Exhibit 10.10
[Execution]
SECURITY AGREEMENT
SECURITY AGREEMENT, dated November 8, 2006, made by Maritime
Logistics US Holdings Inc., a Delaware corporation ("MLI"), Summit Logistics
International Inc, a New Jersey corporation ("Summit"), SeaMaster Logistics
Inc., a Delaware corporation ("SeaMaster"), AmeRussia Shipping Company Inc., a
Delaware corporation ("AmeRussia Shipping"), FMI International LLC, a Delaware
limited liability company ("FMI International"), Fashion Marketing, Inc., a New
Jersey corporation ("FM"), FMI International Corp. (West), a New Jersey
corporation ("FMIW"), FMI International Corp., a New Jersey corporation
("FMII"), Freight Management LLC, a Delaware limited liability company
("FMLLC"), FMI Trucking, Inc., a New Jersey corporation ("Trucking"), FMI
Express Corp., a New Jersey corporation ("Express"), Clare Freight, Los Angeles,
Inc., a California corporation ("Clare"), TUG New York, Inc., a New York
corporation ("TUG NY"), Aerobic Creations, Inc., a Delaware corporation
("Parent"), TUG USA, Inc., a New Jersey corporation, formerly known as Dolphin
US Logistics Inc ("TUG USA"), AMR Investments Inc, a New Jersey corporation
("AMRI") and FMI Holdco I, LLC, a Delaware limited liability company ("FMI
Holdco", and together with MLI, Summit, SeaMaster, AmeRussia Shipping, FM, FMI
International, FMIW, FMII, FMLLC, Trucking, Express, Clare, TUG NY, Parent, TUG
USA, AMRI and FMI Holdco, each individually, a "Borrower" and collectively,
"Borrowers"), the parties from time to time thereto as guarantors (each
individually, a "Guarantor" and collectively, "Guarantors", together with the
Borrowers, each a "Grantor" and collectively, the "Grantors"), in favor of
Fortress Credit Corp., a Delaware corporation, in its capacity as administrative
and collateral agent for and on behalf of the Lenders (as defined below) party
to the Loan Agreement referred to below (in such capacity, the "Agent").
W I T N E S S E T H:
WHEREAS, the Grantors have entered into financing arrangements with
Agent and Lenders pursuant to the Loan Agreement, dated of even date herewith,
by and among Agent, the parties from time to time party thereto as lenders
(collectively, "Lenders") and Grantors (such agreement, as amended, restated,
supplemented or otherwise modified from time to time, being hereinafter referred
to as the "LOAN AGREEMENT");
WHEREAS, pursuant to the Loan Agreement, the Lenders have agreed to
make certain revolving loans and term loans (each a "Loan" and collectively, the
"Loans") to the Borrowers in an aggregate principal amount of up to $65,000,000;
WHEREAS, in order to induce Lenders to make such Loans, Grantors are
required to grant to Agent, for itself and the benefit of Lenders, a security
interest in and lien upon substantially all of the personal property and
fixtures of Grantors as set forth herein;
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 benefits, and is 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
pursuant to the Loan Agreement, the Grantors hereby jointly and severally agree
with the Agent, for itself and the benefit of the Lenders, as follows:
SECTION 1. DEFINITIONS.
(a) Reference is hereby made to the Loan Agreement for a statement
of the terms thereof. All terms used in this Agreement and the recitals hereto
which are defined in the Loan Agreement or in Article 9 of the Uniform
Commercial Code (the "CODE") as in effect from time to time in the State of New
York and which are not otherwise defined herein shall have the same meanings
herein as set forth therein (subject to Section 1(b) below).
(b) The following terms shall have the respective meanings provided
for in the Code (as in effect on the date hereof): "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", "Securities 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 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,
whether registered or unregistered, 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
of America 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 and
Patents.
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"LICENSES" means the Copyright Licenses, the Trademark
Licenses and the Patent Licenses.
"OPERATING ACCOUNT" means (a) a deposit account of any Grantor
used exclusively for making payments and other disbursements by such Grantor and
not for receiving any Collateral, Collections or proceeds thereof; provided,
that, funds may be transferred from the Concentration Account, a Cash Management
Account or the investment account in which Qualified Cash is held to an
Operating Account prior to a Cash Dominion Event and Agent sending a Notice of
Exclusive Control with respect thereto in accordance with Section 7.01 of the
Loan Agreement, (b) a deposit account specifically and exclusively used for
xxxxx cash so long as the aggregate balance of the funds on deposit in all of
such xxxxx cash deposit accounts shall not exceed $250,000 at any time and no
Default or Event of Default shall exist or have occurred and be continuing, and
(c) a deposit account specifically and exclusively used for payroll, payroll
taxes and other employee wage and benefit payments to or for the benefit of a
Grantor's employees.
"PATENT LICENSES" means all licenses, contracts or other
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,
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 of America or any other
country or any political subdivision thereof), and all reissues, divisions,
continuations, continuations in part and extensions or renewals thereof.
"TRADEMARK LICENSES" means all licenses, contracts or 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 and the right to prepare for sale or lease and sell or
lease any and all Inventory now or hereafter owned by any Grantor and now or
hereafter covered by such licenses (including, without limitation, all Trademark
Licenses described in Schedule II hereto).
"TRADEMARKS" means 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 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
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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 of America, 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 and all customer lists, formulae and other
Records of any Grantor relating to the distribution of products and services in
connection with which any of such marks are used.
SECTION 2. GRANT OF SECURITY INTEREST.
(a) As collateral security for all of the Obligations (as defined in
Section 3 hereof), each Grantor (other than Parent) hereby pledges and assigns
to the Agent for the benefit of itself and the Lenders, and grants to the Agent
for the benefit of itself 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:
(i) all Accounts;
(ii) all Chattel Paper (whether tangible or electronic);
(iii) the Commercial Tort Claims specified on Schedule VI
hereto;
(iv) 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 such Agent or such Lender;
(v) all Documents;
(vi) all Equipment;
(vii) all Fixtures;
(viii) all General Intangibles (including, without limitation,
all Payment Intangibles);
(ix) all Goods;
(x) all Instruments (including, without limitation, Promissory
Notes);
(xi) all Inventory;
(xii) all Investment Property;
(xiii) all Copyrights, Patents and Trademarks, and all
Licenses;
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(xiv) all Letter-of-Credit Rights;
(xv) all Supporting Obligations;
(xvi) 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, files and other Records,
including, without limitation, all tapes, desks, cards, Software, data and
computer programs in the possession or under the control of 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
(xvii) 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).
(b) Notwithstanding anything to the contrary set forth in Section
2(a) above, the types or items of Collateral described in such Section shall not
include (i) any rights or interests in any contract, lease, permit, license,
charter or license agreement covering real or personal property, as such, if
under the terms of such contract, lease, permit, license, charter or license
agreement, or applicable law with respect thereto, the valid grant of a security
interest or lien therein to the Agent is prohibited and such prohibition has not
been or is not waived or the consent of the other party to such contract, lease,
permit, license, charter or license agreement has not been or is not otherwise
obtained or under applicable law such prohibition cannot be waived; PROVIDED,
THAT, the foregoing exclusion shall in no way be construed (A) to apply if any
such prohibition is unenforceable under Sections 9-406, 9-407 or 9-408 of the
Code or other applicable law or (B) so as to limit, impair or otherwise affect
the Agent's unconditional continuing security interests in and liens upon any
rights or interests of a Grantor in or to monies due or to become due under any
such contract, lease, permit, license, charter or license agreement (including
any Receivables) or (ii) the funds held in escrow by Law Debenture Trust Company
of New York, a limited purpose trust company chartered by the New York State
Banking Department ("Law Debenture Trust"), as escrow agent pursuant to the
escrow agreement, dated as of May 4, 2006, among AMRI, Xxxx Xxxxxxx, an
individual and Law Debenture Trust Company.
