EXHIBIT 10.7
CLASS B COLLATERAL AGREEMENT, dated as of July 15, 2003 (this
"AGREEMENT"), among JACUZZI BRANDS, INC., a Delaware corporation (the
"COMPANY"), each Subsidiary of the Company listed on Schedule I hereto (each,
including the Company, a "GRANTOR" and collectively the "GRANTORS"), and
WILMINGTON TRUST COMPANY, not in its individual capacity but solely as
collateral agent (in such capacity, the "COLLATERAL AGENT") for the Class B
Secured Parties.
W I T N E S S E T H:
WHEREAS, the Grantors and Wilmington Trust Company have
entered into the Indenture dated as of July 15, 2003 (as amended, restated,
supplemented or otherwise modified from time to time, the "INDENTURE"), among
the Company, the Subsidiary Guarantors from time to time party thereto and
Wilmington Trust Company, as trustee (the "TRUSTEE")
WHEREAS, the Company and Wilmington Trust Company have entered
into the Collateral Agency Agreement dated as of July 15, 2003 (as amended,
restated, supplemented or otherwise modified from time to time, the "COLLATERAL
AGENCY AGREEMENT"), among the Company, the Representatives and the Unrepresented
Holders referred to therein and the Collateral Agent referred to therein;
WHEREAS, each Grantor is executing and delivering this
Agreement pursuant to the terms of the Indenture to induce potential investors
to purchase the Securities; and
WHEREAS, each Grantor has duly authorized the execution,
delivery and performance of this Agreement.
NOW, THEREFORE, in consideration of the premises and to induce
the Trustee to enter into the Indenture and to induce potential investors to
purchase the Securities, the Grantors hereby agree with the Collateral Agent as
follows:
1. DEFINED TERMS.
1.1 DEFINITIONS. Unless otherwise defined herein, terms defined in (i)
the Collateral Agency Agreement and used herein shall have the meanings given to
them in the Collateral Agency Agreement (whether or not the Collateral Agency
Agreement remains in effect), (ii) the Indenture and used herein, and not
otherwise defined in the Collateral Agency Agreement, shall have the meanings
given to them in the Indenture (whether or not the Indenture remains in effect)
and (iii) the Uniform Commercial Code as from time to time in effect in the
State of New York (the "UCC"), and not otherwise defined in the Indenture or the
Collateral Agency Agreement, and used herein shall have the meanings given to
them in the UCC.
1.2 OTHER DEFINITIONAL PROVISIONS. The words "hereof," "herein,"
"hereto" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Section, subsection and Schedule references are to this
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Agreement unless otherwise specified. The meanings given to terms defined herein
shall be equally applicable to both the singular and plural forms of such terms.
2. SECURITY INTERESTS.
2.1 GRANT OF SECURITY INTEREST. To secure the prompt payment and
performance to the Collateral Agent and each Class B Secured Party of the Class
B Obligations, each Grantor hereby grants to the Collateral Agent for the
benefit of itself and each Class B Secured Party a second priority continuing
Lien upon (subject to the terms and conditions of the Intercreditor Agreement),
and only upon, the following assets, Property and interests in Property of each
Grantor, whether now owned or existing or hereafter created, acquired or arising
(collectively, the "COLLATERAL"):
(a) Accounts;
(b) Certificated Securities;
(c) Chattel Paper, including Electronic Chattel Paper;
(d) Commercial Tort Claims, including any added to this Class
B Collateral Agreement pursuant to subsection 2.2(a);
(e) 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;
(f) Contract Rights;
(g) Deposit Accounts;
(h) Documents;
(i) Financial Assets;
(j) General Intangibles;
(k) Goods (including all of its Equipment, Fixtures and
Inventory), and all accessions, additions, attachments, improvements,
substitutions and replacements thereto and therefor;
(l) Instruments;
(m) Intellectual Property;
(n) Inventory;
(o) Investment Property;
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(p) Letter-of-Credit Rights;
(q) money (of every jurisdiction whatsoever);
(r) Payment Intangibles;
(s) Security Entitlements;
(t) Supporting Obligations;
(u) Uncertificated Securities; and
(v) to the extent not included in the foregoing, all other
personal property of any kind or description;
together with all books, records, writings, data bases, information and other
property relating to, evidencing or embodying any of the foregoing, and all
Proceeds, profits and returns of and from any of the foregoing. Notwithstanding
the foregoing, the following property shall be excluded from the assets upon
which a Lien is granted pursuant to this Section 2.1: (a) Securities issued by
immaterial Subsidiaries, (b) voting Securities in any Foreign Subsidiary, to the
extent (but only to the extent) required to prevent the Collateral from
including more than 65% of all voting Securities in such Foreign Subsidiary and
(c) the Class A Collateral.
2.2 OTHER COLLATERAL.
(a) COMMERCIAL TORT CLAIMS. The Grantors (or Company, on behalf of
Grantors) shall promptly notify the Collateral Agent in writing upon any Grantor
incurring or otherwise obtaining a Commercial Tort Claim after the Closing Date
against any third party and, upon request of the Collateral Agent, Grantors
shall promptly enter into an amendment to this Class B Collateral Agreement and
do such other acts or things deemed appropriate by the Collateral Agent to give
the Collateral Agent a security interest in any such Commercial Tort Claim. Each
Grantor represents and warrants that as of the date of this Class B Collateral
Agreement it does not possess any Commercial Tort Claims.
