EXHIBIT 10(c)
EXECUTION VERSION
SECURITY AGREEMENT
SECURITY AGREEMENT, dated October 8, 2003, made by each of
the Grantors referred to below, in favor of Ableco Finance LLC, a Delaware
limited liability company, in its capacity as collateral agent for the
Agents and the Lenders (as such terms are defined below) party to the
Financing Agreement referred to below (in such capacity, together with any
successors and assigns, if any, the "Collateral Agent").
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W I T N E S S E T H:
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WHEREAS, Solutia Inc., a Delaware corporation (the
"Parent"), Solutia Business Enterprises, Inc., a New York corporation
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("Solutia Business", and together with the Parent, each a "Borrower" and
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collectively, the "Borrowers"), each subsidiary of the Parent listed as a
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"Guarantor" on the signature pages thereto (each a "Guarantor" and
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collectively, the "Guarantors", and, together with the Borrowers, each a
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"Grantor" and collectively, the "Grantors"), the lenders from time to time
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party thereto (each a "Lender" and collectively, the "Lenders"), the
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Collateral Agent, Wells Fargo Foothill, Inc., a California corporation, as
administrative agent for the Lenders (in such capacity, together with any
successors and assigns, if any, the "Administrative Agent"), and Congress
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Financial Corporation (Central), an Illinois corporation, as documentation
agent for the Lenders (in such capacity, together with any successors and
assigns, if any, the "Documentation Agent", and together with the Collateral
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Agent and the Administrative Agent, each an "Agent" and collectively, the
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"Agents") are parties to a Financing Agreement, dated as of October 8, 2003
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(such agreement, as amended, restated, supplemented or otherwise modified
from time to time, including any replacement agreement therefor, being
hereinafter referred to as the "Financing Agreement");
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WHEREAS, pursuant to the Financing Agreement, the Lenders
have agreed to make certain revolving loans, which will include a
subfacility for the issuance of letters of credit (each a "Loan" and
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collectively, the "Loans"), to the Borrowers;
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WHEREAS, it is a condition precedent to the Lenders making
any Loan or making any other financial accommodation to the Borrowers
pursuant to the Financing Agreement that each Grantor shall have executed
and delivered to the Collateral Agent a security agreement providing for the
grant to the Collateral Agent for the benefit of the Agents and the Lenders
of a security interest in all personal property of such Grantor (other than
Fixtures attached to a "Principal Property" (as defined in the 1997
Indenture and the Euro Indenture));
WHEREAS, the Grantors are mutually dependent on each other
in the conduct of their respective businesses as an integrated operation,
with the credit needed from time to time by each Grantor often being
provided through financing obtained by the other Grantors and the ability to
obtain such financing being dependent on the successful operations of all of
the Grantors as a whole; and
WHEREAS, each Grantor has determined that the execution,
delivery and performance of this Agreement directly benefit, and are in the
best interest of, such Grantor;
NOW, THEREFORE, in consideration of the premises and the
agreements herein and in order to induce the Lenders to make and maintain
the Loans, the Letter of Credit
Accommodations and other financial accommodations to the Borrowers pursuant
to the Financing Agreement, the Grantors hereby jointly and severally agree
with the Collateral Agent, for the benefit of the Agents and the Lenders, as
follows:
SECTION 1. Definitions.
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(a) Reference is hereby made to the Financing Agreement for
a statement of the terms thereof. All terms used in this Agreement and the
recitals hereto which are defined in the Financing Agreement or in Article 9
of the Uniform Commercial Code as in effect from time to time in the State
of New York (the "Code") and which are not otherwise defined herein shall
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have the same meanings herein as set forth therein; provided that terms used
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herein which are defined in the Code as in effect in the State of New York
on the date hereof shall continue to have the same meaning notwithstanding
any replacement or amendment of such statute except as the Collateral Agent
may otherwise determine.
(b) The following terms shall have the respective meanings
provided for in the Code: "Accounts", "Cash Proceeds", "Chattel Paper",
"Commercial Tort Claim", "Commodity Account", "Commodity Contracts",
"Deposit Account", "Documents", "Equipment", "Fixtures", "General
Intangibles", "Goods", "Instruments", "Inventory", "Investment Property",
"Letter-of-Credit Rights", "Noncash Proceeds", "Payment Intangibles",
"Proceeds", "Promissory Notes", "Record", "Security Account", "Software",
and "Supporting Obligations".
(c) As used in this Agreement, the following terms shall
have the respective meanings indicated below, such meanings to be applicable
equally to both the singular and plural forms of such terms:
"Copyright Licenses" means all licenses, contracts or
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other agreements, whether written or oral, naming any Grantor as licensee or
licensor and providing for the grant of any right to use or sell any works
covered by any copyright (including, without limitation, all Copyright
Licenses set forth in Schedule II hereto).
"Copyrights" means all domestic and foreign copyrights,
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whether registered or not, including, without limitation, all copyright
rights throughout the universe (whether now or hereafter arising) in any and
all media (whether now or hereafter developed), in and to all original works
of authorship fixed in any tangible medium of expression, acquired or used
by any Grantor (including, without limitation, all copyrights described in
Schedule II hereto), all applications, registrations and recordings thereof
(including, without limitation, applications, registrations and recordings
in the United States Copyright Office or in any similar office or agency of
the United States or any other country or any political subdivision
thereof), and all reissues, divisions, continuations, continuations in part
and extensions or renewals thereof.
"Intellectual Property" means the Copyrights, Trademarks
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and Patents.
"Licenses" means the Copyright Licenses, the Trademark
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Licenses and the Patent Licenses.
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"Material Licenses" means all Licenses (a) relating to (i)
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Registered Patents, (ii) trademarks, service marks and other indicia of
origin, whether Registered or not, (iii) copyrights, whether Registered or
not, and (iv) trade secrets and know-how, and (b) having a value in excess
of $1,000,000, or involving aggregate consideration payable by or to any
Grantor in excess of $1,000,000.
"Patent Licenses" means all licenses, contracts or other
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agreements, whether written or oral, naming any Grantor as licensee or
licensor and providing for the grant of any right to manufacture, use or
sell any invention covered by any Patent (including, without limitation, all
Patent Licenses set forth in Schedule II hereto).
"Patents" means all domestic and foreign letters patent,
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design patents, utility patents, industrial designs, inventions, trade
secrets, ideas, concepts, methods, techniques, processes, proprietary
information, technology, know-how, formulae, rights of publicity and other
general intangibles of like nature, now existing or hereafter acquired
(including, without limitation, all domestic and foreign letters patent,
design patents, utility patents, industrial designs, inventions, trade
secrets, ideas, concepts, methods, techniques, processes, proprietary
information, technology, know-how and formulae described in Schedule II
hereto), all applications, registrations and recordings thereof (including,
without limitation, applications, registrations and recordings in the United
States Patent and Trademark Office, or in any similar office or agency of
the United States or any other country or any political subdivision
thereof), and all reissues, divisions, continuations, continuations in part
and extensions or renewals thereof.
"Registered" means, issued, registered or the subject of a
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pending application, in each case with the United States Patent and
Trademark Office, the United States Copyright Office, or any other
comparable office in any other jurisdiction.
"Trademark Licenses" means all licenses, contracts or
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other agreements, whether written or oral, naming any Grantor as licensor or
licensee and providing for the grant of any right concerning any Trademark,
together with any goodwill connected with and symbolized by any such
trademark licenses, contracts or agreements (including, without limitation,
all Trademark Licenses described in Schedule II hereto).
"Trademarks" means all domestic and foreign trademarks,
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service marks, collective marks, certification marks, trade names, business
names, d/b/a's, Internet domain names, trade styles, designs, logos and
other source or business identifiers and all general intangibles of like
nature, now or hereafter owned, adopted, acquired or used by any Grantor
(including, without limitation, all domestic and foreign trademarks, service
marks, collective marks, certification marks, trade names, business names,
d/b/a's, Internet domain names, trade styles, designs, logos and other
source or business identifiers described in Schedule II hereto), all
applications, registrations and recordings thereof (including, without
limitation, applications, registrations and recordings in the United States
Patent and Trademark Office or in any similar office or agency of the United
States, any state thereof or any other country or any political subdivision
thereof), and all reissues, extensions or renewals thereof, together with
all goodwill of the business symbolized by such marks.
