EXHIBIT 10.4
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EXECUTION VERSION
PLEDGE AND SECURITY AGREEMENT
dated as of March 20, 2007
among
FEDDERS CORPORATION,
as Grantor,
FEDDERS NORTH AMERICA, INC.,
as Grantor,
EACH OF THE OTHER GRANTORS
FROM TIME TO TIME PARTY HERETO
and
XXXXXXX XXXXX CREDIT PARTNERS L.P.,
as Collateral Agent
SECTION 1. DEFINITIONS; GRANT OF SECURITY................................1
1.1 General Definitions...........................................1
1.2 Definitions; Interpretation...................................7
SECTION 2. GRANT OF SECURITY.............................................7
2.1 Grant of Security.............................................8
2.2 Certain Limited Exclusions....................................9
SECTION 3. SECURITY FOR OBLIGATIONS; GRANTORS REMAIN
LIABLE........................................................9
3.1 Security for Obligations......................................9
3.2 Continuing Liability Under Collateral.........................9
SECTION 4. REPRESENTATIONS AND WARRANTIES AND COVENANTS.................10
4.1 Generally....................................................10
4.2 Equipment and Inventory......................................13
4.3 Receivables..................................................15
4.4 Investment Related Property..................................16
4.5 Material Contracts...........................................21
4.6 Letter of Credit Rights......................................22
4.7 Intellectual Property........................................23
4.8 Commercial Tort Claims.......................................25
SECTION 5. ACCESS; RIGHT OF INSPECTION AND FURTHER ASSURANCES;
ADDITIONAL GRANTORS..........................................26
5.1 Access; Right of Inspection..................................26
5.2 Further Assurances...........................................26
5.3 Additional Grantors..........................................27
SECTION 6. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT..................27
6.1 Power of Attorney............................................27
6.2 No Duty on the Part of Collateral Agent or
Secured Parties..............................................28
SECTION 7. REMEDIES.....................................................28
7.1 Generally....................................................28
7.2 Application of Proceeds......................................30
7.3 Sales on Credit..............................................30
7.4 Deposit Accounts.............................................30
7.5 Investment Related Property..................................30
7.6 Intellectual Property........................................31
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7.7 Cash Proceeds................................................32
SECTION 8. COLLATERAL AGENT.............................................33
SECTION 9. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS..............33
SECTION 10. STANDARD OF CARE; COLLATERAL AGENT MAY PERFORM...............34
SECTION 11. MISCELLANEOUS................................................34
SCHEDULE 4.1 -- GENERAL INFORMATION
SCHEDULE 4.2 -- LOCATION OF EQUIPMENT AND INVENTORY
SCHEDULE 4.4 -- INVESTMENT RELATED PROPERTY
SCHEDULE 4.6 -- DESCRIPTION OF LETTERS OF CREDIT
SCHEDULE 4.7 -- INTELLECTUAL PROPERTY
SCHEDULE 4.8 -- COMMERCIAL TORT CLAIMS
EXHIBIT A -- PLEDGE SUPPLEMENT
EXHIBIT B -- TRADEMARK SECURITY AGREEMENT
EXHIBIT C -- COPYRIGHT SECURITY AGREEMENT
EXHIBIT D -- PATENT SECURITY AGREEMENT
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This PLEDGE AND SECURITY AGREEMENT, dated as of March 20, 2007 (this
"Agreement"), by FEDDERS CORPORATION ("Holdings"), FEDDERS NORTH AMERICA, INC.
("Company") and EACH OF THE UNDERSIGNED, whether as an original signatory hereto
or as an Additional Grantor (as herein defined) (together with Holdings and
Company, collectively the "Grantors") in favor of XXXXXXX XXXXX CREDIT PARTNERS,
L.P. ("GSCP"), as collateral agent for the Secured Parties (as herein defined)
(in such capacity as collateral agent, the "Collateral Agent").
RECITALS:
WHEREAS, reference is made to that certain Term Loan and Guaranty
Agreement, dated as of the date hereof (as it may be amended, restated,
supplemented or otherwise modified from time to time, the "Term Loan
Agreement"), by and among Holdings, Company, certain Subsidiaries of Holdings,
the Lenders party thereto from time to time (the "Lenders") and GSCP, as Sole
Lead Arranger, Sole Bookrunner, Sole Syndication Agent, Administrative Agent and
Collateral Agent;
WHEREAS, subject to the terms and conditions of the Term Loan
Agreement, certain Grantors may enter into one or more Hedge Agreements with one
or more Lender Counterparties;
WHEREAS, in consideration of the extensions of credit and other
accommodations of Lenders and Lender Counterparties as set forth in the Term
Loan Agreement and the Hedge Agreements, respectively, each Grantor has agreed
to secure such Grantor's obligations under the Credit Documents and the Hedge
Agreements as set forth herein; and
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, each Grantor and the Collateral Agent
agree as follows:
SECTION 1 DEFINITIONS; GRANT OF SECURITY.
1.1 General Definitions. In this Agreement, the following terms
shall have the following meanings:
"Additional Grantors" shall have the meaning assigned in Section 5.3.
"Agreement" shall have the meaning set forth in the preamble hereto.
"Assigned Agreements" shall mean all agreements and contracts to which
a Grantor is a party as of the date hereof, or to which a Grantor becomes a
party after the date hereof, including, without limitation, each Material
Contract, as each such agreement may be amended, supplemented or otherwise
modified from time to time.
"Canadian Grantor" shall mean a Grantor that is a Canadian Subsidiary.
"Cash Proceeds" shall have the meaning assigned in Section 7.7.
"Chattel Paper" shall mean all "chattel paper" as defined in Article 9
of the UCC, including, without limitation, "electronic chattel paper" or
"tangible chattel paper", as each term is defined in Article 9 of the UCC.
"Collateral" shall have the meaning assigned in Section 2.1.
"Collateral Account" shall mean any account established by the
Collateral Agent.
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"Collateral Agent" shall have the meaning set forth in the preamble.
"Collateral Records" shall mean books, records, ledger cards, files,
correspondence, customer lists, blueprints, technical specifications, manuals,
computer software, computer printouts, tapes, disks and related data processing
software and similar items that at any time evidence or contain information
relating to any of the Collateral or are otherwise necessary or helpful in the
collection thereof or realization thereupon.
"Collateral Support" shall mean all property (real or personal)
assigned, hypothecated or otherwise securing any Collateral and shall include
any security agreement or other agreement granting a lien or security interest
in such real or personal property.
"Commercial Tort Claims" shall mean all "commercial tort claims" as
defined in Article 9 of the UCC, including, without limitation, all commercial
tort claims listed on Schedule 4.8 (as such schedule may be amended or
supplemented from time to time).
"Commodities Accounts" shall mean all (i) "commodity accounts" as
defined in Article 9 of the UCC, (ii) "futures accounts" as defined in the UCC
and (iii) accounts listed on Schedule 4.4 under the heading "Commodities
Accounts" or "Futures Accounts" (as such schedule may be amended or supplemented
from time to time).
"Company" shall have the meaning set forth in the preamble.
"Controlled Foreign Corporation" shall mean "controlled foreign
corporation" as defined in the Tax Code.
"Copyright Licenses" shall mean any and all agreements providing for
the granting of any right in or to Copyrights (whether such Grantor is licensee
or licensor thereunder) including, without limitation, each agreement referred
to in Schedule 4.7(B) (as such schedule may be amended or supplemented from time
to time).
"Copyrights" shall mean all United States, Canadian and other foreign
copyrights (including Community designs), including but not limited to
copyrights in software and databases, and all Mask Works (as defined under 17
U.S.C. 901 of the U.S. Copyright Act), whether registered or unregistered, and,
with respect to any and all of the foregoing: (i) all registrations and
applications therefor including, without limitation, the registrations and
applications referred to in Schedule 4.7(A) (as such schedule may be amended or
supplemented from time to time), (ii) all extensions and renewals thereof, (iii)
all rights corresponding thereto throughout the world, (iv) all rights to xxx
for past, present and future infringements thereof, and (v) all Proceeds of the
foregoing, including, without limitation, licenses, royalties, income, payments,
claims, damages and proceeds of suit.
"Credit Documents" shall mean the Term Loan Agreement and each Hedge
Agreement.
"Deposit Accounts" (i) shall mean all "deposit accounts" as defined in
Article 9 of the UCC, (ii) all "Deposit Accounts" as defined in the Term Loan
Agreement and (iii) all of the accounts listed on Schedule 4.4 under the heading
"Deposit Accounts" (as such schedule may be amended or supplemented from time to
time).
"Deposit Account Control Agreement" shall mean an agreement governing a
Deposit Account in such form as may be reasonably agreed to by the Collateral
Agent, as it may be amended,
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supplemented or otherwise modified from time to time, executed by the relevant
Grantor, the Collateral Agent, the relevant financial institution and each
other agent party thereto.
"Documents" shall mean all "documents" as defined in Article 9 of the
UCC and "documents of title" as defined in the UCC.
"Equipment" shall mean (i) all "equipment" as defined in Article 9 of
the UCC, (ii) all machinery, manufacturing equipment, data processing equipment,
computers, office equipment, furnishings, furniture, appliances, fixtures and
tools (in each case, regardless of whether characterized as equipment under the
UCC) and (iii) all accessions or additions thereto, all parts thereof, whether
or not at any time of determination incorporated or installed therein or
attached thereto, and all replacements therefor, wherever located, now or
hereafter existing, including any fixtures.
"Financial Assets" shall mean all "financial assets" as defined in the
UCC.
"General Intangibles" (i) shall mean all "general intangibles" as
defined in Article 9 of the UCC and "intangibles" as defined in the UCC,
including "payment intangibles" also as defined in Article 9 of the UCC and (ii)
shall include, without limitation, all interest rate or currency protection or
hedging arrangements, all tax refunds, all licenses, permits, concessions and
authorizations, all Assigned Agreements and all Intellectual Property (in each
case, regardless of whether characterized as general intangibles or intangibles
under the UCC).
"Goods" (i) shall mean all "goods" as defined in Article 9 of the UCC
and (ii) shall include, without limitation, all Inventory and Equipment (in each
case, regardless of whether characterized as goods under the UCC).
"Grantors" shall have the meaning set forth in the preamble hereto.
"GSCP" shall have the meaning set forth in the preamble hereto.
"Holdings" shall have the meaning set forth in the recitals hereto.
"Indemnitee" shall mean the Collateral Agent, and its Affiliates'
officers, partners, directors, trustees, employees and agents.
"Instruments" shall mean all "instruments" as defined in Article 9 of
the UCC.
"Insurance" shall mean (i) all insurance policies covering any or all
of the Collateral (regardless of whether the Collateral Agent is the loss payee
thereof) and (ii) any key man life insurance policies.
"Intellectual Property" shall mean, collectively, the Copyrights, the
Copyright Licenses, the Patents, the Patent Licenses, the Trademarks, the
Trademark Licenses, the Trade Secrets, and the Trade Secret Licenses.
"Intellectual Property Security Agreement" shall mean (i) each
Trademark security agreement executed by a relevant Grantor and the Collateral
Agent, substantially in the form of Exhibit B, (ii) each Copyright security
agreement executed by a relevant Grantor and the Collateral Agent, substantially
in the form of Exhibit C, and (iii) each Patent security agreement executed by a
relevant Grantor and the Collateral Agent, substantially in the form of Exhibit
D, as the context requires, in each case, as the same may be amended,
supplemented or otherwise modified from time to time.
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"Inventory" shall mean (i) all "inventory" as defined in Article 9 of
the UCC and (ii) all goods held for sale, lease, display or demonstration or to
be furnished under contracts of service or so leased or furnished, all raw
materials, work in process, finished goods, and materials used or consumed in
the manufacture, packing, shipping, advertising, selling, leasing, furnishing or
production of such inventory or otherwise used or consumed in any Grantor's
business; and all goods described above which are returned to or repossessed by
any Grantor, all computer programs embedded in any goods and all accessions
thereto and products thereof (in each case, regardless of whether characterized
as inventory under the UCC).
"Investment Accounts" shall mean the Collateral Account, Securities
Accounts, Commodities Accounts and Deposit Accounts.
"Investment Related Property" shall mean (i) all "investment property"
(as such term is defined in Article 9 of the UCC) and (ii) all of the following
(regardless of whether classified as investment property under the UCC): all
Pledged Equity Interests, Pledged Debt, the Investment Accounts, certificates of
deposit and Financial Assets.
"Lenders" shall have the meaning set forth in the recitals hereto.
"Letter of Credit Right" shall mean "letter-of-credit right" as defined
in Article 9 of the UCC.
"Money" shall mean "money" as defined in the UCC.
"Non-Assignable Contract" shall mean any agreement, contract or license
to which any Grantor is a party that by its terms purports to restrict or
prevent the assignment or granting of a security interest therein (either by its
terms or by any federal, state or provincial statutory prohibition or otherwise
irrespective of whether such prohibition or restriction is enforceable under
Section 9-406 through 409 of the UCC).
"Non-Assignable Material Contract" shall mean any Non-Assignable
Contract to which Holdings or any of its Subsidiaries is a party (other than the
Credit Documents) for which breach, nonperformance, cancellation or failure to
renew could reasonably be expected to have a Material Adverse Effect.
"Patent Licenses" shall mean all agreements providing for the granting
of any right in or to Patents (whether such Grantor is licensee or licensor
thereunder) including, without limitation, each agreement referred to in
Schedule 4.7(D) (as such schedule may be amended or supplemented from time to
time).
"Patents" shall mean all United States, Canadian and other foreign
patents and certificates of invention, or similar industrial property rights,
and applications for any of the foregoing, including, but not limited to: (i)
each patent and patent application referred to in Schedule 4.7(C) hereto (as
such schedule may be amended or supplemented from time to time), (ii) all
reissues, divisions, continuations, continuations-in-part, extensions, renewals,
and reexaminations thereof, (iii) all rights corresponding thereto throughout
the world, (iv) all inventions and improvements described therein, (v) all
rights to xxx for past, present and future infringements thereof, (vi) all
licenses, claims, damages, and proceeds of suit arising therefrom, and (vii) all
Proceeds of the foregoing, including, without limitation, licenses, royalties,
income, payments, claims, damages, and proceeds of suit.
"Pledge Supplement" shall mean any supplement to this agreement in
substantially the form of Exhibit A.
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"Pledged Debt" shall mean all indebtedness owed to such Grantor,
including, without limitation, all Indebtedness described on Schedule 4.4(A)
under the heading "Pledged Debt" (as such schedule may be amended or
supplemented from time to time), issued by the obligors named therein, the
instruments evidencing such Indebtedness, and all interest, cash, instruments
and other property or proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such
Indebtedness.
"Pledged Equity Interests" shall mean all Pledged Stock, Pledged LLC
Interests, Pledged Partnership Interests and Pledged Trust Interests.