(c) Notwithstanding anything to the contrary set forth in this
Agreement, the Collateral for the Obligations of any Borrower shall not include
the Capital Stock of any Subsidiary that is organized under the laws of a
jurisdiction outside of the United States of America that is a "controlled
foreign corporation" (as such term is defined in Section 957(a) of the Internal
Revenue Code or a successor provision thereof) in excess of sixty-five (65%)
percent of all of the issued and outstanding shares of Capital Stock of such
foreign Subsidiary entitled to
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vote (within the meaning of Treasury Regulation Section 1.956-2) to the extent
that the grant of a security interest in the Capital Stock of such foreign
Subsidiary in excess of sixty-six and two thirds (66 2/3%) percent of all of the
issued and outstanding shares of Capital Stock of such foreign Subsidiary
entitled to vote (within the meaning of Treasury Regulation Section 1.956-2) to
secure the Obligations may result in any adverse tax consequence to any Grantor.
SECTION 3. SECURITY FOR OBLIGATIONS. The security interest created hereby
in the Collateral constitutes continuing collateral security for all of the
following obligations, whether now existing or hereafter incurred (the
"OBLIGATIONS"):
(a) all present and future indebtedness, obligations, and
liabilities of each Grantor to Agent and the Lenders under the Loan Documents,
whether or not the right of payment in respect of such claim is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, disputed,
undisputed, legal, equitable, secured, unsecured, and whether or not such claim
is discharged, stayed or otherwise affected by any proceeding referred to in
Sections 8.01(f) and 8.01(g) of the Loan Agreement. Without limiting the
generality of the foregoing, the Obligations include the obligation of each
Grantor to pay principal, interest, charges, expenses, fees, attorneys' fees and
disbursements, indemnities and other amounts payable by such Grantor under the
Loan Documents, whether now existing or hereafter arising, whether arising
before, during or after the initial or any renewal term of the Loan Agreement or
after the commencement of any case with respect to such Grantor under the United
States Bankruptcy Code or any similar statute (including the payment of interest
and other amounts which would accrue and become due but for the commencement of
such case, whether or not such amounts are allowed or allowable in whole or in
part in such case),
(b) the obligation of each Grantor to reimburse any amount in
respect of any of the foregoing that Agent or any Lender (in its sole
discretion) may elect to pay or advance on behalf of such Grantor. Each Grantor
waives any rights it may have under the Code to demand the filing of termination
statements by Agent with respect to the Collateral, and Agent shall not be
required to deliver such termination statements to such Grantor, or to file them
with any filing office, in each case, unless and until all of the Obligations
are Paid in Full and the Loan Agreement and the other Loan Documents are
terminated; and
(c) the due performance and observance by each Grantor of all of its
other obligations from time to time existing in respect of the Loan Documents.
SECTION 4. REPRESENTATIONS AND WARRANTIES. Each Grantor 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,
trust or limited partnership duly organized, validly existing and in good
standing under the laws of the state or jurisdiction of its organization as set
forth on Schedule I hereto, (ii) has all requisite power and authority to
execute, deliver and perform this Agreement and each other Loan Document to be
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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 where the failure to be so qualified and in
good standing has or could reasonably be expected to have a Material Adverse
Effect.
(c) The execution, delivery and performance by each Grantor of this
Agreement (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, its trust agreement or its certificate of partnership or
partnership agreement, as applicable, or any applicable law compliance with
which is material to the business of any Grantor or any Material Contract or any
other contractual restriction binding on or otherwise affecting it or any of its
properties where the contravention of such other contractual restriction has or
could reasonably be expected to have a Material Adverse Effect, (iii) do not and
will not result in or require the creation of any Lien upon or with respect to
any of its properties other than pursuant to any Loan Document and (iv) do not
and will not result in any default, noncompliance, suspension, revocation,
impairment, forfeiture or nonrenewal of any permit, license, authorization or
approval applicable to it or its operations or any of its properties where such
default, noncompliance, suspension, revocation, impairment, forfeiture or
nonrenewal has or could reasonably be expected to have a Material Adverse
Effect.
(d) This Agreement is a legal, valid and binding obligation of such
Grantor, enforceable against such Grantor in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally.
(e) There is no pending or, to the best of the knowledge of any
Grantor, threatened action, suit, proceeding or claim affecting any Grantor or
to which any of the properties of any Grantor is subject, 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 Lien purported to be created hereby in the
Collateral, or the exercise by the Agent of any of its rights or remedies
hereunder.
(f) 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 at the addresses specified therefor in Schedule III hereto, as such
Schedule may be modified from time to time in accordance with Section 5(b)
hereof except for, (i) Inventory in transit which is shipped from the
manufacturer or vendor thereof to the location set forth or permitted in this
clause (g), (ii) Equipment, to the extent necessary for any repair or
maintenance thereof in the ordinary course
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of any Grantor's business, (iii) Equipment in transit from one location set
forth or permitted in this clause (g) to another such location to the extent
necessary to move such Equipment in the ordinary course of any Grantor's
business, and (iv) motor vehicles used by or for the benefit of any Grantor in
the ordinary course of business. 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 as such Schedule may be
modified from time to time in accordance with Section 5(b) hereof. None of the
Accounts is evidenced by Promissory Notes or other Instruments except for (A)
Promissory Notes or other Instruments that have been delivered to Agent to hold
as part of the Collateral and (B) Promissory Notes and other Instruments, each
with an outstanding principal amount of less than $25,000, provided, that, (1)
the aggregate outstanding principal amount of all such Promissory Notes and
other Instruments which shall are not delivered to Agent shall not at any time
exceed $250,000 and (2) at any time a Default or Event of Default shall exist or
have occurred, all of such Promissory Notes and other Instruments shall be
promptly delivered to Agent upon its request. 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. Set forth in Schedule II hereto is (C) a complete
and correct list of each trade name used by each Grantor as of the date hereof
and (D) the name of, and each trade name used by, each person from which such
Grantor has acquired any substantial part of the Collateral.
(h) As of the date hereof, each Grantor has not granted to any other
Person, and has not been granted by any other Person, any material License with
respect to any Intellectual Property other than as set forth in Schedule II. The
Licenses set forth on Schedule II constitute all of the Licenses material to the
business of Parent and each of its Subsidiaries existing on the date hereof.
(i) Each Grantor has delivered to the Agent complete and correct
copies of each License described in Schedule II hereto, including all schedules
and exhibits thereto, which includes all of the Licenses material to such
Grantor's business and existing on the date of this Agreement (other than such
Licenses which under the terms thereof or applicable law with respect thereto,
the valid grant of a security interest or lien therein to Agent is prohibited
and such prohibition has not been or is not waived or the consent of the other
party to such License has not been or is not otherwise obtained or under
applicable law such prohibition cannot be waived). 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 such
License now existing which is material to any Grantor's business is the legal,
valid and binding obligation of the parties thereto, enforceable against such
parties in accordance with its terms. To Grantors' knowledge, no default by any
Grantor or any other party has occurred under any License nor does any defense,
offset, deduction or counterclaim exist thereunder in favor of any such party.
Each Grantor is current in its payments under such Licenses, and no Grantor has
failed to meet any minimum sales volumes, minimum royalty payments or other
similar requirements necessary to maintain such Grantor's rights, or the
exclusivity thereof, under any such License.
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(j) Each Grantor owns, or otherwise possesses adequate rights to
use, all Intellectual Property, which includes the Trademarks, Patents and
Copyrights necessary to conduct its business as conducted as of the date hereof
or projected to be conducted from time to time. Schedule II hereto sets forth a
true and complete list of all registered and applied-for Intellectual Property
and Licenses owned or used by each Grantor as of the date hereof which is
necessary to conduct such Grantor's business in substantially the same manner as
conducted as of the date hereof or projected to be conducted from time to time.
