EXECUTION VERSION
SECURITY AGREEMENT
This SECURITY AGREEMENT (this "AGREEMENT"), dated as of September 24,
2008, among Grantors listed on the signature pages hereof and those additional
entities that hereafter become parties hereto by executing the form of
Supplement attached hereto as ANNEX 1 (collectively, jointly and severally, the
"GRANTORS" and each, individually, a "GRANTOR"), and ▇▇▇▇▇ FARGO FOOTHILL, LLC,
a Delaware limited liability company, in its capacity as agent for the Lender
Group and the Bank Product Providers (in such capacity, together with its
successors and assigns in such capacity, the "AGENT").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Credit Agreement of even date herewith
(as amended, restated, supplemented, or otherwise modified from time to time,
including all schedules thereto, the "CREDIT AGREEMENT") among ▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇'▇ HOLDING INC., a Delaware corporation, as parent ("PARENT"), ▇▇▇▇▇▇▇
& ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇'▇ INC., a Delaware corporation, as borrower ("BORROWER"), the
lenders party thereto as "Lenders" ("LENDERS"), and Agent, the Lender Group has
agreed to make certain financial accommodations available to Borrower from time
to time pursuant to the terms and conditions thereof, and
WHEREAS, Agent has agreed to act as agent for the benefit of the Lender
Group and the Bank Product Providers in connection with the transactions
contemplated by the Credit Agreement and this Agreement, and
WHEREAS, in order to induce the Lender Group to enter into the Credit
Agreement and the other Loan Documents and to induce the Lender Group to make
financial accommodations to Borrower as provided for in the Credit Agreement,
Grantors have agreed to grant a continuing security interest in and to the
Collateral in order to secure the prompt and complete payment, observance and
performance of, among other things, the Secured Obligations, and
NOW, THEREFORE, for and in consideration of the recitals made above and
other good and valuable consideration, the receipt, sufficiency and adequacy of
which are hereby acknowledged, the parties hereto agree as follows:
1. DEFINED TERMS. All capitalized terms used herein (including in the
preamble and recitals hereof) without definition shall have the meanings
ascribed thereto in the Credit Agreement. Any terms used in this Agreement that
are defined in the Code shall be construed and defined as set forth in the Code
unless otherwise defined herein or in the Credit Agreement; provided, HOWEVER,
that to the extent that the Code is used to define any term herein and if such
term is defined differently in different Articles of the Code, the definition of
such term contained in Article 9 of the Code shall govern. In addition to those
terms defined elsewhere in this Agreement, as used in this Agreement, the
following terms shall have the following meanings:
(a) "ACCOUNT" means an account (as that term is defined in Article 9 of
the Code).
(b) "ACCOUNT DEBTOR" means an account debtor (as that term is defined
in the Code).
(c) "ACTIVATION INSTRUCTION" has the meaning specified therefor in
SECTION 6(L).
(d) "AGENT" has the meaning specified therefor in the preamble to this
Agreement.
(e) "AGENT'S LIEN" has the meaning specified therefor in the Credit
Agreement.
(f) "BANK PRODUCT OBLIGATIONS" has the meaning specified therefor in
the Credit Agreement.
(g) "BANK PRODUCT PROVIDER" has the meaning specified therefor in the
Credit Agreement.
(h) "BOOKS" means books and records (including each Grantor's Records
indicating, summarizing, or evidencing such Grantor's assets (including the
Collateral) or liabilities, each Grantor's Records relating to such Grantor's
business operations or financial condition, and each Grantor's goods or General
Intangibles related to such information).
(i) "BORROWER" has the meaning specified therefor in the recitals to
this Agreement.
(j) "CASH EQUIVALENTS" has the meaning specified therefor in the Credit
Agreement.
(k) "CHATTEL PAPER" means chattel paper (as that term is defined in the
Code) and includes tangible chattel paper and electronic chattel paper.
(l) "CODE" means the New York Uniform Commercial Code, as in effect
from time to time; PROVIDED, HOWEVER, that in the event that, by reason of
mandatory provisions of law, any or all of the attachment, perfection, priority,
or remedies with respect to Agent's Lien on any Collateral is governed by the
Uniform Commercial Code as enacted and in effect in a jurisdiction other than
the State of New York, the term "Code" shall mean the Uniform Commercial Code as
enacted and in effect in such other jurisdiction solely for purposes of the
provisions thereof relating to such attachment, perfection, priority, or
remedies; provided, further, however; solely with respect to the grant of a
continuing security interest in permits or licenses that are subject to
regulation or consent by any Governmental Authority (including liquor licenses
and franchises), "Code" shall mean the Delaware Uniform Commercial Code, as in
effect from time to time.
(m) "COLLATERAL" has the meaning specified therefor in SECTION 2.
(n) "COLLECTIONS" has the meaning specified therefor in the Credit
Agreement.
(o) "COMMERCIAL TORT CLAIMS" means commercial tort claims (as that term
is defined in the Code), and includes those commercial tort claims listed on
SCHEDULE 1 attached hereto.
(p) "CONTROLLED ACCOUNT" has the meaning specified therefor in SECTION
6(L).
(q) "CONTROLLED ACCOUNT AGREEMENTS" means those certain cash management
agreements, in form and substance reasonably satisfactory to Agent, each of
which is among Parent or one of its Subsidiaries, Agent, and one of the
Controlled Account Banks.
(r) "CONTROLLED ACCOUNT BANK" has the meaning specified therefor in
SECTION 6(L).
(s) "COPYRIGHTS" means any and all copyrights and copyright
registrations, including, (i) the copyright registrations and recordings thereof
and all applications in connection therewith listed on SCHEDULE 2 attached
hereto and made a part hereof, (ii) all restorations, reversions, extensions or
renewals thereof, (iii) all income, royalties, damages and payments now and
hereafter due or payable under and with respect thereto, including payments
under all licenses entered into in connection therewith and damages and payments
for past or future infringements or dilutions thereof, (iv) the right to ▇▇▇ for
past, present and future
infringements and dilutions thereof, (v) the goodwill of each Grantor's business
symbolized by the foregoing or connected therewith, and (vi) all of each
Grantor's rights corresponding thereto throughout the world.
(t) "COPYRIGHT SECURITY AGREEMENT" means each Copyright Security
Agreement among Grantors, or any of them, and Agent, for the benefit of the
Lender Group and the Bank Product Providers, in substantially the form of
EXHIBIT A attached hereto, pursuant to which Grantors have granted to Agent, for
the benefit of the Lender Group and the Bank Product Providers, a security
interest in all their respective Copyrights.
(u) "CREDIT AGREEMENT" has the meaning specified therefor in the
recitals to this Agreement.
(v) "DEPOSIT ACCOUNT" means a deposit account (as that term is defined
in the Code).
(w) "EQUIPMENT" means equipment (as that term is defined in the Code).
(x) "EVENT OF DEFAULT" has the meaning specified therefor in the Credit
Agreement.
(y) "GENERAL INTANGIBLES" means general intangibles (as that term is
defined in the Code) and includes payment intangibles, contract rights, rights
to payment, rights arising under common law, statutes, or regulations, choses or
things in action, goodwill (including the goodwill associated with any
Trademark, Patent, or Copyright), Patents, Trademarks, Copyrights, URLs and
domain names, industrial designs, other industrial or Intellectual Property or
rights therein or applications therefor, whether under license or otherwise,
programs, programming materials, blueprints, drawings, purchase orders, customer
lists, monies due or recoverable from pension funds, route lists, rights to
payment and other rights under any royalty or licensing agreements, including
Intellectual Property Licenses, infringement claims, computer programs,
information contained on computer disks or tapes, software, literature, reports,
catalogs, pension plan refunds, pension plan refund claims, insurance premium
rebates, tax refunds, and tax refund claims, interests in a partnership or
limited liability company which do not constitute a security under Article 8 of
the Code, and any other personal property other than Commercial Tort Claims,
money, Accounts, Chattel Paper, Deposit Accounts, goods, Investment Related
Property, Negotiable Collateral, and oil, gas, or other minerals before
extraction.
(z) "GRANTOR" and "GRANTORS" have the respective meanings specified
therefor in the recitals to this Agreement.
(aa) "GUARANTY" has the meaning specified therefor in the Credit
Agreement.
(bb) "INSOLVENCY PROCEEDING" has the meaning specified therefor in the
Credit Agreement.
