Exhibit 10.10
SECURITY AGREEMENT dated as of December 20,
1999, among XXXXXX MEDICAL TECHNOLOGY, INC., a
Delaware corporation (the "BORROWER"), XXXXXX
ACQUISITION HOLDINGS, INC., a Delaware corporation
("HOLDINGS"), EACH DOMESTIC SUBSIDIARY OF THE
BORROWER LISTED ON SCHEDULE I HERETO (each such
subsidiary individually a "SUBSIDIARY GRANTOR" and
collectively, the "SUBSIDIARY Grantors"; the
Subsidiary Grantors, Holdings and the Borrower are
referred to collectively herein as the "GRANTORS")
and THE CHASE MANHATTAN BANK, a New York banking
corporation ("CHASE"), as collateral agent (in such
capacity, the "COLLATERAL AGENT") for the Secured
Parties (as defined herein).
Reference is made to (a) the Credit Agreement dated as of December
7, 1999 (as amended, supplemented or otherwise modified from time to time,
the "CREDIT AGREEMENT"), among the Borrower, Holdings, the lenders from time
to time party thereto (the "LENDERS"), Chase, as administrative agent and
collateral agent for the Lenders and as issuing bank (in such capacity, the
"ISSUING BANK"), Bank of America, N.A., as syndication agent, and The Chase
Manhattan Bank, Paris Branch, as the agent and lender for the local
facilities, (b) any Subsidiary Guarantee Agreement (as amended, supplemented
or otherwise modified from time to time, the "SUBSIDIARY GUARANTEE
AGREEMENT"), to be entered into by and among certain subsidiaries of the
Borrower and the Collateral Agent and (c) the Parent Guarantee Agreement
dated as of December 7, 1999 (as amended, supplemented or otherwise modified
from time to time, the "PARENT GUARANTEE AGREEMENT"), among Holdings and the
Collateral Agent. Capitalized terms used but not defined herein shall have
meanings assigned to such terms in the Credit Agreement.
The Lenders have agreed to make Loans to the Borrower, and the
Issuing Bank has agreed to issue Letters of Credit for the account of the
Borrower, pursuant to, and upon the terms and subject to the conditions
specified in, the Credit Agreement. Each of the Subsidiary Grantors and
Holdings has agreed to guarantee, among other things, all the obligations of
the Borrower under the Credit Agreement. The obligations of the Lenders to
make Loans and of the Issuing Bank to issue Letters of Credit are conditioned
upon, among other things, the execution and delivery by the Grantors of an
agreement in the form hereof to secure (a) the due and punctual payment by
the Borrower of (i) the principal of and premium, if any, and interest
(including interest accruing during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding) on the Loans, when and as due,
whether at maturity, by acceleration, upon one or more dates set for
prepayment or otherwise, (ii) each payment required to be made by the
Borrower under the Credit Agreement in respect of any Letter of Credit, when
and as due, including
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payments in respect of reimbursement of disbursements, interest thereon and
obligations to provide cash collateral and (iii) all other monetary
obligations, including reasonable fees, costs, expenses and indemnities,
whether primary, secondary, direct, contingent, fixed or otherwise (including
monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), of the Borrower to the Secured
Parties under the Credit Agreement and the other Loan Documents, (b) the due
and punctual performance of all covenants, agreements, obligations and
liabilities of the Borrower under or pursuant to the Credit Agreement and the
other Loan Documents, (c) the due and punctual payment and performance of all
the covenants, agreements, obligations and liabilities of each WMT Loan Party
under or pursuant to this Agreement and the other WMT Loan Documents and (d)
the due and punctual payment and performance of all obligations of the
Borrower under each Hedging Agreement entered into with any counterparty that
was a Lender at the time such Hedging Agreement was entered into (all the
monetary and other obligations described in the preceding clauses (a) through
(d) being collectively called the "OBLIGATIONS").
Accordingly, the Grantors and the Collateral Agent, on behalf of
itself and each Secured Party (and each of their respective successors or
assigns), hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITION OF TERMS USED HEREIN. Unless the context
otherwise requires, all capitalized terms used but not defined herein shall
have the meanings set forth in the Credit Agreement and all references to the
Uniform Commercial Code shall mean the Uniform Commercial Code in effect in
the State of New York as of the date hereof.
SECTION 1.02. DEFINITION OF CERTAIN TERMS USED HEREIN. As used
herein, the following terms shall have the following meanings:
"ACCOUNT DEBTOR" shall mean any person who is or who may become
obligated to any Grantor under, with respect to or on account of an Account.
"ACCOUNTS" shall mean any and all right, title and interest of any
Grantor to charterhire, freights and sub-freights, payment for goods and
services sold or leased, including any such right evidenced by chattel paper,
whether due or to become due, whether or not it has been earned by
performance, and whether now or hereafter acquired or arising in the future,
including accounts receivable from Affiliates of the Grantors.
"ACCOUNTS RECEIVABLE" shall mean all Accounts and all right, title
and interest in any returned goods, together with all rights, titles,
securities and guarantees with respect thereto, including any rights to
stoppage in transit, replevin, reclamation and resales, and all related
security interests, liens
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and pledges, whether voluntary or involuntary, in each case whether now
existing or owned or hereafter arising or acquired.
"COLLATERAL" shall mean all (a) Accounts Receivable, (b) Documents,
(c) Equipment, (d) General Intangibles, (e) Inventory, (f) cash and cash
accounts, (g) Investment Property and (h) Proceeds.
"COMMODITY ACCOUNT" shall mean an account maintained by a Commodity
Intermediary in which a Commodity Contract is carried out for a Commodity
Customer.
"COMMODITY CONTRACT" shall mean a commodity futures contract, an
option on a commodity futures contract, a commodity option or any other
contract that, in each case, is (a) traded on or subject to the rules of a
board of trade that has been designated as a contract market for such a
contract pursuant to the federal commodities laws or (b) traded on a foreign
commodity board of trade, exchange or market, and is carried on the books of
a Commodity Intermediary for a Commodity Customer.
"COMMODITY CUSTOMER" shall mean a person for whom a Commodity
Intermediary carries a Commodity Contract on its books.
"COMMODITY INTERMEDIARY" shall mean (a) a person who is registered
as a futures commission merchant under the federal commodities laws or (b) a
person who in the ordinary course of its business provides clearance or
settlement services for a board of trade that has been designated as a
contract market pursuant to federal commodities laws.
"COPYRIGHT LICENSE" shall mean any written agreement, now or
hereafter in effect, granting any right to any third party under any
Copyright now or hereafter owned by any Grantor or which such Grantor
otherwise has the right to license, or granting any right to such Grantor
under any Copyright now or hereafter owned by any third party, and all rights
of such Grantor under any such agreement.
"COPYRIGHTS" shall mean all of the following now owned or hereafter
acquired by any Grantor: (a) all copyright rights in any work subject to the
copyright laws of the United States or any other country, whether as author,
assignee, transferee or otherwise, and (b) all registrations and applications
for registration of any such copyright in the United States or any other
country (other than in countries where the granting of a security interest
therein is not permissible under the laws of such country), including
registrations, recordings, supplemental registrations and pending
applications for registration in the United States Copyright Office,
including those listed on Schedule II.
"CREDIT AGREEMENT" shall have the meaning assigned to such term in
the preliminary statement of this Agreement.
"DOCUMENTS" shall mean all instruments, files, records, ledger
sheets and documents covering or relating to any of the Collateral.
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"ENTITLEMENT HOLDER" shall mean a person identified in the records
of a Securities Intermediary as the person having a Security Entitlement
against the Securities Intermediary. If a person acquires a Security
Entitlement by virtue of Section 8-501(b)(2) or (3) of the Uniform Commercial
Code, such person is the Entitlement Holder.