All such 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 as set forth in Schedule II, no
Grantor has any knowledge of any conflict with the rights of others to any
Intellectual Property and, to the knowledge of each Grantor, no Grantor is now
infringing or in conflict with any such rights of others, and to the knowledge
of each Grantor, no other Person is now infringing or in conflict with any such
properties, assets and rights owned or used by any Grantor. No Grantor has
received any 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. The Grantors have timely made all filings
and payments with the appropriate foreign and domestic Governmental Authorities
required to maintain in subsistence all Intellectual Property that is issued,
registered or applied-for in any jurisdiction, including without limitation
office action responses, affidavits of use, affidavits of continuing use,
renewals, requests for extension of time, maintenance fees, application fees and
foreign convention priority filings, other than where the failure to make such
filings or payments could not reasonably be expected to have an adverse effect
on the rights of any Grantor as to any Intellectual Property being used in the
business or that has a value of more than $250,000. The Licenses set forth in
Schedule II constitute all of the Licenses material to the business of Parent
and each of its Subsidiaries existing on the date hereof (other than such
Licenses which under the terms thereof or applicable law with respect thereto,
the valid grant of a security interest or lien therein to the Agent is
prohibited and such prohibition has not been or is not waived or the consent of
the other party to such License has not been or is not otherwise obtained or
under applicable law such prohibition cannot be waived) and complete and correct
copies of each License described on Schedule II have been delivered to the
Agent. 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 Parent or any of its Subsidiaries
or any of their affiliates in respect thereof. Each such License now existing,
which is material to any Loan Party's business, is the legal, valid and binding
obligation of the parties thereto, enforceable against such parties in
accordance with its terms. To the knowledge of the Grantors, no default by
Parent or any of its Subsidiaries or any other party has occurred under any
License, nor does any defense, offset, deduction or counterclaim exist
thereunder in favor of any such party. As to each License of Intellectual
Property where Parent or any of its Subsidiaries is the licensee, Parent or such
Subsidiary, as the case may be, is current in its payments under such Licenses,
and has not failed to meet any minimum sales volumes, minimum royalty payments
or other similar requirements necessary to maintain such party's rights, or the
exclusivity thereof, under any such License.
(k) 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 Liens created by this Agreement
and (ii) the Permitted Liens. No effective financing
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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 Agent relating to this Agreement and (B) such as
may have been filed to perfect or protect any Permitted Liens.
(l) The exercise by the Agent of any of its rights and remedies
hereunder in accordance with the terms of this Agreement will not contravene any
applicable law compliance with which is material to the business of any Grantor
or any contractual restriction binding on or otherwise affecting any Grantor or
any of its properties where the contravention of such contractual restriction
has or could reasonably be expected to have a Material Adverse Effect and will
not result in or require the creation of any Lien (other than pursuant to this
Agreement or the other Loan Documents) upon or with respect to any of its
properties.
(m) 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 Agent of any of its rights and remedies hereunder,
except (A) for the filing under the Code as in effect in the applicable
jurisdiction of the financing statements described in Schedule V hereto, all of
which financing statements when duly filed will be in full force and effect, or
such other filings as may be provided for under the laws of a jurisdiction
outside of the United States of America as to those Grantors organized under the
laws of such jurisdictions, (B) with respect to the perfection of the security
interest created hereby in the United States Intellectual Property, for the
filing under the Code as in effect in the applicable jurisdiction of the
financing statements described in Schedule V hereto and 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, filings and notifications in jurisdictions located outside of
the United States of America and covering rights in such jurisdictions relating
to the Intellectual Property and Licenses in accordance with the laws of the
applicable jurisdiction, (D) with respect to the perfection of the security
interest created hereby in motor vehicles for which the title to such motor
vehicles (including, without limitation, all trucks, trailers, tractors, service
vehicles, automobiles and other mobile equipment) is governed by a certificate
of title or ownership (collectively, the "MOTOR VEHICLES"), for the submission
of an appropriate application requesting that the Lien of the 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 the
perfection of the security interest created by any Pledge Agreement over Capital
Stock, for the registrations, filings and notifications of the relevant Pledge
Agreement in accordance with the laws of the applicable jurisdiction, (F) with
respect to any action that may be necessary to obtain control in Collateral
described in Sections 5(i) and 5(k) hereof and item (E) of the present
paragraph, the taking of such actions, (G) the taking possession of all
Documents, Chattel Paper, Instruments and cash constituting Collateral or such
assets being taken into possession by an agent or bailee for the benefit of
Agent, and (H) generally, with respect to the perfection and enforcement of the
security interest created herein, any actions and formalities as described in
the other Loan Documents.
10
(n) This Agreement creates in favor of the Agent for the benefit of
itself and the Lenders a legal, valid and enforceable security interest in the
Collateral, as security for the Obligations. The 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 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 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 and the taking of
actions described in this Section 4(n). No Grantor holds any Commercial Tort
Claims in respect of which a claim has been filed in a court of law or a written
notice by an attorney has been given to a potential defendant or is aware of any
such pending claims, except for such claims described in Schedule VI. Such
recordings and filings and all other action necessary or desirable to perfect
and protect such security interest have been duly taken, except for (i) the
Agent's having possession of Instruments, Documents and Chattel Paper and cash
constituting Collateral that may come into existence after the date hereof, (ii)
the Agent obtaining control of any Collateral described in Sections 5(i) and
5(k) of this Agreement coming into existence after the date hereof and (iii) the
other filings, recordations and actions described in Section 4(m) hereof.
SECTION 5. COVENANTS AS TO THE COLLATERAL. Unless and until the
Obligations have been Paid in Full, each Grantor will, unless Agent or Required
Lenders shall otherwise consent in writing:
(a) FURTHER ASSURANCES. Each Grantor will at its expense, 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 appropriate
or that the Agent may request in order to (i) perfect and protect the security
interest purported to be created hereby subject to the terms hereof; (ii) enable
the 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, without limitation: (A) marking conspicuously all Chattel Paper and
each License and, at the request of the Agent, each of its Records pertaining to
the Collateral with a legend, in form and substance satisfactory to the Agent,
indicating that such Chattel Paper, License or Collateral is subject to the
security interest created hereby, (B) if any Account shall be evidenced by
Promissory Notes or other Instruments or Chattel Paper, delivering and pledging
to the Agent hereunder such Promissory Notes, Instruments or Chattel Paper, duly
endorsed and accompanied by executed instruments of transfer or collateral
assignment, all in form and substance satisfactory to the Agent, except for any
Promissory Note, Instrument or Chattel Paper which is for a principal amount of
less than $25,000, provided, that, (1) the aggregate outstanding principal
amount of all such Promissory Notes, Instruments and Chattel Paper which are not
delivered to Agent shall not at any time
11
exceed $250,000 and (2) at any time a Default or Event of Default shall exist or
have occurred, all of such Promissory Notes, Instruments and Chattel Paper shall
be promptly delivered to Agent upon its request. (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 Agent may
request in order to perfect and preserve the security interest purported to be
created hereby, (D) furnishing to the 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 Agent may reasonably request,
all in reasonable detail, (E) if any Collateral in excess of $25,000 shall be in
the possession of a third party, notifying such Person of the Agent's security
interest created hereby and obtaining a written acknowledgment from such Person
that such Person holds possession of the Collateral for the benefit of the
Agent, which such written acknowledgement shall be in form and substance
satisfactory to the Agent, (F) if at any time after the date hereof any Grantor
acquires or holds any Commercial Tort Claim, upon the commencement of an action,
suit or proceeding with respect to such Commercial Tort Claim, immediately
notifying the Agent in a writing signed by such Grantor setting forth a brief
description of such Commercial Tort Claim and granting to the 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
Agent, (G) if requested by the Agent, causing the Agent to be listed as the lien
holder, for the benefit of itself and the Lenders, on each certificate of title
or ownership with respect to each Motor Vehicle or other item of Equipment
subject to a certificate of title or ownership (other than a Motor Vehicle or
item of Equipment that is subject to a purchase money security interest
permitted by Section 6.02(a) of the Loan Agreement and a Motor Vehicle having a
fair market value of not more than $50,000) and within 15 days of such request
deliver evidence of the same to the Agent, and (H) taking all actions required
by any relevant version of the Code or by other law, as applicable, or by other
law as applicable in any foreign jurisdiction.
(b) LOCATION OF EQUIPMENT AND INVENTORY.