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SECTION 2. Grant of Security Interest. As collateral
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security for all of the Obligations (as defined in Section 3 hereof), each
Grantor hereby pledges and assigns to the Collateral Agent, and grants to
the Collateral Agent, for the benefit of the Agents and the Lenders, a
continuing security interest in, all personal property of such Grantor,
wherever located and whether now or hereafter existing and whether now owned
or hereafter acquired, of every kind and description, tangible or intangible
(the "Collateral"), including, without limitation, the following:
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(a) all Accounts;
(b) all Chattel Paper (whether tangible or electronic);
(c) the Commercial Tort Claims specified on Schedule VI
hereto;
(d) all Deposit Accounts, all cash, and all other property
from time to time deposited therein and the monies and property in the
possession or under the control of any Agent or any Lender or any affiliate,
representative, agent or correspondent of any Agent or any Lender;
(e) all Documents;
(f) all Equipment;
(g) all Fixtures;
(h) all General Intangibles (including, without limitation,
all Payment Intangibles);
(i) all Goods;
(j) all Instruments (including, without limitation,
Promissory Notes);
(k) all Inventory;
(l) all Investment Property;
(m) all Copyrights, Patents and Trademarks, and all Licenses;
(n) all Letter-of-Credit Rights;
(o) all Supporting Obligations;
(p) all other tangible and intangible personal property of
such Grantor (whether or not subject to the Code), including, without
limitation, all bank and other accounts and all cash and all investments
therein, all proceeds, products, offspring, accessions, rents, profits,
income, benefits, substitutions and replacements of and to any of the
property of such Grantor described in the preceding clauses of this
Section 2 (including, without limitation, any proceeds of insurance thereon
and all causes of action, claims and warranties now or hereafter held by
such Grantor in respect of any of the items listed above), and all books,
correspondence,
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files and other Records, including, without limitation, all tapes, disks,
cards, Software, data and computer programs owned by such Grantor or any
other Person from time to time acting for such Grantor that at any time
evidence or contain information relating to any of the property described in
the preceding clauses of this Section 2 or are otherwise necessary or
helpful in the collection or realization thereof; and
(q) all Proceeds, including all Cash Proceeds and Noncash
Proceeds, and products of any and all of the foregoing Collateral;
in each case howsoever such Grantor's interest therein may arise or appear
(whether by ownership, security interest, claim or otherwise).
The maximum aggregate principal amount of Obligations that constitutes
"Debt" (as defined in the 1997 Indenture or the Euro Indenture) that shall
be secured by (i) the "Principal Properties" (as defined in the 1997
Indenture or the Euro Indenture) or any portion of the "Principal
Properties" (collectively, the "Principal Properties and Related
Collateral") and/or (ii) the Restricted Pledged Collateral (as defined in
the Pledge Agreement) shall not exceed the Senior Lien Limit then in effect
minus $1,000, provided that so long as the aggregate principal amount of the
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Obligations exceeds the aggregate principal amount of the Obligations
constituting such "Debt" secured by the Principal Properties and Related
Collateral and/or the Restricted Pledged Collateral, no payment on account
of the Obligations constituting such "Debt" shall be deemed to be applied
against or to reduce the amount of the Obligations constituting such "Debt"
secured by the Principal Properties and Related Collateral and/or the
Restricted Pledged Collateral, but shall instead, be deemed to be applied
against only such portion of the Obligations constituting such "Debt" in
excess of the amount of such Obligations that is secured by the Collateral
that is the Principal Properties and Related Collateral and/or the
Restricted Pledged Collateral.
SECTION 3. Security for Obligations. The security interest
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created hereby in the Collateral constitutes continuing collateral security
for all of the following obligations, whether now existing or hereafter
incurred (the "Obligations"):
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(a) the prompt payment by each Grantor, as and when due
and payable (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise), of all amounts from time to time owing
by it to the Agents and the Lenders in respect of the Financing Agreement
and the other Loan Documents, including, without limitation, (i) all
principal of and interest on the Loans (including, without limitation, all
interest that accrues after the commencement of any Insolvency Proceeding of
any Loan Party, whether or not the payment of such interest is unenforceable
or is not allowable due to the existence of such Insolvency Proceeding),
(ii) all Letter of Credit Obligations, (iii) in the case of a Guarantor, all
amounts from time to time owing by such Grantor in respect of its guaranty
made pursuant to Article XI of the Financing Agreement or under any other
Guaranty to which it is a party, including all obligations guaranteed by
such Grantor and (iv) all fees, commissions, charges, expense
reimbursements, indemnifications and all other amounts due or to become due
under any Loan Document; and
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(b) the due performance and observance by each Grantor of
all of its other obligations owing to the Agents and the Lenders and from
time to time existing in respect of the Loan Documents.
SECTION 4. Representations and Warranties. Each Grantor
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jointly and severally represents and warrants as follows:
(a) Schedule I hereto sets forth (i) the exact legal name of
each Grantor and (ii) the organizational identification number of each
Grantor or states that no such organizational identification number exists.
(b) Each Grantor (i) is a corporation, limited liability
company or limited partnership duly organized, validly existing and in good
standing under the laws of the state, province or jurisdiction of its
organization as set forth on Schedule I hereto, (ii) has all requisite power
and authority to conduct its business as now conducted and as presently
contemplated and to execute, deliver and perform this Agreement and each
other Loan Document to be executed and delivered by it pursuant hereto and
to consummate the transactions contemplated hereby and thereby, and (iii) is
duly qualified to do business and is in good standing in each jurisdiction
in which the character of the properties owned or leased by it or in which
the transaction of its business makes such qualification necessary except to
the extent that the failure to be so qualified could reasonably be expected
to have a Material Adverse Effect.
(c) The execution, delivery and performance by each Grantor
of this Agreement and each other Loan Document to which such Grantor is or
will be a party (i) have been duly authorized by all necessary action, (ii)
do not and will not contravene its charter or by-laws, its limited liability
company or operating agreement or its certificate of partnership or
partnership agreement, as applicable, or any applicable law or any
contractual restriction binding on or otherwise affecting such Grantor or
any of its properties (including, without limitation, the 2009 Note
Indenture, the 1997 Indenture or the Euro Indenture), (iii) do not and will
not result in or require the creation of any Lien (other than the pursuant
to any Loan Document and the 2009 Note Indenture) upon or with respect to
any of its material properties and (iv) do not and will not result in any
material default, noncompliance, suspension, revocation, impairment,
forfeiture or nonrenewal of any material permit, license, authorization or
approval applicable to it or its operations or any of its properties.
(d) This Agreement is, and each other Loan Document to
which any Grantor is or will be a party, when executed and delivered, will
be, a legal, valid and binding obligation of such Grantor, enforceable
against such Grantor in accordance with its terms, except as may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws.
(e) There is no pending or, to the best knowledge of any
Grantor, threatened action, suit, proceeding or claim affecting any Grantor
or its properties, before any Governmental Authority or any arbitrator, or
any order, judgment or award by any Governmental Authority or arbitrator,
that may adversely affect the grant by any Grantor, or the perfection, of
the security interest purported to be created hereby in the Collateral, or
the exercise by the Collateral Agent of any of its rights or remedies
hereunder.
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(f) All Federal and foreign and all material state and
local tax returns and other material reports required by applicable law to
be filed by any Grantor have been filed, or extensions have been obtained,
and all taxes, assessments and other governmental charges imposed upon any
Grantor or any property of such Grantor (including, without limitation, all
federal income and social security taxes on employees' wages) and which have
become due and payable on or prior to the date hereof have been paid, except
to the extent contested in good faith by proper proceedings which stay the
imposition of any penalty, fine or Lien resulting from the non-payment
thereof and with respect to which adequate reserves have been set aside for
the payment thereof in accordance with GAAP.
(g) All Equipment, Fixtures, Goods and Inventory now existing
are, and all Equipment, Fixtures, Goods and Inventory hereafter existing
will be, located and/or based at the addresses specified therefor in
Schedule III hereto (as amended, supplemented or otherwise modified from
time to time in accordance with the terms hereof). Each Grantor's chief
place of business and chief executive office, the place where such Grantor
keeps its Records concerning Accounts and all originals of all Chattel Paper
are located at the addresses specified therefor in Schedule III hereto. None
of the Accounts is evidenced by Promissory Notes or other Instruments. Set
forth in Schedule IV hereto is a complete and accurate list, as of the date
of this Agreement, of each Deposit Account, Securities Account and
Commodities Account of each Grantor, together with the name and address of
each institution at which each such Account is maintained, the account
number for each such Account and a description of the purpose of each such
Account.
(h) Each Grantor has delivered to the Collateral Agent
complete and correct copies of each License described in Schedule II hereto,
including all schedules and exhibits thereto, which represents all of the
Material Licenses existing on the date of this Agreement. Each such License
sets forth the entire agreement and understanding of the parties thereto
relating to the subject matter thereof, and there are no other agreements,
arrangements or understandings, written or oral, relating to the matters
covered thereby or the rights of any Grantor or any of its Affiliates in
respect thereof. Each License now existing is, and each other License will
be, the legal, valid and binding obligation of the parties thereto,
enforceable against such parties in accordance with its terms. As of the
Effective Date, no default under any Material License (or to the best
knowledge of each Grantor, under any other License) by any such party has
occurred, nor does any defense, offset, deduction or counterclaim exist
thereunder in favor of any such party that could reasonably be expected to
be successful.
