Exhibit 10.3
EXHIBIT N,
AS EXECUTED
FORM OF
SECURITY AGREEMENT
Dated December 20, 2002
From
The Grantors referred to herein
as Grantors
to
BANK OF AMERICA, N.A.
as Collateral Agent
T A B L E O F C O N T E N T S
SECTION PAGE
Section 1. Grant of Security ......................................... 2
Section 2. Security for Obligations .................................. 7
Section 3. Grantors Remain Liable .................................... 7
Section 4. Delivery and Control of Security Collateral ............... 7
Section 5. Maintaining the Account Collateral ........................ 9
Section 6. Investing of Amounts in the Cash Collateral Account ....... 9
Section 7. Maintaining Electronic Chattel Paper, Transferable
Records and Letter-of-Credit Rights and Giving Notice of
Commercial Tort Claims .................................... 10
Section 8. Representations and Warranties ............................ 10
Section 9. Further Assurances ........................................ 15
Section 10. As to Equipment and Inventory ............................. 16
Section 11. Insurance ................................................. 17
Section 12. Post-Closing Changes; Bailees; Collections on Assigned
Agreements, Receivables and Related Contracts ............. 18
Section 13. As to Intellectual Property Collateral .................... 20
Section 14. Voting Rights; Dividends; Etc. ............................ 21
Section 15. As to the Assigned Agreements ............................. 22
Section 16. Payments Under the Assigned Agreements .................... 23
Section 17. As to Letter-of-Credit Rights ............................. 23
Section 18. Transfers and Other Liens; Additional Shares .............. 24
Section 19. Collateral Agent Appointed Attorney-in-Fact ............... 24
Section 20. Collateral Agent May Perform .............................. 24
Section 21. The Collateral Agent's Duties ............................. 25
Section 22. Remedies .................................................. 25
Section 23. Indemnity and Expenses .................................... 27
Section 24. Amendments; Waivers; Additional Grantors; Etc. ............ 28
i
Section 25. Notices, Etc.............................................. 29
Section 26. Continuing Security Interest; Assignments Under the Credit
Agreement............................................... 30
Section 27. Release; Termination...................................... 30
Section 28. Execution in Counterparts................................. 30
Section 29. The Mortgages............................................. 30
Section 30. Governing Law............................................. 32
Schedules I -- Location, Chief Executive Office, Place Where Agreements
Are Maintained, Type of Organization, Jurisdiction of
Organization and Organizational Identification Number
Schedule II -- Pledged Equity and Pledged Debt
Schedule III -- Locations of Equipment and Inventory
Schedule IV -- Changes in Name, Location, Etc.
Schedule V -- Patents, Trademarks and Trade Names, Copyrights and IP
Agreements
Schedule VI -- Securities Accounts and Commodity Accounts
Schedule VII -- Commercial Tort Claims
Schedule VIII -- Letters of Credit
Exhibits
Exhibit A -- Form of Security Agreement Supplement
Exhibit B -- Form of Consent and Agreement
Exhibit C -- Form of Securities Account Control Agreement
Exhibit D -- Form of Commodity Account Control Agreement
Exhibit E -- Form of Intellectual Property Security Agreement
Exhibit F -- Form of Intellectual Property Security Agreement Supplement
Exhibit G -- Form of Consent to Assignment of Letter of Credit Rights
ii
SECURITY AGREEMENT
SECURITY AGREEMENT dated December 20, 2002 made by DEL MONTE CORPORATION
(formerly known as SKF Foods, Inc.), a Delaware corporation (the "Company"),
the other Persons listed on the signature pages hereof and the Additional
Grantors is defined in Section 25)(the Company, the Persons so listed and the
Additional Grantors being, collectively, the "GRANTORS"), to BANK OF AMERICA,
N.A. ("BANK OF AMERICA"), as collateral agent (in such capacity, together with
any successor collateral agent appointed pursuant to Article VII of the Credit
Agreement (as hereinafter defined), the ("COLLATERAL AGENT") for the Secured
Parties (as defined in the Credit Agreement).
PRELIMINARY STATEMENTS.
(1) The Company has entered into a Credit Agreement, dated as of December
2002 (said Agreement, as it may hereafter be amended, amended and restated,
supplemented otherwise modified from time to time, being the "CREDIT
AGREEMENT"), with the lenders and Agents (each as defined therein).
(2) Pursuant to the Credit Agreement, the Grantors are entering into this
Agreement in order to grant the Collateral Agent for the ratable benefit of the
Secured Parties a security interest in the Collateral (as hereinafter defined).
(3) Each Grantor is the owner of the shares of stock or other Equity
Interests (the "INITIAL PLEDGED EQUITY") set forth opposite such Grantor's name
on and as otherwise described in Part I of Schedule II hereto and issued by the
Persons named therein and of the indebtedness (the "Initial Pledged Debt") set
forth opposite such Grantor's name on and as otherwise described in Part II of
Schedule II hereto and issued by the obligors named therein.
(4) Each Grantor has established (i) the securities accounts with the
securities intermediaries identified on Part I of Schedule VI hereto (the
"SECURITIES ACCOUNTS") and (ii) the commodities accounts with the commodity
intermediaries identified on Part II of Schedule VI hereto (the "COMMODITY
ACCOUNTS").
(5) The Company has opened a collateral deposit account (the "CASH
COLLATERAL ACCOUNT"), with Bank of America at its office in
New York,
New York
in the name of the Collateral Agent and under the sole control and domination of
the Collateral Agent and subject to the terms of this Agreement.
(6) The Company is the beneficiary under certain letters of credit as
described Schedule VIII.
(7) It is a condition precedent to the making of Advances and the issuance
of Letters of Credit by the Lenders under the Credit Agreement and the entry
into Swap Contracts by the Lenders or their Affiliates party thereto from time
to time that the Grantors shall have granted the assignment and security
interest and made the pledge and assignment contemplated by this Agreement.
(8) Each Grantor will derive substantial direct and indirect benefit
from the transactions contemplated by the Loan Documents.
(9) Terms defined in the Credit Agreement and not otherwise defined
in this Agreement are used in this Agreement as defined in the Credit Agreement.
Further, unless otherwise defined in this Agreement or in the Credit Agreement,
terms defined in Article 8 or 9 of the UCC (as defined below) and/or in the
Federal Book Entry Regulations (as defined below are used in this Agreement as
such terms are defined in such Article 8 or 9 and/or the Federal Book Entry
Regulations. "UCC" means the Uniform Commercial Code as in effect, from time to
time, in the State of
New York; provided that, if perfection or the effect of
perfection or non-perfection or the priority of any security interest in any
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of
New York, "UCC" means the Uniform
Commercial Code as in effect from time to time in such other jurisdiction for
purposes of the provisions hereof relating to such perfection, effect of
perfection or non-perfection or priority. The term "FEDERAL BOOK ENTRY
REGULATIONS" means (a) the federal regulations contained in Subpart B
("Treasury/Reserve Automated Debt Entry System (TRADES)") governing book-entry
securities consisting of U.S. Treasury bonds, notes and bills and Subpart D
("ADDITIONAL PROVISIONS") of 31 C.F.R. Part 357, 31 C.F.R. Section 357.2,
Section 357.10 through Section 357.14 and Section 357.41 through Section 357.44
and (b) to the extent substantially identical to the federal regulations
referred to in clause (a) above (as in effect from time to time), the federal
regulations governing other book-entry securities.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Lenders to make Advances and issue Letters of Credit under the Credit
Agreement and to induce the Lenders or any of their Affiliates (other than the
Loan Parties) (such parties, the "SWAP COUNTERPARTIES") to enter into the
Permitted Secured Swap Contracts (the "SECURED SWAP CONTRACTS") to enter into
Secured Swap Contracts from time to time, each Grantor hereby agrees with the
Collateral Agent for the ratable benefit of the Secured Parties as follows:
Section 1. Grant of Security. Each Grantor hereby grants to the
Collateral Agent, for the ratable benefit of the Secured Parties, a security
interest in, such Grantor's right, title and interest in and to the following,
in each case, as to each type of property described below, whether now owned or
hereafter acquired by such Grantor, wherever located, and whether now or
hereafter existing or arising (collectively, the "Collateral"):
(a) all equipment in all of its forms, including, without limitation,
all machinery, tools, motor vehicles, vessels, aircraft, furniture and fixtures,
and all parts thereof and all accessions thereto and all software related
thereto, including, without limitation, software that is embedded in and is part
of the equipment (any and all such property being the "EQUIPMENT");
(b) all inventory in all of its forms, including, without limitation,
(i) all raw materials, work in process, finished goods and materials used or
consumed in the manufacture, production, preparation or shipping thereof, (ii)
goods in which such Grantor has an interest in mass or a joint or other interest
or right of any kind (including without limitation, goods in which such Grantor
has an interest or right as consignee) and (iii) goods that are returned to or
repossessed or stopped in transit by such Grantor), and
2
all accessions thereto and products thereof and documents therefor, and all
software related thereto, including, without limitation, software that is
embedded in and is part of the inventory (any and all such property being the
"INVENTORY");
(c) all accounts (including, without limitation, health-care-insurance
receivables), chattel paper (including, without limitation, tangible chattel
paper and electronic chattel paper), instruments (including, without limitation,
promissory notes), deposit accounts, letter-of-credit rights, general
intangibles (including, without limitation, payment intangibles) and other
obligations of any kind, whether or not arising out of or in connection with the
sale or lease of goods or the rendering of services and whether or not earned by
performance, and all rights now or hereafter existing in and to all supporting
obligations and in and to all
security agreements, mortgages, Liens, leases,
letters of credit and other contracts securing or otherwise relating to the
foregoing property (any and all of such accounts, chattel paper, instruments,
deposit accounts, letter-of-credit rights, general intangibles and other
obligations, to the extent not referred to in clause (d), (e) or (f) below,
being the "RECEIVABLES", and any and all such supporting obligations,
security
agreements, mortgages, Liens, leases, letters of credit and other contracts
being the "RELATED CONTRACTS");
(d) the following (the "SECURITY COLLATERAL"):
(i) the Initial Pledged Equity and the certificates, if any,
representing the Initial Pledged Equity, and all dividends, distributions,
return of capital, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of the Initial Pledged Equity and all subscription warrants, rights
or options issued thereon or with respect thereto;
(ii) the Initial Pledged Debt and the instruments, if any, evidencing
the Initial Pledged Debt, and all interest, cash, instruments and other property
from time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of the Initial Pledged Debt;
(iii) all additional shares of stock and other Equity Interests from
time to time acquired by such Grantor in any manner (such shares and other
Equity Interests, together with the Initial Pledged Equity, being the "PLEDGED
EQUITY"), and the certificates, if any, representing such additional shares or
other Equity interests, and all dividends, distributions, return of capital,
cash, instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such shares
or other Equity Interests and all subscription warrants, rights or options
issued thereon or with respect thereto;
(iv) all additional indebtedness from time to time owed to such
Grantor (such indebtedness, together with the Initial Pledged Debt, being the
"PLEDGED DEBT") and the instruments, if any, evidencing such indebtedness, and
all interest, cash, instruments and other property from time to time received,
receivable or
3
otherwise distributed in respect of or in exchange for any or all of
such indebtedness;
(v) each Securities Account, all security entitlements with
respect to all financial assets from time to time credited to any
Securities Account, and financial assets, and all dividends,
distributions, return of capital, interest, cash instruments and
other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such
security entitlements or such financial assets and all subscription
warrants, rights or options issued thereon or with respect thereto;
(vi) each Commodities Account, all commodity contracts from
time to time carried in any Commodities Account, and all value, cash,
instruments and other property from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all
of such commodity contracts; and
(vii) all other investment property (including, without
limitation, all securities, whether certificated or uncertificated,
(B) security entitlements, (C) securities accounts, (D) commodity
contracts and (E) commodity accounts) in which such Grantor has now,
or acquires from time to time hereafter, any right, title or interest
in any manner, and the certificates or instruments, if any,
representing or evidencing such investment property, and all
dividends, distributions, return of capital, interest distributions,
value, cash, instruments, other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for
any or all of such investment property and all subscription warrants,
rights or options issued thereon or with respect thereto.
