Exhibit 4.8
[EXECUTION COPY]
U.S. BORROWER SECURITY AGREEMENT
This U.S. BORROWER SECURITY AGREEMENT (as amended, supplemented,
amended and restated or otherwise modified from time to time, this "SECURITY
AGREEMENT"), dated as of June 30, 1997, is made by LEINER HEALTH PRODUCTS
INC., a Delaware corporation (the "GRANTOR"), in favor of THE BANK OF NOVA
SCOTIA, as collateral agent (the "AGENT") for each of the Secured Parties.
W I T N E S S E T H:
WHEREAS, pursuant to a Credit Agreement, dated as of the date hereof
(as amended, supplemented, amended and restated or otherwise modified from
time to time, the "CREDIT AGREEMENT"), among Leiner Health Products Group
Inc., a Delaware corporation ("LHPG" or the "U.S. BORROWER" (prior to the
Assumption)), Vita Health Company (1985) Ltd., a Manitoba corporation (the
"CANADIAN BORROWER", and together with the U.S. Borrower, the "BORROWERS"),
the various financial institutions as are or may become parties thereto which
extend a Commitment under the U.S. Facility (collectively, the "U.S.
LENDERS"), the various financial institutions as are or may become parties
thereto which extend a Commitment under the Canadian Facility (collectively,
the "CANADIAN LENDERS", and together with the U.S. Lenders, the "LENDERS"),
The Bank of Nova Scotia ("SCOTIABANK"), as agent for the U.S. Lenders under
the U.S. Facility (in such capacity, the "U.S. AGENT"), and Scotiabank, as
agent for the Canadian Lenders under the Canadian Facility (in such capacity,
the "CANADIAN AGENT"), the Lenders and the Issuers have extended Commitments
to make Credit Extensions to the Borrowers;
WHEREAS, as contemplated by the Credit Agreement, immediately
following the making of the initial Credit Extensions, the Grantor and LHPG
have delivered the Assumption Agreement, pursuant to which the Grantor has
assumed (the "ASSUMPTION") the rights and obligations of LHPG as (and has
become) the "U.S. Borrower" under the Credit Agreement;
WHEREAS, as a condition precedent to the making of the Credit
Extensions (including the initial Credit Extensions) and the execution and
delivery of the Assumption Agreement under the Credit Agreement, the Grantor
is required to execute and deliver this Security Agreement; and
WHEREAS, the Grantor has duly authorized the execution, delivery and
performance of this Security Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce the
Lenders and the Issuers to make Credit Extensions (including the initial
Credit Extensions) to the Borrowers pursuant to the Credit Agreement, and to
induce the Secured Parties to enter into Rate Protection Agreements, if any,
the Grantor agrees, for the benefit of each Secured Party, as follows.
ARTICLE 1.
DEFINITIONS
SECTION a. CERTAIN TERMS. The following terms (whether or not
underscored) when used in this Security Agreement, including its preamble and
recitals, shall have the following meanings (such definitions to be equally
applicable to the singular and plural forms thereof):
"ABANDONED TRADEMARKS" means, collectively, the trademarks
identified in ITEM A of SCHEDULE III as abandoned.
"AGENT" is defined in the FIRST RECITAL.
"ASSUMPTION" is defined in the SECOND RECITAL.
"BORROWERS" is defined in the FIRST RECITAL.
"CANADIAN AGENT" is defined in the FIRST RECITAL.
"CANADIAN BORROWER" is defined in the FIRST RECITAL.
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"CANADIAN LENDERS" is defined in the FIRST RECITAL.
"COLLATERAL" is defined in SECTION 2.1.
"COLLATERAL ACCOUNT" is defined in SECTION 4.1.2(b).
"COPYRIGHT COLLATERAL" means (1) all copyrights (including all
copyrights for semi-conductor chip product mask works) owned by the Grantor
in the Grantor's name as such may be changed from time to time, whether
statutory or common law, registered or unregistered, now or hereafter in
force throughout the world including all of the Grantor's right, title and
interest in and to all copyrights registered in the United States Copyright
Office or anywhere else in the world and also including the copyrights
referred to in ITEM A of SCHEDULE IV attached hereto, and all applications
for registration thereof, whether pending or in preparation (all of the
foregoing items in this clause (a) being collectively called a "COPYRIGHT"),
the right to sue for past, present and future infringements of any thereof,
all rights of the Grantor thereto throughout the world, all extensions and
renewals of any thereof and all proceeds of the foregoing, including
licenses, royalties, income, payments, claims, damages and proceeds of suit;
(2) all copyright licenses of the Grantor, including each copyright
license referred to in ITEM B of SCHEDULE IV attached hereto subject, in
each case, to the terms of such license agreements, and the right to
prepare for sale, sell and advertise for sale, all Inventory now or
hereafter covered by such licenses; and
(3) all proceeds of, and rights of the Grantor associated with, the
foregoing (including license royalties and proceeds of infringement suits),
the right to sue for breach or enforcement of any copyright license
subject, in each case, to the terms of such license agreements, and all
rights of the Grantor thereto throughout the world.
"CREDIT AGREEMENT" is defined in the FIRST RECITAL.
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"EQUIPMENT" is defined in CLAUSE (A) of SECTION 2.1.
"EXCLUDED AGREEMENTS" is defined in SECTION 2.1.
"GRANTOR" is defined in the PREAMBLE.
"INTELLECTUAL PROPERTY COLLATERAL" means, collectively, the
Copyright Collateral, the Patent Collateral, the Trademark Collateral and the
Trade Secrets Collateral.
"INVENTORY" is defined in CLAUSE (B) of SECTION 2.1
"LENDERS" is defined in the FIRST RECITAL.
"PATENT COLLATERAL" means:
(a) all letters patent and applications for letters patent owned by
the Grantor in the Grantor's name as such may be changed from time to time,
throughout the world, including all patent applications in preparation for
filing anywhere in the world and including each patent and patent
application referred to in ITEM A of SCHEDULE II attached hereto (all of
the foregoing items in this CLAUSE (A) being collectively called a
"PATENT");
(b) all reissues, divisions, continuations, continuations-in-part,
extensions, renewals and reexaminations of any of the items described in
CLAUSE (A);
(c) all patent licenses of the Grantor, including each patent license
referred to in ITEM B of SCHEDULE II attached hereto subject, in each case,
to the terms of such license agreements, and the right to prepare for sale,
sell and advertise for sale, all Inventory now or hereafter covered by such
licenses; and
(d) all proceeds of, and rights of the Grantor associated with, the
foregoing (including license royalties and proceeds of infringement suits),
the right to sue third parties for past, present or future
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infringements of any patent or patent application (described in clause (a)),
including any patent or patent application referred to in ITEM A of
SCHEDULE II attached hereto, and for breach or enforcement of any patent
license, including any patent license referred to in ITEM B of SCHEDULE II
attached hereto subject, in each case, to the terms of such license
agreements, and all rights of the Grantor thereto throughout the world.
"RECEIVABLES" is defined in CLAUSE (C) of SECTION 2.1.
"RELATED CONTRACTS" is defined in CLAUSE (C) of SECTION 2.1.
"SCOTIABANK" is defined in the FIRST RECITAL.
"SECURITY AGREEMENT" is defined in the PREAMBLE.
"TRADEMARK COLLATERAL" means:
(a) all trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade styles, service marks,
certification marks, collective marks, logos, other source of business
identifiers, designs and general intangibles of a like nature owned by the
Grantor in the Grantor's name as such may be changed from time to time (all
of the foregoing items in this CLAUSE (A) being collectively called a
"TRADEMARK"), now existing anywhere in the world or hereafter adopted or
acquired, whether currently in use or not, all registrations and recordings
thereof and all applications in connection therewith, whether pending or in
preparation for filing, including registrations, recordings and
applications in the United States Patent and Trademark Office or in any
office or agency of the United States of America or any State thereof or
any foreign country, including those referred to in ITEM A of SCHEDULE III
attached hereto; PROVIDED, HOWEVER, that Trademark Collateral shall not
include "intent to use" applications for trademark or service mark
registrations filed in the United States Patent and Trademark Office
pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. Section 1051, unless
and until an Amendment to
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Allege Use or a Statement of Use under Section 1(c) or 1(d) of said Act
has been filed;
(b) all Trademark licenses of the Grantor, including each Trademark
license referred to in ITEM B of SCHEDULE III attached hereto subject, in
each case, to the terms of such license agreements, and the right to
prepare for sale, sell and advertise for sale, all Inventory now or
hereafter covered by such licenses;
(c) all reissues, extensions or renewals of any of the items
described in CLAUSES (A) and (B);
(d) all of the goodwill of the business of the Grantor connected with
the use of, and symbolized by the items described in, CLAUSES (A) and (B);
and
(e) all proceeds of, and rights of the Grantor associated with, the
foregoing, including any claim by the Grantor against third parties for
past, present or future infringement or dilution of any Trademark or
Trademark registration, including any Trademark or Trademark registration
referred to in ITEM A of SCHEDULE III attached hereto, or for any injury to
the goodwill of the Grantor associated with the use of any such Trademark
or for breach or enforcement of any Trademark license subject, in each
case, to the terms of such license agreements.
"TRADE SECRETS COLLATERAL" means all of the Grantor's common law and
statutory trade secrets and all other confidential or proprietary or useful
information and all know-how owned by the Grantor in the Grantor's name as such
may be changed from time to time, or used in or held for use in the business of
the Grantor (all of the foregoing being collectively called a "TRADE SECRET"),
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 the right to sue for and to enjoin
and to collect damages for the actual or threatened misappropriation of any
Trade Secret, all Trade Secret licenses of the Grantor, including each Trade
Secret license referred to in SCHEDULE V attached hereto subject, in each case,
to the terms of such license agreements and the right to prepare for sale,
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sell and advertise for sale, all Inventory now or hereafter covered by such
licenses, and including the right to sue for the breach or enforcement of any
such Trade Secret license subject, in each case, to the terms of such license
agreement.
"U.C.C." means the Uniform Commercial Code, as in effect from time to
time in the State of New York.
"U.S. AGENT" is defined in the FIRST RECITAL.
"U.S. LENDERS" is defined in the FIRST RECITAL.
"VEHICLES" means all cars, trucks, trailers, construction and
transportation equipment and other vehicles covered by a certificate of title
law of any state and all tires and other appurtenances to any of the foregoing.
SECTION b. CREDIT AGREEMENT DEFINITIONS. Unless otherwise defined
herein or the context otherwise requires, terms used in this Security Agreement,
including its preamble and recitals, have the meanings provided in the Credit
Agreement.
SECTION c. U.C.C. DEFINITIONS. Unless otherwise defined herein or in
the Credit Agreement or the context otherwise requires, terms for which meanings
are provided in the U.C.C. are used in this Security Agreement, including its
preamble and recitals, with such meanings.
ARTICLE 2.
SECURITY INTEREST
SECTION a. GRANT OF SECURITY. The Grantor hereby assigns (for
collateral security purposes) and pledges to the Agent for its benefit and the
ratable benefit of each of the Secured Parties, and hereby grants to the Agent
for its benefit and the ratable benefit of each of the Secured Parties, a
security interest in all of the following, whether now or hereafter existing or
acquired by the Grantor (the "COLLATERAL"):
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(1) all equipment (other than Vehicles) of the Grantor, wherever
located, including all parts thereof and all accessions, additions,
attachments, improvements, substitutions and replacements thereto and
therefor and all accessories related thereto (any and all of the foregoing
being the "EQUIPMENT");
(2) all inventory of the Grantor, wherever located, including
(a) all raw materials and work in process therefor, finished
goods thereof, and materials used or consumed in the manufacture or
production thereof,
(b) all goods in which the Grantor has an interest in mass or a
joint or other interest or right of any kind (including goods in which
the Grantor has an interest or right as consignee), and
(c) all goods which are returned to or repossessed by the
Grantor,
and all accessions thereto, products thereof and documents therefor (any
and all such inventory, materials, goods, accessions, products and
documents being the "INVENTORY");
(3) all accounts, contracts, contract rights, chattel paper,
documents, instruments, and general intangibles (including tax refunds) of
the Grantor, whether or not arising out of or in connection with the sale
or lease of goods or the rendering of services, and all rights of the
Grantor now or hereafter existing in and to all security agreements,
guaranties, leases and other contracts securing or otherwise relating to
any such accounts, contracts, contract rights, chattel paper, documents,
instruments, and general intangibles (any and all such accounts, contracts,
contract rights, chattel paper, documents, instruments, and general
intangibles being the "RECEIVABLES", and any and all such security
agreements, guaranties, leases and other contracts being the "RELATED
CONTRACTS");
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(4) all Intellectual Property Collateral of the Grantor;
(5) all books, records, writings, data bases, information and other
property relating to, used or useful in connection with, evidencing,
embodying, incorporating or referring to, any of the foregoing in this
SECTION 2.1;
(6) all of the Grantor's other property and rights of every kind and
description and interests therein; and
(7) all products, rents, issues, profits, returns, income and proceeds
of and from any and all of the foregoing Collateral (including proceeds
which constitute property of the types described in CLAUSES (A), (B), (C),
(D), (E) and (F), proceeds deposited from time to time in the Collateral
Account and in any lock boxes of the Grantor, and, to the extent not
otherwise included, all payments under insurance (whether or not the Agent
is the loss payee thereof), or any indemnity, warranty or guaranty, payable
by reason of loss or damage to or otherwise with respect to any of the
foregoing Collateral).
Notwithstanding the foregoing, "Collateral" shall not include (i) the
Collateral, as defined in the U.S. Borrower Pledge Agreement, (ii) any
Equipment that is subject to a Lien securing Indebtedness permitted by
clauses (d)(i) -(d)(iii) of Section 9.2.2 of the Credit Agreement (to the
extent a Lien in favor of the Agent is restricted or prohibited by the terms
of the agreements or other documents relating to the Indebtedness secured by
the applicable Equipment), and (iii) any chattel paper, general intangibles,
contracts, instruments, Intellectual Property Collateral, licenses or other
documents (collectively, "EXCLUDED AGREEMENTS") as to which the grant of a
security interest would result in a breach, default or termination of such
Excluded Agreements, unless and until any required consents shall have been
obtained. The Grantor agrees to use reasonable efforts to obtain any such
required consent.
