money and other property paid over to or received by the Collateral
Agent pursuant to the provisions of this paragraph (b) shall be retained by the
Collateral Agent in an account to be established by the Collateral Agent upon
receipt of such money or other property and shall be applied in accordance with
the provisions of Section 5.02. After all Events of Default have been cured or
waived and the Borrower has delivered to the Collateral Agent a certificate to
that effect, the Collateral Agent shall promptly repay to each Grantor (without
interest) all dividends, interest, principal or other distributions that such
Grantor would otherwise be permitted to retain pursuant to the terms of
paragraph (a)(iii) of this Section 3.06 and that remain in such account.
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(c) Upon the occurrence and during the continuance of an Event of
Default, after the Collateral Agent shall have notified the Grantors of the
suspension of their rights under paragraph (a)(i) of this Section 3.06, then all
rights of any Grantor to exercise the voting and consensual rights and powers it
is entitled to exercise pursuant to paragraph (a)(i) of this Section 3.06, and
the obligations of the Collateral Agent under paragraph (a)(ii) of this Section
3.06, shall cease, and all such rights shall thereupon become vested in the
Collateral Agent, which shall have the sole and exclusive right and authority to
exercise such voting and consensual rights and powers, provided that, unless
otherwise directed by the Required Lenders, the Collateral Agent shall have the
right from time to time following and during the continuance of an Event of
Default to permit the Grantors to exercise such rights.
(d) Any notice given by the Collateral Agent to the Grantors
suspending their rights under paragraph (a) of this Section 3.06 (i) may be
given by telephone if promptly confirmed in writing, (ii) may be given to one or
more of the Grantors at the same or different times and (iii) may suspend the
rights of the Grantors under paragraph (a)(i) or paragraph (a)(iii) in part
without suspending all such rights (as specified by the Collateral Agent in its
sole and absolute discretion) and without waiving or otherwise affecting the
Collateral Agent's rights to give additional notices from time to time
suspending other rights so long as an Event of Default has occurred and is
continuing.
ARTICLE IV
Security Interests in Personal Property
SECTION 4.01.Security Interest. (a) As security for the payment or
performance, as the case may be, in full of the Obligations, each Grantor hereby
assigns and pledges to the Collateral Agent, its successors and assigns, for the
benefit of the Secured Parties, and hereby grants to the Collateral Agent, its
successors and assigns, for the benefit of the Secured Parties, a security
interest (the "Security Interest") in, all right, title or interest of such
Grantor in or to any and all of the following assets and properties now owned or
at any time hereafter acquired by such Grantor or in which such Grantor now has
or at any time in the future may acquire any right, title or interest
(collectively, the "Article 9 Collateral"):
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all cash and Deposit Accounts;
(iv) all Documents;
(v) all Equipment;
(vi) all General Intangibles;
(vii) all Instruments;
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(viii) all Inventory;
(ix) all Investment Property;
(x) all letter-of-credit rights;
(xi) all commercial tort claims specified on Schedule V;
(xii) all books and records pertaining to the Article 9 Collateral;
and
(xiii) to the extent not otherwise included, all Proceeds and
products of any and all of the foregoing and all collateral security and
guarantees given by any Person with respect to any of the foregoing;
provided that, notwithstanding the foregoing, Article 9 Collateral shall
not include (A) any asset of any Grantor that is subject to a Lien
permitted by Section 6.02(c) or (d) of the Credit Agreement, with respect
to which the Collateral Agent (for the benefit of the Lenders) is not
permitted to obtain a security interest by the terms of such Lien or (B)
any Collateral to the extent, but only to the extent, in which a security
interest is not permitted to be granted by any Grantor pursuant to
applicable law or is prohibited by, or constitutes a breach or default or
results in the termination of or requires any consent not obtained under,
any contract, license, agreement, instrument or other document evidencing
or giving rise to such asset or in the case of Investment Property,
Pledged Stock or Pledged Debt Securities, any applicable shareholder or
other agreement, except to the extent that such requirement of law or the
term in such contract, license, agreement, instrument or other document or
shareholder or similar agreement providing for such prohibition, breach,
default or termination or requiring such consent is ineffective under
applicable law (it being understood that in the case of this clause (B),
(1) the Grantor shall use its commercially reasonable efforts to permit
the grant of a security interest in any such Collateral pursuant to this
Agreement and (2) immediately upon the ineffectiveness, lapse, termination
or waiver of any such provision, a security interest in such Collateral
shall be assigned in accordance with this Section 4.01).
(b) Each Grantor hereby irrevocably authorizes the Collateral Agent
at any time and from time to time to file in any relevant jurisdiction any
initial financing statements (including fixture filings) with respect to the
Article 9 Collateral or any part thereof and amendments thereto that contain the
information required by Article 9 of the Uniform Commercial Code of each
applicable jurisdiction for the filing of any financing statement or amendment,
including (a) whether such Grantor is an organization, the type of organization
and any organizational identification number issued to such Grantor and (b) in
the case of a financing statement filed as a fixture filing or covering Article
9 Collateral constituting minerals or the like to be extracted or timber to be
cut, a sufficient description of the real property to which such Article 9
Collateral relates. Each Grantor agrees to provide such information to the
Collateral Agent promptly upon request.
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Each Grantor also ratifies its authorization for the Collateral
Agent to file in any relevant jurisdiction any initial financing statements or
amendments thereto if filed prior to the date hereof.
The Collateral Agent is further authorized to file with the
United States Patent and Trademark Office and United States Copyright Office (or
any successor office or any similar office in any other country) such documents
as may be necessary or advisable for the purpose of perfecting, confirming,
continuing, enforcing or protecting the Security Interest granted by each
Grantor, without the signature of any Grantor, and naming any Grantor or the
Grantors as debtors and the Collateral Agent as secured party.
(c) The Security Interest is granted as security only and shall not
subject the Collateral Agent or any other Secured Party to, or in any way alter
or modify, any obligation or liability of any Grantor with respect to or arising
out of the Article 9 Collateral.
SECTION 4.02. Representations and Warranties. The Grantors jointly
and severally represent and warrant to the Collateral Agent and the other
Secured Parties that:
(a) Each Grantor has (i) good and valid rights in and title to the
Article 9 Collateral with respect to which it has purported to grant a Security
Interest hereunder (except that, with respect to certain Trademarks as noted on
Schedule III, such right and title is subject to final recordation of changes in
title at the United States Patent and Trademark Office) and (ii) full power and
authority to grant to the Collateral Agent, for the benefit of the Secured
Parties, the Security Interest in such Article 9 Collateral (other than
Intellectual Property that does not constitute Article 9 Collateral pursuant to
the proviso to Section 4.01(a)) pursuant hereto and to execute, deliver and
perform its obligations in accordance with the terms of this Agreement, without
the consent or approval of any other Person other than any consent or approval
that has been obtained, including the consent or approval of any third party
required to be obtained to effect the assignment of such Grantor's rights and
interest in and title to any Copyright License, Patent License or Trademark
License to the Collateral Agent or its designee for the benefit of the Secured
Parties pursuant to Section 4.05(h).
(b) The Perfection Certificate has been duly prepared, completed and
executed and the information set forth therein, including the exact legal name
of each Grantor, is correct and complete as of the Effective Date. The Uniform
Commercial Code financing statements (including fixture filings, as applicable)
or other appropriate filings, recordings or registrations prepared by the
Collateral Agent based upon the information provided to the Collateral Agent in
the Perfection Certificate for filing in each governmental, municipal or other
office specified in Schedule 5 to the Perfection Certificate (or specified by
notice from the Borrower to the Collateral Agent after the Effective Date in the
case of filings, recordings or registrations required by Section 5.03(a) or 5.12
of the Credit Agreement), are all the filings, recordings and registrations
(other than filings required to be made in the United States Patent and
Trademark Office and the United States Copyright Office in order to perfect the
Security
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Interest in Article 9 Collateral consisting of United States Patents, Trademarks
and Copyrights) that are necessary to publish notice of and protect the validity
of and to establish a legal, valid and perfected security interest in favor of
the Collateral Agent (for the benefit of the Secured Parties) in respect of all
Article 9 Collateral in which the Security Interest may be perfected by filing,
recording or registration in the United States (or any political subdivision
thereof) and its territories and possessions, and no further or subsequent
filing, refiling, recording, rerecording, registration or reregistration is
necessary in any such jurisdiction, except as provided under applicable law with
respect to the filing of continuation statements. Each Grantor shall ensure that
a fully executed agreement containing a description of all Article 9 Collateral
consisting of Intellectual Property shall have been filed (i) within one month
after the execution of this Agreement with respect to United States Patents and
United States registered Trademarks (and Trademarks for which United States
registration applications are pending), (ii) within 10 days after the execution
of this Agreement with respect to United States registered Copyrights by the
United States Patent and Trademark Office and the United States Copyright
Office, respectively, pursuant to 35 U.S.C. Section 261, 15 U.S.C. Section 1060
or 17 U.S.C. Section 205 and the regulations thereunder, as applicable, and
(iii) otherwise as may be required pursuant to the Personal Property Security
Act or such other applicable legislation as in effect from time to time in
Canada (or any political subdivision thereof) and its territories and
possessions, to protect the validity of and to establish a legal, valid and
perfected security interest in favor of the Collateral Agent (for the benefit of
the Secured Parties) in respect of all Article 9 Collateral consisting of
Patents, Trademarks and Copyrights (A) solely in respect of clauses (i) and (ii)
above, in which a security interest may be perfected by filing, recording or
registration in the United States (or any political subdivision thereof) and its
territories and possessions and (B) solely in respect of clause (iii) above, in
which a security interest maybe perfected by filing, recording or registration
in Canada (or any political subdivision thereof) and its territories and
possessions and, in each case, no further or subsequent filing, refiling,
recording, rerecording, registration or reregistration is necessary (other than
such actions as are necessary to perfect the Security Interest with respect to
any Article 9 Collateral consisting of Patents, Trademarks and Copyrights (or
registration or application for registration thereof) acquired or developed
after the date hereof).
