EXHIBIT 10.3
EXECUTION COPY
PLEDGE AND SECURITY AGREEMENT
Dated as of May 17, 2006
by and among
OVERHILL FARMS, INC., as Grantor
and
GUGGENHEIM CORPORATE FUNDING, LLC,
as Collateral Agent
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS..........................................................................1
1.1. Terms Defined in Credit Agreement........................................................1
1.2. Definitions of Certain Terms Used Herein.................................................1
ARTICLE II GRANT OF SECURITY INTEREST...........................................................5
2.1. Security Interest in Collateral..........................................................5
2.2. All Property Acknowledgement.............................................................7
ARTICLE III REPRESENTATIONS AND WARRANTIES.......................................................7
3.1. Title, Perfection and Priority...........................................................7
3.2. Type and Jurisdiction of Organization, Organizational and Identification Numbers.........7
3.3. Principal Location.......................................................................7
3.4. Collateral Locations.....................................................................7
3.5. Deposit Accounts.........................................................................7
3.6. Exact Names..............................................................................7
3.7. Letter-of-Credit Rights and Chattel Paper................................................8
3.8. Accounts and Chattel Paper...............................................................8
3.9. Inventory................................................................................8
3.10. Intellectual Property....................................................................9
3.11. Filing Requirements......................................................................9
3.12. No Financing Statements, Security Agreements.............................................9
3.13. Pledged Collateral.......................................................................9
ARTICLE IV COVENANTS...........................................................................10
4.1. General.................................................................................10
4.2. Receivables.............................................................................12
4.3. Inventory and Equipment.................................................................12
4.4. Delivery of Instruments, Securities, Chattel Paper and Documents........................13
4.5. Uncertificated Pledged Collateral.......................................................13
4.6. Pledged Collateral......................................................................14
4.7. Intellectual Property...................................................................15
4.8. Commercial Tort Claims..................................................................16
4.9. Letter-of-Credit Rights.................................................................16
4.10. No Interference.........................................................................16
4.11. Collateral Access Agreements............................................................16
4.12. Control Agreements......................................................................17
4.13. Change of Name or Location..............................................................17
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ARTICLE V REMEDIES............................................................................17
5.1. Remedies................................................................................17
5.2. Grantor's Obligations Upon Default......................................................19
5.3. Grant of Intellectual Property License..................................................19
ARTICLE VI ACCOUNT VERIFICATION; ATTORNEY IN FACT; PROXY.......................................20
6.1. Account Verification....................................................................20
6.2. Authorization for Secured Party to Take Certain Action..................................20
6.3. Proxy...................................................................................21
6.4. Nature of Appointment; Limitation of Duty...............................................21
ARTICLE VII GENERAL PROVISIONS..................................................................22
7.1. Waivers.................................................................................22
7.2. Limitation on Collateral Agent's and Lenders' Duty with Respect to the Collateral.......22
7.3. Compromises and Collection of Collateral................................................23
7.4. Secured Party Performance of Grantor Obligations........................................24
7.5. Specific Performance of Certain Covenants...............................................24
7.6. Dispositions Not Authorized.............................................................24
7.7. No Waiver; Amendments; Cumulative Remedies..............................................24
7.8. Limitation by Law; Severability of Provisions...........................................24
7.9. Reinstatement...........................................................................25
7.10. Benefit of Agreement....................................................................25
7.11. Survival of Representations.............................................................25
7.12. Taxes and Expenses......................................................................25
7.13. Headings................................................................................25
7.14. Termination.............................................................................25
7.15. Entire Agreement........................................................................26
7.16. CHOICE OF LAW...........................................................................26
7.17. CONSENT TO JURISDICTION.................................................................26
7.18. WAIVER OF JURY TRIAL....................................................................26
7.19. Indemnity...............................................................................26
7.20. Counterparts............................................................................27
ARTICLE VIII NOTICES.............................................................................27
8.1. Sending Notices.........................................................................27
8.2. Change in Address for Notices...........................................................27
ARTICLE IX THE COLLATERAL AGENT................................................................27
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EXHIBITS
Exhibit A -- Grantor's Information and Collateral Locations
Exhibit B -- Deposit Accounts and Securities Accounts
Exhibit C -- Letter of Credit Rights/Chattel Paper
Exhibit D -- Intellectual Property Rights
Exhibit E -- Title Documents
Exhibit F -- Fixtures
Exhibit G -- List of Pledged Collateral, Securities and Other Investment Property
Exhibit H-1 -- Material Contracts with Anti-Assignment Provisions
Exhibit H-2 -- Material Contracts Requiring Consent to Assignment
Exhibit H-3 -- Offices In Which Financing Statements Have Been Filed
Exhibit I -- Form of Amendment
(Exhibits to be provided to the Securities and Exchange Commission upon request.)
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PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT (as it may be amended or modified
from time to time, this "SECURITY AGREEMENT") is entered into as of May 17,
2006, by and between Overhill Farms, Inc., as grantor (the "GRANTOR"), and
GUGGENHEIM CORPORATE FUNDING, LLC, a Delaware limited liability company, in its
capacity as collateral agent (the "COLLATERAL AGENT") for the lenders (the
"LENDERS") from time to time party to the Credit Agreement referred to below.
RECITALS
WHEREAS, the Grantor, as borrower, the Lenders, the Collateral Agent
and Guggenheim Corporate Funding, LLC, as Administrative Agent, Arranger and
Syndication Agent, entered into a Senior Secured Credit Agreement dated as of
April 17, 2006 (as it may be amended or modified from time to time, the "CREDIT
AGREEMENT");
WHEREAS, it is a condition precedent to the obligation of the Lenders
to make their respective extensions of credit to the Grantor under the Credit
Agreement that the Grantor shall have executed and delivered this Agreement to
the Collateral Agent, for itself and for the benefit of the other Agents and the
Lenders, to secure all of the Secured Obligations (as defined below).
NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Grantor and the Collateral Agent, for itself and on behalf of
the other Agents and the Lenders, hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1. TERMS DEFINED IN CREDIT AGREEMENT. All capitalized terms used
herein and not otherwise defined shall have the meanings assigned to such terms
in the Credit Agreement.
1.2. DEFINITIONS OF CERTAIN TERMS USED HEREIN. As used in this Security
Agreement, in addition to the terms defined in the Preliminary Statement, the
following terms shall have the following meanings:
"ACCOUNTS" means all of the Grantor's now owned or hereafter acquired
right, title, and interest with respect to "Accounts" (as such term is defined
in Article 9 of the UCC), and any and all Supporting Obligations in respect
thereof.
"AMENDMENT" shall have the meaning set forth in SECTION 4.4.
"ARTICLE" means a numbered article of this Security Agreement, unless
another document is specifically referenced.
"CHATTEL PAPER" means all of the Grantor's now owned or hereafter
acquired right, title, and interest with respect to "Chattel Paper", "Electronic
Chattel Paper" and "Tangible Chattel Paper" (as such terms are defined in
Article 9 of the UCC), and any and all Supporting Obligations in respect
thereof.
"COLLATERAL" shall have the meaning set forth in ARTICLE II.
"COLLATERAL ACCESS AGREEMENT" means any landlord waiver, collateral
access agreement or other agreement, in form and substance satisfactory to the
Collateral Agent, between the Collateral Agent and any third party (including
any bailee, consignee, customs broker, or other similar Person) in possession of
any Collateral or any landlord of the Grantor for any real property where any
Collateral is located, as such landlord waiver or other agreement may be
amended, restated, or otherwise modified from time to time.
"COMMERCIAL TORT CLAIMS" shall have the meaning set forth in Article 9
of the UCC.
"COMPUTER HARDWARE AND SOFTWARE" means all of the Grantor's now owned
or hereafter acquired right (including rights as licensee and lessee), title,
and interest with respect to (i) computer and other electronic data processing
hardware, including all integrated computer systems, central processing units,
memory units, display terminals, printers, computer elements, card readers, tape
drives, hard and soft disk drives, cables, electrical supply hardware,
generators, power equalizers, accessories, peripheral devices and other related
computer hardware; (ii) all Software and all software programs designed for use
on the computers and electronic data processing hardware described in clause (i)
above, including all operating system software, utilities and application
programs in any form (source code and object code in magnetic tape, disk or hard
copy format or any other listings whatsoever); (iii) any firmware associated
with any of the foregoing; and (iv) any documentation for hardware, Software and
firmware described in clauses (i), (ii) and (iii) above, including flow charts,
logic diagrams, manuals, specifications, training materials, charts and pseudo
codes.
"CONTROL" shall have the meaning set forth in Article 8 or, if
applicable, in Section 9-104, 9-105, 9-106 or 9-107 of Article 9 of the UCC.
"COPYRIGHTS" means, with respect to any Person, all of such Person's
right, title, and interest in and to the following: (a) all copyrights, rights
and interests in copyrights, works protectable by copyright, copyright
registrations, and copyright applications; (b) all renewals of any of the
foregoing; (c) all income, royalties, damages, and payments now or hereafter due
and/or payable under any of the foregoing, including, without limitation,
damages or payments for past or future infringements for any of the foregoing;
(d) the right to xxx for past, present, and future infringements of any of the
foregoing; and (e) all rights corresponding to any of the foregoing throughout
the world.
"DELIVERABLE COLLATERAL" means the following Pledged Collateral: (a)
promissory notes having a face value in excess of $100,000; (b) limited
liability company membership interests, (c) partnership interests and (d) shares
of capital stock and other Securities, except, in the case of the foregoing
clauses (a), (b), (c) and (d), Cash Equivalents held in a Deposit Account or a
Securities Account.
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"DOCUMENTS" means all of the Grantor's now owned or hereafter acquired
right, title, and interest with respect to "Documents" (as such term is defined
in Article 9 of the UCC), and any and all Supporting Obligations in respect
thereof.
"EQUITY INTERESTS" means all shares, units, options, warrants,
interests, participations, or other equivalents (regardless of how designated
and whether or not evidenced or represented by any stock certificate,
certificated security or other instruments) of or in a corporation, partnership,
limited liability company, or equivalent entity, whether voting or nonvoting,
including general partner partnership interests, limited partner partnership
interests, common stock, preferred stock, or any other "equity security" (as
such term is defined in Rule 3a11-1 of the General Rules and Regulations
promulgated by the SEC under the Exchange Act); PROVIDED, that the Capital Stock
of TreeCon and United Airlines owned by the Grantor is hereby explicitly
excluded from the definition of "Equity Interests".