SECTION b. SECURITY FOR OBLIGATIONS. This Security Agreement secures
the payment of all Obligations of
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the Grantor now or hereafter existing under the Credit Agreement, the Notes
and each other Loan Document to which the Grantor is or may become a party,
whether for principal, interest, costs, fees, expenses or otherwise.
SECTION c. CONTINUING SECURITY INTEREST; TRANSFER OF NOTES. This
Security Agreement shall create a continuing security interest in the Collateral
and shall
(1) remain in full force and effect until payment in full in cash, or
cash collateralization, of all Obligations, the termination or expiration
of all Letters of Credit, the termination of all Rate Protection Agreements
entered into pursuant to the Credit Agreement and the termination of all
Commitments,
(2) be binding upon the Grantor, its successors, transferees and
assigns, and
(3) inure, together with the rights and remedies of the Agent
hereunder, to the benefit of the Agent and each other Secured Party.
Without limiting the generality of the foregoing CLAUSE (C), any Lender may
assign or otherwise transfer (in whole or in part) any Note or Credit
Extensions held by it to any other Person or entity, and such other Person or
entity shall thereupon become vested with all the rights and benefits in
respect thereof granted to such Lender under any Loan Document (including
this Security Agreement) or otherwise, subject, however, to any contrary
provisions in such assignment or transfer, and to the provisions of Section
12.11 and Article XI of the Credit Agreement. Upon the payment in full in
cash, or cash collateralization, of all Obligations, the termination or
expiration of all Letters of Credit, the termination of all Rate Protection
Agreements entered into pursuant to the Credit Agreement and the termination
of all Commitments, the security interest granted herein and all related
Liens shall terminate and all rights to the Collateral shall revert to the
Grantor. Upon any such termination or release, the Agent will, at the
Grantor's sole expense, execute and deliver to the Grantor such documents as
the Grantor shall reasonably request to evidence such termination. Upon any
sale or other transfer
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of Collateral permitted by the Credit Agreement (including in connection
with, and at the time specified in documentation related to, any Permitted
Receivables Transaction), the security interest created hereunder in such
Collateral (but not in the proceeds thereof) shall be deemed to be
automatically released and all rights to such Collateral shall revert to the
Grantor and the Agent will, at the Grantor's sole expense, execute and
deliver to the Grantor such documents as the Grantor shall reasonably request
to evidence such release.
SECTION d. GRANTOR REMAINS LIABLE. Anything herein to the contrary
notwithstanding
(1) the Grantor shall remain liable under the contracts and agreements
included in the Collateral to the extent set forth therein, and shall
perform in all material respects all of its duties and obligations under
such contracts and agreements to the same extent as if this Security
Agreement had not been executed, unless (i) such performance is fully
excused by breach of the other party or parties thereto or (ii) such
failure to perform would not be reasonably expected to have a material
adverse effect on the value of the Collateral,
(2) the exercise by the Agent of any of its rights hereunder shall not
release the Grantor from any of its duties or obligations under any such
contracts or agreements included in the Collateral, and
(3) neither the Agent nor any other Secured Party shall have any
obligation or liability under any such contracts or agreements included in
the Collateral by reason of this Security Agreement, nor shall the Agent or
any other Secured Party be obligated to perform any of the obligations or
duties of the Grantor thereunder or to take any action to collect or
enforce any claim for payment assigned hereunder.
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ARTICLE 3.
REPRESENTATIONS AND WARRANTIES
SECTION a. REPRESENTATIONS AND WARRANTIES. The Grantor represents
and warrants to each Secured Party as set forth in this Section.
SECTION (i) LOCATION OF COLLATERAL, ETC. All of the Equipment,
Inventory and lock boxes of the Grantor are located at the places specified
in ITEM A, ITEM B and ITEM C, respectively, of SCHEDULE I hereto, as such
Schedule shall be deemed to be modified from time to time to reflect any
notice given to the Agent pursuant to CLAUSE (A) of SECTION 4.1.1. Other
than Equipment or Inventory in transit, sold in the ordinary course of
business or the value of which, individually or in the aggregate, does not
exceed $1,500,000, none of the Equipment and Inventory has, within the four
months preceding the date of this Security Agreement, been located at any
place other than the places specified in ITEM A and ITEM B, respectively, of
SCHEDULE I hereto except as set forth in a footnote thereto. The chief
executive office of the Grantor and the office(s) where the Grantor keeps its
records concerning the Receivables, and all originals of all chattel paper
which evidence Receivables, are located at the address set forth in Item D of
SCHEDULE I hereto as such Schedule may be deemed to be modified from time to
time to reflect any notice given to the Agent pursuant to CLAUSE (C) of
SECTION 4.1.2. The Grantor has no trade names other than those set forth in
ITEM E of SCHEDULE I hereto. During the four months preceding the date
hereof, (i) the Grantor has not been known by any legal name different from
the one set forth on the signature page hereto, (ii) nor has the Grantor been
the subject of any merger or other corporate reorganization, except as set
forth in ITEM F of SCHEDULE I hereto. If the Collateral includes any
Inventory located in the State of California, the Grantor is not a "retail
merchant" within the meaning of Section 9102 of the Uniform Commercial Code
- -Secured Transactions of the State of California. All Receivables evidenced
by a promissory note or other instrument, negotiable document or chattel
paper which (individually or in the aggregate) exceed $1,500,000 have been
duly endorsed and accompanied by duly executed instruments of transfer or
assignment, all in form and
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substance reasonably satisfactory to the Agent and delivered and pledged to
the Agent pursuant to SECTION 4.1.7. The Grantor is not a party to any Federal,
state or local government contract except as set forth in ITEM G of SCHEDULE I
hereto.
SECTION (ii) OWNERSHIP, NO LIENS, ETC. The Grantor owns its
Collateral free and clear of any Lien, security interest, charge or
encumbrance except for the security interest created by this Security
Agreement and except as permitted by the Credit Agreement or any other Loan
Document. No effective financing statement or other instrument similar in
effect covering all or any part of the Collateral is on file in any recording
office, except such as may have been filed in favor of the Agent relating to
this Security Agreement or as have been filed in connection with Liens
permitted pursuant to the Loan Documents, including Section 9.2.3 of the
Credit Agreement.
SECTION (iii) POSSESSION AND CONTROL. The Grantor has exclusive
possession and control of its Equipment and Inventory, except as specified in
Item H of Schedule I hereto, as such Item shall be deemed to be modified from
time to time upon delivery of a written notice to the Agent given not less
than 30 days prior to the date on which the Grantor is to relinquish
exclusive possession and control of such Equipment and Inventory.
SECTION (iv) NEGOTIABLE DOCUMENTS, INSTRUMENTS AND CHATTEL PAPER.
The Grantor has delivered to the Agent possession of all originals of all
negotiable documents, instruments and chattel paper currently owned or held
by the Grantor (duly endorsed in blank, if requested by the Agent) which
(individually or in the aggregate) exceed $1,500,000.
SECTION (v) INTELLECTUAL PROPERTY COLLATERAL. With respect to any
Intellectual Property Collateral owned by the Grantor in the Grantor's name
as such may be changed from time to time the loss, impairment or infringement
of which might have a Material Adverse Effect:
(1) each such Copyright, Patent or Trademark is subsisting and has not
been adjudged invalid or unenforceable, in whole or in part and, to the
Grantor's knowledge, there is no basis or any grounds
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for any such Copyright, Patent or Trademark to be adjudged invalid or
unenforceable in whole or in part;
(2) the Grantor has made all reasonable and proper filings and
recordations to protect its interest in such Copyrights, Patents or
Trademarks, including recordations of its interests in the Patents and
Trademarks in the United States Patent and Trademark Office and in
corresponding offices throughout the world and its claims to the Copyrights
in the United States Copyright Office and in corresponding offices
throughout the world;
(3) to the Grantor's knowledge it is the exclusive owner of the entire
and unencumbered right, title and interest in and to such Copyrights,
Patents or Trademarks and no claim has been made that the use of such
Copyrights, Patents or Trademarks violates the asserted rights of any third
party;
(4) the Grantor has performed and will continue to perform all acts
and has paid and will continue to pay all required fees and taxes to
maintain each and every Copyright, Patent or Trademark in full force and
effect throughout the world, as applicable, except as permitted by the
Credit Agreement or this Agreement; and
(5) the Grantor has taken commercially reasonable steps to protect and
maintain the secrecy of its Trade Secrets.
The Grantor owns or is entitled to use by license or otherwise, all Trade
Secrets, licenses, technology, know-how, processes and rights not included in
the Copyrights, Patents or Trademarks used in, necessary for or of importance
to the conduct of the Grantor's business.
SECTION (vi) VALIDITY, ETC. (1) This Security Agreement is effective
to create, as collateral security for the Obligations of the Grantor, valid and
enforceable Liens on the Collateral in favor of the Agent, for the ratable
benefit of the Secured Parties, except as enforceability may be affected by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar
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laws relating to or affecting creditor's rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
(2) Except with regard to Liens (if any) on Specified Assets, upon
the completion of the Filings (with respect to Collateral existing on the
Effective Date) and Subsequent Filings (with respect to Collateral acquired
following the Effective Date for which the Filings are not effective to
perfect the Lien on such after-acquired Collateral), and the delivery to
and continuing possession by the Agent of all instruments, chattel paper
and documents a security interest in which is perfected by possession
(which, in the case of such Subsequent Filings and such instruments,
chattel paper and documents, subject to SECTIONS 3.1.1 and 3.1.4, shall
have occurred prior to any Credit Extensions after the initial Credit
Extensions), the Liens created pursuant to this Agreement will constitute
valid Liens on and (to the extent provided herein) perfected security
interests in the Grantor's Collateral in favor of the Agent for the ratable
benefit of the Secured Parties, and will be prior to all other Liens of all
other Persons other than Permitted Liens, and enforceable as such as
against all other Persons other than (i) Ordinary Course Buyers, except to
the extent that the recording of an assignment or other transfer of title
to the Agent, in the United States Patent and Trademark Office may be
necessary for enforceability, and (ii) except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and
by general equitable principles (whether enforcement is sought by
proceedings in equity or at law) or by an implied covenant of good faith
and fair dealing. Notwithstanding the foregoing, the representation set
forth above shall be deemed true and correct for all purposes so long as
the Grantor has complied with its covenants set forth under CLAUSE (A) of
SECTION 4.1.1, CLAUSE (A) of SECTION 4.1.2, CLAUSE (E) of SECTION 4.1.4,
and SECTION 4.1.7 of this Security Agreement, including the delivery of
executed financing statements for Subsequent Filings to the
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Agent, whether or not the Agent has caused such financing statements to be
filed in the applicable filing offices. As used in this Section, the
following terms shall have the following meanings:
"FILINGS": the filing or recording of the Financing Statements
and the Trademark Security Agreement relating to the Collateral
existing on the Effective Date, in the places specified in ITEM I of
the SCHEDULE I hereto.
"FINANCING STATEMENTS": the financing statements delivered to the
Agent by such Grantor on the date hereof for filing in the
jurisdictions listed on ITEM I of SCHEDULE I hereto.
"ORDINARY COURSE BUYERS": with respect to goods only, buyers in
the ordinary course of business to the extent provided in Section
9-307(1) of the U.C.C. as in effect from time to time in the relevant
jurisdiction.
"PERMITTED LIENS": Liens permitted pursuant to the Loan
Documents, including those permitted to exist pursuant to Section
9.2.3 of the Credit Agreement.
"SPECIFIED ASSETS": the following property and assets of such
Grantor:
(1) equipment constituting fixtures;
(2) Patent Collateral and Trademark Collateral to the extent
that (a) Liens thereon cannot be perfected by the filing of financing
statements under the Uniform Commercial Code or by filing and
acceptance thereof in the United States Patent and Trademark Office or
(b) such Patent Collateral and Trademark Collateral that is not,
individually or in the aggregate, material to the business of the
Grantor and its Subsidiaries taken as a whole;
(3) Copyright Collateral and accounts arising therefrom to the
extent that the Uniform
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Commercial Code as in effect from time to time in the relevant
jurisdiction is not applicable to the creation or perfection of Liens
thereon;
(4) uncertificated securities;
(5) Collateral for which the perfection of Liens thereon
requires filings in or other actions under the laws of jurisdictions
outside the United States of America, any State, territory or
dependency thereof or the District of Columbia (except to the extent
that such filings or other actions have been made or taken);
(6) Receivables or Related Contracts on which the United States
of America or any department, agency or instrumentality thereof is the
obligor, and property or assets subject to any rights reserved in
favor of the United States government as required under law which do
not, individually or in the aggregate, exceed $1,500,000;
(7) goods included in Collateral received by any Person for
"sale or return" within the meaning of Section 2-326 of the Uniform
Commercial Code of the applicable jurisdiction, to the extent of
claims of creditors of such Person; and
(8) cash proceeds of Receivables or Inventory until transferred
to or deposited in the Collateral Account (if any).
"SUBSEQUENT FILINGS": any filings after the date hereof in any
other jurisdiction not set forth in ITEM I of SCHEDULE I as may be
necessary under any requirement of law to perfect a Lien on the
Collateral in favor of the Agent.
SECTION (vii) COMPLIANCE WITH LAWS. The Grantor is in compliance
with the requirements of all applicable laws (including the provisions of the
Fair Labor Standards Act), rules, regulations and orders of every
governmental authority, the non-compliance with which might have a Material
Adverse Effect or which might materially adversely
17
affect the value of the Collateral or the worth of the Collateral as collateral
security in each case taken as a whole.
SECTION (viii) ABANDONED TRADEMARKS. The Abandoned Trademarks are
not, individually or in the aggregate, material to the continued operations
of the Grantor, and for purposes of this Security Agreement (including CLAUSE
(B) of SECTION 4.1.4), the Grantor hereby notifies the Agent that the
Abandoned Trademarks are of negligible economic value to the Grantor.
ARTICLE 4.