(c) The Security Interest constitutes (i) a legal and valid security
interest in all the Article 9 Collateral securing the payment and performance of
the Obligations, (ii) subject to the filings described in Section 4.02(b), a
perfected security interest in all Article 9 Collateral in which a security
interest may be perfected by filing, recording or registering a financing
statement or analogous document (A) in the United States (or any political
subdivision thereof) and its territories and possessions pursuant to the Uniform
Commercial Code or (B) in Canada (or any political subdivision thereof) and its
territories and possessions pursuant to the Personal Property Security Act or
such other applicable legislation as in effect from time to time in any
applicable province or jurisdiction of Canada and (iii) a security interest that
shall be perfected in all Article 9 Collateral in which a security interest may
be perfected upon the receipt and recording of this Agreement with (A) the
United States Patent and Trademark Office and the United States Copyright
Office, as applicable, within the three-month period (commencing as of the date
hereof) pursuant to 35 U.S.C. Section 261 or 15 U.S.C. Section 1060 or the one
month period
16
(commencing as of the date hereof) pursuant to 17 U.S.C. Section 205 and (B)
otherwise as may be required pursuant to the Personal Property Security Act or
such other applicable legislation as in effect from time to time in Canada (or
any political subdivision thereof) and its territories and possessions. The
Security Interest is and shall be prior to any other Lien on any of the Article
9 Collateral, other than (i) Liens permitted under Section 6.02 of the Credit
Agreement that have priority as a matter of law and (ii) Liens permitted under
Section 6.02 of the Credit Agreement that are expressly permitted to be prior to
the Security Interest pursuant to Section 6.02 of the Credit Agreement.
(d) The Article 9 Collateral is owned by the Grantors free and clear
of any Lien, except for Liens expressly permitted pursuant to Section 6.02 of
the Credit Agreement. None of the Grantors has filed or consented to the filing
of (i) any financing statement or analogous document under the Uniform
Commercial Code or any other applicable laws covering any Article 9 Collateral,
(ii) any assignment in which any Grantor assigns any Collateral or any security
agreement or similar instrument covering any Article 9 Collateral with the
United States Patent and Trademark Office or the United States Copyright Office
or (iii) any assignment in which any Grantor assigns any Article 9 Collateral or
any security agreement or similar instrument covering any Article 9 Collateral
with any foreign governmental, municipal or other office, which financing
statement or analogous document, assignment, security agreement or similar
instrument is still in effect, except, in each case, for Liens expressly
permitted pursuant to Section 6.02 of the Credit Agreement or assignments
expressly permitted pursuant to Section 6.05 of the Credit Agreement.
SECTION 4.03. Covenants. (a) Each Grantor agrees to maintain, at its
own cost and expense, such complete and accurate records with respect to the
Article 9 Collateral owned by it as is consistent with its current practices and
in accordance with such prudent and standard practices used in industries that
are the same as or similar to those in which such Grantor is engaged, but in any
event to include complete accounting records indicating all payments and
proceeds received with respect to any part of the Article 9 Collateral, and, at
such time or times as the Collateral Agent may reasonably request, promptly to
prepare and deliver to the Collateral Agent a duly certified schedule or
schedules in form and detail satisfactory to the Collateral Agent showing the
identity, amount and location of any and all Article 9 Collateral.
(b) Each Grantor shall, at its own expense, take any and all
reasonable actions necessary to defend title to the Article 9 Collateral against
all Persons and to defend the Security Interest of the Collateral Agent in the
Article 9 Collateral and the priority thereof against any Lien not expressly
permitted to be prior to the Security Interest pursuant to this Agreement.
(c) Each Grantor agrees, at its own expense, to execute,
acknowledge, deliver and cause to be duly filed all such further instruments and
documents and take all such actions as the Collateral Agent may from time to
time reasonably request to better assure, preserve, protect and perfect the
Security Interest and the rights and remedies created hereby, including the
payment of any fees and taxes required in connection with the execution and
delivery of this Agreement, the granting of the Security Interest and the
17
filing of any financing statements (including fixture filings) or other
documents in connection herewith or therewith. If any amount payable under or in
connection with any of the Article 9 Collateral shall be or become evidenced by
any promissory note or other instrument in excess of $500,000, such note or
instrument shall be promptly pledged and delivered to the Collateral Agent (for
the benefit of the Secured Parties), duly endorsed in a manner satisfactory to
the Collateral Agent.
Without limiting the generality of the foregoing, each Grantor
hereby authorizes the Collateral Agent, with prompt notice thereof to the
Grantors, to supplement this Agreement by supplementing Schedule III or adding
additional schedules hereto to specifically identify any asset or item that may
constitute Copyrights, Licenses, Patents or Trademarks (but only to the extent
such Intellectual Property would constitute Article 9 Collateral), provided that
any Grantor shall have the right, exercisable within 10 Business Days after it
has been notified by the Collateral Agent of the specific identification of such
Collateral, to advise the Collateral Agent in writing of any inaccuracy of the
representations and warranties made by such Grantor hereunder with respect to
such Collateral. Each Grantor agrees that it will use its commercially
reasonable efforts to take such action as shall be necessary in order that all
representations and warranties hereunder shall be true and correct with respect
to such Collateral within 30 days after the date it has been notified by the
Collateral Agent of the specific identification of such Collateral.
(d) The Collateral Agent and such Persons as the Collateral Agent
may reasonably designate shall have the right, at the Grantors' own cost and
expense upon reasonable prior notice (and only to the extent there is no
disruption of the business and operations of the Grantors), to inspect the
Article 9 Collateral, all records related thereto (and to make extracts and
copies from such records) and the premises upon which any of the Article 9
Collateral is located, to discuss the Grantors' affairs with the officers of the
Grantors and their independent accountants (so long as the Grantors shall be
provided the opportunity to participate in any discussions with such independent
accountants) and to verify under reasonable procedures, in accordance with
Section 5.03 of the Credit Agreement, the validity, amount, quality, quantity,
value, condition and status of, or any other matter relating to, the Article 9
Collateral, including, in the case of Accounts or other Article 9 Collateral in
the possession of any third person, during the continuance of an Event of
Default, by contacting Account Debtors or the third person possessing such
Article 9 Collateral for the purpose of making such a verification (so long as
the Collateral Agent provides the Grantors reasonable prior notice of its plans
to make such contacts). The Collateral Agent shall have the absolute right
(subject to any confidentiality restrictions set forth herein, in the Credit
Agreement or in any other Loan Document) to share any information it gains from
such inspection or verification with any Secured Party.
(e) At its option, the Collateral Agent may discharge past due
taxes, assessments, charges, fees, Liens, security interests or other
encumbrances at any time levied or placed on the Article 9 Collateral and not
permitted pursuant to Section 6.02 of the Credit Agreement, and may pay for the
maintenance and preservation of the Article 9 Collateral to the extent any
Grantor fails to do so as required by the Credit Agreement or
18
this Agreement, and each Grantor jointly and severally agrees to reimburse the
Collateral Agent on demand for any payment made or any expense incurred by the
Collateral Agent pursuant to the foregoing authorization, provided that nothing
in this paragraph shall be interpreted as excusing any Grantor from the
performance of, or imposing any obligation on the Collateral Agent or any
Secured Party to cure or perform, any covenants or other promises of any Grantor
with respect to taxes, assessments, charges, fees, Liens, security interests or
other encumbrances and maintenance as set forth herein or in the other Loan
Documents.
(f) If at any time any Grantor shall take a security interest in any
property of an Account Debtor or any other Person to secure payment and
performance of an Account, such Grantor shall promptly assign such security
interest to the Collateral Agent for the benefit of the Secured Parties. Such
assignment need not be filed of public record unless necessary to continue the
perfected status of the security interest against creditors of and transferees
from the Account Debtor or other Person granting the security interest.
(g) Each Grantor shall remain liable to observe and perform all the
conditions and obligations to be observed and performed by it under each
contract, agreement or instrument relating to the Article 9 Collateral, all in
accordance with the terms and conditions thereof, and each Grantor jointly and
severally agrees to indemnify and hold harmless the Collateral Agent and the
other Secured Parties from and against any and all liability for such
performance.
(h) None of the Grantors shall make or permit to be made an
assignment, pledge or hypothecation of the Article 9 Collateral or shall grant
any other Lien in respect of the Article 9 Collateral, except as permitted by
the Credit Agreement. None of the Grantors shall make or permit to be made any
transfer of the Article 9 Collateral and each Grantor shall remain at all times
in possession of the Article 9 Collateral owned by it, except that (x) if the
Collateral Agent shall notify the Grantors (which notice may be given by
telephone if promptly confirmed in writing) that an Event of Default shall have
occurred and be continuing, the Grantors may sell, convey, lease, assign,
transfer or otherwise dispose of (i) Inventory in the ordinary course of
business consistent with past practice and (ii) other Collateral which the
Grantor is already obligated to sell and (y) if the Collateral Agent shall have
not given notice to the Grantors (which notice may be given by telephone if
promptly confirmed in writing) that an Event of Default shall have occurred and
be continuing (or shall have rescinded all prior notices), the Grantors may use
and dispose of the Article 9 Collateral in any lawful manner not inconsistent
with the provisions of this Agreement, the Credit Agreement or any other Loan
Document. Without limiting the generality of the foregoing, if any Inventory is
at any time in the possession or control of any warehouseman, agent, bailee, or
processor, each Grantor agrees that it shall promptly notify the Collateral
Agent and, if requested by the Collateral Agent, shall promptly obtain a written
acknowledgement from such warehouseman, agent, bailee or processor, in form and
substance reasonably satisfactory to the Collateral Agent, that such
warehouseman, agent, bailee or processor holds such Inventory for the benefit of
the Collateral Agent and the other Secured Parties subject to the Security
Interest and shall act upon the instructions of the Collateral Agent without
further consent from the Grantor. The Collateral Agent agrees that it shall not
make any such request
19
unless an Event of Default has occurred and is continuing or would occur after
taking into account any action by the respective Grantor with respect to the
warehouseman, agent, bailee or processor. At the request of the Collateral
Agent, each Grantor will use its commercially reasonable efforts to obtain
waivers or consents to subordination with respect to any landlord's Liens that
may be applicable to the Collateral, in each case to the extent and in a manner
reasonably satisfactory to the Collateral Agent.