"EXEMPT DEPOSIT ACCOUNTS" means Deposit Accounts the balance of which
consists exclusively of (i) withheld income taxes and federal, state or local
employment taxes in such amounts as are required in the reasonable judgment of
the Grantor to be paid to the Internal Revenue Service or state or local
government agencies within the following two months with respect to employees of
the Grantor and (ii) amounts required to be paid over to an employee benefit
plan pursuant to DOL Reg. Sec. 2510.3-102 on behalf of or for the benefit of
employees of the Grantor.
"EXHIBIT" refers to a specific exhibit to this Security Agreement,
unless another document is specifically referenced.
"FIXTURES" shall have the meaning set forth in Article 9 of the UCC.
"GENERAL INTANGIBLES" means all of the Grantor's now owned or hereafter
acquired right, title, and interest with respect to "General Intangibles" (as
such term is defined in Article 9 of the UCC) (including, without limitation,
payment intangibles, contract rights, rights to payment, rights arising under
common law, statutes, or regulations, goodwill, Patents, trade names,
Trademarks, service marks, Copyrights, blueprints, drawings, licenses, permits,
purchase orders, customer lists, monies due or recoverable from pension funds,
route lists, rights to payment and other rights under any royalty or licensing
agreements, infringement claims, computer programs, information contained on
computer disks or tapes, software, literature, reports, catalogs, money, deposit
accounts, insurance premium rebates, tax refunds, and tax refund claims), and
any and all Supporting Obligations in respect thereof.
"GOODS" shall have the meaning set forth in Article 9 of the UCC.
"GRANTOR'S BOOKS" means all of the Grantor's now owned or hereafter
acquired Documents, books and records (including all of its Records indicating,
summarizing, or evidencing its assets (including the Collateral) or liabilities,
all of the Grantor's Records (including without limitation, all tapes, books,
cards, Software, data and computer programs in the possession or under the
control of the Grantor or any other Person from time to time acting for the
Grantor that at any time evidence or contain information relating to the
Collateral or are otherwise necessary or helpful in the collection or
realization thereof) relating to its business operations or financial condition,
and all of its goods or General Intangibles related to such information.
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"INSTRUMENTS" means all of the Grantor's now owned or hereafter
acquired right, title, and interest with respect to "Instruments" (as such term
is defined in Article 9 of the UCC), and any and all Supporting Obligations in
respect thereof.
"INTELLECTUAL PROPERTY RIGHTS" shall mean any intellectual property
rights of any description including, without limitation, Patents, Trademarks and
Copyrights.
"INVENTORY" means all of the Grantor's now owned or hereafter acquired
right, title, and interest with respect to "Inventory" (as such term is defined
in Article 9 of the UCC), including goods held for sale or lease or to be
furnished under a contract of service, goods that are leased by the Grantor as
lessor, and raw materials, work in process, or materials used or consumed in the
Grantor's business.
"INVESTMENT PROPERTY" means all of the Grantor's now owned or hereafter
acquired right, title, and interest with respect to "Investment Property" (as
such term is defined in Article 9 of the UCC), and any and all Supporting
Obligations in respect thereof, including, without limitation, all outstanding
Equity Interests owned, or hereinafter acquired, by the Grantor; PROVIDED, that
the Capital Stock of TreeCon and United Airlines owned by the Grantor is hereby
explicitly excluded from the definition of "Investment Property".
"LETTER-OF-CREDIT RIGHTS" shall have the meaning set forth in Article 9
of the UCC.
"LICENSES" means, with respect to any Person, all of such Person's
right, title, and interest in and to (a) any and all licensing agreements or
similar arrangements in and to its Patents, Copyrights, or Trademarks, (b) all
income, royalties, damages, claims, and payments now or hereafter due or payable
under and with respect thereto, including, without limitation, damages and
payments for past and future breaches thereof, and (c) all rights to xxx for
past, present, and future breaches thereof.
"PATENTS" means, with respect to any Person, all of such Person's
right, title, and interest in and to: (a) any and all patents and patent
applications; (b) all inventions and improvements described and claimed therein;
(c) all reissues, divisions, continuations, renewals, extensions, and
continuations-in-part thereof; (d) all income, royalties, damages, claims, and
payments now or hereafter due or payable under and with respect thereto,
including, without limitation, damages and payments for past and future
infringements thereof; (e) all rights to xxx for past, present, and future
infringements thereof; and (f) all rights corresponding to any of the foregoing
throughout the world.
"PLEDGED COLLATERAL" means all Instruments, Securities and other
Investment Property of the Grantor, whether or not physically delivered to the
Collateral Agent pursuant to this Security Agreement.
"RECEIVABLES" means the Accounts, Chattel Paper, Documents, Investment
Property, Instruments, Collections and any other rights or claims to receive
money which are General Intangibles or which are otherwise included as
Collateral.
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"RECORDABLE INTELLECTUAL PROPERTY" means intellectual Property the
transfer of which is required to be recorded in the United States Patent and
Trademark Office or the United States Copyright Office in order to be effective
against subsequent third party transferees; provided that the following shall
not be considered "Recordable Intellectual Property" hereunder: (a) unregistered
United States Copyrights and (b) non-exclusive Licenses.
"RECORDS" shall have the meaning set forth in Article 9 of the UCC.
"SECTION" means a numbered section of this Security Agreement, unless
another document is specifically referenced.
"SECURITY" has the meaning set forth in Article 8 of the UCC.
"SOFTWARE" shall have the meaning set forth in Article 9 of the UCC.
"SECURED OBLIGATIONS" means all "Obligations" as defined in the Credit
Agreement.
"STOCK RIGHTS" means all dividends, instruments or other distributions
and any other right or property which the Grantor shall receive or shall become
entitled to receive for any reason whatsoever with respect to, in substitution
for or in exchange for any Equity Interest constituting Collateral, any right to
receive an Equity Interest and any right to receive earnings, in which the
Grantor now has or hereafter acquires any right, issued by an issuer of such
Equity Interest.
"SUPPORTING OBLIGATIONS" shall have the meaning set forth in Article 9
of the UCC.
"TRADEMARKS" means, with respect to any Person, all of such Person's
right, title, and interest in and to the following: (a) all trademarks
(including service marks), trade names, trade dress, and trade styles and the
registrations and applications for registration thereof and the goodwill of the
business symbolized by the foregoing (but excluding any intent-to-use trademark
applications to register any trademark, service xxxx or other xxxx for which an
amendment to allege use or a statement of use (or the equivalent) has not been
filed under applicable law, or if filed, has not been deemed in conformance with
applicable law or examined and accepted respectively by the United States Patent
and Trademark Office); (b) all licenses of the foregoing, whether as licensee or
licensor; (c) all renewals of the foregoing; (d) all income, royalties, damages,
and payments now or hereafter due or payable with respect thereto, including,
without limitation, damages, claims, and payments for past and future
infringements thereof; (e) all rights to xxx for past, present, and future
infringements of the foregoing, including the right to settle suits involving
claims and demands for royalties owing; and (f) all rights corresponding to any
of the foregoing throughout the world.
The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms.
ARTICLE II
GRANT OF SECURITY INTEREST
2.1. SECURITY INTEREST IN COLLATERAL. The Grantor hereby pledges,
assigns and grants to the Collateral Agent, for itself and for the benefit of
the other Agents and the Lenders, a security interest in all of its right, title
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and interest in, to and under all of its personal property, whether now owned by
or owing to, or hereafter acquired by or arising in favor of the Grantor
(including under any trade name or derivations thereof), and whether owned or
consigned by or to, or leased from or to, the Grantor, and regardless of where
located (all of which will be collectively referred to as the "COLLATERAL"),
including:
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Grantor's Books;
(iv) all Equipment;
(v) all Computer Hardware and Software and all
rights with respect thereto, including any
and all licenses, options, warranties,
service contracts, program services, test
rights, maintenance rights, support rights,
improvement rights, renewal rights and
indemnifications, and any substitutions,
replacements, additions or model conversions
of any of the foregoing;
(vi) all Fixtures;
(vii) all General Intangibles;
(viii) all Goods;
(ix) all Instruments;
(x) all Inventory;
(xi) all Investment Property;
(xii) all cash or cash equivalents (of every
jurisdiction whatsoever);
(xiii) all letters of credit, Letter-of-Credit
Rights and any and all Supporting
Obligations in respect thereof;
(xiv) all Deposit Accounts with any bank or other
financial institution;
(xv) all Commercial Tort Claims;
(xvi) all Intellectual Property Rights; and
(xvii) and all accessions to, substitutions for and
replacements, proceeds (including Stock
Rights), insurance proceeds (including
insurance proceeds from executive life
insurance policies) and products of the
foregoing, together with all books and
records, customer lists, credit files,
computer files, programs, printouts and
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other computer materials and records related
thereto and any General Intangibles at any
time evidencing or relating to any of the
foregoing;
to secure the prompt and complete payment and performance of the Secured
Obligations; PROVIDED, HOWEVER, that the Collateral shall not include any Exempt
Deposit Accounts.
2.2. ALL PROPERTY ACKNOWLEDGEMENT. The Grantor acknowledges that the
description of Collateral in this ARTICLE II is intended to encompass all
personal Property of the Grantor and the Grantor hereby represents and warrants
that the description of Collateral in this ARTICLE II constitutes all personal
Property of the Grantor.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Grantor represents and warrants to the Collateral Agent and the
Lenders that:
3.1. TITLE, PERFECTION AND PRIORITY. Except to the extent limited by
anti-assignment provisions in certain Material Contracts listed on EXHIBIT H-1
hereto or provisions requiring consent to assignment by Borrower in certain
Material Contracts listed on EXHIBIT H-2 hereto, the Grantor has good and valid
rights in or the power to transfer the Collateral and title to the Collateral
with respect to which it has purported to grant a security interest hereunder,
free and clear of all Liens, except for Liens permitted under SECTION 4.1(D),
and has full power and authority to grant to the Collateral Agent the security
interest in such Collateral pursuant hereto. When financing statements have been
filed in the appropriate offices against the Grantor in the locations listed on
EXHIBIT H-3, the Collateral Agent will have a fully perfected first priority
security interest in that Collateral in which a security interest may be
perfected by filing, subject only to Liens permitted under SECTION 4.1(D).