"Pledged LLC Interests" shall mean all interests in any limited
liability company including, without limitation, all limited liability company
interests listed on Schedule 4.4(A) under the heading "Pledged LLC Interests"
(as such schedule may be amended or supplemented from time to time) and the
certificates, if any, representing such limited liability company interests and
any interest of such Grantor on the books and records of such limited liability
company or on the books and records of any securities intermediary pertaining to
such interest and all dividends, distributions, cash, warrants, rights, options,
instruments, securities and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of such limited liability company interests.
"Pledged Partnership Interests" shall mean all interests in any general
partnership, limited partnership, limited liability partnership or other
partnership including, without limitation, all partnership interests listed on
Schedule 4.4(A) under the heading "Pledged Partnership Interests" (as such
schedule may be amended or supplemented from time to time) and the certificates,
if any, representing such partnership interests and any interest of such Grantor
on the books and records of such partnership or on the books and records of any
securities intermediary pertaining to such interest and all dividends,
distributions, cash, warrants, rights, options, instruments, securities and
other property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such partnership
interests.
"Pledged Stock" shall mean all shares of capital stock owned by such
Grantor, including, without limitation, all shares of capital stock described on
Schedule 4.4(A) under the heading "Pledged Stock" (as such schedule may be
amended or supplemented from time to time), and the certificates, if any,
representing such shares and any interest of such Grantor in the entries on the
books of the issuer of such shares or on the books of any securities
intermediary pertaining to such shares, and all dividends, distributions, cash,
warrants, rights, options, instruments, securities and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such shares.
"Pledged Trust Interests" shall mean all interests in a Delaware
business trust or other trust including, without limitation, all trust interests
listed on Schedule 4.4(A) under the heading "Pledged Trust Interests" (as such
schedule may be amended or supplemented from time to time) and the certificates,
if any, representing such trust interests and any interest of such Grantor on
the books and records of such trust or on the books and records of any
securities intermediary pertaining to such interest and all dividends,
distributions, cash, warrants, rights, options, instruments, securities and
other property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such trust interests.
"Proceeds" shall mean (i) all "proceeds" as defined in Article 9 of the
UCC, (ii) payments or distributions made with respect to any Investment Related
Property and (iii) whatever is receivable or received when Collateral or
proceeds are sold, exchanged, collected or otherwise disposed of, whether such
disposition is voluntary or involuntary.
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"Receivables" shall mean all rights to payment, whether or not earned
by performance, for goods or other property sold, leased, licensed, assigned or
otherwise disposed of, or services rendered or to be rendered, including,
without limitation all such rights constituting or evidenced by any Account,
Chattel Paper, Instrument, General Intangible or Investment Related Property,
together with all of Grantor's rights, if any, in any goods or other property
giving rise to such right to payment and all Collateral Support and Supporting
Obligations related thereto and all Receivables Records.
"Receivables Records" shall mean (i) all original copies of all
documents, instruments or other writings or electronic records or other Records
evidencing the Receivables, (ii) all books, correspondence, credit or other
files, Records, ledger sheets or cards, invoices, and other papers relating to
Receivables, including, without limitation, all tapes, cards, computer tapes,
computer discs, computer runs, record keeping systems and other papers and
documents relating to the Receivables, whether in the possession or under the
control of Grantor or any computer bureau or agent from time to time acting for
Grantor or otherwise, (iii) all evidences of the filing of financing statements
and the registration of other instruments in connection therewith, and
amendments, supplements or other modifications thereto, notices to other
creditors or secured parties, and certificates, acknowledgments, or other
writings, including, without limitation, lien search reports, from filing or
other registration officers, (iv) all credit information, reports and memoranda
relating thereto and (v) all other written or nonwritten forms of information
related in any way to the foregoing or any Receivable.
"Record" shall have the meaning specified in Article 9 of the UCC.
"Revolving Credit Facility Pledge and Security Agreement" shall mean
that certain pledge and security agreement, dated as of the date hereof, between
Bank of America, N.A., as agent for the Revolving Credit Facility Secured
Parties and each Grantor.
"Secured Obligations" shall have the meaning assigned in Section 3.1.
"Secured Parties" shall mean the Agents, Lenders and the Lender
Counterparties and shall include, without limitation, all former Agents, Lenders
and Lender Counterparties to the extent that any Obligations owing to such
Persons were incurred while such Persons were Agents, Lenders or Lender
Counterparties and such Obligations have not been paid or satisfied in full.
"Securities Accounts" (i) shall mean all "securities accounts" as
defined in Article 8 of the UCC and (ii) shall include, without limitation, all
of the accounts listed on Schedule 4.4(A) under the heading "Securities
Accounts" (as such schedule may be amended or supplemented from time to time).
"Securities Account Control Agreement" shall mean an agreement
governing a Securities Account or a Commodities Account in such form as may be
agreed to by the Collateral Agent, as it may be amended, supplemented or
otherwise modified from time to time, executed by the relevant Grantor, the
Collateral Agent, the relevant Approved Securities Intermediary and each other
agent party thereto.
"Supporting Obligation" shall mean all "supporting obligations" as
defined in Article 9 of the UCC and includes any guarantee, indemnitee or other
obligation of any Person in respect of or related to any Receivables.
"Tax Code" shall mean the United States Internal Revenue Code of 1986,
as amended from time to time.
"Term Loan Agreement" shall have the meaning set forth in the recitals
hereto.
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"Trademark Licenses" shall mean any and all agreements providing for
the granting of any right in or to Trademarks (whether such Grantor is licensee
or licensor thereunder) including, without limitation, each agreement referred
to in Schedule 4.7(F) (as such schedule may be amended or supplemented from time
to time).
"Trademarks" shall mean all United States, Canadian and other foreign
trademarks, trade names, corporate names, company names, business names,
fictitious business names, Internet domain names, service marks, certification
marks, collective marks, logos, other source or business identifiers, designs
and general intangibles of a like nature, all registrations and applications for
any of the foregoing including, but not limited to: (i) the registrations and
applications referred to in Schedule 4.7(E) (as such schedule may be amended or
supplemented from time to time), (ii) all extensions or renewals of any of the
foregoing, (iii) all of the goodwill of the business connected with the use of
and symbolized by the foregoing, (iv) the right to xxx for past, present and
future infringement or dilution of any of the foregoing or for any injury to
goodwill, and (v) all Proceeds of the foregoing, including, without limitation,
licenses, royalties, income, payments, claims, damages, and proceeds of suit.
"Trade Secret Licenses" shall mean any and all agreements providing for
the granting of any right in or to Trade Secrets (whether such Grantor is
licensee or licensor thereunder) including, without limitation, each agreement
referred to in Schedule 4.7(G) (as such schedule may be amended or supplemented
from time to time).
"Trade Secrets" shall mean all trade secrets and all other confidential
or proprietary information and know-how whether or not such Trade Secret has
been reduced to a writing or other tangible form, including all documents and
things embodying, incorporating, or referring in any way to such Trade Secret,
including but not limited to: (i) the right to xxx for past, present and future
misappropriation or other violation of any Trade Secret, and (ii) all Proceeds
of the foregoing, including, without limitation, licenses, royalties, income,
payments, claims, damages, and proceeds of suit.
"UCC" shall mean the Uniform Commercial Code as in effect from time to
time in the State of New York or, when the context implies, the Uniform
Commercial Code as in effect from time to time in any other applicable
jurisdiction; provided that where the perfection, effect of perfection or
non-perfection, priority or enforcement of any Lien granted in Collateral owned
by a Canadian Subsidiary hereunder is governed by the laws of the Province of
Ontario, "UCC" shall include the Personal Property Security Act (Ontario) and
the Securities Transfer Act, 2006 (Ontario), in each case as in effect from time
to time (collectively, the "PPSA"), as the context requires, and section and
article references to the UCC shall include the analogous or similar provisions
of the PPSA.
"United States" shall mean the United States of America.
1.2 Definitions; Interpretation. All capitalized terms used herein
(including the preamble and recitals hereto) and not otherwise defined herein
shall have the meanings ascribed thereto in the Term Loan Agreement or, if not
defined therein, in the UCC. References to "Sections," "Exhibits" and
"Schedules" shall be to Sections, Exhibits and Schedules, as the case may be,
of this Agreement unless otherwise specifically provided. Section headings in
this Agreement are included herein for convenience of reference only and shall
not constitute a part of this Agreement for any other purpose or be given any
substantive effect. Any of the terms defined herein may, unless the context
otherwise requires, be used in the singular or the plural, depending on the
reference. The use herein of the word "include" or "including", when following
any general statement, term or matter, shall not be construed to limit such
statement, term or matter to the specific items or matters set forth
immediately following such word or to similar items or matters, whether or not
nonlimiting language (such as "without limitation" or "but not limited to" or
words of similar import) is used with reference thereto, but rather shall be
deemed to refer
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to all other items or matters that fall within the broadest possible scope of
such general statement, term or matter. If any conflict or inconsistency
exists between this Agreement and the Term Loan Agreement, the Term Loan
Agreement shall govern. All references herein to provisions of the UCC shall
include all successor provisions under any subsequent version or amendment to
any Article of the UCC.
SECTION 2 GRANT OF SECURITY.
2.1 Grant of Security. Each Grantor hereby grants to the Collateral Agent
a security interest in and continuing lien on all of such Grantor's right,
title and interest in, to and under all personal property of such Grantor
including, but not limited to the following, in each case whether now owned or
existing or hereafter acquired or arising and wherever located (all of which
being hereinafter collectively referred to as the "Collateral"):
(a) Accounts;
(b) Chattel Paper;
(c) Deposit Accounts;
(d) Documents;
(e) Equipment;
(f) General Intangibles;
(g) Goods;
(h) Instruments;
(i) Insurance;
(j) Intellectual Property;
(k) Inventory;
(l) Investment Related Property;
(m) Letter of Credit Rights;
(n) Money;
(o) Receivables and Receivables Records;
(p) Commercial Tort Claims;
(q) to the extent not otherwise included above, all Collateral
Records, Collateral Support and Supporting Obligations relating to any of the
foregoing;
(r) all personal property of any Grantor held by the Collateral
Agent or any other Secured Party, including all property of every description,
in the possession or custody of or in transit to the Collateral Agent or such
Secured Party for any purpose, including safekeeping, collection or pledge,
for the account of such Grantor or as to which such Grantor may have any right
or power;
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(s) all other Goods and personal property of any Grantor, whether
tangible or intangible and wherever located; and
(t) all Proceeds, products, accessions, rents and profits of or in
respect of any of the foregoing.
2.2 Certain Limited Exclusions. Notwithstanding anything herein to the
contrary, in no event shall the Collateral include or the security interest
granted under Section 2.1 hereof attach to (a) any lease, license, contract,
property rights or agreement to which any Grantor is a party or any of its
rights or interests thereunder if and for so long as the grant of such
security interest shall constitute or result in (i) the abandonment,
invalidation or unenforceability of any right, title or interest of any
Grantor therein or (ii) in a breach or termination pursuant to the terms of,
or a default under, any such lease, license, contract property rights or
agreement (other than to the extent that any such term would be rendered
ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC (or
any successor provision or provisions) of any relevant jurisdiction or any
other applicable law (including the Bankruptcy Code) or principles of equity),
provided however that the Collateral shall include and such security interest
shall attach immediately at such time as the condition causing such
abandonment, invalidation or unenforceability shall be remedied and to the
extent severable, shall attach immediately to any portion of such Lease,
license, contract, property rights or agreement that does not result in any of
the consequences specified in (i) or (ii) above; (b) any of the outstanding
Capital Stock of a Controlled Foreign Corporation (other than a Canadian
Subsidiary) in excess of 66% of the voting Capital Stock of such Controlled
Foreign Corporation; provided that immediately upon the amendment of the Tax
Code to allow the pledge of a greater percentage of the voting Capital Stock
in a Controlled Foreign Corporation, the Collateral shall include, and the
security interest granted by each Grantor shall attach to, such greater
percentage of the voting Capital Stock of each Controlled Foreign Corporation;
(c) any trademark application filed in the United States Patent and Trademark
Office on the basis of ant Grantor's "intent-to-use" such trademark pursuant
to Section 1(b) of the Xxxxxx Act (15 U.S.C. 1501), unless and until evidence
of use of the Trademark has been filed with the United States Patent and
Trademark Office pursuant to Section 1(c) or 1(d) of the Xxxxxx Act (15 U.S.C.
1501, et. seq.); or (d) the last day of the term of any lease or agreement
therefor, but upon the enforcement of the security interest, the applicable
Grantor shall stand possessed of such last day in trust to assign the same to
any person acquiring such term. Any Grantor's grant of security in trade-marks
(as defined in the Trade-marks Act (Canada)) under this Agreement shall be
limited to a grant by such Grantor of a security interest in all of such
Grantor's right, title and interest in such trade-marks.
SECTION 3. SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE.
3.1 Security for Obligations. This Agreement secures, and the Collateral
is collateral security for, the prompt and complete payment or performance in
full when due, whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise (including the payment of
amounts that would become due but for the operation of the automatic stay
under Section 362(a) of the Bankruptcy Code, 11 U.S.C. ss.362(a) (and any
successor provision thereof) or under any other applicable bankruptcy,
insolvency or similar law now or hereafter in effect), of all Obligations of
every Grantor (the "Secured Obligations").
3.2 Continuing Liability Under Collateral. Notwithstanding anything
herein to the contrary, (a) each Grantor shall remain liable for all
obligations under the Collateral and nothing contained herein is intended or
shall be a delegation of duties to the Collateral Agent or any Secured Party,
(b) each Grantor shall remain liable under each of the agreements included in
the Collateral, including, without limitation, any agreements relating to
Pledged Partnership Interests or Pledged LLC Interests, to perform all of the
obligations undertaken by it thereunder all in accordance with and pursuant
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to the terms and provisions thereof and neither the Collateral Agent nor any
Secured Party shall have any obligation or liability under any of such
agreements by reason of or arising out of this Agreement or any other document
related thereto nor shall the Collateral Agent nor any other Secured Party
have any obligation to make any inquiry as to the nature or sufficiency of any
payment received by it or have any obligation to take any action to collect or
enforce any rights under any agreement included in the Collateral, including,
without limitation, any agreements relating to Pledged Partnership Interests
or Pledged LLC Interests, and (c) the exercise by the Collateral Agent of any
of its rights hereunder shall not release any Grantor from any of its duties
or obligations under the contracts and agreements included in the Collateral.
SECTION 4. REPRESENTATIONS AND WARRANTIES AND COVENANTS.
4.1 Generally.
(a) Representations and Warranties. Each Grantor hereby represents
and warrants, on the Closing Date, that:
(i) it owns the Collateral purported to be owned by it or
otherwise has the rights it purports to have in each item of Collateral
and, as to all Collateral whether now existing or hereafter acquired, will
continue to own or have such rights in each item of the Collateral, in each
case free and clear of any and all Liens, rights or claims of all other
Persons, including, without limitation, Liens arising as a result of such
Grantor becoming bound (as a result of merger or otherwise) as debtor under
a security agreement entered into by another Person, other than Permitted
Liens;
(ii) it has indicated on Schedule 4.1(A) (as such schedule may be
amended or supplemented from time to time): (w) the type of organization of
such Grantor, (x) the jurisdiction of organization of such Grantor, (y) its
organizational identification number and (z) the jurisdiction where the
chief executive office or its sole place of business is (or the principal
residence if such Grantor is a natural person).