(b) OTHER COLLATERAL. Subject to the terms and conditions of the
Intercreditor Agreement, the Grantors (or Company, on behalf of Grantors) shall
promptly notify the Collateral Agent in writing upon any Grantor acquiring or
otherwise obtaining any Collateral after the date hereof consisting of Deposit
Accounts, Investment Property, Letter-of-Credit Rights or Electronic Chattel
Paper and, upon the request of the Collateral Agent, the applicable Grantor
shall promptly execute such other documents, and do such other acts or things
deemed appropriate by the Collateral Agent to deliver to the Collateral Agent
control with respect to such Collateral. Subject to the terms and conditions of
the Intercreditor Agreement, the Grantors (or Company, on behalf of Grantors)
shall promptly notify the Collateral Agent in writing upon any Grantor acquiring
or otherwise obtaining any Collateral after the date hereof consisting of
Documents or Instruments and, upon the request of the Collateral Agent, the
applicable Grantor will promptly execute such other documents, and do such other
acts or things deemed appropriate by the Collateral Agent to deliver to the
Collateral Agent possession of such Documents which are negotiable and
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Instruments, and, with respect to nonnegotiable Documents, to have such
nonnegotiable Documents issued in the name of the Collateral Agent. Subject to
the terms and conditions of the Intercreditor Agreement, with respect to
Collateral in the possession of a third party, other than Certificated
Securities, Goods covered by a Document or other Collateral (including
Collateral subject to the Loan Agreement) having a value of not more than
$200,000 in the aggregate, each Grantor shall obtain an agreement with such
third party in form and substance satisfactory to the Collateral Agent.
2.3 LIEN PERFECTION; FURTHER ASSURANCES. Each Grantor shall execute
such UCC-1 financing statements as are required by the UCC and such other
instruments, assignments or documents as are necessary to perfect the Collateral
Agent's Lien upon any of the Collateral and shall take such other action as may
be required to perfect or to continue, confirm or, subject to the Intercreditor
Agreement, enforce the perfection of the Collateral Agent's Lien upon the
Collateral. Unless prohibited by applicable law, each Grantor hereby authorizes
the Collateral Agent to execute and file any such financing statement,
including, without limitation, financing statements that indicate the Collateral
(i) as all assets of such Grantor or words of similar effect, or (ii) as being
of an equal or lesser scope, or with greater or lesser detail, than as set forth
in Section 2.1, on such Grantor's behalf. Each Grantor also hereby ratifies its
authorization for the Collateral Agent to have filed in any jurisdiction any
like financing statements or amendments thereto if filed prior to the date
hereof. The parties agree that a carbon, photographic or other reproduction of
this Agreement shall be sufficient as a financing statement and may be filed in
any appropriate office in lieu thereof. At the Collateral Agent's request, each
Grantor shall also promptly execute or cause to be executed and shall deliver to
the Collateral Agent any and all documents, instruments and agreements deemed
necessary by the Collateral Agent, to give effect to or carry out the terms or
intent of the Class B Security Documents. Nothing in this Agreement shall be
construed to require any Grantor to deliver any stock certificates or any
promissory notes or other Instruments constituting or evidencing Collateral, or
execute or deliver any control agreements or other agreements or instruments
that would enable any Class B Secured Party to perfect the lien created
hereunder by possession or control, until the Senior Lender Obligations (as
defined in the Intercreditor Agreement) are Paid in Full (as defined in the
Intercreditor Agreement). Notwithstanding any of the foregoing, the Collateral
Agent shall not be obligated to execute or file any such financing statements,
instruments, assignments or documents except to the extent directed in writing
by a Class B Secured Party.
2.4 INTERCREDITOR AGREEMENT. The Collateral Agent's Lien, on behalf of
itself and the Class B Secured Parties, in the Collateral shall be second
priority as and to the extent set forth in the Intercreditor Agreement.
2.5 RELEASE OF LIENS. Upon the occurrence of any sale or other
disposition of Collateral permitted hereunder or under the Indenture, the
Collateral Agent agrees that it shall, at the expense of the Grantors, execute
and deliver a release of its Lien on such Collateral and such other documents as
Grantors shall reasonably request to evidence such release.
3. COLLATERAL ADMINISTRATION.
3.1 GENERAL.
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(a) LOCATION OF COLLATERAL. All Collateral, other than Collateral in
possession of the Collateral Agent, will at all times be kept by the Grantors at
one or more of the business locations set forth in the Perfection Certificate,
as updated from time to time in accordance with Section 3.1(d).
(b) INSURANCE OF COLLATERAL.
