SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Security Agreement"), is entered into as of
May 25, 2006, among ARMOR HOLDINGS, INC., a Delaware corporation (the
"Borrower"), each of the Material Domestic Subsidiaries of the Borrower from
time to time party hereto (individually a "Guarantor" and collectively the
"Guarantors"; the Guarantors, together with the Borrower, individually an
"Obligor" and collectively the "Obligors") and WACHOVIA BANK, NATIONAL
ASSOCIATION, in its capacity as Administrative Agent under the Credit Agreement
referred to below (in such capacity, the "Administrative Agent") for the several
banks and other financial institutions as may from time to time become parties
to such Credit Agreement (individually a "Lender" and collectively the
"Lenders").
RECITALS
WHEREAS, pursuant to that certain Credit Agreement dated as of the date
hereof (as amended, restated, amended and restated, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among the Borrower, the
Guarantors, the Lenders party thereto and the Administrative Agent, the Lenders
have agreed to make Loans and to issue and/or acquire participation interests in
Letters of Credit upon the terms and subject to the conditions set forth
therein; and
WHEREAS, it is a condition precedent to the effectiveness of the Credit
Agreement and the obligations of the Lenders to make their respective Loans and
to issue and/or acquire participation interests in Letters of Credit under the
Credit Agreement that the Obligors shall have executed and delivered this
Security Agreement to the Administrative Agent for the ratable benefit of the
Lenders.
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Definitions.
(a) Unless otherwise defined herein, capitalized terms used herein
shall have the meanings ascribed to such terms in the Credit Agreement, and
the following terms which are defined in the Uniform Commercial Code from
time to time in effect in the State of New York (the "UCC") are used herein
as so defined: Accessions, Accounts, As-Extracted Collateral, Chattel
Paper, Commercial Tort Claims, Consumer Goods, Control, Deposit Accounts,
Documents, Electronic Chattel Paper, Equipment, Farm Products, Fixtures,
General Intangibles, Goods, Instruments, Inventory, Investment Property,
Letter-of-Credit Rights, Manufactured Homes, Proceeds, Securities Account,
Securities Intermediary, Security Entitlement, Software, Supporting
Obligations and Tangible Chattel Paper. For purposes of this Security
Agreement, the term "Lender" shall include any Hedging Agreement Provider.
(b) In addition, the following term shall have the following meaning:
"Secured Obligations" means: (i) all of the Credit Party Obligations
(including obligations under Secured Hedging Agreements), howsoever
evidenced, created, incurred or acquired, whether primary, secondary,
direct, contingent, or joint and several and (ii) all expenses and charges,
legal and otherwise, incurred by the Administrative Agent, the Lenders
and/or the Hedging Agreement Providers in collecting or enforcing any of
the Credit Party Obligations or in realizing on or protecting any security
therefor, including without limitation the security interest granted
hereunder.
"Work" means any work which is subject to copyright protection
pursuant to Title 17 of the United States Code or the applicable copyright
laws of any other State or country.
2. Grant of Security Interest in the Collateral.
(a) To secure the prompt payment and performance in full when due,
whether by lapse of time, acceleration, mandatory prepayment or otherwise,
of the Secured Obligations, each Obligor hereby grants to the
Administrative Agent, for the ratable benefit of the Lenders, a continuing
security interest in, and a right to set off against, any and all right,
title and interest of such Obligor in and to the following, whether now
owned or existing or owned, acquired, or arising hereafter (collectively,
the "Collateral"):
(i) all Accounts;
(ii) all cash and Cash Equivalents;
(iii) all Chattel Paper (including Electronic Chattel Paper);
(iv) those certain Commercial Tort Claims of such Obligor set forth on
Schedule 2(a)(iv) attached hereto (as such Schedule may be
updated from time to time by such Obligor);
(v) all Copyright Licenses;
(vi) all Copyrights;
(vii) all Deposit Accounts;
(viii) all Documents;
(ix) all Equipment;
(x) all Fixtures;
(xi) all General Intangibles;
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(xii) all Goods;
(xiii) all Instruments;
(xiv) all Inventory;
(xv) all Investment Property;
(xvi) all Letter-of-Credit Rights;
(xvii) all Material Contracts and all such other agreements,
contracts, leases, licenses, tax sharing agreements or hedging
arrangements now or hereafter entered into by an Obligor, as such
agreements may be amended or otherwise modified from time to time
(collectively, the "Assigned Agreements"), including without
limitation, (A) all rights of an Obligor to receive moneys due
and to become due under or pursuant to the Assigned Agreements,
(B) all rights of an Obligor to receive proceeds of any
insurance, indemnity, warranty or guaranty with respect to the
Assigned Agreements, (C) claims of an Obligor for damages arising
out of or for breach of or default under the Assigned Agreements
and (D) the right of an Obligor to terminate the Assigned
Agreements, to perform thereunder and to compel performance and
otherwise exercise all remedies thereunder;
(xviii) all Payment Intangibles;
(xix) all Patent Licenses;
(xx) all Patents;
(xxi) all Trademark Licenses;
(xxii) all Trademarks;
(xxiii) all Securities Accounts;
(xxiv) all Software;
(xxv) all Supporting Obligations;
(xxvi) all books, records, ledger cards, files, correspondence,
computer programs, tapes, disks, and related data processing
software (owned by such Obligor or in which it has an interest)
that at any time evidence or contain information relating to any
Collateral or are otherwise necessary or helpful in the
collection thereof or realization thereupon;
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(xxvii) all other personal property of any kind or type whatsoever
owned by such Obligor; and
(xxviii) to the extent not otherwise included, all Accessions,
Proceeds and products of any and all of the foregoing.
(b) Notwithstanding the foregoing the Collateral shall not include any
Government Contract or other contractual agreement or other instrument,
which by its terms or applicable law may not be assigned, it being
understood, however, that in such situations, the Administrative Agent's
security interest shall include (i) except as prohibited by law or pursuant
to such contractual agreement or instrument, the entirety of each Obligor's
right, title and interest in and to all Accounts, Payment Intangibles and
other Proceeds directly or indirectly arising from such Government Contract
or other contractual agreement, and (ii) except as set forth pursuant to
such contractual agreement or instrument, all other rights and interests
that any Obligor may lawfully convey to the Administrative Agent. The
rights and remedies of the Administrative Agent with respect to any
Government Contract or other contractual agreement that it has been granted
a security interest in pursuant to the terms of this Section 2 and the
obligations of the Obligors under this Security Agreement shall at all
times be subject to any confidentiality and secrecy requirements imposed by
any Governmental Authority or set forth in such Government Contract or
other contractual agreement.
(c) The Obligors and the Administrative Agent, on behalf of the
Lenders, hereby acknowledge and agree that the security interest created
hereby in the Collateral (i) constitutes continuing collateral security for
all of the Secured Obligations, whether now existing or hereafter arising
and (ii) is not to be construed as a present assignment of any Intellectual
Property.
(d) The term "Collateral" shall include any Secured Hedging Agreement
and any rights of the Obligors thereunder only for purposes of this Section
2.
3. Provisions Relating to Accounts, Contracts and Agreements.
(a) Anything herein to the contrary notwithstanding, each of the
Obligors shall remain liable under each of its Accounts, contracts and
agreements to observe and perform all of the conditions and obligations to
be observed and performed by it thereunder, all in accordance with the
terms of any agreement giving rise to each such Account or the terms of
such contract or agreement. Neither the Administrative Agent nor any Lender
shall have any obligation or liability under any Account (or any agreement
giving rise thereto), contract or agreement by reason of or arising out of
this Security Agreement or the receipt by the Administrative Agent or any
Lender of any payment relating to such Account, contract or agreement
pursuant hereto, nor shall the Administrative Agent or any Lender be
obligated in any manner to perform any of the obligations of an Obligor
under or pursuant to any Account (or any agreement giving rise thereto),
contract or agreement, to make any payment, to make any inquiry as to the
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nature or the sufficiency of any payment received by it or as to the
sufficiency of any performance by any party under any Account (or any
agreement giving rise thereto), contract or agreement, 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.