COVENANTS
SECTION a. CERTAIN COVENANTS. The Grantor covenants and agrees that,
so long as any portion of the Obligations shall remain unpaid, any Rate
Protection Agreements entered into pursuant to the Credit Agreement shall
remain in full force and effect, any Letters of Credit shall be outstanding
or any Lender shall have any outstanding Commitment, the Grantor will, unless
the Required Lenders shall otherwise consent in writing, perform, comply with
and be bound by the obligations set forth in this Section.
SECTION (i) AS TO EQUIPMENT AND INVENTORY. The Grantor hereby agrees
that it shall
(1) keep all the Equipment and Inventory (other than Inventory sold in
the ordinary course of business) at the places therefor specified in
SECTION 3.1.1 or, upon not less than 30 days' prior written notice to the
Agent, at such other places in a jurisdiction where all representations and
warranties set forth in the first sentence of SECTION 3.1.1, SECTION 3.1.3
and SECTION 3.1.6 shall be true and correct in all material respects, and
all action required pursuant to the first sentence of SECTION 4.1.7 shall
have been taken with respect to the Equipment and Inventory;
(2) cause each material item of Equipment to be maintained in good
operating condition, ordinary wear
18
and tear and immaterial impairments of value and damage by the elements
excepted; and make or cause to be made all repairs, replacements, and other
improvements in connection therewith which are necessary or desirable to
such end, except to the extent that failure to do any of the foregoing would
not reasonably be expected to materially adversely affect the value of the
Collateral; and promptly furnish to the Agent a statement respecting any
material loss or damage to the Equipment; and
(3) pay promptly when due all property and other taxes, assessments
and governmental charges or levies imposed upon, and all claims (including
claims for labor, materials and supplies) against, the Equipment and
Inventory, except to the extent the validity thereof is being contested in
good faith by appropriate proceedings and for which adequate reserves in
accordance with GAAP have been set aside; and
(4) not permit the aggregate value of the Equipment and Inventory not
within its exclusive possession and control to exceed in any fiscal year 2%
of net sales of the Grantor in the preceding fiscal year, PROVIDED that the
foregoing shall not include the value of Equipment or Inventory in
possession of a third party that has received a notice from the Grantor or
the Agent identifying the Lien on such Equipment or Inventory created under
this Security Agreement.
SECTION (ii) AS TO RECEIVABLES. Subject to the terms of any
documentation governing any Permitted Receivables Transaction:
(1) The Grantor shall (i) not change its chief executive office, the
office(s) where it keeps its records concerning the Receivables, and all
originals of all chattel paper which evidenced Receivables, located at the
address(es) set forth in ITEM D of SCHEDULE I hereto, or its name except
upon 30 days' prior written notice to the Agent and, prior to taking any
such action, delivering to the Agent all additional executed financing
statements and other documents reasonably requested by the Agent to
maintain the validity, perfection and priority of the security
19
interests provided for herein; (ii) hold and preserve such records and
chattel paper; and (iii) permit representatives of the Agent at any time
during normal business hours upon reasonable advance written notice to
inspect and make abstracts from such records and chattel paper.
(2) Upon written notice by the Agent to the Grantor pursuant to this
clause, all proceeds of Collateral received by the Grantor shall be
forthwith (and, in any event, within two Business Days) delivered in kind
to the Agent for deposit to a deposit account (the "COLLATERAL ACCOUNT") of
the Grantor maintained with the Agent, and the Grantor shall not commingle
any such proceeds, and shall hold separate and apart from all other
property, all such proceeds in express trust for the benefit of the Agent
until delivery thereof is made to the Agent. The Agent will not give the
notice referred to in the preceding sentence unless there shall have
occurred and be continuing a Default of the nature set forth in
Section 10.1.9 of the Credit Agreement or an Event of Default.
(3) The Agent shall have the right to apply any amount in the
Collateral Account to the payment of any Obligations which are due and
payable or payable upon demand.
SECTION (iii) AS TO COLLATERAL.
(1) Until both (i) the occurrence and continuance of a Default of the
nature set forth in Section 10.1.9 of the Credit Agreement or an Event of
Default, and (ii) such time as the Agent shall notify the Grantor of the
revocation of such power and authority the Grantor (A) may in the ordinary
course of its business (except as otherwise permitted under the Credit
Agreement), at its own expense, sell, lease or furnish under contracts of
service or otherwise transfer any of the Inventory normally held by the
Grantor for such purpose, and use and consume, in the ordinary course of
its business (except as otherwise permitted under the Credit Agreement),
any raw materials, work in process or materials normally held by the
Grantor for such purpose, (B) subject to the terms of any documentation
20
governing any Permitted Receivables Transaction, will, at its own expense,
endeavor to collect, as and when due, all amounts due with respect to any
of the Collateral, including the taking of such action with respect to such
collection as the Agent may reasonably request following the occurrence of
a Default of the nature set forth in Section 10.1.9 of the Credit Agreement
or an Event of Default or, in the absence of such request, as the Grantor
may deem advisable, and (c) subject to the terms of any documentation
governing any Permitted Receivables Transaction, may grant, in the ordinary
course of business (except as otherwise permitted under the Credit
Agreement), to any party obligated on any of the Collateral, any rebate,
refund or allowance to which such party may be lawfully entitled, and may
accept, in connection therewith, the return of goods, the sale or lease of
which shall have given rise to such Collateral. The Agent, however, may,
at any time following a Default of the nature set forth in Section 10.1.9
of the Credit Agreement or an Event of Default, whether before or after any
notice of revocation of such power and authority or the maturity of any of
the Obligations, notify any parties obligated on any of the Collateral to
make payment to the Agent of any amounts due or to become due thereunder
and enforce collection of any of the Collateral by suit or otherwise and
surrender, release, or exchange all or any part thereof, or compromise or
extend or renew for any period (whether or not longer than the original
period) any indebtedness thereunder or evidenced thereby. Upon request of
the Agent following a Default of the nature set forth in Section 10.1.9 of
the Credit Agreement or an Event of Default, the Grantor will, at its own
expense, notify any parties obligated on any of the Collateral to make
payment to the Agent of any amounts due or to become due thereunder.
(2) The Agent is authorized to endorse, in the name of the Grantor,
any item, howsoever received by the Agent, representing any payment on or
other proceeds of any of the Collateral for application pursuant to SECTION
6.1.
21
SECTION (iv) AS TO INTELLECTUAL PROPERTY COLLATERAL. The Grantor
covenants and agrees to comply with the following provisions as such
provisions relate to any Intellectual Property Collateral owned by the
Grantor in the Grantor's name as such may be changed from time to time.
(1) As to any Patent Collateral that the Grantor may acquire following
the Effective Date the Grantor shall not, unless the Grantor shall either
(i) reasonably and in good faith determine (in which case, the Grantor
will, in conjunction with the notices provided under SECTION 4.1.4(E) give
notice of such determination to the Agent) that any of the Patent
Collateral is of negligible economic value to the Grantor, or (ii) have a
valid business purpose to do otherwise, do any act, or omit to do any act,
whereby any of the Patent Collateral may lapse or become abandoned or
dedicated to the public or unenforceable.
(2) The Grantor shall not, and the Grantor shall not permit any of its
licensees to, unless the Grantor shall either (i) reasonably and in good
faith determine (in which case, the Grantor will, in conjunction with the
notices provided under SECTION 4.1.4(E) give notice of such determination
to the Agent) that any of the Trademark Collateral is of negligible
economic value to the Grantor, or (ii) have a valid business purpose to do
otherwise,
(a) fail to continue to use any of the Trademarks in order to
maintain all of the Trademarks in full force free from any claim of
abandonment for non-use,
(b) fail to maintain as in the past the quality of its products
and services offered under all of the Trademark Collateral,
(c) fail to employ all of the Trademarks registered with any
Federal or state or foreign authority with an appropriate notice of
such registration,
(d) adopt or use any other Trademark which is confusingly similar
or a colorable imitation of any of
22
the Trademark Collateral without notifying the Agent,
(e) use any Trademark registered with any Federal or state or
foreign authority except for the uses for which registration or
application for registration of such Trademark has been made except in
the ordinary course of business consistent with past practice, and
(f) do or permit any act or knowingly omit to do any act whereby
any of the Trademark Collateral may lapse or become invalid or
unenforceable.
(3) The Grantor shall not, unless the Grantor shall either (a)
reasonably and in good faith determine (in which case, the Grantor will, in
conjunction with the notices provided under SECTION 4.1.4(E) give notice of
such determination to the Agent) that any of the Copyright Collateral or
any of the Trade Secrets Collateral is of negligible economic value to the
Grantor, or (b) have a valid business purpose to do otherwise, do or permit
any act or knowingly omit to do any act whereby any of the Copyright
Collateral or any of the Trade Secrets Collateral may lapse or become
invalid or unenforceable or placed in the public domain except upon
expiration of the end of an unrenewable term thereof.
(4) The Grantor shall notify the Agent promptly if it knows, or has
reason to know, that any application or registration relating to any
material Copyright, Patent or Trademark may become abandoned or dedicated
to the public or placed in the public domain or invalid or unenforceable,
or of any adverse determination or development (including the institution
of, or any such determination or development in, any proceeding in the
United States Patent and Trademark Office, the United States Copyright
Office or any foreign counterpart thereof or any court) regarding the
Grantor's ownership of any such material Copyright, Patent or Trademark,
its right to register the same or to keep and maintain and enforce the
same.
23
(5) In no event shall the Grantor or any of its agents, employees,
designees or licensees file an application for the registration of any
Patent, Copyright or Trademark with the United States Patent and Trademark
Office, the United States Copyright Office or any similar office or agency
in any other country or any political subdivision thereof, unless within 30
days after the end of each calendar quarter the Grantor informs the Agent,
and upon request of the Agent, executes and delivers any and all
agreements, instruments, documents and papers as the Agent may reasonably
request to evidence the Agent's security interest in such Patent, Copyright
or Trademark and the goodwill and general intangibles of the Grantor
relating thereto or represented thereby; PROVIDED, that the Grantor shall
not be required to deliver any such agreements, instruments, documents or
papers for filing or registration in any offices outside the United States
unless the economic value of such Patent, Copyright or Trademark in the
country in which such office is located is material to the business of the
Grantor and its Subsidiaries taken as a whole, and then shall only be
required to make such filings and registrations in the applicable offices
within such country.
(6) The Grantor shall take all necessary steps, including in any
proceeding before the United States Patent and Trademark Office, the United
States Copyright Office or any similar office or agency in any other
country or any political subdivision thereof, to maintain and pursue any
application (and to obtain the relevant registration) filed by the Grantor
with respect to, and to maintain any registration of, any Patent, Copyright
or Trademark, including the filing of applications for renewal, affidavits
of use, affidavits of incontestability and opposition, interference and
cancellation proceedings and the payment of fees and taxes (except to the
extent that dedication, abandonment or invalidation is permitted under the
foregoing CLAUSES (A), (B) and (C)).
SECTION (v) INSURANCE. The Grantor will maintain or cause to be
maintained with responsible insurance companies insurance with respect to its
business and
24
properties (including the Equipment and Inventory) against such casualties
and contingencies and of such types and in such amounts as is required
pursuant to the Credit Agreement and will, upon the request of the Agent,
furnish a certificate of a reputable insurance broker setting forth the
nature and extent of all insurance maintained by the Grantor in accordance
with this Section. Without limiting the foregoing, the Grantor further
agrees as follows:
(1) Each policy for property insurance shall show the Agent as loss
payee.
(2) Each policy for liability insurance shall show the Agent as
additional insured.
(3) With respect to each life insurance policy, the Grantor shall
execute and deliver to the Agent a collateral assignment, notice of which
has been acknowledged in writing by the insurer.
(4) Each insurance policy shall provide that at least 30 days' prior
written notice of cancellation or of lapse shall be given to the Agent by
the insured.
(5) The Grantor shall, if so requested by the Agent, deliver to the
Agent a copy of each insurance policy.
(6) All payments in respect of property insurance and life insurance
shall be deposited to the Collateral Account and if there shall be no
Collateral Account shall be paid to the Grantor.
SECTION (vi) TRANSFERS AND OTHER LIENS. The Grantor shall not:
(1) sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral, except Inventory in the ordinary course
of business or as permitted by the Credit Agreement or this Security
Agreement; or
(2) create or suffer to exist any Lien or other charge or encumbrance
upon or with respect to any of the Collateral to secure Indebtedness of any
Person or
25
entity, except for the security interest created by this Security
Agreement and except as permitted by the Credit Agreement or this Security
Agreement.
SECTION (vii) FURTHER ASSURANCES, ETC. The Grantor and the Agent
agree that, from time to time at the Grantor's expense, the Agent or the
Grantor, as the case may be, will, upon the written request of the other,
promptly execute and deliver all further instruments and documents, and take
all further action, that may be necessary or desirable, in order to preserve
the benefits of this Security Agreement or to perfect, preserve and protect
any security interest granted or purported to be granted hereby or to enable
the Agent to exercise and enforce its rights and remedies hereunder with
respect to any Collateral. Without limiting the generality of the foregoing,
the Grantor will
(1) following the occurrence of an Event of Default and notice to the
Grantor by the Agent, mark conspicuously each document included in the
Inventory, each chattel paper included in the Receivables and each Related
Contract and, at the request of the Agent, each of its records pertaining
to the Collateral with a legend, in form and substance reasonably
satisfactory to the Agent, indicating that such document, chattel paper,
Related Contract or Collateral is subject to the security interest granted
hereby; and
(2) execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices (including any
assignment of claim form under or pursuant to the federal assignment of
claims statute, 31 U.S.C. Section 3726, any successor or amended version
thereof or any regulation promulgated under or pursuant to any version
thereof, with respect to any Collateral the value of which (individually or
in the aggregate) exceeds $1,500,000), as may be necessary or desirable in
order to preserve the benefits of this Security Agreement or to perfect and
preserve the security interests and other rights granted or purported to be
granted to the Agent hereby; and
26
(3) furnish to the Agent, from time to time at the Agent's request,
statements and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral as the Agent may
reasonably request, all in reasonable detail.