(i) None of the Grantors will, without the Collateral Agent's prior
written consent, grant any extension of the time of payment of any Accounts
included in the Article 9 Collateral, compromise, compound or settle the same
for less than the full amount thereof, release, wholly or partly, any Person
liable for the payment thereof or allow any credit or discount whatsoever
thereon, other than extensions, compromises, settlements, releases, credits or
discounts granted or made in the ordinary course of business and consistent with
its current practices and in accordance with such prudent and standard practice.
(j) The Grantors, at their own expense, shall maintain or cause to
be maintained insurance covering physical loss or damage to the Inventory and
Equipment in accordance with the requirements set forth in Schedule IV hereto
and Section 5.07 of the Credit Agreement. Each Grantor shall notify the
Collateral Agent immediately of any notice specified in paragraph (b) of
Schedule IV provided by any insurer to the Borrower. Each Grantor irrevocably
makes, constitutes and appoints the Collateral Agent (and all officers,
employees or agents designated by the Collateral Agent) as such Grantor's true
and lawful agent (and attorney-in-fact) for the purpose, during the continuance
of an Event of Default, of making, settling and adjusting claims in respect of
Article 9 Collateral under policies of insurance, endorsing the name of such
Grantor on any check, draft, instrument or other item of payment for the
proceeds of such policies of insurance and for making all determinations and
decisions with respect thereto. In the event that any Grantor at any time or
times shall fail to obtain or maintain any of the policies of insurance required
hereby or to pay any premium in whole or part relating thereto, the Collateral
Agent may, without waiving or releasing any obligation or liability of the
Grantors hereunder or any Event of Default, in its sole discretion, obtain and
maintain such policies of insurance and pay such premium and take any other
actions with respect thereto as the Collateral Agent deems advisable. All sums
disbursed by the Collateral Agent in connection with this paragraph, including
reasonable attorneys' fees, court costs, expenses and other charges relating
thereto, shall be payable, upon demand, by the Grantors to the Collateral Agent
and shall be additional Obligations secured hereby.
(k) Each Grantor shall maintain, in form and manner reasonably
satisfactory to the Collateral Agent, records of its Chattel Paper and its
books, records and documents evidencing or pertaining thereto.
SECTION 4.04. Other Actions. In order to further insure the
attachment, perfection and priority of, and the ability of the Collateral Agent
to enforce, the Security Interest, each Grantor agrees, in each case at such
Grantor's own expense, to take the following actions with respect to the
following Article 9 Collateral:
20
(a) Instruments. If any Grantor shall at any time hold or acquire
any Instruments with a value in excess of $500,000, such Grantor shall
forthwith endorse, assign and deliver the same to the Collateral Agent,
accompanied by such undated instruments of transfer or assignment duly
executed in blank as the Collateral Agent may from time to time reasonably
request.
(b) Deposit Accounts. With respect to each existing Deposit Account
maintained by each Grantor, within 90 days of the Effective Date (or such
later date as determined by the Collateral Agent in its sole discretion,
which shall in no event be later than 150 days from the Effective Date),
and with respect to each Deposit Account that any Grantor at any time
opens, within 60 days of the opening of such account, such Grantor shall,
either (i) cause the depositary bank to agree to comply with instructions
from the Collateral Agent to such depositary bank directing the
disposition of funds from time to time credited to such Deposit Account,
without further consent of such Grantor or any other Person, pursuant to
an agreement reasonably satisfactory to the Collateral Agent, or (ii)
arrange for the Collateral Agent to become the customer of the depositary
bank with respect to the Deposit Account, with the Grantor being
permitted, only with the consent of the Collateral Agent, to exercise
rights to withdraw funds from such Deposit Account. The Collateral Agent
agrees with each Grantor that the Collateral Agent shall not give any such
instructions or withhold any withdrawal rights from any Grantor unless an
Event of Default has occurred and is continuing, or, after giving effect
to any withdrawal, would occur. The provisions of this paragraph shall not
apply to (A) any Deposit Account for which any Grantor, the depositary
bank and the Collateral Agent have entered into a cash collateral
agreement specially negotiated among such Grantor, the depositary bank and
the Collateral Agent for the specific purpose set forth therein, (B)
Deposit Accounts for which the Collateral Agent is the depositary, (C) any
Deposit Account exclusively used for payroll, payroll taxes and other
employee wage and benefit payments to or for the Grantor's employees made
in the ordinary course of business, (D) any Deposit Account that is
exclusively used for disbursements made in the ordinary course of business
and (E) any Deposit Account opened and maintained by any Grantor in the
ordinary course of business in which not more than $100,000 is held at any
time, provided that the aggregate amount of funds maintained in all such
deposit accounts under this clause (E) shall not exceed $1,000,000 at any
time.
(c) Investment Property. Except to the extent otherwise provided in
Article III, if any Grantor shall at any time hold or acquire any
certificated securities, such Grantor shall forthwith endorse, assign and
deliver the same to the Collateral Agent, accompanied by such undated
instruments of transfer or assignment duly executed in blank as the
Collateral Agent may from time to time specify. If any securities now or
hereafter acquired by any Grantor are uncertificated and are issued to
such Grantor or its nominee directly by the issuer thereof, such Grantor
shall immediately notify the Collateral Agent thereof and, at the
Collateral Agent's request and option, pursuant to an agreement in form
and substance reasonably satisfactory to the Collateral Agent, either (i)
cause the issuer to agree to comply with instructions from the Collateral
Agent as to such
21
securities, without further consent of any Grantor or such nominee, or
(ii) arrange for the Collateral Agent to become the registered owner of
such securities. If any securities, whether certificated or
uncertificated, or other Investment Property now or hereafter acquired by
any Grantor are held by such Grantor or its nominee through a securities
intermediary or commodity intermediary, such Grantor shall immediately
notify the Collateral Agent thereof and, at the Collateral Agent's request
and option, pursuant to an agreement in form and substance reasonably
satisfactory to the Collateral Agent, either (i) cause such securities
intermediary or (as the case may be) commodity intermediary to agree to
comply with entitlement orders or other instructions from the Collateral
Agent to such securities intermediary as to such security entitlements, or
(as the case may be) to apply any value distributed on account of any
commodity contract as directed by the Collateral Agent to such commodity
intermediary, in each case without further consent of any Grantor or such
nominee, or (ii) in the case of Financial Assets or other Investment
Property held through a securities intermediary, arrange for the
Collateral Agent to become the entitlement holder with respect to such
Investment Property, with the Grantor being permitted, only with the
consent of the Collateral Agent, to exercise rights to withdraw or
otherwise deal with such Investment Property. The Collateral Agent agrees
with each of the Grantors that the Collateral Agent shall not give any
such entitlement orders or instructions or directions to any such issuer,
securities intermediary or commodity intermediary, and shall not withhold
its consent to the exercise of any withdrawal or dealing rights by any
Grantor, unless an Event of Default has occurred and is continuing, or,
after giving effect to any such investment and withdrawal rights would
occur. The provisions of this paragraph shall not apply to any financial
assets credited to a securities account for which the Collateral Agent is
the securities intermediary.
(d) Electronic Chattel Paper and Transferable Records. If any
Grantor at any time holds or acquires an interest in any electronic
chattel paper or any "transferable record," as that term is defined in
Section 201 of the Federal Electronic Signatures in Global and National
Commerce Act, or in Section 16 of the Uniform Electronic Transactions Act
as in effect in any relevant jurisdiction, such Grantor shall promptly
notify the Collateral Agent thereof and, at the request of the Collateral
Agent, shall take such action as the Collateral Agent may reasonably
request to vest in the Collateral Agent control under New York UCC Section
9-105 of such electronic chattel paper or control under Section 201 of the
Federal Electronic Signatures in Global and National Commerce Act or, as
the case may be, Section 16 of the Uniform Electronic Transactions Act, as
so in effect in such jurisdiction, of such transferable record. The
Collateral Agent agrees with such Grantor that the Collateral Agent will
arrange, pursuant to procedures reasonably satisfactory to the Collateral
Agent and so long as such procedures will not result in the Collateral
Agent's loss of control, for the Grantor to make alterations to the
electronic chattel paper or transferable record permitted under UCC
Section 9-105 or, as the case may be, Section 201 of the Federal
Electronic Signatures in Global and National Commerce Act or Section 16 of
the Uniform Electronic Transactions Act for a party in control to allow
without loss of control, unless an Event of Default has occurred and is
continuing or would
22
occur after taking into account any action by such Grantor with respect to
such electronic chattel paper or transferable record. The provisions of
this paragraph shall not apply to any electronic chattel paper or any
"transferable record" unless the value of any such electronic chattel
paper or "transferable record" exceeds $300,000.
(d) Letter-of-Credit Rights. If any Grantor is at any time a
beneficiary under a letter of credit now or hereafter issued in favor of
such Grantor, such Grantor shall promptly notify the Collateral Agent
thereof and, at the request and option of the Collateral Agent, such
Grantor shall, pursuant to an agreement in form and substance reasonably
satisfactory to the Collateral Agent, either (i) arrange for the issuer
and any confirmer of such letter of credit to consent to an assignment to
the Collateral Agent of the proceeds of any drawing under such letter of
credit or (ii) arrange for the Collateral Agent to become the transferee
beneficiary of such letter of credit, with the Collateral Agent agreeing,
in each case, that the proceeds of any drawing under the letter of credit
are to be paid to the applicable Grantor unless an Event of Default has
occurred or is continuing. The provisions of this paragraph shall not
apply to any letter of credit unless the face amount of any such letter of
credit exceeds $300,000.
