EXHIBIT 10.3
EXECUTION COPY
FIRST LIEN PLEDGE AND SECURITY AGREEMENT
DATED AS OF JUNE 24, 2005
BETWEEN
EACH OF COVANTA ENERGY CORPORATION
AND THE OTHER GRANTORS PARTY HERETO
AND
XXXXXXX XXXXX CREDIT PARTNERS L.P.,
AS COLLATERAL AGENT
TABLE OF CONTENTS
PAGE
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SECTION 1. DEFINITIONS; GRANT OF SECURITY..................................................... 1
1.1 GENERAL DEFINITIONS................................................................ 1
1.2 DEFINITIONS; INTERPRETATION........................................................ 7
SECTION 2. GRANT OF SECURITY.................................................................. 7
2.1 GRANT OF SECURITY.................................................................. 8
2.2 CERTAIN LIMITED EXCLUSIONS......................................................... 8
SECTION 3. SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE................................... 9
3.1 SECURITY FOR OBLIGATIONS........................................................... 9
3.2 CONTINUING LIABILITY UNDER COLLATERAL.............................................. 9
SECTION 4. REPRESENTATIONS AND WARRANTIES AND COVENANTS....................................... 9
4.1 Generally.......................................................................... 9
4.2 EQUIPMENT AND INVENTORY............................................................ 12
4.3 RECEIVABLES........................................................................ 13
4.4 INVESTMENT RELATED PROPERTY........................................................ 14
4.5 INTENTIONALLY LEFT BLANK........................................................... 19
4.6 LETTER OF CREDIT RIGHTS............................................................ 19
4.7 INTELLECTUAL PROPERTY. ............................................................ 20
4.8 COMMERCIAL TORT CLAIMS............................................................. 23
SECTION 5. FURTHER ASSURANCES; ADDITIONAL GRANTORS............................................ 23
5.1 FURTHER ASSURANCES................................................................. 23
5.2 ADDITIONAL GRANTORS................................................................ 24
SECTION 6. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT........................................ 24
6.1 POWER OF ATTORNEY.................................................................. 24
6.2 NO DUTY ON THE PART OF COLLATERAL AGENT OR SECURED PARTIES......................... 25
SECTION 7. REMEDIES........................................................................... 26
7.1 GENERALLY.......................................................................... 26
7.2 APPLICATION OF PROCEEDS............................................................ 28
7.3 SALES ON CREDIT.................................................................... 28
7.4 DEPOSIT ACCOUNTS................................................................... 28
7.5 INVESTMENT RELATED PROPERTY........................................................ 28
7.6 INTELLECTUAL PROPERTY.............................................................. 28
7.7 CASH PROCEEDS...................................................................... 29
SECTION 8. COLLATERAL AGENT................................................................... 30
SECTION 9. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS.................................... 30
SECTION 10. STANDARD OF CARE; COLLATERAL AGENT MAY PERFORM.................................... 31
SECTION 11. MISCELLANEOUS..................................................................... 31
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SCHEDULE 2.2 - DESCRIPTION OF EXCLUDED ACCOUNTS AND INVESTMENT RELATED PROPERTY
SCHEDULE 4.1 -- GENERAL INFORMATION
SCHEDULE 4.1.A.1 -- CERTAIN CORPORATE NAME CHANGES
SCHEDULE 4.2 -- LOCATION OF EQUIPMENT AND INVENTORY
SCHEDULE 4.4 -- INVESTMENT RELATED PROPERTY
SCHEDULE 4.6 -- DESCRIPTION OF LETTERS OF CREDIT
SCHEDULE 4.7 -- INTELLECTUAL PROPERTY - EXCEPTIONS
SCHEDULE 4.8 -- COMMERCIAL TORT CLAIMS
EXHIBIT A -- PLEDGE SUPPLEMENT
EXHIBIT B -- UNCERTIFICATED SECURITIES CONTROL AGREEMENT
EXHIBIT C -- SECURITIES ACCOUNT CONTROL AGREEMENT
EXHIBIT D -- DEPOSIT ACCOUNT CONTROL AGREEMENT
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This FIRST LIEN PLEDGE AND SECURITY AGREEMENT, dated as of June 24,
2005 (this "AGREEMENT"), between EACH OF THE UNDERSIGNED, whether as an original
signatory hereto or as an Additional Grantor (as herein defined) (each, a
"GRANTOR"), and XXXXXXX XXXXX CREDIT PARTNERS L.P., as collateral agent for the
Secured Parties (as herein defined) (in such capacity as collateral agent, the
"COLLATERAL AGENT").
RECITALS:
WHEREAS, reference is made to that certain Credit and Guaranty Agreement,
dated as of the date hereof (as it may be amended, restated, supplemented or
otherwise modified from time to time, the "CREDIT AGREEMENT"), by and among
COVANTA ENERGY CORPORATION, a Delaware corporation ("COMPANY"), XXXXXXXXX
HOLDING CORPORATION, a Delaware corporation ("HOLDINGS"), CERTAIN SUBSIDIARIES
OF COMPANY, as guarantors, the Lenders party thereto from time to time (the
"LENDERS"), XXXXXXX XXXXX CREDIT PARTNERS L.P. ("GSCP") and CREDIT SUISSE,
CAYMAN ISLANDS BRANCH ("CREDIT SUISSE"), as Joint Lead Arrangers, Joint Book
Runners and Co-Syndication Agents, GSCP, as Administrative Agent, JPMORGAN CHASE
BANK ("JPMC"), UBS SECURITIES LLC ("UBSS") and CALYON NEW YORK BRANCH, as
Co-Documentation Agents, JPMC and UBS AG, STAMFORD BRANCH ("UBS") as Issuing
Banks and the COLLATERAL AGENT;
WHEREAS, subject to the terms and conditions of the Credit Agreement,
certain Grantors may enter into one or more Hedge Agreements with one or more
Lender Counterparties;
WHEREAS, in consideration of the extensions of credit and other
accommodations of Lenders and Lender Counterparties as set forth in the Credit
Agreement and the Hedge Agreements, respectively, each Grantor has agreed to
secure such Grantor's obligations under the Credit Documents and the Hedge
Agreements as set forth herein;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, each Grantor and the Collateral Agent
agree as follows:
SECTION 1. DEFINITIONS; GRANT OF SECURITY.
1.1 GENERAL DEFINITIONS. In this Agreement, the following terms shall have
the following meanings:
"ACCOUNT DEBTOR" shall mean each Person who is obligated on a
Receivable or any Supporting Obligation related thereto.
"ACCOUNTS" shall mean all "accounts" as defined in Article 9 of the
UCC.
"ADDITIONAL GRANTORS" shall have the meaning assigned in Section
5.3.
"AGREEMENT" shall have the meaning set forth in the preamble.
"CASH PROCEEDS" shall have the meaning assigned in Section 7.7.
"CHATTEL PAPER" shall mean all "chattel paper" as defined in Article
9 of the UCC, including, without limitation, "electronic chattel paper" or
"tangible chattel paper", as each term is defined in Article 9 of the UCC.
"COLLATERAL" shall have the meaning assigned in Section 2.1.
"COLLATERAL ACCOUNT" shall mean any account established by the
Collateral Agent.
"COLLATERAL AGENT" shall have the meaning set forth in the preamble.
"COLLATERAL RECORDS" shall mean books, records, ledger cards, files,
correspondence, customer lists, blueprints, technical specifications, manuals,
computer software, computer printouts, tapes, disks and related data processing
software and similar items that at any time evidence or contain information
relating to any of the Collateral or are otherwise necessary or helpful in the
collection thereof or realization thereupon.
"COLLATERAL SUPPORT" shall mean all property (real or personal)
assigned, hypothecated or otherwise securing any Collateral and shall include
any security agreement or other agreement granting a lien or security interest
in such real or personal property.
"COMMERCIAL TORT CLAIMS" shall mean all "commercial tort claims" as
defined in Article 9 of the UCC.
"COMMODITIES ACCOUNTS" (i) shall mean all "commodity accounts" as
defined in Article 9 of the UCC and (ii) shall include, without limitation, all
of the accounts listed on Schedule 4.4 under the heading "Commodities Accounts"
(as such schedule may be amended or supplemented from time to time).
"COMPANY" shall have the meaning set forth in the recitals.
"CONTROLLED FOREIGN CORPORATION" shall mean any corporation,
partnership, limited liability company or other business entity which is
organized under the laws of a jurisdiction other than a state of the United
States or the District of Columbia.
"COPYRIGHT LICENSES" shall mean "any and all agreements providing
for the granting of any right in or to Copyrights (whether such Grantor is
licensee or licensor thereunder) including, without limitation, each agreement
referred to in Schedule 4.7(B) (as such schedule may be amended or supplemented
from time to time).
"COPYRIGHTS" shall mean all United States, and foreign copyrights
(including Community designs), including but not limited to copyrights in
software and databases, and all Mask Works (as defined under 17 U.S.C. 901 of
the U.S. Copyright Act), whether registered or unregistered, and, with respect
to any and all of the foregoing: (i) all registrations and applications therefor
including, without limitation, the registrations and applications referred to in
Schedule 4.7(A) (as such schedule may be amended or supplemented from time to
time), (ii) all extensions and renewals thereof, (iii) all rights corresponding
thereto throughout the world, (iv) all rights to xxx for past, present and
future infringements thereof, and (v) all Proceeds of the foregoing, and, if not
otherwise included in the definition of "Proceeds" herein, licenses, royalties,
income, payments, claims, damages and proceeds of suit.
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"CREDIT AGREEMENT" shall have the meaning set forth in the recitals.
"DEPOSIT ACCOUNTS" shall mean all "deposit accounts" as defined in
Article 9 of the UCC including, without limitation, all of the accounts listed
on Schedule 4.4 under the heading "Deposit Accounts" (as such schedule may be
amended or supplemented from time to time).
"DOCUMENTS" shall mean all "documents" as defined in Article 9 of
the UCC.
"EQUIPMENT" shall mean all "equipment" as defined in Article 9 of
the UCC including, without limitation, all machinery, manufacturing equipment,
data processing equipment, computers, office equipment, furnishings, furniture,
appliances, fixtures and tools, all accessions or additions thereto, all parts
thereof, whether or not at any time of determination incorporated or installed
therein or attached thereto, and all replacements therefor, wherever located,
now or hereafter existing, including any fixtures.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and any successor thereto.
"EXCLUDED ACCOUNT" means the collective reference to (i) each
Deposit Account and Securities Account identified on Schedule 2.2 hereof and
(ii) Deposit Accounts and Security Accounts with respect to which perfected
liens need not be maintained pursuant to Section 5.15 of the Credit Agreement.
"GENERAL INTANGIBLES" shall mean all "general intangibles" as
defined in Article 9 of the UCC, including, without limitation, all "payment
intangibles" as defined in Article 9 of the UCC, all interest rate or currency
protection or hedging arrangements, all tax refunds, all licenses, permits,
concessions and authorizations and all Intellectual Property.
"GOODS" shall mean all "goods" as defined in Article 9 of the UCC
including, without limitation, all Inventory and Equipment.
"GRANTORS" shall have the meaning set forth in the preamble.
"INSTRUMENTS" shall mean all "instruments" as defined in Article 9
of the UCC.
"INSURANCE" shall mean (i) all insurance policies covering any or
all of the Collateral (regardless of whether the Collateral Agent is the loss
payee thereof) and (ii) any key man life insurance policies.
"INTELLECTUAL PROPERTY" shall mean, collectively, the Copyrights,
the Copyright Licenses, the Patents, the Patent Licenses, the Trademarks, the
Trademark Licenses, the Trade Secrets, and the Trade Secret Licenses.
