SECURITY AGREEMENT
Exhibit
10.3
THIS
SECURITY AGREEMENT
(this
“Security
Agreement”)
is
entered into as of March 15, 2007 among BENIHANA
INC.,
a
Delaware corporation (the “Borrower”),
certain Subsidiaries of the Borrower (individually a “Guarantor”
and
collectively the “Guarantors”;
together with the Borrower, individually an “Obligor”,
and
collectively the “Obligors”)
and
WACHOVIA
BANK, NATIONAL ASSOCIATION (F/K/A FIRST UNION NATIONAL
BANK),
in its
capacity as agent (in such capacity, the “Administrative
Agent”)
for
the lenders from time to time party to the Credit Agreement described below
(the
“Lenders”).
RECITALS
WHEREAS,
pursuant to that certain Credit Agreement dated as of the date hereof (as
amended, modified, extended, restated, replaced, or supplemented from time
to
time, the “Credit
Agreement”),
among
the Borrower, the Guarantors, the Lenders party thereto and the Administrative
Agent, the Lenders have agreed to make Loans and to issue and/or acquire
participation interests in Letters of Credit upon the terms and subject to
the
conditions set forth therein; and
WHEREAS,
it is a
condition precedent to the effectiveness of the Credit Agreement and the
obligations of the Lenders to make their respective Loans and to issue and/or
acquire participation interests in Letters of Credit under the Credit Agreement
that the Obligors shall have executed and delivered this Security Agreement
to
the Administrative Agent for the ratable benefit of the Lenders.
NOW,
THEREFORE,
in
consideration of these premises and other good and valuable consideration,
the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1.
Definitions.
(a)
Unless
otherwise defined herein, capitalized terms used herein shall have the meanings
ascribed to such terms in the Credit Agreement, and the following terms which
are defined in the Uniform Commercial Code from time to time in effect in the
State of North Carolina (the “UCC”)
are
used herein as so defined: Accessions, Accounts, As-Extracted Collateral,
Chattel Paper, Commercial Tort Claims, Consumer Goods, Control, Deposit
Accounts, Documents, Electronic Chattel Paper, Equipment, Farm Products,
Fixtures, General Intangibles, Goods, Instruments, Inventory, Investment
Property, Letter-of-Credit Rights, Manufactured Homes, Proceeds, Securities
Account, Securities Intermediary, Security Entitlement, Software, Supporting
Obligations and Tangible Chattel Paper. For purposes of this Pledge Agreement,
the term (a)
“Lender” shall include any Hedging Agreement Provider and the term “Secured
Hedging Agreement” shall mean any Hedging Agreement between a Credit Party and a
Hedging Agreement Provider, as amended, modified, extended, restated, replaced
or supplemented from time to time.
(b)
In
addition, the following term shall have the following meaning:
“Secured
Obligations”
means:
(i) all of the Credit Party Obligations (including obligations under Secured
Hedging Agreements), howsoever evidenced, created, incurred or acquired, whether
primary, secondary, direct, contingent, or joint and several and (ii) all
expenses and charges, legal and otherwise, incurred by the Administrative Agent,
the Lenders and/or the Secured Hedging Agreement Providers in collecting or
enforcing any of the Credit Party Obligations or in realizing on or protecting
any security therefor, including without limitation the security interest
granted hereunder.
2.
Grant
of Security Interest in the Collateral.
(a) To
secure
the prompt payment and performance in full when due, whether by lapse of time,
acceleration, mandatory prepayment or otherwise, of the Secured Obligations,
each Obligor hereby grants to the Administrative Agent, for the ratable benefit
of the Lenders, a continuing security interest in, and a right to set off
against, any and all right, title and interest of such Obligor in and to the
following, whether now owned or existing or owned, acquired, or arising
hereafter (collectively, the “Collateral”):
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(i)
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all
Accounts;
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(ii)
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all
cash and Cash Equivalents;
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(iii)
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all
Chattel Paper (including Electronic Chattel
Paper);
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(iv)
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those
certain Commercial Tort Claims of such Obligor set forth on Schedule
2(a)(iv)
attached hereto (as such Schedule may be updated from time to time
by such
Obligor);
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(v)
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all
Copyright Licenses;
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(vi)
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all
Copyrights;
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(vii)
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all
Deposit Accounts;
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(viii)
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all
Documents;
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(ix)
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all
Equipment;
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(x)
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all
Fixtures;
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(xi)
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all
General Intangibles;
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(xii)
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all
Goods;
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(xiii)
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all
Instruments;
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(xiv)
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all
Inventory;
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(xv)
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all
Investment Property;
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(xvi)
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all
Letter-of-Credit Rights;
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(xvii)
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all
material contracts and all such other agreements, contracts, leases,
licenses, tax sharing agreements or hedging arrangements now or hereafter
entered into by an Obligor, as such agreements may be amended or
otherwise
modified from time to time (collectively, the “Assigned
Agreements”),
including without limitation, (A) all rights of an Obligor to receive
moneys due and to become due under or pursuant to the Assigned Agreements,
(B) all rights of an Obligor to receive proceeds of any insurance,
indemnity, warranty or guaranty with respect to the Assigned Agreements,
(C) claims of an Obligor for damages arising out of or for breach
of or
default under the Assigned Agreements and (D) the right of an Obligor
to
terminate the Assigned Agreements, to perform thereunder and to compel
performance and otherwise exercise all remedies
thereunder;
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(xviii)
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all
Patent Licenses;
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all
Patents;
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all
Payment Intangibles;
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(xxi)
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all
Trademark Licenses;
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(xxii)
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all
Trademarks;
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(xxiii)
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all
Supporting Obligations;
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(xxiv)
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all
books, records, ledger cards, files, correspondence, computer programs,
tapes, disks, and related data processing software (owned by such
Obligor
or in which it has an interest) that at any time evidence or contain
information relating to any Collateral or are otherwise necessary
or
helpful in the collection thereof or realization
thereupon;
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(xxv)
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all
other personal property of any kind or type whatsoever owned by such
Obligor; and
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to
the extent not otherwise included, all Accessions, Proceeds and products
of any and all of the foregoing.
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(b) The
Obligors and the Administrative Agent, on behalf of the Lenders, hereby
acknowledge and agree that the security interest created hereby in the
Collateral (i) constitutes continuing collateral security for all of the Secured
Obligations, whether now existing or hereafter arising and (ii) is not to be
construed as a present assignment of any Intellectual Property.
(c) The
term
“Collateral” shall include any Secured Hedging Agreement and any rights of the
Obligors thereunder only for purposes of this Section 2.
3.
Provisions
Relating to Accounts, Contracts and Agreements.
(a) Anything
herein to the contrary notwithstanding, each of the Obligors shall remain liable
under each of its Accounts, contracts and agreements to observe and perform
all
of the conditions and obligations to be observed and performed by it thereunder,
all in accordance with the terms of any agreement giving rise to each such
Account or the terms of such contract or agreement. Neither the Administrative
Agent nor any Lender shall have any obligation or liability under any Account
(or any agreement giving rise thereto), contract or agreement by reason of
or
arising out of this Security Agreement or the receipt by the Administrative
Agent or any Lender of any payment relating to such Account, contract or
agreement pursuant hereto, nor shall the Administrative Agent or any Lender
be
obligated in any manner to perform any of the obligations of an Obligor under
or
pursuant to any Account (or any agreement giving rise thereto), contract or
agreement, to make any payment, to make any inquiry as to the nature or the
sufficiency of any payment received by it or as to the sufficiency of any
performance by any party under any Account (or any agreement giving rise
thereto), contract or agreement, to present or file any claim, to take any
action to enforce any performance or to collect the payment of any amounts
which
may have been assigned to it or to which it may be entitled at any time or
times.
(b) The
Administrative Agent hereby authorizes the Obligors to collect the Accounts;
provided,
that
the Administrative Agent may curtail or terminate such authority at any time
after the occurrence and during the continuation of an Event of Default. If
required by the Administrative Agent at any time after the occurrence and during
the continuation of an Event of Default, any payments of Accounts, when
collected by the Obligors (i) shall be forthwith (and in any event within
two (2) Business Days) deposited by the Obligors in a collateral account
maintained under the sole dominion and control of the Administrative Agent,
subject to withdrawal by the Administrative Agent for the account of the Lenders
only as provided in Section 12 hereof, and (ii) until so turned over,
shall be held by the Obligors in trust for the Administrative Agent and the
Lenders, segregated from other funds of the Obligors.