(f) Commercial Tort Claims. If any Grantor shall at any time hold or
acquire a commercial tort claim in an amount reasonably estimated to
exceed $500,000, such Grantor shall promptly notify the Collateral Agent
thereof in a writing signed by such Grantor including a summary
description of such claim and grant to the Collateral Agent for the
benefit of the Secured Parties in such writing a security interest therein
and in the proceeds thereof, all upon the terms of this Agreement, with
such writing to be in form and substance reasonably satisfactory to the
Collateral Agent.
SECTION 4.05.Covenants Regarding Patent, Trademark and Copyright
Collateral. (a) Each Grantor agrees that it will not, do any act or omit to do
any act (and will exercise commercially reasonable efforts to prevent its
licensees from doing any act or omitting to do any act) whereby any Patent that
is material to the conduct of the Grantors' business, taken as a whole, may
become invalidated or dedicated to the public, and agrees that it shall
continue, consistent with past practice, to mark any products covered by a
Patent with the relevant patent number as necessary and sufficient to establish
and preserve its rights under applicable patent laws, provided that this
provision shall cease to apply with respect to any Patent with a Fair Market
Carrying Value not in excess of $500,000 in the aggregate for each fiscal year,
provided further that in such event the Grantor shall give written notice to the
Collateral Agent identifying such Patent and indicating its Fair Market Carrying
Value after the end of each fiscal quarter at the time the Borrower furnishes to
the Administrative Agent the reports required by Section 5.01(b).
(b) Each Grantor (either itself or through its licensees or its
sublicensees) will, for each Trademark material to the conduct of the Grantors'
business, taken as a whole, (i) maintain such Trademark, consistent with past
practice, in full force free from
23
any claim of abandonment or invalidity for non-use, (ii) maintain the quality of
products and services offered under such Trademark, (iii) display such
Trademark, if registered, consistent with past practice, with notice of Federal
or foreign registration to the extent necessary and sufficient to establish and
preserve its maximum rights under applicable law and (iv) not knowingly use or
knowingly permit the use of such Trademark in violation of any third party
rights, provided that this provision shall cease to apply with respect to any
Trademark with a Fair Market Carrying Value not in excess of $500,000 in the
aggregate for each fiscal year, provided further that in such event the Grantor
shall give written notice to the Collateral Agent identifying such Trademark and
indicating its Fair Market Carrying Value after the end of each fiscal quarater
at the time the borrower furnishes to the Administrative Agent the reports
required by Section 5.01(b).
(c) Each Grantor (either itself or through its licensees or
sublicensees) will, consistent with past practice, for each work covered by a
material Copyright, continue to mark such work with appropriate copyright notice
as necessary and sufficient to establish and preserve its rights under
applicable copyright laws.
(d) Each Grantor shall notify the Collateral Agent promptly if it
knows or has reason to know that any Patent, Trademark or Copyright material to
the conduct of the Grantors' business, taken as a whole, may become abandoned,
lost or dedicated to the public, or of any materially adverse determination or
material development (including the institution of, or any such determination or
development in, any proceeding in the United States Patent and Trademark Office,
United States Copyright Office or any court or similar office of any country)
regarding such Grantor's ownership of any such Patent, Trademark or Copyright,
its right to register the same, or its right to keep and maintain the same.
(e) In the event that any Grantor, either itself or through any
agent, employee, licensee or designee, files an application for any Patent,
Trademark or Copyright (or for the registration of any Trademark or Copyright)
with the United States Patent and Trademark Office, the United States Copyright
Office or any office or agency in any political subdivision of the United States
or in any other country or any political subdivision thereof, it shall inform
the Collateral Agent within 10 Business Days of such application, and, upon
request of the Collateral Agent, it shall execute and deliver any and all
agreements, instruments, documents and papers as the Collateral Agent may
reasonably request to evidence the Security Interest in such Patent, Trademark
or Copyright.
(f) Each Grantor will take all necessary steps that are consistent
with the practice in any proceeding before the United States Patent and
Trademark Office, the United States Copyright Office or any office or agency in
any political subdivision of the United States or in any other country or any
political subdivision thereof, to maintain and pursue each application relating
to any material Patents, Trademarks and/or Copyrights (and to obtain the
relevant grant or registration) and to maintain each issued Patent and each
registration of the Trademarks and Copyrights that is material to the conduct of
the Grantors' business, taken as a whole, including timely filings of
applications for renewal, affidavits of use, affidavits of incontestability and
payment of maintenance fees, and, if
24
consistent with good business judgment, to initiate opposition, interference and
cancelation proceedings against third parties.
(g) In the event that any Grantor has reason to believe that any
Article 9 Collateral consisting of a Patent, Trademark or Copyright material to
the conduct of the Grantors' business, taken as a whole, has been or is about to
be infringed, misappropriated or diluted by a third party, such Grantor promptly
shall notify the Collateral Agent and shall, if consistent with good business
judgment, promptly sue for infringement, misappropriation or dilution and to
recover any and all damages for such infringement, misappropriation or dilution,
and take such other reasonable actions as are appropriate under the
circumstances to protect such Article 9 Collateral.
(g) Upon and during the continuance of an Event of Default and after
notice from the Collateral Agent, each Grantor shall use its reasonable best
efforts to obtain all requisite consents or approvals by the licensor of each
Copyright License, Patent License or Trademark License to effect the assignment
of all such Grantor's right, title and interest thereunder to the Collateral
Agent or its designee for the benefit of the Secured Parties.
SECTION 4.06. Deposit and Concentration Accounts.
(a) At any time after the Effective Date, at the Collateral Agent's
request, the Grantors shall establish the Concentration Account. Effective upon
notice to the Grantors from the Collateral Agent after the occurrence and during
the continuance of an Event of Default (which notice may be given by telephone
if promptly confirmed in writing), the Collateral Agent may instruct each
depositary bank to transfer immediately all funds held in each deposit account
of the Grantors to the Concentration Account. Each Grantor irrevocably
authorizes the Collateral Agent to notify each depositary bank (i) of the
occurrence of an Event of Default and (ii) of the matters referred to in this
Section 4.06.
(b) The Concentration Account shall remain under the sole dominion
and control of the Collateral Agent. Each Grantor acknowledges and agrees that
(i) such Grantor shall have no right of withdrawal from the Concentration
Account, (ii) the funds on deposit in the Concentration Account shall continue
to be collateral security for all of the Obligations and (iii) at the Collateral
Agent's election, the funds on deposit in the Concentration Account may be
applied as provided in Section 5.02.
SECTION 4.07. Collections. (a) Each Grantor agrees (i) upon notice
to the Grantors from the Collateral Agent after the occurrence and during the
continuance of an Event of Default (which notice may be given by telephone if
promptly confirmed in writing), to notify and direct promptly each Account
Debtor and every other Person obligated to make payments with respect to
Accounts or Inventory to make all such payments directly to the Concentration
Account, (ii) to use all reasonable efforts to cause each Account Debtor and
every other Person identified in clause (i) above to make all payments with
respect to Accounts or Inventory to the deposit accounts maintained by such
Grantor in accordance with Section 4.04(b) or, upon the occurrence or during the
25
continuance of an Event of Default, directly to the Concentration Account, (iii)
promptly to deposit all payments received by it with respect to Accounts or
Inventory, whether in the form of cash, checks, notes, drafts, bills of
exchange, money orders or otherwise, in such deposit accounts or, upon the
occurrence or during the continuance of an Event of Default, directly to the
Concentration Account, in precisely the form in which received (but with any
endorsements of such Grantor necessary for deposit or collection), and until
they are so deposited such payments shall be held in trust by such Grantor for
and as the property of the Collateral Agent and (iv) that, upon the occurrence
or during the continuance of an Event of Default, the Collateral Agent may, at
its election, notify directly and direct each Account Debtor and every other
Person identified in clause (i) above to make all payments with respect to
Accounts or Inventory directly to the Concentration Account.
(b) Without the prior written consent of the Collateral Agent, no
Grantor shall, in a manner adverse to the Lenders, change the general
instructions given to Account Debtors in respect of payment on Accounts to be
deposited in the Concentration Account. Until the Collateral Agent shall have
advised the Grantors to the contrary, each Grantor shall, and the Collateral
Agent hereby authorizes each Grantor to, enforce and collect all amounts owing
on the Inventory and Accounts, for the benefit and on behalf of the Collateral
Agent and the other Secured Parties, provided that such privilege may at the
option of the Collateral Agent be terminated upon the occurrence and during the
continuance of any Event of Default.
ARTICLE V
Remedies
SECTION 5.01. Remedies Upon Default. Upon the occurrence and during
the continuance of an Event of Default, each Grantor agrees to deliver each item
of Collateral to the Collateral Agent on demand, and it is agreed that the
Collateral Agent shall have the right to take any of or all the following
actions at the same or different times: (a) with respect to any Article 9
Collateral consisting of Intellectual Property, on demand, to cause the Security
Interest to become an assignment, transfer and conveyance of any of or all such
Article 9 Collateral by the applicable Grantors to the Collateral Agent (for the
benefit of the Secured Parties), or to license or sublicense, whether general,
special or otherwise, and whether on an exclusive or nonexclusive basis, any
such Article 9 Collateral throughout the world on such terms and conditions and
in such manner as the Collateral Agent shall determine (other than in violation
of any then-existing licensing arrangements to the extent that waivers cannot be
obtained), subject to the reasonable quality control provisions of such Grantor,
and (b) with or without legal process and with or without prior notice or demand
for performance, to take possession of the Article 9 Collateral and without
liability for trespass to enter any premises where the Article 9 Collateral may
be located for the purpose of taking possession of or removing the Article 9
Collateral and, generally, to exercise any and all rights afforded to a secured
party under the Uniform Commercial Code or other applicable law. Without
limiting the generality of the foregoing, each Grantor agrees that the
Collateral Agent shall have the right, subject to the mandatory requirements of
26
applicable law, to sell or otherwise dispose of all or any part of the
Collateral at a public or private sale or at any broker's board or on any
securities exchange, for cash, upon credit or for future delivery as the
Collateral Agent shall deem appropriate. The Collateral Agent shall be
authorized at any such sale of securities (if it deems it advisable to do so) to
restrict the prospective bidders or purchasers to Persons who will represent and
agree that they are purchasing the Collateral for their own account for
investment and not with a view to the distribution or sale thereof, and upon
consummation of any such sale the Collateral Agent shall have the right to
assign, transfer and deliver to the purchaser or purchasers thereof the
Collateral so sold. Each such purchaser at any sale of Collateral shall hold the
property sold absolutely, free from any claim or right on the part of any
Grantor, and each Grantor hereby waives (to the extent permitted by law) all
rights of redemption, stay and appraisal which such Grantor now has or may at
any time in the future have under any rule of law or statute now existing or
hereafter enacted.
