Exhibit 10.41
PLEDGE AND SECURITY AGREEMENT
NOVEMBER 30, 2006
BETWEEN
EACH OF THE GRANTORS PARTY HERETO
AND
X. XXXX & COMPANY,
AS THE SECURED PARTY
TABLE OF CONTENTS
PAGE
----
SECTION 1 DEFINITIONS....................................................................1
1.1 General Definitions.........................................................1
1.2 Definitions; Interpretation.................................................7
SECTION 2 GRANT OF SECURITY..............................................................7
2.1 Grant of Security...........................................................7
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 Investment Related Property; Investment Related Property Generally.........11
4.3 Pledged Equity Interests...................................................13
4.4 Investment Accounts........................................................15
4.5 Letter of Credit Rights....................................................16
4.6 Commercial Tort Claims.....................................................16
SECTION 5 ACCESS; RIGHT OF INSPECTION AND FURTHER ASSURANCES; ADDITIONAL GRANTORS.......16
5.1 Access; Right of Inspection................................................16
5.2 Further Assurances.........................................................17
5.3 Additional Grantors........................................................18
SECTION 6 SECURED PARTY APPOINTED ATTORNEY-IN-FACT......................................18
6.1 Power of Attorney..........................................................18
6.2 No Duty on the Part of Secured Party or Lender Parties.....................19
SECTION 7 REMEDIES......................................................................19
7.1 Generally..................................................................19
7.2 Application of Proceeds....................................................21
7.3 Sales on Credit............................................................21
7.4 Deposit Accounts...........................................................22
7.5 Investment Related Property................................................22
7.6 Intellectual Property......................................................22
7.7 Cash Proceeds..............................................................24
SECTION 8 AGENT.........................................................................24
SECTION 9 CONTINUING SECURITY INTEREST; TRANSFER OF LOANS...............................25
SECTION 10 STANDARD OF CARE; SECURED PARTY MAY PERFORM..................................26
SECTION 11 MISCELLANEOUS................................................................26
SCHEDULES: 4.1 -- General Information
4.3 -- Investment Related Property
4.5 -- Description of Letters of Credit
4.6 -- Commercial Tort Claims
EXHIBITS: A -- Pledge Supplement
B -- Deposit Account Control Agreement
ii
PLEDGE AND SECURITY AGREEMENT
This PLEDGE AND SECURITY AGREEMENT, dated as of November 30, 2006 (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
X. XXXX & COMPANY, as administrative agent for the Lender Parties (as herein
defined) (in such capacity, the "SECURED PARTY").
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 Pacific Energy Resources Ltd., a Delaware corporation ("COMPANY"),
certain Subsidiaries of Company, the lenders party thereto from time to time
(the "LENDERS"), X. XXXX & COMPANY, as Lead Arranger and Syndication Agent, and
Secured Party;
WHEREAS, subject to the terms and conditions of the Credit Agreement,
certain Grantors may enter into one or more Hedging Contracts 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 Hedging Contracts, respectively, each Grantor has agreed to
secure such Grantor's obligations under the Transaction Documents and the
Hedging Contracts as set forth herein; and
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, each Grantor and the Secured Party
agree as follows:
SECTION 1 DEFINITIONS
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.
"AGREEMENT" shall have the meaning set forth in the preamble.
"ADDITIONAL GRANTORS" shall have the meaning assigned in Section 5.3.
"ASSIGNED AGREEMENTS" shall mean all agreements and contracts to which
such Grantor is a party as of the date hereof, or to which such Grantor becomes
a party after the date hereof, including each Material Contract, as each such
agreement may be amended, supplemented or otherwise modified from time to time.
"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 "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 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, including all commercial tort claims listed on
Schedule 4.6 (as such schedule may be amended or supplemented from time to
time).
"COMMODITIES ACCOUNTS" shall mean all "commodity accounts" as defined
in Article 9 of the UCC.
"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).
"COPYRIGHTS" shall mean all United States and foreign copyrights, all
mask works fixed in semi-conductor chip products (as defined under 17 U.S.C. 901
of the U.S. Copyright Act), whether registered or unregistered, now or hereafter
in force throughout the world, all registrations and applications therefor, all
rights corresponding thereto throughout the world, all extensions and renewals
of any thereof, the right to xxx for past, present and future infringements of
any of the foregoing, and all proceeds of the foregoing, including licenses,
royalties, income, payments, claims, damages, and proceeds of suit.
"CREDIT AGREEMENT" shall have the meaning set forth in the recitals.
"DEPOSIT ACCOUNTS" (i) shall mean all "deposit accounts" as defined in
Article 9 of the UCC and (ii) shall include, without limitation, all of the
accounts listed on Schedule 4.3 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: (i) all "equipment" as defined in Article 9 of
the UCC, (ii) all machinery, manufacturing equipment, data processing equipment,
computers, office equipment, furnishings, furniture, appliances, fixtures and
tools (in each case, regardless of whether characterized as equipment under the
2
UCC) and (iii) 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.