(cc) "INTELLECTUAL PROPERTY" means any and all Intellectual Property
Licenses, Patents, Copyrights, Trademarks, the goodwill associated with such
Trademarks, trade secrets and customer lists.
(dd) "INTELLECTUAL PROPERTY LICENSES" means rights under or interests
in any patent, trademark, copyright or other intellectual property, including
software license agreements with any other party, whether the applicable Grantor
is a licensee or licensor under any such license agreement (but excluding any
off-the-shelf software license agreement), including the license agreements
listed on SCHEDULE 3 attached hereto and made a part hereof, and the right to
use the foregoing in connection with the enforcement of the Lender Group's
rights under the Loan Documents, including the right to prepare for sale and
sell any and all Inventory and Equipment now or hereafter owned by any Grantor
and now or hereafter covered by such licenses.
(ee) "INVENTORY" means inventory (as that term is defined in the Code).
(ff) "INVESTMENT RELATED PROPERTY" means (i) any and all investment
property (as that term is defined in the Code), and (ii) any and all of the
following (regardless of whether classified as investment property under the
Code): all Pledged Interests, Pledged Operating Agreements, and Pledged
Partnership Agreements.
(gg) "LENDER GROUP" has the meaning specified therefor in the Credit
Agreement.
(hh) "LOAN DOCUMENT" has the meaning specified therefor in the Credit
Agreement.
(ii) "LOAN PARTY" has the meaning specified therefor in the Credit
Agreement.
(jj) "NEGOTIABLE COLLATERAL" means letters of credit, letter-of-credit
rights, instruments, promissory notes, drafts and documents (as that term is
defined in the Code).
(kk) "OBLIGATIONS" has the meaning specified therefor in the Credit
Agreement.
(ll) "PATENTS" means patents and patent applications, including, (i)
the patents and patent applications listed on SCHEDULE 4 attached hereto and
made a part hereof, (ii) all reissues, continuations, continuations-in-part,
substitutions, extensions, or renewals thereof and improvements thereon, (iii)
all income, royalties, damages and payments now and hereafter due or payable
under and with respect thereto, including payments under all licenses entered
into in connection therewith and damages and payments for past or future
infringements or dilutions thereof, (iv) the right to ▇▇▇ for past, present and
future infringements and dilutions thereof, and (v) all of each Grantor's rights
corresponding thereto throughout the world.
(mm) "PATENT SECURITY AGREEMENT" means each Patent Security Agreement
among Grantors, or any of them, and Agent, for the benefit of the Lender Group
and the Bank Product Providers, in substantially the form of EXHIBIT B attached
hereto, pursuant to which Grantors have granted to Agent, for the benefit of the
Lender Group and the Bank Product Providers, a security interest in all their
respective Patents.
(nn) "PERMITTED LIENS" has the meaning specified therefor in the Credit
Agreement.
(oo) "PERSON" has the meaning specified therefor in the Credit
Agreement.
(pp) "PLEDGED COMPANIES" means, each Person listed on SCHEDULE 5 hereto
as a "Pledged Company", together with each other Person, all or a portion of
whose Stock, is acquired or otherwise owned by a Grantor after the Closing Date.
(qq) "PLEDGED INTERESTS" means all of each Grantor's right, title and
interest in and to all of the Stock now or hereafter owned by such Grantor,
regardless of class or designation, including, in each of the Pledged Companies,
and all substitutions therefor and replacements thereof, all proceeds thereof
and all rights relating thereto, also including any certificates representing
the Stock, the right to receive any certificates representing any of the Stock,
all warrants, options, share appreciation rights and other rights, contractual
or otherwise, in respect thereof and the right to receive all dividends,
distributions of income, profits, surplus, or other compensation by way of
income or liquidating distributions, in cash or in kind, and all cash,
instruments, and other property from time to time received, receivable, or
otherwise distributed in respect of or in addition to, in substitution of, on
account of, or in exchange for any or all of the foregoing.
(rr) "PLEDGED INTERESTS ADDENDUM" means a Pledged Interests Addendum
substantially in the form of EXHIBIT C to this Agreement.
(ss) "PLEDGED OPERATING AGREEMENTS" means all of each Grantor's rights,
powers, and remedies under the limited liability company operating agreements of
each of the Pledged Companies that are limited liability companies.
(tt) "PLEDGED PARTNERSHIP AGREEMENTS" means all of each Grantor's
rights, powers, and remedies under the partnership agreements of each of the
Pledged Companies that are partnerships.
(uu) "PROCEEDS" has the meaning specified therefor in SECTION 2.
(vv) "REAL PROPERTY" means any estates or interests in real property
now owned or hereafter acquired by any Grantor or any Subsidiary of any Grantor
and the improvements thereto.
(ww) "RECORDS" means information that is inscribed on a tangible medium
or which is stored in an electronic or other medium and is retrievable in
perceivable form.
(xx) "RESCISSION" has the meaning specified therefor in SECTION 6(L).
(yy) "SECURED OBLIGATIONS" means each and all of the following: (a) all
of the present and future obligations of Grantors arising from this Agreement,
the Credit Agreement, or the other Loan Documents (including any Guaranty), (b)
all Bank Product Obligations, and (c) all Obligations of Borrower, including, in
the case of each of clauses (a), (b) and (c), reasonable attorneys fees and
expenses and any interest, fees, or expenses that accrue after the filing of an
Insolvency Proceeding, regardless of whether allowed or allowable in whole or in
part as a claim in any Insolvency Proceeding.
(zz) "SECURITIES ACCOUNT" means a securities account (as that term is
defined in the Code).
(aaa) "SECURITY INTEREST" has the meaning specified therefor in SECTION
2.
(bbb) "STOCK" has the meaning specified therefor in the Credit
Agreement
(ccc) "SUPPORTING OBLIGATIONS" means supporting obligations (as such
term is defined in the Code) and includes letters of credit and guaranties
issued in support of Accounts, Chattel Paper, documents, General Intangibles,
instruments or Investment Related Property.
(ddd) "TRADEMARKS" means any and all trademarks, trade names,
registered trademarks, trademark applications, service marks, registered service
marks and service ▇▇▇▇ applications, including (i) the trade names, registered
trademarks, trademark applications, registered service marks and service ▇▇▇▇
applications listed on SCHEDULE 6 attached hereto and made a part hereof, (ii)
all renewals thereof, (iii) all income, royalties, damages and payments now and
hereafter due or payable under and with respect thereto, including payments
under all licenses entered into in connection therewith and damages and payments
for past or future infringements or dilutions thereof, (iv) the right to ▇▇▇ for
past, present and future infringements and dilutions thereof, (v) the goodwill
of each Grantor's business symbolized by the foregoing or connected therewith,
and (vi) all of each Grantor's rights corresponding thereto throughout the
world.
(eee) "TRADEMARK SECURITY AGREEMENT" means each Trademark Security
Agreement among Grantors, or any of them, and Agent, for the benefit of the
Lender Group and the Bank Product Providers, in substantially the form of
EXHIBIT D attached hereto, pursuant to which Grantors have granted to Agent, for
the benefit of the Lender Group and the Bank Product Providers, a security
interest in all their respective Trademarks.
(fff) "TRIGGERING EVENT" means, as of any date of determination, that
an Event of Default has occurred.
(ggg) "URL" means "uniform resource locator," an internet web address.