(b) The Administrative Agent hereby authorizes the Obligors to collect
the Accounts; provided, that the Administrative Agent may curtail or
terminate such authority at any time after the occurrence and during the
continuation of an Event of Default. If required by the Administrative
Agent at any time after the occurrence and during the continuation of an
Event of Default, any payments of Accounts, when collected by the Obligors
(i) shall be forthwith (and in any event within two (2) Business Days)
deposited by the Obligors in a collateral account maintained under the sole
dominion and control of the Administrative Agent, subject to withdrawal by
the Administrative Agent for the account of the Lenders only as provided in
Section 12 hereof, and (ii) until so turned over, shall be held by the
Obligors in trust for the Administrative Agent and the Lenders, segregated
from other funds of the Obligors.
(c) Upon the occurrence of an Event of Default and during the
continuance thereof, the Administrative Agent shall have the right, but not
the obligation, to make test verifications of the Accounts in any manner
and through any medium that it reasonably considers advisable, and the
Obligors shall furnish all such assistance and information as the
Administrative Agent may require in connection with such test
verifications. Upon the Administrative Agent's request and at the expense
of the Obligors, the Obligors shall cause independent public accountants or
others satisfactory to the Administrative Agent to furnish to the
Administrative Agent reports showing reconciliations, aging and test
verifications of, and trial balances for, the Accounts; provided that the
right of the Administrative Agent to request such reports shall be limited
to (i) once per calendar year and (ii) at any time after the occurrence and
during the continuance of an Event of Default. Upon the occurrence of an
Event of Default and during the continuance thereof, the Administrative
Agent in its own name or in the name of others may communicate with account
debtors on the Accounts to verify with them to the Administrative Agent's
satisfaction the existence, amount and terms of any Accounts.
4. Representations and Warranties. Each Obligor hereby represents and
warrants to the Administrative Agent, for the benefit of the Lenders, that so
long as any of the Secured Obligations (other than contingent indemnity
obligations that survive termination of the Credit Documents pursuant to the
stated terms thereof) remain outstanding, any Credit Document or Secured Hedging
Agreement is in effect, and until all of the Commitments shall have been
terminated:
(a) Chief Executive Office; Books & Records; Legal Name; State of
Formation. As of the Closing Date, each Obligor's chief executive office
and chief place of business are (and for the prior four (4) months has
been) located at the locations set forth on Schedule 3.19(b) to the Credit
Agreement, and as of the Closing Date each Obligor keeps its books and
records at such locations. As of the Closing Date, each
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Obligor's exact legal name is as shown in this Security Agreement and its
state of incorporation or organization is (and for the prior four (4)
months has been) the location set forth on Schedule 3.3 to the Credit
Agreement. No Obligor has in the four (4) months preceding the Closing Date
changed its name, been party to a merger, consolidation or other change in
structure or used any tradename not disclosed on Schedule 4(a) attached
hereto (as updated from time to time).
(b) Location of Collateral. Set forth on Schedule 3.19(a) to the
Credit Agreement is a list of all locations of the Credit Parties and their
Subsidiaries as of the Closing Date required to be disclosed in any filing
with the SEC, including street address, county and state where located.
(c) Ownership. Each Obligor is the legal and beneficial owner of its
Collateral and, subject to Section 2(b) and applicable law, has the right
to pledge, sell, assign or transfer the same.
(d) Security Interest/Priority. This Security Agreement creates a
valid security interest in favor of the Administrative Agent, for the
benefit of the Lenders, in the Collateral of such Obligor and, when
properly perfected by filing, obtaining possession, the granting of Control
to the Administrative Agent or otherwise, shall constitute a valid first
priority, perfected security interest in such Collateral, to the extent
such security interest can be perfected by (i) filing, obtaining
possession, the granting of Control or otherwise under the UCC, (ii) by
filing an appropriate notice with the United States Patent and Trademark
Office or the United States Copyright Office, or (iii) such other action as
may be required pursuant to any applicable jurisdictions' certificate of
title statute, free and clear of all Liens except for Permitted Liens.
(e) Consents. Except for (i) the filing or recording of UCC financing
statements, (ii) the filing of appropriate notices with the United States
Patent and Trademark Office and the United States Copyright Office, (iii)
obtaining Control to perfect the Liens created by this Security Agreement,
(iv) compliance with the Federal Assignment of Claims Act or comparable
state law and other applicable law related to Government Contracts, and/or
(v) the filing, registration or other action required pursuant to any
applicable certificate of title statute, no consent or authorization of,
filing with, or other act by or in respect of, any arbitrator or
Governmental Authority and no consent of any other Person (including,
without limitation, any stockholder, member or creditor of such Obligor) is
required (A) for the grant by such Obligor of the security interest in the
Collateral granted hereby or for the execution, delivery or performance of
this Security Agreement by such Obligor or (B) for the perfection of such
security interest or the exercise by the Administrative Agent of its
material rights and remedies provided for in this Security Agreement.
(f) Types of Collateral. None of the Collateral consists of, or is the
Proceeds of, As-Extracted Collateral, Farm Products, Manufactured Homes or
standing timber (as such term is used in the UCC).
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(g) Accounts. With respect to the Accounts of the Obligors: (i) the
goods sold and/or services furnished giving rise to each Account are not
subject to any security interest or Lien except the first priority,
perfected security interest granted to the Administrative Agent herein and
except for Permitted Liens; (ii) each Account and the papers and documents
of the applicable Obligor relating thereto are genuine and in all material
respects what they purport to be; (iii) each Account arises out of a bona
fide transaction for goods sold and delivered (or in the process of being
delivered) by an Obligor or for services actually rendered (or in the
process of being rendered) by an Obligor, which transaction was conducted
in the ordinary course of the Obligor's business and was completed in
accordance with the terms of any documents pertaining thereto; (iv) no
Account of an Obligor is evidenced by any Instrument or Chattel Paper
unless such Instrument or Chattel Paper has been theretofore endorsed over
and delivered to, or submitted to the Control of, the Administrative Agent;
(v) the amount of each Account as shown on the applicable Obligor's books
and records, and on all invoices and statements which may be delivered to
the Administrative Agent with respect thereto, is due and payable to the
applicable Obligor and is not in any way contingent; (vi) to each of the
Obligor's knowledge, the account debtor with respect to each Account has
the capacity to contract; (vii) except as would not have a Material Adverse
Effect, (A) no Account is evidenced by a judgment, (B) there are no
set-offs, counterclaims or disputes existing or asserted with respect to
any Account, and (C) no Obligor has made any agreement with any account
debtor for any deduction from any Account except for deductions made in the
ordinary course of its business; (viii) to the knowledge of the Obligors,
there are no facts, events or occurrences which in any material respect
impair the validity or enforcement of any material Account or tend to
materially reduce the amount payable thereunder as shown on the applicable
Obligor's books and records; and (ix) the right to receive payment under
each Account is assignable except where the account debtor with respect to
such Account is a Governmental Authority, to the extent assignment of any
such right to payment is prohibited or limited by applicable law,
regulations, administrative guidelines or contract.
(h) Documents, Instruments and Chattel Paper. All Documents,
Instruments and Chattel Paper describing, evidencing or constituting
Collateral are, to the Obligors' knowledge, materially complete, valid, and
genuine.
(i) Equipment. With respect to the material Equipment of the Obligors
taken as a whole: (i) one or more of the Obligors have good and marketable
title thereto; and (ii) such Equipment is in normal operating condition and
repair, ordinary wear and tear alone excepted (subject to casualty events),
and is suitable for the uses to which it is customarily put in the conduct
of the business of the Obligors.
(j) Restrictions on Security Interest. Except as permitted by Section
6.13 of the Credit Agreement, none of the Obligors is party to any material
license or any material lease that contains legally enforceable
restrictions on the granting of a security interest therein.
