EXHIBIT 10.30
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Security Agreement") is entered into as
of July 22, 2003 among UNITED STATES CAN COMPANY, a Delaware corporation (the
"Company"), U.S. CAN CORPORATION, a Delaware corporation (the "Parent
Guarantor"), and each of the Domestic Subsidiaries of the Company (individually
a "Subsidiary Guarantor" and collectively the "Subsidiary Guarantors"; together
with the Company and the Parent Guarantor, individually an "Obligor" and
collectively the "Obligors") and WELLS FARGO BANK MINNESOTA, NATIONAL
ASSOCIATION, in its capacity as trustee and collateral agent (in such capacity,
the "Collateral Agent") for the Holders (described below).
RECITALS
WHEREAS, pursuant to that certain Indenture dated as of the date hereof
(as amended, modified, extended, renewed, restated or replaced from time to time
hereinafter, the "Indenture") among the Company, the Collateral Agent, and the
Parent Guarantor, the Company has issued on the date hereof $125,000,000 10 7/8%
Senior Secured Notes due 2010 (collectively, the "Notes");
WHEREAS, the Subsidiary Guarantors (including all future Subsidiaries
of the Company which become a party thereto by execution of a Guarantee
Supplement (as defined in the Indenture)) have guaranteed the obligations of the
Company under the Notes and the Indenture pursuant to the terms of that certain
Subsidiary Guarantee dated as of the date hereof (as amended, modified,
extended, renewed, restated or replaced from time to time hereinafter, the
"Subsidiary Guarantee") and the Parent Guarantor has guaranteed the obligations
of the Company under the Notes and the Indenture pursuant to the terms of that
certain Parent Guarantee dated as of the date hereof (as amended, modified,
extended, renewed, restated or replaced from time to time hereinafter, the
"Parent Guarantee"; collectively, the Indenture, the Notes, the Subsidiary
Guarantee and the Parent Guarantee, together with all documents and instruments
executed in connection therewith, are referred to herein as the "Note
Documents");
WHEREAS, the obligations of the Company, the Parent Guarantor and the
Subsidiary Guarantors under the Note Documents are to be secured pursuant to the
terms of this Security Agreement by liens on and security interests in the
Collateral;
WHEREAS, pursuant to a Lien Intercreditor Agreement dated as of the
date hereof (as amended, modified, extended, renewed, restated or replaced from
time to time hereinafter, the "Intercreditor Agreement") among Bank of America,
N.A., in its capacity as agent (in such capacity, the "Senior Agent") for the
financial institutions party to the Credit Agreement, the Collateral Agent, the
Company, the Parent Guarantor and the Subsidiary Guarantors, the liens on and
security interests in the Collateral granted by the Company, the Parent
Guarantor and the Subsidiary Guarantors pursuant hereto are junior to the liens
on and security interests in the Collateral granted by the Company, the Parent
Guarantor and the Subsidiary Guarantors to the Senior Agent; and
WHEREAS, it is a condition precedent to the effectiveness of the
Indenture and the obligations of the Holders to purchase the Notes in accordance
with Section 8.01(i) of the Indenture.
AGREEMENT
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Definitions.
(a) Unless otherwise defined herein, capitalized terms
used herein shall have the meanings ascribed to such terms in the
Indenture, and the following terms which are defined in the Uniform
Commercial Code (the "UCC") in effect in the State of New York are used
herein as so defined: Accounts, Chattel Paper, Commercial Tort Claim,
Deposit Accounts, Documents, Electronic Chattel Paper, Equipment, Farm
Products, Fixtures, General Intangibles, Goods, Instruments, Inventory,
Investment Property, Letter-of-Credit Rights, Payment Intangibles,
Proceeds, Securities Intermediary, Software and Supporting Obligations.
Except as otherwise expressly provided, all definitions shall be
equally applicable to the singular and plural forms of the terms
defined.
(b) In addition, the following terms shall have the
following meanings:
"Copyright Licenses": any agreement, whether written or oral,
providing for the grant by or to an Obligor of any right under any
Copyright, including, without limitation, any thereof referred to in
Schedule I hereto.
"Copyrights": (a) all copyrights in all Works, now existing or
hereafter created or acquired, all registrations and recordings
thereof, and all applications in connection therewith, including,
without limitation, registrations, recordings and applications in the
United States Copyright Office or in any similar office or agency of
the United States, any State thereof or any other country or any
political subdivision thereof, or otherwise, and including, without
limitation, any thereof referred to in Schedule I hereto, and (b) all
renewals thereof, including, without limitation, any thereof referred
to in Schedule I hereto.
"Governmental Authority": any nation or government, any
intergovernmental or supranational body, any state or other political
subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of government, any
securities exchange and any self-regulatory organization (including the
National Association of Insurance Commissioners).
"Intellectual Property": all Copyrights, Copyright Licenses,
Patents, Patent Licenses, Trademarks, and Trademark Licenses.
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"Paid in Full": the indefeasible payment in full in of all
obligations of the Obligors under the Indenture and the Notes in
accordance with Section 8.01(i) of the Indenture.
"Patent License": all agreements, whether written or oral,
providing for the grant by or to an Obligor of any right to
manufacture, use or sell any invention covered by a Patent, including,
without limitation, any thereof referred to in Schedule I hereto.
"Patents": (a) all letters patent of the United States or any
other country and all improvement patents, reissues, reexaminations,
patents of additions, renewals and extensions thereof, including,
without limitation, any thereof referred to in Schedule I to the
hereto, and (b) all applications for letters patent of the United
States or any other country, and all divisions, continuations and
continuations-in-part thereof, including, without limitation, any
thereof referred to in Schedule I hereto.
"Secured Obligations": the collective reference to all of the
obligations owing from the Company or any other Obligor to any Holder
or the Collateral Agent in connection with the Note Documents,
howsoever evidenced, created, incurred or acquired, whether primary,
secondary, direct, contingent, or joint and several, including, without
limitation, all obligations and liabilities incurred in connection with
collecting and enforcing the foregoing.
"Trademark License": any agreement, whether written or oral,
providing for the grant by or to an Obligor of any right to use any
Trademark, including, without limitation, any thereof referred to in
Schedule I hereto.
"Trademarks": (a) all trademarks, service marks, trade names,
corporate names, fictitious business names, all elements of package or
trade dress of goods or services, logos and other source or business
identifiers, and the goodwill associated therewith, now existing or
hereafter adopted or acquired, all registrations and recordings
thereof, and all applications in connection therewith, whether in the
United States Patent and Trademark Office or in any similar office or
agency of the United States, any State thereof or any other country or
any political subdivision thereof, or otherwise, including, without
limitation, any thereof referred to in Schedule I hereto, and (b) all
renewals thereof, including, without limitation, any thereof referred
to in Schedule I hereto.
"Work": any work which is subject to copyright protection
pursuant to Title 17 of the United States Code or the applicable
copyright laws of any other state or country.
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2. Grant of Security Interest in the Collateral. To secure the
prompt payment and performance in full when due, whether by lapse of time,
acceleration or otherwise, of the Secured Obligations, each Obligor hereby
grants to the Collateral Agent, for the benefit of the Holders, a continuing
security interest in, and a right to set off against, any and all right, title
and interest of such Obligor in and to the following, whether now owned or
existing or owned, acquired, or arising hereafter (collectively, the
"Collateral"):
(a) all Accounts;
(b) all cash and Cash Equivalents;
(c) all Chattel Paper;
(d) all Copyrights;
(e) all Copyright Licenses;
(f) all Deposit Accounts;
(g) all Documents;
(h) all Equipment;
(i) all Fixtures;
(j) all General Intangibles (including
Payment Intangibles and Software);
(k) all Goods;
(l) all Instruments;
(m) all Inventory;
(n) all Investment Property;
(o) all Patents;
(p) all Patent Licenses;
(q) all Supporting Obligations and
Letter-of-Credit Rights;
(r) all Trademarks;
(s) all Trademark Licenses;
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(t) all books, records, ledger cards,
files, correspondence, computer programs, tapes,
disks, and related data processing software (owned by
such Obligor or in which it has an interest) that at
any time evidence or contain information relating to
any Collateral or are otherwise necessary in the
collection thereof or realization thereupon;
(u) all other personal property of any
kind or type whatsoever owned by such Obligor; and
(v) to the extent not otherwise
included, all Proceeds, tort claims, insurance claims
and other rights to payments not otherwise included
in the foregoing and products of any and all of the
foregoing.