(i) Each Grantor shall maintain and pay for insurance upon all
Collateral wherever located and with respect to the business of such
Grantor and each of their respective Subsidiaries, covering property,
public liability, workers' compensation and such other risks in such
amounts and with such insurance companies as are reasonably
satisfactory to the Collateral Agent. Each Grantor shall deliver
insurance certificates with respect to such policies or certified
copies of such policies to the Collateral Agent as promptly as
practicable, with satisfactory lender's loss payable endorsements,
naming the Collateral Agent as a loss payee, assignee or additional
insured, as appropriate, as its interest may appear, and showing only
such other loss payees, assignees and additional insureds as are
satisfactory to the Collateral Agent and, in any event, so long as the
Senior Lender Obligations (as defined in the Intercreditor Agreement)
are not Paid in Full (as defined in the Intercreditor Agreement), the
holders thereof or any agent acting on their behalf. Each policy of
insurance or endorsement shall contain a clause requiring the insurer
to give not less than 10 days' prior written notice to the Collateral
Agent in the event of cancellation of the policy for nonpayment of
premium and not less than 30 days' prior written notice to the
Collateral Agent in the event of cancellation of the policy for any
other reason whatsoever. Each Grantor agrees to deliver to the
Collateral Agent, promptly as rendered, true copies of all reports made
in any reporting forms to insurance companies.
(ii) Unless each Grantor provides the Collateral Agent with
evidence of the insurance coverage required by this Agreement, the
Collateral Agent may purchase insurance at such Grantor's expense to
protect the Collateral Agent's interests in the Collateral. This
insurance may, but need not, protect the interests of the Grantors. The
coverage that the Collateral Agent purchases may not pay any claim that
any Grantor or any Subsidiary of such Grantor makes or any claim that
is made against such Grantor or any such Subsidiary in connection with
said Collateral. The Grantors may later cancel any insurance purchased
by the Collateral Agent, but only after providing the Collateral Agent
with evidence that such Grantor and its respective Subsidiaries have
obtained insurance as required by this Agreement. If the Collateral
Agent purchases insurance, the Grantors will be responsible for the
costs of that insurance, including interest and any other charges the
Collateral Agent may impose in connection with the placement of
insurance, until the effective date of the cancellation or expiration
of the insurance. The costs of the insurance may be added to the Class
B Obligations. The costs of the insurance may be more than the cost of
insurance that the Grantors and their respective Subsidiaries may be
able to obtain on their own.
(c) PROTECTION OF COLLATERAL. Neither the Collateral Agent nor any
Class B Secured Party shall be liable or responsible in any way for the
safekeeping of any of the Collateral or for any loss or damage thereto (except
for reasonable care in the custody thereof while any Collateral is in the
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Collateral Agent's or any Class B Secured Party's actual possession) or for any
diminution in the value thereof, or for any act or default of any warehouseman,
carrier, forwarding agency, or other person whomsoever, but the same shall be at
each Grantor's sole risk. Subject to the terms of the Intercreditor Agreement,
each Grantor shall, at its own cost and expense, take any and all actions
necessary to defend title to the Collateral against all Persons and to defend
the security interest of the Collateral Agent in the Collateral and the priority
thereof against any Lien other than Permitted Liens.
(d) PERFECTION CERTIFICATE. Each year, at the time of delivery of the
Officers' Certificate pursuant to Section 4.17 of the Indenture, the Company
shall deliver to the Collateral Agent a certificate substantially in the form of
Exhibit A, completed and supplemented with the schedules and attachments
contemplated thereby, and duly executed by the Chief Financial Officer of the
Company (the "PERFECTION CERTIFICATE"), setting forth the information required
pursuant to the Perfection Certificate or confirming that there has been no
change in such information since the date hereof or the date of the most recent
Perfection Certificate delivered pursuant to this Section 3.1(d).
3.2 ADMINISTRATION OF ACCOUNTS.
(a) RECORDS, SCHEDULES AND ASSIGNMENTS OF ACCOUNTS. Subject to the
terms and conditions of the Intercreditor Agreement, each Grantor that has
Accounts shall keep accurate and complete records of its Accounts and all
payments and collections thereon. Annually, or more frequently as requested by
the Collateral Agent if an Event of Default has occurred and is continuing, each
Grantor that has Accounts (or the Company, on behalf of the Grantors) shall
deliver to the Collateral Agent a report specifying the names, addresses, face
values, dates of invoices and due dates for each Account Debtor obligated on an
Account so listed ("SCHEDULE OF ACCOUNTS"), and upon the Collateral Agent's
request therefor during the continuance of a Default or Event of Default, copies
of proof of delivery and the original copy of all documents as the Collateral
Agent shall reasonably request. Subject to the terms and conditions of the
Intercreditor Agreement, if requested by the Collateral Agent during the
continuance of a Default or Event of Default, each Grantor that has Accounts
shall execute and deliver to the Collateral Agent formal written assignments of
all of its Accounts monthly, weekly or daily, which shall include all Accounts
that have been created since the date of the last assignment, together with
copies of invoices or invoice registers related thereto.
(b) DISCOUNTS, ALLOWANCES, DISPUTES. If any Grantor grants any
discounts, allowances or credits that are not shown on the face of the invoice
for the Account involved, the Company shall report such discounts, allowances or
credits, as the case may be, to the Collateral Agent as part of the next
required Schedule of Accounts.
(c) ACCOUNT VERIFICATION. Any of the Collateral Agent's officers,
employees or agents shall have the right, at any time or times hereafter, in the
name of the Collateral Agent or any designee of the Collateral Agent, to verify
the validity, amount or any other matter relating to any Accounts by mail,
telephone, electronic communication or otherwise. Each Grantor that has Accounts
shall cooperate fully with the Collateral Agent in an effort to facilitate and
promptly conclude any such verification process. The Collateral Agent shall give
the Company concurrent notice of any such verification process.