(iii) the full legal name of such Grantor (including any French
form of name if such Grantor is a Canadian Subsidiary), is as set forth on
Schedule 4.1(A) and it has not done in the last five (5) years, and does
not do, business under any other name (including any trade name or
fictitious business name) except for those names set forth on Schedule
4.1(B) (as such schedule may be amended or supplemented from time to time);
(iv) except as provided on Schedule 4.1(C), it has not changed
its name, jurisdiction of organization, chief executive office or sole
place of business (or principal residence if such Grantor is a natural
person) or its corporate structure in any way (e.g., by merger,
amalgamation, consolidation, change in corporate form or otherwise) within
the past five (5) years;
(v) Except as described on Schedule 4.1(D), such Grantor is not
bound (whether by contract or by operation of law) by a security agreement
entered into by another Person, which has not heretofore been terminated;
(vi) with respect to each agreement identified on Schedule
4.1(D), it has indicated on Schedule 4.1 (A) and Schedule 4.1(B) the
information required pursuant to Section 4.1(a)(ii), (iii) and (iv) with
respect to the debtor under each such agreement;
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(vii) (u) upon the filing of all UCC financing statements naming
each Grantor as "debtor" and the Collateral Agent as "secured party" and
describing the Collateral in the filing offices set forth opposite such
Grantor's name on Schedule 4.1(E) hereof (as such schedule may be amended
or supplemented from time to time) and other filings delivered by each
Grantor, (v) upon delivery of all Instruments, Chattel Paper and
certificated Pledged Equity Interests and Pledged Debt, (w) upon sufficient
identification of Commercial Tort Claims, (x) upon execution of a control
agreement establishing the Collateral Agent's "control" (within the meaning
of Section 8-106, 9-106 or 9-104 of the UCC, as applicable) with respect to
any Investment Account, (y) upon consent of the issuer with respect to
Letter of Credit Rights, and (z) to the extent not subject to Article 9 of
the UCC, upon recordation of the security interests granted hereunder in
Patents, Trademarks and Copyrights in the applicable intellectual property
registries, including but not limited to the United States Patent and
Trademark Office, the United States Copyright Office and the Canadian
Intellectual Property Office, the security interests granted to the
Collateral Agent hereunder constitute valid and perfected First Priority
Liens on all of the Fixed Asset Collateral (other than vehicles) and valid
and perfected Second Priority Liens on all of the Current Asset Collateral
(other than Deposit Accounts and Securities Accounts not required to be
subject to a Deposit Account Control Agreement or a Securities Account
Control Agreement, respectively, under Section 5.15(a) of the Term Loan
Agreement) (subject in the case of priority only to Permitted Liens having
priority over the security interests granted to the Collateral Agent
hereunder by operation of law); provided, however, that additional filings
in the United States Copyright Office may be necessary with respect to the
perfection of the Collateral Agent's Lien in United States registrations
and applications for Copyrights which are filed by, issued to, or acquired
by a Grantor after the date hereof and, provided further, that additional
filings and/or other actions may be required to perfect the Collateral
Agent's Lien in Intellectual Property Collateral which is created under the
laws of a jurisdiction outside the United States or Canada;
(viii) all actions and consents, including all filings, notices,
registrations and recordings necessary or desirable for the exercise by the
Collateral Agent of the voting or other rights provided for in this
Agreement or the exercise of remedies in respect of the Collateral have
been made or obtained;
(ix) other than the financing statements filed in favor of the
Collateral Agent, no effective UCC financing statement, fixture filing or
other instrument similar in effect under any applicable law covering all or
any part of the Collateral is on file in any filing or recording office
except for (x) financing statements for which proper termination statements
have been delivered to the Collateral Agent for filing and (y) financing
statements filed in connection with Permitted Liens;
(x) no authorization, approval or other action by, and no notice
to or filing with, any Governmental Authority or regulatory body (in the
case of Capital Stock issued by any Foreign Subsidiary, to the best of such
Grantor's knowledge) is required for either (i) the pledge or grant by any
Grantor of the Liens purported to be created in favor of the Collateral
Agent hereunder or (ii) the exercise by Collateral Agent of any rights or
remedies in respect of any Collateral (whether specifically granted or
created hereunder or created or provided for by applicable law), except (A)
for the filings contemplated by clause (vii) above and (B) as may be
required, in connection with the disposition of any Investment Related
Property, by laws generally affecting the offering and sale of Securities;
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(xi) all information supplied by any Grantor with respect to any
of the Collateral (in each case taken as a whole with respect to any
particular Collateral) is accurate and complete in all material respects;
(xii) none of the Collateral constitutes, or is the Proceeds of,
"farm products" (as defined in the UCC);
(xiii) it does not own any "as extracted collateral" (as defined
in the UCC) or any timber to be cut;
(xiv) except as described on Schedule 4.1(D) or as otherwise
permitted by the Term Loan Agreement, such Grantor has not become bound as
a debtor, either by contract or by operation of law, by a security
agreement previously entered into by another Person; and
(xv) such Grantor has been duly organized as an entity of the
type as set forth opposite such Grantor's name on Schedule 4.1(A) solely
under the laws of the jurisdiction as set forth opposite such Grantor's
name on Schedule 4.1(A) and remains duly existing as such. Such Grantor has
not filed any certificates of domestication, transfer or continuance in any
other jurisdiction.
(b) Covenants and Agreements. Each Grantor hereby covenants and
agrees that:
(i) except for the security interest created by this Agreement,
it shall not create or suffer to exist any Lien upon or with respect to any
of the Collateral, except Permitted Liens, and such Grantor shall maintain
the security interest created by this Agreement as a perfected security
interest having at least the priority described in Section 4.1(a)(vii) and
shall defend the Collateral, such security interest and such priority,
against all Persons at any time disputing such security interest or the
priority thereof;
(ii) it shall not produce, use or permit any Collateral to be
used unlawfully or in violation of any provision of this Agreement, the
Intercreditor Agreement or any applicable statute, regulation or ordinance
or any policy of insurance covering the Collateral;
(iii) it shall not change such Grantor's name, identity,
corporate structure (e.g., by merger, amalgamation, consolidation, change
in corporate form or otherwise), sole place of business (or principal
residence if such Grantor is a natural person), chief executive office,
type of organization or jurisdiction of organization or establish any trade
names unless it shall have (a) notified the Collateral Agent in writing, by
executing and delivering to the Collateral Agent a completed Pledge
Supplement, substantially in the form of Exhibit A attached hereto,
together with all Supplements to Schedules thereto, at least fifteen (15)
Business Days prior to any such change or establishment, identifying such
new proposed name, identity, corporate structure, sole place of business
(or principal residence if such Grantor is a natural person), chief
executive office, jurisdiction of organization or trade name and providing
such other information in connection therewith as the Collateral Agent may
reasonably request and (b) taken all actions necessary or advisable to
maintain the continuous validity, perfection and the same or better
priority of the Collateral Agent's security interest in the Collateral
intended to be granted and agreed to hereby;
(iv) if the Collateral Agent or any Secured Party gives value to
enable Grantor to acquire rights in or the use of any Collateral, it shall
use such value for such purposes and such Grantor further agrees that
repayment of any Obligation shall apply on a "first-in, first-out"
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basis so that the portion of the value used to acquire rights in
any Collateral shall be paid in the chronological order such Grantor
acquired rights therein;
(v) upon such Grantor or any officer of such Grantor obtaining
knowledge thereof, it shall promptly notify the Collateral Agent in writing
of any event that may have a Material Adverse Effect on the value of the
Collateral or any portion thereof, the ability of any Grantor or the
Collateral Agent to dispose of the Collateral or any portion thereof, or
the rights and remedies of the Collateral Agent in relation thereto,
including, without limitation, the levy of any legal process against the
Collateral or any portion thereof;
(vi) it shall bear and pay all expenses of protecting, storing,
warehousing, insuring, handling, maintaining and shipping any Collateral
and all other payments required to be made by Collateral Agent to any
Person to realize upon any Collateral;
(vii) Collateral Agent shall not be liable or responsible in any
way for the safekeeping of any Collateral, for any loss or damage thereto
(except for reasonable care in its custody while Collateral is in
Collateral Agent's actual possession), for any diminution in the value
thereof, or for any act or default of any warehouseman, carrier, forwarding
agency or other Person whatsoever, but the same shall be at Grantor's sole
risk;
(viii) it shall not take or permit any action which could impair
the Collateral Agent's rights in the Collateral except as otherwise in
accordance with the Intercreditor Agreement; and
(ix) it shall not sell, transfer or assign (by operation of law
or otherwise) any Collateral except as otherwise in accordance with the
Term Loan Agreement and the Intercreditor Agreement.
4.2 Equipment and Inventory.
(a) Representations and Warranties. Each Grantor represents and
warrants, on the Closing Date, that:
(i) all of the Equipment and Inventory included in the Collateral
is kept for the past two (2) years only at the locations specified in
Schedule 4.2 (as such schedule may be amended or supplemented from time to
time);
(ii) any Goods now or hereafter produced by any Grantor included
in the Collateral have been and will be produced in material compliance
with the requirements of the Fair Labor Standards Act, as amended, and
similar laws and requirements of Canada; and
(iii) none of the Inventory or Equipment is in the possession of
(x) an issuer of a negotiable document or document of title (as defined in
Section 7-104 of the UCC) therefor or (y) otherwise in the possession of a
bailee or a warehouseman that has not executed and delivered to the
Collateral Agent a Landlord Personal Property Collateral Access Agreement.
(b) Covenants and Agreements. Each Grantor covenants and agrees
that:
(i) it shall keep the Equipment, Inventory and any Documents
evidencing any Equipment and Inventory in the locations specified on
Schedule 4.2 (as such schedule may be amended or supplemented from time to
time) unless it shall have (a) notified the Collateral Agent
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in writing, by executing and delivering to the Collateral Agent a
completed Pledge Supplement, substantially in the form of Exhibit A
attached hereto, together with all Supplements to Schedules thereto, at
least thirty (30) days prior to any change in locations, identifying such
new locations and providing such other information in connection therewith
as the Collateral Agent may reasonably request and (b) taken all actions
necessary or advisable to maintain the continuous validity, perfection and
the same or better priority of the Collateral Agent's security interest in
the Collateral intended to be granted and agreed to hereby, or to enable
the Collateral Agent to exercise and enforce its rights and remedies
hereunder, with respect to such Equipment and Inventory;
(ii) it shall use commercially reasonable efforts to prevent the
Equipment and Inventory from becoming an accession to any real property or
from becoming a fixture to any real property unless perfected security
interests having the priority described herein and in the Intercreditor
Agreement have been granted to the Collateral Agent and rank senior to the
Liens (if any) of all Persons (other than the Revolving Credit Facility
Collateral Agent) in such real property;
(iii) it shall keep correct and accurate records of the
Inventory, itemizing and describing the kind, type and quantity of
Inventory, such Grantor's cost therefor and (where applicable) the current
list prices for the Inventory, in each case, in reasonable detail as is
customarily maintained under similar circumstances by Persons of
established reputation engaged in similar business, and in any event in
conformity with GAAP;
(iv) it shall, at the reasonable request of the Collateral Agent,
xxxx, or otherwise take appropriate steps to identify, the Inventory and
Equipment located in Canada and any Document in respect thereof to indicate
clearly that it is subject to the security interests granted therein;
(v) it shall not deliver any Document evidencing any Equipment
and Inventory to any Person other than the issuer of such Document to claim
the Goods evidenced therefore, the Collateral Agent or the Revolving Credit
Facility Agent, as applicable;
(vi) if any Equipment or Inventory is in possession or control of
any third party, each Grantor shall join with the Collateral Agent in
notifying the third party of the Collateral Agent's security interest and
obtaining an acknowledgment from the third party that it is holding the
Equipment and Inventory for the benefit of the Collateral Agent; and
(vii) with respect to any item of Equipment which is covered by a
certificate of title under a statute of any jurisdiction under the law of
which indication of a security interest on such certificate is required as
a condition of perfection thereof, upon the reasonable request of the
Collateral Agent, (A) provide information with respect to any such
Equipment, (B) in the case of vehicles having a value of $100,000 in the
aggregate (unless an Event of Default shall have occurred and be
continuing, in which case, all vehicles), execute and file with the
registrar of motor vehicles or other appropriate authority in such
jurisdiction an application or other document requesting the notation or
other indication of the security interest created hereunder on such
certificate of title, and (C) deliver to the Collateral Agent copies of all
such applications or other documents filed during such calendar quarter and
copies of all such certificates of title issued during such calendar
quarter indicating the security interest created hereunder in the items of
Equipment covered thereby.
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4.3 Receivables.
(a) Representations and Warranties. Each Grantor represents and
warrants, on the Closing Date, that:
(i) each Receivable (a) is and will be the legal, valid and
binding obligation of the Account Debtor in respect thereof, representing
an unsatisfied obligation of such Account Debtor, (b) is and will be
enforceable in accordance with its terms, (c) is not and will not be
subject to any setoffs, defenses, taxes, counterclaims (except with respect
to refunds, returns and allowances in the ordinary course of business with
respect to damaged merchandise) and (d) is and will be in compliance with
all applicable laws, whether federal, state, provincial, local or foreign;
and
(ii) no Receivable is evidenced by, or constitutes, an Instrument
or Chattel Paper which has not been delivered to, or otherwise subjected to
the control of, the Collateral Agent to the extent required by, and in
accordance with Section 4.3(c).
(b) Covenants and Agreements: Each Grantor hereby covenants and
agrees that:
(i) it shall keep and maintain at its own cost and expense
satisfactory and complete records of the Receivables, including, but not
limited to, the originals of all documentation with respect to all
Receivables and records of all payments received and all credits granted on
the Receivables, all merchandise returned and all other dealings therewith;
(ii) if requested, it shall xxxx conspicuously, in form and
manner reasonably satisfactory to the Collateral Agent, all Chattel Paper,
Instruments and other evidence of Receivables (other than any delivered to
the Collateral Agent as provided herein), as well as the Receivables
Records with an appropriate reference to the fact that the Collateral Agent
has a security interest therein;
(iii) it shall perform in all material respects all of its
obligations with respect to the Receivables;
(iv) it shall not amend, modify, terminate or waive any provision
of any Receivable in any manner which could reasonably be expected to have
a Material Adverse Effect on the value of such Receivable as Collateral.