"GENERAL INTANGIBLES" (i) shall mean all "general intangibles" as
defined in Article 9 of the UCC, including "payment intangibles" also as defined
in Article 9 of the UCC and (ii) shall include, without limitation, all interest
rate or currency protection or hedging arrangements, all tax refunds, all
licenses, permits, concessions and authorizations, all Assigned Agreements and
all Intellectual Property (in each case, regardless of whether characterized as
general intangibles under the UCC).
"GOODS" (i) shall mean all "goods" as defined in Article 9 of the UCC
and (ii) shall include, without limitation, all Inventory and Equipment (in each
case, regardless of whether characterized as goods under the UCC).
"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 Secured Party 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: (i) all "inventory" as defined in Article 9 of
the UCC and (ii) 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; 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 (in each case, regardless of whether characterized as
inventory under the UCC).
"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, the Investment Accounts, and certificates of deposit.
"LENDER" shall have the meaning set forth in the recitals.
3
"LENDER PARTIES" means the Lenders and the Lender Counterparties and
shall include, without limitation, all former Lenders and Lender Counterparties
to the extent that any Obligations owing to such Persons were incurred while
such Persons were Lenders or Lender Counterparties and such Obligations have not
been paid or satisfied in full.
"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.
"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).
"PATENTS" shall mean all United States and foreign patents and
applications for letters patent throughout the world, all reissues, divisions,
continuations, continuations-in-part, extensions, renewals, and reexaminations
of any of the foregoing, all rights corresponding thereto throughout the world,
and all proceeds of the foregoing, including licenses, royalties, income,
payments, claims, damages, and proceeds of suit and the right to xxx for past,
present and future infringements of any of the foregoing.
"PAYMENT INTANGIBLE" shall have the meaning specified in Article 9 of
the UCC.
"PLEDGE SUPPLEMENT" shall mean any supplement to this agreement in
substantially the form of Exhibit A.
"PLEDGED DEBT" shall mean all Indebtedness owed to each Grantor issued
by the obligors named thereunder, 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.
"PLEDGED EQUITY INTERESTS" shall mean all Pledged Stock, Pledged LLC
Interests, Pledged Partnership Interests and Pledged Trust Interests.
"PLEDGED LLC INTERESTS" shall mean all interests in any limited
liability company, including all limited liability company interests listed on
Schedule 4.3 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 or on the
books and records of any securities intermediary pertaining to such interest 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 all interests in any general
partnership, limited partnership, limited liability partnership or other
partnership, including all partnership interests listed on Schedule 4.3 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 or on the books and records of any securities intermediary
4
pertaining to such interest 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 all shares of capital stock owned by such
Grantor, including all shares of capital stock described on Schedule 4.3 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 or on the books of any securities intermediary pertaining to 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 all interests in a Delaware
statutory trust or other trust, including all trust interests listed on Schedule
4.3 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 or on the books and records of any securities intermediary
pertaining to such interest 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 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 giving rise to such
right to payment and all Collateral Support and Supporting Obligations related
thereto and all Receivables Records.
"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 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 Lender Parties, and
certificates, acknowledgments, or other writings, including lien search reports,
from filing or other registration officers, (iv) all credit information, reports
5
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 PARTY" shall have the meaning set forth in the preamble.
"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.
"SUPPORTING OBLIGATION" shall mean all "supporting obligations" as
defined in Article 9 of the UCC.
"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).
"TRADE SECRETS" shall mean all trade secrets and all other confidential
or proprietary information and know-how now or hereafter owned or used in, or
contemplated at any time for use in, the business of such Grantor (all of the
foregoing being collectively called a "Trade Secret"), whether or not such Trade
Secret has been reduced to a writing or other tangible form, including all
documents and things embodying, incorporating, or referring in any way to such
Trade Secret, the right to xxx for past, present and future infringement of any
Trade Secret, and all proceeds of the foregoing, including licenses, royalties,
income, payments, claims, damages, and proceeds of suit.
"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).
"TRADEMARKS" shall mean all United States, state and foreign
trademarks, trade names, corporate names, company names, business names,
fictitious business names, internet domain names, trade styles, 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, all extensions or renewals of any of
the foregoing, all of the goodwill of the business connected with the use of and
symbolized by the foregoing, the right to xxx for past, present and future
infringement or dilution of any of the foregoing or for any injury to goodwill,
and all proceeds of the foregoing, including licenses, royalties, income,
payments, claims, damages, and proceeds of suit.