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(d) TAXES. If an Account includes a charge for any tax payable to any
governmental taxing authority, the Collateral Agent is authorized, in its sole
discretion, to pay the amount thereof to the proper taxing authority for the
account of the Grantors, and to charge the Grantors or the Company therefor,
except for taxes that (i) are being actively contested in good faith and by
appropriate proceedings and with respect to which the relevant Grantor maintain
reasonable reserves on its books therefor and (ii) would not reasonably be
expected to result in any Lien other than a Permitted Lien. In no event shall
the Collateral Agent or any other Class B Secured Party be liable for any taxes
to any governmental taxing authority that may be due by any Grantor.
3.3 PAYMENT OF CHARGES. All amounts chargeable to the Grantors
hereunder shall be Obligations secured by all of the Collateral, and shall be
payable on demand.
4. REPRESENTATIONS AND WARRANTIES. Each Grantor hereby represents and
warrants that:
4.1 POWER AND AUTHORITY. Each Grantor is duly authorized and empowered
to enter into, execute, deliver and perform this Agreement and each of the other
Class B Security Documents to which it is a party. The execution, delivery and
performance of this Agreement and each of the other Class B Security Documents
have been duly authorized by all necessary corporate or other relevant action
and do not and will not (i) require any consent or approval of the shareholders
of any Grantor; (ii) contravene any Grantor's charter, articles or certificate
of incorporation, partnership agreement, certificate of formation, by-laws,
limited liability agreement, operating agreement or other organizational
documents (as the case may be); (iii) violate, or cause any Grantor to be in
default under, any provision of any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award in effect having
applicability to any Grantor, the violation of which could reasonably be
expected to materially adversely affect the operation of the business of the
Grantors, taken as a whole; (iv) result in a breach of or constitute a default
under any indenture or loan or credit agreement or any other agreement, lease or
instrument to which any Grantor is a party or by which any of its assets may be
bound or affected, the breach of or default under which could reasonably be
expected to materially adversely affect the operation of the business of the
Grantors, taken as a whole; or (v) result in, or require, the creation or
imposition of any Lien (other than Permitted Liens) upon or with respect to any
asset now owned or hereafter acquired by any Grantor.
4.2 LEGALLY ENFORCEABLE AGREEMENT. This Agreement and each of the other
Class B Security Documents to which it is a party is a legal, valid and binding
obligation of each Grantor, enforceable against it in accordance with its
respective terms subject to applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance and other laws affecting creditor's rights
generally, and subject to general principles of equity, regardless of whether
considered in a proceeding in equity or at law.
4.3 NAMES; ORGANIZATION. No Grantor has been known as or has used in
the past five years any legal, fictitious or trade names except those listed on
the Perfection Certificate. Except as set forth on the Perfection Certificate,
in the past five years no Grantor has been the surviving entity of a merger or
consolidation or has acquired all or substantially all of the assets of any
Person. Each Grantor's state of incorporation or organization, type of
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organization and organizational I.D. number on the date hereof is set forth on
the Perfection Certificate. The exact legal name of each Grantor on the date
hereof is set forth on the Perfection Certificate.
4.4 BUSINESS LOCATIONS; AGENT FOR PROCESS. On the date hereof, each
Grantor's chief executive office, location of books and records and other places
of business are as listed on the Perfection Certificate. During the preceding
one-year period, no Grantor has had an office, place of business or agent for
service of process, other than as listed on the Perfection Certificate. All
tangible Collateral is and will at all times be kept by each Grantor in
accordance with Section 3.1(a).
4.5 TITLE TO PROPERTIES; PRIORITY OF LIENS. Each Grantor has good,
indefeasible and marketable title to and fee simple ownership of, or valid and
subsisting leasehold interests in, all of its real property, and good title to
all of the Collateral and all of its other property, in each case, free and
clear of all Liens except Permitted Liens. Each Grantor has paid or discharged
all lawful claims which, if unpaid, might become a Lien against any Grantors'
property that is not a Permitted Lien. The Liens granted to the Collateral Agent
hereunder are second priority Liens, subject only to Permitted Liens.
5. COVENANTS. For so long as there are any Class B Obligations
outstanding, each Grantor shall comply with the covenants contained in Article 4
of the Indenture to the extent the Issuer has agreed therein to cause the
Grantor so to act.
6. REMEDIES. Subject to the terms and conditions of the Intercreditor
Agreement, upon the occurrence and during the continuance of an Event of
Default, the Collateral Agent shall have and may exercise from time to time the
following other rights and remedies:
6.1 All of the rights and remedies of a secured party under the UCC or
under other applicable law, and all other legal and equitable rights to which
the Collateral Agent or the Class B Secured Parties may be entitled, all of
which rights and remedies shall be cumulative and shall be in addition to any
other rights or remedies contained in this Agreement or any of the other Class B
Security Documents, and none of which shall be exclusive.