"INVENTORY" shall mean all "inventory" as defined in Article 9 of
the UCC including, without limitation, all goods held for sale or lease or to be
furnished under contracts of service or so leased or furnished, all raw
materials, work in process, finished goods, and materials used or consumed in
the manufacture, packing, shipping, advertising, selling, leasing, furnishing or
production of such inventory or otherwise used or consumed in any Grantor's
business; all goods in which any Grantor has an interest in mass or a joint or
other interest or right of any kind;
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and all goods which are returned to or repossessed by any Grantor, all computer
programs embedded in any goods and all accessions thereto and products thereof.
"INVESTMENT ACCOUNTS" shall mean the Securities Accounts,
Commodities Accounts and Deposit Accounts.
"INVESTMENT RELATED PROPERTY" shall mean: (i) all "investment
property" (as such term is defined in Article 9 of the UCC) and (ii) all of the
following (regardless of whether classified as investment property under the
UCC): all Pledged Equity Interests, Pledged Debt, the Investment Accounts and
certificates of deposit.
"LENDER" shall have the meaning set forth in the recitals.
"LETTER OF CREDIT RIGHT" shall mean "letter-of-credit right" as
defined in Article 9 of the UCC.
"MONEY" shall mean "money" as defined in the UCC.
"NON-ASSIGNABLE CONTRACT" shall mean any agreement, contract or
license to which any Grantor is a party for which the assignment or granting of
a security interest therein by such Grantor is restricted or purported to be
restricted (either by its terms or by any federal or state statutory prohibition
or otherwise irrespective of whether such prohibition or restriction is
enforceable under Section 9-406 through 409 of the UCC).
"PATENT LICENSES" shall mean all agreements providing for the
granting of any right in or to Patents (whether such Grantor is licensee or
licensor thereunder) including, without limitation, each agreement referred to
in Schedule 4.7(D) (as such schedule may be amended or supplemented from time to
time).
"PATENTS" shall mean all United States and foreign patents and
certificates of invention, or similar industrial property rights, and
applications for any of the foregoing, including, but not limited to: (i) each
patent and patent application referred to in Schedule 4.7(C) hereto (as such
schedule may be amended or supplemented from time to time), (ii) all reissues,
divisions, continuations, continuations-in-part, extensions, renewals, and
reexaminations thereof, (iii) all rights corresponding thereto throughout the
world, (iv) all inventions and improvements described therein, (v) all rights to
xxx for past, present and future infringements thereof, (vi) all licenses,
claims, damages, and proceeds of suit arising therefrom, and (vii) all Proceeds
of the foregoing, and, if not otherwise included in the definition of "Proceeds"
herein, licenses, royalties, income, payments, claims, damages, and proceeds of
suit.
"PLEDGE SUPPLEMENT" shall mean any supplement to this agreement in
substantially the form of Exhibit A.
"PLEDGED DEBT" shall mean, with respect to any Grantor, all
indebtedness owed to such Grantor, including, without limitation, all
indebtedness described on Schedule 4.4(A) under the heading "Pledged Debt" (as
such schedule may be amended or supplemented from time to time), issued by the
obligors named therein, the instruments evidencing such indebtedness, and all
interest, cash, instruments and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of such indebtedness.
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"PLEDGED EQUITY INTERESTS" shall mean all Pledged Stock, Pledged LLC
Interests, Pledged Partnership Interests and Pledged Trust Interests.
"PLEDGED LLC INTERESTS" shall mean, with respect to any Grantor, all
interests in any limited liability company directly owned by such Grantor
including, without limitation, all limited liability company interests listed on
Schedule 4.4(A) under the heading "Pledged LLC Interests" (as such schedule may
be amended or supplemented from time to time) and the certificates, if any,
representing such limited liability company interests and any interest of such
Grantor on the books and records of such limited liability company and all
dividends, distributions, cash, warrants, rights, options, instruments,
securities and other property or proceeds from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all of such
limited liability company interests.
"PLEDGED PARTNERSHIP INTERESTS" shall mean, with respect to any
Guarantor, all interests in any general partnership, limited partnership,
limited liability partnership or other partnership directly owned by such
Grantor including, without limitation, all partnership interests listed on
Schedule 4.4(A) under the heading "Pledged Partnership Interests" (as such
schedule may be amended or supplemented from time to time) and the certificates,
if any, representing such partnership interests and any interest of such Grantor
on the books and records of such partnership and all dividends, distributions,
cash, warrants, rights, options, instruments, securities and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such partnership interests.
"PLEDGED STOCK" shall mean, with respect to any Grantor, all shares
of capital stock directly owned by such Grantor, including, without limitation,
all shares of capital stock described on Schedule 4.4(A) under the heading
"Pledged Stock" (as such schedule may be amended or supplemented from time to
time), and the certificates, if any, representing such shares and any interest
of such Grantor in the entries on the books of the issuer of such shares, and
all dividends, distributions, cash, warrants, rights, options, instruments,
securities and other property or proceeds from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all of such
shares.
"PLEDGED TRUST INTERESTS" shall mean, with respect to any Grantor,
all interests in a Delaware business trust or other trust directly owned by such
Grantor including, without limitation, all trust interests listed on Schedule
4.4(A) under the heading "Pledged Trust Interests" (as such schedule may be
amended or supplemented from time to time) and the certificates, if any,
representing such trust interests and any interest of such Grantor on the books
and records of such trust and all dividends, distributions, cash, warrants,
rights, options, instruments, securities and other property or proceeds from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such trust interests.
"PROCEEDS" shall mean: (i) all "proceeds" as defined in Article 9 of
the UCC, (ii) payments or distributions made with respect to any Investment
Related Property and (iii) whatever is receivable or received when Collateral or
proceeds are sold, exchanged, collected or otherwise disposed of, whether such
disposition is voluntary or involuntary.
"RECEIVABLES" shall mean all rights to payment, whether or not
earned by performance, for goods or other property sold, leased, licensed,
assigned or otherwise disposed of, or services rendered or to be rendered,
including, without limitation all such rights constituting or evidenced by any
Account, Chattel Paper, Instrument, General Intangible or Investment Related
Property, together with all of Grantor's rights, if any, in any goods or other
property
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giving rise to such right to payment and all Collateral Support and Supporting
Obligations related thereto.
"RECEIVABLES RECORDS" shall mean (i) all original copies of all
documents, instruments or other writings or electronic records or other Records
evidencing the Receivables, (ii) all books, correspondence, credit or other
files, Records, ledger sheets or cards, invoices, and other papers relating to
Receivables, including, without limitation, all tapes, cards, computer tapes,
computer discs, computer runs, record keeping systems and other papers and
documents relating to the Receivables, whether in the possession or under the
control of Grantor or any computer bureau or agent from time to time acting for
Grantor or otherwise, (iii) all evidences of the filing of financing statements
and the registration of other instruments in connection therewith, and
amendments, supplements or other modifications thereto, notices to other
creditors or secured parties, and certificates, acknowledgments, or other
writings, including, without limitation, lien search reports, from filing or
other registration officers, (iv) all credit information, reports and memoranda
relating thereto and (v) all other written or nonwritten forms of information
related in any way to the foregoing or any Receivable.
"RECORD" shall have the meaning specified in Article 9 of the UCC.
"SECURED OBLIGATIONS" shall have the meaning assigned in Section
3.1.
"SECURED PARTIES" shall mean the Agents, Lenders and the Lender
Counterparties and shall include, without limitation, all former Agents, Lenders
and Lender Counterparties to the extent that any Obligations owing to such
Persons were incurred while such Persons were Agents, Lenders or Lender
Counterparties and such Obligations have not been paid or satisfied in full.
"SECURITIES" shall mean any stock, shares, partnership interests,
voting trust certificates, certificates of interest or participation in any
profit-sharing agreement or arrangement, options, warrants, bonds, debentures,
notes, or other evidences of indebtedness, secured or unsecured, convertible,
subordinated or otherwise, or in general any instruments commonly known as
"securities" or any certificates of interest, shares or participations in
temporary or interim certificates for the purchase or acquisition of, or any
right to subscribe to, purchase or acquire, any of the foregoing.
"SECURITIES ACCOUNTS" shall mean all "securities accounts" as
defined in Article 8 of the UCC including, without limitation, all of the
accounts listed on Schedule 4.4(A) under the heading "Securities Accounts" (as
such schedule may be amended or supplemented from time to time).
"SUPPORTING OBLIGATION" shall mean all "supporting obligations" as
defined in Article 9 of the UCC.
"TAX CODE" shall mean the United States Internal Revenue Code of
1986, as amended from time to time.
"TRADEMARK LICENSES" shall mean any and all agreements providing for
the granting of any right in or to Trademarks (whether such Grantor is licensee
or licensor thereunder) including, without limitation, each agreement referred
to in Schedule 4.7(F) (as such schedule may be amended or supplemented from time
to time).
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"TRADEMARKS" shall mean all United States, and foreign trademarks,
trade names, corporate names, company names, business names, fictitious business
names, Internet domain names, service marks, certification marks, collective
marks, logos, other source or business identifiers, designs and general
intangibles of a like nature, all registrations and applications for any of the
foregoing including, but not limited to: (i) the registrations and applications
referred to in Schedule 4.7(E) (as such schedule may be amended or supplemented
from time to time), (ii) all extensions or renewals of any of the foregoing,
(iii) the goodwill of the business connected with the use of and symbolized by
the foregoing, (iv) the right to xxx for past, present and future infringement
or dilution of any of the foregoing or for any injury to goodwill, and (v) all
Proceeds of the foregoing, and, if not otherwise included in the definition of
"Proceeds" herein, licenses, royalties, income, payments, claims, damages, and
proceeds of suit.
"TRADE SECRET LICENSES" shall mean any and all agreements providing
for the granting of any right in or to Trade Secrets (whether such Grantor is
licensee or licensor thereunder) including, without limitation, each agreement
referred to in Schedule 4.7(G) (as such schedule may be amended or supplemented
from time to time).
"TRADE SECRETS" shall mean all trade secrets and all other
confidential or proprietary information and know-how whether or not such Trade
Secret has been reduced to a writing or other tangible form, including but not
limited to: (i) the right to xxx for past, present and future misappropriation
or other violation of any Trade Secret, and (ii) all Proceeds of the foregoing,
and, if not otherwise included in the definition of "Proceeds" herein, licenses,
royalties, income, payments, claims, damages, and proceeds of suit.
"UCC" shall mean the Uniform Commercial Code as in effect from time
to time in the State of New York or, when the context relates to perfection or
priority of a security interest,, the Uniform Commercial Code as in effect from
time to time in any other applicable jurisdiction.
"UNITED STATES" shall mean the United States of America.
1.2 DEFINITIONS; INTERPRETATION. All capitalized terms used herein
(including the preamble and recitals hereto) and not otherwise defined herein
shall have the meanings ascribed thereto in the Credit Agreement or, if not
defined therein, in the UCC. References to "Sections," "Exhibits" and
"Schedules" shall be to Sections, Exhibits and Schedules, as the case may be, of
this Agreement unless otherwise specifically provided. Section headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect. Any of the terms defined herein may, unless the context
otherwise requires, be used in the singular or the plural, depending on the
reference. The use herein of the word "include" or "including", when following
any general statement, term or matter, shall not be construed to limit such
statement, term or matter to the specific items or matters set forth immediately
following such word or to similar items or matters, whether or not nonlimiting
language (such as "without limitation" or "but not limited to" or words of
similar import) is used with reference thereto, but rather shall be deemed to
refer to all other items or matters that fall within the broadest possible scope
of such general statement, term or matter. If any conflict or inconsistency
exists between this Agreement and the Credit Agreement, the Credit Agreement
shall govern. All references herein to provisions of the UCC shall include all
successor provisions under any subsequent version or amendment to any Article of
the UCC.
SECTION 2. GRANT OF SECURITY.