6
"UCC" shall mean the Uniform Commercial Code as in effect from time to
time in the State of New York or, when the context implies, 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
2.1 GRANT OF SECURITY. Each Grantor hereby grants to the Secured Party
a security interest and continuing lien on all of such Grantor's right, title
and interest in, to and under all personal property of such Grantor including,
but not limited to the following, 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;
7
(h) Intellectual Property;
(i) Investment Related Property;
(j) Letter of Credit Rights;
(k) Money;
(l) Receivables and Receivable Records;
(m) Commercial Tort Claims;
(n) to the extent not otherwise included above, all Collateral
Records, Collateral Support and Supporting Obligations relating to any of the
foregoing; and
(o) 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 security interest granted under Section 2.1
hereof attach to any lease, license, contract, property rights or agreement 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 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. It is the intention of Grantors (other than Company) and Secured
Party that this Agreement not constitute a fraudulent transfer or fraudulent
conveyance under any state or federal law that may be applied hereto. Each
Grantor (other than Company) and, by its acceptance hereof, Secured Party hereby
acknowledges and agrees that, notwithstanding any other provision of this
Agreement: (a) the indebtedness secured hereby shall be limited to the maximum
amount of indebtedness that can be incurred or secured by such Grantor without
rendering this Agreement subject to avoidance under Section 548 of the United
States Bankruptcy Code or any comparable provisions of any applicable state or
federal law, and (b) the Collateral pledged by such Grantor hereunder shall be
limited to the maximum amount of Collateral that can be pledged by such Grantor
without rendering this Agreement subject to avoidance under Section 548 of the
United States Bankruptcy Code or any comparable provisions of any applicable
state or federal law.
8
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. ss.362(a) (and any
successor provision thereof)), of all Obligations with respect to 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 and nothing contained herein is intended or shall be a
delegation of duties to the Secured Party or any Lender Party and (ii) each
Grantor shall remain liable under each of the agreements included in the
Collateral, including 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 Secured Party nor any Lender 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 Secured
Party nor any Lender 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 any agreements relating to Pledged Partnership
Interests or Pledged LLC Interests, and (iii) the exercise by the Secured Party
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 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, in each case free and clear of any and all Liens, rights or
claims of all other Persons other than Permitted Liens;
(ii) it has indicated on Schedule 4.1(A)(as such
schedule may be amended or supplemented from time to time): (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 date
hereof has been, located.
9
(iii) the full legal name of such Grantor is as set
forth on Schedule 4.1(A) and it has not done in the last five (5)
years, and does not do, business under any other name (including any
trade-name or fictitious business name) except for those names set
forth on Schedule 4.1(B) (as such schedule may be amended or
supplemented from time to time);
(iv) except as provided on Schedule 4.1(C), 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) 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 or contemporaneously herewith been terminated;
(vi) upon the filing of all UCC financing statements
naming each Grantor as "debtor" and the Secured Party as "secured
party" and describing the Collateral in the filing offices set forth
opposite such Grantor's name on Schedule 4.1(D) hereof (as such
schedule may be amended or supplemented from time to time) and other
filings delivered by each Grantor, upon execution of a control
agreement substantively in the form of Exhibit B hereto with respect to
any Deposit Account, and upon consent of the issuer with respect to
Letter of Credit Rights, the security interests granted to the Secured
Party hereunder constitute valid and perfected first priority Liens
(subject in the case of priority only to Permitted Liens) on all of the
Collateral;
(vii) all actions and consents, including all
filings, notices, registrations and recordings necessary or desirable
for the exercise by the Secured Party 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;
(viii) other than the financing statements filed in
favor of the Secured Party, no effective UCC financing statement,
fixture filing or other instrument similar in effect under any
applicable law covering all or any part of the Collateral is on file in
any filing or recording office except for financing statements for
which proper termination statements have been delivered to the Secured
Party for filing;
(ix) 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 Liens purported to be created in favor of the Secured
Party hereunder or (ii) the exercise by Secured Party 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) 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;
10
(x) each Receivable (a) is and will be the legal,
valid and binding obligation of the Account Debtor in respect thereof,
representing an unsatisfied obligation of such Account Debtor, (b) is
and will be enforceable in accordance with its terms, (c) is not and
will not be subject to any setoffs, defenses, taxes, counterclaims
(except with respect to refunds, returns and allowances in the ordinary
course of business with respect to damaged merchandise) and (d) is and
will be in compliance with all applicable laws, whether federal, state,
local or foreign;
(xi) none of the Account Debtors in respect of any
Receivable is the government of the United States, any agency or
instrumentality thereof, any state or municipality or any foreign
sovereign; and
(xii) no Receivable is evidenced by, or constitutes,
an Instrument or Chattel Paper which has not been delivered to, or
otherwise subjected to the control of, the Secured Party.
(b) COVENANTS AND AGREEMENTS. Each Grantor hereby covenants
and agrees 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;
(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;
(iii) it shall not take or permit any action which
could impair the Secured Party's rights in the Collateral; and
(iv) it shall keep and maintain at its own cost and
expense satisfactory and complete records of the Collateral.
4.2 INVESTMENT RELATED PROPERTY; INVESTMENT RELATED PROPERTY GENERALLY.
(a) COVENANTS AND AGREEMENTS. Each Grantor hereby covenants
and agrees that:
(i) in the event it acquires rights in any Investment
Related Property after the date hereof, it shall deliver to the Secured
Party a completed Pledge Supplement, substantially in the form of
Exhibit A attached hereto, together with all Supplements to Schedules
thereto, reflecting such new Investment Related Property and all other
Investment Related Property. Notwithstanding the foregoing, it is
understood and agreed that the security interest of the Secured Party
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 as required hereby;
11
(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 Secured Party over such Investment Related
Property (including delivery thereof to the Secured Party) 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 Secured Party and shall be segregated from all other
property of such Grantor. Notwithstanding the foregoing, so long as no
Event of Default shall have occurred and be continuing, the Secured
Party 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; and
(iii) each Grantor consents to the grant by each
other Grantor of a Security Interest in all Investment Related Property
to the Secured Party.