provided, that in the case of any Voting Interests (whether now owned or
hereafter acquired by the relevant Grantor) in a Person organized under the laws
of a jurisdiction other than the United States or any State thereof, the number
of such Voting Interests such Person pledged pursuant to this Agreement shall be
limited to the lessor of (x) the total number of such Voting Interests owned by
the applicable Grantor and (y) such number as, taken together with the Voting
Interests in such Person pledged by other Grantors hereunder, shall equal 66% of
the total number of such Voting Interests issued by such Person; provided
further that notwithstanding the foregoing, the Lien granted pursuant to this
Section 1 shall not in any way extend to or include and the definition of
"COLLATERAL" and "SECURITY COLLATERAL" shall not include any Grantor's Equity
Interests in Xxxxxx Associates Limited Partnership, Xxxxxx North LLC or Xxxxxx
South LLC 23 to the extent that any Organization Document of such Person
prohibits the applicable Grantor from granting a Lien in the interest of such
Grantor therein (the foregoing Equity Interests being collectively the "EXCLUDED
INITIAL EQUITY INTERESTS"; provided further however that the Excluded Initial
Equity Interests shall cease to be excluded from the Collateral and from the
definitions of "COLLATERAL" and "SECURITY COLLATERAL" on the earlier of (I) the
time that the prohibition of assignment or of the creation of a Lien in such
Excluded Initial Equity Interests is no longer in effect or (II) the applicable
Grantor has obtained the consent of any necessary parties under the terms of the
relevant
4
Organization Document to the assignment of, or creation of a Lien in such
Excluded Initial Equity Interests.
(e) each of the Related Documents and any certificate, opinion, document,
instrument or other agreement delivered to such Grantor in connection with or
pursuant to the Related Documents, any Material Agreement to which such Grantor
is a party, the IP Agreements (as hereinafter defined), and each Swap Contract
(including, without limitation, each Secured Swap Contract) to which such
Grantor is now or may hereafter become a party in each case as such agreements
may be amended, amended and restated, supplemented or otherwise modified from
time to time (collectively, the "ASSIGNED AGREEMENTS"), including, without
limitation, (i) all rights of such Grantor to receive moneys due and to become
due under or pursuant to the Assigned Agreements, (ii) all rights of such
Grantor to receive proceeds of any insurance, indemnity, warranty or guaranty
with respect to the Assigned Agreements, (iii) claims of such Grantor for
damages arising out of or for breach of or default under the Assigned Agreements
and (iv) the right of such Grantor to terminate the Assigned Agreements, to
perform thereunder and to compel performance and otherwise exercise all remedies
thereunder (all such Collateral being the "AGREEMENT COLLATERAL");
(f) the following (collectively, the "ACCOUNT COLLATERAL"):
(i) the Cash Collateral Account and each other deposit account of any
Grantor and all funds and financial assets from time to time credited
thereto (including, without limitation, all Cash Equivalent Investments),
all interest, dividends, distributions, cash, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such funds and financial
assets, and all certificates and instruments, if any, from time to time
representing or evidencing the Cash Collateral Account and such other
deposit accounts;
(ii) all promissory notes, certificates of deposit, deposit accounts,
checks and other instruments from time to time delivered to or otherwise
possessed by the Collateral Agent for or on behalf of such Grantor,
including, without limitation, those delivered or possessed in substitution
for or in addition to any or all of the then existing Account Collateral;
and
(iii) all interest, dividends, distributions, cash, instruments and
other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the then
existing Account Collateral; and
(g) the following (collectively, the "INTELLECTUAL PROPERTY COLLATERAL"):
(i) all patents, patent applications, utility models and statutory
invention registrations, all inventions claimed or disclosed therein and
all improvements thereto ("PATENTS");
(ii) all trademarks, service marks, domain names, trade dress, logos,
designs, slogans, trade names, business names, corporate names and other
source
5
identifiers, whether registered or unregistered (provided that no security
interest shall be granted in United States intent-to-use trademark applications
to the extent that, and solely during the period in which, the grant of a
security interest therein would impair the validity or enforceability of such
intent-to-use trademark applications under applicable federal law), together, in
each case, with the goodwill symbolized thereby ("TRADEMARKS");
(iii) all copyrights, including, without limitation, copyrights in
Computer Software (as hereinafter defined), internet web sites and the content
XXXX thereof, whether registered or unregistered ("COPYRIGHTS");
(iv) all computer software, programs and databases (including without
limitation, source code, object code an all related applications and data
files), firmware and documentation and materials relating thereto, together with
any and all maintenance rights, service rights, programming rights, hosting
rights, test rights, improvement rights, renewal rights, and indemnification
rights and any substitutions, replacements, improvements, error corrections,
updates and new versions of any of the foregoing ("COMPUTER SOFTWARE");
(v) all confidential and proprietary information, including, without
limitation, know-how, trade secrets, manufacturing and production processes and
techniques, inventions, research and development information, databases and
data, including, without limitation, technical data, financial, marketing and
business data, pricing and cost information, business and marketing plans and
customer and supplier lists and information (collectively, "TRADE SECRETS"), and
all other intellectual, industrial and intangible property of any type,
including, without limitation, industrial designs and mask works;
(vi) all registrations and applications for registration for any of
the foregoing, including, without limitation, those registrations and
applications for registration set forth in Schedule V hereto (as such Schedule V
may be supplemented from time to time by supplements to this Agreement, each
such supplement being substantially in the form of Exhibit G hereto (an "IP
SECURITY AGREEMENT SUPPLEMENT") executed by such Grantor to the Collateral
Agents from time to time), together with all reissues, divisions,
continuations-in-part, extensions, renewals and reexaminations thereof;
(vii) all tangible embodiments of the foregoing, all rights in the
foregoing provided by international treaties or conventions, all rights
corresponding thereto throughout the world and all other rights of any kind
whatsoever of such Grantor accruing thereunder or pertaining thereto;
(viii) all agreements, permits, consents, orders and franchises relating
to the license, development, use or disclosure of any of the foregoing to which
such Grantor, now or hereafter, is a party or a beneficiary, including, without
limitation, the agreements set forth in Schedule V hereto ("IP AGREEMENTS"); and
6
(ix) any and all claims for damages and injunctive relief for past,
present and future infringement, dilution, misappropriation, violation, misuse
or breach with respect to any of the foregoing, with the right, but not the
obligation, to xxx for and collect, or otherwise recover, such damages;
(h) all commercial tort claims described in Schedule VII hereto
(collectively the "COMMERCIAL TORT CLAIMS COLLATERAL");
(i) all books and records (including, without limitation, customer lists,
credit files, printouts and other computer output materials and records) of such
Grantor pertaining to any of the Collateral; and
(j) all proceeds of, collateral for, income, royalties and other payments
now or hereafter due and payable with respect to, and supporting obligations
relating to, any and all of the Collateral (including, without limitation,
proceeds, collateral and supporting obligations that constitute property of the
types described in clauses (a) through (i) of this Section 1 and this clause
(j)) and, to the extent not otherwise included, all (A) payments under insurance
(whether or not the Collateral Agent is the loss payee thereof), or any
indemnity, warranty or guaranty, payable by reason of loss or damage to or
otherwise with respect to any of the foregoing Collateral, (B) tort claims,
including, without limitation, all commercial tort claims and (C) cash.
Section 2. Security for Obligations. This Agreement secures, in the
case of each Grantor, the payment of all Obligations of such Grantor now or
hereafter existing under the Loan Documents, whether direct or indirect,
absolute or contingent, and whether for principal, reimbursement obligations,
interest, fees, premiums, penalties, indemnifications, contract causes of
action, costs, expenses or otherwise (all such Obligations being the "SECURED
OBLIGATIONS").
Section 3. Grantors Remain Liable. Anything herein to the contrary not
withstanding, (a) each Grantor shall remain liable under the contracts and
agreements included in such Grantor's interests in the Collateral to the extent
set forth therein to perform all of its duties and obligations thereunder to the
same extent as if this Agreement had not been executed, (b) the exercise by the
Collateral Agent of any of the rights hereunder shall not release any Grantor
from any of its duties or obligations under the contracts and agreements
included in the Collateral and (c) no Secured Party shall have any obligation or
liability under the contracts and agreements included in the Collateral by
reason of this Agreement or any other Loan document, nor shall any Secured Party
be obligated to perform any of the obligations or duties of any Grantor
thereunder or to take any action to collect or enforce any claim for payment
assigned hereunder.
Section 4. Delivery and Control of Security Collateral. (a) All
certificates or documents evidencing an aggregate principal amount, taken
together with all Security Collateral owned by the Grantors, in excess of
$10,000,000 representing or evidencing Security Collateral shall be delivered to
and held by or on behalf of the Collateral Agent pursuant hereto and shall be in
suitable form for transfer by delivery, or shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory to the Collateral Agent. The Collateral Agent shall have the right,
at any time in its discretion and without notice to any
7
Grantor, to transfer to or to register in the name of the Collateral Agent or
any of its nominees any or all of the Security Collateral, subject only to the
revocable rights specified in Section 14(a). In addition, the Collateral Agent
shall have the right from and after the occurrence and during the continuance of
an Event of Default at any time to exchange certificates or instruments
representing or evidencing Security Collateral for certificates or instruments
of smaller or larger denominations. Also, the Collateral Agent shall have the
right at any time from and after the occurrence and during the continuance of an
Event of Default to convert Security Collateral consisting of financial assets
credited to a Securities Account to Security Collateral consisting of financial
assets held directly by the Collateral Agent, and to convert Security Collateral
consisting of financial assets held directly by the Collateral Agent to Security
Collateral consisting of financial assets credited to a Securities Account.