"EQUIPMENT" shall mean all equipment, furniture and furnishings, and
all tangible personal property similar to any of the foregoing, including
tools, parts and supplies of every kind and description, and all
improvements, accessions or appurtenances thereto, that are now or hereafter
owned by any Grantor. The term Equipment shall include Fixtures.
"FINANCIAL ASSET" shall mean (a) a Security, (b) an obligation of a
person or a share, participation or other interest in a person or in property or
an enterprise of a person, which is, or is of a type, dealt with in or traded on
financial markets, or which is recognized in any area in which it is issued or
dealt in as a medium for investment or (c) any property that is held by a
Securities Intermediary for another person in a Securities Account if the
Securities Intermediary has expressly agreed with the other person that the
property is to be treated as a Financial Asset under Article 8 of the Uniform
Commercial Code. As the context requires, the term Financial Asset shall mean
either the interest itself or the means by which a person's claim to it is
evidenced, including a certificated or uncertificated Security, a certificate
representing a Security or a Security Entitlement.
"FIXTURES" shall mean all items of Equipment, whether now owned or
hereafter acquired, of any Grantor that become so related to particular real
estate that an interest in them arises under any real estate law applicable
thereto.
"GENERAL INTANGIBLES" shall mean all choses in action and causes of
action and all other assignable intangible personal property of any Grantor
of every kind and nature (other than Accounts Receivable) now owned or
hereafter acquired by any Grantor, including all rights and interests in
partnerships, limited partnerships, limited liability companies and other
unincorporated entities, corporate or other business records, indemnification
claims, contract rights (including rights under leases, whether entered into
as lessor or lessee, Hedging Agreements and other agreements), Intellectual
Property, goodwill, registrations, franchises, tax refund claims and any
letter of credit, guarantee, claim, security interest or other security held
by or granted to any Grantor to secure payment by an Account Debtor of any of
the Accounts Receivable.
"INTELLECTUAL PROPERTY" shall mean all intellectual and similar
property of any Grantor of every kind and nature now owned or hereafter
acquired by any Grantor, including inventions, designs, Patents, Copyrights,
Licenses, Trademarks, trade secrets, confidential or proprietary technical
and business information, know-how, show-how or other data or information,
software and databases and all embodiments or fixations thereof and related
documentation, registrations and franchises, and all additions, improvements
and accessions to, and books and records describing or used in connection
with, any of the foregoing.
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"INVENTORY" shall mean all goods of any Grantor, whether now owned
or hereafter acquired, held for sale or lease, or furnished or to be
furnished by any Grantor under contracts of service, or consumed in any
Grantor's business, including raw materials, intermediates, work in process,
packaging materials, finished goods, semi-finished inventory, scrap
inventory, manufacturing supplies and spare parts, and all such goods that
have been returned to or repossessed by or on behalf of any Grantor.
"INVESTMENT PROPERTY" shall mean all Securities (whether
certificated or uncertificated), Security Entitlements, Securities Accounts,
Commodity Contracts and Commodity Accounts of any Grantor, whether now owned
or hereafter acquired by any Grantor.
"LICENSE" shall mean any Patent License, Trademark License,
Copyright License or other license or sublicense to which any Grantor is a
party, including those listed on Schedule III (other than those license
agreements in existence on the date hereof and listed on Schedule III and
those license agreements entered into after the date hereof, which by their
terms prohibit assignment or a grant of a security interest by such Grantor
as licensee thereunder).
"OBLIGATIONS" shall have the meaning assigned to such term in the
preliminary statement of this Agreement.
"PATENT LICENSE" shall mean any written agreement, now or hereafter
in effect, granting to any third party any right to make, use or sell any
invention on which a Patent, now or hereafter owned by any Grantor or which
any Grantor otherwise has the right to license, is in existence, or granting
to any Grantor any right to make, use or sell any invention on which a
Patent, now or hereafter owned by any third party, is in existence, and all
rights of any Grantor under any such agreement.
"PATENTS" shall mean all of the following now owned or hereafter
acquired by any Grantor: (a) all letters patent of the United States or any
other country (other than in countries where the granting of a security
interest therein is not permissible under the laws of such country), all
registrations and recordings thereof, and all applications for letters patent
of the United States or any other country, including registrations,
recordings and pending applications in the United States Patent and Trademark
Office or any similar offices in any other country, including those listed on
Schedule IV, and (b) all reissues, continuations, divisions,
continuations-in-part, renewals or extensions thereof, and the inventions
disclosed or claimed therein, including the right to make, use and/or sell
the inventions disclosed or claimed therein.
"PERFECTION CERTIFICATE" shall mean a certificate substantially in
the form of Annex I hereto, completed and supplemented with the schedules and
attachments contemplated thereby, and duly executed by a Financial Officer
and the chief legal officer of each of Holdings and the Borrower.
"PROCEEDS" shall mean any consideration received from the sale,
exchange, license, lease or other disposition of any asset or property that
constitutes Collateral, any value received as a consequence of the possession
of any Collateral and any payment received from any insurer or other
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person or entity as a result of the destruction, loss, theft, damage or other
involuntary conversion of whatever nature of any asset or property which
constitutes Collateral and shall include, (a) any claim of any Grantor
against any third party for (and the right to xxx and recover for and the
rights to damages or profits due or accrued arising out of or in connection
with) (i) past, present or future infringement of any Patent now or hereafter
owned by any Grantor, or licensed under a Patent License, (ii) past, present
or future infringement or dilution of any Trademark now or hereafter owned by
any Grantor or licensed under a Trademark License or injury to the goodwill
associated with or symbolized by any Trademark now or hereafter owned by any
Grantor, (iii) past, present or future breach of any License and (iv) past,
present or future infringement of any Copyright now or hereafter owned by any
Grantor or licensed under a Copyright License and (b) any and all other
amounts from time to time paid or payable under or in connection with any of
the Collateral.
"SECURED PARTIES" shall mean (a) the Lenders, (b) the Administrative
Agent, (c) the Collateral Agent, (d) the Issuing Bank, (e) each counterparty
to an Hedging Agreement entered into with the Borrower if such counterparty
was a Lender at the time the Hedging Agreement was entered into, (f) the
beneficiaries of each indemnification obligation undertaken by any Grantor
under any Loan Document and (g) the successors and assigns of each of the
foregoing.
"SECURITIES" shall mean any obligations of an issuer or any shares,
participations or other interests in an issuer or in property or an
enterprise of an issuer which (a) are represented by a certificate
representing a security in bearer or registered form, or the transfer of
which may be registered upon books maintained for that purpose by or on
behalf of the issuer, (b) are one of a class or series or by its terms is
divisible into a class or series of shares, participations, interests or
obligations and (c)(i) are, or are of a type, dealt with or traded on
securities exchanges or securities markets or (ii) are a medium for
investment and by their terms expressly provide that they are a security
governed by Article 8 of the Uniform Commercial Code; PROVIDED, that
"securities" shall not include more than 65% of the voting equity interests
of any non-United States issuer.
"SECURITIES ACCOUNT" shall mean an account to which a Financial
Asset is or may be credited in accordance with an agreement under which the
person maintaining the account undertakes to treat the person for whom the
account is maintained as entitled to exercise rights that comprise the
Financial Asset.
"SECURITIES INTERMEDIARY" shall mean (a) a clearing corporation or
(b) a person, including a bank or broker, that in the ordinary course of its
business maintains securities accounts for others and is acting in that
capacity.
"SECURITY ENTITLEMENTS" shall mean the rights and property interests
of an Entitlement Holder with respect to a Financial Asset.
"SECURITY INTEREST" shall have the meaning assigned to such term in
Section 2.01.
