EXECUTION VERSION
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COLLATERAL AGREEMENT
made by
PAPERWEIGHT DEVELOPMENT CORP.,
APPLETON PAPERS INC.,
and certain of its Subsidiaries
in favor of
U.S. BANK NATIONAL ASSOCIATION,
as Collateral Agent
Dated as of February 8, 2010
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TABLE OF CONTENTS
Page
SECTION 1. DEFINED TERMS.....................................................1
1.1 Definitions..........................................................1
1.2 Other Definitional Provisions........................................5
SECTION 2. RESERVED..........................................................6
SECTION 3. GRANT OF SECURITY INTEREST........................................6
SECTION 4. REPRESENTATIONS AND WARRANTIES....................................7
4.1 Title; No Other Liens................................................7
4.2 Perfected First Priority Liens.......................................8
4.3 Jurisdiction of Organization; Chief Executive Office.................8
4.4 Inventory and Equipment..............................................8
4.5 Farm Products........................................................8
4.6 Investment Property..................................................9
4.7 Receivables..........................................................9
4.8 Intellectual Property................................................9
SECTION 5. COVENANTS........................................................10
5.1 Covenants in Indenture..............................................10
5.2 Delivery of Instruments, Certificated Securities and Chattel Paper..10
5.3 Maintenance of Insurance............................................10
5.4 Maintenance of Perfected Security Interest; Further Documentation...10
5.5 Changes in Locations, Name, etc.....................................11
5.6 Notices.............................................................11
5.7 Investment Property.................................................12
5.8 Receivables.........................................................13
5.9 Intellectual Property...............................................13
5.10 Commercial Tort Claims..............................................15
5.11 Deposit Accounts; Securities Accounts...............................15
SECTION 6. REMEDIAL PROVISIONS..............................................15
6.1 Certain Matters Relating to Receivables.............................15
6.2 Communications with Obligors; Grantors Remain Liable................16
6.3 Pledged Stock.......................................................17
6.4 Proceeds to be Turned Over to Collateral Agent......................17
6.5 Application of Proceeds.............................................18
6.6 Code and Other Remedies.............................................18
6.7 Private Sales.......................................................19
6.8 Deficiency..........................................................20
6.9 Intellectual Property License.......................................20
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SECTION 7. THE COLLATERAL AGENT.............................................20
7.1 Collateral Agent's Appointment as Attorney-in-Fact, etc.............20
7.2 Duty of Collateral Agent............................................22
7.3 Filing of Financing Statements......................................22
7.4 Authority of Collateral Agent.......................................23
SECTION 8. MISCELLANEOUS....................................................23
8.1 Amendments in Writing...............................................23
8.2 Notices.............................................................23
8.3 No Waiver by Course of Conduct; Cumulative Remedies.................23
8.4 Enforcement Expenses; Indemnification...............................23
8.5 Successors and Assigns..............................................24
8.6 Set-Off.............................................................24
8.7 Counterparts........................................................24
8.8 Severability........................................................24
8.9 Section Headings....................................................24
8.10 Integration.........................................................25
8.11 GOVERNING LAW.......................................................25
8.12 Submission To Jurisdiction; Waivers.................................25
8.13 Acknowledgements....................................................25
8.14 Additional Grantors.................................................26
8.15 Releases............................................................26
8.16 WAIVER OF JURY TRIAL................................................26
8.17 Permitted Liens.....................................................26
Annex I to Collateral Agreement................................................1
Schedule 1 Notices
Schedule 2 Pledged Collateral
Schedule 3 Perfection of Liens
Schedule 4 Jurisdiction of Organization
Schedule 5 Location of Inventory and Equipment
Schedule 6 Intellectual Property
Schedule 7 Commercial Tort Claims
Schedule 8 Deposit Accounts, Securities Accounts
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COLLATERAL AGREEMENT, dated as of February 8, 2010, made by each of
the signatories hereto (together with any other entity that may become a party
hereto as provided herein, the "Grantors"), in favor of U.S. Bank National
Association, as collateral agent (in such capacity and together with its
successors and assigns in such capacity, the "Collateral Agent") for the Secured
Parties (as defined below).
W I T N E S S E T H:
WHEREAS, Appleton Papers Inc., a Delaware corporation (the "Notes
Issuer"), Paperweight Development Corp., a Wisconsin corporation ("Holdings"),
the guarantors party thereto (together with Holdings, each a "Guarantor" and
collectively, the "Guarantors") and U.S. Bank National Association, as trustee
(in such capacity and together with its successors and assigns in such capacity,
the "Trustee"), have entered into an Indenture, dated as of February 8, 2010 (as
amended, restated, supplemented and/or otherwise modified from time to time, the
"Indenture"), and pursuant thereto, the Notes Issuer is issuing, and the
Guarantors are guaranteeing, $305,000,000 in aggregate principal amount of
10.50% Senior Secured Notes due 2015 (the "Notes");
WHEREAS, the Notes Issuer is a member of an affiliated group of
companies that includes each other Grantor;
WHEREAS, the proceeds from the issuance of the Notes will be used in
part to repay certain existing indebtedness;
WHEREAS, the Notes Issuer and the other Grantors are engaged in
related businesses, and each Grantor will derive substantial direct and indirect
benefit from the issuance of the Notes;
WHEREAS, the Collateral Agent has agreed to act as agent for the
benefit of the Secured Parties in connection with the transactions contemplated
by the Indenture and this Agreement; and
WHEREAS, in order to induce the prospective holders of the Notes to
subscribe to the Notes, the Grantors have agreed to grant a continuing security
interest in and to the Collateral (as defined below) in order to secure the
prompt and complete payment, observance and performance of, among other things,
their respective Obligations (as defined below);
NOW, THEREFORE, in consideration of the recitals made above and other
good and valuable consideration, the receipt, sufficiency and adequacy of which
are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINED TERMS
1.1 Definitions.
(a) Unless otherwise defined herein, terms defined in the Indenture
and used herein shall have the meanings given to them in the Indenture, and the
following terms are used herein as defined in the New York UCC: Account,
Certificated Security, Chattel Paper,
Commercial Tort Claim, Document, Equipment, Farm Products, General Intangible,
Instruments, Inventory, Letter-of-Credit Right and Supporting Obligation.
(b) The following terms shall have the following meanings:
"Agreement": this Collateral Agreement, as the same may be amended,
restated, supplemented and/or otherwise modified from time to time.
"Collateral": as defined in Section 3.
"Collateral Account": any collateral account established by the
Collateral Agent as provided in Section 6.1 or 6.4.
"Copyrights": (i) all copyrights arising under the laws of the United
States, any other country or any political subdivision thereof, whether
registered or unregistered and whether published or unpublished (including,
without limitation, those listed in Schedule 6), all registrations and
recordings thereof, and all applications in connection therewith, including,
without limitation, all registrations, recordings and applications in the United
States Copyright Office or any other similar authority throughout the world,
(ii) all rights corresponding thereto throughout the world, and (iii) the right
to obtain all extensions and renewals thereof.
"Copyright Licenses": any written or oral agreement naming any Grantor
as licensor or licensee (including, without limitation, those listed in Schedule
6), granting any right under any Copyright, including, without limitation, the
grant of rights to manufacture, distribute, exploit and sell materials derived
from any Copyright.
"Deposit Account": as defined in the New York UCC and, in any event,
including, without limitation, any demand, time, savings, passbook or like
account maintained with a depositary institution. The Deposit Accounts of the
Grantors as of the Closing Date are listed on Schedule 8.
"Excluded Stock" means all interests of the Borrower or any Grantor in
any of their respective Subsidiaries that are not a Domestic Subsidiary and are
not a Guarantor (as such terms is defined in the Indenture).
"Governmental Authority" means the government of the United States or
any other nation, or of any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Indenture Collateral": all "Collateral" under, and as defined in, the
Indenture.
"Intellectual Property": the collective reference to all rights,
priorities and privileges relating to intellectual property or similar
proprietary rights, whether arising under United States, multinational or
foreign laws or otherwise, including, without limitation, the Copyrights, the
Copyright Licenses, the Patents, the Patent Licenses, the Trademarks, the
Trademark Licenses, Trade Secrets and Trade Secret Licenses and all rights
thereto throughout
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the world including, without limitation, all claims, causes of action, defenses
arising out of or related to any of the foregoing and the right to xxx at law or
in equity for any past, present and future infringement, misappropriation,
misuse, dilution or other impairment thereof, including the right to receive all
proceeds and damages from all of the foregoing.
"Intercompany Note": any promissory note evidencing loans made by any
Grantor to Holdings or any of its Subsidiaries.
"Intercreditor Agreement": as defined in Section 3.
"Investment Property": the collective reference to (i) all "investment
property" as such term is defined in Section 9-102(a)(49) of the New York UCC
and (ii) whether or not constituting "investment property" as so defined in the
preceding clause (i), all Pledged Notes and all Pledged Stock.
"Issuers": the collective reference to each issuer of any Investment
Property.
"New York UCC": the Uniform Commercial Code as from time to time in
effect in the State of New York.