2. GRANT OF SECURITY. Each Grantor hereby unconditionally grants, assigns,
and pledges to Agent, for the benefit of the Lender Group and the Bank Product
Providers, to secure the Secured Obligations,
a continuing security interest hereinafter referred to as the "SECURITY
INTEREST" in all personal property of such Grantor whether now owned or
hereafter acquired or arising and wherever located, including such Grantor's
right, title, and interest in and to the following, whether now owned or
hereafter acquired or arising and wherever located (the "COLLATERAL"):
(a) all of such Grantor's Accounts;
(b) all of such Grantor's Books;
(c) all of such Grantor's Chattel Paper;
(d) all of such Grantor's interest with respect to any Deposit Account;
(e) all of such Grantor's Equipment and fixtures;
(f) all of such Grantor's General Intangibles;
(g) all of such Grantor's Inventory;
(h) all of such Grantor's Investment Related Property;
(i) all of such Grantor's Negotiable Collateral;
(j) all of such Grantor's rights in respect of Supporting Obligations;
(k) all of such Grantor's interest with respect to any Commercial Tort
Claims;
(l) all of such Grantor's money, Cash Equivalents, or other assets of
each such Grantor that now or hereafter come into the possession, custody, or
control of Agent or any other member of the Lender Group;
(m) all of the proceeds (as that term is defined in the Code) and
products, whether tangible or intangible, of any of the foregoing, including
proceeds of insurance or Commercial Tort Claims covering or relating to any or
all of the foregoing, and any and all Accounts, Books, Chattel Paper, Deposit
Accounts, Equipment, General Intangibles, Inventory, Investment Related
Property, Negotiable Collateral, Supporting Obligations, money, or other
tangible or intangible property resulting from the sale, lease, license,
exchange, collection, or other disposition of any of the foregoing, whatever is
collected on, or distributed on account of any of the foregoing, any and all
rights arising out of the foregoing, the proceeds of any award in condemnation
with respect to any of the foregoing, any rebates or refunds, whether for taxes
or otherwise, and all proceeds of any such proceeds, or any portion thereof or
interest therein, and the proceeds thereof, claims arising out of the loss,
non-conformity, or interference with the use of, defects, or infringement of
rights in, or damage to, any of the foregoing, and all proceeds of any loss of,
damage to, or destruction of the above, whether insured or not insured, and, to
the extent not otherwise included, any indemnity, warranty, insurance, or
guaranty payable by reason of loss or non-conformity of, defects or infringement
of rights in, or damage to, or otherwise with respect to any of the foregoing
(the "PROCEEDS"). Without limiting the generality of the foregoing, the term
"Proceeds" includes whatever is receivable or received when Investment Related
Property or proceeds are sold, exchanged, collected, or otherwise disposed of,
whether such disposition is voluntary or involuntary, and includes proceeds of
any indemnity or guaranty payable to any Grantor or Agent from time to time with
respect to any of the Investment Related Property.
Notwithstanding anything contained in this Agreement to the contrary, the
term "Collateral" shall not include: (i) voting Stock of any CFC, solely to the
extent that (y) such Stock represents more than 65% of the outstanding voting
Stock of such CFC, and (z) hypothecating more than 65% of the total outstanding
voting Stock of such CFC would result in material adverse tax consequences; (ii)
any rights or interest in any contract, lease, permit, license, charter or
license agreement covering real or personal property of any Grantor if under the
terms of such contract, lease, permit, license, charter or license agreement, or
applicable law with respect thereto, the grant of a security interest or lien
therein is prohibited as a matter of law or under the terms of such contract,
lease, permit, license, charter or license agreement and such prohibition has
not been waived or the consent of the other party to such contract, lease,
permit, license, charter or license agreement has not been obtained (provided,
that, the foregoing exclusions of this clause (ii) shall in no way be construed
(A) to apply to the extent that any described prohibition is unenforceable under
Section 9-406, 9-407, 9-408, OR 9-409 of the Code or other applicable law, (B)
to limit, impair, or otherwise affect the Lender Group's continuing security
interests in and liens upon any rights or interests of any Grantor in or to (x)
monies due or to become due under any described contract, lease, permit,
license, charter or license agreement (including any Accounts), or (y) any
proceeds from the sale, license, lease, or other dispositions of any such
contract, lease, permit, license, charter, license agreement, or Stock, or (C)
apply to the extent that any consent or waiver has been obtained that would
permit the security interest of lien notwithstanding the prohibition); (iii) any
motor vehicles owned by Grantors (provided, that, the foregoing exclusions of
this clause (iii) shall in no way be construed to limit, impair, or otherwise
affect the Lender Group's continuing security interests in and liens upon any
rights or interests of any Grantor in or to any proceeds from the sale, license,
lease, or other dispositions of any such motor vehicles); or (iv) fixtures
located on premises leased by any Grantor to the extent the pledge thereof or
grant of a security interest therein is (A) validly prohibited by the lease
governing such premises and (B) would result in the forfeiture of such Grantor's
right, title or interest thereunder under applicable law (provided that at such
time as any such grant of a security interest in any fixture shall not result in
a forfeiture thereunder under applicable law, such fixture shall (without any
further act or delivery by any Person) constitute Collateral hereunder;
provided, further, that this clause (iv) shall have no application to any Real
Property owned by any Loan Party or any Affiliate thereof; and provided, further
that the foregoing exclusions of this clause (iv) shall in no way be construed
to limit, impair, or otherwise affect the Lender Group's continuing security
interests in and liens upon any rights or interests of any Grantor in or to any
proceeds from the sale, license, lease, or other dispositions of any such
fixtures).
3. SECURITY FOR OBLIGATIONS. The Security Interest created hereby secures
the payment and performance of the Secured Obligations, whether now existing or
arising hereafter. Without limiting the generality of the foregoing, this
Agreement secures the payment of all amounts which constitute part of the
Secured Obligations and would be owed by Grantors, or any of them, to Agent, the
Lender Group, the Bank Product Providers or any of them, but for the fact that
they are unenforceable or not allowable due to the existence of an Insolvency
Proceeding involving any Grantor.
4. GRANTORS REMAIN LIABLE. Anything herein to the contrary
notwithstanding, (a) each of the Grantors shall remain liable under the
contracts and agreements included in the Collateral, including the Pledged
Operating Agreements and the Pledged Partnership Agreements, to perform all of
the duties and obligations thereunder to the same extent as if this Agreement
had not been executed, (b) the exercise by Agent or any other member of the
Lender Group of any of the rights hereunder shall not release any Grantor from
any of its duties or obligations under such contracts and agreements included in
the Collateral, and (c) none of the members of the Lender Group shall have any
obligation or liability under such contracts and agreements included in the
Collateral by reason of this Agreement, nor shall any of the members of the
Lender Group be obligated to perform any of the obligations or duties of any
Grantors thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder. Until an Event of Default shall occur and be
continuing, except as otherwise provided in this Agreement, the Credit
Agreement, or other Loan Documents, Grantors shall have the right to possession
and enjoyment of the Collateral for the purpose of conducting the ordinary
course of their respective businesses, subject to and upon the terms hereof and
of the Credit Agreement and the other Loan Documents. Without limiting the
generality of the foregoing, it is the intention of the parties hereto that
record and beneficial ownership of the Pledged Interests, including all voting,
consensual, and dividend rights, shall remain in the applicable Grantor until
the occurrence of an Event of Default and until Agent shall notify the
applicable Grantor of Agent's exercise of voting, consensual, or dividend rights
with respect to the Pledged Interests pursuant to SECTION 15 hereof.
5. REPRESENTATIONS AND WARRANTIES. Each Grantor hereby represents and
warrants as follows:
(a) The exact legal name of each of the Grantors is set forth on the
signature pages of this Agreement or a written notice provided to Agent pursuant
to SECTION 6.5 of the Credit Agreement.
(b) SCHEDULE 7 attached hereto sets forth all Real Property owned by
Grantors as of the Closing Date.
(c) As of the Closing Date, no Grantor has any interest in, or title
to, any Copyrights, Intellectual Property Licenses, Patents, or Trademarks
except as set forth on SCHEDULES 2, 3, 4, and 6, respectively, attached hereto.
This Agreement is effective to create a valid and continuing Lien on such
Copyrights, Intellectual Property Licenses, Patents and Trademarks and, upon
filing of the Copyright Security Agreement with the United States Copyright
Office and filing of the Patent Security Agreement and the Trademark Security
Agreement with the United States Patent and Trademark Office, and the filing of
appropriate financing statements in the jurisdictions listed on SCHEDULE 8
hereto, all action necessary or desirable to protect and perfect the Security
Interest in and to on each Grantor's Patents, Trademarks, or Copyrights has been
taken and such perfected Security Interest is enforceable as such as against any
and all creditors of and purchasers from any Grantor. No Grantor has any
interest in any Copyright that is necessary in connection with the operation of
such Grantor's business, except for those Copyrights identified on SCHEDULE 2
attached hereto which have been registered with the United States Copyright
Office.
(d) This Agreement creates a valid security interest in the Collateral
of each of Grantors, to the extent a security interest therein can be created
under the Code, securing the payment of the Secured Obligations. Except to the
extent a security interest in the Collateral cannot be perfected by the filing
of a financing statement under the Code, all filings and other actions necessary
or desirable to perfect and protect such security interest have been duly taken
or will have been taken upon the filing of financing statements listing each
applicable Grantor, as a debtor, and Agent, as secured party, in the
jurisdictions listed next to such Grantor's name on SCHEDULE 8 attached hereto.
