EXHIBIT 10.3
PLEDGE AND SECURITY AGREEMENT
DATED AS OF MARCH 25, 2004
BETWEEN
EACH OF THE GRANTORS PARTY HERETO
AND
GOLDMAN SACHS CREDIT PARTNERS L.P.,
AS THE COLLATERAL AGENT
TABLE OF CONTENTS
PAGE
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SECTION 1. DEFINITIONS; GRANT OF SECURITY............................................................... 1
1.1 GENERAL DEFINITIONS.......................................................................... 1
1.2 DEFINITIONS; INTERPRETATION.................................................................. 8
SECTION 2. GRANT OF SECURITY............................................................................ 8
2.1 GRANT OF SECURITY............................................................................ 8
2.2 CERTAIN LIMITED EXCLUSIONS................................................................... 9
SECTION 3. SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE............................................. 9
3.1 SECURITY FOR OBLIGATIONS..................................................................... 9
3.2 CONTINUING LIABILITY UNDER COLLATERAL........................................................ 9
SECTION 4. REPRESENTATIONS AND WARRANTIES AND COVENANTS................................................. 10
4.1 GENERALLY.................................................................................... 10
4.2 EQUIPMENT AND INVENTORY...................................................................... 12
4.3 RECEIVABLES.................................................................................. 13
4.4 INVESTMENT RELATED PROPERTY.................................................................. 15
4.5 [RESERVED]................................................................................... 21
4.6 LETTER OF CREDIT RIGHTS...................................................................... 21
4.7 INTELLECTUAL PROPERTY........................................................................ 21
4.8 COMMERCIAL TORT CLAIMS....................................................................... 23
SECTION 5. ACCESS; RIGHT OF INSPECTION AND FURTHER ASSURANCES; ADDITIONAL GRANTORS...................... 23
5.1 FURTHER ASSURANCES........................................................................... 23
5.2 ADDITIONAL GRANTORS.......................................................................... 24
SECTION 6. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT.................................................. 24
6.1 POWER OF ATTORNEY............................................................................ 24
6.2 NO DUTY ON THE PART OF COLLATERAL AGENT OR SECURED PARTIES................................... 25
SECTION 7. REMEDIES..................................................................................... 26
7.1 GENERALLY.................................................................................... 26
7.2 APPLICATION OF PROCEEDS...................................................................... 27
7.3 SALES ON CREDIT.............................................................................. 27
7.4 DEPOSIT ACCOUNTS............................................................................. 28
7.5 INVESTMENT RELATED PROPERTY.................................................................. 28
7.6 INTELLECTUAL PROPERTY........................................................................ 28
7.7 CASH PROCEEDS................................................................................ 30
SECTION 8. COLLATERAL AGENT............................................................................. 30
SECTION 9. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS.............................................. 31
SECTION 10. STANDARD OF CARE; COLLATERAL AGENT MAY PERFORM.............................................. 31
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SECTION 11. MISCELLANEOUS............................................................................... 31
SCHEDULE 4.1 -- GENERAL INFORMATION
SCHEDULE 4.2 -- LOCATION OF EQUIPMENT AND INVENTORY
SCHEDULE 4.4 -- INVESTMENT RELATED PROPERTY
SCHEDULE 4.6 -- DESCRIPTION OF LETTERS OF CREDIT
SCHEDULE 4.7 -- INTELLECTUAL PROPERTY - EXCEPTIONS
SCHEDULE 4.8 -- COMMERCIAL TORT CLAIMS
EXHIBIT A -- PLEDGE SUPPLEMENT
EXHIBIT B -- UNCERTIFICATED SECURITIES CONTROL AGREEMENT
EXHIBIT C -- SECURITIES ACCOUNT CONTROL AGREEMENT
EXHIBIT D -- DEPOSIT ACCOUNT CONTROL AGREEMENT
EXHIBIT E -- TRADEMARK SECURITY AGREEMENT
EXHIBIT F -- COPYRIGHT SECURITY AGREEMENT
EXHIBIT G -- PATENT SECURITY AGREEMENT
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This PLEDGE AND SECURITY AGREEMENT, dated as of March 25, 2004
(this "AGREEMENT"), between EACH OF THE UNDERSIGNED, whether as an original
signatory hereto or as an Additional Grantor (as herein defined) (each, a
"GRANTOR"), and Goldman Sachs Credit Partners L.P., as collateral agent for the
Secured Parties (as herein defined) (in such capacity as collateral agent, the
"COLLATERAL AGENT").
RECITALS:
WHEREAS, reference is made to that certain Credit and Guaranty
Agreement, dated as of the date hereof (as it may be amended, restated,
supplemented or otherwise modified from time to time, the "CREDIT AGREEMENT"),
by and among ACC ACQUISITION CORP., a Delaware corporation ("ACC"), ACC HOLDING
CORP., a Delaware corporation ("HOLDINGS"), CERTAIN SUBSIDIARIES OF AMERICAN
ACHIEVEMENT CORPORATION, as Guarantors, the Lenders party hereto from time to
time, GOLDMAN SACHS CREDIT PARTNERS L.P. ("GSCP"), as Joint Lead Arranger, Joint
Book Runner, Administrative Agent (together with its permitted successors in
such capacity, "ADMINISTRATIVE AGENT") and as Collateral Agent (together with
its permitted successor in such capacity, "COLLATERAL AGENT"), DEUTSCHE BANK
SECURITIES INC. ("DBSI"), as a Joint Lead Arranger and Joint Bookrunner,
DEUTSCHE BANK AG CAYMAN ISLANDS BRANCH ("DBCI") as Syndication Agent (in such
capacity, "SYNDICATION AGENT") and CIT LENDING SERVICES CORPORATION, GENERAL
ELECTRIC CAPITAL CORPORATION ("GE CAPITAL"), as a Co-Documentation Agent and
MERRILL LYNCH CAPITAL, A DIVISION OF MERRILL LYNCH BUSINESS FINANCIAL SERVICES
INC. ("ML"), as a Co-Documentation Agent (each, in such capacity, a
"CO-DOCUMENTATION AGENT");
WHEREAS, subject to the terms and conditions of the Credit Agreement,
certain Grantors may enter into one or more Hedge Agreements with one or more
Lender Counterparties;
WHEREAS, in consideration of the extensions of credit and other
accommodations of Lenders and Lender Counterparties as set forth in the Credit
Agreement and the Hedge Agreements, respectively, each Grantor has agreed to
secure such Grantor's obligations under the Credit Documents and the Hedge
Agreements as set forth herein; and
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, each Grantor and the Collateral Agent
agree as follows:
SECTION 1. DEFINITIONS; GRANT OF SECURITY.
1.1 GENERAL DEFINITIONS. In this Agreement, the following terms
shall have the following meanings:
"ACCOUNT DEBTOR" shall mean each Person who is obligated on a
Receivable or any Supporting Obligation related thereto.
"ACCOUNTS" shall mean all "accounts" as defined in Article 9
of the UCC, including Health-Care Insurance Receivables.
"ADDITIONAL GRANTORS" shall have the meaning assigned in
Section 5.2.
"AGREEMENT" shall have the meaning set forth in the preamble.
"ASSIGNED AGREEMENTS" shall mean all agreements and contracts
to which such Grantor is a party as of the date hereof, or to which such Grantor
becomes a party after the date hereof, including, without limitation, each
Material Contract, as each such agreement may be amended, supplemented or
otherwise modified from time to time.
"BANKRUPTCY CODE" shall mean Title 11 of the United States
Code entitled "Bankruptcy", as now and hereafter in effect, or any successor
statute.
"CASH PROCEEDS" shall have the meaning assigned in Section
7.7.
"CHATTEL PAPER" shall mean all "chattel paper" as defined in
Article 9 of the UCC, including, without limitation, "electronic chattel paper"
or "tangible chattel paper", as each term is defined in Article 9 of the UCC.
"COLLATERAL" shall have the meaning assigned in Section 2.1.
"COLLATERAL ACCOUNT" shall mean any account established by the
Collateral Agent.
"COLLATERAL AGENT" shall have the meaning set forth in the
preamble.
"COLLATERAL RECORDS" shall mean books, records, ledger cards,
files, correspondence, customer lists, blueprints, technical specifications,
manuals, computer software, computer printouts, tapes, disks and related data
processing software and similar items that at any time evidence or contain
information relating to any of the Collateral or are otherwise necessary or
helpful in the collection thereof or realization thereupon.
"COLLATERAL SUPPORT" shall mean all property (real or
personal) assigned, hypothecated or otherwise securing any Collateral and shall
include any security agreement or other agreement granting a lien or security
interest in such real or personal property.
"COMMERCIAL TORT CLAIMS" shall mean all "commercial tort
claims" as defined in Article 9 of the UCC, including, without limitation, all
commercial tort claims listed on Schedule 4.8 (as such schedule may be amended
or supplemented from time to time).
"COMMODITIES ACCOUNTS" (i) shall mean all "commodity accounts"
as defined in Article 9 of the UCC and (ii) shall include, without limitation,
all of the accounts listed on Schedule 4.4 under the heading "COMMODITIES
ACCOUNTS" (as such schedule may be amended or supplemented from time to time).
"COMPANY" shall have the meaning set forth in the preamble.
"CONTROLLED FOREIGN CORPORATION" shall mean "controlled
foreign corporation" as defined in the Tax Code.
"COPYRIGHT LICENSES" shall mean any and all agreements
providing for the granting of any right in or to Copyrights (whether such
Grantor is licensee or licensor thereunder) including, without limitation, each
agreement referred to in Schedule 4.7(B) (as such schedule may be amended or
supplemented from time to time).
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"COPYRIGHTS" shall mean all United States, and foreign
copyrights (including Community designs), including but not limited to
copyrights in software and databases, and all Mask Works (as defined under 17
U.S.C. 901 of the U.S. Copyright Act), whether registered or unregistered, and,
with respect to any and all of the foregoing: (i) all registrations and
applications therefor including, without limitation, the registrations and
applications referred to in Schedule 4.7(A) (as such schedule may be amended or
supplemented from time to time), (ii) all extensions and renewals thereof, (iii)
all rights corresponding thereto throughout the world, (iv) all rights to sue
for past, present and future infringements thereof, and (v) all Proceeds of the
foregoing, including, without limitation, licenses, royalties, income, payments,
claims, damages and proceeds of suit.
"CREDIT AGREEMENT" shall have the meaning set forth in the
recitals.
"DEPOSIT ACCOUNTS" (i) shall mean all "deposit accounts" as
defined in Article 9 of the UCC and (ii) shall include, without limitation, all
of the accounts listed on Schedule 4.4 under the heading "Deposit Accounts" (as
such schedule may be amended or supplemented from time to time).
"DOCUMENTS" shall mean all "documents" as defined in Article 9
of the UCC.
"EQUIPMENT" shall mean: (i) all "equipment" as defined in
Article 9 of the UCC, (ii) all machinery, manufacturing equipment, data
processing equipment, computers, office equipment, furnishings, furniture,
appliances, fixtures and tools (in each case, regardless of whether
characterized as equipment under the UCC) and (iii) all accessions or additions
thereto, all parts thereof, whether or not at any time of determination
incorporated or installed therein or attached thereto, and all replacements
therefor, wherever located, now or hereafter existing, including any fixtures.
"GENERAL INTANGIBLES" (i) shall mean all "general intangibles"
as defined in Article 9 of the UCC, including "payment intangibles" also as
defined in Article 9 of the UCC and (ii) shall include, without limitation, all
interest rate or currency protection or hedging arrangements, all tax refunds,
all licenses, permits, concessions and authorizations, all Assigned Agreements
and all Intellectual Property (in each case, regardless of whether characterized
as general intangibles under the UCC).