Notwithstanding the foregoing, the Obligors do not grant a security
interest in, or a right of setoff against, any of the following:
(a) any contract, license, permit or franchise that validly
prohibits the creation by the Obligors of a security interest
in such contract, license, permit or franchise (or in any
rights or property obtained by the Obligors under such
contract, license, permit or franchise) so long as such
contract, license, permit or franchise was not entered into or
obtained by the Obligors with the intent of avoiding the
requirement that a security interest be granted therein and
except to the extent such prohibition on the creation of a
security interest is rendered ineffective under by Sections
9-406, 9-407, 9-408 and 9-409 of the UCC; provided, however,
that the provisions of this paragraph shall not prohibit the
security interests created by this Security Agreement from
extending to the proceeds of such contract, license, permit or
franchise (or such rights or property) or to the monetary
value of the good will and other general intangibles of the
Obligors relating thereto unless the contract, license, permit
or franchise in question so prohibits; or
(b) any rights or property to the extent that any valid and
enforceable law or regulation applicable to such rights or
property prohibits the creation of a security interest therein
and except to the extent such prohibition on the creation of a
security interest is rendered ineffective under by Sections
9-406, 9-407, 9-408 and 9-409 of the UCC; provided, however,
that the provisions of this paragraph shall not prohibit the
security interests created by this Security Agreement from
extending to the proceeds of such rights or property or to the
monetary value of the good will and other general intangibles
of the Obligors relating thereto unless the law or regulation
in question prohibits such extension.
The Obligors and the Collateral Agent, on behalf of the Holders, hereby
acknowledge and agree that the security interest created hereby in the
Collateral (i) constitutes continuing collateral security for all of the Secured
Obligations, whether now existing or hereafter arising and (ii) is not to be
construed as an assignment of any Intellectual Property.
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3. Provisions Relating to Accounts, Contracts and Agreements.
(a) Anything herein to the contrary notwithstanding, each
of the Obligors shall remain liable under each of its Accounts,
contracts and agreements to observe and perform all the conditions and
obligations to be observed and performed by it thereunder, all in
accordance with the terms of any agreement giving rise to each such
Account or the terms of such contract or agreement. Neither the
Collateral Agent nor any Holder shall have any obligation or liability
under any Account (or any agreement giving rise thereto), contract or
agreement by reason of or arising out of this Security Agreement or the
receipt by the Collateral Agent or any Holder of any payment relating
to such Account, contract or agreement pursuant hereto, nor shall the
Collateral Agent or any Holder be obligated in any manner to perform
any of the obligations of an Obligor under or pursuant to any Account
(or any agreement giving rise thereto), contract or agreement, to make
any payment, to make any inquiry as to the nature or the sufficiency of
any payment received by it or as to the sufficiency of any performance
by any party under any Account (or any agreement giving rise thereto),
contract or agreement, to present or file any claim, to take any action
to enforce any performance or to collect the payment of any amounts
which may have been assigned to it or to which it may be entitled at
any time or times.
(b) Subject to Section 5(e), the Collateral Agent shall
have the right, but not the obligation, to make test verifications of
the Accounts in any manner and through any medium that it reasonably
considers advisable, and the Obligors shall furnish all such assistance
and information as the Collateral Agent may reasonably require in
connection with such test verifications. Upon the Collateral Agent's
request and at the expense of the Obligors (when required by the Credit
Agreement (to the extent incorporated herein by reference)), the
Obligors shall cause independent public accountants or others
satisfactory to the Collateral Agent to furnish to the Collateral Agent
reports showing reconciliations, aging and test verifications of, and
trial balances for, the Accounts. The Collateral Agent in its own name
or in the name of others may communicate with account debtors on the
Accounts to verify with them to the Collateral Agent's satisfaction the
existence, amount and terms of any Accounts.
4. Representations and Warranties. Each Obligor hereby represents
and warrants to the Collateral Agent, for the benefit of the Holders, that so
long as any of the Secured Obligations remain outstanding (other than any such
obligations which by the terms thereof are stated to survive termination of the
Note Documents) or any Note Document between any Obligor and any Holder is in
effect, and until all of the Notes shall have been Paid in Full and the
Indenture shall have been terminated (except as provided in Section 8.01(iii) of
the Indenture):
(a) Chief Executive Office; Books & Records. Such
Obligor's chief executive office and chief place of business is (and
for the prior four months has been) located at the locations set forth
on Schedule II hereto (as updated from time to time), and such Obligor
keeps its books and records at such locations.
(b) Ownership. Such Obligor is the legal and beneficial
owner of the Collateral which it purports to own and has a valid right
to use all of its other Collateral. Such Obligor
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has the right to pledge, sell, assign or transfer the same. Such
Obligor's legal name is as shown in this Security Agreement and such
Obligor's state of incorporation and, if required for filing under the
applicable UCC, organization identification number issued by such
Obligor's state of incorporation is as set forth in Schedule II hereto
and such Obligor has not in the past four months changed its name, been
party to a merger, consolidation or other change in structure or used
any tradename except as set forth in Schedule II attached hereto.
Schedule II may be updated from time to time by the Obligors by giving
written notice thereof to the Collateral Agent. Such Obligor has only
one state of incorporation or organization.
(c) Security Interest/Priority. This Security Agreement
creates a valid security interest in favor of the Collateral Agent, for
the benefit of the Holders, in the Collateral of such Obligor and, when
properly perfected by filing or otherwise, shall constitute a valid
second priority, perfected security interest in such Collateral, to the
extent such security interest can be perfected by filing or otherwise
under the UCC, federal law or other applicable personal property
security legislation, free and clear of all Liens except for Permitted
Liens.
(d) Consents. Except for the filing or recording of UCC
financing statements to perfect the Liens created by this Security
Agreement that may be perfected through the filing of a UCC financing
statement and/or applicable federal filings for Intellectual Property,
no consent or authorization of, filing with, or other act by or in
respect of, any arbitrator or Governmental Authority and no consent of
any other Person (including, without limitation, any stockholder,
member or creditor of such Obligor), is required (i) for the grant by
such Obligor of the security interest in the Collateral granted hereby
or for the execution, delivery or performance of this Security
Agreement by such Obligor or (ii) for the perfection of such security
interest or the exercise by the Collateral Agent of the rights and
remedies provided for in this Security Agreement.
(e) Farm Products. None of the Collateral constitutes, or
is the Proceeds of, Farm Products.
(f) Accounts. With respect to the Accounts of the
Obligors: (i) the goods sold and/or services furnished giving rise to
each Account are not subject to any security interest or Lien except
the second priority, perfected security interest granted to the
Collateral Agent herein and except for Permitted Liens; (ii) each
Account and the papers and documents of the applicable Obligor relating
thereto are genuine and in all material respects what they purport to
be; (iii) no Account of an Obligor is evidenced by any Instrument
unless such Instrument has been theretofore endorsed over and delivered
to the Collateral Agent; (iv) the amount of each Account as shown on
the applicable Obligor's books and records, and on all invoices and
statements which may be delivered to the Collateral Agent with respect
thereto, is due and payable to the applicable Obligor; and (v) to each
of the Obligors' knowledge, the account debtor with respect to each
Account has the capacity to contract.
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(g) Inventory. No Inventory of an Obligor is held by a
third party (other than an Obligor) pursuant to consignment, sale or
return, sale on approval or similar arrangement, unless such Obligor
has perfected a purchase money security interest therein.
(h) Copyrights, Patents and Trademarks.
(i) Schedule I hereto includes all registered
Intellectual Property and all other material Intellectual
Property, in each case owned or used by the Obligors, as such
Schedule I may be updated from time to time.
(ii) All Intellectual Property of such Obligor is
valid, subsisting, unexpired, enforceable and has not been
abandoned, and each Obligor is legally entitled to use each of
its tradenames.
(iii) Except as set forth on Schedule IV hereto,
no holding, decision or judgment has been rendered against any
Obligor by any Governmental Authority which would limit,
cancel or question the validity of any material Intellectual
Property of the Obligors.
(iv) Except as set forth on Schedule IV hereto,
no action or proceeding is pending seeking to limit, cancel or
question the validity of any material Intellectual Property of
the Obligors.
(v) All applications pertaining to the material
Intellectual Property of each Obligor have been duly and
properly filed, all registrations or letters pertaining to
such Intellectual Property have been duly and properly filed
and issued, and all of such Intellectual Property is valid and
enforceable.
(vi) No Obligor has made any assignment or
agreement in conflict with the security interest in the
Intellectual Property of any Obligor hereunder.
(i) Documents, Instruments, Letter-of-Credit Rights and
Chattel Paper. All Documents, Instruments, Letter-of-Credit Rights and
Chattel Paper describing, evidencing or constituting Collateral are, to
the Obligor's knowledge, complete, valid and genuine.
(j) Restrictions on Security Interest. None of the
Obligors is party to any material contract, license, permit or
franchise that contains legally enforceable restrictions on the
granting of a security interest therein in violation of any provision
of the Indenture.