(c) At
any
time and from time to time, the Administrative Agent shall have the right,
but
not the obligation, to make test verifications of the Accounts in any manner
and
through any medium that it reasonably considers advisable, and the Obligors
shall furnish all such assistance and information as the Administrative Agent
may require in connection with such test verifications. Upon the Administrative
Agent’s request and at the expense of the Obligors, the Obligors shall cause
independent public accountants or others satisfactory to the Administrative
Agent to furnish to the Administrative Agent reports showing reconciliations,
aging and test verifications of, and trial balances for, the Accounts. The
Administrative Agent in its own name or in the name of others may communicate
with account debtors on the Accounts to verify with them to the Administrative
Agent’s satisfaction the existence, amount and terms of any
Accounts.
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4.
Representations
and Warranties.
Each
Obligor hereby represents and warrants to the Administrative Agent, for the
benefit of the Lenders, that so long as any of the Secured Obligations (other
than contingent indemnity obligations that survive termination of the Credit
Documents pursuant to the stated terms thereof) remain outstanding, any Credit
Document or Secured Hedging Agreement is in effect, and until all of the
Commitments shall have been terminated:
(a) Chief
Executive Office; Books & Records; Legal Name; State of
Formation.
As of
the Closing Date, each Obligor’s chief executive office and chief place of
business are (and for the prior four (4) months has been, or, to the extent
organized for less than four (4) months, for the entire period of organization)
located at the locations set forth on Schedule
6.20(b)
to the
Credit Agreement, and as of the Closing Date each Obligor keeps its books and
records at such locations. As of the Closing Date, each Obligor’s exact legal
name is as shown in this Security Agreement and its state of incorporation
or
organization is (and for the prior four (4) months has been, or, to the extent
organized for less than four (4) months, for the entire period of organization)
the location set forth on Schedule
6.20(b)
to the
Credit Agreement. No Obligor has in the four (4) months preceding the Closing
Date changed its name (or, to the extent organized for less than four (4)
months, has ever changed its name), been party to a merger, consolidation or
other change in structure or used any tradename not disclosed on Schedule
4(a)
attached
hereto (as updated from time to time).
(b) Location
of Tangible Collateral.
As of
the Closing Date, the location of all tangible Collateral owned by each Obligor
is as shown on Schedule
6.20(b)
to the
Credit Agreement.
(c) Ownership.
Each
Obligor is the legal and beneficial owner of its Collateral and, subject to
Section 2(b), has the right to pledge, sell, assign or transfer the same.
(d) Security
Interest/Priority.
This
Security Agreement creates a valid security interest in favor of the
Administrative Agent, for the benefit of the Lenders, in the Collateral of
such
Obligor and, when properly perfected by filing, obtaining possession, the
granting of Control to the Administrative Agent or otherwise, shall constitute
a
valid first priority, perfected security interest in such Collateral, to the
extent such security interest can be perfected by (i)
filing,
obtaining possession, the granting of Control or otherwise under the UCC,
(ii)
by
filing an appropriate notice with the United States Patent and Trademark Office
or the United States Copyright Office, or (iii)
such
other action as may be required pursuant to any applicable jurisdictions’
certificate of title statute, free and clear of all Liens except for Permitted
Liens.
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(e) Consents.
Except
for (i)
the
filing or recording of UCC financing statements, (ii)
the
filing of appropriate notices with the United States Patent and Trademark Office
and the United States Copyright Office, (iii)
obtaining Control to perfect the Liens created by this Security Agreement,
(iv)
compliance with the Federal Assignment of Claims Act or comparable state law,
and/or (v)
the
filing, registration or other action required pursuant to any applicable
certificate of title statute, no consent or authorization of, filing with,
or
other act by or in respect of, any arbitrator or Governmental Authority and
no
consent of any other Person (including, without limitation, any stockholder,
member or creditor of such Obligor) is required (A) for the grant by such
Obligor of the security interest in the Collateral granted hereby or for the
execution, delivery or performance of this Security Agreement by such Obligor
or
(B) for the perfection of such security interest or the exercise by the
Administrative Agent of the rights and remedies provided for in this Security
Agreement.
(f)
Types
of Collateral.
None of
the Collateral consists of, or is the Proceeds of, As-Extracted Collateral,
Consumer Goods, Farm Products, Manufactured Homes or standing timber (as such
term is used in the UCC).
(g) Accounts.
With
respect to the Accounts of the Obligors: (i) the goods sold and/or services
furnished giving rise to each Account are not subject to any security interest
or Lien except the first priority, perfected security interest granted to the
Administrative Agent herein and except for Permitted Liens; (ii) each Account
and the papers and documents of the applicable Obligor relating thereto are
genuine and in all material respects what they purport to be; (iii) each
Account arises out of a bona fide transaction for goods sold and delivered
(or
in the process of being delivered) by an Obligor or for services actually
rendered by an Obligor, which transaction was conducted in the ordinary course
of the Obligor’s business and was completed in accordance with the terms of any
documents pertaining thereto; (iv) no Account of an Obligor is evidenced by
any
Instrument or Chattel Paper unless such Instrument or Chattel Paper has been
theretofore endorsed over and delivered to, or submitted to the Control of,
the
Administrative Agent; (v) the amount of each Account as shown on the applicable
Obligor’s books and records, and on all invoices and statements which may be
delivered to the Administrative Agent with respect thereto, is due and payable
to the applicable Obligor and is not in any way contingent; (vi) to each of
the
Obligor’s knowledge, the account debtor with respect to each Account has the
capacity to contract; (vii) no surety bond was required or given in connection
with any Account of an Obligor or the contracts or purchase orders out of which
they arose; (viii) no Account is evidenced by a judgment, there are no set-offs,
counterclaims or disputes existing or asserted with respect to any material
Account, and no Obligor has made any agreement with any account debtor for
any
deduction from any Account except for deductions made in the ordinary course
of
its business; (ix) there are no facts, events or occurrences which in any
material respect impair the validity or enforcement of any Account or tend
to
materially reduce the amount payable thereunder as shown on the applicable
Obligor’s books and records; and (x) the right to receive payment under each
Account is assignable except where the account debtor with respect to such
Account is a Governmental Authority, to the extent assignment of any such right
to payment is prohibited or limited by applicable law, regulations,
administrative guidelines or contract.
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(h) Inventory.
No
Inventory of an Obligor is held by a third party (other than an Obligor)
pursuant to consignment, sale or return, sale on approval or similar
arrangement.
(i)
Intellectual
Property.
(i) Schedule
6.17
to the
Credit Agreement includes all Intellectual Property owned by or licensed by
or
to the Obligors as of the date hereof.
(ii) All
Intellectual Property of each Obligor is valid, subsisting, unexpired,
enforceable and has not been abandoned, and each Obligor is legally entitled
to
use each of its tradenames.
(iii) Except
as
set forth in Schedule
6.17
to the
Credit Agreement, none of the Intellectual Property of the Obligors is the
subject of any licensing or franchise agreement.
(iv) No
holding, decision or judgment has been rendered by any Governmental Authority
which would limit, cancel or question the validity of any Intellectual Property
of the Obligors.
(v) No
action
or proceeding is pending seeking to limit, cancel or question the validity
of
any Intellectual Property of the Obligors, or which, if adversely determined,
would have a material adverse effect on the value of any such Intellectual
Property.
(vi) All
applications pertaining to the Intellectual Property of each Obligor have been
duly and properly filed, and all registrations or letters pertaining to such
Intellectual Property have been duly and properly filed and issued, and all
of
such Intellectual Property is valid and enforceable.
(vii) No
Obligor has made any assignment or entered into any agreement in conflict with
the security interest of the Administrative Agent in the Intellectual Property
of each Obligor hereunder.
(j)
Documents,
Instruments and Chattel Paper.
Set
forth on Schedule
4(j)
is a
description of all Documents,
Instruments, and Tangible Chattel Paper of the Obligors as of the Closing
Date.