Upon the making of such filings, Agent shall have a first priority perfected
security interest in the Collateral of each Grantor to the extent such security
interest can be perfected by the filing of a financing statement. All action by
any Grantor necessary to protect and perfect such security interest on each item
of Collateral has been duly taken.
(e) (i) Except for the Security Interest created hereby, each Grantor
is and will at all times be the sole holder of record and the legal and
beneficial owner, free and clear of all Liens other than Permitted Liens, of the
Pledged Interests indicated on SCHEDULE 5 as being owned by such Grantor and,
when acquired by such Grantor, any Pledged Interests acquired after the Closing
Date; (ii) all of the Pledged Interests are duly authorized, validly issued,
fully paid and nonassessable and the Pledged Interests constitute or will
constitute the percentage of the issued and outstanding Stock of the Pledged
Companies of such Grantor identified on SCHEDULE 5 hereto as supplemented or
modified by any Pledged Interests Addendum or any Supplement to this Agreement;
(iii) such Grantor has the right and requisite authority to pledge, the
Investment Related Property pledged by such Grantor to Agent as provided herein;
(iv) all actions necessary or desirable to perfect, establish the first priority
of, or otherwise protect, Agent's Liens in the Investment Related Property, and
the proceeds thereof, have been duly taken, (A) upon the execution and delivery
of this Agreement; (B) upon the taking of possession by Agent of any
certificates constituting the Pledged Interests, to the extent such Pledged
Interests are represented by certificates, together with undated powers endorsed
in blank by the applicable Grantor; (C) upon the filing of financing statements
in the applicable jurisdiction set forth on SCHEDULE 8 attached hereto for such
Grantor with respect to the Pledged Interests of such Grantor that are not
represented by certificates, and (D) with respect to any Securities Accounts,
upon the delivery of Control Agreements with respect thereto; and (v) each
Grantor has delivered to and deposited with Agent (or, with respect to any
Pledged Interests created or obtained after the Closing Date, will deliver and
deposit in accordance with SECTIONS 6(A) and 8 hereof) all certificates
representing the Pledged Interests owned by such Grantor to the extent such
Pledged Interests are represented by certificates, and undated powers endorsed
in blank with respect to such certificates. None of the Pledged Interests owned
or held by such Grantor has been
issued or transferred in violation of any securities registration, securities
disclosure, or similar laws of any jurisdiction to which such issuance or
transfer may be subject.
(f) No consent, approval, authorization, or other order or other action
by, and no notice to or filing with, any Governmental Authority or any other
Person is required (i) for the grant of a Security Interest by such Grantor in
and to the Collateral pursuant to this Agreement or for the execution, delivery,
or performance of this Agreement by such Grantor, or (ii) for the exercise by
Agent of the voting or other rights provided for in this Agreement with respect
to the Investment Related Property or the remedies in respect of the Collateral
pursuant to this Agreement, except as may be required in connection with such
disposition of Investment Related Property by laws affecting the offering and
sale of securities generally. No Intellectual Property License to which such
Grantor is a party requires any consent for such Grantor to grant the security
interest granted hereunder in such Grantor's right, title or interest in or to
any Copyrights, Patents, Trademarks or material Intellectual Property Licenses.
6. COVENANTS. Each Grantor, jointly and severally, covenants and agrees
with Agent that from and after the date of this Agreement and until the date of
termination of this Agreement in accordance with SECTION 22 hereof:
(a) POSSESSION OF COLLATERAL. In the event that any Collateral,
including proceeds, is evidenced by or consists of Negotiable Collateral,
Investment Related Property, or Chattel Paper, and if and to the extent that
perfection or priority of Agent's Security Interest is dependent on or enhanced
by possession, the applicable Grantor, immediately upon the request of Agent,
shall execute such other documents and instruments as shall be requested by
Agent or, if applicable, endorse and deliver physical possession of such
Negotiable Collateral, Investment Related Property, or Chattel Paper to Agent,
together with such undated powers endorsed in blank as shall be requested by
Agent;
(b) CHATTEL PAPER.
(i) Each Grantor shall take all steps reasonably necessary to grant
Agent control of all electronic Chattel Paper in accordance with the Code and
all "transferable records" as that term is defined in Section 16 of the Uniform
Electronic Transaction Act and Section 201 of the federal Electronic Signatures
in Global and National Commerce Act as in effect in any relevant jurisdiction;
(ii) If any Grantor retains possession of any Chattel Paper or
instruments (which retention of possession shall be subject to the extent
permitted hereby and by the Credit Agreement), promptly upon the request of
Agent, such Chattel Paper and instruments shall be marked with the following
legend: "This writing and the obligations evidenced or secured hereby are
subject to the Security Interest of ▇▇▇▇▇ Fargo Foothill, LLC, as Agent for the
benefit of the Lender Group and the Bank Product Providers";
(c) CONTROL AGREEMENTS.
(i) Except to the extent otherwise excused by the Credit Agreement,
each Grantor shall obtain an authenticated Control Agreement, from each bank
maintaining a Deposit Account for such Grantor;
(ii) Except to the extent otherwise excused by the Credit
Agreement, each Grantor shall obtain an authenticated Control Agreement, from
each issuer of uncertificated securities, securities intermediary, or
commodities intermediary issuing or holding any financial assets or commodities
to or for any Grantor;
(iii) Except to the extent otherwise excused by the Credit
Agreement, each Grantor shall obtain an authenticated Control Agreement with
respect to all of such Grantor's electronic chattel paper, investment property,
and letter-of-credit rights;
(d) LETTER-OF-CREDIT RIGHTS. Each Grantor that is or becomes the
beneficiary of a letter of credit shall promptly (and in any event within 2
Business Days after becoming a beneficiary), notify Agent thereof and, upon the
request by Agent, enter into a tri-party agreement with Agent and the issuer or
confirming bank with respect to letter-of-credit rights assigning such
letter-of-credit rights to Agent and directing all payments thereunder to
Agent's Account, all in form and substance satisfactory to Agent;
(e) COMMERCIAL TORT CLAIMS. Each Grantor shall promptly (and in any
event within 2 Business Days of receipt thereof), notify Agent in writing upon
incurring or otherwise obtaining a Commercial Tort Claim after the date hereof
and, upon request of Agent, promptly amend SCHEDULE 1 to this Agreement to
describe such after-acquired Commercial Tort Claim in a manner that reasonably
identifies such Commercial Tort Claim, and hereby authorizes the filing of
additional financing statements or amendments to existing financing statements
describing such Commercial Tort Claims, and agrees to do such other acts or
things deemed necessary or desirable by Agent to give Agent a first priority,
perfected security interest in any such Commercial Tort Claim;
(f) GOVERNMENT CONTRACTS. If any Account or Chattel Paper arises out of
a contract or contracts with the United States of America or any department,
agency, or instrumentality thereof, Grantors shall promptly (and in any event
within 2 Business Days of the creation thereof) notify Agent thereof in writing
and execute any instruments or take any steps reasonably required by Agent in
order that all moneys due or to become due under such contract or contracts
shall be assigned to Agent, for the benefit of the Lender Group and the Bank
Product Providers, and shall provide written notice thereof under the Assignment
of Claims Act or other applicable law;
(g) INTELLECTUAL PROPERTY.