5. Covenants. Each Obligor covenants that, so long as any of the Secured
Obligations (other than contingent indemnity obligations that survive
termination of the Credit Documents pursuant to the stated terms thereof) remain
outstanding, any Credit Document or
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Secured Hedging Agreement is in effect, and until all of the Commitments shall
have been terminated, such Obligor shall:
(a) Perfection of Security Interest by Filing, Etc. Execute and
deliver to the Administrative Agent and/or file such agreements,
assignments or instruments (including affidavits, notices, reaffirmations,
amendments and restatements of existing documents, and any document as may
be necessary if the law of any jurisdiction other than New York becomes or
is applicable to the Collateral or any portion thereof, in each case, as
the Administrative Agent may reasonably request) and do all such other
things as the Administrative Agent may reasonably deem necessary or
appropriate (i) to assure to the Administrative Agent its security
interests hereunder are perfected, including (A) such financing statements
(including continuation statements) or amendments thereof or supplements
thereto or other instruments as the Administrative Agent may from time to
time reasonably request in order to perfect and maintain the security
interests granted hereunder in accordance with the UCC and any other
personal property security legislation in the appropriate state(s) or
province(s), (B) with regard to Copyrights and Copyright Licenses
constituting Material Intellectual Property, a Notice of Grant of Security
Interest in Copyrights for filing with the United States Copyright Office
in the form of Exhibit A attached hereto, (C) with regard to Patents and
Patent Licenses constituting Material Intellectual Property, a Notice of
Grant of Security Interest in Patents for filing with the United States
Patent and Trademark Office in the form of Exhibit B attached hereto and
(D) with regard to Trademarks and Trademark Licenses constituting Material
Intellectual Property, a Notice of Grant of Security Interest in Trademarks
for filing with the United States Patent and Trademark Office in the form
of Exhibit C attached hereto, (ii) to consummate the transactions
contemplated hereby and (iii) to otherwise protect and assure the
Administrative Agent of its rights and interests hereunder. Each Obligor
hereby authorizes the Administrative Agent to prepare and file such
financing statements (including continuation statements) or amendments
thereof or supplements thereto or other instruments as the Administrative
Agent may from time to time deem necessary or appropriate in order to
perfect and maintain the security interests granted hereunder in accordance
with the UCC, including, without limitation, any financing statement that
describes the Collateral as "all personal property" or "all assets" of such
Obligor or that describes the Collateral in some other manner as the
Administrative Agent deems necessary or advisable. Each Obligor agrees to
xxxx its books and records to reflect the security interest of the
Administrative Agent in the Collateral. In addition, each Obligor will,
upon the request of the Administrative Agent, execute all documents
necessary to comply with the Federal Assignment of Claims Act and
comparable state law with respect to the accounts arising from any Material
Government Contract to the extent required by Section 5.13 of the Credit
Agreement; provided, however, unless an Event of Default has occurred and
is continuing, the Administrative Agent shall hold in escrow all documents
and instruments executed by the Obligors to comply with the terms of the
Federal Assignment of Claims Act and comparable state law and shall not
file such documents and instruments with any Governmental Authority.
(b) Perfection of Security Interest by Possession. If (i) any material
amount payable under or in connection with any of the Collateral shall be
or become evidenced by
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any Instrument, Tangible Chattel Paper or Supporting Obligation or (ii) if
any Collateral shall be stored or shipped subject to a Document or (iii) if
any Collateral shall consist of Investment Property in the form of
certificated securities, promptly notify the Administrative Agent of the
existence of such Collateral and deliver such Instrument, Chattel Paper,
Supporting Obligation, Document or Investment Property to the
Administrative Agent, duly endorsed in a manner satisfactory to the
Administrative Agent, to be held as Collateral pursuant to this Security
Agreement.
(c) Perfection of Security Interest Through Control. If any Collateral
shall consist of (i) Electronic Chattel Paper and Letter-of-Credit Rights
in an aggregate amount in excess of $5,000,000 or (ii) uncertificated
Investment Property (other than Capital Stock of the Obligors and their
Subsidiaries) in an aggregate amount in excess of $5,000,000, (A) notify
the Administrative Agent thereof and provide any information reasonably
required by the Administrative Agent with respect thereto and (B) execute
and deliver (and, with respect to any Collateral consisting of
uncertificated Investment Property, cause the Securities Intermediary or
the issuer, as applicable, with respect to such Investment Property to
execute and deliver) to the Administrative Agent all control agreements,
assignments, instruments or other documents as reasonably requested by the
Administrative Agent for the purposes of obtaining and maintaining Control
of such Collateral. If any Collateral shall consist of Deposit Accounts or
Securities Accounts, comply with the terms of Section 6.14 of the Credit
Agreement with respect thereto.
(d) Other Liens. Defend its interests in the material Collateral
against the claims and demands of all other parties claiming an interest
therein and keep the Collateral free from all Liens, except for Permitted
Liens. Neither the Administrative Agent nor any Lender authorizes any
Obligor to, and no Obligor shall, sell, exchange, transfer, assign, lease
or otherwise dispose of the Collateral or any interest therein, except as
permitted under the Credit Agreement.
(e) Preservation of Collateral. Keep all material Collateral useful to
the business of the Obligors in good order, condition and repair in all
material respects, ordinary wear and tear excepted; not use the Collateral
in violation of the provisions of this Security Agreement or any other
agreement relating to the Collateral or any policy insuring the Collateral
or any applicable Requirement of Law; not permit any material portion of
the Collateral taken as a whole to be or become a fixture to real property
or an accession to other personal property unless the Administrative Agent
has a valid, perfected and first priority security interest for the benefit
of the Lenders in such real or personal property; and not, without the
prior written consent of the Administrative Agent, alter or remove any
identifying symbol or number on or of its material Equipment.
(f) Changes in Structure or Location. Within thirty (30) days after
any Obligor (i) alters its legal existence or, in one transaction or a
series of transactions, merges into or consolidates with any other entity,
or sells all or substantially all of its assets, (ii) changes its state of
incorporation or organization, or (iii) changes its registered legal name,
in each case in a manner that will require the Administrative Agent to
amend any UCC financing statement in order to maintain its perfected
security interest in the
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Collateral of such Obligor, notify the Administrative Agent thereof and
take such actions and execute such documents as may be reasonably required
by the Administrative Agent to maintain its perfected security interest in
the Collateral of such Obligor.
(g) Inspection. Allow the Administrative Agent or its representatives
to visit and inspect the Collateral as set forth in Section 5.6 of the
Credit Agreement.
(h) Collateral Held by Third Parties. If any Collateral, individually
in excess of $2,500,000 or $25,000,000 in the aggregate, is at any time in
the possession or control of a warehouseman, bailee or any agent or
processor of such Obligor or held by a third party (other than an Obligor)
pursuant to consignment, sale or return, sale on approval or similar
arrangement, (i) notify the Administrative Agent of such possession, (ii)
notify such Person of the Administrative Agent's security interest for the
benefit of the Lenders in such Collateral, (iii) to the extent required by
the Administrative Agent, (A) instruct such Person to hold all such
Collateral for the Administrative Agent's account subject to the
Administrative Agent's instructions, (B) obtain an acknowledgment from such
Person that it is holding such Collateral for the benefit of the
Administrative Agent and/or (C) take any other action or execute any
document reasonably required by the Administrative Agent to perfect the
Administrative Agent's and/or such Obligor's security interest in such
Collateral; provided that any Collateral of an Obligor that is held by a
third party (other than an Obligor) pursuant to consignment, sale or
return, sale on approval or similar arrangement with respect to which such
Obligor has a perfected purchase money security interest shall not be
subject to the requirements of this Section 5(h).
(i) Treatment of Accounts. (i) Not grant or extend the time for
payment of any Account, or compromise or settle any material Account for
less than the full amount thereof, or release any person or property, in
whole or in part, from payment thereof, or allow any credit or discount
thereon, other than as normal and customary in the ordinary course of an
Obligor's business and (ii) maintain at its principal place of business a
record of Accounts consistent with customary business practices.
(j) Covenants Relating to Inventory.
(i) Maintain, keep and preserve its material Inventory in good
salable condition at its own cost and expense.
(ii) Comply with all reporting requirements set forth in the
Credit Agreement with respect to Inventory.
(iii) Upon the reasonable request of the Administrative Agent,
deliver any document of title with respect to Inventory of an Obligor
to the Administrative Agent.