All
Documents, Instruments and Chattel Paper describing, evidencing or constituting
Collateral are, to the Obligors’ knowledge, complete, valid, and genuine.
(k) Equipment.
With
respect to each Obligor’s Equipment: (i) such Obligor has good and marketable
title thereto; (ii) all such Equipment is in normal operating condition and
repair, ordinary wear and tear alone and casualty events excepted, and is
suitable for the uses to which it is customarily put in the conduct of such
Obligor’s business; and (iii) no Equipment used in the conduct of such Obligor’s
business is leased, except for non-material items.
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(l) Restrictions
on Security Interest.
None of
the Obligors is party to any material license or any material lease that
contains legally enforceable restrictions on the granting of a security interest
therein.
(m) Collateral
Requiring Control to Perfect.
Set
forth on Schedule
4(m)
is a
description of all Deposit
Accounts, Electronic Chattel Paper, Letter-of-Credit Rights, Securities Accounts
and uncertificated Investment Property of the Obligors as of the Closing Date,
including the name and address of (i)
in the
case of a Deposit Account, the depository institution, (ii)
in the
case of Electronic Chattel Paper, the account debtor, (iii)
in the
case of Letter-of-Credit Rights, the issuer or nominated person, as applicable,
and (iv)
in the
case of a Securities Account or other uncertificated Investment Property, the
Securities Intermediary or issuer, as applicable.
5. Covenants.
Each
Obligor covenants that, so long as any of the Secured Obligations (other than
contingent indemnity obligations that survive termination of the Credit
Documents pursuant to the stated terms thereof) remain outstanding, any Credit
Document or Secured Hedging Agreement is in effect, and until all of the
Commitments shall have been terminated, such Obligor shall:
(a) Perfection
of Security Interest by Filing, Etc.
Execute
and deliver to the Administrative Agent and/or file such agreements, assignments
or instruments (including affidavits, notices, reaffirmations, amendments and
restatements of existing documents, and any document as may be necessary if
the
law of any jurisdiction other than North Carolina becomes or is applicable
to
the Collateral or any portion thereof, in each case, as the Administrative
Agent
may reasonably request) and do all such other things as the Administrative
Agent
may reasonably deem necessary or appropriate (i) to assure to the Administrative
Agent its security interests hereunder are perfected, including (A) such
financing statements (including continuation statements) or amendments thereof
or supplements thereto or other instruments as the Administrative Agent may
from
time to time reasonably request in order to perfect and maintain the security
interests granted hereunder in accordance with the UCC and any other personal
property security legislation in the appropriate state(s) or province(s), (B)
with
regard to Copyrights
and Copyright Licenses, a Notice of Grant of Security Interest in Copyrights
for
filing with the United States Copyright Office in the form of Exhibit
A
attached
hereto, (C) with regard to Patents and Patent Licenses, a Notice of Grant of
Security Interest in Patents for filing with the United States Patent and
Trademark Office in the form of Exhibit
B
attached
hereto and (D) with regard to Trademarks and Trademark Licenses, a Notice of
Grant of Security Interest in Trademarks for filing with the United States
Patent and Trademark Office in the form of Exhibit
C
attached
hereto, (ii) to consummate the transactions contemplated hereby and (iii) to
otherwise protect and assure the Administrative Agent of its rights and
interests hereunder. Each
Obligor hereby authorizes the Administrative Agent to prepare and file such
financing statements (including continuation statements) or amendments thereof
or supplements thereto or other instruments as the Administrative Agent may
from
time to time deem necessary or appropriate in order to perfect and maintain
the
security interests granted hereunder in accordance with the UCC, including,
without limitation, any financing statement that describes the Collateral as
“all personal property” or “all assets” of such Obligor or that describes the
Collateral in some other manner as the Administrative Agent deems necessary
or
advisable. Each
Obligor agrees to xxxx its books and records to reflect the security interest
of
the Administrative Agent in the Collateral.
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(b) Perfection
of Security Interest by Possession.
If (i)
any amount payable under or in connection with any of the Collateral shall
be or
become evidenced by any Instrument, Tangible Chattel Paper or Supporting
Obligation or (ii) any Collateral shall be stored or shipped subject to a
Document or (iii) any Collateral shall consist of Investment Property in the
form of certificated securities, promptly notify the Administrative Agent of
the
existence of such Collateral and at the request of the Administrative Agent,
deliver such Instrument, Chattel Paper, Supporting Obligation, Document or
Investment Property to the Administrative Agent, duly endorsed in a manner
satisfactory to the Administrative Agent, to be held as Collateral pursuant
to
this Security Agreement.
(c) Perfection
of Security Interest Through Control.
If any
Collateral shall consist of Deposit Accounts, Electronic Chattel Paper,
Letter-of-Credit Rights, Securities Accounts or uncertificated Investment
Property, execute and deliver (and,
with
respect to any Collateral consisting of a Securities Account or uncertificated
Investment Property, cause the Securities Intermediary or the issuer, as
applicable, with respect to such Investment Property to execute
and
deliver) to the Administrative Agent all control agreements, assignments,
instruments or other documents as reasonably requested by the Administrative
Agent for the purposes of obtaining and maintaining Control of such Collateral.
(d) Other
Liens.
Defend
its interests in the Collateral against the claims and demands of all other
parties claiming an interest therein and keep the Collateral free from all
Liens, except for Permitted Liens. Neither the Administrative Agent nor any
Lender authorizes any Obligor to, and no Obligor shall, sell, exchange,
transfer, assign, lease or otherwise dispose of the Collateral or any interest
therein, except as permitted under the Credit Agreement.
(e) Preservation
of Collateral.
Keep
the Collateral in good order, condition and repair in all material respects,
ordinary wear and tear excepted; not use the Collateral in violation of the
provisions of this Security Agreement or
any
other agreement relating to the Collateral or any policy insuring the Collateral
or any applicable Requirement of Law; not permit any Collateral to be or become
a fixture to real property or an accession to other personal property unless
the
Administrative Agent has a valid, perfected and first priority security interest
for the benefit of the Lenders in such real or personal property; and not,
without the prior written consent of the Administrative Agent, alter or remove
any identifying symbol or number on its Equipment.
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(f) Changes
in Structure or Location.
Not,
without providing thirty (30) days prior written notice to the Administrative
Agent and without filing (or confirming that the Administrative Agent has filed)
such financing statements and amendments to any previously filed financing
statements as the Administrative Agent may require, (i) alter its legal
existence or, in one transaction or a series of transactions, merge into or
consolidate with any other entity, or sell all or substantially all of its
assets, (ii) change its state of incorporation or organization, or (iii) change
its registered legal name.
(g) Inspection.
Allow
the Administrative Agent or its representatives to visit and inspect the
Collateral as set forth in Section 7.10 of the Credit Agreement.
(h) Collateral
Held by Warehouseman, Bailee, etc.
If any
Collateral is at any time in the possession or control of a warehouseman, bailee
or any agent or processor of such Obligor, (i) notify the Administrative Agent
of such possession, (ii) upon the request of the Administrative Agent, notify
such Person of the Administrative Agent’s security interest for the benefit of
the Lenders in such Collateral, (iii) instruct such Person to hold all such
Collateral for the Administrative Agent’s account subject to the Administrative
Agent’s instructions and (iv) obtain an acknowledgment from such Person that it
is holding such Collateral for the benefit of the Administrative
Agent.
(i)
Treatment
of Accounts.
(i) Not
grant or extend the time for payment of any Account, or compromise or settle
any
Account for less than the full amount thereof, or release any person or
property, in whole or in part, from payment thereof, or allow any credit or
discount thereon, other than as normal and customary in the ordinary course
of
an Obligor’s business and (ii)
maintain at its principal place of business a record of Accounts consistent
with
customary business practices.
(j)
Covenants
Relating to Inventory.
(i) Maintain,
keep and preserve its Inventory in good salable condition at its own cost and
expense.
(ii) Comply
with all reporting requirements set forth in the Credit Agreement with respect
to Inventory.