"TRADEMARK LICENSE" shall mean any written agreement, now or
hereafter in effect, granting to any third party any right to use any
Trademark now or hereafter owned by any Grantor or which any
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Grantor otherwise has the right to license, or granting to any Grantor any
right to use any Trademark now or hereafter owned by any third party, and all
rights of any Grantor under any such agreement.
"TRADEMARKS" shall mean all of the following now owned or hereafter
acquired by any Grantor: (a) all trademarks, service marks, trade names,
corporate names, company names, business names, fictitious business names,
trade styles, trade dress, logos, other source or business identifiers,
designs and general intangibles of like nature, now existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all
registration and recording applications filed in connection therewith,
including registrations and registration applications in the United States
Patent and Trademark Office, any State of the United States or any similar
offices in any other country or any political subdivision thereof (other than
in countries where the granting of a security interest therein is not
permissible under the laws of such country), but excluding any "intent to
use" applications, and all extensions or renewals thereof, including those
listed on Schedule V, (b) all goodwill associated therewith or symbolized
thereby and (c) all other assets, rights and interests that uniquely reflect
or embody such goodwill.
SECTION 1.03. RULES OF INTERPRETATION. The rules of interpretation
specified in Section 1.03 of the Credit Agreement shall be applicable to this
Agreement.
ARTICLE II
SECURITY INTEREST
SECTION 2.01. SECURITY INTEREST. (a) As security for the payment or
performance, as the case may be, in full of the Obligations, each Grantor
hereby bargains, sells, conveys, assigns, sets over, mortgages, pledges,
hypothecates and transfers to the Collateral Agent, its successors and
assigns, for the ratable benefit of the Secured Parties, and hereby grants to
the Collateral Agent, its successors and assigns, for the ratable benefit of
the Secured Parties, a security interest in, all of such Grantor's right,
title and interest in, to and under the Collateral (the "SECURITY INTEREST").
Without limiting the foregoing, the Collateral Agent is hereby authorized to
file one or more financing statements (including fixture filings),
continuation statements, filings with the United States Patent and Trademark
Office or United States Copyright Office (or any successor office or any
similar office in any other country) or other documents for the purpose of
perfecting, confirming, continuing, enforcing or protecting the Security
Interest granted by each Grantor, without the signature of any Grantor, and
naming any Grantor or the Grantors as debtors and the Collateral Agent as
Secured Party.
(b) Notwithstanding anything to the contrary set forth in Section
2.01(a) above or the definition of the term "Collateral", the Collateral
shall not include (i) a pledge of more than 65% of the issued and outstanding
voting equity interest of any non-United States Subsidiary of a Grantor
unless (x) reasonably requested by the Collateral Agent and (y) to the extent
that such pledge may be accomplished without causing adverse tax consequences
to the Borrower; PROVIDED, HOWEVER, that, following any such pledge, if the
Borrower notifies the Collateral Agent that the continued existence
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of such pledge is reasonably likely to cause adverse tax consequences to the
Borrower, then so long as no Event of Default shall have occurred and be
continuing, the Collateral Agent shall promptly release such pledge to the
extent necessary to eliminate such adverse tax consequences, or (ii) to the
extent that applicable law requires that a Subsidiary of a Grantor issue
directors' qualifying shares, such qualifying shares.
SECTION 2.02. NO ASSUMPTION OF LIABILITY. The Security Interest is
granted as security only and shall not subject the Collateral Agent or any
other Secured Party to, or in any way alter or modify, any obligation or
liability of any Grantor with respect to or arising out of the Collateral.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Grantors jointly and severally represent and warrant to the
Collateral Agent and the Secured Parties that:
SECTION 3.01. TITLE AND AUTHORITY. Each Grantor has good and valid
rights in and title to the Collateral with respect to which it has purported
to grant a Security Interest hereunder and has full power and authority to
grant to the Collateral Agent the Security Interest in such Collateral
pursuant hereto and to execute, deliver and perform its obligations in
accordance with the terms of this Agreement, without the consent or approval
of any other person other than any consent or approval which has been
obtained subject to Liens permitted pursuant to Section 6.02 of the Credit
Agreement (including any such Lien expressly permitted pursuant to such
Section 6.02 in respect of which a release in a form acceptable to the
Collateral Agent has been delivered to the Collateral Agent).
SECTION 3.02. FILINGS. (a) The Perfection Certificate has been duly
prepared, completed and executed and the information set forth therein is
correct and complete in all material respects. Fully executed Uniform
Commercial Code financing statements or other appropriate filings, recordings
or registrations containing a description of the Collateral have been
delivered to the Collateral Agent for filing in each governmental, municipal
or other office specified in Schedule 6 to the Perfection Certificate, which
are all the filings, recordings and registrations (other than recordings
required to be made in the United States Patent and Trademark Office and the
United States Copyright Office in order to perfect the Security Interest in
Collateral consisting of United States registered Patents, Trademarks and
Copyrights) that are necessary to publish notice of and protect the validity
of and to establish a legal, valid and perfected security interest in favor
of the Collateral Agent (for the ratable benefit of the Secured Parties) in
respect of all Collateral in which the Security Interest may be perfected by
filing, recording or registration in the United States (or any political
subdivision thereof) and its territories and possessions, and no further or
subsequent filing, refiling, recording, rerecording, registration or
reregistration is necessary in any such jurisdiction, except as provided
under applicable law with respect to the filing of continuation statements.
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(b) Each Grantor represents and warrants that fully executed
security agreements in the form hereof or in a form similar thereto suitable
for filing in the United States Patent and Trademark Office and the United
States Copyright Office and containing a description of all Collateral
consisting of registered and applied for Intellectual Property have been
delivered to the Collateral Agent for recording by the United States Patent
and Trademark Office and the United States Copyright Office, as applicable,
and otherwise as may be required pursuant to the laws of any other necessary
jurisdiction, to protect the validity of and to establish a legal, valid and
perfected security interest in favor of the Collateral Agent (for the ratable
benefit of the Secured Parties) in respect of all Collateral consisting of
Patents, Trademarks and Copyrights in which a security interest may be
perfected by filing, recording or registration in the United States (or any
political subdivision thereof) and its territories and possessions, and,
other than the filing of Uniform Commercial Code financing statements
indicated in Section 3.02(a), no further or subsequent filing, refiling,
recording, rerecording, registration or reregistration is necessary (other
than such actions as are necessary to perfect the Security Interest with
respect to any Collateral consisting of registered Patents, Trademarks and
Copyrights (or registration or application for registration thereof) acquired
or developed after the date hereof).
SECTION 3.03. VALIDITY OF SECURITY INTEREST. The Security Interest
constitutes (a) a legal and valid security interest in all the Collateral
securing the payment and performance of the Obligations, (b) subject to the
filings described in Section 3.02 above, a perfected security interest in all
Collateral in which a security interest may be perfected by filing, recording
or registering a financing statement or analogous document in the United
States (or any political subdivision thereof) and its territories and
possessions pursuant to the Uniform Commercial Code or other applicable law
in such jurisdictions and (c) a security interest that shall be perfected in
so much of the property included in the Collateral in which a security
interest may be perfected upon the receipt and recording of this Agreement
with the United States Patent and Trademark Office and the United States
Copyright Office, as applicable, and otherwise as may be required pursuant to
the laws of any other jurisdiction. The Security Interest is and shall be
prior to any other Lien on any of the Collateral, other than Liens expressly
permitted to be prior to the Security Interest pursuant to Section 6.02 of
the Credit Agreement (including any such Lien expressly permitted pursuant to
such Section 6.02 in respect of which a release in a form acceptable to the
Collateral Agent has been delivered to the Collateral Agent).