(k) Covenants Relating to Copyrights. To the extent a Copyright is
material to the business of the Obligors taken as a whole and comprises an
item of Material Intellectual Property:
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(i) Employ such Copyright for each applicable Work with such
notice of copyright as may be required by law to secure copyright
protection.
(ii) Not do any act or knowingly omit to do any act whereby such
Copyright may become invalidated and (A) not do any act, or knowingly
omit to do any act, whereby such Copyright may become injected into
the public domain; (B) notify the Administrative Agent immediately if
it knows, or has reason to know, that such Copyright could reasonably
be expected to become injected into the public domain or of any
adverse determination or development (including, without limitation,
the institution of, or any such determination or development in, any
proceeding in any court or tribunal in the United States or any other
country) regarding the ownership of such Copyright or its validity;
(C) take all necessary steps as it shall deem appropriate under the
circumstances to maintain and pursue each application (and to obtain
the relevant registration) and to maintain each registration of such
Copyright including, without limitation, filing of applications for
renewal where necessary; and (D) promptly notify the Administrative
Agent of any material infringement of such Copyright of which it
becomes aware and take such actions as it shall reasonably deem
appropriate under the circumstances to protect such Copyright,
including, where appropriate, the bringing of suit for infringement,
seeking injunctive relief and seeking to recover any and all damages
for such infringement.
(iii) Not make any assignment or agreement in conflict with the
security interest in such Copyright hereunder.
(l) Covenants Relating to Patents and Trademarks. To the extent a
Patent or Trademark is material to the business of the Obligors, taken as a
whole and comprises an item of Material Intellectual Property:
(i) (A) Continue to use such Trademark in order to maintain such
Trademark in full force free from any claim of abandonment for
non-use, (B) employ such Trademark with the appropriate notice of
registration, (C) not adopt or use any xxxx which is confusingly
similar or a colorable imitation of such Trademark unless the
Administrative Agent, for the ratable benefit of the Lenders, shall
obtain a perfected security interest in such xxxx pursuant to this
Security Agreement, and (D) not (and not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act
whereby such Trademark may become invalidated.
(ii) Not do any act, or omit to do any act, whereby such Patent
may become abandoned or dedicated.
(iii) Promptly notify the Administrative Agent if it knows, or
has reason to know, that any application or registration relating to
such Patent or Trademark may become abandoned or dedicated, or of any
adverse determination
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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 or any court or tribunal in any
country) regarding the ownership of such Patent or Trademark or its
right to register the same or to keep, maintain and use the same.
(iv) Whenever an Obligor, either by itself or through an agent,
employee, licensee or designee, shall file an application for the
registration of such Patent or Trademark with the United States Patent
and Trademark Office or any similar office or agency in any other
country or any political subdivision thereof, such Obligor shall
report such filing to the Administrative Agent in accordance with the
terms of Section 5.2(c) of the Credit Agreement. Upon the request of
the Administrative Agent, an Obligor shall execute and deliver any and
all agreements, instruments, documents and papers as the
Administrative Agent may request to evidence the Administrative
Agent's security interest in such Patent or Trademark and the goodwill
and General Intangibles of such Obligor relating thereto or
represented thereby.
(v) Take all reasonable and necessary steps, including, without
limitation, in any proceeding before the United States Patent and
Trademark Office, or any similar office or agency in any other country
or any political subdivision thereof, to maintain and pursue each
application, to obtain the relevant registration and to maintain each
registration of such Patent or Trademark, including, without
limitation, filing of applications for renewal, affidavits of use and
affidavits of incontestability.
(vi) Promptly notify the Administrative Agent after it learns
that such Patent or Trademark is materially infringed, misappropriated
or diluted by a third party and, if commercially reasonable, promptly
xxx for infringement, misappropriation or dilution, to seek injunctive
relief where appropriate and to recover any and all damages for such
infringement, misappropriation or dilution, or take such other actions
as it shall reasonably deem appropriate under the circumstances to
protect such Patent or Trademark.
(vii) Not make any assignment or agreement in conflict with the
security interest in such Patent or Trademarks hereunder.
(m) New Patents, Copyrights and Trademarks. In accordance with the
terms of Section 5.2(c) of the Credit Agreement, provide the Administrative
Agent with (i) a listing of all applications, if any, for new items of
Intellectual Property that comprise Material Intellectual Property
(together with a listing of the issuance of registrations or letters on
present applications), which new applications and issued registrations or
letters shall be subject to the terms and conditions hereunder, and (ii)
(A) with respect to any such new Material Intellectual Property consisting
of Copyrights and Copyright Licenses, a duly executed Notice of Grant of
Security Interest in Copyrights, (B) with respect to any such new Material
Intellectual Property consisting of Patents and Patent Licenses, a duly
12
executed Notice of Grant of Security Interest in Patents, (C) with respect
to any such new Material Intellectual Property consisting of Trademarks and
Trademark Licenses, a duly executed Notice of Grant of Security Interest in
Trademarks or (D) such other duly executed documents as the Administrative
Agent may request in a form acceptable to counsel for the Administrative
Agent and suitable for recording to evidence the security interest of the
Administrative Agent on behalf of the Lenders in the Material Intellectual
Property which is the subject of such new application.
(n) Commercial Tort Claims; Notice of Litigation. (i) Promptly forward
to the Administrative Agent written notification of any and all material
Commercial Tort Claims of the Obligors, including, but not limited to, any
and all actions, suits, and proceedings before any court or Governmental
Authority by or affecting such Obligor or any of its Subsidiaries and (ii)
execute and deliver such statements, documents and notices and do and cause
to be done all such things as may be required by the Administrative 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 Administrative Agent's security interest in any Commercial
Tort Claims.
(o) Regulatory Approvals. Promptly, and at its expense, execute and
deliver, or cause to be executed and delivered, all material applications,
certificates, instruments, registration statements, and all other documents
and papers the Administrative Agent may reasonably request and as may be
required by law to acquire any Governmental Approval or the consent,
approval, registration, qualification or authorization of any other Person
deemed necessary or appropriate for the effective exercise of any of the
rights under this Security Agreement. Without limiting the generality of
the foregoing, if an Event of Default shall have occurred and be
continuing, each Obligor shall take any action which the Administrative
Agent may reasonably request in order to transfer and assign to the
Administrative Agent, or to such one or more third parties as the
Administrative Agent may designate, or to a combination of the foregoing,
each Government Approval of such Obligor. To enforce the provisions of this
subsection, upon the occurrence and during the continuance of an Event of
Default, the Administrative Agent is empowered to request the appointment
of a receiver from any court of competent jurisdiction. Such receiver shall
be instructed to seek from the Governmental Authority an involuntary
transfer of control of each such Governmental Approval for the purpose of
seeking a bona fide purchaser to whom control will ultimately be
transferred. Each Obligor hereby agrees to authorize such an involuntary
transfer of control upon the request of the receiver so appointed, and, if
such Obligor shall refuse to authorize the transfer, its approval may be
required by the court. Upon the occurrence and continuance of an Event of
Default, such Obligor shall further use its commercially reasonable efforts
to assist in obtaining Governmental Approvals, if required, for any action
or transaction contemplated by this Security Agreement, including, without
limitation, the preparation, execution and filing with the Governmental
Authority of such Obligor's portion of any necessary or appropriate
application for the approval of the transfer or assignment of any portion
of the assets (including any Governmental Approval) of such Obligor.
Because each Obligor agrees that the Administrative Agent's remedy at law
for failure of such Obligor to comply with the provisions of this
subsection would be inadequate and that such failure would not be
adequately compensable in damages, such
13
Obligor agrees that the covenants contained in this subsection may be
specifically enforced, and such Obligor hereby waives and agrees not to
assert any defenses against an action for specific performance of such
covenants.
(p) Insurance. Insure, repair and replace all material Collateral of
such Obligor as set forth in the Credit Agreement. All proceeds derived
from insurance on the Collateral shall be subject to the security interest
of the Administrative Agent hereunder.
(q) Covenants Relating to the Assigned Agreements.