(i) The Grantors own and control, or otherwise possess
adequate rights to use, all Trademarks, Patents and Copyrights, which are
the only trademarks, patents, copyrights, inventions, trade secrets,
proprietary information and technology, know-how, formulae, rights of
publicity necessary to conduct their business in substantially the same
manner as conducted as of the date hereof. Schedule II hereto sets forth a
true and complete list of (i) all Registered Intellectual Property and all
applications therefor and (ii) all Material Licenses, in each case owned or
used by each Grantor as of the date hereof. All such Registered Intellectual
Property is subsisting and in full force and effect, has not been adjudged
invalid or unenforceable, is valid and enforceable and has not been
abandoned in whole or in part except for any Registered Intellectual
Property that is not material to the business of any Grantor or any line of
business of any Grantor. Except as set forth on Schedule II, no such
Registered Intellectual Property is the
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subject of any licensing or franchising agreement. Except as set forth on
Schedule II, no Grantor has any knowledge of any conflict with the rights of
others to any Intellectual Property, and, to the best knowledge of each
Grantor, no Grantor is now infringing or in conflict with any such rights of
others in any material respect, and to the best knowledge of each Grantor,
no other Person is now infringing or in conflict in any material respect
with any such properties, assets and rights owned or used by any Grantor.
Except as set forth on Schedule II, no Grantor has received any written
notice that it is violating or has violated the trademarks, patents,
copyrights, inventions, trade secrets, proprietary information and
technology, know-how, formulae, rights of publicity or other intellectual
property rights of any third party.
(j) The Grantors are and will be at all times the sole
and exclusive owners of, or otherwise have and will have adequate rights in,
the Collateral free and clear of any Lien except for (i) the Lien created by
this Agreement and (ii) the Permitted Liens. No effective financing
statement or other instrument similar in effect covering all or any part of
the Collateral is on file in any recording or filing office except (A) such
as may have been filed in favor of the Collateral Agent relating to this
Agreement and (B) such as may have been filed to perfect or protect any
Permitted Lien.
(k) The exercise by the Collateral Agent of any of its
rights and remedies hereunder will not contravene any applicable law or any
contractual restriction binding on or otherwise affecting any Grantor or any
of its properties (including, without limitation, the 2009 Note Indenture,
the 1997 Indenture or the Euro Indenture) and will not result in, or require
the creation of, any Lien upon or with respect to any of its material
properties.
(l) No authorization or approval or other action by, and
no notice to or filing with, any Governmental Authority or other regulatory
body, or any other Person, is required for (i) the grant by any Grantor, or
the perfection, of the security interest purported to be created hereby in
the Collateral or (ii) the exercise by the Collateral Agent of any of its
rights and remedies hereunder, except (A) for the filing under the Uniform
Commercial Code as in effect in the applicable jurisdiction of the financing
statements as described in Schedule V hereto, (B) with respect to the
perfection of the security interest created hereby in the United States
Intellectual Property, for the recording of the appropriate Assignment for
Security, substantially in the form of Exhibit A hereto in the United States
Patent and Trademark Office or the United States Copyright Office, as
applicable, (C) with respect to the perfection of the security interest
created hereby in foreign Intellectual Property and Licenses, for
registrations and filings in jurisdictions located outside of the United
States and covering rights in such jurisdictions relating to the
Intellectual Property and Licenses, (D) with respect to the perfection of
the security interest created hereby in motor vehicles (including, without
limitation, all trucks, trailers, tractors, service vehicles, automobiles
and other mobile equipment) for which the title to such motor vehicles is
governed by a certificate of title or ownership (collectively, the "Motor
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Vehicles"), for the submission of an appropriate application requesting that
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the Lien of the Collateral Agent be noted on the certificate of title or
ownership, completed and authenticated by the applicable Grantor, together
with the certificate of title, with respect to each Motor Vehicle, to the
appropriate state agency, (E) with respect to any action that may be
necessary to obtain control of Collateral described in Sections 5(i) and
5(k) hereof, the taking of such actions and (F) the taking possession of all
Documents, Chattel Paper, Instruments and cash constituting Collateral.
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(m) This Agreement creates in favor of the Collateral Agent
for the benefit of the Agents and the Lenders a legal, valid and enforceable
security interest in the Collateral, as security for the Obligations. The
Collateral Agent's having possession of all Instruments, Documents and
Chattel Paper and cash constituting Collateral and obtaining control of all
Collateral described in Sections 5(i) and 5(k) hereof from time to time, the
recording of the appropriate Assignment for Security executed pursuant
hereto in the United States Patent and Trademark Office and the United
States Copyright Office, as applicable, the submission of an appropriate
application requesting that the Lien of the Collateral Agent be noted on the
certificate of title or ownership, completed and authenticated by the
applicable Grantor, together with the certificate of title or ownership,
with respect to such Motor Vehicles, to the applicable state agency, and the
filing of the financing statements and the other filings and recordings, as
applicable, described in Schedule V hereto and, with respect to the
Intellectual Property hereafter existing and not covered by an appropriate
Assignment for Security, the recording in the United States Patent and
Trademark Office or the United States Copyright Office, as applicable, of
appropriate instruments of assignment, result in the perfection of such
security interests. Such security interests are, or in the case of
Collateral in which any Grantor obtains rights after the date hereof, will
be, perfected, first priority security interests, subject only to the
Permitted Liens that, as a matter of law, would be prior to Liens in favor
of the Collateral Agent, for the benefit of the Agents and the Lenders, and
the recording or filing of such instruments of assignment described above.
Such recordings and filings and all other actions necessary or desirable to
perfect and protect such security interest have been duly taken, except for
(i) the Collateral Agent's having possession of Instruments, Documents and
Chattel Paper and cash constituting Collateral after the date hereof, (ii)
the Collateral Agent obtaining control of any Collateral described in
Sections 5(i) and 5(k) of this Agreement after the date hereof and (iii) the
other filings, recordations and actions described in Section 4(l) hereof.
(n) As of the date hereof, no Grantor holds any Commercial
Tort Claims, except for such claims described in Schedule VI.
(o) The partnership interests or membership interests of
each Grantor in each of its Subsidiaries that is a partnership or a limited
liability company are not (i) dealt in or traded on securities exchanges or
in securities markets, (ii) securities for purposes of Article 8 of any
relevant Uniform Commercial Code, (iii) investment company securities within
the meaning of Section 8-103 of any relevant Uniform Commercial Code and
(iv) evidenced by a certificate. Such partnership interests or membership
interests constitute General Intangibles.
SECTION 5. Covenants as to the Collateral. So long as any
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of the Obligations shall remain outstanding (other than indemnification
obligations for which no claim has been asserted) and the Total Revolving
Credit Commitments shall not have expired or terminated, unless the
Collateral Agent shall otherwise consent in writing:
(a) Further Assurances. Each Grantor will at its expense,
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at any time and from time to time, promptly execute and deliver all further
instruments and documents and take all further action that may be necessary
or desirable or that the Collateral Agent may reasonably request in order to
(i) perfect and protect the security interest purported to be created
hereby; (ii) enable the Collateral Agent to exercise and enforce its rights
and remedies hereunder in respect of the Collateral; or (iii) otherwise
effect the purposes of this Agreement, including,
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without limitation: (A) at the request of the Collateral Agent during the
continuance of an Event of Default, marking conspicuously all Chattel Paper,
Licenses and all of its Records pertaining to the Collateral with a legend,
in form and substance reasonably satisfactory to the Collateral Agent,
indicating that such Chattel Paper, License or Collateral is subject to the
security interest created hereby, (B) at the request of the Collateral
Agent, if any Account shall be evidenced by Promissory Notes or other
Instruments or Chattel Paper in an aggregate face amount exceeding $100,000,
delivering and pledging to the Collateral Agent hereunder such Promissory
Notes, Instruments or Chattel Paper, duly endorsed and accompanied by
executed instruments of transfer or assignment, all in form and substance
reasonably satisfactory to the Collateral Agent, (C) executing and filing
(to the extent, if any, that such Grantor's signature is required thereon)
or authenticating the filing of, such financing or continuation statements,
or amendments thereto, as may be necessary or desirable or that the
Collateral Agent may reasonably request in order to perfect and preserve the
security interest purported to be created hereby, (D) furnishing to the
Collateral Agent from time to time statements and schedules further
identifying and describing the Collateral and such other reports in
connection with the Collateral as the Collateral Agent may reasonably
request, all in reasonable detail, (E) if any Collateral shall be in the
possession of a third party, use commercially reasonable efforts to obtain a
Landlord Waiver or Bailee Letter in accordance with the terms of the
Financing Agreement, (F) if at any time after the date hereof, any Grantor
acquires or holds any Commercial Tort Claim, promptly (but in any event
within 10 Business Days) notifying the Collateral Agent in a writing signed
by such Grantor setting forth a brief description of such Commercial Tort
Claim and granting to the Collateral Agent a security interest therein and
in the proceeds thereof, which writing shall incorporate the provisions
hereof and shall be in form and substance satisfactory to the Collateral
Agent, (G) at the request of the Collateral Agent after reasonable prior
written notice (but in any event not less than thirty (30) days' prior
written notice), upon the acquisition after the date hereof by any Grantor
of any Motor Vehicle or other Equipment subject to a certificate of title or
ownership (other than a Motor Vehicle or Equipment that is subject to a
purchase money security interest permitted by Section 7.02(a) of the
Financing Agreement), promptly notifying the Collateral Agent of such
acquisition, setting forth a description of the Motor Vehicle or other
Equipment acquired and a good faith estimate of the current value of such
Motor Vehicle or Equipment, and if so requested by the Collateral Agent,
promptly causing the Collateral Agent to be listed as the lienholder on such
certificate of title or ownership and delivering evidence of the same to the
Collateral Agent, and (H) taking all actions required by applicable law, or
by other law as applicable in any foreign jurisdiction.