6.2 The right to take immediate possession of the Collateral, and to
(i) require each Grantor and each of its Subsidiaries to assemble the
Collateral, at such Grantor's expense, and make it available to the Collateral
Agent at a place designated by the Collateral Agent which is reasonably
convenient to both parties, and (ii) enter any premises where any of the
Collateral shall be located and to keep and store the Collateral on said
premises until sold (and if said premises be the property of any Grantor or any
Subsidiary of any Grantor, such Grantor agrees not to charge, or permit any of
its Subsidiaries to charge, the Collateral Agent for storage thereof).
6.3 The right to sell or otherwise dispose of all or any Collateral in
its then condition, or after any further manufacturing or processing thereof, at
public or private sale or sales, with such notice as may be required by law, in
lots or in bulk, for cash or on credit, all as the Collateral Agent, in its sole
discretion, may deem advisable. The Collateral Agent may, at the Collateral
Agent's option, disclaim any and all warranties regarding the Collateral in
connection with any such sale. The Grantors agree that 10 days' written notice
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to the Grantors of any public or private sale or other disposition of Collateral
shall be reasonable notice thereof, and such sale shall be at such locations as
the Collateral Agent may designate in said notice. The Collateral Agent shall
have the right to conduct such sales on any Grantor's or any of its
Subsidiaries' premises, without charge therefor, and such sales may be adjourned
from time to time in accordance with applicable law. The Collateral Agent shall
have the right to sell, lease or otherwise dispose of the Collateral, or any
part thereof, for cash, credit or any combination thereof, and the Collateral
Agent, on behalf of the Class B Secured Parties, may purchase all or any part of
the Collateral at public or, if permitted by law, private sale and, in lieu of
actual payment of such purchase price, may set off the amount of such price
against the Obligations. If any deficiency shall arise, each Grantor shall
remain jointly and severally liable to the Collateral Agent and the Class B
Secured Parties therefor.
6.4 The Collateral Agent is hereby granted a license or other right to
use, without charge, each Grantor's and each of its Subsidiaries' labels,
patents, copyrights, licenses, rights of use of any name, trade secrets, trade
names, trademarks and advertising matter, or any property of a similar nature,
as it pertains to the Collateral, in completing, advertising for sale and
selling any Collateral and each Grantor's and each of its Subsidiaries' rights
under all licenses and all franchise agreements shall inure to the Collateral
Agent's benefit.
7. APPLICATION OF PROCEEDS. Subject to the Intercreditor Agreement, all
proceeds of Collateral received following either (i) acceleration of the
Obligations, including, without limitation, any automatic acceleration pursuant
to Section 6.02 of the Indenture or (ii) any exercise of rights and remedies
hereunder shall be allocated as provided in Section 5.02(a) of the Collateral
Agency Agreement.
8. POWER OF ATTORNEY. Subject to the Intercreditor Agreement, each
Grantor hereby irrevocably designates, makes, constitutes and appoints the
Collateral Agent (and all Persons designated by the Collateral Agent) as its
true and lawful attorney (and agent-in-fact), solely with respect to the matters
set forth in this Section 8, and the Collateral Agent, or the Collateral Agent's
agent, may, without notice to such Grantor and in such Grantor's or the
Collateral Agent's name, but at the cost and expense of the Grantors:
8.1 At such time or times as the Collateral Agent or said agent, in its
sole discretion, may determine, endorse such Grantor's name on any checks,
notes, acceptances, drafts, money orders or any other evidence of payment or
proceeds of the Collateral which come into the possession of the Collateral
Agent or under the Collateral Agent's control; and
8.2 At such time or times upon or after the occurrence and during the
continuance of an Event of Default, as the Collateral Agent or its agent in its
sole discretion may determine: (i) take control, in any manner, of any item of
payment or proceeds relating to any Collateral; (ii) receive, open and dispose
of all mail addressed to such Grantor and notify postal authorities to change
the address for delivery thereof to such address as the Collateral Agent may
designate; (iii) endorse the name of such Grantor upon any of the items of
payment or proceeds relating to any Collateral and deposit the same in the Class
B General Account; (iv) endorse the name of such Grantor upon any chattel paper,
document, instrument, invoice, freight xxxx, xxxx of lading or similar document
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or agreement relating to any Collateral; (v) use the information recorded on or
contained in any data processing equipment and computer hardware and Software
relating to any Collateral; (vi) make and adjust claims under policies of
insurance; and (vii) do all other acts and things necessary, in the Collateral
Agent's determination, to fulfill such Grantor's obligations under this
Agreement. The power of attorney granted hereby shall constitute a power coupled
with an interest and shall be irrevocable.
9. NOTICES. Except as otherwise provided in the Indenture, all notices,
requests and demands to or upon a party hereto, to be effective, shall be in
writing, return receipt requested, by personal delivery against receipt, by
overnight courier or by facsimile and, unless otherwise expressly provided
herein, shall be deemed to have been validly served, given, delivered or
received immediately when delivered against receipt, one Business Day after
deposit with an overnight courier or, in the case of facsimile notice, when
sent, addressed as follows:
If to the Collateral Agent: Wilmington Trust Company
Xxxxxx Square North,
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Capital Markets
Facsimile No.: 000-000-0000
With a copy to: Stroock & Stroock & Xxxxx LLP
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxx
Facsimile No.: 000-000-0000
If to any Grantor: Jacuzzi Brands, Inc.