Other than in the ordinary course of business as generally conducted by it
on and prior to the date hereof, and except as otherwise provided in
subsection (v) below, upon the occurrence and during the continuation of an
Event of Default, such Grantor shall not (w) grant any extension or renewal
of the time of payment of any Receivable, (x) compromise or settle any
dispute, claim or legal proceeding with respect to any Receivable for less
than the total unpaid balance thereof, (y) release, wholly or partially,
any Person liable for the payment thereof, or (z) allow any credit or
discount thereon;
(v) except as otherwise provided in this subsection, each Grantor
shall continue to collect all amounts due or to become due to such Grantor
under the Receivables and any Supporting Obligation and diligently exercise
each material right it may have under any Receivable any Supporting
Obligation or Collateral Support, in each case, at its own expense, and in
connection with such collections and exercise, such Grantor shall take such
action as such Grantor or the Collateral Agent may deem necessary or
advisable. Notwithstanding the foregoing, at any time following the
occurrence and during the continuation of an Event of Default, the
Collateral Agent shall have the right at any time to notify, or require any
Grantor to notify, any Account Debtor of the Collateral Agent's security
interest in the Receivables and any Supporting Obligation and, the
Collateral Agent may, subject to the Intercreditor Agreement: (1)
15
direct the Account Debtors under any Receivables to make payment of
all amounts due or to become due to such Grantor thereunder directly to
the Collateral Agent; (2) notify, or require any Grantor to notify, each
Person maintaining a lockbox or similar arrangement to which Account
Debtors under any Receivables have been directed to make payment to remit
all amounts representing collections on checks and other payment items from
time to time sent to or deposited in such lockbox or other arrangement
directly to the Collateral Agent; and (3) enforce, at the expense of such
Grantor, collection of any such Receivables and to adjust, settle or
compromise the amount or payment thereof, in the same manner and to the
same extent as such Grantor might have done. If the Collateral Agent
notifies any Grantor that it has elected to collect the Receivables in
accordance with the preceding sentence, any payments of Receivables
received by such Grantor shall be forthwith (and in any event within two
(2) Business Days) deposited by such Grantor in the exact form received,
duly indorsed by such Grantor to the Collateral Agent if required, in the
Collateral Account maintained under the sole dominion and control of the
Collateral Agent, and until so turned over, all amounts and proceeds
(including checks and other instruments) received by such Grantor in
respect of the Receivables, any Supporting Obligation or Collateral Support
shall be received in trust for the benefit of the Collateral Agent
hereunder and shall be segregated from other funds of such Grantor and such
Grantor shall not adjust, settle or compromise the amount or payment of any
Receivable, or release wholly or partly any Account Debtor or obligor
thereof, or allow any credit or discount thereon; and
(vi) it shall use its commercially reasonable efforts to keep in
full force and effect any Supporting Obligation or Collateral Support
relating to any Receivable.
(c) Delivery and Control of Receivables. With respect to any
Receivables evidenced by, or constituting, Chattel Paper or Instruments, each
Grantor shall cause each originally executed copy thereof to be delivered to
the Collateral Agent (or its agent or designee) appropriately indorsed to the
Collateral Agent or indorsed in blank: (i) with respect to any such
Receivables in existence on the date hereof, on or prior to the date hereof
and (ii) with respect to any such Receivables hereafter arising, within ten
(10) days of such Grantor acquiring rights therein. With respect to any
Receivables which would constitute "electronic chattel paper" under Article 9
of the UCC, each Grantor shall take all steps necessary to give the Collateral
Agent control over such Receivables (within the meaning of Section 9-105 of
the UCC): (i) with respect to any such Receivables in existence on the date
hereof, on or prior to the date hereof and (ii) with respect to any such
Receivables hereafter arising, within ten (10) days of such Grantor acquiring
rights therein. Any Receivable not otherwise required to be delivered or
subjected to the control of the Collateral Agent in accordance with this
subsection (c) shall be delivered or subjected to such control upon request of
the Collateral Agent.
4.4 Investment Related Property.
4.4.1 Investment Related Property Generally
(a) Covenants and Agreements. Each Grantor hereby covenants and
agrees that:
(i) in the event it acquires rights in any Investment Related
Property after the date hereof, it shall deliver to the Collateral Agent a
completed Pledge Supplement, substantially in the form of Exhibit A
attached hereto, together with all Supplements to Schedules thereto,
reflecting such new Investment Related Property and all other Investment
Related Property. Notwithstanding the foregoing, it is understood and
agreed that the security interest of the Collateral Agent shall attach to
all Investment Related Property immediately upon any Grantor's acquisition
of rights therein and shall not be affected by the failure of any Grantor
to deliver a supplement to Schedule 4.4 as required hereby;
16
(ii) except as provided in the next sentence, in the event such
Grantor receives any dividends, interest or distributions on any Investment
Related Property, or any securities or other property upon the merger,
consolidation, liquidation or dissolution of any issuer of any Investment
Related Property, then (a) such dividends, interest or distributions and
securities or other property shall be included in the definition of
Collateral without further action and (b) such Grantor shall immediately
take all steps, if any, necessary or advisable to ensure the validity,
perfection, priority and, if applicable, control of the Collateral Agent
over such Investment Related Property (including, without limitation,
delivery thereof to the Collateral Agent) and pending any such action such
Grantor shall be deemed to hold such dividends, interest, distributions,
securities or other property in trust for the benefit of the Collateral
Agent and shall segregate such dividends, distributions, Securities or
other property from all other property of such Grantor. Notwithstanding the
foregoing, so long as no Event of Default shall have occurred and be
continuing, the Collateral Agent authorizes each Grantor to retain all
ordinary cash dividends and distributions paid in the normal course of the
business of the issuer and consistent with the past practice of the issuer
and all scheduled payments of interest;
(iii) each Grantor consents to the grant by each other Grantor of
a Security Interest in all Investment Related Property to the Collateral
Agent.
(b) Delivery and Control. Each Grantor agrees that with respect to
any Investment Related Property in which it currently has rights it shall
comply with the provisions of this Section 4.4.1(b) on or before the Closing
Date and with respect to any Investment Related Property hereafter acquired by
such Grantor it shall comply with the provisions of this Section 4.4.1(b)
promptly, but in any event within three (3) Business Days, upon acquiring
rights therein, in each case in form and substance reasonably satisfactory to
the Collateral Agent. With respect to any Investment Related Property that is
represented by a certificate or that is an "instrument" (other than any
Investment Related Property credited to a Securities Account which is subject
to a valid Securities Account Control Agreement) it shall cause such
certificate or instrument to be delivered to the Collateral Agent, indorsed in
blank by an "effective indorsement" (as defined in Section 8-107 of the UCC),
regardless of whether such certificate constitutes a "certificated security"
for purposes of the UCC, and shall, at the request of the Collateral Agent,
cause the issuer of such Investment Related Property to register the
Collateral Agent as the registered owner thereof on the books and records of
the issuer. With respect to any Investment Related Property that is an
"uncertificated security" for purposes of the UCC (other than any
"uncertificated securities" credited to a Securities Account which is subject
to a valid Securities Account Control Agreement), it shall cause the issuer of
such uncertificated security to either (i) register the Collateral Agent as
the registered owner thereof on the books and records of the issuer or (ii)
execute a control agreement in form and substance reasonably satisfactory to
the Collateral Agent, pursuant to which such issuer agrees to comply with the
Collateral Agent's instructions with respect to such uncertificated security
without further consent by such Grantor.
(c) Voting and Distributions.
(i) So long as no Event of Default shall have occurred and be
continuing:
(1) except as otherwise provided under the covenants and agreements
relating to investment related property in this Agreement or elsewhere
herein or in the Term Loan Agreement, each Grantor shall be entitled
to exercise or refrain from exercising any and all voting and other
consensual rights pertaining to the Investment Related Property or any
part thereof for any purpose not inconsistent with the terms of this
Agreement or the Term Loan Agreement; provided, no Grantor shall
exercise or refrain from exercising any such right if the Collateral
Agent shall have notified such Grantor that, in the Collateral
17
Agent's reasonable judgment, such action would have a Material Adverse
Effect on the value of the Investment Related Property or any part
thereof; and provided further, such Grantor shall give the Collateral
Agent at least five (5) Business Days prior written notice of the
manner in which it intends to exercise, or the reasons for refraining
from exercising, any such right; it being understood, however, that
neither the voting by such Grantor of any Pledged Stock for, or such
Grantor's consent to, the election of directors (or similar governing
body) at a regularly scheduled annual or other meeting of stockholders
or with respect to incidental matters at any such meeting, nor such
Grantor's consent to or approval of any action otherwise permitted
under this Agreement and the Term Loan Agreement, shall be deemed
inconsistent with the terms of this Agreement or the Term Loan
Agreement within the meaning of this Section 4.4(c)(i)(1), and no
notice of any such voting or consent need be given to the Collateral
Agent; and
(2) the Collateral Agent shall promptly execute and deliver (or cause to
be executed and delivered) to each Grantor all proxies, and other
instruments as such Grantor may from time to time reasonably request
for the purpose of enabling such Grantor to exercise the voting and
other consensual rights when and to the extent which it is entitled to
exercise pursuant to clause (1) above;
(3) Upon the occurrence and during the continuation of an Event of
Default:
(A) all rights of each Grantor to exercise or refrain from
exercising the voting and other consensual rights which it
would otherwise be entitled to exercise pursuant hereto shall
cease and all such rights shall thereupon become vested in the
Collateral Agent who shall thereupon have the sole right to
exercise such voting and other consensual rights; and
(B) in order to permit the Collateral Agent to exercise the voting
and other consensual rights which it may be entitled to
exercise pursuant hereto and to receive all dividends and other
distributions which it may be entitled to receive hereunder, in
each case, subject to the Intercreditor Agreement: (1) each
Grantor shall promptly execute and deliver (or cause to be
executed and delivered) to the Collateral Agent all proxies,
dividend payment orders and other instruments as the Collateral
Agent may from time to time reasonably request and (2) each
Grantor acknowledges that the Collateral Agent may utilize the
power of attorney set forth in Section 6.1.
4.4.2 Pledged Equity Interests
(a) Representations and Warranties. Each Grantor hereby represents
and warrants, on the Closing Date, that:
(i) Schedule 4.4(A) (as such schedule may be amended or
supplemented from time to time) sets forth under the headings "Pledged
Stock," "Pledged LLC Interests," "Pledged Partnership Interests" and
"Pledged Trust Interests," respectively, all of the Pledged Stock, Pledged
LLC Interests, Pledged Partnership Interests and Pledged Trust Interests
owned by any Grantor and such Pledged Equity Interests constitute the
percentage of issued and outstanding shares of stock, percentage of
membership interests, percentage of partnership interests or percentage of
beneficial interest of the respective issuers thereof indicated on such
Schedule;
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(ii) it is the record and beneficial owner of the Pledged Equity
Interests free of all Liens, rights or claims of other Persons other than
Permitted Liens and there are no outstanding warrants, options or other
rights to purchase, or shareholder, voting trust or similar agreements
outstanding with respect to, or property that is convertible into, or that
requires the issuance or sale of, any Pledged Equity Interests;
(iii) without limiting the generality of Section 4.1(a)(vii), no
consent of any Person including any other general or limited partner, any
other member of a limited liability company, any other shareholder or any
other trust beneficiary is necessary or desirable in connection with the
creation or perfection of the security interest of the Collateral Agent in
any Pledged Equity Interests, the first priority status (with respect to
Fixed Asset Collateral) and second priority status (with respect to Current
Asset Collateral), the status of the security interest of the Collateral
Agent in any Pledged Equity Interests or the exercise by the Collateral
Agent of the voting or other rights provided for in this Agreement or the
exercise of remedies in respect thereof;
(iv) none of the Pledged LLC Interests nor Pledged Partnership
Interests are or represent interests in issuers that: (a) are registered as
investment companies or (b) are dealt in or traded on securities exchanges
or markets; and
(v) except as otherwise set forth on Schedule 4.4(B), all of the
Pledged LLC Interests and Pledged Partnership Interests are or represent
interests in issuers that have opted to be treated as securities under the
UCC, including the uniform commercial code of any jurisdiction.
(b) Covenants and Agreements. Each Grantor hereby covenants and
agrees that:
(i) without the prior written consent of the Collateral Agent, it
shall not vote to enable or take any other action to: (a) amend or
terminate any partnership agreement, limited liability company agreement,
certificate of incorporation, by-laws or other organizational documents in
any way that materially and adversely (as determined by the Collateral
agent) changes the rights of such Grantor with respect to any Investment
Related Property or adversely affects the validity, perfection or priority
of the Collateral Agent's security interest, (b) permit any issuer of any
Pledged Equity Interest to issue any additional stock, partnership
interests, limited liability company interests or other equity interests of
any nature or to issue securities convertible into or granting the right of
purchase or exchange for any stock or other equity interest of any nature
of such issuer, (c) other than as permitted under the Term Loan Agreement,
permit any issuer of any Pledged Equity Interest to dispose of all or a
material portion of their assets, (d) waive any default under or breach of
any terms of any organizational document relating to the issuer of any
Pledged Equity Interest or the terms of any Pledged Debt, or (e) cause any
issuer of any Pledged Partnership Interests or Pledged LLC Interests which
are not securities (for purposes of the UCC) on the date hereof to elect or
otherwise take any action to cause such Pledged Partnership Interests or
Pledged LLC Interests to be treated as securities for purposes of the UCC;
provided, however, notwithstanding the foregoing, if any issuer of any
Pledged Partnership Interests or Pledged LLC Interests takes any such
action in violation of the foregoing in this clause (e), such Grantor shall
promptly notify the Collateral Agent in writing of any such election or
action and, in such event, shall take all steps necessary or advisable to
establish the Collateral Agent's "control" thereof;
(ii) it shall comply with all of its obligations under any
partnership agreement or limited liability company agreement relating
to Pledged Partnership Interests or
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Pledged LLC Interests and shall enforce all of its rights with respect
to any Investment Related Property;
(iii) without the prior written consent of the Collateral Agent,
it shall not permit any issuer of any Pledged Equity Interest which is a
Subsidiary to (and in the case of any issuer of any Pledged Equity Interest
which is not a Subsidiary, it shall not vote to enable or take any other
action to permit such issuer to) merge, amalgamate or consolidate unless
(a) such issuer creates a security interest that is perfected by a filed
financing statement (that is not effective solely under section 9-508 of
the UCC) in collateral in which such new debtor has or acquires rights, and
(b) no lesser amount of the outstanding capital stock or other equity
interests of the surviving or resulting corporation, limited liability
company, partnership or other entity is, upon such merger, amalgamation or
consolidation, pledged hereunder and no cash, securities or other property
is distributed in respect of the outstanding equity interests of any other
constituent Grantor; provided that if the surviving or resulting Grantors
upon any such merger or consolidation involving an issuer which is a
Controlled Foreign Corporation (other than a Canadian Subsidiary), then
such Grantor shall only be required to pledge equity interests in
accordance with Section 2.2; and
(iv) each Grantor consents to the grant by each other Grantor of
a security interest in all Investment Related Property to the Collateral
Agent and, without limiting the foregoing, consents to the transfer of any
Pledged Partnership Interest and any Pledged LLC Interest to the Collateral
Agent or its nominee during the continuance of an Event of Default and to
the substitution of the Collateral Agent or its nominee as a partner in any
partnership or as a member in any limited liability company with all the
rights and powers related thereto.