(b) Location of Equipment and Inventory. Each Grantor will
------------------------------------
keep the Equipment and Inventory (other than used Equipment and Inventory
sold in the ordinary course of business in accordance with Section 5(g)
hereof) at one or more of the locations specified therefor in Section 4(g)
hereof or at such other locations in the continental United States, as the
Grantors may elect, provided that, the Grantors give the Collateral Agent
--------
not less than 10 Business Days' prior written notice of any such change in
location of such Equipment and Inventory with a book value in excess of
$1,000,000 (when aggregated with all other Collateral at the same location),
and, in the case of relocation of Equipment for purposes of repair in the
ordinary course of business, prompt (but in any event no more than 5
Business Days) written notice after such relocation of Equipment with a book
value in excess of $5,000,000 (when aggregated with all other Collateral at
the same location), in each case, other than to locations set forth on
Schedule III, and accompanied by a new Schedule III hereto indicating each
new
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location of such Equipment and Inventory, and provided further that (i) all
--------
action has been taken to grant to the Collateral Agent a perfected, first
priority security interest in such Equipment and Inventory (subject only to
Permitted Liens that, as a matter of law, would be prior to Liens in favor
of the Collateral Agent, for the benefit of the Agents and the Lenders), and
(ii) the Collateral Agent's rights in such Equipment and Inventory,
including, without limitation, the existence, perfection and priority of the
security interest created hereby in such Equipment and Inventory, are not
adversely affected thereby.
(c) Condition of Equipment. Each Grantor will maintain or
----------------------
cause the Equipment which is necessary or used in the proper conduct of its
business to be maintained and preserved in good condition, repair and
working order, ordinary wear and tear excepted, and will forthwith, or in
the case of any loss or damage to any Equipment promptly after the
occurrence thereof, make or cause to be made all repairs, replacements and
other improvements in connection therewith which are necessary or desirable,
consistent with past practice, or which the Collateral Agent may request to
such end. Each Grantor will promptly furnish to the Collateral Agent a
statement describing in reasonable detail any loss or damage in excess of
$1,000,000 to any such Equipment.
(d) Taxes, Etc. Each Grantor jointly and severally agrees
----------
to 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 otherwise provided in the Financing
Agreement.
(e) Insurance.
---------
(i) Each Grantor will, at its own expense, maintain
insurance (including, without limitation, comprehensive general liability,
hazard, rent and business interruption insurance) with respect to all of its
properties, including, without limitation, its Equipment and Inventory and
all real properties leased or owned by it in such amounts, against such
risks, in such form and with responsible and reputable insurance companies
or associations as is required by any Governmental Authority having
jurisdiction with respect thereto or as is carried generally in accordance
with sound business practice by companies in similar businesses similarly
situated and in any event, in amount, adequacy and scope reasonably
satisfactory to the Collateral Agent. Each policy for liability insurance
shall provide for all losses to be paid to the Collateral Agent as its
interests may appear, and each policy for property damage insurance shall
provide for all losses to be adjusted with, and paid directly to, the
Collateral Agent. In addition, each such policy shall (A) name each Grantor
and the Collateral Agent (and such other Persons as the Collateral Agent may
designate from time to time) as insured parties thereunder (without any
representation or warranty by or obligation upon the Collateral Agent or
such other Person) as their interests may appear, (B) contain an agreement
by the insurer that any loss thereunder shall be payable to the Collateral
Agent on its own account notwithstanding any action, inaction or breach of
representation or warranty by any Grantor, (C) provide that there shall be
no recourse against the Collateral Agent for payment of premiums or other
amounts with respect thereto and (D) provide that at least thirty (30) days'
prior written notice of cancellation, lapse, expiration or other adverse
change shall be given to the Collateral Agent by the insurer. Each Grantor
will, if so requested by the Collateral Agent, deliver to the Collateral
Agent original or duplicate policies of such insurance and, as often as the
Collateral Agent may reasonably request,
-11-
a report of a reputable insurance broker with respect to such insurance.
Each Grantor will also, at the request of the Collateral Agent, execute and
deliver instruments of assignment of such insurance policies and cause the
respective insurers to acknowledge notice of such assignment.
(ii) Reimbursement under any liability insurance
maintained by any Grantor pursuant to this Section 5(e) may be paid directly
to the Person who shall have incurred liability covered by such insurance.
In the case of any loss involving damage to Equipment or Inventory, any
proceeds of insurance maintained by a Grantor pursuant to this Section 5(e)
shall be paid to the Collateral Agent, such Grantor will make or cause to be
made the necessary repairs to or replacements of such Equipment or
Inventory, and any proceeds of insurance maintained by such Grantor pursuant
to this Section 5(e) shall, to the extent that such proceeds have been paid
to the Collateral Agent, be paid by the Collateral Agent to such Grantor as
reimbursement for the costs of such repairs or replacements.
(iii) Upon the occurrence and during the continuance
of an Event of Default or upon any insurance payment in respect of any
Equipment or Inventory, all insurance payments in respect of such Equipment
or Inventory shall be paid to the Collateral Agent and applied as specified
in Section 7(b) hereof.
(f) Provisions Concerning the Accounts and the Licenses.
---------------------------------------------------
(i) No Grantor shall, without the prior written
consent of the Collateral Agent, change (A) such Grantor's name, identity or
organizational structure or (B) its jurisdiction of incorporation as set
forth in Section 4(b) hereto. Each Grantor shall (x) promptly notify the
Collateral Agent upon obtaining an organizational identification number, if
on the date hereof such Grantor did not have such identification number, and
(y) keep adequate records concerning the Accounts and Chattel Paper and
permit representatives of the Collateral Agent pursuant to the terms of the
Financing Agreement to inspect and make abstracts from such Records and
Chattel Paper.
(ii) Each Grantor will, except as otherwise provided
in this subsection (f), continue to collect, at its own expense, all amounts
due or to become due under the Accounts. In connection with such
collections, each Grantor may (and, at the Collateral Agent's direction,
will) take such action as such Grantor (or, if applicable, the Collateral
Agent) may deem reasonably necessary or advisable to enforce collection or
performance of the Accounts; provided, however, that the Collateral Agent
-------- -------
shall have the right at any time, upon the occurrence and during the
continuance of an Event of Default, to notify the Account Debtors or
obligors under any Accounts of the assignment of such Accounts to the
Collateral Agent and to direct such Account Debtors or obligors to make
payment of all amounts due or to become due to such Grantor thereunder
directly to the Collateral Agent or its designated agent and, upon such
notification and at the expense of such Grantor and to the extent permitted
by law, to enforce collection of any such Accounts and to adjust, settle or
compromise the amount or payment thereof, in the same manner and to the same
extent as such Grantor might have done. After receipt by any Grantor of a
written notice from the Collateral Agent that the Collateral Agent has
notified, intends to notify, or has enforced or intends to enforce a
Grantor's rights against the Account Debtors or obligors under any Accounts
as referred to in the proviso to the immediately preceding sentence, (A) all
amounts and proceeds (including Instruments) received by such
-12-
Grantor in respect of the Accounts shall be received in trust for the
benefit of the Collateral Agent hereunder, shall be segregated from other
funds of such Grantor and shall be forthwith paid over to the Collateral
Agent or its designated agent in the same form as so received (with any
necessary endorsement) to be held as cash collateral and either (i) credited
to the Loan Account so long as no Event of Default shall have occurred and
be continuing or (ii) if an Event of Default shall have occurred and be
continuing, applied as specified in Section 7(b) hereof, and (B) such
Grantor will not adjust, settle or compromise the amount or payment of any
Account or release wholly or partly any Account Debtor or obligor thereof or
allow any credit or discount thereon. In addition, upon the occurrence and
during the continuance of an Event of Default, the Collateral Agent may (in
its sole and absolute discretion) direct any or all of the banks and
financial institutions with which any Grantor either maintains a Deposit
Account or a lockbox or deposits the proceeds of any Accounts to send
immediately to the Collateral Agent or its designated agent by wire transfer
(to such account as the Collateral Agent shall specify, or in such other
manner as the Collateral Agent shall direct) all or a portion of such
securities, cash, investments and other items held by such institution. Any
such securities, cash, investments and other items so received by the
Collateral Agent or its designated agent shall (in the sole and absolute
discretion of the Collateral Agent) be held as additional Collateral for the
Obligations or distributed in accordance with Section 7 hereof.
(iii) Upon the occurrence and during the continuance
of any material breach or default under any Material License by any party
thereto other than a Grantor, (A) the relevant Grantor will, promptly after
obtaining knowledge thereof, give the Collateral Agent written notice of the
nature and duration thereof, specifying what action, if any, it has taken
and proposes to take with respect thereto, (B) no Grantor will, without the
prior written consent of the Collateral Agent, declare or waive any such
breach or default or affirmatively consent to the cure thereof or exercise
any of its remedies in respect thereof, and (C) each Grantor will, upon
written instructions from the Collateral Agent and at such Grantor's
expense, take such action as the Collateral Agent may deem necessary or
advisable in respect thereof.