(b) With respect to any Security Collateral with an aggregate fair market
value, taken together with all Security Collateral owned by the Grantors, in
excess of $10,000,000 in which any Grantor has any right, title or interest and
that constitutes an uncertified security, such Grantor will cause the issuer
thereof either (i) to register the Collateral Agent as the registered owner of
such security or (ii) to agree in an authenticated record with such Grantor and
the Collateral Agent that such issuer will comply with instruction with respect
to such security originated by the Collateral Agent without further consent of
such Grantor, such authenticated record to be in form and substance satisfactory
to the Collateral Agent. With respect to any Security Collateral in which any
Grantor has any right, title or interest and that it is not an uncertificated
security, upon the request of the Collateral Agent, such Grantor will notify
each such issuer of Pledged Equity that such Pledged Equity is subject to the
security interest granted hereunder.
(c) With respect to any Security Collateral with an aggregate fair market
value, taken together with all Security Collateral owned by the Grantors, in
excess of $10,000,000 in which any Grantor has any right, title or interest and
that constitutes a security entitlement in which the Collateral Agent is not the
entitlement holder, such Grantor will cause the securities intermediary with
respect to such security entitlement either (i) to identify in its records the
Collateral Agent as the entitlement holder of such security entitlement against
such securities intermediary or (ii) to agree in an authenticated record with
such Grantor and the Collateral Agent that such securities intermediary will
comply with entitlement orders (that is notifications communicated to such
securities intermediary directing transfer or redemption of the financial assets
to which such Grantor has a security entitlement) originated by the Collateral
Agent without further consent of such Grantor, such authenticated record to be
in substantially the form of Exhibit C hereto or otherwise in form and substance
reasonably satisfactory to the Collateral Agent (such agreement being a
"SECURITIES ACCOUNT CONTROL AGREEMENT").
(d) With respect to any Security Collateral with an aggregate fair market
value, taken together with all Security Collateral owned by the Grantors, in
excess of $10,000,000 in which any Grantor has any right, title or interest and
that constitutes a commodity contract, such Grantor shall cause the commodity
intermediary with respect to such commodity contract to agree in an
authenticated record with such Grantor and the Collateral Agent that such
commodity intermediary will apply any value distributed on account of such
commodity contract as directed by the Collateral Agent without further consent
of such Grantor, such authenticated record to be in substantially the form of
Exhibit D hereto or otherwise in form and substance
8
satisfactory to the Collateral Agent (such agreement being a "COMMODITY ACCOUNT
CONTROL AGREEMENT", and all such authenticated records, together with all
Securities Account Control Agreements being, collectively, "SECURITY CONTROL
AGREEMENTS").
(e) No Grantor will change or add any securities intermediary or
commodity intermediary that maintains any securities account or commodity
account in which any of the Collateral is credited or carried, or change or add
any such securities account or commodity account, in each case without first
complying with the above provisions of this Section 4 in order to perfect the
security interest granted hereunder in such Control.
(f) Upon the request of the Collateral Agent, such Grantor will
notify each such issuer of Pledged Debt that such Pledged Debt is subject to the
security interest granted hereunder.
Section 5. Maintaining the Account Collateral. (a) So long as any
Advance or any other Obligation of any Loan Party under any Loan Document shall
remain unpaid, any Letter of Credit shall be outstanding and not cash
collateralized in an amount equal to 105% of the face value thereof, any
Secured Swap Control shall be in effect or any Lender shall have any
Commitment, the Borrower will maintain the Cash Collateral Account with Bank of
America.
(b) The Collateral Agent shall have sole right to direct the
disposition of funds with respect to the Cash Collateral Account; and it shall
be a term and condition of the Cash Collateral Account, notwithstanding any
term or condition to the contrary in any other agreement relating to the Cash
Collateral Account, that no amount (including, without limitation, interest on
Cash Equivalent Investments credited thereto) will be paid or released to or
for the account of, or withdrawn by or for the account of, the Borrower or any
other Person from the Cash Collateral Account.
(c) The Collateral Agent may, at any time and without notice to, or
consent form, the Grantor, transfer, or direct the transfer of, funds form the
Cash Collateral Account to satisfy the Grantor's obligations under the Loan
Documents if an Event of Default shall have incurred and be continuing.
Section 6 Investing of Amounts in the Cash Collateral Account. The
Collateral Agent will, subject to the provisions of Sections 5 and 22, from
time to time (a) invest amounts received with respect to the Cash Collateral
Account in such Cash Equivalent Investments credited to (A) the Cash Collateral
Account as the Borrower may select and the Collateral Agent may approve or (B)
in the case of Cash Equivalent Investments consisting of Securities Collateral,
a securities account subject to a Securities Account Control Agreement, and (b)
invest interest paid on the Cash Equivalent Investments referred to in clause
(a) above, and reinvest other proceeds of any such case Equivalent Investments
that may mature or be sold, in each case in such cash Equivalent Investments
credited in the same manner. Interest and proceeds that are not invested or
reinvested in Cash Equivalent Investments as provided above shall be deposited
and held in the Cash Collateral Account. In addition, the Collateral Agent
shall have the right at any time to exchange such Cash Equivalent Investments
for similar Cash
9
Equivalent Investments of smaller or larger determinations, or for other Cash
Equivalent Investments, credited to the Cash Collateral Account, as the case
may be.
Section 7. Maintaining Electronic Chattel Paper, Transferable
Records and Letter-of-Credit Rights and Giving Notice of Commercial Tort
Claims. So long as any Advance or any other Obligation of any Loan Party under
any Loan Document shall remain unpaid, any Letter of Credit shall be
outstanding (and not cash collateralized in an amount equal to 105% of the L/C
Obligations then outstanding), any Secured Swap Contract shall be in effect or
any Lender shall have any Commitment:
(a) Each Grantor will maintain all (i) electronic chattel paper
evidencing an aggregate principal amount, taken together with all other
electronic chattel paper, all tangible chattel paper, the aggregate face
amount of all letter of credit rights and the aggregate face amount of all
letters of credit owned by the Grantors, in excess of $10,000,000 so that the
Collateral Agent has control of the electronic chattel paper in the manner
specified in Section 9-105 of the UCC and (ii) all transferable records so
that the Collateral Agent has control of the transferable records in the
manner specified in Section 16 of the Uniform Electronic Transactions Act, as
in effect in the jurisdiction governing such transferable record ("UETA");
(b) Each Grantor will maintain all letter-of-credit rights with an
aggregate face amount, taken together with all other electronic chattel
paper, all tangible chattel paper, the aggregate face amount of all letter of
credit rights and the aggregate face amount of all letters of credit owned by
the Grantors, in excess of $10,000,000 assigned to the Collateral Agent,
including, without limitation, all letter-of-credit rights associated with
the letters of credit described in Schedule VIII to the extent the aggregate
amount of such letter-of-credit rights exceeds the foregoing limitation, so
that the Collateral Agent has control of such letter-of-credit rights in the
manner specified in Section 9-107 of the UCC; and
(c) Each Grantor will immediately give notice to the Collateral
Agent of any commercial tort claim that such Guarantor has elected to
prosecute and will promptly execute or otherwise authenticate a supplement to
this Agreement, and otherwise take all necessary action, to subject such
commercial tort claim to the first priority security interest created under
this Agreement.
Section 8. Representations and Warranties. Each Grantor
represents and warrants as follows:
(a) Such Grantor's exact legal name, as defined in Section 9-503(a)
of the UCC, is correctly set forth in Schedule I hereto. Such Grantor has
only the trade names, domain names and marks listed on Schedule V hereto.
Such Grantor is located (within the meaning of Section 9-307 of the UCC) and
has its chief executive office in the state or jurisdiction set forth in
Schedule I hereto. The information set forth in Schedule I hereto with
respect to such Grantor is true and accurate in all material respects. Such
Grantor has not previously changed its name, location, chief executive
office, place where it maintains its agreements, type of organization,
jurisdiction of organization or
10
organizational identification number from those set forth in SCHEDULE I hereto
except as disclosed in SCHEDULE III hereto.
(b) All of the Equipment and Inventory of such Grantor are located at the
places specified therefor in SCHEDULE III hereto, as such SCHEDULE III may be
amended from time to time pursuant to SECTION 10(a). Within the 5 years
preceding the execution of this Agreement, such Grantor has not previously
changed the location of its Equipment and Inventory except as set forth in
SCHEDULE V hereto. All Security Collateral consisting of certificated
securities and instruments have been delivered to the Collateral Agent.
Original copies of each Assigned Agreement and all originals of all tangible
chattel paper evidencing an aggregate principal amount, taken together with all
other electronic chattel paper, all tangible chattel paper, the aggregate face
amount of all letter of credit rights and the aggregate face amount of all
letters of credit owned by the Grantors, in excess of $10,000,000 that
evidence Receivables have been delivered to the Collateral Agent. None of the
Receivables or Agreement Collateral is evidenced by a promissory note or other
instrument that has not been delivered to the Collateral Agent.
(c) Such Grantor is the legal and beneficial owner of the Collateral of
such Grantor free and clear of any Lien, claim, option or right of others,
except for the security interest created under this Agreement and Permitted
Liens. No effective financing statement or other instrument similar in effect
covering all or any part of such Collateral or listing such Grantor or, to such
Grantor's knowledge, any trade name of such Grantor as debtor is on file in any
recording office, except such as may have been filed in favor of the Collateral
Agent relating to the Loan Documents or as otherwise permitted by the Credit
Agreement.
(d) Such Grantor has possession and control of the Equipment and
Inventory other than Equipment and Inventory stored at any leased premises or
warehouse for which the Collateral Agent and the Grantor have agreed that the
Grantor shall use its best efforts to obtain a landlord's or warehouseman's
agreement, in form and substance reasonably satisfactory to the Collateral
Agent. Each such leased premises or warehouse is indicated by an asterisk on
SCHEDULE III hereto, as such SCHEDULE III may be amended from time to time
pursuant to SECTION 10(a). Except as may be disclosed to the Collateral Agent
in writing from time to time, in the case of Equipment and Inventory located on
leased premises or in warehouses, no lessor or warehouseman of any premises or
warehouse upon or in which such Equipment or Inventory is located has (i)
issued any warehouse receipt or other receipt in the nature of a warehouse
receipt in respect of any Equipment or Inventory, (ii) issued any document for
any of such Grantor's Equipment or Inventory, (iii) received notification of
any secured party's interest (other than the security interest granted
hereunder) in such Grantor's Equipment or Inventory or (iv) any Lien, claim or
charge (based on contract, statute or otherwise) on such Equipment and
Inventory.