"Obligations": the collective reference to the unpaid principal of and
interest and premium on the Notes and all other monetary obligations and
liabilities of the Grantors (including, without limitation, interest accruing at
the then applicable rate provided in the Note Documents after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, relating to any of the Grantors, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding) to the
Collateral Agent and Secured Parties as the case may be, whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, or pursuant to, the Note Documents or
any other document made, delivered or given in connection with any of the
foregoing, in each case whether on account of principal, interest, reimbursement
obligations, premium, fees, indemnities, costs, expenses or otherwise
(including, without limitation, all fees and disbursements of counsel to the
Collateral Agent or any Secured Party as the case may be, that are required to
be paid by any Grantor pursuant to the terms of this Agreement) and all
guaranties of the foregoing amounts.
"Patent License": all agreements, whether written or oral, providing
for the grant by or to any Grantor of any right to manufacture, use or sell any
invention covered in whole or in part by a Patent, including, without
limitation, any of the foregoing referred to in Schedule 6.
"Patents": (i) all letters patent of the United States, any other
country or any political subdivision thereof, all reissues and extensions
thereof, including, without limitation, any of the foregoing referred to in
Schedule 6, (ii) all applications for letters patent of the United States or any
other country and all reissues, extensions, renewals, reexaminations, divisions,
continuations and continuations-in-part thereof, including, without limitation,
any of the foregoing referred to in Schedule 6, (iii) all invention disclosures,
utility models or similar industrial property rights and (iv) all rights
corresponding thereto throughout the world, including rights to obtain any
reissues or extensions of the foregoing.
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"Permitted Unperfected Account": with respect to any Grantor, any
Deposit Account or Securities Account of such Grantor (a) that contains a
balance of deposits equal to or less than $10,000, provided that such Deposit
Account or Securities Account shall not cease to be a Permitted Unperfected
Account if it contains a balance greater than $10,000 for not longer than 2
consecutive Business Days and provided that the balance of deposits in all such
Deposit Accounts and Securities Accounts of the Grantors and all other
Guarantors combined shall not exceed $100,000 in the aggregate at any time, (b)
with respect to Deposit Accounts only, is used solely as (i) a payroll account,
(ii) an employee benefit account, (ii) an operating expenses disbursement
account that is zero-balanced on a daily basis, (iii) a sub-concentration
account that is zero-balanced on a daily basis, or (iii) a fiduciary or trust
account; or (c) as to which the Collateral Agent otherwise agrees that no
control agreement need be obtained. The Permitted Unperfected Accounts of the
Grantors as of the Closing Date are so indicated on Schedule 8. Notwithstanding
the foregoing, no "Notes Priority Collateral Account" (as such term is defined
in the First Lien Note Indenture) shall in any event constitute a "Permitted
Unperfected Account" for purposes of this Agreement.
"Pledged Notes": all promissory notes listed on Schedule 2, all
Intercompany Notes at any time issued to any Grantor and all other promissory
notes issued to or held by any Grantor (other than promissory notes issued in
connection with extensions of trade credit by any Grantor in the ordinary course
of business).
"Pledged Stock": the shares of Capital Stock listed on Schedule 2,
together with any other shares, stock certificates, options, interests or rights
of any nature whatsoever in respect of the Capital Stock of any Person that may
be issued or granted to, or held by, any Grantor while this Agreement is in
effect; provided that such term shall not, in any case, include any Excluded
Stock.
"Proceeds": all "proceeds" as such term is defined in Section
9-102(a)(64) of the New York UCC and, in any event, shall include, without
limitation, all dividends or other income from the Investment Property,
collections thereon or distributions or payments with respect thereto.
"Receivable": any right to payment for goods sold or leased or for
services rendered, whether or not such right is evidenced by an Instrument or
Chattel Paper and whether or not it has been earned by performance (including,
without limitation, any Account).
"Requirement of Law" means, as to any Person, the certificate or
articles of incorporation and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Secured Parties": the collective reference to the Trustee, the
Collateral Agent and the Holders.
"Securities Account": as defined in the New York UCC. The Securities
Accounts of the Grantors as of the Closing Date are listed on Schedule 8.
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"Securities Act": the Securities Act of 1933, as amended.
"Trade Secret Licenses" means any and all written or oral agreements
granting any right in or to Trade Secrets (whether a Grantor is licensee or
licensor thereunder).
"Trade Secrets" means all trade secrets, as recognized under
applicable local law, whether or not reduced to a writing or other tangible
form, now or hereafter in force, owned or used in, or contemplated at any time
for use in, the business of any Grantor, including with respect to any and all
of the foregoing: (i) all documents and things embodying, incorporating, or
referring in any way thereto, (ii) all rights to xxx for past, present and
future infringement thereof, (iii) all claims, damages, and proceeds of suit
arising therefrom, and (iv) all payments and royalties and rights to payments
and royalties arising out of the sale, lease, license, assignment, or other
dispositions thereof.
"Trademark License": any agreement, whether written or oral, providing
for the grant by or to any Grantor of any right to use any Trademark, including,
without limitation, any of the foregoing referred to in Schedule 6.
"Trademarks": (i) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, service
marks, logos and other source or business identifiers, and all goodwill
associated therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any state thereof or any other
country or any political subdivision thereof, or otherwise, and all common-law
rights related thereto, including, without limitation, any of the foregoing
referred to in Schedule 6, and (ii) the right to obtain all extensions and
renewals thereof. Notwithstanding the foregoing, the Trademarks shall not
include any "intent-to-use" applications for trademark or service xxxx
registrations filed pursuant to Section 1(b) of the Xxxxxx Act, 15 U.S.C.
Section 1051, unless and until an Amendment to Allege Use or a Statement of Use
under Section 1(c) or Section 1(d) of the Xxxxxx Act has been filed, to the
extent that any assignment of an "intent-to-use" application prior to such
filing would violate the Xxxxxx Act or cause the trademark that is the subject
thereof to be invalidated or abandoned.
1.2 Other Definitional Provisions.
(a) The words "hereof," "herein", "hereto" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
Section and Schedule references are to this Agreement unless otherwise
specified.
(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
(c) Where the context requires, terms relating to the Collateral or
any part thereof, when used in relation to a Grantor, shall refer to such
Grantor's Collateral or the relevant part thereof.
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SECTION 2. RESERVED
SECTION 3. GRANT OF SECURITY INTEREST
Each Grantor hereby assigns and transfers to the Collateral Agent, and
hereby grants to the Collateral Agent, for the ratable benefit of each of the
Secured Parties, a security interest in, all of the following property now owned
or at any time hereafter acquired by such Grantor or in which such Grantor now
has or at any time in the future may acquire any right, title or interest
(collectively, the "Collateral"), as collateral security for the prompt and
complete payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of such Grantor's Obligations:
(a) all Accounts;
(b) all Chattel Paper;
(c) all contracts;
(d) all Deposit Accounts;
(e) all Documents;
(f) all Equipment;
(g) all General Intangibles;
(h) all Instruments;
(i) all Intellectual Property;
(j) all Inventory;
(k) all Investment Property;
(l) all Letter-of-Credit Rights;
(m) all books and records pertaining to the Collateral;
(n) those certain Commercial Tort Claims of the Obligors set forth
on Schedule 7 attached hereto; and
(o) to the extent not otherwise included, all Proceeds, Supporting
Obligations and products of any and all of the foregoing and all collateral
security and guarantees given by any Person with respect to any of the
foregoing;
provided, however, that notwithstanding any of the other provisions set forth in
this Section 3, this Agreement shall not constitute a grant of a security
interest in any property to the extent that (x) such grant of a security
interest is prohibited by any Requirement of Law, requires a consent not
obtained of any Governmental Authority pursuant to any such Requirement of Law
or is
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prohibited by, or constitutes a breach or default under, or results in the
termination of or requires any consent not obtained under, any contract,
license, agreement, instrument or other document evidencing or giving rise to
such property or, in the case of any Investment Property, Pledged Stock or
Pledged Note, any applicable shareholder or similar agreement, except to the
extent that such Requirement of Law or the applicable terms in such contract,
license, agreement, instrument or other document or shareholder or similar
agreement providing for such prohibition, breach, default or termination or
requiring such consent is ineffective under applicable law or (y) such property
constitutes "Collateral" under and as defined in the Fox River Security
Agreement;.
NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, ALL TERMS OF THIS
AGREEMENT (INCLUDING, WITHOUT LIMITATION, THE REPRESENTATIONS AND WARRANTIES
MADE HEREIN, THE LIENS AND SECURITY INTERESTS GRANTED TO THE COLLATERAL AGENT
PURSUANT TO THIS AGREEMENT, THE EXERCISE OF ANY RIGHT OR REMEDY BY THE
COLLATERAL AGENT AND THE OTHER SECURED PARTIES HEREUNDER, ALL OTHER RIGHTS AND
BENEFITS AFFORDED HEREUNDER TO THE COLLATERAL AGENT AND THE OTHER SECURED
PARTIES AND ALL OBLIGATIONS OF THE NOTES ISSUER AND OTHER GRANTORS HEREUNDER)
ARE SUBJECT IN ALL RESPECTS TO THE TERMS, CONDITIONS AND PROVISIONS OF THAT
CERTAIN INTERCREDITOR AGREEMENT, DATED AS OF FEBRUARY 8, 2010 (AS AMENDED,
RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME IN ACCORDANCE
WITH THE TERMS THEREOF, THE "INTERCREDITOR AGREEMENT") BY AND AMONG FIFTH THIRD
BANK, AS RCF REPRESENTATIVE FOR THE BENEFIT OF THE RCF SECURED PARTIES (AS
DEFINED THEREIN), U.S. BANK NATIONAL ASSOCIATION, AS NOTE REPRESENTATIVE FOR THE
NOTE SECURED PARTIES (AS DEFINED THEREIN), FIFTH THIRD BANK, IN ITS CAPACITY AS
FIRST LIEN REPRESENTATIVE (AS DEFINED THEREIN), AND CERTAIN OTHER PERSONS PARTY
OR THAT MAY BECOME PARTY THERETO FROM TIME TO TIME. IN THE EVENT OF ANY CONFLICT
BETWEEN THE TERMS OF THE INTERCREDITOR AGREEMENT AND THE TERMS OF THIS
AGREEMENT, THE TERMS OF THE INTERCREDITOR AGREEMENT SHALL GOVERN AND CONTROL.
SECTION 4. REPRESENTATIONS AND WARRANTIES
Each Grantor hereby represents and warrants to the Collateral Agent and
each other Secured Party that:
4.1 Title; No Other Liens. Except for the security interest granted to the
Collateral Agent for the ratable benefit of the Secured Parties pursuant to this
Agreement and the other Liens permitted to exist on the Collateral by the Note
Documents, such Grantor owns its Collateral in all material respects free and
clear of any and all Liens or claims of others. For the avoidance of doubt, it
is understood and agreed that any Grantor may, as part of its business, grant
licenses to third parties to use Intellectual Property owned or developed by a
Grantor. For purposes of this Agreement and the other Note Documents, such
licensing activity shall not constitute a "Lien" or a "claim" on such
Intellectual Property. Each of the Collateral Agent and each Secured Party
understands that any such licenses may be exclusive to the applicable
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licensees, and such exclusivity provisions may limit the ability of the
Collateral Agent to utilize, sell, Lease or transfer the related Intellectual
Property or otherwise realize value from such Intellectual Property pursuant
hereto.
4.2 Perfected First Priority Liens. The security interests granted
pursuant to this Agreement (a) upon completion of the filings and other actions
specified on Schedule 3 (including obtaining "control" (within the meaning of
the applicable Uniform Commercial Code) of Deposit Accounts and Securities
Accounts (other than Permitted Unperfected Accounts), Investment Property and,
to the extent requested in writing by the Collateral Agent, Letter-of-Credit
Rights (which, in the case of all filings and other documents referred to on
said Schedule, unless otherwise noted, have been delivered to the Collateral
Agent in completed and, where applicable, duly executed form) will constitute
valid perfected security interests (to the extent perfection of security
interests therein may be perfected by filing of UCC-1 financing statements
and/or filings with the United States Patent and Trademark Office and United
States Copyright Office, possession by the Collateral Agent of the respective
Investment Property or "control" of Deposit Accounts and Securities Accounts) in
all of the Collateral (excluding Letter-of-Credit Rights where written request
has not been made by the Collateral Agent) in favor of the Collateral Agent, for
the ratable benefit of the Secured Parties, as collateral security for such
Grantor's Obligations, enforceable in accordance with the terms hereof against
all creditors of such Grantor and any Persons purporting to purchase any
Collateral from such Grantor, other than purchasers in the ordinary course of
business, and (b) are prior to all other Liens on the Collateral in existence on
the date hereof except for Liens permitted by the Note Documents and other Liens
which have priority over the Liens granted hereunder on the Collateral by
operation of law. Notwithstanding anything to the contrary contained above or
elsewhere in this Agreement, but nonetheless subject to the terms of the
Intercreditor Agreement, with respect to Letter-of-Credit Rights where the
relevant Grantor has been requested by the Collateral Agent to obtain "control"
of same, the respective Grantor shall have a reasonable period of time to comply
with such request and such "control" shall not be required if the respective
Grantor is unable to obtain any required consents for such "control" after using
commercially reasonable efforts to obtain same, and unless and until "control"
of the respective Letter-of-Credit Rights is obtained in accordance with the
above provisions of this Section 4.3 (including this sentence), there shall be
no violation of any representation or warranty or covenant contained in this
Agreement as a result thereof.
4.3 Jurisdiction of Organization; Chief Executive Office. On the date
hereof, such Grantor's jurisdiction of organization, identification number from
the jurisdiction of organization (if any), and the location of such Grantor's
chief executive office or sole place of business or principal residence, as the
case may be, are specified on Schedule 4.
4.4 Inventory and Equipment. On the date hereof, except where the value of
such Inventory and Equipment at any one location does not exceed $250,000 in the
aggregate for the Grantors and all other Guarantors combined, all of the
Grantors' Inventory and Equipment (other than goods in transit) is kept at the
locations listed on Schedule 5.
4.5 Farm Products. None of the Collateral constitutes, or is the Proceeds
of, Farm Products.
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4.6 Investment Property.
(a) The shares of Pledged Stock pledged by such Grantor hereunder
constitute all the issued and outstanding shares of all classes of the Capital
Stock of each Issuer owned by such Grantor, except for Excluded Stock.
(b) On the date hereof, all the shares of the Pledged Stock have
been duly and validly issued and are fully paid and nonassessable.
(c) Each of the Pledged Notes issued by a Grantor constitutes the
legal, valid and binding obligation of the obligor with respect thereto,
enforceable in accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
(d) Such Grantor is the record and beneficial owner of, and has
good and marketable title to, the Investment Property pledged by it hereunder,
free of any and all Liens in favor of, or claims of, any other Person, except
the security interest created by this Agreement, the other Note Documents and as
otherwise would not violate the applicable requirements of the Indenture.
4.7 Receivables.
(a) Except to the extent that such amounts so payable to Grantors
and the other Guarantors combined do not exceed $50,000 in aggregate, no amount
payable to such Grantor under or in connection with any Receivable is evidenced
by any Instrument or Chattel Paper that has not been delivered to the Collateral
Agent.
(b) As of the date hereof, not more than ten percent (10%) of the
Receivables have a Governmental Authority as an obligor.
4.8 Intellectual Property.
(a) Schedule 6 lists all registered and applied for Patents,
Trademarks and Copyrights, in the United States that are owned by such Grantor
in its own name on the date hereof. As of the date hereof, all Intellectual
Property owned by such Grantor and set forth on Schedule 6 is valid, in full
force and effect, subsisting, unexpired and enforceable, and has not been
abandoned. The business of such Grantor and the use of any Intellectual Property
in connection therewith, does not infringe, misappropriate, dilute or violate
the intellectual property rights of any third Person. There are no pending or,
to such Grantor's knowledge, threatened claims of infringement,
misappropriation, dilution or violation by Grantor of any third Person's
intellectual property rights, and there are no facts or circumstances that such
Grantor reasonably believes are likely to form the basis for any such claim, and
such Grantor has not received written notice of any such claim.
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(b) Except as set forth in Schedule 6, on the date hereof none of
the material Intellectual Property is the subject of any licensing or franchise
agreement pursuant to which such Grantor is the licensor or franchisor.
SECTION 5. COVENANTS.
Each Grantor covenants and agrees with the Collateral Agent and the Secured
Parties that, from and after the date of this Agreement until the Obligations
shall have been paid in full:
5.1 Covenants in Indenture. In the case of each Grantor, such Grantor
shall take, or shall refrain from taking, as the case may be, any action that is
necessary to be taken or not taken, as the case may be, so that no Default or
Event of Default under the Indenture is caused by the failure to take such
action or to refrain from taking such action by such Grantor or any of its
Subsidiaries.
5.2 Delivery of Instruments, Certificated Securities and Chattel Paper.
Except to the extent that such amounts so payable to Grantors and the other
Guarantors combined do not exceed $50,000 in aggregate, if any amount payable
under or in connection with any of the Collateral shall be or become evidenced
by any Instrument, Certificated Security or Chattel Paper, such Instrument,
Certificated Security or Chattel Paper shall be promptly delivered to the
Collateral Agent, duly endorsed in a manner reasonably satisfactory to the
Collateral Agent, to be held as Collateral pursuant to this Agreement.
5.3 Maintenance of Insurance.
(a) Such Grantor will maintain, with financially sound and
reputable companies, insurance policies in accordance with the terms of the
Indenture (i) insuring the Inventory and Equipment against loss by fire,
explosion, theft and such other casualties in accordance with the terms of the
Indenture and (ii) insuring such Grantor against liability for personal injury
and property damage relating to such Inventory and Equipment.
(b) All such insurance shall (i) provide for not less than 30 days'
prior notice to the Collateral Agent of termination, lapse or cancellation of
such insurance (to the extent such provision is obtainable using commercially
reasonably efforts) and (ii) name the Collateral Agent as an additional insured
and/or loss payee, as applicable.