"GOODS" (i) shall mean all "goods" as defined in Article 9 of
the UCC and (ii) shall include, without limitation, all Inventory and Equipment
(in each case, regardless of whether characterized as goods under the UCC).
"GRANTORS" shall have the meaning set forth in the preamble.
"HEALTH-CARE INSURANCE RECEIVABLE" shall mean all
"health-care-insurance receivable" as defined in Article 9 of the UCC.
"INSTRUMENTS" shall mean all "instruments" as defined in
Article 9 of the UCC.
"INSURANCE" shall mean (i) all insurance policies covering any
or all of the Collateral (regardless of whether the Collateral Agent is the loss
payee thereof) and (ii) any key man life insurance policies.
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"INTELLECTUAL PROPERTY" shall mean, collectively, the
Copyrights, the Copyright Licenses, the Patents, the Patent Licenses, the
Trademarks, the Trademark Licenses, the Trade Secrets, and the Trade Secret
Licenses.
"INVENTORY" shall mean (i) all "inventory" as defined in
Article 9 of the UCC and (ii) all goods held for sale or lease or to be
furnished under contracts of service or so leased or furnished, all raw
materials, work in process, finished goods, and materials used or consumed in
the manufacture, packing, shipping, advertising, selling, leasing, furnishing or
production of such inventory or otherwise used or consumed in any Grantor's
business; all goods in which any Grantor has an interest in mass or a joint or
other interest or right of any kind; and all goods which are returned to or
repossessed by any Grantor, all computer programs embedded in any goods and all
accessions thereto and products thereof (in each case, regardless of whether
characterized as inventory under the UCC).
"INVESTMENT ACCOUNTS" shall mean the Collateral Account,
Securities Accounts, Commodities Accounts and Deposit Accounts.
"INVESTMENT RELATED PROPERTY" shall mean: (i) all "investment
property" (as such term is defined in Article 9 of the UCC) and (ii) all of the
following (regardless of whether classified as investment property under the
UCC): all Pledged Equity Interests, Pledged Debt, the Investment Accounts and
certificates of deposit.
"LENDER" shall have the meaning set forth in the recitals.
"LETTER OF CREDIT RIGHT" shall mean "letter-of-credit right"
as defined in Article 9 of the UCC.
"LIEN" shall mean (i) any lien, mortgage, pledge, assignment,
security interest, charge or encumbrance of any kind (including any agreement to
give any of the foregoing, any conditional sale or other title retention
agreement, and any lease in the nature thereof) and any option, trust or other
preferential arrangement having the practical effect of any of the foregoing and
(ii) in the case of Pledged Equity Interests, any purchase option, call or
similar right of a third party with respect to such Pledged Equity Interests.
"MONEY" shall mean "money" as defined in the UCC.
"PATENT LICENSES" shall mean all agreements providing for the
granting of any right in or to Patents (whether such Grantor is licensee or
licensor thereunder) including, without limitation, each agreement referred to
in Schedule 4.7(D) (as such schedule may be amended or supplemented from time to
time).
"PATENTS" shall mean all United States and foreign patents and
certificates of invention, or similar industrial property rights, and
applications for any of the foregoing, including, but not limited to: (i) each
patent and patent application referred to in Schedule 4.7(C) hereto (as such
schedule may be amended or supplemented from time to time), (ii) all reissues,
divisions, continuations, continuations-in-part, extensions, renewals, and
reexaminations thereof, (ii) all rights corresponding thereto throughout the
world, (ii) all inventions and improvements described therein, (iv) all rights
to sue for past, present and future infringements thereof, (v) all licenses,
claims, damages, and proceeds of suit arising therefrom, and (v) all Proceeds of
the foregoing, including, without limitation, licenses, royalties, income,
payments, claims, damages, and proceeds of suit.
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"PERMITTED SALE" shall mean those sales, transfers or
assignments permitted by the Credit Agreement.
"PLEDGE SUPPLEMENT" shall mean any supplement to this
agreement in substantially the form of Exhibit A.
"PLEDGED DEBT" shall mean all Indebtedness owed to such
Grantor, including, without limitation, all Indebtedness described on Schedule
4.4(A) under the heading "Pledged Debt" (as such schedule may be amended or
supplemented from time to time), issued by the obligors named therein, the
instruments evidencing such Indebtedness, and all interest, cash, instruments
and other property or proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such
Indebtedness.
"PLEDGED EQUITY INTERESTS" shall mean all Pledged Stock,
Pledged LLC Interests, Pledged Partnership Interests and Pledged Trust
Interests.
"PLEDGED LLC INTERESTS" shall mean all interests in any
limited liability company including, without limitation, all limited liability
company interests listed on Schedule 4.4(A) under the heading "Pledged LLC
Interests" (as such schedule may be amended or supplemented from time to time)
and the certificates, if any, representing such limited liability company
interests and any interest of such Grantor on the books and records of such
limited liability company or on the books and records of any securities
intermediary pertaining to such interest and all dividends, distributions, cash,
warrants, rights, options, instruments, securities and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such limited liability company
interests.
"PLEDGED PARTNERSHIP INTERESTS" shall mean all interests in
any general partnership, limited partnership, limited liability partnership or
other partnership including, without limitation, all partnership interests
listed on Schedule 4.4(A) under the heading "Pledged Partnership Interests" (as
such schedule may be amended or supplemented from time to time) and the
certificates, if any, representing such partnership interests and any interest
of such Grantor on the books and records of such partnership or on the books and
records of any securities intermediary pertaining to such interest and all
dividends, distributions, cash, warrants, rights, options, instruments,
securities and other property or proceeds from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all of such
partnership interests.
"PLEDGED STOCK" shall mean all shares of capital stock owned
by such Grantor, including, without limitation, all shares of capital stock
described on Schedule 4.4(A) under the heading "Pledged Stock" (as such schedule
may be amended or supplemented from time to time), and the certificates, if any,
representing such shares and any interest of such Grantor in the entries on the
books of the issuer of such shares or on the books of any securities
intermediary pertaining to such shares, and all dividends, distributions, cash,
warrants, rights, options, instruments, securities and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such shares.
"PLEDGED TRUST INTERESTS" shall mean all interests in a
Delaware business trust or other trust including, without limitation, all trust
interests listed on Schedule 4.4(A) under the heading "Pledged Trust Interests"
(as such schedule may be amended or supplemented from time to time) and the
certificates, if any, representing such trust interests and any interest of such
Grantor on the books and records of such trust or on the books and records of
any securities
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intermediary pertaining to such interest and all dividends, distributions, cash,
warrants, rights, options, instruments, securities and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such trust interests.
"PROCEEDS" shall mean: (i) all "proceeds" as defined in
Article 9 of the UCC, (ii) payments or distributions made with respect to any
Investment Related Property and (iii) whatever is receivable or received when
Collateral or proceeds are sold, exchanged, collected or otherwise disposed of,
whether such disposition is voluntary or involuntary.
"RECEIVABLES" shall mean all rights to payment, whether or not
earned by performance, for goods or other property sold, leased, licensed,
assigned or otherwise disposed of, or services rendered or to be rendered,
including, without limitation all such rights constituting or evidenced by any
Account, Chattel Paper, Instrument, General Intangible or Investment Related
Property, together with all of Grantor's rights, if any, in any goods or other
property giving rise to such right to payment and all Collateral Support and
Supporting Obligations related thereto and all Receivables Records.
"RECEIVABLES RECORDS" shall mean (i) all original copies of
all documents, instruments or other writings or electronic records or other
Records evidencing the Receivables, (ii) all books, correspondence, credit or
other files, Records, ledger sheets or cards, invoices, and other papers
relating to Receivables, including, without limitation, all tapes, cards,
computer tapes, computer discs, computer runs, record keeping systems and other
papers and documents relating to the Receivables, whether in the possession or
under the control of Grantor or any computer bureau or agent from time to time
acting for Grantor or otherwise, (iii) all evidences of the filing of financing
statements and the registration of other instruments in connection therewith,
and amendments, supplements or other modifications thereto, notices to other
creditors or secured parties, and certificates, acknowledgments, or other
writings, including, without limitation, lien search reports, from filing or
other registration officers, (iv) all credit information, reports and memoranda
relating thereto and (v) all other written or nonwritten forms of information
related in any way to the foregoing or any Receivable.
"RECORD" shall have the meaning specified in Article 9 of the
UCC.
"SECURED OBLIGATIONS" means (i) "Obligations" as defined in
the Credit Agreement and (ii) all obligations of every nature of each
Credit Party from time to time owed to the Bank of Nova Scotia under the
Gold Consignment Agreement and the guaranty thereof as in effect on the
Closing Date and as amended in accordance with Section 6.16 of the Credit
Agreement.
"SECURED PARTIES" shall mean the Lenders, the Bank of Nova
Scotia as consignor under the Gold Consignment Agreement as in effect on the
Closing Date and as amended in accordance with Section 6.16 of the Credit
Agreement and the Lender Counterparties and shall include, without limitation,
all former Lenders and Lender Counterparties to the extent that any Obligations
owing to such Persons were incurred while such Persons were Lenders or Lender
Counterparties and such Obligations have not been paid or satisfied in full.
"SECURITIES" shall mean any stock, shares, partnership
interests, voting trust certificates, certificates of interest or participation
in any profit-sharing agreement or arrangement, options, warrants, bonds,
debentures, notes, or other evidences of indebtedness, secured or unsecured,
convertible, subordinated or otherwise, or in general any instruments
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commonly known as "securities" or any certificates of interest, shares or
participations in temporary or interim certificates for the purchase or
acquisition of, or any right to subscribe to, purchase or acquire, any of the
foregoing.
"SECURITIES ACCOUNTS" (i) shall mean all "securities accounts"
as defined in Article 8 of the UCC and (ii) shall include, without limitation,
all of the accounts listed on Schedule 4.4(A) under the heading "Securities
Accounts" (as such schedule may be amended or supplemented from time to time).
"SUPPORTING OBLIGATION" shall mean all "supporting
obligations" as defined in Article 9 of the UCC.
"TAX CODE" shall mean the United States Internal Revenue Code
of 1986, as amended from time to time.
"TRADEMARK LICENSES" shall mean any and all agreements
providing for the granting of any right in or to Trademarks (whether such
Grantor is licensee or licensor thereunder) including, without limitation, each
agreement referred to in Schedule 4.7(F) (as such schedule may be amended or
supplemented from time to time).
"TRADEMARKS" shall mean all United States, and foreign
trademarks, trade names, corporate names, company names, business names,
fictitious business names, Internet domain names, service marks, certification
marks, collective marks, logos, other source or business identifiers, designs
and general intangibles of a like nature, all registrations and applications for
any of the foregoing including, but not limited to: (i) the registrations and
applications referred to in Schedule 4.7(E) (as such schedule may be amended or
supplemented from time to time), (ii) all extensions or renewals of any of the
foregoing, (iii) all of the goodwill of the business connected with the use of
and symbolized by the foregoing, (iv) the right to sue for past, present and
future infringement or dilution of any of the foregoing or for any injury to
goodwill, and (v) all Proceeds of the foregoing, including, without limitation,
licenses, royalties, income, payments, claims, damages, and proceeds of suit.
"TRADE SECRET LICENSES" shall mean any and all agreements
providing for the granting of any right in or to Trade Secrets (whether such
Grantor is licensee or licensor thereunder) including, without limitation, each
agreement referred to in Schedule 4.7(G) (as such schedule may be amended or
supplemented from time to time).
"TRADE SECRETS" shall mean all trade secrets and all other
confidential or proprietary information and know-how whether or not such Trade
Secret has been reduced to a writing or other tangible form, including all
documents and things embodying, incorporating, or referring in any way to such
Trade Secret, including but not limited to: (i) the right to sue for past,
present and future misappropriation or other violation of any Trade Secret, and
(ii) all Proceeds of the foregoing, including, without limitation, licenses,
royalties, income, payments, claims, damages, and proceeds of suit.