(i) Upon request of Agent, in order to facilitate filings with the
United States Patent and Trademark Office and the United States Copyright
Office, each Grantor shall execute and deliver to Agent one or more Copyright
Security Agreements, Trademark Security Agreements, or Patent Security
Agreements to further evidence Agent's Lien on such Grantor's Patents,
Trademarks, or Copyrights, and the General Intangibles of such Grantor relating
thereto or represented thereby;
(ii) Each Grantor shall have the duty, to the extent necessary or
economically desirable in the operation of such Grantor's business, (A) to
promptly ▇▇▇ for infringement, misappropriation, or dilution and to recover any
and all damages for such infringement, misappropriation, or dilution, (B) to
prosecute diligently any trademark application or service ▇▇▇▇ application that
is part of the Trademarks pending as of the date hereof or hereafter until the
termination of this Agreement, (C) to prosecute diligently any patent
application that is part of the Patents pending as of the date hereof or
hereafter until the termination of this Agreement, and (D) to take all
reasonable and necessary action to preserve and maintain all of such Grantor's
Trademarks, Patents, Copyrights, Intellectual Property Licenses, and its rights
therein, including the filing of applications for renewal, affidavits of use,
affidavits of noncontestability and opposition and interference and cancellation
proceedings. Each Grantor shall promptly file an application with the United
States Copyright Office for any Copyright that has not been registered with the
United States Copyright Office if such Copyright is necessary in connection with
the operation of such Grantor's business. Any expenses incurred in connection
with the foregoing shall be borne by the appropriate Grantor. Each Grantor
further agrees not to abandon any Trademark, Patent, Copyright, or Intellectual
Property License that is necessary or economically desirable in the operation of
such Grantor's business;
(iii) Grantors acknowledge and agree that the Lender Group shall
have no duties with respect to the Trademarks, Patents, Copyrights, or
Intellectual Property Licenses. Without limiting the generality of this SECTION
6(G), Grantors acknowledge and agree that no member of the Lender Group shall be
under any obligation to take any steps necessary to preserve rights in the
Trademarks, Patents, Copyrights, or Intellectual Property Licenses against any
other Person, but any member of the Lender Group may do so at its option from
and after the occurrence and during the continuance of an Event of Default, and
all expenses
incurred in connection therewith (including reasonable fees and
expenses of attorneys and other professionals) shall be for the sole account of
Borrower and shall be chargeable to the Loan Account;
(iv) In no event shall any Grantor, either itself or through any
agent, employee, licensee, or designee, file an application for the registration
of any Copyright with the United States Copyright Office without giving Agent
prior written notice thereof or any Patent or Trademark with the United States
Patent and Trademark Office without giving Agent written notice thereof promptly
thereafter. Promptly upon any such filing, each Grantor shall comply with
SECTION 6(G)(I) hereof;
(h) INVESTMENT RELATED PROPERTY.
(i) If any Grantor shall receive or become entitled to receive any
Pledged Interests after the Closing Date, it shall promptly (and in any event
within 5 Business Days of receipt thereof) deliver to Agent a duly executed
Pledged Interests Addendum identifying such Pledged Interests;
(ii) All sums of money and property paid or distributed in respect
of the Investment Related Property which are received by any Grantor shall be
held by the Grantors in trust for the benefit of Agent segregated from such
Grantor's other property, and such Grantor shall deliver it forthwith to Agent's
in the exact form received;
(iii) Each Grantor shall promptly deliver to Agent a copy of each
material notice or other communication received by it in respect of any Pledged
Interests;
(iv) No Grantor shall make or consent to any amendment or other
modification or waiver with respect to any Pledged Interests, Pledged Operating
Agreement, or Pledged Partnership Agreement, or enter into any agreement or
permit to exist any restriction with respect to any Pledged Interests other than
pursuant to the Loan Documents;
(v) Each Grantor agrees that it will cooperate with Agent in
obtaining all necessary approvals and making all necessary filings under
federal, state, local, or foreign law in connection with the Security Interest
on the Investment Related Property or any sale or transfer thereof;
(vi) As to all limited liability company or partnership interests,
issued under any Pledged Operating Agreement or Pledged Partnership Agreement,
each Grantor hereby represents, warrants and covenants that the Pledged
Interests issued pursuant to such agreement (A) are not and shall not be dealt
in or traded on securities exchanges or in securities markets, (B) do not and
will not constitute investment company securities, and (C) are not and will not
be held by such Grantor in a securities account. In addition, none of the
Pledged Operating Agreements, the Pledged Partnership Agreements, or any other
agreements governing any of the Pledged Interests issued under any Pledged
Operating Agreement or Pledged Partnership Agreement, provide or shall provide
that such Pledged Interests are securities governed by Article 8 of the Uniform
Commercial Code as in effect in any relevant jurisdiction;
(i) REAL PROPERTY; FIXTURES. Each Grantor covenants and agrees that
upon the acquisition of any fee interest in Real Property it will promptly (and
in any event within 5 Business Days of acquisition) notify Agent of the
acquisition of such Real Property and, to the extent required by SECTION 5.12 of
the Credit Agreement, will grant to Agent, for the benefit of the Lender Group
and the Bank Product Providers, a first priority Mortgage on each fee interest
in Real Property now or hereafter owned by such Grantor and shall deliver such
other documentation and opinions, in form and substance satisfactory to Agent,
in connection with the grant of such Mortgage as Agent shall request in its
Permitted Discretion, including title insurance policies, financing statements,
fixture filings and environmental audits and such Grantor shall pay all
recording costs, intangible taxes and other fees and costs (including reasonable
attorneys fees and expenses) incurred in connection therewith. Each Grantor
acknowledges and agrees that, to the extent permitted by
applicable law, all of the Collateral shall remain personal property regardless
of the manner of its attachment or affixation to real property;
(j) TRANSFERS AND OTHER LIENS. Grantors shall not (i) sell, assign (by
operation of law or otherwise) or otherwise dispose of, or grant any option with
respect to, any of the Collateral, except expressly permitted by the Credit
Agreement, or (ii) create or permit to exist any Lien upon or with respect to
any of the Collateral of any of Grantors, except for Permitted Liens. The
inclusion of Proceeds in the Collateral shall not be deemed to constitute
Agent's consent to any sale or other disposition of any of the Collateral except
as expressly permitted in this Agreement or the other Loan Documents;
(k) OTHER ACTIONS AS TO ANY AND ALL COLLATERAL. Each Grantor shall
promptly (and in any event within 2 Business Days of acquiring or obtaining such
Collateral) notify Agent in writing upon (i) acquiring or otherwise obtaining
any Collateral after the date hereof consisting of Trademarks, Patents,
Copyrights, Intellectual Property Licenses, Investment Related Property, Chattel
Paper (electronic, tangible or otherwise), documents (as defined in Article 9 of
the Code), promissory notes (as defined in the Code, or instruments (as defined
in the Code) or (ii) any amount payable under or in connection with any of the
Collateral being or becoming evidenced after the date hereof by any Chattel
Paper, documents, promissory notes, or instruments and, in each such case upon
the request of Agent, promptly execute such other documents, or if applicable,
deliver such Chattel Paper, other documents or certificates evidencing any
Investment Related Property and do such other acts or things deemed necessary or
desirable by Agent to protect Agent's Security Interest therein;
(l) CONTROLLED ACCOUNTS.
(i) Parent shall and shall cause each other Loan Party to (i)
establish and maintain cash management services of a type and on terms
reasonably satisfactory to Agent at one or more of the banks set forth on
SCHEDULE 6(L) (each a "CONTROLLED ACCOUNT BANK"), and shall take reasonable
steps to ensure that all of its and its Subsidiaries' Account Debtors forward
payment of the amounts owed by them directly to such Controlled Account Bank,
and (ii) deposit or cause to be deposited promptly, and in any event no later
than the second Business Day after the date of receipt thereof, all of their
Collections (including those sent directly by their Account Debtors to a Loan
Party) into a bank account of such Loan Party (each, a "CONTROLLED ACCOUNT") at
one of the Controlled Account Banks.
(ii) Each Controlled Account Bank shall establish and maintain
Controlled Account Agreements with Agent and the applicable Loan Party, in form
and substance reasonably acceptable to Agent. Each such Controlled Account
Agreement shall provide, among other things, that (a) the Controlled Account
Bank will comply with any instructions originated by Agent directing the
disposition of the funds in such Controlled Account without further consent by
the applicable Loan Party, (b) the Controlled Account Bank has no rights of
setoff or recoupment or any other claim against the applicable Controlled
Account other than for payment of its service fees and other charges directly
related to the administration of such Controlled Account and for returned checks
or other items of payment, and (c) upon the instruction of the Agent (an
"ACTIVATION INSTRUCTION"), the Controlled Account Bank will forward by daily
sweep all amounts in the applicable Controlled Account to the Agent's Account.
Agent agrees not to issue an Activation Instruction with respect to the
Controlled Accounts unless a Triggering Event has occurred and is continuing at
the time such Activation Instruction is issued. Agent agrees to use commercially
reasonable efforts to rescind an Activation Instruction (the "RESCISSION") if:
(x) the Triggering Event upon which such Activation Instruction was issued has
been waived in writing in accordance with the terms of this Agreement, and (y)
no additional Triggering Event has occurred and is continuing prior to the date
of the Rescission or is reasonably expected to occur on or immediately after the
date of the Rescission.