(iii) If
any of
the Inventory is at any time evidenced by a document of title, promptly notify
the Administrative Agent thereof and, upon the request of the Administrative
Agent, deliver such document of title to the Administrative Agent.
(k) Covenants
Relating to Copyrights.
(i) Employ
the Copyright for each material Work with such notice of copyright as may be
required by law to secure copyright protection.
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(ii) Not
do
any act or knowingly omit to do any act whereby any Copyright may become
invalidated and (A) not do any act, or knowingly omit to do any act, whereby
any
material Copyright may become injected into the public domain; (B) notify the
Administrative Agent immediately if it knows, or has reason to know, that any
material Copyright could reasonably be expected to become injected into the
public domain or of any adverse determination or development (including, without
limitation, the institution of, or any such determination or development in,
any
proceeding in any court or tribunal in the United States or any other country)
regarding an Obligor’s ownership of any such Copyright or its validity; (C) take
all necessary steps as it shall deem appropriate under the circumstances, to
maintain and pursue each application (and to obtain the relevant registration)
and to maintain each registration of each material Copyright owned by an Obligor
including, without limitation, filing of applications for renewal where
necessary; and (D) promptly notify the Administrative Agent of any material
infringement of any material Copyright of an Obligor of which it becomes aware
and take such actions as it shall reasonably deem appropriate under the
circumstances to protect such Copyright, including, where appropriate, the
bringing of suit for infringement, seeking injunctive relief and seeking to
recover any and all damages for such infringement.
(iii) Not
make
any assignment or agreement in conflict with the security interest in the
Copyrights of each Obligor hereunder.
(l)
Covenants
Relating to Patents and Trademarks.
(i) (A)
Continue to use each Trademark in order to maintain such Trademark in full
force
free from any claim of abandonment for non-use, (B)
maintain as in the past the quality of products and services offered under
such
Trademark, (C)
employ
such Trademark with the appropriate notice of registration, (D)
not
adopt or use any xxxx which is confusingly similar or a colorable imitation
of
such Trademark unless the Administrative Agent, for the ratable benefit of
the
Lenders, shall obtain a perfected security interest in such xxxx pursuant to
this Security Agreement, and (E)
not
(and not permit any licensee or sublicensee thereof to) do any act or knowingly
omit to do any act whereby any Trademark may become invalidated.
(ii) Not
do
any act, or omit to do any act, whereby any material Patent may become abandoned
or dedicated.
(iii) Promptly
notify the Administrative Agent if it knows, or has reason to know, that any
application or registration relating to any material Patent or material
Trademark may become abandoned or dedicated, or of any adverse determination
or
development (including, without limitation, the institution of, or any such
determination or development in, any proceeding in the United States Patent
and
Trademark Office or any court or tribunal in any country) regarding an Obligor’s
ownership of any such Patent or Trademark or its right to register the same
or
to keep, maintain and use the same.
11
(iv) Take
all
reasonable and necessary steps, including, without limitation, in any proceeding
before the United States Patent and Trademark Office, or any similar office
or
agency in any other country or any political subdivision thereof, to maintain
and pursue each application, to obtain the relevant registration and to maintain
each registration of all material Patents and material Trademarks, including,
without limitation, filing of applications for renewal, affidavits of use and
affidavits of incontestability.
(v) Promptly
notify the Administrative Agent after it learns that any material Patent or
material Trademark included in the Collateral is infringed, misappropriated
or
diluted by a third party and promptly xxx for infringement, misappropriation
or
dilution, to seek injunctive relief where appropriate and to recover any and
all
damages for such infringement, misappropriation or dilution, or take such other
actions as it shall reasonably deem appropriate under the circumstances to
protect such Patent or Trademark.
(vi) Not
make
any assignment or agreement in conflict with the security interest in the
Patents or Trademarks of any Obligor hereunder.
(m) New
Patents, Copyrights and Trademarks.
In
accordance with Section 6.17 of the Credit Agreement, provide the Administrative
Agent with (i) a listing of all applications, if any, for new Copyrights,
Patents or Trademarks (together with a listing of the issuance of registrations
or letters on present applications), which new applications and issued
registrations or letters shall be subject to the terms and conditions hereunder,
and (ii) (A) with respect to Copyrights and Copyright Licenses, a duly executed
Notice of Grant of Security Interest in Copyrights, (B) with respect to Patents
and Patent Licenses, a duly executed Notice of Grant of Security Interest in
Patents, (C) with respect to Trademarks and Trademark Licenses, a duly executed
Notice of Grant of Security Interest in Trademarks or (D) such other duly
executed documents as the Administrative Agent may request in a form acceptable
to counsel for the Administrative Agent and suitable for recording to evidence
the security interest of the Administrative Agent on behalf of the Lenders
in
the Copyright, Patent or Trademark which is the subject of such new application,
and
the
goodwill and General Intangibles of such Obligor relating thereto or represented
thereby.
(n) Commercial
Tort Claims; Notice of Litigation.
Promptly (i) forward to the Administrative Agent written notification of any
and
all Commercial Tort Claims of the Obligors, including, but not limited to,
any
and all actions, suits, and proceedings before any court or Governmental
Authority by or affecting such Obligor or any of its Subsidiaries and (ii)
execute and deliver such statements, documents and notices and do and cause
to
be done all such things as may be required by the Administrative Agent, or
required by law, including all things which may from time to time be necessary
under the UCC to fully create, preserve, perfect and protect the priority of
the
Administrative Agent’s security interest in any Commercial Tort
Claims.
12
(o) Status
of Collateral as Personal Property.
At all
times maintain the Collateral as personal property and not affix any of the
Collateral to any real property in a manner which would change its nature from
personal property to real property or a Fixture.
(p) Regulatory
Approvals.
Promptly, and at its expense, execute and deliver, or cause to be executed
and
delivered, all applications, certificates, instruments, registration statements,
and all other documents and papers the Administrative Agent may reasonably
request and as may be required by law to acquire any Governmental Approval
or
the consent, approval, registration, qualification or authorization of any
other
Person deemed necessary or appropriate for the effective exercise of any of
the
rights under this Security Agreement. Without limiting the generality of the
foregoing, if an Event of Default shall have occurred and be continuing, each
Obligor shall take any action which the Administrative Agent may reasonably
request in order to transfer and assign to the Administrative Agent, or to
such
one or more third parties as the Administrative Agent may designate, or to
a
combination of the foregoing, each Government Approval of such Obligor. To
enforce the provisions of this subsection, upon the occurrence and during the
continuance of an Event of Default, the Administrative Agent is empowered to
request the appointment of a receiver from any court of competent jurisdiction.
Such receiver shall be instructed to seek from the Governmental Authority an
involuntary transfer of control of each such Governmental Approval for the
purpose of seeking a bona fide purchaser to whom control will ultimately be
transferred. Each Obligor hereby agrees to authorize such an involuntary
transfer of control upon the request of the receiver so appointed, and, if
such
Obligor shall refuse to authorize the transfer, its approval may be required
by
the court. Upon the occurrence and continuance of an Event of Default, such
Obligor shall further use its reasonable best efforts to assist in obtaining
Governmental Approvals, if required, for any action or transaction contemplated
by this Security Agreement, including, without limitation, the preparation,
execution and filing with the Governmental Authority of such Obligor’s portion
of any necessary or appropriate application for the approval of the transfer
or
assignment of any portion of the assets (including any Governmental Approval)
of
such Obligor. Because each Obligor agrees that the Administrative Agent’s remedy
at law for failure of such Obligor to comply with the provisions of this
subsection would be inadequate and that such failure would not be adequately
compensable in damages, such Obligor agrees that the covenants contained in
this
subsection may be specifically enforced, and such Obligor hereby waives and
agrees not to assert any defenses against an action for specific performance
of
such covenants.
(q) Insurance.
Insure,
repair and replace the Collateral of such Obligor as set forth in the Credit
Agreement. Each Obligor shall promptly notify the Administrative Agent, in
accordance with Section 7.6 of the Credit Agreement, of any material updates
to
its material insurance policies. All proceeds derived from insurance on the
Collateral shall be subject to the security interest of the Administrative
Agent
hereunder.
(r)
Covenants
Relating to the Assigned Agreements.