(iv) Each Grantor will, at its expense, promptly
deliver to the Collateral Agent a copy of each notice or other communication
received by it by which any other party to any Material License purports to
exercise any of its rights or affect any of its obligations thereunder,
together with a copy of any reply by such Grantor thereto.
(v) Each Grantor will exercise promptly and diligently
all material rights which it may have under each License (other than any
right of termination) and will duly perform and observe in all respects all
of its obligations under each License and will take all action necessary to
maintain the Licenses in full force and effect, in each case to the extent
such Grantor deems (in the exercise of its reasonable business judgment)
such exercise or action to be in its best interests. No Grantor will,
without the prior written consent of the Collateral Agent, cancel,
terminate, amend or otherwise modify in any respect, or waive any provision
of, any Material License.
-13-
(g) Transfers and Other Liens.
-------------------------
(i) Except to the extent expressly permitted by
Section 7.02(c) of the Financing Agreement, no Grantor will sell, assign (by
operation of law or otherwise), lease, license, exchange or otherwise
transfer or dispose of any of the Collateral.
(ii) Except to the extent expressly permitted by
Section 7.02(a) of the Financing Agreement, no Grantor will create, suffer
to exist or grant any Lien upon or with respect to any Collateral.
(h) Intellectual Property.
---------------------
(i) If applicable, each Grantor has duly executed
and delivered the applicable Assignment for Security in the form attached
hereto as Exhibit A. Each Grantor (either itself or through licensees) will,
and will use commercially reasonable efforts to cause each licensee thereof
to, take all action necessary to maintain all of the Intellectual Property
in full force and effect, including, without limitation, using the proper
statutory notices and markings and using the Registered Trademarks on each
applicable trademark class of goods in order to so maintain the Registered
Trademarks in full force, free from any claim of abandonment for non-use,
and no Grantor will (nor knowingly permit any licensee thereof to) do any
act or knowingly omit to do any act whereby any Intellectual Property may
become invalidated; provided, however, that so long as no Event of Default
-------- -------
has occurred and is continuing, no Grantor shall have an obligation to use
or to maintain any Intellectual Property (A) that relates solely to any
product or work, that has been, or is in the process of being, discontinued,
abandoned or terminated, (B) that is being replaced with Intellectual
Property substantially similar to the Intellectual Property that may be
abandoned or otherwise become invalid, so long as the failure to use or
maintain such Intellectual Property does not materially adversely affect the
validity of such replacement Intellectual Property and so long as such
replacement Intellectual Property is subject to the Lien created by this
Agreement, (C) that is substantially the same as another Intellectual
Property that is in full force, so long the failure to use or maintain such
Intellectual Property does not materially adversely affect the validity of
such replacement Intellectual Property and so long as such other
Intellectual Property is subject to the Lien and security interest created
by this Agreement or (D) that is not material to the business of any Grantor
or any line of business of any Grantor. Each Grantor will cause to be taken
all necessary steps in any proceeding before the United States Patent and
Trademark Office and the United States Copyright Office or any similar
office or agency in any other country or political subdivision thereof to
maintain each registration of the Intellectual Property (other than the
Intellectual Property described in the proviso to the immediately preceding
sentence), including, without limitation, filing of renewals, affidavits of
use, affidavits of incontestability and opposition, interference and
cancellation proceedings and payment of maintenance fees, filing fees, taxes
or other governmental fees, except, in each case, to the extent that such
Grantor believes (in the exercise of its reasonable business judgment) that
such actions would not be in the best interests of such Grantor. If any
Intellectual Property (other than any Intellectual Property that is not
material to the business of any Grantor or any line of business of any
Grantor) is infringed, misappropriated, diluted or otherwise violated in any
material respect by a third party, the Grantors shall (x) upon obtaining
knowledge of such infringement, misappropriation, dilution or other
violation, promptly notify the Collateral Agent and (y) to the extent the
Grantors shall deem appropriate under the circumstances, promptly sue for
infringement,
-14-
misappropriation, dilution or other violation, seek injunctive relief where
appropriate and recover any and all damages for such infringement,
misappropriation, dilution or other violation, or take such other actions as
the Grantors shall deem appropriate under the circumstances to protect such
Intellectual Property. Each Grantor shall furnish to the Collateral Agent,
from time to time upon the Collateral Agent's request, but no more
frequently than once per calendar quarter, statements and schedules further
identifying and describing the Registered Intellectual Property and Material
Licenses and such other reports in connection with the Registered
Intellectual Property and Material Licenses as the Collateral Agent may
reasonably request, all in reasonable detail and promptly upon request of
the Collateral Agent, following receipt by the Collateral Agent of any such
statements, schedules or reports, the Grantors shall modify this Agreement
by amending Schedule II hereto, as the case may be, to include any
Intellectual Property, the applications therefor owned or used by each
Grantor and License, as the case may be, which becomes part of the
Collateral under this Agreement and shall execute and authenticate such
documents and do such acts as shall be necessary or, in the reasonable
judgment of the Collateral Agent, desirable to subject such Intellectual
Property, applications therefor and Licenses to the Lien and security
interest created by this Agreement. Notwithstanding anything herein to the
contrary, upon the occurrence and during the continuance of an Event of
Default, no Grantor may abandon or otherwise permit any Intellectual
Property (other than any Intellectual Property that is not material to the
business of any Grantor or any line of business of any Grantor) to become
invalid without the prior written consent of the Collateral Agent, and if
any such Intellectual Property is infringed, misappropriated, diluted or
otherwise violated in any material respect by a third party, the Grantors
will take such action as the Collateral Agent shall deem appropriate under
the circumstances to protect such Intellectual Property.
(ii) In the event any Grantor, either itself or through
any agent, employee, licensee or designee, shall file an application for the
registration of any Trademark or Copyright or the issuance of any Patent
with the United States Patent and Trademark Office or the United States
Copyright Office, as applicable, or in any similar office or agency of the
United States or any country or any political subdivision thereof, it shall
give the Collateral Agent prompt written notice thereof, but in any event,
within 5 days after such filing. Upon request of the Collateral Agent, each
Grantor shall execute, authenticate and deliver any and all assignments,
agreements, instruments, documents and papers as the Collateral Agent may
reasonably request to evidence the Collateral Agent's security interest
hereunder in such Intellectual Property and the General Intangibles of such
Grantor relating thereto or represented thereby, and each Grantor hereby
appoints the Collateral Agent its attorney-in-fact to execute and/or
authenticate and file all such writings for the foregoing purposes, all acts
of such attorney being hereby ratified and confirmed, and such power (being
coupled with an interest) shall be irrevocable until date on which all of
the Obligations have been Paid in Full (except for indemnification
obligations for which no claim has been asserted).
(i) Deposit, Commodities and Securities Accounts.
--------------------------------------------
Prior to the date hereof, each Grantor shall cause each bank and other
financial institution with an account described as a "Designated Account" in
Schedule IV hereto to execute and deliver to the Collateral Agent a control
- -----------
agreement, in form and substance reasonably satisfactory to the Collateral
Agent, duly executed by such Grantor and such bank or financial institution,
or enter into other arrangements in form and substance satisfactory to the
Collateral Agent, pursuant to which such institution shall irrevocably
agree, among other things, that (i) it will comply at any time with the
-15-
instructions originated by the Collateral Agent to such bank or financial
institution directing the disposition of cash, Commodity Contracts,
securities, Investment Property and other items from time to time credited
to such account, without further consent of such Grantor, which instructions
the Collateral Agent will not give to such bank or other financial
institution in the absence of a continuing Event of Default, (ii) all cash,
Commodity Contracts, securities, Investment Property and other items of such
Grantor deposited with such institution shall be subject to a perfected,
first priority security interest in favor of the Collateral Agent or the
Administrative Agent, (iii) any right of set off, banker's Lien or other
similar Lien, security interest or encumbrance shall be fully waived as
against the applicable Agent (unless otherwise agreed to by such Agent with
such bank or financial institution), and (iv) such bank or financial
institution shall immediately send to the Collateral Agent by wire transfer
(to such account as the Collateral Agent or the Administrative Agent shall
specify, or in such other manner as the Collateral Agent or the
Administrative Agent shall direct) all such cash, the value of any Commodity
Contracts, securities, Investment Property and other items held by it.
Without the prior written consent of the Collateral Agent, no Grantor shall
make or maintain any Deposit Account, Commodity Account or Securities
Account except for the accounts set forth in Schedule IV hereto. The
provisions of this paragraph 5(i) shall not apply to (i) Deposit Accounts
for which the Collateral Agent is the depositary and (ii) Deposit Accounts
specially and exclusively used for payroll, payroll taxes and other employee
wage and benefit payments to or for the benefit of a Grantor's salaried
employees.
(j) Motor Vehicles.
--------------
(i) At the request of the Collateral Agent after
reasonable prior written notice (but in any event not less than thirty (30)
days' prior written notice), each Grantor shall (a) cause all Motor
Vehicles, now owned or hereafter acquired by any Grantor, which under
applicable law are required to be registered, to be properly registered in
the name of such Grantor, (b) cause all Motor Vehicles, now owned or
hereafter acquired by any Grantor, the ownership of which under applicable
law (including without limitation, any Motor Vehicle Law), is evidenced by a
certificate of title or ownership, to be properly titled in the name of such
Grantor, and (c) deliver to the Collateral Agent (or its custodian)
originals of all such certificates of title or ownership for such Motor
Vehicles, with the Collateral Agent's Lien noted thereon.