With respect to the foregoing and the grant of the security interest
hereunder, the Grantor hereby authorizes the Agent to file one or more
financing or continuation statements, and amendments thereto, relative to all
or any part of the Collateral without the signature of the Grantor where
permitted by law. A carbon, photographic or other reproduction of this
Security Agreement or any financing statement covering the Collateral or any
part thereof shall be sufficient as a financing statement where permitted by
law.
ARTICLE 5.
THE AGENT
SECTION a. AGENT APPOINTED ATTORNEY-IN-FACT. The Grantor hereby
irrevocably appoints the Agent the Grantor's attorneys-in-fact, with full
authority in the place and stead of the Grantor and in the name of the
Grantor or otherwise, from time to time in the Agent's discretion, following
the occurrence and continuation of a Default of the nature set forth in
Section 10.1.9 of the Credit Agreement or an Event of Default, to take any
action and to execute any instrument which the Agent may deem necessary or
advisable to accomplish the purposes of this Security Agreement, including:
(1) subject to the terms of any documentation governing any Permitted
Receivables Transaction, to ask, demand, collect, sue for, recover,
compromise, receive and give acquittance and receipts for moneys due and to
become due under or in respect of any of the Collateral;
(2) to receive, endorse, and collect any drafts or other instruments,
documents and chattel paper, in connection with CLAUSE (A) above;
27
(3) subject to the terms of any documentation governing any Permitted
Receivables Transaction, to file any claims or take any action or institute
any proceedings which the Agent may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of
the Agent with respect to any of the Collateral; and
(4) to perform the affirmative obligations of the Grantor hereunder
(including all obligations of the Grantor pursuant to SECTION 4.1.7).
The Grantor hereby acknowledges, consents and agrees that the power of
attorney granted pursuant to this Section is irrevocable and coupled with an
interest; provided, that the power of attorney granted by the Grantor shall
terminate upon the payment in full in cash, or cash collateralization, of all
Obligations, the termination or expiration of all Letters of Credit, the
termination of all Rate Protection Agreements entered into pursuant to the
Credit Agreement and the termination of all Commitments.
SECTION b. AGENT MAY PERFORM. If the Grantor fails to perform any
agreement contained herein, the Agent may itself perform, or cause
performance of, such agreement, and the expenses of the Agent incurred in
connection therewith shall be payable by the Grantor pursuant to SECTION 6.2.
SECTION c. AGENT HAS NO DUTY. In addition to, and not in limitation
of, SECTION 2.4, the powers conferred on the Agent hereunder are solely to
protect its interest (on behalf of the Secured Parties) in the Collateral and
shall not impose any duty on it to exercise any such powers. Except for
reasonable care of any Collateral in its possession and the accounting for
moneys actually received by it hereunder, the 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.
SECTION 5.4. REASONABLE CARE. The Agent is required to exercise
reasonable care in the custody and preservation of any of the Collateral in its
possession; PROVIDED, HOWEVER, the Agent shall be deemed to have
28
exercised reasonable care in the custody and preservation of any of the
Collateral, if it takes such action for that purpose as the Grantor
reasonably requests in writing at times other than upon the occurrence and
during the continuance of any Event of Default, but failure of the Agent to
comply with any such request at any time shall not in itself be deemed a
failure to exercise reasonable care.
ARTICLE 6.
REMEDIES
SECTION a. CERTAIN REMEDIES. If any Event of Default shall have
occurred and be continuing and any Obligations shall be due and unpaid
(whether by acceleration or otherwise):
(1) The Agent may exercise in respect of the Collateral, in addition
to other rights and remedies provided for herein or otherwise available to
it, all the rights and remedies of a secured party on default under the
U.C.C. (whether or not the U.C.C. applies to the affected Collateral) and
also may
(a) require the Grantor to, and the Grantor hereby agrees that it
will, at its expense and upon request of the Agent, subject to the
terms of any documentation governing any Permitted Receivables
Transaction, forthwith assemble all or part of the Collateral as
directed by the Agent and make it available to the Agent at a place to
be designated by the Agent which is reasonably convenient to both
parties, and
(b) subject to the terms of any documentation governing any
Permitted Receivables Transaction, without notice except as specified
below, and subject to any existing reserved rights or licenses, sell
the Collateral or any part thereof in one or more parcels at public or
private sale, at the Agent's offices or elsewhere, for cash, on credit
or for future delivery, and upon such other terms as the Agent may
deem commercially reasonable. The Grantor agrees that,
29
to the extent notice of sale shall be required by law, at least ten
days' prior notice to the 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 Agent shall not be obligated
to make any sale of Collateral regardless of notice of sale having been
given. The 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.
(2) All cash proceeds received by the Agent in respect of any sale of,
collection from, or other realization upon all or any part of the
Collateral may, in the discretion of the Agent, be held by the Agent as
collateral for, and/or then or at any time thereafter applied (after
payment of any amounts payable to the Agent pursuant to SECTION 6.2) in
whole or in part by the Agent for the ratable benefit of the Secured
Parties against, all or any part of the Obligations in such order (as among
interest, fees, principal and other monetary Obligations) as the Agent
shall elect. Any surplus of such cash or cash proceeds held by the Agent
and remaining after payment in full in cash of all the Obligations shall be
paid over to the Grantor or to whomsoever may be lawfully entitled to
receive such surplus.
SECTION b. INDEMNITY AND EXPENSES.
(1) The Grantor agrees to indemnify the Agent from and against any and
all claims, losses and liabilities arising out of or resulting from this
Security Agreement (including enforcement of this Security Agreement),
except to the extent resulting from the Agent's gross negligence or wilful
misconduct.
(2) The Grantor will upon demand pay to the Agent the amount of any
and all reasonable expenses, including the reasonable fees and
disbursements of its counsel and of any experts and agents, which the Agent
may incur in connection with
30
(a) the administration of this Security Agreement,
(b) the custody, preservation, use or operation of, or the sale
of, collection from, or other realization upon, any of the Collateral,
and
(c) the exercise or enforcement of any of the rights of the Agent
or the Secured Parties hereunder, or (iv) the failure by the Grantor
to perform or observe any of the provisions hereof.
ARTICLE 7.
MISCELLANEOUS PROVISIONS
SECTION a. LOAN DOCUMENT. This Security Agreement is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions thereof.
SECTION b. AMENDMENTS; ETC. No amendment to or waiver of
any provision of this Security Agreement nor consent to any departure by the
Grantor herefrom, shall in any event be effective unless the same shall be in
writing and signed by the Grantor and the Agent (on behalf of the Lenders or
the Required Lenders, as the case may be), and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
SECTION c. ADDRESSES FOR NOTICES. All notices and other
communications provided for hereunder shall be in writing (including
telegraphic communication) and mailed or telecopied or delivered to either
party hereto, addressed to such party at the address of such party specified
in or pursuant to the Credit Agreement. All such notices and other
communications, when mailed and properly addressed with postage prepaid or if
properly addressed and sent by pre-paid courier service, shall be deemed
given when received; any such notice or communication, if transmitted by
telecopier, shall be deemed given when transmitted and electronically
confirmed.
31
SECTION d. SECTION CAPTIONS. Section captions used in this Security
Agreement are for convenience of reference only, and shall not affect the
construction of this Security Agreement.
SECTION e. SEVERABILITY. Wherever possible each provision of this
Security Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Security Agreement
shall be prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Security Agreement.
SECTION f. COUNTERPARTS. This Security Agreement may be executed by
the parties hereto in several counterparts, each of which shall be deemed an
original and all of which shall constitute together but one and the same
agreement.
SECTION g. GOVERNING LAW, ENTIRE AGREEMENT, ETC. THIS SECURITY
AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING FOR SUCH PURPOSE SECTIONS
5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK),
EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST
HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
THIS SECURITY AGREEMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE
UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER
HEREOF AND THEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH
RESPECT THERETO.
32
IN WITNESS WHEREOF, the Grantor has caused this Security Agreement to
be duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.
LEINER HEALTH PRODUCTS INC.
By /s/ William B. Towne
---------------------------
Name: William B. Towne
Title: Executive Vice
President Finances
THE BANK OF NOVA SCOTIA,
as Agent
By /s/ Gary McDonough
---------------------------
Name: Gary McDonough
Title: Authorized Signatory
33
SCHEDULE I
to U.S. Borrower
Security Agreement
ITEM A. LOCATION OF EQUIPMENT
Description Location
--------------------------------------- ----------------------------------
1. Land Kalamazoo, Michigan
Chicago, Illinois
Madison, Wisconsin
York County, South Carolina
Winnipeg, Manitoba, Canada
2. Buildings and Improvements Kalamazoo, Michigan
Classic--Sherburne, New York
Chicago, Illinois
Madison, Wisconsin
York County, South Carolina
Winnipeg, Manitoba, Canada
3. Leasehold Improvements Kalamazoo, Michigan
Classic--Sherburne, New York
Barstow, California
Trupak--West Unity, Ohio
Chicago, Illinois
Madison, Wisconsin
Garden Grove, California
Dallas, Texas
Carson, California
York County, South Carolina
Winnipeg, Manitoba, Canada
Item A. LOCATION OF EQUIPMENT (continued)
4. Machinery and Equipment Kalamazoo, Michigan
Classic--Sherburne, New York
Barstow, California
Trupak--West Unity, Ohio
Chicago, Illinois
Madison, Wisconsin
Garden Grove, California
Dallas, Texas
Cleveland, Ohio
Clearwater, Florida
Seattle, Washington
Elmhurst, Illinois
Carson, California
York County, South Carolina
Winnipeg, Manitoba, Canada
5. Furniture and Fixtures (continued) Kalamazoo, Michigan
Classic--Sherburne, New York
Barstow, California
Trupak--West Unity, Ohio
Chicago, Illinois
Madison, Wisconsin
Garden Grove, California
Dallas, Texas
Cleveland, Ohio
Clearwater, Florida
Seattle, Washington
Elmhurst, Illinois
Carson, California
York County, South Carolina
Winnipeg, Manitoba, Canada
2
Item B. LOCATION OF INVENTORY
1. Baltimore, Maryland
2. Barstow, California
3. Brattleboro, Vermont
4. Carson, California
5. Chattsworth, California
6. Collinsville, Illinois
7. Colorado Springs, Colorado
8. Columbus, Georgia
9. El Paso, Texas
10. Forth Worth, Texas
11. Garden Grove, California
12. Honolulu, Hawaii
13. Junction City, Kansas
14. Kalamazoo, Michigan
15. Kent, Washington
16. Lawton, Oklahoma
17. Madison, Wisconsin
18. Mainland, Pennsylvania
19. Norfolk, Virginia
20. Oldsmar, Florida
21. Ontario, California
22. Pensacola, Florida
23. Portland, Oregon
24. San Antonio, Texas
25. Sanford, Florida
26. Sherburne, New York
27. Stockton, California
3
Item B. LOCATION OF INVENTORY (continued)
28. West Unity, Ohio
29. Winnipeg, Manitoba, Canada
Item C. LOCATION OF LOCK BOXES
Bank Name & Location Account Number Contact Person
------------------------- ------------------ ------------------------------
1. LaSalle National Bank Acct. #2272755 Betty Latson
120 S. LaSalle Street First Vice President
Chicago, IL 60603 and Deputy Division Head
Commercial Banking
Item D. PLACE(S) OF BUSINESS AND CHIEF EXECUTIVE OFFICE
LOCATION TYPE OF FACILITY
- -------------------------------- -------------------------------------------
Carson, California* Packaging and distribution
Garden Grove, California Manufacturing
Kalamazoo, Michigan Manufacturing
Kalamazoo, Michigan Auxiliary warehouse
York County, South Carolina Manufacturing
Winnipeg, Canada Manufacturing, packaging, distribution
West Unity, Ohio Packaging and distribution
Madison, Wisconsin Packaging and distribution
Sherburne, New York Packaging and distribution
Sherburne, New York Auxiliary warehouse
Chicago, Illionis Not in use; held for sale
- ------------------------
* Chief Executive Offices
Item E. TRADE NAMES
None
4
Item F. MERGER OR OTHER CORPORATE REORGANIZATION
None
Item G. GOVERNMENT CONTRACTS
None
Item H. NON EXCLUSIVE CONTROL OF COLLATERAL
1. Baltimore, Maryland
2. Brattleboro, Vermont
3. Collinsville, Illinois
4. Colorado Spring, Colorado
5. Columbus, Georgia
6. El Paso, Texas
7. Fort Worth, Texas
8. Honolulu, Hawaii
9. Junction City, Kansas
10. Kent, Washington
11. Lawton, Oklahoma
12. Mainland, Pennsylvania
13. Norfolk, Virginia
14. Oldsmar, Florida
15. Ontario, California
16. Pensacola, Florida
5
Item H. NON EXCLUSIVE CONTROL OF COLLATERAL (continued)
17. Portland, Oregon
18. San Antonio, Texas
19. Sanford, Florida
20. Stockton, California
Item I. FILING OFFICES
1. California
a. Secretary of State
2. Colorado
a. Secretary of State
3. Florida
a. Secretary of State
4. Georgia
a. Muscogee County
5. Hawaii
a. Bureau of Conveyances
6. Illinois
a. Secretary of State
7. Kansas
a. Secretary of State
8. Maryland
a. Department of Assesments
9. Michigan
a. Secretary of State
10. New York
a. Secretary of State
b. Chenango County
11. Ohio
a. Secretary of State
b. Williams County
c. Cuyahoga County
6
Item I. FILING OFFICES (continued)
12. Oklahoma
a. County Clerk of Comanche
13. Oregon
a. Secretary of State
14. Pennsylvania
a. Secretary of the Commonwealth
b. Prothonotary of Montgomery
15. South Carolina
a. Secretary of State
16. Texas
a. Secretary of State
17. Vermont
a. Secretary of State
18. Virginia
a. State Corporation Commission
b. City of Norfolk
19. Washington
a. Department of Licensing
20. Wisconsin
a. Secretary of State
7
SCHEDULE II
to U.S. Borrower
Security Agreement
Item A. PATENTS
Issued Patents
- -------------------------------------------------------------------------
Country Patent No. Issue Date Inventor(s) Title
- ----------- ---------- ----------- ------------ -----------------------
USA D270379 08/30/83 Gale K. Ornamental design for
Bensussen a pharmaceutical tablet
USA D270099 08/09/83 Gale K. Ornamental design for
Bensussen a pharmaceutical tablet
USA D270010 08/02/83 Gale K. Ornamental design for
Bensussen a pharmaceutical tablet
USA D270009 08/02/83 Gale K. Ornamental design for
Bensussen a pharmaceutical tablet
Pending Patent Applications
- ----------------------------------------------------------------
Country Serial No. Filing Date Inventor(s) Title
- ----------- ---------- ----------- ------------ ------------
8
SCHEDULE II
to U.S. Borrower
Security Agreement
NONE
Patent Applications in Preparation
- -----------------------------------------------------------------
Expected
Country Docket No. Filing Date Inventor(s) TITLE
- ----------- ----------- ----------- ------------ ------------
NONE
Item B. PATENT LICENSES
Country or Effective Expiration Subject
Territory Licensor Licensee Date Date Matter
- ------------- ---------- --------- --------- ------------ ------------
NONE
9
SCHEDULE III
to U.S. Borrower
Security Agreement
Item A. Trademarks
Registered Trademarks
---------------------
Country Trademark Registration No. Registration
------- --------- ---------------- ------------
Date
----
USA DREMELON 672,108 1-6-59
USA JET-AWAKE 698,477 5-31-60
USA TELESTRES 707,739 11-29-60
USA STRIKES PAIN 733,291 6-26-62
USA GORDON'S ECONO-PAK 742,896 1-1-63
USA CHOOM EE'S 789,316 5-11-65
USA TRU-NATURE 964,561 7-24-73
USA COUNCILABS 973,800 11-27-73
USA SNIP E 1,005,174 2-25-75
USA YOUR LIFE 1,029,138 1-6-76
USA FORMULA RDA 1,034,189 2-24-76
USA TRU-NATURE 1,076,778 11-8-77 (*)
USA VITALIFE 1,094,936 7-4-78
USA YOUR LIFE & DESIGN 1,118,048 5-15-79
USA SUBSTANCE II 1,137,182 6-24-80
USA MY-A-MULTI 1,131,599 3-11-80
USA DIETIC 1,175,765 11-3-81
- -------------------------
*This mark has been abandoned and this registration will not be renewed.