13
(i) Upon
the
request of the Administrative Agent, each Obligor shall, at its expense, (A)
furnish to the Administrative Agent copies of all notices, requests and other
documents received by such Obligor under or pursuant to the Assigned Agreements,
and such other information and reports regarding the Assigned Agreements and
(B)
make to any other party to any Assigned Agreement such demands and requests
for
information and reports or for action as an Obligor is entitled to make
thereunder.
(ii) Unless
the applicable Obligor believes it is necessary in the prudent conduct of its
business, no Obligor shall (A) cancel or terminate any Assigned Agreement of
such Obligor or consent to or accept any cancellation or termination thereof;
(B) amend or otherwise modify any Assigned Agreement of such Obligor or give
any
consent, waiver or approval thereunder; (C) waive any default under or breach
of
any Assigned Agreement of such Obligor; or (D) take any other action in
connection with any Assigned Agreement of such Obligor which would impair the
value of the interest or rights of such Obligor thereunder or which would impair
the interests or rights of the Administrative Agent.
6. License
of Intellectual Property.
The
Obligors hereby assign, transfer and convey to the Administrative Agent,
effective upon the occurrence and during the continuance of any Event of
Default, the nonexclusive right and license to use all Intellectual Property
owned or used by any Obligor that relate to the Collateral and any other
collateral granted by the Obligors as security for the Secured Obligations,
together with any goodwill associated therewith, all to the extent necessary
to
enable the Administrative Agent to use, possess and realize on the Collateral
and to enable any successor or assign to enjoy the benefits of the Collateral.
This right and license shall inure to the benefit of all successors, assigns
and
transferees of the Administrative Agent and its successors, assigns and
transferees, whether by voluntary conveyance, operation of law, assignment,
transfer, foreclosure, deed in lieu of foreclosure or otherwise. Such right
and
license is granted free of charge, without requirement that any monetary payment
whatsoever be made to the Obligors.
7. Special
Provisions Regarding Inventory.
Notwithstanding anything to the contrary contained in this Security Agreement,
each Obligor may, unless and until an Event of Default occurs and is continuing
and the Administrative Agent instructs such Obligor otherwise, without further
consent or approval of the Administrative Agent, use, consume, sell, lease
and
exchange its Inventory in the ordinary course of its business as presently
conducted, whereupon, in the case of such a sale or exchange, the security
interest created hereby in the Inventory so sold or exchanged (but not in any
Proceeds arising from such sale or exchange) shall cease immediately without
any
further action on the part of the Administrative Agent.
8. Performance
of Obligations; Advances by Administrative Agent.
On
failure of any Obligor to perform any of the covenants and agreements contained
herein, the Administrative Agent may, at its sole option and in its sole
discretion, perform or cause to be performed the same and in so doing may expend
such sums as the Administrative Agent may reasonably deem advisable in the
performance thereof, including, without limitation, the payment of any insurance
premiums, the payment of any taxes, a payment to obtain a release of a Lien
or
potential Lien, expenditures made in defending against any adverse claim and
all
other expenditures which the Administrative Agent may make for the protection
of
the security interest hereof or may be compelled to make by operation of law.
All such sums and amounts so expended shall be repayable by the Obligors on
a
joint and several basis promptly upon timely notice thereof and demand therefor,
shall constitute additional Secured Obligations and shall bear interest from
the
date said amounts are expended at the default rate for Revolving Loans that
are
Base Rate Loans set forth in Section 3.1 of the Credit Agreement. No
such
performance of any covenant or agreement by the Administrative Agent on behalf
of any Obligor, and no such advance or expenditure therefor, shall relieve
the
Obligors of any default under the terms of this Security Agreement, the other
Credit Documents or any Secured Hedging Agreement. The Administrative Agent
may
make any payment hereby authorized in accordance with any xxxx, statement or
estimate procured from the appropriate public office or holder of the claim
to
be discharged without inquiry into the accuracy of such xxxx, statement or
estimate or into the validity of any tax assessment, sale, forfeiture, tax
lien,
title or claim except to the extent such payment is being contested in good
faith by an Obligor in appropriate proceedings and against which adequate
reserves are being maintained in accordance with GAAP.
14
9. Events
of Default.
The
occurrence of an event which under the Credit Agreement would constitute an
Event of Default shall be an event of default hereunder (an “Event
of Default”).
10. Remedies.
(a) General
Remedies.
Upon
the occurrence of an Event of Default and during continuation thereof, the
Administrative Agent and the Lenders shall have, in addition to the rights
and
remedies provided herein, in the Credit Documents, in any Secured Hedging
Agreement or by law (including, but not limited to, levy of attachment,
garnishment and the rights and remedies set forth in the UCC of the jurisdiction
applicable to the affected Collateral), the rights and remedies of a secured
party under the UCC (regardless of whether the UCC is the law of the
jurisdiction where the rights and remedies are asserted and regardless of
whether the UCC applies to the affected Collateral), and further, the
Administrative Agent may, with or without judicial process or the aid and
assistance of others, (i) enter on any premises on which any of the Collateral
may be located and, without resistance or interference by the Obligors, take
possession of the Collateral, (ii) dispose of any Collateral on any such
premises, (iii) require the Obligors to assemble and make available to the
Administrative Agent at the expense of the Obligors any Collateral at any place
and time designated by the Administrative Agent which is reasonably convenient
to both parties, (iv) remove any Collateral from any such premises for the
purpose of effecting the sale or other disposition thereof, and/or (v) without
demand and without advertisement, notice, hearing or process of law, all of
which each of the Obligors hereby waives to the fullest extent permitted by
law,
at any place and time or times, sell and deliver any or all Collateral held
by
or for it at public or private sale, by one or more contracts, in one or more
parcels, for cash, upon credit or otherwise, at such prices and upon such terms
as the Administrative Agent deems advisable, in its sole discretion (subject
to
any and all mandatory legal requirements). Neither
the Administrative Agent’s compliance with any applicable state or federal law
in the conduct of such sale, nor its disclaimer of any warranties relating
to
the Collateral, shall be considered to adversely affect the commercial
reasonableness of such sale. In
addition to all other sums due the Administrative Agent and the Lenders with
respect to the Secured Obligations, the Obligors shall pay the Administrative
Agent and each of the Lenders all reasonable documented costs and expenses
incurred by the Administrative Agent or any such Lender, including, but not
limited to, reasonable attorneys’ fees and court costs, in obtaining or
liquidating the Collateral, in enforcing payment of the Secured Obligations,
or
in the prosecution or defense of any action or proceeding by or against the
Administrative Agent or the Lenders or the Obligors concerning any matter
arising out of or connected with this Security Agreement, any Collateral or
the
Secured Obligations, including, without limitation, any of the foregoing arising
in, arising under or related to a case under the Bankruptcy Code. To the extent
the rights of notice cannot be legally waived hereunder, each Obligor agrees
that any requirement of reasonable notice shall be met if such notice is
personally served on or mailed, postage prepaid, to the Borrower in accordance
with the notice provisions of Section 11.1 of the Credit Agreement at least
ten
(10) days before the time of sale or other event giving rise to the requirement
of such notice. The Administrative Agent and the Lenders shall not be obligated
to make any sale or other disposition of the Collateral regardless of notice
having been given. To the extent permitted by law, any Lender may be a purchaser
at any such sale. To the extent permitted by applicable law, each of the
Obligors hereby waives all of its rights of redemption with respect to any
such
sale. Subject to the provisions of applicable law, the Administrative Agent
and
the Lenders may postpone or cause the postponement of the sale of all or any
portion of the Collateral by announcement at the time and place of such sale,
and such sale may, without further notice, to the extent permitted by law,
be
made at the time and place to which the sale was postponed, or the
Administrative Agent and the Lenders may further postpone such sale by
announcement made at such time and place.
15
(b) Remedies
Relating to Accounts.
Upon
the occurrence of an Event of Default and during the continuation thereof,
whether or not the Administrative Agent has exercised any or all of its rights
and remedies hereunder, the Administrative Agent shall have the right to enforce
any Obligor’s rights against any account debtors and obligors on such Obligor’s
Accounts. Each Obligor acknowledges and agrees that the Proceeds of its Accounts
remitted to or on behalf of the Administrative Agent in accordance with the
provisions of this Section shall be solely for the Administrative Agent’s own
convenience and that such Obligor shall not have any right, title or interest
in
such Proceeds or in any such other amounts except as expressly provided herein.