(k) Equipment. With respect to each Obligor's Equipment:
(i) such Obligor has good and marketable title thereto; and (ii) all
such Equipment is in normal operating condition and repair, ordinary
wear and tear alone excepted (subject to casualty events).
(l) Investment Property. As of the Issue Date, none of
the Obligors own any Investment Property except as listed on Schedule
III hereto.
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(m) Commercial Tort Claims. As of the Issue Date, none of
the Obligors has any Commercial Tort Claims.
5. Covenants. Each Obligor covenants that, so long as any of the
Secured Obligations remain outstanding (other than any such obligations which by
the terms thereof are stated to survive termination of the Note Documents) or
any Note Document between any Obligor and any Holder is in effect, and until all
of the Securities shall have been Paid in Full and the Indenture shall have been
terminated (except as provided in Section 8.01(iii) of the Indenture), such
Obligor shall:
(a) Other Liens. Defend the Collateral against the claims
and demands of all other parties claiming an interest therein, keep the
Collateral free from all Liens, except for Permitted Liens, and not
sell, exchange, transfer, assign, lease or otherwise dispose of the
Collateral or any interest therein, except as permitted under the
Indenture.
(b) Preservation of Collateral. Keep the Collateral in
good order, condition and repair in all material respects, ordinary
wear and tear excepted, except for property disposed of in accordance
with the Indenture; not use the Collateral in violation of the
provisions of this Security Agreement or any other Note Document or any
policy insuring the Collateral or any applicable statute, law, bylaw,
rule, regulation or ordinance; not permit Collateral with a fair market
value exceeding $3,000,000 in the aggregate in any year to be or become
a fixture to real property or an accession to other personal property
unless the Collateral Agent has a valid and perfected security interest
for the benefit of the Holders in such fixture or such personal
property to which such Collateral has become an accession; and not,
without the prior written consent of the Collateral Agent, alter or
remove any identifying symbol or number on its Equipment.
(c) Instruments. If any amount payable under or in
connection with any of the Collateral shall be or become evidenced by
any Instrument or if any Collateral shall be stored or shipped subject
to a Document, immediately deliver such Instrument or Document to the
Collateral Agent, duly endorsed in a manner satisfactory to the
Collateral Agent, to be held as Collateral pursuant to this Security
Agreement.
(d) Change in Location; No Reincorporation; Good Standing
Certificates. Not, without providing 30 days prior written notice to
the Collateral Agent and without filing (or confirming that the
Collateral Agent has filed) such amendments to any previously filed
financing statements or any new financing statements as the Collateral
Agent may require, (a) change the location of its chief executive
office and chief place of business (as well as its books and records)
from the locations set forth on Schedule II hereto, (b) reincorporate
or reorganize itself under the laws of any jurisdiction other than the
jurisdiction in which it is incorporated or organized as of the date
hereof, or (c) change its name, be party to a merger, consolidation or
other change in structure or use any tradename other than as set forth
on Schedule II hereto.
(e) Inspection. Allow the Collateral Agent or its
representatives to visit and inspect the Collateral as set forth in
Section 7.10 of the Credit Agreement, such Section 7.10 of the Credit
Agreement being incorporated herein by reference and such provisions
being
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applicable mutatis mutandis to the Collateral Agent as if it were
Administrative Agent thereunder.
(f) Perfection of Security Interest. Execute and deliver
to the Collateral Agent such agreements, assignments or instruments
(including affidavits, notices, reaffirmations and amendments of
existing documents, as the Collateral Agent may reasonably request) and
do all such other things as the Collateral Agent may reasonably deem
necessary or appropriate (i) to assure to the Collateral Agent its
security interests hereunder, including (A) such financing statements
(including renewal statements) or amendments thereof or supplements
thereto or other instruments as the Collateral Agent may from time to
time reasonably request in order to perfect and maintain the security
interests granted hereunder in accordance with the UCC and any other
personal property security legislation in the appropriate state(s) or
province(s), (B) with regard to Investment Property, execute and cause
the Securities Intermediary with respect to such Investment Property to
execute a securities control agreement in form and substance
satisfactory to the Collateral Agent, (C) with regard to Copyrights, a
Notice of Grant of Security Interest in Copyrights in the form of
Exhibit 5(f)(ii)(A) attached hereto, (D) with regard to Patents, a
Notice of Grant of Security Interest in Patents for filing with the
United States Patent and Trademark Office in the form of Exhibit
5(f)(ii)(B) attached hereto and (E) with regard to Trademarks, a Notice
of Grant of Security Interest in Trademarks for filing with the United
States Patent and Trademark Office in the form of Exhibit 5(f)(ii)(C)
attached hereto, (ii) to consummate the transactions contemplated
hereby and (iii) to otherwise protect and assure the Collateral Agent
of its rights and interests hereunder. To that end, each Obligor agrees
that the Collateral Agent may file one or more financing statements
(including financing statements containing a collateral description of
"all assets" and/or "all personal property" of such Obligor) disclosing
the Collateral Agent's security interest in any or all of the
Collateral of such Obligor without, to the extent permitted by law,
such Obligor's signature thereon, and further each Obligor also hereby
irrevocably makes, constitutes and appoints the Collateral Agent, its
nominee or any other Person whom the Collateral Agent may designate, as
such Obligor's attorney-in-fact with full power and for the limited
purpose to sign in the name of such Obligor any such financing
statements, or amendments and supplements to financing statements,
renewal financing statements, notices or any similar documents which in
the Collateral Agent's reasonable discretion would be necessary,
appropriate or convenient in order to perfect and maintain perfection
of the security interests granted hereunder, such power, being coupled
with an interest, being and remaining irrevocable so long as any of the
Secured Obligations remain outstanding or any Note Document between any
Obligor and the Collateral Agent or any Holder is in effect, and until
all of the Notes shall have been Paid in Full and the Indenture shall
have been terminated (except as provided in Section 8.01(iii) of the
Indenture). At any time after the Credit Agreement is no longer in
effect, each Obligor hereby agrees that a carbon, photographic or other
reproduction of this Security Agreement or any such financing statement
is sufficient for filing as a financing statement by the Collateral
Agent without notice thereof to such Obligor wherever the Collateral
Agent may in its sole discretion desire to file the same. In the event
for any reason the law of any jurisdiction other than New York becomes
or is applicable to the Collateral of any Obligor or any part thereof,
or to any of the Secured Obligations, such Obligor agrees to execute
and deliver all such instruments and to do all such other things as
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the Collateral Agent reasonably deems necessary or appropriate to
preserve, protect and enforce the security interests of the Collateral
Agent under the law of such other jurisdiction (and, if an Obligor
shall fail to do so promptly upon the request of the Collateral Agent,
then the Collateral Agent may execute any and all such requested
documents on behalf of such Obligor pursuant to the power of attorney
granted hereinabove). Upon the request of the Collateral Agent, at any
time after the Credit Agreement is no longer in effect, each Obligor
agrees to mark its books and records to reflect the security interest
of the Collateral Agent in the Collateral.
(g) Collateral Held by Warehouseman, Bailee, etc. If any
Collateral that is a single asset with a fair market value in excess of
$100,000 or a group of assets with a fair market value in excess of
$500,000 is at any time in the possession or control of a warehouseman,
bailee or any agent or processor of such Obligor, notify the Collateral
Agent of such possession, notify such Person of the Collateral Agent's
security interest for the benefit of the Holders in such Collateral,
instruct such Person to hold all such Collateral for the Collateral
Agent's account subject to the Collateral Agent's instructions and
obtain acknowledgments from such Person that it is holding the
Collateral for the benefit of the Collateral Agent.
(h) Treatment of Accounts. (i) Not grant or extend the
time for payment of any Account, or compromise or settle any Account
for less than the full amount thereof, or release any Person or
property, in whole or in part, from payment thereof, or allow any
credit or discount thereon, other than in the prudent conduct of an
Obligor's business and (ii) maintain at its principal place of business
a record of Accounts consistent with customary business practices.
(i) Covenants Relating to Copyrights.
(i) Employ the Copyright for each material Work
with such notice of copyright as may be required by law to
secure copyright protection.