"UCC" shall mean the Uniform Commercial Code as in effect from
time to time in the State of New York or, when the context implies, the Uniform
Commercial Code as in effect from time to time in any other applicable
jurisdiction.
"UNITED STATES" shall mean the United States of America.
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1.2 DEFINITIONS; INTERPRETATION. All capitalized terms used herein
(including the preamble and recitals hereto) and not otherwise defined herein
shall have the meanings ascribed thereto in the Credit Agreement or, if not
defined therein, in the UCC. References to "Sections," "Exhibits" and
"Schedules" shall be to Sections, Exhibits and Schedules, as the case may be, of
this Agreement unless otherwise specifically provided. Section headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect. Any of the terms defined herein may, unless the context
otherwise requires, be used in the singular or the plural, depending on the
reference. The use herein of the word "include" or "including", when following
any general statement, term or matter, shall not be construed to limit such
statement, term or matter to the specific items or matters set forth immediately
following such word or to similar items or matters, whether or not nonlimiting
language (such as "without limitation" or "but not limited to" or words of
similar import) is used with reference thereto, but rather shall be deemed to
refer to all other items or matters that fall within the broadest possible scope
of such general statement, term or matter. If any conflict or inconsistency
exists between this Agreement and the Credit Agreement, the Credit Agreement
shall govern. All references herein to provisions of the UCC shall include all
successor provisions under any subsequent version or amendment to any Article of
the UCC.
SECTION 2. GRANT OF SECURITY.
2.1 GRANT OF SECURITY. Each Grantor hereby grants to the
Collateral Agent a security interest in and continuing lien on all of such
Grantor's right, title and interest in, to and under all personal property of
such Grantor including, but not limited to the following, in each case whether
now owned or existing or hereafter acquired or arising and wherever located (all
of which being hereinafter collectively referred to as the "COLLATERAL"):
(a) Accounts;
(b) Chattel Paper;
(c) Documents;
(d) General Intangibles;
(e) Goods;
(f) Instruments;
(g) Insurance;
(h) Intellectual Property;
(i) Investment Related Property;
(j) Letter of Credit Rights;
(k) Money;
(l) Receivables and Receivable Records;
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(m) Commercial Tort Claims to the extent listed in
Schedule 4.8 hereto (as such schedule may be amended, supplemented or modified
from time to time);
(n) to the extent not otherwise included above, all
Collateral Records, Collateral Support and Supporting Obligations relating to
any of the foregoing; and
(o) to the extent not otherwise included above, all
Proceeds, products, accessions, rents and profits of or in respect of any of the
foregoing.
2.2 CERTAIN LIMITED EXCLUSIONS. Notwithstanding anything herein to
the contrary, in no event shall the security interest granted under Section 2.1
hereof attach to (a) any lease, license, contract, property rights or agreement
to which any Grantor is a party or any of its rights or interests thereunder if
and for so long as the grant of such security interest shall constitute or
result in (i) the abandonment, invalidation or unenforceability of any right,
title or interest of any Grantor therein or (ii) in a breach or termination
pursuant to the terms of, or a default under, any such lease, license, contract
property rights or agreement (other than to the extent that any such term is
rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the
UCC (or any successor provision or provisions) of any relevant jurisdiction or
any other applicable law (including the Bankruptcy Code) or principles of
equity), provided however that such security interest shall attach immediately
at such time as the condition causing such abandonment, invalidation or
unenforceability shall be remedied and to the extent severable, shall attach
immediately to any portion of such Lease, license, contract, property rights or
agreement that does not result in any of the consequences specified in (i) or
(ii) above; or (b) in any of the outstanding capital stock of a Controlled
Foreign Corporation in excess of 65% of the voting power of all classes of
capital stock of such Controlled Foreign Corporation entitled to vote; provided
that immediately upon the amendment of the Tax Code to allow the pledge of a
greater percentage of the voting power of capital stock in a Controlled Foreign
Corporation without resulting in repatriation of earnings, the Collateral shall
include, and the security interest granted by each Grantor shall attach to, such
greater percentage of capital stock of each Controlled Foreign Corporation.
SECTION 3. SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE.
3.1 SECURITY FOR OBLIGATIONS. This Agreement secures, and the
Collateral is collateral security for, the prompt and complete payment or
performance in full when due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including the
payment of amounts that would become due but for the operation of the automatic
stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. Section 362(a) (and
any successor provision thereof)), of all Secured Obligations with respect to
every Grantor.
3.2 CONTINUING LIABILITY UNDER COLLATERAL. Notwithstanding
anything herein to the contrary, (i) each Grantor shall remain liable for all
obligations under the Collateral and nothing contained herein is intended or
shall be a delegation of duties to the Collateral Agent or any Secured Party,
(ii) each Grantor shall remain liable under each of the agreements included in
the Collateral, including, without limitation, any agreements relating to
Pledged Partnership Interests or Pledged LLC Interests, to perform all of the
obligations undertaken by it thereunder all in accordance with and pursuant to
the terms and provisions thereof and neither the Collateral Agent nor any
Secured Party shall have any obligation or liability under any of such
agreements by reason of or arising out of this Agreement or any other document
related thereto nor shall the Collateral Agent nor any Secured Party have any
obligation to make any inquiry as to the nature or sufficiency of any payment
received by it or have any obligation to take any action to collect or
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enforce any rights under any agreement included in the Collateral, including,
without limitation, any agreements relating to Pledged Partnership Interests or
Pledged LLC Interests, and (iii) the exercise by the Collateral Agent of any of
its rights hereunder shall not release any Grantor from any of its duties or
obligations under the contracts and agreements included in the Collateral.
SECTION 4. REPRESENTATIONS AND WARRANTIES AND COVENANTS.
4.1 GENERALLY.
(a) Representations and Warranties. Each Grantor hereby
represents and warrants, on the Closing Date and on each Credit Date, that:
(i) it owns the Collateral purported to be owned
by it or otherwise has the rights it purports to have in each item of
Collateral free and clear of any and all Liens, rights or claims of all
other Persons, including, without limitation, liens arising as a result
of such Grantor becoming bound (as a result of merger or otherwise) as
debtor under a security agreement entered into by another Person, other
than Permitted Liens;
(ii) it has indicated on Schedule 4.1(A)(as such
schedule may be amended or supplemented from time to time): (w) the
type of organization of such Grantor, (x) the jurisdiction of
organization of such Grantor, (y) its organizational identification
number, if any and (z) the jurisdiction where the chief executive
office or its sole place of business is (or the principal residence if
such Grantor is a natural person), and for the one-year period
preceding the date hereof has been, located;
(iii) the full legal name of such Grantor is as
set forth on Schedule 4.1(A) and it has not done in the five (5) years
prior to the Closing Date, business under any other name (including any
trade-name or fictitious business name) except for those names set
forth on Schedule 4.1(B) (as such schedule may be amended or
supplemented from time to time);
(iv) except as provided on Schedule 4.1(C), it
has not changed its name, jurisdiction of organization, chief executive
office or sole place of business (or principal residence if such
Grantor is a natural person) or its corporate structure in any way
(e.g., by merger, consolidation, change in corporate form or otherwise)
within the five (5) years prior to the Closing Date;
(v) it has not within the five (5) years prior
to the Closing Date become bound (whether as a result of merger or
otherwise) as debtor under a security agreement entered into by another
Person, which has not heretofore been terminated other than the
agreements identified on Schedule 4.1(D) hereof (as such schedule may
be amended or supplemented from time to time);
(vi) with respect to each agreement identified on
Schedule 4.1(D), it has indicated on Schedule 4.1 (A) and Schedule
4.1(B) the information required pursuant to Section 4.1(a)(ii), (iii)
and (iv) with respect to the debtor under each such agreement;
(vii) (u) upon the filing of all UCC financing
statements naming each Grantor as "debtor" and each Collateral Agent as
"secured party" and describing the Collateral in the filing offices set
forth opposite such Grantor's name on Schedule 4.01(E) hereof (as such
schedule may be amended or supplemented from time to time)
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and other filings delivered by each Grantor, (v) upon delivery of all
Instruments, Chattel Paper and certificated Pledged Equity Interests
and Pledged Debt, (w) upon sufficient identification of Commercial Tort
Claims, (x) upon execution of a control agreement establishing the
Collateral Agent's "control" (within the meaning of Section 9-806,
9-106 or 9-104 of the UCC, as applicable) with respect to any
Investment Account, (y) upon consent of the issuer with respect to
Letter of Credit Rights, and (z) upon recordation of the security
interests granted hereunder in Patents, Trademarks and Copyrights in
the applicable intellectual property registries, including but not
limited to the United States Patent and Trademark Office and the United
States Copyright Office, the security interests granted to the
Collateral Agent hereunder constitute valid and perfected first
priority Liens (subject in the case of priority only to Permitted Liens
and the rights of the United States government (including any agency or
department thereof) with respect to United States government
Receivables) on all of the Collateral;
(viii) other than the financing statements filed in
favor of the Collateral Agent, no effective UCC financing statement,
fixture filing or other instrument similar in effect under any
applicable law covering all or any part of the Collateral is on file in
any filing or recording office except for (x) financing statements for
which proper termination statements have been delivered to the
Collateral Agent for filing and (y) financing statements filed in
connection with Permitted Liens;
(ix) no authorization, approval or other action
by, and no notice to or filing with, any Governmental Authority or
regulatory body is required for either (i) the pledge or grant by any
Grantor of the Liens purported to be created in favor of the Collateral
Agent hereunder or (ii) the exercise by Collateral Agent of any rights
or remedies in respect of any Collateral (whether specifically granted
or created hereunder or created or provided for by applicable law),
except (A) for the filings contemplated by clause (vii) above and (B)
as may be required, in connection with the disposition of any
Investment Related Property, by laws generally affecting the offering
and sale of Securities;
(x) all information supplied by any Grantor with
respect to any of the Collateral (in each case taken as a whole with
respect to any particular Collateral) is accurate and complete in all
material respects;
(xi) none of the Collateral constitutes, or is
the Proceeds of, "farm products" (as defined in the UCC);
(xii) it does not own any "as extracted
collateral" (as defined in the UCC) or any timber to be cut; and
(xiii) Such Grantor has been duly organized as an
entity of the type as set forth opposite such Grantor's name on
Schedule 4.1(A) solely under the laws of the jurisdiction as set forth
opposite such Grantor's name on Schedule 4.1(A) and remains duly
existing as such. Such Grantor has not filed any certificates of
domestication, transfer or continuance in any other jurisdiction.
(b) Covenants and Agreements. Each Grantor hereby
covenants and agrees that:
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(i) except for the security interest created by
this Agreement, it shall not create or suffer to exist any Lien upon or
with respect to any of the Collateral, except Permitted Liens, and such
Grantor shall defend the Collateral against all Persons at any time
claiming any interest therein;
(ii) it shall not produce, use or permit any
Collateral to be used in violation of any provision of this Agreement
or in any material respect unlawfully or in violation of any applicable
statute, regulation or ordinance or any policy of insurance covering
the Collateral;
(iii) it shall not change such Grantor's name,
identity, corporate structure (e.g., by merger, consolidation, change
in corporate form or otherwise) sole place of business (or principal
residence if such Grantor is a natural person), chief executive office,
type of organization or jurisdiction of organization or unless it shall
have (a) notified the Collateral Agent in writing, by executing and
delivering to the Collateral Agent a completed Pledge Supplement,
substantially in the form of Exhibit A attached hereto, together with
all Supplements to Schedules thereto, at least fifteen (15) days prior
to any such change or establishment, identifying such new proposed
name, identity, corporate structure, sole place of business (or
principal residence if such Grantor is a natural person), chief
executive office, jurisdiction of organization and providing such other
information in connection therewith as the Collateral Agent may
reasonably request and (b) taken all actions reasonably requested by
the Collateral Agent to maintain the continuous validity, perfection
and the same or better priority of the Collateral Agent's security
interest in the Collateral intended to be granted and agreed to hereby;
(iv) if the Collateral Agent or any Secured Party
gives value to enable Grantor to acquire rights in or the use of any
Collateral, it shall use such value for such purposes and such Grantor
further agrees that repayment of any Obligation shall apply on a
"first-in, first-out" basis so that the portion of the value used to
acquire rights in any Collateral shall be paid in the chronological
order such Grantor acquired rights therein;
(v) it shall not take or permit any action which
could impair the Collateral Agent's rights in the Collateral other than
Permitted Sales and the granting of Permitted Liens; and
(vi) it shall not sell, transfer or assign (by
operation of law or otherwise) any Collateral except as Permitted
Sales.