After the occurrence and during the continuance of an Event of Default, to
the
extent required by the Administrative Agent, each Obligor agrees to execute
any
document or instrument, and to take any action, necessary under applicable
law
(including the Federal Assignment of Claims Act) in order for the Administrative
Agent to exercise its rights and remedies (or be able to exercise its rights
and
remedies at some future date) with respect to any Accounts of such Obligor
where
the account debtor is a Governmental Authority. The Administrative Agent and
the
Lenders shall have no liability or responsibility to any Obligor for acceptance
of a check, draft or other order for payment of money bearing the legend
“payment in full” or words of similar import or any other restrictive legend or
endorsement or be responsible for determining the correctness of any remittance.
Each Obligor hereby agrees to indemnify the Administrative Agent and the Lenders
and their respective officers, directors, employees, agents, advisors and
affiliates from and against all liabilities, damages, losses, actions, claims,
judgments, costs, expenses, charges and reasonable attorneys’ fees suffered or
incurred by the Administrative Agent or the Lenders (each, an “Indemnified
Party”)
because of the maintenance of the foregoing arrangements except, with respect
to
any Indemnified Party, as relating to or arising out of the gross negligence
or
willful misconduct of such Indemnified Party or its officers, employees or
agents. In the case of any investigation, litigation or other proceeding, the
foregoing indemnity shall be effective whether or not such investigation,
litigation or proceeding is brought by an Obligor, its directors, shareholders
or creditors or an Indemnified Party or any other Person or any other
Indemnified Party is otherwise a party thereto.
16
(c) Access.
In
addition to the rights and remedies hereunder, upon the occurrence of an Event
of Default and during the continuation thereof, the Administrative Agent shall
have the right to enter and remain upon the various premises of the Obligors
without cost or charge to the Administrative Agent, and use the same, together
with materials, supplies, books and records of the Obligors for the purpose
of
collecting and liquidating the Collateral, or for preparing for sale and
conducting the sale of the Collateral, whether by foreclosure, auction or
otherwise. In addition, the Administrative Agent may remove Collateral, or
any
part thereof, from such premises and/or any records with respect thereto, in
order to effectively collect or liquidate such Collateral. If the Administrative
Agent exercises its right to take possession of the Collateral, each Obligor
shall also at its expense perform any and all other steps reasonably requested
by the Administrative Agent to preserve and protect the security interest hereby
granted in the Collateral, such as placing and maintaining signs indicating
the
security interest of the Administrative Agent, appointing overseers for the
Collateral and maintaining inventory records.
(d) Nonexclusive
Nature of Remedies.
Failure
by the Administrative Agent or the Lenders to exercise any right, remedy or
option under this Security Agreement, any other Credit Document, any Secured
Hedging Agreement or as provided by law, or any delay by the Administrative
Agent or the Lenders in exercising the same, shall not operate as a waiver
of
any such right, remedy or option. No waiver hereunder shall be effective unless
it is in writing, signed by the party against whom such waiver is sought to
be
enforced and then only to the extent specifically stated, which in the case
of
the Administrative Agent or the Lenders shall only be granted as provided
herein. To the extent permitted by law, neither the Administrative Agent, the
Lenders, nor any party acting as attorney for the Administrative Agent or the
Lenders, shall be liable hereunder for any acts or omissions or for any error
of
judgment or mistake of fact or law other than their gross negligence or willful
misconduct hereunder. The rights and remedies of the Administrative Agent and
the Lenders under this Security Agreement shall be cumulative and not exclusive
of any other right or remedy which the Administrative Agent or the Lenders
may
have.
17
(e) Retention
of Collateral.
In
addition to the rights and remedies hereunder, upon the occurrence of an Event
of Default and during the continuation thereof, the Administrative Agent may,
after providing the notices required by Sections 9-620 and 9-621 of the UCC
(or
any successor sections of the UCC) or otherwise complying with the notice
requirements of applicable law of the relevant jurisdiction, accept or retain
all or any portion of the Collateral in satisfaction of the Secured Obligations.
Unless and until the Administrative Agent shall have provided such notices,
however, the Administrative Agent shall not be deemed to have retained any
Collateral in satisfaction of any Secured Obligations for any
reason.
(f) Deficiency.
In the
event that the proceeds of any sale, collection or realization are insufficient
to pay all amounts to which the Administrative Agent or the Lenders are legally
entitled, the Obligors shall be jointly and severally liable for the deficiency,
together with interest thereon at the default rate for Revolving Loans that
are
Base Rate Loans set forth in Section 3.1 of the Credit Agreement, together
with
the costs of collection and the reasonable fees of any attorneys employed by
the
Administrative Agent to collect such deficiency. Any surplus remaining after
the
full payment and satisfaction of the Secured Obligations shall be returned
to
the Obligors or to whomsoever a court of competent jurisdiction shall determine
to be entitled thereto.
(g) Other
Security.
To the
extent that any of the Secured Obligations are now or hereafter secured by
property other than the Collateral (including, without limitation, real and
other personal property and securities owned by an Obligor), or by a guarantee,
endorsement or property of any other Person, then the Administrative Agent
shall
have the right to proceed against such other property, guarantee or endorsement
upon the occurrence and during the continuation of any Event of Default, and
the
Administrative Agent shall have the right, in its sole discretion, to determine
which rights, security, Liens, security interests or remedies the Administrative
Agent shall at any time pursue, relinquish, subordinate, modify or take with
respect thereto, without in any way modifying or affecting any of them or any
of
the Administrative Agent’s and the Lenders’ rights or the Secured Obligations
under this Security Agreement, under any other of the Credit Documents or under
any Secured Hedging Agreement.
18
11. Rights
of the Administrative Agent.
(a) Power
of Attorney.
Each
Obligor hereby designates and appoints the Administrative Agent, on behalf
of
the Lenders, and each of its designees or agents, as attorney-in-fact of such
Obligor, irrevocably and with power of substitution, with authority to take
any
or all of the following actions upon the occurrence and during the continuation
of an Event of Default:
(i) to
demand, collect, settle, compromise, adjust and give discharges and releases
concerning the Collateral of such Obligor, all as the Administrative Agent
may
reasonably determine in respect of such Collateral;
(ii) to
commence and prosecute any actions at any court for the purposes of collecting
any Collateral and enforcing any other right in respect thereof;
(iii) to
defend, settle, adjust or compromise any action, suit or proceeding brought
with
respect to the Collateral and, in connection therewith, give such discharge
or
release as the Administrative Agent may deem reasonably
appropriate;
(iv) to
receive, open and dispose of mail addressed to an Obligor and endorse checks,
notes, drafts, acceptances, money orders, bills of lading, warehouse receipts
or
other instruments or documents evidencing payment, shipment or storage of the
goods giving rise to the Collateral of such Obligor, or securing or relating
to
such Collateral, on behalf of and in the name of such Obligor;
(v) to
sell,
assign, transfer, make any agreement in respect of, or otherwise deal with
or
exercise rights in respect of, any Collateral or the goods or services which
have given rise thereto, as fully and completely as though the Administrative
Agent were the absolute owner thereof for all purposes;
(vi) to
adjust
and settle claims under any insurance policy relating to the
Collateral;
(vii) to
execute and deliver and/or file all assignments, conveyances, statements,
financing statements, continuation financing statements, security agreements,
affidavits, notices and other agreements, instruments and documents that the
Administrative Agent may determine necessary in order to perfect and maintain
the security interests and Liens granted in this Security Agreement and in
order
to fully consummate all of the transactions contemplated herein;
(viii) to
institute any foreclosure proceedings that the Administrative Agent may deem
appropriate;
(ix) to
execute any document or instrument, and to take any action, necessary under
applicable law (including the Federal Assignment of Claims Act) in order for
the
Administrative Agent to exercise its rights and remedies (or to be able to
exercise its rights and remedies at some future date) with respect to any
Account of an Obligor where the account debtor is a Governmental Authority;
and
19
(x) to
do and
perform all such other acts and things as the Administrative Agent may
reasonably deem to be necessary, proper or convenient in connection with the
Collateral.