(ii) (A) Not do any act or knowingly omit to do
any act whereby any material Copyright may become invalidated;
(B) not do any act, or knowingly omit to do any act, whereby
any material Copyright may become injected into the public
domain; (C) notify the Collateral Agent immediately if it
knows, or has reason to know, that any material Copyright may
become injected into the public domain or of any adverse
determination or development (including, without limitation,
the institution of, or any such determination or development
in, any proceeding in any court or tribunal in the United
States or any other country) regarding an Obligor's ownership
of any such material Copyright or its validity; (D) take all
necessary steps as it shall deem appropriate under the
circumstances to maintain and pursue each application, to
obtain the relevant registration and to maintain each
registration of each material Copyright owned by an Obligor
including, without limitation, filing of applications for
renewal where necessary; and (E) promptly notify the
Collateral Agent of any material infringement of any material
Copyright of an Obligor of which it becomes aware and take
such actions as it shall reasonably deem
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appropriate under the circumstances to protect such Copyright,
including, where appropriate, the bringing of suit for
infringement, seeking injunctive relief and seeking to recover
any and all damages for such infringement.
(iii) Except in connection with sales or other
dispositions permitted under Section 4.06 of the Indenture,
not make any assignment or agreement in conflict with the
security interest in the Copyrights of each Obligor hereunder
other than in the ordinary course of business.
(j) Covenants Relating to Patents and Trademarks.
(i) (A) Continue to use each material Trademark
in order to maintain such Trademark in full force free from
any claim of abandonment for non-use, (B) maintain as in the
past the quality of products and services offered under such
Trademark, (C) employ such Trademark with the appropriate
notice of registration, or notice of trademark or service
mark, as applicable, sufficient to protect such Trademark, (D)
not adopt or use any mark which is confusingly similar or a
colorable imitation of such Trademark unless the Collateral
Agent, for the ratable benefit of the Holders, shall obtain a
perfected security interest in such mark pursuant to this
Security Agreement, and (E) not (and not permit any licensee
or sublicensee thereof to) do any act or knowingly omit to do
any act whereby any material Trademark may become invalidated.
(ii) Not do any act, or omit to do any act,
whereby any material Patent may become abandoned or dedicated.
(iii) Promptly notify the Collateral Agent if it
knows, or has reason to know, that any application or
registration relating to any material Patent or material
Trademark may become abandoned or dedicated, or of any adverse
determination or development (including, without limitation,
the institution of, or any such determination or development
in, any proceeding in the United States Patent and Trademark
Office or any court or tribunal in any country) regarding an
Obligor's ownership of any such Patent or Trademark or its
right to register the same or to keep, maintain and use the
same.
(iv) Whenever an Obligor, either by itself or
through an agent, employee, licensee or designee, shall file
an application for the registration of any Patent or Trademark
with the United States Patent and Trademark Office of any
similar office or agency in any other country or any political
subdivision thereof, such Obligor shall promptly report such
filing to the Collateral Agent. Upon request of the Collateral
Agent, an Obligor shall execute and deliver any and all
agreements, instruments, documents and papers as the
Collateral Agent, may reasonably request to evidence the
Collateral Agent's and the Holders' security interest in any
Patent or Trademark and the goodwill and General Intangibles
of such Obligor relating thereto or represented thereby.
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(v) Take all reasonable and necessary steps,
including, without limitation, in any proceeding before the
United States Patent and Trademark Office, or any similar
office or agency in any other country or any political
subdivision thereof, to maintain and pursue each application,
to obtain the relevant registration and to maintain each
registration of the material Patents and Trademarks,
including, without limitation, filing of applications for
renewal, affidavits of use and affidavits of incontestability.
(vi) Promptly notify the Collateral Agent on
behalf of the Holders after it learns that any material Patent
or material Trademark included in the Collateral is infringed,
misappropriated or diluted by a third party and promptly sue
for infringement, misappropriation or dilution, to seek
injunctive relief where appropriate and to recover any and all
damages for such infringement, misappropriation or dilution,
or take such other actions as it shall reasonably deem
appropriate under the circumstances to protect such Patent or
Trademark.
(vii) Except for licenses to third parties in the
ordinary course of business or except in connection with sales
or other dispositions permitted under Section 4.06 of the
Indenture, not make any assignment or agreement in conflict
with the security interest in the Patents or Trademarks of any
Obligor hereunder.
(k) New Patents, Copyrights and Trademarks. Promptly
provide the Collateral Agent with (i) a listing of all applications, if
any, for new Copyrights, Patents or Trademarks (together with a listing
of the issuance of registrations or letters on present applications),
which new applications and issued registrations or letters shall be
subject to the terms and conditions hereunder, and (ii) (A) with
respect to new Copyrights, a duly executed Notice of Grant of Security
Interest in Copyrights in the form of Exhibit 5(f)(ii)(A) attached
hereto, (B) with respect to new Patents, a duly executed Notice of
Grant of Security Interest in Patents in the form of Exhibit
5.1(f)(ii)(B) attached hereto, (C) with respect to new Trademarks, a
duly executed Notice of Grant of Security Interest in Trademarks in the
form of Exhibit 5.1(f)(ii)(C) attached hereto or (D) such other duly
executed documents as the Collateral Agent may reasonably request in a
form acceptable to counsel for the Collateral Agent and suitable for
recording to evidence the security interest of the Collateral Agent for
the benefit of the Holders in the Copyright, Patent or Trademark which
is the subject of such new application.
(l) Insurance. Insure, repair and replace the Collateral
of such Obligor as set forth in the Credit Agreement pertaining
thereto, such provisions of the Credit Agreement being incorporated
herein by reference and such provisions being applicable mutatis
mutandis to the Collateral Agent as if it were Administrative Agent
thereunder. All insurance proceeds shall be subject to the security
interest of the Collateral Agent hereunder.
(m) Investment Property. Not acquire any Investment
Property without executing and delivering, or causing to be executed
and delivered, to the Collateral Agent such agreements, documents and
instruments as the Collateral Agent may require to perfect the
Collateral Agent's security interest therein.
13
(n) Contracts. No Obligor shall, in violation of the
Indenture, (i) enter into any contract, license, permit or franchise
that prohibits the granting of a security interest in favor of the
Collateral Agent or the Holders or (ii) amend or modify any existing
contracts, licenses, permits or franchises to prohibit the granting of
a security interest in favor of the Collateral Agent or the Holders.
(o) Commercial Tort Claims. Within 45 days of the end of
each fiscal quarter of the Obligors, each Obligor shall notify the
Collateral Agent of any Commercial Tort Claim acquired by it and,
unless otherwise consented by the Collateral Agent, such Obligor shall
enter into a supplement to this Security Agreement, granting to the
Collateral Agent a Lien in such Commercial Tort Claim.
(p) Letters of Credit. If any Obligor is or becomes the
beneficiary of a letter of credit (other than a letter of credit which
is a Supporting Obligation), such Obligor shall promptly, and in any
event within two (2) Business Days after becoming a beneficiary, notify
the Collateral Agent thereof and enter into a tri-party agreement with
the Collateral Agent and the issuer and/or confirmation bank with
respect to Letter-of-Credit Rights relating to such letter of credit
assigning such Letter-of-Credit Rights to the Collateral Agent, all in
form and substance reasonably satisfactory to the Collateral Agent.
(q) Electronic Chattel Paper. Each Obligor shall take all
steps necessary to grant the Collateral Agent control of all Electronic
Chattel Paper in accordance with the UCC and all "transferable records"
as defined in each of the Uniform Electronic Transactions Act and the
Electronic Signatures in Global and National Commerce Act.
6. Performance of Obligations and Advances by Collateral Agent.
On failure of any Obligor to perform any of the covenants and agreements
contained herein, the Collateral Agent may, at its sole option, perform or cause
to be performed the same and in so doing may expend such sums as the Collateral
Agent may reasonably deem advisable in the performance thereof, including,
without limitation, the payment of any insurance premiums, the payment of any
taxes, a payment to obtain a release of a Lien or potential Lien, expenditures
made in defending against any adverse claim and all other expenditures which the
Collateral Agent may make for the protection of the security interest hereof or
may be compelled to make by operation of law. All such sums and amounts so
expended shall be repayable by the Obligors on a joint and several basis
promptly upon timely notice thereof and demand therefor, shall constitute
additional Secured Obligations and shall bear interest from the date said
amounts are expended at 11 7/8% per annum. No such performance of any covenant
or agreement by the Collateral Agent on behalf of any Obligor, and no such
advance or expenditure therefor, shall relieve the Obligors of any default under
the terms of this Security Agreement or any other Note Documents between any
Obligor and any Holder. The Collateral Agent may make any payment hereby
authorized in accordance with any bill, statement or estimate procured from the
appropriate public office or holder of the claim to be discharged without
inquiry into the accuracy of such bill, statement or estimate or into the
validity of any tax assessment, sale, forfeiture, tax lien, title or claim
except to the extent such payment is being contested in good faith by an Obligor
in appropriate proceedings and against which adequate reserves are being
maintained in accordance with GAAP.
14
7. Events of Default.
The occurrence of an event which under the Indenture would constitute
an Event of Default shall be an event of default hereunder (an "Event of
Default").