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2.1 GRANT OF SECURITY. Each Grantor hereby grants to the Collateral Agent
a security interest in and continuing lien on all of such Grantor's right, title
and interest in, to and under the following property of such Grantor, in each
case whether now owned or existing or hereafter acquired or arising and wherever
located (all of which being hereinafter collectively referred to as the
"COLLATERAL"):
(a) Accounts;
(b) Chattel Paper;
(c) Documents;
(d) General Intangibles;
(e) Goods;
(f) Instruments;
(g) Insurance;
(h) Intellectual Property;
(i) Investment Related Property;
(j) Letter of Credit Rights;
(k) Money;
(l) Commercial Tort Claims described on Schedule 4.8 hereto;
(m) to the extent not otherwise included above, all Collateral
Records, Collateral Support and Supporting Obligations relating to any of the
foregoing; and
(n) to the extent not otherwise included above, all Proceeds,
products, accessions, rents and profits of or in respect of any of the
foregoing.
2.2 CERTAIN LIMITED EXCLUSIONS. Notwithstanding anything herein to the
contrary, in no event shall the Collateral include or the security interest
granted under Section 2.1 hereof attach to (a) any lease, license, contract,
property rights or agreement and any assets subject to any thereof, to which any
Grantor is a party or any of its rights or interests thereunder if and for so
long as the grant of such security interest shall constitute or result in (i)
the abandonment, invalidation or unenforceability of any right, title or
interest of any Grantor therein or (ii) in a breach or termination pursuant to
the terms of, or a default under, any such lease, license, contract property
rights or agreement (other than to the extent that any such term would be
rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the
UCC (or any successor provision or provisions) of any relevant jurisdiction or
any other applicable law (including the Bankruptcy Code) or principles of
equity), provided however that the Collateral shall include and such security
interest shall attach immediately at such time as the condition causing such
abandonment, invalidation or unenforceability shall be remedied and to the
extent severable, shall attach immediately to any portion of such lease,
license, contract, property rights or agreement that does not result in any of
the consequences specified in (i) or (ii) above; or (b) any of the
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outstanding Capital Stock of a Controlled Foreign Corporation in excess of 65%
of the voting power of all classes of Capital Stock of such Controlled Foreign
Corporation entitled to vote; provided that immediately upon the amendment of
the Tax Code to allow the pledge of a greater percentage of the voting power of
capital stock in a Controlled Foreign Corporation without adverse tax
consequences, the Collateral shall include, and the security interest granted by
each Grantor shall attach to, such greater percentage of capital stock of each
Controlled Foreign Corporation; (c) any application to register Trademarks in
the U.S. Patent and Trademark Office (the "PTO") based upon Grantor's "intent to
use" such Trademark (but only if the grant of security interest to such
intent-to-use Trademark violates of 15 U.S.C. Section 1060(a)) unless and until
a "Statement of Use" or "Amendment to Allege Use" is filed in the PTO with
respect thereto, at which point the Collateral shall include, and the security
interest granted hereunder shall attache to, such application, or (d) the
deposit and security accounts identified on Schedule 2.2(A) hereof, or (e) the
Investment Related Property identified on Schedule 2.2(B).
SECTION 3. SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE.
3.1 SECURITY FOR OBLIGATIONS. This Agreement secures, and the Collateral
is collateral security for, the prompt and complete payment or performance in
full when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including the payment of amounts that would
become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, 11 U.S.C. Section 362(a) (and any successor provision
thereof)), of all Obligations of every Grantor (the "SECURED OBLIGATIONS").
3.2 CONTINUING LIABILITY UNDER COLLATERAL. Notwithstanding anything herein
to the contrary, (i) each Grantor shall remain liable for all obligations under
the Collateral the same as if this Agreement had not been executed and nothing
contained herein is intended or shall be a delegation of duties to the
Collateral Agent or any Secured Party, (ii) each Grantor shall remain liable
under each of the agreements included in the Collateral the same as if this
Agreement had not been executed, including, without limitation, any agreements
relating to Pledged Partnership Interests or Pledged LLC Interests, to perform
all of the obligations undertaken by it thereunder all in accordance with and
pursuant to the terms and provisions thereof and neither the Collateral Agent
nor any Secured Party shall have any obligation or liability under any of such
agreements by reason of or arising out of this Agreement or any other document
related thereto nor shall the Collateral Agent nor any Secured Party have any
obligation to make any inquiry as to the nature or sufficiency of any payment
received by it or have any obligation to take any action to collect or enforce
any rights under any agreement included in the Collateral, including, without
limitation, any agreements relating to Pledged Partnership Interests or Pledged
LLC Interests, and (iii) the exercise by the Collateral Agent of any of its
rights hereunder shall not release any Grantor from any of its duties or
obligations under the contracts and agreements included in the Collateral.
SECTION 4. REPRESENTATIONS AND WARRANTIES AND COVENANTS.
4.1 Generally.
(a) Representations and Warranties. Each Grantor hereby represents
and warrants with respect to itself that:
(i) it owns the Collateral purported to be owned by it or otherwise
has the rights it purports to have in each item of Collateral and, as to all
Collateral whether now existing or hereafter acquired, will continue to own or
have such rights in each item of the Collateral, subject to its rights to
dispose of or abandon such rights to the extent permitted hereunder or under the
Credit Agreement, in each case free and clear of any and all Liens of all
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other Persons, including, without limitation, liens arising as a result of such
Grantor becoming bound (as a result of merger or otherwise) as debtor under a
security agreement entered into by another Person other than Permitted Liens;
(ii) it has indicated on Schedule 4.1(A) as of the Closing Date: (w)
the type of organization of such Grantor, (x) the jurisdiction of organization
of such Grantor, (y) its organizational identification number and (z) the
jurisdiction where the chief executive office or its sole place of business is
(or the principal residence if such Grantor is a natural person), and for the
one-year period preceding the Closing Date has been, located.
(iii) as of the Closing Date, the full legal name of such Grantor is
as set forth on Schedule 4.1(A) and it has not had any other legal names in the
last five (5) years, since the Closing Date except for those names set forth on
Schedule 4.1(B);
(iv) except as provided on Schedule 4.1(C), as of the Closing Date
it has not changed its name, jurisdiction of organization, chief executive
office or sole place of business (or principal residence if such Grantor is a
natural person) or its corporate structure in any way (e.g., by merger,
consolidation, change in corporate form or otherwise) within the past five (5)
years;
(v) as of the Closing Date it has not within the last five (5) years
become bound (whether as a result of merger or otherwise) as debtor under a
security agreement entered into by another Person, which has not heretofore been
terminated other than the agreements identified on Schedule 4.1(D) hereof;
(vi) with respect to each agreement identified on Schedule 4.1(D),
it has indicated on Schedule 4.1 (A) and Schedule 4.1(B) the information as of
the Closing Date required pursuant to Section 4.1(a)(ii), (iii) and (iv) with
respect to the debtor under each such agreement;
(vii) (u) to the extent required under this Agreement, upon the
filing of all UCC financing statements naming each Grantor as "debtor" and the
Collateral Agent as "secured party" and describing the Collateral in the filing
offices set forth opposite such Grantor's name on Schedule 4.1(E) hereof and
other filings delivered by each Grantor, (v) upon execution of a control
agreement establishing the Collateral Agent's "control" (within the meaning of
Section 8-106, 9-106 or 9-104 of the UCC, as applicable) with respect to any
Investment Account (other than Excluded Accounts), (w) upon consent of the
issuer with respect to Letter of Credit Rights, and (x) to the extent not
subject to Article 9 of the UCC and to the extent that a perfected first
priority security interest may be obtained by the recordation of the security
interest in the applicable intellectual property registries, upon recordation of
the security interests granted hereunder in Patents, Trademarks and Copyrights
in the applicable intellectual property registries, including but not limited to
the United States Patent and Trademark Office and the United States Copyright
Office, the security interests granted to the Collateral Agent hereunder
constitute valid and perfected first priority Liens (subject in the case of
priority only to Permitted Liens and to the rights of the United States
government (including any agency or department thereof) with respect to United
States government Receivables) on all of the Collateral to the extent that a
security interest may be perfected by the filing of a UCC financing statement,
the execution of a control agreement or by the recordation of the security
interest in the United States Patent and Trademark Office or the United States
Copyright Office;
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(viii) all actions and consents (other than actions and consents
required by the UCC or any other applicable law), including all filings,
notices, registrations and recordings necessary for the exercise by the
Collateral Agent of the voting or other rights provided for in this Agreement or
the exercise of remedies in respect of the Collateral have been made or obtained
or otherwise set forth on Schedule 4.1(F), provided that the filing of
assignments in the applicable intellectual property registries may be necessary
to the exercise of certain remedies in respect of Intellectual Property and the
exercise of remedies in respect of Non-Assignable Contracts (other than those
provided under 9-406, 9-407 and 9-408 of the UCC, to the extent that they apply)
may require the consent of the other party thereto;
(ix) other than the financing statements filed in favor of the
Collateral Agent, no effective UCC financing statement, fixture filing or other
instrument similar in effect under any applicable law which is effective to
perfect a security interest under the UCC as in effect on the Closing Date in
all or any part of the Collateral on file in any filing or recording office on
the Closing Date or has been authorized by such Grantor for filing at any time
thereafter except for (x) financing statements or other instruments similar in
effect for which proper termination statements or releases have been delivered
to the Collateral Agent for filing and (y) financing statements or other
instruments similar in effect or filed in connection with Permitted Liens;
(x) no authorization, approval or other action by, and no notice to
or filing with, any Governmental Authority or regulatory body is required for
either (i) the pledge or grant by any Grantor of the security interest purported
to be created in favor of the Collateral Agent hereunder or (ii) the exercise by
Collateral Agent of any rights or remedies in respect of any Collateral (whether
specifically granted or created hereunder or created or provided for by
applicable law), except (A) for the filings contemplated by clause (vii) and
(vii) above and (B) as may be required, in connection with the disposition of
any Investment Related Property, by laws generally affecting the offering and
sale of Securities;
(xi) all information supplied by any Grantor with respect to any of
the Collateral (in each case taken as a whole with respect to any particular
Collateral) is accurate and complete in all material respects as of the date
supplied by such Grantor;
(xii) none of the Collateral constitutes, or is the Proceeds of,
"farm products" (as defined in the UCC);
(xiii) it does not own any "as extracted collateral" (as defined in
the UCC) or any timber to be cut; and
(xiv) as of the Closing Date, such Grantor has been duly organized
as an entity of the type as set forth opposite such Grantor's name on Schedule
4.1(A) solely under the laws of the jurisdiction as set forth opposite such
Grantor's name on Schedule 4.1(A) and remains duly existing as such. Such
Grantor has not filed any certificates of domestication, transfer or continuance
in any other jurisdiction as of the Closing Date.
(b) Covenants and Agreements. Each Grantor hereby covenants and
agrees with respect to itself that:
(i) except for the security interest created by this Agreement, it
shall not create or suffer to exist any Lien upon or with respect to any of the
Collateral, except Permitted Liens, and such Grantor shall defend the Collateral
against all Persons at any time claiming any interest therein adverse to the
Collateral Agent;
(ii) it shall not produce, use or permit any Collateral to be used
unlawfully or in violation of any provision of this Agreement or any applicable
statute, regulation or ordinance or any policy of insurance covering the
Collateral if such violation or
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noncompliance could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect;
(iii) except as listed on Schedule 4.1.A.1, it shall not change such
Grantor's name, identity, corporate structure (e.g., by merger, consolidation,
change in corporate form or otherwise), type of organization or jurisdiction of
organization unless it shall have (a) notified the Collateral Agent in writing,
by executing and delivering to the Collateral Agent a completed Pledge
Supplement, substantially in the form of Exhibit A attached hereto, together
with all Supplements to applicable Schedules showing such change thereto, at
least thirty (30) days prior to any such change or establishment, identifying
such new proposed name, identity, corporate structure, jurisdiction of
organization and providing such other information in connection therewith as the
Collateral Agent may reasonably request and (b) taken all actions necessary or
reasonably requested by the Collateral Agent to maintain the continuous
validity, perfection and at least the same priority of the Collateral Agent's
security interest in the Collateral intended to be granted and agreed to hereby;
(iv) except as otherwise permitted under the Credit Agreement it
shall not file any certificates of domestication, transfer or continuance in any
jurisdiction other than the jurisdiction set forth opposite such Grantor's name
on Schedule 4.1(A);
(v) it shall not take or permit any action which could materially
impair the Collateral Agent's rights in the Collateral subject to Grantors'
rights to dispose of or abandon rights in the Collateral as to the extent
permitted hereunder or under the Credit Agreement or the right to grant
Permitted Liens; and
(vi) it shall not sell, transfer, exclusively license or assign (by
operation of law or otherwise) any Collateral except as otherwise permitted in
accordance with the Credit Agreement.