(e) The Pledged Equity pledged by such Grantor hereunder has been duly
authorized and validly issued and is fully paid and non-assessable. With
respect to the Pledged Equity that is an uncertificated security, such Grantor
has caused the issuer thereof either (i) to register the Collateral Agent as
the registered owner of such security
11
or (ii) to agree in an authenticated record with such Grantor and the Collateral
Agent that such issuer will comply with instructions with respect to such
security originated by the Collateral Agent without further consent of such
Grantor. If such Grantor is an issuer of Pledged Equity, such Grantor confirms
that it has received notice of such security interest. To such Grantor's
knowledge, the Pledged Debt pledged by such Grantor hereunder has been duly
authorized, authenticated or issued and delivered and is the legal, valid and
binding obligation of the issuers thereof. To the extent such Pledged Debt is
evidenced by one or more promissory notes and evidence aggregate obligations,
taken together with all Security Collateral owned by the Grantors, in excess of
$10,000,000, such notes have been delivered to the Collateral Agent. To each
Grantor's knowledge, none of the Pledged Debt pledged by it is in default.
(f) The Initial Pledged Equity pledged by such Grantor constitutes the
percentage of the issued and outstanding Equity Interests of the issuers thereof
indicated on Schedule II hereto. The Initial Pledged Debt constitutes all of the
outstanding indebtedness owed to such Grantor by the issuers thereof and is
outstanding in the principal amount indicated on Schedule II hereto.
(g) All of the investment property owned by such Grantor is listed on
Schedule 8.4(l) to the Credit Agreement.
(h) The Assigned Agreements to which such Grantor is a party have been
duly authorized, executed and delivered by such Grantor and, to such Grantor's
knowledge, by the counter-parties thereto.
(i) Such Grantor is not a beneficiary or assignee under any letter of
credit, other than the letters of credit described in Schedule VIII hereto, as
such Schedule VIII may be amended from time to time, and legal, binding and
enforceable Consents to Assignment of Letter of Credit Rights, in the form of
the Consent to Assignment of Letter of Credit Rights attached hereto as Exhibit
G, are in effect for each letter of credit that constitutes Collateral, except
to the extent control over any such letter-of-credit right is not required by
Section 7(b) hereof.
(j) This Agreement creates in favor of the Collateral Agent for the
benefit of the Secured Parties a valid security interest in the Collateral of
such Grantor, securing the payment of the Secured Obligations. When UCC
financing statements naming each Grantor, as debtor and the Collateral Agent, as
secured party, and identifying the Collateral have been filed with the Secretary
of State of the jurisdiction of incorporation of each Grantor, the security
interest created under this Agreement shall constitute a perfected security
interest in the Collateral described on such UCC financing statements to the
extent that a security interest therein may be perfected by filing pursuant to
the relevant UCC, prior to all other Liens and rights of others therein except
for Permitted Liens.
(k) No authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body or, to any Grantor's
knowledge, any other third party is required for (i) the grant by such Grantor
of the security interest
12
granted hereunder or for the execution, delivery or performance of this
Agreement by such Grantor, (ii) the perfection or maintenance of the security
interest created hereunder (including the first priority nature of such security
interest), except for the filing of financing and continuation statements under
the UCC, the recordation of the Intellectual Property
Security Agreements
referred to in Section 13(f) with the U.S. Patent and Trademark Office and the
U.S. Copyright Office and the actions described in Section 4 with respect to
Security Collateral or (iii) the exercise by the Collateral Agent of its voting
or other rights provided for in this Agreement or the remedies in respect of the
Collateral pursuant to this Agreement, except as may be required in connection
with the disposition of any portion of the Security Collateral by laws affecting
the offering and sale of securities generally.
(l) The Inventory that has been produced or distributed by such Grantor
has been produced in compliance with all requirements of applicable law,
including, without limitation, the Fair Labor Standards Act.
(m) As to itself and its Intellectual Property Collateral:
(i) To such Grantor's knowledge, the operation of such Grantor's
business as currently conducted or as contemplated to be conducted and the
use of the Intellectual Property Collateral in connection therewith do not
conflict with, infringe, misappropriate, dilute, misuse or otherwise
violate the intellectual property rights of any third party.
(ii) Such Grantor is the exclusive owner of all right, title and
interest in and to such Grantor's interests in the Intellectual Property
Collateral, and is entitled to use all Intellectual Property Collateral
subject only to the terms of the IP Agreements.
(iii) The Intellectual Property Collateral set forth on Schedule V
hereto includes all of the registered patents, patent applications, domain
names, trademark registrations and applications, copyright registrations
and applications and IP Agreements owned by such Grantor.
(iv) The Intellectual Property Collateral is subsisting and has not
been adjudged invalid or unenforceable in whole or part, and to the best of
such Grantor's knowledge, is valid and enforceable. Such Grantor is not
aware of any uses of any item of Intellectual Property Collateral that
could be expected to lead to such item becoming invalid or unenforceable.
(v) Except for such items of Intellectual Property Collateral that
such Grantor reasonably determines are of insignificant or immaterial
economic value, such Grantor has made or performed all filings, recordings
and other acts and has paid all required fees and taxes to maintain and
protect its interest in each and every item of Intellectual Property
Collateral in full force and effect throughout the world, and to protect
and maintain its interest therein including, without limitation,
recordations of any of its interests in the Patents and Trademarks with
13
the U.S. Patent and Trademark Office and in corresponding national and
international patent offices, and recordation of any of its interests in the
Copyrights with the U.S. Copyright Office and in corresponding national and
international copyright offices. Such Grantor has used proper statutory notice
in connection with its use of each material patent, trademark and copyright in
the Intellectual Property Collateral.
(vi) No claim, action, suit, investigation, litigation or proceeding has
been asserted or is pending or to such Grantor's knowledge threatened against
such Grantor (i) based upon or challenging or seeking to deny or restrict the
Grantor's rights in or use of any of the Intellectual Property Collateral, (ii)
alleging that the Grantor's rights in or use of the Intellectual Property
Collateral or that any services provided by, processes used by, or products
manufactured or sold by, such Grantor infringe, misappropriate, dilute, misuse
or otherwise violate any patent, trademark, copyright or any other proprietary
right of any third party, or (iii) alleging that the Intellectual Property
Collateral is being licensed or sublicensed in violation or contravention of the
terms of any license or other agreement. To such Grantor's knowledge, no Person
is engaging in any activity that infringes, misappropriates, dilutes, misuses or
otherwise violates the Intellectual Property Collateral or the Grantor's rights
in or use thereof. Except as set forth on Schedule V hereto, such Grantor has
not granted any license, release, covenant not to xxx, non-assertion assurance,
or other right to any Person with respect to any part of the Intellectual
Property Collateral. The consummation of the transactions contemplated by the
Transaction Documents will not result in the termination or material impairment
of any of the Intellectual Property Collateral.
(vii) With respect to each IP Agreement: (A) to such Grantor's knowledge,
such IP Agreement is valid and binding and in full force and effect and
represents the entire agreement between the respective parties thereto with
respect to the subject matter thereof; (B) such IP Agreement will not cease to
be valid and binding and in full force and effect on terms identical to those
currently in effect as a result of the rights and interest granted herein, nor
will the grant of such rights and interest constitute a material breach or
default under such IP Agreement or otherwise give any party thereto a right to
terminate such IP Agreement; (C) such Grantor has not received any notice of
termination or cancellation under such IP Agreement; (D) such Grantor has not
received any notice of a breach or default under such IP Agreement, which breach
or default has not been cured; (E) such Grantor has not granted to any other
third party any adverse rights under such IP Agreement; and (F) neither such
Grantor nor to such Grantor's knowledge, any other party to such IP Agreement is
in breach or default thereof in any material respect, and to such Grantor's
knowledge, no event has occurred that, with notice or lapse of time or both,
would constitute such a breach or default or permit termination, modification or
acceleration under such IP Agreement.
(viii) To the best of such Grantor's knowledge, (A) none of the Trade
Secrets of such Grantor has been used, divulged, disclosed or appropriated to
the
14
detriment of such Grantor for the benefit of any other Person other
than such Grantor; (B) no employee, independent contractor or agent of
such Grantor has misappropriated any trade secrets of any other Person
in the course of the performance of his or her duties as an employee,
independent contractor or agent of such Grantor; and (C) no employee,
independent contractor or agent of such Grantor is in default or
breach of any term of any employment agreement, non-disclosure
agreement, assignment of inventions agreement or similar agreement or
contract relating in any way to the protection, ownership,
development, use or transfer of such Grantor's Intellectual Property
Collateral.
(ix) No Grantor or Intellectual Property Collateral is subject to
any outstanding consent, settlement, decree, order, injunction,
judgment or ruling restricting the use of any Intellectual Property
Collateral or that would impair the validity or enforceability of such
Intellectual Property Collateral.
(n) The Grantor has no commercial tort claims (as defined in Section
9-102(13) of the UCC) of which it is aware other than those listed in
Schedule VIII hereto.
Section 9. Further Assurances. (a) Each Grantor agrees that from
time to time, at the expense of such Grantor, such Grantor will promptly execute
and deliver, or otherwise authenticate, all further instruments and documents,
and take all further action that may be necessary or desirable, or that the
Collateral Agent may request, in order to perfect and protect any pledge or
security interest granted or purported to be granted by such Grantor hereunder
or to enable the Collateral Agent to exercise and enforce its rights and
remedies hereunder with respect to any Collateral of such Grantor. Without
limiting the generality of the foregoing, each Grantor will promptly, upon the
request of the Collateral Agent, with respect to Collateral of such Grantor: (i)
xxxx conspicuously each document included in Inventory, each chattel paper
included in Receivables, each Related Contract, each Assigned Agreement and, at
the request of the Collateral Agent, each of its records pertaining to such
Collateral with a legend, in form and substance reasonably satisfactory to the
Collateral Agent, indicating that such document, chattel paper, Related
Contract, Assigned Agreement or Collateral is subject to the security interest
granted hereby; (ii) to the extent required by the terms of Sections 4 through 8
hereof, inclusive, if any such Collateral shall be evidenced by a promissory
note or other instrument or chattel paper, deliver and pledge to the Collateral
Agent hereunder such note or instrument or chattel paper duly indorsed and
accompanied by duly executed instruments of transfer or assignment, all in form
and substance reasonably satisfactory to the Collateral Agent; (iii) execute or
authenticate and file such financing or continuation statements, or amendments
thereto, and such other instruments or notice, as may be necessary or desirable,
or as the Collateral Agent may reasonably request, in order to perfect and
preserve the security interest granted or purported to be granted by such
Grantor hereunder; provided, however, that no Grantor shall be required to
undertake or cause to be undertaken on its behalf any actions in any foreign
jurisdiction to perfect the security interest granted hereby in the securities
of any foreign issuer unless requested to do so by the Collateral Agent pursuant
to Section 7.15(b) of the Credit Agreement; (iv) deliver and pledge to the
Collateral Agent for benefit of the Secured Parties certificates representing
Security Collateral that constitutes certificated securities, accompanied by
updated stock or bond powers executed in blank; (v) take all action necessary to
ensure that the Collateral Agent has control of Collateral consisting of deposit
accounts, electronic chattel
15
paper, investment property, letter-of-credit rights and transferable records as
provided in Sections 9-104, 9-105, 9-106 and 9-107 of the UCC and in Section 16
of UETA, in each case, solely to the extent contemplated by Sections 4 through 8
hereof, inclusive; (vi) take all action to ensure that the Collateral Agent's
security interest is noted on any certificate of ownership related to any
Collateral evidenced by a certificate of ownership to the extent that such
Collateral has a book value in excess of $100,000 or $500,000 in the aggregate
for all such Collateral; (vii) cause the Collateral Agent to be the beneficiary
under all letters of credit that constitute Collateral with all rights of a
transferee under Section 5-114(e) of the UCC; and (viii) deliver to the
Collateral Agent evidence that all other action that the Collateral Agent may
deem reasonably necessary or desirable in order to perfect and protect the
security interest created by such Grantor under this Agreement has been taken.