4.2 EQUIPMENT AND INVENTORY.
(a) Representations and Warranties. Each Grantor
represents and warrants, on the Closing Date and on each Credit Date, that:
(i) all of the Equipment and Inventory included
in the Collateral was kept for five (5) years prior to the Closing Date
only at the locations specified in Schedule 4.2 (as such schedule may
be amended or supplemented from time to time) or in the possession of
salesmen in the ordinary course of business; and
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(ii) any Goods now or hereafter produced by any
Grantor included in the Collateral have been and will be produced in
compliance with the requirements of the Fair Labor Standards Act, as
amended.
(b) Covenants and Agreements. Each Grantor covenants and
agrees that:
(i) it shall notify the Collateral Agent in
writing, annually and at such other times as the Collateral Agent may
reasonably request by executing and delivering to the Collateral Agent
the annual collateral verification required by Section 5.1(o) of the
Credit Agreement or an amendment or supplement to Schedule 4.2, as
applicable, of any change in location of where it keeps the Equipment,
Inventory and any Document evidencing any Equipment and Inventory,
identifying such new locations and providing such other information in
connection therewith as the Collateral Agent may reasonably request and
(b) take all actions necessary or advisable to maintain the continuous
validity, perfection and the same or better priority of the Collateral
Agent's security interest in the Collateral intended to be granted and
agreed to hereby, or to enable the Collateral Agent to exercise and
enforce its rights and remedies hereunder, with respect to such
Equipment and Inventory;
(ii) it shall keep correct and accurate records
of the Inventory, as is customarily maintained under similar
circumstances by Persons of established reputation engaged in similar
business, and in any event in conformity with GAAP;
(iii) it shall not deliver any Document evidencing
any Equipment and Inventory to any Person other than the issuer of such
Document to claim the Goods evidenced therefor or the Collateral Agent;
(iv) with respect to any item of Equipment in
excess of $100,000 individually or $1,000,000 in the aggregate which is
covered by a certificate of title under a statute of any jurisdiction
under the law of which indication of a security interest on such
certificate is required as a condition of perfection thereof, upon the
reasonable request of the Collateral Agent, (A) provide information
with respect to any such Equipment, (B) execute and file with the
registrar of motor vehicles or other appropriate authority in such
jurisdiction an application or other document requesting the notation
or other indication of the security interest created hereunder on such
certificate of title, and (C) deliver to the Collateral Agent copies of
all such applications or other documents filed during such calendar
quarter and copies of all such certificates of title issued during such
calendar quarter indicating the security interest created hereunder in
the items of Equipment covered thereby; and
(v) it shall notify the Collateral Agent
promptly and in any event within thirty (30) days of any Inventory or
Equipment in excess of $100,000 individually or $1,000,000 in the
aggregate coming in the possession of an issuer of a negotiable
document (as defined in Section 7-104 of the UCC) therefor.
4.3 RECEIVABLES.
(a) Representations and Warranties. Each Grantor
represents and warrants, on the Closing Date and on each Credit Date, that:
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(i) each Receivable arose from bona fide
transactions in the ordinary course of business; and
(ii) no Receivable is evidenced by, or
constitutes, an Instrument or Chattel Paper which has not been
delivered to, or otherwise subjected to the control of, the Collateral
Agent to the extent required by, and in accordance with Section 4.3(c).
(b) Covenants and Agreements: Each Grantor hereby
covenants and agrees that:
(i) it shall keep and maintain at its own cost
and expense accurate and complete records of the Receivables, as is
customarily maintained under similar circumstances by Persons of
established reputation engaged in similar businesses, and in any event
in conformity with GAAP;
(ii) it shall not amend, modify, terminate or
waive any provision of any Receivable in any manner which could
reasonably be expected to have a Material Adverse Effect on the value
of such Receivable as Collateral other than in the ordinary course of
business. Other than in the ordinary course of business and except as
otherwise provided in subsection (iii) below, following an Event of
Default, such Grantor shall not (w) grant any extension or renewal of
the time of payment of any Receivable, (x) compromise or settle any
dispute, claim or legal proceeding with respect to any Receivable for
less than the total unpaid balance thereof, (y) release, wholly or
partially, any Person liable for the payment thereof, or (z) allow any
credit or discount thereon;
(iii) except as otherwise provided in this
subsection, each Grantor may continue to collect all amounts due or to
become due to such Grantor under the Receivables and any Supporting
Obligation and may exercise each right it may have under any Receivable
any Supporting Obligation or Collateral Support, in each case, at its
own expense; provided however, at any time following the occurrence and
during the continuation of an Event of Default, the Collateral Agent
may: (1) direct the Account Debtors under any Receivables to make
payment of all amounts due or to become due to such Grantor thereunder
directly to the Collateral Agent; (2) notify, or require any Grantor to
notify, each Person maintaining a lockbox or similar arrangement to
which Account Debtors under any Receivables have been directed to make
payment to remit all amounts representing collections on checks and
other payment items from time to time sent to or deposited in such
lockbox or other arrangement directly to the Collateral Agent; and (3)
enforce, at the expense of such Grantor, collection of any such
Receivables and to adjust, settle or compromise the amount or payment
thereof, in the same manner and to the same extent as such Grantor
might have done. If the Collateral Agent notifies any Grantor that it
has elected to collect the Receivables in accordance with the preceding
sentence, any payments of Receivables received by such Grantor shall be
forthwith (and in any event within two (2) Business Days) deposited by
such Grantor in the exact form received, duly indorsed by such Grantor
to the Collateral Agent if required, in the Collateral Account
maintained under the sole dominion and control of the Collateral Agent,
and until so turned over, all amounts and proceeds (including checks
and other instruments) received by such Grantor in respect of the
Receivables, any Supporting Obligation or Collateral Support shall be
received in trust for the benefit of the Collateral Agent hereunder and
shall be segregated from other funds of such Grantor and such Grantor
shall not adjust, settle or compromise the amount or payment of any
Receivable,
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or release wholly or partly any Account Debtor or obligor thereof, or
allow any credit or discount thereon;
(iv) except as it shall determine otherwise in
the ordinary course of business, it shall use its commercially
reasonable efforts to keep in full force and effect any Supporting
Obligation or Collateral Support relating to any Receivable; and
(v) it shall notify the Collateral Agent in
writing promptly and in any event within thirty (30) days after receipt
of any Receivable in excess of $50,000 individually or $250,000 in the
aggregate in respect of which the Account Debtor is the government of
the United States, any agency or instrumentality thereof, any state or
municipality or any foreign sovereign.
(c) Delivery and Control of Receivables. With respect to
any Receivables in excess of $50,000 individually or $250,000 in the aggregate
that is evidenced by, or constitutes, Chattel Paper or Instruments, each Grantor
shall cause each originally executed copy thereof to be delivered to the
Collateral Agent (or its agent or designee) appropriately indorsed to the
Collateral Agent or indorsed in blank: (i) with respect to any such Receivables
in existence on the date hereof, on or prior to the date hereof and (ii) with
respect to any such Receivables hereafter arising, within thirty (30) days of
such Grantor acquiring rights therein. With respect to any Receivables in excess
of $50,000 individually or $250,000 in the aggregate which would constitute
"electronic chattel paper" under Article 9 of the UCC, each Grantor shall take
all steps necessary to give the Collateral Agent control over such Receivables
(within the meaning of Section 9-105 of the UCC): (i) with respect to any such
Receivables in existence on the date hereof, on or prior to the date hereof and
(ii) with respect to any such Receivables hereafter arising, within thirty (30)
days of such Grantor acquiring rights therein. Any Receivable not otherwise
required to be delivered or subjected to the control of the Collateral Agent in
accordance with this subsection (c) shall be delivered or subjected to such
control upon request of the Collateral Agent.
4.4 INVESTMENT RELATED PROPERTY. INVESTMENT RELATED PROPERTY
GENERALLY
(a) Covenants and Agreements. Each Grantor hereby
covenants and agrees that:
(i) in the event it acquires rights in any
Investment Related Property after the date hereof, it shall deliver to
the Collateral Agent, no less frequently than on a quarterly basis or
as otherwise expressly required by the Credit Agreement, a completed
Pledge Supplement, substantially in the form of Exhibit A attached
hereto, together with all Supplements to Schedules thereto, reflecting
such new Investment Related Property and all other Investment Related
Property. Notwithstanding the foregoing, it is understood and agreed
that the security interest of the Collateral Agent shall attach to all
Investment Related Property immediately upon any Grantor's acquisition
of rights therein and shall not be affected by the failure of any
Grantor to deliver a supplement to Schedule 4.4 as required hereby;
(ii) except as provided in the next sentence, in
the event such Grantor receives any dividends, interest or
distributions on any Investment Related Property, or any securities or
other property upon the merger, consolidation, liquidation or
dissolution of any issuer of any Investment Related Property, then (a)
such dividends, interest or distributions and securities or other
property shall be included in the definition
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of Collateral without further action and (b) such Grantor shall
immediately take all steps reasonably requested by the Collateral Agent
to ensure the validity, perfection, priority and, if applicable,
control of the Collateral Agent over such Investment Related Property
(including, without limitation, delivery thereof to the Collateral
Agent) and pending any such action such Grantor shall be deemed to hold
such dividends, interest, distributions, securities or other property
in trust for the benefit of the Collateral Agent and shall segregate
such dividends, distributions, Securities or other property from all
other property of such Grantor. Notwithstanding the foregoing, so long
as no Event of Default shall have occurred and be continuing, the
Collateral Agent authorizes each Grantor to retain all cash dividends
and distributions and all payments of interest;
(iii) each Grantor consents to the grant by each
other Grantor of a Security Interest in all Investment Related Property
to the Collateral Agent.
(b) Delivery and Control.
(i) Each Grantor agrees that with respect to any
Investment Related Property in which it currently has rights it shall
comply with the provisions of this Section 4.4(b) on or before the
Credit Date and with respect to any Investment Related Property
hereafter acquired by such Grantor it shall comply with the provisions
of this Section 4.4(b) within thirty (30) days of acquiring rights
therein, in each case in form and substance satisfactory to the
Collateral Agent. With respect to any Investment Related Property that
is represented by a certificate or that is an "instrument" (other than
any Investment Related Property credited to a Securities Account) it
shall cause such certificate or instrument to be delivered to the
Collateral Agent, indorsed in blank by an "effective indorsement" (as
defined in Section 8-107 of the UCC), regardless of whether such
certificate constitutes a "certificated security" for purposes of the
UCC. With respect to any Investment Related Property that is an
"uncertificated security" for purposes of the UCC (other than any
"uncertificated securities" credited to a Securities Account), it shall
cause any issuer of such uncertificated security which is a Subsidiary,
and shall use commercially reasonable efforts to cause any issuer of
such uncertificated security which is not a Subsidiary, to either (i)
register the Collateral Agent as the registered owner thereof on the
books and records of the issuer or (ii) execute an agreement
substantially in the form of Exhibit B hereto, pursuant to which such
issuer agrees to comply with the Collateral Agent's instructions with
respect to such uncertificated security without further consent by such
Grantor.