Xxxxxxxx Tower - West Tower
000 Xxxxx Xxxxxxx Xxxxx
Xxxxx 0000
Xxxx Xxxx Xxxxx, XX 00000
Attention: Chief Financial Officer
Facsimile No.: 000-000-0000
With copies to Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx
Facsimile No.: 000-000-0000
or to such other address as each party may designate for itself by notice given
in accordance with this Section 9 or the Indenture.
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10. SEVERABILITY. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
11. AMENDMENTS. None of the terms or provisions of this Agreement may
be waived, amended, supplemented or otherwise modified except by a written
instrument executed by each Grantor and the Collateral Agent and in accordance
with (i) Section 4.15 of the Indenture and (ii) Article VIII of the Collateral
Agency Agreement.
12. REMEDIES CUMULATIVE. The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive of any
other rights or remedies provided by law.
13. SECTION HEADINGS. The Section and subsection headings used in this
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
14. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the successors and assigns of each Grantor, the
Collateral Agent and each Class B Secured Party.
15. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which counterparts taken together shall constitute but one and the
same instrument.
16. TIME OF ESSENCE. Time is of the essence of this Agreement.
17. INTERPRETATION No provision of this Agreement shall be construed
against or interpreted to the disadvantage of any party hereto by any court or
other governmental or judicial authority by reason of such party having or being
deemed to have structured or dictated such provision.
18. GOVERNING LAW. THIS AGREEMENT HAS BEEN NEGOTIATED, EXECUTED AND
DELIVERED IN AND SHALL BE DEEMED TO HAVE BEEN MADE IN NEW YORK, NEW YORK. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK; PROVIDED, HOWEVER, THAT IF ANY OF THE COLLATERAL SHALL BE
LOCATED IN ANY JURISDICTION OTHER THAN NEW YORK, THE LAWS OF SUCH JURISDICTION
SHALL GOVERN THE METHOD, MANNER AND PROCEDURE FOR FORECLOSURE OF THE COLLATERAL
AGENT'S LIEN UPON SUCH COLLATERAL AND THE ENFORCEMENT OF THE COLLATERAL AGENT'S
REMEDIES IN RESPECT OF SUCH COLLATERAL TO THE EXTENT THAT THE LAWS OF SUCH
JURISDICTION ARE DIFFERENT FROM OR INCONSISTENT WITH THE LAWS OF NEW YORK. AS
PART OF THE CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS OF ANY PRESENT
OR FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF THE GRANTORS, THE
COLLATERAL AGENT OR ANY OTHER CLASS B SECURED PARTY, EACH GRANTOR HEREBY
CONSENTS AND AGREES THAT THE SUPREME COURT OF NEW YORK COUNTY, NEW YORK, OR, AT
THE COLLATERAL AGENT'S OPTION, THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
11
DISTRICT OF NEW YORK, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE
ANY CLAIMS OR DISPUTES BETWEEN THE GRANTORS, ON THE ONE HAND, AND THE COLLATERAL
AGENT OR ANY OTHER CLASS B SECURED PARTY, ON THE OTHER HAND, PERTAINING TO THIS
AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT. EACH
GRANTOR EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY
ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH GRANTOR HEREBY WAIVES ANY
OBJECTION WHICH SUCH GRANTOR MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION,
IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF
SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH
GRANTOR HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER
PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH
SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO SUCH GRANTOR AT THE ADDRESS SET FORTH IN THIS AGREEMENT AND THAT
SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT
THEREOF OR 3 BUSINESS DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE
PREPAID. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT THE
RIGHT OF THE COLLATERAL AGENT OR ANY OTHER CLASS B SECURED PARTY TO SERVE LEGAL
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY
THE COLLATERAL AGENT OR ANY OTHER CLASS B SECURED PARTY OF ANY JUDGMENT OR ORDER
OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO
ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION.
19. WAIVERS BY GRANTORS. EACH GRANTOR WAIVES (i) THE RIGHT TO TRIAL BY
JURY (WHICH THE COLLATERAL AGENT AND ANY OTHER CLASS B SECURED PARTY ALSO
WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT
OF OR RELATED TO ANY OF THE CLASS B SECURITY DOCUMENTS, THE CLASS B OBLIGATIONS
OR THE COLLATERAL; (ii) PRESENTMENT, DEMAND AND PROTEST AND NOTICE OF
PRESENTMENT, PROTEST, DEFAULT, NON-PAYMENT, MATURITY, RELEASE, COMPROMISE,
12
SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIAL PAPER, ACCOUNTS,
CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS, CHATTEL PAPER AND GUARANTIES AT ANY
TIME HELD BY THE COLLATERAL AGENT OR ANY OTHER CLASS B SECURED PARTY ON WHICH
SUCH GRANTOR MAY IN ANY WAY BE LIABLE AND HEREBY RATIFIES AND CONFIRMS WHATEVER
THE COLLATERAL AGENT OR ANY OTHER CLASS B SECURED PARTY MAY DO IN THIS REGARD;
(iii) NOTICE PRIOR TO THE COLLATERAL AGENT'S TAKING POSSESSION OR CONTROL OF THE
COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO
ALLOWING THE COLLATERAL AGENT TO EXERCISE ANY OF THE COLLATERAL AGENT'S
REMEDIES; (iv) THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION LAWS;
(v) NOTICE OF ACCEPTANCE HEREOF AND (vi) EXCEPT AS PROHIBITED BY LAW, ANY RIGHT
TO CLAIM OR RECOVER ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR
ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. EACH GRANTOR
ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO THE
COLLATERAL AGENT'S ENTERING INTO THIS AGREEMENT AND THAT THE COLLATERAL AGENT
AND EACH OTHER CLASS B SECURED PARTY IS RELYING UPON THE FOREGOING WAIVERS IN
ITS FUTURE DEALINGS WITH EACH GRANTOR. EACH GRANTOR WARRANTS AND REPRESENTS THAT
IT HAS REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY
AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.