(i) 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 and Equipment and Inventory sold as part of
a Permitted Disposition subject to the conditions specified in Section 6.02(c)
of the Loan Agreement) at the locations specified therefor in Section 4(g)
hereof or any of the locations of Equipment and Inventory otherwise permitted
under Section 4(g) hereof or, upon not less than thirty (30) days' prior written
notice to the Agent accompanied by a new Schedule III hereto indicating each new
location of the Equipment and Inventory, at such other locations in the
continental United States of America or, in connection with the business and
operations of any Grantor organized under the laws of a jurisdiction outside of
the United States of America, outside the continental United States of America
as the Grantors may elect (but within the jurisdiction in which such Grantor is
organized), PROVIDED THAT, subject to the terms hereof with respect to Motor
Vehicles, other than with respect to Equipment and Inventory described in
Section 4(g), (A) all action has been taken to grant to the Agent a perfected,
first priority security interest in such Equipment and Inventory (subject only
to Permitted Liens), and (B) the 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.
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(ii) No Grantor shall remove any Equipment or Inventory from
the locations set forth or permitted herein, except (A) to move Inventory or
Equipment directly from one location set forth or permitted herein to another
such location, (B) Inventory shipped from the manufacturer thereof or the
applicable vendor selling such Inventory to such Grantor which is in transit to
the locations set forth or permitted herein, (C) to the extent necessary to have
any Equipment repaired or maintained in the ordinary course of its business or
(D) the movement of motor vehicles or other titled Equipment used by or for the
benefit of any Grantor in the ordinary course of business.
(c) CONDITION OF EQUIPMENT. Each Grantor will maintain or cause the
Equipment necessary to the conduct of its business, as conducted as of the date
hereof or projected to be conducted from time to time, 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 as quickly as practicable 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 Agent may reasonably request for such purpose unless (i) Grantor
decides in its reasonable business judgment that such Equipment is obsolete or
that such repairs, replacements or other improvements are not feasible or
desirable given the value of such Equipment such Grantor's business plan or
strategy or the current operations of such Grantor or (ii) the failure to so
repair, replace or improve upon such Equipment would not have a Material Adverse
Effect. Each Grantor will promptly furnish to the Agent a statement describing
in reasonable detail any such loss or damage in excess of $250,000 per
occurrence to any Equipment.
(d) TAXES, ETC. Each Grantor jointly and severally agrees to pay
promptly when due, after giving effect to all applicable extensions, all
property and other taxes, assessments and governmental charges or levies imposed
upon, and all claims (including claims for labor, materials and supplies)
against, the Equipment and Inventory, except to the extent the validity thereof
is being contested in good faith by 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 in accordance with GAAP have been set aside
for the payment thereof.
(e) INSURANCE.
(i) Each Grantor will, at its own expense, maintain insurance
(including, without limitation, comprehensive general liability and property
insurance) with respect to the Equipment and Inventory 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 Agent.
Each policy for liability insurance shall provide for all losses to be paid on
behalf of the Agent and the Grantors as their respective interests may appear,
and each policy for property damage insurance shall provide for all losses to be
adjusted with, and paid directly to, the Agent for the benefit of itself and the
Lenders. Each such policy shall in addition (A) name the Agent as an additional
insured party thereunder (without any representation or warranty by or
obligation upon the Agent) as its interests may appear, (B) contain an agreement
by the insurer that any loss thereunder shall be
13
payable to the Agent notwithstanding any action, inaction or breach of
representation or warranty by any Grantor, (C) provide that there shall be no
recourse against the Agent for payment of premiums or other amounts with respect
thereto and (D) provide that at least ten (10) days' prior written notice of the
exercise of any right of cancellation as a result of the failure to pay premiums
shall be given to the Agent by the insurer and otherwise at least thirty (30)
days' prior written notice of cancellation, lapse, expiration or other adverse
change shall be given to the Agent by the insurer. Upon the request of the
Agent, each Grantor will deliver to the Agent original or duplicate policies of
such insurance, with the loss payable and additional insured endorsement in
favor of the Agent and such other Persons as the Agent may designate from time
to time. A report of a reputable insurance broker with respect to such insurance
shall be delivered as often as the Agent may reasonably request. Each Grantor
will also, at the request of the Agent, execute and deliver instruments of
assignment of such insurance policies assigning such policies to the Agent as
security for the Obligations 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) shall be paid in the manner set forth
in Section 3.03 of the Loan Agreement. In the case of any loss involving damage
to Equipment, Inventory or other Collateral, any proceeds of insurance
maintained by a Grantor pursuant to this Section 5(e) shall be paid in the
manner set forth in Section 3.03 of the Loan Agreement. Such Grantor will make
or cause to be made the necessary repairs to or replacements of such Equipment,
Inventory or other Collateral.
(iii) All insurance payments in respect of any Collateral
shall be paid in the manner set forth in the Loan Agreement.
(f) PROVISIONS CONCERNING THE ACCOUNTS AND THE LICENSES.
(i) No Grantor shall change (A) its name, identity or
organizational structure; PROVIDED, THAT, Parent may change its name to "Summit
Global Logistics Inc." within forty five (45) days after the date hereof or (B)
its jurisdiction of incorporation as set forth in Section 4(b) hereto. Each
Grantor shall (1) immediately notify the Agent upon obtaining an organizational
identification number, if on the date hereof such Grantor did not have such
identification number, and (2) keep adequate records concerning the Accounts and
Chattel Paper and permit representatives of the Agent pursuant to the terms of
the Loan 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 accordance with its customary business
practices and subject to the terms of the Loan Documents. In connection with
such collections, each Grantor may (and, after the occurrence and during the
continuance of an Event of Default, at the Agent's direction, will) take such
action as such Grantor or the Agent, as the case may be, may deem necessary or
advisable to enforce collection or performance of the Accounts ; PROVIDED,
HOWEVER, that the 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 Agent
and to direct such Account Debtors or obligors to make payment of all amounts
due
14
or to become due to such Grantor thereunder directly to the 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. After receipt
by any Grantor of a notice from the Agent that the 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 Grantor in respect of the Accounts shall be
received in trust for the benefit of the Agent hereunder, shall be segregated
from other funds of such Grantor and shall be forthwith paid over to the Agent,
in the same form as so received (with any necessary endorsement) to be held as
cash collateral and either (1) credited to the Loan Account so long as no Event
of Default shall have occurred and be continuing or (2) 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 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
Agent by wire transfer (to such account as the Agent shall specify, or in such
other manner as the 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 Agent shall (in the sole
and absolute discretion of the 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
breach or default under any License referred to in Schedule II hereto by any
party thereto other than a Grantor, which has or could reasonably be expected to
have a Material Adverse Effect, (A) the Grantors will, promptly after obtaining
knowledge thereof, give the 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
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 Agent and at such
Grantor's expense, take such action as the Agent may deem necessary or advisable
in respect thereof.
(iv) Each Grantor will, at its expense, promptly, and in any
event within five (5) days after receipt, deliver to the Agent a copy of each
material notice or other material communication received by it by which any
other party to any License referred to in Schedule II hereto 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 each
and every material right which it may have under each License referred to in
Schedule II in accordance with reasonable and sound business practice (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 such Licenses in full force and effect, the exercise, performance,
15
observance or taking of which is material to the business of any Grantor. No
Grantor will, without the prior written consent of the Agent, cancel, terminate,
amend or otherwise modify in any material respect, or waive any provision of,
any License referred to in Schedule II hereto which is material to the business
of any Grantor.
(g) TRANSFERS AND OTHER LIENS.
(i) Except to the extent expressly permitted by the Loan
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
6.02(a) of the Loan 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
cause each licensee thereof to, take all action necessary to maintain all of the
Intellectual Property necessary for the conduct of its business, as currently
conducted as of the date hereof or projected to be conducted from time to time,
in full force and effect, including, without limitation, using the proper
statutory notices and markings and using the Trademarks on each applicable
trademark class of goods in order to so maintain the Trademarks in full force,
free from any claim of abandonment for non-use, and no Grantor will (nor permit
any licensee thereof to) do any act or knowingly omit to do any act whereby any
such Intellectual Property may become invalidated; PROVIDED, THAT, no Grantor
shall have an obligation to use or to maintain any such 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) whose full term has
expired without possibility of renewal or (C) that is substantially the same as
another Intellectual Property that is in full force and effect, 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 other Intellectual Property is subject to the Lien and security
interest created by this Agreement. 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 necessary for the conduct of its business, as
currently conducted as of the date hereof or projected to be conducted from time
to time (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.