SECTION 3.04. ABSENCE OF OTHER LIENS. The Collateral is owned by the
Grantors free and clear of any Lien, except for Liens expressly permitted
pursuant to Section 6.02 of the Credit Agreement (including any such Lien
expressly permitted pursuant to such Section 6.02 in respect of which a
release in a form acceptable to the Collateral Agent has been delivered to
the Collateral Agent). The Grantor has not filed or consented to the filing
of (a) any financing statement or analogous document under the Uniform
Commercial Code or any other applicable laws covering any Collateral, (b) any
assignment in which any Grantor assigns any Collateral or any security
agreement or similar instrument covering any Collateral with the United
States Patent and Trademark Office or the United States Copyright Office or
(c) any assignment in which any Grantor assigns any Collateral or any
security agreement or similar instrument covering any Collateral with any
foreign governmental, municipal or other office, which financing statement or
analogous document,
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assignment, security agreement or similar instrument is still in effect,
except, in each case, for Liens expressly permitted pursuant to Section 6.02
of the Credit Agreement (including any such Lien expressly permitted pursuant
to such Section 6.02 in respect of which a release in a form acceptable to
the Collateral Agent has been delivered to the Collateral Agent).
ARTICLE IV
COVENANTS
SECTION 4.01. CHANGE OF NAME; LOCATION OF COLLATERAL; RECORDS; PLACE
OF BUSINESS. (a) Each Grantor agrees promptly to notify the Collateral Agent
in writing of any change (i) in its corporate name or in any trade name used
to identify it in the conduct of its business or in the ownership of its
properties, (ii) in the location of its chief executive office, its principal
place of business, any office in which it maintains original books or records
relating to Collateral owned by it or any office or facility at which
Collateral owned by it is located (including the establishment of any such
new office or facility), (iii) in its identity or corporate structure or (iv)
in its Federal Taxpayer Identification Number. Each Grantor agrees not to
effect or permit any change referred to in the preceding sentence unless
written notice has been given to the Collateral Agent to permit the
Collateral Agent to make all filings under the Uniform Commercial Code or
otherwise that are required in order for the Collateral Agent to continue at
all times following such change to have a valid, legal and perfected first
priority security interest in all the Collateral. Each Grantor agrees
promptly to notify the Collateral Agent if any material portion of the
Collateral owned or held by such Grantor is damaged or destroyed.
(b) Each Grantor agrees to maintain, at its own cost and expense,
such complete and accurate records with respect to the Collateral owned by it
as is consistent with its current practices and in accordance with such
prudent and standard practices used in industries that are the same as or
similar to those in which such Grantor is engaged, but in any event to
include complete accounting records indicating all payments and proceeds
received with respect to any part of the Collateral, and, at such time or
times as the Collateral Agent may reasonably request, promptly to prepare and
deliver to the Collateral Agent a duly certified schedule or schedules in
form and detail reasonably satisfactory to the Collateral Agent showing the
identity, amount and location of any and all Collateral.
SECTION 4.02. PERIODIC CERTIFICATION. Each year, at the time of
delivery of annual financial statements with respect to the preceding fiscal
year pursuant to Section 5.01 of the Credit Agreement, the Borrower shall
deliver to the Collateral Agent a certificate executed by a Financial Officer
and the chief legal officer of the Borrower (a) setting forth the information
required pursuant to Section 2 of the Perfection Certificate or confirming
that there has been no change in such information since the date of such
certificate or the date of the most recent certificate delivered pursuant to
this Section 4.02 and Section 5.03(b) of the Credit Agreement and (b)
certifying that all Uniform Commercial Code financing statements or other
appropriate filings, recordings or registrations, including all refilings,
rerecordings and reregistrations, containing a description of the Collateral
which the Grantor is
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required to file have been filed of record in each governmental, municipal or
other appropriate office in each jurisdiction identified pursuant to clause
(a) above to the extent necessary to protect and perfect the Security
Interest for a period of not less than 18 months after the date of such
certificate (except as noted therein with respect to any continuation
statements to be filed within such period). Each certificate delivered
pursuant to this Section 4.02 shall identify in the format of Schedule II,
III, IV or V, as applicable, all registered and applied for Intellectual
Property of any Grantor in existence on the date thereof and not then listed
on such Schedules or previously so identified to the Collateral Agent.
SECTION 4.03. PROTECTION OF SECURITY. Each Grantor shall, at its own
cost and expense, take any and all actions reasonably necessary to defend
title to the Collateral against all persons and to defend the Security
Interest of the Collateral Agent in the Collateral and the priority thereof
against any Lien not expressly permitted pursuant to Section 6.02 of the
Credit Agreement (including any such Lien expressly permitted pursuant to
such Section 6.02 in respect of which a release in a form acceptable to the
Collateral Agent has been delivered to the Collateral Agent).
SECTION 4.04. FURTHER ASSURANCES. Each Grantor agrees, at its own
expense, to execute, acknowledge, deliver and cause to be duly filed all such
further instruments and documents and take all such actions as the Collateral
Agent may from time to time reasonably request to better assure, preserve,
protect and perfect the Security Interest and the rights and remedies created
hereby, including the payment of any reasonable fees and taxes required in
connection with the execution and delivery of this Agreement, the granting of
the Security Interest and the filing of any financing statements (including
fixture filings) or other documents in connection herewith or therewith. If
any amount payable under or in connection with any of the Collateral shall be
or become evidenced by any promissory note or other instrument, such note or
instrument shall as promptly as reasonably practicable be pledged and
delivered to the Collateral Agent, duly endorsed in a manner reasonably
satisfactory to the Collateral Agent.
Without limiting the generality of the foregoing, each Grantor
hereby authorizes the Collateral Agent, with prompt notice thereof to the
Grantors, to supplement this Agreement by supplementing Schedule II, III, IV
or V hereto or adding additional schedules hereto to specifically identify
any asset or item that may constitute registered and applied for Copyrights,
Licenses, Patents or Trademarks; PROVIDED, HOWEVER, that any Grantor shall
have the right, exercisable within 10 days after it has been notified by the
Collateral Agent of the specific identification of such Collateral, to advise
the Collateral Agent in writing of any inaccuracy of the representations and
warranties made by such Grantor hereunder with respect to such Collateral.
Each Grantor agrees that it will take such action as shall be reasonably
necessary in order that all representations and warranties hereunder shall be
true and correct in all material respects with respect to such Collateral
within 30 days after the date it has been notified by the Collateral Agent of
the specific identification of such Collateral.
SECTION 4.05. INSPECTION AND VERIFICATION. Upon reasonable notice to
the Grantors, but in no event more than four times per fiscal year unless an
Event of Default shall have occurred and be continuing, the Collateral Agent
and such persons as the Collateral Agent may reasonably designate
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shall at any reasonable time and from time to time at reasonable intervals
have the right, at the Grantors' own cost and expense, to inspect the
Collateral, all records related thereto (and to make extracts and copies from
such records) and the premises upon which any of the Collateral is located,
to discuss the Grantors' affairs with the officers of the Grantors and their
independent accountants and to verify under reasonable procedures the
validity, amount, quality, quantity, value, condition and status of, or any
other matter relating to, the Collateral, including, in the case of Accounts
or Collateral in the possession of any third person, by contacting Account
Debtors or the third person possessing such Collateral for the purpose of
making such a verification; PROVIDED that the Collateral Agent shall not
contact any such third person unless a Default or Event of Default has
occurred and is continuing. The Collateral Agent shall have the absolute
right to share any information it gains from such inspection or verification
with any Secured Party (it being understood that any such information shall
be deemed to be "Information" subject to the provisions of Section 9.12 of
the Credit Agreement).