(c) The Notes Issuer shall deliver to the Collateral Agent,
substantially concurrently with the delivery to the Collateral Agent of
Holdings' audited annual financial statements for each fiscal year, commencing
with the audited financial statements for fiscal year 2009, annual insurance
certificates updating the certificates delivered on the Closing Date and, in
addition, such supplemental information with respect to the underlying insurance
policies as the Collateral Agent may from time to time reasonably request.
5.4 Maintenance of Perfected Security Interest; Further Documentation.
(a) Such Grantor shall maintain the security interest created by
this Agreement as a perfected security interest (but only to the extent that
such security interest can be perfected by filing a filing a financing
statements under the Uniform Commercial Code (or
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other similar laws) or obtaining "control" (within the meaning of the applicable
Uniform Commercial Code) of Deposit Accounts (other than Permitted Unperfected
Accounts) or Investment Property) having at least the priority described in
Section 4.3 and shall defend such security interest against the claims and
demands of all Persons whomsoever (other than Persons with prior Liens permitted
under clause (b) of Section 4.3), subject to the rights of such Grantor under
the Note Documents to dispose of the Collateral.
(b) Such Grantor will furnish to the Collateral Agent from time to
time statements and schedules further identifying and describing the assets and
property of such Grantor and such other reports in connection with the
Collateral as the Collateral Agent may reasonably request, all in reasonable
detail.
(c) At any time and from time to time, upon the reasonable written
request of the Collateral Agent, and at the sole expense of such Grantor, such
Grantor will promptly and duly execute and deliver, and have recorded, such
further instruments and documents and take such further actions as the
Collateral Agent may reasonably request for the purpose of obtaining or
preserving the full benefits of this Agreement and of the rights and powers
herein granted, including, without limitation, (i) filing any financing or
continuation statements under the Uniform Commercial Code (or other similar
laws) in effect in any jurisdiction with respect to the security interests
created hereby, (ii) in the case of Investment Property, Deposit Accounts and
Securities Accounts (including the Notes Priority Collateral Account, if
applicable, but excluding any Permitted Unperfected Accounts), Letter-of-Credit
Rights (but, in the case of such Letter-of-Credit Rights, only after written
request from the Collateral Agent and subject to the last sentence of Section
4.3) and any other relevant Collateral, taking any actions necessary to enable
the Collateral Agent to obtain "control" (within the meaning of the applicable
Uniform Commercial Code) with respect thereto, and (iii) in the case of
Intellectual Property, filings to the United States Patent and Trademark Office,
the United States Copyright Office or other similar authority in any
jurisdiction in the world.
5.5 Changes in Locations, Name, etc. Such Grantor will not, except
upon 15 days' prior written notice to the Collateral Agent and delivery to the
Collateral Agent of all additional financing statements and other documents
reasonably requested by the Collateral Agent to maintain the validity,
perfection and priority of the security interests provided for herein:
(i) change its jurisdiction of organization from that referred to
in Section 4.4; or
(ii) change its name.
5.6 Notices. Such Grantor will advise the Collateral Agent promptly,
in reasonable detail, of the occurrence of any event which could reasonably be
expected to have a material adverse effect on the aggregate value of the
Indenture Collateral or on the security interests created hereby.
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5.7 Investment Property.
(a) If such Grantor shall become entitled to receive or shall
receive any certificate (including, without limitation, any certificate
representing a dividend or a distribution in connection with any
reclassification, increase or reduction of capital or any certificate issued in
connection with any reorganization), option or rights in respect of the Capital
Stock of any Issuer, whether in addition to, in substitution of, as a conversion
of, or in exchange for, any shares of the Pledged Stock, or otherwise in respect
thereof, such Grantor shall accept the same as the agent of the Collateral Agent
and the other Secured Parties, hold the same in trust for the Collateral Agent
for the benefit of the Secured Parties and deliver the same forthwith to the
Collateral Agent in the exact form received, duly endorsed by such Grantor to
the Collateral Agent, if required, together with an undated stock power covering
such certificate duly executed in blank by such Grantor to be held by the
Collateral Agent, subject to the terms hereof, as additional collateral security
for the Obligations. If an Event of Default has occurred and is continuing, any
sums paid upon or in respect of the Investment Property upon the liquidation or
dissolution of, or as a distribution of capital by, any Issuer shall be paid
over to the Collateral Agent to be held by it hereunder as additional collateral
security for the Obligations, and in case any property (if an Event of Default
has occurred and is continuing) or any Investment Property shall be distributed
upon or with respect to the Investment Property pursuant to the recapitalization
or reclassification of the capital of any Issuer or pursuant to the
reorganization thereof, the property so distributed shall, unless otherwise
subject to a perfected security interest in favor of the Collateral Agent, be
delivered to the Collateral Agent to be held by it hereunder as additional
collateral security for the Obligations. If any sums of money or property so
paid or distributed in respect of the Investment Property shall be received by
such Grantor (when otherwise required to be paid or delivered over to the
Collateral Agent as set forth above), such Grantor shall, until such money or
property is paid or delivered to the Collateral Agent, hold such money or
property in trust for the Collateral Agent and the other Secured Parties,
segregated from other funds of such Grantor, as additional collateral security
for the Obligations.
(b) Without the prior written consent of the Collateral Agent, such
Grantor will not (i) if an Event of Default has occurred and is continuing, vote
to enable, or take any other action to permit, any Issuer to issue any Capital
Stock of any nature or to issue any other securities convertible into or
granting the right to purchase or exchange for any Capital Stock of any nature
of any Issuer, (ii) sell, assign, transfer, exchange, or otherwise dispose of,
or grant any option with respect to, the Investment Property or Proceeds thereof
(except pursuant to a transaction permitted by the Indenture), (iii) create,
incur or permit to exist any Lien or option in favor of, or any claim of any
Person with respect to, any of the Investment Property or Proceeds thereof, or
any interest therein, except for the security interests created by this
Agreement or otherwise permitted in the Indenture or (iv) enter into any
agreement or undertaking, other than as permitted under the Indenture,
restricting the right or ability of such Grantor or the Collateral Agent to
sell, assign or transfer any of the Investment Property or Proceeds thereof.
(c) In the case of each Grantor which is an Issuer, such Issuer
agrees that (i) it will be bound by the terms of this Agreement relating to the
Investment Property issued by it and will comply with such terms insofar as such
terms are applicable to it and (ii) the terms of Section 6.3(c) shall apply to
it, mutatis mutandis, with respect to all actions that may be required of it
pursuant to Section 6.3(c) with respect to the Investment Property issued by it.
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5.8 Receivables.
(a) Other than in the ordinary course of business, such Grantor
will not, with respect to any material portion of the Receivables, (i) grant any
extension of the time of payment of any Receivable, (ii) compromise or settle
any Receivable for less than the full amount thereof, (iii) release, wholly or
partially, any Person liable for the payment of any Receivable, (iv) allow any
credit or discount whatsoever on any Receivable or (v) amend, supplement or
modify any Receivable in any manner that could materially adversely affect the
value thereof.
(b) Such Grantor will deliver to the Collateral Agent a copy of
each material demand, notice or document received by it that challenges the
validity or enforceability of more than five percent (5%) of the aggregate
amount of the then outstanding Receivables.
(c) If, as of any fiscal quarter end occurring after the Closing
Date, the Grantors determine that more than ten percent (10%) of Receivables (in
the aggregate for all Grantors) have a Governmental Authority as an obligor,
then the Grantors shall so notify the Collateral Agent (such notice to be given
substantially concurrently with the delivery of the quarterly financial
statements required pursuant to Section 4.03 of the Indenture) and, upon the
reasonable request of the Collateral Agent, promptly take such steps as may be
necessary to comply with any applicable federal assignment of claims laws and
other comparable laws.
5.9 Intellectual Property.
(a) Except as would not have a material adverse effect on the
aggregate value of the Indenture Collateral, such Grantor will (i) continue to
use each Trademark on each and every trademark class of goods applicable to its
current line as reflected in its current catalogs, brochures and price lists in
order to maintain such Trademark in full force free from any claim of
abandonment for non-use, (ii) maintain as in the past the quality of products
and services offered under such Trademark, (iii) use such Trademark with the
appropriate notice of registration and all other notices and legends required by
applicable Requirements of Law, (iv) not adopt or use any xxxx which is
confusingly similar or a colorable imitation of such Trademark unless the
Collateral Agent, for the ratable benefit of the Secured Parties, shall obtain a
perfected security interest in such xxxx pursuant to this Agreement, and (v) not
do any act or knowingly omit to do any act whereby such Trademark may become
invalidated or impaired in any way.
(b) Except as would not have a material adverse effect on the
aggregate value of the Indenture Collateral, such Grantor will not do any act,
or omit to do any act, whereby any Patent may become forfeited, abandoned or
dedicated to the public.
(c) Except as would not have a material adverse effect on the
aggregate value of the Indenture Collateral, such Grantor (i) will employ each
Copyright and (ii) will not do any act or knowingly omit to do any act whereby
any Copyright may become invalidated or otherwise impaired. Such Grantor will
not do any act whereby any Copyright may fall into the public domain, to the
extent such Copyright is material to the aggregate value of the Collateral.