(ii) If any Intellectual Property necessary for the conduct of
its business, as currently conducted as of the date hereof or projected to be
conducted from time to time, is infringed, misappropriated, diluted or otherwise
violated in any material respect by a third party, the Grantors shall (A) upon
learning of such infringement, misappropriation, dilution or other
16
violation, promptly notify the Agent and (B) promptly attempt to cause such
infringement to cease including, where reasonably necessary, xxx for
infringement, 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.
(iii) As Agent may reasonably request, each Grantor shall
furnish to the Agent from time to time (but, unless an Event of Default has
occurred and is continuing, no more frequently than quarterly) statements and
schedules further identifying and describing the Intellectual Property and
Licenses necessary for the conduct of its business, as currently conducted as of
the date hereof or projected to be conducted from time to time, and such other
reports in connection with such Intellectual Property and Licenses, all in
reasonable detail, and following receipt by the Agent of any such statements,
schedules or reports, promptly upon request of Agent, the Grantors shall modify
this Agreement by amending Schedule II hereto to include any Intellectual
Property and License necessary for the conduct of its business, as currently
conducted as of the date hereof or projected to be conducted from time to time,
as the case may be, which becomes part of the Collateral under this Agreement.
Each Grantor shall execute and authenticate such documents and do such acts as
shall be necessary or, in the judgment of the Agent, desirable to subject such
Intellectual Property 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 such Intellectual Property to become invalid
without the prior written consent of the 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
Agent shall deem appropriate under the circumstances to protect such
Intellectual Property.
(iv) In no event shall any Grantor, either itself or through
any agent, employee, licensee or designee, 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
of America or any country or any political subdivision thereof unless it gives
the Agent prior written notice thereof. Upon request of the Agent, each Grantor
shall execute, authenticate and deliver any and all collateral assignments,
agreements, instruments, documents and papers as the Agent may reasonably
request to evidence the 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 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 the termination of all Commitments, the Obligations are Paid in Full and
the Loan Documents are terminated.
(v) Each applicable Grantor shall, concurrently with the
execution and delivery of this Agreement, execute and deliver to Agent five (5)
originals of a Special Power of Attorney in the form of Exhibit B hereto for the
implementation of the assignment, sale or other disposition of the Intellectual
Property pursuant to Agent's exercise of the rights and remedies granted to
Agent hereunder.
17
(i) DEPOSIT, COMMODITIES AND SECURITIES ACCOUNTS. By no later than
November 20, 2006, except as otherwise provided in the last sentence of this
Section 5(i), each Grantor shall cause each bank and other financial institution
referred to in Schedule IV hereto to execute and deliver to the Agent a control
agreement, in form and substance satisfactory to the Agent, duly executed by
such Grantor and such bank or financial institution, pursuant to which such
institution shall irrevocably agree, INTER ALIA, that (A) it will comply at any
time with the instructions originated by the 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 Agent will not
give to such bank or other financial institution unless (1) as to the
Concentration Account, any Cash Management Account, any account in which any
Qualified Cash (as defined in the Loan Agreement) is deposited ("Qualified Cash
Account") or any deposit or investment account other than an Operating Account
of any Grantor either a Default or Event of Default has occurred and is
continuing or the sum of Excess Availability plus Qualified Cash is less than
$3,000,000, and (2) as to any Operating Account, an Event of Default has
occurred and is continuing, (B) 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 Agent for the benefit of itself and the Lenders except for
customary fees, items returned unpaid and overdrafts payable in respect of
obligations of such Grantor to such financial institution in respect of such
account, (C) any right of set off, banker's Lien or other similar Lien, security
interest or encumbrance shall be fully waived as against the Agent other than
for payment of its service fees and other charges directly related to the
administration of such accounts or for returned checks or other items of
payment, and (D) upon receipt of written notice from the Agent during the
continuance of an Event of Default as to an Operating Account or during the
continuance of a Default or Event of Default or at any time that the sum of
Excess Availability plus Qualified Cash is less than $3,000,000 as to the
Concentration Account, any Cash Management Account, any Qualified Cash Account
or any other account that is not an Operating Account, such bank or financial
institution shall immediately send to the Agent by wire transfer (to such
account as the Agent shall specify, or in such other manner as the 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 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 and except as permitted under the Loan Agreement.
Notwithstanding anything to the contrary contained in this Section 5(i),
Grantors shall not be required to obtain control agreements for (aa) Deposit
Accounts for which the Agent is the customer, (bb) Deposit Accounts specifically
and exclusively used for xxxxx cash so long as the aggregate balance of the
funds on deposit in all of such xxxxx cash Deposit Accounts shall not exceed
$250,000 at any time and no Default or Event of Default shall exist or have
occurred and be continuing, (cc) Deposit Accounts specifically and exclusively
used for payroll, payroll taxes and other employee wage and benefit payments to
or for the benefit of a Grantor's employees, or (dd) the other Deposit Accounts
listed on Schedule IV hereto that are not at Bank of America; PROVIDED, THAT, as
to any such Deposit Accounts not at Bank of America, (x) all amounts at any time
deposited or credited to such Deposit Accounts shall be transferred to the
Concentration Account (as defined in the Loan Agreement) or to a Cash Management
Account at Bank of America that is subject to a Control Agreement in accordance
with the provisions of the Loan Agreement and (y) such Deposit Accounts shall be
18
closed on or before December 31, 2006 and (ee) any other Deposit Accounts
excluded from the requirements of this paragraph 5(i) in the sole discretion of
the Agent.
(j) MOTOR VEHICLES.
(i) If requested by the Agent, each Grantor shall deliver to
the Agent originals of the certificates of title or ownership for all Motor
Vehicles owned by it with the Agent listed as lienholder, for the benefit of the
Lenders; PROVIDED that the Agent shall not be required to be listed as the
lienholder if (A) a Motor Vehicle is subject to a purchase money security
interest permitted by Section 6.02(a) of the Loan Agreement or (B) a Motor
Vehicle has a fair market value of not more than $50,000.
(ii) Each Grantor hereby appoints the Agent as its
attorney-in-fact, effective the date hereof and terminating upon the termination
of the Commitments and the Obligations being Paid in Full, for the purpose of
(A) executing on behalf of such Grantor title or ownership applications for
filing with appropriate state agencies to enable Motor Vehicles now owned or
hereafter acquired by such Grantor to be retitled and the Agent listed as
lienholder thereof in accordance with Section 5(j)(i) hereof, (B) filing such
applications with such state 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 Agent may deem necessary or advisable to accomplish the purposes
hereof (including, without limitation, for the purpose of creating in favor of
the Agent a perfected Lien on the Motor Vehicles and exercising the rights and
remedies of the Agent hereunder). This appointment as attorney-in-fact is
coupled with an interest and is irrevocable until all of the Obligations are
Paid in Full and the Loan Agreement and the other Loan Documents are terminated.
(iii) Any certificates of title or ownership delivered
pursuant to the terms hereof shall be accompanied by odometer statements for
each Motor Vehicle covered thereby.
(iv) So long as no Event of Default shall have occurred and be
continuing, upon the request of any Grantor, the Agent shall execute and deliver
to such Grantor such instruments as such Grantor shall reasonably request to
remove the notation of the 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 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 3.03 of the Loan Agreement to be paid to the Agent to be applied to the
Obligations and, to the extent required by Section 3.03 of the Loan Agreement,
any proceeds of such sale or casualty loss shall be paid to the Agent hereunder
to be applied to the Obligations then outstanding.
(k) CONTROL. Each Grantor hereby agrees to take any or all action
that may be necessary or desirable promptly upon request of the Agent and
subject to the Loan Agreement in order for the Agent to obtain control in
accordance with Sections 9-105 through and including 9-
19
107 of the Code with respect to the following Collateral: (i) Electronic Chattel
Paper with a value in excess of $25,000, (ii) Investment Property with a value
in excess of $25,000 and (iii) Letter-of-Credit Rights with a value in excess of
$25,000.