4.2 EQUIPMENT AND INVENTORY.
(a) Representations and Warranties. Each Grantor represents and
warrants with respect to itself that:
(i) all of its Equipment and Inventory included in the Collateral
other than Equipment our for repair or Equipment and Inventory in transit is
kept on the Closing Date and during the past 18 months has been kept only at one
of the locations specified in Schedule 4.2; and
(ii) any Goods now or hereafter produced by such Grantor included in
the Collateral have been and will be produced in material compliance with the
requirements of the Fair Labor Standards Act, as amended.
(b) Covenants and Agreements. Each Grantor covenants and agrees with
respect to itself that:
(i) it shall keep the Equipment, Inventory and any Documents
evidencing any of its Equipment and Inventory other than Equipment our for
repair or Equipment and Inventory in transit in one of the locations specified
on Schedule 4.2 (as such schedule may be amended or supplemented from time to
time) unless it shall have (a) notified the Collateral Agent in writing, no
later than forty-five (45) days after any change in locations, identifying such
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new locations and providing such other information in connection therewith as
the Collateral Agent may reasonably request;
(ii) it shall keep (or cause to be kept) records of its Inventory
which are accurate in all material respects, as is customarily maintained under
similar circumstances by Persons of established reputation engaged in similar
business, and in any event in conformity with GAAP; and
(iii) it shall not deliver any Document evidencing any of its
Equipment and Inventory to any Person other than the issuer of such Document to
claim the Goods evidenced therefor or the Collateral Agent.
4.3 RECEIVABLES.
(a) Representations and Warranties. Each Grantor represents and
warrants that none of the Account Debtors in respect of any of its Receivables
in excess of $250,000 individually or $1,000,000 in the aggregate is the
government of the United States or any agency or instrumentality thereof.
(b) Covenants and Agreements: Each Grantor hereby covenants and
agrees with respect to itself that:
(i) it shall keep and maintain at its own cost and expense records
of its Receivables consistent with its past practice;
(ii) at the request of the Collateral Agent after the occurrence and
during the continuation of an Event of Default, it shall xxxx conspicuously, in
form and manner reasonably satisfactory to the Collateral Agent, all of its
Chattel Paper and Instruments (other than any delivered to the Collateral Agent
as provided herein and Instruments deposited in a Deposit Account for collection
in the ordinary course of business), as well as its Receivables Records with an
appropriate reference to the fact that the Collateral Agent has a security
interest therein;
(iii) it shall perform in all material respects all of its
obligations with respect to the Receivables in accordance with its normal
business practice;
(iv) other than in the ordinary course of business as generally
conducted by it on and prior to the date hereof, and except as otherwise
provided in subsection (v) below, following the occurrence and during the
continuation of an Event of Default, such Grantor shall not (w) grant any
extension or renewal of the time of payment of any of its Receivables, (x)
compromise or settle any dispute, claim or legal proceeding with respect to any
of its Receivables for less than the total unpaid balance thereof, (y) release,
wholly or partially, any Person liable for the payment thereof, or (z) allow any
credit or discount thereon;
(v) except as otherwise provided in this subsection, each Grantor
shall continue to collect in accordance with its past business practice, all
amounts due or to become due to such Grantor under its Receivables and any
Supporting Obligation and diligently exercise in accordance with its past
business practice each material right it may have under any of its Receivable,
or any Supporting Obligation or Collateral Support therefor, in each case, at
its own expense, and in connection with such collections and exercise, such
Grantor shall take such action as such Grantor may deem necessary or advisable.
Notwithstanding the foregoing, the Collateral
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Agent shall have the right at any time following the occurrence and during the
continuation of an Event of Default to notify, or require any Grantor to notify,
any Account Debtor of the Collateral Agent's security interest in the
Receivables and any Supporting Obligation and, in addition, at any time
following the occurrence and during the continuation of an Event of Default, the
Collateral Agent may: (1) direct the Account Debtors under any Receivables to
make payment of all amounts due or to become due to such Grantor thereunder
directly to the Collateral Agent; (2) notify, or require any Grantor to notify,
each Person maintaining a lockbox or similar arrangement to which Account
Debtors under any Receivables have been directed to make payment to remit all
amounts representing collections on checks and other payment items from time to
time sent to or deposited in such lockbox or other arrangement directly to the
Collateral Agent; and (3) enforce, at the expense of such Grantor, collection of
any such Receivables and to adjust, settle or compromise the amount or payment
thereof, in the same manner and to the same extent as such Grantor might have
done. If the Collateral Agent notifies any Grantor that it has elected to
collect the Receivables in accordance with the preceding sentence, any payments
of Receivables received by such Grantor shall be forthwith (and in any event
within two (2) Business Days) deposited by such Grantor in the exact form
received, duly indorsed by such Grantor to the Collateral Agent if required, in
a Deposit Account designated by the Collateral Agent, and until so turned over,
all amounts and proceeds (including checks and other instruments) received by
such Grantor in respect of the Receivables, any Supporting Obligation or
Collateral Support shall be received in trust for the benefit of the Collateral
Agent hereunder and shall be segregated from other funds of such Grantor and
such Grantor shall not adjust, settle or compromise the amount or payment of any
Receivable, or release wholly or partly any Account Debtor or obligor thereof,
or allow any credit or discount thereon; and
(vi) subject to any underlying contractual requirements or
provisions, it shall use its commercially reasonable efforts to keep in full
force and effect any Supporting Obligation or Collateral Support relating to any
of its Receivables.
(c) Delivery and Control of Receivables. With respect to any of its
Receivables in excess of $250,000 individually or $1,000,000 in the aggregate
that is evidenced by, or constitutes, Chattel Paper or Instruments, each Grantor
shall cause each originally executed copy thereof to be delivered to the
Collateral Agent (or its agent or designee) appropriately indorsed to the
Collateral Agent or indorsed in blank: (i) with respect to any such Receivables
in existence on the date hereof, on or prior to the date hereof and (ii) with
respect to any such Receivables hereafter arising, within ten (10) days of such
Grantor acquiring rights therein. With respect to any of its Receivables in
excess of $250,000 individually or $1,000,000 in the aggregate which would
constitute "electronic chattel paper" under Article 9 of the UCC, each Grantor
shall take all steps necessary to give the Collateral Agent control over such
Receivables (within the meaning of Section 9-105 of the UCC): (i) with respect
to any such Receivables in existence on the date hereof, on or prior to the date
hereof and (ii) with respect to any such Receivables hereafter arising, within
ten (10) days of such Grantor acquiring rights therein. Any Chattel Paper or
Instruments evidencing or constituting a Receivable of a Grantor not otherwise
required to be delivered or subjected to the control of the Collateral Agent in
accordance with this subsection (c) shall be delivered or subjected to such
control upon request of the Collateral Agent.
4.4 INVESTMENT RELATED PROPERTY.
4.4.1 INVESTMENT RELATED PROPERTY GENERALLY
(a) Covenants and Agreements. Each Grantor hereby covenants and
agrees with respect to itself that:
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(i) in the event it acquires rights in any Investment Related
Property in excess of $250,000 individually or $1,000,000 in the aggregate after
the date hereof, it shall deliver to the Collateral Agent a completed Pledge
Supplement, substantially in the form of Exhibit A attached hereto, together
with Supplements to Schedules thereto, reflecting such new Investment Related
Property. Notwithstanding the foregoing, it is understood and agreed that the
security interest of the Collateral Agent shall attach to all Investment Related
Property immediately upon any Grantor's acquisition of rights therein and shall
not be affected by the failure of any Grantor to deliver a supplement to
Schedule 4.4 as required hereby;
(ii) except as provided in the next sentence, in the event such
Grantor receives any dividends, interest or distributions on any Investment
Related Property, or any securities or other property upon the merger,
consolidation, liquidation or dissolution of any issuer of any Investment
Related Property, then (a) such dividends, interest or distributions and
securities or other property shall be included in the definition of Collateral
without further action and (b) such Grantor shall immediately take all steps, if
any, necessary or advisable to ensure the validity, perfection, priority and, if
applicable, control of the Collateral Agent over such Investment Related
Property (including, without limitation, delivery thereof to the Collateral
Agent if required by this Agreement) and pending any such action such Grantor
shall be deemed to hold such dividends, interest, distributions, securities or
other property in trust for the benefit of the Collateral Agent and shall
segregate such dividends, distributions, Securities or other property from all
other property of such Grantor. Notwithstanding the foregoing, so long as no
Event of Default shall have occurred and be continuing, the Collateral Agent
authorizes each Grantor to retain all ordinary cash dividends and distributions
paid in the normal course of the business of the issuer and consistent with the
past practice of the issuer and all scheduled payments of interest;
(iii) each Grantor consents to the grant by each other Grantor of a
Security Interest in all Investment Related Property to the Collateral Agent.
(b) Delivery and Control.
(i) Each Grantor agrees that with respect to any Investment Related
Property in which it currently has rights it shall comply with the provisions of
this Section 4.4.1(b) on or before the Credit Date and with respect to any
Investment Related Property hereafter acquired by such Grantor it shall comply
with the provisions of this Section 4.4.1(b) within fifteen (15) days of
acquiring rights therein, in each case in form and substance reasonably
satisfactory to the Collateral Agent. With respect to any Investment Related
Property that is represented by a certificate or that is an "instrument" (other
than any Investment Related Property credited to a Securities Account,
Investment Related Property not yet required to be delivered pursuant to Section
5.18 of the Credit Agreement, and instruments in a principal amount in excess of
$250,000 individually or $1,000,000 in the aggregate) it shall cause such
certificate or instrument to be delivered to the Collateral Agent, indorsed in
blank by an "effective indorsement" (as defined in Section 8-107 of the UCC),
regardless of whether such certificate constitutes a "certificated security" for
purposes of the UCC. With respect to any Investment Related Property issued by a
subsidiary that is an "uncertificated security" for purposes of the UCC (other
than any "uncertificated securities" credited to a Securities Account), it shall
cause the issuer of such uncertificated security to execute an agreement
substantially in the form of Exhibit B hereto, pursuant to which such issuer
agrees to comply with the Collateral Agent's instructions with respect to such
uncertificated security without further consent by such Grantor. Each Grantor
agrees that it shall not own or hold any interest in any Investment Related
Property issued by a mutual fund or any other open ended investment fund that is
an "uncertificated security" for purposes of the UCC in excess of $2,000,000 in
the aggregate unless it shall have caused the
15
issuer of such uncertificated security to execute an agreement substantially in
the form of Exhibit B hereto or such form reasonably satisfactory to the
Collateral Agent, pursuant to which such issuer agrees to comply with the
Collateral Agent's instructions with respect to such uncertificated security
without further consent by such Grantor.
(c) Voting and Distributions.