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(d) Except as would not have a material adverse effect on the
aggregate value of the Indenture Collateral, such Grantor will not do any act
that knowingly uses any Intellectual Property to infringe the intellectual
property rights of any other Person.
(e) Such Grantor will promptly notify the Collateral Agent if it
knows, or has reason to know, that any application or registration relating to
any Intellectual Property may become forfeited, abandoned or dedicated to the
public, or of any adverse determination or development (including, without
limitation, the institution of, or any such determination or development in, any
proceeding in the United States Patent and Trademark Office, the United States
Copyright Office or any court or tribunal in any country) regarding such
Grantor's ownership of, or the validity of, any Intellectual Property or such
Grantor's right to register the same or to own and maintain the same, in each
case to the extent such Intellectual Property is material to the aggregate value
of the Indenture Collateral.
(f) Whenever such Grantor, either by itself or through the
Collateral Agent, employee, licensee or designee, shall file an application for
the registration of any Intellectual Property with the United States Patent and
Trademark Office, the United States Copyright Office or any similar office or
agency in any other country or any political subdivision thereof, such Grantor
shall report such filing to the Collateral Agent. Upon reasonable request of the
Collateral Agent, such Grantor shall execute and deliver, and have recorded, any
and all agreements, instruments, documents, and papers as the Collateral Agent
may request to evidence the Secured Parties' security interest in any Copyright,
Patent or Trademark and the goodwill and general intangibles of such Grantor
relating thereto or represented thereby.
(g) Such Grantor will take all reasonable and necessary steps,
including, without limitation, in any proceeding before the United States Patent
and Trademark Office, the United States Copyright Office or any similar office
or agency in any other country or any political subdivision thereof, to maintain
and pursue each application (and to obtain the relevant registration) and to
maintain each registration of Intellectual Property, including, without
limitation, filing of applications for renewal, affidavits of use and affidavits
of incontestability, in each case to the extent such Intellectual Property is
material to the aggregate value of the Indenture Collateral.
(h) In the event that any Intellectual Property is infringed,
misappropriated or diluted by a third party, such Grantor shall (i) take such
actions as such Grantor shall reasonably deem appropriate under the
circumstances to protect such Intellectual Property and (ii) promptly notify the
Collateral Agent after it learns thereof, in each case to the extent such
Intellectual Property is material to the aggregate value of the Collateral.
(i) Upon the occurrence and during the continuance of an Event of
Default, each Grantor shall use its best efforts to obtain all requisite
consents or approvals from the licensor of each Copyright License, Patent
License, Trade Secret License or Trademark License to effect the assignment or
sublicense of all of such Grantor's right, title and interest thereunder to the
Grantee or its designee for the benefit of the Grantees in accordance with this
Agreement or the Indenture.
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5.10 Commercial Tort Claims. Each Grantor shall (i) forward to the
Collateral Agent written notification (such notice to be given substantially
concurrently with the delivery of the quarterly financial statements required
pursuant to Section 4.03 of the Indenture) of any and all Commercial Tort Claims
where the expected recovery could reasonably be expected to be in an amount in
excess of $200,000, including, but not limited to, any and all actions, suits
and proceedings before any court or Governmental Authority by or affecting such
Grantor or any of its Subsidiaries and (ii) if and to the extent requested by
the Collateral Agent in writing, execute and deliver such statements, documents
and notices and do and cause to be done all such things as may be required by
the Collateral Agent, or required by law, including all things which may from
time to time be necessary under the UCC to fully create, preserve, perfect and
protect the priority of the Collateral Agent's security interest in any such
Commercial Tort Claims.
5.11 Deposit Accounts; Securities Accounts.
(a) Each Deposit Account or Securities Account of any Grantor that
is not a Permitted Unperfected Account (each such Deposit Account, a "Controlled
Deposit Account," and each such Securities Account, a "Controlled Securities
Account," Controlled Securities Accounts together with Controlled Deposit
Accounts may sometimes be referred to herein individually as a "Controlled
Account" and, collectively, as "Controlled Accounts") shall be maintained with a
depositary account bank that is a Lender under the Credit Agreement (each a
"Depositary Account Bank").
(b) On or prior to the Issue Date, each Grantor shall have entered
into a deposit account control agreement or securities account control agreement
in form and substance satisfactory to the Collateral Agent with respect to each
Controlled Account with the respective Depositary Account Bank and in favor of
the Collateral Agent (each an "Account Control Agreement"), provided, that the
Collateral Agent hereby agrees that it will not give any instructions under any
Account Control Agreement unless and until an Event of Default shall have
occurred and be continuing.
(c) The closing of any Controlled Deposit Account and the
termination of any Account Control Agreement shall require in each case the
prior written consent of the Collateral Agent.
SECTION 6. REMEDIAL PROVISIONS
6.1 Certain Matters Relating to Receivables.
(a) If an Event of Default shall have occurred and be continuing,
(x) the Collateral Agent shall have the right to make test verifications of the
Receivables in any reasonable manner and through any medium that it reasonably
considers advisable, and each Grantor shall furnish all such assistance and
information as the Collateral Agent may require in connection with such test
verifications and (y) upon the Collateral Agent's reasonable request and at the
expense of the relevant Grantor, such Grantor shall cause independent public
accountants or others satisfactory to the Collateral Agent to furnish to the
Collateral Agent reports showing reconciliations, aging and test verifications
of, and trial balances for, the Receivables.
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(b) The Collateral Agent hereby authorizes each Grantor to collect
such Grantor's Receivables and the Collateral Agent may curtail or terminate
said authority at any time after the occurrence and during the continuance of an
Event of Default. If required by the Collateral Agent at any time after the
occurrence and during the continuance of an Event of Default, any payments of
Receivables, when collected by any Grantor, (i) shall be forthwith (and, in any
event, within two Business Days) deposited by such Grantor in the exact form
received, duly endorsed by such Grantor to the Collateral Agent if required, in
a Collateral Account maintained under the sole dominion and control of the
Collateral Agent, subject to withdrawal by the Collateral Agent for the account
of the Secured Parties only as provided in Section 6.5, and (ii) until so turned
over, shall be held by such Grantor in trust for the Collateral Agent and the
other Secured Parties, segregated from other funds of such Grantor.
(c) If an Event of Default shall have occurred and be continuing,
at the Collateral Agent's reasonable request, (i) each Grantor shall deliver to
the Collateral Agent all original (to the extent such Grantor has original
copies) and other documents evidencing, and relating to, the agreements and
transactions which gave rise to the Receivables, including, without limitation,
all original (to the extent such Grantor has original copies) orders, invoices
and shipping receipts and (ii) the applicable Grantor shall take such steps as
may be necessary to comply with any applicable federal assignment of claims laws
and other comparable laws.
6.2 Communications with Obligors; Grantors Remain Liable.
(a) The Collateral Agent in its own name or in the name of others
may at any time after the occurrence and during the continuance of an Event of
Default communicate with obligors under the Receivables and parties to the
Contracts to verify with them to the Collateral Agent's satisfaction the
existence, amount and terms of any Receivables or Contracts.
(b) Upon the request of the Collateral Agent at any time after the
occurrence and during the continuance of an Event of Default, each Grantor shall
notify obligors on the Receivables and parties to the Contracts that the
Receivables and the Contracts have been assigned to the Collateral Agent for the
ratable benefit of the Secured Parties and that payments in respect thereof
shall be made directly to the Collateral Agent.
(c) Anything herein to the contrary notwithstanding, each Grantor
shall remain liable under each of the Receivables and Contracts to observe and
perform all the conditions and obligations to be observed and performed by it
thereunder, all in accordance with the terms of any agreement giving rise
thereto. Neither the Collateral Agent nor any other Secured Party shall have any
obligation or liability under any Receivable (or any agreement giving rise
thereto) or Contract by reason of or arising out of this Agreement or the
receipt by the Collateral Agent or any other Secured Party of any payment
relating thereto, nor shall the Collateral Agent or any other Secured Party be
obligated in any manner to perform any of the obligations of any Grantor under
or pursuant to any Receivable (or any agreement giving rise thereto) or
Contract, to make any payment, to make any inquiry as to the nature or the
sufficiency of any payment received by it or as to the sufficiency of any
performance by any party thereunder, to present or file any claim, to take any
action to enforce any performance or to collect the payment of any amounts which
may have been assigned to it or to which it may be entitled at any time or
times.
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6.3 Pledged Stock.
(a) Unless an Event of Default shall have occurred and be
continuing and the Collateral Agent shall have given notice to the relevant
Grantor of the Collateral Agent's intent to exercise its corresponding rights
pursuant to Section 6.3(b), each Grantor shall be permitted to receive all
dividends paid in respect of the Pledged Stock and all payments made in respect
of the Pledged Notes and to exercise all voting and corporate or other
organizational rights with respect to the Investment Property; provided,
however, that no vote shall be cast or corporate or other organizational right
exercised or other action taken which would materially impair the Collateral or
which would be inconsistent with or result in any violation of any provision of
the Indenture, this Agreement or any other Note Document.