SECTION 4.06. TAXES; ENCUMBRANCES. At its option, the Collateral
Agent may discharge past due taxes, assessments, charges, fees, Liens,
security interests or other encumbrances at any time levied or placed on the
Collateral and not permitted pursuant to Section 6.02 of the Credit Agreement
(including any such Lien expressly permitted pursuant to such Section 6.02 in
respect of which a release in a form acceptable to the Collateral Agent has
been delivered to the Collateral Agent), and may pay for the maintenance and
preservation of the Collateral to the extent any Grantor fails to do so as
required by the Credit Agreement or this Agreement, and each Grantor jointly
and severally agrees to reimburse the Collateral Agent on demand for any
payment made or any expense incurred by the Collateral Agent pursuant to the
foregoing authorization; PROVIDED, HOWEVER, that nothing in this Section 4.06
shall be interpreted as excusing any Grantor from the performance of, or
imposing any obligation on the Collateral Agent or any Secured Party to cure
or perform, any covenants or other promises of any Grantor with respect to
taxes, assessments, charges, fees, liens, security interests or other
encumbrances and maintenance as set forth herein or in the other Loan
Documents.
SECTION 4.07. ASSIGNMENT OF SECURITY INTEREST. If at any time any
Grantor shall take a security interest in any property of an Account Debtor
or any other person to secure payment and performance of an Account, such
Grantor shall as promptly as reasonably practicable assign such security
interest to the Collateral Agent. Such assignment need not be filed of public
record unless necessary to continue the perfected status of the security
interest against creditors of and transferees from the Account Debtor or
other person granting the security interest.
SECTION 4.08. CONTINUING OBLIGATIONS OF THE GRANTORS. Each Grantor
shall remain liable to observe and perform all the conditions and obligations
to be observed and performed by it under each contract, agreement or
instrument relating to the Collateral, all in accordance with the terms and
conditions thereof, and each Grantor jointly and severally agrees to
indemnify and hold harmless the Collateral Agent and the Secured Parties from
and against any and all liability for such performance.
SECTION 4.09. USE AND DISPOSITION OF COLLATERAL. None of the
Grantors shall make or permit to be made an assignment, pledge or
hypothecation of the Collateral or shall grant any other Lien in respect of
the Collateral, except as expressly permitted by Section 6.02 of the Credit
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Agreement (including any such Lien expressly permitted pursuant to such
Section 6.02 in respect of which a release in a form acceptable to the
Collateral Agent has been delivered to the Collateral Agent). None of the
Grantors shall make or permit to be made any transfer of the Collateral and
each Grantor shall remain at all times in possession (which possession shall
include, in the case of Inventory located on the premises of any property
leased and used by the Borrower or any Subsidiary in the ordinary course of
business, storage of Inventory on such property in the ordinary course of
business) of the Collateral owned by it, except that (a) Inventory may be
sold in the ordinary course of business and (b) unless and until the
Collateral Agent shall notify the Grantors that an Event of Default shall
have occurred and be continuing and that during the continuance thereof the
Grantors shall not sell, convey, lease, assign, transfer or otherwise dispose
of any Collateral (which notice may be given by telephone (if promptly
confirmed in writing) by first class mail or delivery by hand, Federal
Express or any other nationally recognized courier service), the Grantors may
use and dispose of the Collateral in any lawful manner not inconsistent with
the provisions of this Agreement, the Credit Agreement or any other Loan
Document. Without limiting the generality of the foregoing, each Grantor
agrees that it shall not permit any Inventory to be in the possession or
control of any warehouseman, bailee, agent or processor at any time (other
than Inventory of de minimis value held for repair in the ordinary course of
business) unless such warehouseman, bailee, agent or processor shall have
been notified of the Security Interest and shall have agreed in writing to
hold the Inventory subject to the Security Interest and the instructions of
the Collateral Agent and to waive and release any Lien held by it with
respect to such Inventory, whether arising by operation of law or otherwise.
SECTION 4.10. LIMITATION ON MODIFICATION OF ACCOUNTS. None of the
Grantors will, without the Collateral Agent's prior written consent, which,
prior to the occurrence and continuance of any Default or Event of Default,
will not be unreasonably withheld, grant any extension of the time of payment
of any of the Accounts Receivable, compromise, compound or settle the same
for less than the full amount thereof, release, wholly or partly, any person
liable for the payment thereof or allow any credit or discount whatsoever
thereon, other than extensions, credits, discounts, compromises or
settlements granted or made in the ordinary course of business and consistent
with its current practices and in accordance with such prudent and standard
practices used in industries that are the same as or similar to those in
which such Grantor is engaged.
SECTION 4.11. INSURANCE. The Grantors, at their own expense, shall
maintain or cause to be maintained insurance covering physical loss or damage
to the Inventory in accordance with Section 5.07 of the Credit Agreement.
Each Grantor irrevocably makes, constitutes and appoints the Collateral Agent
(and all officers, employees or agents designated by the Collateral Agent) as
such Grantor's true and lawful agent (and attorney-in-fact) for the purpose,
during the continuance of an Event of Default, of making, settling and
adjusting claims in respect of Collateral under policies of insurance,
endorsing the name of such Grantor on any check, draft, instrument or other
item of payment for the proceeds of such policies of insurance and for making
all determinations and decisions with respect thereto. In the event that any
Grantor at any time or times shall fail to obtain or maintain any of the
policies of insurance required hereby or to pay any premium in whole or part
relating thereto, the Collateral Agent may, without waiving or releasing any
obligation or liability of the Grantors hereunder or any Event of Default, in
its sole discretion, obtain and maintain such
14
policies of insurance and pay such premium and take any other actions with
respect thereto as the Collateral Agent deems advisable. All sums disbursed
by the Collateral Agent in connection with this Section 4.11, including
reasonable attorneys' fees, court costs, expenses and other charges relating
thereto, shall be payable, upon written demand, by the Grantors to the
Collateral Agent and shall be additional Obligations secured hereby.
SECTION 4.12. LEGEND. Each Grantor shall legend, in form and manner
reasonably satisfactory to the Collateral Agent, its Accounts Receivable and
its books, records and documents evidencing or pertaining thereto with an
appropriate reference to the fact that such Accounts Receivable have been
assigned to the Collateral Agent for the benefit of the Secured Parties and
that the Collateral Agent has a security interest therein.
SECTION 4.13. COVENANTS REGARDING PATENT, TRADEMARK AND COPYRIGHT
COLLATERAL. (a) Each Grantor agrees that it will not, nor will it permit any
of its licensees to, do any act, or omit to do any act, whereby any Patent
which is material to the conduct of such Grantor's business may become
invalidated or dedicated to the public, and agrees that it shall continue to
xxxx any products covered by a Patent with the relevant patent number as
necessary and sufficient to establish and preserve its maximum rights under
applicable patent laws.
(b) Each Grantor (either itself or through its licensees or its
sublicensees) will, for each Trademark material to the conduct of such
Grantor's business, (i) maintain such Trademark in full force free from any
claim of abandonment or invalidity for non-use, (ii) maintain the quality of
products and services offered under such Trademark, (iii) display such
Trademark with notice of Federal or foreign registration to the extent
necessary and sufficient to establish and preserve its maximum rights under
applicable law and (iv) not knowingly use or knowingly permit the use of such
Trademark in violation of any third party rights.
(c) Each Grantor (either itself or through licensees) will, for each
work covered by a material Copyright, continue to publish, reproduce,
display, adopt and distribute the work with appropriate copyright notice as
necessary and sufficient to establish and preserve its maximum rights under
applicable copyright laws.