(i) So long as no Event of Default shall have occurred and be
continuing:
(1) except as otherwise provided under the covenants and agreements
relating to investment related property in this Agreement or
elsewhere herein or in the Credit Agreement, each Grantor shall be
entitled to exercise or refrain from exercising any and all voting
and other consensual rights pertaining to the Investment Related
Property or any part thereof for any purpose not inconsistent with
the terms of this Agreement or the Credit Agreement;
(2) the Collateral Agent shall promptly execute and deliver (or cause to
be executed and delivered) to each Grantor all proxies, and other
instruments as such Grantor may from time to time reasonably request
for the purpose of enabling such Grantor to exercise the voting and
other consensual rights when and to the extent which it is entitled
to exercise pursuant to clause (1) above; and
(3) upon the occurrence and during the continuation of an Event of
Default and upon written notice from the Collateral Agent to such
Grantor of the Collateral Agent's intention to exercise such rights:
(A) all rights of each Grantor to exercise the voting and other
consensual rights which it would otherwise be entitled to
exercise pursuant hereto shall cease and all such rights shall
thereupon become vested in the Collateral Agent who shall
thereupon have the sole right to exercise such voting and
other consensual rights; and
(B) in order to permit the Collateral Agent to exercise the voting
and other consensual rights which it may be entitled to
exercise pursuant hereto and to receive all dividends and
other distributions which it may be entitled to receive
hereunder: (1) each Grantor shall promptly execute and deliver
(or cause to be executed and delivered) to the Collateral
Agent all proxies, dividend payment orders and other
instruments as the Collateral Agent may from time to time
reasonably request and (2) each Grantor acknowledges that the
Collateral Agent may utilize the power of attorney set forth
in Section 6.1.
4.4.2 PLEDGED EQUITY INTERESTS
(a) Representations and Warranties. Each Grantor hereby represents
and warrants with respect to itself, that:
(i) as of the Closing Date, Schedule 4.4(A) sets forth under the
headings "Pledged Stock, "Pledged LLC Interests," "Pledged Partnership
Interests" and "Pledged Trust Interests," respectively, all of the Pledged
Stock, Pledged LLC Interests, Pledged Partnership
16
Interests and Pledged Trust Interests owned by such Grantor and such Pledged
Equity Interests constitute the percentage of issued and outstanding shares of
stock, percentage of membership interests, percentage of partnership interests
or percentage of beneficial interest of the respective issuers thereof indicated
on such Schedule;
(ii) it is the record and beneficial owner of such Pledged Equity
Interests free of all Liens of other Persons other than Permitted Liens and
there are no outstanding warrants, options or other rights to purchase, or
shareholder, voting trust or similar agreements outstanding with respect to, or
property that is convertible into, or that requires the issuance or sale of, any
such Pledged Equity Interests;
(iii) no consent of any Person including any other general or
limited partner, any other member of a limited liability company, any other
shareholder or any other trust beneficiary is necessary or desirable in
connection with the creation, perfection or first priority status of the
security interest of the Collateral Agent in any such Pledged Equity Interests
or the exercise by the Collateral Agent of the voting or other rights provided
for in this Agreement or the exercise of remedies in respect thereof;
(iv) none of such Pledged LLC Interests nor Pledged Partnership
Interests are or represent interests in issuers that: (a) are registered as
investment companies or (b) are dealt in or traded on securities exchanges or
markets; and
(v) except as otherwise set forth on Schedule 4.4(B), all of the
Pledged LLC Interests and Pledged Partnership Interests are or represent
interests in issuers that have opted to be treated as securities under the
uniform commercial code of any jurisdiction.
(b) Covenants and Agreements. Each Grantor hereby covenants and
agrees that:
(i) unless otherwise permitted under the Credit Agreement, without
the prior written consent of the Collateral Agent, it shall not vote to enable
or take any other action to: cause any issuer of any Pledged Partnership
Interests or Pledged LLC Interests owned by such Grantor which are not
securities (for purposes of the UCC) on the date hereof to elect or otherwise
take any action to cause such Pledged Partnership Interests or Pledged LLC
Interests to be treated as securities for purposes of the UCC unless prior to
taking such actions, such Grantor shall promptly notify the Collateral Agent in
writing of any such election or action and, in such event, shall take all steps
necessary to establish the Collateral Agent's "control" thereof;
(ii) without the prior written consent of the Collateral Agent, it
shall not permit any issuer of any Pledged Equity Interest which is a Subsidiary
of such Grantor to merge or consolidate unless (i) if such issuer is required to
be a Grantor under this Agreement, such issuer creates a security interest that
is perfected by a filed financing statement (that is not effective solely under
section 9-508 of the UCC) in collateral in which such new debtor has or acquires
rights, and (ii) all the outstanding capital stock or other equity interests of
the surviving or resulting corporation, limited liability company, partnership
or other entity which is a Subsidiary of such Grantor and which is owned by such
Grantor is, upon such merger or consolidation, pledged hereunder; provided that
if the surviving or resulting Grantors upon any such merger or consolidation
involving an issuer which is a Controlled Foreign Corporation, then such Grantor
shall only be required to pledge equity interests in accordance with Section
2.2; and
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(iii) each Grantor consents to the grant by each other Grantor of a
security interest in all Investment Related Property to the Collateral Agent
and, without limiting the foregoing, consents to the transfer of any Pledged
Partnership Interest and any Pledged LLC Interest to the Collateral Agent or its
nominee following the occurrence and during the continuation of an Event of
Default and to the substitution of the Collateral Agent or its nominee as a
partner in any partnership or as a member in any limited liability company with
all the rights and powers related thereto.
4.4.3 PLEDGED DEBT
(a) Representations and Warranties. Each Grantor hereby represents
and warrants with respect to itself that Schedule 4.4 sets forth as of the
Closing Date under the heading "Pledged Debt" all of the Pledged Debt owned by
such Grantor in excess of $250,000 individually or $1,000,000 in the aggregate
owned by any Grantor and to the knowledge of such Grantor, all of such Pledged
Debt has been duly authorized, authenticated or issued, and delivered and is the
legal, valid and binding obligation of the issuers thereof and is not in
default;
4.4.4 INVESTMENT ACCOUNTS
(a) Representations and Warranties. Each Grantor hereby represents
and warrants with respect to itself that:
(i) Schedule 4.4 hereto sets forth as of the Closing Date under the
headings "Securities Accounts" and "Commodities Accounts," respectively, all of
the Securities Accounts and Commodities Accounts in which each Grantor has an
interest. Each Grantor is the sole entitlement holder of each such Securities
Account and Commodity Account owned by it, and such Grantor has not consented
to, and is not otherwise aware of, any Person (other than the Collateral Agent
pursuant hereto and the Parity Lien Collateral Agent pursuant to the Parity Lien
Documents) having "control" (within the meanings of Sections 8-106 and 9-106 of
the UCC) over, or any other interest in, any such Securities Account or
Commodity Account or securities or other property credited thereto, other than
any Liens in favor of financial institutions or securities intermediaries where
such Securities Accounts or Commodity Accounts are maintained (in each case,
only in its capacity as a "securities intermediary" or a "commodity
intermediary" (within the meaning of Article 8 or 9 of the UCC, respectively));
(ii) Schedule 4.4 hereto sets forth as of the Closing Date under the
headings "Deposit Accounts" all of the Deposit Accounts in which each Grantor
has an interest. Each Grantor is the sole account holder of each such Deposit
Account and such Grantor has not consented to, and is not otherwise aware of,
any Person (other than the Collateral Agent pursuant hereto and the Parity Lien
Collateral Agent pursuant to the Parity Lien Documents and with respect to
payroll, trust and similar accounts, the employees of such Grantor and any other
beneficiaries thereto ) having "control" (within the meanings of Section 9-104
of the UCC) over, or any other interest in, any such Deposit Account or any
money or other property deposited therein other than any Liens in favor of
financial institutions in each case, only in its capacity as a "bank" (within
the meaning of Article 9 of the UCC)); and
(b) Covenant and Agreement. Each Grantor hereby covenants and agrees
with the Collateral Agent with respect to itself that it shall not establish any
Investment Account (other than an Excluded Account) unless a control agreement
has been entered into by the appropriate Grantor, Collateral Agent and
securities intermediary or depository institution at
18
which such successor or replacement account is to be maintained in accordance
with the provisions of Section 4.4.4(c).
(c) Delivery and Control
(i) To the extent required under the Credit Agreement, each
Grantor agrees that it shall not own any interest in any Investment Related
Property consisting of Securities Accounts (other than Securities Accounts
constituting Excluded Accounts), unless it shall have caused the securities
intermediary maintaining such Securities Account to enter into an agreement
substantially in the form of Exhibit C hereto or such form reasonably
satisfactory to the Collateral Agent pursuant to which it shall agree to comply
with the Collateral Agent's "entitlement orders" without further consent by such
Grantor. To the extent required under the Credit Agreement, each Grantor agrees
that it shall not own any interest in any Investment Related Property that is a
"Deposit Account,"(other than a Deposit Account constituting an Excluded
Account) unless it shall have caused the depositary institution maintaining such
account to enter into an agreement substantially in the form of Exhibit D hereto
or such form reasonably satisfactory to the Collateral Agent, pursuant to which
the Collateral Agent shall have "control" (within the meaning of Section 9-104
of the UCC) over such Deposit Account. To the extent required under the Credit
Agreement, each Grantor shall have entered into such control agreement or
agreements with respect to: (i) any Securities Accounts, Securities Entitlements
or Deposit Accounts owned by it that exist on the Credit Date, as of or prior to
the Credit Date and (ii) any Securities Accounts, Securities Entitlements or
Deposit Accounts owned by it that are created or acquired after the Credit Date,
as of or prior to the deposit or transfer of any such Securities Entitlements or
funds, whether constituting moneys or investments, into such Securities Accounts
or Deposit Accounts.
In addition to the foregoing, if any issuer of any Investment Related
Property is a direct Subsidiary of a Grantor and is located in a
jurisdiction outside of the United States, (other than the issuers listed
on Schedule 4.4(D) such Grantor shall take such additional actions,
including, without limitation, causing the issuer to register the pledge
on its books and records or making such filings or recordings, in each
case as may be reasonably necessary or advisable, under the laws of such
issuer's jurisdiction to insure the validity, perfection and priority of
the security interest of the Collateral Agent. Upon the occurrence and
during the continuation of an Event of Default, the Collateral Agent shall
have the right, without notice to any Grantor, to transfer all or any
portion of the Investment Related Property to its name or the name of its
nominee or agent. In addition, the Collateral Agent shall have the right
at any time following the occurrence and during the continuation of an
Event of Default, without notice to any Grantor, to exchange any
certificates or instruments representing any Investment Related Property
for certificates or instruments of smaller or larger denominations.
4.5 INTENTIONALLY LEFT BLANK.
4.6 LETTER OF CREDIT RIGHTS.
(a) Representations and Warranties. Each Grantor hereby represents
and warrants as to itself that:
(i) all material letters of credit to which such Grantor has rights
is listed on Schedule 4.6 hereto; and
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(ii) it has used reasonable efforts to obtain the consent of each
issuer of any letter of credit in excess of $1,000,000 in the aggregate to the
assignment of the proceeds of the letter of credit to the Collateral Agent.
(b) Covenants and Agreements. Each Grantor hereby covenants and
agrees with respect to itself that with respect to any letter of credit in
excess of $1,000,000 in the aggregate hereafter arising with respect to which it
is the beneficiary it shall use reasonable efforts to obtain the consent of the
issuer thereof to the assignment of the proceeds of the letter of credit to the
Collateral Agent and shall deliver to the Collateral Agent a completed Pledge
Supplement, substantially in the form of Exhibit A attached hereto, together
with all Supplements to Schedules thereto.