(iii) So long as no Default or Event of Default has occurred and is
continuing, Borrower may amend Schedule 6(l) to add or replace a Controlled
Account Bank or Controlled Account; PROVIDED, HOWEVER, that (i) such prospective
Controlled Account Bank shall be reasonably satisfactory to
Agent, and (ii) prior to the time of the opening of such Controlled Account, the
applicable Loan Party and such prospective Controlled Account Bank shall have
executed and delivered to Agent a Controlled Account Agreement. Parent shall and
shall cause each Loan Party to close any of its Controlled Accounts (and
establish replacement Controlled Account accounts in accordance with the
foregoing sentence) as promptly as practicable and in any event within 45 days
of notice from Agent that the operating performance, funds transfer, or
availability procedures or performance of the Controlled Account Bank with
respect to Controlled Account Accounts or Agent's liability under any Controlled
Account Agreement with such Controlled Account Bank is no longer acceptable in
Agent's reasonable judgment.
7. RELATION TO OTHER SECURITY DOCUMENTS. The provisions of this Agreement
shall be read and construed with the other Loan Documents referred to below in
the manner so indicated.
(a) CREDIT AGREEMENT. In the event of any conflict between any
provision in this Agreement and a provision in the Credit Agreement, such
provision of the Credit Agreement shall control.
(b) PATENT, TRADEMARK, COPYRIGHT SECURITY AGREEMENTS. The provisions of
the Copyright Security Agreements, Trademark Security Agreements, and Patent
Security Agreements are supplemental to the provisions of this Agreement, and
nothing contained in the Copyright Security Agreements, Trademark Security
Agreements, or the Patent Security Agreements shall limit any of the rights or
remedies of Agent hereunder.
8. FURTHER ASSURANCES.
(a) Each Grantor agrees that from time to time, at its own expense,
such Grantor will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or that Agent may
reasonably request, in order to perfect and protect the Security Interest
granted or purported to be granted hereby or to enable Agent to exercise and
enforce its rights and remedies hereunder with respect to any of the Collateral.
(b) Each Grantor authorizes the filing by Agent financing or
continuation statements, or amendments thereto, and such Grantor will execute
and deliver to Agent such other instruments or notices, as may be necessary or
as Agent may reasonably request, in order to perfect and preserve the Security
Interest granted or purported to be granted hereby.
(c) Each Grantor authorizes Agent at any time and from time to time to
file, transmit, or communicate, as applicable, financing statements and
amendments (i) describing the Collateral as "all personal property of debtor" or
"all assets of debtor" or words of similar effect, (ii) describing the
Collateral as being of equal or lesser scope or with greater detail, or (iii)
that contain any information required by part 5 of Article 9 of the Code for the
sufficiency or filing office acceptance. Each Grantor also hereby ratifies any
and all financing statements or amendments previously filed by Agent in any
jurisdiction.
(d) Each Grantor acknowledges that it is not authorized to file any
financing statement or amendment or termination statement with respect to any
financing statement filed in connection with this Agreement without the prior
written consent of Agent, subject to such Grantor's rights under Section
9-509(d)(2) of the Code.
9. AGENT'S RIGHT TO PERFORM CONTRACTS, EXERCISE RIGHTS, ETC. Upon the
occurrence and during the continuance of an Event of Default, Agent (or its
designee) (a) may proceed to perform any and all of the obligations of any
Grantor contained in any contract, lease, or other agreement and exercise any
and all rights of any Grantor therein contained as fully as such Grantor itself
could, (b) shall have the right to use any Grantor's rights under Intellectual
Property Licenses in connection with the enforcement of the Agent's rights
hereunder, including the right to prepare for sale and sell any and all
Inventory and Equipment now or
hereafter owned by any Grantor and now or hereafter covered by such licenses,
and (c) shall have the right to request that any Stock that is pledged hereunder
be registered in the name of Agent or any of its nominees.
10. AGENT APPOINTED ATTORNEY-IN-FACT. Each Grantor hereby irrevocably
appoints Agent its attorney-in-fact, with full authority in the place and stead
of such Grantor and in the name of such Grantor or otherwise, at such time as an
Event of Default has occurred and is continuing under the Credit Agreement, to
take any action and to execute any instrument which Agent may reasonably deem
necessary or advisable to accomplish the purposes of this Agreement, including:
(a) to ask, demand, collect, ▇▇▇ for, recover, compromise, receive and
give acquittance and receipts for moneys due and to become due under or in
connection with the Accounts or any other Collateral of such Grantor;
(b) to receive and open all mail addressed to such Grantor and to
notify postal authorities to change the address for the delivery of mail to such
Grantor to that of Agent;
(c) to receive, indorse, and collect any drafts or other instruments,
documents, Negotiable Collateral or Chattel Paper;
(d) to file any claims or take any action or institute any proceedings
which Agent may deem necessary or desirable for the collection of any of the
Collateral of such Grantor or otherwise to enforce the rights of Agent with
respect to any of the Collateral;
(e) to repair, alter, or supply goods, if any, necessary to fulfill in
whole or in part the purchase order of any Person obligated to such Grantor in
respect of any Account of such Grantor;
(f) to use any labels, Patents, Trademarks, trade names, URLs, domain
names, industrial designs, Copyrights, advertising matter or other industrial or
intellectual property rights, in advertising for sale and selling Inventory and
other Collateral and to collect any amounts due under Accounts, contracts or
Negotiable Collateral of such Grantor; and
(g) Agent on behalf of the Lender Group shall have the right, but shall
not be obligated, to bring suit in its own name to enforce the Trademarks,
Patents, Copyrights and Intellectual Property Licenses and, if Agent shall
commence any such suit, the appropriate Grantor shall, at the request of Agent,
do any and all lawful acts and execute any and all proper documents reasonably
required by Agent in aid of such enforcement.
To the extent permitted by law, each Grantor hereby ratifies all that such
attorney-in-fact shall lawfully do or cause to be done by virtue hereof. This
power of attorney is coupled with an interest and shall be irrevocable until
this Agreement is terminated.
11. AGENT MAY PERFORM. If any of Grantors fails to perform any agreement
contained herein, Agent may itself perform, or cause performance of, such
agreement, and the reasonable expenses of Agent incurred in connection therewith
shall be payable, jointly and severally, by Grantors.
12. AGENT'S DUTIES. The powers conferred on Agent hereunder are solely to
protect Agent's interest in the Collateral, for the benefit of the Lender Group
and the Bank Product Providers, and shall not impose any duty upon Agent to
exercise any such powers. Except for the safe custody of any Collateral in its
actual possession and the accounting for moneys actually received by it
hereunder, 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. Agent shall be deemed to have exercised reasonable
care in the custody and preservation of any Collateral in its actual possession
if such Collateral is accorded treatment substantially equal to that which Agent
accords its own property.
13. COLLECTION OF ACCOUNTS, GENERAL INTANGIBLES AND NEGOTIABLE COLLATERAL.
At any time upon the occurrence and during the continuation of an Event of
Default, Agent or Agent's designee may (a) notify Account Debtors of any Grantor
that the Accounts, General Intangibles, Chattel Paper or Negotiable Collateral
have been assigned to Agent, for the benefit of the Lender Group and the Bank
Product Providers, or that Agent has a security interest therein, and (b)
collect the Accounts, General Intangibles and Negotiable Collateral directly,
and any collection costs and expenses shall constitute part of such Grantor's
Secured Obligations under the Loan Documents.
14. DISPOSITION OF PLEDGED INTERESTS BY AGENT. None of the Pledged
Interests existing as of the date of this Agreement are, and none of the Pledged
Interests hereafter acquired on the date of acquisition thereof will be,
registered or qualified under the various federal or state securities laws of
the United States and disposition thereof after an Event of Default may be
restricted to one or more private (instead of public) sales in view of the lack
of such registration. Each Grantor understands that in connection with such
disposition, Agent may approach only a restricted number of potential purchasers
and further understands that a sale under such circumstances may yield a lower
price for the Pledged Interests than if the Pledged Interests were registered
and qualified pursuant to federal and state securities laws and sold on the open
market. Each Grantor, therefore, agrees that: (a) if Agent shall, pursuant to
the terms of this Agreement, sell or cause the Pledged Interests or any portion
thereof to be sold at a private sale, Agent shall have the right to rely upon
the advice and opinion of any nationally recognized brokerage or investment firm
(but shall not be obligated to seek such advice and the failure to do so shall
not be considered in determining the commercial reasonableness of such action)
as to the best manner in which to offer the Pledged Interest or any portion
thereof for sale and as to the best price reasonably obtainable at the private
sale thereof; and (b) such reliance shall be conclusive evidence that Agent has
handled the disposition in a commercially reasonable manner.