The Collateral Agent shall give the applicable Grantors 10 days'
written notice (which each Grantor agrees is reasonable notice within the
meaning of Section 9-611 of the New York UCC or its equivalent in other
jurisdictions) of the Collateral Agent's intention to make any sale of
Collateral. Such notice, in the case of a public sale, shall state the time and
place for such sale and, in the case of a sale at a broker's board or on a
securities exchange, shall state the board or exchange at which such sale is to
be made and the day on which the Collateral, or portion thereof, will first be
offered for sale at such board or exchange. Any such public sale shall be held
at such time or times within ordinary business hours and at such place or places
as the Collateral Agent may fix and state in the notice (if any) of such sale.
At any such sale, the Collateral , or portion thereof, to be sold may be sold in
one lot as an entirety or in separate parcels, as the Collateral Agent may (in
its sole and absolute discretion) determine. The Collateral Agent shall not be
obligated to make any sale of any Collateral if it shall determine not to do so,
regardless of the fact that notice of sale of such Collateral shall have been
given. The Collateral Agent may, without notice or publication, adjourn any
public or private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for sale, and such sale may, without
further notice, be made at the time and place to which the same was so
adjourned. In case any sale of all or any part of the Collateral is made on
credit or for future delivery, the Collateral so sold may be retained by the
Collateral Agent until the sale price is paid by the purchaser or purchasers
thereof, but the Collateral Agent and the other Secured Parties shall not incur
any liability in case any such purchaser or purchasers shall fail to take up and
pay for the Collateral so sold and, in case of any such failure, such Collateral
may be sold again upon like notice. At any public (or, to the extent permitted
by law, private) sale made pursuant to this Agreement, any Secured Party may bid
for or purchase, free (to the extent permitted by law) from any right of
redemption, stay, valuation or appraisal on the part of any Grantor (all said
rights being also hereby waived and released to the extent permitted by law),
the Collateral or any part thereof offered for sale and may make payment on
account thereof by using any claim then due and payable to such Secured Party
from any Grantor as a credit against the purchase price (but in the case of such
payment, such Secured Party will promptly notify the Collateral Agent of the
amount of such credit), and such Secured Party may, upon compliance with the
terms of sale, hold, retain and dispose of such property without
27
further accountability to any Grantor therefor. For purposes hereof, a written
agreement to purchase the Collateral or any portion thereof shall be treated as
a sale thereof; the Collateral Agent shall be free to carry out such sale
pursuant to such agreement and no Grantor shall be entitled to the return of the
Collateral or any portion thereof subject thereto, notwithstanding the fact that
after the Collateral Agent shall have entered into such an agreement all Events
of Default shall have been remedied and the Obligations paid in full. As an
alternative to exercising the power of sale herein conferred upon it, the
Collateral Agent may proceed by a suit or suits at law or in equity to foreclose
this Agreement and to sell the Collateral or any portion thereof pursuant to a
judgment or decree of a court or courts having competent jurisdiction or
pursuant to a proceeding by a court-appointed receiver. Any sale pursuant to the
provisions of this Section 5.01 shall be deemed to conform to the commercially
reasonable standards as provided in Section 9-610(b) of the New York UCC or its
equivalent in other jurisdictions.
SECTION 5.02. Application of Proceeds. The proceeds of any
collection or sale of Collateral, including any Collateral consisting of cash,
shall be applied as follows:
FIRST, to the payment of all costs and expenses incurred by the
Collateral Agent in connection with such collection or sale or otherwise
in connection with this Agreement, any other Loan Document or any of the
Obligations, including all court costs and the fees and expenses of its
agents and legal counsel, the repayment of all advances made by the
Collateral Agent hereunder or under any other Loan Document on behalf of
any Grantor and any other costs or expenses incurred in connection with
the exercise of any right or remedy hereunder or under any other Loan
Document;
SECOND, to the payment in full of the Obligations (the amounts so
applied to be distributed among the Secured Parties pro rata in accordance
with the amounts of the Obligations owed to them on the date of any such
distribution); and
THIRD, to the Grantors, their successors or assigns, or as a court
of competent jurisdiction may otherwise direct.
The Collateral Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of Collateral by the Collateral Agent (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the Collateral Agent or of the officer making the sale shall be a
sufficient discharge to the purchaser or purchasers of the Collateral so sold
and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the Collateral Agent
or such officer or be answerable in any way for the misapplication thereof.
SECTION 5.03. Grant of License to Use Intellectual Property. For the
purpose of enabling the Collateral Agent to exercise rights and remedies under
this Agreement at such time as the Collateral Agent shall be lawfully entitled
to exercise such
28
rights and remedies, each Grantor hereby grants to the Collateral Agent an
irrevocable, nonexclusive license (exercisable without payment of royalty or
other compensation to the Grantors) to use, license or sublicense any of the
Article 9 Collateral consisting of Intellectual Property now owned or hereafter
acquired by such Grantor, and wherever the same may be located, and including in
such license reasonable access to all media in which any of the licensed items
may be recorded or stored and to all computer software and programs used for the
compilation or printout thereof, subject to the reasonable quality control
provisions of such Grantor. The use of such license by the Collateral Agent may
be exercised, at the option of the Collateral Agent, upon the occurrence and
during the continuation of an Event of Default, provided that any license,
sublicense or other transaction entered into by the Collateral Agent in
accordance herewith shall be binding upon the Grantors notwithstanding any
subsequent cure of an Event of Default.
SECTION 5.04. Securities Act. In view of the position of the
Grantors in relation to the Pledged Collateral, or because of other current or
future circumstances, a question may arise under the Securities Act of 1933, as
now or hereafter in effect, or any similar statute hereafter enacted analogous
in purpose or effect (such Act and any such similar statute as from time to time
in effect being called the "Federal Securities Laws") with respect to any
disposition of the Pledged Collateral permitted hereunder. Each Grantor
understands that compliance with the Federal Securities Laws might very strictly
limit the course of conduct of the Collateral Agent if the Collateral Agent were
to attempt to dispose of all or any part of the Pledged Collateral, and might
also limit the extent to which or the manner in which any subsequent transferee
of any Pledged Collateral could dispose of the same. Similarly, there may be
other legal restrictions or limitations affecting the Collateral Agent in any
attempt to dispose of all or part of the Pledged Collateral under applicable
Blue Sky or other state securities laws or similar laws analogous in purpose or
effect. Each Grantor recognizes that in light of such restrictions and
limitations the Collateral Agent may, with respect to any sale of the Pledged
Collateral, limit the purchasers to those who will agree, among other things, to
acquire such Pledged Collateral for their own account, for investment, and not
with a view to the distribution or resale thereof. Each Grantor acknowledges and
agrees that in light of such restrictions and limitations, the Collateral Agent,
in its sole and absolute discretion (a) may proceed to make such a sale whether
or not a registration statement for the purpose of registering such Pledged
Collateral or part thereof shall have been filed under the Federal Securities
Laws and (b) may approach and negotiate with a single potential purchaser to
effect such sale. Each Grantor acknowledges and agrees that any such sale might
result in prices and other terms less favorable to the seller than if such sale
were a public sale without such restrictions. In the event of any such sale, the
Collateral Agent and the other Secured Parties shall incur no responsibility or
liability for a sale of all or any part of the Pledged Collateral at a price
that the Collateral Agent, in its sole and absolute discretion, may in good
faith deem reasonable under the circumstances, notwithstanding the possibility
that a substantially higher price might have been realized if the sale were
deferred until after registration as aforesaid or if more than a single
purchaser were approached. The provisions of this Section 5.04 will apply
notwithstanding the existence of a public or private market upon which the
quotations or sales prices may exceed substantially the price at which the
Collateral Agent sells.
29
SECTION 5.05. Registration. Each Grantor agrees that, upon the
occurrence and during the continuance of an Event of Default, if for any reason
the Collateral Agent desires to sell any of the Pledged Collateral at a public
sale, it will, at any time and from time to time, upon the written request of
the Collateral Agent, use its best efforts to take or to cause the issuer of
such Pledged Collateral to take such action and prepare, distribute and/or file
such documents, as are required or advisable in the reasonable opinion of
counsel for the Collateral Agent to permit the public sale of such Pledged
Collateral. Each Grantor further agrees to indemnify, defend and hold harmless
the Collateral Agent, each other Secured Party, any underwriter and their
respective officers, directors, affiliates and controlling persons from and
against all loss, liability, expenses, costs of counsel (including, without
limitation, reasonable fees and expenses to the Collateral Agent of legal
counsel), and claims (including the costs of investigation) that they may incur
insofar as such loss, liability, expense or claim arises out of or is based upon
any alleged untrue statement of a material fact contained in any prospectus (or
any amendment or supplement thereto) or in any notification or offering
circular, or arises out of or is based upon any alleged omission to state a
material fact required to be stated therein or necessary to make the statements
in any thereof not misleading, except insofar as the same may have been caused
by any untrue statement or omission based upon information furnished in writing
to such Grantor or the issuer of such Pledged Collateral by the Collateral Agent
or any other Secured Party expressly for use therein. Each Grantor further
agrees, upon such written request referred to above, to use its best efforts to
qualify, file or register, or cause the issuer of such Pledged Collateral to
qualify, file or register, any of the Pledged Collateral under the Blue Sky or
other securities laws of such states as may be requested by the Collateral Agent
and keep effective, or cause to be kept effective, all such qualifications,
filings or registrations. Each Grantor will bear all costs and expenses of
carrying out its obligations under this Section 5.05. Each Grantor acknowledges
that there is no adequate remedy at law for failure by it to comply with the
provisions of this Section 5.05 and that such failure would not be adequately
compensable in damages, and therefore agrees that its agreements contained in
this Section 5.05 may be specifically enforced.