8. Remedies.
(a) General Remedies. Upon the occurrence of an Event of
Default and during the continuance thereof, the Holders shall have, in
addition to the rights and remedies provided herein, in the Note
Documents or by law (including, but not limited to, the rights and
remedies set forth in the Uniform Commercial Code of the jurisdiction
applicable to the affected Collateral), the rights and remedies of a
secured party under the UCC (regardless of whether the UCC is the law
of the jurisdiction where the rights and remedies are asserted and
regardless of whether the UCC applies to the affected Collateral), and
further, the Collateral Agent may, with or without judicial process or
the aid and assistance of others, to the fullest extent permitted by
law, (i) enter on any premises on which any of the Collateral may be
located and, without resistance or interference by the Obligors, take
possession of the Collateral, (ii) dispose of any Collateral on any
such premises, (iii) require the Obligors to assemble and make
available to the Collateral Agent at the expense of the Obligors any
Collateral at any place and time designated by the Collateral Agent
which is reasonably convenient to both parties, (iv) remove any
Collateral from any such premises for the purpose of effecting sale or
other disposition thereof, and/or (v) without demand and without
advertisement, notice, hearing or process of law, all of which each of
the Obligors hereby waives to the fullest extent permitted by law
(including Article 9 of the UCC), at any place and time or times, sell
and deliver any or all Collateral held by or for it at public or
private sale, by one or more contracts, in one or more parcels, for
cash, upon credit or otherwise, at such prices and upon such terms as
the Collateral Agent deems advisable, in its sole discretion (subject
to any and all mandatory legal requirements). In addition to all other
sums due the Collateral Agent and the Holders with respect to the
Secured Obligations, the Obligors shall pay the Collateral Agent and
each of the Holders all reasonable documented costs and expenses
incurred by the Collateral Agent or any such Holder, including, but not
limited to, reasonable attorneys' fees and court costs, in obtaining or
liquidating the Collateral, in enforcing payment of the Secured
Obligations, or in the prosecution or defense of any action or
proceeding by or against the Collateral Agent or the Holders or the
Obligors concerning any matter arising out of or connected with this
Security Agreement, any Collateral or the Secured Obligations,
including, without limitation, any of the foregoing arising in, arising
under or related to a case under the Bankruptcy Code. To the extent the
rights of notice cannot be legally waived hereunder, each Obligor
agrees that any requirement of reasonable notice shall be met if such
notice is personally served on or mailed postage prepaid to the Company
in accordance with the notice provisions of Section 12.02 of the
Indenture at least 10 days before the time of sale or other event
giving rise to the requirement of such notice. The Collateral Agent and
the Holders shall not be obligated to make any sale or other
disposition of the Collateral regardless of notice having been given.
To the extent permitted by law, any Holder may be a purchaser at any
such sale. To the extent permitted by applicable law, each of the
Obligors hereby waives all of its
15
rights of redemption with respect to any such sale. Subject to the
provisions of applicable law, the Collateral Agent and the Holders may
postpone or cause the postponement of the sale of all or any portion of
the Collateral by announcement at the time and place of such sale, and
such sale may, without further notice, to the extent permitted by law,
be made at the time and place to which the sale was postponed, or the
Collateral Agent and the Holders may further postpone such sale by
announcement made at such time and place.
(b) Remedies Relating to Accounts. Upon the occurrence of
an Event of Default and during the continuance thereof, whether or not
the Collateral Agent has exercised any or all of its rights and
remedies hereunder, each Obligor will promptly upon request of the
Collateral Agent instruct all account debtors to remit all payments in
respect of Accounts to a mailing location selected by the Collateral
Agent. In addition, upon the occurrence and during the continuance of
an Event of Default, the Collateral Agent or its designee may notify
any Obligor's customers and account debtors that the Accounts of such
Obligor have been assigned to the Collateral Agent or of the Collateral
Agent's security interest therein, and may (either in its own name or
in the name of an Obligor or both) demand, collect (including without
limitation by way of a lockbox arrangement), receive, take receipt for,
sell, sue for, compound, settle, compromise and give acquittance for
any and all amounts due or to become due on any Account, and, in the
Collateral Agent's discretion, file any claim or take any other action
or proceeding to protect and realize upon the security interest of the
Holders in the Accounts. The Collateral Agent and the Holders shall
have no liability or responsibility to any Obligor for acceptance of a
check, draft or other order for payment of money bearing the legend
"payment in full" or words of similar import or any other restrictive
legend or endorsement or be responsible for determining the correctness
of any remittance. Each Obligor hereby agrees to indemnify the
Collateral Agent and the Holders from and against all liabilities,
damages, losses, actions, claims, judgments, costs, expenses, charges
and reasonable attorneys' fees suffered or incurred by the Collateral
Agent or the Holders (each, an "Indemnified Party") because of the
maintenance of the foregoing arrangements except as relating to or
arising out of the gross negligence or willful misconduct of an
Indemnified Party or its officers, employees or agents. In the case of
any investigation, litigation or other proceeding, the foregoing
indemnity shall be effective whether or not such investigation,
litigation or proceeding is brought by an Obligor, its directors,
shareholders or creditors or an Indemnified Party or any other Person
or any other Indemnified Party is otherwise a party thereto.
(c) Access. In addition to the rights and remedies
hereunder, upon the occurrence of an Event of Default and during the
continuance thereof, the Collateral Agent shall have the right as
between the Collateral Agent and the Obligors to enter and remain upon
the various premises of the Obligors without cost or charge to the
Collateral Agent, and use the same, together with materials, supplies,
books and records of the Obligors for the purpose of collecting and
liquidating the Collateral, or for preparing for sale and conducting
the sale of the Collateral, whether by foreclosure, auction or
otherwise. In addition, the Collateral Agent may remove Collateral, or
any part thereof, from such premises and/or any records with respect
thereto, in order to effectively collect or liquidate such Collateral.
16
(d) Nonexclusive Nature of Remedies. Failure by the
Collateral Agent or the Holders to exercise any right, remedy or option
under this Security Agreement, any other Note Document or as provided
by law, or any delay by the Collateral Agent or the Holders in
exercising the same, shall not operate as a waiver of any such right,
remedy or option. No waiver hereunder shall be effective unless it is
in writing, signed by the party against whom such waiver is sought to
be enforced and then only to the extent specifically stated, which in
the case of the Collateral Agent or the Holders shall only be granted
as provided herein. To the extent permitted by law, neither the
Collateral Agent, the Holders, nor any party acting as attorney for the
Collateral Agent or the Holders, shall be liable hereunder for any acts
or omissions or for any error of judgment or mistake of fact or law
other than their gross negligence or willful misconduct hereunder. The
rights and remedies of the Collateral Agent and the Holders under this
Security Agreement shall be cumulative and not exclusive of any other
right or remedy which the Collateral Agent or the Holders may have.
(e) Retention of Collateral. The Collateral Agent may,
after providing the notices required by Section 9-621 of the UCC or
otherwise complying with the requirements of applicable law of the
relevant jurisdiction, to the extent the Collateral Agent is in
possession of any of the Collateral, retain the Collateral in
satisfaction of the Secured Obligations. Unless and until the
Collateral Agent shall have provided such notices, however, the
Collateral Agent shall not be deemed to have retained any Collateral in
satisfaction of any Secured Obligations for any reason.
(f) Deficiency. In the event that the proceeds of any
sale, collection or realization are insufficient to pay all amounts to
which the Collateral Agent or the Holders are legally entitled, the
Obligors shall be jointly and severally liable for the deficiency,
together with interest thereon at 11 7/8% per annum, together with the
costs of collection and the reasonable fees of any attorneys employed
by the Collateral Agent to collect such deficiency. Any surplus
remaining after the full payment and satisfaction of the Secured
Obligations shall be returned to the Obligors or to whomsoever a court
of competent jurisdiction shall determine to be entitled thereto.