(b) DELIVERY AND CONTROL. 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 on or before the Closing Date
and with respect to any Investment Related Property hereafter acquired by such
Grantor it shall comply with the provisions of this Section immediately upon
acquiring rights therein, in each case in form and substance satisfactory to the
Secured Party. 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) it shall cause
such certificate or instrument to be delivered to the Secured Party, 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 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 either (i) register the Secured
Party as the registered owner thereof on the books and records of the issuer or
(ii) execute an agreement in form and substance satisfactory to the Secured
Party, pursuant to which such issuer agrees to comply with the Secured Party'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
12
with the terms of this Agreement or the Credit Agreement;
provided, no Grantor shall exercise or refrain from exercising
any such right if the Secured Party shall have notified such
Grantor that, in the Secured Party's reasonable judgment, such
action would have a Material Adverse Effect on the value of
the Investment Related Property or any part thereof; and
provided further, such Grantor shall give the Secured Party at
least five (5) Business Days prior written notice of the
manner in which it intends to exercise, or the reasons for
refraining from exercising, any such right; it being
understood, however, that neither the voting by such Grantor
of any Pledged Stock for, or such Grantor's consent to, the
election of directors (or similar governing body) at a
regularly scheduled annual or other meeting of stockholders or
with respect to incidental matters at any such meeting, nor
such Grantor's consent to or approval of any action otherwise
permitted under this Agreement and the Credit Agreement, shall
be deemed inconsistent with the terms of this Agreement or the
Credit Agreement within the meaning of this Section
4.2(c)(i)(1), and no notice of any such voting or consent need
be given to the Secured Party;
(2) the Secured Party 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:
(A) upon the written election of
Secured Party, all rights of each Grantor to exercise
or refrain from exercising 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
Secured Party who shall thereupon have the sole right
to exercise such voting and other consensual rights;
and
(B) in order to permit the Secured
Party 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 Secured Party all proxies, dividend payment
orders and other instruments as the Secured Party may
from time to time reasonably request and (2) each
Grantor acknowledges that the Secured Party may
utilize the power of attorney set forth in Section 6.
4.3 PLEDGED EQUITY INTERESTS.
(a) REPRESENTATIONS AND WARRANTIES. Each Grantor hereby
represents and warrants that:
13
(i) Schedule 4.3 (as such schedule may be amended or
supplemented from time to time) 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 Interests and Pledged Trust
Interests owned by any 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) except as set forth on Schedule 4.3, it has not
acquired any equity interests of another entity or substantially all
the assets of another entity within the past five (5) years;
(iii) it is the record and beneficial owner of the
Pledged Equity Interests free of all Liens, rights or claims 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
Pledged Equity Interests;
(iv) without limiting any other provision hereof, 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 Secured Party in any Pledged Equity Interests or the
exercise by the Secured Party of the voting or other rights provided
for in this Agreement or the exercise of remedies in respect thereof;
and
(v) none of the Pledged LLC Interests nor Pledged
Partnership Interests are or represent interests in issuers that are:
(a) registered as investment companies, (b) dealt in or traded on
securities exchanges or markets or (c) 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) without the prior written consent of the Secured
Party, it shall not vote to enable or take any other action to: (a)
amend or terminate any partnership agreement, limited liability company
agreement, certificate of incorporation, by-laws or other
organizational documents in any way that materially changes the rights
of such Grantor with respect to any Investment Related Property or
adversely affects the validity, perfection or priority of the Secured
Party's security interest, (b) permit any issuer of any Pledged Equity
Interest to issue any additional stock, partnership interests, limited
liability company interests or other equity interests of any nature or
to issue securities convertible into or granting the right of purchase
or exchange for any stock or other equity interest of any nature of
such issuer, (c) other than as permitted under the Credit Agreement,
permit any issuer of any Pledged Equity Interest to dispose of all or a
material portion of their assets, (d) waive any default under or breach
14
of any terms of organizational document relating to the issuer of any
Pledged Equity Interest or the terms of any Pledged Debt, or (e) cause
any issuer of any Pledged Partnership Interests or Pledged LLC
Interests 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; provided, however, notwithstanding
the foregoing, if any issuer of any Pledged Partnership Interests or
Pledged LLC Interests takes any such action in violation of the
foregoing in this clause (e), such Grantor shall promptly notify the
Secured Party in writing of any such election or action and, in such
event, shall take all steps necessary or advisable to establish the
Secured Party's "control" thereof;
(ii) it shall comply with all of its obligations
under any partnership agreement or limited liability company agreement
relating to Pledged Partnership Interests or Pledged LLC Interests and
shall enforce all of its rights with respect to any Investment Related
Property;
(iii) each Grantor consents to the grant by each
other Grantor of a security interest in all Investment Related Property
to the Secured Party and, without limiting the foregoing, consents to
the transfer of any Pledged Partnership Interest and any Pledged LLC
Interest to the Secured Party or its nominee following an Event of
Default and to the substitution of the Secured Party 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; and
(iv) it shall notify the Secured Party of any default
under any Pledged Debt that has caused, either in any case or in the
aggregate, a Material Adverse Effect.