ARTICLE VI
Indemnity, Subrogation and Subordination
SECTION 6.01. Indemnity and Subrogation. In addition to all such
rights of indemnity and subrogation as the Guarantors may have under applicable
law (but subject to Section 6.03), the Borrower agrees that (a) in the event a
payment of an obligation shall be made by any Guarantor under this Agreement,
the Borrower shall indemnify such Guarantor for the full amount of such payment
and such Guarantor shall be subrogated to the rights of the Person to whom such
payment shall have been made to the extent of such payment and (b) in the event
any assets of any Grantor shall be sold pursuant to this Agreement or any other
Security Document to satisfy in whole or in part an obligation owed to any
Secured Party, the Borrower shall indemnify such Grantor in an amount equal to
the greater of the book value or the fair market value of the assets so sold.
30
SECTION 6.02. Contribution and Subrogation. Each Guarantor and
Grantor (a "Contributing Party") agrees (subject to Section 6.03) that, in the
event a payment shall be made by any other Guarantor hereunder in respect of any
Obligation or assets of any other Grantor shall be sold pursuant to any Security
Document to satisfy any Obligation owed to any Secured Party and such other
Guarantor or Grantor (the "Claiming Party") shall not have been fully
indemnified by the Borrower as provided in Section 6.01, the Contributing Party
shall indemnify the Claiming Party in an amount equal to the amount of such
payment or the greater of the book value or the fair market value of such
assets, as the case may be, in each case multiplied by a fraction of which the
numerator shall be the net worth of the Contributing Party on the date hereof
and the denominator shall be the aggregate net worth of all the Guarantors and
Grantors on the date hereof (or, in the case of any Guarantor or Grantor
becoming a party hereto pursuant to Section 7.14, the date of the supplement
hereto executed and delivered by such Guarantor or Grantor). Any Contributing
Party making any payment to a Claiming Party pursuant to this Section 6.02 shall
be subrogated to the rights of such Claiming Party under Section 6.01 to the
extent of such payment.
SECTION 6.03. Subordination. (a) Notwithstanding any provision of
this Agreement to the contrary, all rights of the Guarantors and Grantors under
Sections 6.01 and 6.02 and all other rights of indemnity, contribution or
subrogation under applicable law or otherwise shall be fully subordinated to the
indefeasible payment in full in cash of the Obligations (except for contingent
indemnities and cost and expense reimbursement obligations to the extent no
claim has been made). No failure on the part of the Borrower or any Guarantor or
Grantor to make the payments required by Sections 6.01 and 6.02 (or any other
payments required under applicable law or otherwise) shall in any respect limit
the obligations and liabilities of any Guarantor or Grantor with respect to its
obligations hereunder, and each Guarantor and Grantor shall remain liable for
the full amount of the obligations of such Guarantor or Grantor hereunder.
(b) Each Guarantor and Grantor hereby agrees that all Indebtedness
and other monetary obligations owed by it to any other Guarantor, Grantor or any
other Subsidiary shall be fully subordinated to the indefeasible payment in full
in cash of the Obligations (except for contingent indemnities and cost and
expense reimbursement obligations to the extent no claim has been made).
ARTICLE VII
Miscellaneous
SECTION 7.01. Notices. All communications and notices hereunder
shall (except as otherwise expressly permitted herein) be in writing and given
as provided in Section 9.01 of the Credit Agreement. All communications and
notices hereunder to any Subsidiary Party shall be given to it in care of the
Borrower as provided in Section 9.01 of the Credit Agreement.
31
SECTION 7.02. Waivers; Amendment. (a) No failure or delay by the
Collateral Agent, the Issuing Banks or any Lender in exercising any right or
power hereunder or under any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Collateral Agent, the Issuing
Banks and the Lenders hereunder and under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provision of this Agreement or consent to any
departure by any Loan Party therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) of this Section 7.02, and then such
waiver or consent shall be effective only in the specific instance and for the
purpose for which given. Without limiting the generality of the foregoing, the
making of a Loan or issuance of a Letter of Credit shall not be construed as a
waiver of any Default, regardless of whether the Collateral Agent, any Lender or
any Issuing Bank may have had notice or knowledge of such Default at the time.
No notice or demand on any Loan Party in any case shall entitle any Loan Party
to any other or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Collateral Agent and the Loan Party or Loan Parties with
respect to which such waiver, amendment or modification is to apply, subject to
any consent required in accordance with Section 9.02 of the Credit Agreement.
SECTION 7.03. Collateral Agent's Fees and Expenses; Indemnification.
(a) The parties hereto agree that the Collateral Agent shall be entitled to
reimbursement of its expenses incurred hereunder as provided in Section 9.03 of
the Credit Agreement.
(b) Without limitation of its indemnification obligations under the
other Loan Documents, each Grantor and each Guarantor jointly and severally
agrees to indemnify the Collateral Agent and the other Indemnitees (as defined
in Section 9.03 of the Credit Agreement) against, and hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities and related
expenses, including the fees, charges and disbursements of any counsel for any
Indemnitee, incurred by or asserted against any Indemnitee arising out of, in
connection with, or as a result of, the execution, delivery or performance of
this Agreement or any claim, litigation, investigation or proceeding relating to
any of the foregoing, or to the Collateral, whether or not any Indemnitee is a
party thereto, provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related expenses are determined by a court of competent jurisdiction by final
and nonappealable judgment to have resulted from the gross negligence or wilful
misconduct of such Indemnitee or any of its Related Parties. To the extent
permitted by applicable law, each Grantor and each Guarantor shall not assert,
and hereby waives, any claims against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this
32
Agreement or any agreement or instrument contemplated hereby, the Transactions,
any Loan or Letter of Credit or the use of proceeds thereof.
(c) Any such amounts payable as provided hereunder shall be
additional Obligations secured hereby and by the other Security Documents. The
provisions of this Section 7.03 shall remain operative and in full force and
effect regardless of the termination of this Agreement or any other Loan
Document, the consummation of the transactions contemplated hereby, the
repayment of any of the Obligations, the invalidity or unenforceability of any
term or provision of this Agreement or any other Loan Document, or any
investigation made by or on behalf of the Collateral Agent or any other Secured
Party. All amounts due under this Section 7.03 shall be payable on written
demand therefor.
SECTION 7.04. Successors and Assigns. Whenever in this Agreement any
of the parties hereto is referred to, such reference shall be deemed to include
the permitted successors and assigns of such party; and all covenants, promises
and agreements by or on behalf of any Guarantor, Grantor or the Collateral Agent
that are contained in this Agreement shall bind and inure to the benefit of
their respective successors and assigns and shall inure to the benefit of the
other Secured Parties and their respective successors and assigns.
SECTION 7.05. Survival of Agreement. All covenants, agreements,
representations and warranties made by the Loan Parties in the Loan Documents
and in the certificates or other instruments prepared or delivered in connection
with or pursuant to this Agreement or any other Loan Document shall be
considered to have been relied upon by the Lenders and shall survive the
execution and delivery of the Loan Documents and the making of any Loans and
issuance of any Letters of Credit, regardless of any investigation made by any
Lender or on its behalf and notwithstanding that the Collateral Agent, any
Issuing Bank or any Lender may have had notice or knowledge of any Default or
incorrect representation or warranty at the time any credit is extended under
the Credit Agreement, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any fee or any other amount
payable under (except for contingent indemnifies and cost and reimbursement
obligations to the extent no claim has been made) any Loan Document is
outstanding and unpaid or any Letter of Credit is outstanding and so long as the
Commitments have not expired or terminated.
SECTION 7.06. Counterparts; Effectiveness; Several Agreement. This
Agreement may be executed in counterparts, each of which shall constitute an
original but all of which when taken together shall constitute a single
contract, and shall become effective as provided in this Section 7.06. Delivery
of an executed signature page to this Agreement by facsimile transmission shall
be as effective as delivery of a manually signed counterpart of this Agreement.
This Agreement shall become effective as to any Loan Party when a counterpart
hereof executed on behalf of such Loan Party shall have been delivered to the
Collateral Agent and a counterpart hereof shall have been executed on behalf of
the Collateral Agent, and thereafter shall be binding upon such Loan Party and
the Collateral Agent and their respective permitted successors and assigns, and
shall inure to the benefit of such Loan Party, the Collateral Agent and the
other Secured Parties
33
and their respective successors and assigns, except that no Loan Party shall
have the right to assign or transfer its rights or obligations hereunder or any
interest herein or in the Collateral without the prior written consent of the
Lenders (and any such assignment or transfer shall be void) except as expressly
contemplated by this Agreement or the Credit Agreement. This Agreement shall be
construed as a separate agreement with respect to each Loan Party and may be
amended, modified, supplemented, waived or released with respect to any Loan
Party without the approval of any other Loan Party and without affecting the
obligations of any other Loan Party hereunder.
SECTION 7.07. Severability. Any provision of this Agreement held to
be invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
uneforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction. The parties shall endeavor in good-faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 7.08. Right of Set-Off. If an Event of Default shall have
occurred and be continuing, each Lender and each of its Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other obligations at any time
owing by such Lender or Affiliate to or for the credit or the account of any
Subsidiary Party against any of and all the obligations of such Subsidiary Party
now or hereafter existing under this agreement owed to such Lender, irrespective
of whether or not such Lender shall have made any demand under this Agreement
and although such obligations may be unmatured. The applicable Lender shall
notify the Borrower and the Collateral Agent of such set-off or application,
provided that any failure to give or delay in giving such notice shall not
affect the validity of a set-off or application under this Section 7.08. The
rights of each Lender under this Section 7.08 are in addition to other rights
and remedies (including other rights of set-off) which such Lender may have.