10
SCHEDULE III
to U.S. Borrower
Security Agreement
Registered Trademarks
---------------------
Country Trademark Registration No. Registration
------- --------- ---------------- ------------
Date
----
USA VITA-FRESH 1,152,085 4-28-81
USA FORMULA 36 1,172,810 10-13-81
USA DAILY VITAMIN PAK 1,178,785 11-24-81
USA L-FORMULA 1,189,083 2-9-82
USA FULVITA 1,190,422 2-23-82
USA SUPER VITA-HEALTH 36 1,232,483 3-29-83
USA VITA-HEALTH 1,239,943 5-31-83
USA NATURE'S HARMONY 1,257,332 11-15-83
USA EVERYDAY ATHLETE 1,259,763 12-6-83
USA YOUR LIFE 1,267,613 2-21-84
USA SENIOR'S CHOICE 1,308,596 12-11-84
USA HEALTHY LIFE 1,310,734 12-25-84
USA GRAND-SLAM 1,313,044 1-8-85
USA LIGHTWEIGHT 1,313,046 1-8-85
USA BURST 1,313,045 1-8-85
USA NBF NATIONAL BRAND FORMULA 1,320,310 2-19-85
USA MAXIMUM CHOICE 1,338,731 6-4-85
11
SCHEDULE III
to U.S. Borrower
Security Agreement
Registered Trademarks
---------------------
Country Trademark Registration No. Registration
------- --------- ---------------- ------------
Date
----
USA MAXIMUM PAK 1,374,543 12-10-85
USA EXECUTIVE'S CHOICE 1,385,699 3-11-86
USA MAN'S CHOICE 1,387,982 4-1-86
USA WOMAN'S CHOICE 1,387,981 4-1-86
USA YOUR LIFE & DESIGN 1,402,829 7-29-86
USA CHUBBLES 1,418,458 11-25-86**
USA NATURES'S PREMIUM 1,433,522 3-24-87
USA BEARFOOT 1,435,638 4-7-87***
USA DAILY PAK 1,503,542 9-13-88
USA PHARMACIST FORMULA 1,509,847 10-25-88
USA PHARMACIST FORMULA & DESIGN 1,537,889 5-9-89
USA PHARMACIST FORMULA & DESIGN 1,591,651 4-17-90
- -------------------------
**This mark has been abandoned and this registration will not be renewed.
***This mark has been abandoned and this registration will not be renewed.
12
SCHEDULE III
to U.S. Borrower
Security Agreement
Registered Trademarks
---------------------
Country Trademark Registration No. Registration
------- --------- ---------------- ------------
Date
----
USA PHARMACIST FORMULA 1,592,720 4-24-90
USA YOUR LIFE & DESIGN 1,596,015 5-15-90
USA PURITY & QUALITY GUARANTEED 1,604,326 7-3-90
USA THERA PLUS 1,608,014 7-31-90
USA CENTRAL-LIFE 1,630,503 1-1-91(****)
USA CENTRAL-VITE 1,630,504 1-1-91
USA NATURALIZED 1,663,752 11-5-91
USA PHARMACIST FORMULA & DESIGN 1,678,249 3-10-92
USA NRL GOLD BANNER & DESIGN 1,683,558 4-21-92
USA PROVEN RELEASE FORMULA
& DESIGN 1,698,545 6-30-92
USA RELEASE TESTED & DESIGN 1,706,198 8-11-92
- -------------------------
****This mark has been abandoned and this registration will not be renewed.
13
SCHEDULE III
to U.S. Borrower
Security Agreement
Registered Trademarks
---------------------
Country Trademark Registration No. Registration
------- --------- ---------------- ------------
Date
----
USA SUPREME QUALITY 1,710,877 8-25-92
USA BODYCOLOGY 1,719,286 9-22-92
USA DISSOLUTION TESTED PROVEN
RELEASE & DESIGN 1,721,198 9-29-92
USA DISSOLUTION TESTED PROVEN
RELEASE & DESIGN 1,730,435 11-3-92
USA RELEASE ASSURED & DESIGN 1,742,102 12-22-92
USA TRU NATURE & DESIGN 1,745,052 1-5-93
USA PROVEN RELEASE & DESIGN 1,745,043 1-5-93
USA ALLERCOLD 1,746,289 1-12-93
USA SPACE KIDS 1,748,098 1-26-93
USA ABSTRACT DESIGN OF A FLOWER 1,749,184 1-26-93
USA BODYCOLOGY (Script) 1,749,731 2-2-93
14
SCHEDULE III
to U.S. Borrower
Security Agreement
Registered Trademarks
---------------------
Country Trademark Registration No. Registration
------- --------- ---------------- ------------
Date
----
USA DISSOLUTION TESTED
RELEASE ASSURED & DESIGN 1,753,433 2-16-93
USA PHARMACIST FORMULA & DESIGN 1,765,207 4-13-93
USA PHARMACIST FORMULA 1,763,596 4-6-93
USA PHARMACIST FORMULA & DESIGN 1,763,597 4-6-93
USA HISTA TABS 1,768,400 5-4-93
USA RELEASE ASSURED & DESIGN 1,773,376 5-25-93
USA SELECT FORMULA 1,773,363 5-25-93
USA RELEASE ASSURED & DESIGN 1,782,015 7-13-93
USA DRYFEDRINE 1,783,199 7-20-93
USA PC PHARMACIST 1,788,756 8-17-93
USA SLUMBER TIME 1,789,833 8-24-93
USA PHARMACIST VALUE 1,789,839 8-24-93
15
SCHEDULE III
to U.S. Borrower
Security Agreement
Registered Trademarks
---------------------
Country Trademark Registration No. Registration
------- --------- ---------------- ------------
Date
----
USA RELEASE ASSURED & DESIGN 1,794,087 9-21-93
USA ECOLOGIZED 1,802,519 11-2-93
USA LACTASE 3300 1,811,401 12-14-93
USA LABORATORY TESTED RELEASE
ASSURED & DESIGN 1,801,738 10-26-93
USA DISINTEGRATION TESTED
RELEASE ASSURED & DESIGN 1,801,737 10-26-93
USA LUBRICARE 1,831,007 4-19-94
USA CREATED FROM NATURE 1,867,904 12-20-94
USA DAILY PAK SELECT 1,877,375 2-7-95
USA PHARMACIST BEST 1,881,114 2-28-95
USA OPTIMUM BALANCE 1,881,149 2-28-95
USA PHARMACIST TRUST 1,884,193 3-14-95
USA PHARMACIST OWN 1,885,526 3-21-95
16
SCHEDULE III
to U.S. Borrower
Security Agreement
Registered Trademarks
---------------------
Country Trademark Registration No. Registration
------- --------- ---------------- ------------
Date
----
USA PHARMACIST FIRST 1,885,527 3-21-95
USA PHARMACIST NUMBER 1 1,885,528 3-21-95
USA CENTRAL-VITE SUPREME 1,885,535 3-21-95
USA PHARMACIST FRIEND 1,885,529 3-21-95
USA PHARMACIST REFERRAL 1,884,188 3-14-95
USA PHARMACIST SOLUTION 1,884,189 3-14-95
USA PHARMACIST BLEND 1,884,190 3-14-95
USA PHARMACIST PICK 1,884,191 3-14-95
USA PHARMACIST ANSWER 1,884,192 3-14-95
USA PHARMACIST TRUSTED 1,884,194 3-14-95
USA ASSURED RELEASE & DESIGN 1,886,507 3-28-95
USA TODAY'S PHARMACIST 1,887,706 4-4-95
USA PHARMACIST SYSTEM 1,887,714 4-4-95
17
SCHEDULE III
to U.S. Borrower
Security Agreement
Registered Trademarks
---------------------
Country Trademark Registration No. Registration
------- --------- ---------------- ------------
Date
----
USA BABYCOLOGY 1,906,239 7-18-95
USA LHP AND DESIGN 1,913,897 8-22-95
USA PHARMACIST CARE 1,912,171 8-15-95
USA PHARMACIST RELIEF 1,931,895 10-31-95
USA CENTRAL-VITE PLUS 1,915,779 8-29-95
USA REPLENISH 1,926,257 10-10-95
USA THE VITAMIN STORE 1,951,912 1-23-96
USA PHYTO-CONCENTRATES 1,969,648 4-23-96
USA BEYOND VITAMINS 1,971,903 4-30-96
USA LIQUI-COAT 1,986,734 7-16-96
USA BODYCOLOGY (Script) 1,989,228 7-23-96
USA KWIK-KAP 2,012,314 10-29-96
USA FORMULAE USP 2,033,157 1-21-97
USA LIQUID LIFT 2,035,351 2-4-97
USA BIO-BALANCE 2,041,108 2-25-97
18
SCHEDULE III
to U.S. Borrower
Security Agreement
Registered Trademarks
---------------------
Country Trademark Registration No. Registration
------- --------- ---------------- ------------
Date
----
USA LEINER HEALTH PRODUCTS
& DESIGN 2,059,591 5-6-97
USA
California YOUR LIFE California 4-28-75
53094
California PHARMACIST FORMULA
ADJACENT THE REPRESENTATION
OF A MORTAR AND PESTLE California 6-14-91
94202
SCHEDULE III
to U.S. Borrower
Security Agreement
FOREIGN TRADEMARK REGISTRATIONS
Country Mark Reg. No. Reg. Date
------- ---- -------- ---------
Argentina BODYCOLOGY 1,549,896 01/31/95
Argentina BODYCOLOGY 1,549,895 01/31/95
Argentina PHYTO-NUTRIENTS 1,574,447 05/17/96
Argentina YOUR LIFE 1,488,512 11/30/93
Argentina PHARMACIST FORMULA 1,612,272 08/22/96
Australia VITA-FRESH B418,057 11/09/84
Australia YOUR LIFE A303,284 12/21/76
19
SCHEDULE III
to U.S. Borrower
Security Agreement
FOREIGN TRADEMARK REGISTRATIONS
Country Mark Reg. No. Reg. Date
------- ---- -------- ---------
Bulgaria PHARMACIST FORMULA 28,612 06/27/96
Bulgaria YOUR LIFE 26,679 11/13/95
Canada BODYCOLOGY 444,247 06/23/95
Canada NATURE'S HARMONY 304,672 07/12/85
Canada PHARMACIST FORMULA 463,731 09/27/96
Canada YOUR LIFE 228,785 02/21/79
Chile BODYCOLOGY 421,742 02/10/94
China BODYCOLOGY 888,341 10/27/96
China YOUR LIFE 685,624 09/01/95
Columbia BODYCOLOGY 192,452 12/23/96
Columbia NATURAL LIFE 148,953 08/24/93
Costa Rica VITA-FRESH 65,013 04/18/85
Ecuador BODYCOLOGY 252-97 03/12/97
Hong Kong BODYCOLOGY 3274/96 12/22/94
Italy NATURAL LIFE 439,451 03/17/81
Italy YOUR LIFE 439,450 03/17/81
Japan BODYCOLOGY 3,296,573 04/25/97
Japan NATURAL LIFE 2,508,775 02/26/93
Japan SUBSTANCE II 2,395,314 03/31/92
Japan YOUR LIFE 1,740,629 01/23/85
20
SCHEDULE III
to U.S. Borrower
Security Agreement
FOREIGN TRADEMARK REGISTRATIONS
Country Mark Reg. No. Reg. Date
------- ----- --------- ---------
Japan YOUR LIFE (Katakana) 2,616,893 01/31/94
Japan YOUR LIFE (Katakana) 2,691,018 5/27/96
Japan YOUR LIFE 3,296,575 04/25/97
Japan YOUR LIFE (Katakana) 3,296,576 04/25/97
Korea BODYCOLOGY 350,666 11/27/96
Korea BODYCOLOGY 350,667 11/27/96
Mexico BODYCOLOGY 450,043 01/12/94
Mexico FLOWER DESIGN 450,042 01/12/94
Mexico NEW ERA 480,932 11/29/94
Mexico PHARMACIST FORMULA 458,316 04/25/94
Mexico PHYTO-NUTRIENTS 498,447 07/25/95
Mexico YOUR LIFE 490,877 05/03/93
Moldova YOUR LIFE 4,390 06/23/95
New Zealand NATURAL LIFE 250,595 06/26/95
New Zealand NATURAL LIFE 266,085 08/20/96
New Zealand YOUR LIFE 250,594 06/26/95
Peru BODYCOLOGY 27,288 07/10/96
Peru YOUR LIFE 27,289 07/10/96
Romania YOUR LIFE 23,805 02/16/97
21
SCHEDULE III
to U.S. Borrower
Security Agreement
FOREIGN TRADEMARK REGISTRATIONS
Country Mark Reg. No. Reg. Date
------- ---- -------- ---------
Russia BODYCOLOGY 144,765 02/29/96
Saudi Arabia BODYCOLOGY 365/18 12/31/95
Saudi Arabia YOUR LIFE 377/77 08/09/95
Spain FLOWER DESIGN 1,759,189 04/30/93
Switzerland BODYCOLOGY 441,127 04/25/97
Switzerland YOUR LIFE 439,225 10/21/96
Taiwan FLOWER DESIGN 619,886 12/16/93
Taiwan FLOWER DESIGN 617,796 12/01/93
Taiwan BODYCOLOGY 617,795 12/01/93
Taiwan BODYCOLOGY 622,227 12/01/93
Taiwan NATURAL LIFE 716,049 06/16/96
Taiwan YOUR LIFE 685,624 09/01/95
Thailand YOUR LIFE kor36,721 10/26/95
UAE BODYCOLOGY 5,625 07/03/96
UAE NATURAL LIFE 6,406 08/12/95
UAE YOUR LIFE 5,705 07/07/96
UK BODYCOLOGY 1,250,928 09/25/85
UK BODYCOLOGY 2,006,693 12/28/94
UK BURST 1,458,246 03/14/91
UK NATURAL LIFE 1,175,140 05/18/82
UK VITA-FRESH 1,229,652 11/06/84
UK YOURLIF 1,072,487 12/29/76
22
SCHEDULE III
to U.S. Borrower
Security Agreement
FOREIGN TRADEMARK REGISTRATIONS
Country Mark Reg. No. Reg. Date
------- ---- -------- ---------
Vietnam BODYCOLOGY 19,201 12/01/95
Vietnam NATURAL LIFE 24,074 05/11/96
Vietnam YOUR LIFE 19,202 12/01/95
23
SCHEDULE III
to U.S. Borrower
Security Agreement
Pending Trademark Applications
------------------------------
Country Trademark Serial No. Filing Date
- ------- --------- ---------- -----------
USA ANTIOXIDANT PAK 74/359,579 2-16-93(*****)
USA NATURE'S CHOICE 74/484,440 1-27-94
USA RECTANGLE WITH OBLIQUE 74/486,615 2-4-94
OVAL DESIGN
USA PHYTO-NUTRIENTS & DESIGN 74/590,438 10-25-94
USA PHYTOPRINT 74/656,580 4-5-95
USA PHYTOGRAPH 74/717,312 8-18-95
USA BOOSTER PAK 74/732,911 9-22-95
USA OCEAN DEW 74/735,644 9-28-95
USA VITA-FRESH 75/024,396 11-27-95
USA YOUR LIFE 75/064,603 2-28-96
USA LEINER HEALTH PRODUCTS 75/064,602 2-28-96
USA APPLE 75/114,447 6-5-96
USA VITAMANIA 75/145,244 8-5-96
USA PHARMACEUTICAL GRADE 75/166,671 9-16-96
- -------------------------
(*****)Final refusal mailed.