(i) Upon the request of the Administrative Agent, each Obligor
shall, at its expense (except where such document relates to the
day-to-day business of an Obligor and such document is made available
to the Administrative Agent for inspection), (A) furnish to the
Administrative Agent copies of all notices, requests and other
documents received by such Obligor under or pursuant to the Assigned
Agreements, and such other information and reports regarding the
Assigned Agreements and (B) make to any other party to any Assigned
Agreement such demands and requests for information and reports or for
action as an Obligor is entitled to make thereunder.
(ii) Unless the applicable Obligor believes it is necessary in
the prudent conduct of its business, no Obligor shall (A) cancel or
terminate any Assigned Agreement of such Obligor or consent to or
accept any cancellation or termination thereof; (B) amend or otherwise
modify any Assigned Agreement of such Obligor or give any consent,
waiver or approval thereunder; (C) waive any default under or breach
of any Assigned Agreement of such Obligor; or (D) take any other
action in connection with any Assigned Agreement of such Obligor which
would impair the value of the interest or rights of such Obligor
thereunder or which would impair the interests or rights of the
Administrative Agent.
(r) Material Contracts. Upon the request of the Administrative Agent,
with respect to any Material Contract, each Obligor will (i) execute and
deliver (or cause to be executed and delivered) to the Administrative Agent
a collateral assignment of such Material Contract and its consent to such
collateral assignment, in each case in a form acceptable to the
Administrative Agent, (ii) use commercially reasonable efforts to cause the
other parties to such Material Contract to execute such consent and (iii)
do any act or execute any additional documents reasonably required by the
Administrative Agent to ensure to the Administrative Agent the
effectiveness and first priority of its security interest in such Material
Contract.
6. License of Intellectual Property. The Obligors hereby assign, transfer
and convey to the Administrative Agent, effective upon the occurrence and during
the continuance of any Event of Default, the nonexclusive right and license to
use all Intellectual Property owned or used by any Obligor that relate to the
Collateral and any other collateral granted by the Obligors as security for the
Secured Obligations, together with any goodwill associated therewith, all to the
extent necessary to enable the Administrative Agent to use, possess and realize
on the
14
Collateral and to enable any successor or assign to enjoy the benefits of the
Collateral. This right and license shall inure to the benefit of all successors,
assigns and transferees of the Administrative Agent and its successors, assigns
and transferees, whether by voluntary conveyance, operation of law, assignment,
transfer, foreclosure, deed in lieu of foreclosure or otherwise. Such right and
license is granted free of charge, without requirement that any monetary payment
whatsoever be made to the Obligors.
7. Special Provisions Regarding Inventory. Notwithstanding anything to the
contrary contained in this Security Agreement, each Obligor may, unless and
until an Event of Default occurs and is continuing and the Administrative Agent
instructs such Obligor otherwise, without further consent or approval of the
Administrative Agent, use, consume, sell, lease and exchange its Inventory in
the ordinary course of its business as presently conducted (and as will be
conducted after giving effect to the Acquisition), whereupon, in the case of
such a sale or exchange, the security interest created hereby in the Inventory
so sold or exchanged (but not in any Proceeds arising from such sale or
exchange) shall cease immediately without any further action on the part of the
Administrative Agent.
8. Performance of Obligations; Advances by Administrative Agent. On failure
of any Obligor to perform any of the covenants and agreements contained herein,
the Administrative Agent may, at its sole option and in its sole discretion,
perform or cause to be performed the same and in so doing may expend such sums
as the Administrative Agent may reasonably deem advisable in the performance
thereof, including, without limitation, the payment of any insurance premiums,
the payment of any taxes, a payment to obtain a release of a Lien or potential
Lien, expenditures made in defending against any adverse claim and all other
expenditures which the Administrative Agent may make for the protection of the
security interest hereof or may be compelled to make by operation of law. All
such sums and amounts so expended shall be repayable by the Obligors on a joint
and several basis promptly upon timely notice thereof and demand therefor, shall
constitute additional Secured Obligations and shall bear interest from the date
said amounts are expended at the ABR Default Rate. No such performance of any
material covenant or agreement by the Administrative Agent on behalf of any
Obligor, and no such advance or expenditure therefor, shall relieve the Obligors
of any default under the terms of this Security Agreement, the other Credit
Documents or any Secured Hedging Agreement. The Administrative Agent may make
any payment hereby authorized in accordance with any xxxx, statement or estimate
procured from the appropriate public office or holder of the claim to be
discharged without inquiry into the accuracy of such xxxx, statement or estimate
or into the validity of any tax assessment, sale, forfeiture, tax lien, title or
claim except to the extent such payment is being contested in good faith by an
Obligor in appropriate proceedings and against which adequate reserves are being
maintained in accordance with GAAP.
9. Events of Default.
The occurrence of an event which under the Credit Agreement would
constitute an Event of Default shall be an event of default hereunder (an "Event
of Default").
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10. Remedies.
(a) General Remedies. Upon the occurrence of an Event of Default and
during continuation thereof, the Administrative Agent and the Lenders shall
have, in addition to the rights and remedies provided herein, in the Credit
Documents, in any Secured Hedging Agreement or by law (including, but not
limited to, levy of attachment, garnishment and the rights and remedies set
forth in the UCC of the jurisdiction applicable to the affected
Collateral), the rights and remedies of a secured party under the UCC
(regardless of whether the UCC is the law of the jurisdiction where the
rights and remedies are asserted and regardless of whether the UCC applies
to the affected Collateral), and further, the Administrative Agent may,
with or without judicial process or the aid and assistance of others, (i)
enter on any premises on which any of the Collateral may be located and,
without resistance or interference by the Obligors, take possession of the
Collateral, (ii) dispose of any Collateral on any such premises, (iii)
require the Obligors to assemble and make available to the Administrative
Agent at the expense of the Obligors any Collateral at any place and time
designated by the Administrative Agent which is reasonably convenient to
both parties, (iv) remove any Collateral from any such premises for the
purpose of effecting the sale or other disposition thereof, and/or (v)
without demand and without advertisement, notice, hearing or process of
law, all of which each of the Obligors hereby waives to the fullest extent
permitted by law, at any place and time or times, sell and deliver any or
all Collateral held by or for it at public or private sale, by one or more
contracts, in one or more parcels, for cash, upon credit or otherwise, at
such prices and upon such terms as the Administrative Agent deems
advisable, in its sole discretion (subject to any and all mandatory legal
requirements). Neither the Administrative Agent's compliance with any
applicable state or federal law in the conduct of such sale, nor its
disclaimer of any warranties relating to the Collateral, shall be
considered to adversely affect the commercial reasonableness of such sale.
In addition to all other sums due the Administrative Agent and the Lenders
with respect to the Secured Obligations, the Obligors shall pay the
Administrative Agent and each of the Lenders all reasonable documented
costs and expenses incurred by the Administrative Agent or any such Lender,
including, but not limited to, reasonable attorneys' fees and court costs,
in obtaining or liquidating the Collateral, in enforcing payment of the
Secured Obligations, or in the prosecution or defense of any action or
proceeding by or against the Administrative Agent or the Lenders or the
Obligors concerning any matter arising out of or connected with this
Security Agreement, any Collateral or the Secured Obligations, including,
without limitation, any of the foregoing arising in, arising under or
related to a case under the Bankruptcy Code. To the extent the rights of
notice cannot be legally waived hereunder, each Obligor agrees that any
requirement of reasonable notice shall be met if such notice is personally
served on or mailed, postage prepaid, to the Borrower in accordance with
the notice provisions of Section 9.2 of the Credit Agreement at least ten
(10) days before the time of sale or other event giving rise to the
requirement of such notice. The Administrative Agent and the Lenders shall
not be obligated to make any sale or other disposition of the Collateral
regardless of notice having been given. To the extent permitted by law, any
Lender may be a purchaser at any such sale. To the extent permitted by
applicable law, each of the Obligors hereby waives all of its rights of
16
redemption with respect to any such sale. Subject to the provisions of
applicable law, the Administrative Agent and the Lenders may postpone or
cause the postponement of the sale of all or any portion of the Collateral
by announcement at the time and place of such sale, and such sale may,
without further notice, to the extent permitted by law, be made at the time
and place to which the sale was postponed, or the Administrative Agent and
the Lenders may further postpone such sale by announcement made at such
time and place.