SECTION 7.09. Governing Law; Jurisdiction; Consent to Service of
Process. (a) This Agreement shall be construed in accordance with and governed
by the law of the State of New York.
(b) Each of the Loan Parties hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of the
Supreme Court of the State of New York sitting in New York County and of the
United States District Court of the Southern District of New York, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or any other Loan Document, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
34
a final 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 in this Agreement or any other Loan Document shall
affect any right that the Collateral Agent, the Issuing Banks or any Lender may
otherwise have to bring any action or proceeding relating to this Agreement or
any other Loan Document against any Grantor or Guarantor, or its properties in
the courts of any jurisdiction.
(c) Each of the Loan Parties hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or any other
Loan Document in any court referred to in paragraph (b) of this Section 7.09.
Each of the parties hereto hereby irrevocably waives, to the fullest extent
permitted by law, the defense of an inconvenient forum to the maintenance of
such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 7.01. Nothing in this
Agreement or any other Loan Document will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.
SECTION 7.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 7.10.
SECTION 7.11. Headings. Article and Section headings and the Table
of Contents used herein are for convenience of reference only, are not part of
this Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 7.12. Security Interest Absolute. All rights of the
Collateral Agent hereunder, the Security Interest, the grant of a security
interest in the Collateral and all obligations of each Grantor and Guarantor
hereunder shall be absolute and unconditional irrespective of (a) any lack of
validity or enforceability of the Credit Agreement, any other Loan Document, any
agreement with respect to any of the Obligations or any other agreement or
instrument relating to any of the foregoing, (b) any change in the time, manner
or place of payment of, or in any other term of, all or any of
35
the Obligations, or any other amendment or waiver of or any consent to any
departure from the Credit Agreement, any other Loan Document or any other
agreement or instrument, (c) any exchange, release or non-perfection of any Lien
on other collateral, or any release or amendment or waiver of or consent under
or departure from any guarantee, securing or guaranteeing all or any of the
Obligations, or (d) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, any Grantor or Guarantor in respect of
the Obligations or this Agreement.
SECTION 7.13. Termination or Release. (a) This Agreement, the
Guarantees made herein, the Security Interest and all other security interests
granted hereby shall terminate when all the Loan Document Obligations then due
and owing have been indefeasibly paid in full (except for contingent indemnities
and cost and reimbursement obligations to the extent no claim has been made) and
the Lenders have no further commitment to lend under the Credit Agreement, the
LC Exposure has been reduced to zero and the Issuing Banks have no further
obligations to issue Letters of Credit under the Credit Agreement.
(b) A Subsidiary Party shall automatically be released from its
obligations hereunder and the Security Interest in the Collateral of such
Subsidiary Party shall be automatically released upon the consummation of any
transaction permitted by the Credit Agreement as a result of which such
Subsidiary Party ceases to be a Subsidiary, provided that the Required Lenders
shall have consented to such transaction (to the extent required by the Credit
Agreement) and the terms of such consent did not provide otherwise.
(c) Upon any sale or other transfer by any Grantor of any Collateral
that is permitted under the Credit Agreement to any Person that is not a
Grantor, or upon the effectiveness of any written consent to the release of the
security interest granted hereby in any Collateral pursuant to Section 9.02 of
the Credit Agreement, the security interest in such Collateral shall be
automatically released.
(d) In connection with any termination or release pursuant to
paragraph (a), (b) or (c), the Collateral Agent shall return, execute and
deliver to any Grantor, at such Grantor's expense, all documents that such
Grantor shall reasonably request to evidence such termination or release. Any
return, execution and delivery of documents pursuant to this Section 7.13 shall
be without recourse to or warranty by the Collateral Agent or any other Secured
Party.
SECTION 7.14. Additional Subsidiaries. Pursuant to Section 5.12 of
the Credit Agreement, each Subsidiary of a Loan Party that was not in existence
or not a Subsidiary on the date of the Credit Agreement and is not a Foreign
Subsidiary is required to enter in this Agreement as a Subsidiary Party upon
becoming such a Subsidiary. Upon execution and delivery by the Collateral Agent
and a Subsidiary of an instrument in the form of Exhibit I hereto, such
Subsidiary shall become a Subsidiary Party hereunder with the same force and
effect as if originally named as a Subsidiary Party herein. The execution and
delivery of any such instrument shall not require the consent of any other Loan
Party hereunder. The rights and obligations of each Loan
36
Party hereunder shall remain in full force and effect notwithstanding the
addition of any new Loan Party as a party to this Agreement.
SECTION 7.15. Collateral Agent Appointed Attorney-in-Fact. Each
Grantor hereby appoints the Collateral Agent the attorney-in-fact of such
Grantor for the purpose of carrying out the provisions of this Agreement and
taking any action and executing any instrument that the Collateral Agent may
deem necessary or advisable to accomplish the purposes hereof, which appointment
is irrevocable and coupled with an interest. Without limiting the generality of
the foregoing, the Collateral Agent shall have the right, upon the occurrence
and during the continuance of an Event of Default, with full power of
substitution either in the Collateral Agent's name or in the name of such
Grantor (a) to receive, endorse, assign and/or deliver any and all notes,
acceptances, checks, drafts, money orders or other evidences of payment relating
to the Collateral or any part thereof, (b) to demand, collect, receive payment
of, give receipt for and give discharges and releases of all or any of the
Collateral, (c) to sign the name of any Grantor on any invoice or bill of lading
relating to any of the Collateral, (d) to send verifications of Accounts
Receivable to any Account Debtor, (e) to commence and prosecute any and all
suits, actions or proceedings at law or in equity in any court of competent
jurisdiction to collect or otherwise realize on all or any of the Collateral or
to enforce any rights in respect of any Collateral, (f) to settle, compromise,
compound, adjust or defend any actions, suits or proceedings relating to all or
any of the Collateral, (g) to notify, or to require any Grantor to notify,
Account Debtors to make payment directly to the Collateral Agent, and (h) to
use, sell, assign, transfer, pledge, make any agreement with respect to or
otherwise deal with all or any of the Collateral, and to do all other acts and
things necessary to carry out the purposes of this Agreement, as fully and
completely as though the Collateral Agent were the absolute owner of the
Collateral for all purposes, provided that nothing herein contained shall be
construed as requiring or obligating the Collateral Agent to make any commitment
or to make any inquiry as to the nature or sufficiency of any payment received
by the Collateral Agent, or to present or file any claim or notice, or to take
any action with respect to the Collateral or any part thereof or the moneys due
or to become due in respect thereof or any property covered thereby. The
Collateral Agent and the other Secured Parties shall be accountable only for
amounts actually received as a result of the exercise of the powers granted to
them herein, and neither they nor their officers, directors, employees or agents
shall be responsible to any Grantor for any act or failure to act hereunder,
except for their own gross negligence or wilful misconduct.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
CRUNCH HOLDING CORP.,
By /S/ JONATHAN LYNCH
-----------------------
Name: Jonathan Lynch
PINNACLE FOODS HOLDING
CORPORATION,
By /S/ N. MICHAEL DION
-----------------------
Name: N. Michael Dion
PINNACLE FOODS CORPORATION,
By /S/ N. MICHAEL DION
-----------------------
Name: N. Michael Dion
PINNACLE FOODS BRANDS
CORPORATION,
By /S/ N. MICHAEL DION
----------------------
Name: N. Michael Dion
PINNACLE FOODS MANAGEMENT
CORPORATION,
By /S/ N. MICHAEL DION
-----------------------
Name: N. Michael Dion
PF SALES, LLC,
By /S/ N. MICHAEL DION
-----------------------
Name: N. Michael Dion
PF DISTRIBUTION, LLC,
By /S/ N. MICHAEL DION
-----------------------
Name: N. Michael Dion
PF STANDARDS CORPORATION,
By /S/ N. MICHAEL DION
-----------------------
Name: N. Michael Dion
PF SALES (N. CENTRAL REGION)
CORP.,
By /S/ N. MICHAEL DION
-----------------------
Name: N. Michael Dion
DEUTSCHE BANK TRUST COMPANY
AMERICAS, as Collateral Agent,
By /S/ SCOTTYE LINDSEY
-----------------------
Name: Scottye Lindsey
Title: Vice President
Schedule I to
the Guarantee and
Collateral Agreement
SUBSIDIARY PARTIES
Schedule II to
the Guarantee and
Collateral Agreement
EQUITY INTERESTS
Number and
Number of Registered Class of Percentage
Issuer Certificate Owner Equity Interest of Equity Interests
- ------ ----------- ----- --------------- -------------------
DEBT SECURITIES
Principal
Issuer Amount Date of Note Maturity Date
- ------ ------ ------------ -------------
Schedule III to
the Guarantee and
Collateral Agreement
U.S. COPYRIGHTS OWNED BY [NAME OR GRANTOR]
[Make a separate page of Schedule III for each Grantor and state if no
copyrights are owned. List in numerical order by Registration No.]
U.S. Copyright Registrations
Title Reg. No. Author
- ----- ------- ------
Pending U.S. Copyright Applications for Registration
Title Author Class Date Filed
- ----- ------ ----- ----------
Non-U.S. Copyright Registrations
[List in alphabetical order by country/numerical order by Registration No.
within each country]
Country Title Reg. No. Author
- ------- ----- -------- ------
Non-U.S. Pending Copyright Applications for Registration
[List in alphabetical order by country.]
Country Title Author Class Date Filed
- ------- ----- ------ ----- ----------
Schedule III to
the Guarantee and
Collateral Agreement
LICENSES
[Make a separate page of Schedule III for each Grantor, and state if any Grantor
is not a party to a license/sublicense.]