4.4.3 Pledged Debt
(a) Representations and Warranties. Each Grantor hereby represents
and warrants, on the Closing Date, that:
(i) Schedule 4.4 (as such schedule may be amended or supplemented
from time to time) sets forth under the heading "Pledged Debt" all of the
Pledged Debt owned by any Grantor and all of such Pledged Debt has been
duly authorized, authenticated or issued, and delivered and is the legal,
valid and binding obligation of the issuers thereof and is not in default
and constitutes all of the issued and outstanding inter-company
Indebtedness;
(b) Covenants and Agreements. Each Grantor hereby covenants and
agrees that:
(i) it shall notify the Collateral Agent of any default under any
Pledged Debt that has caused, either in any individual case or in the
aggregate, a Material Adverse Effect.
4.4.4 Investment Accounts
(a) Representations and Warranties. Each Grantor hereby represents
and warrants, on the Closing Date, that:
(i) Schedule 4.4 hereto (as such schedule may be amended or
supplemented from time to time) sets forth under the headings "Securities
Accounts" and "Commodities Accounts," respectively, all of the Securities
Accounts and Commodities Accounts in which each Grantor has an interest.
Each Grantor is the sole entitlement holder of each such Securities Account
and Commodity Account, and such Grantor has not consented to, and is not
otherwise
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aware of, any Person (other than the Collateral Agent pursuant hereto and,
subject to the Intercreditor Agreement, the Revolving Credit Facility
Collateral Agent) having "control" (within the meanings of Sections 8-106
and 9-106 of the UCC) over, or any other interest in, any such Securities
Account or Commodity Account or securities or other property credited
thereto;
(ii) Schedule 4.4 hereto (as such schedule may be amended or
supplemented from time to time) sets forth under the headings "Deposit
Accounts" all of the Deposit Accounts in which each Grantor has an
interest. Each Grantor is the sole account holder of each such Deposit
Account and such Grantor has not consented to, and is not otherwise aware
of, any Person (other than the Collateral Agent pursuant hereto and,
subject to the Intercreditor Agreement, the Revolving Credit Facility
Collateral Agent) having either sole dominion and control (within the
meaning of common law) or "control" (within the meanings of Section 9-104
of the UCC) over, or any other interest in, any such Deposit Account or any
money or other property deposited therein; and
(iii) Each Grantor has taken all actions necessary or desirable,
including those specified in Section 4.4.4(c), to: (a) establish Collateral
Agent's "control" (within the meanings of Sections 8-106 and 9-106 of the
UCC) over any portion of the Investment Related Property constituting
Certificated Securities, Uncertificated Securities, Financial Assets,
Securities Accounts, Securities Entitlements or Commodities Accounts (each
as defined in the UCC); (b) establish the Collateral Agent's "control"
(within the meaning of Section 9-104 of the UCC) over all Deposit Accounts;
and (c) deliver all Instruments to the Collateral Agent, in each case, to
the extent required by the Term Loan Agreement.
(iv) Each of the Securities Accounts (and related Securities
Account Control Agreements) and Commodities Accounts (and related
Securities Account Control Agreements) maintained in Canada is enforceable
in accordance with its terms against the applicable securities intermediary
or commodities intermediary without any Lien held by such securities
intermediary or commodities intermediary or right of set-off, netting or
consolidation other than for normal charges applicable to the maintenance
of such accounts and brokerage fees incurred in the ordinary course of
business.
(b) Covenant and Agreement. Each Grantor hereby covenants and agrees
with the Collateral Agent and each other Secured Party that it shall not close
or terminate any Investment Account as to which there are Deposit Account
Control Agreements or Securities Account Control Agreements without the prior
consent of the Collateral Agent and unless a successor or replacement account
has been established with the consent of the Collateral Agent with respect to
which successor or replacement account a control agreement has been entered
into by the appropriate Grantor, Collateral Agent and securities intermediary
or depository institution at which such successor or replacement account is to
be maintained in accordance with the provisions of Section 4.4.4(c).
(c) Delivery and Control. If the jurisdiction governing the
validity, perfection, effect of perfection, non-perfection or priority of the
pledge of any Investment Related Property is other than the United States or
the Province of Ontario, and the Term Loan Agreement requires that a security
interest be granted to the Collateral Agent in such Investment Related
Property, each Grantor shall, from time to time, take such additional actions,
including, without limitation, causing the issuer to register the pledge on
its books and records or making such filings or recordings, in each case as
may be necessary or advisable, under the laws of such jurisdiction to insure
the validity, perfection and priority of the security interest of the
Collateral Agent. Upon the occurrence of an Event of Default, the Collateral
Agent shall have the right, without notice to any Grantor, to transfer all or
any portion of the Investment Related Property to its name or the name of its
nominee or agent. In addition, the Collateral Agent shall have the
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right at any time, without notice to any Grantor, to exchange any certificates
or instruments representing any Investment Related Property for certificates or
instruments of smaller or larger denominations.
4.5 Material Contracts. Each Grantor hereby covenants and agrees that:
(a) in addition to any rights under the Section of this Agreement
relating to Receivables, after the occurrence and during the continuance of an
Event of Default, the Collateral Agent may upon written notice to the
applicable Grantor, notify, or require any Grantor to notify, the counterparty
on any Material Contract to make all payments under such Material Contract
directly to the Collateral Agent;
(b) it shall perform in all material respects all of its obligations
with respect to the Material Contracts;
(c) it shall promptly and diligently exercise each material right in
its commercially reasonable judgment (except the right of termination) it may
have under any Material Contract, any Supporting Obligation or Collateral
Support, in each case, at its own expense, and in connection with such
collections and exercise, such Grantor shall take such action as such Grantor
or the Collateral Agent may reasonably deem necessary or advisable;
(d) it shall use its commercially reasonable efforts to keep in full
force and effect any Supporting Obligation or Collateral Support relating to
any Material Contract; and
(e) each Grantor shall, within thirty (30) days of the date hereof
with respect to any Non-Assignable Material Contract in effect on the date
hereof and within thirty (30) days after entering into any Non-Assignable
Material Contract after the Closing Date, request in writing the consent of
the counterparty or counterparties to the Non-Assignable Material Contract
pursuant to the terms of such Non-Assignable Material Contract or applicable
law to the assignment or granting of a security interest in such
Non-Assignable Material Contract to Secured Party and use its commercially
reasonable efforts to obtain such consent as soon as practicable thereafter.
4.6 Letter of Credit Rights
(a) Representations and Warranties. Each Grantor hereby represents
and warrants, on the Closing Date, that:
(i) all material letters of credit (other than letters of credit
which constitute Supporting Obligations) to which such Grantor has rights
is listed on Schedule 4.6 (as such schedule may be amended or supplemented
from time to time) hereto; and
(ii) it has obtained the consent of each issuer of any material
letter of credit to the assignment of the proceeds of the letter of credit
to the Collateral Agent.
(b) Covenants and Agreements. Each Grantor hereby covenants and
agrees that with respect to any material letter of credit (other than letters
of credit which constitute Supporting Obligations) hereafter arising it shall
obtain the consent of the issuer thereof to the assignment of the proceeds of
the letter of credit to the Collateral Agent and shall deliver to the
Collateral Agent a completed Pledge Supplement, substantially in the form of
Exhibit A attached hereto, together with all Supplements to Schedules thereto.
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4.7 Intellectual Property.
(a) Representations and Warranties. Except as disclosed in Schedule
4.7(H) (as such schedule may be amended or supplemented from time to time),
each Grantor hereby represents and warrants, on the Closing Date, that:
(i) Schedule 4.7 (as such schedule may be amended or supplemented
from time to time) sets forth a true and complete list of (i) all United
States, state and foreign registrations of and applications for Patents,
Trademarks, and Copyrights owned by each Grantor and (ii) all Patent
Licenses, Trademark Licenses, Trade Secret Licenses and Copyright Licenses
material to the business of any Grantor;
(ii) it is the sole and exclusive owner of the entire right,
title, and interest in and to all Intellectual Property listed with
reference to such Grantor on Schedules 4.7(A), 4.7(C) and 4.7(E) (as each
may be amended or supplemented from time to time), and owns or has the
valid right to use all other Intellectual Property used in or necessary to
conduct its business, free and clear of all Liens, claims, encumbrances and
licenses, except for Permitted Liens and the licenses set forth on Schedule
4.7(B), (D), (F) and (G) (as each may be amended or supplemented from time
to time) or licenses which are not material to the business of any Grantor;
(iii) all Intellectual Property owned by such Grantor is
subsisting and has not been adjudged invalid or unenforceable, in whole or
in part, and such Grantor has performed all acts and has paid all renewal,
maintenance, and other fees and taxes required to maintain each and every
material registration and application of Copyrights, Patents and Trademarks
owned by such Grantor in full force and effect;
(iv) all Intellectual Property owned by such Grantor is valid and
enforceable and no holding, decision, or judgment has been rendered in any
action or proceeding before any court or administrative authority
challenging the validity of such Grantor's right to register, or such
Grantor's rights to own or use, any material Intellectual Property and no
such action or proceeding is pending or, to the best of such Grantor's
knowledge, threatened;
(v) all registrations and applications for Copyrights, Patents
and Trademarks owned by such Grantor are standing in the name of such
Grantor, and none of the Trademarks, Patents, Copyrights or Trade Secrets
material to the business of any Grantor has been licensed by any Grantor to
any Affiliate or third party, except as disclosed in Schedule 4.7(B), (D),
(F), or (G) (as each may be amended or supplemented from time to time);
(vi) each Grantor has been using appropriate statutory notice of
registration in connection with its use of registered Trademarks material
to the business of any Grantor, proper marking practices in connection with
the use of Patents material to the business of any Grantor, and appropriate
notice of copyright in connection with the publication of Copyrights
material to the business of any Grantor;
(vii) such Grantor uses adequate standards of quality in the
manufacture, distribution, and sale of all products sold and in the
provision of all services rendered under or in connection with all
Trademark Collateral and has taken all commercially reasonable actions
necessary to insure that all licensees of the Trademark Collateral owned by
such Grantor use such adequate standards of quality;
(viii) to the best of each Grantor's knowledge, the conduct of
such Grantor's business does not infringe upon or otherwise violate any
trademark, patent, copyright, trade secret or other intellectual property
right owned or controlled by a third party and no claim has been
23
made that the use of any Intellectual Property owned or used by Grantor
(or any of its respective licensees) violates the asserted rights of
any third party;
(ix) to the best of each Grantor's knowledge, no third party is
infringing upon or otherwise violating any rights in any Intellectual
Property owned or used by such Grantor, or any of its respective licensees;
(x) no settlement or consents, covenants not to xxx, nonassertion
assurances, or releases have been entered into by such Grantor or bind such
Grantor that adversely affect Grantor's rights to own or use any
Intellectual Property; and
(xi) such Grantor has not made a previous assignment, sale,
transfer or agreement constituting a present or future assignment, sale,
transfer or agreement of any Intellectual Property that has not been
terminated or released. There is no effective financing statement or other
document or instrument now executed, or on file or recorded in any public
office, granting a security interest in or otherwise encumbering any part
of the Intellectual Property, other than in favor of the Collateral Agent.
(b) Covenants and Agreements. Each Grantor hereby covenants and
agrees as follows:
(i) it shall not do any act or omit to do any act whereby any of
the Intellectual Property owned by such Grantor which is material to the
business of any Grantor may lapse, or become abandoned, dedicated to the
public, or unenforceable, or which would adversely affect the validity,
grant, or enforceability of the security interest granted therein;
(ii) it shall not, with respect to any Trademarks owned by such
Grantor which are material to the business of any Grantor, cease the use of
any of such Trademarks or fail to maintain the level of the quality of
products sold and services rendered under any of such Trademark at a level
at least substantially consistent with the quality of such products and
services as of the date hereof, and such Grantor shall take all
commercially reasonable steps necessary to insure that licensees of such
Trademarks use such consistent standards of quality;
(iii) it shall, within thirty (30) days of the creation or
acquisition of any Copyrightable work which is material to the business of
any Grantor, apply to register the Copyright in the United States Copyright
Office or the Canadian counterpart thereof, of applicable;
(iv) it shall promptly notify the Collateral Agent if it knows or
has reason to know that any item of the Intellectual Property that is
material to the business of any Grantor is likely to become (a) abandoned
or dedicated to the public or placed in the public domain, (b) invalid or
unenforceable, or (c) subject to any adverse determination or development
(including the institution of proceedings) in any action or proceeding in
the United States Patent and Trademark Office, the United States Copyright
Office, any state registry, any foreign counterpart of the foregoing, or
any court;
(v) it shall take all reasonable steps in the United States
Patent and Trademark Office, the United States Copyright Office, any state
registry or any foreign counterpart of the foregoing, to pursue any
application and maintain any registration of each Trademark, Patent, and
Copyright owned by any Grantor and material to the business of any Grantor
which is now or shall become included in the Intellectual Property
Collateral;
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(vi) in the event that any material Intellectual Property owned
by or exclusively licensed to such Grantor is infringed, misappropriated,
or diluted by a third party, such Grantor shall promptly take all
reasonable actions to stop such infringement, misappropriation, or dilution
and protect its rights in such Intellectual Property including, but not
limited to, the initiation of a suit for injunctive relief and to recover
damages;
(vii) it shall promptly (but in no event more than thirty (30)
days after any Grantor obtains knowledge thereof) report to the Collateral
Agent (i) the filing of any application to register any Intellectual
Property with the United States Patent and Trademark Office, the United
States Copyright Office, or any state registry or foreign counterpart of
the foregoing (whether such application is filed by such Grantor or through
any agent, employee, licensee, or designee thereof) and (ii) the
registration of any Intellectual Property by any such office, in each case
by executing and delivering to the Collateral Agent a completed Pledge
Supplement, substantially in the form of Exhibit A attached hereto,
together with all Supplements to Schedules thereto;
(viii) it shall, promptly upon the reasonable request of the
Collateral Agent, execute and deliver to the Collateral Agent any document
required to acknowledge, confirm, register, record, or perfect the
Collateral Agent's interest in any part of the Intellectual Property
Collateral, whether now owned or hereafter acquired;
(ix) except with the prior consent of the Collateral Agent or as
permitted under the Term Loan Agreement, each Grantor shall not execute,
and there will not be on file in any public office, any financing statement
or other document or instruments, except financing statements or other
documents or instruments filed or to be filed in favor of the Collateral
Agent and each Grantor shall not sell, assign, transfer, license, grant any
option, or create or suffer to exist any Lien upon or with respect to the
Intellectual Property Collateral, except for the Lien created by and under
this Agreement and the other Credit Documents;
(x) it shall hereafter use best efforts so as not to permit the
inclusion in any contract to which it hereafter becomes a party of any
provision that could or might in any way materially impair or prevent the
creation of a security interest in, or the assignment of, such Grantor's
rights and interests in any property included within the definitions of any
Intellectual Property acquired under such contracts;
(xi) it shall take all steps reasonably necessary to protect the
secrecy of all Trade Secrets material to the business of any Grantor,
including, without limitation, entering into confidentiality agreements
with employees and labeling and restricting access to secret information
and documents;
(xii) it shall use proper statutory notice in connection with its
use of any Intellectual Property owned by such Grantor; and
(xiii) it shall continue to collect, at its own expense, all
amounts due or to become due to such Grantor in respect of the Intellectual
Property or any portion thereof. In connection with such collections, each
Grantor may take (and, at the Collateral Agent's reasonable direction,
shall take) such action as such Grantor or the Collateral Agent may deem
reasonably necessary or advisable to enforce collection of such amounts.