(b) If an Event of Default shall occur and be continuing and the
Collateral Agent shall give notice of its intent to exercise such rights to the
relevant Grantor or Grantors, (i) the Collateral Agent shall have the right to
receive any and all cash dividends, payments or other Proceeds paid in respect
of the Investment Property and make application thereof to the Obligations in
the order set forth in Section 6.5, and (ii) any or all of the Investment
Property shall be registered in the name of the Collateral Agent or its nominee,
and the Collateral Agent or its nominee may thereafter exercise (x) all voting,
corporate and other rights pertaining to such Investment Property at any meeting
of shareholders of the relevant Issuer or Issuers or otherwise and (y) any and
all rights of conversion, exchange and subscription and any other rights,
privileges or options pertaining to such Investment Property as if it were the
absolute owner thereof (including, without limitation, the right to exchange at
its discretion any and all of the Investment Property upon the merger,
consolidation, reorganization, recapitalization or other fundamental change in
the corporate or other organizational structure of any Issuer, or upon the
exercise by any Grantor or the Collateral Agent of any right, privilege or
option pertaining to such Investment Property, and in connection therewith, the
right to deposit and deliver any and all of the Investment Property with any
committee, depositary, transfer agent, registrar or other designated agency upon
such terms and conditions as the Collateral Agent may determine), all without
liability except to account for property actually received by it, but the
Collateral Agent shall have no duty to any Grantor to exercise any such right,
privilege or option and shall not be responsible for any failure to do so or
delay in so doing.
(c) Each Grantor hereby authorizes and instructs each Issuer of any
Investment Property pledged by such Grantor hereunder to (i) comply with any
instruction received by it from the Collateral Agent in writing that (x) states
that an Event of Default has occurred and is continuing and (y) is otherwise in
accordance with the terms of this Agreement, without any other or further
instructions from such Grantor, and each Grantor agrees that each Issuer shall
be fully protected in so complying, and (ii) unless otherwise expressly
permitted hereby, pay any dividends or other payments with respect to the
Investment Property directly to the Collateral Agent.
6.4 Proceeds to be Turned Over to Collateral Agent. In addition to the
rights of the Collateral Agent and the Secured Parties specified in Section 6.1
with respect to payments of Receivables, if an Event of Default shall occur and
be continuing, all Proceeds received by any Grantor consisting of cash, checks
and other similar near-cash items shall be held by such Grantor in trust for the
Collateral Agent and the other Secured Parties, segregated from other
17
funds of such Grantor, and shall, upon the request of the Collateral Agent, be
turned over to the Collateral Agent forthwith upon receipt by such Grantor in
the exact form received by such Grantor (duly endorsed by such Grantor to the
Collateral Agent, if required). All Proceeds received by the Collateral Agent
hereunder shall be held by the Collateral Agent in a Collateral Account
maintained under its sole dominion and control. All Proceeds while held by the
Collateral Agent in a Collateral Account (or by such Grantor in trust for the
Collateral Agent and the other Secured Parties) shall continue to be held as
collateral security for all the Obligations and shall not constitute payment
thereof until applied as provided in Section 6.5.
6.5 Application of Proceeds. Subject to any different order of payment
set forth in the Indenture (which different order shall be controlling), if an
Event of Default shall have occurred and be continuing, at any time at the
Collateral Agent's election, the Collateral Agent shall apply all or any part of
Proceeds constituting Collateral, whether or not held in any Collateral Account,
in payment of the Obligations in the following order:
(a) First, to pay incurred and unpaid fees and expenses of the
Collateral Agent and the Trustee under the Note Documents;
(b) Second, to the Collateral Agent, for application by it towards
payment of amounts then due and owing and remaining unpaid in respect of the
Obligations, pro rata among the Secured Parties according to the amounts of the
Obligations then due and owing and remaining unpaid to the Secured Parties;
(c) Third, to the Collateral Agent, for application by it towards
prepayment of the Obligations, pro rata among the Secured Parties according to
the amounts of the Obligations then held by the Secured Parties; and
(d) Fourth, to any balance of such Proceeds remaining after the
Obligations shall have been paid in full shall be paid over to the Notes Issuer
or to whomsoever may be lawfully entitled to receive the same.
6.6 Code and Other Remedies. If an Event of Default shall occur and be
continuing, the Collateral Agent, on behalf of the Secured Parties, may
exercise, in addition to all other rights and remedies granted to them in this
Agreement and in any other instrument or agreement securing, evidencing or
relating to the Obligations, all rights and remedies of a secured party under
the New York UCC or any other applicable law. Without limiting the generality of
the foregoing, the Collateral Agent, without demand of performance or other
demand, presentment, protest, advertisement or notice of any kind (except any
notice required by law referred to below) to or upon any Grantor or any other
Person (all and each of which demands, defenses, advertisements and notices are
hereby waived), may in such circumstances forthwith collect, receive, have
assigned to it, appropriate and realize upon the Collateral, or any part
thereof, and/or may forthwith sell, lease, license, sublicense, assign, give
option or options to purchase, or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do any of the foregoing), in one
or more parcels at public or private sale or sales, at any exchange, broker's
board or office of the Collateral Agent or any other Secured Party or elsewhere
upon such terms and conditions as it may deem advisable and at such prices as it
may deem best, for cash or on credit or for future delivery without assumption
of any credit risk. Upon written demand from
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the Collateral Agent, each Grantor shall grant, assign, convey or otherwise
transfer to the Collateral Agent an absolute assignment of 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. Any Secured
Party shall have the right upon any such public sale or sales, and, to the
extent permitted by law, upon any such private sale or sales, to purchase the
whole or any part of the Collateral so sold, free of any right or equity of
redemption in any Grantor, which right or equity is hereby waived and released
to the extent permitted by law. Each Grantor further agrees, at the Collateral
Agent's request, to assemble the Collateral and make it available to the
Collateral Agent at places which the Collateral Agent shall reasonably select,
whether at such Grantor's premises or elsewhere. The Collateral Agent shall
apply the net proceeds of any action taken by it pursuant to this Section 6.6,
after deducting all reasonable costs and expenses of every kind incurred in
connection therewith or incidental to the care or safekeeping of any of the
Collateral or in any way relating to the Collateral or the rights of the
Collateral Agent and the Secured Parties hereunder, including, without
limitation, reasonable attorneys' fees and disbursements, to the payment in
whole or in part of the Obligations, in the order set forth in Section 6.5
hereof, and only after such application and after the payment by the Collateral
Agent of any other amount required by any provision of law, including, without
limitation, Section 9-615(a)(3) of the New York UCC, need the Collateral Agent
account for the surplus, if any, to any Grantor. To the extent permitted by
applicable law, each Grantor waives all claims, damages and demands it may
acquire against the Collateral Agent or any Secured Party arising out of the
exercise by them of any rights hereunder, except for gross negligence or willful
misconduct on the part of the Collateral Agent or such Secured Party. If any
notice of a proposed sale or other disposition of Collateral shall be required
by law, such notice shall be deemed reasonable and proper if given at least 20
days before such sale or other disposition.
6.7 Private Sales.
(a) Each Grantor recognizes that the Collateral Agent may be unable
to effect a public sale of any or all the Pledged Stock, by reason of certain
prohibitions contained in the Securities Act and applicable state securities
laws or otherwise, and may be compelled to resort to one or more private sales
thereof to a restricted group of purchasers which will be obliged to agree,
among other things, to acquire such securities for their own account for
investment and not with a view to the distribution or resale thereof. Each
Grantor acknowledges and agrees that any such private sale may result in prices
and other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner. The Collateral
Agent shall be under no obligation to delay a sale of any of the Pledged Stock
for the period of time necessary to permit the Issuer thereof to register such
securities for public sale under the Securities Act, or under applicable state
securities laws, even if such Issuer would agree to do so.
(b) Each Grantor agrees to use its best efforts to do or cause to
be done all such other acts as may be necessary to make such sale or sales of
all or any portion of the Pledged Stock pursuant to this Section 6.7 valid and
binding and in compliance with any and all other applicable Requirements of Law.
Each Grantor further agrees that a breach of any of the covenants contained in
this Section 6.7 will cause irreparable injury to the Collateral Agent and the
Secured Parties, that the Collateral Agent and the Secured Parties have no
adequate remedy
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at law in respect of such breach and, as a consequence, that each and every
covenant contained in this Section 6.7 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 Event of Default has occurred under the Indenture.
6.8 Deficiency. Each Grantor shall remain liable for any deficiency if the
proceeds of any sale or other disposition of the Collateral are insufficient to
pay its Obligations and the reasonable fees and disbursements of any attorneys
employed by the Collateral Agent or any other Secured Party to collect such
deficiency.