(l) INSPECTION AND REPORTING. Each Grantor shall permit the Agent
and representative of Agent and any Lender at any time and from time to time
during normal business hours upon prior notice to such Grantor so long as no
Default or Event of Default shall exist or have occurred and be continuing and
at any time without notice at any time a Default or an Event of Default shall
exist or have occurred and be continuing, no more than two (2) times in any
twelve (12) month period so long as no Default or Event of Default shall exist
or have occurred and be continuing, but otherwise as the Agent may request, at
the reasonable expense of such Grantor, (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
receivable, deposit accounts and its other assets, (iv) to conduct audits,
physical counts, valuations, appraisals, 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, independent accountants or any of its other
representatives. In furtherance of the foregoing, each Grantor hereby authorizes
its independent accountants to discuss the affairs, finances and accounts of
such Grantor (independently or together with representatives of Grantor) with
Agent and representative of any Lender in accordance with this Section 5(l).
SECTION 6. ADDITIONAL PROVISIONS CONCERNING THE COLLATERAL.
(a) Each Grantor hereby (i) authorizes the Agent to file, one or
more financing or continuation statements, and amendments thereto, relating to
the Collateral and (ii) ratifies such authorization to the extent that the 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 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
Agent's discretion, to take any action and to execute any instrument which the
Agent may deem necessary or advisable to accomplish the purposes of this
Agreement (subject to the rights of a Grantor under Section 5 hereof),
including, without limitation, (i) to obtain and adjust insurance required to be
paid to the Agent for the benefit of itself and Lenders pursuant to Section 5(e)
hereof, (ii) upon the occurrence and during the continuation of any Event of
Default, to ask, demand, collect, xxx 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) upon the occurrence and during the continuation of any Event of
Default, to file any claims or take any action or institute any proceedings
which the Agent may deem necessary or desirable for the collection of any
Collateral or otherwise to enforce the rights of the Agent and the Lenders with
respect to any Collateral, and (v) upon the occurrence and during the
continuation of any Event of Default, to execute assignments, licenses and other
documents to enforce the rights of the Agent and the
20
Lenders with respect to any Collateral. This power is coupled with an interest
and is irrevocable until all of the Obligations are Paid in Full and the Loan
Agreement and the other Loan Documents are terminated.
(c) For the purpose of enabling the Agent to exercise rights and
remedies hereunder, at such time as the Agent shall be lawfully entitled to
exercise such rights and remedies, and for no other purpose, each Grantor hereby
grants to the Agent, to the extent assignable, an irrevocable, non-exclusive
license (exercisable without payment of royalty or other compensation to any
Grantor) to 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 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. In furtherance of the foregoing, unless an
Event of Default shall have occurred and be continuing, the 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, on the date the Obligations have been Paid in Full and the Loan
Agreement and the other Loan Documents have been terminated, the Agent (subject
to Section 10(e) hereof) shall release and reassign to the Grantors all of the
Agent's right, title and interest in and to the Intellectual Property, and the
Licenses, all without recourse, representation or warranty whatsoever. The
exercise of rights and remedies hereunder by the Agent shall not terminate the
rights of the holders of any licenses or sublicenses theretofore granted by any
Grantor in accordance with the terms of the Loan Agreement. Each Grantor hereby
releases the 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 Agent under the powers of attorney granted herein other than actions taken
or omitted to be taken through the 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,
upon five (5) days written notice to such Grantor so long as no Default or Event
of Default shall exist or have occurred and be continuing, but otherwise without
any notice to any Grantor, the Agent may itself perform, or cause performance
of, such agreement or obligation, in the name of such Grantor or the Agent, and
the expenses of the 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 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
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
21
had not been executed, (ii) the exercise by the 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 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 (except as expressly set
forth in Section 6(e) hereof), nor shall the Agent be obligated to perform any
of the obligations or duties 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 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 for the benefit of itself and the
Lenders, including, without limitation, transfer into the Agent's name or into
the name of its nominee or nominees (to the extent the Agent has not theretofore
done so) and thereafter receive, for the benefit of itself and the Lenders 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 Agent forthwith, assemble all or
part of the Collateral as directed by the Agent and make it available to the
Agent at a place or places to be designated by the Agent that is reasonably
convenient to both parties, and the Agent may enter into and occupy any premises
owned or leased by any Grantor where the Collateral or any part thereof is
located or assembled for a reasonable period in order to effectuate the 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 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 Agent may deem commercially reasonable and/or (B) lease, license or dispose
of the Collateral or any part thereof upon such terms as the 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' 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 Agent shall not be
obligated to make any sale or other disposition of Collateral regardless of
notice of sale having been given. The Agent may adjourn any public or private
sale from time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to which it
was so adjourned. Each Grantor hereby waives any claims against the Agent 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 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 Agent shall be made without warranty,
(ii) the Agent may specifically disclaim any warranties of title, possession,
quiet
22
enjoyment or the like (but will provide a copy of this Agreement to any
prospective purchaser who requests such information), 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 from the 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 Agent may, at
any time and from time to time, upon ten (10) days' prior 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 Agent
shall in its sole discretion determine; and (iii) the 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 Agent as Collateral and all Cash Proceeds
received by the 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 Agent, be held by the Agent as collateral for, and/or then or at any time
thereafter applied (after payment of any amounts payable to the Agent pursuant
to Section 8 hereof) in whole or in part by the Agent against, all or any part
of the Obligations in such order as the Agent shall elect, consistent with the
provisions of the Loan Agreement. Any surplus of such cash or Cash Proceeds held
by the Agent and remaining after the Obligations have been Paid in Full and the
Loan Agreement and the other Loan Documents are terminated 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 Agent 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 Agent to collect such deficiency.
(d) Each Grantor hereby acknowledges that if the Agent complies with
any applicable state or federal law requirements in connection with a
disposition of the Collateral, such compliance will not adversely effect the
commercial reasonableness of any sale or other disposition of the Collateral.
(e) The 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 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 Agent's rights under this
23
Agreement or under any other instrument creating or evidencing any of 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 the Agent harmless from and against any and all claims,
damages, losses, liabilities, obligations, penalties, fees, costs and expenses
(including, without limitation, reasonable legal fees, costs, expenses, and
disbursements of Agent's counsel) to the extent that they arise out of or
otherwise result from this Agreement (including, without limitation, enforcement
of this Agreement), except claims, damages, losses, liabilities, obligations,
penalties, fees, costs or expenses resulting solely and directly from the
Agent's gross negligence or willful misconduct, as determined by a final
judgment of a court of competent jurisdiction.
(b) The Grantors will upon demand pay to the Agent the amount of any
and all costs and expenses, including the reasonable fees, costs, expenses and
disbursements of counsel for the Agent and of any experts and agents (including,
without limitation, the Administrative Agent and any collateral trustee which
may act as agent of the Agent), which the 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 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 (by certified mail, postage
prepaid and return receipt requested), telecopied or delivered, if to a Grantor,
to its address specified in Section 11.01 of the Loan Agreement or as otherwise
specified next to such Grantor's signature below and if to the Agent, to it at
its address specified in Section 11.01 of the Loan 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 as set
forth in the Loan Agreement.
SECTION 10. SECURITY INTEREST ABSOLUTE. All rights of the Agent and the
Lenders, 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 Loan Agreement, any other Loan Document or any other
agreement or instrument relating thereto, (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 Loan Agreement or any other Loan Document, (c) any exchange or release
of, or non-perfection of any Lien on any Collateral except to the extent of any
such release, 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 which might otherwise constitute a defense available to, or a
discharge of, any of the Grantors in respect of the Obligations other than
payment in full of all such Obligations. All
24
authorizations and agencies contained herein with respect to any of the
Collateral are irrevocable and powers coupled with an interest.
SECTION 11. MISCELLANEOUS.