24
SCHEDULE III
to U.S. Borrower
Security Agreement
Pending Trademark Applications
------------------------------
Country Trademark Serial No. Filing Date
- ------- --------- ---------- -----------
USA SPECIAL REFINING GUARANTEES 75/169,471 9-20-96
PURITY!
USA SPECIALLY PROCESSED AND 75/169,472 9-20-96
REFINED FOR EXTRA PURITY
USA MEMORY SUPPORT COMPLEX 75/204,606 11-26-96
USA CARDIO COMPLEX 75/204,607 11-26-96
USA SUPER E 75/204,608 11-26-96
USA E-MERGE 75/226,688 1-14-97
USA ENERGY COMPLEX 75/238,653 2-10-97
USA IMPERIAL GINSENG 75/252,865 3-6-97
USA ULTIMUM 75/271,340 4-8-97
USA GINSEVEN 75/285,684 5-2-97
Argentina NATURAL LIFE 2,026,121 3/11/96
Australia BODYCOLOGY 703,336 2/28/96
Australia NATURAL LIFE 703,337 2/28/96
Australia PHYTO-NUTRIENTS 703,335 2/28/96
Bahrain YOUR LIFE 850/95 6/28/95
Benelux YOUR LIFE 880823 10/18/96
25
SCHEDULE III
to U.S. Borrower
Security Agreement
Pending Trademark Applications
------------------------------
Country Trademark Serial No. Filing Date
- ------- --------- ---------- -----------
Brazil BODYCOLOGY 818,551,453 5/31/95
Brazil NATURAL LIFE (Stylized) 818,999,411 1/11/96
Brazil NATURAL LIFE (Stylized) 818,999,420 1/11/96
Brazil PHARMACIST FORMULA 819,165,530 3/29/96
Brazil PHYTO-NUTRIENTS & DESIGN 818,777,478 9/20/95
Brazil YOUR LIFE 818,601,132 6/16/95
Canada PHYTO-NUTRIENTS & DESIGN 770,309 12/7/94
Canada TRU-NATURE 812,380 5/10/96
Chile YOUR LIFE 334,929 2/20/96
China LEINER 970008281 1/27/97
China LEINER 970008282 1/27/97
China NATURAL LIFE 950,150,595 11/3/95
China NATURE'S GIFT 960,137,031 12/12/96
China YOUR LIFE 950,150,596 11/3/95
Colombia BODYCOLOGY 96/008,847 2/26/96
Colombia NATURAL LIFE 96/008,848 2/26/96
Colombia YOUR LIFE 96/019,027 4/19/96
Ecuador BODYCOLOGY 58764/95 7/23/95
26
SCHEDULE III
to U.S. Borrower
Security Agreement
Pending Trademark Applications
------------------------------
Country Trademark Serial No. Filing Date
- ------- --------- ---------- -----------
Ecuador NATURAL LIFE 58762/95 7/3/95
Ecuador PHARMACIST FORMULA 58761/95 7/3/95
Ecuador YOUR LIFE 58763/95 7/3/95
France YOUR LIFE 96/650,930 11/15/96
Germany YOUR LIFE 396 47 337.7 10/24/96
Greece PHYTO-NUTRIENTS & Design 126027 9/4/95
Greece YOUR LIFE 126058 9/7/95
Guatemala VITA-FRESH Unknown Unknown
Hong Kong VITA FRESH 94/15262 12/22/94
Hong Kong YOUR LIFE 94/15261 12/22/94
Indonesia BODYCOLOGY D95-4537 3/20/95
Indonesia NATURAL LIFE D95-9960 6/12/95
Indonesia PHARMACIST FORMULA D95-16477 9/13/95
Indonesia PHYTO-NUTRIENTS & DESIGN D95-16305 9/11/95
Indonesia YOUR LIFE D95-4538 3/20/95
Israel YOUR LIFE 104,556 4/12/96
Israel YOUR LIFE 105,670 6/7/96
Israel YOUR LIFE 105,671 6/7/96
27
SCHEDULE III
to U.S. Borrower
Security Agreement
Pending Trademark Applications
------------------------------
Country Trademark Serial No. Filing Date
- ------- --------- ---------- -----------
Italy BODYCOLOGY RM96C001755 4/15/96
Italy PHYTO-NUTRIENTS & DESIGN MI95C011680 11/22/95
Japan DISSOLUTION TESTED 7,133,709 12/22/95
Japan DISSOLUTION TESTED 7,133,710 12/22/95
Japan DISSOLUTION TESTED 7,133,711 12/22/95
in Katakana
Japan DISSOLUTION TESTED in 7,133,712 12/22/95
Katakana
Japan NATURAL LIFE 7,133,725 12/22/95
Japan NATURAL LIFE 7,133,726 12/22/95
Japan NATURAL LIFE in Katakana 7,133,727 12/22/95
Japan NATURAL LIFE in Katakana 7,133,728 12/22/95
Japan NATURALIZED 7,133,701 12/22/95
Japan NATURALIZED 7,133,702 12/22/95
Japan NATURALIZED in Katakana 7,133,703 12/22/95
Japan NATURALIZED in Katakana 7,133,704 12/22/95
28
SCHEDULE III
to U.S. Borrower
Security Agreement
Pending Trademark Applications
------------------------------
Country Trademark Serial No. Filing Date
- ------- --------- ---------- -----------
Japan NATURE'S HARMONY 7,133,705 12/22/95
Japan NATURE'S HARMONY 7,133,706 12/22/95
in Katakana
Japan NATURE'S HARMONY 7,133,707 12/22/95
in Katakana
Japan NATURE'S HARMONY 7,133,708 12/22/95
in Katakana
Japan NATURE'S PREMIUM 7,133,737 12/22/95
Japan NATURE'S PREMIUM 7,133,738 12/22/95
Japan NATURE'S PREMIUM 7,133,739 12/22/95
in Katakana
Japan NATURE'S PREMIUM 7,133,740 12/22/95
in Katakana
Japan PHARMACIST FORMULA 116191/1994 11/16/94
Japan PHYTO-NUTRIENTS & Design 123098/1994 12/06/94
Japan PROVEN RELEASE & Design 116564/1995 11/09/95
29
SCHEDULE III
to U.S. Borrower
Security Agreement
Pending Trademark Applications
------------------------------
Country Trademark Serial No. Filing Date
- ------- --------- ---------- -----------
Japan PROVEN RELEASE & Design 116565/1995 11/09/95
Japan PROVEN RELEASE & Design 116566/1995 11/09/95
Japan PURITY & QUALITY GUARANTEED 116567/1995 11/09/95
& Design
Japan PURITY & QUALITY GUARANTEED 116568/1995 11/09/95
& Design
Japan PURITY & GUARANTEED 116569/1995 11/09/95
& Design
Japan RELEASE ASSURED 7,133,713 12/22/95
Japan RELEASE ASSURED 7,133,714 12/22/95
Japan RELEASE ASSURED in Katakana 7,133,715 12/22/95
Japan RELEASE ASSURED in Katakana 7,133,716 12/22/95
Japan TRU-NATURE 7,133,717 12/22/95
Japan TRU-NATURE 7,133,718 12/22/95
Japan TRU-NATURE in Katakana 7,133,719 12/22/95
30
SCHEDULE III
to U.S. Borrower
Security Agreement
Pending Trademark Applications
------------------------------
Country Trademark Serial No. Filing Date
- ------- --------- ---------- -----------
Japan TRU-NATURE in Katakana 7,133,720 12/22/95
Japan VITA FRESH 7,133,733 12/22/95
Japan VITA FRESH 7,133,734 12/22/95
Japan VITA FRESH in Katakana 7,133,735 12/22/95
Japan VITA FRESH in Katakana 7,133,736 12/22/95
Japan VITA-HEALTH 7,133,721 12/22/95
Japan VITA-HEALTH 7,133,722 12/22/95
Japan VITA-HEALTH in Katakana 7,133,723 12/22/95
Japan VITA-HEALTH in Katakana 7,133,724 12/22/95
Japan VITAL LIFE 7,133,729 12/22/95
Japan VITAL LIFE 7,133,730 12/22/95
Japan VITAL LIFE in Katakana 7,133,731 12/22/95
Japan VITAL LIFE in Katakana 7,133,732 12/22/95
Japan YOUR LIFE 116561/1995 11/09/95
Japan YOUR LIFE 116562/1995 11/09/95
Japan YOUR LIFE (Katakana) 116563/1995 11/09/95
31
SCHEDULE III
to U.S. Borrower
Security Agreement
Pending Trademark Applications
------------------------------
Country Trademark Serial No. Filing Date
- ------- --------- ---------- -----------
KOREA (South) PHYTO-NUTRIENTS & Design 95/32910 8/25/95
KOREA (South) YOUR LIFE 96/15120 4/16/96
KOREA (South) YOUR LIFE 96/14632 4/12/96
Kuwait YOUR LIFE 32914 1/30/96
Latvia YOUR LIFE M-97-145 1/31/97
Lithuania YOUR LIFE 95/0455 2/15/95
Macao BODYCOLOGY 001849 4/15/97
Malaysia BODYCOLOGY 95/03342 4/13/95
Malaysia NATURAL LIFE 95/04123 5/2/95
Malaysia PHYTO-NUTRIENTS & Design 95/07899 8/7/95
Malaysia YOUR LIFE 95/03344 4/13/95
Malaysia YOUR LIFE 004648 6/23/95
Moldova NATURAL LIFE 250595 6/26/95
New Zealand PHYTO-NUTRIENTS 250596 6/26/95
Nicaragua BODYCOLOGY 96-03851 11/1/96
Nicaragua NATURAL LIFE 96-03852 11/1/96
Nicaragua PHARMACIST FORMULA & Design 96-03853 11/1/96
Nicaragua YOUR LIFE 96-03649 10/11/96
32
SCHEDULE III
to U.S. Borrower
Security Agreement
Pending Trademark Applications
------------------------------
Country Trademark Serial No. Filing Date
- ------- --------- ---------- -----------
Nigeria BODYCOLOGY Unknown Unknown
Nigeria NATURAL LIFE Unknown Unknown
Nigeria PHARMACIST FORMULA Unknown Unknown
Panama PHARMACIST FORMULA 077680 11/09/95
Panama YOUR LIFE 077681 10/9/95
Paraguay YOUR LIFE Unknown Unknown
Peru NATURAL LIFE 4271 2/26/96
Peru NATURAL LIFE 4270 2/26/96
Philippines BODYCOLOGY 108,167 5/16/96
Philippines NATURAL LIFE 108,052 5/10/96
Philippines PHARMACIST FORMULA & Design 115,194 10/30/96
Philippines PHYTO-NUTRIENTS & Design 102,652 9/12/95
Philippines YOUR LIFE 102,651 9/12/95
Poland BODYCOLOGY Z-159,569 5/10/96
Poland NATURAL LIFE Z-159,571 5/10/96
Poland PHARMACIST FORMULA & Design Z-154,913 1/3/96
Poland YOUR LIFE Z-159570 5/10/96
33
SCHEDULE III
to U.S. Borrower
Security Agreement
Pending Trademark Applications
------------------------------
Country Trademark Serial No. Filing Date
- ------- --------- ---------- -----------
Qatar YOUR LIFE 13390 5/6/95
Romania PHARMACIST FORMULA 36,131 8/16/95
Singapore BODYCOLOGY 1081/95 2/9/95
Singapore NATURAL LIFE 3216/95 4/11/95
Singapore PHYTO-NUTRIENTS & Design 4942/95 6/22/95
Singapore YOUR LIFE 1082/95 2/9/95
South Africa YOUR LIFE 96/13512 9/25/96
Spain BODYCOLOGY 1,759,188 4/30/93
Taiwan CENTRAL-VITE 86-018394 4/16/97
Taiwan PHARMACIST FORMULA & Design 85-31107 6/26/96
Taiwan PHYTO-NUTRIENTS & Design 84022242 5/9/95
Taiwan YOUR LIFE 85048280 9/24/96
Thailand BODYCOLOGY 282562 3/17/95
Turkey BODYCOLOGY 96/010115 7/8/96
Turkey PHARMACIST FORMULA & Design 96/010116 7/8/96
Turkey YOUR LIFE 96/010114 7/8/96
34
SCHEDULE III
to U.S. Borrower
Security Agreement
Pending Trademark Applications
------------------------------
Country Trademark Serial No. Filing Date
- ------- --------- ---------- -----------
Ukraine YOUR LIFE 95062125/T 6/28/95
United Kingdom LEINER 2,057,953 2/23/96
United Kingdom PHYTO-NUTRIENTS & Design 2,060,959 3/13/96
United Kingdom YOUR LIFE 2,108,771 8/29/96
Vietnam NATURAL LIFE N-1830/96 5/11/96
Zaire YOUR LIFE Unknown Unknown
35
SCHEDULE III
to U.S. Borrower
Security Agreement
TRADEMARK APPLICATIONS IN PREPARATION
-------------------------------------
Expected Products/
Country Trademark Docket No. Filing Date Services
------- --------- ---------- ----------- ---------
NONE
Item B. TRADEMARK LICENSES
------------------
Country or Effective Expiration
Territory Trademark Licensor Licensee Date Date
- --------- --------- -------- -------- --------- ----------
NONE
36
SCHEDULE IV
to U.S. Borrower
Security Agreement
Item A. COPYRIGHTS/MASK WORKS
---------------------
REGISTERED COPYRIGHTS/MASK WORKS (******)
--------------------------------
Country Registration No. Registration Date Author(s) Title
- ------ ---------------- ----------------- --------- -----
USA TX4-292-297 03/27/96 Leiner Natural
Health Life
Products
Inc.