3.2. TYPE AND JURISDICTION OF ORGANIZATION, ORGANIZATIONAL AND
IDENTIFICATION NUMBERS. The type of entity of the Grantor, its state of
organization, the organizational number issued to it by its state of
organization and its federal employer identification number are set forth on
EXHIBIT A.
3.3. PRINCIPAL LOCATION. The Grantor's mailing address and the location
of its chief executive office are disclosed in EXHIBIT A; the Grantor has no
other places of business except those set forth in EXHIBIT A.
3.4. COLLATERAL LOCATIONS. All of the Grantor's locations where
Collateral is located are listed on EXHIBIT A. All of said locations are owned
by the Grantor, except for locations (i) which are leased by the Grantor as
lessee and designated in Part VII(b) of EXHIBIT A and (ii) at which Inventory is
held in a public warehouse or is otherwise held by a bailee or on consignment as
designated in Part VII(c) of EXHIBIT A.
3.5. DEPOSIT ACCOUNTS. All of the Grantor's Deposit Accounts and
Securities Accounts are listed on EXHIBIT B.
3.6. EXACT NAMES. The Grantor's name in which it has executed this
Security Agreement is the exact name as it appears in the Grantor's
organizational documents, as amended, as filed with the Grantor's jurisdiction
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of organization. The Grantor has not, during the past five years, been known by
or used any other corporate or fictitious name, or been a party to any merger or
consolidation, or been a party to any acquisition, except as set forth on
EXHIBIT A.
3.7. LETTER-OF-CREDIT RIGHTS AND CHATTEL PAPER. EXHIBIT C lists all
Letter-of-Credit Rights in respect of letters of credit having a face or
statement amount of more than $50,000 and Chattel Paper of the Grantor. All
action by the Grantor necessary or desirable to protect and perfect the
Collateral Agent's Lien on each Letter of Credit right in respect of letters of
credit having a face or stated amount of more than $50,000 and each item of
Chattel Paper of the Grantor (including the delivery of all originals and the
placement of a legend on all Chattel Paper as required hereunder) has been duly
taken. The Collateral Agent will have a fully perfected first priority security
interest in the Collateral listed on EXHIBIT C, subject only to Liens permitted
under SECTION 4.1(D).
3.8. ACCOUNTS AND CHATTEL PAPER.
(a) The names of the obligors, amounts owing, due dates and
other information with respect to the Accounts and Chattel Paper are and will be
correctly stated in all material respects in all records of the Grantor relating
thereto and in all invoices with respect thereto. As of the time when each
Account or each item of Chattel Paper arises, the Grantor shall be deemed to
have represented and warranted that such Account or Chattel Paper, as the case
may be, and all records relating thereto, are genuine and in all respects what
they purport to be.
(b) With respect to Accounts, (i) to the Grantor's knowledge,
there are no facts, events or occurrences which in any way impair the validity
or enforceability thereof or could reasonably be expected to reduce the amount
payable thereunder as shown on the Grantor's books and records (subject to "bad
debt" reserves as shown on the Grantor's financial statements) and any invoices,
statements and Collateral Reports with respect thereto; (ii) the Grantor has not
received any notice of proceedings or actions which are threatened or pending
against any Account Debtor which might result in any adverse change in such
Account Debtor's financial condition; and (iii) the Grantor has no knowledge
that any Account Debtor is unable generally to pay its debts as they become due.
(c) In addition, with respect to all Accounts of the Grantor,
(i) the amounts shown on all invoices, statements and Collateral Reports with
respect thereto are actually and absolutely owing to the Grantor as indicated
thereon and are not in any way contingent; (ii) no payments have been or shall
be made thereon except payments immediately deposited into a Blocked Account as
required pursuant to Section 12.02 of the Credit Agreement; and (iii) to the
Grantor's knowledge, all Account Debtors have the capacity to contract.
3.9. INVENTORY. With respect to any of the Grantor's Inventory, (a)
such Inventory (other than Inventory in transit) is located at one of the
Grantor's locations set forth on EXHIBIT A, (b) no Inventory (other than
Inventory in transit) is now, or shall at any time or times hereafter be stored
at any other location except as permitted by SECTION 4.1(F), (c) the Grantor has
good, indefeasible and merchantable title to such Inventory and such Inventory
is not subject to any Lien or security interest or document whatsoever except
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for the Lien granted to the Collateral Agent, for itself and for the benefit of
the other Agents and Lenders, and except for Permitted Encumbrances, (d) except
as specifically disclosed in the most recent Collateral Report, such Inventory
is of good and merchantable quality, free from any defects, (e) such Inventory
is not subject to any licensing, patent, royalty, trademark, trade name or
copyright agreements with any third parties which would require any consent of
any third party upon sale or disposition of that Inventory or the payment of any
monies to any third party upon such sale or other disposition, (f) such
Inventory has been produced in accordance with the Federal Fair Labor Standards
Act of 1938, as amended, and all rules, regulations and orders thereunder and
(g) the completion of manufacture, sale or other disposition of such Inventory
by the Collateral Agent following a Default or an Event of Default shall not
require the consent of any Person and shall not constitute a breach or default
under any contract or agreement to which the Grantor is a party or to which such
property is subject.
3.10. INTELLECTUAL PROPERTY. The Grantor does not have any interest in,
or title to, any material Patent, Trademark or Copyright except as set forth in
EXHIBIT D. The Security Agreement is effective to create a valid and continuing
Lien and, upon filing of appropriate financing statements in the offices listed
on EXHIBIT H-3, fully perfected first priority security interest in favor of the
Collateral Agent, on the Grantor's Trademarks; and all action necessary or
desirable to protect and perfect the Collateral Agent's Lien on the Grantor's
Patents, Trademarks or Copyrights shall have been duly taken; PROVIDED that, the
Collateral Agent has agreed that no filings with the United States Patent and
Trademark Office shall be required until such filings are requested by
Collateral Agent.
3.11. FILING REQUIREMENTS. None of the Grantor's Equipment having a
value in excess of $50,000 is covered by any certificate of title, except for
the vehicles described in Part I of EXHIBIT E. None of the Collateral is of a
type for which security interests or liens may be perfected by filing under any
federal statute except for (a) the vehicles described in Part II of EXHIBIT E
and (b) Patents, Trademarks and Copyrights constituting Recordable Intellectual
Property held by the Grantor and described in EXHIBIT D. The legal description,
county and street address of each property on which any of the Grantor's
Fixtures are located is set forth in EXHIBIT F together with the name and
address of the record owner of each such property.
3.12. NO FINANCING STATEMENTS, SECURITY AGREEMENTS. No financing
statement or security agreement describing all or any portion of the Collateral
which has not lapsed or been terminated naming the Grantor as debtor has been
filed or is of record in any jurisdiction except (a) for financing statements or
security agreements naming the Collateral Agent for itself and on behalf of the
other Agents and the Lenders as the secured parties and (b) as permitted by
SECTION 4.1(D).
3.13. PLEDGED COLLATERAL.
(a) EXHIBIT G sets forth a complete and accurate list of all
of the Pledged Collateral. The Grantor is the direct, sole beneficial owner and
sole holder of record of the Pledged Collateral listed on EXHIBIT G as being
owned by it, free and clear of any Liens, except for the security interest
granted to the Collateral Agent for itself and for the benefit of the other
Agents and the Lenders hereunder and Permitted Encumbrances referred to in
paragraphs (a) or (e) of the definition thereof. The Grantor further represents
9
and warrants with respect to its Pledged Collateral that (i) all Pledged
Collateral constituting an Equity Interest has been (to the extent such concepts
are relevant with respect to such Pledged Collateral) duly authorized, validly
issued, are fully paid and non-assessable, (ii) with respect to any certificates
delivered to the Collateral Agent representing an Equity Interest, either such
certificates are Securities as defined in Article 8 of the UCC as a result of
actions by the issuer or otherwise, or, if such certificates are not Securities,
the Grantor has so informed the Collateral Agent so that the Collateral Agent
may take steps to perfect its security interest therein as a General Intangible,
(iii) except to the extent otherwise permitted pursuant to Section 9.15 of the
Credit Agreement, all Pledged Collateral held by a securities intermediary is
covered by a control agreement among the Grantor, the securities intermediary
and the Collateral Agent pursuant to which the Collateral Agent has Control and
(iv) all Pledged Collateral which represents Indebtedness owed to the Grantor
has been duly authorized, authenticated or issued and delivered by the issuer of
such Indebtedness, is the legal, valid and binding obligation of such issuer and
such issuer is not in default thereunder.
(b) In addition, the Grantor represents and warrants with
respect to its Pledged Collateral that (i) to the Grantor's knowledge, none of
the Pledged Collateral has been issued or transferred in violation of the
securities registration, securities disclosure or similar laws of any
jurisdiction to which such issuance or transfer may be subject, (ii) there are
existing no options, warrants, calls or commitments of any character whatsoever
relating to the Pledged Collateral or which obligate the issuer of any Equity
Interest included in the Pledged Collateral to issue additional Equity
Interests, and (iii) no consent, approval, authorization, or other action by,
and no giving of notice, filing with, any governmental authority or any other
Person is required for the pledge by the Grantor of the Pledged Collateral
pursuant to this Security Agreement or for the execution, delivery and
performance of this Security Agreement by the Grantor, or for the exercise by
the Collateral Agent of the voting or other rights provided for in this Security
Agreement or for the remedies in respect of the Pledged Collateral pursuant to
this Security Agreement, except as may be required in connection with such
disposition by laws affecting the offering and sale of securities generally.
(c) Except as set forth in EXHIBIT G, the Grantor owns 100% of
the issued and outstanding Equity Interests which constitutes Pledged Collateral
of the Grantor and none of the Pledged Collateral which represents Indebtedness
owed to the Grantor is subordinated in right of payment to other Indebtedness
(other than the Obligations) or subject to the terms of an indenture.