Notwithstanding the foregoing, the Collateral Agent shall have the right at
any time, to notify, or require any Grantor to notify, any obligors with
respect to any such amounts of the existence of the security interest
created hereby.
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4.8 Commercial Tort Claims
(a) Representations and Warranties. Each Grantor hereby represents
and warrants, on the Closing Date, that Schedule 4.8 (as such schedule may be
amended or supplemented from time to time) sets forth all Commercial Tort
Claims of each Grantor reasonably expected to be worth $25,000 in the
aggregate; and
(b) Covenants and Agreements. Each Grantor hereby covenants and
agrees that with respect to any Commercial Tort Claims expected to be worth
$25,000 in the aggregate (together with all other Commercial Tort Claims in
existence) hereafter arising it shall deliver to the Collateral Agent a
completed Pledge Supplement, substantially in the form of Exhibit A attached
hereto, together with all Supplements to Schedules thereto, identifying such
new Commercial Tort Claims.
SECTION 5. ACCESS; RIGHT OF INSPECTION AND FURTHER ASSURANCES;
ADDITIONAL GRANTORS
5.1 Access; Right of Inspection. The Collateral Agent shall at all times
have full and free access during normal business hours to all the books,
correspondence and records of each Grantor, and the Collateral Agent and its
representatives may examine the same, take extracts therefrom and make
photocopies thereof, and each Grantor agrees to render to the Collateral
Agent, at such Grantor's cost and expense, such clerical and other assistance
as may be reasonably requested with regard thereto. The Collateral Agent and
its representatives shall at all times also have the right to enter any
premises of each Grantor and inspect any property of each Grantor where any of
the Collateral of such Grantor granted pursuant to this Agreement is located
for the purpose of inspecting the same, observing its use or otherwise
protecting its interests therein.
5.2 Further Assurances.
(a) Each Grantor agrees that from time to time, at the expense of
such Grantor, that it shall promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary
or desirable, or that the Collateral Agent may reasonably request, in order to
create and/or maintain the validity, perfection or priority of and protect any
security interest granted hereby or to enable the Collateral Agent to exercise
and enforce its rights and remedies hereunder with respect to any Collateral.
Without limiting the generality of the foregoing, each Grantor shall:
(i) file such financing, financing change or continuation
statements, or amendments thereto, and execute and deliver such other
agreements, instruments, endorsements, powers of attorney or notices, as
may be necessary or desirable, or as the Collateral Agent may reasonably
request, in order to perfect and preserve the security interests granted or
purported to be granted hereby;
(ii) take all actions necessary to ensure the recordation of
appropriate evidence of the liens and security interest granted hereunder
in the Intellectual Property with any intellectual property registry in
which said Intellectual Property is registered or in which an application
for registration is pending including, without limitation, the United
States Patent and Trademark Office, the United States Copyright Office, the
various Secretaries of State, and the foreign counterparts on any of the
foregoing;
(iii) at any reasonable time, upon reasonable request by the
Collateral Agent, assemble the Collateral and allow inspection of the
Collateral by the Collateral Agent, or persons designated by the Collateral
Agent; and
26
(iv) at the Collateral Agent's request, appear in and defend any
action or proceeding that may affect such Grantor's title to or the
Collateral Agent's security interest in all or any part of the Collateral.
(b) Each Grantor hereby authorizes the Collateral Agent and its
counsel and other representatives, at any such time and from time to time, to
file a Record or Records, including, without limitation, financing, financing
change or continuation statements, and amendments thereto, in any
jurisdictions and with any filing offices as the Collateral Agent may
determine, in its sole discretion, are necessary or advisable to perfect the
security interest granted to the Collateral Agent herein. Such financing or
financing change statements may describe the Collateral in the same manner as
described herein or may contain an indication or description of collateral
that describes such property in any other manner as the Collateral Agent may
determine, in its sole discretion, is necessary, advisable or prudent to
ensure the perfection of the security interest in the Collateral granted to
the Collateral Agent herein, including, without limitation, describing such
property as "all assets" or "all personal property, whether now owned or
hereafter acquired." Each Grantor shall furnish to the Collateral Agent from
time to time statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral as the
Collateral Agent may reasonably request, all in reasonable detail.
(c) Each Grantor hereby authorizes the Collateral Agent to modify
this Agreement after obtaining such Grantor's approval of or signature to such
modification by amending Schedule 4.7 (as such schedule may be amended or
supplemented from time to time) to include reference to any right, title or
interest in any existing Intellectual Property or any Intellectual Property
acquired or developed by any Grantor after the execution hereof or to delete
any reference to any right, title or interest in any Intellectual Property in
which any Grantor no longer has or claims any right, title or interest.
5.3 Additional Grantors. From time to time subsequent to the date hereof,
additional Persons may become parties hereto as additional Grantors (each, an
"Additional Grantor"), by executing a Counterpart Agreement. Upon delivery of
any such counterpart agreement to the Collateral Agent, notice of which is
hereby waived by Grantors, each Additional Grantor shall be a Grantor and
shall be as fully a party hereto as if Additional Grantor were an original
signatory hereto. Each Grantor expressly agrees that its obligations arising
hereunder shall not be affected or diminished by the addition or release of
any other Grantor hereunder, nor by any election of Collateral Agent not to
cause any Subsidiary of Company to become an Additional Grantor hereunder.
This Agreement shall be fully effective as to any Grantor that is or becomes a
party hereto regardless of whether any other Person becomes or fails to become
or ceases to be a Grantor hereunder.
SECTION 6. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT.
6.1 Power of Attorney. Each Grantor hereby irrevocably appoints the
Collateral Agent (such appointment being coupled with an interest) as such
Grantor's attorney-in-fact, with full authority in the place and stead of such
Grantor and in the name of such Grantor, the Collateral Agent or otherwise,
from time to time in the Collateral Agent's discretion to take any action and
to execute any instrument that the Collateral Agent may deem reasonably
necessary or advisable to accomplish the purposes of this Agreement,
including, without limitation, the following:
(a) upon the occurrence and during the continuance of any Event of
Default, to obtain and adjust insurance required to be maintained by such
Grantor or paid to the Collateral Agent pursuant to the Term Loan Agreement;
27
(b) upon the occurrence and during the continuance of any Event of
Default, to ask for, demand, collect, xxx for, recover, compound, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;
(c) upon the occurrence and during the continuance of any Event of
Default, to receive, endorse and collect any drafts or other instruments,
documents and chattel paper in connection with clause (b) above;
(d) upon the occurrence and during the continuance of any Event of
Default, to file any claims or take any action or institute any proceedings
that the Collateral Agent may deem necessary or desirable for the collection
of any of the Collateral or otherwise to enforce the rights of the Collateral
Agent with respect to any of the Collateral;
(e) to prepare and file any UCC financing or financing change
statements against such Grantor as debtor;
(f) to prepare, sign, and file for recordation in any intellectual
property registry, appropriate evidence of the lien and security interest
granted herein in the Intellectual Property in the name of such Grantor as
debtor;
(g) upon the occurrence and during the continuance of any Event of
Default, to take or cause to be taken all actions necessary to perform or
comply or cause performance or compliance with the terms of this Agreement,
including, without limitation, access to pay or discharge taxes or Liens
(other than Permitted Liens) levied or placed upon or threatened against the
Collateral, the legality or validity thereof and the amounts necessary to
discharge the same to be determined by the Collateral Agent in its sole
discretion, any such payments made by the Collateral Agent to become
obligations of such Grantor to the Collateral Agent, due and payable
immediately without demand; and
(h) upon the occurrence and during the continuance of any Event of
Default, generally to sell, transfer, pledge, make any agreement with respect
to or otherwise deal with any of the Collateral as fully and completely as
though the Collateral Agent were the absolute owner thereof for all purposes,
and to do, at the Collateral Agent's option and such Grantor's expense, at any
time or from time to time, all acts and things that the Collateral Agent deems
reasonably necessary to protect, preserve or realize upon the Collateral and
the Collateral Agent's security interest therein in order to effect the intent
of this Agreement, all as fully and effectively as such Grantor might do.
6.2 No Duty on the Part of Collateral Agent or Secured Parties. The
powers conferred on the Collateral Agent hereunder are solely to protect the
interests of the Secured Parties in the Collateral and shall not impose any
duty upon the Collateral Agent or any Secured Party to exercise any such
powers. The Collateral Agent and the Secured Parties shall be accountable only
for amounts that they actually receive as a result of the exercise of such
powers, and neither they nor any of their officers, directors, employees or
agents shall be responsible to any Grantor for any act or failure to act
hereunder, except for their own gross negligence or willful misconduct.
SECTION 7. REMEDIES.
7.1 Generally.
(a) If any Event of Default shall have occurred and be continuing,
the Collateral Agent may exercise in respect of the Collateral, in addition to
all other rights and remedies provided for herein or otherwise available to it
at law or in equity, all the rights and remedies of the Collateral Agent
28
on default under the UCC (whether or not the UCC applies to the affected
Collateral) to collect, enforce or satisfy any Secured Obligations then owing,
whether by acceleration or otherwise, and also may pursue any of the following
separately, successively or simultaneously:
(i) require any Grantor to, and each Grantor hereby agrees that
it shall at its expense and promptly upon request of the Collateral Agent
forthwith, assemble all or part of the Collateral as directed by the
Collateral Agent and make it available to the Collateral Agent at a place
to be designated by the Collateral Agent that is reasonably convenient to
both parties;
(ii) enter onto the property where any Collateral is located and
take possession thereof with or without judicial process;
(iii) prior to the disposition of the Collateral, store, process,
repair or recondition the Collateral or otherwise prepare the Collateral
for disposition in any manner to the extent the Collateral Agent deems
appropriate; and
(iv) without notice except as specified below or under the UCC,
sell, assign, lease, license (on an exclusive or nonexclusive basis) or
otherwise dispose of the Collateral or any part thereof in one or more
parcels at public or private sale, at any of the Collateral Agent's offices
or elsewhere, for cash, on credit or for future delivery, at such time or
times and at such price or prices and upon such other terms as the
Collateral Agent may deem commercially reasonable.
(b) The Collateral Agent or any Secured Party may be the purchaser
of any or all of the Collateral at any public or private (to the extent the
portion of the Collateral being privately sold is of a kind that is
customarily sold on a recognized market or the subject of widely distributed
standard price quotations) sale in accordance with the UCC and the Collateral
Agent, as collateral agent for and representative of the Secured Parties,
shall be entitled, for the purpose of bidding and making settlement or payment
of the purchase price for all or any portion of the Collateral sold at any
such sale made in accordance with the UCC, to use and apply any of the Secured
Obligations as a credit on account of the purchase price for any Collateral
payable by the Collateral Agent at such sale. Each purchaser at any such sale
shall hold the property sold absolutely free from any claim or right on the
part of any Grantor, and each Grantor hereby waives (to the extent permitted
by applicable law) all rights of redemption, stay and/or appraisal which it
now has or may at any time in the future have under any rule of law or statute
now existing or hereafter enacted. Each Grantor agrees that, to the extent
notice of sale shall be required by law, at least ten (10) days notice to such
Grantor of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification. The
Collateral Agent shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The Collateral Agent may
adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned. Each Grantor agrees
that it would not be commercially unreasonable for the Collateral Agent to
dispose of the Collateral or any portion thereof by using Internet sites that
provide for the auction of assets of the types included in the Collateral or
that have the reasonable capability of doing so, or that match buyers and
sellers of assets. Each Grantor hereby waives any claims against the
Collateral Agent arising by reason of the fact that the price at which any
Collateral may have been sold at such a private sale was less than the price
which might have been obtained at a public sale, even if the Collateral Agent
accepts the first offer received and does not offer such Collateral to more
than one offeree. If the proceeds of any sale or other disposition of the
Collateral are insufficient to pay all the Secured Obligations, Grantors shall
be liable for the deficiency and the fees of any attorneys employed by the
Collateral Agent to collect such deficiency. Each Grantor further agrees that
a breach of any of the covenants contained in this Section will cause
irreparable injury to the Collateral Agent, that the
29
Collateral Agent has no adequate remedy at law in respect of such breach and, as
a consequence, that each and every covenant contained in this Section shall be
specifically enforceable against such Grantor, and such Grantor hereby waives
and agrees not to assert any defenses against an action for specific performance
of such covenants except for a defense that no default has occurred giving rise
to the Secured Obligations becoming due and payable prior to their stated
maturities. Nothing in this Section shall in any way alter the rights of the
Collateral Agent hereunder.
(c) The Collateral Agent may sell the Collateral without giving any
warranties as to the Collateral. The Collateral Agent may specifically
disclaim or modify any warranties of title or the like. This procedure will
not be considered to adversely affect the commercial reasonableness of any
sale of the Collateral.
(d) The Collateral Agent shall have no obligation to marshal any of
the Collateral;
(e) The Collateral Agent may, to the extent permitted by applicable
law, appoint by instrument in writing a receiver (which term shall include a
receiver and manager or agent) of any Canadian Grantor and of all or any part
of the Collateral and remove or replace such receiver from time to time or may
institute proceedings in any court of competent jurisdiction for the
appointment of a receiver. Any such receiver appointed by Collateral Agent,
with respect to responsibility for its acts, shall, to the extent permitted by
applicable law, be deemed the agent of the applicable Canadian Grantor and not
of Collateral Agent. Where "Collateral Agent" is referred to in this Section
7.1, the reference includes, where the context permits, any receiver so
appointed and the officers, employees, servants or agents of such receiver.
7.2 Application of Proceeds. Subject to the Intercreditor Agreement and
except as expressly provided elsewhere in this Agreement, all proceeds
received by the Collateral Agent in respect of any sale, any collection from,
or other realization upon all or any part of the Collateral shall be applied
in full or in part by the Collateral Agent against, the Secured Obligations in
the following order of priority: first, to the payment of all costs and
expenses of such sale, collection or other realization, including reasonable
compensation to the Collateral Agent and its agents and counsel, and all other
expenses, liabilities and advances made or incurred by the Collateral Agent in
connection therewith, and all amounts for which the Collateral Agent is
entitled to indemnification hereunder (in its capacity as the Collateral Agent
and not as a Lender) and all advances made by the Collateral Agent hereunder
for the account of the applicable Grantor, and to the payment of all costs and
expenses paid or incurred by the Collateral Agent in connection with the
exercise of any right or remedy hereunder or under the Term Loan Agreement,
all in accordance with the terms hereof or thereof; second, to the extent of
any excess of such proceeds, to the payment of all other Secured Obligations
for the ratable benefit of the Lenders and the Lender Counterparties; and
third, to the extent of any excess of such proceeds, to the payment to or upon
the order of such Grantor or to whosoever may be lawfully entitled to receive
the same or as a court of competent jurisdiction may direct.