15. VOTING RIGHTS.
(a) Upon the occurrence and during the continuation of an Event of
Default, (i) Agent may, at its option, and with 2 Business Days prior notice to
any Grantor, and in addition to all rights and remedies available to Agent under
any other agreement, at law, in equity, or otherwise, exercise all voting
rights, and all other ownership or consensual rights in respect of the Pledged
Interests owned by such Grantor, but under no circumstances is Agent obligated
by the terms of this Agreement to exercise such rights, and (ii) if Agent duly
exercises its right to vote any of such Pledged Interests, each Grantor hereby
appoints Agent, such Grantor's true and lawful attorney-in-fact and IRREVOCABLE
PROXY to vote such Pledged Interests in any manner Agent deems advisable for or
against all matters submitted or which may be submitted to a vote of
shareholders, partners or members, as the case may be. The power-of-attorney
granted hereby is coupled with an interest and shall be irrevocable.
(b) For so long as any Grantor shall have the right to vote the Pledged
Interests owned by it, such Grantor covenants and agrees that it will not,
without the prior written consent of Agent, vote or take any consensual action
with respect to such Pledged Interests which would materially adversely affect
the rights of Agent and the other members of the Lender Group or the value of
the Pledged Interests.
16. REMEDIES. Upon the occurrence and during the continuance of an Event
of Default:
(a) Agent may, and, at the instruction of the Required Lenders, shall
exercise in respect of the Collateral, in addition to other rights and remedies
provided for herein, in the other Loan Documents, or otherwise available to it,
all the rights and remedies of a secured party on default under the Code or any
other applicable law. Without limiting the generality of the foregoing, each
Grantor expressly agrees that, in any such event, Agent without demand of
performance or other demand, advertisement or notice of any kind (except a
notice specified below of time and place of public or private sale) to or upon
any of Grantors or any other Person (all and each of which demands,
advertisements and notices are hereby expressly waived to the maximum extent
permitted by the Code or any other applicable law), may take immediate
possession of all or any portion of the Collateral and (i) require Grantors to,
and each Grantor hereby agrees that it will at its own
expense and upon request of Agent forthwith, assemble all or part of the
Collateral as directed by Agent and make it available to Agent at one or more
locations where such Grantor regularly maintains Inventory, and (ii) without
notice except as specified below, sell the Collateral or any part thereof in one
or more parcels at public or private sale, at any of Agent's offices or
elsewhere, for cash, on credit, and upon such other terms as Agent may deem
commercially reasonable. Each Grantor agrees that, to the extent notice of sale
shall be required by law, at least 10 days notice to any of Grantors 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 and specifically such notice shall
constitute a reasonable "authenticated notification of disposition" within the
meaning of Section 9-611 of the Code. Agent shall not be obligated to make any
sale of Collateral regardless of notice of sale having been given. 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.
(b) Agent is hereby granted a license or other right to use, without
liability for royalties or any other charge, each Grantor's labels, Patents,
Copyrights, rights of use of any name, trade secrets, trade names, Trademarks,
service marks and advertising matter, URLs, domain names, industrial designs,
other industrial or intellectual property or any property of a similar nature,
whether owned by any of Grantors or with respect to which any of Grantors have
rights under license, sublicense, or other agreements but only to the extent (i)
such license, sublicense or agreement does not prohibit such use by Agent and
(ii) such Grantor will not be in default under such license, sublicense, or
other agreement as a result of such use by Agent, as it pertains to the
Collateral, in preparing for sale, advertising for sale and selling any
Collateral, and each Grantor's rights under all licenses and all franchise
agreements shall inure to the benefit of Agent.
(c) Agent may, in addition to other rights and remedies provided for
herein, in the other Loan Documents, or otherwise available to it under
applicable law and without the requirement of notice to or upon any of Grantors
or any other Person (which notice is hereby expressly waived to the maximum
extent permitted by the Code or any other applicable law), (i) with respect to
any of Grantors' Deposit Accounts in which Agent's Liens are perfected by
control under Section 9-104 of the Code, instruct the bank maintaining such
Deposit Account for the applicable Grantor to pay the balance of such Deposit
Account to or for the benefit of Agent, and (ii) with respect to any of
Grantors' Securities Accounts in which the Agent's Liens are perfected by
control under Section 9-106 of the Code, instruct the securities intermediary
maintaining such Securities Account for the applicable Grantor to (A) transfer
any cash in such Securities Account to or for the benefit of Agent, or (B)
liquidate any financial assets in such Securities Account that are customarily
sold on a recognized market and transfer the cash proceeds thereof to or for the
benefit of Agent.
(d) Any cash held by Agent as Collateral and all cash proceeds received
by Agent in respect of any sale of, collection from, or other realization upon
all or any part of the Collateral shall be applied against the Secured
Obligations in the order set forth in the Credit Agreement. In the event the
proceeds of Collateral are insufficient to satisfy all of the Secured
Obligations in full, each Grantor shall remain jointly and severally liable for
any such deficiency.
(e) Each Grantor hereby acknowledges that the Secured Obligations arose
out of a commercial transaction, and agrees that if an Event of Default shall
occur and be continuing Agent shall have the right to an immediate writ of
possession without notice of a hearing. Agent shall have the right to the
appointment of a receiver for the properties and assets of each of Grantors, and
each Grantor hereby consents to such rights and such appointment and hereby
waives any objection such Grantors may have thereto or the right to have a bond
or other security posted by Agent.
17. REMEDIES CUMULATIVE. Each right, power, and remedy of Agent as
provided for in this Agreement or in the other Loan Documents or now or
hereafter existing at law or in equity or by statute or otherwise shall be
cumulative and concurrent and shall be in addition to every other right, power,
or remedy provided for in this Agreement or in the other Loan Documents or now
or hereafter existing at law or in equity or by statute or otherwise, and the
exercise or beginning of the exercise by Agent, of any one or more of such
rights, powers, or remedies shall not preclude the simultaneous or later
exercise by Agent of any or all such other rights, powers, or remedies.
18. MARSHALING. Agent shall not be required to marshal any present or
future collateral security (including but not limited to the Collateral) for, or
other assurances of payment of, the Secured Obligations or any of them or to
resort to such collateral security or other assurances of payment in any
particular order, and all of its rights and remedies hereunder and in respect of
such collateral security and other assurances of payment shall be cumulative and
in addition to all other rights and remedies, however existing or arising. To
the extent that it lawfully may, each Grantor hereby agrees that it will not
invoke any law relating to the marshaling of collateral which might cause delay
in or impede the enforcement of Agent's rights and remedies under this Agreement
or under any other instrument creating or evidencing any of the Secured
Obligations or under which any of the Secured Obligations is outstanding or by
which any of the Secured Obligations is secured or payment thereof is otherwise
assured, and, to the extent that it lawfully may, each Grantor hereby
irrevocably waives the benefits of all such laws.
19. INDEMNITY AND EXPENSES.
(a) Each Grantor agrees to indemnify Agent and the other members of the
Lender Group from and against all claims, lawsuits and liabilities (including
reasonable attorneys fees) growing out of or resulting from this Agreement
(including enforcement of this Agreement) or any other Loan Document to which
such Grantor is a party, except claims, losses or liabilities resulting from the
gross negligence or willful misconduct of the party seeking indemnification as
determined by a final non-appealable order of a court of competent jurisdiction.
This provision shall survive the termination of this Agreement and the Credit
Agreement and the repayment of the Secured Obligations.
(b) Grantors, jointly and severally, shall, upon demand, pay to Agent
(or Agent, may charge to the Loan Account) all the Lender Group Expenses which
Agent may incur in connection with (i) the administration of this Agreement,
(ii) the custody, preservation, use or operation of, or, upon an Event of
Default, the sale of, collection from, or other realization upon, any of the
Collateral in accordance with this Agreement and the other Loan Documents, (iii)
the exercise or enforcement of any of the rights of Agent hereunder or (iv) the
failure by any of Grantors to perform or observe any of the provisions hereof.
20. MERGER, AMENDMENTS; ETC. THIS AGREEMENT, TOGETHER WITH THE OTHER LOAN
DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES. No waiver
of any provision of this Agreement, and no consent to any departure by any of
Grantors herefrom, shall in any event be effective unless the same shall be in
writing and signed by Agent, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given. No
amendment of any provision of this Agreement shall be effective unless the same
shall be in writing and signed by Agent and each of Grantors to which such
amendment applies.