(d) Each Grantor shall notify the Collateral Agent immediately if it
knows or has reason to know that any Patent, Trademark or Copyright material
to the conduct of its business may become abandoned, lost or dedicated to the
public, or of any adverse determination or development (including the
institution of, or any such determination or development in, any proceeding
in the United States Patent and Trademark Office, United States Copyright
Office or any court or similar office of any country) regarding such
Grantor's ownership of any Patent, Trademark or Copyright, its right to
register the same, or to keep and maintain the same.
(e) In no event shall any Grantor, either itself or through any
agent, employee, licensee or designee, file an application for any Patent,
Trademark or Copyright (or for the registration of any Trademark or
Copyright) with the United States Patent and Trademark Office, United States
15
Copyright Office or any office or agency in any political subdivision of the
United States or in any other country or any political subdivision thereof,
unless it promptly informs the Collateral Agent, and, upon reasonable request
of the Collateral Agent, executes and delivers any and all agreements,
instruments, documents and papers as the Collateral Agent may reasonably
request to evidence the Collateral Agent's security interest in such Patent,
Trademark or Copyright, and each Grantor hereby appoints the Collateral Agent
as its attorney-in-fact to execute and file such writings for the foregoing
purposes, all acts of such attorney being hereby ratified and confirmed; such
power, being coupled with an interest, is irrevocable.
(f) Each Grantor will take all necessary steps that are consistent
with the practice in any proceeding before the United States Patent and
Trademark Office, United States Copyright Office or any office or agency in
any political subdivision of the United States or in any other country or any
political subdivision thereof, to maintain and pursue each material
application relating to the Patents, Trademarks and/or Copyrights (and to
obtain the relevant grant or registration) and to maintain each issued Patent
and each registration of the Trademarks and Copyrights that is material to
the conduct of any Grantor's business, including timely filings of
applications for renewal, affidavits of use, affidavits of incontestability
and payment of maintenance fees, and, if consistent with good business
judgment, to initiate opposition, interference and cancelation proceedings
against third parties.
(g) In the event that any Grantor has reason to believe that any
Collateral consisting of a Patent, Trademark or Copyright material to the
conduct of any Grantor's business has been or is about to be infringed,
misappropriated or diluted by a third party, such Grantor promptly shall
notify the Collateral Agent and shall, if consistent with good business
judgment, promptly xxx for infringement, misappropriation or dilution and to
recover any and all damages for such infringement, misappropriation or
dilution, and take such other actions as are appropriate under the
circumstances to protect such Collateral.
(h) Upon and during the continuance of an Event of Default, each
Grantor shall use its best efforts to obtain all requisite consents or
approvals by the licensor of each Copyright License, Patent License or
Trademark License to effect the assignment of all of such Grantor's right,
title and interest thereunder to the Collateral Agent or its designee.
ARTICLE V
COLLECTIONS
Each Grantor irrevocably makes, constitutes and appoints the
Collateral Agent (and all officers, employees or agents designated by the
Collateral Agent with notice to the Grantor) as such Grantor's true and
lawful agent and attorney-in-fact, and in such capacity the Collateral Agent
shall have the right, with power of substitution for each Grantor and in each
Grantor's name or otherwise, for the use and benefit of the Collateral Agent
and the Secured Parties, upon the occurrence and during the continuance of an
Event of Default (a) to receive, endorse, assign and/or deliver any and
16
all notes, acceptances, checks, drafts, money orders or other evidences of
payment relating to the Collateral or any part thereof; (b) to demand,
collect, receive payment of, give receipt for and give discharges and
releases of all or any of the Collateral; (c) to sign the name of any Grantor
on any invoice or xxxx of lading relating to any of the Collateral; (d) to
send verifications of Accounts Receivable to any Account Debtor; (e) to
commence and prosecute any and all suits, actions or proceedings at law or in
equity in any court of competent jurisdiction to collect or otherwise realize
on all or any of the Collateral or to enforce any rights in respect of any
Collateral; (f) to settle, compromise, compound, adjust or defend any
actions, suits or proceedings relating to all or any of the Collateral; (g)
to notify, or to require any Grantor to notify, Account Debtors to make
payment directly to the Collateral Agent; and (h) to use, sell, assign,
transfer, pledge, make any agreement with respect to or otherwise deal with
all or any of the Collateral, and to do all other acts and things necessary
to carry out the purposes of this Agreement, as fully and completely as
though the Collateral Agent were the absolute owner of the Collateral for all
purposes; PROVIDED, HOWEVER, that nothing herein contained shall be construed
as requiring or obligating the Collateral Agent or any Secured Party to make
any commitment or to make any inquiry as to the nature or sufficiency of any
payment received by the Collateral Agent or any Secured Party, or to present
or file any claim or notice, or to take any action with respect to the
Collateral or any part thereof or the moneys due or to become due in respect
thereof or any property covered thereby, and no action taken or omitted to be
taken by the Collateral Agent or any Secured Party with respect to the
Collateral or any part thereof shall give rise to any defense, counterclaim
or offset in favor of any Grantor or to any claim or action against the
Collateral Agent or any Secured Party. It is understood and agreed that the
appointment of the Collateral Agent as the agent and attorney-in-fact of the
Grantors for the purposes set forth above is coupled with an interest and is
irrevocable. The provisions of this Section shall in no event relieve any
Grantor of any of its obligations hereunder or under any other Loan Document
with respect to the Collateral or any part thereof or impose any obligation
on the Collateral Agent or any Secured Party to proceed in any particular
manner with respect to the Collateral or any part thereof, or in any way
limit the exercise by the Collateral Agent or any Secured Party of any other
or further right which it may have on the date of this Agreement or
hereafter, whether hereunder, under any other Loan Document, by law or
otherwise.
ARTICLE VI
REMEDIES
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SECTION 6.01. REMEDIES UPON DEFAULT. Upon the occurrence and during
the continuance of an Event of Default, each Grantor agrees to deliver each
item of Collateral to the Collateral Agent on demand, and it is agreed that
the Collateral Agent shall have the right to take any of or all the following
actions at the same or different times: (a) with respect to any Collateral
consisting of Intellectual Property, on demand, to cause the Security
Interest to become an assignment, transfer and conveyance of any of or all
such Collateral by the applicable Grantors to the Collateral Agent, or to
license or sublicense, whether general, special or otherwise, and whether on
an exclusive or non-exclusive basis, any such Collateral throughout the world
on such terms and conditions and in such manner as the Collateral Agent shall
determine (other than in violation of any then-existing licensing
arrangements to the extent that waivers cannot be obtained), and (b) with or
without legal process and with or without prior notice or demand for
performance, to take possession of the Collateral and without liability for
trespass to enter any premises where the Collateral may be located for the
purpose of taking possession of or removing the Collateral and, generally, to
exercise any and all rights afforded to a secured party under the Uniform
Commercial Code or other applicable law. Without limiting the generality of
the foregoing, each Grantor agrees that the Collateral Agent shall have the
right, subject to the mandatory requirements of applicable law, to sell or
otherwise dispose of all or any part of the Collateral, at public or private
sale or at any broker's board or on any securities exchange, for cash, upon
credit or for future delivery as the Collateral Agent shall deem appropriate.
The Collateral Agent shall be authorized at any such sale (if it deems it
advisable to do so) to restrict the prospective bidders or purchasers to
persons who will represent and agree that they are purchasing the Collateral
for their own account for investment and not with a view to the distribution
or sale thereof, and upon consummation of any such sale the Collateral Agent
shall have the right to assign, transfer and deliver to the purchaser or
purchasers thereof the Collateral so sold. Each such purchaser at any such
sale shall hold the property sold absolutely, free from any claim or right on
the part of any Grantor, and each Grantor hereby waives (to the extent
permitted by law) all rights of redemption, stay and appraisal which such
Grantor now has or may at any time in the future have under any rule of law
or statute now existing or hereafter enacted.