4.4 INVESTMENT ACCOUNTS.
(a) COVENANTS AND AGREEMENTS. Each Grantor hereby covenants
and agrees that:
(i) With respect to any Investment Related Property
consisting of Securities Accounts or Securities Entitlements, it shall
cause the securities intermediary maintaining such Securities Account
or Securities Entitlement to enter into an agreement substantially in
form and substance satisfactory to the Secured Party pursuant to which
it shall agree to comply with the Secured Party's "entitlement orders"
without further consent by such Grantor. With respect to any Investment
Related Property that is a "Deposit Account," it shall cause the
depositary institution maintaining such account to enter into an
agreement substantively in the form of Exhibit B hereto (or such other
form satisfactory to the Secured Party), pursuant to which the Secured
Party shall have both sole dominion and control over such Deposit
Account (within the meaning of the common law) and "control" (within
the meaning of Section 9-104 of the UCC) over such Deposit Account.
(ii) In addition to the foregoing, if any issuer of
any Investment Related Property is located in a jurisdiction outside of
the United States, each Grantor shall take such additional actions,
including causing the issuer to register the pledge on its books and
15
records or making such filings or recordings, in each case as may be
necessary or advisable, under the laws of such issuer's jurisdiction to
insure the validity, perfection and priority of the security interest
of the Secured Party. Upon the occurrence of an Event of Default, the
Secured Party 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 Secured
Party shall have the right at any time, 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 LETTER OF CREDIT RIGHTS.
(a) REPRESENTATIONS AND WARRANTIES. Each Grantor hereby
represents and warrants that:
(i) all material letters of credit to which such
Grantor has rights are listed on Schedule 4.5 (as such schedule may be
amended or supplemented from time to time) hereto; and
(ii) it has obtained the consent of each issuer of
any material letter of credit to the assignment of the proceeds of the
letter of credit to the Secured Party.
(b) COVENANTS AND AGREEMENTS. Each Grantor hereby covenants
and agrees that with respect to any material letter of credit hereafter arising
it shall obtain the consent of the issuer thereof to the assignment of the
proceeds of the letter of credit to the Secured Party and shall deliver to the
Secured Party a completed Pledge Supplement, substantially in the form of
Exhibit A attached hereto, together with all Supplements to Schedules thereto.
4.6 COMMERCIAL TORT CLAIMS.
(a) REPRESENTATIONS AND WARRANTIES. Each Grantor hereby
represents and warrants that Schedule 4.6 (as such schedule may be amended or
supplemented from time to time) sets forth all Commercial Tort Claims of each
Grantor; and
(b) COVENANTS AND AGREEMENTS. Each Grantor hereby covenants
and agrees that with respect to any Commercial Tort Claim hereafter arising it
shall deliver to the Secured Party 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 ACCESS; RIGHT OF INSPECTION AND FURTHER ASSURANCES; ADDITIONAL
GRANTORS
5.1 ACCESS; RIGHT OF INSPECTION. The Secured Party shall at all times
have full and free access during normal business hours to all the books,
correspondence and records of each Grantor, and the Secured Party and its
representatives may examine the same, take extracts therefrom and make
photocopies thereof, and each Grantor agrees to render to the Secured Party, at
16
such Grantor's cost and expense, such clerical and other assistance as may be
reasonably requested with regard thereto. The Secured Party and its
representatives shall at all times also have the right to enter any premises of
each Grantor and inspect any property of each Grantor where any of the
Collateral of such Grantor granted pursuant to this Agreement is located for the
purpose of inspecting the same, observing its use or otherwise protecting its
interests therein.
5.2 FURTHER ASSURANCES.
(a) Each Grantor agrees that from time to time, at the expense
of such Grantor, it shall promptly execute and deliver all further instruments
and documents, and take all further action, that may be necessary or desirable,
or that the Secured Party may reasonably request, in order to create and/or
maintain the validity, perfection or priority of and protect any security
interest granted or purported to be granted hereby or to enable the Secured
Party 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 desirable, or as the Secured Party may reasonably request,
in order to perfect and preserve the security interests granted or
purported to be 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 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, upon request by the
Secured Party, assemble the Collateral and allow inspection of the
Collateral by the Secured Party, or persons designated by the Secured
Party; and
(iv) at the Secured Party's request, appear in and
defend any action or proceeding that may affect such Grantor's title to
or the Secured Party's security interest in all or any part of the
Collateral.