4.7 INTELLECTUAL PROPERTY.
(a) Representations and Warranties. Except as disclosed in Schedule
4.7(H) (as such schedule may be amended or supplemented from time to time), each
Grantor hereby represents and warrants with respect to itself that:
(i) Schedule 4.7 (as such schedule may be amended or supplemented
from time to time) sets forth a true and complete list of (i) all United States,
state and foreign registrations of and applications for Patents, Trademarks, and
Copyrights owned by each Grantor and (ii) all Patent Licenses, Trademark
Licenses, Trade Secret Licenses and Copyright Licenses material to the business
of such Grantor except for non-exclusive licenses to commercially available
software;
(ii) it is the sole and exclusive owner of the entire right, title,
and interest in and to all Intellectual Property of such Grantor listed on
Schedule 4.7(A), (C) and (E) (as such schedule may be amended or supplemented
from time to time), and owns or has the valid right to use all other
Intellectual Property material to the conduct of its business, free and clear of
all Liens and licenses, except for Permitted Liens and the licenses set forth on
Schedule 4.7(B), (D), (F) and (G) (as each may be amended or supplemented from
time to time);
(iii) all Intellectual Property owned by any Grantor and material to
the conduct of its business is subsisting and has not been adjudged invalid or
unenforceable, in whole or in part, and each Grantor has performed all acts and
has paid all renewal, maintenance, and other fees and taxes required to maintain
each and every registration and application of Copyrights, Patents and
Trademarks in full force and effect;
(iv) to such Grantor's knowledge, all Intellectual Property material
to the conduct of such Grantor's business is valid and enforceable; no holding,
decision, or judgment has been rendered in any action or proceeding before any
court or administrative authority challenging the validity of, such Grantor's
right to register, or such Grantor's rights to own or use, any Intellectual
Property and no such action or proceeding is pending or, to the best of such
Grantor's knowledge, threatened (except for routine office actions issued in the
course of prosecution);
(v) all registrations and applications for Copyrights, Patents and
Trademarks owned by such Grantor are standing in the name of such Grantor (or
its predecessor-in-interest, as set forth on Schedules 4.7(A), (C) and (E)), and
none of the Trademarks, Patents, Copyrights or Trade Secrets owned by such
Grantor has been licensed by such Grantor to any
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Affiliate or third party, except as disclosed in Schedule 4.7(B), (D), (F), or
(G) (as each may be amended or supplemented from time to time);
(vi) such Grantor uses adequate standards of quality in the
manufacture, distribution, and sale of all products sold and in the provision of
all services rendered under or in connection with all Trademark Collateral
material to the business of such Grantor and has taken all action necessary to
insure that all licensees of the Trademark Collateral owned by such Grantor use
such adequate standards of quality;
(vii) to such Grantor's knowledge, the conduct of such Grantor's
business does not infringe upon or otherwise violate any trademark, patent,
copyright, trade secret or other intellectual property right owned or controlled
by a third party and no claim has been made against such Grantor that the use of
any Intellectual Property owned or used or licensed out by such Grantor violates
the asserted rights of any third party;
(viii) to the best of such Grantor's knowledge, no third party is
infringing upon or otherwise violating in any material respect any rights in any
Intellectual Property owned or used or licensed out by such Grantor;
(ix) with respect to each of its Copyright Licenses, Trademark
Licenses, Trade Secret Licenses and Patent Licenses listed in Schedule 4.7: (a)
such license is in full force and effect and there is no other agreement to
which such Grantor is party that adversely affects such Grantor's rights to use
the licensed intellectual property or to receive payment of any amounts due or
to become due thereunder, as the case may be, in each case, in accordance with
the terms of such license; (b) such license will not cease to be in full force
and effect on terms identical to those currently in effect as a result of the
rights and interests granted herein, nor will the grant of such rights and
interests constitute a breach or default under such license or otherwise give
the licensor or licensee a right to terminate such license; provided that this
Section 4.7(ix)(b) shall not apply to the extent that such license (or portion
thereof) is excluded pursuant to Section 2.2; (c) such Grantor has not received
any notice of termination or cancellation under such license; (d) such Grantor
has not received any notice of a breach or default under such license, which
breach or default has not been cured; (e) other than to its Affiliates, such
Grantor has not granted to any other person any rights, adverse or otherwise,
under such license; and (f) such Grantor is not in breach or default in any
material respect, and no event has occurred that, with notice and/or lapse of
time, would constitute such a breach or default or permit termination,
modification or acceleration under such license;
(x) to such Grantor's knowledge, (i) none of the Trade Secrets owned
by such Grantor that are material to its business have been used, divulged,
disclosed or appropriated to the detriment of such Grantor for the benefit of
any other person; (ii) no employee, independent contractor or agent of such
Grantor has misappropriated any material trade secrets of any other person in
the course of the performance of his or her duties as an employee, independent
contractor or agent of such Grantor; and (iii) no employee, independent
contractor or agent of such Grantor is in default or breach of any term of any
employment agreement, non-disclosure agreement, assignment of inventions
agreement or similar agreement or contract relating in any way to the
protection, ownership, development, use of such Grantor's Intellectual Property;
and
(xi) no settlement or consents, covenants not to xxx, nonassertion
assurances, or releases have been entered into by such Grantor or to which such
Grantor is bound
21
that adversely affect such Grantor's rights to own or use any Intellectual
Property in connection with its business as currently conducted.
(b) Covenants and Agreements. Each Grantor hereby covenants and
agrees with respect to itself as follows:
(i) it shall not do any act or knowingly omit to do any act whereby
any of the Intellectual Property which is material to the business of such
Grantor may lapse, or become abandoned, dedicated to the public, or
unenforceable, or which would adversely affect the validity, grant, or
enforceability of the security interest granted therein;
(ii) it shall not, with respect to any Trademarks which are material
to the business of such Grantor, cease the use of any of such Trademarks or fail
to maintain the level of the quality of products sold and services rendered
under any of such Trademark at a level at least substantially consistent with
the quality of such products and services as of the date hereof, and such
Grantor shall take all steps necessary to insure that licensees of such
Trademarks use such consistent standards of quality;
(iii) it shall promptly notify the Collateral Agent if it knows or
has reason to know that any item of the Intellectual Property that is material
to the business of such Grantor is reasonably likely to become (a) abandoned or
dedicated to the public or placed in the public domain, (b) invalid or
unenforceable (other than as a result of the expiration of its non-renewable
term), or (c) subject to any adverse determination or development (including the
institution of proceedings) in any action or proceeding in the United States
Patent and Trademark Office, the United States Copyright Office, any state
registry, any foreign counterpart of the foregoing, or any court (other than
office actions in the course of prosecution that do not materially affect such
Grantor's right to use such Intellectual Property);
(iv) it shall take all reasonable steps in the United States Patent
and Trademark Office, the United States Copyright Office, any state registry or
any foreign counterpart of the foregoing, to pursue any application and maintain
any registration of each Trademark, Patent, and Copyright owned by such Grantor
and material to its business which is now or shall become included in the
Intellectual Property including, but not limited to, those items on Schedule
4.7(A), (C) and (E) (as each may be amended or supplemented from time to time)
to the extent that such items remain material to such Grantor's business;
(v) in the event that any Intellectual Property owned by or
exclusively licensed to such Grantor and that is material to the business of
such Grantor is infringed, misappropriated, or diluted by a third party, such
Grantor shall promptly take all commercially reasonable actions to limit or
prevent such infringement, misappropriation, or dilution and protect its rights
in such Intellectual Property in accordance with the type of Intellectual
Property at issue and the practices in the industry, including, but not limited
to and if commercially reasonable, (a) negotiating and granting a license to
such third party for valuable consideration or (b) threatening or initiating a
lawsuit or other action to stop such infringement, misappropriation or dilution
and/or to compel the third to pay damages and royalties with respect thereto;
(vi) it shall promptly (but in no event more than once per calendar
quarter) report to the Collateral Agent the occurrence of any of the following
which occurred since the last report to the Collateral Agent: (i) the filing of
any application to register any Patent, Trademark or Copyright with the United
States Patent and Trademark Office, the United States Copyright Office, or any
foreign counterpart of the foregoing (whether such application is filed by such
22
Grantor or through any agent, employee, licensee, or designee thereof) and (ii)
the registration of any Intellectual Property by any such office, in each case
by executing and delivering to the Collateral Agent a completed Pledge
Supplement, substantially in the form of Exhibit A attached hereto, together
with all Supplements to Schedules thereto;
(vii) it shall take all steps reasonably necessary to protect the
secrecy of all Trade Secrets that are material to the business of such Grantor,
including, without limitation, entering into confidentiality agreements with
employees and contractors and limiting access to secret information and
documents; and
(viii) it shall use proper statutory notice in connection with its
use of any of the Intellectual Property.
4.8 COMMERCIAL TORT CLAIMS
(a) Representations and Warranties. Each Grantor hereby represents
and warrants with respect to itself that Schedule 4.8 sets forth all Commercial
Tort Claims of such Grantor that such Grantor intends to pursue; and
(b) Covenants and Agreements. Each Grantor hereby covenants and
agrees that with respect to any Commercial Tort Claim of such Grantor hereafter
arising that it intends to pursue it shall deliver to the Collateral Agent a
completed Pledge Supplement, substantially in the form of Exhibit A attached
hereto, together with all Supplements to Schedules thereto, identifying such new
Commercial Tort Claims.
SECTION 5. FURTHER ASSURANCES; ADDITIONAL GRANTORS.
5.1 FURTHER ASSURANCES.
(a) Each Grantor agrees that from time to time, at the expense of
such Grantor, that it shall promptly execute and deliver all further instruments
and documents, and take all further action, that may be necessary or that the
Collateral Agent may reasonably request, in order to create and/or maintain the
validity, perfection or priority of and protect any security interest granted
hereby or to enable the Collateral Agent to exercise and enforce its rights and
remedies hereunder with respect to any Collateral. Without limiting the
generality of the foregoing, each Grantor shall:
(i) file such financing or continuation statements, or amendments
thereto, and execute and deliver such other agreements, instruments,
endorsements, powers of attorney or notices, as may be necessary or as the
Collateral Agent may reasonably request, in order to perfect and preserve the
security interests granted hereby;
(ii) take all actions necessary to ensure the recordation of
appropriate evidence of the liens and security interest granted hereunder in the
Intellectual Property with any intellectual property registry in which said
Intellectual Property is registered or in which an application for registration
is pending including, without limitation, the United States Patent and Trademark
Office, the United States Copyright Office, the various Secretaries of State,
and the foreign counterparts on any of the foregoing;
(iii) at any reasonable time following the occurrence and during the
continuation of an Event of Default, upon request by the Collateral Agent,
assemble the Collateral
23
and allow inspection of the Collateral by the Collateral Agent, or persons
designated by the Collateral Agent; and
(iv) at the Collateral Agent's reasonable request, appear in and
defend any action or proceeding that may affect such Grantor's title to or the
Collateral Agent's security interest in all or any part of the Collateral.
(b) Each Grantor hereby authorizes the Collateral Agent to file a
Record or Records, including, without limitation, financing or continuation
statements, and amendments thereto, in any jurisdictions and with any filing
offices as the Collateral Agent may determine, in its sole discretion, are
necessary or advisable to perfect the security interest granted to the
Collateral Agent herein. Such financing statements may describe the Collateral
in the same manner as described herein or may contain an indication or
description of collateral that describes such property in any other manner as
the Collateral Agent may determine, in its sole discretion, is necessary,
advisable or prudent to ensure the perfection of the security interest in the
Collateral granted to the Collateral Agent herein, including, without
limitation, describing such property as "all assets" or "all personal property,
whether now owned or hereafter acquired." Each Grantor shall furnish to the
Collateral Agent from time to time statements and schedules further identifying
and describing the Collateral and such other reports in connection with the
Collateral as the Collateral Agent may reasonably request, all in reasonable
detail.