9. Rights of the Collateral Agent.
(a) Power of Attorney. In addition to other powers of
attorney contained herein, to the fullest extent permitted by
applicable law, each Obligor hereby designates and appoints the
Collateral Agent, on behalf of the Holders, and each of its designees
or agents, as attorney-in-fact of such Obligor, irrevocably and with
power of substitution, with authority to take any or all of the
following actions upon the occurrence and during the continuance of an
Event of Default:
(i) to demand, collect, settle, compromise,
adjust and give discharges and releases concerning the
Collateral of such Obligor, all as the Collateral Agent may
reasonably determine;
17
(ii) to commence and prosecute any actions at any
court for the purposes of collecting any Collateral and
enforcing any other right in respect thereof;
(iii) to defend, settle, adjust or compromise any
action, suit or proceeding brought and, in connection
therewith, give such discharge or release as the Collateral
Agent may deem reasonably appropriate;
(iv) to receive, open and dispose of mail
addressed to an Obligor and endorse checks, notes, drafts,
acceptances, money orders, bills of lading, warehouse receipts
or other instruments or documents evidencing payment, shipment
or storage of the goods giving rise to the Collateral of such
Obligor, or securing or relating to such Collateral, on behalf
of and in the name of such Obligor;
(v) to sell, assign, transfer, make any
agreement in respect of, or otherwise deal with or exercise
rights in respect of, any Collateral or the goods or services
which have given rise thereto, as fully and completely as
though the Collateral Agent were the absolute owner thereof
for all purposes;
(vi) to adjust and settle claims under any
insurance policy relating thereto;
(vii) to execute and deliver all assignments,
conveyances, statements, financing statements, renewal
financing statements, security agreements, affidavits, notices
and other agreements, instruments and documents that the
Collateral Agent may determine necessary in order to perfect
and maintain the security interests and liens granted in this
Security Agreement and in order to fully consummate all of the
transactions contemplated herein;
(viii) to institute any foreclosure proceedings
that the Collateral Agent may deem appropriate; and
(ix) to do and perform all such other acts and
things as the Collateral Agent may reasonably deem to be
necessary, proper or convenient in connection with the
Collateral.
This power of attorney is a power coupled with an interest and shall be
irrevocable (i) for so long as any of the Secured Obligations remain
outstanding (other than any such obligations which by the terms thereof
are stated to survive termination of the Note Documents) or any Note
Document is in effect and (ii) until all of the Notes shall have been
Paid in Full and the Indenture shall have been terminated (except as
provided in Section 8.01(iii) of the Indenture). The Collateral Agent
shall be under no duty to exercise or withhold the exercise of any of
the rights, powers, privileges and options expressly or implicitly
granted to the
18
Collateral Agent in this Security Agreement, and shall not be liable
for any failure to do so or any delay in doing so. The Collateral Agent
shall not be liable for any act or omission or for any error of
judgment or any mistake of fact or law in its individual capacity or
its capacity as attorney-in-fact except acts or omissions resulting
from its gross negligence or willful misconduct. This power of attorney
is conferred on the Collateral Agent solely to protect, preserve and
realize upon its security interest in the Collateral.
(b) Assignment by the Collateral Agent. Subject to the
terms of the Indenture and the Intercreditor Agreement, the Collateral
Agent may from time to time assign the Secured Obligations and any
portion thereof and/or the Collateral and any portion thereof, and the
assignee shall be entitled to all of the rights and remedies of the
Collateral Agent under this Security Agreement in relation thereto.
(c) The Collateral Agent's Duty of Care. Other than the
exercise of reasonable care to ensure the safe custody of the
Collateral while being held by the Collateral Agent hereunder, the
Collateral Agent shall have no duty or liability to preserve rights
pertaining thereto, it being understood and agreed that the Obligors
shall be responsible for preservation of all rights in the Collateral,
and the Collateral Agent shall be relieved of all responsibility for
the Collateral upon surrendering it or tendering the surrender of it to
the Obligors. The Collateral Agent shall be deemed to have exercised
reasonable care in the custody and preservation of the Collateral in
its possession if the Collateral is accorded treatment substantially
equal to that which the Collateral Agent accords its own property,
which shall be no less than the treatment employed by a reasonable and
prudent agent in the industry, it being understood that the Collateral
Agent shall not have responsibility for taking any necessary steps to
preserve rights against any parties with respect to any of the
Collateral.
SECTION 10. Collateral Agent's Fees and Expenses; Indemnification. (a)
The Company agrees to pay upon demand to the Collateral Agent the amount of any
and all reasonable expenses, including the reasonable fees, disbursements and
other charges of its counsel and of any experts or agents, which the Collateral
Agent may incur in connection with (i) the administration of this Security
Agreement, (ii) the custody or preservation of, or the sale of, collection from
or other realization upon any of the Collateral, (iii) the exercise, enforcement
or protection of any rights of the Collateral Agent hereunder or (iv) the
failure of the Company to perform or observe any of the provisions hereof
applicable to it.
(b) Without limitation of its indemnification obligations under
the other Note Documents, the Company agrees to indemnify the Collateral Agent,
the Trustee, and each Affiliate of the foregoing Persons (each such Person being
called an "Indemnitee") against, and hold each Indemnitee harmless from, any and
all losses, claims, damages, liabilities and related expenses, including the
fees, charges and disbursements of any counsel for any Indemnitee, incurred by
or asserted against any Indemnitee arising out of, in connection with, or as a
result of, the execution, delivery or performance of this Security Agreement or
any claim, litigation, investigation or proceeding relating to any of the
foregoing agreement or instrument contemplated hereby, or to the Collateral,
whether or not any Indemnitee is a party thereto; provided that such indemnity
shall not, as to any Indemnitee, be available to the extent that such
19
losses, claims, damages, liabilities or related expenses have resulted from the
gross negligence or willful misconduct of such Indemnitee.
(c) Any such amounts payable as provided hereunder shall be
additional Secured Obligations secured hereby and by the other Note Documents.
The provisions of this Section 10 shall remain operative and in full force and
effect regardless of the termination of this Security Agreement or any other
Note Document, the consummation of the transactions contemplated hereby, the
repayment of any of the Secured Obligations, the invalidity or unenforceability
of any term or provision of this Security Agreement or any other Note Document,
or any investigation made by or on behalf of the Collateral Agent. All amounts
due under this Section 10 shall be payable on written demand therefor.
(d) The Collateral Agent shall not be responsible in any manner
whatsoever for the correctness of any recitals, statements, representations or
warranties contained herein. The Collateral Agent makes no representation as to
the value or condition of the Collateral or any part thereof, as to the title of
the Company to the Collateral, as to the security afforded by this Security
Agreement or any other Note Document or as to the validity, execution,
enforceability, legality or sufficiency of this Security Agreement or any other
Note Document, and the Collateral Agent shall incur no liability or
responsibility in respect of any such matters. Except as may be expressly
provided in any Note Document, the Collateral Agent shall not be responsible for
insuring the Collateral, for the payment of taxes, charges, assessments or liens
upon the Collateral or otherwise as to the maintenance of the Collateral, except
as provided in the immediately following sentence when the Collateral Agent has
possession of the Collateral. The Collateral Agent shall have no duty to the
Company or to the Holders as to any Collateral in its possession or control or
in the possession or control of any agent or nominee of the Collateral Agent or
any income thereon or as to the preservation of rights against prior parties or
any other rights pertaining thereto, except the duty to accord such of the
Collateral as may be in its possession substantially the same care as it accords
its own assets and the duty to account for monies received by it. Without
limitation on the Collateral Agent's right to make any such filing, the
Collateral Agent shall have no obligations (i) to file any UCC financing
statements or UCC continuation statements except at the written direction of the
Company and upon receipt of such statements completed and in a proper form for
filing provided to the Collateral Agent at least five Business Days in advance
of any requested filing date or (ii) to file any document with any foreign or
domestic patent, trademark or copyright office, or any foreign governmental,
municipal or other office. The Collateral Agent shall not be responsible for the
consequences of any oversight or error of judgment whatsoever, except that the
Collateral Agent shall be liable for losses due to its willful misconduct, gross
negligence or bad faith. The Collateral Agent shall not be required to ascertain
or inquire as to the performance by the Company of any of the covenants or
agreements contained herein or in the Indenture, the Notes or the Note
Documents. Neither the Collateral Agent nor any officer, agent or representative
thereof shall be personally liable for any action taken or omitted to be taken
by any such person in connection with this Security Agreement or any other Note
Document except for such person's own gross negligence, willful misconduct or
bad faith. The Collateral Agent may execute any of the powers granted under this
Security Agreement or any of the other Note Documents and perform any duty
hereunder or thereunder either directly or by or through agents or
attorneys-in-fact, and shall not be responsible for the misconduct of any agents
or attorneys-in-fact selected by it with due care.
20
(e) Subject to any additional requirements provided herein or in
the Indenture, if in the performance of its duties under this Security Agreement
the Collateral Agent shall deem it necessary or desirable that a matter be
proved or established with respect to any Person in connection with the taking,
suffering or omitting of any action hereunder by the Collateral Agent, such
matter may be conclusively deemed to be proved or established by a certificate
executed by an officer of such Person, and absent gross negligence, willful
misconduct or bad faith, the Collateral Agent shall have no liability with
respect to any action taken, suffered or omitted in reliance thereon.