(b) Each Grantor hereby authorizes the Secured Party to file a
Record or Records, including financing or continuation statements, and
amendments thereto, in any jurisdictions and with any filing offices as the
Secured Party may determine, in its sole discretion, are necessary or advisable
to perfect the security interest granted to the Secured Party 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 Secured Party 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 Secured Party herein,
including describing such property as "all assets" or "all personal property,
17
whether now owned or hereafter acquired." Each Grantor shall furnish to the
Secured Party from time to time statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as the Secured Party may reasonably request, all in reasonable
detail.
5.3 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 Pledge Supplement. Upon delivery
of any such Pledge Supplement to the Secured Party, 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 Secured Party 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 SECURED PARTY APPOINTED ATTORNEY-IN-FACT
6.1 POWER OF ATTORNEY. Each Grantor hereby irrevocably appoints the
Secured Party (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 Secured Party or otherwise, from
time to time in the Secured Party's discretion to take any action and to execute
any instrument that the Secured Party may deem reasonably necessary or advisable
to accomplish the purposes of this Agreement, including 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 Secured Party 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;
(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 Secured Party may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of the
Secured Party with respect to any of the Collateral;
(e) to prepare and file any UCC financing statements against
such Grantor as debtor;
18
(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 assignor;
(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 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 Secured Party in its sole discretion, any such payments
made by the Secured Party to become obligations of such Grantor to the Secured
Party, due and payable immediately without demand;
(h) upon the occurrence and during the continuance of any
Event of Default, 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 Secured Party were the absolute owner thereof for all purposes,
and to do, at the Secured Party's option and such Grantor's expense, at any time
or from time to time, all acts and things that the Secured Party deems
reasonably necessary to realize upon the Collateral and the Secured Party's
security interest therein in order to effect the intent of this Agreement, all
as fully and effectively as such Grantor might do; and
(i) to do, at the Secured Party's option and such Grantor's
expense, at any time or from time to time, all acts and things that the Secured
Party deems reasonably necessary to protect and preserve the Collateral and the
Secured Party's security interest therein in order to effect the intent of this
Agreement, all as fully and effectively as such Grantor might do.
6.2 NO DUTY ON THE PART OF SECURED PARTY OR LENDER PARTIES. The powers
conferred on the Secured Party hereunder are solely to protect the interests of
the Lender Parties in the Collateral and shall not impose any duty upon the
Secured Party or any Lender Party to exercise any such powers. The Secured Party
and the Lender 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.
SECTION 7 REMEDIES
7.1 GENERALLY.
(a) If any Event of Default shall have occurred and be
continuing, the Secured Party 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 Secured
Party 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
Secured Party forthwith, assemble all or part of the Collateral as
directed by the Secured Party and make it available to the Secured
19
Party at a place to be designated by the Secured Party 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
Secured Party 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
Secured Party'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 Secured Party may deem commercially reasonable.
(b) The Secured Party or any Lender Party may be the purchaser
of any or all of the Collateral at any public or private (to the extent to
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 Secured Party, as collateral
agent for and representative of the Lender 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 Secured Party 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 Secured Party shall not be obligated to
make any sale of Collateral regardless of notice of sale having been given. The
Secured Party 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 agrees that it would not be commercially unreasonable for the Secured
Party to dispose of the Collateral or any portion thereof by using Internet
sites that provide for the auction of assets of the types included in the
Collateral or that have the reasonable capability of doing so, or that match
buyers and sellers of assets. Each Grantor hereby waives any claims against the
20
Secured Party arising by reason of the fact that the price at which any
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 Secured Party
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 Secured Party
to collect such deficiency. Each Grantor further agrees that a breach of any of
the covenants contained in this Section will cause irreparable injury to the
Secured Party, that the Secured Party has no adequate remedy at law in respect
of such breach and, as a consequence, that each and every covenant contained in
this Section shall be specifically enforceable against such Grantor, and such
Grantor hereby waives and agrees not to assert any defenses against an action
for specific performance of such covenants except for a defense that no default
has occurred giving rise to the Secured Obligations becoming due and payable
prior to their stated maturities. Nothing in this Section shall in any way alter
the rights of the Secured Party hereunder.
(c) The Secured Party may sell the Collateral without giving
any warranties as to the Collateral. The Secured Party may specifically disclaim
or modify any warranties of title or the like. This procedure will not be
considered to adversely effect the commercial reasonableness of any sale of the
Collateral.
(d) The Secured Party shall have no obligation to xxxxxxxx any
of the Collateral.
7.2 APPLICATION OF PROCEEDS. Except as expressly provided elsewhere in
this Agreement, all proceeds received by the Secured Party 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 Secured Party against, the
Secured Obligations in the following order of priority: first, to the payment of
all costs and expenses of such sale, collection or other realization, including
reasonable compensation to the Secured Party and its agents and counsel, and all
other expenses, liabilities and advances made or incurred by the Secured Party
in connection therewith, and all amounts for which the Secured Party is entitled
to indemnification hereunder (in its capacity as the Secured Party and not as a
Lender) and all advances made by the Secured Party hereunder for the account of
the applicable Grantor, and to the payment of all costs and expenses paid or
incurred by the Secured Party in connection with the exercise of any right or
remedy hereunder or under the Credit Agreement, all in accordance with the terms
hereof or thereof; second, to the extent of any excess of such proceeds, to the
payment of all other Secured Obligations for the ratable benefit of the Lenders
and the Lender Counterparties; and third, to the extent of any excess of such
proceeds, to the payment to or upon the order of such Grantor or to whosoever
may be lawfully entitled to receive the same or as a court of competent
jurisdiction may direct.