(ii) At the request of the Collateral Agent after
reasonable prior written notice (but in any event not less than thirty (30)
days' prior written notice), upon the acquisition after the date hereof by
any Grantor of any Motor Vehicle or other Equipment subject to a certificate
of title or ownership (other than a Motor Vehicle or Equipment to be
acquired that is subject to a purchase money security interest permitted by
Section 7.02(a) of the Financing Agreement), such Grantor shall immediately
notify the Collateral Agent of such acquisition, set forth a description of
the Motor Vehicle or other Equipment acquired and a good faith estimate of
the current value of such Motor Vehicle or Equipment, and if so requested by
the Collateral Agent, immediately deliver to the Collateral Agent (or its
custodian) originals of the certificates of title or ownership for such
Motor Vehicle or Equipment, together with the manufacturer's statement of
origin, and an application duly executed by the appropriate Grantor to
evidence the Collateral Agent's Lien thereon.
-16-
(iii) Subject to clauses (j)(i) and (ii) above, each
Grantor hereby appoints the Collateral Agent as its attorney-in-fact,
effective the date hereof and terminating upon the termination of this
Agreement, for the purpose of (A) executing on behalf of such Grantor title
or ownership applications for filing with appropriate state or provincial
agencies to enable Motor Vehicles now owned or hereafter acquired by such
Grantor to be retitled and the Collateral Agent listed as lienholder
thereof, (B) filing such applications with such state or provincial
agencies, and (C) executing such other documents and instruments on behalf
of, and taking such other action in the name of, such Grantor as the
Collateral Agent may deem necessary or advisable to accomplish the purposes
hereof (including, without limitation, for the purpose of creating in favor
of the Collateral Agent a perfected Lien on such Motor Vehicles and
exercising the rights and remedies of the Collateral Agent hereunder). This
appointment as attorney-in-fact is coupled with an interest and is
irrevocable until the date on which all of the Obligations have been Paid in
Full after the termination of the Loan Documents.
(iv) Any certificates of title or ownership delivered
pursuant to the terms hereof shall be accompanied by odometer statements for
each Motor Vehicle covered thereby.
(v) So long as no Event of Default shall have
occurred and be continuing, upon the request of any Grantor, the Collateral
Agent shall execute and deliver to such Grantor such instruments as such
Grantor shall reasonably request to remove the notation of the Collateral
Agent as lienholder on any certificate of title for any Motor Vehicle;
provided that any such instruments shall be delivered, and the release
- --------
effective, only upon receipt by the Collateral Agent of a certificate from
such Grantor, stating that the Motor Vehicle, the Lien on which is to be
released, is to be sold or has suffered a casualty loss (with title thereto
passing to the casualty insurance company therefor in settlement of the
claim for such loss), the amount that such Grantor will receive as sale
proceeds or insurance proceeds and whether or not such sale proceeds or
insurance proceeds are required by Section 2.05 of the Financing Agreement
to be paid to the Collateral Agent to be applied to the Obligations and, to
the extent required by Section 2.05 of the Financing Agreement, any proceeds
of such sale or casualty loss shall be paid to the Collateral Agent
hereunder to be applied to the Obligations then outstanding, in accordance
with the terms of the Financing Agreement.
(k) Control. Each Grantor hereby agrees to take any or all
-------
action that may be necessary or desirable or that the Collateral Agent may
request in order for the Collateral Agent to obtain control in accordance
with Sections 9-104, 9-105, 9-106, and 9-107 of the Code with respect to the
following Collateral: (i) Deposit Accounts, (ii) Electronic Chattel Paper,
(iii) Investment Property and (iv) Letter-of-Credit Rights.
(l) Inspection and Reporting. Each Grantor shall permit
------------------------
the Agents or any agents or representatives thereof or such professionals or
other Persons as the Agents and the Lenders may designate (i) to examine and
make copies of and abstracts from such Grantor's records and books of
account, (ii) to visit and inspect its properties, (iii) to verify
materials, leases, notes, Accounts, Inventory and other assets of such
Grantor from time to time, (iv) to conduct audits, physical counts,
appraisals and/or valuations, Phase I and Phase II Environmental Site
Assessments or examinations at the locations of such Grantor and (v) to
discuss such Grantor's affairs, finances and accounts with any of its
directors, officers, managerial employees,
-17-
independent accountants or any of its other representatives, in each case as
provided in the Financing Agreement.
(m) Partnership and Limited Liability Company Interest. No
--------------------------------------------------
Grantor that is a partnership or a limited liability company shall, nor
shall any Grantor with any Subsidiary that is a partnership or a limited
liability company, permit such partnership interests or membership interests
to (i) be dealt in or traded on securities exchanges or in securities
markets, (ii) become a security for purposes of Article 8 of any relevant
Uniform Commercial Code, (iii) become an investment company security within
the meaning of Section 8-103 of any relevant Uniform Commercial Code or (iv)
be evidenced by a certificate. Each Grantor agrees that such partnership
interests or membership interests shall constitute General Intangibles.
SECTION 6. Additional Provisions Concerning the Collateral.
-----------------------------------------------
(a) Each Grantor hereby (i) authorizes the Collateral Agent
to file, one or more financing or continuation statements, and amendments
thereto, relating to the Collateral (including, without limitation, any such
financing statements that indicate the Collateral as "all assets" or words
of similar import) and (ii) ratifies such authorization to the extent that
the Collateral Agent has filed any such financing or continuation
statements, or amendments thereto, prior to the date hereof. A photocopy or
other reproduction of this Agreement or any financing statement covering the
Collateral or any part thereof shall be sufficient as a financing statement
where permitted by law.
(b) Each Grantor hereby irrevocably appoints the Collateral
Agent as its attorney-in-fact and proxy, with full authority in the place
and stead of such Grantor and in the name of such Grantor or otherwise, from
time to time in the Collateral Agent's discretion, to take any action and to
execute any instrument which the Collateral Agent may deem necessary or
advisable to accomplish the purposes of this Agreement (subject to the
rights of a Grantor under this Agreement), including, without limitation,
(i) to obtain and adjust insurance required to be paid to the Collateral
Agent pursuant to Section 5(e) hereof, (ii) to ask, demand, collect, sue
for, recover, compound, receive and give acquittance and receipts for moneys
due and to become due under or in respect of any Collateral, (iii) to
receive, endorse, and collect any drafts or other instruments, documents and
chattel paper in connection with clause (i) or (ii) above, (iv) to file any
claims or take any action or institute any proceedings which the Collateral
Agent may deem necessary or desirable for the collection of any Collateral
or otherwise to enforce the rights of the Agents and the Lenders with
respect to any Collateral, and (v) to execute assignments, licenses and
other documents to enforce the rights of the Agents and the Lenders with
respect to any Collateral. This power is coupled with an interest and is
irrevocable until the date on which all of the Obligations have been Paid in
Full.
(c) For the purpose of enabling the Collateral Agent to
exercise rights and remedies hereunder, at such time as the Collateral Agent
shall be lawfully entitled to exercise such rights and remedies, and for no
other purpose, each Grantor hereby grants to the Collateral Agent, to the
extent assignable, an irrevocable, non-exclusive license (exercisable
without payment of royalty or other compensation to any Grantor) to, during
the continuance of an Event of Default, use, assign, license or sublicense
any Intellectual Property now owned or hereafter acquired by any Grantor,
wherever the same may be located, including in such license reasonable
-18-
access to all media in which any of the licensed items may be recorded or
stored and to all computer programs used for the compilation or printout
thereof. Notwithstanding anything contained herein to the contrary, but
subject to the provisions of the Financing Agreement that limit the right of
a Grantor to dispose of its property and Section 5(h) hereof, so long as no
Event of Default shall have occurred and be continuing, each Grantor may
exploit, use, enjoy, protect, license, sublicense, assign, sell, dispose of
or take other actions with respect to the Intellectual Property in the
ordinary course of its business. In furtherance of the foregoing, unless an
Event of Default shall have occurred and be continuing, the Collateral Agent
shall from time to time, upon the request of a Grantor, execute and deliver
any instruments, certificates or other documents, in the form so requested,
which such Grantor shall have certified are appropriate (in such Grantor's
judgment) to allow it to take any action permitted above (including
relinquishment of the license provided pursuant to this clause (c) as to any
Intellectual Property). Further, upon the date on which all of the
Obligations have been Paid in Full, the Collateral Agent (subject to Section
10(e) hereof) shall release and reassign to the Grantors all of the
Collateral Agent's right, title and interest in and to the Intellectual
Property, and the Licenses, all without recourse, representation or warranty
whatsoever and at the Grantor's sole expense. The exercise of rights and
remedies hereunder by the Collateral Agent shall not terminate the rights of
the holders of any licenses or sublicenses theretofore granted by any
Grantor in accordance with the second sentence of this clause (c). Each
Grantor hereby releases the Collateral Agent from any claims, causes of
action and demands at any time arising out of or with respect to any actions
taken or omitted to be taken by the Collateral Agent under the powers of
attorney granted herein other than actions taken or omitted to be taken
through the Collateral Agent's gross negligence or willful misconduct, as
determined by a final determination of a court of competent jurisdiction.