ARTICLE IV
COVENANTS
From the date of this Security Agreement, and thereafter until this
Security Agreement is terminated, the Grantor agrees that:
4.1. GENERAL.
(a) AUTHORIZATION TO FILE FINANCING STATEMENTS; RATIFICATION.
The Grantor hereby authorizes the Collateral Agent to file, and if requested
will deliver to the Collateral Agent, all financing statements and other
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documents and take such other actions as may from time to time be requested by
the Collateral Agent in order to maintain a first priority (subject to Permitted
Encumbrances) perfected security interest in and, if applicable, Control of, the
Collateral. Any financing statement filed by the Collateral Agent may be filed
in any filing office in any UCC jurisdiction and may (i) indicate the Collateral
(1) as all assets of the Grantor or words of similar effect, regardless of
whether any particular asset comprised in the Collateral falls within the scope
of Article 9 of the UCC or such jurisdiction, or (2) by any other description
which reasonably approximates the description contained in this Security
Agreement, and (ii) contain any other information required by Part 5 of Article
9 of the UCC for the sufficiency or filing office acceptance of any financing
statement or amendment, including (A) whether the Grantor is an organization,
the type of organization and any organization identification number issued to
the Grantor (if any), and (B) in the case of a financing statement filed as a
fixture filing or indicating Collateral as as-extracted collateral or timber to
be cut, a sufficient description of real property to which the Collateral
relates. The Grantor also agrees to furnish any such information to the
Collateral Agent promptly upon request. The Grantor also ratifies its
authorization for the Collateral Agent to have filed in any UCC jurisdiction any
initial financing statements or amendments thereto if filed prior to the date
hereof.
(b) DEFENSE OF COLLATERAL. The Grantor agrees to take any and
all commercially reasonable actions necessary to defend title to the Collateral
owned by it against all persons and to defend the security interest of the
Collateral Agent in the Collateral owned by the Grantor and the priority thereof
against any Lien not expressly permitted hereunder.
(c) DISPOSITION OF COLLATERAL. The Grantor will not sell,
lease or otherwise dispose of the Collateral owned by it except for dispositions
specifically permitted pursuant to Section 9.03 of the Credit Agreement.
(d) LIENS. The Grantor will not create, incur, or suffer to
exist any Lien on the Collateral owned by it except (i) the security interest
created by this Security Agreement, and (ii) other Permitted Encumbrances.
(e) OTHER FINANCING STATEMENTS. The Grantor will not authorize
the filing of any financing statement naming it as debtor covering all or any
portion of the Collateral owned by it, except as permitted by SECTION 4.1(D).
The Grantor acknowledges that it is not authorized to file any financing
statement naming the Collateral Agent as secured party and covering any
Collateral or amendment or termination statement with respect to any financing
statement without the prior written consent of the Collateral Agent, subject to
the Grantor's rights under Section 9-509(d)(2) of the UCC.
(f) LOCATIONS. The Grantor will not (i) maintain any
Collateral owned by it at any location other than those locations listed for the
Grantor on EXHIBIT A, (ii) otherwise change, or add to, such locations without
the Collateral Agent's prior written consent as required by the Credit Agreement
(and if the Collateral Agent gives such consent, the Grantor will concurrently
therewith obtain a Collateral Access Agreement for each such location to the
extent required by the Credit Agreement), or (iii) change its principal place of
business or chief executive office from the location identified for the Grantor
on EXHIBIT A, other than as permitted by the Credit Agreement.
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(g) COMPLIANCE WITH TERMS. The Grantor will perform and comply
with all obligations in respect of the Collateral owned by it and all agreements
to which it is a party or by which it is bound relating to the Collateral.
4.2. RECEIVABLES.
(a) CERTAIN AGREEMENTS ON RECEIVABLES. The Grantor will not
make or agree to make any discount, credit, rebate or other reduction in the
original amount owing on a Receivable or accept in satisfaction of a Receivable
less than the original amount thereof, except that, prior to the occurrence of a
Default or an Event of Default, the Grantor may reduce the amount of Accounts
arising from the sale of Inventory in accordance with its present policies and
in the ordinary course of business.
(b) COLLECTION OF RECEIVABLES. Except as otherwise provided in
this Security Agreement, the Grantor will collect and enforce, at the Grantor's
sole expense, all amounts due or hereafter due to the Grantor under the
Receivables.
(c) DELIVERY OF INVOICES. Upon the occurrence of a Default or
an Event of Default, the Grantor will deliver to the Collateral Agent
immediately upon its request duplicate invoices with respect to each Account of
the Grantor bearing such language of assignment as the Collateral Agent shall
specify.
(d) ELECTRONIC CHATTEL PAPER. The Grantor shall take all steps
necessary to grant the Collateral Agent Control of all electronic chattel paper
in accordance with the UCC and all "transferable records" as defined in each of
the Uniform Electronic Transactions Act and the Electronic Signatures in Global
and National Commerce Act.
4.3. INVENTORY AND EQUIPMENT.
(a) MAINTENANCE OF GOODS. The Grantor will do all things
necessary to maintain, preserve, protect and keep its Inventory and Equipment in
good repair and working and saleable condition, except for damaged or defective
goods arising in the ordinary course of the Grantor's business and except for
ordinary wear and tear in respect of its Equipment.
(b) RETURNED INVENTORY. If an Account Debtor returns any
Inventory to the Grantor when no Default or Event of Default exists, then the
Grantor shall promptly determine the reason for such return and shall issue a
credit memorandum to the Account Debtor in the appropriate amount. In the event
any Account Debtor returns Inventory to the Grantor when a Default or an Event
of Default exists, the Grantor, upon the request of the Collateral Agent, shall:
(i) hold the returned Inventory in trust for the Collateral Agent; (ii)
segregate all returned Inventory from all of its other Property; (iii) dispose
of the returned Inventory solely according to the Collateral Agent's written
instructions; and (iv) not issue any credits or allowances with respect thereto
without the Collateral Agent's prior written consent. All returned Inventory
shall be subject to the Collateral Agent's Liens thereon. Whenever any Inventory
is returned, the related Account shall be deemed ineligible to the extent of the
amount owing by the Account Debtor with respect to such returned Inventory.
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(c) INVENTORY COUNT; PERPETUAL INVENTORY SYSTEM. The Grantor
will conduct a physical count of its Inventory at least once per Fiscal Year,
and after and during the continuation of a Default or an Event of Default, at
such other times as the Collateral Agent requests. The Grantor, at its own
expense, shall deliver to the Collateral Agent the results of each physical
verification, which the Grantor has made, or has caused any other Person to make
on its behalf, of all or any portion of its Inventory. The Grantor will maintain
a perpetual inventory reporting system at all times.
(d) EQUIPMENT. The Grantor shall promptly inform the
Collateral Agent of any additions to or deletions from its Equipment which
individually exceed $150,000. The Grantor shall not permit any Equipment to
become a fixture with respect to real property or to become an accession with
respect to other personal property with respect to which real or personal
property the Collateral Agent does not have a Lien. The Grantor will not,
without the Collateral Agent's prior written consent, alter or remove any
identifying symbol or number on any of the Grantor's Equipment constituting
Collateral.
(e) TITLED VEHICLES. The Grantor will give the Collateral
Agent notice of its acquisition of any vehicle covered by a certificate of title
having a fair market value in excess of $50,000 and deliver to the Collateral
Agent, upon request, the original of any vehicle title certificate and provide
and/or file all other documents or instruments necessary to have the Lien of the
Collateral Agent noted on any such certificate or with the appropriate state
office.
4.4. DELIVERY OF INSTRUMENTS, SECURITIES, CHATTEL PAPER AND DOCUMENTS.
The Grantor will (a) deliver to the Collateral Agent immediately upon execution
of this Security Agreement the originals of all Chattel Paper, Securities and
Instruments owned by it constituting Collateral (if any then exist), (b) hold in
trust for the Collateral Agent upon receipt and immediately thereafter deliver
to the Collateral Agent any Chattel Paper, Securities and Instruments owned by
it constituting Deliverable Collateral, (c) upon the Collateral Agent's request,
deliver to the Collateral Agent (and thereafter hold in trust for the Collateral
Agent upon receipt and immediately deliver to the Collateral Agent) any Document
evidencing or constituting Collateral owned by it, and (d) upon the Collateral
Agent's request, deliver to the Collateral Agent a duly executed amendment to
this Security Agreement, in the form of EXHIBIT I hereto (an "AMENDMENT"),
pursuant to which the Grantor will pledge such additional Collateral. The
Grantor hereby authorizes the Collateral Agent to attach each Amendment to this
Security Agreement and agrees that all additional Collateral set forth in such
Amendments shall be considered to be part of the Collateral.
4.5. UNCERTIFICATED PLEDGED COLLATERAL. The Grantor will permit the
Collateral Agent from time to time to cause the appropriate issuers (and, if
held with a securities intermediary, such securities intermediary) of
uncertificated securities or other types of Pledged Collateral owned by the
Grantor not represented by certificates to xxxx their books and records with the
numbers and face amounts of all such uncertificated securities or other types of
Pledged Collateral owned by the Grantor not represented by certificates and all
rollovers and replacements therefor to reflect the Lien of the Collateral Agent
granted pursuant to this Security Agreement. The Grantor will take any actions
necessary to cause (a) the issuers of uncertificated securities which are
Pledged Collateral owned by the Grantor and (b) any securities intermediary
which is the holder of any such Pledged Collateral, to cause the Collateral
13
Agent to have and retain Control over such Pledged Collateral. Without limiting
the foregoing, the Grantor will, with respect to Pledged Collateral owned by the
Grantor held with a securities intermediary, cause such securities intermediary
to enter into a control agreement with the Collateral Agent, in form and
substance satisfactory to the Collateral Agent, giving the Collateral Agent
Control.
4.6. PLEDGED COLLATERAL.
(a) CHANGES IN CAPITAL STRUCTURE OF ISSUERS. The Grantor will
not (i) permit or suffer any issuer of an Equity Interest constituting Pledged
Collateral owned by the Grantor to dissolve, merge, liquidate, retire any of its
Equity Interests or other Instruments or Securities evidencing ownership, reduce
its capital, sell or encumber all or substantially all of its assets (except for
Permitted Encumbrances and sales of assets permitted pursuant to SECTION 4.1(C))
or merge or consolidate with any other entity other than as permitted pursuant
to Section 9.03 of the Credit Agreement, or (ii) vote any Pledged Collateral
owned by it in favor of any of the foregoing.