7.3 SALES ON CREDIT. If Secured Party sells any of the Collateral upon
credit, Grantor will be credited only with payments actually made by purchaser
and received by Secured Party and applied to indebtedness of the Purchaser. In
the event the purchaser fails to pay for the Collateral, Secured Party may
resell the Collateral and Grantor shall be credited with proceeds of the sale.
21
7.4 DEPOSIT ACCOUNTS. If any Event of Default shall have occurred and
be continuing, the Secured Party may 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 Secured Party.
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 Secured Party 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 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 any such private
sale shall be deemed to have been made in a commercially reasonable manner and
that the Secured Party 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 Secured Party 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 from time to time to furnish
to the Secured Party all such information as the Secured Party 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
Secured Party 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:
22
(i) the Secured Party 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 Secured Party or otherwise,
in the Secured Party's sole discretion, to enforce any Intellectual
Property, in which event such Grantor shall, at the request of the
Secured Party, do any and all lawful acts and execute any and all
documents required by the Secured Party in aid of such enforcement and
such Grantor shall promptly, upon demand, reimburse and indemnify the
Secured Party as provided in Section 10 of the Credit Agreement in
connection with the exercise of its rights under this Section, and, to
the extent that the Secured Party shall elect not to bring suit to
enforce any Intellectual Property as provided in this Section, each
Grantor agrees to use all reasonable measures, whether by action, suit,
proceeding or otherwise, to prevent the infringement of any of the
Intellectual Property by others and for that purpose agrees to
diligently maintain any action, suit or proceeding against any Person
so infringing as shall be necessary to prevent such infringement;
(ii) upon written demand from the Secured Party, each
Grantor shall grant, assign, convey or otherwise transfer to the
Secured Party an absolute assignment of all of such Grantor's right,
title and interest in and to the Intellectual Property and shall
execute and deliver to the Secured Party such documents as are
necessary or appropriate to carry out the intent and purposes of this
Agreement;
(iii) each Grantor agrees that such an assignment
and/or recording shall be applied to reduce the Secured Obligations
outstanding only to the extent that the Secured Party (or any Lender
Party) receives Cash Proceeds in respect of the sale of, or other
realization upon, the Intellectual Property;
(iv) within five (5) Business Days after written
notice from the Secured Party, each Grantor shall make available to the
Secured Party, to the extent within such Grantor's power and authority,
such personnel in such Grantor's employ on the date of such Event of
Default as the Secured Party may reasonably designate, by name, title
or job responsibility, 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 the
Trademarks, Trademark Licenses, such persons to be available to perform
their prior functions on the Secured Party's behalf and to be
compensated by the Secured Party at such Grantor's expense on a per
diem, pro-rata basis consistent with the salary and benefit structure
applicable to each as of the date of such Event of Default; and
(v) the Secured Party shall have the right to notify,
or require each Grantor to notify, any obligors with respect to amounts
due or to become due to such Grantor in respect of the Intellectual
Property, of the existence of the security interest created herein, to
direct such obligors to make payment of all such amounts directly to
the Secured Party, and, upon such notification and at the expense of
such Grantor, to enforce collection of any such amounts 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;
(1) all amounts and proceeds (including
checks and other instruments) received by Grantor in respect
of amounts due to such Grantor in respect of the Collateral or
any portion thereof shall be received in trust for the benefit
of the Secured Party hereunder, shall be segregated from other
funds of such Grantor and shall be forthwith paid over or
delivered to the Secured Party in the same form as so received
(with any necessary endorsement) to be held as cash Collateral
and applied as provided by Section 7.7 hereof; and
23
(2) Grantor shall not adjust, settle or
compromise the amount or payment of any such amount or release
wholly or partly any obligor with respect thereto or allow any
credit or discount thereon.
(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 Secured Party of any
rights, title and interests in and to the Intellectual Property shall have been
previously made and shall have become absolute and effective, and (iv) the
Secured Obligations shall not have become immediately due and payable, upon the
written request of any Grantor, the Secured Party 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 Secured
Party as aforesaid, subject to any disposition thereof that may have been made
by the Secured Party; provided, after giving effect to such reassignment, the
Secured Party's security interest granted pursuant hereto, as well as all other
rights and remedies of the Secured Party 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 Liens granted by or on behalf of
the Secured Party and the Lender Parties.