COPYRIGHT/MASK WORK PENDING REGISTRATION APPLICATIONS
-----------------------------------------------------
Country Serial No. Filing Date Author(s) Title
- ------- ---------- ----------- --------- -----
NONE
COPYRIGHT/MASK WORK REGISTRATION APPLICATIONS IN PREPARATION
------------------------------------------------------------
Expected
Country Docket No. Filing Date Author(s) Title
- ------- ---------- ----------- --------- -----
NONE
- -------------------------
(******)The Grantor creates various copyrightable materials for use
in connection with the marketing of its products. The Grantor does not
generally register its copyrights in such works.
37
SCHEDULE IV
to U.S. Borrower
Security Agreement
Item B. COPYRIGHT/MARK WORK LICENSES
----------------------------
Country or Effective Expiration Subject
Territory Licensor Licensee Date Date Matter
- -------- -------- -------- --------- ---------- -------
The Grantor licenses various off-the-shelf software programs from third party
vendors.
38
SCHEDULE V
to U.S. Borrower
Security Agreement
TRADE SECRET OR KNOW-HOW LICENSES
---------------------------------
Country or Effective Expiration Subject
Territory Licensor Licensee Date Date Matter
- -------- -------- -------- --------- ---------- -------
NONE
EXHIBIT A
to U.S. Borrower
Security Agreement
PATENT SECURITY AGREEMENT
-------------------------
This PATENT SECURITY AGREEMENT (this "AGREEMENT"), dated as of ________ __,
19__, is made between LEINER HEALTH PRODUCTS INC., a Delaware corporation
(the "GRANTOR"), and THE BANK OF NOVA SCOTIA, as collateral agent (the
"AGENT") for each of the Secured Parties;
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, pursuant to a Credit Agreement, dated as of the date hereof
(as amended, supplemented, amended and restated or otherwise modified from
time to time, the "CREDIT AGREEMENT"), among Leiner Health Products Group
Inc., a Delaware corporation ("LHPG" or the "U.S. BORROWER" (prior to the
Assumption)), Vita Health Company (1985) Ltd., a Manitoba corporation (the
"CANADIAN BORROWER", and together with the U.S. Borrower, the "BORROWERS"),
the various financial institutions as are or may become parties thereto which
extend a Commitment under the U.S. Facility (collectively, the "U.S.
LENDERS"), the various financial institutions as are or may become parties
thereto which extend a Commitment under the Canadian Facility (collectively,
the "CANADIAN LENDERS", and together with the U.S. Lenders, the "LENDERS"),
The Bank of Nova Scotia ("SCOTIABANK"), as agent for the U.S. Lenders under
the U.S. Facility (in such capacity, the "U.S. AGENT"), and Scotiabank, as
agent for the Canadian Lenders under the Canadian Facility (in such capacity,
the "CANADIAN AGENT"), the Lenders and the Issuers have extended Commitments
to make Credit Extensions to the Borrowers;
WHEREAS, as contemplated by the Credit Agreement, immediately
following the making of the initial Credit Extensions, the Grantor and LHPG
have delivered the Assumption Agreement, pursuant to which the Grantor has
assumed (the "ASSUMPTION") the rights and obligations of LHPG as (and has
become) the "U.S. Borrower" under the Credit Agreement;
WHEREAS, in connection with the Credit Agreement, the Grantor has
executed and delivered a U.S. Borrower Security Agreement, dated as of June
30, 1997 (as amended, supplemented, amended and restated or otherwise
modified from time to time, the "SECURITY AGREEMENT");
WHEREAS, as a condition precedent to the making of the Credit
Extensions (including the initial Credit Extensions) and the execution and
delivery of the Assumption Agreement under the Credit Agreement, the Grantor
is required to execute and deliver this Agreement; and
WHEREAS, the Grantor has duly authorized the execution, delivery and
performance of this Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and in order to induce the
Lenders and the Issuers to make Credit Extensions (including the initial
Credit Extensions) to the Borrowers pursuant to the Credit Agreement, and to
induce the Secured Parties to enter into Rate Protection Agreements, if any,
the Grantor agrees, for the benefit of each Secured Party, as follows:
SECTION 1. DEFINITIONS. Unless otherwise defined herein or the
context otherwise requires, terms used in this Agreement, including its
preamble and recitals, have the meanings provided (or incorporated by
reference) in the Security Agreement.
SECTION 2. GRANT OF SECURITY INTEREST. For good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, to secure all of the Obligations, the Grantor does hereby grant
to the Agent a security interest in, for the ratable benefit of the Secured
Parties, all of the following property (the "PATENT COLLATERAL"), whether now
owned or hereafter acquired by it:
(a) all letters patent and applications for letters patent owned by
the Grantor in the Grantor's name as such may be changed from time to time,
throughout the world, including all patent applications in preparation for
filing anywhere in the world and including each patent and patent
application referred to in ITEM A of ATTACHMENT 1 attached hereto;
(b) all reissues, divisions, continuations, continuations-in-part,
extensions, renewals and reexaminations of any of the items described in
CLAUSE (A);
2
(c) all patent licenses of the Grantor, including each patent license
referred to in ITEM B of ATTACHMENT 1 attached hereto subject, in each
case, to the terms of such license agreements, and the right to prepare for
sale, sell and advertise for sale, all Inventory now or hereafter covered
by such licenses; and
(d) all proceeds of, and rights of the Grantor associated with, the
foregoing (including license royalties and proceeds of infringement suits),
the right to sue third parties for past, present or future infringements of
any patent or patent application described in CLAUSE (A), including any
patent or patent application referred to in ITEM A of ATTACHMENT 1 attached
hereto, and for breach or enforcement of any patent license, including any
patent license referred to in ITEM B of ATTACHMENT 1 attached hereto
subject, in each case, to the terms of such license agreements, and all
rights thereto throughout the world of the Grantor.
SECTION 3. SECURITY AGREEMENT. This Agreement has been executed and
delivered by the Grantor for the purpose of registering the security interest
of the Agent in the Patent Collateral with the United States Patent and
Trademark Office and, to the extent required by the Security Agreement,
corresponding offices in other countries of the world. The security interest
granted hereby has been granted as a supplement to, and not in limitation of,
the security interest granted to the Agent for its benefit and the benefit of
each Secured Party under the Security Agreement. The Security Agreement (and
all rights and remedies of the Agent and each Secured Party thereunder) shall
remain in full force and effect in accordance with its terms.
SECTION 4. RELEASE OF SECURITY INTEREST. Upon the payment in full in
cash, or cash collateralization, of all Obligations, the termination or
expiration of all Letters of Credit, the termination of all Rate Protection
Agreements entered into pursuant to the Credit Agreement and the termination
of all Commitments, the security interest granted herein and all related
Liens shall terminate and all rights to the Patent Collateral shall revert to
the Grantor. Upon any such termination or release, the Agent will, at the
Grantor's sole expense, execute and deliver to the Grantor such documents as
the Grantor shall reasonably request to evidence such termination of the
security
3
interest in the Patent Collateral granted herein and all related Liens.
SECTION 5. ACKNOWLEDGMENT. The Grantor does hereby
further acknowledge and affirm that the rights and remedies of the Agent with
respect to the security interest in the Patent Collateral granted hereby are
more fully set forth in the Security Agreement, the terms and provisions of
which (including the remedies provided for therein) are incorporated by
reference herein as if fully set forth herein.
SECTION 6. LOAN DOCUMENT, ETC. This Agreement is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise
expressly indicated herein) be construed, administered and applied in
accordance with the terms and provisions of the Credit Agreement.
SECTION 7. COUNTERPARTS. This Agreement may be executed by the
parties hereto in several counterparts, each of which shall be deemed to be
an original and all of which shall constitute together but one and the same
agreement.
4
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the day and year first above written.
LEINER HEALTH PRODUCTS INC.
By
--------------------------
Name:
Title:
THE BANK OF NOVA SCOTIA,
as Agent
By
--------------------------
Name:
Title:
5
ATTACHMENT 1
to U.S. Borrower
Patent Security Agreement
Item A. PATENTS
-------
Issued Patents
--------------
*Country Patent No. Issue Date Inventor(s) Title
------- ---------- ---------- ----------- -----
Pending Patent Applications
---------------------------
*Country Serial No. Filing Date Inventor(s) Title
------- ---------- ----------- ----------- -----
Patent Applications in Preparation
----------------------------------
Expected
*Country Docket No. Filing Date Inventor(s) Title
------- ---------- ----------- ----------- -----
Item B. PATENT LICENSES
---------------
*Country or Effective Expiration Subject
Territory Licensor Licensee Date Date Matter
--------- -------- -------- --------- ---------- -------
______________________
* List items related to the United States first for ease of
recordation. List items related to other countries next, grouped
by country and in alphabetical order by country name.
EXHIBIT B
to U.S. Borrower
Security Agreement
TRADEMARK SECURITY AGREEMENT
This TRADEMARK SECURITY AGREEMENT (this "AGREEMENT"),
dated as of June 30, 1997, is made between LEINER HEALTH PRODUCTS INC., a
Delaware corporation (the "GRANTOR"), and THE BANK OF NOVA SCOTIA, as
collateral agent (the "AGENT") for each of the Secured Parties;
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, pursuant to a Credit Agreement, dated as of the
date hereof (as amended, supplemented, amended and restated or otherwise
modified from time to time, the "CREDIT AGREEMENT"), among Leiner Health
Products Group Inc., a Delaware corporation ("LHPG or the "U.S. BORROWER"
(prior to the Assumption)), Vita Health Company (1985) Ltd., a Manitoba
corporation (the "CANADIAN BORROWER", and together with the U.S. Borrower,
the "BORROWERS"), the various financial institutions as are or may become
parties thereto which extend a Commitment under the U.S. Facility
(collectively, the "U.S. LENDERS"), the various financial institutions as are
or may become parties thereto which extend a Commitment under the Canadian
Facility (collectively, the "CANADIAN LENDERS", and together with the U.S.
Lenders, the "LENDERS"), The Bank of Nova Scotia ("SCOTIABANK"), as agent for
the U.S. Lenders under the U.S. Facility (in such capacity, the "U.S.