(f) The Collateral Agent may consult with counsel and, in the
absence of gross negligence, willful misconduct or bad faith, shall be fully
protected in taking any action hereunder in accordance with any advice of such
counsel. The Collateral Agent shall have the right but not the obligation at any
time to seek instructions concerning the administration of this Security
Agreement, the duties created hereunder or any of the Collateral from any court
of competent jurisdiction.
(g) The Collateral Agent shall be fully protected in relying upon
any resolution, statement, certificate, instrument, opinion, report, notice,
request, consent, order or other paper or document which it believes to be
genuine and to have been signed or presented by the proper party or parties. In
the absence of its gross negligence, willful misconduct or bad faith the
Collateral Agent may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon any certificate or
opinions furnished to the Collateral Agent in connection with this Security
Agreement and the other Note Documents.
(h) The Collateral Agent shall not be deemed to have actual,
constructive, direct or indirect notice or knowledge of the occurrence of any
Event of Default unless and until the Collateral Agent shall have received a
written notice of Event of Default. The Collateral Agent shall have no
obligation whatsoever either prior to or after receiving such a notice of Event
of Default to inquire whether an Event of Default has, in fact, occurred and
shall be entitled to rely conclusively, and shall be fully protected in so
relying, on any certificate so furnished to it and shall have no obligation to
take or omit to take any action with respect to such notice of Event of Default.
(i) If any dispute or disagreement shall arise as to the
allocation of any sum of money received by the Collateral Agent hereunder, under
the Indenture or under any Note Document, the Collateral Agent shall have the
right to deliver such sum to a court of competent jurisdiction and therein
commence an action for interpleader.
(j) The resignation or removal of the Collateral Agent and
appointment of a successor Collateral Agent shall become effective only upon the
successor Collateral Agent's acceptance of appointment as provided in this
Section 10.
(k) The Collateral Agent may resign in writing at any time and be
discharged from the duties hereby created by so notifying the Obligors and the
Trustee. The Company or the Trustee may remove the Collateral Agent if:
21
(A) the Collateral Agent is adjudged a bankrupt or an insolvent or
an order for relief is entered with respect to the Collateral Agent under Title
11, U.S. Code or any similar federal or state law for the relief of debtors;
(B) a custodian or public officer takes charge of the Collateral
Agent or its property; or
(C) the Collateral Agent becomes incapable of acting.
(ii) If the Collateral Agent resigns or is removed or if a vacancy
exists in the office of Collateral Agent for any reason, the Trustee shall
promptly appoint a successor Collateral Agent.
(iii) If a successor Collateral Agent does not take office within 60
days after the retiring Collateral Agent resigns or is removed, the retiring
Collateral Agent may petition any court of competent jurisdiction for the
appointment of a successor Collateral Agent.
(iv) A successor Collateral Agent shall deliver a written
acceptance of its appointment to the retiring Collateral Agent, the Trustee and
the Company. Thereupon, the resignation or removal of the retiring Collateral
Agent shall become effective, and the successor Collateral Agent shall have all
the rights, powers and duties of the Collateral Agent under this Security
Agreement. The successor Collateral Agent shall mail a notice of its succession
to the Indenture Trustee. The retiring Collateral Agent shall promptly transfer
all property held by it as Collateral Agent to the successor Collateral Agent,
provided all sums owing to the Collateral Agent hereunder have been paid.
Notwithstanding replacement of the Collateral Agent pursuant to this Section 10,
the Company's obligations under Sections 10(a), (b) and (c) hereof shall
continue for the benefit of the retiring Collateral Agent, and the Company shall
pay to any such replaced or removed Collateral Agent all amounts owed to such
replaced or removed Collateral Agent under Sections 10(a), (b) and (c) hereof
upon such replacement or removal.
11. Application of Proceeds. Upon the occurrence and during the
continuance of an Event of Default, any payments in respect of the Secured
Obligations and any proceeds of the Collateral, when received by the Collateral
Agent or any of the Holders in cash or its equivalent, subject to the
Intercreditor Agreement, will be applied in reduction of the Secured Obligations
in the order set forth in Section 6.10 of the Indenture, and each Obligor
irrevocably waives the right to direct the application of such payments and
proceeds.
12. Costs of Counsel. At all times hereafter, whether or not an
Event of Default exists, the Obligors agree to promptly pay upon demand any and
all reasonable costs and expenses of the Collateral Agent or the Holders, (a) as
required under Section 7.07 of the Indenture and (b) as necessary to protect the
Collateral or to exercise any rights or remedies under this Security Agreement
or with respect to any Collateral. All of the foregoing costs and expenses shall
constitute Secured Obligations hereunder.
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13. Continuing Agreement.
(a) This Security Agreement shall be a continuing
agreement in every respect and shall remain in full force and effect so
long as any of the Secured Obligations remain outstanding (other than
any such obligations which by the terms thereof are stated to survive
termination of the Note Documents) or any Note Document is in effect,
and until all of the Notes shall have been Paid in Full and the
Indenture shall have terminated (except as provided in Section
8.01(iii) of the Indenture). Upon such payment and termination, this
Security Agreement shall be automatically terminated and the Collateral
Agent and the Holders shall, upon the request and at the expense of the
Obligors, forthwith release all of their Liens and security interests
hereunder and shall execute and deliver all UCC termination statements
and/or other documents reasonably requested by the Obligors evidencing
such termination. Notwithstanding the foregoing, all releases and
indemnities provided hereunder shall survive termination of this
Security Agreement.
(b) This Security Agreement shall continue to be
effective or be automatically reinstated, as the case may be, if at any
time payment, in whole or in part, of any of the Secured Obligations is
rescinded or must otherwise be restored or returned by the Collateral
Agent or any Holder as a preference, fraudulent conveyance or otherwise
under any bankruptcy, insolvency or similar law, all as though such
payment had not been made; provided that in the event payment of all or
any part of the Secured Obligations is rescinded or must be restored or
returned, all reasonable costs and expenses (including without
limitation any reasonable legal fees and disbursements) incurred by the
Collateral Agent or any Holder in defending and enforcing such
reinstatement shall be deemed to be included as a part of the Secured
Obligations.
14. Amendments; Waivers; Modifications. This Security Agreement
and the provisions hereof may not be amended, waived, modified, changed,
discharged or terminated except as set forth in Section 2.2 of the Intercreditor
Agreement and Article 9 of the Indenture.
15. Successors in Interest. This Security Agreement shall create a
continuing security interest in the Collateral and shall be binding upon each
Obligor, its successors and assigns and shall inure, together with the rights
and remedies of the Collateral Agent and the Holders hereunder, to the benefit
of the Collateral Agent and the Holders and their successors and permitted
assigns; provided, however, that none of the Obligors may assign its rights or
delegate its duties hereunder except as permitted by the Indenture. To the
fullest extent permitted by law, each Obligor hereby releases the Collateral
Agent and each Holder, and its successors and assigns, from any liability for
any act or omission relating to this Security Agreement or the Collateral,
except for any liability arising from the gross negligence or willful misconduct
of the Collateral Agent, or such Holder, or its officers, employees or agents.
16. Notices. All notices required or permitted to be given under
this Security Agreement shall be in conformance with Section 12.02 of the
Indenture.
17. Counterparts; Telecopy. This Security Agreement may be
executed in any number of counterparts, each of which where so executed and
delivered shall be an original, but all of
23
which shall constitute one and the same instrument. It shall not be necessary in
making proof of this Security Agreement to produce or account for more than one
such counterpart. Delivery of an executed counterpart by facsimile shall be as
effective as an original executed counterpart and shall be deemed a
representation that an original executed counterpart will be delivered.
18. Headings. The headings of the sections and subsections hereof
are provided for convenience only and shall not in any way affect the meaning,
construction or interpretation of any provision of this Security Agreement.
19. Governing Law; Submission to Jurisdiction; Venue.
(a) THIS SECURITY AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Any legal action or proceeding with respect to this Security Agreement
may be brought in the courts of the State of New York, or of the United
States for the Southern District of New York, and, by execution and
delivery of this Security Agreement, each Obligor hereby irrevocably
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of such courts. Each Obligor further
irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing
of copies thereof by registered or certified mail, postage prepaid, to
it at the address for notices pursuant to Section 12.02 of the
Indenture, such service to become effective 30 days after such mailing.
Nothing herein shall affect the right of the Collateral Agent to serve
process in any other manner permitted by law or to commence legal
proceedings or to otherwise proceed against any Obligor in any other
jurisdiction.
(b) Each Obligor hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with
this Security Agreement brought in the courts referred to in subsection
(a) hereof and hereby further irrevocably waives and agrees not to
plead or claim in any such court that any such action or proceeding
brought in any such court has been brought in an inconvenient forum.