5.2 ADDITIONAL GRANTORS. From time to time subsequent to the date hereof,
additional Persons may become parties hereto as additional Grantors (each, an
"Additional Grantor"), by executing a COUNTERPART AGREEMENT. Upon delivery of
any such counterpart agreement to the Collateral Agent, notice of which is
hereby waived by Grantors, each Additional Grantor shall be a Grantor and shall
be as fully a party hereto as if Additional Grantor were an original signatory
hereto. Each Grantor expressly agrees that its obligations arising hereunder
shall not be affected or diminished by the addition or release of any other
Grantor hereunder, nor by any election of Collateral Agent not to cause any
Subsidiary of Company to become an Additional Grantor hereunder. This Agreement
shall be fully effective as to any Grantor that is or becomes a party hereto
regardless of whether any other Person becomes or fails to become or ceases to
be a Grantor hereunder.
SECTION 6. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT.
6.1 POWER OF ATTORNEY. Each Grantor hereby irrevocably appoints the
Collateral Agent (such appointment being coupled with an interest) as such
Grantor's attorney-in-fact, with full authority in the place and stead of such
Grantor and in the name of such Grantor, the Collateral Agent or otherwise, from
time to time in the Collateral Agent's discretion to take any action and to
execute any instrument that the Collateral Agent may deem reasonably necessary
or advisable to accomplish the purposes of this Agreement, including, without
limitation, the following:
(a) upon the occurrence and during the continuance of any Event of
Default, to obtain and adjust insurance required to be maintained by such
Grantor or paid to the Collateral Agent pursuant to the Credit Agreement;
(b) upon the occurrence and during the continuance of any Event of
Default, to ask for, 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 of the Collateral;
24
(c) upon the occurrence and during the continuance of any Event of
Default, to receive, endorse and collect any drafts or other instruments,
documents and chattel paper in connection with clause (b) above;
(d) upon the occurrence and during the continuance of any Event of
Default, to file any claims or take any action or institute any proceedings that
the Collateral Agent may deem necessary or desirable for the collection of any
of the Collateral or otherwise to enforce the rights of the Collateral Agent
with respect to any of the Collateral;
(e) to prepare and file any UCC financing statements against such
Grantor as debtor;
(f) to prepare, sign, and file for recordation in any intellectual
property registry, appropriate evidence of the lien and security interest
granted herein in the Intellectual Property in the name of such Grantor as
debtor;
(g) to take or cause to be taken all actions necessary to perform or
comply or cause performance or compliance with the terms of this Agreement,
including, without limitation, access to pay or discharge taxes or Liens (other
than Permitted Liens) levied or placed upon or threatened against the
Collateral, the legality or validity thereof and the amounts necessary to
discharge the same to be determined by the Collateral Agent in its sole
discretion, any such payments made by the Collateral Agent to become obligations
of such Grantor to the Collateral Agent, due and payable immediately without
demand; and
(h) generally to sell, transfer, pledge, make any agreement with
respect to or otherwise deal with any of the Collateral as fully and completely
as though the Collateral Agent were the absolute owner thereof for all purposes,
and to do, at the Collateral Agent's option and such Grantor's expense, at any
time or from time to time, all acts and things that the Collateral Agent deems
reasonably necessary to protect, preserve or realize upon the Collateral and the
Collateral Agent's security interest therein in order to effect the intent of
this Agreement, all as fully and effectively as such Grantor might do.
Anything in this Section 6.1 to the contrary notwithstanding, the
Collateral Agent agrees that, except as provided in Section 6.1(e) and (f) and
subject to the next sentence, it will not exercise any rights under the power of
attorney provided for in this Section 6.1 unless and until and Event of Default
shall have occurred and be continuing. If any Grantor fails to perform or comply
with any of its agreements contained herein, the Collateral Agent, at its
option, but without any obligation so to do, may perform or comply, or otherwise
cause performance or compliance, with such agreement; provided, however, that
unless an Event of Default has occurred and is continuing or time is of the
essence, the Collateral Agent shall not exercise this power without first making
demand on the Grantor and the Grantor has failed to comply immediately
therewith.
6.2 NO DUTY ON THE PART OF COLLATERAL AGENT OR SECURED PARTIES. The powers
conferred on the Collateral Agent hereunder are solely to protect the interests
of the Collateral Agent in the Collateral and shall not impose any duty upon the
Collateral Agent or any Secured Party to exercise any such powers. The
Collateral Agent and the Secured Parties shall be accountable only for amounts
that they actually receive as a result of the exercise of such powers, and
neither they nor any of their officers, directors, employees or agents shall be
responsible to any Grantor for any act or failure to act hereunder, except for
their own gross negligence or willful misconduct.
25
SECTION 7. REMEDIES.
7.1 GENERALLY.
(a) If any Event of Default shall have occurred and be continuing,
the Collateral Agent may exercise in respect of the Collateral, in addition to
all other rights and remedies provided for herein or otherwise available to it
at law or in equity, all the rights and remedies of the Collateral Agent on
default under the UCC (whether or not the UCC applies to the affected
Collateral) to collect, enforce or satisfy any Secured Obligations then owing,
whether by acceleration or otherwise, and also may pursue any of the following
separately, successively or simultaneously:
(i) require any Grantor to, and each Grantor hereby agrees that it
shall at its expense and promptly upon request of the Collateral Agent
forthwith, assemble all or part of the Collateral as directed by the Collateral
Agent and make it available to the Collateral Agent at a place to be designated
by the Collateral Agent that is reasonably convenient to both parties;
(ii) enter onto the property where any Collateral is located and
take possession thereof with or without judicial process;
(iii) prior to the disposition of the Collateral, store, process,
repair or recondition the Collateral or otherwise prepare the Collateral for
disposition in any manner to the extent the Collateral Agent deems appropriate;
and
(iv) without notice except as specified below or under the UCC,
sell, assign, lease, license (on an exclusive or nonexclusive basis) or
otherwise dispose of the Collateral or any part thereof in one or more parcels
at public or private sale, at any of the Collateral Agent's offices or
elsewhere, for cash, on credit or for future delivery, at such time or times and
at such price or prices and upon such other terms as the Collateral Agent may
deem commercially reasonable.
(b) The Collateral Agent or any Secured Party may be the purchaser
of any or all of the Collateral at any public or private (to the extent that the
portion of the Collateral being privately sold is of a kind that is customarily
sold on a recognized market or the subject of widely distributed standard price
quotations) sale in accordance with the UCC and the Collateral Agent, as
collateral agent for and representative of the Secured Parties, shall be
entitled, for the purpose of bidding and making settlement or payment of the
purchase price for all or any portion of the Collateral sold at any such sale
made in accordance with the UCC, to use and apply any of the Secured Obligations
as a credit on account of the purchase price for any Collateral payable by the
Collateral Agent at such sale. Each purchaser at any such sale shall hold the
property sold absolutely free from any claim or right on the part of any
Grantor, and each Grantor hereby waives (to the extent permitted by applicable
law) all rights of redemption, stay and/or appraisal which it now has or may at
any time in the future have under any rule of law or statute now existing or
hereafter enacted. Each Grantor agrees that, to the extent notice of sale shall
be required by law, at least ten (10) days notice to such Grantor of the time
and place of any public sale or the time after which any private sale is to be
made shall constitute reasonable notification. The Collateral Agent shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. The Collateral Agent may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so
adjourned. Each Grantor hereby waives any claims against the Collateral Agent
arising by reason of the fact that the price at which any
26
Collateral may have been sold at such a private sale was less than the price
which might have been obtained at a public sale, even if the Collateral Agent
accepts the first offer received and does not offer such Collateral to more than
one offeree. If the proceeds of any sale or other disposition of the Collateral
are insufficient to pay all the Secured Obligations, Grantors shall be liable
for the deficiency and the fees of any attorneys employed by the Collateral
Agent to collect such deficiency. Nothing in this Section shall in any way alter
the rights of the Collateral Agent hereunder.
(c) The Collateral Agent may sell the Collateral without giving any
warranties as to the Collateral. The Collateral Agent may specifically disclaim
or modify any warranties of title or the like. This procedure will not be
considered to adversely affect the commercial reasonableness of any sale of the
Collateral.
(d) The Collateral Agent shall have no obligation to marshal any of
the Collateral.
7.2 APPLICATION OF PROCEEDS. Except as expressly provided elsewhere in
this Agreement, all proceeds received by the Collateral Agent in respect of any
sale, any collection from, or other realization upon all or any part of the
Collateral shall be applied in full or in part by the Collateral Agent in
accordance with the Intercreditor Agreement and the Credit Agreement.
7.3 SALES ON CREDIT. If Collateral Agent sells any of the Collateral upon
credit, Grantor will be credited only with payments actually made by purchaser
and received by Collateral Agent and applied to indebtedness of the purchaser.
In the event the purchaser fails to pay for the Collateral, Collateral Agent may
resell the Collateral and Grantor shall be credited with proceeds of the sale.
7.4 DEPOSIT ACCOUNTS.
If any Event of Default shall have occurred and be continuing, the
Collateral Agent may, upon prior written notice to the Company, apply the
balance from any Deposit Account or instruct the bank at which any Deposit
Account is maintained to pay the balance of any Deposit Account to or for the
benefit of the Collateral Agent.
Until an Event of Default shall have occurred and be continuing, the
Collateral Agent will not (i) originate any orders, notices, drafts,
withdrawals, requests, directions, entitlement orders or other instructions
directing disposition of funds in, or directing transfer or redemption of the
financial assets relating to, or otherwise relating to, any control agreement or
(ii) send any notice pursuant to any control agreement terminating the rights of
such Grantor to originate any orders, notices, drafts, withdrawals, requests,
directions, entitlement orders or other instructions directing disposition of
funds in, or directing transfer or redemption of the financial assets relating
to, or otherwise relating to, any control agreement. In addition, the Collateral
Agent hereby agrees that it will revoke any such notice described in clause (i)
or (ii) above if no such Event of Default is continuing.
7.5 INVESTMENT RELATED PROPERTY.
Each Grantor recognizes that, by reason of certain prohibitions contained
in the Securities Act and applicable state securities laws, the Collateral Agent
may be compelled, with respect to any sale of all or any part of the Investment
Related Property conducted without prior registration or qualification of such
Investment Related Property under the Securities Act and/or such state
27
securities laws, to limit purchasers to those who will agree, among other
things, to acquire the Investment Related Property for their own account, for
investment and not with a view to the distribution or resale thereof. Each
Grantor acknowledges that any such private sale may be at prices and on terms
less favorable than those obtainable through a public sale without such
restrictions (including a public offering made pursuant to a registration
statement under the Securities Act) and, notwithstanding such circumstances,
each Grantor agrees that the fact that any such sale is conducted as a private
sale shall not, in and of itself, cause such sale to not be deemed to have been
made in a commercially reasonable manner and that the Collateral Agent shall
have no obligation to engage in public sales and no obligation to delay the sale
of any Investment Related Property for the period of time necessary to permit
the issuer thereof to register it for a form of public sale requiring
registration under the Securities Act or under applicable state securities laws,
even if such issuer would, or should, agree to so register it. If the Collateral
Agent determines to exercise its right to sell any or all of the Investment
Related Property, upon written request, each Grantor shall and shall cause each
issuer of any Pledged Stock to be sold hereunder, each partnership and each
limited liability company, in each case, which is a Subsidiary of such Grantor,
from time to time to furnish to the Collateral Agent all such information as the
Collateral Agent may request in order to determine the number and nature of
interest, shares or other instruments included in the Investment Related
Property which may be sold by the Collateral Agent in exempt transactions under
the Securities Act and the rules and regulations of the Securities and Exchange
Commission thereunder, as the same are from time to time in effect.