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This
power of attorney is a power coupled with an interest and shall be
irrevocable for so long as any of the Secured Obligations (other
than
contingent indemnity obligations that survive termination of the
Credit
Documents pursuant to the stated terms thereof) remain outstanding,
any
Credit Document or Secured Hedging Agreement is in effect, and until
all
of the Commitments shall have been terminated. The Administrative
Agent
shall be under no duty to exercise or withhold the exercise of any
of the
rights, powers, privileges and options expressly or implicitly granted
to
the Administrative Agent in this Security Agreement, and shall not
be
liable for any failure to do so or any delay in doing so. The
Administrative Agent shall not be liable for any act or omission
or for
any error of judgment or any mistake of fact or law in its individual
capacity or its capacity as attorney-in-fact except acts or omissions
resulting from its gross negligence or willful misconduct. This power
of
attorney is conferred on the Administrative Agent solely to perfect,
protect, preserve and realize upon its security interest in the
Collateral.
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(b) Assignment
by the Administrative Agent.
The
Administrative Agent may from time to time assign the Secured Obligations or
any
portion thereof and/or the Collateral or any portion thereof to a successor
Administrative Agent, and the assignee shall be entitled to all of the rights
and remedies of the Administrative Agent under this Security Agreement in
relation thereto.
(c) The
Administrative Agent’s Duty of Care.
Other
than the exercise of reasonable care to assure the safe custody of the
Collateral while being held by the Administrative Agent hereunder, the
Administrative Agent shall have no duty or liability to preserve rights
pertaining thereto, it being understood and agreed that the Obligors shall
be
responsible for preservation of all rights in the Collateral, and the
Administrative Agent shall be relieved of all responsibility for the Collateral
upon surrendering it or tendering the surrender of it to the Obligors. The
Administrative Agent shall be deemed to have exercised reasonable care in the
custody and preservation of the Collateral in its possession if the Collateral
is accorded treatment substantially equal to that which the Administrative
Agent
accords its own property, which shall be no less than the treatment employed
by
a reasonable and prudent agent in the industry, it being understood that the
Administrative Agent shall not have responsibility for taking any necessary
steps to preserve rights against any parties with respect to any of the
Collateral. In
the
event of a public or private sale of Collateral pursuant to Section 10 hereof,
the Administrative Agent shall have no obligation to clean-up, repair or
otherwise prepare the Collateral for sale.
12. Application
of Proceeds.
After
the exercise of remedies by the Administrative Agent or the Lenders pursuant
to
Section 9.2 of the Credit Agreement (or after the Commitments shall
automatically terminate and the Loans (with accrued interest thereon) and all
other amounts under the Credit Documents (including without limitation the
maximum amount of all contingent liabilities under Letters of Credit) shall
automatically become due and payable in accordance with the terms of such
Section), any proceeds of the Collateral, when received by the Administrative
Agent, any of the Lenders or any Hedging Agreement Provider in cash or its
equivalent, will be applied in reduction of the Secured Obligations in the
order
set forth in Section 3.15 of the Credit Agreement, and each Obligor irrevocably
waives the right to direct the application of such payments and proceeds and
acknowledges and agrees that the Administrative Agent shall have the continuing
and exclusive right to apply and reapply any and all such proceeds in the
Administrative Agent’s sole discretion, notwithstanding any entry to the
contrary upon any of its books and records.
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13. Costs
of Counsel.
If at
any time hereafter, whether upon the occurrence of an Event of Default or not,
the Administrative Agent employs counsel to prepare or consider amendments,
waivers or consents with respect to this Security Agreement, or to take action
or make a response in or with respect to any legal or arbitral proceeding
relating to this Security Agreement or relating to the Collateral, or to protect
the Collateral or exercise any rights or remedies under this Security Agreement
or with respect to the Collateral, then the Obligors agree to promptly pay
upon
demand any and all such reasonable documented costs and expenses of the
Administrative Agent, all of which costs and expenses shall constitute Secured
Obligations hereunder.
14. Continuing
Agreement.
(a) This
Security Agreement shall be a continuing agreement in every respect and shall
remain in full force and effect so long as any of the Secured Obligations (other
than contingent indemnity obligations that survive termination of the Credit
Documents pursuant to the stated terms thereof) remain outstanding, any Credit
Document or Secured Hedging Agreement is in effect, and until all of the
Commitments shall have been terminated. Upon such payment and termination,
this
Security Agreement shall be automatically terminated and the Administrative
Agent and the Lenders shall, upon the request and at the expense of the
Obligors, forthwith release all of the Liens and security interests granted
hereunder and shall execute and/or deliver all UCC termination statements and/or
other documents reasonably requested by the Obligors evidencing such
termination. Notwithstanding the foregoing all releases and indemnities provided
hereunder shall survive termination of this Security Agreement.
(b) This
Security Agreement shall continue to be effective or be automatically
reinstated, as the case may be, if at any time payment, in whole or in part,
of
any of the Secured Obligations is rescinded or must otherwise be restored or
returned by the Administrative Agent or any Lender as a preference, fraudulent
conveyance or otherwise under any bankruptcy, insolvency or similar law, all
as
though such payment had not been made; provided
that in
the event that payment of all or any part of the Secured Obligations is
rescinded or must be restored or returned, all reasonable costs and expenses
(including without limitation any reasonable legal fees and disbursements)
incurred by the Administrative Agent or any Lender in defending and enforcing
such reinstatement shall be deemed to be included as a part of the Secured
Obligations.
21
15. Amendments;
Waivers; Modifications.
This
Security Agreement and the provisions hereof may not be amended, waived,
modified, changed, discharged or terminated except as set forth in Section
11.6
of the Credit Agreement.
16. Successors
in Interest.
This
Security Agreement shall create a continuing security interest in the Collateral
and shall be binding upon each Obligor, its successors and assigns and shall
inure, together with the rights and remedies of the Administrative Agent and
the
Lenders hereunder, to the benefit of the Administrative Agent and the Lenders
and their successors and permitted assigns; provided,
however,
that
none of the Obligors may assign its rights or delegate its duties hereunder
without the prior written consent of each Lender or the Required Lenders, as
required by the Credit Agreement. To the fullest extent permitted by law, each
Obligor hereby releases the Administrative Agent and each Lender, each of their
respective officers, employees and agents and each of their respective
successors and assigns, from any liability for any act or omission relating
to
this Security Agreement or the Collateral, except for any liability arising
from
the gross negligence or willful misconduct of the Administrative Agent or such
Lender or their respective officers, employees and agents, in each case as
determined by a court of competent jurisdiction pursuant to a final
non-appealable judgment.
17. Notices.
All
notices required or permitted to be given under this Security Agreement shall
be
in conformance with Section 11.1 of the Credit Agreement.
18. Counterparts.
This
Security Agreement may be executed in any number of counterparts, each of which
where so executed and delivered shall be an original, but all of which shall
constitute one and the same instrument. It shall not be necessary in making
proof of this Security Agreement to produce or account for more than one such
counterpart. Delivery of executed counterparts of the Security Agreement by
telecopy or other electronic means shall be effective as an original and shall
constitute a representation that an original shall be delivered upon the request
of the Administrative Agent.
19. Headings.
The
headings of the sections and subsections hereof are provided for convenience
only and shall not in any way affect the meaning, construction or interpretation
of any provision of this Security Agreement.
20. Governing
Law; Submission to Jurisdiction and Service of Process; Waiver of Jury Trial;
Venue.
THIS
SECURITY AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL
BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NORTH CAROLINA. The terms of Sections 11.10 and 11.16 of
the
Credit Agreement are incorporated herein by reference, mutatis
mutandis,
and the
parties hereto agree to such terms.
21. Severability.
If any
provision of this Security Agreement is determined to be illegal, invalid or
unenforceable, such provision shall be fully severable and the remaining
provisions shall remain in full force and effect and shall be construed without
giving effect to the illegal, invalid or unenforceable provisions.