(d) If any Grantor fails to perform any agreement contained
herein as and when required, the Collateral Agent may itself perform, or
cause performance of, such agreement or obligation, in the name of such
Grantor or the Collateral Agent, and the expenses of the Collateral Agent
incurred in connection therewith shall be jointly and severally payable by
the Grantors pursuant to Section 8 hereof and shall be secured by the
Collateral.
(e) The powers conferred on the Collateral Agent hereunder
are solely to protect its interest in the Collateral and shall not impose
any duty upon it to exercise any such powers. Except for the safe custody of
any Collateral in its possession and the accounting for moneys actually
received by it hereunder, the Collateral Agent shall have no duty as to any
Collateral or as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Collateral.
(f) Anything herein to the contrary notwithstanding
(i) each Grantor shall remain liable under the Licenses and otherwise with
respect to any of the Collateral to the extent set forth therein to perform
all of its obligations thereunder to the same extent as if this Agreement
had not been executed, (ii) the exercise by the Collateral Agent of any of
its rights hereunder shall not release any Grantor from any of its
obligations under the Licenses or otherwise in respect of the Collateral,
and (iii) the Collateral Agent shall not have any obligation or liability by
reason of this Agreement under the Licenses or with respect to any of the
other Collateral, nor shall the Collateral Agent be obligated to perform any
of the obligations or duties
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of any Grantor thereunder or to take any action to collect or enforce any
claim for payment assigned hereunder.
SECTION 7. Remedies Upon Default. If any Event of Default
---------------------
shall have occurred and be continuing:
(a) The Collateral Agent may exercise in respect of the
Collateral, in addition to any other rights and remedies provided for herein
or otherwise available to it, all of the rights and remedies of a secured
party upon default under the Code (whether or not the Code applies to the
affected Collateral), and also may (i) take absolute control of the
Collateral, including, without limitation, transfer into the Collateral
Agent's name or into the name of its nominee or nominees (to the extent the
Collateral Agent has not theretofore done so) and thereafter receive, for
the benefit of the Collateral Agent, all payments made thereon, give all
consents, waivers and ratifications in respect thereof and otherwise act
with respect thereto as though it were the outright owner thereof, (ii)
require each Grantor to, and each Grantor hereby agrees that it will at its
expense and upon request of the Collateral Agent forthwith, assemble all or
part of the Collateral as directed by the Collateral Agent and make it
available to the Collateral Agent at a place or places to be designated by
the Collateral Agent that is reasonably convenient to both parties, and the
Collateral Agent may enter into and occupy any premises owned or leased
(subject to the rights of the landlord of such leased premises) by any
Grantor where the Collateral or any part thereof is located or assembled for
a reasonable period in order to effectuate the Collateral Agent's rights and
remedies hereunder or under law, without obligation to any Grantor in
respect of such occupation, and (iii) without notice except as specified
below and without any obligation to prepare or process the Collateral for
sale, (A) sell the Collateral or any part thereof in one or more parcels at
public or private sale, at any of the Collateral Agent's offices or
elsewhere, for cash, on credit or for future delivery, and at such price or
prices and upon such other terms as the Collateral Agent may deem
commercially reasonable and/or (B) lease, license or dispose of the
Collateral or any part thereof upon such terms as the Collateral Agent may
deem commercially reasonable. Each Grantor agrees that, to the extent notice
of sale or any other disposition of the Collateral shall be required by law,
at least ten (10) days' prior written notice to a Grantor of the time and
place of any public sale or the time after which any private sale or other
disposition of the Collateral is to be made shall constitute reasonable
notification. The Collateral Agent shall not be obligated to make any sale
or other disposition of Collateral regardless of notice of sale having been
given. The Collateral Agent may adjourn any public or private sale from time
to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was
so adjourned. Each Grantor hereby waives any claims against the Agents and
the Lenders arising by reason of the fact that the price at which the
Collateral may have been sold at a private sale was less than the price
which might have been obtained at a public sale or was less than the
aggregate amount of the Obligations, even if the Collateral Agent accepts
the first offer received and does not offer the Collateral to more than one
offeree, and waives all rights that such Grantor may have to require that
all or any part of the Collateral be marshalled upon any sale (public or
private) thereof. Each Grantor hereby acknowledges that (i) any such sale of
the Collateral by the Collateral Agent may be made without warranty, (ii)
the Collateral Agent may specifically disclaim any warranties of title,
possession, quiet enjoyment or the like, and (iii) such actions set forth in
clauses (i) and (ii) above shall not adversely effect the commercial
reasonableness of any such sale of the Collateral. In addition to the
foregoing, (i) upon written notice to any Grantor
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from the Collateral Agent, each Grantor shall cease any use of the
Intellectual Property or any trademark, patent or copyright similar thereto
for any purpose described in such notice; (ii) the Collateral Agent may, at
any time and from time to time, upon ten (10) days' prior written notice to
any Grantor, license, whether general, special or otherwise, and whether on
an exclusive or non-exclusive basis, any of the Intellectual Property,
throughout the universe for such term or terms, on such conditions, and in
such manner, as the Collateral Agent shall in its sole discretion determine;
and (iii) the Collateral Agent may, at any time, pursuant to the authority
granted in Section 6 hereof (such authority being effective upon the
occurrence and during the continuance of an Event of Default), execute and
deliver on behalf of a Grantor, one or more instruments of assignment of the
Intellectual Property (or any application or registration thereof), in form
suitable for filing, recording or registration in any country.
(b) Any cash held by the Collateral Agent as Collateral
and all Cash Proceeds received by the Collateral Agent in respect of any
sale of or collection from, or other realization upon, all or any part of
the Collateral may, in the discretion of the Collateral Agent, be held by
the Collateral Agent as collateral for, and/or then or at any time
thereafter applied (after payment of any amounts payable to the Collateral
Agent pursuant to Section 8 hereof) in whole or in part by the Collateral
Agent against, all or any part of the Obligations in such order as the
Collateral Agent shall elect, consistent with the provisions of the
Financing Agreement. Any surplus of such cash or Cash Proceeds held by the
Collateral Agent and remaining after the date on which all of the
Obligations have been Paid in Full (except for indemnification obligations
for which no claim has been asserted) after the termination of the Loan
Documents shall be paid over to whomsoever shall be lawfully entitled to
receive the same or as a court of competent jurisdiction shall direct.
(c) In the event that the proceeds of any such sale,
collection or realization are insufficient to pay all amounts to which the
Agents and the Lenders are legally entitled, the Grantors shall be jointly
and severally liable for the deficiency, together with interest thereon at
the highest rate specified in any applicable Loan Document for interest on
overdue principal thereof or such other rate as shall be fixed by applicable
law, together with the costs of collection and the reasonable fees, costs,
expenses and other client charges of any attorneys employed by the
Collateral Agent to collect such deficiency.
(d) Each Grantor hereby acknowledges that if the Collateral
Agent complies with any applicable state, provincial or federal law
requirements in connection with a disposition of the Collateral, such
compliance will not adversely affect the commercial reasonableness of any
sale or other disposition of the Collateral.
(e) The Collateral Agent shall not be required to marshal
any present or future collateral security (including, but not limited to,
this Agreement and the Collateral) for, or other assurances of payment of,
the Obligations or any of them or to resort to such collateral security or
other assurances of payment in any particular order, and all of the
Collateral Agent's rights hereunder and in respect of such collateral
security and other assurances of payment shall be cumulative and in addition
to all other rights, however existing or arising. To the extent that any
Grantor lawfully may, such Grantor hereby agrees that it will not invoke any
law relating to the marshalling of collateral which might cause delay in or
impede the enforcement of the Collateral Agent's rights under this Agreement
or under any other instrument creating or evidencing any of
-21-
the Obligations or under which any of the Obligations is outstanding or by
which any of the Obligations is secured or payment thereof is otherwise
assured, and, to the extent that it lawfully may, each Grantor hereby
irrevocably waives the benefits of all such laws.
SECTION 8. Indemnity and Expenses.
----------------------
(a) Each Grantor jointly and severally agrees to defend,
protect, indemnify and hold each Indemnitee harmless from and against any
and all damages, losses, liabilities, obligations, penalties, fees,
reasonable costs and expenses (including, without limitation, reasonable
legal fees, costs, expenses and disbursements of each Agent's and each
Lender's counsel) to the extent that they arise out of or otherwise result
from this Agreement (including, without limitation, enforcement of this
Agreement); provided, however, that the Grantors shall not have any
-------- -------
obligation under this Section 8(a) (i) to any Indemnitee caused by such
Person's gross negligence or willful misconduct, as determined by a final
judgment of a court of competent jurisdiction or (ii) to any Lender or its
Indemnitees arising directly from any action solely between or among the
Lenders.