(b) ISSUANCE OF ADDITIONAL SECURITIES. The Grantor will not
permit or suffer the issuer of an Equity Interest constituting Pledged
Collateral owned by the Grantor to issue additional Equity Interests, any right
to receive the same or any right to receive earnings, except to the Grantor.
(c) REGISTRATION OF PLEDGED COLLATERAL. The Grantor will
permit any registerable Pledged Collateral owned by the Grantor to be registered
in the name of the Collateral Agent or its nominee at any time following the
occurrence and during the continuance of a Default or an Event of Default.
(d) EXERCISE OF RIGHTS IN PLEDGED COLLATERAL.
(i) Without in any way limiting the foregoing and
subject to clause (ii) below, the Grantor shall have the right to
exercise all voting rights or other rights relating to the Pledged
Collateral owned by the Grantor for all purposes not inconsistent with
this Security Agreement, the Credit Agreement or any other Loan
Document; PROVIDED, HOWEVER, that no vote or other right shall be
exercised or action taken which would have the effect of impairing the
rights of the Collateral Agent in respect of the Pledged Collateral
owned by the Grantor.
(ii) The Grantor will permit the Collateral Agent or
its nominee at any time after the occurrence and during the continuance
of a Default or an Event of Default, without notice, to exercise all
voting rights or other rights relating to Pledged Collateral owned by
the Grantor, including, without limitation, exchange, subscription or
any other rights, privileges, or options pertaining to any Equity
Interest or Investment Property constituting Pledged Collateral owned
by the Grantor as if the Collateral Agent were the absolute owner
thereof.
(iii) The Grantor shall be entitled to receive and
retain any and all dividends, interest, distributions, cash,
instruments and other payments and distributions made upon or in
respect of the Collateral; provided, however, that any and all:
14
(A) dividends, interest and other payments
and 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 Collateral;
(B) additional stock, other securities,
limited liability company membership interests, partnership
interests, promissory notes or other instruments or property
paid or distributed in respect of any Delivered Collateral
(other than promissory notes) by way of share-split, spin-off,
split-up, reclassification, combination of shares or similar
rearrangement;
(C) all other or additional stock, other
securities, limited liability company membership interests,
partnership interests, promissory notes or other instruments
or property which may be paid in respect of the Collateral by
reason of any consolidation, merger, exchange of shares,
conveyance of assets, liquidation or similar reorganization;
shall be delivered to the Collateral Agent to hold as Pledged
Collateral and shall, if received by any Grantor, be received in trust
for the benefit of the Collateral Agent as Pledged Collateral, be
segregated from the other property or funds of the Grantor, and be
forthwith delivered to the Collateral Agent as Pledged Collateral in
the same form as so received (with any necessary endorsement).
4.7. INTELLECTUAL PROPERTY.
(a) The Grantor will use its commercially reasonable efforts
to secure all consents and approvals necessary or appropriate for the assignment
to or benefit of the Collateral Agent of any material License held by the
Grantor (excluding non-exclusive Licenses of Software) and to enforce the
security interests granted hereunder.
(b) The Grantor shall notify the Collateral Agent immediately
if it knows or has reason to know that any application or registration relating
to any Patent, Trademark or Copyright (now or hereafter existing) material to
the business of the Grantor may become abandoned or dedicated, 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, the United States Copyright Office or any court) regarding the
Grantor's ownership of any Patent, Trademark or Copyright, its right to register
the same, or to keep and maintain the same.
(c) Except where failure to do so could prejudice the
Grantor's rights, the Grantor shall not, either directly or through any agent,
employee, licensee or designee, file an application for the registration of any
Patent, Trademark or Copyright with the United States Patent and Trademark
Office, the United States Copyright Office or any similar office or agency
without giving the Collateral Agent prior written notice thereof, and, upon
request of the Collateral Agent, the Grantor shall execute and deliver any and
all security agreements as the Collateral Agent may reasonably request to
evidence the Collateral Agent's first priority security interest on such Patent,
Trademark or Copyright, and the General Intangibles of the Grantor relating
thereto or represented thereby.
15
(d) The Grantor shall take all commercially reasonable actions
necessary or requested by the Collateral Agent to maintain and pursue each
application, to obtain the relevant registration and to maintain the
registration of each of the Grantor's Patents, Trademarks and Copyrights (now or
hereafter existing), in each instance which are material to the conduct of its
business, including, unless the Grantor shall reasonably determine that any such
action would be of negligible economic value, the filing of applications for
renewal, affidavits of use, affidavits of noncontestability and opposition and
interference and cancellation proceedings.
(e) The Grantor shall, unless it shall reasonably determine
that such Patent, Trademark or Copyright is in no way material to the conduct of
its business or operations, or such action would be of negligible economic
value, promptly xxx for infringement, misappropriation or dilution and to
recover any and all damages for such infringement, misappropriation or dilution,
and shall take such other actions as the Collateral Agent shall deem appropriate
under the circumstances to protect such Patent, Trademark or Copyright. In the
event that the Grantor institutes suit because any of the Patents, Trademarks or
Copyrights owned by the Grantor constituting Collateral is infringed upon, or
misappropriated or diluted by a third party, the Grantor shall comply with
SECTION 4.8.
4.8. COMMERCIAL TORT CLAIMS. The Grantor shall promptly, and in any
event within two Business Days after the same is acquired by it, notify the
Collateral Agent of any Commercial Tort Claim in excess of $100,000 acquired by
it and, unless the Collateral Agent otherwise consents, the Grantor shall enter
into an amendment to this Security Agreement, in the form of EXHIBIT I hereto,
granting to the Collateral Agent a first priority security interest in such
Commercial Tort Claim.
4.9. LETTER-OF-CREDIT RIGHTS. If the Grantor is or becomes the
beneficiary of a letter of credit having a face or stated amount of in excess of
$50,000, the Grantor shall promptly, and in any event within two Business Days
after becoming a beneficiary, notify the Collateral Agent thereof and cause the
issuer and/or confirmation bank to (i) consent to the assignment of any related
Letter-of-Credit Rights to the Collateral Agent and (ii) agree to direct all
payments thereunder to a Deposit Account maintained with one of the Lenders
subject to a Blocked Account Agreement, all in form and substance reasonably
satisfactory to the Collateral Agent.
4.10. NO INTERFERENCE. The Grantor agrees that it will not interfere
with any right, power and remedy of the Collateral Agent provided for in this
Security Agreement or now or hereafter existing at law or in equity or by
statute or otherwise, or the exercise or beginning of the exercise by the
Collateral Agent of any one or more of such rights, powers or remedies.
4.11. COLLATERAL ACCESS AGREEMENTS. The Grantor shall use commercially
reasonable efforts to obtain a Collateral Access Agreement from the lessor of
each property leased by the Grantor after the Effective Date, mortgagee of
property acquired by the Grantor after the Effective Date or bailee or consignee
with respect to any warehouse, processor or converter facility or other location
where Collateral owned by the Grantor is stored or located, which agreement or
letter shall be consistent with Collateral Access Agreements to be obtained
pursuant to Section 8.14 of the Credit Agreement or otherwise reasonably
satisfactory to the Collateral Agent.
16
4.12. CONTROL AGREEMENTS. Except as otherwise provided in the Credit
Agreement, the Grantor will provide to the Collateral Agent upon the Collateral
Agent's request, a Control Agreement duly executed on behalf of each financial
institution holding a Deposit Account or Securities Account of the Grantor as
set forth on EXHIBIT B.
4.13. CHANGE OF NAME OR LOCATION. The Grantor shall not (a) change its
name as it appears in official filings in the state of its incorporation or
organization, (b) change the type of entity that it is, (c) change its
organization identification number, if any, issued by its state of incorporation
or other organization, or (d) change its state of incorporation or organization,
in each case, unless the Collateral Agent shall have received at least thirty
days prior written notice of such change.
ARTICLE V
REMEDIES
5.1. REMEDIES.
(a) Upon the occurrence and during the continuance of a
Default or an Event of Default, the Collateral Agent may exercise any or all of
the following rights and remedies:
(i) those rights and remedies provided in this
Security Agreement, the Credit Agreement, or any other Loan Document;
PROVIDED that, this SECTION 5.1(A) shall not be understood to limit any
rights or remedies available to the Collateral Agent and the Lenders
prior to a Default or an Event of Default;
(ii) those rights and remedies available to a secured
party under the UCC (whether or not the UCC applies to the affected
Collateral) or under any other applicable law (including, without
limitation, any law governing the exercise of a bank's right of setoff
or bankers' lien) when a debtor is in default under a security
agreement;
(iii) give notice of sole control or any other
instruction under any Control Agreement or any other control agreement
with any securities intermediary and take any action therein with
respect to such Collateral;
(iv) without notice (except as specifically provided
in SECTION 7.1 or elsewhere herein), demand or advertisement of any
kind to the Grantor or any other Person, enter the premises of the
Grantor or any other location listed on EXHIBIT A where any Collateral
is located (through self-help and without judicial process) to collect,
receive, assemble, process, appropriate, sell, lease, assign, grant an
option or options to purchase or otherwise dispose of, deliver, or
realize upon, the Collateral or any part thereof in one or more parcels
at public or private sale or sales (which sales may be adjourned or
continued from time to time with or without notice and may take place
at the Grantor's premises or elsewhere), for cash, on credit or for
future delivery without assumption of any credit risk, and upon such
other terms as the Collateral Agent may deem commercially reasonable;
and
17
(v) concurrently with written notice to the Grantor,
transfer and register in its name or in the name of its nominee the
whole or any part of the Pledged Collateral of the Grantor, to exchange
certificates or instruments representing or evidencing Pledged
Collateral of the Grantor for certificates or instruments of smaller or
larger denominations, to exercise the voting and all other rights as a
holder with respect thereto, to collect and receive all cash dividends,
interest, principal and other distributions made thereon and to
otherwise act with respect to the Pledged Collateral of the Grantor as
though the Collateral Agent was the outright owner thereof.