(b) Remedies Relating to Accounts. Upon the occurrence of an Event of
Default and during the continuation thereof, whether or not the
Administrative Agent has exercised any or all of its rights and remedies
hereunder, the Administrative Agent shall have the right to enforce any
Obligor's rights against any account debtors and obligors on such Obligor's
Accounts. Each Obligor acknowledges and agrees that the Proceeds of its
Accounts remitted to or on behalf of the Administrative Agent in accordance
with the provisions of this Section shall be solely for the Administrative
Agent's own convenience and that such Obligor shall not have any right,
title or interest in such Proceeds or in any such other amounts except as
expressly provided herein. After the occurrence and during the continuance
of an Event of Default, to the extent required by the Administrative Agent,
each Obligor agrees to execute any document or instrument, and to take any
action, necessary under applicable law (including the Federal Assignment of
Claims Act) in order for the Administrative Agent to exercise its rights
and remedies (or be able to exercise its rights and remedies at some future
date) with respect to any Accounts of such Obligor where the account debtor
is a Governmental Authority. The Administrative Agent and the Lenders shall
have no liability or responsibility to any Obligor for acceptance of a
check, draft or other order for payment of money bearing the legend
"payment in full" or words of similar import or any other restrictive
legend or endorsement or be responsible for determining the correctness of
any remittance. Each Obligor hereby agrees to indemnify the Administrative
Agent and the Lenders and their respective officers, directors, employees,
partners, members, counsel, agents, representatives, advisors and
affiliates from and against all liabilities, damages, losses, actions,
claims, judgments, costs, expenses, charges and reasonable attorneys' fees
suffered or incurred by the Administrative Agent or the Lenders (each, an
"Indemnified Party") because of the maintenance of the foregoing
arrangements except as relating to or arising out of the gross negligence
or willful misconduct of an Indemnified Party or its officers, employees or
agents. In the case of any investigation, litigation or other proceeding,
the foregoing indemnity shall be effective whether or not such
investigation, litigation or proceeding is brought by an Obligor, its
directors, shareholders or creditors or an Indemnified Party or any other
Person or any other Indemnified Party is otherwise a party thereto.
(c) Access. In addition to the rights and remedies hereunder, upon the
occurrence of an Event of Default and during the continuation thereof, the
Administrative Agent shall have the right to enter and remain upon the
various premises of the Obligors without cost or charge to the
Administrative Agent, and use the same, together with materials, supplies,
books and records of the Obligors for the purpose of collecting and
liquidating the Collateral, or for preparing for sale and conducting the
sale of the Collateral, whether by foreclosure, auction or otherwise. In
addition, the Administrative
17
Agent may remove Collateral, or any part thereof, from such premises and/or
any records with respect thereto, in order to effectively collect or
liquidate such Collateral. If the Administrative Agent exercises its right
to take possession of the Collateral, each Obligor shall also at its
expense perform any and all other steps reasonably requested by the
Administrative Agent to preserve and protect the security interest hereby
granted in the Collateral, such as placing and maintaining signs indicating
the security interest of the Administrative Agent, appointing overseers for
the Collateral and maintaining inventory records.
(d) Nonexclusive Nature of Remedies. Failure by the Administrative
Agent or the Lenders to exercise any right, remedy or option under this
Security Agreement, any other Credit Document, any Secured Hedging
Agreement or as provided by law, or any delay by the Administrative Agent
or the Lenders in exercising the same, shall not operate as a waiver of any
such right, remedy or option. No waiver hereunder shall be effective unless
it is in writing, signed by the party against whom such waiver is sought to
be enforced and then only to the extent specifically stated, which in the
case of the Administrative Agent or the Lenders shall only be granted as
provided herein. To the extent permitted by law, neither the Administrative
Agent, the Lenders, nor any party acting as attorney for the Administrative
Agent or the Lenders, shall be liable hereunder for any acts or omissions
or for any error of judgment or mistake of fact or law other than their
gross negligence or willful misconduct hereunder. The rights and remedies
of the Administrative Agent and the Lenders under this Security Agreement
shall be cumulative and not exclusive of any other right or remedy which
the Administrative Agent or the Lenders may have.
(e) Retention of Collateral. In addition to the rights and remedies
hereunder, upon the occurrence of an Event of Default and during the
continuation thereof, the Administrative Agent may, after providing the
notices required by Sections 9-620 and 9-621 of the UCC (or any successor
sections of the UCC) or otherwise complying with the notice requirements of
applicable law of the relevant jurisdiction, accept or retain all or any
portion of the Collateral in satisfaction of the Secured Obligations.
Unless and until the Administrative Agent shall have provided such notices,
however, the Administrative Agent shall not be deemed to have retained any
Collateral in satisfaction of any Secured Obligations for any reason.
(f) Deficiency. In the event that the proceeds of any sale, collection
or realization are insufficient to pay all amounts to which the
Administrative Agent or the Lenders are legally entitled, the Obligors
shall be jointly and severally liable for the deficiency, together with
interest thereon at the ABR Default Rate, together with the costs of
collection and the reasonable fees of any attorneys employed by the
Administrative Agent to collect such deficiency. Any surplus remaining
after the full payment and satisfaction of the Secured Obligations shall be
returned to the Obligors or to whomsoever a court of competent jurisdiction
shall determine to be entitled thereto.
(g) Other Security. To the extent that any of the Secured Obligations
are now or hereafter secured by property other than the Collateral
(including, without limitation,
18
real and other personal property and securities owned by an Obligor), or by
a guarantee, endorsement or property of any other Person, then the
Administrative Agent shall have the right to proceed against such other
property, guarantee or endorsement upon the occurrence and during the
continuation of any Event of Default, and the Administrative Agent shall
have the right, in its sole discretion, to determine which rights,
security, Liens, security interests or remedies the Administrative Agent
shall at any time pursue, relinquish, subordinate, modify or take with
respect thereto, without in any way modifying or affecting any of them or
any of the Administrative Agent's and the Lenders' rights or the Secured
Obligations under this Security Agreement, under any other of the Credit
Documents or under any Secured Hedging Agreement.
11. Rights of the Administrative Agent.
(a) Power of Attorney. In addition to other powers of attorney
contained herein, each Obligor hereby designates and appoints the
Administrative Agent, on behalf of the Lenders, and each of its designees
or agents, as attorney-in-fact of such Obligor, irrevocably and with power
of substitution, with authority to take any or all of the following actions
upon the occurrence and during the continuation of an Event of Default:
(i) to demand, collect, settle, compromise, adjust and give
discharges and releases concerning the Collateral of such Obligor, all
as the Administrative Agent may reasonably determine in respect of
such Collateral;
(ii) to commence and prosecute any actions at any court for the
purposes of collecting any Collateral and enforcing any other right in
respect thereof;
(iii) to defend, settle, adjust or compromise any action, suit or
proceeding brought with respect to the Collateral and, in connection
therewith, give such discharge or release as the Administrative Agent
may deem reasonably appropriate;
(iv) to receive, open and dispose of mail addressed to an Obligor
and endorse checks, notes, drafts, acceptances, money orders, bills of
lading, warehouse receipts or other instruments or documents
evidencing payment, shipment or storage of the goods giving rise to
the Collateral of such Obligor, or securing or relating to such
Collateral, on behalf of and in the name of such Obligor;
(v) to sell, assign, transfer, make any agreement in respect of,
or otherwise deal with or exercise rights in respect of, any
Collateral or the goods or services which have given rise thereto, as
fully and completely as though the Administrative Agent were the
absolute owner thereof for all purposes;
19
(vi) to adjust and settle claims under any insurance policy
relating to the Collateral;
(vii) to execute and deliver and/or file all assignments,
conveyances, statements, financing statements, continuation financing
statements, security agreements, affidavits, notices and other
agreements, instruments and documents that the Administrative Agent
may determine necessary in order to perfect and maintain the security
interests and Liens granted in this Security Agreement and in order to
fully consummate all of the transactions contemplated herein;
(viii) to institute any foreclosure proceedings that the
Administrative Agent may deem appropriate;
(ix) to execute any document or instrument, and to take any
action, necessary under applicable law (including the Federal
Assignment of Claims Act) in order for the Administrative Agent to
exercise its rights and remedies (or to be able to exercise its rights
and remedies at some future date) with respect to any Account of an
Obligor where the account debtor is a Governmental Authority; and
(x) to do and perform all such other acts and things as the
Administrative Agent may reasonably deem to be necessary, proper or
convenient in connection with the Collateral.