7.3 Sales on Credit. If Collateral Agent sells any of the Collateral upon
credit, Grantor will be credited only with payments actually made by purchaser
and received by Collateral Agent and applied to indebtedness of the purchaser.
In the event the purchaser fails to pay for the Collateral, Collateral Agent
may resell the Collateral and Grantor shall be credited with proceeds of the
sale.
7.4 Deposit Accounts. If any Event of Default shall have occurred and be
continuing, or, in respect of Deposit Accounts held by a Canadian Grantor,
upon the occurrence of a Material Adverse Effect, the Collateral Agent,
subject to the Intercreditor Agreement, may apply the balance from any Deposit
Account or instruct the bank at which any Deposit Account is maintained to pay
the balance of any Deposit Account to or for the benefit of the Collateral
Agent.
30
7.5 Investment Related Property. Each Grantor recognizes that, by reason
of certain prohibitions contained in the Securities Act and applicable state
or provincial securities laws, the Collateral Agent may be compelled, with
respect to any sale of all or any part of the Investment Related Property
conducted without prior registration or qualification of such Investment
Related Property under the Securities Act and/or such state or provincial
securities laws, to limit purchasers to those who will agree, among other
things, to acquire the Investment Related Property for their own account, for
investment and not with a view to the distribution or resale thereof. Each
Grantor acknowledges that any such private sale may be at prices and on terms
less favorable than those obtainable through a public sale without such
restrictions (including a public offering made pursuant to a registration
statement or prospectus under the Securities Act or applicable state or
provincial securities law) and, notwithstanding such circumstances, each
Grantor agrees that any such private sale shall be deemed to have been made in
a commercially reasonable manner and that the Collateral Agent shall have no
obligation to engage in public sales and no obligation to delay the sale of
any Investment Related Property for the period of time necessary to permit the
issuer thereof to register or qualify it for a form of public sale requiring
registration or qualification under the Securities Act or under applicable
state securities laws, even if such issuer would, or should, agree to so
register or qualify it. If the Collateral Agent determines to exercise its
right to sell any or all of the Investment Related Property, upon written
request, each Grantor shall and shall cause each issuer of any Pledged Stock
to be sold hereunder, each partnership and each limited liability company from
time to time to furnish to the Collateral Agent all such information as the
Collateral Agent may request in order to determine the number and nature of
interest, shares or other instruments included in the Investment Related
Property which may be sold by the Collateral Agent in exempt transactions
under the Securities Act and the rules and regulations of the Securities and
Exchange Commission thereunder or applicable state or provincial securities
law, as the same are from time to time in effect.
7.6 Intellectual Property.
(a) Anything contained herein to the contrary notwithstanding, upon
the occurrence and during the continuation of an Event of Default:
(i) the Collateral Agent shall have the right (but not the
obligation) to bring suit or otherwise commence any action or proceeding in
the name of any Grantor, the Collateral Agent or otherwise, in the
Collateral Agent's sole discretion, to enforce any Intellectual Property,
in which event such Grantor shall, at the request of the Collateral Agent,
do any and all lawful acts and execute any and all documents required by
the Collateral Agent in aid of such enforcement and such Grantor shall
promptly, upon demand, reimburse and indemnify the Collateral Agent as
provided in Section 10 hereof in connection with the exercise of its rights
under this Section, and, to the extent that the Collateral Agent shall
elect not to bring suit to enforce any Intellectual Property as provided in
this Section, each Grantor agrees to use all reasonable measures, whether
by action, suit, proceeding or otherwise, to prevent the infringement or
other violation of any of such Grantor's rights in the Intellectual
Property by others and for that purpose agrees to diligently maintain any
action, suit or proceeding against any Person so infringing as shall be
necessary to prevent such infringement or violation;
(ii) upon written demand from the Collateral Agent, each Grantor
shall grant, assign, convey or otherwise transfer to the Collateral Agent
or such Collateral Agent's designee all of such Grantor's right, title and
interest in and to the Intellectual Property and shall execute and deliver
to the Collateral Agent such documents as are necessary or appropriate to
carry out the intent and purposes of this Agreement;
31
(iii) each Grantor agrees that such an assignment and/or
recording shall be applied to reduce the Secured Obligations outstanding
only to the extent that the Collateral Agent (or any Secured Party)
receives cash proceeds in respect of the sale of, or other realization
upon, the Intellectual Property;
(iv) within five (5) Business Days after written notice from the
Collateral Agent, each Grantor shall make available to the Collateral
Agent, to the extent within such Grantor's power and authority and
applicable law, such personnel in such Grantor's employ on the date of such
Event of Default as the Collateral Agent may reasonably designate, by name,
title or job responsibility, to permit such Grantor to continue, directly
or indirectly, to produce, advertise and sell the products and services
sold or delivered by such Grantor under or in connection with the
Trademarks, Trademark Licenses, such persons to be available to perform
their prior functions on the Collateral Agent's behalf and to be
compensated by the Collateral Agent at such Grantor's expense on a per
diem, pro-rata basis consistent with the salary and benefit structure
applicable to each as of the date of such Event of Default; and
(v) the Collateral Agent shall have the right to notify, or
require each Grantor to notify, any obligors with respect to amounts due or
to become due to such Grantor in respect of the Intellectual Property, of
the existence of the security interest created herein, to direct such
obligors to make payment of all such amounts directly to the Collateral
Agent, and, upon such notification and at the expense of such Grantor, to
enforce collection of any such amounts and to adjust, settle or compromise
the amount or payment thereof, in the same manner and to the same extent as
such Grantor might have done;
(1) all amounts and proceeds (including checks and other instruments)
received by Grantor in respect of amounts due to such Grantor in
respect of the Collateral or any portion thereof shall be received in
trust for the benefit of the Collateral Agent hereunder, shall be
segregated from other funds of such Grantor and shall be forthwith
paid over or delivered to the Collateral Agent in the same form as so
received (with any necessary endorsement) to be held as cash
Collateral and applied as provided by Section 7.7 hereof; and
(2) Grantor shall not adjust, settle or compromise the amount or payment
of any such amount or release wholly or partly any obligor with
respect thereto or allow any credit or discount thereon.
(b) If (i) an Event of Default shall have occurred and, by reason of
cure, waiver, modification, amendment or otherwise, no longer be continuing,
(ii) no other Event of Default shall have occurred and be continuing, (iii) an
assignment or other transfer to the Collateral Agent of any rights, title and
interests in and to the Intellectual Property shall have been previously made
and shall have become absolute and effective, and (iv) the Secured Obligations
shall not have become immediately due and payable, upon the written request of
any Grantor, the Collateral Agent shall promptly execute and deliver to such
Grantor, at such Grantor's sole cost and expense, such assignments or other
transfer as may be necessary to reassign to such Grantor any such rights,
title and interests as may have been assigned to the Collateral Agent as
aforesaid, subject to any disposition thereof that may have been made by the
Collateral Agent; provided, after giving effect to such reassignment, the
Collateral Agent's security interest granted pursuant hereto, as well as all
other rights and remedies of the Collateral Agent granted hereunder, shall
continue to be in full force and effect; and provided further, the rights,
title and interests so reassigned shall be free and clear of any other Liens
granted by or on behalf of the Collateral Agent and the Secured Parties.
32
(c) Solely for the purpose of enabling the Collateral Agent to
exercise rights and remedies under this Section 7 and at such time as the
Collateral Agent shall be lawfully entitled to exercise such rights and
remedies, each Grantor hereby grants to the Collateral Agent, to the extent it
has the right to do so, an irrevocable, nonexclusive license (exercisable
without payment of royalty or other compensation to such Grantor), subject, in
the case of Trademarks, to quality control and quality standards then in
effect and inspection rights in favor of such Grantor to avoid the risk of
invalidation of said Trademarks, to use, operate under, license, or sublicense
any Intellectual Property now owned or hereafter acquired by such Grantor, and
wherever the same may be located.
7.7 Cash Proceeds. In addition to the rights of the Collateral Agent
specified in Section 4.3 with respect to payments of Receivables, all proceeds
of any Collateral received by any Grantor consisting of cash, checks and other
non-cash items (collectively, "Cash Proceeds") shall be held by such Grantor
in trust for the Collateral Agent, segregated from other funds of such
Grantor, and shall, forthwith upon receipt by such Grantor, unless otherwise
provided pursuant to the Intercreditor Agreement, be turned over to the
Collateral Agent in the exact form received by such Grantor (duly indorsed by
such Grantor to the Collateral Agent, if required) and held by the Collateral
Agent in the Collateral Account. Any Cash Proceeds received by the Collateral
Agent (whether from a Grantor or otherwise): (i) if no Event of Default shall
have occurred and be continuing, shall be held by the Collateral Agent for the
ratable benefit of the Secured Parties, as collateral security for the Secured
Obligations (whether matured or unmatured) and (ii) if an Event of Default
shall have occurred and be continuing, may, in the sole discretion of the
Collateral Agent, (A) be held by the Collateral Agent for the ratable benefit
of the Secured Parties, as collateral security for the Secured Obligations
(whether matured or unmatured) and/or (B) then or at any time thereafter may
be applied by the Collateral Agent against the Secured Obligations then due
and owing.
SECTION 8. COLLATERAL AGENT.
The Collateral Agent has been appointed to act as Collateral Agent
hereunder by Lenders and, by their acceptance of the benefits hereof, the other
Secured Parties. The Collateral Agent shall be obligated, and shall have the
right hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any action (including,
without limitation, the release or substitution of Collateral), solely in
accordance with this Agreement, the Term Loan Agreement and the Intercreditor
Agreement. In furtherance of the foregoing provisions of this Section, each
Secured Party, by its acceptance of the benefits hereof, agrees that it shall
have no right individually to realize upon any of the Collateral hereunder, it
being understood and agreed by such Secured Party that all rights and remedies
hereunder may be exercised solely by the Collateral Agent for the benefit of
Secured Parties in accordance with the terms of this Section. Collateral Agent
may resign at any time by giving thirty (30) days' prior written notice thereof
to Lenders and the Grantors, and Collateral Agent may be removed at any time
with or without cause by an instrument or concurrent instruments in writing
delivered to the Grantors and Collateral Agent signed by the Requisite Lenders.
Upon any such notice of resignation or any such removal, Requisite Lenders shall
have the right, upon five (5) Business Days' notice to the Administrative Agent,
to appoint a successor Collateral Agent. Upon the acceptance of any appointment
as Collateral Agent hereunder by a successor Collateral Agent, that successor
Collateral Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring or removed Collateral
Agent under this Agreement, and the retiring or removed Collateral Agent under
this Agreement shall promptly (i) transfer to such successor Collateral Agent
all sums, Securities and other items of Collateral held hereunder, together with
all records and other documents necessary or appropriate in connection with the
performance of the duties of the successor Collateral Agent under this
Agreement, and (ii) execute and deliver to such successor Collateral Agent or
otherwise authorize the filing of such amendments to financing or financing
change statements, and take such other actions, as may be necessary or
appropriate in connection with the assignment to such successor
33
Collateral Agent of the security interests created hereunder, whereupon such
retiring or removed Collateral Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring or removed Collateral
Agent's resignation or removal hereunder as the Collateral Agent, the provisions
of this Agreement shall inure to its benefit as to any actions taken or omitted
to be taken by it under this Agreement while it was the Collateral Agent
hereunder.
SECTION 9. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS.
This Agreement shall create a continuing security interest in the
Collateral and shall remain in full force and effect until the payment in full
of all Secured Obligations, be binding upon each Grantor, its successors and
assigns, and inure, together with the rights and remedies of the Collateral
Agent hereunder, to the benefit of the Collateral Agent and its successors,
transferees and assigns. Without limiting the generality of the foregoing, but
subject to the terms of the Term Loan Agreement, any Lender may assign or
otherwise transfer any Loans held by it to any other Person, and such other
Person shall thereupon become vested with all the benefits in respect thereof
granted to Lenders herein or otherwise. Upon the payment in full of all Secured
Obligations, the security interest granted hereby shall automatically terminate
hereunder and of record and all rights to the Collateral shall revert to
Grantors. Upon any such termination the Collateral Agent shall, at Grantors'
expense, execute and deliver to Grantors or otherwise authorize the filing of
such documents as Grantors shall reasonably request, including financing
statement amendments to evidence such termination. Upon any disposition of
property permitted by the Term Loan Agreement, the Liens granted herein shall be
deemed to be automatically released and such property shall automatically revert
to the applicable Grantor with no further action on the part of any Person. The
Collateral Agent shall, at Grantor's expense, execute and deliver or otherwise
authorize the filing of such documents as Grantors shall reasonably request, in
form and substance reasonably satisfactory to the Collateral Agent, including
financing statement amendments to evidence such release.
SECTION 10. STANDARD OF CARE; COLLATERAL AGENT MAY PERFORM.
The powers conferred on the Collateral Agent hereunder are solely to
protect its interest in the Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the exercise of reasonable care in the
custody of any Collateral in its possession and the accounting for moneys
actually received by it hereunder, the Collateral Agent shall have no duty as to
any Collateral or as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Collateral. The
Collateral Agent shall be deemed to have exercised reasonable care in the
custody and preservation of Collateral in its possession if such Collateral is
accorded treatment substantially equal to that which the Collateral Agent
accords its own property. Neither the Collateral Agent nor any of its directors,
officers, employees or agents shall be liable for failure to demand, collect or
realize upon all or any part of the Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise dispose of any Collateral
upon the request of any Grantor or otherwise. If any Grantor fails to perform
any agreement contained herein, the Collateral Agent may itself perform, or
cause performance of, such agreement, and the expenses of the Collateral Agent
incurred in connection therewith shall be payable by each Grantor under Section
10.2 of the Term Loan Agreement.
SECTION 11. MISCELLANEOUS.
Any notice required or permitted to be given under this Agreement shall
be given in accordance with Section 10.1 of the Term Loan Agreement. No failure
or delay on the part of the Collateral Agent in the exercise of any power, right
or privilege hereunder or under any other Credit Document shall impair such
power, right or privilege or be construed to be a waiver of any default or
acquiescence therein, nor shall any single or partial exercise of any such
power, right or privilege preclude other or further exercise
34
thereof or of any other power, right or privilege. All rights and remedies
existing under this Agreement and the other Credit Documents are cumulative to,
and not exclusive of, any rights or remedies otherwise available. In case any
provision in or obligation under this Agreement shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby.
All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or would otherwise be within
the limitations of, another covenant shall not avoid the occurrence of a Default
or an Event of Default if such action is taken or condition exists. This
Agreement shall be binding upon and inure to the benefit of the Collateral Agent
and Grantors and their respective successors and assigns. No Grantor shall,
without the prior written consent of the Collateral Agent given in accordance
with the Term Loan Agreement, assign any right, duty or obligation hereunder.