(c) Voting and Distributions.
(i) So long as no Event of Default shall have
occurred and be continuing:
(1) except as otherwise provided under the covenants and
agreements relating to investment related property in this
Agreement or elsewhere herein or in the Credit Agreement, each
Grantor shall be entitled to exercise or refrain from
exercising any and all voting and other consensual rights
pertaining to the Investment Related Property or any part
thereof for any purpose not inconsistent with the terms of
this Agreement or the Credit Agreement; it being understood,
however, that neither the voting by such Grantor of any
Pledged Stock for, or such Grantor's consent to, the election
of directors (or similar governing body) at a regularly
scheduled annual or other meeting of stockholders or with
respect to
16
incidental matters at any such meeting, nor such Grantor's
consent to or approval of any action otherwise permitted under
this Agreement and the Credit Agreement, shall be deemed
inconsistent with the terms of this Agreement or the Credit
Agreement within the meaning of this Section 4.4(c)(i)(1), and
no notice of any such voting or consent need be given to the
Collateral Agent; and
(2) the Collateral Agent shall promptly execute and deliver (or
cause to be executed and delivered) to each Grantor all
proxies, and other instruments as such Grantor may from time
to time reasonably request for the purpose of enabling such
Grantor to exercise the voting and other consensual rights
when and to the extent which it is entitled to exercise
pursuant to clause (1) above;
(ii) Upon either delivery by any Grantor to
Collateral Agent of written notice that an Event of Default has
occurred and is continuing, or delivery by Collateral Agent or the
Administrative Agent to Grantor of written notice that the Event of
Default exists:
(A) all rights of each Grantor to exercise or refrain
from exercising the voting and other consensual
rights which it would otherwise be entitled to
exercise pursuant hereto shall cease and all such
rights shall thereupon become vested in the
Collateral Agent who shall thereupon have the sole
right to exercise such voting and other consensual
rights; and
(B) in order to permit the Collateral Agent to exercise
the voting and other consensual rights which it may
be entitled to exercise pursuant hereto and to
receive all dividends and other distributions which
it may be entitled to receive hereunder: (1) each
Grantor shall promptly execute and deliver (or cause
to be executed and delivered) to the Collateral Agent
all proxies, dividend payment orders and other
instruments as the Collateral Agent may from time to
time reasonably request and (2) each Grantor
acknowledges that the Collateral Agent may utilize
the power of attorney set forth in Section 6.1.
4.4.2 PLEDGED EQUITY INTERESTS
(a) Representations and Warranties. Each Grantor hereby
represents and warrants, on the Closing Date and on each Credit Date, that:
(i) Schedule 4.4(A) (as such schedule may be
amended or supplemented from time to time) sets forth under the
headings "Pledged Stock, "Pledged LLC Interests," "Pledged Partnership
Interests" and "Pledged Trust Interests," respectively, all of the
Pledged Stock, Pledged LLC Interests, Pledged Partnership Interests and
Pledged Trust Interests owned by any Grantor and such Pledged Equity
Interests constitute the percentage of issued and outstanding shares of
stock, percentage of membership interests, percentage of partnership
interests or percentage of beneficial interest of the respective
issuers thereof indicated on such Schedule, all of which is true,
accurate and complete as of the Closing Date or thereafter, as of the
date on which financial statements were required to be provided under
the Credit Agreement for the last Fiscal Quarter then ended or the last
date such Schedule 4.4(A) was otherwise required to be amended or
supplemented in accordance with the Credit Agreement;
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(ii) except as set forth on Schedule 4.4(B), it
has not acquired any equity interests of another entity or
substantially all the assets of another entity within the five (5)
years prior to the Closing Date;
(iii) it is the record and beneficial owner of the
Pledged Equity Interests free of all Liens, rights or claims of other
Persons other than Permitted Liens and there are no outstanding
warrants, options or other rights to purchase, or shareholder, voting
trust or similar agreements outstanding with respect to, or property
that is convertible into, or that requires the issuance or sale of, any
Pledged Equity Interests;
(iv) no material consent of any Person including
any other general or limited partner, any other member of a limited
liability company, any other shareholder or any other trust beneficiary
is necessary in connection with the creation, perfection or first
priority status of the security interest of the Collateral Agent in any
Pledged Equity Interests or the exercise by the Collateral Agent of the
voting or other rights provided for in this Agreement or the exercise
of remedies in respect thereof; and
(v) except as otherwise set forth in Schedule
4.4 hereto, none of the Pledged LLC Interests nor Pledged Partnership
Interests issued by any Grantor or any Subsidiary thereof are or
represent interests in issuers that: (a) are registered as investment
companies or (b) are dealt in or traded on securities exchanges or
markets.
(b) Covenants and Agreements. Each Grantor hereby
covenants and agrees that:
(i) without the prior written consent of the
Collateral Agent (which shall not be unreasonably withheld), it shall
not vote to enable or take any other action to: (a) amend or terminate
any partnership agreement, limited liability company agreement,
certificate of incorporation, by-laws or other organizational documents
in any way that adversely affects the validity, perfection or priority
of the Collateral Agent's security interest except for Permitted Liens
and Permitted Sales, (b) permit any issuer of any Pledged Equity
Interest that is a Grantor or a Subsidiary thereof to issue any
additional stock, partnership interests, limited liability company
interests or other equity interests of any nature or to issue
securities convertible into or granting the right of purchase or
exchange for any stock or other equity interest of any nature of such
issuer unless such stock or interests is pledged hereunder, (c) other
than as permitted under the Credit Agreement, permit any issuer of any
Pledged Equity Interest that is a Subsidiary to dispose of all or a
material portion of their assets, (d) waive any default under or breach
of any terms of organizational document relating to the issuer of any
Pledged Equity Interest or the terms of any Pledged Debt that would
individually or in the aggregate cause a Material Adverse Effect, or
(e) cause any Subsidiary of Holdings that is an issuer of any Pledged
Partnership Interests or Pledged LLC Interests which are not securities
(for purposes of the UCC) on the date hereof to elect or otherwise take
any action to cause such Pledged Partnership Interests or Pledged LLC
Interests to be treated as securities for purposes of the UCC;
provided, however, notwithstanding the foregoing, if any issuer of any
Pledged Partnership Interests or Pledged LLC Interests takes any such
action in violation of the foregoing in this clause (e), such Grantor
shall promptly notify the Collateral Agent in writing of any such
election or action and, in such event, shall take all steps reasonably
requested by the Collateral Agent to establish the Collateral Agent's
"control" thereof;
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(ii) each Grantor consents to the grant by each
other Grantor of a security interest in all Investment Related Property
to the Collateral Agent and, without limiting the foregoing, consents
to the transfer of any Pledged Partnership Interest and any Pledged LLC
Interest to the Collateral Agent or its nominee following the
occurrence and during the continuance of an Event of Default and to the
substitution of the Collateral Agent or its nominee as a partner in any
partnership or as a member in any limited liability company with all
the rights and powers related thereto; and
(iii) it shall notify the Collateral Agent in
writing, by executing and delivering to the Collateral Agent a
completed Pledge Supplement, substantially in the form of Exhibit A
attached hereto, together with all Supplements to Schedules thereto,
promptly if any issuer of Pledged LLC Interests or Pledged Partnership
Interests that is a Grantor or a Subsidiary thereof has not opted to be
treated as securities under the uniform commercial code of any
jurisdiction.
4.4.3 PLEDGED DEBT
(a) Representations and Warranties. Each Grantor hereby
represents and warrants, on the Closing Date and each Credit Date, that:
(i) Schedule 4.4 (as such schedule may be
amended or supplemented from time to time) sets forth under the heading
"Pledged Debt" all of the Pledged Debt owned by any Grantor as of the
Closing Date or thereafter, as of the date on which financial
statements were required to be provided under the Credit Agreement for
the last Fiscal Quarter then ended or the last date such Schedule 4.4
was otherwise required to be amended or supplemented in accordance with
the Credit Agreement and all of such Pledged Debt has been duly
authorized, authenticated or issued, and delivered and is the legal,
valid and binding obligation of the issuers thereof and is not in
default and constitutes all of the issued and outstanding inter-company
Indebtedness.
4.4.4 INVESTMENT ACCOUNTS
(a) Representations and Warranties. Each Grantor hereby
represents and warrants, on the Closing Date and each Credit Date, that:
(i) Schedule 4.4 hereto (as such schedule may be
amended or supplemented from time to time) sets forth under the
headings "Securities Accounts" and "Commodities Accounts,"
respectively, all of the Securities Accounts and Commodities Accounts
in which each Grantor has an interest as of the Closing Date or
thereafter, as of the date on which financial statements were required
to be provided under the Credit Agreement for the last Fiscal Quarter
then ended or the last date such Schedule 4.4 was otherwise required to
be amended or supplemented in accordance with the Credit Agreement.
Each Grantor is the sole entitlement holder of each such Securities
Account and Commodity Account, and such Grantor has not consented to,
and is not otherwise aware of, any Person (other than the Collateral
Agent pursuant thereto) having "control" (within the meanings of
Sections 8-106 and 9-106 of the UCC) over, or any other interest in,
any such Securities Account or Commodity Account or securities or other
property credited thereto;
(ii) Schedule 4.4 hereto (as such schedule may be
amended or supplemented from time to time) sets forth under the
headings "Deposit Accounts" all of
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the Deposit Accounts in which each Grantor has an interest as of the
Closing Date or thereafter, as of the date on which financial
statements were required to be provided under the Credit Agreement for
the last Fiscal Quarter then ended or the last date such Schedule 4.4
was otherwise required to be amended or supplemented in accordance with
the Credit Agreement. Each Grantor is the sole account holder of each
such Deposit Account and such Grantor has not consented to, and is not
otherwise aware of, any Person (other than the Collateral Agent
pursuant thereto) having either sole dominion and control (within the
meaning of common law) or "control" (within the meanings of Section
9-104 of the UCC) over, or any other interest in, any such Deposit
Account or any money or other property deposited therein; and
(iii) Each Grantor has taken all actions
reasonably requested by the Collateral Agent, including those specified
in Section 4.4.4(c), to: (a) establish Collateral Agent's "control"
(within the meanings of Sections 8-106 and 9-106 of the UCC) over any
portion of the Investment Related Property constituting Certificated
Securities, Uncertificated Securities, Securities Accounts, Securities
Entitlements or Commodities Accounts (each as defined in the UCC); (b)
establish the Collateral Agent's "control" (within the meaning of
Section 9-104 of the UCC) over all Deposit Accounts; and (c) deliver
all Instruments to the Collateral Agent.
(b) Delivery and Control
(i) With respect to any Investment Related
Property consisting of Securities Accounts or Securities Entitlements,
within thirty (30) days it shall cause the securities intermediary
maintaining such Securities Account or Securities Entitlement to enter
into an agreement substantially in the form of Exhibit C hereto
pursuant to which it shall agree to comply with the Collateral Agent's
"entitlement orders" without further consent by such Grantor. With
respect to any Investment Related Property that is a "Deposit Account,"
within thirty (30) days it shall cause the depositary institution
maintaining such account to enter into an agreement substantially in
the form of Exhibit D hereto, pursuant to which the Collateral Agent
shall have both sole dominion and control over such Deposit Account
(within the meaning of the common law) and "control" (within the
meaning of Section 9-104 of the UCC) over such Deposit Account. Each
Grantor shall have entered into such control agreement or agreements
with respect to: (i) any Securities Accounts, Securities Entitlements
or Deposit Accounts that exist on the Credit Date, as of or prior to
the Credit Date and (ii) any Securities Accounts, Securities
Entitlements or Deposit Accounts that are created or acquired after the
Credit Date, within thirty (30) days after the deposit or transfer of
any such Securities Entitlements or funds, whether constituting moneys
or investments, into such Securities Accounts or Deposit Accounts.