The Collateral Agent shall give the Grantors 10 days' written notice
(which each Grantor agrees is reasonable notice within the meaning of Section
9-504(3) of the Uniform Commercial Code as in effect in the State of New York
or its equivalent in other jurisdictions) of the Collateral Agent's intention
to make any sale of Collateral. Such notice, in the case of a public sale,
shall state the time and place for such sale and, in the case of a sale at a
broker's board or on a securities exchange, shall state the board or exchange
at which such sale is to be made and the day on which the Collateral, or
portion thereof, will first be offered for sale at such board or exchange.
Any such public sale shall be held at such time or times within ordinary
business hours and at such place or places as the Collateral Agent may fix
and state in the notice (if any) of such sale. At any such sale, the
Collateral, or portion thereof, to be sold may be sold in one lot as an
entirety or in separate parcels, as the Collateral Agent may (in its sole and
absolute discretion) determine. The Collateral Agent shall not be obligated
to make any sale of any Collateral if it shall determine not to do so,
regardless of the fact that notice of sale of such Collateral shall have been
given. The Collateral Agent may, without notice or publication, adjourn any
public or private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for sale, and such sale may, without
further notice, be made
18
at the time and place to which the same was so adjourned. In case any sale of
all or any part of the Collateral is made on credit or for future delivery,
the Collateral so sold may be retained by the Collateral Agent until the sale
price is paid by the purchaser or purchasers thereof, but the Collateral
Agent shall not incur any liability in case any such purchaser or purchasers
shall fail to take up and pay for the Collateral so sold and, in case of any
such failure, such Collateral may be sold again upon like notice. At any
public (or, to the extent permitted by law, private) sale made pursuant to
this Section, any Secured Party may bid for or purchase, free (to the extent
permitted by law) from any right of redemption, stay, valuation or appraisal
on the part of any Grantor (all said rights being also hereby waived and
released to the extent permitted by law), the Collateral or any part thereof
offered for sale and may make payment on account thereof by using any claim
then due and payable to such Secured Party from any Grantor as a credit
against the purchase price, and such Secured Party may, upon compliance with
the terms of sale, hold, retain and dispose of such property without further
accountability to any Grantor therefor. For purposes hereof, a written
agreement to purchase the Collateral or any portion thereof shall be treated
as a sale thereof; the Collateral Agent shall be free to carry out such sale
pursuant to such agreement and no Grantor shall be entitled to the return of
the Collateral or any portion thereof subject thereto, notwithstanding the
fact that after the Collateral Agent shall have entered into such an
agreement all Events of Default shall have been remedied and the Obligations
paid in full. As an alternative to exercising the power of sale herein
conferred upon it, the Collateral Agent may proceed by a suit or suits at law
or in equity to foreclose this Agreement and to sell the Collateral or any
portion thereof pursuant to a judgment or decree of a court or courts having
competent jurisdiction or pursuant to a proceeding by a court-appointed
receiver.
SECTION 6.02. APPLICATION OF PROCEEDS. The Collateral Agent shall
apply the proceeds of any collection or sale of the Collateral, as well as
any Collateral consisting of cash, as follows:
FIRST, to the payment of all costs and expenses incurred by
the Administrative Agent or the Collateral Agent (in its capacity as
such hereunder or under any other Loan Document) in connection with
such collection or sale or otherwise in connection with this Agreement
or any of the Obligations, including all reasonable court costs and the
reasonable fees and expenses of its agents and legal counsel, the
repayment of all advances made by the Collateral Agent hereunder or
under any other Loan Document on behalf of any Grantor and any other
costs or expenses incurred in connection with the exercise of any right
or remedy hereunder or under any other Loan Document;
SECOND, to the payment in full of the Obligations (the amounts
so applied to be distributed among the Secured Parties pro rata in
accordance with the amounts of the Obligations owed to them on the date
of any such distribution); and
THIRD, as promptly as practicable, to the Grantors, their
successors or assigns, or as a court of competent jurisdiction may
otherwise direct.
The Collateral Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of the Collateral by the
19
Collateral Agent (including pursuant to a power of sale granted by statute or
under a judicial proceeding), the receipt of the Collateral Agent or of the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold and such purchaser or purchasers shall
not be obligated to see to the application of any part of the purchase money
paid over to the Collateral Agent or such officer or be answerable in any way
for the misapplication thereof.
SECTION 6.03. GRANT OF LICENSE TO USE INTELLECTUAL PROPERTY. For the
purpose of enabling the Collateral Agent to exercise rights and remedies
under this Article at such time as the Collateral Agent shall be lawfully
entitled to exercise such rights and remedies, each Grantor hereby grants to
the Collateral Agent an irrevocable, non-exclusive license (exercisable
without payment of royalty or other compensation to the Grantors and, with
respect to Trademarks, subject to appropriate quality control standards) to
use, license or sub-license any of the Collateral consisting of Intellectual
Property now owned or hereafter acquired by such Grantor, and wherever the
same may be located, and including in such license reasonable access to all
media in which any of the licensed items may be recorded or stored and to all
computer software and programs used for the compilation or printout thereof.
The use of such license by the Collateral Agent shall only be exercised, at
the option of the Collateral Agent, upon the occurrence and during the
continuation of an Event of Default; PROVIDED that any license, sub-license
or other transaction entered into by the Collateral Agent in accordance
herewith shall be binding upon the Grantors notwithstanding any subsequent
cure of an Event of Default.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. NOTICES. All communications and notices hereunder
shall (except as otherwise expressly permitted herein) be in writing and
given as provided in Section 9.01 of the Credit Agreement. All communications
and notices hereunder to any Subsidiary Grantor shall be given to it in care
of the Borrower.
SECTION 7.02. SECURITY INTEREST ABSOLUTE. All rights of the Collateral
Agent hereunder, the Security Interest and all obligations of the Grantors
hereunder shall be absolute and unconditional irrespective of (a) any lack of
validity or enforceability of the Credit Agreement, any other Loan Document, any
agreement with respect to any of the Obligations or any other agreement or
instrument relating to any of the foregoing, (b) any change in the time, manner
or place of payment of, or in any other term of, all or any of the Obligations,
or any other amendment or waiver of or any consent to any departure from the
Credit Agreement, any other Loan Document or any other agreement or instrument,
(c) any exchange, release or non-perfection of any Lien on other collateral, or
any release or amendment or waiver of or consent under or departure from any
guarantee, securing or guaranteeing all or any of the Obligations, or (d) any
other circumstance that might otherwise constitute a defense available to, or a
discharge of, any Grantor in respect of the Obligations or this Agreement (other
than the indefeasible payment in full of all the Obligations and termination of
all commitments of the Lenders and the Issuing Bank).
20
SECTION 7.03. SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made by any Grantor herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement shall be considered to have been relied upon by
the Secured Parties and shall survive the making by the Lenders of the Loans,
and the execution and delivery to the Lenders of any notes evidencing such
Loans, regardless of any investigation made by the Lenders or on their
behalf, and shall continue in full force and effect until this Agreement
shall terminate.
SECTION 7.04. BINDING EFFECT; SEVERAL AGREEMENT. This Agreement
shall become effective as to any Grantor when a counterpart hereof executed
on behalf of such Grantor shall have been delivered to the Collateral Agent
and a counterpart hereof shall have been executed on behalf of the Collateral
Agent, and thereafter shall be binding upon such Grantor and the Collateral
Agent and their respective successors and assigns, and shall inure to the
benefit of such Grantor, the Collateral Agent and the other Secured Parties
and their respective successors and assigns, except that no Grantor shall
have the right to assign or transfer its rights or obligations hereunder or
any interest herein or in the Collateral (and any such assignment or transfer
shall be void) except as expressly contemplated by this Agreement or the
Credit Agreement. This Agreement shall be construed as a separate agreement
with respect to each Grantor and may be amended, modified, supplemented,
waived or released with respect to any Grantor without the approval of any
other Grantor and without affecting the obligations of any other Grantor
hereunder.