AGENT"), and Scotiabank, as agent for the Canadian Lenders under the Canadian
Facility (in such capacity, the "CANADIAN AGENT"), the Lenders and the
Issuers have extended Commitments to make Credit Extensions to the Borrowers;
WHEREAS, as contemplated by the Credit Agreement,
immediately following the making of the initial Credit Extensions, the
Grantor and LHPG have delivered the Assumption Agreement, pursuant to which
the Grantor has assumed (the "ASSUMPTION") the rights and obligations of LHPG
as (and has become) the "U.S. Borrower" under the Credit Agreement;
WHEREAS, in connection with the Credit Agreement, the
Grantor has executed and delivered a U.S. Borrower Security
Agreement, dated as of June 30, 1997 (as amended,
supplemented, amended and restated or otherwise modified from time to time, the
"SECURITY AGREEMENT");
WHEREAS, as a condition precedent to the making of the
Credit Extensions (including the initial Credit Extensions) and the execution
and delivery of the Assumption Agreement under the Credit Agreement, the
Grantor is required to execute and deliver this Agreement; and
WHEREAS, the Grantor has duly authorized the execution,
delivery and performance of this Agreement;
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, and in order to
induce the Lenders and the Issuers to make Credit Extensions (including the
initial Credit Extensions) to the Borrowers pursuant to the Credit Agreement,
and to induce the Secured Parties to enter into Rate Protection Agreements,
if any, the Grantor agrees, for the benefit of each Secured Party, as follows:
SECTION 1. DEFINITIONS. Unless otherwise defined herein
or the context otherwise requires, terms used in this Agreement, including
its preamble and recitals, have the meanings provided (or incorporated by
reference) in the Security Agreement.
SECTION 2. GRANT OF SECURITY INTEREST. For good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, to secure all of the Obligations, the Grantor does hereby grant
to the Agent a security interest in, for the ratable benefit of the Secured
Parties, all of the following property (the "TRADEMARK COLLATERAL"), whether
now owned or hereafter acquired by it:
(a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names,
trade styles, service marks, certification marks, collective
marks, logos, other source of business identifiers, designs
and general intangibles of a like nature owned by the Grantor
in the Grantor's name as such may be changed from time to time
(all of the foregoing items in this CLAUSE (A) being
collectively called a "TRADEMARK"), now existing anywhere in
the world or hereafter adopted or acquired,
2
whether currently in use or not, all registrations and recordings
thereof and all applications in connection therewith, whether pending
or in preparation for filing, including registrations, recordings
and applications in the United States Patent and Trademark Office or
in any office or agency of the United States of America or any State
thereof or any foreign country, including those referred to in ITEM A
of ATTACHMENT 1 attached hereto, PROVIDED, HOWEVER, that Trademark
Collateral shall not include "intent to use" applications for trademark
or service mark registrations filed in the United States Patent and
Trademark Office pursuant to Section 1(b) of the Lanham Act, 15 U.S.C.
Section 1051, unless and until an Amendment to Allege Use or a Statement
of Use under Section 1(c) or 1(d) of said Act has been filed;
(b) all Trademark licenses of the Grantor, including each Trademark
license referred to in ITEM B of ATTACHMENT 1 attached hereto subject, in
each case, to the terms of such license agreements, and the right to
prepare for sale, sell and advertise for sale, all Inventory now or
hereafter covered by such licenses;
(c) all reissues, extensions or renewals of any of the items
described in CLAUSES (A) and (B);
(d) all of the goodwill of the business of the Grantor connected with
the use of, and symbolized by the items described in, CLAUSES (A) and (B);
and
(e) all proceeds of, and rights of the Grantor associated with, the
foregoing, including any claim by the Grantor against third parties for
past, present or future infringement or dilution of any Trademark or
Trademark registration including any Trademark or Trademark registration
referred to in ITEM A of ATTACHMENT 1 attached hereto, or for any injury
to the goodwill of the Grantor associated with the use of any such
Trademark or for breach or enforcement of any Trademark license subject,
in each case, to the terms of such license agreements.
SECTION 3. SECURITY AGREEMENT. This Agreement has been executed and
delivered by the Grantor for the
3
purpose of registering the security interest of the Agent in the Trademark
Collateral with the United States Patent and Trademark Office and, to the
extent required by the Security Agreement, corresponding offices in other
countries of the world. The security interest granted hereby has been
granted as a supplement to, and not in limitation of, the security interest
granted to the Agent for its benefit and the benefit of each Secured Party
under the Security Agreement. The Security Agreement (and all rights and
remedies of the Agent and each Secured Party thereunder) shall remain in full
force and effect in accordance with its terms.
SECTION 4. RELEASE OF SECURITY INTEREST. Upon the payment in full in
cash, or cash collateralization, of all Obligations, the termination or
expiration of all Letters of Credit, the termination of all Rate Protection
Agreements entered into pursuant to the Credit Agreement and the termination
of all Commitments, the security interest granted herein and all related
Liens shall terminate and all rights to the Trademark Collateral shall revert
to the Grantor. Upon any such termination or release, the Agent will, at the
Grantor's sole expense, execute and deliver to the Grantor such documents as
the Grantor shall reasonably request to evidence such termination of the
security interest in the Trademark Collateral granted herein and all related
Liens.
SECTION 5. ACKNOWLEDGMENT. The Grantor does hereby further
acknowledge and affirm that the rights and remedies of the Agent with respect
to the security interest in the Trademark Collateral granted hereby are more
fully set forth in the Security Agreement, the terms and provisions of which
(including the remedies provided for therein) are incorporated by reference
herein as if fully set forth herein.
SECTION 6. LOAN DOCUMENT, ETC. This Agreement is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise
expressly indicated herein) be construed, administered and applied in
accordance with the terms and provisions of the Credit Agreement.
SECTION 7. COUNTERPARTS. This Agreement may be executed by the
parties hereto in several counterparts, each
4
of which shall be deemed to be an original and all of which shall constitute
together but one and the same agreement.
5
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the day and year first above written.
LEINER HEALTH PRODUCTS INC.
By
--------------------------
Name:
Title:
THE BANK OF NOVA SCOTIA,
as Agent
By
--------------------------
Name:
Title:
6
ATTACHMENT 1
to U.S. Borrower
Trademark Security Agreement
Item A. TRADEMARKS
----------
Registered Trademarks
---------------------
*Country Trademark Registration No. Registration
------- --------- ---------------- ------------
Date
- ----
Pending Trademark Applications
------------------------------
*Country Trademark Serial No. Filing Date
------- --------- ---------- -----------
Trademark Applications in Preparation
-------------------------------------
Products/ Expected
*Country Trademark Docket No. Filing Date
------- --------- ---------- -----------
Services
- --------
Item B. TRADEMARK LICENSES
------------------
*Country or Effective Expiration
Territory Trademark Licensor Licensee Date Date
---------- --------- -------- -------- --------- ---------
_______________________
*List items related to the United States first for ease of recordation.
List items related to other countries next, grouped by country and in
alphabetical order by country name.
EXHIBIT C
to U.S. Borrower
Security Agreement
COPYRIGHT SECURITY AGREEMENT
----------------------------
This COPYRIGHT SECURITY AGREEMENT (this "AGREEMENT"), dated as
of ________ __, 19__, is made between LEINER HEALTH PRODUCTS INC., a
Delaware corporation (the "GRANTOR"), and THE BANK OF NOVA SCOTIA, as
collateral agent (the "AGENT") for each of the Secured Parties;
W I T N E S S E T H :
WHEREAS, pursuant to a Credit Agreement, dated as of the date hereof
(as amended, supplemented, amended and restated or otherwise modified from
time to time, the "CREDIT AGREEMENT"), among Leiner Health Products Group
Inc., a Delaware corporation ("LHPG" or the "U.S. BORROWER" (prior to the
Assumption)), Vita Health Company (1985) Ltd., a Manitoba corporation (the
"CANADIAN BORROWER", and together with the U.S. Borrower, the "BORROWERS"),
the various financial institutions as are or may become parties thereto which
extend a Commitment under the U.S. Facility (collectively, the "U.S.
LENDERS"), the various financial institutions as are or may become parties
thereto which extend a Commitment under the Canadian Facility (collectively,
the "CANADIAN LENDERS", and together with the U.S. Lenders, the "LENDERS"),
The Bank of Nova Scotia ("SCOTIABANK"), as agent for the U.S. Lenders under
the U.S. Facility (in such capacity, the "U.S. AGENT"), and Scotiabank, as
agent for the Canadian Lenders under the Canadian Facility (in such capacity,
the "CANADIAN AGENT"), the Lenders and the Issuers have extended Commitments
to make Credit Extensions to the Borrowers;
WHEREAS, as contemplated by the Credit Agreement, immediately
following the making of the initial Credit Extensions, the Grantor and LHPG
have delivered the Assumption Agreement, pursuant to which the Grantor has
assumed (the "ASSUMPTION") the rights and obligations of LHPG as (and has
become) the "U.S. Borrower" under the Credit Agreement;
WHEREAS, in connection with the Credit Agreement, the Grantor has
executed and delivered a U.S. Borrower
Security Agreement, dated as of June 30, 1997 (as amended, supplemented,
amended and restated or otherwise modified from time to time, the "SECURITY
AGREEMENT");
WHEREAS, as a condition precedent to the making of the Credit
Extensions (including the initial Credit Extensions) and the execution and
delivery of the Assumption Agreement under the Credit Agreement, the Grantor
is required to execute and deliver this Agreement; and
WHEREAS, the Grantor has duly authorized the execution, delivery and
performance of this Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and in order to induce the
Lenders and the Issuers to make Credit Extensions (including the initial
Credit Extensions) to the Borrowers pursuant to the Credit Agreement, and to
induce the Secured Parties to enter into Rate Protection Agreements, if any,
the Grantor agrees, for the benefit of each Secured Party, as follows:
SECTION 1. DEFINITIONS. Unless otherwise defined herein or the
context otherwise requires, terms used in this Agreement, including its
preamble and recitals, have the meanings provided (or incorporated by
reference) in the Security Agreement.
SECTION 2. GRANT OF SECURITY INTEREST. For good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
to secure all of the Obligations, the Grantor does hereby grant to the Agent
a security interest in, for the ratable benefit of each of the Secured
Parties, all of the following property (the "COPYRIGHT COLLATERAL"), whether
now owned or hereafter acquired by it, being (a) all copyrights (including
all copyrights for semi-conductor chip product mask works) owned by the
Grantor in the Grantor's name as such may be changed from time to time,
whether statutory or common law, registered or unregistered, now or hereafter
in force throughout the world including all of the Grantor's right, title and
interest in and to all copyrights registered in the United States Copyright
Office or anywhere else in the world and also including the copyrights
referred to in ITEM A of ATTACHMENT 1 attached hereto, and all applications
for
2
registration thereof, whether pending or in preparation (all of the
foregoing items in this clause being collectively called a "COPYRIGHT"), the
right to sue for past, present and future infringements of any thereof, all
rights of the Grantor thereto throughout the world, all extensions and
renewals of any thereof and all proceeds of the foregoing, including
licenses, royalties, income, payments, claims, damages and proceeds of suit;
(b) all copyright licenses of the Grantor, including
each copyright license referred to in ITEM B of SCHEDULE IV
attached hereto subject, in each case, to the terms of such
license agreements, and the right to prepare for sale, sell
and advertise for sale, all Inventory now or hereafter covered
by such licenses; and
(c) all proceeds of, and rights of the Grantor
associated with, the foregoing (including license royalties
and proceeds of infringement suits), the right to sue for
breach or enforcement of any copyright license subject, in
each case, to the terms of such license agreements, and all
rights of the Grantor thereto throughout the world.
SECTION 3. SECURITY AGREEMENT. This Agreement has been executed and
delivered by the Grantor for the purpose of registering the security interest
of the Agent in the Copyright Collateral with the United States Copyright
Office and, to the extent required by the Security Agreement, corresponding
offices in other countries of the world. The security interest granted
hereby has been granted as a supplement to, and not in limitation of, the
security interest granted to the Agent for its benefit and the benefit of
each Secured Party under the Security Agreement. The Security Agreement (and
all rights and remedies of the Agent and each Secured Party thereunder) shall
remain in full force and effect in accordance with its terms.
SECTION 4. RELEASE OF SECURITY INTEREST. Upon the payment in full
in cash, or cash collateralization, of all Obligations, the termination or
expiration of all Letters of Credit, the termination of all Rate Protection
Agreements entered into pursuant to the Credit Agreement and
3
the termination of all Commitments, the security interest granted herein and
all related Liens shall terminate and all rights to the Copyright Collateral
shall revert to the Grantor. Upon any such termination or release, the Agent
will, at the Grantor's sole expense, execute and deliver to the Grantor such
documents as the Grantor shall reasonably request to evidence such
termination of the security interest in the Copyright Collateral granted
herein and all related Liens.
SECTION 5. ACKNOWLEDGMENT. The Grantor does hereby further
acknowledge and affirm that the rights and remedies of the Agent with respect
to the security interest in the Copyright Collateral granted hereby are more
fully set forth in the Security Agreement, the terms and provisions of which
(including the remedies provided for therein) are incorporated by reference
herein as if fully set forth herein.
SECTION 6. LOAN DOCUMENT, ETC. This Agreement is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise
expressly indicated herein) be construed, administered and applied in
accordance with the terms and provisions of the Credit Agreement.
SECTION 7. COUNTERPARTS. This Agreement may be executed by the
parties hereto in several counterparts, each of which shall be deemed to be
an original and all of which shall constitute together but one and the same
agreement.
4
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the day and year first
above written.
LEINER HEALTH PRODUCTS INC.
By
--------------------------
Name:
Title:
THE BANK OF NOVA SCOTIA,
as Agent
By
--------------------------
Name:
Title:
5
ATTACHMENT 1
to U.S. Borrower
Copyright Security Agreement
Item A. COPYRIGHTS/MASK WORKS
---------------------
Registered Copyrights/Mask Works
--------------------------------
*Country Registration No. Registration Date Author(s) Title
------- ---------------- ----------------- --------- -----
Copyright/Mask Work Pending Registration Applications
-----------------------------------------------------
*Country Serial No. Filing Date Author(s) Title
------- ---------- ----------- --------- -----
Copyright/Mask Work Registration Applications in Preparation
------------------------------------------------------------
Expected
*Country Docket No. Filing Date Author(s) Title
------- ---------- ----------- --------- -----
Item B. COPYRIGHT/MASK WORK LICENSES
----------------------------
*Country or Effective Expiration Subject
Territory Licensor Licensee Date Date Matter
---------- -------- -------- --------- ---------- -------
______________________
* List items related to the United States first for ease of recordation.
List items related to other countries next, groupedby country and in
alphabetical order by country name.