This power of attorney is a power coupled with an interest and shall be
irrevocable for so long as any of the Secured Obligations (other than
contingent indemnity obligations that survive termination of the Credit
Documents pursuant to the stated terms thereof) remain outstanding, any
Credit Document or Secured Hedging Agreement is in effect, and until all of
the Commitments shall have been terminated. The Administrative Agent shall
be under no duty to exercise or withhold the exercise of any of the rights,
powers, privileges and options expressly or implicitly granted to the
Administrative Agent in this Security Agreement, and shall not be liable
for any failure to do so or any delay in doing so. The Administrative Agent
shall not be liable for any act or omission or for any error of judgment or
any mistake of fact or law in its individual capacity or its capacity as
attorney-in-fact except acts or omissions resulting from its gross
negligence or willful misconduct. This power of attorney is conferred on
the Administrative Agent solely to perfect, protect, preserve and realize
upon its security interest in the Collateral appointed pursuant to the
terms and conditions of the Credit Agreement.
(b) Assignment by the Administrative Agent. The Administrative Agent
may from time to time assign the Secured Obligations or any portion thereof
and/or the Collateral or any portion thereof to a successor Administrative
Agent, and the assignee shall be entitled to all of the rights and remedies
of the Administrative Agent under this Security Agreement in relation
thereto.
20
(c) The Administrative Agent's Duty of Care. Other than the exercise
of reasonable care to assure the safe custody of the Collateral while being
held by the Administrative Agent hereunder, the Administrative Agent shall
have no duty or liability to preserve rights pertaining thereto, it being
understood and agreed that the Obligors shall be responsible for
preservation of all rights in the Collateral, and the Administrative Agent
shall be relieved of all responsibility for the Collateral upon
surrendering it or tendering the surrender of it to the Obligors. The
Administrative Agent shall be deemed to have exercised reasonable care in
the custody and preservation of the Collateral in its possession if the
Collateral is accorded treatment substantially equal to that which the
Administrative Agent accords its own property, which shall be no less than
the treatment employed by a reasonable and prudent agent in the industry,
it being understood that the Administrative Agent shall not have
responsibility for taking any necessary steps to preserve rights against
any parties with respect to any of the Collateral. In the event of a public
or private sale of Collateral pursuant to Section 10 hereof, the
Administrative Agent shall have no obligation to clean-up, repair or
otherwise prepare the Collateral for sale.
12. Application of Proceeds. After the exercise of remedies by the
Administrative Agent or the Lenders pursuant to Section 7.2 of the Credit
Agreement (or after the Commitments shall automatically terminate and the Loans
(with accrued interest thereon) and all other amounts under the Credit Documents
(including without limitation the maximum amount of all contingent liabilities
under Letters of Credit) shall automatically become due and payable in
accordance with the terms of such Section), any proceeds of the Collateral, when
received by the Administrative Agent, any of the Lenders or any Hedging
Agreement Provider in cash or its equivalent, will be applied in reduction of
the Secured Obligations in the order set forth in Section 2.11(b) of the Credit
Agreement, and each Obligor irrevocably waives the right to direct the
application of such payments and proceeds and acknowledges and agrees that the
Administrative Agent shall have the continuing and exclusive right to apply and
reapply any and all such proceeds in the Administrative Agent's sole discretion,
notwithstanding any entry to the contrary upon any of its books and records.
13. Costs of Counsel. If at any time hereafter, whether upon the occurrence
of an Event of Default or not, the Administrative Agent employs counsel to
prepare or consider amendments, waivers or consents with respect to this
Security Agreement, or to take action or make a response in or with respect to
any legal or arbitral proceeding relating to this Security Agreement or relating
to the Collateral, or to protect the Collateral or exercise any rights or
remedies under this Security Agreement or with respect to the Collateral, then
the Obligors agree to promptly pay upon demand any and all such reasonable
documented costs and expenses of the Administrative Agent, all of which costs
and expenses shall constitute Secured Obligations hereunder.
14. Continuing Agreement.
(a) This Security Agreement shall be a continuing agreement in every
respect and shall remain in full force and effect so long as any of the
Secured Obligations (other than contingent indemnity obligations that
survive termination of the Credit Documents pursuant to the stated terms
thereof) remain outstanding, any Credit Document or
21
Secured Hedging Agreement is in effect, and until all of the Commitments
shall have been terminated. Upon such payment and termination, this
Security Agreement shall be automatically terminated and the Administrative
Agent and the Lenders shall, upon the request and at the expense of the
Obligors, forthwith release all of the Liens and security interests granted
hereunder and shall execute and/or deliver all UCC termination statements
and/or other documents reasonably requested by the Obligors evidencing such
termination. Notwithstanding the foregoing all releases and indemnities
provided hereunder shall survive termination of this Security Agreement.
(b) This Security Agreement shall continue to be effective or be
automatically reinstated, as the case may be, if at any time payment, in
whole or in part, of any of the Secured Obligations is rescinded or must
otherwise be restored or returned by the Administrative Agent or any Lender
as a preference, fraudulent conveyance or otherwise under any bankruptcy,
insolvency or similar law, all as though such payment had not been made;
provided that in the event that payment of all or any part of the Secured
Obligations is rescinded or must be restored or returned, all reasonable
costs and expenses (including without limitation any reasonable legal fees
and disbursements) incurred by the Administrative Agent or any Lender in
defending and enforcing such reinstatement shall be deemed to be included
as a part of the Secured Obligations.
15. Amendments; Waivers; Modifications. This Security Agreement and the
provisions hereof may not be amended, waived, modified, changed, discharged or
terminated except as set forth in Section 9.1 of the Credit Agreement.
16. Successors in Interest. This Security Agreement shall create a
continuing security interest in the Collateral and shall be binding upon each
Obligor, its successors and assigns and shall inure, together with the rights
and remedies of the Administrative Agent and the Lenders hereunder, to the
benefit of the Administrative Agent and the Lenders and their successors and
permitted assigns; provided, however, that none of the Obligors may assign its
rights or delegate its duties hereunder without the prior written consent of
each Lender or the Required Lenders, as required by the Credit Agreement. To the
fullest extent permitted by law, each Obligor hereby releases the Administrative
Agent and each Lender, each of their respective officers, employees and agents
and each of their respective successors and assigns, from any liability for any
act or omission relating to this Security Agreement or the Collateral, except
for any liability arising from the gross negligence or willful misconduct of the
Administrative Agent or such Lender or their respective officers, employees and
agents, in each case as determined by a court of competent jurisdiction.
17. Notices. All notices required or permitted to be given under this
Security Agreement shall be in conformance with Section 9.2 of the Credit
Agreement.
18. Counterparts. This Security Agreement may be executed in any number of
counterparts, each of which where so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this Security Agreement to produce or
account for more than one such counterpart. Delivery of executed counterparts of
the Security Agreement by telecopy or other electronic means shall be
22
effective as an original and shall constitute a representation that an original
shall be delivered upon the request of the Administrative Agent.
19. Headings. The headings of the sections and subsections hereof are
provided for convenience only and shall not in any way affect the meaning,
construction or interpretation of any provision of this Security Agreement.
20. Governing Law; Submission to Jurisdiction and Service of Process;
Waiver of Jury Trial; Venue. THIS SECURITY AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (INCLUDING
SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW). The terms
of Sections 9.14 and 9.17 of the Credit Agreement are incorporated herein by
reference, mutatis mutandis, and the parties hereto agree to such terms.