SECTION 7.05. SUCCESSORS AND ASSIGNS. Whenever in this Agreement any
of the parties hereto is referred to, such reference shall be deemed to
include the successors and assigns of such party; and all covenants, promises
and agreements by or on behalf of any Grantor or the Collateral Agent that
are contained in this Agreement shall bind and inure to the benefit of their
respective successors and assigns.
SECTION 7.06. COLLATERAL AGENT'S FEES AND EXPENSES; INDEMNIFICATION.
(a) Each Grantor jointly and severally agrees to pay upon demand to the
Collateral Agent the amount of any and all reasonable expenses, including the
reasonable fees, disbursements and other charges of its counsel and of any
experts or agents, which the Collateral Agent may incur in connection with
(i) the administration of this Agreement (including the customary fees and
charges of the Collateral Agent for any audits conducted by it or on its
behalf with respect to the Accounts Receivable or Inventory), (ii) the
custody or preservation of, or the sale of, collection from or other
realization upon any of the Collateral, (iii) the exercise, enforcement or
protection of any of the rights of the Collateral Agent hereunder or (iv) the
failure of any Grantor to perform or observe any of the provisions hereof.
(b) Without limitation of its indemnification obligations under the
other Loan Documents, each Grantor jointly and severally agrees to indemnify
the Collateral Agent and the other Indemnitees against, and hold each of them
harmless from, any and all losses, claims, damages, liabilities and related
expenses, including reasonable fees, disbursements and other charges of
counsel, incurred by or asserted against any of them arising out of, in any
way connected with, or as a result of, the
21
execution, delivery or performance of this Agreement or any claim, litigation,
investigation or proceeding relating hereto or to the Collateral, whether or
not any Indemnitee is a party thereto; PROVIDED that such indemnity shall not,
as to any Indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Indemnitee or any Related Party of such
Indemnitee.
(c) Any such amounts payable as provided hereunder shall be additional
Obligations secured hereby and by the other Security Documents. The provisions
of this Section 7.06 shall remain operative and in full force and effect
regardless of the termination of this Agreement or any other Loan Document, the
consummation of the transactions contemplated hereby, the repayment of any of
the Loans, the invalidity or unenforceability of any term or provision of this
Agreement or any other Loan Document, or any investigation made by or on behalf
of the Collateral Agent or any Lender. All amounts due under this Section 7.06
shall be payable on written demand therefor.
SECTION 7.07. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
SECTION 7.08. WAIVERS; AMENDMENT. (a) No failure or delay of the
Collateral Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
and of the Collateral Agent, the Issuing Bank, the Administrative Agent and the
Lenders under the other Loan Documents are cumulative and are not exclusive of
any rights or remedies that they would otherwise have. No waiver of any
provisions of this Agreement or any other Loan Document or consent to any
departure by any Grantor therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) below, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice to or demand on any Grantor in any case shall entitle such
Grantor or any other Grantor to any other or further notice or demand in similar
or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Collateral Agent and the Grantor or Grantors with respect to
which such waiver, amendment or modification is to apply, subject to any consent
required in accordance with Section 9.02 of the Credit Agreement.
SECTION 7.09. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS
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AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.09.
SECTION 7.10. SEVERABILITY. In the event any one or more of the
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction). The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 7.11 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original but all of which
when taken together shall constitute but one contract (subject to Section 7.04),
and shall become effective as provided in Section 7.04. Delivery of an executed
signature page to this Agreement by facsimile transmission shall be effective as
delivery of a manually executed counterpart hereof.
SECTION 7.12. HEADINGS. Article and Section headings used herein are
for the purpose of reference only, are not part of this Agreement and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Agreement.
SECTION 7.13. JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) Each
Grantor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final non-appealable judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that the Collateral Agent, the Administrative Agent, the Issuing Bank or
any Lender may otherwise have to bring any action or proceeding relating to this
Agreement or the other Loan Documents against any Grantor or its properties in
the courts of any jurisdiction.
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(b) Each Grantor hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other Loan Documents in any
New York State or Federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 7.01. Nothing in this
Agreement will affected the right of any party to this Agreement to serve
process in any other manner permitted by law.
SECTION 7.14. TERMINATION AND RELEASE. This Agreement (including the
license granted to the Collateral Agent pursuant to Section 6.03 hereof,
PROVIDED that any license, sub-license or other transaction entered into by the
Collateral Agent in accordance with Section 6.03 prior thereto shall be binding
upon the Grantors notwithstanding the termination of this Agreement pursuant to
this Section 7.14) and the Security Interest shall terminate when all the
Obligations have been indefeasibly paid in full (other than wholly contingent
Obligations in respect of indemnification and expense reimbursement obligations
hereunder or under any other Loan Document to the extent such Obligations are
not due and payable), the Lenders have no further commitment to lend, the
Standby LC Exposure has been reduced to zero, the Trade LC Exposure has been
reduced to zero and the Issuing Bank has no further commitment to issue Letters
of Credit under the Credit Agreement, at which time the Collateral Agent shall
execute and deliver to the Grantors, at the Grantors' expense, all Uniform
Commercial Code termination statements, release of security interests for filing
in the United States Patent and Trademark Office and Copyright Office and
similar documents which the Grantors shall reasonably request to evidence such
termination. Any execution and delivery of termination statements or documents
pursuant to this Section 7.14 shall be without recourse to or warranty by the
Collateral Agent. A Subsidiary Grantor shall automatically be released from its
obligations hereunder and the Security Interest in the Collateral of such
Subsidiary Grantor shall be automatically released in the event that all the
capital stock of such Subsidiary Grantor shall be sold, transferred or otherwise
disposed of to a person that is not an Affiliate of the Borrower in accordance
with the terms of the Credit Agreement; PROVIDED that the Required Lenders shall
have consented to such sale, transfer or other disposition (to the extent
required by the Credit Agreement) and the terms of such consent did not provide
otherwise.
(b) Upon any sale or other transfer by any Grantor of any Collateral
that is permitted under the Credit Agreement to any person that is not a
Grantor, or, upon the effectiveness of any written consent to the release of the
security interest granted hereby in any Collateral pursuant to Section 9.02(b)
of the Credit Agreement, the security interest in such Collateral shall be
automatically released. If all of the capital stock of a Grantor is sold,
transferred or otherwise disposed of to a person that is not an Affiliate of the
Borrower pursuant to a transaction permitted by Section 6.05 of the Credit
Agreement, such Grantor shall be released from its obligations under this
Agreement without further action.
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SECTION 7.15. ADDITIONAL GRANTORS. Upon execution and delivery by the
Collateral Agent and a Subsidiary of an instrument in the form of Annex II
hereto, such Subsidiary shall become a Grantor hereunder with the same force and
effect as if originally named as a Grantor herein. The execution and delivery of
any such instrument shall not require the consent of any Grantor hereunder. The
rights and obligations of each Grantor hereunder shall remain in full force and
effect notwithstanding the addition of any new Grantor as a party to this
Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
XXXXXX MEDICAL TECHNOLOGY, INC.,
by: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Pres. & CEO
XXXXXX ACQUISITION HOLDINGS, INC.,
by: /s/ Xxxxxxxxx Xxxxxxxxxx
------------------------------------
Name: Xxxxxxxxx Xxxxxxxxxx
Title: President
THE CHASE MANHATTAN BANK,
as Collateral Agent,
by: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