(c) Solely for the purpose of enabling the Secured Party to
exercise rights and remedies under this Section 7.6 and at such time as the
Secured Party shall be lawfully entitled to exercise such rights and remedies,
each Grantor hereby grants to the Secured Party, 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, 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. All proceeds of any Collateral received by any
Grantor consisting of cash, checks and other near-cash items (collectively,
"CASH PROCEEDS") shall be held by such Grantor in trust for the Secured Party
and shall be applied and paid as provided in Sections 2.10 and 2.11 of the
Credit Agreement. Any Cash Proceeds received by the Secured Party (whether from
a Grantor or otherwise): (i) if no Event of Default shall have occurred and be
continuing, shall be applied and paid as provided in Sections 2.10 and 2.11 of
the Credit Agreement and (ii) if an Event of Default shall have occurred and be
continuing, may, in the sole discretion of the Secured Party, (A) be held by the
Secured Party for the ratable benefit of the Lender Parties, as collateral
security for the Secured Obligations (whether matured or unmatured) and/or (B)
then or at any time thereafter may be applied by the Secured Party against the
Secured Obligations then due and owing.
SECTION 8 AGENT
The Secured Party has been appointed to act as secured party hereunder
by Lenders and, by their acceptance of the benefits hereof, the other Lender
Parties. The Secured Party 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
the release or substitution of Collateral), solely in accordance with this
Agreement and the Credit Agreement. In furtherance of the foregoing provisions
of this Section, each Lender 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 Lender Party that
all rights and remedies hereunder may be exercised solely by the Secured Party
for the benefit of Lenders and Lender Counterparties in accordance with the
terms of this Section. Secured Party may resign at any time by giving thirty
(30) days' prior written notice thereof to Lenders and the Grantors, and Secured
Party may be removed at any time with or without cause by an instrument or
concurrent instruments in writing delivered to the Grantors and Secured Party
signed by the Required Lenders. Upon any such notice of resignation or any such
24
removal, Required Lenders shall have the right, upon five (5) Business Days'
notice to the Secured Party, following receipt of the Grantors' consent (which
shall not be unreasonable withheld or delayed and which shall not be required
while an Event of Default exists), to appoint a successor Secured Party. Upon
the acceptance of any appointment as Secured Party hereunder by a successor
Secured Party, that successor Secured Party under this Agreement. Upon the
acceptance of any appointment as Administrative Agent under the terms of the
Credit Agreement by a successor Administrative Agent, that successor
Administrative Agent shall thereby also be deemed the successor Secured Party
and such successor Secured Party shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the retiring or removed
Secured Party under this Agreement, and the retiring or removed Secured Party
under this Agreement shall promptly (i) transfer to such successor Secured Party
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 Secured Party under this Agreement,
and (ii) execute and deliver to such successor Secured Party such amendments to
financing statements, and take such other actions, as may be necessary or
appropriate in connection with the assignment to such successor Secured Party of
the security interests created hereunder, whereupon such retiring or removed
Secured Party shall be discharged from its duties and obligations under this
Agreement. After any retiring or removed Secured Party's resignation or removal
hereunder as the Secured Party, 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 Secured Party 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,
be binding upon each Grantor, its successors and assigns, and inure, together
with the rights and remedies of the Secured Party hereunder, to the benefit of
the Secured Party 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 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, the security interest granted hereby shall terminate hereunder
and of record and all rights to the Collateral shall revert to Grantors. Upon
any such termination the Secured Party shall, at Grantors' expense, execute and
deliver to Grantors such documents as Grantors shall reasonably request to
evidence such termination.
25
SECTION 10 STANDARD OF CARE; SECURED PARTY MAY PERFORM
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 Secured Party 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 Secured Party 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 Secured Party accords its own property. Neither the Secured
Party 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
Secured Party may itself perform, or cause performance of, such agreement, and
the expenses of the Secured Party 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 Secured Party in the exercise of any power, right or
privilege hereunder or under any other Transaction 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 Transaction 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 condition exists. This Agreement
shall be binding upon and inure to the benefit of the Secured Party and Grantors
and their respective successors and assigns. No Grantor shall, without the prior
written consent of the Secured Party given in accordance with the Credit
Agreement, assign any right, duty or obligation hereunder. This Agreement and
the other Transaction Documents embody the entire agreement and understanding
between Grantors and the Secured Party and supersede all prior agreements and
understandings between such parties relating to the subject matter hereof and
thereof. Accordingly, the Transaction 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.
26
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, WITHOUT REGARD TO ITS CONFLICTS OF LAW
PROVISIONS (OTHER THAN SECTION 5-1401 AND SECTION 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW).
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
27
IN WITNESS WHEREOF, each Grantor and the Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
PACIFIC ENERGY RESOURCES LTD.,
a Grantor
By: /s/ Xxxxxx Xxxxx
---------------------------------------
Xxxxxx Xxxxx
President
PETROCAL ACQUISITION CORP.,
a Grantor
By: /s/ Xxxxxx Xxxxx
---------------------------------------
Xxxxxx Xxxxx
President and Chief Financial Officer
X. XXXX & COMPANY, as the Secured Party
By: /s/ [ILLEGIBLE]
-----------------------------------------
Authorized Signatory
28