In addition to the foregoing, if any issuer of any Investment Related
Property is located in a jurisdiction outside of the United States,
each Grantor shall take such additional actions, including, without
limitation, causing the issuer to register the pledge on its books and
records or making such filings or recordings, in each case as may be
reasonably requested by the Collateral Agent, under the laws of such
issuer's jurisdiction to insure the validity, perfection and priority
of the security interest of the Collateral Agent. Upon the occurrence
and during the continuance of an Event of Default, the Collateral Agent
shall have the right, without notice to any Grantor, to transfer all or
any portion of the Investment Related Property to its name or the name
of its nominee or agent. In addition, the Collateral Agent shall have
the right at any time, without notice to any Grantor, to
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exchange any certificates or instruments representing any Investment
Related Property for certificates or instruments of smaller or larger
denominations.
4.5 [RESERVED].
4.6 LETTER OF CREDIT RIGHTS.
(a) Representations and Warranties. Each Grantor hereby
represents and warrants, on the Closing Date and on each Credit Date, that:
(i) all material letters of credit to which such
Grantor has rights as of the Closing Date or thereafter, as of the date
on which financial statements were required to be provided under the
Credit Agreement for the last Fiscal Quarter then ended or the last
date such Schedule 4.6 was otherwise required to be amended or
supplemented in accordance with the Credit Agreement is listed on
Schedule 4.6 (as such schedule may be amended or supplemented from time
to time) hereto; and
(ii) it has obtained the consent of each issuer
of any material letter of credit to the assignment of the proceeds of
the letter of credit to the Collateral Agent.
(b) Covenants and Agreements. Each Grantor hereby
covenants and agrees that with respect to any material letter of credit
hereafter arising it shall promptly and in no event later than ten (10) days of
its obtaining rights in such material letter of credit rights obtain the consent
of the issuer thereof to the assignment of the proceeds of the letter of credit
to the Collateral Agent and shall deliver to the Collateral Agent a completed
Pledge Supplement, substantially in the form of Exhibit A attached hereto,
together with all Supplements to Schedules thereto.
4.7 INTELLECTUAL PROPERTY.
(a) Representations and Warranties. Except as disclosed
in Schedule 4.7(H) (as such schedule may be amended or supplemented from time to
time), each Grantor hereby represents and warrants, on the Closing Date and on
each Credit Date, that:
(i) Schedule 4.7 (as such schedule may be
amended or supplemented from time to time) sets forth a true and
complete list of (i) all United States, state and foreign registrations
of and applications for Patents, Trademarks, and Copyrights owned by
each Grantor and (ii) all Patent Licenses, Trademark Licenses, Trade
Secret Licenses and Copyright Licenses material to the business of such
Grantor as of the Closing Date or thereafter, as of the date on which
financial statements were required to be provided under the Credit
Agreement for the last Fiscal Quarter then ended or the last date such
Schedule 4.7 was otherwise required to be amended or supplemented in
accordance with the Credit Agreement;
(ii) it is the owner of the entire right, title,
and interest in and to all Intellectual Property listed on Schedule 4.7
that it purports to own (as such schedule may be amended or
supplemented from time to time); and
(iii) all registrations and applications for
Copyrights, Patents and Trademarks purported to be owned by any Grantor
are standing in the name of each Grantor.
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(b) Covenants and Agreements. Each Grantor hereby
covenants and agrees as follows:
(i) it shall not do any act or omit to do any
act whereby any of the Intellectual Property which is material to the
business of Grantor may lapse, or become abandoned, dedicated to the
public, or unenforceable, or which would adversely affect the validity,
grant, or enforceability of the security interest granted therein;
(ii) it shall not, with respect to any Trademarks
which are material to the business of any Grantor, cease the use of any
of such Trademarks or fail to maintain the level of the quality of
products sold and services rendered under any of such Trademark at a
level at least substantially consistent with the quality of such
products and services as of the date hereof, and each Grantor shall
take all steps reasonably necessary to insure that licensees of such
Trademarks use such consistent standards of quality;
(iii) it shall, within thirty (30) days of the
creation or acquisition of any Copyrightable work which is material to
the business of Grantor, apply to register the Copyright in the United
States Copyright Office except for works with respect to which the
Grantor has determined with the exercise of its commercially reasonable
judgment that it shall not so apply;
(iv) it shall take all reasonable steps in the
United States Patent and Trademark Office, the United States Copyright
Office, any state registry or any foreign counterpart of the foregoing,
to pursue any application and maintain any registration of each
Trademark, Patent, and Copyright owned by any Grantor and material to
its business which is now or shall become included in the Intellectual
Property including, but not limited to, those items on Schedule 4.7(A),
(C) and (E) (as each may be amended or supplemented from time to time)
except for works with respect to which the Grantor has determined with
the exercise of its commercially reasonable judgment that it shall not
so apply;
(v) in the event that any Intellectual Property
owned by or exclusively licensed to any Grantor that is material to the
business of such Grantor is, to such Grantor's knowledge, infringed,
misappropriated, or diluted by a third party, such Grantor shall
promptly take all reasonable actions to stop such infringement,
misappropriation, or dilution and protect its rights in such
Intellectual Property (except for such works in respect to which such
Grantor has determined in the exercise of its commercially reasonable
judgment that it shall not take any action);
(vi) it shall promptly (but in no event more than
thirty (30) days after any Grantor obtains knowledge thereof) report to
the Collateral Agent (i) the filing of any application to register any
material Intellectual Property with the United States Patent and
Trademark Office, the United States Copyright Office, or any state
registry or foreign counterpart of the foregoing (whether such
application is filed by such Grantor or through any agent, employee,
licensee, or designee thereof) and (ii) the registration of any
Intellectual Property by any such office, in each case by executing and
delivering to the Collateral Agent a completed Pledge Supplement,
substantially in the form of Exhibit A attached hereto, together with
all Supplements to Schedules thereto;
(vii) it shall, promptly upon the reasonable
request of the Collateral Agent, execute and deliver to the Collateral
Agent any document required to
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acknowledge, confirm, register, record, or perfect the Collateral
Agent's interest in any part of the Intellectual Property, whether now
owned or hereafter acquired;
(viii) except with the prior consent of the
Collateral Agent (not to be unreasonably withheld) or as permitted
under the Credit Agreement, each Grantor shall not execute, and there
will not be on file in any public office, any financing statement or
other document or instruments, except financing statements or other
documents or instruments filed or to be filed in favor of the
Collateral Agent and each Grantor shall not sell, assign, transfer,
license, grant any option, or create or suffer to exist any Lien upon
or with respect to the Intellectual Property, except for the Lien
created by and under this Agreement and the other Credit Documents; and
(ix) it shall hereafter use commercially
reasonable efforts so as not to permit the inclusion in any material
contract to which it hereafter becomes a party of any provision that
could or might in any way materially impair or prevent the creation of
a security interest in, or the assignment of, such Grantor's rights and
interests in any property included within the definitions of any
Intellectual Property acquired under such contracts, provided that this
shall not apply to standard form contracts entered into in the ordinary
course of business.
4.8 COMMERCIAL TORT CLAIMS
(a) Representations and Warranties. Each Grantor hereby
represents and warrants, on the Closing Date and on each Credit Date, that
Schedule 4.8 (as such schedule may be amended or supplemented from time to time)
sets forth all Commercial Tort Claims of each Grantor in excess of $500,000
individually or $2,500,000 in the aggregate as of the Closing Date or
thereafter, as of the date on which financial statements were required to be
provided under the Credit Agreement for the last Fiscal Quarter then ended or
the last date such Schedule 4.8 was otherwise required to be amended or
supplemented in accordance with the Credit Agreement; and
(b) Covenants and Agreements. Each Grantor hereby
covenants and agrees that with respect to any Commercial Tort Claim in excess of
$500,000 individually or $2,500,000 in the aggregate hereafter arising it shall
promptly and in no event later than ten (10) days of it acquiring rights in such
Commercial Tort Claims deliver to the Collateral Agent a completed Pledge
Supplement, substantially in the form of Exhibit A attached hereto, together
with all Supplements to Schedules thereto, identifying such new Commercial Tort
Claims.
SECTION 5. ACCESS; RIGHT OF INSPECTION AND FURTHER ASSURANCES; ADDITIONAL
GRANTORS.
5.1 FURTHER ASSURANCES.
(a) Each Grantor agrees that from time to time, at the
expense of such Grantor, that it shall promptly execute and deliver all further
instruments and documents, and take all further action, that the Collateral
Agent may reasonably request, in order to create and/or maintain the validity,
perfection or priority of and protect any security interest granted hereby or to
enable the Collateral Agent to exercise and enforce its rights and remedies
hereunder with respect to any Collateral. Without limiting the generality of the
foregoing, each Grantor shall:
(i) file such financing or continuation
statements, or amendments thereto, and execute and deliver such other
agreements, instruments, endorsements,
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powers of attorney or notices, as the Collateral Agent may reasonably
request, in order to perfect and preserve the security interests
granted or purported to be granted hereby;
(ii) take all actions necessary to ensure the
recordation of appropriate evidence of the liens and security interest
granted hereunder in the Intellectual Property with any intellectual
property registry in which said Intellectual Property is registered or
in which an application for registration is pending including, without
limitation, the United States Patent and Trademark Office, the United
States Copyright Office, the various Secretaries of State, and the
foreign counterparts on any of the foregoing.
(b) Each Grantor hereby authorizes the Collateral Agent
to file a Record or Records, including, without limitation, financing or
continuation statements, and amendments thereto, in any jurisdictions and with
any filing offices as the Collateral Agent may determine, in its sole
discretion, are necessary to perfect the security interest granted to the
Collateral Agent herein. Such financing statements may describe the Collateral
in the same manner as described herein or may contain an indication or
description of collateral that describes such property in any other manner as
the Collateral Agent may determine, in its sole discretion, is necessary,
advisable or prudent to ensure the perfection of the security interest in the
Collateral granted to the Collateral Agent herein, including, without
limitation, describing such property as "all assets" or "all personal property,
whether now owned or hereafter acquired."
(c) Each Grantor hereby authorizes the Collateral Agent
to modify this Agreement after obtaining such Grantor's approval of or signature
to such modification by amending Schedule 4.7 (as such schedule may be amended
or supplemented from time to time) to include reference to any right, title or
interest in any existing Intellectual Property or any Intellectual Property
acquired or developed by any Grantor after the execution hereof or to delete any
reference to any right, title or interest in any Intellectual Property in which
any Grantor no longer has or claims any right, title or interest.
5.2 ADDITIONAL GRANTORS. From time to time subsequent to the date
hereof, additional Persons may become parties hereto as additional Grantors
(each, an "Additional Grantor"), by executing a Counterpart Agreement. Upon
delivery of any such counterpart agreement to the Collateral Agent, notice of
which is hereby waived by Grantors, each Additional Grantor shall be a Grantor
and shall be as fully a party hereto as if Additional Grantor were an original
signatory hereto. Each Grantor expressly agrees that its obligations arising
hereunder shall not be affected or diminished by the addition or release of any
other Grantor hereunder, nor by any election of Collateral Agent not to cause
any Subsidiary of Company to become an Additional Grantor hereunder. This
Agreement shall be fully effective as to any Grantor that is or becomes a party
hereto regardless of whether any other Person becomes or fails to become or
ceases to be a Grantor hereunder.
SECTION 6. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT.