(b) Each Grantor hereby authorizes the Collateral Agent to file one or
more financing or continuation statements, and amendments thereto, including,
without limitations, one or more financing statements indicating that such
financing statements cover all assets or all personal property (or words of
similar effect) of such Grantor, in each case without the signature of such
Grantor, and regardless of whether any particular asset described in such
financing statements falls within the scope of the UCC or the granting clause of
this Agreement. A photocopy or other reproduction of this Agreement or any
financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law. Each Grantor
ratifies its authorization for the Collateral Agent to have filed such financing
statements, continuation statements or amendments filed prior to the date
hereof.
(c) Each Grantor will furnish to the Collateral Agent from time to time
statements and schedules further identifying and describing the Collateral of
such Grantor and such other reports in connection with such Collateral as the
Collateral Agent may reasonably request, all in reasonable detail.
(d) Each Grantor who has an interest in any of the Excluded Initial Equity
Interests hereby agrees that it shall use its best efforts to obtain the consent
of any necessary parties to the assignment of, or creation of a Lien in, such
Excluded Initial Equity Interests pursuant to the terms of this Agreement.
Section 10. As to Equipment and Inventory. (a) Each Grantor will (i)
provide the Collateral Agent with 30 days' prior written notice before moving
any Equipment or Inventory to any warehouse or leased premises as to which a
landlord's or warehouseman's agreement in form and substance reasonably
satisfactory to the Collateral Agent has not been obtained and (ii) use its best
efforts to obtain such an agreement from the relevant warehouseman or landlord.
Upon receipt by the Collateral Agent of such notice, Schedule III will be deemed
amended to reflect such change.
(b) Each Grantor will cause the Equipment of such Grantor to be maintained
and preserved in the same condition, repair and working order as when acquired,
ordinary wear and tear excepted, and in accordance with any manufacturer's
manual, and will forthwith, or in the case of any loss or damage to any of such
Equipment as soon as practicable after the occurrence thereof, make or cause to
be made all repairs, replacements and other improvements in connection therewith
that are necessary or desirable to such end. Each Grantor will promptly
16
furnish to the Collateral Agent a statement respecting any loss or damage
exceeding $5,000,000 to any of the Equipment or Inventory of such Grantor.
(c) Each Grantor will pay promptly prior to delinquency all property
and other taxes, assessments and governmental charges or levies imposed upon,
and all claims (including, without limitation, claims for labor, materials and
supplies) against, the Equipment and Inventory of such Grantor, except to the
extent payment thereof is not required by Section 7.7 of the Credit Agreement.
In producing its Inventory, each Grantor will comply with all requirements of
applicable law, including, without limitation, the Fair Labor Standards Act.
Section 11. Insurance. (a) Each Grantor will, at its own expense,
maintain with financially sound and reputable independent insurers, insurance
with respect to the Equipment and Inventory of such Grantor against loss or
damage of the kinds customarily insured against by Persons engaged in the same
or similar business, of such types and in such amounts as are customarily
carried under similar circumstances by such other Persons. Each policy for
property damage insurance shall provide for all losses (except for losses of
less than $5,000,000 per occurrence) to be paid directly to the Collateral
Agent. Each such policy shall in addition (i) name such Grantor and the
Collateral Agent as insured parties thereunder (without any representation or
warranty by or obligation upon the Collateral Agent) as their interests may
appear, (ii) provide that there shall be no recourse against the Collateral
Agent for payment of premiums or other amounts with respect thereto and (iii)
provide that at least 10 days' prior written notice of cancellation or of lapse
shall be given to the Collateral Agent by the insurer. Each Grantor will, if so
requested by the Collateral Agent, deliver to the Collateral Agent original or
duplicate policies of such insurance and, as often as the Collateral Agent may
reasonably request (which shall not be more often than once in any calendar year
unless an Event of Default shall have occurred and be continuing), a report of a
reputable insurance broker with respect to such insurance. Further, each Grantor
will, at the request of the Collateral Agent after the occurrence and during the
continuance of an Event of Default, duly execute and deliver instruments of
assignment of such insurance policies to comply with the requirements of Section
10 and cause the insurers to acknowledge notice of such assignment.
(b) Reimbursement under any liability insurance maintained by any
Grantor pursuant to this Section 11 may be paid directly to the Person who shall
have incurred liability covered by such insurance. In case of any loss involving
damage to Equipment or Inventory when subsection (c) of this Section 11 is not
applicable, the applicable Grantor will make or cause to be made the necessary
repairs to or replacements of such Equipment or Inventory, and any proceeds of
insurance properly received by or released to such Grantor shall be used by such
Grantor, except as otherwise required hereunder or by the Credit Agreement, to
pay or as reimbursement for the costs of such repairs or replacements.
(c) So long as no Event of Default shall have occurred and be
continuing, all insurance payments received by the Collateral Agent in
connection with any loss, damage or destruction of any Inventory or Equipment
will be released by the Collateral Agent to the Applicable Grantor for the
repair, replacement or restoration thereof. Upon the occurrence and during the
continuance of a Default, to the extent that (i) the amount of any such
insurance payments exceeds the cost of any such repair, replacement or
restoration, or (ii) such insurance payments are not otherwise required by the
applicable Grantor to complete any such repair,
17
replacement or restoration required hereunder, the Collateral Agent will not be
required to release the amount thereof to such Grantor and may hold or continue
to hold such amount in the Cash Collateral Account as additional security for
the Secured Obligations of such Grantor (except that the Collateral Agent will
release to such Grantor any such amount if and to the extent that any prepayment
of Obligations is required under the Credit Agreement in connection with the
receipt of such amount and such prepayment has been made). Upon the occurrence
and during the continuance of any Event of Default or the actual or constructive
total loss (in excess of $5,000,000 per occurrence) of any Equipment or
Inventory, all insurance payments in respect of such Equipment or Inventory
shall be paid to the Collateral Agent and shall, in the Collateral Agent's sole
discretion, (i) be released to the applicable Grantor to be applied as set forth
in the first sentence of this subsection (c) or (ii) be held as additional
collateral hereunder or applied as specified in Section 22(b).
Section 12. Post-Closing Changes; Bailees; Collections on Assigned
Agreements, Receivables and Related Contracts. (a) No Grantor will change its
name, type of organization, jurisdiction of organization, organizational
identification number or location from those set forth in Section 8(a) of this
Agreement without first giving at least 30 days' prior written notice to the
Collateral Agent and taking all action required by the Collateral Agent for the
purpose of perfecting or protecting the security interest granted by this
Agreement. Each Grantor will hold and preserve its records relating to the
Collateral, including, without limitation, the Assigned Agreements and Related
Contracts, and will permit representatives of the Collateral Agent at any time
upon reasonable prior notice during normal business hours to inspect and make
abstracts from such records and other documents. If the Grantor does not have an
organizational identification number and later obtains one, it will forthwith
notify the Collateral Agent of such organizational identification number.
(b) If any Collateral of any Grantor is at any time in the possession or
control of a warehouseman, bailee or agent, and if the Collateral Agent so
requests such Grantor will (i) notify such warehouseman, bailee or agent of the
security interest created hereunder, (ii) instruct such warehouseman, bailee or
agent to hold all such Collateral solely for the Collateral Agent's account
subject only to the Collateral Agent's instructions (which shall permit such
Collateral to be removed by such Grantor in the ordinary course of business
until the Collateral Agent notifies such warehouseman, bailee or agent that an
Event of Default has occurred and is continuing), (iii) use best efforts, to
cause such warehouseman, bailee or agent to authenticate a record acknowledging
that it holds possession of such Collateral for the Collateral Agent's benefit
and shall act solely on the instructions of the Collateral Agent without the
further consent of the Grantor or any other Person, and (iv) make such
authenticated record available to the Collateral Agent.
(c) Except as otherwise provided in this subsection (c), each Grantor will
continue to collect, at its own expense, all amounts due or to become due such
Grantor under the Assigned Agreements, Receivables and Related Contracts. In
connection with such collections, such Grantor may take (and, at the Collateral
Agent's written direction after the occurrence and during the continuance of a
Default, will take) such action as such Grantor or the Collateral Agent may deem
necessary or advisable to enforce collection of the Assigned Agreements,
Receivables and Related Contracts; provided, however, that the Collateral Agent
shall have the right at any time after the occurrence and during the continuance
of an Event of Default, upon
18
written notice to such Grantor of its intention to do so, to notify the account
debtors under any Assigned Agreements, Receivables and Related Contracts of the
assignment of such Assigned Agreements, Receivables and Related Contracts to the
Collateral Agent and to direct such account debtors to make payment of all
amounts due or to become due to such Grantor thereunder directly to the
Collateral Agent and, upon such notification and at the expense of such Grantor,
to enforce collection of any such Assigned Agreements, Receivables and Related
Contracts, 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, and to
otherwise exercise all rights with respect to such Assigned Agreements,
Receivables and Related Contracts, including, without limitation, those set
forth in Section 9-607 of the UCC. After receipt by any Grantor of the notice
from the Collateral Agent referred to in the proviso to the preceding sentence,
(i) all amounts and proceeds (including, without limitation, instruments)
received by such Grantor in respect of the Assigned Agreements, Receivables and
Related Contracts of such Grantor shall be received in trust for the benefit of
the Collateral Agent hereunder, shall be segregated from other funds of such
Grantor and shall be forthwith paid over to the Collateral Agent in the same
form as so received (with any necessary indorsement) to be deposited in the Cash
Collateral Amount and either (A) released to such Grantor so long as no Event of
Default shall have occurred and be continuing or (B) if any Event of Default
shall have occurred and be continuing, applied as provided in Section 22(b) and
(ii) such Grantor will not adjust, settle or compromise the amount or payment of
any Receivable or amount due on any Assigned Agreements, Receivables and Related
Contract, release wholly or partly any Obligor thereof or allow any credit or
discount thereon. No Grantor will permit or consent to the subordination of its
right to payment under any of the Assigned Agreements, Receivables and Related
Contracts to any other indebtedness or obligations of the account debtor or
obligor thereof unless such Grantor deems such subordination advisable in the
exercise of its reasonable business judgment.