20. Waiver of Jury Trial; Waiver of Consequential Damages. EACH OF
THE PARTIES TO THIS SECURITY AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS SECURITY AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY. Each Obligor agrees not to assert any claim
against the Collateral Agent, any Holder, any of their Affiliates, or any of
their respective directors, officers, employees, attorneys or agents, on any
theory of liability, for special, indirect, consequential or punitive damages
arising out of or otherwise relating to any of the transactions contemplated
herein.
24
21. Severability. If any provision of this Security Agreement is
determined to be illegal, invalid or unenforceable, such provision shall be
fully severable and the remaining provisions shall remain in full force and
effect and shall be construed without giving effect to the illegal, invalid or
unenforceable provisions.
22. Entirety. This Security Agreement together with the other Note
Documents represent the entire agreement of the parties hereto and thereto, and
supersede all prior agreements and understandings, oral or written, if any,
including any commitment letters or correspondence relating to the Note
Documents or the transactions contemplated herein and therein.
23. Survival. All representations and warranties of the Obligors
hereunder shall survive the execution and delivery of this Security Agreement
and the other Note Documents and the issuance of the Notes.
24. Other Security. To the extent that any of the Secured
Obligations are now or hereafter secured by property other than the Collateral
(including, without limitation, real property and securities owned by an
Obligor), or by a guarantee, endorsement or property of any other Person, then
the Collateral Agent, on behalf of the Holders, shall have the right to proceed
against such other property, guarantee or endorsement upon the occurrence of any
Event of Default, and the Collateral Agent and the Lenders have the right, in
their sole discretion, to determine which rights, security, liens, security
interests or remedies the Collateral Agent, on behalf of the Holders, shall at
any time pursue, relinquish, subordinate, modify or take with respect thereto,
without in any way modifying or affecting any of them or any of the Collateral
Agent's and the Holders', rights or the Secured Obligations under this Security
Agreement or under any other of the Note Documents.
25. Priority of Liens. The relative priority of the security
interests with respect to certain of the Collateral is governed by the terms of
the Intercreditor Agreement. This Security Agreement and the Liens granted
herein will be junior in priority to the First Priority Liens (as defined in the
Intercreditor Agreement) in the manner and to the extent set forth in the
Intercreditor Agreement. This Security Agreement shall automatically be amended
and the Collateral covered hereunder (or portion thereof) automatically released
upon the terms and conditions set forth in Section 2.2 of the Intercreditor
Agreement. To the extent of any inconsistency between the terms of the
Intercreditor Agreement and this Security Agreement, the terms of the
Intercreditor Agreement shall govern.
26. Delivery to Senior Agent. Notwithstanding any other provision
of this Security Agreement, during the term of the Credit Agreement, in the
event any requirement hereunder of an Obligor to deliver or cause to be
delivered any agreement, instrument, Collateral or other document to the
Collateral Agent is also a requirement of such Obligor under the terms of the
Credit Agreement, such requirement hereunder shall be deemed to be satisfied
upon the delivery of such agreement, instrument, Collateral or other document to
the Senior Agent pursuant to the terms of the Credit Agreement.
25
Each of the parties hereto has caused a counterpart of this Security
Agreement to be duly executed and delivered as of the date first above written.
COMPANY:
UNITED STATES CAN COMPANY,
a Delaware corporation
By: /s/ Sandra K. Vollman
Name: Sandra K. Vollman
Title: Sr. VP and CFO
GUARANTORS:
U.S. CAN CORPORATION,
a Delaware corporation
By: /s/ Sandra K. Vollman
Name: Sandra K. Vollman
Title: Sr. VP and CFO
USC MAY VERPACKUNGEN HOLDING, INC.,
a Delaware corporation
By: /s/ Sandra K. Vollman
Name: Sandra K. Vollman
Title: Sr. VP and CFO
SECURITY AGREEMENT
Accepted and agreed to as of the date first above written.
WELLS FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Collateral Agent
By: /s/ Jane Y. Schweiger
Name: Jane Y. Schweiger
Title: Vice President
SECURITY AGREEMENT
SCHEDULE I
Intellectual Property
SCHEDULE II
Chief Executive Office; Books and Records; Ownership; Mergers, Consolidations
and Use of Tradenames; State of Organization
SCHEDULE III
Investment Property
SCHEDULE IV
Judgments, etc.
EXHIBIT 5(f)(ii)(A)
NOTICE
OF
GRANT OF SECURITY INTEREST
IN
COPYRIGHTS
United States Copyright Office
Please be advised that pursuant to the Security Agreement dated as of
July 22, 2003 (as the same may be amended, modified, extended or restated from
time to time, the "Security Agreement") by and among the Obligors party thereto
(each a "Obligor" and collectively, the "Obligors") and Wells Fargo Bank
Minnesota, National Association, as Collateral Agent (the "Collateral Agent")
for the Holders referenced therein (the "Holders"), the undersigned Obligor has
granted a continuing security interest in and continuing lien upon, the
copyrights and copyright applications shown below to the Collateral Agent for
the ratable benefit of the Holders:
COPYRIGHTS
Date of
Copyright No. Description of Copyright Copyright
- ------------- ------------------------ ---------
Copyright Applications
Copyright Description of Copyright Date of Copyright
Applications No. Applied For Applications
- ---------------- ----------- ------------
The Obligors and the Collateral Agent, on behalf of the Holders, hereby
acknowledge and agree that the security interest in the foregoing copyrights and
copyright applications (i) may only be in accordance with the terms of the
Security Agreement and (ii) is not to be construed as an assignment of any
copyright or copyright application.
Very truly yours,
___________________________________
[Obligor]
By:________________________________
Name:______________________________
Title:_____________________________
Acknowledged and Accepted:
WELLS FARGO BANK, NATIONAL ASSOCIATION
as Collateral Agent
By:___________________________
Name:_________________________
Title:________________________
EXHIBIT 5(f)(ii)(B)
NOTICE
OF
GRANT OF SECURITY INTEREST
IN
PATENTS
United States Patent and Trademark Office
Please be advised that pursuant to the Security Agreement dated as of
July 22, 2003 (the "Security Agreement") by and among the Obligors party thereto
(each a "Obligor" and collectively, the "Obligors") and Wells Fargo Bank
Minnesota, National Association, as Collateral Agent (the "Collateral Agent")
for the Holders referenced therein (the "Holders"), the undersigned Obligor has
granted a continuing security interest in and continuing lien upon, the patents
and patent applications shown below to the Collateral Agent for the ratable
benefit of the Holders:
PATENTS
Description of Patent Date of
Patent No. Item Patent
- ---------- ---- ------
Patent Applications
Patent Date of Patent
Applications No. Applications
- ---------------- ------------
The Obligors and the Collateral Agent, on behalf of the Holders, hereby
acknowledge and agree that the security interest in the foregoing patents and
patent applications (i) may only be terminated in accordance with the terms of
the Security Agreement and (ii) is not to be construed as an assignment of any
patent or patent application.
Very truly yours,
____________________________________
[Obligor]
By:_________________________________
Name:_______________________________
Title:______________________________
Acknowledged and Accepted:
WELLS FARGO BANK MINNESOTA
NATIONAL ASSOCIATION,
as Collateral Agent
By:____________________________
Name:__________________________
Title:_________________________
EXHIBIT 5(f)(ii)(C)
NOTICE
OF
GRANT OF SECURITY INTEREST
IN
TRADEMARKS
United States Patent and Trademark Office
Please be advised that pursuant to the Security Agreement dated as of
July 22, 2003 (the "Security Agreement") by and among the Obligors party thereto
(each a "Obligor" and collectively, the "Obligors") and Wells Fargo Bank
Minnesota, National Association, as Collateral Agent (the "Collateral Agent")
for the Holders referenced therein (the "Holders"), the undersigned Obligor has
granted a continuing security interest in and continuing lien upon, the
trademarks and trademark applications shown below to the Collateral Agent for
the ratable benefit of the Holders:
TRADEMARKS
Description of Trademark Date of
Trademark Registration No. Item Trademark
- -------------------------- ---- ---------
Trademark Applications
Trademark Description of Trademark Date of Trademark
Applications No. Applied For Applications
- ---------------- ----------- ------------
The Obligors and the Collateral Agent, on behalf of the Holders, hereby
acknowledge and agree that the security interest in the foregoing trademarks and
trademark applications (i) may only be terminated in accordance with the terms
of the Security Agreement and (ii) is not to be construed as an assignment of
any trademark or trademark application.
Very truly yours,
_____________________________________
[Obligor]
By:_________________________________
Name:_______________________________
Title:______________________________
Acknowledged and Accepted:
WELLS FARGO BANK MINNESOTA
NATIONAL ASSOCIATION,
as Collateral Agent
By:__________________________
Name:________________________
Title:_______________________