21. Severability. If any provision of this Security Agreement is determined
to be illegal, invalid or unenforceable, such provision shall be fully severable
and the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
22. Entirety. This Security Agreement, the other Credit Documents and the
Secured Hedging Agreements represent the entire agreement of the parties hereto
and thereto, and supersede all prior agreements and understandings, oral or
written, if any, including any commitment letters or correspondence relating to
this Security Agreement, the other Credit Documents, the Secured Hedging
Agreements or the transactions contemplated herein and therein.
23. Survival. All representations and warranties of the Obligors hereunder
shall survive the execution and delivery of this Security Agreement, the other
Credit Documents and the Secured Hedging Agreements, the delivery of the Notes
and the making of the Loans and the issuance of the Letters of Credit under the
Credit Agreement.
24. Joint and Several Obligations of Obligors.
(a) Each of the Obligors is accepting joint and several liability
hereunder in consideration of the financial accommodations to be provided
by the Lenders under the Credit Agreement, for the mutual benefit, directly
and indirectly, of each of the Obligors and in consideration of the
undertakings of each of the Obligors to accept joint and several liability
for the obligations of each of them.
(b) Each of the Obligors jointly and severally hereby irrevocably and
unconditionally accepts joint and several liability with the other Obligors
with respect to the payment and performance of all of the Secured
Obligations arising under this Security Agreement, the other Credit
Documents and the Secured Hedging Agreements, it being the intention of the
parties hereto that all the Secured Obligations shall be the joint and
23
several obligations of each of the Obligors without preferences or
distinction among them.
(c) Notwithstanding any provision to the contrary contained herein, in
any other of the Credit Documents or in any Secured Hedging Agreement, to
the extent the obligations of an Obligor shall be adjudicated to be invalid
or unenforceable for any reason (including, without limitation, because of
any applicable state or federal law relating to fraudulent conveyances or
transfers) then the obligations of such Obligor hereunder shall be limited
to the maximum amount that is permissible under applicable law (whether
federal or state and including, without limitation, the Bankruptcy Code).
25. Rights of Required Lenders. All rights of the Administrative Agent
hereunder, if not exercised by the Administrative Agent, may be exercised by the
Required Lenders.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
24
Each of the parties hereto has caused a counterpart of this Security
Agreement to be duly executed and delivered as of the date first above written.
BORROWER: ARMOR HOLDINGS, INC.
By: /s/ Xxxxxx Xxxxxxxxx
-----------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Corporate Controller, Treasurer
and Secretary
GUARANTORS: 911EP, INC.
AHI PROPERTIES I, LLC
ARMOR ACCESSORIES, INC.
ARMOR BRANDS, INC.
ARMORGROUP SERVICES, LLC
ARMOR HOLDINGS GP, LLC
ARMOR HOLDINGS LP, LLC
ARMOR HOLDINGS FORENSICS, L.L.C.
ARMOR HOLDINGS PRODUCTS, L.L.C.
ARMOR HOLDINGS PROPERTIES, INC.
ARMOR HOLDINGS MOBILE
SECURITY, L.L.C.
ARMOR SAFETY PRODUCTS COMPANY
CASCO INTERNATIONAL, INC.
CDR INTERNATIONAL, INC.
DEFENSE TECHNOLOGY CORPORATION
OF AMERICA
IDENTICATOR, LLC
MONADNOCK LIFETIME PRODUCTS, INC.,
a Delaware corporation
MONADNOCK LIFETIME PRODUCTS, INC.,
a New Hampshire corporation
MONADNOCK POLICE TRAINING COUNCIL, INC.
ODV HOLDINGS CORP.
NEW TECHNOLOGIES ARMOR, INC.
RAMTECH DEVELOPMENT CORP.
SAFARILAND GOVERNMENT SALES, INC.
SAFARI LAND LTD., INC.
Each of the above
By: /s/ Xxxxxx Xxxxxxxxx
-----------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Vice President
GUARANTORS (CONTINUED): X'XXXX-XXXX & XXXXXXXXXX ARMORING
COMPANY, L.L.C.
PRO-TECH ARMORED PRODUCTS OF
MASSACHUSETTS, INC.
THE CENTIGON COMPANY, LLC
CENTIGON SALES & MARKETING, LLC
CENTIGON USA, LLC
HATCH IMPORTS, INC.
ARMOR HOLDINGS INFORMATION
TECHNOLOGY, L.L.C.
THE SPECIALTY GROUP, INC.
SPECIALTY PLASTIC PRODUCTS OF
DELAWARE, INC.
SPECIALTY DEFENSE SYSTEMS OF
DELAWARE, INC.
MT. XXXX SPECIALTY, INC.
PENN FIBRE & SPECIALTY COMPANY OF
DELAWARE, INC.
PFS SALES COMPANY
SPECIALTY DEFENSE SYSTEMS OF
KENTUCKY, INC.
SPECIALTY DEFENSE SYSTEMS OF
NEVADA, INC.
SPECIALTY DEFENSE SYSTEMS OF
PENNSYLVANIA, INC.
SPECIALTY DEFENSE SYSTEMS OF
TENNESSEE, INC.
SPECIALTY MACHINERY, INC.
BIANCHI INTERNATIONAL
ACCUCASE, LLC
ARMOR HOLDINGS GOVERNMENT
RELATIONS, LLC
SECOND CHANCE ARMOR, INC.
Each of the above
By: /s/ Xxxxxx Xxxxxxxxx
-----------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Vice President
GUARANTORS (CONTINUED): OAK BRANCH, LLC
By: /s/ Xxxxxx Xxxxxxxxx
-----------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: President and Treasurer
NAP PROPERTIES, LTD., A CALIFORNIA
LIMITED PARTNERSHIP
By: NAP PROPERTY MANAGERS LLC,
its General Partner
By: ARMOR HOLDINGS PROPERTIES, INC.,
its Managing Member
By: /s/ Xxxxxx Xxxxxxxxx
-----------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Vice President
NAP PROPERTY MANAGERS LLC
By: ARMOR HOLDINGS PROPERTIES, INC.,
its Managing Member
By: /s/ Xxxxxx Xxxxxxxxx
-----------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Vice President
ARMOR HOLDINGS PAYROLL SERVICES, LLC
By: /s/ Xxxxxx Xxxxxxxxx
-----------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Manager
XXXXXXX & XXXXXXXXX TACTICAL
VEHICLE SYSTEMS, LP
By: XXXXXXX & XXXXXXXXX TVS, INC.,
its General Partner
By: /s/ Xxxxxx Xxxxxxxxx
-----------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Vice President
GUARANTORS (CONTINUED): SIMULA, INC.
SIMULA AEROSPACE & DEFENSE GROUP, INC.
SIMULA POLYMER SYSTEMS, INC.
SIMULA TECHNOLOGIES, INC.
INTERNATIONAL CENTER FOR SAFETY
EDUCATION, INC.
ARMOR HOLDINGS AEROSPACE &
DEFENSE, INC.
Each of the above
By: /s/ Xxxxx Xxxxx
-----------------------------------
Name: Xxxxx Xxxxx
Title: Secretary and Treasurer
ARMOR HOLDINGS AIRCRAFT, LLC
By: /s/ Xxxxxx Xxxxxxxxx
-----------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: President
XXXXXXX & XXXXXXXXX SERVICES, INC.
EXTENDED REACH LOGISTICS, INC.
XXXXXXX & XXXXXXXXX FMTV
INTERNATIONAL, INC.
S&S TRUST
SIERRA DETROIT DIESEL XXXXXXX, INC.
XXXXXXX & XXXXXXXXX TVS, INC.
XXXXXXX & XXXXXXXXX VEHICLE
SERVICES, INC.
XXXXXXX & XXXXXXXXX HOLDINGS, INC.
TVS HOLDINGS, INC.
TVS HOLDINGS, LLC
Each of the above
By: /s/ Xxxxxx Xxxxxxxxx
-----------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Vice President
Accepted and agreed to as of the date first above written.
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Administrative Agent
By: /s/ Xxxxx Xxxxxxx
-----------------------------------
Name: Xxxxx Xxxxxxx
Title: Managing Director