Section 13. As to Intellectual Property Collateral. (a) With
respect to each item of its Intellectual Property Collateral, each Grantor
agrees to take, at its expense, all necessary steps, including, without
limitation, in the U.S. Patent and Trademark Office, the U.S. Copyright Office
and any other governmental authority, to (i) maintain the validity and
enforceability of such Intellectual Property Collateral and maintain such
Intellectual Property Collateral in full force and effect, and (ii) pursue the
registration and maintenance of each material patent, trademark, or copyright
registration or application, now or hereafter included in such Intellectual
Property Collateral of such Grantor, including, without limitation, the payment
of required fees and taxes, the filing of responses to office actions issued by
the U.S. Patent and Trademark Office, the U.S. Copyright Office or other
governmental authorities, the filing of applications for renewal or extension,
the filing of affidavits under Sections 8 and 15 of the U.S. Trademark Act, the
filing of divisional, continuation, continuation-in-part, reissue and renewal
applications or extensions, the payment of maintenance fees and the
participation in interference, reexamination, opposition, cancellation,
infringement and misappropriation proceedings. No Grantor shall, without the
written consent of the Collateral Agent, discontinue use of or otherwise abandon
any Intellectual Property Collateral, or abandon any right to file an
application for patent, trademark, or copyright, unless such Grantor shall have
previously determined that such use or the pursuit or maintenance of such
Intellectual Property Collateral is no longer desirable in the conduct of such
Grantor's business and that the loss thereof would not be reasonably likely to
have a Material Adverse Effect.
(b) Each Grantor agrees promptly to notify the Collateral Agent if
such Grantor becomes aware (i) that any item of the Intellectual Property
Collateral may have become abandoned, placed in the public domain, invalid or
unenforceable, or of any adverse determination or development regarding such
Grantor's ownership of any of the Intellectual Property Collateral or its right
to register the same or to keep and maintain and enforce the same, or (ii) of
any adverse determination or the institution of any proceeding (including,
without limitation, the institution of any proceeding in the U.S. Patent and
Trademark Office or any court) regarding any item of the Intellectual Property
Collateral.
(c) In the event that any Grantor becomes aware that any material
item of the Intellectual Property Collateral is being infringed or
misappropriated by a third party, such Grantor shall promptly notify the
Collateral Agent and shall take such actions, at its expense, as such Grantor or
the Collateral Agent deems reasonable and appropriate under the circumstances to
protect or enforce such Intellectual Property Collateral, including, without
limitation, suing for infringement or misappropriation and for an injunction
against such infringement or misappropriation.
(d) Each Grantor shall use proper statutory notice in connection with
its use of each material item of its Intellectual Property Collateral. No
Grantor shall do or permit any act or knowingly omit to do any act whereby any
of its material Intellectual Property Collateral may lapse or become invalid or
unenforceable or placed in the public domain.
(e) Each Grantor shall take all steps which it or the Collateral
Agent deems reasonable and appropriate under the circumstances to preserve and
protect each material item of its Intellectual Property Collateral, including,
without limitation, maintaining the quality of any and all products or services
used or provided in connection with any of the Trademarks,
20
consistent with the quality of the products and services as of the date hereof,
and taking all steps necessary to ensure that all licensed users of any of the
Trademarks use such consistent standards of quality.
(f) With respect to its registered Intellectual Property Collateral
and applications therefor, each Grantor agrees to execute or otherwise
authenticate an agreement, in substantially the form set forth in Exhibit E
hereto or otherwise in form and substance reasonably satisfactory to the
Collateral Agent (an "INTELLECTUAL PROPERTY SECURITY AGREEMENT"), for recording
the security interest granted hereunder to the Collateral Agent in such
Intellectual Property Collateral with the U.S. Patent and Trademark Office, the
U.S. Copyright Office and any other governmental authorities necessary to
perfect the security interest hereunder in such Intellectual Property
Collateral.
(g) Each Grantor agrees that should it obtain an ownership interest
in any item of the type set forth in Section 1(g) that is not on the date hereof
a part of the Intellectual Property Collateral ("AFTER-ACQUIRED INTELLECTUAL
PROPERTY") (i) the provisions of this Agreement shall automatically apply
thereto, and (ii) any such After-Acquired Intellectual Property and, in the case
of trademarks, the goodwill symbolized thereby, shall automatically become part
of the Intellectual Property Collateral subject to the terms and conditions of
this Agreement with respect thereto. Within ten (10) days after the end of each
fiscal quarter, each Grantor shall give written notice to the Collateral Agent
identifying the After-Acquired Intellectual Property acquired since the delivery
of the last such report, and such Grantor shall contemporaneously therewith
execute and deliver to the Collateral Agent with such written notice, or
otherwise authenticate, an agreement substantially in the form of Exhibit F
hereto or otherwise in form and substance reasonably satisfactory to the
Collateral Agent (an "IP SECURITY AGREEMENT SUPPLEMENT") covering such
After-Acquired Intellectual Property which IP Security Agreement Supplement
shall be recorded with the U.S. Patent and Trademark Office, the U.S. Copyright
Office and any other governmental authorities necessary to perfect the security
interest hereunder in such After-Acquired Intellectual Property.
Section 14. Voting Rights; Dividends; Etc. (a) So long as no Event
of Default shall have occurred and be continuing:
(i) Each Grantor shall be entitled to exercise, in the use of its
reasonable business judgment, any and all voting and other consensual rights
pertaining to the Security Collateral of such Grantor or any part thereof for
any purpose.
(ii) Each Grantor shall be entitled to receive and retain any and all
dividends, interest and other distributions paid in respect of the Security
Collateral of such Grantor if and to the extent that the payment thereof is not
otherwise prohibited by the terms of the Loan Documents; provided, however, that
any and all
(A) dividends, interest and other distributions paid or payable
other than in cash in respect of, and instruments and other property received,
receivable or otherwise distributed in respect of, or in exchange for, any
Security Collateral,
21
(B) dividends and other distributions paid or payable in cash in
respect of any Security Collateral in connection with a partial or
total liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid-in-surplus, and
(C) cash paid, payable or otherwise distributed in respect of
principal of, or in redemption of, or in exchange for, any Security
Collateral
shall be, and shall be forthwith delivered to the Collateral Agent to hold
as, Security Collateral and shall, if received by such Grantor, be received
in trust for the benefit XXXX Collateral Agent, be segregated from the
other property or funds of such Grantor and forthwith delivered to the
Collateral Agent as Security Collateral in the same form as received (with
any necessary indorsement).
(iii) The Collateral Agent will execute and deliver (or cause to be
executed and delivered) to each Grantor all such proxies and other
instruments as such Grantor may reasonably request for the purpose of
enabling such Grantor to exercise the voting and other rights that it is
entitled to exercise pursuant to paragraph (i) above and to receive
dividends or interest payments that it is authorized to receive and retain
pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuance of an Event of
Default:
(i) All rights of each Grantor (x) to exercise or refrain from
exercising theXXXX voting and other consensual rights that it would
otherwise be entitled to exercise pursuant to Section 14(a)(i) shall, upon
written notice to such Grantor by the Collateral Agent, cease and (y) to
receive the dividends, interest and other distributions that it would
otherwise be authorized to receive and retain pursuant to Section 14(a)(ii)
shall automatically cease, and all such rights shall thereupon become
vested in the Collateral Agent, which shall thereupon have the sole right
to exercise or refrain from exercising such voting and other consensual
rights and to receive and hold as Security Collateral such dividends,
interest and other distributions.
(ii) All dividends, interest and other distributions that are
received by any Grantor contrary to the provisions of paragraph (i) of this
Section 14(b) shall be received in trust for the benefit of the Collateral
Agent, shall be segregated from other funds of such Grantor and shall be
forthwith paid over to the Collateral Agent as Security Collateral in the
same form as so received (with any necessary indorsement).
(iii) The Collateral Agent shall be authorized to send to each
Securities Intermediary or Commodity Intermediary as defined in and under
any Security Control Agreement a Notice of Exclusive Control as defined in
and under such Security Control Agreement.
Section 15. As to the Assigned Agreements. (a) Except to the extent
that the failure to do so could not reasonably be expected to result in a
Material Adverse Effect, each Grantor will at its expense:
22
(i) perform and observe all terms and provisions of the Assigned
Agreements to be performed or observed by it, maintain the Assigned
Agreements to which it is a party in full force and effect, enforce the
Assigned Agreements to which it is a party in accordance with the terms
thereof and take all such action to such end as may be reasonably requested
from time to time by the Collateral Agent; and
(ii) furnish to the Collateral Agent promptly upon receipt thereof
copies of all material notices, requests and other documents received by
such Grantor under or pursuant to the Assigned Agreements to which it is a
party, and from time to time (A) furnish to the Collateral Agent such
information and reports regarding the Assigned Agreements and such other
Collateral of such Grantor as the Collateral Agent may reasonably request
and (B) upon the reasonable request of the Collateral Agent make to each
other party to any Assigned Agreement to which it is a party such demands
and requests for information and reports or for action as such Grantor is
entitled to make thereunder.
(b) Except to the extent that failure to comply with the provisions of
this clause (b) could not reasonably be expected to result in a Material Adverse
Effect, each Grantor agrees that it will not, except to the extent otherwise
permitted under the Credit Agreement:
(i) cancel or terminate any Assigned Agreement to which it is a party
or consent to or accept any cancellation or termination thereof;
(ii) amend, amend and restate, supplement or otherwise modify any such
Assigned Agreement or give any consent, waiver or approval thereunder;
(iii) waive any default under or breach of any such Assigned
Agreement; or
(iv) take any other action in connection with any such Assigned
Agreement that would impair the value of the interests or rights of such
Grantor thereunder or that would impair the interests or rights of any
Secured Party.
(c) Each Grantor hereby consents on its behalf and on behalf of its
Subsidiaries to the assignment and pledge to the Collateral Agent for benefit of
the Secured Parties of each Assigned Agreement to which it is a party by any
other Grantor hereunder.
Section 16. Payments Under the Assigned Agreements. (a) Each Grantor
agrees that, after the occurrence of any payment default or after the Lenders
have elected to exercise their remedies under Section 9.2 of the Credit
Agreement, all payments due or to become due under or in connection with such
Assigned Agreement will be made directly to the Cash Collateral Account.
(b) All moneys received or collected pursuant to above shall be
applied as provided in Section 22(b).