6.1 POWER OF ATTORNEY. Each Grantor hereby irrevocably appoints
the Collateral Agent (such appointment being coupled with an interest) as such
Grantor's attorney-in-fact, with full authority in the place and stead of such
Grantor and in the name of such Grantor, the Collateral Agent or otherwise, from
time to time, to take any of the following actions:
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(a) upon the occurrence and during the continuance of any
Event of Default, to obtain and adjust insurance required to be maintained by
such Grantor or paid to the Collateral Agent pursuant to the Credit Agreement;
(b) upon the occurrence and during the continuance of any
Event of Default, to ask for, demand, collect, sue for, recover, compound,
receive and give acquittance and receipts for moneys due and to become due under
or in respect of any of the Collateral;
(c) upon the occurrence and during the continuance of any
Event of Default, to receive, endorse and collect any drafts or other
instruments, documents and chattel paper in connection with clause (b) above;
(d) upon the occurrence and during the continuance of any
Event of Default, to file any claims or take any action or institute any
proceedings that the Collateral Agent may reasonably request for the collection
of any of the Collateral or otherwise to enforce the rights of the Collateral
Agent with respect to any of the Collateral;
(e) to prepare and file any UCC financing statements
against such Grantor as debtor;
(f) to prepare, sign, and file for recordation in any
intellectual property registry, appropriate evidence of the lien and security
interest granted herein in the Intellectual Property in the name of such Grantor
as debtor;
(g) upon the occurrence and during the continuance of an
Event of Default, to take or cause to be taken all actions necessary to perform
or comply or cause performance or compliance with the terms of this Agreement,
including, without limitation, access to pay or discharge taxes or Liens (other
than Permitted Liens) levied or placed upon or threatened against the
Collateral, the legality or validity thereof and the amounts necessary to
discharge the same to be determined by the Collateral Agent in its sole
discretion, any such payments made by the Collateral Agent to become obligations
of such Grantor to the Collateral Agent, due and payable immediately without
demand; and
(h) upon the occurrence and during the continuance of an
Event of Default, generally to sell, transfer, pledge, make any agreement with
respect to or otherwise deal with any of the Collateral as fully and completely
as though the Collateral Agent were the absolute owner thereof for all purposes,
and to do, at the Collateral Agent's option and such Grantor's expense, at any
time or from time to time, all acts and things that the Collateral Agent deems
reasonably necessary to protect, preserve or realize upon the Collateral and the
Collateral Agent's security interest therein in order to effect the intent of
this Agreement, all as fully and effectively as such Grantor might do.
6.2 NO DUTY ON THE PART OF COLLATERAL AGENT OR SECURED PARTIES.
The powers conferred on the Collateral Agent hereunder are solely to protect the
interests of the Secured Parties in the Collateral and shall not impose any duty
upon the Collateral Agent or any Secured Party to exercise any such powers. The
Collateral Agent and the Secured Parties shall be accountable only for amounts
that they actually receive as a result of the exercise of such powers, and
neither they nor any of 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 willful misconduct.
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SECTION 7. REMEDIES.
7.1 GENERALLY.
(a) If any Event of Default shall have occurred and be
continuing, the Collateral Agent may exercise in respect of the Collateral, in
addition to all other rights and remedies provided for herein or otherwise
available to it at law or in equity, all the rights and remedies of the
Collateral Agent on default under the UCC (whether or not the UCC applies to the
affected Collateral) to collect, enforce or satisfy any Secured Obligations then
owing, whether by acceleration or otherwise, and also may to the fullest extent
permitted by applicable law pursue any of the following separately, successively
or simultaneously:
(i) require any Grantor to, and each Grantor
hereby agrees that it shall at its expense and promptly upon request of
the Collateral Agent forthwith, assemble all or part of the Collateral
as directed by the Collateral Agent and make it available to the
Collateral Agent at a place to be designated by the Collateral Agent
that is reasonably convenient to both parties;
(ii) enter onto the property where any Collateral
is located and take possession thereof with or without judicial
process;
(iii) prior to the disposition of the Collateral,
store the Collateral or otherwise prepare the Collateral for
disposition in any manner to the extent the Collateral Agent deems
appropriate; and
(iv) without notice except as specified below or
under the UCC, sell, assign, lease, license (on an exclusive or
nonexclusive basis) or otherwise dispose of the Collateral or any part
thereof in one or more parcels at public or private sale, at any of the
Collateral Agent's offices or elsewhere, for cash, on credit or for
future delivery, at such time or times and at such price or prices and
upon such other terms as the Collateral Agent may deem commercially
reasonable.
(b) The Collateral Agent or any Secured Party may be the
purchaser of any or all of the Collateral at any public or private (to the
extent to the portion of the Collateral being privately sold is of a kind that
is customarily sold on a recognized market or the subject of widely distributed
standard price quotations) sale in accordance with the UCC and the Collateral
Agent, as collateral agent for and representative of the Secured Parties, shall
be entitled, for the purpose of bidding and making settlement or payment of the
purchase price for all or any portion of the Collateral sold at any such sale
made in accordance with the UCC, to use and apply any of the Secured Obligations
as a credit on account of the purchase price for any Collateral payable by the
Collateral Agent at such sale. Each purchaser at any such sale 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 applicable
law) all rights of redemption, stay and/or appraisal which it now has or may at
any time in the future have under any rule of law or statute now existing or
hereafter enacted. Each Grantor agrees that, to the extent notice of sale shall
be required by law, at least ten (10) days notice to such Grantor of the time
and place of any public sale or the time after which any private sale is to be
made shall constitute reasonable notification. The Collateral Agent shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. The Collateral Agent may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so
adjourned. Each Grantor agrees that it
26
would not be commercially unreasonable for the Collateral Agent to dispose of
the Collateral or any portion thereof by using Internet sites that provide for
the auction of assets of the types included in the Collateral or that have the
reasonable capability of doing so, or that match buyers and sellers of assets.
Each Grantor hereby waives any claims against the Collateral Agent arising by
reason of the fact that the price at which any Collateral may have been sold at
such a private sale was less than the price which might have been obtained at a
public sale, even if the Collateral Agent accepts the first offer received and
does not offer such Collateral to more than one offeree. If the proceeds of any
sale or other disposition of the Collateral are insufficient to pay all the
Secured Obligations, Grantors shall be liable for the deficiency and the
reasonable fees of any attorneys employed by the Collateral Agent to collect
such deficiency. Each Grantor further agrees that a breach of any of the
covenants contained in this Section will cause irreparable injury to the
Collateral Agent, that the Collateral Agent has no adequate remedy at law in
respect of such breach and, as a consequence, that each and every covenant
contained in this Section shall be specifically enforceable against such
Grantor, and such Grantor hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenants except for a
defense that no default has occurred giving rise to the Secured Obligations
becoming due and payable prior to their stated maturities. Nothing in this
Section shall in any way alter the rights of the Collateral Agent hereunder.
(c) The Collateral Agent may sell the Collateral without
giving any warranties as to the Collateral. The Collateral Agent may
specifically disclaim or modify any warranties of title or the like. This
procedure will not be considered to adversely affect the commercial
reasonableness of any sale of the Collateral.
(d) The Collateral Agent shall have no obligation to
marshal any of the Collateral.
7.2 APPLICATION OF PROCEEDS. Except as expressly provided in
Section 7 of the Gold Consignment Intercreditor Agreement or elsewhere in this
Agreement, all proceeds received by the Collateral Agent in respect of any sale,
any collection from, or other realization upon all or any part of the Collateral
shall be applied in full or in part by the Collateral Agent against, the Secured
Obligations in the following order of priority: first, to the payment of all
costs and expenses of such sale, collection or other realization, including
reasonable compensation to the Collateral Agent and its agents and counsel, and
all other reasonable expenses, liabilities and advances made or incurred by the
Collateral Agent in connection therewith, and all advances made by the
Collateral Agent hereunder for the account of the applicable Grantor, and to the
payment of all reasonable costs and expenses paid or incurred by the Collateral
Agent in connection with the exercise of any right or remedy hereunder or under
the Credit Agreement, all in accordance with the terms hereof or thereof;
second, to the extent of any excess of such proceeds, to the payment of all
other Secured Obligations for the ratable benefit of the Secured Parties; and
third, to the extent of any excess of such proceeds, to the payment to or upon
the order of such Grantor or to whosoever may be lawfully entitled to receive
the same or as a court of competent jurisdiction may direct.
7.3 SALES ON CREDIT. If Collateral Agent sells any of the
Collateral upon credit, Grantor will be credited only with payments actually
made by purchaser and received by Collateral Agent and applied to indebtedness
of the purchaser. In the event the purchaser fails to pay for the Collateral,
Collateral Agent may resell the Collateral and Grantor shall be credited with
proceeds of the sale.
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7.4 DEPOSIT ACCOUNTS.
If any Event of Default shall have occurred and be continuing, the
Collateral Agent may apply the balance from any Deposit Account or instruct the
bank at which any Deposit Account is maintained to pay the balance of any
Deposit Account to or for the benefit of the Collateral Agent.
7.5 INVESTMENT RELATED PROPERTY.
Each Grantor recognizes that, by reason of certain prohibitions
contained in the Securities Act and applicable state securities laws, the
Collateral Agent may be compelled, with respect to any sale of all or any part
of the Investment Related Property conducted without prior registration or
qualification of such Investment Related Property under the Securities Act
and/or such state securities laws, to limit purchasers to those who will agree,
among other things, to acquire the Investment Related Property for their own
account, for investment and not with a view to the distribution or resale
thereof. Each Grantor acknowledges that any such private sale may be at prices
and on terms less favorable than those obtainable through a public sale without
such restrictions (including a public offering made pursuant to a registration
statement under the Securities Act) and, notwithstanding such circumstances,
each Grantor agrees that any such private sale shall be deemed to have been made
in a commercially reasonable manner and that the Collateral Agent shall have no
obligation to engage in public sales and no obligation to delay the sale of any
Investment Related Property for the period of time necessary to permit the
issuer thereof to register it for a form of public sale requiring registration
under the Securities Act or under applicable state securities laws, even if such
issuer would, or should, agree to so register it. If the Collateral Agent
determines to exercise its right to sell any or all of the Investment Related
Property, upon written request, each Grantor shall and shall cause each issuer
of any Pledged Stock to be sold hereunder, each partnership and each limited
liability company from time to time to furnish to the Collateral Agent all such
information as the Collateral Agent may request in order to determine the number
and nature of interest, shares or other instruments included in the Investment
Related Property which may be sold by the Collateral Agent in exempt
transactions under the Securities Act and the rules and regulations of the
Securities and Exchange Commission thereunder, as the same are from time to time
in effect.
7.6 INTELLECTUAL PROPERTY.
(a) Anything contained herein to the contrary
notwithstanding, upon the occurrence and during the continuation of an Event of
Default:
(i) the Collateral Agent shall have the right
(but not the obligation) to bring suit or otherwise commence any action
or proceeding in the name of any Grantor, the Collateral Agent or
otherwise, in the Collateral Agent's sole discretion, to enforce any
Intellectual Property, in which event such Grantor shall, at the
request of the Collateral Agent, do any and all lawful acts and execute
any and all documents required by the Collateral Agent in aid of such
enforcement and such Grantor shall promptly, upon demand, reimburse and
indemnify the Collateral Agent as provided in the Credit Agreement
hereof in connection with the exercise of its rights under this
Section, and, to the extent that the Collateral Agent shall elect not
to bring suit to enforce any Intellectual Property as provided in this
Section, each Grantor agrees to use all reasonable measures, whether by
action, suit, proceeding or otherwise, to prevent the infringement or
other violation of any of such Grantor's rights in the Intellectual
Property that is material to the business by others and for that
purpose agrees to diligently maintain any action, suit or
28
proceeding against any Person so infringing as shall be necessary to
prevent such infringement or violation; and
(ii) the Collateral Agent shall have the right to
notify, or require each Grantor to notify, any obligors with respect to
amounts due or to become due to such Grantor in respect of the
Intellectual Property, of the existence of the security interest
created herein, to direct such obligors to make payment of all such
amounts directly to the Collateral Agent, and, upon such notification
and at the expense of such Grantor, to enforce collection of any such
amounts and to adjust, settle or compromise the amount or payment
thereof, in the same manner and to the same extent as such Grantor
might have done;
(1) all amounts and proceeds (including checks and other
instruments) received by Grantor in respect of amounts due to
such Grantor in respect of the Collateral or any portion
thereof shall be received in trust for the benefit of the
Collateral Agent hereunder, shall be segregated from other
funds of such Grantor and shall be forthwith paid over or
delivered to the Collateral Agent in the same form as so
received (with any necessary endorsement) to be held as cash
Collateral and applied as provided by Section 7.7 hereof; and
(2) Grantor shall not adjust, settle or compromise the amount or
payment of any such amount or release wholly or partly any
obligor with respect thereto or allow any credit or discount
thereon.