20. OBLIGATIONS JOINT AND SEVERAL. All obligations and liabilities of
the Grantors hereunder are joint and several.
13
IN WITNESS WHEREOF, the undersigned have caused this Agreement
to be duly executed and delivered as of the date first above written.
JACUZZI BRANDS, INC.,
by /s/ Xxxx Xxxxxxxxx
---------------------------------------------
Name: Xxxx Xxxxxxxxx
Title: Vice President
Each Subsidiary listed on Schedule I hereto,
by /s/ Xxxx Xxxxxxxxx
---------------------------------------------
Name: Xxxx Xxxxxxxxx
Title: Assistant Secretary
14
WILMINGTON TRUST COMPANY, not in its individual
capacity but solely as Collateral Agent,
by /s/ Xxxxx X. Xxxxxxxx, Xx.
---------------------------------------------
Name: Xxxxx X. Xxxxxxxx, Xx.
Title: Vice President
15
Schedule I
Asteria Company (f/k/a Elite Bath Company)
Bathcraft, Inc.
Xxxxxx Brothers Inc.
Xxxxxxxx Manufacturing Corp. (f/k/a Farberware Inc.)
Carlsbad Corp. (f/k/a Odyssey Sports, Inc.)
Compax Corp.
Eljer Industries, Inc.
Eljer Plumbingware, Inc.
Environmental Energy Company
Xxxx Concrete Products, Inc.
Gatsby Spas, Inc.
HL Capital Corp.
Jacuzzi Inc.
Jacuzzi Whirlpool Bath, Inc.
Jusi Holdings, Inc.
KLI, Inc. (f/k/a Xxxxxx Ladders, Inc.)
Krikles Canada U.S.A., Inc. (f/k/a Selkirk Canada U.S.A., Inc.)
Krikles Europe U.S.A., Inc. (f/k/a Selkirk Europe U.S.A., Inc.)
Krikles, Inc. (f/k/a Selkirk, Inc.)
Lokelani Development Corporation
Luxor Industries Inc.
Maili Kai Land Development Corporation
Mobilite, Inc.
Xxxxxx Universal Holdings Inc.
Outdoor Products LLC
PH Property Development Company
PLC Realty Inc. (f/k/a Prescolite Lite Controls, Inc.)
Redmont, Inc.
Rexair, Inc.
Rexair Holdings, Inc.
Sanitary - Dash Manufacturing Co., Inc.
SH 1 Inc.
Strategic Capital Management, Inc.
Strategic Membership Company
Streamwood Corporation (f/k/a Quantum Performance Films, Inc.)
Sundance Spas, Inc.
TA Liquidation Corp. (f/k/a Xxxxx Xxxxxx Golf Company)
Trimfoot Co.
TT Liquidation Corp.
UGE Liquidation Inc. (f/k/a W.K. 25, Inc.)
USI American Holdings, Inc.
USI Atlantic Corp.
USI Capital, Inc.
USI Funding, Inc.
16
USI Global Corp.
USI Properties, Inc.
USI Realty Corp.
Xxxx (Cayman Islands), Inc.
Xxxx Constructors, Inc. (f/k/a Advanco Constructors, Inc.)
Xxxx XXX Services, Inc. (f/k/a National Energy Production Corporation)
Xxxx Industries, Inc.,
Xxxx Pex, Inc.
Zurnacq of California, Inc.
Zurco, Inc.
17
EXHIBIT A
FORM OF PERFECTION CERTIFICATE
Reference is made to the Indenture dated as of July 15, 2003
(as amended, supplemented or otherwise modified from time to time, the
"INDENTURE"), among Jacuzzi Brands, Inc. (the "COMPANY"), the Subsidiary
Guarantors identified therein and Wilmington Trust Company (the "TRUSTEE").
Capitalized terms used but not defined herein have the meanings assigned in the
Indenture or the Collateral Agreements referred to therein, as applicable.]
The undersigned, a Financial Officer of the Company, hereby
certifies to the Collateral Agent and each other Secured Party as follows:
SECTION 1. NAMES. (a) Set forth in Schedule 1(a) hereto is (i)
the exact legal name of each Grantor, as such name appears in its document of
formation, (ii) each other legal name each Grantor has had in the past five
years, (iii) the date of the relevant change and (iv) the organizational
identification number, if any, issued by the jurisdiction of formation of each
Grantor that is a registered organization.