Section 17. As to Letter-of-Credit Rights. Upon the occurrence and
during the continuance of an Event of Default, each Grantor will, promptly upon
written request by the Collateral Agent, (i) notify (and such Grantor hereby
authorizes the Collateral Agent to notify)
23
the issuer and each nominated person with respect to each of the Related
Contracts consisting of letters of credit that the proceeds thereof have been
assigned to the Collateral Agent hereunder and any payments due or to become due
in respect thereof are to be made directly to the Collateral Agent or its
designee and (ii) arrange for the Collateral Agent to become the transferee
beneficiary of letter of credit.
Section 18. Transfers and Other Liens; Additional Shares. (a) Each
Grantor agrees that it will not (i) sell, assign or otherwise dispose of, or
grant any option with respect to, any of the Collateral, other than sales,
assignments and other dispositions of Collateral, and options relating to
Collateral, and options relating to Collateral, permitted under the terms of the
Credit Agreement, or (ii) create or suffer to exist any Lien upon or with
respect to any of the Collateral of such Grantor except for the pledge,
assignment and security interest created under this Agreement and as otherwise
permitted by the Credit Agreement.
(b) Each Grantor agrees that it will (i) cause each issuer of the
Initial Pledged Equity pledged by such Grantor not to issue any Equity Interests
or other securities in addition to or in substitution for the Initial Pledged
Equity issued by such issuer, except to such Grantor, and (ii) pledge hereunder,
immediately upon its acquisition (directly or indirectly) thereof, any and all
additional Equity Interests or other securities.
Section 19. Collateral Agent Appointed Attorney-in-Fact. Each Grantor
hereby irrevocably appoints the Collateral Agent such Grantor's
attorney-in-fact, with full authority in the place and stead of such Grantor and
in the name of such Grantor or otherwise, from time to time in the Collateral
Agent's discretion, to take any action and to execute any instrument that the
Collateral Agent may deem necessary or advisable to accomplish the purposes of
this Agreement, including, without limitation:
(a) if such Grantor has failed to do so, to obtain and adjust
insurance required to be paid to the Collateral Agent pursuant to Section
11
(b) to ask for, demand, collect, xxx for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become due
under or in respect of any of the Collateral,
(c) to receive, indorse and collect any drafts or other instruments,
documents and chattel paper, in connection with clause (a) or (b) above,
and
(d) to file any claims or take any action or institute any
proceedings that the Collateral Agent may deem necessary or desirable for
the collection of any of the Collateral or otherwise to enforce compliance
with the terms and conditions of any Assigned Agreement or the rights of
the Collateral Agent with respect to any of the Collateral.
Section 20. Collateral Agent May Perform. If any Grantor fails to
perform any agreement contained herein, the Collateral Agent may, but without
any obligation to do so and without notice, itself perform, or cause performance
of, such agreement, and the expenses of the Collateral Agent incurred in
connection therewith shall be payable by such Grantor under Section 23.
24
Section 21. THE COLLATERAL AGENT'S DUTIES. (a) The powers conferred on
the Collateral Agent hereunder are solely to protect the Secured Parties'
interest in the Collateral and shall not impose any duty upon it to exercise any
such powers. Except for the safe custody of any Collateral in its possession and
the accounting for moneys actually received by it hereunder, the Collateral
Agent shall have no duty as to any Collateral, as to ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relative to any Collateral, whether or not any Secured Party has
or is deemed to have knowledge of such matters, or as to the taking of any
necessary steps to preserve rights against any parties or any other rights
pertaining to any Collateral. The Collateral Agent shall be deemed to have
exercised reasonable care in the custody and preservation of any Collateral in
its possession if such Collateral is accorded treatment substantially equal to
that which it accords its own property.
(b) Anything contained herein to the contrary notwithstanding, the
Collateral Agent may from time to time, when the Collateral Agent deems it to
be necessary, appoint one or more subagents (each a "SUBAGENT") for the
Collateral Agent hereunder with respect to all or any part of the Collateral.
In the event that the Collateral Agent so appoints any Subagent with respect to
any Collateral, (i) the assignment and pledge of such Collateral and the
security interest granted in such Collateral by each Grantor hereunder shall be
deemed for purposes of this Security Agreement to have been made to such
Subagent, in addition to the Collateral Agent, for the ratable benefit of the
Secured Parties, as security for the Secured Obligations of such Grantor, (ii)
such Subagent shall automatically be vested, in addition to the Collateral
Agent, with all rights, powers, privileges, interests and remedies of the
Collateral Agent hereunder with respect to such Collateral, and (iii) the term
"Collateral Agent," when used herein in relation to any rights, powers,
privileges, interests and remedies of the Collateral Agent with respect to such
Collateral, shall include such Subagent; provided, however, that no such
Subagent shall be authorized to take any action with respect to any such
Collateral unless and except to the extent expressly authorized in writing by
the Collateral Agent.
Section 22. REMEDIES. If any Event of Default shall have occurred and
be continuing:
(a) The Collateral Agent may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party upon default
under the UCC (whether or not the UCC applies to the affected Collateral) and
also may: (i) require each Grantor to, and each Grantor hereby agrees that it
will at its expense and upon request of the Collateral Agent forthwith,
assemble all or part of the Collateral as directed by the Collateral Agent and
make it available to the Collateral Agent at a place and time to be designated
by the Collateral Agent that is reasonably convenient to both parties; (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 the
Collateral Agent's offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as the Collateral Agent may deem
commercially reasonable; (iii) occupy any premises owned or leased by any of
the Grantors where the Collateral or any part thereof is assembled or located
for a reasonable period in order to effectuate its rights and remedies
hereunder or under law, without obligation to such Grantor in respect of such
occupation; and (iv) exercise any and all rights and remedies of any of the
Grantors under or in connection with the Collateral, or
25
otherwise in respect of the Collateral, including, without limitation, (A) any
and all rights of such Grantor to demand or otherwise require payment of any
amount under, or performance of any provision of, the Assigned Agreements, the
Receivables, the Related Contracts and the other Collateral, (B) withdraw, or
cause or direct the withdrawal, of all funds with respect to the Account
Collateral and (C) exercise all other rights and remedies with respect to the
Assigned Agreements, the Receivables, the Related Contracts and the other
Collateral, including, without limitation, those set forth in Section 9-607 of
the UCC. Each Grantor agrees that, to the extent notice of sale shall be
required by law, at least ten days' notice to such Grantor of the time and place
of any public sale or the time after which any private sale is to be made shall
constitute reasonable notification. The Collateral Agent shall not be obligated
to make any sale of Collateral regardless of notice of sale having been given.
The Collateral Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned.
(b) Any cash held by or on behalf of the Collateral Agent and all cash
proceeds received by or on behalf of the Collateral Agent in respect of any sale
of, collection from, or other realization upon all or any part of the Collateral
may, in the discretion of the Collateral Agent, be held by the Collateral Agent
as collateral for, and/or then or at any time thereafter applied (after payment
of any amounts payable to the Collateral Agent pursuant to Section 23) by the
Collateral Agent for the ratable benefit of the Secured Parties against, all or
any part of the Secured Obligations, in the following manner:
(i) first, paid to the Agents for any amounts then owing to the Agents
pursuant to Section 11.04 of the Credit Agreement or otherwise under the
Loan Documents, ratably in accordance with such respective amounts then
owing to the Agents; and
(ii) second, ratably (A) paid to the Lenders and the Swap
Counterparties, respectively, for any amounts then owing to them, in their
capacities as such, under the Loan Documents ratably in accordance with
such respective amounts then owing to such Lenders and the Swap
Counterparties, provided that, for purposes of this Section 22, the amount
owing to any such Swap Counterparty pursuant to any Secured Swap Contract
to which it is a party (other than any amount therefore accrued and unpaid)
shall be deemed to be equal to the Agreement Value therefor and (B)
deposited as Collateral in the Cash Collateral Account up to an amount
equal to 105% of the aggregate Effective Amount of all outstanding L/C
Obligations, provided further that in the event that any such Letter of
Credit is drawn, the Collateral Agent shall pay to the Issuing Bank that
issued such Letter of Credit the amount held in the Cash Collateral Account
in respect of such Letter of Credit, provided further that, to the extent
that any such Letter of Credit shall expire or terminate undrawn and as a
result thereof the amount of the Collateral in the Cash Collateral Account
shall exceed 105% of the aggregate Effective Amount of all then outstanding
L/C Obligations,
26
such excess amount of such Collateral shall be applied in accordance
with the remaining order of priority set out in this Section 22(b).
Any surplus of such cash or cash proceeds held by or on behalf of the
Collateral Agent and remaining after payment in full of all the Secured
Obligations shall be paid over to the applicable Grantor or to whomsoever
may be lawfully entitled to receive such surplus.
(c) All payments received by any Grantor under or in connection with
any Assigned Agreement or otherwise in respect of the Collateral shall be
received in trust for the benefit of the Collateral Agent, shall be
segregated from other funds of such Grantor and shall be forthwith paid
over to the Collateral Agent in the same form as so received (with any
necessary indorsement).
(d) The Collateral Agent may, without notice to any Grantor except as
required by law and at any time or from time to time, charge, set-off and
otherwise apply all or any part of the Secured Obligations against any
funds held with respect to the Account Collateral or in any other deposit
account.
(e) In the event of any sale or other disposition of any of the
Intellectual Property Collateral of any Grantor, the goodwill symbolized by
any Trademarks subject to such sale or other disposition shall be included
therein, and such Grantor shall supply to the Collateral Agent or its
designee such Grantor's know-how and expertise, and documents and things
relating to any Intellectual Property Collateral subject to such sale or
other disposition, and such Grantor's customer lists and other records and
documents relating to such Intellectual Property Collateral and to the
manufacture, distribution, advertising and sale of products and services of
such Grantor.
(f) The Collateral Agent is authorized, in connection with any sale
of the Security Collateral pursuant to this Section 22, to deliver or
otherwise disclose to any prospective purchaser of the Security Collateral
any information in its possession relating to such Security Collateral.