21. ADDRESSES FOR NOTICES. All notices and other communications provided
for hereunder shall be given in the form and manner and delivered to Agent at
its address specified in the Credit Agreement, and to any of the Grantors at
their respective addresses specified in the Credit Agreement or Guaranty, as
applicable, or, as to any party, at such other address as shall be designated by
such party in a written notice to the other party.
22. CONTINUING SECURITY INTEREST: ASSIGNMENTS UNDER CREDIT AGREEMENT. This
Agreement shall create a continuing security interest in the Collateral and
shall (a) remain in full force and effect until the Obligations have been paid
in full in cash in accordance with the provisions of the Credit Agreement and
the Commitments have expired or have been terminated, (b) be binding upon each
of Grantors, and their respective successors and assigns, and (c) inure to the
benefit of, and be enforceable by, Agent, and its
successors, transferees and assigns. Without limiting the generality of the
foregoing clause (c), any Lender may, in accordance with the provisions of the
Credit Agreement, assign or otherwise transfer all or any portion of its rights
and obligations under the Credit Agreement to any other Person, and such other
Person shall thereupon become vested with all the benefits in respect thereof
granted to such the Lender herein or otherwise. Upon payment in full in cash of
the Obligations in accordance with the provisions of the Credit Agreement and
the expiration or termination of the Commitments, the Security Interest granted
hereby shall terminate and all rights to the Collateral shall revert to Grantors
or any other Person entitled thereto. At such time, Agent will authorize the
filing of appropriate termination statements to terminate such Security
Interests. No transfer or renewal, extension, assignment, or termination of this
Agreement or of the Credit Agreement, any other Loan Document, or any other
instrument or document executed and delivered by any Grantor to Agent nor any
additional Advances or other loans made by any Lender to Borrower, nor the
taking of further security, nor the retaking or re-delivery of the Collateral to
Grantors, or any of them, by Agent, nor any other act of the Lender Group or the
Bank Product Providers, or any of them, shall release any of Grantors from any
obligation, except a release or discharge executed in writing by Agent in
accordance with the provisions of the Credit Agreement. Agent shall not by any
act, delay, omission or otherwise, be deemed to have waived any of its rights or
remedies hereunder, unless such waiver is in writing and signed by Agent and
then only to the extent therein set forth. A waiver by Agent of any right or
remedy on any occasion shall not be construed as a bar to the exercise of any
such right or remedy which Agent would otherwise have had on any other occasion.
23. GOVERNING LAW.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (EXCEPT
AS EXPRESSLY PROVIDED IN SECTION 23(B) AND UNLESS EXPRESSLY PROVIDED TO THE
CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS
OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER
OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(b) THE VALIDITY OF SECTION 2 OF THIS AGREEMENT, SOLELY WITH RESPECT TO
THE GRANT OF A CONTINUING SECURITY INTEREST IN PERMITS OR LICENSES THAT ARE
SUBJECT TO REGULATION BY OR CONSENT OF ANY GOVERNMENTAL AUTHORITY (INCLUDING
LIQUOR LICENSES AND FRANCHISES), THE CONSTRUCTION, INTERPRETATION, AND
ENFORCEMENT THEREOF, AND THE RIGHTS OF THE PARTIES HERETO WITH RESPECT THERETO
SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF DELAWARE.
(c) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT SHALL BE TRIED AND LITIGATED ONLY IN THE STATE OF
NEW YORK AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED
IN THE COUNTY OF NEW YORK, STATE OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT
SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT
AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING
SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. AGENT AND
EACH GRANTOR WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH
MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO
THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 23(C).
(d) TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, AGENT AND EACH
GRANTOR HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. AGENT AND
EACH GRANTOR REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.
24. NEW SUBSIDIARIES. Pursuant to SECTION 5.11 of the Credit Agreement,
any new direct or indirect Subsidiary (whether by acquisition or creation) of
Grantor is required to enter into this Agreement by executing and delivering in
favor of Agent a supplement to this Agreement in the form of ANNEX 1 attached
hereto. Upon the execution and delivery of ANNEX 1 by such new Subsidiary, such
Subsidiary shall become a Grantor hereunder with the same force and effect as if
originally named as a Grantor herein. The execution and delivery of any
instrument adding an additional Grantor as a party to this Agreement shall not
require the consent of any Grantor hereunder. The rights and obligations of each
Grantor hereunder shall remain in full force and effect notwithstanding the
addition of any new Grantor hereunder.
25. AGENT. Each reference herein to any right granted to, benefit
conferred upon or power exercisable by the "Agent" shall be a reference to
Agent, for the benefit of the Lender Group and the Bank Product Providers.
26. MISCELLANEOUS.
(a) This Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which, when executed and
delivered, shall be deemed to be an original, and all of which, when taken
together, shall constitute but one and the same Agreement. Delivery of an
executed counterpart of this Agreement by telefacsimile or other electronic
method of transmission shall be equally as effective as delivery of an original
executed counterpart of this Agreement. Any party delivering an executed
counterpart of this Agreement by telefacsimile or other electronic method of
transmission also shall deliver an original executed counterpart of this
Agreement but the failure to deliver an original executed counterpart shall not
affect the validity, enforceability, and binding effect of this Agreement. The
foregoing shall apply to each other Loan Document MUTATIS MUTANDIS.
(b) Any provision of this Agreement which is prohibited or
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof in that
jurisdiction or affecting the validity or enforceability of such provision in
any other jurisdiction.
(c) Headings used in this Agreement are for convenience only and shall
not be used in connection with the interpretation of any provision hereof.
(d) The pronouns used herein shall include, when appropriate, either
gender and both singular and plural, and the grammatical construction of
sentences shall conform thereto.
(e) Unless the context of this Agreement or any other Loan Document
clearly requires otherwise, references to the plural include the singular,
references to the singular include the plural, the terms "includes" and
"including" are not limiting, and the term "or" has, except where otherwise
indicated, the inclusive meaning represented by the phrase "and/or." The words
"hereof," "herein," "hereby," "hereunder," and similar terms in this Agreement
or any other Loan Document refer to this Agreement or such other Loan Document,
as the case may be, as a whole and not to any particular provision of this
Agreement or such other Loan Document, as the case may be. Section, subsection,
clause, schedule, and exhibit references herein are to
this Agreement unless otherwise specified. Any reference in this Agreement or in
any other Loan Document to any agreement, instrument, or document shall include
all alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). Any reference herein or in any
other Loan Document to the satisfaction or repayment in full of the Obligations
shall mean the repayment in full in cash (or cash collateralization in
accordance with the terms of the Credit Agreement) of all Obligations other than
unasserted contingent indemnification Obligations and other than any Bank
Product Obligations that, at such time, are allowed by the Bank Product
Providers to remain outstanding and that are not required by the provisions of
the Credit Agreement to be repaid or cash collateralized. Any reference herein
to any Person shall be construed to include such Person's successors and
assigns. Any requirement of a writing contained herein or in any other Loan
Document shall be satisfied by the transmission of a Record.
[SIGNATURE PAGE TO SECURITY AGREEMENT]
IN WITNESS WHEREOF, the undersigned parties hereto have executed
this Agreement by and through their duly authorized officers, as of the day and
year first above written.
GRANTORS:
▇▇▇▇▇▇▇ & ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇'▇ HOLDING INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Secretary
▇▇▇▇▇▇▇ & ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇'▇ INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Secretary
▇▇▇▇▇▇▇ & ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇'▇ REALTY LLC,
a Delaware limited liability company
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Secretary
▇▇▇▇▇▇▇ FINANCE CORP.,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Secretary
WILSHIRE RESTAURANT GROUP LLC,
a Delaware limited liability company
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Secretary
[SIGNATURE PAGE TO SECURITY AGREEMENT]
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ PIE SHOPS, INC.,
a California corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Secretary
MACAL INVESTORS, INC.,
a California corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Secretary
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ WHOLESALERS, INC.,
a California corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Secretary
FIV CORP.,
a Delaware corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
---------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title: Vice President, Secretary
MCID, INC.,
an Idaho corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Secretary
WILSHIRE BEVERAGE, INC.,
a Texas corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President, Vice President, Treasurer,
Secretary
[SIGNATURE PAGE TO SECURITY AGREEMENT]
AGENT: ▇▇▇▇▇ FARGO FOOTHILL, LLC,
a Delaware limited liability company, as Agent
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