(b) The Collateral Agent, for itself and on behalf of the
other Agents and the Lenders, may comply with any applicable state or federal
law requirements in connection with a disposition of the Collateral and
compliance will not be considered to adversely affect the commercial
reasonableness of any sale of the Collateral.
(c) The Collateral Agent shall have the right upon any
such public sale or sales and, to the extent permitted by law, upon any such
private sale or sales, to purchase for itself or for the benefit of any other
Agent or the Lenders, the whole or any part of the Collateral so sold, free of
any right of equity redemption, which equity redemption the Grantor hereby
expressly releases.
(d) Until the Collateral Agent is able to effect a sale,
lease, or other disposition of the Collateral, the Collateral Agent shall have
the right to hold or use the Collateral, or any part thereof, to the extent that
it deems appropriate for the purpose of preserving the Collateral or its value
or for any other purpose deemed appropriate by the Collateral Agent. The
Collateral Agent may, if it so elects, seek the appointment of a receiver or
keeper to take possession of the Collateral and to enforce any of the Collateral
Agent's remedies (for itself and for the benefit of the other Agents and the
Lenders), with respect to such appointment without prior notice or hearing as to
such appointment.
(e) Notwithstanding the foregoing, neither the Collateral
Agent nor the Lenders shall be required to (i) make any demand upon, or pursue
or exhaust any of their rights or remedies against, the Grantor, any other
obligor, guarantor, pledgor or any other Person with respect to the payment of
the Secured Obligations or to pursue or exhaust any of their rights or remedies
with respect to any Collateral therefor or any direct or indirect guarantee
thereof, (ii) marshal the Collateral or any guarantee of the Secured Obligations
or to resort to the Collateral or any such guarantee in any particular order, or
(iii) effect a public sale of any Collateral.
(f) The Grantor recognizes that the Collateral Agent may
be unable to effect a public sale of any or all the Pledged Collateral owned by
the Grantor and may be compelled to resort to one or more private sales thereof
in accordance with clause (a) above. The Grantor also acknowledges that any
private sale may result in prices and other terms less favorable to the seller
than if such sale were a public sale and, notwithstanding such circumstances,
agrees that any such private sale shall not be deemed to have been made in a
commercially unreasonable manner solely by virtue of such sale being private.
The Collateral Agent shall be under no obligation to delay a sale of any of the
Pledged Collateral for the period of time necessary to permit the Grantor or any
issuer of Pledged Collateral to register such securities for public sale under
the Securities Act, or under applicable state securities laws, even if the
Grantor and such issuer would agree to do so.
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5.2. GRANTOR'S OBLIGATIONS UPON DEFAULT. Upon the request of the
Collateral Agent after the occurrence and during the continuance of a Default or
an Event of Default, the Grantor will:
(a) assemble and make available to the Collateral Agent
the Collateral owned by the Grantor and all books and records relating thereto
at any place or places specified by the Collateral Agent, whether at the
Grantor's premises or elsewhere;
(b) permit the Collateral Agent, by the Collateral
Agent's representatives and agents (i) to enter, occupy and use any premises
where all or any part of the Collateral owned by the Grantor, or the books and
records relating thereto, or both, are located, (ii) to take possession of all
or any part of the Collateral owned by the Grantor, or the books and records
relating thereto, or both, (iii) to remove all or any part of the Collateral
owned by the Grantor, or the books and records relating thereto, or both, and
(iv) to conduct sales of the Collateral owned by the Grantor, without any
obligation to pay the Grantor for such use and occupancy; and
(c) at its own expense, cause the independent certified
public accountants then engaged by the Grantor to prepare and deliver to the
Collateral Agent and each Lender, at any time, and from time to time, promptly
upon the Collateral Agent's request, the following reports with respect to the
Grantor: (i) a reconciliation of all Accounts; (ii) an aging of all Accounts;
(iii) trial balances; and (iv) a test verification of such Accounts.
5.3. GRANT OF INTELLECTUAL PROPERTY LICENSE. For the purpose of
enabling the Collateral Agent to exercise the rights and remedies under this
ARTICLE V at such time as the Collateral Agent shall be lawfully entitled to
exercise such rights and remedies, the Grantor hereby (a) grants to the
Collateral Agent, for itself and for the benefit of the other Agents and the
Lenders, an irrevocable, nonexclusive license (exercisable without payment of
royalty or other compensation to the Grantor) to use, license or sublicense any
Intellectual Property Rights now owned or hereafter acquired by the Grantor, and
wherever the same may be located, and including in such license 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 and
(b) irrevocably agrees that the Collateral Agent may sell any of the Grantor's
Inventory directly to any person, including without limitation persons who have
previously purchased the Grantor's Inventory from the Grantor and in connection
with any such sale or other enforcement of the Collateral Agent's rights under
this Security Agreement, may sell Inventory which bears any Trademark owned by
or licensed to the Grantor and any Inventory that is covered by any Copyright
owned by or licensed to the Grantor and the Collateral Agent may finish any work
in process and affix any Trademark owned by or licensed to the Grantor and sell
such Inventory as provided herein.
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ARTICLE VI
ACCOUNT VERIFICATION; ATTORNEY IN FACT; PROXY
6.1. ACCOUNT VERIFICATION. The Collateral Agent may (i) prior to the
occurrence of a Default or an Event of Default after consulting with the Grantor
or (ii) after the occurrence and during the continuance of a Default or an Event
of Default at any time following written notice to the Grantor, in each case in
the Collateral Agent's own name, in the name of a nominee of the Collateral
Agent, or in the name of the Grantor communicate (by mail, telephone, facsimile
or otherwise) with the Account Debtors of the Grantor, parties to contracts with
the Grantor and obligors in respect of Instruments of the Grantor to verify with
such Persons, to the Collateral Agent's satisfaction, the existence, amount,
terms of, and any other matter relating to, Accounts, Instruments, Chattel
Paper, payment intangibles and/or other Receivables.
6.2. AUTHORIZATION FOR SECURED PARTY TO TAKE CERTAIN ACTION.
(a) The Grantor irrevocably authorizes the Collateral
Agent at any time and from time to time in the sole discretion of the Collateral
Agent and appoints the Collateral Agent as its attorney in fact (i) to execute
on behalf of the Grantor as debtor and to file financing statements necessary or
desirable in the Collateral Agent's sole discretion to perfect and to maintain
the perfection and priority of the Collateral Agent's security interest in the
Collateral owned by the Grantor, (ii) upon the occurrence and during the
continuance of a Default or an Event of Default, to endorse and collect any cash
proceeds of the Collateral owned by the Grantor, (iii) to file a carbon,
photographic or other reproduction of this Security Agreement or any financing
statement with respect to the Collateral owned by the Grantor as a financing
statement and to file any other financing statement or amendment of a financing
statement (which does not add new collateral or add a debtor) in such offices as
the Collateral Agent in its sole discretion deems necessary or desirable to
perfect and to maintain the perfection and priority of the Collateral Agent's
security interest in the Collateral owned by the Grantor, (iv) to contact and
enter into one or more agreements with the issuers of uncertificated securities
which are Pledged Collateral owned by the Grantor or with securities
intermediaries holding Pledged Collateral owned by the Grantor as may be
necessary or advisable to give the Collateral Agent Control over such Pledged
Collateral, (v) to apply the proceeds of any Collateral owned by the Grantor
received by the Collateral Agent to the Secured Obligations as provided in
ARTICLE XII of the Credit Agreement, (vi) to discharge past due taxes,
assessments, charges, fees or Liens in connection therewith on the Collateral
owned by the Grantor (except for such Liens as are specifically permitted
hereunder), (vii) upon the occurrence and during the continuance of a Default or
an Event of Default, to contact Account Debtors of the Grantor for any reason,
(viii) upon the occurrence and during the continuance of a Default or an Event
of Default, to demand payment or enforce payment of the Receivables of the
Grantor in the name of the Collateral Agent or the Grantor and to endorse any
and all checks, drafts, and other instruments for the payment of money relating
to the Receivables of the Grantor, (ix) upon the occurrence and during the
continuance of a Default or an Event of Default, to sign the Grantor's name on
any invoice or xxxx of lading relating to the Receivables of the Grantor, drafts
against any Account Debtor of the Grantor, assignments and verifications of
Receivables of the Grantor, (x) upon the occurrence and during the continuance
of a Default or an Event of Default, to exercise all of the Grantor's rights and
remedies with respect to the collection of the Receivables of the Grantor and
any other Collateral owned by the Grantor, (xi) upon the occurrence and during
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the continuance of a Default or an Event of Default, to settle, adjust,
compromise, extend or renew the Receivables of the Grantor, (xii) upon the
occurrence and during the continuance of a Default or an Event of Default, to
settle, adjust or compromise any legal proceedings brought to collect
Receivables of the Grantor, (xiii) upon the occurrence and during the
continuance of a Default or an Event of Default, to prepare, file and sign the
Grantor's name on a proof of claim in bankruptcy or similar document against any
Account Debtor of the Grantor, (xiv) upon the occurrence and during the
continuance of a Default or an Event of Default, to prepare, file and sign the
Grantor's name on any notice of Lien, assignment or satisfaction of Lien or
similar document in connection with the Receivables of the Grantor, (xv) upon
the occurrence and during the continuance of a Default or an Event of Default,
to require Account Debtors to direct all payments to be delivered by mail to the
Grantor to such address as the Collateral Agent may designate and to receive,
open and dispose of all such mail addressed to the Grantor, and (xvi) to do all
other acts and things necessary to carry out this Security Agreement; and the
Grantor agrees to reimburse the Collateral Agent on demand for any payment made
or any expense incurred by the Collateral Agent in connection with any of the
foregoing; PROVIDED that, this authorization shall not relieve the Grantor of
any of its obligations under this Security Agreement, the Credit Agreement or
the other Loan Documents.
(b) All acts of said attorney or designee are hereby
ratified and approved. The powers conferred on the Collateral Agent, for itself
and for the benefit of the other Agents and the Lenders, under this SECTION 6.2
are solely to protect the Collateral Agent's interests in the Collateral and
shall not impose any duty upon the Collateral Agent, any other Agent or any
Lender to exercise any such powers.