(b) Except as set forth in Schedule 1(b) hereto, no Grantor
has changed its identity or corporate structure in any way within the past five
years. Changes in identity or corporate structure would include mergers and
consolidations, as well as any change in the form, nature or jurisdiction of
corporate organization. If any such change has occurred, include in Schedule 1
the information required by Sections 1 and 2 of this certificate as to each
acquiree or constituent party to a merger or consolidation.
(c) Set forth in Schedule 1(c) hereto is a list of all other
names (including trade names or similar appellations) used by each Grantor or
any of its divisions or other business units in connection with the conduct of
its business or the ownership of its properties at any time during the past five
years.
SECTION 2. LOCATIONS. (a) Set forth in Schedule 2(a) hereto
opposite the name of each Grantor that is a registered organization is the
jurisdiction of formation of such Grantor.
(b) Set forth in Schedule 2(b) hereto opposite the name of
each Grantor is the address and county of the chief executive office of such
Grantor.
(c) Set forth in Schedule 2(c) hereto opposite the name of
each Grantor is the address and county of all locations where such Grantor
maintains any books or records relating to any Accounts Receivable and/or
General Intangibles (with each location at which chattel paper, if any, is kept
being indicated by an "*").
(d) Set forth in Schedule 2(d) hereto opposite the name of
each Grantor is the address and county of all locations where such Grantor
maintains any Inventory, Equipment and/or other Collateral not identified above.
(e) Set forth in Schedule 2(e) hereto opposite the name of
each Grantor is the address and county of all the places of business of such
Grantor not identified in paragraph (a), (b), (c) or (d) above.
(f) Set forth in Schedule 2(f) hereto opposite the name of
each Grantor are the names and addresses of all Persons other than such Grantor
that have possession of any of the Collateral of such Grantor.
SECTION 3. UNUSUAL TRANSACTIONS. All Accounts have been
originated by the Grantors and all Inventory has been acquired by the Grantors
in the ordinary course of business. other than Inventory having a fair market
value not exceeding $500,000 in the aggregate.
SECTION 4. UCC FILINGS. UCC financing statements in
substantially the form of Schedule 4 hereto have been prepared for filing in the
UCC filing office and, in the case of fixture filings, the applicable County
recorder's office, in each jurisdiction identified with respect to such Grantor
in Section 2 and Section 10, as applicable, hereof.
SECTION 5. STOCK OWNERSHIP AND OTHER EQUITY INTERESTS.
Attached hereto as Schedule 5 is a true and correct list of all the Equity
Interests of the Company and each Grantor and the record and beneficial owners
of such Equity Interests. Also set forth on Schedule 5 is each equity investment
of the Company and each Grantor that represents 50% or less of the equity of the
entity in which such investment was made.
SECTION 6. DEBT INSTRUMENTS. Attached hereto as Schedule 6 is
a true and correct list of all instruments, including any promissory notes, and
other evidence of indebtedness held by the Company and each Grantor that are
required to be pledged under the Class B Collateral Agreement, including all
intercompany notes between the Company and any Grantor or between any Grantor
and any other Grantor.
SECTION 7. ADVANCES. Attached hereto as Schedule 7 is (a) a
true and correct list of all advances made by the Company to any Grantor or made
by any Grantor or to any other Grantor (other than those identified on Schedule
7), which advances will be on and after the date hereof evidenced by one or more
intercompany notes pledged to the Collateral Agent under the Class B Collateral
Agreement and (b) a true and correct list of all unpaid intercompany transfers
of goods sold and delivered by or to the Company or any Grantor.
2
SECTION 8. MORTGAGE FILINGS. Attached hereto as Schedule 8 is
a true and correct list, with respect to each Mortgaged Property, of (a) the
exact name of the Person that owns such property as such name appears in its
certificate of incorporation or other organizational document, (b) if different
from the name identified pursuant to clause (a), the exact name of the current
record owner of such property reflected in the records of the filing office for
such property identified pursuant to the following clause and (c) the filing
office in which a Mortgage with respect to such property must be filed or
recorded in order for the Collateral Agent to obtain a perfected security
interest therein.
SECTION 9. INTELLECTUAL PROPERTY. Attached hereto as Schedule
9(A) in proper form for filing with the United States Patent and Trademark
Office is a is a true and correct list of each Grantor's Patents, Patent
Licenses, Trademarks and Trademark Licenses, including the name of the
registered owner, registration number and expiration date of each Patent, Patent
License, Trademark and Trademark License owned by any Grantor. Attached hereto
as Schedule 9(B) in proper form for filing with the United States Copyright
Office is a true and correct list of each Grantor's Copyrights and Copyright
Licenses, including the name of the registered owner, registration number and
expiration date of each Copyright or Copyright License owned by any Grantor.
SECTION 10. COMMERCIAL TORT CLAIMS. Attached hereto as
Schedule 10 is a true and correct list of commercial tort claims in excess of
$500,000 held by any Grantor, including a brief description thereof.
SECTION 11. DEPOSIT ACCOUNTS. Attached hereto as Schedule 11
is a true and correct list of deposit accounts maintained by each Grantor,
including the name and address of the depositary institution, the type of
account, and the account number.
3
IN WITNESS WHEREOF, the undersigned have duly executed this
certificate on this [__] day of [__].
JACUZZI BRANDS, INC.,
by
------------------------------------
Name:
Title: Chief Financial Officer
4