(b) Each Grantor jointly and severally agrees to pay to
the Collateral Agent upon demand the amount of any and all costs and
expenses, including the reasonable fees, costs, expenses and disbursements
of counsel for the Collateral Agent and of any experts and agents
(including, without limitation, any collateral trustee which may act as
agent of the Collateral Agent), which the Collateral Agent may incur in
connection with (i) the preparation, negotiation, execution, delivery,
recordation, administration, amendment, waiver or other modification or
termination of this Agreement, (ii) the custody, preservation, use or
operation of, or the sale of, collection from, or other realization upon,
any Collateral, (iii) the exercise or enforcement of any of the rights of
the Collateral Agent hereunder, or (iv) the failure by any Grantor to
perform or observe any of the provisions hereof.
SECTION 9. Notices, Etc. All notices and other communications
------------
provided for hereunder shall be in writing and shall be mailed, telecopied
or delivered, if to a Grantor, to it in care of the Administrative Borrower
at its address specified in the Financing Agreement and if to the Collateral
Agent, to it at its address specified in the Financing Agreement; or as to
any such Person, at such other address as shall be designated by such Person
in a written notice to such other Person complying as to delivery with the
terms of this Section 9. All such notices and other communications shall be
effective (a) if mailed, when received or three (3) Business Days after
deposited in the mails, whichever occurs first, (b) if telecopied, when
transmitted and confirmation received, or (c) if delivered, upon delivery.
SECTION 10. Security Interest Absolute. All rights of the
--------------------------
Agents, the Lenders and the L/C Issuer, all Liens and all obligations of
each of the Grantors hereunder shall be absolute and unconditional
irrespective of (a) any lack of validity or enforceability of the Financing
Agreement or any other Loan Document, (b) any change in the time, manner or
place of payment of, or in any other term in respect of, all or any of the
Obligations, or any other amendment or waiver of or consent to any departure
from the Financing Agreement or any other Loan Document, (c) any exchange or
release of, or non-perfection of any Lien on any Collateral, or any release
or amendment or waiver of or consent to departure from any guaranty, for all
or any of the Obligations, or (d) any other circumstance that might
otherwise constitute a defense
-22-
available to, or a discharge of, any of the Grantors in respect of the
Obligations. All authorizations and agencies contained herein with respect
to any of the Collateral are irrevocable and powers coupled with an
interest.
SECTION 11. Miscellaneous.
-------------
(a) No amendment of any provision of this Agreement
(including any Schedule attached hereto) shall be effective unless it is in
writing and signed by each Grantor and the Collateral Agent, and no waiver
of any provision of this Agreement, and no consent to any departure by any
Grantor therefrom, shall be effective unless it is in writing and signed by
the Collateral Agent, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
(b) No failure on the part of the Agents, the Lenders or
the L/C Issuer to exercise, and no delay in exercising, any right hereunder
or under any other Loan Document shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right preclude any other or
further exercise thereof or the exercise of any other right. The rights and
remedies of the Agents, the Lenders and the L/C Issuer provided herein and
in the other Loan Documents are cumulative and are in addition to, and not
exclusive of, any rights or remedies provided by law. The rights of the
Agents, the Lenders and the L/C Issuer under any Loan Document against any
party thereto are not conditional or contingent on any attempt by such
Person to exercise any of its rights under any other Loan Document against
such party or against any other Person, including but not limited to, any
Grantor.
(c) Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining portions hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.
(d) This Agreement shall create a continuing security
interest in the Collateral and shall (i) remain in full force and effect
until the date on which all of the Obligations have been Paid in Full
(except for indemnification obligations for which no claim has been
asserted) and (ii) be binding on each Grantor and all other Persons who
become bound as debtor to this Agreement in accordance with Section 9-203(d)
of the Code and shall inure, together with all rights and remedies of the
Agents, the Lenders and the L/C Issuer hereunder, to the benefit of the
Agents, the Lenders and the L/C Issuer and their respective permitted
successors, transferees and assigns. Without limiting the generality of
clause (ii) of the immediately preceding sentence, the Agents, the Lenders
and the L/C Issuer may assign or otherwise transfer their rights and
obligations under this Agreement and any other Loan Document in accordance
with the provisions of the Financing Agreement, to any other Person and such
other Person shall thereupon become vested with all of the benefits in
respect thereof granted to the Agents, the Lenders and the L/C Issuer herein
or otherwise. Upon any such permitted assignment or transfer, all references
in this Agreement to any such Agent, any such Lender or the L/C Issuer shall
mean the assignee of such Agent, such Lender or such L/C Issuer. None of the
rights or obligations of any Grantor hereunder may be assigned or otherwise
transferred without the prior written consent of the Collateral Agent, and
any such assignment or transfer shall be null and void.
-23-
(e) Upon the date on which all of the Obligations have
been Paid in Full (except for indemnification obligations for which no claim
has been asserted), (i) this Agreement and the security interests and
licenses created hereby shall terminate and all rights to the Collateral
shall revert to the Grantors and (ii) the Collateral Agent will, upon the
Grantors' request and at the Grantors' expense, without any representation,
warranty or recourse whatsoever, (A) return to the Grantors such of the
Collateral as shall not have been sold or otherwise disposed of or applied
pursuant to the terms hereof and (B) execute and deliver to the Grantors
such documents as the Grantors shall reasonably request to evidence such
termination.
(f) THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT AS
REQUIRED BY MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT THE
VALIDITY AND PERFECTION OR THE PERFECTION AND THE EFFECT OF PERFECTION OR
NON-PERFECTION OF THE SECURITY INTEREST CREATED HEREBY, OR REMEDIES
HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAW
OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
(g) ANY LEGAL ACTION, SUIT OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT OR ANY DOCUMENT RELATED THERETO MAY BE BROUGHT IN THE COURTS
OF THE STATE OF NEW YORK IN THE COUNTY OF NEW YORK OR THE UNITED STATES OF
AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS THEREOF,
AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH GRANTOR HEREBY
ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH GRANTOR
HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW, ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT
----- --- ----------
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION, SUIT OR
PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS AND CONSENTS TO THE GRANTING OF
SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT.
(h) EACH OF THE GRANTORS (AND BY ITS ACCEPTANCE OF THE
BENEFITS OF THIS AGREEMENT, THE COLLATERAL AGENT) WAIVES ANY RIGHT IT MAY
HAVE TO TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, VERBAL OR WRITTEN STATEMENT OR
OTHER ACTION OF THE PARTIES HERETO.
(i) Each Grantor irrevocably consents to the service of
process of any of the aforesaid courts in any such action, suit or
proceeding by the mailing of copies thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to such
-24-
Grantor at its address provided herein, such service to become effective ten
(10) days after such mailing.
(j) Nothing contained herein shall affect the right of
the Collateral Agent to serve process in any other manner permitted by law
or commence legal proceedings or otherwise proceed against any Grantor or
any property of any Grantor in any other jurisdiction.
(k) Each Grantor irrevocably and unconditionally waives
any right it may have to claim or recover in any legal action, suit or
proceeding referred to in this Section any special, exemplary, punitive or
consequential damages.
(l) Section headings herein are included for convenience
of reference only and shall not constitute a part of this Agreement for any
other purpose.
(m) This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each
of which shall be deemed to be an original, but all of which taken together
constitute one in the same Agreement. Delivery of an executed counterpart of
this Agreement by facsimile shall be equally effective as delivery of an
original executed counterpart.
(n) All of the obligations of the Grantors hereunder are
joint and several. The Collateral Agent may, in its sole and absolute
discretion, enforce the provisions hereof against any of the Grantors and
shall not be required to proceed against all Grantors jointly or seek
payment from the Grantors ratably. In addition, the Collateral Agent may, in
its sole and absolute discretion, select the Collateral of any one or more
of the Grantors for sale or application to the Obligations, without regard
to the ownership of such Collateral, and shall not be required to make such
selection ratably from the Collateral owned by all of the Grantors. The
release or discharge of any Grantor by the Collateral Agent shall not
release or discharge any other Grantor from the obligations of such Person
hereunder.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, each Grantor has caused this Agreement
to be executed and delivered by its officer thereunto duly authorized, as of
the date first above written.
GRANTORS:
--------
SOLUTIA INC.
By: /s/ Kevin Wilson
----------------
Name: C. Kevin Wilson
Title: Vice President and Treasurer
Solutia Inc.
SOLUTIA BUSINESS ENTERPRISES, INC.
By: /s/ Kevin Wilson
----------------
Name: C. Kevin Wilson
Title: President
CPFILMS INC.
By: /s/ Kevin Wilson
----------------
Name: C. Kevin Wilson
Title: Vice President
MONCHEM, INC.
By: /s/ Kevin Wilson
----------------
Name: C. Kevin Wilson
Title: President
Monchem, Inc.
MONCHEM INTERNATIONAL, INC.
By: /s/ Kevin Wilson
----------------
Name: C. Kevin Wilson
Title: President
Monchem International, Inc.
SOLUTIA INVESTMENTS, LLC
By: /s/ Kevin Wilson
----------------
Name: C. Kevin Wilson
Title: President
SOLUTIA SYSTEMS, INC.
By: /s/ Kevin Wilson
----------------
Name: C. Kevin Wilson
Title: President
Solutia Systems, Inc.