7.6 INTELLECTUAL PROPERTY.
(a) Anything contained herein to the contrary notwithstanding, upon
the occurrence and during the continuation of an Event of Default:
(i) the Collateral Agent shall have the right (but not the
obligation) to bring suit or otherwise commence any action or proceeding in the
name of any Grantor, the Collateral Agent or otherwise, in the Collateral
Agent's sole discretion, to enforce any Intellectual Property, in which event
such Grantor shall, at the request of the Collateral Agent, do any and all
lawful acts and execute any and all documents required by the Collateral Agent
in aid of such enforcement and such Grantor shall promptly, upon demand,
reimburse and indemnify the Collateral Agent as provided in Section 10 hereof in
connection with the exercise of its rights under this Section;
(ii) in the event of a sale or other disposition of the Intellectual
Property pursuant to Section 7.1, such Granter shall, upon written demand from
the Collateral Agent, assign, convey or otherwise transfer to the Collateral
Agent or the third-party acquirer, as the case may be, all of such Grantor's
right, title and interest in and to the Intellectual Property and shall execute
and deliver to the Collateral Agent or the third-party acquirer, as the case may
be, such documents as are necessary or appropriate to carry out the intent and
purposes of this Agreement;
(iii) within five (5) Business Days after written notice from the
Collateral Agent, each Grantor shall identify to the Collateral Agent, by name,
title and job responsibility, such key personnel in such Grantor's employ on the
date such notice was received that are reasonably essential to permit such
Grantor to continue, directly or indirectly, to produce, advertise and sell the
products and services sold or delivered by such Grantor under or in connection
with material Trademarks, and such Granter shall use commercially reasonable
efforts to maintain such essential personnel in such Grantor's employ and
available to perform their
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then-current functions at such Grantor's expense consistent with the salary and
benefit structure applicable to each as of the date such notice was received by
Grantor; and
(iv) for the avoidance of doubt, the Collateral Agent shall have all
of the rights specified in Sections 4.3 and 7.7 of this Agreement with respect
to amounts due or to become due to such Grantor in respect of the Intellectual
Property in the same manner and to the same extent as such Grantor has with
respect to other Receivables.
(b) If (i) an Event of Default shall have occurred and, by reason of
cure, waiver, modification, amendment or otherwise, no longer be continuing,
(ii) no other Event of Default shall have occurred and be continuing, (iii) an
assignment or other transfer to the Collateral Agent of any rights, title and
interests in and to the Intellectual Property shall have been previously made,
and (iv) the Secured Obligations shall not have become immediately due and
payable, upon the written request of any Grantor, the Collateral Agent shall
promptly execute and deliver to such Grantor, at such Grantor's sole cost and
expense, such assignments or other transfer as may be necessary to reassign to
such Grantor any such rights, title and interests as may have been assigned to
the Collateral Agent as aforesaid, subject to any disposition thereof that may
have been made by the Collateral Agent; provided, after giving effect to such
reassignment, the Collateral Agent's security interest granted pursuant hereto,
as well as all other rights and remedies of the Collateral Agent granted
hereunder, shall continue to be in full force and effect; and provided further,
the rights, title and interests so reassigned shall be free and clear of any
other Liens granted by or on behalf of the Collateral Agent and the Secured
Parties.
(c) Solely for the purpose of enabling the Collateral Agent to
exercise rights and remedies under this Section 7 and at such time as the
Collateral Agent shall be lawfully entitled to exercise such rights and
remedies, each Grantor hereby grants to the Collateral Agent, to the extent it
has the right to do so, an irrevocable, nonexclusive license (exercisable
without payment of royalty or other compensation to such Grantor), subject, in
the case of Trademarks, to sufficient rights to quality control and inspection
in favor of such Grantor to avoid the risk of invalidation of said Trademarks
and subject to exclusive licenses validly granted by Grantor in accordance with
the terms this Agreement and the other Credit Documents prior to the date that
the Collateral Agent exercises its rights under this Section, to use, operate
under, license, or sublicense any Intellectual Property now owned or hereafter
acquired by such Grantor, and wherever the same may be located.
7.7 CASH PROCEEDS. In addition to the rights of the Collateral Agent
specified in Section 4.3 with respect to payments of Receivables, all proceeds
of any Collateral received by any Grantor consisting of cash, checks and other
non-cash items (collectively, "CASH PROCEEDS") shall, if an Event of Default
shall have occurred and is continuing be held by such Grantor in trust for the
Collateral Agent, segregated from other funds of such Grantor, and shall,
forthwith upon receipt by such Grantor, unless otherwise provided pursuant to
Section 4.4(a)(ii), be turned over to the Collateral Agent in the exact form
received by such Grantor (duly indorsed by such Grantor to the Collateral Agent,
if required) and held by the Collateral Agent in the Collateral Account. Any
Cash Proceeds received by the Collateral Agent (whether from a Grantor or
otherwise): (i) if no Event of Default shall have occurred and be continuing,
shall be handled as required by the Credit Agreement and (ii) if an Event of
Default shall have occurred and be continuing, may, in the sole discretion of
the Collateral Agent, (A) be held by the Collateral Agent for the ratable
benefit of the Secured Parties, as collateral security for the Secured
Obligations (whether matured
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or unmatured) and/or (B) then or at any time thereafter may be applied by the
Collateral Agent against the Secured Obligations then due and owing in
accordance with the Intercreditor Agreement and the Credit Agreement.
SECTION 8. COLLATERAL AGENT.
The Collateral Agent has been appointed to act as Collateral Agent
hereunder by Lenders and, by their acceptance of the benefits hereof, the other
Secured Parties. The Collateral Agent shall be obligated, and shall have the
right hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any action (including,
without limitation, the release or substitution of Collateral), solely in
accordance with this Agreement, the Intercreditor Agreement and the Credit
Agreement; provided, the Collateral Agent shall, after payment in full of all
Obligations under the Credit Agreement and the other Credit Documents, exercise,
or refrain from exercising, any remedies provided for herein in accordance with
the instructions of the holders of a majority of the aggregate notional amount
(or, with respect to any Hedge Agreement that has been terminated in accordance
with its terms, the amount then due and payable (exclusive of expenses and
similar payments but including any early termination payments then due) under
such Hedge Agreement) under all Hedge Agreements. In furtherance of the
foregoing provisions of this Section, each Secured Party, by its acceptance of
the benefits hereof, agrees that it shall have no right individually to realize
upon any of the Collateral hereunder, it being understood and agreed by such
Secured Party that all rights and remedies hereunder may be exercised solely by
the Collateral Agent for the benefit of Secured Parties in accordance with the
terms of this Section. Collateral Agent may resign at any time by giving thirty
(30) days' prior written notice thereof to Lenders and the Grantors. Upon any
such notice of resignation, Requisite Lenders shall have the right, upon five
(5) Business Days' notice to the Administrative Agent, to appoint a successor
Collateral Agent. Upon the acceptance of any appointment as Collateral Agent
hereunder by a successor Collateral Agent, that successor Collateral Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Collateral Agent under this Agreement, and the
retiring Collateral Agent under this Agreement shall promptly (i) transfer to
such successor Collateral Agent all sums, Securities and other items of
Collateral held hereunder, together with all records and other documents
necessary or appropriate in connection with the performance of the duties of the
successor Collateral Agent under this Agreement, and (ii) execute and deliver to
such successor Collateral Agent or otherwise authorize the filing of such
amendments to financing statements, and take such other actions, as may be
necessary or appropriate in connection with the assignment to such successor
Collateral Agent of the security interests created hereunder, whereupon such
retiring Collateral Agent shall be discharged from its duties and obligations
under this Agreement. After any retiring Collateral Agent's resignation
hereunder as the Collateral Agent, the provisions of this Agreement shall inure
to its benefit as to any actions taken or omitted to be taken by it under this
Agreement while it was the Collateral Agent hereunder.
SECTION 9. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS.
This Agreement shall create a continuing security interest in the
Collateral and shall remain in full force and effect until the payment in full
of all Secured Obligations, the cancellation or termination of the Commitments
and the cancellation, cash collateralization or expiration of all outstanding
Letters of Credit, be binding upon each Grantor, its successors and assigns, and
inure, together with the rights and remedies of the Collateral Agent hereunder,
to the benefit of the Collateral Agent and its successors, transferees and
assigns. Without limiting the generality of the foregoing, but subject to the
terms of the Credit Agreement, any Lender may
30
assign or otherwise transfer any Loans held by it to any other Person, and such
other Person shall thereupon become vested with all the benefits in respect
thereof granted to Lenders herein or otherwise. Upon the payment in full of all
Secured Obligations, the cancellation or termination of the Commitments and the
cancellation, cash collateralization or expiration of all outstanding Letters of
Credit, the security interest granted hereby shall automatically terminate
hereunder and of record and all rights to the Collateral shall automatically
revert to Grantors. Upon any such termination the Collateral Agent shall, at
Grantors' expense, execute and deliver to Grantors or otherwise authorize the
filing of such documents as Grantors shall reasonably request, including
financing statement amendments to evidence such termination. Upon any
disposition of property permitted by the Credit Agreement, the Liens granted
herein shall be deemed to be automatically released and such property shall
automatically revert to the applicable Grantor with no further action on the
part of any Person. The Collateral Agent shall, at Grantor's expense, execute
and deliver or otherwise authorize the filing of such documents as Grantors
shall reasonably request, in form and substance reasonably satisfactory to the
Collateral Agent, including financing statement amendments to evidence such
release.
SECTION 10. STANDARD OF CARE; COLLATERAL AGENT MAY PERFORM.
The powers conferred on the Collateral Agent hereunder are solely to
protect its interest in the Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the exercise of reasonable care in the
custody of any Collateral in its possession and the accounting for moneys
actually received by it hereunder, the Collateral Agent shall have no duty as to
any Collateral or as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Collateral. The
Collateral Agent shall be deemed to have exercised reasonable care in the
custody and preservation of Collateral in its possession if such Collateral is
accorded treatment substantially equal to that which the Collateral Agent
accords its own property. Neither the Collateral Agent nor any of its directors,
officers, employees or agents shall be liable for failure to demand, collect or
realize upon all or any part of the Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise dispose of any Collateral
upon the request of any Grantor or otherwise. If any Grantor fails to perform
any agreement contained herein, the Collateral Agent may itself perform, or
cause performance of, such agreement, and the expenses of the Collateral Agent
incurred in connection therewith shall be payable by each Grantor under Section
10.2 of the Credit Agreement.
SECTION 11. MISCELLANEOUS.
Any notice required or permitted to be given under this Agreement shall be
given in accordance with Section 10.1 of the Credit Agreement. No failure or
delay on the part of the Collateral Agent in the exercise of any power, right or
privilege hereunder or under any other Credit Document shall impair such power,
right or privilege or be construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other power,
right or privilege. All rights and remedies existing under this Agreement and
the other Credit Documents are cumulative to, and not exclusive of, any rights
or remedies otherwise available. In case any provision in or obligation under
this Agreement shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby. All covenants hereunder shall be
given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or would otherwise be within the limitations of, another covenant
shall not avoid the occurrence of a Default or an Event of Default if such
action is taken or
31
condition exists. This Agreement shall be binding upon and inure to the benefit
of the Collateral Agent and Grantors and their respective successors and
assigns. No Grantor shall, without the prior written consent of the Collateral
Agent given in accordance with the Credit Agreement, assign any right, duty or
obligation hereunder. This Agreement and the other Credit Documents embody the
entire agreement and understanding between Grantors and the Collateral Agent and
supersede all prior agreements and understandings between such parties relating
to the subject matter hereof and thereof. Accordingly, the Credit Documents may
not be contradicted by evidence of prior, contemporaneous or subsequent oral
agreements of the parties. There are no unwritten oral agreements between the
parties. This Agreement may be executed in one or more counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
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IN WITNESS WHEREOF, each Grantor and the Collateral Agent have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
COVANTA ENERGY CORPORATION, A DELAWARE
CORPORATION, AND EACH OF ITS
SUBSIDIARIES LISTED ON ANNEX X HERETO
By: /s/ XXXXXXX XXXXXXX
-------------------------------------
Name: Xxxxxxx Xxxxxxx
Title: President
33
XXXXXXX XXXXX CREDIT PARTNERS
L.P.,
as Collateral Agent
By: /s/
----------------------------------
Authorized Signatory
34