22
22. Entirety.
This
Security Agreement, the other Credit Documents and the Secured Hedging
Agreements represent the entire agreement of the parties hereto and thereto,
and
supersede all prior agreements and understandings, oral or written, if any,
including any commitment letters or correspondence relating to this Security
Agreement, the other Credit Documents, the Secured Hedging Agreements or the
transactions contemplated herein and therein.
23. Survival.
All
representations and warranties of the Obligors hereunder shall survive the
execution and delivery of this Security Agreement, the other Credit Documents
and the Secured Hedging Agreements, the delivery of the Notes and the making
of
the Loans and the issuance of the Letters of Credit under the Credit
Agreement.
24. Joint
and Several Obligations of Obligors.
(a) Each
of
the Obligors is accepting joint and several liability hereunder in consideration
of the financial accommodations to be provided by the Lenders under the Credit
Agreement, for the mutual benefit, directly and indirectly, of each of the
Obligors and in consideration of the undertakings of each of the Obligors to
accept joint and several liability for the obligations of each of
them.
(b) Each
of
the Obligors jointly and severally hereby irrevocably and unconditionally
accepts, not merely as a surety but also as a co-debtor, joint and several
liability with the other Obligors with respect to the payment and performance
of
all of the Secured Obligations arising under this Security Agreement, the other
Credit Documents and the Secured Hedging Agreements, it being the intention
of
the parties hereto that all the Secured Obligations shall be the joint and
several obligations of each of the Obligors without preferences or distinction
among them.
(c) Notwithstanding
any provision to the contrary contained herein, in any other of the Credit
Documents or in any Secured Hedging Agreement, to the extent the obligations
of
an Obligor shall be adjudicated to be invalid or unenforceable for any reason
(including, without limitation, because of any applicable state or federal
law
relating to fraudulent conveyances or transfers) then the obligations of such
Obligor hereunder shall be limited to the maximum amount that is permissible
under applicable law (whether federal or state and including, without
limitation, the Bankruptcy Code).
25. Rights
of Required Lenders.
All
rights of the Administrative Agent hereunder, if not exercised by the
Administrative Agent, may be exercised by the Required Lenders.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
23
Each
of
the parties hereto has caused a counterpart of this Security Agreement to be
duly executed and delivered as of the date first above written.
| BORROWER: | ||
|
a
Delaware corporation
|
||
| |
|
|
| By: | /s/ Xxxx X. Xxxxxxxx | |
|
|
||
|
Xxxx
X. Xxxxxxxx
|
||
|
President
|
||
|
GUARANTORS:
|
|
|
0000
XXXXXXXX RESTAURANT CORP.,
a
New York corporation
BENIHANA
BETHESDA CORP.,
a
New York corporation
BENIHANA
BRICKELL STATION CORP.,
a
Delaware corporation
BENIHANA
BROOMFIELD CORP.,
a
Delaware corporation
BENIHANA
CARLSBAD CORP.,
a
Delaware corporation
BENIHANA
XXXXXXXX CORP.,
a
Delaware corporation
BENIHANA
CHICAGO CORP.,
a
Delaware corporation
BENIHANA
ENCINO CORP.,
a
California corporation
BENIHANA
INTERNATIONAL CORP.,
a
Delaware corporation
BENIHANA
LINCOLN ROAD CORP.,
a
Florida corporation
BENIHANA
LOMBARD CORP.,
an
Illinois corporation
BENIHANA
MARINA CORP.,
a
California corporation
BENIHANA
MONTEREY CORPORATION,
a
Delaware corporation
BENIHANA
NATIONAL CORP.,
a
Delaware corporation
BENIHANA
NATIONAL OF FLORIDA CORP.,
a
Delaware corporation
BENIHANA
NEW YORK CORP.,
a
Delaware corporation
BENIHANA
ONTARIO CORP.,
a
Delaware corporation
BENIHANA
ORLANDO CORP.,
a
Delaware corporation
|
|
|
[signature
pages continue]
|
|
|
BENIHANA
PLYMOUTH MEETING CORP.,
a
Delaware corporation
BENIHANA
OF XXXXXX HILLS CORP.,
a
Delaware corporation
BENIHANA
SCHAUMBURG CORP.,
a
Delaware corporation
BENIHANA
SUNRISE CORPORATION,
a
Delaware corporation
BENIHANA
TUCSON CORP.,
a
Delaware corporation
BENIHANA
WESTBURY CORP.,
a
Delaware corporation
BENIHANA
WESTWOOD CORP.,
a
Delaware corporation
BENIHANA
WHEELING CORP.,
a
Delaware corporation
BIG
SPLASH XXXXXXX CORP.,
a
Delaware corporation
HARU
AMSTERDAM AVENUE CORP.,
a
New York corporation
HARU
FOOD CORP.,
a
New York corporation
HARU
GRAMERCY PARK CORP.,
a
New York corporation
HARU
HOLDING CORP.,
a
Delaware corporation
HARU
PARK AVENUE CORP.,
a
Delaware corporation
HARU
PHILADELPHIA CORP.,
a
Delaware corporation
HARU
PRUDENTIAL CORP.,
a
Delaware corporation
HARU
THIRD AVENUE CORP.,
a
New York corporation
HARU
TOO, INC.,
a
New York corporation
HARU
WALL STREET CORP.,
a
Delaware corporation
XXXXXXX’X
INTERNATIONAL INC.,
a
Delaware corporation
NOODLE
TIME, INC.,
a
Florida corporation
RA
AHWATUKEE RESTAURANT CORP.,
a
Delaware corporation
RA
FASHION VALLEY CORP.,
a
Delaware corporation
XX
XXXXXXXX RESTAURANT CORP.,
a
Delaware corporation
RA
SCOTTSDALE CORP.,
a
Delaware corporation
|
|
|
[signature
pages continue]
|
|
|
RA
TEMPE CORP.,
a
Delaware corporation
RA
SUSHI BALTIMORE CORP.,
a
Delaware corporation
RA
SUSHI CHICAGO CORP.,
a
Delaware corporation
RA
SUSHI CORONA CORP.,
a
Delaware corporation
RA
SUSHI DENVER CORP.,
a
Delaware corporation
RA
SUSHI GLENVIEW CORP.,
a
Delaware corporation
RA
SUSHI HUNTINGTON BEACH CORP.,
a
Delaware corporation
RA
SUSHI HOLDING CORP.,
a
Delaware corporation
RA
SUSHI LAS VEGAS CORP.,
a
Nevada corporation
RA
SUSHI LOMBARD CORP.,
a
Delaware corporation
RA
SUSHI MESA CORP.,
a
Delaware corporation
RA
SUSHI PALM BEACH GARDENS CORP.,
a
Delaware corporation
RA
SUSHI SAN DIEGO CORP.,
a
Delaware corporation
RA
SUSHI SOUTH MIAMI CORP.,
a
Delaware corporation
RA
SUSHI TORRANCE CORP.,
a
Delaware corporation
RA
SUSHI TUCSON CORP.,
a
Delaware corporation
RA
SUSHI TUSTIN CORP.,
a
Delaware corporation
RA
SUSHI WESTWOOD CORP.,
a
Delaware corporation
RUDY’S
RESTAURANT GROUP, INC.,
a
Nevada corporation
TEPPAN
RESTAURANTS LTD.,
an
Oregon corporation
THE
SAMURAI, INC.,
a
New York corporation
|
| By: | /s/ Xxxx X. Xxxxxxxx | |
|
|
||
|
Name: Xxxx
X. Xxxxxxxx
|
||
| Title: President of each of the foregoing Guarantors | ||
[signature
pages continue]
|
BENIHANA
LAS COLINAS CORP.,
a
Texas corporation
BENIHANA
OF TEXAS, INC.,
a
Texas corporation
BENIHANA
WOODLANDS CORP.,
a
Texas corporation
XX
XXXXXXX CORP.,
a
Texas corporation
RA
SUSHI CITY CENTER CORP.,
a
Texas corporation
RA
SUSHI PLANO CORP.,
a
Texas corporation
|
Accepted
and agreed to as of the date first above written.
|
WACHOVIA
BANK, NATIONAL ASSOCIATION,
as
Administrative Agent
|
||
| |
|
|
| By: | ||
|
|
||
|
Name:
|
||
| Title: | ||