(a) AMENDMENTS, ETC. No amendment or waiver of any provision of this
Agreement shall be effective unless it is in writing and signed by each Grantor
and the Agent, and no consent to any departure by any Grantor from any provision
of this Agreement, shall be effective unless it is in writing and signed by the
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 WAIVERS; REMEDIES, ETC. No failure on the part of the Agent
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 Agent or any Lender
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 Agent or any Lender under any Loan Document against any party
thereto are not conditional or contingent on any attempt by Agent and the
Lenders to exercise any of their respective rights under any other Loan Document
against such party or against any other Person, including but not limited to,
any Grantor.
(c) SEVERABILITY. 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) BINDING EFFECT OF THIS AGREEMENT; ASSIGNMENTS. This Agreement
shall create a continuing security interest in the Collateral and shall (i)
remain in full force and effect until the date the Obligations shall have been
Paid in Full and the Commitments have been terminated 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 Agent and the Lenders hereunder, to the benefit
of the Agent and the Lenders and their respective permitted successors,
transferees and assigns. Without limiting the generality of clause (ii) of the
immediately preceding sentence, without notice to the Grantors, the Agent and
the Lenders may assign or otherwise transfer their rights and obligations under
this Agreement and any other Loan Document, to any other Person (to the extent
permitted by the Loan Agreement) and such other Person shall thereupon become
vested with all of the benefits in respect thereof granted to the Agent and the
Lenders herein or otherwise. Upon any such assignment or transfer, all
references in this Agreement to the Agent or any such Lender shall mean the
assignee of the Agent or such Lender. None of the rights or obligations of any
Grantor hereunder may be assigned or otherwise transferred without the prior
written consent of the Agent, and any such assignment or transfer without
Agent's consent shall be null and void.
(e) On the date the Obligations have been Paid in Full and the Loan
Agreement and the other Loan Documents have been terminated, (i) this Agreement
and the security interests created hereby shall terminate and all rights to the
Collateral shall revert to the Grantors and (ii)
25
the Agent will, at the Grantors' expense, except as otherwise required by
applicable law, (A) return to any of 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, all without any
representation, warranty or recourse whatsoever.
(f) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
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) PROCESS AGENTS. Each Grantor (collectively, the "Process Agent
Entities") hereby irrevocably and unconditionally appoints Corporation Service
Company, 00 Xxxxx Xxxxxx, Xxxxxx, XX 00000-0000 (the "Process Agent") as its
agent to receive on behalf of such Process Agent Entity and its property service
of copies of the summons and complaint and any other process which may be served
in any such action, suit or proceeding, agrees that such service may be made by
mailing (by certified or registered mail, postage prepaid and return receipt
requested) or delivering a copy of such process to such Process Agent Entity in
care of the Process Agent at the Process Agent's above address, irrevocably
authorizes and directs the Process Agent to accept such service on its behalf
and as an alternative method of service, irrevocably consents to the service of
any and all process in any such action, suit or proceeding by the mailing of
copies of such process to such Process Agent Entity at its address specified
above such service to become effective ten (10) days after such mailing. The
Agent hereby irrevocably appoints the Secretary of State of the State of New
York as its agent for service of process in respect of any such action or
proceeding and further irrevocably consents to the service of process out of any
of the aforementioned courts and in any such action or proceeding by the mailing
of copies thereof by registered or certified mail, postage prepaid, to the
Secretary of State of the State of New York, such service to become effective
ten (10) days after such mailing. Nothing herein shall affect the right of the
Agent to service of process in any other manner permitted by law or to commence
legal proceedings or otherwise proceed against any Grantor in any other
jurisdiction.
(h) VENUE; CONSENT TO JURISDICTION. ANY LEGAL ACTION OR PROCEEDING
WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN XXX XXXXXX XX XXX XXXXX XX XXX
XXXX IN THE COUNTY OF NEW YORK OR OF THE UNITED STATES OF AMERICA DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH OF THE GRANTORS HEREBY IRREVOCABLY ACCEPTS IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS. EACH GRANTOR HEREBY IRREVOCABLY APPOINTS PROCESS AGENT AS ITS AGENT FOR
SERVICE OF PROCESS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING AND FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED
COURTS AND IN ANY SUCH
26
ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED
MAIL, POSTAGE PREPAID, TO ADMINISTRATIVE BORROWER AT ITS ADDRESS FOR NOTICES AS
SET FORTH IN SECTION 11.01 OF THE LOAN AGREEMENT AND TO THE PROCESS AGENT, SUCH
SERVICE TO BECOME EFFECTIVE TEN (10) DAYS AFTER SUCH MAILING. NOTHING HEREIN
SHALL AFFECT THE RIGHT OF THE AGENT AND THE LENDERS TO SERVICE OF PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST ANY GRANTOR IN ANY OTHER JURISDICTION. EACH GRANTOR HEREBY
EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE JURISDICTION OR LAYING OF
VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY
CLAIM THAT ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND
ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO
THE EXTENT THAT ANY GRANTOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM
JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR
NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR
OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, EACH GRANTOR HEREBY
IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS.
(i) WAIVER OF JURY TRIAL, ETC. EACH GRANTOR (AND BY ITS ACCEPTANCE
OF THIS AGREEMENT, THE AGENT) HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT OR
THE OTHER LOAN DOCUMENTS, OR UNDER ANY AMENDMENT, WAIVER, CONSENT, INSTRUMENT,
DOCUMENT OR OTHER AGREEMENT DELIVERED OR WHICH IN THE FUTURE MAY BE DELIVERED IN
CONNECTION THEREWITH, OR ARISING FROM ANY FINANCING RELATIONSHIP EXISTING IN
CONNECTION WITH THIS AGREEMENT, AND AGREES THAT ANY SUCH ACTION, PROCEEDINGS OR
COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. EACH GRANTOR
CERTIFIES THAT NO OFFICER, REPRESENTATIVE, AGENT OR ATTORNEY OF ANY AGENT OR ANY
LENDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT ANY AGENT OR ANY LENDER
WOULD NOT, IN THE EVENT OF ANY ACTION, PROCEEDING OR COUNTERCLAIM, SEEK TO
ENFORCE THE FOREGOING WAIVERS. EACH GRANTOR HEREBY ACKNOWLEDGES THAT THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENT AND THE LENDERS ENTERING INTO
THIS AGREEMENT.
(j) LIMITATION OF REMEDIES OF GRANTOR. 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.
(k) SECTION HEADINGS. Section headings herein are included for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.
27
(l) COUNTERPARTS. 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.
(m) JOINT AND SEVERAL. All of the obligations of the Grantors
hereunder are joint and several. The 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 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 Agent shall not release or discharge any other Grantor from the
obligations of such Person hereunder.
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28
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.
BORROWERS:
MARITIME LOGISTICS US HOLDINGS INC.
By:_________________________________
Name:____________________________
Title:___________________________
SUMMIT LOGISTICS INTERNATIONAL INC
By:_________________________________
Name:____________________________
Title:___________________________
SEAMASTER LOGISTICS INC.
By:_________________________________
Name:____________________________
Title:___________________________
AMERUSSIA SHIPPING COMPANY INC.
By:_________________________________
Name:____________________________
Title:___________________________
FMI INTERNATIONAL LLC
By:_________________________________
Name:____________________________
Title:___________________________
[SIGNATURES CONTINUE ON NEXT PAGE]
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
FASHION MARKETING, INC.
By:_________________________________
Name:____________________________
Title:___________________________
FMI INTERNATIONAL CORP. (WEST)
By:_________________________________
Name:____________________________
Title:___________________________
FMI INTERNATIONAL CORP.
By:_________________________________
Name:____________________________
Title:___________________________
FREIGHT MANAGEMENT LLC
By:_________________________________
Name:____________________________
Title:___________________________
FMI TRUCKING, INC.
By:_________________________________
Name:____________________________
Title:___________________________
[SIGNATURES CONTINUE ON NEXT PAGE]
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
FMI EXPRESS CORP.
By:_________________________________
Name:____________________________
Title:___________________________
CLARE FREIGHT, LOS ANGELES, INC.
By:_________________________________
Name:____________________________
Title:___________________________
TUG NEW YORK, INC.
By:_________________________________
Name:____________________________
Title:___________________________
AEROBIC CREATIONS, INC.