6.3. PROXY. THE GRANTOR HEREBY IRREVOCABLY CONSTITUTES AND APPOINTS THE
COLLATERAL AGENT AS THE PROXY AND ATTORNEY-IN-FACT (AS SET FORTH IN SECTION 6.2
ABOVE) OF THE GRANTOR WITH RESPECT TO THE PLEDGED COLLATERAL OWNED BY THE
GRANTOR, INCLUDING THE RIGHT TO VOTE SUCH PLEDGED COLLATERAL, WITH FULL POWER OF
SUBSTITUTION TO DO SO. IN ADDITION TO THE RIGHT TO VOTE ANY SUCH PLEDGED
COLLATERAL, THE APPOINTMENT OF THE COLLATERAL AGENT AS PROXY AND
ATTORNEY-IN-FACT SHALL INCLUDE THE RIGHT TO EXERCISE ALL OTHER RIGHTS, POWERS,
PRIVILEGES AND REMEDIES TO WHICH A HOLDER OF SUCH PLEDGED COLLATERAL WOULD BE
ENTITLED (INCLUDING GIVING OR WITHHOLDING WRITTEN CONSENTS OF SHAREHOLDERS,
CALLING SPECIAL MEETINGS OF SHAREHOLDERS AND VOTING AT SUCH MEETINGS). SUCH
PROXY SHALL BE EFFECTIVE, AUTOMATICALLY AND WITHOUT THE NECESSITY OF ANY ACTION
(INCLUDING ANY TRANSFER OF ANY SUCH PLEDGED COLLATERAL ON THE RECORD BOOKS OF
THE ISSUER THEREOF) BY ANY PERSON (INCLUDING THE ISSUER OF SUCH PLEDGED
COLLATERAL OR ANY OFFICER OR AGENT THEREOF), UPON THE OCCURRENCE OF A DEFAULT OR
AN EVENT OF DEFAULT.
6.4. NATURE OF APPOINTMENT; LIMITATION OF DUTY. THE APPOINTMENT OF THE
COLLATERAL AGENT AS PROXY AND ATTORNEY-IN-FACT IN THIS ARTICLE VI IS COUPLED
WITH AN INTEREST AND SHALL BE IRREVOCABLE UNTIL THE DATE ON WHICH THIS SECURITY
AGREEMENT IS TERMINATED IN ACCORDANCE WITH SECTION 7.14. NOTWITHSTANDING
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ANYTHING CONTAINED HEREIN, NEITHER THE COLLATERAL AGENT, ANY OTHER AGENT, ANY
LENDER, NOR ANY OF THEIR RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES,
AGENTS OR REPRESENTATIVES SHALL HAVE ANY DUTY TO EXERCISE ANY RIGHT OR POWER
GRANTED HEREUNDER OR OTHERWISE OR TO PRESERVE THE SAME AND SHALL NOT BE LIABLE
FOR ANY FAILURE TO DO SO OR FOR ANY DELAY IN DOING SO, EXCEPT IN RESPECT OF
DAMAGES ATTRIBUTABLE SOLELY TO THEIR OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT
AS FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION; PROVIDED THAT, IN NO
EVENT SHALL THEY BE LIABLE FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR
CONSEQUENTIAL DAMAGES.
ARTICLE VII
GENERAL PROVISIONS
7.1. WAIVERS. The Grantor hereby waives notice of the time and place of
any public sale or the time after which any private sale or other disposition of
all or any part of the Collateral owned by the Grantor may be made. To the
extent such notice may not be waived under applicable law, any notice made shall
be deemed reasonable if sent to the Grantor, addressed as set forth in ARTICLE
VIII, at least ten days prior to (i) the date of any such public sale or (ii)
the time after which any such private sale or other disposition may be made. To
the maximum extent permitted by applicable law, the Grantor waives all claims,
damages, and demands against the Collateral Agent or any Lender arising out of
the repossession, retention or sale of the Collateral, except such as arise
solely out of the gross negligence or willful misconduct of the Collateral Agent
or such Lender as finally determined by a court of competent jurisdiction. To
the extent it may lawfully do so, the Grantor absolutely and irrevocably waives
and relinquishes the benefit and advantage of, and covenants not to assert
against the Collateral Agent or any Lender, any valuation, stay, appraisal,
extension, moratorium, redemption or similar laws and any and all rights or
defenses it may have as a surety now or hereafter existing which, but for this
provision, might be applicable to the sale of any Collateral owned by the
Grantor made under the judgment, order or decree of any court, or privately
under the power of sale conferred by this Security Agreement, or otherwise.
Except as otherwise specifically provided herein, the Grantor hereby waives
presentment, demand, protest or any notice (to the maximum extent permitted by
applicable law) of any kind in connection with this Security Agreement or any
Collateral owned by it.
7.2. LIMITATION ON COLLATERAL AGENT'S AND LENDERS' DUTY WITH RESPECT TO
THE COLLATERAL. Notwithstanding any provision contained in this Security
Agreement, neither Collateral Agent nor any Lender shall have any duty to
exercise any of the rights, privileges or powers afforded to it and shall not be
responsible to the Grantor or any other Person for any failure to do so or delay
in doing so. The Collateral Agent shall have no obligation to clean-up or
otherwise prepare the Collateral for sale. The Collateral Agent and each Lender
shall use reasonable care with respect to the Collateral in its possession or
under its control. Neither the Collateral Agent nor any Lender shall have any
other duty as to any Collateral in its possession or control or in the
possession or control of any agent or nominee of the Collateral Agent or such
Lender, or any income thereon or as to the preservation of rights against prior
parties or any other rights pertaining thereto. To the extent that applicable
law imposes duties on the Collateral Agent to exercise remedies in a
commercially reasonable manner, the Grantor acknowledges and agrees that it is
commercially reasonable for the Collateral Agent (i) to fail to incur expenses
deemed significant by the Collateral Agent to prepare Collateral for disposition
or otherwise to transform raw material or work in process into finished goods or
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other finished products for disposition, (ii) to fail to obtain third party
consents for access to Collateral to be disposed of, or to obtain or, if not
required by other law, to fail to obtain governmental or third party consents
for the collection or disposition of Collateral to be collected or disposed of,
(iii) to fail to exercise collection remedies against Account Debtors or other
Persons obligated on Collateral or to remove Liens on or any adverse claims
against Collateral, (iv) to exercise collection remedies against Account Debtors
and other Persons obligated on Collateral directly or through the use of
collection agencies and other collection specialists, (v) to advertise
dispositions of Collateral through publications or media of general circulation,
whether or not the Collateral is of a specialized nature, (vi) to contact other
Persons, whether or not in the same business as the Grantor, for expressions of
interest in acquiring all or any portion of such Collateral, (vii) to hire one
or more professional auctioneers to assist in the disposition of Collateral,
whether or not the Collateral is of a specialized nature, (viii) to dispose of
Collateral by utilizing internet sites that provide for the auction of assets of
the types included in the Collateral or that have the reasonable capacity of
doing so, or that match buyers and sellers of assets, (ix) to dispose of assets
in wholesale rather than retail markets, (x) to disclaim disposition warranties,
such as title, possession or quiet enjoyment, (xi) to purchase insurance or
credit enhancements to insure the Collateral Agent against risks of loss,
collection or disposition of Collateral or to provide to the Collateral Agent a
guaranteed return from the collection or disposition of Collateral, or (xii) to
the extent deemed appropriate by the Collateral Agent, to obtain the services of
other brokers, investment bankers, consultants and other professionals to assist
the Collateral Agent in the collection or disposition of any of the Collateral.
The Grantor acknowledges that the purpose of this SECTION 7.2 is to provide
non-exhaustive indications of what actions or omissions by the Collateral Agent
would be commercially reasonable in the Collateral Agent's exercise of remedies
against the Collateral and that other actions or omissions by the Collateral
Agent shall not be deemed commercially unreasonable solely on account of not
being indicated in this SECTION 7.2. Without limitation upon the foregoing,
nothing contained in this SECTION 7.2 shall be construed to grant any rights to
the Grantor or to impose any duties on the Collateral Agent that would not have
been granted or imposed by this Security Agreement or by applicable law in the
absence of this SECTION 7.2.
7.3. COMPROMISES AND COLLECTION OF COLLATERAL. The Grantor and the
Collateral Agent recognize that setoffs, counterclaims, defenses and other
claims may be asserted by obligors with respect to certain of the Receivables,
that certain of the Receivables may be or become uncollectible in whole or in
part and that the expense and probability of success in litigating a disputed
Receivable may exceed the amount that reasonably may be expected to be recovered
with respect to a Receivable. In view of the foregoing, the Grantor agrees that
the Collateral Agent may at any time and from time to time, if a Default or an
Event of Default has occurred and is continuing, compromise with the obligor on
any Receivable, accept in full payment of any Receivable such amount as the
Collateral Agent in its sole discretion shall determine or abandon any
Receivable, and any such action by the Collateral Agent shall be commercially
reasonable so long as the Collateral Agent acts in good faith based on
information known to it at the time it takes any such action.
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7.4. SECURED PARTY PERFORMANCE OF GRANTOR OBLIGATIONS. Without having
any obligation to do so, the Collateral Agent may perform or pay any obligation
which the Grantor has agreed to perform or pay in this Security Agreement and
the Grantor shall reimburse the Collateral Agent for any amounts paid by the
Collateral Agent pursuant to this SECTION 7.4. The Grantor's obligation to
reimburse the Collateral Agent pursuant to the preceding sentence shall be a
Secured Obligation payable on demand.
7.5. SPECIFIC PERFORMANCE OF CERTAIN COVENANTS. The Grantor
acknowledges and agrees that a breach of any of the covenants contained in
SECTIONS 4.1(C), 4.1(D), 4.4, 4.5, 4.6, 4.7, 4.8, 4.9, 4.10, 4.11, 4.12, or 5.2
will cause irreparable injury to the Collateral Agent and the Lenders, that the
Collateral Agent and the Lenders have no adequate remedy at law in respect of
such breaches and therefore agrees, without limiting the right of the Collateral
Agent or the Lenders to seek and obtain specific performance of other
obligations of the Grantor contained in this Security Agreement, that the
covenants of the Grantor contained in the Sections referred to in this SECTION
7.5 shall be specifically enforceable against the Grantor.