(b) If (i) an Event of Default shall have occurred and,
by reason of cure, waiver, modification, amendment or otherwise, no longer be
continuing, (ii) no other Event of Default shall have occurred and be
continuing, (iii) an assignment or other transfer to the Collateral Agent of any
rights, title and interests in and to the Intellectual Property shall have been
previously made and shall have become absolute and effective, and (iv) the
Secured Obligations shall not have become immediately due and payable, upon the
written request of any Grantor, the Collateral Agent shall promptly execute and
deliver to such Grantor, at such Grantor's sole cost and expense, such
assignments or other transfer as may be necessary to reassign to such Grantor
any such rights, title and interests as may have been assigned to the Collateral
Agent as aforesaid, subject to any disposition thereof that may have been made
by the Collateral Agent; provided, after giving effect to such reassignment, the
Collateral Agent's security interest granted pursuant hereto, as well as all
other rights and remedies of the Collateral Agent granted hereunder, shall
continue to be in full force and effect; and provided further, the rights, title
and interests so reassigned shall be free and clear of any other Liens granted
by or on behalf of the Collateral Agent and the Secured Parties.
(c) Solely for the purpose of enabling the Collateral
Agent to exercise rights and remedies under this Section 7 and at such time as
the Collateral Agent shall be lawfully entitled to exercise such rights and
remedies, each Grantor hereby grants to the Collateral Agent, to the extent it
has the right to do so, an irrevocable, nonexclusive license (exercisable
without payment of royalty or other compensation to such Grantor), subject, in
the case of Trademarks, to sufficient rights to quality control and inspection
in favor of such Grantor to avoid the risk of invalidation of said Trademarks,
to use, operate under, license, or sublicense any Intellectual Property now
owned or hereafter acquired by such Grantor, and wherever the same may be
located.
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7.7 CASH PROCEEDS. In addition to the rights of the Collateral
Agent specified in Section 4.3 with respect to payments of Receivables, all
proceeds of any Collateral received by any Grantor consisting of cash, checks
and other non-cash items (collectively, "CASH PROCEEDS") shall be held by such
Grantor in trust for the Collateral Agent, segregated from other funds of such
Grantor, and shall, forthwith upon receipt by such Grantor, unless otherwise
provided pursuant to Section 4.4(a)(ii), be turned over to the Collateral Agent
in the exact form received by such Grantor (duly indorsed by such Grantor to the
Collateral Agent, if required) and held by the Collateral Agent in the
Collateral Account. Any Cash Proceeds received by the Collateral Agent (whether
from a Grantor or otherwise): (i) if no Event of Default shall have occurred and
be continuing, shall be held by the Collateral Agent for the ratable benefit of
the Secured Parties, as collateral security for the Secured Obligations (whether
matured or unmatured) and (ii) if an Event of Default shall have occurred and be
continuing, may, in the sole discretion of the Collateral Agent, (A) be held by
the Collateral Agent for the ratable benefit of the Secured Parties, as
collateral security for the Secured Obligations (whether matured or unmatured)
and/or (B) then or at any time thereafter may be applied by the Collateral Agent
against the Secured Obligations then due and owing.
SECTION 8. COLLATERAL AGENT.
The Collateral Agent has been appointed to act as Collateral Agent
hereunder by Lenders and, by their acceptance of the benefits hereof, the other
Secured Parties. The Collateral Agent shall be obligated, and shall have the
right hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any action (including,
without limitation, the release or substitution of Collateral), solely in
accordance with this Agreement and the Credit Agreement; provided, the
Collateral Agent shall, after payment in full of all Obligations under the
Credit Agreement and the other Credit Documents, exercise, or refrain from
exercising, any remedies provided for herein in accordance with the instructions
of the holders of a majority of the aggregate notional amount (or, with respect
to any Hedge Agreement that has been terminated in accordance with its terms,
the amount then due and payable (exclusive of expenses and similar payments but
including any early termination payments then due) under such Hedge Agreement)
under all Hedge Agreements. In furtherance of the foregoing provisions of this
Section, each Secured Party, by its acceptance of the benefits hereof, agrees
that it shall have no right individually to realize upon any of the Collateral
hereunder, it being understood and agreed by such Secured Party that all rights
and remedies hereunder may be exercised solely by the Collateral Agent for the
benefit of Secured Parties in accordance with the terms of this Section.
Collateral Agent may resign at any time by giving thirty (30) days' prior
written notice thereof to Lenders and the Grantors, and Collateral Agent may be
removed at any time with or without cause by an instrument or concurrent
instruments in writing delivered to the Grantors and Collateral Agent signed by
the Requisite Lenders holding more than 50% of the outstanding Commitments under
the Credit Agreement. Upon any such notice of resignation or any such removal,
Requisite Lenders shall have the right, upon five (5) Business Days' notice to
the Collateral Agent, following receipt of the Grantors' consent (which shall
not be unreasonably withheld or delayed and which shall not be required while an
Event of Default exists), to appoint a successor Collateral Agent. Upon the
acceptance of any appointment as Collateral Agent hereunder by a successor
Collateral Agent, that successor Collateral Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the retiring
or removed Collateral Agent under this Agreement, and the retiring or removed
Collateral Agent under this Agreement shall promptly (i) transfer to such
successor Collateral Agent all sums, Securities and other items of Collateral
held hereunder, together with all records and other documents necessary or
appropriate in connection with the performance of the duties of the successor
Collateral Agent under this Agreement, and (ii) execute and deliver to such
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successor Collateral Agent or otherwise authorize the filing of such amendments
to financing statements, and take such other actions, as may be necessary or
appropriate in connection with the assignment to such successor Collateral Agent
of the security interests created hereunder, whereupon such retiring or removed
Collateral Agent shall be discharged from its duties and obligations under this
Agreement. After any retiring or removed Collateral Agent's resignation or
removal hereunder as the Collateral Agent, the provisions of this Agreement
shall inure to its benefit as to any actions taken or omitted to be taken by it
under this Agreement while it was the Collateral Agent hereunder.
SECTION 9. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS.
This Agreement shall create a continuing security interest in the
Collateral and shall remain in full force and effect until the payment in full
of all Secured Obligations, the cancellation or termination of the Commitments
and the cancellation or expiration of all outstanding Letters of Credit, be
binding upon each Grantor, its successors and assigns, and inure, together with
the rights and remedies of the Collateral Agent hereunder, to the benefit of the
Collateral Agent and its successors, transferees and assigns. Without limiting
the generality of the foregoing, but subject to the terms of the Credit
Agreement, any Lender may assign or otherwise transfer any Loans held by it to
any other Person, and such other Person shall thereupon become vested with all
the benefits in respect thereof granted to Lenders herein or otherwise. Upon the
payment in full of all Secured Obligations (other than unmatured indemnification
obligations), the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding Letters of Credit, the security
interest granted hereby shall terminate hereunder and of record and all rights
to the Collateral shall revert to Grantors. Upon any such termination the
Collateral Agent shall, at Grantors' expense, execute and deliver to Grantors
such documents as Grantors shall reasonably request to evidence such
termination.
SECTION 10. STANDARD OF CARE; COLLATERAL AGENT MAY PERFORM.
The powers conferred on the Collateral Agent hereunder are solely to
protect its interest in the Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the exercise of reasonable care in the
custody of any Collateral in its possession and the accounting for moneys
actually received by it hereunder, the Collateral Agent shall have no duty as to
any Collateral or as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Collateral. The
Collateral Agent shall be deemed to have exercised reasonable care in the
custody and preservation of Collateral in its possession if such Collateral is
accorded treatment substantially equal to that which the Collateral Agent
accords its own property. Neither the Collateral Agent nor any of its directors,
officers, employees or agents shall be liable for failure to demand, collect or
realize upon all or any part of the Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise dispose of any Collateral
upon the request of any Grantor or otherwise. If any Grantor fails to perform
any agreement contained herein, the Collateral Agent may itself perform, or
cause performance of, such agreement, and the expenses of the Collateral Agent
incurred in connection therewith shall be payable by each Grantor under Section
10.2 of the Credit Agreement.
SECTION 11. MISCELLANEOUS.
Any notice required or permitted to be given under this Agreement shall be
given in accordance with Section 10.1 of the Credit Agreement. No failure or
delay on the part of the Collateral Agent in the exercise of any power, right or
privilege hereunder or under any other Credit Document shall impair such power,
right or privilege or be construed to be a waiver of any
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default or acquiescence therein, nor shall any single or partial exercise of any
such power, right or privilege preclude other or further exercise thereof or of
any other power, right or privilege. All rights and remedies existing under this
Agreement and the other Credit Documents are cumulative to, and not exclusive
of, any rights or remedies otherwise available. In case any provision in or
obligation under this Agreement shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby. All
covenants hereunder shall be given independent effect so that if a particular
action or condition is not permitted by any of such covenants, the fact that it
would be permitted by an exception to, or would otherwise be within the
limitations of, another covenant shall not avoid the occurrence of a Default or
an Event of Default if such action is taken or condition exists. This Agreement
shall be binding upon and inure to the benefit of the Collateral Agent and
Grantors and their respective successors and assigns. No Grantor shall, without
the prior written consent of the Collateral Agent given in accordance with the
Credit Agreement, assign any right, duty or obligation hereunder. This Agreement
and the other Credit Documents embody the entire agreement and understanding
between Grantors and the Collateral Agent and supersede all prior agreements and
understandings between such parties relating to the subject matter hereof and
thereof. Accordingly, the Credit Documents may not be contradicted by evidence
of prior, contemporaneous or subsequent oral agreements of the parties. There
are no unwritten oral agreements between the parties. This Agreement may be
executed in one or more counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ITS
CONFLICTS OF LAW PROVISIONS (OTHER THAN SECTION 5-1401 AND SECTION 5-1402 OF THE
NEW YORK GENERAL OBLIGATION LAWS).
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IN WITNESS WHEREOF, each Grantor and the Collateral Agent have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
AAC HOLDING CORP.
By: ____________________________________
Name:
Title:
AAC ACQUISITION CORP.
By: ____________________________________
Name:
Title:
EDUCATIONAL COMMUNICATIONS, INC.
COMMEMORATIVE BRANDS, INC.
TAYLOR SENIOR HOLDING CORP.
TP HOLDING CORP.
TAYLOR PUBLISHING COMPANY
CBI NORTH AMERICAN, INC.
By: ____________________________________
Name:
Title:
TAYLOR PUBLISHING MANUFACTURING, L.P.
By: Taylor Publishing Company
its General Partner
By: ____________________________________
Name:
Title:
TAYLOR MANUFACTURING HOLDINGS, LLC
By: Taylor Publishing Company
its Sole Member
By: ____________________________________
Name:
Title:
33
GOLDMAN SACHS CREDIT PARTNERS L.P.,
as the Collateral Agent
By: ____________________________________
Name:
Title:
34