6.9 Intellectual Property License. The Grantors hereby grant the Grantee a
non-exclusive, transferable, sublicensable, worldwide license and right,
effective solely during an Event of Default, to the maximum extent permitted by
applicable law and to the extent of the Grantors' interest therein, exercisable
without payment of royalty or other compensation, under and to any and all of
the Intellectual Property now or hereafter owned by, licensed to, or otherwise
used by the Grantors to purchase, use, market, repossess, possess, store,
assemble, manufacture, process, sell, transfer, distribute, lease, license and
otherwise exploit and dispose of any asset included in the Collateral to the
extent the Grantee takes possession of such in accordance with the terms and
conditions of this Agreement and the Credit Agreement. For the avoidance of
doubt, in the event that any such Event of Default is cured in accordance with
the terms and conditions of this Agreement and the Credit Agreement, the
foregoing license shall automatically be suspended. The Grantors agree that any
sale, transfer, grant of an exclusive license or other disposition of any of the
foregoing Intellectual Property (whether by foreclosure or otherwise) will be
subject to the Grantee's rights as set forth in this Section 6.9. Any use of
Trademarks under the foregoing license shall be consistent with the historical
use of such Trademarks by the Grantors and shall meet the Grantors' standards of
quality in all material respects. At the Grantors' reasonable request, the
Grantee shall provide samples of any goods to be sold under a Grantor Trademark.
SECTION 7. THE COLLATERAL AGENT
7.1 Collateral Agent's Appointment as Attorney-in-Fact, etc.
(a) Each Grantor hereby irrevocably constitutes and appoints the
Collateral Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of such Grantor and in the name of
such Grantor or in its own name, for the purpose of carrying out the terms of
this Agreement, to take any and all appropriate action and to execute any and
all documents and instruments which may be necessary or desirable to accomplish
the purposes of this Agreement, and, without limiting the generality of the
foregoing, each Grantor hereby gives the Collateral Agent the power and right,
on behalf of such Grantor, without notice to or assent by such Grantor, to do
any or all of the following:
(i) in the name of such Grantor or its own name, or otherwise, take
possession of and endorse and collect any checks, drafts, notes, acceptances
or other instruments for the payment of moneys due under any Receivable or
Contract or with respect to any other Collateral and file any claim or take
any other action or proceeding in
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any court of law or equity or otherwise deemed appropriate by the Collateral
Agent for the purpose of collecting any and all such moneys due under any
Receivable or Contract or with respect to any other Collateral whenever
payable;
(ii) in the case of any Intellectual Property, execute and deliver,
and have recorded, any and all agreements, instruments, documents and papers
as the Collateral Agent may reasonably request to evidence the Collateral
Agent and the other Secured Parties' security interest in such Intellectual
Property and the goodwill and general intangibles of such Grantor relating
thereto or represented thereby;
(iii) pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, effect any repairs or any insurance
called for by the terms of this Agreement and pay all or any part of the
premiums therefor and the costs thereof;
(iv) execute, in connection with any sale provided for in
Section 6.6, any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral; and
(v) (1) direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Collateral Agent or as the Collateral Agent shall
direct; (2) ask or demand for, collect, and receive payment of and receipt
for, any and all moneys, claims and other amounts due or to become due at
any time in respect of or arising out of any Collateral; (3) sign and
endorse any invoices, freight or express bills, bills of lading, storage or
warehouse receipts, drafts against debtors, assignments, verifications,
notices and other documents in connection with any of the Collateral; (4)
commence and prosecute any suits, actions or proceedings at law or in equity
in any court of competent jurisdiction to collect the Collateral or any
portion thereof and to enforce any other right in respect of any Collateral;
(5) defend any suit, action or proceeding brought against such Grantor with
respect to any Collateral; (6) settle, compromise or adjust any such suit,
action or proceeding and, in connection therewith, give such discharges or
releases as the Collateral Agent may deem appropriate; (7) assign any
Copyright, Patent or Trademark (along with the goodwill of the business to
which any such Copyright, Patent or Trademark pertains), throughout the
world for such term or terms, on such conditions, and in such manner, as the
Collateral Agent shall in its sole discretion determine; and (8) generally,
sell, transfer, pledge and 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 do,
at the Collateral Agent's option and such Grantor's expense, at any time, or
from time to time, all acts and things which the Collateral Agent deems
necessary to protect, preserve or realize upon the Collateral and the
Collateral Agent's and the Secured Parties' security interests therein and
to effect the intent of this Agreement, all as fully and effectively as
such Grantor might do.
Anything in this Section 7.1 to the contrary notwithstanding, the Collateral
Agent agrees that it will not exercise any rights under the power of attorney
provided for in this Section 7.1 unless an Event of Default shall have occurred
and be continuing.
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(b) If any Grantor fails to perform or comply with any of its
agreements contained herein, the Collateral Agent, at its option, but without
any obligation so to do, may perform or comply, or otherwise cause performance
or compliance, with such agreement.
(c) The expenses of the Collateral Agent incurred in connection
with actions undertaken as provided in this Section 7.1, together with interest
thereon payable on past due Notes under the Indenture, from the date of payment
by the Collateral Agent to the date reimbursed by the relevant Grantor, shall be
payable by such Grantor to the Collateral Agent on demand.
(d) Each Grantor hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue hereof. All powers, authorizations and
agencies contained in this Agreement are coupled with an interest and are
irrevocable until this Agreement is terminated and the security interests
created hereby are released.
7.2 Duty of Collateral Agent. The Collateral Agent's sole duty with
respect to the custody, safekeeping and physical preservation of the Collateral
in its possession, under Section 9-207 of the New York UCC or otherwise, shall
be to deal with it in the same manner as the Collateral Agent deals with similar
property for its own account. Neither the Collateral Agent, any Secured Party
nor any of their respective officers, directors, employees or agents shall be
liable for failure to demand, collect or realize upon any 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 any other Person or
to take any other action whatsoever with regard to the Collateral or any part
thereof. The powers conferred on the Collateral Agent and the other Secured
Parties hereunder are solely to protect the Collateral Agent's and the other
Secured Parties' interests in the Collateral and shall not impose any duty upon
the Collateral Agent or any other Secured Party to exercise any such powers. The
Collateral Agent and the other 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. The Grantors and each
Secured Party, by acceptance of the benefits hereof, agrees that references to
the Trustee in the Indenture shall be understood to include the Collateral Agent
when acting under this Agreement, the First Lien Intercreditor Agreement and the
other Security Documents, and that such provisions are hereby incorporated
herein in their entirety, mutatis mutandis.
7.3 Filing of Financing Statements. Pursuant to any applicable law, each
Grantor authorizes the Collateral Agent to file or record financing statements
and other filing or recording documents or instruments with respect to the
Collateral without the signature of such Grantor in such form and in such
offices as the Collateral Agent determines appropriate to perfect the security
interests of the Collateral Agent under this Agreement. Each Grantor authorizes
the Collateral Agent to use the collateral description "all personal property"
or such similar language in any such financing statements. Each Grantor hereby
ratifies and authorizes the filing by the Collateral Agent of any financing
statement with respect to the Collateral made prior to the date hereof.
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7.4 Authority of Collateral Agent. Each Grantor acknowledges that the
rights and responsibilities of the Collateral Agent under this Agreement with
respect to any action taken by the Collateral Agent or the exercise or
non-exercise by the Collateral Agent of any option, voting right, request,
judgment or other right or remedy provided for herein or resulting or arising
out of this Agreement shall, as between the Collateral Agent and the other
Secured Parties, be governed by the Indenture and by such other agreements with
respect thereto as may exist from time to time among them, but, as between the
Collateral Agent and the Grantors, the Collateral Agent shall be conclusively
presumed to be acting as agent for the Secured Parties with full and valid
authority so to act or refrain from acting, and no Grantor shall be under any
obligation, or entitlement, to make any inquiry respecting such authority.
SECTION 8. MISCELLANEOUS
8.1 Amendments in Writing. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except in
accordance with Article IX of the Indenture.
8.2 Notices. All notices, requests and demands to or upon the Collateral
Agent or any Grantor hereunder shall be effected in the manner provided for in
Section 12.02 of the Indenture; provided that any such notice, request or demand
to or upon any Grantor shall be addressed to such Grantor at its notice address
set forth on Schedule 1.
8.3 No Waiver by Course of Conduct; Cumulative Remedies. Neither the
Collateral Agent nor any other Secured Party shall by any act (except by a
written instrument pursuant to Section 8.1), delay, indulgence, omission or
otherwise be deemed to have waived any right or remedy hereunder or to have
acquiesced in any Default or Event of Default. No failure to exercise, nor any
delay in exercising, on the part of the Collateral Agent or any other Secured
Party, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Collateral Agent or any
other Secured Party of any right or remedy hereunder on any one occasion shall
not be construed as a bar to any right or remedy which the Collateral Agent or
such other Secured Party would otherwise have on any future occasion. The rights
and remedies herein provided are cumulative, may be exercised singly or
concurrently and are not exclusive of any other rights or remedies provided by
law.
8.4 Enforcement Expenses; Indemnification.
(a) Each Grantor agrees to pay, and to save the Collateral Agent
and the Secured Parties harmless from, any and all liabilities with respect to,
or resulting from any delay in paying, any and all stamp, excise, sales or other
taxes which may be payable or determined to be payable with respect to any of
the Collateral or in connection with any of the transactions contemplated by
this Agreement.
(b) Each Grantor agrees to pay, and to save the Collateral Agent
and the other Secured Parties harmless from, any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever with
23
respect to the execution, delivery, enforcement, performance and administration
of this Agreement to the extent the Notes Issuer would be required to do so
pursuant to the Indenture.