7.6. DISPOSITIONS NOT AUTHORIZED. The Grantor is not authorized to sell
or otherwise dispose of any Collateral owned by it except as set forth in
SECTION 4.1(C) and notwithstanding any course of dealing between any Grantor and
the Collateral Agent or other conduct of the Collateral Agent, no authorization
to sell or otherwise dispose of the Collateral owned by any Grantor (except as
set forth in SECTION 4.1(C)) shall be binding upon the Collateral Agent or the
Lenders unless such authorization is in writing signed by the Collateral Agent.
7.7. NO WAIVER; AMENDMENTS; CUMULATIVE REMEDIES. No delay or omission
of the Collateral Agent or any Lender to exercise any right or remedy granted
under this Security Agreement shall impair such right or remedy or be construed
to be a waiver of any Default or an acquiescence therein, and any single or
partial exercise of any such right or remedy shall not preclude any other or
further exercise thereof or the exercise of any other right or remedy. No
waiver, amendment or other variation of the terms, conditions or provisions of
this Security Agreement whatsoever shall be valid unless in writing signed by
the Collateral Agent with the concurrence or at the direction of the Lenders
required under Section 14.02 of the Credit Agreement and then only to the extent
in such writing specifically set forth. All rights and remedies contained in
this Security Agreement or by law afforded shall be cumulative and all shall be
available to the Collateral Agent and the Lenders until the Secured Obligations
have been paid in full.
7.8. LIMITATION BY LAW; SEVERABILITY OF PROVISIONS. All rights,
remedies and powers provided in this Security Agreement may be exercised only to
the extent that the exercise thereof does not violate any applicable provision
of law, and all the provisions of this Security Agreement are intended to be
subject to all applicable mandatory provisions of law that may be controlling
and to be limited to the extent necessary so that they shall not render this
Security Agreement invalid, unenforceable or not entitled to be recorded or
registered, in whole or in part. Any provision in this Security Agreement that
is held to be inoperative, unenforceable, or invalid in any jurisdiction shall,
as to that jurisdiction, be inoperative, unenforceable, or invalid without
affecting the remaining provisions in that jurisdiction or the operation,
enforceability, or validity of that provision in any other jurisdiction, and to
this end the provisions of this Security Agreement are declared to be severable.
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7.9. REINSTATEMENT. The Grantor agrees that this Security Agreement
shall remain in full force and effect and continue to be effective against the
Grantor should (i) any petition be filed by or against the Grantor for
liquidation or reorganization, (ii) the Grantor become insolvent or make an
assignment for the benefit of any creditor or creditors or (iii) a receiver or
trustee be appointed for all or any significant part of the Grantor's assets,
and shall continue to be effective or be reinstated, as the case may be, if at
any time payment and performance of the Secured Obligations, or any part
thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by any obligee of the Secured Obligations,
whether as a "voidable preference," "fraudulent conveyance," or otherwise, all
as though such payment or performance had not been made. In the event that any
payment, or any part thereof, is rescinded, reduced, restored or returned, the
Secured Obligations shall be reinstated and deemed reduced only by such amount
paid and not so rescinded, reduced, restored or returned.
7.10. BENEFIT OF AGREEMENT. The terms and provisions of this Security
Agreement shall be binding upon and inure to the benefit of the Grantor, the
Collateral Agent and the Lenders and their respective successors and assigns
(including all persons who become bound as a debtor to this Security Agreement),
except that the Grantor shall not have the right to assign its rights or
delegate its obligations under this Security Agreement or any interest herein,
without the prior written consent of the Collateral Agent. No sales of
participations, assignments, transfers, or other dispositions of any agreement
governing the Secured Obligations or any portion thereof or interest therein
shall in any manner impair the Lien granted to the Collateral Agent, for itself
and for the benefit of the other Agents and the Lenders, hereunder.
7.11. SURVIVAL OF REPRESENTATIONS. All representations and warranties
of the Grantor contained in this Security Agreement shall survive the execution
and delivery of this Security Agreement.
7.12. TAXES AND EXPENSES. Any taxes (including income taxes) payable or
ruled payable by federal or state authority in respect of this Security
Agreement shall be paid by the Grantor, together with interest and penalties, if
any. The Grantor shall reimburse the Collateral Agent for any and all
out-of-pocket expenses and internal charges (including reasonable attorneys',
auditors' and accountants' fees and reasonable time charges of attorneys,
paralegals, auditors and accountants who may be employees of the Collateral
Agent) paid or incurred by the Collateral Agent in connection with the
preparation, execution, delivery, administration, collection and enforcement of
this Security Agreement and in the audit, analysis, administration, collection,
preservation or sale of the Collateral (including the expenses and charges
associated with any periodic or special audit of the Collateral). Any and all
costs and expenses incurred by the Grantor in the performance of actions
required pursuant to the terms hereof shall be borne solely by the Grantor.
7.13. HEADINGS. The title of and section headings in this Security
Agreement are for convenience of reference only, and shall not govern the
interpretation of any of the terms and provisions of this Security Agreement.
7.14. TERMINATION. This Security Agreement shall continue in effect
(notwithstanding the fact that from time to time there may be no Secured
Obligations outstanding) until (i) the Credit Agreement has terminated pursuant
to its express terms and (ii) all of the Secured Obligations have been
25
indefeasibly paid and performed in full and no commitments of the Collateral
Agent or the Lenders which would give rise to any Secured Obligations are
outstanding.
7.15. ENTIRE AGREEMENT. This Security Agreement embodies the entire
agreement and understanding between the Grantor and the Collateral Agent
relating to the Collateral and supersedes all prior agreements and
understandings between the Grantor and the Collateral Agent relating to the
Collateral.
7.16. CHOICE OF LAW. THIS SECURITY AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
7.17. CONSENT TO JURISDICTION. THE GRANTOR HEREBY IRREVOCABLY SUBMITS
TO THE NON-EXCLUSIVE JURISDICTION OF ANY U.S. FEDERAL OR NEW YORK STATE COURT
SITTING IN NEW YORK, NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT AND THE GRANTOR
HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES
ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN
INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE COLLATERAL AGENT
OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE GRANTOR IN THE COURTS OF ANY
OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY THE GRANTOR AGAINST THE
COLLATERAL AGENT OR ANY LENDER OR ANY AFFILIATE OF THE COLLATERAL AGENT OR ANY
LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH THIS SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT
SHALL BE BROUGHT ONLY IN A COURT IN NEW YORK, NEW YORK.
7.18. WAIVER OF JURY TRIAL. THE GRANTOR, THE COLLATERAL AGENT AND EACH
LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY
OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN
ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS SECURITY AGREEMENT OR
ANY OTHER LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.
7.19. INDEMNITY. The Grantor hereby agrees to indemnify the Collateral
Agent and the Lenders, and their respective successors, assigns, agents and
employees, from and against any and all liabilities, damages, penalties, suits,
costs, and expenses of any kind and nature (including, without limitation, all
expenses of litigation or preparation therefor whether or not the Collateral
Agent or any Lender is a party thereto) imposed on, incurred by or asserted
against the Collateral Agent or the Lenders, or their respective successors,
assigns, agents and employees, in any way relating to or arising out of this
Security Agreement, or the manufacture, purchase, acceptance, rejection,
ownership, delivery, lease, possession, use, operation, condition, sale, return
26
or other disposition of any Collateral owned by the Grantor (including, without
limitation, latent and other defects, whether or not discoverable by the
Collateral Agent or the Lenders or the Grantor, and any claim for Patent,
Trademark or Copyright infringement) except to the extent resulting from the
gross negligence or willful misconduct of the Collateral Agent or the Lenders,
as determined by a final judgment of a court of competent jurisdiction.
7.20. COUNTERPARTS. This Security Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one
agreement, and any of the parties hereto may execute this Security Agreement by
signing any such counterpart.
ARTICLE VIII
NOTICES
8.1. SENDING NOTICES. Any notice required or permitted to be given
under this Security Agreement shall be sent by United States mail, telecopier,
personal delivery or nationally established overnight courier service, and shall
be deemed received (a) when received, if sent by hand or overnight courier
service, or mailed by certified or registered mail notices or (b) when sent, if
sent by telecopier (except that, if not given during normal business hours for
the recipient, shall be deemed to have been given at the opening of business on
the next Business Day for the recipient), in each case addressed to the Grantor
at the address set forth on EXHIBIT A as the Grantor's principal place of
business, and to the Collateral Agent and the Lenders at the addresses set forth
in and in accordance with Section 14.01 of the Credit Agreement.
8.2. CHANGE IN ADDRESS FOR NOTICES. The Grantor, the Collateral Agent
and the Lenders may change the address for service of notice upon it by a notice
in writing to the other parties.
ARTICLE IX
THE COLLATERAL AGENT
Guggenheim Corporate Funding, LLC has been appointed Collateral Agent
for itself and for the benefit of the other Agents and the Lenders hereunder
pursuant to ARTICLE XIII of the Credit Agreement. It is expressly understood and
agreed by the parties to this Security Agreement that any authority conferred
upon the Collateral Agent hereunder is subject to the terms of the delegation of
authority made by the Lenders to the Collateral Agent pursuant to the Credit
Agreement, and that the Collateral Agent has agreed to act (and any successor
Collateral Agent shall act) as such hereunder only on the express conditions
contained in such ARTICLE XIII. Any successor Collateral Agent appointed
pursuant to ARTICLE XIII of the Credit Agreement shall be entitled to all the
rights, interests and benefits of the Collateral Agent hereunder.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Grantor and the Collateral Agent have executed
this Security Agreement as of the date first above written.
GRANTOR:
OVERHILL FARMS, INC.
By: /S/ XXXX X. STEINBRUN
-----------------------------------
Name: Xxxx X. Steinbrun
Title: Chief Financial Officer
COLLATERAL AGENT:
----------------
GUGGENHEIM CORPORATE FUNDING, LLC
By: /S/ XXXXXXX X. XXXXXX
---------------------
Name: Xxxxxxx X. Xxxxxx
Title: Managing Director
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