This Agreement and the other Credit Documents embody the entire agreement and
understanding between Grantors and the Collateral Agent and supersede all prior
agreements and understandings between such parties relating to the subject
matter hereof and thereof. Accordingly, the Credit Documents may not be
contradicted by evidence of prior, contemporaneous or subsequent oral agreements
of the parties. There are no unwritten oral agreements between the parties. This
Agreement may be executed in one or more counterparts and by different parties
hereto in separate counterparts, each of which when so executed and delivered
shall be deemed an original, but all such counterparts together shall constitute
but one and the same instrument; signature pages may be detached from multiple
separate counterparts and attached to a single counterpart so that all signature
pages are physically attached to the same document.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK, WITHOUT, UNLESS THE CONTEXT REQUIRES
OTHERWISE, REGARD TO ITS CONFLICTS OF LAW PROVISIONS (OTHER THAN SECTION 5-1401
AND SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATION LAWS).
[Signature pages follow]
IN WITNESS WHEREOF, each Grantor and the Collateral Agent have caused
this Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
FEDDERS NORTH AMERICA, INC.,
as Grantor
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
--------------------------------
Name: Xxxxxx X. Xxxxxxx, Xx.
Title: Executive Vice President
FEDDERS CORPORATION,
as Grantor
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
--------------------------------
Name: Xxxxxx X. Xxxxxxx, Xx.
Title: Executive Vice President
XXXXXXX QUIET KOOL CORPORATION,
as Grantor
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
--------------------------------
Name: Xxxxxx X. Xxxxxxx, Xx.
Title: Executive Vice President
XXXXXX COIL COMPANY,
as Grantor
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
--------------------------------
Name: Xxxxxx X. Xxxxxxx, Xx.
Title: Executive Vice President
COLUMBIA SPECIALTIES, INC.,
as Grantor
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
--------------------------------
Name: Xxxxxx X. Xxxxxxx, Xx.
Title: Executive Vice President
ROTOREX COMPANY, INC.,
as Grantor
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
--------------------------------
Name: Xxxxxx X. Xxxxxxx, Xx.
Title: Executive Vice President
[SIGNATURE PAGE TO TERM LOAN PLEDGE AND SECURITY AGREEMENT]
FEDDERS ADDISON COMPANY, INC.,
as Grantor
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
--------------------------------
Name: Xxxxxx X. Xxxxxxx, Xx.
Title: Executive Vice President
FEDDERS ISLANDAIRE, INC.,
as Grantor
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
--------------------------------
Name: Xxxxxx X. Xxxxxxx, Xx.
Title: Executive Vice President
ISLAND METAL FABRICATING INC.,
as Grantor
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
--------------------------------
Name: Xxxxxx X. Xxxxxxx, Xx.
Title: Executive Vice President
TRION, INC.,
as Grantor
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
--------------------------------
Name: Xxxxxx X. Xxxxxxx, Xx.
Title: Executive Vice President
ENVIRCO CORPORATION,
as Grantor
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
--------------------------------
Name: Xxxxxx X. Xxxxxxx, Xx.
Title: Executive Vice President
FEDDERS INTERNATIONAL, INC.,
as Grantor
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
--------------------------------
Name: Xxxxxx X. Xxxxxxx, Xx.
Title: Executive Vice President
[SIGNATURE PAGE TO TERM LOAN PLEDGE AND SECURITY AGREEMENT]
FEDDERS INVESTMENT CORPORATION,
as Grantor
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
--------------------------------
Name: Xxxxxx X. Xxxxxxx, Xx.
Title: Executive Vice President
FEDDERS HOLDING COMPANY, INC.,
as Grantor
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
--------------------------------
Name: Xxxxxx X. Xxxxxxx, Xx.
Title: Executive Vice President
HERRMIDIFIER COMPANY, INC.,
as Grantor
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
--------------------------------
Name: Xxxxxx X. Xxxxxxx, Xx.
Title: Executive Vice President
FEDDERS, INC.,
as Grantor
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
--------------------------------
Name: Xxxxxx X. Xxxxxxx, Xx.
Title: Executive Vice President
[SIGNATURE PAGE TO TERM LOAN PLEDGE AND SECURITY AGREEMENT]
XXXXXXX XXXXX CREDIT PARTNERS L.P.,
as the Collateral Agent
By: /s/ Xxxx XxXxxxxx
--------------------------------
Name: Xxxx XxXxxxxx
Title: Authorized Signatory
[SIGNATURE PAGE TO TERM LOAN PLEDGE AND SECURITY AGREEMENT]
SCHEDULE 4.1
TO PLEDGE AND SECURITY AGREEMENT
GENERAL INFORMATION
(A) Full Legal Name, Type of Organization, Jurisdiction of Organization,
Chief Executive Office/Sole Place of Business (or Residence if Grantor
is a Natural Person) and Organizational Identification Number of each
Grantor:
Chief Executive
Office/Sole Place
Jurisdiction of Business (or
Full Legal Type of of Residence if Grantor Organization
Name Organization Organization is a Natural Person) I.D. #
---- ------------ ------------ -------------------- ------------
(B) Other Names (including any Trade Name or Fictitious Business Name)
under which each Grantor has conducted business for the past five (5)
years:
Full Legal Name Trade Name or Fictitious Business Name
--------------- --------------------------------------
(C) Changes in Name, Jurisdiction of Organization, Chief Executive Office
or Sole Place of Business (or Principal Residence if Grantor is a
Natural Person) and Corporate Structure within past five (5) years:
Grantor Date of Change Description of Change
------- -------------- ---------------------
(D) Agreements pursuant to which any Grantor is found as debtor within
past five (5) years:
Grantor Description of Agreement
------- ------------------------
(E) Financing Statements:
Grantor Filing Jurisdiction(s)
------- ----------------------
SCHEDULE 4.1-1
SCHEDULE 4.2
TO PLEDGE AND SECURITY AGREEMENT
Grantor Location of Equipment and Inventory
------- -----------------------------------
SCHEDULE 4.2-1
SCHEDULE 4.4
TO PLEDGE AND SECURITY AGREEMENT
INVESTMENT RELATED PROPERTY
(A) Pledged Stock:
------------------ ------------ ------------- ------------------ --------------- ---------------- ------------ ------------------
Percentage of
Stock No. of Outstanding
Stock Class of Certificated Certificate Pledged Stock of the
Grantor Issuer Stock (Y/N) No. Par Value Stock Stock Issuer
------------------ ------------ ------------- ------------------ --------------- ---------------- ------------ ------------------
------------------ ------------ ------------- ------------------ --------------- ---------------- ------------ ------------------
Pledged LLC Interests:
---------------------- ----------------- -------------------- --------------------- -------------------- -------------------------
Percentage of
Outstanding LLC
Limited Interests of the
Liability Certificated Certificate No. No. of Pledged Limited Liability
Grantor Company (Y/N) (if any) Units Company
---------------------- ----------------- -------------------- --------------------- -------------------- -------------------------
---------------------- ----------------- -------------------- --------------------- -------------------- -------------------------
Pledged Partnership Interests:
-------------------- ------------------ ----------------------- --------------------- ------------------- -----------------------
Percentage of
Type of Partnership Outstanding
Interests (e.g., Certificate No. Partnership Interests
Grantor Partnership general or limited) Certificated (Y/N) (if any) of the Partnership
--------------------- ------------------ ----------------------- --------------------- ------------------- -----------------------
--------------------- ------------------ ----------------------- --------------------- ------------------- -----------------------
Pledged Trust Interests:
------------------- -------------------- -------------------- --------------------- -------------------- ------------------------
Percentage of
Class of Trust Certificate No. Outstanding Trust
Grantor Trust Interests Certificated (Y/N) (if any) Interests of the Trust
------------------- -------------------- -------------------- --------------------- -------------------- ------------------------
------------------- -------------------- -------------------- --------------------- -------------------- ------------------------
Pledged Debt:
------------------- -------------------- -------------------- --------------------- -------------------- ------------------------
Grantor Issuer Original Principal Outstanding
Grantor Issuer Amount Principal Balance Issue Date Maturity Date
------------------- -------------------- -------------------- --------------------- -------------------- ------------------------
------------------- -------------------- -------------------- --------------------- -------------------- ------------------------
Securities Account:
---------------------------------- ------------------------------- ------------------------------ -------------------------------
Share of Securities Account Number Account Name
Grantor Intermediary
---------------------------------- ------------------------------- ------------------------------ -------------------------------
---------------------------------- ------------------------------- ------------------------------ -------------------------------
Commodities Accounts:
------------------------------ ------------------------------ ------------------------------- -----------------------------------
Name of Commodities
Grantor Intermediary Account Number Account Name
------------------------------ ------------------------------ ------------------------------- -----------------------------------
------------------------------ ------------------------------ ------------------------------- -----------------------------------
Deposit Accounts:
----------------------------------- ------------------------------ ------------------------------ ------------------------------
Grantor Name of Depositary Bank Account Number Account Name
----------------------------------- ------------------------------ ------------------------------ ------------------------------
----------------------------------- ------------------------------ ------------------------------ ------------------------------
SCHEDULE 4.4-1
(B)
--------------------------------------- ----------------------------------------- ------------------------------------------
Grantor Date of Acquisition Description of Acquisition
--------------------------------------- ----------------------------------------- ------------------------------------------
--------------------------------------- ----------------------------------------- ------------------------------------------
--------------------------------------- ----------------------------------------- ------------------------------------------
(C)
------------------------------------------------------------ ---------------------------------------------------------------
Grantor Name of Issuer of Pledged LLC Interest/Pledged
Partnership Interest
------------------------------------------------------------ ---------------------------------------------------------------
------------------------------------------------------------ ---------------------------------------------------------------
------------------------------------------------------------ ---------------------------------------------------------------
SCHEDULE 4.4-2
SCHEDULE 4.6
TO PLEDGE AND SECURITY AGREEMENT
Grantor Description of Letters of Credit
------- --------------------------------
SCHEDULE 4.6-1
SCHEDULE 4.7
TO PLEDGE AND SECURITY AGREEMENT
INTELLECTUAL PROPERTY
(A) Copyrights
(B) Copyright Licenses
(C) Patents
(D) Patent Licenses
(E) Trademarks
(F) Trademark Licenses
(G) Trade Secret Licenses
(H) Intellectual Property Exceptions
SCHEDULE 4.7-1
SCHEDULE 4.8
TO PLEDGE AND SECURITY AGREEMENT
Grantor Commercial Tort Claims
------- ----------------------
SCHEDULE 4.8-1
EXHIBIT A-7
EXHIBIT A
TO PLEDGE AND SECURITY AGREEMENT
PLEDGE SUPPLEMENT
This PLEDGE SUPPLEMENT, dated [mm/dd/yy], is delivered by [NAME OF
GRANTOR] a [NAME OF STATE OF INCORPORATION] [Corporation] (the "Grantor")
pursuant to the Pledge and Security Agreement, dated as of March [___], 2007 (as
it may be from time to time amended, restated, modified or supplemented, the
"Security Agreement"), among FEDDERS CORPORATION, FEDDERS NORTH AMERICA, INC.,
the other Grantors named therein, and XXXXXXX XXXXX CREDIT PARTNERS L.P., as the
Collateral Agent. Capitalized terms used herein not otherwise defined herein
shall have the meanings ascribed thereto in the Security Agreement.
Grantor hereby confirms the grant to the Collateral Agent set forth in
the Security Agreement of, and does hereby grant to the Collateral Agent, a
security interest in all of Grantor's right, title and interest in and to all
Collateral to secure the Secured Obligations, in each case whether now or
hereafter existing or in which Grantor now has or hereafter acquires an interest
and wherever the same may be located. Grantor represents and warrants that the
attached Supplements to Schedules accurately and completely set forth all
additional information required pursuant to the Security Agreement and hereby
agrees that such Supplements to Schedules shall constitute part of the Schedules
to the Security Agreement.
IN WITNESS WHEREOF, Grantor has caused this Pledge Supplement to be
duly executed and delivered by its duly authorized officer as of [mm/dd/yy].
[NAME OF GRANTOR]
By:_____________________________
Name:
Title:
EXHIBIT A-1
SUPPLEMENT TO SCHEDULE 4.1
TO PLEDGE AND SECURITY AGREEMENT
Additional Information:
(A) Full Legal Name, Type of Organization, Jurisdiction of Organization,
Chief Executive Office/Sole Place of Business (or Residence if Grantor
is a Natural Person) and Organizational Identification Number of each
Grantor:
Chief Executive
Office/Sole Place
of Business (or
Jurisdiction Residence if
Full Legal Type of of Grantor is a Organization
Name Organization Organization Natural Person) I.D.#
------------- -------------- -------------- ------------------ ---------------
(B) Other Names (including any Trade Name or Fictitious Business Name)
under which each Grantor has conducted business for the past five (5)
years:
Full Legal Name Trade Name or Fictitious Business Name
--------------- --------------------------------------
(C) Changes in Name, Jurisdiction of Organization, Chief Executive Office
or Sole Place of Business (or Principal Residence if Grantor is a
Natural Person) and Corporate Structure within past five (5) years:
Name of Grantor Date of Change Description of Change
--------------- -------------- ---------------------
(D) Agreements pursuant to which any Grantor is found as debtor within
past five (5) years:
Name of Grantor Description of Agreement
--------------- ------------------------
\
(E) Financing Statements:
Name of Grantor Filing Jurisdiction(s)
--------------- ----------------------
EXHIBIT A-2
SUPPLEMENT TO SCHEDULE 4.2
TO PLEDGE AND SECURITY AGREEMENT
Additional Information:
Name of Grantor Location of Equipment and Inventory
--------------- -----------------------------------
EXHIBIT A-3
SUPPLEMENT TO SCHEDULE 4.4
TO PLEDGE AND SECURITY AGREEMENT
Additional Information:
(A)
Pledged Stock:
Pledged Partnership Interests:
Pledged LLC Interests:
Pledged Trust Interests:
Pledged Debt:
Securities Account:
Commodities Accounts:
Deposit Accounts:
(B)
Name of Grantor Date of Acquisition Description of Acquisition
--------------- ------------------- --------------------------
(C)
Name of Grantor Name of Issuer of Pledged LLC Interest/Pledged
--------------- ----------------------------------------------
Partnership Interest
--------
EXHIBIT A-4
SUPPLEMENT TO SCHEDULE 4.6
TO PLEDGE AND SECURITY AGREEMENT
Additional Information:
Name of Grantor Description of Letters of Credit
--------------- --------------------------------
EXHIBIT A-5
SUPPLEMENT TO SCHEDULE 4.7
TO PLEDGE AND SECURITY AGREEMENT
Additional Information:
(A) Copyrights
(B) Copyright Licenses
(C) Patents
(D) Patent Licenses
(E) Trademarks
(F) Trademark Licenses
(G) Trade Secret Licenses
(H) Intellectual Property Exceptions
EXHIBIT A-6
SUPPLEMENT TO SCHEDULE 4.8
TO PLEDGE AND SECURITY AGREEMENT
Additional Information:
Name of Grantor Commercial Tort Claims
--------------- ----------------------
EXHIBIT X-0
XXXXXXX X, X, X
TO PLEDGE AND SECURITY AGREEMENT
INTELLECTUAL PROPERTY SECURITY AGREEMENTS
[PROVIDED SEPARATELY]
EXHIBIT B