Section 23. Indemnity and Expenses. (a) Whether or not the
transactions contemplated hereby are consummated, each Grantor shall indemnify
and hold the Indemnified Persons harmless from and against any and all
liabilities, obligations, losses, damages, penalties, claims, demands, actions,
judgments, suits, costs, charges, expenses and disbursements (including Attorney
Costs) of any kind or nature whatsoever (excluding costs and expenses
specifically referred to in Section 12.4) of the Credit Agreement which may at
any time (including at any time following repayment of the Loans, the
termination of the Letters of Credit and the termination, resignation or
replacement of any Agent or replacement of any Lender) be imposed on, incurred
by or asserted against any such Indemnified Person in any way relating to or
arising out of or in connection with the execution, delivery, enforcement,
performance or administration of this Agreement or any other agreement, letter
or instrument delivered in connection with the transactions contemplated hereby
or the consummation of the transactions contemplated hereby or any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory (including
27
any investigation of, preparation for, or defense of any pending or threatened
claim, investigation, litigation or proceeding) and regardless of whether any
Indemnified Person is a party thereto (all the foregoing, collectively, the
"INDEMNIFIED LIABILITIES"), in all cases, whether or not caused by or arising,
in whole or in part, out of the negligence of any Indemnified Person; provided
that such indemnity shall not, as to any Indemnified Person, be available to the
extent that such Indemnified Liabilities are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted directly and
primarily from the gross negligence or willful misconduct of such Indemnified
Person. No Indemnified Person shall be liable for any damages arising from the
use by others of any information or other materials obtained through IntraLinks
or other similar information transmission systems in connection with this
Agreement, nor shall any Indemnified Person have any liability for any indirect
or consequential damages relating to this Agreement or any other Loan Document
or arising out of its activities in connection herewith or therewith (whether
before or after the date hereof). In the case of an investigation, litigation or
other proceeding to which the indemnity in this Section 23 applies, such
indemnity shall be effective whether or not such investigation, litigation or
proceeding is brought by any Loan Party, its directors, shareholders or
creditors or an Indemnified Party or any other Person, whether or not an
Indemnified Person is otherwise a party thereto and whether or not any of the
transactions contemplated hereunder or under any of the other Loan Documents are
consummated. All amounts due under this Section 23 shall be payable within five
Business Days after demand therefor. The agreements in this Section shall
survive the resignation of any Agent, the replacement of any Lender, the
termination of the Commitments and the repayment, satisfaction or discharge of
all the other Obligations. Each Agent-Related Person and each lender agrees that
in the event that any investigation, litigation or proceeding is asserted or
threatened in writing or instituted against it or any other Indemnified Person,
or any remedial, removal or response action which is requested of it or any
other Indemnified Person, for which any Agent-Related Person or Lender may
desire indemnity or defense hereunder, such Agent-Related Person or such Lender
shall notify the Company in writing of such event; provided that failure to so
notify the Company shall not affect the right of any Agent-Related Person or
Lender to seek indemnification under this Section.
(b) Each Grantor will upon demand pay to the Collateral Agent the
amount of any and all reasonable expenses, including, without limitation, the
reasonable fees and expenses of its counsel and of any experts and agents, that
the Collateral Agent may incur in connection with (i) the administration of this
Agreement, (ii) the custody, preservation, use or operation of, or the sale of,
collection from or other realization upon, any of the Collateral of such
Grantor, (iii) the exercise or enforcement of any of the rights of the
Collateral Agent or the other Secured parties hereunder or (iv) the failure by
such Grantor to perform or observe any of the provisions hereof.
Section 24. Amendments; Waivers; Additional Grantors; Etc. (a) No
failure on the part of any Secured Party to exercise, and no delay in
exercising, any right, remedy, power or privilege hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law.
28
(b) Upon the execution and delivery, or authentication, by any Person of
a security agreement supplement in substantially the form of Exhibit A hereto
(each a "SECURITY AGREEMENT SUPPLEMENT"),(i) such Person shall be referred to as
an "ADDITIONAL GRANTOR" and shall be and become a Grantor hereunder, and each
reference in this Agreement and the other Loan Documents to "Grantor" shall also
mean and be a reference to such Additional Grantor, and each reference in this
Agreement and the other Loan Documents to "Collateral" shall also mean and be a
reference to the Collateral of such Additional Grantor, and (ii) the
supplemental Schedules I-VIII attached to each Security Agreement Supplement
shall be incorporated into and become a part of and supplement Schedules I-VIII,
respectively, hereto, and the Collateral Agent may attach such supplemental
schedules to such Schedules; and each reference to such Schedules shall mean and
be a reference to such Schedules as supplemented pursuant to each Security
Agreement Supplement.
Section 25. Notices. Etc. (a) Unless otherwise expressly provided
herein, all notices and other communications provided for hereunder shall be in
writing (including by facsimile transmission). All such written notices shall be
mailed, faxed or delivered, if to any Grantor, addressed to it at the address,
facsimile number or (subject to subsection (c) below), electronic mail address
set forth opposite its name on the signature pages hereof, if to any Agent or
any Lender, at its address, facsimile number or (subject to subsection (c)
below), electronic mail address specified in Section 12.2 of the Credit
Agreement, if to any Lender or Affiliate thereof party to any Secured Swap
Contract, at its address, facsimile number or (subject to subsection (c) below),
electronic mail address specified in the Secured Swap Contract to which it is a
party, or, as to any party, at such other address as shall be designated by such
party in a written notice to each other party. All such notices and other
communications shall be deemed to be given or made upon the earlier to occur of
(i) actual receipt by the relevant party hereto and (ii)(A) if delivered by hand
or by courier, when signed for by or on behalf of the relevant party hereto;(B)
if delivered by mail, four Business Days after deposit in the mails, postage
prepaid; (C) if delivered by facsimile, when sent and receipt has been confirmed
by telephone; and (D) if delivered by electronic mail (which form of delivery
is subject to the provisions of subsection (c) below), when delivered. In no
event shall a voicemail message be effective as a notice, communication or
confirmation hereunder.
(b) Effectiveness of Facsimile Documents and Signatures. This Agreement
may be transmitted and/or signed by facsimile. The effectiveness of such
document and signatures shall, subject to applicable law, have the same force
and effect as manually-signed original and shall be binding on each Grantor. The
Administrative Agent may also require that any such document and signatures be
confirmed by a manually-signed original thereof; provided, however, that the
failure to request or deliver the same shall not limit the effectiveness of any
facsimile document or signature.
(c) Limited Use of Electronic Mail. Notices and other communications to
the Collateral Agent hereunder may be delivered or furnished by electronic
communications including e-mail and internet or intranet websites) pursuant to
procedures approved by the Collateral Agent. The Collateral Agent or any Grantor
may, in its discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures approved by it;
provided that approval of such procedures may be limited to particular notices
or communications.
29
Section 26. Continuing Security Interest; Assignments Under the Credit
Agreement. This Agreement shall create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until the latest of (i)
the payment in full in cash of the Secured Obligations, (ii) the termination in
full of the Commitments and (iii) the termination or expiration of all Letters
of Credit and all Secured Hedge Agreements (or, in the case of Letters of
Credit, the cash collateralization thereof in an amount equal to 105% of the
face value thereof), (b) be binding upon each Grantor, its successors and
assigns and (c) inure, together with the rights and remedies of the Collateral
Agent hereunder, to the benefit of the Secured Parties and their respective
successors, transferees and assigns. Without limiting the generality of the
foregoing clause (c), any Lender may assign or otherwise transfer all or any
portion of its rights and obligations under the Credit Agreement (including,
without limitation, all or any portion of its Commitments, the Advances owing to
it and the Note or Notes, if any, held by it) to any other Person, and such
other Person shall thereupon become vested with all the benefits in respect
thereof granted to such Lender herein or otherwise, in each case as provided in
Section 8.07 of the Credit Agreement.
Section 27. Release; Termination. (a) Upon any sale, lease, transfer or
other disposition of any item of Collateral of any Grantor in accordance with
the terms of the Loan Documents (other than sales of Inventory in the ordinary
course of business), the Collateral Agent will, at such Grantor's expense,
execute and deliver to such Grantor such documents as such Grantor shall
reasonably request to evidence the release of such item of Collateral from the
assignment and security interest granted hereby; provided, however, that (i) at
the time of such request and such release no Default shall have occurred and be
continuing, (ii) such Grantor shall have delivered to the Collateral Agent, at
least five Business Days prior to the date of the proposed release, a
certificate of such Grantor to the effect that the transaction is in compliance
with the Loan Documents together with a form of release for execution by the
Collateral Agent and (iii) the proceeds of any such sale, lease, transfer or
other disposition required to the applied, or any payment to be made in
connection therewith, in accordance with Section 2.06 of the Credit Agreement
shall, to the extent so required, be paid or made to, or in accordance with the
instructions of, the Collateral Agent when and as required under Section 2.06
of the Credit Agreement.
(b) Upon the latest of (i) the payment in full in cash of the Secured
Obligations, (ii) the termination in full of the Commitments and (iii) the
termination or expiration of all Letters of Credit and all Secured Swap
Contracts (or, in the case of Letters of Credit, the cash collateralization
thereof in an amount equal to 105% of the face value thereof), the pledge and
security interest granted hereby shall terminate and all rights to the
Collateral shall revert to the applicable Grantor. Upon any such termination,
the Collateral Agent will, at the applicable Grantor's expense, execute and
deliver to such Grantor such documents as such Grantor shall reasonably request
to evidence such termination.
Section 28. Execution in Counterparts. This Agreement may be executed in
any number of counterparts, each of which when so executed shall be deemed to
be an original and all of which taken together shall constitute one and the
same agreement.
Section 29. The Mortgages. In the event that any of the Collateral
hereunder is also subject to a valid and enforceable Lien under the terms of
any Mortgage and the terms of
30
such Mortgage are inconsistent with the terms of this Agreement, then with
respect to such Collateral, the terms of such Mortgage shall be controlling in
the case of fixtures and real estate leases, letting and licenses of, and
contracts and agreements relating to the lease of, real property, and the terms
of this Agreement shall be controlling in the case of all other Collateral.
31
Section 30. Governing Law
This Agreement shall be governed by, and construed in accordance
with, the laws of the State of
New York.
IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
DEL MONTE CORPORATION (f/k/a SKF
FOODS, INC.)
By /s/ Xxx X. Xxxxxx
-----------------------------------------
Name: XXX X. XXXXXX
Title: ASSISTANT TREASURER
Address for Notices: XXXX MAC IHC, INC.
One Market @ The Landmark
Xxx Xxxxxxxxx, XX 00000
By /s/ Xxx X. Xxxxxx
-----------------------------------------
Name: XXX X. XXXXXX
Title: ASSISTANT TREASURER
Address for Notices: STAR-XXXX SAMOA, INC.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
By /s/ Xxx X. Xxxxxx
-----------------------------------------
Name: XXX X. XXXXXX
Title: ASSISTANT TREASURER
Address for Notices: MARINE TRADING PACIFIC, INC.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
By /s/ Xxx X. Xxxxxx
-----------------------------------------
Name: XXX X. XXXXXX
Title: ASSISTANT TREASURER
Address for Notices: STAR-XXXX MAURITIUS, INC.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
By /s/ Xxx X. Xxxxxx
-----------------------------------------
Name: XXX X. XXXXXX
Title: ASSISTANT TREASURER
Address for Notices: DEL MONTE FOOD COMPANY
One Market @ The Landmark
Xxx Xxxxxxxxx, XX 00000
By: /s/ Xxx X. Xxxxxx
------------------------------
Name: XXX X. XXXXXX
Title: ASSISTANT TREASURER