I. Licenses/Sublicensees of [Name of Grantor] as Licensor on Date Hereof
A. Copyrights
[List U.S. copyrights in numerical order by Registration No. List non-U.S.
copyrights by country in alphabetical order with Registration Nos. within each
country in numerical order.]
U.S. Copyrights
Title of
Licensee Name Date of License/ U.S.
and Address Sublicense Copyright Author Reg. No.
----------- ---------- --------- ------ -------
Non-U.S. Copyrights
Date of Title of
Licensee Name License/ Non-U.S.
Country and Address Sublicensee Copyrights Author Reg. No.
- ------- ----------- ----------- ---------- ------ -------
B. Patents
[List U.S. patent nos. and U.S. patent application nos. in numerical order. List
non-U.S. patent nos. and non-U.S. application in alphabetical order by country,
with numbers within each country in numerical order.]
Schedule III to
the Guarantee and
Collateral Agreement
U.S. Patents
Licensee Name Date of License/
and Address Sublicense Issue Date Patent No.
----------- ---------- ---------- ----------
Schedule III to
the Gurantee and
Cllateral Agreement
U.S. Patent Applications
Licensee Name Date of License/
and address Sublicense Date Filed Application No.
----------- ---------- ---------- ---------------
Non-U.S. Patents
Licensee Name Date of License/ Issue Non-U.S.
Country and Address Sublicense Date Patent No.
- ------- ----------- ---------- ---- ----------
Non-U.S. Patent Applications
Licensee Name Date of License/ Date Application
Country and Address Sublicense Filed No.
- ------- ----------- ---------- ----- --
C. Trademarks
[List U.S. trademark nos. and U.S. trademark application nos. in numerical
order. List non-U.S. trademark nos. and non-U.S. application nos. with trademark
nos. within each country in numerical order.]
U.S. Trademarks
Licensee Name Date of License/
and Address Sublicense U.S. Mark Reg. Date Reg. No.
----------- ---------- --------- --------- -------
Schedule III to
the Guarantee and
Collateral Agreement
U.S. Trademark Applications
Licensee Name Date of License/ Application
and Address Sublicense U.S. Mark Date Filed No.
----------- ---------- --------- ---------- --
Non-U.S. Trademarks
Licensee Name Date of License/ Non-U.S.
Country and Address Sublicense Mark Reg. Date Reg. No.
- ------- ----------- ---------- ---- --------- --------
Non-U.S. Trademark Applications
Licensee Name Date of License/ Non-U.S. Date Application
Country and Address Sublicense Mark Filed No.
- ------- ----------- ---------- ---- ----- --
D. Others
Licensee Name Date of License/ Subject
and Address Sublicense Matter
----------- ---------- ------
Schedule III to
the Guarantee and
Collateral Agreement
II. Licensees/Sublicenses of [Name of Grantor] as Licensee on Date Hereof
A. Copyrights
[List U.S. copyrights in numerical order by Registration No. List non-U.S.
copyrights by country in alphabetical order, with Registration Nos. within each
country in numerical order.]
U.S. Copyrights
Licensor Name and Date of License/ Title of
Address Sublicense U.S. Copyright Author Reg. No.
------- ---------- -------------- ------ -------
Non-U.S. Copyrights
Date of Title of
Licensor Name License/ Non-U.S.
Country and Address Sublicensee Copyrights Author Reg. No.
- ------- ----------- ----------- ---------- ------ --------
B. Patents
[List U.S. patent nos. and U.S. patent application nos. in numerical order. List
non-U.S. patent nos. and non-U.S. application nos. in alphabetical order by
country with patent nos. within each country in numerical order.]
U.S. Patents
Date of
Licensor Name License/
and Address Sublicense Issue Date Patent No.
----------- ---------- ---------- ----------
Schedule III to
the Guarantee and
Collateral Agreement
U.S. Patent Applications
Licensor Name Date of License/
and Address Sublicense Date Filed Application No.
----------- ---------- ---------- ---------------
Non-U.S. Patents
Licensor Name Date of License/ Issue Non-U.S.
Country and Address Sublicense Date Patent No.
- ------- ----------- ---------- ---- ----------
Non-U.S. Patent Applications
Licensor Name Date of License/ Date Application
Country and Address Sublicense Filed No.
- ------- ----------- ---------- ----- ---
C. Trademarks
[List U.S. trademark nos. and U.S. trademark application nos. in numerical
order. List non-U.S. trademark nos. and non-U.S. application nos. with trademark
nos. within each country in numerical order.]
U.S. Trademarks
Licensor Name Date of License/
and Address Sublicense U.S. Mark Reg. Date Reg. No.
----------- ---------- --------- --------- -------
Schedule III to
the Guarantee and
Collateral Agreement
U.S. Trademark Applications
Licensor Name Date of License/ Date Application
and Address Sublicense U.S. Mark Filed No.
----------- ---------- --------- ----- ---
Non-U.S. Trademarks
Licensor Name Date of License/ Non-U.S.
Country and Address Sublicense Mark Reg. Date Reg. No.
- ------- ----------- ---------- ---- --------- --------
Non-U.S. Trademark Applications
Licensor Name Date of License/ Non-U.S. Date Application
Country and Address Sublicense Mark Filed No.
- ------- ----------- ---------- ---- ----- ---
D. Others
Date of License/
Licensor Name and Address Sublicense Subject Matter
- ------------------------- ---------- --------------
Schedule III to
the Guarantee and
Collateral Agreement
PATENTS OWNED BY [NAME OF GRANTOR]
[Make a separate page of Schedule III for each Grantor and state if no patents
are owned. List in numerical order by Patent No./Patent Application No.]
U.S. Patent Registrations
Patent Numbers Issue Date
- -------------- ----------
U.S. Patent Applications
Patent Application No. Filing Date
- ---------------------- -----------
Non-U.S. Patent Registrations
[List in alphabetical order by country/numerical order by Patent No. within each
country]
Country Issue Date Patent No.
- ------- ---------- ----------
Non-U.S. Patent Registrations
[List in alphabetical order by country/numerical order by Application No. within
each country]
Country Filing Date Patent Application No.
- ------- ----------- ----------------------
Schedule III to
the Guarantee and
Collateral Agreement
TRADEMARK/TRADE NAMES OWNED BY [NAME OF GRANTOR]
[Make a separate page of Schedule III for each Grantor and state if no
trademarks/trade names are owned. List in numerical order by trademark
registration/application no.]
U.S. Trademark Registrations
Mark Reg. Date Reg. No.
- ---- --------- --------
U.S. Trademark Applications
Mark Filing Date Application No.
- ---- ----------- ---------------
State Trademark Registrations
[List in alphabetical order by state/numerical order by trademark no. within
each state]
State Mark Filing Date Application No.
- ----- ---- ----------- ---------------
Non-U.S. Trademark Registrations
[List in alphabetical order by country/numerical order by trademark no. within
each country]
Country Mark Reg. Date Reg. No.
- ------- ---- --------- -------
Schedule III to
the Guarantee and
Collateral Agreement
Non-U.S. Trademark Applications
[List in alphabetical order by country/numerical order by application no.]
Country Mark Application Date Application No.
- ------- ---- ---------------- ---------------
Trade Names
Country(s) Where Used Trade Names
- --------------------- -----------
Schedule IV to
the Guarantee and
Collateral Agreement
INSURANCE REQUIREMENTS
(a) Holdings and the Borrower will, and will cause each Subsidiary
Party to, maintain (or cause to be maintained on its behalf), with financially
sound and reputable insurance companies:
(i) fire, boiler and machinery, and extended coverage insurance, on
a replacement cost basis, with respect to all personal property and
improvements to real property (in each case constituting Collateral), in
such amounts as are customarily maintained by companies in the same or
similar business operating in the same or similar locations;
(ii) commercial general liability insurance against claims for
bodily injury, death or property damage occurring upon, about or in
connection with the use of any properties owned, occupied or controlled by
it, providing coverage on an occurrence basis with a combined single limit
of not less than $1,000,000 per occurrence and including the broad form
CGL endorsement;
(iii) business interruption insurance, insuring against loss of
gross earnings for a period of not less than 12 months arising from any
risks or occurrences required to be covered by insurance pursuant to
clause (i) above; and
(iv) such other insurance as may be required by law.
Deductibles or self-insured retention shall not exceed $2,000,000 for fire,
boiler and machinery and extended coverage policies, $2,000,000 for commercial
general liability policies or 45 days for business interruption policies, unless
in any case a higher level is commercially reasonable.
(b) Fire, boiler and machinery and extended coverage policies
maintained with respect to any Collateral shall be endorsed or otherwise amended
to include (i) a lenders' loss payable clause in favor of the Collateral Agent
and providing for losses thereunder to be payable to the Collateral Agent or its
designee, (ii) a provision to the effect that neither any Loan Party, the
Collateral Agent nor any other party shall be a coinsurer and (iii) such other
provisions as the Collateral Agent may reasonably require from time to time to
protect the interests of the Secured Parties. Commercial general liability
policies shall be endorsed to name the Collateral Agent as an additional
insured. Business interruption policies shall name the Collateral Agent as loss
payee. Each such policy referred to in this paragraph also shall provide that it
shall not be canceled, modified or not renewed (i) by reason of nonpayment of
premium except upon not less than 10 days' prior written notice thereof by the
insurer to the Collateral Agent (giving the Collateral Agent the right to cure
defaults in the payment of premiums) or (ii) for any other reason except upon
not less than 30 days' prior written notice thereof by the insurer to the
Collateral Agent. The Borrower shall deliver to the Collateral Agent, prior to
the cancellation, modification or nonrenewal of any such policy of insurance, a
copy of a
2
renewal or replacement policy (or other evidence of renewal of a policy
previously delivered to the Collateral Agent) together with evidence reasonably
satisfactory to the Collateral Agent of payment of the premium therefor.
Schedule V to
the Guarantee and
Collateral Agreement
COMMERCIAL TORT CLAIMS
Grantor/Plaintiff Defendant Description
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