By:_________________________________
Name:____________________________
Title:___________________________
TUG USA, INC. (formerly known as
Dolphin US Logistics Inc)
By:_________________________________
Name:____________________________
Title:___________________________
[SIGNATURES CONTINUE ON NEXT PAGE]
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
AMR INVESTMENTS INC
By:_________________________________
Name:____________________________
Title:___________________________
FMI HOLDCO I, LLC
By:_________________________________
Name:____________________________
Title:___________________________
AGENT:
FORTRESS CREDIT CORP.
By:_________________________________
Name:____________________________
Title:___________________________
SCHEDULE I
LEGAL NAMES; ORGANIZATIONAL IDENTIFICATION NUMBERS; STATES OR
JURISDICTION OF ORGANIZATION
LEGAL NAME ORGANIZATIONAL ID JURISDICTION
---------- ----------------- ------------
SCHEDULE II
INTELLECTUAL PROPERTY AND LICENSES; TRADENAMES
I. Trademarks
--------------------------------------------------------------------------------
COUNTY OF REGISTRATION
TRADEMARK REGISTRATION NUMBER REGISTRATION DATE EXPIRATION DATE
--------- ------------ ------ ----------------- ---------------
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II. Licenses
--------------------------------------------------------------------------------
STORE NUMBER ADDRESS BUYER TERM DESCRIPTION
------------ ------- ----- ---- -----------
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III. Tradenames
IV. Domain Names
Sched. II-1
SCHEDULE III
LOCATIONS OF GRANTORS
I. Owned Locations
Description of Location (State if Location
(i) contains Equipment, Fixtures, Goods or
Inventory,
(ii) is chief place of business and chief
executive office, or
LOCATION (iii) contains Records concerning Accounts
and originals of Chattel Paper)
II. Leased Locations
Description of Location (State if Location
(i) contains Equipment, Fixtures, Goods or
Inventory,
(ii) is chief place of business and chief
executive office, or
LOCATION (iii) contains Records concerning Accounts
and originals of Chattel Paper)
Sched. III-1
SCHEDULE IV
DEPOSIT ACCOUNTS, SECURITIES ACCOUNTS AND COMMODITIES ACCOUNTS
Name and Address
of Institution
Maintaining Account Account Number Type of Account
------------------- -------------- ---------------
Sched. IV-1
SCHEDULE V
UCC-1 FINANCING STATEMENTS
UCC-1 Financing Statements have been filed in the jurisdictions below
against the Loan Parties:
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Debtor Secured Party Jurisdiction
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SCHEDULE VI
COMMERCIAL TORT CLAIMS
Sched. VI-1
EXHIBIT A
COLLATERAL ASSIGNMENT FOR SECURITY
[TRADEMARKS] [PATENTS] [COPYRIGHTS]
WHEREAS, ____________________ (the "ASSIGNOR") [has adopted, used and is
using, and holds all right, title and interest in and to, the trademarks and
service marks listed on the annexed Schedule A, which trademarks and service
marks are registered or applied for in the United States Patent and Trademark
Office (the "TRADEMARKS")] [holds all right, title and interest in the letter
patents, design patents and utility patents listed on the annexed Schedule A,
which patents are issued or applied for in the United States Patent and
Trademark Office (the "PATENTS")] [holds all right, title and interest in the
copyrights listed on the annexed Schedule A, which copyrights are registered in
the United States Copyright Office (the "COPYRIGHTS")];
WHEREAS, the Assignor has collaterally assigned to Fortress Credit Corp.,
in its capacity as agent (in such capacity, "ASSIGNEE") pursuant to the Loan
Agreement (as hereinafter defined) acting for and on behalf of the parties
thereto from time to time as lenders (collectively, "LENDERS") and granted to
the Assignee for the benefit of itself and the Lenders a continuing security
interest in all right, title and interest of the Assignor in, to and under the
[Trademarks, together with, among other things, the good-will of the business
symbolized by the Trademarks] [Patents] [Copyrights] and the applications and
registrations thereof, and all proceeds thereof, including, without limitation,
any and all causes of action which may exist by reason of infringement thereof
and any and all damages arising from past, present and future violations thereof
(the "Collateral"), as set forth in the Security Agreement, dated _______ __,
2006, by and among Assignee, Assignor and certain of its affiliates (as the same
may be amended, supplemented, restated or replaced, the "SECURITY AGREEMENT") to
secure the payment, performance and observance of the Obligations (as defined in
the Security Agreement);
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Assignor does hereby pledge
and collaterally assign unto the Assignee and grants to the Assignee for the
benefit of itself and the Lenders a continuing security interest in the
Collateral to secure the prompt payment, performance and observance of the
Obligations.
The Assignor does hereby further acknowledge and affirm that the rights
and remedies of the Assignee with respect to the Collateral are more fully set
forth in the Security Agreement, the terms and provisions of which are hereby
incorporated herein by reference as if fully set forth herein.
The term "Loan Agreement" as used herein means the Loan Agreement, dated
of even date herewith, by and among Assignee, Lenders, Assignor and certain of
its affiliates, as the same may be amended, supplemented, restated or replaced.
IN WITNESS WHEREOF, the Assignor has caused this Assignment to be duly
executed by its officer thereunto duly authorized as of _____________ __, 20__.
Xxx. X-0
[GRANTOR]
By:__________________________
Name:_____________________
Title:____________________
STATE OF ____________
ss.:
COUNTY OF ___________
On this ____ day of _______________, 20__, before me personally came
________________, to me known to be the person who executed the foregoing
instrument, and who, being duly sworn by me, did depose and say that s/he is the
________________ of _______________________________________, a
____________________, and that s/he executed the foregoing instrument in the
firm name of _______________________________________, and that s/he had
authority to sign the same, and s/he acknowledged to me that he executed the
same as the act and deed of said firm for the uses and purposes therein
mentioned.
_____________________________
Exh. A-2
SCHEDULE A TO ASSIGNMENT FOR SECURITY
[Trademarks and Trademark Applications]
[Patent and Patent Applications]
[Copyright and Copyright Applications]
Owned by ______________________________
EXHIBIT B
TO
SECURITY AGREEMENT
SPECIAL POWER OF ATTORNEY
STATE OF _______________ )
) ss.:
COUNTY OF ______________ )
KNOW ALL MEN BY THESE PRESENTS, that ("Debtor"), having an office at
_______________________________________ hereby appoints and constitutes,
severally, FORTRESS CREDIT CORP., as Agent ("Secured Party"), and each of its
officers, its true and lawful attorney, with full power of substitution and with
full power and authority to perform the following acts on behalf of Debtor in
each case in accordance with the Security Agreement (as hereafter defined):
1. Execution and delivery of any and all agreements, documents, instrument
of assignment, or other papers which Secured Party, in its discretion, deems
necessary or advisable for the purpose of assigning, selling, or otherwise
disposing of all right, title, and interest of Debtor in and to any [trademarks
and all registrations, recordings, reissues, extensions, and renewals thereof,]
[patents and all applications, registrations and recordings related to the
foregoing and all reissues, divisions continuations, extensions, and renewals
thereof,] or for the purpose of recording, registering and filing of, or
accomplishing any other formality with respect to the foregoing.
2. Execution and delivery of any and all documents, statements,
certificates or other papers which Secured Party, in its discretion, deems
necessary or advisable to further the purposes described in Subparagraph 1
hereof.
This Power of Attorney is made pursuant to a Security Agreement, dated of
even date herewith, between Debtor and Secured Party (the "Security Agreement")
and is subject to the terms and provisions thereof. This Power of Attorney,
being coupled with an interest, is irrevocable until all "Obligations", as such
term is defined in the Security Agreement, are paid in full and the Security
Agreement is terminated in writing by Secured Party.
Dated: ___________, ____
______________________________
By:___________________________
Name:_________________________
Title:________________________
STATE OF _______________ )
) ss.:
COUNTY OF ______________ )
On this ____ day of ____________, ____, before me personally came
___________________, to me known, who being duly sworn, did depose and say, that
he is the _________ of , the corporation described in and which executed the
foregoing instrument; and that he signed his name thereto by order of the Board
of Directors of said corporation.
____________________________________
Notary Public