(c) The agreements in this Section 8.4 shall survive repayment of
the Obligations and all other amounts payable under the Indenture and the other
Note Documents.
8.5 Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of each Grantor and shall inure to the benefit of the
Collateral Agent and the Secured Parties and their successors and assigns;
provided that no Grantor may assign, transfer or delegate any of its rights or
obligations under this Agreement without the prior written consent of the
Collateral Agent.
8.6 Set-Off. Each Grantor hereby irrevocably authorizes each Secured Party
at any time after the Obligations shall have become due and payable pursuant to
the Indenture, without notice to such Grantor or any other Grantor, any such
notice being expressly waived by each Grantor, to set-off and appropriate and
apply any and all deposits (general or special, time or demand, provisional or
final), in any currency, and any other credits, indebtedness or claims, in any
currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by such Secured Party to or for
the credit or the account of such Grantor, or any part thereof in such amounts
as such Secured Party may elect, against and on account of the obligations and
liabilities of such Grantor to such Secured Party hereunder and claims of every
nature and description of such Secured Party against such Grantor, in any
currency, whether arising hereunder, under the Indenture, any other Note
Document or otherwise, as such Secured Party may elect, whether or not the
Collateral Agent or any Secured Party has made any demand for payment and
although such obligations, liabilities and claims may be contingent or
unmatured. Each Secured Party shall notify such Grantor promptly of any such
set-off and the application made by such Agent or such Secured Party of the
proceeds thereof, provided that the failure to give such notice shall not affect
the validity of such set-off and application. The rights of each Secured Party
under this Section 8.6 are in addition to other rights and remedies (including,
without limitation, other rights of set-off) which such Secured Party may have.
8.7 Counterparts. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts (including by
telecopy or other electronic transmission), and all of said counterparts taken
together shall be deemed to constitute one and the same instrument.
8.8 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
8.9 Section Headings. The Section headings used in this Agreement are
for convenience of reference only and are not to affect the construction hereof
or be taken into consideration in the interpretation hereof.
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8.10 Integration. This Agreement and the other Note Documents represent the
agreement of the Grantors, the Collateral Agent and the other Secured Parties
with respect to the subject matter hereof and thereof, and there are no
promises, undertakings, representations or warranties by the Collateral Agent or
any other Secured Party relative to subject matter hereof and thereof not
expressly set forth or referred to herein or in the other Note Documents.
8.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
8.12 Submission To Jurisdiction; Waivers. Each Grantor hereby irrevocably
and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Note Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the courts of the State of
New York, the courts of the United States of America for the Southern District
of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail (or
any substantially similar form of mail), postage prepaid, to such Grantor at its
address referred to in Section 8.2 or at such other address of which the
Collateral Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the right
to xxx in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right
it may have to claim or recover in any legal action or proceeding referred to in
this Section any special, exemplary, punitive or consequential damages.
8.13 Acknowledgements. Each Grantor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution
and delivery of this Agreement and the other Note Documents to which it is a
party;
(b) Neither the Collateral Agent nor any Secured Party has any
fiduciary relationship with or duty to any Grantor arising out of or in
connection with this Agreement or any of the other Note Documents, and the
relationship between the Grantors, on the one hand, and the Collateral Agent and
other Secured Parties, on the other hand, in connection herewith or therewith is
solely that of debtor and creditor; and
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(c) no joint venture is created hereby or by the other Note
Documents or otherwise exists by virtue of the transactions contemplated hereby
among the Secured Parties or among the Grantors and the Secured Parties.
8.14 Additional Grantors. Each Subsidiary of Holdings that is required to
become a party to this Agreement pursuant to Section 4.19 of the Indenture shall
become a Grantor for all purposes of this Agreement upon execution and delivery
by such Subsidiary of an Assumption Agreement in the form of Annex 1 hereto.
8.15 Releases.
(a) At such time as the Notes and the other Obligations shall have
been paid in full, the Collateral shall be released from the Liens created
hereby, and this Agreement and all obligations (other than those expressly
stated to survive such termination) of the Collateral Agent and each Grantor
hereunder shall terminate, all without delivery of any instrument or performance
of any act by any party, and all rights to the Collateral shall revert to the
Grantors. At the request and sole expense of any Grantor following any such
termination, the Collateral Agent shall deliver to such Grantor any Collateral
held by the Collateral Agent hereunder, and execute and deliver to such Grantor
such documents as such Grantor shall reasonably request to evidence such
termination and to authorize the filing by Grantors of any necessary UCC
terminations or other terminations or releases.
(b) If any of the Collateral shall be sold, transferred or
otherwise disposed of by any Grantor in a transaction permitted by the
Indenture, then the Collateral Agent, at the request and sole expense of such
Grantor, shall execute and deliver to such Grantor all releases or other
documents reasonably necessary or desirable for the release of the Liens created
hereby on such Collateral. At the request and sole expense of the Notes Issuer,
a Grantor shall be released from its obligations hereunder in the event that all
the Capital Stock of such Grantor shall be sold, transferred or otherwise
disposed of in a transaction permitted by the Indenture; provided that the Notes
Issuer shall have delivered to the Collateral Agent a certification by the Notes
Issuer stating that such transaction is in compliance with the Indenture and the
other Note Documents.
8.16 WAIVER OF JURY TRIAL. EACH GRANTOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER NOTE DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
8.17 Permitted Liens. Subject to the terms of the Intercreditor Agreement,
the inclusion or reference to liens permitted under the Indenture in this
Agreement or in any other Note Document is not intended to subordinate and shall
not subordinate, and shall not be interpreted as subordinating, the Lien and
security interest created by this Agreement or any other Note Document to any
liens permitted under the Indenture.
[Signature Pages Follow]
26
IN WITNESS WHEREOF, each of the undersigned has caused this Collateral
Agreement to be duly executed and delivered as of the date first above written.
PAPERWEIGHT DEVELOPMENT CORP., a
Wisconsin corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------
Title: Controller
----------------------------
APPLETON PAPERS INC., a Delaware
corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------
Title: Controller
----------------------------
AMERICAN PLASTICS COMPANY, INC., a
Wisconsin corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------
Title: Treasurer
----------------------------
NEW ENGLAND EXTRUSION INC., a
Wisconsin corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------
Title: Treasurer
----------------------------
Collateral Agreement
27
IN WITNESS WHEREOF, each of the undersigned has caused this Collateral
Agreement to be duly executed and delivered as of the date first above written.
U.S. BANK NATIONAL ASSOCIATION, a
national banking association, as Collateral Agent
By: /s/ Xxxxxxx Xxxxxxxx
-------------------------------
Title: Vice President
----------------------------
Collateral Agreement
Annex I
to
Collateral Agreement
ASSUMPTION AGREEMENT, dated as of ________________, 20___, made by
______________________________, a ______________ [corporation] (the "Additional
Grantor"), in favor of U.S. Bank National Association, as collateral agent (in
such capacity and together with its successors and assigns in such capacity, the
"Collateral Agent") for the Secured Parties (as defined in the Collateral
Agreement). All capitalized terms not defined herein shall have the meaning
ascribed to them in the Indenture (as referred to below).
W I T N E S S E T H:
WHEREAS, Appleton Papers Inc., a Delaware corporation (the "Notes Issuer"),
Paperweight Development Corp., a Wisconsin corporation ("Holdings"), the
Guarantors party thereto and U.S. Bank National Association, as Trustee, have
entered into an Indenture, dated as of February 8, 2010 (as amended, restated,
supplemented or otherwise modified from time to time, the "Indenture");
WHEREAS, in connection with the Indenture, the Notes Issuer and certain of
its Affiliates (other than the Additional Grantor) have entered into the
Collateral Agreement, dated as of February 8, 2010 (as amended, restated,
supplemented or otherwise modified from time to time, the "Collateral
Agreement") in favor of the Collateral Agent for the benefit of the Secured
Parties (as defined in the Collateral Agreement);
WHEREAS, the Indenture requires the Additional Grantor to become a party to
the Collateral Agreement; and
WHEREAS, the Additional Grantor has agreed to execute and deliver this
Assumption Agreement in order to become a party to the Collateral Agreement;
NOW, THEREFORE, IT IS AGREED:
1. Collateral Agreement. By executing and delivering this Assumption
Agreement, the Additional Grantor, as provided in Section 8.14 of the Collateral
Agreement, hereby becomes a party to the Collateral Agreement as a Grantor
thereunder and, without limiting the generality of the foregoing, hereby
expressly assumes all obligations and liabilities of a Grantor thereunder. The
information set forth in Annex 1-A hereto is hereby added to the information set
forth in Schedules ____________(*) to the Collateral Agreement. The Additional
Grantor hereby represents and warrants that each of the representations and
warranties contained in Section 4 of the Collateral Agreement is true and
correct on and as the date hereof (after giving effect to this Assumption
Agreement) as if made on and as of such date.
----------
* Refer to each Schedule which needs to be supplemented.
Collateral Agreement
1
2. GOVERNING LAW. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the undersigned has caused this Assumption Agreement to
be duly executed and delivered as of the date first above written.
[ADDITIONAL GRANTOR]
By:
-------------------------------
Name:
Title:
Collateral Agreement
2
